Exhibit 10.17
AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT
AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT ("Amendment") dated as of
December 31, 2002, by and among TA Operating Corporation, a Delaware corporation
(the "Company"), TravelCenters of America, Inc., a Delaware corporation
("Holdings"), and Xxxxx X. Xxxx (the "Employee").
WHEREAS, the Company, Holdings and the Employee are parties to an
Employment Agreement dated as of January 1, 2000, which agreement was amended by
Amendment No. 1 dated as of May 26, 2000 (the "Employment Agreement"); and
WHEREAS, Holdings and the Employee are parties to a Stock Option
Agreement dated as of December 26, 2001 (the "Option Agreement"), pursuant to
which Holdings stock options were granted to the Employee under the
TravelCenters of America, Inc. 2001 Stock Option Plan; and
WHEREAS, Holdings, as successor by merger to TCA Acquisition
Corporation, and the Employee are parties to a Management Equity Rollover
Agreement dated November 9, 2000 (the "Management Equity Rollover Agreement");
and
WHEREAS, in order to ensure the continued services of the Employee and
to provide for an orderly succession following the Employee's retirement, the
parties to the aforesaid agreements desire to modify further such Employment
Agreement and to modify the Option Agreement and Management Equity Rollover
Agreement as hereinafter set forth; and
WHEREAS, each of Section 11.7 of the Employment Agreement, Section 6.4
of the Option Agreement and Section 11.2(b) of the Management Equity Rollover
Agreement permit the parties thereto to amend such agreement in a writing signed
by each party.
NOW, THEREFORE, in consideration of the parties' mutual desire to
modify the Employment Agreement, the Option Agreement and the Management Equity
Rollover Agreement, and the mutual covenants herein contained, the parties agree
as follows effective December 31, 2002:
PART I -- EMPLOYMENT AGREEMENT
Part I of this Amendment shall amend the terms of the Employment
Agreement as set forth herein. Capitalized terms used in this Part I not
otherwise defined shall have the meanings ascribed to them in the Employment
Agreement.
1. The following shall be inserted as Section 3.3 to the Employment
Agreement:
"3.3 RETENTION BONUS. In order to encourage the Employee to continue
his employment hereunder until his Scheduled Retirement (as such term
is defined in Section 5.2.2 hereof), the Company shall pay to the
Employee in a single sum on January 31, 2003, if he remains an employee
of the Company on the payment date, the amount of Two Hundred Thousand
Dollars ($200,000), which amount, when paid, shall thereafter not be
forfeitable by the Employee."
2. The introductory paragraph to Section 5 of the Employment Agreement
shall be deleted, and the following shall be inserted therefor:
"5. TERMINATION OF EMPLOYMENT. The Employee's employment with the
Company shall terminate upon the death of the Employee, and the Company
shall have the right, at any time during the Term, by delivery of
written notice to the Employee, to terminate the Employee's employment
as a result of the Employee's Permanent Disability (as such term is
defined in Section 5.1 hereof), for Cause (as such term is defined in
Section 5.3 hereof) or for any other reason, and the Employee shall
have the right to resign or to terminate his employment hereunder
because of his Scheduled Retirement, the consequences of any such
termination or resignation being as specified in this Section 5:"
3. Section 5.2 of the Employment Agreement shall be deleted, and the
following shall be inserted therefor:
"5.2 RESIGNATION. If the Employee's employment with the Company is
terminated during the Term by reason of the Employee's resignation
(other than on account of the Employee's `Scheduled Retirement' as
defined in Section 5.2.2 hereof or for `Good Reason' as defined in
Section 5.5 hereof), all obligations of the Company and Holdings,
including, without limitation, the obligation to pay
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salary or other amounts payable under this Agreement to or for
the benefit of the Employee, shall terminate upon the
effective date of such resignation, and the Employee shall not
be entitled to any compensation under this Agreement except
for Base Salary accrued and unpaid through, and any vested
benefits under any awards to the Employee pursuant to the
Stock Incentive Plans, or any amount payable under any other
benefit plan of the Company or any Affiliate in accordance
with the terms of such plan, as of the effective date of such
resignation. The Employee agrees to give the Company one
hundred twenty (120) days written notice of his resignation
(other than for Good Reason and except for Scheduled
Retirement)."
4. The following shall be inserted as Section 5.2.1 of the Employment
Agreement:
"5.2.1 TERMINATION DUE TO SCHEDULED RETIREMENT. If the
Employee's employment with the Company hereunder is terminated
during the Term because of the Employee's Scheduled Retirement
(as Scheduled Retirement is defined in Section 5.2.2 hereof),
all obligations of the Company and Holdings, including,
without limitation, the obligation to pay salary or other
amounts payable under this Agreement to or for the benefit of
the Employee, shall terminate upon the date of such Scheduled
Retirement, and the Employee shall not be entitled to any
compensation under this Agreement except for (i) Base Salary
accrued and unpaid through the date of such Scheduled
Retirement, (ii) an amount equal to the product of (x) the
Annual Bonus, if any, determined by the Compensation Committee
for the year in which the Scheduled Retirement occurs,
MULTIPLIED BY (y) the fraction, the numerator of which equals
the number of days the Employee was employed by the Company
during the Fiscal Year in which such Scheduled Retirement
occurs and the denominator of which is three hundred
sixty-five (365); and (iii) any vested benefits under any
awards to the Employee pursuant to the Stock Incentive Plans,
or any amount payable under any other benefit plan of the
Company or any Affiliate or any other agreement between the
Employee and the Company or any Affiliate, in accordance with
the terms of such plan or agreement as of the date of such
Scheduled Retirement. The Employee agrees to give the Company
six (6) months' written notice of his Scheduled Retirement.
Upon the Employee's Scheduled Retirement, Holdings and the
Company shall offer the Employee the position of Chairman,
Non-Executive, in which position the Employee would commence
service immediately after the Scheduled Retirement date at an
annual salary of Two Hundred Fifty Thousand Dollars
($250,000), with such duties and in accordance with such other
terms contained in any supplemental or substitute agreement
hereto as to which Holdings, the Company and the Employee may
agree; provided that the Employee's refusal of any such offer
shall in no way adversely affect his entitlement to any
benefit to which he would otherwise have been entitled
hereunder or under any other plan or agreement in the event of
his Scheduled Retirement, but the Employee shall not be
entitled to further vesting under any Stock Incentive Plan if
Employee's service does not continue after his Scheduled
Retirement.
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5. The following shall be inserted as Section 5.2.2 to the Employment
Agreement:
"5.2.2 SCHEDULED RETIREMENT. `Scheduled Retirement' shall mean
a termination of the Employee's employment as President and
Chief Executive Officer of the Company and Holdings on a date
selected by the Employee, which date shall be no earlier than
June 30, 2004. In order for such termination to be deemed a
`Scheduled Retirement,' the Employee must notify the Company
in writing of such Scheduled Retirement at least six (6)
months in advance of the date selected by the Employee to be
the date of his Scheduled Retirement including a Scheduled
Retirement date of June 30, 2004. The term `Scheduled
Retirement' shall be deemed to include a termination of the
Employee's employment as President and Chief Executive Officer
of the Company and Holdings following which he remains an
Employee of the Company, Holdings or an affiliated company
pursuant to an arrangement approved by the Board. A Scheduled
Retirement shall not be deemed to be a voluntary resignation
without Good Reason nor a discharge of any type."
PART II -- STOCK OPTION AGREEMENT
Part II of this Amendment shall amend the terms of the Stock Option
Agreement as set forth herein. Capitalized terms used in this Part II not
otherwise defined shall have the meanings ascribed to them in the Stock Option
Agreement.
6. Section 1.2 of the Stock Option Agreement shall be deleted in its
entirety, and the following shall be inserted therefor:
"SECTION 1.2 CHANGE IN STATUS. `Change in Status' shall mean a
reduction in the Optionee's duties, responsibilities or
authority, or other change in the Optionee's position with the
Company or its affiliates after the Grant Date that is
determined by the Board, in its absolute discretion, to be a
demotion; provided, however, that the Employee's Scheduled
Retirement shall not be deemed to be a Change in Status."
7. Section 1.22 of the Stock Option Agreement shall be deleted in its
entirety, and the following shall be inserted therefor:
"SECTION 1.22. SCHEDULED RETIREMENT. "Scheduled Retirement"
shall mean a Termination of Employment which shall occur on a
date selected by the Optionee, upon at least six (6) months'
advance written notice from the Optionee, which Scheduled
Retirement date shall in no event be earlier than June 30,
2004."
8. Section 3.1(c)(i)(A) shall be deleted in its entirety, and the
following shall be inserted therefor:
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"(A) TIME OPTION. The Time Option shall become exercisable to
the extent indicated on the chart below in lieu of the chart
set forth in Section 3.1(a) hereof (unless already exercisable
to a greater extent pursuant to another provision of Section
3.1 of this Agreement):
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TIME OPTION
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FULL YEARS OF PERCENTAGE OF OPTION SHARES SUBJECT TO TIME OPTION AS TO
EMPLOYMENT WHICH TIME OPTION IS DEEMED EXERCISABLE UPON TERMINATION
FOLLOWING JANUARY OF EMPLOYMENT IN CASES OF DEATH, DISABILITY OR SCHEDULED
1, 2001 RETIREMENT
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0 50%
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1 60%
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2 70%
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3 80%
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4 90%
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5 100%
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; provided, however, that if the Optionee's Scheduled
Retirement occurs on or after June 30, 2004, he shall be
deemed to have completed the greater of four full years of
employment or the actual number of years of employment (which
shall include the Optionee's years of service in the capacity
of Chairman, Non-Executive following his Scheduled Retirement)
following January 1, 2001 under the above chart."
9. Section 3.1(c)(i)(B) shall be deleted in its entirety, and the
following shall be inserted therefor:
"(B) PERFORMANCE OPTION. With respect to the unexercisable
portion of the Performance Option as of such Termination of
Employment, the Optionee shall be allowed to continue holding
a percentage of the unexercisable Option Shares subject to
each of the Class A and Class B Performance Options, as
indicated on the chart set forth below. Such unexercisable
portion of the Performance Option shall remain outstanding and
eligible for exercisability on a subsequent Measurement Date,
subject to Section 3.2 of this Agreement.
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PERFORMANCE OPTION
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FULL YEARS OF PERCENTAGE OF UNEXERCISABLE OPTION SHARES SUBJECT TO EACH
EMPLOYMENT OF CLASS A AND CLASS B PERFORMANCE OPTIONS WHICH REMAIN
FOLLOWING JANUARY OUTSTANDING AND ELIGIBLE FOR EXERCISABILITY UPON
1, 2001 TERMINATION OF EMPLOYMENT DUE TO DEATH, DISABILITY OR
SCHEDULED RETIREMENT
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0 50%
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1 60%
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2 70%
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3 80%
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4 90%
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5 100%
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; provided, however, that if the Optionee's Scheduled
Retirement occurs on or after June 30, 2004, he shall be
deemed to have completed the greater of four full years of
employment or the actual number of years of employment (which
shall include the Optionee's years of service in the capacity
of Chairman, Non-Executive, following his Scheduled
Retirement) following January 1, 2001 under the above chart.
10. Section 3.2(b) shall be deleted in its entirety, and the following
shall be inserted therefor:
"(b) upon a Termination of Employment (provided that in the
case of a Scheduled Retirement, Section 3.2(a) shall apply),
except as follows:
(i) BY COMPANY WITHOUT CAUSE; BY OPTIONEE WITH GOOD
REASON; OR DUE TO DEATH OR DISABILITY.
(A) TIME OPTION. The portion of the Time Option that
is exercisable at the time of a Termination of
Employment by the Company without Cause, by the
Optionee with Good Reason, or due to death or
Disability shall remain exercisable for 60 days
following such Termination of Employment.
(B) PERFORMANCE OPTION. The portion of the
Performance Option that is exercisable at the
time of a Termination of Employment by the
Company without Cause, by the Optionee with Good
Reason, or due to death or Disability shall
remain exercisable for 60 days following such
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Termination of Employment; provided that with
respect to any portion of the Performance Option
that becomes exercisable following such
Termination of Employment pursuant to Section
3.1(c), such exercisable portion of the
Performance Option instead shall remain
exercisable for 60 days following the relevant
Measurement Date, if applicable.
(ii) BY COMPANY FOR CAUSE. All exercisable and
unexercisable portions of the Option held by the
Optionee on the date of Termination of Employment by
the Company for Cause will immediately expire and be
forfeited on such date.
(iii) BY OPTIONEE WITHOUT GOOD REASON. The portions of
the Time Option and Performance Option that are
exercisable at the time of a Termination of
Employment by the Optionee without Good Reason shall
remain exercisable for 10 days following such
Termination of Employment."
11. The footnote to Schedule 1 to the Option Agreement shall be deleted
in its entirety, and the following shall be inserted therefor:
"* The number of Option Shares specified above is subject to
adjustment (increase but not decrease) in the event the Optionee
receives an allocation of shares from the discretionary option
pool established by the Board of Directors as of January 1, 2001,
and deemed granted as of the Grant Date specified herein. Such
discretionary option pool shares shall be allocated annually
(beginning in 2001) in equal installments over a period of five
years. Any such allocation to the Optionee shall represent a pro
rata portion of the discretionary pool shares that are allocated
to new Optionees added to the Plan as participants after January
1, 2001 with respect to a particular year following allocations
for that year to such new Optionees (as a ratio of (A) one-fifth
of the total number of Option Shares granted to the Optionee to
(B) one-fifth of the total number of shares subject to the
options, in each case not including the discretionary pool
shares). Allocations from the discretionary pool shall be made
pursuant to procedures established by the Committee.
Pursuant to Article III of this Agreement, the number of Option
Shares specified above also is subject to decrease and forfeiture
in the event the Optionee experiences a Change in Status prior to
the expiration of the Option. Any Option Shares so forfeited shall
be added to the discretionary pool for allocation.
In the event the Optionee's Scheduled Retirement occurs before all
of the discretionary pool shares have been allocated as described
above (i.e., prior to the end of the five-year period), Optionee
shall be entitled to a pro
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rata allocation for the calendar year in which his Scheduled
Retirement occurs, which shall be equal to the product of (x) the
number of discretionary pool shares to which the Optionee would
have been entitled, but for his Scheduled Retirement, for the year
in which the Scheduled Retirement occurs, MULTIPLIED BY (y) the
fraction, the numerator of which equals the number of complete
months the Employee was employed by the Company during the
calendar year in which such Scheduled Retirement occurs and the
denominator of which is 12."
PART III -- MANAGEMENT EQUITY ROLLOVER AGREEMENT
Part III of this Amendment shall amend the terms of the Management
Equity Rollover Agreement as set forth herein. Capitalized terms used in this
Part III not otherwise defined shall have the meanings ascribed to them in the
Management Equity Rollover Agreement.
12. Section 4.2 of the Management Equity Rollover Agreement shall be
deleted in its entirety, and the following shall be inserted therefor:
"4.2 REQUIRED REPURCHASE - SCHEDULED RETIREMENT. In the event
of a Termination by reason of Management Employee's Scheduled
Retirement, Management Employee shall have the right to put to
the Company upon 60, but not more than 90, days' advance
written notice, and if Management Employee exercises such
right, the Company shall be required to purchase from
Management Employee, all or any part of the TravelCenters
Common Stock and equity interests held by Management Employee
as follows:
(a) commencing on the date of such Scheduled
Retirement, the shares of TravelCenters Common Stock
held by Management Employee at the Fair Market Value
therefor;
(b) commencing on the date which is six months after
the date of such Scheduled Retirement, 50% of all
then exercisable TravelCenters equity interests held
by Management Employee at the Fair Market Value of
the TravelCenters Common Stock underlying such equity
interests, minus the exercise price therefor;
(c) commencing on the date which is eighteen months
after the date of such Scheduled Retirement, all
remaining exercisable TravelCenters equity interests
held by Management Employee at the Fair Market Value
of the TravelCenters Common Stock underlying such
equity interests, minus the exercise price therefor;
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where, in each case, the Fair Market Value of a share is
deemed to be its Fair Market Value (i) if the put right is
exercised with proper notice as of the date of Management
Employee's Scheduled Retirement or the date which is six
months or eighteen months thereafter, the Fair Market Value on
the last day of the fiscal quarter which includes the date on
which Management Employee provided notice of the exercise of
his put right; or (ii) if the put right is exercised with
proper notice as of any other date, the Fair Market Value on
the last day of the fiscal quarter during which Management
Employee provided notice of the exercise of his put right. The
foregoing put right may be exercised by Management Employee
not more than two times per calendar year and is intended,
notwithstanding the language of Section 5.1 of the Stock
Option Agreement, dated December 26, 2001, between
TravelCenters of America, Inc. and Management Employee, to be
in lieu of and to supersede the Company's obligation to
repurchase options contained in such Section 5.1. The
foregoing provisions of this Section 4.2 to the contrary
notwithstanding, if there is a Change of Control which
involves the sale by stockholders of the Company other than
Management Employee of shares of TravelCenters Common Stock
(or the receipt of cash or other property in connection with
Change of Control in respect of such shares of TravelCenters
Common Stock), the Company shall be required upon the
consummation of the transaction which gives rise to the Change
of Control to purchase (or cause the purchase of) all
remaining shares of TravelCenters Common Stock and
TravelCenters equity interests held by Management Employee, at
a price per share equal to the price per share paid to such
stockholders pursuant to the Change of Control, minus any
exercise price, as the case may be."
13. Section 4.3 of the Management Equity Rollover Agreement shall be
deleted in its entirety, and the following shall be inserted therefor:
"4.3 CLOSING OF PURCHASE. The closing of any purchase
pursuant to Section 4.1 or 4.2 shall take place at the
principal office of the Company at a mutually scheduled day
and time not later than the 60th day following (a) the later
of (i) the date as of which the Fair Market Value with respect
to such purchase is determined or (ii) the date as of which
the put right is exercised, or (b) the date of the Change of
Control, as the case may be."
14. Section 4.6(a) of the Management Equity Rollover Agreement shall be
deleted in its entirety, and the following substituted therefor:
"(a) At any time the Company elects or is required to purchase
any shares pursuant to this Section 4, the Company shall pay
the purchase price for such shares it purchases first, by
set-off of any of the Management Employee's Note (including
accrued and unpaid interest thereon) and then, by the
Company's delivery of a bank cashier's check or certified
check for the remainder of such purchase price, if any;
provided that in lieu of paying cash, the Company may pay the
purchase price for any purchases of shares pursuant to Section
4.4 (other than a purchase in connection with a Scheduled
Retirement, Termination without Cause or due to a Resignation
with Good Reason and except as provided in
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Section 4.5 above) by delivery of a promissory note
substantially in the form of Exhibit B hereto issued by the
Company to the Management Employee with an aggregate principal
amount equal to the purchase price, bearing interest at the
Prime Rate per annum, payable annually in arrears on the
outstanding principal amount of such note and accruing on a
daily basis from the date payment is otherwise required
pursuant to this Section 4, and with principal payments to
Management Employee in four equal annual installments
commencing on the first anniversary of the date of such note."
15. Section 4.7(a) of the Management Equity Rollover Agreement shall be
deleted in its entirety, and the following substituted therefor:
"(a) For purposes of this Section 4, the terms `Cause,'
`Change of Control,' `Disability,' `Good Reason' and
`Scheduled Retirement' have the meanings given to such terms
in the Stock Option Agreement between Management Employee and
TravelCenters, dated the Closing Date, as it may be amended
from time to time, entered into pursuant to the TravelCenters
of America, Inc. 2001 Stock Option Plan; in addition, the
following terms shall have the following meanings:"
PART IV -- MISCELLANEOUS
16. ALTERNATIVE SATISFACTION OF COMPANY'S OBLIGATIONS. In the event
that this Amendment provides for any payment or benefit to the Employee in Part
I, II or III hereof which cannot be provided because this Amendment conflicts
with or contradicts another provision in any other plan or agreement or because
the Amendment is deemed not to have amended the provisions of the agreement
which it purports to amend, Holdings or the Company shall provide the Employee
with an "Alternative Benefit" in lieu thereof. The Alternative Benefit is a
benefit or payment which places the Employee in at least as good of an economic
position as if the payment or benefit promised by this Amendment (a) were
provided exactly as called for by this Amendment and (b) had the favorable
economic, tax and legal characteristics customary for plans, policies or
arrangements of that type.
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IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 to
Employment Agreement as of the date first above written.
TRAVELCENTERS OF AMERICA, INC.
("Holdings")
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Chairman, Compensation Committee
TA OPERATING CORPORATION
("Company")
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Chairman, Compensation Committee
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
("Employee")
