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MARKETER FRANCHISE AGREEMENT
Between CITGO Petroleum Corporation and JEI DISTRIBUTING a LIMITED LIABILITY COMPANY
As a Franchised Marketer, 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 I 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 11 through 14 herein we have produced the concise summary of the provisions of Title I 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.
MARKETER FRANCHISE AGREEMENT
It is agreed this x 21 st day of x December, 2009 between CITGO Petroleum Corporation, a Delaware corporation, having a place of business at 1293 Eldridge Parkway, P. O. Box 4689, Houston, TX 77210-4689, hereinafter called “CITGO,” and JEI DISTRIBUTING, a LIMITED LIABILITY COMPANY, a x corporation, having a principal office and place of business at 718 S BUCHANAN ST. LAFAYETTE, LA 70501 hereinafter called “MARKETER.”
WHEREAS, CITGO and Marketer intend by this Agreement to create a “franchise relationship” within the meaning of the Petroleum Marketing Practices Act; the parties expressly do not intend by this Agreement to create a “franchise” within the meaning of any state law relating to franchises; and
WHEREAS, CITGO and Marketer desire to provide for Marketer’s purchase from CITGO of certain petroleum products for resale by Marketer under CITGO’s trademarks to consumers and retailers in a manner that will serve the interest of the consuming public and be of benefit to CITGO and Marketer;
NOW, THEREFORE, CITGO and Marketer agree as follows:
1. TERM . This Agreement shall be effective for the term of five (5) years, beginning the first day of December, 2009 , and expiring on the last day of November , 2014 Unless validly terminated or non renewed as provided for in the Petroleum Marketing Practices Act, this Agreement shall automatically renew for successive three (3) year periods. Marketer shall have the right to terminate or non-renew this Agreement after the Initial Term by providing CITGO with ninety (90) days written notice prior to termination.
2. QUANTITIES . Marketer shall purchase and lift or accept delivery of quantities of products as set forth below during the respective monthly periods and CITGO shall sell and deliver the specified quantities of products during the respective monthly periods. Marketer hereby acknowledges and agrees that the purchase and ratable lifting of the monthly quantities of product specified herein by Marketer are reasonable, important and of material significance to the franchise relationship. Marketer understands and agrees that any failure by Marketer to purchase a minimum of ninety percent (90%) of the monthly quantity of gasoline listed below during any month on a ratable basis shall be a violation of this Agreement. CITGO shall have no obligation at any time to provide more than the quantities listed below.
The monthly quantities of product set forth below are based on the sales of motor fuels projected by the Marketer at locations that CITGO has approved for branding with the CITGO trade name and trademark. In the event that CITGO agrees to brand additional locations, the monthly quantities of products set forth below shall be increased by the projected sales of motor fuels at the newly branded locations. Likewise, if any location is debranded, the monthly quantities of product set forth below shall be decreased by the projected sales at such formerly branded location. These increases/decreases shall be effective beginning with the month in which the installation, or removal and return, of the CITGO sign and equipment is completed, and shall be confirmed by an Amendment to this Agreement. It is acknowledged that the purpose of this paragraph is to allow the parties to adjust the volume requirements resulting from new brandings and debrandings that may take place from time to time in the ordinary course of Marketer’s business and does not supercede (i) a branding commitment for a particular station agreed to by the Marketer in a separate marketing agreement or program or (ii) other provisions of this Agreement including
the term of the Agreement. Marketer and CITGO will review the addition or deletion of branded outlets at least on an annual basis.
Marketer agrees that the monthly quantity of gasoline set forth below shall be purchased and be lifted ratably during the month.
CITGO may establish limitations and restrictions, upon Marketer’s purchases of gasoline that in CITGO’s sole judgment, are necessary or appropriate to enforce Marketer’s obligations to make ratable purchases.
Quantities shall be determined at time and place of loading. All measurements with regard to deliveries into marine vessel, pipeline or tank car shall be corrected to 60° F. in accordance with prevailing ASTM procedures. With respect to all other deliveries under this Agreement, Marketer elects to have quantities determined by liquid measure Temperature Corrected method. In any jurisdiction where applicable law dictates the method of measurement, such method shall be used.
3. DELIVERY OF PRODUCTS. Products will be made available at terminals or other locations selected by CITGO or, upon mutual agreement, may be delivered to destination by transportation selected by CITGO. Marketer shall strictly comply with all applicable rules and regulations of terminals and facilities at which Marketer receives motor fuel from CITGO. Marketer shall ensure that all trucks, tankers and lines are clean and ready to receive CITGO’s motor fuel, so that said fuel is not mixed, blended or adulterated with any other substance or product. CITGO or the terminal operator may refuse to make delivery into any vehicle which, in the sole judgment of CITGO or the terminal operator, is unsafe or inadequate. Marketer agrees to provide such proof of insurance as required by CITGO covering Marketer’s liability for any negligent or willful acts it commits in connection with the loading, transporting and delivery of products. Title and risk of loss on all products covered by this Agreement shall pass to Marketer at the time and place of delivery. Time and place of delivery shall be when and at the point that products pass connections between the terminal’s truck rack or pipeline flange and Marketer or its agent’s receiving connections, transport trucks, tank cars, or vessels. All demurrage is Marketer’s responsibility.
4. PRICES . Marketer shall pay CITGO’s Marketer prices in effect at time and place of delivery. Such prices will be established by CITGO on an FOB, terminal basis, or other point of sale basis, including, upon mutual agreement, on a delivered basis. Marketer shall also pay CITGO amounts equivalent to any tax, duty or impost now or hereafter imposed by the United States and or any state and/or municipality, and/or any other governmental authority on all Temperature Corrected gallons delivered under the terms of this Agreement.
5. TERMS OF PAYMENT.
a. Marketer agrees to pay CITGO in accordance with such terms as CITGO’s Credit Department, in its sole discretion may from time to time prescribe in writing. At the present time, CITGO’s credit
terms are one percent (1%) Electronic Funds Transfer (EFT) ten (10) days. The failure by Marketer to pay any invoice within the terms then prescribed by CITGO’s Credit Department may result in the restriction of credit, the denial of access to the petroleum terminals from which Marketer is authorized to obtain its supply of petroleum products, the withholding of any rebates, discounts or benefits from CITGO programs that may otherwise be available to Marketer and shall constitute grounds for termination and or non-renewal of this Agreement. Further, failure to make payment within payment terms authorizes the imposition of finance charges in an amount equal to the lesser of (i) the maximum amount allowed by applicable law or (ii) one and one-half percent (1.5%) per month. Marketer and its parent company, Jacobs Entertainment, Inc.,agree to provide CITGO’s Credit Department with a current, audited or certified financial statement within ninety (90) days after the end of each fiscal year and such other business related information as may be requested by CITGO’s Credit Department from time to time.
b. At the time of execution of this Agreement and thereafter upon CITGO’s request, in order to maintain a credit line, Marketer may be required to furnish CITGO with letters of credit that may be requested by CITGO.
c. If Marketer fails to comply with the terms and conditions of payment and credit established by CITGO, of if CITGO has reasonable grounds for insecurity with respect to Marketer’s performance of any of Marketer’s obligations under this Agreement, then, in addition to all other rights and remedies afforded to CITGO under this Agreement and applicable law, CITGO may take such action as CITGO deems reasonable.
6. BRANDS AND TRADE NAMES . Subject to the following, CITGO hereby grants to Marketer for the term of this Agreement, the right to use CITGO’s applicable brand names, trademarks and other forms of CITGO’s identification, in the manner established by CITGO from time to time, in connection with the resale by Marketer of products acquired under CITGO’s brand names.
a. CITGO reserves the right to control fully the quality and branding of products which may, from time to time, be sold and/or distributed under CITGO’s brands and trade names, including the right to terminate or add to such products, or to change the name or names of any products. Marketer shall sell all branded products delivered hereunder under such brand names, trademarks and trade names of CITGO as may be in use at the time of sale thereof. Marketer shall not change or alter by any means whatsoever the nature, quality or appearance of any of the products purchased hereunder. However, if Marketer elects to sell product(s) not purchased or acquired under this Agreement, Marketer shall not allow nor permit the use of CITGO’s brand names, trademarks, trade dress, and all other forms of CITGO identification, in connection with the resale of such product(s). CITGO’s “brand names and trademarks,’ as used herein, include CITGO’s logos, brand identification, product and service advertising, credit cards, product names and service marks. CITGO’s “trade dress” refers to the manner and style of advertising material, including color graphics and art work on product labels, point of sale material, buildings, signs, pumps and other equipment. Any other product(s) shall be clearly identified and labeled in such language and print at least comparable in size to CITGO’s brand names, trademarks, trade dress, and other forms of CITGO identification, used on identical or similar product(s) to make it unmistakably clear that CITGO brand product(s) are not sold and to preclude any likelihood of confusion, mistake or deception of the public. As an example, but not by way of limitation, if a Marketer sells from a product dispenser a fuel which was not purchased or acquired under this Agreement, the Marketer shall completely obliterate the CITGO brand names, trademarks, trade dress, and all other forms of CITGO identification with the following designation in print at least comparable in size to the largest CITGO identification which is being used on any similar product dispenser: “NO BRAND, THIS IS NOT A CITGO PRODUCT”. Marketer agrees that if a customer of the Marketer requests a CITGO product(s) and such product(s) is not available, the customer of the Marketer will be orally advised by the Marketer that such CITGO product(s) is not available. Marketer hereby agrees to defend. indemnify and hold CITGO harmless from any and all claims, damages, actions or fines (including costs and attorneys’ fees actually incurred) arising out of Marketer’s purchase, storage or sale of non-CITGO products.
b. Marketer recognizes that the identification, trademark and brand names of CITGO are the property of CITGO and that CITGO’s requirements as herein stated relating to the use of such identification and Marketers advertising (to include motor vehicles and dispensing equipment) are reasonable and of material significance to the franchise relationship. Accordingly, it is further agreed that a failure by the Marketer to comply with the terms and provisions of this Section 6 shall constitute grounds for termination and/or non-renewal of this Agreement.
c. All signs, poles and identification items furnished or leased to Marketer by CITGO, for display at premises through which Marketer supplies products for resale, shall be erected, installed and maintained in accordance with CITGO’s specifications, shall remain the property of CITGO and shall be detached by the Marketer, or by CITGO (at Marketers expense), at CITGO’s option, from the premises and be safely stored and made available for repossession by CITGO upon CITGO’s request. Marketer agrees to advise its dealers and/or the owners and occupants of the retail facilities of CITGO’s ownership of said signs, poles and identification items and of the right of Marketer or CITGO or their agents to remove same from the premises at any time. Marketer understands and agrees that CITGO’s identification items will only be provided for those premises that fulfill CITGO’s standards and requirements. Therefore, Marketer shall not make available or erect any such CITGO identification items at any location that has not been approved in writing by CITGO nor shall Marketer relocate any CITGO identification items without CITGO’s prior written consent. Marketer hereby agrees to install all said signs, poles and identification items in accordance with CITGO’s specifications and to maintain all said equipment in good repair. Marketer shall bear all responsibility for costs involved in such maintenance and repair as well as removal. Marketer agrees to purchase insurance sufficient to cover the repair and/or replacement value of all said signs, poles and identification items. CITGO retains title and all ownership rights in all such signs, poles and identification items that bear CITGO’s name, trademarks and/or trade dress. Marketer further agrees to indemnify and hold CITGO harmless from any and all damages and/or claims for damages arising out of the installation, use, repair, maintenance, or removal of all signs, poles, equipment and identification items furnished or leased to Marketer by CITGO.
d. Marketer agrees to comply with applicable laws regarding the filing and payment of applicable local ad valorem taxes regarding all signage, Branding Material and POS and credit card equipment.
e. The poles, signs and branding material including any installation costs paid or furnished by CITGO (collectively, the “Branding Material”) that have been furnished by CITGO for each station shall be amortized over a sixty (60) month period on a straightline basis. Should a station be debranded within the sixty (60) month amortization period, the Marketer shall pay to CITGO the unamortized portion of the Branding Material as of the date of debranding. Upon such payment the ownership of that portion of the Branding Material that does not contain CITGO’s name and trademarks shall pass to Marketer. Furthermore, after the branding material is fully amortized, title to such Branding Material shall pass to Marketer. Notwithstanding anything to the contrary, CITGO shall always retain ownership of sign faces, decals and other identification items that contain CITGO’s name and trademarks.
7. MINIMUM RETAIL STANDARDS . Marketer shall operate or cause to operate retail facilities including all buildings, equip