EXHIBIT 10.12
Agreement Sequence: 000
-------
Facility Number: 82060
-------
Customer Account Number: 0000000
-------
AR Number: 0883314
-------
Agreement Type: AMPMN
-------
am/pm MINI MARKET AGREEMENT
THIS AGREEMENT is made September 2 , 1999, between ARCO
------------------------------- ----
Products Company (a division of ATLANTIC RICHFIELD COMPANY - incorporated in
Delaware), with an office at:
0 XXXXXXXXXXXX XXXXX, XX XXXXX, XXXXXXXXXX 00000
--------------------------------------------------------------------------------
("ARCO") and LLO-Gas, Inc.
-------------------------------------------------------------------
a Corporation
------------------------------------------------------------------------------
(state whether a sole proprietorship, partnership, limited partnership,
corporation or limited liability company ["LLC"],
if partnership, the names of all partner 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 00000 Xxxxxx Xxxxx Xxxx, Xxx. 000, Xxxxxx, XX 00000
-------------------------------------------------------------
("Operator").
Operator desires to be the franchisee of, and ARCO is willing to grant to
Operator a franchisor 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
PART I contains specific terms which relate to the terms and conditions set
forth in the corresponding sections - PART II, Form No. A.P.C. 239-T-10 (4/99),
attached hereto and incorporated herein.
Section
-------
4.01 Hours/Days of Operation (Pedestrian Traffic Only Stores)
N/A
---------------------------------------------------------------------
---------------------------------------------------------------------
4.03 Store Manager (if Operator has more than one am/pm mini market)
---------------------------------------------------------------------
5.01 This Agreement shall be binding on the parties as of the date first
written above. The term of this Agreement shall begin on the _______
day of ____________________, ______, ("Commencement Date"), and shall
end at 10 a.m. on the first day after the last day of the [_____]
120th or [_______] 180th full calendar month following the
Commencement Date. If not time is checked, the box for 120th shall 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 of PART II.
6.01 Premises
0000 X. Xxxxx Xx - MARIPOSA
---------------------------------------------------------------------
(complete address by street number, including, where applicable,
designation of corner)
---------------------------------------------------------------------
City LOS ANGELES LOS ANGELES
---------------------------
(City or town)
State California Zip Code 90020
------------------------- -------------------
7.01(a) Initial franchise fee: Ninety-Five Thousand 00/100
---------------------------------------------
Dollars [$ 95,000.00]
------------ ---------
7.01(c) Renewal franchise fee: n/a
---------------------------------------------
Dollars [$ 0 .00]
------------ ------
7.02(a) Minimum royalty fee: One Thousand 00/100
------------------------------------------------
Dollars [$ 1000 .00]
------------ ----------
7.03 Security Deposit: One Thousand 00/100
--------------------------------------------------
Dollars [$ 1000 .00]
------------ ----------
16.01 Operational Designee, if applicable:
--------------------------------
17.01(j) Transfer fee:
-------------------------------------------------------
Dollars [$ .00]
------------ ------
17.02 Corporate Designee (Corporate operators only): XXXX X. XXXXXXXXXXX
-------------------
1 of 4
Limited Liability Company Designee (LLC's Only):
---------------------------
Partnership Designee (Limited Partnership Only):
---------------------------
Facility Number: 82060
-----
Store Size ________ sq. ft.
(exterior dimensions)
STORE EQUIPMENT
(Real and Personal Property)
The equipment required to be installed in the Store is indicated below by a
check xxxx at the left of the required items. ARCO agrees to loan the equipment
initialed by ARCO to the right of such items and to install such equipment prior
to the Commencement Date. Operator agrees to install, at Operator's expense, on
or before the Commencement Date, the equipment initialed by Operator to the
right of such items. All equipment, whether furnished by Operator or by ARCO,
must meet ARCO's specifications including, but not limited to, specifications
with respect to brand, size, color and quality.
To be To be
Equipment Required furnished furnished
(Check Items of equipment and installed and installed
required to be installed by Operator by ARCO
------------------------ ----------- -------
X am/pm Sun & Moon Sign X
----- -----
X Building Fascia (illuminated) X
----- -----
X Cigarette Merchandiser (Overhead)(Vendor Supplied) X
----- -----
X Corner am/pm I.D. Sign
----- and where applicable, Sign Pole X
-----
X Interior Signage X
----- -----
X Training Materials [Employee Training System ("E.T.S.")] X
----- -----
X Bun Toaster X
----- -----
X Capuccino Bulk Powder Machine X
----- -----
X Cash Register (Primary with PayPoint(R) P.O.S. X
----- -----
X Cheese Sauce Dispensers (2) X
----- -----
X Coffee Xxxxxx (6 Burner Twin Xxxxxx) X
----- -----
X Coffee Xxxxxx Timer X
----- -----
X Coffee/ Bakery Menu Board X
----- -----
X Coffee Mug Rack X
----- -----
X Coffee Lid/Supply Spinner Rack X
----- -----
X Computer Software and Hardward X
----- -----
X Condiment Pumps (2) X
----- -----
X Convection Oven X
----- -----
X Convection Oven Racks (4) X
----- -----
X Cooler Boxes (Walk-In) Size______ Number______ X
----- -----
X Cooler Boxes (Upright) Size______ Number______ X
----- -----
X Cooler Cabinet (Horizontal; for sandwiches) X
----- -----
X Counter Top Condiment Dispenser Unit X
----- -----
X Counter and Shelving (including Condiment Table) X
----- -----
X Counter Merchandising System X
----- -----
X Cup Dispenser (Hot and Cold) X
----- -----
X Fast Food Module (older units only) X
----- -----
X Fax Machine X
----- -----
X Food Merchandising Warmer X
----- -----
X Food Merchandising Rack Identification Channels and Strips X
----- -----
X Food Preparation Table X
----- -----
X Fountain Drink and Ice Dispenser with Ice Maker and X
----- Carbonator (Pepsi-Cola) -----
X Fountain Lid and Straw Rack X
----- -----
X Prepackaged Electronic Facility Controller (EFC) X
----- (see Electronic Drawings for Details) -----
2 of 4
To be To be
Equipment Required furnished furnished
(Check Items of equipment and installed and installed
required to be installed by Operator by ARCO
------------------------ ----------- -------
X Freezer Cabinets (Upright) Size______ Number______ X
----- -----
X Freezer (Storage Room) X
----- -----
X Frozen Carbonated Beverage Machine X
----- -----
X Frozen Dessert Graphics Package X
----- -----
X Frozen Dessert Cup, Cone Tower X
----- -----
X Gondolas Size______ Number______ X
----- -----
X Hood and Exhaust Ventilation System for Convection Oven
----- (California only and only where locally required) X
-----
X Ice Maker X
----- -----
X Ice Merchandiser Size______ Number______ X
----- -----
X In-store Television Monitors for display of multi-media
----- advertising** X
-----
X Microwave Over (Commercial) X
----- -----
X Nacho CheeseSauce Dispensers X
----- -----
X PayQuick Island Cashier (PIC) (only if Operator is
----- party to Contract Dealer Gasoline Agreement) X
-----
X Retail Excellence (RE) POS System (RS 2000) with PayPoint X
----- -----
X Shelving (Storage Room) Size______ Number______ X
----- -----
X Shelving (Modular; Walk-In Cooler behind Display Area) X
----- -----
X Shelving (Wall) Size______ Number______ X
----- -----
X Sink (3-compartment - food preparation) X
----- -----
X Sink (Hand sink in hot food area) X
----- -----
X Sink (Service/Mop) X
----- -----
X Small Wares (Food Service) X
----- -----
X Soft Serve Dispenser X
----- -----
X Sports Bottle Rack X
----- -----
X Lid/Straw Spinner Rack X
----- -----
X (Combination VHS Player/Monitor
----- to utilize ETS/VHS tapes) X
-----
X Water Heater X
----- -----
X Video Surveillance Equipment (including six Color
----- Cameras.two 20" color Monitors, Flashing Red Lights
for Monitors, Multiplexor Unit to support up to 9
Cameras, Time-lapse Video Recorder, Video Tape Library
with 31 tapes (replaced annually with 31 new long
playing Video T-160 tapes) and 24 Hour Surveillance
Decal) X
-----
X VSAT Equipment: (1) Xxxxxx Satellite Dish X
----- -----
X (2) Xxxxxx Indoor Unit - Satellite Receiver X
----- -----
(3) Deicer (if required for colder climate) X
-----
----- Other: 1. _____________________________ -----
2. _____________________________ -----
3. _____________________________ -----
** When available, franchisee will be given 30 days advance notice of
installation.
Operator shall be furnished with a copy of ARCO's specifications for all
required equipment upon execution by Operator of this Agreement.
3 of 4
OPERATOR ACKNOWLEDGES HAVING READ THIS AGREEMENT, INCLUDING PART II, GENERAL
TERMS AND CONDITIONS, FORM No. A.P.C. 239-T-10 (4/99), AND UNDERSTANDS FULLY ALL
THE TERMS, PROVISIONS AND CONDITIONS HEREOF.
ARCO MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO OPERATOR'S
PROFIT OR INCOME TO BE DERIVED FROM THE OPERATION OF THE am/pm STORE
CONTEMPLATED HEREUNDER.
IN WITNESS WHEREOF, ARCO and Operator have executed this Agreement as of the
date first above written.
ARCO Products Company Operator
Division of Atlantic Richfield Company LLO-Gas, Inc.
By /s/ Xxxxxx Xxxxxxx 9/2/99 By /s/ Xxxx Xxxxxxxxxxx 9-2-99
--------------------------------- ---------------------------------
Manager Date Manager Date
/s/ [illegible] 9-2-99 /s/ Xxxxxx Xxxxxx 9/2/99
----------------------------------- ------------------------------------
Witness Date Witness Date
ATTACHMENT: PART II, General Terms and Conditions
4 of 4
am/pm MINI MARKET AGREEMENT
PART II
General Terms and Conditions
ARTICLE 1
Service Xxxx and Service Name Conditions, Copyrights, Trade Secrets
and Confidentiality
A. Service Marks and Service Names
1.01 Subject to the terms and conditions specified herein, and to the
extent of ARCO's rights therein, ARCO hereby grants to Operator, beginning on
the Commencement Date as defined 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 mini markets, the service xxxx and
service name "am/pm", or any variation thereof as may be approved in writing by
ARCO, and any other service marks and service names used in connection with
am/pm mini markets, solely in conjunction with Operator's operation of the Store
provided for herein. Operator has no exclusive territory. ARCO reserves the
right, in its sole discretion, to establish additional am/pm mini market stores
and other ARCO franchises and franchises operated by ARCO's wholly owned
subsidiary, in any location and proximity to Operator's business.
1.02 ARCO represents that it has applied for federal registration for
various service marks for "am/pm" for retail grocery store and convenience store
services. ARCO has been granted federal registration for certain "am/pm"
service marks for retail grocery store and convenience store services. ARCO
expressly reserves the right to change, alter or modify the am/pm service xxxx
or service name or substitute any other service xxxx or service name at any time
by giving Operator not less than thirty (30) days' prior notice thereof. In the
event of any change, alteration or modification of the service xxxx or service
name, Operator agrees that only the service xxxx or service name, as changed,
altered or modified, shall be used by Operator to identify the Store. If the
service xxxx and service name "am/pm" is changed by ARCO, it is agreed that the
new service xxxx and service name adopted by ARCO shall be substituted for
"am/pm" wherever "am/pm" appears in this Agreement. ARCO also expressly
reserves the right to change, alter or modify colors and designs and other
service marks and service names used in connection with am/pm mini markets from
time to time and place to place as ARCO deems appropriate or as required by law.
1.03 Operator agrees that it shall notify ARCO promptly of any
unauthorized use of the am/pm service xxxx and service name by any person, firm,
corporation or other entity (collectively referred to as "person"). At its
expense, ARCO shall challenge all unauthorized uses or infringements of the
am/pm service xxxx and service name, and ARCO shall have the sole right to
decide whether to prosecute any person who unlawfully uses or attempts to use
ARCO's am/pm service xxxx or service name for retail grocery store, convenience
store, or fast food services. Operator agrees to provide such evidence and
expert assistance as Operator may have within its control in connection with any
such challenge or prosecution.
1.04 Operator recognizes and acknowledges that, as between ARCO and
Operator, ARCO is the sole and exclusive owner of the am/pm service xxxx,
trademark and service name and other service marks, trademarks and service names
used in connection with am/pm mini markets and appearing on am/pm stores.
Operator hereby agrees: not to claim any right, title or interest in or to said
service marks, trademarks or service names; not to directly or indirectly deny,
assail, or assist in denying or assailing the sole and exclusive ownership of
ARCO in said service marks, trademarks and service names; not to adopt or use as
Operator's own property any service marks, trademarks or service names of ARCO
nor employ any service marks, trademarks or service names confusingly similar to
those of ARCO; not to register or attempt to register
1 of 33
ARCO'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 thereat as am part of any corporate or partnership name or any
other business name. It is understood that this covenant shall survive the
termination of this Agreement and shall be binding upon the heirs; successors
and assigns of Operator.
1.05 Operator agrees, upon termination or nonrenewal of this Agreement or
upon termination or nonrenewal of any subsequent Store Agreement, to assign
ARCO, without additional consideration; any service name or service xxxx,
trademark rights that may have vested in Operator notwithstanding 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, terms
and conditions set forth in the Agreement and in accordance with instructions,
rules and procedures prescribed in writing by ARCO. Operator shall not use the
am/pm service xxxx or service name, or other service marks, trademarks or
service names of ARCO, except as authorized by ARCO and in no event in any
manner which may or could adversely impact or jeopardize the am/pm image.
1.06 Operator agrees to display the am/pm service xxxx, trademark and
service names as prescribed by ARCO and to conduct the business of the Store in
such a manner as to not reflect unfavorably on ARCO's good will, service marks
and service names.
1.07 Operator agrees, immediately upon the termination of this Agreement
or termination of any subsequent Store Agreement to cease and forever abstain
from using the am/pm service xxxx and service name and other service marks and
service names used in connection with am/pm mini markets.
B. Copyrights
1.08 ARCO grants to Operator a nonexclusive right and license during the
term of this agreement to use ARCO's franchise accounting system software at the
am/pm mini market and display at Operator's am/pm Store copyrighted am/pm
signage, posters, and other advertising and point of purchase materials. No
rights of reproduction or distribution are included in the grant, and upon
termination for any reason Operator shall immediately cease and desist from
using or displaying any such copyrighted materials.
C. Trade Secrets and Confidentiality
1.09 ARCO shall furnish or make available to Operator for use solely in
connection with Operator's conduct of Operator's am/pm Store, ARCO's franchise
accounting system software, an am/pm Store System Manual, guides, and other
forms and materials. Operator agrees during the term of this Agreement and
after termination to keep confidential and not to furnish information as to the
methods of operation, advertising programs or ideas, business information, or
any other confidential information of ARCO relating to the operation of any
am/pm Store, to any person, except ARCO, Operator's employees, or Operator's
attorneys or accountants engaged by Operator in connection with Operator's
operation of Operator's am/pm Store who have undertaken the same obligation of
confidentiality as set forth herein for
Operator.
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, partner, joint venture or
employee of ARCO. Operator shall have no authority, right or power to, and
shall not bind nor obligate ARCO in any way, manner or thing whatsoever, nor
shall Operator
2 of 33
represent that it has any right or power to do so. Operator
shall undertake all obligations herein described as an independent contractor
and shall exercise and be responsible for the exclusive control of the Store and
Premises and all activities conducted therein and therefrom.
2.02 Operator shall be solely responsible for hiring, supervising and
directing all employees, the payment and withholding of all payroll and other
taxes imposed upon or determined by wages and salaries of such employees, and
for complying with all applicable workers and unemployment compensation,
occupational disease, disability and similar laws. ARCO shall have no control
over employees of Operator, including, without limitation, the terms and
conditions of their employment.
ARTICLE 3
am/pm Store Systems Manual and Ancillary Equipment Specifications Manual
3.01 Operator agrees that it shall operate the Store and maintain the
Premises in accordance with the standards, methods, procedures, requirements,
instructions, food specifications and equipment specifications set forth in the
am/pm Store Systems Manual and the Ancillary Equipment Specifications Manual
("Manuals" or "Systems Manuals"), and any and all subsequent amendments and
supplements thereto. ARCO shall loan to Operator a copy of the Manuals which
shall be furnished to Operator upon execution by Operator of this Agreement;
subsequent amendments and supplements shall also be loaned and furnished to
Operator and Operator shall be required to acknowledge receipt of any of the
foregoing loaned materials. Operator further agrees to instruct and keep its
employees fully informed of all such methods and procedures as shall be
promulgated by ARCO from time to time. The Manuals, as presently constituted
and as at may hereafter be amended or supplemented by ARCO from time to time, is
incorporated in and made a part of this Agreement. Operator acknowledges and
agrees that compliance with the standards, methods, procedures, requirements,
instructions and food specifications contained in the Manuals (as from time to
time amended or supplemented) is important to Operator and to ARCO. Failure to
adhere to the provisions of the Manuals shall constitute a breach of this
Agreement.
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 throughout the term of this Agreement.
Operator shall cause the Store to be open for business not less than sixteen
(16) hours every day of the year, excluding Christmas, or the maximum hours
permitted by applicable law if less than sixteen (16) hours; provided, however
that if Operator operates a Store that is accessible only to pedestrian traffic,
Operator shall cause the Store to be open for business for the hours and days
set forth in PART I.
4.02 FAILURE OF OPERATOR TO CAUSE THE STORE TO BE OPEN FOR BUSINESS IN
THE MANNER AND DURING THE HOURS AND DAYS PRESCRIBED HEREIN SHALL CONSTITUTE A
MATERIAL BREACH OF THIS AGREEMENT. In addition to any other remedy available to
ARCO, in the event Operator fails to operate the Store during the hours and days
prescribed in Section 4.01 during any calendar month during the term of this
Agreement, Operator shall pay ARCO, as liquidated damages and not as a penalty,
in addition to the royalty fee payable for such month, one thirtieth of the
minimum monthly 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
am/pm mini market. Operator must have one employee for each store, who has
attended and successfully completed a four week am/pm Store Manager training
3 of 33
program offered by ARCO and who is employed on a full time basis at each store
("Store Manager"). If Operator has more than one am/pm mini market, Operator
hereby designates the person whose name is set forth in PART I, Section 4.03,
hereof as the Store Manager for the Premises which are the subject of this
Agreement (within two months of the date such designated person is no longer
employed at the store, Operator must replace such Store Manager with another
trained Store Manager or the franchise may be terminated). 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,
partnership or LLC. The Operational Designee must be a an officer or
shareholder if Operator is a corporation, a member or manager of the LLC if
Operator is an LLC, a general partner if Operator is a limited partnership, a
partner if Operator is a partnership other than a limited partnership. In the
case of Concurrent 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 employed 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 mini market, with ARCO's approval, is
operated at the Premises by Operator in conjunction with another or more than
one other ARCO franchise, such as e.g. a SMOGPROS Center franchise ("Concurrent
Operations"), such Concurrent Operations shall be conducted and governed by the
terms and conditions of the franchise agreements of each of the applicable
franchises and any additional special terms, conditions and provisions relating
to Concurrent Operations as may be included in such franchise agreements or
other writing with regard to such operations.
4.06 Each individual who owns an interest in the franchise entity must
sign a personal guarantee agreeing to discharge all obligations of the Operator
under the franchise agreement. This will also be required of the individual's
spouse where jointly owned assets are used to purchase/operate the franchise and
where the individual lives in or the franchise is located in a community
property state.
ARTICLE 5
Term
5.01 This Agreement shall be binding on the parties as of the date first
above written. Except as otherwise provided in this Article, the "Commencement
Date" shall be on the date set forth in PART I. If no date is set forth in PART
1, the Commencement Date shall be the date established by ARCO by notice to
Operator ("Notice of Final Inspection and Readiness") as the date the Premises
are available for occupancy and ready for conduct of the business of the am/pm
mini market. The term hereof shall end as of 10:00 a.m. on the first day after
the last day of the one hundred twentieth (120th) or one hundred eightieth
(180th) full calendar month following the Commencement Date as set forth in Part
I, unless this Agreement is terminated earlier pursuant to the terms hereof.
5.02 (a) In the case of ground-up construction of an am/pm mini market,
as soon as reasonably practicable after execution of the Agreement, but within
six (6) months of the date of the Agreement, Operator shall supply ARCO with the
following items sufficient to enable ARCO to prepare site specification and
standard generic architectural and engineering plans, i.e. plans of ARCO's then
standard typical am/pm mini market scheme suitable for Operator's property, so
as to enable Operator to apply for the applicable permits and then to construct
such a standard facility ("Plans"):
4 of 33
(1) Photographs of the entire site, including improvements and corner
signage, if any, and of adjacent business properties.
(2) Current topographic survey of the property. (Such survey should
show all existing elevations and site features and should also include
additional data such as: width of streets; type of curbs and corner
radius; existing sidewalks and/or approaches, including material and
condition; location of existing power poles, light poles, hydrants,
traffic light poles, water, gas and electrical curb boxes, etc.; buildings
and islands on the site, if any, by dimension; paving, landscaping, trees,
fencing, retaining walls, underground motor fuel storage, if any; property
line dimensions, angles and bearings, known setbacks, easements and code
restrictions; North arrow and notes on any special building, zoning and/or
sign code regulations affecting the property.)
(3) Copy of the deed, lease or other document(s) evidencing
Operator's right to possess and modify the Premises and a copy of all
restrictions, if any, affecting the Premises and rights of Operator.
(4) Such additional information as ARCO may request in order to
prepare Plans or that Operator may deem pertinent.
Upon receipt of the foregoing, as soon as reasonably practicable, ARCO
shall prepare standard generic architectural, plumbing and electrical site
plans. ARCO shall provide Operator with 3 sets of blueline and 1 set of
reproducible prints of preliminary and final construction documents for
Operator's use; additional copies of sets or pans of sets must be acquired by
Operator at Operator's expense from any vendor of Operator's choosing.
ARCO shall submit to Operator the aforementioned site plans and standard
generic plans for ground-up construction which include: floor plans, elevations
and sections, foundations plan, roof framing plant, roof plan, ceiling plan,
store fixture plant, interior floor finish and color plan, heating, ventilation
and air conditioning plan, sales and wall counter plans, corner identification
sign plan, general layout for motor fuel storage and dispensing facilities and
applicable notes and details for the foregoing. It shall be necessary for
Operator to obtain any additional plans and reports (e.g., grading plan, soil
reports) from an architectural or engineering firm prior to applying for
applicable permits.
It may be necessary for Operator to have the plans modified in order to
meet local building codes and other requirements; ARCO does not represent that
the Plans shall be sufficient to meet such local requirements. All
modifications to meet local building codes and other requirements, and other
changes not resulting from local requirements, but requested by Operator must be
submitted in writing to ARCO with drawings and specifications and approved in
advance by ARCO. All changes, if any, not mandated by governmental authority
but requested by Operator must be submitted simultaneously as one consolidated
request for modification of the preliminary plans. If modifications are
mandated by governmental authority, copy of the specific instructions to change
the plans must be submitted along with the request for change. ARCO is willing,
within the limitations set forth below, to make the approved modifications, or
Operator may, at Operator's expense, have an architectural or engineering firm
of Operator's choosing make the approved modifications. If Operator elects to
have ARCO make the approved modifications, ARCO is willing to do so provided the
total cost of all plans incurred by ARCO in rendering this service to Operator,
including the cost of the 3 sets of blueline and 1 set of reproducible prints of
the preliminary plans and the final plans, does not exceed $20,000, and provided
further that any costs in excess of $20,000 be at Operator's expense and be paid
in advance before such excess costs are incurred. ARCO will seal final plans
developed by ARCO and provide 3 sets of blueline and 1 set of reproducible
prints.
5 of 33
(b) In the case of conversion of an existing building and an existing or
proposed commercial building or shopping complex to an am/pm mini market, as
soon as reasonably practicable after execution of the Agreement, Operator shall
supply ARCO with the following items sufficient to enable ARCO to prepare
standard architectural and engineering plans, i.e., plans of ARCO's then current
typical am/pm mini market scheme suitable for Operator's property and building
so as to enable Operator to apply for the applicable permits and to convert the
existing building to such a typical facility ("Plans"):
(1) General arrangement ("As Built") drawings including informational
sketches and data showing: complete set of drawings used for construction
of building (if available); exterior dimensions, length, width, and height
of every vertical and horizontal surface; interior dimensions, length,
width and height of every room, location of all existing electrical
outlets, plumbing lines, fixtures, switches, controls, furniture, etc.;
obstructions in area to be occupied by walk-in coolers; all other major
obstructions such as columns, downspouts, vents, ducts, etc.; existing
ceiling layout and placement of all light fixtures, grilles, etc.,
location of heating, air conditioning and water heating units, type, size,
and condition; electrical panel, size of service, number of circuits,
condition of panel; if reusable as is, or with supplementary panel and if
three-phase service is available; description of existing structural
system, age, type, size, location of beams, columns, bearing walls, shear
walls, etc.; current condition of building, roof, exterior, interior,
restrooms, walkways, existing motor fuel storage and dispensing system, if
any, showing age, size and type of underground tanks (steel or
fiberglass), make and size of suction pumps, leak detectors, make and
model of pumps/dispensers and self-service console/equipment, if any;
describe necessary repairs; photographs of all four sides of building,
interior of office, storage, bays, electrical panel, heating/air
conditioning unit, unusual conditions, existing islands, signs and
canopies; local building restrictions affecting plans.
(2) Copy of deed, lease or other document(s) evidencing Operator's
right to possess and modify the Premises and a copy of all restrictions,
if any, affecting the Premises and rights of Operator.
(3) Such additional information as ARCO may request in order to
prepare Plans or that Operator may deem pertinent.
Upon receipt of the foregoing, as soon as reasonably practicable, ARCO
shall prepare standard construction Plans which shall include a site plan,
elevations and sections, ceiling plan, store fixture plan, interior floor finish
and color plan, heating, ventilation and air conditioning plan, sales and wall
counter plans, corner identification sign plan and applicable notes and details
for the foregoing. It shall be necessary for Operator to obtain an electrical
plan, which addresses the specific site requirements, from a local electrical
engineer or contractor or architectural firm prior to applying for applicable
permits. ARCO shall provide Operator with 3 sets of blueline and 1 set of
reproducible prints of preliminary and final construction documents for
Operator's use: additional copies of sets or parts of sets must be acquired by
Operator at Operator's expense from any vendor of Operator's choosing.
It may be necessary for Operator to have the Plans modified in order to
meet local building codes and other requirements; ARCO does not represent that
the Plans shall be sufficient to meet such local requirements. All
modifications to meet local building codes and other requirements and other
changes not resulting from local requirements but requested by Operator, must be
approved in advance by ARCO. All changes, if any, not mandated by governmental
authority but requested by Operator must be submitted simultaneously as one
consolidated guest for modification of the preliminary plans. If modifications
are mandated by governmental authority, copy of the specific instructions to
change the plans must be submitted along with the request for change. ARCO is
willing, within the limitations set forth below, to make the approved
modifications, or Operator may, at Operator's expense have an architectural or
engineering firm
6 of 33
of Operator's chasing make the approved modifications. If Operator elects to
have ARCO make the approved modifications, ARCO is willing to do so provided the
total cost of all plans incurred by ARCO in rendering this service to Operator,
including the cost of the 3 sets of blueline and 1 set of reproducible prints of
the preliminary plans and the final plans, does not exceed 520,000, and provided
further that any costs in excess of $20,000 be at Operator's expense and be paid
in advance before such excess costs are incurred. ARCO will seal final plans
developed by ARCO and provide 3 sets of blueline and 1 set of reproducible
prints.
(c) Within 60 days after receipt of the standard Plans, Operator shall
apply for all licenses, permits, variances and other required governmental
approvals (collectively "permits") necessary for such construction or conversion
and Operator shall undertake construction or conversion at the earliest possible
date. Operator shall construct or convert the Store, as the case may be, in
accordance with the Plans and shall not make alterations or changes to the
Store, except with the prior written consent of ARCO, during the term hereof.
(d) Operator shall obtain a license to sell beer and wine if available
in the jurisdiction in which the Store is located. The beer and wine license
must be obtained before ARCO installs or arranges to have installed illuminated
fascia up to ARCO's specifications shown on the Plans, the exterior am/pm sign,
sign pole and interior signage which consists of photo panels, product area
identifiers, striping, fast food menu board and other miscellaneous decals, and
a cigarette overhead merchandiser, if such licenses are available at the time in
the jurisdiction in which Operator's store is located. If a beer and wine
license is not available until construction is completed or the Store is opened
for business, ARCO shall proceed with the necessary work but Operator shall
nevertheless be required to pursue diligently efforts to obtain a beer and wine
license at the earliest possible date in which case the obtaining of a beer and
wine license as a condition to events contemplated in this Article 5, however,
shall be waived and not obtaining a license shall not serve as a ground for
termination by ARCO prior to the opening of the Store as provided in
subparagraph (f) below.
(e) In the event Operator is not able to obtain permits required for
construction or conversion or a beer and wine license (if available), Operator
may terminate this Agreement before the commencement date only.
(f) In the event Operator does not obtain the necessary permits for
construction or conversion within 12 months from receipt of the plans or does
not complete such construction or conversion, obtain a license to sell beer and
wine (if available prior to the Commencement Date) and satisfactorily complete
the initial training described in Article 16 within 24 months after receipt of
the Plans from ARCO including the installation of all equipment indicated in the
listing entitled "Store Equipment" in PART I, ARCO may terminate this Agreement.
(g) In the event of such termination by Operator or in the event the
failure of Operator to obtain permits for and complete construction or
conversion within the prescribed time or to obtain a license to sell beer and
wine was for reasons not within Operator's control. ARCO shall return the
initial fee and any other funds paid to ARCO by Operator pursuant to or in
contemplation of entering into this Agreement, less ARCO's expenses incurred in
preparing the Plans, site evaluation and training. In the event Operator fails
to obtain permits for and complete construction or conversion or fails to obtain
a license to sell beer and wise within the time period specified under "(f)"
above for any other reason, ARCO shall return, unless ARCO's expenses exceed
one-half of the initial fee, one-half of the initial fee. If ARCO's expenses
exceed one-half of the initial foe, the initial fee shall not be refunded in
whole or in part upon termination, Operator shall return Plans to ARCO.
5.03 As soon as reasonably practicable after Operator has completed
construction or conversion, obtained a beer and wine license (if available) and
satisfactorily completed the initial training, ARCO shall install or arrange to
have installed exterior illuminated building fascia up to ARCO's specifications
shown on
7 of 33
the Plans, and the exterior am/pm sign, sign pole and interior signage which
consists of photo panels, product area identifiers, striping, fast food menu
board and other miscellaneous decals, and a cigarette overhead merchandiser. If
Operator is not the sole and exclusive owner of the Premises, as a condition to
ARCO performing its obligations set forth in the preceding sentence, Operator
shall submit, in form satisfactory to ARCO, a consent of all owners of the
Premises to the modification of the Premises, and a waiver in recordable form,
of all claims of the owner, and any party claiming through or under the owner,
including any mortgagees, to any improvements installed by ARCO on the Premises
and consent to removal by ARCO of such improvements upon termination of the
am/pm franchise. After ARCO installs or arranges to have installed exterior
illuminated building fascia, the exterior am/pm sign, sign pole and interior
signage which consists of photo panels, product area identifiers, striping, fast
food menu board and other miscellaneous decals, and a cigarette overhead
merchandiser, and provides the additional items referred to in the second
sentence of this Section 5.03, ARCO shall issue the Notice of Final Inspection
and Readiness. If Operator fails to open the Store for business on the
Commencement Date as established by the aforementioned Notice of Final
Inspection and Readiness, in addition to any other remedies herein provided, at
its option, ARCO shall have the right to collect, as liquidated damages and not
as penalty, in addition to the minimum royalty fee, one thirtieth of the minimum
royalty fee per day for each calendar day Operator fails to open the Store for
business in accordance with the terms and provisions of this Agreement. In
addition, if Operator fails to open the Store for business within thirty (30)
days after the Commencement Date, ARCO may terminate this Agreement.
5.04 Upon expiration of the term of this Agreement if this Agreement is
the initial Store Agreement for the Premises, Operator shall have the right to
be offered a subsequent franchise Agreement for the Premises which right can be
exercised by payment of the then-current initial fee or other fees which may
then be payable and by execution of a new franchise agreement and collateral
agreements on the terms and conditions then existing, which may differ
materially from those presently existing, provided that:
(a) Operator gives ARCO written notice of its election to be offered a
subsequent franchise agreement not less than six months prior to the
expiration of the term of the initial Store Agreement ("notice of
election"); and
(b) Operator, at the time of the notice of election and at the end of
the term of the initial Store Agreement is not in default of any of
the terms or conditions of such Store Agreement or any other
agreement between Operator and ARCO and has substantially complied
with the terms and conditions of all such agreements during the term
of such Store Agreement [including, but not limited to, attendance
at and successful completion of ARCO's am/pm Refresher Training
program within the 3-month period preceding the last month of
Operator's current term]; and
(c) All of the Operator's accrued monetary obligations to ARCO have been
satisfied and timely met throughout the term of the initial Store
Agreement; and
(d) Operator is in compliance with the standards set forth in the
Systems Manual and has made or has provided for, to ARCO's
reasonable satisfaction, such renovation and modernization of
Operator's Premises as ARCO may reasonably require, including,
without limitation, signs, equipment, furnishings, and decor so as
to reflect the then-current image required for new am/pm mini
markets; and
(e) ARCO has not exercised its right to withdraw from marketing and to
no longer maintain the am/pm mini market franchise in the relevant
geographic area in which the Premises are located.
8 of 33
ARTICLE 6
Premises 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 forth in PART I hereof
which must have prior approval from ARCO ("Premises") during the term hereof and
may not be relocated to another site.
6.02 Operator is required to have installed on the Premises the equipment
shown on the list entitled "Store Equipment" attached to PART I ("Store
Equipment"). ARCO hereby agrees to loan and install or arrange to have
installed exterior illuminated fascia up to ARCO's specifications shown on the
Plans, the exterior am/pm sign, sign pole and interior signage which consists of
photo panels, product area identifiers, striping, fast food menu board and other
miscellaneous decals ("Loaned Store Equipment"), and a cigarette overhead
merchandiser. Operator agrees to install the Store Equipment on or before the
Commencement Date. All Store Equipment must meet ARCO's specifications,
including but not limited to specifications with respect to size, color and
quality. Operator may not install additional equipment, fixtures or machines
without the prior written consent of ARCO. Operator shall maintain all
equipment, including required and optional equipment, ready for use and in
operable condition and shall use or permit the equipment to be used only for its
intended use and only in a manner consistent with the manufacturer's
instructions, and Operator shall utilize the equipment and exert Operator's best
efforts to promote the retail sale of items or services for which the equipment
is designed. In the event that ARCO agrees to lease to Operator and Operator
agrees to lease from ARCO additional equipment during the term of this
Agreement, the list entitled "Store Equipment" attached to PART I shall be
revised accordingly by means of an amendment to this Agreement executed by both
parties hereto. Operator agrees not to remove any of the Store Equipment from
Store without the prior written consent of ARCO except in the event replacement
of the equipment is necessitated by malfunction, in which case Operator may
replace the equipment with equipment meeting the same specifications with
respect to size, color and quality as the equipment replaced. Operator shall
notify ARCO of any such replacement. Title to the Loaned Store Equipment shall
remain in ARCO at all times during the term hereof and Operator shall not suffer
or permit any levy, attachment or execution by Operator's creditors, including
taxing authorities, or by any person or entity having any interest in the
Premises to remain on such Loaned Store Equipment. ARCO reserves the right to
add or delete Equipment during the term of the Agreement and Operator will
install or remove such Equipment within 90 days after written notice from ARCO.
6.03 Operator shall not operate other business within the am/pm mini
market or the building housing the am/pm mini market without the prior consent
of ARCO.
ARTICLE 7
Fees
7.01 (a) Operator shall pay ARCO an initial franchise fee in the
amount set forth in PART I upon the signing of this Agreement
by Operator.
(b) The initial fee is not refundable in whole or in part except
in the following circumstances:
(1) If this Agreement is for Premises at which construction
of or conversion to an am/pm mini market is contemplated,
after Operator executes the Agreement, ARCO shall have up to
90 days to execute the Agreement ARCO shall not be obligated
under the Agreement until it is executed by ARCO. If ARCO
has made changes to the am/pm franchise between the time the
offering circular was given to
9 of 33
Operator and the time before the offering circular expires by
its own term and Operator has not yet executed the Agreement,
ARCO shall give Operator a new offering circular and a new
Agreement and related agreements reflecting any such changes
and Operator may elect to execute either the agreements
originally given to Operator or those reflecting the changes.
Operator may notify ARCO that Operator does not want an am/pm
franchise and wishes to revoke the Agreement at any time
before Operator is notified that ARCO has executed it. If
Operator does revoke before Operator is notified that ARCO
has executed the Agreement, ARCO shall return any initial fee
paid by Operator, less ARCO's costs incurred for site
selection and study and preparation of engineering and other
plans for the Premises and any other costs incurred by ARCO
in contemplation of Operator operating an am/pm mini market.
If ARCO elects not to execute the Agreement, ARCO shall
return, in full, any initial fee paid by Operator.
(2) In the event ARCO determines, in its sole opinion, that
Operator did not satisfactorily participate in or complete
ARCO's initial training program, ARCO may terminate the
Agreement and return the initial fee paid by Operator, less
ARCO's costs incurred for site selection and study and
preparation of engineering and other plans for the Premises,
if any, training and any other costs incurred by ARCO in
contemplation of Operator operating an am/pm mini market.
(3) In the event the Premises require construction or
modification to make them suitable for an am/pm mini market,
any initial fee paid by Operator less ARCO's costs incurred
for site selection and study and preparation of standard
engineering and other plans and training Operator shall be
returned to Operator if: (i) Operator terminates the
Agreement because Operator is unable to obtain all necessary
construction permits and, under certain conditions, a beer
and wine license; or (ii) ARCO terminates the Agreement
because of Operator's failure to obtain permits within 12
months from the receipt of final plans and/or complete
construction or conversion of the Premises to suitable am/pm
mini market facilities within 24 months from the receipt of
final plans, for reasons not within Operator's control or
Operator's failure to obtain a beer and wine license, if
available in the jurisdiction in which Operator's am/pm mini
market is located. Except if ARCO's expenses exceed one-half
of the initial fee, in which case ARCO shall deduct its
expenses as set forth in the first sentence of this
subsection (3), one-half of the initial fee shall be returned
to Operator if ARCO terminates the Agreement because of
Operator's failure to obtain permits for and/or complete
construction or conversion within the prescribed time for any
other reason.
(4) The initial fee shall be prorated on a monthly basis
over the term of the Agreement and shall be refundable or
payable on such prorated basis if ARCO terminates the
Agreement for the following reasons:
(i) Operator's death;
(ii) Operator's physical or mental incapacitation,
for more than 90 consecutive days, which renders
Operator unable to provide for the continued
proper operation of the am/pm mini market;
(iii) Condemnation or the taking, in whole or in part;
of the Premises pursuant to the power of eminent
domain;
10 of 33
(iv) Destruction of all or a substantial part of the
Premises through no fault of the Operator, or,
(v) A determination made by ARCO in good faith and
in the normal course of business to withdraw
from and to no longer maintain the marketing of
Motor Fuels through retail outlets or the am/pm
mini market franchise in the relevant geographic
market area in which Operator's am/pm mini
market is located.
In the event Operator's initial fee is returned in
whole or in part for any of the foregoing reasons, no
interest shall be paid on the amount returned.
ARCO's policy with respect to the payment of the initial
franchise fee for any term of the franchise offered in the future
may differ from that set forth above and, accordingly, schedules of
payments and due dates of payments shall be in accordance with
ARCO's then current policy.
(c) If this Agreement is for Operator's subsequent term of the
Franchise at the Premises, one-half of the renewal fee is payable at
the time Operator executes this Agreement and the other half is
payable on the commencement date.
ARCO's policy with respect to schedules of payments and due dates of
payments on account of the renewal fee for any term of the franchise offered in
the future may differ from those set forth above and, accordingly, schedules of
payments and due dates of payments shall be in accordance with ARCO's then
current policy.
7.02 (a) Unless otherwise agreed to in writing by the parties,
Operator shall pay ARCO, as a monthly royalty fee, six percent (6%) of the
monthly gross sales, as that term is hereinafter defined, but not less than the
minimum royalty fee set forth in PART I; provided, however, that if Operator
operates a Store that is accessible to pedestrian traffic only, unless otherwise
agreed to in writing by the parties, commencing on the Commencement Date,
Operator shall pay ARCO, as a monthly royalty fee, five percent (5%) of the
monthly gross sales, but not less than the minimum royalty fee set forth in PART
I. Notwithstanding the foregoing, unless otherwise agreed to in writing by the
parties, in the event Operator operates the Store twenty-four (24) hours of
every day in any given calendar month, the monthly royalty fee for such a month
shall be five percent (5%) of the monthly gross sales, but not less than the
minimum monthly royalty fee set forth in PART I.
The minimum monthly royalty fee is payable on the Commencement Date
and thereafter in advance on or before the first day of each calendar month
during the term 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.
ARCO shall have the right to increase the amount of the royalty fee
at any time by up to one percent (1%) in any one calendar year in accordance
with ARCO's then prevailing royalty fee policy; provided, however, the total
increase during the term of this Agreement shall not be more than two percent
(2%). ARCO shall notify Operator not less than 90 days in advance of any such
change in royalty fee.
(b) As used herein the term "gross sales" shall mean the total
amount of the sales of Operator and any inventory variation calculated as
described below.
11 of 33
(1) Gross sales shall be valued in United States currency,
whether received in that form or otherwise, without deduction on account
of any of the following:
(i) the cost of the goods sold, including taxes paid by
Operator in procuring goods for resale;
(ii) the cost of material used, labor or service cost,
interest paid, or any other expense; or
(iii) cost of transportation of the goods.
(2) Gross sales includes all cash, credits, property or other
consideration received for:
(i) all sales of merchandise made from or in the Store
or in the immediate vicinity of the store, such as a cart or
sidewalk sale;
(ii) all compensation received for services performed
from or in the Store including but not limited to, commissions and
referral, commissions on lottery and lotto tickets (including all
payments by state agencies for the sale of tickets and for the
redeeming of winning tickets), handling and placement fees and fees
for placement of coin operated and other machines; and
(iii) all rentals of equipment or merchandise.
(3) The inventory variation shall be determined each time a
physical inventory is taken of merchandise currently held for sale in the
Store: as required in Section 15.03 (b). The inventory variation is
defined as either the inventory gain (physical inventory value is greater
than book inventory) or the inventory loss (book inventory value is
greater than physical inventory). The inventory variation subject to
gross sales calculation for royalty reporting is the inventory variation
in excess of the allowable variation. Detailed calculations for
variations and allowable variations are further described in the Store
Systems Manual.
(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 property returned by customer when the
full sale price is refunded 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 this paragraph, refund or credit of the entire
amount shall be deemed to be given when the purchase price less
rehandling and restocking costs, is refunded or credited to the
customer;
(iv) the amount of any tax imposed by the United States
or any city, county, state, or other governmental entity or agency
or instrumentality thereof upon or with respect to retail sales of
tangible personal property measured by a stated
12 of 33
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 constructed or converted am/pm mini
markets only, store sales made during the first 7 days of the term
of the franchise, i.e., during the period comprised of the
Commencement Date as established by the "Notice of Final Inspection
and Readiness" and the next succeeding 6 days of initial operation.
(vi) store sales made during an eligible Grand Opening
Event for a new store, or for an existing store, following
completion of ARCO-approved remodeling or rebuilding. An eligible
Grand Opening Event, which event is not to exceed seven consecutive
days, is more fully described in Article 14.02 hereof.
Any monthly royalty fee due in excess of the minimum monthly royalty fee
shall be payable on or before the tenth (10th) day of 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 forms
and procedures set forth in the Systems Manual.
7.03 Operator shall pay to ARCO a security deposit in the amount set
forth in PART I on or before the Commencement Date of this Agreement. If
Operator shall be in default at any time in the performance of any of the terms
and conditions of this Agreement, ARCO, at its option, shall have the right, in
addition to any other remedy, it may possess either at law or at equity or under
the terms of this Agreement, to correct said default and deduct any cost or
expense in connection therewith from said security deposit. Immediately upon
application of all or part of said security deposit toward any such cost or
expense, Operator shall pay to ARCO an amount equal to that portion of the
security deposit so applied so as to restore the security deposit to the amount
stated above. Except as provided herein, the security deposit, less any
depletion because of default by Operator or deduction for accidental or
malicious physical damage to the Loaned Store Equipment repaired by ARCO, shall
be refunded to Operator without interest upon termination of this Agreement.
7.04 Unless otherwise agreed to in writing by the parties, commencing on
the Commencement Date, Operator shall pay an advertising and promotion fee for
each month equal to 4.5% of Operator's gross sales. ("Gross Sales" is defined
in Section 7.02 above.) At any time during the term hereof, on thirty (30)
days' prior written notice to Operator, ARCO may increase or decrease the
advertising and promotion fee, but the total advertising and promotion fee may
not be increased to more than five and one-half percent (5.5%) at any time
during the term of this Agreement and ARCO may not increase the fee by more than
one percent (1%) in any calendar year. The advertising and promotion fee is
payable on or before the tenth (10th) day of the calendar 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 ARCO pursuant to this
Article and any other provisions of this Agreement shall be paid when due by
Operator to ARCO, at ARCO's option to ARCO's address set forth in the Systems
Manual or ARCO's representative, by U.S. Postal money order, other money order
approved by ARCO, business check, cashier's check, wire transfer or electronic
funds transfer initiated by ARCO, whichever ARCO directs and which may change
from time to time at ARCO's sole discretion. Operator's financial institution
through which payment by electronic funds transfer initiated by ARCO is made
must be a member of NACHA (The National Automated Clearing House Association).
If any Agreement between Operator and ARCO requires or permits payment by check,
all checks shall be made payable to "ARCO" or "Atlantic Richfield Company," and
to no other person, film, or entity. If such Agreement requires or permits
payment by wire transfer, all such payments shall be made to "ARCO Products
Company, x/x
00 xx 00
Xxxxxxxx XX. For Credit to APC National Credit #4051-4874, Xxx Xxxx, Xxx Xxxx
00000," and to no other bank or account number unless so advised in writing by
the Credit Manager, ARCO Products Company. If such Agreement requires or permits
payment by automated clearing house ("ACH"), all such payments shall be made to
"ARCO Products Company, c/o Citibank Delaware, For Credit to APC National
Credit-ACH #3815-2114, Xxx Xxxxxx, Xxxxxxxx 00000," and to no other bank or
account number unless so advised in writing by the Credit Manager, ARCO Products
Company. If such Agreement requires or permits payment by electronic funds
transfer ("EFT"), all such payments shall be made in strict accord with
procedures established and promulgated by the ARCO Products Company credit
department. Operator agrees to indemnify ARCO for any loss or expense caused by
Operator's failure to comply with this Paragraph. Payment shall be deemed made
when, and only when, its receipt has been verified by ARCO. Receipt by ARCO of
any monies due ARCO after notice of termination or nonrenewal does not
constitute a waiver by ARCO of such notice of termination or nonrenewal.
ARTICLE 8
Licenses, Permits, Taxes and Compliance with Laws
8.01 Operator agrees to obtain, post as required, and maintain, at its
expense, all permits and licenses necessary for the operation of the Store and
Store Equipment including, without limiting the foregoing, all permits and
licenses required for selling beer and wine, if available pursuant to applicable
laws and regulations, and for signs used or installed by Operator; Operator
agrees to pay promptly when due and to hold ARCO harmless from all ad valorem
taxes assessed upon the Premises and all fees, and sales, use, rental, gross
receipts, inventory, excise, income, business and occupation and any other taxes
(including interest, penalties and additions to tax) imposed by any federal,
state or local governmental authority upon Operator or ARCO (except those taxes
based upon or measured by the net income of ARCO) in connection with the
operation of the Store or in connection with any payments made pursuant to this
Agreement. Operator agrees to pay promptly when due and to hold ARCO harmless
from any taxes (including interest, penalties and additions to tax) imposed upon
any property of Operator located at or used in connection with the operation of
the Store. Operator agrees to pay promptly when due and to hold ARCO harmless
from all sales or use taxes and other similar taxes (including interest,
penalties and additions to tax) imposed upon or with respect to charges for the
use of any loaned property. Operator further agrees not to do any act which may
result in the suspension or revocation of any permit or license required for the
operation of the Store. Operator shall furnish to ARCO, promptly upon request,
any documentation, which in ARCO's sole discretion is required to evidence the
payment of any tax, including but not limited to, official receipts of the
appropriate taxing authorities, copies of tax returns and cancelled checks.
8.02 Operator shall at all times operate the Store and Premises in strict
accordance with all applicable federal, state and local laws, ordinances, rules,
regulations and lawful directives or orders of public officials administering
such laws. Operator agrees to immediately notify ARCO, in writing, of any
citations, notices of violation or other communications alleging violations of
federal, state or local laws, ordinances, rules, regulations, directives or
orders, affecting the operation of the Store and Premises.
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
Utilities
14 of 33
9.01 Operator shall be solely responsible for all costs of and taxes
and assessments on utilities used at or provided to the Store.
ARTICLE 10
Appearance, Housekeeping, Maintenance and Right of Entry
10.01 Operator shall comply with the housekeeping and maintenance
provisions set forth in the Systems Manual and shall maintain the Premises,
Store and Store Equipment in a clean, orderly, safe, sanitary and operable
condition.
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, including but not limited to Loaned Store
Equipment. Replacement equipment must meet ARCO's then-current specifications.
Operator shall immediately report to ARCO each incidence of accidental or
malicious physical damage to Loaned Store Equipment and shall provide ARCO with
the names, addresses, driver's license and insurance policy information of the
person(s) causing such damage. As used herein, accidental and malicious
physical damage shall exclude damages by the elements and acts of God. ARCO
shall make all necessary repairs and replacements to the Loaned Store Equipment
resulting from each such incidence of accidental or malicious physical damage
and deduct all costs so incurred from Operator's security deposit and shall
pursue collection from the person(s) reported by Operator to ARCO as having
caused such damages. Immediately upon such deduction of costs so incurred,
Operator shall pay to ARCO an amount equal to that portion of the security
deposit so deducted so as to restore said security deposit to the amount set
forth in PART I. Operator agrees to execute and deliver any instruments and
papers and do whatever else is necessary or required in order for ARCO to pursue
such collection efforts on behalf of Operator for the amount deducted from
Operator's security deposit. If ARCO's collection efforts result in repayment
for all costs incurred by ARCO in making all necessary repairs and replacements
for such an incidence and in collecting such repayment, ARCO shall reimburse
Operator for the amount deducted from Operator's security deposit. If ARCO's
collection efforts result in partial repayment for all such costs incurred, ARCO
shall reimburse Operator only to the extent that the amount collected and the
amount deducted from Operator's security deposit taken together exceed the total
amount of cost of collection and of repair and replacement incurred by ARCO.
Operator shall return all Loaned Store Equipment to ARCO at the termination or
expiration of this Agreement in the same condition which existed at the time the
Loaned Store Equipment was delivered to Operator, subject to normal wear and
tear.
Notwithstanding the foregoing, in the event of destruction of the Premises
to the extent that the normal authorized uses are no longer practicable, either
party may terminate this Agreement within 120 days of such destruction by giving
the other party written notice. The effective date of such termination shall
relate back to the date of destruction.
Accidents occurring at the Premises resulting in personal injury are to be
reported in writing immediately to ARCO; such reports shall include names and
addresses of people involved, names of insurance companies involved, or
potentially involved, and details of the accident.
10.03 Operator shall allow ARCO the right of entry at all reasonable
times and the right to remain on the Premises for examination and inspection of
the Premises, Store, Store Equipment, Operator's books, records and reports and
for any and all other purposes contemplated by any other provisions of this
Agreement. ARCO shall have the right upon at least one (1) day's oral notice to
enter upon the Premises in order to maintain, repair or replace the Loaned Store
Equipment in the event Operator fails to maintain, repair or replace such
equipment as required by Section 10.02 above and in order to change, alter or
modify its service marks, service names and other similar indicia. ARCO may
charge Operator ARCO's reasonable cost
15 of 33
incurred in performing such maintenance and repair and the full replacement
cost, without discount or adjustment for any difference between the remaining
term of the franchise and the useful life of the equipment
10.04 ARCO shall not be liable to Operator for injury to or sickness or
death of Operator or any other person or persons or for the damage to Operator's
property or property of others caused by any fire, breakage, failure of or other
casualty occurring to refrigeration equipment, or leakage in any portion of the
Store, or from water, rain or snow that may leak into, issue or flow from any
part of the Store, or from drains, pipes or plumbing work in the Store, whether
such injury or damage is caused by the failure of ARCO to make repairs or
otherwise.
10.05 Except for the time routinely necessary for patrons of the
authorized businesses, conducted by Operator on the Premises to conclude
purchase transactions in a prompt and efficient manner, Operator agrees not to
permit any person(s), including children, teenagers and off-duty employees of
Operator, to loiter, i.e. spend time idly or otherwise linger in an aimless way,
on or about the Premises.
10.06 Operator shall continuously operate the required Video
Surveillance equipment for its intended purpose consistent with the
manufacturer's instructions and ARCO's specifications and maintain at all times
the equipment, including all of its components, in good working order.
ARTICLE 11
Indemnity and Insurance
11.01 Operator agrees to indemnify, hold harmless and defend ARCO from
and against all claims, losses and damages for personal injury or death (whether
to third persons, employees of Operator, contractors or agents of Operator), or
damage to property, occurring on the Premises, or arising out of Operator's use
or occupancy of the Premises, or arising out of Operator's use, custody or
operation of the Store, Store Equipment, Loaned Store Equipment, or any other
equipment on the Premises excepting any damage or loss caused solely by the
negligence of ARCO or solely by ARCO's failure to perform its obligations
hereunder.
11.02 During the period this Agreement is in effect, Operator further
covenants and agrees that Operator shall procure and maintain, at its expense,
in full force and effect with a financially responsible insurance company, (1)
Workers' Compensation Insurance, including Occupational Disease in accordance
with the laws of the State in which the franchise is located, and Employers'
Liability Insurance with limits of not less than $100,000 per person and
$100,000 per accident; and (2) General Liability Insurance with contractual
liability, insuring the indemnity provision set forth in this Agreement, with
products-completed operations coverage [with liquor law liability if Operator
sells or dispenses alcoholic beverages] with limits of not less than $1,000,000
applicable to personal injury, sickness or death in any one occurrence and
$200,000 for loss of or damage to property in any one or a combined single limit
of not less than $1,000,000 in any one occurrence; Operator shall name ARCO as
an additional named insured under Operator's General Liability Insurance Police.
The General Liability Policy shall contain a contractual liability endorsement
insuring Operator's obligation to indemnify ARCO pursuant to Section 11.01.
Operator shall furnish ARCO, at its address shows herein, certificates of
insurance evidencing the above-required insurances, and providing that
Operator's contractual liability to ARCO as set forth in Section 11.01 above is
covered by such policy or policies and that no such policy or policies may be
cancelled or changed materially without at least thirty (30) days' prior written
notice to ARCO. ARCO reserves the right, from time to time, to revise the above
stated amounts of insurance required to be maintained by Operator.
ARTICLE 12
16 of 33
Promotions, Signs and Uniforms
12.01 Operator agrees to display signs and other promotional material
solely in a manner as prescribed or authorized by ARCO. The color, size, design
and location of said signs shall be as specified by ARCO. Operator shall not
place additional signs or posters in, on or about the Store and Premises without
prior written consent of ARCO.
12.02 In executing this Agreement, Operator assigns to ARCO Operator's
rights to directly receive marketing, advertising, promotional, volume and
retail display and placement allowances offered by any manufacturers or
suppliers of products to Operator, excluding volume discounts given off invoice
by any manufacturer or supplier and payment for magazine rack placement. Using
funds collected from Operator pursuant to Section 7.04 and from other am/pm
Operators and using funds collected as promotional and other allowances, ARCO
shall arrange or provide advertising and promotion which may, in ARCO's sole
discretion, include local or regional advertising placed by ARCO, advertising
copy and designs for use of Operator, display or other allowances to Operators,
handbills, flyers, brochures, signs, point of purchase, billboards, high rise
signs, other materials and marketing research. ARCO's obligation to provide the
foregoing shall be limited in cost to the amount of the advertising and
promotion fee paid by Operator and funds collected as promotional and other
allowances. The entire amount of the advertising and promotion fee paid by
Operator and of promotional and other allowances shall be used by ARCO for the
expense of advertising and promotion at such times and in such manner as ARCO
solely determines. All promotion and advertising of the am/pm trademarks and
service marks, wherever located and in whatever form, shall be deemed to benefit
Operator. ARCO shall make no accounting to Operator of the expenditure of
advertising and promotion fees or promotional and other allowances. ARCO may
condition Operator's eligibility for and receipt of promotional, display and
other allowances on Operator's observance of maximum retail selling prices
determined by ARCO or maximum gross profit margins determined by ARCO or a
reduction in Franchisee's retail selling price commensurate with the amount of
the allowance.
12.03 Operator and Operator's employees shall be attired in clean, neat
uniforms, meeting ARCO's minimum required specifications at all times while
working in the Store, as set forth in the Systems Manual and the Ancillary
Equipment Specifications Manual. Operator, Operator's transferee and Operator's
successor-in-interest must order the initial supply of 20 uniforms while
attending ARCO's training program at ARCO's training center. In the case of
Concurrent Operations, Operator's employees assigned to perform duties
associated with the operation of a particular franchise are required to be
attired in the uniform of that franchise.
12.04 Operator shall acquire items specified by ARCO as part of the
Merchandising Accessories Items Required. ARCO shall give to Operator a list of
the specified items prior to Operator's execution of this Agreement. Operator
may purchase the items from any licensed supplier, so long as they meet ARCO's
specifications, which ARCO shall provide to Operator upon request. Operator,
shall maintain all merchandising accessories items required in a clean, workable
and presentable condition throughout the term of the franchise. Operator shall
sell products bearing ARCO's marks, including fountain drinks, frozen desserts,
hot chocolate, coffee, hot prepared foods, milkshakes, etc., in standardized
containers bearing ARCO's marks and Operator shall use only self serve napkins
and carry-out food trays bearing ARCO's marks at the Store. Such containers,
napkins and carry-out food trays may be purchased from any responsible vendor
licensed by ARCO and shall meet ARCO's specifications as to type, quality, and
style and shall bear the am/pm marks. ARCO shall, upon written request by
Operator or a vendor, license any responsible vendor upon a showing that the
specifications shall be met and that the terms of license are satisfactory.
ARTICLE 13
Inventory, Working Capital and Required Foods and Beverages
17 of 33
13.01 Operator shall at all times maintain merchandise inventory of a
type, quality, quantity and variety as provided in the Systems Manual. ARCO
reserves the right to disapprove certain products and/or services in the event
that, in ARCO's sole discretion, such products and/or services reflect
unfavorably on the am/pm image.
13.02 Operator shall at all times maintain working capital in an amount
sufficient for the payment of current operating expenses as provided for in the
Systems Manual.
13.03 Operator shall be required to continuously offer for sale a
reasonable inventory of certain prepared foods, frozen desserts and beverages in
quantities sufficient to meet customer demand. The items specified by ARCO are
set forth in the Section entitled "Required Foods and Beverages" of the Chapter
entitled "Food Specifications" of the am/pm Store Systems Manual.
ARTICLE 14
Merchandising Services
14.01 From time to time, ARCO shall provide Operator with a list of
merchandise vendors suggested by ARCO, a list of merchandise items recommended
by ARCO for purchase by Operator, and merchandising recommendations. A
suggested electronic file or the product file will also be available for the
operation of the Point of Sale scannable register(s).
14.02 ARCO shall reimburse Operator for one-half of Operator's
expenditures, if any, but not more than two thousand dollars ($2,000)
reimbursement, for eligible grand opening advertising which may include any of
the following types of media selected by Operator, handbills and flyers,
including the cost of preparation, printing and distribution thereof direct mail
advertisements, including mailing lists and postage; local newspaper
advertisements; special promotional equipment; give away items; special services
such as clowns; and radio advertising. All handbills, flyers, direct mail
advertisements, newspaper advertisements and radio advertising must use ARCO's
approved formats, which shall be supplied to Operator. To be eligible for
reimbursement, such grand opening advertising, which event is not to exceed
seven consecutive days, must be conducted following completion of original
construction of the Store between the seventh (7th) and the ninetieth (90th)
days after the Commencement Date or within ninety days following completion of
ARCO approved remodeling or rebuilding of an existing store. Requests for
reimbursement must be submitted by Operator to ARCO within 90 days following the
conclusion of the grand opening event.
14.03 Operator is free to set its own prices for products and services
provided, however, that ARCO reserves the right to set a maximum retail selling
price on products and services and Operator agrees to sell such products and
services for no more than the maximum retail selling price determined by ARCO.
ARTICLE 15
Books, Records, Reports, Fee Verification, Reviews and Audits
15.01 For the purposes of ascertaining the amount of the fees due and
payable by Operator pursuant to this Agreement, Operator shall maintain true and
accurate business records, reports, accounts, books and data (collectively
referred to herein as "business records") pertaining to the operation of the
Store, as more fully described in the Systems Manual. Except for records which
Operator may be required to retain and maintain on the Premises at all times
pursuant to governmental requirements or other provisions of this agreement or
other agreements between ARCO and Operator, upon 24-hour notice from ARCO to
Operator; Operator shall make Operator's complete business records available at
the Store and on the Premises and
18 of 33
shall permit ARCO and its representatives to enter the Premises and the Store to
examine Operator's business records at all reasonable times. In addition, in
executing this Agreement, Operator grants ARCO the right to electronically
collect certain sales data via Operator's point-of-sale ("P.O.S.") system,
including scanning devices, for purposes of verifying fees and analyzing sales,
as more fully described in the am/pm Store Systems Manual.
15.02 The acceptance by ARCO of the monthly royalty fee and advertising
and promotion fee paid by Operator shall be without prejudice to ARCO's right to
examine Operator's business records of its gross receipts and inventories of
food and other merchandise at the Store in order to verify the amount of the
monthly royalty, advertising and promotion fees payable by Operator to ARCO. In
addition, at any reasonable time, upon twenty-four (24) hours' prior written
notice to Operator, ARCO and its representatives may enter the Store and remain
in the Store for the time necessary to perform fee verification reviews or
audits of Operator's business records relating to the Store for the period
covered by any statement required to be issued by Operator. If a reviewer
dispatched by ARCO to Operator's am/pm mini market is tenable to perform a
review or audit due to missing or incomplete business records, Operator shall be
required to pay ARCO its reasonable costs incurred in attempting to perform a
review or audit. Without in any way limiting ARCO's right to review or audit or
the grounds for or frequency of reviews or audits of Operator's business
records, if Operator fails to submit to ARCO the bookkeeping information
required to be submitted in accordance with the am/pm Store Systems Manual, ARCO
shall have the right to review or audit Operator's business records every six
months or more frequently, to verify royalty fee and advertising and promotion
fees due to ARCO and, in such event, regardless of whether or not such reviews)
or audit(s) disclose(s) a deficiency, Operator shall be required to pay ARCO its
reasonable costs in performing such review(s) or audit(s). ARCO may conduct
mystery shops at Operator's location to determine compliance with the terms and
conditions of the franchise; in the event such mystery shops result in a fee
verification review/audit, regardless of whether such review discloses a
deficiency, Operator shall be required to pay ARCO its reasonable costs in
performing the review, including the then-current cost of the mystery shops
(currently $36 each). If a review or audit discloses a liability for royalty,
advertising and promotion fees due to ARCO, Operator shall pay promptly the
amount of the deficiency. If the sales amount from which the deficiency is
derived is two percent (2%) or more in excess of the sales actually reported for
royalty purposes by Operator for such a period, Operator shall promptly pay to
ARCO, as liquidated damages and not as a penalty, the cost of the review or
audit in addition to the amount of the deficiency, plus interest at the highest
legal rate and, in addition, ARCO, at its option, tray terminate this Agreement
upon not less than five (5) days' prior written notice to Operator of ARCO's
election to do so. Prior to giving its written consent to the transfer or
assignment of the Store Agreement, ARCO has the right to review or audit
Operator's business records.
In executing this Agreement, in connection with any fee verification
review or audit of Operator's books and records, Operator authorizes all vendors
of Operator to submit to ARCO copy of any and all invoices evidencing sales of
merchandise to Operator and Operator agrees to execute any authorization for
release of such invoices to ARCO as may be required in order for ARCO to obtain
such invoices. ARCO may also exercise its right to examine invoices direct from
vendors via Operator's release at any time.
In executing this Agreement, in connection with any fee verification
review or audit of Operator's books and records, Operator agrees to provide ARCO
copies of State and Federal tax returns and schedules pertaining to Operator's
am/pm Franchise and to execute any authorization to the tax agencies as may be
necessary for ARCO to obtain such tax returns and schedules directly from the
tax agencies.
In addition, in executing this Agreement, in connection with any fee
verification review or audit of Operator's books and records, Operator
authorizes all banks and other financial institutions of Operator to submit to
ARCO copies of all bank or other financial institution statements and cancelled
chocks reflecting cash accounts of Operator that pertain to Operator's am/pm
franchise and Operator agrees to execute any
19 of 33
authorization for release of statements and cancelled checks to ARCO as may be
requited in order for ARCO to obtain such statements and cancelled checks.
15.03 Operator shall have physical inventories performed and shall
provide reports, statements and data to ARCO as described below and as described
more fully in the Systems Manual.
(a) Operator shall provide periodic reports relating to royalty fee
calculations.
(b) Once every two months (at approximately 60-day intervals),
Operator shall have performed a physical inventory at retail value of
merchandise held for sale in the Store by an independent inventory
service. ARCO reserves the right, upon 15 days' prior written notice to
Operator, to increase or decrease the interval at which physical
inventories must be performed. Unless prior written approval has been
obtained, merchandise off-premises shall not be included in the physical
inventory count. Operator shall submit to ARCO a statement by the service
performing the inventory of the total amount of inventory in the Store.
(c) In order for ARCO to verify fees due and develop merchandising
recommendations for Operator and information for, the benefit of all am/pm
franchises, Operator shall provide to ARCO, or to an accounting service
designated by ARCO, such reports and data as are reasonably requested by
ARCO for such purposes and as are more fully described in the Systems
Manual. Such reports and data shall be in a format as designated by ARCO
and transmitted to ARCO, at ARCO's option, either by diskette or
electronically.
15.04 ARCO shall make available to Operator the am/pm Franchise
Accounting System ("F.A.S."), which Operator is required to use, and other
bookkeeping, accounting and physical inventory services. Such services are more
fully described in the Systems Manual. Except for F.A.S., which Operator is
required to use, Operator may elect not to use the other bookkeeping, accounting
and inventory services offered by ARCO and may obtain, at its expense, any other
bookkeeping, accounting and inventory services for Operator's business as
Operator desires. Operator shall nevertheless be required to provide to ARCO,
or to an accounting service designated by ARCO, the information referred to in
Section 15.03.
15.05 The provisions of Article 15 shall survive termination or
expiration of this Agreement.
ARTICLE 16
Training
16.01 All training courses, program and tests offered by ARCO shall be
given only in the English language and therefore, in order to successfully
complete any such courses, programs and tests, an ability to read, communicate
in and comprehend English is necessary. Passing an English proficiency test is
required.
Unless otherwise indicated, all training programs described herein shall
be conducted at ARCO's facilities in La Palma, California, or, at ARCO's option,
at such other locations as ARCO may establish and may include nighttime hours in
connection with on the job training at an am/pm mini market.
All expenses, including, but not limited to transportation, meals and
lodging, incurred by Operator or employees, of Operator in connection with
attendance of Operator or employee(s) of Operator at any of ARCO's training
programs must be borne by Operator.
20 of 33
The person(s) required to attend and satisfactorily complete the training
programs described below are identified herein as follows:
1. Operator
For purposes of this Article, "Operator" shall mean:
. The sole proprietor, if Operator is a sole proprietor;
. All partners or the Operational Designee as designated by the
partnership in PART I, Section 16.01 (a) of the Store
Agreement, who must also be a partner, if Operator is a
partnership; in the case of limited partnerships, the
Operational Designee must be the general partner, or if more
than one, one of the general partners;
. All by the corporation in PART I, Section 16.01 (a) of the
Store Agreement, who must be an officer or a shareholder, if
Operator is a corporation;
. All members or the Operational Designee as designated by the
limited liability company [("LLC"), in States where allowed]
in PART I, Section 16.01(a) of the Store Agreement, who must
be a manager or member of the LLC, if Operator is a LLC.
The Operational Designee, if one is designated, may, but need
not be the same person designated by the corporation as the
Corporate Designee or by a LLC as the LLC designee in PART I,
Section 17.02 of the Store Agreement (a Corporate Designee
must be an officer or director and own the largest percentage
of shares in the corporation; a LLC Designee must be the
member owning the majority ownership interest in the LLC).
If no Operational Designee is designated, all partners in a
partnership (in the case of a limited partnership, the
general partner, or if more than one, the general partners),
all shareholders in a corporation or all members in an LLC
must successfully complete the training programs.
2. Assignee(s) of Operator
3. Successor(s)-In-Interest to Operator
4. Employee(s) of Operator, under the circumstances described below:
If Operator has more than one am/pm mini market, Operator must have
one employee who has attended and successfully completed an four
week am/pm Store Manager training program and who is employed on a
full time basis at each store.
16.02 Following is a description of ARCO training programs in
connection with the operation of am/pm mini markets:
Initial Franchisee Training Program
Unless Operator, Operator's successor-in-interest, Operator's assignee, or
any employee of Operator required to be trained as Operator, has successfully
completed ARCO's initial franchisee training program, such person(s) must attend
and satisfactorily complete ARCO's current initial franchisee training program
before beginning operation of the store.
Payment of the initial franchise fee (but not the renewal fee) includes
training for two people in the operation of an am/pm mini market.
21 of 33
The initial franchisee training program is currently seven weeks, but may
be increased or decreased at ARCO's election, and may include nighttime hours in
connection with on the job training at an am/pm location.
The initial franchisee training program shall include instruction in
general store management including personnel matters, customer service,
merchandise control, bookkeeping and accounting and other subjects relating to
the general operation of a retail store featuring convenience store service.
Except for Operator's successor(s)-in-interest and Operator's assignee(s),
who are required to pay tuition for the initial franchisee training program at
the then-current rate (currently the tuition for the 7-week program is $15,000),
no tuition shall be charged for the initial training program for Operator, or
for one or two employees eligible for training if they attend before or within
thirty-six (36) months after the Commencement Date of the initial Store
Agreement between Operator and ARCO for the Premises. Attendance by additional
persons shall be subject to tuition payable by Operator at the current rate.
The current tuition is $7,500 per additional person, but that is subject to
increase. Tuition must be paid, at ARCO's then-current rate for initial
training, for more than two persons, regardless of whether such persons in
excess of two are partners, shareholders or eligible employees of Operator. If
the franchise is transferred within thirty-six (36) months, a separate training
fee must be paid by the transferee even if only one person has been trained up
to that time.
If Operator has previously successfully completed initial franchise
training program and, accordingly, Operator is not required to attend and does
not attend the initial franchisee training program, Operator may elect to have
one or two employees attend.
ARCO may terminate this Agreement at any time prior to or on the
completion of Operator's initial training if, in ARCO's sole opinion, Operator
does not participate in or does not complete the training program in a manner
satisfactory to ARCO. In the event of such termination, ARCO shall return the
initial fee or any other funds paid to ARCO by Operator in connection with this
Agreement, less ARCO's expenses incurred in studying the site, preparing
engineering and architectural plans for the premises, training and any other
costs incurred in contemplation of Operator operating an am/pm Store.
am/pm Store Manager Training Program
If Operator has more than one am/pm mini market. Operator must have one
employee for each store who has attended and successfully completed an four week
am/pm Store Manager training program employed on a full time basis at each
store. Such am/pm Store Manager training program must be successfully completed
prior to the opening of such stores.
ARCO offers to train one employee for each such store in the am/pm Store
Manager training program. The tuition fee for the first employee so trained for
each such store shall be $5,000 .
If the Store Manager trained by ARCO is no longer employed at the Store,
Operator must replace such trained Store Manager with another trained Store
Manager within two months of the date such Store Manager is no longer employed
at the Store or the franchise may be terminated. Operator shall be responsible
for payment of tuition for training of any such replacement Store Managers
(currently, tuition for training of any such replacements is $5,000, but that
amount may be increased in the future).
Additional Training Requested by Operator
ARCO may, but is not required to, also provide Operator or Operator's
employees such additional initial training or special instruction requested by
Operator at such time and place and for such duration as
22 of 33
may be mutually convenient, provided, however, that the cost of such additional
instruction, including transportation, food, lodging and reasonable charges for
time and services of ARCO shall be borne by Operator.
Additional Training Required by ARCO
Additional training required by ARCO in connection with changes to
programs or new programs or equipment added during the term of this Agreement,
ARCO may require Operator to attend additional training not to exceed eight (8)
hours per training session. Such required training shall be tuition free except
that if Operator does not attend the training session at the time offered and
reasonably notified by ARCO, Operator may be required to pay a fee not to exceed
$1,000 to attend training.
Employee Training System
ARCO is in the process of developing a replacement system for the Employee
Training System, which replacement system will be required when available. It
is estimated that the replacement system will use CD-Rom technology and will be
utilized with personal computers. The current cost for the training materials
is estimated to be $1,000 but may be subject to change.
ARTICLE 17
Assignment and Transfer
A. ASSIGNMENT AND TRANSFER BY OPERATOR
17.01 Operator may not transfer or assign this Agreement or any of
Operator rights, duties or obligations hereunder and Operator's interest in the
real property and improvements, in whole or in part, without first offering the
same to ARCO. The offer must be in writing and must specify the total purchase
price, including a breakdown of the amount for real property, equipment and
goodwill, with copies of purchase and sale agreements and leases associated with
the real property, improvements and equipment and must also include the name and
address of the proposed buyer. The offer will not have been made until the
foregoing information is received by ARCO. ARCO shall have 30 days from receipt
of the complete written offer to accept the offer by agreeing in writing to pay
the total purchase price minus the amount of the transfer fee payable to ARCO in
the event of an assignment to a third party. If ARCO does not accept the offer
within 30 days, operator may assign to a third party subject to ARCO's prior
written consort. If Operator offers a lower price or more favorable terms which
have the effect of a lower price to the third party, ARCO's right of first
refusal shall be triggered again and Operator must make the offer to ARCO. If
Operator's proposed assignee has not enrolled in the next available training
school within 90 days after making the original offer to ARCO, the request
assignment will be considered abandoned by the Operator. A further request for
assignment will again trigger the right of first refusal. If the assignment has
not been completed within 210 days after making the original offer to ARCO, the
request for assignment will be considered abandoned by the operator. Any
further request for assignment will again trigger the right of first refusal.
All communications between ARCO and Operator with regard to the assignment,
right of first refusal, offers, withdrawals, changes in terms and acceptances
must be in writing. In any event, Operator may not assign this Agreement and
Operator's interest in the real property and improvements without the prior
written consent of ARCO, which consent shall not be unreasonably withheld. In
order to allow ARCO adequate time to process an assignment request, any such
request for ARCO's consent to an assignment received 45 days or less before the
expiration of the Store Agreement shall be considered for a subsequent Store
Agreement between Operator and ARCO, if such subsequent Agreement has been
offered and accepted by the parties, and shall be in compliance with the
provisions of such subsequent Agreement. Prior to giving its written consent,
ARCO has the right to review or audit Operator's business records, including but
not limited to those relating to the value
23 of 33
of inventories at cost, and ARCO shall consider, among other things, the
qualifications, character, apparent ability and creditworthiness of the proposed
transferee and such other factors as ARCO deems appropriate, including but not
limited to the following:
(a) There shall be no existing default in the performance or
observance of any of Operator's obligations hereunder.
(b) Operator shall have settled all outstanding accounts with ARCO.
(c) The proposed transferee must satisfactorily demonstrate to ARCO
that it meets reasonable financial standards which shall not be more
stringent than the standards applicable to new am/pm Operators at the time
of the proposed assignment.
(d) Prior to the assignment, unless previously trained by ARCO
pursuant to ARCO's current 7-week training program for the operation of an
am/pm mini market, the proposed transferee and any employees who must be
trained as described in Article 16, shall attend and satisfactorily
complete ARCO's then-current training program for new am/pm operators.
Tuition shall be payable by the proposed transferee. The training tuition
fee is due and payable by means of a cashier's check before the proposed
transferee begins training school. For prospective transferees, the
training tuition fee, which is payable by the prospective transferee to
ARCO regardless of whether or not the transferor is subject to payment of
a transfer fee, shall be refunded in full in the event ARCO refines its
consent to the transfer prior to the proposed transferee attending ARCO's
training program. In the event that ARCO refuses its consent after the
prospective transferee has started attending ARCO's training program or
the prospective transferee withdraws from the training program, ARCO shall
prorate the refund based on any remainder of training to be completed.
The training tuition fee is not refundable in whole or in part upon
completion of the training program. If the proposed transferee is a sole
proprietor or single shareholder corporation, ARCO shall offer to train
and not charge tuition for one employee of the proposed transferee who
attends the initial training within twelve months after the effective date
of the assignment. ARCO shall not reimburse the proposed transferee for
any expenses incurred in connection with attendance at the training
program of the transferee or the transferee's employee. An initial supply
of 20 uniforms must be ordered by the transferee while attending ARCO's
training program at ARCO's training center. In addition, prior to the
effective date of the transfer and as a condition of ARCO granting its
consent to the transfer. ARCO shall require that the transferor has all
then current "Merchandising Accessories Items Required" on hand in the
Store and in good condition and that any such items that are no longer
clean, workable and presentable or outdated be replaced by items meeting
ARCO's then-current specifications for such items.
(e) The proposed transferee must satisfactorily demonstrate
management, business and educational experience reasonably consistent, in
the opinion of ARCO, with the nature and extent of obligations of the
am/pm franchise. If the proposed transferee operates one or more ARCO
locations, proposed transferee must meet the then-current requirements
applicable to multiple unit operators.
(f) The proposed transferee shall agree to assume, as of the
effective date of the assignment, all of the agreements and Operator's
duties and obligations thereunder relating to the am/pm franchise.
(g) Operator shall agree to unconditionally release Operator's
rights under this Agreement and shall release and discharge ARCO from all
duties and obligations to Operator in connection with this Agreement as of
the effective date of the assignment; whereupon Operator
24 of 33
shall have no further rights, duties or obligations under this Agreement,
except for those obligations that survive the termination of the Store
Agreement.
(h) Operator shall obtain and submit evidence satisfactory to ARCO
of all required approvals of federal, state and local governmental
entities, agencies or instrumentalities thereof or of any third person,
including but not limited to, approval for the transfer of, or issuance of
a new beer and wine license, if available in the jurisdiction in which
Operator's store is located
(i) The proposed transferee must satisfactorily meet the then-
current criteria established by ARCO for new am/pm Operators including,
but not limited to, passing an English proficiency test, being at least 21
years of age and proof of U.S. citizenship or permanent resident alien
status (green card).
(j) Operator shall pay a transfer fee of $20,000 as follows: The
first $1,000 of the fee is payable by Operator at the time Operator
requests ARCO's consent to an assignment of the franchise and the
remainder must be paid before ARCO's final consent is given. In the case
of Concurrent Operations, the transfer fee shall be the combined amount of
the transfer, fee applicable to each franchise at the Premises. Such
transfer fee is payable as follows: $1,000 at the time Operator requests
ARCO's consent to an assignment of the franchise and (a) where the
proposed transferee's transfer price for the businesses shall be deposited
in escrow, Operator may, in accordance with ARCO's policies in this
regard, direct payment from such escrow of the remaining portion of the
applicable transfer fee to ARCO which must be paid before ARCO's final
consent to the assignment is given or (b) where the proposed transferee's
transfer price for the businesses shall not be deposited in escrow,
Operator may, in accordance with ARCO's policies in this regard, pay the
remaining portion of the applicable transfer fee by means of a cashier's
check payable to ARCO and given to ARCO before ARCO's final consent to the
assignment is given. In the event that ARCO refuses its consent to the
proposed assignment prior to the proposed transferee attending ARCO's
training program, ARCO shall refund all but $1,000 of any transfer fee
paid. In the event that ARCO refuses its consent to the proposed
assignment because the-proposed transferee does not pass the English
proficiency test and before the proposed transferee attends training
school, ARCO shall refund all but $300 of any transfer fee paid.
Otherwise, the transfer fee is not refundable in whole or in part and
shall bear no interest. Except if there were a transfer immediately
preceding the proposed assignment for which transfer no transfer fee was
paid, the transfer fee shall not be payable by Operator in the event that
Operator requests ARCO to consent to an assignment of Operator's franchise
to: (1) Operator's spouse, adult natural or adopted child, or parent; (2)
a sole proprietorship in which the current shareholder of Operator, which
is a single shareholder corporation, shall be the sole proprietor, (3) a
partnership in which there are only two partners, current Operator as an
individual and one other person, and in which the current Operator has at
least a fifty percent interest; (4) a corporation in which there are only
two shareholders, current Operator as an individual and one other person,
and in which the sole shareholder of the current Operator has at least
fifty percent of the issued and outstanding voting shares of stock; (5) a
corporation in which current Operator, as an individual shareholder, owns
one hundred percent of the issued and outstanding voting shares of stock;
(6) if Operator is a corporation, the transfer of less than fifty percent
of the issued and outstanding voting shares of stock; or (7) the
dissolution of a two-partner partnership or a two-shareholder corporation
resulting in one of the former partners remaining as the sole proprietor,
or one of the former shareholders remaining as the sole shareholder of the
corporation or as a sole proprietor and the remaining partner or
shareholder or sole proprietor had at least a fifty percent interest in
the partnership or corporation prior to the dissolution.
25 of 33
ARCO reserves the right to refuse to consent to any proposed assignment
which would result in ARCO having any material increased risk, burden or chance
of not obtaining performance.
17.02 This Agreement is personal as between Operator and ARCO and this
Agreement is entered into in reliance upon and in consideration of the personal
qualifications, and representations made with respect thereto of Operator.
Operator shall not incorporate or form a partnership, a limited liability
company ("LLC") or limited partnership without the prior written approval of
ARCO, which approval shall not be unreasonably withheld. In the event Operator
incorporates, ARCO may require Operator to execute a personal guarantee and
other instruments as ARCO deems appropriate. If Operator is a partnership or
corporation, all partners or all shareholders must execute this Agreement and
guarantees and other instruments, if any; however, if Operator is a limited
partnership, a partnership having as members one or more general partners and
one or more limited partners, Operator may designate a partnership designee
whose name is set forth in PART 1, who must be the general partner, or if more
than one, one of the general partners, to execute this Agreement. If a
partnership designee is designated, the partnership designee hereby agrees to
personally guarantee the performance of this Agreement by Operator, including,
without limitation, the payment of all sums which may from time to time become
payable to ARCO by Operator pursuant to any provisions of this Agreement and to
execute such forms of guarantee as ARCO may reasonably require; if Operator is a
limited liability company ("LLC"), all members must execute this Agreement and
guarantees and other instruments, if any; however, if the LLC has unequal
ownership by 2 members or more than 2 members, such Operator may designate a LLC
Designee, whose name is set forth in PART 1, who must be the member owning the
majority ownership interest in the LLC, to execute this Agreement. If a LLC
Designee is designated, the LLC Designee hereby agrees to personally guarantee
the performance of this Agreement by Operator, including, without limitation,
the payment of all sums which may from time to time become due and payable to
ARCO pursuant to any provisions of this Agreement and to execute such forms of
guarantee as ARCO may reasonably require; if Operator is a corporation with one,
two unequal or with more than two shareholders, Operator may designate a
corporate designee whose name is set forth in PART I, who must be an officer or
director and shareholder who owns the largest percentage of shares in the
corporation, to execute this Agreement. If a corporate designee is designated,
the corporate designee hereby agrees to personally guarantee the performance of
this Agreement by Operator, including, without limitation, the payment of all
sums which may from time to time become payable to ARCO by Operator pursuant to
any of the provisions of this Agreement and to execute such forms of guarantee
as ARCO may reasonably require. In the case of a corporation with two equal
shareholders, both shareholders hereby agree to personally guarantee the
performance of this Agreement by Operator as described earlier in this Section
17.02.
17.03 If Operator is a corporation, any transfer of its capital stock,
issuance of additional stock, change in rights of any class or series of stock
or contractual agreement affecting stock rights which results in present
stockholder[s] as an individual or a group, as the case may be, owning legally
or beneficially or having voting control of less than one hundred percent (100%)
of its capital stock shall be deemed as assignment of Operator's rights under
this Agreement.
17.04 Operator agrees not to change its form of business through
merger, consolidation, organization or reorganization without the prior written
consent of ARCO and except upon such terms and conditions as ARCO shall then
require.
17.05 In the event Operator requests ARCO to approve an assignment,
Operator agrees to produce a signed copy of the offer to purchase and accept an
assignment. ARCO shall have no obligation to consider any request for consent
to any assignment if it does not receive a copy of such offer.
17.06 Any assignment or attempt by Operator to assign any of its rights
or interests under this Agreement and Operator's interest in the real property
and improvements without having received the
26 of 33
the prior written consent of ARCO shall constitute a material breach of this
Agreement and ARCO shall have the right to terminate this Agreement upon written
notice to Operator.
17.07 Operator's formation or dissolution of a partnership or adding or
deleting any partner, formation or dissolution of a corporation or adding or
deleting any shareholder, formation or dissolution of a LLC or adding or
deleting any member shall be considered a transfer of this Agreement.
17.08 In the case of Concurrent Operations, if ARCO consents to the
transfer of this Agreement to the proposed transferee, all other franchise
agreements relating to any other business conducted at the Premises shall be
transferred to the same transferee.
B. ASSIGNMENT AND TRANSFER BY ARCO
17.09 ARCO shall have the unrestricted right to transfer or assign all
or any part of its rights or obligations under the Franchise Agreement to any
person or legal entity.
ARTICLE 18
Termination
18.01 In the event ARCO fails to perform any of its obligations
hereunder and fails to cure such default within thirty (30) days after receipt
of written notice of default from Operator, Operator shall have the right to
terminate this Agreement by giving ARCO not less than fifteen (15) days' prior
written notice of termination.
18.02 This Agreement may be terminated at any time by mutual agreement
in writing between Operator and ARCO.
18.03 In addition to any other remedy of ARCO, ARCO may terminate this
Agreement on the following conditions:
(1) ARCO may terminate this Agreement for failure of Operator to comply
with the provisions of this Agreement after being given notice
thereof and a reasonable opportunity, which in no event need be more
than 30 days, to cure the failure.
(2) Notwithstanding the foregoing, ARCO may terminate this Agreement by
giving immediate notice of termination without an opportunity to
cure upon the occurrence of any of the following events:
a. Failure of Operator to pay any sums due to ARCO within 5 days
after receipt of written notice of default.
b. Operator repeatedly fails to comply with one or more
requirements of this Agreement, whether or not cured after
notice.
c. Operator, after curing any failure pursuant to Section 1
above, engages in the same noncompliance, whether or not such
noncompliance is corrected after notice.
d. Failure of Operator to obtain the release of any attachment,
garnishment execution, lien or levy (collectively, "liens")
against the Premises, Store Equipment or business
27 of 33
of the am/pm mini market within 72 hours after any such liens
attach, or such longer time as required by applicable law.
e. Declaration of bankruptcy or judicial determination of
insolvency of Operator, Operator's entry into any arrangement
with creditors or assignment for the benefit of creditors or
the commencement of any proceeding to appoint a receiver or
trustee for Operator, its business or its property.
f. Abandonment of the am/pm mini market by Operator.
g. Fraud or criminal misconduct of Operator relating to the
operation of the am/pm mini market or conviction of Operator
of any felony involving moral turpitude.
h. If Operator is sole proprietor, Operator's death or
incapacity, for at least 90 consecutive days, which results
in Operator's inability to personally operate the am/pm mini
market; provided, however, if Operator has, in accordance
with the terms set forth in this Agreement designated a
successor-in-interest who qualifies as a franchisee, this
Agreement shall not be deemed to have terminated in the event
of Operator's death.
i. If Operator is a partnership, the withdrawal of any partner
or the dissolution of the partnership or the death of any
partner, provided, however, if Operator has, in accordance
with the terms set forth in this Agreement, designated a
successor-in-interest who qualifies as a franchiser, this
Agreement shall not be deemed to have terminated in the event
of Operator's death.
j. If Operator is a corporation, the death of any shareholder,
or, if applicable, the death of the Corporate Designer; or,
the sale, transfer or other disposition (by operation of law
or otherwise) of any portion of any interest in the
corporation without ARCO's prior written consent; or the
termination of the Corporate Designee, if applicable, as
director or officer and shareholder of the corporation; or
all or substantially all of the assets of the corporation are
sold, conveyed or otherwise transferred, voluntarily or by
operation of law. Provided, however, if Operator has, in
accordance with the terms set forth in this Agreement,
designated a successor-in-interest who qualifies as a
franchisee, this Agreement shall not be deemed to have
terminated in the event of the death of the Corporate
Designee or any shareholder. For purposes of this Section,
"corporation" shall include a limited liability company
("LLC") and "shareholders" shall include a member of the LLC
and "Corporate Designee" shall include a LLC Designee.
k. Operator's failure to commence operation of the am/pm mini
market within 30 days after the Commencement Date.
1. If a fee verification review or audit of Operator's books and
records discloses liability for royalty fees due of 2% or
more in excess of fees reported and paid by Operator.
m. Misrepresentations or misstatements by Operator to ARCO
relating to the acquisition of the franchise or Operator,
engages in conduct which reflects materially and unfavorably
upon the operation and reputation of the franchise business
or system.
28 of 33
n. ARCO makes a reasonable determination that continued
operation of the franchise by the Operator will result in an
imminent danger to public health or safety.
(3) Operator's assignment or transfer or attempt to assign or transfer
this Agreement in whole or in part or attempt to assign or transfer
the business of the am/pm mini market or attempt to assign, transfer
or sublet in whole or in part the portion of the Premises upon which
the store building is located or the Loaned Store Equipment, in a
manner inconsistent with the provisions of Article 17 of this
Agreement.
(4) Operator's failure to successfully complete the initial training
program described in Article 16 hereof; and, in the case of
Operators who operate more than 1 am/pm mini market, failure of
Operator to have a Store Manager trained and employed at each store;
and, failure of Operator to replace such full-time Store Manager
with another trained full-time Store Manager within two months from
the date such designated full-time Store Manager or any of their
successor(s) is/are no longer employed at the store; and, failure of
Operator to comply with any other provision of Article 16 of this
Agreement.
(5) The failure of the conditions relating to obtaining permits for and
completion of construction or conversion of the Premises which are
described in Article 5.
(6) A determination made by ARCO in good faith and in the normal course
of business to withdraw from marketing and to no longer maintain the
am/pm mini market franchise in the relevant geographic market area
in which the Premises are located.
18.04 In the event of destruction of all or a significant portion of
the Premises to the extent that the normal authorized uses are no longer
practicable, either party may terminate this Agreement within 120 days of such
destruction by giving the other party written notice. The effective date of
such termination shall relate back to the date of destruction.
18.05 In the case of Concurrent Operations at the Premises, ARCO may
terminate this Agreement upon termination of any one other franchise agreement.
18.06 If Operator is a party to a Loan Agreement and related Promissory
Note as described in Item 10 and Exhibit E of the am/pm Offering Circular for
Prospective Franchisees, and Operator has not cured any default under that Loan
Agreement or Promissory Note as required, ARCO may terminate this Agreement.
ARTICLE 19
Procedure on Expiration or Termination
19.01 Upon expiration or termination of this Agreement, Operator shall:
(a) Cease using the am/pm service name and service xxxx or other indicia
of ARCO pertaining to the am/pm system.
(b) Return to ARCO all copies of ARCO's franchise accounting system
software and all copies of the am/pm Manuals and all other
documents, instructions, manuals, display items, materials, and
writings furnished by ARCO pertaining to the am/pm mini market
franchise or bearing the am/pm service xxxx or service name or other
service marks or service names used in connection with the am/pm
mini market; and Operator shall allow ARCO to remove
29 of 33
any loaned am/pm Store Equipment and to de-identify any Operator
owned equipment that bears the service xxxx or service name or other
indicia of ARCO pertaining to the am/pm Store; and
(c) If the Agreement has been terminated by ARCO, Operator shall pay
ARCO a sum equal to the amount of expenses incurred or to be
incurred by ARCO in removing and returning to ARCO service names,
service marks, designs and other indicia of ARCO pertaining to the
am/pm Store, including, but not limited to, removal of all signs and
materials bearing the foregoing. Operator shall permit ARCO to
enter the premises to perform the foregoing.
(d) In addition, Operator shall pay to ARCO at the time of termination,
as liquidated damages and not as a penalty, the greater of (a) the
total minimum royalty fee which would have been payable under the
Agreement from the date of termination of the Agreement through the
end of the term provided for in the Agreement; or (b) for each month
from the date of termination of the Agreement through the end of the
term provided in the Agreement, the actual average royalty fee paid
but not less than the minimum royalty fee for any months that the
Store was operational prior to termination of the Agreement.
Provided, however, that the provisions of the previous sentence
shall not be applicable if the Agreement is terminated by ARCO due
to the following: (i) Operator's death; (ii) Operators incapacity,
for at least 90 consecutive days, which results in Operator's
inability to personally operate the am/pm mini market; (iii)
condemnation or other taking, in whole or in part, of the Premises
due to eminent domain; (iv) destruction of all or a substantial part
of the Premises through no fault of Operator, or (v) a determination
made by ARCO in good faith and in the normal course of business to
withdraw from marketing Motor Fuels at retail or the am/pm mini
market franchise in the relevant geographic market area in which
Operator's Premises are located.
(e) Where the Agreement has been terminated pursuant to Article 5,
Operator shall, where applicable, pay ARCO for its expenses as set
forth in the applicable section of such Article which, in some
instances, shall include, but not be limited to, ARCO's expenses
incurred in studying the site, preparing engineering and
architectural plans for the Premises, training and any costs
incurred by ARCO in contemplation of Operator operating an am/pm
Store; and
(f) Pay ARCO, upon receipt of final statements, any and all sums then
due and owing by Operator to ARCO.
19.02 (a) Upon termination of Operator's license rights under Article
1 hereof, Operator shall pay ARCO liquidated damages of $100.00 per day for each
Major Violation (as defined hereafter) and $25.00 per day for each other
violation of ARCO's am/pm service marks and service names at the terminated
am/pm mini market. (By "Major Violation" is meant the display after termination
of the am/pm colored striping design on the facing of the building of the former
am/pm mini market or the display of the am/pm pole sign.)
(b) The aforesaid damages are agreed in advance by the parties
because of the difficulty in ascertaining actual damages; however, such damages
are not deemed to replace, or be in lieu of, damages or profits that ARCO may be
entitled to recover resulting from, or arising out of Operator's unlicensed use
of ARCO's am/pm or other trademarks and trade names.
19.03 The provisions of this Article 19 shall survive termination or
expiration of this Agreement and shall be binding upon the heirs, successors and
assigns of Operator.
ARTICLE 20
30 of 33
Successor-in-Interest
20.01 Notwithstanding the terms of Sections 18.03.2(h), (i) or (j)
above, this Agreement shall not terminate upon the death or incapacitation for
more than 90 consecutive days, of Operator if Operator, prior to his or her
death or incapacitation, designates a successor-in-interest to his or her
interest in this Agreement in a form prescribed by ARCO and the designated
successor-in-interest assumes all of Operator's duties and obligations under the
am/pm franchise (the "franchise") on the terms and conditions set forth herein.
20.02 For purposes of this Article, "Operator" shall mean: if Operator
is a sole proprietor, the sole proprietor, if Operator is a partnership, a
partner of Operator or, if Operator is a corporation, a shareholder.
"Successor-in-interest" shall mean either a surviving spouse or natural or
adopted child or parent of Operator, provided that such spouse or child at the
time of Operator's death or incapacitation, shall be an adult and shall meet the
qualifications then being required of am/pm franchisees by ARCO for the
operation of an am/pm mini market. In the case of partnerships or corporations,
"successor-in-interest" shall also mean a surviving partner or a surviving
shareholder and, in such cases, any partner and any shareholder may designate
any of the others as successor-in-interest to his or her interest in this
Agreement, provided that no other successor-in-interest has been designated by
such partner or shareholder and that at the time of Operator's death or
incapacitation, such surviving partner or shareholder shall meet the
qualifications then being required of am/pm franchisees by ARCO. If someone
other than Operator's spouse is designated as the successor-in-interest,
Operator's spouse must execute a document waiving any claim of interest in this
Agreement and acknowledging that such spouse understands and agrees to the
successor-in-interest designation.
20.03 The designated successor-in-interest shall be allowed 21 days
after the death or incapacitation, for more than 90 consecutive days, of
Operator to give written notice of his or her intention (the "Notice of
Intention") to assume and operate the franchise or, in the case of a successor-
in-interest to the corporate designer, written notice of his or her intention to
personally guarantee performance hereof by the corporate franchisee. The
notification shall contain such information regarding business experience and
creditworthiness as is reasonably required by ARCO. Except as described more
fully below, unless the successor-in-interest has previously been trained by
ARCO pursuant to ARCO's current 7 week training program for the operation of an
am/pm mini market, the successor-in-interest must attend and successfully
complete such training as is then required by ARCO for new franchisees and
within 21 days after giving the Notice of Intention commence such training. In
addition, ARCO must approve or disapprove the successor-in-interest within 10
days after the successor-interest completes such training. If the successor-in-
interest successfully completes training and is approved by ARCO, ARCO shall
give notice of approval to the successor-in-interest and the successor-in-
interest must commence operation of the franchise (or execute a guarantee of
performance by a corporate franchisee) within 10 days after receipt of such
notice by ARCO. The successor-in-interest shall be required to pay tuition at
the then-current rate for assignees and successors-in-intent. Provided,
however, that if there is an Operational Designee who is different from the
Corporate Designee successor-in-interest, it is the Operational Designee, who
must attend and successfully complete the initial training, unless such
Operational Designee has previously been gained by ARCO pursuant to ARCO's
current 7 week training program for the operation of an am/pm mini market. An
initial supply of 20 uniforms must be ordered by the successor-in-interest while
attending ARCO's training program at ARCO's training center.
20.04 The franchise available to the successor-in-interest pursuant
hereto is intended to be no greater than the franchise as it exists in the name
of the deceased or incapacitated Operator (or, in the case of a corporate
franchisee, with the deceased or incapacitated Operator as Guarantor) at the
time of such Operator's death or incapacitation. The term of the franchise
shall not be extended by reason of the successor-in-interest assuming (or
guaranteeing) the franchise and ARCO may change the terms of the
31 of 33
franchise upon its renewal, if it is renewed. ARCO may require Operator to
arrange for the discharge or performance of other franchise obligations such as,
but not limited to, insurance, but excluding any obligation to be open to the
public, for a period of up to 21 days after Operator's death or incapacitation.
20.05 Operator may designate a primary and one alternate successor-in-
interest. The alternate, if one is designated, shall have no right to assume and
operate (or guarantee) the franchise or Operator's interest in the franchise, as
applicable, in the event of any exercise of rights by the primary successor-in-
interest. If the alternate desires to assume and operate (or guarantee) the
franchise or Operator's interest in the franchise, as applicable, in the event
the primary successor-in-interest, fails to do so the alternate must give notice
of intention to do so and otherwise comply with Section 20.03. (In the case of
Concurrent Operations, the primary successor-in-interest, if one is designated,
must be one and the same person designated as the primary successor-in-interest
to succeed to Operator's interest in all agreements relating to all businesses
conducted at the Premises; the alternate successor, if one is designated, must
be one and the same person designated as the alternate successor-in-interest to
succeed to Operator's interest in all agreements relating to all businesses
conducted at the Premises.)
20.06 Unless ARCO otherwise agrees in writing, there shall be no
operation of the franchise following the death or incapacitation of Operator by
anyone until all parts of the franchise have been expressly assumed as herein
provided, including, but not limited to, such items as licensing and tax
permits.
20.07 If the successor-in-interest assumes the franchise (or, in the
cast of a corporate franchisee, guarantees the franchise), the successor-in-
interest shall account to the heirs or estate of the deceased or incapacitated
Operator (or, in the case of a corporate franchisee, to the corporation) for the
value or other disposition of personal property of the Operator located at or
related to the franchise.
ARTICLE 21
General
21.01 Criminal Activity. Franchisee shall immediately report to ARCO
each incidence of personal injury or criminal activity at the premises.
21.02 Right of Entry. In addition to specific rights of entry granted
herein, ARCO shall have the right at all reasonable times to enter the Premises
for the purpose of determining Operator's compliance with the provisions of this
Agreement and the Manuals.
21.03 Entire Agreement. This Agreement, PARTS I and II, the Manuals,
as from time to time amended or supplemented, and, if applicable, an agreement
relating to ARCO's PayPoint Network contain all agreements and understandings
between Operator and ARCO and cover the entire relationship between the parties
concerning the Store and the am/pm franchise. There are no oral
representations, stipulations, warranties or understandings, express or implied,
with respect to the subject matter of this Agreement which are not fully set
forth herein and in the Manuals, and all prior or contemporaneous promises,
representations, agreements or understandings, express or implied, in connection
with the Store and the am/pm franchise are expressly merged herein and in the
Manuals incorporated herein by reference.
21.04 Compliance with Applicable Laws. In the event any provisions of
this Agreement provide for periods of notice less than those required by
applicable law, provide for termination other than in accordance with applicable
law or are otherwise inconsistent with applicable law, to the extent such
provisions are inconsistent with applicable law, they shall not be effective and
ARCO and Operator shall comply with applicable law regarding such matters.
32 of 33
21.05 Excused Performance. In the event that either party hereto shall
be delayed or hindered or prevented from the performance of any act required
hereunder by reason of strikes, lockouts, inability to procure materials, fire,
flood, act of God, failure of power, governmental law or regulation, riot,
insurrection, war, or other reason of a like or similar nature not the fault of
the party delayed in performing work or doing acts required under the terms of
this Agreement, then performance of such act shall be excused for the period of
the delay. For the duration of such excused performance, only the minimum
royalty fee shall be waived, however the royalty based on a percentage of gross
sales and the advertising and promotion fee shall continue to be payable. If
the excused performance is for a period less than a full month, the minimum
royalty fee shall be prorated for such partial month and Operator shall pay, as
a royalty fee for such month, the greater of the royalty fee based on a
percentage of gross sales or the prorated minimum.
21.06 Severability. If any provision of this Agreement is declared
invalid, such decision shall not affect the validity of any remaining portion,
which remaining portion shall remain in force and effect as if this Agreement
had been executed with the invalid portion thereof eliminated.
21.07 Notices. Except as otherwise provided herein, all notices
required or permitted by or pertaining to this Agreement shall be in writing and
addressed to the party to be notified at the address for such party specified in
PART I of this Agreement (as to notices to ARCO, from time to time and upon
prior written notice to Operator, ARCO may change the address of ARCO specified
in PART I). All notices shall be sent by prepaid certified, prepaid registered,
or prepaid overnight mail, return receipt requested, and shall be deemed served
as of the date of mailing or shall be personally delivered to Operator and shall
be deemed served as of the date delivered.
21.08 Waiver. Failure of either Operator or ARCO to require
performance of any provision of this Agreement shall not affect either party's
right to require full performance thereof at any time thereafter and the waiver
by either Operator or ARCO of any provision hereof shall not constitute or be
deemed a waiver of a similar breach in the future.
21.09 Amendments. No amendment, addition to or alteration,
modification or waiver of any provision of this Agreement shall be of any effect
unless in writing and signed by Operator and an authorized representative of
ARCO.
21.10 Prior Course of Dealing. ARCO and Operator acknowledge and agree
that this Agreement is not to be reformed, altered, or modified in any way by
any practice or course of dealing during or prior to the term of the Agreement
or by any representations, stipulations, warranties, agreement or
understandings, express or implied, except as fully and expressly set forth
herein or except as may subsequently be expressly amended by the written
agreement of Operator and ARCO by their authorized representatives.
21.11 Approval. This Agreement and any modifications thereto shall not
become effective and binding upon ARCO until executed by Operator and accepted
by ARCO as evidenced by the signature of one of ARCO's representatives
authorized to execute this Agreement. Operator's occupancy of the Store prior
to such execution hereof by ARCO shall not be construed as a waiver by ARCO of
this requirement.
21.12 Pronouns. The use herein of any personal pronoun shall include
the masculine, feminine and neuter pronouns.
Facility: 82060
-----
33 of 33
STATEMENT REGARDING FINANCES & INVESTORS
The undersigned, LLO-Gas, Inc. proposed assignee(s)/applicants for the ARCO
-------------
facility located at 0000 X Xxxxx Xx., Xxx Xxxxxxx, XX 00000 hereby represents
----------------------------------------
and warrants that:
(1) have truly represented his/her/their assets and financial condition and
have not included the assets of any other individuals or entities;
(2) have acknowledged any and all partners, stockholders, stakeholders,
backers, other investors and lenders, be they active or passive; and
(3) have received none of the assets listed or being used to buy this facility
other than as income, earnings, inheritances, gifts or other non-
investment and non-returnable payment, rather than as loans or
investments, except as expressly and explicitly disclosed in writing to
ARCO.
The undersigned acknowledges that he/she/they are aware:
(1) that no persons other than the above (and any shareholders who have been
disclosed in writing to ARCO during this application process) will be
recognized as having any interest whatsoever in the facility or right to
be heard, notified, consulted or protected regarding it; and
(2) that ARCO will presumably terminate any and all interests by the above, as
---------
well as all others, if ARCO discovers that anything has been
misrepresented to ARCO in order to obtain this facility, including without
limitation any misrepresentations regarding assets, debts, credit status
and history, investments and loans and regarding partners, stockholders,
stakeholders, backers, other investors or lenders and regarding
citizenship or immigration status.
The disclosure obligations and representations identified herein encompass facts
as of the date this document is executed and facts that change before this
assignment or appointment is final. Your obligation and representation thus
includes that you will notify us of any changes during this period.
The undersigned acknowledges that they have read the above and agree to the
terms thereof.
/s/ Xxxx Xxxxxxxxxxx 9-2-99
----------------------------------------- ------------------------------------
LLO-Gas, Inc. Date
