Exhibit 10.4

 

LOGO [g443383g51v36.jpg]

DISTRIBUTOR SALES AGREEMENT

between

SOUTHWEST CONVENIENCE STORES, LLC

and

ALON USA, LP

 

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Detail Schedule

 

Effective Date

   November 26, 2012 Distributor    Name    Southwest Convenience Stores, LLC   

 

Type of Entity

  

 

Limited Liability Company

  

 

State of Organization

  

 

Texas

  

 

Principal Offices

  

 

4001 Penbrook, Suite 400

Odessa, Texas 79762

Branded Products (§1.1)    Gasoline and diesel fuel Expiration Date (§12)   
November 26, 2032 Addresses for Notice (§19)    Distributor    US Mail   

Southwest Convenience Stores, LLC

Attn: Yossi Lipman

P.O. Box 711

Odessa, Texas 79760

     

 

Street

  

 

Southwest Convenience Stores, LLC

Attn: Yossi Lipman

4001 Penbrook, Suite 400

Odessa, Texas 7976

     

 

Fax

  

 

(432) 332-9307 Attn: Yossi Lipman

  

 

Alon

  

 

US Mail

  

 

Alon USA, LP

Attn: Manager, Branded Fuels

P.O. Box 517030

Dallas, Texas 75251-7030

     

 

Street

  

 

Alon USA, LP

Attn: Manager, Branded Fuels

12700 Park Central Drive, Suite 1600

Dallas, Texas 75251

     

 

Fax

  

 

(972) 367-3728 Attn: Manager, Branded Fuels

 

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This Distributor Sales Agreement (this “Agreement”) is executed to be effective
as of the Effective Date stated in the attached Detail Schedule, by ALON USA, LP
(“Alon”), and the Distributor identified in the Detail Schedule (“Distributor”)
(each a “Party” and collectively the “Parties”) to set out the terms and
conditions under which (a) Alon will sell certain petroleum products to
Distributor for resale by Distributor, (b) Distributor will participate in the
Alon payment card network, and (c) Alon will make certain services available to
Distributor in connection with Distributor’s resale of Alon-branded petroleum
products and Distributor’s participation in the Alon payment card network.

Background

A. Alon owns or licenses all rights to use certain trademarks, which may be
changed at Alon’s sole discretion, (the “Alon Marks”). The Alon Marks, together
with any other trademark or trade dress used by Alon for the marketing and sale
of Alon-branded gasoline and/or diesel (the “Branded Products”), collectively
constitute the “Alon Brand and Image.”

B. Alon and Distributor desire to provide for Distributor’s purchase from Alon
of the Branded Products for resale by Distributor, all in accordance with the
terms and provisions of this Agreement.

C. Alon operates the Alon payment card network (the “Credit Card Program”) and
from time to time conducts a variety of marketing support activities (the
“Marketing Services”) to facilitate retail sales of Branded Products under the
Alon Marks.

D. Distributor desires to (a) sell the Branded Products under the Alon Marks,
and (b) use the Credit Card Program and Marketing Services to facilitate sales
of the Branded Products, all at Covered Stations (as set forth on Schedule
2.1.3).

E. This Agreement covers (a) the sale by Alon, and the purchase by Distributor,
of the Branded Products, (b) use of the Alon Marks in connection with the sale
of the Branded Products at the Covered Locations, (c) participation in the
Credit Card Program with respect to such Covered Locations and use of the Alon
Marks in connection with the Credit Card Program, and (d) availability of the
Marketing Services.

F. Each schedule attached to this Agreement is incorporated in this Agreement
for all purposes.

NOW, THEREFORE, Alon and Distributor agree as follows:

1.     Purchase and Sale of Branded Products

1.1 Products and Quantities. For the term of this Agreement, Alon agrees to sell
to Distributor and Distributor agrees to purchase from Alon each month between
90% and 120% of the estimated monthly quantities of Branded Products as set
forth below. The estimated monthly quantities shall be purchased ratably. Such
obligation shall include the requirement to purchase quantities reasonably
evenly over the course of each month and on a month to month basis. Alon and
Distributor agree that the estimated monthly quantities of the Branded Products
are reasonable and material to this Agreement. Distributor understands and
agrees that the failure of Distributor to purchase the required quantities of
Branded Products as provided in this Section 1.1 shall be a material violation
of this Agreement.

Estimated Monthly Quantities of Branded Products:

 

Alon Gasoline

        Gallons

Alon No. 2/Diesel Fuel

        Gallons

 

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1.2 Price.

(a) Distributor shall pay Alon (i) the Alon-branded distributor price per unit
in effect for the Branded Products at the time the Branded Products are
delivered to Distributor minus the discount for the applicable Terminal (as
hereinafter defined) as set forth in the Discount Schedule and (ii) any
applicable freight, taxes, pipeline tariff, and delivery place differential
applicable to the location where product is delivered to Distributor. The
“Alon-branded distributor price” means the price for Branded Products set by
Alon from time to time under Alon’s traditional pricing program. Distributor may
ascertain current applicable prices from electronic transmissions from Alon so
long as Distributor maintains the required equipment or by contacting Alon’s
marketing department.

(b) The current discount structure is based on              gallons of Branded
Products annually. Alon reserves the right to review and make applicable changes
to the discounts reflected in the Discount Schedule if the Distributor’s
purchases do not meet or exceed              gallons of Branded Product
annually.

(c) At all times during the term of this Agreement, unless otherwise directed by
Alon Distributor shall purchase Branded Products for each Covered Station (as
hereinafter defined) only from the Terminal located in the market in which such
Covered Station is located.

1.3 Terms of Payment.

1.3.1 Unless Alon establishes other payment terms for Distributor, Distributor
shall pay Alon in cash upon the placement of each order for the Branded
Products.

1.3.2 At its sole determination, Alon may elect to extend credit to Distributor.
In such event, credit will be extended on such terms and conditions as Alon may
specify from time to time. Alon shall have the right at any time to withdraw the
extended credit or to modify the terms and conditions applicable thereto with or
without cause. In the event Alon extends credit to Distributor for one or more
purchases of the Branded Products, no practice or course of dealing, regardless
of duration or circumstances, shall obligate Alon to continue to extend credit
for additional purchases.

1.3.3 As promptly as possible after each delivery date, Alon will invoice
Distributor for delivery of the Branded Products to Distributor. Alon’s
invoices, delivery tickets and other documents pertinent to the supply of
Branded Products shall be prima facie evidence of the quantities, deliveries and
prices of said Branded Products.

1.3.4 Distributor expressly agrees that Alon may, and Distributor hereby directs
Alon to, offset amounts owed by Distributor to Alon for purchases of Branded
Products, and all other amounts owed or owing by Distributor to Alon hereunder,
against the amounts payable by Alon to Distributor under the Credit Card
Program.

1.3.5 To secure the payment of all sums of money owed by Distributor to Alon
hereunder, Distributor hereby grants Alon a continuing security interest in
(a) all Branded Products purchased under this Agreement and on the proceeds
thereof and (b) all proceeds due to Distributor under the Credit Card Program.
In order to perfect and enforce the security interest granted herein, Alon shall
have all of the rights and remedies afforded a secured party under the Uniform
Commercial Code, as adopted by the state in which Distributor has its principal
place of business. Distributor agrees to execute such other instruments as may
be necessary or appropriate for Alon to perfect the security interest granted
hereunder and agrees further that this Agreement may be filed of record by Alon
as a financing statement.

1.3.6 If at any time during the term of this Agreement there shall arise between
the Parties a dispute as to the amount payable by Distributor to Alon for any of
the Branded Products delivered or deliverable hereunder, Alon, at its sole
option, may suspend all further deliveries hereunder until the dispute is
settled to Alon’s satisfaction. Alon shall not be obligated to make up any
deliveries that are suspended under the provisions of this paragraph 1.3.6.

 

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1.3.7 Alon’s rights hereunder to offset, change credit terms or terms of sale,
enforce its security interests granted hereunder and to suspend sales of Branded
Products to Distributor shall be in addition to, and not in substitution for,
other rights and remedies available to Alon by operation of law and under other
provisions of this Agreement.

1.4 Delivery and Transportation of Branded Products.

1.4.1 Deliveries to Distributor shall be made at terminals or other supply
sources designated by Alon (each a “Terminal,” and collectively, “Terminals”),
whether or not such Terminals are owned or operated by Alon. From time to time
Alon may designate different or additional Terminals and determine the volumes,
grades, and types of Branded Products to be made available from each Terminal.
Alon shall have no obligation or liability for payment of Distributor’s
transportation costs to or from any Terminal.

1.4.2 Branded Products delivered under this Agreement shall be in quantities and
by the methods of delivery authorized at the Terminal. Delivery of the Branded
Products to Distributor’s transport trucks or to any authorized common, private
or contract carrier shall constitute delivery of the Branded Products to
Distributor.

1.4.3 Distributor’s transportation equipment shall have a load capacity
satisfactory to and approved by Alon. Distributor’s transportation equipment
shall be loaded only during regular scheduled hours of Terminal operation, as
such hours may be established from time to time.

1.4.4 Distributor warrants to Alon that Distributor’s employees and/or the
employees of common, private, contract carriers or others hired by Distributor
to deliver Branded Products are fully qualified to load and operate the vehicles
used in the transportation of Branded Products. Distributor shall ensure that
all such parties hired to deliver Branded Products shall be aware of all safety
rules, regulations and procedures to be observed at the Terminal and shall be
solely responsible for the failure of any such party to follow safe practices,
to observe safety rules, regulations and procedures at the Terminal, or to
comply with applicable laws and regulations.

1.4.5 Failure to notify Alon in writing of any loss arising from a claimed
defect in a Terminal’s loading equipment or from any loading shortage, defect or
other discrepancy, within five (5) days following delivery of the affected
Branded Product shall bar Distributor from asserting any claim against Alon
related to the claimed defect. Such notice shall substantiate said claim by
properly noted freight bills and sworn affidavit of the manager at the Terminal
from which the Branded Products were loaded. Claims for shortages of any Branded
Product delivered by common carrier shall comply with the terms of the tariff in
effect for said common carrier as well as the rules and regulations of the
government entity regulating said common carrier. Alon shall have the right to
specify other and additional claims procedures from time to time and to modify
the requirements for claims submissions.

1.4.6 In order to gain access to any Terminal, Distributor shall obtain and
furnish to the operator of that Terminal evidence that Distributor maintains the
insurance coverage required by such Terminal. Such insurance requirements may or
may not be met by Distributor’s compliance with the insurance requirements
stated in paragraph 6 below.

1.5 Measurement. The number of gallons of each Branded Product delivered
hereunder shall be determined on a temperature-adjusted basis, by using the
Abridged Volume Correction Table for Petroleum Oils, as prepared by the United
States Bureau of Standards.

1.6 Handling of Branded Products. Distributor shall comply with all laws, rules,
guidelines, requirements, and procedures in connection with loading,
transporting, handling, storing, testing, selling, dispensing or using the
Branded Products, including without limitation such guidelines as Alon may issue
from time to time with respect to high-sulfur diesel fuel, the Reid Vapor
Pressure level of motor fuel, and unleaded motor fuels.

 

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1.7 Product Specifications. All Branded Products sold under this Agreement shall
meet Alon’s specifications for the respective grades and types of Branded
Products at the time and place of delivery. Alon shall have the right to modify
existing specifications and/or adopt new specifications, grades, or types of
Branded Products at any time. Alon shall have the right at any time to
discontinue the sale of any of the grades or types of Branded Products in any
relevant geographic area. EXCEPT AS EXPRESSLY STATED ABOVE, ALON MAKES NO
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, REGARDING THE BRANDED
PRODUCTS OR THE PROVISION OF ANY SERVICES, INCLUDING, BUT NOT LIMITED TO, ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

1.8 Product Inspection. Distributor hereby authorizes Alon, at any time and to
the extent deemed necessary by Alon, to inspect, test and collect samples of
Branded Products located in Distributor’s facilities and equipment or in
Alon-branded retail facilities operated or served by Distributor. Distributor
shall cooperate with Alon in any investigation of any alleged violations of
Distributor’s obligations under this Agreement.

1.9 Claims for Quality. Failure to notify Alon in writing of a claimed defect in
quality of a Branded Product within ten (10) days of Distributor’s discovery of
any claimed defect shall bar Distributor from asserting any claim against Alon
related to the claimed defect. Any notice to Alon under this paragraph 1.9 shall
identify the Branded Product by delivery receipt number or other basis of
identification. In connection with any such notice, Distributor shall furnish
Alon evidence of the claimed defect, including any test results or reports of
investigation of the Branded Product. Distributor shall allow Alon access to the
subject Branded Product for inspection and shall deliver suitable quantities of
that Branded Product to Alon for testing.

1.10 Taxes. Distributor shall pay all taxes and other charges that may be
imposed by any federal, state or local or other governmental or other taxing
authority, on the sale, manufacture or distribution of the Branded Products,
provided that to the extent Alon is required by law to pay such tax or charge,
Distributor agrees to reimburse Alon for payment of such tax or charge promptly
upon receipt from Alon of written notice thereof. Distributor agrees that Alon
shall be entitled to offset any amounts due to Alon by Distributor pursuant to
this paragraph against the amounts payable by Alon to Distributor under the
Credit Card Program.

 

2. Trademark Use

2.1 Alon Marks

2.1.1 Subject to the terms and provisions of this Agreement, Distributor is
permitted to:

 

  (a) use the Alon Marks in connection with the Branded Products Distributor
offers for sale in retail transactions at certain stations owned by Distributor
and identified as Covered Stations (“Owned Stations”);

 

  (b) use the Alon Marks in promoting sales of Branded Products at Owned
Stations (including use of the Alon Marks in connection with the Credit Card
Program);

 

  (c) use the Alon Marks in connection with the Branded Products purchased from
Distributor for resale by dealers qualified by Distributor as required in
Section 2.3.11 (“Permitted Dealers”) at certain retail stations (“Dealer
Stations”); and

 

  (d) use the Alon Marks in promoting sales of Branded Products at Dealer
Stations (including use of the Alon Marks in connection with the Credit Card
Program).

2.1.2 References in this Agreement to the permitted “use” of the Alon Marks by
Distributor shall mean the sales, promotion and other activities set out in
subsections (a), (b), (c) and (d) above. Distributor shall insure that each use
described in subsections (c) and (d) above complies with terms and conditions at
least as restrictive as those contained in this Agreement.

 

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2.1.3 Distributor shall use the Alon Marks only in connection with the Owned
Stations and Dealer Stations shown on the attached Covered Station Schedule
(collectively, the “Covered Stations”), which schedule identifies, for each
Covered Station, the estimated annual quantity of Branded Products sold at such
facility. From time to time, on mutual agreement, Distributor and Alon may amend
the Covered Station Schedule to add or delete Covered Stations.

2.1.4 Distributor expressly agrees that an Owned Station or a Dealer Station
shall cease to be a Covered Station (and Distributor shall immediately delete
such Station from the Covered Station Schedule) if any of the following events
occur:

 

  (a) Distributor ceases to operate the facility or ceases to operate the
facility during the hours and on the days service stations in the area generally
are open;

 

  (b) a Permitted Dealer ceases to operate the facility or ceases to operate the
facility during the hours and on the days service stations in the area generally
are open;

 

  (c) Distributor ceases to be the sole supplier of petroleum products to an
Owned Station or a Dealer Station for any reason;

 

  (d) this Agreement is terminated for any reason;

 

  (e) Distributor and Alon amend the Covered Station Schedule to delete the
facility; or

 

  (f) a Covered Station fails to meet Minimum Product Standards and/or Minimum
Image Standards (each as defined below) as set by Alon from time to time.

Distributor shall comply with all applicable laws, including without limitation,
the Petroleum Marketing Practices Act (as hereinafter defined) in terminating
the status of any Owned Station or Dealer Station as a Covered Station. Alon’s
obligations under this Agreement with respect to such facility, and
Distributor’s and a Permitted Dealer’s rights (if any) relating to such
facility, shall terminate immediately on its loss of Covered Station status.

2.1.5 Distributor shall use each Alon Mark only in connection with the promotion
and sale of a Branded Product. Distributor shall not, and shall not permit any
Permitted Dealer to, sell or offer for sale any refined petroleum products not
supplied to Distributor by Alon, at any Covered Station or otherwise, under any
Alon Mark or under circumstances which would lead the public to believe such
products are Alon-branded products. Distributor further agrees that it will not
sell any refined petroleum products supplied to Distributor by Alon at any
retail station that is not a Covered Station or to any operator or dealer for
resale at any station that is not a Covered Station.

2.1.6 Distributor shall not, and shall cause each Permitted Dealer not to, use
the Alon Marks or the Alon Brand and Image (i) for any purpose or in any manner
other than the purposes and in the manner specifically contemplated by this
Agreement, (ii) in connection with any other business or any other property,
including any retail station that is not a Covered Station, or (iii) as part of
its corporate or business name.

2.1.7 Distributor shall have the right to sell products other than the Branded
Products such as grocery or convenience store items (“Unlicensed Products”) at
its Owned Stations, and to sell Unlicensed Products for retail resale at Dealer
Stations; provided that Distributor shall not, and shall cause each Permitted
Dealer not to, use the Alon Marks in connection with any Unlicensed Products.

2.1.8 Any use or attempted use of the Alon Marks or the Alon Brand and Image at
any Dealer Station pursuant to subsections (c) and (d) of Section 2.1.1 that
does not bind the Permitted Dealer to abide by terms and conditions in
conformance with, and at least as restrictive as, those contained in this
Agreement shall not be a permitted use under this Agreement of the Alon Marks,
the Alon Brand and Image, or any other rights under this Agreement and such
Dealer Station shall immediately cease to be a Covered Station.

 

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2.2 Rights of Alon; Limited Warranty

2.2.1 Distributor acknowledges and agrees that all rights, title and interest in
and to the Alon Marks, whether registered or unregistered, and the Alon Brand
and Image, including all goodwill associated with the Alon Marks and the Alon
Brand and Image, shall at all times remain the sole and exclusive property of
Alon. . Distributor further acknowledges and agrees that it shall obtain no
right of ownership or any other right whatsoever over or in relation to the Alon
Marks or the Alon Brand and Image, other than the limited rights granted in or
pursuant to this Agreement.. Any and all goodwill that may accrue as a result of
Distributor’s use of the Alon Marks and/or the Alon Brand and Image as permitted
hereunder shall inure solely to Alon.

2.2.2 Distributor shall permit Alon to inspect Covered Stations and other
facilities used by Distributor or a Permitted Dealer in connection with its
operations under this Agreement at any reasonable time for compliance with the
requirements of this Agreement. These inspection rights include but are not
limited to the right to inspect, sample and test Branded Products. Distributor
shall, and shall cause each Permitted Dealer to, cooperate fully with Alon in
such inspections and in any follow-up investigation that Alon deems appropriate,
including but not limited to investigations to determine if any of the Alon
Marks have been infringed or to determine if a breach of any of Distributor’s
obligations under this Agreement has occurred.

2.2.3 Alon may amend its Marking Policies and Signage Specifications (each as
defined below) from time to time in its discretion. Distributor acknowledges
that the Alon Brand and Image is constantly evolving and that the Alon Brand and
Image may change as it continues to evolve. Therefore, Distributor agrees that
it shall, and shall cause its Permitted Dealers to, make such changes in its
operations, including remodeling of Covered Stations, as may be reasonably
necessary to keep its operations up to date with the current Alon Brand and
Image, which shall include, but not be limited to, the exterior/interior
signage, color identification and equipment specifications. Any changes
reasonably necessary to comply with the then current Marking Policies, Signage
Specifications or Alon Brand and Image shall be completed as soon as reasonably
practicable after Distributor receives notice of an amendment thereto. At all
times during the term of this Agreement, the then most recent Image
Specification Manual (as hereinafter defined) shall be the standard for
determining the Alon Brand and Image.

2.2.4 Alon reserves the right at any time to change, modify, add or discontinue
any part of the Alon Brand and Image by written notification to Distributor.

2.2.5 Distributor acknowledges and agrees that any usage of the Alon Marks and
the Alon Brand and Image by Distributor, its Permitted Dealers or anyone on
Distributor’s behalf pursuant to this Agreement (or otherwise, even if such
action is a breach of this Agreement) will inure to the benefit of Alon.

2.2.6 Distributor recognizes that it is in the interests of the Parties to this
Agreement for Distributor to affirmatively conduct its business to reflect
favorably on the Parties and to further promote public acceptance of the Alon
Marks, the Alon Brand and Image and the Branded Products. In recognition of such
objectives, Distributor shall at all times conduct its operations, and shall
cause its Permitted Dealers to conduct their operations, at all Covered Stations
in accordance with the Minimum Product Standards and Minimum Image Standards.

2.2.7 Alon warrants that it owns or licenses the Alon Marks as of the Effective
Date and that Alon has taken all requisite action to authorize the making of
this Agreement under its organizational documents. ALON MAKES NO OTHER
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, REGARDING THIS AGREEMENT OR ITS
SUBJECT MATTER, INCLUDING BUT NOT LIMITED TO ANY WARRANTY AS TO THE VALIDITY OF
ANY ALON MARK, ANY WARRANTY OF SUITABILITY OR MERCHANTABILITY OR ANY
REPRESENTATION OR WARRANTY AS TO DISTRIBUTOR’S FUTURE OPERATING PERFORMANCE OR
RESULTS WHILE USING THE ALON MARKS OR THE ALON BRAND AND IMAGE.

 

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2.3 Distributor’s Obligations, Representations and Warranties

2.3.1 Distributor shall ensure that all Branded Products sold at Covered
Stations meet or exceed all applicable governmental and industry specifications
for the respective grades and types of Branded Products (“Minimum Product
Standards”). Distributor shall not sell, and shall not permit any Permitted
Dealer to sell, Branded Products at any Covered Station that do not meet or
exceed the Minimum Product Standards. Distributor agrees that Branded Products
purchased hereunder will not be mixed with any other petroleum products or
chemicals, except as expressly authorized or required by Alon.

2.3.2 At all times during the term of this Agreement, Distributor shall maintain
sufficient supplies of Branded Products in stock to meet promptly and fully the
requirements of all Covered Stations. Distributor shall (a) diligently promote
the sale and distribution of Branded Products to the Covered Stations, (b) cause
each Covered Station to (i) purchase all of its petroleum products supply from
Distributor and (ii) sell only Branded Products purchased from Distributor and
(c) cause all Covered Stations to display Branded Products prominently and
consistent with the demand therefor.

2.3.3 For each Covered Station, Distributor shall, at its expense, obtain,
install and maintain signage displaying Alon Marks in accordance with the
specifications set out by Alon (as may be amended by Alon pursuant to
Section 2.2.3, the “Signage Specifications”) in the Alon Image Specification
Manual provided to Distributor by Alon (as may be amended or modified by Alon
from time to time, the “Image Specification Manual”). By execution of this
Agreement, Distributor acknowledges receipt of the current Image Specification
Manual. Distributor may require Permitted Dealers to assume responsibility for
the duties under this Section 2.3.3 for purposes of the Dealer Stations, but no
such assumption shall relieve Distributor of its obligations under this
Section 2.3.3.

2.3.4 Distributor shall display the Alon Marks in accordance with Alon’s marking
policy set out by Alon in the Image Specification Manual (as may be amended by
Alon pursuant to Section 2.2.3, the “Marking Policy”). Distributor shall utilize
the symbol ® in conjunction with the federally registered trademarks and service
marks contained in the Alon Marks when used on or in connection with Branded
Products, on signage and in printed materials.

2.3.5 Distributor shall diligently promote retail sales of Branded Products
under the Alon Marks at the Covered Stations and shall ensure that each Owned
Station, whether operated directly by Distributor or by a contract operator, and
each Dealer Station is operated consistently with high industry standards,
including but not limited to compliance with all rules, guidelines,
requirements, permits, or procedures on or for loading, transportation,
handling, storing, testing, selling, dispensing or use of Branded Products,
including, without limitation, with respect to sulfur content, the Reid Vapor
Pressure level of motor fuel, and unleaded motor fuels.

2.3.6 Distributor shall comply with all laws, ordinances, rules, regulations,
permits and standards of all pertinent governmental or regulatory bodies and
authorities having jurisdiction with respect to the use of the Alon Marks
pursuant to this Agreement, the operation of each Covered Station, or the
handling, storage, testing, sale, distribution, transportation, or use of
Branded Products covered by this Agreement, including, if applicable, Branded
Products containing lead compounds and unleaded gasoline, and shall require each
subsequent purchaser for resale similarly to obligate itself. Distributor will
obtain and pay for all necessary licenses, permits or consents required for the
operation of its business at any Covered Station or performance of this
Agreement.

2.3.7 Distributor shall not do or permit to be done any act that would tend to
disparage the goodwill and reputation of Alon or of any Alon Mark, nor permit
any act that could be reasonably foreseen to prejudice, affect, impair or
destroy the title, interest, and/or ownership of Alon in any Alon Mark or the
legal existence or enforceability of any Alon Mark, or the Alon Brand and Image
generally. Should Distributor become aware of any third party infringement of
any one or more of the Alon Marks, or any improper or wrongful use of the Alon
Marks, Distributor shall immediately bring such infringement or improper use to
Alon’s attention in writing. In the event Alon chooses to pursue legal action
with respect to such infringement or improper use, Distributor shall, at Alon’s
expense, reasonably cooperate and assist Alon in such action.

 

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2.3.8 Distributor shall take all reasonable steps to protect the goodwill
associated with the Alon Marks and the Alon Brand and Image and, in order to
prevent any deception to the public, shall operate its business in accordance
with the standards and requirements of quality, appearance, cleanliness, safety,
access, size and service as from time to time prescribed by Alon. The steps
include, but are not limited to, maintaining Covered Stations in a neat,
attractive and safe condition, making repairs and renovations to Owned Stations
reasonably necessary to meet Alon’s standards, and maintaining adequate
inventories and trained personnel to serve the public in a manner commensurate
with the reputation of Alon-branded stations generally (the standards and
requirements described in this Section 2.3.8 being referred to herein as the
“Minimum Image Standards”).

2.3.9 During and after the term of this Agreement, Distributor shall not
challenge the validity of any Alon Mark, Alon’s ownership of any Alon Mark, or
Alon’s entitlement to use any Alon Mark in any court or proceeding, or attempt
to cancel or invalidate the registration of any Alon Mark. Distributor shall,
and shall cause each Permitted Dealer to, execute and deliver such documents, at
Alon’s expense, as Alon may request to protect its interests in the Alon Marks.

2.3.10 Distributor shall cooperate with Alon in the original registration or
renewing the registration of any Alon Mark as it becomes due, including
providing Alon with a reasonable number of specimens of Distributor’s commercial
use of the Alon Mark and specific information on dates and types of usage, as
requested by Alon, but Distributor shall have no obligation to pay any of the
applicable registration fees.

2.3.11 Distributor shall exercise due diligence before permitting any Dealer
Station to become a Covered Station under this Agreement to ensure that the
proposed Permitted Dealer is a qualified wholesale customer. A qualified
wholesale customer is a reputable independent dealer or potential independent
dealer for Distributor whose credit, prior experience, operations and existing
or planned facilities demonstrate such dealer’s capacity and ability to comply
with the terms of this Agreement. Alon shall have the right to review the
qualifications of each Permitted Dealer and proposed Permitted Dealer, and the
right to require Distributor to prohibit a Dealer Station from becoming a
Covered Station, or to terminate the status of a Dealer Station as a Covered
Station, if the Permitted Dealer is deemed unqualified or would not, or does
not, satisfy the requirements of Section 2.1.4. Alon’s review or non-review
under this section shall not relieve Distributor of its obligations under this
Section 2.3.11.

2.3.12 Distributor shall not make any representations to any person, including
without limitation, its Permitted Dealers or its retail customers, as to the
existence of any warranties of Alon with respect to Branded Products sold by
Distributor, nor shall Distributor represent that anyone other than Distributor
is in any way responsible for the quality of any product or service provided by
Distributor. Distributor shall make no representations that it is affiliated
with Alon in any manner, or that Alon in any manner guarantees the debts,
obligations or liabilities of Distributor.

2.3.13 Distributor shall cause each Permitted Dealer to comply with the terms of
this Agreement, including this Section 2.3. Distributor shall diligently enforce
the terms of this Agreement against each Permitted Dealer for its own benefit
and for the benefit of Alon. Distributor shall notify Alon promptly of any
noncompliance or suspected noncompliance with any term or obligation set forth
in this Agreement that could adversely affect any of the Alon Marks, the Alon
Brand and Image, or the goodwill represented by the Alon Marks or the Alon Brand
and Image.

2.3.14 Distributor shall, at its own cost and expense, immediately de-brand each
facility that loses Covered Station status, and shall de-brand all products
associated with such facility, in the same manner as provided in Section 12.3.
Distributor shall cause all such debranding to be completed within 60 days of
loss of Covered Station status. If Distributor fails to do so, then Alon or its
representatives shall have the right to de-brand the facility, and Distributor
shall reimburse Alon for all costs and expenses of the debranding. Distributor
agrees that Alon shall be entitled to offset any amounts due to Alon by
Distributor pursuant to this paragraph against the amounts payable by Alon to
Distributor under the Credit Card Program.

 

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2.3.15 Distributor is duly organized, validly existing and in good standing
under the laws of the state of organization set forth in the Detail Schedule and
is duly qualified to do business in each jurisdiction where Distributor conducts
its business and operations.

2.3.16 The execution, delivery, consummation and performance of this Agreement
by Distributor does not conflict with, or constitute a breach of, any terms of
Distributor’s charter or bylaws, or any contract, agreement, mortgage, lease or
restriction to which Distributor is a party or by which it is bound.

2.3.17 Distributor has all necessary corporate power and authority to execute,
deliver, consummate and perform this Agreement and this Agreement shall be
binding and enforceable against Distributor in accordance with its terms.

2.3.18 Distributor agrees that it will make every reasonable effort at all time
during the terms of this Agreement to provide sufficient working capital for
Distributor to faithfully fulfill its obligations under this Agreement.

2.3.19 Distributor has no material liabilities, adverse claims, commitments or
obligations of any nature as of the date of this Agreement, whether accrued,
unliquidated, absolute, contingent or otherwise which are not reflected in the
financial statements of Distributor furnished to Alon in connection with this
Agreement. All such financial statements fairly present the financial condition
and results of operation of Distributor.

2.3.20 There are no claims, suits, actions, proceedings or investigations
pending, or to the knowledge of Distributor’s directors and officers (after due
inquiry), threatened in any court or before any governmental agency or
instrumentality, or to the knowledge of Distributor’s directors and officers
(after due inquiry), any basis for any claim, action, suit, proceeding or
investigation, which affects or could affect, directly or indirectly, any of the
assets, properties, rights or business of Distributor.

 

3. Marketing Services

3.1 Alon may from time to time provide or coordinate Marketing Services for the
benefit of Distributors. From time to time, Alon may, at its sole discretion,
provide regional or local advertising or marketing for the Alon Marks in
Distributor’s geographic area and may make available to Distributor advertising
or marketing support such as materials or cooperative advertising opportunities,
but no course of dealing, practice or custom by Alon acting independently or
between the Parties to this Agreement shall create any duty or obligation on the
part of Alon to support the Alon Marks with any particular kind or level of
advertising or marketing support or activity.

3.2 Alon will afford Distributor and Distributor’s Permitted Dealers an
opportunity to participate in marketing or advertising programs (if any)
initiated by Alon.

3.3 Distributor shall not, and shall cause each Permitted Dealer not to, use any
advertising, programs or other Marketing Services made available by Alon
(including any technology related thereto) for any purpose other than as
expressly contemplated by this Agreement in connection with a Covered Station.
In furtherance of the foregoing, Distributor agrees that it will not, and will
cause each Permitted Dealer not to, use any advertising, programs or other
Marketing Services made available by Alon (including any technology related
thereto) at any Owned Station or Dealer Station which is not a Covered Station
and that the confidentiality and non-use provisions of Section 8 shall apply to
all advertising, programs and other Marketing Services made available by Alon
(including any technology related thereto). Distributor further agrees that it
shall not, and will not permit any Permitted Dealer to, use any programs or
other marketing services or related technology that is not provided by Alon at
any Covered Station without Alon’s prior written consent which may be withheld
in Alon’s sole discretion.

 

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3.4 Distributor acknowledges that the Marketing Services, including the
technology, the trade secrets and other information relating thereto, that may
be made available to Distributor pursuant to this Agreement are in addition to
any skills, knowledge or information that Distributor, any Permitted Dealer or
their respective personnel, agents and representatives currently have and is in
addition to customary or usual skills generally possessed in the business and
retail community.

 

4. Charges for Marketing Services

Should the Distributor choose to participate in Marketing Services, Distributor
shall pay for all Marketing Services in which Distributor or its Permitted
Dealers participate according to the terms of the particular program offered and
to the extent the program requires payments by participants. Alon may offset any
amounts due under this Section 4 against the amounts payable by Alon to
Distributor under the Credit Card Program.

 

5. Credit Card Program

5.1 Definitions. Capitalized terms used in this Section 5 that are not otherwise
defined in this Section 5 or elsewhere in this Agreement shall have the meanings
given such terms in the schedule attached hereto as the “Credit Card Program
Defined Terms Schedule.”

5.2 Distributor’s Participation.

5.2.1 Participation. Distributor shall, and shall cause each Owned Station which
is a Covered Station to, participate in the Credit Card Program during the term
of this Agreement. In furtherance thereof, Distributor must accept Cards in
transactions at each Owned Station which is a Covered Station and Distributor
shall cause all applicable conditions for authorization of Card Transactions to
be satisfied. Distributor’s participation in the Credit Card Program is subject
to (a) the terms of Alon’s agreements with the Alon Card Issuer and to the
regulations for approved Alon Card transactions imposed by the Alon Card Issuer
from time to time, (b) the obligation of Distributor to pay Alon, Alon Card
Issuer and Card Transaction Processor such fees and expenses as are described in
the fee schedule (the “Alon Payment Card Program Schedule”) included within the
Alon Branded Program Manual (as may be amended or modified by Alon from time to
time, the “Branded Program Manual”), (c) immediate termination upon termination
of Alon’s agreements with the Alon Card Issuer, and (d) immediate termination
upon termination of Alon’s agreements with Card Transaction Processor, unless
Alon has elected to replace Card Transaction Processor. By execution of this
Agreement, Distributor acknowledges receipt of the current Branded Program
Manual.

5.2.2 Service Elements. Alon will make the Credit Card Program available to
Distributor and its Permitted Dealers through contracts between Alon and
independent third party service providers. Under the contracts, such service
providers will provide processing services for Alon Cards, Bank Cards and Debit
Cards. The Credit Card Program will include the following service elements:
(a) specifications for required point of sale equipment; (b) credit card
application forms and application processing for Alon Cards; (c) subject to
approval, issuance of Alon Cards; (d) Bank Card processing; (e) Debit Card
processing; (f) responses to requests for copies of sales drafts; and
(g) processing chargebacks.

5.2.3 Credit Card Applications. Under its contract with Alon, Alon Card Issuer
is obligated to provide Distributor with applications for Alon Cards. Alon Card
Issuer will process Alon Card applications as received and either issue a Alon
Card to the applicant or deny the card in accordance with Alon Card Issuer’s
procedures. Distributor agrees to, and shall cause Permitted Dealers to, display
Alon Card applications and promotional material at all Covered Stations at all
times during the term of this Agreement.

5.2.4 Processing Services. Under its contract with Alon, Card Transaction
Processor is obligated to provide Card Transaction processing services to
Distributor and its Permitted Dealers for Alon Card, Bank Card, and Debit Card
transactions. Alon’s obligation to provide services to Distributor under the
Credit Card Program is limited to and defined by (a) the services Card
Transaction Processor has agreed to provide Alon and (b) Alon’s agreement in
Section 5.5.1 to collect and process net proceeds from Card Transactions for
Distributor.

 

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5.3 Permitted Dealer Participation.

5.3.1 Participation. Distributor shall cause each Permitted Dealer, and each
Dealer Station which is a Covered Station, to participate in the Credit Card
Program during the term of this Agreement. In furtherance thereof, Distributor
shall cause each Permitted Dealer to accept Cards in transactions at Dealer
Stations which are Covered Stations and Distributor shall cause Permitted
Dealers to satisfy all applicable conditions for authorization of Card
Transactions. Each Permitted Dealer’s participation in the Credit Card Program
shall be subject to (a) the terms of Alon’s agreements with the Alon Card Issuer
and the regulations for approved Alon Card transactions imposed by the Alon Card
Issuer from time to time, (b) Permitted Dealer’s obligation to pay Alon, Alon
Card Issuer and Card Transaction Processor such fees and expenses as are
described in the Alon Payment Card Program Schedule, (c) immediate termination
upon termination of Alon’s agreements with the Alon Card Issuer, and
(d) immediate termination upon termination of Alon’s agreements with Card
Transaction Processor, unless Alon has elected to replace Card Transaction
Processor.

5.3.2 Permitted Dealer Agreements. Distributor shall enter into an Alon Payment
Card Program Dealer Agreement with each Permitted Dealer in substantially the
form attached to this Agreement as Exhibit B. Distributor will provide Alon with
copies of all Alon Payment Card Program Dealer Agreements. Each Alon Payment
Card Program Dealer Agreement shall be a separate contract between Distributor
and the Permitted Dealer and shall create no contractual rights between the
Permitted Dealer and Alon, but Alon shall be a third party beneficiary of
certain covenants, conditions and restrictions applicable to the Permitted
Dealer under the Alon Payment Card Program Dealer Agreement and shall be
entitled to enforce those provisions as a third party beneficiary. Distributor
shall be solely responsible for the breach of Distributor’s obligations under an
Alon Payment Card Program Dealer Agreement. BY PROVIDING THE FORM ALON PAYMENT
CARD PROGRAM DEALER AGREEMENT TO DISTRIBUTOR, ALON IS NOT PROVIDING LEGAL ADVICE
TO DISTRIBUTOR, BUT INSTEAD ALON ADVISES DISTRIBUTOR TO SEEK ITS OWN LEGAL
COUNSEL. ALON MAKES NO REPRESENTATION OF THE VALIDITY OR ADEQUACY OF THE ALON
PAYMENT CARD PROGRAM DEALER AGREEMENT OR ANY OF ITS PROVISIONS.

5.3.3 Settlement with Permitted Dealers. Alon shall not, and shall not be
obligated to, provide any processing, settlement or other services to Permitted
Dealers in connection with the Credit Card Program. Alon’s sole obligation to
provide processing or other services is limited to Alon’s agreement in
Section 5.5.1 to collect and process net proceeds from Card Transactions for
Distributor. Distributor shall be solely responsible for settlement with its
Permitted Dealers for proceeds from Card Transactions due to Permitted Dealers.

5.4 Point of Sale Equipment. Card Transaction Processor will furnish to Alon and
Alon will provide to Distributor as received the technical and operating
specifications for all point of sale equipment required at the pump or in the
store for initiating the processing of Card Transactions. Distributor and
Permitted Dealers may purchase or lease from Alon the required point of sale
equipment. Alon will provide Distributor and its Permitted Dealers with a list
of suggested equipment and prices and terms for lease or sale from Alon.
Installation of the required point of sale equipment shall be in accordance with
Card Transaction Processor’s requirements, including any required testing and
authentication procedures to initiate on-line processing services through Card
Transaction Processor’s designated media for connection to its processing
system. Distributor and its Permitted Dealers may acquire the required point of
sale equipment from other suppliers, but Distributor and its Permitted Dealers
must acquire only point of sale equipment and installation that meets
specifications and is otherwise compatible with Card Transaction Processor’s
data processing system, including any subsequent updates or modifications.

 

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5.5 Fees, Payments, Rights and Responsibilities.

5.5.1 Distributor Fees and Payments. Distributor is obligated to pay the fees
and expenses stated in the Alon Payment Card Program Schedule and authorizes
Card Transaction Processor to deduct from settlement proceeds received from Card
Issuers all fees and expenses then due to Card Transaction Process under the
Alon Payment Card Program Schedule. After such deductions, the Card Transaction
Processor shall transfer to Alon the net amount of settlement proceeds due. Alon
shall collect such net settlement proceeds and, after deducting all fees and
expenses due Alon under the Alon Payment Card Program Schedule and all other
amounts Alon is entitled to offset under this Agreement and applicable law,
shall offset the remaining proceeds against the amounts owed by Distributor to
Alon for purchases of Branded Products in accordance with Section 1.3.4 hereof.
If Card Transaction Processor or Alon fails to collect from settlement proceeds
all fees and expenses Distributor owes under the Alon Payment Card Program
Schedule, then Distributor shall pay Alon upon demand all unpaid amounts. Alon
may modify the Alon Payment Card Program Schedule at any time, provided no
increase in fees or in reimbursable expenses shall be effective unless
Distributor and the Permitted Dealers are given at least thirty (30) days prior
notice of the change.

5.5.2 Permitted Dealer Fees and Expenses. Distributor may charge Permitted
Dealers such reasonable fees and require reimbursement of such reasonable
expenses for participation in the Alon Payment Card Program as Distributor and
Permitted Dealers may agree in the Alon Payment Card Program Dealer Agreements.

5.5.3 Independent Status. Alon will make the Credit Card Program available
through independent, third parties acting as independent contractors in
providing those services. Alon shall have no responsibility for any error,
omission or breach of legal or contractual duty by Distributor, any Permitted
Dealer, Card Transaction Processor or any Card Issuer. Except for receipt and
disbursement of net proceeds from Card Transactions as described in
Section 5.5.1, Alon shall fully discharge its obligations with respect to the
Credit Card Program by providing the services of Card Transaction Processor and
Alon Card Issuer and any replacements for the existing providers required to
continue the Credit Card Program while it is in effect.

5.5.4 Taxes. Distributor shall be wholly responsible for collecting, reporting
and remitting timely all motor fuel taxes, all sales or use taxes and all other
excise taxes imposed under state or federal law upon any Card Transaction or the
proceeds of any Card Transaction. In the event that Alon is required by any
governmental entity to withhold any such taxes for the account of Distributor or
any Permitted Dealer, Alon may comply with such requirement without liability to
Distributor or any Permitted Dealer. DISTRIBUTOR SHALL INDEMNIFY, DEFEND AND
HOLD HARMLESS ALON, ITS AFFILIATES, AND EACH OF THEIR RESPECTIVE OFFICERS,
DIRECTORS AND EMPLOYEES FROM ANY LIABILITY OR EXPENSE RESULTING FROM THE FAILURE
OF DISTRIBUTOR OR ITS PERMITTED DEALERS TO COLLECT, REPORT OR PAY EXCISE TAXES
OR TO DO SO IN THE TIMES PROSCRIBED THEREFOR. Alon and Distributor agree that
upon Distributor or one of its Permitted Dealer’s electronically transmitting a
sales draft to a Card Issuer, the transaction is a draft upon a lender and the
proceeds remitted by the Card Issuer in settlement are the proceeds of a loan
made by the Card Issuer to the holder of the Card when the draft on the Card
Issuer is honored by the Card Issuer.

5.5.5 Compliance with Laws. Distributor, Card Transaction Processor and the Card
Issuers are and shall be wholly responsible for compliance with all applicable
state or federal law with respect to any aspect of the Card Transactions.

5.5.6 Cancellation of Participation. Alon Card Issuer and Alon separately
reserve the right to cancel the authorization of Distributor or any Permitted
Dealer to participate in the Credit Card Program at any time for any or all of
Distributor’s or such Permitted Dealer’s Covered Stations if Distributor or such
Permitted Dealer has (a) breached the terms of this Agreement, (b) violated the
regulations for Card Transactions or otherwise breached or violated any duty or
obligation under contract or at law to Alon or to a Card Issuer, or (c) filed,
or any creditor(s) of Distributor or such Permitted Dealer has filed against
Distributor or such Permitted Dealer, a petition in bankruptcy.

 

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5.5.7 Right to Withdraw. Alon reserves the right to withdraw the Credit Card
Program at any time in any geographic area with or without cause. The terms of
this Section 5 shall terminate upon the date specified in Alon’s notice of
withdrawal.

5.5.8 Effect of Cancellation or Withdrawal. On any cancellation or withdrawal of
the Credit Card Program pursuant to Sections 5.5.6 or 5.5.7, Distributor shall,
and/or shall cause the Permitted Dealer(s) to, as applicable, immediately cease
all use of the Credit Card Program.

 

6. Distributor’s Insurance Requirements

6.1 Unless otherwise specified by Alon, throughout the term of this Agreement
Distributor shall, at its sole expense, cause to be issued the following
insurance coverage:

 

  (a) Comprehensive General Liability: General commercial liability insurance
with a minimum combined single limit coverage of $1,000,000 per occurrence and
$1,000,000 aggregate for property damage, personal injury, or death of persons.

 

  (b) Automobile Liability: Automobile liability insurance of not less than
$1,000,000 combined single limit coverage per occurrence on all owned, hired,
borrowed and non-owned vehicles.

 

  (c) Worker’s Compensation: Worker’s compensation insurance with benefits no
less than $500,000 per accident and provided under a worker’s compensation
policy by a rated worker’s compensation subscriber licensed in the state where
Distributor conducts its business.

 

  (d) Occupational Disease Insurance: Employer’s liability insurance with
benefits no less than $500,000 for each accident, $500,000 for disease for each
employee and $1,000,000 aggregate disease policy limit.

 

  (e) Excess Umbrella Coverage: Excess umbrella coverage for the insurance
policies described in clauses (a) through (d) above with limits of no less than
$3,000,000.

6.2 Alon, its parent, subsidiaries, and affiliated companies, and their
respective employees, officers and agents shall be named as additional insureds
in each of Distributor’s policies, except Workers’ Compensation. Each of
Distributor’s policies shall be endorsed to provide that underwriters and
insurance companies of Distributor shall not have any right of subrogation
against Alon, its parent, subsidiaries and affiliated companies, and their
respective agents, employees, officers, invitees, servants, contractors,
subcontractors, underwriters and insurance companies. Any coverage provided Alon
by Distributor’s insurance under this Agreement is primary insurance and shall
not be considered contributory insurance with any insurance policies of Alon,
its parent, subsidiaries and affiliated companies.

6.3 Distributor shall furnish Alon certificates of insurance evidencing the
insurance required herein and, upon request, Alon may examine true copies of the
actual policies. The insurance coverage as stated above shall be maintained by
Distributor at its sole expense at all times during the term of this Agreement.
Each certificate shall provide that thirty (30) days prior written notice shall
be given Alon in the event of cancellation or material change of insurance
coverage or endorsements required hereunder.

 

7. Customer Complaints

Distributor shall respond to any customer inquiries or complaints received by
Distributor or Alon in connection with any customer served by Distributor or the
Covered Stations it operates or serves and shall take prompt and reasonable
action to correct or satisfactorily resolve each inquiry or complaint.

 

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8. Confidential Information

Distributor and Distributor’s officers, directors, employees, agents and
representatives (collectively, “Distributor Parties”) shall not, and shall not
permit any Permitted Dealer or any officer, director, employee, agent or
representative of such Permitted Dealer (collectively with such Permitted
Dealer, the “Dealer Parties”) to, during the term of this Agreement or
thereafter, communicate, reproduce, publish, disclose, divulge or use, for the
benefit of themselves (other than solely in connection with the operation of the
Covered Stations as contemplated by this Agreement) or any other person, entity,
business or operation (including any Owned Station or Dealer Station which is
not a Covered Station), any information relating to the trade practices,
software, computer systems, sales, promotions, marketing, programs, technology
or know-how of Alon which may be communicated to or in any way made available to
any Distributor Party or Dealer Party by virtue of Distributor’s operations
under or in connection with this Agreement (all, the “Confidential
Information”). Distributor and Distributor Parties shall, and shall cause each
Dealer Party to, use the Confidential Information solely for the purpose of this
Agreement and the operation of the Covered Stations and expressly agree that no
Confidential Information shall be used for or in connection with any Owned
Station or Dealer Station which is not a Covered Station. Distributor shall
disclose Confidential Information only to those Distributor Parties or Dealer
Parties which are (i) employed or engaged in the operation of Covered Stations,
(ii) which need to know such Confidential Information for the purposes of
operating a Covered Station as contemplated by this Agreement, and (iii) which
have been informed of these restrictions and have agreed to comply with the
terms hereof.

 

9. Independent Status of Distributor

This Agreement does not reserve, give, or grant to Alon any right to manage or
control the day-to-day business of Distributor, any Permitted Dealer, or any
Covered Station, and neither Distributor nor any Permitted Dealer or their
respective employees or agents shall be agents or employees of Alon for any
reason or for any purpose whatsoever. Distributor is, and shall be at all times,
an independent business entity that is free to conduct its business as it
determines, subject to the obligations set forth in this Agreement. Distributor
agrees to place and maintain a sign in a prominent place at all Covered Stations
where Branded Products are sold pursuant to this Agreement identifying the
operator of the facility. Distributor shall not make any agreements,
representations or warranties in the name of or on behalf of Alon, and Alon
shall not be obligated by or have any liability under any agreements,
representations or warranties made by Distributor, nor shall Alon be obligated
for any damages to any person or property directly or indirectly arising out of
the operation of Distributor’s business conducted pursuant to this Agreement.

 

10. Force Majeure; Allocation

10.1 If Alon’s performance of any obligation under this Agreement is delayed,
prevented, or affected by strikes or other labor matters, fire, riot, war,
insurrection, terrorist acts, governmental authority or governmental requests,
or requisitions for national defense or other purposes, or any other cause
beyond the reasonable control of Alon, whether similar to or dissimilar from the
enumerated causes (it being expressly agreed that the causes enumerated above
are not exhaustive), performance during the period of such disability or
impossibility to perform shall be excused and no liability for damages shall
exist against Alon on account thereof. On cessation of the cause or causes of
any such failure or delay, Alon shall resume its performance hereunder, but such
failure or delay shall not operate to extend the term of this Agreement.

10.2 If deliveries by Alon to Distributor are made commercially impracticable
because of a shortage of Branded Products or interruption of Alon’s supply
origin or other conditions as provided in paragraph 10.1 above, Alon may
allocate its available supply of Branded Products among all of its customers,
including Distributor, in such manner as Alon in its sole discretion may deem
reasonable, without liability to Distributor for failure to deliver the
quantities of Branded Products that Distributor may require or otherwise be
entitled to under this Agreement; provided, however, that should federal or
state law and rules and regulations in implementation thereof establish a
mandatory allocation formula applicable to Alon, the available supply of Branded
Products shall be allocated in accordance with such federal or state law and the
rules and regulations issued pursuant thereto. Upon cessation

 

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of the cause or causes of any such failure or delay, performance hereof shall be
resumed, but such failure or delay shall not operate to extend the term of this
Agreement nor obligate either Party to deliver or take delivery of any Branded
Products not delivered or received as a result of such allocation.

 

11. Indemnity

DISTRIBUTOR SHALL INDEMNIFY, DEFEND AND HOLD HARMLESS THE INDEMNIFIED PARTIES
(DEFINED BELOW) FROM ANY AND ALL CLAIMS, LOSSES, LIABILITIES, DAMAGES,
SETTLEMENTS, JUDGMENTS, PENALTIES, FINES, SUITS, CAUSES OF ACTION AND COSTS AND
EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES AND COURT COSTS), SUFFERED OR
INCURRED BY ANY ONE OR MORE OF THEM DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO (A) THE OPERATION OF DISTRIBUTOR’S OR ANY PERMITTED DEALER’S
BUSINESS, (B) THE OPERATION OF ANY OWNED STATION OR DEALER STATION,
(C) DISTRIBUTOR’S OR ANY PERMITTED DEALER’S USE OF ANY ALON MARKS OR MARKETING
SERVICES OR PARTICIPATION IN THE CREDIT CARD PROGRAM, (D) DISTRIBUTOR’S BREACH
OF ANY OF THE TERMS, CONDITIONS OR WARRANTIES OF THIS AGREEMENT, (E) ANY
PERMITTED DEALER’S FAILURE TO COMPLY WITH ANY OF THE TERMS, CONDITIONS OR
WARRANTIES OF THIS AGREEMENT, (F) FALSITY, INCOMPLETENESS OR MISLEADING EFFECT
OF ANY OF DISTRIBUTOR’S REPRESENTATIONS UNDER THIS AGREEMENT, (G) THE SALE, USE,
HANDLING, MARKETING OR STORING OF ANY LICENSED PRODUCTS PURCHASED OR SOLD BY
DISTRIBUTOR OR ANY PERMITTED DEALER, (H) THE FAILURE OF DISTRIBUTOR OR ITS
PERMITTED DEALER TO COLLECT, REPORT OR PAY ANY STATE OR FEDERAL TAXES THE
DISTRIBUTOR OR ITS PERMITTED DEALER IS OBLIGATED TO COLLECT, REPORT OR PAY, OR
(I) ANY INJURY TO, OR DEATH OF, ANY PERSON OR PERSONS OR DAMAGE TO PROPERTY THAT
RESULTS, DIRECTLY OR INDIRECTLY, FROM ANY CONDUCT, ACT OR FAILURE TO ACT BY
DISTRIBUTOR, ITS EMPLOYEES, AGENTS, REPRESENTATIVES OR ANY PERMITTED DEALER, OR
THEIR EMPLOYEES, AGENTS AND REPRESENTATIVES, WHETHER OR NOT SAID CLAIMS, DEMANDS
AND CAUSES OF ACTION IN WHOLE OR IN PART ARE COVERED BY ONE OR MORE POLICIES OF
INSURANCE. THE FOREGOING OBLIGATIONS TO INDEMNIFY, DEFEND AND HOLD HARMLESS
SHALL APPLY REGARDLESS OF ANY NEGLIGENT ACT OR OMISSION BY ANY INDEMNIFIED
PARTY. “INDEMNIFIED PARTIES” MEANS ALON AND ITS EMPLOYEES, OFFICERS, DIRECTORS,
AGENTS, REPRESENTATIVES, PARENTS, LIMITED AND GENERAL PARTNERS, SUBSIDIARIES AND
AFFILIATES, AND THE EMPLOYEES, OFFICERS, DIRECTORS, AGENTS AND REPRESENTATIVES
OF SUCH PARENTS, LIMITED AND GENERAL PARTNERS, SUBSIDIARIES AND AFFILIATES. ALON
MAY PARTICIPATE IN AND CONTROL THE DEFENSE OF ANY PORTION OF ANY SUCH DEMAND,
CLAIM, LOSS, LIABILITY, DAMAGE, SETTLEMENT, JUDGMENT, PENALTY, FINE, SUIT, CAUSE
OF ACTION OR COST OR EXPENSE (INCLUDING REASONABLE ATTORNEYS’ FEES AND COURT
COSTS) AS TO WHICH COVERAGE BY THIS INDEMNIFICATION IS ANTICIPATED OR DISPUTED
OR OTHERWISE IN DOUBT.

 

12. Term and Termination

12.1 Term. This term of this Agreement shall begin on the Effective Date, and,
unless sooner terminated as provided in this Agreement, shall expire on the
Expiration Date stated in the Detail Schedule. Notwithstanding the foregoing, in
the event (i) this Agreement is not expressly renewed, replaced or terminated
prior to the Expiration Date and (ii) Alon has not exercised a right to
terminate or not renew this Agreement under the Petroleum Marketing Practices
Act (as defined below) or any successor statute prior to the Expiration Date and
such statute is then applicable to this Agreement, then the terms of this
Agreement as in effect on the Expiration Date shall be automatically renewed
thereafter on a month-to-month basis until such time as either (A) this
Agreement is so renewed, replaced or terminated, or (B) Alon has exercised a
right to terminate or not renew this Agreement pursuant to the Petroleum
Marketing Practices Act or any successor statute thereto.

12.2 Termination. This Agreement may be terminated for the reasons specified in
Title I of the Petroleum Marketing Practices Act, 15 U.S.C. § 2801, et seq., as
the same may be amended from time to time, including, without limitation, for
Distributor’s failure to comply with the terms and provisions of this Agreement.
A copy of the summary statement of the Petroleum Marketing Practices Act is
attached hereto and incorporated herein as Exhibit A.

 

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12.3 Effect of Nonrenewal or Termination.

12.3.1 On nonrenewal or termination of this Agreement for any reason,
Distributor shall, and shall cause each Permitted Dealer to, immediately and
permanently (a) cease all use or display of the Alon Marks, (b) cease all use of
the Credit Card Program, (c) return to Alon or, if requested by Alon, destroy
all printed materials bearing the Alon Marks, and (d) remove all traces of the
Alon Brand and Image from all Covered Stations and all Branded Products.

12.3.2 Sections 1.3.4, 1.3.5, 1.4, 1.9, 1.10, 2.2.1, 2.3.9, 2.3.12, 2.3.14,
5.5.4, 8, 11, 12.3 and 13 through 24 shall survive expiration or termination of
this Agreement for any reason.

 

13. Image Improvement Advances and Amortization

13.1 Alon may from time to time, upon the mutual agreement of Distributor and
Alon, advance sums (“Advances”) to Distributor for certain image improvements at
Distributor’s Alon-branded stations. Such Advances will be evidenced by separate
documentation between the Parties.

13.2 At the end of each calendar year, Advances made by Alon to Distributor
during the year will be totaled. Except to the extent payment is waived as
provided in Section 13.3 below, Distributor agrees to repay such Advances to
Alon in 60 equal, consecutive monthly payments beginning in the following
calendar year. Except to the extent all or a portion of payment is waived as
provided in Section 13.3 below, each monthly payment shall be equal to 1/60th of
the Advances and shall be due and payable ten (10) days following the end of
each calendar month. Payments shall be sent to Alon, Attention: Credit
Department, P.O. Box 517030, Dallas, Texas 75251.

13.3 Alon agrees to waive up to the full amount of the payment due for any
single month to the extent the following two conditions have been satisfied by
Distributor:

13.3.1 For the twelve (12) month period ending on the last day of such month,
Distributor’s monthly purchases of products under this Agreement have a standard
deviation of less than 15%; and

13.3.2 Distributor during the month has complied substantially with all other
terms of this Agreement between the Parties.

13.4 In the event this Agreement is terminated or not renewed for any reason,
all then-remaining monthly payments shall become immediately due and payable.

 

14. Assignability

Distributor shall not sell, assign or dispose of Distributor’s interest in this
Agreement in whole or in part, directly or indirectly, by operation of law or
otherwise, without the prior written consent of Alon, which may be withheld in
Alon’s sole discretion. Sale, assignment or other disposition of any interest in
Distributor which results in the purchaser, assignee or other transferee
acquiring the right to control Distributor (including any merger of Distributor
with another entity resulting in the current owners of Distributor’s ownership
interest owning less than a majority of the outstanding ownership interests of
the surviving corporation) shall be deemed an indirect disposition of
Distributor’s interest in this Agreement. Alon may sell or assign all, or any
part or parts of, this Agreement upon ten (10) days prior notice to Distributor.

 

15. Waiver

Alon’s or Distributor’s failure on any occasion to (a) insist on the other
Party’s performance or observance of a provision of this Agreement, or to insist
on the satisfaction of any condition to its own performance or observance of a
provision of this Agreement, or (b) exercise any of its rights or privileges
under this Agreement, shall not be construed as a waiver of any such provision,
condition, right or privilege on any other occasion.

 

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16. No Inducements or Reliance

16.1 Each Party acknowledges that it has not been induced to enter into this
Agreement by any representations or promises of the other Party that are not
specifically stated herein. More specifically, Distributor represents and
acknowledges that (a) Distributor has independently evaluated the merits and
risks of this Agreement and has consulted with such legal, tax, and business
advisors as Distributor deemed appropriate, and (b) Distributor has not relied
upon Alon or its representatives for any legal, tax or business advice or
disclosure regarding this Agreement.

16.2 Distributor further acknowledges that (a) this Agreement does not
constitute the grant of a franchise within the meaning of any applicable state
or federal law protecting franchisees, (b) Alon has made no representations as
to Distributor’s future operating performance or results while using the Alon
Marks or the Alon Brand and Image, either as an absolute quantity or range, and
(c) any information Alon has provided to Distributor that includes projections
of volumes or revenues from sales of Branded Products are mere estimates of
potential sales and actual results may be materially different from any such
estimates.

 

17. Entire Agreement

Subject to the immediately following sentence, this Agreement (and the schedules
and exhibits hereto) constitutes the entire agreement between Alon and
Distributor regarding the purchase and sale of Branded Products, the use of the
Alon Marks and the Alon Brand and Image and participation in the Credit Card
Program and supercedes any prior agreements between the Parties relating to the
purchase and sale of petroleum products, the use of the Alon Marks and the Alon
Brand and Image and participation in the Credit Card Program. Notwithstanding
the foregoing, this Agreement shall not supercede or affect in any manner any
separate or subsequent agreement or arrangement between Alon and Distributor
relating to amortization of image costs. Except when this Agreement expressly
provides that a Party may amend or modify a specific provision of this Agreement
unilaterally, no amendment or modification of this Agreement shall be binding on
either Party unless made in writing and signed by an authorized representative
of each Party. If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, the remainder hereof will not be affected
thereby.

 

18. Acceptance

This Agreement and any amendment or modification hereof shall be binding on Alon
only upon due execution by Alon. Commencement of performance under this
Agreement by either Party before such execution shall not be deemed or construed
as a waiver by Alon of this requirement.

 

19. Notices

Notices required under the terms of this Agreement shall be deemed to have been
properly given when such notice is (a) personally delivered, (b) deposited in
the United States mail, first class postage prepaid, (c) deposited with a
commercial overnight express delivery service, or (c) delivered by facsimile
addressed to Alon and Distributor at their respective addresses for notice
specified in the Detail Schedule. Either Party may substitute a different
address by giving written notice thereof to the other Party. The date of service
of a notice served by mail shall be deemed to be the date on which the notice is
deposited in the United States mail.

 

20. Attorney’s Fees

If Distributor breaches any material obligation under this Agreement and fails
to cure the breach within the time permitted (if any), and if Alon employs an
attorney to enforce or defend any of its rights or remedies hereunder,
Distributor shall pay all reasonable legal costs and expenses, including but not
limited to attorney’s fees, incurred by Alon in that connection.

 

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21. Headings

The headings contained in this Agreement are for reference only and shall have
no effect on its meaning or interpretation.

 

22. Successors

This Agreement shall inure to the benefit of and be binding upon the Parties
hereto, their heirs, representatives, successors, and assigns; subject, however,
to the limitations of Section 13 above.

 

23. Limitation of Liability

IN NO EVENT SHALL ALON BE LIABLE TO DISTRIBUTOR, OR TO ANY THIRD PARTY CLAIMING
BY, THROUGH OR UNDER DISTRIBUTOR, INCLUDING WITHOUT LIMITATION, ANY PERMITTED
DEALER, FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES OF ANY
KIND (INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS), HOWEVER CAUSED AND BASED
ON WHATEVER THEORY OF LIABILITY, WHETHER TORT, CONTRACT, STRICT LIABILITY,
NEGLIGENCE OR OTHERWISE, ARISING OUT OF OR RELATED TO THIS AGREEMENT.

 

24. No Third Party Beneficiaries

This Agreement is not intended to, and shall not, create any rights in or under
any benefits upon any person other than the Parties hereto.

 

25. Choice of Law; Venue

This Agreement shall be governed and interpreted in accordance with the laws of
the State of Texas, without regard to the conflicts of law provisions thereof.
Each Party submits to the jurisdiction of any state or federal court sitting in
the City of Dallas, Dallas County, Texas, in any action arising out of or
relating to this Agreement and agrees that all claims in respect of any such
action may be heard and determined in any such court.

[This space intentionally left blank]

 

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Executed to be effective as of the Effective Date.

 

ALON USA, LP     SOUTHWEST CONVENIENCE STORES, LLC By: Alon USA GP, LLC, its
General Partner     By:    /s/ Michael Oster     By:    /s/ Michael Oster  
Name: Michael Oster       Name: Michael Oster   Title: Senior Vice President    
  Title: Vice President

 

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Covered Station Schedule

(Section 2.1.3)

Distributor: Southwest Convenience Stores, LLC

All Stations Owned and/or Operated by Southwest Convenience Stores, LLC and its
affiliates as of the Effective Date.

Signed for confirmation:

 

ALON USA, LP     SOUTHWEST CONVENIENCE STORES, LLC By: Alon USA GP, LLC, its
General Partner     By:          By:     

    Name:             Name:         Title:             Title:    

Date:         Date:    

 

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Credit Card Program Defined Terms Schedule

(Section 5.1)

Capitalized terms used in this Schedule and not otherwise defined shall have the
meanings given such terms in the Distributor Sales Agreement of which this
Schedule is part.

“Alon Card” is a credit card identified by an Alon Mark.

“Alon Card Issuer” is the third party, independent entity that owns the right to
issue Alon Cards and to offer customers credit under their Alon Cards.

“Bank Card” is a credit card issued by any independent, third party issuer
authorized for processing in the Credit Card Program.

“Bank Card Issuer” is any person that issues Bank Cards included in the Credit
Card Program.

“Card” is any of an Alon Card, Bank Card or Debit Card.

“Card Issuer” is Alon Card Issuer, Bank Card Issuer or Debit Card Issuer. “Card
Issuers” are all of them.

“Card Transaction” is any activity related to a credit card transaction under
the Credit Card Program at a Covered Station between Distributor or a Permitted
Dealer, on the one hand, and the holder of a Bank Card, Debit Card or Alon Card,
on the other hand.

“Card Transaction Processor” is the third party independent entity, now or in
the future, who has contracted with Alon to provide data processing services for
credit card transactions by Distributor or a Permitted Dealer under the Credit
Card Program.

“Debit Card” is a debit card issued by any financial institution.

“Debit Card Issuer” is any person that issues Debit Cards authorized for
processing in the Credit Card Program.

“Dealer’s Subscription” refers to any valid contract between Distributor and a
Permitted Dealer for such dealer’s participation in the Credit Card Program.

 

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EXHIBIT A

Summary Statement of the

Petroleum Marketing Practices Act

SUMMARY OF TITLE I OF THE PETROLEUM MARKETING PRACTICES ACT

Summary of Legal Rights of Motor Fuel Franchisees

This is a summary of the franchise protection provisions of the Federal
Petroleum Marketing Practices Act, as amended in 1994 (the Act), 15 U.S.C.
sub-sections 2801-2806. This summary must be given to you, as a person holding a
franchise for the sale, consignment or distribution of gasoline or diesel motor
fuel, in connection with any termination or nonrenewal of your franchise by your
franchising company (referred to in this summary as your supplier).

You should read this summary carefully, and refer to the Act if necessary, to
determine whether a proposed termination or nonrenewal of your franchise is
lawful, and what legal remedies are available to you if you think the proposed
termination or failure to renew is not lawful. In addition, if you think your
supplier has failed to comply with the Act, you may wish to consult an attorney
in order to enforce your legal rights.

The franchise protection provisions of the Act apply to a variety of franchise
agreements. The term “franchise” is broadly defined as a license to use a motor
fuel trademark which is owned or controlled by a refiner, and it includes
secondary arrangements such as leases of real property and motor fuel supply
agreements which have existed continuously since May 15, 1973 regardless of a
subsequent withdrawal of a trademark. Thus, if you have lost the use of a
trademark previously granted by your supplier but have continued to receive
motor fuel supplies through a continuation of a supply agreement with your
supplier, you are protected under the Act.

Any issue arising under your franchise which is not governed by this Act will be
governed by the law of the State in which the principal place of business of
your franchise is located.

Although a State may specify the terms and conditions under which your franchise
may be transferred upon the death of the franchisee, it may not require a
payment to you (the franchisee) for the goodwill of a franchise upon termination
or nonrenewal.

The Act is intended to protect you, whether you are a distributor or a retailer,
from arbitrary or discriminatory termination or nonrenewal of your franchise
agreement. To accomplish this, the Act first lists the reasons for which
termination or nonrenewal is permitted. Any notice of termination or nonrenewal
must state the precise reason, as listed in the Act, for which the particular
termination or nonrenewal is being made. These reasons are described below under
the headings “Reasons for Termination” and “Reasons for Nonrenewal.”

The Act also requires your supplier to give you a written notice of termination
or intention not to renew the franchise within certain time periods. These
requirements are summarized below, under the heading “Notice Requirements for
Termination or Nonrenewal.”

The Act also provides certain special requirements with regard to trial and
interim franchise agreements, which are described below under the heading “Trial
and Interim Franchises.”

The act gives you certain legal rights if your supplier terminates or does not
renew your franchise in a way that is not permitted by the Act. These legal
rights are described below under the heading “Your Legal Rights.”

The Act contains provisions pertaining to waiver of franchisee rights and
applicable State law. These provisions are described under the heading “Waiver
of Rights and Applicable State Law.”

 

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This summary is intended as a simple and concise description of the general
nature of your rights under the Act. For a more detailed description of these
rights, you should read the text of the Petroleum Marketing Practices Act, as
amended in 1994 (15 U.S.C. sub-sections 2801-2806). This summary does not
purport to interpret the Act as amended, or to create new legal rights.

I. Reasons for Termination

If your franchise was entered into on or after June 19, 1978, the Act bars
termination of your franchise for any reasons other than those reasons discussed
below. If your franchise was entered into before June 19, 1978, there is no
statutory restriction on the reasons for which it may be terminated. If a
franchise entered into before June 19, 1978, is terminated, however, the Act
requires the supplier to reinstate the franchise relationship unless one of the
reasons listed under this heading or one of the additional reasons for
nonrenewable described below under the heading “Reasons for Nonrenewal” exists.

A. Non-Compliance with Franchise Agreement. Your supplier may terminate your
franchise if you do not comply with a reasonable and important requirement of
the franchise relationship. However, termination may not be based on a failure
to comply with a provision of the franchise that is illegal or unenforceable
under applicable Federal, State or local law. In order to terminate for
noncompliance with the franchise agreement, your supplier must have learned of
this noncompliance recently. The Act limits the time period within which your
supplier must have learned of your non-compliance to various periods, the
longest of which is 120 days, before you receive notification of the
termination.

B. Lack of Good Faith Efforts. Your supplier may terminate your franchise if you
have not made good faith efforts to carry out the requirements of the franchise,
provided you are first notified in writing that you are not meeting a
requirement of the franchise and you are given an opportunity to make a good
faith effort to carry out the requirement. This reason can be used by your
supplier only if you fail to make good faith efforts to carry out the
requirements of the franchise within the period which began not more than 180
days before you receive the notice of termination.

C. Mutual Agreement to Terminate the Franchise. A franchise can be terminated by
an agreement in writing between you and your supplier if the agreement is
entered into not more than 180 days before the effective date of the termination
and you receive a copy of that agreement, together with this summary statement
of your rights under the Act. You may cancel the agreement to terminate within 7
days after you receive a copy of the agreement, by mailing (by certified mail) a
written statement to this effect to your supplier.

D. Withdrawal From the Market Area. Under certain conditions, the Act permits
your supplier to terminate your franchise if your supplier is withdrawing from
marketing activities in the entire geographic area in which you operate. You
should read the Act for a more detailed description of the conditions under
which market withdrawal terminations are permitted. See 15 U.S.C. section 2802
(b)(E).

E. Other Events Permitting a Termination. If your supplier learns within the
time period specified in the Act (which in no case is more than 120 days prior
to the termination notice) that one of the following events has occurred, your
supplier may terminate your franchise agreement:

(1) Fraud or criminal misconduct by you that relates to the operation of your
marketing premises.

(2) You declare bankruptcy or a court determines that you are insolvent.

(3) You have a severe physical or mental disability lasting at least 3 months
which makes you unable to provide for the continued proper operation of the
marketing premises.

(4) Expiration of your supplier’s underlying lease to the leased marketing
premises, if (a) your supplier gave you written notice before the beginning of
the term of the franchise of the duration of the underlying lease and that the
underlying lease might expire and not be renewed during the term of the
franchise; (b) your franchisor offered to assign to you, during the 90-day
period after notification of termination or nonrenewal was given, any option
which the franchisor held to extend the underlying lease or to purchase the
marketing premises (such an assignment may be conditioned on the franchisor
receiving from both the

 

A-2

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landowner and the franchisee an unconditional release from liability for
specified events occurring after the assignment); and © in a situation in which
the franchisee acquires possession of the leased marketing premises effective
immediately after the loss of the right of franchisor to grant possession, the
franchisor, upon the written request of the franchisee, made a bona fide offer
to sell or assign to the franchisee the franchisor’s interest in any
improvements or equipment located on the premises, or offered the franchisee a
right of first refusal of any offer from another person to purchase the
franchisor’s interest in the improvements and equipment.

(5) Condemnation or other taking by the government, in whole or in part, of the
marketing premises pursuant to the power of eminent domain. If the termination
is based on a condemnation or other taking, your supplier must give you a fair
share of any compensation which he receives for any loss of business opportunity
or good will.

(6) Loss of your supplier’s right to grant the use of the trademark that is the
subject of the franchise, unless the loss was because of bad faith actions by
your supplier relating to trademark abuse, violation of Federal or State law, or
other fault or negligence.

(7) Destruction (other than by your supplier) of all or a substantial part of
your marketing premises. If the termination is based on the destruction of the
marketing premises and if the premises are rebuilt or replaced by your supplier
and operated under a franchise, your supplier must give you a right of first
refusal to this new franchise.

(8) Your failure to make payments to your supplier of any sums to which your
supplier is legally entitled.

(9) Your failure to operate the marketing premises for 7 consecutive days, or
any shorter period of time which, taking into account facts and circumstances,
amounts to an unreasonable period of time not to operate.

(10) Your intentional adulteration, mislabeling or misbranding of motor fuels or
other trademark violations.

(11) Your failure to comply with Federal, State, or local laws or regulations of
which you have knowledge and that relate to the operation of the marketing
premises.

(12) Your conviction of any felony involving moral turpitude.

(13) Any event that affects the franchise relationship and as a result of which
termination is reasonable.

II. Reasons for Nonrenewal

If your supplier gives notice that he does not intend to renew any franchise
agreement, the Act requires that the reason for nonrenewal must be either one of
the reasons for termination listed immediately above, or one of the reasons for
nonrenewal listed below.

A. Failure To Agree on Changes or Additions To Franchise. If you and your
supplier fail to agree to changes in the franchise that your supplier in good
faith has determined are required, and your supplier’s insistence on the changes
is not for the purpose of converting the leased premises to a company operation
or otherwise preventing the renewal of the franchise relationship, your supplier
may decline to renew the franchise.

B. Customer Complaints. If your supplier has received numerous customer
complaints relating to the condition of your marketing premises or to the
conduct of any of your employees, and you have failed to take prompt corrective
action after having been notified of these complaints, your supplier may decline
to renew the franchise.

 

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C. Unsafe or Unhealthful Operations. If you have failed repeatedly to operate
your marketing premises in a clean, safe and healthful manner after repeated
notices from your supplier, your supplier may decline to renew the franchise.

D. Operation of Franchise is Uneconomical. Under certain conditions specified in
the Act, your supplier may decline to renew your franchise if he has determined
that renewal of the franchise is likely to be uneconomical. Your supplier may
also decline to renew your franchise if he has decided to convert your marketing
premises to a use other than for the sale of motor fuel, to sell the premises,
or to materially alter, add to, or replace the premises.

III. Notice Requirements of Termination or Nonrenewal

The following is a description of the requirements for the notice which your
supplier must give you before he may terminate your franchise or decline to
renew your franchise relationship. These notice requirements apply to all
franchise terminations, including franchises entered into before June 9, 1978
and trial and interim franchise as well as to all nonrenewals of franchise
relationships.

A. How Much Notice Is Required. In most cases, your supplier must give you
notice of termination or nonrenewal at least 90 days before the termination or
renewal takes effect.

In circumstances where it would not be reasonable for your supplier to give you
90 days’ notice, he must give you notice as soon as he can do so. In addition,
if the franchise involves leased marketing premises, your supplier may not
establish a new franchise relationship involving the same premises until 30 days
after notice was given to you or the date the termination or nonrenewal takes
effect, whichever is later. If the franchise agreement permits, your supplier
may repossess the premises and, in reasonable circumstances, operate them
through his employees or agents.

If the termination or nonrenewal is based upon a determination to withdraw from
the marketing of motor fuel in the area, your supplier must give you notice at
least 180 days before the termination or nonrenewal takes effect.

B. Manner and Contents of Notice. To be valid, the notice must be in writing and
must be sent by certified mail or personally delivered to you. It must contain:

(1) A statement of your supplier’s intention to terminate the franchise or not
to renew the franchise relationship, together with his reasons for this action;

(2) The date the termination or nonrenewal takes effect; and

(3) A copy of this summary.

IV. Trial Franchises and Interim Franchises

The following is a description of the special requirements that apply to trial
and interim franchises.

A. Trial Franchises. A trial franchise is a franchise, entered into on or after
June 19, 1978, in which the franchisee has not previously been a party to a
franchise with the franchisor and which has an initial term of 1 year or less. A
trial franchise must be in writing and must make certain disclosures, including
that it is a trial franchise, and that the franchisor has the right not to renew
the franchise relationship at the end of the initial term by giving the
franchisee proper notice.

The unexpired portion of a transferred franchise ( other than as a trial
franchise, as described above) does not qualify as a trial franchise.

In exercising his right not to renew a trial franchise at the end of its initial
term, your supplier must comply with the notice requirements described above
under the heading “Notice Requirements for Termination or Nonrenewal.”

 

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B. Interim Franchises. An interim franchise is a franchise, entered into on or
after June 19, 1978, the duration of which, when combined with the terms of all
prior interim franchises between the franchisor and the franchisee, does not
exceed 3 years, and which begins immediately after the expiration of a prior
franchise involving the same marketing premises which was not renewed, based on
a lawful determination by the franchisor to withdraw from marketing activities
in the geographic area in which the franchisee operates.

An interim franchise must be in writing and must make certain disclosures,
including that it is an interim franchise and that the franchisor has the right
not to renew the franchise at the end of the term based upon a lawful
determination to withdraw from marketing activities in the geographic area in
which the franchisee operates.

In exercising his right not to renew a franchise relationship under an interim
franchise at the end of its term, your supplier must comply with the notice
requirements described above under the heading “Notice Requirements for
termination or Nonrenewal.”

V. Your Legal Rights

Under the enforcement provisions of the Act, you have the right to sue your
supplier if he fails to comply with the requirements of the Act. The courts are
authorized to grant whatever equitable relief is necessary to remedy the effects
of your supplier’s failure to comply with the requirements of the Act, including
declaratory judgment, mandatory or prohibitive injunctive relief, and interim
equitable relief. Actual damages, exemplary (punitive) damages under certain
circumstances, and reasonable attorney and expert witness fees are also
authorized. For a more detailed description of these legal remedies you should
read the text of the Act, 15 U.S.C., sub-sections 2801-2806.

VI. Waiver of Rights and Applicable State Law

Your supplier may not require, as a condition of entering into or renewing the
franchise relationship, that you relinquish or waive any right that you have
under this or any other Federal law or applicable State law. In addition, no
provision in a franchise agreement would be valid or enforceable if the
provision specifies that the franchise would be governed by the law of any State
other than the one in which the principal place of business for the franchise is
located.

The foregoing is a true copy of the summary statement required by section
104(d)(1) of the Petroleum Marketing Practices Act, as it appeared in the
Federal Register, Vol. 61, No. 123 - Tuesday, June 25, 1996.

 

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