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EXHIBIT 10.18
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of January 1, 2005, by and among
TA
Operating Corporation, a Delaware
corporation (the "Company"), TravelCenters of
America, Inc., a Delaware corporation
("Holdings") and Joseph A. Szima (the
"Employee").
In consideration of the parties' desire to assure the Company
and
Holdings of the services of the Employee,
and the mutual covenants herein
contained, the parties agree as
follows:
1. Employment.
1.1 Employment, Acceptance and Term. Subject to Section 5
hereof, the Company and Holdings hereby
agree to employ the Employee, and the
Employee agrees to serve the Company and
Holdings, during the term of this
Agreement (the "Term") which shall commence
January 1, 2005 (the "Effective
Date") and end on December 31, 2006 (the
"Initial Term"), and shall be renewed
automatically for successive one calendar
year periods thereafter through
December 31 of the calendar year in which
the Employee reaches age sixty-five
(65), unless the Company gives the Employee
or the Employee gives the Company
written notice of its or his intent not to
renew this Agreement, which notice
must be given not later than December 31,
2005 if this Agreement is to expire at
the end of the Initial Term or December 31
of the year last preceding the final
calendar year of the Term if this Agreement
is to expire after the Initial Term;
provided, however, that no such notice
given by either the Company or the
Employee after a "Change of Control" as
defined in Section 1.2 hereof shall have
the effect of terminating this Agreement
prior to the December 31 coinciding
with or next following the second
anniversary of the date on which such Change
of Control occurs. The Employee
acknowledges that neither the Company nor
Holdings shall have any obligation to
extend the
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Term beyond the Initial Term or to renew
the Agreement after any extension, or
to enter into a new employment agreement
upon the expiration of the Term. Unless
otherwise agreed between the parties in
writing, any continuation of the
Employee's employment beyond the expiration
of the Term shall constitute an
employment at will and shall not extend the
terms of this Agreement.
1.2 Change of Control. Any of the following events shall
constitute a "Change of Control":
(i) any "person," as such term is used in Sections 13(d) and
14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"),
becomes the beneficial owner (as defined in Rule 13d-3
promulgated
under the
Exchange Act) of fifty-one percent (51%) or more of the voting
power of
the then-outstanding voting securities of Holdings; provided,
however,
that the foregoing does not apply to any such acquisition that
is
made by
(i) the Company or any Affiliate or (ii) any employee benefit
plan
maintained
either by the Company or any Affiliate; or
(ii) Holdings merges into itself, or is merged or consolidated
with,
another corporation and as a result of such merger or
consolidation
less than
fifty-one (51%) of the voting power of the then-outstanding
voting
securities of the surviving or resulting corporation
immediately
after such
transaction are owned in the aggregate by the former
shareholders of Holdings immediately prior to such transaction;
(iii) all or substantially all the assets accounted for on the
consolidated balance sheet of the Company and the Affiliates, in
the
aggregate,
are sold or transferred to one or more corporations or persons,
and as a
result of such sale or transfer less than fifty-one percent
(51%)
of the
voting power of the then-outstanding
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voting
securities of such corporation or person immediately after such
sale or
transfer is held in the aggregate by the former shareholders of
Holdings
immediately prior to such transaction or series of
transactions;
(iv) fifty-one percent (51%) or more of the assets accounted
for in the
consolidated balance sheet of Company and its Affiliates, in
the
aggregate, are sold or transferred to one or more corporations
or
persons,
whether such sale or transfer is accomplished by the sale or
transfer
of assets directly, the sale or transfer of stock of the
Company
or one or
more Affiliates or otherwise with, in any case, an aggregate
value of
fifty-one percent (51%) or more of the aggregate value of the
Company
and its Affiliates, or any combination of methods by which
fifty-one
percent (51%) or more of the aggregate value of the Company and
its
Affiliates are sold or transferred, if, immediately after such sale
or
transfer,
the purchaser or transferee is less than fifty-one percent
(51%)
owned, in
the aggregate, by the persons who are the shareholders of
Holdings
immediately prior to such sale or transfer; or
(v) during any period of two (2) consecutive years, including,
without
limitation, the year 2004, individuals who at the beginning of
any
such
period constitute the Board of Directors of Holdings cease, for
any
reason, to
constitute at least a majority thereof, unless the election or
nomination
for election of each Director first elected during such period
was
approved by a vote of at least a majority of the members of the
Board
of
Directors of Holdings who were members of the Board of Directors
of
Holdings
on the date of the beginning of any such period.
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Without
otherwise limiting the generality of the foregoing, an
initial
public offering of the Common Stock of Holdings shall not be
deemed a
"Change of Control" for purposes of this Agreement.
2. Duties and Authority.
2.1 Office. Subject to Section 5 hereof, during the Term the
Employee will serve as the Senior Vice
President, Marketing of the Company and
Holdings, in accordance with the
Certificates of Incorporation and By-Laws of
the Company and Holdings, respectively, and
subject to the direction of, and in
accordance with the authority delegated to
the Employee by, the Boards of
Directors of the Company and Holdings, and
reporting to the President and Chief
Executive Officer.
2.2 Duties. Subject to Section 5 hereof, during the Term the
Employee shall devote all of his full
working time and energies to the business
and affairs of the Company and, in
connection therewith, shall perform such
duties, functions and responsibilities as
are commensurate with and appropriate
to the position of an officer of the
Company. Throughout the Term, the Employee
will use his best efforts, skills and
abilities to promote the interests of the
Company and its Affiliates. For purposes of
this Agreement, the term
"Affiliates" shall mean, collectively,
Holdings, TA Franchise Systems Inc., a
Delaware corporation ("TAFSI"), TA
Licensing, Inc., a Delaware corporation
("Licensing"), and all subsidiaries and
affiliates of the Company, Holdings,
TAFSI, and Licensing.
3. Compensation.
3.1 Base Salary. As compensation for services to be rendered
during the Term pursuant to this Agreement,
the Company shall pay the Employee a
base salary at the rate of Two Hundred
Eight Thousand Dollars ($208,000) per
annum (the "Base Salary"), which
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amount shall be reviewed not less
frequently than annually and which may be
increased but not decreased by action of
the Board of Directors of the Company
or the Compensation Committee (as defined
in Section 3.2 hereof) in a manner
consistent with the treatment of other
employees of the Company as approved by
the Compensation Committee and payable
currently in equal biweekly installments
or otherwise in accordance with the payroll
policies of the Company as from time
to time in effect.
3.2 Annual Bonus. For each fiscal year of the Company during
the Term (a "Fiscal Year"), commencing with
the Fiscal Year ending December 31,
2005, the Company shall pay to the Employee
an annual bonus (the "Annual
Bonus"). The amount of each Annual Bonus
shall be determined by the Compensation
Committee of the Board of Directors of the
Company (the "Compensation
Committee"), based fifty percent (50%) upon
corporate performance (EBITDA goals)
and fifty percent (50%) upon the Employee's
individual performance (MBO
targets), and shall range from zero (0) to
seventy-five percent (75%) of the
Base Salary in effect as of the first day
of the Fiscal Year (seventy-five
percent (75%) of such Base Salary being the
"Target Bonus"). The MBO targets for
the following Fiscal Year shall be
presented to and approved by the Board of
Directors or Compensation Committee of the
Company in December of each year in a
manner consistent with past practice. The
Annual Bonus shall be paid within
thirty (30) days after the completion of
the audit by the Company's independent
auditors of the financial statements of the
Company and its Affiliates for the
Fiscal Year to which the Annual Bonus
applies.
4. Additional Benefits.
4.1 Benefit Plans. The Employee shall be entitled during the
Term, if and to the extent eligible, to
participate in all employee benefit
plans of the Company or Holdings which the
Company or
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Holdings provides to its executive
employees or officers generally, including,
without limitation, a health and medical
insurance plan, basic life insurance,
supplemental life insurance, basic
disability benefit plan, supplemental
disability benefit plan, relocation,
retirement or pension plan or similar
benefit plans, whether now in existence or
hereafter adopted; provided, however,
that neither the Company nor Holdings shall
be obligated to adopt, maintain or
contribute to any such benefit plans which,
in their discretion, the Company and
Holdings believe would be imprudently
expensive or otherwise inappropriate. Any
new benefit plan which the Company or
Holdings provides to its executive
employees, and any change to a benefit plan
which the Company or Holdings
provides to its executive employees, shall
be applied consistently to all such
executive employees.
4.2 Director's and Officer's Insurance. Holdings has purchased
and Holdings or the Company will use
reasonable efforts to maintain during the
Term, at Holdings' or the Company's
expense, Director's and Officer's liability
insurance in a reasonable amount covering
all insurable acts of the Employee
pursuant to this Agreement provided that
the Employee's coverage will not be
less extensive than that provided by
Holdings or the Company to any other
director or officer of Holdings, the
Company or any Affiliate.
4.3 Fringe Benefits. The Employee shall be entitled during the
Term to the following additional benefits:
(i) a company-owned automobile of a
make and model approved by the Compensation
Committee as appropriate for an
officer of the position of the Employee;
(ii) company-owned club membership (or
to the extent the club does not permit
company membership, reimbursement for
individual membership) for fees, dues and
fixed expenses only, paid by the
Company and/or the Employee, which shall
not exceed Ten Thousand
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Dollars ($10,000.00) per year; and (iii)
paid vacation days in accordance with
standard Company policy for similarly
situated officers.
5. Termination of Employment. The Employee's employment with
the
Company shall terminate upon the death of
the Employee, and the Company shall
have the right, at any time during the
Term, by delivery of written notice to
the Employee, to terminate the Employee's
employment as a result of the
Employee's Permanent Disability (as such
term is defined in Section 5.1 hereof),
for Cause (as such term is defined in
Section 5.3 hereof) or for any other
reason, and the Employee shall have the
right to resign, the consequences of any
such termination or resignation being as
specified in this Section 5:
5.1 Death; Disability. If the Employee's employment with the
Company is terminated by reason of the
Employee's death or Permanent Disability
during the Term, the obligations of the
Company and Holdings under this
Agreement shall be satisfied by providing
the benefits set forth in the
Company's life insurance or disability
benefit plan or plans, as the case may
be. The Employee shall not be entitled to
any other payments or compensation
under this Agreement except for (i) Base
Salary accrued and unpaid to the date
of death or Permanent Disability, (ii) any
vested benefits as of the date of
death or termination for Permanent
Disability under any awards to the Employee
pursuant to the TravelCenters of America,
Inc. 2001 Stock Option Plan, and any
other such plan or individual agreement
adopted after the date of this Agreement
(collectively, the "Stock Incentive
Plans"), or any amount payable under any
other benefit plan of the Company or any
Affiliate, in accordance with the terms
of any such plan, (iii) an amount equal to
the product of (x) the Annual Bonus,
if any, determined by the Compensation
Committee for the year in which the
termination occurs, multiplied by (y) the
fraction, the numerator of which
equals the number of days the Employee
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was employed by the Company during the
Fiscal Year in which such termination
occurs and the denominator of which is
three hundred sixty-five (365), and (iv)
if the Employee and/or his spouse and
dependents properly elect continued
medical coverage ("COBRA") in accordance
with Code section 4980B, the Company
will pay the entire cost of the premiums
for such continued medical coverage for
the maximum required period of coverage
under Code section 4980B(f). "Permanent
Disability," as used in this Section 5.1,
shall mean the physical or mental
inability of the Employee to perform,
consistent with past practice, the
essential functions of such Employee's
duties as specified in Section 2.1
hereof, with reasonable accommodation to
the extent required by the applicable
requirements of the Americans with
Disabilities Act, for at least twelve (12)
consecutive months. Determination of
Permanent Disability shall be made
initially by the Board of Directors of the
Company. If there is a disagreement
between the Employee and the Company as to
the existence of such a Permanent
Disability, such disagreement shall be
resolved by the determination of two
physicians, one selected by the Employee
and one selected by the Company. If
such physicians shall disagree, the
decision shall be made by a third physician
selected by the first two physicians. The
fees and expenses of all of the
physicians shall be paid by the
Company.
5.2 Resignation. If the Employee's employment with the Company
is terminated during the Term by reason of
the Employee's resignation (other
than for "Good Reason" as defined in
Section 5.5 hereof), all obligations of the
Company and Holdings, including, without
limitation, the obligation to pay
salary or other amounts payable under this
Agreement to or for the benefit of
the Employee, shall terminate upon the
effective date of such resignation, and
the Employee shall not be entitled to any
compensation under this Agreement
except for Base Salary accrued and unpaid
through, and any vested benefits under
any awards to
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the Employee pursuant to the Stock
Incentive Plans, or any amount payable under
any other benefit plan of the Company or
any Affiliate in accordance with the
terms of such plan, as of the effective
date of such resignation. The Employee
agrees to give the Company one hundred
twenty (120) days notice of his
resignation (other than for Good
Reason).
5.3 Company's Right to Terminate for Cause. If the Employee
shall be discharged for "Cause" (as defined
below) during the Term, all
obligations of the Company and Holdings,
including, without limitation, the
obligation to pay salary or other amounts
payable under this Agreement to or for
the benefit of the Employee, shall
terminate upon the effective date of such
discharge, and the Employee shall not be
entitled to any compensation under this
Agreement except for Base Salary accrued
and unpaid through, and vested benefits
under any awards to the Employee pursuant
to the Stock Incentive Plans, or any
amount payable under any other benefit plan
of the Company or any Affiliate in
accordance with the terms of such plan, as
of the effective date of such
discharge. As used in this Agreement,
"Cause" shall mean a discharge in one or
more of the following events:
(i) the Employee's misappropriation of money or other assets
or
property, breach of fiduciary duty, tortious conduct or other act
of
dishonesty
with respect to the Company or any Affiliate; the Employee's
conviction
of, or plea of guilty or nolo contendere to, any act of fraud,
embezzlement, tortious conduct or any crime for an offense that
constitutes a felony, or the Employee's indictment for any crime
involving
dishonesty
or moral turpitude;
(ii) the Employee's continuing, repeated willful failure or
refusal to
follow written directions of the Board of Directors of the
Company or
Holdings which failure or refusal continues following the
Employee's
receipt of written notice
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from such
Board of Directors advising him of the acts or omissions that
constitute
the
