Document:

exv10w3

Exhibit 10.3

[***] DENOTES CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT

AREA LICENSE AGREEMENT

     THIS AREA LICENSE AGREEMENT (this “Agreement”) is made and entered into by and between
Southwest Convenience Stores, Inc., a Texas corporation (“Licensee”), and The Southland
Corporation, a Texas corporation (“Southland”).

     WHEREAS, Southland has developed a unique system for the identification, fixturization,
layout, merchandising, and operation of extended-hour retail stores, identified principally by the
trade name and mark “7-Eleven®” (“7-Eleven Stores”), providing groceries, take-out foods and
beverages, dairy products, nonfood merchandise, specialty items and various services, and
emphasizing convenience to the consumer (“Convenience Stores”), which system (not to be construed
to include Southland’s distribution system and electronic data processing programs and procedures
relating thereto or Southland operations other than Convenience Stores) has been and is being
continually refined and modified by Southland based on experience and/or new marketing developments
to meet and serve the changing preferences of the consumer (the “7-Eleven System”); and

     WHEREAS, Southland has achieved extensive public acceptance of, and a favorable reputation and
extensive good will throughout the United States and elsewhere for, the Trademarks (as defined in
subsection A of Section I) and 7-Eleven Stores operated pursuant to the 7-Eleven System (the
“7-Eleven Image”); and

     WHEREAS, Licensee, recognizing the advantages of the 7-Eleven System, is desirous of acquiring
from Southland (i) a license to use the 7-Eleven System, Trade Secrets (as defined in paragraph (1)
of subsection B of Section VI) and Trademarks in connection with its operation, and/or individual
by franchising single stores to its independent sublicensees (“Sublicensees”), of 7-Eleven Stores
in the territory (the “Licensed Territory”) described in Exhibit A, attached hereto, and (ii) the
various services described herein (the “Services”);

     NOW THEREFORE, in consideration of the terms, representations, warranties, covenants,
promises, and conditions contained in this Agreement, Licensee agrees with Southland as follows:

SECTION I. LICENSE.

     A. Southland, for the consideration herein provided and commencing on the Effective Date
hereof (as defined below) and continuing until terminated as provided herein, hereby grants
Licensee, solely in the Licensed Territory, and pursuant to the terms, representations, warranties,
covenants, restrictions and conditions contained in this Agreement the following:

          (1) the License, which shall be an exclusive right and limited license solely in the Licensed
Territory to operate, or individually franchise to Sublicensees, Convenience Stores under the
7-Eleven System; and

 

 

          (2) except as otherwise provided in subsection C of Section VI, the exclusive right and
limited license to use, solely in the Licensed Territory and in conjunction with Licensee’s
operations under and to the extent set forth in this Agreement, the 7-Eleven System, Trade Secrets,
and the trade name and mark “7-Eleven,” or such variation thereof or such other mark as may be
allowed hereby; and

          (3) the nonexclusive right to use solely in the Licensed Territory such other related or
ancillary trademarks, trade names, copyrights, emblems, designs, labels, signs, and symbols
belonging to Southland and appearing in 7-Eleven Stores, or on products or services arranged by or
available from Southland, as Southland may from time to time make available to Licensee ((2) and
(3) collectively referred to herein as the “Trademarks”).

     Only those parts of Southland’s business system for the operation of convenience stores is
included in this license, and the other systems developed by, or to be developed by Southland
and/or its affiliates, are not included in this license, but may be offered under separate license
by Southland, in its sole discretion, or if such systems are obtained separately by the Licensee,
they must conform to the type, quality, quantity and variety of goods and services provided by
7-Eleven Stores pursuant to the 7-Eleven Image. The parties acknowledge that the accounting
system, electronic data processing system and any point-of-sale systems are not part of Southland’s
business system licensed hereunder. As to the Trademarks and the systems referred to in this and
the preceding paragraph, nothing in this Agreement shall require Licensee to license, take or
utilize such Trademarks and systems in the three (3) Truck Stops and seven (7) Merit Stores listed
on Exhibit B attached hereto. The convenience stores to be initially included and covered by this
Agreement as of the Effective Date consist of 150 stores listed and described on Exhibit C attached
hereto.

     The exclusive grant of the right to use the trade name and service mark “7-Eleven” is only in
conjunction with Licensee’s operation of convenience stores hereunder and such grant does not
preclude Southland from licensing the use of the trade name and mark “7-Eleven” in connection with
other nonrelated businesses in the Licensed Territory.

     B. Licensee hereby acknowledges that:

          (1) “7-Eleven” is a valid registered mark owned by Southland;

          (2) Southland is the sole and exclusive owner of the Trademarks, the 7-Eleven Image, and
valuable goodwill attached thereto, the Trade Secrets and the 7-Eleven System;

          (3) Southland’s rights in the mark “7-Eleven” and to the 7-Eleven System and Trademarks are
not limited to the specific configuration of the mark as presented in present registrations or
applications, but rather extend, as to “7-Eleven,” to all combinations of the word or numeral “7”
and the word or numeral “Eleven,” in any language, when the combination is used in any way as a
trade or product identification or indicia of origin or sponsorship;

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          (4) Southland’s rights in the Trademarks are not limited to the aforesaid registrations or
applications, as extensive common law rights are vested in Southland as a result of its long
continuing, widespread and successful use of the mark “7-Eleven” and other Trademarks in the United
States and elsewhere;

          (5) Southland and its franchisees, registered users, licensees and sublicensees have the sole
right to use the Trademarks, Trade Secrets, and/or 7-Eleven System;

          (6) Southland has by this Agreement licensed to Licensee the use of the Trademarks, Trade
Secrets and the 7-Eleven System;

          (7) any usage of the Trademarks, Trade Secrets and/or 7-Eleven System by Licensee, its
Sublicensees or anyone on Licensee’s behalf pursuant to this Agreement (or otherwise, even though
such action is a breach of this Agreement), will inure to the benefit of Southland.

          (8) that the Trade Secrets and business system information it is obtaining pursuant to this
License Agreement is in addition to any skills it and its personnel currently have and is in
addition to customary or usual skills generally possessed in the business and retail community;

          (9) that the obtaining of such Trade Secrets and business system information, in addition to
the grant or right to the use of the Trademark, is an inducement for it to enter into this License
Agreement; and

          (10) that the 7-Eleven System is a constantly evolving system and that the 7-Eleven Image may
change as the system evolves and, therefore, Licensee agrees that it shall make such changes in its
operation, including remodeling of stores, as may be reasonably necessary to keep its operation up
to date with the current 7-Eleven System, which shall include, but not be limited to the
interior/exterior signage, color identification and equipment specifications.

     C. Licensee will not use, and will not permit or cause the use of, at any time, the
Trademarks, 7-Eleven System, or Trade Secrets, except in the manner and to the extent specifically
licensed to Licensee by this Agreement. Such use hereunder will accurately portray the Trademarks
and will not jeopardize the good will attached thereto or to the 7-Eleven System or 7-Eleven Image.

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     D. Upon Southland’s request, Licensee shall make and execute an agreement with Southland
whereby Licensee is appointed by Southland to be a registered user of the Trademarks, and take
whatever steps are required to obtain registration of Licensee as a registered user of the
Trademarks pursuant to the registered user agreement. Each such registered user agreement shall
contain appropriate provisions relating to the goods in respect of which Licensee is to become
registered as the user of the Trademarks concerned, the parts of the Licensed Territory in which
Licensee is permitted to use the Trademarks and the terms and conditions upon and subject to which
the Trademarks are to be used by Licensee, and shall be in such form as required to give effect to
this clause.

     E. Licensee shall, at Southland’s expense, execute and deliver such documents as Southland
deems necessary to protect Southland’s ownership of the Trademarks. The use of the Trademarks
shall be included under the license for the purpose of this Agreement and may also be covered by a
separate agreement to be entered into between Southland and Licensee. During and after the term of
this Agreement, Licensee will not assert, contend or in any way claim that Southland is not the
owner of all right, title and interest in the 7-Eleven name and mark, or any other Southland name
or mark, or that any such name or mark or any registration therefore is not valid or enforceable by
Southland.

SECTION II. EFFECTIVE DATE.

     The Effective Date of this Agreement shall be June 2, 1993.

SECTION III. LICENSE FEE AND ROYALTY.

     A. License Fee. As an inducement and in partial consideration of the license herein
granted, Licensee has paid Southland, on the execution hereof, the sum of [***] dollars ($[***]),
the receipt of which is hereby acknowledged by Southland (the “License Fee”).

     B. License Royalty.

     (1) As an additional inducement for and in further consideration of the License herein
granted, Licensee agrees to pay Southland at Dallas, Texas, in lawful money of the United States on
or before the tenth (10th) day of each month during the term of this Agreement, without demand, set
off, counterclaim or deduction whatsoever, a sum equal to [***] percent ([***]%) times the prior
month’s Monthly Gross Sales, as defined herein (the “License Royalty” or “Royalty”) from the first
150 of Licensees then operating Convenience Stores in the Licensed Territory operated or
sublicensed by or through Licensee or from which Licensee receives any compensation for the first
full twelve (12) calendar months after the Effective Date. The initial list of Convenience Stores
covered by this Agreement is listed in Exhibit C. Thereafter, as to the first 150 Convenience
Stores under this Agreement, the Royalty shall be [***] percent ([***]%) of monthly Gross Sales.
In exchange for the initial one-year (12 months) of reduced Royalty and the providing of the
“Loaned Employee” as herein set out, Licensee agrees to pay to Southland the sum of $[***] per
month for the first full twelve (12) calendar months.

 

			
	 [***]	 	Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.

 

 

          (2) If Licensee shall bring within the 7-Eleven System any of the Merit Stores or any of
the Truck Stops listed on the Exhibit B attached hereto, then the amount of Royalty shall be [***]
percent ([***]%) of the Monthly Gross Sales for such added stores. If Licensee shall bring within
the 7-Eleven System additional Convenience Stores, including any Convenience Stores to be operated
by a Sublicensee of Licensee, then the amount of Royalty shall be [***] percent ([***]%) of the
Monthly Gross Sales for those stores numbered 151 through 200, and the amount of Royalty shall be
[***] percent ([***]%) of the Monthly Gross Sales for all such stores numbered 201 and above.
Licensee agrees to keep at least 135 stores, plus those Merit Stores and Truck Stops converted and
referred to in Section I A (3) (the “Quota”), open and operating, in addition, whenever any of the
original 150 stores are closed or sold, other operating stores will take their place for Royalty
purposes. All delinquent payments of Royalty shall bear interest beginning on the first day of the
month following the month during which the payment was due at a rate which is [***] percent
([***]%) per annum in excess of the prime rate charged by First National Bank of West Texas (or any
successor, the “Bank”) as of the first working day of the calendar year during which interest
begins to accrue on such delinquent Royalty payment.

     C. Loaned Employee. In exchange for the $[***] per month payment by Licensee to
Southland for the first twelve (12) months after the Effective Date, Southland shall furnish an
employee of Southland’s (the “Loaned Employee”) to Licensee for that same twelve (12) month period.
The Loaned Employee shall be available in the Licensed Territory on a full-time basis to consult
with and advise Licensee’s employees. The Loaned Employee shall be and remain a full-time employee
of Southland’s and will only advise Licensee regarding the operation. Licensee will individually
determine whether to utilize the Loaned Employee’s advice and, if so, how to implement the advice,
and all decisions and liability therefor shall be Licensee’s. The Loaned Employee shall be
equivalent to or above the level of a Southland Market Manager.

     D. Determination of Gross Sales. “Monthly Gross Sales” as used in this Agreement
means all sales emanating from Convenience Stores covered by this Agreement or any stores,
supermarkets, or other retail stores owned, operated, or affiliated with or sublicensed by
Licensee, including, but not limited to, sales of promotional merchandise, credit card sales and
all fees, service, rental, consignment, commission, or concession income. For purposes of this
Agreement, Monthly Gross Sales shall not include:

          (1) refunds made to customers;

          (2) sales, excise, and gross receipts taxes;

          (3) the face amount of money orders, services or products sold where the fee, service, rental,
consignment, commission or concession income received in connection with the sale thereof,
including but not limited to, commissions received on lottery sales, amusement games and video
rentals, is included in Monthly Gloss Sales;

          (4) sales of motor fuel, including, but not limited to, the sale of consigned motor fuel;

 

			
	 [***]	 	 Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.

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          (5) cigarettes display rebates and other retailer rebates from vendors; and

          (6) sales from the Merit Stores and Truck Stops covered by Section I A(2) shall not be covered
by this Section, unless and until they are converted to 7-Eleven Stores or after twelve (12) months
from the Effective Date.

SECTION IV. CONSIDERATION.

     Although Southland has certain continuing obligations only to the extent set forth herein,
when it imparts to Licensee its printed manuals and forms and extensive technical and other
assistance and initial advice of its personnel as provided herein, the principal consideration to
be given by Southland hereunder will have been executed. Southland may, however, continue to
update information and provide technical and other assistance as provided herein. The principal
consideration to be given by Licensee is the continuing License Royalty provided herein.

SECTION V. SOUTHLAND’S SERVICES TO LICENSEE.

     A. Southland will provide the training as specified in Exhibit D, attached hereto, for certain
of Licensee’s personnel and will provide such additional training as Southland, in its sole
discretion, determines is appropriate.

     B. Southland will provide the technical and other assistance of Southland’s personnel to
Licensee in the Licensed Territory as specified in Exhibit D and will provide such additional
technical assistance as Southland, in its sole discretion, determines is appropriate.

     C. Southland will deliver to Licensee those printed manuals and forms relating to Southland’s
Convenience Store operation in the United States, as specified in Exhibit E, attached hereto.

     D. Southland will, at the request of Licensee, make available to Licensee in the Licensed
Territory, upon payment by Licensee of such amount as may be determined by Southland, promotional
and point-of-sale materials, advertising campaigns and visual training aids developed by Southland
for use under the 7-Eleven System in the United States and additional copies of printed manuals and
forms provided to Licensee by Southland hereunder, all of which are also Trade Secrets. Additional
copies of such printed manuals and forms may be reproduced by Licensee, without additional payment
to Southland, for use by Licensee only, pursuant to and in accordance with this Agreement. All
such materials modified to delete references to Southland (where appropriate) must clearly
designate the Licensee as owner and operator or franchisor) of the business.

     E. Southland may, at its option and at the request of Licensee, in addition to the technical
assistance previously provided and any assistance to be provided by Southland’s personnel, make
Southland’s personnel available to provide continuing technical and other assistance to Licensee
either in the Licensed Territory or at Southland’s facilities, for the payment by Licensee to
Southland of the charges and expenses of such personnel, if any, as Southland shall specify at the
time of such request.

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     F. Southland, at its expense, shall have the right (but not the duty) to undertake the defense
or prosecution, as the case may be, of any and all claims or causes of action arising from
Licensee’s use, under and pursuant to this Agreement, of the Trademarks, Trade Secrets or the
7-Eleven System. Southland presently has a large number of Convenience Stores which are franchised
under the 7-Eleven System and has several other area licensees in the United States, Japan,
Australia, Hong Kong and other countries, which operations it plans to expand into various areas
during the term of this Agreement. Because Licensee’s agreement with its Sublicensees, if any, may
be substantially identical to the agreements between Southland, or its other area licensees, and
their respective franchisees or sublicensees, any attack on or question concerning the validity or
enforceability of Licensee’s agreement with its Sublicensees may have implications affecting
Southland, its other area licensees, and their respective franchisees or sublicensees. Therefore,
Southland, at its option, shall have the right (but not the duty) to advise, assist or undertake
the defense or prosecution, as the case may be, of any hearings or conferences before any
governmental agencies or litigation directly or indirectly concerning the Trademarks, Trade Secrets
or 7-Eleven System, and Licensee shall promptly notify Southland of any such matters in writing.

     G. Southland is extending to Licensee its permission or license lawfully to use the Trademarks
solely under the conditions and limitations set forth herein, and only to the extent that Southland
could make use thereof were it not for the License being granted herein. The parties recognize
that others may have acquired or attempted to acquire rights in or to colorable variations or
copies of the Trademarks. Licensee shall promptly notify Southland if the use of any Trademarks in
the Licensed Territory pursuant to this Agreement would violate the rights of any other person.
With the exception of small, few, minor or isolated claims, Southland will indemnify, defend and
hold Licensee harmless from and against any and all claims, causes of action, fines, penalties,
damages, suits and judgments, relating to the use of an infringing mark which may be suffered or
incurred as a result of such infringement or allegation thereof by any third party. As to adverse
decisions in such small, few, minor or isolated Trademark claims, thereafter, Southland may require
the Licensee to adopt a trade name, service mark or trademark other than “7-Eleven” or any other of
the Trademarks, and Licensee specifically acknowledges that such event shall not constitute a
failure or partial failure of consideration.

     H. On or before the fifteenth (15th) day of each month Southland shall send Licensee an
invoice covering Southland’s charges for its services to Licensee. The amount stated on such
invoice shall be payable within ten (10) days of the date thereof, and if delinquent, shall bear
interest beginning on the first day of the month following the month during which payment was due
at a rate which is [***] percent ([***]%) per annum in excess of the prime rate charged by the Bank
as of the first working day of the calendar year during which interest begins to accrue on such
delinquent payment.

 

			
	[***]	 	 Text omitted pursuant to a request for confidential treatment and
filed separately with the Securities and Exchange Commission.

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     I. Except as otherwise herein authorized, Southland shall not, during the term of this
Agreement, operate any Convenience Stores in the Licensed Territory.

     J. Southland represents, warrants and covenants to Licensee, with the intention that Licensee
rely thereon in entering into this Agreement, that:

          (1) “7-Eleven®” is a valid registered U.S. service mark owned by Southland.

          (2) Southland, to its knowledge and with the exception of minor claims in the continental
United States (including the non-affiliated usage in the Indianapolis, Indiana area), which may be
either known or unknown, owns the Trademarks, Trade Secrets and 7-Eleven System, and its
franchisees, registered users, licensees and sublicensees have the rights to use the Trademarks,
Trade Secrets and/or 7-Eleven System.

          (3) The execution, delivery, consummation or performance of this Agreement does not conflict
with, or constitute a material breach of any contract, agreement, mortgage, bylaw provision, lease
or restriction of any nature to which Southland is a party. So long as this Agreement is in
effect, Southland will not undertake any obligations (i) the performance of which would constitute
a material breach hereunder, or (ii) in the event Southland’s performance hereunder would
constitute a material breach of such obligations.

          (4) Southland has all necessary corporate power and authority to execute, deliver, consummate
and perform this Agreement, and it shall be a binding agreement upon Southland and its successors
and assigns when executed.

          (5) All representations and warranties of Southland’s contained in this Agreement shall be
complete, correct and accurate on the Effective Date and, except where limited by their terms to
conditions existing on the Effective Date, shall remain in effect thereafter so long as this
Agreement is in effect.

          (6) Southland will offer and make available to Licensee all programs, Trademarks, training
(including training for new programs) and assistance that it makes generally available to all of
its domestic licensees and area licensees upon comparable terms and conditions (including
territorial exclusivity where appropriate) and at a cost, where applicable, comparable to that
which the other licensees and area licensees pay, and based upon the same cost formula.

          (7) Southland is a corporation duly organized, in good standing and qualified to do business
under the laws of Texas and New Mexico.

     K. In the event that Licensee, pursuant to the terms of subsection I of Section VI of this
Agreement, undertakes the defense of prosecution of any litigation, Southland shall execute any and
all documents and do such acts and things as may be reasonably necessary to carry out the defense
or prosecution, either in the name of Licensee or in the name of Southland, as Licensee shall
elect.

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     L. Southland represents and warrants that the 7-Eleven System as granted hereunder is the
complete 7-Eleven System for area licensees and that no necessary portions of that system are
omitted from the License hereunder.

SECTION VI. LICENSEE’S REPRESENTATIONS, DUTIES AND OBLIGATIONS.

     A. Licensee represents and warrants to Southland, with the intention that Southland rely
thereon in entering into this Agreement, that:

          (1) Licensee is a corporation duly organized, under the laws of the state of Texas in good
standing, and qualified to do business under the laws of Texas and New Mexico. All of the
authorized shares of Licensee are beneficially owned by the shareholders listed on Exhibit D
attached hereto and made a part hereof, and no other persons or entities own any interests in
Licensee.

          (2) (a) All outstanding shares of capital stock of Licensee are duly authorized and those
shares set out on Exhibit D are issued, fully paid and nonassessable. No shares of stock of
Licensee will be sold or transferred without Southland’s prior written consent. All of the capital
stock of Licensee has been and shall continue to be legended to preclude the transfer or sale of
such stock without Southland’s prior written consent.

               (b) Southland shall not withhold the written consent described in the preceding paragraph (a)
if Licensee shall furnish to Southland a written statement of the number of shares being
transferred, the name and address of the transferee along with a statement that after such transfer
the effective control of Licensee will not have changed.

               (c) Each of the persons and/or entities listed on the Exhibit F attached hereto shall be
authorized by Southland under the preceding paragraph (a) to purchase, sell or transfer shares of
Licensee’s stock to or from any of the other persons or entities listed on Exhibit F and no further
written consent from Southland shall be required.

               (d) Southland shall not withhold the written consent described in the preceding paragraph (a)
if Licensee shall furnish to Southland a written statement of the structure and basic terms of the
merger or acquisition, the name and address of the persons and/or entities involved in the merger
or acquisition, the number of shares to be held by each shareholder after the merger or acquisition
along with a statement that after such merger or acquisition the effective control of Licensee will
not have changed.

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               (e) Southland shall not withhold the written consent described in the preceding paragraph (a)
if Licensee shall furnish to Southland a written statement of the structure and basic terms of the
public offering (or other method of acquiring publicly traded stock status) the name and address of
the persons and/or entities involved in the public offering (or other method of acquiring status),
number of shares to be retained by those persons or entities listed on the Exhibit F attached
hereto, along with a statement that after such public offering (or other method), the effective
control of Licensee will not have changed, provided that Licensee shall pay all of Southland’s
reasonable costs in reviewing and responding to the proposed transfer, provided that in no event
shall the amount to be paid exceed $[***].

               (f) The first right of refusal as set out at Section XIII shall not apply to any of the
provisions contained in this VIA(2).

               (g) Notwithstanding anything to the contrary herein Section VI A 2(a) - (f), and with the
exception of a public offering contemplated by Section VI A(3)(e) and where the Licensee does not
control the disposition, Southland may refuse to approve any of the above transfers, if the
intended transferee is a competitor of Southland’s, a person of ill repute or convicted felon.

          (3) The authorized shares of Licensee, together with the record and beneficial ownership of
those shares outstanding, are set forth on Exhibit G. Without Southland’s prior written consent:
(i) no shares of Licensee will be opened for subscription and Licensee will not issue any further
or additional shares, or (ii) provisions of Licensee’s Articles of Incorporation and Bylaws
relating to the authorization and/or issuance of shares of Licensee shall not be amended. No
mortgage, charge, lien or other security interest in respect of any of such shares or capital shall
be created in favor of any person(s) or entity without Southland’s prior written consent.

          (4) The execution, delivery, consummation or performance of this Agreement does not conflict
with, or constitute a material breach of, any contract, agreement, mortgage, by law provision,
lease or restriction of any nature to which Licensee is a party. So long as this Agreement is in
effect, Licensee will not undertake any obligations (i) the performance of which would constitute a
material breach hereunder, or (ii) in the event Licensee’s performance hereunder would constitute a
material breach of such obligations.

          (5) Licensee has all necessary corporate power and authority to execute, deliver, consummate,
and perform this Agreement, and it shall be a binding agreement upon Licensee and its successors
and assigns when executed.

          (6) Licensee agrees that it will make every reasonable effort at all times during the term of
this Agreement to provide sufficient working capital for Licensee to faithfully fulfill its
obligations under this Agreement.

 

			
	[***]	 	 Text omitted pursuant to a request for confidential treatment and
filed separately with the Securities and Exchange Commission.

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          (7) Licensee has no material liabilities, adverse claims, commitments or obligations of
any nature as of the Effective Date, whether accrued, unliquidated, absolute, contingent or
otherwise which are not reflected as liabilities on the balance sheets of Licensee as contained in
the financial statements or otherwise disclosed therein.

          (8) Licensee will obtain all governmental approvals necessary to the execution of this
Agreement and the payments to be made by the Licensee to Southland hereunder, and shall furnish
true and complete copies of such approvals upon request to Southland.

          (9) Licensee, so long as this Agreement is in effect, shall devote its best efforts to the
conduct of the business hereunder, and Licensee will not, either directly or indirectly:

               (i) engage in the Convenience Store business during the term of this Agreement in any
territory other than by Licensee in the Licensed Territory pursuant to this Agreement.

               (ii) use the 7-Eleven System, the Trade Secrets, or the Trademarks for the operation of
Convenience Stores or otherwise in any territory other than the Licensed Territory and pursuant to
this Agreement; and

               (iii) except in the case of termination of this Agreement by Licensee for a material breach by
Southland, engage in the Convenience Store business for a period of three (3) years after the
termination of this Agreement for any reason whatsoever, in any state of the United States or any
country where Southland operates, franchises or licenses convenience stores; provided, however, the
foregoing noncompete restriction shall not apply with respect to the Licensed Territory.

               (iv) The provisions of this paragraph (9) notwithstanding, Southland acknowledges that
Southwest Energy Distributors, Inc. (“SW Energy”), a related company to Licensee, owns and/or
leases seven (7) convenience stores and two (2) Truck Stops within the Licensed Territory and one
(1) Truck Stop out of the Licensed Territory, all of which are more particularly described in the
Exhibit B attached hereto. Southland and Licensee agree as follows: that neither SW Energy,
Licensee nor the principals thereof or related companies thereto shall be prohibited form owning,
leasing or operating said convenience stores or Truck Stops; that within twelve (12) months from
the Closing Date, all of the seven (7) convenience stores shall be: (i) converted to the 7-Eleven
System and brought within the coverage of this Agreement; (ii) closed or shall cease to be
convenience stores; or (iii) leased/sold to unrelated third party(ies). Southland and Licensee
further agree that the Truck Stops are not presently subject to this Agreement, but that Licensee
shall have the option during the term of this Agreement to convert any one or all of the three (3)
Truck Stops to the 7-Eleven System, provided that such Truck Stop is within a territory licensed to
Licensee and that such Truck Stop meets the 7-Eleven standards contained within this Agreement, and
complies with the royalty requirements and the other provisions of this Agreement.

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               Licensee agrees that the restrictions contained in this subsection (9) are valid and
reasonable. If a court having jurisdiction should hold that these covenants not to compete are not
enforceable, in whole or in part, they shall be limited to such areas and periods as the court
holds are enforceable, and such action shall not be deemed to affect or impair the validity of any
other covenants or provisions of this Agreement. These restrictions shall not be deemed to be
restrictions on the operations of Licensee’s Sublicensees under this Agreement.

          (10) As of the Effective Date, there are no actions, suits, proceedings, or investigations
pending, or to the knowledge of any of the officers or directors of Licensee (after due inquiry)
threatened in any court or before any governmental agency or instrumentality, or to the knowledge
of the officers and directors of Licensee (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 Licensee, or the right of the Licensee to operate and
use its assets, properties or rights and carry on its business.

          (11) All representations and warranties of Licensee contained in this Agreement shall be
complete, correct and accurate on the Effective Date shall remain in effect thereafter so long as
this Agreement is in effect and shall survive any termination of this Agreement.

     B. Licensee will not use any of the Trademarks as a part of its corporate or business name
without Southland’s prior written consent and further agrees that:

          (1) As a result of this Agreement, Licensee will be (or has been) provided by Southland in
confidence with and become familiar with, printed manuals and forms and other materials which are
restricted information and proprietary property, belonging to and exclusively for the benefit of
Southland and constitute valuable “trade secrets” of Southland (the “Trade Secrets”) which are
fully protected by Southland’s copyrights.

          (2) Licensee will use and limit and permit the use of the Trade Secrets solely in connection
with its business under this Agreement and for the benefit of Southland and that Licensee will not
permit, directly or indirectly, at any time, Licensee to disclose or turn over any document or
other item concerning any of the Trade Secrets, the Trademarks and the 7-Eleven System or any
copies or excerpts thereof, to any person, except authorized employees of Licensee, its
Sublicensees, or as specifically directed by Southland, or imitate or aid anyone else to imitate
same, either for Licensee’s benefit or for the benefit of any other person, firm or corporation, as
principal, agent, employee, or in any other capacity. All materials used shall correctly reflect
the parties ownership and control of the business.

          (3) No title to the Trademarks or any of the Trade Secrets will pass hereunder to or
thereafter through or from Licensee, and only the rights granted in or pursuant to this Agreement
are provided to Licensee.

12

 

     C. Licensee shall open or cause to be opened and maintained in the Licensed Territory the
number of stores listed in Exhibit H and will utilize its best efforts in good faith to develop the
Licensed Territory by expanding and opening additional stores. As a material part of the
consideration for the grant of this License, Licensee has represented that it can comply with these
requirements. Should Licensee fail to fulfill the Quota for any reason, Southland shall have the
right to the payments set out in Section X A and the provisions of Section X E. Southland’s remedy
provided herein shall be in addition to whatever other remedies it has at law or in equity.

     Within the first five (5) years after the Effective Date, Southland and Licensee shall perform
and complete a Market Development Plan for the Licensed Territory, using Southland’s forms and
program and based upon that study. Southland and Licensee shall, during the ninety (90) days
following the completion of the study, meet and discuss the Quota and develop new Quota for the
next seven (7) years, based upon the study, and shall amend this Agreement consistent with these
Quotas. In the event the new Quota cannot be agreed to within the ninety (90) day period, either
party may refer the matter to mediation and/or arbitration. Thereafter, this process shall repeat
itself so long as the Agreement is in effect.

     D. Licensee, in conformity with the terns of this Agreement, the 7-Eleven System as from time
to time constituted (whether or not any changes therein are within the present contemplation of the
parties), and the printed manuals, forms and materials furnished Licensee hereunder, as revised or
amended from time to time, and in a good and prudent business manner, will select and purchase or
negotiate and enter leases and subleases for store locations, procure equipment and merchandise,
hire and train employees, select and train Sublicensees, enter into agreements with its
Sublicensees and do all other things necessary to facilitate the acquiring, opening and operating
or sublicensing of Convenience Stores in the Licensed Territory and the conduct of a Convenience
Store business under and pursuant to this Agreement. Licensee shall not purchase any goods or
services for use in or resale from the Stores from Licensee’s parent, subsidiary or affiliates at
prices in excess of the fair market value of such goods or services.

     E. To sustain the good will and prestige the Trademarks enjoy with the public, to promote the
Trademarks, for the protection of the Trademarks, to preserve the high quality and standards of
merchandise distributed through, and services emanating from, Convenience Stores operated under the
7-Eleven System and to sustain tine uniformity of appearance and efficiency of operation of
Convenience Stores operated under the 7-Eleven System, Licenses agrees that:

          (1) (a) Each new freestanding Convenience Store operated or to be operated under this
Agreement will be constructed generally in accordance with plans and specifications approved by
Southland under this Agreement and shall be consistent with the then current 7-Eleven Image.
Remodeling of existing Convenience Stores, or of stores to become Convenience Stores hereunder,
shall be consistent with the then current 7-Eleven Image. Licensee, at its sole expense, shall
retain a local architect or engineer to modify the standard plans and specifications to be provided
by Southland to comply with applicable local codes. Any changes by Licensee to or modification of
recommended plans and specifications shall be submitted to Southland for its prior written
approval.

               (b) Licensee acknowledges that in order to have the opportunity to keep its stores at an
acceptable image level, all of its stores will need to be remodeled with a full

13

 

remodel, on average every seven (7) years, and provided that such remodel requirement will be
commercially reasonable under the circumstances.

          (2) Each Convenience Store under this Agreement will be identified, decorated, furnished,
fixturized and equipped in accordance with uniform standards established by Southland and all such
equipment shall meet Southland’s specifications.

          (3) All merchandise and services used or distributed by Licensee and its sublicensees under
this Agreement will be of substantially equivalent type, quantity, quality and variety as those
used or distributed by Southland and consistent with the then current 7-Eleven Image.

          (4) No merchandise to be sold in any Convenience Store under this Agreement will have any of
the Trademarks imprinted thereon, attached thereto or associated therewith without Southland’s
prior written consent, and any such usage with Southland’s consent will inure to the benefit of
Southland. Southland must license any and all distributors of trademarked products.

     F. Licensee, at its sole cost and expense, will be responsible for and will undertake
reasonable advertising in the Licensed Territory. To assure the integrity of and protect
Southland’s rights in the Trademarks, the first usage thereof, and any change thereafter, on signs,
displays or in advertising of any sort will be presented to Southland for written approval prior to
any public use, publication or display. Such usage of the Trademarks by Licensee thereafter shall
be consistent with the previously approved usage. Licensee agrees to utilize “at participating
stores” or comparable language in its advertisements. Notwithstanding anything herein to the
contrary, nothing herein shall preclude Southland from placing, or imply an obligation on Southland
to place, such institutional or other advertising in the Licensed Territory as it deems
appropriate. Licensee acknowledges that “spill over” advertisements from Southland and/or other
Licensees may from time to time be present in the Licensed Territory and agrees that such
advertisements shall not be in any way in violation of this Agreement.

     G. The forms and substantive provisions of agreements entered into between Licensee and its
Sublicensees shall, at Southland’s option, be submitted for review by Southland. Licensee agrees
that it shall act to preserve the integrity of the 7-Eleven System and Image and to protect the
Trademarks. On the execution of each such agreement, Licensee will forthwith furnish Southland a
copy.

     H. Licensee will operate and cause its individual store Sublicensees (“Franchisees”) to
operate Convenience Stores under this Agreement in compliance with all applicable ordinances, laws,
regulations and other requirements of any governmental authority, including agencies thereof, and
will obtain and pay for, or cause its Franchisees to obtain and pay for, all necessary licenses,
permits or consents of whatsoever kind or character, and Licensee will pay or cause to be paid
prior to delinquency all taxes, fines, fees or assessments arising out of or in connection with the
operation of its business hereunder. Licensee recognizes that there are franchise registration and
disclosure laws and regulations, and Licensee specifically agrees (without limiting the general
application of this subsection) to comply with such laws and

14

 

regulations. Anything herein to the contrary notwithstanding, Licensee may contest the
applicability of any such law or ordinance.

     I. Licensee hereby indemnifies and agrees to defend and hold Southland harmless from any and
all claims, causes of action, fines, penalties, liabilities (including statutory and other
liability under worker’s compensation and other employer’s liability laws), damages, suits or
judgments, including costs of investigation, court costs and reasonable attorney’s fees, arising
directly or indirectly from, as a result of, or in connection with Licensee’s business pursuant to
this Agreement or in connection with claims for damages as the result of injury or death of any
person or damage to property sustained by Licensee and all other persons which either arise from or
in any manner, directly or indirectly, grow out of any statutory basis of liability or from an act,
error, omission or neglect by Licensee, Licensee’s partners, agents, employees, licensees,
sublicensees, customers, invitees, contractors and subcontractors, and Southland shall have no
obligation or liability in connection therewith or arising therefrom and without any substantial
contributing action or inaction on the part of Southland. Southland shall have the right to select
the attorney to defend Southland in those actions in which Southland is named.

     Licensee will, within thirty (30) days of notice of the same, notify Southland in writing any
general liability claims, demands or suits where Southland is alleged to be at fault.

     Licensee agrees to obtain insurance coverage, reasonably sufficient for the nature of
Licensee’s operation to protect and hold Southland harmless from any and all claims of personal
injury, bodily injury, death or property damage arising out of Licensee’s operations, including
personal injury coverage; product liability coverage, advertising liability coverage, liquor
liability coverage, and contractual liability coverage in amounts sufficient to fully protect
Southland as above stated. Southland shall be specifically named as an additional insured in all
such insurance policies reflecting such coverage and shall provide for notices of any changes to be
forwarded to Southland. At all times during the existence of this Agreement, Licensee shall have
such coverage in place. Licensee shall deliver to Southland a certified copy of any renewal policy
or policies thereof to Southland within ten (10) days of issuance. All such policies shall provide
for thirty (30) days minimum written notice of cancellation to Southland and Licensee. The amount
of insurance coverage required to be carried hereunder may be revised by Southland, and Licensee
shall obtain such insurance, provided such revision is commercially reasonable to Licensee under
its then current circumstances. Licensee, with Southland’s approval, shall have the option of
setting up one or more plans of self-insurance and not have to carry certain lines of insurance
such as the statutory Workmen’s Compensation Insurance, and Southland will not unreasonably
withhold its approval.

     J. By November 1 of each calendar year during the term hereof, Licensee will submit to
Southland, in a form acceptable to Southland, a projected operating budget for the following fiscal
year of Licensee for Licensee’s total operations, including projected sales of merchandise, for
each Convenience Store under this Agreement.

          (1) The projected sales figures shall include, at a minimum, the following information:

15

 

               (a) projected total merchandise sales for the following calendar year from all Convenience
Stores which are open on January 1 of the following calendar year and for all new Convenience
Stores to be opened during the following calendar years; and

               (b) projected total commissions and income for the following calendar year from all
Convenience Stores which are open on January 1 of the following calendar year and for all new
Convenience Stores to be opened during the following calendar year.

          (2) Upon Southland’s request, Licensee will also submit to Southland, in a form acceptable to
Southland:

               (a) a copy of a monthly operating report for each Convenience Store under this Agreement by
the end of the following month;

               (b) a copy of a monthly operating report, including, without limitation, a profit and loss
statement, (including) the balance sheet and statement of sources and uses of funds for Licensee’s
business pursuant to this Agreement by the end of the following month and a copy of the audited
annual financial statements, if available, or unaudited if audited annual financial statements are
not available, and the report of its independent public accountants thereon within 120 days after
the close of its fiscal year; and

               (c) a copy of each financial statement for each sublicensed Convenience Store and a copy of an
equivalent report for each Convenience Store operated by Licensee under this Agreement promptly
after their preparation.

     K. Licensee will make and maintain full, accurate and adequate records in a permanent form and
pursuant to generally accepted accounting principles consistently applied, pertaining to its
business pursuant to this Agreement, which records shall be, at a minimum, those required by and
shall be maintained for the period prescribed by applicable tax regulations. All such records
shall be or shall be made available to Southland at all reasonable times for such inspection and
audit as it deems necessary. Licensee hereby grants Southland and its agents, designees and
employees access at all times during normal business hours to all such records, including invoices
and any other documents of any nature relating to financial statements of Licensee and its
Sublicensees required to be furnished to Southland pursuant to this Agreement and the right to
inspect, test, copy, sample and audit such records at Southland’s expense and to observe the
operations of Licensee and its Sublicensees at the office of Licensee and at the location of any
Convenience Store under this Agreement. In the event an audit by Southland discovers a failure to
properly report and pay Royalty, Licensee shall pay all of Southland’s costs to audit and all
applicable late charges and interest.

16

 

     L. Licensee will, no later than fifteen (15) days after receiving notice of the same, notify
Southland in writing of any claim, demand or suit based upon or arising from the use of, or of any
attempt by any other person, firm or corporation to use, any of the Trademarks, 7-Eleven System
and/or Trade Secrets. Licensee also will promptly notify Southland in writing of any litigation
relating to this Agreement or Licensee’s operations hereunder instituted by Licensee, any of
Licensee’s Sublicensees or by any person, firm, corporation or governmental agency against Licensee
or any of Licensee’s Sublicensees.

     In the event Southland, pursuant to the terms of subsection F of Section V of this Agreement,
undertakes the defense or prosecution of any litigation, Licensee shall execute any and all
documents and do such acts and things as may, in the opinion of counsel for Southland, be necessary
to carry out such defense or prosecution, either in the name of Southland or in the name of
Licensee, as Southland shall elect.

     M. Licensee shall use its best efforts to assist Southland in obtaining any rulings or
approvals from any government or any agency thereof which Southland believes are necessary to
effectuate the intent of this Agreement.

SECTION VII. ASSIGNMENT.

     A. This Agreement will not be assigned by Licensee in whole or in part, directly or
indirectly, and any such assignment or attempted assignment without the prior written consent of
Southland shall be a material breach of this Agreement. The direct or indirect sale or assumption
of a controlling interest in Licensee or Licensee’s assets shall be deemed to be an assignment.
The foregoing shall not limit or restrict the rights of Licensee under paragraph VIA(2) hereof.

     B. If Southland consents to the assignment of this Agreement, the Termination Fee (hereinafter
defined) shall not apply, and the Licensee shall pay all costs and expenses associated with the
reviewing of the requested assignment.

SECTION VIII. RIGHT TO TERMINATE.

     A. If Licensee materially misrepresents or materially breaches any representations or
warranties made herein or materially defaults in the performance of any term, covenant or condition
provided in this Agreement, specifically including, but not limited to, Licensee’s failure to make
any payment when and as due of the License Royalty or any other amount due from Licensee hereunder,
and such misrepresentation or material breach or default continues for a period of thirty (30) days
following notice thereof to Licensee by Southland, this Agreement shall terminate without further
notice or action by Southland. Southland shall also have the right to terminate this Agreement
upon the occurrence of any one of the following:

          (1) the commencement by Licensee of any voluntary proceeding in bankruptcy, receivership, for
corporate reorganization or for any similar relief;

17

 

          (2) the commencement against Licensee of any involuntary proceeding in bankruptcy or its
equivalent, not dismissed within 90 days;

          (3) Licensee makes an assignment for the benefit of creditors or a failure or delay that
continues for more than 120 days, as provided in Paragraph XVII. I.

     In any such event, Southland, at its option, may deliver to Licensee a notice of termination,
and this Agreement will immediately wholly terminate except for the obligations of Licensee upon
termination as provided in paragraph (9) of subsection A of Section VI, subsection I of Section VI
and in Section IX nothing in this section limits the rights provided in Section X E.

     B. Licensee will have the right to terminate this Agreement in the event that Southland
materially misrepresents or materially breaches any representations or warranties made herein or
materially defaults in the performance of any term, covenant or condition provided in this
Agreement, and such default continues for a period of thirty (30) days following notice thereof to
Southland. In any such event, Licensee at its option, may deliver to Southland a notice of
termination, and this Agreement will wholly terminate except for the obligations of Licensee upon
termination as provided in Sections VI, IX and X. Licensee shall also have the right to terminate
this Agreement upon the occurrence of any one of the following:

          (1) the commencement by Southland of any voluntary proceeding in bankruptcy receivership, for
corporate reorganization or for any similar relief; or

          (2) the commencement against Southland of any involuntary proceeding bankruptcy or its
equivalent, not dismissed within ninety (90) days.

     C. Notwithstanding anything herein, Licensee shall have the right to terminate this Agreement
at any time and without cause, provided it meets the following:

          (1) the Licensee provides a ninety (90) day prior written notice to Southland indicating that
it wishes to terminate the Agreement pursuant to the terms of this Section VIII C. and the date of
termination being ninety (90) days from the date of the notice.

          (2) Licensee, on or before the effective date of the termination, pays to Southland the
“Termination Fee,” computed as follows:

               (a) The Termination Fee shall he computed as set out on Exhibit J, attached hereto and made a
part hereof; further provided that notwithstanding anything herein to the contrary, the Termination
Fee will not be less than $[***]. The Termination Fee shall be prorated to the day of the month
listed on Exhibit J which corresponds with the Effective Date of the termination.

               (b) Notwithstanding the provisions herein, all of the other terms contained in this agreement
dealing with obligations and rights of the parties upon termination shall be in full force and
effect upon a termination pursuant to this subsection.

 

			
	[***]	 	Text omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission.

18

 

SECTION IX. OBLIGATIONS OF LICENSEE UPON TERMINATION

     A. Upon the termination of this Agreement for any reason permitted by this Agreement, Licensee
will cause its Sublicensees to permanently discontinue the use of the Trademarks, the Trade Secrets
and the 7-Eleven System, as well as any identification connected with the 7-Eleven System, within
sixty (60) days of the termination, and thereafter will make no use of any name, mark or other
trade indicia likely to cause confusion with or dilute the distinctive quality of any of the
Trademarks, or of any work substantially similar to any work subject to a copyright owned or
licensed by Southland.

     B. Upon the termination of this Agreement for any reason, Licensee will return to Southland,
or destroy pursuant to Southland’s instructions, all Trade Secrets, including printed manuals and
forms and other materials provided by Southland to Licensee hereunder and all copies of such
material, or any adaptations thereof within thirty (30) days of the termination. Unless such
termination is due solely to a material breach of this Agreement by Southland, Licensee shall bear
all reasonable costs incurred in compliance with this subsection IX B.

     C. The representations and warranties made herein, including but not limited to, the
noncompete provisions of subsection 9 of paragraph A and paragraph I of Section VI, if applicable,
shall survive the termination of this Agreement for the period of the applicable statute of
limitations.

SECTION X. PROTECTION OF TRADEMARKS, TRADE SECRETS, THE 7-ELEVEN SYSTEM AND LIQUIDATED DAMAGES.

     If at any time Licensee defaults in compliance with the quota requirements specified in
Exhibit H, fails to protect the Trademarks, Trade Secrets, the 7-Eleven Image or System or if it
becomes necessary for Southland to institute a suit to enforce any of the provisions of Agreement,
it is hereby agreed by and between Licensee and Southland that the amount of damages which
Southland would incur would be difficult, if not impossible, to accurately ascertain and that a
reasonable amount of liquidated damages, which amount shall not be construed to be a penalty, shall
be calculated as follows:

     A. In the event that Licensee fails to comply with the Quota, then it is agreed that Licensee
shall pay Southland an amount equal to [***] percent ([***]%) times the total, for the immediately
preceding month, of the Monthly Gross Sales for all Convenience Stores operated or sublicensed by
Licensee in the Licensed Territory pursuant to this Agreement, divided by the number of Convenience
Stores licensed or sublicensed by Licensee in the Licensed Territory pursuant to this Agreement in
operation during the entire month, multiplied by the number of Convenience Stores which Licensee is
in default, far each month during which Licensee fails to comply with the Quota. Such amounts
shall be paid at the same time and added to the amount paid as a continuing royalty and service fee
pursuant to this Agreement.

     B. The parties agree that in the event the number of Convenience Stores operating hereunder
falls below the Quota, and an Agreement regarding a reduced Quota cannot be agreed

 

			
	[***] 	 	Text omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission.

19

 

upon, then either party may require mediation and/or arbitration to determine what the Quota
should be.

     C. Should Licensee default in the performance of its obligations and duties under Section VI,
paragraphs B and E, with respect to sustaining the good will and prestige of the Trademarks, and
fails to cure the act or omission causing such default after reasonable notice and opportunity to
cure, then Licensee shall pay to Southland an amount equal to [***] percent ([***]%) times the
Monthly Gross Sales, including any continuing royalty or service fee provided herein, for each of
the Convenience Stores operated or sublicensed by Licensee in the Licensed Territory, which is in
default, for each month during which Licensee is in default or suit is pending with respect to such
default, or for each month during which the act or omission causing the default was in existence,
whichever is shorter.

     D. Any amounts paid pursuant to the provisions of this section shall be deemed to be payments
of royalty.

     E. In the event the Licensee does not have at least one (1) Store operating for a full twelve
(12) calendar months in any Metropolitan Statistical Area (“MSA”) as defined by the U.S.
Government, within the Licensed Territory, then Southland shall have the right to declare the MSA’s
as no longer being a part of the Licensed Territory, immediately upon written notice to Licensee.
At that time, Southland will be free to re-license or operate in, or do anything else it desires
with that MSA. The city of “Big Spring, Texas,” shall, for purposes of this Agreement, be
considered to be a part of the “Midland-Odessa” MSA.

SECTION XI. RELATIONSHIP OF PARTIES.

     Licensee is an independent contractor, and neither Licensee nor its employees or Sublicensees
are or are to be construed to be either legal or implied agents, servants or employees of Southland
and have no authority whatsoever to act for or on behalf of Southland. No acts or assistance given
by Southland pursuant to this Agreement will be construed to alter this relationship. It is the
intention of the parties that Licensee will exercise control over the manner and means of the
operation of its business pursuant to this Agreement. Licensee will have no right or authority and
will not attempt to negotiate, enter, permit or cause its employees or Sublicensees to negotiate or
attempt to or enter into contracts or commitments of any nature in the name of or on behalf of
Southland that provide for successor liability or that purport to bind Southland in any respect
whatsoever.

 

			
	[***]	 	Text omitted pursuant to a request for confidential treatment and filed separately with the Securities and Exchange Commission.

20

 

SECTION XII. NOTICES.

     A. Any notice, request, demand or statement herein required or desired to be given by either
party to the other, shall be in writing in an envelope addressed:

	 	 	 
	if to LICENSEE:

	 	SOUTHWEST CONVENIENCE STORES, INC.
	 

	 	Attn: Donald E. Wood, President
	 

	 	415 N. Grant Avenue (79761)
	 

	 	P.O. Box 711
	 

	 	Odessa, TX 79760
	 
	 	 
	with a copy to:
	 	 
	 

	 	TODD, BARRON & THOMASON, P.C.
	 

	 	Attn: Jimmie B. Todd
	 

	 	3800 E. 42nd Street, Suite 409
	 

	 	Odessa, TX 79762
	 
	 	 
	if to SOUTHLAND:

	 	THE SOUTHLAND CORPORATION
	 

	 	Attn: Southland Licensing Group
	 

	 	2711 North Haskell Avenue
	 

	 	Dallas, Texas 75204
	 

	 	Facsimile No. 214/841-6590
	 
	 	 
	with a copy:

	 	Attn: Legal Department
	 

	 	Facsimile No. 214/841-6574

and shall be deemed given or delivered:

          (1) upon personal delivery at the above addresses to a corporate officer of Licensee or
Southland; or

          (2) if dispatched via telegraph, cable or facsimile to the above addresses or numbers,
ninety-six (96) hours after submission to telegraph or cable company or after transmitted; or

          (3) seven (7) days after posting in United States mail to the above addresses, if deposited in
the post office first class air mail postage prepaid, registered or certified, return receipt
requested.

Either party may from time to time designate by notice to the other party another address in
lieu of the address stated herein.

     B. In the event of a postal strike in the United States, notices shall only be effective when
given pursuant to paragraphs (1) through (3) of subsection A of this Section XII until regularly
scheduled postal delivery has resumed.

21

 

SECTION XIII. RIGHT OF FIRST REFUSAL.

     A. If, at any time after the Effective Date Licensee receives a bona fide offer for the
purchase of all or any part of Licensee’s business (or ownership) under this Agreement which
Licensee decides to accept, Licensee agrees that Southland, or its nominee or designee, will have
and is hereby granted an option to purchase said business upon the same terms and conditions as
such bona fide offer. Immediately after receipt of such offer, Licensee will give Southland notice
of all of the terms and provisions thereof. Southland or its nominee or designee will have thirty
(30) days after receipt of all necessary documents within which to review the offer and to notify
Licensee of its election. The failure of Southland or its nominee or designee to exercise the
option provided in this Section XIII will not affect Southland’s right to approve any assignment of
this Agreement to such purchaser or a later purchaser. Licensee’s right to unilaterally terminate
this Agreement will not apply in the event Licensee has received a bona fide offer to purchase all
or a portion of Licensee’s assets or business and until Southland has had the right to exercise or
decline this right.

     B. Should Southland, its nominee or designee decline to exercise the right of first refusal
and should Southland approve such purchaser, conditions precedent to such purchaser’s assignment
are that:

          (1) such purchaser executes a release in favor of Southland (in a form acceptable to
Southland) of any and all claims against Southland for any amount paid by such purchaser to
Licensee or by Licensee to Southland prior to, or relating to the periods prior to, the purchase of
Licensee’s business (or portion thereof) by such purchaser and for all representations or
statements made by Licensee or its agents;

          (2) such purchaser executes (in form acceptable to Southland) an assumption of the applicable
portions of this Agreement or, at Southland’s option, a new area license agreement, and a release
of Southland with respect thereto;

          (3) Licensee executes (in form acceptable to Southland):

               (a) an assignment to such purchaser of the applicable portions of this Agreement or, as
appropriate, a termination and release of this Agreement; and

               (b) an indemnity for claims by such purchaser against Southland released as provided in
Paragraph (1) of this subsection B of this Section XIII;

          (4) Licensee pays in full any amount then due from Licensee to Southland;

          (5) such purchaser agrees to submit personnel to training by Southland and pay a reasonable
fee reimbursing Southland in an amount determined by Southland; and

          (6) such purchaser agrees to pay Southland’s legal expenses and costs associated with
effecting the assignment.

22

 

     C. Licensee’s right of first refusal and first option.

          (1) If, at any time after the Effective Date, but before any Effective Termination of this
Agreement, Southland receives a bona fide offer to license any one or more or all of the counties
listed on Exhibit A-1 as “Optional Licensed Territory,” Southland agrees that Licensee shall have
the first right of refusal to license those counties, within the Optional Licensed Territory, which
are subject to the offer and upon the same terms and conditions as such bona fide offer.
Immediately after the receipt of such offer, Southland will give Licensee notice of all the terms
and provisions thereof. Licensee will have thirty (30) days after receipt of all necessary
documents within which to review the offer and to notify Southland of its election to exercise or
not its right of first refusal to license. In the event Licensee declines to license such
counties, they may be licensed to others, but Licensee’s failure to exercise this right shall not
preclude Licensee from utilizing this right on counties still available in the Optional Licensed
Territory.

          (2) In the event Southland determines that it will begin operations in any of the counties
listed on Exhibit A-1, “Optional Licensed Territory,” Southland will first provide Licensee the
right to license such counties on whatever terms Southland reasonably deems appropriate for such
counties (including, but not limited to, License Fees, Royalty, Quota and other appropriate
provisions) and upon the execution of an amendment to this License Agreement evidencing all of
those terms and satisfactory to both.

          Southland will provide Licensee with the necessary information and Licensee shall have thirty
(30) days from the date of receipt of that information to notify Southland of its election to
accept or reject the offered terms.

          (3) In the event Licensee elects to exercise the right of first refusal, Licensee shall
execute an amendment to this Agreement, satisfactory to both parties, covering such counties in the
Optional Licensed Territory as are required under this right.

          (4) Neither the failure to exercise nor the partial exercise of this right of first refusal or
the right of first option to license shall be deemed a waiver or foreclosure of a subsequent full
or partial (depending upon circumstances) exercise of those rights.

SECTION XIV. LICENSEE’S OBLIGATION AS SUBLICENSOR.

     A. In connection with any Convenience Stores to be operated by individual store franchisees of
Licensee, Licensee hereby covenants and agrees that Licensee shall not sell franchises pursuant to
this Agreement except in compliance with the applicable franchise laws, including registration
prior to selling or negotiating the sale of franchises in any state where so required.

23

 

     B. Licensee shall comply with all applicable state and federal laws in connection with any
offer to sell, solicitation of any offer to purchase, sale, or transfer a franchise, or in
connection with the operation or termination of franchises. Upon Licensee’s request, Southland
will provide Licensee copies of Southland’s franchise offering circulars and provide such other
reasonable information necessary to enable Licensee to comply with applicable franchise laws
regarding presale disclosure.

     C. Concurrent with (i) the filing of any Uniform Franchise Offering Circulars or other
franchising materials with any governmental agency in any states within the Licensed Territory or
in any way connected with 7-Eleven Stores in the Licensed Territory, or (ii) the use of any such
materials in any states within the Licensed Territory or in any way connected with 7-Eleven Stores
in the Licensed Territory, Licensee shall provide copies to Southland of any and all Uniform
Franchise Offering Circulars, annual reports, and any other documentation prepared or used by
Licensee in order to comply with any state or federal law, rule, or regulation with regard to any
offer to sell, solicitation of any offer to purchase, sale, or transfer of a franchise, or in
connection with the operation of franchises, including all materials submitted to any state agency
for filing or registration purposes.

     D. Nothing herein shall be construed as allowing Licensee to sublicense any geographic
territory (except for single store licenses or franchises contemplated above) within the Licensed
Territory.

SECTION XV. ARBITRATION AND MEDIATION.

     A. Unless prohibited by applicable law, any controversy or claim arising out of or relating to
this Agreement, or a breach hereof, except for a claim of termination by either party, will be
settled by arbitration to be held in Dallas, Texas or such other location as may be agreed upon by
the parties. Any such arbitration shall be conducted in accordance with the Arbitration Rules of
the American Arbitration Association (the “Association”), and judgment upon any award rendered by
the arbitrator may be entered in any court having jurisdiction thereof.

     B. A demand for arbitration:

          (1) if based in whole or in part on wrongful termination, shall be filed with the Association
within thirty (30) days after a notice of termination is received (as determined in Section XII,
above);

          (2) if based on any other ground, may be filed with the Association and served on the other
party at any time during the term of this Agreement, or within the period provided by the
applicable statute of limitations; and

          (3) shall contain a statement setting forth the nature of the dispute, the amount involved, if
any, and the remedy sought.

24

 

     C. Arbitration will not proceed until any protest of arbitrability is resolved by an
appropriate court, if necessary. The arbitrator will have authority to assess damages sustained by
reason of any breach or wrongful termination of this Agreement. The parties will share equally all
expenses of the arbitrator and the Association, and each party will bear its own expenses incident
to the arbitration.

     D. The arbitrator will not extend, modify or suspend any of the terms of this Agreement or the
reasonable standards of business performance set by Southland in good faith. The decision of the
arbitrator within the scope of this submission (as provided in this Section XV) shall be final and
binding on all parties and any right to judicial action on any matter subject to arbitration
hereunder is hereby waived, except suit to enforce the arbitration award.

     E. If the rules of the Association differ from this Section XV, the provisions herein shall
control.

     F. Notwithstanding the above, the parties hereto agree to voluntarily submit disagreement
issues to mediation under a professional mediation organization, before resulting to arbitration.

SECTION XVI. GENERAL CONDITIONS.

     A. This Agreement is the complete and only agreement between the parties, and all
negotiations, representations and prior written or oral understandings are merged herein. This
Agreement will not be modified or changed except in writing executed by both parties hereto.

     B. This Agreement will be binding upon and inure to the benefit of the parties hereto and
their respective legal representatives, successors and assigns.

     C. The captions herein are for the convenience of the parties and will not be considered in
any question of interpretation or construction of this Agreement.

     D. Either party hereto will have the right to require specific performance of the other party.

     E. Southland has not and does not warrant or represent that any printed manuals or forms or
other materials which it has furnished or will furnish Licensee hereunder are valid or enforceable
in the Licensed Territory as written and expressly disclaims any warranties or representations
regarding the value or results to be obtained from use by Licensee or its Sublicensees of any
material or information furnished by Southland hereunder, which shall be the sole responsibility of
Licensee, and further, Southland disclaims any warranties of merchantability or fitness for any
particular purpose, whether or not intended.

     F. The failure of either party to enforce at any time or for any period of time any provision
of this Agreement will not be construed to be a waiver of such provision or of the right of such
party thereafter to enforce each such provision.

25

 

     G. In all references herein to any parties, persons, entities or corporations, the use of any
particular gender or the plural or singular number, is intended to include the appropriate gender
or number as the text of this Agreement may require.

     H. It is understood and agreed that where any approval or consent is herein required, same
shall not be unreasonably withheld.

     I. Notwithstanding anything herein to the contrary, and except for the purposes of Royalty
payments due, Southland and/or Licensee shall not be responsible in damages to the other for any
failure or delay in performance hereunder due to (1) any governmental act or regulation; (2) war,
civil commotion, earthquake, fire, flood or other disaster or similar event or (3) any other event
beyond such party’s control; provided, however, such party shall take all steps reasonably possible
to mitigate damages caused by such failure or delay. Notwithstanding the foregoing, if such
failure or delay shall continue for more than one hundred and eighty (180) days, the party against
whom such failure or delay affects most detrimentally shall have the right at any time thereafter
during the continuance of such failure or delay to terminate this Agreement under subsection A of
Section VIII hereof by giving thirty (30) days prior notice thereof to Licensee.

     J. Neither Southland nor Licensee shall issue or cause to be issued any press release,
publicity or other public statement concerning this Agreement without the prior written consent of
the other party.

     K. If any provision of this Agreement, except payments from Licensee to Southland, is held by
a court of competent jurisdiction to be invalid, the remainder hereof will not be affected thereby.

     L. All payments due Southland hereunder shall be made in United States dollars in the United
States or such other place as Southland may designate in writing.

     M. This Agreement shall be construed under the laws of Texas, United States of America. For
purposes of any controversy or claim arising out of or relating to this Agreement or to enforce any
term, representation, warranty, covenant or condition herein contained, Licensee and Southland
hereby submit to the jurisdiction in Dallas County, Texas, United States of America.

     N. This Agreement shall be executed in duplicate, which together will constitute a single
original.

     O. All confidential and trade secret information of Southland which Licensee obtains hereunder
will be used exclusively by Licensee, its representatives and employees solely for the purpose set
forth herein. Such information shall not be disclosed to any party not specifically authorized
hereunder to receive same, in any manner whatsoever, in whole or in part, without the prior written
consent of Southland and shall not be reproduced, distributed or revealed in whole or in part to
any person other than to Licensee’s representatives and employees each of whom have been informed
of the confidential and proprietary nature of such information.

26

 

     IN WITNESS WHEREOF, Southland and License have executed this Agreement this
2nd day of June 1993.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	THE SOUTHLAND CORPORATION
	ATTEST:	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By

	 	/s/ Edward Herman 

	 	 	 	By
	 	/s/ Adrian O. Evans 
	 	 	 	 	 	 
	 

	 	Edward Herman
 

Assistant Secretary
	 	 	 	 	 	Adrian O. Evans
 

Vice President
	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	LICENSEE

SOUTHWEST CONVENIENCE STORES, INC.
	ATTEST:	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By

	 	/s/ Jack Wood 

	 	 	 	By
	 	/s/ Donald E. Wood 
	 	 	 	 	 	 
	 

	 	Jack Wood
	 	 	 	 	 	Donald E. Wood	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 	 	 	 	 
	 

	 	Secretary
	 	 	 	 	 	President	 	 	 	 	 	 

27

 

EXHIBIT A

LICENSED TERRITORY

The License to be granted covers the following counties in the States of Texas and New Mexico:

	 	 	 
	TEXAS	 	NEW MEXICO
	Andrews

	 	Bernalillo
	Bailey

	 	Catron
	Borden

	 	Chaves (1)
	Brewster

	 	Cibola
	Cochran

	 	Curry
	Crane

	 	De Baca
	Crockett

	 	Dona Ana
	Crosby

	 	Eddy
	Culberson

	 	Grant
	Dawson

	 	Guadalupe
	Ector

	 	Hidalgo
	El Paso

	 	Lea
	Floyd

	 	Lincoln
	Gaines

	 	Los Alamos (2)
	Garza

	 	Luna
	Glasscock

	 	McKinley
	Hale

	 	Otero
	Hockley

	 	Quay
	Howard

	 	Roosevelt
	Hudspeth

	 	San Miguel
	Jeff Davis

	 	Sandoval
	Lamb

	 	Santa Fe (2)
	Loving

	 	Sierra
	Lubbock

	 	Socorro
	Lynn

	 	Taos
	Martin

	 	Torrance
	Midland

	 	Union
	Mitchell

	 	Valencia
	Pecos
	 	 	 	 
	Presidio
	 	 
	Reagan
	 	 
	Reeves
	 	 
	Scurry
	 	 
	Sterling
	 	 
	Terrell
	 	 
	Terry
	 	 
	Upton
	 	 
	Ward
	 	 
	Winkler
	 	 
	Yoakum
	 	 

 

			
	1.	 	 Not part of the Licensed Territory until a 5-year, 5-mile noncompete is completed, which will
end at December 31, 1994.
	2.	 	 Not part of the Licensed Territory until a 5-year noncomplete is completed, which will end at
December 31, 1993.
	A.	 	  

	 	 	 	 	 
	 	 	 
	 	Southland 	 	/s/ Adrian O. Evans
 	 
	 	 	 
	 	Licensee	 	/s/ Donald E. Wood
 	 

	 	 	 	 	 
	 	 	 
	 	Date  	June 2, 1993 	 
	 	 	  	 
	 	 	 	 
	 

 

EXHIBIT A-1

OPTIONAL LICENSED TERRITORY

The following counties in the state of Texas shall be subject to the right of first refusal and
right of option to license to the extent, and as set out in subsection C of Section XIII of
this agreement.

	 	 	 
	 

	 	Callahan
	 

	 	Carson
	 

	 	Coke
	 

	 	Dallam
	 

	 	Gray
	 

	 	Irion
	 

	 	Jones
	 

	 	Nolan
	 

	 	Oldham
	 

	 	Potter
	 

	 	Randall
	 

	 	Schleicher
	 

	 	Shackelford
	 

	 	Sutton
	 

	 	Taylor
	 

	 	Tom Green
	 

	 	Wheeler

 

 

EXHIBIT B

LIST OF CONVENIENCE STORES AND TRUCK STOPS

OWNED/LEASED BY ENTITY RELATED TO LICENSEE

	 	 	 	 	 	 	 
	1.

	 	Merit Store
	 	721 W. County Road
	 	Odessa, TX 79763
	 
	 	 	 	 	 	 
	2.

	 	Merit Store
	 	1800 N. Big Spring
	 	Midland, TX 79763
	 
	 	 	 	 	 	 
	3.

	 	Merit Store
	 	4525 E. University
	 	Odessa, TX 79762
	 
	 	 	 	 	 	 
	4.

	 	Merit Store
	 	8468 W. University
	 	Odessa, TX 79764
	 
	 	 	 	 	 	 
	5.

	 	Merit Store
	 	317 N. Dixie
	 	Odessa, TX 79761
	 
	 	 	 	 	 	 
	6.

	 	Merit Store
	 	3700 Andrews Hwy.
	 	Odessa, TX 79762
	 
	 	 	 	 	 	 
	7.

	 	Merit Store
	 	1000 N. Golder
	 	Odessa, TX 79761
	 
	 	 	 	 	 	 
	8.

	 	Truck Stop
	 	Rt. 1 Box 583
	 	Longview, TX 75602
	 

	 	 	 	I-20 & Exit 599	 	 
	 
	 	 	 	 	 	 
	9.

	 	Truck Stop
	 	P.O. Box 10
	 	Las Cruces, NM 88004
	 

	 	 	 	I-20 & Exit 155	 	 
	 
	 	 	 	 	 	 
	10.

	 	Truck Stop
	 	2400 W. Loop 250
	 	Midland, TX 79701

	 	 	 	 	 
	 	 	 
	 	Southland  	                                                 /s/ Adrian O. Evans
 	 
	 	 	 
	 	Licensee  	                                                  /s/ Donald E. Wood
 	 
	 	 	 
	 	Date  June 2, 1993
 	 
	 	 	 	 
	 	 	 	 

 

 

	 	 	 	 	 

EXHIBIT C

CONVENIENCE STORES INITIALLY COVERED BY AGREEMENT

[***]

 

			
	[***]	 	Text of entire exhibit omitted pursuant to a request for confidential treatment and filed separately with the
Securities and Exchange Commission.

 

 

EXHIBIT D

TRAINING AND TECHNICAL ASSISTANCE

PROVIDED OR TO BE PROVIDED TO LICENSEE BY SOUTHLAND

	A.	 	STORE OPERATION TRAINING

     Either at Southland’s Facilities or in Licensed Territory

	 	(1)	 	Training in Southland’s “7-Eleven Store Operation Training
Program.”

	 	(2)	 	Training in Southland’s “7-Eleven Training Store Operations.”

	 	(3)	 	The assistance of Southland’s personnel for the purpose of
assisting the Licensee in establishing a training store.

	B.	 	REAL ESTATE

     Either at Southland’s Facilities or in Licensed Territory

	 	(1)	 	Training covering Southland’s convenience store real estate
policies and procedures, including location analysis and selection, the
provisions of real estate forms provided by Southland and establishment of a
location number system for Licensee.

	 	(2)	 	The assistance of Southland’s real estate personnel to
participate in the selection of Licensee’s certain number of convenience
stores.

	C.	 	CONSTRUCTION AND EQUIPMENT

     Either at Southland’s Facilities or in Licensed Territory

	 	(1)	 	Training covering Southland’s architecture, construction and
equipment programs.

	 	(2)	 	The continuing evaluation of convenience store plans and
modifications submitted to Southland’s general offices by Licensee.

	 	(3)	 	The assistance of Southland’s construction personnel after
Licensee has selected the first convenience store location to consult with
Licensee’s architect’s and/or engineers regarding plans and specifications for
the construction and equipment.

 

 

	D.	 	BOOKKEEPING

     Either at Southland’s Facilities or in Licensed Territory

	 	(1)	 	Training covering Southland’s convenience store bookkeeping
system, including general accounting, data processing and store accounting of
certain of Licensee’s personnel.
	 
	 	(2)	 	Continuing evaluation of Licensee’s financial statements and
reports concerning operations under the Agreement which are submitted to
Southland pursuant to the Agreement.
	 
	 	(3)	 	Training regarding Southland’s convenience store bookkeeping
program of certain of Licensee’s personnel.
	 
	 	(4)	 	The assistance of Southland’s convenience store accounting
personnel at the time of the beginning of the License Agreement to participate
in establishing a bookkeeping program for Licensee for a period of
approximately one month.

	E.	 	MERCHANDISING

     Either at Southland’s Facilities or in Licensed Territory

	 	(1)	 	Training — covering Southland’s convenience store
merchandising policies, philosophy and procedure.
	 
	 	(2)	 	Continuing evaluation, if requested, of Licensee’s
merchandising programs submitted to Southland’s general office by the Licensee.
	 
	 	(3)	 	The assistance of Southland’s merchandising personnel to
participate in the analysis of various marketing and competition factors in the
marketplace.
	 
	 	(4)	 	The assistance of Southland’s merchandising personnel to
participate in the initial setup and analyze product movement and layout.
	 
	 	(5)	 	The assistance of Southland’s merchandising personnel to
participate in an analysis of Licensee’s merchandising programs.

	F.	 	ADVERTISING, SALES PROMOTION AND PUBLIC RELATIONS

     Either at Southland’s Facilities or in Licensed Territory

	 	(1)	 	Training covering Southland’s convenience store advertising,
sales promotion and public relations philosophies and programs.
	 
	 	(2)	 	Continuing evaluation, if requested, of Licensee’s advertising,
sales promotion and public relations philosophies and programs submitted to

 

 

	 	 	 	Southland’s general office by Licensee.
	 
	 	(3)	 	The assistance of Southland’s personnel to counsel with
Licensee regarding the development of advertising, sales promotion and public
relations programs and strategy.

	G.	 	Licensee and Southland, except as otherwise provided herein, will each bear the expense of
their respective personnel including all expenses for travel, accommodations and meals.

	 	 	 	 	 
	 	 	 
	 	Southland  	

/s/  Adrian O. Evans
 	 
	 	 	 
	 	Licensee  	                                                 /s/  Donald E. Wood
 	 
	 	 	 

	 	 	 	 	 
	 	Date   	 	June 2, 1993 	 
	 	 	 	 
	 	 	 	 

 

 

	 	 	 	 	 

EXHIBIT E

PRINTED FORMS AND MANUALS RELATING TO

SOUTHLAND’S CONVENIENCE STORE OPERATION

IN THE UNITED STATES

TO BE DELIVERED BY SOUTHLAND TO LICENSEE TERRITORY DURING THE TRAINING PERIOD.

	A.	 	REAL ESTATE

	 	(1)	 	Two copies of the “Real Estate Policy and Procedure Manual,” including typical
real estate forms.

	 	(2)	 	One copy of the “Market Development Plan.”

	B.	 	EQUIPMENT

	 	(1)	 	Two copies of the “Equipment Specifications List.”

	C.	 	CONSTRUCTION

	 	(1)	 	Two copies each of representative standard “7-Eleven Store” plans and
specifications.

	 	(2)	 	Two copies of the “7-Eleven Construction Handbook.”

	D.	 	BOOKKEEPING

	 	(1)	 	One copy each of current typical accounting forms.

	 	(2)	 	Two copies of the “7-Eleven Office Manager’s Accounting Manual.”

	E.	 	FRANCHISING (delivered upon request)

	 	(1)	 	Two copies each of typical 7-Eleven Franchise UFOC with Franchise Agreement.

	 	(2)	 	Two copies of 7-Eleven Franchise Systems Manual.
	 
	 	(3)	 	Two copies of Field Representative Field Book.

	 	(4)	 	Two copies of printed materials used by Southland in the introduction and
presentation to a prospective franchisee of the 7-Eleven “Store Agreement.”

	F.	 	STORE OPERATIONS

 

 

	 	(1)	 	One copy of the “New Employee Training Program” (NETP).

	 	(2)	 	Two copies of the Supervisor Field guides.

	 	(3)	 	One NETP video.

	 	(4)	 	One set of Store Manager Training Program (SMTP) material.

	 	(5)	 	One set of leader guides for both NETP and SMTP.

	G.	 	MERCHANDISING

	 	(1)	 	One copy of the Individual Store Development Process (“ISDP”).

	 	(2)	 	One copy of the Accelerated Inventory Management (“AIM”) program.

	H.	 	CHALLENGE OF EXCELLENCE

	 	(1)	 	Two copies of Challenge of Excellence Program Guide Book.

	 	 	 	 	 
	 	 	 
	 	Southland  	

/s/  Adrian O. Evans
 	 
	 	 	 
	 	Licensee   	                                                 /s/  Donald E. Wood
 	 

	 	 	 	 	 
	  	Date  	June 2, 1993 	 
	 	 	 	 
	 	 	 	 

 

 

	 	 	 	 	 

EXHIBIT F

PRE-AUTHORIZED TRANSFEREES OF LICENSEE’S STOCK

	1.	 	Clay Wood

	2.	 	Jack Wood

	3.	 	Donald E. Wood

	4.	 	Southwest Energy Distributors, Inc.

	 	 	 	 	 
	 	 	 
	 	Southland  	

/s/  Adrian O. Evans
 	 
	 	 	 
	 	Licensee   	                                                 /s/  Donald E. Wood
 	 

	 	 	 	 	 
	  	Date  	June 2, 1993 	 
	 	 	 	 
	 	 	 	 

 

 

	 	 	 	 	 

EXHIBIT G

AUTHORIZED SHARES AND RECORD AND BENEFICIAL OWNERSHIP

	 	 	 	 	 	 	 	 	 
	No. of Shares Authorized	 	Class of Stock	 	 	Par	 
	200,000
	 	Common	 	$1.00/Share

	 	 	 	 	 	 	 	 	 
	Ownership	 	 	 	 	 	 
	Record/Beneficial Owner	 	No. of Shares	 	 	Class of Stock	 
	Jack Wood
	 	 	100,000	 	 	Common
	Don Wood
	 	 	100,000	 	 	Common

	 	 	 	 	 
	 	 	 
	 	Southland  	

/s/  Adrian O. Evans
 	 
	 	 	 
	 	Licensee   	                                                 /s/  Donald E. Wood
 	 

	 	 	 	 	 
	  	Date  	June 2, 1993 	 
	 	 	 	 
	 	 	 	 

 

 

	 	 	 	 	 

EXHIBIT H

STORE QUOTA SCHEDULE

	 	 	 	 	 
	Year	 	New Stores	 	Total Stores
	1. Effective Date through December 31, 1997

	 	___
	 	[***]

At least [***] stores or the total of [***] plus such merit Stores and Truck Stops as are
converted to 7-Eleven shall remain open and operating at all times. In the event that more
than [***] total stores are opened and operating under this Agreement, 90% of all stores
opened, or [***] stores, whichever is greater, shall remain open and operating at all times
during the term of this Agreement. At such time as the parties agree on a new Quota or one is
determined, that new Quota shall replace this.

	 	 	 	 	 
	 	 	 
	 	Southland  	

/s/  Adrian O. Evans
 	 
	 	 	 
	 	Licensee   	                                                 /s/  Donald E. Wood
 	 

	 	 	 	 	 
	  	Date  	June 2, 1993 	 
	 	 	 	 
	 	 	 	 

 

	 	 	 	 	 

 

			
	[***]	 	 Text omitted pursuant to a request for confidential
treatment and filed separately with the Securities and Exchange Commission. 

 

 

EXHIBIT I

ADDITIONAL TRADE OR SERVICE MARKS

	 	 	The following are additional Trade or Service Marks exclusively licensed to Licensee in the
Licensed Territory which grant does not preclude Southland from advertising the 7-Eleven Mark,
the Trademarks and those marks in the Licensed Territory.

Big Gulp®

Slurpee®

Big Bite®

	 	 	 	 	 
	 	 	 
	 	Southland  	

/s/  Adrian O. Evans
 	 
	 	 	 
	 	Licensee   	                                                 /s/  Donald E. Wood
 	 

	 	 	 	 	 
	  	Date  	June 2, 1993 	 
	 	 	 	 
	 	 	 	 

 

 

	 	 	 	 	 

EXHIBIT J

[EXHIBIT J HAS BEEN AMENDED AND SUPERSEDED BY EXHIBIT J-1

TO AMENDMENT TO AREA LICENSE AGREEMENT AND CONSENT

TO ASSIGNMENT]exv10w4

Exhibit 10.4

[***] DENOTES CONFIDENTIAL MATERIALS OMITTED AND FILED

SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION

PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT

AMENDMENT TO AREA LICENSE AGREEMENT

AND CONSENT TO ASSIGNMENT

     This Amendment to Area License Agreement and Consent to Assignment (“Agreement”) is made and
entered into this 20th day of December, 1996, by and between THE SOUTHLAND CORPORATION
(“Licensor”) and PERMIAN BASIN INVESTMENTS, INC., d/b/a SOUTHWEST CONVENIENCE STORES, INC. (“SCS,
Inc.”).

BACKGROUND

	A.	 	Licensor and SCS, Inc., entered into an Area License Agreement (“License Agreement”) dated
June 2. 1993.

	B.	 	SCS, Inc. wishes to transfer and assign the License Agreement to Southwest Convenience
Stores, LLC (“Licensee”) effective on or about January 1, 1997 (“Effective Date”).

	C.	 	The Licensee will be a limited liability company owned 65.6% by SCS, Inc. and 34.4% by Fina
Oil and Chemical Company (“Fina”).

	D.	 	Licensor and SCS, Inc. wish to modify and amend the License Agreement effective the Effective
Date, with the Licensee then assuming the License Agreement as amended.

	E.	 	On the terms set forth in this Agreement, Licensor will consent to the assignment of the
License Agreement, as amended, from SCS, Inc. to the Licensee.

     NOW, THEREFORE, in consideration of the terms and conditions set forth herein and other good
and valuable consideration, and intending to be legally bound hereby, the parties hereto agree as
follows:

ARTICLE I

AMENDMENT OF LICENSE AGREEMENT

     1.1 On the Effective Date of this Agreement, Licensee hereunder shall be deemed the Licensee
under the License Agreement and the License Agreement shall be amended by the addition of the
following provisions under Section VI (Licensee’s Representations, Duties and Obligations):

     “N. Licensee and Licensee’s Members, Board of Managers and/or employees (“Principals”)
shall not either during the term of this License Agreement, or at any time thereafter,
communicate, reproduce, publish, disclose, divulge, use or authorize anyone else to
communicate, reproduce, publish, disclose, divulge, or use, for the benefit of themselves
(other than in connection with the operation of the licensed business during the term
hereof) or any other person, partnership, association, corporation, including but not
limited to Fina Oil and Chemical Company, or other entity, any secret or confidential

 

 

information relating to the business, trade practices, Trade Secrets, methods of
operation, software, computer systems, sales, promotions, marketing, technology, know-how or
recipes of the Licensor, the 7-Eleven System, or operation of the 7-Eleven Stores and
licensed business which may be communicated to Licensee or Licensee’s Principals in any way
or of which Licensee or Licensee’s Principals may be appraised by virtue of Licensee’s
operation under the terms of this License Agreement (all the “Confidential Information”).

     “O. Licensee and Licensee’s Principals shall divulge the Confidential Information only
to such of Licensee’s employees as must have access to it in order to operate the licensed
business. Any and all information, knowledge, know-how, and techniques provided or made
available by Licensor shall be deemed to be a part of the Confidential Information for
purposes of this License Agreement, except (i) information which Licensee or any of
Licensee’s Principals can demonstrate came to their attention prior to disclosure thereof by
Licensor or which is already in the public domain; (ii) information which, at or after the
time of disclosure by Licensor to Licensee or Licensee’s Principals, lawfully had become or
later becomes a part of the public domain, through lawful publication or communication by
others, (iii) information which is independently developed by Licensee or Licensee’s
Principals without the benefit of Confidential Information.

     “P. Any and all information, knowledge, know-how and techniques used in or related to
the 7-Eleven System that Licensor communicates in writing or otherwise to Licensee
including, but not limited to the 7-Eleven System software, the contents of the Manuals,
plans, and specifications and other materials, marketing information and strategies, site
evaluation and selection techniques, merchandising information or computer systems provided
by Licensor shall be deemed to be a part of the Confidential Information for purposes of
this License Agreement

     “Q. Any and all information, trade secrets, knowledge, know-how, techniques, and any
materials used in or related to the 7-Eleven System which Licensor provides to Licensee in
connection with this License Agreement which Licensor designates as confidential shall be
deemed to be a part of the Confidential Information for purposes of the License Agreement.”

     1.2 On the Effective Date of this Agreement the License Agreement shall be amended by deleting
the Exhibit “J” (West Texas Present Value Schedule for Termination) and by substituting a new
Exhibit “J-l”, which is attached to and made a part of this Agreement and the License Agreement. If
the Termination Fee called for by Exhibit “J-1” is to be paid, Licensee shall immediately pay such
fee to Licensor.

     1.3 On the Effective Date of this Agreement, the License Agreement shall be amended to provide
that notices to Licensee, pursuant to Section XII (Notices), shall be addressed as follows:

2

 

SOUTHWEST CONVENIENCE STORES, LLC

Attention: Donald E. Wood, President

415 North Grant Avenue

P. 0. Box 711

Odessa, Texas 79760

Telecopy Number: (915) 333-4535 

with Copies to:

TODD, BARRON & THOMASON, P.C.

Attention: Jimmie B. Todd

3800 East 42nd Street Suite 409

Odessa, Texas 79762

Telecopy Number: (915) 367-7092

and

FINA OIL AND CHEMICAL COMPANY

Attention: General Counsel

8350 North Central Expressway

Dallas, Texas 75206

Telecopy Number: (214) 750-2987

3

 

     1.4 On the Effective Date of this Agreement the License Agreement shalt be clarified to
provide that references in Section XIII (Right of First Refusal) to “all or any part of Licensee’s
business” shall mean the sale of one or more of Licensee’s Convenience Stores, or the sale of any
other substantial portion of its assets, or any voting or membership, equity or any other interest
in the Licensee.

     1.5 On the Effective Date of this Agreement the License Agreement shall be amended by the
addition of a new Section XVII, as follows;

“ARTICLE XVII

SPECIAL TRANSFER CONDITIONS

     “A. In the event Fina wishes to acquire Effective Control (as defined in paragraph L
below) of the Licensee, which acquisition Fina and SCS, Inc. acknowledge and agree is
subject to the Licensor’s Right of First Refusal and separately subject to the Licensor’s
right to approve or reject the acquisition by Fina of Effective Control of the Licensee, as
set forth in Section VII of the License Agreement, Fina may propose an interim management
team (composed of non-competitors and otherwise acceptable to Licensor) to be responsible
for operation of the Licensee. If that team is satisfactory to Licensor, in Licensor’s sole
discretion, then after Fina is so advised in writing, Fina may complete the acquisition of
Effective Control of the Licensee for a period of up to eighteen (18) months and allow the
approved management team to take control over and operate the Licensee for such period.

     “B. During the eighteen (18) month period in which the approved management team shall
operate the Licensee, Fina may: (i) propose to sell Effective Control of Licensee to an
independent third party; (ii) propose an ownership or management structure for the Licensee
by which Fina no longer retains Effective Control; or (iii) propose arrangements by which
Fina would be acceptable to Licensor as the “Licensee” or otherwise retain Effective Control
(collectively, the “Fina Options”).

     “C. In the event Fina selects a proposed purchaser of the Effective Control owned by
Fina, it shall bring that entity to the attention of the Licensor. Within a reasonable time
after all information necessary, in the Licensor’s opinion, for the Licensor to properly
evaluate the proposed purchaser as the prospective owner of Effective Control of the
Licensee has been presented to the Licensor, Licensor will, using its sole discretion,
evaluate the proposed purchaser and advise the Licensee, Fina and the proposed purchaser,
regarding whether Licensor will elect to exercise its Right of First Refusal or, in the
alternative, approve such purchase and the proposed purchaser for ownership of Effective
Control of the Licensee. The information disclosed to the Licensor shall include all details
about the proposed sale of Effective Control of the Licensee.

     “D. In the event the Licensor approves the proposed purchaser, the consummation of the
sale of Effective Control of the Licensee to the prospective purchaser shall be consummated
within six (6) months after the approval is granted and shall be upon the same terms as
approved by the Licensor.

4

 

     “E. In the event the proposed purchaser is not approved and no substitute purchaser is
approved by the Licensor within the eighteen (18) month period herein provided for, if Fina
elects not to seek an approved purchaser upon taking Effective Control, or if the terms of
sale of Effective Control of the Licensee are different from those shared with the Licensor
and Fina fails to exercise any of the other Fina Options in accordance with the terms and
conditions hereof, then, unless the Licensor elects to exercise its right of first refusal
upon the altered terms, the Licensor may, in its discretion, terminate this License
Agreement effective upon notice to the Licensee. If Licensor elects to terminate the
License Agreement, the Termination Fee provided for by the new Exhibit “J-1” shall be
immediately paid by Licensee to Licensor.

     “F. In the event Fina proposes to create an ownership or management structure for the
Licensee pursuant to which Fina would no longer retain “Effective Control,” it must do so
within twelve (12) months of the interim management team taking control of the Licensee.

     “G. Upon being provided with sufficient information regarding the proposed ownership or
management structure, Southland will evaluate the proposal and, in its sole discretion,
determine whether to approve it or not. If approved, the proposed ownership or management
structure must be fully implemented as approved within three (3) months of approval by the
Licensor.

     “H. In the event the proposed ownership or management structure is not implemented
within the time frame allowed hereunder, if an altered ownership or management structure is
implemented, or if Fina elects not to offer a different ownership or management structure
(after advising Licensor that it was going to do so), and Fina fails to exercise any of the
other Fina Options in accordance with the terms and conditions hereof, Licensor may, in its
discretion, terminate the License Agreement effective upon notice to the Licensee. If
Licensor elects to terminate the License Agreement, the Termination Fee provided for by new
Exhibit “J-l” shall be immediately paid by Licensee to Licensor.

     “I. In the event Fina proposes other arrangements by which it would request that
Southland approve Fina as the entity with Effective Control of the Licensee beyond the
initial eighteen (18) month period provided above, any such proposal must be made within
twelve (12) months of the interim management taking control of the Licensee. Within a
reasonable time after Fina provides Licensor with sufficient information to evaluate the
proposal whereby Fina would retain Effective Control of Licensee and which Fina is
requesting the Licensor approve, Licensor will evaluate, in its sole discretion, and advise
Fina whether or not the proposal is acceptable to Licensor. If the proposal is accepted by
Licensor, it must be fully implemented as represented within three (3) months of Licensor’s
approval.

     “J. In the event the proposed arrangement is not accepted by Licensor or no such
arrangement is proposed by Fina, or if the proposal is implemented but is different from
that approved by the Licensor, then Licensor may, in its discretion, terminate the License
Agreement effective upon written notice to Licensee. If Licensor elects to

5

 

terminate the License Agreement, the Termination Fee provided for by new Exhibit “J-1”
shall be immediately paid by Licensee to Licensor.

     “K. Nothing herein obligates Licensor to approve any proposals made by Licensee or Fina
or waives any of Licensor’s other rights hereunder and nothing herein shall be interpreted
as in any way approving Fina as the “Licensee” or owner of Effective Control of the
Licensee.

     “L. For purposes of this Agreement, “Effective Control” shall mean, (i) the acquisition
of more than 50% of the membership or any other equity or ownership interests of the
Licensee, or (ii) the acquisition of more than 50% of the voting interest of the Licensee.”

     1.6 Except as expressly amended in this Agreement, the License Agreement shall remain unchanged and
in full force and effect subject to its terms.

6

 

ARTICLE II

LIMITED WAIVER OF RIGHT OF FIRST REFUSAL

AND RIGHT OF APPROVAL OF ASSIGNMENT

     2.1 Licensor hereby waives its right of first refusal, as outlined in Section XIII of the
License Agreement, to match the offer made by Fina to purchase a 34.4% interest in Licensee, which
transaction is contemplated by this document.

     2.2 Nothing herein shall be construed, either express or implied, as providing Licensor’s
consent or waiver with respect to any other purchase of all or any part of Licensee’s business,
including but not limited to any other purchase offer made by Fina.

     2.3 Each certificate representing an ownership interest in Licensee shall have conspicuously
endorsed upon its face a statement in a form satisfactory to Licensor that it is held subject to,
and that further assignment or transfer thereof is subject to, all restrictions imposed upon
assignments by the License Agreement.

     2.4 Prior to the assignment or issuance of any interest in Licensee to a proposed new Member
of Licensee, Licensee’s Principals shall cause such proposed new Member to enter into an agreement
with Licensor, agreeing to be bound by the covenants, representations and agreements of Licensee’s
Principals, as set forth in this Agreement, including, without limitation, an obligation to be
bound by a right of first refusal similar to the Right of First Refusal and the restriction on
assignment contained in Section VII of the License Agreement.

ARTICLE III

CONFIDENTIALITY AND NON-USE AGREEMENT

     4.1 Attached to and made a part of this Agreement as Exhibit 3.1 is a Confidentiality and
Non-Use Agreement executed by and among Licensor, Fina, and SCS, Inc., whereby Fina and SCS, Inc.
have agreed to certain provisions with respect to the confidentiality and non-use of Licensor’s
Trade Secrets and other Confidential Information.

ARTICLE IV

PAYMENT OF PURCHASE MONEY NOTE

     5.1 On or prior to the Effective Date, SCS, Inc. shall pay in full its Purchase Money Note to
Licensor dated June 2, 1993, in the original principal amount of $[***].

 

			
	[***]	 	 Text omitted pursuant to a request for confidential treatment and filed separately with the Securities
and Exchange Commission.

7

 

ARTICLE V

CONSENT TO ASSIGNMENT OF LICENSE AGREEMENT

     6.1 Subject to the provisions of this Agreement and the assumption on the Effective Date by
the Licensee of all of the rights and obligations of SCS, Inc. under the License Agreement,
Licensor hereby consents to the assignment of the License Agreement from SCS, Inc. to the Licensee.

     6.2 Nothing herein shall be construed, either express or implied, as providing Licensor’s
consent to any further or other assignment in whole or in part of Licensee’s business, as defined
in Section 1.4 of this Agreement.

ARTICLE VI

CONSENT TO ASSIGNMENT OF PURCHASE AND SALE AGREEMENT

     7.1 Attached to and made a part of this Agreement is a Consent to Assignment of Purchase and
Sale Agreement executed by and among Licensor, The Southland Employees’ Trust, and SCS, Inc.,
whereby Licensor and The Southland Employees’ Trust have consented to the assignment from SCS, Inc.
to the Licensee of the Purchase and Sale Agreement dated April 9, 1993, by and among Licensor, The
Southland Employees’ Trust, and SCS, Inc.

ARTICLE VII

COMPLETION OF TRANSACTION

     8.1 In the event for any reason SCS, Inc. fails to complete the transaction involving the
assignment of the License Agreement to Licensee by March 1, 1997, this Agreement shall be null and
void.

8

 

     IN WITNESS WHEREOF, the parties have executed this Agreement of the date stated above.

	 	 	 	 	 
	 	 	THE SOUTHLAND CORPORATION
	ATTEST:
	 	 	 	 
	 
	 	 	 	 
	 

	 	By: 
	/s/ Steve B. LeRoy
	 

	 	 	 
	 

	 	 	Name: Steve B. LeRoy
	/s/ Michael R. (Illegible)
 

	 	 
	Title: Sr. Vice President
	Assistant Secretary
	 	 	 	 
	 
	 	 	 	 
	 	 	PERMIAN BASIN INVESTMENTS, INC., d/b/a

SOUTHWEST CONVENIENCE STORES, INC.
	 
	 	 	 	 
	ATTEST:
	 	 	 	 
	 
	 	 	 	 
	/s/ Jimmie B. Todd

	 	By: 
	/s/ Donald E. Wood
	 

	 	 	 
	Assistant Secretary

	 	 	Name: Donald E. Wood
	 

	 	 	Title: President

9

 

     Each of the undersigned acknowledges and agrees as follows:

     (1) Each has read the terms and conditions of this Agreement and the License Agreement, and
each acknowledges that the undertakings by Licensee’s principals under this Agreement and as stated
below are made and given in partial consideration of, and as a condition to, the Licensor’s consent
to the assignment of the License Agreement;

     (2) Each is included in the term “Principals” as described in Article I of this Agreement; and

     (3) Each individually makes all of the covenants, representations and agreements of Licensee’s
Principals set forth in this Agreement and any attachments or amendments thereto and is obligated
to perform thereunder for so long as it, he or she qualifies as such and thereafter to the extent
expressly provided by the terms of this Agreement. Nothing herein shall be construed as granting
to any of Licensee’s Principals any of the rights or privileges of Licensee set forth in the
License Agreement or in this Agreement.

	 	 	 	 	 
	 	 	LICENSEE’S PRINCIPALS:
	 
	 	 	 	 
	 	 	FINA OIL AND CHEMICAL COMPANY
	 
	 	 	 	 
	ATTEST:

	 	By: 
	/s/ Jeff D. Morris
	 

	 	 	 
	 

	 	 	Name: Jeff D. Morris
	/s/ (Illegible)
 

	 	 
	Title: Vice President
	Assistant Secretary
	 	 	 	 
	 
	 	 	 	 
	 	 	PERMIAN BASIN INVESTMENTS, INC., d/b/a

SOUTHWEST CONVENIENCE STORES, INC.
	 
	 	 	 	 
	ATTEST:
	 	 	 	 
	 

	 	By: 
	/s/ Donald E. Wood
	 

	 	 	 
	 

	 	 	Name: Donald E. Wood
	/s/ Jimmie B. Todd
 

Assistant Secretary

	 	 
	Title: President

10

 

     Southwest Convenience Stores, LLC hereby accepts the above assignment and assumes all of the
rights and obligations of SCS, Inc. under the License Agreement, as hereby amended.

	 	 	 	 	 
	 	SOUTHWEST CONVENIENCE STORES, LLC

 	 
	 	By:  	/s/ Donald E. Wood
 	 
	 	 	Title:       President 	 
	 	 	Date:  12-20-96 	 
	 

11

 

EXHIBIT J-1

     The termination fee shall be an amount equal to the following formula:

	 	 	 
	YEAR	 	AMOUNT
	TERMINATION OCCURS AT ANY TIME
WITHIN THE FIRST TWELVE MONTHS
IMMEDIATELY FOLLOWING THE EFFECTIVE
DATE.

	 	[***] TIMES THE IMMEDIATELY
PRECEDING TWELVE (12) MONTHS ROYALTY
AS COMPUTED UNDER THE LICENSE
AGREEMENT.
	 
	 	 
	TERMINATION OCCURS AT ANY TIME
WITHIN MONTHS THIRTEEN THROUGH
TWENTY-FOUR IMMEDIATELY FOLLOWING
THE EFFECTIVE DATE.

	 	[***] TIMES THE IMMEDIATELY
PRECEDING TWELVE (12) MONTHS ROYALTY
AS COMPUTED UNDER THE LICENSE
AGREEMENT.
	 
	 	 
	TERMINATION OCCURS AT ANY TIME
WITHIN MONTHS TWENTY-FIVE THROUGH
THIRTY-SIX IMMEDIATELY FOLLOWING THE
EFFECTIVE DATE.

	 	[***] TIMES THE IMMEDIATELY
PRECEDING TWELVE (12) MONTHS ROYALTY
AS COMPUTED UNDER THE LICENSE
AGREEMENT.
	 
	 	 
	TERMINATION OCCURS AT ANY TIME
WITHIN MONTHS THIRTY-SEVEN THROUGH
FORTY-EIGHT IMMEDIATELY FOLLOWING
THE EFFECTIVE DATE.

	 	[***] TIMES THE IMMEDIATELY
PRECEDING TWELVE (12) MONTHS ROYALTY
AS COMPUTED UNDER THE LICENSE
AGREEMENT.
	 
	 	 
	TERMINATION OCCURS AT ANY TIME
WITHIN MONTHS FORTY-NINE THROUGH
SIXTY IMMEDIATELY FOLLOWING THE
EFFECTIVE DATE.

	 	[***] TIMES THE IMMEDIATELY
PRECEDING TWELVE (12) MONTHS ROYALTY
AS COMPUTED UNDER THE LICENSE
AGREEMENT.
	 
	 	 
	TERMINATION OCCURS AT ANY TIME
WITHIN DURING OR AFTER MONTH
SIXTY-ONE IMMEDIATELY FOLLOWING THE
EFFECTIVE DATE.

	 	[***] TIMES THE IMMEDIATELY
PRECEDING TWELVE (12) MONTHS ROYALTY
AS COMPUTED UNDER THE LICENSE
AGREEMENT.

IN THE EVENT THE EFFECTIVE DATE PURSUANT TO THE AMENDMENT TO AREA LICENSE AGREEMENT AND CONSENT TO
ASSIGNMENT IS JANUARY 1, 1997 OR EARLIER, THE EFFECTIVE DATE FOR PURPOSES OF THIS EXHIBIT J-1 SHALL
BE JANUARY 1, 1997.

 

			
	 [***]	 	 Text omitted pursuant to a request for confidential treatment and filed
separately with the Securities and Exchange Commission.

12

 

	 	 	 	 	 
	 

	 	Southland
	 	/s/ (Illegible)
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Licensee	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Permian Basin Investments, Inc. d/b/a
	
	 

	 	Southwest Convenience Stores, Inc.
	
	 
	 	 	 	 
	 

	 	/s/ Donald E. Wood
	
	 

	 	 

	 
	 	 	 	 
	 

	 	Fina Oil and Chemical Company
	 	
	 
	 	 	 	 
	 

	 	/s/ Jeff D. Morris
	 	
	 

	 	 

	 
	 	 	 	 

	 	 	 	 	 
	 

	 	Date
	 	12-20-96
	 

	 	 	 	 

13

 

EXHIBIT 3.1

CONFIDENTIALITY AND NON-USE AGREEMENT

     This Confidentiality and Non-Use Agreement (“Agreement”) is made and entered into this       day
of                , 1996, by and among The Southland Corporation (“Southland”), Fina Oil and Chemical
Company (“Fina”), and Permian Basin Investments, Inc. d/b/a Southwest Convenience Stores, Inc.
(“SCS, Inc.”).

BACKGROUND:

	A.	 	Southland and SCS, Inc. entered into an Area License Agreement (“License Agreement”) dated
June 2, 1993, which as amended will be assigned by SCS, Inc. to Southwest Convenience Stores,
LLC (“Licensee”) effective on or about January 1, 1997 (“Effective Date”).
	 
	B.	 	The Licensee will be owned 65.6% by SCS, Inc. and 34.4% by Fina.
	 
	C.	 	Pursuant to agreements among Fina and SCS, Inc., Fina and SCS, Inc. shall be entitled to
designate or assign certain individuals employed by Fina and SCS, Inc. to serve in management
positions of Licensee. In connection with the operation of Licensee’s business, these
individuals may have access to certain confidential information and trade secrets of
Southland, which the parties desire to protect.

     NOW THEREFORE, in consideration of the terms and conditions set forth herein and of other good
and valuable consideration, and intending to be legally bound hereby, the parties hereto agree as
follows:

ARTICLE I

DEFINITIONS

     1.1 Undefined terms used in this Agreement shall have the same meaning as used in the License
Agreement.

     1.2 As used in this Agreement, the term “Proprietary Information” shall mean (i) any secret or
confidential information of Southland relating to the business, trade practices, Trade Secrets,
methods of operation, software, computer systems, sales, promotions, marketing, technology,
know-how or recipes of Southland, the 7-Eleven System or operation of the 7-Eleven licensed
business which may be communicated to Licensee or Licensee’s Principals in any way or of which
Licensee or Licensee’s Principals may be apprised by virtue of Licensee’s operation under the terms
of the License Agreement, (ii) any and all information, knowledge, know-how and techniques used in
or related to the 7-Eleven System that Southland communicates in writing or otherwise to Licensee
including, but not limited to the 7-Eleven System software, the contents of the Manuals, plans, and
specifications and other materials, marketing information and strategies, site evaluation and
selection techniques, merchandising information, computer systems or other information that
Southland designates as confidential, and (iii) any and all information, trade secrets, knowledge,
know-how, techniques and any materials used in or related to the 7-Eleven System which Southland
provides to Licensee in connection with the License Agreement which Southland designates as
confidential.

 

 

     1.3 As used in this Agreement, the terms “Fina Managers” and “SCS, Inc. Managers” shall mean
the individuals designated by Fina or SCS, Inc. from time to time to serve on the Board of Managers
of Licensee.

     1.4 As used in this Agreement, the term “Assigned Employee” shall mean, whether one or more,
any individual who remains a Fina or SCS, Inc. employee and is assigned to serve in full time
capacity with Licensee.

     1.5 As used in this Agreement, the term “Fina’s Retail Store Operations” shall mean the
activities of Fina’s direct owned and operated stores (including the activities of FinaServe, Inc.,
a subsidiary of Fina) now or hereafter existing, including merchandising, accounting, employee
training, and purchasing activities. The term shall not include motor fuel supply operations or
credit card operations.

ARTICLE II

CONFIDENTIALITY AND NON-USE

     2.1 Fina and SCS, Inc. acknowledge that they have received a copy of the License Agreement.
Fina and SCS, Inc. agree that they will not communicate, reproduce, publish, disclose, divulge, use
or authorize anyone else to communicate, reproduce, publish, disclose, divulge, or use for the
benefit of themselves (other than in connection with the operation of the Licensee during the term
of the License Agreement) or any other person, partnership, association, or corporation, any
Proprietary Information.

     2.2 The obligations of confidentiality stated in 2.1 above shall not apply to any Proprietary
Information which (i) Fina or SCS, Inc. can demonstrate came to its attention prior to disclosure
thereof by Southland or which is already in the public domain, (ii) at or after the time of
disclosure by Southland to Fina or SCS, Inc. lawfully had become or later becomes a part of the
public domain through lawful publication or communication by others, or (iii) is independently
developed by Fina or SCS, Inc. without the benefit of Proprietary Information.

ARTICLE III

RIDER

     3.1 Fina and SCS, Inc. agree that the officers of the Licensee, the Fina Managers, the SCS,
Inc. Managers, and any Assigned Employee, prior to undertaking positions with the Licensee, will
execute the Rider to Confidentiality and Non-Use Agreement substantially in the form attached
hereto as Exhibit A.

ARTICLE IV

ADDITIONAL RESTRICTIONS

     4.1 Fina agrees that the Fina Managers and Assigned Employee, during the time they have
positions with the Licensee and for one year thereafter, will not be involved in direct operational
control of Fina’s Retail Store Operations. This restriction shall not apply to (i) officers of
Fina and (ii) managers of Fina who do not have profit and loss responsibility for Fina’s Retail
Store Operations.

2

 

     4.2 Fina agrees that it will not hire employees of the Licensee (other than hourly paid store
clerks) for Fina’s Retail Store Operations for a period of one year following the termination of
the employee’s employment with the Licensee.

ARTICLE V

TERMINATION

     5.1 The obligation stated in this Agreement shall cease (i) with respect to Fina, three years
after Fina no longer has an ownership interest in the Licensee, (ii) with respect to SCS, Inc.
three years after SCS, Inc. no longer has an ownership interest in the Licensee, or (iii) three
years after the termination of the License Agreement.

ARTICLE VI

LEGAL PROCESS

     6.1 If Fina or SCS, Inc. is requested by legal process to disclose any of the Proprietary
Information, Southland will be promptly notified of such request or requirement so that Southland
may obtain an appropriate protective order and/or waive compliance with the provisions of this
Agreement.

ARTICLE VII

COMPLETION OF TRANSACTION

     7.1 In the event for any reason SCS, Inc. fails to complete the transaction involving the
assignment of the License Agreement to Licensee by March 1, 1997, this Agreement shall be null and
void.

ARTICLE VIII

ENFORCEMENT

     8.1 Fina and SCS, Inc. agree that breach of this Agreement would be harmful to Southland and
that Southland shall be entitled to equitable relief, including injunction and specific
performance, as a remedy for any such breach, in addition to other remedies available to Southland.

3

 

     IN WITNESS WHEREOF the parties have executed this Agreement effective as of the date stated
above.

	 	 	 	 	 
	ATTEST:	 	THE SOUTHLAND CORPORATION	 	 
	 
	/s/ Michael R. (Illegible)

	 	By: 
	/s/ Steve B. LeRoy
	 

	 	 	 
	Assistant Secretary

	 	 	Title:
	Sr. Vice President
	 

	 	 	 	 
	 
	 	 	 	 
	ATTEST:

	 	FINA OIL AND CHEMICAL COMPANY
	 
	 
	 	 	 	 
	 

	 	By: 	 	 
	 

	 	 	 
	Assistant Secretary

	 	 	Title:	 
	 

	 	 	 	 
	 
	 	 	 	 
	ATTEST:

	 	PERMIAN BASIN INVESTMENTS, INC. d/b/a SOUTHWEST CONVENIENCE STORES, INC.

	
	 
	 

Assistant Secretary

	 	 	 	 
	 
	 	 	 	 
	 

	 	By: 	 	 
	 

	 	 	 
	 

	 	 	Title:	 
	 

	 	 	 	 

4

 

EXHIBIT “A”

RIDER TO CONFIDENTIALITY AND NON-USE AGREEMENT

     I,    
                    
                    
        have been assigned by         
           
                  
       to serve as             
                   
          of Southwest Convenience Stores, LLC.

     I acknowledge receipt of a copy of the Confidentiality and Non-Use Agreement by and among The
Southland Corporation, Fina Oil and Chemical Company (“Fina”), and Southwest Convenience Stores,
Inc. (“SCS, Inc.”). I agree to personally comply with all of the terms and conditions of the
Confidentiality and Non-Use Agreement and assume the same responsibilities and obligations
thereunder as Fina and SCS, Inc. I will maintain Southland Proprietary Information (as defined in
the Confidentiality and Non-Use Agreement) solely in the offices of Southwest Convenience Stores,
LLC or, to the extent feasible, in segregated files clearly labeled as being Southland Proprietary
Information.

	 	 	 	 	 	 	 
	WITNESS:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

 

 

STATE OF TEXAS               
               §

COUNTY OF                  
                      §

     Before me, the undersigned authority, on this day personally appeared                               , an
individual, known to me to be the person whose name is subscribed to the foregoing instrument, and
acknowledged to me that he executed the same for the purposes and consideration therein expressed.

     Given under my hand and seal of office on this       day of           , 1996.

	 	 	 	 	 
	 	 	 
	 	  	

 	 
	 	 	Notary Public, State of Texas

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