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z;g Parri,da nd FUEL CORPORATION
Parkland Fuel Corporation #236, 4919- 59 Street Red Deer, Albe1ia T4N 6C9 August 23, 2012
Attention:
Re: :Cetter oflntent for Alcurve Shell Alberta Dear This letter of intent ("Letter of Intent") confinns our mutual intent to complete our cmTent negotiations with respect to the operation of an Essa-branded service station at your site. Your confirmation of the proposed principle terms set out in this Letter of Intent is required before we can proceed fmiher. It is our understanding that you, 1561097 Albe1ia Ltd. (the "Dealer"), plan to operate your site at Alcurve Albe1ia as a dealer canying on business as 1561097 Albe1ia Ltd. and that you intend to enter into a Esso-Branded Motor Fuel Supply Agreement (the "Agreement") to operate this site as an Esso branded service station. This Letter of Intent is not binding upon Parkland Industries until if or~ subsequent docuinent has been executed in Parkland's Head Office in Albe1ia. This Letter of Intent is binding upon the Dealer once he has reviewed it aiid signed it. The Dealer agrees to execute the follow-up Essa standard brand agreement which will follow if this deal is approved by Pai路kland senior mai1agement.
The following are certain proposed principle terms: INTENT Parkland, contingent on the satisfaction of the conditions set out above, would be pleased to enter into an Essa-Branded Motor Fuel Supply. Agreement. An example of a standard form Agreement is enclosed for your review and to assist in the interpretation of the key terms described in this
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Letter of Intent. The Agreement provided to you for execution may differ from the attached example of the Agreement. Capitalized tenns in this Letter of Intent, unless the context otherwise requires, have the same meaning as in the attached Agreement.
TERM AND COMMENCEMENT DATE The term of the Agreement will be for 10 years, commencing on or about September 1, 2012 and terminating August 31, 2022.
DEALER PA YI.VIENT Parkland will pay to the Dealer a Dealer Payment in the amount of 1.00 cents per litre (plus applicable taxes) multiplied by the volume of Motor Fuels purchased by the Dealer from Parkland pursuant to the tenns and conditions of the Agreement. The Dealer Payment will be paid monthly in arrears by way of cheque or electronically deposited to your bank account, as dete1mined from time to time by Parkland .
PROPOSED VOLUME The Minimum Purchase Obligation is 2,000,000 liters of Motor Fuels during eve1y consecutive twelve (12) month period of the Agreement. Failure to meet eighty percent (80%) of the Minimum Purchase Obligation may result in termination of the Agreement. ,. r
PRODUCT PRICING (MOTOR FUELS) Wholesale pricing for Motor Fuels will be at Parkland's Esso Dealer Price prevailing in the Dealer's market area. Wholesale prices are detennined at time of load. The retail pwnp price is set by the Dealer. Retail margins vaiy with local conditions.
DELIVERIES OF MOTOR FUELS AND PETROLEUM PRODUCTS AND PAYMENT TERMS Motor Fuels will be delivered from a supply point to be determined by Parkland. Payment tenns for the Motor Fuels are C.O.D. (cash on delive1y and the funds must be immediately available). Payment for Motor Fuels may be collected by Parklai1d via pre-authorized debit or as detennined by Pai路ldai1d from tin1e to time. Deliveries to your site will not be less than a full load (28000 liters) and quantities ai路e detem1ined by Pai路kland . Delive1y smcharges may apply for "paii-load" orders, product returns or demunage.
The daily pre-authorized debit limit for all monies owing to Parkland by the Dealer will be unlimited.
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RETAIL CREDIT AND DEBIT SYSTEM & PR OMOT IONS Parkland will provide via Imperial Oil for the Dealer's use, point of sale (POS) equipment and electronic transmission facilities for credit and debit cards and the Esso promotional program application. The equipment and transmission facility monthly rental and maintenance fees are as follows: D
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eN-touch: 3 unit(s) at$ 0/month Manual Imprinter : Yes at $0/month VSAT Satellite: 1 unit at $0/month Speed pass "inside pay" pad : 1 unit at $0/month
The Esso credit card system will be made available to you. All cards accepted cmTently attract a 1.9 % to 2 .2 % credit card charge . Debit card transactions currently attract a ten cent charge. All charges and fees are subject to change from time to time . The Dealer shall participate fully in all: (i) promotions of the Motor Fuels ; and (ii) customer loyalty programs that Esso may implement from time to time, and shall pay all fees in respect of same . Cunently the Win & Earn (customer loyalty program) fees are set at $0.005 per point issued at your site.
ESSO BRAND SIGNS Parkland will loan to the Dealer for the term of the Agreement signage to identify the Esso brand . Loaned signs include: Major Identification Signs Spanner sign acrylics above pumps Parkland will supply and install all such signs . The Dealer shall provide electrical feed to the signs, electrical hook up, concrete bases and permits Parkland will also re-decal existing pump equipment to the Esso standard and paint MID structme , island fo1111 , kiosk and canopy colunms to the Esso standard colour specifications .
SITE IMAGE AND MERCHANDISING Parkland Supplies Option Parkland will supply the dealer with the following site image and merchandise items : • 2 - Windshield washer centers o 2 - Garbage cans " 1 -MID sign acrylic o Parkland will contribute to general site image upgrades and merchandising to be completed by the Dealer at the conun encement of the Agreement. The Dealer will purchase the upgrade and merchandising items from Parkland's recommended suppliers before reimbursem ent.
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The $50,000 .00 contributed by Parkland is a forgivable loan whereby you will earn the said amount by $.002 per litre for every litre of fuel you purchase from parkland until the forgivable loan is written off in full. If there is a balance remaining at the expiration or termination of the contract then that balance will be due and payable to Parkland ..
RIGHT OF FIRST REFUSAL The Dealer will grant to Parkland a right of first refusal to purchase your site with an option period of not less than sixty (60) days upon the Dealer's receipt from a third party of a bona fide offer to purchase, lease, sublease assign or in any other way transfer possession of your site, which offer the Dealer is prepared to accept. The Dealer shall execute Parkland's standard form ofright of first refusal to give effect to this right, a copy of which is attached hereto .
PROPOSED AGREEMENT The Agreement and related documentation will be in the standard fonn specified by Parkland and will be without deletions or revisions .
APPLICABLE LAW AND ENVIRONMENTAL MATTERS The Dealer will be required to verify compliance with all applicable statutory requirements. The Dealer will comply with all applicable laws, regulations, rules, by-laws, orders and ordinances applicable to the Dealer's business and the site and will maintain all necessruy pem1its to conduct business. Notwithstanding the statuto1y requirements, Parklru1drequires the Dealer to have in place, at a minimum, on all underground Motor Fuels storage tanks the following:
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Spill containment boxes; and Overfill prevention valves. A tank ru1dline test before the commencement of supply .
CONDITIONS This letter of intent is conditional upon: 1) Satisfactmy credit review by Parkland's Credit depruiment; 2) Satisfactmy site review by Pru路kland's distribution depruiment; ru1d 3) Pru路klru1d'ssenior management approval of tenns ru1dconditions.
CONFIRMATION This Letter of Intent represents Parkland's understanding of our mutual intent in respect of our negotiations, and will remain in effect until September 30, 2012.
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Please sign the enclosed duplicate copy of this Letter of Intent and return to me to confinn the status of our negotiations. Upon receipt of your confirmation, I will proceed with soliciting Parkland's senior management approval.
Yours truly, Parkland Industries Ltd.
Confirmed on this ___
day of ______
_,
For 1561097 Alberta Ltd
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