10-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED AUGUST 31, 2004

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File No. 333-35083

UNITED REFINING COMPANY

(Exact name of registrant as specified in its charter)

Pennsylvania	25-1411751
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

See Table of Additional Subsidiary Guarantor Registrants

15 Bradley Street, Warren, PA	16365-3299
(Address of principal executive offices)	(Zip Code)

(814) 723-1500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12 (b) of the Act:

None

Securities registered pursuant to Section 12 (g) of the Act:

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13, or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  x    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12-b – 2).    Yes  ¨    No  x

As of November 24, 2004, 100 shares of the Registrant’s common stock, $0.10 par value per share, were outstanding. All shares of common stock of the Registrant’s are held by an affiliate. Therefore, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant is zero.

Documents Incorporated by Reference: None

TABLE OF ADDITIONAL REGISTRANTS

Name	State of Other Jurisdiction of Incorporation	IRS Employer Identification Number	Commission File Number
Kiantone Pipeline Corporation	New York	25-1211902	333-35083-01
Kiantone Pipeline Company	Pennsylvania	25-1416278	333-35083-03
United Refining Company of Pennsylvania	Pennsylvania	25-0850960	333-35083-02
United Jet Center, Inc.	Delaware	52-1623169	333-35083-06
Kwik-Fill Corporation	Pennsylvania	25-1525543	333-35083-05
Independent Gas and Oil Company of Rochester, Inc.	New York	06-1217388	333-35083-11
Bell Oil Corp.	Michigan	38-1884781	333-35083-07
PPC, Inc.	Ohio	31-0821706	333-35083-08
Super Test Petroleum Inc.	Michigan	38-1901439	333-35083-09
Kwik-Fil, Inc.	New York	25-1525615	333-35083-04
Vulcan Asphalt Refining Corporation	Delaware	23-2486891	333-35083-10

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ITEM 1.    BUSINESS.

Introduction

We are the leading integrated refiner and marketer of petroleum products in our primary market area, which encompasses western New York and northwestern Pennsylvania. We own and operate a medium complexity 65,000 barrel per day (“bpd”) petroleum refinery in Warren, Pennsylvania where we produce a variety of products, including various grades of gasoline, diesel fuel, kerosene, No. 2 heating oil and asphalt. Operations are organized into two business segments: wholesale and retail. The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to the retail segment and the marketing of petroleum products to wholesale and industrial customers.

The retail segment sells petroleum products under the Kwik Fill^®, Citgo^® and Keystone^® brand names at a network of Company-operated retail units and convenience and grocery items through Company-owned gasoline stations and convenience stores under the Red Apple Food Mart^® and Country Fair^® brand names. As of August 31, 2004, we operated 372 units, of which, 185 units are owned, 127 units are leased, and the remaining stores are operated under a management agreement. Approximately 22% of the gasoline stations within this network are branded Citgo^® pursuant to a license agreement granting us the right to use Citgo’s applicable brand names, trademarks and other forms of Citgo’s identification. For the year ended August 31, 2004 (sometimes referred to as “fiscal 2004”), approximately 81% and 19% of our gasoline and distillate production, respectively, was sold through our retail network.

For the fiscal year ended August 31, 2004, we had total net sales of $1.5 billion, of which approximately 54% were derived from gasoline sales, approximately 34% were from sales of other petroleum products and 12% were from sales of merchandise and other revenue. Our capacity utilization rates have ranged from approximately 90% to approximately 100% over the last five years.

We believe that the location of our 65,000 bpd refinery in Warren, Pennsylvania provides us with a transportation cost advantage over our competitors, which is significant within an approximately 100-mile radius of our refinery. For example, in Buffalo, New York over our last five fiscal years, we have experienced approximately 1.82 cents per gallon transportation cost advantage over those competitors who are required to ship gasoline by pipeline and truck from New York Harbor sources to Buffalo. For the fiscal year ended August 31, 2004, our transportation cost advantage was approximately 1.95 cents per gallon. We own and operate the Kiantone Pipeline, a 78-mile long crude oil pipeline which connects the refinery to Canadian, U.S. and world crude oil sources through the Enbridge Pipelines Inc. and affiliates (collectively, “Enbridge”) pipeline system. Utilizing the storage capability of the pipeline, we are able to blend various grades of crude oil from different suppliers, allowing us to efficiently schedule production while managing feedstock mix and product yields in order to optimize profitability.

It is our view that the high construction costs and the stringent regulatory requirements inherent in petroleum refinery operations make it uneconomical for new competing refineries to be constructed in our primary market area. The nearest fuels refinery is over 160 miles from Warren, Pennsylvania and we believe that no significant production from such refinery is currently shipped into our primary market area.

Our primary market area is western New York and northwestern Pennsylvania and our core market area encompasses our Warren County base and the eight contiguous counties in New York and Pennsylvania. Our retail gasoline and merchandise sales are split approximately 59% / 41% between rural and urban markets. Margins on gasoline sales are traditionally higher in rural markets, while gasoline sales volume is greater in urban markets. Our urban markets include Buffalo, Rochester and Syracuse, New York and Erie, Pennsylvania.

As of August 31, 2004, 175 of our retail units were located in New York, 184 in Pennsylvania and 13 in Ohio. In fiscal year 2004, approximately 81% of the refinery’s gasoline production was sold through our retail network. In addition to gasoline, all units sell convenience merchandise, 103 are QSRs including franchise

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operations and seven of the units are full-service truck stops. Customers may pay for purchases with credit cards including our own Kwik Fill^® credit card. In addition to this credit card, we maintain a fleet credit card catering to regional truck and automobile fleets. Sales of convenience products, which tend to have constant margins throughout the year, have served to reduce the effects of the seasonality inherent in gasoline retail margins.

We intend to commence our delayed Coker and related infrastructure project in the first quarter of 2005, at which time we plan to raise the necessary financing and commence construction. We expect an approximate three-year construction and start-up period, with commercial operations commencing in the first quarter of 2008.

A delayed Coker converts the heaviest portion of crude oil that would otherwise produce asphalt or residual fuel oil into lighter material which can be blended into higher priced gasoline and distillate. This will allow us to take advantage of significant discounts for heavy grades of crude oil versus lighter grades by purchasing a higher percentage of these discounted heavy grades without uneconomically increasing our asphalt production or decreasing our gasoline and distillate production.

We anticipate that this project will be financed through a newly formed project company by way of a combination of senior tax-exempt debt, subordinated debt, and/or equity totaling approximately $400 million to $450 million. This project company will own the delayed Coker and related infrastructure and lease them to us on a fully net basis. The availability of future borrowings and access to the capital markets for equity financing for this project depends on prevailing market conditions and the acceptability of financing terms offered to us. There can be no assurance that future borrowings or equity financing will be available to us, or available on acceptable terms, in amounts sufficient to fund the needs of the delayed Coker and related infrastructure project.

In connection with this project, we are currently negotiating with Canadian crude oil suppliers to provide a long-term crude oil supply agreement, contribute equity or subordinated debt, and provide a floor on the differential between light and heavy crude oil. We expect this project to position us to be able to process a heavier sour crude slate and thereby maximize the benefit of a favorable light/heavy crude differential.

On October 8, 2003, the Pennsylvania Department of Environmental Protection (“DEP”) issued air and water permits to us at our Warren, Pennsylvania Refinery authorizing the construction and operation of a delayed coker unit among other refinery upgrades. The Coker and other improvements, if financed and constructed, will allow the refinery to process a 100% heavy, sour crude slate, increase crude oil throughput to 70,000 bpd and will allow it to meet new low sulfur fuel requirements.

As used herein, the term “The Company” refers to United Refining Company together with its consolidated subsidiaries.

Recent Developments

The annual shut down of the refinery’s reformer unit was completed in November 2004 to regenerate the reformer catalyst. The reformer unit was shut down for 9 days from November 2 to November 11. We also decided to shut down the crude unit for minor maintenance during the period of the reformer unit shutdown, at which time crude oil throughput would have been otherwise restricted. The crude unit was shut down for 5 days from November 3 to November 8. The crude unit maintenance enables us to defer the crude units major turnaround from October 2005 to October 2006.

On August 6, 2004, we completed a private placement offering of $200,000,000 in Senior Notes due 2012 which bear an interest rate of 10.5%. The notes were issued at 98.671% of par to yield 10 ³/4% to maturity, resulting in a debt discount of $2,658,000, which will be amortized over the life of the notes using the interest method. The net proceeds of the offering of $191,600,000 were used to retire all of our outstanding 10 ³/4% Senior Unsecured Notes due 2007, Series B, pay accrued interest of $3,700,000 and a redemption premium related thereto and to pay a dividend of $5,000,000 to the Company’s stockholder. A loss of $6,770,000 on the early extinguishment of debt was recorded consisting of a redemption premium of $3,228,000, a write-off of

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deferred financing costs of $1,990,000 and additional interest paid of $1,552,000. Such notes are fully and unconditionally guaranteed on a senior unsecured basis by all of the Company’s subsidiaries (see Notes 9 and 17 to Consolidated Financial Statements, Item 8). The notes will be eligible for resale under Rule 144A of the Securities Act of 1933.

Industry Overview

We are a regional refiner and marketer located primarily in PADD I. As of January 1, 2004, there were 16 operable refineries operating in PADD I with a combined crude processing capacity of 1.7 million bpd, representing approximately 10% of U.S. refining capacity. Petroleum product consumption during calendar year 2003 in PADD I averaged 6.25 million bpd, representing approximately 31% of U.S. demand based on industry statistics reported by the EIA. According to the EIA, prime supplier sales volume of gasoline in the region grew by approximately 7.7% during the five-year period ending December 2003. Refined petroleum production in PADD I is insufficient to satisfy demand for such products in the region, making PADD I a net importer of such products.

We believe that domestic refining capacity utilization is close to maximum sustainable limits because of the existing high throughput coupled with a minimal change in refining capacity. We believe that high utilization rates coupled with little anticipated crude capacity expansion is likely to result in sustainable current operating margins in the refining industry over the long term.

Asphalt is a residual product of the crude oil refining process, which is used primarily for construction and maintenance of roads and highways and as a component of roofing shingles. Distribution of asphalt is localized, usually within a distance of 150 miles from a refinery or terminal, and demand is influenced by levels of federal, state, and local government funding for highway construction and maintenance and by levels of roofing construction activities. We believe that an ongoing need for highway maintenance and domestic economic growth will sustain asphalt demand.

Refining Operations

Our refinery is located on a 92-acre site in Warren, Pennsylvania. The refinery has a nominal capacity of 65,000 bpd of crude oil processing and averaged saleable production of approximately 65,200 bpd during fiscal 2004.

The West End of the refinery consisting of the FCC Unit, polymerization unit, alkylation unit and sulfur recovery unit-2 was shut down April 4, 2004 for a scheduled 26-day turnaround. The FCC had been on-stream for 41 months between turnarounds.

The major activity in addition to normal shutdown maintenance was the replacement of FCC regenerator cyclones and expansion joints which were original equipment having functioned for 23 years. Metallurgical testing during prior turnarounds enabled us to extend the useful life of this equipment beyond a normal life expectancy of 15 years. For more on the scheduled maintenance turnaround, see “Refining Operations—Refinery Turnarounds.”

We believe our geographic location in the product short PADD I is a significant marketing advantage. Our refinery is located in northwestern Pennsylvania and is geographically distant from the majority of PADD I refining capacity. The nearest fuels refinery is over 160 miles from Warren, Pennsylvania and we believe that no significant production from such refinery is currently shipped into our primary market area (see Note 16 to Consolidated Financial Statements, Item 8).

Products

We produce three primary petroleum products: gasoline, middle distillates, and asphalt. We presently produce two grades of unleaded gasoline, 87-octane regular and 93-octane premium. We also blend our 87 and

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93 octane gasoline to produce a mid-grade 89-octane. In fiscal year 2004, approximately 81% of our gasoline production was sold through our retail network and the remaining 19% of such production was sold to wholesale customers.

Middle distillates include kerosene, diesel fuel, and heating oil (No. 2 oil). For the fiscal year ended August 31, 2004, approximately 81% of our distillate production was sold to wholesale customers and the remaining 19% through our retail network.

We optimize our bottom of the barrel processing by producing asphalt, a higher value alternative to residual fuel oil. Asphalt production as a percentage of all refinery production has exceeded 22% over the last five fiscal years due to our ability and decision to process a larger amount of less costly heavy higher sulfur content crude oil in order to realize higher overall refining margins.

Refining Process

Our production of petroleum products from crude oil involves many complex steps, which are briefly summarized below.

We seek to maximize refinery profitability by selecting crude oil and other feedstocks taking into account factors including product demand and pricing in our market areas as well as price, quality and availability of various grades of crude oil. We also consider product inventory levels and any planned turnarounds of refinery units for maintenance. The combination of these factors is optimized by a sophisticated proprietary linear programming computer model, which selects the most profitable feedstock and product mix. The linear programming model is continuously updated and improved to reflect changes in the product market place and in the refinery’s processing capability.

Blended crude is stored in a tank farm near the refinery, which has a capacity of approximately 200,000 barrels. The blended crude is then brought into the refinery where it is first distilled at low pressure into its component streams in the crude and preflash unit. This yields the following intermediate products: light products consisting of fuel gas components (methane and ethane) and LPG (propane and butane), naphtha or gasoline, kerosene, diesel or heating oil, heavy atmospheric distillate, and crude tower bottoms which are further distilled under vacuum conditions to yield light and heavy vacuum distillates and asphalt. The present capacity of the crude unit is 65,000 bpd.

The intermediate products are then processed in downstream units that are blended to produce finished products. A naphtha hydrotreater treats naphtha with hydrogen across a fixed bed catalyst to remove sulfur before further treatment. The treated naphtha is then distilled into light and heavy naphtha at a prefractionator. Light naphtha is then sent to an isomerization unit and heavy naphtha is sent to a reformer in each case for octane enhancement. The isomerization unit converts the light naphtha catalytically into a gasoline component with 83 octane. The reformer unit converts the heavy naphtha into another gasoline component with up to 94 octane depending upon the desired octane requirement for the grade of gasoline to be produced. The reformer also produces as a co-product all the hydrogen needed to operate hydrotreating units in the refinery.

Raw kerosene or heating oil is treated with hydrogen at a distillate hydrotreater to remove sulfur and make finished kerosene and No. 2 fuel oil. A distillate hydrotreater built in 1993 also treats raw distillates to produce low sulfur diesel fuel.

The long molecular chains of the heavy atmospheric and vacuum distillates are broken or “cracked” in the fluid catalytic cracking (FCC) unit and separated and recovered in the gas concentration unit to produce fuel gas, propylene, butylene, LPG, gasoline, light cycle oil and clarified oil. Fuel gas is burned within the refinery, propylene is fed to a polymerization unit which polymerizes its molecules into a larger chain to produce an 87 octane gasoline component, butylene is fed into an alkylation unit to produce a gasoline component and LPG is

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treated to remove trace quantities of water and then sold. Clarified oil is burned in the refinery or sold. Various refinery gasoline components are blended together in refinery tankage to produce 87 octane and 93 octane finished gasoline. Likewise, light cycle oil is blended with other distillates to produce low sulfur diesel and No. 2 fuel oil. A portion of the FCC gasoline is hydrotreated in order to meet new more stringent legally mandated limits on gasoline sulfur content which took effect January 1, 2004.

Our refining configuration allows the processing of a wide variety of crude oil inputs. During the past five years our inputs have been of Canadian origin and range from light low sulfur (38 degrees API, 0.5% sulfur) to high sulfur heavy asphaltic (21 degrees API, 3.5% sulfur). Our ability to market asphalt on a year round basis enables us to purchase selected heavier crude oils at higher differentials and thus at a lower cost.

Supply of Crude Oil

Even though our crude supply is currently nearly all Canadian, it is not dependent on this source alone. Within 90 days, we could shift up to 80% of our crude oil requirements to some combination of domestic and offshore crude. With additional time, 100% of our crude requirements could be obtained from non-Canadian sources. 86% of our contracts with our crude suppliers are on a month-to-month evergreen basis, with 60-to-90 day cancellation provisions; 14% of our crude contracts are on an annual basis (with month to month pricing provisions). As of August 31, 2004, we had supply contracts with approximately 30 different suppliers for an aggregate of 58,000 bpd of crude oil. We have contracts with four vendors amounting to 69% of daily crude oil supply (none more than 16,000 barrels per day). None of the remaining suppliers accounted for more than 10% of our crude oil supply.

We access crude through the Kiantone Pipeline, which connects with the Enbridge pipeline system in West Seneca, New York, which is near Buffalo. The Enbridge pipeline system provides access to most North American and foreign crude oils through three primary routes: (i) Canadian crude oils are transported eastward from Alberta and other points in Canada; (ii) various mid-continent crude oils from Texas, Oklahoma and Kansas are transported northeast along the Ozark, Woodpat and Chicap Pipelines (foreign crude oils shipped on the Seaway system can also access this route), which connects to the Enbridge pipeline system at Mokena, Illinois; and (iii) foreign crude oils unloaded at the Louisiana Offshore Oil Port are transported north via the Capline and Chicap pipelines which connect to the Enbridge pipeline system at Mokena, Illinois.

The Kiantone Pipeline, a 78-mile Company-owned and operated pipeline, connects our West Seneca, New York terminal at the pipeline’s northern terminus to the refinery’s tank farm at its southern terminus. We completed construction of the Kiantone Pipeline in 1971 and have operated it continuously since then. We are the sole shipper on the Kiantone Pipeline, and can currently transport up to 70,000 bpd along the pipeline. Our right to maintain the pipeline is derived from approximately 265 separate easements, right-of-way agreements, licenses, permits, leases and similar agreements.

The pipeline operation is monitored by a computer at the refinery. Shipments of crude arriving at the West Seneca terminal are separated and stored in one of the terminal’s three storage tanks, which have an aggregate storage capacity of 485,000 barrels. The refinery tank farm has two additional crude storage tanks with a total capacity of 200,000 barrels. An additional 35,000 barrels of crude can be stored at the refinery.

Refinery Turnarounds

Turnaround cycles vary for different refinery units. A planned turnaround of each of the two major refinery units (the crude unit and the fluid catalytic cracking unit) is conducted approximately every three to five years, during which time such units are shut down for internal inspection and repair. The most recent turnarounds occurred in October and November 2002 at our crude unit and its related processing equipment and in April 2004, at our FCC unit and its related processing equipment. A turnaround, which generally takes two to four weeks to complete in the case of the two major refinery units, consists of a series of moderate to extensive

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maintenance exercises. Turnarounds are planned and accomplished in a manner that allows for reduced production during maintenance instead of a complete plant shutdown. We defer the cost of turnarounds when incurred and amortized on a straight-line basis over the period of benefit, which ranges from 3 to 10 years. Thus, we charge costs to production over the period most clearly benefited by the turnarounds.

The scheduled maintenance turnarounds during late October and early November 2002 and during April 2004 resulted in an inventory build-up (starting in August 2002 and February 2004, respectively) of petroleum products to meet minimum sales demand during the maintenance shutdown periods.

Marketing and Distribution

General

We have a long history of service within our market area. Our first retail service station was established in 1927 near the Warren refinery, and we have steadily expanded our distribution network over the years.

We maintain an approximate 59% / 41% split between sales at our rural and urban units. We believe this to be advantageous, balancing the higher gross margins and lower volumes often achievable due to decreased competition in rural areas with higher volumes and lower gross margins in urban areas. We believe that our network of rural convenience store units provide an important alternative to traditional grocery store formats. In fiscal year 2004, approximately 81% and 19% of our gasoline and distillate production, respectively, was sold through this retail network.

We also have a 50% interest in a joint venture with an unrelated entity for the marketing of asphalt products. This joint venture is accounted for using the equity method of accounting.

Retail Operations

As of August 31, 2004, we operated a retail-marketing network (including those stores operated under a management agreement) that includes 372 retail units, of which 175 are located in western New York, 184 in northwestern Pennsylvania and 13 in eastern Ohio. We own 185 of these units. The retail segment sells petroleum products under the Kwik Fill^®, Citgo^® and Keystone^® brand names and grocery items under the Red Apple Food Mart^® and Country Fair^® brand names. We believe that Red Apple Food Mart^®, Kwik Fill^®, Country Fair^®, Keystone^® and Citgo^® are well-recognized names in our marketing areas. Approximately 22% of the gasoline stations within this network are branded Citgo^® pursuant to a license agreement granting us the right to use Citgo’s applicable brand names, trademarks and other forms of Citgo’s identification. We believe that the operation of our retail units provides us with a significant advantage over competitors that operate wholly or partly through dealer arrangements because we have greater control over pricing and operating expenses.

We classify our retail stores into four categories: convenience stores, limited gasoline stations, truck stop facilities, and other stores. Convenience stores sell a wide variety of foods, snacks, cigarettes, and beverages and also provide self-service gasoline. One hundred and three of our 372 retail outlets include QSRs where food is prepared on the premises for retail sales and also distribution to our other nearby units which do not have in-store delicatessens. Limited gasoline stations sell gasoline, cigarettes, oil and related car care products and provide full service for gasoline customers. Truckstop facilities sell gasoline and diesel fuel on a self-service and full-service basis. All truckstops include either a full or mini convenience store.

Total merchandise sales for fiscal year 2004 were $180.7 million, with a gross profit of approximately $51.7 million. Gross margins on the sale of convenience merchandise averaged 28.6% for fiscal 2004 and have been between 25% and 28.6% for the last five years, (see Note 16 to Consolidated Financial Statements, Item 8). In our experience, these sales are essentially unaffected by variations in crude oil and petroleum products prices.

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Merchandise Supply

Our primary merchandise vendor is Tripifoods, which is located in Buffalo, New York. During fiscal year 2004, we purchased approximately 87% of our convenience merchandise from this vendor. Tripifoods supplies us with tobacco products, candy, deli foods, grocery, health and beauty products, and sundry items on a cost plus basis for resale. We also purchase coffee, dairy products, beer, soda, snacks, and novelty goods from direct store vendors for resale. We annually review our suppliers’ costs and services versus those of alternate suppliers. We believe that alternative sources of merchandise supply at competitive prices are readily available.

Location Performance Tracking

We maintain a store tracking mechanism to collect operating data including sales and inventory levels for our retail network. Data transmissions are made using personal computers, which are available at each location. Once verified, the data interfaces with a variety of retail accounting systems, which support daily, weekly, and monthly performance reports. These different reports are then provided to both the field management and administrative personnel. Upon completion of a capital project, management tracks “before and after” performance, to evaluate the return on investment which has resulted from the improvements.

Wholesale Marketing and Distribution

We sold in fiscal year 2004, on a wholesale basis, approximately 48,200 bpd of gasoline, distillate and asphalt products to distributor, commercial, and government accounts. In addition, we sell approximately 1,000 bpd of propane to liquefied petroleum gas marketers. In fiscal year 2004, our production of gasoline, distillate, and asphalt sold at wholesale was 19%, 81%, and 100%, respectively. We sell approximately 98% of our wholesale gasoline and distillate products from our refinery in Warren, PA, and our Company-owned and operated product terminals. The remaining 2% are sold through third-party exchange terminals.

Our wholesale gasoline customer base includes 54 branded dealer/distributor units operating under our proprietary “Keystone^®” (including one Company-operated location) and “Kwik Fill^®” brand names. Long-term dealer/distributor contracts accounted for approximately 19% of our wholesale gasoline sales in fiscal 2004. Supply contracts generally range from three to five years in length, with branded prices based on our prevailing wholesale rack price in Warren.

We believe that the location of our refinery provides us with a transportation cost advantage over our competitors, which is significant within an approximately 100-mile radius of our refinery. For example, in Buffalo, New York over our last five fiscal years, we have experienced an approximately 1.82 cents per gallon transportation cost advantage over those competitors who are required to ship gasoline by pipeline and truck from New York Harbor sources to Buffalo. For the fiscal year ended August 31, 2004, our transportation cost advantage was approximately 1.95 cents per gallon. In addition to this transportation cost advantage, our proximity to local accounts allows it a greater range of shipment options, including the ability to deliver truckload quantities of approximately 210 barrels versus much larger 10,000 barrel pipeline batch deliveries, and faster response time, which we believe helps us provide enhanced service to our customers.

Our ability to market asphalt is critical to the performance of our refinery, since such marketing ability enables us to process lower cost higher sulfur content crude oils which in turn affords us higher refining margins. Sales of paving asphalt generally occur during the summer months (May 31 to October 31) due primarily to weather conditions. In order to maximize our asphalt sales, we have made substantial investments to increase our asphalt storage capacity through the installation of additional tanks, as well as through the purchase or lease of outside terminals. Partially mitigating the seasonality of the asphalt paving business is our ability to sell asphalt year-round to roofing shingle manufacturers. In fiscal year 2004, we sold 7.7 million barrels of asphalt while producing 6.4 million barrels. This difference is primarily attributed to us purchasing product for resale.

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We have a significant share of the asphalt market in the cities of Pittsburgh, Pennsylvania and Rochester and Buffalo, New York. We distribute asphalt from the refinery by railcar and truck transport to our owned and leased asphalt terminals in such cities or their suburbs. Asphalt can be purchased in the Gulf Coast area and delivered by barge to third party or Company-owned terminals near Pittsburgh.

We also have a 50% interest in a joint venture with an entity for the marketing of asphalt products. This joint venture is accounted for using the equity method of accounting.

We use a network of six terminals to store and distribute refined products. This network provides gasoline, distillate, and asphalt storage capacities of approximately 505,000, 770,000 and 1,750,000 barrels, respectively, as of August 31, 2004.

During fiscal 2004, approximately 93% of our refined products were transported from the refinery via truck transports, with the remaining 7% transported by rail. The majority of our wholesale and retail gasoline distribution is handled by common carrier trucking companies at competitive costs. We also operate a fleet of ten tank trucks that supply approximately 25% of our Kwik Fill^® retail stations.

Product distribution costs to both retail and wholesale accounts are minimized through product exchanges. Through these exchanges, we have access to product supplies at approximately 31 sources located throughout our retail marketing area. We seek to minimize retail distribution costs through the use of a system wide distribution model.

Environmental Considerations

General

We are subject to extensive federal, state and local laws and regulations relating to pollution and protection of the environment such as those governing releases of certain materials into the environment and the storage, treatment, transportation, disposal and clean-up of wastes, including, but not limited to, the Federal Clean Water Act as amended, the Clean Air Act as amended (“CAA”), the Resource Conservation and Recovery Act of 1976 as amended, the Comprehensive Environmental Response Compensation and Liability Act of 1980 as amended (“CERCLA”), and analogous state and local laws and regulations. As with the industry in general, compliance with existing and anticipated environmental laws and regulations increases the overall cost of business, including capital costs to construct, maintain and upgrade equipment and facilities.

The Clean Air Act Amendments of 1990

In 1990, the CAA was amended to greatly expand the role of the government in controlling product quality and air emissions. The legislation included provisions that have significantly impacted the manufacture of both gasoline and diesel fuel including the requirement for significantly lower sulfur content. In regards to emissions, the government has required increasingly stringent emission controls on process equipment. For example, we will need to comply with the second phase of regulations effective April 2005, establishing Maximum Achievable Control Technologies for petroleum refineries. These regulations, which became effective in April 2002, may require additional emission controls on certain refinery units.

Gasoline and Diesel Fuel Sulfur Content

In February 2000, the United States Environmental Protection Agency (“USEPA”) issued a final rule requiring a phased reduction of the sulfur content in gasoline to ultimately achieve 30 Parts Per Million (“PPM”). Many refiners had to make this reduction beginning in January 2004, but some smaller refiners and those in certain Western states will be allowed to phase down sulfur more slowly, reaching the 30 PPM level as late as January 2008. Although we are of comparable size to some of the small refiners granted more time to comply, we

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were not classified as a small refiner for this purpose, nor are our operations located in any of the Western states given additional time. However, the rule allows individual refiners to seek additional time to comply on a case-by-case basis at the discretion of the USEPA. We applied for and were granted additional time to phase down the sulfur content of gasoline. USEPA granted this relief in the form of a three-phase compliance approach giving us until January 2008 to meet the 30 PPM sulfur limit. We made the initial required sulfur reduction on January 1, 2004 by modifying the refinery kerosene hydrotreater to allow it to hydrotreat gasoline as well as kerosene.

The USEPA promulgated another set of regulations under the CAA in January 2001 that limits allowable sulfur content in highway diesel fuel. By June 1, 2006, the sulfur content in highway diesel fuel must be reduced to 15 PPM. Furthermore, USEPA has proposed a comprehensive national program to reduce emissions from non-road diesel engines by forcing the eventual reduction of sulfur in non-road diesel to 15 PPM by 2010.

We anticipate that a material investment of funds will be required before 2008 to comply with the low sulfur fuel requirements for both gasoline and diesel. It is believed that compliance with the low sulfur gasoline and diesel fuel mandates will require an estimated expenditure of approximately $15 to $30 million in capital improvements.

Competition

Petroleum refining and marketing is highly competitive. Our major retail competitors include British Petroleum, Amerada Hess, Mobil, Sunoco, Sheetz, Delta Sonic, and Uni-Marts. With respect to wholesale gasoline and distillate sales, we compete with Sunoco, Inc., Mobil, and other major refiners. We primarily compete with PetroCanada and Marathon Ashland Petroleum in the asphalt market. Many of our principal competitors are integrated multinational oil companies that are substantially larger and better known than us. Because of their diversity, integration of operations, larger capitalization and greater resources, these major oil companies may be better able to withstand volatile market conditions, compete on the basis of price and more readily obtain crude oil in times of shortages.

The principal competitive factors affecting our refining operations are crude oil and other feedstock costs, refinery efficiency, refinery product mix and product distribution and transportation costs. Certain of our larger competitors have refineries, which are larger and more complex and, as a result, could have lower per barrel costs or higher margins per barrel of throughput. We have no crude oil reserves and are not engaged in exploration. We believe that we will be able to obtain adequate crude oil and other feedstocks at generally competitive prices for the foreseeable future.

The principal competitive factors affecting our retail marketing network are location of stores, product price and quality, appearance and cleanliness of stores and brand identification. Competition from large, integrated oil companies, as well as from convenience stores which sell motor fuel, is expected to continue. The principal competitive factors affecting our wholesale marketing business are quality and price of our products, reliability and availability of supply and location of distribution points.

Employees

As of August 31, 2004, we had approximately 4,173 employees; 1,961 full-time and 2,212 part-time employees. Approximately 3,536 persons were employed at our retail units, 397 persons at our refinery, Kiantone Pipeline and at terminals operated by us, with the remainder at our office in Warren, Pennsylvania. We have entered into collective bargaining agreements with International Union of Operating Engineers Local No. 95, United Steel Workers of America Local No. 2122-A, the International Union of Plant Guard Workers of America Local No. 502 and General Teamsters Local Union No. 397 covering 215, 9, 23 and 20 employees, respectively. The agreements expire on February 1, 2006, January 31, 2006, June 25, 2005 and July 31, 2005, respectively. We believe that our relationship with our employees is good.

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Intellectual Property

We own various federal and state service and trademarks used by us, including Kwik Fill^®, United^®, Country Fair^®, SuperKwik^®, Keystone^®, SubFare^® and PizzaFare^®. Our subsidiary, Country Fair, along with us, have licensing agreements with Citgo Petroleum Corporation (“Citgo”) for the right to use Citgo’s applicable brand names, trademarks and other forms of Citgo’s identification for petroleum products purchased under a distributor franchise agreement.

We have obtained the right to use the Red Apple Food Mart^® service mark to identify our retail units under a royalty-free, nonexclusive, nontransferable license from Red Apple Supermarkets, Inc., a corporation which is indirectly wholly owned by John A. Catsimatidis, the indirect sole stockholder, Chairman of the Board and Chief Executive Officer of the Company. The license is for an indefinite term. The licensor has the right to terminate this license in the event that we fail to maintain quality acceptable to the licensor. We license the right to use the Keystone^® trademark to approximately 54 independent distributors on a non-exclusive royalty-free basis.

We currently do not own any material patents. Management believes that it does not infringe upon the patent rights of others, nor does our lack of patent ownership impact our business in any material manner.

Governmental Approvals

We believe we have obtained all necessary governmental approvals, licenses, and permits to operate the refinery and convenience stores.

Financing

On August 6, 2004, we completed a private placement offering of $200,000,000 in Senior Notes due 2012 which bear an interest rate of 10.5%. The notes were issued at 98.671% of par to yield 10 ³/4% to maturity, resulting in a debt discount of $2,658,000, which will be amortized over the life of the notes using the interest method. The net proceeds of the offering of $191,600,000 were used to retire all of our outstanding 10 ³/4% Senior Unsecured Notes due 2007, Series B, pay accrued interest of $3,700,000 and a redemption premium related thereto and to pay a dividend of $5,000,000 to the Company’s stockholder. A loss of $6,770,000 on the early extinguishment of debt was recorded consisting of a redemption premium of $3,228,000, a write-off of deferred financing costs of $1,990,000 and additional interest paid of $1,552,000. Such notes are fully and unconditionally guaranteed on a senior unsecured basis by all of the Company’s subsidiaries (see Notes 9 and 17 to Consolidated Financial Statements, Item 8). The notes will be eligible for resale under Rule 144A of the Securities Act of 1933.

Effective January 27, 2004, the Company amended its secured credit facility to increase the maximum facility commitment from $50,000,000 to $75,000,000 on a permanent basis. The facility expires on May 9, 2007 and is secured by certain cash accounts, accounts receivable, and inventory. Until maturity, the Company may borrow on a borrowing base formula as set forth in the facility. For Base Rate borrowings, interest is calculated at the greater of the Agent Bank’s prime rate or federal fund rate plus 1%, plus an applicable margin of .25% to .75%, which was 5.00% at August 31, 2004. For Euro-Rate borrowings, interest is calculated at the LIBOR rate plus an applicable margin of 1.75% to 3.00%. The applicable margin varies with the Company’s facility leverage ratio calculation. As of August 31, 2004, $0 of Euro-Rate borrowings and $13,000,000 of Base Rate borrowings were outstanding under the agreement. The Company pays a commitment fee of 3/8% per annum on the unused balance of the facility.

We had outstanding letters of credit of $385,000 as of August 31, 2004.

As of August 31, 2004 the outstanding borrowings under the Revolving Credit Facility was $13,385,000 resulting in net availability of $61,615,000. The corresponding balance of cash and cash equivalents as of August 31, 2004 was $11,552,000.

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ITEM 2.    PROPERTIES.

We own a 92-acre site in Warren, Pennsylvania upon which we operate our refinery. The site also contains an office building housing our principal executive office.

We own various real property in the states of Pennsylvania, New York, Ohio, and Alabama as of August 31, 2004, upon which we operate 185 retail units and two crude oil and six refined product storage terminals. We also own the 78-mile long Kiantone Pipeline, a pipeline which connects our crude oil storage terminal to the refinery’s tank farm. Our right to maintain the pipeline is derived from approximately 265 separate easements, right-of-way agreements, leases, permits, and similar agreements. We also have easements, right-of-way agreements, leases, permits, and similar agreements that would enable us to build a second pipeline on property contiguous to the Kiantone Pipeline.

We also lease an aggregate of 127 sites in Pennsylvania, New York, and Ohio upon which we operate retail units. As of August 31, 2004, 66 of these leases had an average remaining term of 52 months, exclusive of option terms, and 61 leased Country Fair locations had terms from 10 to 20 years remaining.

ITEM 3.    LEGAL PROCEEDINGS.

The Company and its subsidiaries are from time to time parties to various legal proceedings that arise in the ordinary course of their respective business operations. These proceedings include various administrative actions relating to federal, state and local environmental laws and regulations as well as civil matters before various courts seeking money damages. The Company believes that if these legal proceedings in which it is currently involved were determined against the Company, there would be no Company’s operations or its consolidated financial condition. In the opinion of management, all such matters are adequately covered by insurance, or if not so covered, are without merit or are of such kind, or involve such amounts that an unfavorable disposition would not have a material adverse effect on the consolidated operations or financial position of the Company.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

NONE

ITEM 5.    MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

NONE

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ITEM 6.    SELECTED FINANCIAL DATA.

The following table sets forth certain historical financial and operating data (the “Selected Information”) as of the end of and for each of the years in the five-year period ended August 31, 2004. The selected income statement, balance sheet, financial and ratio data as of and for each of the five years ended August 31, 2004 has been derived from our audited consolidated financial statements. The operating information for all periods presented has been derived from our accounting and financial records. The Selected Information set forth below should be read in conjunction with, and is qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and our Consolidated Financial Statements and Notes thereto in Item 8 and other financial information included elsewhere herein.

	Year Ended August 31,
	2000			2001			2002			2003			2004
	(dollars in thousands)
Income Statement Data:
Net sales(2)	$	1,123,439		$	1,108,565		$	1,052,016		$	1,290,351		$	1,488,937
Gross margin(1)(2)		200,379			216,701			163,192			231,435			277,716
Refining operating expenses(3)		70,812			90,271			77,821			99,666			104,938
Selling, general and administrative expenses(4)		80,390			73,234			94,297			106,427			111,808
Operating income (loss)(2)		39,009			42,483			(20,700	)		13,123			48,517
Interest expense		22,962			21,051			20,064			21,376			21,445
Interest income		288			1,606			330			36			22
Other, net(2)		(2,822	)		1,836			(1,345	)		(1,291	)		(2,201	)
Costs associated with terminated acquisition		—			(1,300	)		—			—			—
Equity in net earnings of affiliate		—			516			1,242			867			672
Gain (loss) on early extinguishment of debt(5)		—			5,210			—			—			(6,770	)
Income (loss) before income tax expense (benefit)		13,513			29,300			(40,537	)		(8,641	)		18,795
Income tax expense (benefit)		6,828			12,021			(15,596	)		(3,370	)		7,400
Net Income (loss)		6,685			17,279			(24,941	)		(5,271	)		11,395
Balance Sheet Data (at end of period):
Total assets		340,368			355,557			371,440			361,428			366,382
Total debt		201,111			181,100			206,413			214,410			212,948
Total stockholder’s equity		55,106			75,966			48,196			41,975			47,106

(1) Gross margin is defined as gross profit plus refining operating expenses. Refinery operating expenses are expenses incurred in refining and included in costs of goods sold in our consolidated financial statements. Refining operating expense equals refining operating expenses per barrel, multiplied by the volume of total saleable products per day, multiplied by the number of days in the period.

(2) Certain amounts in the fiscal 2000 Consolidated Financial Statements have been reclassified to conform to the 2001 through 2004 presentation.

(3) Refinery operating expenses include refinery fuel produced and consumed in refinery operations.

(4) Fiscal 2002 includes eight months of Selling, general and administrative expenses for Country Fair^® operations and fiscal 2003 and 2004 include twelve months of Country Fair^® operations.

(5) In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 145, “Rescission of Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections”, we have reclassified our gain on early extinguishment of debt in fiscal 2001.

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ITEM 7.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward Looking Statements

This Annual Report on Form 10-K contains certain statements that constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements may include, among other things, United Refining Company and its subsidiaries current expectations with respect to future operating results, future performance of its refinery and retail operations, capital expenditures and other financial items. Words such as “expects”, “intends”, “plans”, “projects”, “believes”, “estimates”, “may”, “will”, “should”, “shall”, “anticipates”, “predicts”, and similar expressions typically identify such forward looking statements in this Annual Report on Form 10-K.

By their nature, all forward looking statements involve risk and uncertainties. All phases of the Company’s operations involve risks and uncertainties, many of which are outside of the Company’s control, and any one of which, or a combination of which, could materially affect the Company’s results of operations and whether the forward looking statements ultimately prove to be correct. Actual results may differ materially from those contemplated by the forward looking statements for a number of reasons.

Although we believe our expectations are based on reasonable assumptions within the bounds of its knowledge, investors and prospective investors are cautioned that such statements are only projections and that actual events or results may differ materially depending on a variety of factors described in greater detail in the Company’s filings with the SEC, including quarterly reports on Form 10-Q, annual reports on Form 10-K, reports on Form 8-K, etc. In addition to the factors discussed elsewhere in this Annual Report 10-K, the Company’s actual consolidated quarterly or annual operating results have been affected in the past, or could be affected in the future, by additional factors, including, without limitation:

• repayment of debt;

• general economic, business and market conditions;

• risks and uncertainties with respect to the actions of actual or potential competitive suppliers of refined petroleum products in our markets;

• the demand for and supply of crude oil and refined products;

• the spread between market prices for refined products and market prices for crude oil;

• the possibility of inefficiencies or shutdowns in refinery operations or pipelines;

• the availability and cost of financing to us;

• environmental, tax and tobacco legislation or regulation;

• volatility of gasoline prices, margins and supplies;

• merchandising margins;

• labor costs;

• level of capital expenditures;

• customer traffic;

• weather conditions;

• acts of terrorism and war;

• business strategies;

• expansion and growth of operations;

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• future projects and investments;

• future exposure to currency devaluations or exchange rate fluctuations;

• expected outcomes of legal and administrative proceedings and their expected effects on our financial position, results of operations and cash flows;

• future operating results and financial condition; and

• the effectiveness of our disclosure controls and procedures and internal control over financial reporting.

All subsequent written and oral forward looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing. We undertake no obligation to update any information contained herein or to publicly release the results of any revisions to any such forward looking statements that may be made to reflect events or circumstances that occur, or which we becomes aware of, after the date of this Annual Report on Form 10-K.

Business Strategy and Overview

Our strategy is to strengthen our position as a leading producer and marketer of high quality refined petroleum products within our market area. We plan to accomplish this strategy through continued attention to optimizing our operations, resulting in the lowest possible crude and overhead costs, and continuing to improve and enhance our retail and wholesale positions. More specifically, we intend to:

• Maximize the favorable economic impact of our transportation cost advantage by increasing our retail and wholesale market shares within our market area.

• Optimize profitability by managing feedstock costs, product yields, and inventories through our refinery feedstock management program and our system-wide distribution model.

• Continue to investigate additional strategic acquisitions and capital improvements to our existing facilities.

• Construct a delayed Coker and related infrastructure to position us to process a heavier sour crude slate and thereby maximize the benefit of a favorable light/heavy crude differential.

Company Background

Critical Accounting Policies

The accompanying consolidated financial statements and supplementary information were prepared in accordance with accounting principles generally accepted in the United States of America. Significant accounting policies are discussed in Note 1 to the Consolidated Financial Statements, Item 8. Inherent in the application of many of these accounting policies is the need for management to make estimates and judgments in the determination of certain revenues, expenses, assets and liabilities. As such, materially different financial results can occur as circumstances change and additional information becomes known. The policies with the greatest potential effect on our results of operation and financial position include:

Revenue Recognition

Revenues from wholesale sales are recognized upon shipment or when title passes. Retail revenues are recognized immediately upon sale to the customer. Revenue derived from other sources including freight charges are recognized when the related product revenue is recognized.

Collectibility of Accounts Receivable

For accounts receivable we estimate the net collectibility considering both historical and anticipated trends relating to our customers and the possibility of non-collection due to their financial position. While such

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non-collections have been historically within our expectations and the allowances the Company has established, the Company cannot guarantee that it will continue to experience non-collection rates that it has experienced in the past. A significant change in the financial position of our customers could have a material impact on the quality of our accounts receivable and our future operating results.

Goodwill and Other Non-Amortizable Assets

In accordance with SFAS No. 141, “Business Combinations”, and No. 142, “Goodwill and Other Intangible Assets”, goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to annual impairment tests. We assess the impairment of goodwill and other indefinite-lived intangible assets annually.

The Company performed separate impairment tests on June 1, 2004 for its tradename and other intangible assets using discounted and undiscounted cash flow methods, respectively. The fair value of the tradename and other intangible assets exceeded their respective carrying values. The Company has noted no subsequent indication that would require testing the tradename and intangible assets for impairment.

There were no material changes in the gross carrying amounts of goodwill, tradename, or other intangible assets for the fiscal year ended August 31, 2004.

Long-Lived Assets

Whenever events or changes in circumstances indicate that the carrying value of any of these assets may not be recoverable, the Company will assess the recoverability of such assets based upon estimated undiscounted cash flow forecasts. When any such impairment exists, the related assets will be written down to fair value.

Value of Pension Assets

The Company maintains three noncontributory defined benefit retirement plans for substantially all its employees. The assets of the plans are invested through financial institutions that follow an investment policy drafted by the Company. The investment guidelines provide a percentage range for each class of assets to be managed by the financial institution. The historic performance of these asset classes supports the Company’s expected return on the assets. The asset classes are rebalanced periodically should they fall outside the range allocations.

The percentage of total asset allocation range is as follows:

Asset Class	Minimum		Maximum
Equity	55	%	75	%
Fixed Income	25	%	35	%
Cash or Cash Equivalents	0	%	10	%

The discount rate utilized in valuing the benefit obligations of the plans was derived from the rate of return on high quality bonds as of August 31, 2004. Similarly, the rate of compensation utilizes historic increases granted by the Company and the industry as well as future compensation policies. See Note 10 to Consolidated Financial Statements, Item 8.

Environmental Remediation and Litigation Reserve Estimations

Management also makes judgments and estimates in recording liabilities for environmental cleanup and litigation. Liabilities for environmental remediation are subject to change because of matters such as changes in laws, regulations and their interpretation; the effect of additional information on the extent and nature of site contamination; and improvements in technology. Likewise, actual litigation costs can vary from estimates based on the facts and circumstance and application of laws in individual cases.

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The above assessment of critical accounting policies is not meant to be an all-inclusive discussion of the uncertainties to financial results that occur from the application of the full range of the Company’s accounting policies. Materially different financial results could occur in the application of other accounting policies as well. Likewise, materially different results can occur upon the adoption of new accounting standards promulgated by the various rule-making bodies.

General

The Company is engaged in the refining and marketing of petroleum products. In fiscal 2004, approximately 81% and 19% of the Company’s gasoline and distillate production, respectively, was sold through the Company’s network of service stations and truck stops. The balances of the Company’s refined products were sold to wholesale customers. In addition to transportation and heating fuels, primarily gasoline and distillate, the Company is a major regional wholesale marketer of asphalt. The Company also sells convenience merchandise at convenience stores located at most of its service stations. The Company’s profitability is influenced by fluctuations in the market prices of crude oils and refined products. Although the Company’s product sales mix helps to reduce the impact of large short-term variations in crude oil price, net sales and costs of goods sold can fluctuate widely based upon fluctuations in crude oil prices. Specifically, the margins on wholesale gasoline and distillate tend to decline in periods of rapidly declining crude oil prices, while margins on asphalt, retail gasoline and distillate tend to improve. During periods of rapidly rising crude oil prices, margins on wholesale gasoline and distillate tend to improve, while margins on asphalt and retail gasoline and distillate tend to decline. Gross margins on the sale of convenience merchandise averaged 28.6% for fiscal 2004 and have been between 25% and 28.6% for the last five years and are essentially unaffected by variations in crude oil and petroleum products prices.

The Company includes in costs of goods sold operating expenses incurred in the refining process. Therefore, operating expenses reflect only selling, general and administrative expenses, including all expenses of the retail network, and depreciation and amortization.

Recent Developments

The Company’s results in fiscal 2004 were impacted by high and rising worldwide crude oil prices, as indicated by crude oil contracts traded on the New York Mercantile Exchange (NYMEX). Monthly average NYMEX crude prices increased $9.21/BBL from $31.60/BBL in September 2003, the first month of the fiscal year, to $40.81/BBL in August 2004, the final month of the fiscal year. For all of fiscal 2004, NYMEX crude oil prices averaged approximately $35/BBL, or 18% higher than the approximate $30/BBL average for fiscal 2003.

The first several months of fiscal 2005 have seen a continuation of the increases in worldwide crude oil prices, with prices for September and October 2004 NYMEX contracts averaging more than $45/BBL, while October trading in November NYMEX contacts closed higher than $50/BBL on several individual trading days.

Industry-wide margins on gasoline and distillate for fiscal 2004 versus fiscal 2003, as indicated by the difference between the prices of crude oil contracts traded on the NYMEX and the prices of NYMEX gasoline and heating oil contracts, increased 21% for gasoline and 13% for heating oil, as increases in gasoline and distillate prices more than kept pace with rising crude oil prices. This contributed to higher gross profit, operating income and net income for the Company.

We continue to benefit from our ability to process a significant percentage of heavy, high sulfur grades of crude oil. In fiscal 2004, the price spread between heavy high sulfur crude oils and light low sulfur crude oil was about 35.6% greater than fiscal 2003. This resulted in a decrease in our average crude cost relative to the NYMEX average crude cost of $1.48/barrel for fiscal 2004 versus fiscal 2003. The benefit of increased crude oil

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price discounts out weighed reduced margins on associated asphalt production, such that the net benefit of heavy crude processing increased significantly. This pattern has continued into the early months of fiscal 2005, with further increases in crude price discounts offsetting lower asphalt margins.

Results of Operations

The Company is a petroleum refiner and marketer in its primary market area of Western New York and Northwestern Pennsylvania. Operations are organized into two business segments: wholesale and retail.

The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to the retail segment and the marketing of petroleum products to wholesale and industrial customers. The retail segment sells petroleum products under the Kwik Fill^®, Citgo^® and Keystone^® brand names at a network of Company-operated retail units and convenience and grocery items through Company-owned gasoline stations and convenience stores under the, Red Apple Food Mart^® and Country Fair^® brand names.

A discussion and analysis of the factors contributing to the Company’s results of operations are presented below. The accompanying Consolidated Financial Statements and related Notes (see Item 8), together with the following information, are intended to supply investors with a reasonable basis for evaluating the Company’s operations, but should not serve as the only criteria for predicting the Company’s future performance.

Retail Operations:

	Fiscal Year Ended August 31,
	2004			2003			2002
	(dollars in thousands)
Net Sales
Petroleum	$	596,922		$	536,340		$	430,316
Merchandise and other		180,702			182,564			149,762
Total Net Sales	$	777,624		$	718,904		$	580,078
Costs of Goods Sold	$	674,022		$	614,552		$	494,493
Gross Profit	$	103,602		$	104,352		$	85,585
Operating Expenses	$	98,439		$	93,725		$	80,929
Segment Operating Income	$	5,163		$	10,627		$	4,656
Petroleum Sales (thousands of gallons)		343,526			351,711			328,699
Gross Profit
Petroleum(a)	$	51,952		$	53,062		$	43,181
Merchandise and other		51,650			51,290			42,404
	$	103,602		$	104,352		$	85,585
Petroleum margin ($/gallon)(b)		.1512			.1509			.1314
Merchandise margin (percent of sales)		28.6	%		28.1	%		28.3	%
Average number of stations (during period)
Owned and leased		312			312			310
Managed		60			60			60
		372			372			370

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(a) Includes the effect of intersegment purchases from our wholesale segment at prices, which approximate market.

(b) Company management calculates petroleum margin per gallon by dividing petroleum gross margin by petroleum sales volumes. Management uses fuel margin per gallon calculations to compare profitability to other companies in the industry. Petroleum margin per gallon may not be comparable to similarly titled measures used by other companies in the industry.

Net Sales

2004 vs. 2003

Retail sales increased during 2004 by $58.7 million, or 8.2% from $718.9 million to $777.6 million. The retail sales increase was a result of a $60.6 million increase in petroleum sales, offset by a reduction of $1.9 million in merchandise sales. The petroleum sales increase is due to a 13.9% increase in retail selling prices offset by a 2.3% decrease in retail petroleum volume. The merchandise sales decrease was attributable to reduced tobacco related sales.

2003 vs. 2002

Retail sales increased during 2003 by $138.8 million, or 23.9% from $580.1 million to $718.9 million. The retail sales increase was primarily due to a $32.8 million increase in merchandise sales and a $106.0 million increase in petroleum sales. The petroleum sales increase results from a 7% increase in retail petroleum volume (on a same store basis and including the Country Fair locations) and by a 16.5% increase in retail selling prices (on a same store basis and including the Country Fair locations).

On December 21, 2001 the Company acquired 100% of the operations and working capital assets of Country Fair. The fiscal year ended August 31, 2003 was positively impacted by the additional sales from Country Fair for the entire period versus the fiscal year ended August 31, 2002 in which Country Fair sales were only included from the acquisition date of December 21, 2001. See Note 5 to Consolidated Financial Statements, Item 8.

Costs of Goods Sold

2004 vs. 2003

Retail costs of goods sold increased during 2004 by $59.4 million or 9.7% from $614.6 million to $674.0 million. The cost of gasoline increased 25%, on a per gallon basis, over fiscal year 2003. The cost of distillates increased 14%, on a per gallon basis, over the prior fiscal year. These cost increases, offset by sales volume declines, resulted in an increased costs of goods sold for petroleum purchases of $61.5 million. Other material increases to costs of goods sold were increased freight costs of $.3 million and $.9 million for the year-end impact of valuing the Company’s inventories under the LIFO cost method. Reductions in retail costs of goods sold were $.6 million in fuel taxes, $2.2 million in merchandise purchases and $.5 million in other sundry costs.

2003 vs. 2002

Retail costs of goods sold increased during 2003 by $120.0 million or 24.3% from $494.5 million to $614.6 million. The fiscal year ended August 31, 2003 was impacted by the additional sales from Country Fair for the entire period versus the fiscal year ended August 31, 2002 in which Country Fair sales were only included from the acquisition date of December 21, 2001. The cost of gasoline increased 28%, on a per gallon basis, over fiscal year 2002. The cost of distillates increased 31%, on a per gallon basis, over the prior fiscal year. This combined with the additional sales volume resulted in an increased costs of goods sold for petroleum purchases of $82.1 million. Other material increases to costs of goods sold were increased fuel taxes of $11.8 million, increased

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freight costs of $.9 million and increased merchandise purchases of $23.9 million. Costs of goods sold was positively impacted by an approximate $.3 million increase in the value of the Company’s working inventories on a market valuation basis, which decreased costs of goods sold. For the fiscal year 2002, costs of goods was positively impacted by an approximately $.3 million increase in the value of the Company’s working inventories on a market valuation basis, which decreased costs of goods sold. However, costs of goods sold was increased during fiscal 2003 by the effect of valuing the Company’s inventories under the LIFO cost method, which decreased the value of the Company’s total inventories by $1.4 million than if the FIFO method had been used.

Gross Profit/(Loss)

2004 vs. 2003

Retail gross profit decreased during 2004 by $.8 million or .8%. Petroleum margins decreased $1.1 million and merchandise margin increased by $.3 million. The merchandise margin increased despite a reduction in merchandise sales. This margin increase was due to a renegotiated supply contract with a major vendor. Petroleum margins were impacted by the 2.3% decrease in petroleum volume and per gallon cost increases.

2003 vs. 2002

Retail gross profit increased during 2003 by $18.8 million or 21.9%. Inclusive of Country Fair, the Company increased its petroleum margins by $9.9 million and its merchandise margin by $8.9 million. These margin increases were a result of 23.0 million gallons of additional volume sold and $32.8 million in increased merchandise sales.

Operating Expenses

2004 vs. 2003

Retail operating expenses increased during 2004 by $4.7 million or 5.0%. Operating expenses increased due to increased payroll and payroll costs of $2.4 million, increased maintenance costs of $.3 million, increased advertising costs of $.3 million, increased credit/customer service costs of $.6 million, increased legal/professional services costs of $.2 million, increased pension/post retirement costs of $.2 million, increased insurance, utilities and taxes of $.2 million, increased rent expenses of $.1 million and increased miscellaneous sundry items of $.4 million. The largest increase, payroll and payroll costs, was due primarily to $.9 million workers compensation costs of which approximately $.6 million was related to prior period workers compensation claim balances and increased costs in health insurance of $1.1 million.

2003 vs. 2002

Retail operating expenses increased during 2003 by $12.8 million or 15.8%. Retail operations for the fiscal year ended August 31, 2003 included Country Fair for the entire period versus the fiscal year ended August 31, 2002 in which Country Fair operations were only included from the acquisition date of December 21, 2001 which resulted in increased operating expenses of $10.4 million from $20.7 million for the fiscal year ended 2002 to $31.1 million for the fiscal year ended 2003. The remaining increases to operating expenses were due to increased payroll and payroll costs of $1.1 million, increased maintenance costs of $.3 million, increased insurance, utilities and taxes of $.3 million, increased credit/customer service costs of $.7 million and increased depreciation of $.3 million offset by lower legal/professional services costs of $.2 million and lower pension/post retirement costs of $.1 million.

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Wholesale Operations:

	Fiscal Year Ended August 31,
	2004		2003		2002
	(dollars in thousands)
Net Sales(a)	$	711,313	$	571,447	$	471,938
Costs of Goods Sold		642,137		544,030		472,152
Gross Profit / (Loss)	$	69,176	$	27,417	$	(214	)
Operating Expenses		25,822		24,921		25,142
Segment Operating Income / (Loss)	$	43,354	$	2,496	$	(25,356	)
Crude throughput (thousand barrels per day)		63.7		58.8		62.2

Refinery Product Yield

(thousands of barrels)

	Fiscal Year Ended August 31,
	2004		2003		2002
Gasoline and gasoline blendstock	10,210		9,751		10,351
Distillates	6,058		5,348		5,904
Asphalt	6,352		5,975		5,898
Butane, propane, residual products, internally produced fuel and other	2,735		2,298		2,343
Total Product Yield	25,355		23,372		24,496
% Heavy Crude Oil of Total Refinery Throughput(b)	54	%	57	%	53	%

Product Sales

(dollars in thousands)(a)

	Fiscal Year Ended August 31,
	2004		2003		2002
Gasoline and gasoline blendstock	$	285,949	$	207,823	$	180,325
Distillates		216,585		180,976		147,279
Asphalt		187,237		167,242		136,086
Other		21,542		15,406		8,248
	$	711,313	$	571,447	$	471,938

Product Sales

(thousand of barrels)(a)

	Fiscal Year Ended August 31,
	2004	2003	2002
Gasoline and gasoline blendstock	6,090	5,432	6,121
Distillates	5,041	4,668	5,179
Asphalt	7,732	6,749	6,872
Other	822	719	575
	19,685	17,568	18,747

(a) Sources of total product sales include products manufactured at the refinery located in Warren, Pennsylvania and products purchased from third parties.

(b) The Company defines “heavy” crude oil as crude oil with an American Petroleum Institute specific gravity of 26 or less.

22

Net Sales

2004 vs. 2003

Wholesale sales increased during 2004 by $139.9 million or 24.5% from $571.4 million to $711.3 million. The wholesales increase was due to a 12.1% increase in wholesale volume and a 11.1% increase in wholesale prices.

2003 vs. 2002

Wholesale sales increased during 2003 by $99.5 million or 21.1% from $471.9 million to $571.4 million. The wholesale sales increase was due to a 29.2% increase in wholesale prices offset by a 6.3% decrease in wholesale volume.

Costs of Goods Sold

2004 vs. 2003

Wholesale costs of goods sold increased during 2004 by $98.1 million or 18.0% from $544.0 million to $642.1 million. The increase in wholesale costs of goods sold was primarily due to the 10.1% increase in the Company’s average crude oil purchase price for fiscal 2004 as compared to the prior year period. Worldwide crude oil prices, as indicated by NYMEX crude oil contract prices, increased 17.9% as compared to the prior year period. Additionally, crude throughput increased 8.3% over the prior year, which is attributable to the Company’s scheduled maintenance turnaround of late October and early November 2002. Costs of goods sold increased $13.3 million during fiscal 2004 by the year-end impact of valuing the Company’s inventories under the LIFO cost method.

2003 vs. 2002

Wholesale costs of goods sold increased during 2003 by $71.8 million or 15.2% from $472.2 million to $544.0 million. The increase in wholesale costs of goods was primarily due to the 26.3% increase in the Company’s average crude oil purchase price for the fiscal year ended 2003 as compared to the prior year period. Worldwide crude oil prices, as indicated by NYMEX crude oil contract prices, increased 23.1% as compared to the prior year period. For the fiscal year 2002, costs of goods was positively impacted by an approximately $1.2 million increase in the value of the Company’s working inventories on a market valuation basis, which decreased costs of goods sold. However, costs of goods sold was increased during fiscal 2003 by the effect of valuing the Company’s inventories under the LIFO cost method, which decreased the value of the Company’s total inventories by $3.9 million than if the FIFO method had been used.

Gross Profit/(Loss)

2004 vs. 2003

Wholesale gross profit increased $41.8 million from $27.4 million for fiscal year ended 2003 to $69.2 million for the fiscal year ended 2004. This increase is due to the increases in wholesale selling prices and wholesale sales volume.

2003 vs. 2002

Wholesale gross profit increased $27.6 million from ($.2) million for fiscal year ended 2002 to $27.4 million for the fiscal year ended 2003. This increase was primarily due to the increase in wholesale selling prices and to 7.7% higher discounts on heavy high-sulfur crude oil grades processed by the Company.

23

Operating Expenses

2004 vs. 2003

Wholesale operating expenses increased during 2004 by $.9 million or 3.6%. For 2004 operating expenses were $25.8 million, or 3.6% of net wholesale sales, compared to $24.9 million or 4.4% of net wholesale sales for 2003.

2003 vs. 2002

Wholesale operating expenses remained relatively consistent between fiscal year ended 2002 and fiscal year ended 2003, decreasing by $.2 million or .8%.

Interest Expense

Net interest expense (interest expense less interest income) increased during fiscal 2004 by $.1 million from $21.3 million for the fiscal year ended 2003 to $21.4 million for the fiscal year ended 2004. The increased net interest expense was primarily due to an increase in borrowings on our revolving credit facility throughout the fiscal year.

Net interest expense (interest expense less interest income) increased during fiscal 2003 by $1.6 million from $19.7 million for the fiscal year ended 2002 to $21.3 million for the fiscal year ended 2003. The increased net interest expense was due to a $.2 million reduction in interest income earned and $1.2 million increased interest expense for borrowings on our revolving credit facility.

Income Tax Expense/(Benefit)

Our fiscal 2004 effective tax remained relatively consistent with that for fiscal 2003 which was approximately 39%.

Our fiscal 2003 effective tax rate remained relatively consistent with that for fiscal 2002 which was approximately 39%.

Liquidity and Capital Resources

On August 6, 2004, we completed a private placement offering of $200,000,000 in Senior Notes due 2012 which bear an interest rate of 10.5%. The notes were issued at 98.671% of par to yield 10 ³/4% to maturity, resulting in a debt discount of $2,658,000, which will be amortized over the life of the notes using the interest method. The net proceeds of the offering of $191,600,000 were used to retire all of our outstanding 10 ³/4% Senior Unsecured Notes due 2007, Series B, pay accrued interest of $3,700,000 and a redemption premium related thereto and to pay a dividend of $5,000,000 to the Company’s stockholder. A loss of $6,770,000 on the early extinguishment of debt was recorded consisting of a redemption premium of $3,228,000, a write-off of deferred financing costs of $1,990,000 and additional interest paid of $1,552,000. Such notes are fully and unconditionally guaranteed on a senior unsecured basis by all of the Company’s subsidiaries (see Notes 9 and 17 to Consolidated Financial Statements, Item 8). The notes will be eligible for resale under Rule 144A of the Securities Act of 1933.

We operate in an environment where our liquidity and capital resources are impacted by changes in the price of crude oil and refined petroleum products, availability of credit, market uncertainty and a variety of additional factors beyond our control. Included in such factors are, among others, the level of customer product demand, weather conditions, governmental regulations, worldwide political conditions and overall market and economic conditions.

The following table summarizes selected measures of liquidity and capital sources (in thousands):

	August 31, 2004		August 31, 2003
Cash and cash equivalents	$	11,552	$	13,819
Working capital	$	66,222	$	37,638
Current ratio		1.8		1.4
Debt	$	212,948	$	214,410

24

Primary sources of liquidity have been cash and cash equivalents, cash flows from operations and borrowing availability under a revolving line of credit. We believe available capital resources will be adequate to meet our working capital, debt service, and capital expenditure requirements for existing operations.

Our cash and cash equivalents consist of bank balances and investments in money market funds. These investments have staggered maturity dates, none of which exceed three months. They have a high degree of liquidity since the securities are traded in public markets. During the fiscal year ended August 31, 2004, significant uses of cash include $181.0 million to pay off 10 ³/4% Notes due 2007, $10.0 million for purchases of property, plant and equipment, which includes $1.7 million for USEPA low sulfur gasoline compliance, $2.8 million for FCC regenerator cyclone replacement and related equipment, and $5.5 million for other general repair and maintenance. Also, $5.4 million for additions to refinery turnaround costs $18.5 million of reductions to borrowings on the Revolving Credit Facility an increase in cash used by working capital items including $6.9 million for prepaid expenses and $6.4 million for accounts payable, both related primarily to increased crude oil costs.

We require a substantial investment in working capital which is susceptible to large variations during the year resulting from purchases of inventory and seasonal demands. Inventory purchasing activity is a function of sales activity and turnaround cycles for the different refinery units.

Maintenance and non-discretionary capital expenditures have averaged approximately $4 million annually over the last three years for the refining and marketing operations. Management does not foresee any increase in maintenance and non-discretionary capital expenditures during fiscal year 2004.

Future liquidity, both short and long-term, will continue to be primarily dependent on realizing a refinery margin sufficient to cover fixed and variable expenses, including planned capital expenditures. We expect to be able to meet our working capital, capital expenditure, contractual obligations, letter of credit and debt service requirements out of cash flow from operations, cash on hand and borrowings under our Revolving Credit Facility with PNC Bank, N.A. as Agent Bank. This is a $75,000,000 revolving facility, which expires May 9, 2007. The Revolving Credit Facility is secured primarily by certain cash accounts, accounts receivable, and inventory. Until maturity, we may borrow on a borrowing base formula as set forth in the facility. For Base Rate borrowings, interest is calculated at the greater of the agent bank’s prime rate or federal fund rate plus 1%, plus an applicable margin of .25% to .75%, which was 5.00% at August 31, 2004. For Euro-Rate borrowings, interest is calculated at the LIBOR rate plus an applicable margin of 1.75% to 3.00%. The applicable margin varies with our facility leverage ratio calculation. As of August 31, 2004, $0 of Euro-Rate borrowings and $13,000,000 of Base Rate borrowings were outstanding under the agreement.

We had outstanding letters of credit of $385,000 as of August 31, 2004.

As of August 31, 2004 the outstanding borrowings under the Revolving Credit Facility was $13,385,000 resulting in net availability of $61,615,000.

The following is a summary of our significant contractual cash obligations for the periods indicated that existed as of August 31, 2004 and is based on information appearing in the Notes to the Consolidated Financial Statements in Item 8:

	Payments due by period
Contractual Obligations	Total		Less Than 1 Year		1 – 3 Years		3 –5 Years			More than 5 Years
	(in thousands)
Long-term debt (a) (b)	$	199,948	$	452	$	212	$	(251	)	$	199,535
Operating leases		106,643		10,257		18,763		15,286			62,337
Capital lease obligations		1,971		240		484		447			800
Total contractual cash obligations	$	308,562	$	10,949	$	19,459	$	15,488		$	262,672

(a) Does not include the following:

(i) Interest on the 10.5 % Senior Notes.

25

(ii) Interest on the Revolving Credit Facility, which is calculated at the greater of the agent bank’s prime rate or federal fund rate plus 1%, plus an applicable margin of .25% to ..75%, which was 5.00% at August 31, 2004. For Euro-Rate borrowings, interest is calculated at the LIBOR rate plus an applicable margin of 1.75% to 3.00%. The applicable margin varies with our facility leverage ratio calculation.

(b) Amounts reflect amortization of debt discount on $200 million of Senior Notes due 2012 issued August 6, 2004, which will be amortized over the life of the notes using the interest method (see Note 9 to Consolidated Financial Statements, Item 8).

Although we are not aware of any pending circumstances which would change our expectation, changes in the tax laws, the imposition of and changes in federal and state clean air and clean fuel requirements and other changes in environmental laws and regulations may also increase future capital expenditure levels. Future capital expenditures are also subject to business conditions affecting the industry. We continue to investigate strategic acquisitions and capital improvements to our existing facilities.

Federal, state and local laws and regulations relating to the environment affect nearly all of our operations. As is the case with all the companies engaged in similar industries, we face significant exposure from actual or potential claims and lawsuits involving environmental matters. Future expenditures related to environmental matters cannot be reasonably quantified in many circumstances due to the uncertainties as to required remediation methods and related clean-up cost estimates. We cannot predict what additional environmental legislation or regulations will be enacted or become effective in the future or how existing or future laws or regulations will be administered or interpreted with respect to products or activities to which they have not been previously applied.

Related Party Transactions

See Item 13, Certain Relationships and Related Transactions.

Seasonal Factors

Seasonal factors affecting the Company’s business may cause variation in the prices and margins of some of the Company’s products. For example, demand for gasoline tends to be highest in spring and summer months, while demand for home heating oil and kerosene tends to be highest in winter months.

As a result, the margin on gasoline prices versus crude oil costs generally tends to increase in the spring and summer, while margins on home heating oil and kerosene tend to increase in winter.

Inflation

The effect of inflation on the Company has not been significant during the last five fiscal years.

Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (“FASB”) issued Interpretation (“FIN”) No. 46, “Consolidation of Variable Interest Entities” and in December 2003, a revised interpretation was issued (“FIN 46(R)”). In general, a variable interest entity (“VIE”) is a corporation, partnership, trust, or any other legal structure used for business purposes that either does not have equity investors with voting rights or has equity investors that do not provide sufficient financial resources for the entity to support its activities. FIN 46(R) requires a VIE to be consolidated by a company if that company is designated as the primary beneficiary. The interpretation applies to VIEs created after January 31, 2003, and for all financial statements issued after December 15, 2003 for VIEs in which an enterprise held a variable interest that is acquired before February 1, 2003. The adoption of FIN 46(R) did not have any effect on the Company’s financial position or results of operations.

In December 2003, the FASB issued a revision to Statement No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits” (Statement 132”). The revision to Statement 132 requires additional

26

disclosures relating to the description of the types of plan assets, investment strategy, measurement date(s), plan obligations, cash flows, and components of net periodic benefit costs of defined benefit pension plans and other defined postretirement benefit plans recognized during interim periods. These disclosure requirements are effective for all of the Company’s future quarterly and annual reports. Disclosures required under Statement 132 are included in Note 5 to the Consolidated Financial Statements, Item 8.

In May 2004, the FASB released Staff Position No. 106-2, “Accounting and Disclosure Requirements related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (“FSP 106-2”), which supersedes Staff Position No. 106-1. FSP 106-2 addresses the accounting and disclosure implications that are expected to arise as a result of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 enacted on December 8, 2003. FSP 106-2 is effective for interim or annual periods beginning after June 15, 2004. The Company adopted the provisions of FSP 106-2 for the year ended August 31, 2004.

In March 2004, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairments and Its Application to Certain Investments” (“EITF 03-1”). EITF 03-1 provides a three-step impairment model for determining whether an investment is other-than-temporarily impaired and requires the Company to recognize such impairments as an impairment loss equal to the difference between the investment’s cost and fair value at the reporting date. The guidance is effective for the Company during the first quarter of fiscal 2005. The Company does not believe that the adoption of EITF 03-1 will have a material effect on its financial position or results of operations.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We use our Revolving Credit Facility to finance a portion of our operations. These on-balance sheet financial instruments, to the extent they provide for variable rates, expose us to interest rate risk resulting from changes in the PNC Prime rate, the Federal Funds rate or the LIBOR rate.

We have exposure to price fluctuations of crude oil and refined products. We do not manage the price risk related to all of our inventories of crude oil and refined products with a permanent formal hedging program, but we do manage our risk exposures by managing inventory levels. During the fiscal years ended August 31, 2004 and 2003, the Company realized net gains from its trading activity of $400,000 and $1,600,000, respectively, which is included as a reduction of costs of goods sold. At August 31, 2004, the Company had net open futures positions of 750,000 barrels of crude oil that will expire during the first quarter of 2005. The unrealized loss associated with the open future positions amounted to $299,000 at August 31, 2004.

At August 31, 2004, we were exposed to the risk of market price declines with respect to a substantial portion of our crude oil and refined product inventories.

ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	28
Consolidated Financial Statements:
Balance Sheets	29
Statements of Operations	30
Statements of Comprehensive Income (Loss)	31
Statements of Stockholder’s Equity	32
Statements of Cash Flows	33
Notes to Consolidated Financial Statements	34 thru 61

27

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholder

United Refining Company

Warren, Pennsylvania

We have audited the accompanying consolidated balance sheets of United Refining Company and subsidiaries as of August 31, 2004 and 2003, and the related consolidated statements of operations, comprehensive income (loss), stockholder’s equity and cash flows for each of the three years in the period ended August 31, 2004. These consolidated financial statements are the responsibility of the management of United Refining Company and its subsidiaries. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of United Refining Company and subsidiaries as of August 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended August 31, 2004, in conformity with accounting principles generally accepted in the United States of America.

/s/    BDO Seidman, LLP

New York, New York

October 29, 2004

28

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	August 31,
	2004			2003
Assets
Current:
Cash and cash equivalents	$	11,552		$	13,819
Accounts receivable, net		44,596			42,732
Inventories		75,623			76,123
Prepaid expenses and other assets		17,247			10,336
Amounts due from affiliated companies, net		—			639
Total current assets		149,018			143,649
Property, plant and equipment, net		184,705			186,879
Investment in affiliated company		846			574
Deferred financing costs, net		6,723			2,963
Goodwill		1,349			1,349
Tradename		10,500			10,500
Amortizable intangible assets, net		3,103			3,588
Deferred turnaround costs and other assets, net		10,138			8,217
Deferred income taxes		—			3,709
	$	366,382		$	361,428
Liabilities and Stockholder’s Equity
Current:
Revolving credit facility	$	13,000		$	31,500
Current installments of long-term debt		452			683
Accounts payable		28,732			35,111
Accrued liabilities		16,300			15,707
Income taxes payable		795			—
Sales, use and fuel taxes payable		19,466			17,853
Deferred income taxes		3,919			5,157
Amounts due to affiliated companies, net		132			—
Total current liabilities		82,796			106,011
Long term debt: less current installments		199,496			182,227
Deferred income taxes		1,898			—
Deferred gain on settlement of pension plan obligations		915			1,130
Deferred retirement benefits		32,402			28,398
Other noncurrent liabilities		1,769			1,687
Total liabilities		319,276			319,453
Commitments and contingencies
Stockholder’s equity:
Common stock; $.10 par value per share—shares authorized 100; issued and outstanding 100		—			—
Additional paid-in capital		16,648			16,648
Retained earnings		32,762			26,367
Accumulated other comprehensive loss		(2,304	)		(1,040	)
Total stockholder’s equity		47,106			41,975
	$	366,382		$	361,428

See accompanying notes to consolidated financial statements.

29

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

	Year Ended August 31,
	2004			2003			2002
Net sales (includes consumer excise taxes of $167,629, $168,241, and $156,489)	$	1,488,937		$	1,290,351		$	1,052,016
Costs of goods sold		1,316,159			1,158,582			966,645
Gross profit		172,778			131,769			85,371
Expenses:
Selling, general and administrative expenses		111,808			106,427			94,297
Depreciation and amortization expenses		12,453			12,219			11,774
Total operating expenses		124,261			118,646			106,071
Operating income (loss)		48,517			13,123			(20,700	)
Other income (expense):
Interest expense, net		(21,423	)		(21,340	)		(19,734	)
Other, net		(2,201	)		(1,291	)		(1,345	)
Equity in net earnings of affiliate		672			867			1,242
Loss on early extinguishment of debt		(6,770	)		—			—
		(29,722	)		(21,764	)		(19,837	)
Income (loss) before income tax expense (benefit)		18,795			(8,641	)		(40,537	)
Income tax expense (benefit):
Current		2,200			258			(2,702	)
Deferred		5,200			(3,628	)		(12,894	)
		7,400			(3,370	)		(15,596	)
Net income (loss)	$	11,395		$	(5,271	)	$	(24,941	)

See accompanying notes to consolidated financial statements.

30

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

	Year Ended August 31,
	2004			2003			2002
Net income (loss)	$	11,395		$	(5,271	)	$	(24,941	)
Other comprehensive loss:
Minimum pension liability, net of taxes		(1,264	)		(950	)		(90	)
Other comprehensive loss		(1,264	)		(950	)		(90	)
Total comprehensive income (loss)	$	10,131		$	(6,221	)	$	(25,031	)

See accompanying notes to consolidated financial statements.

31

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

(in thousands, except share data)

				Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholder’s Equity
	Common Stock
	Shares	Amount
Balance at August 31, 2001	100	$	—	$	16,648	$	59,318		$	—		$	75,966
Dividend to stockholder	—		—		—		(2,130	)		—			(2,130	)
Net loss	—		—		—		(24,941	)		—			(24,941	)
Distribution to Parent under the Tax Sharing Agreement	—		—		—		(609	)		—			(609	)
Other comprehensive loss	—		—		—		—			(90	)		(90	)
Balance at August 31, 2002	100		—		16,648		31,638			(90	)		48,196
Net loss	—		—		—		(5,271	)		—			(5,271	)
Other comprehensive loss	—		—		—		—			(950	)		(950	)
Balance at August 31, 2003	100		—		16,648		26,367			(1,040	)		41,975
Dividend to stockholder	—		—		—		(5,000	)		—			(5,000	)
Other comprehensive loss	—		—		—		—			(1,264	)		(1,264	)
Net income	—		—		—		11,395			—			11,395
Balance at August 31, 2004	100	$	—	$	16,648	$	32,762		$	(2,304	)	$	47,106

See accompanying notes to consolidated financial statements.

32

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended August 31,
	2004			2003			2002
Cash flows from operating activities:
Net income (loss)	$	11,395		$	(5,271	)	$	(24,941	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		16,620			15,820			14,830
Write-off of deferred financing costs		1,990			—			—
Equity in net earnings of affiliate		(672	)		(867	)		(1,242	)
Deferred income taxes		5,200			(3,628	)		(12,894	)
Loss on asset dispositions		1,046			585			630
Cash (used in) provided by working capital items		(10,882	)		(2,545	)		2,279
Other, net		(2	)		18			(41	)
Change in operating assets and liabilities:
Other assets		(147	)		(750	)		—
Deferred retirement benefits		1,911			2,693			4,336
Other noncurrent liabilities		82			(663	)		—
Total adjustments		15,146			10,663			7,898
Net cash provided by (used in) operating activities		26,541			5,392			(17,043	)
Cash flows from investing activities:
Purchase of business, net of cash acquired		—			—			(16,900	)
Additions to property, plant and equipment		(10,075	)		(8,043	)		(9,061	)
Additions to turnaround costs		(5,360	)		(5,619	)		(1,415	)
Dividends received		400			2,000			1,064
Proceeds from asset dispositions		32			17			3
Net cash used in investing activities		(15,003	)		(11,645	)		(26,309	)
Cash flows from financing activities:
Net (reductions) borrowings on revolving credit facility		(18,500	)		7,186			24,314
Proceeds from issuance of long-term debt		197,342			—			—
Principal reductions of long-term debt		(180,994	)		(379	)		(227	)
Dividends to stockholder		(5,000	)		—			(2,130	)
Deferred financing costs		(6,653	)		(250	)		(314	)
Net cash (used in) provided by financing activities		(13,805	)		6,557			21,643
Net (decrease) increase in cash and cash equivalents		(2,267	)		304			(21,709	)
Cash and cash equivalents, beginning of year		13,819			13,515			35,224
Cash and cash equivalents, end of year	$	11,552		$	13,819		$	13,515
Cash (used in) provided by working capital items:
Accounts receivable, net	$	(1,864	)	$	(8,867	)	$	8,877
Inventories		500			17,444			(25,014	)
Prepaid expenses and other assets		(6,911	)		843			3,518
Refundable income taxes		—			3,300			(3,300	)
Accounts payable		(6,379	)		(15,527	)		21,944
Accrued liabilities		593			1,705			376
Amounts due affiliated companies		771			(779	)		(2,210	)
Income taxes payable		795			—			(2,473	)
Sales, use and fuel taxes payable		1,613			(664	)		561
Total change	$	(10,882	)	$	(2,545	)	$	2,279
Cash paid (received) during the period for:
Interest	$	21,490		$	21,538		$	19,728
Income taxes	$	1,721		$	(2,753	)	$	2,723
Non-cash investing and financing activities:
Property additions and capital leases	$	690		$	1,181		$	1,238

See accompanying notes to consolidated financial statements.

33

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    Description of Business and Summary of Significant Accounting Policies

Description of Business and Basis of Presentation

The consolidated financial statements include the accounts of United Refining Company and its subsidiaries, United Refining Company of Pennsylvania and its subsidiaries, and Kiantone Pipeline Corporation (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.

The Company is a petroleum refiner and marketer in its primary market area of Western New York and Northwestern Pennsylvania. Operations are organized into two business segments: wholesale and retail.

The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to the retail segment and the marketing of petroleum products to wholesale and industrial customers. The retail segment sells petroleum products under the Kwik Fill^®, Citgo^® and Keystone^® brand names at a network of Company-operated retail units and convenience and grocery items through Company-owned gasoline stations and convenience stores under the Red Apple Food Mart^® and Country Fair^® brand names.

The Company is a wholly-owned subsidiary of United Refining, Inc., a wholly-owned subsidiary of United Acquisition Corporation, which in turn is a wholly-owned subsidiary of Red Apple Group, Inc. (the “Parent”).

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company considers all highly liquid investment securities with maturities of three months or less at date of acquisition to be cash equivalents.

Derivative Financial Instruments

From time to time the Company uses derivatives to reduce its exposure to fluctuations in crude oil purchase costs and refining margins. Derivative products, specifically crude oil options contracts and crack spread option contracts are used to hedge the volatility of these items. The Company does not enter such contracts for speculative purposes.

For derivative instruments that are designated and qualify as fair value hedges (i.e. hedging the exposure to changes in the fair value of an asset or a liability or an identified portion thereof that is attributable to a particular risk), the gain or loss on the derivative instrument as well as the offsetting gain or loss on the hedge item attributable to the hedged risk is recognized in earnings in the current period. For derivative instruments not designated as hedging instruments, changes in fair market values are recognized in earnings as a component of costs of goods sold.

The Company accounts for changes in the fair value of its contracts by marking them to market and recognizing any resulting gains or losses in its statement of operations. During the fiscal years ended August 31, 2004 and 2003, the Company realized net gains from its trading activities of $400,000 and $1,600,000, respectively, which is included as a reduction of costs of goods sold. The Company includes the carrying amounts of the contracts in prepaid expenses and other assets in the Consolidated Balance Sheet.

At August 31, 2004, the Company had net open futures positions of 750,000 barrels of crude oil that will expire during the first quarter of 2005. The unrealized loss associated with the open future positions amounted to $299,000 at August 31, 2004.

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UNITED REFINING COMPANY AND SUBSIDIARIES

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Inventories and Exchanges

Inventories are stated at the lower of cost or market, with cost being determined under the Last-in, First-out (LIFO) method for crude oil and petroleum product inventories and the First-in, First-out (FIFO) method for merchandise. Supply inventories are stated at either lower of cost or market or replacement cost and include various parts for the refinery operations. If the cost of inventories exceeds their market value, provisions are made currently for the difference between the cost and the market value. As of August 31, 2004 and 2003, had the Company utilized the FIFO inventory method, petroleum product inventories would have been higher by $19,515,000 and $5,301,000, respectively. As of August 31, 2004, the Company had a LIFO layer liquidation resulting in an inventory gain of approximately $252,000. As of August 31, 2003, the Company had no LIFO layer liquidation.

Property, Plant and Equipment

Property, plant and equipment is stated at cost and depreciated by the straight-line method over the respective estimated useful lives. Routine current maintenance, repairs and replacement costs are charged against income. Expenditures which materially increase values, expand capacities or extend useful lives are capitalized. A summary of the principal useful lives used in computing depreciation expense is as follows:

	Estimated Useful Lives (Years)
Refinery Equipment	20-30
Marketing	15-30
Transportation	20-30

Deferred Maintenance Turnarounds

The cost of maintenance turnarounds, which consist of complete shutdown and inspection of significant units of the refinery at intervals of two or more years for necessary repairs and replacements, are deferred when incurred and amortized on a straight-line basis over the period of benefit, which ranges from 3 to 10 years. As of August 31, 2004 and 2003, deferred turnaround costs included in deferred turnaround costs and other assets, net amounted to $9,077,000 and $7,090,000, net of accumulated amortization of $5,209,000 and $5,494,000, respectively. Amortization expense included in costs of goods sold for the fiscal years ended August 31, 2004, 2003 and 2002 amounted to $3,372,000, $2,889,000 and $2,455,000, respectively.

Amortizable Intangible Assets

The Company amortizes identifiable intangible assets such as brand names, non-compete agreements, leasehold covenants and deed restrictions on a straight line basis over their estimated useful lives which range from 5 to 25 years.

Revenue Recognition

Revenues from wholesale sales are recognized upon shipment or when title passes. Retail revenues are recognized immediately upon sale to the customer.

Income Taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to

35

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company joins with the Parent and the Parent’s other subsidiaries in filing a Federal Income tax return on a consolidated basis. Income taxes are calculated on a separate return basis with consideration of the Tax Sharing Agreement between the Parent and its subsidiaries.

Post-Retirement Healthcare Benefits

The Company provides at no cost to retirees, post-retirement healthcare benefits to salaried and certain hourly employees. The benefits provided are hospitalization, medical coverage and dental coverage for the employee and spouse until age 65. After age 65, benefits continue until the death of the retiree, which results in the termination of benefits for all dependent coverage. If an employee leaves the Company as a terminated vested member of a pension plan prior to normal retirement age, the person is not entitled to any post-retirement healthcare benefits.

The Company accrues post-retirement benefits other than pensions, during the years that the employee renders the necessary service, of the expected cost of providing those benefits to an employee and the employee’s beneficiaries and covered dependents. The Company has elected to amortize the transition obligation of approximately $12,000,000 on a straight-line basis over a 20-year period.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts based on specifically identified amounts that we believe to be uncollectible. We also record additional allowances based on historical collection experience and our assessment of the general financial conditions affecting our customer base. Senior management reviews accounts receivable on a weekly basis to determine if any receivables will potentially be uncollectible. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments.

The Company places its temporary cash investments with quality financial institutions. At times, such investments were in excess of FDIC insurance limits. The Company has not experienced any losses in such accounts.

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UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Environmental Matters

The Company expenses environmental expenditures related to existing conditions resulting from past or current operations and from which no current or future benefit is discernible. Expenditures, which extend the life of the related property or mitigate or prevent future environmental contamination are capitalized. The Company determines its liability on a site by site basis and records a liability at the time when it is probable and can be reasonably estimated. The Company’s estimated liability is reduced to reflect the anticipated participation of other potentially responsible parties in those instances where it is probable that such parties are legally responsible and financially capable of paying their respective shares of the relevant costs. The estimated liability of the Company is not reduced for possible recoveries from insurance carriers and is recorded in accrued liabilities.

Goodwill and Other Non-Amortizable Assets

In accordance with Statement of Financial Accounting Standard No. 142, “Goodwill and Other Intangible Assets” (“Statement 142”), goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to annual impairment tests in accordance with Statement 142. Other intangible assets continue to be amortized over their estimated useful lives.

The Company performed separate impairment tests for its goodwill and tradename using the discounted cash flow methods. The fair value of the goodwill and tradename exceeded their respective carrying values. The Company has noted no subsequent indication that would require testing its goodwill and tradename for impairment.

Long-Lived Assets

Whenever events or changes in circumstances indicate that the carrying value of any of these assets (other than goodwill and tradename) may not be recoverable, the Company will assess the recoverability of such assets based upon estimated undiscounted cash flow forecasts. When any such impairment exists, the related assets will be written down to fair value.

Other Comprehensive Income (Loss)

The Company reports comprehensive income (loss) in accordance with Statement of Financial Accounting Standard No. 130, “Reporting Comprehensive Income” (“Statement 130”). Statement 130 establishes guidelines for the reporting and display of comprehensive income (loss) and its components in financial statements. Comprehensive income (loss) includes charges and credits to equity that are not the result of transactions with the shareholder. Included in other comprehensive income (loss) for the Company is a minimum pension liability adjustment, which is net of taxes.

Recent Accounting Pronouncements

In January 2003, the FASB issued Interpretation (“FIN”) No. 46, “Consolidation of Variable Interest Entities” and in December 2003, a revised interpretation was issued (“FIN 46(R)”). In general, a variable interest entity (“VIE”) is a corporation, partnership, trust, or any other legal structure used for business purposes that either does not have equity investors with voting rights or has equity investors that do not provide sufficient financial resources for the entity to support its activities. FIN 46(R) requires a VIE to be consolidated by a company if that company is designated as the primary beneficiary. The interpretation applies to VIEs created

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UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

after January 31, 2003, and for all financial statements issued after December 15, 2003 for VIEs in which an enterprise held a variable interest that is acquired before February 1, 2003. The adoption of FIN 46(R) did not have any effect on the Company’s financial position or results of operations.

In December 2003, the FASB issued a revision to Statement No. 132, “Employers’ Disclosures about Pensions and Other Postretirement Benefits” (“Statement 132”). The revision to Statement 132 requires additional disclosures relating to the description of the types of plan assets, investment strategy, measurement date(s), plan obligations, cash flows, and components of net periodic benefit costs of defined benefit pension plans and other defined postretirement benefit plans recognized during interim periods. These disclosure requirements are effective for all of the Company’s future quarterly and annual reports. Disclosures required under Statement 132 are included in Note 10 to the Consolidated Financial Statements herein.

In May 2004, the FASB released Staff Position No. 106-2, “Accounting and Disclosure Requirements related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (“FSP 106-2”), which supersedes Staff Position No. 106-1. FSP 106-2 addresses the accounting and disclosure implications that are expected to arise as a result of the Medicare Prescription Drug, Improvement and Modernization Act of 2003 enacted on December 8, 2003. FSP 106-2 is effective for interim or annual periods beginning after June 15, 2004. The Company adopted the provisions of FSP 106-2 for the year ended August 31, 2004 (see Note 10 to the Consolidated Financial Statements).

In March 2004, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No. 03-1, “The Meaning of Other-Than-Temporary Impairments and Its Application to Certain Investments” (“EITF 03-1”). EITF 03-1 provides a three-step impairment model for determining whether an investment is other-than-temporarily impaired and requires the Company to recognize such impairments as an impairment loss equal to the difference between the investment’s cost and fair value at the reporting date. The guidance is effective for the Company during the first quarter of fiscal 2005. The Company does not believe that the adoption of EITF 03-1 will have a material effect on its financial position or results of operations.

2.    Accounts Receivable, Net

As of August 31, 2004 and 2003, accounts receivable were net of allowance for doubtful accounts of $1,460,000 and $1,469,000, respectively.

3.    Inventories

Inventories consist of the following:

	August 31,
	2004		2003
	(in thousands)
Crude Oil	$	12,445	$	14,093
Petroleum Products		33,431		33,406
Total @ LIFO		45,876		47,499
Merchandise		15,275		14,554
Supplies		14,472		14,070
Total @ FIFO		29,747		28,624
Total Inventory	$	75,623	$	76,123

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UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Included in petroleum product inventories are exchange balances either held for or due from other petroleum marketers. These balances are not significant.

The Company does not own sources of crude oil and depends on outside vendors for its needs.

4.    Property, Plant and Equipment

Property, plant and equipment is summarized as follows:

	August 31,
	2004		2003
	(in thousands)
Refinery equipment, including construction-in-progress	$	194,183	$	191,197
Marketing (i.e. retail outlets)		89,422		87,173
Transportation		7,704		7,549
		291,309		285,919
Less: Accumulated depreciation		106,604		99,040
	$	184,705	$	186,879

5.    Goodwill and Intangible Assets

On December 21, 2001, the Company acquired 100% of the operations and working capital assets of Country Fair for approximately $17,300,000 in cash. Country Fair currently operates 71 convenience stores in northwestern Pennsylvania, southwestern New York, and eastern Ohio. The fixed assets of Country Fair were acquired by related entities controlled by John A. Catsimatidis, the indirect sole shareholder of the Company (See Footnote 14 to Consolidated Financial Statements).

The acquisition was accounted for under the purchase method of accounting and, accordingly, the consolidated financial statements include the results of operations of Country Fair from the acquisition date. The cost of the acquisition was allocated on the basis of the estimated fair value of the assets acquired over the liabilities assumed, based on an independent appraisal. The excess of the purchase price over the net assets acquired of approximately $1,400,000 has been recorded as goodwill.

39

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the fair values of the assets acquired and liabilities assumed at the date of acquisition.

At December 21, 2001

(in thousands)

Current assets		$	8,012
Property, plant and equipment			400
Deferred taxes			3,361
Intangible assets not subject to amortization:
Tradename			10,500
Intangible assets subject to amortization:
Vendor contracts	2,600
Deed restrictions	800
Non-compete agreements	400
Leasehold covenants	1,537		5,337
Goodwill			1,349
Total assets acquired			28,959
Current liabilities			(8,864	)
Other long-term liabilities			(2,795	)
Total liabilities assumed			(11,659	)
Net assets acquired		$	17,300

The following unaudited pro forma information presents the Company’s consolidated results of operations as if the Country Fair acquisition had occurred on September 1, 2000. These pro forma amounts have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which actually would have resulted had the acquisition occurred on September 1, 2000, or which may result in the future.

	Year Ended August 31, 2002
	(in thousands)
Net sales	$	1,103,329
Net income (loss)	$	(24,326	)

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UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

During the fiscal year ended August 31, 2004, the Company acquired $104,000 of leasehold covenants. As of August 31, 2004 and 2003, the Company’s intangible assets and goodwill, included in the Company’s retail segment, were as follows:

	Weighted Average Remaining Life	August 31, 2004				August 31, 2003
		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(in thousands)
Amortizable intangible assets:
Vendor contracts	4 yrs.	$	2,600	$	991	$	2,600	$	619
Deed restrictions	20 yrs.		800		85		800		53
Non-compete agreement	2 yrs.		400		213		400		133
Leasehold covenants	15 yrs.		1,641		278		1,537		173
			5,441		1,567		5,337		978
Less current portion			771		—		771		—
		$	4,670	$	1,567	$	4,566	$	978
Non-amortizable assets:
Tradename		$	10,500	$	—	$	10,500	$	—
Goodwill		$	1,349	$	—	$	1,349	$	—

Amortization expense for the fiscal years ended August 31, 2004, 2003, and 2002 amounted to $589,000, $585,000, and $390,000, respectively.

Amortization expense for intangible assets subject to amortization for each of the years in the five-year period ending August 31, 2009 is estimated to be $591,000 in 2005, $588,000 in 2006, $505,000 in 2007, $478,000 in 2008, and $230,000 in 2009.

6.    Accrued Liabilities

Accrued liabilities include the following:

	August 31,
	2004		2003
	(in thousands)
Interest	$	1,519	$	4,330
Payrolls and benefits		13,007		9,831
Other		1,774		1,546
	$	16,300	$	15,707

7.    Leases

The Company occupies premises, primarily retail gas stations and convenience stores and office facilities under long-term leases which require minimum annual rents plus, in certain instances, the payment of additional rents based upon sales. The leases generally are renewable for one to three five-year periods.

As of August 31, 2004 and 2003, capitalized lease obligations, included in long-term debt, amounted to $1,028,000 and $1,130,000, respectively, net of current portion of $102,000 and $89,000, respectively. The

41

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

related assets (retail gas stations and convenience stores) as of August 31, 2004 and 2003 amounted to $856,000 and $974,000, net of accumulated amortization of $586,000 and $468,000, respectively. Lease amortization amounting to $118,000, $118,000, and $94,000 for the years ended August 31, 2004, 2003, and 2002, respectively, is included in depreciation and amortization expense.

Future minimum lease payments as of August 31, 2004 are summarized as follows:

Year ended August 31,	Capital Leases		Operating Leases
	(in thousands)
2005	$	240	$	10,257
2006		244		9,637
2007		240		9,126
2008		221		8,075
2009		226		7,211
Thereafter		800		62,337
Total minimum lease payments		1,971		106,643
Less: Minimum sublease rents		—		95
Net minimum sublease payments		1,971	$	106,548
Less: Amount representing interest		841
Present value of net minimum lease payments	$	1,130

Net rent expense for operating leases amounted to $10,231,000, $10,105,000, and $7,786,000 for the years ended August 31, 2004, 2003 and 2002, respectively.

8.    Credit Facility

Effective January 27, 2004, the Company amended its secured credit facility to increase the maximum facility commitment from $50,000,000 to $75,000,000 on a permanent basis. Additionally, the amendments revised select covenant calculations, including the fixed charge coverage ratio and redefined select definitions.

The facility expires on May 9, 2007 and is secured by certain cash accounts, accounts receivable, and inventory, which amounted to $104,893,000 as of August 31, 2004. Until maturity, the Company may borrow on a borrowing base formula as set forth in the facility. For Base Rate borrowings, interest is calculated at the greater of the Agent Bank’s prime rate or federal fund rate plus 1%, plus an applicable margin of .25% to .75%, which was 5.00% and 4.75% at August 31, 2004 and 2003, respectively. For Euro-Rate borrowings, interest is calculated at the LIBOR rate plus an applicable margin of 1.75% to 3.00%. The applicable margin varies with the Company’s facility leverage ratio calculation. As of August 31, 2004, $13,000,000 of Base-Rate borrowings and no Euro-Rate borrowings were outstanding under the agreement. As of August 31, 2003, $1,500,000 of Base Rate borrowings and $30,000,000 of Euro-Rate borrowings were outstanding under the agreement. $385,000 and $615,000 of letters of credit were outstanding under the agreement at August 31, 2004 and 2003, respectively. The weighted average interest rate for Base Rate borrowings for the years ended August 31, 2004 and 2003 was 4.8%, respectively. The weighted average interest rate for Euro-Rate borrowings was 4.1% for the fiscal years ending August 31, 2004 and 2003, respectively. The Company pays a commitment fee of 3/8% per annum on the unused balance of the facility.

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UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

9.    Long-Term Debt

During August 2004, the Company sold $200,000,000 of 10 ¹/2% Senior Unsecured Notes due 2012 (the “Senior Unsecured Notes”) for $197,342,000, resulting in debt discount of $2,658,000 which will be amortized over the life of the notes using the interest method. The net proceeds of the offering of $191,600,000 were used to retire all of its outstanding 10 ³/4% Senior Unsecured Notes due 2007, Series B, pay accrued interest of $3,700,000 and a redemption premium related thereto and to pay a dividend of $5,000,000 to the Company’s stockholder. A loss of $6,770,000 on the early extinguishment of debt was recorded consisting of a redemption premium of $3,228,000, a write-off of deferred financing costs of $1,990,000 and additional interest paid of $1,552,000. Such notes are fully and unconditionally guaranteed on a senior unsecured basis by all of the Company’s subsidiaries (see Footnote 17 to Consolidated Financial Statements).

Both the Indenture of the Senior Unsecured Notes and the facility (See Footnote 8 to Consolidated Financial Statements) require that the Company maintain certain financial covenants. The facility requires the Company to meet certain financial covenants, as defined in the facility, a minimum Fixed Charge Coverage Ratio and a minimum Consolidated Net Worth. In addition, the facility limits the amount the Company can distribute for capital and operating leases. Both the facility and the Indenture of the Senior Unsecured Notes restrict the amount of dividends payable and the incurrence of additional Indebtedness. As of August 31, 2004 the Company is currently in compliance with covenants under the facility and the Indenture.

A summary of long-term debt is as follows:

	August 31,
	2004		2003
	(in thousands)
Long-term debt:
10.50% Senior Unsecured Notes due August 15, 2012	$	197,365	$	—
10.75% Senior Unsecured Notes due June 9, 2007, Series B		—		180,135
Other long-term debt		2,583		2,775
		199,948		182,910
Less: Current installments of long-term debt		452		683
Total long-term debt, less current installments	$	199,496	$	182,227

The principal amount of long-term debt outstanding as of August 31, 2004, net of unamortized discount matures as follows:

Year ended August 31,
	(in thousands)
2005	$	452
2006		248
2007		(36	)
2008		(105	)
2009		(146	)
Thereafter		199,535
	$	199,948

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UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following financing costs have been deferred and are being amortized to expense over the term of the related debt:

	August 31,
	2004		2003
	(in thousands)
Beginning balance	$	7,922	$	7,672
Current year additions		6,653		250
Total financing costs		14,575		7,922
Less:
Write-off of deferred financing costs		7,358		—
Accumulated amortization		494		4,959
	$	6,723	$	2,963

Amortization expense for the fiscal years ended August 31, 2004, 2003 and 2002 amounted to $902,000, $928,000, and $818,000, respectively.

10.    Employee Benefit Plans

Substantially all employees of the Company are covered by noncontributory defined benefit retirement plans. The benefits are based on each employee’s years of service and compensation. The Company’s policy is to contribute the minimum amounts required by the Employee Retirement Income Security Act of 1974 (ERISA), as amended. The assets of the plans are invested in an investment trust fund and consist of interest-bearing cash and bank common/collective trust funds.

In addition to the above, the Company provides certain post-retirement healthcare benefits to salaried and certain hourly employees. These post-retirement benefit plans are unfunded and the costs are shared by the Company and its retirees.

Net periodic pension cost and post-retirement healthcare benefit cost consist of the following components for the years ended August 31, 2004, 2003, and 2002:

	Pension Benefits									Other Post-Retirement Benefits
	2004			2003			2002			2004		2003		2002
	(in thousands)
Service cost	$	2,031		$	1,785		$	2,013		$	1,427	$	1,213	$	1,178
Interest cost on benefit obligation		3,210			2,948			2,848			2,396		2,290		1,920
Expected return on plan assets		(2,588	)		(2,332	)		(2,583	)		—		—		—
Amortization of transition obligation		140			140			140			597		597		597
Amortization and deferrals		583			250			207			507		401		146
Net periodic benefit cost	$	3,376		$	2,791		$	2,625		$	4,927	$	4,501	$	3,841

44

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The following table summarizes the change in benefit obligations and fair values of plan assets for the years ended August 31, 2004 and 2003:

	Pension Benefits						Other Post-Retirement Benefits
	2004			2003			2004			2003
	(in thousands)
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation @ beginning of year	$	49,171		$	44,702		$	36,851		$	32,707
Service cost		2,031			1,785			1,427			1,213
Interest cost		3,210			2,948			2,396			2,290
Medicare act subsidy effect		—			—			(3,940	)		—
Actuarial losses		3,527			1,027			4,371			1,714
Benefits paid		(1,400	)		(1,291	)		(1,124	)		(1,073	)
Benefit obligation @ end of year		56,539			49,171			39,981			36,851
CHANGE IN PLAN ASSETS:
Fair values of plan assets @ beginning of year		27,560			25,322			—			—
Actual return on plan assets		2,350			2,329			—			—
Company contributions		4,143			1,200			1,124			1,073
Benefits paid		(1,400	)		(1,291	)		(1,124	)		(1,073	)
Fair values of plan assets @ end of year		32,653			27,560			—			—
Funded status		23,886			21,611			39,981			36,851
Unrecognized net actuarial loss		(12,031	)		(8,617	)		(10,708	)		(10,785	)
Unrecognized prior service cost		(2,225	)		(2,457	)		—			—
Unrecognized transition obligation		(491	)		(631	)		(5,371	)		(5,968	)
Net amount recognized	$	9,139		$	9,906		$	23,902		$	20,098
AMOUNTS RECOGNIZED IN THE BALANCE SHEET CONSIST OF:
Accrued benefit cost	$	9,139		$	9,906
Additional minimum liability		6,515			4,808
Intangible asset		(2,716	)		(3,103	)
Accumulated other comprehensive loss		(3,799	)		(1,705	)
Net amount recognized	$	9,139		$	9,906

Note: For plans with assets less than the accumulated benefit obligation (ABO), the aggregate ABO is $48,307,000 while the aggregate asset value is $32,653,000.

WEIGHTED AVERAGE ASSUMPTIONS:
Discount rate	6.00	%	6.35	%	6.0	%	6.35	%
Expected return on plan assets	9.00	%	9.00	%
Rate of compensation increase	3.50	%	3.00	%

45

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

For measurement purposes, the assumed annual rate of increase in the per capita cost of covered medical and dental benefits was 10% and 5%, respectively for 2004; the rates were assumed to decrease gradually to 5% for both medical and dental benefits until 2010 and remain at that level thereafter. The healthcare cost trend rate assumption has a significant effect on the amounts reported. To illustrate, a 1 percentage point change in the assumed healthcare cost trend rate would have the following effects:

	1% Point Increase		1% Point Decrease
Effect on total of service and interest cost components	$	702	$	(563	)
Effect on post-retirement benefit obligation		6,166		(5,124	)

A reconciliation of the above accrued benefit costs to the consolidated amounts reported on the Company’s balance sheets follows:

	August 31,
	2004			2003
	(in thousands)
Accrued pension benefits	$	9,139		$	9,906
Accrued other post-retirement benefits		23,902			20,098
		33,041			30,004
Current portion of above benefits, included in payrolls and benefits in accrued liabilities		(5,149	)		(4,211	)
Minimum pension liability, net of intangible asset		3,799			1,705
Supplemental pension and other deferred compensation benefits		711			900
Deferred retirement benefits	$	32,402		$	28,398

The pension plans weighted-average target allocation for the year ended August 31, 2005 and strategic asset allocation matrix as of August 31, 2004 and 2003 are as follows:

	Target Allocation		Plan Assets @ 8/31
Asset Category	2005		2004		2003
Equity Securities	55 – 75	%	67	%	69	%
Debt Securities	25 – 35	%	28	%	27	%
Real Estate	—	%	—	%	—	%
Cash/Cash Equivalents	0 – 10	%	5	%	4	%
			100	%	100	%

The investment policy for the plans is formulated by the Company’s Pension Plan Committee (the “Committee”). The Committee is responsible for adopting and maintaining the investment policy, managing the investment of plan assets and ensuring that the plans’ investment program is in compliance with all provisions of ERISA, as well as the appointment of any investment manager who is responsible for implementing the plans’ investment process.

In drafting a strategic asset allocation policy, the primary objective is to invest assets in a prudent manner to meet the obligations of the plans to the Company’s employees, their spouses and other beneficiaries, when the obligations come due. The stability and improvement of the plans’ funded status is based on the various reasons for which money is funded. Other factors that are considered include the characteristics of the plans’ liabilities and risk-taking preferences.

46

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The asset classes used by the plan are the United States equity market, the international equity market, the United States fixed income or bond market and cash or cash equivalents. Plan assets are diversified to minimize the risk of large losses. Cash flow requirements are coordinated with the custodian trustees and the investment manager to minimize market timing effects. The asset allocation guidelines call for a maximum and minimum range for each broad asset class as noted above.

The target strategic asset allocation and ranges established under the asset allocation represents a long-term perspective. The Committee will rebalance assets to ensure that divergences outside of the permissible allocation ranges are minimal and brief as possible.

The net of investment manager fee asset return objective is to achieve a return earned by passively managed market index funds, weighted in the proportions identified in the strategic asset allocation matrix. Each investment manager is expected to perform in the top one-third of funds having similar objectives over a full market cycle.

The investment policy is reviewed by the Committee at least annually and confirmed or amended as needed.

The following contributions and benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Employer Contributions	Pension Benefits		Other Postretirement Benefits
			Gross		(Subsidy Receipts)
	(in thousands)
FYE 8/31/2005 (expected)	$	3,949	$	1,458	$	—
Expected Benefit Payments for the fiscal years ending August 31,
2005		1,631		1,458		—
2006		1,819		1,569		(79	)
2007		2,106		1,781		(126	)
2008		2,409		1,960		(146	)
2009		2,707		2,175		(162	)
2010—2014		18,697		14,001		(1,069	)

The pension plan contributions are deposited into the plans’ trusts, and the pension plan benefit payments are made from trust assets. For the postretirement benefit plan, the contributions and the benefit payments are the same and represent expected benefit amounts, which are paid from general assets.

The Company’s postretirement benefit plan is likely to be affected by The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”). Beginning in 2006, the Act provides a Federal subsidy payment to companies providing benefit plans that meet certain criteria regarding their generosity. The Company expects to receive those subsidy payments. The Company has accounted for the Act in accordance with FSP, which requires, in the Company’s case, recognition on August 31, 2004. The benefit obligation as of that date reflects the effect of the federal subsidy, and this amount is identified in the table reconciling the change in benefit obligation above. The estimated effect of the subsidy on cash flow is shown in the accompanying table of expected benefit payments above. The Act will not affect the net periodic postretirement benefit cost until the fiscal year ending August 31, 2005.

47

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company’s deferred gain on settlement of past pension plan obligations amounted to $915,000 and $1,130,000 as of August 31, 2004 and 2003, respectively, and is being amortized over 23 years. The related amortization amounted to $215,000 for each of the years ended August 31, 2004, 2003 and 2002.

The Company also contributes to voluntary employee savings plans through regular monthly contributions equal to various percentages of the amounts invested by the participants. The Company’s contributions to these plans amounted to $567,000, $538,000, and $751,000 for the years ended August 31, 2004, 2003 and 2002, respectively.

11.    Income Taxes

Income tax expense (benefit) consists of:

	Year Ended August 31,
	2004			2003			2002
	(in thousands)
Federal:
Current	$	260		$	(521	)	$	(2,953	)
Deferred		5,375			(2,929	)		(9,019	)
		5,635			(3,450	)		(11,972	)
State:
Current		1,940			779			251
Deferred		(175	)		(699	)		(3,875	)
		1,765			80			(3,624	)
	$	7,400		$	(3,370	)	$	(15,596	)

Reconciliation of the differences between income taxes computed at the Federal statutory rate and the provision for income taxes attributable to income (loss) before income tax expense (benefit) is as follows:

	Year Ended August 31,
	2004			2003			2002
	(in thousands)
U. S. federal income taxes at the statutory rate of 34%	$	6,390		$	(2,937	)	$	(13,783	)
State income taxes, net of Federal benefit		1,037			(201	)		(2,338	)
Federal income tax audit		—			—			188
Nondeductible expenses		316			225			259
Prior period accrual adjustment		(67	)		(745	)		113
Other		(276	)		288			(35	)
Income tax attributable to income (loss) before income tax expense (benefit)	$	7,400		$	(3,370	)	$	(15,596	)

48

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Deferred income tax liabilities (assets) are comprised of the following:

	August 31,
	2004			2003
	(in thousands)
Current deferred income tax liabilities (assets):
Inventory valuation	$	6,833		$	7,517
Accounts receivable allowance		(587	)		(641	)
Accrued liabilities		(2,462	)		(1,988	)
Other		135			269
		3,919			5,157
Deferred income tax liabilities (assets):
Property, plant and equipment		34,076			32,436
Accrued liabilities		(17,011	)		(15,769	)
Tax credits and carryforwards		(8,515	)		(13,862	)
State net operating loss carryforwards		(6,841	)		(6,963	)
Valuation allowance		162			416
Other		27			33
		1,898			(3,709	)
Net deferred income tax liability	$	5,817		$	1,448

The Company’s results of operations are included in the consolidated Federal tax return of the Parent (See Footnote 14 to Consolidated Financial Statements). The Company has a net operating loss carryfoward for regular tax purposes of $3,400,000, which will expire after 2022. For financial reporting purposes, valuation allowances of $162,000 and $416,000 at August 31, 2004 and 2003, respectively, were recognized for state net operating loss carryforwards not anticipated to be realized before expiration.

The Tax Reform Act of 1986 created a separate parallel tax system called the Alternative Minimum Tax (“AMT”) system. AMT is calculated separately from the regular U.S. Federal income tax and is based on a flat rate of 20% applied to a broader tax base. The higher of the two taxes is paid. The excess AMT over regular tax is a tax credit, which can be carried forward indefinitely to reduce regular tax liabilities in excess of AMT liabilities of future years. The Company generated AMT credits in prior years of approximately $6,500,000 that is available to offset the regular tax liability in the future years.

12.    Disclosures About Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value.

The carrying amount of cash and cash equivalents, trade accounts receivable, the revolving credit facility and current liabilities approximate fair value because of the short maturity of these instruments.

The fair value of long-term debt (See Footnote 9 to Consolidated Financial Statements) was determined using the fair market value of the individual debt instruments. As of August 31, 2004, the carrying amount and estimated fair value of these debt instruments approximated $199,948,000 and $192,103,000, respectively.

49

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

13.    Contingencies

In addition to the environmental matters discussed in Footnote 15 to the Consolidated Financial Statements, the Company is a defendant in various claims, legal actions and complaints arising in the ordinary course of business. In the opinion of management, all such matters are adequately covered by insurance, or if not so covered, are without merit or are of such kind, or involve such amounts that an unfavorable disposition would not have a material adverse effect on the consolidated financial position of the Company.

14.    Transactions with Affiliated Companies

On December 21, 2001, the Company acquired the operations and working capital assets of Country Fair (See Footnote 5 to Consolidated Financial Statements). The fixed assets of Country Fair were acquired by related entities controlled by John A. Catsimatidis, the indirect sole shareholder of the Company. These assets are being leased to the Company at an annual aggregate rental of approximately $5,200,000, which management, based on an independent third party valuation believes is fair, over a period ranging from 10 to 20 years. During the fiscal years ended August 31, 2004, 2003 and 2002, $5,215,000, $5,215,000, and $3,481,000 of rent payments were made to these related entities. The Company is not a guarantor on the underlying mortgages on the properties.

Concurrent with the above acquisition of Country Fair, the Company entered into a management agreement with a non-subsidiary affiliate to operate and manage 18 of the retail units owned by the non-subsidiary affiliate on a turn-key basis. For the years ended August 31, 2004, 2003 and 2002, the Company billed the affiliate $779,000, $761,000, and $525,000 for management fees and overhead expenses incurred in the management and operation of the 18 retail units which amount was deducted from expenses. As of August 31, 2004 and 2003, the Company owed the affiliate $28,000 and $229,000 under the terms of the agreement.

Effective June 1, 2001, the Company sold certain intangible assets to an unrelated entity and realized a $3,000,000 gain on the transaction which was recorded in other income. Concurrent with the sale, the Company entered into a 50% joint venture with the entity for the marketing of asphalt products. The joint venture is accounted for using the equity method of accounting. As part of its investment in the joint venture, the Company transferred $1,013,000 of inventory to it. For the years ended August 31, 2004, 2003 and 2002, net sales to the joint venture amounted to $9,209,000, $5,373,000, and $4,756,000, respectively. As of August 31, 2004 and 2003, the Company had a receivable from the joint venture of $651,000 and $1,529,000, respectively, under the terms of the agreement.

On September 29, 2000, the Company sold 42 retail units to an affiliate for $23,870,000. Concurrent with this asset sale, the Company terminated the leases on 8 additional retail locations which it had previously leased from a non-subsidiary affiliate. The Company has entered into a management agreement with the non-subsidiary affiliate to operate and manage the retail units owned by the non-subsidiary affiliate on a turnkey basis. For the years ended August 31, 2004, 2003 and 2002, the Company billed the affiliate $1,524,000, $1,554,000, and $1,436,000, respectively, for management fees and overhead expenses incurred in the management and operation of the 50 retail units, which amount was deducted from expenses. For the fiscal years ended August 31, 2004, 2003 and 2002, net sales to the affiliate amounted to $55,592,000, $44,816,000, and $35,617,000, respectively. As of August 31, 2004 and 2003, the Company owed the affiliate $310,000 and $318,000, respectively, under the terms of the agreement.

The Company paid a service fee relating to certain costs incurred by its Parent for the Company’s New York office. During the years ended August 31, 2004, 2003 and 2002, such fees amounted to approximately $984,000, $1,000,000, and $1,000,000, respectively.

50

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The Company joins with the Parent and the Parent’s other subsidiaries in filing a Federal income tax return on a consolidated basis. Income taxes are calculated on a separate return basis with consideration of the Tax Sharing Agreement between the Parent and its subsidiaries. Amounts related to the Tax Sharing Agreement for the utilization by the Company of certain tax attributes of the Parent and other subsidiaries related to tax years ended August 31, 1997 through August 31, 2001, totaled $609,000 and have been recorded as a distribution in fiscal 2002. As of August 31, 2004 and 2003, the Company owed the Parent $445,000 under the terms of the Tax Sharing Agreement.

The Company paid an insurance premium of $102,000 during the fiscal year ending August 31, 2003 on behalf of a non-subsidiary affiliate which is included in amounts due from affiliated companies at August 31, 2003. This receivable was subsequently paid by the affiliate.

15.    Environmental Matters And Other Contingencies

The Company is subject to Federal, state and local laws and regulations relating to pollution and protection of the environment such as those governing releases of certain materials into the environment and the storage, treatment transportation, disposal and clean-up of wastes, including, but not limited to, the Federal Clean Water Act, as amended, the Clean Air Act, as amended, the Resource Conservation and Recovery Act of 1976, as amended, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, and analogous state and local laws and regulations.

Due to the nature of the Company’s business, the Company is and will continue to be subject to various environmental claims, legal actions, and complaints. In the opinion of management, all other current matters are without merit or are of such kind or involve such amounts that an unfavorable disposition would not have a material adverse effect on the consolidated financial position or operations of the Company.

In addition to the foregoing proceedings, the Company and its subsidiaries are from time to time parties to various legal proceedings that arise in the ordinary course of their respective business operations. These proceedings include various administrative actions relating to federal, state and local environmental laws and regulations. The Company believes that if these legal proceedings in which it is currently involved are determined against the Company, they would not result in a material adverse effect on the Company’s operations or its consolidated financial condition. In the opinion of management, all such matters are adequately covered by insurance, or if not so covered, are without merit or are of such kind, or involve such amounts that an unfavorable disposition would not have a material adverse effect on the consolidated financial position or results of operations of the Company.

The management of the Company believes that remediation and related environmental costs incurred during the normal course of business are not expected to be material.

16.    Segments of Business

The Company is a petroleum refiner and marketer in its primary market area of Western New York and Northwestern Pennsylvania. Operations are organized into two business segments: wholesale and retail.

The wholesale segment is responsible for the acquisition of crude oil, petroleum refining, supplying petroleum products to the retail segment and the marketing of petroleum products to wholesale and industrial

51

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

customers. The retail segment sells petroleum products under the Kwik Fill^®, Citgo^® and Keystone^® brand names at a network of Company-operated retail units. and convenience and grocery items through Company-owned gasoline stations and convenience stores under the, Red Apple Food Mart^® and Country Fair^® brand names.

The accounting policies of the reportable segments are the same as those described in Footnote 1 to Consolidated Financial Statements. Intersegment revenues are calculated using estimated market prices and are eliminated upon consolidation. Summarized financial information regarding the Company’s reportable segments is presented in the following table.

	Year Ended August 31,
	2004		2003		2002
	(in thousands)
Net Sales
Retail	$	777,624	$	718,904	$	580,078
Wholesale		711,313		571,447		471,938
	$	1,488,937	$	1,290,351	$	1,052,016
Intersegment Sales
Wholesale	$	273,726	$	235,724	$	182,834
Operating Income (Loss)
Retail	$	5,163	$	10,627	$	4,656
Wholesale		43,354		2,496		(25,356	)
	$	48,517	$	13,123	$	(20,700	)
Total Assets
Retail	$	123,069	$	119,709	$	127,712
Wholesale		243,313		241,719		243,728
	$	366,382	$	361,428	$	371,440
Depreciation and Amortization
Retail	$	3,970	$	3,923	$	3,638
Wholesale		8,483		8,296		8,136
	$	12,453	$	12,219	$	11,774
Capital Expenditures
Retail	$	3,559	$	2,456	$	4,552
Wholesale		7,206		6,768		5,747
	$	10,765	$	9,224	$	10,299

17.    Subsidiary Guarantors

Certain of United Refining Company’s (the “issuer”) subsidiaries function as guarantors under the terms of the $200,000,000 Senior Unsecured Note Indenture due August 15, 2012. These subsidiaries were also guarantors under the terms of the $200,000,000 Senior Unsecured Notes due June 9, 2007, which were retired in August 2004. Financial information for the Company’s wholly-owned subsidiary guarantors (see Footnote 9 to Consolidated Financial Statements) is as follows:

52

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

	August 31, 2004
	Issuer			Guarantors			Eliminations			Consolidated
Assets
Current:
Cash and cash equivalents	$	4,709		$	6,843		$	—		$	11,552
Accounts receivable, net		33,459			11,137			—			44,596
Inventories		54,481			21,142			—			75,623
Prepaid expenses and other assets		12,090			5,157			—			17,247
Amounts due from affiliated companies		—			—			—			—
Intercompany		87,468			19,223			(106,691	)		—
Total current assets		192,207			63,502			(106,691	)		149,018
Property, plant and equipment, net		115,363			69,342			—			184,705
Investment in affiliated company		846			—			—			846
Deferred financing costs, net		6,723			—			—			6,723
Goodwill and other non-amortizable assets		—			11,849			—			11,849
Amortizable intangible assets		—			3,103			—			3,103
Deferred turnaround costs & other assets		9,462			1,847			(1,171	)		10,138
Deferred income taxes		—			—			—			—
	$	324,601		$	149,643		$	(107,862	)	$	366,382
Liabilities and Stockholder’s Equity
Current:
Revolving credit facility	$	13,000		$	—		$	—		$	13,000
Current installments of long-term debt		(181	)		633			—			452
Accounts payable		14,530			14,202			—			28,732
Accrued liabilities		11,100			5,200			—			16,300
Income taxes payable		958			(163	)		—			795
Sales, use and fuel taxes payable		16,217			3,249			—			19,466
Deferred income taxes		4,363			(444	)		—			3,919
Amounts due to affiliated companies		(206	)		338			—			132
Intercompany		—			106,691			(106,691	)		—
Total current liabilities		59,781			129,706			(106,691	)		82,796
Long term debt: less current installments		198,076			1,420			—			199,496
Deferred income taxes		(1,845	)		3,743			—			1,898
Deferred gain on settlement of pension plan obligations		915			—			—			915
Deferred retirement benefits		31,236			1,166			—			32,402
Other noncurrent liabilities		—			1,769			—			1,769
Total liabilities		288,163			137,804			(106,691	)		319,276
Commitment and contingencies
Stockholder’s equity
Common stock, $.10 par value per share—shares authorized 100; issued and outstanding 100		—			18			(18	)		—
Additional paid-in capital		7,150			10,651			(1,153	)		16,648
Retained earnings (deficit)		31,536			1,226			—			32,762
Accumulated other comprehensive loss		(2,248	)		(56	)		—			(2,304	)
Total stockholder’s equity		36,438			11,839			(1,171	)		47,106
	$	324,601		$	149,643		$	(107,862	)	$	366,382

53

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	August 31, 2003
	Issuer			Guarantors			Eliminations			Consolidated
Assets
Current:
Cash and cash equivalents	$	3,383		$	10,436		$	—		$	13,819
Accounts receivable, net		31,780			10,952			—			42,732
Inventories		55,435			20,688			—			76,123
Prepaid expenses and other assets		9,453			883			—			10,336
Amounts due from affiliated companies		1,186			(547	)		—			639
Intercompany		88,123			19,467			(107,590	)		—
Total current assets		189,360			61,879			(107,590	)		143,649
Property, plant and equipment, net		117,149			69,730			—			186,879
Investment in affiliated company		574			—			—			574
Deferred financing costs, net		2,963			—			—			2,963
Goodwill and other non-amortizable assets		—			11,849			—			11,849
Amortizable intangible assets		—			3,588			—			3,588
Deferred turnaround costs & other assets		8,204			1,184			(1,171	)		8,217
Deferred income taxes		7,455			(3,746	)		—			3,709
	$	325,705		$	144,484		$	(108,761	)	$	361,428
Liabilities and Stockholder’s Equity
Current:
Revolving credit facility	$	31,500		$	—		$	—		$	31,500
Current installments of long-term debt		89			594			—			683
Accounts payable		19,906			15,205			—			35,111
Accrued liabilities		11,708			3,999			—			15,707
Income taxes payable		—			—			—			—
Sales, use and fuel taxes payable		14,891			2,962			—			17,853
Deferred income taxes		5,123			34			—			5,157
Amounts due to affiliated companies		—			—			—			—
Intercompany		—			107,590			(107,590	)		—
Total current liabilities		83,217			130,384			(107,590	)		106,011
Long term debt: less current installments		180,375			1,852			—			182,227
Deferred income taxes		1,037			(1,037	)		—			—
Deferred gain on settlement of pension plan obligations		1,130			—			—			1,130
Deferred retirement benefits		27,174			1,224			—			28,398
Other noncurrent liabilities		—			1,687			—			1,687
Total liabilities		292,933			134,110			(107,590	)		319,453
Commitment and contingencies
Stockholder’s equity
Common stock, $.10 par value per share—shares authorized 100; issued and outstanding 100		—			18			(18	)		—
Additional paid-in capital		7,150			10,651			(1,153	)		16,648
Retained earnings (deficit)		26,662			(295	)		—			26,367
Accumulated other comprehensive loss		(1,040	)		—			—			(1,040	)
Total stockholder’s equity		32,772			10,374			(1,171	)		41,975
	$	325,705		$	144,484		$	(108,761	)	$	361,428

54

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)

	Year Ended August 31, 2004
	Issuer			Guarantors			Eliminations			Consolidated
Net sales	$	985,039		$	782,500		$	(278,602	)	$	1,488,937
Costs of goods sold		917,155			677,606			(278,602	)		1,316,159
Gross profit (loss)		67,884			104,894			—			172,778
Expenses:
Selling, general and administrative expenses		16,898			94,910			—			111,808
Depreciation and amortization expenses		8,311			4,142			—			12,453
Total operating expenses		25,209			99,052			—			124,261
Operating income (loss)		42,675			5,842			—			48,517
Other income (expense):
Interest expense, net		(17,386	)		(4,037	)		—			(21,423	)
Other, net		(2,732	)		531			—			(2,201	)
Equity in net earnings of affiliate		672			—			—			672
Loss on early extinguishment of debt		(6,770	)		—			—			(6,770	)
		(26,216	)		(3,506	)		—			(29,722	)
Income (loss) before income tax expense (benefit)		16,459			2,336			—			18,795
Income tax expense (benefit):
Current		1,979			221			—			2,200
Deferred		4,606			594			—			5,200
		6,585			815			—			7,400
Net income (loss)	$	9,874		$	1,521		$	—		$	11,395

55

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Year Ended August 31, 2003
	Issuer			Guarantors			Eliminations			Consolidated
Net sales	$	807,171		$	723,384		$	(240,204	)	$	1,290,351
Costs of goods sold		781,053			617,733			(240,204	)		1,158,582
Gross profit (loss)		26,118			105,651			—			131,769
Expenses:
Selling, general and administrative expenses		16,253			90,174			—			106,427
Depreciation and amortization expenses		8,123			4,096			—			12,219
Total operating expenses		24,376			94,270			—			118,646
Operating income (loss)		1,742			11,381			—			13,123
Other income (expense):
Interest expense, net		(17,176	)		(4,164	)		—			(21,340	)
Other, net		(1,633	)		342			—			(1,291	)
Equity in net earnings of affiliate		867			—			—			867
Loss on early extinguishment of debt		—			—			—			—
		(17,942	)		(3,822	)		—			(21,764	)
Income (loss) before income tax expense (benefit)		(16,200	)		7,559			—			(8,641	)
Income tax expense (benefit):
Current		(3,542	)		3,800			—			258
Deferred		(3,207	)		(421	)		—			(3,628	)
		(6,749	)		3,379			—			(3,370	)
Net income (loss)	$	(9,451	)	$	4,180		$	—		$	(5,271	)

56

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Year Ended August 31, 2002
	Issuer			Guarantors			Eliminations			Consolidated
Net sales	$	654,772		$	584,801		$	(187,557	)	$	1,052,016
Costs of goods sold		656,695			497,507			(187,557	)		966,645
Gross profit (loss)		(1,923	)		87,294			—			85,371
Expenses:
Selling, general and administrative expenses		16,670			77,627			—			94,297
Depreciation and amortization expenses		7,964			3,810			—			11,774
Total operating expenses		24,634			81,437			—			106,071
Operating income (loss)		(26,557	)		5,857			—			(20,700	)
Other income (expense):
Interest expense, net		(15,544	)		(4,190	)		—			(19,734	)
Other, net		(1,926	)		581			—			(1,345	)
Equity in net earnings of affiliate		1,242			—			—			1,242
Loss on early extinguishment of debt		—			—			—			—
		(16,228	)		(3,609	)		—			(19,837	)
Income (loss) before income tax expense (benefit)		(42,785	)		2,248			—			(40,537	)
Income tax expense (benefit):
Current		(3,840	)		1,138			—			(2,702	)
Deferred		(12,939	)		45			—			(12,894	)
		(16,779	)		1,183			—			(15,596	)
Net income (loss)	$	(26,006	)	$	1,065		$	—		$	(24,941	)

57

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended August 31, 2004
	Issuer			Guarantors			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	25,204		$	1,337		$	—	$	26,541
Cash flows from investing activities:
Purchase of business, net of cash acquired		—			—			—		—
Dividends received		400			—			—		400
Additions to property, plant and equipment		(6,720	)		(3,355	)		—		(10,075	)
Additions to turnaround costs		(4,517	)		(843	)		—		(5,360	)
Proceeds from asset dispositions		13			19			—		32
Net cash used in investing activities		(10,824	)		(4,179	)		—		(15,003	)
Cash flows from financing activities:
Net (reductions) borrowings on revolving credit facility		(18,500	)		—			—		(18,500	)
Proceeds from issuance of long-term debt		197,342			—			—		197,342
Principal reductions of long-term debt		(180,243	)		(751	)		—		(180,994	)
Dividends		(5,000	)		—			—		(5,000	)
Deferred financing costs		(6,653	)		—			—		(6,653	)
Net cash (used in) provided by financing activities		(13,054	)		(751	)		—		(13,805	)
Net increase (decrease) in cash and cash equivalents		1,326			(3,593	)		—		(2,267	)
Cash and cash equivalents, beginning of year		3,383			10,436			—		13,819
Cash and cash equivalents, end of year	$	4,709		$	6,843		$	—	$	11,552

58

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Year Ended August 31, 2003
	Issuer			Guarantors			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	2,026		$	3,366		$	—	$	5,392
Cash flows from investing activities:
Purchase of business, net of cash acquired		—			—			—		—
Dividends received		2,000			—			—		2,000
Additions to property, plant and equipment		(6,397	)		(1,646	)		—		(8,043	)
Additions to turnaround costs		(5,361	)		(258	)		—		(5,619	)
Proceeds from asset dispositions		17			—			—		17
Net cash used in investing activities		(9,741	)		(1,904	)		—		(11,645	)
Cash flows from financing activities:
Net (reductions) borrowings on revolving credit facility		7,186			—			—		7,186
Proceeds from issuance of long-term debt		—			—			—		—
Principal reductions of long-term debt		(92	)		(287	)		—		(379	)
Dividends		—			—			—		—
Deferred financing costs		(250	)		—			—		(250	)
Net cash (used in) provided by financing activities		6,844			(287	)		—		6,557
Net increase (decrease) in cash and cash equivalents		(871	)		1,175			—		304
Cash and cash equivalents, beginning of year		4,254			9,261			—		13,515
Cash and cash equivalents, end of year	$	3,383		$	10,436		$	—	$	13,819

59

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

	Year Ended August 31, 2002
	Issuer			Guarantors			Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	(41,140	)	$	24,097		$	—	$	(17,043	)
Cash flows from investing activities:
Purchase of business, net of cash acquired		—			(16,900	)		—		(16,900	)
Dividends received		1,064			—			—		1,064
Additions to property, plant and equipment		(5,251	)		(3,810	)		—		(9,061	)
Additions to turnaround costs		(1,415	)		—			—		(1,415	)
Proceeds from asset dispositions		—			3			—		3
Net cash used in investing activities		(5,602	)		(20,707	)		—		(26,309	)
Cash flows from financing activities:
Net (reductions) borrowings on revolving credit facility		24,314			—			—		24,314
Proceeds from issuance of long-term debt		—			—			—		—
Principal reductions of long-term debt		(71	)		(156	)		—		(227	)
Dividends		(2,130	)		—			—		(2,130	)
Deferred financing costs		(314	)		—			—		(314	)
Net cash (used in) provided by financing activities		21,799			(156	)		—		21,643
Net increase (decrease) in cash and cash equivalents		(24,943	)		3,234			—		(21,709	)
Cash and cash equivalents, beginning of year		29,197			6,027			—		35,224
Cash and cash equivalents, end of year	$	4,254		$	9,261		$	—	$	13,515

60

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

18.    Quarterly Financial Data (unaudited)

	Net Sales		Gross Profit		Net Income (Loss)
	(in thousands)
2004
First Quarter	$	330,815	$	43,811	$	4,457
Second Quarter		326,965		36,877		527
Third Quarter		374,320		48,426		7,158
Fourth Quarter		456,837		43,664		(747	)
2003
First Quarter	$	293,305	$	27,986	$	(4,218	)
Second Quarter		311,429		41,542		3,662
Third Quarter		331,124		27,690		(4,808	)
Fourth Quarter		354,493		34,551		93

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

NONE

ITEM 9A.    CONTROLS AND PROCEDURES

(a) Based on an evaluation of the Company’s disclosure controls and procedures (as defined in Rules 13(a)– 15(e) and 15(d)–15(e) of the Securities Exchange Act of 1934, as amended), as of the end of the Company’s fiscal year ended August 31, 2004, the Company’s Chief Executive Officer and Chief Financial Officer (its principal executive officer and principal financial officer, respectively) have concluded that the Company’s disclosure controls and procedures were effective.

(b) There have not been any significant changes in the Company’s internal controls over financial reporting that occurred during the Company’s fiscal quarter ended August 31, 2004 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

ITEM 9B.    OTHER INFORMATION

NONE

PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Set forth below is certain information as of November 24, 2004 with respect to all directors and executive officers of the Company.

Name	Age	Position
John A. Catsimatidis	56	Chairman of the Board, Chief Executive Officer, Director
Myron L. Turfitt	52	President, Chief Operating Officer, Director
Thomas C. Covert	70	Vice Chairman and Director
Ashton L. Ditka	63	Senior Vice President—Marketing
Thomas E. Skarada	62	Vice President—Refining
Frederick J. Martin, Jr.	50	Vice President—Supply and Transportation
James E. Murphy	59	Vice President and Chief Financial Officer
John R. Wagner	45	Vice President, General Counsel and Secretary
Dennis E. Bee, Jr.	62	Treasurer
Martin R. Bring	61	Director
Evan Evans	79	Director
Douglas Lemmonds	57	Director
Andrew Maloney	72	Director
Dennis Mehiel	61	Director
Kishore Lall	57	Director

John A. Catsimatidis has been Chairman of the Board and Chief Executive Officer since February 1986, when his wholly-owned company, United Acquisition Corp., purchased our parent. He also served as President from February 1986 until September 1996. He also serves as Chairman of the Board, Chief Executive Officer, President, and was the founder of Red Apple Group, Inc. (a holding company for certain businesses, including corporations which operate supermarkets in New York); Chief Executive Officer and Director of Gristede’s Foods, Inc., a public company whose common stock is listed on the American Stock Exchange and operates supermarkets in New York; a director of News Communications, Inc., a public company whose stock is traded over-the-counter; and Fonda Paper Company, Inc., a privately held company.

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Myron L. Turfitt has been President and Chief Operating Officer since September 1996. From June 1987 to September 1996 he was Chief Financial Officer and Executive Vice President. From August 1983 until June 1987 he was Senior Vice President—Finance and from July 1981 to August 1983, Mr. Turfitt held the position of Vice President, Accounting and Administration. Mr. Turfitt is a CPA with over 28 years of financial and operations experience in all phases of the petroleum business including exploration and production, refining and retail marketing. His experience covers both fully-integrated major oil companies and large independents.

Thomas C. Covert has been Vice Chairman since September 1996. From December 1987 to September 1996 Mr. Covert was Executive Vice President and Chief Operating Officer and from June 1986 to December 1987 he was Executive Vice President—Manufacturing. Mr. Covert was Executive Vice President of Prudential Energy Company from 1983 until June 1986. Prior thereto Mr. Covert was Vice President—Refining of Coastal Corporation. Mr. Covert is a petroleum expert with over 41 years of experience in the international and domestic petroleum industry. He is experienced in all phases of integrated oil company operations including crude oil and gas production, refining, marketing, marine and pipeline.

Ashton L. Ditka has been Senior Vice President—Marketing since July 1990. From December 1989 to July 1990 he was Vice President—Wholesale & Retail Marketing and from August 1976 until December 1989 he was Vice President—Wholesale Marketing. Mr. Ditka has over 36 years of experience in the petroleum industry, including 11 years in retail marketing with Atlantic Richfield Company.

Thomas E. Skarada has been Vice President—Refining since February 1996. From September 1994 to February 1996 he was Assistant Vice President—Refining and from March 1993, when he joined us, to September 1994 he was Director of Regulatory Compliance. Over his 36 year refining and marketing career, Mr. Skarada has worked in virtually every segment of the downstream business including supply, distribution, refinery operations, economics, planning, research and development. He has 18 years of managerial experience with Sun Refining and Marketing Co. and one year consulting with Muse Stancil and Co. in Dallas, Texas.

Frederick J. Martin, Jr. has been Vice President—Supply and Transportation since February 1993. From 1980 to January 1993 he held other positions with us involving transportation, product supply, crude supply and pipeline and terminal administration.

James E. Murphy has been Chief Financial Officer since January 1997. He was Vice President—Finance from April 1995 to December 1996 and since May 1982 has held other accounting and internal auditing positions with us, including Director of Internal Auditing since April 1986. Prior to joining us, Mr. Murphy had over 10 years experience in accounting and auditing with banking, public accounting and manufacturing companies.

John R. Wagner has been Vice President, General Counsel and Secretary since August 1997. Prior to joining us, Mr. Wagner served as Counsel to Dollar Bank, F.S.B. from 1988 to August 1997.

Dennis E. Bee, Jr. has been Treasurer since May 1988. Prior thereto and since he joined us in 1977, Mr. Bee held various positions in the accounting department including Assistant Treasurer from July 1982 to May 1988.

Martin R. Bring has served as a Director since 1988. He has also been a stockholder in the Anderson, Kill & Olick, P.C., a New York law firm since February 2002. Prior thereto Mr. Bring was a partner in the law firm of Wolf, Block, Schorr and Solis-Cohen LLP, a Philadelphia, Pennsylvania law firm and its predecessor law firm for more than 5 years. He also serves as a director for Gristede’s Foods, Inc., a public company whose common stock is listed on the American Stock Exchange and operates supermarkets in New York. Effective November 22, 2004, Mr. Bring will be joining the law office of Ellenoff Grossman & Schole, LLP as a partner.

Evan Evans has served as a Director since 1997. He has also been the Chairman of Holvan Properties, Inc., a privately owned petroleum industry consulting firm since 1983; a director of U.S. Energy Systems, Inc., a public company whose common stock is quoted on the Nasdaq SmallCap Market.

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Douglas Lemmonds has served as a Director since 1997. He has also served as Executive Vice President at SunTrust Bank (Washington D.C.) since 2002. From May 1996 to 2002 he served as Managing Director and the Chief Operating Officer, Private Banking-Americas of the Deutsche Bank Group. Private Banking-Americas operates across four separate legal entities, including a registered investment advisor, a broker-dealer, a trust company and a commercial bank. From June 1991 to May 1996 Mr. Lemmonds was the Regional Director of Private Banking of the Northeast Regional Office of the Bank of America and from August 1973 to June 1991 he held various other positions with Bank of America.

Andrew Maloney has served as a Director since 1997. He has also been counsel to De Feis O’Connell & Rose, a New York law firm since January 2003. From April 1998 to December 2002 Mr. Maloney was counsel to Kramer Levin Naftalis & Frankel LLP, a New York law firm. From December 1992 to April 1998 was a partner at Brown & Wood LLP, a New York law firm. From June 1986 to December 1992 he was the United States Attorney for the Eastern District of New York.

Dennis Mehiel has served as a Director since 1997. He has also been Chairman and Chief Executive Officer of The Fonda Group, Inc. since 1988. Since 1966 he has been the Chairman of Four M, a converter and seller of interior packaging, corrugated sheets and corrugated containers which he co-founded, and since 1977 (except during a leave of absence from April 1994 through July 1995) he has been the Chief Executive Officer of Four M. Mr. Mehiel is also the Chairman of MannKraft Corporation, a manufacturer of corrugated containers, and Chief Executive Officer and Chairman of Creative Expressions, Group, Inc.

Kishore Lall has served as a Director since 1997. He has also been Chief Financial Officer of Gristede’s Foods, Inc. since August 2003 and Executive Vice President—Finance and Administration and Secretary of Gristede’s Foods, Inc. since May 2002. He has also served as a Director of Gristede’s Foods, Inc. since 1997. From January 1997 to October 1997 he served as a consultant to Red Apple Group, Inc. From June 1994 to December 1996 has was a private investor. From January 1991 to May 1994 he was Senior Vice President and Head of Commercial Banking of ABN AMRO Bank (New York branch).

Audit Committee

We do not have a class of securities listed on a national securities exchange or national securities association subject to the requirements of Rule 10A-3 of the Securities Exchange Act of 1934, as amended. Consequently, the Company does not have an audit committee at this time, and has not designated an audit committee financial expert. However, the Company is reviewing whether it would be appropriate to appoint an audit committee consisting of independent members of its board of directors.

Code Of Ethics

We have adopted a Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act of 2002.

Section 16(a) Beneficial Ownership Reporting Compliance

Not Applicable

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ITEM 11.    EXECUTIVE COMPENSATION

The following table sets forth for the three fiscal years ended August 31, 2002, 2003 and 2004 the compensation paid by the Company to its Chairman of the Board and Chief Executive Officer and each of the four other executive officers of the Company whose salary and bonus exceeded $100,000 for the fiscal year ended August 31, 2004.

SUMMARY COMPENSATION TABLE

	Year	Annual Compensation				Other Annual Compensation ($)(1)		Other Compensation ($)(2)
Name & Principal Position		Salary ($)		Bonus ($)
John A. Catsimatidis	2004	$	360,000	$	395,000	$	—	$	5,579
Chairman of the Board &	2003		360,000		308,000		—		1,602
Chief Executive Officer	2002		360,000		355,000		—		7,864
Myron L. Turfitt	2004	$	235,000	$	540,000	$	4,024	$	3,509
President &	2003		235,000		260,000		5,372		1,172
Chief Operating Officer	2002		235,000		300,000		5,460		6,231
Ashton L. Ditka	2004	$	163,020	$	65,000	$	2,827	$	3,786
Senior Vice President	2003		158,400		7,920		1,932		2,705
Marketing	2002		158,817		25,000		2,117		7,530
Thomas E. Skarada	2004	$	136,982	$	65,000	$	7,044	$	3,124
Vice President	2003		133,100		6,655		5,507		2,677
Refining	2002		133,604		25,000		6,813		6,235
Frederick J. Martin, Jr.	2004	$	117,531	$	25,000	$	6,137	$	1,528
Vice President	2003		114,200		5,710		6,530		1,611
Supply & Transportation	2002		114,534		25,000		6,409		4,586

(1) Amounts include automobile allowances.

(2) Amounts include Company matching contributions under the Company’s 401(K) Incentive Savings Plan for fiscal year2002, September through December 2002 and May through August 2004; and health and term life insurance benefits.

Pension Plan

The Company maintains a defined benefit pension plan for eligible employees. The following table shows estimated annual benefits payable upon retirement in specified compensation categories and years of service classifications.

Pension Plan Table

	Years of Service
Average Earnings	15		20		25		30		35
$100,000	$	17,036	$	22,714	$	28,393	$	34,071	$	39,750
$125,000		21,723		28,964		36,205		43,446		50,687
$150,000		26,411		35,214		44,018		52,821		61,625
$200,000 or more		30,161		40,214		50,268		60,321		70,375

The benefit formula is based on the average earnings of the participant for the three years in which such participant’s earnings were the highest. Earnings include salary and bonus up to a maximum of $205,000 per year. Benefits are calculated by multiplying the sum of (a) 1.1% of average earnings up to the Social Security

65

compensation base, plus (b) 1.25% of average earnings in excess of the Social Security compensation base, by (c) the number of years of service. Payments of retirement benefits are not reduced by any Social Security benefits received by the participant. Effective May 2001, for purposes of calculating retirement benefits, the Company has fixed the Social Security compensation base at $76,200.

Assuming that the following officers continue to be employed by the Company until they reach age 65, their credited years of service will be as follows:

Name of Individual	Current Years of Service	Years of Service At Age 65
John A. Catsimatidis	18	27
Myron L. Turfitt	26	39
Ashton L. Ditka	28	30
Thomas E. Skarada	11	14
Frederick J. Martin	24	39

Compensation of Directors

Non-officer directors receive a stipend of $15,000 per year and $1,000 for each meeting attended.

Employment and Consulting Agreements

Mr. Thomas C. Covert has entered into a Deferred Compensation Agreement with us pursuant to which since the date of his retirement on September 1, 1996, we have been paying Mr. Covert a retirement benefit at the rate of approximately $12,300 per year. The benefit is payable to Mr. Covert until his death, whereupon Mr. Covert’s surviving spouse, if any, is entitled to a benefit of approximately $6,150 per year until her death.

We do not have any employment agreements with our officers or employees.

ITEM 12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information regarding ownership of Common Stock on November 24, 2004 by: (i) each stockholder known to the Company to own beneficially, directly or indirectly, more than 5% of the outstanding shares of Common Stock; (ii) each of the Company’s directors; and (iii) all officers and directors of the Company as a group. The Company believes that ownership of the shares by the persons named below is both of record and beneficial and such persons have sole voting and investing power with respect to the shares indicated.

Name and Address of Beneficial Owner	Number of Shares	Percent of Class
John A. Catsimatidis 823 Eleventh Avenue New York, NY 10019	100	100	%
All officers and directors as a group (15 persons)	100	100	%

ITEM 13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

On December 21, 2001, we acquired the operations and working capital assets of Country Fair (see Note 5 to Consolidated Financial Statements, Item 8). The fixed assets of Country Fair were acquired by related entities controlled by John A. Catsimatidis, our indirect sole shareholder. These assets are being leased to us at an annual aggregate rental of approximately $5,200,000, which management, based on an independent third party valuation believes is fair, over a period ranging from 10 to 20 years. During the fiscal years ended August 31, 2004, 2003

66

and 2002, $5,215,000, $5,215,000, and $3,481,000 of rent payments were made to these related entities. We are not a guarantor on the underlying mortgages on the properties.

Concurrent with the above acquisition of Country Fair, we entered into a management agreement with a non-subsidiary affiliate to operate and manage 18 of the retail units owned by the non-subsidiary affiliate on a turn-key basis. For the years ended August 31, 2004, 2003 and 2002, we billed the affiliate $779,000, $761,000, and $525,000 for management fees and overhead expenses incurred in the management and operation of the 18 retail units which amount was deducted from expenses. As of August 31, 2004 and 2003, we owed the affiliate $28,000 and $229,000 under the terms of the agreement.

Effective June 1, 2001, we sold certain intangible assets to an unrelated entity and realized a $3,000,000 gain on the transaction which was recorded in other income. Concurrent with the sale, we entered into a 50% joint venture with the entity for the marketing of asphalt products. The joint venture is accounted for using the equity method of accounting. As part of its investment in the joint venture, we transferred $1,013,000 of inventory to it. For the years ended August 31, 2004, 2003 and 2002, net sales to the joint venture amounted to $9,209,000, $5,373,000, and $4,756,000, respectively. As of August 31, 2004 and 2003, we had a receivable from the joint venture of $651,000 and $1,529,000, respectively, under the terms of the agreement.

On September 29, 2000, we sold 42 retail units to an affiliate for $23,870,000. An opinion as to the fairness of this transaction was delivered by an independent financial advisor in connection therewith. Concurrent with this asset sale, we terminated the leases on 8 additional retail locations which we had previously leased from a non-subsidiary affiliate. We have entered into a management agreement with the non-subsidiary affiliate to operate and manage the retail units owned by the non-subsidiary affiliate on a turnkey basis. For the years ended August 31, 2004, 2003 and 2002, we billed the affiliate $1,524,000, $1,554,000, and $1,436,000, respectively, for management fees and overhead expenses incurred in the management and operation of the 50 retail units, which amount was deducted from expenses. For the fiscal years ended August 31, 2004, 2003 and 2002, net sales to the affiliate amounted to $55,592,000, $44,816,000, and $35,617,000, respectively. As of August 31, 2004 and 2003, we owed the affiliate $310,000 and $318,000, respectively, under the terms of the agreement.

We paid a service fee relating to certain costs incurred by its Parent for the Company’s New York office. During the years ended August 31, 2004, 2003 and 2002, such fees amounted to approximately $984,000, $1,000,000, and $1,000,000, respectively.

We join with the Parent and the Parent’s other subsidiaries in filing a Federal income tax return on a consolidated basis. Income taxes are calculated on a separate return basis with consideration of the Tax Sharing Agreement between the Parent and its subsidiaries. Amounts related to the Tax Sharing Agreement for the utilization by the Company of certain tax attributes of the Parent and other subsidiaries related to tax years ended August 31, 1997 through August 31, 2001, totaled $609,000 and have been recorded as a distribution in fiscal 2002. As of August 31, 2004 and 2003, we owed the Parent $445,000 under term of the Tax Sharing Agreement.

We paid an insurance premium of $102,000 during the fiscal year ending August 31, 2003 on behalf of a non subsidiary affiliate which is included in amounts due from affiliated companies at August 31, 2003. This receivable was subsequently paid by the affiliate.

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ITEM 14.    PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following represents amounts billed and amounts expected to be billed to the Company for the professional services of BDO Seidman, LLP rendered during fiscal years 2004 and 2003:

	2004		2003
Audit Fees	$	482,225	$	328,480
Audit - Related Fees(1)	$	65,000	$	75,000
Tax Fees	$	—	$	—
All Other Fees	$	—	$	—
Total	$	547,225	$	403,480

(1) Services provided under this category consist of $65,000 and $75,000 for the audits of the Company’s employee benefit plans in 2004 and 2003, respectively.

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PART IV

ITEM 15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)    (1)    Financial Statements

A list of all financial statements filed as part of this report is contained in the index to Item 8, which index is incorporated herein by reference.

(2) Financial Statement Schedules

Report of Independent Certified Public Accountants Schedule II—Valuation and Qualifying Accounts

(3) Exhibits

Number	Description
3.1	Certificate of Incorporation of United Refining Company (“URC”). Incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form S-4 (File No. 333-35083) (the “Registration Statement”).
3.2	Bylaws of URC. Incorporated by reference to Exhibit 3.2 to the Registration Statement.
3.3	Certificate of Incorporation of United Refining Company of Pennsylvania (“URCP”). Incorporated by reference to Exhibit 3.3 to the Registration Statement.
3.4	Bylaws of URCP. Incorporated by reference to Exhibit 3.4 to the Registration Statement.
3.5	Certificate of Incorporation of Kiantone Pipeline Corporation (“KPC”). Incorporated by reference to Exhibit 3.5 to the Registration Statement.
3.6	Bylaws of KPC. Incorporated by reference to Exhibit 3.6 to the Registration Statement.
3.7	Certificate of Incorporation of Kiantone Pipeline Company (“KPCY”). Incorporated by reference to Exhibit 3.7 to the Registration Statement.
3.8	Bylaws of KPCY. Incorporated by reference to Exhibit 3.8 to the registration Statement.
3.9	Certificate of Incorporation of Kwik FillCorporation. (“K-FC”). Incorporated by reference to Exhibit 3.9 to the Registration Statement.
3.10	Bylaws of K-FC. Incorporated by reference to Exhibit 3.10 to the Registration Statement.
3.11	Certificate of Incorporation of Independent Gasoline & Oil Company of Rochester, Inc. (“IGOCRI”). Incorporated by reference to Exhibit 3.11 to the Registration Statement.
3.12	Bylaws of IGOCRI. Incorporated by reference to Exhibit 3.12 to the Registration Statement.
3.13	Certificate of Incorporation of Bell Oil Corp. (“BOC”). Incorporated by reference to Exhibit 3.13 to the Registration Statement.
3.14	Bylaws of BOC. Incorporated by reference to Exhibit 3.14 to the Registration Statement.
3.15	Certificate of Incorporation of PPC, Inc. (“PPCI”). Incorporated by reference to Exhibit 3.15 to the Registration Statement.
3.16	Bylaws of PPCI. Incorporated by reference to Exhibit 3.16 to the Registration Statement.
3.17	Certificate of Incorporation of Super Test Petroleum, Inc. (“STPI”). Incorporated by reference to Exhibit 3.17 to the Registration Statement.
3.18	Bylaws of STPI. Incorporated by reference to Exhibit 3.18 to the Registration Statement.
3.19	Certificate of Incorporation of Kwik-Fil, Inc. (“K-FI”). Incorporated by reference to Exhibit 3.19 to the Registration Statement.

69

Number	Description
3.20	Bylaws of K-FI. Incorporated by reference to Exhibit 3.20 to the Registration Statement.
3.21	Certificate of Incorporation of Vulcan Asphalt Refining Corporation (“VARC”). Incorporated by reference to Exhibit 3.21 to the Registration Statement.
3.22	Bylaws of VARC. Incorporated by reference to Exhibit 3.22 to the Registration Statement.
3.23	Certificate of Incorporation of United Jet Center, Inc. (“UJCI”). Incorporated by reference to Exhibit 3.23 to the Registration Statement.
3.24	Bylaws of UJCI. Incorporated by reference to Exhibit 3.24 to the Registration Statement.
*4.1	Indenture dated as of August 6, 2004 between URC, Country Fair, Inc, (“CFI”), KPC, KPCY, UJCI, URCP, K-FC, IGOCRI, BOC, PPCI, STPI, K-FI, VARC and The Bank of New York (“BONY”), relating to the 10 1/2% Series A Senior Notes due 2012.
*4.2	Form of Note.
*10.1	Purchase Agreement dated August 6, 2004 between URC, CFI, KPC, KPCY, UJCI, URCP, K-FC, IGOCRI, BOC, PPCI, STPI, K-FI, VARC, Citigroup (“CITI”), Goldman, Sachs & Co. (“GSC”), and PNC Capital Markets, Inc. (“PNCCMI”).
*10.2	Registration Rights Agreement dated August 6, 2004 between URC, CFI, KPC, KPCY, UJCI, URCP, K-FC, IGOCRI, BOC, PPCI, STPI, K-FI, VARC, CITI, GSC, and PNCCMI.
10.3	Servicing Agreement dated June 9, 1997 between URC and Red Apple Group, Inc. Incorporated by reference to Exhibit 10.4 to the Registration Statement.
10.4	Deferred Compensation Agreement dated September 1, 1996 with Thomas C. Covert. Incorporated by reference to Exhibit 10.14 of Registrant’s Annual Report on Form 10K for fiscal year ended August 31, 1998.
10.5	Amended and Restated Credit Agreement dated July 12, 2002 by and among URC, URCP, KPC, Country Fair and the Banks party thereto and PNC Bank, National Association, as Agent. Incorporated by reference to Exhibit 10.21 of Registrant’s Quarterly Report on Form 10Q for fiscal quarter ended May 31, 2002.
10.6	Amendment to Credit Agreement dated as of July 12, 2002 by and among URC, URCP, KPC, Country Fair and the Banks party thereto and PNC Bank, National Association, as Agent. Incorporated by reference to Exhibit 10.12 of Registrant’s Annual Report on Form 10K for fiscal year ended August 31, 2002.
10.7	Limited Waiver and Amendment No 3 to Credit Agreement dated as of March 24, 2003 by and among, URC, URCP, KPC, Country Fair and the Banks thereto and PNC Bank, National Association, as Agent. Incorporated by reference to Exhibit 10.13 of Registrant’s Quarterly Report on Form 10Q for fiscal quarter ended May 31, 2003.
10.8	Amendment to Credit Agreement dated as of January 27, 2004 by and among URC, URCP, KPC, CFI, K-FC and the Banks party thereto and PNC Bank, National Association, as Agent. Incorporated by reference to Exhibit 10.9 of Registrant’s Quarterly Report on Form 10Q for fiscal quarter ended February 29, 2004.
*10.9	Amendment No. 5 to Credit Agreement dated as of August 6, 2004 by and among URC, URCP, KPC, Country Fair, Inc., Kwik Fill, Inc., and the Banks party thereto and PNC Bank, National Association, as Agent.
14.1	Code of Ethics pursuant to Section 406 of the Sarbanes-Oxley Act of 2002. Incorporated by reference to Exhibit 14.1 in Registrant’s Annual Report on Form 10K for fiscal year ended August 31, 2003.

70

Number	Description
21.1	Subsidiaries of the Registrants. A) Incorporated by reference to Exhibit 21.1 to the Registration Statement. B) Country Fair, Inc. Incorporated in the Commonwealth of Pennsylvania in 1965, doing business as “Country Fair”.
*31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Filed herewith.

71

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholder of United Refining Company

Warren, Pennsylvania

The audits referred to in our report dated October 29, 2004 relating to the consolidated financial statements of United Refining Company and Subsidiaries included the audits of the financial statement Schedule II—Valuation and Qualifying Accounts for each of the three years in the period ended August 31, 2004. This financial statement schedule is the responsibility of management. Our responsibility is to express an opinion on this schedule based on our audits.

In our opinion, such financial statement Schedule—Valuation and Qualifying Accounts, presents fairly, in all material respects, the information set forth therein.

/s/    BDO SEIDMAN, LLP

New York, New York

October 29, 2004

72

UNITED REFINING COMPANY AND SUBSIDIARIES

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

Description	Balance at Beginning of Period		Charged to Costs and Expenses		Deductions			Balance at End Of Period
Year ended August 31, 2002:         Reserves and allowances deducted from asset accounts:         Allowance for uncollectible Accounts	$	1,370	$	420	$	(395	)	$	1,395
Year ended August 31, 2003:         Reserves and allowances deducted from asset accounts:         Allowance for uncollectible Accounts	$	1,395	$	440	$	(366	)	$	1,469
Year ended August 31, 2004:         Reserves and allowances deducted from asset accounts:         Allowance for uncollectible Accounts	$	1,469	$	409	$	(418	)	$	1,460

73

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 24, 2004
	UNITED REFINING COMPANY
	By:	/s/  Myron L. Turfitt
		Myron L. Turfitt President and Chief Operating Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 24, 2004
/s/  Myron L. Turfitt Myron L. Turfitt	President, Chief Operating Officer and Director	November 24, 2004
/s/  Thomas C. Covert Thomas C. Covert	Vice Chairman and Director	November 24, 2004
/s/  James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 24, 2004
/s/  Martin R. Bring Martin R. Bring	Director	November 24, 2004
/s/  Evan Evans Evan Evans	Director	November 24, 2004
/s/  Kishore Lall Kishore Lall	Director	November 24, 2004
/s/  Douglas Lemmonds Douglas Lemmonds	Director	November 24, 2004
/s/   Andrew Maloney	Director
/s/  Dennis Mehiel Dennis Mehiel	Director	November 24, 2004

74

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 24, 2004
	UNITED REFINING COMPANY OF PENNSYLVANIA
	By:	/s/  Myron L. Turfitt
		Myron L. Turfitt President and Chief Operating Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 24, 2004
/s/  Myron L. Turfitt Myron L. Turfitt	President, Chief Operating Officer	November 24, 2004
/s/  James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 24, 2004

75

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 24, 2004
	KIANTONE PIPELINE CORPORATION
	By:	/s/  Myron L. Turfitt
		Myron L. Turfitt President and Chief Operating Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 24, 2004
/s/  Myron L. Turfitt Myron L. Turfitt	President, Chief Operating Officer and Director	November 24, 2004
/s/  James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 24, 2004

76

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 24, 2004
	KIANTONE PIPELINE COMPANY
	By:	/s/  Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 24, 2004
/s/  Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 24, 2004
/s/  James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 24, 2004

77

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 24, 2004
	UNITED JET CENTER, INC.
	By:	/s/  Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 24, 2004
/s/  Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 24, 2004
/s/  James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 24, 2004

78

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 24, 2004
	VULCAN ASPHALT REFINING CORPORATION
	By:	/s/  Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 24, 2004
/s/  Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 24, 2004
/s/  James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 24, 2004

79

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 24, 2004
	KWIK-FIL, INC.
	By:	/s/  Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 24, 2004
/s/  Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 24, 2004
/s/  James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 24, 2004

80

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 24, 2004
	KWIK-FILLCORPORATION
	By:	/s/  Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 24, 2004
/s/  Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 24, 2004
/s/  James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 24, 2004

81

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 24, 2004
	INDEPENDENT GASOLINE & OIL COMPANY OF ROCHESTER, INC.
	By:	/s/  Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 24, 2004
/s/  Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 24, 2004
/s/  James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 24, 2004

82

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 24, 2004
	BELL OIL CORP.
	By:	/s/  Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 24, 2004
/s/  Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 24, 2004
/s/  James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 24, 2004

83

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 24, 2004
	PPC, INC.
	By:	/s/  Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 24, 2004
/s/  Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 24, 2004
/s/  James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 24, 2004

84

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 24, 2004
	SUPER TEST PETROLEUM, INC.
	By:	/s/  Myron L. Turfitt
		Myron L. Turfitt Executive Vice President

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/  John A. Catsimatidis John A. Catsimatidis	Chairman of the Board, Chief Executive Officer and Director	November 24, 2004
/s/  Myron L. Turfitt Myron L. Turfitt	Executive Vice President	November 24, 2004
/s/  James E. Murphy James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	November 24, 2004

85

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT

No annual report or proxy material was sent to security holders by the Corporation during the fiscal year ended August 31, 2004.

86

EX-4.1

Exhibit 4.1

INDENTURE

Dated as of August 6, 2004

among

UNITED REFINING COMPANY

as Company,

the Subsidiary Guarantors named herein,

and

THE BANK OF NEW YORK

as Trustee

10 ¹/2% Senior Notes due 2012, Series A

10 ¹/2% Senior Notes due 2012, Series B

CROSS-REFERENCE TABLE

TIA Section	Indenture Section
310(a)(1)	7.10
(a)(2)	7.10
(a)(3)	N.A.
(a)(4)	N.A.
(a)(5)	7.10
(b)	7.10
(c)	N.A.
311(a)	7.11
(b)	7.11
(c)	N.A.
312(a)	2.05
(b)	11.03
(c)	11.03
313(a)	7.06
(b)(1)	7.06
(b)(2)	7.06
(c)	7.06; 11.02
(d)	7.06
314(a)	4.08; 4.10
(b)	N.A
(c)(1)	4.08; 11.04
(c)(2)	13.04
(c)(3)	4.08
(d)	N.A.
(e)	11.05
(f)	N.A.
315(a)	7.01(b)
(b)	7.05; 11.02
(c)	7.01(a)
(d)	6.05; 7.01(c)
(e)	6.11
316(a)(last sentence)	2.09
(a)(1)(A)	6.05
(a)(1)(B)	6.04
(a)(2)	N.A.
(b)	6.07
(c)	9.04
317(a)(1)	6.08
(a)(2)	6.09
(b)	2.04
318(a)	11.01
(c)	11.01

N.A. means Not Applicable

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a part of the Indenture.

TABLE OF CONTENTS

		Page
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01.	Definitions.	1
SECTION 1.02.	Incorporation by Reference of TIA	16
SECTION 1.03.	Rules of Construction.	17
ARTICLE TWO
THE SECURITIES
SECTION 2.01.	Form and Dating.	17
SECTION 2.02.	Execution and Authentication	18
SECTION 2.03.	Registrar and Paying Agent	19
SECTION 2.04.	Paying Agent To Hold Money in Trust.	19
SECTION 2.05.	Securityholder Lists.	19
SECTION 2.06.	Transfer and Exchange.	20
SECTION 2.07.	Replacement Securities	20
SECTION 2.08.	Outstanding Securities	20
SECTION 2.09.	Treasury Securities	21
SECTION 2.10.	Temporary Securities	21
SECTION 2.11.	Cancellation	21
SECTION 2.12.	Defaulted Interest	21
SECTION 2.13.	CUSIP Number	22
SECTION 2.14.	Deposit of Moneys.	22
SECTION 2.15.	Book-Entry Provisions for Global Securities.	22
SECTION 2.16.	Registration of Transfers and Exchanges.	23
SECTION 2.17.	Designation.	26
ARTICLE THREE
REDEMPTION
SECTION 3.01.	Notices to Trustee.	27
SECTION 3.02.	Selection of Securities To Be Redeemed.	27
SECTION 3.03.	Notice of Redemption.	27
SECTION 3.04.	Effect of Notice of Redemption.	28
SECTION 3.05.	Deposit of Redemption Price; Unclaimed Moneys.	28
SECTION 3.06.	Securities Redeemed in Part.	28
ARTICLE FOUR
COVENANTS
SECTION 4.01.	Payment of Securities.	29
SECTION 4.02.	Maintenance of Office or Agency.	29
SECTION 4.03.	Limitation on Restricted Payments.	29
SECTION 4.04.	Limitation on Additional Indebtedness.	30
SECTION 4.05.	Corporate Existence.	31

-i-

			Page
	SECTION 4.06.	Payment of Taxes and Other Claims.	31
	SECTION 4.07.	Maintenance of Properties; Insurance; Books and Records.	31
	SECTION 4.08.	Compliance Certificate; Notice of Default.	31
	SECTION 4.09.	Compliance with Laws.	32
	SECTION 4.10.	Reports.	32
	SECTION 4.11.	Waiver of Stay, Extension or Usury Laws.	33
	SECTION 4.12.	Limitation on Transactions with Affiliates.	33
	SECTION 4.13.	Independent Directors.	34
	SECTION 4.14.	Limitations on Restrictions on Distributions from Subsidiaries.	34
	SECTION 4.15.	Limitation on Liens.	34
	SECTION 4.16.	Limitation on Asset Sales.	35
	SECTION 4.17.	Restrictions on Sale of Capital Stock of Subsidiaries.	36
	SECTION 4.18.	Restrictions on Sale and Leaseback Transactions.	36
	SECTION 4.19.	Additional Subsidiary Guarantees.	36
	SECTION 4.20.	Change of Control.	37
ARTICLE FIVE SUCCESSOR CORPORATION
	SECTION 5.01.	Mergers, Consolidations and Sale of Assets.	39
	SECTION 5.02.	Successor Corporation Substituted.	39
ARTICLE SIX DEFAULT AND REMEDIES
	SECTION 6.01.	Events of Default.	40
	SECTION 6.02.	Acceleration.	41
	SECTION 6.03.	Other Remedies.	41
	SECTION 6.04.	Waiver of Past Defaults.	41
	SECTION 6.05.	Control by Majority.	42
	SECTION 6.06.	Limitation on Suits.	42
	SECTION 6.07.	Rights of Holders to Receive Payment.	42
	SECTION 6.08.	Collection Suit by Trustee.	42
	SECTION 6.09.	Trustee May File Proofs of Claim.	43
	SECTION 6.10.	Priorities.	43
	SECTION 6.11.	Undertaking for Costs.	44
	SECTION 6.12.	Rights and Remedies Cumulative.	44
	SECTION 6.13.	Delay or Omission Not Waiver.	44
ARTICLE SEVEN TRUSTEE
	SECTION 7.01.	Duties of Trustee.	44
	SECTION 7.02.	Rights of Trustee.	45
	SECTION 7.03.	Individual Rights of Trustee.	46
	SECTION 7.04.	Trustee’s Disclaimer.	46
	SECTION 7.05.	Notice of Default.	47
	SECTION 7.06.	Reports by Trustee to Holders.	47
	SECTION 7.07.	Compensation and Indemnity.	47
	SECTION 7.08.	Replacement of Trustee.	48
	SECTION 7.09.	Successor Trustee by Merger, Etc.	49
	SECTION 7.10.	Eligibility; Disqualification.	49

-ii-

		Page
SECTION 7.11.	Preferential Collection of Claims Against Company.	49
ARTICLE EIGHT DISCHARGE OF INDENTURE
SECTION 8.01.	Termination of Company’s Obligations.	49
SECTION 8.02.	Application of Trust Money.	51
SECTION 8.03.	Repayment to the Company.	51
SECTION 8.04.	Indemnity for Government Obligations.	51
SECTION 8.05.	Reinstatement.	51
ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01.	Without Consent of Holders.	52
SECTION 9.02.	With Consent of Holders.	52
SECTION 9.03.	Compliance with TIA.	53
SECTION 9.04.	Revocation and Effect of Consents.	54
SECTION 9.05.	Notation on or Exchange of Securities.	54
SECTION 9.06.	Trustee to Sign Amendments, Etc.	54
ARTICLE TEN GUARANTEES
SECTION 10.01.	Unconditional Guarantee.	55
SECTION 10.02.	Severability.	55
SECTION 10.03.	Limitation of Subsidiary Guarantors’ Liability.	55
SECTION 10.04.	Contribution.	56
SECTION 10.05.	Waiver of Subrogation.	56
SECTION 10.06.	Execution of Guarantee.	57
SECTION 10.07.	Waiver of Stay, Extension or Usury Laws.	57
ARTICLE ELEVEN MISCELLANEOUS
SECTION 11.01.	TIA Controls.	57
SECTION 11.02.	Notices.	57
SECTION 11.03.	Communications by Holders with Other Holders.	58
SECTION 11.04.	Certificate and Opinion as to Conditions Precedent.	58
SECTION 11.05.	Statements Required in Certificate or Opinion.	59
SECTION 11.06.	Rules by Trustee, Paying Agent, Registrar.	59
SECTION 11.07.	Legal Holidays.	59
SECTION 11.08.	Governing Law.	59
SECTION 11.09.	No Adverse Interpretation of Other Agreements.	60
SECTION 11.10.	No Recourse Against Others.	60
SECTION 11.11.	Successors.	60
SECTION 11.12.	Duplicate Originals.	60
SECTION 11.13.	Severability.	60
Signatures		S-1

Exhibit A	–	Form of Series A Security
Exhibit B	–	Form of Series B Security
Exhibit C	–	Form of Legend for Global Securities
Exhibit D	–	Transfer Certificate
Exhibit E	–	Transferee Certificate for Institutional Accredited Investors
Exhibit F	–	Transferee Certificate for Regulation S Transfers

Note: This Table of Contents shall not, for any purpose, be deemed to be part of the Indenture.

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INDENTURE dated as of August 6, 2004, among United Refining Company (the “Company”), the Subsidiary Guarantors signatory hereto (the “Subsidiary Guarantors”) and The Bank of New York, (the “Trustee”).

The Company has duly authorized the creation of an issue of (i) 10 ¹/2% Senior Notes due 2012, Series A, and (ii) 10 ¹/2% Senior Notes due 2012, Series B, to be issued in exchange for the 10 ¹/2% Senior Notes due 2012, Series A, pursuant to the Registration Rights Agreement and, to provide therefore, the Company and the Subsidiary Guarantors have duly authorized the execution and delivery of this Indenture. All things necessary to make the Securities, when duly issued and executed by the Company and authenticated and delivered hereunder, and the Guarantees the valid joint and several obligations of the Company and the Subsidiary Guarantors, respectively, and to make this Indenture a valid and binding agreement of the Company and each of the Subsidiary Guarantors, have been done.

Each party hereto agrees as follows for the benefit of each other party and for the equal and ratable benefit of the Holders of the Securities:

DEFINITIONS AND INCORPORATION BY REFERENCE

Definitions.

“Acquired Indebtedness” means (a) with respect to any Person that becomes a direct or indirect Subsidiary of the Company after the date of this Indenture, Indebtedness of such Person and its Subsidiaries existing at the time such Person becomes a Subsidiary of the Company that was not incurred in connection with, or in contemplation of, such Person becoming a Subsidiary of the Company and (b) with respect to the Company or any of its Subsidiaries, any Indebtedness assumed by the Company or any of its Subsidiaries in connection with the acquisition of an asset from another Person that was not incurred by such other Person in connection with, or in contemplation of, such acquisition.

“Additional Securities” means any additional Securities having identical terms and conditions to the Securities issued pursuant to Article II and in compliance with Section 4.04 hereof after the Issue Date.

“Affiliate” of any Person means any Person (i) which directly or indirectly controls or is controlled by, or is under direct or indirect common control with, the referent Person, (ii) which beneficially owns or holds 10% or more of any class of the Voting Stock of the referent Person, (iii) of which 10% or more of the Voting Stock (or, in the case of a Person which is not a corporation, 10% or more of the equity interest) is beneficially owned or held by the referent Person or (iv) with respect to an individual, who is an immediate family member of such Person. For purposes of this definition, control of a Person shall mean the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; notwithstanding the foregoing, a Person shall not be deemed to be an affiliate of the referent Person solely as a result of the referent Person owning Voting Stock of such Person.

“Affiliate Transaction” has the meaning ascribed to such term in Section 4.12.

“Asset Sale” means any sale, issuance, conveyance, transfer, lease, assignment or other disposition to any Person other than the Company or any of its Subsidiaries (including, without limitation, by means of a Sale and Leaseback Transaction or a merger or consolidation) (collectively, for purposes of this

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definition, a “transfer”), directly or indirectly, in one transaction or a series of related transactions, of (a) any Capital Stock of any Subsidiary or (b) any other properties or assets of the Company or any of its Subsidiaries other than transfers of cash, Cash Equivalents, accounts receivable, inventory or other properties or assets in the ordinary course of business. For the purposes of this definition, the term “Asset Sale” shall not include any of the following: (i) any transfer of properties or assets (including Capital Stock) that is governed by, and made in accordance with, the provisions described under Section 5.01; (ii) any transfer of properties or assets to an Unrestricted Subsidiary, if permitted under Section 4.03; (iii) sales of damaged, worn-out or obsolete equipment or assets that, in the Company’s reasonable judgment, are either no longer used or useful in the business of the Company or its Subsidiaries; and (iv) any Sale and Leaseback Transactions not to exceed $5.0 million outstanding at anytime; and (v) any transfers that, but for this clause (v), would be Asset Sales, if after giving effect to such transfers, the aggregate Fair Market Value of the properties or assets transferred in such transaction or any such series of related transactions does not exceed $1,000,000.

“Attributable Indebtedness” of any Person, when used with respect to any Sale and Leaseback Transaction, means, as at the time of determination, property subject to such Sale and Leaseback Transaction and the present value (discounted at a rate equivalent to Company’s then-current weighted average cost of funds for borrowed money as at the time of determination, compounded on a semi-annual basis) of the total obligations of the lessee for rental payments during the remaining term of the lease included in any such Sale and Leaseback Transaction.

“Bankruptcy Law” means Title 11, U.S. Code or foreign law for the relief of debtors.

“Board Resolution” means a duly adopted resolution of the Board of Directors of the Company.

“Business Day” means any day other than a Saturday, Sunday or any other day on which banking institutions in the City of New York are required or authorized by law or other governmental action to be closed.

“Capital Stock” of any Person means any and all shares, rights to purchase, warrants or options (whether or not currently exercisable), participations or other equivalents of or interests in (however designated) the equity (including without limitation common stock, preferred stock and partnership interests) of such Person.

“Capitalized Lease Obligations” of any Person means the obligations of such Person to pay rent or other amounts under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of such obligation shall be the capitalized amount thereof determined in accordance with GAAP.

“Cash Equivalents” means (i) marketable obligations with a maturity of 180 days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof (provided that the full faith and credit of the United States of America is pledged in support thereof); (ii) demand and time deposits and certificates of deposit or acceptances with a maturity of 180 days or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $500 million; (iii) commercial paper maturing no more than 180 days from the date of creation thereof issued by a Person that is not an Affiliate of the Company and is organized under the laws of any state of the United States or the District of Columbia and rated at least A-1 by S&P or at least P-1 by Moody’s; (iv) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clause (i) above entered into with any commercial bank meeting the specifications of clause (ii) above; and (v) investments in money market or other mutual funds substantially all of whose assets comprise securities of the types described in clauses (i) through (iv) above.

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“Change of Control” means the occurrence of any of the following: (i) the consummation of any transaction the result of which is (x) if such transaction occurs prior to the first sale of Common Equity of the Company pursuant to a registration statement under the Securities Act that results in at least 20% of the then outstanding Common Equity of the Company having been sold to the public, that Permitted Holders beneficially own less than, directly or indirectly, 51% of the Common Equity of the Company, and (y) if such transaction occurs thereafter, that any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) (other than Permitted Holders) owns, directly or indirectly, a majority of the Common Equity of the Company, (ii) the Company consolidates with, or merges with or into, another person or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of the Company’s assets or the assets of Company and its Subsidiaries taken as a whole to any Person, or any Person consolidates with, or merges with or into, the Company, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company, as the case may be, is converted into or exchanged for cash, securities or other property, other than any such transaction where the outstanding Voting Stock of the Company, as the case may be, is converted into or exchanged for Voting Stock (other than Disqualified Stock) of the surviving or transferee Person and the beneficial owners of the Voting Stock of the Company immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the surviving or transferee Person immediately after such transaction, (iii) the Company, either individually or in conjunction with one or more Subsidiaries sells, assigns, conveys, transfers, leases or otherwise disposes of, or the Subsidiaries sell, assign, convey, transfer, lease or otherwise dispose of, all or substantially all of the properties and assets of the Company and its Subsidiaries, taken as a whole (either in one transaction or a series of related transactions), including Capital Stock of the Subsidiaries, to any Person (other than the Company or a Wholly Owned Subsidiary), or (iv) during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company was approved by either (i) a vote of two-thirds of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved or (ii) a Permitted Holder) cease for any reason to constitute a majority of the Board of Directors of the Company then in office.

“Change of Control Offer” has the meaning ascribed to that term in Section 4.20(a).

“Change of Control Purchase Date” has the meaning ascribed to that term in Section 4.20(a).

“Change of Control Purchase Notice” has the meaning ascribed to that term in Section 4.20(a).

“Change of Control Purchase Price” has the meaning ascribed to that term in Section 4.20(a).

“Commission” means the Securities and Exchange Commission.

“Common Equity” of any Person means all Capital Stock of such Person that is generally entitled to (i) vote in the election of directors or managing directors of such Person or (ii) if such Person is not a corporation, vote or otherwise participate in the selection of the governing body, partners, members, managers or others that controls the management and policies of such Person.

“Consolidated Amortization Expense” of any Person for any period means the amortization expense of such Person and its Subsidiaries for such period (to the extent included in the computation of Consolidated Net Income of such Person), determined on a consolidated basis in accordance with GAAP.

“Consolidated Depreciation Expense” of any Person for any period means the depreciation expense of such Person and its Subsidiaries for such period (to the extent included in the computation of Consolidated Net Income of such Person), determined on a consolidated basis in accordance with GAAP.

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“Consolidated Fixed Charge Coverage Ratio” of any Person means, with respect to any determination date, the ratio of (i) EBITDA for such Person’s four full fiscal quarters immediately preceding the determination date, to (ii) the aggregate Fixed Charges of such Person for such four fiscal quarters. In making such computations, (i) EBITDA and Fixed Charges shall be calculated on a pro forma basis assuming that (A) the Indebtedness to be incurred or the Disqualified Capital Stock to be issued (and all other Indebtedness incurred or Disqualified Capital Stock issued after the first day of such period of four full fiscal quarters referred to in the covenant described in paragraph (a) under Section 4.04 through and including the date of determination), and (if applicable) the application of the net proceeds therefrom (and from any other such Indebtedness or Disqualified Capital Stock), including the refinancing of other Indebtedness, had been incurred on the first day of such four quarter period and, in the case of Acquired Indebtedness, on the assumption that the related transaction (whether by means of purchase, merger or otherwise) also had occurred on such date with the appropriate adjustments with respect to such acquisition being included in such pro forma calculation and (B) any acquisition or disposition by the Company or any Subsidiary of any properties or assets outside the ordinary course of business or any repayment of any principal amount of any Indebtedness of the Company or any Subsidiary prior to the stated maturity thereof, in either case since the first day of such period of four full fiscal quarters through and including the date of determination, had been consummated on such first day of such four quarter period; (ii) the Fixed Charges attributable to interest on any Indebtedness required to be computed on a pro forma basis in accordance with the covenant described in paragraph (a) under Section 4.04 and (A) bearing a floating interest rate shall be computed as if the rate in effect on the date of computation had been the applicable rate for the entire period and (B) which was not outstanding during the period for which the computation is being made but which bears, at the option of the Company, a fixed or floating rate of interest, shall be computed by applying, at the option of the Company, either the fixed or floating rate; (iii) the Fixed Charges attributable to interest on any Indebtedness under a revolving credit facility required to be computed on a pro forma basis in accordance with the covenant described in paragraph (a) under Section 4.04 shall be computed based upon the average daily balance of such Indebtedness during the applicable period, provided that such average daily balance shall be reduced by the amount of any repayment of Indebtedness under a revolving credit facility during the applicable period, which repayment permanently reduced the commitments or amounts available to be reborrowed under such facility; (iv) notwithstanding the foregoing clauses (ii) and (iii), interest on Indebtedness determined on a fluctuating basis, to the extent such interest is covered by agreements relating to Hedging Obligations, shall be deemed to have accrued at the rate per annum resulting after giving effect to the operation of such agreements; and (v) if after the first day of the applicable four quarter period the Company has permanently retired any Indebtedness, Fixed Charges shall be calculated on a pro forma basis as if such Indebtedness had been retired on the first day of such period.

“Consolidated Income Tax Expense” means, for any Person for any period, the provision for taxes based on income and profits of such Person and its Restricted Subsidiaries to the extent such income or profits were included in computing Consolidated Net Income of such Person for such period.

“Consolidated Interest Expense” means, without duplication, with respect to any Person for any period, the sum of the interest expense on all Indebtedness of such Person and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP and including, without limitation, (i) imputed interest on Capitalized Lease Obligations and Attributable Indebtedness, (ii) commissions, discounts and other fees and charges owed with respect to letters of credit securing financial obligations and bankers’ acceptance financing, (iii) the net costs associated with Hedging Obligations, (iv) amortization of other financing fees and expenses, (v) the interest portion of any deferred payment obligations, (vi) amortization of debt discount or premium, if any, (vii) all other non-cash interest expense, (viii) capitalized interest, (ix) all interest payable with respect to discontinued operations, and (x) all interest on any Indebtedness of any other Person guaranteed by the referent Person or any of its Subsidiaries.

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“Consolidated Net Income” of any Person for any period means the net income (or loss) of such Person and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein), without duplication, (i) the net income (or loss) of any Person (other than a Subsidiary of the referent Person) in which any Person other than the referent Person has an ownership interest, except to the extent that any such income has actually been received by the referent Person or any of its Wholly-Owned Subsidiaries in the form of cash dividends during such period; (ii) except to the extent includible in the consolidated net income of the referent Person pursuant to the foregoing clause (i), the net income (or loss) of any Person that accrued prior to the date that (a) such Person becomes a Subsidiary of the referent Person or is merged into or consolidated with the referent Person or any of its Subsidiaries or (b) the assets of such Person are acquired by the referent Person or any of its Subsidiaries; (iii) the net income of any Subsidiary of the referent Person during such period to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary of that income is not permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Subsidiary during such period; (iv) any gain (but not loss), together with any related provisions for taxes on any such gain, realized during such period by the referent Person or any of its Subsidiaries upon (a) the acquisition of any securities, or the extinguishment of any Indebtedness, of the referent Person or any of its Subsidiaries or (b) any Asset Sale by the referent Person or any of its Subsidiaries; (v) any extraordinary gain (but not extraordinary loss), together with any related provision for Taxes on any such extraordinary gain, realized by the referent Person or any of its Subsidiaries during such period; and (vi) in the case of a successor to such Person by consolidation, merger or transfer of its assets, any earnings of the successor prior to such merger, consolidation or transfer of assets; and provided, further, that any gain referred to in clauses (iv) and (v) above that is received in cash by the referent Person or one of its Subsidiaries during such period shall be included in the consolidated net income of the referent Person.

“Consolidated Tangible Assets” of any Person as of any date means the total assets of such Person and its Subsidiaries (excluding any assets that would be classified as “intangible assets” under GAAP) on a consolidated basis at such date, determined in accordance with GAAP, less all write-ups subsequent to the Issue Date in the book value of any asset owned by such Person or any of its Restricted Subsidiaries.

“Custodian” means any receiver, trustee, assignee, liquidator, sequestrator, or similar official under any Bankruptcy Law.

“Default” means any event, act or condition that is, or after notice or the passage of time or both would be, an Event of Default.

“Depository” means, with respect to the Securities issued in the form of one or more Global Securities, The Depository Trust Company or another Person designated as Depository by the Company, which must be a clearing agency registered under the Exchange Act.

“Disqualified Capital Stock” means any Capital Stock of such Person or any of its Subsidiaries that, by its terms, by the terms of any agreement related thereto or by the terms of any security into which it is convertible, puttable or exchangeable, is, or upon the happening of any event or the passage of time would be, required to be redeemed or repurchased by such Person or any of its Subsidiaries, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the final maturity date of the Senior Notes; provided, however, that any class of Capital Stock of such Person that, by its terms, authorizes such Person to satisfy in full its obligations with respect to the payment of dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or otherwise by the delivery of Capital Stock that is not Disqualified Capital Stock, and that is not convertible, puttable or exchangeable for Disqualified Capital Stock or Indebtedness, shall not be deemed to be Disqualified Capital Stock so long as such Person satisfies its obligations with respect thereto solely by the delivery of Capital Stock that is not Disqualified Capital Stock.

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“EBITDA” means, with respect to any Person for any period, without duplication, the sum of the amounts for such period of (i) Consolidated Net Income, (ii) Consolidated Income Tax Expense, (iii) Consolidated Amortization Expense (but only to the extent not included in Fixed Charges), (iv) Consolidated Depreciation Expense, (v) Fixed Charges, (vi) prepayment or make-whole payments incurred in connection with the repayment of Indebtedness on the date of this Indenture and (vii) all other non-cash items reducing the Consolidated Net Income (excluding any such non-cash charge that results in an accrual of a reserve for cash charges in any future period) of such Person and its Subsidiaries, in each case determined on a consolidated basis in accordance with GAAP (provided, however, that the amounts set forth in clauses (ii) through (vii) shall be included only to the extent such amounts reduce Consolidated Net Income), less the aggregate amount of all non-cash items, determined on a consolidated basis, to the extent such items increase Consolidated Net Income.

“Equity Offering” means an offering or sale of Capital Stock (other than Disqualified Capital Stock) of the Company pursuant to a registration statement filed with the Commission in accordance with the Securities Act or pursuant to an exemption from the registration requirements in accordance with the Securities Act or pursuant to an exemption from the registration requirements thereof.

“Events of Default” has the meaning ascribed to that term in Section 6.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Existing Indebtedness” means all of the Indebtedness of the Company and its Subsidiaries that is outstanding on the Issue Date.

“Fair Market Value” means the fair market value as determined in good faith by the Board of Directors and evidenced by a Board Resolution.

“Fixed Charges” means, with respect to any Person for any period, the sum of (a) the Consolidated Interest Expense of such Person and its Subsidiaries for such period, and (b) the product of (i) all cash dividend payments (and non-cash dividend payments in the case of a Person that is a Subsidiary) on any series of preferred stock of such Person or a Subsidiary of such Person, times (ii) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state, local or equivalent foreign statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as may be approved by a significant segment of the accounting profession of the United States, as in effect on the Issue Date.

“Global Security” means a security evidencing all or a part of the Securities issued to the Depository in accordance with Section 2.01 and bearing the legend prescribed in Exhibit C.

“Guarantee” has the meaning ascribed to that term in Section 10.01.

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“Hedging Obligations” of any Person means the obligations of such Person pursuant to any interest rate swap agreement, interest rate collar agreement or other similar agreement or arrangement relating to interest rates.

“Holder” or “Securityholder” means the Person in whose name a Security is registered in the register of the Securities maintained by the Registrar pursuant to Section 2.03.

“Indebtedness” of any Person at any date means, without duplication, (i) all liabilities, contingent or otherwise, of such Person for borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof); (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all obligations of such Person in respect of letters of credit or other similar instruments (or reimbursement obligations with respect thereto); (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, except trade payables and accrued expenses incurred by such Person in the ordinary course of business in connection with obtaining goods, materials or services, which payable is not overdue by more than 60 days according to the original terms of sale unless such payable is being contested in good faith; (v) the maximum fixed repurchase price of all Disqualified Capital Stock of such Person; (vi) all Capitalized Lease Obligations of such Person; (vii) all Indebtedness of others secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; (viii) all Indebtedness of others guaranteed by such Person to the extent of such guarantee; provided that Indebtedness of the Company or its Subsidiaries that is guaranteed by the Company or the Company’s Subsidiaries shall only be counted once in the calculation of the Company and its Subsidiaries on a consolidated basis; and (ix) all Attributable Indebtedness of such Person. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above, the maximum liability of such Person for any such contingent obligations at such date and, in the case of clause (vii), the lesser of (A) the fair market value of any asset subject to a Lien securing the Indebtedness of others on the date that the Lien attaches and (B) the amount of the Indebtedness secured. For purposes of the preceding sentence, the “maximum fixed repurchase price” of any Disqualified Capital Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock as if such Disqualified Capital Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Capital Stock (or any equity security for which it may be exchanged or converted), such fair market value shall be determined in good faith by the Board of Directors of such Person, which determination shall be evidenced by a Board Resolution.

“Indenture” means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof.

“Independent Director” means a director of the Company who has not and whose Affiliates have not, at any time during the twelve months prior to the taking of any action hereunder, directly or indirectly, received, or entered into any understanding or agreement to receive, any compensation, payment or other benefit, of any type or form, from the Company or any of its Affiliates other than customary directors fees for serving on the Board of Directors of the Company or any Affiliate and reimbursement of out-of-pocket expenses for attendance at the Company’s or Affiliate’s board and board committee meetings. On the Issue Date, the Independent Directors are Evan Evans, Douglas Lemmonds, Andrew Maloney and Dennis Mehiel.

“Independent Financial Advisor” means an accounting, appraisal or investment banking firm of nationally recognized standing in the United States that is, in the reasonable judgment of the Company’s Board of Directors, qualified to perform the task for which it has been engaged and disinterested and independent with respect to the Company and its Affiliates.

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“Index Amount” means, for any year, an amount equal to the percentage increase, if any, in the Index as of the end of such year when compared to the Index in effect that the end of the previous year multiplied by the applicable amount of total compensation for such year. The “Index” means the Consumer Price Index for all Urban Consumers (CPI-U), Northeast, all items, 1982-84=100 published by the Bureau of Labor Statistics of the U.S. Department of Labor or if at any time such Index is not published, any substitute index designated by the Company and appropriately adjusted.

“Initial Purchasers” means Citigroup Global Markets Inc., PNC Capital Markets, Inc. and Goldman, Sachs & Co.

“Institutional Accredited Investor” means an institution that is an “accredited investor” as that term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

“Interest Payment Date” means the stated maturity of an installment of interest on the Securities.

“Investments” of any Person means (i) all investments by such Person in any other Person in the form of loans, advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business) or similar credit extensions constituting Indebtedness of such Person, and any guarantee of Indebtedness of any other Person, (ii) all purchases (or other acquisitions for consideration) by such Person of Indebtedness, Capital Stock or other securities of any other Person and (iii) all other items that would be classified as investments (including without limitation purchases of assets outside the ordinary course of business) on a balance sheet of such Person prepared in accordance with GAAP.

“Issue Date” means the date the Securities are initially issued.

“Lien” means, with respect to any asset or property, any mortgage, deed of trust, debenture, fiduciary transfer, fiduciary assignment, lien (statutory or other), pledge, lease, easement, restriction, covenant, charge, security interest or other encumbrance of any kind or nature in respect of such asset or property, whether or not filed, recorded or otherwise perfected under applicable law (including without limitation any conditional sale or other title retention agreement, and any lease in the nature thereof, any option or other agreement to sell, and any filing of, or agreement to give, any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).

“Liquidated Damages” has the meaning ascribed to such term in the Registration Rights Agreement.

“Management Agreements” means (i) the Management Agreement, dated September 29, 2000, between United Refining Holding, Inc. and United Refining Company of Pennsylvania and (ii) the Management Agreement, dated July 12, 2002, between United Refining, Inc. and Country Fair, Inc., each as subsequently amended, restated or replaced from time to time in any manner resulting in the terms and conditions of such Management Agreement being no less favorable to the Company or any of its Subsidiaries as on the Issue Date.

“Net Available Proceeds” means, with respect to any Asset Sale, the proceeds thereof in the form of cash or Cash Equivalents including payments in respect of deferred payment obligations when received in the form of cash or Cash Equivalents (except to the extent that such obligations are financed or sold with recourse to the Company or any Subsidiary), net of (i) brokerage commissions and other fees and expenses (including fees and expenses of legal counsel, accountants and investment banks) related to such Asset Sale, (ii) provisions for all taxes payable as a result of such Asset Sale (after taking into account any available tax credits

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or deductions and any tax sharing arrangements), (iii) amounts required to be paid to any Person (other than the Company or any Subsidiary) owning a beneficial interest in the properties or assets subject to the Asset Sale or having a Lien therein and (iv) appropriate amounts to be provided by the Company or any Subsidiary, as the case may be, as a reserve required in accordance with GAAP against any liabilities associated with such Asset Sale and retained by the Company or any Subsidiary, as the case may be, after such Asset Sale, including, without limitation, pensions and other postemployment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as reflected in an Officers’ Certificate delivered to the Trustee; provided, however, that any amounts remaining after adjustments, revaluations or liquidations of such reserves shall constitute Net Available Proceeds.

“Non-Recourse Purchase Money Indebtedness” means Indebtedness of Company or any of its Subsidiaries incurred (a) to finance the purchase of any assets of the Company or any of its Subsidiaries within 90 days of such purchase, (b) to the extent the amount of Indebtedness thereunder does not exceed 100% of the purchase cost of such assets, (c) to the extent the purchase cost of such assets is or should be included in “additions to property, plant and equipment” in accordance with GAAP, (d) to the extent that such Indebtedness is non-recourse to the Company or any of its Subsidiaries or any of their respective assets other than the assets so purchased and (e) to the extent the purchase of such assets is not part of an acquisition of any Person.

“Obligations” means all obligations of the Company and the Subsidiary Guarantors for principal, premium, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities and amounts payable under this Indenture, the Securities, the Guarantees.

“Officer” means, with respect to any Person, the Chairman of the Board, the Managing Director, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Controller, or the Secretary of such Person.

“Officers’ Certificate” means a certificate signed by two Officers of the Company or a Subsidiary Guarantor, as the case may be.

“Opinion of Counsel” means a written opinion from legal counsel (who may be an employee of the Company) who is acceptable to the Trustee.

“Parent” means Red Apple Group, Inc.

“Paying Agent” has the meaning ascribed to that term in Section 2.03.

“Payment Restriction”, with respect to a Subsidiary of any Person, means any encumbrance, restriction or limitation, whether by operation of the terms of its charter or by reason of any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation, on the ability of (i) such Subsidiary to (a) pay dividends or make other distributions on its Capital Stock or make payments on any obligation, liability or Indebtedness owed to such Person or any other Restricted Subsidiary of such Person, (b) make loans or advances to such Person or any other Subsidiary of such Person or (c) transfer any of its properties or assets to such Person or any other Subsidiary of such Person or (ii) such Person or any other Subsidiary of such Person to receive or retain any such dividends, distributions or payments, loans or advances or transfer or properties or assets.

“Permitted Holders” means John A. Catsimatidis and his Related Parties.

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“Permitted Indebtedness” means any of the following:

Indebtedness in an aggregate principal amount at any time outstanding not to exceed the greater of (1) $75.0 million or (2) 85% of the book value of the eligible accounts receivable and 60% of inventory of the Company and its Subsidiaries, calculated on a consolidated basis and in accordance with GAAP;

Indebtedness under the Securities, the Subsidiary Guarantees and this Indenture issued on the Issue Date;

Existing Indebtedness;

Indebtedness under Hedging Obligations, provided that (1) such Hedging Obligations are related to payment obligations on Permitted Indebtedness or Indebtedness otherwise permitted by paragraph (a) of Section 4.04, and (2) the notional principal amount of such Hedging Obligations does not exceed the principal amount of such Indebtedness to which such Hedging Obligations relate;

Indebtedness of the Company to a Subsidiary and Indebtedness of any Subsidiary to the Company or a Subsidiary; provided, however, that upon either (1) the subsequent issuance (other than directors’ qualifying shares), sale, transfer or other disposition of any Capital Stock or any other event which results in any such Subsidiary ceasing to be a Subsidiary or (2) the transfer or other disposition of any such Indebtedness (except to the Company or a Subsidiary), the provisions of this clause (v) shall no longer be applicable to such Indebtedness and such Indebtedness shall be deemed, in each case, to be incurred and shall be treated as an incurrence for purposes of paragraph (a) of Section 4.04 at the time the Subsidiary in question ceased to be a Subsidiary or the time such transfer or other disposition occurred;

Indebtedness in respect of bid, performance or surety bonds issued for the account of the Company in the ordinary course of business, including guarantees or obligations of the Company with respect to letters of credit supporting such bid, performance or surety obligations (in each case other than for an obligation for money borrowed);

Indebtedness in respect of Non-Recourse Purchase Money Indebtedness incurred by the Company or any Subsidiary;

Refinancing Indebtedness;

Indebtedness in respect of Recourse Purchase Money Indebtedness (including Capitalized Lease Obligations) incurred by the Company or any Subsidiary in an aggregate principal amount at any time outstanding not to exceed $10.0 million; and

Other Indebtedness of the Company and its Subsidiaries in an aggregate principal amount at any time outstanding not to exceed $10.0 million.

“Permitted Liens” means (i) Liens for taxes, assessments or governmental charges or claims that either (a) are not yet delinquent or (b) are being contested in good faith by appropriate proceedings and as to which appropriate reserves or other provisions have been made in accordance with GAAP; (ii) statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other Liens imposed by law arising in the ordinary course of business and with respect to amounts that either (a) are not yet delinquent or (b) are being contested in good faith by appropriate proceedings and as to which appropriate reserves or other provisions have been made in accordance with GAAP; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers’ compensation, unemployment insurance and other types of social

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security; (iv) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, progress payments, government contracts and other obligations of like nature (exclusive of obligations for the payment of borrowed money), in each case, incurred in the ordinary course of business; (v) easements, rights-of-way, restrictions and other similar charges or encumbrances in respect of real property not interfering with the ordinary conduct of the business of the Company or any of its Subsidiaries and not materially affecting the value of the property subject thereto; (vi) leases or subleases granted to others not interfering with the ordinary conduct of the business of the Company or any of its Subsidiaries and not materially affecting the value of the property subject thereto; (vii) Liens securing Acquired Indebtedness, provided that such Liens (x) are not incurred in connection with, or in contemplation of, the acquisition of the property or assets acquired and (y) do not extend to or cover any property or assets of the Company or any of its Restricted Subsidiaries other than the property or assets so acquired; (viii) Liens securing Refinancing Indebtedness to the extent incurred to repay, refinance or refund Indebtedness that is secured by Liens and outstanding as of the date hereof, provided that such Refinancing Indebtedness shall be secured solely by the assets securing the outstanding Indebtedness being repaid, refinanced or refunded; (ix) Liens that secure Sale and Leaseback Transactions that are permitted to be incurred under Sections 4.04 and 4.18 that extend to or cover property and assets acquired by the Company or a Subsidiary prior to or on the Issue Date in an aggregate amount at any time outstanding not to exceed $5.0 million or that extend to or cover property and assets acquired by the Company or Subsidiary after the Issue Date; (x) Liens securing Indebtedness between the Company and its Wholly Owned Subsidiaries or among such Wholly Owned Subsidiaries; (xi) Liens existing on the Issue Date to the extent and in the manner such Liens are in effect on the Issue Date (after giving effect to the application of the proceeds of this Offering); (xii) Liens securing the Revolving Credit Facility in an aggregate principal amount at any time outstanding not to exceed the greater of (1) $75.0 million or (2) 85% of the book value of the eligible accounts receivable and 60% of the Company and its Subsidiaries’ inventory, calculated on a consolidated basis and in accordance with GAAP; (xiii) Liens securing Non-Recourse Purchase Money Indebtedness or Recourse Purchase Money Indebtedness (including Capitalized Lease Obligations), provided, that such Liens extend only to the property being acquired and such Lien is created within 90 days of the purchase of such property; (xiv) Liens securing Indebtedness in an amount not to exceed $10.0 million at any time outstanding; and (xv) Liens on raw materials in transit.

“Person” means any individual, corporation, partnership, joint venture, incorporated or unincorporated association, joint-stock company, trust, unincorporated organization or government or other agency or political subdivision thereof or other entity of any kind.

“Physical Securities” has the meaning ascribed to that term in Section 2.01.

“Plan of Liquidation”, with respect to any Person, means a plan that provides for, contemplates or the effectuation of which is preceded or accompanied by (whether or not substantially contemporaneously, in phases or otherwise): (i) the sale, lease, conveyance or other disposition of all or substantially all of the assets of such Person otherwise than as an entirety or substantially as an entirety; and (ii) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and all or substantially all of the remaining assets of such Person to Holders of Capital Stock of such Person.

“Private Placement Legend” means the legend initially set forth on the Securities in the form set forth on Exhibit A.

“pro forma” means, with respect to any calculation made or required to be made pursuant to the terms of this Indenture, a calculation in accordance with Article 11 of Regulation S-X under the Securities Act as interpreted by the Company’s Boards of Directors in consultation with its independent certified public accountants.

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“Purchase Agreement” means the purchase agreement dated as of August [    ], 2004 by and among the Company, the Subsidiary Guarantors and the Initial Purchasers.

“Purchase Date” shall have the meaning ascribed to such term in Section 4.15(e).

“Qualified Institutional Buyer” or “QIB” shall have the meaning specified in Rule 144A under the Securities Act.

“Record Date” means each of the Record Dates specified in the Securities; provided that if any such date is not a Business Day, the Record Date shall be the first day immediately preceding such specified day that is a Business Day.

“Recourse Purchase Money Indebtedness” means Indebtedness of the Company or any of its Subsidiaries incurred (a) to finance the purchase of any of the Company’s or any of its Subsidiaries’ assets within 90 days of such purchase, (b) to the extent the amount of Indebtedness thereunder does not exceed 100% of the purchase cost of such assets, (c) to the extent the purchase cost of such assets is or should be included in “additions to property, plant and equipment” in accordance with GAAP, and (d) to the extent the purchase of such assets is not part of an acquisition of any Person.

“Redemption Date,” when used with respect to any Security to be redeemed, means the date fixed for such redemption pursuant to this Indenture and the Securities.

“Redemption Price,” when used with respect to any Security to be redeemed, means the price fixed for such redemption, payable in immediately available funds, pursuant to this Indenture and the Securities.

“Refinancing Indebtedness” means Indebtedness of the Company or a Subsidiary of the Company issued in exchange for, or the proceeds from the issuance and sale or disbursement of which are used substantially concurrently to repay, redeem, refund, refinance, discharge or otherwise retire for value, in whole or in part (collectively, “repay”), or constituting an amendment, modification or supplement to or a deferral or renewal of (collectively, an “amendment”), any Indebtedness of the Company or any of its Subsidiaries existing immediately after the original issuance of the Securities or incurred pursuant to the Fixed Charge Coverage Ratio of Section 4.04 in a principal amount not in excess of the principal amount of the Indebtedness so repaid or amended or, if such Refinancing Indebtedness refinances Indebtedness under a revolving credit facility or other agreement providing a commitment for subsequent borrowings, with a maximum commitment not to exceed the maximum commitment under such revolving credit facility or other agreement; provided that: (i) the Refinancing Indebtedness is the obligation of the same Person, and is subordinated to the Securities, if at all, to the same extent, as the Indebtedness being repaid or amended; (ii) the Refinancing Indebtedness is scheduled to mature either (a) no earlier than the Indebtedness being repaid or amended or (b) after the maturity date of the Securities; (iii) the portion, if any, of the Refinancing Indebtedness that is scheduled to mature on or prior to the maturity date of the Securities has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Weighted Average Life to Maturity of the portion of the Indebtedness being repaid that is scheduled to mature on or prior to the maturity date of the Securities; and (iv) the Refinancing Indebtedness is secured only to the extent, if at all, and by the assets, that the Indebtedness being repaid or amended is secured.

“Registered Exchange Offer” means the offer to exchange the Series B Securities for all of the outstanding Series A Securities in accordance with the Registration Rights Agreement.

“Registrar” has the meaning ascribed to that term in Section 2.03.

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“Registration Rights Agreement” means the Registration Rights Agreement dated the Issue Date by and among the Company, the Subsidiary Guarantors and the Initial Purchasers.

“Regulation S” means Regulation S under the Securities Act.

“Related Business Investment” means any Investment directly by the Company or its Subsidiaries in any business that is closely related to or complements the business of the Company or its Subsidiaries as such business exists on the Issue Date.

“Related Party” with respect to any Person means (i) any controlling stockholder, 80% (or more) owned Subsidiary, or spouse or immediate family member (in the case of an individual) of such Person or (ii) any trust, corporation, partnership or other entity, the beneficiaries, shareholders, partners, owners or Persons beneficially holding an 80% or more controlling interest of which consist of such Person and/or such other Persons referred to in the immediately preceding clause (i).

“Responsible Officer” shall mean, when used with respect to the Trustee, any officer of the Trustee within the Corporate Finance Unit of the Corporate Trust Division of the Trustee (or any successor unit, department or division of the Trustee) located at the Corporate Trust Office of the Trustee who has direct responsibility for the administration of this Indenture and, for the purposes of Section 7.01(c)(2) and the second sentence of Section 7.05, shall also include any officer of the Trustee to whom any corporate trust matter is referred because of such person’s knowledge of and familiarity with the particular subject.

“Restricted Debt Payment” means any purchase, redemption, defeasance (including without limitation in substance or legal defeasance) or other acquisition or retirement for value, directly or indirectly, by the Company or a Subsidiary, prior to the scheduled maturity or prior to any scheduled repayment of principal or sinking fund payment, as the case may be, in respect of Subordinated Indebtedness.

“Restricted Investment”, with respect to any Person, means any Investment by such Person (other than investments in Cash Equivalents) in any Person that is not a Subsidiary including its Unrestricted Subsidiaries, if any.

“Restricted Payment” means with respect to any Person: (i) the declaration of any dividend (other than a dividend declared by a Wholly Owned Restricted Subsidiary to holders of its Common Equity) or the making of any other payment or distribution of cash, securities or other property or assets in respect of such Person’s Capital Stock (except that a dividend payable solely in Capital Stock (other than Disqualified Stock) of such Person shall not constitute a Restricted Payment); (ii) any payment on account of the purchase, redemption, retirement or other acquisition for value of such Person’s Capital Stock or any other payment or distribution made in respect thereof, either directly or indirectly (other than a payment solely in Capital Stock that is not Disqualified Stock); (iii) any Restricted Investment; (iv) any Restricted Debt Payment; or (v) any payments under the Servicing Agreement in excess of $2 million per fiscal year.

“Restricted Security” has the meaning set forth in Rule 144(a)(3) under the Securities Act; provided that the Trustee shall be entitled to request and conclusively rely upon an Opinion of Counsel with respect to whether any Security is a Restricted Security.

“Revolving Credit Facility” means that certain Amended and Restated Credit Agreement, dated as of July 12, 2002, as amended by that Amendment No. 1 to Credit Agreement, dated as of November 27, 2002, as amended by that Limited Waiver and Amendment No. 2, dated as of February 19, 2003, as amended by that Limited Waiver and Amendment No. 3, dated as of March 24, 2003 and as amended by that Amendment No. 4 to Credit Agreement, dated as of January 27, 2004, among the Company, United Refining Company of

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Pennsylvania, Kiantone Pipeline Corporation, Country Fair, Inc., Kwik-Fill corporation, the Banks party thereto and PNC Bank, National Association, as Agent, as subsequently amended, restated or replaced from time to time.

“Rule 144A” means Rule 144A under the Securities Act.

“Sale and Leaseback Transaction” means, with respect to any Person, an arrangement with any bank, insurance company or other lender or investor or to which such lender or investor is a party, providing for the leasing by such Person or any of its Subsidiaries of any property or asset of such Person or any of its Subsidiaries which has been or is being sold or transferred by such Person or such Subsidiary to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor on the security of such property or asset.

“Securities” means the Series A Securities, the Series B Securities and any Additional Securities treated as a single class of securities, as amended or supplemented from time to time in accordance with the terms hereof, that are issued pursuant to this Indenture.

“Securities Act” means the Securities Act of 1933, as amended.

“Series A Securities” means the 10 ¹/2% Senior Notes due 2012, Series A, of the Company issued pursuant to this Indenture and sold pursuant to the Purchase Agreement.

“Series B Securities” means the 10 ¹/2% Senior Notes due 2012, Series B, of the Company to be issued in exchange for the Series A Securities pursuant to the Registered Exchange Offer and the Registration Rights Agreement.

“Servicing Agreement” means that certain agreement between Parent and the Company, dated June 9, 1997, pursuant to which the Company shall pay to Parent for the use of Parent’s New York headquarters, as such agreement may be amended from time to time, and any agreement concerning the same subject matter between the Company and John A. Catsimatidis and/or any of his Affiliates, whether such agreement is a replacement thereof or in addition thereto.

“Significant Subsidiary” means any Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date, except all references to “10 percent” in such definition shall be changed to “2 percent”.

“Subordinated Indebtedness” means Indebtedness of the Company or any Subsidiary that is subordinated in right of payment to the Securities or the Subsidiary Guarantees, respectively.

“Subsidiary” of any Person means (i) any corporation of which at least a majority of the aggregate voting power of all classes of the Common Equity is owned by such Person directly or through one or more other Subsidiaries of such Person and (ii) any entity other than a corporation in which such Person, directly or indirectly, owns at least a majority of the Common Equity of such entity other than any such person designated as an Unrestricted Subsidiary in accordance with the definition of “Unrestricted Subsidiary”.

“Subsidiary Guarantors” means each of Country Fair, Inc., Kiantone Pipeline Corporation, Kiantone Pipeline Company, United Jet Center, Inc., United Refining Company of Pennsylvania, Kwik Fill, Inc., Independent Gasoline and Oil Company of Rochester, Inc., Bell Oil Corp., PPC, Inc., Super Test Petroleum,

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Inc., Kwik-Fil, Inc. and Vulcan Asphalt Refining Corporation and each other Person who is required to become a Subsidiary Guarantor by the terms of this Indenture.

“Successor” has the meaning ascribed to that term in Section 5.01(a).

“Tax Sharing Agreement” means the Tax Sharing Agreement dated as of June 9, 1997 by and among Parent, the Company and certain of their affiliates, as in effect on the Issue Date and as amended from time to time thereafter; provided that any such amendment does not increase the liability or decrease the rights of the Company or any of its Subsidiaries under the Tax Sharing Agreement.

“TIA” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb), as amended, as in effect on the date of the execution of this Indenture until such time as this Indenture is qualified under the TIA, and thereafter as in effect on the date on which this Indenture is qualified under the TIA, except as otherwise provided in Section 9.03; provided, however, that in the event the Trust Indenture Act of 1939 is amended after either such date, “TIA” means, to the extent required by any such amendment, the Trust Indenture Act of 1939, as so amended.

“Trust Moneys” means all cash received by the Trustee in accordance with the terms of this Indenture.

“Trustee” means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and thereafter means such successor.

“Unrestricted Subsidiary” means each of the Subsidiaries of the Company so designated by a resolution adopted by the Board of Directors of the Company and whose creditors have no direct or indirect recourse (including without limitation recourse with respect to the payment of principal of or interest on Indebtedness of such Subsidiary) to the Company or a Subsidiary; provided, however, that the Board of Directors of the Company will be prohibited from designating as an Unrestricted Subsidiary any Subsidiary of the Company existing on the date of this Indenture. The Board of Directors of the Company may designate an Unrestricted Subsidiary to be a Restricted Subsidiary, provided that (i) any such redesignation shall be deemed to be an incurrence by the Company and its Restricted Subsidiaries of the Indebtedness (if any) of such redesignated Subsidiary for purposes of Section 4.04 as of the date of such redesignation and (ii) immediately after giving effect to such redesignation and the incurrence of any such additional Indebtedness, the Company and its Restricted Subsidiaries could incur $1 of additional Indebtedness pursuant to the Consolidated Fixed Charge Coverage Ratio test set forth in Section 4.04. Any such designation or redesignation by the Board of Directors shall be evidenced to the Trustee by the filing with the Trustee of a certified copy of the Board Resolution giving effect to such designation or redesignation and an Officers’ Certificate certifying that such designation or redesignation complied with the foregoing conditions and setting forth the underlying calculations in such certificate.

“U.S. Government Obligations” means U.S. Legal Tender or direct non-callable obligations of, or non-callable obligations guaranteed by, the United States of America for payment of which obligation or guarantee the full faith and credit of the United States of America is pledged.

“U.S. Legal Tender” means such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts.

“U.S. Person” means (i) any individual resident in the United States, (ii) any partnership or corporation organized or incorporated under the laws of any state of the United States, (iii) any estate of which an executor or administrator is a U.S. Person (other than an estate governed by foreign law and of which at least

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one executor or administrator is a non-U.S. Person who has sole or shared investment discretion with respect to its assets), (iv) any trust of which any trustee is a U.S. Person (other than a trust of which at least one trustee is a non-U.S. Person who has sole or shared investment discretion with respect to its assets and no beneficiary of the trust (and no settlor of the trust if revocable) is a U.S. Person), (v) any agency or branch of a foreign entity located in the United States, (vi) any non-discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. Person, (vii) any discretionary or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated or (if an individual) resident in the U.S. (other than such an account held for the benefit or account of a non-U.S. Person), (viii) any partnership or corporation organized or incorporated under the laws of a foreign jurisdiction and formed by a U.S. Person principally for the purpose of investing in securities not registered under the Securities Act (unless it is organized or incorporated, and owned, by accredited investors within the meanings of Rule 501(a) under the Securities Act who are not natural Persons, estates or trusts); provided, however, that the term “U.S. Person” shall not include (A) a branch or agency of a U.S. Person that is located and operating outside the U.S. for valid business purposes as a locally regulated branch or agency engaged in the banking or insurance business, (B) any employee benefit plan established and administered in accordance with the law, customary practices and documentation of a foreign country and (C) the international organizations set forth in Section 902(o)(7) of Regulation S under the Securities Act and any other similar international organizations, and their agencies, Affiliates and pension plans.

“U.S. Physical Securities” has the meaning ascribed to that term in Section 2.01.

“Voting Stock”, with respect to any Person, means securities of any class of Capital Stock of such Person entitling the Holders thereof (whether at all times or only so long as no senior class of stock has voting power by reason of any contingency) to vote in the election of members of the board of directors of such Person.

“Weighted Average Life to Maturity”, when applied to any Indebtedness at any date, means the number of years obtained by dividing (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payment of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (ii) the then outstanding principal amount of such Indebtedness.

“Wholly-Owned Subsidiary” of the Company means a Subsidiary, of which 100% of the Common Equity (except for directors’ qualifying shares or certain minority interests owned by other Persons solely due to local law requirements that there be more than one stockholder, but which interest is not in excess of what is required for such purpose) is owned directly by the Company or through one or more Wholly-Owned Subsidiaries of the Company.

Incorporation by Reference of TIA.

Whenever this Indenture refers to a provision of the TIA, such provision is incorporated by reference in, and made a part of, this Indenture. The following TIA terms used in this Indenture have the following meanings:

“indenture securities” means the Securities.

“indenture security holder” means a Holder of Securities.

“indenture to be qualified” means this Indenture.

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“indenture trustee” or “institutional trustee” means the Trustee.

“obligor” on the indenture securities means the Company, any Subsidiary Guarantor or any other obligor on the Securities.

All other TIA terms used in this Indenture that are defined by the TIA, defined by reference in the TIA to another statute or defined by Commission rule and not otherwise defined herein have the meanings assigned to them therein.

Rules of Construction.

Unless the context otherwise requires:

a term has the meaning assigned to it;

an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

“or” is not exclusive;

words in the singular include the plural, and words in the plural include the singular;

provisions apply to successive events and transactions; and

“herein,” “hereof,” “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision.

THE SECURITIES

Form and Dating.

The Series A Securities and the Trustee’s certificate of authentication thereof shall be substantially in the form of Exhibit A annexed hereto, which is hereby incorporated in and expressly made a part of this Indenture. The Series B Securities and the Trustee’s certificate of authentication thereof shall be substantially in the form of Exhibit B annexed hereto, which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements (including notations relating to the Guarantees) required by law, stock exchange rule or usage. The Company and the Trustee shall approve any notation, legend or endorsement (including notations relating to the Guarantees) on the Securities. Each Security shall be dated the date of its authentication.

Securities offered and sold in reliance on Rule 144A, Securities offered and sold to Institutional Accredited Investors and Securities offered and sold in reliance on Regulation S shall be issued initially in the form of one or more permanent Global Securities in registered form, substantially in the form set forth in Exhibit A, deposited with the Trustee, as custodian for the Depository, and shall bear the legend set forth on Exhibit C. The aggregate principal amount of any Global Security may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depository, as hereinafter provided.

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Securities offered and sold in reliance on any other exemption from registration under the Securities Act other than as described in the preceding paragraph shall be issued, and Securities offered and sold in reliance on Rule 144A may be issued, in the form of certificated Securities in registered form in substantially the form set forth in Exhibit A (the “Physical Securities”). All Securities offered and sold in reliance on Regulation S shall remain in the form of a Global Security until the consummation of the Exchange Offer pursuant to the Registration Rights Agreement; provided, however, that all of the time period specified in the Registration Rights Agreement to be complied with by the Company have been so complied with.

Execution and Authentication.

Two Officers, or an Officer and an Assistant Secretary of the Company, shall sign, or one Officer shall sign and one Officer or an Assistant Secretary of the Company (each of whom shall, in each case, have been duly authorized by all requisite corporate actions) shall attest to, the Securities for the Company by manual or facsimile signature.

If an Officer or Assistant Secretary of the Company whose signature is on a Security was an Officer or Assistant Secretary of the Company at the time of such execution but no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. Each Subsidiary Guarantor shall execute the Guarantee in the manner set forth in Section 10.06.

A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture.

The Trustee shall authenticate and deliver (i) Series A Securities for original issue in the aggregate principal amount not to exceed $200,000,000, (ii) Series B Securities from time to time for issue only in exchange for a like principal amount of Series A Securities, and (iii) subject to Section 4.04 hereof, any amount of Additional Securities specified by the Company, in each case upon a written order of the Company. Such written order shall specify the amount of Securities to be authenticated, the series of Securities and the date on which the Securities are to be authenticated. The aggregate principal amount of Securities outstanding at any time may not exceed the aggregate principal amount of Securities of such series authorized for issuance by the Company pursuant to one or more written orders of the Company, except as provided in Section 2.07. Upon receipt of a written order of the Company in the form of an Officers’ Certificate, the Trustee shall authenticate Securities in substitution for Securities originally issued to reflect any name change of the Company.

The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate Securities. Unless otherwise provided in the appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as the Trustee to deal with the Company and Affiliates of the Company.

The Securities shall be issuable only in registered form without coupons in denominations of $1,000 and any integral multiple thereof, except as other denominations may be necessary as a result of a pro rata redemption or purchase of Securities required by the provisions of this Indenture and the Securities.

The Company, any Subsidiary Guarantor, the Trustee and any agent of the Company, any Subsidiary Guarantor or the Trustee may treat the Person in whose name any Security is registered as the owner

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of such Security for the purpose of receiving payment of principal of and (subject to the provisions of this Indenture and the Securities with respect to record dates) interest on such Security and for all other purposes whatsoever, whether or not such Security is overdue, and neither the Company, any Subsidiary Guarantor, the Trustee nor any agent of the Company, any Subsidiary Guarantor or the Trustee shall be affected by notice to the contrary.

Registrar and Paying Agent.

The Company shall maintain an office or agency in the Borough of Manhattan, The City of New York, where (a) Securities may be presented or surrendered for registration of transfer or for exchange (“Registrar”), (b) Securities may be presented or surrendered for payment (“Paying Agent”) and (c) notices and demands in respect of the Securities and this Indenture may be served. The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company, upon written notice to the Trustee, may have one or more co-Registrars reasonably acceptable to the Trustee. The Company hereby appoints the Trustee as Registrar and Paying Agent until such time as the Trustee has resigned or a successor has been appointed. Notwithstanding anything to the contrary in this Indenture, the Paying Agent shall be, at all times, the Trustee.

To the extent the Company makes such payments directly to the Holders of the Securities, the Company shall simultaneously notify the Trustee thereof in writing.

The Paying Agent shall comply with all applicable backup withholding tax and information reporting requirements under the U.S. Internal Revenue Code of 1986, as amended, and the Treasury regulations issued thereunder in respect of any payment on, or in respect of, a Security or under a Guarantee.

Paying Agent To Hold Money in Trust.

Each Paying Agent shall hold in trust for the benefit of the Holders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Securities (whether such money has been paid to it by the Company or any other obligor on the Securities), and the Company and the Paying Agent shall notify the Trustee of any default by the Company (or any other obligor on the Securities) in making any such payment. Money held in trust by the Paying Agent need not be segregated except as required by law and in no event shall the Paying Agent be liable for any interest on any money received by it hereunder. The Company at any time may require the Paying Agent to pay all money held by it to the Trustee and account for any funds disbursed and the Trustee may at any time during the continuance of any Event of Default, upon written request to the Paying Agent, require such Paying Agent to pay forthwith all money so held by it to the Trustee and to account for any funds disbursed. Upon making any payment, the Paying Agent shall have no further liability for the money delivered to the Trustee.

Securityholder Lists.

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders of the Securities. If the Trustee is not the Registrar, the Company shall furnish to the Trustee before each Record Date and at such other times as the Trustee may request in writing a list as of such date and in such form as the Trustee may reasonably require of the names and addresses of Holders of the Securities, which list may be conclusively relied upon by the Trustee and the Company shall otherwise comply with TIA Section 312(a).

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Transfer and Exchange.

Subject to the provisions of Sections 2.15 and 2.16, when Securities are presented to the Registrar or a co-Registrar with a request to register the transfer of such Securities or to exchange such Securities for an equal principal amount of Securities of other authorized denominations of the same series, the Registrar or co-Registrar shall register the transfer or make the exchange as requested if its requirements for such transaction are met; provided, however, that the Securities surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar or co-Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing. To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Securities at the Registrar’s or co-Registrar’s request. No service charge shall be made for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other governmental charge payable upon exchanges (without transfer to another Person) pursuant to Section 2.02, 2.10, 3.06, 4.15, 6.14 or 9.05, in which event the Company shall be responsible for payment of any such taxes or charges). The Registrar or co-Registrar shall not be required to register the transfer of or exchange of any Security (i) during a period beginning at the opening of business 15 days before the mailing of a notice of redemption of Securities and ending at the close of business on the day of such mailing, (ii) selected for redemption in whole or in part pursuant to Article Three, except the unredeemed portion of any Security being redeemed in part and (iii) between a Record Date and the next succeeding Interest Payment Date.

Any Holder of a Global Security shall, by acceptance of such Global Security, agree that transfers of beneficial interests in such Global Security may be effected only through a book-entry system maintained by the Depository (or its agent), and that ownership of a beneficial interest in a Global Security shall be required to be reflected in a book-entry system.

Replacement Securities.

If a mutilated Security is surrendered to the Trustee or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate upon written notice from the Company a replacement Security if the Trustee’s requirements are met. If required by the Trustee or the Company, such Holder must provide an indemnity bond or other indemnity, sufficient in the judgment of both the Company and the Trustee, to protect the Company and the Trustee from any loss which they may suffer if a Security is replaced. The Company and the Trustee may charge such Holder for their reasonable, out-of-pocket expenses in replacing a Security, including reasonable fees and expenses of counsel.

Every replacement Security is an additional obligation of the Company and is entitled to the benefit of this Indenture.

Outstanding Securities.

Securities outstanding at any time are all the Securities that have been authenticated by the Trustee except those cancelled by it, those delivered to it for cancellation and those described in this Section as not outstanding. Subject to Section 2.09, a Security does not cease to be outstanding because either of the Company or any of their Affiliates holds the Security.

If a Security is replaced pursuant to Section 2.07 (other than a mutilated Security surrendered for replacement), it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. A mutilated Security ceases to be outstanding upon surrender of such Security and replacement thereof pursuant to Section 2.07.

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If on a Redemption Date or the Final Maturity Date the Paying Agent holds U.S. Legal Tender sufficient to pay all of the principal and interest due on the Securities payable on that date, then on and after that date such Securities cease to be outstanding and interest on them ceases to accrue.

Treasury Securities.

In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by either of the Company, any of the Subsidiary Guarantors or any of their respective Affiliates shall be disregarded, except that, for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities that a Responsible Officer of the Trustee actually knows are so owned shall be disregarded.

The Trustee may require an Officers’ Certificate listing Securities owned by either of the Company, a Subsidiary Guarantor or any of their respective Affiliates.

Temporary Securities.

Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities upon receipt of a written order of the Company in the form of an Officers’ Certificate. The Officers’ Certificate shall specify the amount of temporary Securities to be authenticated and the date on which the temporary Securities are to be authenticated. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company consider appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate upon receipt of a written order of the Company pursuant to Section 2.02 definitive Securities in exchange for temporary Securities.

Cancellation.

The Company shall deliver to the Trustee for cancellation any Securities that the Company may have acquired in any matter whatever. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent, and no one else, shall cancel and, unless otherwise directed in writing by the Company, shall dispose of all Securities surrendered for registration of transfer, exchange, payment or cancellation. Subject to Section 2.07, the Company may not issue new Securities to replace Securities that they had paid or delivered to the Trustee for cancellation. If any Subsidiary Guarantor shall acquire any of the Securities, such acquisition shall not operate as a redemption or satisfaction of the Indebtedness represented by such Securities unless and until the same are surrendered to the Trustee for cancellation pursuant to this Section 2.11.

Defaulted Interest.

If the Company defaults in a payment of interest on the Securities, it shall pay interest on overdue principal and on overdue installments of interest (to the extent lawful) (without grace periods) on a subsequent special record date, which date shall be at least ten Business Days prior to the payment date, at the rate of 2% per annum in excess of the rate shown on the Securities. The Company shall fix or cause to be fixed any such special record date and payment date. The Company shall notify the Trustee in writing of the amount of defaulted interest to be paid on each Security and the date of the proposed payment, and at the same time the

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Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such defaulted interest. At least 15 days before any such special record date, the Company shall mail or cause to be mailed to each Holder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.

CUSIP Number.

The Company in issuing the Securities will use a “CUSIP,” “ISIN” or other similar number, and, if such CUSIP, ISIN or other similar number shall be provided to the Trustee, the Trustee shall use the CUSIP, ISIN or other similar number in notices of redemption or exchange as a convenience to Holders of the Securities; provided that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP, ISIN or other similar number printed in the notice or on the Securities, and that reliance may be placed only on the other identification numbers (if any) printed on the Securities. The Company shall promptly notify the Trustee of any change in a CUSIP, ISIN or other similar number.

Deposit of Moneys.

Prior to 10:00 a.m. New York City time as per our conversation last night on each Interest Payment Date and the Final Maturity Date, the Company shall have either delivered by wire transfer or check such interest or principal and interest, as the case may be, to Holders of the Securities at such Holders’ registered addresses or deposited with the Paying Agent in immediately available funds money sufficient to make cash payments due on such Interest Payment Date or the Final Maturity Date, as the case may be, in a timely manner which permits the Paying Agent to remit payment to the Holders of the Securities on such Interest Payment Date or the Final Maturity Date, as the case may be. If payment is made directly to Holders, the Company shall give notice to the Paying Agent and Trustee of such payment.

Book-Entry Provisions for Global Securities.

The Global Securities initially shall (i) be registered in the name of the Depository or the nominee of such Depository, (ii) be delivered to the Trustee as custodian for such Depository and (iii) bear legends as set forth in Exhibit C.

Members of, or participants in, the Depository (“Participants”) and any other owners of beneficial interests in a Global Security shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depository, or the Trustee as its custodian, or under such Global Security, and the Depository may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner of the Global Security for all purposes whatsoever. The Company, the Trustee and the Securities Registrar shall be entitled to deal with any depositary, and any nominee thereof, that is the Holder of any such Global Security for all purposes of this Indenture relating to such Global Security (including the payment of principal, premium, if any, and interest and Liquidated Damages, if any, and the giving of instructions or directions by or to the owner or holder of a beneficial ownership interest in such Global Security) as the sole Holder of such Global Security and shall have no obligations to the beneficial owners thereof. None of the Company, the Trustee, any Paying Agent or the Security Registrar shall have any responsibility or liability for any acts or omissions of any such depositary with respect to such Global Security, for the records of any such depositary, including records in respect of beneficial ownership interests in respect of any such Global Security, for any transactions between such depositary and any participant in such depositary or between or among any such depositary, any such participant and/or any holder or owner of a beneficial interest in such Global Security or for any transfers of beneficial interests in any such Global Security. Notwithstanding the foregoing, nothing

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herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depository or impair, as between the Depository and Participants, the operation of customary practices governing the exercise of the rights of a Holder of any Security.

Transfers of Global Securities shall be limited to transfers in whole, but not in part, to the Depository, its successors or their respective nominees. Interests of beneficial owners in the Global Securities may be transferred or exchanged for Physical Securities in accordance with the rules and procedures of the Depository and the provisions of Section 2.16. In addition, Physical Securities shall be delivered to all beneficial owners in exchange for their beneficial interests in Global Securities if (i) the Depository notifies the Company that it is unwilling or unable to continue as Depository for any Global Security and a successor depository is not appointed by the Company within 90 days of such notice or (ii) an Event of Default has occurred and is continuing and the Registrar has received a request from the Depository to issue Physical Securities.

In connection with the transfer of Global Securities as an entirety to beneficial owners pursuant to paragraph (b) of this Section 2.15, the Global Securities shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall upon written instructions from the Company authenticate and deliver, to each beneficial owner identified by the Depository in exchange for its beneficial interest in the Global Securities, an equal aggregate principal amount of Physical Securities of authorized denominations.

Any Physical Security constituting a Restricted Security delivered in exchange for an interest in a Global Security pursuant to paragraph (b) or (c) of this Section 2.15 shall, except as otherwise provided by Section 2.16, bear the Private Placement Legend.

The Holder of any Global Security may grant proxies and otherwise authorize any Person, including Participants and Persons that may hold interests through Participants, to take any action which a Holder of Securities is entitled to take under this Indenture or the Securities.

Registration of Transfers and Exchanges.

Transfer and Exchange of Physical Securities. When Physical Securities are presented to the Registrar with a request:

to register the transfer of the Physical Securities; or

to exchange such Physical Securities for an equal number of Physical Securities of other authorized denominations,

the Registrar shall register the transfer or make the exchange as requested if the requirements under this Indenture as set forth in this Section 2.16 for such transactions are met; provided, however, that the Physical Securities presented or surrendered for registration of transfer or exchange:

(I) shall be duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Registrar or co-Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and

(II) in the case of Physical Securities the offer and sale of which have not been registered under the Securities Act, such Physical Securities shall be accompanied by the following additional information and documents, as applicable:

(A) if such Physical Security is being delivered to the Registrar by the Holder thereof for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (in substantially the form of Exhibit D hereto); or

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(B) if such Physical Security is being transferred to a Qualified Institutional Buyer in accordance with Rule 144A under the Securities Act, a certification to that effect (in substantially the form of Exhibit D hereto); or

(C) if such Physical Security is being transferred to an Institutional Accredited Investor, a certification to that effect (in substantially the form of Exhibit D hereto) and a Transferee Certificate for Institutional Accredited Investors in substantially the form of Exhibit E hereto; or

(D) if such Physical Security is being transferred in reliance on Regulation S, a certification to that effect (in substantially the form of Exhibit D hereto) and a Transferee Certificate for Regulation S Transfers in substantially the form of Exhibit F hereto and an Opinion of Counsel reasonably satisfactory to the Company and addressed to the Company and the Registrar to the effect that such transfer is in compliance with the Securities Act; or

(E) if such Physical Security is being transferred in reliance on Rule 144 under the Securities Act, a certification to that effect (in substantially the form of Exhibit D hereto) and an Opinion of Counsel reasonably satisfactory to the Company and addressed to the Company and the Registrar to the effect that such transfer is in compliance with the Securities Act; or

(F) if such Physical Security is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect (in substantially the form of Exhibit D hereto) and an Opinion of Counsel reasonably satisfactory to the Company and addressed to the Company and the Registrar to the effect that such transfer is in compliance with the Securities Act.

Restrictions on Exchange of a Physical Security for a Beneficial Interest in a Global Security. A Physical Security may not be exchanged for a beneficial interest in a Global Security except upon satisfaction of the requirements set forth below. Upon receipt by the Registrar of a Physical Security, duly endorsed or accompanied by appropriate instruments of transfer, in form satisfactory to the Registrar, together with:

a certification, in substantially the form of Exhibit D hereto, that such Physical Security is being transferred to a Qualified Institutional Buyer or an Institutional Accredited Investor; and

written instructions directing the Registrar to make, or to direct the Depository to make, an endorsement on the Global Security to reflect an increase in the aggregate amount of the Securities represented by the Global Security,

then the Registrar shall cancel such Physical Security and cause, or direct the Depository to cause, in accordance with the standing instructions and procedures existing between the Depository and the Registrar, the number of Securities represented by the Global Security to be increased accordingly. If no Global Security is then outstanding, the Company shall issue and the Trustee shall upon written instructions from the Company authenticate a new Global Security in the appropriate amount.

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Transfer and Exchange of Global Securities. The transfer and exchange of Global Securities or beneficial interests therein shall be effected through the Depository, in accordance with this Indenture (including the restrictions on transfer set forth herein) and the procedures of the Depository therefor.

Transfer of a Beneficial Interest in a Global Security for a Physical Security.

If requested by law, any Person having a beneficial interest in a Global Security may upon request exchange such beneficial interest for a Physical Security. Upon receipt by the Registrar of written instructions or such other form of instructions as is customary for the Depository from the Depository or its nominee on behalf of any Person having a beneficial interest in a Global Security and upon receipt by the Trustee of a written order or such other form of instructions as is customary for the Depository or the Person designated by the Depository as having such a beneficial interest containing registration instructions and, in the case of any such registration of transfer or exchange of a beneficial interest in a Global Security the offer and sale of which have not been registered under the Securities Act, the following additional information and documents:

if such beneficial interest is being transferred to the Person designated by the Depository as being the beneficial owner, a certification from such Person to that effect (in substantially the form of Exhibit D hereto); or

if such beneficial interest is being transferred to a Qualified Institutional Buyer in accordance with Rule 144A under the Securities Act, a certification to that effect (in substantially the form of Exhibit D hereto); or

if such beneficial interest is being transferred to an Institutional Accredited Investor, a certification to that effect (in substantially the form of Exhibit D hereto) and a Transferee Certificate for Institutional Accredited Investors in substantially the form of Exhibit E hereto; or

if such beneficial interest is being transferred in reliance on Regulation S, a certification to that effect (in substantially the form of Exhibit D hereto) and a Transferee Certificate for Regulation S Transfers in substantially the form of Exhibit F hereto and an Opinion of Counsel reasonably satisfactory to the Company and addressed to the Company and the Registrar to the effect that such transfer is in compliance with the Securities Act; or

if such beneficial interest is being transferred in reliance on Rule 144 under the Securities Act, a certification to that effect (in substantially the form of Exhibit D hereto) and an Opinion of Counsel reasonably satisfactory to the Company and addressed to the Company and the Registrar to the effect that such transfer is in compliance with the Securities Act; or

if such beneficial interest is being transferred in reliance on another exemption from the registration requirements of the Securities Act, a certification to that effect (in substantially the form of Exhibit D hereto) and an Opinion of Counsel reasonably satisfactory to the Company and addressed to the Company and the Registrar to the effect that such transfer is in compliance with the Securities Act,

then the Registrar will cause, in accordance with the standing instructions and procedures existing between the Depository and the Registrar, the aggregate amount of the Global Security to be reduced and, following such reduction, the Company will execute and, upon receipt of an authentication order in the form of an Officers’ Certificate, the Trustee will authenticate and deliver to the transferee a Physical Security.

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Securities issued in exchange for a beneficial interest in a Global Security pursuant to this Section 2.16(d) shall be registered in such names and in such authorized denominations as the Depository, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Registrar in writing. The Registrar shall deliver such Physical Securities to the Persons in whose names such Physical Securities are so registered.

Restrictions on Transfer and Exchange of Global Securities. Notwithstanding any other provisions of this Indenture, a Global Security may not be transferred as a whole except by the Depository to a nominee of the Depository or by a nominee of the Depository to the Depository or another nominee of the Depository or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository.

Private Placement Legend. Upon the registration of transfer, exchange or replacement of Securities not bearing the Private Placement Legend, the Registrar shall deliver Securities that do not bear the Private Placement Legend. Upon the registration of transfer, exchange or replacement of Securities bearing the Private Placement Legend, the Registrar shall deliver only Securities that bear the Private Placement Legend unless, and the Trustee is hereby authorized to deliver Securities without the Private Placement Legend if, (i) there is delivered to the Trustee an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act or (ii) such Security has been sold pursuant to an effective registration statement under the Securities Act.

General. By its acceptance of any Security bearing the Private Placement Legend, each Holder of such a Security acknowledges the restrictions on transfer of such Security set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Security only as provided in this Indenture.

The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer that may be imposed under this Indenture with respect to the Securities of any series pursuant to the terms thereof established as contemplated by Section 3.01 or under applicable law with respect to any transfer of any interest in any such Security (including any transfers between or among any depositary, or its nominee, as a Holder of a Security issued in global form, any participants in such depositary or owners or holders of beneficial interests in any such Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of such Securities if and as may be so established in respect of such Securities, and to examine the same to determine substantial compliance as to form with the express requirements thereof.

The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.15 or this Section 2.16 in accordance with its usual procedures. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar.

Designation.

The Indebtedness evidenced by the Securities and the Guarantees is hereby irrevocably designated as “senior indebtedness” or such other term denoting seniority for the purposes of any future Indebtedness of the Company and the Subsidiary Guarantors which the Company or any Subsidiary Guarantor makes subordinate to any senior indebtedness or such other term denoting seniority.

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REDEMPTION

Notices to Trustee.

If the Company elects to redeem Securities pursuant to Paragraph 5 of the Securities, it shall notify the Trustee in writing of the Redemption Date, the Redemption Price and the principal amount of Securities to be redeemed. The Company shall give notice of redemption to the Trustee at least 45 days but not more than 60 days before the Redemption Date (unless a shorter notice shall be agreed to by the Trustee in writing), together with an Officers’ Certificate stating that such redemption will comply with the conditions contained herein.

Selection of Securities To Be Redeemed.

If fewer than all of the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed in compliance with the requirements of the principal national securities exchange, if any, on which the Securities are listed or, if the Securities are not listed on a national securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate. If the Securities are listed on any national securities exchange, the Company shall notify the Trustee in writing of the requirements of such exchange in respect of any redemption. The Trustee shall make the selection from the Securities outstanding and not previously called for redemption and shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Security selected for partial redemption, the principal amount thereof to be redeemed. Securities in denominations equal to $1,000 may be redeemed only in whole. The Trustee may select for redemption portions (equal to $1,000 or any integral multiple thereof) of the principal of Securities that have denominations larger than $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption.

Notice of Redemption.

At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail or cause to be mailed a notice of redemption by first class mail, postage prepaid, to each Holder whose Securities are to be redeemed. At the Company’s written request, the Trustee shall give the notice of redemption in the name of the Company and at the expense of the Company. Each notice for redemption shall identify the Securities to be redeemed and shall state:

the Redemption Date;

the Redemption Price and the amount of accrued interest, if any, to be paid;

the name and address of the Paying Agent;

that Securities called for redemption must be surrendered to the Paying Agent to collect the Redemption Price plus accrued interest, if any;

that, unless the Company defaults in making the redemption payment, interest on Securities called for redemption ceases to accrue on and after the Redemption Date, and the only remaining right of the Holders of such Securities is to receive payment of the Redemption Price upon surrender to the Paying Agent of the Securities redeemed;

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if any Security is being redeemed in part, the portion of the principal amount of such Security to be redeemed and that, after the Redemption Date, and upon surrender of such Security, a new Security or Securities in aggregate principal amount equal to the unredeemed portion thereof will be issued;

if fewer than all the Securities are to be redeemed, the identification of the particular Securities (or portion thereof) to be redeemed, as well as the aggregate principal amount of Securities to be redeemed and the aggregate principal amount of Securities to be outstanding after such partial redemption; and

the Paragraph of the Securities pursuant to which the Securities are to be redeemed.

Effect of Notice of Redemption.

Once notice of redemption is mailed in accordance with Section 3.03, Securities called for redemption become due and payable on the Redemption Date and at the Redemption Price plus accrued interest, if any. Upon surrender to the Paying Agent, such Securities called for redemption shall be paid at the Redemption Price (plus accrued and unpaid interest, if any, thereon to the Redemption Date), but installments of interest, the maturity of which is on or prior to the Redemption Date, shall be payable to Holders of record at the close of business on the relevant Record Dates.

Deposit of Redemption Price; Unclaimed Moneys.

On or before 11:00 A.M. on the Redemption Date, the Company shall deposit with the Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price plus accrued and unpaid interest, if any, of all Securities to be redeemed on that date.

If the Company complies with the preceding paragraph, then, unless the Company defaults in the payment of such Redemption Price plus accrued and unpaid interest, if any, interest on the Securities to be redeemed will cease to accrue on and after the applicable Redemption Date, whether or not such Securities are presented for payment.

If money on deposit with the Trustee or the Paying Agent, as the case may be, for the payment of principal or interest remains unclaimed for two years, the Trustee and the Paying Agent will, subject to any applicable law, pay the money to the Company at Company’s request. Thereafter, Holders of Securities entitled to the money must look to the Company and the Subsidiary Guarantors for payment unless an abandoned property law designates another Person, and all liability of the Trustee and the Paying Agent with respect to such money shall cease. Any money earned on funds held in trust by the Trustee or the Paying Agent, if any, shall be remitted to the Company.

Securities Redeemed in Part.

Upon surrender of a Security that is to be redeemed in part, the Company shall issue and the Trustee shall authenticate for the Holder a new Security or Securities equal in principal amount to the unredeemed portion of the Security surrendered.

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COVENANTS

Payment of Securities.

The Company shall pay the principal of and interest on the Securities in the manner provided in the Securities. An installment of principal of or interest on the Securities shall be considered paid on the date it is due if the Trustee or Paying Agent holds on that date U.S. Legal Tender designated for and sufficient to pay the installment.

Maintenance of Office or Agency.

The Company shall maintain in the Borough of Manhattan, The City of New York, the office or agency required under Section 2.03. The Company shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 11.02. The Company hereby initially designates the corporate trust office of the Trustee as its office or agency in the Borough of Manhattan, The City of New York.

Limitation on Restricted Payments.

The Company shall not, and shall not permit any of its Subsidiaries to, directly or indirectly, make any Restricted Payment (except as permitted below) if at the time of such Restricted Payment:

a Default or Event of Default shall have occurred and be continuing or shall occur as a consequence thereof;

the Company would be unable to incur an additional $1.00 of Indebtedness pursuant to the Consolidated Fixed Charge Coverage Ratio test set forth in Section 4.04(a); or

the amount of such Restricted Payment, when added to the aggregate amount of all Restricted Payments made after the Issue Date, exceeds the sum of (A) 50% of the Company’s Consolidated Net Income (taken as one accounting period) from but not including May 31, 2004, to the end of the Company’s most recently ended fiscal quarter for which financial statements are available at the time of such Restricted Payment (or, if such aggregate Consolidated Net Income shall be a deficit, minus 100% of such aggregate deficit) plus (B) the net Cash proceeds from the issuance and sale (other than to a Subsidiary of the Company) after the Issue Date of the Company’s Capital Stock that is not Disqualified Stock, plus (C) to the extent that any Restricted Investment that was made after the Issue Date is sold for cash or otherwise liquidated or repaid for cash, the lesser of (x) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (y) the initial amount of such Restricted Investment plus (D) the amount of Restricted Investment outstanding in an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is designated a Subsidiary of the Company in accordance with the definition of “Unrestricted Subsidiary”.

The foregoing provisions will not prohibit (1) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of this Indenture; (2) the redemption, repurchase, retirement or other acquisition of any Capital Stock

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of the Company in exchange for, or out of the proceeds of, the substantially concurrent sale (other than to a Subsidiary of the Company) of other Capital Stock of the Company, so long as no default shall have occurred and be continuing, (other than any Disqualified Capital Stock); (3) the defeasance, redemption, repurchase or other retirement of Subordinated Indebtedness in exchange for, or out of the proceeds of, the substantially concurrent issue and sale of (I) the Securities or (II) Capital Stock of the Company (other than (x) Disqualified Capital Stock, (y) Capital Stock sold to a Subsidiary of the Company and (z) Capital Stock purchased with the proceeds of loans from the Company or any of its Subsidiaries); (4) the making of Related Business Investments not otherwise treated as Investments with respect to a new Coker plant so long as the amount of such investments outstanding less the amount of cash received upon the disposition of any such investments or the return of capital thereon or committed does not exceed at any time $30.0 million; provided that no portion of such amount shall be utilized for any Investment unless the Company would be permitted at such time to incur an additional $1 of Additional Indebtedness (other than Permitted Indebtedness) pursuant to the Consolidated Fixed Charge Coverage Ratio test set forth in Section 4.04 and either (x) the new Coker plant is operational and already performing to approximate design specifications, or (y) to the extent an Investment has been made in the new Coker plant and the new Coker plant has thereafter been terminated or abandoned, in either case as evidenced by a Board Resolution, in which case, Investments may be made up to the amount of $30 million available under this subsection (4), less the Investment in the new Coker plant made pursuant to subsection (6); (5) the making of a Related Business Investment in joint ventures or Unrestricted Subsidiaries out of the proceeds of the substantially concurrent issue and sale of Capital Stock of the Company (other than (x) Disqualified Stock, (y) Capital Stock sold to a Subsidiary of the Company and (z) Capital Stock purchased by members of the Company’s or its Subsidiaries’ management with the proceeds of loans from the Company or any of its Subsidiaries); and (6) Investments with respect to a new Coker plant not otherwise treated as Related Business Investments in an amount at any time outstanding not to exceed $25.0 million.

The amounts referred to in clauses (1), (2) and (5) of this paragraph shall be included as Restricted Payments in any computation made pursuant to clause (iii) above.

Not later than the date of making any Restricted Payment, the Company shall deliver to the Trustee an Officers’ Certificate stating that such Restricted Payment is permitted and setting forth the basis upon which the calculations required by this Section 4.03 were computed, which calculations shall be based upon the Company’s latest available financial statements.

Limitation on Additional Indebtedness.

The Company will not, and will not permit any of its Subsidiaries to directly or indirectly, create, incur, assume, guarantee or otherwise become liable with respect to (collectively, “incur”) any Indebtedness (including without limitation Acquired Indebtedness) and the Company will not permit any of its Subsidiaries to issue or have outstanding (except if issued to or owned beneficially and of record by the Company or any of its Subsidiaries) any Capital Stock having a preference in liquidation or with respect to the payment of dividends; provided that (i) the Company and its Subsidiaries may incur Permitted Indebtedness and (ii) the Company may incur Indebtedness, if, after giving effect thereto, the Company’s Consolidated Fixed Charge Ratio on the date thereof would be at least 2.0 to 1, determined on a pro forma basis as if the incurrence of such additional Indebtedness and the application of the net proceeds therefrom had occurred at the beginning of the four-quarter period used to calculate the Company’s Consolidated Fixed Charge Coverage Ratio.

The Company will not, and will not permit any of its Subsidiaries to, incur any Indebtedness that is expressly subordinated to any other Indebtedness of the Company or such Subsidiary unless such Indebtedness by its terms is also expressly made subordinated to the Securities in the case of the Company or the Company Subsidiary Guarantees, in the case of a Subsidiary.

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For purposes of determining compliance with this Section 4.04, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Indebtedness described in clauses (i) through (x) of the definition of Permitted Indebtedness, or is entitled to be incurred pursuant to the first paragraph of this Section 4.04, the Company, in its sole discretion, may classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.04. Indebtedness under the Revolving Credit Facility outstanding on the Issue Date will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (i) of the definition of Permitted Indebtedness.

Corporate Existence.

Except as otherwise permitted by Article Five, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect their corporate existence and the corporate, partnership or other existence of each of the Company’s Subsidiaries in accordance with the respective organizational documents of each Subsidiary and the material rights (charter and statutory) and franchises of the Company and each of the Company’s Subsidiaries.

Payment of Taxes and Other Claims.

The Company shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all Taxes levied or imposed upon them or any of the Subsidiaries or upon their or any of the Subsidiaries’ income, profits or property and (ii) all lawful claims for labor, materials and supplies which, in each case, if unpaid, might by law become a Lien upon the property of the Company or any of the Subsidiaries.

Maintenance of Properties; Insurance; Books and Records.

The Company will cause all material properties used in the conduct of its business or the business of any Subsidiary of the Company to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company advantageously conducted at all times; provided, however, that nothing in this Section 4.07(a) shall prevent the Company or any Subsidiary of the Company from (i) discontinuing the operation or maintenance of any of such properties if such discontinuance is, as determined by the Board of Directors in good faith, desirable in the conduct of the business of the Company or of any of its Subsidiaries, (ii) making an Asset Sale that complies with Section 4.16 or (iii) entering into a transaction permitted by Section 5.01.

The Company shall, and shall cause each of its Subsidiaries to, keep at all times all of their properties which are of an insurable nature insured against loss or damage with insurers believed by the Company to be responsible to the extent that property of similar character usually is so insured by corporations similarly situated and owning like properties in accordance with good business practice.

The Company shall, and shall cause each of its Restricted Subsidiaries to, keep proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Company and each of its Restricted Subsidiaries, in accordance with GAAP.

Compliance Certificate; Notice of Default.

The Company shall deliver to the Trustee, within 90 days after the close of each fiscal year and 45 days after the close of each fiscal quarter, an Officers’ Certificate (one of which Officers shall be the principal executive officer, principal financial officer or principal accounting officer of the Company) stating that a review

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of the activities of the Company and the Subsidiary Guarantors has been made under the supervision of the signing Officers with a view to determining whether the Company and the Subsidiary Guarantors have kept, observed, performed and fulfilled their obligations under this Indenture and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge, the Company and the Subsidiary Guarantors during such preceding fiscal year or fiscal quarter, as the case may be, have kept, observed, performed and fulfilled each and every such covenant and no Default or Event of Default occurred during such period and at the date of such certificate no Default or Event of Default has occurred and is continuing or, if such signers do know of any Default or Event of Default, the certificate shall describe its status with reasonable particularity. The Officers’ Certificate shall also notify the Trustee should the Company or a Subsidiary Guarantor elect to change its fiscal year end. For purposes of this Section 4.08(a), performance by the Company and the Subsidiary Guarantors of their obligations under this Indenture shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture.

The annual financial statements delivered pursuant to Section 4.10 shall be accompanied by a written report of the Company’s independent accountants (who shall be a firm of established national reputation) that in conducting their audit of such financial statements nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article Four, Five or Six of this Indenture insofar as they relate to accounting matters or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation.

The Company shall deliver to the Trustee, within ten days of becoming aware of any Default or Event of Default in the performance of any covenant, agreement or condition contained in this Indenture, an Officers’ Certificate specifying the Default or Event of Default and describing its status with particularity.

Compliance with Laws.

The Company shall comply, and shall cause each of their Subsidiaries to comply, with all applicable statutes, laws, rules, regulations and orders of, and all applicable restrictions imposed by, all governmental bodies, domestic or foreign, in respect of the conduct of its business and the ownership of its properties, except for such noncompliance as would not, individually or in the aggregate, have a material adverse effect on the business, condition (financial or otherwise), properties, assets, results of operations or prospects of the Company and their Restricted Subsidiaries taken as a whole.

Reports.

Whether or not required by the rules and regulations of the Commission, so long as any Securities are outstanding, the Company and the Subsidiary Guarantors will file with the Commission, to the extent such filings are accepted by the Commission, and will furnish to the Holders of Senior Notes all quarterly and annual reports and other information, documents and reports that would be required to be filed with the Commission pursuant to Section 13 of the Exchange Act if the Company and the Subsidiary Guarantors were required to file under such section. In addition, the Company and the Subsidiary Guarantors will make such information available to prospective purchasers of the Securities, securities analysts and broker-dealers who request it in writing.

For so long as any Securities remain outstanding, the Company and the Subsidiary Guarantors will furnish to the Holders and beneficial holders of Securities and to prospective purchasers of Securities designated by the Holders of Transfer Restricted Securities (as defined in the Registration Rights Agreement) and to broker dealers, upon their request, the information required to be delivered pursuant to Rule 144A(d)(4).

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Delivery of such reports, information and documents to the Trustee pursuant to this Section 4.10 or elsewhere in this Indenture is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

Waiver of Stay, Extension or Usury Laws.

The Company and the Subsidiary Guarantors covenant (to the extent that they may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company and the Subsidiary Guarantors from paying all or any portion of the principal of and/or interest on the Securities as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture, and (to the extent that they may lawfully do so) the Company and the Subsidiary Guarantors hereby expressly waive all benefit or advantage of any such law, and covenant that they will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

Limitation on Transactions with Affiliates.

The Company shall not and shall not permit any of its Subsidiaries to, directly or indirectly, in one transaction or a series of related transactions, sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from or enter into any contract, agreement, understanding, loan advance or guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an “Affiliate Transaction”), unless (i) such Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee (a) with respect to any Affiliate Transaction (or series of related transactions) involving aggregate payments in excess of $2.5 million but less than $5.0 million, an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (i) above and a Secretary’s Certificate which sets forth and authenticates a resolution that has been adopted by a vote of a majority of the Independent Directors approving such Affiliate Transaction or, if at the time fewer than four Independent Directors are then in office, a Secretary’s Certificate which sets forth and authenticates a resolution that has been adopted unanimously by the Company’s Board of Directors and (b) with respect to any Affiliate Transaction (or series of related transactions) involving aggregate payments of $5.0 million or more, the certificates described in the preceding clause (a) and an opinion as to the fairness to the Company or such Subsidiary from a financial point of view issued by an Independent Financial Advisor; provided, however, that (v) the Management Agreements, (w) any employment agreement entered into by the Company or any of its Subsidiaries in the ordinary course of business and consistent with the past practice of the Company or such Subsidiary, (x) transactions exclusively between or among the Company and/or its Subsidiaries, (y) the payment of up to $2 million per fiscal year pursuant to the Servicing Agreement and (z) payments to Parent under the Tax Sharing Agreement shall not be deemed to be Affiliate Transactions. Notwithstanding the foregoing proviso, the Company shall not and shall not permit any of its Subsidiaries to pay any of its employees total annual compensation in excess of $350,000 unless (a) such amount of compensation has been approved by a vote of a majority of the Independent Directors, or (b) such employee’s total annual compensation in effect on the Issue Date exceeded $350,000. Any increase in total compensation over and above the amount previously approved in the case of clause (a) or the employee’s total annual compensation on the Issue Date in the case of clause (b), shall be approved by a vote of a majority of the Independent Directors, other than an increase at the end of any year in the amount of total compensation by an amount equal to the Index Amount for such year.

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Independent Directors.

The Company’s Board of Directors shall at all times have at least four Independent Directors; provided, however, that notwithstanding the foregoing, if an Independent Director resigns, dies or is terminated for any reason and the remaining number of Independent Directors is less than four, a replacement for that Independent Director shall be elected as promptly as practicable, but in no event later than the date that is six months from the date of the resignation, death or termination of the Independent Director being replaced.

After the Issue Date, the election of any new Independent Directors must be approved by a unanimous vote of the Independent Directors then in office, provided that only a majority vote of the Independent Directors is required if at the time there are four or more Independent Directors in office. The Independent Directors shall approve such new Independent Director unless the Independent Directors determine that such person does not satisfy the requirements to serve as an Independent Director under this Indenture or such person is not able or willing to perform the obligations of the Independent Directors under this Indenture.

If at any time the number of Independent Directors then in office is less than two, then until such time as the number of Independent Directors exceeds two the Company shall not, and shall not permit any of its Subsidiaries to, engage in any transaction that this Indenture requires be approved by a vote of the Independent Directors.

Any transaction that this Indenture requires be approved by a vote of the Independent Directors shall be evidenced by a Secretary’s Certificate setting forth a resolution adopted by at least the requisite number of Independent Directors, a copy of which shall be delivered to the Trustee, which resolution shall state that the transaction being approved is not unfair to the holders of the Securities. The failure to comply with this clause (d) shall have the effect of the Company failing to comply with the requirement in this Indenture to obtain a vote of the Independent Directors.

Limitations on Restrictions on Distributions from Subsidiaries.

The Company shall not, and shall not permit any of its Subsidiaries to, create or otherwise cause or suffer to exist or become effective any consensual Payment Restriction with respect to any of its Subsidiaries, except for (a) any such Payment Restriction in effect on the Issue Date under the Revolving Credit Facility or any similar Payment Restriction under any similar bank credit facility or any replacement thereof, provided that such similar Payment Restriction is no more restrictive than the Payment Restriction in effect on the Issue Date under the Revolving Credit Facility, (b) any such Payment Restriction under any agreement evidencing any Acquired Indebtedness that was permitted to be incurred pursuant to this Indenture, provided that such Payment Restriction only applies to assets that were subject to such restriction and encumbrances prior to the acquisition of such assets by the Company or its Subsidiaries and (c) any such Payment Restriction arising in connection with Refinancing Indebtedness; provided that any such Payment Restrictions that arise under such Refinancing Indebtedness are not, taken as a whole, more restrictive than those under the agreement creating or evidencing the Indebtedness being refunded or refinanced.

Limitation on Liens.

The Company shall not, and shall not cause or permit any of the Subsidiaries to, directly or indirectly create, incur, assume or suffer to exist any Lien on any property or asset now owned or hereafter acquired, or on any income or profits therefrom, or assign or convey any right to receive income therefrom, except Permitted Liens, unless prior thereto or simultaneously therewith, the Securities are equally and ratably secured; provided that if such Indebtedness is Subordinated Indebtedness the Lien securing such Indebtedness shall be junior to the Lien securing the Securities.

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Limitation on Asset Sales.

The Company shall not, and shall not permit any of its Subsidiaries to, consummate any Asset Sale unless (i) the Company or its Subsidiaries receive consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets included in such Asset Sale, provided the aggregate Fair Market Value of the consideration received from an Asset Sale that is not in the form of cash or Cash Equivalents shall not, when aggregated with the Fair Market Value of all other non-cash or consideration received by the Company and its Subsidiaries from all previous Asset Sales since the Issue Date that has not, prior to such date, been converted into cash or Cash Equivalents, exceed 5% of the Consolidated Tangible Assets of the Company at the time of such Asset Sale under consideration; and provided, further, that with respect to any Asset Sale to Affiliates the Company shall receive consideration consisting of not less than 75% cash or Cash Equivalents and (ii) the Company delivers to the Trustee an Officers’ Certificate certifying that such Asset Sale complies with clause (i). The amount (without duplication) of any Indebtedness (other than Subordinated Indebtedness) of the Company or such Subsidiary that is expressly assumed by the transferee in such Asset Sale and with respect to which the Company or such Subsidiary, as the case may be, is unconditionally released by the holder of such Indebtedness, shall be deemed to be cash or Cash Equivalents for purposes of clause (ii) and shall also be deemed to constitute a repayment of and a permanent reduction in, the amount of such Indebtedness for purposes of the following paragraph (b). If at any time any non-cash consideration received by the Company or any Subsidiary of the Company, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then the date of such conversion or disposition shall be deemed to constitute the date of an Asset Sale hereunder and the Net Available Proceeds thereof shall be applied in accordance with this Section 4.16. A transfer of assets by the Company to a Subsidiary or by a Subsidiary to the Company or to a Subsidiary will not be deemed to be an Asset Sale and a transfer of assets that constitutes a Restricted Investment and that is permitted under Section 4.03 will not be deemed to be an Asset Sale.

In the event of the transfer of substantially all (but not all) of the property and assets of the Company and its Subsidiaries as an entirety to a Person in a transaction permitted under Section 5.01 the successor corporation shall be deemed to have sold the properties and assets of the Company and its Subsidiaries not so transferred for purposes of this covenant, and shall comply with the provisions of this covenant with respect to such deemed sale as if it were an Asset Sale. In addition, the Fair Market Value of such properties and assets of the Company or its Subsidiaries deemed to be sold shall be deemed to be Net Available Proceeds for purposes of this covenant.

If the Company or any Subsidiary engages in an Asset Sale, the Company or such Subsidiary may either, no later than 360 days after such Asset Sale, (i) apply all or any of the Net Available Proceeds therefrom to repay amounts outstanding under the Revolving Credit Facility or any other Indebtedness (other than Subordinated Indebtedness) of the Company or any Subsidiary; provided, in each case, that the related loan commitment (if any) is thereby permanently reduced by the amount of such Indebtedness so repaid or (ii) invest all or any part of the Net Available Proceeds thereof in properties and assets that replace the properties or assets that were the subject of such Asset Sale or in other properties or assets that will be used in the business of the Company and its Subsidiaries as it existed on the Issue Date. The amount of such Net Available Proceeds not applied or invested as provided in this paragraph will constitute “Excess Proceeds.”

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When the aggregate amount of Excess Proceeds equals or exceeds $10.0 million, the Company will be required to make an offer to purchase, from all Holders of the Senior Notes, an aggregate principal amount of Senior Notes equal to such Excess Proceeds as follows:

The Company will make an offer to purchase (a “Net Proceeds Offer”) from all Holders of the Securities the maximum principal amount (expressed as a multiple of $1,000) of Securities that may be purchased out of the amount (the “Payment Amount”) of such Excess Proceeds.

The offer prices for the Securities will be payable in cash in an amount equal to 100% of the principal amount of the Securities tendered pursuant to a Net Proceeds Offer, plus accrued and unpaid interest and Liquidated Damages, if any, to the date such Net Proceeds Offer is consummated (the “Offered Price”). To the extent that the aggregated Offered Price of Securities tendered pursuant to a Net Proceeds Offer is less than the Payment Amount relating thereto (such shortfall constituting a “Net Proceeds Deficiency”), the Company may use such Net Proceeds Deficiency, or a portion thereof, for general corporate purposes, subject to the limitations of Section 4.03.

If the aggregate Offered Price of Securities validly tendered and not withdrawn by Holders thereof exceeds the Payment Amount, Securities to be purchased will be selected on a pro rata basis.

Upon completion of such Net Proceeds Offer, the amount of Excess Proceeds remaining shall be zero.

The Company will not permit any Subsidiary to enter into or suffer to exist any agreement that would place any restriction of any kind (other than pursuant to law or regulation) on the ability of the Company to make a Net Proceeds Offer following any Asset Sale. The Company will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder, if applicable, in the event that an Asset Sale occurs and the Company is required to purchase Senior Notes as described above.

Restrictions on Sale of Capital Stock of Subsidiaries.

The Company shall not, and shall not permit any Subsidiary to, sell or otherwise dispose of any of the Capital Stock of any Subsidiary unless (i) (a) the Company shall retain ownership, directly or indirectly, of more than 50% of the Common Equity of such Subsidiary or (b) all of the Capital Stock of such Subsidiary shall be sold or otherwise disposed of; and (ii) the Net Available Proceeds from any such sale or disposition are applied or otherwise treated in a manner consistent with the provisions described in Section 4.16.

Restrictions on Sale and Leaseback Transactions.

The Company will not, and will not permit any of its Subsidiaries to, directly or indirectly, enter into, renew or extend any Sale and Leaseback Transaction unless: (i) the Company or such Subsidiary would be entitled, under Section 4.04 and Section 4.19 to incur Indebtedness in an amount equal to the Attributable Indebtedness with respect to such Sale and Leaseback Transaction, (ii) such Sale and Leaseback Transaction would not result in a violation of Section 4.16; and (iii) the Net Available Proceeds from any such Sale and Leaseback Transaction are applied in a manner consistent with the provisions described in Section 4.16.

Additional Subsidiary Guarantees.

If the Company or any of its Subsidiaries shall acquire or create another Subsidiary, then, such newly acquired or created Subsidiary will be required to execute a Subsidiary Guarantee, in accordance with the terms of this Indenture, unless it has been designated as an Unrestricted Subsidiary.

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Change of Control.

Upon the occurrence of a Change of Control, the Company shall be obligated to make an offer to all Holders of Securities to purchase (a “Change of Control Offer”) all outstanding Securities and will purchase, on a business day not more than 60 days nor less than 30 days after the occurrence of the Change of Control (such purchase date being the “Change of Control Purchase Date”), all Securities properly tendered pursuant to such offer to purchase for a cash price (the “Change of Control Purchase Price”) equal to 101% of the principal amount of the Senior notes, plus accrued and unpaid interest, if any, to the Change of Control Purchase Date.

In order to effect a Change of Control Offer, the Company shall within 30 days after the occurrence of the Change of Control mail the Trustee who shall mail to each Holder of Securities (with a copy to the Trustee), a copy of the Change of Control Offer. The Change of Control Offer shall remain open from the time of mailing for at least 20 Business Days and until the close of business on the third Business Day prior to the Change of Control Purchase Date. The notice, which shall govern the terms of the Change of Control Offer, shall include such disclosures as are required by law and shall state:

the date of such Change of Control and, briefly, the events causing such Change of Control;

that the Change of Control Offer is being made pursuant to this Section 4.20 and that all Securities tendered in the Change of Control Offer will be accepted for payment;

the Change of Control Purchase Price for each Security, the date on which the Securities shall be purchased (such purchase date being the “Change of Control Purchase Date”), the last date on which the Change of Control Purchase Notice must be given, the date on which the Change of Control Offer expires and the names and addresses of any Paying Agent and the offices or agencies maintained by the Company for such purpose in The City of New York;

that any Security not tendered for payment will continue to accrue interest in accordance with the terms thereof;

that, unless the Company shall default in the payment of the Change of Control Purchase Price, any Security accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Purchase Date;

that Holders electing to have Securities purchased pursuant to a Change of Control Offer will be required to surrender their Securities to the Paying Agent at the address specified in the notice prior to 5:00 p.m., New York City time, on the third Business Day immediately preceding the Change of Control Purchase Date and, except in the case of a Global Security, must complete any form letter of transmittal (the “Change of Control Purchase Notice”) proposed by the Company and acceptable to the Trustee and the Paying Agent;

that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than 5:00 p.m., New York City time, on the Business Day immediately preceding the Change of Control Purchase Date, a telex or facsimile transmission (confirmed by overnight delivery of the original thereof) or letter setting forth the name of the Holder, the principal amount of Securities the Holder delivered for purchase, the Security certificate number (if any) and a statement that such Holder is withdrawing his election to have such Securities purchased;

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that Holders whose Securities are purchased only in part will be issued Securities equal in principal amount to the unpurchased portion of the Securities surrendered;

the instructions that Holders must follow in order to tender their Securities and the procedures for withdrawing a Change in Control Purchase Notice; and

the most recent annual and quarterly reports of the Company and the Subsidiary Guarantors filed with the Commission pursuant to the Exchange Act (or, if the Company and the Subsidiary Guarantors are not required to file any such reports with the Commission, the comparable reports prepared pursuant to Section 4.10), a description of material developments in the Company’s business, information with respect to pro forma historical financial information after giving effect to such Change of Control and such other information concerning the circumstances and relevant facts regarding such Change of Control and Change of Control Offer as would be material to a Holder of Securities in connection with the decision of such Holder as to whether or not it should tender Securities pursuant to the Change of Control Offer, including, but not limited to, the events causing such Change of Control and the date such Change of Control is deemed to have occurred.

On the Change of Control Purchase Date, the Company shall (i) accept for payment Securities or portions thereof tendered pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent money in United States dollars, in immediately available funds, sufficient to pay the Change of Control Purchase Price of all Securities or portions thereof so tendered and accepted (including any Additional Amounts or Reimbursement Payments payable in respect thereof) and (iii) deliver to the Trustee the Securities so accepted together with an Officers’ Certificate setting forth the Securities or portions thereof tendered to and accepted for payment by the Company. The Paying Agent shall promptly disburse or deliver to the Holders of Securities so accepted payment in an amount equal to such Change of Control Purchase Price, and the Trustee shall promptly authenticate and mail or deliver to such Holders a new Security equal in principal amount to any unpurchased portion of each Security surrendered. Any Securities not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company will publicly announce the results of the Change of Control Offer not later than the first Business Day following the Change of Control Purchase Date.

The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act, and any other securities laws or regulations, in connection with the repurchase of Securities pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.20, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations under this Section 4.20 by virtue thereof.

For purposes of this Section 4.20, the Trustee shall act as Paying Agent.

Prior to the commencement of a Change of Control Offer, the Company shall deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel (to the extent matters of law are involved) stating that all conditions precedent to such Change of Control Offer have been complied with.

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SUCCESSOR CORPORATION

Mergers, Consolidations and Sale of Assets.

The Company shall not, in a single transaction or a series of related transactions, (i) consolidate or merge with or into (other than a merger with a Wholly-Owned Subsidiary solely for the purpose of changing the Company’s jurisdiction of incorporation to one of the States of the United States), or sell, lease, convey or otherwise dispose of or assign all or substantially all of the assets of the Company and its Subsidiaries (taken as a whole), or assign any of its obligations under the Securities or this Indenture, to any Person or (ii) adopt a Plan of Liquidation unless, in either case: (a) the Person formed by or surviving such consolidation or merger (if other than the Company) or to which such sale, lease, conveyance or other disposition or assignment shall be made (or, in the case of a Plan of Liquidation, any Person to which assets are transferred) (collectively, the “Successor”) is a Person organized and existing under the laws of the United States or any State thereof or the District of Columbia and the Successor assumes by supplemental indenture in a form satisfactory to the Trustee all of the obligations of the Company under the Securities and this Indenture; (b) immediately prior to and immediately after giving effect to such transaction and the assumption of the obligations as set forth in clause (a) above and the incurrence of any Indebtedness to be incurred in connection therewith, no Default or Event of Default shall have occurred and be continuing; (c) immediately after and giving effect to such transaction and the assumption of the obligations set forth in clause (a) above and the incurrence of any Indebtedness to be incurred in connection therewith, and the use of any net proceeds therefrom on a pro forma basis, the Company or the Successor, as the case may be, could incur at least $1.00 of additional Indebtedness pursuant to the Consolidated Fixed Charge Coverage Ratio test set forth in Section 4.04(a); and (d) each Subsidiary Guarantor, unless it is the other party to the transactions described above, shall have by amendment to its Guarantee confirmed that its Guarantee of the Securities shall apply to the obligations of the Company or the Successor under the Securities and this Indenture. For purposes of this Section 5.01, any Indebtedness of the Successor which was not Indebtedness of the Company immediately prior to the transaction shall be deemed to have been incurred in connection with such transaction.

The Company shall give the Trustee an Officers’ Certificate and if a supplemental indenture is required, a legal opinion that the merger, consolidation, or sale of assets contemplated in this Section 5.01 complies with this Indenture.

Successor Corporation Substituted.

Upon any such consolidation, merger, conveyance, lease or transfer in accordance with the foregoing, the Successor formed by such consolidation or into which the Company is merged or to which such conveyance, lease or transfer is made will succeed to, and be substituted for, and may exercise every right and power of, the Company entering into or making such consolidation, merger, conveyance, lease or transfer under this Indenture with the same effect as if such Successor had been named as the Company herein, and thereafter (except in the case of a sale, assignment, transfer, lease, conveyance or other disposition) the predecessor corporation will be relieved of all further obligations and covenants under this Indenture, the Securities and the Registration Rights Agreement. For all purposes of this Indenture and the Securities (including the provisions of this Article Five and Article Four), Subsidiaries of any Successor will, upon such transaction or series of transactions, become Subsidiaries or Unrestricted Subsidiaries as provided pursuant to definition of Unrestricted Subsidiary and all Indebtedness, and all Liens on property or assets, of the Company and the Subsidiaries immediately prior to such transaction or series of transactions will be deemed to have been incurred upon such transaction or series of transactions.

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DEFAULT AND REMEDIES

Events of Default.

The following are “Events of Default” under this Indenture:

failure by the Company to pay interest on any of the Securities when it becomes due and payable and the continuance on any such failure for 30 days; or

failure by the Company to pay the principal or premium, if any, on any of the Securities when it becomes due and payable, whether at stated maturity, upon redemption, upon acceleration or otherwise; or

the Company shall fail to comply with any of its agreements or covenants in Section 4.13, 4.16 or 4.20; or

failure by the Company to comply with any other covenant in this Indenture and continuance of such failure for 30 days after notice of such failure has been given to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% of the aggregate principal amount of the Securities then outstanding; or

failure by the Company or any of their Subsidiaries to make any payment after the expiration of any applicable grace period in respect of any Indebtedness of the Company or any of such Subsidiaries that has an aggregate outstanding principal amount of $5.0 million or more; or

a default under any Indebtedness of either of the Company or any Subsidiary of a Company, whether such Indebtedness now exists or hereafter shall be created, if (A) such default results in the holder or holders of such Indebtedness causing the Indebtedness to become due prior to its stated maturity and (B) the outstanding principal amount of such Indebtedness, together with the outstanding principal amount of any other such Indebtedness the maturity of which has been so accelerated, aggregate $5.0 million or more at any one time; or

one or more final judgments or orders that exceed $5.0 million in the aggregate for the payment of money have been entered by a court or courts of competent jurisdiction against the Company or any Subsidiary of the Company and such judgment or judgments have not been satisfied, stayed, annulled or rescinded within 60 days of being entered; or

except as permitted by this Indenture, any Subsidiary Guarantee ceases to be in full force and effect or any Subsidiary Guarantor repudiates its obligations under any Guarantee; or

the Company or any Subsidiary Guarantor (a) admits in writing its inability to pay its debts generally as they become due, (b) commences a voluntary case or proceeding under any Bankruptcy Law with respect to itself, (c) consents to the entry of a judgment, decree or order for relief against it in an involuntary case or proceeding under any Bankruptcy Law, (d) consents to the appointment of a Custodian (as defined below) of it or for substantially all of its property, (e) consents to or acquiesces in the institution of a bankruptcy or an insolvency proceeding against it, (f) makes a general assignment

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for the benefit of its creditors or (g) takes any partnership or corporate action, as the case may be, to authorize or effect any of the foregoing; or

a court of competent jurisdiction enters a judgment, decree or order for relief in respect of the Company or any Subsidiary Guarantor in an involuntary case or proceeding under any Bankruptcy Law, which shall (a) approve as properly filed a petition seeking reorganization, arrangement, adjustment or composition in respect of an Company or any Subsidiary Guarantor, (b) appoint a Custodian of the Company or a Subsidiary Guarantor or for substantially all of any of their property or (c) order the winding-up or liquidation of its affairs; and such judgment, decree or order shall remain unstayed and in effect for a period of 60 consecutive days.

For purposes of this Article Six, the term “Custodian” means any receiver, interim receiver, receiver and manager, trustee, assignee, liquidator, sequestrator or similar official charged with maintaining possession or control over property for one or more creditors, whether under any Bankruptcy Law or otherwise.

Acceleration.

If an Event of Default (other than an Event of Default specified in clauses (ix) or (x)) shall have occurred and be continuing under this Indenture, the Trustee, by written notice to the Company, or the Holders of at least 25% in the aggregate principal amount of the Securities then outstanding by written notice to the Company and Trustee may declare all amounts owing under the Securities to be due and payable immediately. Upon such declaration of acceleration, the aggregate principal amount of, premium, if any, and interest on the outstanding Securities shall immediately become due and payable. If an Event of Default specified in clauses (ix) or (x) above with respect to Company occurs and is continuing, then the principal amount of, premium, if any, and accrued interest on, all the Securities shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder of Securities.

Other Remedies.

If an Event of Default occurs and is continuing, the Trustee may (and, at the direction of the Holders of a majority of the aggregate principal amount of outstanding Securities, subject to Section 7.02(f), shall) pursue any available remedy by proceeding at law or in equity to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities, this Indenture, or the Guarantees.

The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee, or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law.

Waiver of Past Defaults.

Subject to Sections 6.07 and 9.02, the Holders of not less than a majority in aggregate principal amount of the outstanding Securities may on behalf of the Holders of all the Securities waive any past Defaults under this Indenture, except a Default in the payment of the principal of, premium, if any, or interest on any Security. The Company shall deliver to the Trustee an Officers’ Certificate stating that the requisite percentage of Holders have consented to such waiver and attaching copies of such consents upon which the Trustee may conclusively rely.

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Control by Majority.

The Holders of not less than a majority in principal amount of the outstanding Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it hereunder. Subject to Section 7.01, however, the Trustee may refuse to follow any direction that the Trustee reasonably believes conflicts with any law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of another Holder of Securities, or that may involve the Trustee in personal liability; provided that the Trustee may take any other action deemed proper by it which is not inconsistent with such direction; and provided, further, that this provision shall not affect the rights of the Trustee set forth in Section 7.01(d).

In the event the Trustee takes any action or follows any direction pursuant to this Indenture, the Trustee shall be entitled to indemnification from the Company satisfactory to it in its sole discretion against any loss, liability, cost or expense caused by taking such action or following such direction.

Limitation on Suits.

A Holder of Securities may not pursue any remedy with respect to this Indenture, the Guarantees or the Securities unless:

the Holder gives to the Trustee written notice of a continuing Event of Default;

the Holder or Holders of at least 25% in principal amount of the outstanding Securities make a written request to the Trustee to pursue the remedy;

such Holder or Holders offer and, if requested, provide to the Trustee indemnity or security satisfactory to the Trustee against any loss, liability or expense;

the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity or security; and

during such 60-day period the Holder or Holders of a majority in principal amount of the outstanding Securities do not give the Trustee a direction which, in the opinion of the Trustee, is inconsistent with the request.

A Holder of Securities may not use this Indenture to prejudice the rights of another Holder of Securities or to obtain a preference or priority over such other Holder of Securities.

Rights of Holders to Receive Payment.

Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of or premium, if any, and interest on a Security, on or after the respective due dates expressed in such Security, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of the Holder.

Collection Suit by Trustee.

If an Event of Default specified in clause (i) or (ii) of Section 6.01 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any other obligor on the Securities for the whole amount of principal, accrued interest and other amounts remaining

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unpaid, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, in each case at the rate per annum borne by the Securities and such further amount as shall be sufficient to cover the costs and expenses of collection, including the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

Trustee May File Proofs of Claim.

The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the compensation, expenses, legal fees, disbursements and advances of the Trustee, and its agents, nominees, custodians and counsel, and any other amounts due to the Trustee under Section 7.07) and the Holders of Securities allowed in any judicial proceedings relating to the Company and the Subsidiary Guarantors, their creditors or their property and shall be entitled and empowered to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same, and any Custodian in any such judicial proceedings is hereby authorized by each Holder of Securities to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders of Securities, to pay to the Trustee any amount due to it for the compensation, expenses, legal fees, disbursements and advances of the Trustee and its agents, nominees, custodians and counsel, and any other amounts due the Trustee under Section 7.07. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder of Securities any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder of Securities in any such proceeding.

Priorities.

Any money or property collected by the Trustee pursuant to this Article Six, and any money or other property distributable in respect of the Company’s obligations under this Indenture after an Event of Default shall be applied in the following order:

First: to the Trustee (including any predecessor Trustee) for amounts due under Section 7.07;

Second: if the Holders of Securities are forced to proceed against the Company or a Subsidiary Guarantor or any other obligor on the Securities directly without the Trustee, to such Holders for their collection costs;

Third: to Holders of Securities for amounts due and unpaid on the Securities for interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for interest;

Fourth: to Holders of Securities for amounts due and unpaid on the Securities for principal, ratably, without preference or priority of any kind, according to amounts due and payable on the Securities for principal; and

Fifth: to the Company or the Subsidiary Guarantors, as their respective interests may appear.

The Trustee, upon prior notice to the Company, may fix a record date and payment date for any payment to Holders of Securities pursuant to this Section 6.10.

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Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of Securities pursuant to Section 6.07, or a suit by a Holder or Holders of more than 10% in principal amount of the outstanding Securities.

Rights and Remedies Cumulative.

No right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder of any Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article VI or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

TRUSTEE

Duties of Trustee.

If an Event of Default actually known to a Responsible Officer (except in the case of Sections 7.05 and 7.06, as used in this Article Seven, “Trustee” shall mean the Trustee in its capacity as Trustee under this Indenture) has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of his own affairs. Subject to such provisions, the Trustee shall be under no obligation to exercise any of its rights or powers under this Indenture at the request of any Holder of Securities, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it.

Except during the continuance of an Event of Default actually known to a Responsible Officer,

the Trustee need perform only those duties as are specifically set forth herein and no others and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions and

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such other documents furnished to the Trustee and conforming to the requirements of this Indenture; however, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

The Trustee may not be relieved from liability for its own grossly negligent action, its own grossly negligent failure to act, or its own willful misconduct, except that:

this paragraph does not limit the effect of paragraph (b) of this Section 7.01;

the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee unless it is proved that the Trustee was grossly negligent in ascertaining the pertinent facts; and

the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.02 or 6.05.

No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or to take or omit to take any action under this Indenture or take any action at the request or direction of Holders of Securities if it shall have grounds for believing that repayment of such funds is not assured to it or it does not receive an indemnity satisfactory to it in its sole discretion against such risk, liability, loss, fee or expense which might be incurred by it in compliance with such request or direction.

Every provision of this Indenture that in any way relates to the Trustee is subject to this Section 7.01.

The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

Rights of Trustee.

The Trustee may conclusively rely and shall be protected in acting or refraining from acting on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.

Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel, or both, which shall conform to the provisions of Section 11.05. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion.

The Trustee may act through its attorneys, agents, custodians and nominees and shall not be responsible for the misconduct or negligence of any attorney, agent, custodian or nominee (other than such a Person who is an employee of the Trustee) appointed with due care.

The Trustee shall not be liable for any action it takes or omits to take in good faith which it reasonably believes to be authorized or within its rights or powers.

The Trustee may consult with counsel and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

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The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby.

The Trustee shall not be deemed to have notice or knowledge of any matter, including any Default or Event of Default, unless a Responsible Officer has actual knowledge thereof or unless written notice thereof is received by the Trustee at its Corporate Trust Department and such notice references the Securities and this Indenture.

in the event that the Trustee is also acting as Paying Agent, Security Registrar or in any other capacity hereunder, the rights, privileges, protections, immunities and benefits afforded to the Trustee pursuant to this Article Seven, including without limitation, its rights to be indemnified, shall also be afforded to such Paying Agent, Security Registrar or in such other capacity.

the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

the rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

the Trustee may request that the Company deliver an Officers’ Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person authorized to sign an Officers’ Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.

Individual Rights of Trustee.

The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may make loans to, accept deposits from or perform services for and may otherwise deal with either of the Company, any of their Subsidiaries or any of their respective Affiliates with the same rights it would have if it were not Trustee. However, the Trustee is subject to the provisions of Sections 7.10 and 7.11.

Trustee’s Disclaimer.

The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture, it shall not be accountable for the Company’s use of the proceeds from the Securities, and it shall not be responsible for any statement of the Company or the Subsidiary Guarantors in this Indenture, the Securities or other than the Trustee’s certificate of authentication. The Trustee makes no representations with respect to and shall not be responsible for the effectiveness or adequacy of this Indenture. The Trustee shall not be responsible for independently ascertaining or maintaining such validity, if any, and shall be fully protected in relying upon certificates and opinions delivered to it in accordance with the terms of this Indenture.

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Notice of Default.

If a Default or an Event of Default occurs and is continuing and a Responsible Officer receives actual notice of such event, the Trustee shall mail to each Holder of Securities, as their names and addresses appear on the list of Holders of Securities described in Section 2.05, notice of the uncured Default or Event of Default within 30 days after the Trustee receives such notice. Except in the case of a Default or an Event of Default in payment of principal amount, premium, if any, or interest on, any Security, including the failure to make payment on (i) any Change of Control Purchase Date pursuant to a Change of Control Offer or (ii) any Purchase Date pursuant to an Offer to Purchase, the Trustee may withhold the notice if and so long as the board of directors, the executive committee, or a trust committee of directors, of the Trustee in good faith determines that withholding the notice is in the interest of the Holders of Securities.

Reports by Trustee to Holders.

This Section 7.06 shall not be operative as a part of this Indenture until this Indenture is qualified under the TIA and, until such qualification, this Indenture shall be construed as if this Section 7.06 were not contained herein.

Within 60 days after each May 15 of each year beginning with 1998, the Trustee shall, to the extent that any of the events described in TIA § 313(a) occurred within the previous twelve months, but not otherwise, mail to each Holder of Securities a brief report dated as of such date that complies with TIA § 313(a). The Trustee also shall comply with TIA §§ 313(b), 313(c) and 313(d).

A copy of each report at the time of its mailing to Holders of Securities shall be mailed to the Company and filed with the Commission and each securities exchange, if any, on which the Securities are listed.

The Company shall notify a Responsible Officer of the Trustee if the Securities become listed on any securities exchange or of any delisting thereof.

Compensation and Indemnity.

The Company shall pay to the Trustee from time to time compensation for its acceptance of this Indenture and its services hereunder. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all disbursements, expenses and advances (including fees and expenses of counsel) incurred or made by it in addition to the compensation for its services, except any such disbursements, expenses and advances as may be attributable to the Trustee’s gross negligence, bad faith or willful misconduct. Such expenses shall include the reasonable compensation, legal fees, disbursements and expenses of the Trustee’s agents, accountants, experts, nominees, custodians and counsel and any taxes or other expenses incurred by a trust created pursuant to Section 8.01 hereof.

The Company shall indemnify the Trustee, its directors, officers and employees and each predecessor trustee for, and hold it harmless against, any loss, liability or expense incurred by the Trustee without gross negligence, bad faith or willful misconduct on its or their part arising out of or in connection with the administration of this trust and the Trustee’s duties under this Indenture, including the reasonable expenses and attorneys’ fees of defending themselves against any claim of liability arising hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity. However, the failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee shall cooperate in the defense (and may employ its own counsel) at the Company’s expense. The Company need not pay for any settlement made without their

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written consent, which consent shall not be unreasonably withheld or delayed. The Company need not reimburse any expense or indemnify against any loss or liability incurred by the Trustee as a result of the violation of this Indenture by the Trustee if such violation arose from the gross negligence, bad faith or willful misconduct of the Trustee.

To secure the Company’s payment obligations in this Section 7.07, the Trustee shall have a senior Lien prior to the Securities against all money or property held or collected by the Trustee, in its capacity as Trustee, other than money held in trust to pay principal of and interest on particular Securities.

When the Trustee incurs expenses or renders services after an Event of Default specified in clauses (ix) and (x) of Section 6.01 occurs, the expenses (including the reasonable fees and expenses of its agents and counsel) and the compensation for the services shall be preferred over the status of the Holders in a proceeding under any Bankruptcy Law and are intended to constitute expenses of administration under any Bankruptcy Law. The Company’s obligations under this Section 7.07 and said lien and any claim arising hereunder shall survive the resignation or removal of any Trustee, the discharge of the Company’s obligations pursuant to Article Eight, any rejection or termination under any Bankruptcy Law and the termination of this Indenture.

Replacement of Trustee.

The Trustee may resign at any time (subject to the further provisions of this Section 7.08) by so notifying the Company in writing. The Holders of a majority in principal amount of the outstanding Securities may remove the Trustee by so notifying the Company and the Trustee in writing and may appoint a successor trustee with the Company’s consent. The Company may remove the Trustee if:

the Trustee fails to comply with Section 7.10;

the Trustee is adjudged a bankrupt or insolvent;

a receiver or other public officer takes charge of the Trustee or its property; or

the Trustee becomes legally incapable of acting with respect to its duties hereunder.

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall notify each Holder of Securities of such event and shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the Securities may appoint a successor Trustee to replace the successor Trustee appointed by the Company.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer, after payment of all sums then owing to the Trustee pursuant to Section 7.07, all property held by it as Trustee to the successor Trustee, subject to the Lien provided in Section 7.07, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture; provided, however, that no Trustee under this Indenture shall be liable for any act or omission of any successor Trustee. A successor Trustee shall mail notice of its succession to each Holder of Securities.

If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of at least 10% in principal amount of the outstanding Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee.

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If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company’s obligations under Section 7.07 shall continue for the benefit of the retiring Trustee and the Company shall pay to any such replaced or removed Trustee all amounts owed under Section 7.07 upon such replacement or removal.

Successor Trustee by Merger, Etc.

If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the resulting, surviving or transferee corporation without any further act shall, if such resulting, surviving or transferee corporation is otherwise eligible hereunder, be the successor Trustee. In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated with the same effect as if such successor Trustee had itself authenticated such Securities.

Eligibility; Disqualification.

This Indenture shall always have a Trustee who satisfies the requirement of TIA §§ 310(a)(1) and 310(a)(5). The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA § 310(b); provided, however, that there shall be excluded from the operation of TIA § 310(b)(1) (a) the Indenture dated as of June 9, 1997, among the Company, Kiantone Pipeline Corporation, Kiantone Pipeline Company, United Jet Center, Inc., United Refining Company of Pennsylvania, Kwik Fill, Inc., Independent Gasoline and Vulcan Asphalt Refining Company, as subsidiary guarantors, and IBJ Shroder Bank & Trust Company, as trustee, under which the Company’s 10 ³/4 % Senior Notes due 2014 were issued and (b) any indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Company are outstanding, if the requirements for such exclusion set forth in TIA § 310(b)(1) are met.

Preferential Collection of Claims Against Company.

The Trustee, in its capacity as Trustee hereunder, shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311(b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated.

DISCHARGE OF INDENTURE

Termination of Company’s Obligations.

This Indenture shall cease to be of further effect (except that the Company’s obligations under Section 7.07 and the Trustee’s and Paying Agent’s obligations under Section 8.03 shall survive) when all outstanding Securities theretofore authenticated and issued have been delivered (other than destroyed, lost or stolen Securities that have been replaced or paid) to the Trustee for cancellation and the Company have paid all sums payable hereunder.

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The Company, at its option, (i) will be discharged from any and all obligations with respect to the Securities (except for certain obligations of the Company to register the transfer or exchange of such Securities, replace stolen, lost or mutilated Securities, maintain paying agencies and holding moneys for payment in trust) or (ii) need not comply with certain of the restricted covenants with respect to this Indenture, if the Company deposits with the Trustee, in trust, U.S. Legal Tender or U.S. Government Obligations or a combination thereof that, through the payment of interest and premium thereon and principal amount at maturity in respect thereof in accordance with their terms, will be sufficient to pay all the principal amount at maturity of and interest and premium on the Securities on the dates such payments are due in accordance with the terms of such Securities as well as the Trustee’s fees and expenses if the Company delivers to the Trustee:

an Opinion of Counsel and in connection with a discharge pursuant to clause (i) above, a private letter ruling issued to the Company by the Internal Revenue Service (the “Service”), to the effect that the holders of the Securities will not recognize income, gain or loss for federal income tax purposes as a result of the deposit and related defeasance and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such option had not been exercised;

subject to certain customary qualifications, an Opinion of Counsel to the effect that funds so deposited will not be subject to avoidance under applicable Bankruptcy Law; and

an Officers’ Certificate and an Opinion of Counsel to the effect that the Company has complied with all conditions precedent to the defeasance.

Notwithstanding the foregoing, the Opinion of Counsel required by clause (A) above need not be delivered if all Securities not theretofore delivered to the Trustee for cancellation (i) have become due and payable, (ii) will become due and payable on the maturity date within one year or (iii) are to be called for redemption within one year under arrangement satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company. Immediately after such event, or after the expiration of the period of time referred to in the Opinion of counsel referred to in clause (B) above, this Indenture shall cease to be of further effect, and the Trustee, on demand of the Company, shall execute proper instruments acknowledging confirmation of and discharge under this Indenture.

However, the Company’s obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 2.12, 2.13, 4.01, 4.02 and 6.07 and Article Seven and the Company’s, the Trustee’s and Paying Agent’s obligations in Section 8.03 shall survive until the Securities are no longer outstanding. Thereafter, only the Company’s obligations in Section 7.07 and the Trustee’s and Paying Agent’s obligations in Sections 8.03 and 8.04 shall survive. Nothing contained in this Article Eight shall abrogate any of the rights, obligations or duties of the Trustee under this Indenture.

After such irrevocable deposit made pursuant to this Section 8.01 and satisfaction of the other conditions set forth herein, the Trustee upon request shall acknowledge in writing the discharge of the Company’s obligations under this Indenture except for those surviving obligations specified above.

In order to have money available on a payment date to pay principal amount of, premium, if any, or interest on the Securities, the U.S. Government Obligations shall be payable as to principal or interest on or before such payment date in such amounts as will provide the necessary money. U.S. Government Obligations shall not be callable at the issuer’s option.

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Application of Trust Money.

The Trustee or a trustee satisfactory to the Trustee and the Company shall hold in trust money or U.S. Government Obligations deposited with it pursuant to Section 8.01. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal amount of, premium, if any, and interest on the Securities.

Repayment to the Company.

The Trustee and the Paying Agent shall promptly pay to the Company upon delivery of an Officer’s Certificate stating that such payment does not violate the terms of this Indenture any excess money or securities held by them or if deposited with the Trustee by any Subsidiary Guarantor, to such Subsidiary Guarantor at any time.

The Trustee and the Paying Agent shall pay to the Company or any Subsidiary Guarantor, as the case may be, upon delivery of an Officer’s Certificate stating that such payment does not violate the terms of this Indenture any money held by them for the payment of principal, premium, if any, or interest that remains unclaimed for two years after the date upon which such payment shall have become due; provided, however, that the Company shall have either caused notice of such payment to be mailed to each Holder entitled thereto no less than 30 days prior to such repayment or within such period shall have published such notice in a financial newspaper of widespread circulation published in the City of New York. After payment to the Company, Holders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease.

Indemnity for Government Obligations.

The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.

Reinstatement.

If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Indenture by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then and only then the Company’s and each Subsidiary Guarantor’s, if any, obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had been made pursuant to this Indenture until such time as the Trustee is permitted to apply all such money or U.S. Government Obligations in accordance with this Indenture; provided, however, that if the Company or the Subsidiary Guarantors, as the case may be, have made any payment of principal amount of, premium, if any, or interest on any Securities because of the reinstatement of their obligations, the Company or the Subsidiary Guarantors, as the case may be, shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.

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AMENDMENTS, SUPPLEMENTS AND WAIVERS

Without Consent of Holders.

The Company and the Subsidiary Guarantors (when authorized by Board Resolutions), and the Trustee, together, may amend or supplement this Indenture, the Securities and the Guarantees, without notice to or consent of any Securityholder,

to cure any ambiguity, defect or inconsistency, provided that such amendment or supplement does not, in the opinion of the Company, adversely affect the rights of any Holder;

to evidence the succession in accordance with Article Five hereof of another Person to a Company or a Subsidiary Guarantor and the assumption by any such successor of the covenants of a Company or a Subsidiary Guarantor herein and in the Securities or a Guarantee, as the case may be;

to provide for uncertificated Securities in addition to or in place of certificated Securities;

to make any other change that does not adversely affect the rights of any Holders of Securities hereunder or thereunder;

to mortgage, pledge or grant a security interest in favor of the Trustee as additional security for the payment and performance of obligations under this Indenture, the Securities and the Guarantees;

to comply with any requirements of the Commission in connection with the qualification of this Indenture under the TIA; or

to add or release any Subsidiary Guarantor strictly in accordance with another provision of this Indenture expressly providing for such addition or release;

provided that each of the Company and the Subsidiary Guarantors party thereto has delivered to the Trustee an Opinion of Counsel and an Officers’ Certificate, each stating that such amendment or supplement complies with the provisions of this Section 9.01.

With Consent of Holders.

Subject to Section 6.07, the Company and the Subsidiary Guarantors (when authorized by Board Resolutions) and the Trustee, together, with the written consent (which may include consents obtained in connection with a tender offer or exchange offer for Securities) of the Holder or Holders of at least a majority in aggregate principal amount of the outstanding Securities, may amend or supplement this Indenture, the Securities or the Guarantees without notice to any other Holders of Securities. Subject to Section 6.07, the Holder or Holders of a majority in aggregate principal amount of the outstanding Securities may by written consent (which may include consents obtained in connection with a tender offer for Securities) waive any existing Default (other than any continuing Default or Event of Default in the payment of the principal amount of, premium, if any, or interest on Securities) under, or compliance by the Company with any provision of, this Indenture or the Securities without notice to any other Holder of Securities.

52

Without the consent of each Holder of Securities affected no such amendment, supplement or waiver, including a waiver pursuant to Section 6.04, may:

change the principal amount of Securities whose Holders must consent to an amendment, supplement or waiver of any provision of this Indenture, the Securities, the Guarantees;

reduce the rate or change the time for payment of interest, including default interest, on any Security;

reduce the principal amount of any Security;

change the Final Maturity Date of any Security, affect the terms of any scheduled payment of interest on or principal of the Securities, or alter the redemption provisions contained in this Indenture or the Securities in any manner adverse to any Holder;

make any change in provisions of this Indenture protecting the right of each Holder to receive payment of principal of and interest on such Security on or after the due date thereof or to bring suit to enforce such payment, or permitting Holders of a majority in principal amount of the Securities to waive Defaults or Events of Default;

make any changes in Section 6.04, 6.07 or this Section 9.02;

make the principal of, or the interest on any Security payable in money other than as provided for in this Indenture, the Securities and the Guarantees as in effect on the date hereof;

make any changes in the provisions described in Section 4.20 or in the obligations of the Company to make a Net Proceeds Offer or Special Offer or the definitions related thereto that could adversely affect the rights of any Holder of the Securities; or

take any action that would subordinate the Securities or the Subsidiary Guarantees to any other Indebtedness of the Company or any of its Subsidiaries, respectively, or otherwise affect the ranking of the Securities or the Subsidiary Guarantees.

It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.

After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company shall mail to the Holders of Securities affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture.

Compliance with TIA.

From the date on which this Indenture is qualified under the TIA, every amendment, waiver or supplement of this Indenture, the Securities or the Guarantees shall comply with the TIA as then in effect and to the extent applicable thereto.

53

Revocation and Effect of Consents.

Until an amendment, waiver or supplement becomes effective, a consent to it by a Holder of Securities is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to his Security or portion of his Security by notice to the Trustee or the Company received before the date on which the Trustee receives an Officers’ Certificate certifying that the Holders of the requisite principal amount of Securities have consented (and not theretofore revoked such consent) to the amendment, supplement or waiver.

The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders of Securities entitled to consent to any amendment, supplement or waiver, which record date shall be at least 30 days prior to the first solicitation of such consent. If a record date is fixed, then notwithstanding the last sentence of the immediately preceding paragraph, those Persons who were Holders of Securities at such record date (or their duly designated proxies), and only those Persons, shall be entitled to revoke any consent previously given, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date.

After an amendment, supplement or waiver becomes effective, it shall bind every Holder, unless it makes a change described in any of clauses (1) through (9) of Section 9.02, in which case, the amendment, supplement or waiver shall bind only each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder’s Security; provided that any such waiver shall not impair or affect the right of any Holder to receive payment of principal of and interest on a Security, on or after the respective due dates expressed in such Security, or to bring suit for the enforcement of any such payment on or after such respective dates without the consent of such Holder.

Notation on or Exchange of Securities.

If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms.

Trustee to Sign Amendments, Etc.

The Trustee may execute any amendment, supplement or waiver to any agreement authorized pursuant to this Article Nine; provided that (i) the form of any amendment, supplement or waiver or permitted shall be satisfactory to the Trustee and (ii) the Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver which affects its own rights, duties or immunities under this Indenture or otherwise. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel and an Officers’ Certificate of the Company each stating, in addition to the matters set forth in Section 11.04, that the execution of any amendment, supplement or waiver authorized pursuant to this Article Nine is authorized or permitted by this Indenture and constitutes the legal, valid and binding obligations of the Company or the Subsidiary Guarantors, as the case may be, enforceable in accordance with its terms. Such Opinion of Counsel shall be at the expense of the Company, and the Trustee shall have a Lien under Section 7.07 for any such expense.

54

GUARANTEES

Unconditional Guarantee.

Each Subsidiary Guarantor, jointly and severally, hereby unconditionally guarantees (such guarantee to be referred to herein as a “Guarantee”) to each Holder of a Security authenticated and delivered by the Trustee and to the Trustee and its successors and assigns that: (i) the principal amount of, premium, if any, and interest on the Securities will be promptly paid in full when due, subject to any applicable grace period, whether at maturity, by acceleration or otherwise and interest on the overdue principal and interest on any overdue interest, to the extent lawful, of the Securities and all other Obligations of the Company to the Holders of the Securities or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (ii) in case of any extension of time of payment or renewal of any Securities or of any such other Obligations, the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, subject to any applicable grace period, whether at stated maturity, by acceleration or otherwise, subject, however, in the case of clauses (i) and (ii) above, to the limitations set forth in Section 10.03. Each Subsidiary Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Securities or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Securities with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, and action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each Subsidiary Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenants that this Guarantee will not be discharged except by complete performance of the obligations contained in the Securities, this Indenture and in this Guarantee. If any Holder of the Securities or the Trustee is required by any court or otherwise to return to the Company or any Subsidiary Guarantor, or any custodian, trustee, liquidator or other similar official acting in relation to the Company or any Subsidiary Guarantor, any amount paid by the Company or any Subsidiary Guarantor to the Trustee or such Holder, this Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect. Each Subsidiary Guarantor further agrees that, as between each Subsidiary Guarantor, on the one hand, and the Holders of the Securities and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article Six for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration against the Company in respect of the obligations guaranteed hereby, and (y) in the event of any acceleration of such obligations as provided in Article Six, such obligations (whether or not due and payable) shall forthwith become due and payable by each Subsidiary Guarantor for the purpose of this Guarantee.

Severability.

In case any provision of this Article Ten or any Guarantee shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof or thereof shall not in any way be affected or impaired thereby.

Limitation of Subsidiary Guarantors’ Liability.

It is the intention of all parties hereto that the guarantee by each Subsidiary Guarantor pursuant to its Guarantee not constitute a fraudulent transfer or conveyance for purposes of any Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar Federal, state or

55

foreign law. To effectuate the foregoing intention, the Holders of Securities and each Subsidiary Guarantor incorporated in one of the States of the United States hereby irrevocably agree that the obligations of such Subsidiary Guarantor under its Guarantee shall be limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Subsidiary Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Subsidiary Guarantor in respect of the obligations of such other Subsidiary Guarantor under its Guarantee or pursuant to Section 10.04, result in the obligations of such Subsidiary Guarantor under its Guarantee not constituting such fraudulent transfer or conveyance.

Contribution.

In order to provide for just and equitable contribution among the Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the event any payment or distribution is made by any Subsidiary Guarantor (a “Funding Subsidiary Guarantor”) under its Guarantee, such Funding Subsidiary Guarantor shall be entitled to a contribution from all other Subsidiary Guarantors in a pro rata amount based on the Adjusted Net Assets (as defined below) of each Subsidiary Guarantor (including the Funding Subsidiary Guarantor) for all payments, damages and expenses incurred by that Funding Subsidiary Guarantor in discharging the Company’s obligations with respect to the Securities or any other Subsidiary Guarantor’s obligations with respect to its Guarantee. “Adjusted Net Assets” of such Subsidiary Guarantor at any date shall mean the lesser of (x) the amount by which the fair value of the property of such Subsidiary Guarantor exceeds the total amount of liabilities, including, without limitation, contingent liabilities (after giving effect to all other fixed and contingent liabilities incurred or assumed on such date (other than liabilities of such Subsidiary Guarantor under Indebtedness subordinated to such Subsidiary Guarantor’s Guarantee)), but excluding liabilities under the Guarantee, of such Subsidiary Guarantor at such date and (y) the amount by which the present fair salable value of the assets of such Subsidiary Guarantor at such date exceeds the amount that will be required to pay the probable liability of such Subsidiary Guarantor on its debts (after giving effect to all other fixed and contingent liabilities incurred or assumed on such date and after giving effect to any collection from any Subsidiary of such Subsidiary Guarantor in respect of the obligations of such Subsidiary under its Guarantee, if any), excluding debt in respect of the Guarantee of such Subsidiary Guarantor, as they become absolute and matured.

Waiver of Subrogation.

Until all Guarantee Obligations are paid in full, each Subsidiary Guarantor hereby irrevocably waives any claims or other rights which it may now or hereafter acquire against the Company that arise from the existence, payment, performance or enforcement of such Subsidiary Guarantor’s obligations under its Guarantee and this Indenture, including, without limitation, any right of subrogation, reimbursement, exoneration, indemnification, and any right to participate in any claim or remedy of any Holder of Securities against the Company, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Company, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Subsidiary Guarantor in violation of the preceding sentence and the Securities shall not have been paid in full, such amount shall have been deemed to have been paid to such Subsidiary Guarantor for the benefit of, and held in trust for the benefit of, the Holders of the Securities, and shall forthwith be paid to the Trustee for the benefit of such Holders to be credited and applied upon the Securities, whether matured or unmatured, in accordance with the terms of this Indenture. Each Subsidiary Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 10.05 is knowingly made in contemplation of such benefits.

56

Execution of Guarantee.

To evidence its guarantee to the Holders of Securities set forth in this Article Ten, each Subsidiary Guarantor hereby agrees to execute its Guarantee in substantially the form included in the Securities, which shall be endorsed on each Security ordered to be authenticated and delivered by the Trustee. Each Subsidiary Guarantor hereby agrees that its Guarantee set forth in this Article Ten shall remain in full force and effect notwithstanding any failure to endorse on each Security a notation of such Guarantee. Each such Guarantee shall be signed on behalf of each Subsidiary Guarantor by two Officers. Such signatures upon the Guarantee may be by manual or facsimile signature of such officers and may be imprinted or otherwise reproduced on the Guarantee, and in case any such officer who shall have signed the Guarantee shall cease to be such officer before the Security on which such Guarantee is endorsed shall have been authenticated and delivered by the Trustee or disposed of by the Company, such Security nevertheless may be authenticated and delivered or disposed of as though the Person who signed the Guarantee had not ceased to be such officer of the Subsidiary Guarantor.

Waiver of Stay, Extension or Usury Laws.

Each Subsidiary Guarantor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive each such Subsidiary Guarantor from performing its Guarantee as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) such Subsidiary Guarantor hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

MISCELLANEOUS

TIA Controls.

If any provision of this Indenture limits, qualifies, or conflicts with another provision which is required to be included in this Indenture by the TIA, the required provision shall control.

Notices.

Any notices or other communications required or permitted hereunder shall be in writing, and shall be sufficiently given if made by hand delivery, by telecopier or registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

if to the Company or any Subsidiary Guarantor:

United Refining Company

15 Bradley Street

Warren, Pennsylvania 16365

Attention: Myron L. Turfitt

Facsimile: (814) 723-4371

Telephone: (814) 723-4655

57

if to the Trustee:

The Bank of New York

101 Barclay Street, 8W

New York, NY 10268

Attention: Corporate Trust Division-Corporate Finance Unit

Facsimile: (212) 815-5707

Telephone: (212) 815-4799

Each of the Company, the Subsidiary Guarantors and the Trustee by written notice to each other such Person may designate additional or different addresses for notices to such Person. Any notice or communication to the Company, the Subsidiary Guarantors and the Trustee shall be deemed to have been given or made as of the date so delivered if personally delivered; when receipt is acknowledged, if telecopied; and five (5) calendar days after mailing if sent by registered or certified mail, postage prepaid (except that a notice of change of address shall not be deemed to have been given until actually received by the addressee).

Any notice or communication mailed to a Holder of Securities shall be mailed to him by first-class mail or other equivalent means at his address as it appears on the registration books of the Registrar and shall be sufficiently given to him if so mailed within the time prescribed.

Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Holders of Securities. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it.

Communications by Holders with Other Holders.

Holders of Securities may communicate pursuant to TIA § 312(b) with other Holders of Securities with respect to their rights under this Indenture, the Securities or the Guarantees. The Company, the Trustee, the Registrar and any other Person shall have the protection of TIA § 312(c).

Certificate and Opinion as to Conditions Precedent.

Upon any request or application by the Company or a Subsidiary Guarantor to the Trustee to take any action under this Indenture, the Company or such Subsidiary Guarantor, as the case may be, shall furnish to the Trustee:

an Officers’ Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

58

Statements Required in Certificate or Opinion.

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture, other than the Officers’ Certificate required by Section 4.08, shall include:

a statement that the person making such certificate or opinion has read such covenant or condition;

a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

a statement as to whether or not, in the opinion of each such person, such condition or covenant has been complied with; provided, however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers’ Certificate or certificates of public officials.

Rules by Trustee, Paying Agent, Registrar.

The Trustee, Paying Agent or Registrar may make reasonable rules for its functions.

Legal Holidays.

If a payment date is not a Business Day, payment may be made on the next succeeding day that is a Business Day with the same force and effect as if made on such payment date.

Governing Law.

THIS INDENTURE, THE SECURITIES AND THE GUARANTEES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. Each of the parties hereto agrees to submit to the nonexclusive jurisdiction of the courts of the State of New York and the U.S. Federal Courts sitting in the City of New York for the purposes of any suit, action or proceeding arising out of or relating to this Indenture. The Company and the Subsidiary Guarantors hereby designate and appoint CT Corporation System, 1633 Broadway, New York, New York 10019, as its agent to receive on its behalf service of all process in any proceedings in any court sitting in New York, New York, such service being hereby acknowledged by the Company and Subsidiary Guarantors to be effective and binding service in every respect. A copy of any such process so served shall be mailed by registered mail to the Company and Subsidiary Guarantors, at their respective address specified in Section 11.02 hereof, except that unless otherwise provided by applicable law, any failure to mail such copy shall not affect the validity of service of process. If any agent appointed by the Company and Subsidiary Guarantors refuses to accept service, the Company and Subsidiary Guarantors hereby agree that service upon them by mail shall constitute sufficient notice. Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of the Trustee to bring proceedings against the Company and Subsidiary Guarantors in the courts of any other jurisdiction.

59

No Adverse Interpretation of Other Agreements.

This Indenture may not be used to interpret another indenture, loan or debt agreement of any of the Company or any of its Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

No Recourse Against Others.

A director, officer, employee, its direct or indirect stockholder or incorporator, as such, of the Company or any of its Subsidiaries, shall not have any liability for any obligations of the Company or the Subsidiary Guarantors under the Securities, this Indenture or the Guarantees or for any claim based on, in respect of or by reason of such obligations or their creations. Each Holder of Securities by accepting a Security waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Securities.

Successors.

All agreements of the Company and the Subsidiary Guarantors in this Indenture, the Securities and the Guarantees shall bind their respective successors. All agreements of the Trustee in this Indenture shall bind its successors.

Duplicate Originals.

All parties may sign any number of copies of this Indenture. Each signed copy or counterpart shall be an original, but all of them together shall represent the same agreement.

Severability.

In case any one or more of the provisions in this Indenture, in the Securities or in the Guarantees shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law.

60

SIGNATURES

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first written above.

UNITED REFINING COMPANY
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	Chief Executive Officer
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President, Finance and Chief Financial Officer

S-1

THE BANK OF NEW YORK, as Trustee
By:	/s/ Cynthia Chaney
Name:	Cynthia Chaney
Title:	Vice President

S-2

IN WITNESS WHEREOF, each of the undersigned Subsidiary Guarantors has caused this Indenture to be duly executed as of this 6th day of August, 2004.

COUNTRY FAIR, INC.
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President – Finance
By:	/s/ John R. Wagner
Name:	John R. Wagner
Title:	Vice President, General Counsel & Secretary

S-3

KIANTONE PIPELINE CORPORATION
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	Chief Executive Officer
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President, Finance and Chief Financial Officer

S-4

KIANTONE PIPELINE COMPANY
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President, Finance and Chief Financial Officer

S-5

UNITED JET CENTER, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President
By:	/s/ John R. Wagner
Name:	John R. Wagner
Title:	Vice President, General Counsel & Secretary

S-6

UNITED REFINING COMPANY OF PENNSYLVANIA
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	Chief Executive Officer
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President, Finance and Chief Financial Officer

S-7

KWIK-FILL CORPORATION
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President, Finance and Chief Financial Officer

S-8

INDEPENDENT GASOLINE AND OIL COMPANY OF ROCHESTER, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President, Finance and Chief Financial Officer

S-9

BELL OIL, CORP.
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President, Finance and Chief Financial Officer
By:	/s/ John R. Wagner
Name:	John R. Wagner
Title:	Vice President, General Counsel & Secretary

S-10

PPC, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President, Finance and Chief Financial Officer

S-11

SUPER TEST PETROLEUM, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President, Finance and Chief Financial Officer

S-12

KWIK-FIL, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President, Finance and Chief Financial Officer

S-13

VULCAN ASPHALT REFINING CORPORATION
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President
By:	/s/ John R. Wagner
Name:	John R. Wagner
Title:	Vice President, General Counsel & Secretary

S-14

EXHIBIT A

[FORM OF SERIES A SECURITY]

“THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:

(1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A “QIB”), OR (B) IT IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT;

(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, IF THE COMPANY SO REQUESTS, THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY), OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND

(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION” AND “UNITED STATES” HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE GOVERNING THIS SECURITY CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING.”

A-1

3 UNITED REFINING COMPANY

10 ¹/2% Senior Notes due 2012, Series A

CUSIP No.:

No.                                                                                                                                                                $

United Refining Company, a Pennsylvania corporation (the “Company”), for value received, hereby promises to pay to                    or registered assigns, the principal sum of $200,000,000 United States Dollars, on August 15, 2012.

Interest Payment Dates: February 15 and August 15, commencing February 15, 2005

Record Dates: February 1 and August 1

Reference is made to the further provisions of this Security contained herein, which will for all purposes have the same effect as if set forth at this place.

A-2

IN WITNESS WHEREOF, the Company has caused this Security to be signed manually or by facsimile by its duly authorized officers.

Dated: August 6, 2004

UNITED REFINING COMPANY
By:
	Name:
	Title:
By:
	Name:
	Title:

A-3

This is one of the 10 ¹/2% Senior Notes due 2012, Series A, described in the within-mentioned Indenture.

THE BANK OF NEW YORK as Trustee
By:
	Authorized Signatory

A-4

(REVERSE OF SECURITY)

UNITED REFINING COMPANY

10 ¹/2% Senior Notes due 2012, Series A

1. Interest.

The Company promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semi-annually on February 15 and August 15 of each year (the “Interest Payment Date”), commencing February 15, 2005. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 6, 2004. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

The Company shall pay interest on overdue principal from time to time on demand at the rate borne by the Securities plus 2% and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful.

2. Method of Payment.

The Company shall pay interest on the Securities (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Securities are cancelled on registration of transfer or registration of exchange after such Record Date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts (“U.S. Legal Tender”). However, the Company may pay principal and interest by wire transfer of U.S. Federal funds, or interest by check payable in such U.S. Legal Tender. The Company may deliver any such interest payment to the Paying Agent or to a Holder at the Holder’s registered address.

3. Paying Agent and Registrar.

The Bank of New York (the “Trustee”) will act as Paying Agent and Registrar. The Company may change any Registrar or co-Registrar without notice to the Holders; however, the Paying Agent shall always be the Trustee or any successor trustee, under the Indenture.

4. Indenture and Guarantees.

The Company issued the Securities under an Indenture, dated as of August 6, 2004 (the “Indenture”), among the Company, the Subsidiary Guarantors and the Trustee. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) (the “TIA”), as in effect on the date of the Indenture until such time as the Indenture is qualified under the TIA, and thereafter as in effect on the date on which the Indenture is qualified under the TIA, except as provided in the Indenture. Notwithstanding anything to the contrary herein, the Securities are subject to all such terms, and Holders of Securities are referred to the Indenture and the TIA for a statement of them. The Securities are unsecured obligations of the Company. The Company may issue Additional Securities under the Indenture subject to compliance with Section 4.04 thereof, unlimited in aggregate principal amount. Payment on each Security is guaranteed on a senior basis, jointly and severally, by the Subsidiary Guarantors pursuant to Article Ten of the Indenture.

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5. Redemption.

(a) Optional Redemption. The Securities will be redeemable, in whole or in part, at the Company’s option at any time or from time to time, prior to August 15, 2008, at the Make-Whole Price (as defined below), in accordance with the provisions of the Indenture.

“Make-Whole Price” means an amount equal to the greater of:

(1) 100% of the principal amount of the Securities to be redeemed; and

(2) as determined by an Independent Investment Banker, the sum of the present values of (a) the Redemption Price of the Securities at August 15, 2008 (as set forth below) and (b) the remaining scheduled payments of interest from the Redemption Date to August 15, 2008 (not including any portion of such payments of interest accrued as of the Redemption Date) discounted back to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 50 basis points.

plus, in the case of both (1) and (2), accrued and unpaid interest and Liquidated Damages, if any, to the Redemption Date. Unless the Company defaults in payment of the Make-Whole Price, on and after the applicable Redemption Date, interest will cease to accrue on the Securities to be redeemed.

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having the maturity comparable to the remaining term of the Securities to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities.

“Comparable Treasury Price” means, with respect to any Redemption Date, (1) the average of four Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

“Independent Investment Banker” means Citigroup Global Markets Inc. and its successors, or, if Citigroup Global Markets Inc. or its successors, if any, to Citigroup Global Markets Inc., are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company.

“Reference Treasury Dealers” means Citigroup Global Markets Inc. and three additional primary U.S. government securities dealers in New York City, (each a “Primary Treasury Dealer”) selected by the Company, and their respective successors (provided, however, that if Citigroup Global Markets Inc. or any such successor, as the case may be, shall cease to be a primary U.S. government securities dealer in New York City, the Company shall substitute therefore another Primary Treasury Dealer).

“Reference Treasury Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date.

“Treasury Rate” means, with respect to any Redemption Date, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15 (519)” or any successor publication that is published weekly by the Board of Governors of the Federal Reserve System and that establishes yields on actively traded United States Treasury

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securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before and after the stated maturity, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined, and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month) or (2) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Treasury Rate shall be calculated on the third Business Day preceding the Redemption Date.

The notice of redemption with respect to the foregoing redemption need not set forth the Make-Whole Price but only the manner of calculation thereof. The Company will notify the Trustee of the Make-Whole Price with respect to any redemption promptly after the calculation thereof, and the Trustee shall not be responsible for such calculation.

The Securities will be redeemable at the option of the Company, in whole or in part, at any time on or after August 15, 2008, at the following Redemption Prices (expressed as percentages of principal amount), together with accrued and unpaid interest, if any, thereon to the Redemption Date, if redeemed during the 12-month period beginning August 15:

Year	Optional Redemption Price
2008	105.250	%
2009	102.625	%
2010 and thereafter	100.000	%

(b) Optional Redemption upon Public Equity Offering. Notwithstanding the foregoing clause (a), at any time prior to August 15, 2007, the Company may redeem up to 35% of the aggregate principal amount of the Securities with the net cash proceeds of one or more Equity Offerings at a redemption price equal to 110.500% of the principal amount thereof, plus accrued and unpaid interest, if any, to the Redemption Date; provided that (a) at least 65% of the aggregate principal amount of the Securities remain outstanding immediately after the occurrence of such redemption and (b) such redemption occurs within 60 days of the date of the closing of any such Equity Offering.

(c) Selection of Securities for Redemption. If less than all of the Securities are to be redeemed at any time, selection of the Securities to be redeemed will be made by the Trustee from among the outstanding Securities on a pro rata basis, by lot or by any other method permitted in the Indenture; provided that in the case of a redemption with the net cash proceeds of an Equity Offering pursuant to the immediately preceding paragraph, selection shall be made on a pro rata basis.

6. Notice of Redemption.

Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at such Holder’s registered address. Securities in denominations of $1,000 may be redeemed only in whole. The Trustee may select for redemption portions (equal to $1,000 or any integral multiple thereof) of the principal of Securities that have denominations larger than $1,000.

If any Security is to be redeemed in part only, the notice of redemption that relates to such Security shall state the portion of the principal amount thereof to be redeemed. A new Security in a principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Security. On and after the Redemption Date, interest will cease to accrue on Securities or portions thereof called for redemption.

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7. Denominations; Transfer; Exchange.

The Securities are in registered form, without coupons, in denominations of U.S.$1,000 and integral multiples of U.S.$1,000. A Holder shall register the transfer of or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities or portions thereof selected for redemption, except the unredeemed portion of any Security being redeemed in part.

8. Persons Deemed Owners.

The registered Holder of a Security shall be treated as the owner of it for all purposes.

9. Unclaimed Funds.

If funds for the payment of principal or interest remain unclaimed for two years, the Trustee and the Paying Agent will repay the funds to the Company at their request. After that, all liability of the Trustee and Paying Agent with respect to such funds shall cease.

10. Discharge.

The Company may be discharged from their obligations under the Indenture and the Securities except for certain provisions thereof, upon satisfaction of certain conditions specified in the Indenture.

11. Amendment; Supplement; Waiver.

Subject to certain exceptions, the Indenture or the Securities may be amended or supplemented with the written consent (which may include consents obtained in connection with a tender offer or exchange offer for securities) of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding, and any existing Default or Event of Default or compliance with any provision may be waived other than any continuing Default or Event of Default in the payment of the principal amount of, premium, if any, or interest on the Securities with the consent (which may include consents obtained in connection with a tender offer or exchange offer for securities) of the Holders of a majority in aggregate principal amount of the Securities then outstanding. Without the consent of any Holder, the parties thereto may amend or supplement the Indenture or the Securities to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Securities in addition to or in place of certificated Securities to provide for the assumption of the Company’s obligations to Holders in the case of a merger or acquisition or comply with any requirements of the Commission in connection with the qualification of the Indenture under the TIA, or make any other change that does not materially adversely affect the rights of any Holder of a Security.

12. Restrictive Covenants.

The Indenture contains certain covenants that, among other things, limit the ability of the Company and their subsidiaries to make Restricted Payments, to incur Indebtedness, to create Liens, to issue preferred or other Capital Stock of Subsidiaries, to sell assets, to permit restrictions on dividends and other payments by subsidiaries to the Company, to consolidate, merge or sell all or substantially all of their assets or to engage in transactions with Affiliates. The limitations are subject to a number of important qualifications and exceptions. The Company must report to the Trustee on compliance with such limitations.

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13. Defaults and Remedies.

If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Securities then outstanding may declare all the Securities to be due and payable immediately in the manner and with the effect provided in the Indenture. Holders of Securities may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Securities unless it has received indemnity satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Securities then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Securities notice of any continuing Default or Event of Default (except a Default in payment of principal or interest, including an accelerated payment) if it determines that withholding notice is in their interest.

14. Trustee Dealings with Company.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company, their Subsidiaries or their respective Affiliates as if it were not the Trustee.

15. No Recourse Against Others.

No director, officer, employee, direct or indirect stockholder or incorporator, as such, of the Company or any of their Subsidiaries, including but not limited to Parent and its stockholders, shall have any liability for any obligation of the Company under the Securities or the Indenture, or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Security by accepting a Security waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Securities.

16. Authentication.

This Security shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on this Security.

17. Abbreviations and Defined Terms.

Customary abbreviations may be used in the name of a Holder of a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

18. CUSIP Numbers.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company have caused CUSIP, ISIN or other similar numbers to be printed on the Securities as a convenience to the Holders of the Securities. No representation is made as to the accuracy of such numbers as printed on the Securities and reliance may be placed only on the other identification numbers printed hereon.

19. Registration Rights.

Pursuant to the Registration Rights Agreement, the Company will be obligated upon the occurrence of certain events to consummate an exchange offer pursuant to which the Holder of this Security shall, subject to certain limitations, have the right to exchange this Series A Security for the Company’s 10 ¹/2% Senior Notes due 2012, Series B (the “Series B Securities”), which will be registered under the Securities Act, in

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like principal amount and having terms identical in all material respects as the Series A Securities. The Holders shall be entitled to receive certain additional interest payments in the event such exchange offer is not consummated and upon certain other conditions, all pursuant to and in accordance with the terms of the Registration Rights Agreement.

The Company will furnish to any Holder of a Security upon written request and without charge a copy of the Indenture. Requests may be made to: United Refining Company, 15 Bradley Street, Warren, Pennsylvania 16365, Attention: Myron L. Turfitt.

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GUARANTEE

The Subsidiary Guarantors (as defined in the Indenture referred to in the Security upon which this notation is endorsed and each hereinafter referred to as a “Subsidiary Guarantor,” which term includes any successor Person under the Indenture) have unconditionally guaranteed on a senior basis (such guarantee by each Subsidiary Guarantor being referred to herein as the “Guarantee”) (i) the due and punctual payment of the principal amount of, premium and interest on the Securities, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal amount and interest, if any, on the Securities, to the extent lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms set forth in Article Ten of the Indenture and (ii) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.

No director, officer, employee, direct or indirect stockholder or incorporator, as such, of any Subsidiary Guarantor, including but not limited to Parent and its stockholders, shall have any liability for any obligations of the Subsidiary Guarantors under the Guarantee or for any claim based on, in respect of or by reason of such obligations or their creation.

The Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Securities upon which the Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers.

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COUNTRY FAIR, INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

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KIANTONE PIPELINE CORPORATION
By:
	Name:
	Title:
By:
	Name:
	Title:

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KIANTONE PIPELINE COMPANY
By:
	Name:
	Title:
By:
	Name:
	Title:

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UNITED JET CENTER, INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

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UNITED REFINING COMPANY OF PENNSYLVANIA
By:
	Name:
	Title:
By:
	Name:
	Title:

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KWIK-FILL CORPORATION
By:
	Name:
	Title:
By:
	Name:
	Title:

A-17

INDEPENDENT GASOLINE AND OIL COMPANY OF ROCHESTER, INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

A-18

BELL OIL CORP.
By:
	Name:
	Title:
By:
	Name:
	Title:

A-19

PPC, INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

A-20

SUPER TEST PETROLEUM, INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

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KWIK-FIL, INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

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VULCAN ASPHALT REFINING CORPORATION
By:
	Name:
	Title:
By:
	Name:
	Title:

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ASSIGNMENT FORM

I or we assign and transfer this Security to

________________________________________________________________________________________________________________________

________________________________________________________________________________________________________________________

(Print or type name, address and zip code of assignee or transferee)

________________________________________________________________________________________________________________________

(Insert Social Security or other identifying number of assignee or transferee)

and irrevocably appoint______________________________________________________________________________________________________

agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

Dated:	Signed:
		(Sign exactly as name appears on the other side of this Security)

Signature Guarantee:
	Participant in a recognized Signature
	Guarantee Medallion Program (or other
	signature guarantor program reasonably
	acceptable to the Trustee)

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OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Security purchased by the Company pursuant to Section 4.16 or Section 4.20 of the Indenture, check the appropriate box:

Section 4.16 [    ] or Section 4.20 [    ]

If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.16 or Section 4.20 of the Indenture, state the amount: $                    

Dated:	Signed:
		(Sign exactly as name appears on the other side of this Security)

Signature Guarantee:
	Participant in a recognized Signature
	Guarantee Medallion Program (or other
	signature guarantor program reasonably
	acceptable to the Trustee)

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EXHIBIT B

[FORM OF SERIES B SECURITY]

UNITED REFINING COMPANY

10 ¹/2% Senior Note due 2012, Series B

CUSIP No.:

No.

$

United Refining Company, a Pennsylvania corporation (the “Company”), for value received, hereby promises to pay                    to or registered assigns, the principal sum of $200,000,000 United States Dollars, on August 15, 2012.

Interest Payment Dates: February 15 and August 15 commencing February 15, 2005.

Record Dates: February 1 and August 1

Reference is made to the further provisions of this Security contained herein, which will for all purposes have the same effect as if set forth at this place.

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IN WITNESS WHEREOF, the Company has caused this Security to be signed manually or by facsimile by its duly authorized officers.

Dated:	UNITED REFINING COMPANY
	By:
		Name:
		Title:
	By:
		Name:
		Title:

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This is one of the 10 ¹/2% Senior Notes due 2012, Series B, described in the within-mentioned Indenture.

THE BANK OF NEW YORK, as Trustee
By:
	Authorized Signatory

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(REVERSE OF SECURITY)

UNITED REFINING COMPANY

10 ¹/2% Senior Note due 2012, Series B

1. Interest.

The Company hereby jointly and severally promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semi-annually on February 15 and August 15 of each year (the “Interest Payment Date”), commencing February 15, 2005. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from August 6, 2004. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

The Company shall pay interest on overdue principal from time to time on demand at the rate borne by the Securities plus 2% and on overdue installments of interest (without regard to any applicable grace periods) to the extent lawful.

2. Method of Payment.

The Company shall pay interest on the Securities (except defaulted interest) to the Persons who are the registered Holders at the close of business on the Record Date immediately preceding the Interest Payment Date even if the Securities are cancelled on registration of transfer or registration of exchange after such Record Date. Holders must surrender Securities to a Paying Agent to collect principal payments. The Company shall pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts (“U.S. Legal Tender”). However, the Company may pay principal and interest by wire transfer of U.S. Federal funds, or interest by check payable in such U.S. Legal Tender. The Company may deliver any such interest payment to the Paying Agent or to a Holder at the Holder’s registered address.

3. Paying Agent and Registrar.

The Bank of New York (the “Trustee”) will act as Paying Agent and Registrar. The Company may change any Registrar or co-Registrar without notice to the Holders; however the Paying Agent shall always be the Trustee or any successor trustee under the Indenture.

4. Indenture and Guarantees.

The Company issued the Securities under an Indenture, dated as of August 6, 2004 (the “Indenture”), among the Company, the Subsidiary Guarantors and the Trustee. Capitalized terms herein are used as defined in the Indenture unless otherwise defined herein. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) (the “TIA”), as in effect on the date of the Indenture until such time as the Indenture is qualified under the TIA, and thereafter as in effect on the date on which the Indenture is qualified under the TIA, except as provided in the Indenture. Notwithstanding anything to the contrary herein, the Securities are subject to all such terms, and Holders of Securities are referred to the Indenture and the TIA for a statement of them. The Securities are unsecured obligations of the Company. The Company may issue Additional Securities under the Indenture subject to compliance with Section 4.04 thereof, unlimited in aggregate principal amount. Payment on each Security is guaranteed on a senior basis, jointly and severally, by the Subsidiary Guarantors pursuant to Article Ten of the Indenture.

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5. Redemption.

(a) Optional Redemption. The Securities will be redeemable, in whole or in part, at the Company’s option at any time or from time to time, prior to August 15, 2008, at the Make-Whole Price (as defined below), in accordance with the provisions of the Indenture.

“Make-Whole Price” means an amount equal to the greater of:

(1) 100% of the principal amount of the Securities to be redeemed; and

(2) as determined by an Independent Investment Banker, the sum of the present values of (a) the Redemption Price of the Securities at August 15, 2008 (as set forth below) and (b) the remaining scheduled payments of interest from the Redemption Date to August 15, 2008 (not including any portion of such payments of interest accrued as of the Redemption Date) discounted back to the Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate (as defined below) plus 50 basis points.

plus, in the case of both (1) and (2), accrued and unpaid interest and Liquidated Damages, if any, to the Redemption Date. Unless the Company defaults in payment of the Make-Whole Price, on and after the applicable Redemption Date, interest will cease to accrue on the Securities to be redeemed.

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker as having the maturity comparable to the remaining term of the Securities to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the remaining term of the Securities.

“Comparable Treasury Price” means, with respect to any Redemption Date, (1) the average of four Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest of such Reference Treasury Dealer Quotations, or (2) if the Trustee obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Dealer Quotations.

“Independent Investment Banker” means Citigroup Global Markets Inc. and its successors, or, if Citigroup Global Markets Inc. or its successors, if any, to Citigroup Global Markets Inc., are unwilling or unable to select the Comparable Treasury Issue, an independent investment banking institution of national standing appointed by the Company.

“Reference Treasury Dealers” means Citigroup Global Markets Inc. and three additional primary U.S. government securities dealers in New York City, (each a “Primary Treasury Dealer”) selected by the Company, and their respective successors (provided, however, that if Citigroup Global Markets Inc. or any such successor, as the case may be, shall cease to be a primary U.S. government securities dealer in New York City, the Company shall substitute therefore another Primary Treasury Dealer).

“Reference Treasury Quotations” means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date.

“Treasury Rate” means, with respect to any Redemption Date, (1) the yield, under the heading which represents the average for the immediately preceding week, appearing in the most recently published statistical release designated “H.15 (519)” or any successor publication that is published weekly by the Board of Governors of the Federal Reserve System and that establishes yields on actively traded United States Treasury

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securities adjusted to constant maturity under the caption “Treasury Constant Maturities,” for the maturity corresponding to the Comparable Treasury Issue (if no maturity is within three months before and after the stated maturity, yields for the two published maturities most closely corresponding to the Comparable Treasury Issue shall be determined, and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month) or (2) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date. The Treasury Rate shall be calculated on the third Business Day preceding the Redemption Date.

The notice of redemption with respect to the foregoing redemption need not set forth the Make-Whole Price but only the manner of calculation thereof. The Company will notify the Trustee of the Make-Whole Price with respect to any redemption promptly after the calculation thereof, and the Trustee shall not be responsible for such calculation.

The Securities will be redeemable at the option of the Company, in whole or in part, at any time on or after August 15, 2008, at the following Redemption Prices (expressed as percentages of principal amount), together with accrued and unpaid interest, if any, thereon to the Redemption Date, if redeemed during the 12-month period beginning August 15:

Year	Optional Redemption Price
2008	105.250	%
2009	102.625	%
2010 and thereafter	100.000	%

(b) Optional Redemption upon Public Equity Offering. Notwithstanding the foregoing clause (a), at any time prior to August 15, 2007, the Company may redeem up to 35% of the aggregate principal amount of the Securities with the net cash proceeds of one or more Equity Offerings at a redemption price equal to 110.500% of the principal amount thereof, plus accrued and unpaid interest to the Redemption Date; provided that (a) at least 65% of the aggregate principal amount of the Securities remain outstanding immediately after the occurrence of such redemption and (b) such redemption occurs within 60 days of the date of the closing of any such Equity Offering.

(c) Selection of Securities for Redemption. If less than all of the Securities are to be redeemed at any time, selection of the Securities to be redeemed will be made by the Trustee from among the outstanding Securities on a pro rata basis, by lot or by any other method permitted in the Indenture; provided that in the case of a redemption with the net cash proceeds of an Equity Offering pursuant to the immediately preceding paragraph, selection shall be made on a pro rata basis.

6. Notice of Redemption.

Notice of redemption will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at such Holder’s registered address. Securities in denominations of $1,000 may be redeemed only in whole. The Trustee may select for redemption portions (equal to $1,000 or any integral multiple thereof) of the principal of Securities that have denominations larger than $1,000.

If any Security is to be redeemed in part only, the notice of redemption that relates to such Security shall state the portion of the principal amount thereof to be redeemed. A new Security in a principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Security. On and after the Redemption Date, interest will cease to accrue on Securities or portions thereof called for redemption.

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7. Denominations; Transfer; Exchange.

The Securities are in registered form, without coupons, in denominations of U.S.$1,000 and integral multiples of U.S.$1,000. A Holder shall register the transfer of or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges payable in connection therewith as permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities or portions thereof selected for redemption, except the unredeemed portion of any security being redeemed in part.

8. Persons Deemed Owners.

The registered Holder of a Security shall be treated as the owner of it for all purposes.

9. Unclaimed Funds.

If funds for the payment of principal or interest remain unclaimed for two years, the Trustee and the Paying Agent will repay the funds to the Company at its request. After that, all liability of the Trustee and Paying Agent with respect to such funds shall cease.

10. Discharge.

The Company may be discharged from their obligations under the Indenture and the Securities except for certain provisions thereof upon satisfaction of certain conditions specified in the Indenture.

11. Amendment; Supplement; Waiver.

Subject to certain exceptions, the Indenture, or the Securities may be amended or supplemented with the written consent (which may include consents obtained in connection with a tender offer or exchange offer for securities) of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding, and any existing Default or Event of Default or compliance with any provision may be waived other than any continuing Default or Event of Default in the payment of the principal amount of, premium, if any, or interest on the Securities with the consent (which may include consents obtained in connection with a tender offer or exchange offer for securities) of the Holders of a majority in aggregate principal amount of the Securities then outstanding. Without the consent of any Holder, the parties thereto may amend or supplement the Indenture or the Securities to, among other things, cure any ambiguity, defect or inconsistency, provide for uncertificated Securities in addition to or in place of certificated Securities to provide for the assumption of the Company’s obligations to Holders in the case of a merger or acquisition or comply with any requirements of the Commission in connection with the qualification of the Indenture under the TIA, or make any other change that does not materially adversely affect the rights of any Holder of a Security.

12. Restrictive Covenants.

The Indenture contains certain covenants that, among other things, limit the ability of the Company and their subsidiaries to make Restricted Payments, to incur Indebtedness, to create Liens, to issue preferred or other Capital Stock of Subsidiaries, to sell assets, to permit restrictions on dividends and other payments by subsidiaries to the Company, to consolidate, merge or sell all or substantially all of their assets or to engage in transactions with Affiliates. The limitations are subject to a number of important qualifications and exceptions. The Company must report to the Trustee on compliance with such limitations.

B-7

13. Defaults and Remedies.

If an Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of Securities then outstanding may declare all the Securities to be due and payable immediately in the manner and with the effect provided in the Indenture. Holders of Securities may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee is not obligated to enforce the Indenture or the Securities unless it has received indemnity satisfactory to it. The Indenture permits, subject to certain limitations therein provided, Holders of a majority in aggregate principal amount of the Securities then outstanding to direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of Securities notice of any continuing Default or Event of Default (except a Default in payment of principal or interest, including an accelerated payment) if it determines that withholding notice is in their interest.

14. Trustee Dealings with Company.

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company, their Subsidiaries or their respective Affiliates as if it were not the Trustee.

15. No Recourse Against Others.

No director, officer, employee, direct or indirect stockholder or incorporator, as such, of the Company or any of their Subsidiaries, including but not limited to Parent and its stockholders, shall have any liability for any obligation of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder of a Security by accepting a Security waives and releases all such liability. Such waiver and release are part of the consideration for the issuance of the Securities.

16. Authentication.

This Security shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on this Security.

17. Abbreviations and Defined Terms.

Customary abbreviations may be used in the name of a Holder of a Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

18. CUSIP Numbers.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company have caused CUSIP, ISIN or other similar numbers to be printed on the Securities as a convenience to the Holders of the Securities. No representation is made as to the accuracy of such numbers as printed on the Securities and reliance may be placed only on the other identification numbers printed hereon.

B-8

GUARANTEE

The Subsidiary Guarantors (as defined in the Indenture referred to in the Security upon which this notation is endorsed and each hereinafter referred to as a “Subsidiary Guarantor,” which term includes any successor Person under the Indenture) have unconditionally guaranteed on a senior basis (such guarantee by each Subsidiary Guarantor being referred to herein as the “Guarantee”) (i) the due and punctual payment of the principal amount of, premium and interest on the Securities, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal amount and interest, if any, on the Securities, to the extent lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms set forth in Article Ten of the Indenture and (ii) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.

No director, officer, employee, direct or indirect stockholder or incorporator, as such, of any Subsidiary Guarantor, including but not limited to Parent and its stockholders, shall have any liability for any obligations of the Subsidiary Guarantors under the Guarantee or for any claim based on, in respect of or by reason of such obligations or their creation.

The Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Securities upon which the Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers.

B-9

COUNTRY FAIR, INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

B-10

KIANTONE PIPELINE CORPORATION
By:
	Name:
	Title:
By:
	Name:
	Title:

B-11

KIANTONE PIPELINE COMPANY
By:
	Name:
	Title:
By:
	Name:
	Title:

B-12

UNITED JET CENTER, INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

B-13

UNITED REFINING COMPANY OF PENNSYLVANIA
By:
	Name:
	Title:
By:
	Name:
	Title:

B-14

KWIK-FILL CORPORATION
By:
	Name:
	Title:
By:
	Name:
	Title:

B-15

INDEPENDENT GASOLINE AND OIL COMPANY OF ROCHESTER, INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

B-16

BELL OIL CORP.
By:
	Name:
	Title:
By:
	Name:
	Title:

B-17

PPC, INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

B-18

SUPER TEST PETROLEUM, INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

B-19

KWIK-FIL, INC.
By:
	Name:
	Title:
By:
	Name:
	Title:

B-20

VULCAN ASPHALT REFINING CORPORATION
By:
	Name:
	Title:
By:
	Name:
	Title:

B-21

ASSIGNMENT FORM

I or we assign and transfer this Security to

________________________________________________________________________________________________________________________

________________________________________________________________________________________________________________________

(Print or type name, address and zip code of assignee or transferee)

________________________________________________________________________________________________________________________

(Insert Social Security or other identifying number of assignee or transferee)

and irrevocably appoint                                                                                                                                                                                                                         

agent to transfer this Security on the books of the Company. The agent may substitute another to act for him.

Dated:	Signed:
		(Sign exactly as name appears on the first page of this Security)

Signature Guarantee:
	Participant in a recognized Signature Guarantee Medallion
	Program (or other signature guarantor program reasonably
	acceptable to the Trustee)

B-22

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Security purchased by the Company pursuant to Section 4.16 or Section 4.20 of the Indenture, check the appropriate box:

Section 4.16 [    ] or Section 4.20 [    ]

If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.16 or Section 4.20 of the Indenture, state the amount: $                    

Dated:	Signed:
		(Sign exactly as name appears on the first page of this Security)

Signature Guarantee:
	Participant in a recognized Signature Guarantee Medallion
	Program (or other signature guarantor program reasonably
	acceptable to the Trustee)

B-23

EXHIBIT C

FORM OF LEGEND FOR GLOBAL SECURITIES

Any Global Security authenticated and delivered hereunder shall bear a legend (which would be in addition to any other legends required in the case of a Restricted Security) in substantially the following form:

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY (AS DEFINED IN THE INDENTURE) OR A NOMINEE OF A DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUERS OR THEIR AGENTS FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

C-1

EXHIBIT D

CERTIFICATE TO BE DELIVERED UPON EXCHANGE

OR REGISTRATION OF TRANSFER OF SECURITIES

Re: 10 ¹/2% Senior Notes due 2012, Series A

(the “Securities”) of United Refining Company

This Certificate relates to $                 principal amount of Securities held in the form of*      a beneficial interest in a Global Security or*              Physical Securities by              (the “Transferor”).

The Transferor:*

¨ has requested by written order that the Registrar deliver in exchange for its beneficial interest in a Global Security held by the Depositary a Physical Security or Physical Securities in definitive, registered form of authorized denominations and an aggregate number equal to its beneficial interest in such Global Security (or the portion thereof indicated above); or

¨ has requested the Registrar by written order to exchange or register the transfer of a Physical Security or Physical Securities.

In connection with such request and in respect of each such Security, the Transferor does hereby certify that the Transferor is familiar with the Indenture relating to the above captioned Securities and the restrictions on transfers thereof as provided in Section 2.16 of such Indenture, and that the transfer of the Securities does not require registration under the Securities Act of 1933, as amended (the “Act”) because*:

¨ Such Security is being acquired for the Transferor’s own account, without transfer (in satisfaction of Section 2.16(a)(II)(A) or Section 2.16(d)(i)(A) of the Indenture).

¨ Such Security is being transferred to a “qualified institutional buyer” (as defined in Rule 144A under the Act), in reliance on Rule 144A.

¨ Such Security is being transferred to an institutional “accredited investor” (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule 501 under the Act.

¨ Such Security is being transferred in reliance on Regulation S under the Act.

¨ Such Security is being transferred in accordance with Rule 144 under the Act.

¨ Such Security is being transferred in reliance on and in compliance with another exemption from the registration requirements of the Act.

D-1

[INSERT NAME OF TRANSFEROR]
By:
	[Authorized Signatory]

Date:
	* Check applicable box.

D-2

EXHIBIT E

Form of Certificate To Be

Delivered in Connection with

Transfers to Institutional Accredited Investors

                    ,             

Trustee

[Address]

Re:	United Refining Company, Incorporated (the “Company”)
	Under the Indenture (the “Indenture”) relating to
	10 1/2% Senior Notes due 2012, Series A

Ladies and Gentlemen:

In connection with our proposed purchase of 10½% Senior Notes due 2012, Series A (the “Securities”), of the Company, we confirm that:

1. We have received such information as we deem necessary in order to make our investment decision.

2. We understand that any subsequent transfer of the Securities is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Securities except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the “Securities Act”).

3. We understand that the offer and sale of the Securities have not been registered under the Securities Act, and that the Securities may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons except as permitted in the following sentence. We agree, on our own behalf and on behalf of each account for which we acquire any Securities, that, prior to (x) the date which is two years after the later of the date of original issuance of the Securities and (y) such later date, if any, as may be required by applicable laws, the Securities may be offered, resold, pledged or otherwise transferred only (a) to the Company, (b) inside the United States to a Person whom we reasonably believe to be a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) in compliance with Rule 144A under the Securities Act, (c) inside the United States to a Person we reasonably believe to be an institutional “accredited investor” (as defined below) that, prior to such transfer, furnishes to the Trustee a signed letter substantially in the form hereof, (d) outside the United States to Persons other than U.S. Persons in offshore transactions meeting the requirements of Rule 904 under Regulation S under the Securities Act, (e) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available), (f) pursuant to an effective registration statement under the Securities Act or (g) pursuant to another available exemption from the registration requirements of the Securities Act, and, in each case, in accordance with any applicable securities laws of any state of the United States or any other applicable jurisdiction, and we further agree to provide to any Person purchasing Securities from us a notice advising such purchaser that resales of the Securities are restricted as stated herein.

E-1

4. We understand that, on any proposed resale of Securities, we will be required to furnish to the Trustee and the Company, such certification, legal opinions and other information as the Trustee and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Securities purchased by us will bear a legend to the foregoing effect.

5. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Securities, and we and any accounts for which we are acting are each able to bear the economic risk of our or their investment, as the case may be.

6. We are acquiring the Securities purchased by us for our account or for one or more accounts (each of which is an institutional “accredited investor”) as to each of which we exercise sole investment discretion.

E-2

You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

Very truly yours, [Name of Transferor]
By:
	[Authorized Signatory]

Upon transfer the Securities would be registered in the name of the new beneficial owner as follows:

Name:                                                                             

Address:                                                                         

Taxpayer ID Number:                                                   

E-3

EXHIBIT F

Form of Certificate To Be

Delivered in Connection

with Regulation S Transfers

____________,____

Trustee

[address]

Re: United Refining Company, Incorporated (the “Company”)

10 ¹/2% Senior Notes due 2012, Series A (the “Securities”)

Ladies and Gentlemen:

In connection with our proposed sale of $ aggregate principal amount of the Securities, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, we represent that:

(1) the offer of the Securities was not made to a Person in the United States;

(2) either (a) at the time the buy offer was originated, the transferee was outside the United States or we and any Person acting on our behalf reasonably believed that the transferee was outside the United States, or (b) the transaction was executed in, on or through the facilities of a designated off-shore securities market and neither we nor any Person acting on our behalf knows that the transaction has been pre-arranged with a buyer in the United States;

(3) no directed selling efforts have been made in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, as applicable;

(4) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act; and

(5) we have advised the transferee of the transfer restrictions applicable to the Securities.

You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

F-1

Very truly yours, [Name of Transferor]
By:
	[Authorized Signatory]

Upon transfer the Securities would be registered in the name of the new beneficial owner as follows:

Name:                                                                                      

Address:                                                                                  

Taxpayer ID Number:                                                           

F-2

EX-4.2

Exhibit 4.2

FORM OF SERIES A SECURITY

“THIS SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:

(1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A “QIB”), OR (B) IT IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT;

(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS SECURITY (THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF SECURITIES LESS THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY, IF THE COMPANY SO REQUESTS, THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY), OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND

(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION” AND “UNITED STATES” HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE GOVERNING THIS SECURITY CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS SECURITY IN VIOLATION OF THE FOREGOING.”

EX-10.1

Exhibit 10.1

UNITED REFINING COMPANY

$200,000,000

10 ¹/2% Senior Notes Due 2012

Purchase Agreement

August 3, 2004

Citigroup Global Markets Inc.

As Representative of the Initial Purchasers

c/o Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

Ladies and Gentlemen:

United Refining Company, a corporation organized under the laws of Pennsylvania (the “Company”), proposes to issue and sell to the several parties named in Schedule I hereto (the “Initial Purchasers”), for whom you (the “Representative”) are acting as Representative, $200,000,000 principal amount of its 10 1/2% Senior Notes Due 2012 (the “Notes”). The Notes are to be issued under an indenture (the “Indenture”), to be dated as of the Closing Date (as defined herein), among the Company, the Guarantors (as defined herein) and The Bank of New York, as trustee (the “Trustee”). The Company’s obligations under the Notes will be guaranteed (the “Guarantees,” and, together with the Notes, the “Securities”) on a senior unsecured basis by each of the guarantors listed on the signature pages hereto (collectively, the “Guarantors,” and together with the Company, the “Issuers”).

The Securities will have the benefit of a registration rights agreement (the “Registration Rights Agreement”), to be dated as of the Closing Date, among the Issuers and the Initial Purchasers, pursuant to which the Issuers will agree to register the Securities under the Act subject to the terms and conditions therein specified. The use of the neuter in this Agreement shall include the feminine and masculine wherever appropriate. Certain terms used herein are defined in Section 18 hereof.

The sale of the Securities to the Initial Purchasers will be made without registration of the Securities under the Act in reliance upon exemptions from the registration requirements of the Act.

In connection with the sale of the Securities, the Issuers have prepared a preliminary offering memorandum, dated July 22, 2004 (as amended or supplemented at the date thereof, including any and all exhibits thereto and any information incorporated by reference therein, the “Preliminary Memorandum”), and a final offering memorandum, dated August 3, 2004 (as amended or supplemented at the Execution Time, including any and all exhibits thereto and any information incorporated by reference therein, the “Final Memorandum”). Each of the Preliminary Memorandum and the Final Memorandum sets forth certain information concerning the Issuers and the Securities. Each of the Issuers hereby confirms that it has authorized the use of the Preliminary Memorandum and the Final Memorandum, and any amendment or supplement thereto, in connection with the offer and sale of the Securities by the Initial Purchasers as contemplated by this Agreement, the Preliminary Memorandum and the Final Memorandum. Unless stated to the contrary, any references herein to the terms “amend”, “amendment” or “supplement” with respect to the Final Memorandum shall be deemed to refer to and include any information filed under the Exchange Act subsequent to the Execution Time that is incorporated by reference therein.

1. Representations and Warranties. The Issuers, jointly and severally, represent and warrant to each Initial Purchaser as set forth below in this Section 1.

(a) The Preliminary Memorandum, at the date thereof, did not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. At the Execution Time and on the Closing Date the Final Memorandum did not and will not (and any amendment or supplement thereto, at the date thereof and at the Closing Date will not) contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Issuers make no representation or warranty as to the information contained in or omitted from the Preliminary Memorandum or the Final Memorandum, or any amendment or supplement thereto, in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of the Initial Purchasers through the Representative specifically for inclusion therein.

(b) None of the Issuers, their Affiliates, or any person acting on their behalf has, directly or indirectly, made offers or sales of any security, or solicited offers to buy, any security under circumstances that would require the registration of the Securities under the Act.

(c) None of the Issuers, their Affiliates, or any person acting on their behalf has: (i) engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Securities or (ii) engaged in any directed selling efforts (within the meaning of Regulation S) with respect to the Securities; and each of the Issuers, their Affiliates and each person acting on their behalf has complied with the offering restrictions requirement of Regulation S.

(d) The Securities satisfy the eligibility requirements of Rule 144A(d)(3) under the Act.

(e) No registration under the Act of the Securities is required for the offer and sale of the Securities to or by the Initial Purchasers in the manner contemplated herein and in the Final Memorandum assuming in each case (i) that the purchasers who buy the Securities in the resales are either “qualified institutional buyers” (as defined under Rule 144A of the Act) or “Accredited Investors” (within the meaning of Regulation D) and (ii) the accuracy of and compliance with the Initial Purchasers’ representations, warranties and covenants contained in Section 4 of this Agreement.

(f) No Issuer is, or after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Final Memorandum will not be, an “investment company” as defined in the Investment Company Act, without taking account of any exemption arising out of the number of holders of the Issuers’ securities.

(g) Each Issuer is subject to and in full compliance with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act.

(h) No Issuer has paid or agreed to pay to any person any compensation for soliciting another to purchase any securities of any Issuer under circumstances that would require the registration of the Securities under the Act (except as contemplated in this Agreement).

(i) No Issuer has taken, directly or indirectly, any action designed to cause or result, under the Exchange Act or otherwise, in stabilization or manipulation of the price of any security of any Issuer to facilitate the sale or resale of the Securities.

(j) Each Issuer has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized with full corporate power and authority

-2-

to own or lease, as the case may be, and to operate its properties and conduct its business as described in the Final Memorandum, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction that requires such qualification, or is subject to no material liability by reason of the failure to be so qualified in any such jurisdiction.

(k) All the outstanding shares of capital stock of each subsidiary have been duly authorized and validly issued and are fully paid and nonassessable, and, except as otherwise set forth in the Final Memorandum, all outstanding shares of capital stock of the subsidiaries are owned by the Company either directly or through wholly owned subsidiaries free and clear of any security interest, claim, lien or encumbrance.

(l) The statements set forth in the Final Memorandum under the caption “Description of Notes,” insofar as they purport to constitute a summary of the terms of the Securities, and under the caption “Certain United States Federal Tax Consequences, “ insofar as they purport to describe United States tax considerations to holders of the Securities,” fairly summarize the matters described therein.

(m) This Agreement has been duly authorized, executed and delivered by each Issuer; the Indenture has been duly authorized by each Issuer and, assuming due authorization, execution and delivery thereof by the Trustee, when executed and delivered by each Issuer, will constitute a legal, valid, binding instrument enforceable against each Issuer in accordance with its terms (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors’ rights generally from time to time in effect and to general principles of equity); the Notes have been duly authorized by the Company and, when executed by the Company and authenticated by the Trustee in accordance with the provisions of the Indenture and delivered to and paid for by the Initial Purchasers, will constitute the legal, valid and binding obligations of the Company entitled to the benefits of the Indenture (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors’ rights generally from time to time in effect and to general principles of equity); and the Registration Rights Agreement has been duly authorized by each Issuer and, when executed by each Issuer and delivered by each Issuer, will constitute the legal, valid, binding and enforceable instrument of each Issuer (subject, as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting creditors’ rights generally from time to time in effect and to general principles of equity).

(n) Each of the Guarantees has been duly authorized by the applicable Guarantor and, when executed by the applicable Guarantor and delivered to the Trustee in accordance with the terms of the Indenture, will constitute the legal, valid and binding obligation of such Guarantor enforceable against such Guarantor in accordance with its terms (subject as to the enforcement of remedies, to applicable bankruptcy, reorganization, insolvency (including, without limitation, all laws relating to fraudulent transfers), moratorium or other laws affecting creditors’ rights generally from time to time in effect and to the general principles of equity).

(o) No consent, approval, authorization, filing with or order of any court or governmental agency or body is required in connection with the transactions contemplated herein, in the Indenture or in the Registration Rights Agreement, except such as may be required under the blue sky laws of any jurisdiction in which the Securities are offered and sold and, in the case of the Registration Rights Agreement, such as will be obtained under the Act and the Trust Indenture Act.

(p) None of the execution and delivery by the Issuers of the Indenture, this Agreement or the Registration Rights Agreement, the issuance and sale of the Securities, or the consummation of any other of the transactions herein or therein contemplated, or the fulfillment of the terms hereof or thereof will conflict with, result in a breach or violation or imposition of any lien, charge or encumbrance upon any property or assets of any Issuer pursuant to, (i) the charter or by-laws of any Issuer; (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which any Issuer is a party or bound or to which its property is subject; or (iii) any statute, law, rule, regulation, judgment, order or decree of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over an Issuer or any of its properties, except where such breach or violation or imposition of any lien, charge or encumbrance upon any property or assets of any Issuer as set forth in clauses (ii) or (iii) above would not reasonably be expected to have a material adverse effect on the condition (financial or otherwise), earnings,

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business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business (a “Material Adverse Effect”), except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto).

(q) The consolidated historical financial statements and schedules of the Company and its consolidated subsidiaries included or incorporated by reference in the Final Memorandum present fairly the financial condition, results of operations and cash flows of the Company as of the dates and for the periods indicated, comply as to form with the applicable accounting requirements of Regulation S-X and have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved (except as otherwise noted therein); the selected financial data set forth under the caption “Selected Consolidated Financial and Other Operating Data” in the Final Memorandum, the summary financial data set forth under the caption “Summary Historical and Pro Forma Consolidated Financial and Other Operating Data” in the Final Memorandum, and financial information set forth under the caption “Capitalization” in the Final Memorandum, fairly presents, on the basis stated in the Final Memorandum, the information included therein.

(r) No action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving any of the Issuers or their property is pending or, to the best knowledge of any Issuer, threatened that (i) would reasonably be expected to have a material adverse effect on the performance of this Agreement, the Indenture, the Securities or the Registration Rights Agreement, or the consummation of any of the transactions contemplated hereby or thereby or (ii) would not have a Material Adverse Effect, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto).

(s) Each Issuer owns or leases all such properties as are necessary to the conduct of its operations as presently conducted.

(t) No Issuer is in violation or default of (i) any provision of its charter or bylaws or other organizational or governing documents; (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which it is a party or bound or to which its property is subject; or (iii) any statute, law, rule, regulation, judgment, order or decree applicable to any Issuer of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Issuers or any of their properties, as applicable, except where such violation or default as set forth in clause (ii) or (iii) would not have a Material Adverse Effect.

(u) BDO Seidman, LLP, who have certified certain financial statements of the Company and its consolidated subsidiaries and delivered their report with respect to the audited consolidated financial statements and schedules included or incorporated by reference in the Final Memorandum, are independent public accountants with respect to the Company within the meaning of the Act.

(v) The Issuers have filed all foreign, federal, state and local tax returns that are required to be filed or has requested extensions thereof (except in any case in which the failure so to file would not have a Material Adverse Effect and except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto)) and have paid all taxes required to be paid by them and any other assessment, fine or penalty levied against them, to the extent that any of the foregoing is due and payable, except for any such assessment, fine or penalty that is currently being contested in good faith or as would not have a Material Adverse Effect and except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto).

(w) No labor problem or dispute with the employees of any of the Issuers exists or, to the knowledge of the Company, is threatened or imminent, and the Company is not aware of any existing or imminent labor disturbance by the employees of any of the Issuers’ principal suppliers, contractors or customers, except as would not have a Material Adverse Effect, and except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto).

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(x) The Issuers are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged, and no Issuer has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto).

(y) No subsidiary of the Company is currently prohibited, directly or indirectly, from paying any dividends to the Company, from making any other distribution on such subsidiary’s capital stock, from repaying to the Company any loans or advances to such subsidiary from the Company or from transferring any of such subsidiary’s property or assets to the Company or any other subsidiary of the Company, except (i) as described in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto) and (ii) in connection with the Revolving Credit Facility.

(z) The Issuers possess all licenses, certificates, permits and other authorizations issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses, and no Issuer has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto).

(aa) Each Issuer maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

(bb) Each Issuer (i) is in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”); (ii) has received and is in compliance with all permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its respective businesses; and (iii) has not received notice of any actual or potential liability under any Environmental Law, except where such non-compliance with Environmental Laws, failure to receive required permits, licenses or other approvals, or liability would not, individually or in the aggregate, have a Material Adverse Effect, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto). Except as set forth in the Final Memorandum, no Issuer has been named as a “potentially responsible party” under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, except in such cases that would not have a Material Adverse Effect.

(cc) The Issuers have no costs and liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws, or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) that would, singly or in the aggregate, have a Material Adverse Effect, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto).

(dd) The minimum funding standard under Section 302 of the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published interpretations thereunder (“ERISA”), has been satisfied by each “pension plan” (as defined in Section 3(2) of ERISA) which has been established or maintained by the Issuers, and the trust forming part of each such plan which is intended to be qualified under Section 401 of the Code is so qualified; each Issuer has fulfilled its obligations, if any, under Section 515 of ERISA; each pension plan and welfare plan established or maintained by the Issuers is in compliance in all material respects with the currently applicable provisions of ERISA; and no Issuer has incurred or could reasonably be expected to incur any withdrawal liability under Section 4201 of ERISA, any liability under Section 4062, 4063, or 4064 of ERISA, or any other liability under Title IV of ERISA.

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(ee) The statistical and market-related data included in the Final Memorandum (exclusive of any amendment or supplement thereto) are based on or derived from sources which the Issuers believe to be reliable and accurate.

(ff) None of the Issuers or any agent acting on their behalf has taken or will take any action that might cause this Agreement or the sale of the Securities to violate Regulation T, U or X of the Board of Governors of the Federal Reserve System, in each case as in effect, or as the same may hereafter be in effect, on the Closing Date.

(gg) No Issuer or, to the knowledge of the Issuers, any director, officer, agent, employee or Affiliate of any Issuer is aware of or has taken any action, directly or indirectly, that would result in a violation by such Persons of Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder (the “FCPA”), including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA; and the Issuers and, to the knowledge of the Issuers, their Affiliates have conducted their businesses in compliance with the FCPA.

(hh) The Company is in compliance with all the applicable provisions of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) that are currently in effect and require compliance on or before the date hereof.

(ii) None of the Company, any of its subsidiaries or, to the knowledge of the Company, any director, officer, agent, employee or Affiliate of the Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”); and the Company will not directly or indirectly use the proceeds of the offering of the Securities hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

(jj) All of the Company’s subsidiaries are listed on Schedule II hereto and each such subsidiary will be a Guarantor unless indicated otherwise on such schedule.

Any certificate signed by any officer of any Issuer and delivered to the Representative or counsel for the Initial Purchasers in connection with the offering of the Securities shall be deemed a representation and warranty by each such Issuer, as to matters covered thereby, to each Initial Purchaser.

2. Purchase and Sale. Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Issuers agree to sell to each Initial Purchaser, and each Initial Purchaser agrees, severally and not jointly, to purchase from the Issuers, at a purchase price of 95.921% of the principal amount thereof, plus accrued interest, if any, from August 6, 2004 to the Closing Date, the principal amount of Securities set forth opposite such Initial Purchaser’s name in Schedule I hereto.

3. Delivery and Payment. Delivery of and payment for the Securities shall be made at 10:00 A.M., New York City time, on August 6, 2004 or at such time on such later date not more than three Business Days after the foregoing date as the Representative shall designate, which date and time may be postponed by agreement between the Representative and the Company or as provided in Section 9 hereof (such date and time of delivery and payment for the Securities being herein called the “Closing Date”). Delivery of the Securities shall be made to the Representative for the respective accounts of the several Initial Purchasers against payment by the several Initial Purchasers through the Representative of the purchase price thereof to or upon the order of the Company by wire transfer payable in same-day funds to the account specified by the Company. Delivery of the Securities shall be made through the facilities of The Depository Trust Company unless the Representative shall otherwise instruct.

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4. Offering by Initial Purchasers. (a) Each Initial Purchaser acknowledges that the Securities have not been and will not be registered under the Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Act.

(b) Each Initial Purchaser, severally and not jointly, represents and warrants to and agrees with the Issuers that:

(i) it has not offered or sold, and will not offer or sell, any Securities within the United States or to, or for the account or benefit of, U.S. persons (x) as part of their distribution at any time or (y) otherwise until 40 days after the later of the commencement of the offering and the date of closing of the offering except:

(A) to those it reasonably believes to be “qualified institutional buyers” (as defined in Rule 144A under the Act) or

(B) in accordance with Rule 903 of Regulation S;

(ii) neither it nor any person acting on its behalf has made or will make offers or sales of the Securities in the United States by means of any form of general solicitation or general advertising (within the meaning of Regulation D) in the United States;

(iii) in connection with each sale pursuant to Section 4(b)(i)(A), it has taken or will take reasonable steps to ensure that the purchaser of such Securities is aware that such sale is being made in reliance on Rule 144A;

(iv) neither it, nor any of its Affiliates nor any person acting on its or their behalf has engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Securities;

(v) it has not entered and will not enter into any contractual arrangement with any distributor (within the meaning of Regulation S) with respect to the distribution of the Securities, except with its affiliates or with the prior written consent of the Company;

(vi) it and its Affiliates have complied and will comply with the offering restrictions requirement of Regulation S;

(vii) at or prior to the confirmation of sale of Securities (other than a sale of Securities pursuant to Section 4(b)(i)(A) of this Agreement), it shall have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Securities from it during the distribution compliance period (within the meaning of Regulation S) a confirmation or notice to substantially the following effect:

“The Securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the “Act”) and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the date of closing of the offering, except in either case in accordance with Regulation S or Rule 144A under the Act. Terms used in this paragraph have the meanings given to them by Regulation S.”

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(viii) it has not offered or sold and, prior to the date six months after the date of issuance of the Securities, will not offer or sell any Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or as agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995;

(ix) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom; and

(x) it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of any Securities, in circumstances in which section 21(1) of the FSMA does not apply to the Company.

5. Agreements. The Issuers, jointly and severally, agree with each Initial Purchaser that:

(a) The Issuers will furnish to the Initial Purchasers and to counsel for the Initial Purchasers, without charge, during the period referred to in paragraph (c) below, as many copies of the Final Memorandum and any amendments and supplements thereto as they may reasonably request.

(b) The Issuers will not amend or supplement the Final Memorandum, other than by filing documents under the Exchange Act that are incorporated by reference therein, without the prior written consent of the Representative; provided, however, that, prior to the completion of the distribution of the Securities by the Initial Purchasers (as determined by the Initial Purchasers), the Company will not file any document under the Exchange Act that is incorporated by reference in the Final Memorandum unless, prior to such proposed filing, the Company has furnished the Representative with a copy of such document for its review and the Representative has not reasonably objected to the filing of such document. The Company will promptly advise the Representative when any document filed under the Exchange Act that is incorporated by reference in the Final Memorandum shall have been filed with the Commission.

(c) If at any time prior to the completion of the sale of the Securities by the Initial Purchasers (as determined by the Representative), but in any event no later than nine months from the date of the Final Memorandum, any event occurs as a result of which the Final Memorandum, as then amended or supplemented, would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it should be necessary to amend or supplement the Final Memorandum to comply with applicable law, the Issuers will promptly (i) notify the Representative of any such event; (ii) subject to the requirements of paragraph (b) of this Section 5, prepare an amendment or supplement that will correct such statement or omission or effect such compliance; and (iii) supply any supplemented or amended Final Memorandum to the several Initial Purchasers and counsel for the Initial Purchasers without charge in such quantities as they may reasonably request.

(d) The Issuers will arrange, upon the request of the Representative, for the qualification of the Securities for sale by the Initial Purchasers under the laws of such jurisdictions as the Representative may designate and will maintain such qualifications in effect so long as required for the sale of the Securities; provided that in no event shall any Issuer be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to take any action that would subject it to service of process in suits, other than those arising out of the offering or sale of the Securities, in any jurisdiction where it is not now so subject. The Issuers will promptly advise the Representative of the receipt by any Issuer of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose.

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(e) During the period of two years after the Closing Date, the Issuers will not, and will not permit any of their Affiliates to, resell any Securities that constitute “restricted securities” under Rule 144 that have been acquired by any of them.

(f) None of the Issuers, their Affiliates, or any person acting on any of their behalf will, directly or indirectly, make offers or sales of any security, or solicit offers to buy any security, under circumstances that would require the registration of the Securities under the Act.

(g) None of the Issuers, their Affiliates, or any person acting on any of their behalf will engage in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Securities in the United States and none of the Issuers, their Affiliates, or any person acting on any of their behalf will engage in any directed selling efforts with respect to the Securities, and each of them will comply with the offering restrictions requirement of Regulation S. Terms used in this paragraph have the meanings given to them by Regulation S.

(h) So long as any of the Securities are “restricted securities” within the meaning of Rule 144(a)(3) under the Act, the Issuers will, during any period in which it is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, provide to each holder of such restricted securities and to each prospective purchaser (as designated by such holder) of such restricted securities, upon the request of such holder or prospective purchaser, any information required to be provided by Rule 144A(d)(4) under the Act. This covenant is intended to be for the benefit of the holders, and the prospective purchasers designated by such holders, from time to time of such restricted securities.

(i) The Issuers will cooperate with the Representative and use their best efforts to permit the Securities to be eligible for clearance and settlement through The Depository Trust Company.

(j) No Issuer will take, directly or indirectly, any action designed to result, under the Exchange Act or otherwise, in stabilization or manipulation of the price of any security of any Issuer to facilitate the sale or resale of the Securities.

(k) The Company agrees to pay the costs and expenses relating to the following matters: (i) the preparation of the Indenture and the Registration Rights Agreement, the issuance of the Securities and the fees of the Trustee; (ii) the preparation, printing or reproduction of the Preliminary Memorandum and the Final Memorandum and each amendment or supplement to either of them; (iii) the printing (or reproduction) and delivery (including postage, air freight charges and charges for counting and packaging) of such copies of the Preliminary Memorandum and the Final Memorandum, and all amendments or supplements to either of them, as may, in each case, be reasonably requested for use in connection with the offering and sale of the Securities; (iv) the preparation, printing, authentication, issuance and delivery of certificates for the Securities; (v) any stamp or transfer taxes in connection with the original issuance and sale of the Securities; (vi) the printing (or reproduction) and delivery of this Agreement, any blue sky memorandum and all other agreements or documents printed (or reproduced) and delivered in connection with the offering of the Securities; (vii) any registration or qualification of the Securities for offer and sale under the securities or blue sky laws of the several states and any other jurisdictions specified pursuant to Section 5(d) (including filing fees and the reasonable fees and expenses of counsel for the Initial Purchasers relating to such registration and qualification); (viii) admitting the Securities for trading in the PORTAL Market; (ix) the transportation and other expenses incurred by or on behalf of Company representatives in connection with presentations to prospective purchasers of the Securities; (x) the fees and expenses of the Issuers’ accountants and the fees and expenses of counsel (including local and special counsel) for the Issuers; and (xi) all other costs and expenses incident to the performance by the Issuers of their obligations hereunder. It is understood, however, that the Initial Purchasers will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes, fees and commissions on resale of any of the securities by them, and any advertising expenses connected with any offers they may make.

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(l) The Company will, for a period of twelve months following the Execution Time, furnish to the Representative (i) all reports or other communications (financial or other) generally made available to stockholders, and deliver such reports and communications to the Representative as soon as they are available, unless such documents are furnished to or filed with the Commission or any securities exchange on which any class of securities of the Company is listed and generally made available to the public and (ii) such additional information concerning the business and financial condition of the Company as Representative may from time to time reasonably request (such statements to be on a consolidated basis to the extent the accounts of the Company and its subsidiaries are consolidated in reports furnished to stockholders).

(m) Each Issuer will comply with all applicable securities and other laws, rules and regulations, including, without limitation, the Sarbanes-Oxley Act, and use its best efforts to cause each of their directors and officers, in their capacities as such, to comply with such laws, rules and regulations, including, without limitation, the provisions of the Sarbanes-Oxley Act.

6. Conditions to the Obligations of the Initial Purchasers. The obligations of the Initial Purchasers to purchase the Securities shall be subject to the accuracy of the representations and warranties of the Issuers contained herein at the Execution Time and the Closing Date, to the accuracy of the statements of the Issuers made in any certificates pursuant to the provisions hereof, to the performance by the Issuers of their respective obligations hereunder and to the following additional conditions:

(a) The Representative shall have received from Kramer Levin Naftalis & Frankel LLP, counsel for the Company, an opinion, dated the Closing Date and addressed to the Representative, substantially in the form of Annex A attached hereto.

(b) The Representative shall have received from John R. Wagner, General Counsel for the Issuers, the opinion, dated the Closing Date and addressed to the Representative, substantially in the form of Annex B attached hereto.

(c) The Representative shall have received from Cahill Gordon & Reindel LLP, counsel for the Initial Purchasers, such opinion or opinions, dated the Closing Date and addressed to the Representative, with respect to the issuance and sale of the Securities, the Indenture, the Registration Rights Agreement, the Final Memorandum (as amended or supplemented at the Closing Date) and other related matters as the Representative may reasonably require, and each of the Issuers shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.

(d) The Company shall have furnished to the Representative a certificate of the Company, signed by (x) the Chairman of the Board or the President and (y) the principal financial or accounting officer of the Company, dated the Closing Date, to the effect that the signers of such certificate have reviewed the Final Memorandum, any amendment or supplement to the Final Memorandum and this Agreement and that:

(i) the representations and warranties of each Issuer in this Agreement are true and correct on and as of the Closing Date with the same effect as if made on the Closing Date, and each Issuer has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date; and

(ii) since the date of the most recent financial statements included or incorporated by reference in the Final Memorandum (exclusive of any amendment or supplement thereto), there has been no material adverse change to the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto).

(e) At the Execution Time and at the Closing Date, the Issuers shall have requested and caused BDO Seidman, LLP to furnish to the Representative, a “comfort” letter, dated as of the Execution Time and

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a bring-down “comfort letter”, dated as of the Closing Date, in form and substance satisfactory to the Representative, confirming that they are independent accountants within the meaning of the Exchange Act and the applicable rules and regulations thereunder and confirming certain matters with respect to the audited and unaudited financial statements and other financial and accounting information contained in the Final Memorandum.

(f) Subsequent to the Execution Time or, if earlier, the dates as of which information is given in the Final Memorandum (exclusive of any amendment or supplement thereto), there shall not have been (i) any change or decrease specified in the letter or letters referred to in paragraph (e) of this Section 6; or (ii) any change, or any development involving a prospective change in or affecting the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries taken as a whole, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto), the effect of which, in any case referred to in clause (i) or (ii) above, is, in the sole judgment of the Representative, so material and adverse as to make it impractical or inadvisable to proceed with the offering or delivery of the Securities as contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto).

(g) The Securities shall have been designated as PORTAL-eligible securities in accordance with the rules and regulations of the NASD and the Securities shall be eligible for clearance and settlement through The Depository Trust Company.

(h) Subsequent to the Execution Time, there shall not have been any decrease in the rating of any of the Company’s securities by any “nationally recognized statistical rating organization” (as defined for purposes of Rule 436(g) under the Act) or any notice given of any intended or potential decrease in any such rating or of a possible change in any such rating that does not indicate the direction of the possible change.

(i) Prior to the Closing Date, the Company shall have furnished to the Representative such further information, certificates and documents as the Representative may reasonably request.

(j) The Company shall have entered into and delivered to the Representative an amendment to the Revolving Credit Facility in form and substance reasonably satisfactory to the Representative.

(k) The Company shall have dissolved United Refining Marketing, Inc, a Delaware corporation and shall have delivered to the Representative a notice of dissolution or equivalent evidence of dissolution from the Delaware Secretary of State, in form and substance reasonably satisfactory to the Representative.

(l) The Company shall have caused a notice of redemption to be mailed to the holders of the 10.75% Senior Notes due 2007 and irrevocably deposited an amount equal to such redemption with IBJ Schroder Bank & Trust Company, in each case, concurrently with the closing of the Securities.

If any of the conditions specified in this Section 6 shall not have been fulfilled when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be reasonably satisfactory in form and substance to the Representative and counsel for the Initial Purchasers, this Agreement and all obligations of the Initial Purchasers hereunder may be cancelled at, or at any time prior to, the Closing Date by the Representative. Notice of such cancellation shall be given to the Company in writing or by telephone or facsimile confirmed in writing.

The documents required to be delivered by this Section 6 will be delivered at the office of counsel for the Initial Purchasers, at 80 Pine Street, New York, New York 10005, on the Closing Date.

7. Reimbursement of Expenses. If the sale of the Securities provided for herein is not consummated because any condition to the obligations of the Initial Purchasers set forth in Section 6 hereof is not satisfied, because of any termination pursuant to Section 10 hereof or because of any refusal, inability or failure on the part of the Issuers to perform any agreement herein or comply with any provision hereof other than by reason of a default by any of the Initial Purchasers, the Issuers will reimburse the Initial Purchasers severally through Citigroup on demand for all expenses (including reasonable fees and disbursements of counsel) that shall have been incurred by them in connection with the proposed purchase and sale of the Securities.

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8. Indemnification and Contribution. (a) The Issuers, jointly and severally, agree to indemnify and hold harmless each Initial Purchaser, the directors, officers, employees, Affiliates and agents of each Initial Purchaser and each person who controls any Initial Purchaser within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other U.S. federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Memorandum, the Final Memorandum or in any amendment or supplement thereto or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Issuers will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the Preliminary Memorandum, the Final Memorandum or in any amendment thereof or supplement thereto, in reliance upon and in conformity with written information furnished to the Issuers by or on behalf of any Initial Purchaser through the Representative specifically for inclusion therein. This indemnity agreement will be in addition to any liability that the Company may otherwise have.

(b) Each Initial Purchaser severally, and not jointly, agrees to indemnify and hold harmless each Issuer, each of their directors, each of their officers, and each person who controls such Issuer within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from such Issuer to each Initial Purchaser, but only with reference to written information relating to such Initial Purchaser furnished to such Issuer by or on behalf of such Initial Purchaser through the Representative specifically for inclusion in the Preliminary Memorandum, the Final Memorandum or in any amendment or supplement thereto. This indemnity agreement will be in addition to any liability that any Initial Purchaser may otherwise have. Each Issuer acknowledges that (i) the statements set forth in the last paragraph of the cover page regarding delivery of the Securities and (ii), under the heading “Plan of Distribution”, the paragraphs related to over-allotment, covering transactions and stabilizing transactions in the Preliminary Memorandum and the Final Memorandum constitute the only information furnished in writing by or on behalf of the Initial Purchasers for inclusion in the Preliminary Memorandum, the Final Memorandum or in any amendment or supplement thereto.

(c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel (including local counsel) of the indemnifying party’s choice at the indemnifying party’s expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel, other than local counsel if not appointed by the indemnifying party, retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party’s election to appoint counsel (including local counsel) to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have

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employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize in writing the indemnified party to employ separate counsel at the expense of the indemnifying party; provided, however, the indemnifying party shall not be liable for the fees and expenses of more than one such separate counsel (together with local counsel) in connection with any action or related proceeding in the same jurisdiction. An indemnifying party will not, without the prior written consent of the indemnified parties, which consent shall not be unreasonably withheld, delayed or conditioned, settle, compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding.

(d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 8 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Issuers and the Initial Purchasers severally agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending any loss, claim, damage, liability or action) (collectively “Losses”) to which the Issuers and one or more of the Initial Purchasers may be subject in such proportion as is appropriate to reflect the relative benefits received by the Issuers on the one hand and by the Initial Purchasers on the other from the offering of the Securities; provided, however, that in no case shall any Initial Purchaser be responsible for any amount in excess of the purchase discount or commission applicable to the Securities purchased by such Initial Purchaser hereunder. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Issuers and the Initial Purchasers severally shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Issuers on the one hand and the Initial Purchasers on the other in connection with the statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations. Benefits received by the Issuers shall be deemed to be equal to the total net proceeds from the offering (before deducting expenses) received by them, and benefits received by the Initial Purchasers shall be deemed to be equal to the total purchase discounts and commissions. Relative fault shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the Issuers on the one hand or the Initial Purchasers on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Issuers and the Initial Purchasers agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation that does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person who controls an Initial Purchaser within the meaning of either the Act or the Exchange Act and each director, officer, employee, Affiliate and agent of any Initial Purchaser shall have the same rights to contribution as such Initial Purchaser, and each person who controls an Issuer within the meaning of either the Act or the Exchange Act and each officer and director of an Issuer shall have the same rights to contribution as such Issuer, subject in each case to the applicable terms and conditions of this paragraph (d).

9. Default by an Initial Purchaser. If any one or more Initial Purchasers shall fail to purchase and pay for any of the Securities agreed to be purchased by such Initial Purchaser hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Initial Purchasers shall be obligated severally to take up and pay for (in the respective proportions which the principal amount of Securities set forth opposite their names in Schedule I hereto bears to the aggregate principal amount of Securities set forth opposite the names of all the remaining Initial Purchasers) the Securities which the defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase; provided, however, that in the event that the aggregate principal amount of Securities which the defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase shall exceed 10% of the aggregate principal amount of Securities set forth in Schedule I hereto, the remaining Initial Purchasers shall have the right to purchase all, but shall not be under any obligation to purchase any, of the Securities, and if such nondefaulting Initial Purchasers do not purchase all the Securities, this Agreement will terminate without liability to any nondefaulting Initial Purchaser or any Issuer. In the event of a default by any Initial Purchaser as set forth in this Section 9, the Closing Date shall be postponed for such period, not exceeding five Business Days, as the Representative shall determine in order that the required changes in the

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Final Memorandum or in any other documents or arrangements may be effected. Nothing contained in this Agreement shall relieve any defaulting Initial Purchaser of its liability, if any, to the Issuers or any nondefaulting Initial Purchaser for damages occasioned by its default hereunder.

10. Termination. This Agreement shall be subject to termination in the absolute discretion of the Representative, by notice given to the Company prior to delivery of and payment for the Securities, if at any time prior to such time (i) trading in securities generally on the New York Stock Exchange or the Nasdaq National Market shall have been suspended or limited or minimum prices shall have been established on such exchange or the Nasdaq National Market; (ii) a banking moratorium shall have been declared either by U.S. federal or New York State authorities; or (iii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets is such as to make it, in the sole judgment of the Representative, impractical or inadvisable to proceed with the offering or delivery of the Securities as contemplated in the Final Memorandum (exclusive of any amendment or supplement thereto).

11. Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other statements of the Issuers or their respective officers and of the Initial Purchasers set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Initial Purchasers or the Issuers or any of the indemnified persons referred to in Section 8 hereof, and will survive delivery of and payment for the Securities. The provisions of Sections 7 and 8 hereof shall survive the termination or cancellation of this Agreement.

12. Notices. All communications hereunder will be in writing and effective only on receipt, and, if sent to the Representative, will be mailed, delivered or telefaxed to the Citigroup General Counsel (fax no.: (212) 816-7912) and confirmed to Citigroup at 388 Greenwich Street, New York, New York 10013, Attention: General Counsel; or, if sent to the Issuers, will be mailed, delivered or telefaxed to (814) 723-4371 and confirmed to it at 15 Bradley Street, Warren, Pennsylvania 16365, attention of the Legal Department.

13. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the indemnified persons referred to in Section 8 hereof and their respective successors, and, except as expressly set forth in Section 5(h) hereof, no other person will have any right or obligation hereunder.

14. Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed within the State of New York. The parties hereto each hereby waive any right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement.

15. Counterparts. This Agreement may be signed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement.

16. Headings. The section headings used herein are for convenience only and shall not affect the construction hereof.

17. Definitions. The terms that follow, when used in this Agreement, shall have the meanings indicated.

“Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.

“Affiliate” shall have the meaning specified in Rule 501(b) of Regulation D.

“Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in The City of New York.

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“Citigroup” shall mean Citigroup Global Markets Inc.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Commission” shall mean the Securities and Exchange Commission.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder.

“Execution Time” shall mean the date and time that this Agreement is executed and delivered by the parties hereto.

“Investment Company Act” shall mean the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission promulgated thereunder.

“NASD” shall mean the National Association of Securities Dealers, Inc.

“PORTAL” shall mean the Private Offerings, Resales and Trading through Automated Linkages system of the NASD.

“Regulation D” shall mean Regulation D under the Act.

“Regulation S” shall mean Regulation S under the Act.

“Revolving Credit Facility” shall mean the Amended and Restated Credit Agreement, dated as of July 12, 2002, as amended, among the Company, PNC Bank, National Association, and the parties listed on the signature pages thereto.

“Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended, and the rules and regulations of the Commission promulgated thereunder.

If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Company, the Guarantors and the several Initial Purchasers.

[–Signature pages to follow–]

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Very truly yours,
UNITED REFINING COMPANY
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	Chief Executive Officer

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COUNTRY FAIR, INC.
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President – Finance
By:	/s/ John R. Wagner
Name:	John R. Wagner
Title:	Secretary

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KIANTONE PIPELINE CORPORATION
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	Chief Executive Officer

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KIANTONE PIPELINE COMPANY
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

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UNITED JET CENTER, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

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UNITED REFINING COMPANY OF PENNSYLVANIA
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	Chief Executive Officer

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KWIK FILL CORPORATION
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

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INDEPENDENT GASOLINE AND OIL COMPANY OF ROCHESTER, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

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BELL OIL CORP.
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President – Finance
By:	/s/ John R. Wagner
Name:	John R. Wagner
Title:	Secretary

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PPC, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

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SUPER TEST PETROLEUM, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

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KWIK-FIL, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

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VULCAN ASPHALT REFINING CORPORATION
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

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CITIGROUP GLOBAL MARKETS INC.
By:	/s/ P. Sharkey
Name:	Paul Sharkey
Title:	Vice President
For itself and the other several Initial Purchasers named in Schedule I to the foregoing Agreement.

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SCHEDULE I

Initial Purchasers	Principal Amount of Securities to be Purchased
Citigroup Global Markets Inc.	$	176,000,000
Goldman, Sachs & Co		20,000,000
PNC Capital Markets, Inc.		4,000,000
Total	$	200,000,000

SCHEDULE II

Subsidiaries

Company	Jurisdiction of Incorporation
Country Fair, Inc.	Pennsylvania
Kiantone Pipeline Corporation	New York
Kiantone Pipeline Company	Pennsylvania
United Jet Center, Inc.	Delaware
United Refining Company of Pennsylvania	Pennsylvania
Kwik Fill Corporation	Pennsylvania
Independent Gasoline and Oil Company of Rochester, Inc.	New York
Bell Oil Corp.	Michigan
PPC, Inc.	Ohio
Super Test Petroleum, Inc.	Michigan
Kwik-Fil, Inc.	New York
Vulcan Asphalt Refining Corporation	Delaware
Vulcan-Koch Asphalt Marketing, LLC*	Delaware
United Refining Marketing, Inc.*	Delaware

* Not a Guarantor

ANNEX A

Form of Kramer Levin Naftalis & Frankel LLP Opinion

[to be provided by Issuers’ Counsel]

ANNEX B

Form of John R. Wagner Opinion

[to be provided by John R. Wagner]

EX-10.2

Exhibit 10.2

REGISTRATION RIGHTS AGREEMENT

Dated as of August 6, 2004

by and among

UNITED REFINING COMPANY

THE SUBSIDIARY GUARANTORS NAMED HEREIN

and

CITIGROUP GLOBAL MARKETS INC.,

as Representative of the several Initial Purchasers named herein

This Registration Rights Agreement (the “Agreement”) is made and entered into as of August 6, 2004 by and among UNITED REFINING COMPANY, a Pennsylvania corporation (the “Company”), the SUBSIDIARY GUARANTORS (as defined herein) and CITIGROUP GLOBAL MARKETS INC. as Representative for the several initial purchasers named herein (collectively, the “Initial Purchasers”). The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers to purchase $200,000,000 of the Company’s 10 ¹/2% Senior Notes due 2012 under the Purchase Agreement, dated as of August 3, 2004 (the “Purchase Agreement”), by and among the Company, the Subsidiary Guarantors and the Initial Purchasers.

The Company, the Subsidiary Guarantors and the Initial Purchasers hereby agree as follows:

SECTION 1. DEFINITIONS

As used in this Agreement, the following capitalized terms shall have the following meanings:

Act: The Securities Act of 1933, as amended, and the rules and regulations promulgated by the Commission pursuant thereto.

Action: As defined in Section 8(c) of this Agreement.

Broker-Dealer: Any broker or dealer registered under the Exchange Act.

Closing Date: The date that the Notes are purchased by the Initial Purchasers pursuant to the Purchase Agreement.

Commission: The Securities and Exchange Commission.

Consummate: A Registered Exchange Offer shall be deemed “Consummated” for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Act of the Exchange Offer Registration Statement relating to the Notes to be issued in the Exchange Offer, (ii) the maintenance of such Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) of this Agreement and (iii) the delivery by the Company to the Registrar under the Indenture of New Notes in the same aggregate principal amount as the aggregate principal amount of Old Notes that were so tendered.

Damages Payment Date: With respect to the Notes, each Interest Payment Date.

Effectiveness Target Date: As defined in Section 5 of this Agreement.

Exchange Act: The Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated by the Commission pursuant thereto.

Exchange Offer: The registration under the Act by the Company and the Subsidiary Guarantors of the New Notes pursuant to a Registration Statement pursuant to which the Company and the Subsidiary Guarantors offer the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Old Notes that are Transfer Restricted Securities held by such Holders for New Notes in an aggregate principal amount equal to the aggregate principal amount of the Old Notes that are Transfer Restricted Securities tendered in such exchange offer by such Holders.

Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer, including the related Prospectus.

Exempt Resales: The transactions in which the Initial Purchasers propose to sell the Notes to (i) certain “qualified institutional buyers,” as such term is defined in Rule 144A under the Act, (ii) to a limited number of certain institutional “accredited investors,” as such term is defined in Rule 501(a)(1), (2), (3) and (7) of Regulation D under the Act and (iii) other eligible purchasers pursuant to Regulation S under the Act.

Holders: As defined in Section 2(b) of this Agreement.

Indenture: The Indenture, dated as of August 6, 2004, by and among the Company, the Subsidiary Guarantors and The Bank of New York, as trustee (the “Trustee”), pursuant to which the Notes are to be issued, as such Indenture is amended or supplemented from time to time in accordance with its terms.

Initial Purchasers: Citigroup Global Markets, Inc., Goldman, Sachs & Co. and PNC Capital Markets, Inc.

Interest Payment Date: As defined in the Notes.

NASD: National Association of Securities Dealers, Inc.

New Notes: The Company’s 10 ¹/2% Senior Notes due 2012 to be issued pursuant to the Indenture in connection with the Exchange Offer and evidencing the same debt as the Old Notes, including the guarantees by the Subsidiary Guarantors.

Notes: Old Notes and New Notes.

Old Notes: The Company’s 10 ¹/2% Senior Notes due 2012 to be issued pursuant to the Indenture on the Closing Date, including the guarantees by the Subsidiary Guarantors.

Person: An individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.

Prospectus: The prospectus included in a Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments and supplements thereto, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference, if any, in such Prospectus.

Registration Default: As defined in Section 5 of this Agreement.

Registration Statement: Any registration statement of the Company and the Subsidiary Guarantors relating to (a) an offering of New Notes pursuant to an Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement that is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including pre- and post-effective amendments) and all exhibits and material incorporated by reference or deemed to be incorporated by reference, if any, therein.

Shelf Filing Deadline: As defined in Section 4(a) of this Agreement.

Shelf Registration Statement: As defined in Section 4(a) of this Agreement.

Subsidiary: With respect to any Person, any other Person of which a majority of the equity ownership or the voting securities is at the time owned, directly or indirectly, by such Person or by one or more other subsidiaries of such Person or a combination thereof.

Subsidiary Guarantors: Each Subsidiary of the Company that, pursuant to the Indenture, is, or is required to become, a guarantor of the obligations of the Company under the Notes and the Indenture.

TIA: The Trust Indenture Act of 1939, as amended (15 U.S.C. Section 77aaa-77bbbb), as in effect on the date of the Indenture.

Transfer Restricted Securities: Each Note until the earliest to occur of (i) the date on which each such Old Note has been exchanged by a person other than a Broker-Dealer for a New Note in the Exchange Offer, (ii) following the exchange by a Broker-Dealer in the Exchange Offer of an Old Note for a New Note, the date on which such New Note is sold to a purchaser who receives from such Broker-Dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Note has been effectively registered under the Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Note is distributed to the public pursuant to Rule 144 under the Act.

Underwritten Registration or Underwritten Offering: A registration in which securities of the Company are sold to an underwriter for reoffering to the public pursuant to an effective Registration Statement.

SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT

(a) Transfer Restricted Securities. The securities entitled to the benefits of this Agreement are the Transfer Restricted Securities.

(b) Holders of Transfer Restricted Securities. A Person is deemed to be a holder of Transfer Restricted Securities (each, a “Holder”) whenever such Person beneficially owns Transfer Restricted Securities.

SECTION 3. REGISTERED EXCHANGE OFFER

(a) Unless, due to a change in law or Commission policy after the date hereof, the Exchange Offer shall not be permissible under applicable federal law or Commission policy, the Company and the Subsidiary Guarantors shall (i) cause to be filed with the Commission as soon as practicable on or prior to 135 days after the Closing Date, a Registration Statement under the Act relating to the New Notes and the Exchange Offer and (ii) use their best efforts to cause such Registration Statement to be declared effective by the Commission as soon as practicable on or prior to 225 days after the Closing Date. In connection with the foregoing, the Company and the Subsidiary Guarantors shall (A) file all pre-effective amendments to such Registration Statement as may be necessary to cause such Registration Statement to become effective, (B) if applicable, file a post-effective amendment to such Registration Statement pursuant to Rule 430A under the Act, (C) cause all necessary filings in connection with the registration and qualification of the New Notes to be made under the Blue Sky laws of such jurisdictions as are necessary to permit Consummation of the Exchange Offer (provided, however, that the Company and the Subsidiary Guarantors shall not be obligated to qualify as foreign corporations in any jurisdiction in which they are not so qualified or to take any action that would subject them to general service of process or taxation in any jurisdiction where they are not so subject) and (D) upon the effectiveness of such Registration Statement, commence the Exchange Offer and use their best efforts to issue on or prior to 45 days after the date on which such Registration Statement is declared effective by the Commission, New Notes in exchange for all Old Notes tendered in the Exchange Offer. The Exchange Offer shall be on the

appropriate form permitting registration of the New Notes to be offered in exchange for the Transfer Restricted Securities and to permit resales of New Notes held by Broker-Dealers as contemplated by Section 3(c) below. If, after such Exchange Offer Registration Statement initially is declared effective by the Commission, the Exchange Offer or the issuance of New Notes under the Exchange Offer or the resale of New Notes received by Broker-Dealers in the Exchange Offer as contemplated by Section 3(c) below is interfered with by any stop order, injunction or other order or requirement of the Commission or any other governmental agency or court, such Registration Statement shall be deemed not to have become effective for purposes of this Agreement during the period that such stop order, injunction or other similar order or requirement shall remain in effect.

(b) The Company shall cause the Exchange Offer Registration Statement to be effective continuously and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 20 business days nor longer than 90 days. The Company and the Subsidiary Guarantors shall cause the Exchange Offer to comply with all applicable federal and state securities laws. The Company and the Subsidiary Guarantors shall only offer to exchange New Notes for Old Notes in the Exchange Offer, and only the New Notes shall be registered under the Exchange Offer Registration Statement. The Company and the Subsidiary Guarantors shall use its best efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 45 business days after such effective date.

(c) The Company shall indicate in a “Plan of Distribution” section contained in the Prospectus included in the Exchange Offer Registration Statement that any Broker-Dealer that holds Old Notes that are Transfer Restricted Securities and that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Company), may exchange such Old Notes pursuant to the Exchange Offer; provided, however, that such Broker-Dealer may be deemed to be an “underwriter” within the meaning of the Act and must, therefore, deliver a prospectus meeting the requirements of the Act in connection with any resales of the New Notes received by such Broker-Dealer in the Exchange Offer. Such “Plan of Distribution” section shall allow the use of the Prospectus by all Persons subject to the prospectus delivery requirements of the Act, including Participating Broker-Dealers, and shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require to permit such resales pursuant thereto, but such “Plan of Distribution” shall not name any such Broker-Dealer or disclose the amount of Notes held by any such Broker-Dealer except to the extent required by the Commission as a result of a change in policy after the date of this Agreement.

The Company and the Subsidiary Guarantors shall use their best efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) below to the extent necessary to ensure that it is available for resales of Notes acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time. The Company shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such period in order to facilitate such resales.

(d) The Company and the Subsidiary Guarantors shall not consummate the Exchange Offer later than 270 days following the Closing Date.

SECTION 4. SHELF REGISTRATION

(a) Shelf Registration. If (i) the Company and the Subsidiary Guarantors are not required to file an Exchange Offer Registration Statement or to consummate the Exchange Offer because the Exchange

Offer is not permitted by applicable law or Commission policy or (ii) any Holder of Transfer Restricted Securities shall notify the Company within 20 business days of the Consummation of the Exchange Offer that such Holder (A) is prohibited by applicable law or Commission policy from participating in the Exchange Offer, or (B) may not resell the New Notes acquired by it in the Exchange Offer to the public without delivering a prospectus and the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder or (C) is a Broker-Dealer and holds Old Notes (including the Initial Purchasers who holds Old Notes as part of an unsold allotment from the original offering of the Notes) acquired directly from the Company or one of its affiliates or (iii) the Company and the Subsidiary Guarantors do not consummate the Exchange Offer within 45 days following the effectiveness date of the Exchange Offer Registration Statement, then the Company and the Subsidiary Guarantors shall (x) cause to be filed a shelf registration statement pursuant to Rule 415 under the Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the “Shelf Registration Statement”), on or prior to the earliest to occur of (1) the 135th day after the date on which the Company determines that it is not required to file the Exchange Offer Registration Statement or (2) the 135th day after the date on which the Company receives notice from a Holder of Transfer Restricted Securities as contemplated by clause (ii) above (such earliest date being the “Shelf Filing Deadline”), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) of this Agreement, and (y) use its best efforts to cause such Shelf Registration Statement to be declared effective by the Commission on or before the 225th day after the Shelf Filing Deadline. The Company and the Subsidiary Guarantors shall use its best efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (c) of this Agreement to the extent necessary to ensure that it is available for resales of Notes by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a) and to ensure that it conforms with the requirements of this Agreement, the Act and the policies, rules and regulations of the Commission as announced from time to time, for a continuous period of two years following the date on which such Shelf Registration Statement becomes effective under the Act or such shorter period that will terminate when all the Notes covered by the Shelf Registration Statement have been sold pursuant to such Shelf Registration Statement.

(b) Provision by Holders of Certain Information in Connection with the Shelf Registration Statement. No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 business days after receipt of a request therefor, such information regarding such Holder as the Company may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included in such Shelf Registration Statement. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed to make the information previously furnished to the Company by such Holder not materially misleading.

SECTION 5. LIQUIDATED DAMAGES

If (i) any of the Registration Statements required by this Agreement is not filed with the Commission on or prior to the date specified for such filing in this Agreement, (ii) any of such Registration Statements has not been declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement (the “Effectiveness Target Date”), (iii) the Exchange Offer has not been Consummated within 45 business days after the Effectiveness Target Date with respect to the Exchange Offer Registration Statement or (iv) any Registration Statement required by this Agreement is filed and declared effective but shall thereafter cease to be effective or usable in connection with resales of Transfer Restricted Securities during the periods required by this Agreement (each such event referred to in clauses (i) through (iv), a “Registration Default”), the Company hereby agrees to pay liquidated damages to each Holder of Transfer Restricted Securities with respect to the first 90-day period immediately following the occurrence of such Registration Default, in an amount equal

to $.05 per week per $1,000 principal amount of Notes constituting Transfer Restricted Securities held by such Holder for each week or portion thereof that the Registration Default continues. The amount of the liquidated damages shall increase by an additional $.05 per week per $1,000 in principal amount of Notes constituting Transfer Restricted Securities with respect to each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of liquidated damages of $.20 per week per $1,000 in principal amount of Notes constituting Transfer Restricted Securities. Notwithstanding the foregoing, the Company shall not be required to pay liquidated damages to each Holder of Transfer Restricted Securities if the Registration Default arises from the failure of the Company to file, or cause to become effective, a Shelf Registration Statement within the time period required by Section 4 of this Agreement and such Registration Default is by reason of the failure of the Holders to provide the information regarding the Holder reasonably requested by the Company, the NASD or any other regulatory agency having jurisdiction over any of the Holders at least 10 business days prior to such Registration Default. All accrued liquidated damages shall be paid by the Company on each Damages Payment Date to the Holders by wire transfer of immediately available funds or by federal funds check and to the Holders of certificated securities by mailing a check to such Holders’ registered addresses. Following the cure of all Registration Defaults relating to any particular Transfer Restricted Securities, the accrual of liquidated damages with respect to such Transfer Restricted Securities will cease.

All obligations of the Company set forth in the preceding paragraph that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such Transfer Restricted Security shall have been satisfied in full.

SECTION 6. REGISTRATION PROCEDURES

(a) Exchange Offer Registration Statement. In connection with the Exchange Offer, the Company and the Subsidiary Guarantors shall comply with all of the provisions of Section 6(c) below, shall use their best efforts to effect such exchange to permit the sale of Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and shall comply with all of the following provisions:

(i) If, due to a change in law or Commission policy after the date hereof, in the reasonable opinion of special counsel to the Company there is a question as to whether the Exchange Offer is permitted by applicable federal law or Commission policy, the Company hereby agrees to seek a no-action letter or other favorable decision from the Commission allowing the Company and the Subsidiary Guarantors to Consummate an Exchange Offer for such Old Notes. The Company hereby agrees to pursue the issuance of such a no-action letter or favorable decision to the Commission staff level but shall not be required to take commercially unreasonable action to effect a change of Commission policy. The Company hereby agrees, however, to (A) participate in telephonic conferences with the Commission, (B) deliver to the Commission an analysis prepared by special counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursue a resolution (which need not be favorable) by the Commission of such submission. The Initial Purchasers shall be given prior notice of any action taken by the Company under this clause (i).

(ii) As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Company, prior to the Consummation of the Exchange Offer, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of the Company or any of the Subsidiary Guarantors, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding

with any person to participate in, a distribution of the New Notes to be issued in the Exchange Offer and (C) it is acquiring the New Notes in its ordinary course of business. In addition, all such Holders of Transfer Restricted Securities shall otherwise cooperate in the Company’ preparations for the Exchange Offer.

(iii) The Company and the Initial Purchasers acknowledge that the staff of the Commission has taken the position that any broker-dealer that owns New Notes that were received by such broker-dealer for its own account in the Exchange Offer (a “Participating Broker-Dealer”) may be deemed to be an “underwriter” within the meaning of the Act and must deliver a prospectus meeting the requirements of the Act in connection with any resale of such New Notes (other than a resale of an unsold allotment resulting from the original offering of the Notes).

The Company and the Initial Purchasers also acknowledge that it is the Commission staff’s position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the New Notes, without naming the Participating Broker-Dealers or specifying the amount of New Notes owned by them, such Prospectus may be delivered by Participating Broker-Dealers to satisfy their prospectus delivery obligations under the Act in connection with resales of New Notes for their own accounts, so long as the Prospectus otherwise meets the requirements of the Act.

(b) Shelf Registration Statement. In the event that a Shelf Registration Statement is required by this Agreement, the Company and the Subsidiary Guarantors shall comply with all the provisions of Section 6(c) of this Agreement and shall use their best efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution of such Transfer Restricted Securities and, in connection therewith, the Company and the Subsidiary Guarantors will as expeditiously as possible prepare and file with the Commission a Shelf Registration Statement relating to the registration on any appropriate form under the Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution of such Transfer Restricted Securities.

(c) General Provisions. In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Registration Statement and the related Prospectus, to the extent that the same are required to be available to permit resales of Notes by Broker-Dealers), the Company and the Subsidiary Guarantors shall:

(i) use their best efforts to keep such Registration Statement continuously effective for the applicable time period required hereunder and provide all requisite financial statements (including, if required by the Act or any regulation thereunder, financial statements of the Subsidiary Guarantors) for the period specified in Section 3 or 4 of this Agreement, as applicable; upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company shall promptly notify the Holders to suspend use of the Prospectus, and the Holders shall suspend use of the Prospectus, and such Holders shall not communicate non-public information to any third party, in violation of the securities laws, until the Company and the Subsidiary Guarantors have made an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), the Company and the Subsidiary Guarantors shall use their best efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter;

(ii) prepare and file with the Commission such amendments and post-effective amendments to such Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 3 or 4 of this Agreement, or such shorter period as will terminate when all Transfer Restricted Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Act during the applicable time period required hereunder and to comply fully with the applicable provisions of Rules 424 and 430A under the Act in a timely manner; and comply with the provisions of the Act and the Exchange Act with respect to the disposition of all Transfer Restricted Securities covered by such Registration Statement during such period in accordance with the intended method or methods of distribution by the sellers of such securities set forth in such Registration Statement as so amended or in such Prospectus as so supplemented;

(iii) advise the underwriter(s), if any, the Initial Purchasers, and, in the case of a Shelf Registration Statement, each of the selling Holders promptly and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus or any prospectus supplement or post-effective amendment has been filed and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating to such Registration Statement or Prospectus, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement to such Registration Statement or Prospectus, as the case may be, or any document incorporated by reference in such Registration Statement or Prospectus untrue in any material respect, or that requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements in such Registration Statement or Prospectus not misleading and that in the case of the Prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or Blue Sky laws, the Company and the Subsidiary Guarantors shall use their best efforts to obtain the withdrawal or lifting of such order at the earliest possible time;

(iv) furnish to each of the underwriter(s), if any, the Initial Purchasers and, in the case of a Shelf Registration Statement, each of the selling Holders before filing with the Commission, copies of any Registration Statement or any Prospectus included in such Registration Statement or Prospectus or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the reasonable review of such underwriter(s), if any, the Initial Purchasers, and such Holders for a period of at least five business days, and the Company and the Subsidiary Guarantors will not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus, as the case may be, (including all such documents incorporated by reference) to which any underwriter, Initial Purchasers or selling Holder shall reasonably object within five business days after the receipt of such Registration Statement or Prospectus. A selling Holder or underwriter, if any, shall be deemed to have reasonably objected to such filing if such Registration Statement, Prospectus, amendment or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission;

(v) promptly prior to the filing of any document that is to be incorporated by reference into a Registration Statement or Prospectus, (a) provide copies of such document to the selling Holders and to the underwriter(s), if any, (b) make the Company’s and the Subsidiary Guarantors’ representatives available for discussion of such document and other customary due diligence matters; provided that such discussion and due diligence shall be coordinated on behalf of the selling Holders by one counsel designated by and on behalf of such selling Holders and (c) include such information in such document prior to the filing of such document as such selling Holders or underwriter(s), if any, may reasonably request

(vi) make available at reasonable times for inspection by the selling Holders, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney or accountant retained by such selling Holders or any of the underwriter(s), if any, at the offices where normally kept, during reasonable business hours, all relevant financial and other records, pertinent corporate documents and properties of the Company and the Subsidiary Guarantors and cause the Company’s and the Subsidiary Guarantors’ officers, directors and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration Statement subsequent to the filing thereof and prior to its effectiveness; provided, however, that such persons shall first agree in writing with the Company that any information that is reasonably and in good faith designated by the Company in writing as confidential at the time of delivery of such information shall be kept confidential by such persons, unless and to the extent that (i) disclosure of such information is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities, (ii) disclosure of such information is required by law (including any disclosure requirements pursuant to federal securities laws in connection with the filing of the Shelf Registration Statement or the use of any Prospectus), (iii) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard such information by such person or (iv) such information becomes available to such person from a source other than the Company and its Subsidiaries and such source is not bound by a confidentiality agreement;

(vii) if requested by any selling Holders or the underwriter(s), if any, promptly incorporate in any Registration Statement or Prospectus, pursuant to a supplement or post-effective amendment if necessary, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information relating to the “Plan of Distribution” of the Transfer Restricted Securities, information with respect to the principal amount of Transfer Restricted Securities being sold to such underwriter(s), the purchase price being paid for Transfer Restricted Securities and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; provided, however, that the Company shall not be required to take any action pursuant to this Section 6(c)(vii) that would, in the opinion of counsel for the Company, violate applicable law;

(viii) furnish to each underwriter, if any, the Initial Purchasers and upon request to the Company to a selling Holder without charge, at least one conformed copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including, upon the request of such Person, all documents incorporated by reference therein and all exhibits to the extent requested (including exhibits incorporated therein by reference);

(ix) deliver to each selling Holder, each of the underwriter(s), if any, and the Initial Purchasers, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons may reasonably request; the Company and the

Subsidiary Guarantors hereby consent to the use of the Prospectus and any amendment or supplement to the Prospectus by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities in accordance with the terms thereof and with U.S. Federal securities laws and Blue Sky laws covered by the Prospectus or any amendment or supplement thereto;

(x) enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings of securities of this type) and take all such other reasonable actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Registration Statement contemplated by this Agreement, all as may be reasonably requested by any Holder of Transfer Restricted Securities or the underwriter(s), if any, in connection with any sale or resale of Transfer Restricted Securities pursuant to any Registration Statement contemplated by this Agreement; and whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, the Company and the Subsidiary Guarantors shall (i) make such representations and warranties to the Holders of such Transfer Restricted Securities and the underwriters, if any, with respect to the business of the Company and its Subsidiaries (including with respect to businesses or assets acquired or to be acquired by any of them), and the Shelf Registration Statement, Prospectus and documents, if any, incorporated or deemed to be incorporated by reference therein, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings, and confirm the same if and when customarily requested; (ii) obtain opinions of counsel to the Company and the Subsidiary Guarantors and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the underwriters, if any, and special counsel to the Holders of the Transfer Restricted Securities being sold), addressed to each selling Holder of Transfer Restricted Securities and each of the underwriters, if any, covering the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such underwriters, if any, and special counsel to Holders of Transfer Restricted Securities; (iii) use their best efforts to obtain customary “cold comfort” letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company or any such subsidiary for which financial statements and financial data is, or is required to be, included in the Registration Statement), addressed (where reasonably possible) to each selling Holder of Transfer Restricted Securities and each of the underwriters, if any, such letters to be in customary form and covering matters of the type customarily covered in “cold comfort” letters in connection with underwritten offerings; (iv) if an underwriting agreement is entered into, the same shall contain indemnification provisions and procedures no less favorable to the selling Holders and the underwriters, if any, than those set forth in Section 8 hereof (or such other provisions and procedures acceptable to Holders of a majority in aggregate principal amount of Transfer Restricted Securities covered by such Shelf Registration Statement and the underwriters, if any); and (v) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities being sold and the underwriters, if any, to evidence the continued validity of the representations and warranties made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company.

If at any time the representations and warranties of the Company and the Subsidiary Guarantors contemplated in clause (A)(1) above cease to be true and correct, the Company shall so advise the Initial Purchasers and the underwriter(s), if any, and each selling Holder promptly and, if requested by any of them, shall confirm such advice in writing;

(xi) prior to any public offering of Transfer Restricted Securities, cooperate with and cause the Subsidiary Guarantors to cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification (or exemption from such registration or qualification) of the Transfer Restricted Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the selling Holders and underwriter(s), if any, may reasonably request in writing and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the Registration Statement; provided, however, that neither the Company nor the Subsidiary Guarantors shall be required to register or qualify as a foreign corporation where it is not now so qualified or to take any action that would subject it to the service of process or to taxation, other than as to matters and transactions relating to the Registration Statement, in any jurisdiction where it is not now so subject;

(xii) if a Shelf Registration is filed pursuant to Section 2(b), cooperate with the selling Holders of Registrable Securities and the managing Underwriters, if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold, which certificates shall not bear any restrictive legends and shall be in a form eligible for deposit with The Depository Trust Company; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the managing Underwriters, if any, or Holders may reasonably request;

(xiii) in connection with any sale or transfer of Transfer Restricted Securities that will result in such securities no longer being Transfer Restricted Securities, cooperate with and cause the Subsidiary Guarantors to cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two business days prior to any sale of Transfer Restricted Securities made by such underwriter(s);

(xiv) use its best efforts to cause the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers of such Transfer Restricted Securities or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in clause (xi) above;

(xv) if any fact or event contemplated by Section 6(c)(iii)(D) of this Agreement shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated in such Registration Statement or Prospectus by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Registration Statement will not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading and the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading;

(xvi) provide a CUSIP number for all Transfer Restricted Securities not later than the effective date of the Registration Statement and provide the Trustee under the Indenture with printed certificates for the Transfer Restricted Securities that are in a form eligible for deposit with The Depository Trust Company;

(xvii) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter (including any “qualified independent underwriter” that is required to be retained in accordance with the rules and regulations of the NASD);

(xviii) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission in regards to any Registration Statement, and make generally available to its securityholders, as soon as practicable, a consolidated earning statement of the Company meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm commitment or reasonable best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the Registration Statement;

(xix) cause the Indenture to be qualified under the TIA not later than the effective date of the first Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders to effect such changes to the Indenture, if any, as may be required for such Indenture to be so qualified in accordance with the terms of the TIA; and execute, and use its best efforts to cause the Trustee to execute, all customary documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner.

Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) of this Agreement, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xv) of this Agreement, or until it is advised in writing (the “Advice”) by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Company, each Holder will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice. In the event that the Company shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 of this Agreement, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(iii)(D) of this Agreement to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xv) of this Agreement or shall have received the Advice.

SECTION 7. REGISTRATION EXPENSES

(a) All fees and expenses incident to the Company’s and the Subsidiary Guarantors’ performance of or compliance with this Agreement will be borne by the Company regardless of whether a Registration Statement becomes effective, including without limitation: (i) all registration and filing fees and expenses (including filings made with the NASD (and, if applicable, the fees and expenses of any “qualified independent underwriter” and its counsel that may be required by the rules and regulations of the NASD)); (ii) all fees and expenses of compliance with federal securities and state Blue Sky or securities laws; (iii) all expenses of printing (including printing certificates for the New Notes to be issued in the Exchange Offer and printing of Prospectuses); (iv) all fees and disbursements of counsel for the Company, the Subsidiary Guarantors and, subject to Section 7(b) below, the Holders of Transfer Restricted Securities; and (v) all fees and disbursements of independent certified public accountants of the Company (including the expenses of any special audit and comfort letters required by or incident to such performance).

The Company will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by it.

Notwithstanding the foregoing or anything in this Agreement to the contrary, each Holder of Transfer Restricted Notes shall pay all underwriting discounts and commissions of any underwriters with respect to any Notes sold by or on behalf of it.

(b) In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Company will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities being tendered in the Exchange Offer and/or resold pursuant to the “Plan of Distribution” contained in the Exchange Offer Registration Statement or registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Cahill Gordon & Reindel LLP or such other counsel as may be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared.

SECTION 8. INDEMNIFICATION

(a) The Company and each of the Subsidiary Guarantors jointly and severally agree to indemnify and hold harmless (i) the Initial Purchasers, each Holder of Transfer Restricted Securities and each Participating Broker Dealer, (ii) each person, if any, who controls any of the foregoing within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act (any of the persons referred to in this clause (ii) being hereinafter referred to as a “controlling person”) and (iii) the agents, employees, officers and directors and the agents, employees, officers and directors of any such controlling person (collectively, the “Indemnified Persons”) from and against any and all losses, liabilities, claims, damages and reasonable expenses whatsoever (including but not limited to reasonable attorneys’ fees and any and all reasonable expenses whatsoever incurred in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, and any and all reasonable amounts paid in settlement of any claim or litigation) to which they or any of them may become subject under the Act, the Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages or expenses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or Prospectus, or in any supplement thereto or amendment thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company and the Subsidiary Guarantors will not be liable in any such case to the extent, but only to the extent, that any such loss, liability, claim, damage or expense arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Indemnified Person relating to such Indemnified Person expressly for use therein; provided, further, that the Company and the Subsidiary Guarantors shall not be liable to any Indemnified Person under the indemnity agreement in this subsection with respect to any preliminary Prospectus to the extent that any such loss, claim, damage or liability of such Indemnified Person results solely from an untrue statement of a material fact contained in, or the omission of a material fact from, such preliminary Prospectus that was corrected in the final Prospectus, if the Company or the Subsidiary Guarantors shall sustain the burden of proving that such Indemnified Person sold Notes to the person alleging such loss, claim, damage or liability without sending or giving, at or prior to the written confirmation of such sale, a copy of the Prospectus or of the Prospectus as then amended or supplemented even though the Company and the Subsidiary Guarantors had previously furnished copies thereof to such Indemnified Person. This indemnity agreement will be in addition to any liability that the Company or any of the Subsidiary Guarantors may otherwise have, including, but not limited to, under this Agreement.

(b) In connection with any Registration Statement pursuant to which a Holder of Transfer Restricted Securities offers or sells Transfer Restricted Securities, such Holder agrees, severally and not jointly, to indemnify and hold harmless the Company and the Subsidiary Guarantors, their respective directors and officers and any person controlling the Company or a Subsidiary Guarantor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, to the same extent as the foregoing indemnity from the Company and the Subsidiary Guarantors to each Indemnified Person but only with respect to information relating to such Holder furnished in writing by or on behalf of such Holder expressly for use in such Registration Statement. In any such case in which any action shall be brought against the Company or a Subsidiary Guarantor, any director or officer of the Company or a Subsidiary Guarantor or any person controlling the Company or a Subsidiary Guarantor based on such Registration Statement and in respect of which indemnity may be sought against a Holder of Transfer Restricted Securities, such Holder shall have the rights and duties given to the Company and the Subsidiary Guarantors (except that if the Company or a Subsidiary Guarantor shall have assumed the defense thereof, such Holder shall not be required to do so, but may employ separate counsel therein and participate in the defense thereof but the fees and expenses of such counsel shall be at the expense of such Holder), and the Company and the Subsidiary Guarantors, their respective directors and officers and any person controlling the Company or a Subsidiary Guarantor shall have the rights and duties given to the Indemnified Persons by Section 7(a) hereof.

(c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, suit or proceeding (collectively, an “Action”), such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, promptly notify each party against whom indemnification is to be sought in writing of the commencement of such Action (but the failure so to notify an indemnifying party shall not relieve such indemnifying party from any liability that it may have under this Section 8 except to the extent that it has been prejudiced in any material respect by such failure or from any liability which it may otherwise have). In case any such Action is brought against any indemnified party, and it notifies an indemnifying party of the commencement of such Action, the indemnifying party will be entitled to participate in such Action, and to the extent it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense of such Action with counsel reasonably satisfactory to such indemnified party. Notwithstanding the foregoing, the indemnified party or parties shall have the right to employ its or their own counsel in any such Action, but the fees and expenses of such counsel shall be at the expense of such indemnified party or parties unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying parties in connection with the defense of such Action, (ii) the indemnifying parties shall not have employed counsel to take charge of the defense of such Action within a reasonable time after notice of commencement of the Action, or (iii) such indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them that are different from or additional to those available to one or all of the indemnifying parties (in which case the indemnifying parties shall not have the right to direct the defense of such Action on behalf of the indemnified party or parties), in any of which events such fees and expenses of counsel shall be borne by the indemnifying parties. In no event shall the indemnifying party be liable for the fees and expenses of more than one counsel (together with appropriate local counsel) at any time for all indemnified parties in connection with any one Action or separate but substantially similar or related Actions in the same jurisdiction arising out of the same general allegations or circumstances. Anything in this subsection to the contrary notwithstanding, an indemnifying party shall not be liable for any settlement of any claim or Action effected without its written consent; provided, however, that such consent was not unreasonably withheld.

(d) In order to provide for contribution in circumstances in which the indemnification provided for in paragraphs (a) and (b) of this Section 8 is for any reason held to be unavailable from the indemnifying party, or is insufficient to hold harmless a party indemnified under this Section 8, the Company, the Subsidiary Guarantors and the Indemnified Parties shall contribute to the aggregate losses, claims, damages, liabilities and expenses of the nature contemplated by such indemnification provision (including any reasonable investigation, legal and other expenses incurred in connection with, and any amount paid in settlement of, any

Action or any claims asserted, but after deducting in the case of losses, claims, damages, liabilities and expenses suffered by the indemnifying party, any contribution received by the indemnifying party, from persons other than the indemnified party who may also be liable for contribution, including persons who control the indemnified party within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act) to which the Company, the Subsidiary Guarantors and the Indemnified Parties may be subject, in such proportion as is appropriate to reflect the relative benefits received by the Company and the Subsidiary Guarantors, on the one hand, and the Indemnified Parties, on the other hand, from the offering of the Old Notes or, if such allocation is not permitted by applicable law or indemnification is not available as a result of the indemnifying party not having received notice as provided in paragraph (c) of this Section 8, in such proportion as is appropriate to reflect not only the relative benefits referred to above but also the relative fault of the Company and the Subsidiary Guarantors, on the one hand, and the Indemnified Parties, on the other hand, in connection with the statements or omissions that resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Subsidiary Guarantors shall be deemed to be in the same proportion as the total proceeds from the offering of Old Notes (net of discounts but before deducting expenses) received by the Company as set forth in the table on the cover page of the Prospectus. The relative fault of the Company and the Subsidiary Guarantors, on the one hand, and the Indemnified Parties, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, the Subsidiary Guarantors or the Indemnified Parties and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(e) The Company, the Subsidiary Guarantors and the Initial Purchasers agree that it would not be just and equitable if contribution pursuant to paragraph (d) of this Section 8 were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to above. Notwithstanding the provisions of paragraph (d) of this Section 8, (i) in no case shall an Indemnified Party be required to contribute any amount in excess of the amount by which the total received by such Indemnified Party with respect to its sale of its Transfer Restricted Securities or New Notes, as the case may be, exceeds the amount of any damages that such Indemnified Party has otherwise been required to pay by reason of any untrue or alleged untrue statement or omission or alleged omission and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of paragraphs (d) and (e) of this Section 8, each person, if any, who controls an Indemnified Party within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as such Indemnified Party, and each person, if any, who controls the Company or the Subsidiary Guarantors within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same rights to contribution as the Company or the Subsidiary Guarantors, subject in each case to clauses (i) and (ii) of this Section 8(e). Any party entitled to contribution will, promptly after receipt of notice of commencement of any Action against such party in respect of which a claim for contribution may be made against another party or parties under paragraphs 8(d) or (e) of this Section 8, notify such party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under paragraphs (d) or (e) of this Section 8 or otherwise. No party shall be liable for contribution with respect to any Action or claim settled without its written consent; provided, however, that such written consent was not unreasonably withheld.

SECTION 9. RULE 144A

The Company shall use its best efforts, for so long as any Transfer Restricted Securities remain outstanding, to make available to any Holder or beneficial owner of Transfer Restricted Securities in connection with any sale of such securities and any prospective purchaser of such Transfer Restricted Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A.

SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS

No Holder may participate in any Underwritten Registration under this Agreement unless such Holder (a) agrees to sell such Holder’s Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled under this Agreement to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorneys, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements.

SECTION 11. SELECTION OF UNDERWRITERS

The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering; provided, that such investment bankers and managers must be reasonably satisfactory to the Company.

SECTION 12. MISCELLANEOUS

(a) Remedies. Each Holder, in addition to being entitled to exercise all rights provided in this Agreement, in the Indenture, the Purchase Agreement or granted by law, including recovery of liquidated or other damages, will be entitled to specific performance of its rights under this Agreement. The Company and the Subsidiary Guarantors agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agree to waive the defense in any Action for specific performance that a remedy at law would be adequate.

(b) No Inconsistent Agreements. The Company will not on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions of this Agreement. The Company have not previously entered into any agreement granting any registration rights with respect to its securities to any Person. The rights granted to the Holders under this Agreement do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company’s securities under any agreement in effect on the date of this Agreement.

(c) Adjustments Affecting the Notes. Without the written consent of the Holders of a majority in aggregate principal amount of outstanding Transfer Restricted Notes, the Company and the Subsidiary Guarantors will not take any action, or permit any change to occur, with respect to the Notes that would materially and adversely affect the ability of the Holders to Consummate any Exchange Offer.

(d) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions of this Agreement may not be given unless the Company has obtained the written consent of Holders of a majority of the outstanding principal amount of Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or consent to departure from the provisions of this Agreement that relates exclusively to the rights of Holders whose securities are being sold or tendered pursuant to a Registration Statement and that does not affect directly or indirectly the rights of other Holders whose securities are not being sold or tendered pursuant to such Registration Statement may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities being so sold or tendered.

(e) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivering, first-class mail (registered or certified, return receipt requested), telex, telecopier or air courier guaranteeing overnight delivery:

(i) if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and

(ii) if to the Company or the Subsidiary Guarantors, at:

United Refining Company

15 Bradley Street

Warren, Pennsylvania 16365

Facsimile: (814) 723-4371

Attention: Myron Turfitt

with a copy to:

Kramer Levin Naftalis & Finnkel LLP

919 Third Avenue

New York, NY 10022

Facsimile: (212) 715-8000

Attention: Thomas D. Balliett

All such notices and communications shall be deemed to have been duly given: (i) at the time delivered by hand, if personally delivered; (ii) five business days after being deposited in the mail, postage prepaid, if mailed; (iii) when answered back, if telexed; (iv) when receipt acknowledged, if telecopied; and (v) on the next business day, if timely delivered to an air courier guaranteeing overnight delivery.

Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture.

(f) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties, including without limitation and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities.

(g) Counterparts. This Agreement may be executed in any number of counterparts and by the parties to this Agreement in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(h) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of this Agreement.

(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.

(j) Severability. In the event that any one or more of the provisions contained in this Agreement, or the application of any such provision in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained in this Agreement shall not be affected or impaired thereby.

(k) Entire Agreement. This Agreement together with the other Operative Documents (as defined in the Purchase Agreement) is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties to this Agreement in respect of the subject matter contained in this Agreement. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to in this Agreement with respect to the registration rights granted by the Company with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

[–Signatures pages follow–]

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

UNITED REFINING COMPANY
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	Chief Executive Officer

COUNTRY FAIR, INC.
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President – Finance
By:	/s/ John R. Wagner
Name:	John R. Wagner
Title:	Vice President, General Counsel and Secretary

KIANTONE PIPELINE CORPORATION
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	Chief Executive Officer

KIANTONE PIPELINE COMPANY
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

UNITED JET CENTER, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

UNITED REFINING COMPANY OF
PENNSYLVANIA
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	Chief Executive Officer

KWIK-FILL CORPORATION
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

INDEPENDENT GASOLINE AND OIL COMPANY OF
ROCHESTER, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

BELL OIL CORP.
By:	/s/ James E. Murphy
Name:	James E. Murphy
Title:	Vice President, Finance and Chief Executive Officer
By:	/s/ John R. Wagner
Name:	John R. Wagner
Title:	Vice President, General Counsel and Secretary

PPC, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

SUPER TEST PETROLEUM, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

KWIK-FIL, INC.
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

VULCAN ASPHALT REFINING CORPORATION
By:	/s/ John A. Catsimatidis
Name:	John A. Catsimatidis
Title:	President

Accepted and agreed as of the date first above written:
CITIGROUP GLOBAL MARKETS INC.
GOLDMAN SACHS & CO.
PNC CAPITAL MARKETS, INC.
CITIGROUP GLOBAL MARKETS, INC.
By:	/s/ P. Sharkey
Name:	Paul Sharkey
Title:	Vice President

EX-10.9

Exhibit 10.9

AMENDMENT NO. 5 TO CREDIT AGREEMENT

THIS AMENDMENT NO. 5 TO CREDIT AGREEMENT (“Amendment No. 5”) is dated as of August 6, 2004 and is made by and among UNITED REFINING COMPANY, a Pennsylvania corporation (“United Refining”), UNITED REFINING COMPANY OF PENNSYLVANIA, a Pennsylvania corporation (“United Refining of PA”), KIANTONE PIPELINE CORPORATION, a New York corporation (“Kiantone”), COUNTRY FAIR, INC., a Pennsylvania corporation (“Country Fair”), KWIK-FILL CORPORATION (“Guarantor”), the Banks party to the Credit Agreement (defined below) and PNC BANK, NATIONAL ASSOCIATION (“PNC”), as Agent (“Agent”).

WITNESSETH:

WHEREAS, United Refining, United Refining of PA, Kiantone and Country Fair as Borrowers (collectively, the “Borrowers”), Guarantor, PNC and the Banks (as defined in the Credit Agreement, the “Banks”) are party to that certain Amended and Restated Credit Agreement dated as of July 12, 2002, as amended by that Amendment No. 1 to Credit Agreement dated as of November 27, 2002, as amended by that Limited Waiver and Amendment No. 2 dated as of February 19, 2003, as amended by that Limited Waiver and Amendment No. 3 dated as of March 24, 2003, and as amended by that Amendment No. 4 dated as of January 27, 2004 (as amended, restated, supplemented or modified, the “Credit Agreement”);

WHEREAS, capitalized terms used herein shall have the meanings given to them in the Credit Agreement;

WHEREAS, Borrowers desire to refinance the Senior Unsecured Notes by redeeming the current Senior Secured Notes and issuing new Senior Unsecured Notes in an amount of up to $220,000,000;

WHEREAS, Borrowers have requested that the Banks amend certain definitions and Section 7.2.1 [Indebtedness], Section 7.2.14 [Changes in Organizational Documents and Senior Unsecured Notes], Section 7.2.17 [Negative Pledge Covenants], Section 7.2.19 [Redemptions of Senior Unsecured Notes], and to make other corresponding amendments to the Credit Agreement for purposes of permitting the Loan Parties to refinance the Senior Unsecured Notes and to account for the terms of the proposed new Indenture and Senior Unsecured Notes, all subject to the terms and conditions hereof;

WHEREAS, the Loan Parties have also requested that the Banks amend Section 7.2.8 for purposes of increasing the annual amount permitted to be paid under the Servicing Agreement;

WHEREAS, the Loan Parties have also requested that the Banks permit the Loan Parties to make a dividend in an amount not to exceed $5,000,000 out of the proceeds of the issuance of the Senior Unsecured Notes during the fiscal quarter ending August 31, 2004.

WHEREAS, the Loan Parties and the Banks desire to amend the Credit Agreement to make certain other modifications as more fully set forth herein.

NOW, THEREFORE, the parties hereto and in consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, covenant and agree as follows:

1. Definitions.

Amendment of Existing Definitions. The following definitions in Section 1.1 of the Credit Agreement are hereby amended and restated as follows:

“Adjusted Fixed Charge Coverage Ratio shall mean the Consolidated Fixed Charge Coverage Ratio as such term is defined in the Indenture as the Indenture exists on the Amendment No. 5 Effective Date and without giving effect to any amendments to such Indenture after the Amendment No. 5 Effective Date (the “Closing Date Indenture”). All defined terms included in the definition of Consolidated Fixed Charge Coverage Ratio in the Closing Date Indenture (or included in other defined terms contained in the definitions of such defined terms or otherwise contained in the Closing Date Indenture) also shall have the meanings given them in the Closing Date Indenture.”

Indenture shall mean that certain Indenture, to be entered into on the Amendment No. 5 Effective Date, among each of the Borrowers, certain of their Subsidiaries and Bank of New York, as trustee pursuant to which the Senior Unsecured Notes are to be issued, without regard to any restatement, amendment, modification or supplement thereof after the Amendment No. 5 Effective Date.

Senior Unsecured Notes shall mean up to $220,000,000 of Senior Notes due 2014 to be issued by United Refining under the Indenture, provided that the interest rate to be paid on such Senior Notes shall not exceed 10.75%.

B. New Definitions. The following new definition is hereby inserted into Section 1.1 in alphabetical order as follows:

“Amendment No. 5 Effective Date shall mean the date on which all of the conditions precedent to the effectiveness of Amendment No. 5 have been satisfied.”

2. Amendment of Section 7.2.1 of the Credit Agreement. Subsection (ii) of Section 7.2.1 of the Credit Agreement is hereby amended and restated as follows:

“(ii) Indebtedness in an amount not to exceed $220,000,000 under the Senior Unsecured Notes as set forth on Schedule 7.2.1; provided that there is not an increase in the amount thereof or other significant change in the terms thereof;”

The remainder of Section 7.2.1 shall remain unchanged hereby.

3. Amendment of Section 7.2.8 of the Credit Agreement. Subsection (i) of Section 7.2.8 of the Credit Agreement is hereby amended and restated as follows:

“(i) The Borrowers may pay up to $2,000,000 during any fiscal year pursuant to the Servicing Agreement.”

The remainder of Section 7.2.8 shall remain unchanged hereby.

4. Amendment of Section 7.2.14 of the Credit Agreement. Section 7.2.14 of the Credit Agreement is hereby amended and restated as follows:

“7.2.14 Changes in Organizational Documents and Senior Unsecured Notes.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, amend in any respect its certificate of incorporation (including any provisions or resolutions relating to capital stock), by-laws or other organizational documents without providing at least thirty (30) calendar days’ prior written notice to the Agent and

the Banks and, in the event such change would be adverse to the Banks as determined by the Agent in its sole discretion, obtaining the prior written consent of the Required Banks. Each of the Loan Parties shall not amend, refinance or replace in any respect any provision of the Senior Unsecured Notes or related agreements if such amendment, refinancing or replacement provides for, or could result in, (a) any addition, acceleration or increase, directly or indirectly, in the amount of any principal payment thereunder, (b) a prohibition or conditioning of the granting of collateral security to the Agent and the Banks hereunder or under any similar agreement, (c) provisions more restrictive to any of the Loan Parties than those contained in the Indenture on the Amendment No. 5 Effective Date, (d) a maturity date earlier than the maturity date contained in the Indenture on the Amendment No. 5 Effective Date, (e) the granting of collateral as security therefore, except that the Senior Unsecured Notes and related agreements may be amended, refinanced or replaced to provide for the addition or increase of payments which are due after the scheduled due date for the last payment due under such Senior Unsecured Notes (as such Senior Unsecured Notes exist on the Amendment No. 5 Effective Date) without obtaining the prior written consent of the Required Banks. “

5. Amendment of Section 7.2.17 of the Credit Agreement. Section 7.2.17 of the Credit Agreement is hereby amended and restated as follows:

“7.2.17 Negative Pledge Covenants.

Except for the restrictions on granting Liens identified in subsection (xii) of the definition of Permitted Liens as such definition is defined in the Indenture on the Amendment No. 5 Effective Date, each of the Loan Parties covenants and agrees that it shall not, and shall not permit any of its Subsidiaries to, (a) enter into any agreement, promise, commitment or other undertaking with any Person which, conditionally or unconditionally, prohibits, or limits in any way the right of, any of the Loan Parties or their Subsidiaries from granting any Liens to the Agent or the Banks in the assets or ownership interests of the Loan Parties or their Subsidiaries or which imposes any conditions upon such a grant of such Liens or the exercise by the Agent or the Banks of their rights and remedies under such Liens (including their rights to transfer or dispose of such assets or interests), or (b) agree to, create or suffer to exist any Lien to any Person on any assets at any time, other than Permitted Liens.”

6. Amendment of Section 7.2.19 of the Credit Agreement. Section 7.2.19 of the Credit Agreement is hereby amended and restated as follows:

“7.2.19 Redemptions of Senior Unsecured Notes.

The Loan Parties may not redeem any part of the Senior Unsecured Notes unless (a) no Event of Default Exists or would exist after giving effect to such proposed redemption, (b) the aggregate amount of payments on account of all such redemptions does not exceed $15,000,000 from and after the Amendment No. 5 Effective Date and (c) if any Loans are outstanding or would be outstanding after giving effect to such proposed redemption, the Loan Parties shall deliver a Borrowing Base Certificate to the Agent three (3) days prior to such proposed redemption demonstrating that Unused Availability would exceed $10,000,000 after giving effect to such proposed redemption.”

7. Amendments to Schedules. Schedule 7.2.1 is hereby amended and restated in its entirety to read as set forth on Schedule 7.2.1 hereto.

8. Special One Time Distribution. Notwithstanding the procedures set forth in Section 7.2.5(ii) [Dividends and Related Distributions] of the Credit Agreement with respect to making dividends or distributions, the Banks hereby permit the Loan Parties to make a dividend during the fiscal quarter ended August 31, 2004 in an amount not in excess of $5,000,000 from the proceeds of the Senior Unsecured Notes, provided that prior to August 31, 2004, the Borrowers deliver a compliance certificate demonstrating that such dividend does not exceed 50% of the consolidated net income (computed in accordance with GAAP) of the Borrower as of such quarter end for the four fiscal quarters then ended less any dividend payments made during such fiscal quarter ended May 31, 2004.

9. Representations and Warranties Relating to Indenture. Each of the Loan Parties represents and warrants that (i) the terms of the Indenture do not conflict with or create a Potential Default or Event of Default under the Credit Agreement, (ii) the terms of the Credit Agreement do not conflict with or create a default under the Indenture, (iii) the definition of Permitted Liens as set forth in the Indenture is identical to the definition of that term contained in the draft Offering Memorandum dated July 21 2004 distributed to the Banks, (iv) the definition of Consolidated Fixed Charge Coverage Ratio as set forth in the Indenture is identical to the definition of that term contained in the draft Offering Memorandum dated July 21, 2004 distributed to the Banks, and (v) the maturity date of the Senior Unsecured Notes is not earlier than August     , 2014.

10. Affirmative Covenants. The Loan Parties, jointly and severally agree that upon issuance of the new Senior Unsecured Notes as permitted hereunder, the proceeds from such issuance shall immediately be used to redeem in their entirety, the Senior Unsecured Notes as existed immediately prior to the Amendment No. 5 Effective Date. The Loan Parties, jointly and severally agree that after such redemption, any remaining proceeds of such issuance after paying costs and expenses related to such issuance and the dividend permitted pursuant to paragraph 9 hereof shall be applied to pay down the Revolving Credit Loans then outstanding.

11. Conditions to Effectiveness. This Amendment No. 5 shall be effective on the date (the “Amendment No. 5 Effective Date”) on which each of the following conditions have been satisfied:

(i) the Senior Unsecured Notes (as defined in this Amendment No. 5) to be issued by the Borrowers pursuant to clause (ii) of Section 7.2.1 of the Credit Agreement shall have been issued on terms and conditions and pursuant to documentation satisfactory to the Agent in all respects, including but not limited to (a) issuance of the Senior Unsecured Notes in a principal amount not greater than $220,000,000 shall have occurred on or before August 31, 2004, (b) the net proceeds of such issuance shall be in an amount at least equal to the Indebtedness outstanding under the Senior Unsecured Notes (as such term is defined in the Credit Agreement without giving effect to this Amendment No. 5) that are being redeemed, (c) the interest rate on the Senior Unsecured Notes shall not exceed 10.75%, and (d) the terms in the Indenture shall be satisfactory in all respects to the Agent in its sole discretion;

(ii) Borrowers shall pay to the Agent for the benefit of the Banks a fee of $37,500 on account of the amendments provided for herein, to be allocated to the Banks that execute and deliver this Amendment No. 5 to the Agent prior to 5:00 p.m. on July 30, 2004 according to their pro rata share of the Revolving Credit Commitments;

(iii) there shall have been delivered to the Agent for the benefit of each Bank a certificate dated as of the date hereof and signed by the Secretary or an Assistant Secretary of each of the Loan Parties certifying as appropriate to: (a) all corporate action taken by each Loan Party in connection with this Amendment No. 5 together with a copy of the resolutions of each Loan Party evidencing same; (b) the names of the officer or officers authorized to sign this Amendment No. 5 and the true signatures of such officer or officers and specifying the officers authorized to act on behalf of each Loan Party for purposes of this Amendment No. 5 and the true signatures of such officers, on which the Agent and each Bank may conclusively rely; and (c) a certificate from the Secretary or Assistant Secretary stating that each Loan Party’s organizational documents, including its certificate or articles of incorporation and bylaws have not changed since the Closing Date and are in effect on the date hereof as on the Closing Date together with certificates of the appropriate state officials as to the continued existence and good standing of each Loan Party in each state where organized or qualified to do business;

(iv) no Potential Default or Event of Default shall exist immediately prior to and after giving effect to the transactions contemplated by this Amendment No. 5;

(v) this Amendment No. 5 shall have been executed by the Required Banks, the Agent the Borrowers and the Guarantor and delivered to the Agent;

(vi) there shall be delivered to the Agent for the benefit of each Bank a written opinion dated the Amendment No. 5 Effective Date in form and substance satisfactory to the Agent, including that no provision of the Credit Agreement conflicts with or causes a default under the Indenture and that no provisions of the Indenture conflicts with or causes a Potential Default or Event of Default under the Credit Agreement;

(vii) on the date hereof and on Amendment No. 5 Effective Date no action, proceeding, investigation, regulation or legislation shall have been instituted, threatened or proposed before any court, governmental agency or legislative body to enjoin, restrain or prohibit, or to obtain damages in respect of, the Credit Agreement, the Loan Documents, the Indenture, the Senior Unsecured Notes or the consummation of the transactions contemplated by any of the foregoing, or which, in Agent’s reasonable discretion, could result in a Material Adverse Change; and

(viii) to the extent any consent, approval, order, or authorization or registration, declaration, or filing with any governmental authority or other person or legal entity is required in connection with the valid execution and delivery of this Amendment No. 5, the Indenture or the Senior Unsecured Notes or the carrying out or performance of any of the transactions contemplated thereby, all such consents, approvals, orders or authorizations shall have been obtained or all such registrations, declarations, or filings shall have been accomplished prior to the consummation of this Amendment No. 5.

12. Full Compliance. The Borrowers represent and warrant that (after giving effect to the payment of the dividend as provided in paragraph 9 above) they are in full compliance with each of the provisions of the Credit Agreement, the representations and warranties set forth in the Credit Agreement are true and accurate on the date hereof (except representations and warranties that relate solely to and earlier date or time, which representations shall be true as of the specific dates or times referred to therein) and that no Potential Default or Event of Default exists (after giving effect to the payment of the dividend as provided in paragraph 9 above). The Banks do not amend or waive any provisions of the Credit Agreement, except as expressly set forth herein. All terms of the Credit Agreement and each of the other Loan Documents remain in full force and effect on and after the date hereof except as provided herein.

13. Governing Law. This Amendment No. 5 shall be deemed to be a contract under the laws of the Commonwealth of Pennsylvania and for all purposes shall be governed by and construed and enforced in accordance with the internal laws of the Commonwealth of Pennsylvania without regard to its conflict of laws principles.

14. Counterparts; Telecopy Signatures. This Amendment No. 5 may be executed by different parties hereto in any number of separate counterparts, each of which, when so executed and delivered shall be an original and all such counterparts shall together constitute one and the same instrument. Each Loan Party acknowledges and agrees that a telecopy transmission to the Agent or any Bank of the signature pages hereof purporting to be signed on behalf of any Loan Party shall constitute effective and binding execution and delivery hereof by such Loan Party.

15. Fees and Expenses. The Loan Parties shall pay all of Agent’s outstanding fees and expenses, including legal fees and expenses through the Amendment No. 5 Effective Date.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

[SIGNATURE PAGE 1 OF 5 TO AMENDMENT NO. 5 TO CREDIT AGREEMENT]

IN WITNESS WHEREOF, the parties hereto by their duly authorized officers have executed this Amendment No. 5 as of the day and year first written above.

BORROWERS:
UNITED REFINING COMPANY
By:	/s/ James E. Murphy
Title:	Vice President – Finance and Chief Financial Officer
UNITED REFINING COMPANY OF PENNSYLVANIA
By:	/s/ James E. Murphy
Title:	Vice President – Finance and Chief Financial Officer
KIANTONE PIPELINE CORPORATION
By:	/s/ James E. Murphy
Title:	Vice President – Finance and Chief Financial Officer
COUNTRY FAIR, INC.
By:	/s/ James E. Murphy
Title:	Vice President - Finance
GUARANTOR:
KWIK-FILL CORPORATION
By:	/s/ James E. Murphy
Title:	Vice President - Finance and Chief Financial Officer

[SIGNATURE PAGE 2 OF 5 TO AMENDMENT NO. 5 TO CREDIT AGREEMENT]

AGENT AND BANKS:
PNC BANK, NATIONAL ASSOCIATION, individually and as Agent
By:	/s/ James Steffey
Title:	Vice President

[SIGNATURE PAGE 3 OF 5 TO AMENDMENT NO. 5 TO CREDIT AGREEMENT]

MANUFACTURERS AND TRADERS TRUST COMPANY
By:	/s/ Christopher Kania
Title:	Vice President

[SIGNATURE PAGE 4 OF 5 TO AMENDMENT NO. 5 TO CREDIT AGREEMENT]

GENERAL ELECTRIC CAPITAL CORPORATION
By:	/s/ Philip F. Carfora
Title:	Duly Authorized Signatory

[SIGNATURE PAGE 5 OF 5 TO AMENDMENT NO. 5 TO CREDIT AGREEMENT]

BANK LEUMI, USA
By:	/s/ Paul Tine
Title:	Vice President
By:	/s/ Glenn Kreutzer
Title:	A.T.

EX-31.1

Exhibit 31.1

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350,

As adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John A. Catsimatidis certify that:

1. I have reviewed this annual report on Form 10-K of United Refining Company (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 24, 2004	Signature:	/s/ John A. Catsimatidis
		Principal Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

Pursuant to 18 U.S.C. Section 1350,

As adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, James E. Murphy certify that:

1. I have reviewed this annual report on Form 10-K of United Refining Company (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(c) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

4. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 24, 2004	Signature:	/s/ James E. Murphy
		Principal Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of United Refining Company, a Pennsylvania corporation (the “Company”), does hereby certify, to such officer’s knowledge, that:

The Annual Report on Form 10-K for the year ended August 31, 2004 (the “Form 10-K”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 24, 2004	By:	/s/ John A. Catsimatidis
		John A. Catsimatidis
		Principal Executive Officer
Dated: November 24, 2004	By:	/s/ James E. Murphy
		James E. Murphy
		Principal Financial Officer

The foregoing certification is being furnished solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of Form 10-K or as a separate disclosure document.

A signed original of this written statement required by Section 906 has been provided to United Refining Company and will be retained by United Refining Company and furnished to the Securities and Exchange Commission or its staff upon request.