Document:

EXHIBIT 10.7

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement  (this “Agreement”) made August 11,
2008, between TravelCenters of America LLC 
(the “Company”) and Hospitality Properties Trust (the “Shareholder”).

 

RECITAL

 

Pursuant to the terms of that certain Deferral
Agreement, dated August 11, 2008 (the “Deferral Agreement”), among the
Company, the Shareholder and certain of their affiliates, the Company has
issued and the Shareholder has acquired and holds as of the date hereof
1,540,000 common shares, no par value, representing limited liability company
interests of the Company subject to the restrictions set forth in Section 4
of the Deferral Agreement (the “Shares”).

 

The Company has agreed to enter into this Agreement to
provide the Shareholder with certain rights relating to the registration of the
Shares.

 

Now, therefore, the parties agree as follows:

 

1.             DEFINITIONS.  Except as otherwise noted, for all purposes
of this Agreement, the following terms shall have the respective meanings set
forth in this Agreement, which meanings shall apply equally to the singular and
plural forms of the terms so defined and the words “herein,” “hereof” and “hereunder”
and other words of similar import refer to this Agreement as a whole.  The following capitalized terms used herein
have the following meanings:

 

“Agreement” means this
Agreement, as amended, restated, supplemented, or otherwise modified from time
to time.

 

“Business Day” means any day other than a Saturday, a Sunday or a day on which
banks in the City of Boston are required, permitted or authorized, by
applicable law or executive order, to be closed for regular banking business.

 

“Commission”
means the United States Securities and Exchange Commission, or such successor
federal agency or agencies as may be established in lieu thereof.

 

“Company” is defined
in the preamble to this Agreement.

 

“Company
Indemnified Party” is defined in Section 4.2.

 

“Demand Registration”
is defined in Section 2.1.1.

 

“Demand
Registration Period” means the period from and after (i) the
date upon which one-third (1/3) of the Shares issued to the Shareholder
pursuant to the Deferral Agreement are no longer subject to the restrictions
set forth in Section 4 of the Deferral Agreement, through and including (ii) the
date which is 12 calendar months following the latest of the expiration of the
terms of the leases dated January 31, 2007 and May 30, 2007 between
subsidiaries of the Company and subsidiaries of the Shareholder, as amended.

 

 

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

 

“Maximum Number of Shares”
is defined in Section 2.1.3.

 

“Notices” is defined
in Section 6.2.

 

“Piggy-Back Registration”
is defined in Section 2.2.1.

 

“Prospectus” means a
prospectus relating to a Registration Statement, as amended or supplemented,
including all materials incorporated by reference in such Prospectus.

 

“register,” “registered” and “registration” refer
to a registration effected by preparing and filing a registration statement or
similar document under the Securities Act and such registration statement
becoming effective.

 

“Registration Statement”
means any registration statement filed by the Company with the Commission in
compliance with the Securities Act for a public offering and sale of Shares
(other than a registration statement on Form S-4 or Form S-8, or
their successors, or any registration statement covering only securities proposed
to be issued in exchange for securities or assets of another entity), as
amended or supplemented, including all materials incorporated by reference in
such Registration Statement.

 

“Restricted Shares”
mean all of the Shares held of record by the Shareholder or held of record by
its permitted transferees from time to time in accordance with Section 6.1
(together with any shares issued in respect thereof as a result of any stock
split, stock dividend, share exchange, merger, consolidation or similar recapitalization),
in each case that are no longer subject to the restrictions set forth in Section 4
of the Deferral Agreement; provided,
that such Shares shall cease to be Restricted Shares hereunder, as of any
date, when:  (a) a Registration
Statement with respect to the sale of such Restricted Shares shall have become
effective under the Securities Act (as defined below) and such Restricted
Shares shall have been sold, transferred, disposed of or exchanged in
accordance with such Registration Statement as of such date; (b) such
Restricted Shares shall have been otherwise transferred pursuant to Rule 144
under the Securities Act (or any similar provisions thereunder, but not Rule 144A),
and new certificates for them not bearing a legend restricting further transfer
shall have been delivered by the Company and subsequent public distribution of
them shall not require registration under the Securities Act, in each case, as
of such date; (c) such Restricted Shares are saleable immediately in their
entirety without condition or limitation pursuant to Rule 144 under the
Securities Act; or (d) such Restricted Shares shall have ceased to be
outstanding as of such date.

 

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

 

“Shareholder” is
defined in the preamble to this Agreement.

 

“Shareholder
Indemnified Party” is defined in Section 4.1.

 

“Shares” is defined in
the recitals of this Agreement.

 

 

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“Underwriter” means a
securities dealer who purchases any Restricted Shares as principal in an
underwritten offering and not as part of such dealer’s market-making
activities.

 

2.             REGISTRATION
RIGHTS.

 

2.1         Demand Registration.

 

2.1.1        General
Request for Registration.  At any
time during the Demand Registration Period, the Shareholder may make a written
demand for registration under the Securities Act of all or part of the
Restricted Shares (a “Demand Registration”).  Any such written demand for a Demand
Registration shall specify the number of Restricted Shares proposed to be sold
and the intended method(s) of distribution thereof and, unless otherwise
agreed by the Shareholder, shall be for the Shareholder’s exclusive benefit.

 

2.1.2        Underwritten
Offering.  If the Shareholder so
elects and so advises the Company as part of its written demand for a Demand
Registration, the offering of such Restricted Shares pursuant to such Demand
Registration shall be in the form of an underwritten offering.  In such case, the Shareholder shall enter
into an underwriting agreement in customary form with the Underwriter or
Underwriters selected for such underwriting by the Shareholder (which
Underwriter or Underwriters shall be reasonably acceptable to the Company),
complete and execute any questionnaires, powers of attorney, indemnities,
lock-up agreements, securities escrow agreements and other documents reasonably
required or which are otherwise customary under the terms of such underwriting
agreement, and furnish to the Company such information as the Company may
reasonably request in writing for inclusion in the Registration Statement.

 

2.1.3        Reduction
of Offering.  If the managing
Underwriter or Underwriters for a Demand Registration that is to be an
underwritten offering advises the Company and the Shareholder that the dollar
amount or number of Restricted Shares which the Shareholder desires to sell
taken together with all other shares or other securities which the Shareholder
has agreed may be included in such offering, exceeds the maximum dollar amount
or maximum number of shares that can be sold in such offering without adversely
affecting the proposed offering price, the timing, the distribution method or
the probability of success of such offering (such maximum dollar amount or
maximum number of shares or other securities, as applicable, the “Maximum
Number of Shares”), then the
Company shall include in such registration: 
(i) first, the Restricted Shares which the Shareholder has
requested be included in the Demand Registration; (ii) second, to the
extent that the Maximum Number of Shares has not been reached under the
foregoing clause (i), the Shares or other securities that the Company desires
to sell that can be sold without exceeding the Maximum Number of Shares; (iii) third,
to the extent that the Maximum Number of Shares has not been reached under the
foregoing clauses (i) and (ii), the Shares or other securities for the
account of other security holders of the Company that can be sold without
exceeding the Maximum Number of Shares.

 

2.1.4        Withdrawal.  In the case of a Demand Registration, if the
Shareholder disapproves of the terms of any underwriting or is not entitled to
include all of its Restricted Shares in any offering, the Shareholder may elect
to withdraw such offering by giving written notice to the Company and the
Underwriter or Underwriters of its request to withdraw prior to the
effectiveness of the Registration Statement filed with the Commission with
respect to 

 

 

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such Demand Registration.  In
such event, the Company need not seek effectiveness of such Registration
Statement.  If the Shareholder’s
withdrawal is based on (i) a material adverse change in circumstances with
respect to the Company and not known to the Shareholder at the time the
Shareholder makes its written demand for such Demand Registration, (ii) the
Company’s failure to comply with its obligations under this Agreement or (iii) a
reduction pursuant to Section 2.1.3 of 10% or more of the number of
Restricted Shares which the Shareholder has requested be included in the Demand
Registration, the Company shall pay all expenses incurred by the Shareholder in
connection with such Demand Registration as provided in Section 3.2, and such
registration shall not count as a Demand Registration for purposes of Section 3.1.1(b) or
(e).

 

2.2         Piggy-Back Registration.

 

2.2.1        Piggy-Back
Rights.  If, at any time on or after
the date of this Agreement, the Company proposes to file a Registration
Statement under the Securities Act with respect to an offering of common shares
of the Company, or securities or other obligations exercisable or exchangeable
for, or convertible into, common shares of the Company, by the Company for its
own account or for any other shareholder of the Company for such shareholder’s
account, other than a Registration Statement (i) filed in connection with
any employee benefit plan, (ii) for an exchange offer or offering of
securities solely to the Company’s existing shareholders, (iii) for an
offering of debt securities convertible into equity securities of the Company, (iv) for
a dividend reinvestment plan or (v) filed on Form S-4, then the
Company shall (x) give written notice of such proposed filing to the
Shareholder as soon as practicable but in no event less than ten (10) Business
Days before the anticipated filing date, which notice shall describe the amount
and type of securities to be included in such offering, the intended method(s) of
distribution, and the name of the proposed managing Underwriter or
Underwriters, if any, of the offering and (y) offer to the Shareholder in
such notice the opportunity to register the sale of such number of Restricted
Shares as the Shareholder may request in writing within five (5) Business
Days following receipt of such notice (a “Piggy-Back Registration”). 
The Company shall cause such Restricted Shares to be included in such
registration and shall use commercially reasonable efforts to cause the
managing Underwriter or Underwriters of a proposed underwritten offering to
permit the Restricted Shares requested to be included in the Piggy-Back
Registration to be included on the same terms and conditions as any similar
securities of the Company and to permit the sale or other disposition of such
Restricted Shares in accordance with the intended method(s) of
distribution thereof.  If the Piggy-Back
Registration involves an Underwriter or Underwriters, the Shareholder shall
enter into an underwriting agreement in customary form with the Underwriter or
Underwriters selected for such Piggy-Back Registration by the Company and
complete and execute any questionnaires, powers of attorney, indemnities,
lock-up agreements, securities escrow agreements and other documents reasonably
required or which are otherwise customary under the terms of such underwriting
agreement, and furnish to the Company such information as the Company may
reasonably request in writing for inclusion in the Registration Statement or
such information that is otherwise customary.

 

2.2.2        Reduction
of Offering.  If the managing
Underwriter or Underwriters for a Piggy-Back Registration that is to be an
underwritten offering advises the Company and the holders of Restricted Shares
that the dollar amount or number of Shares or other securities which the
Company desire to sell, taken together with Shares or 

 

 

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other securities, if any, as to which registration has been demanded
pursuant to written contractual arrangements with persons other than the
Shareholder, the Restricted Shares as to which registration has been requested
under this Section 2.2, and the Shares or other securities, if any, as to
which registration has been requested pursuant to the written contractual
piggy-back registration rights of other shareholders of the Company, exceeds
the Maximum Number of Shares, then the Company shall include in any such
registration:

 

(a)           If the registration
is undertaken for the Company’s account: (i) first, the shares or other
securities that the Company desires to sell that can be sold without exceeding
the Maximum Number of Shares; (ii) second, to the extent that the Maximum
Number of Shares has not been reached under the foregoing clause (i), the
shares or other securities, if any, including the Restricted Shares, as to
which registration has been requested pursuant to written contractual
piggy-back registration rights of security holders (pro rata in accordance with the number of Shares or other
securities which each such person has actually requested to be included in such
registration, regardless of the number of shares or other securities with
respect to which such persons have the right to request such inclusion) that
can be sold without exceeding the Maximum Number of Shares; and

 

(b)           If the registration
is a “demand” registration undertaken at the demand of persons, other than the
Shareholder, pursuant to written contractual arrangements with such persons, (i) first,
the Shares or other securities for the account of the demanding persons that
can be sold without exceeding the Maximum Number of Shares; (ii) second,
to the extent that the Maximum Number of Shares has not been reached under the
foregoing clause (i), the Shares or other securities that the Company desires
to sell that can be sold without exceeding the Maximum Number of Shares; and (iii) third,
to the extent that the Maximum Number of Shares has not been reached under the
foregoing clauses (i) and (ii), the shares or other securities, if any,
including the Restricted Shares, as to which registration has been requested
pursuant to written contractual piggy-back registration rights which other
security holders desire to sell (pro rata
in accordance with the number of Shares or other securities which each such
person has actually requested to be included in such registration, regardless
of the number of shares or other securities with respect to which such persons
have the right to request such inclusion) that can be sold without exceeding
the Maximum Number of Shares.

 

2.2.3        Withdrawal.  The Shareholder may elect to withdraw its
request for inclusion of Restricted Shares in any Piggy-Back Registration by
giving written notice to the Company of such request to withdraw prior to the
effectiveness of the Registration Statement. 
The Company may also elect to withdraw a registration at any time prior
to the effectiveness of the Registration Statement.  If the Shareholder’s withdrawal is based on (i) a
material adverse change in circumstances with respect to the Company and not known
to the Shareholder at the time the Shareholder elects to participate in such
Piggy-Back Registration, (ii) the Company’s failure to comply with its
obligations under this Agreement or (iii) a reduction pursuant to Section 2.2.2
of 10% or more of the number of Restricted Shares which the Shareholder has
requested be included in the Piggy-Back Registration, the Company shall pay all
expenses

 

 

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incurred by the Shareholder in connection with such Piggy-Back
Registration as provided in Section 3.2.

 

3.             REGISTRATION
PROCEDURES.

 

3.1         Filings; Information.  Whenever the Company is required to effect
the registration of any Restricted Shares pursuant to Section 2, the
Company shall use commercially reasonable efforts to effect the registration
and sale of such Restricted Shares in accordance with the intended method(s) of
distribution thereof as expeditiously as practicable, and in connection with
any such request.

 

3.1.1        Filing
Registration Statement.  The Company
shall, as expeditiously as possible and in any event within thirty (30) days
after receipt of a request for a Demand Registration pursuant to Section 2.1,
prepare and file with the Commission a Registration Statement on any form for
which the Company then qualifies or which counsel for the Company shall deem
appropriate and which form shall be available for the sale of all Restricted
Shares to be registered thereunder in accordance with Section 2.1.2 and
the intended method(s) of distribution thereof, and shall use commercially
reasonable efforts to cause such Registration Statement to become and remain
effective for the period required by Section 3.1.3; provided, however, that:

 

(a)           the Company shall
have the right to defer any Demand Registration for periods of up to thirty
(30) days, and any Piggy-Back Registration for such period(s) as may be
applicable to deferment of any demand registration to which such Peggy-Back
Registration relates, in each case if the Company shall furnish to the holders
a certificate signed by the Chief Executive Officer of the Company stating
that, in the good faith judgment of the Board of Directors of the Company, it
would be materially detrimental to the Company and its Shareholder for such
Registration Statement to be effected at such time (including without
limitation because the Company is then engaged in a material transaction or has
an undisclosed material corporate development, in either case, which would be
required to be disclosed in the Registration Statement); provided, further, however, that the Company shall not
have the right to exercise the right set forth in this clause (a) for more
than one hundred and twenty (120) days in any 365-day period in respect of a
Demand Registration (including in such 120 days, any deferral under subsection (d) of
this Section 3.1.1 if the Registration Statement was not timely filed
thereunder);

 

(b)           the Company shall
not be obligated to effect any registration of Restricted Shares upon receipt
of a written demand for a Demand Registration if the Company has already
completed three (3) Demand Registrations;

 

(c)           the
Company shall not be obligated to effect any registration of Restricted Shares
upon receipt of a written demand for a Demand Registration in the event that
the number of Restricted Shares proposed to be included in the Demand
Registration represents less than one-third (1/3) of the Shares issued to the
Shareholder pursuant to the Deferral Agreement or if less, all the Shares then
held by the Shareholder;

 

 

6

 

(d)           the
Company shall not then be obligated to effect any registration of Restricted
Shares upon receipt of a written demand for a Demand Registration if the
Company shall furnish to the Shareholder a certificate signed by the Chief
Executive Officer of the Company stating that within ninety (90) days of
receipt of the written demand for a Demand Registration, the Company shall file
a Registration Statement and offer to the Shareholder the opportunity to
register Restricted Shares thereunder in accordance with Section 2.2; and

 

(e)           the
Company shall not be obligated to effect any registration of Restricted Shares
upon receipt of a written demand for a Demand Registration if the Company has,
within the six (6) month period preceding the date of the written demand
for a Demand Registration already effected one Demand Registration for the
Shareholder pursuant to Section 2.1.

 

3.1.2        Copies.  If the Shareholder has included Restricted
Shares in a registration, the Company shall, prior to filing a Registration Statement
or Prospectus, or any amendment or supplement thereto, furnish without charge
to the Shareholder and its counsel, copies of such Registration Statement as
proposed to be filed, each amendment and supplement to such Registration
Statement (in each case including all exhibits thereto and documents
incorporated by reference therein), the Prospectus included in such
Registration Statement (including each preliminary Prospectus), and such other
documents as the Shareholder or counsel for any the Shareholder may reasonably
request in order to facilitate the disposition of the Restricted Shares
included in such registration.

 

3.1.3        Amendments
and Supplements.  The Company shall
prepare and file with the Commission such amendments, including post-effective
amendments, and supplements to such Registration Statement and the Prospectus
used in connection therewith as may be necessary to keep such Registration
Statement effective and in compliance with the provisions of the Securities Act
until all Restricted Shares, and all other securities covered by such
Registration Statement, have been disposed of in accordance with the intended
method(s) of distribution set forth in such Registration Statement (which
period shall not exceed the sum of one hundred eighty (180) days, plus any
period during which any such disposition is interfered with by any stop order
or injunction of the Commission or any governmental agency or court ) or such
securities have been withdrawn.

 

3.1.4        Notification.  If the Shareholder has included Restricted
Shares in a registration, after the filing of the Registration Statement, the
Company shall promptly, and in no event more than two (2) Business Days
after such filing, notify the Shareholder of such filing, and shall further
notify the Shareholder promptly and confirm such notification in writing in all
events within two (2) Business Days of the occurrence of any of the
following:  (i) when such
Registration Statement becomes effective; (ii) when any post-effective
amendment to such Registration Statement becomes effective; (iii) the
issuance or threatened issuance by the Commission of any stop order (and the
Company shall use reasonable best efforts to prevent the entry of such stop
order or to remove it if entered); and (iv) any request by the Commission
for any amendment or supplement to such Registration Statement or any
Prospectus relating thereto or for additional information or of the occurrence
of an event requiring the preparation of a supplement or amendment to such
Prospectus so that, as thereafter delivered to the purchasers of 

 

 

7

 

the securities covered by such Registration Statement, such Prospectus
will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and promptly make available to the Shareholder any such
supplement or amendment; except that before filing with the Commission a
Registration Statement or Prospectus or any amendment or supplement thereto,
including documents incorporated by reference, the Company shall furnish to the
Shareholder and to its counsel, copies of all such documents proposed to be
filed sufficiently in advance of filing to provide the Shareholder and its
counsel with a reasonable opportunity to review such documents and comment
thereon, and the Company shall not file any Registration Statement or
Prospectus or amendment or supplement thereto, including documents incorporated
by reference, to which the Shareholder or its counsel shall reasonably object.

 

3.1.5        State
Securities Laws Compliance.  If the
Shareholder has included Restricted Shares in a registration the Company shall
use commercially reasonable efforts to (i) register or qualify the
Restricted Shares covered by the Registration Statement under such securities
or “blue sky” laws of such jurisdictions in the United States as the
Shareholder (in light of the intended plan of distribution) may request and (ii) take
such action necessary to cause such Restricted Shares covered by the
Registration Statement to be registered with or approved by such other federal
or state authorities as may be necessary by virtue of the business and
operations of the Company and do any and all other acts and things that may be
necessary or advisable to enable the Shareholder to consummate the disposition
of such Restricted Shares in such jurisdictions; provided, however,
that the Company shall not be required to qualify generally to do business
in any jurisdiction where it would not otherwise be required to qualify but for
this Section 3.1.5 or subject itself to taxation in any such jurisdiction.

 

3.1.6        Agreements
for Disposition.  The Company shall
enter into customary agreements (including, if applicable, an underwriting
agreement in customary form) and use commercially reasonable efforts to take
such other actions as are required in order to expedite or facilitate the
disposition of Restricted Shares.  The representations,
warranties and covenants of the Company in any underwriting agreement which are
made to or for the benefit of any Underwriters, to the extent applicable, shall
also be made to and for the benefit of the Shareholder.  For the avoidance of doubt, the Shareholder
may not require the Company to accept terms, conditions or provisions in any
such agreement which the Company determines are not reasonably acceptable to
the Company, notwithstanding any agreement to the contrary herein.  The Shareholder shall not be required to make
any representations or warranties in the underwriting agreement except as
reasonably requested by the Company and, if applicable, with respect to the
Shareholder’s organization, good standing, authority, title to Restricted
Shares, lack of conflict of such sale with such holder’s material agreements
and organizational documents, and with respect to written information relating
to the Shareholder that the Shareholder has furnished in writing expressly for
inclusion in such Registration Statement. 
The Shareholder, however, shall agree to such covenants and
indemnification and contribution obligations for selling stockholders as are
reasonable and customarily contained in agreements of that type.

 

3.1.7        Cooperation.  The Company and all officers and members of
the management of the Company, shall reasonably cooperate in any offering of
Restricted Shares under this Agreement, which cooperation shall include,
without limitation, the preparation of the 

 

 

8

 

Registration Statement with respect to such offering and all other
offering materials and related documents, and participation in meetings with
Underwriters, attorneys, accountants and potential investors.  The Shareholder shall reasonably cooperate in
the preparation of the registration statement and other documents relating to
any offering in which it includes securities pursuant to this Section 3.  The Shareholder shall also furnish to the
Company such information regarding itself, the Restricted Shares held by it,
and the intended method(s) of disposition of such securities as shall be
reasonably required to effect the registration of the Restricted Shares.

 

3.1.8        Records.  Upon reasonable notice and during normal
business hours, subject to the Company receiving any customary confidentiality
undertakings or agreements, the Company shall make available for inspection by
the Shareholder, any Underwriter participating in any disposition pursuant to
such registration statement and any attorney, accountant or other professional
retained by the Shareholder or any Underwriter, all relevant financial and
other records, pertinent corporate documents and properties of the Company as
shall be necessary to enable them to exercise their due diligence
responsibility, and shall cause the Company’s officers, directors and employees
to supply all information reasonably requested by the Shareholder in connection
with such Registration Statement.

 

3.1.9        Opinions
and Comfort Letters.  The Company
shall use commercially reasonable efforts to furnish to the Shareholder signed
counterparts, addressed to the Shareholder, of (i) any opinion of counsel
to the Company delivered to any Underwriter and (ii) any comfort letter
from the Company’ independent public accountants delivered to any Underwriter; provided,  however,
that counsel to the Underwriter shall have exclusive authority to negotiate the
terms thereof.  In the event no legal
opinion is delivered to any Underwriter, the Company shall furnish to the
Shareholder, at any time that the Shareholder elects to use a Prospectus, an
opinion of counsel to the Company to the effect that the Registration Statement
containing such Prospectus has been declared effective, that no stop order is
in effect, and such other matters as the Shareholder may reasonably request as
would customarily have been addressed in an opinion of counsel to the Company
delivered to an Underwriter.

 

3.1.10      Earnings
Statement.  The Company shall comply
with all applicable rules and regulations of the Commission and the
Securities Act, and make generally available to its shareholders, as soon as
practicable, an earnings statement satisfying the provisions of Section 11(a)
of the Securities Act, provided that the Company will be deemed to have
complied with this Section 3.1.10 if the earnings statement satisfies the
provisions of Rule 158 under the Securities Act.

 

3.1.11      Listing.  The Company shall use commercially reasonable
efforts to cause all Restricted Shares included in any registration to be
listed on such exchanges or otherwise designated for trading in the same manner
as similar shares of the Company are then listed or designated or, if no such
similar securities are then listed or designated, in a manner satisfactory to
the Shareholder.

 

3.2           Registration
Expenses.  The Company shall bear all
customary costs and expenses incurred in connection with any Demand
Registration effected pursuant to Section 2.1, and any Piggy-Back
Registration effected pursuant to Section 2.2, and all reasonable expenses
incurred in performing or complying with its other obligations under this
Agreement, whether or

 

 

9

 

not the Registration Statement becomes effective, including, without
limitation: (i) all registration and filing fees; (ii) fees and expenses
of compliance with securities or “blue sky” laws (including fees and
disbursements of counsel in connection with blue sky qualifications of the
Restricted Shares, subject to the limit set forth in paragraph (ix) below);
(iii) printing expenses; (iv) the Company’s internal expenses
(including, without limitation, all fees, salaries and expenses of its
officers, employees and management); (v) the fees and expenses incurred in
connection with the listing of the Restricted Shares, as required by Section 3.1.11;
(vi) fees imposed by the Financial Industry Regulatory Authority, Inc.;
(vii) fees and disbursements of counsel for the Company and fees and
expenses for independent certified public accountants retained by the Company
(including the expenses or costs associated with the delivery of any opinions
or comfort letters requested pursuant to Section 3.1.9); (viii) the
fees and expenses of any special experts retained by the Company in connection
with such registration; and (ix) the fees and expenses of one counsel
selected by the Shareholder in a Demand Registration or if it participates in a
Piggy-Back Registration.  The Company
shall have no obligation to pay any underwriting discounts or selling
commissions attributable to the Restricted Shares being sold by the
Shareholder, which underwriting discounts or selling commissions shall be borne
solely by the Shareholder.  Additionally,
in an underwritten offering, the Shareholder and the Company shall bear the
expenses of the Underwriter or Underwriters pro
rata in proportion to the respective amount of shares each is
selling in such offering.

 

3.3           Information.  The Shareholder shall provide such
information as may reasonably be requested by the Company, or the managing
Underwriter, if any, in connection with the preparation of any Registration
Statement, including amendments and supplements thereto, in order to effect the
registration of any Restricted Shares under the Securities Act pursuant to Section 2
and in connection with the Company’s obligation to comply with federal and
applicable state securities laws.

 

3.4           Shareholder
Obligations.  The Shareholder may not
participate in any underwritten offering pursuant to Section 2 unless such
holder (i) agrees to only sell Restricted Shares on the basis reasonably provided
in any underwriting agreement, and (ii) completes, executes and delivers
any and all questionnaires, lock-up agreements, powers of attorney, custody
agreements, indemnities, underwriting agreements and other documents reasonably
or customarily required by or under the terms of any underwriting agreement or
as reasonably requested by the Company.

 

4.             INDEMNIFICATION
AND CONTRIBUTION.

 

4.1           Indemnification
by the Company.  The Company agrees
to indemnify and hold harmless the Shareholder and its officers, employees,
affiliates, directors, partners, members, attorneys and agents, and each
person, if any, who controls the Shareholder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) (each, a “Shareholder
Indemnified Party”) from and against any expenses, losses, judgments, claims,
damages or liabilities, whether joint or several, arising out of or based upon
any untrue statement (or allegedly untrue statement) of a material fact
contained in any Registration Statement under which the sale of Restricted
Shares was registered under the Securities Act, any preliminary Prospectus,
final Prospectus or summary Prospectus contained in such Registration
Statement, or arising out of or based upon any omission (or alleged omission)
to state a material 

 

 

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fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such expense, loss, judgment, claim,
damage or liability arises out of or is based upon (a) any untrue
statement or allegedly untrue statement or omission or alleged omission made in
such Registration Statement, preliminary Prospectus, final Prospectus or
summary Prospectus in reliance upon and in conformity with information
furnished in writing to the Company by the Shareholder expressly for use
therein, or (b) the use of any Registration Statement, any preliminary
Prospectus, final Prospectus or summary Prospectus during a period when the
Shareholder has been notified that a stop order has been issued in respect
thereof or any proceeding for that purpose has been initiated, or the use of
any Registration Statement, any preliminary Prospectus, final Prospectus or
summary Prospectus has been suspended by the Company pursuant to the terms of
this Agreement.  The foregoing indemnity
shall not inure to the benefit of any Shareholder Indemnified Party from whom
the person asserting losses, claims, damages or liabilities purchased Restricted
Shares, if a copy of the Prospectus (as then amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) was not
sent or given by or on behalf of such Shareholder Indemnified Party to such
person, if required by law so to have been delivered at or prior to the written
confirmation of the sale of Restricted Shares to such person, and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such losses, claims, damages or liabilities, unless such failure is the
result of noncompliance by the Company with Section 3.1.3.

 

4.2           Indemnification
by the Shareholder.  The Shareholder
will, with respect to any Registration Statement where Restricted Shares were
registered under the Securities Act, indemnify and hold harmless the Company,
each of the Company’s directors and officers, and each other person, if any,
who controls the Company (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) (each, a “Company
Indemnified Party”), against any expenses, losses, claims, judgments, damages
or liabilities, whether joint or several, insofar as such expenses, losses,
claims, judgments, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or allegedly untrue statement of
a material fact contained in any Registration Statement under which the sale of
such Restricted Shares was registered under the Securities Act, any preliminary
Prospectus, final Prospectus or summary Prospectus contained in such Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or the alleged omission to state a
material fact required to be stated therein or necessary to make the statement
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information furnished in writing to the Company by the
Shareholder expressly for use therein. 
The Shareholder’s indemnification obligations hereunder shall be limited
to the amount of any net proceeds actually received by the Shareholder.

 

4.3           Notification
of Indemnification.  Promptly after
receipt by an indemnified party under this Section 4 of notice of the
commencement of any action (including any action by a governmental authority),
such indemnified party shall, if a claim in respect thereof is to be made
against any indemnifying party under this Section 4, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided,
however, that an
indemnified party shall have the right to retain its own counsel, with the
reasonable fees and expenses of one such counsel to be paid by 

 

 

11

 

the indemnifying party, if representation of such indemnified party by
the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and any
other party represented by such counsel in such proceeding.  The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section 4,
but the omission so to deliver written notice to the indemnifying party shall
not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 4.

 

5.             UNDERWRITING
AND DISTRIBUTION.

 

5.1           Rule 144.  The Company covenants that it shall file all
reports required to be filed by it under the Securities Act and the Exchange
Act and shall take such further action as the Shareholder may reasonably
request, all to the extent required from time to time to enable the Shareholder
to sell Restricted Shares without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144 under the Securities
Act, or any similar provision thereto, but not Rule 144A.

 

6.             MISCELLANEOUS.

 

6.1           Assignment;
No Third Party Beneficiaries.  This
Agreement and the rights, duties and obligations of the Company hereunder may
not be assigned or delegated by the Company in whole or in part and shall be
binding on its successors.  This
Agreement and the rights, duties and obligations of the Shareholder hereunder
may be assigned, transferred or delegated by the Shareholder, in whole or in
part, in conjunction with and to the extent of any permitted transfer of
Restricted Shares to an affiliate of the Shareholder in accordance with
applicable law, which affiliate agrees in writing to be subject to and bound by
all duties and obligations set forth in this Agreement, whereupon any such
assignee, transferee or delegable would have all rights, duties and obligations
hereunder in addition to the Shareholder to the extent that the Shareholder
continues to own Restricted Shares.  This
Agreement and the rights, duties and obligations of the Shareholder hereunder
may be assigned, transferred or delegated by the Shareholder, in whole or in
part, in conjunction with and to the extent of any permitted transfer of 1/3 or
more of the Shares issued to the Shareholder under the Deferral Agreement or if
less, all the Restricted Shares then held by the Shareholder to a person or
entity that is not an affiliate of the Shareholder in accordance with
applicable law and which person or entity agrees in writing to be subject to
and bound by all duties and obligations set forth in this Agreement, whereupon
any such assignee, transferee or delegable would have all rights, duties and
obligations hereunder; provided,
however, that the rights,
duties and obligations hereunder may not be assigned, transferred or delegated
to a person that is not an affiliate of the Shareholder may not be further
assigned, transferred or delegated by such person.  This Agreement is not intended to confer any
rights or benefits on any persons that are not party hereto other than as
expressly set forth in Section 4 and this Section 6.1.

 

6.2           Notices.
All notices, demands, requests, consents, approvals or other communications
(collectively, “Notices”) required
or permitted to be given hereunder or which are given with respect to this
Agreement shall be in writing and shall be personally served, delivered by
reputable air courier service with charges prepaid, or transmitted by hand
delivery, 

 

 

12

 

or facsimile, addressed as set forth below, or to such other address as
such party shall have specified most recently by written notice provided in
accordance with this Section 6.2. 
Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by facsimile; provided, that if such service or transmission is not on
a Business Day or is after normal business hours, then such notice shall be
deemed given on the next Business Day. 
Notice otherwise sent as provided herein shall be deemed given on the
next Business Day following timely delivery of such notice to a reputable air
courier service with an order for next-day delivery.

 

To the Company:

 

TravelCenters
of America LLC

24601
Center Ridge Road

Westlake,
Ohio  44145

Attn:  Thomas M. O’Brien, President

Facsimile:  (440) 808-3301

 

with a
copy (which shall not constitute notice) to:

 

Skadden, Arps, Slate Meagher & Flom
LLP

One Beacon Street

Boston, MA 02108

Attn.:  Louis Goodman

Facsimile:  (617) 573-4822

 

To the Shareholder:

 

Hospitality
Properties Trust

400
Centre Street

Newton,
Massachusetts  02458

Attn:  John G. Murray, President

Facsimile:  (617) 969-5730

 

with a copy (which
shall not constitute notice) to:

 

Sullivan &
Worcester LLP

One
Post Office Square

Boston,
Massachusetts  02109

Attn:  Richard Teller

Facsimile:
(617) 338-2880

 

6.3           Severability.  This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision hereof shall not
affect the validity or enforceability of this Agreement or of any other term or
provision hereof.  Furthermore, if any
term or provision hereof shall be deemed to be invalid or unenforceable, the
parties hereto shall mutually agree upon an amendment to this Agreement to
include a term or provision as similar 

 

 

13

 

in purpose to such invalid or unenforceable term or provision as may be
reasonably possible and which term or provision is valid and enforceable.

 

6.4           Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.

 

6.5           Entire
Agreement.  This Agreement (including
all agreements entered into pursuant hereto and all certificates and
instruments delivered pursuant hereto and thereto) constitute the entire
agreement of the parties with respect to the subject matter hereof and
supersede all prior and contemporaneous agreements, representations,
understandings, negotiations and discussions between the parties, whether oral
or written.

 

6.6           Modifications
and Amendments.  No amendment,
modification or termination of this Agreement shall be binding upon any party
unless executed in writing by such party.

 

6.7           Titles
and Headings.  Titles and headings of
sections of this Agreement are for convenience only and shall not affect the
construction of any provision of this Agreement.

 

6.8           Waivers
and Extensions.  Any party entitled
to benefits under this Agreement may waive any right, breach or default which
such party has the right to waive;  provided, that such waiver will not be
effective against the waiving party unless it is in writing, is signed by such
party, and specifically refers to this Agreement.  Waivers may be made in advance or after the
right waived has arisen or the breach or default waived has occurred.  Any waiver may be conditional.  No waiver of any breach of any agreement or
provision herein contained shall be deemed a waiver of any preceding or
succeeding breach thereof nor of any other agreement or provision herein
contained.  No waiver or extension of
time for performance of any obligations or acts shall be deemed a waiver or
extension of the time for performance of any other obligations or acts.

 

6.9           Remedies
Cumulative.  If the Company fails to
observe or perform any covenant or agreement to be observed or performed under
this Agreement, the Shareholder may proceed to protect and enforce its rights
by suit in equity or action at law, whether for specific performance of any
term contained in this Agreement or for an injunction against the breach of any
such term or in aid of the exercise of any power granted in this Agreement or
to enforce any other legal or equitable right, or to take any one or more of
such actions, without being required to post a bond.  None of the rights, powers or remedies
conferred under this Agreement shall be mutually exclusive, and each such
right, power or remedy shall be cumulative and in addition to any other right,
power or remedy, whether conferred by this Agreement or now or hereafter
available at law, in equity, by statute or otherwise.

 

6.10         Governing
Law.  This Agreement shall be
governed by and interpreted and construed in accordance with the laws of the
State of Delaware applicable to contracts formed and to be performed entirely
within the State of Delaware, without regard to
the conflicts of law provisions thereof to the extent such principles or rules would
require or permit 

 

 

14

 

the application of the laws of another jurisdiction.  The Company and the Shareholder irrevocably
and unconditionally submit to the exclusive jurisdiction of any state or
federal court sitting in the State of Delaware, in any action arising out of or
relating to this Agreement, agree that all claims in respect of the action may
be heard and determined in any such court and agree not to bring any action
arising out of or relating to this Agreement in any other court.  In any action, the Company and the
Shareholder irrevocably and unconditionally waive and agree not to assert by
way of motion, as a defense or otherwise any claims that it is not subject to
the jurisdiction of the above court, that such action is brought in an
inconvenient forum or that the venue of such action is improper.  Without limiting the foregoing, the Company
and the Shareholder agree that service of process at each parties respective
addresses as provided for in Section 6.2 shall be deemed effective service
of process on such party.

 

6.11         Non-liability
of Trustees.  THE AMENDED AND
RESTATED DECLARATION OF TRUST OF HOSPITALITY PROPERTIES TRUST, DATED
AUGUST 21, 1995, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS AND
SUPPLEMENTS THERETO, IS DULY FILED IN THE OFFICE OF THE STATE DEPARTMENT OF
ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT THE NAME “HOSPITALITY
PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION OF TRUST AS SO
AMENDED AND SUPPLEMENTED, COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR
PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF
HOSPITALITY PROPERTIES TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY
OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, HOSPITALITY PROPERTIES
TRUST.  ALL PERSONS DEALING WITH
HOSPITALITY PROPERTIES TRUST, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF
HOSPITALITY PROPERTIES TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY
OBLIGATION.

 

6.12         Legends.  The Shareholder understands and agrees that
the certificate representing the Shares issued to the Shareholder pursuant to
the Deferral Agreement (and any certificate or certificates issued in
replacement thereof) shall bear the following legends:

 

(a)           “These
securities have not been registered under the Securities Act of 1933.  They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under the Securities Act or an opinion of
counsel (which counsel shall be reasonably satisfactory to TravelCenters of
America LLC) that such registration is not required or unless sold pursuant to Rule 144
of the Securities Act.”;

 

(b)           any
legend generally appearing of certificates for the Company’s shares;

 

(c)           and
any legend required by applicable state securities laws; and

 

(c)           “These
securities are subject to and shall be transferable only upon the terms and
conditions of the Deferral Agreement, dated August 11, 2008, among
TravelCenters of America LLC, Hospitality Properties Trust and certain of their

 

 

15

 

affiliates,  A
copy of which is on file with the Secretary of TravelCenters of America LLC.”

 

Signatures
appear on the next  page

 

 

16

 

Executed under seal   as
of the date first above written.

 

	
   

  	
  TRAVELCENTERS OF AMERICA LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Thomas M. O’Brien

  
	
   

  	
  Name:
  Thomas M. O’Brien

  
	
   

  	
  Title:
  President

  

 

	
   

  	
  HOSPITALITY PROPERTIES TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John G. Murray

  
	
   

  	
   

  	
  Name: John G. Murray

  
	
   

  	
   

  	
  Title: President

  

 

 

17Exhibit 10.64

 

EMPLOYMENT AGREEMENT

 

THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made on this 10th day of April, 2008 (the
“Effective Date”), by and between AVI
BioPharma, Inc., an Oregon corporation, with its principal office
at 1 SW Columbia Street, Suite 1105, Portland, OR  97258 (“Company”), and Ryszard Kole, 203
Longwood Drive, Chapel Hill, NC 27514 (“Employee”).

 

RECITALS:

 

The Company
desires to hire the Employee as Senior Vice President of Discovery Research and
the Employee desires to accept such position under the terms and conditions
stated herein.

 

NOW,
THEREFORE, in consideration of the mutual benefits contained herein, the
sufficiency of which the parties acknowledge, the parties hereby agree as
follows:

 

AGREEMENT:

 

1.             Employment Term.  The term of employment (“Term”) shall
commence on the Effective Date and shall continue until terminated in
accordance with Section 12. 
This Agreement establishes an “at will” employment relationship between
the Company and the Employee as such term is defined and used under Oregon law.

 

2.             Duties.  Employee shall be employed as Senior Vice
President of Discovery Research and shall have such duties as are customarily
associated with that position, including oversight as line manager of all
biology research personnel and such other duties as may be assigned to him from
time to time by the Company’s Chief Executive Officer (“CEO”) and the Board of
Directors of the Company (“Board”). Employee shall be a direct report of the
Company’s President or CEO. Employee shall devote substantially all of his
business time to the service of the Company throughout the Term.  Employee and Company acknowledge and agree
that (i) Employee may hold certain offices within certain entities as set
forth on Exhibit A to this Agreement,  (ii) Employee’s devotion of reasonable
amounts of time in such capacities, so long as it does not interfere with his
performance of services hereunder, shall not conflict with the terms of this
Agreement, and (iii) Exhibit A may be amended from time to
time by agreement of the parties.

 

3.             Compensation.

 

(a)           Base
Compensation.  During the Term the
Company shall compensate the Employee at an initial annual salary of two
hundred thirty-five thousand dollars ($235,000.00), payable in accordance with
the Company’s payroll practices in effect from time to time, and less amounts
required to be withheld under applicable law and requested to be withheld by
the Employee (as increased from time to time, “Base Compensation”). The
Employee’s Base 

 

 

Compensation shall be subject to review for potential increase (but not
decrease) on an annual basis. Except as otherwise provided in this Agreement,
the Base Compensation shall be prorated for any period of service less than a
full month.

 

(b)           Bonus.  The Employee shall be eligible for an annual
bonus of up to 25% of Employee’s Base Compensation, which bonus shall be paid
upon achievement and satisfaction of goals and objectives established upon
mutual agreement of the CEO, Employee and the Compensation Committee of the
Company’s Board.  Such goals shall be
established concurrently with the goals and objectives of the Company’s other
senior executives.

 

(c)           Equity
Compensation.  On the Effective Date,
the Employee will be granted options to purchase one hundred fifty thousand (150,000)
shares of the Company’s common stock (the “Options”) under the Company’s 2002
Equity Incentive Plan (the “Plan”), with an exercise price at the fair market
value of the Company common stock on the Effective Date.  Subject to accelerated vesting or termination
as set forth herein, the Options shall vest in equal annual installments over
four (4) years.  The exercise price
of the Options and all other terms and conditions associated with the Options
shall be determined in accordance with the Plan and grants (the forms of which
are annexed hereto as Exhibit B and Exhibit C,
respectively). To the maximum extent possible, the Options shall be Incentive
Stock Options.

 

4.             Expenses.  The Company will reimburse Employee for all
expenses reasonably incurred by him in discharging his duties for the Company,
conditioned upon Employee’s submission of written documentation in support of
claimed reimbursement of such expenses, and consistent with the Company’s
expense reimbursement policies in effect from time to time. The Company will
reimburse the Employee up to sixty-five thousand dollars ($65,000) for
reasonable expenses incurred in 2008 to relocate Employee, Employee spouse and
parts of Employee’s and Employee Spouse’s household in a manner compatible with
Employee’s duties hereunder to the city where the Company’s primary research
facility is located (“Facility Location”), including the reasonable and
customary costs of selling his North Carolina residence (but not vacant home
carrying costs), shipment of personal effects to the Facility Location, and the
customary closing costs associated with the purchase of a residence in the
Facility Location.

 

5.             Benefits.  Subject to eligibility requirements, Employee
shall be entitled to participate in such benefits plans and programs as adopted
by the Company from time to time and shall be eligible for paid vacation of
four (4) business weeks (20 business days) annually; provided,
however, if Employee does not use all available vacation in any
given year, Employee may roll-over up to one business week (5 business days) to
the following year, the parties intending that Employee shall have an aggregate
of five (5) business weeks (25 business days) of paid vacation in any year
following 2008.

 

6.             Confidentiality.

 

(a)           In
the course of his employment with the Company, it is anticipated that Employee
may acquire knowledge (both orally and in writing) regarding confidential
affairs of the Company and confidential or proprietary information including: (i) matters
of a technical nature, such as know-how, inventions, processes, products,
designs, chemicals, compounds, 

 

 

materials, drawings, concepts, formulas, trade secrets, secret
processes or machines, inventions or research projects; (ii) matters of a
business nature, such as information about costs, profits and pricing policies;
(iii)  markets, sales, suppliers, customers, plans for future development,
plans for future products, marketing plans or strategies; and (iv) other
information of a similar nature which is not generally disclosed by the Company
to the public, referred to collectively hereafter as “Confidential Information.”
“Confidential Information” shall not include information generally available to
the public. Employee agrees that during the term of this Agreement and
thereafter, he (1) will keep secret and retain in the strictest confidence
all Confidential Information, (2) not disclose Confidential Information to
anyone except employees of the Company authorized to receive it and third
parties to whom such disclosure is specifically authorized, and (3) not
use any Confidential Information for any purpose other than performance of
services under this Agreement without prior written permission from the
Company.

 

(b)           If
Employee is served with any subpoena or other compulsory judicial or
administrative process calling for production or disclosure of Confidential
Information or if Employee is otherwise required by law or regulation to
disclose Confidential Information, Employee will immediately, and prior to
production or disclosure, notify the Company and provide it with such
information as may be necessary in order that the Company may take such action
as it deems necessary to protect its interest.

 

(c)           The
provisions of this Section 6 shall survive termination of this
Agreement.

 

7.             Non-competition and
Non-solicitation.

 

(a)           Employee
agrees that for a two-year period from the effective date of the termination of
Employee’s employment with the Company, Employee shall not directly or
indirectly engage in or have any ownership interest in, or participate in the
financing, operation, management or control of, any person, firm, corporation
or business that engages in any activity customarily associated with the
Company’s ordinary course of business at the time of such termination anywhere
in the world; provided, however, that this provision shall not
prohibit Employee from owning up to five percent (5%) of any class of
outstanding bonds, preferred stock or shares of common stock of any such entity
or from employment with any institute of higher learning.

 

(b)           For
a period of two (2) years following termination of employment with the
Company for any reason, except with the express written consent of the Company,
Employee agrees to refrain from directly or indirectly recruiting, hiring or
assisting anyone else to hire, or otherwise counseling to discontinue
employment with the Company, any person then employed by the Company or its
subsidiaries or affiliates.

 

(c)           In
the event that the provisions of this Section 7 should ever be deemed
to exceed the duration or geographic limitations or scope permitted by
applicable law, then such provisions shall be reformed to the maximum time or
geographic limitations or scope, as the case may be, permitted by applicable
laws.

 

(d)           The
provisions of this Section 7 shall survive termination of this
Agreement and the term of employment.

 

 

8.             Covered Work.

 

(a)           All
rights, title and interest to any Covered Work that Employee makes or conceives
(whether alone or with others) while employed by the Company, belong to the
Company. This Agreement operates as an actual assignment of all rights in
Covered Work to the Company. “Covered Work” means products and Inventions that
relate to the actual or anticipated business of the Company or any of its
subsidiaries or affiliates, or that result from or are suggested by a task
assigned to Employee or work performed by Employee on behalf of the Company or
any of its subsidiaries or affiliates, or that were developed in whole or in
part on the Company time or using the Company’s equipment, supplies or
facilities. “Inventions” mean ideas, improvements, designs, computer software,
technologies, techniques, processes, products, chemicals, compounds, materials,
concepts, drawings, authored works or discoveries, whether or not patentable or
copyrightable, as well as other newly discovered or newly applied information
or concepts. Attached hereto as Exhibit D is a description of any
product or Invention in which Employee had or has any right, title or interest,
which is not included within the definition of “Covered Work” or which is
otherwise excluded from the restrictions set forth in this Section 8.

 

(b)           Employee
shall promptly reveal all information relating to Covered Work and Confidential
Information to an appropriate officer of the Company and shall cooperate with
the Company, and execute such documents as may be necessary, in the event that
the Company desires to seek copyright, patent or trademark protection
thereafter relating to same.

 

(c)           In
the event that the Company requests that Employee assist in efforts to defend
any legal claims to patents or other right, the Company agrees to reimburse
Employee for any reasonable expenses Employee may incur in connection with such
assistance. This obligation to reimburse shall survive termination of this
Agreement and the term of employment.

 

(d)           The
provisions of this Section 8 shall survive termination of this
Agreement and the term of employment.

 

9.             Return of Inventions,
Products and Documents.  Employee
acknowledges and agrees that all Inventions, all products of the Company and
all originals and copies of records, reports, documents, lists, drawings,
memoranda, notes, proposals, contracts and other documentation related to the
business of the Company or containing any information described in this Section 9  shall be the sole and exclusive property of
the Company and shall be returned to the Company immediately upon termination
of Employee’s employment with the Company or upon the written request of the
Company. The provisions of this Section 9 shall survive termination
of this Agreement and the term of employment

 

10.          Injunction.  Employee agrees that it would be difficult to
measure damages to the Company from any breach by Employee of Sections 6, 7,
8 and/or 9 of this Agreement, and that monetary damages would be an
inadequate remedy for any such breach. Accordingly, Employee agrees that if
Employee shall breach Sections 6, 7, 8 and/or 9 of this
Agreement, the Company shall be entitled, in addition to all other remedies it
may have at law or in equity, to an injunction or other appropriate orders to
restrain any such breach without showing or proving any actual 

 

 

damage sustained by the Company. The provisions of this Section 10
shall survive termination of this Agreement and the term of employment.

 

11.          Obligations to Others.  Except for items fully disclosed in writing
to the Company, Employee represents and warrants to the Company that (i) Employee’s
employment by the Company does not violate any agreement with any prior
employer or other person or entity, and (ii) Employee is not subject to
any existing confidentiality or non-competition agreement or obligation, or any
agreement relating to the assignment of Inventions except as has been fully
disclosed in writing to the Company. 
Notwithstanding the foregoing, the Company and Employee do not intend
for any provision of this Agreement to conflict with any obligations or rights
the parties may have under any NIH grant. 
If any provision of such provision is found to conflict with any
obligations or rights the parties may have under any NIH grant, the parties
agree that any such conflicting provision shall be deemed modified to the
minimum extent required to bring it in compliance with the NIH grant and the
parties agree to comply with all requirements reasonably imposed by any
applicable NIH grant; provided, however,
in the event such NIH requirements are deemed by the Company, in its reasonable
discretion, to impose unreasonable or otherwise onerous burdens on the Company,
the parties agree to terminate the NIH grant upon request of the Company.

 

12.          Termination.

 

(a)           Employee
may voluntarily terminate his employment with the Company upon giving the
Company sixty (60) days written notice.

 

(b)           The
Company may terminate Employee’s employment without Cause (as defined below)
upon giving Employee thirty (30) days written notice of termination.

 

(c)           Employee’s
employment with the Company shall terminate upon the occurrence of any one of
the following:

 

(i)            Employee’s
death;

 

(ii)           The
effective date of a notice sent to Employee stating the Board’s determination
made in good faith and after consultation with a qualified physician selected
by the Board, that Employee is incapable of performing his duties under this
Agreement, with or without reasonable accommodation, because of a physical or
mental incapacity that has prevented Employee from performing such full-time
duties for a period of ninety (90) consecutive calendar days and the
determination that such incapacity is likely to continue for at least another
ninety (90) days; or

 

(iii)          The
effective date of a notice sent to Employee terminating Employee’s employment
for Cause.

 

 

(d)           “Cause”
means the occurrence of one or more of the following events:

 

(i)            Employee’s
willful and repeated failure or refusal to comply in any material respect with
the reasonable lawful policies, standards or regulations from time to time
established by the Company, or to perform his duties in accordance with this
Agreement after notice to Employee of such failure and after Employee has been
given a reasonable period of time to cure such failure to comply; or

 

(ii)           Employee
engages in criminal conduct or engages in misconduct that is materially
detrimental to the reputation, character or standing of the Company.

 

13.          Termination
Compensation.

 

(a)           Upon
Employee’s voluntary termination of employment other than voluntary termination
with Good Reason (as defined below), the Company shall pay to Employee all
compensation due to the date of termination, but shall have no further
obligation to Employee hereunder in respect of any period following
termination.

 

(b)           Upon
the death of Employee, the Company shall pay to Employee’s estate or such other
party who shall be legally entitled thereto, all compensation due at the date
of death, and an additional amount equal to compensation at the rate set forth
in this Agreement or then current annual salary rate, whichever is greater,
from the date of death to the final day of the month following the month in which
the death occurs.

 

(c)           Upon
termination of Employee’s employment by the Company other than for Cause, or
upon Employee’s voluntary termination of employment for Good Reason the Company
shall pay to Employee six (6) months of Base Compensation if Employee is
terminated before the one year anniversary of his employment with the Company,
and shall pay Employee twelve (12) months of Base Compensation if Employee is
terminated on or after the one year anniversary of his employment with the
Company.

 

(d)           Amounts
payable under this Section 13 shall be net of amounts required to
be withheld under applicable law and amounts requested to be withheld by
Employee.

 

(e)           As
used herein, “Good Reason” shall
mean the termination by Employee upon the occurrence of any of the below
described events. The Employee must provide notice to the Company of the
existence of such event within ninety (90) days of the first occurrence of such
event, and the Company will have thirty (30) days to remedy the condition, in
which case no Good Reason shall exist. 
If the Company fails to remedy the condition within such thirty (30) day
period, the Employee must terminate employment within two (2) years of the
first occurrence of such event.  The
events which constitute a Good Reason termination are:

 

 

(i)                    The assignment of a different title
or change that results in a material reduction in Employees duties or
responsibilities;

 

(ii)                   A reduction by the Company in
Employee’s Base Compensation, other than a salary reduction that is part of a
general salary reduction affecting employees generally and provided the
reduction is not greater, percentage-wise, than the reduction affecting other
employees generally or failure to provide an annual increase in Base
Compensation commensurate with other Employees; provided,
however, in determining whether to provide an annual increase in
Base Compensation commensurate with an annual increase provided to other
Employees, the Company may take into
account factors such as market levels of compensation, Employee’s overall
performance, and other factors reasonably considered by the Company’s
compensation committee and/or Board of Directors, so long as such determination
is not made in bad faith with the intent to discriminate against Employee;
or

 

(iii)                  Relocation of Employee’s principal
place of business of greater than seventy-five (75) miles from its then
location; provided, however, the first such relocation in connection with the
concurrent relocation of the Company’s primary research facility shall not
constitute Good Reason hereunder.

 

As a condition of payment of the amounts set forth in this Section 13,
if requested by Company Employee agrees to enter into a Separation and Release
Agreement substantially in the form attached hereto as Exhibit E.

 

(f)            As used herein, “Change of Control” means the
occurrence of any one of the following events: 
(i) any person becomes the beneficial owner of twenty-five percent
(25%) or more of the total number of voting shares of the Company; (ii) any
person (other than the persons named as proxies solicited on behalf of the
Board of Directors of the Company) holds revocable or irrevocable proxies
representing twenty-five percent (25%) or more of the total number of voting
shares of the Company; (iii) any person has commenced a tender or exchange
offer, or entered into an agreement or received an option, to acquire
beneficial ownership of twenty-five percent (25%) or more of the total number
of voting shares of the Company; and (iv) as the result of, or in
connection with, any cash tender or exchange offer, merger, or other business
combination, sale of assets, or any combination of the foregoing transactions,
the persons who were directors of the Company before such transactions shall
cease to constitute at least two-thirds (2/3) of the Board of Directors of the
Company or any successor entity.

 

14.          Notice.  Unless otherwise provided herein, any notice,
request, certificate or instrument required or permitted under this Agreement
shall be in writing and shall be deemed “given” upon personal delivery to the
party to be notified or three business days after deposit with the United
States Service, by registered or certified mail, addressed to the party to
receive notice at the address set forth above, postage prepaid. Either party may
change its address by notice to the other party given in the manner set forth
in this Section.

 

 

15.          Entire Agreement.  This Agreement constitutes the entire
agreement between the parties and contains all the agreements between them with
respect to the subject matter hereof. It also supersedes any and all other
agreements or contracts, either oral or written, between the parties with
respect to the subject matter hereof;  provided, however, in the event any of Sections 6, 7, 8,
9, or 10 of this Agreement is found enforceable in any way, then
such section shall be amended to the extent necessary to conform to applicable
law.

 

16.          Modification.  Except as otherwise specifically provided,
the terms and conditions of this Agreement may be amended at any time by mutual
agreement of the parties, provided that before any amendment shall be valid or
effective, it shall have been reduced to writing and signed by an authorized
representative of the Company and Employee.

 

17.          No Waiver.  The failure of any party hereto to exercise
any right, power or remedy provided under this Agreement or otherwise available
in respect hereof at law or in equity, or to insist upon compliance by any
other party hereto with its obligations, shall not be a waiver by such party of
its right to exercise any such or other right, power or remedy or to demand
compliance.

 

18.          Severability.  In the event that any section or
provision of this Agreement shall be held to be illegal or unenforceable, such
section or provision shall be severed from this Agreement and the entire
Agreement shall not fail as a result, but shall otherwise remain in full force
and effect.

 

19.          Assignment.  This Agreement shall be binding upon and
inure to the benefit of the Company and its successors and assigns, and shall
be binding upon Employee, his administrators, executors, legatees, and heirs.
In that this Agreement is a personal services contract, it shall not be
assigned by Employee.

 

20.          Dispute Resolution.  Except as otherwise provided in Section 10,
the Company and Employee agree that any dispute between Employee and the
Company or its officers, directors, employees, or agents in their individual or
Company capacity of this Agreement, shall be submitted to a mediator for
nonbinding, confidential mediation. If the matter cannot be resolved with the
aid of the mediator, the Company and Employee mutually agree to arbitration of
the dispute. The arbitration shall be in accordance with the then-current
Employment Dispute Resolution Rules of the Arbitration Service of Portland
(“ASP”) before an arbitrator who is licensed to practice law in the State of
Oregon. The arbitration shall take place in or near Portland, Oregon. Employee
and the Company will share the cost of the arbitration equally, but each will
bear their own costs and legal fees associated with the arbitration; provided, however, if any party prevails on a statutory
claim, which affords the prevailing party attorneys’ fees, or if there is a
written agreement providing for attorneys’ fees, the arbitrator may award
reasonable attorneys’ fees.  The Company
and Employee agree that the procedures outlined in this provision are the
exclusive method of dispute resolution.

 

21.          Attorneys’ Fees.  In the event suit or action is instituted
pursuant to Section 10 or Section 20 of this Agreement,
the prevailing party in such proceeding, including any appeals thereon, shall
be awarded reasonable attorneys’ fees and costs.

 

 

22.          Applicable Law.  This Agreement shall be construed and
enforced under and in accordance with the laws of the State of Oregon.

 

23.          Section 409A.

 

(a)           It is the intention of the parties to this Agreement
that no payment or entitlement pursuant to this Agreement will give rise to any
adverse tax consequences to Employee or the Company with regard to Section 409A
of the Internal Revenue Code of 1986 (“Section 409A”). This Agreement
shall be interpreted to that end and consistent with that objective. The
Company and the Employee shall, to the extent necessary to comply with Section 409A
and permitted thereunder, agree to act reasonably and in good faith to mutually
reform the provisions of this Agreement to avoid the application of the
additional tax and interest under Section 409A(a)(1)(B), provided that any
such reformation shall not negatively impact the economics of the Company or
the Employee hereunder. Notwithstanding any other provision herein, if Employee
is a “specified employee,” as defined in, and pursuant to, Treasury Regulation Section 1.409A-1(i) or
any successor regulation, on the date of termination, no payment of any “deferred
compensation”, as defined under Treasury Regulation Section 1.409A or any
successor regulation, shall be made to Employee during the period lasting until
the earlier of six (6) months from the date of termination or upon
Employee’s death.  If any payment to
Employee is delayed pursuant to the foregoing sentence, such payment instead
shall be made on the first business day following the expiration of the six (6) month
period referred to in the prior sentence or, if in the case of Employee’s
death, promptly thereafter.

 

(b)           Except as otherwise specifically provided in
this Agreement, if any reimbursement to which the Employee is entitled under
this Agreement would constitute deferred compensation subject to Section 409A
of the Code, the following additional rules shall apply:  (i) the reimbursable expense must have
been incurred, except as otherwise expressly provided in this Agreement, during
the term of this Agreement; (ii) the amount of expenses eligible for
reimbursement during any calendar year will not affect the amount of expenses
eligible for reimbursement in any other calendar year; (iii) the
reimbursement shall be made not later than December 31 of the calendar
year following the calendar year in which the expense was incurred; and (iv) the
Employee’s entitlement to reimbursement shall not be subject to liquidation or
exchange for another benefit.

 

(c)           With regard to any installment payment, each
installment thereof shall be deemed a separate payment for purposes of Section 409A
of the Code.

 

24.          Counterparts.  This Agreement may be signed in two
counterparts, each of which shall be deemed an original and both of which shall
together constitute one agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, AVI BioPharma, Inc. has caused this Agreement
to be signed by its duly authorized representative, and Employee has hereunder
set his name as of the date of this Agreement.

 

 

	
   

  	
  COMPANY: 
  AVI BioPharma, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
  Leslie Hudson, PhD, Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Ryszard Kole, PhD

  

 

 

Exhibit A

 

List
of Offices Held

 

·      Senior Vice President of Discovery Research of AVI BioPharma, Inc.

 

·      Principal Investigator on NIH grant-funded research to be conducted at
the University of North Carolina at Chapel Hill (“UNC”), including any
necessary affiliation with UNC, but only to the extent that such roles do not
constitute more than 5% of Employee’s professional time, calculated on a
monthly basis.

 

 

Exhibit B

 

2002
Equity Incentive Plan

 

 

Exhibit C

 

Form Of
Stock Option Agreement

 

 

Exhibit D

 

Inventions
Excluded from Covered Works

 

·      Covered Works also shall not
include any work product arising out of the NIH grant, the ownership of, under
the terms of such grant, is reserved for parties other than Employee or the
Company; provided, however, to the extent the
terms of such NIH grant provide or allocate certain ownership rights or rights
to use such work product to Employee, to the extent thereof such work product
shall be Covered Works.

 

·      Additional Exclusions: to be
provided by Ryszard Kole

 

 

Exhibit E

 

SEPARATION AND RELEASE AGREEMENT

 

THIS SEPARATION AND RELEASE AGREEMENT (“Agreement”)
is between Richard Kole (“Employee”) and AVI BioPharma, Inc. (“Employer”),
and is effective eight (8) days after Employee signs this Agreement (“Effective
Date”).

 

The parties agree as follows:

 

1.             Resignation. Employee
resigned his position as Employer’s [Title] effective [effective date of
termination] (the “Resignation Date”). 
Employee has been paid his salary and other compensation through the
Resignation Date, less all lawful or required deductions.

 

2.             Consideration.   In consideration of  Employee’s agreements hereunder, Employer shall pay to
Employee the amounts set forth and described in that certain Employment
Agreement dated effective the       day of                  ,
2008.

 

3.             Return of Employer
Property. Employee represents that he has returned all Employer
property in his possession or under his control, including but not limited to
keys, credit cards, files, laptop computer and any and all Employer documents.

 

4.             Confidentiality. The
parties will use reasonable efforts to keep the terms of this Agreement
confidential.  Employee may disclose the
terms of this Agreement to his immediate family.  Employer may disclose the terms of this
Agreement to its officers and managers. 
Either party may disclose the terms of this Agreement to their
respective attorneys, accountants, financial advisers, auditors, or similar
advisors, or in response to government requests.  Third persons informed of the terms of this
Agreement shall in turn be advised of this confidentiality provision and
requested to maintain such confidentiality.

 

5.             Release.

 

5.1           In exchange for the consideration paid to Employee
as set forth in this Agreement, Employee forever releases and discharges
Employer, any of Employer-sponsored employee benefit plans in which Employee
participates, or was participating in, (collectively the “Plans”) and all of
their respective officers, members, managers, partners, directors, trustees,
agents, employees, and all of their successors and assigns (collectively “Releasees”)
from any and all claims, actions, causes of action, rights, or damages,
including costs and attorneys’ fees (collectively “Claims”) which Employee may
have arising out of his employment (including Claims that may arise out of Employee’s
employment agreement), on behalf of himself, known, unknown, or later
discovered which arose prior to the date Employee signs this Agreement.  This release includes but is not limited to,
any Claims under any local, state, or federal laws prohibiting discrimination
in employment, including without limitation the federal civil rights acts,
Oregon Revised Statutes Chapter 659A, the Americans with Disabilities Act, the
Age Discrimination in Employment Act, or Claims under the Employee Retirement
Income Security Act, or Claims alleging any legal restriction on Employer’s
right to terminate its employees, any Claims Employee has relating to his
rights to or against any of the Plans, or personal injury Claims, including
without limitation 

 

 

wrongful
discharge, breach of contract, defamation, tortious interference with business
expectancy, constructive discharge, or infliction of emotional distress.  Employee represents that he has not filed any
Claim against Employer or its Releasees, he has no knowledge of any facts that
would support any Claim by Employee against Employer or by a third party
against Employer, and that he will file a Claim at any time in the future
concerning Claims released in this Agreement; provided, however, that this will
not limit Employee from filing a Claim to enforce the terms of this Agreement.

 

5.2           In consideration of the promises of Employee as set
forth herein, Employer does hereby, and for its successors and assigns,
release, acquit and forever discharge Employee from any and all actions, causes
of action, obligations, costs, expenses, damages, losses, claims, liabilities,
suits, debts, and demands (including attorneys’ fees and costs actually
incurred), of whatever character in law or in equity known or unknown,
suspected or unsuspected, from the beginning of time to the date of execution
hereof.

 

6.             Non-disparagement. Employee and Employer each agree not to make
disparaging statements about each other, except in the case of Employer
statements that are required under applicable federal or state securities laws
or applicable rules and regulations of any exchange on which Employer’s
stock is traded.

 

7.             Consideration and Revocation Periods. Employee understands and acknowledges the
significance and consequences of this Agreement, that it is voluntary, that it
has not been given as a result of any coercion, and expressly confirms that it
is to be given full force and effect according to all of its terms, including
those relating to unknown Claims. 
Employee was hereby advised of his right to seek the advice of an
attorney prior to signing this Agreement. 
Employee acknowledges that he has signed this Agreement only after full
reflection and analysis. Although he is free to sign this Agreement before
then, Employee acknowledges he was given at least 21 days after receipt of this
document in which to consider it (the “Consideration Period”).  If Employee executes this Agreement prior to
the end of the Consideration Period, Employee hereby waives any rights
associated therewith. Employee may revoke this Agreement seven (7) days
after signing it and forfeit all benefits described in Section 2 of this
Agreement. Employee and Employer agree that any changes made to this Agreement
during the Consideration Period as a result of negotiations between the parties
do not restart the running of the Consideration Period.

 

8.             No Liability. This
Agreement shall not be construed as an admission by either party that it acted
wrongfully with respect to the other.

 

9.             Severability. If any of the provisions of this Agreement are held
to be invalid or unenforceable, the remaining provisions will nevertheless
continue to be valid and enforceable.

 

10.           Entire Agreement. This Agreement represents and contains the entire
understanding between the parties in connection with its subject matter.  All other prior written or oral agreements or
understandings are merged into and superseded by this Agreement.  Employee acknowledges that in signing this
Agreement, he has not relied upon any representation or statement not set forth
in this Agreement made by Employer or any of its representatives.

 

 

11.           Attorney Fees. If any suit or action is filed by either party to
enforce this Agreement or otherwise with respect to the subject matter hereof,
the prevailing party shall be entitled to recover reasonable attorney fees
incurred in preparation or in prosecution or defense of such suit or action as
fixed by the trial court, and if any appeal is taken from the decision of the
trial court, reasonable attorney fees as fixed by the appellate court.

 

12.           Choice of Law. This Agreement is made and shall be construed and
performed under the laws of the State of Oregon.

 

PLEASE READ CAREFULLY.  THIS AGREEMENT INCLUDES A RELEASE OF CERTAIN
KNOWN OR UNKNOWN CLAIMS.

 

 

	
  DATED this       day of        ,
  200X.

  	
   

  	
  DATED this     day of        ,
  200X.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  AVI BioPharma, Inc. 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Ryszard Kole, PhD

  
	
   

  	
   

  	
   

  
	
  Title:

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