Exhibit 10.9
CITGO PETROLEUM
CORPORATION
DISTRIBUTOR FRANCHISE
AGREEMENT
Between CITGO Petroleum Corporation
and SUSSER PETROLEUM CO.
NOTICE
As a Franchised Distributor, under
this agreement you will be entitled to the protections of the
Petroleum Marketing Practices Act, a federal law which was enacted
on June 19, 1978. Title I of this law is intended to protect
you against any arbitrary or discriminatory termination or
non-renewal of your Franchise. CITGO Petroleum Corporation, as a
Franchisor, is required to provide you with a summary of title 1 of
the Petroleum Marketing Practices Act whenever notification of
termination or non-renewal of your franchise is given. However,
CITGO wishes to ensure that you are totally familiar with your
rights in this regard even prior to executing this Franchise
Agreement. Accordingly, on page i through iii herein we have
produced the concise summary of the provisions of Title 1 as
prepared and published by the secretary of energy in the Federal
Register. Please review this summary carefully. You should resolve
with your lawyer or other appropriate parties any questions you
might have, prior to executing this franchise.
OFFICE OF THE SECRETARY
SUMMARY OF TITLE I
OF THE PETROLEUM MARKETING PRACTICES
ACT
AGENCY: Department of
Energy.
ACTION: Notice.
SUMMARY: This notice contains a
summary of title I of the Petroleum Marketing Practices Act, a new
Federal law enacted on June 19, 1978. The law is intended to
protect franchised distributors and retailers of gasoline and
diesel motor-fuel against arbitrary or discriminatory termination
or non-renewal of franchises. The summary describes the reasons for
which a franchise may be terminated or not renewed under the new
law, the responsibilities of franchisors, and the remedies and
relief available to franchisees. Franchisors must give franchisees
copies of the summary contained in this notice whenever
notification of termination or nonrenewal of a franchise is
given.
FOR FURTHER INFORMATION CONTACT:
William C. Lane, Jr., Office of Competition, Department of
Energy, 20 Massachusetts Avenue NW., Room 7123, Washington, D.C.
20845, 202-376-9495.
Michael Paige or Judith H.
Garfield, Office of General Counsel, Department of Energy, 12th and
Pennsylvania Avenue NW, Room 5134, Washington, D.C. 20461,
202-566-9565 or 202-566-2085.
SUPPLEMENTARY INFORMATION: Title I
of the Petroleum Marketing Practices Act, Pub. L. 95-297 (the
“Act”), enacted on June 19, 1978, provides for the
protection of
franchised distributors and retailers of motor
fuel by establishing minimum Federal standards governing the
termination of franchises and the nonrenewal of franchise
relationships by the franchisor or distributor of such fuel.
Section 104(d)(1) of the Act provides that the Secretary of
Energy shall prepare and publish in the FEDERAL REGISTER, not later
than 30 days after enactment of the Act, a simple and concise
summary of the provisions of title 1, including a statement of the
respective responsibilities of, and the remedies and relief
available to, franchisors and franchisees under that
title.
As required by section 104(d)(1) of
the Act, the following is a summary statement of the respective
responsibilities of, and the remedies and relief available to,
franchisors and franchisees. Franchisors must give copies of this
summary statement to their franchisees when entering an agreement
to terminate the franchise or not to renew the franchise
relationship, and when giving notification of termination or
nonrenewal. In addition to the summary of the provisions of Title
1, a more detailed description of the definition contained in the
Act and of the legal remedies available to franchisees is also
included in this notice, following the summary
statement.
NOTICES
SUMMARY OF LEGAL RIGHTS OF MOTOR FUEL
FRANCHISEES
This is a summary of the franchise
protection provisions of the Federal Petroleum Marketing Practices
Act. This summary must be given to you, as a person holding a
franchise for the sale, consignment or distribution of gasoline or
diesel motor fuel, in connection with any termination or nonrenewal
of your franchise by your franchising company (referred to in this
summary as your supplier).
The franchise protection provisions
of the Act apply to a variety of franchise arrangements. The term
“franchise” is broadly defined as a license to use a
motor fuel trademark which is owned or controlled by a refiner, and
it includes secondary arrangements such as leases of real property
and motor fuel supply agreements which have existed continuously
since May 15, 1973, regardless of a subsequent withdrawal of a
trademark. Thus, if you have lost the use of a trademark previously
granted by your supplier but have continued to receive motor fuel
supplies through a continuation of a supply agreement with your
supplier, you are protected under the Act.
You should read this summary
carefully, and refer to the Act if necessary, to determine whether
a proposed termination or nonrenewal of your franchise is lawful,
and what legal remedies are available to you if you think the
proposed termination or failure to renew is not lawful. In
addition, if you think your supplier has failed to comply with the
Act, you may wish to consult an attorney in order to enforce your
legal rights.
The Act is intended to protect you,
whether you are a distributor or a retailer, from arbitrary or
discriminatory termination or nonrenewal of your franchise
agreement. To accomplish this, the Act first lists the reasons for
which termination or nonrenewal is permitted. Any notice of
termination or nonrenewal must state the precise reason, as listed
in the Act, for which the particular termination or nonrenewal is
being made. These reasons are described below under the headings
“Reasons for Termination” and “Reasons for
Nonrenewal.”
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You should note that the Act does
not restrict the reasons which may be given for the termination of
a franchise agreement entered into before the June 19, 1978
effective date of the Act. However, any nonrenewal of such a
terminated franchise must be based on one of the reasons for
nonrenewal summarized below.
The Act also requires your supplier
to give you a written notice of termination or intention not to
renew the franchise within certain time periods. These requirements
are summarized below, under the heading “Notice Requirements
for Termination or Nonrenewal.”
The Act allows trial and interim
franchise agreements, which are described below under the heading
“Trial and Interim Franchises.”
The Act gives you certain legal
rights if your supplier terminates or does not renew your franchise
in a way that is not permitted by the Act. These legal rights are
described below under the heading “Your Legal
Rights.
This summary is intended as a simple
and concise description of the general nature of your rights under
the Act. For a more detailed description of these rights, you
should read the text of the Petroleum Marketing Practices Act
itself (Pub. L. 95-297, 92 Stat. 322,15 U.S.C. 2801).
I. REASONS FOR
TERMINATION
The following is a list of the only
reasons for which your franchise is permitted to be terminated by
the Act. One or more of these reasons must be specified if your
franchise was entered into on or after June 19, 1978 and is
being terminated. If your franchise was entered into before
June 19, 1978, as discussed above, there is no statutory
restriction on the reasons for which it may be terminated. If such
a franchise is terminated, however, the Act required the supplier
to renew the franchise relationship unless one of the reasons
listed under this heading or one of the additional reasons for
nonrenewal described below under the heading “Reasons for
Nonrenewal” exists.
If your supplier attempts to
terminate a franchise which you entered into on or after
June 19, 1978 for a reason that is not listed under this
heading, you can take the legal action against your supplier that
is described below under the heading “Your Legal
Rights.”
Noncompliance with franchise
agreement . Your supplier
may terminate your franchise if you do not comply with a reasonable
and important requirement of the franchise relationship. In order
to use this reason, your supplier must have learned of this
non-compliance recently. The Act limits the time period within
which your supplier must have learned of your non-compliance to
various periods, the longest of which is 120 days, before you
receive notification of the termination.
Lack of good faith
efforts . Your supplier
may terminate your franchise if you have not made good faith
efforts to carry out the requirements of the franchise, provided
you are not first notified in writing that you are not meeting a
requirement of the franchise and you are given an opportunity to
make a good faith effort to carry out the requirement. This reason
can be used by
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your supplier only if you fail to make good
faith efforts to carry out the requirements of the franchise for a
period of 180 days before you receive the notice of
termination.
Mutual agreement to terminate the
franchise. A franchise
can be terminated by an agreement in writing between you and your
supplier if the agreement is entered into not more than 180 days
before the effective date of the termination and you receive a copy
of this agreement, together with this summary statement of your
rights under the Act. You may cancel the agreement to terminate
within 7 days after you receive a copy of the agreement, by mailing
(by certified mail) a written statement of this effect to your
supplier.
Withdrawal from the market
area. Under certain
conditions, the Act permits your supplier to terminate your
franchise if your supplier is withdrawing from marketing activities
in the entire geographic area in which you operate. You should read
the Act for a more detailed description, of the conditions under
which market withdrawal terminations are permitted.
Other events permitting a
termination. If your
supplier learns within the time period specified in the Act (which
in no case is more than 120 days prior to the termination notice)
that one of the following events has occurred, your supplier may
terminate your franchise agreement:
(1) Fraud or criminal misconduct by
you that relates to the operation of your marketing
premises.
(2) You declare bankruptcy or a
court determines that you are insolvent.
(3) You have a severe physical or
mental disability lasting at least 3 months which makes you unable
to provide for the continued proper operation of the marketing
premises.
(4) Expiration of your
supplier’s underlying lease to the leased marketing premises,
if you were given written notice before the beginning of the term
of the franchise of the duration of the underlying lease and that
the underlying lease might expire and not be renewed during the
tern of the franchise.
(5) Condemnation or other taking by
the government, in whole or in part, of the marketing premises
pursuant to the power of eminent domain. If the termination is
based on a condemnation or other taking, your supplier must give
you a fair share of any compensation which he receives for any loss
of business opportunity or good will.
(6) Loss of your supplier’s
right to grant the use of the trademark that is the subject of the
franchise, unless the loss was because of bad faith actions by your
supplier relating to trademark abuse, violation of Federal or State
law, or other fault or negligence.
(7) Destruction (other than by your
supplier) of all or a substantial part of your marketing premises.
If the termination is based on the destruction of the marketing
premises and if the premises are rebuilt or replaced by your
supplier and operated under a franchise, your supplier must give
you a right of first refusal to this new franchise.
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(8) Your failure to make payments to
your supplier of any sums to which your supplier is legally
entitled.
(9) Your failure to operate the
marketing premises for 7 consecutive days, or any shorter period of
time which, taking into account facts and circumstances, amounts to
an unreasonable period of time not to operate.
(10) Your intentional adulteration,
mislabeling or misbranding of motor fuels or other trademark
violations.
(11) Your failure to comply with
Federal, State, or local laws or regulations of which you have
knowledge and that relate to the operation of the marketing
premises.
(12) Your conviction of any felony
involving moral turpitude.
(13) Any event that affects the
franchise relationship and as a result of which termination is
reasonable.
II. REASONS FOR
NONRENEWAL
If your supplier gives notice that
he does not intend to renew any franchise agreement, the act
requires that the reason for nonrenewal must be either one of the
reasons for termination listed immediately above, or one of the
reasons for nonrenewal fisted below.
Failure to agree on changes or
additions to franchise. If you and your supplier fail to agree to
changes in the franchise that your supplier in good faith has
determined are required, and your suppliers insistence on the
changes is not for the purpose of preventing renewal of the
franchise, your supplier may decline to renew the
franchise.
Customer complaints.
If your supplier has received
numerous customer complaints relating to the condition of your
marketing premises or to the conduct of any of your employees, and
you have failed to take prompt corrective action after having been
notified of these complaints, your supplier may decline to renew
the franchise.
Unsafe or unhealthful
operations. If you have
failed repeatedly to operate your marketing premises in a clean,
safe and healthful manner after repeated notices from your
supplier, your supplier may decline to renew the
franchise.
Operation of franchise is
uneconomical. Under
certain conditions specified in the act, your supplier may decline
to renew your franchise if he has determined that renewal of the
franchise is likely to be uneconomical. Your supplier may also
decline to renew your franchise if he has decided to convert your
marketing premises to a use other than for the sale of motor fuel,
to sell the premises, or to materially alter, add to, or replace
the premises.
III. NOTICE REQUIREMENTS FOR
TERMINATION OR NONRENEWAL
The following is a description of
the requirements for the notice which your supplier must give you
before he may terminate your franchise or decline to renew your
franchise
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relationship. These notice requirements apply to
all franchise terminations, including franchises entered into
before June 19, 1978 and trial and interim franchises, as well
as to all nonrenewals of franchise relationships.
How much notice is
required. In most cases,
your supplier must give you notice of termination or nonrenewal at
least 90 days before the termination or nonrenewal takes
effect.
In circumstances where it would not
be reasonable for your supplier to give you 90 days notice, he must
give you notice as soon as he can do so. In addition, if the
franchise involves leased marketing premises, your supplier may not
establish a new franchise relationship involving the same premises
until 30 days notice was given to you or the date the termination
or nonrenewal takes effect, whichever is later. If the franchise
agreement permits, your supplier may repossess the premises and, in
reasonable circumstances, operate them through his employees or
agents.
If the termination or nonrenewal is
based upon a determination to withdraw from the marketing of motor
fuel in the area, your supplier must give you notice at least 180
days before the termination or nonrenewal takes effect.
Manner and contents of
notice. To be valid, the
notice must be in writing and must be sent by certified mail or
personally delivered to you. It must contain:
(1) A statement of your suppliers
intention to terminate the franchise or not to renew the franchise
relationship, together with his reasons for this action;
(2) The date the termination or
nonrenewal takes effect; and
(3) A copy of this
summary.
IV. TRIAL FRANCHISES AND INTERIM
FRANCHISES
The following is a description of
the special requirements that apply to trial and interim
franchises.
Trial franchises.
A trial franchise is a franchise,
entered into on or after June 19, 1978, in which the
franchisee has not previously been a party to a franchise with the
franchisor and which has an initial term of 1 year or less. A trial
franchise must be in writing and must make certain disclosures,
including that it is a trial franchise, and that the franchisor has
the right not to renew the franchise relationship at the end of the
initial term by giving the franchisee proper notice.
The unexpired portion of a
transferred franchise (other than a trial franchise, as described
above) does not qualify as a trial franchise.
In exercising his right not to renew
a trial franchise at the end of its initial term, your supplier
must comply with the notice requirements described above under the
heading “Notice Requirements for Termination or
Nonrenewal.”
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Interim franchises.
An interim franchise is a
franchise, entered into on or after June 19, 1978, the
duration of which, when combined with the terns of all prior
interim franchises between the franchisor and the franchisee, does
not exceed 3 years, and which begins immediately after the
expiration of a prior franchise involving the same marketing
premises which was not renewed, based upon a lawful determination
by the franchisor to withdraw from marketing activities in the
geographic area in which the franchisee operates.
An interim franchise must be in
writing and must make certain disclosures, including that it is an
interim franchise and that the franchisor has the right not to
renew the franchise at the end of the term based upon a lawful
determination to withdraw from marketing activities in the
geographic area in which the franchisee operates.
In exercising his right not to renew
a franchise relationship under an interim franchise at the end of
its term, your supplier must comply with the notice requirements
described above under the heading “Notice Requirements for
Termination or Nonrenewal.”
V. YOUR LEGAL
RIGHTS
Under the enforcement provisions of
the Act, you have the right to sue your supplier if he fails to
comply with the requirements of the Act. The courts are authorized
to grant whatever equitable relief is necessary to remedy the
effects of your supplier’s failure to comply with the
requirements of the Act, including or judgment, mandatory or
prohibitive injunctive relief, and interim equitable relief. Actual
damages, exemplary (punitive) damages under certain circumstances,
and reasonable attorney and expert witness fees are also
authorized. For a more detailed description of these legal remedies
you should read the text of the Act.
FURTHER DISCUSSION OF TITLE I -
DEFINITIONS AND LEGAL REMEDIES
I. DEFINITIONS
Section 101 of the Petroleum
Marketing Practices Act sets forth definitions of the key terms
used throughout the franchise protection provisions of the Act. The
definitions from the Act which are listed below are of those terms
which are most essential for purposes of the foregoing summary
statement. (You should consult section 101 of the Act for
additional definitions not included here.)
Franchise . A franchise is any contract between a refiner
and a distributor, between a refiner and a retailer, between a
distributor and another distributor, or between a distributor and a
retailer, under which a refiner or distributor (as the case may be)
authorizes or permits a retailer or distributor to use, in
connection with the sale, consignment, or distribution of motor
fuel a trademark which is owned or controlled by such refiner or by
a refiner which supplies motor fuel to the distributor which
authorizes or permits such use.
The term “franchise”
includes any contract under which a retailer or distributor (as the
case may be) is authorized or permitted to occupy leased marketing
premises, which premises are to be employed in connection with the
sale, consignment, or distribution of motor fuel under a trademark
which is owned or controlled by such refiner or by a refiner which
supplies motor
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fuel to the distributor which authorizes or
permits such occupancy. The term also includes any contract
pertaining to the supply of motor fuel which is to be sold,
consigned or distributed under a trademark owned or controlled by a
refiner, or under a contract which has existed continuously since
May 15, 1973, and pursuant to which, on May 15, 1973,
motor fuel was sold consigned or distributed under a trademark
owned or controlled on such date by a refiner. The unexpired
portion of a transferred franchise is also included in the
definition of the term.
Franchise relationship. The term
“franchise relationship” refers to the respective motor
fuel marketing or distribution obligations and responsibilities of
a franchisor and a franchisee which result from the marketing of
motor fuel under a franchise.
Franchisee
. A franchisee is a retailer or
distributor who is authorized or permitted, under a franchise, to
use a trademark in connection with the sale, consignment, or
distribution of motor fuel.
Franchisor
. A franchisor is a refiner or
distributor who authorizes or permits, under a franchise, a
retailer or distributor to use a trademark in connection with the
sale, consignment, or distribution of motor fuel.
Marketing premises
. Marketing premises are the
premises which, under a franchise, are to be employed by the
franchisee in connection with the sale, consignment, or
distribution of motor fuel.
Leased marketing
premises . Leased
marketing premises are marketing premises owned, leased, or in any
way controlled by a franchisor and which the franchisee is
authorized or permitted, under the franchise, to employ in
connection with the sale, consignment, or distribution of motor
fuel.
Fail to renew and
nonrenewal . The terms
“fail to renew” and “nonrenewal” refer to a
failure to reinstate, continue, or extend a franchise relationship
(1) at the conclusion of the term, or the expiration date,
stated in the relevant franchise, (2) at any time, in the case
of the relevant franchise which does not state a term of duration
or an expiration date, or (3) following a termination (on or
after June 19, 1978) of the relevant franchise which was
entered into prior to June 19, 1978 and has not been renewed
after such date.
II. LEGAL REMEDIES AVAILABLE TO
FRANCHISEE
The following is a more detailed
description of the remedies available to the franchisee if a
franchise is terminated or not renewed in a way that fails to
comply with the Act.
Franchisee’s right to
sue . A franchisee may
bring a civil action in United States District Court against a
franchisor who does not comply with the requirements of the Act.
The action must be brought within one year after the date of
termination or nonrenewal or the date the franchisor fails to
comply with the requirements of the law, whichever is
later.
Equitable relief
. Courts are authorized to grant
whatever equitable relief is necessary to remedy the effects of a
violation of the law’s requireme