Document:

Exhibit 10.1

 

AGREEMENT
AND PLAN OF MERGER

among

TravelCenters
of America, Inc.

Hospitality
Properties Trust

HPT
TA Merger Sub Inc.

and

Oak
Hill Capital Partners, L.P.

September 15, 2006

 

 

 

TABLE OF CONTENTS

	
  

  	
  Page

  
	
  ARTICLE I DEFINITIONS

  	
  1

  
	
  Section 1.01.
  Certain Definitions

  	
  1

  
	
   

  	
   

  
	
  ARTICLE II THE MERGER

  	
  6

  
	
  Section 2.01.
  The Merger

  	
  6

  
	
  Section 2.02.
  Effect of Merger

  	
  6

  
	
  Section 2.03.
  Additional Actions

  	
  6

  
	
  Section 2.04.
  Certificate of Incorporation By-laws, Directors and Officers of the Surviving
  Corporation

  	
  7

  
	
  Section 2.05.
  Effect of Merger on Capital Stock of Constituent Corporations

  	
  7

  
	
  Section 2.06.
  Effect of Merger on Company Stock Options and Company Warrants

  	
  9

  
	
  Section 2.07.
  Withholding

  	
  10

  
	
   

  	
   

  
	
  ARTICLE III PAYMENT OF MERGER CONSIDERATION

  	
  10

  
	
  Section 3.01.
  Merger Consideration

  	
  10

  
	
  Section 3.02.
  Post-Closing Adjustment of Merger Consideration

  	
  11

  
	
  Section 3.03.
  Escrow Agreement and Escrow Fund

  	
  14

  
	
  Section 3.04.
  Exchange of Certificates Representing Company Securities

  	
  14

  
	
   

  	
   

  
	
  ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE
  COMPANY

  	
  16

  
	
  Section 4.01.
  Organization

  	
  16

  
	
  Section 4.02.
  Subsidiaries

  	
  17

  
	
  Section 4.03.
  Capitalization

  	
  17

  
	
  Section 4.04.
  Authorization

  	
  18

  
	
  Section 4.05. No
  Violation

  	
  18

  
	
  Section 4.06.
  Approvals

  	
  19

  
	
  Section 4.07.
  Financial Statements

  	
  19

  
	
  Section 4.08.
  Absence of Certain Transactions

  	
  20

  
	
  Section 4.09.
  Taxes

  	
  21

  
	
  Section 4.10.
  Litigation

  	
  23

  
	
  Section 4.11.
  Environmental Matters

  	
  23

  
	
  Section 4.12.
  Title to Property

  	
  25

  
	
  Section 4.13.
  Condition of Property

  	
  26

  
	
  Section 4.14.
  Contracts

  	
  26

  
	
  Section 4.15.
  Employee and Labor Matters and Plans

  	
  27

  
	
  Section 4.16.
  Insurance Policies

  	
  30

  
	
  Section 4.17.
  Intellectual Property

  	
  30

  
	
  Section 4.18.
  Permits

  	
  30

  
	
  Section 4.19.
  Compliance with Laws

  	
  31

  
	
  Section 4.20.
  Brokerage Fees

  	
  31

  
	
  Section 4.21.
  Affiliate Agreements

  	
  31

  
	
  Section 4.22. No
  Other Representations or Warranties

  	
  31

  

 

 i
 

 

 

	
  ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

  	
  32

  
	
  Section 5.01.
  Organization

  	
  32

  
	
  Section 5.02.
  Authorization

  	
  32

  
	
  Section 5.03. No
  Violation

  	
  32

  
	
  Section 5.04.
  Approvals

  	
  33

  
	
  Section 5.05.
  Litigation

  	
  33

  
	
  Section 5.06.
  Available Funds

  	
  33

  
	
  Section 5.07.
  Brokerage Fees

  	
  34

  
	
  Section 5.08. No
  Other Representations or Warranties

  	
  34

  
	
   

  	
   

  
	
  ARTICLE VI COVENANTS

  	
  34

  
	
  Section 6.01.
  Interim Operations of the Company

  	
  34

  
	
  Section 6.02.
  Access to Information

  	
  36

  
	
  Section 6.03.
  Consents and Approvals

  	
  37

  
	
  Section 6.04.
  Employment Matters

  	
  38

  
	
  Section 6.05.
  Publicity

  	
  39

  
	
  Section 6.06.
  Notification of Certain Matters

  	
  40

  
	
  Section 6.07.
  Directors’ and Officers’ Indemnification

  	
  40

  
	
  Section 6.08.
  Additional Agreements

  	
  41

  
	
  Section 6.09.
  Cooperation with Financing

  	
  41

  
	
  Section 6.10.
  Conduct of Business of Parent and Merger Sub Pending the Merger

  	
  42

  
	
  Section 6.11. No
  Adverse Change in Financial Commitments

  	
  42

  
	
  Section 6.12.
  Termination of Affiliate Contracts

  	
  42

  
	
  Section 6.13.
  Stockholder Approval; Stockholder Notice

  	
  43

  
	
  Section 6.14. No
  Solicitation or Negotiation

  	
  43

  
	
  Section 6.15.
  Repayment of Outstanding Indebtedness

  	
  43

  
	
  Section 6.16.
  Consultation

  	
  44

  
	
  Section 6.17.
  Real Property Matters

  	
  44

  
	
  Section 6.18.
  Additional Financial Statements

  	
  44

  
	
  Section 6.19. No
  Control of Other Party’s Business

  	
  45

  
	
   

  	
   

  
	
  ARTICLE VII CONDITIONS

  	
  45

  
	
  Section 7.01.
  Conditions to the Obligations of All Parties

  	
  45

  
	
  Section 7.02.
  Conditions to the Obligations of Parent and Merger Sub

  	
  45

  
	
  Section 7.03.
  Conditions to the Obligations of the Company

  	
  46

  
	
   

  	
   

  
	
  ARTICLE VIII CLOSING; TERMINATION

  	
  47

  
	
  Section 8.01.
  Closing

  	
  47

  
	
  Section 8.02.
  Termination

  	
  48

  
	
  Section 8.03.
  Effect of Termination

  	
  48

  
	
   

  	
   

  
	
  ARTICLE IX GENERAL PROVISIONS

  	
  49

  
	
  Section 9.01.
  Non-Survival of Representations and Warranties

  	
  49

  
	
  Section 9.02.
  Costs and Expenses

  	
  49

  
	
  Section 9.03.
  Notices

  	
  49

  

 

 ii
 

 

 

	
  Section 9.04. Stockholders
  Representative

  	
  51

  
	
  Section 9.05.
  Counterparts

  	
  51

  
	
  Section 9.06.
  Entire Agreement

  	
  51

  
	
  Section 9.07.
  Governing Law; Exclusive Jurisdiction

  	
  51

  
	
  Section 9.08.
  Third Party Rights; Assignment

  	
  52

  
	
  Section 9.09.
  Waivers and Amendments

  	
  52

  
	
  Section 9.10.
  Schedules

  	
  52

  
	
  Section 9.11.
  Enforcement

  	
  52

  
	
  Section 9.12.
  [Reserved.]

  	
  53

  
	
  Section 9.13.
  Headings; Interpretation

  	
  53

  
	
  Section 9.14.
  Nonliability of Trustees

  	
  53

  

 

 iii
 

 

The Disclosure Schedules to the Agreement and Plan of
Merger have been omitted and will be supplementally furnished to the Securities
and Exchange Commission upon request.

 iv
 

 

INDEX OF
DEFINED TERMS 

	
  Accounting Firm

  	
   

  	
  12

  	
   

  
	
  Actual Balance Sheet

  	
   

  	
  11

  	
   

  
	
  Actual Net Working Capital

  	
   

  	
  11

  	
   

  
	
  Additional Financial Statements

  	
   

  	
  44

  	
   

  
	
  Additional Transaction Bonuses

  	
   

  	
  1

  	
   

  
	
  Affiliate

  	
   

  	
  2

  	
   

  
	
  Agreement

  	
   

  	
  1

  	
   

  
	
  Antitrust Division

  	
   

  	
  37

  	
   

  
	
  Balance Sheet Date

  	
   

  	
  19

  	
   

  
	
  Certificate of Merger

  	
   

  	
  6

  	
   

  
	
  Certificates

  	
   

  	
  14

  	
   

  
	
  Closing

  	
   

  	
  47

  	
   

  
	
  Closing Date

  	
   

  	
  2

  	
   

  
	
  Closing Transaction Bonus Payout Amount

  	
   

  	
  10

  	
   

  
	
  Code

  	
   

  	
  2

  	
   

  
	
  Company

  	
   

  	
  1

  	
   

  
	
  Company Balance Sheet

  	
   

  	
  19

  	
   

  
	
  Company Closing Costs

  	
   

  	
  2

  	
   

  
	
  Company Common Stock

  	
   

  	
  2

  	
   

  
	
  Company Material Adverse Effect

  	
   

  	
  2

  	
   

  
	
  Company Preferred Stock

  	
   

  	
  17

  	
   

  
	
  Company Securities

  	
   

  	
  13

  	
   

  
	
  Company Stock

  	
   

  	
  2

  	
   

  
	
  Company Stock Option

  	
   

  	
  9

  	
   

  
	
  Company Stock Option Exercise Price

  	
   

  	
  9

  	
   

  
	
  Company Subsidiary

  	
   

  	
  2

  	
   

  
	
  Company Warrant

  	
   

  	
  2

  	
   

  
	
  Company Warrant Exercise Price

  	
   

  	
  9

  	
   

  
	
  Confidentiality Agreement

  	
   

  	
  36

  	
   

  
	
  Constituent Corporations

  	
   

  	
  6

  	
   

  
	
  Covered Parties

  	
   

  	
  40

  	
   

  
	
  Covered Party

  	
   

  	
  40

  	
   

  
	
  D&T

  	
   

  	
  12

  	
   

  
	
  Dataroom

  	
   

  	
  3

  	
   

  
	
  Declaration

  	
   

  	
  53

  	
   

  
	
  DGCL

  	
   

  	
  1

  	
   

  
	
  Dissenting Shares

  	
   

  	
  8

  	
   

  
	
  Effective Time

  	
   

  	
  3

  	
   

  
	
  Employee Plan

  	
   

  	
  27

  	
   

  
	
  Environmental Law

  	
   

  	
  3

  	
   

  
	
  Environmental Permit

  	
   

  	
  3

  	
   

  
	
  ERISA

  	
   

  	
  3

  	
   

  
	
  ERISA Affiliate

  	
   

  	
  3

  	
   

  
	
  Escrow Agent

  	
   

  	
  14

  	
   

  
	
  Escrow Agreement

  	
   

  	
  14

  	
   

  
	
  Escrow Amount

  	
   

  	
  14

  	
   

  
	
  Escrow Fund

  	
   

  	
  14

  	
   

  
	
  Estimated Merger Consideration

  	
   

  	
  11

  	
   

  
	
  Estimated Net Working Capital

  	
   

  	
  11

  	
   

  
	
  Estimated Per Share Merger Consideration

  	
   

  	
  11

  	
   

  
	
  Excess Payment

  	
   

  	
  13

  	
   

  
	
  Exchange Act

  	
   

  	
  3

  	
   

  
	
  Exchange Agent

  	
   

  	
  14

  	
   

  
	
  Exchange Fund

  	
   

  	
  14

  	
   

  
	
  Final Statement

  	
   

  	
  13

  	
   

  
	
  Financial Statements

  	
   

  	
  19

  	
   

  
	
  Financing

  	
   

  	
  33

  	
   

  
	
  Financing Commitment

  	
   

  	
  33

  	
   

  
	
  FIRPTA Certificate

  	
   

  	
  15

  	
   

  
	
  FTC

  	
   

  	
  37

  	
   

  
	
  Fully Diluted Basis

  	
   

  	
  3

  	
   

  
	
  GAAP

  	
   

  	
  3

  	
   

  
	
  Good Faith Deposit

  	
   

  	
  47

  	
   

  
	
  Governmental Antitrust Authority

  	
   

  	
  37

  	
   

  
	
  Governmental Entity

  	
   

  	
  3

  	
   

  
	
  Hazardous Materials

  	
   

  	
  3

  	
   

  
	
  HSR Act

  	
   

  	
  3

  	
   

  
	
  Indebtedness

  	
   

  	
  4

  	
   

  
	
  Intellectual Property

  	
   

  	
  30

  	
   

  
	
  Intercompany Indebtedness

  	
   

  	
  4

  	
   

  
	
  Interest Factor

  	
   

  	
  4

  	
   

  
	
  IRS

  	
   

  	
  4

  	
   

  
	
  Judgment

  	
   

  	
  4

  	
   

  
	
  knowledge

  	
   

  	
  4

  	
   

  
	
  Law

  	
   

  	
  4

  	
   

  
	
  Leased Premises

  	
   

  	
  25

  	
   

  
	
  Letter of Transmittal

  	
   

  	
  14

  	
   

  
	
  Liabilities

  	
   

  	
  4

  	
   

  
	
  Lien

  	
   

  	
  4

  	
   

  
	
  Material Contracts

  	
   

  	
  27

  	
   

  
	
  Merger

  	
   

  	
  1

  	
   

  
	
  Merger Consideration

  	
   

  	
  10

  	
   

  
	
  Merger Sub

  	
   

  	
  1

  	
   

  
	
  Net Working Capital

  	
   

  	
  11

  	
   

  
	
  Notice of Disagreement

  	
   

  	
  12

  	
   

  
	
  Oak Hill

  	
   

  	
  1

  	
   

  

 v

 

 

	
  Owned Property

  	
   

  	
  25

  	
   

  
	
  Parent

  	
   

  	
  1

  	
   

  
	
  Parent Closing Costs

  	
   

  	
  4

  	
   

  
	
  Payment Shortfall

  	
   

  	
  13

  	
   

  
	
  Per Share Merger Consideration

  	
   

  	
  11

  	
   

  
	
  Permits

  	
   

  	
  5

  	
   

  
	
  Person

  	
   

  	
  5

  	
   

  
	
  Proceeding

  	
   

  	
  5

  	
   

  
	
  PWC

  	
   

  	
  44

  	
   

  
	
  Recipients

  	
   

  	
  13

  	
   

  
	
  Requisite Regulatory Approvals

  	
   

  	
  5

  	
   

  
	
  SEC

  	
   

  	
  5

  	
   

  
	
  Secretary of State

  	
   

  	
  6

  	
   

  
	
  Securities

  	
   

  	
  41

  	
   

  
	
  Securities Act

  	
   

  	
  5

  	
   

  
	
  Special Costs

  	
   

  	
  5

  	
   

  
	
  Stock Option Plan

  	
   

  	
  9

  	
   

  
	
  Stockholder Approval

  	
   

  	
  5

  	
   

  
	
  Stockholder Notice

  	
   

  	
  43

  	
   

  
	
  Stockholders

  	
   

  	
  1

  	
   

  
	
  Stockholders Agreement

  	
   

  	
  5

  	
   

  
	
  Stockholders Representative

  	
   

  	
  1

  	
   

  
	
  Subsidiary

  	
   

  	
  5

  	
   

  
	
  Surveys

  	
   

  	
  26

  	
   

  
	
  Surviving Corporation

  	
   

  	
  6

  	
   

  
	
  Target Net Working Capital

  	
   

  	
  5

  	
   

  
	
  Tax Return

  	
   

  	
  23

  	
   

  
	
  Taxes

  	
   

  	
  23

  	
   

  
	
  Transaction Bonus Agreements

  	
   

  	
  6

  	
   

  
	
  Warrant Agreement

  	
   

  	
  6

  	
   

  
	
  Working Capital Adjustment Amount

  	
   

  	
  11

  	
   

  
	
  Working Capital Statement

  	
   

  	
  11

  	
   

  
	
  Written Consent

  	
   

  	
  1

  	
   

  

 

 

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (the “Agreement”), dated
September 15, 2006, among TravelCenters of America, Inc., a Delaware
corporation (the “Company”), Hospitality Properties Trust, a Maryland
real estate investment trust (“Parent”), HPT TA Merger Sub Inc., a
Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”),
and Oak Hill Capital Partners, L.P., a Delaware limited partnership (“Oak
Hill”), solely in its capacity as the representative for the stockholders
of the Company as further provided herein (in such capacity, the “Stockholders
Representative”).

WHEREAS, the Board of Directors
of the Company has (i) determined that it is in the best interests of the
Company and the stockholders of the Company, and declared it advisable, to
enter into this Agreement with Parent and Merger Sub providing for the merger
(the “Merger”) of Merger Sub with and into the Company in accordance
with the General Corporation Law of the State of Delaware (the “DGCL”),
upon the terms and subject to the conditions set forth herein,
(ii) approved this Agreement in accordance with the DGCL, upon the terms
and subject to the conditions set forth herein, and (iii) resolved to
recommend adoption of this Agreement by the stockholders of the Company;

WHEREAS, the Boards of Directors
of Parent and Merger Sub have each approved, and the Board of Directors of
Merger Sub has declared it advisable for Merger Sub to enter into, this
Agreement providing for the Merger in accordance with the DGCL, upon the terms
and subject to the conditions set forth herein; and

WHEREAS, simultaneously
herewith, each of the stockholders of the Company listed on Schedule 4.04(b)
hereto (the “Stockholders”), who collectively own in excess of 90% of the voting power of the Company, will
execute and deliver a written consent (the “Written Consent”) (i) approving this Agreement, the
Merger and the other transactions contemplated hereby, and (ii) designating Oak Hill as
the Stockholders Representative.

NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements of the parties hereto contained herein, and other good
and valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, and subject to the satisfaction or waiver of the conditions
hereof, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01. 
Certain Definitions.

Certain terms used in this
Agreement and the Schedules hereto are defined as follows:

“Additional Transaction
Bonuses” means the transaction bonuses granted by the Company to senior
executives of the Company between the date hereof and the Closing Date.

 1
 

 

“Affiliate” of a Person
shall mean another Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with,
such Person.

“Closing Date” shall mean
the date on which the Closing occurs.

“Code” shall mean the
Internal Revenue Code of 1986, as amended.

“Company Closing Costs”
shall mean (i) any and all costs and expenses of the Company or its Affiliates
incurred prior to the Effective Time in connection with, or as a result of or
related to, the sale process with respect to the Company and the negotiation,
preparation, execution and closing of the transactions contemplated hereby,
including, but not limited to, the fees and expenses of all professional
advisors, investment bankers, brokers, accountants, attorneys, consultants,
engineers and representatives of the Company or its Affiliates and (ii) the
amount of any Additional Transaction Bonuses; provided, however,
any Special Costs shall not be deemed to be, or included in the calculation of,
Company Closing Costs.

“Company Common Stock”
shall mean the Common Stock, $0.0001 par value per share, of the Company.

“Company Material Adverse Effect” shall mean any change or effect that is
materially adverse to the business, properties, assets, financial condition or
results of operations of the Company and the Company Subsidiaries taken as a
whole, other than any change or effect resulting from (i) changes in
general economic conditions, (ii) general changes or developments in the
industries in which the Company and the Company Subsidiaries operate, including
changes in refined product margin, (iii) the announcement of this Agreement
and the transactions contemplated hereby, including any termination of,
reduction in or similar negative impact on relationships, contractual or
otherwise, with any customers, suppliers, distributors, partners or employees
of the Company and the Company Subsidiaries, or the performance of this
Agreement and the transactions contemplated hereby, including compliance with
the covenants set forth herein, (iv) changes in any Tax Laws or applicable
accounting regulations or principles or (v) any attack on, or by, outbreak
or escalation of hostilities or acts of terrorism involving, the United States,
any declaration of war by the United States or any other national or
international calamity, unless, in the case of the foregoing clauses (i) and
(ii), such changes referred to therein have a materially disproportionate
effect on the Company and the Company Subsidiaries taken as a whole relative to
other participants in the industries in which the Company and the Company
Subsidiaries operate.

“Company Stock” shall mean
all shares of the Company’s capital stock authorized, issued or outstanding
prior to the Effective Time, of whatever class or series, including all of the
Company Common Stock.

“Company Subsidiary”
shall mean any Subsidiary of the Company.

“Company Warrant” shall
mean each Initial Warrant or Contingent Warrant (as defined in the Warrant
Agreement) issued by the Company to purchase shares of Company Common Stock.

 2
 

 

“Dataroom” shall mean the
online data rooms (Intralinks and ENFOS) established by Lehman Brothers for
purposes of the transactions contemplated by this Agreement.

“Effective Time” shall mean such date and time
as mutually agreed by the parties hereto and set forth in the Certificate of
Merger.

“Environmental Law” shall
mean any and all applicable Laws of any Governmental Entity relating to
protection of natural resources, the environment or human health (as relating
to exposure to hazardous or toxic substances, materials or chemicals including
petroleum, gasoline, diesel fuel, asbestos and polychlorinated biphenyls).

“Environmental Permit”
shall mean any license, permit, authorization or registration required by any
Environmental Law for the operation of business of the Company or any Company
Subsidiary.

“ERISA” shall mean the
Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” shall
mean each trade or business (whether or not incorporated) which together with
the Company would be deemed to be a ‘single employer’ within the meaning of
Section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of
Section 414 of the Code.

“Exchange Act” shall mean
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

“Fully Diluted Basis”
means, when used with respect to the outstanding number of shares of Company
Stock as of any date, the sum of (i) all shares of Company Stock outstanding on
that date plus (ii) the number of shares of Company Common Stock
issuable upon the exercise, exchange or conversion of (A) all Company Stock
Options vested prior to the date hereof and vesting and exercisable at the
Effective Time pursuant to their terms and (B) the Company Warrants.

“GAAP” shall mean United
States generally accepted accounting principles consistently applied.

“Governmental Entity” shall
mean any federal, state, local or foreign government or political subdivision
thereof, or any court, administrative agency or commission, or other
governmental authority or instrumentality or any subdivision thereof.

“Hazardous Materials”
shall mean any substance, material, waste, pollutant, or contaminant that is
regulated as toxic or hazardous or other term of similar regulatory import or
that is subject to remedial, investigatory or reporting obligations under any
Environmental Law including petroleum and petroleum products (including oil,
gasoline and diesel fuel), friable asbestos and polychlorinated biphenyls.

“HSR Act” shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
thereunder.

 3
 

 

“Indebtedness” means,
with respect to the Company and the Company Subsidiaries, without duplication
and exclusive of Intercompany Indebtedness, all indebtedness for borrowed
money, including the aggregate principal amount of, and any accrued interest
and applicable prepayment charges or premiums (including any “make-whole” or
similar premium or penalty payable in connection with redemption or otherwise
extinguishing such indebtedness whether or not then due) with respect to all
borrowed money, purchase money financing and capitalized lease obligations.

“Intercompany Indebtedness” means, with respect
to the Company and the Company Subsidiaries, all outstanding Indebtedness owed
by the Company or any Company Subsidiary to the Company or any other Company
Subsidiary.

“Interest Factor” means
an amount equal to the Merger Consideration (calculated excluding the Interest
Factor) times the interest rate set forth in Schedule 1.01 hereto
(accruing on a per diem basis), compounded monthly, for the period, if any,
from and including February 1, 2007 to and including the Closing Date.

“IRS” shall mean the
United States Internal Revenue Service, or any successor agency thereto.

“Judgment” shall mean any
and all judgments, orders, writs, directives, rulings, decisions, injunctions
(temporary, preliminary or permanent), decrees or awards of any Governmental
Entity.

“knowledge” in the phrase
“to its knowledge” or a similar phrase, when used to qualify a
representation of a party, shall be deemed to be the actual knowledge, after reasonable
investigation, of (i) the individuals listed on Schedule 1.01(a)
hereto, if the Company is making such representation, and (ii) the individuals
listed on Schedule 1.01(b) hereto, if Parent or Merger Sub is making
such representation, in each case, at the time such representation is made.

“Law” shall mean all laws
(whether statutory or otherwise), ordinances, codes, rules, regulations and
Judgments of all Governmental Entities.

“Liabilities” shall mean
any liabilities or obligations of any nature, whether accrued, absolute,
contingent or otherwise, whether due or to become due.

“Lien” shall mean, with
respect to any property or asset, any mortgage, pledge, security interest, lien
(statutory or other), charge, encumbrance or other similar restrictions or
limitations of any kind or nature whatsoever on or with respect to such
property or asset.

“Parent Closing Costs”
shall mean any and all costs and expenses of Parent, Merger Sub or their
Affiliates incurred in connection with, or as a result of, the negotiation,
preparation, execution and closing of the transactions contemplated hereby,
including, but not limited to, the fees and expenses of all professional
advisors, investment bankers, brokers, accountants, attorneys, consultants,
engineers and representatives of Parent, Merger Sub or their Affiliates.

 4
 

 

“Permits” shall mean all
franchises, licenses, authorizations, approvals, permits (excluding
Environmental Permits), consents or other rights granted by any Governmental
Entity and all certificates of convenience or necessity, immunities,
privileges, licenses, concessions, consents, grants, ordinances and other
rights, of every character whatsoever required for the conduct of business and
the use of properties by the Company and the Company Subsidiaries as currently
conducted or used.

“Person” shall mean any
individual, corporation, partnership, limited liability company, joint venture,
trust, unincorporated organization or other entity or government or any agency
or political subdivision thereof.

“Proceeding” shall mean
any action, claim, suit, or legal, administrative, arbitration or other
alternative dispute resolution proceeding or investigation.

“Requisite Regulatory
Approvals” shall mean all permits, approvals, consents and filings required
to be obtained or made with or by any Governmental Entity under any Law or
Judgment, and all waiting periods required to expire prior to the Merger under
applicable Laws, including notifications, approvals and filings pursuant to the
HSR Act.

“SEC” shall mean the Securities
and Exchange Commission.

“Securities Act” shall
mean the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

“Special Costs” shall
mean (i) any costs incurred by the Company related to the Evaluation of Environmental
Liabilities Associated with TravelCenters of America, dated August 2006,
prepared by Environ International Corporation, (ii) any and all costs and
expenses incurred by the Company in connection with any title searches, title
insurance commitments or title insurance policies, including endorsements,
obtained in connection with the Merger or the Financing, and (iii) any and all
out of pocket costs and expenses, as specifically requested or approved by
Parent or Merger Sub in writing, (x) paid by the Company or any Company
Subsidiary prior to the Effective Time or (y) accrued by the Company or any
Company Subsidiary on the Actual Balance Sheet, in order for the Company or any
Company Subsidiary to comply with its obligations pursuant to Section 6.09 or
otherwise.

“Stockholder Approval”
shall mean the adoption and approval of this Agreement and the Merger by the
affirmative vote of or the written consent by the holders of a majority of
outstanding shares of all classes of the Company Stock voting together as a
single class.

“Stockholders Agreement”
shall mean the Stockholders’ Agreement, dated as of November 14, 2000, as
amended, among the Company, the Stockholders Representative, the other
Stockholders and the other parties thereto.

“Subsidiary” shall mean,
in respect of any specified Person, any company or other entity of which 50% or
more of the outstanding share capital or other equity interest is owned,
directly or indirectly, by such specified Person.

“Target Net Working Capital” shall mean
$100,000,000.

 5
 

 

“Transaction Bonus Agreements”
shall mean those agreements between the Company and certain employees of the
Company or a Company Subsidiary set forth on Schedule 3.01(ix).

“Warrant Agreement” shall
mean that Warrant Agreement, dated as of November 14, 2000, as amended, between
the Company and State Street Bank and Trust Company, as warrant agent.

ARTICLE
II

THE
MERGER

Section 2.01.  The Merger.

On the Closing Date, subject to the terms and conditions of this
Agreement, Merger Sub shall be merged with and into the Company in accordance
with the DGCL, with the Company being the surviving corporation (following the
Merger, the “Surviving Corporation”). 
The Company and Merger Sub are sometimes collectively referred to as the
“Constituent Corporations.”  The
Merger shall be effective at the Effective Time when a Certificate of Merger,
together with any other documents required by the Laws of the State of Delaware
to effectuate the Merger (collectively, the “Certificate of Merger”),
properly executed shall be filed with the Secretary of State of the State of
Delaware (the “Secretary of State”), which filing shall be made on the
Closing Date, as provided for in Section 8.01(a).

Section 2.02.  Effect of Merger.

By virtue of the Merger, as of the Effective Time, all rights,
privileges, immunities, powers and purposes of the Company and Merger Sub, and
all the property, real and personal, including causes of action, and every
other asset of the Company and Merger Sub, shall vest in the Surviving
Corporation, without any further act or deed, and the separate existence of
Merger Sub shall cease and the corporate existence of the Company as the
Surviving Corporation and a corporation organized under the DGCL shall continue
unaffected and unimpaired by the Merger. 
The Surviving Corporation shall assume and be liable for all the
Liabilities, obligations and penalties of the Company and Merger Sub.  No liability or obligation due or to become
due, and no claim or demand for any cause of action existing against either the
Company or Merger Sub, or any stockholder, officer or director thereof, shall
be released or impaired by the Merger. 
No Proceeding, whether civil or criminal, then pending by or against
either the Company or Merger Sub or any stockholder, officer or director
thereof, shall abate or be discontinued as a result of or by the Merger, but
may be enforced, prosecuted, settled or compromised as if the Merger had not
occurred, or the Surviving Corporation may be substituted in such Proceeding in
place of either the Company or Merger Sub.

Section 2.03.  Additional Actions.

If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any deeds, bills of sale, assignments, assurances
or any other actions or things are necessary or desirable to (i) vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation, its
right, title or interest in, to or under, any of the rights, properties or
assets of the 

 6
 

 

Company
or Merger Sub acquired or to be acquired by the Surviving Corporation as a
result of, or in connection with, the Merger or (ii) otherwise carry out
the purposes of this Agreement, the Company and its officers and directors and
Merger Sub and its officers and directors shall be deemed to have granted the
Surviving Corporation an irrevocable power of attorney to execute and deliver
all such deeds, bills of sale, assignments and assurances and to take and do
all such other actions and things as may be necessary or desirable to vest,
perfect or confirm any and all rights, title, properties or assets in the
Surviving Corporation or to otherwise carry out the purposes of this Agreement;
and the officers and directors of the Surviving Corporation are fully
authorized in the name of the Company and of Merger Sub or otherwise to take
any and all such actions.

Section 2.04.  Certificate
of Incorporation By-laws, Directors and Officers of the Surviving Corporation.

(a)                                  At
the Effective Time, the certificate of incorporation of the Surviving
Corporation shall, subject to the requirements of Section 6.07(b) hereof, be
amended to read in its entirety as the certificate of incorporation of Merger
Sub read immediately prior to the Effective Time, except that the name of the
Surviving Corporation shall be TravelCenters of America, Inc. and the provision
in the certificate of incorporation of Merger Sub naming its incorporator shall
be omitted.

(b)                                 At
the Effective Time, the by-laws of the Surviving Corporation shall, subject to
the requirements of Section 6.07(b) hereof, be amended so as to read in their
entirety as the by-laws of Merger Sub as in effect immediately prior to the
Effective Time, until thereafter amended in accordance with applicable Law,
except the references to Merger Sub’s name shall be replaced by references to
TravelCenters of America, Inc.

(c)                                  The
directors of the Company immediately prior to the Effective Time shall submit
their resignations to be effective as of the Effective Time.  Immediately after the Effective Time, Parent
shall take the necessary action to cause the directors of Merger Sub
immediately prior to the Effective Time to be the directors of the Surviving
Corporation, each to hold office in accordance with the certificate of
incorporation and by-laws of the Surviving Corporation and applicable Law.  The officers of the Company immediately prior
to the Effective Time shall be the initial officers of the Surviving
Corporation, each to hold office until the earlier of their resignation or
removal.

Section 2.05.  Effect of Merger on Capital Stock of
Constituent Corporations.

At the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any class of capital stock of the Constituent Corporations, the following
shall occur:

(a)                                  Conversion
of Company Stock.  Each share of
Company Stock issued and outstanding immediately prior to the Effective Time
(other than (x) shares to be canceled pursuant to Section 2.05(c) and (y)
Dissenting Shares) shall, at the Effective Time, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive cash from Parent in an amount equal to the Per Share Merger
Consideration payable to 

 7
 

 

the holder thereof, without interest thereon, upon the surrender of the
certificate previously representing such share of Company Common Stock.

(b)                                 Shares
of Merger Sub.  Each share of the
common stock, $0.01 par value per share, of Merger Sub, issued and outstanding
immediately prior to the Effective Time, shall, at the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub or any
other Person, be converted into one fully paid and nonassessable share of
common stock, $0.01 par value per share, of the Surviving Corporation.

(c)                                  Treasury
Shares of Company; Parent Owned Shares. 
All shares of Company Stock held in the treasury of the Company and each
share of Company Stock owned or otherwise held by Parent, Merger Sub or any
direct or indirect wholly-owned subsidiary of Parent or the Company immediately
prior to the Effective Time shall be canceled and retired without any
conversion thereof and no
payment or distribution shall be made with respect thereto.

(d)                                 Shares
of Dissenting Stockholders.

(i)                                     Notwithstanding
anything in this Agreement to the contrary, any shares of Company Stock that
are issued and outstanding as of the Effective Time and that are held by a
holder who has properly exercised such holder’s appraisal rights (the “Dissenting
Shares”) under the DGCL shall not be converted into the right to receive
the consideration provided for in this Section 2.05, unless and until such
holder shall have failed to perfect, or shall have effectively withdrawn or
lost, his or her right to dissent from the Merger under the DGCL and to receive
such consideration as may be determined to be due with respect to such
Dissenting Shares pursuant to and subject to the requirements of the DGCL.  If any such holder shall have so failed to
perfect or have effectively withdrawn or lost such right, each share of such
holder’s Company Stock shall thereupon be deemed to have been converted into
and to have become, as of the Effective Time, the right to receive, without any
interest thereon, the consideration provided for in this Section 2.05.

(ii)                                  The
Company shall give Parent prompt notice of any notice or demands for appraisal
or payment for shares of Company Stock received by the Company.  The Company shall not, without the prior
written consent of Parent (not to be unreasonably withheld), make any payment
with respect to, or settle, offer to settle or otherwise negotiate, with
respect to any such demands.

(iii)                               Dissenting
Shares, if any, after payments of fair value in respect thereto have been made
to the holders thereof pursuant to the DGCL, shall be canceled.

(e)                                  Stock
Transfer Books.  At the Effective
Time, the stock transfer books of the Company shall be closed and there shall
be no further registration of transfers of shares of Company Stock on the
records of the Company.  If, after the
Effective Time, certificates previously representing shares of Company Stock
are presented to the Surviving Corporation, they shall be canceled and
exchanged for cash pursuant to the provisions of this Section 2.05.

 8
 

 

(f)                                    Cancellation
and Retirement of Shares of Company Stock. 
At and after the Effective Time, holders of certificates which
immediately prior to the Effective Time represented outstanding shares of
Company Stock shall cease to have any rights as stockholders of the Company,
except the right to receive the cash into which their shares of Company Stock
have been converted by the Merger as provided in Section 2.05(a).

Section 2.06.  Effect
of Merger on Company Stock Options and Company Warrants.

(a)                                  At the Effective Time, each stock option
granted under the 2001 Stock Incentive Plan of TravelCenters of America, Inc. (the
“2001 Stock Option Plan”) that
is outstanding and unexercised at the Effective Time (a “Company
Stock Option”) shall be cancelled
at the Effective Time.  In exchange for
such cancellation, the holder of such Company Stock Option shall receive the
right to payment from Parent immediately following the Effective Time (subject
to any applicable withholding taxes), in respect of the portion of the Company
Stock Option that is exercisable at the Effective Time by its terms (prior to giving
effect to such cancellation), of an amount in cash equal to (1) the total
number of shares of Company Common Stock subject to such exercisable portion of
such Company Stock Option held by such holder, multiplied by
(2) the excess, if any, of the Per Share Merger Consideration (calculated
based on the Estimated Merger Consideration, subject to subsequent adjustment
pursuant to Section 3.02) over the exercise price per share of the Company
Stock set forth in such Company Stock Option subject to such exercisable
portion of such Company Stock Option held by such holder (such exercise
price, the “Company Stock Option Exercise Price”).

(b)                                 As
soon as practicable following the date of this Agreement, the Company shall use
commercially reasonable efforts to take such actions and obtain such consents
as are necessary under the Warrant Agreement to amend the Warrant Agreement in
order to provide that each Company Warrant that is outstanding and unexercised
at the Effective Time shall be cancelled at the Effective Time.  In exchange for such cancellation, the
holders of the Company Warrants shall receive the right to payment from Parent
immediately following the Effective Time (subject to any applicable withholding
taxes), of an amount in cash equal to (1) the total number of shares of Company
Common Stock for which such Company Warrant was exercisable for immediately
prior to cancellation, multiplied by (2) the excess of the Per Share
Merger Consideration (calculated based
on the Estimated Merger Consideration, subject to subsequent adjustment
pursuant to Section 3.02) over the exercise price per share of the
Company Common Stock set forth in such Company Warrant (such exercise price,
the “Company Warrant Exercise Price”). 
If the Warrant Agreement is not so amended, immediately following the
Effective Time, Parent shall deposit with the Warrant Agent (as defined in the
Warrant Agreement) an amount equal to the excess of the Per Share Merger
Consideration (calculated based on the
Estimated Merger Consideration, subject to subsequent adjustment pursuant to
Section 3.02) multiplied by the total number of shares of Company Common
Stock for which all Company Warrants were exercisable for immediately prior to
the Effective Time over the aggregate sum of the Company Warrant Exercise Price
for all Company Warrants outstanding and unexercised immediately prior to the
Effective Time.

 9
 

 

Section 2.07.  Withholding.

Each of Parent and
the Surviving Corporation shall be entitled to deduct and withhold from the
consideration otherwise payable to any Person under this Article II, such
amounts as are required to be deducted and withheld under any provision of
applicable Law.

ARTICLE
III

PAYMENT
OF MERGER CONSIDERATION

Section 3.01.  Merger Consideration.

The “Merger
Consideration” shall be an amount equal to:

(i)                                     One billion, nine hundred twenty-five million Dollars ($1,925,000,000.00),

(ii)                                  plus
the aggregate sum of the Company Stock Option Exercise Price for all Company
Stock Options (or portions thereof) that are exercisable at the Effective Time
by their terms,

(iii)                               plus
the aggregate sum of the Company Warrant Exercise Price for all Company
Warrants,

(iv)                              plus
an amount equal to any Special Costs to the extent paid prior to the Effective
Time or accrued as a Liability on the Actual Balance Sheet,

(v)                                 minus
the aggregate amount of Indebtedness of the Company and the Company
Subsidiaries as of the close of business on the day immediately preceding the
Closing Date,

(vi)                              minus
the amount, if any, by which the Estimated Net Working Capital (as defined
below) is less than the Target Net Working Capital;

(vii)                           plus
the amount, if any, by which the Estimated Net Working Capital is greater than
the Target Net Working Capital;

(viii)                        plus
or minus, as the case may be, the amount of any upward or downward
adjustment (if any) of the Merger Consideration, respectively, pursuant to
Section 3.02 in an amount equal to the Working Capital Adjustment Amount
(as defined below),

(ix)                                minus
50% of the aggregate amount of all amounts payable to employees of the Company
or a Company Subsidiary pursuant to the Transaction Bonus Agreements (the “Closing
Transaction Bonus Payout Amount”);

 10
 

 

(x)                                   minus
the amount of any Company Closing Costs to the extent payable by the Company or
a Company Subsidiary after the close of business on the day immediately
preceding the Closing Date; and

(xi)                                plus
an amount equal to the Interest Factor.

The “Per Share
Merger Consideration” shall be (A) the Merger Consideration divided
by (B) the aggregate number of shares of Company Stock outstanding
immediately prior to the Effective Time (calculated on a Fully Diluted
Basis).  The “Estimated Merger
Consideration” and the “Estimated Per Share Merger Consideration”
shall mean the Merger Consideration and the Per Share Merger Consideration (in
each case, calculated without giving effect to Section 3.01(viii)) as estimated
in good faith by the Company no more than three (3) days prior to the
Closing.  Copies of such estimates (and
the Company’s calculation thereof) shall be provided to Parent and Merger Sub
prior to the Closing Date.

Section
3.02.                     Post-Closing
Adjustment of Merger Consideration.

(a)                                  Estimated
Net Working Capital.  The Company
shall, concurrently with the delivery to Parent and Merger Sub of its
calculations of the Estimated Merger Consideration and Estimated Per Share
Merger Consideration, cause to be prepared and delivered to Parent and Merger
Sub a statement setting forth the estimated calculation of the Net Working
Capital (as defined below) (the “Estimated Net Working Capital”) as of
the close of business on the day immediately preceding the Closing Date.  “Net Working Capital” shall mean the
current assets less the current liabilities of the Company and the Company
Subsidiaries, all as determined in accordance with GAAP applied in a manner
consistent with the Company Balance Sheet; provided that, in determining
Net Working Capital, the following shall be excluded: (i) the current portion
of any Indebtedness; (ii) Company Closing Costs to the extent a deduct in
calculating the Merger Consideration pursuant to Section 3.01(x) and (iii) the
Closing Transaction Bonus Payout Amount. 

(b)                                 Actual
Balance Sheet and Working Capital Statement.  Within forty-five (45) days following
the Closing Date, Parent shall deliver to the Stockholders Representative and
the Escrow Agent a consolidated balance sheet of the Company and the Company
Subsidiaries as of the close of business on the day immediately preceding the
Closing Date prepared in accordance with GAAP applied on a basis consistent
with the Company Balance Sheet and shall reflect a pro rata portion of all
known adjustments which would be required in a year-end closing of the books of
the Company and the Company Subsidiaries but shall not give effect to any
changes in accruals (including tax accruals with respect to the exercise or
cancellation of Company Stock Options between January 1, 2006 and the Effective Time) for any items
resulting from the transactions contemplated hereby (the “Actual Balance
Sheet”).  The Actual Balance Sheet
shall be accompanied by a statement, certified by the Chief Financial Officer
of the Surviving Corporation (the “Working Capital Statement”), that
sets forth in reasonable detail the Actual Net Working Capital, the Working
Capital Adjustment Amount, and the final calculation of the Merger
Consideration.  The “Actual Net
Working Capital” shall mean the Net Working Capital of the Company and the
Company Subsidiaries as of the close of business on the day immediately
preceding the Closing Date.  The “Working
Capital Adjustment Amount” shall mean the difference between the Estimated
Net Working Capital and the Actual Net 

 11
 

 

Working Capital.
The Surviving Corporation shall give the Stockholders Representative reasonable
access to its books, records, work papers (including, to the extent applicable,
accountants’ work papers, subject to such confidentiality restrictions as the
Surviving Corporation’s accountants shall reasonably request) and employees in
connection with the review by the Stockholders Representative of the Actual
Balance Sheet and the Working Capital Statement.  In the course of preparing the Actual Balance
Sheet and the Working Capital Statement, Parent may consult with the
Stockholders Representative in order to resolve any issues that otherwise might
become the subject of a dispute under Section 3.02(c).

(c)                                  Dispute
Resolution.  The Stockholders
Representative may dispute the calculation of the Actual Net Working Capital,
the Working Capital Adjustment Amount or the calculation of the Merger Consideration
set forth in the Working Capital Statement by delivering a written notice (a “Notice
of Disagreement”) to Parent, the Surviving Corporation and the Escrow
Agent within thirty (30) days following the delivery of the Working
Capital Statement to the Stockholders Representative.  Any Notice of Disagreement delivered pursuant
to this Section 3.02(c) shall specify in reasonable detail the nature
and dollar amount of any disagreement so asserted.  If the Stockholders Representative fails to
deliver a timely Notice of Disagreement, Parent’s calculation of the Actual Net
Working Capital, the Working Capital Adjustment Amount or the calculation of
the Merger Consideration (as set forth in the Working Capital Statement) shall
be deemed the final Actual Net Working Capital, the Working Capital Adjustment
Amount and/or Merger Consideration, as applicable.  During the thirty (30) days following
the delivery of a Notice of Disagreement, Parent and the Stockholders Representative
shall seek in good faith to resolve in writing any differences which they may
have with respect to the matters specified in the Notice of Disagreement and
such final resolution shall be the final Merger Consideration.  If at the end of such 30-day period, the
parties are unable to resolve such dispute, the parties shall submit the
dispute to Deloitte & Touche LLP (“D&T”) or, if D&T is
unavailable, another mutually satisfactory (to Parent and the Stockholders
Representative) independent “big-four” accounting firm (the “Accounting Firm”) for
its review and resolution of all matters (but only such matters) which
remain in dispute and which were properly included in the Notice of
Disagreement, and the Accounting Firm shall make final determinations of the
Actual Net Working Capital, the Working Capital Adjustment Amount and/or the
Merger Consideration in accordance with the guidelines and procedures set forth
in this Agreement.  If the parties are
unable to mutually agree on the selection of the Accounting Firm, the “big-four”
accounting firm that is not D&T or the independent public accountants of
the Company and Parent shall
serve as the Accounting Firm.  The
parties will cooperate with the Accounting Firm during the term of its
engagement.  In resolving any matters in
dispute with respect to any assets or liabilities as to which both the
Stockholders Representative and Parent have assigned values, the Accounting
Firm may not assign a value to any item in dispute greater than the greatest
value for such item assigned by the Stockholders Representative, on the one
hand, or by Parent, on the other hand, or less than the smallest value for such
item assigned by the Stockholders Representative, on the one hand, or by
Parent, on the other hand.  The
Accounting Firm’s determination will be based solely on presentations
(including work papers) by the Stockholders Representative and Parent or by
their respective representatives which are in accordance with the guidelines
and procedures set forth in this Agreement (i.e., not on the basis of an
independent review).  The determination
of the Actual Net Working Capital, Working Capital Adjustment Amount and the
Merger Consideration shall become final and binding on the parties and such
determination of the Merger Consideration shall be deemed the final Merger Consideration
on 

 12
 

 

the date the Accounting Firm delivers to the
Stockholders Representative, Parent and the Surviving Corporation its final
resolution in writing (such resolution, the “Final Statement”) (and the
parties will direct the Accounting Firm to complete its determination and
deliver the Final Statement within thirty (30) days following the
submission of the disputed matters to it). 
The fees and expenses of the Accounting Firm shall be paid by (i) Parent
if the final calculation of the Merger Consideration, as set forth in the Final
Statement, is greater than the amount of the Merger Consideration as set forth
in the Working Capital Statement and (ii) the holders of shares of Company
Stock, Company Stock Options and the Company Warrants (collectively, the “Company
Securities”) (but only such holders of Company Stock Options all or a
portion of which are
exercisable at the Effective Time by their terms) on a pro rata basis
based upon their respective percentages of the Merger Consideration, if the
final calculation of the Merger Consideration, as set forth in the Final
Statement, is less than or equal to the amount of the Merger Consideration as
set forth in the Working Capital Statement. 
To the extent such fees and expenses of the Accounting Firm are payable
by the holders of the Company Securities, such fees and expenses shall be paid
using the funds deposited into the Escrow Fund to the extent such holders are
entitled to such funds.

(d)                                 Payment
of Adjustment to Merger Consideration.

(i) Excess Payment.  If the Estimated Merger Consideration is greater
than the Merger Consideration as finally determined pursuant to this
Section 3.02 (such difference, an “Excess Payment”), then an aggregate
amount equal to such Excess Payment shall be distributed to Parent from the
Escrow Fund (after deducting any applicable fees and expenses of the Accounting
Firm payable by Parent (if any) in accordance with Section 3.02(c)).  Any remaining funds in the Escrow Fund (after
deducting any applicable fees and expenses of the Accounting Firm payable by
the holders of the Company Securities (if any) in accordance with Section
3.02(c)) shall be distributed to the holders of the Company Securities eligible
to receive such distributions from the Escrow Fund as determined based on the
final Per Share Merger Consideration (such holders collectively, the “Recipients”)
pursuant to the Escrow Agreement.  If the
Excess Payment exceeds the aggregate amount of the Escrow Fund, then each
Recipient entitled to receive distributions from the Escrow Fund shall, on
demand, pay to Parent a pro rata amount of such excess based upon their
respective rights to receive the Merger Consideration.

(ii) Payment Shortfall.  If the Estimated Merger Consideration is less
than the final Merger Consideration (such difference, a “Payment
Shortfall”), then (A) Parent shall pay to the holders of Company Securities
an aggregate amount (after deducting any applicable fees and expenses of the
Accounting Firm payable by the holders of the Company Securities (if any) in
accordance with Section 3.02(c)) equal to the Payment Shortfall, to be
distributed based on their respective rights to receive the Merger
Consideration and (B) each Recipient, as appropriate and depending upon such
Recipient’s interest in and to the Escrow Fund, shall receive from such fund
such Recipient’s relative interest in the Escrow Fund pursuant to the Escrow
Agreement.

(iii) Distributions.  The parties hereto agree that any and all
distributions which are required to be made from the Escrow Fund under this
Section 3.02 shall be made in accordance with the Escrow Agreement.

 13

 

Section 3.03.                     Escrow
Agreement and Escrow Fund.

At or prior to the Closing, Parent, the Company, the
Stockholders Representative and The Bank of New York (the “Escrow Agent”)
shall enter into an Escrow Agreement on mutually agreeable terms consistent with
the terms of this Agreement or as may be acceptable to the parties thereto (the
“Escrow Agreement”).  The Escrow
Agreement shall provide for the creation of an escrow fund (the “Escrow Fund”)
consisting of Ten Million Dollars ($10,000,000) of the Merger Consideration
(the “Escrow Amount”) to be applied to any downward adjustment of the
Merger Consideration pursuant to Section 3.02. 
The Escrow Agreement shall contain provisions with respect to the timing
and procedure of distributions of funds from the Escrow Fund consistent with
the terms hereof.

Section 3.04.                     Exchange
of Certificates Representing Company Securities.

(a)                                  Exchange
Agent.  Immediately following the Effective Time (but
in any event on the Closing Date), Parent shall deposit with an exchange agent
selected by the Parent and reasonably acceptable to the Company (the “Exchange
Agent”), for the benefit of the holders of Company Securities (other than
the Company Warrants if they have not been amended), for exchange in accordance
with this Agreement, an amount equal to (i) the Estimated Merger
Consideration minus (ii) the Escrow Amount, minus (iii) the
product of (A) the Per Share Merger Consideration (calculated based on the
Estimated Merger Consideration) and (B) the total number of Dissenting Shares,
and, if the Company Warrants have not been amended, minus (iv) an amount
equal to the excess, if any, of the Per Share Merger Consideration (calculated
based on the Estimated Merger Consideration) multiplied by the total
number of shares of Company Common Stock for which all Company Warrants were
exercisable for immediately prior to the Effective Time over the aggregate sum
of the Company Warrant Exercise Price for all Company Warrants outstanding and
unexercised immediately prior to the Effective Time (the “Exchange Fund”)
(it being understood that any adjustment to the Estimated Merger Consideration
pursuant to Section 3.02 shall be paid in accordance with such section).  Immediately following the Effective Time (but
in any event on the Closing Date), Parent shall deposit the Escrow Amount with
the Escrow Agent, which shall be held and disbursed by the Escrow Agent in
accordance with the Escrow Agreement. 
Promptly after the Effective Time, the Exchange Agent shall mail to each
record holder of an outstanding certificate, certificates or instruments as of
the Effective Time (other than instruments representing Company Warrants, if
they have not been amended) which immediately prior to the Effective Time
represented Company Securities (the “Certificates”), a letter of
transmittal and instructions for use in effecting the surrender of the
Certificates for payment therefor (collectively, the “Letter of Transmittal”),
which Letter of Transmittal shall include (i) representations of the
holder for the benefit of the Surviving Corporation regarding title to the
Company Securities, due authorization to sell or transfer the Company
Securities pursuant to the terms of this Agreement, and the absence of any
conflicts or breaches by such holder in connection therewith, (ii) an
agreement for the benefit of Parent that such holder shall pay to Parent, to
the extent applicable, such stockholders’ pro rata portion of the amounts
required to be paid pursuant to Section 3.02(d)(i) plus any cost of collection
thereof, (iii) such information as the Stockholders Representative may
reasonably request be included therein, including an agreement for the benefit
of the Stockholders Representative that such holder agrees to Oak Hill’s
designation as the Stockholders Representative and that Oak Hill shall have the
full and exclusive authority to, in its capacity as the Stockholders
Representative,

 14
 

 

execute
any and all instruments or other documents on behalf of such holder, and do any
and all other acts or things on behalf of such holder, which the Stockholders
Representative may deem necessary or advisable, or which may be required
pursuant to this Agreement or otherwise, in connection with the consummation of
the Merger and the other transactions contemplated hereby, including (w) agreeing
with Parent or Merger Sub with respect to any matter or thing required or
deemed necessary by the Stockholders Representative in connection with the
provisions of this Agreement calling for the agreement of the holder and giving
and receiving notices on behalf of the holder, all in the absolute discretion
of the Stockholders Representative, (x) in general, doing all things and
performing all acts, including executing and delivering all agreements,
certificates, receipts, consents, elections, instructions, and other
instruments or documents contemplated by, or deemed by the Stockholders
Representative to be necessary or advisable in connection with, this Agreement,
(y) executing and delivering the Escrow Agreement, and (z) negotiating,
settling, compromising and otherwise handling the post-closing adjustment of
the Merger Consideration pursuant to Section 3.02, and (iv) such other
documents as may reasonably be required in connection with such
surrender, in customary form to be agreed upon by the Company and Parent
prior thereto, including a certificate of each holder of Company Stock
conforming to the requirements of Treasury Regulation Section 1.1445-2(b)(2)
certifying that such holder is not a “foreign person” for purposes of Section
1445 of the Code (a “FIRPTA Certificate”) or, for those holders of
Company Stock who are “foreign persons” for purposes of Section 1445 of the
Code, a statement to that effect.

(b)                                 Exchange
Procedures.

(i)                                     After
the Effective Time, each holder of Certificate(s) shall, upon surrender to
the Exchange Agent of such Certificate(s) and a fully and properly
completed Letter of Transmittal and acceptance thereof by the Exchange Agent,
be entitled to receive the amount of the Merger Consideration into which such
surrendered Certificate(s) have been converted or exchanged pursuant to
this Agreement.

(ii)                                  After
the Effective Time, there shall be no further transfer on the records of the
Company or its transfer agent of Certificates, and if Certificates are
presented to the Company for transfer, they shall be canceled against delivery
of the Merger Consideration into which such Certificates have been converted or
exchanged pursuant to this Agreement.  If
any Merger Consideration is to be paid to a Person other than the Person in whose
name the surrendered Certificate is registered, it shall be a condition of such
exchange that the Certificate so surrendered shall properly be endorsed, with
signature guaranteed, or otherwise in proper form for transfer and that the
Person requesting such exchange shall pay to the Surviving Corporation or its
transfer agent any transfer or other taxes required, or establish to the
satisfaction of the Surviving Corporation or its transfer agent that such taxes
have been paid or are not applicable.

(iii)                               Until
surrendered as contemplated by this Section 3.04(b), each Certificate (for
the purposes of clarification, excluding certificates relating to Company
Warrants, if the Company Warrants have not been amended prior to the Effective
Time) shall be deemed at any time after the Effective Time to represent only
the right to receive upon such surrender the Merger Consideration into which
such Certificate has been converted or exchanged pursuant to this Agreement and
after the Effective Time the 

 15
 

 

holders thereof shall
cease to have any other rights as holders of Company Securities.  No interest will be paid or will accrue on
any amount payable to holders of Company Securities as Merger Consideration.

(c)                                  No
Further Rights in Company Securities.  All Merger Consideration paid upon
the surrender for exchange of Certificates in accordance with the terms of this
Agreement shall be deemed to have been issued and paid in full satisfaction of all rights pertaining to the Company
Securities represented thereby.

(d)                                 Termination
of Exchange Fund.  Any portion of the
Exchange Fund which remains undistributed to the holders of Certificates upon
the expiration of two years following the Effective Time shall be delivered to
the Surviving Corporation upon demand, and any holders of Company Securities
who have not theretofore complied with this Article III shall thereafter look
only to the Surviving Corporation, and only as general creditors thereof, for
payment of any claim for Merger Consideration.

(e)                                  No
Liability.  None of the Surviving Corporation, Parent,
Merger Sub or the Exchange Agent shall be liable to any Person in respect of
any cash or other assets from the Exchange Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.  If any Certificate has not been surrendered
prior to the later of (i) two years after the Effective Time and
(ii) immediately prior to the date on which any cash or other assets, if
any, in respect of such Certificate would otherwise escheat to or become the
property of any Governmental Entity, any such cash or other assets in respect
of such Certificate shall, to the extent permitted by applicable Law, become
the property of the Surviving Corporation, free and clear of all claims or
interests of any Person previously entitled thereto.

(f)                                    Investment
of Exchange Fund.  The Exchange Agent shall invest the
cash included in the Exchange Fund in a money market deposit account selected
by Parent prior to the Closing.  Any
interest and other income resulting from such investments shall be paid to
Parent.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents
and warrants to Parent and Merger Sub as follows:

Section 4.01. 
Organization.

Each of the Company and each
Company Subsidiary is a corporation or other entity duly organized, validly
existing and (to the extent the concept of good standing is applicable to such
entity) in good standing under the laws of the jurisdiction of its
incorporation or organization and has full corporate power and authority to
conduct its business as it is now being conducted and to own, operate or lease
the properties and assets it currently owns, operates or holds under
lease.  Each of the Company and each Company
Subsidiary is duly qualified or licensed to do business and is in good standing
as a foreign entity in each jurisdiction where such qualification or licensing
is necessary, except where the failure to so qualify or be so licensed would
not, individually or in the aggregate, have a Company Material Adverse Effect.

 16
 

 

Section 4.02. 
Subsidiaries.

Schedule 4.02 sets forth a list, as of the date hereof of
(a) all Company Subsidiaries and (b) all other entities in which the
Company or any Company Subsidiary has an aggregate equity investment in excess
of $100,000 (other than through a mutual fund or similar investment
account).  Except as set forth in Schedule 4.02,
all outstanding shares of stock of any Company Subsidiary have been duly
authorized and validly issued and are fully paid and non-assessable, and are
owned, directly or indirectly, by the Company free and clear of any Liens, and
there are no outstanding options, warrants, convertible securities, calls,
rights, commitments, preemptive rights or agreements or instruments or
understandings of any character, obligating the Company or any Company
Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold,
contingently or otherwise, additional shares of such Company Subsidiary or any
securities or obligations convertible or exchangeable for such shares or to
grant, extend or enter into any such option, warrants, convertible security,
call, right, commitment, preemptive right or agreement.  Except for transactions among Company
Subsidiaries or among the Company and Company Subsidiaries, with respect to any
Company Subsidiary or other entity in which the Company or any Company
Subsidiary has an equity investment (other than through a mutual fund or
similar investment account), neither the Company nor any Company Subsidiary has
(i) an obligation to make a loan or other capital contribution, (ii) any
liability for the obligations of such entity or (iii) any other obligations to
such entity.

Section 4.03. 
Capitalization.

(a)                                  The authorized capital stock of the Company
consists of 20,000,000 shares of Company Common Stock and 5,000,000 shares of
Preferred Stock, par value $0.0001 per share (the “Company Preferred Stock”).  As of the date of this Agreement:

(i)                                     6,937,003
shares of Company Common Stock were issued and outstanding,

(ii)                                  no shares of Company Preferred Stock were issued
and outstanding,

(iii)                               Company Warrants to purchase an aggregate 277,165
shares of Company Common Stock were issued and outstanding, and

(iv)                              939,375
shares of Company Common Stock were reserved and available for issuance upon or
otherwise deliverable in connection with the grant of equity-based awards or
the exercise of Company Stock Options issued pursuant to the 2001 Stock Option
Plan.

(b)                                 Schedule 4.03(b) sets forth the number, class or series and
record owner of all Company Stock and Company Stock Options as of the date of
this Agreement.  All outstanding shares
of Company Stock have been duly authorized, validly issued and are fully paid
and non-assessable.  Except for the
Company Stock Options and the Company Warrants or as set forth in the
Stockholders Agreement and except as set forth in Schedule 4.03(b),
there are no authorized or outstanding options, warrants, convertible
securities, calls, rights, commitments, preemptive rights or agreements or instruments
or understandings of any character, to which the Company is a party or by which
the Company is bound, obligating the Company to issue, deliver

 17
 

 

or sell, or cause to be issued, delivered or sold, contingently or
otherwise, additional shares of Company Stock or any securities or obligations
convertible into or exchangeable for such shares or to grant, extend or enter
into any such option, warrant, convertible security, call, right, commitment,
preemptive right or agreement.  No bonds,
notes or other indebtedness having the right to vote on matters on which
stockholders may vote are issued or outstanding.

Section 4.04. 
Authorization.

(a)                                  The Company.  The Company has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder.  The execution and
delivery of this Agreement by the Company and the consummation by it of the
transactions contemplated hereby have been duly and validly authorized by all
necessary action of the Board of Directors of the Company, and no other
corporate proceedings on the part of the Company are necessary to authorize the
Merger, this Agreement and the transactions contemplated hereby.  This Agreement has been duly and validly
executed and delivered by the Company, and assuming due authorization,
execution and delivery by each other party hereto, constitutes a legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforcement may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws relating to creditors’ rights generally,
(ii) general principles of equity (whether applied in a proceeding at law
or in equity) and (iii) any implied covenant of good faith and fair dealing.

(b)                                 The Stockholders.  The
class and total number of shares of Company Stock owned by each Stockholder is
as set forth in Schedule 4.04(b). 
Such shares, taken in the aggregate, represent in excess of 90% of the voting power of the Company.

Section 4.05. 
No Violation.

Except as set forth on Schedule
4.05, the execution and delivery of this Agreement by the Company does not,
and the consummation by the Company of the transactions contemplated by this
Agreement will not, (i) conflict with, or result in any violation of or
default or loss of any benefit under, any provision of the Company’s or any
Company Subsidiary’s Certificate of Incorporation or By-Laws; (ii) subject
to the matters described in Section 4.06, conflict with or result in any
violation of or default or loss of any benefit under, any Law or Judgment of
any Governmental Entity to which the Company or any Company Subsidiary is a
party or to which any of its property is subject; or (iii) conflict with,
or result in a breach, termination (or right of termination) or violation of or
default or loss of any benefit under the terms of any agreement, contract,
indenture or other instrument to which the Company or any Company Subsidiary is
a party or to which any of its property is subject, or constitute a default or
loss of any right thereunder or any event which, with the lapse of time or
notice or both, might result in a default or loss of any right thereunder,
except with respect to clauses (ii) and (iii) hereof, where the conflict,
breach, termination, violation, default, loss of benefit, acceleration or loss
of right would not, individually or in the aggregate, have a Company Material
Adverse Effect.

 18
 

 

Section 4.06. 
Approvals.

The execution and delivery of this Agreement and the consummation
of the transactions contemplated by this Agreement by the Company will not
require any consent, approval, order, authorization or Permit of any
counterparty to a Material Contract or a lease pursuant to which the Company or
a Company Subsidiary leases the Leased Premises, or a party to any agreement,
declaration, covenant, restriction, option agreement or right of first refusal
affecting title to the Owned Property or Leased Premises, or any other third
party, or any Governmental Entity under any Law or Judgment, other than
consents, approvals, orders, authorizations, Permits and Requisite Regulatory
Approvals disclosed in Schedule 4.06 and no declaration, filing or
registration with any Governmental Entity is required by the Company or any
Company Subsidiary in connection with the execution and delivery of this
Agreement and the consummation of transactions contemplated by this Agreement,
except for (i) the filing of the Certificate of Merger as required by the DGCL
and the filing of appropriate documents with the relevant authorities of other
states in which the Company or any Company Subsidiary is qualified to do
business, (ii) filings pursuant to the HSR Act, and the expiration or
termination of the applicable waiting period under the HSR Act, or (iii) such
other consents, approvals, orders, authorizations, actions, registrations,
declarations and filings the failure of which to be obtained or made
individually or in the aggregate has not had and would not reasonably be
expected to (w) have a Company Material Adverse Effect, (x) impair in any
material respect the ability of the Company to perform its obligations under
this Agreement, (y) prevent or materially impede, interfere with, hinder or
delay the consummation of the transactions contemplated by this Agreement, or
(z) filings and notices not required to be made or given until after the
Effective Time.

 

Section 4.07. Financial Statements.

(a)                                  Schedule 4.07(a) contains copies of the following consolidated
financial statements of the Company and the Company Subsidiaries (collectively,
the “Financial Statements”):  (i)
the audited consolidated balance sheet of the Company and the Company
Subsidiaries as of December 31, 2005 and December 31, 2004 and the related
statements of income and cash flows for each of the three years in the period
ending December 31, 2005 (together with the notes thereto); and (ii) the
unaudited consolidated balance sheet (the “Company Balance Sheet”) of
the Company and the Company Subsidiaries as of June 30, 2006 (the “Balance
Sheet Date”) and the related unaudited statements of income and cash flows
for the six month period ending on the Balance Sheet Date.  The Financial Statements (i) present fairly
in all material respects the consolidated financial condition and results of
operations of the Company and the Company Subsidiaries as of the dates thereof
or for the periods covered thereby, except as otherwise noted therein
(subject, in the case of the unaudited Financial Statements, to normal year-end
adjustments) and (ii) have been prepared in
accordance with GAAP applied on a consistent basis for the periods involved
(except as may be indicated in the notes thereto or as described on Schedule
4.07(a)).

(b)                                 Except
as set forth in Schedule 4.07(b), neither the Company nor any Company
Subsidiary has any Liabilities, other than Liabilities (i) that have been
specifically disclosed or accrued or reserved for in the Company Balance Sheet,
(ii) that have been incurred in the ordinary course of business since the
date thereof, (iii) of the type that are not required by 

 19
 

 

GAAP to be
included in or, in the notes to, a balance sheet prepared in accordance with
GAAP, (iv) relating to operating leases incurred in accordance with the terms
of such leases in the ordinary course of business and which with respect to
clauses (ii) and (iii) that have not had, and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.

Section 4.08. 
Absence of Certain Transactions.

Except as set forth on Schedule 4.08 and except
for the transactions expressly contemplated hereby, since the Balance Sheet
Date, the Company and the Company Subsidiaries have conducted their respective
businesses in the ordinary and usual course consistent with past practices.  Since the Balance Sheet Date, there have not
been any events, changes, effects or developments which have had or would
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.  Except as set forth on Schedule 4.08
and except for actions following the date of this Agreement undertaken in
accordance with the other provisions of this Agreement, since the Balance Sheet
Date:

(a)                                  Neither
the Company nor any Company Subsidiary has (i) declared or paid any
dividend or made any other distribution with respect to Company Stock or the
capital stock of any Company Subsidiary (other than dividends or distributions
made by any Company Subsidiary to the Company), (ii) redeemed, purchased,
canceled or otherwise acquired, directly or indirectly, any outstanding shares
of Company Stock or any shares of capital stock of any Company Subsidiary
(other than repurchases or acquisitions of Company Stock from management
pursuant to subscription agreements entered into with such members of management),
(iii) issued additional stock (other than upon the exercise or conversion
of outstanding options, warrants or convertible securities), warrants, options
or any other similar rights to acquire Company Stock or any shares of capital
stock of any Company Subsidiary, or (iv) split, combined or reclassified
any shares of Company Stock or any shares of capital stock of any Company
Subsidiary or issued or authorized the issuance of any other securities in
respect of, in lieu of or in substitution for shares of, shares of Company
Stock or any shares of capital stock of any Company Subsidiary;

(b)                                 Neither
the Company nor any Company Subsidiary has merged or consolidated with any
other Person or reorganized, restructured, recapitalized, liquidated or filed a
voluntary petition in bankruptcy;

(c)                                  Neither
the Company nor any Company Subsidiary has incurred any obligation for borrowed
money or entered into or modified any material contract, agreement, commitment
or arrangement with respect to borrowed money, except borrowings in the
ordinary course of business pursuant to the Company’s existing revolving credit
facilities;

 20
 

 

(d)                                 Neither
the Company nor any Company Subsidiary has granted any increase in compensation
to any salaried employees or paid any bonus, except for increases in salary or
wages or payment of bonuses in the ordinary course of business or in accordance
with existing Employee Plans;

(e)                                  Other
than provision of services or sales in the ordinary course of business, neither
the Company nor any Company Subsidiary has (i) sold, leased, transferred
or otherwise disposed of any of its assets having a book or market value in
excess of $1,000,000 individually or $10,000,000 in the aggregate, or
(ii) entered into, or consented to the entering into of, any agreement
granting a preferential right to sell, lease or otherwise dispose of any of
such assets;

(f)                                    Neither
the Company nor any Company Subsidiary has (i) incurred or committed to
incur any capital expenditures or liabilities in connection therewith other
than capital expenditures or liabilities that do not individually exceed
$1,000,000; (ii) acquired or agreed to acquire by merging or consolidating
with, or acquired or agreed to acquire by purchasing a substantial portion of
the assets of, or in any other manner, any business or Person; or
(iii) except with respect to inventory purchased or to be purchased for
resale to customers in the ordinary course of business, acquired or agreed to
acquire any other assets or made any individual lease commitments involving
payments in excess of $500,000 in any one year;

(g)                                 The
Company has not made any material Tax election;

(h)                                 The
Company has not changed its methods of accounting in effect at December 31,
2005, except as required by GAAP;

(i)                                     Neither
the Company nor any Company Subsidiary has entered into or amended any Material
Contract other than in the ordinary course of business; and

(j)                                     Neither
the Company nor any Company Subsidiary has agreed or committed to do any of the
foregoing.

Section
4.09.  Taxes.

Except as disclosed on Schedule 4.09,

(a)                                  all
material Tax Returns that are required to be filed (taking into account all
extensions) before the Effective Time for, by, on behalf of or with respect to
the Company or any Company Subsidiary have been or will be filed with the
applicable Governmental Entity when due and all such Tax Returns are correct
and complete in all material respects and were prepared in accordance with all
applicable Tax Laws;

 21
 

 

(b)                                 none
of such Tax Returns are now under audit or examination by any Governmental
Entity the outcome of which would, individually or in the aggregate, have a
Company Material Adverse Effect;

(c)                                  each
of the Company and each Company Subsidiary has paid or will pay in full when
due all Taxes due and payable or has made adequate provision in the Company
Balance Sheet for all material Taxes, and neither the Company nor any Company
Subsidiary has knowledge of any reason for any Governmental Entity to assess
any material additional Taxes for any period for which Tax Returns have been
filed except with respect to those additional Taxes for which reserves have
been recorded by the Company;

(d)                                 no
claim which currently remains unresolved has been made in writing by an
authority in a jurisdiction where the Company or any Company Subsidiary does
not file Tax Returns that the Company or such Subsidiary currently is or may be
subject to taxation by that jurisdiction;

(e)                                  there
are no material liens for Taxes upon any asset of the Company or any Company
Subsidiary other than with respect to Taxes not yet due and payable;

(f)                                    there
are no outstanding agreements or waivers extending the statutory period of
limitations applicable to the Tax Returns of the Company or any Company
Subsidiary, and neither the Company nor any Company Subsidiary has requested or
received any extension of time within which to file any Tax Return, which Tax
Return has not yet been filed;

(g)                                 the
Company and each Company Subsidiary has, within the time and manner prescribed
by Law, withheld, paid over and reported all Taxes required to have been
withheld, paid and reported in connection with the amounts paid or owing to any
employee, independent contractor, creditor, stockholder, foreign Person or
other third party, except where such failure would not, individually or in the
aggregate, have a Company Material Adverse Effect;

(h)                                 neither
the Company nor any Company Subsidiary is a party to, is bound by or has any
obligation under any tax sharing agreement or similar arrangement;

(i)                                     neither
the Company nor any Company Subsidiary (i) is, or has been, a member of an
affiliated group filing a consolidated federal income Tax Return other than a
group the common parent of which is the Company, nor (ii) has any material
liability for the Taxes of any entity under Treas. Reg. § 1.1502-6 (or any
similar provision of Law), or as a transferee or successor, by contract or
otherwise;

 22
 

 

(j)                                     none
of the Company or any Company Subsidiary has agreed to make any adjustment
pursuant to Section 481(a) of the Code (or any predecessor provision) or
pursuant to any similar provision of Law, and neither the IRS nor any other
taxing authority has proposed any such adjustment or change in accounting
method; and

(k)                                  the
Company and each Company Subsidiary have made available to Parent complete and
correct copies of all federal income Tax Returns and a summary of all material
federal, state, local and foreign examination reports and statements of
deficiencies assessed against or agreed to by the Company or any Company
Subsidiary, in each case, filed or received since January 1, 2003.

For purposes of
this Agreement, “Taxes” mean all United States federal, state, local or
foreign income, profits, estimated, gross receipts, windfall profits,
environmental (including taxes under Code Section 59A), severance,
property, intangible property, occupation, production, sales, use, license,
excise, emergency excise, franchise, capital gains, capital stock, employment,
withholding, social security (or similar), disability, transfer, registration,
stamp, payroll, goods and services, value added, alternative or add-on minimum
tax, estimated, or any other tax, custom, duty or governmental fee, or other
like assessment or charge of any kind whatsoever, together with any interest,
penalties, fines, related liabilities or additions to tax that may become
payable in respect thereof imposed by any Governmental Entity, whether disputed
or not.  For purposes of this Agreement, “Tax
Return” means any return, declaration, report or similar statement required
to be filed with respect to any Taxes (including any attached schedules)
including any information return, claim for refund, amended return or
declaration of estimated Tax.

Section
4.10.  Litigation.

Except as set forth on Schedule 4.10
and except as would not have a Company Material Adverse Effect, as of the date
of this Agreement, (i) there are no Proceedings pending or, to the Company’s
knowledge, threatened against the Company or any Company Subsidiary by or
before any Governmental Entity or by any Person; and (ii) neither the Company
nor any Company Subsidiary is a party to or, to the Company’s knowledge, bound
by any Judgment.

Section
4.11.  Environmental Matters.

(a)                                  Except
as set forth on Schedule 4.11(a), (i) the Company and each Company
Subsidiary has been, and is, in compliance with all applicable Environmental
Laws, including requirements of Environmental Permits, except where failure to
comply would not, individually or in the aggregate, have or reasonably be
expected to have, a Company Material Adverse Effect; and (ii) the Company and
the Company Subsidiaries have all Environmental Permits, except for those
Environmental Permits which the failure to have would not, individually or in
the aggregate, have or reasonably be expected to have, a Company Material Adverse
Effect.  All of the Environmental Permits
are in full force and effect and have not been repealed, except where any such
failure to be in effect or such repeal would not, individually or in the
aggregate, have or reasonably be expected to have, a Company Material Adverse
Effect 

 23
 

 

and there is no proceeding or investigation pending,
or to the knowledge of the Company, threatened which would reasonably be
expected to lead to the revocation, amendment, failure to renew, or suspension
of any such Environmental Permit which would, individually or in the aggregate,
have a Company Material Adverse Effect. 
Each of the Company and each Company Subsidiary has filed when due all
materially accurate and complete applications necessary to timely renew such
Environmental Permits and all materially accurate and complete documents
required to be filed with any Governmental Entity in connection with such
Environmental Permits except where the failure to file such applications or
documents would not, individually or in the aggregate, have or reasonably be
expected to have, a Company Material Adverse Effect;

(b)                                 Except
as set forth in Schedule 4.11(b) and except as would not, individually
or in the aggregate, have a Company Material Adverse Effect, there are no
outstanding or, to the Company’s knowledge, threatened claims against the
Company or any Company Subsidiary (i) for damages or penalties relating to
the presence, generation, transportation, treatment, storage or disposal of
Hazardous Materials in, under or from any Owned Property, any Leased Premises,
or any property formerly owned, leased or operated by the Company or any
Company Subsidiary; or (ii) otherwise arising under Environmental Law; and
neither the Company nor any Company Subsidiary has received any written request
for information from any Governmental Entity regarding the disposal or release
of Hazardous Materials which would, individually or in the aggregate, have a
Company Material Adverse Effect;

(c)                                  Except
as set forth in Schedule 4.11(c) and except as would not, individually
or in the aggregate, have a Company Material Adverse Effect, neither the
Company nor any Company Subsidiary, and, to the Company’s knowledge, no other
Person has disposed of, spilled, or otherwise released any Hazardous Materials
at any Owned Property, any Leased Premises or any property formerly owned,
leased or operated by the Company or any Company Subsidiary, other than in
compliance with Environmental Laws and Hazardous Materials are not otherwise
present in the environment at such properties in amounts or conditions that
would reasonably be expected to result in liability under Environmental Law and
none of the Company and the Company Subsidiaries has released Hazardous
Materials at any other location which would reasonably be expected to result in
liability under Environmental Law;

(d)                                 Except
as set forth in Schedule 4.11(d) and except as would not, individually
or in the aggregate, have a Company Material Adverse Effect, (i) all Hazardous
Materials generated by the Company or any Company Subsidiary have been stored,
transported, treated and disposed of by transporters and/or treatment, storage
and disposal facilities authorized under applicable Environmental Laws or
maintaining valid Environmental Permits, and (ii) to the Company’s knowledge,
neither the Company nor any Company Subsidiary has disposed of, transported, or
arranged for the disposal or transportation of any Hazardous Materials at or to
any location at which there is or has been a release of Hazardous Materials
into the environment which, regarding each of the foregoing, would reasonably
be expected to result in liability to the Company or any Company Subsidiary
under Environmental Law;

(e)                                  Except
as would not, individually or in the aggregate, have a Company Material Adverse
Effect, the Company has made available to Parent through the Dataroom 

 24
 

 

materially true, correct and complete copies of all
material reports, studies, and analyses that are in the possession, custody or
control of the Company or any Company Subsidiary and relate to compliance by
the Company or any Company Subsidiary with Environmental Law or contamination
by Hazardous Materials as they relate to the Owned Properties and Leased
Premises;

(f)                                    Except
as set forth on Schedule 4.11(f) and except as would not, individually or in
the aggregate, have a Company Material Adverse Effect, neither the Company nor
any Company Subsidiary has retained or assumed by contract any liability or
responsibility for any environmental claims or conditions; and

(g)                                 Except
as would not, individually or in the aggregate, have a Company Material Adverse
Effect, completion of the transaction contemplated by this Agreement does not
require permission of any Governmental Entity pursuant to any so-called “transaction
trigger” or other Environmental Law.

Section
4.12.  Title to Property.

(a)                                  Schedule 4.12
identifies by street address or freeway interchange, all material real estate
leased by the Company or any Company Subsidiary (the “Leased Premises”)
or owned by the Company or any Company Subsidiary (“Owned Property”).  The Leased Premises are leased to the Company
or such Company Subsidiary pursuant to written leases, true and complete copies
of which (together with all amendments thereto) have been made available to
Parent through the Dataroom.  Except as
set forth in Schedule 4.12, neither the Company nor any Company
Subsidiary is in material default under any material term of any lease or, to
the knowledge of the Company, any declaration, restriction, covenant, option
agreement or right of first refusal relating to the Leased Premises or Owned
Property, nor do any state of facts exist which with the passage of time would
constitute a material default of the Company or any Company Subsidiary under
any material term of any lease or, to the knowledge of the Company, any
declaration, restriction, covenant, option agreement or right of first refusal
relating to the Leased Premises or Owned Property.  True and complete copies of all title
policies of the Company and the Company Subsidiaries, in the possession of the
Company as of the date hereof, relating to the Owned Property and the Leased
Premises have been made available to Parent through the Dataroom.  The Company or a Company Subsidiary has good and
valid title to the Owned Property, and good and valid leasehold title to the
Leased Premises, free and clear of all Liens, except (i) for Taxes,
installments of special assessments and governmental charges or levies not yet
delinquent, (ii) defects or irregularities in title, recorded easements, rights
of way, covenants, and other restrictions and utility easements, building
restrictions, zoning restrictions, encroachments, and other similar matters and
other easements and restrictions existing generally which do not and will not
detract in any material respect from the value, as currently operated, of any
Owned Property or Leased Premises, and do not and will not affect, in any
material respect, the ability of the Company or any Company Subsidiary to
conduct its business as it is currently being conducted on the Owned Property
or the Leased Premises, and (iii) mechanics’, carriers’, construction,
workers’, repairers’ and similar Liens arising or incurred in the ordinary
course of business and (iv) as otherwise set forth on Schedule 4.12.

 25
 

 

(b)                                 The
Company or a Company Subsidiary has good and merchantable title to all
personalty of any kind or nature owned by the Company or a Company Subsidiary,
free and clear of all Liens, (including, to the Company’s knowledge, Liens on
the lessor’s interest in leasehold estates leased to the Company), except for
(i) Liens identified on Schedule 4.12, (ii) Liens for
taxes, assessments and governmental charges or levies not yet due and payable,
(iii) Liens imposed by Law, including statutory Liens of landlords, (iv)
pledges or deposits to secure obligations under workers’ compensation laws or
similar legislation or to secure public or statutory obligations,
(v) mechanics’, carriers’, construction, workers’, repairers’ and similar
Liens arising or incurred in the ordinary course of business, (vi) Liens
incurred or deposits made in the ordinary course of business of the Company or
any Company Subsidiary, (vii) Liens of lessors of personal property; or (viii)
minor irregularities of title which do not materially detract from the value or
use of said property and assets.  The
Company or a Company Subsidiary as lessee has the right under valid and
subsisting leases to use, possess and control all personalty leased by and
material to the Company or such Company Subsidiary as now used, possessed and
controlled by the Company or such Company Subsidiary.

Section
4.13.  Condition of Property.

(a)                                  All
buildings, machinery, equipment and other tangible assets currently being used
by the Company or any Company Subsidiary which are owned or leased by the
Company or any Company Subsidiary are in good operating condition, maintenance
and repair, ordinary wear and tear and casualty damage excepted, are usable in
the ordinary course of business and are reasonably adequate and suitable for
the uses to which they are being put, except where any other conditions of any
building, machinery, equipment or other tangible asset would not, individually
or in the aggregate, have a Company Material Adverse Effect.

(b)                                 True
and complete copies of all surveys of the Company and the Company Subsidiaries
relating to the Owned Property and the Leased Premises in possession of the
Company as of the date hereof have been made available to Parent through the
Dataroom (the “Surveys”).  Except
as set forth in Schedule 4.13(b) and except as would not individually or
in the aggregate have a Company Material Adverse Effect, the buildings and
structures located on each of the Owned Properties and Leased Premises
currently have valid legal access to (i) public roads or valid easements over
private streets or private property for such ingress to and egress from all
such buildings and structures, and (ii) water supply, telephone, gas and
electric connections, and fire protection, in each case as is necessary for the
operation of such Owned Property or Leased Premises as heretofore
conducted.  Except as set forth in Schedule
4.13(b) or as disclosed on the Surveys and except as would not individually
or in the aggregate have a Company Material Adverse Effect, to the Company’s
knowledge, no material portion of such buildings or structures substantially
encroaches upon real property of another Person and no structure of any other
Person substantially encroaches upon any of the Owned Property or Leased
Premises.

Section
4.14.  Contracts.

Except for such items with
respect to the purchase of goods for resale in the ordinary course of business
or intercompany transactions between or among the Company and/or Company
Subsidiaries, Schedule 4.14 is a complete list of all written contracts,
agreements, 

 26
 

 

commitments, leases, sales contracts and other agreements to which the
Company or any of the Company Subsidiaries is a party as of the date of this
Agreement (i) which provide for the receipt or expenditure by the Company or
any Company Subsidiary after the date of this Agreement, of more than
$1,000,000 (or, in either case, its equivalent in non-cash consideration) per
year; (ii) which provide for the acquisition, issuance or transfer of any
securities of the Company other than this Agreement, the Company Stock Options
or the Company Warrants, (iii) which create Liens on assets of the Company or
any of the Company Subsidiaries as security for indebtedness for borrowed
money, (iv) with any fast-food or motel franchisors; or (v) with any
Stockholder (or any affiliate of any Stockholder) pursuant to which the Company
(or any Company Subsidiary) will have any Liability or obligation following the
Closing, (vii) all agreements with a labor union, or (viii) any agreement that
limits the freedom of the Company or any Company Subsidiary to compete in any
line of business with any Person or in any geographic area (all agreements,
arrangements or commitments required to be identified in Schedule 4.14
being hereinafter referred to as the “Material Contracts”).  True and complete copies of all the Material
Contracts (including all written amendments thereto) identified in Schedule 4.14
have been made available to Parent through the Dataroom.  Except as set forth on Schedule 4.14,
(i) all Material Contracts are valid and existing, and the Company and the
Company Subsidiaries, have duly performed their obligations thereunder in all
material respects to the extent such obligations have accrued, and (ii) no
breach or default thereunder by the Company or any Company Subsidiary has
occurred and is continuing, except in each case, for those failures to be valid
and existing or breaches or defaults which would not, individually or in the
aggregate, have, or reasonably be expected to have, a Company Material Adverse
Effect.

Section
4.15.  Employee and Labor Matters and
Plans.

(a)                                  Schedule 4.15(a)
lists each of the following plans, policies, arrangements and contracts which
is sponsored, maintained or contributed to by the Company or any Company
Subsidiary, or, in the case of any “employee pension plan” (as defined in
Section 3(2) of ERISA), an ERISA Affiliate or for the benefit of any current or
former employee, director or officer: (i) any “employee benefit plan,” as
such term is defined in Section 3(3) of ERISA, whether or not subject to the
provisions of ERISA; and (ii) any other employment, consulting, collective
bargaining, stock option, stock bonus, stock purchase, phantom stock,
incentive, bonus, deferred compensation, retirement, severance, change-in-control,
fringe, insurance, disability, post-employment (including compensation,
pension, health, medical or life insurance or other benefits), vacation,
medical or dental contract, policy or arrangement which is not an employee
benefit plan as defined in Section 3(3) of ERISA (each such plan, contract,
policy and arrangement being herein referred to as an “Employee Plan”).

(b)                                 With
respect to each Employee Plan, except as set forth on Schedule 4.15(b),
the Company has made available to Parent through the Dataroom true and complete
copies (including amendments) of each contract, plan document and summary plan
description (including any related trust agreement or insurance company
contract) or, if there are no such written materials, a summary description of the
Employee Plan, plus a copy of the most recent determination letter, if
applicable, and a copy of the most recent Form 5500.  Except as set forth on Schedule 4.15(b),
there have been no amendments to, written interpretations of or announcements
by the Company or any Company Subsidiary published to employees relating to, or
any changes in employee participation or coverage under, any Employee Plan that
would 

 27
 

 

increase materially the expense of maintaining such
Employee Plan above the level of expense incurred in respect thereof for the
most recent fiscal year ended prior to the date hereof, for which financial
statements have been provided.  Schedule 4.03(b)
contains a complete and accurate listing of all outstanding Company Stock
Options, indicating the extent vested or unvested, the extent exercisable or
not, the exercise price and the name of the optionee.

(c)                                  Each
Employee Plan has been maintained in compliance in all respects with its terms
and the requirements prescribed by any and all applicable statues, orders,
rules and regulations, including, but not limited to, ERISA and the Code except
where the failure to be in compliance therewith would not, individually or in
the aggregate, have a Company Material Adverse Effect.  Except as set forth on Schedule 4.15(c),
with respect to each Employee Plan, (1) no actions, suits or claims (other than
routine claims for benefits in the ordinary course) are pending, or to the
Company’s knowledge, threatened, and (2) to the Company’s knowledge, there are
no facts or circumstances that would reasonably be expected to form the basis
of any such actions, suits or claims, and (3) no administrative investigation,
audit or other administrative proceeding by the Department of Labor, the
Pension Benefit Guaranty Corporation, the Internal Revenue Service or other
Governmental Entities are in progress or pending, or to the Company’s
knowledge, threatened.  With respect to
each Employee Plan which is an “employee benefit plan” within the meaning of
Section 3(3) of ERISA or which is a “plan” within the meaning of Section
4975(e) of the Code, there has occurred no transaction which is prohibited by
Section 406 of ERISA or which constitutes a “prohibited transaction” under
Section 4975(c) of the Code and with respect to which a prohibited transaction
exemption has not been granted and is not currently in effect, except where
such “prohibited transaction” would not, individually or in the aggregate, have
a Company Material Adverse Effect.

(d)                                 Schedule 4.15(d)
identifies each funded Employee Plan which is an employee pension plan within
the meaning of Section 3(2) of ERISA (including a multi-employer plan within
the meaning of Section 3(37) of ERISA). 
With respect to each such Employee Plan, (i) the Employee Plan is a
qualified plan under Section 401(a) or 403(a) of the Code, and its related
trust is exempt from federal income taxation under Section 501(a) of the Code;
(ii) a favorable IRS determination letter has been received and, since the
date of such IRS submission, the Employee Plan has not been amended or operated
in a manner which would be reasonably likely to have a Company Material Adverse
Effect, nor would there result any material cost or liability to remedy any
such defect; (iii) there has been no termination or partial termination
within the meaning of Section 41l(d)(3) of the Code; (iv) no Employee Plan
is covered by Section 412 of the Code; and (v) no such Employee Plan is
covered by Title IV of ERISA.  Neither
the Company nor any ERISA Affiliate has ceased operations at a facility so as
to become subject to the provisions of Section 4068 of ERISA, withdrawn as a
substantial employer so as to become subject to the provisions of Section 4063
of ERISA or ceased making contributions on or before the Closing Date to any
Employee Plan which is a pension plan subject to Section 4064(a) of
ERISA.  No event has occurred and no
condition exists, with respect to any Employee Plan that would be reasonably
likely to subject the Company to any Tax, fine, Lien, penalty or other
Liability imposed by ERISA, the Code or any other applicable Laws, which, when
added to all other Liabilities under this paragraph would reasonably be
expected to have a Company Material Adverse Effect.

 28

 

(e)           Neither the Company
nor any Company Subsidiary has any material liability in respect of
post-retirement health benefits for retired employees of the Company or any
Company Subsidiary except as required to avoid excise tax under Code Section
4980B or similar provisions under state law.

(f)            Except
as set forth on Schedule 4.15(f), the consummation of the
transactions contemplated by this Agreement will not entitle any employee,
officer or director to receive severance or other compensation or benefits from
the Company or any Company Subsidiary which would not otherwise be payable
absent the consummation of the transactions contemplated by this Agreement or
cause the acceleration of the time of payment or vesting of any award or
entitlement under any Employee Plan, whether or not such occurrence would
constitute a parachute payment within the meaning of Code Section 280G,
and whether or not another subsequent action or event (or lack thereof) in
addition to the transactions contemplated hereby would be required to trigger
such occurrence.

(g)           To
the Company’s knowledge, since December 31, 2005, there have been no
governmental audits of the equal employment opportunity practices of the
Company or any Company Subsidiary. 
Except as set forth on Schedule 4.15(g), there are no unfair
labor practice charges or complaints against the Company or any Company
Subsidiary pending before the National Labor Relations Board or strikes,
disputes, slowdowns or stoppages pending or, to the Company’s knowledge,
threatened against or involving the Company that would reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect.

(h)           Except
as set forth on Schedule 4.15(h) (i) neither the Company nor any Company
Subsidiary is a party to or bound by, any collective bargaining agreement with
a labor union or labor organization; (ii) there is no labor practice proceeding
or labor arbitration proceeding pending, or to the Company’s knowledge,
threatened against the Company or any Company Subsidiary; and (iii) to the
Company’s knowledge there are no organizational efforts with respect to the
formation of a collective bargaining unit presently being made.

(i)            The
Company has made available to Parent accurate and complete copies of all
material employee manuals and handbooks and a copy of the current new hire
orientation package relating to the employment of the current employees of the
Company and the Company Subsidiaries.

(j)            To
the knowledge of the Company, neither the Company nor any Company Subsidiary
has since January 1, 2006 engaged in any unfair labor practice of any
nature.  Since January 1, 2003, there has
not been any slowdown, work stoppage, labor dispute or union organizing
activity, or any similar activity or dispute, affecting the Company or the
Company Subsidiary, except for such slowdowns, work stoppages, disputes or
activities that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.  Except as set forth on Schedule 4.15(j)
and except as would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect, there are no actions,
suits, claims, labor disputes or grievances pending or, to the knowledge of the
Company, threatened or reasonably anticipated relating to any labor, safety or
discrimination matters involving any Company Employee, including charges of
unfair labor practices or discrimination complaints.

 29
 

 

Section 4.16. 
Insurance Policies.

Schedule 4.16 contains a summary description of all material
insurance policies of the Company and the Company Subsidiaries and each such
policy is in full force and effect.  All
premiums with respect to the insurance policies listed on Schedule 4.16
which are due and payable prior to the Effective Time have been paid or will be
paid prior to the Effective Time, and no written notice of cancellation or
termination has been received by the Company with respect to any such
policy.  To the Company’s knowledge,
there are no pending claims against such insurance by the Company or any
Company Subsidiary as to which the insurers have denied coverage or otherwise
reserved rights that would reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect.

Section 4.17.  Intellectual
Property.

(a)           Schedule 4.17
contains a list of all U.S. and foreign patents, registrations and applications
for Intellectual Property owned by the Company or Company Subsidiary.

(b)           Except
as would not, individually or in the aggregate, have, or reasonably be expected
to have, a Company Material Adverse Effect, (i) the Company and the Company
Subsidiaries own or have a valid license to use all Intellectual Property used
in the conduct of their businesses as currently conducted; (ii) neither the
Company nor any Company Subsidiary has received written notice of infringement
or challenge to the right to use any Intellectual Property; (iii) to the
Company’s knowledge, the conduct of the Company and the Company Subsidiaries’
businesses as currently conducted does not infringe or violate the Intellectual
Property of any other Person and their Intellectual Property is not being
infringed or violated by any other Person; and (iv) the Company and the Company
Subsidiaries take reasonable steps to protect and maintain their Intellectual
Property.

(c)           For
the purposes of this Section 4.17, “Intellectual Property” shall mean
all United States, state and foreign intellectual property, including
patents, inventions, discoveries, technology, and know-how, copyrights and
copyrightable works (including software and software code in any form,
including source code and executable or object code), trademarks, service
marks, trade names, brand names, corporate names, domain names, URLs, web
sites, logos, trade dress and other source indicators, trade secrets and other
confidential information.

Section 4.18.  Permits.

The Company and the Company Subsidiaries have all
Permits (exclusive of any Environmental Permits and Permits with respect to
state or local sales, use or other Taxes), except for those Permits the failure
to have would not, individually or in the aggregate, have or be reasonably
expected to have, a Company Material Adverse Effect.  All of the Permits are in full force and effect
except where any such failure to be so in effect would not, individually or in
the aggregate, have or be reasonably expected to have, a Company Material
Adverse Effect, and there is no proceeding or investigation pending, or to the
knowledge of the Company, threatened which would reasonably be expected to lead
to the revocation, amendment, failure to renew or suspension of any such
Permit.  Each of the Company and each
Company Subsidiary has filed

 30
 

 

when due all documents required to be filed with any Governmental Entity
in connection with such Permits except where the failure to file such documents
would not, individually or in the aggregate, have or be reasonably
expected to have, a Company Material
Adverse Effect,  and, at the time of
the filing thereof, all such filings were accurate and complete in all material
respects.

Section 4.19.  Compliance
with Laws.

Neither the Company nor any Company Subsidiary is in
violation of, or has since December 31, 2003, violated or failed to comply with
any Law (other than Environmental Laws, ERISA and Laws with respect to Taxes
which are addressed elsewhere in Article IV) applicable to its business or
operations, except for violations and failures to comply that would not,
individually or in the aggregate, have, or be reasonably expected to have, a
Company Material Adverse Effect.

Section 4.20.  Brokerage
Fees.

The Company has not retained any financial advisor,
broker, agent or finder or agreed to pay a financial advisor, broker, agent or
finder on account of this Agreement or any transaction contemplated hereby or
any transaction of like nature except for Lehman Brothers Inc. and Credit
Suisse Securities (USA) LLC, the fees of which will be paid by the Company.

Section 4.21.  Affiliate
Agreements.

Except as set forth on Schedule 4.21, there
are no oral or written agreements between the Company or any Company Subsidiary
and (i) any officer or director of the Company or any Company Subsidiary; (ii)
any record or beneficial owner of the voting stock of the Company, or (iii) any
Affiliate of any such officer, director or record of beneficial owner other
than payment as compensation for services rendered by employees in the ordinary
course of employment by the Company or any Company Subsidiary or as otherwise
provided pursuant to Employee Plans.

Section 4.22.  No
Other Representations or Warranties.

Except for the representations and warranties contained
in this Article IV, each of Parent and Merger Sub acknowledges that none of the
Company, any Affiliate of the Company or any other Person on behalf of the
Company or any of its Affiliates makes any other express or implied
representation or warranty with respect to the Company or with respect to any
other information provided to Parent or Merger Sub in connection with the
transaction contemplated hereunder.  None
of the Company, any Affiliate of the Company or any other Person will have or
be subject to any liabilities or indemnification obligation to Parent, Merger
Sub or any other Person resulting from the distribution to Parent or Merger Sub
(or any of their advisors), or Parent’s or Merger Sub’s (or their advisors’)
use of, any such information, including any information, documents,
projections, forecasts or other material made available to Parent or Merger Sub
in the Data Room or management presentations in expectation of the transactions
contemplated by this Agreement.

 31
 

 

ARTICLE V

REPRESENTATIONS
AND WARRANTIES OF PARENT AND MERGER SUB

Parent and Merger Sub hereby represent and warrant to
the Company as follows:

Section 5.01.  Organization.

Each of Parent and Merger Sub is a real estate
investment trust or corporation, as applicable, duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation.  Each of Parent and Merger
Sub has full corporate power and authority to conduct its business as it is now
being conducted and to own, operate or lease the properties and assets it
currently owns, operates or holds under lease. 
Each of Parent and Merger Sub is duly qualified or licensed to do
business and is in good standing as a foreign corporation in each jurisdiction
where such qualification or licensing is necessary, except where the failure to
so qualify or be so licensed would not prevent or materially delay the
consummation of the transactions contemplated by this Agreement.  Parent owns beneficially, and Parent or one
of its wholly-owned subsidiaries owns of record, all of the outstanding capital
stock of Merger Sub, in each case free and clear of all Liens.  Prior to the date hereof, Parent has provided
to the Company the name of the “ultimate parent entity” for purposes of
obtaining the approvals of the Governmental Entities contemplated by this
Agreement.

Section 5.02.  Authorization.

Each of Parent and Merger Sub has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder.  The execution and
delivery of this Agreement by each of Parent and Merger Sub and the
consummation by each of Parent and Merger Sub of the transactions contemplated
hereby have been duly approved by the Board of Directors and stockholders of
each of Parent and Merger Sub, and no other corporate proceedings on the part
of Parent or Merger Sub are necessary to authorize the Merger or this
Agreement, to perform their respective obligations hereunder or to consummate
the transactions contemplated hereby. 
This Agreement has been duly and validly executed and delivered by each
of Parent and Merger Sub and, assuming due authorization, execution and
delivery by the Company, constitutes the legal, valid and binding obligation of
each of Parent and Merger Sub, enforceable against each of Parent and Merger
Sub in accordance with its terms, except as such enforcement may be subject to
(i) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
or other similar laws relating to creditors’ rights generally,
(ii) general principles of equity (whether applied in a proceeding at law
or in equity) and (iii) any implied covenant of good faith and fair dealing.

Section 5.03.  No Violation.

The execution and delivery of this Agreement by Parent
and Merger Sub does not, and the consummation by Parent and Merger Sub of the
transactions contemplated by this Agreement will not, (i) conflict with,
or result in any violation of or default or loss of any benefit under, any
provision of Parent and Merger Sub’s respective Certificates of Incorporation
or By-laws; (ii) subject to the matters described in Section 5.04,
conflict with or result in any violation

 32
 

 

of or default or loss of any benefit under, any Law or Judgment of any
Governmental Entity applicable to Parent or Merger Sub or by which any of their
respective properties are subject; or (iii) conflict with, or result in a
breach, termination (or right of termination) or violation of or default or
loss of any benefit under the terms of any agreement, contract, indenture or
other instrument to which Parent or Merger Sub is a party or by which Parent or
Merger Sub or any of their respective properties are subject, or constitute a
default or loss of any right thereunder or an event which, with the lapse of
time or notice or both, might result in a default or loss of any right
thereunder, except with respect to clauses (ii) and (iii) hereof, where the
breach, termination, violation, default, loss of benefit, acceleration or loss
of right or other occurrence would not prevent or materially delay the
consummation of the transactions contemplated hereby.

Section 5.04.  Approvals.

The execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement by each of
Parent and Merger Sub do not and will not require the consent, approval, order,
authorization or Permit of any Governmental Entity under any Law or Judgment,
and no declaration, filing or registration with any Governmental Entity is
required by Parent or Merger Sub in connection with the execution and delivery
of this Agreement and the consummation of transactions contemplated by this
Agreement, except for (i) the filing of the Certificate of Merger as required
by the DGCL and the filing of appropriate documents with the relevant
authorities of other states in which Parent and Merger Sub are qualified to do
business, (ii) filings pursuant to the HSR Act, and the expiration or
termination of the applicable waiting period under such Act, and
(iii) those other consents, approvals, orders, authorizations, Permits,
filings, declarations or registrations the failure of which to obtain or make
would not prevent or materially delay the consummation of the transactions
contemplated hereby.

Section 5.05.  Litigation.

There are no Proceedings pending or, to the knowledge of
Parent or Merger Sub, threatened against Parent or any of its Affiliates by or
before any Governmental Entity or by any Person that would, or would reasonably
be expected to, prevent or materially delay the consummation of the
transactions contemplated hereby. 
Neither Parent nor any of its
Subsidiaries nor any of their respective properties is or are a party to or
bound by any Judgment that would, or would reasonably be expected to, prevent
or materially delay the consummation of the transactions contemplated hereby.

Section 5.06.  Available Funds.

(a)           Parent has delivered to the Company
true and complete copies of the written financial commitment, dated as of the
date hereof (the “Financing Commitment”) from Merrill Lynch Capital Corporation and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, addressed to Parent, pursuant to which the financing parties have agreed to lend
the amounts set forth therein (the “Financing”).

(b)           The Financing Commitment is in full
force and effect and has not been amended or modified, and the commitments
contained therein have not been withdrawn or

 33
 

 

rescinded in any respect.  The Financing Commitment, in
the form delivered to the Company, is a legal, valid and binding obligation of
Parent and, to the knowledge of Parent, the other parties thereto.  There are no other agreements, side letters
or arrangements relating to the Financing Commitment that could affect the
availability of the Financing.  No event
has occurred which, with or without notice, lapse of time or both, would
constitute a default or breach on the part of Parent under any term or
condition of the Financing Commitment, and Parent has no reason to believe that
it will be unable to satisfy on a timely basis any term or condition of closing
to be satisfied by it contained in the Financing Commitment.  Parent has fully paid any and all commitment
fees or other fees required by the Financing Commitment to be paid on or before
the date of this Agreement.  There are no conditions precedent or other
contingencies related to the funding of the full amount of the Financing, other
than as set forth in or contemplated by the Financing Commitment.  The aggregate proceeds contemplated by the
Financing Commitment will be sufficient for Parent, Merger Sub and the
Surviving Corporation to consummate the transactions contemplated hereby,
including payment of the aggregate Merger Consideration and any applicable fees
and expenses.  As of the date of this
Agreement, Parent does not have any reason to believe that any of the
conditions to the Financing will not be satisfied or that the Financing will
not be available to Parent on the Closing Date.

Section 5.07.  Brokerage Fees.

Neither Parent nor Merger Sub has retained any financial
advisor, broker, agent or finder or agreed to pay any financial advisor,
broker, agent or finder on account of this Agreement or any transaction
contemplated hereby or any transaction of like nature except for Merrill Lynch Capital Corporation and Merrill
Lynch, Pierce, Fenner & Smith Incorporated, the fees of which will be paid
by Parent.

Section 5.08.  No Other Representations or Warranties.

Except for the representations and warranties contained
in this Article V, the Company acknowledges that none of Parent, Merger Sub or
any other Person on behalf of Parent or Merger Sub makes any other express or
implied representation or warranty with respect to Parent or Merger Sub or with
respect to any other information provided to the Company.

ARTICLE
VI

COVENANTS

Section 6.01.  Interim Operations of the Company.

During the period from the date of this Agreement to the
Effective Time, except as required by Law, specifically permitted by this
Agreement or as set forth on Schedule 6.01, or as otherwise
consented to in writing by Parent, the Company will and will cause each Company
Subsidiary to:

(a)           use commercially
reasonable efforts (consistent with operating in the ordinary course of
business and past practices) to (i) preserve intact its present business
organization, (ii) keep available the services of its present officers and
employees, (iii) preserve its relationships with clients, suppliers,
customers, distributors and others having significant

 34
 

 

business dealings with it, including renewing existing
leases and licenses in the ordinary course of business, (iv) maintain all
assets in good repair and condition other than those disposed of in the
ordinary course of business, (v) maintain all insurance, (vi) maintain
its books of account and records in the usual, regular and ordinary manner and
(vii) otherwise operate in the ordinary course of business;

(b)           not amend its
Certificate of Incorporation or By-Laws;

(c)           not acquire by
merging or consolidating with, or purchasing all or substantially all of the
assets of, or otherwise acquiring, any business of any Person or other business
organization or division thereof, in each case for consideration having a value
in excess of $5,000,000 or an aggregate value in excess of $10,000,000;

(d)           not split, combine
or reclassify its outstanding capital stock or declare, set aside, make or pay
any dividend or other distribution in respect of its capital stock other than
(i) cash dividends or distributions made prior to the Effective Time; or (ii)
dividends paid by the Company’s wholly-owned Subsidiaries to the Company or its
wholly-owned Subsidiaries;

(e)           not issue or sell
(or agree to issue or sell) any shares of its capital stock of any class or
series, or any options, warrants, conversion or other rights to purchase any
such shares or any securities convertible into or exchangeable for such shares
(other than upon the exercise or conversion of options, warrants or convertible
securities outstanding on the date hereof), or grant, or agree to grant, any
such options or modify or alter the terms of any of the above, except as
contemplated under Section 2.06;

(f)            not (i)  incur
any indebtedness for borrowed money other than pursuant to the terms of the
Company’s existing credit facilities in effect on the date hereof or vary the
material terms of any existing debt securities, (ii) issue or sell any
debt securities, (iii) other than in the ordinary course of business or
pursuant to the Company’s 2006 capital expenditure plan which has previously
been made available to Parent, acquire or dispose of any assets (other
than acquisitions and dispositions of goods purchased for resale in the
ordinary course of business) having a book or market value individually in
excess of $1,000,000, or (iv) other than in the ordinary course of
business, enter into, modify in any material respect or terminate any Material
Contract;

(g)           not take any steps
to mortgage or pledge to secure any material obligation, or to subject to any
material Lien, any of its material properties other than pursuant to the terms
of the Company’s existing credit facilities as in effect on the date hereof or
in the ordinary course of business;

(h)           not grant to any
present or former director or officer, or, except in the ordinary course of
business, consultant or other employee any increase in compensation or benefits
in any form, or any severance or termination pay, or make any loan to or enter
into any employment agreement, collective bargaining agreement or arrangement
with any such Person, except in each case as may be required by Law or the
terms of any existing Employee Plan or arrangement and except for the
Additional Transaction Bonuses;

 35
 

 

(i)            not adopt, enter
into, amend in any material respect, announce to participants any intention to
adopt or terminate, any Employee Plan or other employee benefit plan, program
or arrangement that would be an Employee Plan if it were in effect on the date
hereof, except (i) as required by applicable Law, (ii) as disclosed on any
disclosure Schedule pursuant to Section 4.15, (iii) as contemplated under
Section 2.06, (iv) in connection with the Additional Transaction Bonuses or (v)
except, with respect to the Company’s health and medical plans, in the ordinary
course of business provided such action does not materially increase the
benefits payable under such Employee Plans;

(j)            not discharge or
satisfy any material Lien or pay or satisfy any material obligation or
Liability (fixed or contingent) (other than in the ordinary course of business)
or commence any voluntary petition, proceeding or action under any bankruptcy,
insolvency or other similar Laws;

(k)           not make or
institute any material change in its accounting procedures or practices unless
mandated by GAAP;

(l)            not make any
material Tax election or settle or compromise any material Tax Liability;

(m)          not, other than in
the ordinary course of business, enter into, or consent to the entering into
of, any agreement with any Governmental Entity relating to the actual or
threatened condemnation of any Owned Property or Leased Premises; and

(n)           not authorize or
agree to take any of the actions set forth in the foregoing subparagraphs (a)
through (l).

Section 6.02.  Access to Information.

The Company shall (and shall cause each Company
Subsidiary to) afford to the officers, employees, accountants, counsel and
other representatives of Parent and Merger Sub, reasonable access, during
normal business hours, during the period prior to the Effective Time, to all of
the properties, books, contracts, commitments and records of the Company and
the Company Subsidiaries; provided that nothing herein shall
require the provision of such access to the extent it would interfere
unreasonably with the business or operations of the Company or the Company
Subsidiaries or otherwise result in any unreasonable interference with the
prompt and timely discharge by such employees of their normal duties.  Prior to
Closing, Parent and Merger Sub will hold and treat and will cause their
respective officers, employees, auditors and other authorized representatives
to hold and treat in confidence all documents and information concerning the
Company and the Company Subsidiaries made available to Parent or Merger Sub in
connection with the transactions contemplated by this Agreement in accordance with the provisions of the existing
confidentiality agreement between the Company and Reit Management &
Research LLC dated as of June 13, 2006 (the “Confidentiality Agreement”), provided
public disclosure which is reasonably believed by Parent to be necessary in
connection with the Financing, issuance of the Securities or distribution of
equity of a Subsidiary of Parent to its shareholders or which Parent or any of
its Affiliates are advised by counsel is required by Law or the rules of any
national securities exchange to be disclosed shall not be deemed a violation of

 36
 

 

Parent’s or Merger Sub’s obligations under this Section 6.02 or under the
Confidentiality Agreement. 
Notwithstanding anything herein to the contrary, neither the
Company nor any of the Company Subsidiaries shall be required to provide access
to or to disclose information where such access or disclosure would violate or
prejudice the rights of its clients, jeopardize the attorney-client privilege
of the Company or the Company Subsidiaries or contravene any Law or binding
agreement entered into prior to the date of this Agreement (it being agreed
that the Company, Parent and Merger Sub shall use their reasonable best efforts
to cause such information to be provided in a manner that does not cause such
violation or jeopardization).

Section 6.03.  Consents and Approvals.

(a)           Each
of the Company, Parent and Merger Sub shall use all reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including, without limitation, (i)
to comply promptly with all legal requirements which may be imposed on it with
respect to this Agreement and the transactions contemplated by this Agreement
by any Governmental Entity (which actions shall include furnishing all
information required by applicable Law in connection with approvals of or
filings with any Governmental Entity), including filing, or causing to be
filed, as promptly as practicable, any required notification and report forms
(x) under the HSR Act with the Federal Trade Commission (the “FTC”) and
the Antitrust Division of the United States Department of Justice (the “Antitrust
Division”), (ii) to obtain any other Requisite Regulatory Approvals in
connection with the transactions contemplated by this Agreement or the taking
of any action contemplated by this Agreement, and (iii) to take any action
necessary to defend vigorously, lift, mitigate or rescind the effect of any
litigation or administrative proceeding involving any Governmental Entity
adversely affecting this Agreement or the transactions contemplated by this
Agreement, including promptly appealing any adverse court or administrative decision.  Without limitation of the foregoing, the
Company, Parent, Merger Sub and their respective Affiliates shall not extend
any waiting period or comparable period under the HSR Act or enter into any
agreement with any Governmental Antitrust Authority not to consummate the
transactions contemplated by this Agreement, except with the prior written
consent of the other parties hereto.  For
purposes of this Agreement, a “Governmental Antitrust Authority” shall
mean any Governmental Entity with regulatory jurisdiction over any Requisite
Regulatory Approval under the HSR Act or similar Laws intended to prohibit,
restrict or regulate actions having an anticompetitive effect or purposes.

(b)           Without
limiting the generality of the undertakings and subsection (a) of this Section
6.03 and subject to appropriate confidentiality protections, the Company, on
the one hand, and Parent and Merger Sub, on the other hand, shall each furnish
to the other such necessary information and reasonable assistance as the other
party may request in connection with the foregoing and shall each promptly
provide counsel for the other party with copies of all filings made by such
party, and all correspondence between such party (and its advisors) with any
Governmental Antitrust Authority and any other information supplied by such
party and such party’s Affiliates to a Governmental Antitrust Authority in
connection with this Agreement and the transactions contemplated by this
Agreement.  Each party shall, subject to
applicable Law, permit counsel for the other party to review in advance any
proposed written and, if practicable, oral, communication to any Governmental
Antitrust Authority.  Upon the terms and

 37
 

 

subject to the conditions herein provided, in case at any time after
the Closing Date any further action is necessary or desirable to secure the
approvals from any and all Governmental Antitrust Authorities necessary to
carry out the purposes of this Agreement, the proper officers and/or directors
of the parties shall use all reasonable efforts to take or cause to be taken
all such further action.

(c)           Without
limiting the generality of the undertakings and subsections (a) and (b) of this
Section 6.03, the Company, Parent and Merger Sub agree to take or cause to be
taken the following actions:  (i) provide
as promptly as practicable information and documents requested by any
Governmental Antitrust Authority necessary, proper or advisable to permit
consummation of the transactions contemplated by this Agreement, (ii) take, or
cause to be taken, all actions necessary, proper or advisable to obtain the
approval for consummation of the transactions contemplated by this Agreement by
any Governmental Antitrust Authority, which actions shall include each of
Parent and Merger Sub’s agreement to (x) sell or otherwise dispose of, or hold
separate and agree to sell or otherwise dispose of, any entities, assets or
facilities of the Company or a Company Subsidiary or any entity, facility or
asset of Parent or its Affiliates, (y) terminate, amend or assign such existing
relationships and contractual rights and obligations (other than termination
that would result in a breach of a contractual obligation to a third party) and
(z) amend, assign or terminate such existing licenses or other agreements
(other than a termination that would result in a breach of a license or such
other agreement with a third party) and to enter into such new licenses or
other agreements (and, in each case, to enter into agreements with the relevant
Governmental Antitrust Authority giving effect thereto) in each case with
respect to the foregoing clauses (x), (y) or (z) if such action is necessary or
advisable or as may be required by any Governmental Antitrust Authority, provided
that any such action contemplated by this clause (ii) shall not be required to
be effective prior to the Closing and (iii) take promptly, in the event that
any permanent or preliminary injunction or other order is entered or becomes
reasonably foreseeable to be entered in any proceeding that would make consummation
of the transactions contemplated by this Agreement in accordance with the terms
of this Agreement unlawful or that would prevent or delay consummation of any
such transaction, any and all steps (including the appeal thereof, the posting
of a bond or the taking of the steps contemplated by clause (ii) of this
subsection (c)) necessary to vacate, modify or suspend such injunction or order
so as to permit such consummation on a schedule as close as possible to that
contemplated by this Agreement.  The Company,
Parent and Merger Sub agree to offer the other parties, if possible, a
reasonable opportunity to participate in all telephonic conferences and all
meetings with a Governmental Antitrust Authority.

(d)           The
filing fees under the HSR Act, as well as the fees and disbursements of any
legal counsel or other advisor jointly retained by the parties in connection
with any such filings, shall be borne by Parent.

Section 6.04.  Employment Matters.

(a)           After
the Effective Time, the Surviving Corporation shall either (i) continue
the existing Employee Plans of the Company and the Company Subsidiaries as
disclosed on Schedule 4.15(a), or (ii) provide substitutes for some
or all of such Employee Plans that provide compensation or benefits to
employees of the Company and the Company Subsidiaries that are no less
favorable in the aggregate to such employees than the replaced

 38
 

 

Employee Plans until December
31, 2007; provided, however, that in no event shall the
Surviving Corporation be obligated to continue, provide or otherwise take into
account Employee Plans that relate to stock options, restricted stock, stock
rights or any other equity-based arrangements; and provided  further
that nothing herein shall be construed to mean that the Surviving Corporation
cannot amend or terminate any particular Employee Plan or Plans so long as the
aggregate benefits to such employees under the remaining Employee Plans and all
substituted plans are no less favorable to such employees than the existing
Employee Plans until such date.  For
purposes of any such benefit plans, (A) Parent and the Surviving
Corporation shall grant all employees of the Company credit for purposes of
eligibility and vesting for all service with the Company and the Company
Subsidiaries prior to the Effective Time for which such service was recognized
by the Company; (B) any limitations on pre-existing conditions shall be
waived (but only to the extent such conditions were covered prior to the
Effective Time unless required by Law); and (C) expenses incurred with
respect to the plan year in which the Closing occurs on or before the Effective
Time shall be taken into account for purposes of establishing satisfaction of
any applicable deductible, coinsurance and maximum out-of-pocket provisions to
the same extent taken into account prior to the Effective Time.

(b)           From
and after the Effective Time, the Surviving Corporation shall honor (i) the
Transaction Bonus Agreements; and (ii) the Company’s severance plan and
severance agreements which are disclosed on Schedule 4.15(a), in each
case, in accordance with the terms thereof.

(c)           Nothing
in this Agreement shall be construed as granting any Person any rights of
continuing employment, other than as provided by contract.

(d)           Parent’s
current intention is that the Company’s headquarters will remain at its current
location.

(e)           As
soon as reasonably practicable following the date hereof, the Company shall
provide to the employees of the Company or Company Subsidiaries party to the
Transaction Bonus Agreements an amendment thereto providing that the payout
amounts will be payable in connection with the Merger whether the Closing is
before or after December 31, 2006.

Section 6.05.  Publicity.

Prior to the Closing, none of the Company, Parent,
Merger Sub or any of their agents or representatives shall issue or cause the
publication of any press release or other public statement or announcement with
respect to this Agreement or the transactions contemplated hereby without the
prior written consent of the Company and Parent (such consent not to be
unreasonably withheld or delayed), except as may be required by Law, or by the
rules of any national securities exchange or automated quotation system to
which Parent or any Affiliate of Parent is or becomes subject, and in such case
shall use its reasonable best efforts to consult with Parent and/or the
Company, as applicable, prior to such release or announcement being issued,
provided Parent may issue such press releases or other public statements or
announcements as it reasonably determines necessary and advisable in connection
with its investor relations program, conducted in the normal course, without
the prior written consent of the Company.

 39
 

 

Section
6.06.  Notification of Certain Matters.

From and after the date of this Agreement until the
earlier of the Effective Time or termination of this Agreement pursuant to and
in accordance with Section 8.02, the Company shall give prompt notice to
Parent, and Parent shall give prompt notice to the Company, of the occurrence
or non-occurrence of any event or events the occurrence or non-occurrence of
which, individually or in the aggregate, would make the timely satisfaction of
any of the conditions set forth in Article VII impossible or unlikely.  This Section 6.06 shall not constitute a covenant
or agreement for the purposes of Sections 7.02(b) and 7.03(b).

Section 6.07.  Directors’
and Officers’ Indemnification.

(a)           Without
limiting any additional rights that any employee may have under any Employee
Plan, from and after the Effective Time, the Surviving Corporation will
indemnify and hold harmless each Person who is now, or has been at any time
prior to the date hereof, a director or officer of the Company or of any
Company Subsidiary or a Person entitled to indemnification (individually a “Covered
Party” and collectively the “Covered Parties”), with respect to any
Proceedings and/or damages, penalties, Judgments, assessments, losses, costs
and expenses (including, but not limited to, attorneys’ fees) based in whole or
in part on, or arising in whole or in part out of any matter arising out of or
pertaining to matters existing or occurring at or prior to the Effective Time,
whether asserted or claimed prior to, at or after the Effective Time, to the
fullest extent that Parent or the Surviving Corporation is permitted under
applicable law.  In the event of any such
Proceeding, (i) each Covered Party will be entitled to advancement of expenses
incurred in the defense of any Proceeding from Parent or the Surviving
Corporation within ten business days of receipt by Parent or the Surviving
Corporation from the Indemnified Party of a request therefor, (ii) neither
Parent nor the Surviving Corporation shall settle, compromise or consent to the
entry of any Judgment in any existing or threatened Proceeding (and in which
indemnification could be sought by such Covered Party hereunder), unless such
settlement, compromise or consent includes an unconditional release of such
Covered Party from all Liability arising out of such Proceeding or such Covered
Party otherwise consents, and (iii) the Surviving Corporation shall cooperate
in the defense of any such matter.

(b)           The
certificate of incorporation and by-laws of the Surviving Corporation shall
contain provisions no less favorable with respect to indemnification,
advancement of expenses and exculpation of individuals who were directors and
officers prior to the Effective Time than are presently set forth in the
Company’s Certificate of Incorporation and By-Laws, which provisions shall not
be amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of any such individuals.

(c)           At
or prior to the Effective Time, Parent shall obtain “tail” or “runoff”
insurance policies with a claims period of at least six years from the
Effective Time with respect to directors’ and officers’ liability insurance, in
either case in an amount and scope at least as favorable as the Company’s
existing policies from an insurance carrier with the same or better credit
rating as the Company’s current insurance carrier for the Covered Parties; provided
that the annual cost thereof shall not exceed 300% of the current annual
premium paid by the Company for its existing coverage in the aggregate.  Parent shall, and shall cause the Surviving

 40
 

 

Corporation to, honor and perform under all indemnification agreements
entered into by the Company or any of the Company Subsidiaries.

(d)           If
the Surviving Corporation or any of its successors or assigns (i) shall
consolidate with or merge into any other Person and shall not be the continuing
or surviving corporation or entity of such consolidation or merger, or (ii)
shall transfer all or substantially all of its assets to any Person, then, and
in each such case, proper provisions shall be made so that the successors and
assigns of the Surviving Corporation shall assume all of the obligations of the
Surviving Corporation set forth in this Section 6.07.   In addition, the Surviving Corporation shall
not distribute, sell, transfer or otherwise dispose of any of its assets in a
manner that would reasonably be expected to render the Surviving Corporation
unable to satisfy its obligations under this Section 6.07.

(e)           The
provisions of this Section 6.07 are intended to be in addition to the rights
otherwise available to the current and former officers and directors of the
Company by Law, charter, statute, by-law or agreement, and shall operate for
the benefit of, and shall be enforceable by, each of the Covered Parties and
their heirs.

(f)            This
covenant is intended to be for the benefit of, and shall be enforceable by,
each of the Covered Parties and their respective heirs and legal
representatives.  The indemnification
provided for herein shall not be deemed exclusive of any other rights to which
an Covered Party is entitled, whether pursuant to Law, contract or otherwise.

Section 6.08.  Additional
Agreements.

Subject to the terms and conditions herein
provided, except as otherwise expressly provided herein, each of the parties
hereto agrees to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable, whether under applicable Law or otherwise, or to remove any
injunctions or other impediments or delays, legal or otherwise, to consummate
and make effective the Merger and the other transactions contemplated by this
Agreement.

Section 6.09.  Cooperation
with Financing.

Prior to
the Closing, so long as the out-of-pocket costs and expenses of the Company
and/or the Company Subsidiaries in connection therewith are Special Costs, the
Company shall provide, and shall cause the Company Subsidiaries to, and shall
use its reasonable efforts to cause the respective officers, employees,
representatives and advisors, including legal and accounting, of the Company
and the Company Subsidiaries to, provide all cooperation reasonably requested
by Parent in connection with the Financing, any issuance by Parent of debt
securities, equity securities, equity-linked securities or hybrid securities
(the “Securities”)
principally to finance its obligations under this Agreement and the other
transactions contemplated by this Agreement, including (i) participation in
meetings, presentations, road shows, due diligence sessions and sessions with
rating agencies, (ii) assisting with the preparation of materials for rating
agency presentations, bank information memoranda, prospectuses and similar
documents required in connection with the Financing or the issuance of the Securities,
(iii) executing and delivering any pledge and security documents, other
definitive

 41
 

 

financing documents, or
other certificates, legal opinions or documents as may be reasonably requested
by Parent and (iv) seeking to obtain such consents from such parties as may be
required in connection with the Financing, the Merger, any contemplated
reorganizations of the Company and the Company Subsidiaries to occur
concurrently with the Merger pursuant to Contracts to which the Company or any
Company Subsidiary is a party; provided that nothing herein shall
require such cooperation to the extent it would interfere unreasonably with the
business or operations of the Company or the Company Subsidiaries or otherwise
result in any unreasonable interference with the prompt and timely discharge by
such employees of their normal duties.

Section 6.10.  Conduct
of Business of Parent and Merger Sub Pending the Merger.

Each of
Parent and Merger Sub agrees that, between the date of this Agreement and the
Effective Time, it shall not, directly or indirectly, take any action (i) to
cause its representations and warranties set forth in Article V to be untrue in
any material respect; or (ii) that would, or would reasonably be expected to,
individually or in the aggregate, prevent, materially delay or materially
impede the ability of Parent or Merger Sub to consummate the Merger or the
other transactions contemplated by this Agreement.

Section 6.11.  No
Adverse Change in Financial Commitments.

Parent shall not, and shall cause Merger Sub not to, in
any material respect, adversely amend, change, alter, replace or modify the
terms and conditions of the Financial Commitment prior to the Closing without
the prior written consent of the Company, not to be unreasonably withheld.  If, at any time prior to the Closing, Merrill Lynch Capital Corporation or Merrill
Lynch, Pierce, Fenner & Smith Incorporated desires to, in any
material respect, adversely amend, change, alter or modify the terms and
conditions of the Financial Commitments, Parent shall promptly notify the
Company of such event and shall permit the Company (and such advisors the
Company reasonably deems appropriate) to meet with representatives of Parent
and Merrill Lynch Capital
Corporation or Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
applicable, regarding such event.  Parent and Merger Sub shall use all
reasonable efforts to arrange the Financing as promptly as practicable on the
terms and conditions described in the Financing Commitment, including using all
reasonable efforts to (i) negotiate definitive agreements with respect thereto
on the terms and conditions contained therein and (ii) to satisfy on a timely
basis all conditions applicable to Parent in the Financing Commitment and the
related definitive agreements.

Section 6.12.  Termination
of Affiliate Contracts.

Except as
otherwise disclosed on Schedule 6.12, on or prior to the Closing Date,
all agreements between the Company and the Company Subsidiaries, on the one
hand, and its Affiliates, on the other hand (other than agreements solely
between the Company and the Company Subsidiaries), shall be terminated as of
the Closing, and all obligations and liabilities thereunder shall have been
satisfied.

 42
 

 

Section
6.13.  Stockholder Approval; Stockholder Notice.

(a)           The
Company shall provide Parent with copies of the Written Consent and, if
requested by Parent or Merger Sub, copies of the documentation executed by each
of the Stockholders appointing Oak Hill the Stockholders Representative.

(b)          
The Company shall prepare and mail to all stockholders other than the
Stockholders which executed the Written Consent as promptly as practicable
following the execution of this Agreement the notice required by Section 228(e)
of the DGCL describing in reasonable detail the Merger and the Written Consent
(the “Stockholder
Notice”) and otherwise to comply with all legal requirements under
the DGCL in respect of the Merger.

Section 6.14.  No
Solicitation or Negotiation.

The
Company agrees that between the date of this Agreement and the earlier of (a)
the Closing or (b) the termination of this Agreement pursuant to Section
8.01(b) or Section 8.02 hereof, the Company shall not, and shall cause its
directors, officers and employees not to, and shall use reasonable best efforts
to cause its representatives not to, directly or indirectly (i) solicit,
initiate, consider, encourage or accept any other proposals or offers from any
Person relating to (A) any acquisition or purchase of all or any portion of the
Company’s or any Company Subsidiary’s business or assets or any Company Stock
or the stock of any Company Subsidiary or (B) any merger, consolidation or
other business combination with any of the Company or any Company Subsidiary,
(ii) participate in any discussions, negotiations and other communications,
regarding or furnish to any other Person any information with respect to, or
otherwise cooperate in any way, assist or participate in, facilitate or
encourage any effort or attempt by any other Person to seek to do any of the
foregoing or (iii) consider, entertain or accept any proposal from any Person
to do any of the foregoing; provided that notwithstanding anything herein to the
contrary, any actions taken by the Company or a Company Subsidiary in
accordance with or otherwise permitted by Section 6.01 shall not be deemed to
be a violation of this Section 6.14.

Section 6.15.  Repayment
of Outstanding Indebtedness.

Not less
than two business days prior to the Closing Date, the Company shall deliver to
Parent payoff letters from third-party lenders, in form and substance
reasonably satisfactory to Parent, with respect to the Indebtedness of the
Company and the Company Subsidiaries identified on Schedule 6.15 or
incurred after the date hereof in compliance with Section 6.01.  Such payoff letters shall specify the amount
necessary to repay such Indebtedness and completely discharge the obligations
of the Company and the Company Subsidiaries with respect thereto.  At Closing, Parent shall provide to the Surviving
Corporation the aggregate amount necessary to make such repayment and
discharge, and shall cause the Surviving Corporation or a Company Subsidiary to
discharge such Indebtedness in accordance with the delivery instructions
provided in such payoff letters.

 43

 

Section 6.16.  Consultation.

Subject
to applicable Law, in connection with the continued operation of the business
of the Company and the Company Subsidiaries between the date of this Agreement
and the Effective Time, the Company shall cause its officers and the officers
of the Company Subsidiaries to confer in good faith with one or more
representatives of Parent as often as Parent shall reasonably request on
operational matters of materiality and the general status of operations.  After January 31, 2007, the Company shall
provide office facilities at its executive offices for a representative of
Parent.

Section 6.17.  Real
Property Matters.

(a)           The
Company shall request estoppel certificates from the lessor under each lease
pursuant to which the Company or any Company Subsidiary leases the Leased
Premises, in a form provided by Parent and reasonably acceptable to the
Company.

(b)           The
Company shall provide such affidavits of title or other certifications of title
as shall be customarily and reasonably requested by the title insurance company
insuring the Surviving Corporation’s or the appropriate Company Subsidiary’s
title to the Owned Property and the leasehold interest in the Leased Premises,
in accordance with the provisions of Section 4.12, provided such affidavits and
certifications do not increase any obligations or liabilities of the Company
set forth in this Agreement.

Section 6.18.  Additional
Financial Statements.

In the
event required by the Securities Act or the Exchange Act and solely in connection
with obtaining the Financing or otherwise consummating the Merger, so long as
the out-of-pocket costs and expenses of the Company in connection therewith are
Special Costs, as soon as reasonably practicable upon request of Parent, (a)
the Company shall use reasonable efforts to prepare consolidated balance sheets
and statements of income, cash flows and changes in stockholders’ equity (the “Additional
Financial Statements”) for the Company (and any and all documents and
consents related thereto) which comply with Regulation S-X under the Securities
Act, for inclusion in any registration statement or other public filing of
Parent or any Affiliate of Parent under the Securities Act or the Exchange Act,
and any other offering circular or document used by Parent or any Affiliate of
Parent in any other offering of securities, whether public or private, (b) the
Company shall use reasonable efforts to cause PricewaterhouseCoopers LLP (“PWC”),
its independent accountants, to cooperate with Parent in connection with the
foregoing (including, without limitation, using reasonable efforts to cause PWC
to deliver so-called “comfort letters” and written consents relating to the
foregoing).  Without limiting the
generality of the foregoing, the Company agrees that, upon reasonable notice
from Parent, it will (y) consent to the use of such Additional Financial
Statements in any such registration statement, document or circular and (z)
execute and deliver, and use reasonable efforts to cause its officers to
execute and deliver (if required), such “representation” letters as are
customarily delivered in connection with audits and as PWC and Parent’s
independent accountants may reasonably request under the circumstances.

 44
 

 

Section
6.19.  No Control of Other Party’s
Business.

Nothing
contained in this Agreement shall give Parent, directly or indirectly, the
right to control or direct the Company’s or the Company Subsidiaries’
operations prior to the Effective Time, and nothing contained in this Agreement
shall give the Company, directly or indirectly, the right to control or direct
Parent’s or its Subsidiaries’ operations prior to the Effective Time.  Prior to the Effective Time, each of the
Company and Parent shall exercise, consistent with the terms and conditions of
this Agreement, complete control and supervision over its and its subsidiaries’
respective operations.

ARTICLE
VII

CONDITIONS

Section 7.01.  Conditions
to the Obligations of All Parties.

The respective obligations of each of the Company,
Parent and Merger Sub to consummate the Merger are subject to the satisfaction
(or, if permissible, waiver by the party for whose benefit such conditions
exist) at or prior to the Effective Time of the following conditions:

(a)           there
shall not be any Judgment or Law restraining, enjoining or prohibiting the
consummation of the Merger; provided, however, that no party
hereto may invoke this condition unless and until such party has complied in
full with Section 6.03; and

(b)           all
waiting periods applicable to the Merger under the HSR Act shall have expired
or been terminated.

Section 7.02.  Conditions
to the Obligations of Parent and Merger Sub.

The obligations of Parent and Merger Sub to consummate
the Merger are subject to the satisfaction (or waiver by Parent and/or Merger
Sub, as applicable) at or prior to the Effective Time of the following further
conditions; provided that notwithstanding the foregoing or anything in
this Agreement to the contrary, after January 31, 2007, neither Section 7.02(a)
nor 7.02(c) shall be a condition to Parent and Merger Sub’s obligations to
consummate the Merger:

(a)           the
representations and warranties of the Company contained in this agreement shall
be true and correct when made and at and as of the Closing as if made at and as
of the Closing (except for those representations and warranties that address
matters only as of a particular date or only with respect to a specific period
of time which need only be true and correct as of such date or with respect to
such period), except where the failure of such representations or warranties to
be true and correct (without giving effect to any materiality qualifiers set
forth in such representations and warranties) does not have and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect; provided, however, that notwithstanding
the foregoing, the representations and warranties set forth in Section 4.03
shall be true and correct in all material respects and the representations and
warranties set forth in the second sentence of Section 4.08 shall be true and
correct in all respects at and as of the Closing as if made at and as of the
Closing (except for those

 45
 

 

representations and warranties that address matters only as of a
particular date or only with respect to a specific period of time which need
only be true and correct as of such date or with respect to such period);

(b)           the
Company shall have performed in all material respects its obligations hereunder
required to be performed by it at or prior to the Effective Time;

(c)           since
December 31, 2005, there shall not have been any change, event, circumstance or
effect that has had or would reasonably be expected to have, individually or in
the aggregate, a Company Material Adverse Effect;

(d)           the
Company shall have obtained the consents and Requisite Regulatory Approvals
listed in Schedule 4.06, other than such consents and approvals the
failure of which to obtain would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect; provided
that the failure to obtain any consents or approvals due to the identity of
Parent or its Affiliates shall not be taken into account in determining whether
or not the condition in this Section 7.02(d) is satisfied; and

(e)           the
Company shall have delivered to Parent a certificate (dated as of the Closing
Date), signed by an officer or officers with authority to bind the Company as
to compliance with the conditions set forth in paragraphs (a) (if applicable),
(b) and (d) of this Section 7.02.

For the avoidance of
doubt, nothing in this Agreement shall be construed to require or otherwise
impose as a condition to Parent or Merger Sub’s obligation to consummate the
Merger that Parent shall have received or otherwise has available financing in
order to satisfy its payment obligations hereunder, including with respect to
payment of the Merger Consideration.

Section 7.03.  Conditions to the
Obligations of the Company.

The obligations of the Company to consummate the Merger
are subject to the satisfaction (or waiver by the Company) at or prior to the
Effective Time of the following further conditions:

(a)           the
representations and warranties of Parent and Merger Sub contained in this
Agreement which are qualified as to materiality shall be true and correct and
all such representations and warranties that are not qualified as to
materiality shall be true and correct in all material respects, in each case
when made and at and as of the Closing Date as if made at and as of the Closing
Date (except for those representations and warranties that address matters only
as of a particular date or only with respect to a specific period of time which
need only be true and accurate as of such date or with respect to such period);

(b)           each
of Parent and Merger Sub shall have performed in all material respects all of
its respective obligations hereunder required to be performed by it at or prior
to the Effective Time; and

 46
 

 

(c)           each
of Parent and Merger Sub shall have delivered to the Company certificates
(dated as of the Closing Date), signed by an officer or officers with authority
to bind such Person as to compliance with the conditions set forth in
paragraphs (a) and (b) of this Section 7.03.

ARTICLE
VIII

CLOSING;
TERMINATION

Section 8.01.  Closing.

(a)           Unless this Agreement shall have been terminated
and the Merger abandoned, the closing of the transactions contemplated hereby
(the “Closing”) shall take place at the offices of Simpson Thacher &
Bartlett LLP, 425 Lexington Avenue, New York, New York on the third business day
following the satisfaction or waiver of the conditions set forth in Article VII
(excluding conditions that, by their terms, cannot be satisfied until the
Closing, but subject to the satisfaction or wavier of such conditions at the
Closing) or at such other place and on such other date as shall be mutually
agreed to by Parent and the Company.  At
the Closing, the parties shall exchange the documents referred to in Article
VII and all necessary filings with the Secretary of State to consummate the
Merger under the DGCL (including the Certificate of Merger) shall be made in
accordance with the applicable provisions of the DGCL.

(b)           Notwithstanding the foregoing, if in Parent’s
reasonable judgment delaying the Closing is necessary or desirable in
connection with obtaining the Financing or consummation of the “Restructuring”
substantially as contemplated by the Financing Commitment (i) so that
consummation of the Merger pursuant to this Agreement will not result in a
disqualification of Parent’s status as a real estate investment trust under the
Code, or (ii) in connection with any filings with respect to the Securities or
such Restructuring with the Securities and Exchange Commission relating to the
transactions contemplated by this Agreement deemed necessary or desirable by
Parent: (A) Parent shall have the right, by notice given to the Company on or prior to the third business day
following the satisfaction of the conditions set forth in Article VII, to delay the Closing until such date as Parent
shall determine (but not later than January 31, 2007); and (B) Parent shall have the further right (if
Parent has exercised its right to delay the Closing under subclause (A)), by
notice given to the Company on or prior to January 26, 2007, to delay the Closing to the extent that, in Parent’s
reasonable judgment, such delay is necessary or desirable in connection with
obtaining the Financing for either or both of the reasons set forth in clauses
(i) and (ii) above, until such date as Parent shall determine (but not later
than June 30, 2007); provided
that if Parent exercises its right
to delay the Closing under subclause (B), simultaneously with giving
notice to delay the Closing, Parent shall deposit with the Escrow Agent an
amount of cash equal to one hundred million
dollars ($100,000,000.00) (the “Good Faith Deposit”) pursuant to
an escrow agreement on mutually agreeable terms consistent with the terms of
this Agreement.  If the Merger shall not
have occurred on or prior to June 29, 2007
(X) other than as a result of the failure to be satisfied (or waived) of
one or more of the applicable conditions set forth in Sections 7.01 or Section
7.02(b), (d) and (e), the Good Faith Deposit (and interest accrued thereon)
shall be paid to the Company and may be retained by it in addition to and not
in lieu of any other remedy available to the Company at law or in equity, and,
accordingly, shall not be deemed to be a substitute therefor or

 47
 

 

approximation thereof, or
(Y) as a result of the failure to be satisfied (or waived) of one or more of
the applicable conditions set forth in Section 7.01 or Section 7.02(b), (d) and
(e), the Good Faith Deposit (and interest accrued thereon) shall be paid to
Parent.  The escrow agreement referred to
above shall contain provisions with respect to the timing and procedure of
distributions of the Good Faith Deposit (and interest accrued thereon)
consistent with the foregoing, and shall provide that, upon consummation of the
Merger, the Good Faith Deposit (and interest accrued thereon) shall be applied
to the Exchange Fund.

Section 8.02.  Termination.

Anything herein or elsewhere to
the contrary notwithstanding, this Agreement may be terminated and the Merger
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after obtaining the Stockholder Approval:

(i)            by mutual written consent of Parent, Merger Sub
and the Company;

(ii)           by the Company or Parent, if the Merger shall not have occurred on or
prior to January 31, 2007, or if Parent has exercised its rights
under Section 8.01(b)(B), if the Merger shall not have occurred on or prior to
June 30, 2007; provided, however, that the right to terminate
this Agreement and abandon the Merger under this clause (ii) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Merger to
occur on or prior to such date; or

(iii)          by the Company or Parent in the event that any court of competent
jurisdiction or other Governmental Entity located or having jurisdiction within
the United States shall have issued a final Judgment or taken any other final
action restraining, enjoining or otherwise prohibiting the Merger and such
Judgment or other action is or shall have become final and nonappealable.

Section 8.03.  Effect
of Termination.

In the event of the termination of this Agreement as
provided in Section 8.02 hereof, written notice thereof shall forthwith be
given to the other parties specifying the provision hereof pursuant to which
such termination is made, and this Agreement shall forthwith become null and
void, and there shall be no liability on the part of any of the parties hereto
except (i) for fraud or for willful breach of this Agreement (it being
understood and agreed that any failure by Parent or Merger Sub to consummate
the Merger in accordance with the terms of this Agreement due to the failure of
Parent to obtain the Financing shall be deemed to be a willful breach of this
Agreement) and (ii) as set forth in Section 9.02.

 48
 

 

ARTICLE IX

GENERAL
PROVISIONS

Section 9.01.  Non-Survival
of Representations and Warranties.

None of
the representations, warranties, covenants and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement, including any rights
arising out of any breach of such representations, warranties, covenants and
agreements, shall survive the Effective Time, except for (i) those covenants
and agreements contained herein that by their terms apply or are to be
performed in whole or in part after the Effective Time and (ii) this Article
IX.

Section 9.02.  Costs
and Expenses.

Except as
otherwise specifically provided herein, each party shall bear its own expenses
in connection with this Agreement and the transactions contemplated hereby.

Section 9.03.  Notices.

All notices or other communications required or
permitted by this Agreement shall be effective upon receipt and shall be in
writing and delivered personally or by overnight courier, or sent by facsimile,
as follows:

(i)            if to Parent or Merger Sub, to:

Hospitality Properties Trust

400 Centre Street

Newton, MA 02458

Attn.:  President

Facsimile:  (617) 332-2261

with a copy to:

Sullivan & Worcester LLP

One Post Office Square

23rd Floor

Boston, MA 02109

Attn.:  Richard Teller, Esq.

Facsimile:  (617) 338-2880

 49
 

 

(ii)           if to the Company, to:

TravelCenters
of America, Inc.

24601
Center Ridge Road

Suite
200

Westlake,
Ohio  44145-5634

Attention:
General Counsel

Facsimile:  (440) 808-3301

with copies to

Oak
Hill Capital Partners, L.P.

201
Main Street

Fort
Worth, Texas 76102

Attention:  Controller

Facsimile:  (817) 339-7350

Keystone
Group, L.P.

201
Main Street, Suite 3100

Fort
Worth, Texas 76102

Attention:
Kevin G. Levy, Esq.

Facsimile: (817) 820-1623

Simpson
Thacher & Bartlett LLP

425
Lexington Avenue

New
York, New York  10017

Attention:  William E. Curbow, Esq.

Facsimile:  (212) 455-2502

(iii)          if to the Stockholders Representative, to:

Oak
Hill Capital Partners, L.P.

201
Main Street

Fort
Worth, Texas 76102

Attention:  Controller

Facsimile:  (817) 339-7350

with a copy to:

Keystone
Group, L.P.

201
Main Street, Suite 3100

Fort
Worth, Texas 76102

Attention:
Kevin G. Levy, Esq.

Facsimile: (817) 820-1623

or to such other address as hereafter shall be furnished as provided in
this Section 9.03 by any of the parties hereto to the other parties hereto.

 50
 

 

Section
9.04.  Stockholders Representative.

(a)           The
parties to this Agreement shall cooperate with the Stockholders Representative
and any accountants, attorneys or other agents whom it may retain to assist in
carrying out its duties hereunder.  The
Stockholders Representative may communicate with any Stockholder or any other
Person concerning his responsibilities hereunder, but it is not required to do
so.  The Stockholders Representative has
a duty to serve in good faith the interests of the Stockholders and other
stockholders of the Company who designate the Stockholders Representative to
act as such, and to perform its designated role under this Agreement and the
Escrow Agreement, but the Stockholders Representative shall have no financial
liability whatsoever to any Person relating to its service hereunder (including
any action taken or omitted to be taken), except that it shall be liable for
harm which it directly causes by an act of willful misconduct.  The Stockholders Representative may resign at
any time by notifying in writing Parent, the Company and the Stockholders.

(a)           The
Stockholders Representative represents and warrants to the Company, Parent and
Merger Sub: (i)  that it has all
necessary power, authority and capacity to execute and deliver this Agreement
and to perform its obligations under Sections 3.02, 3.03, 3.04, 9.04, 9.08 and 9.09; (ii) the execution,
delivery and performance of this Agreement by the Stockholders Representative
has been duly and validly authorized by all necessary action on the part of the
Stockholders Representative and (iii) this Agreement has been duly and validly
executed and delivered by the Stockholders Representative and, assuming the due
authorization, execution and delivery by each other party hereto, constitutes a
legal, valid and binding obligation of the Stockholders Representative,
enforceable against it in accordance with its terms, except that such
enforceability may be limited by (x) bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to creditors’
rights generally, (y) general principles of equity (whether applied in a
proceeding at law or in equity) and (z) any implied covenant of good faith and
fair dealing.

Section 9.05.  Counterparts.

This Agreement may be executed and delivered (including
by facsimile transmission) in any number of counterparts, and by the different
parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute a
single instrument.

Section 9.06.  Entire Agreement.

This Agreement (including the Schedules referred to herein) and the
Confidentiality Agreement sets forth the entire understanding and agreement
between the parties as to the matters covered herein and supersedes and
replaces any prior understanding, agreement or statement of intent, in each
case, written or oral, among the parties, of any and every nature with respect
thereto.

Section 9.07.  Governing Law; Exclusive Jurisdiction.

This Agreement shall be governed in all respects, by the
laws of the State of Delaware, including validity, interpretation and effect,
without regard to principles of conflicts of

 51
 

 

law.  The parties hereto irrevocably and unconditionally
consent to submit to the exclusive jurisdiction of the courts of the State of
Delaware for any lawsuits, actions or other proceedings arising out of or
related to this Agreement and agree not to commence any lawsuit, action or
other proceeding except in such courts. 
The parties hereto further agree that service of process, summons,
notice or document by mail to their addresses set forth above shall be
effective service of process for any lawsuit, action or other proceeding
brought against them in any such court. 
The parties hereto irrevocably and unconditionally waive any objection
to the laying of venue of any lawsuit, action or other proceeding arising out
of or related to this Agreement in the courts of the State of Delaware, and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such lawsuit, action or proceeding brought in
any such court has been brought in an inconvenient forum.

Section 9.08.  Third Party Rights; Assignment.

Except as specified in Section 6.07 and except for the
rights of the holders of Company Securities to receive Merger Consideration in
accordance with Article II and to recover, solely through an action brought by
the Company, damages from Parent in the event of a breach of this Agreement by
Parent or Merger Sub, this Agreement is intended to be solely for the benefit
of the parties hereto and is not intended to confer any benefits upon, or
create any rights in favor of, any Person other than the parties hereto and
shall not be assignable without the prior written consent of the Company,
Parent and the Stockholders Representative.

Section 9.09.  Waivers and Amendments.

(a)           This Agreement may be amended by the parties hereto by action taken by or
on behalf of their respective Boards of Directors; provided, however,
that after the date hereof, there shall be made no amendment that by Law
requires further approval by the stockholders of the Company without the
further approval of such stockholders. 
No modification of or amendment to this Agreement shall be valid unless
in a writing signed by the parties hereto referring specifically to this
Agreement and stating the parties’ intention to modify or amend the same.

(b)           Any
party hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (iii) subject to the requirements of
applicable Law, waive compliance with any of the agreements or conditions
contained herein.  Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby and referring specifically to the term or
condition to be waived.  The failure of
any party to assert any rights or remedies shall not constitute a waiver of
such rights or remedies.

Section 9.10.  Schedules.

Disclosure of any fact or item in any
Schedule shall not be deemed to constitute an admission that such item or
fact is material for the purposes of this Agreement.

 52
 

 

Section
9.11.  Enforcement.

The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms.  It
is accordingly agreed that the parties shall be entitled to specific
performance of the terms hereof and costs of enforcement (including attorneys
fees); this being in addition to any other remedy to which such parties are entitled
at law or in equity.  The parties agree
that, notwithstanding anything to the contrary contained in this Agreement, in
the event of a breach of this Agreement by Parent or Merger Sub (whether or not
due to a failure to obtain the Financing), the damages recoverable by the
Company for itself and on behalf of the holders of the Company Securities shall
be determined by reference to the total amount that would have been recoverable
by the holders of Company Securities if all such holders brought an action
against Parent as intended third party beneficiaries hereunder.

Section 9.12.  [Reserved.]

Section 9.13.  Headings; Interpretation.

The
descriptive headings contained in this Agreement are included for convenience
of reference only and shall not affect in any way the meaning or interpretation
of this Agreement.  When reference is
made in this Agreement to a Section, such reference shall be to a Section of
this Agreement unless otherwise indicated. 
Whenever the words “include”, “includes” or “including” are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation.”  The words “hereof,” “herein,”
“hereby” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.  The word “or”
shall not be exclusive.  This Agreement
shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting or causing any
instrument to be drafted.

Section 9.14.  Nonliability of Trustees.

THE
DECLARATION OF TRUST ESTABLISHING PARENT, A COPY OF WHICH, TOGETHER WITH ALL
AMENDMENTS THERETO (THE “DECLARATION”), IS DULY FILED WITH THE
DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT
THE NAME “HOSPITALITY PROPERTIES
TRUST” 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 THE PARENT SHALL BE HELD TO ANY PERSONAL LIABILITY,
JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE PARENT.  ALL PERSONS DEALING WITH THE PARENT, IN ANY
WAY, SHALL LOOK ONLY TO THE ASSETS OF PARENT FOR THE PAYMENT OF ANY SUM OR THE
PERFORMANCE OF ANY OBLIGATION.

[signature
page follows]

 53

 

IN WITNESS WHEREOF, this Agreement has been executed and delivered
as of the date first written above.

	
   

  	
  TRAVELCENTERS OF AMERICA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy L. Doane

  
	
   

  	
   

  	
  Name:  Timothy L. Doane

  
	
   

  	
   

  	
  Title:  President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HOSPITALITY PROPERTIES
  TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Murray

  
	
   

  	
   

  	
  Name:  John G. Murray

  
	
   

  	
   

  	
  Title:  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HPT TA MERGER SUB INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John G. Murray

  
	
   

  	
   

  	
  Name:  John G. Murray

  
	
   

  	
   

  	
  Title:  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SOLELY IN ITS CAPACITY AS

  “STOCKHOLDERS REPRESENTATIVE”

  FOR PURPOSES OF SECTIONS 3.02, 3.03,

  3.04, 9.04, 9.08 AND 9.09 OF THE

  AGREEMENT:

  
	
   

  	
   

  	
   

  
	
   

  	
  OAK HILL CAPITAL PARTNERS,
  L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  OHCP GenPar,
  L.P., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  OHCP MGP, LLC,
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kevin P. Levy

  
	
   

  	
   

  	
  Name:  Kevin P. Levy

  
	
   

  	
   

  	
  Title: Vice President

  

[Signature Page to Merger
Agreement]Exhibit 10.1

EIGHTH AMENDMENT TO RECEIVABLES PURCHASE
AGREEMENT

THIS EIGHTH AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT,
dated as of September 19, 2006 (this “Amendment”),
is by and among Edwards Lifesciences Financing LLC, a Delaware limited
liability company (“Seller”), Edwards
Lifesciences LLC, a Delaware limited liability company (“Servicer”),
Variable Funding Capital Company LLC, a Delaware limited liability company (“VFCC”) as assignee of Blue Ridge
Asset Funding Corporation, the liquidity banks from time to time party to the
Liquidity Agreement (the “Liquidity Banks;”
together with VFCC, the “Purchasers”)
and Wachovia Bank, National Association, as agent for the Purchasers (the “Agent”), and pertains to the
Receivables Purchase Agreement dated as of December 21, 2000 amongst the
parties hereto (as heretofore and hereby amended, the “Purchase
Agreement”).  Unless otherwise defined in this Amendment
capitalized terms used herein shall have the meanings assigned to such terms in
the Purchase Agreement.

PRELIMINARY
STATEMENTS

WHEREAS, the
Seller wishes to make certain amendments to the Purchase Agreement; and

WHEREAS, the
Agent and the Purchasers are willing to agree to such amendments.

NOW, THEREFORE,
in consideration of the foregoing premises and the mutual agreements herein
contained and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:

1.             Amendments. 
The Purchase Agreement is hereby amended as follows:

(a)           All references in
the Purchase Agreement to “Blue Ridge Asset Funding Corporation” and “Blue
Ridge” are hereby replaced with “Variable Funding Capital Company LLC” and “VFCC,”
respectively.

(b)           Sections 13.4(b) and
(c) of the Purchase Agreement are hereby combined, amended and restated in
their entirety to read as follows:

(b)           Each of the Agent and the Purchasers
shall maintain and shall cause each of its employees and officers to maintain
the confidentiality of this Agreement and the other nonpublic, confidential or
proprietary information with respect to the Seller and the Originator and their
respective businesses obtained by it or them in connection with the
structuring, negotiating, execution and administration of the transactions
contemplated herein, except that such information may be disclosed: (i) to the
Agent, the Liquidity Banks or VFCC by each other, (ii) to any prospective or
actual assignee or participant of the Agent or any Purchaser, (iii) to any
provider of a surety, guaranty or credit or liquidity enhancement to VFCC or
any entity organized for the purpose of purchasing, or making loans secured by,
financial assets for which Wachovia acts as the administrative agent (each, an “Enhancer”), (iv) to any rating
agency or

 1
 

 

Commercial Paper dealer,
or (v) to any officers, directors, employees and/or external accountants,
attorneys, consultants and advisors of any of the foregoing, provided that each such Person is
informed of the confidential nature of such information.  In addition, each of the Agent, the Purchasers
and the Enhancers may disclose any such nonpublic information to its external
accountants, attorneys, consultants and advisors and pursuant to any law, rule,
regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings (whether or not having the force or effect
of law).

(c)           The definition of “Default Horizon Ratio” set
forth in Exhibit I to the Purchase Agreement is hereby amended and restated in
its entirety to read as follows:

“Default
Horizon Ratio” means, as of any Cut-Off Date, the ratio
(expressed as a decimal) computed by dividing (i) the aggregate sales generated
by the Originator during the five (5) Calculation Periods ending on such
Cut-Off Date, by (ii) the Net Pool Balance as of such Cut-off Date.

(d)           Clause (iii) of the
definition of “Eligible Receivable”
set forth in Exhibit I to the Purchase Agreement is hereby amended and restated
in its entirety to read as follows:

(iii) which is not a
Defaulted Receivable or owing from an Obligor as to which more than 50% of the
aggregate Outstanding Balance of all Receivables owing from such Obligor are
Defaulted Receivables,

(e)         The definition of “Liquidity Termination Date” set
forth in Exhibit I to the Purchase Agreement is hereby amended and restated in
its entirety to read as follows:

“Liquidity
Termination Date” means the earlier to occur of (a) September
18, 2007, and (b) the date on which a Downgrading Event with respect to a
Liquidity Bank shall have occurred and been continuing for not less than 45
days, and either (i) the Downgraded Liquidity Bank shall not have been replaced
by an Eligible Assignee pursuant to the Liquidity Agreement or (ii) the
Liquidity Commitment of such Downgraded Liquidity Bank shall not have been
funded or collateralized in such a manner that will avoid a reduction in or
withdrawal of the credit rating applied to the Commercial Paper to which such
Liquidity Agreement applies by any of the rating agencies then rating such
Commercial Paper.

(f)            The table in the
definition of “Obligor Concentration Limit”
set forth in Exhibit I to the Purchase Agreement is hereby amended to replace “2%”
where it appears in the bottom right-hand cell therein with “1.5%”.

(g)           The definition of “Required Reserve Factor Floor” set
forth in Exhibit I to the Purchase Agreement is hereby amended and restated in
its entirety to read as follows:

“Required
Reserve Factor Floor” means, for any Calculation Period,
the sum (expressed as a percentage) of (a) 14.0% plus (b) the product of the
Adjusted Dilution Ratio and Dilution Horizon Ratio, in each case, as of the
immediately preceding Cut-Off Date.

 2
 

 

2.             Representations
and Warranties.  In order to induce VFCC
and the Agent, on behalf of the other Purchasers, to enter into this Amendment,
each of the Seller Parties hereby represents and warrants to VFCC and the
Agent, on behalf of the other Purchasers, as follows:

(a) The execution and
delivery by such party of this Amendment, and the performance of its
obligations under the Purchase Agreement as amended hereby, are within such
party’s organizational powers and authority and have been duly authorized by
all necessary organizational action on its part;

(b) This Amendment has
been duly executed and delivered by such party, and the Purchase Agreement, as
amended hereby, constitutes such party’s legal, valid and binding obligation,
enforceable against such party in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency, reorganization
or other similar laws relating to or limiting creditors’ rights generally and
by general principles of equity (regardless of whether enforcement is sought in
a proceeding in equity or at law), and

(c) As of the date
hereof, no event has occurred and is continuing that will constitute an
Amortization Event or an Unmatured Amortization Event.

3.             Conditions
Precedent.  This Amendment shall
become effective as of the date first above written upon:

(a)           execution and
delivery to the Agent of a counterpart hereof by each of the parties hereto,
and

(b)           execution and
delivery to the Agent of a counterpart of a sixth amended and restated Fee
Letter by each of the parties thereto, and payment to the Agent of any fees due
and owing on the date hereof.

4.             Miscellaneous.

(a)           CHOICE OF LAW.  THIS AMENDMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS)
OF THE STATE OF NEW YORK.

(b)           Counterparts.  This Amendment may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement.

 3
 

 

(c)           Ratification of
Purchase Agreement.  Except as
expressly amended hereby, the Purchase Agreement remains unaltered and in full
force and effect and is hereby ratified and confirmed.

IN
WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their duly authorized officers as of
the date hereof.

	
   

  	
  EDWARDS LIFESCIENCES
  FINANCING LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas M.
  Abate

  	
   

  
	
   

  	
  Name: 

  	
  Thomas M. Abate

  
	
   

  	
  Title: 

  	
  Corporate Vice
  President,

  
	
   

  	
   

  	
  Chief Financial
  Officer and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EDWARDS
  LIFESCIENCES LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas M.
  Abate

  	
   

  
	
   

  	
  Name:

  	
  Thomas M. Abate

  
	
   

  	
  Title:

  	
  Corporate Vice
  President,

  
	
   

  	
   

  	
  Chief Financial
  Officer and Treasurer

  
						

 

 4
 

 

 

	
  

  	
   

  	
  VARIABLE FUNDING CAPITAL COMPANY

  
	
   

  	
   

  	
  LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  BY: WACHOVIA CAPITAL MARKETS, LLC, ITS 

  ATTORNEY IN FACT

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas R. Wilson

  	
   

  
	
   

  	
  Name:

  	
  Douglas R. Wilson

  
	
   

  	
  Title:

  	
  Sr. Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION, AS A LIQUIDITY BANK AND AS
  

  AGENT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Elizabeth R. Wagner

  	
   

  
	
   

  	
  Name:

  	
  Elizabeth R. Wagner

  
	
   

  	
  Title:

  	
  Managing Director

  
								

 

 5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]