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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE BCG, INC. and CHESAPEAKE PRODUCTS & SERVICES, Plaintiffs, v. GLES, INC. d/b/a SWEET OIL COMPANY, Defendant/Third-Party Plaintiff, v. SUNOCO, INC., Third-Party Defendant. : : : : : : : : : : : : : : :

C.A. No. 07-cv-207 (GMS) TRIAL BY JURY OF TWELVE DEMANDED NON-ARBITRATION CASE

THIRD-PARTY DEFENDANT'S OPENING BRIEF IN SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT ON COUNT I OF THE AMENDED THIRD-PARTY COMPLAINT PURSUANT TO FED. R. CIV. P. 56 Matthew A. Kaplan (#4956) PEPPER HAMILTON LLP Hercules Plaza, Suite 5100 1313 Market Street P.O. Box 1709 Wilmington, DE 19899-1709 Telephone No.: 302-777-6528 A. Christopher Young (pro hac vice) Jennifer Lori Lambert (pro hac vice) PEPPER HAMILTON LLP 3000 Two Logan Square Eighteenth and Arch Streets Philadelphia, PA 19103-2799 Telephone No.: 215-981-4000 Dated: April 7, 2008 Attorneys for Third-Party Defendant, Sunoco, Inc. (R&M)

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TABLE OF CONTENTS Page I. II. III. A. B. IV. A. B. NATURE AND STAGE OF THE PROCEEDINGS ......................................... 1 SUMMARY OF ARGUMENT............................................................................ 3 STATEMENT OF THE FACTS ......................................................................... 3 Agreements Between Sunoco and Sweet Oil. ..................................................... 3 Non-Renewal of the Distributor Agreement and Debranding of the Stations................................................................................................................... 5 ARGUMENT......................................................................................................... 6 Legal Standard ...................................................................................................... 6 Sunoco is Entitled to Summary Judgment on the Declaratory Judgment Claim Because the Incentive Agreements Obligate Sweet Oil to Pay Sunoco Liquidated Damages ............................................................................................. 7 a. b. V. The Incentive Agreements Are Clear and Unambiguous. .................... 8 The Non-renewal of the Distributor Agreement and the Debranding of the Facilities Entitled Sunoco to Liquidated Damages...................... 9

CONCLUSION ................................................................................................... 10

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TABLE OF AUTHORITIES Page(s) CASES Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)...................................................................................................................6 Assaf v. Fields, 178 F.3d 170 (3d Cir. 1999).......................................................................................................6 Boyle v. County of Allegheny Pa., 139 F.3d 386 (3d Cir. 1998).......................................................................................................6 E.I. du Pont de Nemours & Co. v. Allstate Ins. Co., 693 A.2d 1059 (Del. 1997) ........................................................................................................7 Johnson v. Geico Cas. Co., 516 F. Supp. 2d 351 (D. Del. 2007)...........................................................................................7 Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574 (1986)...................................................................................................................6 N.I. Petroleum Ventures Corp. v. GLeS, Inc., 333 F. Supp. 2d 251 (D. Del. 2004)...........................................................................................7 O'Brien v. Progressive N. Ins. Co., 785 A.2d 281 (Del. 2001) ..........................................................................................................7

STATUTES 28 U.S.C. § 1444 (2006) ..................................................................................................................2 28 U.S.C. § 2201 (2006) ..................................................................................................................7 15 U.S.C. §§ 2801 et seq. (2006).....................................................................................................2

OTHER AUTHORITIES Fed. R. Civ. P. 12(b)(6)....................................................................................................................2 Fed. R. Civ. P. 56.........................................................................................................................6, 9

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I.

NATURE AND STAGE OF THE PROCEEDINGS On October 19, 2006, Plaintiffs, BCG, Inc. and Chesapeake Products & Services,

Inc. (hereinafter collectively referred to as "BCG") sued GLeS, Inc. d/b/a Sweet Oil (hereinafter referred to as "Sweet Oil") in the Court of Common Pleas, Kent County, Delaware for, among other things, breach of a Dealer Agreement dated October 3, 2002 ("Dealer Agreement"), tortious interference with contract, and violations of Delaware Franchise Security Law. BCG owned and operated a Mobil branded retail motor fuel facility located at 9521 Ocean Highway, Delmar, Maryland (hereinafter referred to as the "Delmar Station") and, by the terms of the Dealer Agreement, contracted with Sweet Oil to supply it with Mobil branded motor fuel for resale at the Delmar Station. Sweet Oil purchased Mobil branded motor fuel from Third-Party Defendant Sunoco, Inc. (R&M) (hereinafter referred to as "Sunoco") pursuant to a Mobil Branded Distributor Agreement dated September 18, 2000 ("Distributor Agreement"). The Distributor Agreement also contained a license permitting Sweet Oil to use the Mobil trademarks in connection with the sale of motor fuel at three retail facilities, including the Delmar Station and another retail motor fuel facility not operated by the Plaintiffs located at 5610 Market Street, Snow Hill, Maryland (hereinafter referred to as the "Duck-In Station"). Sweet Oil and Sunoco (by reason of certain and separate assignments) were also parties to two Tosco Distributor Incentive Agreements which entitled Sweet Oil to receive any incentive payments due from Sunoco on and after the assignment from Sweet Oil's predecessor for its purchases of Mobil branded motor fuel for resale to the Delmar and Duck-In Stations. With respect to sales of motor fuel at the Delmar Station, Sweet Oil agreed to pass the incentive payments it received under the Incentive Agreement on to BCG. (Dealer Agreement at ¶ 2(b), attached as Exhibit "4" to Statement of Undisputed Facts, D.I. 38 at ¶ 11).

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Sweet Oil answered the Complaint and denied any liability to BCG. However, it joined Sunoco to the cause of action by filing a Third-Party Complaint seeking to interplead the amount of incentive payments due but not paid to BCG under the Dealer Agreement, for a declaration of the parties' rights and liabilities with respect to the Delmar Station, and for indemnity. Sunoco filed an answer to the Third-Party Complaint denying any liability to Sweet Oil. On March 1, 2007, BCG filed an Amended Complaint stating a claim against Sweet Oil for violation of the Petroleum Marketing Practices Act, 15 U.S.C. §§ 2801, et seq. ("PMPA"). Thereupon, Sweet Oil removed the case to federal court pursuant to 28 U.S.C. § 1444 (2006). Following removal, Sweet Oil amended the Third-Party Complaint to include additional allegations concerning the Duck-In Station and substituting a conversion claim for its interpleader claim. (Am. Compl., D.I. 23). Sweet Oil voluntarily dismissed its indemnification claim after Sunoco filed a Rule 12(b)(6) motion to dismiss. (Mot. to Dismiss, D.I. 25 & Stipulation, D.I. 27). Sunoco filed an answer to the Amended Third-Party Complaint again denying any liability to Sweet Oil on the remaining declaratory judgment and conversion claims. (Answer, D.I. 30). Discovery has concluded and Sweet Oil's declaratory judgment claim is ripe for summary adjudication. By its motion for summary judgment, Sunoco respectfully requests this Court to declare that the non-renewal of the Distributor Agreement and the debranding of the Delmar and Duck-In Stations entitled Sunoco to liquidated damages under the respective Incentive Agreements.

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II.

SUMMARY OF ARGUMENT 1. The Incentive Agreements obligate Sweet Oil to reimburse Sunoco 100% of

the incentive payments it received if the Distributor Agreement between them should non-renew or terminate or if the Delmar or Duck-In Stations should debrand within the first 5 years of the Incentive Agreements' effective dates. The non-renewal of the Distributor Agreement and the debranding of the Delmar and Duck-In Stations within five years of the Incentive Agreements' effective date triggered Sweet Oil's obligation to pay Sunoco liquidated damages, thus, entitling Sunoco to judgment as a matter of law on Sweet Oil's declaratory judgment claim. Since the material facts are undisputed, Sunoco respectfully requests this Court to declare that Sunoco is entitled to liquidated damages from Sweet Oil. III. STATEMENT OF THE FACTS A. Agreements Between Sunoco and Sweet Oil. On April 28, 2004, Conoco Phillips assigned all of its right, title, and interest under a Mobil Branded Distributor Agreement (the "Distributor Agreement") and two Tosco Distributor Incentive Program Agreements ("Incentive Agreements") it had with Peninsula Oil Company ("Peninsula") to Sunoco. (Distributor Agreement, Delmar Incentive Agreement dated Feb. 25, 2002, and Incentive Agreement dated May 2, 2001, attached as Exhibits "1," "2," and "3" to Statement of Undisputed Facts, D.I. 38 at ¶¶ 3, 6, 8). Under the terms of the Incentive Agreements, Sunoco paid Peninsula an incentive payment for each gallon of motor fuel Peninsula sold to the Delmar and Duck-In Stations. (Am. Comp., D.I. 23 at ¶ 10; Delmar Incentive Agreement dated Feb. 25, 2002 and Incentive Agreement dated May 2, 2001, Ex. 2 & 3 to Statement of Undisputed Facts, D.I. 38 at ¶¶ 6, 8). Importantly, for purposes of this motion, the Incentive Agreements provide, in pertinent part, as follows:

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Distributor recognizes that it would be difficult to quantify [Sunoco]'s economic losses if Distributor's franchise relationship terminated or non-renewed or the retail facility debranded. Thus, Distributor agrees that if Distributor's contract is terminated/non-renewed, or the retail facility is debranded within ten (10) years after the first month Distributor reports volume for incentive payment purposes, Distributor will pay to [Sunoco] liquidated damages, to compensate for such losses. . . . (Delmar Incentive Agreement dated Feb. 25, 2002 and Incentive Agreement dated May 2, 2001, Ex. 2 & 3 to Statement of Undisputed Facts, D.I. 38 at ¶¶ 6, 8). Peninsula was obligated to pay back the incentive payments to Sunoco on a fixed amortization schedule if the Distributor Agreement was terminated or non-renewed, if the Delmar Station was debranded prior to July 31, 2012, or if the Duck-In Station was debranded prior to March 31, 2011. (Am. Compl., D.I. 23 at ¶ 11; Delmar Incentive Agreement dated Feb. 25, 2002 and Incentive Agreement dated May 2, 2001, Ex. 2 & 3 to Statement of Undisputed Facts, D.I. 38 at ¶¶ 6, 8). On August 31, 2005, Sweet Oil purchased, among other things, Peninsula's right, title, and interest in the Distributor Agreement and the Incentive Agreements through an Assignment and Assumption Agreement ("Assignment Agreement"). (Assignment and Assumption Agreement at ¶ 2, attached as Exhibit "6" to the Statement of Undisputed Facts, D.I. 38 at ¶ 16). Sweet Oil signed the Assignment Agreement with full knowledge that the Delmar and Duck-In Stations were subject to the Incentive Agreements and that the full amortization dates for the incentive payments were July 31, 2012 and March 31, 2011, respectively. (Id. at ¶ 7). Importantly, Sweet Oil knew the Distributor Agreement would expire on September 30, 2005 and would not be renewed under the Mobil trademark. (Id. at ¶ 2). Instead, Sweet Oil agreed that the Delmar and Duck-In Stations, among others, would be "promptly" rebranded Sunoco. (Id. at ¶ 3).

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B.

Non-Renewal of the Distributor Agreement and Debranding of the Stations. Despite their stated intentions in the Assignment Agreement, the Distributor

Agreement was not non-renewed at the end of September, 2005. Rather, in order to allow for an orderly transition from the Mobil to the Sunoco brand, Sunoco and Sweet Oil extended the Distributor Agreement on a month by month basis. (Am. Comp., D.I. 23 at ¶ 6). From September 2005 until late in 2006, Sweet Oil made frequent and repeated efforts to rebrand the Delmar Station to Sunoco. Sunoco assisted Sweet Oil in this effort by offering to waive its right to demand liquidated damages under the Incentive Agreements if the Delmar Station would rebrand Sunoco. (March 26, 2008 deposition of Mark Greco ("Greco Deposition"), 224:11225:12, attached hereto as Exhibit "A"). Sunoco also offered to pay for all brand conversion expenses and an additional incentive payment if BCG would sign a new Dealer Agreement with Sweet Oil under the Sunoco brand.1 BCG refused to rebrand the Delmar Station to Sunoco. On November 2, 2006, Sunoco informed Sweet Oil that the Distributor Agreement would be terminated and non-renewed as of February 2, 2007 due to the fact that Sunoco's license to use the Mobil trademarks would expire at the end of February, 2007. (Letter dated Nov. 2, 2006, attached as Exhibit "9" to the Statement of Undisputed Facts, D.I. 38 at ¶ 25). On February 2, 2007, Sweet Oil debranded the Delmar and Duck-In Stations as Mobil stations by removing all indicia of the Mobil trademarks. (Greco Dep., 247:4-14, Ex. A; Statement of Undisputed Facts, D.I. 38 at ¶ 33). Thereafter, these stations sold unbranded motor fuel to the motoring public.

Both the Distributor Agreement and Dealer Agreement allowed Sunoco and Sweet Oil, respectively, to change the brand of motor fuel they supplied. (Distributor Agreement at ¶6(B) & ¶11(C), and Dealer Agreement at ¶8, Ex. 1 & 4 to the Statement of Undisputed Facts, D.I. 38 at ¶¶ 3, 11). Thus, Sunoco could supply the Delmar Station, through Sweet Oil, with Sunoco branded motor fuel until the Dealer Agreement expired in 2012. Sunoco preferred that BCG sign a new Dealer Agreement with Sweet Oil pursuant to which it expressly agreed to purchase and resell Sunoco branded motor fuel to the motoring public.

1

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Upon the non-renewal of the Distributor Agreement and the debranding of the stations, Sunoco became entitled to a return of the incentive payments as liquidated damages pursuant to the express terms of the Incentive Agreements. IV. ARGUMENT The non-renewal of the Distributor Agreement and the debranding of the Delmar and Duck-In Stations entitles Sunoco to liquidated damages based on a plain reading of the Incentive Agreements. The Distributor Agreement was terminated and non-renewed as of February 2, 2007 and the Delmar and Duck-In Stations were debranded prior to the full amortization date of the incentive fees. These material facts are not in dispute. The occurrence of each of these events obligated Sweet Oil to pay liquidated damages to Sunoco, therefore, entitling Sunoco to judgment as a matter of law on Sweet Oil's declaratory relief claim. A. Legal Standard Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Boyle v. County of Allegheny, Pa., 139 F.3d 386, 392 (3d Cir. 1998). Summary judgment is appropriate when the moving party shows that there are no genuine issues of material fact that would permit a reasonable jury to find for the non-moving party. Boyle, 139 F.3d at 392. In deciding a motion for summary judgment, the court must construe all facts and inferences in the light most favorable to the nonmoving party. Assaf v. Fields, 178 F.3d 170, 173-74 (3d Cir. 1999). However, the party opposing a properly supported motion for summary

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judgment may not rest upon the mere allegations of his pleading, but must set forth specific facts showing that there is a genuine issue for trial. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). There must be "sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50 (internal citations omitted).

B.

Sunoco is Entitled to Summary Judgment on the Declaratory Judgment Claim Because the Incentive Agreements Obligate Sweet Oil to Pay Sunoco Liquidated Damages The Declaratory Judgment Act permits this Court to declare the rights and duties

of the parties with respect to contractual disputes. 28 U.S.C. § 2201 (2006); See Johnson v. Geico Cas. Co., 516 F. Supp. 2d 351, 357 (D. Del. 2007). This Court has jurisdiction over this action pursuant to the PMPA. See N.I. Petroleum Ventures Corp. v. GLeS, Inc., 333 F. Supp. 2d 251, 253 (D. Del. 2004). Sunoco is entitled to summary judgment because the non-renewal of the Distributor Agreement and the debranding of the Delmar and Duck-In Stations obligated Sweet Oil to pay liquidated damages to Sunoco. A termination and/or non-renewal of the Distributor Agreement or a debranding of the stations entitles Sunoco to liquidated damages pursuant to the plain language of the Incentive Agreements. The Distributor Agreement was terminated and non-renewed and the facilities were debranded on February 2, 2007. These events triggered Sweet Oil's contractual obligation to pay Sunoco liquidated damages under the Incentive Agreements. -7#9116234 v4

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a.

The Incentive Agreements Are Clear and Unambiguous.

Contract interpretation is a question of law for the court to decide. O'Brien v. Progressive N. Ins. Co., 785 A.2d 281, 286 (Del. 2001). Under Delaware law, contract provisions are only considered ambiguous when the terms are "reasonably or fairly susceptible of different interpretations or may have two or more different meanings." E.I. du Pont de Nemours & Co. v. Allstate Ins. Co., 693 A.2d 1059, 1061 (Del. 1997). Here, the contractual provisions are not only clear on their face, but there is no factual dispute between the parties regarding the provision that triggered Sweet Oil's obligations to repay the incentive payments. The Incentive Agreements specifically provide that if the Distributor Agreement is "terminated/non-renewed, or the retail facility is debranded within ten (10) years," Sweet Oil will reimburse Sunoco for all incentive payments paid for the Delmar and Duck-In stations as liquidated damages. (Delmar Incentive Agreement dated Feb. 25, 2002 and Incentive Agreement dated May 2, 2001, Ex. 2 & 3 to Statement of Undisputed Facts, D.I. 38 at ¶¶ 6, 8). The amount of the liquidated damages depends on the length of time the Incentive Agreement was in effect and a schedule in the Incentive Agreements allows the parties to easily calculate the amount due. (Id.) The terms contained in the pertinent section of the Incentive Agreements are plain and clear. A termination or non-renewal of the Distributor Agreement is a discontinuance of the contractual relationship between the parties. Debranding is a term of art used in the motor fuel industry and simply means to remove or cover all indicia of a trademark associated with a particular brand of motor fuel at a retail motor fuel facility. (Greco Dep., 235:15-22, Ex. A). In this case, the term meant to remove or cover any and all indicia of the Mobil trademark from the Delmar or Duck-In Stations. Sweet Oil, as an experienced motor fuel distributor, understood that Sunoco was entitled to a return of the incentive moneys if, and when, the Distributor -8#9116234 v4

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Agreement terminated or non-renewed or the Delmar and Duck-In Stations no longer sold Mobil branded motor fuel. (Id. at 235:3-13). b. The Non-renewal of the Distributor Agreement and the Debranding of the Facilities Entitled Sunoco to Liquidated Damages.

The non-renewal of the Distributor Agreement entitled Sunoco to liquidated damages. Sweet Oil does not dispute that the Distributor Agreement was non-renewed on February 2, 2007. Under the plain language of the Incentive Agreements, Sunoco is and was entitled to reimbursement of the incentive payments from Sweet Oil as liquidated damages upon the occurrence of the non-renewal of the Distributor Agreement. Any debranding of the subject facility, regardless of the reason for the debranding, entitled Sunoco to return of the incentive payments as liquidated damages. (Delmar Incentive Agreement dated Feb. 25, 2002 and Incentive Agreement dated May 2, 2001, Ex. 2 & 3 to Statement of Undisputed Facts, D.I. 38 at ¶¶ 6, 8). Specifically, Sunoco was entitled to liquidated damages if the Delmar Station was debranded prior to July 31, 2012 or the Duck-In Station was debranded prior to March 3, 2011. (Delmar Incentive Agreement dated Feb. 25, 2002, Incentive Agreement dated May 2, 2001, and Dealer Agreement at ¶ 7, Ex. 2, 3, & 4 to the Statement of Undisputed Facts, D.I. 38 at ¶¶ 6, 8, 11). In February 2007, Sweet Oil debranded the Delmar and Duck-In Stations, more than four years prior to the full amortization of the incentive payments. Sweet Oil does not dispute these facts. As a result of the debranding, Sunoco was entitled to full reimbursement of all incentive payments made for the two retail facilities as liquidated damages under the Incentive Agreements. (Delmar Incentive Agreement dated Feb. 25, 2002 and Incentive Agreement dated May 2, 2001, Ex. 2 & 3 to Statement of Undisputed Facts, D.I. 38 at ¶¶ 6, 8).

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V. CONCLUSION For the foregoing reasons, Sunoco respectfully requests that this Court grant its motion for summary judgment in Sunoco's favor pursuant to Rule 56 of the Federal Rules of Civil as there is no genuine issue as to any material fact and Sunoco, Inc. (R&M) is entitled to judgment as a matter of law. Sunoco respectfully requests that this Court declare that the nonrenewal of the Distributor Agreement and the debranding of the Delmar and Duck-In Stations entitled Sunoco to liquidated damages under the respective Incentive Agreements.

Respectfully Submitted, /s/ Matthew A. Kaplan Matthew A. Kaplan (#4956) PEPPER HAMILTON LLP Hercules Plaza, Suite 5100 1313 N. Market Street P.O. Box 1709 Wilmington, DE 19899-1709 Telephone No.: 302-777-6528 A. Christopher Young (pro hac vice) Jennifer Lori Lambert (pro hac vice) PEPPER HAMILTON LLP 3000 Two Logan Square Eighteenth and Arch Streets Philadelphia, PA 19103-2799 Telephone No.: 215-981-4190 Attorneys for Third-Party Defendant, Sunoco, Inc. (R&M)

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EXHIBIT "A"

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE BCG, INC. and CHESAPEAKE PRODUCTS & SERVICES, INC. Plaintiff, v. GLES, INC., d/b/a SWEET OIL COMPANY, Defendant/Third-Party Plaintiff, v. SUNOCO, INC., Third-Party Defendant ) ) ) ) ) Civil Action No. ) 07-CV-207 (GMS) ) ) ) ) ) ) ) ) ) ) ) )

Deposition of MARK GRECO, taken pursuant to notice at the law offices of Young, Conaway, Stargatt & Taylor, The Brandywine Building, 1000 West Street, Wilmington, Delaware, beginning at 10:00 a.m., on Wednesday, March 26, 2008, before Terry Barbano Burke, RMR-CRR and Notary Public. APPEARANCES: HARRY C. STORM, ESQUIRE Lerch Early & Brewer Three Bethesda Metro Center, Suite 460 Bethesda, Maryland 20814-5367 For the Plaintiff

WILCOX & FETZER 1330 King Street - Wilmington, Delaware 19801 (302) 655-0477 www.wilfet.com

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Mark Greco 1 2 3 4 5 6 7 8 9 10 ALSO PRESENT: 11 12 13 14 15 16 17 18 19 20 21 22 23 24 BILL GLENN CHARLIE GLENN BEN LeROY BILL SWEET APPEARANCES (cont'd): HUGH J. HUTCHISON, ESQUIRE Leonard, Sciolla, Hutchison, Leonard & Tinari, LLP 1515 Market Street, 18th Floor Philadelphia, Pennsylvania 19102 For the Defendant GLeS, Inc., d/b/a Sweet Oil Company A. CHRISTOPHER YOUNG, ESQUIRE JENNIFER L. LAMBERT, ESQUIRE Pepper Hamilton, LLP 3000 Two Logan Square Eighteenth and Arch Street Philadelphia, Pennsylvania 19103-2799 For the Defendant Sunoco, Inc.

MARK GRECO, the deponent herein, having first been duly sworn on oath, was examined and testified as follows: BY MR. STORM: Q. Mr. Greco, good morning. Would you state your

full name and home address, please. A. Jersey. Q. How about your business address? It's Mark Greco, 25 Wendy Way, Sewell, New

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 A. The current today is 4501 Route 42, Suite

No. 2, Turnersville, New Jersey. Q. A. What business is at that address? There are several businesses at that address.

Specifically this -- are you asking about Sweet Oil? Q. What business are you engaged in at that

address, at the 4501 Route 42 address? A. Q. A. I own several different businesses. What are those? GLeS, Incorporated; Primo Properties, LLC; MLG

Realty, LLC; and For Sale Realty, LLC. Q. A. What does Primo Properties do? Primo Properties is a land holding company and

property management company. Q. A. Is it affiliated in some way with GLeS? Yes. Primo Properties owns many properties

that were leased to GLeS during its operation as Sweet Oil. Q. And does Primo Properties still own any

operating service stations? A. Q. Yes. Are those stations operated or affiliated at

this time with GLeS? A. No.

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q. Was there some transaction within the last

couple of years where that changed? A. Yes. At one point Primo Properties leased gas

stations to GLeS, and on March 7th of last year, GLeS sold its operational business to another company. Q. A. Q. What company was that? GPM Investments, LLC. Did GPM step into GLeS's shoes with respect to

those Primo Properties' locations? A. The relationship between Primo and GLeS was

terminated by mutual termination, and then Primo negotiated a new ground lease with GPM. Q. But those sites that Primo controlled and that

were formerly leased to GLeS as gas stations are still operating as gas stations, only through GPM at this time? A. Q. A. Q. Yes. Who owns Primo Properties? Ben LeRoy, William Sweet, and myself. I take it it has a separate corporate

existence or organizational existence from GLeS? A. Q. A. Yes. Is that a Delaware entity, do you know? Yes.

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q. A. Q. A. Is GLeS still in business at this time? Yes. What does it do at this time? GLeS owns two properties which it leases to

GPM Investments. Q. It is no longer involved in the supplying of

motor fuel? A. Q. No. The two properties that it owns, that it

leases to GPM, where are those located? A. Q. In New Castle County, Delaware. The transaction that occurred in March, I

guess, 2007 between GLeS and GPM, was that an asset sale? A. It was a sale of business assets, equipment

and supply contracts. Q. Either of the locations that are involved in

this litigation, the Laurel Oasis location or the Delmar location, was there anything in the GPM transaction with GLeS related to those two sites? A. Originally they were going to be included in

the sale, but they were excluded because of the breach of agreements. Q. So the transaction that ultimately occurred

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 foundation. on that. between GPM and GLeS did not include anything with respect to the Laurel Oasis or Delmar locations? A. Q. No, it did not. Was there any adjustment to the purchase price

between GPM and GLeS as a result of those two locations not being part of a package that was sold? MR. HUTCHISON: Objection to foundation

There's no indication, it was part of it To say there's an

originally as part of the price. adjustment, I think is perhaps -MR. STORM:

Maybe I can lay a better

I thought I understood him to say that

originally they had been part of the package and then they were later excluded. THE WITNESS: It was our intention to

sell all of the supply agreements, but due to the breach on the two agreements, we were forced to exclude them from negotiation. BY MR. STORM: Q. And was there any adjustment made on the price

as a result of those locations being excluded? A. No. They were excluded prior to coming up

with price. MR. STORM: I think, and we can go back

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 BY MR. STORM: Q. Mr. Greco, let me direct your attention to and check, but I think that we had in the document request requested documents with respect to that transaction, and I don't believe that there was anything produced in connection with that. that those documents are relevant. I think

Not all of the

documents, obviously, but certainly any of the original drafts of the documents and the ultimate purchase documents as related to these locations I think are relevant. So we can talk some more on a break about that, but I think that insofar certainly as the price, there may have been adjustment in the price from the initial price that was agreed upon and the ultimate price, I think it certainly is relevant to the question of the damages here. MR. HUTCHISON: MR. STORM: We can talk about that.

Okay.

Exhibit 1 that's in front of you there, which is the deposition notice, the original deposition notice, which I don't think was formally amended. But I just

want to establish on the record that you are here on behalf of GLeS, Inc., doing business as Sweet Oil

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Company, to testify about the seven categories of items that are set forth in the notice? A. Q. Yes. And you believe to be knowledgeable about all

of those areas; is that right? A. Q. Yes. I'd like to ask you a little bit, try to Can you

understand some of the background about GLeS. tell me when it was formed? A. Q. April of 1997.

And were you and Mr. Sweet and Mr. LeRoy all

founders, if you will, of the organization? A. Q. Yes. At the time that GLeS was formed, were you

already in the motor fuels business at that time? A. Q. A. Q. A. Yes, each of us were. Together in some way or separately? Separately. Tell me what everybody was doing generally. Both Bill and Ben were long-time gasoline I was, more recently had become a gasoline Previous to that, I was actually working for

retailers. retailer.

Texaco as a sales representative, franchise consultant. Q. And how many retail sites did you operate at

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 that time in '97? A. two. Q. I think in '97 I only had one. I'm not sure. Of the locations that the three of you Either one or

operated in some way, were any of those sites locations where the individuals or their entities controlled the real estate? A. Q. company? A. Q. Yes. So you had one site, and how many sites did Yes. As opposed to being a lessee dealer of an oil

Mr. LeRoy operate, do you know? A. Q. A. At the time we formed the company? Right. I don't know. It was either one or two. I

couldn't tell you exactly. Q. A. Q. A. Q. And then Mr. Sweet operated some sites too? Yes. How many did he operate, do you know? I think it was two, but I'm not sure. At the time that the three of you came

together, what was the objective in bringing the three together, what was GLeS going to do?

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 A. Initially we were going to build and/or buy a

service station collectively together and be supplied by an oil company. And later it evolved into an

opportunity for us to supply ourselves. Q. And ultimately then you became a jobber or a

distributor of some kind? A. Q. A. when. Q. Mr. LeRoy or Mr. Sweet, had their background Yes, through Amoco. When was that, do you remember? It was early '97. I couldn't tell you exactly

been with an oil company like yours with Texaco? A. Q. point? A. Q. A. Q. Yes. I'm sorry, what year was that? 1997. Did you then also undertake to obtain other Only as dealers. So GLeS becomes an Amoco distributor at some

supply accounts? A. Q. Yes. How many supply accounts ultimately with Amoco

do you think you acquired? A. In 1997?

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q. Well, from the time that you started in '97

until the time that you sold to GPM, sort of take me through the history of the company, what happens with it? A. We continually went out and negotiated supply

agreements with independent dealers who owned their own properties, as well as acquiring locations or leasing locations and continuing to grow our distribution business. GLeS -- I'm trying to think -- maybe can you tell me exactly what you're trying to get? Q. So you went out and you obtained supply

agreements with dealers who controlled their real estate; right? A. Q. Yes. Did you continue to acquire locations through

GLeS yourself where you acquired the interest in the real estate? A. GLeS only owned a couple of locations. We

formed a real estate company, which was designed to be a real estate holding company. purchase the real estate. Q. A. Was that Primo? Yes. GLeS wasn't intended to

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q. And how many sites did Primo acquire that GLeS

ultimately supplied? A. Q. A. Q. A. Off the top of my head, I couldn't tell you. More than ten? Yes, more than ten. More than 20? Somewhere in the 20's, I would say. I

couldn't tell you exactly without looking. Q. By the time we get to 2007 when you do the

transaction with GPM, there would have been locations where GLeS and/or Primo controlled the real estate; right? A. Q. Yes. And then there would have been locations where

GLeS was supplying motor fuel to others who controlled the real estate; right? A. Q. Correct. How many locations were there at that time of

each of those categories? A. Off the top of my head, I couldn't tell you a

breakdown. Q. A. Give me just an approximate number. We had ground leases, we had some fee sites, I couldn't tell you a

we had some supply sites.

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 breakdown off the top of my head. Q. Of the sites that were transferred to GPM, you

have no idea how many locations were involved in the transaction? A. I believe only one gas station was transferred The rest were supply

to them, the real estate. agreements and leases. Q. A. Q. A. Q. A. Q.

How many was that, more than 50? All combined? Yes. Yes. More than 75? No. So somewhere between 50 and 75 sites that were

supplied by Sweet Oil? A. Q. Yes. Do you recall in 2007 what kind of volume

Sweet Oil was doing on an annual basis? A. Q. Approximately 55 million gallons. Let's go back. You mentioned that you became

a distributor for Amoco? A. Q. Yes. I assume, then, that that ultimately became

the BP brand when BP acquired Amoco; is that right?

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 in? A. New Jersey, Pennsylvania, Delaware, Maryland Q. A. Q. Yes. Did GLeS become a distributor for any other

oil companies? A. Q. A. Sunoco. Yes. Which ones? With Coastal Refining & Marketing. With ExxonMobil. With CITGO. With

And I believe

that was it. I'm sorry, excuse me, in addition Tosco. Was the ExxonMobil distributorship separate

and apart from that with Tosco? A. Yes. We supplied Exxon through ExxonMobil.

At the time we supplied Tosco, it was the BP brand before BP did their purchase of Amoco. Q. So, in other words, you were a BP distributor

before BP acquired Amoco? A. Yes, we were BP through Tosco, and Amoco

through Amoco. Q. that? What jurisdictions did you do business I got that straight. Is everybody clear on

and Virginia.

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q. Was there one jurisdiction that you

concentrated on more than others of those? A. Initially it was Delaware, because that's

where our office was, our base was, but we grew out from there. Q. Did anyone else ever, aside from the

transaction that you ultimately did with GPM, other than you, Mr. Sweet, and Mr. LeRoy, did anybody else have an ownership interest in GLeS? A. Q. No. Ultimately -- not ultimately -- in 2005, I

believe you did, GLeS did a transaction with Peninsula Oil, isn't that right? A. Q. Yes. Prior to that, had you acquired the interests

of any other distributor or oil company? A. Q. A. Yes. Which ones? In October of 2003, we acquired other assets In December of 2000, we acquired And also in December of 2000, we

of Peninsula Oil. assets of Amoco.

acquired assets of Shellhorn & Hill. Q. A. I'm sorry, Shell what? Shellhorn & Hill.

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q. Okay. Tell me the nature of the assets that you acquired from Peninsula in 2003, what was that? A. Primo Properties acquired 14 Uncle Willie's

branded locations and then leased them to GLeS. Q. A. Q. time? A. Q. No. So GLeS sold the businesses there and retained Had Peninsula operated Uncle Willie's itself? Yes. Did GLeS operate those sites for any period of

the real estate and had a lease arrangement with an operator? A. it. Q. And then GLeS supplied whoever it was who GLeS never owned the real estate. Primo owned

became the operators of those sites? A. Q. Yes. How about the transaction with Amoco in 2000,

what was the nature of that? A. Amoco co-existed with us in this market. We

were supplying dealers and they were supplying dealers and they made a corporate decision that they weren't going to continue to serve directly, and we purchased

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 their assets, along with assignment of the existing dealer leases. Q. So the portion of the territory that had been

both direct supplied and distributor supplied now became wholly distributor supplied? A. Q. Yes. And then you said in December of 2000 you also

did a transaction with Shellhorn & Hill? A. Q. A. Yes. What was that? Primo Properties purchased eight pieces of

real estate and then leased them to GLeS. Q. In connection with the 2005 transaction with

Peninsula, was there any one person in particular at Peninsula that you dealt with? A. Q. A. Q. Yes. John Willie.

Was Mr. Willie the president of the company? Yes. Did Peninsula continue doing business in some

fashion after the 2005 transaction? A. They continued to operate, but they were no

longer in the gasoline business. Q. They were still involved in heating oil or

some other type of business like that?

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 A. Q. A. Yes. What was that? After GLeS's sale and assignment of the A. Q. Yeah, other businesses. Now, you mentioned earlier on that I think you

also were engaged in business with MLG Realty and I think another realty company. A. Q. A. Yes. What are those? They are businesses that I wholly own outside I own commercial real

of the Primo and GLeS companies.

estate and do property management. Q. Just so I am clear, at this time GLeS does not

supply motor fuel to anybody? A. Q. No. I think I saw somewhere in the documents that

there was a reference to a mutual cancellation that you entered into with Sunoco at some point in time, I think in 2006 or 2007. Do you recall that?

balance of our supply agreements to GPM, we terminated our relationships with each of our suppliers. Q. The agreement that you had with Sunoco, was

that an agreement that was separate from the Tosco

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 BY MR. STORM: agreement that had been assigned to Sunoco? A. Q. I'm not sure if I understand the question. When you -- and when I say you, when GLeS --

when GLeS acquired the interest of Peninsula in 2005, Peninsula at that time had a relationship with Tosco, did it not? A. At the time I'm not sure if it was still Tosco

or if it was Sunoco. Q. It had an original agreement with Tosco that

had been assigned to Sunoco; correct? A. Q. A. Q. Yes. Related to the Mobil brand; right? Yes. And you ultimately took an assignment -- you

being GLeS -- took an assignment of Peninsula's interest in that agreement; right? A. Q. Yes. Separate from that relationship that was

created through you stepping into Peninsula's shoes -when I refer to you, I'm talking about GLeS -A. Okay. MR. HUTCHISON: MR. STORM: We agree.

Okay.

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q. Other than the relationship that GLeS stepped

into through Peninsula and Sunoco stepped into through its assignment from Tosco, did GLeS have a separate relationship of some kind with Sunoco? A. Q. Yes. Was that pursuant to a separate Sunoco/GLeS

agreement related to the Sunoco brand? A. Q. know? A. I'd have to go back and pull the agreement. I Yes. When was that agreement entered into, if you

don't know. Q. Prior to the assignment from Peninsula in 2005

to GLeS, did you ever supply Sunoco branded locations? A. Q. A. Q. A. Q. Yes. How many? One. Where was that? In Glasgow, Delaware. And that was pursuant to that agreement that

you had with Sunoco? A. Q. Yes. Was that a 2003 agreement, do you recall, that

you had with Sunoco?

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 A. I'm not sure of the date. I'd have to pull

the agreement. MR. YOUNG: while we are at a break. between Tosco and Sunoco. One point of clarification You refer to the assignment I believe it was an

assignment from ConocoPhillips, which was a successor to Tosco. MR. HUTCHISON: I think we can agree that

we don't have to fill in the blanks in the middle. MR. STORM: Actually ConocoPhillips was a

successor to Phillips under that agreement, which was a successor to Tosco, but we will save that for later. BY MR. STORM: Q. Was there any particular person at Sunoco

during the time period, from the time you signed the Sunoco agreement until the time that you got out of business in 2007, out of the distribution business in 2007, were there certain people at Sunoco with whom you dealt? A. Q. Yes. I think I have seen the name Dorothy Love or

Dolores Love? A. Q. Dolores Love. And Jeff Byard?

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q. A. Q. A. Yes. Anybody else at Sunoco you dealt with? Karl Beckers. Dan Moore. And I'm not sure who else. Were those people, Miss Love, Mr. Byard,

Mr. Beckers, and Mr. Moore, were those all people who were part of the distributor side of Sunoco's business? A. Q. Yes. Let me direct your attention to Exhibit 2 in

front of you there, and ask if you can identify that exhibit for me? A. This is the assignment of Peninsula's rights

to GLeS as it related to their, Tosco/Sunoco supply agreement. Q. I am going to ask you a few questions about

this document, but I want to just go back to ask a couple of background questions about GPM for a minute, the entity that GLeS did the transaction with in 2007. Was GPM already involved in the motor fuel business in this area? A. Q. Yes. How many sites did they operate, do you know,

approximately?

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 A. Q. area? A. Virginia, Delaware, Maryland. I couldn't tell I couldn't tell you. Something over 200.

They did business in what general geographic

you other states. Q. Were they a larger entity than GLeS at the

time that they acquired the interests of GLeS? A. Q. Yes. Do you know approximately how many sites they

operated or supplied? A. number. Q. A. Q. Total, not just in this area? Total. The document, Exhibit 2, I think you mentioned Something over 200, but I don't know the exact

it's the assignment and assumption agreement related to the Tosco/ConocoPhillips/Peninsula agreement; right? A. Q. Yes. Was there also an assignment and assumption

agreement that GLeS entered into with Peninsula as part of the Peninsula/GLeS transaction that related to sites that were not Mobil-branded locations? A. Q. Can you restate the question? At the time that GLeS acquired the interests

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 of Peninsula in these various locations in 2005, which included the two sites that are involved in this litigation, only one of the sites involved in the litigation was a Mobil-branded site; right? A. Q. Yes. And so, for example, the site, the Laurel

Oasis location, which at the time was branded Texaco, that would not have been a location that was covered by this assignment, Exhibit 2; correct? A. Q. Correct. So my question is, were there other assignment

documents between GLeS and Peninsula that dealt with these other locations that were outside of the Sunoco bailiwick? A. No, I don't believe we were. We didn't take

assignment of any other supply agreements. Q. Did you take assignment of my client's

agreement with Peninsula related to Laural Oasis? A. Q. Yes, we did. How did you do that, pursuant to what

document? A. I believe we had an agreement of sale. It was

probably addressed in the agreement of sale. Q. Was there a closing on that transaction?

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 A. Q. A. Yes. Did that happen in a lawyer's office? I'm sure that it did. I don't remember

exactly where it was. MR. STORM: That's another document I

mentioned that was not in the documents that were produced, that there were no other assignment documents relating to the transaction. Certainly not an

assignment document that would specifically relate to Laural Oasis. BY MR. STORM: Q. The document in front of you as Exhibit 2, you

were aware, were you not, at the time that you signed this document on or about August 31st of 2005 that Sunoco's right to the Mobil brand, that Sunoco and ConocoPhillips in the agreement between them had limited Sunoco's right to use the Mobil brand past some period of time? MR. YOUNG: Objection to form.

You can answer. THE WITNESS: expiration date. of my head. BY MR. STORM: I know that there was an

I don't know what it was off the top

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 BY MR. STORM: Q. Had you seen the distributor agreement between Q. You were the -- when I say you, GLeS/Sweet

Oil -- was the assignee under Exhibit 2; right? A. Q. Yes. You agreed in this document with Sunoco in

paragraph -- well, in this document with Sunoco and with Peninsula that the locations that were supplied Mobil brand fuel under the expiring agreement will be rebranded Sunoco promptly in accordance with a schedule to be agreed upon, do you see that in Paragraph 3? A. Q. Yes. And you knew at that time that the agreement

between Peninsula and ConocoPhillips that had been assigned to Sunoco was set to expire on September 30th of 2005 pursuant to Paragraph 2 of this agreement? A. Q. Yes. Had you seen that agreement at the time that

you signed this assignment document or the time that GLeS -MR. HUTCHISON: Which?

Tosco, ConocoPhillips and Peninsula? A. Q. I don't recall. Let me direct your attention to Exhibit 8.

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 So my question is, in late August of 2005, had you seen and reviewed Exhibit 8? A. Q. I don't believe that we did. Prior to signing this document, Exhibit 2, had

you seen the agreement between Peninsula and my clients relating to the Delmar Mobil location? A. Q. A. Q. Yes. And had you reviewed that? Yes. You were aware, then, at the time you signed

Exhibit 2, or at the time that GLeS signed Exhibit 2, that any brand change had to be mutually agreed upon? A. Q. Yes. The signature on this Exhibit 2 on behalf of

GLeS, is that your signature? A. Q. Yes, it is. If you go to Paragraph 7 of Exhibit 2, the

location that's identified as the Duck-In #2 location -A. Q. Yes. -- was that a Mobil-branded location that you

began, that Sweet Oil began supplying after it acquired the Peninsula assets? A. Yes.

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q. Did the relationship between Sweet Oil and

Duck-In continue after that? A. Q. A. Q. Yes. And for how long? Up until the assignment to GPM. Was Duck-In one of the locations that was

transferred to GPM? A. Q. A. Yes. What was Duck-In branded at that time? At the time of transfer, I think it was

unbranded. Q. Do you remember how that happened, that it

went from the Mobil brand to unbranded? A. Yes. Once the breach of the Mobil brand -- or

once the breach occurred at the Delmar location, we no longer met the minimum criteria for Sunoco to supply under the jobber agreement, and they didn't want us to maintain that agreement with just the Duck-In location, so we mutually agreed on terminating. Q. A. What supply agreement are you talking about? Our distributor agreement with Sunoco had

minimum volume requirements that we had to meet. Q. But wasn't that distributor agreement as

related to the Mobil brand the agreement that Sunoco

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 BY MR. STORM: Q. A. Q. Who at Sunoco were you dealing with on that? Dolores Love and Dan Moore, I believe. Did you ever say to Sunoco, well, wait a was talking about in this assignment document as ending and wouldn't be renewed on September 30th, 2005, Paragraph 2? A. Yes, at the time that we signed this, it was

contemplated that this Tosco agreement was due to expire at the end of September, and the Mobil gallons were going to be rolled into our Sunoco agreement. Q. A. Sunoco. Q. And Sunoco told you that's the way it's going Who envisioned that? That's the way it was explained to us by

to work; correct? MR. YOUNG: Objection to form. Right.

THE WITNESS:

minute, this contract that Peninsula has with the Glenns requires the Glenns to consent? A. Yes, I actually furnished them a copy of the

agreement. Q. And what conversation did you have with Sunoco

about that?

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 A. To the best of my recollection, I believe that

they said that it was going to be a required conversion because they had purchased the rights to that brand. Q. A. Who at Sunoco told you that? I believe it was Dolores, but I'm not 100

percent certain. Q. When do you think that occurred, that

conversation? A. On or about when we signed the assignment

agreement. Q. In 2005, at the time that GLeS was going to do

the transaction with Peninsula, did GLeS have an office somewhere in Delaware? A. Q. A. Q. A. Q. Yes. Where was that? On Kirkwood Highway in Newark. How many employees did the company have? Approximately ten. And I take it there was an accounting and

bookkeeping department? A. Q. Correct. And how many employees were in the accounting

and bookkeeping department? A. At the time, I believe it was four.

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 A. Q. A. Q. Did Sweet Oil do any of its own hauling? No. So any hauling of product was done through

outside haulers; right? A. Q. Common carriers, yes. Common carriers. Can you tell me which ones? I believe at the time it was exclusively

Coraluzzo. Q. Did Sweet Oil have an annual contract with

Coraluzzo? A. Q. Yes. And when that contract came up each year, did

you put the contract out to bid? A. Q. Yes, we did. What other freight companies would it have

been put out to? A. Q. A. Numerous companies. Give me some names, if you recall. Eagle, Penn Tank, Tipton, MIT. Many other

companies. Q. You were trying to, obviously, get the lowest

freight rate; is that right? A. That was one of our objectives.

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q. A. What were the other objectives? We wanted to get the maximum amount of service

that we could, 24-hour-a-day/seven-day-a-week deliveries. One of the criteria was they had to be able to deliver through the extent of our network. Not

all the carriers have the capability of delivering the entire network, so that was a requirement. Q. Do you know who was doing Peninsula's hauling

to my client's locations? A. At the time we purchased the contracts,

Peninsula had Coraluzzo and Eagle both supplying. Q. The product that was supplied, the

Mobil-branded product, was there a particular distribution terminal that that came from? A. The primary terminal would have been

Salisbury, Maryland. Q. How about with respect to initially the Texaco

product and then the CITGO product? A. Q. I believe primarily that was Delaware City. How about the same for any diesel fuel for

those two locations? A. Q. Yes, either of those terminals. At any of the locations that GLeS or you or

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Mr. LeRoy or Mr. Sweet operated, did any of those sites have convenience stores? A. Q. A. Q. A. Q. A. Q. Yes. Did any of them have quick serve restaurants? No. Did GLeS develop any locations itself? When you say develop? As a ground up facility? That GLeS owned, is that what you're asking? Or that one of the related, some related

entity owned. A. Q. None that Primo or GLeS owned. How about any other, you or Mr. Sweet or

Mr. LeRoy? A. Q. No. How about when you were affiliated with

Texaco, were you affiliated with any ground-up locations? A. Q. Many. Were those facilities that included

convenience stores? A. Q. A. Yes. How about any food service? Yes. Delis and things like that.

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Q. Why were sites developed with convenience

stores and delis, things of that nature? A. Providing additional offerings to the

customers. Q. A. Q. To tie in with the motor fuel sales? In some cases. It was generally viewed, was it not,

throughout the 90's, and up to the present time, that convenience stores and food service and motor fuel are complimentary of one another? MR. YOUNG: Objection. Objection as well.

MR. HUTCHISON: THE WITNESS: term "generally." BY MR. STORM: Q.

You used the

I don't know --

Well, most of the new facilities that you see

being built today include convenience stores, do they not? A. Q. A. They include many different uses. Such as? Car washes, quick lube centers, repair Any number of different

facilities, Dunkin' Donuts. offerings. Q. Why is that?

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 BY MR. STORM: Q. Is it a business where, based on your BY MR. STORM: Q. Generally it's a business, is it not, where A. Well, the margins continue to shrink on

everything as competition develops, so you increase the number of offerings that you have. Q. In order to try to increase the profitability

of a site? A. Q. Yes. You mentioned shrinking margins. Is the motor

fuel business competitive? MR. YOUNG: Objection. Yes.

THE WITNESS:

the margins are measured in pennies per gallon? A. Yes. MR. YOUNG: Objection.

experience, consumers buying at retail are price sensitive to the price of gasoline? MR. HUTCHISON: MR. YOUNG: Objection.

Objection. To the best of my opinion,

THE WITNESS: I would say yes. BY MR. STORM:

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 BY MR. STORM: Q. A. Q. Let me rephrase it. Yeah. When GLeS was supplying locations, there was Q. A. Q. How many years have you been in the business? Since I was 15 years old. 30 years.

A typical load of gasoline that's delivered to

a site, how many gallons, if it is a full load? A. Q. 8900. Have credit card fees become a big issue in

the industry? MR. YOUNG: Objection. Objection.

MR. HUTCHISON:

generally credit card processing that was involved at the retail sites, was there not? A. Q. Correct. The retail sites took either branded

proprietary oil company cards and they took Visa, Master Card, credit cards like that; right? A. Q. Correct. And on the non-oil company cards, there were

generally fees associated with the processing of those cards; right? A. Yes.

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 A. Yes. date? MR. STORM: There is another page to that It was Q. And as the price of the gasoline or motor fuel

goes up, the credit card fees, for example, at $4 a gallon are greater than they were at $2 a gallon; right? A. Q. A. Q. Correct. I know you know Mr. LeRoy; right? Yes. Let me direct your attention to Exhibit 3. Have you seen that article before? MR. HUTCHISON: Does the article have a

that appears not to have been copied.

December 23rd, 2007, in the Sunday News Journal here in Wilmington in the business section. BY MR. STORM: Q. A. Q. Have you seen that article? Yes, I believe so. On the second page, Mr. LeRoy is quoted as

saying that competitive prices are the driving force. You cannot be competitive in this market place. If you

didn't stay competitive, you wouldn't have customers. Do you see that?

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 A. Q. A. Yes. Do you agree with that? I don't know if I would have stated it exactly Q. A. Do you agree with that? Competitive is a relative term. I would say

to some extent, yes. Q. Later on, in the middle column on the second

page, he is quoted as saying, "Retailers are getting killed, they're getting squashed in the middle. One of

the biggest culprits is not the oil companies, it's the credit card companies." Do you see that?

like that. Q. But the point that's being made there is it

relates to the credit card fees; right? A. Q. Yes. Let's go back to 2005 and the purchase of the

assets from Peninsula, and I think that we have already established that those assets included the two locations that are involved in the litigation. Were there values that were allocated to the various assets that were being acquired from Peninsula? A. They weren't allocated by site. We bought a

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 package of agreements. Q. A. Q. A. Q. How many agreements, do you remember? I believe it was 18, but I'm not sure. Were those all supply contracts? Yes. I think you talked earlier that you dealt

primarily with Mr. Willie. A. Q. Yes. And Mr. Willie was probably the same guy that

Willie's were named for? A. Q. It's the family name. Did you talk to him about how Peninsula had

been performing under the various contracts, the method of performance? Let me give you an example. For

example, on the commission site at Laurel Oasis, how did monies come into Peninsula from Laurel Oasis and how were commissions paid by Peninsula, did you talk at all about the mechanics of how it worked? A. I don't think we got into that detail. They

furnished us all the contracts and we, I guess, made our own interpretation based on what the contracts required us to do. Q. Did you visit with my clients before the

assignment took place?

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 A. Q. A. Yes. Tell me what you recall about that meeting? We had several meetings, myself and Bill

Glenn, discussing the possibility of changing the brand at the Texaco truck stop. We had meetings with Terry We discussed the

Sullivan from CITGO Petroleum.

possibility of making them an actual distributor, a subdistributor of ours where they would be able to go out and hire their own trucks and supply not only their locations, but potentially other locations. Q. Were those discussions before you acquired the

assets from Peninsula or after you acquired the assets? A. It was right in that same time frame. I

couldn't tell you exactly when. Q. So just so I'm clear, before you actually

bought the assets from Peninsula, you didn't do a review of Peninsula's method of operation to see how Peninsula was performing under its contracts with the various operators that -A. We actually hired their sales rep, Rod

Coleman, who was Peninsula's rep and then later became our rep in an effort that we would not disturb customer service. Q. Did he become a rep for either of my clients'

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Mark Greco 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 locations? A. He continued to be the rep. He was the rep

prior to and he was the rep afterwards. Q. Adam? A. Q. A. Q. A. At a later date, Adam Gray became the rep. When did he become the rep? I don't know the exact date. What happened to the fellow from Peninsula? He was with us for a while and then eventually I couldn't tell you exactly the time Was there another rep also, somebody named

left the company.

frames when everything occurred. Q. A. Do you remember how long he stayed with you? He was with us for a while. He changed

assignments, he had various different dealers, and then eventually he left the company. Q. At the