Free Amended Complaint - District Court of California - California

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 1 of 42

EXHIBIT B TO FIRST AMENDED COMPLAINT

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 2 of 42

Facilty Number: 82461
Customer Account Number: 0996439
Category: NTI

am/pm MINI MARKET AGREEMENT

THIS AGREEMENT is made~, ~, between BP West Coast Products LLC, a Delaware limited
liability company, with an office at 4 Ci:NlNTE DRIVE, LA PALMA, CALIFORNIA 90623 ("BPWCP")

and STTN Enterprises, Inc., a California Corporation
(state whether a sole proprietorship, partnership, limited partnership, corporation or limited liabilty company I"LLC"J; if partnership, the names of all partners and State of Organization; if limited partnership, the names of all general partners and State of Organization; if corporation, the State of Incorporation; if LLC, the State of Organization)

with an address at 631 San Felipe Road. Hollister. CA 95035 ("Operator").
Operator desires to be the franchisee of, and BPWCP is willng to grant to Operator a franchise for, an am/pm mini market located at the Premises set forth in PART I (which together with the buildings and improvements now or
hereafter constructed thereon is referred to herein as the "Premises") on the terms and conditions set forth in PARTS I and II of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and promises contained in PARTS I and II hereof, each of the parties intending to be legally bound hereby, agrees as follows:
PART I

P ART I contains specific terms which relate to the terms and conditions set forth in the corresponding sections - PART II, Form No. amlpm- 240WR-1 (412006), attached hereto and incorporated herein.
Section
4.03
Store Manager (if

Operator operates more than one am/pm mini market):

5.01

This Agreement shall be binding on the paries as of the date first written above (Effective Date.) The franchise term of this Agreement shall begin on the, ("Commencement Date"), and shall end at 10 a.m. on the first day after the last day of

the (J 120'" or (XX) 240ih full calendar month following the Commencement Date. If no box is checked at the tie this Agreement is executed, the box for ¡20th shaH be deemed checked. If no date is set forth in this PART I, the Commencement Date shall be established by the "Notice of Final Inspection and Readiness" provided for in Section 5.01
6.01

PART II. Premises:
of

631 San Felipe Road
(complete address by street number, including, where applicable, designation of comer)

City Hollister State CA Zip 95035
Ifno address is set fort, the Premises shall be established by the "Site Acceptance" provided for in Section 6.01 of

II.

Par

6.01(a)
7.01 (a)

Target Area:

7.01 (c)

Initial Franchise Fee: Seventy Thousand and 00/100 Dollars ($ 70.000.00). Renewal Franchise Fee:

Dollars ($ .00)
7.02(a)
7.03

Minimum royalty fee: One Thousand and 00/100
Dollars ($ 1.000..00).

Security Deposit: One Thousand and 00/100
Dollars ($ 1.000..001.

16.01

Operational Designee, if applicable:

17.02

Entity Designee (Corporate Operators, LLC's, Limited Partnerships):

non-.li'ssilC operator (DOFO) ¡ml/pii¡:2,t'IWR-1 (4/2006) Uniform

1 of 4

83

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 3 of 42

Facilty Number:
Store Size 3,600 sq. ft.

STORE EQUIPMENT (Real and Personal Property)

(exterior dimensions)

The equipment listed below is required to be installed in the Store unless otherwise indicated by a check mak
at the left of the required items. Operator must install and maintain the equipment so indicated prior to the

Commencement Date. All equipment must be obtained from approved vendors, or, if applicable, meet BPWCP's specifcations including, but not limited to, specifications with respect to brand, model, size, color and quality.

(Check only Required Equipment to be Furnished and
if excluded) Installed bv Operator

BUILDING am/pm Sun & Moon Sign Building Fascia (IlW1nated) Comer Signage Interior Signage

STORE
COFFEE
Airpots (4) w/Rack (vendor supplied) Cappuccino Machine (5 head) (vendor supplied) Coffee Airpot Brewer (vendor supplied) Coffee Brewer (i Burner) (vendor supplied) Coffee Brewer (3 Burner) (vendor supplied) Coffee Brewer Riser (vendor supplied) Coffee Condiment Rack (vendor supplied) Coffee Menu Board Coffee Mug rack (vendor supplied) Coffee Warmer (2 position) (vendor supplied) Tea Rack (vendor supplied) Timer (vendor supplied)

FLOOR
Beverage Merchandiser, Breeze 20 oz Cigarette Merchandiser/Backbar Cooler Cabinet (Upright) Cooler boxes (walk-in) Napkin Dispenser (3)
Shelving (Modular; Walk-in Cooler)

Shelving (Storage Room), NSF Approved

EQ Bun Toaster

Shelving (hand sink in food area)

Chili/Cheese Dispenser
Condiment Dispenser (6 position)

Convection Oven w/Racks Food Merchandising Warmer (i)
Food Preparation Table

Hood and Exhaust Ventilation System (for convection oven) (Califomia only) Microwave Oven (Commercial) Nacho Rack (3 position) Sink (3 compartment-food) Sink (hand sink in food area)
Thermometer (digital)
non-lessee operator (DOFO)

am/pm-241WR-1 (4/2006)
Uniform

2of4

84

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 4 of 42

Facilty Number: 82461

(Check only Required Equipment to be Furnished and if excluded) Installed bv Operator (continued)
FOUNTAIN Bulk C02 (vendor supplied) Mantiovoc Ice and Beverage Equipment
Scotman Ice Maker

FROZEN BEVERAGE Frozen Carbonated Beverage (FCB) Machine OFFICE/SALES COUNTER
Computer Softare and Hardware

Counter Merchandising System Fax Machine
m ._- POS System with PayPoint(I (BPWCP Approved)

Safe

Video Surveilance Equipment
VSA T Equipment: (J) HughesSatellite Dish and

Hughes Indoor Unit - Satellite Receiver
(2) Deicer (if

required for colder climate)

OTHER
Ice Maker PayQuick Island Cashier (PIC) Sales, take-out and beverage counters (including cup dispensers)

--_._~-

---

Sink (service/mop)

Water Heater
Other: Other: Other: Other:

:lems indicated as vendor supplied may be supplied by vendors in connection with vendors' products. Operator shall be .,rnished with a list of approved vendors and/or a copy of BPWCP's specifications for all required equipment upon

"ecution by Operator of this Agreement.

This space is intentionally left blank.

,,,,:¡,:'.';ee operator (DOFO)
:1r~\¡ìJrn.241WR-1 (4/2006)
iJrY:H"'T"'

30f4

85

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 5 of 42

IN WITNESS WHEREOF, BPWCP and Operator have executed this Agreement as of

the date first aboye written.

OP.ERATOR ACKNOWLEDGES HAVING READ THIS AGREEMENT, INCLUDING PART II, GENERAL
TERMS AND CONDITIONS, FORM No. am/pm- 240WR-I (4/2006), AND UNDERSTANDS FULLY ALL THE TERMS, PROVISIONS AND CONDITIONS HEREOF. No representative of BPWCP is authorized by

BPWCP to orally modify, amend, add to or waive any provision of this Agreement.
BPWCP MAKES NO REPRESENTATION OR WARRNTY, EXPRESS OR IMPLIED, AS TO OPERATOR'S PROFIT OR INCOME TO BE DERIVED FROM THE OPERATION OF THE am/pm STORE CONTEMPLATED HEREUNER.
IN WITNESS WHEREOF, BPWCP and Operator have executed this Agreement as of

the date first above written.

B

Date

'7--1/-00

If Operator is an entity, complete and sign below:
STTN Enterprises. Inc.
(prit or tye name of entity)

Check one:

Oa Oa
By:

Name: Nazim FaQuirvan
Its: CEO and President
Date Signed:

~~~
& )?el fl?
nIa
nIa nIa nIa

general partership;

limited liability company;

Oa
IZ a

CA

limited partership; corporation

~

By:

Name:
Its:
Date Signed:

By
Name:
Its:
Date Signed:

nIa
nIa nIa

nIa
nIa nIa

By

Name:
Tts:

nIa

Datc Signed: nla
non..lessee operator (DOFO)

ani/prn241WR-1 (4/2006)
U'liform

4 of 4

86

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 6 of 42

am/pm MINI MART AGREEMENT
PART II
General Terms and Conditions

ARTICLE I

Service Mark and Service Name Conditions, Copyrights, Trade Secrets . and Confidentiality
A.

Service Marks, Trademarks and Service Names

1.01 Subject to the term and conditions specified herein, and to the extent of BPWCP's rights

therein, BPWCP hereby grants to Operator, beginning on the Commencement Date as defmed in Section 5.01 and continuing during the term of this Agreement, the non-exclusive right and license to use the trade

secrets and know-how regarding operation of am/pm mi markets, the service mark and service name
"am/pm", or any yariation thereof as may be approved in wrting by BPWCP, and any other service maries,

trademarks and service names used in connection with am/pm mi markets, solely in conjunction with Operator's operation of the Store provided for herein. Operator has no exclusive terrtory. BPWCP
reserves the right, in its sale discretion, to establish additional am/pm mini market stores and other BPWCP

and non BPWCP franchises and franchises operated by BPWCP's wholly owned subsidiary or other company operated franchises and businesses, in any location and proximty to Operator's business.
1.02 BPWCP represents that it has applied for federal registration for various service marks for

"am/pm" for retail grocery store and convenience store services and trademarks for various products. BPWCP has been granted federal registration for certin "am/pm" service marks and trademarks for retail grocery store and convenience store services. BPWCP expressly reserves the right to change, alter or
modifY the am/pm service mark or service name or substitute any other service mak or service name at any
tie by givig Operator not less than tl (30) days' prior notice thereof. In the event of any change,

alteration or modification of the service mark or service name, Operator agrees that only the service mark or
servce name, as changed, altered or modified, shall be used by Operator to identifY the Store. If

the service mark and service name "am/pm" is changed by BPWCP, it is agreed that the new service mark and service

name adopted by BPWCP shall be substituted for "am/pm" wherever "ampm" appears in ths Agreement. BPWCP also expressly reserves the right to change, alter or modifY colors and design and other service

marks, trademarks and service names used in connection with ampm mi markets from time to time and place to place as BPWCP deems appropriate or as required by law and, upon 90 days prior wrtten notice from BPWCP (uness a lesser time is required by law), Operator wi11 intall such modifed marks, colors or designs at Operator's expense.
1.03 Operator agrees that it shall notifY BPWCP promptly of any unauthoried use of

name by any person, firm corporation or other entity (collectively referred to as "person"). At its expense, BPWCP shall challenge all wwauthoried uses or ingements of the am/pm servce mak, trademark and service name, and BPWCP shall have the sole right to decide whether to prosecute any person who unawf11y uses or attempts to use BPWCP's ampm service mak, trademark or servce name for retail grocery store, convenience store, or fast food services. Operator agrees to provide such evidence and expert assistance as Operator may haye witt its control in connection with any such
service mark and service

the ampm

challenge or prosecution.

1.04 Operator recognes and acknowledges that, as between BPWCP and Operator, BPWCP is the

s('k and exclusive owner of the am/pm service mak, trademark and service name and other service marles,
tt(,,:i~marks and service names used in connection with am/pm mi markets and appearig on ampm stores.

(¡p~!'ator hereby agrees: not to claim any right, title or interest in or to said service maks, trademaks or ;" ",..' names; not to directly or indirectly deny, assail, or assist in denyig or assailing the sale and
r,.".' i"""('e opertor (DOPO)
;,.,;.; !41 WR-l

(4/2006)

','P,"!",:

1 of 34

87

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 7 of 42

exclusive ownership of BPWCP in said service marIes, trademarks and service names; not to adopt or use as

Operator's own propert any service marks, trademarks or service names of BPWCP nor employ any service marks, trademarks or service names confusingly similar to those of BPWCP; not to register or
attempt to register BPWCP's service names or service marks, trademarks in Operator's name or that of any
other person and not to use such service marks, trademarks or service names, or any parts thereof, as any

part of any corporate or partership name or any other business name. It is understood that this coyenant sha11 surive the tennnation of this Agreement and shaH be binding upon the heirs, successors and assigns
of

Operator.
1.05 Operator agrees, upon tennnation or non-renewal of this Agreement or upon tennnation or

non-renewal of any subsequent Store Agreement, to assign BPWCP, without additional consideration, any service name or service mark, trademark rights that may have vested in Operator notwthstanding the provisions of Section 1.04 as a result of any activities of Operator pursuant to this Agreement. Operator agrees to use said service marks, trademarks and service names in connection with and exclusively for, the promotion and operation of an am/pm store as provided hereunder, and in accordance with the standards,
term and conditions set fort in the Agreement and in accordance with intrctions, rules and procedures

prescribed in writing by BPWCP. Operator shaH not use the am/pm service mark or service name, or other
service marks, trademarks or service names of

BPWCP, except as authorized by BPWCP and in no event in any manner that may or could adversely imact orjeopardize the am/pm imge.

1.06 Operator agrees to display the ampm service mark, trademark and service names as prescribed
by BPWCP and to conduct the business of the Store in such a manner as to not reflect unfavorably on BPWCP's good wi11, service marks, trademarks and service names.

1.07 Operator agrees, imediately upon the termation of this Agreement or termation of any
subsequent Store Agreement to cease and forever abstain from using the am/pm service mak and service name and other service maks, trademarks and servce names used in connection with am/pm mi markets.
B.

Copyrights

1.08 BPWCP grants to Operator a nonexclusive right and license durg the term of ths
agreement to use BPWCP's franchise accountig system softare at the am/pm mi market and display at Operator's am/pm Store copyrghted ampm signage, posters, and other advertsing and point of purchase materials. No rights of reproduction or distrbution are included in the grant, and upon temmation for any
reason Operator shall imediately cease and desist from using or displayig any such copyrghted

materials.

.C.

Trade Secrets and Confidentiality

1.09 BPWCP shaH fush or mae ayailable to Operator for use solely in connection with
Operator's conduct of Operator's am/pm Store, BPWCP's franchise accountig system softare, an am/pm
Store System/Operations Manual, guides, and other form and materials. Operator agrees durg the term

of this Agreement and after termtion to keep confdential and not to fuish ÌIonntion as to the
methods of operation, advertsing programs or ideas,

business ÌIonntion, or any other confdential ÌIonntion of BPWCP relatig to the operation of any am/pm Store, to any person, except BPWCP,
Operator's attorneys or accountats engaged by Operator in connection with Operator's am/pm Store who have undertaken the same obligation of confdentiality

Operator's employees, or Operator's operation of

as set fort herein for Operator. Notwthstanding the foregoing, nothing in this Agreement or any other

agreement between the parties shaH limit the abilty of the Operator to consult with any tax advisor
regarding tax issues pertaing to the ampm franchise business.

nc",.lessee opertor (DOFO)
:.'''''''11- 24IWR-I (4/2006)

:J:itnrm

2 of 34

88

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 8 of 42

ARTICLE 2
Relationship of Parties
2.01 Neither Operator nor any of its employees shall hold itself or himself out at any time as an

agent, representative, parter, joint ventuer or employee of BPWCP. Operator shall haye no authority,
right or power to, and shall not bind nor oblig'ate BPWCP in any way, manner or thng whatsoeyer, nor shall

Operator represent that it has any right or power to do so. Operator shall undertake all obligations herein
the Store and Premises and all actiyities conducted therein and therefrom. In order to cómmunicate with
described as an independent contractor and shall exercise and be responsible for the exclusive control of

BPWCP, governent agencies and others regarding matters such as financial reporting, safety, health and
security, an ability to comprehend and communicate in English is necessary. Passing an English proficiency test is required.

2.02 Operator shall be solely responsible for hiring, supeivising and directing all employees, the payment and witholding of all payroll and other taxes imposed upon or detenned by wages and
salaries of such employees, and for complying with all applicable workers' and unemployment

compensation, occupational disease, wage and hour, disability and simlar laws. BPWCP shall have no
control over employees of Operator, including, without lirtation, the t-err and conditions of their

employment.
2.03 Unless otherwse expressly set forth in this Agreement, "Operator" shall include and refer to

the sale proprietor, shareholders if franchisee is a corporation, parters if franchisee is a partership and
members if franchisee is an LLC.

2.04 Operator shall continuously display on the exterior of the building in a conspicuous manner

at a point visible and accessible to the public a legible sign meeting BPWCP's specifications, showig that
Operator is the owner of

the business being conducted thereon.
ARTICLE 3

am/pm Store Systems/Operations Manual; Extranet
3.01 Operator agrees that it shall operate the Store and maintain the Premises in accordance with the standards, methods, procedures, requirements, intrctions, food specifications and equipment specifications set
fort in the am/pm Store Systems/Operations Manual ("Manual" or "Systems Manuàl"), and any and all
subsequent amendments and supplements thereto. BPWCP shall

loan to Operator a copy of the Manual which

shall be fushed to Operator upon execution by Operator of tls Agreement; subsequent amendments and

supplements shall also be loaned and fushed to Operator and Operator shall be requied to acknowledge
receipt of any of the foregoing loaned materials. The manual may be provided in wrtig, on CD-ROM, via the
intemet, extranet or equivalent means. Operator fuer agrees to

of all such methods and procedures as shall be promulgated by BPWCP from tie to tie. The Manual, as presently constituted and as it may hereafter be amended or supplemented by BPWCP from tie to tie, is
incorporated in and made a part of

intrct and keep its employees fully Í1offed

ths Agreement. Operator acknowledges and agrees tht compliance with the

standards, methods, procedures, requirements, intrctions and food specifications contained il the Manual (as

from tie to tie amended or supplemented) is imortt to Operator and to BPWCP. Failure to adhere to the
provisions of the Manual shall constitute a breach of

ths Agreement.

3.02(a) Operator must maintain a computer connection to connect to BPWCP's extranet, though which

BPWCP and Operator may communcate with each other and though which BPWCP may dissemiate the
iVIamial, updates thereto, planograms, inventory books, required stadards and

cfinlÏdential Í1ormtion from tie to time. BPWCP shall have sole discretion and control oyer all aspects of

specifications and other

I'on .k~~ce opertor (DOFO)

',0'-'11\- 24IWR-I (4(200) ; !llii.'nn

3 of 34

89

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 9 of 42

the extranet, including the content and functionality thereof. BPWCP wil have no obligation to maintain the extranet indefinitely, and may dismantle it at any time without liabilty to Operator.

the Standards, protocols and restrictions that BPWCP may establish from time to time. Such Standards,
protocols and restrictions may relate to, among other things, (a) the use of abusive, slanderous or otherwise

(b) Operator shall have the priyilege to use the extranet, subject to Operator's strict compliance with

offensive language in electronic communications, (b) communications between or among operators that endorse or encourage breach of any operator's franchise agreement, (c) confdential treatment of materials that BPWCP transItts yia the extr net, (d) password protocols and other securty precautions, (e) grounds and procedures for BPWCP's suspending or revoking an operator's access to the extranet, and (f) a prhiacy policy governing BPWCP's access to and use of electronic communications that operators post to the extraneI. Operator

acknowledges that, as adItnistrator of the extranet, BPWCP can technically access and view any
communication that any person posts on the extranet. Operator fuer acknowledges that the extranet facility
and all communications that are posted to it will become BPWCP's propert, free of any claims of

privilege that Operator or any other person may assert.

privacy or

(c) Operator shall establish and have continually available (durg all times that the extranet shall be
established and until the termnation of ths Agreement) an electronic connection (the specifications of which

shall be specified in the Manual) with the extranet that allows BPWCP to send messages to and receive messages from Operator, subject to the standards and specifications. Op~rator shall participate and use the
extranet in accordance with BPWCP's requirements as set fort in the ManuaL.

(d) If Operator shall breach ths Agreement or any other agreement with BPWCP or it's Affliates, BPWCP may, in addition to, and without limting any other rights and remedies available to BPWCP,
disable or temmate Operator's access to the extranet without BPWCP having any liability to Operator, and

in which case BPWCP shaH only be required to provide Operator a paper copy of the Manual and any updates thereto, if none have been previously provided to Operator, uness not otherwse entitled to the
ManuaL.

ARTICLE 4

Hours of Operation and Personal Participation

4.01 Operator shall promote the business of the Store and shall cause the Store to be operated
continuously thoughout the temm of ths Agreement. Operator shall cause the Store to be open for business

not less than sixteen (16) hours every day of the year, excluding Chstms, or the maximum hour
permtted by applicable law if less thn sixteen (16) hours.

. 4.02 Failure of Operator to cause the store to be open for business in the manner and durg the hours and days prescribed herein shall constitute a material breach of ths Agreement. In addition to any
other remedy available to BPWCP, in the event Operator fails to operate the Store durg the hour and
days prescnòed in Section 4.01 durg any calendar month durg the temm of ths Agreement, Operator

shall pay BPWCP, as liquidated damges and not as a penalty, in addition to the royalty fee payable for

such month, one thieth of the mium monthy royalty fee for each day Operator fails to cause the Store
to be open for the prescribed hours.
4.03 Operator shall participate in the operation of the am/pm business for a period of at least 40

hours per week and if Operator has more than one ampm mi maket, Operator must have one employee for each store, who has attended and successfully completed the am/pm Store Manager trainig program offered by BPWCP and who is employed on a full ti basis at each store ("Store Manager"). If Operator operates more than one am/pm mi market, Operator hereby designtes the person whose name is set fort in PART I, Section 4.03, hereof as the Store Manager for the PreItses .which are the subject of ths Agreement (with two month of the date such designated person is no longer employed at the store,
Operator must replace such Store Manager with another traied Store Manager or the franchise

may be

non-lessee 'Opertor (DOFO)

amlpm-24IWR-I (4/2006)
Uniform

4 of 34

90

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 10 of 42

tennnated). For purposes of personal participation, Operator shall be the sole proprietor if Operator is a
sole proprietor, the Operational Designee if

Operator is a corporation, partership or LLC. The Operational Designee must be an offcer or shareholder if Operator is a corporation, a member or manager of the LLC if

Operator is an LLC, a general parter if Operator is a limited partership, a parter if Operator is a
partership other than a limited partership. In the case of Concurent Operations at the Premises, as more

fully described in Article 4.05 hereof, Operator is obligated to participate in the operation of all franchise businesses for at least 40 hours per week.
4.04 Failure of Operator to participate in the operation of the am/pm business as described in

Section 4.03 and/or, if applicable, to have the Store Manager designated in PART I emproyed at the store on a full time basis and/or, if applicable, to replace such person with another trained Store Manager within two months from the date the Store Manager designated in PART I or any successor to such person is no
longer employed at the store shall constitute a material breach of

this Agreement.

4.05 In the event the am/pm núi market, with BPWCP's approval, is operated at the Premises by

Operator in conjunction with another or more than one other BPWCP franchise, ("Concurent Operations"),
such Concurent Operations shall be conducted and govemed by the tenn and conditions of the franchise agreements of each of the applicable franchises and any additional special tenn, conditions and provisions
relatig to Concurent Operations as may be included in such franchise a~eements or other wrtig with

regard to such operations.

4.06 Each individual who own an interest in the franchise entity must sign a personal guarantee agreeing to discharge all obligations of the Operator under the franchise agreement. Ths will also be required of the individual's spouse where the individual lives in or the franchise is located in a community propert state. BPWCP wilI only accept as a franchisee sale proprietorship, partership, corporation or limited liability
company. A franchisee may not be a trt, custodian or trstee of a trt, nor can a trst, trstee or custodian be
a parer, shareholder or member of an LLC.

ARTICLE 5

Term
5.01 This Agreement shalI be binding on the pares as of the Effective Date. Except as otheiwse
provided in ths Arcle, the "Commencement Date" shalI be on the date set fort in PART 1. If

set fort in PART I, the Commencement Date shaH be the date established by BPWCP by notice to

no date is

Operator (''Notice afFinal Inspection and Readiness") as the date the Premises are available for occupancy and ready for conduct of the business of the am/pm mi market. The tenn hereof shalI end as of 10:00 a.m on the fit day after the last day of the one hundred twentieth (120il) or two hundred fortieth (240th) fulI
calendar month folIowig the Connncement Date as set fort in Par I, wùess ths Agreement is

temmated earlier pursuant to the tenn hereof. In addition, BPWCP may, at its discretion, extend the tenn

of ths Agreement for a period of up to 180 days by giving written notice to Operator before the end of the

term
5.02 New Construction or Raze and Rebuild.
(a) If ths Agreement is for an arpm mi market that wilI be newly constrcted after ths Agreement

is executed or an am/pm mi market at Premises where an existing BPWCP franchised premises is to be razed
and a new am/pm mi market constrcted after ths Agreement is executed ("New Constrction" or "Rae and

Rebuild"), BPWCP shall proyide stadard generic architectual, plwnbing and electrcal site plans to Operator. It will be necessary for Operator to have the generic plans modified in order to take into consideration the
topographic featues of the Premises, meet the zonig, setback, easem~nt, sign codes, local building codes and
other requirements. Operator shalI promptly do all of

the followig:

n.on-k.~see opertor (DOFO) arr1/plii. 24IWR-I (4/2006)
Uiii form

5 of 34

91

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 11 of 42

A. Have prepared and submit to BPWPC, for approval, in a fonnat provided by BPWCP or acceptable to BPWCP, a Site Inyestigation Report which includes, but is not limited to, detailed
Deyelopment Guidelines, Requirements and Restrictions, Roadway Considerations, Approval Process, Assessments and Fees, Project Timeline, Cost Estimate and Site Photographs.

B. Haye prepared and submit to BPWCP for approval, architectural and constrction plans
and drawings for the am/pm mini market specific to the Premises.

right to occupy and modify the Premises .
market.
With 60 days after BPWCP's approval of the architectual plans and drawings, Operator shall apply

C. Submit to BPWCP a copy of the deed, lease or other documents evidencing Operator's

D. Maintain satisfactory creditwortiness and submit to BPWCP all documents reasonably requested by BPWCP to verify Operator's financial ability to constrct and operate the am/pm mini

for all licenses, permts, variances and other required governental approvals (collectively "Permts") necessary for the New Constrction or the Raze and Rebuild. BPWCP, at its sole discretion, may provide assistance in obtaing
Pennts. AH expenses in connection with obtainng Permts shall be Operatots responsibility.

All changes to the BPWCP approyed plans to meet local building codes and other governental requirements

and changes not resultig from governental requirements must be submitted to BPWCP in writig with
drawigs and specifications and approved by BPWCP in adyance of constrction. If changes are madated by

governental authority, a copy of the specific intrctions to change the plans shaIl be submitted along with the
request for approval of the changes. Any changes not mandated by governental authority shall be submitted
simultaneously as one consolidated request for modification of

the approved plans.

All constrction of the am/pm mi market and Premises shall be in accordance with plans and drawings

approved by BPWCP and, once constrcted, Operator shaH not make alterations or changes to the Store or
Premises durg the teil of ths Agreement, except with the prior wrtten consent of BPWCP. Prior to the sta

of constrction, Operator shall tranmit a complete constrction drawig set in electronic fommt to BPWCP.
Softre fommt shall be AutoCAD release 14 or 13. Drawigs created on softare other than those AutoCAD
versions shall be converted prior to trnsmittal. Multiple drawig files shall be contained on either a 100 mega

bYte zip disk or 650 megabyte compact disk. Single sheet or small files, 1MB or less, shall be emailed to a designated addressee. AH cross references must be bound prior to transmittl.
If Operator uses a BPWCP approved architectural fiil to prepare the Site Investigation Report and all

architectual plan and drwigs; and after Operator has paid the total Intial Franchise Fee set fort in Arcle 7, BPWCP shall reimbure Operator up to a maimum of $20,000 for the fees and expenses incured for such
Report and plan and drawigs upon submission to BPWCP of satisfactory documentation of the payment of

such fees and expenses to such architectual firm but no sooner than the start of constrction.
(b)
Store is located.

Operator shall obtain a license to selI beer and wie if lawfl in the jurisdiction in which the

(c) If this Agreement is for New Constrction, Operator shall begin constrction with 18

months of the Effective Date and complete constrction and open for business with 24 months of the Effective Date.
(d) If ths Agreement is for a Raze and Rebuild, Operator shall complete constrction and open
for business withi 12 month of

the Effective Date.

non-lessee opetor (DOFO) amlpm- 24\ WR-\ (4/2006) Uniform

6 of 34 .

92

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 12 of 42

(e) Only in the event that Operator is not able, for reasons beyond Operator's control, to obtain permts required for New Constrction or Raze and Rebuild or obtain a beer and wine license, if lawful in the jurisdiction where the Premises is located, Operator may termnate this Agreement within 18 month of the
Effectiye Date if

for a Raze and Rebuild. In the event of such termnation by Operator, any initial franchise feethis Agreement is paid to BPWCP
the Effective Date if

this Agreement is for New Constrction or 12 months of

shall be refunded after deducting the greater of either BPWCP's out of pocket expenses incurred or $ 150.0. No

interest shall be payable on any refunded amounts. .
(f) In the event that Operator fails to timely comply with any of the requirements set fort herein,

does not complete the New Constrction or Raze and Rebuild, obtain a beer and wine lieense, if available, and satisfactorily complete the initial training described in Article 16 of this Agreement within the time limits specified, in addition to any other remedies BPWCP shall have under this or any other agreement, BPWCP may
termate this Agreement.

(g) After Operator has completed constrction and successfully completed required initial

traing, BPWCP shall issue the Notice of Final Inspection and Readiness setting fort the Commencement
Date. If Operator fails to open the Store for business on the Commencement Date as established by the Notice of Finl Inpection and Readiness, in addition to any other remedies provic!ed in ths Agreement, at its option, BPWCP shall have the right to collect, as liquidated damges and not as a penalty, in addition to the mimum royalty fee, one theth of the mimum royalty fee per day for each calendar day operator fails to open the

Store for business. In addition, if Operator fails to open the Store for business with 30 days after the Commencement Date, in addition to any other remedies BPWCP has under ths Agreement or any other agreement between the partes, BPWCP may tenrnate ths Agreement. In addition, in the event of such termation pursuant to ths subparagraph, the Intial Franchise Fee shall not be refudable in whole or in part.
5.03 Retrofit or Rebrand.
(a) If ths Agreement is for an existig am/pm mi maket that does not meet BPWCP's curent visual and design standards, Operator shall made modifications to the am/pm mi maket and the Premises in accordance with the Retrofit Program Design Intent, Visual Standards and approved ampm Store layouts
proyided to Operator ("Retrofit Program"). Such Retrofit Progrm includes building enhancements, intallation of new fixtues, including shelving gondolas and sales counters, new equipment and new graphics as specified in the Retrofit Program Design Intent. Operator shall obtain at its expense all necessary permts and licenses to
complete such modications and installations. In the event tht permts necessar for the retrofit are obtained by
BPWCP and assigned to Operator, Operator shall reimburse BPWCP for its out of

pocket costs to Date of ths permts. Operator shall complete the Retrofit Program no later than nie month after the Effective obtain such
Agreement.
(b) If this Agreement is for an existing convenience store tht is not branded am/pm, Operator

shall make modifcations to the store and Premises to comply with, at a mium the Retrofit Program In
addition, BPWCP and Operator may agree to additional modifications. Operator shall apply for all necessary pemmts and licenses to complete such modifications and intallations. Operator shall complete the Retrofit
Program and any additional modifications no later than nie months after the Effective Date of

ths Agreement.

(c) Operator shall maintain satisfactory creditworthiess and submit to BPWCP all documnts

reasonably requested by BPWCP to verify Operator's financial ability to retrofit or rebrand 'ànd operate the am/pm mi market. If Operator fails to complete the Retrofit Progrm with nie months of the Effective Date of ths Agreement, in addition to any other remedies BPWCP may have under this Agreement or any other agreement between the parties, BPWCP may termate ths Agreement.
(d) All costs and expenses in connection with the Retrofit Program modifications shall be at the

sole expense of Operator. If Operator uses BPWCP approyed architectul fir to prepare all architectual
non-lessee opertor (DOFO) am/pm-241WR-I (4/2006) Uniform

7 of 34

93

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 13 of 42

plans and drawings to Rebrand a convenience store, but not to Retrofit an existing am/pm mini market, and after Operator has paid the total Initial Franchisee Fee set fort in Article 7, BPWCP shall reimburse Operator up to a maximum of $20,000.00 for the fees and expenses inculTed for such plans and drawings upon submission to BPWCP of satisfactory documentation of the payment of such fees and expenses to the approved architectural finn but no sooner than the start of the retrofit constrction.
(e) After Operator has completed the retrofit or rebrand work and training, if applicable, BPWCP

shall issue the Notice of Final Inspection and Readiness setting forth the Commencement Date. If Operator fails to open the Store for business on the Commencement Date as established by the Notice of Final Inspection and Readiness, in addition to any other remedies provided in this Agreement, at its option, BPWCP shall have the right to collect, as liquidated damages and not as a penalty, in addition to the miimum royalty fee, one thirtieth of the minimum royalty fee per day for each calendar day operator fails to open the Store for business. In

addition, if Operator fails to open the Store for business within 30 days after the Commencement Date, in addition to any other remedies BPWCP has under this Agreement or any other agreement between the parties,

BPWCP may tennnate ths Agreement. In addition, in the event of such tem1ation pursuant to ths
subparagraph, the Initial Franchise Fee shaH not be refudable in whole or in part.

5.04 Upon expiration of the temm of this Agreement if ths Agreement is the intial Store Agreement for to be offered a subsequent franchise Agreement for the Premises which right can be exercised by payment of the then-curent Renewal Franchise Fee or other fees which may
the Premises, Operator shall haye the right

then be payable and by execution of a new franchise agreement and collateral agreements on the terr and

conditions then existig, which may differ materially from those presently existing, provided that:

agreement not less thn six month prior to the expiration of the temm of the intial Store Agreement ("notice of election"); and
(b) Operator, at the time of the notice of election and at the end of the temm of the intial Store

(a) Operator gives BPWCP wrtten notice of its election to be offered a subsequent franchise

Agreement is not in default of any of the term or conditions of such Store Agreement or any other agreement

between Operator and BPWCP and has substantially complied with the term and conditions of all such
agreements durg the temm of

such Store Agreement; and

(c) All of met thoughout the temm of

the Operator's accrued monetary obligations to BPWCP have been satisfied and tiely the intial Store Agreement; and

(d) Operator is in compliance with the standards set fort in the then-curent Systems Manual and

has made or has provided for, to BPWCP's reasonable satisfaction, such renovation and moderntion of Operator's Premises as BPWCP may reasonably require, including, without limtation, sign, equipment,
fushigs, and decor so as to reflect the then-curent image required for new am/pm mi markets; and

(e) BPWCP has not exercised its right to withdraw from marketing and to no longer maintain the am/pm mi maket frchise in the relevant geographic area in which the Premises are located.
5.05 If ths Agreement has a temm of 240 months, after 120 month, Operator will make such

modifications and imrovements as may be required to comply with the then curent visual and design stadards

for am/pm mi markets and which may include such items as paintig, instalhition of new fixtues and
equipment and compliance with new visual standards but shall not include major strctual modifications.

This space is intentionally left blank
non-lessee optor (DFO)
am/pm- 241 WR-1 (4/2006)
8 of 34

Uniform

94

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 14 of 42

ARTICLE 6

Prennses and Store Equipment
6.01 The am/pm mini market franchise granted hereunder is for the operation of an am/pm mini market
on the Premises set fort in PART I hereof which must haye prior approval from BPWCP ("Premises") during the term hereof and may not be relocated to another site.

(a) If no address has been inserted in the space provided in Part I at the time of execution of this

Agreement, Operator shall promptly following the execution hereof (but in no event more than 6 months
following the Effective Date) locate one or more proposed sites which meet BPWCP's then-cuITent Standards and specifications, which must be located within the Target Area designated by BPWCP in Part 1. Operator shall submit to BPWCP such demographic and other informtion regarding the proposed site(s) and neighboring areas as BPWCP shall require, in the form prescribed by BPWCP ("Site Review Request"). BPWCP may seek such additional informtion as it deems necessary Operator shall respond promptly to such request for additional informtion. If BPWCP shall not deliver wrtten notice to Operator that BPWCP accepts the proposed site,
with 30 days of receipt of Operator's Site Review Request, or within 10 days after receipt

of such requested inormtion, whichever is later, the site shall be deemed rejected: If BPWCP accepts the additional proposed site it shall notify Operator of its acceptace of the site ("Acceptance"), which Acceptance shall be subject to Operator enterig into a rinllease or purchase agreement, and such other conditions as BPWCP may imose. Promptly followig mutual execution of ths Agreement, or Operator's receipt of Acceptance, if no address has

been inerted in the blan space provided above, Operator shall proceed to negotiate a lease or purchase
agreement for the site. Operator's enterig into any lease or purchase agreement for the Premises uness

Operator has received Acceptance relating to the proposed site is at Operator's sale discretion and at Operator's the proposed site by BPWCP, such site shall be deemed to be the "Premises" as defined above.
sole rik. Upon Acceptance of (b) BPWCP may voluntarily (without obligation) assist Operator

Neither BPWCP's said assistance, if any, its acceptace of Operator's proposed site, nor its acceptace of the

in obtaÍIg an acceptable location.

proposed lease or purchase agreement shall be constred to insure or guartee the profitable or successful
operation of the Premises by Operator, and BPWCP hereby expressly disclaim any responsibility therefore.

Operator ackrowledges its sole responsibility for finding the Premises. Operator acknowledges its sole
responsibility for rinding each site for the Store it develops puruant to ths Agreement.
6.02 Operator is required to have installed on the Premises the equipment

"Store Equipment" attached to PART I ("Store Equipment"). Operator agrees to intall the Store Equipment on or before the Commencement Date. Certin Store Equipment must be purchased or obtained from approved
suppliers, as set fort in the Store Systems ManuaL. All Store Equipment must meet BPWCP's specifications,

shown on the list entitled

including but not limted to specifications with respect to brand, model, size, color and quality. Operator may not intall additional equipment, fixtues or machies without the prior wrtten consent of BPWCP. Operator
shall maintain all equipment, including required and optional equipment, ready for use and in operable condition and shall use or permt the equipment to be used only for its intended use and only in a maer consistent with the maufactuer's intrctions, and Operator shall utilize the equipment and exert Operator's best effort to promote the retail sale of items or services for which the equipment is designed. Operator agrees not to remove any of the Store Equipment from Store without. the prior wrtten consent of BPWCP except in theeyent replacement of the equipment is necessitated by malfuction, in which case Operator shall replace the equipment with the then curent equipment or equipment meeting the same specifications with respect to size, color and quality as the equipment replaced, if the malfuctioning equipment is less than 3 years old.. Operator shall notify BPWCP of any such replacement. BPWCP reserves the right to add or delete Store Equipment during the term of the Agreement and. Operator will intall or remove such Equipment with 90 days after wrtten n.otice from BPWCP. If specifications for Store Equipment or approved suppliers for Store Equipment are (:hanged by BPWCP, any replacement of Store Equipment by Operator, due to wear and tear, malfuction,
non-1cssee operator (DFO)
";¡¡/¡.'ll- 241WR-1 (4/2006)
; fni:~;i'm
9 of 34

95

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 15 of 42

depreciation or otherwse, shall be with the then current Store Equipment. Otherwise, Operator wil be required
to obtain the then current Store Equipment upon renewaL.

6.03 Operator shall not operate other business within the am/pm mii market, the building housing the

am/pm mini market or on the Premises without the prior consent ofBPWCP.

ARTICLE 7

Fees

7.01 (a) Operator shall pay BPWCP an Initial Franchise Fee or Renewal Franchise Fee in the amount

set forth in PART 1. The Initial Franchisee Fee is payable as follows: one half upon the signng of ths
Agreement by Operator; The remainder of the Initial Franchise Fee is payable on the Commencement Date. The Initial Franchise Fee shall not be considered paid until paid in full.

(b) The Initial Franchise Fee is not refudable in whole or in part except for the followig
circumtances:
(I) If ths Agreement is for New Constrction or Raz~ and Rebuild at the Premises, after

Operator executes the Agreement, BPWCP shall have up to 90 days to execute the Agreement.

BPWCP shall not be obligated under the Agreement until it is executed by BPWCP. If
BPWCP elects not to execute the Agreement, BPWCP shaH notify Operator and shaH retu

in full, any Intial Fee paid by Operator.
(2) If th Agreement is for New Constrction or Rae and Rebuild, and the Operator

fails to complete the New Constrction or Raze and Rebuild, obtain a beer and wie license, if

lawfl in the jurdiction in which the Premies is located, satisfactorily complete the intial
traing program or meet the requirements of Arcle 5 or 6.01(a) with the tie lints

specified, BPWCP may temùate ths Agreement and refud one half of the total Intial
Franchise Fee provided that in the event Francruse Fee, BPWCP shall retain

the one-halfpayment and there shall be no refud.

Operator has paid only one half of the Intial

(3) If ths Agreement is for New Constrction or a Raze and Rebuild and the Operator

temùates ths Agreement with 18 month for New Constrction or 12 month for Raze and Rebuild after the Effective Date of ths Agreement pursuant to 5.02 (e) for inbility to obtain pennts or a beer and wie license for reasons beyond Operator's control, BPWCP will refud the Intial Franchise Fee paid after deductig the greater of either BPWCP's expenses incured
in contemplation of

Operator operatig an ampmmi market or $1,500.00.

(4) The Initial Frachise Fee or Renewal Franchise Fee shall be prorated on a monthy

basis over the tenn of the Agreement from the Commencement Date to the temùation date

and shall be refudable or payable on such prorated basis if BPWCP tenntes the Agreement for the followig reasons:
(i) Operator's death;

(ii) Operator's physical or mental incapacitation, for more than 90 consecutive days,
which renders Operator unable to proyidè for the continued proper operation of

am/pm mi market;
(iii) Condemnation or the takig, in whole or in part, of

the

power of emient domain;

the Premises pursuant to the

non-lessee operator (DOFO) am/pm- 241WR-I (4/2006) Unifonn

io of 34

96

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 16 of 42

(iv) Destrction of all or a substantial part of the Preilses though no fault of the
Operator; or,

(v) A detennation made by BPWCP in good faith and in the norml course of
business to withdraw from and to no longer maintain the marketing of Motor Fuels

though retail outlets and/or the am/pm mii market franchise in the releyant
geographic market area in which Operator's am/pm ilni market is located.

In the event Operator's Initial Franchise Fee or Renewal Franchise Fee is returned in whole or in
part for any reasons, no interest shall be paid on the amount returned. .

BPWCP's policy with respect to the payment of the Initial Franchise Fee or Renewal Franchise Fee for any term of the franchise offered in the futue may differ from that set fort above and, accordingly,
schedules of payments and due dates of payments shall be in accordance with BPWCP's then current policy.
( 0')

If ths Agreement is for Operator's subsequent term of the Franchise at the Preilses, the Renewal Franchise Fee ("Renewal Fee") is payable as follows:
Amount Payable
Due Date ofPavrent for Operator's Subsequent Term

One thd of the total amount payable - On the Commencement Date of ths Agreement the total amount payable - On the i st day of the 2nd year of the term of ths Agreement One thid of the total amount payable - On the I st day of the 3rd year ofthe term of ths Agreement
One thid of

Notwthtading the foregoing, payment of any remaing balance due and owig BPWCP on
account of the renewal fee shall be accelerated to become due and payable on or before the effective date of

tennation of ths Agreement and, at BPWCP's sale discretion, on or before the effectie date of the sale,
Iransfer or assignment with BPWCP's consent of Operator's interest in ths Agreement and on or before the effective date a designated successor-in-interest assumes all of a deceased or incapacitated Operator's duties and obligations under ths Agreement and other agreements with BPWCP.
If the Renewal Franchise Fee is not accelerated, the transferee or successor-in-interest must assume the obligation to mae payments.

The Renewal Frachise Fee is not refudable, in whole or in part, except in the circumtances
described in Arcle 7.01(b)(4) of

ths Agreement.

In the event Operator's Renewal Frachise Fee is retued, in whole or in part for any of the

reason, no interest shall be paid on the amount retued.
BPWCP's policy with respect to schedules of

payments the Renewal Francruse Fee for any term of the franchise offered in the futue may differ from on account offort above those set and, accordingly, schedules of payments and due dates of

payments and due dates of

curent policy.

payments shall be in accordance with BPWCP's then

(d) Operator shall pay an Intial Development Fee, if applicable, in the amount set fort in PART I as
follows: one-half is payable at the tie the Operator executes ths Agreement and the other half

Commencement Date.

is payable on the

non-lessee operator (OOFO) amlpm- 241WR-l (4/2006)
Unifomm

11 of 34

97

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 17 of 42

Article 7.0l(b)(4) of

The Initial Deyelopment Fee is not refundable in whole or part except in the circumstances described in this Agreement and no interest shall be paid on the amount returned.

7.02 (a) Unless otherwise agreed to in writing by the parties, Operator shall pay BPWCP, as a monthly royalty
fee, six percent (6%) of the monthly gross sales, as that tenn is hereinafter deffned, but not less than the minimum royalty fee set fort in PART 1. Notwthtanding the foregoing, unless otherwise agreed to in wrting by the parties, in the event Operator operates the Store twenty-four (24) hours of eyery day in any giyen calendar month, the monthly royalty fee for such a month shall be ffve percent (5%) of the monthly gross sales, but not less than the mimum monthy royalty fee set fort in PART 1. -

The minium monthly royalty fee is payable on the Commencement Date and thereafter in adyance on or before the ffrst day of each calendar month durg the tenn of this Agreement. For any month this Agreement is in effect which is less than a full calendar month, the minimum monthly royalty fee shall be
prorated on a daily basis.

BPWCP shall have the right to increase the amount of the royalty fee at any tie by up to one
percent (1 %) durg the tenn of

ths Agreement in accordance with BPWCP's then prevailing royalty fee policy.

BPWCP shall notify Operator not less than 90 days in advance of any such change in royalty fee.
(b) As used herein the tenn "gross sales" shall mean the total amount of the sales of Operator and any inventory varation calculated as described below.

(1) Gross sales shall be valued in United States curency, whether received in that fonn or

otherwse, without deduction on account of any of the followig:

(i) the cost of the goods sold, including taxes paid by Operator in procurig goods for
resale;
(ii) the cost of material used, labor or servce cost, interest paid, or any other expense;

or
(iii) cost of transporttion of

the goods.

(2) Gross sales includes all cash, credits, propert or other consideration received for:

(i) all sales of merchandise made from or in the Store or in the imediate vicinity of the store, including, but not linted to, a cart kiosk, drve thr or sidewalk sale;
(ii) all compensation received for services pedonned from or in the Store including but
not linted to, commssions and referral, commssions on lottery all payments by state agencies for the sale of

and lotto tickets (including

tickets and for the redeemig ofwig tickets),

handling and placement fees and fees for placement of coin operated and other maclúes; and

(iii) all rentals of equipment or merchandise.

(3) The inventory variation shall be detemmed each tie a physical inventory is taken of merchandise curently held for sale in the Store, as required in Section 15.03 (b). The inventory
varation is defied as either the inventory ~ain (physical inventory value is greater than book

inventory) or the inyentory loss (book inventory value is greater than physical inventory). The inventory variation subject to gross sales calculation for royalty reportg is the inventory varation in
excess .of the allowable yaration. Detailed calculations for variations and allowable variations are

fuer described in the Store Systems ManuaL.

non-lessee operator. (DOFO)

am/pm- 241WR-I (4/2006) Uniform

12 of 34

98

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 18 of 42

(4) The following are not included in gross sales:

(i) gasoline and other motor fuel sales, if any, including all applicable motor fuel and
sales taxes;

(ii) any deposits refunded to customers;

(iii) sale price of propert returned by customer when the full sale price is refuded
either in cash or credit. Where the customer is required to exchange retUrned merchandise for other new merchandise, the cashier is required to ring the sale of the new merchandise on the
register and the sale of the new merchandise is included in

gross sales subject to royalty. For

the purpose of ths paragraph, refud or credit of the entire amount shall be deemed to be

given when the purchase price, less rehandling and restocking costs, is refuded or credited to
the customer;

(iy) the amount of any tax imposed by the Uruted States or any city, county, state, or other goyemmental entity or agency or intrentality thereof upon or with respect to retail sales of tangible personal propert measured by a stated_percentage of sales price or gross
receipts, whether imposed upon the Operator, as a seller, or upon the customer, as a purchaser.

(v) for newly constrcted or razed and rebuilt ampm mi markets only, store sales made during the ffrst 7 days of the term of the frnchise, i.e., durg the period comprised of the Commencement Date as established by the "Notice of Final Inpection and Readiness" and the next succeeding 6 days of intial operation.
(vi) store sales made durg an eligible Grand Openig Event for a new store, or for an

existing store, followig completion of BPWCP-approved retrofft, remodeling or rebuilding. An eligible Grand Openig Event, which event is not to exceed seven consecutive days, is more fully described in Arcle 14.02 hereof.

(c) Any monthy royalty fee due in excess of the minium monthy royalty fee shall be payable
the calendar month succeeding the month in which the sales were made for which said fee is due. Payment of the royalty fee shall be made in accordance herewith and with form and
on or before the tenth (10th) day of

procedures set fort in the Systems ManuaL.

7.03 Operator shall pay to BPWCP a securty depsit in the amount set fort in PART I on or before the

Commencement Date of ths Agreement. If Operator shall be in default at any ti in the perfommce of any of
the term and conditions of

other remedy it may possess either at law or at equity or under the term of ths Agreement, to correct said default and deduct any cost or expense in connection therewith from said securty deposit. Immediately upon application of all or par of said securty deposit toward any such cost or expense, Operator shall pay to BPWCP an amount
equal to that porton of the securty deposit so applied so as to restore the securty deposit to the amount stated

ths Agreement, BPWCP, at its option, shall have the right, in addition to any

aboye. Except as provided herein the securty deposit, less any depletion because of default by Operator shall be refuded to Operator without interest upon temmation of ths Agreement.

7.04 Unless otherwse agreed to in writing by the partes, commencing on the Commencement Date, Operator shall pay an advertsing and promotion fee for each month equal to 5.5% of Operator's gross sales.
("Gross Sales" is deffned in Section 7.02 aboye.) At any time durg the term hereof, on thi (30) days' prior

wrtten notice to Operator, BPWCP may increase or decrease the advertising and promotion fee, but the total
advertising and promotion fee may not be increased to more than six and one-half percent (6.5%) at any tie
during the term of

ths Agreement and BPWCP may not increase the fee by more than one percent (1%) in any

cc'le.rrdar year. The advertising and promotion fee is payable on or before the tenth (10th) day of the calendar
non-lessee opetor (DOFO)
'"i¡/pm- 241WR-I (4/2006) '--nifonn
13 of 34

99

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 19 of 42

month succeeding the month in which sales were made upon which the fee is calculated. In addition, Operator may be required to pay shipping costs, plus the cost of replacement signs, if Operator requests duplicate signage.

7.05 Any fees and other amounts due and owing BPWCP pursuant to tts Aricle and any other
provisions oftts Agreement shall be paid when due by Operator to BPWCP, at BPWCP's option, to BPWCP's
address set fort in the Systems Manual or BPWCP's representative, by money order approved by BPWCP,

business check, casmer's check, wie transfer or electronic funds transfer initiated by BPWCP, wmchever BPWCP directs and which may change from time to time at BPWCP's sole discretion. Operator's financial institution though wmch payment by electronic funds transfer intiated by BPWCP is made must be a member of NACHA (The National Automated Clearing House Association). If any Agreement between Operator and BPWCP requires or peimts payment by check, all checks shall be made payable to "BPWCP" or "BP West Coast Products LLC," and to no other person, finn or entity. If such Agreement requires or peimts payment by wire transfer, all such payments shall be made to "BPWCP, c/o Citibank NA, For Credit to BP West Coast
Products #4051-4874 ABA 021000089, New York, New York 10043," and to no other ban or account number

unless so advised in wrting by the Credit Manager, BPWCP. If such Agreement requires or peimts payment by automated clearig house ("ACH"), all such payments shall be made to "BPWCP", c/o Citibank Delaware, For
Credit to BP West Coast Products - ACH #3815-2114, New Castle, Delaware 19720," and to no other ban or

account number uness so advised in wrtig by the Credit Manager, BPWCP. If such Agreement requires or peimts payment by electronic fuds tranfer ("EFT"), all such payments .~hall be made in strct accord with procedures established and promulgated by the BPWCP credit departent. Operator agrees to indenmfy
BPWCP for any loss or expense caused by Operator's failure to comply with th Paragraph. Payment shall be

deemed made when, and only when, its receipt has been verified by BPWCP. Receipt by BPWCP of any
monies due BPWCP after notice of temúnation or non-renewal does not constitute a waiver by BPWCP of such
notice of

termation or non-renewal.

ARTICLE 8

Licenses, Permits, Taxes and Compliance with Laws

8.01 Operator agrees to obtain, post as required, and ,maintain at its expense, all permts and licenses
necessary for the operation of the Store and Store Equipment including, without limtig the foregoing, all

peimts and licenses required for selling beer and wie, if available pursuant to applicable laws and regulations, and for sign used or intalled by Operator. Operator agrees to pay promptly when due and to hold BPWCP harmess from all ad valorem taes assessed upon the Premises and all fees, and sales, use, rental, gross receipts,

inventory, excise, income, business and occupation and any other taxes (includig interest, penalties and
additions to ta) imosed by any federal, state or local governental authority upon Operator or BPWCP (except those taes based upon or measured by the net income of BPWCP) in connection with the operation of the Store or in connection with any payments made pursuant to tts Agreement. Operator agrees to pay promptly when due and to hold BPWCP hanness from any taxes (including interest, penalties and additions to tax) imosed upon any propert of Operator located at or used in connection with the operation of the Store.
Operator agrees to pay promptly when due and to hold BPWCP haress from all sales or use taes and other

simlar taxes (includig interest, penalties and additions to tax) imosed upon or with respect to charges for the
use of any loaned propert. Oprator fuer agrees not to do any act which may result in the suspension or

revocation of any peimt or license required for the operation of the Store. Operator shall fush to BPWCP, promptly upon request, any documentation, wmch in BPWCP's sole discretion is required to evidence the
payment of any tax, including but not limted to, offcial receipts of the appropriate taxig authorities, copies of
tax retus and cancelled checks.

8.02 Operator shall at all times operate the Store and Premises in strct accordance with all applicable federal, state and local laws, ordinances, rules, regulations and lawfl directives or orders of public offcials
adnsterig such laws. Operator agrees to imediately notify BPWCP, in wrtig, of any citations, notices of
violation or

other communcations alleging violations of federal, state or local laws, ordinances, rules,

regulations, directives. or orders, affecting the operation of the Store and Premises.
non-lessee operator (DOFO)
am/pm- 241WR-1 (4/2006)

Uniform

14 of 34

100

Case 5:07-cv-04808-JF

Document 7-3

Filed 10/18/2007

Page 20 of 42

. 8.03 Operator represents and warrants that as of the date hereof, Operator is in compliance with all
leases, contracts and agreements affecting the Premises and Operator's use and possession of

the Premises.

ARTICLE 9

Utiities
9.0 I Operator shall be providedsolely responsible for all costsStore. .on utilities used at or to the of and taxes and assessments
ARTICLE 10

Appearance, Housekeeping, Maintenance, Right of Entry and Crisis Management
10.01 Operator shall comply with the housekeeping and maintenance provisions set fort in the Systems

Manual and shall maintain the Premises, Store and Store Equipment in a clean orderly, safe, graffti free,
sanitar and operable condition. BPWCP shall perform periodic inspections, for which repeated failure or poor
performnce is grounds for termtion or nonrenewal of

ths Agreement.

10.02 In addition to the requirements of Section 10.01, Operator shall perform all maintenance, .
repairs, and replacement, as necessary, of the Premises, Store and Store Equipment. Replacement equipment

must meet BPWCP's then-curent specifications.

Notwthtanding the foregoing, in the event of destrction of the Premises to the extent that the norml authoried uses are no longer practicable, either par may temmate ths Agreement with 120 days of such destrction by givig the other part wrtten notice. The effectiye date of such terrtion shall relate back to
the date of destrction.

Accidents occurg at the Premises resultig in personal injur are to be reported in wrtig imediately
to BPWCP; such report shall include names and addresses of people inyolved, names of inurance companes
involved, or potentiaHy involved, and details of the accident.

i 0.03 Operator shall allow BPWCP the right of entr at all times and the right