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EXHIBIT 10.11
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of January 1, 2000, 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").
In consideration of the parties' desire to assure the Company and
Holdings of the services of the Employee, and the mutual covenants herein
contained, the parties agree as follows:
1. Employment.
1.1 Employment, Acceptance and Term. Subject to Section
5 hereof, the Company and Holdings hereby agree to employ the Employee, and the
Employee agrees to serve the Company and Holdings, during the term of this
Agreement (the "Term") which shall commence January 1, 2000 (the "Effective
Date") and end on December 31, 2001 (the "Initial Term"), and shall be renewed
automatically for successive one calendar year periods thereafter through
December 31 of the calendar year in which the Employee reaches age sixty-five
(65), unless the Company gives the Employee or the Employee gives the Company
written notice of its or his intent not to renew this Agreement, which notice
must be given not later than December 31, 2000 if this Agreement is to expire at
the end of the Initial Term or December 31 of the year last preceding the final
calendar year of the Term if this Agreement is to expire after the Initial Term;
provided, however, that no such notice given by either the Company or the
Employee after a "Change of Control" as defined in Section 1.2 hereof shall have
the effect of terminating this Agreement prior to the December 31 coinciding
with or next following the second anniversary of the date on which such Change
of Control occurs. The Employee acknowledges that neither the Company nor
Holdings shall have any obligation to extend the Term beyond the
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Initial Term or to renew the Agreement after any extension, or to enter into a
new employment agreement upon the expiration of the Term. Unless otherwise
agreed between the parties in writing, any continuation of the Employee's
employment beyond the expiration of the Term shall constitute an employment at
will and shall not extend the terms of this Agreement.
1.2 Change of Control. Any of the following events shall
constitute a "Change of Control":
(i) any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), becomes the beneficial owner (as defined in
Rule 13d-3 promulgated under the Exchange Act) of fifty-one percent (51%)
or more of the voting power of the then-outstanding voting securities of
Holdings; provided, however, that the foregoing does not apply to any
such acquisition that is made by (i) the Company or any Affiliate or (ii)
any employee benefit plan maintained either by the Company or any
Affiliate; or
(ii) Holdings merges into itself, or is merged or
consolidated with, another corporation and as a result of such merger or
consolidation less than fifty-one (51%) of the voting power of the
then-outstanding voting securities of the surviving or resulting
corporation immediately after such transaction are owned in the aggregate
by the former shareholders of Holdings immediately prior to such
transaction;
(iii) all or substantially all the assets accounted
for on the consolidated balance sheet of the Company and the Affiliates,
in the aggregate, are sold or transferred to one or more corporations or
persons, and as a result of such sale or transfer less than fifty-one
percent (51%) of the voting power of the then-outstanding voting
securities of such corporation or person immediately after such sale or
transfer is
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held in the aggregate by the former shareholders of Holdings immediately
prior to such transaction or series of transactions;
(iv) fifty-one percent (51%) or more of the assets
accounted for in the consolidated balance sheet of Company and its
Affiliates, in the aggregate, are sold or transferred to one or more
corporations or persons, whether such sale or transfer is accomplished by
the sale or transfer of assets directly, the sale or transfer of stock of
the Company or one or more Affiliates or otherwise with, in any case, an
aggregate value of fifty-one percent (51%) or more of the aggregate value
of the Company and its Affiliates, or any combination of methods by which
fifty-one percent (51%) or more of the aggregate value of the Company and
its Affiliates are sold or transferred, if, immediately after such sale
or transfer, the purchaser or transferee is less than fifty-one percent
(51%) owned, in the aggregate, by the persons who are the shareholders of
Holdings immediately prior to such sale or transfer; or
(v) during any period of two (2) consecutive
years, including, without limitation, the year 1999, individuals who at
the beginning of any such period constitute the Board of Directors of
Holdings cease, for any reason, to constitute at least a majority
thereof, unless the election or nomination for election of each Director
first elected during such period was approved by a vote of at least a
majority of the members of the Board of Directors of Holdings who were
members of the Board of Directors of Holdings on the date of the
beginning of any such period.
Without otherwise limiting the generality of the foregoing,
an initial public offering of the Common Stock of Holdings shall not be deemed a
"Change of Control" for purposes of this Agreement.
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2. Duties and Authority.
2.1 Office. Subject to Section 5 hereof, during the Term
the Employee will serve as the President and Chief Executive Officer of the
Company and Holdings, in accordance with the Certificates of Incorporation and
By-Laws of the Company and Holdings, respectively, and subject to the direction
of, and in accordance with the authority delegated to the Employee by, the
Boards of Directors of the Company and Holdings.
2.2 Duties. Subject to Section 5 hereof, during the Term
the Employee shall devote all of his full working time and energies to the
business and affairs of the Company and, in connection therewith, shall perform
such duties, functions and responsibilities as are commensurate with and
appropriate to the position of an officer of the Company. Throughout the Term,
the Employee will use his best efforts, skills and abilities to promote the
interests of the Company and its Affiliates. For purposes of this Agreement, the
term "Affiliates" shall mean, collectively, Holdings, National Auto/Truckstops,
Inc., a Delaware corporation ("National"), TA Franchise Systems, Inc., a
Delaware corporation ("TAFSI"), TA Licensing, Inc., a Delaware corporation
("Licensing"), and all subsidiaries and affiliates of the Company, Holdings,
National, TAFSI, and Licensing.
3. Compensation.
3.1 Base Salary. As compensation for services to be
rendered during the Term pursuant to this Agreement, the Company shall pay the
Employee a base salary at the rate of Four Hundred Fifty Thousand Dollars
($450,000) per annum (the "Base Salary"), which amount shall be reviewed not
less frequently than annually and which may be increased but not decreased by
action of the Board of Directors of the Company or the Compensation Committee
(as defined in Section 3.2 hereof) in a manner consistent with the treatment of
other employees
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of the Company as approved by the Compensation Committee and payable currently
in equal biweekly installments or otherwise in accordance with the payroll
policies of the Company as from time to time in effect.
3.2 Annual Bonus. For each fiscal year of the Company
during the Term (a "Fiscal Year"), commencing with the Fiscal Year ending
December 31, 2000, the Company shall pay to the Employee an annual bonus (the
"Annual Bonus"). The amount of each Annual Bonus shall be determined by the
Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee"), based fifty percent (50%) upon corporate performance
(EBITDA goals) and fifty percent (50%) upon the Employee's individual
performance (MBO targets), and shall range from zero (0) to seventy-five percent
(75%) of the Base Salary in effect as of the first day of the Fiscal Year
(seventy-five percent (75%) of such Base Salary being the "Target Bonus"). The
MBO targets for the following Fiscal Year shall be presented to and approved by
the Board of Directors or Compensation Committee of the Company in December of
each year in a manner consistent with past practice. The Annual Bonus shall be
paid within thirty (30) days after the completion of the audit by the Company's
independent auditors of the financial statements of the Company and its
Affiliates for the Fiscal Year to which the Annual Bonus applies.
4. Additional Benefits.
4.1 Benefit Plans. The Employee shall be entitled during
the Term, if and to the extent eligible, to participate in all employee benefit
plans of the Company or Holdings which the Company or Holdings provides to its
executive employees or officers generally, including, without limitation, a
health and medical insurance plan, basic life insurance, supplemental life
insurance, basic disability benefit plan, supplemental disability benefit plan,
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relocation, retirement or pension plan or similar benefit plans, whether now in
existence or hereafter adopted; provided, however, that neither the Company nor
Holdings shall be obligated to adopt, maintain or contribute to any such benefit
plans which, in their discretion, the Company and Holdings believe would be
imprudently expensive or otherwise inappropriate. Any new benefit plan which the
Company or Holdings provides to its executive employees, and any change to a
benefit plan which the Company or Holdings provides to its executive employees,
shall be applied consistently to all such executive employees.
4.2 Director's and Officer's Insurance. Holdings has
purchased and Holdings or the Company will use reasonable efforts to maintain
during the Term, at Holdings' or the Company's expense, Director's and Officer's
liability insurance in a reasonable amount covering all insurable acts of the
Employee pursuant to this Agreement provided that the Employee's coverage will
not be less extensive than that provided by Holdings or the Company to any other
director or officer of Holdings, the Company or any Affiliate.
4.3 Fringe Benefits. The Employee shall be entitled
during the Term to the following additional benefits: (i) a company-owned
automobile of a make and model approved by the Compensation Committee as
appropriate for an officer of the position of the Employee; (ii) company-owned
club membership (or to the extent the club does not permit company membership,
reimbursement for individual membership) for fees, dues and fixed expenses only,
paid by the Company and/or the Employee, which shall not exceed Ten Thousand
Dollars ($10,000.00) per year; (iii) paid vacation days in accordance with
standard Company policy for similarly situated officers; and (iv) participation
in a nonqualified unfunded elective salary deferral plan adopted or to be
adopted by the Compensation Committee having such terms as the Compensation
Committee determines in its sole discretion are appropriate for the purpose
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of providing certain benefits in excess of the benefits otherwise available
under the Company's employee benefit plan established pursuant to Code sections
401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (the "Code"),
which nonqualified plan provides or is expected to provide tax-deferred savings
opportunities through elective salary deferrals in excess of certain of the
limits set forth in Subchapter D of Chapter I of Subtitle A of the Code.
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, the consequences of any
such termination or resignation being as specified in this Section 5:
5.1 Death; Disability. If the Employee's employment with
the Company is terminated by reason of the Employee's death or Permanent
Disability during the Term, the obligations of the Company and Holdings under
this Agreement shall be satisfied by providing the benefits set forth in the
Company's life insurance or disability benefit plan or plans, as the case may
be. The Employee shall not be entitled to any other payments or compensation
under this Agreement except for (i) Base Salary accrued and unpaid to the date
of death or Permanent Disability, (ii) any vested benefits as of the date of
death or termination for Permanent Disability under any awards to the Employee
pursuant to the National Auto/Truckstops Holdings Corporation 1993 Stock
Incentive Plan, the TravelCenters of America, Inc. 1997 Stock Incentive Plan,
and any other such plan or individual agreement adopted after the date of this
Agreement (collectively, the "Stock Incentive Plans"), or any
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amount payable under any other benefit plan of the Company or any Affiliate, in
accordance with the terms of any such plan, (iii) an amount equal to the product
of (x) the Annual Bonus, if any, determined by the Compensation Committee for
the year in which the termination 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 termination occurs and the
denominator of which is three hundred sixty-five (365), and (iv) if the Employee
and/or his spouse and dependents properly elect continued medical coverage
("COBRA") in accordance with Code section 4980B, the Company will pay the entire
cost of the premiums for such continued medical coverage for the maximum
required period of coverage under Code section 4980B(f). "Permanent Disability,"
as used in this Section 5.1, shall mean the physical or mental inability of the
Employee to perform, consistent with past practice, the essential functions of
such Employee's duties as specified in Section 2.1 hereof, with reasonable
accommodation to the extent required by the applicable requirements of the
Americans with Disabilities Act, for at least twelve (12) consecutive months.
Determination of Permanent Disability shall be made initially by the Board of
Directors of the Company. If there is a disagreement between the Employee and
the Company as to the existence of such a Permanent Disability, such
disagreement shall be resolved by the determination of two physicians, one
selected by the Employee and one selected by the Company. If such physicians
shall disagree, the decision shall be made by a third physician selected by the
first two physicians. The fees and expenses of all of the physicians shall be
paid by the Company.
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 for "Good Reason" as defined in Section 5.5 hereof), all obligations
of the Company and Holdings,
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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 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 notice of his resignation
(other than for Good Reason).
5.3 Company's Right to Terminate for Cause. If the
Employee shall be discharged for "Cause" (as defined below) during the Term, 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 effective date of such
discharge, and the Employee shall not be entitled to any compensation under this
Agreement except for Base Salary accrued and unpaid through, and 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
discharge. As used in this Agreement, "Cause" shall mean a discharge in one or
more of the following events:
(i) the Employee's misappropriation of money or
other assets or property, breach of fiduciary duty, tortious conduct or
other act of dishonesty with respect to the Company or any Affiliate; the
Employee's conviction of, or plea of guilty or nolo contendere to, any
act of fraud, embezzlement, tortious conduct or any crime for
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an offense that constitutes a felony, or the Employee's indictment for
any crime involving dishonesty or moral turpitude;
(ii) the Employee's continuing, repeated willful
failure or refusal to follow written directions of the Board of Directors
of the Company or Holdings which failure or refusal continues following
the Employee's receipt of written notice from such Board of Directors
advising him of the acts or omissions that constitute the failure to
perform his duties as an officer of the Company or Holdings, if such
failure continues after the Employee shall have had a reasonable
opportunity to correct the act or omissions so complained of;
(iii) the Employee's violation of the Company's
drug abuse or alcohol abuse policy; or
(iv) the Employee's breach of any covenant set
forth in Section 6 hereof.
5.4 Termination for Any Other Reason or Resignation for
a Good Reason. If (a) the Employee is discharged by the Company during the Term
for any reason (other than for "Cause" (as defined in Section 5.3 hereof) or by
reason of the Employee's death or "Permanent Disability" (as defined in Section
5.1 hereof)) or (b) the Employee's employment with the Company is terminated by
reason of the Employee's resignation for a "Good Reason" (as defined in Section
5.5 hereof) occurring during the Term, then all obligations of the Company and
Holdings hereunder shall cease except that the Employee shall be entitled to the
following from the Company:
(i) any Base Salary accrued and unpaid to the
date of such discharge or resignation, which shall be payable within
thirty (30) days of such discharge
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or resignation, plus an amount equal to the product of (A) multiplied by
(B), where (A) equals his Annual Bonus, if any, determined by the
Compensation Committee for the year in which his discharge or resignation
occurred and where (B) equals a fraction, the numerator of which equals
the number of days in the calendar year during which the Employee was
employed by the Company, and the denominator of which equals three
hundred sixty-five (365), which amount shall be payable on the same date
that active officers are paid similar Annual Bonuses;
(ii) during the twenty-four (24) month period
following the date of his discharge or termination, a monthly amount
equal to the greater of (i) his monthly rate of Base Salary in effect as
of the date immediately preceding any Change of Control or (ii) his
monthly rate of Base Salary in effect as of the date of his discharge or
termination, which shall be payable in such manner and at such times as
active employees of the Company are paid base salaries;
(iii) an amount equal to two hundred percent (200%)
of the greater of the Employee's Target Bonus as set forth in Section 3.2
hereof for the Fiscal Year ended December 31, 2000 or the Employee's
Target Bonus as set forth in Section 3.2 hereof for the Fiscal Year in
which his Termination of Employment occurs, which amount shall be payable
in two separate payments each equal to one-half of such amount (i.e.,
each payment equal to one hundred percent (100%) of the Target Bonus
amount). The first such payment shall be payable at such time and in such
manner as active officers of the Company customarily are paid similar
bonuses for the Fiscal Year next following the Fiscal Year in which his
discharge or resignation occurs (or in accordance with past practice if
such bonuses are not being paid to such active officers), and the
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second such payment shall be payable at such time and in such manner as
active officers of the Company customarily are paid similar bonuses for
the second Fiscal Year following the Fiscal Year in which his discharge
or resignation occurs (or in accordance with past practice if such
bonuses are not being paid to such active officers), provided that the
second payment shall be made not later than the date of the last
scheduled payment payable pursuant to Section 5.4(ii) hereof;
(iv) any vested benefits as of the date of such
resignation or discharge 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; and
(v) if the Employee (and/or his spouse and/or
dependents) properly elect continued COBRA medical coverage, the Company
and the Employee (and/or his spouse and/or dependents) each shall pay
their same portions of the premiums for such medical coverage as if the
Employee had remained in the employ of the Company until the Participant
shall elect to discontinue such coverage, provided that the obligation of
the Company under this Section 5.4(v) shall cease upon the expiration of
the later of (A) the maximum required period of coverage under Code
Section 4980B(f), or (B) twenty-four (24) months after the date of such
discharge or resignation;
provided, however, that, in each case in clauses (i) through (v) above in this
Section 5.4, if at any time during which the Company is obligated to make
payments thereunder the Employee engages in any activity violative of Section 6
hereof, then, as of the date the Employee commences engaging in such activity,
all of the Company's obligations to pay compensation or other amounts under this
Agreement to or for the benefit of the Employee shall terminate except
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for (i) Base Salary then accrued and unpaid, (ii) any vested benefits under any
awards to the Employee pursuant to the Stock Incentive Plans, and (iii) any
amount payable under any other benefit plan of the Company or any Affiliate in
accordance with the terms of such plan.
5.5 Resignation for Good Reason. As used in this
Agreement, "Good Reason" shall mean a resignation by the Employee as a result of
one or more of the following events occurring during the Term:
(i) a material reduction in the Employee's
compensation (including the additional benefits described in Section 4
hereof) in the aggregate or his duties or title with respect to the
Company or any of its Affiliates (other than nonsubstantive, titular or
nominal changes);
(ii) the Company requires the Employee to change
his principal location of work to any location which is outside of the
Cleveland, Ohio, metropolitan area, without his prior written consent; or
(iii) a material breach of this Agreement by the
Company or any of its Affiliates unless such breach is substantially
cured within a reasonable period of time (hereby defined as thirty (30)
days) after written notice advising the Company of the acts or omissions
constituting such breach is actually received by the Company in
accordance with Section 11.5 hereof.
If the Employee claims the existence of a Good Reason, he must
notify the Company in writing of the event constituting Good Reason not later
than sixty (60) days following the later to occur of the occurrence of the event
(e.g., the actual reduction in compensation, the scheduled date of relocation or
the date of the breach) constituting Good Reason or his actual knowledge
thereof. If the event which the Employee claims to be a Good
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Reason is not cured within thirty (30) days following the date of such notice,
the Employee must resign within ten (10) days following the thirty (30) day cure
period in order to invoke his right to resign for Good Reason. If no such timely
resignation occurs or no such timely written notices are given, the Employee's
right to resign for Good Reason with respect to such event shall be permanently
waived.
5.6 Employee Benefit Plans. In addition to such payments
and benefits as may be provided to the Employee upon his termination of
employment during the Term as set forth herein, the Employee (or his estate,
legal representative or employee benefit plan beneficiary, as the case may be)
shall be entitled to receive such other benefits as are expressly so provided
under the terms of any employee benefit plan or other contractual arrangement
maintained by the Company or any Affiliate; provided, however, that the
Compensation Committee may reduce benefits under any such other plan or
arrangement, if permissible thereunder, or may reduce benefits hereunder, to the
extent it both (i) determines in good faith that such benefits are clearly
duplicative or unintended (e.g., duplicative severance benefits or more than one
company car), and (ii) permits full payment of the better (in the case of two
duplicative benefits) or the best (in the case of more than two duplicative
benefits) of the benefits. This Section 5.6 shall not be deemed to permit any
reduction in any amount otherwise payable to the Employee under any nonqualified
deferred compensation plan of the Company or any Affiliate.
6. Covenants of the Employee.
6.1 Covenants Against Competition. The Employee
acknowledges that (a) the Company and its Affiliates are engaged in the business
of operating a truckstop network, with facilities that provide motor fuel
pumping along with one or more of the following
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services: truck care and repair services, a fast food restaurant, a full-service
restaurant, a convenience store, showers, laundry facilities, telephones,
recreation rooms, truck weighing scales and other compatible business services
approved by the Company (the "Business"); (b) the Employee is one of the limited
number of persons who developed the Business; (c) such Business is conducted
nationally; (d) the Employee's work for the Business has given him, and will
continue to give him, trade secrets of, and confidential information concerning,
the Business; (e) the Employee acknowledges that the Employee's knowledge of
such trade secrets and of, and confidential information concerning, the Business
would be of significant assistance and value to any "TA Truck-Stop Competitor,"
which for purposes of this Section 6 shall mean Petro, Flying J, AMBEST, PTP,
Xxxx Bros., Giant, All American, Rip Griffin, Bosselman's, Xxxxx Trucker's Home,
Texaco/Equilon, Pilot, Love's, Speedway (Emro), Little America, Total, Mapco,
Coastal, Fuel Mart and any other chain or network of national or regional "truck
stops" as such term is generally understood in the trucking industry, including
any affiliates or successors to any of the foregoing; and (f) the agreements and
covenants contained in this Section 6.1 are essential to protect the Business
and the goodwill associated with it. Accordingly, the Employee covenants and
agrees as follows:
6.1.1 Non-Compete. From the date hereof through the later
of (A) the last day of the Term and (B) the last date through which the Employee
is entitled to receive any payment pursuant to Section 5.4(ii) hereof, the
Employee shall not, in the United States of America, directly or indirectly, (x)
enter the employ of or render any services to any TA Truck-Stop Competitor, or
(y) have an interest in any TA Truck-Stop Competitor, whether such interest is
direct or indirect, and including any interest as a partner, shareholder,
trustee, consultant, officer or similarly situated person; provided, however,
that in any case, the Employee may own,
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solely as an investment, securities of any TA Truck-Stop Competitor that are
publicly traded if the Employee (a) is not a controlling person and (b) does
not, directly or indirectly, own five percent (5%) or more of any class of
securities of such person. After the date which is the later of (A) and (B) in
the preceding sentence, the Employee shall be free to engage in any lawful
business activities, including activities for or related to a TA Truck-Stop
Competitor. The covenant contained in this Section 6.1.1 shall survive the
termination of this Agreement.
6.1.2 Confidential Information. The Employee agrees that
neither during the Term nor at any time thereafter shall he (i) disclose to any
person not employed by the Company or an Affiliate, or not engaged to render
services to the Company or an Affiliate or (ii) use for the benefit of himself
or others, any confidential information of the Company, any of the Company's
Affiliates or of the Business obtained by him, including, without limitation,
"know-how," trade secrets, details of customers', suppliers', manufacturers' or
distributors' contracts with the Company or any of the Company's Affiliates,
pricing policies, financial data, operational methods, marketing and sales
information, marketing plans or strategies, product development techniques or
plans, plans to enter into any contract with any person or any strategies
relating thereto, technical processes, designs and design projects, and other
proprietary information of the Company, the Company's Affiliates or of the
Business or the business of any of the Company's Affiliates; provided, however,
that this provision shall not preclude the Employee from (a) making any
disclosure required by law or court order or (b) using or disclosing information
(i) known generally to the public (other than information known generally to the
public as a result of a violation of this Section 6.1.2 by the Employee), (ii)
acquired by the Employee outside of his affiliation with the Company or any of
the Company's Affiliates, or (iii) of a general nature (that is, not related
specifically to the Business) that ordinarily would be
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learned, developed or obtained by individuals similarly active and/or employed
in similar capacities by other companies in the same Business as the Company or
any of the Company's Affiliates. The Employee agrees that all confidential
information of the Company or any of the Company's Affiliates shall remain the
Company's or the Company's Affiliates', as the case may be, property and shall
be delivered to the Company or to the Company's Affiliates, as the case may be,
promptly upon the termination of the Employee's employment with the Company or
at any other time on request. The covenant contained in this Section 6.1.2 shall
survive the termination of this Agreement.
6.1.3 Nonsolicitation by Restricted Persons. From the date
hereof through the later of (A) the last day of the Term and (B) the last date
through which the Employee is entitled to receive any payment pursuant to
Section 5.4(ii) hereof, the Employee shall not, directly or indirectly, (a)
solicit any employee to leave the employment of the Company or the employment of
any of the Company's Affiliates or (b) hire any employee who has left the employ
of the Company or the employ of any of the Company's Affiliates within six (6)
months after termination of such employee's employment with the Company or such
employee's employment with any of the Company's Affiliates, as the case may be
(unless such employee was discharged by the Company without Cause and excepting
clerical and similar employees). The covenant contained in this Section 6.1.3
shall survive the termination of this Agreement.
7. Rights and Remedies Upon Breach of Covenants. If the
Employee breaches, or threatens to commit a breach of, any of the provisions of
Section 6 hereof (the "Restrictive Covenants"), the Company shall have the
following rights and remedies, each of which rights and remedies shall be
independent of the others and severally enforceable, and all of
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which rights and remedies shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company at law or in equity:
7.1 Specific Performance. The right and remedy to have
the Restrictive Covenants specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and that money
damages will not provide an adequate remedy to the Company.
7.2 Severability of Covenants. The Employee acknowledges
and agrees that the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full effect to the greatest extent
possible, without regard to the invalid portions.
7.3 Blue Penciling. If any court construes any of the
Restrictive Covenants, or any part thereof, to be unenforceable because of the
duration of such provision or the area covered thereby, such court shall have
the power to reduce the duration or area of such provision and, in its reduced
form, such provision shall be enforceable and shall be enforced to the greatest
extent possible.
7.4 Enforceability in Jurisdictions. The parties intend
to and hereby do limit jurisdiction to enforce the Restrictive Covenants upon
the courts of the jurisdiction of the Employee's last principal place of
business under this Agreement and the sites of the alleged breach of the
Restrictive Covenants.
7.5 Survival. The provisions of this Section 7 shall
survive the termination of this Agreement.
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8. Representations of Employee. The Employee hereby represents
and warrants to the Company (a) that there are no restrictions, agreements or
understandings whatsoever to which the Employee is a party which would prevent
or make unlawful the execution or performance of this Agreement or his
employment hereunder and (b) that the execution of this Agreement and the
Employee's employment hereunder shall not constitute a breach of any contract,
agreement or understanding to which he is a party or by which he is bound.
9. Senior Management Incentive Program. The Employee shall be
a participant in the Company's Senior Management Incentive Program. Under the
Program, the Employee may become entitled to an Incentive Bonus as hereinafter
described:
9.1 Full Incentive Bonus. Subject to Section 9.3 hereof,
in the event of a Change of Control on or before December 31, 2000, the Employee
shall receive as an Incentive Bonus a single sum cash payment at the closing of
the Change of Control transaction in the amount hereinafter described:
(i) if the "Enterprise Value," as hereinafter
defined, shall be less than or equal to Eight Hundred Million Dollars
($800,000,000.00), the Incentive Bonus shall be equal to the sum of one
year's Base Salary plus one year's Target Bonus;
(ii) if the Enterprise Value shall be in excess of
Eight Hundred Million Dollars ($800,000,000.00), but less than One
Billion Dollars ($1,000,000,000.00), the Incentive Bonus shall increase
linearly from the sum of one year's Base Salary plus one year's Target
Bonus at the Eight Hundred Million Dollar ($800,000,000.00) level to four
(4) times the sum of one year's Base Salary plus one year's Target Bonus
at the One Billion Dollar ($1,000,000,000.00) level; and
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(iii) if the Enterprise Value shall be in excess of
One Billion Dollars ($1,000,000,000.00), the Incentive Bonus shall be
equal to the sum of (A) plus (B) below, where:
(A) equals four (4) times the sum of one year's
Base Salary plus one year's Target Bonus; and
(B) equals an amount equal to the portion of the
Enterprise Value in excess of One Billion Dollars
($1,000,000,000.00) times a fraction, the numerator of which is
the amount determined under Section 9.1(iii)(A) above and the
denominator of which is One Billion Dollars ($1,000,000,000.00).
For purposes of calculating the amount of the Incentive Bonus, the Enterprise
Value shall be deemed to be equal to the "Enterprise Value" of the Company and
the Affiliates, in the aggregate, as the words "Enterprise Value" are used to
determine the payments to be made to the Company's financial advisors.
9.2 Partial Incentive Bonus. In the event that, prior to
a Change of Control, but on or before December 31, 2000, a person or group of
persons who are not shareholders of Holdings on December 31, 1999 acquires ten
percent (10%) or more of the equity of Holdings on a fully diluted basis (a "Ten
Percent Or Greater Acquisition"), then for each such Ten Percent Or Greater
Acquisition the Employee shall receive as an Incentive Bonus a single cash
payment at the closing of the Ten Percent Or Greater Acquisition transaction in
an amount equal to (i) multiplied by (ii) below, where:
(i) equals the amount of the Incentive Bonus
which would have been payable to the Employee under Section 9.1 hereof if
the Ten Percent Or
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Greater Acquisition had been a Change of Control based on the Enterprise
Value implicit in the transaction; and
(ii) equals the percentage of equity ownership
which is replaced by new outside equity ownership in the Ten Percent Or
Greater Acquisition transaction. Such "new outside equity ownership"
shall not be deemed to include any increase in equity ownership by any
person who was an equity owner of Holdings on December 31, 1999.
9.3 Limitations and Qualifications. Notwithstanding any
provision of this Section 9 to the contrary, the following limitations and
qualifications shall apply to Incentive Bonuses and Partial Incentive Bonuses:
(i) Upon the occurrence of a Change of Control,
the Employee shall have no right to an Incentive Bonus for any subsequent
Change of Control transaction or to a Partial Incentive Bonus for any
subsequent Ten Percent Or Greater Acquisition.
(ii) If, on or before December 31, 2000, there
shall occur more than one Ten Percent Or Greater Acquisition prior to a
Change of Control, the Employee shall be entitled to a Partial Incentive
Bonus payment for each such Ten Percent Or Greater Acquisition; provided,
however, that the aggregate amount of such Partial Incentive Bonus
payments shall not exceed an amount equal to the Incentive Bonus that
would have been payable if the Ten Percent Or Greater Acquisition having
the highest Enterprise Value had been a Change of Control transaction.
(iii) If a Change of Control shall occur on or
before December 31, 2000 but after one or more Ten Percent Or Greater
Acquisitions, the Incentive Bonus
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payment payable to the Employee pursuant to Section 9.1 hereof in
connection with such Change of Control shall be reduced, but not below
zero, by any Partial Incentive Bonus payments payable to the Employee
pursuant to this Section 9.
10. Rollover of Investment. The Employee and the Company agree
to the following concerning the rollover of investment in the event of a Change
of Control:
10.1 Rollover at Buyer's Request. If the buyer in the
Change of Control transaction (the "Buyer") shall request that the Employee roll
over his issued and outstanding shares of Common Stock of the Company into an
equity investment in the entity resulting from the Change of Control transaction
(the "Successor") so that the Change of Control transaction will qualify for
recapitalization accounting, the Employee agrees to such a rollover, but to no
greater extent than his pro rata portion of the total amount of issued and
outstanding shares (immediately prior to the closing of the Change of Control
transaction and calculated giving effect to Preferred Stock as if it had been
converted to Common Stock but excluding compensatory options and stock
appreciation rights) of Common Stock which the Buyer requests to be rolled over,
and agrees to take any and all such action as may be required to effect such a
rollover.
If such a rollover is to be made, the Company agrees to
make such rollover, to the extent reasonably possible, on a basis which is tax
favored to the Employee. The issued and outstanding shares of Common Stock
referred to in this Section 10.1 are only those actually owned by the Employee
immediately prior to the closing of the Change of Control transaction. The words
"issued and outstanding shares of Common Stock" shall not be deemed to include
any outstanding compensatory options or stock appreciation rights, nor any
shares of Common Stock received or receivable due to the exercise of any
compensatory options or stock
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appreciation rights, of the Employee or any other officer or employee of the
Company or any Affiliate.
11. Other Provisions.
11.1 Conflict. To the extent any provisions of this
Agreement conflict with the terms of any existing plan, policy or arrangement
affecting the compensation or benefits of the Employee, the provisions of this
Agreement will control.
11.2 Withholding. The Company may withhold from any
amounts payable under this Agreement such federal, state or local taxes or other
amounts as shall be required to be withheld pursuant to any applicable law or
regulation.
11.3 Code Section 280G. The Employee's right to receive
any payment or benefit hereunder in connection with his termination of
employment or otherwise which may be characterized as a "parachute payment"
(within the meaning of Code section 280G), or deemed to constitute a payment
made in connection with or contingent upon a change of control of the Company or
Holdings for purposes of Code section 280G, is contingent upon and subject to
the approval of holders of record of stock of the Company or Holdings, as
applicable, representing more than seventy-five percent (75%) of the voting
power of all outstanding stock of the Company or Holdings, as the case may be,
immediately prior to such change of control (determined without regard to any
stock actually or constructively owned by the Employee and by certain other
persons as determined by the Company).
The Company and Holdings covenant that they will present
this Agreement in a timely manner to the shareholders of the Company or Holdings
or both, as appropriate, with a unanimous recommendation of the Boards of
Directors of the Company and Holdings that it be approved by such shareholders.
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11.4 Subsidiaries and Affiliates. Notwithstanding any
contrary provision of this Agreement, to the extent it does not adversely affect
the Employee, the Company and Holdings may provide the compensation and benefits
to which the Employee is entitled hereunder through one or more subsidiaries or
affiliates, including, without limitation, Holdings.
11.5 Notices. Any notice or other communication required
or which may be given hereunder shall be in writing and shall be delivered
personally, sent by facsimile transmission or overnight courier or sent by
registered or certified mail, return receipt requested, postage prepaid, and
shall be deemed given when so delivered personally or sent by facsimile
transmission or overnight courier, or if mailed, four days after the date of
mailing, as follows:
(i) if to the Company or Holdings, to it at:
TravelCenters of America, Inc.
00000 Xxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxx 00000-0000
Attention: General Counsel
Telecopy No: (000) 000-0000
and a copy to:
Xxxxxx, Halter & Xxxxxxxx LLP
1400 XxXxxxxx Investment Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy No. (000) 000-0000
and, if prior to a Change of Control, a copy to:
The Clipper Group, L.P.
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxx
Telecopy No.: (000) 000-0000
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or at such other address as such person may
hereafter designate to the Employee by notice as
provided herein; and
(ii) if to the Employee, to him at the address set forth
below or at such other address as the Employee may
hereafter designate to each of the persons listed in
clause (i) above by notice as provided herein.
Xxxxx X. Xxxx
00000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, Xxxx 00000
Either party may give any notice or other communication hereunder
using any other means (including ordinary mail or electronic mail), but no such
notice or other communication shall be deemed to have been duly given unless and
until it actually is received by the individual for whom it is intended. Either
party may change the address to which notices and other communications hereunder
are to be delivered by giving the other party notice in the manner herein set
forth.
11.6 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto,
including, without limitation, the employment agreement by and between the
Company and the Employee dated as of November 30, 1997. The Employee
acknowledges that, as of the date this Agreement is executed, he has received
all amounts accrued or due under any prior agreements, and that he is not
entitled to receive additional amounts pursuant to any such agreements.
11.7 Waivers and Amendments. This Agreement may be
amended, modified, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or a privilege hereunder
shall operate as a waiver thereof, nor shall any waiver on the part of any
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party of any right, power or privilege hereunder, nor any single or partial
exercise of any right, power or privilege hereunder, preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder. The rights and remedies herein provided are cumulative and are not
exclusive of any rights or remedies which any party may otherwise have at law or
in equity.
11.8 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Ohio applicable to
agreements made and to be performed entirely within such State.
11.9 Assignment; Binding Effect. This Agreement is being
executed with the expectation that a Change of Control will occur on or before
December 31, 2000 and with the further expectation that this Agreement will be
assumed, expressly or by operation of law, by the Successor in the Change of
Control transaction. This Agreement, and the Employee's rights and obligations
hereunder, may not be assigned by the Employee. The Company and Holdings,
jointly but not severally, may assign this Agreement and their rights, together
with their obligations, hereunder to any entity that controls the Company or
Holdings, is controlled by the Company or Holdings, or is under common control
with the Company or Holdings, or in connection with any sale, transfer or other
disposition of all or substantially all of the assets or business of the Company
and Holdings, whether by merger, consolidation or otherwise. The Company and
Holdings, or any direct or indirect Successor to the Company or Holdings, shall
use its reasonable efforts to cause its successor in interest to assume
explicitly the obligations of the Company and Holdings or such direct or
indirect Successor to the Company or Holdings, as the case may be, hereunder.
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11.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
11.11 Headings. The headings in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
11.12 Arbitration. If requested by the Employee or the
Company, any claim or controversy arising out of or relating to the
interpretation, construction and performance of this Agreement, or any alleged
breach hereof, shall be finally resolved by arbitration conducted in accordance
with such rules as may be agreed upon by the parties within thirty (30) days
following written notice by either party to the other identifying the issue in
dispute and the position of the party giving notice, or failing to achieve such
agreement, in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association. Any award rendered
in connection with the foregoing arbitration shall be in writing and shall be
final and binding upon the parties, and judgment upon any such award may be
entered and enforced in any court of competent jurisdiction. The forum for such
arbitration shall be in Cleveland, Ohio and the governing law shall be the laws
of the State of Ohio without giving effect to conflict of laws provisions.
Notwithstanding any provision in this Section 11.12 to the contrary, the Company
shall have the right and power to seek and obtain equitable relief in accordance
with Section 7.1 hereof.
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IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the date first above written.
TRAVELCENTERS OF AMERICA, INC.
("Holdings")
By: /s/ Xxxx X. Xxxx
--------------------------------
Name: Xxxx X. Xxxx
------------------------------
Title: Chairman, Compensation
Committee of the Board
-----------------------------
TA OPERATING CORPORATION
("Company")
By: /s/ Xxxx X. Xxxx
------------------------------
Name: Xxxx X. Xxxx
------------------------------
Title: Chairman, Compensation
Committee of the Board
------------------------------
/s/ Xxxxx X. Xxxx
------------------------------
Xxxxx X. Xxxx
("Employee")
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