This Indemnification Agreement involves
Title: 2ND AMENDED/RESTATED INDEMNITY AND HOLD HARMLESS AGREEMENT
Governing Law: Texas Date: 3/26/2004
Law Firm: Kemp Smith LLP
SECOND AMENDED AND RESTATED INDEMNITY AND
HOLD HARMLESS AGREEMENT
PETRO, INC. - INDEMNITOR
This Second Amended and Restated Indemnity and Hold Harmless Agreement (the “Agreement”) is entered into on February 9, 2004 by Petro, Inc. , a Texas corporation (“Indemnitor”) for the benefit of Petro Stopping Centers Holdings, L.P. , a Delaware limited partnership (the “Petro Holdings”), Petro Stopping Centers, L.P. , a Delaware limited partnership (“Petro Operating”), Petro, Inc. , a Texas corporation (“Petro”) in its capacity as a general partner of both Petro Holdings and Petro Operating, Petro Holdings Financial Corporation , a Delaware corporation and wholly owned subsidiary of Petro Holdings (“Petro Holdings Financial”), Petro Distributing, Inc. , a Delaware corporation and wholly owned subsidiary of Petro Operating (“Petro Distributing”), Petro Financial Corporation , a Delaware corporation and wholly owned subsidiary of Petro Operating (“Petro Financial”), and any other party liable for the Debt Obligations (as defined below). This Agreement amends, restates and continues that certain Indemnity and Hold Harmless Agreement (the “Original Hold Harmless Agreement”) dated January 30, 1997, which was amended and restated by that certain Amended and Restated Indemnity and Hold Harmless Agreement (the “First Restated Hold Harmless Agreement”) dated July 23, 1999 by Petro, Inc. (the Original Hold Harmless Agreement and the First Restated Hold Harmless Agreement are collectively referred to as the “Previous Hold Harmless Agreements”).
Indemnitor was a party to that certain Participation Agreement (the “Participation Agreement”) dated May 1, 1992 and that certain Amended and Restated Limited Partnership Agreement of Petro PSC Properties, L.P. (the “PSCP Partnership Agreement”) dated May 1, 1992. Pursuant to the Participation Agreement and the PSCP Partnership Agreement, Indemnitor agreed to contribute and convey to Petro Operating all of those rights and assets more specifically described in exhibits to the Participation Agreement, subject to such obligations and indebtedness as the parties to the PSCP Partnership Agreement expressly agreed that Petro Operating would assume as set forth in exhibits to the Participation Agreement and the PSCP Partnership Agreement.
But for the operation of the Previous Hold Harmless Agreements, Petro, Roadside, Inc., a Delaware corporation (“Roadside”) (which up until and including the effective date of the Original Hold Harmless Agreement was a general partner of the Petro Operating), Petro Operating GP Corp., a Delaware corporation (“Operating GP”) (which up until and including the effective date of the First Restated Hold Harmless Agreement was a general partner of the Petro Operating), and Petro Financial would have been liable for the obligations of indebtedness that are described in Exhibit ”A” attached to each of the Previous Hold Harmless Agreements. Consequently, Petro, Roadside, Operating GP, and Petro Financial would have borne the economic risk of loss (the “Economic Risk of Loss”) under section 752 of the Internal Revenue Code of 1986, as amended (the “Code”), and the Treasury regulations thereunder, and would have been at risk (“At Risk”) under section 465 of the Code for such indebtedness. The Previous Hold Harmless Agreements were entered into to ensure that Indemnitor would be solely liable for a specific dollar amount (as adjusted under Paragraph 1.2 of each of the Previous Harmless Agreements) of indebtedness (the “Old Indemnified Amount”) so that the Indemnitor would bear the Economic Risk of Loss and be At Risk for the Old Indemnified Amount. By making the Indemnitor bear the Economic Risk of Loss and be At Risk for the Old Indemnified Amount, the Indemnitor has been able to: (i) avoid recognizing gain under section 731(a)(1) of the Code as a result of a decrease in Indemnitor’s share of liabilities under section 752(b) of the Code and the Treasury regulations thereunder; (ii) receive an allocation of debts and liabilities for tax purposes such that Indemnitor’s adjusted tax basis in his interest in Petro Holdings allows him to utilize deductions and losses, if any, allocated to him from Petro Holdings; and (iii) receive an allocation of debts and liabilities for tax purposes such that Indemnitor’s amount At Risk in Petro Holdings allows him to utilize deductions and losses, if any, allocated to him from Petro Holdings.
This Agreement is being entered into in connection with the closing of a series of transactions (the “Refinancing Transactions”) pursuant to which the Petro Holdings and Petro Operating will refinance substantially all of their indebtedness. The Refinancing Transactions are described in an offering memorandum (the “Offering Memorandum”) being issued in connection with the offering of new senior secured notes that are due in 2012. As a result of the
Refinancing Transactions, Petro Holdings, Petro Operating, Petro, Petro Holdings Financial, Petro Distributing, and/or Petro Financial will be liable on various debt obligations that are described on the attached Exhibit ”A” (defined collectively as the “Debt Obligations”). The Debt Obligations are a continuation, confirmation, extension, increase and/or additional issuance of debt represented by the various debt obligations described in the Previous Hold Harmless Agreements. To evidence the continuing intent and legal obligation to continue the terms and provisions of the Previous Hold Harmless Agreements with respect to the Debt Obligations, as continued, increased, extended and/or amended, Indemnitor is entering into this Agreement.
NOW, THEREFORE , in consideration of the mutual agreements and covenants set forth herein, including, but not limited to, the events which were attendant to the formation and operation of Petro Holdings and Petro Operating and the confirmation, extension, increase creation and/or issuance of the Debt Obligations, the parties agree as follows:
1. Indemnification Provisions
1.1 Indemnitor shall indemnify and hold harmless Petro Holdings, Petro Operating, Petro, Petro Holdings Financial, Petro Distributing, Petro Financial, and any other party liable for the Debt Obligations, and their respective legal representatives, successors, assigns, subsidiaries and past and present officers, directors, partners, agents and employees (collectively, the “Indemnified Parties”), from and against any and all claims, causes of action, liabilities, obligations, losses, costs, damages and expenses (including reasonable attorneys’ fees) suffered or incurred by any of the Indemnified Parties, of whatever kind, nature or character, whether arising before or after the date of this Agreement, and whether known or unknown, liquidated or unliquidated, fixed or contingent, arising from any loan, assumption, guaranty or other agreement executed by any Indemnified Party or by reason of operation of law, in connection with the Debt Obligations and the liabilities thereunder, including, but not limited to, the liability of any Indemnified Party who may be a subrogee with respect to the Debt Obligations (defined collectively as the “Indemnified Claims”), in an amount equal to $3,050,000 , or such greater or lesser amount as specified in Paragraph 1.2, below (with the foregoing amount hereinafter referred to as the “Indemnified Amount”); provided, however, the indemnity and hold harmless provided hereunder shall not relieve the Indemnified Parties from making regular interest and principal payments on and otherwise satisfying all obligations with respect to the Debt Obligations until (i) an Event of Default or Default (as defined in the instruments giving rise to and governing the repayment of the applicable Debt Obligations) has occurred in connection with one or more of the Debt Obligations which remains uncured and/or is not otherwise waived, (ii) all amounts owing on the Debt Obligations in default become immediately due and payable, and (iii) all real and personal property, if any, liable for or securing the Debt Obligations in default has been exhausted or otherwise disposed of to satisfy the Debt Obligations. The Indemnified Amount payable hereunder shall be paid to the Indemnified Parties proportionately based on the Indemnified Claims incurred by each of the Indemnified Parties over the total Indemnified Claims incurred by all of the Indemnified Parties.
1.2 Notwithstanding anything contained herein to the contrary, the amount that Indemnitor shall be required to indemnify and hold harmless the Indemnified Parties in the manner specified in Paragraph 1.1, above, with respect to the Debt Obligations shall be no less nor more than the amount necessary to cause Indemnitor’s adjusted tax basis in his interest in Petro Holdings (pursuant to both section 465 of the Code and Subchapter K of Chapter 1 of Subtitle A of the Code) at all times to equal no less than a minimum of One Dollar ($1.00), determined after (i) taking into account all adjustments to Indemnitor’s tax basis in his interest in Petro Holdings resulting from partnership operations both before and after the date of this Agreement, including, but not limited to, the allocation to Indemnitor of his proportionate share of income, gains, deductions, losses, credits and all other tax attributes pursuant to the terms of the limited partnership agreement of Petro Holdings, as amended from time to time (the “Partnership Agreement”), (ii) allocating to Indemnitor pursuant to the terms and provisions of section 752 of the Code and sections 1.752-3