Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

  For the quarterly period ended September 30, 2016

  Commission File Number 001-33274

TRAVELCENTERS OF AMERICA LLC
(Exact Name of Registrant as Specified in Its Charter)
 
 
 
 
 
Delaware
 
20-5701514
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
 
 
 
24601 Center Ridge Road, Suite 200, Westlake, OH 44145-5639
 
 
(Address of Principal Executive Offices) 
 
 
 
 
 
 
 
(440) 808-9100
 
 
(Registrant's Telephone Number, Including Area Code)
 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
 
Accelerated filer x
 
 
 
Non-accelerated filer o
 
Smaller reporting company o
 (Do not check if a smaller reporting company)
 
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o   No x

 Number of Common Shares outstanding at November 7, 2016 : 38,852,663 common shares.


Table of Contents



TABLE OF CONTENTS
 
 
Page
 
 
 
 
 
 
 
 
 
 
As used herein the terms "we," "us," "our" and "TA" include TravelCenters of America LLC and its consolidated subsidiaries unless otherwise expressly stated or the context otherwise requires.



Table of Contents



Part I.  Financial Information

Item 1.  Financial Statements

TravelCenters of America LLC
Consolidated Balance Sheets (Unaudited)
(in thousands)
 
September 30,
2016
 
December 31,
2015
Assets
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
137,288

 
$
172,087

Accounts receivable (less allowance for doubtful accounts of $715 and $850
   as of September 30, 2016 and December 31, 2015, respectively)
118,103

 
91,580

Inventory
195,229

 
183,492

Other current assets
39,014

 
48,181

Total current assets
489,634

 
495,340

 
 
 
 
Property and equipment, net
1,070,757

 
989,606

Goodwill and intangible assets, net
127,153

 
105,977

Other noncurrent assets
31,333

 
30,618

Total assets
$
1,718,877

 
$
1,621,541

 
 
 
 
Liabilities and Shareholders' Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
146,454

 
$
125,079

Current HPT Leases liabilities
39,697

 
37,030

Other current liabilities
191,817

 
133,513

Total current liabilities
377,968

 
295,622

 
 
 
 
Long term debt
318,472

 
316,447

Noncurrent HPT Leases liabilities
385,134

 
385,498

Other noncurrent liabilities
78,232

 
74,655

Total liabilities
1,159,806

 
1,072,222

 
 
 
 
Shareholders' equity:
 

 
 

Common shares, no par value, 41,369 and 39,069 shares authorized as of
   September 30, 2016, and December 31, 2015, respectively, 38,853 shares issued
   and outstanding as of September 30, 2016, and 38,808 shares issued and outstanding
   as of December 31, 2015
685,714

 
682,219

Accumulated other comprehensive income (loss)
100

 
(240
)
Accumulated deficit
(128,185
)
 
(132,660
)
Total TA shareholders' equity
557,629

 
549,319

Noncontrolling interests
1,442

 

Total shareholders' equity
559,071

 
549,319

Total liabilities and shareholders' equity
$
1,718,877

 
$
1,621,541

The accompanying notes are an integral part of these consolidated financial statements.

1

Table of Contents


TravelCenters of America LLC
Consolidated Statements of Income and Comprehensive Income (Unaudited)
(in thousands, except per share amounts)


 
Three Months Ended 
 September 30,
 
2016
 
2015
Revenues:
 

 
 

Fuel
$
947,558

 
$
1,031,146

Nonfuel
525,516

 
474,646

Rent and royalties from franchisees
4,529

 
3,201

Total revenues
1,477,603

 
1,508,993

 
 
 
 
Cost of goods sold (excluding depreciation):
 

 
 

Fuel
837,525

 
928,596

Nonfuel
245,282

 
221,917

Total cost of goods sold
1,082,807

 
1,150,513

 
 
 
 
Operating expenses:
 

 
 

Site level operating
247,584

 
229,215

Selling, general and administrative
34,812

 
29,760

Real estate rent
66,573

 
60,616

Depreciation and amortization
22,698

 
17,445

Total operating expenses
371,667

 
337,036

 
 
 
 
Income from operations
23,129

 
21,444

 
 
 
 
Acquisition costs
225

 
1,755

Interest expense, net
7,200

 
5,042

Income from equity investees
1,534

 
1,336

Income before income taxes
17,238

 
15,983

Provision for income taxes
6,263

 
6,157

Net income
10,975

 
9,826

Less net income for noncontrolling interests
77

 

Net income attributable to common shareholders
$
10,898

 
$
9,826

 
 
 
 
Other comprehensive income (loss), net of tax:
 

 
 

Foreign currency loss, net of taxes of $(30) and $(131), respectively
$
(46
)
 
$
(240
)
Equity interest in investee's unrealized gain (loss) on investments
80

 
(72
)
Other comprehensive income (loss) attributable to common shareholders
34

 
(312
)
 
 
 
 
Comprehensive income attributable to common shareholders
$
10,932

 
$
9,514

 
 
 
 
Net income per common share attributable to common shareholders:
 

 
 

Basic and diluted
$
0.28

 
$
0.26

The accompanying notes are an integral part of these consolidated financial statements.

2

Table of Contents


TravelCenters of America LLC
Consolidated Statements of Income and Comprehensive Income (Unaudited)
(in thousands, except per share amounts)


 
Nine Months Ended 
 September 30,
 
2016
 
2015
Revenues:
 

 
 

Fuel
$
2,588,297

 
$
3,159,399

Nonfuel
1,485,686

 
1,330,786

Rent and royalties from franchisees
13,135

 
9,392

Total revenues
4,087,118

 
4,499,577

 
 
 
 
Cost of goods sold (excluding depreciation):
 

 
 

Fuel
2,284,570

 
2,848,175

Nonfuel
688,962

 
608,629

Total cost of goods sold
2,973,532

 
3,456,804

 
 
 
 
Operating expenses:
 

 
 

Site level operating
725,754

 
657,133

Selling, general and administrative
101,787

 
87,438

Real estate rent
194,838

 
169,528

Depreciation and amortization
64,545

 
53,086

Total operating expenses
1,086,924

 
967,185

 
 
 
 
Income from operations
26,662

 
75,588

 
 
 
 
Acquisition costs
2,286

 
3,296

Interest expense, net
20,761

 
16,461

Income from equity investees
3,572

 
3,156

Loss on extinguishment of debt

 
10,502

Income before income taxes
7,187

 
48,485

Provision for income taxes
2,571

 
19,158

Net income
4,616

 
29,327

Less net income for noncontrolling interests
141

 

Net income attributable to common shareholders
$
4,475

 
$
29,327

 
 
 
 
Other comprehensive income (loss), net of tax:
 

 
 

Foreign currency gain (loss), net of taxes of $102 and $(287), respectively
$
165

 
$
(540
)
Equity interest in investee's unrealized gain (loss) on investments
175

 
(91
)
Other comprehensive income (loss) attributable to common shareholders
340

 
(631
)
 
 
 
 
Comprehensive income attributable to common shareholders
$
4,815

 
$
28,696

 
 
 
 
Net income per common share attributable to common shareholders:
 

 
 

Basic and diluted
$
0.12

 
$
0.76

The accompanying notes are an integral part of these consolidated financial statements.

3

Table of Contents


TravelCenters of America LLC
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)


 
Nine Months Ended 
 September 30,
 
2016
 
2015
Cash flows from operating activities:
 

 
 

Net income
$
4,616

 
$
29,327

Adjustments to reconcile net income to net cash provided by
   operating activities:
 

 
 

Noncash rent expense
(10,317
)
 
(11,835
)
Depreciation and amortization expense
64,545

 
53,086

Deferred income tax provision
3,545

 
531

Loss on extinguishment of debt

 
10,502

Changes in operating assets and liabilities, net of effects of business acquisitions:
 

 
 

Accounts receivable
(25,645
)
 
(18,968
)
Inventory
(7,996
)
 
1,651

Other assets
10,024

 
(702
)
Accounts payable and other liabilities
66,784

 
75,323

Other, net
3,551

 
1,746

Net cash provided by operating activities
109,107

 
140,661

 
 
 
 
Cash flows from investing activities:
 

 
 

Proceeds from asset sales
157,749

 
348,498

Capital expenditures
(229,217
)
 
(170,284
)
Acquisitions of businesses, net of cash acquired
(72,137
)
 
(269,309
)
Net cash used in investing activities
(143,605
)
 
(91,095
)
 
 
 
 
Cash flows from financing activities:
 

 
 

Proceeds from sale leaseback transactions with HPT
216

 
1,190

Sale leaseback financing obligation payments
(468
)
 
(46,174
)
Other, net
(74
)
 
(150
)
Net cash used in financing activities
(326
)
 
(45,134
)
 
 
 
 
Effect of exchange rate changes on cash
25

 
(82
)
Net (decrease) increase in cash and cash equivalents
(34,799
)
 
4,350

Cash and cash equivalents at the beginning of the period
172,087

 
224,275

Cash and cash equivalents at the end of the period
$
137,288

 
$
228,625

 
 
 
 
Supplemental disclosure of cash flow information:
 

 
 

Interest paid (including rent classified as interest and net of capitalized interest)
$
20,587

 
$
16,430

Income taxes paid, net of refunds
420

 
1,519

The accompanying notes are an integral part of these consolidated financial statements.

4

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)


1.
Basis of Presentation, Business Description and Organization
TravelCenters of America LLC, which we refer to as the Company or we, us and our, is a Delaware limited liability company. As of September 30, 2016 , we operated and franchised 540 travel center, standalone convenience store, which we refer to as convenience stores, and standalone restaurant locations described below. Our customers include trucking fleets and their drivers, independent truck drivers, highway and local motorists and casual diners. We also collect rents, royalties and other fees from our tenants, franchisees and dealers.
We manage our business on the basis of  two  reportable segments, travel centers and convenience stores. See Note 7 for more information about our reportable segments. We have a single travel center located in a foreign country, Canada, that we do not consider material to our operations.
As of September 30, 2016 , our business included 255 travel centers in 43 states in the United States, or U.S., primarily along the U.S. interstate highway system, and the province of Ontario, Canada. Our travel centers included 178 operated under the "TravelCenters of America" and "TA" brand names, or the TA brand, and 77 operated under the "Petro Stopping Centers" and "Petro" brand names, or the Petro brand. Of our 255 travel centers at September 30, 2016 , we owned 29 , we leased 199 , including 197 that we leased from Hospitality Properties Trust, or HPT, we operated two for a joint venture in which we own a noncontrolling interest and our franchisees owned or leased from others 25 . We operated 225 of our travel centers and franchisees operated 30 travel centers, including five we leased to franchisees. Our travel centers offer a broad range of products and services, including diesel fuel and gasoline, as well as nonfuel products and services such as truck repair and maintenance services, full service restaurants, quick service restaurants, and various customer amenities. We report this portion of our business as our travel center segment.
As of September 30, 2016 , our business included 233 standalone convenience stores in 11 states in the U.S. We operate our convenience stores primarily under the "Minit Mart" brand name, or the Minit Mart brand. Of these 233 convenience stores at September 30, 2016 , we owned 198 , we leased 32 , including one that we leased from HPT, and we operated three for a joint venture in which we own a noncontrolling interest. Our convenience stores offer gasoline as well as a variety of nonfuel products, including coffee, groceries, fresh foods and quick service restaurants. We report this portion of our business as our convenience store segment.
As of September 30, 2016 , our business included 52 standalone restaurants in 15 states in the U.S. operated primarily under the "Quaker Steak & Lube" brand name, or the QSL brand. Of our 52 standalone restaurants at September 30, 2016 , we owned five , we leased seven , we operated one for a joint venture in which we own a noncontrolling interest and 39 were owned or leased from others by our franchisees. We report this portion of our business within corporate and other in our segment information in Note 7.
The accompanying consolidated financial statements are unaudited. These unaudited interim financial statements have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP, applicable for interim financial statements. The disclosures presented do not include all the information necessary for complete financial statements in accordance with GAAP. These unaudited interim financial statements should be read in conjunction with the consolidated financial statements and notes contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 , or our Annual Report. In the opinion of our management, the accompanying consolidated financial statements include all adjustments, including normal recurring adjustments, considered necessary for a fair presentation. All intercompany transactions and balances have been eliminated. While our revenues are modestly seasonal, the quarterly variations in our operating results may reflect greater seasonal differences because our rent expense and certain other costs do not vary seasonally. For this and other reasons, our operating results for interim periods are not necessarily indicative of the results that may be expected for a full year.
Certain prior year amounts have been reclassified to conform to the current year presentation.

5

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

Fair Value Measurement
Senior Notes
We refer to our $110,000 of 8.25% Senior Notes due 2028, our $120,000 of 8.00% Senior Notes due 2029, and our $100,000 of 8.00% Senior Notes due 2030 collectively as our Senior Notes, which are our senior unsecured obligations. Our Senior Notes have been presented on our consolidated balance sheets as long term debt net of unamortized debt issuance costs totaling $12,804 and $13,553 as of September 30, 2016 , and December 31, 2015 , respectively. We estimate that, based on their trading prices (a Level 1 input), the aggregate fair value of our Senior Notes on September 30, 2016 , was $337,760 .
Goodwill Impairment
Goodwill is tested for impairment annually as of July 31 at the reporting unit level, which is equivalent to our two reportable segments, travel centers and convenience stores. Impairment testing for 2016 was performed using a quantitative analysis under which the fair value of our goodwill was estimated using both an income approach and a market approach. The income approach considered discounted forecasted cash flows that were based on our long term operating plan. A terminal value was used to estimate the cash flows beyond the period covered by the operating plan. The discount rate is an estimate of the overall after tax rate of return required by equity and debt market holders of a business enterprise. The market approach considered comparable publicly traded guideline companies' business value. For each comparable publicly traded guideline company, value indicators, or pricing multiples, were considered to estimate the value of our business enterprise. These analyses require the exercise of significant judgments, including judgments about appropriate discount rates, perpetual growth rates and the timing of expected future cash flows of the respective operating segment.
We concluded based on this analysis that as of July 31, 2016, the fair values of our reporting units exceeded their respective carrying amounts.
Recently Issued Accounting Pronouncements  
In May 2014, the Financial Accounting Standards Board, or the FASB, issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers , which establishes a comprehensive revenue recognition standard under GAAP for almost all industries. The new standard will apply for annual periods beginning after December 15, 2017, including interim periods therein. We have not yet determined the effects, if any, the adoption of this update may have on our consolidated financial statements.
In April 2015, the FASB issued Accounting Standards Update 2015-03, Simplifying the Presentation of Debt Issuance Costs , which requires debt issuance costs to be presented on the balance sheet as a reduction of the associated debt liability. In August 2015, the FASB clarified the previous Accounting Standards Update and issued Accounting Standards Update 2015-15,  Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Lines of Credit Arrangements- Amendments to SEC Paragraphs Pursuant to Staff Announcements on June 18, 2015 EITF Meeting , which addresses the presentation of debt issuance costs related to line of credit arrangements. These updates were effective for interim and annual reporting periods beginning after December 15, 2015, and required retrospective application. We adopted this standard during the three months ended March 31, 2016, and applied it to all periods presented. Adoption of this standard resulted in the reclassification of debt issuance costs from other noncurrent assets to long term debt in our consolidated balance sheets. Debt issuance costs related to our line of credit arrangements remain classified as other noncurrent assets.

6

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

In February 2016, the FASB issued Accounting Standards Update 2016-02,  Leases , which establishes a comprehensive lease standard under GAAP for virtually all industries. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. The new standard will apply for annual periods beginning after December 15, 2018, including interim periods therein. Early adoption is permitted. We have not yet determined the effects the adoption of this update may have on us; however, we believe the adoption of this update will have a material impact on our consolidated balance sheets due to the recognition of the lease rights and obligations as assets and liabilities. While the adoption will have no effect on the cash we pay, amounts within our statements of income and comprehensive income are expected to change materially.
In August 2016, the FASB issued Accounting Standards Update 2016-15, Statement of Cash Flows , which simplifies elements of cash flow classification and reduces diversity in practice across all industries. The new standard will apply for annual periods beginning after December 15, 2017, including interim periods therein, and requires retrospective application. Early adoption is permitted. The implementation of this update is not expected to cause any material changes to our consolidated financial statements.

2.  
Acquisitions
During the nine months ended September 30, 2016 , we acquired 29 convenience stores, 11 standalone restaurants and franchise agreements for an additional 39 restaurants, and accounted for these transactions as business combinations, which requires, among other things, that the assets acquired and liabilities assumed be recognized at their respective fair values as of the date of acquisition. We have included the results of these acquired businesses in our consolidated financial statements from the dates of acquisition. The pro forma impact of these acquisitions, including the results of operations of the acquired convenience stores and standalone restaurants from the beginning of the periods presented, is not material to our consolidated financial statements.
The following table summarizes the amounts we recorded for the assets acquired and liabilities assumed in the business combinations described above, along with resulting goodwill. We expect that amortization of all of the goodwill resulting from these acquisitions will be deductible for tax purposes.
 
Convenience
Stores
 
Corporate
and Other (1)
 
Total
Inventory
$
3,175

 
$
465

 
$
3,640

Property and equipment
36,289

 
12,867

 
49,156

Goodwill
7,219

 

 
7,219

Intangible assets
370

 
15,910

 
16,280

Other assets
18

 
1,289

 
1,307

Other liabilities
(1,918
)
 
(3,547
)
 
(5,465
)
Total aggregate purchase price
$
45,153

 
$
26,984

 
$
72,137

(1)  
Includes standalone restaurants. See Note 7 for more segment information.
The purchase price allocations included in the table above, primarily related to real estate, property and equipment, and intangibles, are based on valuations that are not yet finalized. The process for estimating the fair value of assets acquired and liabilities assumed requires the use of judgment in determining appropriate assumptions and estimates. As we obtain additional information to finalize these preliminary valuations, adjustments to the recorded amounts may be made during the measurement period (up to one year from the acquisition date).


7

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

Acquisition costs, such as legal fees, due diligence costs and closing costs, are not included as a component of consideration transferred in business combinations but instead are expensed as incurred.
As of  September 30, 2016 , we had entered agreements to acquire  six restaurants for an aggregate purchase price of  $6,000 and one travel center for a purchase price of $13,050 , excluding closing costs and working capital adjustments. We expect to complete these acquisitions during 2016, but these purchases are subject to conditions and may not occur, may be delayed or the terms may change.

3.  
Shareholders' Equity
On May 19, 2016, our shareholders approved the 2016 Equity Compensation Plan, or the 2016 Plan, under which 2,300 shares were authorized for issuance under the terms of the 2016 Plan.
Changes in Shareholders' Equity
On April 20, 2016, we acquired the Quaker Steak & Lube restaurant business of Lube Holdings, Inc., or the QSL acquisition. The QSL acquisition included a 75% controlling interest in an entity that operates one restaurant and leases certain assets from another entity in which we own a 25% interest. These entities are consolidated in our consolidated financial statements. See Note 2 for more information about the QSL acquisition.
The changes in shareholders' equity for the nine months ended September 30, 2016 , follow:
 
Total TA
Shareholders'
Equity
 
Noncontrolling
Interests
 
Total
Shareholders'
Equity
December 31, 2015
$
549,319

 
$

 
$
549,319

Grants under share award plan and share based
   compensation, net
3,495

 

 
3,495

QSL acquisition

 
1,301

 
1,301

Other comprehensive income, net of tax
340

 

 
340

Net income
4,475

 
141

 
4,616

September 30, 2016
$
557,629

 
$
1,442

 
$
559,071


8

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

Net Income Per Common Share Attributable to Common Shareholders
The following table presents a reconciliation of net income attributable to common shareholders to net income available to common shareholders and the related earnings per share.
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
Net income attributable to common
   shareholders, as reported
$
10,898

 
$
9,826

 
$
4,475

 
$
29,327

Less: net income attributable to
   participating securities
534

 
494

 
219

 
1,477

Net income available to
   common shareholders
$
10,364

 
$
9,332

 
$
4,256

 
$
27,850

 
 
 
 
 
 
 
 
Weighted average common shares (1)
36,953

 
36,467

 
36,922

 
36,435

 
 
 
 
 
 
 
 
Basic and diluted net income per
   common share
$
0.28

 
$
0.26

 
$
0.12

 
$
0.76

(1)  
Excludes unvested shares granted under our share award plans, which shares are considered participating securities because they participate equally in earnings and losses with all of our other common shares. The weighted average number of unvested shares outstanding for the three months ended September 30, 2016 and 2015 , was 1,900 and 1,932 , respectively. The weighted average number of unvested shares outstanding for the nine months ended September 30, 2016 and 2015 , was 1,904 and 1,933 , respectively.

4.
Related Party Transactions
We have relationships and historical and continuing transactions with HPT, The RMR Group LLC, or RMR, and others related to them, including other companies to which RMR provides management services and which have trustees, directors and officers who are also our Directors or officers. For further information about these and other such relationships and certain other related party transactions, please refer to our Annual Report.
Relationship with HPT  
HPT is our largest shareholder. As of September 30, 2016 , HPT owned 3,420 of our common shares, representing approximately 8.8% of our outstanding common shares. HPT is also our principal landlord. We have five leases with HPT, the four TA Leases for 158 properties and the Petro Lease for 40 properties. We refer to the four TA Leases and the Petro Lease collectively as the HPT Leases.
On June 1, 2015 , we entered a transaction agreement with HPT. On June 22, 2016 , we and HPT amended the transaction agreement. We refer to the amended transaction agreement as the Transaction Agreement. Under the Transaction Agreement, among other things, we agreed to sell to HPT four travel centers upon the completion of their development at a purchase price equal to their development costs, including the cost of the land, and two existing travel centers owned by us, and HPT agreed to lease back these properties to us under the HPT Leases.
In connection with the Transaction Agreement:
On March 31, 2016 , we sold one of the development properties to HPT for $19,683 , and we and HPT amended our TA Lease 4 to add this property and our minimum annual rent under our TA Lease 4 increased by $1,673 .

9

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

On June 22, 2016 , we sold two existing travel centers for an aggregate of $23,876 , and we and HPT amended our TA Lease 1 and TA Lease 3 to add these properties, respectively, and our minimum annual rent under our TA Lease 1 and TA Lease 3 increased by $1,121 and $908 , respectively. The sale of these two properties generated a gain of $11,794 that was deferred and will be amortized on a straight line basis over the terms of the related leases as a reduction of rent expense. We also amended the Petro Lease to extend its term to 2032.
On June 30, 2016 , we sold one of the development properties to HPT for $22,297 , and we and HPT amended our TA Lease 2 to add this property and our minimum annual rent under our TA Lease 2 increased by $1,895 .
On September 30, 2016 , we sold one of the two remaining development properties to HPT for $16,557 , and we and HPT amended our TA Lease 2 to add this property and our minimum annual rent under our TA Lease 2 increased by $1,407 .
As of September 30, 2016 , the sale and lease back of the remaining development property pursuant to the terms of the Transaction Agreement, is expected to be completed before June 30, 2017 .
Because of the relationships between us and HPT, the terms of the Transaction Agreement and lease amendments described above were negotiated and approved by special committees of our Board of Directors and the HPT board of trustees composed of our Independent Directors and HPT's independent trustees who are not also Directors or trustees of the other party, which committees were represented by separate counsel.
On September 14, 2016 , HPT purchased a vacant land parcel located adjacent to a property we lease from HPT in Holbrook, Arizona for $325 ; and we and HPT amended our TA Lease 4 to add this parcel and our minimum annual rent under our TA Lease 4 increased by $28 .
As of September 30, 2016 , the number of properties leased, the terms, the minimum annual rents and the deferred rent balances under our HPT Leases were as follows:
 
Number
of Properties
 
Initial Term
End Date (1)
 
Minimum Annual
Rent as of
September 30, 2016
 
Deferred Rent (2)
TA Lease 1
40
 
December 31, 2029
 
$
50,885

 
$
27,421

TA Lease 2
40
 
December 31, 2028
 
51,696

 
29,107

TA Lease 3
39
 
December 31, 2026
 
52,262

 
29,324

TA Lease 4
39
 
December 31, 2030
 
47,526

 
21,233

Petro Lease
40
 
June 30, 2032
 
66,685

 
42,915

Total
198
 
 
 
$
269,054

 
$
150,000

(1)
We have two renewal options of 15 years each under each of our HPT Leases.
(2)
Deferred rent for the TA Lease 1, TA Lease 2, TA Lease 3 and TA Lease 4 is due and payable on the respective initial term end dates noted above. Deferred rent for the Petro Lease is due and payable on June 30, 2024. Deferred rent is subject to acceleration at HPT's option upon an uncured default by, or a change in control of, us.

10

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

The following table summarizes the various amounts related to the HPT Leases and leases with other lessors that are reflected in real estate rent expense in our consolidated statements of income and comprehensive income.
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2016
 
2015
 
2016
 
2015
Cash payments for rent under the HPT Leases
$
67,040

 
$
62,445

 
$
197,063

 
$
178,818

Change in accrued estimated percentage rent
384

 
(878
)
 
667

 
(1,275
)
Adjustments to recognize expense on a
   straight line basis
(53
)
 
(52
)
 
(180
)
 
(4,639
)
Less sale leaseback financing
   obligation amortization
(126
)
 
(64
)
 
(350
)
 
(1,132
)
Less portion of rent payments recognized
   as interest expense
(433
)
 
(446
)
 
(1,297
)
 
(2,866
)
Less deferred tenant improvements
   allowance amortization
(942
)
 
(942
)
 
(2,827
)
 
(4,077
)
Amortization of deferred gain on sale
   leaseback transactions
(2,525
)
 
(2,053
)
 
(7,218
)
 
(2,871
)
Rent expense related to HPT Leases
63,345

 
58,010

 
185,858

 
161,958

Rent paid to others (1)
3,294

 
2,693

 
9,219

 
7,858

Adjustments to recognize expense on a
   straight line basis for other leases
(66
)
 
(87
)
 
(239
)
 
(288
)
Total real estate rent expense
$
66,573

 
$
60,616

 
$
194,838

 
$
169,528

(1)  
Includes rent paid directly to HPT's landlords under leases for properties we sublease from HPT as well as rent related to properties we lease from landlords other than HPT.
The following table summarizes the various amounts related to the HPT Leases that are included in our consolidated balance sheets.
 
September 30,
2016
 
December 31,
2015
Current HPT Leases liabilities:
 

 
 

Accrued rent
$
22,833

 
$
21,098

Sale leaseback financing obligation (1)
481

 
469

Straight line rent accrual (2)
2,458

 
2,458

Deferred gain (3)
10,155

 
9,235

Deferred tenant improvements allowance (4)
3,770

 
3,770

Total Current HPT Leases liabilities
$
39,697

 
$
37,030

 
 
 
 
Noncurrent HPT Leases liabilities:
 

 
 

Deferred rent obligation (5)
$
150,000

 
$
150,000

Sale leaseback financing obligation (1)
20,568

 
20,719

Straight line rent accrual (2)
48,013

 
48,373

Deferred gain (3)
124,024

 
121,049

Deferred tenant improvements allowance (4)
42,529

 
45,357

Total Noncurrent HPT Leases liabilities
$
385,134

 
$
385,498


11

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

(1)  
Sale Leaseback Financing Obligation.  Prior to June 2015, the assets related to nine travel centers we leased from HPT were reflected in our consolidated balance sheets, as was the related financing obligation. This accounting was required primarily because, at the time of the inception of the applicable HPT Lease, more than a minor portion of these nine travel centers was subleased to third parties. In June 2015, we purchased five of these nine travel centers from HPT. That purchase was accounted for as an extinguishment of the related financing obligation and resulted in a loss on extinguishment of debt of $10,502 because the price we paid to HPT to purchase the five properties was $10,502 in excess of the then remaining related financing obligation. Also, because the TA Leases we entered into with HPT in connection with the Transaction Agreement were accounted for as new leases and two of the remaining four properties reflected as financings under the prior TA Lease then qualified for operating lease treatment, the remaining net assets and financing obligation related to these two properties were eliminated, resulting in a gain of $1,033 , which was deferred and will be recognized over the terms of the applicable TA Leases as a reduction of rent expense.
(2)  
Straight Line Rent Accrual. We accrued rent expense from 2007 to 2012 for stated increases in our minimum annual rents due under our then existing TA lease. While the TA Leases we entered into with HPT in connection with the Transaction Agreement contain no stated rent payment increases, we continue to amortize this accrual on a straight line basis over the current terms of the TA Leases as a reduction to real estate rent expense. The straight line rent accrual also includes our obligation for the estimated cost of removal of underground storage tanks at properties leased from HPT at the end of the related lease; we recognize these obligations on a straight line basis over the term of the related leases as additional rent expense.
(3)  
Deferred Gain . The deferred gain primarily includes $145,462 of gains from the sales of travel centers and certain other assets to HPT during 2015 and 2016 pursuant to the Transaction Agreement. We amortize the deferred gains on a straight line basis over the terms of the related leases as a reduction of rent expense.
(4)  
Deferred Tenant Improvements Allowance.  HPT funded certain capital projects at the properties we lease under the HPT Leases without an increase in rent payable by us. In connection with HPT's initial capital commitment, we recognized a liability for rent deemed to be related to this capital commitment as a deferred tenant improvements allowance. We amortize the deferred tenant improvements allowance on a straight line basis over the terms of the HPT Leases as a reduction of rent expense.
(5)  
Deferred Rent Obligation.  Pursuant to a rent deferral agreement with HPT, from July 2008 through December 31, 2010, we deferred a total of $150,000 of rent payable to HPT. This deferred rent obligation was allocated among the HPT Leases. Deferred rent for the TA Leases is due at the end of the initial terms of the respective TA Leases as noted above, and deferred rent for the Petro Lease is due on June 30, 2024.
HPT waived percentage rent of $271 for the three months ended September 30, 2015 , and $372 and $819 for the nine months ended September 30, 2016 and 2015 , respectively. As of June 30, 2016 , HPT had cumulatively waived all of the $2,500 of percentage rent it previously agreed to waive. The total amount of percentage rent (which is net of any waived amounts) was $408 and $0 for the three months ended September 30, 2016 and 2015 , respectively, and $937 and $1,999 for the nine months ended September 30, 2016 and 2015 , respectively.
Pursuant to the terms of our HPT Leases, we sold improvements made to properties leased from HPT for $20,255 and $29,734 during the three months ended September 30, 2016 and 2015, respectively, and $75,314 and $70,150 during the nine months ended September 30, 2016 and 2015, respectively. As a result, our minimum annual rent payable to HPT increased by $1,722 and $2,527 for the three months ended September 30, 2016 and 2015, respectively, and $6,402 and $5,963 for the nine months ended September 30, 2016 and 2015, respectively. At September 30, 2016 , our property and equipment balance included $55,308 of improvements of the type that we typically request that HPT purchase for an increase in minimum annual rent; however, HPT is not obligated to purchase these improvements.

12

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

Relationship with RMR
Pursuant to our business management agreement and property management agreement with RMR, we incurred aggregate fees of $3,935 and $3,567 for the three months ended September 30, 2016 and 2015 , respectively, and $10,748 and $10,063 for the nine months ended September 30, 2016 and 2015 , respectively. These amounts are included in selling, general and administrative expenses in our consolidated statements of income and comprehensive income. In August 2016, we and RMR amended our property management agreement to increase the property management fees we pay to RMR to $36 per year (previously, we paid $30 per year to RMR for property management fees).
We have historically awarded share grants to certain RMR employees under our equity compensation plan. In addition, under our business management agreement we reimburse RMR for our allocable costs for internal audit services. The amounts recognized as expense for share grants to RMR employees and internal audit costs were $989 and $868 for the three months ended September 30, 2016 and 2015 , respectively, and $3,186 and $2,555 for the nine months ended September 30, 2016 and 2015 , respectively; these amounts are included in selling, general and administrative expenses in our consolidated statements of income and comprehensive income.
Relationship with AIC
We and six other companies to which RMR provides management services each own in equal amounts Affiliates Insurance Company, or AIC, an insurance company. We and the other AIC shareholders participate in a combined property insurance program arranged and reinsured in part by AIC. We paid aggregate annual premiums, including taxes and fees, of approximately $2,186 in connection with this insurance program for the policy year ending June 30, 2017, which amount may be adjusted from time to time as we acquire and dispose of properties that are included in this insurance program.
As of September 30, 2016 and December 31, 2015 , our investment in AIC had a carrying value of $7,110 and $6,828 , respectively. These amounts are included in other noncurrent assets in our consolidated balance sheets. We recognized income (loss) of $14 and $(25) related to our investment in AIC for the three months ended September 30, 2016 and 2015 , respectively, and $108 and $70 for the nine months ended September 30, 2016 and 2015 , respectively. Our other comprehensive income includes our proportional share of unrealized gains (losses) on securities held for sale, which are owned by AIC, of $80 and $(72) for the three months ended September 30, 2016 and 2015 , respectively, and $175 and $(91) for the nine months ended September 30, 2016 and 2015 , respectively.
Directors' and Officers' Liability Insurance
We, The RMR Group Inc., the managing member of RMR, RMR and certain companies to which RMR provides management services participate in a combined directors' and officers' liability insurance policy. In September 2016, we participated in a one year extension of this combined directors' and officers' insurance policy through September 2018. Our premium for this policy extension was approximately $91 for the current policy year ending September 2017.
Relationship with PTP
We own a 40% minority interest in Petro Travel Plaza Holdings LLC, or PTP. As of September 30, 2016 and December 31, 2015 , our investment in PTP had a carrying value of $20,507 and $20,042 , respectively, which amounts are included in other noncurrent assets in our consolidated balance sheets. In February 2016, we began managing a third standalone convenience store PTP owns. As of September 30, 2016 , we managed two travel centers, three convenience stores and one restaurant for PTP for which we receive management and accounting fees. We recognized management fee income of $323 and $200 for the three months ended September 30, 2016 and 2015, respectively, and $776 and $600 for the nine months ended September 30, 2016 and 2015, respectively. In addition to the management fees we earned, we recognized income of $1,520 and $1,361 during the three months ended September 30, 2016 and 2015 , respectively, and $3,464 and $3,086 for the nine months ended September 30, 2016 and 2015 , respectively. At September 30, 2016 and December 31, 2015 , we had a net payable to PTP of $834 and net receivable from PTP of $43 , respectively.


13

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

5.
Contingencies
Legal Proceedings
We are routinely involved in various legal and administrative proceedings, including tax audits, incidental to the ordinary course of our business, none of which we expect, individually or in the aggregate, to have a material adverse effect on our business, financial condition, results of operations or cash flows.
Environmental Contingencies
Extensive environmental laws regulate our operations and properties. These laws may require us to investigate and clean up hazardous substances, including petroleum or natural gas products, released at our owned and leased properties. Governmental entities or third parties may hold us liable for property damage and personal injuries, and for investigation, remediation and monitoring costs incurred in connection with any contamination and regulatory compliance at our locations. We use both underground storage tanks and above ground storage tanks to store petroleum products, natural gas and other hazardous substances at our locations. We must comply with environmental laws regarding tank construction, integrity testing, leak detection and monitoring, overfill and spill control, release reporting and financial assurance for corrective action in the event of a release. At some locations we must also comply with environmental laws relative to vapor recovery or discharges to water. Under the terms of the HPT Leases, we generally have agreed to indemnify HPT for any environmental liabilities related to properties that we lease from HPT and we are required to pay all environmental related expenses incurred in the operation of the leased properties. Under an agreement with Equilon Enterprises LLC doing business as Shell Oil Products US, or Shell, we have agreed to indemnify Shell and its affiliates from certain environmental liabilities incurred with respect to our travel centers where Shell has installed natural gas fueling lanes.
From time to time we have received, and in the future likely will receive, notices of alleged violations of environmental laws or otherwise have become or will become aware of the need to undertake corrective actions to comply with environmental laws at our locations. Investigatory and remedial actions were, and regularly are, undertaken with respect to releases of hazardous substances at our locations. In some cases we received, and may receive in the future, contributions to partially offset our environmental costs from insurers, from state funds established for environmental clean up associated with the sale of petroleum products or from indemnitors who agreed to fund certain environmental related costs at locations purchased from those indemnitors. To the extent we incur material amounts for environmental matters for which we do not receive or expect to receive insurance or other third party reimbursement or for which we have not previously recorded a liability, our operating results may be materially adversely affected. In addition, to the extent we fail to comply with environmental laws and regulations, or we become subject to costs and requirements not similarly experienced by our competitors, our competitive position may be harmed.
At September 30, 2016 , we had a gross accrued liability of $4,951 for environmental matters as well as a receivable for expected recoveries of certain of these estimated future expenditures of $1,063 , resulting in an estimated net amount of $3,888 that we expect to fund in the future. We cannot precisely know the ultimate costs we may incur in connection with currently known or future potential environmental related violations, corrective actions, investigation and remediation; however, we do not expect the costs for such matters to be material, individually or in the aggregate, to our financial position or results of operations.

14

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

In February 2014, we reached an agreement with the California State Water Resources Control Board, or the State Water Board, to settle certain claims the State Water Board had filed against us in California Superior Court in 2010 relating to alleged violations of underground storage tank laws and regulations for a cash payment of $1,800 ; suspended penalties of $1,000 that may become payable by us in the future if, prior to March 2019, we fail to comply with specified underground storage tank laws and regulations; and our agreement to invest, prior to March 2018, up to $2,000 of verified costs that are directly related to the development and implementation of a comprehensive California Enhanced Environmental Compliance Program for the underground storage tank systems at all of our California facilities that is above and beyond minimum requirements of California law and regulations related to underground storage tank systems. The settlement, which was approved by the Superior Court on February 20, 2014, also included injunctive relief provisions requiring that we comply with certain California environmental laws and regulations applicable to underground storage tank systems. In October 2015, the State Water Board issued a notice of alleged suspended penalty conduct claiming that we are liable for the full amount of the $1,000 in suspended penalties as a result of five alleged violations of underground storage tank regulations and requesting further information concerning the alleged violations. In November 2015, we filed our response to the October 2015 notice of alleged suspended penalties and in June and September 2016 we met with the State Water Board to attempt to resolve these matters. We believe we have meritorious defenses to these alleged violations, but cannot predict whether any penalties relating to these matters will be assessed by the Superior Court, which has retained jurisdiction over such matters. The State Water Board also has retained the right to file a separate action relating to these violations, but to date has not done so. As of September 30, 2016 , we have recognized a liability of $2,264 with respect to these matters concerning the State Water Board and believe, though we can provide no assurance, that any additional amount of loss we may realize above that accrued, if any, upon the ultimate resolution of this matter will not be material to us.
We currently have insurance of up to $10,000 per incident and up to $25,000 in the aggregate for certain environmental liabilities, subject, in each case, to certain limitations and deductibles. However, we can provide no assurance that we will be able to maintain similar environmental insurance coverage in the future on acceptable terms.
We cannot predict the ultimate effect changing circumstances and changing environmental laws may have on us in the future or the ultimate outcome of matters currently pending. We cannot be certain that contamination presently unknown to us does not exist at our sites, or that material liability will not be imposed on us in the future. If we discover additional environmental issues, or if government agencies impose additional environmental requirements, increased environmental compliance or remediation expenditures may be required, which could have a material adverse effect on us.
Other Disputes
Many of our customers use fuel cards issued by Comdata Inc., or Comdata, to make payments to us. On September 12, 2016, we received a letter from Comdata alleging that we were in default under the Comdata Merchant Agreement, of December 15, 2010, (as amended on December 14, 2011) by and between Comdata and us, or the Comdata Merchant Agreement, pursuant to which we agreed to accept Comdata fuel cards for certain purchases by our customers through January 2, 2022. The September 12, 2016, letter from Comdata alleges default under the Comdata Merchant Agreement due to our purported failure to comply with a separate agreement with Comdata to install radio frequency identification, or RFID, technology at 224 of our company operated travel center locations. In its letter, Comdata threatened to terminate both agreements unless we cured the alleged default on or before October 13, 2016. Although we disputed, and continue to dispute, Comdata's assertions, by letter dated October 13, 2016, we informed Comdata that we had substantially completed installation of the RFID technology, that the technology had been installed and was operational at 201 of our travel center locations, that one location had been operational but was damaged and under repair, and that the remaining 22 travel center locations would be outfitted with the RFID technology as soon as we received the required hardware and licenses previously ordered from Comdata. On November 3, 2016, we received a letter from Comdata purporting to terminate both agreements effective immediately and offering to continue the terms of the agreements for up to 90 days. The Comdata Merchant Agreement provides that in the event that either party engages legal counsel to enforce, protect or preserve any rights it might have under such agreement, the prevailing party shall be entitled to recover its reasonable attorney’s fees and associated costs, in addition to any other relief to which it may be entitled. We do not believe that Comdata has the right to terminate either of our agreements under the present circumstances and are considering our response.


15

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

6.
Inventory
Inventory consisted of the following:
 
September 30,
2016
 
December 31,
2015
Nonfuel products
$
163,641

 
$
159,256

Fuel products
31,588

 
24,236

Total inventory
$
195,229

 
$
183,492


16

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

7.
Segment Information
Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. Our reportable segments are travel centers and convenience stores. We measure our reportable segments profitability based on site level gross margin in excess of site level operating expenses. See Note 1 above and Note 15 to the Notes to Consolidated Financial Statements of our Annual Report for more information about our reportable segments.
 
Three Months Ended September 30, 2016
 
Travel
Centers
 
Convenience
Stores
 
Corporate
and Other
 
Consolidated
Revenues:
 
 
 
 
 
 
 
Fuel
$
808,366

 
$
119,375

 
$
19,817

 
$
947,558

Nonfuel
434,712

 
81,691

 
9,113

 
525,516

Rent and royalties from franchisees
3,238

 
58

 
1,233

 
4,529

Total revenues
1,246,316

 
201,124

 
30,163

 
1,477,603

 
 
 
 
 
 
 
 
Site level gross margin in excess of
   site level operating expenses
$
131,866

 
$
12,249

 
$
3,097

 
$
147,212

 
 
 
 
 
 
 
 
Corporate operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
 
 
 
 
34,812

 
$
34,812

Real estate rent
 
 
 
 
66,573

 
66,573

Depreciation and amortization
 
 
 
 
22,698

 
22,698

Income from operations
 
 
 
 
 
 
23,129

 
 
 
 
 
 
 
 
Acquisition costs
 
 
 
 
225

 
225

Interest expense, net
 
 
 
 
7,200

 
7,200

Income from equity investees
 
 
 
 
1,534

 
1,534

Income before income taxes
 
 
 
 
 
 
17,238

Provision for income taxes
 
 
 
 
6,263

 
6,263

Net income
 
 
 
 
 
 
10,975

Less net income for noncontrolling interests
 
 
 
 
 
 
77

Net income attributable to
   common shareholders
 
 
 
 
 
 
$
10,898


17

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

 
Three Months Ended September 30, 2015
 
Travel
Centers
 
Convenience
Stores
 
Corporate
and Other
 
Consolidated
Revenues:
 
 
 
 
 
 
 
Fuel
$
943,291

 
$
69,733

 
$
18,122

 
$
1,031,146

Nonfuel
431,318

 
43,082

 
246

 
474,646

Rent and royalties from franchisees
3,201

 

 

 
3,201

Total revenues
1,377,810

 
112,815

 
18,368

 
1,508,993

 
 
 
 
 
 
 
 
Site level gross margin in excess of
   site level operating expenses
$
121,359

 
$
7,421

 
$
485

 
$
129,265

 
 
 
 
 
 
 
 
Corporate operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
 
 
 
 
$
29,760

 
$
29,760

Real estate rent
 
 
 
 
60,616

 
60,616

Depreciation and amortization
 
 
 
 
17,445

 
17,445

Income from operations
 
 
 
 
 
 
21,444

 
 
 
 
 
 
 
 
Acquisition costs
 
 
 
 
1,755

 
1,755

Interest expense, net
 
 
 
 
5,042

 
5,042

Income from equity investees
 
 
 
 
1,336

 
1,336

Income before income taxes
 
 
 
 
 
 
15,983

Provision for income taxes
 
 
 
 
6,157

 
6,157

Net income
 
 
 
 
 
 
9,826

Less net income for noncontrolling interests
 
 
 
 
 
 

Net income attributable to
   common shareholders
 
 
 
 
 
 
$
9,826


18

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

 
Nine Months Ended September 30, 2016
 
Travel
Centers
 
Convenience
Stores
 
Corporate
and Other
 
Consolidated
Revenues:
 
 
 
 
 
 
 
Fuel
$
2,222,962

 
$
311,199

 
$
54,136

 
$
2,588,297

Nonfuel
1,248,533

 
220,562

 
16,591

 
1,485,686

Rent and royalties from franchisees
10,556

 
249

 
2,330

 
13,135

Total revenues
3,482,051

 
532,010

 
73,057

 
4,087,118

 
 
 
 
 
 
 
 
Site level gross margin in excess of
   site level operating expenses
$
353,645

 
$
27,188

 
$
6,999

 
$
387,832

 
 
 
 
 
 
 
 
Corporate operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
 
 
 
 
$
101,787

 
$
101,787

Real estate rent
 
 
 
 
194,838

 
194,838

Depreciation and amortization
 
 
 
 
64,545

 
64,545

Income from operations
 
 
 
 
 
 
26,662

 
 
 
 
 
 
 
 
Acquisition costs
 
 
 
 
2,286

 
2,286

Interest expense, net
 
 
 
 
20,761

 
20,761

Income from equity investees
 
 
 
 
3,572

 
3,572

Income before income taxes
 
 
 
 
 
 
7,187

Provision for income taxes
 
 
 
 
2,571

 
2,571

Net income
 
 
 
 
 
 
4,616

Less net income for noncontrolling interests
 
 
 
 
 
 
141

Net income attributable to
   common shareholders
 
 
 
 
 
 
$
4,475


19

Table of Contents


TravelCenters of America LLC
Notes to Consolidated Financial Statements (Unaudited)
(in thousands, except per share amounts)

 
Nine Months Ended September 30, 2015
 
Travel
Centers
 
Convenience
Stores
 
Corporate
and Other
 
Consolidated
Revenues:
 
 
 
 
 
 
 
Fuel
$
2,976,528

 
$
134,600

 
$
48,271

 
$
3,159,399

Nonfuel
1,234,468

 
95,678

 
640

 
1,330,786

Rent and royalties from franchisees
9,392

 

 

 
9,392

Total revenues
4,220,388

 
230,278

 
48,911

 
4,499,577

 
 
 
 
 
 
 
 
Site level gross margin in excess of
   site level operating expenses
$
371,009

 
$
12,450

 
$
2,181

 
$
385,640

 
 
 
 
 
 
 
 
Corporate operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
 
 
 
 
$
87,438

 
$
87,438

Real estate rent
 
 
 
 
169,528

 
169,528

Depreciation and amortization
 
 
 
 
53,086

 
53,086

Income from operations
 
 
 
 
 
 
75,588

 
 
 
 
 
 
 
 
Acquisition costs
 
 
 
 
3,296

 
3,296

Interest expense, net
 
 
 
 
16,461

 
16,461

Income from equity investees
 
 
 
 
3,156

 
3,156

Loss on extinguishment of debt
 
 
 
 
10,502

 
10,502

Income before income taxes
 
 
 
 
 
 
48,485

Provision for income taxes
 
 
 
 
19,158

 
19,158

Net income
 
 
 
 
 
 
29,327

Less net income for noncontrolling interests
 
 
 
 
 
 

Net income attributable to
   common shareholders
 
 
 
 
 
 
$
29,327



20

Table of Contents



Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, or this Quarterly Report, and with our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 , or our Annual Report. Amounts are in thousands of dollars or gallons unless indicated otherwise. Unless the context indicates otherwise, references to our convenience stores and restaurants refer to our standalone convenience stores and restaurants and not the convenience stores and restaurants located at our travel centers or restaurants at our convenience stores.

Company Overview
TravelCenters of America LLC, which we refer to as the Company or we, us and our, is a Delaware limited liability company. As of September 30, 2016 , we operated and franchised 540  travel center, standalone convenience store and standalone restaurant locations described below. Our customers include trucking fleets and their drivers, independent truck drivers, highway and local motorists and casual diners. We also collect rents, royalties and other fees from our tenants, franchisees and dealers.
We manage our business on the basis of  two  reportable segments, travel centers and convenience stores. See Note 1 and Note 7 to the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report for more information about our reportable segments. We have a single travel center located in a foreign country, Canada, that we do not consider material to our operations.
As of September 30, 2016 , our business included 255 travel centers in 43 states in the United States, or U.S., primarily along the U.S. interstate highway system, and the province of Ontario, Canada. Our travel centers included 178 operated under the "TravelCenters of America" and "TA" brand names, or the TA brand, and 77 operated under the "Petro Stopping Centers" and "Petro" brand names, or the Petro brand. Of our 255 travel centers at September 30, 2016 , we owned 29 , we leased 199 , including 197 that we leased from Hospitality Properties Trust, or HPT, we operated two for a joint venture in which we own a noncontrolling interest and our franchisees owned or leased from others 25 . We operated 225 of our travel centers and franchisees operated 30 travel centers, including five we leased to franchisees. Our travel centers offer a broad range of products and services, including diesel fuel and gasoline, as well as nonfuel products and services such as truck repair and maintenance services, full service restaurants, quick service restaurants, and various customer amenities. We report this portion of our business as our travel center segment.
As of September 30, 2016 , our business included 233 convenience stores in 11 states in the U.S. We operate our convenience stores primarily under the "Minit Mart" brand name, or the Minit Mart brand. Of these 233 convenience stores at September 30, 2016 , we owned 198 , we leased 32 , including one that we leased from HPT, and we operated three for a joint venture in which we own a noncontrolling interest. Our convenience stores offer gasoline as well as a variety of nonfuel products, including coffee, groceries, fresh foods and quick service restaurants. We report this portion of our business as our convenience store segment.
As of September 30, 2016 , our business included 52 standalone restaurants in 15 states in the U.S. operated primarily under the "Quaker Steak & Lube" brand name, or the QSL brand. Of our 52 standalone restaurants at September 30, 2016 , we owned five , we leased seven , we operated one for a joint venture in which we own a noncontrolling interest and 39 were owned or leased from others by our franchisees. We report this portion of our business within corporate and other in our segment information.
Executive Summary
Our revenues and income are subject to material changes as a result of market prices and the availability of diesel fuel and gasoline. These factors are subject to the worldwide petroleum products supply chain, which historically has experienced price and supply volatility as a result of, among other things, severe weather, terrorism, political crises, military actions and variations in supply and demand that are often the result of changes in the macroeconomic environment. Over the past few years there have been significant changes in the cost of fuel. During the three and nine months ended September 30, 2016 , the average fuel price was 9.2% and 24.6% , respectively, below the average fuel price during the three and nine months ended September 30, 2015 . Some current economic forecasts reflect continued low prices for fuel; however, as noted above, various factors and events can cause fuel prices to change, sometimes suddenly and sharply. 

21

Table of Contents



Due to the volatility of our fuel costs and our pricing to fuel customers, we believe that fuel revenue is not a reliable metric for analyzing our results of operations from period to period. As a result solely of changes in fuel prices, our fuel revenue may materially increase or decrease, in both absolute amounts and on a percentage basis, without a comparable change in fuel sales volumes or in fuel gross margin. We therefore consider fuel sales volume and fuel gross margin to be better measures of our performance. We generally are able to pass changes in our cost for fuel products to customers, but typically with a delay, such that during periods of rising fuel commodity prices, fuel gross margins per gallon tend to be lower than they otherwise may have been, and during periods of falling fuel commodity prices fuel gross margins per gallon tend to be higher than they otherwise may have been. Increases and volatility in the prices we pay for fuel can have negative effects on our sales and profitability and increase our working capital requirements. For more information about fuel market risks that may affect us and our actions to mitigate those risks, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report.
We believe that demand for fuel by trucking companies for any given level of trucking activity will be reduced over time by technological innovations that permit, and regulations that encourage, require or give rise to, improved fuel efficiency of motor vehicle engines, and other fuel conservation practices. We believe these factors, combined with managing our fuel sales pricing to balance sales volume and profitability and lower levels of freight activity, were contributors to decreases in the level of fuel sales volumes we realized on a same site basis for the three and nine months ended September 30, 2016 , as compared to the three and nine months ended September 30, 2015 . Our fuel sales volume increased during the three and nine months ended September 30, 2016 , primarily as a result of sites we acquired since the beginning of the three and nine months ended September 30, 2015 , respectively.
Our fuel gross margin and fuel gross margin per gallon for the three months ended September 30, 2016 , were higher than those in the three months ended September 30, 2015 , due to newly acquired locations and a continued focus on managing our fuel gross margin by balancing competitive pricing decisions with their impact on sales volume. Our fuel gross margin and fuel gross margin per gallon for the nine months ended September 30, 2016 , were lower than those in the nine months ended September 30, 2015 , primarily due to a favorable purchasing environment in the first four months of 2015 that did not recur in the nine months ended September 30, 2016 .
The increase in our net income attributable to common shareholders for the three months ended September 30, 2016 , as compared to the three months ended September 30, 2015 , was primarily attributable to our recently acquired sites. The decrease in our net income attributable to common shareholders we experienced for the nine months ended September 30, 2016 , as compared to the nine months ended September 30, 2015 , was primarily due to lower fuel gross margin for the 2016 period for the reasons noted above as well as the effect of expenses associated with recently acquired sites.

Factors Affecting Comparability
Transaction Agreement with HPT
On June 1, 2015 , we entered a transaction agreement with HPT. On June 22, 2016 , we and HPT amended the transaction agreement. We refer to the amended transaction agreement as the Transaction Agreement. Under the Transaction Agreement, among other things, we agreed to sell to HPT four travel centers upon the completion of their development at a purchase price equal to their development costs, including the cost of the land, and two existing travel centers owned by us, and HPT agreed to lease back these properties to us under the HPT Leases. See Note 12 to the Notes to Consolidated Financial Statements included in Item 15 of our Annual Report for more information about our sale leaseback and other related transactions with HPT.
On March 31, 2016 , we sold one of the development properties to HPT for $19,683 , and we and HPT amended our TA Lease 4 to add this property and increase our minimum annual rent under this lease by $1,673 .
On June 22, 2016 , we sold two existing travel centers for an aggregate of $23,876 , and we and HPT amended our TA Lease 1 and TA Lease 3 to add these properties and increase our minimum annual rent under these leases by $1,121 and $908 , respectively.
On June 30, 2016 , we sold one of the development properties to HPT for $22,297 , and we and HPT amended our TA Lease 2 to add this property. Our minimum annual rent under our TA Lease 2 increased by $1,895 .
On September 30, 2016 , we sold one of the development properties to HPT for $16,557 , and we and HPT amended our TA Lease 2 to add this property. Our minimum annual rent under out TA Lease 2 increased by $1,407 .

22

Table of Contents



See Note 4 to the Notes to the Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report for more information about our transaction agreement with HPT.
Recently Acquired Sites
From the beginning of 2015 through September 30, 2016 , we acquired three travel centers, 198 convenience stores, 12 standalone restaurants and franchise agreements for an additional 39 restaurants. As of September 30, 2016 , our investments in these acquired travel centers, convenience stores and standalone restaurants totaled $19,017 , $377,811 and $32,171 , respectively. We estimate that we will invest an additional $9,355 to complete the expansion and renovation of these travel centers, $7,344 to complete the rebranding, expansion and improvements of these convenience stores and $1,719 to complete the renovation and improvements of these restaurants. We are also currently planning to invest an additional $5,370 to make certain improvements to travel centers acquired prior to 2015 .
Since our current acquisition program began in 2011, and through the third quarter of 2016 , we have acquired  317  travel centers, convenience stores and standalone restaurants. As of  September 30, 2016 , our investments, including improvements, in these travel centers, convenience stores and standalone restaurants acquired totaled  $321,897 , $444,302 and $32,171 respectively. We estimate that we will invest an additional  $14,725  to complete the expansion and renovation of certain of these travel centers, $7,344  to complete the rebranding, expansion and improvements of certain of these convenience stores and $1,719 to complete renovation and improvements of certain of these standalone restaurants. Of the 317 locations acquired since 2011, we operate 277 of the locations and franchisees operate 40. The  317  locations we acquired generated site level gross margin in excess of site level operating expenses of  $89,961  in the time we owned them during the twelve months ended  September 30, 2016 , and are expected to generate additional amounts of site level gross margin in excess of site level operating expenses when these acquired sites become fully stabilized, although there can be no assurance that these locations will operate profitably or that our profits from these locations will increase.
The cost of capital improvements to recently purchased travel centers and the development of new travel centers are often substantial and require a long period of time to plan, design, permit and complete; and, after being completed, the improved, or new, travel centers require a period of time to become part of our customers' supply networks and produce stabilized financial results. We estimate that the travel centers we acquire or develop generally will reach stabilization in approximately the third year after acquisition or completion of development. We estimate that the convenience stores we acquire generally will reach stabilization in approximately one year after acquisition. Actual results for travel centers and convenience stores can vary widely from these estimates due to many factors, some of which are outside our control, and there can be no assurance that acquired sites will operate profitably.

Seasonality
Our sales volumes are generally lower in the first and fourth quarters than the second and third quarters of each year. In the first quarter, the movement of freight by professional truck drivers as well as motorist travel are usually at their lowest levels of each calendar year. In the fourth quarter, freight movement is typically lower due to the holiday season. While our revenues are modestly seasonal, quarterly variations in our operating results may reflect greater seasonal differences as our rent and certain other costs do not vary seasonally.


23

Table of Contents



Results of Operations
Consolidated Financial Results    
The following table presents changes in our operating results for the three and nine months ended September 30, 2016 , as compared to the three and nine months ended September 30, 2015 .
 
Three Months Ended 
 September 30,
 
 
 
Nine Months Ended 
 September 30,
 
 
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Revenues:
 

 
 

 
 

 
 
 
 
 
 
Fuel
$
947,558

 
$
1,031,146

 
(8.1
)%
 
$
2,588,297

 
$
3,159,399

 
(18.1
)%
Nonfuel
525,516

 
474,646

 
10.7
 %
 
1,485,686

 
1,330,786

 
11.6
 %
Rent and royalties from franchisees
4,529

 
3,201

 
41.5
 %
 
13,135

 
9,392

 
39.9
 %
Total revenues
1,477,603

 
1,508,993

 
(2.1
)%
 
4,087,118

 
4,499,577

 
(9.2
)%
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin:
 
 
 
 
 
 
 
 
 
 
 
Fuel
110,033

 
102,550

 
7.3
 %
 
303,727

 
311,224

 
(2.4
)%
Nonfuel
280,234

 
252,729

 
10.9
 %
 
796,724

 
722,157

 
10.3
 %
Rent and royalties from franchisees
4,529

 
3,201

 
41.5
 %
 
13,135

 
9,392

 
39.9
 %
Total gross margin
394,796

 
358,480

 
10.1
 %
 
1,113,586

 
1,042,773

 
6.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 

 
 

 
 
 
 
 
 
 
 
Site level operating
247,584

 
229,215

 
8.0
 %
 
725,754

 
657,133

 
10.4
 %
Selling, general and administrative
34,812

 
29,760

 
17.0
 %
 
101,787

 
87,438

 
16.4
 %
Real estate rent
66,573

 
60,616

 
9.8
 %
 
194,838

 
169,528

 
14.9
 %
Depreciation and amortization
22,698

 
17,445

 
30.1
 %
 
64,545

 
53,086

 
21.6
 %
Total operating expenses
371,667

 
337,036

 
10.3
 %
 
1,086,924

 
967,185

 
12.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Income from operations
23,129

 
21,444

 
7.9
 %
 
26,662

 
75,588

 
(64.7
)%
 
 
 
 
 
 
 
 
 
 
 
 
Acquisition costs
225

 
1,755

 
(87.2
)%
 
2,286

 
3,296

 
(30.6
)%
Interest expense, net
7,200

 
5,042

 
42.8
 %
 
20,761

 
16,461

 
26.1
 %
Income from equity investees
1,534

 
1,336

 
14.8
 %
 
3,572

 
3,156

 
13.2
 %
Loss on extinguishment of debt

 

 
 %
 

 
10,502

 
NM

Income before income taxes
17,238

 
15,983

 
7.9
 %
 
7,187

 
48,485

 
(85.2
)%
Provision for income taxes
6,263

 
6,157

 
1.7
 %
 
2,571

 
19,158

 
(86.6
)%
Net income
10,975

 
9,826

 
11.7
 %
 
4,616

 
29,327

 
(84.3
)%
Less net income for
   noncontrolling interests
77

 

 
NM

 
141

 

 
NM

Net income attributable to
   common shareholders
$
10,898

 
$
9,826

 
10.9
 %
 
$
4,475

 
$
29,327

 
(84.7
)%
    
    

24

Table of Contents



Revenues.  Fuel revenues for the three and nine months ended September 30, 2016 , decrease d from the three and nine months ended September 30, 2015 , by $83,588 , or 8.1% , and $571,102 , or 18.1% , respectively. The tables below show the change in sales volumes and fuel revenues by segment. Corporate and other fuel gallons sold and fuel revenues represent wholesale sales to the joint venture we operate and to other retailers.
 
 
Three Months Ended 
 September 30,
 
 
 
Nine Months Ended 
 September 30,
 
 
Fuel Gallons Sold
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Travel centers
 
487,114

 
507,196

 
(4.0
)%
 
1,446,793

 
1,495,557

 
(3.3
)%
Convenience stores
 
68,680

 
34,493

 
99.1
 %
 
189,867

 
67,509

 
181.2
 %
Corporate and other
 
11,646

 
8,617

 
35.2
 %
 
32,938

 
22,645

 
45.5
 %
  Consolidated totals
 
567,440

 
550,306

 
3.1
 %
 
1,669,598

 
1,585,711

 
5.3
 %
 
 
Three Months Ended 
 September 30,
 
 
 
Nine Months Ended 
 September 30,
 
 
Fuel Revenues
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Travel centers
 
$
808,366

 
$
943,291

 
(14.3
)%
 
$
2,222,962

 
$
2,976,528

 
(25.3
)%
Convenience stores
 
119,375

 
69,733

 
71.2
 %
 
311,199

 
134,600

 
131.2
 %
Corporate and other
 
19,817

 
18,122

 
9.4
 %
 
54,136

 
48,271

 
12.2
 %
  Consolidated totals
 
$
947,558

 
$
1,031,146

 
(8.1
)%
 
$
2,588,297

 
$
3,159,399

 
(18.1
)%
The decreases in fuel revenue for the three and nine months ended September 30, 2016 , as compared to the three and nine months ended September 30, 2015 , were due to significant decreases in market prices for fuel and lower fuel sales volume in our travel center segment, partially offset by increases in fuel sales volume in our convenience store segment as a result of newly acquired locations.
Nonfuel revenues for the three and nine months ended September 30, 2016 , increase d by $50,870 , or 10.7% , and $154,900 , or 11.6% , respectively, compared to the three and nine months ended September 30, 2015 , primarily as a result of newly acquired locations.
Fuel gross margin. Fuel gross margin for the three months ended September 30, 2016 , increase d by $7,483 , or 7.3% , compared to the three months ended September 30, 2015 ; this increase in fuel gross margin was primarily due to recently acquired locations and our managing fuel sales profitability by balancing sales volume and pricing. Fuel gross margin for the nine months ended September 30, 2016 , decrease d $7,497 , or 2.4% , compared to the nine months ended September 30, 2015 . This decrease in fuel gross margin was primarily due to a favorable purchasing environment in the first four months of 2015 that did not recur in the nine months ended September 30, 2016 , partially offset by the positive effect of recently acquired locations.
Nonfuel gross margin. Nonfuel gross margin for the three and nine months ended September 30, 2016 , increase d by $27,505 , or 10.9% , and $74,567 , or 10.3% , respectively compared to the three and nine months ended September 30, 2015 , due primarily to recently acquired sites and our pricing and marketing initiatives. Nonfuel gross margin as a percentage of nonfuel revenues was 53.3% and 53.2% for the three months ended September 30, 2016 and 2015 , respectively, and 53.6% and 54.3% , for the nine months ended September 30, 2016 and 2015 , respectively. Nonfuel gross margin percentage for the three months ended September 30, 2016, remained relatively flat, whereas nonfuel gross margin percentage for the nine months ended September 30, 2016 , decreased compared to the nine months ended September 30, 2015 . This decrease in nonfuel gross margin percentage is primarily due to the inclusion of additional convenience stores, as a result of acquisitions since the beginning of 2015 . Nonfuel gross margin percentage in our convenience store operations is typically lower than the nonfuel gross margin percentage for our travel center operations.
Site level operating expenses.  Site level operating expenses for the three and nine months ended September 30, 2016 , increase d by $18,369 , or 8.0% , and $68,621 , or 10.4% , respectively, compared to the three and nine months ended September 30, 2015 due primarily to the newly acquired convenience stores and restaurants. Site level operating expenses as a percentage of nonfuel revenue were 47.1% and 48.3% for the three months ended September 30, 2016 and 2015 , respectively, and 48.8% and 49.4% for the nine months ended September 30, 2016 and 2015 , respectively. These improved expense ratios reflect both the larger portion of our operations conducted at standalone convenience stores and the continued stabilization of our recently acquired sites.

25

Table of Contents



Selling, general and administrative expenses.  Selling, general and administrative expenses for the three and nine months ended September 30, 2016 , increase d by $5,052 , or 17.0% , and $14,349 , or 16.4% , respectively, compared to the three and nine months ended September 30, 2015 . The increases in selling, general and administrative expenses were primarily attributable to increased personnel required to support the growth of our business, as well as increased spending on marketing and promotional activities.
Real estate rent expense.  Real estate rent expense for the three and nine months ended September 30, 2016 , increase d by $5,957 , or 9.8% , and $25,310 , or 14.9% , respectively, compared to the three and nine months ended September 30, 2015 . The increase in real estate rent expense was primarily a result of the sale to, and lease back from, HPT of travel centers and improvements at leased sites since the beginning of 2015 .
Depreciation and amortization expense.  Depreciation and amortization expense for the three and nine months ended September 30, 2016 increase d by  $5,253 , or  30.1% , and $11,459 , or  21.6% , respectively, from the three and nine months ended September 30, 2015 . The increase in depreciation and amortization expense primarily resulted from the locations we acquired and other capital investments we completed (and did not subsequently sell to HPT) since the beginning of 2015 . The increase was partially offset by the reduction in our depreciable assets as a result of the sale to, and lease back from, HPT in June  2015  and September  2015  of 14 owned travel centers and certain assets we owned at 11 properties leased from HPT, as well as the sale to, and lease back from, HPT of two properties in 2016.
Interest expense, net.  Interest expense, net, for the three and nine months ended September 30, 2016 increase d by  $2,158 , or  42.8% , and $4,300 , or  26.1% , respectively, from the three and nine months ended September 30, 2015 . The increases in interest expense, net were primarily a result of our issuance of $100,000 of 8.00% Senior Notes due 2030 in October 2015 .
Provision for income taxes . The income tax provision reflects an effective tax rate of 36.3% and 38.5% for the three months ended September 30, 2016 and 2015 , respectively, and 35.8% and 39.5% for the nine months ended September 30, 2016 and 2015 , respectively. The decrease in the effective tax rate was primarily due to certain tax credits that were enacted in December of 2015 and applied retrospectively for 2015 and prospectively for 2016.


26

Table of Contents



Segment Results of Operations
The following is a discussion of fuel and nonfuel revenue and site level gross margin in excess of site level operating expenses by reportable segment.
As part of this discussion and analysis of our reportable segment operating results we refer to increases and decreases in results on a same site basis. We include a location in the same site comparisons only if we continuously operated it for the entire duration since the beginning of the earliest comparative period presented, with the exception of locations we operate that are owned by an unconsolidated joint venture in which we own a noncontrolling interest. Same site data also excludes revenues and expenses that were not generated at locations we operate, such as rent and royalties from franchisees, revenues from the dealer operated convenience store and corporate level selling, general and administrative expenses. We do not exclude locations from the same site comparisons as a result of capital improvements to the site or changes in the services offered.

Travel Centers
The following table presents changes in the operating results of our travel center segment for the three and nine months ended September 30, 2016 , as compared with the three and nine months ended   September 30, 2015 .
 
Three Months Ended 
 September 30,
 
 
 
Nine Months Ended 
 September 30,
 
 
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Number of company operated travel
   center locations
225

 
223

 
2

 
225

 
223

 
2

Number of franchise operated travel
   center locations
30

 
30

 

 
30

 
30

 

 
 
 
 
 
 
 
 
 
 
 
 
Fuel:
 
 
 
 
 
 
 
 
 
 
 
Fuel sales volume (gallons)
487,114

 
507,196

 
(4.0)
 %
 
1,446,793

 
1,495,557

 
(3.3)
 %
Fuel revenues
$
808,366

 
$
943,291

 
(14.3)
 %
 
$
2,222,962

 
$
2,976,528

 
(25.3)
 %
Fuel gross margin
94,915

 
93,239

 
1.8
 %
 
264,446

 
296,712

 
(10.9)
 %
Fuel gross margin per gallon
$
0.195

 
$
0.184

 
6.0
 %
 
$
0.183

 
$
0.198

 
(7.6)
 %
 
 
 
 
 
 
 
 
 
 
 
 
Nonfuel:
 
 
 
 
 
 
 
 
 
 
 
Nonfuel revenues
$
434,712

 
$
431,318

 
0.8
 %
 
$
1,248,533

 
$
1,234,468

 
1.1
 %
Nonfuel gross margin
248,967

 
239,664

 
3.9
 %
 
717,707

 
692,212

 
3.7
 %
Nonfuel gross margin percentage
57.3
%
 
55.6
%
 
170
pts
 
57.5
%
 
56.1
%
 
140
pts
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
$
1,246,316

 
$
1,377,810

 
(9.5)
 %
 
$
3,482,051

 
$
4,220,388

 
(17.5)
 %
Total gross margin
347,120

 
336,104

 
3.3
 %
 
992,709

 
998,316

 
(0.6)
 %
Site level operating expenses
215,254

 
214,745

 
0.2
 %
 
639,064

 
627,307

 
1.9
 %
Site level operating expenses as a
   percentage of nonfuel revenues
49.5
%
 
49.8
%
 
(30
)pts
 
51.2
%
 
50.8
%
 
40
pts
Site level gross margin in excess of
   site level operating expenses
$
131,866

 
$
121,359

 
8.7
 %
 
$
353,645

 
$
371,009

 
(4.7)
 %

27

Table of Contents



The following table presents our same site operating results for our travel center segment for the three and nine months ended September 30, 2016 , as compared with the three and nine months ended   September 30, 2015 .
 
Three Months Ended 
 September 30,
 
 
 
Nine Months Ended 
 September 30,
 
 
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Number of same site company
   operated travel center locations
219

 
219

 

 
217

 
217

 

 
 
 
 
 
 
 
 
 
 
 
 
Fuel:
 
 
 
 
 
 
 
 
 
 
 
Fuel sales volume (gallons)
481,618

 
506,167

 
(4.8)
 %
 
1,429,421

 
1,490,918

 
(4.1)
 %
Fuel revenues
$
799,060

 
$
941,171

 
(15.1)
 %
 
$
2,194,658

 
$
2,967,144

 
(26.0)
 %
Fuel gross margin
93,721

 
92,990

 
0.8
 %
 
260,617

 
295,094

 
(11.7)
 %
Fuel gross margin per gallon
$
0.195

 
$
0.184

 
6.0
 %
 
$
0.182

 
$
0.198

 
(8.1)
 %
 
 
 
 
 
 
 
 
 
 
 
 
Nonfuel:
 
 
 
 
 
 
 
 
 
 
 
Nonfuel revenues
$
428,110

 
$
430,026

 
(0.4)
 %
 
$
1,228,170

 
$
1,229,329

 
(0.1)
 %
Nonfuel gross margin
245,655

 
238,993

 
2.8
 %
 
706,735

 
689,541

 
2.5
 %
Nonfuel gross margin percentage
57.4
%
 
55.6
%
 
180
pts
 
57.5
%
 
56.1
%
 
140
pts
 
 
 
 
 
 
 
 
 
 
 
 
Total gross margin
$
339,376

 
$
331,983

 
2.2
 %
 
$
967,352

 
$
984,635

 
(1.8)
 %
Site level operating expenses
211,898

 
213,619

 
(0.8)
 %
 
626,842

 
623,396

 
0.6
 %
Site level operating expenses as a
   percentage of nonfuel revenues
49.5
%
 
49.7
%
 
(20
)pts
 
51.0
%
 
50.7
%
 
30
pts
Site level gross margin in excess of
   site level operating expenses
$
127,478

 
$
118,364

 
7.7
 %
 
$
340,510

 
$
361,239

 
(5.7)
 %
Revenues.  Fuel revenues for the three and nine months ended September 30, 2016 decrease d by  $134,925 , or  14.3% , and $753,566 , or  25.3% , respectively, from the three and nine months ended September 30, 2015 . The table below shows the changes in total fuel revenues of our travel center segment based on price and volume changes between periods.
 
Gallons Sold
 
Fuel Revenues
Results for the three months ended September 30, 2015
507,196

 
$
943,291

 
 
 
 
Decrease due to petroleum products price changes
 
 
(102,059
)
Decrease due to same site volume changes
(24,549
)
 
(40,127
)
Increase due to locations opened
4,467

 
7,261

Net change from prior year period
(20,082
)
 
(134,925
)
 
 
 
 
Results for the three months ended September 30, 2016
487,114

 
$
808,366

 
 
 
 
Results for the nine months ended September 30, 2015
1,495,557

 
$
2,976,528

 
 
 
 
Decrease due to petroleum products price changes
 
 
(679,477
)
Decrease due to same site volume changes
(61,497
)
 
(93,166
)
Increase due to locations opened
12,733

 
19,077

Net change from prior year period
(48,764
)
 
(753,566
)
 
 
 
 
Results for the nine months ended September 30, 2016
1,446,793

 
$
2,222,962


28

Table of Contents



Fuel revenues primarily reflected decreases in market prices for fuel and sales volume from same sites. On a same site basis, fuel sales volume decreased by  24,549  gallons, or  4.8% , and 61,497  gallons, or  4.1% , during the three and nine months ended September 30, 2016 , respectively, as compared to the three and nine months ended September 30, 2015 . The decrease in same site fuel sales volume was primarily due to truck engine efficiency improvements and other fuel conservation efforts, as well as our managing fuel sales profitability by balancing sales volume and pricing, the effect of competition and lower levels of freight activity.
Nonfuel revenues for the three and nine months ended September 30, 2016 increase d by  $3,394 , or  0.8% , and $14,065 , or  1.1% , respectively, from the three and nine months ended September 30, 2015 . The increase in nonfuel revenues was primarily due to nonfuel sales at newly acquired locations partially offset by decreases in nonfuel sales on a same site basis. The decreases on a same site basis were primarily due to lower revenue at full service restaurants due to closing certain of our restaurants during slower night time periods and a decrease in tire sales revenue primarily due to increased competition.
Site level gross margin in excess of site level operating expenses.  Site level gross margin in excess of site level operating expenses for the three months ended September 30, 2016 increase d by  $10,507 , or  8.7% , from the three months ended September 30, 2015 , due to both an increase on a same site basis and our recently acquired locations and reflects the net increase in profitability from closing certain of our restaurants during slower night time periods.
On a same site basis, site level gross margin in excess of site level operating expenses increase d for the three months ended September 30, 2016 , as compared to the three months ended September 30, 2015 , resulting from increases in fuel and nonfuel gross margin due to a continued focus on managing fuel sales pricing to balance sales volume and profitability and a favorable change in the mix of products and services sold, as well as a decrease in site level operating expenses.
Site level gross margin in excess of site level operating expenses for the nine months ended September 30, 2016 decrease d by  $17,364 , or  4.7% , from the nine months ended September 30, 2015 , that was due to a decrease of $20,729 , or 5.7% , on a same site basis partially offset by an increase due to newly acquired locations.
On a same site basis, site level gross margin in excess of site level operating expenses decrease d for the nine months ended September 30, 2016 , as compared to the nine months ended September 30, 2015 , as a result of a decrease in fuel gross margin primarily due to a favorable purchasing experience in the first four months of 2015 that did not recur during the nine months ended September 30, 2016 , and an increase in site level operating expenses, partially offset by an increase in nonfuel gross margin due to a favorable change in the mix of products and services sold.


29

Table of Contents



Convenience Stores
The following table presents changes in the operating results of our convenience store segment for the three and nine months ended September 30, 2016 , as compared with the three and nine months ended   September 30, 2015 .
 
Three Months Ended 
 September 30,
 
 
 
Nine Months Ended 
 September 30,
 
 
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Number of company operated
   convenience store locations
232

 
183

 
49

 
232

 
183

 
49

Number of franchise operated
   convenience store locations
1

 
1

 

 
1

 
1

 

 
 
 
 
 
 
 
 
 
 
 
 
Fuel:
 
 
 
 
 
 
 
 
 
 
 
Fuel sales volume (gallons)
68,680

 
34,493

 
99.1
 %
 
189,867

 
67,509

 
181.2
 %
Fuel revenues
$
119,375

 
$
69,733

 
71.2
 %
 
$
311,199

 
$
134,600

 
131.2
 %
Fuel gross margin
15,059

 
9,299

 
61.9
 %
 
38,905

 
14,621

 
166.1
 %
Fuel gross margin per gallon
$
0.219

 
$
0.270

 
(18.9)
 %
 
$
0.205

 
$
0.217

 
(5.5)
 %
 
 
 
 
 
 
 
 
 
 
 
 
Nonfuel:
 
 
 
 
 
 
 
 
 
 
 
Nonfuel revenues
$
81,691

 
$
43,082

 
89.6
 %
 
$
220,562

 
$
95,678

 
130.5
 %
Nonfuel gross margin
25,015

 
12,897

 
94.0
 %
 
67,721

 
29,497

 
129.6
 %
Nonfuel gross margin percentage
30.6
%
 
29.9
%
 
70
pts
 
30.7
%
 
30.8
%
 
(10
)pts
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
$
201,124

 
$
112,815

 
78.3
 %
 
$
532,010

 
$
230,278

 
131.0
 %
Total gross margin
40,132

 
22,196

 
80.8
 %
 
106,875

 
44,118

 
142.2
 %
Site level operating expenses
27,883

 
14,775

 
88.7
 %
 
79,687

 
31,668

 
151.6
 %
Site level operating expenses as a
   percentage of nonfuel revenues
34.1
%
 
34.3
%
 
(20
)pts
 
36.1
%
 
33.1
%
 
300
pts
Site level gross margin in excess of
   site level operating expenses
$
12,249

 
$
7,421

 
65.1
 %
 
$
27,188

 
$
12,450

 
118.4
 %

30

Table of Contents



The following table presents our same site operating results for our convenience store segment for the three and nine months ended September 30, 2016 , as compared with the three and nine months ended   September 30, 2015 .
 
Three Months Ended 
 September 30,
 
 
 
Nine Months Ended 
 September 30,
 
 
 
2016
 
2015
 
Change
 
2016
 
2015
 
Change
Number of same site company
   operated convenience store locations
77

 
77

 

 
32

 
32

 

 
 
 
 
 
 
 
 
 
 
 
 
Fuel:
 
 
 
 
 
 
 
 
 
 
 
Fuel sales volume (gallons)
21,873

 
22,279

 
(1.8)
 %
 
31,106

 
31,903

 
(2.5)
 %
Fuel revenues
$
37,101

 
$
45,032

 
(17.6)
 %
 
$
49,868

 
$
61,839

 
(19.4)
 %
Fuel gross margin
4,798

 
6,198

 
(22.6)
 %
 
6,762

 
6,700

 
0.9
 %
Fuel gross margin per gallon
$
0.219

 
$
0.278

 
(21.2)
 %
 
$
0.217

 
$
0.210

 
3.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
Nonfuel:
 
 
 
 
 
 
 
 
 
 
 
Nonfuel revenues
$
33,694

 
$
33,545

 
0.4
 %
 
$
60,399

 
$
59,782

 
1.0
 %
Nonfuel gross margin
10,977

 
10,317

 
6.4
 %
 
19,839

 
19,667

 
0.9
 %
Nonfuel gross margin percentage
32.6
%
 
30.8
%
 
180
pts
 
32.8
%
 
32.9
%
 
(10
)pts
 
 
 
 
 
 
 
 
 
 
 
 
Total gross margin
$
15,775

 
$
16,515

 
(4.5)
 %
 
$
26,601

 
$
26,367

 
0.9
 %
Site level operating expenses
10,769

 
10,842

 
(0.7)
 %
 
16,914

 
16,989

 
(0.4)
 %
Site level operating expenses as a
   percentage of nonfuel revenues
32.0
%
 
32.3
%
 
(30
)pts
 
28.0
%
 
28.4
%
 
(40
)pts
Site level gross margin in excess of
   site level operating expenses
$
5,006

 
$
5,673

 
(11.8)
 %
 
$
9,687

 
$
9,378

 
3.3
 %

Revenues . Fuel revenues for the three and nine months ended  September 30, 2016 increase d by  $49,642 , or  71.2% , and $176,599 , or  131.2% , respectively, from the three and nine months ended  September 30, 2015 . The table below shows the changes in total fuel revenues of our convenience store segment based on price and volume changes between periods.
 
Gallons Sold
 
Fuel Revenues
Results for the three months ended September 30, 2015
34,493

 
$
69,733

 
 
 
 
Decrease due to petroleum products price changes
 
 
(7,240
)
Decrease due to same site volume changes
(406
)
 
(692
)
Increase due to locations opened
34,593

 
57,574

Net change from prior year period
34,187

 
49,642

 
 
 
 
Results for the three months ended September 30, 2016
68,680

 
$
119,375

 
 
 
 
Results for the nine months ended September 30, 2015
67,509

 
$
134,600

 
 
 
 
Decrease due to petroleum products price changes
 
 
(10,730
)
Decrease due to same site volume changes
(797
)
 
(1,242
)
Increase due to locations opened
123,155

 
188,571

Net change from prior year period
122,358

 
176,599

 
 
 
 
Results for the nine months ended September 30, 2016
189,867

 
$
311,199


31

Table of Contents



The increase in fuel revenues in our convenience store segment was due to sales volume at recently acquired locations, partially offset by decreases in market prices for fuel and a decrease in fuel sales volume on a same site basis. On a same site basis, fuel sales volume decreased by 406  gallons, or  1.8% , and 797  gallons, or  2.5% , respectively, for the three and nine months ended September 30, 2016 , as compared to the three and nine months ended September 30, 2015 . The decrease in same site fuel sales volume was primarily due to our managing fuel sales pricing to balance sales volume and profitability and the effect of competition.
Nonfuel revenues for the three and nine months ended  September 30, 2016 increase d by  $38,609 , or 89.6% , and $124,884 , or 130.5% , respectively, from the three and nine months ended  September 30, 2015 . The increases in nonfuel revenues are primarily the result of recently acquired locations. On a same site basis, nonfuel revenue increased modestly, despite the decline in fuel sales volume, as operations at newer sites continued to stabilize.
Site level gross margin in excess of site level operating expenses.  Site level gross margin in excess of site level operating expenses for the three and nine months ended  September 30, 2016 increase d by  $4,828 , or  65.1% , and $14,738 , or  118.4% , respectively, from the three and nine months ended  September 30, 2015 , primarily due to recently acquired locations.
On a same site basis, site level gross margin in excess of site level operating expenses decrease d for the three months ended September 30, 2016 , as compared to the three months ended September 30, 2015 , due to a decrease in fuel gross margin primarily resulting from decreases in fuel sales volume.
On a same site basis, site level gross margin in excess of site level operating expenses increase d for the nine months ended September 30, 2016 , as compared to the nine months ended September 30, 2015 , due to an increase in fuel gross margin primarily resulting from our continued focus on managing our fuel sales pricing to balance sales volume and profitability, an increase in nonfuel gross margin due to a favorable change in the mix of products and services sold, and a decrease in site level operating expenses.

Liquidity and Capital Resources
Our principal liquidity requirements are to meet our operating and financing costs and to fund our capital expenditures, acquisitions and working capital requirements. Our principal sources of liquidity to meet these requirements are our:
cash balance;
operating cash flow;
revolving credit facility with a current maximum availability of $200,000 , or our Credit Facility, subject to limits based on our qualified collateral;
sales to HPT, for an increase in our rent, of improvements we make to the sites we lease from HPT and the development site to be sold to HPT under the Transaction Agreement;
potential issuances of new debt and equity securities; and
potential financing or selling of unencumbered real estate that we own.
We believe that the primary risks we currently face with respect to our operating cash flow are:
the risk of a renewed economic slowdown or recession;
continuing decreased demand for our fuel products resulting from regulatory and market efforts for improved engine fuel efficiency and fuel conservation generally;
decreased demand for our products and services that we may experience as a result of competition;
a significant portion of our expenses are fixed in nature, which may restrict our ability to realize a sufficient reduction in our expenses to offset a reduction in our revenues;
the negative impacts on our gross margins and working capital requirements if there were a return to the higher level of prices for petroleum products we experienced during the first half of 2014 and in prior years, as well as the volatility of those prices; and
the possible inability of recently acquired or developed properties to generate the stabilized financial results we expect.

32

Table of Contents



Our business requires substantial amounts of working capital, including cash liquidity, and our working capital requirements can be especially large because of the volatility of fuel prices. Our growth strategy of selectively acquiring additional properties and businesses and developing new sites requires us to expend substantial additional capital. In addition, our properties are high traffic sites with many customers, including large trucks, entering and exiting our properties daily, requiring us to expend capital to improve, repair and maintain our properties. Although we had a cash balance of $137,288 on September 30, 2016 , and net cash provided by operating activities in the first nine months of 2016 , there can be no assurance that we will maintain similar amounts of cash, that we will generate future profits or positive cash flows or that we will be able to obtain additional financing, if and when it becomes necessary.
Liquidity Aspects of Transactions with HPT
Pursuant to the Transaction Agreement, HPT agreed to purchase from us, for our cost, four travel centers then being or to be developed, on land parcels we then owned, upon their completion, if such development were completed prior to June 30, 2017 . As of September 30, 2016 , we had completed construction of three of these travel centers and had one of these travel centers under construction. On each of March 31, 2016 , June 30, 2016 , and September 30, 2016 , we sold to HPT for $19,683 , $22,297 , and $16,557 , respectively, and leased back from HPT, one of the completed travel centers. Also pursuant to the Transaction Agreement, we agreed to sell to and lease back from HPT two existing travel centers owned by us for an aggregate of $23,876 . We expect to sell to HPT the remaining development property during the first quarter of 2017 . As of September 30, 2016 , we had invested $18,838 (including land costs) for the remaining development property and we estimate a remaining development cost of $9,393 .
Revolving Credit Facility
We have a Credit Facility with a group of commercial banks that matures on December 19, 2019. Under the Credit Facility, a maximum of $200,000 may be drawn, repaid and redrawn until maturity. The availability of this maximum amount is subject to limits based on qualified collateral. Subject to available collateral and lender participation, the maximum amount may be increased to $300,000 . The Credit Facility may be used for general business purposes and provides for the issuance of letters of credit. Generally, no principal payments are due until maturity. Borrowings under the Credit Facility bear interest at a rate based on, at our option, LIBOR or a base rate, plus a premium (which premium is subject to adjustment based upon facility availability, utilization and other matters). At September 30, 2016 , based on our qualified collateral, a total of $116,211 was available to us for loans and letters of credit under the Credit Facility. At September 30, 2016 , there were no loans outstanding under the Credit Facility but we had outstanding $31,818 of letters of credit issued under that facility, which reduce the amount available for borrowing under the Credit Facility, leaving $84,393 available for our use as of that date.
Sources and Uses of Cash
Cash Flow from Operating Activities . During the nine months ended September 30, 2016 and 2015 , we had net cash inflows from operating activities of $109,107 and $140,661 , respectively. The decrease in operating cash inflows of $31,554 was primarily due to lower operating income and higher working capital levels.
Cash Flow from Investing Activities . During the nine months ended September 30, 2016 and 2015 , we had net cash outflows from investing activities of $143,605 and $91,095 , respectively. The increase in cash outflows from investing activities resulted from higher capital expenditures due to renovations at recently acquired sites and lower proceeds from asset sales due to the sale to HPT of 14 travel centers and certain assets at other properties leased from HPT in the nine months ended September 30, 2015, pursuant to the Transaction Agreement. These uses of cash were partially offset by lower cash requirements due to a reduction in acquisition activity. See Note 2 and Note 4 to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report for more information about our acquisitions and transactions with HPT.
Cash Flow from Financing Activities . During the nine months ended September 30, 2016 and 2015 , we had net cash outflows from financing activities of $326 and $45,134 , respectively. The lower use of cash in financing activities was primarily due to the repayment of a financing obligation during the nine months ended September 30, 2015 of $45,042 for five properties we purchased from HPT that we had previously leased.



33

Table of Contents



Off Balance Sheet Arrangements
As of September 30, 2016 , we had no off balance sheet arrangements that have had or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, other than with respect to the debt owed by Petro Travel Plaza Holdings LLC, or PTP, an entity in which we own a noncontrolling interest. See Note 4 to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report and Notes 11 and 12 to the Notes to Consolidated Financial Statements included in Item 15 of our Annual Report for more information about our relationship and transactions with PTP.

Related Party Transactions
We have relationships and historical and continuing transactions with HPT, The RMR Group LLC, or RMR, and others related to them. HPT is our former parent company, our largest shareholder and our principal landlord; RMR provides management services to both us and to HPT and RMR employs certain of our and HPT's executive officers; and we and six other companies to which RMR provides management services own in equal amounts Affiliates Insurance Company, or AIC, an insurance company, and we participate in a combined property insurance program arranged and reinsured in part by AIC. See Note 4 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, our Annual Report, our definitive Proxy Statement for our 2016 Annual Meeting of Shareholders, and our other filings with the Securities and Exchange Commission, or SEC, for more information about these and other such relationships and related party transactions. In addition, please see the section captioned "Risk Factors" of our Annual Report for a description of risks that may arise as a result of these related party transactions and relationships. Our filings with the SEC and copies of certain of our agreements with these related parties are publicly available as exhibits to our public filings with the SEC and accessible at the SEC's website, www.sec.gov . We may engage in additional transactions with related parties, including HPT, RMR and companies to which RMR or its affiliates provide management services.

Environmental and Climate Change Matters
Legislation and regulation regarding climate change, including greenhouse gas emissions, and other environmental matters and market reaction to any such legislation or regulation or to climate change concerns, may decrease the demand for our fuel products, may require us to expend significant amounts and may negatively impact our business. For instance, federal and state governmental requirements addressing emissions from trucks and other motor vehicles, such as the U.S. Environmental Protection Agency's, or EPA's, gasoline and diesel sulfur control requirements that limit the concentration of sulfur in motor fuel, as well as new fuel efficiency standards for medium and heavy duty commercial trucks released in March 2016, has caused us to add certain services and provide certain products to our customers at a cost to us that we may be unable to pass through to our customers for increased sales revenues. Also, various private initiatives and government regulations to promote fuel efficiency that raise the cost of trucking as compared to other types of freight transport, may decrease the demand for our fuel products and negatively impact our business. For example, pursuant to the President's executive order, in August 2016 the EPA and the National Highway Traffic Safety Administration established final regulations that will phase in more stringent greenhouse gas emission and fuel efficiency standards for medium and heavy duty trucks beginning in model year 2021 (model year 2018 for certain trailers) through model year 2027, and these regulations are estimated to reduce fuel usage between 9% and 25% (depending on vehicle category) by model year 2027. We may not be able to completely offset the loss of business we may suffer as a result of increasing engine efficiency and other fuel conservation efforts.
In addition, there have recently been severe weather events in different parts of the country that some observers believe evidence global climate change. Such severe weather that may result from climate change may have an adverse effect on individual properties we own, lease or operate. We mitigate these risks by owning, leasing and operating a diversified portfolio of properties, by procuring insurance coverage we believe adequately protects us from material damages and losses and by attempting to monitor and be prepared for such events. However, there can be no assurance that our mitigation efforts will be sufficient or that storms that may occur due to future climate change or otherwise could not have a material adverse effect on our business.
For further information about these and other environmental and climate change matters, and the related risks that may arise, see the disclosure under the heading "Environmental Contingencies" in Note 5 to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report, which disclosure is incorporated herein by reference.

34

Table of Contents



Item 3.  Quantitative and Qualitative Disclosures About Market Risk
For quantitative and qualitative disclosures about market risk affecting us, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report, filed with the SEC on March 14, 2016. Our exposure to market risks has not changed materially from those set forth in our Annual Report.

Item 4.  Controls and Procedures
As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 and Rule 15d-15 of the Securities Exchange Act of 1934, as amended. Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective at September 30, 2016 .
Changes in Internal Control over Financial Reporting
During the quarter ended September 30, 2016 , there were no changes to our internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.


35

Table of Contents



WARNING CONCERNING FORWARD LOOKING STATEMENTS
THIS QUARTERLY REPORT CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. WHENEVER WE USE WORDS SUCH AS "BELIEVE," "EXPECT," "ANTICIPATE," "INTEND," "PLAN," "ESTIMATE," "WILL," "MAY" AND NEGATIVES AND DERIVATIVES OF THESE OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. AMONG OTHERS, THE FORWARD LOOKING STATEMENTS THAT APPEAR IN THIS QUARTERLY REPORT THAT MAY NOT OCCUR INCLUDE STATEMENTS THAT:
WE EXPECT THAT LOCATIONS WE ACQUIRE WILL PRODUCE STABILIZED FINANCIAL RESULTS AFTER A PERIOD OF TIME FOLLOWING ACQUISITION, AND THAT THESE LOCATIONS WILL GENERATE ADDITIONAL AMOUNTS OF SITE LEVEL GROSS MARGIN IN EXCESS OF SITE LEVEL OPERATING EXPENSES ONCE FULLY STABILIZED. THIS STATEMENT IMPLIES THAT THE EXPECTED STABILIZATION OF OUR ACQUIRED SITES WILL GENERATE INCREASED NET INCOME. HOWEVER, MANY OF THE LOCATIONS WE HAVE ACQUIRED OR MAY ACQUIRE PRODUCED OPERATING RESULTS THAT CAUSED THE PRIOR OWNERS TO EXIT THESE BUSINESSES AND OUR ABILITY TO OPERATE THESE LOCATIONS PROFITABLY DEPENDS UPON MANY FACTORS, SOME OF WHICH ARE BEYOND OUR CONTROL. ACCORDINGLY, OUR ACQUIRED SITES MAY NOT GENERATE INCREASED NET INCOME OR IT MAY TAKE LONGER THAN WE EXPECT FOR OUR NET INCOME TO INCREASE;
WE HAVE MADE ACQUISITIONS AND MAY MAKE ADDITIONAL ACQUISITIONS. THESE STATEMENTS IMPLY THAT PENDING ACQUISITIONS WILL BE COMPLETED AND THAT COMPLETED AND PENDING ACQUISITIONS WILL IMPROVE OUR FUTURE EARNINGS. HOWEVER, OUR PENDING ACQUISITIONS ARE SUBJECT TO CONDITIONS WHICH MAY NOT BE MET. THESE ACQUISITIONS MAY NOT BE COMPLETED OR MAY BE DELAYED OR THEIR TERMS MAY CHANGE. THERE ARE MANY FACTORS THAT MAY RESULT IN OUR NOT BEING ABLE TO ACQUIRE AND RENOVATE ADDITIONAL LOCATIONS TO PRODUCE EARNINGS, INCLUDING COMPETITION FOR SUCH ACQUISITIONS FROM OTHER BUYERS OR OUR INABILITY TO NEGOTIATE ACCEPTABLE PURCHASE TERMS. MOREOVER, MANAGING AND INTEGRATING ACQUIRED LOCATIONS CAN BE DIFFICULT, TIME CONSUMING AND/OR MORE EXPENSIVE THAN ANTICIPATED. ALL OF OUR ACQUISITIONS CREATE RISKS OF FINANCIAL LOSSES. WE MAY NOT OPERATE OUR ACQUIRED LOCATIONS PROFITABLY;
WE HAVE AGREED TO SELL AND LEASE BACK TO HPT, UPON COMPLETION OF ITS DEVELOPMENT, A FULL SERVICE TRAVEL CENTER. THIS STATEMENT IMPLIES THAT THIS DEVELOPMENT PROJECT AND RELATED SALE AND LEASEBACK TRANSACTION WILL BE COMPLETED. HOWEVER, THERE ARE MANY FACTORS THAT MAY RESULT IN OUR NOT BEING ABLE TO DEVELOP AND SELL AND LEASE BACK THIS ADDITIONAL LOCATION, INCLUDING PERMITTING REQUIREMENTS. ALSO, OUR AND HPT'S OBLIGATIONS UNDER THIS AGREEMENT IS SUBJECT TO VARIOUS TERMS AND CONDITIONS TYPICAL OF LARGE, COMPLEX REAL ESTATE TRANSACTIONS. SOME OF THESE TERMS AND CONDITIONS MAY NOT BE SATISFIED AND, AS A RESULT, THIS TRANSACTION MAY BE DELAYED, MAY NOT OCCUR OR THE TERMS MAY CHANGE;
WE CURRENTLY PLAN TO RENOVATE RECENTLY ACQUIRED PROPERTIES AND TO COMPLETE THE DEVELOPMENT OF A PROPERTY. IN ADDITION, THE NATURE OF OUR BUSINESS REQUIRES US TO REGULARLY EXPEND CAPITAL TO RENOVATE, REPAIR AND IMPROVE OUR PROPERTIES. AN IMPLICATION OF THESE STATEMENTS MAY BE THAT WE WILL HAVE SUFFICIENT CAPITAL TO MAKE THESE CAPITAL INVESTMENTS. HOWEVER, THE AMOUNT AND TIMING OF CAPITAL EXPENDITURES ARE OFTEN DIFFICULT TO PREDICT. SOME CAPITAL PROJECTS COST MORE AND TAKE LONGER TO COMPLETE THAN ANTICIPATED. CURRENTLY UNANTICIPATED PROJECTS THAT WE MAY BE REQUIRED TO COMPLETE IN THE FUTURE (AS A RESULT OF GOVERNMENT PROGRAMS OR REGULATION, ADVANCES OR CHANGES MADE BY OUR COMPETITION, OR FOR OTHER REASONS) MAY ARISE AND CAUSE US TO SPEND MORE THAN CURRENTLY ANTICIPATED. AS A RESULT OF MARKET CONDITIONS OR OTHER CONSIDERATIONS, WE MAY DEFER CERTAIN CAPITAL PROJECTS AND SUCH DEFERRALS MAY HARM OUR BUSINESS OR

36

Table of Contents



REQUIRE US TO MAKE LARGER CAPITAL EXPENDITURES IN THE FUTURE. ALSO, WE MAY BE UNABLE TO ACCESS REASONABLY PRICED CAPITAL TO FUND SUCH INVESTMENTS;
WE HAVE A CREDIT FACILITY WITH A CURRENT MAXIMUM AVAILABILITY OF $200.0 MILLION SUBJECT TO OUR HAVING QUALIFIED COLLATERAL, INCLUDING ELIGIBLE CASH, ACCOUNTS RECEIVABLE AND INVENTORY THAT VARY IN AMOUNT FROM TIME TO TIME. ACCORDINGLY, THE AMOUNT AVAILABLE FOR BORROWING (INCLUDING ISSUING LETTERS OF CREDIT) AT ANY TIME MAY BE LESS THAN $200.0 MILLION. AT SEPTEMBER 30, 2016 , OUR BORROWING AND LETTER OF CREDIT AVAILABILITY WAS $116.2 MILLION AND WE HAD USED $31.8 MILLION OF THAT AMOUNT FOR OUTSTANDING LETTERS OF CREDIT. THE MAXIMUM AMOUNT AVAILABLE UNDER THE CREDIT FACILITY MAY BE INCREASED TO $300.0 MILLION, SUBJECT TO AVAILABLE COLLATERAL AND LENDER PARTICIPATION. HOWEVER, IF WE DO NOT HAVE SUFFICIENT COLLATERAL OR IF WE ARE UNABLE TO IDENTIFY LENDERS WILLING TO INCREASE THEIR COMMITMENTS OR JOIN OUR CREDIT FACILITY, WE MAY NOT BE ABLE TO INCREASE THE CREDIT FACILITY OR THE AVAILABILITY OF BORROWINGS WHEN WE NEED OR WANT TO DO SO;
WE MAY FINANCE OR SELL UNENCUMBERED REAL ESTATE THAT WE OWN. HOWEVER, WE DO NOT KNOW THE EXTENT TO WHICH WE COULD MONETIZE OUR EXISTING REAL ESTATE OR HOW LONG IT MAY TAKE TO DO SO; AND
WE DO NOT BELIEVE THAT COMDATA HAS THE RIGHT TO TERMINATE ITS AGREEMENTS WITH US, AS COMDATA PURPORTED TO DO BY LETTER DATED NOVEMBER 3, 2016. THESE STATEMENTS IMPLY THAT WE WILL PREVAIL IN OUR CONTRACT DISPUTE WITH COMDATA, OR THAT WE AND COMDATA WILL OTHERWISE RESOLVE THIS DISPUTE AND THAT OUR AGREEMENTS WITH COMDATA WILL REMAIN IN EFFECT WITH NO MATERIAL CHANGES TO THEIR TERMS. HOWEVER, OUTCOMES OF CONTRACT DISPUTES ARE DIFFICULT TO PREDICT AND DEPEND ON MANY FACTORS, SOME OF WHICH ARE BEYOND OUR CONTROL. COMDATA MAY SEEK TO RENEGOTIATE ITS AGREEMENTS WITH US TO INCLUDE HIGHER COSTS TO US OR OTHER TERMS THAT ARE UNFAVORABLE TO US, OR COMDATA MAY STOP SERVICES TO US CAUSING US BUSINESS DISRUPTION OR LOSSES. ALSO, OUR DISPUTE WITH COMDATA MAY RESULT IN LITIGATION. THE OUTCOME OF ANY SUCH LITIGATION IS DIFFICULT TO PREDICT AND SUCH LITIGATION MAY BE EXPENSIVE AND DISTRACTING TO OUR MANAGEMENT.
THESE AND OTHER UNEXPECTED RESULTS MAY BE CAUSED BY VARIOUS FACTORS, SOME OF WHICH ARE BEYOND OUR CONTROL, INCLUDING:
THE TREND TOWARDS IMPROVED FUEL EFFICIENCY OF MOTOR VEHICLE ENGINES AND OTHER FUEL CONSERVATION PRACTICES BY OUR CUSTOMERS MAY CONTINUE TO REDUCE THE DEMAND FOR FUEL AND ADVERSELY AFFECT OUR BUSINESS;
COMPETITION WITHIN THE TRAVEL CENTER AND CONVENIENCE STORE INDUSTRIES MAY ADVERSELY IMPACT OUR FINANCIAL RESULTS;
FUTURE INCREASES IN FUEL PRICES MAY REDUCE THE DEMAND FOR THE PRODUCTS AND SERVICES THAT WE SELL BECAUSE HIGH FUEL PRICES MAY ENCOURAGE FUEL CONSERVATION, DIRECT FREIGHT BUSINESS AWAY FROM TRUCKING OR OTHERWISE ADVERSELY AFFECT THE BUSINESS OF OUR CUSTOMERS;
FUTURE COMMODITY FUEL PRICE INCREASES, FUEL PRICE VOLATILITY OR OTHER FACTORS MAY CAUSE US TO NEED MORE WORKING CAPITAL TO MAINTAIN OUR INVENTORY AND CARRY OUR ACCOUNTS RECEIVABLE THAN WE NOW EXPECT;
OUR SUPPLIERS MAY BE UNWILLING OR UNABLE TO MAINTAIN THE CURRENT CREDIT TERMS FOR OUR PURCHASES. IF WE ARE UNABLE TO PURCHASE GOODS ON REASONABLE CREDIT TERMS, OUR REQUIRED WORKING CAPITAL MAY INCREASE AND WE MAY INCUR MATERIAL LOSSES. ALSO, IN TIMES OF RISING FUEL AND NONFUEL PRICES, OUR SUPPLIERS MAY BE UNWILLING OR UNABLE TO INCREASE THE CREDIT AMOUNTS THEY EXTEND TO US, WHICH MAY INCREASE OUR WORKING CAPITAL REQUIREMENTS. THE AVAILABILITY AND THE TERMS OF ANY CREDIT WE MAY BE ABLE TO OBTAIN ARE UNCERTAIN;
ACQUISITIONS OR PROPERTY DEVELOPMENT MAY SUBJECT US TO GREATER RISKS THAN OUR CONTINUING OPERATIONS, INCLUDING THE ASSUMPTION OF UNKNOWN LIABILITIES;

37

Table of Contents



MOST OF OUR TRUCKING COMPANY CUSTOMERS TRANSACT BUSINESS WITH US BY USE OF FUEL CARDS, MOST OF WHICH ARE ISSUED BY THIRD PARTY FUEL CARD COMPANIES. THE FUEL CARD INDUSTRY HAS ONLY A FEW SIGNIFICANT PARTICIPANTS. FUEL CARD COMPANIES FACILITATE PAYMENTS TO US AND CHARGE US FEES FOR THESE SERVICES. COMPETITION, OR LACK THEREOF, AMONG FUEL CARD COMPANIES MAY RESULT IN FUTURE INCREASES IN OUR TRANSACTION FEE EXPENSES OR WORKING CAPITAL REQUIREMENTS, OR BOTH;
COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS, ACCOUNTING AND FINANCIAL REPORTING STANDARDS AND REGULATIONS, TAX RATES, ENVIRONMENTAL REGULATIONS, PAYMENT CARD INDUSTRY REQUIREMENTS AND SIMILAR MATTERS MAY INCREASE OUR OPERATING COSTS AND REDUCE OUR PROFITS OR CAUSE US TO EXPERIENCE INCREASED LOSSES;
WE ARE ROUTINELY INVOLVED IN LITIGATION. DISCOVERY AND COURT DECISIONS DURING LITIGATION OFTEN HAVE UNANTICIPATED RESULTS. LITIGATION IS USUALLY EXPENSIVE AND CAN BE DISTRACTING TO MANAGEMENT. WE CAN PROVIDE NO ASSURANCE AS TO THE OUTCOME OF ANY OF THE LITIGATION MATTERS IN WHICH WE ARE OR MAY BECOME INVOLVED;
ACTS OF TERRORISM, GEOPOLITICAL RISKS, WARS, OUTBREAKS OF SO CALLED PANDEMICS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND OUR CONTROL MAY ADVERSELY AFFECT OUR FINANCIAL RESULTS; AND
ALTHOUGH WE BELIEVE THAT WE BENEFIT FROM OUR RELATIONSHIPS WITH OUR RELATED PARTIES, INCLUDING HPT, RMR, AIC AND OTHERS AFFILIATED WITH THEM, ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH RELATED PARTIES MAY PRESENT A CONTRARY PERCEPTION OR RESULT IN LITIGATION.
RESULTS THAT DIFFER FROM THOSE STATED OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS MAY ALSO BE CAUSED BY VARIOUS CHANGES IN OUR BUSINESS OR MARKET CONDITIONS AS DESCRIBED MORE FULLY IN OUR ANNUAL REPORT, INCLUDING UNDER "WARNING CONCERNING FORWARD LOOKING STATEMENTS" AND ITEM 1A. "RISK FACTORS," AND ELSEWHERE IN THIS QUARTERLY REPORT.
YOU SHOULD NOT PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS. EXCEPT AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD LOOKING STATEMENT AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

38

Table of Contents



Part II. Other Information

Item 1. Legal Proceedings
The disclosure under the headings "Legal Proceedings" and "Environmental Contingencies" in Note 5 to the Notes to Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report is incorporated herein by reference.

Item 1A.  Risk Factors
On May 18, 2016, the U.S. Department of Labor issued a final rule, or the Final Rule, regarding exemptions from the laws which require employers to pay overtime wages. The Final Rule currently is effective beginning December 1, 2016. The Final Rule materially increases the amount of salary compensation which must be paid to employees in order for those employees to be exempt from the requirement for overtime wages. To comply with the Final Rule, we expect that we will need to pay some increased amounts of overtime wages, to pay increased salaries to certain employees and possibly to hire additional employees. We currently do not believe these increased costs will be material.
Other than the risk factor above, there have been no material changes during the period covered by this Quarterly Report to the risk factors previously disclosed under the "Risk Factors" section of our Annual Report.

Item 5. Other Information
WEX Inc.
On November 5, 2016, we entered into the WEX Merchant Acceptance Agreement, or the WEX Agreement, with WEX Inc., a Delaware corporation, or WEX, pursuant to which we agreed to accept WEX fuel cards for certain purchases for an initial term of sixty months beginning on November 7, 2016, and thereafter automatically renewing for successive twenty-four month terms, unless earlier terminated in accordance with its terms. The WEX Agreement may be terminated under certain circumstances, including: (i) by either party upon six months' notice prior to any scheduled term expiration; (ii) by either party for a material breach that remains uncured following a 30 day cure period; (iii) by either party for bankruptcy related events with respect to the other party; (iv) by us for WEX's non-payment after expiration of specified periods or (v) by WEX upon 180 days' prior notice following certain business combination transactions involving us.
Comdata, Inc.
Many of our customers use fuel cards issued by Comdata Inc., or Comdata, to make payments to us. On September 12, 2016, we received a letter from Comdata alleging that we were in default under the Comdata Merchant Agreement of December 15, 2010 (as amended on December 14, 2011) by and between Comdata and us, or the Comdata Merchant Agreement, pursuant to which we agreed to accept Comdata fuel cards for certain purchases by our customers through January 2, 2022. The September 12, 2016, letter from Comdata alleges default under the Comdata Merchant Agreement due to our purported failure to comply with a separate agreement with Comdata to install radio frequency identification, or RFID, technology at 224 of our company operated travel center locations. In its letter, Comdata threatened to terminate both agreements unless we cured the alleged default on or before October 13, 2016. Although we disputed, and continue to dispute, Comdata's assertions, by letter dated October 13, 2016, we informed Comdata that we had substantially completed installation of the RFID technology, that the technology had been installed and was operational at 201 of our travel center locations, that one location had been operational but was damaged and under repair, and that the remaining 22 travel center locations would be outfitted with the RFID technology as soon as we received the required hardware and licenses previously ordered from Comdata. On November 3, 2016, we received a letter from Comdata purporting to terminate both agreements effective immediately and offering to continue the terms of the agreements for up to 90 days. The Comdata Merchant Agreement provides that in the event that either party engages legal counsel to enforce, protect or preserve any rights it might have under such agreement, the prevailing party shall be entitled to recover its reasonable attorney's fees and associated costs, in addition to any other relief to which it may be entitled. We do not believe that Comdata has the right to terminate either of our agreements under the present circumstances and are considering our response.


39

Table of Contents



Item 6.  Exhibits
Exhibit 3.1
Certificate of Formation of TravelCenters of America LLC (Incorporated by reference to Exhibit 3.1 to our Registration Statement on Form S-1 filed on December 12, 2006, File No. 333-139272)
 
 
Exhibit 3.2
Composite copy of Amended and Restated Limited Liability Company Agreement of TravelCenters of America LLC dated as of May 20, 2013, as amended to date (filed herewith)
 
 
Exhibit 3.3
Composite copy of Amended and Restated Limited Liability Company Agreement of TravelCenters of America LLC dated as of May 20, 2013, as amended to date (marked) (filed herewith)
 
 
Exhibit 3.4
Amended and Restated Bylaws of TravelCenters of America LLC, as amended and restated on September 7, 2016 (Incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed on September 9, 2016)
 
 
Exhibit 4.1
Form of share certificate (Incorporated by reference to Exhibit 4.1 to our Annual Report on Form 10-K for the year ended December 31, 2009, filed on February 24, 2010)
 
 
Exhibit 4.2
Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of January 15, 2013 (Incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed January 15, 2013)
 
 
Exhibit 4.3
First Supplemental Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of January 15, 2013 (Incorporated by reference to Exhibit 4.2 to our Current Report on Form 8-K filed January 15, 2013)
 
 
Exhibit 4.4
Second Supplemental Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of December 16, 2014 (Incorporated by reference to Exhibit 4.2 to our Registration Statement on Form 8-A (File No. 001-33274) filed December 16, 2014)
 
 
Exhibit 4.5
Third Supplemental Indenture by and between TravelCenters of America LLC and U.S. Bank National Association, as trustee, dated as of October 5, 2015 (Incorporated by reference to Exhibit 4.1 to our Registration Statement on Form 8-A (File No. 001-33274) filed December 16, 2014)
 
 
Exhibit 4.6
Form of 8.25% Senior Notes due 2028 (included in Exhibit 4.3 above)
 
 
Exhibit 4.7
Form of 8.00% Senior Notes due 2029 (included in Exhibit 4.4 above)
 
 
Exhibit 4.8
Form of 8.00% Senior Notes due 2030 (included in Exhibit 4.5 above)
 
 
Exhibit 10.1
Development Property Agreement, dated September 30, 2016, between HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on October 4, 2016)
 
 
Exhibit 10.2
Sixth Amendment to Amended and Restated Lease Agreement No. 2, dated September 30, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (Incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on October 4, 2016)
 
 
Exhibit 10.3
Sixth Amendment to Amended and Restated Lease Agreement No. 4 dated September 14, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (filed herewith)
 
 
Exhibit 12.1
Statement of Computation of Ratio of Earnings to Fixed Charges (filed herewith)
 
 
Exhibit 31.1
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith)
 
 
Exhibit 31.2
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer (filed herewith)
 
 
Exhibit 32.1
Section 1350 Certification of Chief Executive Officer and Chief Financial Officer (furnished herewith)
 
 
Exhibit 99.1
Amendment to Property Management Agreement, dated August 1, 2016, between The RMR Group LLC and TA Operating LLC (filed herewith)
 
 
Exhibit 101.1
The following materials from TravelCenters of America LLC's Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income and Comprehensive Income, (iii) the Consolidated Statements of Cash Flows, and (iv) related notes to these financial statements, tagged as blocks of text (filed herewith)

40

Table of Contents



SIGNATURE  
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
 
 
TRAVELCENTERS OF AMERICA LLC
 
 
 
 
 
 
 
 
 
 
 
 
 
By:
/s/ Andrew J. Rebholz
 
Date:
November 8, 2016
 
 
 
Name:
Andrew J. Rebholz
 
 
 
 
 
 
Title:
Executive Vice President,
Chief Financial Officer and Treasurer
(Principal Financial Officer)

41
Exhibit 3.2





TRAVELCENTERS OF AMERICA LLC
 
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
 
As Amended June 15, 2007
and November 9, 2009
and January 25, 2010
and May 13, 2010
and February 21, 2013
and May 20, 2013
and September 7, 2016
 
This Amended and Restated Limited Liability Company Agreement of TravelCenters of America LLC, a Delaware limited liability company (the “ Company ”), dated as of January 31, 2007, is entered into by and among Hospitality Properties Trust, a Maryland real estate investment trust (“ HPT ”), together with any other Persons who hereafter become Shareholders in TravelCenters of America LLC or parties hereto as provided herein.  This Agreement amends and restates in its entirety the Limited Liability Company Agreement of TravelCenters of America LLC, dated October 10, 2006 (as amended from time to time, the “ Original LLC Agreement ”).  HPT was the original holder of the limited liability company interests of the Company; subsequent transfers of such interests were made, but at the time of the execution hereof HPT is the owner of all of the outstanding limited liability company interests of the Company and, as of the date of the execution of this Agreement, is the sole member of the Company.  In consideration of the covenants, conditions and agreements contained herein, the parties hereto hereby agree to amend and restate the Original LLC Agreement in its entirety as follows:
 
ARTICLE I
DEFINITIONS
 
Section 1.1            Definitions.
 
The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.  Additional definitions related to restrictions on ownership of Shares are contained in Article VIII.  “Acquiring Person” has the meaning assigned to such term in Section 13.1(b).
 
Affiliate ” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with the Person in question.  As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
 
Agreement ” means this Amended and Restated Limited Liability Company Agreement of TravelCenters of America LLC, as it may be amended, supplemented or restated from time to time.
 
Board of Directors ” has the meaning assigned to such term in Section 7.1(a).
 
Business Day ” means Monday through Friday of each week, except that a legal holiday recognized as such by the U.S.  Government shall not be regarded as a Business Day.
 
Certificate ” means a certificate (i) issued in global form in accordance with the rules and regulations of the Depository or (ii) in such other form as may be adopted by the Board of Directors that is issued by the Company to evidence ownership of one or more Shares or one or more other securities of the Company.




 “ Certificate of Formation ” means the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware on October 10, 2006, which filing is hereby ratified and approved in all respects, as such Certificate of Formation may be amended, supplemented or restated from time to time.
 
Chairman of the Board ” has the meaning assigned to such term in Section 7.1(k).
 
Code ” means the Internal Revenue Code of 1986, as amended and in effect from time to time, or any successor to such statute.
 
Commission ” means the United States Securities and Exchange Commission.
 
Common Shares ” means Shares representing common limited liability company interests in the Company, as further described in Article V.
 
Company ” has the meaning assigned to such term in the preamble.
 
Delaware General Corporation Law ” means the Delaware General Corporation Law, as amended, supplemented or restated from time to time, or any successor to such statute.
 
Delaware LLC Act ” means the Delaware Limited Liability Company Act, as amended, supplemented or restated from time to time, or any successor to such statute.
 
Delivery Date ” has the meaning assigned to such term in Section 9.1(i).
 
Depository ” means, with respect to any Shares issued in global form, The Depository Trust Company and its successors and permitted assigns.
 
Director ” means a member of the Board of Directors of the Company.
 
Disputes ” has the meaning assigned to such term in Section 16.1.
 
Distribution ” means the distribution by HPT of all of the issued and outstanding Common Shares of the Company to the Transfer Agent, which distribution shall be effected by written instructions to distribute such Common Shares to each holder of record of HPT common shares, as further described in the Transaction Agreement.
 
Distribution Date ” means the date on which the Distribution takes place.
 
Exchange Act ” means the Securities Exchange Act of 1934, as amended, supplemented or restated from time to time, or any successor to such statute, and the applicable rules and regulations thereunder.
 
Exchange Rule ” means a rule of the National Securities Exchange on which the Common Shares or other securities of the Company are listed for trading.
 
HPT ” has the meaning assigned to such term in the prologue to this Agreement.
 
Indemnitee ” means (a) any natural Person who is or was an officer (including any Officer), director (including any Director), trustee, manager or partner of the Company or any Subsidiary of the Company, (b) any natural Person who is or was serving at the request of the Company as an officer, director, member, trustee, manager or partner of another Person ( provided that a Person shall not be an Indemnitee by reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services) and (c) any Person the Board of Directors designates as an “Indemnitee” for purposes of




this Agreement.  For purposes of this Agreement, HPT and The RMR Group LLC and The RMR Group Inc., together with their respective officers and directors, are each designated as Indemnitees.
 
Initial Shareholder ” means HPT.
 
Liquidation Date ” means the date on which an event giving rise to the dissolution of the Company occurs.
 
Liquidator ” means one or more Persons selected by the Board of Directors to perform the functions described in Section 12.2 as liquidating trustee of the Company within the meaning of the Delaware LLC Act.
 
Meeting Record Date ” has the meaning assigned to such term in Section 9.1(i).
 
Merger Agreement ” has the meaning assigned to such term in Section 14.1.
 
National Securities Exchange ” means an exchange registered with the Commission under Section 6(a) of the Exchange Act, as amended, supplemented or restated from time to time, and any successor to such statute.
 
Officers ” has the meaning assigned to such term in Section 7.3(a).
 
Opinion of Counsel ” means a written opinion of counsel (who may be regular counsel to the Company or any of its Affiliates) acceptable to the Board of Directors.
 
Outstanding ” means, with respect to any securities of the Company, all securities of the Company that are issued by the Company and reflected as outstanding on the Company’s books and records as of the date of determination.
 
Person ” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization or other enterprise (including an employee benefit plan), association, government agency or political subdivision thereof or other entity.
 
Plan of Conversion ” has the meaning assigned to such term in Section 14.1.
 
Prime Rate ” means the prime rate of interest as quoted from time to time by The Wall Street Journal or another source reasonably selected by the Company.
 
Pro Rata ” means apportioned equally among all Shares of the class or series in question.
 
Quarter ” means, unless the context requires otherwise, a fiscal quarter of the Company, or, with respect to the first fiscal quarter ending after the Distribution Date, the portion of such fiscal quarter after the Distribution Date.
 
Record Date ” means the date established by the Board of Directors for determining (a) the identity of the Record Holders entitled to notice of, or to vote at, any meeting of Shareholders or entitled to exercise rights in respect of any lawful action of Shareholders or (b) the identity of Record Holders entitled to receive any report or distribution or to participate in any offer.
 
Record Date Request Notice ” has the meaning assigned to such term in Section 9.1(f).
 
Record Holder ” means the Person in whose name Shares are registered on the books of the Transfer Agent as of the opening of business on a particular Business Day, or with respect to other securities of the Company, the Person in whose name any such other securities are registered on the books that the Company has caused to be kept as of the opening of business on such Business Day.
 




Request Record Date ” has the meaning assigned to such term in Section 9.1(f).
 
Securities Act ” means the Securities Act of 1933, as amended, supplemented or restated from time to time, or any successor to such statute, and the applicable rules and regulation thereunder.
 
Share Designation ” has the meaning assigned to such term in Section 5.3(b).
 
Share Majority ” means a majority of the Outstanding Common Shares.
 
Share Plurality ” means a majority of the Outstanding Shares of all classes and series of Shares with voting power, voting together as a single class, that have voted on the matter in question at the conclusion of voting thereon, as prescribed or determined by the Board of Directors.
 
Share Separate Class Approval ” means a majority of the Outstanding Shares of each class and series of Shares with voting power, voting separately by class and series.
 
Share Super-Majority Approval ” means 75% of the Outstanding Shares of each class and series of Shares with voting power, voting together as a single class.
 
Shares ” means the shares of any class or series of limited liability company interest in the Company (but excluding any options, rights, warrants and appreciation rights relating to a limited liability company interest in the Company), including Common Shares.
 
Shareholders ” means the holders of Shares that have been admitted to the Company as members of the Company in accordance with this Agreement.
 
Shareholder Requested Meeting ” has the meaning assigned to such term in Section 9.1(i).
 
Shareholder Associated Person ” has the meaning assigned to such term in Section 9.7(a).
 
Special Meeting Percentage ” has the meaning assigned to such term in Section 9.1(e).
 
Special Meeting Request ” has the meaning assigned to such term in Section 9.1(g).
 
Subsidiary ” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the partnership interests of such partnership (considering all of the partnership interests of the partnership as a single class) is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such Person.
 
Surviving Business Entity ” has the meaning assigned to such term in Section 14.2. 

Transaction Agreement ” means the Transaction Agreement made on or about the date hereof by and among HPT, HPT TA Properties Trust, HPT TA Properties LLC, The RMR Group LLC and the Company, as the same may be amended, supplemented or restated from time to time.
 




transfer ” has the meaning assigned to such term in Section 4.4.
 
Transfer Agent ” means such bank, trust company or other Person (including the Company or one of its Affiliates) as shall be appointed from time to time by the Company to act as registrar and transfer agent for the Shares; provided that if no Transfer Agent is specifically designated for Shares or any other securities of the Company, the Company shall act in such capacity.
 
Treasury Regulations ” means the Treasury Regulations (including temporary and proposed regulations) promulgated by the United States Department of Treasury with respect to the Code or other federal tax statutes.
 
U.S. GAAP ” means United States generally accepted accounting principles as in effect from time to time.
 
Section 1.2            Construction.
 
Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to Articles and Sections of this Agreement; and (c) the term “include” or “includes” means include(s), without limitation, and “including” means including, without limitation.
 
Except as otherwise specifically provided herein, when referring to any action or determination of the Board of Directors, the phrase “sole and absolute discretion,” or words of similar import, shall mean that there shall be no standards for the exercise of such discretion other than as required by any applicable fiduciary duties as modified by the terms of this Agreement.
 
ARTICLE II
ORGANIZATION
 
Section 2.1             Formation .  The Initial Shareholder formed the Company as a limited liability company pursuant to the provisions of the Delaware LLC Act and hereby adopts this Agreement in its entirety as an amendment and restatement of the Original LLC Agreement of the Company.  Except as expressly provided to the contrary in this Agreement, the rights, duties (including fiduciary duties), liabilities and obligations of the Directors and Shareholders and the administration, dissolution and termination of the Company shall be governed by the Delaware LLC Act.  All Shares shall constitute personal property of the owner thereof for all purposes, and a Shareholder has no interest in specific Company property.
 
Section 2.2             Name .  The name of the Company shall be TravelCenters of America LLC.  The Company’s business may be conducted under any other name or names, as determined by the Board of Directors.  The Board of Directors may change the name of the Company at any time and from time to time and shall notify the Shareholders of such change in the next regular communication to the Shareholders.
 
Section 2.3             Registered Office; Registered Agent; Principal Office; Other Offices.   The Board of Directors may establish and change the principal office or place of business of the Company at any time and may cause the Company to establish other offices or places of business in various jurisdictions.  The name and address of the registered agent and the address of the registered office for service of process on the Company as required by the Delaware LLC Act are Corporation Service Company, 2711 Centerville Road, Wilmington, Delaware.
 
Section 2.4             Purposes and Powers.   The Company shall have the authority to engage in any lawful business, purpose or activity permitted by the Delaware LLC Act.  The Company shall possess and may exercise all powers and privileges granted or permitted by the Delaware LLC Act.
 




Section 2.5             Power of Attorney.   Each Shareholder hereby constitutes and appoints each of the Chief Executive Officer, the President and the Secretary of the Company and, if a Liquidator shall have been selected pursuant to Section 12.2, the Liquidator and each of their authorized officers and attorneys-in-fact, as the case may be, with full power of substitution, as his true and lawful agent and attorney-in-fact, with full power and authority in the name, place and stead of such Person, to execute (i) all agreements, instruments, certificates and other documents and take all actions necessary or appropriate to or for the furtherance and accomplishment of the purposes described in Section 2.4, and (ii) any duly adopted amendments to this Agreement.  The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, and it shall survive and, to the maximum extent permitted by law, shall not be affected by the subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy or termination of any Shareholder or the transfer of all or any portion of such Shareholder’s Shares and shall extend to such Shareholder’s heirs, successors, assigns and personal representatives.
 
Section 2.6             Term.   The Company’s existence shall be perpetual, unless and until it is dissolved in accordance with the provisions of Article XII.  The existence of the Company as a separate legal entity shall continue until the cancellation of the Certificate of Formation as provided in the Delaware LLC Act.
 
Section 2.7             Title to Company Assets.   Title to Company assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Company as an entity, and no Shareholder, Director or Officer, individually or collectively, shall have any ownership interest in such Company assets or any portion thereof. Title to any or all of the Company assets may be held in the name of the Company or one or more nominees, as the Board of Directors may determine.
 
ARTICLE III
RIGHTS OF SHAREHOLDERS AND LIMITATIONS THEREOF
 
Section 3.1            Shareholders.
 
(a)        A Person shall be admitted as a Shareholder and shall, without further action, including execution of this Agreement, become a party to and become bound by the terms of this Agreement if such Person purchases or otherwise lawfully acquires any Shares to the fullest extent permitted by law.  A Person may become a Record Holder without the consent or approval of any of the Shareholders.  A Person may not become a Shareholder without acquiring one or more Shares.
 
(b)        The name and mailing address of each Shareholder shall be listed on the books and records of the Company maintained for such purpose by the Company or the Transfer Agent.  The Secretary of the Company shall update, or cause to be updated, the books and records of the Company from time to time as necessary to reflect accurately the information therein.
 
(c)        Except as otherwise provided by the Delaware LLC Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company.  The Directors, Officers and Shareholders shall have no liability under this Agreement or for any such debt, obligation or liability of the Company, in their capacity as such, except as expressly provided in this Agreement or the Delaware LLC Act.
 
(d)        Shareholders shall not have any right to resign from the Company; provided that when a transferee of all of a Shareholder’s Shares acquires such Shares, such transferring Shareholder shall cease to be a Shareholder (and member of the Company).
 
Section 3.2             Management of Business.   No Shareholder, in his capacity as such, shall participate in the operation or management of the Company’s business, transact any business in the Company’s name or have the power to sign documents for or otherwise bind the Company by reason of being a Shareholder.
 




Section 3.3             Outside Activities of the Shareholders.   Notwithstanding any duty (including any fiduciary duty) that might otherwise exist at law or in equity, any Shareholder shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Company, including business interests and activities in direct competition with the Company.  Notwithstanding any duty (including any fiduciary duty) that might otherwise exist at law or in equity, neither the Company nor any of the other Shareholders shall have any rights by virtue of this Agreement in any business ventures of any Shareholder.
 
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF SHARES; REDEMPTION OF SHARES
 
Section 4.1             Certificates.   Upon the Company’s issuance of Shares or other securities to any Person, the Company may, but shall not be obligated to, issue one or more Certificates in the name of such Person evidencing the number of such Shares or securities being so issued.  In addition, subsequent to the issuance of such Shares or other securities, the Board of Directors may, but shall not be obligated to, provide that every Shareholder or other holder of such securities shall be entitled to have a Certificate certifying the number and class of Shares or securities owned by such Person.  Subsequent to the date hereof, the Board of Directors may, but shall not be obligated to, provide that, notwithstanding the foregoing, every Shareholder shall be entitled to have a Certificate certifying the number and class of Shares owned by such Shareholder.  Certificates shall be executed on behalf of the Company by the Chairman of the Board, President or any Vice President and the Secretary or any Assistant Secretary.  No Certificate shall be valid for any purpose until it has been countersigned by the Transfer Agent; provided, however, that if the Board of Directors elects to issue Shares or other securities in global form, the Certificates with regard thereto shall be valid upon receipt by the Depository and need not be countersigned.  Any or all of the signatures required on the Certificate may be by facsimile.  If any Officer or Transfer Agent who shall have signed or whose facsimile signature shall have been placed upon any such Certificate shall have ceased to be such Officer or Transfer Agent before such Certificate is issued by the Company, such Certificate may nevertheless be issued by the Company with the same effect as if such Person were such Officer or Transfer Agent at the date of issue.
 
Section 4.2            Mutilated, Destroyed, Lost or Stolen Certificates.
 
(a)        If any mutilated Certificate is surrendered to the Transfer Agent, the appropriate Officers on behalf of the Company shall execute, and the Transfer Agent shall countersign and deliver in exchange therefor, a new Certificate evidencing the same number and type of securities as the Certificate so surrendered.
 
(b)        The appropriate Officers on behalf of the Company shall execute and deliver, and the Transfer Agent shall countersign, a new Certificate in place of any Certificate previously issued if the Record Holder of the Certificate:
 
(i)         makes proof by affidavit, in form and substance satisfactory to the Company or to the Transfer Agent, that a previously issued Certificate has been lost, destroyed or stolen;
 
(ii)        requests the issuance of a new Certificate before the Company has notice that the Certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim;
 
(iii)       if requested by the Company or the Transfer Agent, delivers to the Company a bond, in form and substance satisfactory to the Company or the Transfer Agent, with a surety or sureties and with fixed or open penalty as the Company or the Transfer Agent may direct to indemnify the Company and the Transfer Agent against any claim that may be made on account of the alleged loss, destruction or theft of the Certificate; and
 
(iv)       satisfies any other reasonable requirements imposed by the Company or the Transfer Agent.
 




If a Shareholder fails to notify the Company within a reasonable time after such Shareholder has notice of the loss, destruction or theft of a Certificate, and a transfer of the Shares represented by the Certificate is registered before the Company or the Transfer Agent receives such notification, the Shareholder shall be precluded from making any claim against the Company or the Transfer Agent for such transfer or for a new Certificate.
 
(c)        As a condition to the issuance of any new Certificate under this Section 4.2, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Transfer Agent) reasonably connected therewith.
 
Section 4.3             Record Holders.    The Company shall be entitled to recognize the Record Holder as the owner of Shares or other securities issued by the Company and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Shares or other securities on the part of any other Person, regardless of whether the Company shall have actual or other notice thereof, except as otherwise provided by law or any applicable rule, regulation, guideline or requirement of any National Securities Exchange on which such Shares or securities are listed for trading.  Without limiting the foregoing, when a Person (such as a broker, dealer, bank, trust company or clearing corporation or an agent of any of the foregoing) is acting as nominee, agent or in some other representative capacity for another Person in acquiring and/or holding Shares or other securities, as between the Company on the one hand, and such other Persons on the other, such representative Person shall be the Record Holder of such Shares.
 
Section 4.4             Transfer Generally.    Except as otherwise set forth in this Agreement, the term “transfer,” when used in this Agreement with respect to any Shares, shall be deemed to refer to a transaction by which the holder of Shares assigns such Shares to another Person who is or becomes a Shareholder, and includes a sale, assignment, gift, exchange or any other disposition by law or otherwise, including any transfer upon foreclosure of any pledge, encumbrance, hypothecation or mortgage.  No Shares shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article IV.  To the fullest extent permitted by law, any transfer or purported transfer of Shares not made in accordance with this Article IV shall be null and void.
 
Section 4.5            Registration and Transfer of Shares.
 
(a)        The Company shall keep or cause to be kept on behalf of the Company a register that, subject to such reasonable regulations as it may prescribe, will provide for the registration and transfer of both certificated and uncertificated Shares.  The Transfer Agent is hereby appointed registrar and transfer agent for the purpose of registering Shares and transfers of such Shares as herein provided.
 
(b)        The Company shall not recognize transfers of Certificates evidencing Shares unless such transfers are effected in the manner described in this Section 4.5.  Upon surrender of a Certificate for registration of transfer of any Shares evidenced by a Certificate in accordance with this Agreement, the appropriate Officers of the Company shall execute and deliver, and the Transfer Agent shall countersign and deliver, in the name of the holder or the designated transferee or transferees, as required pursuant to the Record Holder’s instructions, one or more new Certificates evidencing the same aggregate number and type of Shares as were evidenced by the Certificate so surrendered.  The Company shall not recognize any transfer of certificated Shares until any Certificates evidencing such Shares are surrendered for registration of transfer.  No charge shall be imposed by the Company for such transfer; provided that as a condition to the issuance of any new Certificate under this Section 4.5(b), the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed with respect thereto.
 
(c)        By acceptance of the transfer of any Shares in accordance with this Section 4.5, each transferee of Shares (including any nominee holder or an agent or representative acquiring such Shares for the account of another Person) (i) shall be admitted to the Company as a Shareholder with respect to the Shares so transferred to such Person when any such transfer or admission is reflected in the books and records of the Company, with or without execution of this Agreement, (ii) shall be bound by the terms of this Agreement, (iii) shall become the Record Holder of the Shares so transferred, (iv) represents that the transferee has the capacity, power and authority to enter into this Agreement, (v) grants




the power of attorney contained herein to the Officers of the Company and any Liquidator of the Company and (vi) makes the consents and waivers contained in this Agreement.  The transfer of any Shares and the admission of any new Shareholder shall not constitute an amendment to this Agreement.
 
ARTICLE V
ISSUANCE OF SHARES
 
Section 5.1             Issuance to Initial Shareholder.    Pursuant to the Original LLC Agreement, the Company issued one Common Share to the Initial Shareholder.  The Initial Shareholder owns 1 Common Share at the time of the execution of this Agreement, representing all of the issued and outstanding Shares.  Immediately prior to the Distribution on the Distribution Date, the Company will automatically be deemed to issue or have issued to the Initial Shareholder (which will continue to be a member of the Company through completion of the Distribution) such additional Common Shares so that the total number of Common Shares held by the Initial Shareholder will be equal to the number of Common Shares required to be distributed pursuant to the Transaction Agreement.  Upon completion of the Distribution and immediately following the admission of at least one Shareholder as a member of the Company in connection therewith, the Initial Shareholder shall cease to be a member of the Company.
 
Unless otherwise specified by the Board of Directors, no interest shall be paid by the Company on the capital contributions of any Shareholder, and no Shareholder shall be entitled to the withdrawal or return of its capital contribution.
 
Section 5.2            Rights of Holders of Common Shares.
 
(a)        The only class or series of Shares authorized and Outstanding on the date of this Agreement is the Common Shares.  All preferences, voting powers, relative, participating, optional or other special rights and privileges, and qualifications, limitations, or restrictions of the Common Shares are expressly made subject and subordinate to those that may be fixed by the Board of Directors with respect to any additional classes or series of Shares.
 
(b)        Except as otherwise required by law or this Agreement and subject to the preferential rights of any additional classes or series of Shares authorized by the Board of Directors, each holder of Common Shares shall have one vote in respect of each Common Share held by such Shareholder of record on the books of the Company on all matters submitted to a vote of Shareholders.
 
(c)        Subject to the preferential rights of any additional classes or series of Shares authorized by the Board of Directors, the holders of Common Shares shall be entitled to receive, when, as and if declared by the Board of Directors of the Company, out of the assets of the Company which are by law available therefor, distributions payable either in cash, in property or in securities of the Company.
 
(d)        In the event of any dissolution, liquidation or winding up of the affairs of the Company, after satisfaction (whether by payment or reasonable provision for payment) of creditors of the Company and after distribution in full of the preferential amounts, if any, to be distributed to the holders of other securities of the Company, the holders of Common Shares shall be entitled to receive (with or without participation of the holders of other securities of the Company, as determined by the Board of Directors at the time of authorization of such securities) all of the remaining assets of the Company of whatever kind available for distribution to the holders of the Common Shares ratably in proportion to the number of Common Shares by them unless otherwise provided by law.
 
Section 5.3            Issuances of Additional Company Securities.
 
(a)        The Company may issue additional Shares and other securities of the Company, and unsecured and secured debt obligations, debt obligations convertible into any class or series of Shares, or any combination of the foregoing, and options, rights, warrants, appreciation rights and other derivative rights relating to the securities of the




Company, for any Company purpose at any time and from time to time to such Persons for such consideration and on such terms and conditions as the Board of Directors shall determine, all without the approval of any Shareholder.
 
(b)        Additional Shares authorized to be issued by the Company pursuant to Section 5.3(a) may be authorized and/or issued in one or more classes or series, with such designations, preferences, rights, powers and duties (which may be senior to existing classes and series of Shares or other securities of the Company), as shall be fixed by the Board of Directors and reflected in a written action or actions approved by the Board of Directors in compliance with Section 7.1(i) (each, a “ Share Designation ”), including (i) the right to share in Company distributions; (ii) the rights upon dissolution and liquidation of the Company; (iii) whether, and the terms and conditions upon which, the Company may redeem such class or series of Shares; (iv) whether such class or series of Shares is issued with the privilege of conversion or exchange and, if so, the terms and conditions of such conversion or exchange; (v) the terms and conditions upon which each class or series of Shares will be issued, evidenced (or not evidenced) by certificates and assigned or transferred; and (vii) the right, if any, of each such class or series of Shares to vote on Company matters, including matters relating to the relative rights, preferences and privileges of such class or series of Shares.  A Share Designation (or any resolution of the Board of Directors amending any Share Designation) shall be effective when a duly executed (executed in accordance with Section 7.1(i)) original of the same is delivered to the Secretary of the Company for inclusion among the permanent records of the Company.  For the avoidance of doubt, any securities of the Company, in addition to additional classes or series of Shares, may be issued on such terms and conditions as the Board of Directors may determine.
 
(c)        The Board of Directors shall take all actions that it determines to be necessary or appropriate in connection with (i) each issuance of Shares and other securities of the Company, unsecured and secured debt obligations, debt obligations convertible into any class or series of Shares, or any combination of the foregoing, and options, rights, warrants, appreciation rights and other derivative rights relating to securities, issued pursuant to this Section 5.3; (ii) the admission of additional Shareholders; and (iii) all additional issuances of securities by the Company.  The Board of Directors shall determine the relative designations, preferences, rights, powers and duties of the holders of the Shares or other securities being so issued.  The Board of Directors shall do all things necessary to comply with the Delaware LLC Act and is authorized and directed to do all things that it determines to be necessary or appropriate in connection with any future issuance of securities pursuant to the terms of this Agreement, including compliance with any statute, rule, regulation or guideline of any federal, state or other governmental agency or any National Securities Exchange on which the Common Shares or other securities of the Company are listed for trading.
 
Section 5.4             No Preemptive Rights.   No Person shall have any preemptive, preferential or other similar right with respect to the issuance of any securities of the Company, whether unissued, held in the treasury or hereafter created.
 
Section 5.5             Rights of Additional Classes and Series of Shares.   Notwithstanding anything to the contrary contained in this Agreement, the voting and other rights of a particular class or series of Shares are subject to the voting and other rights of any class or series of Shares designated by the Board of Directors.
 
Section 5.6            Splits and Combinations.
 
(a)        The Company may make a Pro Rata distribution of securities to all Record Holders of one or more classes or series of Shares, or may effect a subdivision or combination of any class or series of Shares.
 
(b)        Whenever such a distribution, subdivision or combination is declared, the Board of Directors shall select a Record Date as of which the distribution, subdivision or combination shall be effective and shall send notice thereof to each applicable Record Holder thereof in compliance with all applicable laws and rules of any National Securities Exchange on which the Common Shares or other securities of the Company are listed for trading.
 
(c)        Unless otherwise determined by the Board of Directors, the Company shall not issue fractional Shares upon any distribution, subdivision or combination of Shares.  If a distribution, subdivision or combination of Shares would result in the issuance of fractional Shares but for the contrary provisions hereof, then unless otherwise determined




by the Board of Directors, each fractional Share shall be rounded to the nearest whole Share (and a 0.5 Share shall be rounded to the next higher Share).
 
Section 5.7             Fully Paid and Non-Assessable Nature of Shares.    All Shares issued pursuant to, and in accordance with the requirements of, this Article V shall be validly issued, fully paid and non-assessable Shares of the Company, except to the extent otherwise provided in this Agreement or a Share Designation.
 
ARTICLE VI
TAX TREATMENT
 
Section 6.1             Tax Treatment of the Company and the Initial Shareholder Prior to the Distribution. Prior to the time of the Distribution, the Company shall be treated as a disregarded entity for all purposes under the Code pursuant to Section 301.7701-2(c)(2)(i) of the Treasury Regulations.  The Initial Shareholder intends that no action be taken to treat the Company as a corporation under the Code prior to the Distribution.
 
Section 6.2             Tax Treatment of the Company and the Shareholders Subsequent to the Distribution.   Subsequent to the Distribution, pursuant to Section 7704 of the Code, the Company will be a publicly traded partnership and be treated as if it were a corporation for all purposes under the Code.  As a result, all Company items of income, gain, loss, deduction, expense and credit will be treated as tax attributes of the Company, and, for purposes of the Delaware LLC Act, each Shareholder will have no claim on and no right to any such tax attributes of the Company, in the same manner as corporate shareholders under the Code and the Delaware General Corporation Law.
 
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
 
Section 7.1            Board of Directors.
 
(a)           Except as otherwise expressly provided in this Agreement, the business and affairs of the Company shall be managed by or under the direction of a Board of Directors (the “ Board of Directors ”).  As provided in Section 7.3, the Board of Directors shall have the power and authority to appoint Officers of the Company.  The Directors shall constitute “managers” within the meaning of the Delaware LLC Act.  No Shareholder, by virtue of such Shareholder’s status as such, shall have any management power over the business and affairs of the Company or actual or apparent authority to enter into, execute or deliver contracts on behalf of, or to otherwise bind, the Company.  Except as otherwise specifically provided in this Agreement and to the extent permitted by law, as near as practical, the authority, powers, functions and duties (including fiduciary duties) of the Board of Directors shall be identical to the authority, powers, functions and duties (including fiduciary duties) of the board of directors of a business corporation organized under the Delaware General Corporation Law.  In addition to the powers that now or hereafter can be granted to managers under the Delaware LLC Act and to all other powers granted under any other provision of this Agreement subject to Section 7.3, the Board of Directors, without Shareholder approval, shall have full power and authority to do, and to direct the Officers to do, all things (and on such terms as it determines to be necessary or appropriate) to conduct the business of the Company, to exercise all powers set forth in Section 2.4 and to effectuate the purposes set forth in Section 2.4, including the following:
 
(i)         the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into or exchangeable for Shares, and the incurring of any other obligations;
 
(ii)        the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Company;





(iii)       the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Company or the transactions contemplated by Section 14.3(d);
 
(iv)       the use of the assets of the Company (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Company and its Subsidiaries; the lending of funds to other Persons; and the repayment of obligations of the Company and its Subsidiaries;
 
(v)        the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Company under contractual arrangements to all or particular assets of the Company);
 
(vi)       the distribution of Company cash or other Company assets;
 
(vii)      the selection and dismissal of Officers, employees, agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring, the creation and operation of employee benefit plans, employee programs and employee practices;
 
(viii)     the maintenance of insurance for the benefit of the Company, the Shareholders and the Indemnitees;
 
(ix)       the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any limited or general partnerships, joint ventures, corporations, limited liability companies or other relationships;
 
(x)        the control of any matters affecting the rights and obligations of the Company, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation, arbitration or remediation, and the incurring of legal expense and the settlement of claims and litigation;
 
(xi)       the indemnification of any Person including, without limitation, as set forth in Article X to the extent permitted by law;
 
(xii)      the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Shares from, or requesting that trading be suspended on, any such exchange;

(xiii)     the purchase, sale or other acquisition or disposition of securities of the Company, or the issuance of unsecured and secured debt obligations, debt obligations convertible into any class or series of Shares, or any combination of the foregoing, or options, rights, warrants, appreciation rights and other derivative rights relating thereto; and
 
(xiv)     the entering into of agreements with any of its Affiliates.
 
(b)        The Board of Directors may from time to time determine the number of Directors then constituting the whole Board of Directors, provided tha t, effective immediately after the Distribution, such number shall be at least three and no more than seven.  Notwithstanding the foregoing, the Board of Directors, by unanimous vote of the Directors then in office, may change the minimum and maximum number of Directors; provided that the Board of Directors shall not decrease the number of Persons that constitutes the whole Board of Directors if such decrease would shorten the term of any Director.
 




(c)        Except as may be provided by the Board of Directors in setting the terms of any class or series of Shares, any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining Directors in office, even if the remaining Directors do not constitute a quorum, and any Director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which such vacancy occurred.
 
(d)        Effective upon the Distribution, the Directors (other than any Director subsequently elected solely by holders of one or more classes or series of Shares as specified by the Board of Directors upon the authorization of such Shares) shall be classified into three groups, Group I, Group II and Group III.  The number of Directors in each class shall be as nearly equal in number as possible, as determined by the Board of Directors.  Directors in Group I shall serve for a term ending at the annual meeting of Shareholders to be held in 2008; Directors in Group II shall serve for a term ending at the annual meeting of Shareholders to be held in 2009; and Directors in Group III shall serve for a term ending at the annual meeting of Shareholders to be held in 2010 and, in each such case, until their successors are duly elected or until their earlier death, resignation or removal.  At each annual meeting of the Shareholders, the successors to the class of Directors whose term expires at such meeting shall be elected by the Shareholders to hold office for a term expiring at the annual meeting of Shareholders held in the third year following the year of their election and until their successors are duly elected.
 
(e)        Effective upon the Distribution, three of the Directors shall be “Independent Directors,” as defined below, and the remaining two Directors shall be “Managing Directors.” “Independent Directors” shall be those directors who meet the qualifications as independent directors under the applicable rules of each National Securities Exchange on which the Common Shares or other securities of the Company are listed for trading and the Commission from time to time.  “Managing Directors” shall mean Directors who are not Independent Directors.  If at any time the Board of Directors shall not be comprised of a majority of Independent Directors, the Board of Directors shall take such actions as will cure such condition, including increasing the size of the Board of Directors and electing one or more Independent Directors; provided that the fact that the Board of Directors does not have a majority of Independent Directors at any time or from time to time shall not affect the validity of any action taken by the Board of Directors.
 
(f)        Effective upon the Distribution, the Group I Directors, the Group II Directors and the Group III Directors shall be as specified in a written consent of the Initial Shareholder adopted prior to the Distribution.
 
(g)        Directors need not be Shareholders.  The Board of Directors may, from time to time and by the adoption of resolutions, establish qualifications for Directors.
 
(h)        Unless otherwise required by law or the provisions hereof,
 
(i)         each member of the Board of Directors shall have one vote;
 
(ii)        the presence at a meeting of the Board of Directors of a majority of the members of the Board of Directors shall constitute a quorum at any such meeting (or at any adjournment thereof) for the transaction of business; and
 
(iii)       the act of a majority of the members of the Board of Directors present at a meeting of the Board of Directors at which a quorum is present shall be deemed to constitute the act of the Board of Directors.
 
(i)         Regular meetings of the Board of Directors and any committee thereof shall be held at such times and places as shall be designated from time to time by resolution of the Board of Directors or such committee.  Notice of such regular meetings shall not be required.  Special meetings of the Board of Directors or meetings of any committee thereof may be called by the Chairman of the Board or the chairman of such committee, as the case may be, or on the written request of a majority of the Directors then in office or a majority of the committee members then in office, as applicable, to the Secretary, in each case on at least twenty-four hours personal, written, fax or other electronic notice to each Director




or committee member, which notice may be waived by any Director.  Any such notice, or waiver thereof, need not state the purpose of such meeting except as may otherwise be required by law.  Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting, except where such Director attends the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.  Any action required or permitted to be taken at a meeting of the Board of Directors, or any committee thereof, may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, are signed by a majority of the members of the Board of Directors or committee.  Members of the Board of Directors or any committee thereof may participate in and hold a meeting by means of conference telephone, video conference or similar communications equipment by means of which all Persons participating in the meeting can hear each other at the same time, and participation in such meetings shall constitute presence in Person at the meeting.
 
(j)         The Board of Directors may designate one or more committees, each committee to consist of one or more of the Directors.  The Board of Directors may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified Director at any meeting of such committee.  Any such committee, to the extent provided in the resolution of the Board of Directors or in this Agreement, shall have and may exercise all powers and authority of the Board of Directors in the management of the business and affairs of the Company; but no such committee shall have the power or authority in reference to the following matters: approving or adopting, or recommending to the Shareholders, any action or matter expressly required by this Agreement or the Delaware LLC Act to be submitted to the Shareholders for approval, or adopting, amending or repealing any provision of this Agreement.  The Board of Directors, or, if authorized by the Board in a committee charter or otherwise, the members of any committee may choose a chairman, shall keep regular minutes of its proceedings and report the same to the Board of Directors when requested, and, unless the same shall be determined by the Board of Directors, shall fix its own rules or procedures and shall meet at such times and at such place or places as may be provided by such rules.  Unless otherwise required by law or the provisions hereof,
 
(i)         each member of a committee shall have one vote;
 
(ii)        the presence at a meeting of a committee of a majority of the members of the committee shall constitute a quorum at any such meeting for the transaction of business; and
 
(iii)       the act of a majority of the members of a committee present at a meeting of the committee at which a quorum is present shall be deemed to constitute the act of the committee.
 
(k)        The Board of Directors may elect one of its members as Chairman of the Board (the “ Chairman of the Board ”).  The Chairman of the Board, if any, and if present and acting, shall preside at all meetings of the Board of Directors and of Shareholders, unless otherwise directed by the Board of Directors.  If the Board of Directors does not elect a Chairman or if the Chairman is absent from the meeting, the Chief Executive Offer, if present and a Director, or any other Director chosen by the Board of Directors, shall preside.  In the absence of a Secretary, the person presiding over the meeting may appoint any Person to serve as secretary of the meeting.
 
(l)         Unless otherwise restricted by law, the Board of Directors shall have the authority to fix the compensation of the Directors.  The Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or paid a stated salary or paid other compensation as Director.  No such payment shall preclude any Director from serving the Company in any other capacity and receiving compensation therefor.  Directors serving on special or standing committees may also be paid their expenses, if any, of and allowed compensation for attending committee meetings.
 
(m)      Subject to the rights of holders of one or more future classes or series of Shares to elect or remove one or more Directors, any Director may be removed from office at any time, but only for cause and then only by the unanimous vote of the other Directors then in office.  In addition, subject to the rights of holders of one or more future classes or series of Shares to elect or remove one or more Directors, the entire Board of Directors (but not less than the entire Board




of Directors) may be removed from office at any time, but only for cause and then only by Share Super-Majority Approval.  For the purpose of this paragraph, “cause” shall mean, with respect to any particular Director, incapacity, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such Director caused demonstrable, material harm to the Company through bad faith or active and deliberate dishonesty.
 
Section 7.2             Certificate of Formation.   The Certificate of Formation has been filed with the Secretary of State of Delaware as required by the Delaware LLC Act.  The Board of Directors shall use all reasonable efforts to cause to be filed such other certificates or documents that it determines to be necessary or appropriate for the formation, continuation, qualification and operation of a limited liability company in the State of Delaware or any other state in which the Company may elect to do business or own property.  To the extent that the Board of Directors determines such action to be necessary or appropriate, the Board of Directors shall direct the appropriate Officers of the Company to file amendments to and restatements of the Certificate of Formation and do all things to maintain the Company as a limited liability company under the laws of the State of Delaware or of any other state in which the Company may elect to do business or own property.  The Company shall not be required, before or after filing, to deliver or mail a copy of the Certificate of Formation, any qualification document or any amendment thereto to any Shareholder.
 
Section 7.3            Officers.
 
(a)        The Board of Directors shall have the power and authority to appoint such officers with such titles, authority and duties as determined by the Board of Directors.  Such Persons so designated by the Board of Directors shall be referred to as “ Officers .” Except as otherwise specifically provided in this Agreement and to the extent permitted by law, as near as practical, the authority, powers, functions and duties (including fiduciary duties) of the Officers shall be identical to the authority, powers, functions and duties (including fiduciary duties) of the officers of a business corporation organized under the Delaware General Corporation Law.  Unless provided otherwise by resolution of the Board of Directors, the Officers shall have the titles, power, authority and duties described below in this Section 7.3.
 
(b)        The Officers of the Company shall include a Chief Executive Officer, a President, and a Secretary, and may also include a Chairman of the Board, a Vice Chairman, Chief Financial Officer, Chief Operating Officer, Treasurer, one or more Vice Presidents (who may be further classified by such descriptions as “executive,” “senior,” “assistant” or otherwise, as the Board of Directors shall determine), one or more Assistant Secretaries and one or more Assistant Treasurers.  Officers shall be elected by the Board of Directors from time to time as the Board of Directors considers appropriate.  Each Officer shall hold office until his successor is elected and qualified or until his earlier death, resignation or removal.  Any number of offices may be held by the same Person.  The compensation of Officers elected by the Board of Directors shall be fixed from time to time by the Board of Directors or by such Officers as may be designated by resolution of the Board of Directors.
 
(c)        Any Officer may resign at any time upon written notice to the Company.  Any Officer, agent or employee of the Company may be removed by the Board of Directors with or without cause at any time.  The Board of Directors may delegate the power of removal as to officers, agents and employees who have not been appointed by the Board of Directors.  Such removal shall be without prejudice to a Person’s contract rights, if any, but the appointment of any Person as an Officer, agent or employee of the Company shall not of itself create contract rights.
 
(d)        Subject to the control of the Board of Directors and the executive committee (if any) of the Board of Directors, the Chief Executive Officer shall have general executive charge, management and control of the properties, business and operations of the Company with all such powers as may be reasonably incident to such responsibilities; he or she may employ and discharge employees and agents of the Company except such as shall be appointed by the Board of Directors, and he or she may delegate these powers; he or she may agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Company, and shall have such other powers and duties as designated in accordance with this Agreement and as from time to time may be assigned by the Board of Directors.
 




(e)        If elected, the Chairman of the Board shall have such powers and duties as are designated in this Agreement and as from time to time may be assigned by the Board of Directors.
 
(f)        Unless the Board of Directors otherwise determines, the President shall have such powers and duties as are designated in accordance with this Agreement and as from time to time may be assigned by the Board of Directors.
 
(g)        In the absence of the President, or in the event of the President’s inability or refusal to act, a Vice President designated by the Board of Directors shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President.  In the absence of a designation by the Board of Directors of a Vice President to perform the duties of the President, or in the event of his absence or inability or refusal to act, the Vice President who is present and who is senior in terms of uninterrupted time as a Vice President of the Company shall so act.  The Vice President shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe.
 
(h)        The Treasurer shall have responsibility for the custody and control of all the funds and securities of the Company and shall have such other powers and duties as are designated in accordance with this Agreement and as from time to time may be assigned to the Treasurer by the Board of Directors.  The Treasurer shall perform all acts incident to the position of Treasurer, subject to the control of the Chief Executive Officer and the Board of Directors.  Each Assistant Treasurer shall have such powers and duties as are designated in accordance with this Agreement and as from time to time may be assigned by the Treasurer or the Board of Directors.  The Assistant Treasurers shall exercise the powers of the Treasurer during that Officer’s absence or inability or refusal to act.
 
(i)         The Secretary shall issue all authorized notices for, and shall keep minutes of, all meetings of the Shareholders and the Board of Directors.  The Secretary shall have charge of the Company’s minute books and shall perform such other duties as the Board of Directors may from time to time prescribe.  In the absence or inability to act of the Secretary, any Assistant Secretary may perform all the duties and exercise all the powers of the Secretary.  The performance of any such duty shall, in respect of any other Person dealing with the Company, be conclusive evidence of the power to act.  An Assistant Secretary shall also perform such other duties as the Secretary or the Board of Directors may assign.
 
(j)         Unless the Board of Directors otherwise determines and subject to such limitations as the Board of Directors may adopt, each Officer shall have the authority to agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Company.  The Board of Directors may from time to time delegate all or a portion of the powers or duties of any Officer to any other Officers or agents, notwithstanding any provision hereof.
 
(k)        Unless otherwise directed by the Board of Directors, the Chief Executive Officer, the President or any Officer of the Company authorized by the Chief Executive Officer shall have power to vote and otherwise act on behalf of the Company, in person or by proxy, at any meeting of shareholders of or with respect to any action of equity holders of any other entity in which the Company may hold securities and otherwise to exercise any and all rights and powers which the Company may possess by reason of its ownership of securities in such other entities.
 
Section 7.4             Outside Activities.   Unless otherwise provided in a written agreement with the Company, notwithstanding any duty (including any fiduciary duty) that might otherwise exist in law or equity, it shall not be a breach of any duty (including any fiduciary duty) or any other obligation of any type whatsoever of any Director for such Director or Affiliates of such Director to engage in outside business interests and activities in preference to or to the exclusion of the Company or in direct competition with the Company; provided that no confidential information of the Company may be used by any such Person.  Notwithstanding any duty (including any fiduciary duty) that might otherwise exist in law or equity, Directors shall have no obligation hereunder or as a result of any duty expressed or implied by law to present business opportunities to the Company that may become available to such Director or to Affiliates of such Director.
 




Section 7.5            Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties.
 
(a)        Unless otherwise expressly provided in this Agreement or required by the Delaware LLC Act, whenever a potential conflict of interest exists or arises between any Shareholder or an Affiliate thereof, and/or one or more Directors or their respective Affiliates and/or the Company, any resolution or course of action by the Board of Directors in respect of such conflict of interest shall be permitted and deemed approved by all Shareholders, and shall not constitute a breach of this Agreement, of any agreement contemplated herein, or of any duty stated or implied by law or equity, including any fiduciary duty, if the resolution or course of action in respect of such conflict of interest is (i) approved by a Share Plurality (with interested Shareholders not counted for any purpose), or (ii) on terms no less favorable to the Company than those generally being provided to or available from unrelated third parties or (iii) fair and reasonable to the Company, taking into account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to the Company).  It shall be presumed that, in making its decision and notwithstanding that such decision may be interested, the Board of Directors acted properly and in accordance with its duties (including fiduciary duties), and in any proceeding brought by or on behalf of any Shareholder or the Company challenging such approval, the Person bringing or prosecuting such proceeding shall have the burden of overcoming such presumption by clear and convincing evidence.
 
Section 7.6            Duties of Officers and Directors.
 
(a)        Except as otherwise expressly provided in this Agreement, the duties (including fiduciary duties) and obligations owed to the Company and to the Shareholders by the Officers and Directors shall be the same as the respective duties and obligations owed to a business corporation organized under the Delaware General Corporation Law and its shareholders by its officers and directors, respectively.
 
(b)        Each Director shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Company and on such information, opinions, reports or statements presented to the Company by any of the Company’s Officers or employees, or committees of the Board of Directors, or by any other Person as to matters the Director reasonably believes are within such other Person’s professional or expert competence.
 
(c)        The Board of Directors shall have the right, in respect of any of its powers or obligations hereunder, to act through a duly appointed attorney or attorneys-in-fact or the duly authorized Officers of the Company.
 
Section 7.7             Purchase or Sale of Company Securities.   The Board of Directors may cause the Company or its designee to purchase or otherwise acquire Shares or any other securities of the Company.
 
Section 7.8             Reliance by Third Parties.   Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Company shall be entitled to assume that the Board of Directors and any Officer authorized by the Board of Directors to act on behalf of and in the name of the Company has full power and authority to encumber, sell or otherwise use in any manner any and all assets of the Company and to enter into any authorized contracts on behalf of the Company, and such Person shall be entitled to deal with the Board of Directors or any Officer as if it were the Company’s sole party in interest, both legally and beneficially.  Each Shareholder hereby waives any and all defenses or other remedies that may be available against such Person to contest, negate or disaffirm any action of the Board of Directors or any Officer in connection with any such dealing.  In no event shall any Person dealing with the Board of Directors or any Officer or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expedience of any act or action of the Board of Directors or any Officer or its representatives.  Each and every certificate, document or other instrument executed and delivered on behalf of the Company by the Board of Directors or any Officer or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (b) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Company and (c) such certificate,




document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Company.
 
ARTICLE VIII
RESTRICTIONS ON TRANSFER AND OWNERSHIP OF SHARES
 
Section 8.1             Definitions.    For the purpose of this Article VIII, the following terms shall have the following meanings:
 
Charitable Beneficiary ” shall mean one or more beneficiaries of the Charitable Trust as determined pursuant to Section 8.3(g), provided that each such organization must be described in Sections 501(c)(3), 170(b)(1)(A) (other than clause (vii) or (viii) thereof) and 170(c)(2) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

Charitable Trust ” shall mean any trust provided for in Section 8.2(a)(ii) and Section 8.3(a).
 
Charitable Trustee ” shall mean the Person, unaffiliated with the Company and a Prohibited Owner, that is appointed by the Company from time to time to serve as trustee of the Charitable Trust.
 
Closing Price ” with respect to Shares on any date shall mean the last sale price for such Shares, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such Shares, in either case as reported on the principal consolidated transaction reporting system with respect to such Shares, or if such Shares are not listed or admitted to trading on any National Securities Exchange, the last sale price in the over-the-counter market, or if no trading price is available for such Shares, the fair market value of such Shares as determined in good faith by the Board of Directors.
 
Constructive Ownership ” shall mean ownership of Shares by a Person, whether the interest in Shares is held directly or indirectly (including by a nominee), and shall include any interests that would be treated as owned through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code.  The terms “Constructive Owner,” “Constructively Owns” and “Constructively Owned” shall have the correlative meanings.
 
Excepted Holder ” shall mean a Shareholder for whom an Excepted Holder Limit is created by the Board of Directors pursuant to Section 8.2(f)(i).
 
Excepted Holder Limit ” shall mean, provided that and only so long as the affected Excepted Holder complies with all of the requirements established by the Board of Directors pursuant to Section 8.2(f), and subject to adjustment pursuant to Section 8.2(f)(iv), the percentage limit established by the Board of Directors pursuant to Section 8.2(f).
 
Excluded Holder ” shall mean any Person who acquires Constructive Ownership of Common Shares solely by reason of the Transfer of Common Shares in the Distribution and who, immediately following the Distribution, Constructively Owns Common Shares in excess of the Ownership Limit solely by reason of such Transfer of Common Shares in the Distribution.
 
Excluded Holder Limit ” shall mean, with respect to any Excluded Holder, the Shares that such Excluded Holder was considered to Constructively Own immediately following the Distribution solely by reason of the Distribution (taking into account only such Shares and no other Shares as to which such Person may thereafter become, for any reason, the Constructive Owner); provided, however , that (i) if the amount of Shares such Excluded Holder is considered to Constructively Own decreases by disposition or otherwise, but remains higher than the Ownership Limit, then such decreased amount shall become the Excluded Holder Limit, and (ii) if at any time the Excluded Holder Limit for any Excluded Holder would be less than the Ownership Limit, such Excluded Holder shall cease to be an Excluded Holder and the Ownership Limit shall thereafter apply to such Person.
 




Market Price ” on any date shall mean, with respect to any class or series of Shares, the Closing Price for such Shares on such date.
 
Ownership Limit ” shall mean (i) with respect to Common Shares, 9.8% (in value or number of shares, whichever is more restrictive) of the Outstanding Common Shares; and (ii) with respect to any other class or series of Shares, 9.8% (in value or number of shares, whichever is more restrictive) of the Outstanding Shares of such class or series.
 
Person ” shall have the meaning set forth in Section 1.1 and also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act; provided, however, that the term “Person” shall not include any “group” as that term is used for purposes of Section 13(d)(3) of the Exchange Act, if such “group” would be an Excluded Holder (but any Person that is a member of such “group” shall still be considered to be a “Person” for purposes hereof).
 
Prohibited Owner ” shall mean any Person who, but for the provisions of Section 8.2(a), would Constructively Own Shares in excess of the Ownership Limitation, and if appropriate in the context, shall also mean any Person who would have been the Record Holder of Shares that the Prohibited Owner would have so owned.
 
Transfer ” shall mean any issuance, sale, transfer, gift, assignment, devise or other disposition, as well as any other event (or any agreement to take any such actions or cause any such events) that causes any Person to acquire Constructive Ownership of Shares or the right to vote or receive distributions on Shares, including without limitation, (a) the transfer of Shares to holders of common shares of HPT in the Distribution, (b) any change in the capital structure of the Company which has the effect of increasing the total equity interest of any Person in the Company, (c) a change in the relationship between two or more Persons which causes a change in ownership of Shares by application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code, (d) the grant or exercise of any option or warrant (or any disposition of any option or warrant, or any event that causes any option or warrant not theretofore exercisable to become exercisable), pledge, security interest or similar right to acquire Shares, (e) any disposition of any securities or rights convertible into or exchangeable for Shares or any interest in Shares or any exercise of any such conversion or exchange right, and (f) transfers of interests in other entities that result in changes in Constructive Ownership of Shares, in each case, whether voluntary or involuntary, whether owned of record or Constructively Owned, and whether by operation of law or otherwise.  The terms “Transferring” and “Transferred” shall have the correlative meanings.
 
Section 8.2            Restrictions on Ownership and Transfer of Shares.
 
(a)        Ownership Limitations .  Commencing on the Distribution Date:
 
(i)           Basic Restrictions.  (A) No Person, other than an Excepted Holder or an Excluded Holder, shall Constructively Own Shares in excess of the Ownership Limit, (B) no Excepted Holder shall Constructively Own Shares in excess of the Excepted Holder Limit for such Excepted Holder, and (C) no Excluded Holder shall Constructively Own Shares in excess of the Excluded Holder Limit for such Excluded Holder.
 
(ii)         Transfer in Trust.  If any Transfer of Shares occurs (whether or not such Transfer is the result of a transaction entered into through the facilities of a National Securities Exchange or automated inter-dealer quotation system) which, if effective, would result in any Person Constructively Owning Shares in violation of Section 8.2(a)(i)(A), 8.2(a)(i)(B) or 8.2(a)(i)(C), as applicable; (x) then that number of Shares the Constructive Ownership of which otherwise would cause such Person to violate Section 8.2(a)(i)(A), 8.2(a)(i)(B) or 8.2(a)(i)(C) (rounded upward to the nearest whole share) shall be automatically transferred to a Charitable Trust for the benefit of a Charitable Beneficiary, as described in Section 8.3, effective as of the close of business on the Business Day prior to the date of such Transfer (or as of the close of business on the Distribution Date as to any




such Transfer that occurs on the Distribution Date), and such Person shall acquire no rights in such Shares; or (y) if the transfer to the Charitable Trust described in clause (x) of this sentence would not be effective for any reason to prevent the violation of Section 8.2(a)(i)(A), 8.2(a)(i)(B) or 8.2(a)(i)(C), as applicable, then, to the fullest extent permitted by law, the Transfer of that number of Shares that otherwise would cause any Person to violate Section 8.2(a)(i)(A), 8.2(a)(i)(B) or 8.2(a)(i)(C), as applicable, shall be void ab initio, and the intended transferee shall acquire no rights in such Shares.
 
(b)        Remedies for Breach .  If the Board of Directors or any duly authorized committee thereof shall at any time determine that a Transfer or other event has taken place that results in a violation of Section 8.2(a)(i) or that a Person intends to acquire or has attempted to acquire Constructive Ownership of any Shares in violation of Section 8.2(a)(i) (whether or not such violation is intended), the Board of Directors or a committee thereof shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the Company to redeem Shares, refusing to give effect to such Transfer on the books of the Company or instituting proceedings to enjoin such Transfer or other event (and such Person shall be liable, without limitation, for all costs incurred in connection therewith and pursuant to Section 10.3); provided, however , that any Transfer or attempted Transfer or other event in violation of Section 8.2(a)(i) shall automatically result in the transfer to the Charitable Trust described above, and, where applicable under Section 8.2(a)(ii)(y) such Transfer (or other event) shall, to the fullest extent permitted by law, be void ab initio as provided above irrespective of any action (or non-action) by the Board of Directors or a committee thereof.
 
(c)        Notice of Restricted Transfer.  Any Person who acquires or attempts or intends to acquire Constructive Ownership of Shares that will or may violate Section 8.2(a)(i), or any Person who would have owned Shares that resulted in a transfer to the Charitable Trust pursuant to the provisions of Section 8.2(a)(ii)(x), shall immediately give written notice to the Company of such event, or in the case of such a proposed or attempted transaction, give at least 15 days prior written notice, and shall provide to the Company such other information as the Company may request.
 
(d)        Owners Required to Provide Information.  Commencing on the Distribution Date, every Shareholder of record of more than five percent of the Outstanding Shares of any series or class, within 30 days after the end of each taxable year and also within 30 days after a request from the Company, shall give written notice to the Company stating the name and address of such owner, the number of Shares owned, and a description of the manner in which such Shares are held; provided that a Shareholder of record who holds Outstanding Shares as nominee for another Person, which other Person is required to include in gross income the distributions received on such Shares (an “ Actual Owner ”), shall give written notice to the Company stating the name and address of such Actual Owner and the number of Shares of such Actual Owner with respect to which the Shareholder of record is nominee.  Each such Shareholder of record and each Actual Owner shall provide to the Company such additional information as the Company may request in order to ensure compliance with the Ownership Limit.

(e)        Ambiguity.  In the case of an ambiguity in the application of any of the provisions of this Section 8.2, Section 8.3 or any definition contained in Section 8.1, the Board of Directors shall have the power to determine the application of the provisions of this Section 8.2 or Section 8.3 with respect to any situation based upon the facts known to it.  If Section 8.2 or 8.3 requires an action by the Board of Directors and this Agreement does not contain a specific provision authorizing such action, the Board of Directors shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of Section 8.1, Section 8.2 or Section 8.3.
 
(f)        Exceptions .
 
(i)    The Board of Directors, in its sole and absolute discretion (without the application to the fullest extent permitted by law of any fiduciary duty), may grant to any Person who makes a request therefor (a “ Requesting Person ”) an exception to the Ownership Limit (or one or more elements thereof) with respect to the ownership of any series or class of Shares, subject to the following conditions and




limitations: (A) (1) the Board of Directors shall have determined, in its sole and absolute discretion (without the application to the fullest extent permitted by law of any fiduciary duty), that the Requesting Person’s ownership of Shares in excess of the Ownership Limit pursuant to the exception requested hereunder (together with the ownership of Shares by all other Persons as permitted under this Article VIII, taking into account any previously granted exceptions pursuant hereto) would not cause a default under the terms of any contract to which the Company is a party or reasonably expects to become a party and (2) the Board of Directors shall have determined, in its sole and absolute discretion (without the application to the fullest extent permitted by law of any fiduciary duty), and in the case of each individual Director, in his business judgment, that the Requesting Person’s ownership of Shares in excess of the Ownership Limit pursuant to the exception requested hereunder (together with the ownership of Shares by all other Persons as permitted under this Article VIII, taking into account any previously granted exceptions pursuant hereto) is in the best interests of the Company; and (B) such Requesting Person provides to the Board of Directors, for the benefit of the Company, such representations and undertakings, if any, as the Board of Directors may, in its sole and absolute discretion (without the application to the fullest extent permitted by law of any fiduciary duty), determine to be necessary in order for it to make the determination that the conditions set forth in clause (A) above of this Section 8.2(f)(i) have been and/or will continue to be satisfied (including, without limitation, an agreement as to a reduced Ownership Limit or Excepted Holder Limit for such Requesting Person with respect to the Constructive Ownership of one or more other classes or series of Shares not subject to the exception), and such Requesting Person agrees that any violation of such representations and undertakings or any attempted violation thereof will result in the application of the remedies set forth in Section 8.2(b) with respect to Shares held in excess of the Ownership Limit or the Excepted Holder Limit (as may be applicable) with respect to such Requesting Person (determined without regard to the exception granted such Requesting Person under this subparagraph (i)).  If a member of the Board of Directors requests that the Board of Directors grant an exception pursuant to this subsection (f) with respect to such member, or with respect to any other Person if such member of the Board of Directors would be considered to be the Constructive Owner of Shares owned by such other Person, such member of the Board of Directors shall not participate in the decision of the Board of Directors as to whether to grant any such exception.
 
(ii)   In determining whether to grant any exemption pursuant to Section 8.2(f)(i), the Board of Directors may, but need not, consider, among other factors, (A) the general reputation and moral character of the Requesting Person, (B) whether ownership of Shares would be direct or through ownership attribution, (C) whether the Requesting Person’s ownership of Shares would interfere with the conduct of the Company’s business, (D) whether granting an exemption for the Requesting Person would adversely affect any of the Company’s existing contractual arrangements, and (E) whether the Requesting Person to whom the exemption would apply is attempting to change control of the Company or affect its policies in a way which the Board of Directors, in its sole and absolute discretion (without the application to the fullest extent permitted by law of any fiduciary duty), considers adverse to the best interest of the Company or the Shareholders.  Nothing in this Section 8.2(f)(ii) shall be interpreted to mean that the Board of Directors may not act in its sole and absolute discretion (without the application to the fullest extent permitted by law of any fiduciary duty) in making any determination under Section 8.2(f)(i).
 
(iii)  An underwriter or initial purchaser that participates in a public offering or a private placement of Shares (or securities convertible into or exchangeable for Shares) may Constructively Own Shares (or securities convertible into or exchangeable for Shares) in excess of the Ownership Limit, but only to the extent necessary to facilitate such public offering or private placement as determined by the Board of Directors.
 




(iv)  The Board of Directors may reduce the Excepted Holder Limit for an Excepted Holder only: (1) with the written consent of such Excepted Holder or (2) pursuant to the terms and conditions of the agreements and undertakings entered into with such Excepted Holder in connection with the establishment of the Excepted Holder Limit for that Excepted Holder.
 
(v)   To the fullest extent permitted by law, any determination made by the Board of Directors with respect to the provisions of Section 8.2(f) may be made without regard to any fiduciary or other duties that the Board of Directors may have to the Prohibited Owner or any other Person.
 
(g)        Increase or Decrease in Ownership Limit.  The Board of Directors may from time to time increase or decrease the Ownership Limit, provided that any decrease may be made only prospectively as to subsequent holders (other than a decrease as a result of a retroactive change in existing law, in which case such change shall be effective immediately).
 
(h)        Legend .  Unless otherwise provided by the Board of Directors, each certificate for Shares (or securities exercisable for or convertible into Shares) shall bear a legend with respect to the restrictions contained in this Agreement in such form as shall be prescribed by the Board of Directors.  Instead of the foregoing legend, the certificate may state that the Company will furnish a full statement about certain restrictions on transferability to a Shareholder on request and without charge.
 
(i)         No Recourse .  A Prohibited Owner shall have no claim, cause of action or other recourse whatsoever against the purported transferor of Shares causing the violation of the restrictions set forth in Section 8.2(a).
 
Section 8.3            Transfer of Shares.
 
(a)        Ownership in Trust.  Upon any purported Transfer or other event described in Section 8.2(a)(ii) that would result in a transfer of Shares to a Charitable Trust, such Shares shall be deemed to have been transferred to the Charitable Trustee as trustee of a Charitable Trust for the exclusive benefit of one or more Charitable Beneficiaries (except to the extent otherwise provided in Section 8.3(e)).  Such transfer to the Charitable Trustee shall be deemed to be effective as of the close of business on the Business Day prior to any other purported Transfer or other event that otherwise results in the transfer to the Charitable Trust pursuant to Section 8.2(a)(ii) (or as of the close of business on the Distribution Date if such other purported Transfer or other event occurs on that date).  The Charitable Trustee shall be appointed by the Company and shall be a Person unaffiliated with the Company and any Prohibited Owner.  Each Charitable Beneficiary shall be designated by the Company as provided in Section 8.3(g).
 
(b)        Status of Shares Held by the Charitable Trustee.  Shares held by the Charitable Trustee shall be issued and Outstanding Shares of the Company.  The Prohibited Owner shall (i) have no rights in the Shares held by the Charitable Trustee; (ii) not benefit economically from ownership of any Shares held in trust by the Charitable Trustee (except to the extent otherwise provided in Section 8.3(e)); (iii) have no rights to dividends or other distributions; (iv) not possess any rights to vote or other rights attributable to the Shares held in the Charitable Trust; and (v) have no claim, cause of action or other recourse whatsoever against the purported transferor of such Shares.
 
(c)        Dividend and Voting Rights .  The Charitable Trustee shall have all voting rights and rights to dividends or other distributions with respect to Shares held in the Charitable Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary (except to the extent otherwise provided in Section 8.3(e)).  Any dividend or other distribution paid prior to the discovery by the Company that Shares have been transferred to the Charitable Trustee shall be paid with respect to such Shares to the Charitable Trustee by the Prohibited Owner upon demand and any dividend or other distribution authorized but unpaid shall be paid when due to the Charitable Trustee.  Any dividends or distributions so paid over to the Charitable Trustee shall be held in trust for the Charitable Beneficiary.  The Prohibited Owner shall have no voting rights with respect to Shares held in the Charitable Trust and, effective as of the date that Shares have been transferred to the Charitable Trustee, the Charitable Trustee shall have the authority (at the Charitable Trustee’s sole




discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the Company that Shares have been transferred to the Charitable Trustee and (ii) to recast such vote in accordance with the desires of the Charitable Trustee acting for the benefit of the Charitable Beneficiary; provided, however, that if the Company has already taken irreversible corporate action, then the Charitable Trustee shall not have the power to rescind and recast such vote.  Notwithstanding the provisions of this Article VIII, until the Company has received notification that Shares have been transferred into a Charitable Trust, the Company shall be entitled to rely on its stock transfer and other Shareholder records for purposes of preparing lists of Shareholders entitled to vote at meetings, determining the validity and authority of proxies, and otherwise conducting votes of Shareholders.
 
(d)        Rights upon Liquidation.  Upon any voluntary or involuntary liquidation, dissolution or winding up of or any distribution of the assets of the Company, the Charitable Trustee shall be entitled to receive, ratably with each other holder of Shares of the class or series of Shares that is held in the Charitable Trust, that portion of the assets of the Company available for distribution to the holders of such class or series (determined based upon the ratio that the number of Shares of such class or series of Shares held by the Charitable Trustee bears to the total number of Shares of such class or series of Shares then outstanding).  The Charitable Trustee shall distribute any such assets received in respect of the Shares held in the Charitable Trust in any liquidation, dissolution or winding up or distribution of the assets of the Company, in accordance with Section 8.3(e).
 
(e)        Sale of Shares by Charitable Trustee .
 
(i)    Within 20 days of receiving notice from the Company that Shares have been transferred to the Charitable Trust, the Charitable Trustee shall sell the Shares held in the Charitable Trust (together with the right to receive dividends or other distributions with respect to such Shares as to any Shares transferred to the Charitable Trustee as a result of the operation of Section 8.2(a)(ii)) to a Person, designated by the Charitable Trustee, whose ownership of the Shares will not violate the ownership limitations set forth in Section 8.2(a)(i).  Upon such sale, the interest of the Charitable Beneficiary in the Shares sold shall terminate and the Charitable Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 8.3(e).
 
(ii)   A Prohibited Owner shall receive the lesser of (1) the net price paid by the Prohibited Owner for the Shares or, if the Prohibited Owner did not give value for the Shares in connection with the event causing the Shares to be held in the Charitable Trust (e.g., in the case of a gift, devise or other such transaction), the Market Price of the Shares on the day of the event causing the Shares to be held in the Charitable Trust, and (2) the net sales proceeds received by the Charitable Trustee from the sale or other disposition of the Shares held in the Charitable Trust.  Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary.  If, prior to the discovery by the Company that Shares have been transferred to the Charitable Trustee, such Shares are sold by a Prohibited Owner, then (i) such Shares shall be deemed to have been sold on behalf of the Charitable Trust and (ii) to the extent that the Prohibited Owner received an amount for such Shares that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 8.3(e), such excess shall be paid to the Charitable Trustee upon demand.

(f)         Purchase Right in Shares Transferred to Trustee.  Shares transferred to the Charitable Trustee shall be deemed to have been offered for sale to the Company, or its designee, at a price per Share equal to the lesser of (i) the price per Share in the transaction that resulted in such transfer to the Charitable Trust (or, in the case of a devise, gift or other such transaction, the Market Price per such Share on the day of the event causing the Shares to be held in the Charitable Trust) and (ii) the Market Price per such Share on the date the Company, or its designee, accepts such offer.  The Company shall have the right to accept such offer until the Charitable Trustee has sold the Shares held in the Charitable Trust pursuant to Section 8.3(e).  Upon such a sale to the Company, the interest of the Charitable Beneficiary in the Shares sold shall terminate and the Charitable Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and the Charitable Beneficiary as provided in Section 8.3(e).
 




(g)        Designation of Charitable Beneficiaries.  By written notice to the Charitable Trustee, the Company shall designate from time to time one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Charitable Trust such that (i) Shares held in the Charitable Trust would not violate the restrictions set forth in Section 8.2(a)(i) in the hands of such Charitable Beneficiary and (ii) contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.
 
Section 8.4              Transactions on a National Securities Exchange.   Nothing in this Article VIII shall preclude the settlement of any transaction entered into through the facilities of a National Securities Exchange or any automated inter-dealer quotation system.  The fact that the settlement of any transaction takes place shall not negate the effect of any other provision of this Article VIII and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article VIII.
 
Section 8.5              Enforcement.   The Company is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Article VIII (and, to the fullest extent permitted by law, a Person shall be liable, without limitation, for all costs incurred in connection therewith and pursuant to Section 10.3).
 
Section 8.6              Non-Waiver.   No delay or failure on the part of the Company or the Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the Company or the Board of Directors, as the case may be, except to the extent specifically waived in writing.
 
Section 8.7             Enforceability.   If any of the restrictions on transfer of Shares contained in this Article VIII are determined to be void, invalid or unenforceable by any court of competent jurisdiction, then the Prohibited Owner may be deemed, at the option of the Company, to have acted as an agent of the Company in acquiring such Shares and to hold such Shares on behalf of the Company.
 
ARTICLE IX
VOTING RIGHTS OF SHAREHOLDERS; MEETINGS OF SHAREHOLDERS
 
Section 9.1             General.
 
(a)        The provisions of this Article IX shall be subject to the requirements of the Exchange Act and any applicable Exchange Rule.  If, in the Opinion of Counsel, any of such provisions are inconsistent with such requirements, such requirements shall supersede the provisions of this Agreement and the Board of Directors shall amend the provisions of this Article IX so as to make its provisions consistent with such requirements.
 
(b)        Any matter, including the nomination of Directors, submitted by the Board of Directors to the Shareholders for approval, and any matter otherwise voted upon by the Shareholders and subject to the provisions of Section 5.5 (relating to the creation of new classes and series of Shares) and Section 7.1(m) (relating to the removal of Directors by the Shareholders), shall require the following vote by the Shareholders for approval: (i) the election of Directors nominated by the Board of Directors, a Share Majority; (ii) any other matter that has been approved previously by the Board of Directors, a Share Plurality; and (iii) any matter that has not been approved previously by the Board of Directors, a Share Super-Majority Approval.  There shall not be cumulative voting of Common Shares.  Notwithstanding anything in this Section 9.1(b), the election of a Managing Director or an Independent Director in an uncontested election (which, for purposes of this Agreement, is an election in which the number of nominees for election equals or is less than the number to be elected at a meeting) shall require the vote of a plurality of the Outstanding Shares with voting power voting at a meeting of Shareholders.
 
(c)        All meetings of Shareholders shall be held at the principal executive office of the Company or at such other place as shall be set by the Board of Directors and stated in the notice of the meeting.  For purposes of determining the Shareholders entitled to notice of or to vote at a meeting of the Shareholders, the Board of Directors may set a Record




Date.  If no Record Date is fixed by the Board of Directors, the Record Date for determining Shareholders entitled to notice of or to vote at a meeting of Shareholders shall be at the close of business on the day next preceding the day on which notice is given.  A determination of Shareholders of record entitled to notice of or to vote at a meeting of Shareholders shall apply to any adjournment or postponement of the meeting; provided, however, that the Board of Directors may fix a new Record Date for the adjourned or postponed meeting.
 
(d)        An annual meeting of the Shareholders shall be called by the Board of Directors and shall be held on a date and at the time set by the Board of Directors.  The Board of Directors shall cause at least 30 days’ notice to be given of an annual meeting of Shareholders.
 
(e)        The Chairman of the Board, if any, or a majority of the entire Board of Directors may call a special meeting of the Shareholders.  Subject to subsection (f) and the last sentence of this subsection (e), a special meeting of Shareholders shall also be called by the Secretary of the Company upon the written request of Shareholders entitled to cast not less than the Special Meeting Percentage of all the votes entitled to be cast at such meeting.  The “ Special Meeting Percentage ” shall be a majority or, to the extent permitted by any applicable Exchange Rule, such higher percentage as shall be specified from time to time by the Board of Directors; provided, however , that in no case shall the Special Meeting Percentage be more than 75%.  Nothing in this Agreement shall be construed to permit the Shareholders to cause a special meeting of the Shareholders to be called unless applicable law or Exchange Rule requires that the Shareholders be able to do so.
 
(f)         Subject to the last sentence of subsection (e), any Shareholder of record seeking to have Shareholders request a special meeting shall, by sending written notice to the Secretary (the “ Record Date Request Notice ”) by registered mail, return receipt requested, request the Board of Directors to fix a record date to determine the Shareholders entitled to request a special meeting (the “ Request Record Date ”).  No Shareholder may make a Record Date Request Notice unless such Shareholder holds a Certificate for all Shares owned by such Shareholder, and a copy of each Certificate shall accompany such Shareholder’s written request to the Secretary, as described in the preceding sentence, in order for such request to be effective; provided, however , that the provisions of this sentence shall be inapplicable unless Shareholders are entitled to receive a Certificate evidencing the Shares owned by them.  The Record Date Request Notice shall set forth the purpose of the meeting and the matters proposed to be acted on at it, shall be signed by one or more Shareholders of record as of the date of signature (or their duly authorized agents), shall bear the date of signature of each such Shareholder (or other agent) and shall set forth all information relating to each such Shareholder that must be disclosed in solicitations of proxies for election of Directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to the Exchange Act.  Upon receiving the Record Date Request Notice, the Board of Directors may fix a Request Record Date and may also fix the Special Meeting Percentage for that meeting.  The Request Record Date shall not precede and shall not be more than ten days after the close of business on the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors.  If the Board of Directors, within ten days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date and make a public announcement of such Request Record Date, the Request Record Date shall be the close of business on the tenth day after the first date on which the Record Date Request Notice is received by the Secretary.
 
(g)        Subject to the last sentence of subsection (e), in order for any Shareholder to request a special meeting, one or more written requests for a special meeting (the “ Special Meeting Request ”) signed by Shareholders of record (or their duly authorized agents) as of the Request Record Date entitled to cast not less than the Special Meeting Percentage shall be delivered to the Secretary.  No Shareholder may make a Special Meeting Request unless such Shareholder holds a Certificate for all Shares owned by such Shareholder, and a copy of each Certificate shall accompany such Shareholder’s written request to the Secretary, as described in the preceding sentence, in order for such request to be effective; provided, however , that the provisions of this sentence shall be inapplicable unless Shareholders are entitled to receive a Certificate evidencing the Shares owned by them.  In addition, the Special Meeting Request shall set forth the purpose of the meeting and the matters proposed to be acted on at it (which shall be limited to the matters set forth in the Record Date Request
Notice received by the Secretary), shall bear the date of signature of each such Shareholder (or other agent) signing the




Special Meeting Request, shall set forth the name and address, as they appear in the Company’s books, of each Shareholder signing such request (or on whose behalf the Special Meeting Request is signed) and the class and number of Shares of the Company which are owned of record and beneficially by each such Shareholder, shall be sent to the Secretary by registered mail, return receipt requested, and must be received by the Secretary within 60 days after the Request Record Date.  Any requesting Shareholder may revoke his request for a special meeting at any time by written revocation delivered to the Secretary.
 
(h)        The Secretary shall inform the requesting Shareholders of the reasonably estimated cost of preparing and mailing the notice of meeting (including the Company’s proxy materials).  The Secretary shall not be required to call a special meeting upon Shareholder request and such meeting shall not be held unless, in addition to the written requests required by subsection (g), the Secretary receives payment from the requesting Shareholders of such reasonably estimated cost prior to the mailing of any notice of the meeting.

(i)         Except as provided in the next sentence, any special meeting shall be held at such place, date and time as may be designated by the Officer who called the meeting, if any, and otherwise by the Board of Directors.  In the case of any special meeting called by the Secretary upon the request of Shareholders (a “ Shareholder Requested Meeting ”), such meeting shall be held at such place, date and time as may be designated by the Board of Directors; provided, however , that if the Board of Directors fails to designate, within ten days after the date that a valid Special Meeting Request is actually received by the Secretary (the “ Delivery Date ”), a date and time for a Shareholder Requested Meeting, then such meeting shall be held at 2:00 p.m., local time on the 90(th) day after the record date for such Shareholder Requested Meeting (the “ Meeting Record Date ”) or, if such 90(th) day is not a Business Day, on the first preceding Business Day; and provided further that in the event that the Board of Directors fails to designate a place for a Shareholder Requested Meeting within ten days after the Delivery Date, then such meeting shall be held at the principal executive offices of the Company.  In fixing a date for any special meeting, the Chairman of the Board, if any, the President or the Board of Directors may consider such factors as he, she or it deems relevant within the good faith exercise of business judgment, including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for meeting and any plan of the Board of Directors to call an annual meeting or a special meeting.  In the case of any Shareholder Requested Meeting, if the Board of Directors fails to fix a Meeting Record Date that is a date within 30 days after the Delivery Date, then the close of business on the 30(th) day after the Delivery Date shall be the Meeting Record Date.
 
(j)         If at any time as a result of written revocations of requests for the special meeting, Shareholders of record (or their duly authorized agents) as of the Request Record Date entitled to cast less than the Special Meeting Percentage shall have delivered and not revoked requests for a special meeting, the Secretary may refrain from mailing the notice of the meeting or, if the notice of the meeting has been mailed, the Secretary may revoke the notice of the meeting at any time not less than ten days before the meeting if the Secretary has first sent to all other requesting Shareholders written notice of such revocation and of intention to revoke the notice of the meeting.  Any request for a special meeting received after a revocation by the Secretary of a notice of a meeting shall be considered a request for a new special meeting.
 
(k)        The Chairman of the Board, if any, the President or the Board of Directors may appoint regionally or nationally recognized independent inspectors of elections to act as the agent of the Company for the purpose of promptly performing a ministerial review of the validity of any Special Meeting Request received by the Secretary.  For the purpose of permitting the inspectors to perform such review, no such request shall be deemed to have been delivered to the Secretary until the earlier of (i) five Business Days after receipt by the Secretary of such request and (ii) such date as the independent inspectors certify to the Company that the Secretary has validly received requests signed by Record Holders (or their duly authorized agents) entitled to cast not less than the Special Meeting Percentage of all votes entitled to be cast at the meeting to be called pursuant to such requests.  Nothing contained in this subsection (k) shall in any way be construed to suggest or imply that the Company or any Shareholder shall not be entitled to contest the validity of any request, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).
 




Section 9.2              Notice.   If and to the extent required by law, the Secretary shall give to each Shareholder entitled to vote at such meeting and to each Shareholder not entitled to vote who is entitled to notice of the meeting written notice stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, either by mail, by recognized national courier service, by presenting it to such Shareholder personally, by leaving it at the Shareholder’s residence or usual place of business or by any other means, including electronic delivery, permitted by the Delaware LLC Act, the Exchange Act and any applicable Exchange Rule.  If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the Shareholder at the Shareholder’s address as it appears on the records of the Company, with postage thereon prepaid.  No business shall be transacted at a Shareholder Requested Meeting except as specifically designated in the notice.
 
Section 9.3             Quorum; Organization and Conduct.
 
(a)       Quorum.  A quorum for action at an annual or special meeting of Shareholders shall be the holders, present in person or by proxy, of a majority of the Outstanding Shares entitled to vote at the meeting; provided, however , that a quorum for the approval of any proposal that requires a Share Separate Class Approval or a Share Super-Majority Approval shall be the holders of that number of each class and series of Shares required to approve the proposal in question.
 
(b)        Organization and Conduct .  Every meeting of Shareholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment, by the Chairman of the Board, if there be one, or, in the case of the absence of the Chairman of the Board, by one of the following officers present at the meeting: the Vice Chairman of the Board, if there be one, the President, the Vice Presidents in their order of rank and seniority, or, in the absence of such officers, a chairman chosen by the Shareholders by the vote of a majority of the votes cast by Shareholders present in person or by proxy.  The Secretary, or, in the Secretary’s absence, an Assistant Secretary, or in the absence of both the Secretary and Assistant Secretaries, a person appointed by the Board of Directors or, in the absence of such appointment, a person appointed by the chairman of the meeting shall act as Secretary.  In the event that the Secretary presides at a meeting of the Shareholders, an Assistant Secretary shall record the minutes of the meeting.  The order of business and all other matters of procedure at any meeting of Shareholders shall be determined by the chairman of the meeting.  The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of such chairman, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to Shareholders of record of the Company, their duly authorized proxies or other such persons as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to Shareholders of record of the Company entitled to vote on such matter, their duly authorized proxies or other such persons as the chairman of the meeting may determine; (d) limiting the time allotted to questions or comments by participants; (e) maintaining order and security at the meeting; (f) removing any Shareholder who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; and (g) recessing or adjourning the meeting to a later date and time and place announced at the meeting.  Unless otherwise determined by the chairman of the meeting, meetings of Shareholders shall not be required to be held in accordance with the rules of parliamentary procedure or any established rules of order.  If a quorum shall not be present at any meeting of the Shareholders, the chairman of the meeting or the Shareholders entitled to vote at such meeting, present in person or by proxy, shall have the authority to adjourn the meeting from time to time to a specified date without notice other than announcement at the meeting.  At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.  The Shareholders present either in person or by proxy, at a meeting which has been duly called and convened, may continue to transact business until adjournment, notwithstanding the withdrawal of enough Shareholders to leave less than a quorum.
 
Section 9.4              Proxies.   A Shareholder may cast the votes entitled to be cast by the Shares owned of record by the Shareholder in person or by proxy granted by the Shareholder or by the Shareholder’s duly authorized agent in




writing, by any means permitted by the Board of Directors or in any manner required by law.  Such proxy or evidence of authorization of such proxy shall be filed with the Secretary of the Company before or at the meeting.  No proxy shall be valid more than eleven months after its date unless otherwise provided in the proxy.
 
Section 9.5             Voting of Shares by Certain Holders.
 
(a)        For all purposes of this Agreement, Shares registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock.  For all purposes of this Agreement, any director or other fiduciary may vote stock registered in his name as such fiduciary, either in person or by proxy.  Shares directly or indirectly owned by the Company shall not be voted at any meeting and shall not be counted in determining the total number of Outstanding Shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of Outstanding Shares at any given time.
 
(b)        The Board of Directors may adopt by resolution a procedure by which a Shareholder may certify in writing to the Company that any Shares registered in the name of the Shareholder are held for the account of a specified person other than the Shareholder.  The resolution shall set forth the class of Shareholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date or closing of the stock transfer books, the time after the record date or closing of the stock transfer books within which the certification must be received by the Company; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable.  On receipt of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the Shareholder of record of the specified stock in place of the Shareholder who makes the certification.
 
Section 9.6              Inspectors.   The Board of Directors, in advance of any meeting, may, but need not, appoint one or more individual inspectors or one or more entities that designate individuals as inspectors to act at the meeting or any adjournment thereof.  If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors.  In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the Board of Directors in advance of the meeting or at the meeting by the chairman of the meeting.  The inspectors, if any, shall determine the number of Shares outstanding and the voting power of each, the Shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all Shareholders.  Each such report shall be in writing and signed by him or her or by a majority of them if there is more than one inspector acting at such meeting.  If there is more than one inspector, the report of a majority shall be the report of the inspectors.  The report of the inspector or inspectors on the number of Shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.
 
Section 9.7             Advance Notice of Shareholder Nominees for Director and Other Shareholder Proposals.
 
(a)        Annual Meetings of Shareholders.  (1) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the Shareholders may be made at an annual meeting of Shareholders (i) pursuant to the Company’s notice of meeting by or at the direction of the Board of Directors or (ii) by any Shareholder of the Company (A) who holds, at the time of giving of notice provided for in this Section 9.7 and through and including the time of the annual meeting, a Certificate evidencing such Shareholder’s ownership of all Shares owned by such Shareholder, (B) who is entitled to vote at the meeting and present in person or by proxy at the meeting to answer questions concerning the nomination or business, and (C) who complies with the notice procedures set forth in this Section 9.7.
 




(2) For nominations or other business to be properly brought before an annual meeting by a Shareholder pursuant to clause (ii) of Section 9.7(a)(1), the Shareholder must have given timely notice thereof in writing to the Secretary of the Company and such other business must otherwise be a proper matter for Shareholder action.  To be timely, a Shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the Company not later than 5:00 p.m. (Eastern Time) on the one hundred twentieth (120th) day nor earlier than 5:00 p.m. (Eastern Time) on the one hundred fiftieth (150th) day prior to the first anniversary of the date of mailing of the notice for the preceding year’s annual meeting; provided, however, that in the event that the annual meeting is called for a date that is more than thirty (30) days earlier or later than the first anniversary of the date of the preceding year’s annual meeting, notice by the Shareholder to be timely must be so delivered not later than 5:00 p.m. (Eastern Time) on the tenth (10th) day following the earlier of the day on which (A) notice of the date of the annual meeting is mailed or otherwise made available or (B) public announcement of the date of the annual meeting is first made by the Company.  In no event shall the public announcement of a postponement of the mailing of notice for such annual meeting or of an adjournment of an annual meeting to a later date or time commence a new time period for the giving of Shareholder’s notice as described above.  No Shareholder may give a notice to the Secretary described in this Section 9.7(a)(2) unless such Shareholder holds a Certificate for all Shares owned by such Shareholder, and a copy of each Certificate shall accompany such Shareholder’s notice to the Secretary in order for such notice to be effective; provided, however , that (x) the provisions of this sentence and clause (A) of Section 9.7(a)(1)(ii) shall be inapplicable unless Shareholders are entitled to receive a Certificate evidencing the Shares owned by them, and (y) if clause (x) of this proviso is applicable, no Shareholder may give a notice to the Secretary described in this Section 9.7(a)(2) unless such Shareholder is, at the time of giving such notice and through and including the time of the annual meeting, a Shareholder of record of all Shares owned by such Shareholder.  Such Shareholder’s notice shall set forth (a) as to each person whom the Shareholder proposes to nominate for election or reelection as a director, (i) such person’s name, age, business address and residence address, (ii) the principal occupation or employment of the person for the past five years, (iii) the class and number of Shares of the Company that are beneficially owned or owned of record by such person and the investment intent of such acquisition, (iv) the record of all purchases and sales of securities of the Company by such person during the previous 12 month period including the dates of the transactions, the class, series and number of securities involved in the transactions and the consideration involved, and (v) all other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to the Exchange Act, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (b) as to any other business that the Shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any interest in such business of such Shareholder (including any anticipated benefit to the Shareholder therefrom) and of each beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the Shareholder giving the notice and any Shareholder Associated Person, (i) the class, series and number of securities of the Company which are owned of record by such Shareholder and by such Shareholder Associated Person, if any; (ii) the class, series and number of, and the nominee holder for, Shares owned beneficially but not of record by such Shareholder and by any Shareholder Associated Person, if any; (iii) the name and address of such Shareholder as it appears on the Company’s stock ledger and the address, if different, of such Shareholder Associated Person; (iv) the record of all purchases and sales of securities of the Company by such Shareholder or Shareholder Associated Person during the previous 12 month period including the dates of the transactions, the class, series and number of securities involved in the transactions and the consideration involved; and (v) to the extent known by such Shareholder, the name and address of any other Shareholder supporting the nominee for election or reelection as a director or the proposal of other business on the date of such Shareholder’s notice.
 
For the purposes of this Section 9.7, “Shareholder Associated Person” of any Shareholder shall mean (i) any Person controlling, directly or indirectly, or acting in concert with, such Shareholder, (ii) any beneficial owner of Common Shares or other securities issued by the Company owned of record or beneficially by such Shareholder and (iii) any Person controlling, controlled by or under common control with such Shareholder or Shareholder Associated Person.
 




(3) Notwithstanding anything in the second sentence of Section 9.7(a)(2) to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Company is increased and there is no public announcement by the Company naming all of the nominees for director or specifying the size of the increased Board of Directors at least one hundred (100) days prior to the first anniversary of the date of mailing of notice for the preceding year’s annual meeting, a Shareholder’s notice required by this Section 9.7 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive office of the Company not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Company.
 
(b)        Shareholder Proposals Causing Covenant Breaches.  At the same time as or prior to the submission of any Shareholder proposal of business to be conducted at an annual or special meeting that, if approved and implemented by the Company, would cause the Company to be in breach of any covenant of the Company in any existing or proposed debt instrument of the Company or agreement of the Company with any lender, the proponent Shareholder or Shareholders must submit to the Secretary at the principal executive offices of the Company (i) evidence satisfactory to the Board of Directors of the lender’s willingness to waive the breach of covenant or (ii) a plan for repayment of the indebtedness to the lender and the payment of all related interest, prepayment premiums, breakage costs and other amounts due and payable in connection with such repayment satisfactory to the Board of Directors, specifically identifying the source of funds to be used in the repayment and related payments and presenting evidence satisfactory to the Board of Directors that the identified funds could be applied by the Company to the repayment.
 
(c)        Shareholder Proposals Requiring Regulatory Notice, Consent or Approval.  At the same time or prior to the submission of any Shareholder proposal of business to be conducted at an annual or special meeting that, if approved, could not be implemented by the Company without notifying or obtaining the consent or approval of any federal, state, municipal or other regulatory body, the proponent Shareholder or Shareholders must submit to the Secretary at the principal executive offices of the Company (i) evidence satisfactory to the Board of Directors that any and all required notices, consents or approvals have been given or obtained or (ii) a plan, satisfactory to the Board of Directors, for making the requisite notices or obtaining the requisite consents or approvals, as applicable, prior to the implementation of the proposal.
 
(d)        Special Meetings of Shareholders .  Only such business shall be conducted at a special meeting of Shareholders as shall have been brought before the meeting pursuant to the Company’s notice of meeting.  Nominations of persons for election to the Board of Directors may only be made at a special meeting of Shareholders at which directors are to be elected: (i) pursuant to the Company’s notice of meeting for a meeting called by the Chairman or the Board of Directors by or at the direction of the Board of Directors or (ii) provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any Shareholder of the Company (A) who holds, at the time of giving of notice provided for in this Section 9.7(d) and through and including the time of the special meeting, a Certificate evidencing such Shareholder’s ownership of all Shares owned by such Shareholder, (B) who is entitled to vote at the meeting and present in person or by proxy at the meeting to answer questions concerning the nomination or business and (C) who complies with the notice procedures set forth in this Section 9.7(d).  If, pursuant to the request of the Chairman, the President or a majority of the members of the Board of Directors, the Company calls a special meeting of Shareholders for the purpose of electing one or more directors to the Board of Directors, any such Shareholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Company’s notice of meeting, if the Shareholder’s notice contains the information required by Section 9.7(a)(2) and the notice has been delivered to the Secretary at the principal executive offices of the Company not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting nor later than the later of (x) the ninetieth (90th) day prior to such special meeting or (y) the tenth (10th) day following the day on which public announcement is first made of the date of such special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.  In no event shall the public announcement of a postponement or adjournment of a special meeting to a later date or time commence a new time period for the giving of a Shareholder’s notice as described above. No Shareholder may give a notice to the Secretary provided for in this Section 9.7(d) unless such Shareholder holds a Certificate for all Shares owned by such Shareholder, and a copy of each Certificate shall accompany such Shareholder’s notice to the Secretary in order for such




notice to be effective; provided, however, that (x) the provisions of this sentence and clause (A) of Section 9.7(d)(ii) shall be inapplicable unless Shareholders are entitled to receive a Certificate evidencing the Shares owned by them, and (y) if clause (x) of this proviso is applicable, no Shareholder may give a notice to the Secretary described in this Section 9.7(d) unless such Shareholder is, at the time of giving such notice and through and including the time of the special meeting, a Shareholder of record of all Shares owned by such Shareholder.
 
(e)        General.  (1) Upon written request by the Secretary or the Board of Directors or any committee thereof, any Shareholder proposing a nominee for election as a director or any proposal for other business at a meeting of Shareholders shall provide, within three business days of delivery of such request (or such other period as may be specified in such request), written verification, satisfactory to the Secretary or the Board of Directors or any committee thereof, in his, her or its sole discretion, of the accuracy of any information submitted by the Shareholder pursuant to this Section 9.7.  If a Shareholder fails to provide such written verification within such period, the Secretary or the Board of Directors or any committee thereof may treat the information as to which written verification was requested as not having been provided in accordance with the procedures set forth in this Section 9.7.
 
(2) Only such persons who are nominated in accordance with the procedures set forth in this Section 9.7 shall be eligible to serve as directors and only such business as shall have been brought before the meeting with the procedures set forth in this Section 9.7 shall be transacted at a meeting of Shareholders.  The chairperson of the meeting shall have the power and duty to determine whether a nomination proposed to be made or any business proposed to be brought before the meeting was made at or brought before the meeting, as the case may be, in accordance with the procedures set forth in this Section 9.7 and, if any proposed nomination or business is not in compliance with this Section 9.7, to declare that such nomination or business is out of order and should be disregarded.

(3) For purposes of this Section 9.7, (a) the “date of mailing of the notice” shall mean the date of the proxy statement for the solicitation of proxies for election of directors and (b) “public announcement” shall mean disclosure (i) in a press release reported by the Dow Jones News Service, Associated Press or comparable news service or (ii) in a document publicly filed by the Company with the Commission.
 
(4) The Company shall not be required to include in the Company’s proxy statement a Shareholder nomination of one or more persons for election to the Board of Directors unless (i) such nomination has been properly made in accordance with the provisions of this Section 9.7 and (ii) the Board of Directors has endorsed such nomination.  The Company shall not be required to include in the Company’s proxy statement a Shareholder proposal other than a Board of Directors nomination unless (i) such proposal has been properly made in accordance with the provisions of this Section 9.7 and (ii) either the Board of Directors has endorsed such proposal or the proposal has been made by Shareholders holding not less than 25% of the Shares required to approve the proposal (or such lesser percentage as may be required by law).  In addition, the Company shall not be required to include in the Company’s proxy statement a Shareholder proposal of business to be brought before an annual or special meeting of Shareholders unless the proponent Shareholder or Shareholders shall have complied with (i) all applicable requirements of state and federal law and the rules and regulations thereunder, including without limitation Rule 14a-8 (or any successor provision) under the Exchange Act, and (ii) the applicable procedures and other requirements set forth in this Section 9.7.  Nothing in this Section 9.7 shall be deemed to affect any right of the Company to omit a Shareholder proposal from the Company’s proxy statement under the Exchange Act, including without limitation nominations of persons for election to the Board of Directors and business to be brought before the Shareholders at an annual or special meeting of Shareholders.  A Shareholder proposal properly made in accordance with the provisions of this Section 9.7 shall be considered at the meeting with respect to which it was made even if such proposal does not appear in the Company’s proxy statement for that meeting.
 
(5) The Board of Directors may from time to time require any person nominated to serve on the Board of Directors to agree in writing with regard to matters of business ethics and confidentiality while such nominee serves as a Director, such agreement to be on the terms and in a form determined satisfactory by the Board of Directors, as amended and supplemented from time to time in the discretion of the Board of Directors.  The terms of such agreement may be




substantially similar to the Code of Business Conduct and Ethics of the Company or any similar code promulgated by the Company or may differ from or supplement such Code of Business Conduct and Ethics or other code.
 
Section 9.8              Actions of Shareholders by Written Consent.    Any action required or permitted to be taken at a meeting of Shareholders may be taken without a meeting only by a unanimous written consent of the Shareholders entitled to vote on the matter which sets forth the action. 
 
ARTICLE X
INDEMNIFICATION
 
Section 10.1           Indemnification.
 
(a)        To the fullest extent permitted by law but subject to the limitations expressly provided in this Agreement or in any Bylaws of the Company, all Indemnitees shall be indemnified and held harmless by the Company from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, whether or not by or in the right of the Company, in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, in connection with any act or omission performed, or omitted to be performed, by such Indemnitee in good faith on behalf of or with respect to the Company or by reason of its status as an Indemnitee; provided that the Indemnitee shall not be indemnified and held harmless if there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Section 10.1, the Indemnitee acted in bad faith or engaged in fraud, willful misconduct, or in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful.
 
(b)        To the fullest extent permitted by law, expenses (including legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant to Section 10.1 in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to a determination that the Indemnitee is not entitled to be indemnified upon receipt by the Company of any undertaking by or on behalf of the Indemnitee to repay such amount if it shall be determined that the Indemnitee is not entitled to be indemnified as authorized in this Section 10.1.
 
(c)        The indemnification, advancement of expenses and other provisions of this Section 10.1 shall be in addition to any other rights to which an Indemnitee may be entitled under any agreement, pursuant to any vote of the holders of Outstanding Shares entitled to vote on such matter, pursuant to a vote of the Board of Directors, as a matter of law or otherwise, both as to actions in the Indemnitee’s capacity as an Indemnitee and as to actions in any other capacity, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee.
 
(d)        The Company may purchase and maintain insurance, on behalf of its Directors and Officers, and such other Persons as the Board of Directors shall determine, against any liability that may be asserted against or expense that may be incurred by such Person in connection with the Company’s activities or such Person’s activities on behalf of the Company, regardless of whether the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement or otherwise.
 
(e)        For purposes of the definition of Indemnitee in Section 1.1, the Company shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by such Indemnitee of his or her duties to the Company also imposes duties on, or otherwise involves services by, such Indemnitee to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute “fines” within the meaning of this Section 10.1; and action taken or omitted by such Indemnitee with respect to any employee benefit plan in the performance of such Indemnitee’s duties for




a purpose reasonably believed by him or her to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose that is in, or not opposed to, the best interests of the Company.
 
(f)         Any indemnification pursuant to this Section 10.1 shall be made only out of the assets of the Company, it being agreed that the Shareholders shall not be personally liable for such indemnification and shall have no obligation to contribute or loan any monies or property to the Company to enable it to effectuate such indemnification.
 
(g)        An Indemnitee shall not be denied indemnification in whole or in part under this Section 10.1 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement or applicable law.
 
(h)        The indemnification, advancement of expenses and other provisions of this Section 10.1 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons.
 
(i)         No amendment, modification or repeal of this Section 10.1 or any provision hereof shall in any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be indemnified by the Company, nor the obligations of the Company to indemnify any such Indemnitee under and in accordance with the provisions of this Section 10.1 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.
 
(j)         The Company shall have the power, with the approval of the Board of Directors, to provide such indemnification and advancement of expenses to a person who served a predecessor of the Company in any of the capacities described above and to any employee or agent of the Company or a predecessor of the Company.
 
(k)        The provisions of this Article X shall be applicable to all claims, demands, actions, suits or proceedings made or commenced after the adoption thereof whether arising from acts or omissions to act occurring before or after its adoption.
 
Section 10.2           Exculpation of Liability.
 
(a)        The personal liability of each member of its Board of Directors to the Company, its Shareholders or any other Person bound by this Agreement is hereby eliminated for monetary damages for breach of fiduciary duty as a Director; provided, however , that, the foregoing shall not eliminate the liability of a director (i) for any breach of such director’s duty of loyalty to the Company or the Shareholders as modified by this Agreement, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or (iii) for any transaction from which such director derived an improper personal benefit.
 
(b)        Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall be liable for monetary damages to the Company, the Shareholders or any other Person bound by this Agreement for losses sustained or liabilities incurred as a result of any act or omission of an Indemnitee unless there has been a final, non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter in question, the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful.
 
(c)        The Board of Directors may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents, and the Board of Directors shall not be responsible for any misconduct or negligence on the part of any such agent appointed by the Board of Directors in good faith.
 




(d)        The provisions of this Agreement, to the extent that they restrict or eliminate or otherwise modify the duties (including fiduciary duties) and liabilities of an Indemnitee otherwise existing at law or in equity, are agreed by the Shareholders to replace such other duties and liabilities of such Indemnitee.
 
(e)        Any amendment, modification or repeal of this Section 10.2 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the liability of any Indemnitee and other protective provisions under this Section 10.2 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted and provided such Person became an Indemnitee hereunder prior to such amendment, modification or repeal.
 
Section 10.3            Indemnification of the Company.    To the fullest extent permitted by law, each Shareholder will be liable to the Company (and any Subsidiaries or Affiliates thereof) for, and indemnify and hold harmless the Company (and any Subsidiaries or Affiliates thereof) from and against, all costs, expenses, penalties, fines or other amounts, including, without limitation, reasonable attorneys’ and other professional fees, whether third party or internal, arising from such Shareholder’s breach of or failure to fully comply with any covenant, condition or provision of this Agreement or any Bylaws, including, without limitation, Sections 8.1 through 8.2 of Article VIII and Section 9.7 of Article IX and the provisions of any Bylaws that may address similar matters as those contained in such sections, or any action by or against the Company (or any Subsidiaries or Affiliates thereof) in which such Shareholder is not the prevailing party, and shall pay such indemnitee such amounts on demand, together with interest on such amounts, which interest will accrue at the rate of interest provided in any Bylaws of the Company for indemnification amounts payable by a Shareholder to any such indemnitee pursuant to this Section 10.3 or any Bylaws or if there are no Bylaws of the Company or if any such Bylaws which may be in effect do not provide for a rate of interest for any such amounts then the rate of interest for such amounts shall be the lesser of 15% per annum compounded and the maximum amount permitted by law, in each case from the date such costs or the like are incurred until the receipt of repayment by the indemnitee.
 
Section 10.4            Limitation of Liability.    If there is any liability on the part of the Initial Shareholder or any Subsidiary or Affiliate thereof that is a real estate investment trust, with respect to any matter under this Agreement, the following shall apply: THE DECLARATION OF TRUST ESTABLISHING HPT (OR, AS APPLICABLE, SUCH SUBSIDIARY OR AFFILIATE), A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (EACH A “ DECLARATION ” AND TOGETHER THE “ DECLARATIONS ”), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME “HOSPITALITY PROPERTIES TRUST” (OR, AS APPLICABLE, THE NAME OF SUCH SUBSIDIARY OR AFFILIATE) REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HPT (OR, AS APPLICABLE, SUCH SUBSIDIARY OR AFFILIATE) SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, HPT (OR, AS APPLICABLE, SUCH SUBSIDIARY OR AFFILIATE).  ALL PERSONS DEALING WITH HPT (OR, AS APPLICABLE, SUCH SUBSIDIARY OR AFFILIATE) IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF HPT (OR, AS APPLICABLE, SUCH SUBSIDIARY OR AFFILIATE) FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
 
ARTICLE XI
BOOKS, RECORDS, ACCOUNTING AND REPORTS
 
Section 11.1            No Right of Inspection or Access.   Except as the Board of Directors may specify in one or more instances or categories, to the maximum extent permitted by Section 18-305(g) of the Delaware LLC Act, no Shareholder shall have the right to inspect, or obtain a copy of, any of the books and records of the Company, and no Shareholder shall have any right of access to any Director or Officer of the Company.  Any right of inspection or access granted by the Board of Directors shall be subject to such restrictions, including confidentiality restrictions, as the Board




of Directors may impose.  The Company shall not be required to furnish any reports or other information to the Shareholders except as otherwise required by applicable law, rule or regulation.
 
ARTICLE XII
DISSOLUTION AND LIQUIDATION
 
Section 12.1            Dissolution.   The Company shall dissolve, and its affairs shall be wound up, only upon the first to occur of the following:
 
(a)        an election to dissolve the Company by the Board of Directors that is approved by the holders of a Share Plurality;
 
(b)        the sale, exchange or other disposition of all or substantially all of the assets and properties of the Company and the Company’s Subsidiaries unless otherwise determined by the Board of Directors;
 
(c)        the entry of a decree of judicial dissolution of the Company pursuant to the provisions of the Delaware LLC Act; or
 
(d)        the reduction of the number of Shareholders to zero.
 
Section 12.2            Liquidator.   Upon dissolution of the Company, the Board of Directors shall select one or more Persons to act as Liquidator.  The Liquidator (if other than the Board of Directors) shall be entitled to receive such compensation for its services as may be approved by holders of a Share Majority.  The Liquidator (if other than the Board of Directors) shall agree not to resign at any time without 15 days’ prior notice and may be removed at any time, with or without cause, by notice of removal approved by holders of a Share Majority.  Upon dissolution, removal or resignation of the Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights, powers and duties of the original Liquidator) shall within 30 days thereafter be approved by holders of a Share Majority.  The right to approve a successor or substitute Liquidator in the manner provided herein shall be deemed to refer also to any such successor or substitute Liquidator approved in the manner herein provided.  Except as expressly provided in this Article XII, the Liquidator approved in the manner provided herein shall have and may exercise, without further authorization or consent of any of the parties hereto, all of the powers conferred upon the Board of Directors under the terms of this Agreement (but subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such powers) necessary or appropriate to carry out the duties and functions of the Liquidator hereunder for and during the period of time required to complete the winding up and liquidation of the Company as provided for herein.
 
Section 12.3            Liquidation.   The Liquidator shall proceed to dispose of the assets of the Company, discharge its liabilities, and otherwise wind up its affairs in such manner and over such period as determined by the Liquidator, subject to the applicable provisions of the Delaware LLC Act.
 
Section 12.4            Cancellation of Certificate of Formation.   Upon the completion of the distribution of Company cash and property as provided in Section 12.3 in connection with the liquidation of the Company, the Certificate of Formation and all qualifications of the Company as a foreign limited liability company in jurisdictions other than the State of Delaware shall be canceled and such other actions as may be necessary to terminate the Company shall be taken.
 
Section 12.5            Return of Contributions.   No Shareholder, Director or Officer of the Company will be personally liable for, or have any obligation to contribute or loan any monies or property to the Company to enable it to effectuate, the return of any capital contributions of any Shareholder or Shareholders, or any portion thereof, it being expressly understood that any such return shall be made solely from Company assets.
 
Section 12.6            Waiver of Partition.   To the maximum extent permitted by law, each Shareholder hereby waives any right to partition of the Company property.
 




Section 12.7            No Shareholder Right to Dissolve.   Except as specifically contemplated by Section 12.1, the Shareholders shall have no right to dissolve or liquidate the Company.

ARTICLE XIII
AMENDMENT OF AGREEMENT
 
Section 13.1           Amendment of Limited Liability Company Agreement.
 
(a)        General Amendments .  Except as provided in Section 13.1(b), the Board of Directors may amend any of the terms of this Agreement but only in compliance with the terms, conditions and procedures set forth in this Section 13.1(a).  If the Board of Directors desires to amend any provision of this Agreement other than pursuant to Section 13.1(b), then it shall first adopt a resolution setting forth the amendment proposed, declaring its advisability, and either calling a special meeting of the Shareholders entitled to vote in respect thereof for the consideration of such amendment or directing that the amendment proposed be considered at the next annual meeting of the Shareholders.  Amendments to this Agreement may be proposed only by or with the consent of the Board of Directors.  In the event that applicable law requires that amendments may be proposed by the Shareholders, such amendments may be proposed only by the holders of the percentage of Shares specified by law or if no such percentage is specified then by the holders of 25% of the Outstanding Shares; in addition, no such proposal shall be considered unless such proposal has been properly made in accordance with the provisions of Section 9.7.  A special or annual meeting to consider any such proposal shall be called and held upon notice in accordance with Article IX of this Agreement.  The notice shall set forth such amendment in full or a brief summary of the changes to be effected thereby, as the Board of Directors shall deem advisable.  At the meeting, a vote of Shareholders entitled to vote thereon shall be taken for and against the proposed amendment.  A proposed amendment shall be effective upon its approval in accordance with the provisions of Section 9.1(b).
 
(b)        Amendments to be Adopted Solely by the Board of Directors.  Notwithstanding Section 13.1(a), the Board of Directors, without the approval or any other action of any Shareholder, may amend any provision of this Agreement, and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect:
 
(i)    change in the name of the Company, the location of the principal place of business of the Company, the registered agent of the Company or the registered office of the Company;
 
(ii)    the admission, substitution or removal of Shareholders in accordance with this Agreement;
 
(iii)  any change as to which the Board of Directors reasonably determines is customarily of the type contained in the bylaws of a corporation organized under the Delaware General Corporation Law, including without limitation, any of the provisions of Articles IV, VII, IX, X, XI and XV;
 
(iv)   a change that the Board of Directors determines (A) does not adversely affect the Shareholders (including any particular class or series of Shares as compared to other classes or series of Shares) in any material respect, (B) to be necessary or appropriate to (1) satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute (including the Delaware LLC Act) or (2) facilitate the trading of the Shares (including the division of any class or series of Outstanding Shares into different classes or series to facilitate uniformity of tax consequences within such classes or series of Shares) or comply with any rule, regulation, guideline or requirement of any National Securities Exchange on which the Common Shares or other securities of the Company are or will be listed for trading, compliance with any of which the Board of Directors deems to be in the best interests of the Company and the Shareholders, (C) is required to effect the intent of the provisions of




this Agreement or is otherwise contemplated by this Agreement or (D) is required or desired to correct any ambiguity or mistake in this Agreement determined to be such by the Board of Directors;
 
(v)    notwithstanding the provisions of Section 13.1(b)(iv)(A), any change that the Board of Directors determines to be in the best interest of the Shareholders of the Company as a whole and regardless of whether or not such provision is adverse to any class or series of Shares or particular Shareholder or group of Shareholders;
 
(vi)   a change in the fiscal year or taxable year of the Company and any other changes that the Board of Directors determines to be necessary or appropriate as a result of a change in the fiscal year or taxable year of the Company including, if the Board of Directors shall so determine, a change in the definition of “Quarter”;
 
(vii)  notwithstanding the provisions of Section 13.1(b)(iv)(A), an amendment that the Board of Directors determines to be necessary or appropriate in connection with the authorization or issuance of any class or series of Shares or other securities of the Company pursuant to Section 5.3;
 
(viii) an amendment that the Board of Directors, in its sole discretion, determines to be necessary or appropriate to implement a defensive shareholder rights plan similar to a shareholder rights plan, or “poison pill,” for corporations, including the issuance of a dividend of rights to each Shareholder that would become exercisable if any Person or group (an “Acquiring Person”) acquires ownership in excess of a specified percentage of the Outstanding Shares or initiates a tender offer for in excess of that specified percentage of the Outstanding Shares; and the provisions of such a plan may include provisions that delegate all or certain decisions to Directors who have specified qualifications, including a lack of a relationship to the Acquiring Person and/or specified tenure on the Board of Directors;
 
(ix)  any amendment expressly permitted in this Agreement to be made by the Board of Directors acting alone;
 
(x)   an amendment effected, necessitated or contemplated by a Merger Agreement approved in accordance with Section 14.3;
 
(xi)  an amendment that the Board of Directors determines to be necessary or appropriate to reflect and account for the formation by the Company of, or investment by the Company in, any corporation, partnership, joint venture, limited liability company or other entity; or
 
(xii)  any other amendments substantially similar to the foregoing.
 
Section 13.2           Amendment Requirements.
 
(a)        Notwithstanding the provisions of Section 13.1, no provision of this Agreement that establishes a percentage of Outstanding Shares required to take any action shall be amended, altered, changed, repealed or rescinded in any respect that would reduce such voting percentage unless such amendment is approved by the affirmative vote of holders of Outstanding Shares whose aggregate Outstanding Shares constitute not less than the voting requirement sought to be reduced.
 
(b)        Notwithstanding the provisions of Section 13.1, no amendment to this Agreement may (i) enlarge the obligations of any Shareholder without its consent, unless such shall be deemed to have occurred as a result of an amendment approved pursuant to Section 13.2(c), (ii) change Section 12.1(a), (iii) give any Person the right to dissolve the Company other than in accordance with Section 12.1 or (iv) change the term of existence of the Company.
 




(c)        Except as provided in Section 14.3, and without limitation of the Board of Directors’ authority to adopt amendments to this Agreement without the approval of any Shareholders as contemplated in Section 13.1, any amendment that would have a material adverse effect on the rights or preferences of any class of Shares in relation to other classes of Shares must be approved by the holders of not less than a majority of the Outstanding Shares of the class affected.
 
ARTICLE XIV
MERGER, CONSOLIDATION OR CONVERSION
 
Section 14.1            Authority.   The Company may merge or consolidate with one or more limited liability companies or “other business entities” as defined in the Delaware LLC Act, or convert into another entity, whether such entity is formed under the laws of the State of Delaware or any other state of the United States of America, pursuant to a written agreement of merger or consolidation (“ Merger Agreement ”) or a written plan of conversion (“ Plan of Conversion ”), as the case may be, in accordance with this Article XIV.
 
Section 14.2            Procedure for Merger, Consolidation or Conversion.   Merger, consolidation or conversion of the Company pursuant to this Article XIV requires the prior approval of the Board of Directors.
 
(a)        If the Board of Directors shall determine to consent to the merger or consolidation, the Board of Directors shall approve the Merger Agreement, which shall set forth:
 
(i)    the names and jurisdictions of formation or organization of each of the business entities proposing to merge or consolidate;
 
(ii)   the name and jurisdiction of formation or organization of the business entity that is to survive the proposed merger or consolidation (the “ Surviving Business Entity ”);
 
(iii)    the terms and conditions of the proposed merger or consolidation;

(iv)    the manner and basis of canceling the rights or securities of, or interests in, each constituent entity or of exchanging or converting the rights or securities of, or interests in, each constituent business entity for, or into, cash, property, rights, or securities of or interests in, the Surviving Business Entity; and if any rights or securities of, or interests in, any constituent business entity are not to be exchanged or converted solely for, or into, cash, property, rights, or securities of or interests in, the Surviving Business Entity, the cash, property, rights, or securities of or interests in, any limited liability company or other business entity which the holders of such rights, securities or interests are to receive;
 
(v)    a statement of any changes in the constituent documents or the adoption of new constituent documents (the certificate of formation or limited liability company agreement, articles or certificate of incorporation, articles of trust, declaration of trust, certificate or agreement of limited partnership or other similar charter or governing document) of the Surviving Business Entity to be effected by such merger or consolidation;
 
(vi)   the effective time of the merger or consolidation, which may be the date of the filing of the certificate of merger or consolidation pursuant to Section 14.4 or a later date specified in or determinable in accordance with the Merger Agreement (provided, that if the effective time of the merger or consolidation is to be later than the date of the filing of the certificate of merger or consolidation, the effective time shall be fixed no later than the time of the filing of the certificate of merger or consolidation and stated therein); and
 




(vii)  such other provisions with respect to the proposed merger or consolidation that the Board of Directors determines to be necessary or appropriate.
 
(b)        If the Board of Directors shall determine to consent to the conversion, the Board of Directors may approve and adopt a Plan of Conversion containing such terms and conditions that the Board of Directors determines to be necessary or appropriate.
 
Section 14.3           Approval by Shareholders of Merger, Consolidation or Conversion.
 
(a)        Except as provided in Section 14.3(d), the Board of Directors, upon its approval of the Merger Agreement or Plan of Conversion, as the case may be, shall direct that the Merger Agreement or Plan of Conversion, as applicable, be submitted to a vote of Shareholders, whether at an annual meeting or a special meeting, in either case in accordance with the requirements of Article IX.  A copy or a summary of the Merger Agreement or Plan of Conversion, as applicable, shall be included in or enclosed with the notice of meeting.
 
(b)        Except as provided in Section 14.3(d), the Merger Agreement or Plan of Conversion, as applicable, shall be approved upon receiving the affirmative vote or consent of the holders of a Share Plurality.
 
(c)        Except as provided in Section 14.3(d), after such approval by vote or consent of the Shareholders, and at any time prior to the filing of the certificate of merger or a certificate of conversion pursuant to Section 14.4, the merger, consolidation or conversion may be abandoned or amended pursuant to provisions therefor, if any, set forth in the Merger Agreement or the Plan of Conversion, as the case may be.
 
(d)        Notwithstanding anything else contained in this Article XIV or in this Agreement, the Board of Directors is permitted without Shareholder approval to create, dissolve, merge, consolidate or convert the Company or any Subsidiary, or convey all of the Company’s assets to another limited liability entity, if the principal purpose of such action, as determined by the Board of Directors, is to effect a change in the legal form of the Company’s business, including to change the Company into a corporation, limited partnership, trust or other legal entity, to change the jurisdiction of organization of the Company or any combination of the foregoing.
 
(e)        Notwithstanding anything else contained in this Article XIV or in this Agreement, the Board of Directors is permitted without Shareholder approval to mortgage, sell and leaseback, pledge, hypothecate, or grant a security interest in, some, all or substantially all of the assets of the Company or the Company’s Subsidiaries and permit the sale upon foreclosure or other realization of such an encumbrance.
 
(f)         Shareholders are not entitled to dissenters’ rights of appraisal in the event of a merger, consolidation or conversion involving the Company, a sale of all or substantially all of the assets of the Company or the Company’s Subsidiaries, or any other transaction or event.
 
Section 14.4            Certificate of Merger or Conversion.   Upon the required approval by the Board of Directors and the Shareholders (if required) of a Merger Agreement or a Plan of Conversion, as the case may be, a certificate of merger or consolidation or certificate of conversion, as applicable, shall be executed and filed with the Secretary of State of the State of Delaware in conformity with the requirements of the Delaware LLC Act.
 
Section 14.5            Business Combination Limitations.   Notwithstanding any other provision of this Agreement, but in addition to the transfer restrictions contained in this Agreement, with respect to any “Business Combination” (as such term is defined in Section 203 of the Delaware General Corporation Law), the provisions of Section 203 of the Delaware General Corporation Law shall be applied with respect to the Company as though the Company were a Delaware corporation, the Shareholders were stockholders of such corporation and the Board of Directors was the board of directors of such corporation.  Any amendment of this Section shall be governed by Article XIII.
 




ARTICLE XV
GENERAL PROVISIONS
 
Section 15.1            Fiscal Year.   The fiscal year of the Company shall be a fiscal year ending December 31 or as otherwise determined by the Board of Directors.
 
Section 15.2            Addresses and Notices.   Any notice, demand, request, report or proxy materials required or permitted to be given or made to a Shareholder under this Agreement shall be in writing and shall be deemed given or made when delivered in person, by mail, by recognized national courier service, by presenting it to such Shareholder personally, by leaving it at the Shareholder’s residence or usual place of business or by any other means, including electronic delivery, permitted by the Delaware LLC Act, the Exchange Act and any applicable Exchange Rule.  Any notice to the Company shall be deemed given if received by the Secretary at the principal office of the Company designated by the Board of Directors.  The Board of Directors and the Officers may rely and shall be protected in relying on any notice or other document from a Shareholder or other Person if believed by it to be genuine.
 
Section 15.3            Bylaws.   The Board of Directors is authorized to adopt Bylaws governing the affairs of the Company provided that such Bylaws are not inconsistent with this Agreement. For the avoidance of doubt, no bylaw shall be deemed to be inconsistent with this Agreement (i) if the Board had the authority, at the time the bylaw was adopted or any time thereafter, to remove the inconsistency pursuant to Section 13.1(b) or (ii) if such bylaw is furtherance of any provision of this Agreement.
 
Section 15.4            Further Action.   The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.
 
Section 15.5            Binding Effect.   This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.
 
Section 15.6            Integration.   This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
 
Section 15.7            Creditors.   None of the provisions of this Agreement shall be for the benefit of, or shall be enforceable by, any creditor of the Company.
 
Section 15.8            Waiver.   No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.
 
Section 15.9            Counterparts.   This Agreement may be executed in counterparts, all of which together shall constitute an agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart.  Each party shall become bound by this Agreement immediately upon affixing its signature hereto or, in the case of a Person acquiring a Share, as otherwise provided in this Agreement.
 
Section 15.10          Applicable Law.   This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to principles of conflict of laws.
 
Section 15.11          Invalidity of Provisions.   If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.
 




Section 15.12          Consent of Shareholders.   Each Shareholder hereby expressly consents and agrees that, whenever in this Agreement it is specified that an action may be taken without the consent of Shareholders or upon the affirmative vote or consent of less than all of the Shareholders, such action may be so taken without the consent of Shareholders or upon the concurrence of less than all of the Shareholders and each Shareholder shall be bound by the results of such action.
 
Section 15.13          Signatures.   The use of facsimile signatures affixed in the name and on behalf of the transfer agent and registrar of the Company on certificates representing Shares is expressly permitted by this Agreement.  Any Board of Directors or Shareholder written consent or approval may be evidenced by faxed signatures or other electronic representation delivered to the Secretary.
 
ARTICLE XVI
ARBITRATION
 
Section 16.1           Procedures for Arbitration of Disputes.       Any disputes, claims or controversies brought by or on behalf of any shareholder of the Company (which, for purposes of this Article XVI, shall mean any shareholder of record or any beneficial owner of shares of the Company, or any former shareholder of record or beneficial owner of shares of the Company), either on his, her or its own behalf, on behalf of the Company or on behalf of any series or class of shares of the Company or shareholders of the Company against the Company or any director, officer, manager (including The RMR Group LLC and The RMR Group Inc. or its or their successors), agent or employee of the Company, including disputes, claims or controversies relating to the application or enforcement of this Agreement or any Bylaws of the Company (all of which are referred to as “Disputes”) or relating in any way to such a Dispute or Disputes, shall on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the procedures and rules for arbitration prescribed by any Bylaws of the Company. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against directors, officers or managers of the Company and class actions by shareholders against those individuals or entities and the Company.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. Notwithstanding the foregoing, (a) the provisions of this Article XVI shall not apply to any request for a declaratory judgment or similar action regarding the meaning, interpretation or validity of any provision of this Agreement or any Bylaws of the Company, but such request shall be heard and determined by a court of competent jurisdiction and (b) in the event a Dispute involves both a question of the meaning, interpretation or validity of any provision of this Agreement or any Bylaws of the Company and any other matter in dispute, the arbitration of such other matter in dispute, if dependent upon a determination of the meaning, interpretation or validity of any provision of this Agreement or any Bylaws of the Company, shall be stayed until a final, non-appealable judgement regarding such meaning, interpretation or validity has been rendered by a court of competent jurisdiction.
 
Section 16.2           Award Final.       The award or decision of the arbitrator(s), which in the case of an appeal in accordance with the procedures and rules for arbitration prescribed in any Bylaws of the Company is the decision rendered by an appeal tribunal, shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between such parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators.  Judgment upon the Award may be entered in any court having jurisdiction.  To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made, except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.
 
Section 16.3           Costs and Expenses.       Except as otherwise set forth in this Agreement, including Section 10.3, or any Bylaws of the Company, or agreed between the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of the Company’s award to the claimant or the claimant’s attorneys.
 




Section 16.4           Beneficiaries.       This Article XVI is intended to benefit and be enforceable by the shareholders, directors, officers, managers (including The RMR Group LLC and The RMR Group Inc. or its or their successors), agents or employees of the Company and the Company and shall be binding on the shareholders of the Company and the Company, as applicable, and shall be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.
 
[Remainder of page intentionally left blank.]
  




IN WITNESS WHEREOF, the parties hereto have executed or have otherwise become bound by this Agreement as of the date first written above.
 
INITIAL SHAREHOLDER:
 
ADDITIONAL SHAREHOLDERS:
 
 
 
HOSPITALITY PROPERTIES TRUST
 
All Shareholders hereafter admitted
 
 
as Shareholders of the Company
 
 
pursuant to the Distribution or
 
 
otherwise in accordance with this
 
 
Agreement.
 
 
 
By:
/s/ John G. Murray
 
 
 
Name:
John G. Murray
 
 
 
Title:
President
 
 
 
[Signature Page to Amended and Restated Limited Liability Company Agreement]





Exhibit 3.3

 
 
 
 
TRAVELCENTERS OF AMERICA LLC
 
AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT
 
As Amended June 15, 2007
and November 9, 2009
and January 25, 2010
and May 13, 2010
and February 21, 2013
and May 20, 2013
and September 7, 2016
 
This Amended and Restated Limited Liability Company Agreement of TravelCenters of America LLC, a Delaware limited liability company (the “ Company ”), dated as of January 31, 2007, is entered into by and among Hospitality Properties Trust, a Maryland real estate investment trust (“ HPT ”), together with any other Persons who hereafter become Shareholders in TravelCenters of America LLC or parties hereto as provided herein.  This Agreement amends and restates in its entirety the Limited Liability Company Agreement of TravelCenters of America LLC, dated October 10, 2006 (as amended from time to time, the “ Original LLC Agreement ”).  HPT was the original holder of the limited liability company interests of the Company; subsequent transfers of such interests were made, but at the time of the execution hereof HPT is the owner of all of the outstanding limited liability company interests of the Company and, as of the date of the execution of this Agreement, is the sole member of the Company.  In consideration of the covenants, conditions and agreements contained herein, the parties hereto hereby agree to amend and restate the Original LLC Agreement in its entirety as follows:
 
ARTICLE I
DEFINITIONS
 
Section 1.1            Definitions.
 
The following definitions shall be for all purposes, unless otherwise clearly indicated to the contrary, applied to the terms used in this Agreement.  Additional definitions related to restrictions on ownership of Shares are contained in Article VIII.  “Acquiring Person” has the meaning assigned to such term in Section 13.1(b).
 
Affiliate ” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with the Person in question.  As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
 
Agreement ” means this Amended and Restated Limited Liability Company Agreement of TravelCenters of America LLC, as it may be amended, supplemented or restated from time to time.
 
Board of Directors ” has the meaning assigned to such term in Section 7.1(a).
 
Business Day ” means Monday through Friday of each week, except that a legal holiday recognized as such by the U.S.  Government shall not be regarded as a Business Day.
 
Certificate ” means a certificate (i) issued in global form in accordance with the rules and regulations of the Depository or (ii) in such other form as may be adopted by the Board of Directors that is issued by the Company to evidence ownership of one or more Shares or one or more other securities of the Company.




 
Certificate of Formation ” means the Certificate of Formation of the Company filed with the Secretary of State of the State of Delaware on October 10, 2006, which filing is hereby ratified and approved in all respects, as such Certificate of Formation may be amended, supplemented or restated from time to time.
 
Chairman of the Board ” has the meaning assigned to such term in Section 7.1(k).
 
Code ” means the Internal Revenue Code of 1986, as amended and in effect from time to time, or any successor to such statute.
 
Commission ” means the United States Securities and Exchange Commission.
 
Common Shares ” means Shares representing common limited liability company interests in the Company, as further described in Article V.
 
Company ” has the meaning assigned to such term in the preamble.
 
Delaware General Corporation Law ” means the Delaware General Corporation Law, as amended, supplemented or restated from time to time, or any successor to such statute.
 
Delaware LLC Act ” means the Delaware Limited Liability Company Act, as amended, supplemented or restated from time to time, or any successor to such statute.
 
Delivery Date ” has the meaning assigned to such term in Section 9.1(i).
 
Depository ” means, with respect to any Shares issued in global form, The Depository Trust Company and its successors and permitted assigns.
 
Director ” means a member of the Board of Directors of the Company.
 
Disputes ” has the meaning assigned to such term in Section 16.1.
 
Distribution ” means the distribution by HPT of all of the issued and outstanding Common Shares of the Company to the Transfer Agent, which distribution shall be effected by written instructions to distribute such Common Shares to each holder of record of HPT common shares, as further described in the Transaction Agreement.
 
Distribution Date ” means the date on which the Distribution takes place.
 
Exchange Act ” means the Securities Exchange Act of 1934, as amended, supplemented or restated from time to time, or any successor to such statute, and the applicable rules and regulations thereunder.
 
Exchange Rule ” means a rule of the National Securities Exchange on which the Common Shares or other securities of the Company are listed for trading.
 
HPT ” has the meaning assigned to such term in the prologue to this Agreement.
 
Indemnitee ” means (a) any natural Person who is or was an officer (including any Officer), director (including any Director), trustee, manager or partner of the Company or any Subsidiary of the Company, (b) any natural Person who is or was serving at the request of the Company as an officer, director, member, trustee, manager or partner of another Person ( provided that a Person shall not be an Indemnitee by reason of providing, on a fee-for-services basis, trustee, fiduciary or custodial services) and (c) any Person the Board of Directors designates as an “Indemnitee” for purposes of




this Agreement.  For purposes of this Agreement, HPT and Reit Management & Research The RMR Group LLC and The RMR Group Inc. , together with their respective officers and directors, are each designated as Indemnitees.
 
Initial Shareholder ” means HPT.
 
Liquidation Date ” means the date on which an event giving rise to the dissolution of the Company occurs.
 
Liquidator ” means one or more Persons selected by the Board of Directors to perform the functions described in Section 12.2 as liquidating trustee of the Company within the meaning of the Delaware LLC Act.
 
Meeting Record Date ” has the meaning assigned to such term in Section 9.1(i).
 
Merger Agreement ” has the meaning assigned to such term in Section 14.1.
 
National Securities Exchange ” means an exchange registered with the Commission under Section 6(a) of the Exchange Act, as amended, supplemented or restated from time to time, and any successor to such statute.
 
Officers ” has the meaning assigned to such term in Section 7.3(a).
 
Opinion of Counsel ” means a written opinion of counsel (who may be regular counsel to the Company or any of its Affiliates) acceptable to the Board of Directors.
 
Outstanding ” means, with respect to any securities of the Company, all securities of the Company that are issued by the Company and reflected as outstanding on the Company’s books and records as of the date of determination.
 
Person ” means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization or other enterprise (including an employee benefit plan), association, government agency or political subdivision thereof or other entity.
 
Plan of Conversion ” has the meaning assigned to such term in Section 14.1.
 
Prime Rate ” means the prime rate of interest as quoted from time to time by The Wall Street Journal or another source reasonably selected by the Company.
 
Pro Rata ” means apportioned equally among all Shares of the class or series in question.
 
Quarter ” means, unless the context requires otherwise, a fiscal quarter of the Company, or, with respect to the first fiscal quarter ending after the Distribution Date, the portion of such fiscal quarter after the Distribution Date.
 
Record Date ” means the date established by the Board of Directors for determining (a) the identity of the Record Holders entitled to notice of, or to vote at, any meeting of Shareholders or entitled to exercise rights in respect of any lawful action of Shareholders or (b) the identity of Record Holders entitled to receive any report or distribution or to participate in any offer.
 
Record Date Request Notice ” has the meaning assigned to such term in Section 9.1(f).
 
Record Holder ” means the Person in whose name Shares are registered on the books of the Transfer Agent as of the opening of business on a particular Business Day, or with respect to other securities of the Company, the Person in whose name any such other securities are registered on the books that the Company has caused to be kept as of the opening of business on such Business Day.
 




Request Record Date ” has the meaning assigned to such term in Section 9.1(f).
 
Securities Act ” means the Securities Act of 1933, as amended, supplemented or restated from time to time, or any successor to such statute, and the applicable rules and regulation thereunder.
 
Share Designation ” has the meaning assigned to such term in Section 5.3(b).
 
Share Majority ” means a majority of the Outstanding Common Shares.
 
Share Plurality ” means a majority of the Outstanding Shares of all classes and series of Shares with voting power, voting together as a single class, that have voted on the matter in question at the conclusion of voting thereon, as prescribed or determined by the Board of Directors.
 
Share Separate Class Approval ” means a majority of the Outstanding Shares of each class and series of Shares with voting power, voting separately by class and series.
 
Share Super-Majority Approval ” means 75% of the Outstanding Shares of each class and series of Shares with voting power, voting together as a single class.
 
Shares ” means the shares of any class or series of limited liability company interest in the Company (but excluding any options, rights, warrants and appreciation rights relating to a limited liability company interest in the Company), including Common Shares.
 
Shareholders ” means the holders of Shares that have been admitted to the Company as members of the Company in accordance with this Agreement.
 
Shareholder Requested Meeting ” has the meaning assigned to such term in Section 9.1(i).
 
Shareholder Associated Person ” has the meaning assigned to such term in Section 9.7(a).
 
Special Meeting Percentage ” has the meaning assigned to such term in Section 9.1(e).
 
Special Meeting Request ” has the meaning assigned to such term in Section 9.1(g).
 
Subsidiary ” means, with respect to any Person, (a) a corporation of which more than 50% of the voting power of shares entitled (without regard to the occurrence of any contingency) to vote in the election of directors or other governing body of such corporation is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person or a combination thereof, (b) a partnership (whether general or limited) in which such Person or a Subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if more than 50% of the partnership interests of such partnership (considering all of the partnership interests of the partnership as a single class) is owned, directly or indirectly, at the date of determination, by such Person, by one or more Subsidiaries of such Person, or a combination thereof, or (c) any other Person (other than a corporation or a partnership) in which such Person, one or more Subsidiaries of such Person, or a combination thereof, directly or indirectly, at the date of determination, has (i) at least a majority ownership interest or (ii) the power to elect or direct the election of a majority of the directors or other governing body of such Person.
 
Surviving Business Entity ” has the meaning assigned to such term in Section 14.2.
 
Transaction Agreement ” means the Transaction Agreement made on or about the date hereof by and among HPT, HPT TA Properties Trust, HPT TA Properties LLC, Reit Management & Research The RMR Group LLC and the Company, as the same may be amended, supplemented or restated from time to time.
 




transfer ” has the meaning assigned to such term in Section 4.4.
 
Transfer Agent ” means such bank, trust company or other Person (including the Company or one of its Affiliates) as shall be appointed from time to time by the Company to act as registrar and transfer agent for the Shares; provided that if no Transfer Agent is specifically designated for Shares or any other securities of the Company, the Company shall act in such capacity.
 
Treasury Regulations ” means the Treasury Regulations (including temporary and proposed regulations) promulgated by the United States Department of Treasury with respect to the Code or other federal tax statutes.
 
U.S. GAAP ” means United States generally accepted accounting principles as in effect from time to time.
 
Section 1.2            Construction.
 
Unless the context requires otherwise: (a) any pronoun used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns, pronouns and verbs shall include the plural and vice versa; (b) references to Articles and Sections refer to Articles and Sections of this Agreement; and (c) the term “include” or “includes” means include(s), without limitation, and “including” means including, without limitation.
 
Except as otherwise specifically provided herein, when referring to any action or determination of the Board of Directors, the phrase “sole and absolute discretion,” or words of similar import, shall mean that there shall be no standards for the exercise of such discretion other than as required by any applicable fiduciary duties as modified by the terms of this Agreement.
 
ARTICLE II
ORGANIZATION
 
Section 2.1             Formation .  The Initial Shareholder formed the Company as a limited liability company pursuant to the provisions of the Delaware LLC Act and hereby adopts this Agreement in its entirety as an amendment and restatement of the Original LLC Agreement of the Company.  Except as expressly provided to the contrary in this Agreement, the rights, duties (including fiduciary duties), liabilities and obligations of the Directors and Shareholders and the administration, dissolution and termination of the Company shall be governed by the Delaware LLC Act.  All Shares shall constitute personal property of the owner thereof for all purposes, and a Shareholder has no interest in specific Company property.
 
Section 2.2             Name .  The name of the Company shall be TravelCenters of America LLC.  The Company’s business may be conducted under any other name or names, as determined by the Board of Directors.  The Board of Directors may change the name of the Company at any time and from time to time and shall notify the Shareholders of such change in the next regular communication to the Shareholders.
 
Section 2.3             Registered Office; Registered Agent; Principal Office; Other Offices.   The Board of Directors may establish and change the principal office or place of business of the Company at any time and may cause the Company to establish other offices or places of business in various jurisdictions.  The name and address of the registered agent and the address of the registered office for service of process on the Company as required by the Delaware LLC Act are Corporation Service Company, 2711 Centerville Road, Wilmington, Delaware.
 
Section 2.4             Purposes and Powers.   The Company shall have the authority to engage in any lawful business, purpose or activity permitted by the Delaware LLC Act.  The Company shall possess and may exercise all powers and privileges granted or permitted by the Delaware LLC Act.
 




Section 2.5             Power of Attorney.   Each Shareholder hereby constitutes and appoints each of the Chief Executive Officer, the President and the Secretary of the Company and, if a Liquidator shall have been selected pursuant to Section 12.2, the Liquidator and each of their authorized officers and attorneys-in-fact, as the case may be, with full power of substitution, as his true and lawful agent and attorney-in-fact, with full power and authority in the name, place and stead of such Person, to execute (i) all agreements, instruments, certificates and other documents and take all actions necessary or appropriate to or for the furtherance and accomplishment of the purposes described in Section 2.4, and (ii) any duly adopted amendments to this Agreement.  The foregoing power of attorney is hereby declared to be irrevocable and a power coupled with an interest, and it shall survive and, to the maximum extent permitted by law, shall not be affected by the subsequent death, incompetency, disability, incapacity, dissolution, bankruptcy or termination of any Shareholder or the transfer of all or any portion of such Shareholder’s Shares and shall extend to such Shareholder’s heirs, successors, assigns and personal representatives.
 
Section 2.6             Term.   The Company’s existence shall be perpetual, unless and until it is dissolved in accordance with the provisions of Article XII.  The existence of the Company as a separate legal entity shall continue until the cancellation of the Certificate of Formation as provided in the Delaware LLC Act.
 
Section 2.7             Title to Company Assets.   Title to Company assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Company as an entity, and no Shareholder, Director or Officer, individually or collectively, shall have any ownership interest in such Company assets or any portion thereof.  Title to any or all of the Company assets may be held in the name of the Company or one or more nominees, as the Board of Directors may determine.
 
ARTICLE III
RIGHTS OF SHAREHOLDERS AND LIMITATIONS THEREOF
 
Section 3.1            Shareholders.
 
(a)        A Person shall be admitted as a Shareholder and shall, without further action, including execution of this Agreement, become a party to and become bound by the terms of this Agreement if such Person purchases or otherwise lawfully acquires any Shares to the fullest extent permitted by law.  A Person may become a Record Holder without the consent or approval of any of the Shareholders.  A Person may not become a Shareholder without acquiring one or more Shares.
 
(b)        The name and mailing address of each Shareholder shall be listed on the books and records of the Company maintained for such purpose by the Company or the Transfer Agent.  The Secretary of the Company shall update, or cause to be updated, the books and records of the Company from time to time as necessary to reflect accurately the information therein.
 
(c)        Except as otherwise provided by the Delaware LLC Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company.  The Directors, Officers and Shareholders shall have no liability under this Agreement or for any such debt, obligation or liability of the Company, in their capacity as such, except as expressly provided in this Agreement or the Delaware LLC Act.
 
(d)        Shareholders shall not have any right to resign from the Company; provided that when a transferee of all of a Shareholder’s Shares acquires such Shares, such transferring Shareholder shall cease to be a Shareholder (and member of the Company).
 
Section 3.2             Management of Business.   No Shareholder, in his capacity as such, shall participate in the operation or management of the Company’s business, transact any business in the Company’s name or have the power to sign documents for or otherwise bind the Company by reason of being a Shareholder.
 




Section 3.3             Outside Activities of the Shareholders.   Notwithstanding any duty (including any fiduciary duty) that might otherwise exist at law or in equity, any Shareholder shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Company, including business interests and activities in direct competition with the Company.  Notwithstanding any duty (including any fiduciary duty) that might otherwise exist at law or in equity, neither the Company nor any of the other Shareholders shall have any rights by virtue of this Agreement in any business ventures of any Shareholder.
 
ARTICLE IV
CERTIFICATES; RECORD HOLDERS; TRANSFER OF SHARES; REDEMPTION OF SHARES
 
Section 4.1             Certificates.   Upon the Company’s issuance of Shares or other securities to any Person, the Company may, but shall not be obligated to, issue one or more Certificates in the name of such Person evidencing the number of such Shares or securities being so issued.  In addition, subsequent to the issuance of such Shares or other securities, the Board of Directors may, but shall not be obligated to, provide that every Shareholder or other holder of such securities shall be entitled to have a Certificate certifying the number and class of Shares or securities owned by such Person.  Subsequent to the date hereof, the Board of Directors may, but shall not be obligated to, provide that, notwithstanding the foregoing, every Shareholder shall be entitled to have a Certificate certifying the number and class of Shares owned by such Shareholder.  Certificates shall be executed on behalf of the Company by the Chairman of the Board, President or any Vice President and the Secretary or any Assistant Secretary.  No Certificate shall be valid for any purpose until it has been countersigned by the Transfer Agent; provided, however, that if the Board of Directors elects to issue Shares or other securities in global form, the Certificates with regard thereto shall be valid upon receipt by the Depository and need not be countersigned.  Any or all of the signatures required on the Certificate may be by facsimile.  If any Officer or Transfer Agent who shall have signed or whose facsimile signature shall have been placed upon any such Certificate shall have ceased to be such Officer or Transfer Agent before such Certificate is issued by the Company, such Certificate may nevertheless be issued by the Company with the same effect as if such Person were such Officer or Transfer Agent at the date of issue.
 
Section 4.2            Mutilated, Destroyed, Lost or Stolen Certificates.
 
(a)        If any mutilated Certificate is surrendered to the Transfer Agent, the appropriate Officers on behalf of the Company shall execute, and the Transfer Agent shall countersign and deliver in exchange therefor, a new Certificate evidencing the same number and type of securities as the Certificate so surrendered.
 
(b)        The appropriate Officers on behalf of the Company shall execute and deliver, and the Transfer Agent shall countersign, a new Certificate in place of any Certificate previously issued if the Record Holder of the Certificate:
 
(i)         makes proof by affidavit, in form and substance satisfactory to the Company or to the Transfer Agent, that a previously issued Certificate has been lost, destroyed or stolen;
 
(ii)        requests the issuance of a new Certificate before the Company has notice that the Certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim;
 
(iii)       if requested by the Company or the Transfer Agent, delivers to the Company a bond, in form and substance satisfactory to the Company or the Transfer Agent, with a surety or sureties and with fixed or open penalty as the Company or the Transfer Agent may direct to indemnify the Company and the Transfer Agent against any claim that may be made on account of the alleged loss, destruction or theft of the Certificate; and
 
(iv)       satisfies any other reasonable requirements imposed by the Company or the Transfer Agent.
 




If a Shareholder fails to notify the Company within a reasonable time after such Shareholder has notice of the loss, destruction or theft of a Certificate, and a transfer of the Shares represented by the Certificate is registered before the Company or the Transfer Agent receives such notification, the Shareholder shall be precluded from making any claim against the Company or the Transfer Agent for such transfer or for a new Certificate.
 
(c)        As a condition to the issuance of any new Certificate under this Section 4.2, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Transfer Agent) reasonably connected therewith.
 
Section 4.3             Record Holders.    The Company shall be entitled to recognize the Record Holder as the owner of Shares or other securities issued by the Company and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Shares or other securities on the part of any other Person, regardless of whether the Company shall have actual or other notice thereof, except as otherwise provided by law or any applicable rule, regulation, guideline or requirement of any National Securities Exchange on which such Shares or securities are listed for trading.  Without limiting the foregoing, when a Person (such as a broker, dealer, bank, trust company or clearing corporation or an agent of any of the foregoing) is acting as nominee, agent or in some other representative capacity for another Person in acquiring and/or holding Shares or other securities, as between the Company on the one hand, and such other Persons on the other, such representative Person shall be the Record Holder of such Shares.
 
Section 4.4             Transfer Generally.    Except as otherwise set forth in this Agreement, the term “transfer,” when used in this Agreement with respect to any Shares, shall be deemed to refer to a transaction by which the holder of Shares assigns such Shares to another Person who is or becomes a Shareholder, and includes a sale, assignment, gift, exchange or any other disposition by law or otherwise, including any transfer upon foreclosure of any pledge, encumbrance, hypothecation or mortgage.  No Shares shall be transferred, in whole or in part, except in accordance with the terms and conditions set forth in this Article IV.  To the fullest extent permitted by law, any transfer or purported transfer of Shares not made in accordance with this Article IV shall be null and void.
 
Section 4.5            Registration and Transfer of Shares.
 
(a)        The Company shall keep or cause to be kept on behalf of the Company a register that, subject to such reasonable regulations as it may prescribe, will provide for the registration and transfer of both certificated and uncertificated Shares.  The Transfer Agent is hereby appointed registrar and transfer agent for the purpose of registering Shares and transfers of such Shares as herein provided.
 
(b)        The Company shall not recognize transfers of Certificates evidencing Shares unless such transfers are effected in the manner described in this Section 4.5.  Upon surrender of a Certificate for registration of transfer of any Shares evidenced by a Certificate in accordance with this Agreement, the appropriate Officers of the Company shall execute and deliver, and the Transfer Agent shall countersign and deliver, in the name of the holder or the designated transferee or transferees, as required pursuant to the Record Holder’s instructions, one or more new Certificates evidencing the same aggregate number and type of Shares as were evidenced by the Certificate so surrendered.  The Company shall not recognize any transfer of certificated Shares until any Certificates evidencing such Shares are surrendered for registration of transfer.  No charge shall be imposed by the Company for such transfer; provided that as a condition to the issuance of any new Certificate under this Section 4.5(b), the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed with respect thereto.
 
(c)        By acceptance of the transfer of any Shares in accordance with this Section 4.5, each transferee of Shares (including any nominee holder or an agent or representative acquiring such Shares for the account of another Person) (i) shall be admitted to the Company as a Shareholder with respect to the Shares so transferred to such Person when any such transfer or admission is reflected in the books and records of the Company, with or without execution of this Agreement, (ii) shall be bound by the terms of this Agreement, (iii) shall become the Record Holder of the Shares so transferred, (iv) represents that the transferee has the capacity, power and authority to enter into this Agreement, (v) grants




the power of attorney contained herein to the Officers of the Company and any Liquidator of the Company and (vi) makes the consents and waivers contained in this Agreement.  The transfer of any Shares and the admission of any new Shareholder shall not constitute an amendment to this Agreement.
 
ARTICLE V
ISSUANCE OF SHARES
 
Section 5.1             Issuance to Initial Shareholder.    Pursuant to the Original LLC Agreement, the Company issued one Common Share to the Initial Shareholder.  The Initial Shareholder owns 1 Common Share at the time of the execution of this Agreement, representing all of the issued and outstanding Shares.  Immediately prior to the Distribution on the Distribution Date, the Company will automatically be deemed to issue or have issued to the Initial Shareholder (which will continue to be a member of the Company through completion of the Distribution) such additional Common Shares so that the total number of Common Shares held by the Initial Shareholder will be equal to the number of Common Shares required to be distributed pursuant to the Transaction Agreement.  Upon completion of the Distribution and immediately following the admission of at least one Shareholder as a member of the Company in connection therewith, the Initial Shareholder shall cease to be a member of the Company.
 
Unless otherwise specified by the Board of Directors, no interest shall be paid by the Company on the capital contributions of any Shareholder, and no Shareholder shall be entitled to the withdrawal or return of its capital contribution.
 
Section 5.2            Rights of Holders of Common Shares.
 
(a)        The only class or series of Shares authorized and Outstanding on the date of this Agreement is the Common Shares.  All preferences, voting powers, relative, participating, optional or other special rights and privileges, and qualifications, limitations, or restrictions of the Common Shares are expressly made subject and subordinate to those that may be fixed by the Board of Directors with respect to any additional classes or series of Shares.
 
(b)        Except as otherwise required by law or this Agreement and subject to the preferential rights of any additional classes or series of Shares authorized by the Board of Directors, each holder of Common Shares shall have one vote in respect of each Common Share held by such Shareholder of record on the books of the Company on all matters submitted to a vote of Shareholders.
 
(c)        Subject to the preferential rights of any additional classes or series of Shares authorized by the Board of Directors, the holders of Common Shares shall be entitled to receive, when, as and if declared by the Board of Directors of the Company, out of the assets of the Company which are by law available therefor, distributions payable either in cash, in property or in securities of the Company.
 
(d)        In the event of any dissolution, liquidation or winding up of the affairs of the Company, after satisfaction (whether by payment or reasonable provision for payment) of creditors of the Company and after distribution in full of the preferential amounts, if any, to be distributed to the holders of other securities of the Company, the holders of Common Shares shall be entitled to receive (with or without participation of the holders of other securities of the Company, as determined by the Board of Directors at the time of authorization of such securities) all of the remaining assets of the Company of whatever kind available for distribution to the holders of the Common Shares ratably in proportion to the number of Common Shares by them unless otherwise provided by law.
 
Section 5.3            Issuances of Additional Company Securities.
 
(a)        The Company may issue additional Shares and other securities of the Company, and unsecured and secured debt obligations, debt obligations convertible into any class or series of Shares, or any combination of the foregoing, and options, rights, warrants, appreciation rights and other derivative rights relating to the securities of the




Company, for any Company purpose at any time and from time to time to such Persons for such consideration and on such terms and conditions as the Board of Directors shall determine, all without the approval of any Shareholder.
 
(b)        Additional Shares authorized to be issued by the Company pursuant to Section 5.3(a) may be authorized and/or issued in one or more classes or series, with such designations, preferences, rights, powers and duties (which may be senior to existing classes and series of Shares or other securities of the Company), as shall be fixed by the Board of Directors and reflected in a written action or actions approved by the Board of Directors in compliance with Section 7.1(i) (each, a “ Share Designation ”), including (i) the right to share in Company distributions; (ii) the rights upon dissolution and liquidation of the Company; (iii) whether, and the terms and conditions upon which, the Company may redeem such class or series of Shares; (iv) whether such class or series of Shares is issued with the privilege of conversion or exchange and, if so, the terms and conditions of such conversion or exchange; (v) the terms and conditions upon which each class or series of Shares will be issued, evidenced (or not evidenced) by certificates and assigned or transferred; and (vii) the right, if any, of each such class or series of Shares to vote on Company matters, including matters relating to the relative rights, preferences and privileges of such class or series of Shares.  A Share Designation (or any resolution of the Board of Directors amending any Share Designation) shall be effective when a duly executed (executed in accordance with Section 7.1(i)) original of the same is delivered to the Secretary of the Company for inclusion among the permanent records of the Company.  For the avoidance of doubt, any securities of the Company, in addition to additional classes or series of Shares, may be issued on such terms and conditions as the Board of Directors may determine.
 
(c)        The Board of Directors shall take all actions that it determines to be necessary or appropriate in connection with (i) each issuance of Shares and other securities of the Company, unsecured and secured debt obligations, debt obligations convertible into any class or series of Shares, or any combination of the foregoing, and options, rights, warrants, appreciation rights and other derivative rights relating to securities, issued pursuant to this Section 5.3; (ii) the admission of additional Shareholders; and (iii) all additional issuances of securities by the Company.  The Board of Directors shall determine the relative designations, preferences, rights, powers and duties of the holders of the Shares or other securities being so issued.  The Board of Directors shall do all things necessary to comply with the Delaware LLC Act and is authorized and directed to do all things that it determines to be necessary or appropriate in connection with any future issuance of securities pursuant to the terms of this Agreement, including compliance with any statute, rule, regulation or guideline of any federal, state or other governmental agency or any National Securities Exchange on which the Common Shares or other securities of the Company are listed for trading.
 
Section 5.4             No Preemptive Rights.   No Person shall have any preemptive, preferential or other similar right with respect to the issuance of any securities of the Company, whether unissued, held in the treasury or hereafter created.
 
Section 5.5             Rights of Additional Classes and Series of Shares.   Notwithstanding anything to the contrary contained in this Agreement, the voting and other rights of a particular class or series of Shares are subject to the voting and other rights of any class or series of Shares designated by the Board of Directors.
 
Section 5.6            Splits and Combinations.
 
(a)        The Company may make a Pro Rata distribution of securities to all Record Holders of one or more classes or series of Shares, or may effect a subdivision or combination of any class or series of Shares.
 
(b)        Whenever such a distribution, subdivision or combination is declared, the Board of Directors shall select a Record Date as of which the distribution, subdivision or combination shall be effective and shall send notice thereof to each applicable Record Holder thereof in compliance with all applicable laws and rules of any National Securities Exchange on which the Common Shares or other securities of the Company are listed for trading.
 
(c)        Unless otherwise determined by the Board of Directors, the Company shall not issue fractional Shares upon any distribution, subdivision or combination of Shares.  If a distribution, subdivision or combination of Shares would result in the issuance of fractional Shares but for the contrary provisions hereof, then unless otherwise determined




by the Board of Directors, each fractional Share shall be rounded to the nearest whole Share (and a 0.5 Share shall be rounded to the next higher Share).
 
Section 5.7             Fully Paid and Non-Assessable Nature of Shares.    All Shares issued pursuant to, and in accordance with the requirements of, this Article V shall be validly issued, fully paid and non-assessable Shares of the Company, except to the extent otherwise provided in this Agreement or a Share Designation.
 
ARTICLE VI
TAX TREATMENT
 
Section 6.1             Tax Treatment of the Company and the Initial Shareholder Prior to the Distribution. Prior to the time of the Distribution, the Company shall be treated as a disregarded entity for all purposes under the Code pursuant to Section 301.7701-2(c)(2)(i) of the Treasury Regulations.  The Initial Shareholder intends that no action be taken to treat the Company as a corporation under the Code prior to the Distribution.
 
Section 6.2             Tax Treatment of the Company and the Shareholders Subsequent to the Distribution.   Subsequent to the Distribution, pursuant to Section 7704 of the Code, the Company will be a publicly traded partnership and be treated as if it were a corporation for all purposes under the Code.  As a result, all Company items of income, gain, loss, deduction, expense and credit will be treated as tax attributes of the Company, and, for purposes of the Delaware LLC Act, each Shareholder will have no claim on and no right to any such tax attributes of the Company, in the same manner as corporate shareholders under the Code and the Delaware General Corporation Law.
 
ARTICLE VII
MANAGEMENT AND OPERATION OF BUSINESS
 
Section 7.1            Board of Directors.
 
(a)           Except as otherwise expressly provided in this Agreement, the business and affairs of the Company shall be managed by or under the direction of a Board of Directors (the “ Board of Directors ”).  As provided in Section 7.3, the Board of Directors shall have the power and authority to appoint Officers of the Company.  The Directors shall constitute “managers” within the meaning of the Delaware LLC Act.  No Shareholder, by virtue of such Shareholder’s status as such, shall have any management power over the business and affairs of the Company or actual or apparent authority to enter into, execute or deliver contracts on behalf of, or to otherwise bind, the Company.  Except as otherwise specifically provided in this Agreement and to the extent permitted by law, as near as practical, the authority, powers, functions and duties (including fiduciary duties) of the Board of Directors shall be identical to the authority, powers, functions and duties (including fiduciary duties) of the board of directors of a business corporation organized under the Delaware General Corporation Law.  In addition to the powers that now or hereafter can be granted to managers under the Delaware LLC Act and to all other powers granted under any other provision of this Agreement subject to Section 7.3, the Board of Directors, without Shareholder approval, shall have full power and authority to do, and to direct the Officers to do, all things (and on such terms as it determines to be necessary or appropriate) to conduct the business of the Company, to exercise all powers set forth in Section 2.4 and to effectuate the purposes set forth in Section 2.4, including the following:
 
(i)         the making of any expenditures, the lending or borrowing of money, the assumption or guarantee of, or other contracting for, indebtedness and other liabilities, the issuance of evidences of indebtedness, including indebtedness that is convertible into or exchangeable for Shares, and the incurring of any other obligations;
 
(ii)        the making of tax, regulatory and other filings, or rendering of periodic or other reports to governmental or other agencies having jurisdiction over the business or assets of the Company;





(iii)       the acquisition, disposition, mortgage, pledge, encumbrance, hypothecation or exchange of any or all of the assets of the Company or the transactions contemplated by Section 14.3(d);
 
(iv)       the use of the assets of the Company (including cash on hand) for any purpose consistent with the terms of this Agreement, including the financing of the conduct of the operations of the Company and its Subsidiaries; the lending of funds to other Persons; and the repayment of obligations of the Company and its Subsidiaries;
 
(v)        the negotiation, execution and performance of any contracts, conveyances or other instruments (including instruments that limit the liability of the Company under contractual arrangements to all or particular assets of the Company);
 
(vi)       the distribution of Company cash or other Company assets;
 
(vii)      the selection and dismissal of Officers, employees, agents, outside attorneys, accountants, consultants and contractors and the determination of their compensation and other terms of employment or hiring, the creation and operation of employee benefit plans, employee programs and employee practices;
 
(viii)     the maintenance of insurance for the benefit of the Company, the Shareholders and the Indemnitees;
 
(ix)       the formation of, or acquisition of an interest in, and the contribution of property and the making of loans to, any limited or general partnerships, joint ventures, corporations, limited liability companies or other relationships;
 
(x)        the control of any matters affecting the rights and obligations of the Company, including the bringing and defending of actions at law or in equity and otherwise engaging in the conduct of litigation, arbitration or remediation, and the incurring of legal expense and the settlement of claims and litigation;
 
(xi)       the indemnification of any Person including, without limitation, as set forth in Article X to the extent permitted by law;
 
(xii)      the entering into of listing agreements with any National Securities Exchange and the delisting of some or all of the Shares from, or requesting that trading be suspended on, any such exchange;

(xiii)     the purchase, sale or other acquisition or disposition of securities of the Company, or the issuance of unsecured and secured debt obligations, debt obligations convertible into any class or series of Shares, or any combination of the foregoing, or options, rights, warrants, appreciation rights and other derivative rights relating thereto; and
 
(xiv)     the entering into of agreements with any of its Affiliates.
 
(b)        The Board of Directors may from time to time determine the number of Directors then constituting the whole Board of Directors, provided tha t, effective immediately after the Distribution, such number shall be at least three and no more than seven.  Notwithstanding the foregoing, the Board of Directors, by unanimous vote of the Directors then in office, may change the minimum and maximum number of Directors; provided that the Board of Directors shall not decrease the number of Persons that constitutes the whole Board of Directors if such decrease would shorten the term of any Director.
 




(c)        Except as may be provided by the Board of Directors in setting the terms of any class or series of Shares, any and all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of the remaining Directors in office, even if the remaining Directors do not constitute a quorum, and any Director elected to fill a vacancy shall serve for the remainder of the full term of the directorship in which such vacancy occurred.
 
(d)        Effective upon the Distribution, the Directors (other than any Director subsequently elected solely by holders of one or more classes or series of Shares as specified by the Board of Directors upon the authorization of such Shares) shall be classified into three groups, Group I, Group II and Group III.  The number of Directors in each class shall be as nearly equal in number as possible, as determined by the Board of Directors.  Directors in Group I shall serve for a term ending at the annual meeting of Shareholders to be held in 2008; Directors in Group II shall serve for a term ending at the annual meeting of Shareholders to be held in 2009; and Directors in Group III shall serve for a term ending at the annual meeting of Shareholders to be held in 2010 and, in each such case, until their successors are duly elected or until their earlier death, resignation or removal.  At each annual meeting of the Shareholders, the successors to the class of Directors whose term expires at such meeting shall be elected by the Shareholders to hold office for a term expiring at the annual meeting of Shareholders held in the third year following the year of their election and until their successors are duly elected.
 
(e)        Effective upon the Distribution, three of the Directors shall be “Independent Directors,” as defined below, and the remaining two Directors shall be “Managing Directors.” “Independent Directors” shall be those directors who meet the qualifications as independent directors under the applicable rules of each National Securities Exchange on which the Common Shares or other securities of the Company are listed for trading and the Commission from time to time.  “Managing Directors” shall mean Directors who are not Independent Directors.  If at any time the Board of Directors shall not be comprised of a majority of Independent Directors, the Board of Directors shall take such actions as will cure such condition, including increasing the size of the Board of Directors and electing one or more Independent Directors; provided that the fact that the Board of Directors does not have a majority of Independent Directors at any time or from time to time shall not affect the validity of any action taken by the Board of Directors.
 
(f)        Effective upon the Distribution, the Group I Directors, the Group II Directors and the Group III Directors shall be as specified in a written consent of the Initial Shareholder adopted prior to the Distribution.
 
(g)        Directors need not be Shareholders.  The Board of Directors may, from time to time and by the adoption of resolutions, establish qualifications for Directors.
 
(h)        Unless otherwise required by law or the provisions hereof,
 
(i)         each member of the Board of Directors shall have one vote;
 
(ii)        the presence at a meeting of the Board of Directors of a majority of the members of the Board of Directors shall constitute a quorum at any such meeting (or at any adjournment thereof) for the transaction of business; and
 
(iii)       the act of a majority of the members of the Board of Directors present at a meeting of the Board of Directors at which a quorum is present shall be deemed to constitute the act of the Board of Directors.
 
(i)         Regular meetings of the Board of Directors and any committee thereof shall be held at such times and places as shall be designated from time to time by resolution of the Board of Directors or such committee.  Notice of such regular meetings shall not be required.  Special meetings of the Board of Directors or meetings of any committee thereof may be called by the Chairman of the Board or the chairman of such committee, as the case may be, or on the written request of a majority of the Directors then in office or a majority of the committee members then in office, as applicable, to the Secretary, in each case on at least twenty-four hours personal, written, fax or other electronic notice to each Director




or committee member, which notice may be waived by any Director.  Any such notice, or waiver thereof, need not state the purpose of such meeting except as may otherwise be required by law.  Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting, except where such Director attends the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.  Any action required or permitted to be taken at a meeting of the Board of Directors, or any committee thereof, may be taken without a meeting, without prior notice and without a vote if a consent or consents in writing, setting forth the action so taken, are signed by a majority of the members of the Board of Directors or committee.  Members of the Board of Directors or any committee thereof may participate in and hold a meeting by means of conference telephone, video conference or similar communications equipment by means of which all Persons participating in the meeting can hear each other at the same time, and participation in such meetings shall constitute presence in Person at the meeting.
 
(j)         The Board of Directors may designate one or more committees, each committee to consist of one or more of the Directors.  The Board of Directors may designate one or more Directors as alternate members of any committee, who may replace any absent or disqualified Director at any meeting of such committee.  Any such committee, to the extent provided in the resolution of the Board of Directors or in this Agreement, shall have and may exercise all powers and authority of the Board of Directors in the management of the business and affairs of the Company; but no such committee shall have the power or authority in reference to the following matters: approving or adopting, or recommending to the Shareholders, any action or matter expressly required by this Agreement or the Delaware LLC Act to be submitted to the Shareholders for approval, or adopting, amending or repealing any provision of this Agreement.  The Board of Directors, or, if authorized by the Board in a committee charter or otherwise, the members of any committee may choose a chairman, shall keep regular minutes of its proceedings and report the same to the Board of Directors when requested, and, unless the same shall be determined by the Board of Directors, shall fix its own rules or procedures and shall meet at such times and at such place or places as may be provided by such rules.  Unless otherwise required by law or the provisions hereof,
 
(i)         each member of a committee shall have one vote;
 
(ii)        the presence at a meeting of a committee of a majority of the members of the committee shall constitute a quorum at any such meeting for the transaction of business; and
 
(iii)       the act of a majority of the members of a committee present at a meeting of the committee at which a quorum is present shall be deemed to constitute the act of the committee.
 
(k)        The Board of Directors may elect one of its members as Chairman of the Board (the “ Chairman of the Board ”).  The Chairman of the Board, if any, and if present and acting, shall preside at all meetings of the Board of Directors and of Shareholders, unless otherwise directed by the Board of Directors.  If the Board of Directors does not elect a Chairman or if the Chairman is absent from the meeting, the Chief Executive Offer, if present and a Director, or any other Director chosen by the Board of Directors, shall preside.  In the absence of a Secretary, the person presiding over the meeting may appoint any Person to serve as secretary of the meeting.
 
(l)         Unless otherwise restricted by law, the Board of Directors shall have the authority to fix the compensation of the Directors.  The Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or paid a stated salary or paid other compensation as Director.  No such payment shall preclude any Director from serving the Company in any other capacity and receiving compensation therefor.  Directors serving on special or standing committees may also be paid their expenses, if any, of and allowed compensation for attending committee meetings.
 
(m)      Subject to the rights of holders of one or more future classes or series of Shares to elect or remove one or more Directors, any Director may be removed from office at any time, but only for cause and then only by the unanimous vote of the other Directors then in office.  In addition, subject to the rights of holders of one or more future classes or series of Shares to elect or remove one or more Directors, the entire Board of Directors (but not less than the entire Board




of Directors) may be removed from office at any time, but only for cause and then only by Share Super-Majority Approval.  For the purpose of this paragraph, “cause” shall mean, with respect to any particular Director, incapacity, conviction of a felony or a final judgment of a court of competent jurisdiction holding that such Director caused demonstrable, material harm to the Company through bad faith or active and deliberate dishonesty.
 
Section 7.2             Certificate of Formation.   The Certificate of Formation has been filed with the Secretary of State of Delaware as required by the Delaware LLC Act.  The Board of Directors shall use all reasonable efforts to cause to be filed such other certificates or documents that it determines to be necessary or appropriate for the formation, continuation, qualification and operation of a limited liability company in the State of Delaware or any other state in which the Company may elect to do business or own property.  To the extent that the Board of Directors determines such action to be necessary or appropriate, the Board of Directors shall direct the appropriate Officers of the Company to file amendments to and restatements of the Certificate of Formation and do all things to maintain the Company as a limited liability company under the laws of the State of Delaware or of any other state in which the Company may elect to do business or own property.  The Company shall not be required, before or after filing, to deliver or mail a copy of the Certificate of Formation, any qualification document or any amendment thereto to any Shareholder.
 
Section 7.3            Officers.
 
(a)        The Board of Directors shall have the power and authority to appoint such officers with such titles, authority and duties as determined by the Board of Directors.  Such Persons so designated by the Board of Directors shall be referred to as “ Officers .” Except as otherwise specifically provided in this Agreement and to the extent permitted by law, as near as practical, the authority, powers, functions and duties (including fiduciary duties) of the Officers shall be identical to the authority, powers, functions and duties (including fiduciary duties) of the officers of a business corporation organized under the Delaware General Corporation Law.  Unless provided otherwise by resolution of the Board of Directors, the Officers shall have the titles, power, authority and duties described below in this Section 7.3.
 
(b)        The Officers of the Company shall include a Chief Executive Officer, a President, and a Secretary, and may also include a Chairman of the Board, a Vice Chairman, Chief Financial Officer, Chief Operating Officer, Treasurer, one or more Vice Presidents (who may be further classified by such descriptions as “executive,” “senior,” “assistant” or otherwise, as the Board of Directors shall determine), one or more Assistant Secretaries and one or more Assistant Treasurers.  Officers shall be elected by the Board of Directors from time to time as the Board of Directors considers appropriate.  Each Officer shall hold office until his successor is elected and qualified or until his earlier death, resignation or removal.  Any number of offices may be held by the same Person.  The compensation of Officers elected by the Board of Directors shall be fixed from time to time by the Board of Directors or by such Officers as may be designated by resolution of the Board of Directors.
 
(c)        Any Officer may resign at any time upon written notice to the Company.  Any Officer, agent or employee of the Company may be removed by the Board of Directors with or without cause at any time.  The Board of Directors may delegate the power of removal as to officers, agents and employees who have not been appointed by the Board of Directors.  Such removal shall be without prejudice to a Person’s contract rights, if any, but the appointment of any Person as an Officer, agent or employee of the Company shall not of itself create contract rights.
 
(d)        Subject to the control of the Board of Directors and the executive committee (if any) of the Board of Directors, the Chief Executive Officer shall have general executive charge, management and control of the properties, business and operations of the Company with all such powers as may be reasonably incident to such responsibilities; he or she may employ and discharge employees and agents of the Company except such as shall be appointed by the Board of Directors, and he or she may delegate these powers; he or she may agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Company, and shall have such other powers and duties as designated in accordance with this Agreement and as from time to time may be assigned by the Board of Directors.
 




(e)        If elected, the Chairman of the Board shall have such powers and duties as are designated in this Agreement and as from time to time may be assigned by the Board of Directors.
 
(f)        Unless the Board of Directors otherwise determines, the President shall have such powers and duties as are designated in accordance with this Agreement and as from time to time may be assigned by the Board of Directors.
 
(g)        In the absence of the President, or in the event of the President’s inability or refusal to act, a Vice President designated by the Board of Directors shall perform the duties of the President, and when so acting shall have all the powers of and be subject to all the restrictions upon the President.  In the absence of a designation by the Board of Directors of a Vice President to perform the duties of the President, or in the event of his absence or inability or refusal to act, the Vice President who is present and who is senior in terms of uninterrupted time as a Vice President of the Company shall so act.  The Vice President shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe.
 
(h)        The Treasurer shall have responsibility for the custody and control of all the funds and securities of the Company and shall have such other powers and duties as are designated in accordance with this Agreement and as from time to time may be assigned to the Treasurer by the Board of Directors.  The Treasurer shall perform all acts incident to the position of Treasurer, subject to the control of the Chief Executive Officer and the Board of Directors.  Each Assistant Treasurer shall have such powers and duties as are designated in accordance with this Agreement and as from time to time may be assigned by the Treasurer or the Board of Directors.  The Assistant Treasurers shall exercise the powers of the Treasurer during that Officer’s absence or inability or refusal to act.
 
(i)         The Secretary shall issue all authorized notices for, and shall keep minutes of, all meetings of the Shareholders and the Board of Directors.  The Secretary shall have charge of the Company’s minute books and shall perform such other duties as the Board of Directors may from time to time prescribe.  In the absence or inability to act of the Secretary, any Assistant Secretary may perform all the duties and exercise all the powers of the Secretary.  The performance of any such duty shall, in respect of any other Person dealing with the Company, be conclusive evidence of the power to act.  An Assistant Secretary shall also perform such other duties as the Secretary or the Board of Directors may assign.
 
(j)         Unless the Board of Directors otherwise determines and subject to such limitations as the Board of Directors may adopt, each Officer shall have the authority to agree upon and execute all leases, contracts, evidences of indebtedness and other obligations in the name of the Company.  The Board of Directors may from time to time delegate all or a portion of the powers or duties of any Officer to any other Officers or agents, notwithstanding any provision hereof.
 
(k)        Unless otherwise directed by the Board of Directors, the Chief Executive Officer, the President or any Officer of the Company authorized by the Chief Executive Officer shall have power to vote and otherwise act on behalf of the Company, in person or by proxy, at any meeting of shareholders of or with respect to any action of equity holders of any other entity in which the Company may hold securities and otherwise to exercise any and all rights and powers which the Company may possess by reason of its ownership of securities in such other entities.
 
Section 7.4             Outside Activities.   Unless otherwise provided in a written agreement with the Company, notwithstanding any duty (including any fiduciary duty) that might otherwise exist in law or equity, it shall not be a breach of any duty (including any fiduciary duty) or any other obligation of any type whatsoever of any Director for such Director or Affiliates of such Director to engage in outside business interests and activities in preference to or to the exclusion of the Company or in direct competition with the Company; provided that no confidential information of the Company may be used by any such Person.  Notwithstanding any duty (including any fiduciary duty) that might otherwise exist in law or equity, Directors shall have no obligation hereunder or as a result of any duty expressed or implied by law to present business opportunities to the Company that may become available to such Director or to Affiliates of such Director.
 




Section 7.5            Resolution of Conflicts of Interest; Standards of Conduct and Modification of Duties.
 
(a)        Unless otherwise expressly provided in this Agreement or required by the Delaware LLC Act, whenever a potential conflict of interest exists or arises between any Shareholder or an Affiliate thereof, and/or one or more Directors or their respective Affiliates and/or the Company, any resolution or course of action by the Board of Directors in respect of such conflict of interest shall be permitted and deemed approved by all Shareholders, and shall not constitute a breach of this Agreement, of any agreement contemplated herein, or of any duty stated or implied by law or equity, including any fiduciary duty, if the resolution or course of action in respect of such conflict of interest is (i) approved by a Share Plurality (with interested Shareholders not counted for any purpose), or (ii) on terms no less favorable to the Company than those generally being provided to or available from unrelated third parties or (iii) fair and reasonable to the Company, taking into account the totality of the relationships between the parties involved (including other transactions that may be particularly favorable or advantageous to the Company).  It shall be presumed that, in making its decision and notwithstanding that such decision may be interested, the Board of Directors acted properly and in accordance with its duties (including fiduciary duties), and in any proceeding brought by or on behalf of any Shareholder or the Company challenging such approval, the Person bringing or prosecuting such proceeding shall have the burden of overcoming such presumption by clear and convincing evidence.
 
Section 7.6            Duties of Officers and Directors.
 
(a)        Except as otherwise expressly provided in this Agreement, the duties (including fiduciary duties) and obligations owed to the Company and to the Shareholders by the Officers and Directors shall be the same as the respective duties and obligations owed to a business corporation organized under the Delaware General Corporation Law and its shareholders by its officers and directors, respectively.
 
(b)        Each Director shall, in the performance of his or her duties, be fully protected in relying in good faith upon the records of the Company and on such information, opinions, reports or statements presented to the Company by any of the Company’s Officers or employees, or committees of the Board of Directors, or by any other Person as to matters the Director reasonably believes are within such other Person’s professional or expert competence.
 
(c)        The Board of Directors shall have the right, in respect of any of its powers or obligations hereunder, to act through a duly appointed attorney or attorneys-in-fact or the duly authorized Officers of the Company.
 
Section 7.7             Purchase or Sale of Company Securities.   The Board of Directors may cause the Company or its designee to purchase or otherwise acquire Shares or any other securities of the Company.
 
Section 7.8             Reliance by Third Parties.   Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Company shall be entitled to assume that the Board of Directors and any Officer authorized by the Board of Directors to act on behalf of and in the name of the Company has full power and authority to encumber, sell or otherwise use in any manner any and all assets of the Company and to enter into any authorized contracts on behalf of the Company, and such Person shall be entitled to deal with the Board of Directors or any Officer as if it were the Company’s sole party in interest, both legally and beneficially.  Each Shareholder hereby waives any and all defenses or other remedies that may be available against such Person to contest, negate or disaffirm any action of the Board of Directors or any Officer in connection with any such dealing.  In no event shall any Person dealing with the Board of Directors or any Officer or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expedience of any act or action of the Board of Directors or any Officer or its representatives.  Each and every certificate, document or other instrument executed and delivered on behalf of the Company by the Board of Directors or any Officer or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (a) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (b) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Company and (c) such certificate,




document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Company.
 
ARTICLE VIII
RESTRICTIONS ON TRANSFER AND OWNERSHIP OF SHARES
 
Section 8.1             Definitions.    For the purpose of this Article VIII, the following terms shall have the following meanings:
 
Charitable Beneficiary ” shall mean one or more beneficiaries of the Charitable Trust as determined pursuant to Section 8.3(g), provided that each such organization must be described in Sections 501(c)(3), 170(b)(1)(A) (other than clause (vii) or (viii) thereof) and 170(c)(2) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

Charitable Trust ” shall mean any trust provided for in Section 8.2(a)(ii) and Section 8.3(a).
 
Charitable Trustee ” shall mean the Person, unaffiliated with the Company and a Prohibited Owner, that is appointed by the Company from time to time to serve as trustee of the Charitable Trust.
 
Closing Price ” with respect to Shares on any date shall mean the last sale price for such Shares, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such Shares, in either case as reported on the principal consolidated transaction reporting system with respect to such Shares, or if such Shares are not listed or admitted to trading on any National Securities Exchange, the last sale price in the over-the-counter market, or if no trading price is available for such Shares, the fair market value of such Shares as determined in good faith by the Board of Directors.
 
Constructive Ownership ” shall mean ownership of Shares by a Person, whether the interest in Shares is held directly or indirectly (including by a nominee), and shall include any interests that would be treated as owned through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code.  The terms “Constructive Owner,” “Constructively Owns” and “Constructively Owned” shall have the correlative meanings.
 
Excepted Holder ” shall mean a Shareholder for whom an Excepted Holder Limit is created by the Board of Directors pursuant to Section 8.2(f)(i).
 
Excepted Holder Limit ” shall mean, provided that and only so long as the affected Excepted Holder complies with all of the requirements established by the Board of Directors pursuant to Section 8.2(f), and subject to adjustment pursuant to Section 8.2(f)(iv), the percentage limit established by the Board of Directors pursuant to Section 8.2(f).
 
Excluded Holder ” shall mean any Person who acquires Constructive Ownership of Common Shares solely by reason of the Transfer of Common Shares in the Distribution and who, immediately following the Distribution, Constructively Owns Common Shares in excess of the Ownership Limit solely by reason of such Transfer of Common Shares in the Distribution.
 
Excluded Holder Limit ” shall mean, with respect to any Excluded Holder, the Shares that such Excluded Holder was considered to Constructively Own immediately following the Distribution solely by reason of the Distribution (taking into account only such Shares and no other Shares as to which such Person may thereafter become, for any reason, the Constructive Owner); provided, however , that (i) if the amount of Shares such Excluded Holder is considered to Constructively Own decreases by disposition or otherwise, but remains higher than the Ownership Limit, then such decreased amount shall become the Excluded Holder Limit, and (ii) if at any time the Excluded Holder Limit for any Excluded Holder would be less than the Ownership Limit, such Excluded Holder shall cease to be an Excluded Holder and the Ownership Limit shall thereafter apply to such Person.
 




Market Price ” on any date shall mean, with respect to any class or series of Shares, the Closing Price for such Shares on such date.
 
Ownership Limit ” shall mean (i) with respect to Common Shares, 9.8% (in value or number of shares, whichever is more restrictive) of the Outstanding Common Shares; and (ii) with respect to any other class or series of Shares, 9.8% (in value or number of shares, whichever is more restrictive) of the Outstanding Shares of such class or series.
 
Person ” shall have the meaning set forth in Section 1.1 and also includes a group as that term is used for purposes of Section 13(d)(3) of the Exchange Act; provided, however, that the term “Person” shall not include any “group” as that term is used for purposes of Section 13(d)(3) of the Exchange Act, if such “group” would be an Excluded Holder (but any Person that is a member of such “group” shall still be considered to be a “Person” for purposes hereof).
 
Prohibited Owner ” shall mean any Person who, but for the provisions of Section 8.2(a), would Constructively Own Shares in excess of the Ownership Limitation, and if appropriate in the context, shall also mean any Person who would have been the Record Holder of Shares that the Prohibited Owner would have so owned.
 
Transfer ” shall mean any issuance, sale, transfer, gift, assignment, devise or other disposition, as well as any other event (or any agreement to take any such actions or cause any such events) that causes any Person to acquire Constructive Ownership of Shares or the right to vote or receive distributions on Shares, including without limitation, (a) the transfer of Shares to holders of common shares of HPT in the Distribution, (b) any change in the capital structure of the Company which has the effect of increasing the total equity interest of any Person in the Company, (c) a change in the relationship between two or more Persons which causes a change in ownership of Shares by application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code, (d) the grant or exercise of any option or warrant (or any disposition of any option or warrant, or any event that causes any option or warrant not theretofore exercisable to become exercisable), pledge, security interest or similar right to acquire Shares, (e) any disposition of any securities or rights convertible into or exchangeable for Shares or any interest in Shares or any exercise of any such conversion or exchange right, and (f) transfers of interests in other entities that result in changes in Constructive Ownership of Shares, in each case, whether voluntary or involuntary, whether owned of record or Constructively Owned, and whether by operation of law or otherwise.  The terms “Transferring” and “Transferred” shall have the correlative meanings.
 
Section 8.2            Restrictions on Ownership and Transfer of Shares.
 
(a)        Ownership Limitations .  Commencing on the Distribution Date:
 
(i)           Basic Restrictions.  (A) No Person, other than an Excepted Holder or an Excluded Holder, shall Constructively Own Shares in excess of the Ownership Limit, (B) no Excepted Holder shall Constructively Own Shares in excess of the Excepted Holder Limit for such Excepted Holder, and (C) no Excluded Holder shall Constructively Own Shares in excess of the Excluded Holder Limit for such Excluded Holder.
 
(ii)         Transfer in Trust.  If any Transfer of Shares occurs (whether or not such Transfer is the result of a transaction entered into through the facilities of a National Securities Exchange or automated inter-dealer quotation system) which, if effective, would result in any Person Constructively Owning Shares in violation of Section 8.2(a)(i)(A), 8.2(a)(i)(B) or 8.2(a)(i)(C), as applicable; (x) then that number of Shares the Constructive Ownership of which otherwise would cause such Person to violate Section 8.2(a)(i)(A), 8.2(a)(i)(B) or 8.2(a)(i)(C) (rounded upward to the nearest whole share) shall be automatically transferred to a Charitable Trust for the benefit of a Charitable Beneficiary, as described in Section 8.3, effective as of the close of business on the Business Day prior to the date of such Transfer (or as of the close of business on the Distribution Date as to any
    




such Transfer that occurs on the Distribution Date), and such Person shall acquire no rights in such Shares; or (y) if the transfer to the Charitable Trust described in clause (x) of this sentence would not be effective for any reason to prevent the violation of Section 8.2(a)(i)(A), 8.2(a)(i)(B) or 8.2(a)(i)(C) , as applicable, then, to the fullest extent permitted by law, the Transfer of that number of Shares that otherwise would cause any Person to violate Section 8.2(a)(i)(A), 8.2(a)(i)(B) or 8.2(a)(i)(C) , as applicable, shall be void ab initio, and the intended transferee shall acquire no rights in such Shares.
 
(b)        Remedies for Breach .  If the Board of Directors or any duly authorized committee thereof shall at any time determine that a Transfer or other event has taken place that results in a violation of Section 8.2(a)(i) or that a Person intends to acquire or has attempted to acquire Constructive Ownership of any Shares in violation of Section 8.2(a)(i) (whether or not such violation is intended), the Board of Directors or a committee thereof shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the Company to redeem Shares, refusing to give effect to such Transfer on the books of the Company or instituting proceedings to enjoin such Transfer or other event (and such Person shall be liable, without limitation, for all costs incurred in connection therewith and pursuant to Section 10.3); provided, however , that any Transfer or attempted Transfer or other event in violation of Section 8.2(a)(i) shall automatically result in the transfer to the Charitable Trust described above, and, where applicable under Section 8.2(a)(ii)(y) such Transfer (or other event) shall, to the fullest extent permitted by law, be void ab initio as provided above irrespective of any action (or non-action) by the Board of Directors or a committee thereof.
 
(c)        Notice of Restricted Transfer.  Any Person who acquires or attempts or intends to acquire Constructive Ownership of Shares that will or may violate Section 8.2(a)(i), or any Person who would have owned Shares that resulted in a transfer to the Charitable Trust pursuant to the provisions of Section 8.2(a)(ii)(x), shall immediately give written notice to the Company of such event, or in the case of such a proposed or attempted transaction, give at least 15 days prior written notice, and shall provide to the Company such other information as the Company may request.
 
(d)        Owners Required to Provide Information.  Commencing on the Distribution Date, every Shareholder of record of more than five percent of the Outstanding Shares of any series or class, within 30 days after the end of each taxable year and also within 30 days after a request from the Company, shall give written notice to the Company stating the name and address of such owner, the number of Shares owned, and a description of the manner in which such Shares are held; provided that a Shareholder of record who holds Outstanding Shares as nominee for another Person, which other Person is required to include in gross income the distributions received on such Shares (an “ Actual Owner ”), shall give written notice to the Company stating the name and address of such Actual Owner and the number of Shares of such Actual Owner with respect to which the Shareholder of record is nominee.  Each such Shareholder of record and each Actual Owner shall provide to the Company such additional information as the Company may request in order to ensure compliance with the Ownership Limit.

(e)        Ambiguity.  In the case of an ambiguity in the application of any of the provisions of this Section 8.2, Section 8.3 or any definition contained in Section 8.1, the Board of Directors shall have the power to determine the application of the provisions of this Section 8.2 or Section 8.3 with respect to any situation based upon the facts known to it.  If Section 8.2 or 8.3 requires an action by the Board of Directors and this Agreement does not contain a specific provision authorizing such action, the Board of Directors shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of Section 8.1, Section 8.2 or Section 8.3.
 
(f)        Exceptions .
 
(i)    The Board of Directors, in its sole and absolute discretion (without the application to the fullest extent permitted by law of any fiduciary duty), may grant to any Person who makes a request therefor (a “ Requesting Person ”) an exception to the Ownership Limit (or one or more elements thereof) with respect to the ownership of any series or class of Shares, subject to the following conditions and
    




limitations: (A) (1) the Board of Directors shall have determined, in its sole and absolute discretion (without the application to the fullest extent permitted by law of any fiduciary duty), that the Requesting Person’s ownership of Shares in excess of the Ownership Limit pursuant to the exception requested hereunder (together with the ownership of Shares by all other Persons as permitted under this Article VIII, taking into account any previously granted exceptions pursuant hereto) would not cause a default under the terms of any contract to which the Company is a party or reasonably expects to become a party and (2) the Board of Directors shall have determined, in its sole and absolute discretion (without the application to the fullest extent permitted by law of any fiduciary duty), and in the case of each individual Director, in his business judgment, that the Requesting Person’s ownership of Shares in excess of the Ownership Limit pursuant to the exception requested hereunder (together with the ownership of Shares by all other Persons as permitted under this Article VIII, taking into account any previously granted exceptions pursuant hereto) is in the best interests of the Company; and (B) such Requesting Person provides to the Board of Directors, for the benefit of the Company, such representations and undertakings, if any, as the Board of Directors may, in its sole and absolute discretion (without the application to the fullest extent permitted by law of any fiduciary duty), determine to be necessary in order for it to make the determination that the conditions set forth in clause (A) above of this Section 8.2(f)(i) have been and/or will continue to be satisfied (including, without limitation, an agreement as to a reduced Ownership Limit or Excepted Holder Limit for such Requesting Person with respect to the Constructive Ownership of one or more other classes or series of Shares not subject to the exception), and such Requesting Person agrees that any violation of such representations and undertakings or any attempted violation thereof will result in the application of the remedies set forth in Section 8.2(b) with respect to Shares held in excess of the Ownership Limit or the Excepted Holder Limit (as may be applicable) with respect to such Requesting Person (determined without regard to the exception granted such Requesting Person under this subparagraph (i)).  If a member of the Board of Directors requests that the Board of Directors grant an exception pursuant to this subsection (f) with respect to such member, or with respect to any other Person if such member of the Board of Directors would be considered to be the Constructive Owner of Shares owned by such other Person, such member of the Board of Directors shall not participate in the decision of the Board of Directors as to whether to grant any such exception.
 
(ii)   In determining whether to grant any exemption pursuant to Section 8.2(f)(i), the Board of Directors may, but need not, consider, among other factors, (A) the general reputation and moral character of the Requesting Person, (B) whether ownership of Shares would be direct or through ownership attribution, (C) whether the Requesting Person’s ownership of Shares would interfere with the conduct of the Company’s business, (D) whether granting an exemption for the Requesting Person would adversely affect any of the Company’s existing contractual arrangements, and (E) whether the Requesting Person to whom the exemption would apply is attempting to change control of the Company or affect its policies in a way which the Board of Directors, in its sole and absolute discretion (without the application to the fullest extent permitted by law of any fiduciary duty), considers adverse to the best interest of the Company or the Shareholders.  Nothing in this Section 8.2(f)(ii) shall be interpreted to mean that the Board of Directors may not act in its sole and absolute discretion (without the application to the fullest extent permitted by law of any fiduciary duty) in making any determination under Section 8.2(f)(i).
 
(iii)  An underwriter or initial purchaser that participates in a public offering or a private placement of Shares (or securities convertible into or exchangeable for Shares) may Constructively Own Shares (or securities convertible into or exchangeable for Shares) in excess of the Ownership Limit, but only to the extent necessary to facilitate such public offering or private placement as determined by the Board of Directors.
 




(iv)  The Board of Directors may reduce the Excepted Holder Limit for an Excepted Holder only: (1) with the written consent of such Excepted Holder or (2) pursuant to the terms and conditions of the agreements and undertakings entered into with such Excepted Holder in connection with the establishment of the Excepted Holder Limit for that Excepted Holder.
 
(v)   To the fullest extent permitted by law, any determination made by the Board of Directors with respect to the provisions of Section 8.2(f) may be made without regard to any fiduciary or other duties that the Board of Directors may have to the Prohibited Owner or any other Person.
 
(g)        Increase or Decrease in Ownership Limit.  The Board of Directors may from time to time increase or decrease the Ownership Limit, provided that any decrease may be made only prospectively as to subsequent holders (other than a decrease as a result of a retroactive change in existing law, in which case such change shall be effective immediately).
 
(h)        Legend .  Unless otherwise provided by the Board of Directors, each certificate for Shares (or securities exercisable for or convertible into Shares) shall bear a legend with respect to the restrictions contained in this Agreement in such form as shall be prescribed by the Board of Directors.  Instead of the foregoing legend, the certificate may state that the Company will furnish a full statement about certain restrictions on transferability to a Shareholder on request and without charge.
 
(i)         No Recourse .  A Prohibited Owner shall have no claim, cause of action or other recourse whatsoever against the purported transferor of Shares causing the violation of the restrictions set forth in Section 8.2(a).
 
Section 8.3            Transfer of Shares.
 
(a)        Ownership in Trust.  Upon any purported Transfer or other event described in Section 8.2(a)(ii) that would result in a transfer of Shares to a Charitable Trust, such Shares shall be deemed to have been transferred to the Charitable Trustee as trustee of a Charitable Trust for the exclusive benefit of one or more Charitable Beneficiaries (except to the extent otherwise provided in Section 8.3(e)).  Such transfer to the Charitable Trustee shall be deemed to be effective as of the close of business on the Business Day prior to any other purported Transfer or other event that otherwise results in the transfer to the Charitable Trust pursuant to Section 8.2(a)(ii) (or as of the close of business on the Distribution Date if such other purported Transfer or other event occurs on that date).  The Charitable Trustee shall be appointed by the Company and shall be a Person unaffiliated with the Company and any Prohibited Owner.  Each Charitable Beneficiary shall be designated by the Company as provided in Section 8.3(g).
 
(b)        Status of Shares Held by the Charitable Trustee.  Shares held by the Charitable Trustee shall be issued and Outstanding Shares of the Company.  The Prohibited Owner shall (i) have no rights in the Shares held by the Charitable Trustee; (ii) not benefit economically from ownership of any Shares held in trust by the Charitable Trustee (except to the extent otherwise provided in Section 8.3(e)); (iii) have no rights to dividends or other distributions; (iv) not possess any rights to vote or other rights attributable to the Shares held in the Charitable Trust; and (v) have no claim, cause of action or other recourse whatsoever against the purported transferor of such Shares.
 
(c)        Dividend and Voting Rights .  The Charitable Trustee shall have all voting rights and rights to dividends or other distributions with respect to Shares held in the Charitable Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary (except to the extent otherwise provided in Section 8.3(e)).  Any dividend or other distribution paid prior to the discovery by the Company that Shares have been transferred to the Charitable Trustee shall be paid with respect to such Shares to the Charitable Trustee by the Prohibited Owner upon demand and any dividend or other distribution authorized but unpaid shall be paid when due to the Charitable Trustee.  Any dividends or distributions so paid over to the Charitable Trustee shall be held in trust for the Charitable Beneficiary.  The Prohibited Owner shall have no voting rights with respect to Shares held in the Charitable Trust and, effective as of the date that Shares have been transferred to the Charitable Trustee, the Charitable Trustee shall have the authority (at the Charitable Trustee’s sole




discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the Company that Shares have been transferred to the Charitable Trustee and (ii) to recast such vote in accordance with the desires of the Charitable Trustee acting for the benefit of the Charitable Beneficiary; provided, however, that if the Company has already taken irreversible corporate action, then the Charitable Trustee shall not have the power to rescind and recast such vote.  Notwithstanding the provisions of this Article VIII, until the Company has received notification that Shares have been transferred into a Charitable Trust, the Company shall be entitled to rely on its stock transfer and other Shareholder records for purposes of preparing lists of Shareholders entitled to vote at meetings, determining the validity and authority of proxies, and otherwise conducting votes of Shareholders.
 
(d)        Rights upon Liquidation.  Upon any voluntary or involuntary liquidation, dissolution or winding up of or any distribution of the assets of the Company, the Charitable Trustee shall be entitled to receive, ratably with each other holder of Shares of the class or series of Shares that is held in the Charitable Trust, that portion of the assets of the Company available for distribution to the holders of such class or series (determined based upon the ratio that the number of Shares of such class or series of Shares held by the Charitable Trustee bears to the total number of Shares of such class or series of Shares then outstanding).  The Charitable Trustee shall distribute any such assets received in respect of the Shares held in the Charitable Trust in any liquidation, dissolution or winding up or distribution of the assets of the Company, in accordance with Section 8.3(e).
 
(e)        Sale of Shares by Charitable Trustee .
 
(i)    Within 20 days of receiving notice from the Company that Shares have been transferred to the Charitable Trust, the Charitable Trustee shall sell the Shares held in the Charitable Trust (together with the right to receive dividends or other distributions with respect to such Shares as to any Shares transferred to the Charitable Trustee as a result of the operation of Section 8.2(a)(ii)) to a Person, designated by the Charitable Trustee, whose ownership of the Shares will not violate the ownership limitations set forth in Section 8.2(a)(i).  Upon such sale, the interest of the Charitable Beneficiary in the Shares sold shall terminate and the Charitable Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 8.3(e).
 
(ii)   A Prohibited Owner shall receive the lesser of (1) the net price paid by the Prohibited Owner for the Shares or, if the Prohibited Owner did not give value for the Shares in connection with the event causing the Shares to be held in the Charitable Trust (e.g., in the case of a gift, devise or other such transaction), the Market Price of the Shares on the day of the event causing the Shares to be held in the Charitable Trust, and (2) the net sales proceeds received by the Charitable Trustee from the sale or other disposition of the Shares held in the Charitable Trust.  Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary.  If, prior to the discovery by the Company that Shares have been transferred to the Charitable Trustee, such Shares are sold by a Prohibited Owner, then (i) such Shares shall be deemed to have been sold on behalf of the Charitable Trust and (ii) to the extent that the Prohibited Owner received an amount for such Shares that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 8.3(e), such excess shall be paid to the Charitable Trustee upon demand.

(f)         Purchase Right in Shares Transferred to Trustee.  Shares transferred to the Charitable Trustee shall be deemed to have been offered for sale to the Company, or its designee, at a price per Share equal to the lesser of (i) the price per Share in the transaction that resulted in such transfer to the Charitable Trust (or, in the case of a devise, gift or other such transaction, the Market Price per such Share on the day of the event causing the Shares to be held in the Charitable Trust) and (ii) the Market Price per such Share on the date the Company, or its designee, accepts such offer.  The Company shall have the right to accept such offer until the Charitable Trustee has sold the Shares held in the Charitable Trust pursuant to Section 8.3(e).  Upon such a sale to the Company, the interest of the Charitable Beneficiary in the Shares sold shall terminate and the Charitable Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and the Charitable Beneficiary as provided in Section 8.3(e).
 




(g)        Designation of Charitable Beneficiaries.  By written notice to the Charitable Trustee, the Company shall designate from time to time one or more nonprofit organizations to be the Charitable Beneficiary of the interest in the Charitable Trust such that (i) Shares held in the Charitable Trust would not violate the restrictions set forth in Section 8.2(a)(i) in the hands of such Charitable Beneficiary and (ii) contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.
 
Section 8.4              Transactions on a National Securities Exchange.   Nothing in this Article VIII shall preclude the settlement of any transaction entered into through the facilities of a National Securities Exchange or any automated inter-dealer quotation system.  The fact that the settlement of any transaction takes place shall not negate the effect of any other provision of this Article VIII and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article VIII.
 
Section 8.5              Enforcement.   The Company is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Article VIII (and, to the fullest extent permitted by law, a Person shall be liable, without limitation, for all costs incurred in connection therewith and pursuant to Section 10.3).
 
Section 8.6              Non-Waiver.   No delay or failure on the part of the Company or the Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the Company or the Board of Directors, as the case may be, except to the extent specifically waived in writing.
 
Section 8.7             Enforceability.   If any of the restrictions on transfer of Shares contained in this Article VIII are determined to be void, invalid or unenforceable by any court of competent jurisdiction, then the Prohibited Owner may be deemed, at the option of the Company, to have acted as an agent of the Company in acquiring such Shares and to hold such Shares on behalf of the Company.
 
ARTICLE IX
VOTING RIGHTS OF SHAREHOLDERS; MEETINGS OF SHAREHOLDERS
 
Section 9.1             General.
 
(a)        The provisions of this Article IX shall be subject to the requirements of the Exchange Act and any applicable Exchange Rule.  If, in the Opinion of Counsel, any of such provisions are inconsistent with such requirements, such requirements shall supersede the provisions of this Agreement and the Board of Directors shall amend the provisions of this Article IX so as to make its provisions consistent with such requirements.
 
(b)        Any matter, including the nomination of Directors, submitted by the Board of Directors to the Shareholders for approval, and any matter otherwise voted upon by the Shareholders and subject to the provisions of Section 5.5 (relating to the creation of new classes and series of Shares) and Section 7.1(m) (relating to the removal of Directors by the Shareholders), shall require the following vote by the Shareholders for approval: (i) the election of Directors nominated by the Board of Directors, a Share Majority; (ii) any other matter that has been approved previously by the Board of Directors, a Share Plurality; and (iii) any matter that has not been approved previously by the Board of Directors, a Share Super-Majority Approval.  There shall not be cumulative voting of Common Shares.  Notwithstanding anything in this Section 9.1(b), the election of a Managing Director or an Independent Director in an uncontested election (which, for purposes of this Agreement, is an election in which the number of nominees for election equals or is less than the number to be elected at a meeting) shall require the vote of a plurality of the Outstanding Shares with voting power voting at a meeting of Shareholders.
 
(c)        All meetings of Shareholders shall be held at the principal executive office of the Company or at such other place as shall be set by the Board of Directors and stated in the notice of the meeting.  For purposes of determining the Shareholders entitled to notice of or to vote at a meeting of the Shareholders, the Board of Directors may set a Record




Date.  If no Record Date is fixed by the Board of Directors, the Record Date for determining Shareholders entitled to notice of or to vote at a meeting of Shareholders shall be at the close of business on the day next preceding the day on which notice is given.  A determination of Shareholders of record entitled to notice of or to vote at a meeting of Shareholders shall apply to any adjournment or postponement of the meeting; provided, however, that the Board of Directors may fix a new Record Date for the adjourned or postponed meeting.
 
(d)        An annual meeting of the Shareholders shall be called by the Board of Directors and shall be held on a date and at the time set by the Board of Directors.  The Board of Directors shall cause at least 30 days’ notice to be given of an annual meeting of Shareholders.
 
(e)        The Chairman of the Board, if any, or a majority of the entire Board of Directors may call a special meeting of the Shareholders.  Subject to subsection (f) and the last sentence of this subsection (e), a special meeting of Shareholders shall also be called by the Secretary of the Company upon the written request of Shareholders entitled to cast not less than the Special Meeting Percentage of all the votes entitled to be cast at such meeting.  The “ Special Meeting Percentage ” shall be a majority or, to the extent permitted by any applicable Exchange Rule, such higher percentage as shall be specified from time to time by the Board of Directors; provided, however , that in no case shall the Special Meeting Percentage be more than 75%.  Nothing in this Agreement shall be construed to permit the Shareholders to cause a special meeting of the Shareholders to be called unless applicable law or Exchange Rule requires that the Shareholders be able to do so.
 
(f)         Subject to the last sentence of subsection (e), any Shareholder of record seeking to have Shareholders request a special meeting shall, by sending written notice to the Secretary (the “ Record Date Request Notice ”) by registered mail, return receipt requested, request the Board of Directors to fix a record date to determine the Shareholders entitled to request a special meeting (the “ Request Record Date ”).  No Shareholder may make a Record Date Request Notice unless such Shareholder holds a Certificate for all Shares owned by such Shareholder, and a copy of each Certificate shall accompany such Shareholder’s written request to the Secretary, as described in the preceding sentence, in order for such request to be effective; provided, however , that the provisions of this sentence shall be inapplicable unless Shareholders are entitled to receive a Certificate evidencing the Shares owned by them.  The Record Date Request Notice shall set forth the purpose of the meeting and the matters proposed to be acted on at it, shall be signed by one or more Shareholders of record as of the date of signature (or their duly authorized agents), shall bear the date of signature of each such Shareholder (or other agent) and shall set forth all information relating to each such Shareholder that must be disclosed in solicitations of proxies for election of Directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case pursuant to the Exchange Act.  Upon receiving the Record Date Request Notice, the Board of Directors may fix a Request Record Date and may also fix the Special Meeting Percentage for that meeting.  The Request Record Date shall not precede and shall not be more than ten days after the close of business on the date on which the resolution fixing the Request Record Date is adopted by the Board of Directors.  If the Board of Directors, within ten days after the date on which a valid Record Date Request Notice is received, fails to adopt a resolution fixing the Request Record Date and make a public announcement of such Request Record Date, the Request Record Date shall be the close of business on the tenth day after the first date on which the Record Date Request Notice is received by the Secretary.
 
(g)        Subject to the last sentence of subsection (e), in order for any Shareholder to request a special meeting, one or more written requests for a special meeting (the “ Special Meeting Request ”) signed by Shareholders of record (or their duly authorized agents) as of the Request Record Date entitled to cast not less than the Special Meeting Percentage shall be delivered to the Secretary.  No Shareholder may make a Special Meeting Request unless such Shareholder holds a Certificate for all Shares owned by such Shareholder, and a copy of each Certificate shall accompany such Shareholder’s written request to the Secretary, as described in the preceding sentence, in order for such request to be effective; provided, however , that the provisions of this sentence shall be inapplicable unless Shareholders are entitled to receive a Certificate evidencing the Shares owned by them.  In addition, the Special Meeting Request shall set forth the purpose of the meeting and the matters proposed to be acted on at it (which shall be limited to the matters set forth in the Record Date Request Notice received by the Secretary), shall bear the date of signature of each such Shareholder (or other agent) signing the




Special Meeting Request, shall set forth the name and address, as they appear in the Company’s books, of each Shareholder signing such request (or on whose behalf the Special Meeting Request is signed) and the class and number of Shares of the Company which are owned of record and beneficially by each such Shareholder, shall be sent to the Secretary by registered mail, return receipt requested, and must be received by the Secretary within 60 days after the Request Record Date.  Any requesting Shareholder may revoke his request for a special meeting at any time by written revocation delivered to the Secretary.
 
(h)        The Secretary shall inform the requesting Shareholders of the reasonably estimated cost of preparing and mailing the notice of meeting (including the Company’s proxy materials).  The Secretary shall not be required to call a special meeting upon Shareholder request and such meeting shall not be held unless, in addition to the written requests required by subsection (g), the Secretary receives payment from the requesting Shareholders of such reasonably estimated cost prior to the mailing of any notice of the meeting.

(i)         Except as provided in the next sentence, any special meeting shall be held at such place, date and time as may be designated by the Officer who called the meeting, if any, and otherwise by the Board of Directors.  In the case of any special meeting called by the Secretary upon the request of Shareholders (a “ Shareholder Requested Meeting ”), such meeting shall be held at such place, date and time as may be designated by the Board of Directors; provided, however , that if the Board of Directors fails to designate, within ten days after the date that a valid Special Meeting Request is actually received by the Secretary (the “ Delivery Date ”), a date and time for a Shareholder Requested Meeting, then such meeting shall be held at 2:00 p.m., local time on the 90(th) day after the record date for such Shareholder Requested Meeting (the “ Meeting Record Date ”) or, if such 90(th) day is not a Business Day, on the first preceding Business Day; and provided further that in the event that the Board of Directors fails to designate a place for a Shareholder Requested Meeting within ten days after the Delivery Date, then such meeting shall be held at the principal executive offices of the Company.  In fixing a date for any special meeting, the Chairman of the Board, if any, the President or the Board of Directors may consider such factors as he, she or it deems relevant within the good faith exercise of business judgment, including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for meeting and any plan of the Board of Directors to call an annual meeting or a special meeting.  In the case of any Shareholder Requested Meeting, if the Board of Directors fails to fix a Meeting Record Date that is a date within 30 days after the Delivery Date, then the close of business on the 30(th) day after the Delivery Date shall be the Meeting Record Date.
 
(j)         If at any time as a result of written revocations of requests for the special meeting, Shareholders of record (or their duly authorized agents) as of the Request Record Date entitled to cast less than the Special Meeting Percentage shall have delivered and not revoked requests for a special meeting, the Secretary may refrain from mailing the notice of the meeting or, if the notice of the meeting has been mailed, the Secretary may revoke the notice of the meeting at any time not less than ten days before the meeting if the Secretary has first sent to all other requesting Shareholders written notice of such revocation and of intention to revoke the notice of the meeting.  Any request for a special meeting received after a revocation by the Secretary of a notice of a meeting shall be considered a request for a new special meeting.
 
(k)        The Chairman of the Board, if any, the President or the Board of Directors may appoint regionally or nationally recognized independent inspectors of elections to act as the agent of the Company for the purpose of promptly performing a ministerial review of the validity of any Special Meeting Request received by the Secretary.  For the purpose of permitting the inspectors to perform such review, no such request shall be deemed to have been delivered to the Secretary until the earlier of (i) five Business Days after receipt by the Secretary of such request and (ii) such date as the independent inspectors certify to the Company that the Secretary has validly received requests signed by Record Holders (or their duly authorized agents) entitled to cast not less than the Special Meeting Percentage of all votes entitled to be cast at the meeting to be called pursuant to such requests.  Nothing contained in this subsection (k) shall in any way be construed to suggest or imply that the Company or any Shareholder shall not be entitled to contest the validity of any request, whether during or after such five Business Day period, or to take any other action (including, without limitation, the commencement, prosecution or defense of any litigation with respect thereto, and the seeking of injunctive relief in such litigation).
 




Section 9.2              Notice.   If and to the extent required by law, the Secretary shall give to each Shareholder entitled to vote at such meeting and to each Shareholder not entitled to vote who is entitled to notice of the meeting written notice stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, either by mail, by recognized national courier service, by presenting it to such Shareholder personally, by leaving it at the Shareholder’s residence or usual place of business or by any other means, including electronic delivery, permitted by the Delaware LLC Act, the Exchange Act and any applicable Exchange Rule.  If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the Shareholder at the Shareholder’s address as it appears on the records of the Company, with postage thereon prepaid.  No business shall be transacted at a Shareholder Requested Meeting except as specifically designated in the notice.
 
Section 9.3             Quorum; Organization and Conduct.
 
(a)       Quorum.  A quorum for action at an annual or special meeting of Shareholders shall be the holders, present in person or by proxy, of a majority of the Outstanding Shares entitled to vote at the meeting; provided, however , that a quorum for the approval of any proposal that requires a Share Separate Class Approval or a Share Super-Majority Approval shall be the holders of that number of each class and series of Shares required to approve the proposal in question.
 
(b)        Organization and Conduct .  Every meeting of Shareholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment, by the Chairman of the Board, if there be one, or, in the case of the absence of the Chairman of the Board, by one of the following officers present at the meeting: the Vice Chairman of the Board, if there be one, the President, the Vice Presidents in their order of rank and seniority, or, in the absence of such officers, a chairman chosen by the Shareholders by the vote of a majority of the votes cast by Shareholders present in person or by proxy.  The Secretary, or, in the Secretary’s absence, an Assistant Secretary, or in the absence of both the Secretary and Assistant Secretaries, a person appointed by the Board of Directors or, in the absence of such appointment, a person appointed by the chairman of the meeting shall act as Secretary.  In the event that the Secretary presides at a meeting of the Shareholders, an Assistant Secretary shall record the minutes of the meeting.  The order of business and all other matters of procedure at any meeting of Shareholders shall be determined by the chairman of the meeting.  The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of such chairman, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to Shareholders of record of the Company, their duly authorized proxies or other such persons as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to Shareholders of record of the Company entitled to vote on such matter, their duly authorized proxies or other such persons as the chairman of the meeting may determine; (d) limiting the time allotted to questions or comments by participants; (e) maintaining order and security at the meeting; (f) removing any Shareholder who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; and (g) recessing or adjourning the meeting to a later date and time and place announced at the meeting.  Unless otherwise determined by the chairman of the meeting, meetings of Shareholders shall not be required to be held in accordance with the rules of parliamentary procedure or any established rules of order.  If a quorum shall not be present at any meeting of the Shareholders, the chairman of the meeting or the Shareholders entitled to vote at such meeting, present in person or by proxy, shall have the authority to adjourn the meeting from time to time to a specified date without notice other than announcement at the meeting.  At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified.  The Shareholders present either in person or by proxy, at a meeting which has been duly called and convened, may continue to transact business until adjournment, notwithstanding the withdrawal of enough Shareholders to leave less than a quorum.
 
Section 9.4              Proxies.   A Shareholder may cast the votes entitled to be cast by the Shares owned of record by the Shareholder in person or by proxy granted by the Shareholder or by the Shareholder’s duly authorized agent in




writing, by any means permitted by the Board of Directors or in any manner required by law.  Such proxy or evidence of authorization of such proxy shall be filed with the Secretary of the Company before or at the meeting.  No proxy shall be valid more than eleven months after its date unless otherwise provided in the proxy.
 
Section 9.5             Voting of Shares by Certain Holders.
 
(a)        For all purposes of this Agreement, Shares registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock.  For all purposes of this Agreement, any director or other fiduciary may vote stock registered in his name as such fiduciary, either in person or by proxy.  Shares directly or indirectly owned by the Company shall not be voted at any meeting and shall not be counted in determining the total number of Outstanding Shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of Outstanding Shares at any given time.
 
(b)        The Board of Directors may adopt by resolution a procedure by which a Shareholder may certify in writing to the Company that any Shares registered in the name of the Shareholder are held for the account of a specified person other than the Shareholder.  The resolution shall set forth the class of Shareholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date or closing of the stock transfer books, the time after the record date or closing of the stock transfer books within which the certification must be received by the Company; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable.  On receipt of such certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the Shareholder of record of the specified stock in place of the Shareholder who makes the certification.
 
Section 9.6              Inspectors.   The Board of Directors, in advance of any meeting, may, but need not, appoint one or more individual inspectors or one or more entities that designate individuals as inspectors to act at the meeting or any adjournment thereof.  If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors.  In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the Board of Directors in advance of the meeting or at the meeting by the chairman of the meeting.  The inspectors, if any, shall determine the number of Shares outstanding and the voting power of each, the Shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all Shareholders.  Each such report shall be in writing and signed by him or her or by a majority of them if there is more than one inspector acting at such meeting.  If there is more than one inspector, the report of a majority shall be the report of the inspectors.  The report of the inspector or inspectors on the number of Shares represented at the meeting and the results of the voting shall be prima facie evidence thereof.
 
Section 9.7             Advance Notice of Shareholder Nominees for Director and Other Shareholder Proposals.
 
(a)        Annual Meetings of Shareholders.  (1) Nominations of persons for election to the Board of Directors and the proposal of business to be considered by the Shareholders may be made at an annual meeting of Shareholders (i) pursuant to the Company’s notice of meeting by or at the direction of the Board of Directors or (ii) by any Shareholder of the Company (A) who holds, at the time of giving of notice provided for in this Section 9.7 and through and including the time of the annual meeting, a Certificate evidencing such Shareholder’s ownership of all Shares owned by such Shareholder, (B) who is entitled to vote at the meeting and present in person or by proxy at the meeting to answer questions concerning the nomination or business, and (C) who complies with the notice procedures set forth in this Section 9.7.
 




(2) For nominations or other business to be properly brought before an annual meeting by a Shareholder pursuant to clause (ii) of Section 9.7(a)(1), the Shareholder must have given timely notice thereof in writing to the Secretary of the Company and such other business must otherwise be a proper matter for Shareholder action.  To be timely, a Shareholder’s notice shall be delivered to the Secretary at the principal executive offices of the Company not later than 5:00 p.m. (Eastern Time) on the one hundred twentieth (120th) day nor earlier than 5:00 p.m. (Eastern Time) on the one hundred fiftieth (150th) day prior to the first anniversary of the date of mailing of the notice for the preceding year’s annual meeting; provided, however, that in the event that the annual meeting is called for a date that is more than thirty (30) days earlier or later than the first anniversary of the date of the preceding year’s annual meeting, notice by the Shareholder to be timely must be so delivered not later than 5:00 p.m. (Eastern Time) on the tenth (10th) day following the earlier of the day on which (A) notice of the date of the annual meeting is mailed or otherwise made available or (B) public announcement of the date of the annual meeting is first made by the Company.  In no event shall the public announcement of a postponement of the mailing of notice for such annual meeting or of an adjournment of an annual meeting to a later date or time commence a new time period for the giving of Shareholder’s notice as described above.  No Shareholder may give a notice to the Secretary described in this Section 9.7(a)(2) unless such Shareholder holds a Certificate for all Shares owned by such Shareholder, and a copy of each Certificate shall accompany such Shareholder’s notice to the Secretary in order for such notice to be effective; provided, however , that (x) the provisions of this sentence and clause (A) of Section 9.7(a)(1)(ii) shall be inapplicable unless Shareholders are entitled to receive a Certificate evidencing the Shares owned by them, and (y) if clause (x) of this proviso is applicable, no Shareholder may give a notice to the Secretary described in this Section 9.7(a)(2) unless such Shareholder is, at the time of giving such notice and through and including the time of the annual meeting, a Shareholder of record of all Shares owned by such Shareholder.  Such Shareholder’s notice shall set forth (a) as to each person whom the Shareholder proposes to nominate for election or reelection as a director, (i) such person’s name, age, business address and residence address, (ii) the principal occupation or employment of the person for the past five years, (iii) the class and number of Shares of the Company that are beneficially owned or owned of record by such person and the investment intent of such acquisition, (iv) the record of all purchases and sales of securities of the Company by such person during the previous 12 month period including the dates of the transactions, the class, series and number of securities involved in the transactions and the consideration involved, and (v) all other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to the Exchange Act, including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (b) as to any other business that the Shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any interest in such business of such Shareholder (including any anticipated benefit to the Shareholder therefrom) and of each beneficial owner, if any, on whose behalf the proposal is made; and (c) as to the Shareholder giving the notice and any Shareholder Associated Person, (i) the class, series and number of securities of the Company which are owned of record by such Shareholder and by such Shareholder Associated Person, if any; (ii) the class, series and number of, and the nominee holder for, Shares owned beneficially but not of record by such Shareholder and by any Shareholder Associated Person, if any; (iii) the name and address of such Shareholder as it appears on the Company’s stock ledger and the address, if different, of such Shareholder Associated Person; (iv) the record of all purchases and sales of securities of the Company by such Shareholder or Shareholder Associated Person during the previous 12 month period including the dates of the transactions, the class, series and number of securities involved in the transactions and the consideration involved; and (v) to the extent known by such Shareholder, the name and address of any other Shareholder supporting the nominee for election or reelection as a director or the proposal of other business on the date of such Shareholder’s notice.
 
For the purposes of this Section 9.7, “Shareholder Associated Person” of any Shareholder shall mean (i) any Person controlling, directly or indirectly, or acting in concert with, such Shareholder, (ii) any beneficial owner of Common Shares or other securities issued by the Company owned of record or beneficially by such Shareholder and (iii) any Person controlling, controlled by or under common control with such Shareholder or Shareholder Associated Person.
 




(3) Notwithstanding anything in the second sentence of Section 9.7(a)(2) to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Company is increased and there is no public announcement by the Company naming all of the nominees for director or specifying the size of the increased Board of Directors at least one hundred (100) days prior to the first anniversary of the date of mailing of notice for the preceding year’s annual meeting, a Shareholder’s notice required by this Section 9.7 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive office of the Company not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Company.
 
(b)        Shareholder Proposals Causing Covenant Breaches.  At the same time as or prior to the submission of any Shareholder proposal of business to be conducted at an annual or special meeting that, if approved and implemented by the Company, would cause the Company to be in breach of any covenant of the Company in any existing or proposed debt instrument of the Company or agreement of the Company with any lender, the proponent Shareholder or Shareholders must submit to the Secretary at the principal executive offices of the Company (i) evidence satisfactory to the Board of Directors of the lender’s willingness to waive the breach of covenant or (ii) a plan for repayment of the indebtedness to the lender and the payment of all related interest, prepayment premiums, breakage costs and other amounts due and payable in connection with such repayment satisfactory to the Board of Directors, specifically identifying the source of funds to be used in the repayment and related payments and presenting evidence satisfactory to the Board of Directors that the identified funds could be applied by the Company to the repayment.
 
(c)        Shareholder Proposals Requiring Regulatory Notice, Consent or Approval.  At the same time or prior to the submission of any Shareholder proposal of business to be conducted at an annual or special meeting that, if approved, could not be implemented by the Company without notifying or obtaining the consent or approval of any federal, state, municipal or other regulatory body, the proponent Shareholder or Shareholders must submit to the Secretary at the principal executive offices of the Company (i) evidence satisfactory to the Board of Directors that any and all required notices, consents or approvals have been given or obtained or (ii) a plan, satisfactory to the Board of Directors, for making the requisite notices or obtaining the requisite consents or approvals, as applicable, prior to the implementation of the proposal.
 
(d)        Special Meetings of Shareholders .  Only such business shall be conducted at a special meeting of Shareholders as shall have been brought before the meeting pursuant to the Company’s notice of meeting.  Nominations of persons for election to the Board of Directors may only be made at a special meeting of Shareholders at which directors are to be elected: (i) pursuant to the Company’s notice of meeting for a meeting called by the Chairman or the Board of Directors by or at the direction of the Board of Directors or (ii) provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any Shareholder of the Company (A) who holds, at the time of giving of notice provided for in this Section 9.7(d) and through and including the time of the special meeting, a Certificate evidencing such Shareholder’s ownership of all Shares owned by such Shareholder, (B) who is entitled to vote at the meeting and present in person or by proxy at the meeting to answer questions concerning the nomination or business and (C) who complies with the notice procedures set forth in this Section 9.7(d).  If, pursuant to the request of the Chairman, the President or a majority of the members of the Board of Directors, the Company calls a special meeting of Shareholders for the purpose of electing one or more directors to the Board of Directors, any such Shareholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Company’s notice of meeting, if the Shareholder’s notice contains the information required by Section 9.7(a)(2) and the notice has been delivered to the Secretary at the principal executive offices of the Company not earlier than the close of business on the one hundred twentieth (120th) day prior to such special meeting nor later than the later of (x) the ninetieth (90th) day prior to such special meeting or (y) the tenth (10th) day following the day on which public announcement is first made of the date of such special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.  In no event shall the public announcement of a postponement or adjournment of a special meeting to a later date or time commence a new time period for the giving of a Shareholder’s notice as described above. No Shareholder may give a notice to the Secretary provided for in this Section 9.7(d) unless such Shareholder holds a Certificate for all Shares owned by such Shareholder, and a copy of each Certificate shall accompany such Shareholder’s notice to the Secretary in order for such




notice to be effective; provided, however, that (x) the provisions of this sentence and clause (A) of Section 9.7(d)(ii) shall be inapplicable unless Shareholders are entitled to receive a Certificate evidencing the Shares owned by them, and (y) if clause (x) of this proviso is applicable, no Shareholder may give a notice to the Secretary described in this Section 9.7(d) unless such Shareholder is, at the time of giving such notice and through and including the time of the special meeting, a Shareholder of record of all Shares owned by such Shareholder.
 
(e)        General.  (1) Upon written request by the Secretary or the Board of Directors or any committee thereof, any Shareholder proposing a nominee for election as a director or any proposal for other business at a meeting of Shareholders shall provide, within three business days of delivery of such request (or such other period as may be specified in such request), written verification, satisfactory to the Secretary or the Board of Directors or any committee thereof, in his, her or its sole discretion, of the accuracy of any information submitted by the Shareholder pursuant to this Section 9.7.  If a Shareholder fails to provide such written verification within such period, the Secretary or the Board of Directors or any committee thereof may treat the information as to which written verification was requested as not having been provided in accordance with the procedures set forth in this Section 9.7.
 
(2) Only such persons who are nominated in accordance with the procedures set forth in this Section 9.7 shall be eligible to serve as directors and only such business as shall have been brought before the meeting with the procedures set forth in this Section 9.7 shall be transacted at a meeting of Shareholders.  The chairperson of the meeting shall have the power and duty to determine whether a nomination proposed to be made or any business proposed to be brought before the meeting was made at or brought before the meeting, as the case may be, in accordance with the procedures set forth in this Section 9.7 and, if any proposed nomination or business is not in compliance with this Section 9.7, to declare that such nomination or business is out of order and should be disregarded.

(3) For purposes of this Section 9.7, (a) the “date of mailing of the notice” shall mean the date of the proxy statement for the solicitation of proxies for election of directors and (b) “public announcement” shall mean disclosure (i) in a press release reported by the Dow Jones News Service, Associated Press or comparable news service or (ii) in a document publicly filed by the Company with the Commission.
 
(4) The Company shall not be required to include in the Company’s proxy statement a Shareholder nomination of one or more persons for election to the Board of Directors unless (i) such nomination has been properly made in accordance with the provisions of this Section 9.7 and (ii) the Board of Directors has endorsed such nomination.  The Company shall not be required to include in the Company’s proxy statement a Shareholder proposal other than a Board of Directors nomination unless (i) such proposal has been properly made in accordance with the provisions of this Section 9.7 and (ii) either the Board of Directors has endorsed such proposal or the proposal has been made by Shareholders holding not less than 25% of the Shares required to approve the proposal (or such lesser percentage as may be required by law).  In addition, the Company shall not be required to include in the Company’s proxy statement a Shareholder proposal of business to be brought before an annual or special meeting of Shareholders unless the proponent Shareholder or Shareholders shall have complied with (i) all applicable requirements of state and federal law and the rules and regulations thereunder, including without limitation Rule 14a-8 (or any successor provision) under the Exchange Act, and (ii) the applicable procedures and other requirements set forth in this Section 9.7.  Nothing in this Section 9.7 shall be deemed to affect any right of the Company to omit a Shareholder proposal from the Company’s proxy statement under the Exchange Act, including without limitation nominations of persons for election to the Board of Directors and business to be brought before the Shareholders at an annual or special meeting of Shareholders.  A Shareholder proposal properly made in accordance with the provisions of this Section 9.7 shall be considered at the meeting with respect to which it was made even if such proposal does not appear in the Company’s proxy statement for that meeting.
 
(5) The Board of Directors may from time to time require any person nominated to serve on the Board of Directors to agree in writing with regard to matters of business ethics and confidentiality while such nominee serves as a Director, such agreement to be on the terms and in a form determined satisfactory by the Board of Directors, as amended and supplemented from time to time in the discretion of the Board of Directors.  The terms of such agreement may be




substantially similar to the Code of Business Conduct and Ethics of the Company or any similar code promulgated by the Company or may differ from or supplement such Code of Business Conduct and Ethics or other code.
 
Section 9.8              Actions of Shareholders by Written Consent.    Any action required or permitted to be taken at a meeting of Shareholders may be taken without a meeting only by a unanimous written consent of the Shareholders entitled to vote on the matter which sets forth the action. 
 
ARTICLE X
INDEMNIFICATION
 
Section 10.1           Indemnification.
 
(a)        To the fullest extent permitted by law but subject to the limitations expressly provided in this Agreement or in any Bylaws of the Company, all Indemnitees shall be indemnified and held harmless by the Company from and against any and all losses, claims, damages, liabilities, joint or several, expenses (including legal fees and expenses), judgments, fines, penalties, interest, settlements or other amounts arising from any and all claims, demands, actions, suits or proceedings, whether civil, criminal, administrative or investigative, whether or not by or in the right of the Company, in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise, in connection with any act or omission performed, or omitted to be performed, by such Indemnitee in good faith on behalf of or with respect to the Company or by reason of its status as an Indemnitee; provided that the Indemnitee shall not be indemnified and held harmless if there has been a final and non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter for which the Indemnitee is seeking indemnification pursuant to this Section 10.1, the Indemnitee acted in bad faith or engaged in fraud, willful misconduct, or in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful.
 
(b)        To the fullest extent permitted by law, expenses (including legal fees and expenses) incurred by an Indemnitee who is indemnified pursuant to Section 10.1 in defending any claim, demand, action, suit or proceeding shall, from time to time, be advanced by the Company prior to a determination that the Indemnitee is not entitled to be indemnified upon receipt by the Company of any undertaking by or on behalf of the Indemnitee to repay such amount if it shall be determined that the Indemnitee is not entitled to be indemnified as authorized in this Section 10.1.
 
(c)        The indemnification, advancement of expenses and other provisions of this Section 10.1 shall be in addition to any other rights to which an Indemnitee may be entitled under any agreement, pursuant to any vote of the holders of Outstanding Shares entitled to vote on such matter, pursuant to a vote of the Board of Directors, as a matter of law or otherwise, both as to actions in the Indemnitee’s capacity as an Indemnitee and as to actions in any other capacity, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee.
 
(d)        The Company may purchase and maintain insurance, on behalf of its Directors and Officers, and such other Persons as the Board of Directors shall determine, against any liability that may be asserted against or expense that may be incurred by such Person in connection with the Company’s activities or such Person’s activities on behalf of the Company, regardless of whether the Company would have the power to indemnify such Person against such liability under the provisions of this Agreement or otherwise.
 
(e)        For purposes of the definition of Indemnitee in Section 1.1, the Company shall be deemed to have requested an Indemnitee to serve as fiduciary of an employee benefit plan whenever the performance by such Indemnitee of his or her duties to the Company also imposes duties on, or otherwise involves services by, such Indemnitee to the plan or participants or beneficiaries of the plan; excise taxes assessed on an Indemnitee with respect to an employee benefit plan pursuant to applicable law shall constitute “fines” within the meaning of this Section 10.1; and action taken or omitted by such Indemnitee with respect to any employee benefit plan in the performance of such Indemnitee’s duties for




a purpose reasonably believed by him or her to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose that is in, or not opposed to, the best interests of the Company.
 
(f)         Any indemnification pursuant to this Section 10.1 shall be made only out of the assets of the Company, it being agreed that the Shareholders shall not be personally liable for such indemnification and shall have no obligation to contribute or loan any monies or property to the Company to enable it to effectuate such indemnification.
 
(g)        An Indemnitee shall not be denied indemnification in whole or in part under this Section 10.1 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement or applicable law.
 
(h)        The indemnification, advancement of expenses and other provisions of this Section 10.1 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons.
 
(i)         No amendment, modification or repeal of this Section 10.1 or any provision hereof shall in any manner terminate, reduce or impair the right of any past, present or future Indemnitee to be indemnified by the Company, nor the obligations of the Company to indemnify any such Indemnitee under and in accordance with the provisions of this Section 10.1 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.
 
(j)         The Company shall have the power, with the approval of the Board of Directors, to provide such indemnification and advancement of expenses to a person who served a predecessor of the Company in any of the capacities described above and to any employee or agent of the Company or a predecessor of the Company.
 
(k)        The provisions of this Article X shall be applicable to all claims, demands, actions, suits or proceedings made or commenced after the adoption thereof whether arising from acts or omissions to act occurring before or after its adoption.
 
Section 10.2           Exculpation of Liability.
 
(a)        The personal liability of each member of its Board of Directors to the Company, its Shareholders or any other Person bound by this Agreement is hereby eliminated for monetary damages for breach of fiduciary duty as a Director; provided, however , that, the foregoing shall not eliminate the liability of a director (i) for any breach of such director’s duty of loyalty to the Company or the Shareholders as modified by this Agreement, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or (iii) for any transaction from which such director derived an improper personal benefit.
 
(b)        Notwithstanding anything to the contrary set forth in this Agreement, no Indemnitee shall be liable for monetary damages to the Company, the Shareholders or any other Person bound by this Agreement for losses sustained or liabilities incurred as a result of any act or omission of an Indemnitee unless there has been a final, non-appealable judgment entered by a court of competent jurisdiction determining that, in respect of the matter in question, the Indemnitee acted in bad faith or engaged in fraud, willful misconduct or, in the case of a criminal matter, acted with knowledge that the Indemnitee’s conduct was unlawful.
 
(c)        The Board of Directors may exercise any of the powers granted to it by this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents, and the Board of Directors shall not be responsible for any misconduct or negligence on the part of any such agent appointed by the Board of Directors in good faith.
 




(d)        The provisions of this Agreement, to the extent that they restrict or eliminate or otherwise modify the duties (including fiduciary duties) and liabilities of an Indemnitee otherwise existing at law or in equity, are agreed by the Shareholders to replace such other duties and liabilities of such Indemnitee.
 
(e)        Any amendment, modification or repeal of this Section 10.2 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the liability of any Indemnitee and other protective provisions under this Section 10.2 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted and provided such Person became an Indemnitee hereunder prior to such amendment, modification or repeal.
 
Section 10.3            Indemnification of the Company.    To the fullest extent permitted by law, each Shareholder will be liable to the Company (and any Subsidiaries or Affiliates thereof) for, and indemnify and hold harmless the Company (and any Subsidiaries or Affiliates thereof) from and against, all costs, expenses, penalties, fines or other amounts, including, without limitation, reasonable attorneys’ and other professional fees, whether third party or internal, arising from such Shareholder’s breach of or failure to fully comply with any covenant, condition or provision of this Agreement or any Bylaws, including, without limitation, Sections 8.1 through 8.2 of Article VIII and Section 9.7 of Article IX and the provisions of any Bylaws that may address similar matters as those contained in such sections, or any action by or against the Company (or any Subsidiaries or Affiliates thereof) in which such Shareholder is not the prevailing party, and shall pay such indemnitee such amounts on demand, together with interest on such amounts, which interest will accrue at the rate of interest provided in any Bylaws of the Company for indemnification amounts payable by a Shareholder to any such indemnitee pursuant to this Section 10.3 or any Bylaws or if there are no Bylaws of the Company or if any such Bylaws which may be in effect do not provide for a rate of interest for any such amounts then the rate of interest for such amounts shall be the lesser of 15% per annum compounded and the maximum amount permitted by law, in each case from the date such costs or the like are incurred until the receipt of repayment by the indemnitee.
 
Section 10.4            Limitation of Liability.    If there is any liability on the part of the Initial Shareholder or any Subsidiary or Affiliate thereof that is a real estate investment trust, with respect to any matter under this Agreement, the following shall apply: THE DECLARATION OF TRUST ESTABLISHING HPT (OR, AS APPLICABLE, SUCH SUBSIDIARY OR AFFILIATE), A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (EACH A “ DECLARATION ” AND TOGETHER THE “ DECLARATIONS ”), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME “HOSPITALITY PROPERTIES TRUST” (OR, AS APPLICABLE, THE NAME OF SUCH SUBSIDIARY OR AFFILIATE) REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HPT (OR, AS APPLICABLE, SUCH SUBSIDIARY OR AFFILIATE) SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, HPT (OR, AS APPLICABLE, SUCH SUBSIDIARY OR AFFILIATE).  ALL PERSONS DEALING WITH HPT (OR, AS APPLICABLE, SUCH SUBSIDIARY OR AFFILIATE) IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF HPT (OR, AS APPLICABLE, SUCH SUBSIDIARY OR AFFILIATE) FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
 
ARTICLE XI
BOOKS, RECORDS, ACCOUNTING AND REPORTS
 
Section 11.1            No Right of Inspection or Access.   Except as the Board of Directors may specify in one or more instances or categories, to the maximum extent permitted by Section 18-305(g) of the Delaware LLC Act, no Shareholder shall have the right to inspect, or obtain a copy of, any of the books and records of the Company, and no Shareholder shall have any right of access to any Director or Officer of the Company.  Any right of inspection or access granted by the Board of Directors shall be subject to such restrictions, including confidentiality restrictions, as the Board




of Directors may impose.  The Company shall not be required to furnish any reports or other information to the Shareholders except as otherwise required by applicable law, rule or regulation.
 
ARTICLE XII
DISSOLUTION AND LIQUIDATION
 
Section 12.1            Dissolution.   The Company shall dissolve, and its affairs shall be wound up, only upon the first to occur of the following:
 
(a)        an election to dissolve the Company by the Board of Directors that is approved by the holders of a Share Plurality;
 
(b)        the sale, exchange or other disposition of all or substantially all of the assets and properties of the Company and the Company’s Subsidiaries unless otherwise determined by the Board of Directors;
 
(c)        the entry of a decree of judicial dissolution of the Company pursuant to the provisions of the Delaware LLC Act; or
 
(d)        the reduction of the number of Shareholders to zero.
 
Section 12.2            Liquidator.   Upon dissolution of the Company, the Board of Directors shall select one or more Persons to act as Liquidator.  The Liquidator (if other than the Board of Directors) shall be entitled to receive such compensation for its services as may be approved by holders of a Share Majority.  The Liquidator (if other than the Board of Directors) shall agree not to resign at any time without 15 days’ prior notice and may be removed at any time, with or without cause, by notice of removal approved by holders of a Share Majority.  Upon dissolution, removal or resignation of the Liquidator, a successor and substitute Liquidator (who shall have and succeed to all rights, powers and duties of the original Liquidator) shall within 30 days thereafter be approved by holders of a Share Majority.  The right to approve a successor or substitute Liquidator in the manner provided herein shall be deemed to refer also to any such successor or substitute Liquidator approved in the manner herein provided.  Except as expressly provided in this Article XII, the Liquidator approved in the manner provided herein shall have and may exercise, without further authorization or consent of any of the parties hereto, all of the powers conferred upon the Board of Directors under the terms of this Agreement (but subject to all of the applicable limitations, contractual and otherwise, upon the exercise of such powers) necessary or appropriate to carry out the duties and functions of the Liquidator hereunder for and during the period of time required to complete the winding up and liquidation of the Company as provided for herein.
 
Section 12.3            Liquidation.   The Liquidator shall proceed to dispose of the assets of the Company, discharge its liabilities, and otherwise wind up its affairs in such manner and over such period as determined by the Liquidator, subject to the applicable provisions of the Delaware LLC Act.
 
Section 12.4            Cancellation of Certificate of Formation.   Upon the completion of the distribution of Company cash and property as provided in Section 12.3 in connection with the liquidation of the Company, the Certificate of Formation and all qualifications of the Company as a foreign limited liability company in jurisdictions other than the State of Delaware shall be canceled and such other actions as may be necessary to terminate the Company shall be taken.
 
Section 12.5            Return of Contributions.   No Shareholder, Director or Officer of the Company will be personally liable for, or have any obligation to contribute or loan any monies or property to the Company to enable it to effectuate, the return of any capital contributions of any Shareholder or Shareholders, or any portion thereof, it being expressly understood that any such return shall be made solely from Company assets.
 
Section 12.6            Waiver of Partition.   To the maximum extent permitted by law, each Shareholder hereby waives any right to partition of the Company property.
 




Section 12.7            No Shareholder Right to Dissolve.   Except as specifically contemplated by Section 12.1, the Shareholders shall have no right to dissolve or liquidate the Company.

ARTICLE XIII
AMENDMENT OF AGREEMENT
 
Section 13.1           Amendment of Limited Liability Company Agreement.
 
(a)        General Amendments .  Except as provided in Section 13.1(b), the Board of Directors may amend any of the terms of this Agreement but only in compliance with the terms, conditions and procedures set forth in this Section 13.1(a).  If the Board of Directors desires to amend any provision of this Agreement other than pursuant to Section 13.1(b), then it shall first adopt a resolution setting forth the amendment proposed, declaring its advisability, and either calling a special meeting of the Shareholders entitled to vote in respect thereof for the consideration of such amendment or directing that the amendment proposed be considered at the next annual meeting of the Shareholders.  Amendments to this Agreement may be proposed only by or with the consent of the Board of Directors.  In the event that applicable law requires that amendments may be proposed by the Shareholders, such amendments may be proposed only by the holders of the percentage of Shares specified by law or if no such percentage is specified then by the holders of 25% of the Outstanding Shares; in addition, no such proposal shall be considered unless such proposal has been properly made in accordance with the provisions of Section 9.7.  A special or annual meeting to consider any such proposal shall be called and held upon notice in accordance with Article IX of this Agreement.  The notice shall set forth such amendment in full or a brief summary of the changes to be effected thereby, as the Board of Directors shall deem advisable.  At the meeting, a vote of Shareholders entitled to vote thereon shall be taken for and against the proposed amendment.  A proposed amendment shall be effective upon its approval in accordance with the provisions of Section 9.1(b).
 
(b)        Amendments to be Adopted Solely by the Board of Directors.  Notwithstanding Section 13.1(a), the Board of Directors, without the approval or any other action of any Shareholder, may amend any provision of this Agreement, and execute, swear to, acknowledge, deliver, file and record whatever documents may be required in connection therewith, to reflect:
 
(i)    change in the name of the Company, the location of the principal place of business of the Company, the registered agent of the Company or the registered office of the Company;
 
(ii)    the admission, substitution or removal of Shareholders in accordance with this Agreement;
 
(iii)  any change as to which the Board of Directors reasonably determines is customarily of the type contained in the bylaws of a corporation organized under the Delaware General Corporation Law, including without limitation, any of the provisions of Articles IV, VII, IX, X, XI and XV;
 
(iv)   a change that the Board of Directors determines (A) does not adversely affect the Shareholders (including any particular class or series of Shares as compared to other classes or series of Shares) in any material respect, (B) to be necessary or appropriate to (1) satisfy any requirements, conditions or guidelines contained in any opinion, directive, order, ruling or regulation of any federal or state agency or judicial authority or contained in any federal or state statute (including the Delaware LLC Act) or (2) facilitate the trading of the Shares (including the division of any class or series of Outstanding Shares into different classes or series to facilitate uniformity of tax consequences within such classes or series of Shares) or comply with any rule, regulation, guideline or requirement of any National Securities Exchange on which the Common Shares or other securities of the Company are or will be listed for trading, compliance with any of which the Board of Directors deems to be in the best interests of the Company and the Shareholders, (C) is required to effect the intent of the provisions of
    




this Agreement or is otherwise contemplated by this Agreement or (D) is required or desired to correct any ambiguity or mistake in this Agreement determined to be such by the Board of Directors;
 
(v)    notwithstanding the provisions of Section 13.1(b)(iv)(A), any change that the Board of Directors determines to be in the best interest of the Shareholders of the Company as a whole and regardless of whether or not such provision is adverse to any class or series of Shares or particular Shareholder or group of Shareholders;
 
(vi)   a change in the fiscal year or taxable year of the Company and any other changes that the Board of Directors determines to be necessary or appropriate as a result of a change in the fiscal year or taxable year of the Company including, if the Board of Directors shall so determine, a change in the definition of “Quarter”;
 
(vii)  notwithstanding the provisions of Section 13.1(b)(iv)(A), an amendment that the Board of Directors determines to be necessary or appropriate in connection with the authorization or issuance of any class or series of Shares or other securities of the Company pursuant to Section 5.3;
 
(viii) an amendment that the Board of Directors, in its sole discretion, determines to be necessary or appropriate to implement a defensive shareholder rights plan similar to a shareholder rights plan, or “poison pill,” for corporations, including the issuance of a dividend of rights to each Shareholder that would become exercisable if any Person or group (an “Acquiring Person”) acquires ownership in excess of a specified percentage of the Outstanding Shares or initiates a tender offer for in excess of that specified percentage of the Outstanding Shares; and the provisions of such a plan may include provisions that delegate all or certain decisions to Directors who have specified qualifications, including a lack of a relationship to the Acquiring Person and/or specified tenure on the Board of Directors;
 
(ix)  any amendment expressly permitted in this Agreement to be made by the Board of Directors acting alone;
 
(x)   an amendment effected, necessitated or contemplated by a Merger Agreement approved in accordance with Section 14.3;
 
(xi)  an amendment that the Board of Directors determines to be necessary or appropriate to reflect and account for the formation by the Company of, or investment by the Company in, any corporation, partnership, joint venture, limited liability company or other entity; or
 
(xii)  any other amendments substantially similar to the foregoing.
 
Section 13.2           Amendment Requirements.
 
(a)        Notwithstanding the provisions of Section 13.1, no provision of this Agreement that establishes a percentage of Outstanding Shares required to take any action shall be amended, altered, changed, repealed or rescinded in any respect that would reduce such voting percentage unless such amendment is approved by the affirmative vote of holders of Outstanding Shares whose aggregate Outstanding Shares constitute not less than the voting requirement sought to be reduced.
 
(b)        Notwithstanding the provisions of Section 13.1, no amendment to this Agreement may (i) enlarge the obligations of any Shareholder without its consent, unless such shall be deemed to have occurred as a result of an amendment approved pursuant to Section 13.2(c), (ii) change Section 12.1(a), (iii) give any Person the right to dissolve the Company other than in accordance with Section 12.1 or (iv) change the term of existence of the Company.
 




(c)        Except as provided in Section 14.3, and without limitation of the Board of Directors’ authority to adopt amendments to this Agreement without the approval of any Shareholders as contemplated in Section 13.1, any amendment that would have a material adverse effect on the rights or preferences of any class of Shares in relation to other classes of Shares must be approved by the holders of not less than a majority of the Outstanding Shares of the class affected.
 
ARTICLE XIV
MERGER, CONSOLIDATION OR CONVERSION
 
Section 14.1            Authority.   The Company may merge or consolidate with one or more limited liability companies or “other business entities” as defined in the Delaware LLC Act, or convert into another entity, whether such entity is formed under the laws of the State of Delaware or any other state of the United States of America, pursuant to a written agreement of merger or consolidation (“ Merger Agreement ”) or a written plan of conversion (“ Plan of Conversion ”), as the case may be, in accordance with this Article XIV.
 
Section 14.2            Procedure for Merger, Consolidation or Conversion.   Merger, consolidation or conversion of the Company pursuant to this Article XIV requires the prior approval of the Board of Directors.
 
(a)        If the Board of Directors shall determine to consent to the merger or consolidation, the Board of Directors shall approve the Merger Agreement, which shall set forth:
 
(i)    the names and jurisdictions of formation or organization of each of the business entities proposing to merge or consolidate;
 
(ii)   the name and jurisdiction of formation or organization of the business entity that is to survive the proposed merger or consolidation (the “ Surviving Business Entity ”);
 
(iii)    the terms and conditions of the proposed merger or consolidation;

(iv)    the manner and basis of canceling the rights or securities of, or interests in, each constituent entity or of exchanging or converting the rights or securities of, or interests in, each constituent business entity for, or into, cash, property, rights, or securities of or interests in, the Surviving Business Entity; and if any rights or securities of, or interests in, any constituent business entity are not to be exchanged or converted solely for, or into, cash, property, rights, or securities of or interests in, the Surviving Business Entity, the cash, property, rights, or securities of or interests in, any limited liability company or other business entity which the holders of such rights, securities or interests are to receive;
 
(v)    a statement of any changes in the constituent documents or the adoption of new constituent documents (the certificate of formation or limited liability company agreement, articles or certificate of incorporation, articles of trust, declaration of trust, certificate or agreement of limited partnership or other similar charter or governing document) of the Surviving Business Entity to be effected by such merger or consolidation;
 
(vi)   the effective time of the merger or consolidation, which may be the date of the filing of the certificate of merger or consolidation pursuant to Section 14.4 or a later date specified in or determinable in accordance with the Merger Agreement (provided, that if the effective time of the merger or consolidation is to be later than the date of the filing of the certificate of merger or consolidation, the effective time shall be fixed no later than the time of the filing of the certificate of merger or consolidation and stated therein); and
 




(vii)  such other provisions with respect to the proposed merger or consolidation that the Board of Directors determines to be necessary or appropriate.
 
(b)        If the Board of Directors shall determine to consent to the conversion, the Board of Directors may approve and adopt a Plan of Conversion containing such terms and conditions that the Board of Directors determines to be necessary or appropriate.
 
Section 14.3           Approval by Shareholders of Merger, Consolidation or Conversion.
 
(a)        Except as provided in Section 14.3(d), the Board of Directors, upon its approval of the Merger Agreement or Plan of Conversion, as the case may be, shall direct that the Merger Agreement or Plan of Conversion, as applicable, be submitted to a vote of Shareholders, whether at an annual meeting or a special meeting, in either case in accordance with the requirements of Article IX.  A copy or a summary of the Merger Agreement or Plan of Conversion, as applicable, shall be included in or enclosed with the notice of meeting.
 
(b)        Except as provided in Section 14.3(d), the Merger Agreement or Plan of Conversion, as applicable, shall be approved upon receiving the affirmative vote or consent of the holders of a Share Plurality.
 
(c)        Except as provided in Section 14.3(d), after such approval by vote or consent of the Shareholders, and at any time prior to the filing of the certificate of merger or a certificate of conversion pursuant to Section 14.4, the merger, consolidation or conversion may be abandoned or amended pursuant to provisions therefor, if any, set forth in the Merger Agreement or the Plan of Conversion, as the case may be.
 
(d)        Notwithstanding anything else contained in this Article XIV or in this Agreement, the Board of Directors is permitted without Shareholder approval to create, dissolve, merge, consolidate or convert the Company or any Subsidiary, or convey all of the Company’s assets to another limited liability entity, if the principal purpose of such action, as determined by the Board of Directors, is to effect a change in the legal form of the Company’s business, including to change the Company into a corporation, limited partnership, trust or other legal entity, to change the jurisdiction of organization of the Company or any combination of the foregoing.
 
(e)        Notwithstanding anything else contained in this Article XIV or in this Agreement, the Board of Directors is permitted without Shareholder approval to mortgage, sell and leaseback, pledge, hypothecate, or grant a security interest in, some, all or substantially all of the assets of the Company or the Company’s Subsidiaries and permit the sale upon foreclosure or other realization of such an encumbrance.
 
(f)         Shareholders are not entitled to dissenters’ rights of appraisal in the event of a merger, consolidation or conversion involving the Company, a sale of all or substantially all of the assets of the Company or the Company’s Subsidiaries, or any other transaction or event.
 
Section 14.4            Certificate of Merger or Conversion.   Upon the required approval by the Board of Directors and the Shareholders (if required) of a Merger Agreement or a Plan of Conversion, as the case may be, a certificate of merger or consolidation or certificate of conversion, as applicable, shall be executed and filed with the Secretary of State of the State of Delaware in conformity with the requirements of the Delaware LLC Act.
 
Section 14.5            Business Combination Limitations.   Notwithstanding any other provision of this Agreement, but in addition to the transfer restrictions contained in this Agreement, with respect to any “Business Combination” (as such term is defined in Section 203 of the Delaware General Corporation Law), the provisions of Section 203 of the Delaware General Corporation Law shall be applied with respect to the Company as though the Company were a Delaware corporation, the Shareholders were stockholders of such corporation and the Board of Directors was the board of directors of such corporation.  Any amendment of this Section shall be governed by Article XIII.
 




ARTICLE XV
GENERAL PROVISIONS
 
Section 15.1            Fiscal Year.   The fiscal year of the Company shall be a fiscal year ending December 31 or as otherwise determined by the Board of Directors.
 
Section 15.2            Addresses and Notices.   Any notice, demand, request, report or proxy materials required or permitted to be given or made to a Shareholder under this Agreement shall be in writing and shall be deemed given or made when delivered in person, by mail, by recognized national courier service, by presenting it to such Shareholder personally, by leaving it at the Shareholder’s residence or usual place of business or by any other means, including electronic delivery, permitted by the Delaware LLC Act, the Exchange Act and any applicable Exchange Rule.  Any notice to the Company shall be deemed given if received by the Secretary at the principal office of the Company designated by the Board of Directors.  The Board of Directors and the Officers may rely and shall be protected in relying on any notice or other document from a Shareholder or other Person if believed by it to be genuine.
 
Section 15.3            Bylaws.   The Board of Directors is authorized to adopt Bylaws governing the affairs of the Company provided that such Bylaws are not inconsistent with this Agreement. For the avoidance of doubt, no bylaw shall be deemed to be inconsistent with this Agreement (i) if the Board had the authority, at the time the bylaw was adopted or any time thereafter, to remove the inconsistency pursuant to Section 13.1(b) or (ii) if such bylaw is furtherance of any provision of this Agreement.
 
Section 15.4            Further Action.   The parties shall execute and deliver all documents, provide all information and take or refrain from taking action as may be necessary or appropriate to achieve the purposes of this Agreement.
 
Section 15.5            Binding Effect.   This Agreement shall be binding upon and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives and permitted assigns.
 
Section 15.6            Integration.   This Agreement constitutes the entire agreement among the parties hereto pertaining to the subject matter hereof and supersedes all prior agreements and understandings pertaining thereto.
 
Section 15.7            Creditors.   None of the provisions of this Agreement shall be for the benefit of, or shall be enforceable by, any creditor of the Company.
 
Section 15.8            Waiver.   No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach of any other covenant, duty, agreement or condition.
 
Section 15.9            Counterparts.   This Agreement may be executed in counterparts, all of which together shall constitute an agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart.  Each party shall become bound by this Agreement immediately upon affixing its signature hereto or, in the case of a Person acquiring a Share, as otherwise provided in this Agreement.
 
Section 15.10          Applicable Law.   This Agreement shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to principles of conflict of laws.
 
Section 15.11          Invalidity of Provisions.   If any provision of this Agreement is or becomes invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be affected thereby.
 




Section 15.12          Consent of Shareholders.   Each Shareholder hereby expressly consents and agrees that, whenever in this Agreement it is specified that an action may be taken without the consent of Shareholders or upon the affirmative vote or consent of less than all of the Shareholders, such action may be so taken without the consent of Shareholders or upon the concurrence of less than all of the Shareholders and each Shareholder shall be bound by the results of such action.
 
Section 15.13          Signatures.   The use of facsimile signatures affixed in the name and on behalf of the transfer agent and registrar of the Company on certificates representing Shares is expressly permitted by this Agreement.  Any Board of Directors or Shareholder written consent or approval may be evidenced by faxed signatures or other electronic representation delivered to the Secretary.
 
ARTICLE XVI
ARBITRATION
 
Section 16.1           Procedures for Arbitration of Disputes.       Any disputes, claims or controversies brought by or on behalf of any shareholder of the Company (which, for purposes of this Article XVI, shall mean any shareholder of record or any beneficial owner of shares of the Company, or any former shareholder of record or beneficial owner of shares of the Company), either on his, her or its own behalf, on behalf of the Company or on behalf of any series or class of shares of the Company or shareholders of the Company against the Company or any director, officer, manager (including Reit Management & Research The RMR Group LLC and The RMR Group Inc. or its successor or their successors ), agent or employee of the Company, including disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance application or enforcement of this Agreement or any Bylaws of the Company (all of which are referred to as “Disputes”) or relating in any way to such a Dispute or Disputes, shall on the demand of any party to such Dispute be resolved through binding and final arbitration in accordance with the procedures and rules for arbitration prescribed by any Bylaws of the Company. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against directors, officers or managers of the Company and class actions by shareholders against those individuals or entities and the Company.  For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. Notwithstanding the foregoing, (a) the provisions of this Article XVI shall not apply to any request for a declaratory judgment or similar action regarding the meaning, interpretation or validity of any provision of this Agreement or any Bylaws of the Company, but such request shall be heard and determined by a court of competent jurisdiction and (b) in the event a Dispute involves both a question of the meaning, interpretation or validity of any provision of this Agreement or any Bylaws of the Company and any other matter in dispute, the arbitration of such other matter in dispute, if dependent upon a determination of the meaning, interpretation or validity of any provision of this Agreement or any Bylaws of the Company, shall be stayed until a final, non-appealable judgement regarding such meaning, interpretation or validity has been rendered by a court of competent jurisdiction.
 
Section 16.2           Award Final.       The award or decision of the arbitrator(s) , which in the case of an appeal in accordance with the procedures and rules for arbitration prescribed in any Bylaws of the Company is the decision rendered by an appeal tribunal,  shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between such parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators.  Judgment upon the Award may be entered in any court having jurisdiction.  To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made, except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.
 
Section 16.3           Costs and Expenses.       Except as otherwise set forth in this Agreement, including Section 10.3, or any Bylaws of the Company, or agreed between the parties, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include




shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of the Company’s award to the claimant or the claimant’s attorneys.
 
Section 16.4           Beneficiaries.       This Article XVI is intended to benefit and be enforceable by the shareholders, directors, officers, managers (including Reit Management & Research The RMR Group LLC and The RMR Group Inc. or its successor or their successors ), agents or employees of the Company and the Company and shall be binding on the shareholders of the Company and the Company, as applicable, and shall be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.
 
[Remainder of page intentionally left blank.]
  




IN WITNESS WHEREOF, the parties hereto have executed or have otherwise become bound by this Agreement as of the date first written above.
 
INITIAL SHAREHOLDER:
 
ADDITIONAL SHAREHOLDERS:
 
 
 
HOSPITALITY PROPERTIES TRUST
 
All Shareholders hereafter admitted
 
 
as Shareholders of the Company
 
 
pursuant to the Distribution or
 
 
otherwise in accordance with this
 
 
Agreement.
 
 
 
By:
/s/ John G. Murray
 
 
 
Name:
John G. Murray
 
 
 
Title:
President
 
 
 
[Signature Page to Amended and Restated Limited Liability Company Agreement]



















Exhibit 10.3

SIXTH AMENDMENT TO
AMENDED AND RESTATED LEASE AGREEMENT NO. 4
THIS SIXTH AMENDMENT TO AMENDED AND RESTATED LEASE AGREEMENT NO. 4 (this “ Amendment ”) is made and entered into as of September 14, 2016 by and between HPT TA PROPERTIES TRUST , a Maryland real estate investment trust, and HPT TA PROPERTIES LLC , a Maryland limited liability company, as landlord (collectively, “ Landlord ”), and TA OPERATING LLC , a Delaware limited liability company, as tenant (“ Tenant ”).
W I T N E S S E T H :
WHEREAS , Landlord and Tenant are parties to that certain Amended and Restated Lease Agreement No. 4, dated as of June 9, 2015, as amended by that certain First Amendment to Amended and Restated Lease Agreement No. 4, dated as of June 16, 2015, that certain Second Amendment to Amended and Restated Lease Agreement No. 4, dated as of June 23, 2015, that certain Third Amendment to Amended and Restated Lease Agreement No. 4, dated as of September 23, 2015, that certain Fourth Amendment to Amended and Restated Lease Agreement No. 4, dated as of March 31, 2016, and that certain Fifth Amendment to Amended and Restated Lease Agreement No. 4, dated as of June 22, 2016 (as so amended, the “ Lease ”);
WHEREAS , pursuant to the Lease, Landlord leases to Tenant, and Tenant leases from Landlord, the Property (this and other capitalized terms used and not otherwise defined in this Amendment shall have the meanings given such terms in the Lease) having an address at 3747 Express Drive, Holbrook, Arizona 86205 and further described on Exhibit A-38 to the Lease (the “ Holbrook Property ”);
WHEREAS , Landlord has acquired certain vacant land located adjacent to the Holbrook Property and Landlord and Tenant desire to amend the Lease to include such vacant land as part of the Holbrook Property; and
WHEREAS , Guarantor is executing this Amendment to confirm the continuation of the Guaranty;
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 of the date of this Amendment, as follows:
1.     Minimum Rent . The defined term “Minimum Rent” set forth in Section 1.68 of the Lease is hereby deleted in its entirety and replaced with the following:
Minimum Rent ” shall mean Forty-Seven Million One Hundred Ninety-Eight Thousand Two Hundred Twenty and 45/100ths Dollars ($47,198,220.45), subject to adjustment as provided in Section 3.1.1(b) .

    


2.     Exhibit A . Exhibit A to the Lease is hereby amended by deleting Exhibit A-38 therefrom in its entirety and replacing it with Exhibit A-38 attached to this Amendment.
3.     Ratification . As amended hereby, the Lease is hereby ratified and confirmed and all other terms remain in full force and effect.
4.     Counterparts . This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.



[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]



- 2 -


IN WITNESS WHEREOF , Landlord and Tenant have caused this Amendment to be duly executed, as a sealed instrument, as of the date first above written.
LANDLORD:
 
 
HPT TA PROPERTIES TRUST
 
 
By:
/s/ John G. Murray
 
John G. Murray
 
President

HPT TA PROPERTIES LLC
 
 
By:
/s/ John G. Murray
 
John G. Murray
 
President

TENANT:
 
 
TA OPERATING LLC
 
 
By:
/s/ Mark R. Young
 
Mark R. Young
 
Executive Vice President



[Signature Page to Sixth Amendment to Amended and Restated Lease Agreement No. 4]


Reference is made to that certain Guaranty Agreement, dated as of June 9, 2015, given by TRAVELCENTERS OF AMERICA LLC and TRAVELCENTERS OF AMERICA HOLDING COMPANY LLC, each a Delaware limited liability company (collectively, “ Guarantors ”), to Landlord with respect to Tenant’s obligations under the Lease (the “ Guaranty ”). Guarantors hereby confirm that all references in such Guaranty to the word “Lease” shall mean the Lease, as defined therein, as amended by this Amendment (and any prior amendments referenced in this Amendment), and said Guarantors hereby reaffirm the Guaranty.

TRAVELCENTERS OF AMERICA LLC
 
 
By:
/s/ Mark R. Young
 
Mark R. Young
 
Executive Vice President

TRAVELCENTERS OF AMERICA HOLDING
COMPANY LLC
 
 
By:
/s/ Mark R. Young
 
Mark R. Young
 
Executive Vice President






EXHIBIT A-38

3747 Express Drive
Holbrook, AZ 86025

(See attached copy.)






Parcel A:
THAT PART OF THE NORTH ONE-HALF OF SECTION 3, TOWNSHIP 17 NORTH, RANGE 20 EAST OF THE GILA AND SALT RIVER BASE AND MERIDIAN, NAVAJO COUNTY, ARIZONA, DESCRIBED AS FOLLOWS:
COMMENCING AT THE NORTHWEST SECTION CORNER OF SAID SECTION 3;
THENCE SOUTH TO THE SOUTHERLY RIGHT-OF-WAY LINE OF INTERSTATE 40, A DISTANCE OF 812.40 FEET;
THENCE SOUTH 81 DEGREES 53 MINUTES 42 SECONDS EAST ALONG SAID RIGHT-OF-WAY LINE, A DISTANCE OF 365.10 FEET;
THENCE ALONG A CURVE TO THE RIGHT, HAVING A RADIUS OF 377.46 FEET, A CENTRAL ANGLE OF 26 DEGREES, 55 MINUTES 21 SECONDS, A CHORD BEARING OF SOUTH 68 DEGREES 20 MINUTES 43 SECONDS EAST, AND A CHORD DISTANCE OF 175.74 FEET, A DISTANCE OF 177.36 FEET;
THENCE SOUTH 54 DEGREES 53 MINUTES 42 SECONDS EAST ALONG SAID RIGHT-OF-WAY LINE, A DISTANCE OF 237.70 FEET;
THENCE ALONG SAID RIGHT-OF-WAY AND A CURVE TO THE LEFT, HAVING A RADIUS OF 577.78 FEET, A CENTRAL ANGLE OF 11 DEGREES 58 MINUTES 54 SECONDS, A CHORD BEARING OF SOUTH 60 DEGREES 53 MINUTES 27 SECONDS EAST AND A CHORD DISTANCE OF 120.61 FEET, A DISTANCE OF 120.83 FEET TO THE TRUE POINT OF BEGINNING;
THENCE SOUTH 02 DEGREES 01 MINUTES 07 SECONDS WEST A DISTANCE OF 828.41 FEET;
THENCE SOUTH 87 DEGREES 59 MINUTES 06 SECONDS EAST A DISTANCE OF 1347.77 FEET;
THENCE NORTH 05 DEGREES 06 MINUTES 40 SECONDS EAST A DISTANCE OF 878.07 FEET TO THE SOUTHERLY RIGHT-OF-WAY LINE OF INTERSTATE 40;
THENCE SOUTH 86 DEGREES 00 MINUTES 01 SECONDS WEST ALONG SAID RIGHT-OF-WAY LINE A DISTANCE 253.64 FEET;
THENCE SOUTH 77 DEGREES 27 MINUTES 53 SECONDS WEST ALONG SAID RIGHT-OF-WAY A DISTANCE OF 461.40 FEET;
THENCE NORTH 81 DEGREES 53 MINUTES 44 SECONDS WEST ALONG SAID RIGHT-OF-WAY A DISTANCE OF 552.67 FEET;




THENCE ALONG SAID RIGHT-OF-WAY LINE AND ALONG A CURVE TO THE RIGHT, HAVING A RADIUS OF 577.78 FEET, A CENTRAL ANGLE OF 15 DEGREES 00 MINUTES 55 SECONDS, A CHORD BEARING OF NORTH 74 DEGREES 23 MINUTES 22 SECONDS WEST AND A CHORD LENGTH OF 150.98 FEET; A DISTANCE OF 151.42 FEET TO THE TRUE POINT OF BEGINNING.
EXCEPT ALL OIL, GAS, COAL AND MINERAL AS RESERVED IN BOOK 31 OF DEEDS, PAGE 322 .
PARCEL NO. 1:
COMMENCING AT THE NORTHWEST CORNER OF SECTION 3, TOWNSHIP 17 NORTH, RANGE 20 EAST OF THE GILA AND SALT RIVER BASE AND MERIDIAN, NAVAJO COUNTY, ARIZONA.
THENCE SOUTH 00 DEGREES 00 MINUTES 00 SECONDS EAST, ALONG THE WEST LINE OF SAID SECTION 3, A DISTANCE OF 812.40 FEET;
THENCE SOUTH 81 DEGREES 53 MINUTES 42 SECONDS EAST A DISTANCE OF 316.28 FEET TO THE BEGINNING OF A CURVE CONCAVE TO THE SOUTHWEST WITH A RADIUS OF 377.46 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE, A DISTANCE OF 177.36 FEET AND THEN A DELTA ANGLE OF 26 DEGREES 55 MINUTES 21 SECONDS;
THENCE SOUTH 54 DEGREES 53 MINUTES 42 SECONDS EAST A DISTANCE OF 237.70 FEET TO THE BEGINNING OF A CURVE CONCAVE TO THE NORTHEAST WITH A RADIUS OF 577.78 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE A DISTANCE OF 272.24 FEET AND THROUGH A DELTA ANGLE OF 26 DEGREES 59 MINUTES 49 SECONDS;
THENCE SOUTH 81 DEGREES 53 MINUTES 44 SECONDS EAST A DISTANCE OF 552.67 FEET;
THENCE NORTH 77 DEGREES 27 MINUTES 53 SECONDS EAST A DISTANCE OF 461.40 FEET;
THENCE NORTH 86 DEGREES 00 MINUTES 01 SECONDS EAST A DISTANCE OF 253.64 FEET TO THE POINT OF BEGINNING.
THENCE SOUTH 05 DEGREES 06 MINUTES 40 SECONDS WEST A DISTANCE OF 398.07 FEET;




THENCE SOUTH 87 DEGREES 59 MINUTES 00 SECONDS EAST A DISTANCE OF 1303.39 FEET;
THENCE NORTH 05 DEGREES 43 MINUTES 20 SECONDS EAST A DISTANCE OF 330.93 FEET;
THENCE NORTH 84 DEGREES 51 MINUTES 23 SECONDS WEST A DISTANCE OF 1280.31 FEET;
THENCE SOUTH 86 DEGREES 00 MINUTES 01 SECONDS WEST A DISTANCE OF 25.02 FEET TO THE POINT OF BEGINNING.
EXCEPT ALL OIL, GAS, COAL AND MINERALS AS RESERVED IN BOOK 31 OF DEEDS, PAGE 322 , RECORDS OF NAVAJO COUNTY, ARIZONA.
EXCEPT THE EAST 680.00 FEET THEREOF.
PARCEL NO. 2:
THE EAST 680.00 FEET OF THE FOLLOWING DESCRIBED PROPERTY;
COMMENCING AT THE NORTHWEST CORNER OF SECTION 3, TOWNSHIP 17 NORTH, RANGE 20 EAST OF THE GILA AND SALT RIVER BASE AND MERIDIAN, NAVAJO COUNTY, ARIZONA.
THENCE SOUTH 00 DEGREES 00 MINUTES 00 SECONDS EAST ALONG THE WEST LINE OF SAID SECTION 3, A DISTANCE OF 812.40 FEET;
THENCE SOUTH 81 DEGREES 53 MINUTES 42 SECONDS EAST A DISTANCE OF 316.28 FEET TO THE BEGINNING OF A CURVE CONCAVE TO THE SOUTHWEST WITH A RADIUS OF 377.46 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE, A DISTANCE OF 177.36 FEET AND THEN A DELTA ANGLE OF 26 DEGREES 55 MINUTES 21 SECONDS;
THENCE SOUTH 54 DEGREES 53 MINUTES 42 SECONDS EAST, A DISTANCE OF 237.70 FEET TO THE BEGINNING OF A CURVE CONCAVE TO THE NORTHEAST WITH A RADIUS OF 577.78 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE A DISTANCE OF 272.24 FEET AND THROUGH A DELTA ANGLE OF 26 DEGREES 59 MINUTES 49 SECONDS;
THENCE SOUTH 81 DEGREES 53 MINUTES 44 SECONDS EAST A DISTANCE OF 552.67 FEET;




THENCE NORTH 77 DEGREES 27 MINUTES 53 SECONDS EAST A DISTANCE OF 461.40 FEET;
THENCE NORTH 86 DEGREES 00 MINUTES 01 SECONDS EAST A DISTANCE OF 253.64 FEET TO THE POINT OF BEGINNING;
THENCE SOUTH 05 DEGREES 06 MINUTES 40 SECONDS WEST, A DISTANCE OF 398.07 FEET;
THENCE SOUTH 87 DEGREES 59 MINUTES 06 SECONDS EAST A DISTANCE OF 1303.39 FEET;
THENCE NORTH 05 DEGREES 43 MINUTES 20 SECONDS EAST A DISTANCE OF 330.93 FEET;
THENCE NORTH 84 DEGREES 51 MINUTES 23 SECONDS WEST A DISTANCE OF 1280.31 FEET;
THENCE SOUTH 86 DEGREES 00 MINUTES 01 SECONDS WEST A DISTANCE OF 25.02 FEET TO THE POINT OF BEGINNING.
EXCEPT ALL OIL, GAS, COAL AND MINERALS AS RESERVED IN BOOK 31 OF DEEDS, PAGE 322 , RECORDS OF NAVAJO COUNTY, ARIZONA.
PARCEL NO. 3:
COMMENCING AT THE NORTHWEST CORNER OF SECTION 3, TOWNSHIP 17 NORTH, RANGE 20 EAST OF THE GILA AND SALT RIVER BASE AND MERIDIAN, NAVAJO COUNTY, ARIZONA;
THENCE SOUTH 00 DEGREES 00 MINUTES 00 SECONDS EAST ALONG THE WEST LINE OF SAID SECTION 3, A DISTANCE OF 812.40 FEET;
THENCE SOUTH 81 DEGREES 53 MINUTES 42 SECONDS EAST A DISTANCE OF 316.28 FEET TO THE BEGINNING OF A CURVE CONCAVE TO THE SOUTHWEST WITH A RADIUS OF 377.46 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE, A DISTANCE OF 177.36 FEET AND THEN A DELTA ANGLE OF 26 DEGREES 55 MINUTES 21 SECONDS;
THENCE SOUTH 54 DEGREES 53 MINUTES 42 SECONDS EAST A DISTANCE OF 237.70 FEET TO THE BEGINNING OF A CURVE CONCAVE TO THE NORTHEAST WITH A RADIUS OF 577.78 FEET;




THENCE SOUTHEASTERLY ALONG SAID CURVE A DISTANCE OF 120.83 FEET AND THROUGH A DELTA ANGLE OF 11 DEGREES 58 MINUTES 54 SECONDS;
THENCE SOUTH 02 DEGREES 01 MINUTES 07 SECONDS EAST A DISTANCE OF 828.42 FEET TO THE TRUE POINT OF BEGINNING;
THENCE SOUTH 87 DEGREES 59 MINUTES 06 SECONDS EAST A DISTANCE OF 1,347.77 FEET TO THE SOUTHEAST CORNER OF THAT CERTAIN PARCEL DESCRIBED IN DEED RECORDED ON NOVEMBER 21, 1991 IN DOCKET 1057, PAGE 23 ;
THENCE NORTH 05 DEGREES 06 MINUTES 40 SECONDS EAST A DISTANCE OF 480.00 FEET TO THE SOUTHWEST CORNER OF THAT CERTAIN PARCEL DESCRIBED IN DEED RECORDED ON JULY 15, 1992 IN DOCKET 1087, PAGE 191 ;
THENCE SOUTH 87 DEGREES 59 MINUTES 06 SECONDS EAST, A DISTANCE OF 1,303.39 FEET TO THE EAST LINE OF THAT CERTAIN PARCEL DESCRIBED IN DEED RECORDED ON NOVEMBER 21, 1991 IN DOCKET 1057, PAGE 21 ;
THENCE SOUTH 05 DEGREES 43 MINUTES 50 SECONDS WEST A DISTANCE OF 530.40 FEET TO THE SOUTHEAST CORNER OF THAT CERTAIN PARCEL DESCRIBED IN DEED RECORDED ON NOVEMBER 21, 1991 IN DOCKET 1057, PAGE 21 ;
THENCE SOUTH 81 DEGREES 55 MINUTES 50 SECONDS WEST A DISTANCE OF 1,365.84 FEET TO THE POINT OF BEGINNING OF A CURVE CONCAVE TO THE NORTH WITH A RADIUS OF 5,250.00 FEET;
THENCE WESTERLY ALONG SAID CURVE A DISTANCE OF 980.39 FEET AND THROUGH A DELTA ANGLE OF 10 DEGREES 41 MINUTES 58 SECONDS;
THENCE NORTH 87 DEGREES 22 MINUTES 12 SECONDS WEST A DISTANCE OF 322.47 FEET;
THENCE NORTH 02 DEGREES 01 MINUTES 06 SECONDS EAST A DISTANCE OF 366.50 FEET TO THE TRUE POINT OF BEGINNING.
EXCEPTING THEREFROM ANY PORTION DEEDED TO THE STATE OF ARIZONA IN INSTRUMENT RECORDED ON JULY 1, 1977 IN DOCKET 492, PAGE 66 .
EXCEPT ALL OIL, GAS, COAL AND MINERALS AS RESERVED IN BOOK 31 OF DEEDS, PAGE 322 , RECORDS OF NAVAJO COUNTY, ARIZONA.
PARCEL NO. 4:
THE NORTH 406.24 FEET OF THE FOLLOWING DESCRIBED PROPERTY;




COMMENCING AT THE NORTHWEST CORNER OF SECTION 3, TOWNSHIP 17 NORTH, RANGE 20 EAST OF THE GILA AND SALT RIVER BASE AND MERIDIAN, NAVAJO COUNTY, ARIZONA;
THENCE SOUTH 00 DEGREES 00 MINUTES 00 SECONDS EAST ALONG THE WEST LINE OF SAID SECTION 3, A DISTANCE OF 812.40 FEET;
THENCE SOUTH 81 DEGREES 53 MINUTES 42 SECONDS EAST, A DISTANCE OF 316.28 FEET TO THE BEGINNING OF A CURVE CONCAVE TO THE SOUTHWEST WITH A RADIUS OF 377.46 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE, A DISTANCE OF 177.36 FEET AND WITH A DELTA ANGLE OF 26 DEGREES 55 MINUTES 21 SECONDS;
THENCE SOUTH 54 DEGREES 53 MINUTES 42 SECONDS EAST A DISTANCE OF 237.70 FEET TO THE BEGINNING OF A CURVE CONCAVE TO THE NORTHEAST WITH A RADIUS OF 577.78 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE A DISTANCE OF 120.83 FEET AND THROUGH A DELTA ANGLE OF 11 DEGREES 58 MINUTES 54 SECONDS;
THENCE SOUTH 02 DEGREES 01 MINUTES 06 SECONDS WEST A DISTANCE OF 492.72 FEET TO THE POINT OF BEGINNING;
THENCE SOUTH 02 DEGREES 01 MINUTES 06 SECONDS WEST A DISTANCE OF 702.13 FEET;
THENCE NORTH 87 DEGREES 59 MINUTES 06 SECONDS WEST A DISTANCE OF 733.33 FEET;
THENCE NORTH 00 DEGREES 00 MINUTES 00 SECONDS WEST A DISTANCE OF 694.69 FEET;
THENCE SOUTH 87 DEGREES 59 MINUTES 00 SECONDS EAST A DISTANCE OF 757.75 FEET TO THE POINT OF BEGINNING.
EXCEPT ALL OIL, GAS, COAL AND MINERALS AS RESERVED IN BOOK 31 OF DEEDS, PAGE 322 , RECORDS OF NAVAJO COUNTY, ARIZONA.
PARCEL NO. 5:
COMMENCING AT THE NORTHWEST CORNER OF SECTION 3, TOWNSHIP 17 NORTH, RANGE 20 EAST OF THE GILA AND SALT RIVER BASE AND MERIDIAN, NAVAJO COUNTY, ARIZONA;




THENCE SOUTH 00 DEGREES 00 MINUTES 00 SECONDS EAST ALONG THE WEST LINE OF SAID SECTION 3, A DISTANCE OF 812.40 FEET;
THENCE SOUTH 81 DEGREES 53 MINUTES 42 SECONDS EAST A DISTANCE OF 48.82 FEET TO THE TRUE POINT OF BEGINNING;
THENCE SOUTH 81 DEGREES 53 MINUTES 42 SECONDS EAST A DISTANCE OF 316.28 FEET TO THE BEGINNING OF A CURVE CONCAVE TO THE SOUTHWEST WITH A RADIUS OF 377.46 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE, A DISTANCE OF 177.36 FEET AND THEN A DELTA ANGLE OF 26 DEGREES 55 MINUTES 21 SECONDS;
THENCE SOUTH 54 DEGREES 53 MINUTES 42 SECONDS EAST A DISTANCE OF 237.70 FEET TO THE BEGINNING OF A CURVE CONCAVE TO THE NORTHEAST WITH A RADIUS OF 577.78 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE A DISTANCE OF 120.83 FEET AND THROUGH A DELTA ANGLE OF 11 DEGREES 58 MINUTES 54 SECONDS;
THENCE SOUTH 02 DEGREES 01 MINUTES 06 SECONDS WEST A DISTANCE OF 492.72 FEET TO THE NORTHEAST CORNER OF THAT CERTAIN PARCEL DESCRIBED IN DEED RECORDED ON JULY 15, 1992 IN DOCKET 1087, PAGE 183 ;
THENCE NORTH 87 DEGREES 59 MINUTES 06 SECONDS WEST A DISTANCE OF 757.75 FEET TO THE WEST LINE OF THAT CERTAIN PARCEL, DESCRIBED IN DEED RECORDED ON JULY 15, 1992 IN DOCKET 1087, PAGE 177 ;
THENCE NORTH 00 DEGREES 00 MINUTES 00 SECONDS WEST A DISTANCE OF 781.08 FEET TO THE TRUE POINT OF BEGINNING.
EXCEPTING THEREFROM ANY PORTION DEEDED TO THE STATE OF ARIZONA IN INSTRUMENT RECORDED ON JULY 1, 1977 IN DOCKET 492, PAGE 66 .
EXCEPT ALL OIL, GAS, COAL AND MINERALS AS RESERVED IN BOOK 31 OF DEEDS, PAGE 322 , RECORDS OF NAVAJO COUNTY, ARIZONA.
PARCEL NO. 6:
COMMENCING AT THE NORTHWEST CORNER OF SECTION 3, TOWNSHIP 17 NORTH, RANGE 20 EAST OF THE GILA AND SALT RIVER BASE AND MERIDIAN, NAVAJO COUNTY, ARIZONA;
THENCE SOUTH 00 DEGREES 00 MINUTES 00 SECONDS EAST ALONG THE WEST LINE OF SAID SECTION 3, A DISTANCE OF 812.40 FEET;




THENCE SOUTH 81 DEGREES 53 MINUTES 42 SECONDS EAST, A DISTANCE OF 316.28 FEET TO THE SOUTHWEST OF A CURVE CONCAVE TO THE SOUTHWEST WITH A RADIUS OF 377.46 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE, A DISTANCE OF 177.36 FEET AND WITH A DELTA ANGLE OF 26 DEGREES 55 MINUTES 21 SECONDS;
THENCE SOUTH 54 DEGREES 53 MINUTES 42 SECONDS EAST A DISTANCE OF 237.70 FEET TO THE BEGINNING OF A CURVE CONCAVE TO THE NORTHEAST WITH A RADIUS OF 577.78 FEET;
THENCE SOUTHEASTERLY ALONG SAID CURVE A DISTANCE OF 120.83 FEET AND THROUGH A DELTA ANGLE OF 11 DEGREES 58 MINUTES 54 SECONDS;
THENCE SOUTH 02 DEGREES 01 MINUTES 06 SECONDS WEST A DISTANCE OF 492.72 FEET TO THE POINT OF BEGINNING;
THENCE SOUTH 02 DEGREES 01 MINUTES 06 SECONDS WEST A DISTANCE OF 702.13 FEET;
THENCE NORTH 87 DEGREES 59 MINUTES 06 SECONDS WEST A DISTANCE OF 733.33 FEET;
THENCE NORTH 00 DEGREES 00 MINUTES 00 SECONDS WEST A DISTANCE OF 694.69 FEET;
THENCE SOUTH 87 DEGREES 59 MINUTES 00 SECONDS EAST A DISTANCE OF 757.75 FEET TO THE POINT OF BEGINNING.
EXCEPT THE NORTH 406.24 FEET THEREOF:
EXCEPT ALL OIL, GAS, COAL AND MINERALS AS RESERVED IN BOOK 31 OF DEEDS, PAGE 322 , RECORDS OF NAVAJO COUNTY, ARIZONA.
Parcels 1 through 6 collectively also described as:
SITUATED IN THE CITY OF HOLBROOK, COUNTY OF NAVAJO, STATE OF ARIZONA, BEING A PORTION OF THE NORTH HALF OF SECTION 3, TOWNSHIP 17 NORTH, RANGE 30 EAST OF THE GILA AND SALT RIVER BASE AND MERIDIAN, AND BEING MORE PARTICULARLY BOUNDED AND DESCRIBED AS FOLLOWS:
COMMENCING AT A FOUND U.S. G.L.O. BRASS CAP STAMPED "1944" AT THE NORTHWEST CORNER OF SAID SECTION 3;




THENCE SOUTH 01 DEGREES 36 MINUTES 30 SECONDS WEST, ALONG THE WESTERLY LINE OF SAID SECTION 3, A DISTANCE OF 812.40 FEET TO A FOUND CAPPED 1/2" REBAR STAMPED "16097" ALONG THE SOUTHERLY RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY 40;
THENCE SOUTH 82 DEGREES 51 MINUTES 08 SECONDS EAST, LEAVING SAID WESTERLY LINE OF SECTION 3 ALONG SAID SOUTHERLY RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY 40, A DISTANCE OF 48.82 FEET TO THE TRUE POINT OF BEGINNING;
THENCE SOUTH 82 DEGREES 51 MINUTES 08 SECONDS EAST, ALONG SAID SOUTHERLY RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY 40, A DISTANCE OF 125.39 FEET TO A FOUND CAPPED 1/2" REBAR STAMPED "16165";
THENCE ALONG SAID SOUTHERLY RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY 40 THE FOLLOWING COURSES AND DISTANCES:
1. THENCE SOUTH 81 DEGREES 53 MINUTES 42 SECONDS EAST, A DISTANCE OF 213.59 FEET TO A FOUND A.D.O.T. BRASS CAP AND THE BEGINNING OF A NON-TANGENT CURVE TO THE RIGHT HAVING A RADIUS OF 377.46 FEET;
2. THENCE ALONG SAID CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 26 DEGREES 55 MINUTES 21 SECONDS, AN ARC LENGTH OF 177.36 FEET (CHORD: SOUTH 68 DEGREES 20 MINUTES 43 SECONDS EAST - 175.74 FEET) TO A FOUND A.D.O.T. BRASS CAP;
3. THENCE SOUTH 54 DEGREES 53 MINUTES 42 SECONDS EAST, A DISTANCE OF 237.70 FEET TO A FOUND A.D.O.T. BRASS CAP AND THE BEGINNING OF A NON-TANGENT CURVE TO THE LEFT HAVING A RADIUS OF 577.78 FEET;
4. THENCE ALONG SAID CURVE TO THE LEFT, THROUGH A CENTRAL ANGLE OF 11 DEGREES 58 MINUTES 54 SECONDS, AN ARC LENGTH OF 120.83 FEET (CHORD: SOUTH 60 DEGREES 53 MINUTES 27 SECONDS EAST - 120.61 FEET) TO A FOUND CAPPED 1/2" REBAR STAMPED "15328";
THENCE LEAVING SAID SOUTHERLY RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY 40 THE FOLLOWING COURSES AND DISTANCES:
1. THENCE SOUTH 02 DEGREES 01 MINUTES 07 SECONDS WEST, A DISTANCE OF 828.41 FEET TO A FOUND CAPPED 1/2" REBAR STAMPED "15328";
2. THENCE SOUTH 87 DEGREES 59 MINUTES 06 SECONDS EAST, A DISTANCE OF 1347.77 FEET TO A FOUND CAPPED 1/2" REBAR STAMPED "15328";




3. THENCE NORTH 05 DEGREES 06 MINUTES 40 SECONDS EAST, A DISTANCE OF 878.07 FEET TO A FOUND CAPPED 1/2" REBAR STAMPED "16097" ON SAID SOUTHERLY RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY 40;
THENCE ALONG SAID SOUTHERLY RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY 40 THE FOLLOWING COURSES AND DISTANCES:
1. THENCE NORTH 86 DEGREES 00 MINUTES 01 SECONDS EAST, A DISTANCE OF 25.02 FEET TO A FOUND A.D.O.T. BRASS CAP;
2. THENCE SOUTH 84 DEGREES 51 MINUTES 23 SECONDS EAST, A DISTANCE OF 1280.31 FEET TO A FOUND A.D.O.T. BRASS CAP;
THENCE SOUTH 05 DEGREES 43 MINUTES 20 SECONDS WEST, LEAVING SAID SOUTHERLY RIGHT-OF-WAY LINE OF INTERSTATE HIGHWAY 40, A DISTANCE OF 861.33 FEET TO A FOUND CAPPED 1/2" REBAR STAMPED "16097" ON THE NORTHERLY RIGHT-OF-WAY LINE OF THE SANTE FE RAILROAD;
THENCE ALONG SAID NORTHERLY RIGHT-OF-WAY LINE OF THE SANTE FE RAILROAD, THE FOLLOWING COURSES AND DISTANCES:
1. THENCE SOUTH 81 DEGREES 55 MINUTES 50 SECONDS WEST, A DISTANCE OF 1365.84 FEET TO A FOUND CAPPED 1/2" REBAR STAMPED "16097" AND THE BEGINNING OF A TANGENT CURVE TO THE RIGHT HAVING A RADIUS OF 5,250.00 FEET;
2. THENCE ALONG SAID CURVE TO THE RIGHT, THROUGH A CENTRAL ANGLE OF 10 DEGREES 41 MINUTES 58 SECONDS, AN ARC LENGTH OF 980.39 FEET (CHORD: SOUTH 87 DEGREES 16 MINUTES 49 SECONDS WEST - 978.96 FEET) TO A FOUND CAPPED 1/2" REBAR STAMPED "16097" AND A POINT OF TANGENCY;
3. THENCE NORTH 87 DEGREES 22 MINUTES 12 SECONDS WEST, A DISTANCE OF 322.47 FEET TO A FOUND CAPPED 1/2" REBAR STAMPED "16097";
4. THENCE NORTH 87 DEGREES 59 MINUTES 06 SECONDS WEST, A DISTANCE OF 798.78 FEET TO A POINT;
THENCE NORTH 01 DEGREES 36 MINUTES 30 SECONDS EAST, ALONG A LINE PARALLEL WITH SAID WESTERLY LINE OF SECTION 3, A DISTANCE OF 1,472.59 FEET TO THE TRUE POINT OF BEGINNING AND CONTAINING 66.460 ACRES (2,894,977 SQUARE FEET) OF LAND MORE OR LESS.


Exhibit 12.1

TravelCenters of America LLC
Statement of Computation of Ratio of Earnings to Fixed Charges

 
Nine Months Ended 
 September 30, 2016
 
Years Ended December 31,
 
 
2015
 
2014
 
2013
 
2012
 
2011
 
(in thousands, except ratio amounts)
Income before income taxes,
   income from equity investees and
   noncontrolling interest
$
3,474

 
$
40,202

 
$
95,768

 
$
2,331

 
$
31,812

 
$
23,784

 
 
 
 
 
 
 
 
 
 
 
 
Distributions received from equity
   investees
3,000

 

 

 

 
4,800

 

Fixed charges
88,083

 
106,344

 
93,101

 
90,880

 
79,161

 
75,471

Amortization of capitalized interest
54

 
30

 
41

 
31

 

 

Capitalized interest
(1,876
)
 
(1,797
)
 
(755
)
 
(1,033
)
 

 

Total Earnings
$
92,735

 
$
144,779

 
$
188,155

 
$
92,209

 
$
115,773

 
$
99,255

 
 
 
 
 
 
 
 
 
 
 
 
Interest expense (1)
$
21,261

 
$
24,425

 
$
17,241

 
$
17,650

 
$
10,358

 
$
9,005

Estimated interest within rent expense (2)
64,946

 
80,122

 
75,105

 
72,197

 
68,803

 
66,466

Capitalized interest
1,876

 
1,797

 
755

 
1,033

 

 

Total fixed charges
$
88,083

 
$
106,344

 
$
93,101

 
$
90,880

 
$
79,161

 
$
75,471

 
 
 
 
 
 
 
 
 
 
 
 
Ratio of earnings to fixed charges
1.05

 
1.36

 
2.02

 
1.01

 
1.46

 
1.32

 
 
 
 
 
 
 
 
 
 
 
 
Deficiency of earnings available to
   cover fixed charges
$ N/A

 
$ N/A

 
$ N/A

 
$ N/A

 
$ N/A

 
$ N/A

(1)
Includes interest expense and amortization of premiums and discounts related to indebtedness.
(2)
Estimated interest within rent expense includes one third of rental expense, which approximates the interest component of operating leases.


Exhibit 31.1

 
CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)
 
I, Thomas M. O'Brien, certify that:
 
1.
  I have reviewed this quarterly report on Form 10-Q of TravelCenters of America LLC;
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.   
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)   
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c) 
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
 
Date: November 8, 2016
/s/ THOMAS M. O'BRIEN
 
Thomas M. O'Brien
 
President and Chief Executive Officer



Exhibit 31.2

 
CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)
 
I, Andrew J. Rebholz, certify that:
 
1.
  I have reviewed this quarterly report on Form 10-Q of TravelCenters of America LLC;
 
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
 
4.   
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
 
a)    
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
c)  
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
 
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
 
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
 
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 8, 2016
/s/ ANDREW J. REBHOLZ
 
Andrew J. Rebholz
 
Executive Vice President, Chief Financial
 
Officer and Treasurer



Exhibit 32.1

 
Certification Pursuant to 18 U.S.C. Sec. 1350
(Section 906 of the Sarbanes — Oxley Act of 2002)
 

 
In connection with the filing by TravelCenters of America LLC (the "Company") of the Quarterly Report on Form 10-Q for the period ended September 30, 2016 (the "Report"), each of the undersigned hereby certifies, to the best of his knowledge:
 
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
  
 
 
Date: November 8, 2016
/s/ Thomas M. O’Brien
 
Thomas M. O’Brien
 
President and Chief Executive Officer
 
 
 
 
 
/s/ Andrew J. Rebholz
 
Andrew J. Rebholz
 
Executive Vice President, Chief Financial Officer and Treasurer



Exhibit 99.1

AMENDMENT TO PROPERTY MANAGEMENT AGREEMENT
This Amendment to Property Management Agreement (this “ Amendment ”), effective as of August 1, 2016 (the “ Effective Date ”), is made by and between The RMR Group LLC (formerly Reit Management & Research LLC), a Maryland limited liability company (“ Managing Agent ”) and TA Operating LLC, a Delaware limited liability company (“ Owner ”). Capitalized terms used but not otherwise defined herein have the meanings ascribed to such terms in the Agreement (defined below).
WHEREAS, on July 21, 2011, Managing Agent and Owner entered into a Property Management Agreement (the “ Agreement ”); and
WHEREAS, the parties desire to amend the Agreement as set forth below.
NOW, THEREFORE, as of the Effective Date, the parties agree as follows:
1. Management Fees .
1.1 Reference in Section 6(a) of the Agreement to the Fee equal to “Two Thousand Five Hundred Dollars ($2,500) per month” shall be amended to “Three Thousand Dollars ($3,000) per month”.
2. Effective Date; No Further Modifications . This Amendment shall be effective from and after the date first above written. Except as expressly provided in this Amendment, all of the terms and provisions of the Agreement are and will remain in full force and effect and are hereby ratified and confirmed by the parties. Any reference in the Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import will mean and be a reference to the Agreement as amended by this Amendment.
3. Miscellaneous .
3.1. This Amendment shall be governed by and in accordance with the laws of the Commonwealth of Massachusetts.
3.2. This Amendment shall be binding upon any successors or permitted assigns of the parties hereto as provided herein.
3.3. The headings in this Amendment are for reference only and do not affect the interpretation of this Amendment.
3.4. This Amendment may be executed in counterparts, each of which is deemed an original, but all of which constitutes one and the same agreement.
3.5. This Amendment constitutes the sole and entire agreement of the parties with respect to the subject matter contained herein, and supersedes all prior and




contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter.

[Signature Page Follows]







IN WITNESS WHEREOF, the parties have executed this Amendment as of August 1, 2016.

THE RMR GROUP LLC
 
 
 
By:
/s/ Matthew Jordan
 
Name:
Matthew Jordan
 
Title:
Senior Vice President,
Chief Financial Officer & Treasurer
 
 
 
 
 
 
TA OPERATING LLC
 
 
 
By:
/s/ Mark R. Young
 
Name:
Mark R. Young
 
Title:
Executive Vice President
& General Counsel






















[Signature Page to Amendment to Property Management Agreement]