10-K

UNITED STATES

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, 2008

¨ 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 if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  x

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 (§229.405 of this chapter) 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 a large accelerated filer, an accelerated filer, a non-accelerated filer or a small reporting company. See definition of “large accelerated filer” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  x (Do not check if a smaller reporting company)		Small reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of December 1, 2008, 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
Country Fair, Inc.	Pennsylvania	25-1149799	333-35083-12

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FORM 10-K CONTENTS

		PAGE(S)
Item 1.	Business	4
Item 1A.	Risk Factors	13
Item 1B.	Unresolved Staff Comments	16
Item 2.	Properties	16
Item 3.	Legal Proceedings	16
Item 4.	Submission of Matters to a Vote of Security Holders	16
Item 5.	Market for Registrant’s Equity, Related Stockholder Matters and Issuer Purchase of Equity Securities	16
Item 6.	Selected Financial Data	17
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	31
Item 8.	Financial Statements and Supplementary Data	32
	Report of Independence Registered Public Accounting Firm	33
	Consolidated Financial Statements:
	Balance Sheets	34
	Statements of Operations	35
	Statements of Comprehensive Income	36
	Statements of Stockholder’s Equity	37
	Statements of Cash Flows	38
	Notes to Consolidated Financial Statements	39 thru 63
Item 9.	Changes in Disagreements with Accountants on Accounting and Financial Disclosure	64
Item 9A.(t)	Controls and Procedures	64
Item 9B.	Other Information	64
Item 10.	Directors and Executive Officers of the Registrant	65
Item 11.	Executive Compensation	67
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	71
Item 13.	Certain Relationships and Related Transactions	71
Item 14.	Principal Accounting Fees and Services	72
Item 15.	Exhibits, Financial Statement Schedules	73
	Signatures	78
	Certifications

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ITEM 1. BUSINESS.

Introduction

United Refining Company is a Pennsylvania Corporation that began business operations in 1902. 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 70,000 barrel per day (“bpd”) petroleum refinery in Warren, Pennsylvania where we produce a variety of products, including various grades of gasoline, ultra low sulfur 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^®, Keystone^® and Country Fair^® brand names at a network of Company-operated retail units and convenience and grocery items through convenience stores under the Red Apple Food Mart^® and Country Fair^® brand names. As of August 31, 2008, (sometimes referred to as “fiscal 2008”), we operated 369 units, of which, 185 units are owned, 121 units are leased, and the remaining stores are operated under a management agreement. Approximately 20% 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 fiscal 2008 approximately 53% and 26% of our gasoline and distillate production, respectively, was sold through our retail network.

For fiscal 2008, we had total net sales of $3.2 billion, of which approximately 54% were derived from gasoline sales, approximately 39% were from sales of other petroleum products and 7% were from sales of merchandise and other revenue. Our capacity utilization rates have averaged 95% for the last five years.

We believe that the location of our 70,000 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, and including fiscal 2008, we have experienced approximately 1.9 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. 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 60% / 40% 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, 2008, 170 of our retail units were located in New York, 186 in Pennsylvania and 13 in Ohio. In fiscal year 2008, approximately 53% of the refinery’s gasoline production was sold through our retail network. In addition to gasoline, all units sell convenience merchandise, 106 are Quick Serve Restaurants

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(“QSRs”) including franchise operations and eight 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.

Recent Developments

The Company continues to be impacted by the volatility in petroleum markets in fiscal year 2009. The lagged 3-2-1 crackspread as measured by the difference between the price of crude oil contracts traded on the NYMEX for the proceeding month to the prices of NYMEX gasoline and heating oil contracts in the current trading month, have been severely affected by falling petroleum prices. The Company uses a lagged crackspread as a margin indicator as it reflects the time period between the purchase of crude oil and its delivery to the refinery for processing. The lagged crackspread for the month of September in fiscal year 2009 was ($2.11) as compared to $9.40 for the fourth quarter of fiscal year 2008, a decrease of $11.51 or 122%. The lagged crackspread for October of fiscal year 2009 was ($22.33), a decrease of $31.73 or 337% as compared to the fourth quarter of fiscal year 2008.

The Company has reached an agreement with its bank group, led by PNC Bank NA to increase its working capital line from $100,000,000 to $130,000,000. More information regarding this improvement to the liquidity position of the Company can be found in Liquidity and Capital Resources.

Industry Overview

We are a regional refiner and marketer located primarily in Petroleum Administration for Defense Districts I (“PADD I”). As of January 1, 2008, there were 15 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 2007 in PADD I averaged 6.26 million bpd, representing approximately 30% of U.S. demand based on industry statistics reported by the Energy Information Administration (“EIA”). According to the EIA, prime supplier sales volume of gasoline in the region grew slightly by approximately .6% during the five-year period ending December 2007. 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 inadequate crude capacity expansion is likely to result in sustainable operating margins in the refining industry.

Refining Operations

The Company’s refinery is located on a 92-acre site in Warren, Pennsylvania. The refinery has a nominal capacity of 70,000 bpd of crude oil processing and averaged saleable production of approximately 60,700 bpd during fiscal 2008.

Crude oil processing was reduced during October and November 2007 when the Company completed a scheduled 21 day maintenance and enhancement turnaround of the fluid catalytic cracking (FCC) unit and related operations. The FCC unit had been on-stream for 41 months between turnarounds with the exception of an unscheduled 6 day shutdown in March, 2006 caused by a compressor control system malfunction and a steam boiler leak. The major activity during the turnaround in addition to normal shutdown maintenance was the replacement and upgrading of the compressor control system and complete replacement of the steam boiler.

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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.

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 93 octane gasoline to produce a mid-grade 89-octane. In fiscal year 2008, approximately 53% of our gasoline production was sold through our retail network and the remaining 47% of such production was sold to wholesale customers.

Middle distillates include kerosene, ultra low sulfur diesel fuel, and No. 2 heating oil. For fiscal 2008, approximately 74% of our distillate production was sold to wholesale customers and the remaining 26% 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 27% 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.

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 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 70,000 bpd.

The intermediate products are then processed in downstream units and blended to produce finished products. A naphtha hydrotreater treats naphtha and FCC light catalytic naptha 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

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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 is treated with hydrogen at a distillate hydrotreater to remove sulfur to make finished kerosene. A distillate hydrotreater built in 1993 and modified in 2006 also treats raw distillates to produce ultra low sulfur diesel fuel.

The long molecular chains of the heavy atmospheric and vacuum distillates are broken or “cracked” in the FCC unit and separated and recovered in the gas concentration unit to produce fuel gas, propylene, butylene, LPG, light and heavy catalytic naptha 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 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 No. 2 heating oil. FCC light and heavy catalytic naptha is hydrotreated in order to meet new more stringent legally mandated limits on gasoline sulfur content which took effect January 1, 2008, and a portion of the light cycle oil is hydrotreated in order to meet new more stringent legally mandated limits on diesel fuel sulfur content which took effect June 1, 2006.

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 substantially all Canadian, it is not dependent on this source alone. Within 90 days, we could shift up to 70% 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. 64% of our term contracts with our crude suppliers are on a month-to-month evergreen basis, with 60-to-90 day cancellation provisions; 36% of our term crude contracts are on an annual basis (with month to month pricing provisions). As of August 31, 2008, we had supply contracts with 14 major suppliers for an aggregate of 56,200 bpd of crude oil. We have contracts with three suppliers amounting to 53% of daily crude oil supply (none more than 12,000 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.

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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 FCC) is conducted approximately every three to five years, during which time such units are shutdown for internal inspection and repair. The most recent turnarounds occurred in March and April 2007 at our crude unit and its related processing equipment, and in October and November 2007 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 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 (for tank turnarounds). Thus, we charge costs to production over the period most clearly benefited by the turnarounds.

The next scheduled turnarounds are currently scheduled to begin March 2010 at the crude unit and October 2010 at the FCC unit.

The scheduled maintenance turnarounds result in an inventory build of petroleum products to meet minimum sales demand during the maintenance shutdown period.

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, Pennsylvania refinery, and we have steadily expanded our distribution network over the years.

We maintain an approximate 60% / 40% 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 2008, approximately 53% and 26% of our gasoline and distillate production, respectively, was sold through this retail network.

We deliver asphalt from the refinery to end user contractors by truck or railcar in addition to re-supplying our asphalt terminals in Rochester, New York and Pittsburgh, Pennsylvania.

Retail Operations

As of August 31, 2008, we operated a retail-marketing network (including those stores operated under a management agreement) that includes 369 retail units, of which 170 are located in western New York, 186 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 20% 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 Company 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.

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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 six of our 369 retail outlets include QSRs where food is prepared on the premises for retail sales and also distribution to our other nearby units that 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 2008 were $221.0 million, with a gross profit of approximately $58.4 million. Gross margins on the sale of convenience merchandise averaged 26.5% for fiscal 2008 and have been over 27.0% for the last three years. Merchandise sales have shown continued positive growth.

Merchandise Supply

Tripifoods, Buffalo, New York is our primary wholesale grocery supplier for our entire chain. During fiscal year 2008, we purchased approximately 68.9% of our convenience merchandise from this vendor. Tripifoods supplies us with products including tobacco, candy, deli, grocery, health and beauty products, and sundry items. 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

In fiscal 2008, we sold on a wholesale basis approximately 43,600 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 2008, our production of gasoline, distillate, and asphalt sold at wholesale was 47%, 74%, and 100%, respectively. We sell approximately 98% of our wholesale gasoline and distillate products from our refinery in Warren, Pennsylvania, and our Company-owned and operated product terminals. The remaining 2% are sold through third-party exchange terminals.

Our wholesale gasoline customer base includes 45 branded dealer/distributor units operating under our proprietary “Keystone^®” and “Kwik Fill^®” brand names. Long-term dealer/distributor contracts accounted for approximately 17% of our wholesale gasoline sales in fiscal 2008. 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, including fiscal 2008, we have experienced an approximately 1.9 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.

Our ability to market asphalt is critical to the performance of our refinery. The timing and a consistent marketing effort enables the refinery to process lower cost higher sulfur content crude oils, which in turn affords

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us higher refining margins. Sales of paving asphalt generally occur during the period May 1 through October 31 based on weather conditions. In order to maximize our in season asphalt sales, we have made substantial investments to increase our asphalt storage capacity through the installation of additional tankage, 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 2008, we sold 7.5 million barrels of asphalt while producing 6.5 million barrels. This difference is primarily attributed to our purchasing product for resale, predominantly for our Cordova, Alabama facility.

We have a significant share of the asphalt market in southwestern New York and western and central Pennsylvania as well as in the greater metro areas 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 or exchanged in the Gulf Coast area and delivered by barge to third party or Company-owned terminals near Pittsburgh.

We also had a 50% interest in a joint venture with an entity for the marketing of asphalt products in Alabama which was discontinued as of July 31, 2008. This joint venture was accounted for using the equity method of accounting.

We use a network of five terminals to store and distribute refined products. This network provides distillate, and asphalt storage capacities of approximately 1,127,000 barrels, as of August 31, 2008.

During fiscal 2008, approximately 89% of our refined products were transported from the refinery via truck transports, with the remaining 11% transported by rail. The majority of our wholesale and retail gasoline distribution is handled by common carrier trucking companies at competitive rates. We also operate a fleet of ten tank trucks that supply approximately 22% 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 22 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 fuel quality, pollution control and protection of the environment, such as those governing releases of certain materials to the air and water and the storage, treatment, transportation, disposal and clean-up of wastes located on land. 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.

Gasoline and Diesel Fuel Manufacturing Standards

Changes in fuel manufacturing standards including mandatory benzene reduction in gasoline and renewable fuel blending requirements will continue to affect our operations. In February 2000, the United States Environmental Protection Agency (“USEPA”) issued a final rule under the federal Clean Air Act (“CAA”) requiring a phased reduction of the sulfur content in gasoline to ultimately achieve an annual average of 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 were 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 were not classified as a small refiner for this purpose, nor are our operations located in any of

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the Western states given more 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 plan giving us until January 2008 to meet the 30 PPM annual average sulfur limit. Process modifications necessary to reduce sulfur in all three phases of plan were successfully implemented and the industry wide standard was achieved before the January 1, 2008 deadline.

In 2005, the U.S. Congress passed the Energy Policy Act creating a Renewable Fuel Standard. That standard requires a certain volume each year of transportation fuel sold to be comprised of renewable fuel, such as ethanol. The renewable fuel volume requirement was increased through passage of Energy Independence and Security Act of 2007. We are required to comply with the Renewable Fuel Standard by January 2011. The estimated cost of this project is approximately $18 million.

The USEPA finalized another rule on February 26, 2007 under the CAA known as the Mobile Source Air Toxics Rule No. 2 (“MSAT II”) intended to reduce emissions of benzene by, among other things, regulating gasoline quality. The rule requires us to reduce the amount of benzene in gasoline from a current average level of about 2% down to 0.62% by January 2011.

Retail Gasoline Stations

We currently operate gasoline stations in three states with underground petroleum product storage tanks and in the past have operated gasoline stations that are now closed. Federal and state statutes and regulations govern the installation, operation and removal from service of these underground storage tanks and associated piping and product dispensing systems. The operation of underground storage tanks and systems carries the risk of contamination to soil and groundwater with petroleum products. We manage this risk by promptly responding to actual and suspected leaks and spills and implementing remedial action plans meeting regulatory requirements. In addition to prompt response and remediation, we receive reimbursement for response costs associated with leaks and spills in the Commonwealth of Pennsylvania through the Underground Storage Tank Indemnification Fund.

Competition

Petroleum refining and marketing is highly competitive. Our major retail gasoline c-store competitors include British Petroleum, Amerada Hess, Exxon-Mobil, Sunoco, Sheetz, Delta Sonic, Valero and Giant Eagle/GetGo. With respect to wholesale gasoline and distillate sales, we compete with Sunoco, Inc., Exxon-Mobil, and other refiners via their pipeline system. We primarily compete with Marathon Petroleum in the asphalt market, both in New York and Pennsylvania. 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 continue to 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, product price, overall appearance and cleanliness of stores and brand identification. Competition from large, integrated oil companies, supermarkets, and “big box” convenience store chains such as Wal-Mart and Sam’s Club, is expected to be

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ongoing. The principal competitive factors affecting our wholesale marketing business are the price and quality of our products, as well as the reliability and availability of supply and the location of multiple distribution points.

Employees

As of August 31, 2008, we had approximately 4,576 employees; 2,039 full-time and 2,573 part-time employees. Approximately 3,763 persons were employed at our retail units, 359 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 and General Teamsters Local Union No. 397 covering 220, 8, and 18 employees, respectively. The agreements expire on February 1, 2012, January 31, 2009 and July 31, 2010, respectively. We believe that our relationship with our employees is good.

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 45 independent distributors on a non-exclusive royalty-free basis.

We currently do not own any material patents. Management believes that the Company 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

In November, 2008, we increased the limit of our revolving credit facility with PNC Bank, N.A., as Agent Bank (the “Revolving Credit Facility”) from $100,000,000 to $130,000,000. This amendment provides the Company greater flexibility relative to its cash flow requirements in light of market fluctuations, particularly involving crude oil prices and seasonal business cycles. The improved liquidity resulting from the expansion of the facility will assist the Company in meeting its working capital, ongoing capital expenditure needs and for general corporate purposes. The term of the agreement does not change. It will expire on November 27, 2011. The amendment to the Revolving Credit Facility affected certain terms and provisions thereof, including an increase in the interest rate and a modification to the Net Worth covenant. Under the new amendment to the Revolving Credit Facility effective November 21, 2008, the applicable margin will continue to be calculated on the average unused availability as follows: (a) for base rate borrowing, at the greater of the Agent Bank’s prime rate plus an applicable margin of .5% to 0%; the Federal Funds Open Rate plus .5%; or the Daily LIBOR rate plus 1%; (b) for euro-rate based borrowings, at the LIBOR Rate plus an applicable margin of 2.35% to 1.75%. Prior to this amendment of the Revolving Credit Facility, commencing May 7, 2007, interest was calculated as follows: (a) for base rate borrowings, at the greater of the Agent Bank’s prime rate less an applicable margin of

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.5% to 0% or the federal funds rate plus 1%; (b) for euro-rate borrowings, at the LIBOR rate plus an applicable margin of 1.25% to 1.75%. For the period commencing November 2006 when the Revolving Credit Facility was amended and extended, until May 7, 2007, interest was calculated as follows: (a) for base rate borrowings, at the greater of the Agent Bank’s prime rate plus an applicable margin of .25% to .75% or federal funds rate plus 1%; (b) for euro-rate borrowings, at the LIBOR rate plus an applicable margin of 1.75% to 3%. The applicable margin varies with our facility leverage ratio calculation. The Agent Bank’s prime rate at August 31, 2008 was 5.00%.

During May 2007, the Company sold an additional $125,000,000 of 10 ¹ /2% Senior Unsecured Notes due 2012 (the “Additional Notes”) for $130,312,500 resulting in a debt premium of $5,312,500 which will be amortized over the life of the Additional Notes using the effective interest method. These Additional Notes were issued under an indenture, dated as of August 6, 2004 (the “Indenture”), pursuant to which $200,000,000 of Notes of the same series were issued in August 2004 and an additional $25,000,000 in February 2005. The net proceeds of the offering were used and will continue to be used for capital expenditures and general corporate purposes. Additional Notes are hereinafter collectively called “the Senior Unsecured Notes” and are fully and unconditionally guaranteed on a senior unsecured basis by all of the Company’s subsidiaries (see Notes 9 and 16 to Consolidated Financial Statements, Item 8).

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. We had outstanding letters of credit of $432,000 and approximately $90,568,000 unused and available under the Revolving Credit Facility as of August 31, 2008.

ITEM 1A.    RISK FACTORS.

Risks Relating to the Business

Substantial Leverage and Ability to Service and Refinance Debt

Our ability to pay interest and principal on the Senior Unsecured Notes and to satisfy our other debt obligations will depend upon our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, most of which are beyond our control. We anticipate that our operating cash flow, together with borrowings under the Revolving Credit Facility, will be sufficient to meet our operating expenses and capital expenditures, to sustain operations and to service our interest requirements as they become due.

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 risks resulting from changes in the PNC Prime rate, the Federal Funds rate or the LIBOR rate.

If we are unable to generate sufficient cash flow to service our indebtedness and fund our capital expenditures, we will be forced to adopt an alternative strategy that may include reducing or delaying capital expenditures, selling assets, restructuring or refinancing our indebtedness (including the notes) or seeking additional equity capital. There can be no assurance that any of these strategies could be affected on satisfactory terms, if at all. Our ability to meet our debt service obligations will be dependent upon our future performance which, in turn, is subject to future economic conditions and to financial, business and other factors, many of which are beyond our control.

Volatility of Crude Oil Prices and Refining Margins

We are engaged primarily in the business of refining crude oil and selling refined petroleum products. Our earnings and cash flows from operations are dependent upon us realizing refining and marketing margins at least sufficient to cover our fixed and variable expenses. The cost of crude oil and the prices of refined products depend upon numerous factors beyond our control, such as the supply of and demand for crude oil, gasoline and other refined products, which are affected by, among other things, changes in domestic and foreign economies, political events, and instability or armed conflict in oil producing regions, production levels, weather, the

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availability of imports, the marketing of gasoline and other refined petroleum products by our competitors, the marketing of competitive fuels, the impact of energy conservation efforts, and the extent of domestic and foreign government regulation and taxation. A large, rapid increase in crude oil prices would adversely affect our operating margins if the increased cost of raw materials could not be passed to our customers on a timely basis, and would adversely affect our sales volumes if consumption of refined products, particularly gasoline, were to decline as a result of such price increases. A sudden drop in crude oil prices would adversely affect our operating margins since wholesale prices typically decline promptly in response thereto, while we will be paying the higher crude oil prices until our crude supply at such higher prices is processed. The prices which we may obtain for our refined products are also affected by regional factors, such as local market conditions and the operations of competing refiners of petroleum products as well as seasonal factors influencing demand for such products. In addition, our refinery throughput and operating costs may vary due to scheduled and unscheduled maintenance shutdowns.

We do not manage the price risk related to all of our inventories of crude oil and refined products with a permanent hedging program; however, we do manage the risk exposure by managing inventory levels and by selectively applying hedging activities. At August 31, 2008, the Company had no open futures positions of crude oil puts.

At August 31, 2008, we were exposed to the risk of market price declines with respect to a substantial portion of our crude oil and refined product inventories.

Competition

Many of our competitors are fully integrated companies engaged on a national and/or international basis in many segments of the petroleum business, including exploration, production, transportation, refining and marketing, on scales much larger than ours. Large oil companies, because of the diversity and integration of their operations, larger capitalization and greater resources, 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.

We face strong competition in our market for the sale of refined petroleum products, including gasoline. Such competitors have in the past and may in the future engage in marketing practices that result in profit margin deterioration for us for periods of time, causing an adverse impact on us.

Concentration of Refining Operations

All of our refinery activities are conducted at our facility in Warren, Pennsylvania. In addition, we obtain substantially all of our crude oil supply through our owned and operated Kiantone Pipeline. Any prolonged disruption to the operations of our refinery or the Kiantone Pipeline, whether due to labor difficulties, destruction of or damage to such facilities, severe weather conditions, interruption of utilities service or other reasons, would have a material adverse effect on our business, results of operations or financial condition. In order to minimize the effects of any such incident, we maintain a full schedule of insurance coverage which includes, but is not limited to, property and business interruption insurance. The property insurance policy has a combined loss limit for a property loss at our refinery and business interruptions of $500 million. A deductible of $5 million applies to physical damage claims, with a 45-day wait period deductible for business interruption. We believe that our business interruption coverage is adequate. However, there can be no assurance that the proceeds of any such insurance would be paid in a timely manner or be in an amount sufficient to meet our needs if such an event were to occur.

Impact of Environmental Regulation; Government Regulation

Our operations and properties are subject to increasingly more stringent environmental laws and regulations, such as those governing the use, storage, handling, generation, treatment, transportation, emission, release, discharge and disposal of certain materials, substances and wastes, remediation of areas of contamination and the

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health and safety of employees. These laws may impose strict, and under certain circumstances, joint and several, liability for remediation costs and also can impose responsibility for natural resource damages. Failure to comply, including failure to obtain required permits, can also result in significant fines and penalties, as well as potential claims for personal injury and property damage.

We cannot predict the nature, scope or effect of environmental legislation or regulatory requirements that could be imposed or how existing or future laws or regulations will be administered or interpreted. The nature of our operations and previous operations by others at certain of our facilities exposes us to the risk of claims under those laws and regulations. There can be no assurance that material costs or liabilities will not be incurred in connection with such claims, including potential claims arising from discovery of currently unknown conditions.

Taxes

Our operations and products will be subject to taxes imposed by federal, state and local governments, which taxes have generally increased over time. There can be no certainty of the effect that increases in these taxes, or the imposition of new taxes, could have on us, or whether such taxes could be passed on to our customers.

Nature of Demand for Asphalt

In fiscal 2008, asphalt sales represented 13% of our total revenues. Over the same period, approximately 87% of our asphalt was produced for use in paving or repaving roads and highways. The level of paving activity is, in turn, dependent upon funding available from federal, state and local governments. Funding for paving has been affected in the past, and may be affected in the future, by budget difficulties at the federal, state or local levels. A decrease in demand for asphalt could cause us to sell asphalt at significantly lower prices or to curtail production of asphalt by processing more costly lower sulfur content crude oil which would adversely affect refining margins. In addition, paving activity in our marketing area generally ceases in the winter months. Therefore, much of our asphalt production during the winter must be stored until warmer weather arrives, resulting in delayed revenue recognition and inventory buildups each year.

Controlling Stockholder

John A. Catsimatidis indirectly owns all of our outstanding voting stock. By virtue of such stock ownership, Mr. Catsimatidis has the power to control all matters submitted to our stockholders and to elect all of our directors.

Restrictions Imposed by Terms of Indebtedness

The terms of the Revolving Credit Facility, the Indenture and the other agreements governing our indebtedness impose operating and financing restrictions on us and our subsidiaries. Such restrictions affect, and in many respects limit or prohibit, among other things, our ability and our subsidiaries’ ability to incur additional indebtedness, create liens, sell assets, or engage in mergers or acquisitions. These restrictions could limit our ability to plan for or react to market conditions or meet extraordinary capital needs or otherwise could restrict corporate activities. There can be no assurance that such restrictions will not adversely affect our ability to finance our future operations or capital needs or to engage in other business activities which will be in our interest.

Our Pension Plans are Currently Underfunded

Substantially all of our employees are covered by three noncontributory defined benefit pension plans. As of August 31, 2008, as measured under FAS 87 (which is not the same as the measure used for purposes of calculating required contributions and potential liability to the Pension Benefit Guaranty Corporation, or PBGC), the aggregate accumulated benefit obligation under our pension plans was approximately $65.8 million and the

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value of the assets of the plans was approximately $53.5 million. In fiscal 2008, we contributed $3.6 million to the three plans, and we have made additional contributions to our pension plans of $2.5 million in fiscal year 2009. If the performance of the assets in our pension plans does not meet our expectations or if other actuarial assumptions are modified, our contributions for future years could be higher than we expect.

Our pension plans are subject to the Employee Retirement Income Security Act of 1974, or ERISA. Under ERISA, the PBGC generally has the authority to terminate an underfunded pension plan if the possible long-run loss of the PBGC with respect to the plan may reasonably be expected to increase unreasonably if the plan is not terminated. In the event our pension plans are terminated for any reason while the plans are underfunded, we will incur a liability to the PBGC that may be equal to the entire amount of the underfunding.

ITEM 1B.    UNRESOLVED STAFF COMMENTS.

Not Applicable

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, upon which, as of August 31, 2008, we operated 185 retail units and two crude oil and five 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.

As of August 31, 2008, we also lease an aggregate of 184 sites in Pennsylvania, New York, and Ohio upon which we operate retail units.

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 the legal proceedings in which it is currently involved were determined against the Company, there would be no 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 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, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

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, 2008. The selected income statement, balance sheet, financial and ratio data as of and for each of the five-years ended August 31, 2008 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,
	2008			2007			2006			2005			2004
	(dollars in thousands)
Income Statement Data:
Net sales	$	3,208,012		$	2,405,063		$	2,437,052		$	1,890,189		$	1,488,937
Gross margin (1)		261,413			449,451			418,426			294,173			277,716
Refining operating expenses (2)		152,521			130,164			145,117			120,573			105,352
Selling, general and administrative expenses		145,770			136,474			129,522			116,240			111,312
Operating income (loss)		(52,595	)		168,394			130,597			42,134			48,021
Interest expense		(36,934	)		(28,178	)		(24,645	)		(24,661	)		(21,445	)
Interest income		4,966			4,384			750			133			22
Other, net		(3,706	)		(825	)		(429	)		(1,658	)		(1,705	)
Equity in net earnings of affiliate		2,879			1,611			2,190			864			672
Loss on early extinguishment of debt		—			—			—			—			(6,770	)
Income (loss) before income tax expense (benefit)		(85,390	)		145,386			108,463			16,812			18,795
Income tax expense (benefit)		(35,485	)		59,680			44,449			6,900			7,400
Net income (loss)		(49,905	)		85,706			64,014			9,912			11,395
Balance Sheet Data (at end of period):
Total assets		601,793			731,566			516,771			418,837			366,382
Total debt		367,291			358,952			228,014			227,141			212,948
Total stockholder’s equity		58,058			142,910			91,853			50,873			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) Refinery operating expenses include refinery fuel produced and consumed in refinery operations.

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.

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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, current 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:

• the effect of the current banking and credit crisis on the Company and our customers and suppliers;

• 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;

• future projects and investments;

• 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 become aware of, after the date of this Annual Report on Form 10K.

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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.

• Continue to evaluate the construction of 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 for products sold by the wholesale segment are recorded upon delivery of the products to our customers, at which time title to those products is transferred and when payment has either been received or collection is reasonably assured. At no point do we recognize revenue from the sale of product prior to transfer of its title. Title to product is transferred to the customer at the shipping point, under predetermined contracts for sale at agreement upon or posted prices to customers of which collectibility is reasonably assured.

Revenues for products sold by the retail segment 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 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.

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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, 2008 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 fiscal 2008.

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 with a financial institution that follows 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, 2008. Similarly, the rate of compensation utilizes historic increases granted by the Company and the industry as well as future compensation policies. See Note 11 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.

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.

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General

The Company is engaged in the refining and marketing of petroleum products. In fiscal 2008, approximately 53% and 26% 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 26.5% for fiscal 2008 and have been between 26.5% 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 continues to be impacted by the volatility in petroleum markets in fiscal year 2009. The lagged 3-2-1 crackspread as measured by the difference between the price of crude oil contracts traded on the NYMEX for the proceeding month to the prices of NYMEX gasoline and heating oil contracts in the current trading month, have been severely affected by falling petroleum prices. The Company uses a lagged crackspread as a margin indicator as it reflects the time period between the purchase of crude oil and its delivery to the refinery for processing. The lagged crackspread for the month of September in fiscal year 2009 was ($2.11) as compared to $9.40 for the fourth quarter of fiscal year 2008, a decrease of $11.51 or 122%. The lagged crackspread for October of fiscal year 2009 was ($22.33), a decrease of $31.73 or 337% as compared to the fourth quarter of fiscal year 2008.

The Company has also reached an agreement with its bank group, led by PNC Bank NA to increase its working capital line to $130,000,000. More information regarding this improvement to the liquidity position of the Company can be found in Liquidity and Capital Resources.

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.

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Retail Operations:

	Fiscal Year Ended August 31,
	2008			2007			2006
	(dollars in thousands)
Net Sales
Petroleum	$	1,328,832		$	982,624		$	937,604
Merchandise and other		220,723			208,966			199,473
Total Net Sales	$	1,549,555		$	1,191,590		$	1,137,077
Costs of Goods Sold	$	1,424,629		$	1,068,264		$	1,027,878
Gross Profit	$	124,926		$	123,326		$	109,199
Operating Expenses	$	126,141		$	117,775		$	110,650
Segment Operating Income/(Loss)	$	(1,215	)	$	5,551		$	(1,451	)
Petroleum Sales (thousands of gallons)		380,285			371,418			351,117
Gross Profit
Petroleum (a)	$	66,522		$	66,728		$	54,627
Merchandise and other		58,404			56,598			54,572
	$	124,926		$	123,326		$	109,199
Petroleum margin ($/gallon) (b)		.1749			.1797			.1556
Merchandise margin (percent of sales)		26.5	%		27.1	%		27.4	%
Average number of stations (during period)
Owned and leased		306			308			310
Managed		63			63			62
		369			371			372

(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 profit 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

2008 vs. 2007

Retail sales increased during fiscal 2008 by $358.0 million, or 30.0%, from $1,191.6 million in fiscal 2007 to $1,549.6 million in fiscal 2008. The retail sales increase was a result of a $346.2 million increase in petroleum sales, and an $11.8 million increase in merchandise sales. The petroleum sales increase is due to an 8.9 million gallon or 2.4% increase in retail petroleum volume and a 32.1% increase in retail selling price. The merchandise sales increase is primarily due to increased prepared food, beverages and cigarette sales due to promotional campaigns and increased selling prices.

2007 vs. 2006

Retail sales increased during fiscal 2007 by $54.5 million, or 4.8%, from $1,137.1 million in fiscal 2006 to $1,191.6 million in fiscal 2007. The retail sales increase was a result of a $45.0 million increase in petroleum

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sales, and a $9.5 million increase in merchandise sales. The petroleum sales increase is due to a 20.3 million gallon or 5.8% increase in retail petroleum volume offset by a 0.9% decrease in retail selling price. The merchandise sales increase is primarily due to increased prepared food, beverages and cigarette sales due to promotional campaigns and increased selling prices.

Costs of Goods Sold

2008 vs. 2007

Retail costs of goods sold increased during fiscal 2008 by $356.3 million, or 33.4%, from $1,068.3 million in fiscal 2007 to $1,424.6 million in fiscal 2008. The increase of $356.3 million is due to the following: petroleum purchases increased $328.0 million due to increases in volume and purchase price, fuel taxes of $9.5 million, merchandise costs of $10.0 million, freight costs of $3.2 million, inventory costs of $5.8 million and $.2 million in other sundry costs, all directly related to increase in sales and prices.

2007 vs. 2006

Retail costs of goods sold increased during fiscal 2007 by $40.4 million, or 3.9%, from $1,027.9 million in fiscal 2006 to $1,068.3 million in fiscal 2007. The increase of $40.4 million is due to the following: petroleum purchases increased $23.1 million due to an increase volume, fuel taxes of $11.8 million and merchandise costs of $7.5 million offset by decreases in the following: freight costs of $.2 million, inventory costs of $1.7 million and $.1 million in other sundry costs, all directly related to increase in sales.

Gross Profit

2008 vs. 2007

Retail gross profit increased during fiscal 2008 by $1.6 million or 1.3% from $123.3 million in fiscal 2007 to $124.9 million in fiscal 2008. Gross profit on petroleum decreased as a percent of sales from 12.6% in fiscal 2007 to 9.4% in fiscal 2008. Petroleum costs of goods sold increased substantially faster than the petroleum selling prices. Petroleum margins decreased by $.2 million, or .3%, due primarily to higher cost of goods on petroleum products. Merchandise margin increased by $1.8 million, or 3.2%, primarily due to a 5.6% increase in merchandise sales.

2007 vs. 2006

Retail gross profit increased during fiscal 2007 by $14.1 million or 12.9% from $109.2 million in fiscal 2006 to $123.3 million in fiscal 2007. Petroleum margins increased by $12.1 million, or 22.1%, due primarily to lower cost of goods on petroleum products. Gross profit on petroleum increased as a percent of sales from 11.6% in fiscal 2006 to 12.6% in fiscal 2007. Merchandise margin increased by $2.0 million, or 3.7%, primarily due to a 4.8% increase in merchandise sales.

Operating Expenses

2008 vs. 2007

Retail operating expenses increased during fiscal 2008 by $8.4 million or 7.1% from $117.8 million in fiscal 2007 to $126.1 million in fiscal 2008. The primary contributing factor was increased payroll and related payroll costs of $4.2 million due to a Pennsylvania minimum wage increase effective July 1, 2007 from $6.25 to $7.15 per hour. Other increases were related to maintenance costs of $.2 million, credit/customer service costs of $2.6 million, supplies of $.3 million, legal/professional fees of $.1 million, insurance/utilities/taxes of $.7 million and advertising/promotion costs of $.4 million offset by a decrease in other miscellaneous costs of $.1 million.

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2007 vs. 2006

Retail operating expenses increased during fiscal 2007 by $7.1 million or 6.4% from $110.7 million in fiscal 2006 to $117.8 million in fiscal 2007. The primary contributing factors were (i) environmental costs of $1.5 million, due primarily to environmental remediation liability issues and (ii) increased payroll and related payroll costs of $1.3 million due to a minimum wage increase effective January 1, 2006 from $6.00 to $6.75 per hour and another increase effective January 1, 2007 from $6.75 to $7.15 per hour for New York State and effective January 1, 2007 an increase of $5.15 to $6.25 per hour for Pennsylvania. Combined these January 1, 2007 increases affected approximately 1,100 retail employees. Other increases were related to gain and loss on fixed asset retirements of $1.0 million, maintenance costs of $.9 million, credit/customer service costs of $.8 million, supplies of $.2 million, legal/professional fees of $.1 million, equipment rental of $.1 million, insurance/utilities/taxes of $.4 million, advertising/promotion costs of $.5 million and other miscellaneous costs of $.3 million.

Wholesale Operations:

	Fiscal Year Ended August 31,
	2008			2007		2006
	(dollars in thousands)
Net Sales (a)	$	1,658,457		$	1,213,473	$	1,299,975
Costs of Goods Sold		1,674,243			1,017,512		1,135,865
Gross Profit (Loss)		(15,786	)		195,961		164,110
Operating Expenses		35,346			33,118		31,962
Segment Operating Income (Loss)	$	(51,132	)	$	162,843	$	132,148
Crude throughput (thousand barrels per day)		59.6			61.7		65.8

Refinery Product Yield

	Fiscal Year Ended August 31,
	2008		2007		2006
	(thousands of barrels)
Gasoline and gasoline blendstock	8,990		10,209		10,394
Distillates	5,446		5,442		6,590
Asphalt	6,535		6,604		6,700
Butane, propane, residual products, internally produced fuel and other	2,559		2,360		2,466
Total Product Yield	23,530		24,615		26,150
% Heavy Crude Oil of Total Refinery Throughput (b)	60	%	59	%	54	%

Product Sales (a)

	Fiscal Year Ended August 31,
	2008		2007		2006
	(dollars in thousands)
Gasoline and gasoline blendstock	$	620,983	$	487,852	$	503,158
Distillates		577,743		365,582		449,259
Asphalt		407,708		338,262		327,992
Other		52,023		21,777		19,566
	$	1,658,457	$	1,213,473	$	1,299,975

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Product Sales (a)

	Fiscal Year Ended August 31,
	2008	2007	2006
	(thousands of barrels)
Gasoline and gasoline blendstock	5,568	6,163	6,283
Distillates	4,351	4,523	5,348
Asphalt	7,592	7,427	8,219
Other	824	549	497
	18,335	18,662	20,347

(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.

Net Sales

2008 vs. 2007

Wholesale sales increased during fiscal 2008 by $445.0 million, or 36.7%, from $1,213.5 million in fiscal 2007 to $1,658.5 million in fiscal 2008. The wholesale sales increase was due to a 39.1% increase in wholesale prices offset by a 1.7% decrease in wholesale volume. The increase in wholesale price was primarily due to the volatility of the energy market.

2007 vs. 2006

Wholesale sales decreased during fiscal 2007 by $86.5 million, or 6.7%, from $1,300.0 million in fiscal 2006 to $1,213.5 million in fiscal 2007. The wholesale sales decrease was due to an 8.3% decrease in wholesale volume offset by a 1.8% increase in wholesale prices. The decrease in volume was primarily a result of our scheduled refinery maintenance turnaround.

Costs of Goods Sold

2008 vs. 2007

Wholesale costs of goods sold increased during fiscal 2008 by $656.7 million, or 64.5%, from $1,017.5 million in fiscal 2007 to $1,674.2 million in fiscal 2008. The increase in wholesale costs of goods sold was primarily due to a 39.1% increase in wholesale prices due to the volatility of the energy market.

2007 vs. 2006

Wholesale costs of goods sold decreased during fiscal 2007 by $118.4 million, or 10.4%, from $1,135.9 million in fiscal 2006 to $1,017.5 million in fiscal 2007. The decrease in wholesale costs of goods sold was primarily due to an 8.3% decrease in wholesale volume as a result of our scheduled refinery turnaround. Also contributing to the decrease was the sale of Motor Vehicle Fuel Credits of $2.4 million, and a gain on hedging activity of $4.1 million.

Gross Profit

2008 vs. 2007

Wholesale gross profit decreased during fiscal 2008 by $211.7 million or 108.1% from $195.9 million in fiscal 2007 to $(15.8) million in fiscal 2008. Gross profit decreased as a percent of sales from 16.1% in fiscal 2007 to (1.0)% in fiscal 2008. Costs of goods sold increased primarily due to an increase in costs due to the volatility of the energy market and by the year-end impact of valuing the Company’s inventories under the LIFO cost method.

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2007 vs. 2006

Wholesale gross profit increased during fiscal 2007 by $31.8 million or 19.4% from $164.1 million in fiscal 2006 to $195.9 million in fiscal 2007. Gross profit increased as a percent of sales from 12.6% in fiscal 2006 to 16.1% in fiscal 2007. Costs of goods sold decreased primarily due to a decrease in wholesale volumes as a result of our scheduled refinery turnaround, sale of Motor Vehicle Fuel Credits, a gain on hedging activity and by the year-end impact of valuing the Company’s inventories under the LIFO cost method.

Operating Expenses

2008 vs. 2007

Wholesale operating expenses increased during fiscal 2008 by $2.2 million or 6.7% from $33.1 million in fiscal 2007 to $35.3 million in fiscal 2008. This increase was primarily due to pension expense, corporate administrative overhead, credit fees and depreciation on capital additions made in fiscal 2007. For fiscal 2008 operating expenses were $35.3 million, or 2.1% of net wholesale sales, compared to $33.1 million or 2.7% of net wholesale sales for fiscal 2007.

2007 vs. 2006

Wholesale operating expenses increased during fiscal 2007 by $1.2 million or 3.6% from $31.9 million in fiscal 2006 to $33.1 million in fiscal 2007. This increase was primarily due to executive officers bonuses incurred, increased pension expense and corporate administrative overhead. For fiscal 2007 operating expenses were $33.1 million, or 2.7% of net wholesale sales, compared to $32.0 million or 2.5% of net wholesale sales for fiscal 2006.

Interest Expense, Net

Net interest expense (interest expense less interest income) increased during fiscal 2008 by $8.2 million from $23.8 million for fiscal 2007 to $32.0 million for fiscal 2008. The increase was due to increased usage of short term borrowings under the Revolving Credit Facility throughout the fiscal year and a full years interest on Senior Unsecured Notes due 2012.

Net interest expense (interest expense less interest income) decreased during fiscal 2007 by $.1 million from $23.9 million for fiscal 2006 to $23.8 million for fiscal 2007. The decrease was due to reduced usage of short term borrowings under the Revolving Credit Facility throughout the fiscal year.

Income Tax Expense / (Benefit)

Our fiscal 2008, 2007 and 2006 effective tax rate remained consistent at 41%.

Liquidity and Capital Resources

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:

	August 31, 2008		August 31, 2007
	(in thousands)
Cash and cash equivalents	$	32,447	$	135,441
Working capital	$	206,985	$	320,088
Current ratio		3.0		3.1
Debt	$	367,291	$	358,952

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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. We continuously evaluate our capital budget; however, management does not foresee any significant increase in maintenance and non-discretionary capital expenditures during fiscal 2009 that would impact future liquidity or capital resources. Maintenance and non-discretionary capital expenditures have averaged approximately $6 million annually over the last three years for the refining and marketing operations and management currently projects this capital expenditure to be approximately $5 million for fiscal 2009.

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 fiscal 2008, significant uses of cash are summarized in the following table:

	Fiscal Year Ended August 31, 2008
	(in millions)
Significant uses of cash
Investing activities:
Property, plant and equipment
Residual upgrade	$	(8.1	)
Deltak boiler replacement		(3.3	)
New storm water / light naptha tank		(3.3	)
USEPA ultra low sulfur gasoline compliance		(3.0	)
Miscellaneous equipment replacement		(2.9	)
Computers and equipment upgrade		(2.7	)
Purchase property		(2.6	)
Waste water treatment plant upgrade		(2.1	)
Retail store rehab		(1.8	)
Retail petroleum upgrade		(1.8	)
Environmental upgrade		(1.7	)
Heavy crude processing upgrade		(.4	)
Other general capital items (tank repairs, refinery piping projects, etc.)		(8.4	)
Total property, plant and equipment	$	(42.1	)
Proceeds from sale of marketable securities	$	75.8
Refinery turnaround costs	$	(10.1	)
Net cash provided by investing activities	$	23.6
Financing activities:
Distribution from Parent under the Tax Sharing Agreement	$	2.6
Principal reductions of long-term debt		(1.3	)
Net borrowings on revolving credit facility		9.0
Dividends to stockholder		(35.3	)
Net cash (used in) financing activities	$	(25.0	)
Working capital items:
Accounts receivable increase	$	(44.3	)
Income taxes payable decrease		(36.5	)
Refundable income taxes increase		(35.9	)
Accounts payable decrease		(22.9	)
Prepaid expense increase		(4.3	)
Increase in inventory		71.3
Accrued liabilities increase		.7
Other		1.1
Cash (used in) working capital items	$	(70.8	)

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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.

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. In November, 2008, we increased the limit of our revolving credit facility with PNC Bank, N.A., as Agent Bank (the “Revolving Credit Facility”) from $100,000,000 to $130,000,000. This amendment provides the Company greater flexibility relative to its cash flow requirements in light of market fluctuations, particularly involving crude oil prices and seasonal business cycles. The improved liquidity resulting from the expansion of the facility will assist the Company in meeting its working capital, ongoing capital expenditure needs and for general corporate purposes. The term of the agreement does not change. It will expire on November 27, 2011. The amendment to the Revolving Credit Facility affected certain terms and provisions thereof, including an increase in the interest rate and a modification to the Net Worth covenant. Under the new amendment to the Revolving Credit Facility effective November 21, 2008, the applicable margin will continue to be calculated on the average unused availability as follows: (a) for base rate borrowing, at the greater of the Agent Bank’s prime rate plus an applicable margin of .5% to 0%; the Federal Funds Open Rate plus .5%; or the Daily LIBOR rate plus 1%; (b) for euro-rate based borrowings, at the LIBOR Rate plus an applicable margin of 2.35% to 1.75%. Prior to this amendment of the Revolving Credit Facility, commencing May 7, 2007, interest was calculated as follows: (a) for base rate borrowings, at the greater of the Agent Bank’s prime rate less an applicable margin of .5% to 0% or the federal funds rate plus 1%; (b) for euro-rate borrowings, at the LIBOR rate plus an applicable margin of 1.25% to 1.75%. For the period commencing November 2006 when the Revolving Credit Facility was amended and extended, until May 7, 2007, interest was calculated as follows: (a) for base rate borrowings, at the greater of the Agent Bank’s prime rate plus an applicable margin of .25% to .75% or federal funds rate plus 1%; (b) for euro-rate borrowings, at the LIBOR rate plus an applicable margin of 1.75% to 3%. The applicable margin varies with our facility leverage ratio calculation. The Agent Bank’s prime rate at August 31, 2008 was 5.00%.

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.

We had outstanding letters of credit of $432,000 as of August 31, 2008. As of August 31, 2008, outstanding borrowings under the Revolving Credit Facility were $9,000,000 resulting in net availability of $90,568,000.

The following is a summary of our significant contractual cash obligations for the periods indicated that existed as of August 31, 2008 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	$	364,226	$	10,409	$	1,769	$	350,678	$	1,370
Operating leases		90,833		10,604		18,795		15,420		46,014
Interest on 10.5% Senior Notes due 8/15/2012 (a) (b)		145,490		36,750		73,500		35,240		—
Total contractual cash obligations (c)	$	600,549	$	57,763	$	94,064	$	401,338	$	47,384

(a) Amounts do not reflect amortization of debt discount of $2.7 million, debt premium of $.8 million and debt premium of $5.3 million, respectively, on $200 million of Senior Unsecured Notes issued August 6, 2004, $25 million of Senior Unsecured Notes issued February 15, 2005, and $125 million of Senior Unsecured

28

Notes issued May 4, 2007, respectively, which will be amortized over the life of the notes using the interest method (see Note 9 to Consolidated Financial Statements, Item 8).

(b) Does not include interest on the Revolving Credit Facility. The applicable margin varies with our facility leverage ratio calculation. Under the amended Revolving Credit Facility, for base rate borrowings, interest is calculated at the greater of the Agent Bank’s prime rate less an applicable margin of 0% to .5% or federal funds rate plus 1%. For Euro-Rate borrowings, interest is calculated at the LIBOR rate plus an applicable margin of 1.25% to 1.75%. The applicable margin varies with our facility’s average unused availability calculation (see Notes 8 and 18 to Consolidated Financial Statements, Item 8).

(c) Pension obligations are not included since payments are not known.

Although we are not aware of any pending circumstances which would change our expectations, 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 June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109” (“FIN No. 48”). FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with Statement No. 109, “Accounting for Income Taxes.” FIN No. 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement classification, accounting for interest and penalties and accounting in interim periods and disclosure. The Company adopted FIN No. 48 effective September 1, 2007, with no cumulative effect adjustment required, and the adoption had no effect on the Company’s consolidated financial position, results of operations and cash flows.

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The Company’s results of operations are included in the consolidated Federal tax return of the Parent and separately in various state jurisdictions. The Company is open to examination for tax years 2002 through 2007. There is currently one state tax audit in process and there are no unsettled income tax assessments outstanding. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax positions as a component of interest expense, net and other, net, respectively. No amounts of such expenses are currently accrued.

In September 2006, the FASB issued Staff Position No. AUG AIR-1, “Accounting for Planned Major Maintenance Activities” (“Position No. AUG AIR-1”). Position No. AUG AIR-1 prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities. The provisions of Position No. AUG AIR-1 were effective for fiscal years beginning after December 15, 2006. The adoption of AUG AIR-1 by the Company effective September 1, 2007 had no impact on the Company’s consolidated financial position, results of operations or cash flows.

In December 2007, the FASB issued Statement No. 141 (revised 2007), “Business Combinations” (“Statement 141R”), which replaces Statement No. 141. Statement 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non controlling interest in the acquiree and the goodwill acquired. Statement 141R also establishes disclosure requirements which will enable users to evaluate the nature and financial effects of the business combination. Statement 141R is effective for fiscal years beginning after December 15, 2008. The Company is currently evaluating the potential impact, if any, of the adoption of Statement 141R on the Company’s consolidated financial position, results of operations and cash flows.

In September 2006, the FASB issued Statement No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 provides guidance for using fair value to measure assets and liabilities. This statement clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing the asset or liability. SFAS No. 157 establishes a fair value hierarchy, giving the highest priority to quoted prices in active markets and the lowest priority to unobservable data. SFAS No. 157 applies whenever other standards require assets or liabilities to be measured at fair value. This statement is effective in fiscal years beginning after November 15, 2007. In February 2008, the FASB provided a one year deferral for the implementation of Statement 157 for non-financial assets and liabilities recognized or disclosed at fair value on a non-recurring basis. The Company believes that the adoption of SFAS No. 157 will not have a significant effect on the Company’s consolidated financial statements.

In February 2007, FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS No. 159”). SFAS No. 159 provides a “Fair Value Option” under which a company may irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial assets and liabilities. SFAS No. 159 will be available on contract-by-contract basis with changes in fair values recognized in earnings as those changes occur. SFAS No. 159 is effective for fiscal years after November 15, 2007. SFAS No. 159 also allows early adoption provided the entity also adopts the requirements of SFAS No. 157. The Company does not believe the adoption of SFAS No. 159 will have a material impact, if any, on its consolidated financial statements.

In March 2008, the FASB issued FSAB Statement No. 161 “Disclosure about Derivative Instruments and Hedging Activities-an amendment of FASB statements No. 133 ( “FAS 161”) which provides revised guidance for enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under FAS 133, and how derivative instruments and the related hedged items affect and entity’s financial position, financial performance and cash flows. FAS 161 is effective for the Company’s fiscal and interim periods beginning after November 15, 2008. The Company does not currently have any derivative instruments and is not involved in any hedging activities.

In December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an Amendment of Accounting Research Bulletin No. 51” (“Statement 160”), which establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than

30

the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. Statement 160 also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interest of the parent and the interests of the noncontrolling owner. Statement 160 is effective for fiscal years beginning after December 15, 2008. The Company is currently evaluating the potential impact, if any, of the adoption of Statement 160 on the Company’s consolidated financial position, results of operations and cash flows.

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 exposure by managing inventory levels and by selectively applying hedging activities. At August 31, 2008, the Company had no future positions.

At August 31, 2008, we were exposed to the risk of market price declines with respect to a substantial portion of our crude oil and refined product inventories.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm	33
Consolidated Financial Statements:
Balance Sheets	34
Statements of Operations	35
Statements of Comprehensive Income	36
Statements of Stockholder’s Equity	37
Statements of Cash Flows	38
Notes to Consolidated Financial Statements	39 thru 63

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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, 2008 and 2007, and the related consolidated statements of operations, comprehensive (loss) income, stockholder’s equity and cash flows for each of the three years in the period ended August 31, 2008. 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 consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, 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, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended August 31, 2008, in conformity with accounting principles generally accepted in the United States of America.

/s/ BDO Seidman, LLP

New York, New York

November 14, 2008

33

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	August 31,
	2008			2007
Assets
Current:
Cash and cash equivalents	$	32,447		$	135,441
Marketable securities		—			75,854
Accounts receivable, net		124,022			79,703
Refundable income taxes		35,913			—
Inventories		94,708			166,024
Prepaid expenses and other assets		21,304			16,957
Total current assets		308,394			473,979
Property, plant and equipment, net		244,011			217,837
Investment in affiliated company		6,389			3,510
Deferred financing costs, net		4,544			5,635
Goodwill		1,349			1,349
Tradename		10,500			10,500
Amortizable intangible assets, net		1,713			2,191
Deferred turnaround costs and other assets, net		13,120			9,252
Deferred income taxes		11,773			7,313
	$	601,793		$	731,566
Liabilities and Stockholder’s Equity
Current:
Revolving credit facility	$	9,000		$	—
Current installments of long-term debt		2,184			1,808
Accounts payable		46,912			69,806
Accrued liabilities		16,377			15,643
Income taxes payable		—			36,514
Sales, use and fuel taxes payable		21,454			20,725
Deferred income taxes		2,891			7,218
Amounts due to affiliated companies, net		2,591			2,177
Total current liabilities		101,409			153,891
Long term debt: less current installments		356,107			357,144
Deferred gain on settlement of pension plan obligations		55			270
Deferred retirement benefits		86,146			77,305
Other noncurrent liabilities		18			46
Total liabilities		543,735			588,656
Commitments and contingencies
Stockholder’s equity:
Common stock; $.10 par value per share—shares authorized 100; issued and outstanding 100		—			—
Additional paid-in capital		24,665			22,031
Retained earnings		56,338			141,555
Accumulated other comprehensive loss		(22,945	)		(20,676	)
Total stockholder’s equity		58,058			142,910
	$	601,793		$	731,566

See accompanying notes to consolidated financial statements.

34

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

	Year Ended August 31,
	2008			2007			2006
Net sales	$	3,208,012		$	2,405,063		$	2,437,052
Costs of goods sold		3,099,120			2,085,776			2,163,743
Gross profit		108,892			319,287			273,309
Expenses:
Selling, general and administrative expenses		145,770			136,474			129,522
Depreciation and amortization expenses		15,717			14,419			13,190
Total operating expenses		161,487			150,893			142,712
Operating (loss) income		(52,595	)		168,394			130,597
Other income (expense):
Interest expense, net		(31,968	)		(23,794	)		(23,895	)
Other, net		(3,706	)		(825	)		(429	)
Equity in net earnings of affiliate		2,879			1,611			2,190
		(32,795	)		(23,008	)		(22,134	)
(Loss) income before income tax (benefit) expense		(85,390	)		145,386			108,463
Income tax (benefit) expense:
Current		(28,274	)		59,705			41,449
Deferred		(7,211	)		(25	)		3,000
		(35,485	)		59,680			44,449
Net (loss) income	$	(49,905	)	$	85,706		$	64,014

See accompanying notes to consolidated financial statements.

35

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

	Year Ended August 31,
	2008			2007		2006
Net (loss) income	$	(49,905	)	$	85,706	$	64,014
Other comprehensive (loss) income, net of taxes:
Minimum pension liability		—			1,579		5,127
Unrecognized post retirement costs		(2,269	)		—		—
Other comprehensive (loss) income		(2,269	)		1,579		5,127
Total comprehensive (loss) income	$	(52,174	)	$	87,285	$	69,141

See accompanying notes to consolidated financial statements.

36

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

(in thousands, except share data)

	Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Stockholder’s Equity
	Shares	Amount
Balance at August 31, 2005	100	$	—	$	16,648		$	40,931		$	(6,706	)	$	50,873
Dividend to stockholder	—		—		—			(25,757	)		—			(25,757	)
Other comprehensive income	—		—		—			—			5,127			5,127
Distribution to Parent under the Tax Sharing Agreement	—		—		(2,404	)		—			—			(2,404	)
Net income	—		—		—			64,014			—			64,014
Balance at August 31, 2006	100		—		14,244			79,188			(1,579	)		91,853
Dividends to stockholder	—		—		—			(23,339	)		—			(23,339	)
Other comprehensive income	—		—		—			—			1,579			1,579
Distribution from Parent under the Tax Sharing Agreement	—		—		7,787			—			—			7,787
Adjustment to initially apply Statement 158, net of taxes	—		—		—			—			(20,676	)		(20,676	)
Net income	—		—		—			85,706			—			85,706
Balance at August 31, 2007	100		—		22,031			141,555			(20,676	)		142,910
Dividends to stockholder	—		—		—			(35,312	)		—			(35,312	)
Other comprehensive loss	—		—		—			—			(2,269	)		(2,269	)
Distribution from Parent under the Tax Sharing Agreement	—		—		2,634			—			—			2,634
Net loss	—		—		—			(49,905	)		—			(49,905	)
Balance at August 31, 2008	100	$	—	$	24,665		$	56,338		$	(22,945	)	$	58,058

See accompanying notes to consolidated financial statements.

37

UNITED REFINING COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended August 31,
	2008			2007			2006
Cash flows from operating activities:
Net (loss) income	$	(49,905	)	$	85,706		$	64,014
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		22,165			18,044			17,462
Equity in net earnings of affiliate		(2,879	)		(1,611	)		(2,190	)
Deferred income taxes		(7,211	)		(25	)		3,000
Loss on asset dispositions		1,967			1,932			1,469
Cash used in working capital items		(70,794	)		(25,195	)		(22,356	)
Other, net		(1	)		(2	)		24
Change in operating assets and liabilities:
Other assets		(28	)		61			—
Deferred retirement benefits		4,994			8,059			3,313
Other noncurrent liabilities		(28	)		(555	)		(657	)
Total adjustments		(51,815	)		708			65
Net cash (used in) provided by operating activities		(101,720	)		86,414			64,079
Cash flows from investing activities:
Additions to property, plant and equipment		(42,143	)		(43,590	)		(21,719	)
Marketable securities purchased		—			(75,854	)		—
Proceeds from sale of marketable securities		75,854			—			—
Additions to turnaround costs		(10,077	)		(6,023	)		(980	)
Dividends received		—			1,000			1,000
Proceeds from asset dispositions		9			11			1,371
Net cash provided by (used in) investing activities		23,643			(124,456	)		(20,328	)
Cash flows from financing activities:
Distribution from (to) Parent under the Tax Sharing Agreement		2,634			7,787			(2,404	)
Proceeds from issuance of long-term debt		178			131,956			1,140
Principal reductions of long-term debt		(1,309	)		(947	)		(665	)
Net borrowings on revolving credit facility		9,000			—			—
Dividends to stockholder		(35,312	)		(23,339	)		(25,757	)
Deferred financing costs		(108	)		(1,171	)		(72	)
Net cash (used in) provided by financing activities		(24,917	)		114,286			(27,758	)
Net (decrease) increase in cash and cash equivalents		(102,994	)		76,244			15,993
Cash and cash equivalents, beginning of year		135,441			59,197			43,204
Cash and cash equivalents, end of year	$	32,447		$	135,441		$	59,197
Cash (used in) provided by working capital items:
Accounts receivable, net	$	(44,319	)	$	5,333		$	(15,455	)
Refundable income taxes		(35,913	)		—			—
Inventories		71,316			(35,391	)		(57,497	)
Prepaid expenses and other assets		(4,347	)		4,852			(4,288	)
Accounts payable		(22,894	)		(14,463	)		34,346
Accrued liabilities		734			(4,249	)		3,065
Amounts due affiliated companies		414			3,060			(1,594	)
Income taxes payable		(36,514	)		15,082			19,464
Sales, use and fuel taxes payable		729			581			(397	)
Total change	$	(70,794	)	$	(25,195	)	$	(22,356	)
Cash paid during the period for:
Interest	$	37,582		$	30,758		$	24,560
Income taxes	$	42,320		$	34,438		$	21,851
Non-cash investing and financing activities:
Property additions and capital leases	$	1,245		$	24		$	167

See accompanying notes to consolidated financial statements.

38

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 Corp., 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.

Marketable Securities

The Company considers all investment securities not classified as cash or cash equivalents to be marketable securities and classifies these investments as available-for-sale in accordance with the provisions of Statement of Financial Accounting Standard No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“Statement 115”). These securities are carried at fair value with the unrealized gain or loss, net of tax, reported in Other Comprehensive Income (Loss). The Company classifies these securities as current assets as they are used to support its current operations. The fair value of marketable securities is determined by available market prices.

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 option 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.

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, 2008, 2007, and 2006, the Company realized net (losses) / gains from its trading activities of $(3,518,000), $4,114,000, and $(215,000), respectively, which is included as an increase or reduction to 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, 2008 and 2007, the Company had no open future positions that will expire in future periods. The Company’s net investment in open future positions at August 31, 2008 amounted to $0.

39

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

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. The costs of funds used to finance projects during construction are capitalized. 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

Leases

The Company leases land, buildings, and equipment under long-term operating and capital leases and accounts for the leases in accordance with Financial Account Standard No. 13, “Accounting for Leases”. Lease expense for operating leases is recognized on a straight-line basis over the expected lease term. The lease term begins on the date the Company has the right to control the use of the leased property pursuant to the terms of the lease.

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 2 to 10 years. As of August 31, 2008 and 2007, deferred turnaround costs included in deferred turnaround costs and other assets, amounted to $12,079,000 and $8,241,000, net of accumulated amortization of $9,368,000 and $7,023,000, respectively. Amortization expense included in costs of goods sold for the fiscal years ended August 31, 2008, 2007 and 2006 amounted to $6,239,000, $2,757,000, and $3,058,000, 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.

40

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Revenue Recognition

Revenues for products sold by the wholesale segment are recorded upon delivery of the products to our customers, at which time title to those products is transferred and when payment has either been received or collection is reasonably assured. At no point do we recognize revenue from the sale of products prior to the transfer of its title. Title to product is transferred to the customer at the shipping point, under pre-determined contracts for sale at agreed upon or posted prices to customers of which collectibility is reasonably assured. Revenues for products sold by the retail segment are recognized immediately upon sale to the customer. Included in Net Sales and Costs of Goods Sold are consumer excise taxes of $213,829,000, $206,885,000 and $192,552,000 for the years ended August 31, 2008, 2007 and 2006, respectively.

Product Shipping and Handling Costs

Costs incurred for shipping and handling of products are included in costs of goods sold in the Consolidated Statements of Operations.

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 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 and Pension 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.

41

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Allowance for Doubtful Accounts

The Company records an allowance for doubtful accounts based on specifically identified amounts that we believe to be uncollectible. The Company also recorded additional allowances based on historical collection experience and its assessment of the general financial conditions affecting the 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 Risks

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.

The Company purchased approximately 13% of its cost of goods sold from one vendor during the year ended August 31, 2008 and approximately 26% from two vendors during the year ended August 31, 2007. The Company is not obligated to purchase from these vendors, and, if necessary, there are other vendors from which the Company can purchase crude oil and other petroleum based products. The Company had approximately $14,451,000 and $16,213,000 in accounts payable for the years ended August 31, 2008 and 2007 to these respective vendors.

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 method. 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.

42

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 loss includes charges and credits to equity that is not the result of transactions with the shareholder. Included in other comprehensive loss for the Company is a charge for unrecognized post retirement costs, which is net of taxes in accordance with Statement 158.

Recent Accounting Pronouncements

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109” (“FIN No. 48”). FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with Statement No. 109, “Accounting for Income Taxes.” FIN No. 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement classification, accounting for interest and penalties and accounting in interim periods and disclosure. The Company adopted FIN No. 48 effective September 1, 2007, with no cumulative effect adjustment required, and the adoption had no effect on the Company’s consolidated financial position, results of operations and cash flows.

The Company’s results of operations are included in the consolidated Federal tax return of the Parent and separately in various state jurisdictions. The Company is open to examination for tax years 2002 through 2007. There is currently one state tax audit in process and there are no unsettled income tax assessments outstanding. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax positions as a component of interest expense, net and other, net, respectively. No amounts of such expenses are currently accrued.

In September 2006, the FASB issued Staff Position No. AUG AIR-1, “Accounting for Planned Major Maintenance Activities” (“Position No. AUG AIR-1”). Position No. AUG AIR-1 prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities. The provisions of Position No. AUG AIR-1 were effective for fiscal years beginning after December 15, 2006. The adoption of AUG AIR-1 by the Company effective September 1, 2007 had no impact on the Company’s consolidated financial position, results of operations or cash flows.

In December 2007, the FASB issued Statement No. 141 (revised 2007), “Business Combinations” (“Statement 141R”), which replaces Statement 141. Statement 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non controlling interest in the acquiree and the goodwill acquired. Statement 141R also establishes disclosure requirements which will enable users to evaluate the nature and financial effects of the business combination. Statement 141R is effective for fiscal years beginning after December 15, 2008. The Company is currently evaluating the potential impact, if any, of the adoption of Statement 141R on the Company’s consolidated financial position, results of operations and cash flows.

43

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

In September 2006, the FASB issued Statement No. 157, Fair Value Measurements (“Statement 157”). Statement 157 provides guidance for using fair value to measure assets and liabilities. This statement clarifies the principle that fair value should be based on the assumptions that market participants would use when pricing the asset or liability. Statement 157 establishes a fair value hierarchy, giving the highest priority to quoted prices in active markets and the lowest priority to unobservable data. Statement 157 applies whenever other standards require assets or liabilities to be measured at fair value. This statement is effective in fiscal years beginning after November 15, 2007. In February 2008, the FASB provided a one year deferral for the implementation of Statement 157 for non-financial assets and liabilities recognized or disclosed at fair value on a non-recurring basis. The Company believes that the adoption of Statement 157 will not have a significant effect on the Company’s consolidated financial statements.

In February 2007, the FASB issued Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“Statement 159”). Statement 159 provides a “Fair Value Option” under which a company may irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial assets and liabilities. Statement 159 will be available on contract-by-contract basis with changes in fair values recognized in earnings as those changes occur. Statement 159 is effective for fiscal years after November 15, 2007. Statement 159 also allows early adoption provided the entity also adopts the requirements of Statement 157. The Company does not believe the adoption of Statement 159 will have a material impact, if any, on its consolidated financial statements.

In December 2007, the FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an Amendment of Accounting Research Bulletin No. 51” (“Statement 160”), which establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. Statement 160 also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interest of the parent and the interests of the noncontrolling owner. Statement 160 is effective for fiscal years beginning after December 15, 2008. The Company is currently evaluating the potential impact, if any, of the adoption of Statement 160 on the Company’s consolidated financial position, results of operations and cash flows.

In March 2008, the FASB issued FSAB Statement No. 161 “Disclosure about Derivative Instruments and Hedging Activities-an amendment of FASB statements No. 133 ( “Statement 161”) which provides revised guidance for enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under Statement 133, and how derivative instruments and the related hedged items affect and entity’s financial position, financial performance and cash flows. Statement 161 is effective for the Company’s fiscal and interim periods beginning after November 15, 2008. The Company does not currently have any derivative instruments and is not involved in any hedging activities.

Reclassification

Certain amounts in the prior year’s consolidated financial statements have been reclassified to conform with the presentation in the current year.

44

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

2. Marketable Securities

The following is a summary of marketable securities classified as “available-for-sale” securities:

	August 31,
	2008		2007
	(in thousands)
Debt securities:
Cost	$	—	$	75,854
Gross unrealized gains (losses)		—		—
Estimated fair value	$	—	$	75,854

The estimated fair value of these securities is based on published closing prices of securities at August 31, 2007.

3. Accounts Receivable, Net

As of August 31, 2008 and 2007, accounts receivable were net of allowance for doubtful accounts of $2,892,000 and $840,000, respectively.

4. Inventories

Inventories consist of the following:

	August 31,
	2008		2007
	(in thousands)
Crude Oil	$	17,273	$	59,566
Petroleum Products		39,836		70,198
Total @ LIFO		57,109		129,764
Merchandise		18,350		18,127
Supplies		19,249		18,133
Total @ FIFO		37,599		36,260
Total Inventory	$	94,708	$	166,024

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.

As of August 31, 2008 and 2007, the replacement cost of LIFO inventories exceeded their LIFO carrying values by approximately $153,347,000 and $63,209,000, respectively. Due to anticipated fluctuations in inventory levels and the many factors which enter into the LIFO calculation which are beyond management’s control, it is the policy of the Company to record the LIFO inventory adjustment only at fiscal year-end. These adjustments resulted in a charge of $90,138,000, net of a gain from a LIFO layer liquidation of $10,899,000 for the fiscal year ended August 31, 2008 and income of $(9,910,000) for the fiscal year ended August 31, 2007.

45

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

5. Property, Plant and Equipment

Property, plant and equipment is summarized as follows:

	August 31,
	2008		2007
	(in thousands)
Refinery equipment, including construction-in-progress	$	278,556	$	244,549
Marketing (i.e. retail outlets)		100,088		95,809
Transportation		12,538		12,329
		391,182		352,687
Less: Accumulated depreciation		147,171		134,850
	$	244,011	$	217,837

6. Goodwill and Intangible Assets

As of August 31, 2008 and 2007, the Company’s intangible assets and goodwill, included in the Company’s retail segment, were as follows:

	Weighted Average Remaining Life	August 31, 2008				August 31, 2007
		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
	(in thousands)
Amortizable intangible assets:
Vendor contracts	—	$	2,600	$	2,476	$	2,600	$	2,105
Deed restrictions	16 yrs.		800		213		800		181
Leasehold covenants	15 yrs.		1,490		488		1,490		413
		$	4,890	$	3,177	$	4,890	$	2,699
Non-amortizable assets:
Tradename		$	10,500	$	—	$	10,500	$	—
Goodwill		$	1,349	$	—	$	1,349	$	—

Amortization expense for the fiscal years ended August 31, 2008, 2007, and 2006 amounted to $478,000, $505,000, and $588,000, respectively.

Amortization expense for intangible assets subject to amortization for each of the years in the five-year period ending August 31, 2013 is estimated to be $230,000 in 2009, $106,000 in 2010, $106,000 in 2011, $106,000 in 2012, and $106,000 in 2013.

7. Accrued Liabilities

Accrued liabilities include the following:

	August 31,
	2008		2007
	(in thousands)
Interest	$	1,645	$	1,518
Payrolls and benefits		12,654		11,718
Other		2,078		2,407
	$	16,377	$	15,643

46

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

8. 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, 2008 and 2007, capitalized lease obligations, included in long-term debt, amounted to $1,464,000 and $1,621,000, respectively, inclusive of current portion of $182,000 and $157,000, respectively. The related assets (retail gas stations and convenience stores) as of August 31, 2008 and 2007 amounted to $1,104,000 and $1,273,000, net of accumulated amortization of $1,110,000 and $941,000, respectively. Lease amortization amounting to $169,000, $168,000, and $168,000 for the years ended August 31, 2008, 2007, and 2006, respectively, is included in depreciation and amortization expense.

Future minimum lease payments as of August 31, 2008 are summarized as follows:

Year ended August 31,	Capital Leases		Operating Leases
	(in thousands)
2009	$	341	$	10,604
2010		341		9,665
2011		275		9,130
2012		195		8,516
2013		155		6,904
Thereafter		1,131		46,014
Total minimum lease payments		2,438		90,833
Less: Minimum sublease rents		—		209
Net minimum sublease payments		2,438	$	90,624
Less: Amount representing interest		974
Present value of net minimum lease payments	$	1,464

Net rent expense for operating leases amounted to $11,564,000, $11,094,000, and $10,876,000 for the years ended August 31, 2008, 2007 and 2006, respectively.

9. Credit Facility

In November 2006, the Company extended the term of its $100,000,000 Revolving Credit Facility from May 9, 2007 to November 27, 2011, and amended certain terms and provisions thereof, including a reduction in the interest rate and a modification of certain covenants. Under the amended Revolving Credit Facility, interest is calculated as follows: (a) for base rate borrowings, at the greater of the Agent Bank’s prime rate less an applicable margin of .5% to 0% or federal funds rate plus 1%; (b) for euro-rate borrowings, at the LIBOR rate plus an applicable margin of 1.25% to 1.75%. The applicable margin will vary depending on a formula calculating the Company’s average unused availability under the facility. The Revolving Credit Facility is secured primarily by certain cash accounts, accounts receivable and inventory which amounted to $291,000,000 as of August 31, 2008. Until maturity, the Company may borrow on a borrowing base formula as set forth in the facility.

As of August 31, 2008, $9,000,000 of Base-Rate borrowings and no Euro-Rate borrowings were outstanding under the agreement. As of August 31, 2007, no Base-Rate borrowings or Euro-Rate borrowings were outstanding under the agreement. $432,000 of letters of credit were outstanding under the agreement at

47

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

August 31, 2008 and 2007, respectively. The weighted average interest rate for Base-Rate borrowing for the years ended August 31, 2008 and 2007 was 4.7% and 7.8%, respectively. The weighted average interest rate for Euro-Rate borrowings was 0% for the fiscal years ended August 31, 2008 and 2007, respectively. The Company pays a commitment fee of 3/8% per annum on the unused balance of the facility. All bank related charges are included in Other, net in the Consolidated Statements of Operations.

10. Long-Term Debt

During May 2007, the Company sold an additional $125,000,000 of 10 ¹ /2% Senior Unsecured Notes (the “Senior Unsecured Notes”) due 2012 for $130,312,500, resulting in a debt premium of $5,312,500 which will be amortized over the life of the notes using the interest method. These additional notes were issued under an indenture, dated as of August 6, 2004, pursuant to which $200,000,000 of notes of the same series were issued in August 2004. The net proceeds of the offering were used for capital expenditures and general corporate purposes.

During February 2005, the Company sold an additional $25,000,000 of 10 ¹/2% Senior Unsecured Notes due 2012 for $25,750,000, resulting in a debt premium of $750,000 which is being amortized over the life of the notes using the interest method. These additional notes were issued under an indenture, dated as of August 6, 2004, pursuant to which $200,000,000 of notes of the same series were issued in August 2004. The net proceeds of the offering were used to pay down a portion of the Company’s outstanding indebtedness under its existing revolving credit facility.

During August 2004, the Company sold $200,000,000 of 10 ¹/2% Senior Unsecured Notes due 2012 for $197,342,000, resulting in debt discount of $2,658,000 which is being amortized over the life of the notes using the interest method.

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 9 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, 2008 the Company is in compliance with covenants under the facility and the Indenture.

A summary of long-term debt is as follows:

	August 31,
	2008		2007
	(in thousands)
Long-term debt:
10.50% Senior Unsecured Notes due August 15, 2012	$	353,065	$	353,840
Other long-term debt		5,226		5,112
		358,291		358,952
Less: Current installments of long-term debt, net of unamortized premium		2,184		1,808
Total long-term debt, less current installments	$	356,107	$	357,144

48

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The principal amount of long-term debt matures as follows:

Year ended August 31,
	(in thousands)
2009	$	1,409
2010		1,176
2011		593
2012		350,508
2013		170
Thereafter		1,370
	$	355,226
Unamortized premium, net		3,065
Total	$	358,291

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

	August 31,
	2008		2007
	(in thousands)
Beginning balance	$	8,444	$	8,444
Current year additions		108		1,174
Total financing costs		8,552		9,618
Less:
Write-off of fully amortized deferred financing costs		—		1,174
Accumulated amortization		4,008		2,809
	$	4,544	$	5,635

Amortization expense for the fiscal years ended August 31, 2008, 2007 and 2006 amounted to $1,199,000, $1,182,000, and $1,198,000, respectively.

11. 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, and any additional amounts for strategic financial purposes or to meet other goals relating to plan funded status. The assets of the plans are invested in an investment trust fund and consist of interest-bearing cash, separately managed accounts 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 paid by the Company from general assets.

49

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Net periodic pension cost and post-retirement healthcare benefit cost consist of the following components for the years ended August 31, 2008, 2007, and 2006:

	Pension Benefits									Other Post-Retirement Benefits
	2008			2007			2006			2008		2007		2006
	(in thousands)
Service cost	$	2,639		$	2,611		$	2,938		$	2,588	$	2,275	$	2,376
Interest cost on benefit obligation		4,542			4,187			3,936			4,085		3,398		2,746
Expected return on plan assets		(4,786	)		(4,240	)		(3,639	)		—		—		—
Amortization of transition obligation		65			140			140			597		597		597
Amortization and deferrals		360			762			1,741			1,299		975		947
Net periodic benefit cost	$	2,820		$	3,460		$	5,116		$	8,569	$	7,245	$	6,666

The Company adopted Statement 158 effective August 31, 2007. Statement 158 requires an employer to recognize the funded status of each of its defined pension and postretirement benefit plans as a net asset or liability in its statement of financial position with an offsetting amount in accumulated other comprehensive income, and to recognize changes in that funded status in the year in which changes occur through comprehensive income. The provisions of Statement 158 are to be applied on a prospective basis; therefore, prior periods presented are not restated. The incremental change due to the adoption of Statement 158 at August 31, 2007 is as follows:

Pension Benefits	Balance Prior to Statement 158 Adjustments			Statement 158 Adjustments			Balance After Statement 158 Adjustments
	(in thousands)
Intangible pension asset	$	(576	)	$	576		$	—
Accrued and minimum pension liability	$	6,643		$	8,825		$	15,468
Accumulated other comprehensive income, pre-tax	$	—		$	(8,825	)	$	(8,825	)
Deferred tax assets		—			3,618			3,618
Accumulated other comprehensive income, net of tax	$	—		$	(5,207	)	$	(5,207	)
Other Post-Retirement Benefits
Accrued and minimum liability	$	37,609		$	26,218		$	63,827
Accumulated other comprehensive income, pre-tax	$	—		$	(26,218	)	$	(26,218	)
Deferred tax assets		—			10,749			10,749
Accumulated other comprehensive income, net of tax	$	—		$	(15,469	)	$	(15,469	)

50

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Other changes in plan assets and benefit obligation recognized in Other Comprehensive Income consist of the following for the fiscal year ending August 31, 2008 (in thousands):

	Pension Benefits				Other Post-Retirement Benefits
	2008			2007	2008			2007
Curtailment effects	$	—		N/A	$	—		N/A
Settlements		—		N/A		—		N/A
Current year actuarial (gain) / loss		8,778		N/A		(2,610	)	N/A
Amortization of actuarial gain / (loss)		(81	)	N/A		(1,300	)	N/A
Current year prior service (credit) / cost		—		N/A		—		N/A
Amortization of prior service credit / (cost)		(278	)	N/A		—		N/A
Amortization of transition asset / (obligation)		(65	)	N/A		(597	)	N/A
Total recognized in other comprehensive income	$	8,354		N/A	$	(4,507	)	N/A
Total recognized in net periodic benefit cost and other comprehensive income	$	11,173		N/A	$	4,062		N/A

The following table summarizes the change in benefit obligations and fair values of plan assets for the years ended August 31, 2008 and 2007:

	Pension Benefits						Other Post-Retirement Benefits
	2008			2007			2008			2007
	(in thousands)
Change in benefit obligation:
Benefit obligation @ beginning of year	$	71,270		$	67,822		$	63,827		$	54,739
Service cost		2,639			2,611			2,588			2,275
Interest cost		4,542			4,187			4,085			3,398
Medicare act subsidy effect		—			—			194			105
Actuarial (gains) / losses		53			(1,581	)		(2,610	)		5,448
Benefits paid		(1,962	)		(1,769	)		(2,620	)		(2,138	)
Benefit obligation @ end of year		76,542			71,270			65,464			63,827
Change in plan assets:
Fair values of plan assets @ beginning of year		55,802			45,105			—			—
Actual return on plan assets		(3,939	)		6,306			—			—
Company contributions		3,600			6,160			2,426			2,033
Benefits paid		(1,962	)		(1,769	)		(2,620	)		(2,138	)
Medicare act subsidy effect		—			—			194			105
Fair values of plan assets @ end of year		53,501			55,802			—			—
Funded status	$	23,041		$	15,468		$	65,464		$	63,827
Amounts recognized in the balance sheet consist of:
Current liability	$	—		$	—		$	2,750		$	2,400
Noncurrent liability		23,041			15,468			62,714			61,427
Net amount recognized	$	23,041		$	15,468		$	65,464		$	63,827
Note: For plans with assets less than the accumulated benefit obligation (ABO), the aggregate ABO is $65,797,000 while the aggregate asset value is $53,501,000.

51

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

Amounts recognized in Accumulated Other Comprehensive Income:

	Pension Benefits						Other Post-Retirement Benefits
	2008			2007			2008			2007
	(in thousands)
Accumulated transition obligation	$	(15,864	)	$	(71	)	$	(18,727	)	$	(3,581	)
Accumulated prior service cost		(1,308	)		(1,586	)		—			—
Accumulated net actuarial loss		(7	)		(7,168	)		(2,984	)		(22,637	)
Net amount recognized, before tax effect	$	(17,179	)	$	(8,825	)	$	(21,711	)	$	(26,218	)

The preceding table presents two measures of benefit obligations for the pension plans. Accumulated benefit obligation (ABO) generally measures the value of benefits earned to date. Projected benefit obligation (PBO) also includes the effect of assumed future compensation increases for plans in which benefits for prior service are affected by compensation changes. Each of the three pension plans, whose information is aggregated above, have asset values less that these measures. Plan funding amounts are calculated pursuant to ERISA and Internal Revenue Code rules. The postretirement benefits are not funded.

Weighted average assumptions:	Pension Benefits		Other Post-Retirement Benefits
	2008	2007	2008	2007
Discount rate	6.40% – 6.70%	6.00% – 6.30%	6.70%	6.25%
Expected return on plan assets	8.25%	8.50%
Rate of compensation increase	4.00%	3.50%

The discount rate assumptions at August 31, 2008 and 2007 were determined independently for each plan. A yield curve was produced for a universe containing the majority of U.S.-issued Aa-graded corporate bonds, all of which were non-callable (or callable with make-whole provisions), and after exclusion of the 10% of the bonds with the highest yields and the 10% with the lowest yields. For each plan, the discount rate was developed as the level equivalent rate that would produce the same present value as that using spot rates aligned with the projected benefit payments.

	Pension Benefits		Other Post-Retirement Benefits
	2008	2007	2008	2007
Discount rate	6.00% – 6.30%	5.90% – 6.05%	6.25%	6.05%
Expected return on plan assets	8.25%	8.50%	N/A	N/A
Rate of compensation increase	3.50%	3.50%	N/A	N/A
Health care cost trend rate
—Initial trend	N/A	N/A	9.00%	10.00%
—Ultimate trend	N/A	N/A	5.00%	5.00%
—Year ultimate reached	N/A	N/A	2012	2012

52

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 8% and 5% for 2008 and 9% and 5%, respectively, for 2007. The rates were assumed to decrease gradually to 5% for medical benefits until 2015 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
	(in thousands)
Effect on total of service and interest cost components	$	1,179	$	(952	)
Effect on post-retirement benefit obligation		9,379		(7,773	)

The expected return on plan assets is a long-term assumption established by considering historical and anticipated returns of the asset classes invested in by the pension plans and the allocation strategy currently in place among those classes.

The Company intends to change the expected return on asset assumption to 8.00% and the rate of compensation increased to 4% for the 2009 net periodic cost.

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

	August 31,
	2008			2007
	(in thousands)
Accrued pension benefits	$	23,041		$	15,468
Accrued other post-retirement benefits		65,464			63,827
		88,505			79,295
Current portion of above benefits, included in payrolls and benefits in accrued liabilities		(2,786	)		(2,400	)
Supplemental pension and other deferred compensation benefits		427			410
Deferred retirement benefits	$	86,146		$	77,305

The pension plans weighted-average target allocation for the year ended August 31, 2009 and strategic asset allocation matrix as of August 31, 2008 and 2007 are as follows:

	Target Allocation		Plan Assets @ 8/31
Asset Category	2008		2008	2007
Equity Securities	55 – 75	%	68%	71%
Debt Securities	25 – 35	%	31%	27%
Cash/Cash Equivalents	0 – 10	%	1%	2%
			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.

53

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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.

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.

Under Statement 158 beginning at FYE August 31, 2007, the transition obligation, prior service costs, and actuarial (gains)/losses are recognized in Accumulated Other Comprehensive Income each August 31 or any interim measurement date, while amortization of these amounts through net periodic benefit cost will occur in accordance with FAS 87 and FAS 106. The estimated amounts that will be amortized in 2009 follow:

Estimated 2009 Amortization	Pension Benefits		Other Post-Retirement Benefits
	(in thousands)
Transition obligation amortization	$	2	$	597
Prior service cost (credit) amortization		278		—
Net loss amortization		826		978
Total	$	1,106	$	1,575

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

	Pension Benefits		Other Post-Retirement Benefits
Employer Contributions			Gross		(Subsidy receipts)
	(in thousands)
FYE 8/31/2009 (expected)	$	2,485	$	2,795	$	(203	)
Expected Benefit Payments for FYE 8/31
2009	$	2,919	$	2,795	$	(203	)
2010		3,226		3,237		(226	)
2011		3,611		3,617		(256	)
2012		4,014		3,995		(290	)
2013		4,418		4,397		(326	)
2014 - 2018		28,960		28,638		(2,142	)

54

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

The pension plan contributions are deposited into a trust, 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 FASB Staff Position No. 106-2 “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003”, 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 expected subsidy reduced net periodic postretirement benefit cost by $1,045,000, as compared with the amount calculated without considering the effects of the subsidy.

The Company’s deferred gain on settlement of past pension plan obligations amounted to $55,000 and $270,000 as of August 31, 2008 and 2007, respectively, and is being amortized over 23 years. The related amortization amounted to $215,000 for each of the years ended August 31, 2008, 2007 and 2006.

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 $1,011,000, $937,000, and $1,066,000 for the years ended August 31, 2008, 2007 and 2006, respectively.

12. Income Taxes

Income tax expense (benefit) consists of:

	Year Ended August 31,
	2008			2007			2006
	(in thousands)
Federal:
Current	$	(28,379	)	$	44,752		$	30,394
Deferred		1,271			391			2,841
		(27,108	)		45,143			33,235
State:
Current		105			14,953			11,055
Deferred		(8,482	)		(416	)		159
		(8,377	)		14,537			11,214
	$	(35,485	)	$	59,680		$	44,449

55

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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

	Year Ended August 31,
	2008			2007			2006
	(in thousands)
U. S. federal income taxes (benefits) at the statutory rate	$	(29,877	)	$	50,885		$	37,962
State income taxes (benefits), net of Federal benefit		(5,443	)		9,469			7,308
Domestic production activity deduction		(169	)		(1,015	)		(1,015	)
Nondeductible expenses		564			238			261
Other		(560	)		103			(67	)
Income tax attributable to income before income tax expense	$	(35,485	)	$	59,680		$	44,449

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

	August 31,
	2008			2007
	(in thousands)
Current deferred income tax liabilities (assets):
Inventory valuation	$	4,442		$	9,642
Accounts receivable allowance		(1,206	)		(351	)
Accrued liabilities		(900	)		(2,803	)
Other		555			730
		2,891			7,218
Deferred income tax liabilities (assets):
Property, plant and equipment		34,761			52,054
Accrued liabilities		(36,060	)		(49,952	)
Federal carryforwards		(264	)		—
State net operating loss carryforwards		(9,771	)		(7,577	)
Valuation allowance		—			334
Other		(439	)		(2,172	)
		(11,773	)		(7,313	)
Net deferred income tax (asset) liability	$	(8,882	)	$	(95	)

The Company’s results of operations are included in the consolidated Federal tax return of the Parent (See Footnote 13 to Consolidated Financial Statements). The Company has a Federal net operating loss for regular tax purposes of $79,400,000, which will be carried back and fully utilized against prior year’s taxable income and, accordingly, is included in refundable income taxes at the Federal statutory rate. For state purposes, two entities have Pennsylvania net operating loss carryforwards of $87,000,000 and $47,000,000, respectively. Pennsylvania limits the amount of net operating loss carryforwards which can be used to offset Pennsylvania taxable income to the greater of $3,000,000 or 12.5% of Pennsylvania taxable income prior to the net operating loss deduction. The Company believes that the Pennsylvania net operating loss carryforwards will be utilized to offset future Pennsylvania taxable income.

For financial reporting purposes, valuation allowances of $0 and $334,000 at August 31, 2008 and 2007, respectively, were recognized for state net operating loss carryforwards not anticipated to be realized before expiration.

56

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

13. 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 marketable securities is determined by available market prices.

The fair value of long-term debt (See Footnote 10 to Consolidated Financial Statements) was determined using the fair market value of the individual debt instruments. As of August 31, 2008, the carrying amount and estimated fair value of these debt instruments approximated $358,291,000 and $333,376,000, respectively.

14. Transactions with Affiliated Companies

On December 21, 2001, the Company acquired the operations and working capital assets of Country Fair. 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 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, 2008, 2007 and 2006, $5,102,000, $5,102,000, and $5,102,000 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, 2008, 2007 and 2006, the Company billed the affiliate $1,147,000, $1,018,000, and $972,000 for management fees and overhead expenses incurred in the management and operation of the retail units which amount was deducted from expenses. As of August 31, 2008 and 2007, the Company had a receivable from the affiliate of $27,000 and $24,000, respectively, under the terms of the agreement, which is included in Amounts Due to/from Affiliated Companies, Net.

Effective June 1, 2001, the Company entered into a 50% joint venture with an unrelated entity for the marketing of asphalt products. The joint venture is accounted for using the equity method of accounting. As of July 31, 2008 the joint venture ceased operations due to the insolvency of the joint venture partner. Pursuant to the joint venture agreement, the Company is required to pay $1,600,000 to the other entity which has been recorded as other, net in the statement of operations. For the years ended August 31, 2008, 2007 and 2006, net sales to the joint venture amounted to $15,419,000, $12,596,000, and $13,019,000, respectively. As of August 31, 2008 and 2007, the Company had a (payable) receivable (to) from the joint venture of $(1,931,000) and $1,161,000, respectively, under the terms of the agreement, which is included in Amounts Due to/from Affiliated Companies, Net.

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, 2008, 2007 and 2006, the Company billed the affiliate $2,037,000, $1,976,000, and $1,725,000, 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, 2008, 2007 and 2006, net sales to the affiliate amounted to $173,190,000, $116,240,000, and $105,651,000, respectively. As of August 31, 2008 and 2007, the Company had accounts payable to the affiliate of $1,321,000 and $1,096,000, respectively, under the terms of the agreement.

57

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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, 2008, 2007 and 2006, such fees amounted to approximately $2,000,000, $2,000,000, and $2,000,000, respectively, which is included in Selling, General and Administrative Expenses.

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 the tax years ended August 31, 2008 and 2007 amounted to $2,634,000 and $7,787,000, respectively and have been recorded as a capital contribution. As of August 31, 2008 and 2007, the Company had a receivable (payable) from (to) the Parent of $634,000 and $(2,268,000), respectively, under the terms of the Tax Sharing Agreement.

During the years ended August 31, 2008, 2007 and 2006, the Company incurred $372,000 in each year as its share of occupancy expenses for our offices in New York that it shares with affiliates of the Company. Such offices are located in a building owned by John Catsimatidis.

During fiscal 2008 the Company shared certain costs with an affiliate of the Company for aircraft owned by another affiliate of the Company and incurred $180,000 as its share of such costs. For fiscal 2007 and 2006, the Company’s share of such costs was $332,000 and $390,000, respectively.

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 actions by regulatory authorities. In the opinion of management, all 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 condition or operations of the Company.

The management of the Company believes that remediation and related environmental response costs incurred during the normal course of business, including contractual obligations as well as activities required under applicable law and regulation, will not have a material adverse effect on its consolidated financial condition or operations.

In addition to the foregoing proceedings, the Company and its subsidiaries are parties to various legal proceedings that arise in the ordinary course of their respective business operations. 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 unfavorable dispositions would not have a material adverse effect on the consolidated financial position or results of operations of the Company.

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.

58

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

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 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,
	2008			2007		2006
	(in thousands)
Net Sales
Retail	$	1,549,555		$	1,191,590	$	1,137,077
Wholesale		1,658,457			1,213,473		1,299,975
	$	3,208,012		$	2,405,063	$	2,437,052
Intersegment Sales
Wholesale	$	829,577		$	546,981	$	503,414
Operating Income (Loss)
Retail	$	(1,215	)	$	5,551	$	(1,551	)
Wholesale		(51,380	)		162,843		132,148
	$	(52,595	)	$	168,394	$	130,597
Total Assets
Retail	$	179,119		$	158,164	$	143,881
Wholesale		422,674			573,402		372,890
	$	601,793		$	731,566	$	516,771
Depreciation and Amortization
Retail	$	5,044		$	4,609	$	4,320
Wholesale		10,673			9,810		8,870
	$	15,717		$	14,419	$	13,190
Capital Expenditures (including non-cash portion)
Retail	$	8,359		$	7,783	$	5,161
Wholesale		35,029			35,831		16,725
	$	43,388		$	43,614	$	21,886

17. Subsidiary Guarantors

Certain of United Refining Company’s (the “issuer”) subsidiaries function as guarantors under the terms of the $350,000,000 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 (see Footnote 10 to Consolidated Financial Statements). Financial information for the Company’s wholly-owned subsidiary guarantors is as follows:

59

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING BALANCE SHEETS

(in thousands)

	August 31, 2008												August 31, 2007
	Issuer			Guarantors			Eliminations			Consolidated			Issuer			Guarantors			Eliminations			Consolidated
Assets
Current:
Cash and cash equivalents	$	11,358		$	21,089		$	—		$	32,447		$	123,858		$	11,583		$	—		$	135,441
Marketable securities		—			—			—			—			75,854			—			—			75,854
Accounts receivable, net		75,524			48,498			—			124,022			49,577			30,126			—			79,703
Refundable income taxes		34,530			1,383			—			35,913
Inventories		64,614			30,094			—			94,708			139,382			26,642			—			166,024
Prepaid expenses and other assets		16,338			4,966			—			21,304			12,660			4,297			—			16,957
Intercompany		163,202			17,001			(180,203	)		—			135,343			17,374			(152,717	)		—
Total current assets		365,566			123,031			(180,203	)		308,394			536,674			90,022			(152,717	)		473,979
Property, plant and equipment, net		166,266			77,745			—			244,011			141,955			75,882			—			217,837
Investment in affiliated company		6,389			—			—			6,389			3,510			—			—			3,510
Deferred financing costs, net		4,544			—			—			4,544			5,635			—			—			5,635
Goodwill and other non-amortizable assets		—			11,849			—			11,849			—			11,849			—			11,849
Amortizable intangible assets		—			1,713			—			1,713			—			2,191			—			2,191
Deferred turnaround costs & other assets		11,984			1,136			—			13,120			7,908			1,344			—			9,252
Deferred income taxes		15,778			(4,005	)		—			11,773			13,063			(5,750	)		—			7,313
Investment in subsidiaries		(5,922	)		—			5,922			—			(3,863	)		—			3,863			—
	$	564,605		$	211,469		$	(174,281	)	$	601,793		$	704,882		$	175,538		$	(148,854	)	$	731,566
Liabilities and Stockholder’s Equity
Current:
Revolving credit facility	$	9,000		$	—		$	—		$	9,000		$	—		$	—		$	—		$	—
Current installments of long-term debt		1,315			869			—			2,184			1,003			805			—			1,808
Accounts payable		24,550			22,362			—			46,912			54,421			15,385			—			69,806
Accrued liabilities		10,615			5,762			—			16,377			10,474			5,169			—			15,643
Income taxes payable		—			—			—			—			38,215			(1,701	)		—			36,514
Sales, use and fuel taxes payable		16,961			4,493			—			21,454			16,736			3,989			—			20,725
Deferred income taxes		3,590			(699	)		—			2,891			9,041			(1,823	)		—			7,218
Amounts due to affiliated companies		1,297			1,294			—			2,591			1,107			1,070			—			2,177
Intercompany		—			180,203			(180,203	)		—			—			152,717			(152,717	)		—
Total current liabilities		67,328			214,284			(180,203	)		101,409			130,997			175,611			(152,717	)		153,891
Long term debt: less current installments		353,098			3,009			—			356,107			353,407			3,737			—			357,144
Deferred gain on settlement of pension plan obligations		55			—			—			55			270			—			—			270
Deferred retirement benefits		86,066			80			—			86,146			77,298			7			—			77,305
Other noncurrent liabilities		—			18			—			18			—			46			—			46
Total liabilities		506,547			217,391			(180,203	)		543,735			561,972			179,401			(152,717	)		588,656
Commitment and contingencies
Stockholder’s equity
Common stock, $.10 par value per share–shares authorized 100; issued and outstanding 100		—			18			(18	)		—			—			18			(18	)		—
Additional paid-in capital		24,665			10,651			(10,651	)		24,665			22,031			10,651			(10,651	)		22,031
Retained earnings (deficit)		56,338			(16,464	)		16,464			56,338			141,555			(14,681	)		14,681			141,555
Accumulated other comprehensive loss		(22,945	)		(127	)		127			(22,945	)		(20,676	)		149			(149	)		(20,676	)
Total stockholder’s equity		58,058			(5,922	)		5,922			58,058			142,910			(3,863	)		3,863			142,910
	$	564,605		$	211,469		$	(174,281	)	$	601,793		$	704,882		$	175,538		$	(148,854	)	$	731,566

60

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(in thousands)

	Year Ended August 31, 2008												Year Ended August 31, 2007												Year Ended August 31, 2006
	Issuer			Guarantors			Eliminations			Consolidated			Issuer			Guarantors			Eliminations			Consolidated			Issuer			Guarantors			Eliminations			Consolidated
Net sales	$	2,488,034		$	1,554,041		$	(834,063	)	$	3,208,012		$	1,760,454		$	1,196,266		$	(551,657	)	$	2,405,063		$	1,803,379		$	1,142,068		$	(508,395	)	$	2,437,052
Costs of goods sold		2,507,529			1,425,654			(834,063	)		3,099,120			1,564,431			1,073,002			(551,657	)		2,085,776			1,641,078			1,031,060			(508,395	)		2,163,743
Gross (loss) profit		(19,495	)		128,387			—			108,892			196,023			123,264			—			319,287			162,301			111,008			—			273,309
Expenses:
Selling, general and administrative expenses		24,115			121,655			—			145,770			22,773			113,701			—			136,474			22,578			106,944			—			129,522
Depreciation and amortization expenses		10,273			5,444			—			15,717			9,506			4,913			—			14,419			8,669			4,521			—			13,190
Total operating expenses		34,388			127,099			—			161,487			32,279			118,614			—			150,893			31,247			111,465			—			142,712
Operating (loss) income		(53,883	)		1,288			—			(52,595	)		163,744			4,650			—			168,394			131,054			(457	)		—			130,597
Other income (expense):
Interest expense, net		(26,791	)		(5,177	)		—			(31,968	)		(13,229	)		(10,565	)		—			(23,794	)		(14,338	)		(9,557	)		—			(23,895	)
Other, net		(4,829	)		1,123			—			(3,706	)		(2,144	)		1,319			—			(825	)		(1,784	)		1,355			—			(429	)
Equity in net earnings of affiliate		2,879			—			—			2,879			1,611			—			—			1,611			2,190			—			—			2,190
Equity in net earnings of subsidiaries		(1,783	)		—			1,783			—			(3,252	)		—			3,252			—			(6,231	)		—			6,231			—
		(30,524	)		(4,054	)		1,783			(32,795	)		(17,014	)		(9,246	)		3,252			(23,008	)		(20,163	)		(8,202	)		6,231			(22,134	)
(Loss) income before income tax expense (benefit)		(84,407	)		(2,766	)		1,783			(85,390	)		146,730			(4,596	)		3,252			145,386			110,891			(8,659	)		6,231			108,463
Income tax (benefit) expense:
Current		(27,722	)		(552	)		—			(28,274	)		60,880			(1,175	)		—			59,705			44,485			(3,036	)		—			41,449
Deferred		(6,780	)		(431	)		—			(7,211	)		144			(169	)		—			(25	)		2,392			608			—			3,000
		(34,502	)		(983	)		—			(35,485	)		61,024			(1,344	)		—			59,680			46,877			(2,428	)		—			44,449
Net (loss) income	$	(49,905	)	$	(1,783	)	$	1,783		$	(49,905	)	$	85,706		$	(3,252	)	$	3,252		$	85,706		$	64,014		$	(6,231	)	$	6,231		$	64,014

61

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(in thousands)

	Year Ended August 31, 2008											Year Ended August 31, 2007											Year Ended August 31, 2006
	Issuer			Guarantors			Eliminations		Consolidated			Issuer			Guarantors			Eliminations		Consolidated			Issuer			Guarantors			Eliminations		Consolidated
Net cash (used in) provided by operating activities	$	(120,501	)	$	18,781		$	—	$	(101,720	)	$	70,591		$	15,823		$	—	$	86,414		$	65,752		$	(1,673	)	$	—	$	64,079
Cash flows from investing activities:
Additions to property, plant and equipment		(33,566	)		(8,577	)		—		(42,143	)		(32,104	)		(11,486	)		—		(43,590	)		(16,233	)		(5,486	)		—		(21,719	)
Marketable securities purchased		—			—			—		—			(75,854	)		—			—		(75,854	)		—			—			—		—
Proceeds from sale of investment securities		75,854			—			—		75,854			—			—			—		—			—			—			—		—
Additions to turnaround costs		(10,038	)		(39	)		—		(10,077	)		(5,928	)		(95	)		—		(6,023	)		(911	)		(69	)		—		(980	)
Dividends received		—			—			—		—			1,000			—			—		1,000			1,000			—			—		1,000
Proceeds from asset dispositions		4			5			—		9			—			11			—		11			1			1,370			—		1,371
Net cash provided by (used in) investing activities		32,254			(8,611	)		—		23,643			(112,886	)		(11,570	)		—		(124,456	)		(16,143	)		(4,185	)		—		(20,328	)
Cash flows from financing activities:
Distribution from (to) Parent under the Tax Sharing Agreement		2,634			—			—		2,634			7,787			—			—		7,787			(2,404	)		—			—		(2,404	)
Proceeds from issuance of long-term debt		—			178			—		178			130,711			1,245			—		131,956			—			1,140			—		1,140
Principal reductions of long-term debt		(467	)		(842	)		—		(1,309	)		(210	)		(737	)		—		(947	)		(196	)		(469	)		—		(665	)
Net borrowings on revolving credit facility		9,000			—			—		9,000			—			—			—		—			—			—			—		—
Dividends to stockholder		(35,312	)		—			—		(35,312	)		(23,339	)		—			—		(23,339	)		(25,757	)		—			—		(25,757	)
Deferred financing costs		(108	)		—			—		(108	)		(1,171	)		—			—		(1,171	)		(72	)		—			—		(72	)
Net cash (used in) provided by financing activities		(24,253	)		(664	)		—		(24,917	)		113,778			508			—		114,286			(28,429	)		671			—		(27,758	)
Net (decrease) increase in cash and cash equivalents		(112,500	)		9,506			—		(102,994	)		71,483			4,761			—		76,244			21,180			(5,187	)		—		15,993
Cash and cash equivalents, beginning of year		123,858			11,583			—		135,441			52,375			6,822			—		59,197			31,195			12,009			—		43,204
Cash and cash equivalents, end of year	$	11,358		$	21,089		$	—	$	32,447		$	123,858		$	11,583		$	—	$	135,441		$	52,375		$	6,822		$	—	$	59,197

62

UNITED REFINING COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

18. Quarterly Financial Data (unaudited)

	Net Sales		Gross Profit (Loss)			Net Income (Loss)
	(in thousands)
2008
First Quarter	$	693,568	$	68,545		$	13,413
Second Quarter		663,718		30,923			(9,739	)
Third Quarter		788,949		55,819			4,251
Fourth Quarter (1)		1,061,777		(46,395	)		(57,830	)
2007
First Quarter	$	584,596	$	37,819		$	(3,190	)
Second Quarter		492,781		41,443			(679	)
Third Quarter		587,298		98,364			32,366
Fourth Quarter (1)		740,388		141,671			57,209

(1) See Note 3 for LIFO adjustment.

19. Subsequent Events

In November 2008, the Company amended its Revolving Credit Facility to increase the maximum facility commitment from $100,000,000 to $130,000,000 on a permanent basis and amended certain terms and provisions thereof, including an increase in the interest rate and a modification to the Net Worth covenant. Under the amended Revolving Credit Facility, interest is calculated as follows: (a) for base rate borrowings, at the greater of the Agent Bank’s prime rate plus an applicable margin of .5% to 0% or, the Federal Funds Open Rate plus .5% or the Daily LIBOR rate plus 1%; and (b) for euro-rate based borrowings, at the LIBOR Rate plus an applicable margin of 2.35% to 1.75%. The applicable margin will vary depending on a formula calculating our average unused availability under the facility.

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

None.

ITEM 9A(t). CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

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, 2008, 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.

Management’s Report on Internal Control over Financial Reporting

The company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The company’s internal control over financial reporting is a process designed under the supervision of its Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the company’s financial statements for external reporting in accordance with accounting principles generally accepted in the United States of America. Management evaluates the effectiveness of the company’s internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control Integrated Framework. Management, under the supervision and with the participation of the company’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the company’s internal control over financial reporting as of August 31, 2008 and concluded that it is effective.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.

Changes in Internal Controls

There have not been any changes in the Company’s internal controls over financial reporting that occurred during the Company’s fiscal quarter ended August 31, 2008 that has materially affected, or is reasonably likely to materially affect, the Company’s internal controls over financial reporting.

ITEM 9B. OTHER INFORMATION.

On November 21, 2008, the Company amended its Revolving Credit Agreement with PNC Bank, N.A. as Agent Bank. The amendment increased the line limit from $100,000,000 to $130,000,000. The amendment also includes changes to the interest rates charged and increases the minimum Net Worth level from $40,000,000 to $75,000,000 without taking into effect a LIFO inventory adjustment. For additional information, (see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources”, Item 7).

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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Set forth below is certain information as of December 1, 2008 with respect to all directors and executive officers of the Company.

Name	Age	Position
John A. Catsimatidis	60	Chairman of the Board, Chief Executive Officer, Director
Myron L. Turfitt	56	President, Chief Operating Officer, Director
Ashton L. Ditka	67	Senior Vice President—Marketing
Thomas E. Skarada	66	Vice President—Refining
Frederick J. Martin, Jr.	54	Vice President—Supply and Transportation
James E. Murphy	63	Vice President and Chief Financial Officer
John R. Wagner	49	Vice President, General Counsel and Secretary
Dennis E. Bee, Jr.	66	Treasurer
Martin R. Bring	66	Director
Jacob Feinstein	65	Director
Kishore Lall	61	Director
Douglas Lemmonds	61	Director
Andrew Maloney	77	Director
Dennis Mehiel	64	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 is Chairman of the Board, Chief Executive Officer, President, and the founder of Red Apple Group, Inc. (a holding company for certain businesses, including the Company and corporations which operate supermarkets in New York).

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 30 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.

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 38 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 38 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. Mr. Murphy is a CPA and prior to joining us he had over 15 years experience in accounting and auditing with banking, public accounting and manufacturing companies.

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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. Since November 2004, he has been a partner at the law firm of Ellenoff, Grossman & Schole, LLP. Previously he was a stockholder in Anderson, Kill & Olick, P.C., a New York law firm, from February 2002 to November 2004. 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.

Jacob Feinstein has served as a Director since 2006. Since 1999, he has been employed as a Consultant to the electric power industry in disciplines such as management, transmission, generation interconnection and power system operation and control. From 1998 to 1999, he was employed by Cogen Technologies, Inc. as a Vice President. From 1991 to 1998, he was employed by Consolidated Edison Company of New York, Inc. as a Vice President.

Kishore Lall has served as a Director since 1997. He is currently Managing Director & Global Head/Diamonds & Jewelry with Chartered Bank, London. He was Global Head, Business Development, International Diamond and Jewelry Group of ABN AMRO Bank in New York from September 2005 to September 2008. He served as Chief Financial Officer of Gristede’s Foods, Inc. an affiliate of the Company from August 2003 to August 2005 and Executive Vice President-Finance and Administration and Secretary of Gristede’s Foods, Inc. from May 2002 to August 2005. From January 1997 to October 1997 he served as a consultant to Red Apple Group, Inc. From June 1994 to December 1996 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).

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 2006 and previously was a director from 1997 to 2005. 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. W. Mehiel is also the Chairman of MannKraft Corporation, a manufacturer of corrugated containers, and Chief Executive Officer and Chairman of Creative Expressions, Group, Inc.

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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 which is filed as Exhibit 14.1 in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2003. A copy of the Code of Ethics is available for review on the Company’s website at www.urc.com.

Section 16(a) Beneficial Ownership Reporting Compliance

Not Applicable

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

The Summary Compensation Table and supplementary tables that follow describe the compensation paid to our Chairman of the Board and Chief Executive Officer (“CEO”), Vice President and Chief Financial Officer (“CFO”), President and Chief Operating Officer (“COO”), Senior Vice President Marketing and Vice President Refining for 2008.

Compensation Objectives and Components

The objective of the Company’s compensation program is to motivate, retain and attract management, linking incentives to financial and personal performance and enhanced shareholder value. The compensation program for the named executive officers consists of the following components:

• Salary

• Annual performance-based cash awards; and

• Other fringe benefits and perquisites.

There is no Compensation Committee of the Board of Directors; however, the CEO and COO review and approve any proposed changes in salary, as well as discretionary bonuses for the other named executive officers.

Salary

Salaries for the named executive officers have been established by the CEO and COO. There is no policy to provide any scheduled increase to these individuals and increases may be awarded at the discretion of the CEO. There is no deferred compensation program for the named individuals or any other executives of the Company. The salaries of the CEO and COO are set by the CEO after reviewing comparable salaries for similar positions within the industry.

Annual Cash Bonus Awards

While there is no formal bonus program for the named executives, bonuses have been paid to them on an annual basis. The amount of the bonus is determined by the CEO and may vary based on the performance of the Company.

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Other Fringe Benefits and Perquisites

The Company provides several fringe benefit plans including the United Refining Company Pension Plan for Salaried Employees (the “Pension Plan”) and the United Refining Company Employees’ 401(k) Plan (the “401(k) Plan”) to its named executive officers. Additionally, the Company provides other benefits, including medical and dental plans, life and accidental death insurance, short-term and long-term disability insurance, paid sick leave and vacation and paid holidays.

Potential Payments upon Termination or Change in Control

The Company does not have any change in control agreements with any of the named executive officers.

Estimated Benefits upon Termination Related to Other Than a Change in Control

The Company does not have a severance policy for benefits paid upon termination of employment.

Indemnification of Directors and Officers

The Company’s By-laws provide an open-ended indemnity of all officers and directors to the fullest extent permitted by law.

The following table sets forth the compensation paid by the Company to its principal executive officer and principal financial officer and each of the three other most highly compensated executive officers of the Company whose salary and bonus exceeded $100,000 for the fiscal year ended August 31, 2008.

SUMMARY COMPENSATION TABLE

Name & Principal Position	Year	Annual Compensation				Change in Pension Value ($) (1)		Other Compensation ($) (2)		Total ($)
		Salary ($)		Bonus ($)
John A. Catsimatidis	2008	$	650,000	$	1,100,000	$	35,317	$	2,322	$	1,787,639
Chairman of the Board &
Chief Executive Officer
James E. Murphy	2008	$	109,074	$	30,000	$	23,907	$	10,012	$	172,993
Vice President &
Chief Financial Officer
Myron L. Turfitt	2008	$	420,000	$	700,000	$	50,193	$	7,538	$	1,177,731
President &
Chief Operating Officer
Ashton L. Ditka	2008	$	193,833	$	100,000	$	133,725	$	7,908	$	435,466
Senior Vice President
Marketing
Thomas E. Skarada	2008	$	148,140	$	100,000	$	28,563	$	14,834	$	291,537
Vice President
Refining

(1) Amounts in this column reflect the actuarial increase in the present value at August 31, 2008 compared to August 31, 2007 of the named executive officer’s benefits under the Defined Benefit Plan.

(2) Amounts in this column represent the total of all perquisites (non-cash benefits and perquisites such as the use of employer-owned automobiles, membership dues and other personal benefits), employee benefits (employer cost of life insurance), and employer contributions to defined contribution plans (the 401(K) Plan). Amounts are reported separately under the “All Other Compensations” table below.

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2008 ALL OTHER COMPENSATION

Name	Automobile Usage	Company Match on Qualified 401(k) Plan	Life Insurance Premium	Total All Other
John A. Catsimatidis	—	—	2,322	2,322
James E. Murphy	5,402	3,272	1,338	10,012
Myron L. Turfitt	5,216	—	2,322	7,538
Ashton L. Ditka	2,757	—	5,151	7,908
Thomas E. Skarada	6,626	4,444	3,764	14,834

2008 PENSION BENEFITS

Name	Plan Name	Number of Years of Credited Service	Present Value of Accumulated Benefits		Payments During Last Fiscal Year
John A. Catsimatidis	United Refining Company Pension Plan for Salaried Employees	22.5	$	692,272	$	0
James E. Murphy	United Refining Company Pension Plan for Salaried Employees	26.29	$	417,689	$	0
Myron L. Turfitt	United Refining Company Pension Plan for Salaried Employees	30.17	$	773,651	$	0
Ashton L. Ditka	United Refining Company Pension Plan for Salaried Employees	32.08	$	929,510	$	0
Thomas E. Skarada	United Refining Company Pension Plan for Salaried Employees	15.42	$	432,396	$	0

The Pension Plan is a tax-qualified, non-contributory defined benefit plan established to provide pension benefits to employees of the Company, including the named executive officers, meeting Pension Plan eligibility criteria. The criteria states that employees are eligible to participate in, and will be enrolled in, the Pension Plan on the first day of the month coincident with or next following the later of the completion of one Year of Service and attainment of age twenty-one years. Years of service for benefits purposes are measured based on the number of years in which at least 1,000 hours are worked.

A participant’s normal retirement date is the first of the month coinciding with or following the attainment of age 65. Participants who are actively employed may also elect an unreduced early retirement option at age 59 ¹/2. In addition to a single life annuity, benefits can be paid as other actuarially equivalent annuities.

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 the IRC 401(a)(17) limit, which for 2008 is $225,000. Benefits are calculated by multiplying the sum of (a) 1.1% of average earnings up to the Social Security compensation base, plus (b) 1.25% of average earnings in excess of 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 earnings subject to tax under the Federal Insurance Contribution Act at $76,200.00 for years after 2001 for purposes of calculating Social Security compensation base.

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In connection with a transaction in 1984, a portion of the benefits from the plan are provided through an annuity contract with an insurance company. The benefits shown in the table are gross amounts before off-setting the insured benefit and thereby represent the total benefit earned with the Company.

Vested benefits are those amounts to which participants are entitled regardless of future services to the Company. A participant is credited with a year of service for vesting purposes for each Pension Plan year during which at least 1,000 hours of service are completed, commencing with year of hire. Each executive is currently vested in his accumulated benefit.

In addition to vested benefits, the Pension Plan provides certain death benefits. Upon the death of a participant, the beneficiary is entitled to receive a portion of the vested interest of the participant’s accrued benefit in the form of a monthly annuity amount, subject to eligibility requirements stipulated in the Pension Plan.

The present value of accumulated benefits in the table above has been determined by an independent actuary. These assumptions for August 31, 2008 include a 6.70% discount rate and the RP 2000 mortality table projected to 2015 with a 15-year phase-in and no collar adjustment, each of which is consistent with the assumptions used for FAS 87 financial reporting. Further, it was assumed that benefits will commence at the earliest age in which an unreduced benefit is available (age 59.5 or current age if later) and there will be no turnover or death prior to retirement. The foregoing actuarial assumptions are also based on the presumption that the Pension Plan will continue. If the Pension Plan were to terminate or be frozen, different actuarial assumptions and other factors might be applicable in determining the present value of accumulated benefits.

DIRECTOR COMPENSATION

The Company pays its non-officer Directors an annual retainer of $15,000 per year and $1,000 for meetings attended. Directors are reimbursed for reasonable travel, meals, lodging and other expenses incidental to attendance at meetings.

2008 Director Compensation

Name	Fees Earned or Paid in Cash ($)		Option Awards ($)		Total ($)
Martin R. Bring (1)	$	0	$	0	$	0
John A. Catsimatidis (2)	$	0	$	0	$	0
Evan Evans (3)	$	16,000	$	0	$	16,000
Jacob Feinstein	$	16,000	$	0	$	16,000
Douglas Lemmonds	$	16,000	$	0	$	16,000
Kishore Lall	$	16,000	$	0	$	16,000
Andrew Maloney	$	16,000	$	0	$	16,000
Dennis Mehiel	$	16,000	$	0	$	16,000
Myron L. Turfitt (4)	$	0	$	0	$	0

Fees and expenses paid to Directors are recorded as expense in the period in which the meetings are held, and deducted for income tax purposes in the year incurred.

(1) Martin R. Bring is a partner in the firm of Ellenoff, Grossman and Schole, LLP. Mr. Bring was paid $204,000 on a retainer basis for legal and consulting services during fiscal 2008.

(2) Chairman of the Board and Chief Executive Officer of the Company.

(3) As of September 14, 2008, Mr. Evan Evans is deceased.

(4) President and Chief Operating Officer of the Company.

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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 December 1, 2008 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 (23 persons)	0	100	%

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE.

On December 21, 2001, the Company acquired the operations and working capital assets of Country Fair. 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 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, 2008, 2007 and 2006, $5,102,000, $5,102,000, and $5,102,000 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, 2008, 2007 and 2006, the Company billed the affiliate $1,147,000, $1,018,000, and $972,000 for management fees and overhead expenses incurred in the management and operation of the retail units which amount was deducted from expenses. As of August 31, 2008 and 2007, the Company had a receivable from the affiliate of $27,000 and $24,000, respectively, under the terms of the agreement, which is included in Amounts Due to/from Affiliated Companies, net.

Effective June 1, 2001, the Company entered into a 50% joint venture with an unrelated entity for the marketing of asphalt products. The joint venture is accounted for using the equity method of accounting. As of July 31, 2008 the joint venture ceased operations due to the insolvency of the joint venture partner. Pursuant to the joint venture agreement, the Company is required to pay $1.6 million to the other entity which has been recorded as other expenses in the statement of operations. For the years ended August 31, 2008, 2007 and 2006, net sales to the joint venture amounted to $15,075,000, $12,596,000, and $13,019,000, respectively. As of August 31, 2008 and 2007, the Company had a (payable) receivable (to) from the joint venture of $(1,931,000) and $1,161,000, respectively, under the terms of the agreement, which is included in Amounts Due to/from Affiliated Companies, Net.

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, 2008, 2007 and 2006, the Company billed the affiliate $2,037,000, $1,976,000, and $1,725,000, respectively, for management fees and overhead expenses incurred in the management and operation

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of the 50 retail units, which amount was deducted from expenses. For the fiscal years ended August 31, 2008, 2007 and 2006, net sales to the affiliate amounted to $173,190,000, $116,240,000, and $105,651,000, respectively. As of August 31, 2008 and 2007, the Company had accounts payable to the affiliate of $1,321,000 and $1,096,000, 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, 2008, 2007 and 2006, such fees amounted to approximately $2,000,000, $2,000,000, and $2,000,000, respectively, which is included in Selling, General and Administrative Expenses.

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 the tax years ended August 31, 2008 and 2007 amounted to $2,634,000 and $7,782,000, respectively and have been recorded as a capital contribution. As of August 31, 2008 and 2007, the Company had a receivable (payable) from (to) the Parent of $634,000 and $(2,268,000), respectively, under the terms of the Tax Sharing Agreement.

During the years ended August 31, 2008, 2007 and 2006, the Company incurred $372,000 in each year as its share of occupancy expenses for our offices in New York that it shares with affiliates of the Company. Such offices are located in a building owned by John Catsimatidis.

During fiscal 2008 the Company shared certain costs with an affiliate of the Company for aircraft owned by another affiliate of the Company and incurred $180,000 as its share of such costs. For fiscal 2007 and 2006, the Company’s share of such costs was $332,000 and $390,000, respectively.

ITEM 14. PRINCIPAL ACCOUNTING 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 2008 and 2007:

	2008		2007
Audit Fees	$	493,000	$	547,000
Audit—Related Fees(1)		1,000		—
Tax Fees		—		—
All Other Fees		—		—
Total	$	494,000	$	547,000

(1) Services provided under this category consist of $1,000 related to Sarbanes Oxley Act-Section 404 compliance consultation in 2008.

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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 Registered Public Accounting Firm

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 Fill Corporation. (“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.

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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. Incorporated by reference to Exhibit 4.1 to the Registration Statement.
4.2	Form of Note. Incorporated by reference to Exhibit 4.2 to the Registration Statement.
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”). Incorporated by reference to Exhibit 10.1 to the Registration Statement.
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. Incorporated by reference to Exhibit 10.2 to the Registration Statement.
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	Amended and Restated Credit Agreement dated July 12, 2002 by and among URC, URCP, KPC, CFI 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 10-Q for fiscal quarter ended May 31, 2002.
10.5	Amendment to Credit Agreement dated as of July 12, 2002 by and among URC, URCP, KPC, CFI 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 10-K for fiscal year ended August 31, 2002.
10.6	Limited Waiver and Amendment No 3 to Credit Agreement dated as of March 24, 2003 by and among, URC, URCP, KPC, CFI 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 10-Q for fiscal quarter ended May 31, 2003.
10.7	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 10-Q for fiscal quarter ended February 29, 2004.
10.8	Amendment No. 5 to Credit Agreement dated as of August 6, 2004 by and among URC, URCP, KPC, CFI., K-FI., and the Banks party thereto and PNC Bank, National Association, as Agent. Incorporated by reference to Exhibit 10.8 to the Registration Statement.

74

Number	Description
10.9	Purchase Agreement dated February 10, 2005 between URC, CFI, KPC, KPCY, USCF, URCP, K-FC, IGOCRI, BOC, PPCI, STPI, K-FI, VARC and Citigroup Global Markets, Inc. (CGMI). Incorporated by reference to Exhibit 10.1 of Registrant’s Quarterly Report on Form 10-Q for fiscal quarter ended February 28, 2005.
10.10	Registrant’s Rights Agreement dated February 17, 2005 between URC, CFI, KPC, KPCY, UJCI, URCP, K-FC, IGOCRI, BOC, PPCI, STPI, K-FI, VARC and CGMI. Incorporated by reference to Exhibit 10.2 of Registrants Quarterly Report on Form 10-Q for fiscal quarter ended February 28, 2005
10.11	Amendment No. 6 to Credit Agreement dated as of April 19, 2005 by and among URC, URCP, KPC, CFI, K-FI and the Banks party thereto and PNC Bank, National Association, as Agent. Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K, filed on April 22, 2005.
10.12	Amendment No. 7 to Credit Agreement dated as of November 27, 2006 by and among URC, URCP, KPC, CFI, K-FC and the Banks party thereto and PNC Bank, National Association, as Agent.
10.13	Purchase Agreement dated May 1, 2007 between URC, CFI, KPC, KPCY, UJCI, URCP, K-FC, IGOCRI, BOC, PPCI, STPI, K-FI, VARC and Morgan Stanley & Co. Incorporated. Incorporated by reference to Exhibit 10.1 of Registrant’s Quarterly Report on Form 10-Q for fiscal quarter ended May 31, 2007.
10.14	Registrant’s Rights Agreement dated May 4, 2007 between URC, CFI, KPC, KPCY, UJCI, URCP, K-FC, IGOCRI, BOC, PPCI, STPI, K-FI, VARC and Morgan Stanley & Co. Incorporated. Incorporated by reference to Exhibit 10.2 of Registrant’s Quarterly Report on Form 10-Q for fiscal quarter ended May 31, 2007.
*10.15	Amendment No. 8 to Credit Agreement dated as of November 21, 2008 by and among URC, URCP, KPC, CFI, K-FC 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 10-K for fiscal year ended August 31, 2003.
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.

75

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 November 14, 2008 relating to the consolidated financial statements of United Refining Company, which is contained in Item 8 of this Form 10-K also included the audit of the financial statement schedule listed in the accompanying index. This financial statement schedule is the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.

In our opinion such financial statement schedule, when considered in relation to the consolidated financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.

/s/ BDO Seidman, LLP

New York, New York

November 14, 2008

76

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, 2006:
Reserves and allowances deducted from asset accounts:
Allowance for uncollectible Accounts	$	1,675	$	881	$	(1,816	)	$	740
Year ended August 31, 2007:
Reserves and allowances deducted from asset accounts:
Allowance for uncollectible Accounts	$	740	$	1,015	$	(915	)	$	840
Year ended August 31, 2008:
Reserves and allowances deducted from asset accounts:
Allowance for uncollectible Accounts	$	840	$	2,645	$	593		$	2,892

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.

	UNITED REFINING COMPANY
Dated: December 1, 2008	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	December 1, 2008
/S/ MYRON L. TURFITT Myron L. Turfitt	President, Chief Operating Officer and Director	December 1, 2008
/S/ JAMES E. MURPHY James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	December 1, 2008
/S/ MARTIN R. BRING Martin R. Bring	Director	December 1, 2008
/S/ JACOB FEINSTEIN Jacob Feinstein	Director	December 1, 2008
/S/ KISHORE LALL Kishore Lall	Director	December 1, 2008
/S/ DOUGLAS LEMMONDS Douglas Lemmonds	Director	December 1, 2008
/S/ ANDREW MALONEY Andrew Maloney	Director	December 1, 2008
/S/ DENNIS MEHIEL Dennis Mehiel	Director	December 1, 2008

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.

	UNITED REFINING COMPANY OF PENNSYLVANIA
Dated:   December 1, 2008	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	December 1, 2008
/S/ MYRON L. TURFITT Myron L. Turfitt	President, Chief Operating Officer	December 1, 2008
/S/ JAMES E. MURPHY James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	December 1, 2008

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.

	KIANTONE PIPELINE CORPORATION
Dated:  December 1, 2008	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	December 1, 2008
/S/ MYRON L. TURFITT Myron L. Turfitt	President, Chief Operating Officer and Director	December 1, 2008
/S/ JAMES E. MURPHY James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	December 1, 2008

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.

	KIANTONE PIPELINE COMPANY
Dated:  December 1, 2008	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	December 1, 2008
/S/ MYRON L. TURFITT Myron L. Turfitt	Executive Vice President	December 1, 2008
/S/ JAMES E. MURPHY James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	December 1, 2008

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.

	UNITED JET CENTER, INC.
Dated: December 1, 2008	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	December 1, 2008
/S/ MYRON L. TURFITT Myron L. Turfitt	Executive Vice President	December 1, 2008
/S/ JAMES E. MURPHY James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	December 1, 2008

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.

	VULCAN ASPHALT REFINING CORPORATION
Dated: December 1, 2008	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	December 1, 2008
/S/ MYRON L. TURFITT Myron L. Turfitt	Executive Vice President	December 1, 2008
/S/ JAMES E. MURPHY James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	December 1, 2008

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.

	KWIK-FIL, INC.
Dated: December 1, 2008	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	December 1, 2008
/S/ MYRON L. TURFITT Myron L. Turfitt	Executive Vice President	December 1, 2008
/S/ JAMES E. MURPHY James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	December 1, 2008

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.

	KWIK-FILLCORPORATION
Dated:  December 1, 2008	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	December 1, 2008
/S/ MYRON L. TURFITT Myron L. Turfitt	Executive Vice President	December 1, 2008
/S/ JAMES E. MURPHY James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	December 1, 2008

85

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.

	INDEPENDENT GASOLINE & OIL COMPANY OF ROCHESTER, INC.
Dated:  December 1, 2008	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	December 1, 2008
/S/ MYRON L. TURFITT Myron L. Turfitt	Executive Vice President	December 1, 2008
/S/ JAMES E. MURPHY James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	December 1, 2008

86

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.

	BELL OIL CORP.
Dated: December 1, 2008	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	December 1, 2008
/S/ MYRON L. TURFITT Myron L. Turfitt	Executive Vice President	December 1, 2008
/S/ JAMES E. MURPHY James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	December 1, 2008

87

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.

	PPC, INC.
Dated: December 1, 2008	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	December 1, 2008
/S/ MYRON L. TURFITT Myron L. Turfitt	Executive Vice President	December 1, 2008
/S/ JAMES E. MURPHY James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	December 1, 2008

88

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.

	SUPER TEST PETROLEUM, INC.
Dated: December 1, 2008	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	December 1, 2008
/S/ MYRON L. TURFITT Myron L. Turfitt	Executive Vice President	December 1, 2008
/S/ JAMES E. MURPHY James E. Murphy	Vice President and Chief Financial Officer (Principal Accounting Officer)	December 1, 2008

89

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, 2008.

90

EX-10.15

Exhibit 10.15

AMENDMENT NO. 8 TO CREDIT AGREEMENT

THIS AMENDMENT NO. 8 TO CREDIT AGREEMENT (the “Amendment”) is dated as of November 21, 2008, 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), MANUFACTURERS AND TRADERS TRUST COMPANY and BANK LEUMI, USA, as Co-Documentation Agents, 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 Amendment No. 1 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, as amended by Amendment No. 4 dated as of January 27, 2004, as amended by Amendment No. 5 dated as of August 6, 2004, as amended by Amendment No. 6 dated as of April 19, 2005, and as amended by Amendment No. 7 dated as of November 27, 2006 (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, the Borrowers have requested the Banks accommodate an increase in the amount of the Revolving Credit Commitments from $100,000,000 to $130,000,000 and the joinder of an additional financial institution as a Bank under the Credit Agreement and agree to certain other amendments to the terms of the Credit Agreement;

WHEREAS, the Banks are willing to amend the Credit Agreement to accommodate the requested changes, subject to the terms and conditions hereof;

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.

Defined terms used herein unless otherwise defined herein shall have the meanings ascribed to them in the Credit Agreement, as amended by this Amendment.

2. Amendment and Restatement of Credit Agreement and Related Matters.

(a) Articles 1 through 10. Articles 1 through 10 to the Credit Agreement are hereby amended and restated as set forth on Exhibit 1 hereto.

(b) Amendment to Schedules. The Schedules to the Credit Agreement are hereby replaced by the Schedules set forth in Exhibit 1.

(c) Exhibits. Exhibit 7.3.3 [Quarterly Compliance Certificate] is hereby amended and restated to read as set forth on the exhibit of the same number and title attached hereto. Exhibit 2.1.2 [Swing Loan Request] attached hereto is hereby incorporated as an additional exhibit to the Credit Agreement.

3. Conditions to Effectiveness of Amendment and Restatement of Credit Agreement and Related Matters.

The effectiveness of this Amendment and the amendment and restatement of portions of the Credit Agreement and the effectiveness of the other matters set forth in Section 2 shall be subject to each of the following conditions precedent:

(a) Representations and Warranties; No Defaults. The representations and warranties of the Loan Parties contained in Article 5 of the Credit Agreement shall be true and accurate with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein), and the Loan Parties shall have performed and complied with all covenants and conditions under the Loan Documents and hereof; no Event of Default or Potential Default under the Credit Agreement and the other Loan Documents shall have occurred and be continuing or shall exist; and the Chief Executive Officer, President or Chief Financial Officer of each Loan Party shall have delivered to the Agent for the benefit of each Bank a duly executed certificate dated the date of this Amendment certifying as to the items in this Section 3(a).

(b) Organization, Authorization and Incumbency. There shall be delivered to the Agent for the benefit of each Bank a certificate, dated the date of this Amendment and signed by the Secretary or an Assistant Secretary of each Loan Party, certifying as appropriate as to:

(c) all action taken by such party in connection with this Amendment and the other Loan Documents together with resolutions of each Loan Party evidencing same;

(d) the names of the officer or officers authorized to sign this Amendment and the other documents executed and delivered in connection herewith and the true signatures of such officer or officers, on which the Agent and each Bank may conclusively rely; and

(e) the organizational documents of the Loan Parties including their respective articles of incorporation and bylaws, or alternatively, a certification that no changes to the articles of incorporation and bylaws have been effected since the last certification of such documents provided to the Banks.

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(f) Officer’s Certificate Regarding MACs. Since August 31, 2007, no Material Adverse Change shall have occurred and there shall have been no material change in the management of any Loan Party or Subsidiary of any Loan Party; and there shall have been delivered to the Agent for the benefit of each Bank a certificate dated as of the date of this Amendment and signed by the Chief Executive Officer, President or Chief Financial Officer of each Loan Party to each such effect.

(g) Opinions of Counsel. There shall be delivered to the Agent for the benefit of each Bank a written opinion dated as of the date of this Amendment of John R. Wagner, Esquire as to matters set forth on Exhibit 3(g), with such opinions to be in form and substance satisfactory to the Agent.

(h) Lien and Judgment Searches. The Agent shall have received the results of lien searches satisfactory in scope, form and substance to the Agent evidencing that no Liens exist on the assets of the Loan Parties or any of their Subsidiaries, except for Permitted Liens.

(i) Consents. The Loan Parties shall have delivered to the Agent copies of all consents and approvals of third parties or any Official Body required to effectuate the transactions contemplated hereby including without limitation for each Loan Party and its Subsidiaries to grant the first priority perfected liens and security interests in the Collateral.

(j) Fees and Expenses. The Borrowers shall have paid or caused to be paid (i) all fees and expenses required to be paid pursuant to the October 22, 2008 engagement letter with the Agent, and (ii) all other costs and expenses accrued through the Effective Date of this Amendment and the costs and expenses of the Agent and the Banks including, without limitation, reasonable fees of the Agent’s counsel in connection with this Amendment.

(k) Litigation. On the date hereof 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, or any Loan Documents or the consummation of the transactions contemplated hereby or which, in the Agent’s reasonable discretion, could result in a Material Adverse Change.

(l) Legal Details; Counterparts. All legal details and proceedings in connection with the transactions contemplated by this Amendment shall be in form and substance satisfactory to the Agent, the Agent shall have received from the Borrowers and the Banks an executed original of this Amendment and the Agent shall have received all such other counterpart originals or certified or other copies of such documents and proceedings in connection with such transactions, in form and substance satisfactory to the Agent.

-3-

4. Force and Effect.

Except as otherwise expressly modified by this Amendment, the Credit Agreement is hereby ratified and confirmed and shall remain in full force and effect after the date hereof. Each Loan Party hereby acknowledges that the Guaranty, the Intercompany Subordination Agreement, and the Security Agreement, (i) continue in full force and effect, and (ii) relate to the obligations of each Loan Party under the Agreement and the other Loan Documents as increased pursuant to this Amendment. Each Loan Party further (a) acknowledges that the Obligations of the Loan Parties under the Agreement, as increased by this Amendment, are Guarantied Obligations under the Guaranty, Debt under the Security Agreement, Senior Debt under the Intercompany Subordination Agreement, and (b) confirms its obligations under each of the foregoing Loan Documents. The guaranties, security interests, pledges, covenants and agreements set forth in the Loan Documents are hereby made and granted to secure the obligations under the Agreement as if the same were made, increased or granted on the date hereof; and, each Loan Party hereby agrees that from the date hereof and so long as any Loan or any Commitment of any Bank shall remain outstanding and until the payment in full of the Loans and the Notes, the expiration of all Letters of Credit, and the performance of all other obligations of Loan Parties under the Loan Documents, such Loan Party shall perform, comply with, and be subject to and bound by each of the terms and provisions of the Agreement, Guaranty, Intercompany Subordination Agreement, Security Agreement, and each of the other Loan Documents jointly and severally with the other parties thereto. Each Loan Party hereby makes, affirms, and ratifies in favor of the Banks and the Agent the Credit Agreement, Guaranty, Intercompany Subordination Agreement, the Security Agreement, and each of the other Loan Documents to which it is a party given by it to Agent and any of the Banks. The National City Lockbox Agreement and the JP Morgan Lockbox Agreement shall be and remain in force and effect until such time as such agreements are restated in a manner satisfactory to the Agent.

5. Governing Law.

This Amendment 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.

6. Effective Date; Certification of the Borrowers.

This Amendment shall be dated as of and shall be binding, effective and enforceable upon the date (the “Effective Date”) of (i) satisfaction of all conditions set forth in Section 3 hereof, (ii) receipt by the Agent of duly executed original counterparts of this Amendment from the Borrowers and the Banks, (iii) receipt by the Agent of duly executed original Revolving Credit Notes payable to the Banks in the respective amounts set forth on Schedule 1.1 (B) [Commitment of Banks and Addresses for Notices] attached to Exhibit 1 to this Amendment, and (iv) receipt by the Agent of a duly executed original Swing Loan Note payable to PNC in the amount of the Swing Loan Commitment. From and after the Effective Date, this Amendment shall be binding upon the Borrowers, each Bank and the Agent, and their respective successors and assigns permitted by the Credit Agreement.

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7. No Novation.

This Amendment amends and restates portions of the Credit Agreement, but is not intended to constitute, and does not constitute, a novation or satisfaction of the Obligations of the Loan Parties under the Credit Agreement. The Liens of Agent in the Collateral shall be deemed to be continuously granted and perfected from the earliest date of the granting and perfection of such Liens to Agent. Nothing contained in this Amendment shall be deemed to waive, release, limit, adversely affect or impair, (i) any “Obligations” arising under or in connection with the Credit Agreement or other Loan Documents, including without limitation, the Obligations which are not due and payable under the Credit Agreement or other Loan Documents, or (ii) the Liens and other interests in the Collateral heretofore granted, pledged and/or assigned by Borrowers to Agent for the benefit of itself and Banks and such Liens shall not in any manner be impaired, limited, terminated, waived or released, but shall continue in full force and effect in favor of Agent for the benefit of itself and Banks as the Obligations are increased pursuant to the terms of this Amendment.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

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[SIGNATURE PAGE TO AMENDMENT NO. 8 TO CREDIT AGREEMENT]

IN WITNESS WHEREOF, the parties hereto by their duly authorized officers have executed this Amendment as of the day and year first written above.

BORROWERS:
UNITED REFINING COMPANY
By:	/s/ James E. Murphy
Title:	Vice President and Chief Financial Officer
UNITED REFINING COMPANY OF PENNSYLVANIA
By:	/s/ James E. Murphy
Title:	Vice President and Chief Financial Officer
KIANTONE PIPELINE CORPORATION
By:	/s/ James E. Murphy
Title:	Vice President 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 and Chief Financial Officer

[SIGNATURE PAGE TO AMENDMENT NO. 8 TO CREDIT AGREEMENT]

AGENT AND BANKS:
PNC BANK, NATIONAL ASSOCIATION, individually and as Agent
By:	/s/  James M. Steffy
Title:	Vice President

[SIGNATURE PAGE TO AMENDMENT NO. 8 TO CREDIT AGREEMENT]

MANUFACTURERS AND TRADERS TRUST COMPANY, individually and as Co-Documentation Agent
By;	/s/ Jon Werbitsky
Title:	Vice President

[SIGNATURE PAGE TO AMENDMENT NO. 8 TO CREDIT AGREEMENT]

BANK LEUMI, USA, individually and as Co-Documentation Agent
By:	/s/ John Koenigsberg
Title:	Senior Vice President
By:	/s/ Iris Steinhardt
Title:	Vice President

[SIGNATURE PAGE TO AMENDMENT NO. 8 TO CREDIT AGREEMENT]

BMO CAPITAL MARKETS FINANCING, INC.
By:	/s/ William P. Robin
Title:	Managing Director

[SIGNATURE PAGE TO AMENDMENT NO. 8 TO CREDIT AGREEMENT]

DOLLAR BANK, FEDERAL SAVINGS BANK
By:	/s/ Perry E. Nofey
Title:	Senior Vice President

EXHIBIT 1

$130,000,000 REVOLVING CREDIT FACILITY

AMENDED AND RESTATED CREDIT AGREEMENT

by and among

UNITED REFINING COMPANY,

UNITED REFINING COMPANY OF PENNSYLVANIA,

KIANTONE PIPELINE CORPORATION,

COUNTRY FAIR, INC.

and

THE BANKS PARTY HERETO

and

PNC BANK, NATIONAL ASSOCIATION, As Agent

and

MANUFACTURERS AND TRADERS TRUST COMPANY

AND BANK LEUMI, USA, As Co-Documentation Agents

Dated as of July 12, 2002,

as Articles 1 through 10 are amended and restated by Amendment No. 8 to Credit Agreement

dated as of November 21, 2008

TABLE OF CONTENTS

Section				Page
1.	CERTAIN DEFINITIONS			1
	1.1	Certain Definitions		1
	1.2	Construction		23
		1.2.1	Number; Inclusion	23
		1.2.2	Determination	23
		1.2.3	Agent’s Discretion and Consent	24
		1.2.4	Documents Taken as a Whole	24
		1.2.5	Headings	24
		1.2.6	Implied References to This Agreement	24
		1.2.7	Persons	24
		1.2.8	Modifications to Documents	24
		1.2.9	From, To and Through	24
		1.2.10	Shall; Will	24
	1.3	Accounting Principles		25
2.	REVOLVING CREDIT LOAN FACILITIES			25
	2.1	Revolving Credit Commitments; Swing Loan Commitment		25
		2.1.1	Revolving Credit Commitments	25
		2.1.2	Swing Loan Commitment	25
	2.2	Nature of Banks’ Obligations With Respect to Revolving Credit Loans		26
	2.3	Commitment Fees		26
	2.4	Revolving Credit Loan Requests; Swing Loan Requests		26
		2.4.1	Revolving Credit Loan Requests	26
		2.4.2	Swing Loan Requests	27
	2.5	Making Revolving Credit Loans and Swing Loans		27
		2.5.1	Making Revolving Credit Loans	27
		2.5.2	Making Swing Loans	28
		2.5.3	Borrowings to Repay Swing Loans	28
	2.6	Notes		28
		2.6.1	Revolving Credit Notes	28
		2.6.2	Swing Loan Note	28
	2.7	Use of Proceeds		28
	2.8	Letter of Credit Subfacility		29
		2.8.1	Issuance of Letters of Credit	29
		2.8.2	Letter of Credit Fees	29
		2.8.3	Disbursements, Reimbursement	29
		2.8.4	Repayment of Participation Advances	30
		2.8.5	Documentation	31
		2.8.6	Determinations to Honor Drawing Requests	31
		2.8.7	Nature of Participation and Reimbursement Obligations	31
		2.8.8	Indemnity	33
		2.8.9	Liability for Acts and Omissions	33

TABLE OF CONTENTS

Section				Page
3.	INTEREST RATES			35
	3.1	Interest Rate Options		35
		3.1.1	Revolving Credit Interest Rate Options	35
		3.1.2	Rate Quotations	35
	3.2	Interest Periods		35
		3.2.1	Ending Date and Business Day	36
		3.2.2	Amount of Borrowing Tranche	36
		3.2.3	Termination Before Expiration Date	36
		3.2.4	Renewals	36
	3.3	Interest After Default		36
		3.3.1	Letter of Credit Fees, Interest Rate	36
		3.3.2	Other Obligations	36
		3.3.3	Acknowledgment	36
	3.4	Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available		37
		3.4.1	Unascertainable	37
		3.4.2	Illegality; Increased Costs; Deposits Not Available	37
		3.4.3	Agent’s and Bank’s Rights	37
	3.5	Selection of Interest Rate Options		38
4.	PAYMENTS			38
	4.1	Payments		38
	4.2	Pro Rata Treatment of Banks		39
	4.3	Interest Payment Dates		39
	4.4	Voluntary Prepayments		39
		4.4.1	Right to Prepay	39
		4.4.2	Replacement of a Bank	40
		4.4.3	Change of Lending Office	41
	4.5	Reduction of Commitment		41
	4.6	Additional Compensation in Certain Circumstances		41
		4.6.1	Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital Adequacy Requirements, Expenses, Etc.	41
		4.6.2	Indemnity	42
	4.7	Deposit into Lockbox		43
	4.8	Receipt and Application of Payment; Cash Collateral Account; Collections; Agent’s Right to Notify Account Debtors		43
		4.8.1	Receipt and Application of Payment	43
		4.8.2	Cash Collateral Account	44
		4.8.3	Collections; Agent’s Right to Notify Account Debtors	44
	4.9	Settlement Date Procedures		44

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TABLE OF CONTENTS

Section				Page
5.	REPRESENTATIONS AND WARRANTIES			45
	5.1	Representations and Warranties		45
		5.1.1	Organization and Qualification	45
		5.1.2	Capitalization and Ownership	45
		5.1.3	Subsidiaries	46
		5.1.4	Power and Authority	46
		5.1.5	Validity and Binding Effect	46
		5.1.6	No Conflict	46
		5.1.7	Litigation	47
		5.1.8	Title to Properties	47
		5.1.9	Financial Statements	47
		5.1.10	Use of Proceeds; Margin Stock; Section 20 Subsidiaries	48
		5.1.11	Full Disclosure	48
		5.1.12	Taxes	49
		5.1.13	Consents and Approvals	49
		5.1.14	No Event of Default; Compliance With Instruments	49
		5.1.15	Patents, Trademarks, Copyrights, Licenses, Etc.	49
		5.1.16	Security Interests	50
		5.1.17	Insurance	50
		5.1.18	Compliance With Laws	50
		5.1.19	Material Contracts; Burdensome Restrictions	50
		5.1.20	Investment Companies; Regulated Entities	51
		5.1.21	Plans and Benefit Arrangements	51
		5.1.22	Employment Matters	52
		5.1.23	Environmental Matters	52
		5.1.24	Senior Debt Status	54
	5.2	Updates to Schedules		55
6.	CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT			55
	6.1	Loans and Letters of Credit made on the Closing Date		55
	6.2	Each Additional Loan or Letter of Credit		55
7.	COVENANTS			56
	7.1	Affirmative Covenants		56
		7.1.1	Preservation of Existence, Etc.	56
		7.1.2	Payment of Liabilities, Including Taxes, Etc.	56
		7.1.3	Maintenance of Insurance	57
		7.1.4	Maintenance of Properties and Leases	58
		7.1.5	Maintenance of Patents, Trademarks, Etc.	58

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TABLE OF CONTENTS

Section				Page
		7.1.6	Visitation Rights	58
		7.1.7	Keeping of Records and Books of Account	59
		7.1.8	Plans and Benefit Arrangements	59
		7.1.9	Compliance With Laws	59
		7.1.10	Use of Proceeds	59
		7.1.11	Further Assurances	59
		7.1.12	Subordination of Intercompany Loans	60
		7.1.13	Tax Sharing	60
		7.1.14	Wire Transfer Agreement	60
		7.1.15	[Intentionally Omitted]	60
		7.1.16	Anti-Terrorism Laws	60
		7.1.17	[Intentionally Omitted]	60
	7.2	Negative Covenants		60
		7.2.1	Indebtedness	61
		7.2.2	Liens	62
		7.2.3	Guaranties	62
		7.2.4	Loans and Investments	62
		7.2.5	Dividends and Related Distributions	63
		7.2.6	Liquidations, Mergers, Consolidations, Acquisitions	64
		7.2.7	Dispositions of Assets or Subsidiaries	66
		7.2.8	Affiliate Transactions	66
		7.2.9	Subsidiaries, Partnerships and Joint Ventures	67
		7.2.10	Continuation of or Change in Business	67
		7.2.11	Plans and Benefit Arrangements	67
		7.2.12	Fiscal Year	68
		7.2.13	Issuance of Stock	68
		7.2.14	Changes in Organizational Documents and Senior Unsecured Notes	68
		7.2.15	Unused Availability	69
		7.2.16	Minimum Net Worth	69
		7.2.17	Negative Pledge Covenants	69
		7.2.18	Capital and Operating Leases	69
		7.2.19	Redemptions of Senior Unsecured Notes	70
		7.2.20	Enbridge Costs; Enbridge Cash Collateral	70
	7.3	Reporting Requirements		70
		7.3.1	Quarterly Financial Statements	70
		7.3.2	Annual Financial Statements	71
		7.3.3	Certificate of the Borrowers	71
		7.3.4	Borrowing Base Certificates, Schedules of Accounts and Inventory, Audits of Accounts and Inventory	72
		7.3.5	Notice of Default	72
		7.3.6	Notice of Litigation	72
		7.3.7	Certain Events	72
		7.3.8	Budgets, Forecasts, Other Reports and Information	73
		7.3.9	Notices Regarding Plans and Benefit Arrangements	73

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TABLE OF CONTENTS

Section				Page
8.	DEFAULT			75
	8.1	Events of Default		75
		8.1.1	Payments Under Loan Documents	75
		8.1.2	Breach of Warranty	75
		8.1.3	Unused Availability	76
		8.1.4	Breach of Negative Covenants or Visitation Rights	76
		8.1.5	Breach of Other Covenants	76
		8.1.6	Defaults in Other Agreements or Indebtedness	76
		8.1.7	Final Judgments or Orders	77
		8.1.8	Loan Document Unenforceable	77
		8.1.9	Notice of Lien or Assessment	77
		8.1.10	Insolvency	77
		8.1.11	Events Relating to Plans and Benefit Arrangements	77
		8.1.12	Cessation of Business	78
		8.1.13	Involuntary Proceedings	78
		8.1.14	Voluntary Proceedings	78
		8.1.15	Change in Control	79
	8.2	Consequences of Event of Default		79
		8.2.1	Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings	79
		8.2.2	Bankruptcy, Insolvency or Reorganization Proceedings	79
		8.2.3	Set-off	80
		8.2.4	Suits, Actions, Proceedings	80
		8.2.5	Application of Proceeds	80
		8.2.6	Other Rights and Remedies	81
	8.3	Notice of Sale		81
9.	THE AGENT			81
	9.1	Appointment		81
	9.2	Delegation of Duties		82
	9.3	Nature of Duties; Independent Credit Investigation		82
	9.4	Actions in Discretion of Agent; Instructions From the Banks		83
	9.5	Reimbursement and Indemnification of Agent by the Borrowers		83
	9.6	Exculpatory Provisions; Limitation of Liability		84
	9.7	Reimbursement and Indemnification of Agent by Banks		84
	9.8	Reliance by Agent		84
	9.9	Notice of Default		85
	9.10	Notices		85
	9.11	Banks in Their Individual Capacities		85

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TABLE OF CONTENTS

Section				Page
	9.12	Holders of Notes		85
	9.13	Equalization of Banks		86
	9.14	Successor Agent		86
	9.15	Agent’s Fee		87
	9.16	Availability of Funds		87
	9.17	Calculations		87
	9.18	Beneficiaries		87
10.	MISCELLANEOUS			88
	10.1	Modifications, Amendments or Waivers		88
		10.1.1	Increase of Commitment; Extension or Expiration Date	88
		10.1.2	Extension of Payment; Reduction of Principal Interest or Fees; Modification of Terms of Payment	88
		10.1.3	Release of Collateral or Guarantor	89
		10.1.4	Borrowing Base	89
		10.1.5	Inventory and Accounts Advance Rates	89
		10.1.6	Miscellaneous	89
	10.2	No Implied Waivers; Cumulative Remedies; Writing Required		90
	10.3	Reimbursement and Indemnification of Banks by the Borrowers; Taxes		90
	10.4	Holidays		91
	10.5	Funding by Branch, Subsidiary or Affiliate		91
		10.5.1	Notional Funding	91
		10.5.2	Actual Funding	91
	10.6	Notices		92
	10.7	Severability		93
	10.8	Governing Law		93
	10.9	Prior Understanding		93
	10.10	Duration; Survival		93
	10.11	Successors and Assigns		94
	10.12	Confidentiality		95
		10.12.1	General	95
		10.12.2	Sharing Information With Affiliates of the Banks	96
	10.13	Counterparts		96
	10.14	Agent’s or Bank’s Consent		96
	10.15	Exceptions		96

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TABLE OF CONTENTS

Section				Page
	10.16	CONSENT TO FORUM; WAIVER OF JURY TRIAL		96
	10.17	Certification From Banks and Participants		97
		10.17.1	Tax Withholding Clause	97
	10.18	Joinder of Guarantors		98
	10.19	Judgment Currency		98

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TABLE OF CONTENTS

Section			Page
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
SCHEDULE 1.1(A)	-	PRICING GRID
SCHEDULE 1.1(B)	-	COMMITMENTS OF BANKS AND ADDRESSES FOR NOTICES
SCHEDULE 1.1(P)	-	PERMITTED LIENS
SCHEDULE 1.1(Q)(i)	-	QUALIFIED ACCOUNTS
SCHEDULE 1.1(Q)(ii)	-	QUALIFIED INVENTORY
SCHEDULE 5.1.1	-	QUALIFICATIONS TO DO BUSINESS
SCHEDULE 5.1.2	-	CAPITALIZATION
SCHEDULE 5.1.3	-	SUBSIDIARIES
SCHEDULE 5.1.7	-	LITIGATION
SCHEDULE 5.1.8	-	OWNED AND LEASED REAL PROPERTY
SCHEDULE 5.1.12	-	TAXES
SCHEDULE 5.1.13	-	CONSENTS AND APPROVALS
SCHEDULE 5.1.15	-	PATENTS, TRADEMARKS, COPYRIGHTS, LICENSES, ETC.
SCHEDULE 5.1.17	-	INSURANCE POLICIES
SCHEDULE 5.1.19	-	MATERIAL CONTRACTS
SCHEDULE 5.1.21	-	EMPLOYEE BENEFIT PLAN DISCLOSURES
SCHEDULE 5.1.23	-	ENVIRONMENTAL DISCLOSURES
SCHEDULE 7.2.1	-	PERMITTED INDEBTEDNESS
SCHEDULE 7.2.4	-	EXISTING INVESTMENTS
EXHIBITS
EXHIBIT 1.1(A)(1)	-	ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT 1.1(G)	-	GUARANTOR JOINDER
EXHIBIT 1.1(Q)	-	LANDLORD/WAREHOUSEMAN’S WAIVER
EXHIBIT 1.1(R)	-	REVOLVING CREDIT NOTE
EXHIBIT 1.1(S)	-	SWING LOAN NOTE
EXHIBIT 1.1(W)	-	WIRE TRANSFER AGREEMENT
EXHIBIT 2.4.1	-	REVOLVING CREDIT LOAN REQUEST
EXHIBIT 2.4.2	-	SWING LOAN REQUEST
EXHIBIT 7.2.6	-	ACQUISITION NOTICE CERTIFICATE
EXHIBIT 7.3.3	-	QUARTERLY COMPLIANCE CERTIFICATE
EXHIBIT 7.3.4	-	BORROWING BASE CERTIFICATE

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AMENDED AND RESTATED CREDIT AGREEMENT

THIS AMENDED AND RESTATED CREDIT AGREEMENT is dated as of July 12, 2002 and is made by and among UNITED REFINING COMPANY, a Pennsylvania corporation (“United Refining”), UNITED REFINING COMPANY OF PENNSYLVANIA, a Pennsylvania corporation (“United Refining PA”), KIANTONE PIPELINE CORPORATION, a New York corporation (“Kiantone”), COUNTRY FAIR, INC., a Pennsylvania corporation (“Country Fair”) and hereinafter together with Kiantone, United Refining and United Refining PA sometimes collectively referred to as the “Borrowers” and individually as a “Borrower”), KWIK-FILL CORPORATION, a Pennsylvania corporation (as a Guarantor), the BANKS (as hereinafter defined), and PNC BANK, NATIONAL ASSOCIATION, in its capacity as agent for the Banks under this Agreement (hereinafter referred to in such capacity as the “Agent”).

WITNESSETH:

WHEREAS, the Borrowers have requested the Banks to provide a revolving credit facility to the Borrowers in an aggregate principal amount not to exceed $130,000,000; and

WHEREAS, the revolving credit facility shall be used for capital expenditures, permitted acquisitions and for working capital and general corporate purposes; and

WHEREAS, the Banks are willing to provide such credit upon the terms and conditions hereinafter set forth;

NOW, THEREFORE, the parties hereto, in consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, covenant and agree as follows:

1. CERTAIN DEFINITIONS

1.1 Certain Definitions.

In addition to words and terms defined elsewhere in this Agreement, the following words and terms shall have the following meanings, respectively, unless the context hereof clearly requires otherwise:

Account shall mean any account, contract right, general intangible, chattel paper, instrument or document representing any right to payment for goods sold (as such terms are defined in the Uniform Commercial Code) or services rendered, whether or not earned by performance and whether or not evidenced by a contract, instrument or document, which is now owned or hereafter acquired by a Loan Party. All Accounts, whether Qualified Accounts or not, shall be subject to the Banks’ Prior Security Interest.

Account Debtor shall mean any Person who is or who may become obligated to a Borrower under, with respect to, or on account of, an Account.

Acquisition Consideration shall mean with respect to any Permitted Acquisition, the aggregate of (i) the cash paid by any of the Loan Parties, directly or indirectly, to the seller in connection therewith, (ii) the Indebtedness incurred or assumed by any of the Loan Parties, whether in favor of the seller or otherwise and whether fixed or contingent, (iii) any Guaranty given or incurred by any Loan Party in connection therewith, and (iv) any other consideration given or obligation incurred by any of the Loan Parties in connection therewith.

Adjusted Fixed Charge Coverage Ratio shall mean the Consolidated Fixed Charge Coverage Ratio as such term is defined in the Indenture as in effect on the Closing Date. All defined terms included in the definition of Consolidated Fixed Charge Coverage Ratio in the Indenture as in effect on the Closing Date or included in other defined terms contained in such definition shall also have the meanings given them in the Indenture as in effect on the Closing Date.

Affiliate as to any Person shall mean any other Person (i) which directly or indirectly controls, is controlled by, or is under common control with such Person, (ii) which beneficially owns or holds ten percent (10%) or more of any class of the voting or other equity interests of such Person, or (iii) ten percent (10%) or more of any class of voting interests or other equity interests of which is beneficially owned or held, directly or indirectly, by such Person. Control, as used in this definition, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise, including the power to elect a majority of the directors or trustees of a corporation or trust, as the case may be.

Agent shall mean PNC Bank, National Association, and its successors and assigns.

Agent’s Fee shall have the meaning assigned to that term in Section 9.15.

Agent’s Letter shall have the meaning assigned to that term in Section 9.15.

Agreement shall mean this Credit Agreement, as the same may be supplemented or amended from time to time, including all schedules and exhibits.

Anti-Terrorism Laws shall mean any Laws relating to terrorism or money laundering, including Executive Order No. 13224, the USA Patriot Act, the Laws comprising or implementing the Bank Secrecy Act, and the Laws administered by the United States Treasury Department’s Office of Foreign Asset Control (as any of the foregoing Laws may from time to time be amended, renewed, extended, or replaced).

Applicable Margin shall mean, as applicable:

(A) the percentage spread to be added to Base Rate under the Base Rate Option based on the Average Unused Availability then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Revolving Credit Base Rate Spread,” or

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(B) the percentage spread to be added to Euro-Rate under the Euro-Rate Option based on the Average Unused Availability then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Revolving Credit Euro-Rate Spread.”

The Applicable Margin shall be computed in accordance with the parameters set forth on Schedule 1.1(A).

Appraised Value shall mean with respect to the Loan Parties’ Retail Store Inventory classified as Qualified Inventory, the net orderly liquidation value thereof as determined by an appraisal performed from time to time at Agent’s discretion by an appraiser approved by the Agent.

Assignment and Assumption Agreement shall mean an Assignment and Assumption Agreement by and among a Purchasing Bank, a Transferor Bank and the Agent, as Agent and on behalf of the remaining Banks, substantially in the form of Exhibit 1.1(A).

Authorized Officer shall mean those individuals, designated by written notice to the Agent from each Borrower, authorized to execute notices, reports and other documents on behalf of the Loan Parties required hereunder. A Borrower may amend such list of individuals from time to time by giving written notice of such amendment to the Agent.

Average Unused Availability shall mean, for any fiscal quarter of the Borrowers, the average daily difference between (i) the Borrowing Base, and (ii) the Revolving Facility Usage.

Banks shall mean the financial institutions named on Schedule 1.1(B) and their respective successors and assigns as permitted hereunder, each of which is referred to herein as a Bank.

Base Net Worth shall mean $75,000,000 of the Borrowers on a consolidated basis, excluding any non-cash Inventory adjustment as a result of LIFO accounting and the tax effect of such adjustments as a consequence of such LIFO accounting.

Base Rate shall mean, for any day, a fluctuating per annum rate of interest equal to the highest of (i) the interest rate per annum announced from time to time by the Agent at its Principal Office as its then prime rate, which rate may not be the lowest rate then being charged commercial borrowers by the Agent, (ii) the Federal Funds Open Rate plus  ¹/2 of 1%, and (iii) the Daily LIBOR Rate plus 100 basis points (1%). Interest on borrowings at the Base Rate is calculated on an actual/actual day basis and is payable monthly.

For purposes of this definition, “Daily LIBOR Rate” shall mean, for any day, the rate per annum determined by the Agent by dividing (x) the Published Rate by (y) a number equal to 1.00 minus the percentage prescribed by the Federal Reserve for determining the maximum reserve requirements with respect to any eurocurrency funding by banks on such day. “Published Rate” shall mean the rate of interest published each Business Day in The Wall Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for a one month period (or, if no such rate is published therein for any reason, then the Published Rate shall be the eurodollar rate for a one month period as published in another publication determined by the Agent).

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Base Rate Option shall mean the option of the Borrowers to have Revolving Credit Loans bear interest at the rate and under the terms and conditions set forth in subsection 3.1.1(i) or subsection 3.1.2(ii), respectively.

Benefit Arrangement shall mean at any time an “employee benefit plan,” within the meaning of Section 3(3) of ERISA, which is neither a Plan nor a Multiemployer Plan and which is maintained, sponsored or otherwise contributed to by any member of the ERISA Group.

Blocked Person shall have the meaning assigned to such term in Subsection 5.1.25.2.

Borrowers or Borrower shall have the meanings as set forth in the first paragraph of this Agreement.

Borrowing Base shall mean:

(1) at any time prior to the Retail Assets Perfection Period or after the Retail Assets Perfection Period has terminated, the sum of

(i) one hundred percent (100%) of cash held in the Cash Collateral Account, plus

(ii) eighty-five percent (85%) of (A) Qualified Accounts (excluding any Accounts arising from retail stores) and (B) Qualified Accounts consisting of Accounts arising from retail stores, plus

(iii) the lesser of the amount in (A) or the amount in (B) below:

(A) seventy percent (70%) of Qualified Inventory (excluding any Inventory at retail stores which is not Retail Store Inventory) and excluding Retail Store Inventory, OR

(B) $104,000,000.

(2) at any time during the Retail Assets Perfection Period, the sum of

(i) one hundred percent (100%) of cash held in the Cash Collateral Account, plus

(ii) eighty-five percent (85%) of (A) Qualified Accounts (excluding any Account arising from retail stores) and (B) Qualified Accounts consisting of Accounts arising from retail stores (collectively, the “Accounts Portion”), plus

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(iii) the lesser of the amount in (A) or the amount in (B) below:

(A) the sum of:

(x) seventy percent (70%) of Qualified Inventory (excluding Retail Store Inventory), plus

(y) the lesser of (1) eighty-five percent (85%) of the Appraised Value of Qualified Inventory which is Retail Store Inventory, or (2) seventy percent (70%) of the cost of such Retail Store Inventory, OR

(B) $104,000,000.

Borrowing Date shall mean, with respect to any Loan, the date for the making thereof or the renewal or conversion thereof at or to the same or a different Interest Rate Option, which shall be a Business Day.

Borrowing Tranche shall mean specified portions of Loans outstanding as follows: (i) any Loans to which a Euro-Rate Option applies which become subject to the same Interest Rate Option under the same Loan Request by the Borrowers and which have the same Interest Period shall constitute one Borrowing Tranche, and (ii) all Loans to which the Base Rate Option applies shall constitute one Borrowing Tranche.

Business Day shall mean any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed for business in Pittsburgh, Pennsylvania, and if the applicable Business Day relates to any Loan to which the Euro-Rate Option applies, such day must also be a day on which dealings are carried on in the London interbank market.

Canadian Law shall mean the Law of the Canadian provinces of Alberta, Saskatchewan, Manitoba or Ontario, as the case may be, and the federal laws of Canada applicable therein.

Cash Collateral Account shall mean the cash collateral account maintained by each of the Borrowers with the Agent from which monies may be withdrawn only by the Agent.

Closing Date shall mean November 21, 2008.

Collateral shall mean the property of the Loan Parties in which security interests are to be granted under the Security Agreement which shall include all Accounts and Inventory and related rights, as more fully set forth in the Security Agreement.

Commercial Letter of Credit shall mean any Letter of Credit which is a commercial letter of credit issued in respect of the purchase of goods or services by one or more of the Loan Parties in the ordinary course of their business.

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Consolidated Net Worth shall mean, as of any date of determination, total stockholders’ equity of the Borrowers and their Subsidiaries as of such date determined and consolidated in accordance with GAAP, excluding any non-cash Inventory adjustment as a result of LIFO accounting and the tax effect of such adjustments as a consequence of such LIFO accounting.

Depository shall have the meaning assigned to such term in Section 4.8.1.

Dollar, Dollars, U.S. Dollars and the symbol $ shall mean lawful money of the United States of America.

Drawing Date shall have the meaning assigned to that term in Section 2.8.3.2.

Earnings Before Interest and Taxes shall mean for any period the sum of (a) net income (or loss) of Borrowers on a consolidated basis for such period (excluding extraordinary gains), plus (b) all interest expense of Borrowers on a consolidated basis for such period, plus (c) all charges against income of Borrowers on a consolidated basis for such period for federal, state and local taxes.

EBITDA shall mean for any period the sum of (a) Earnings Before Interest and Taxes for such period plus (b) depreciation expenses for such period, plus (c) amortization expenses for such period.

Enbridge shall mean any one or more of Enbridge Energy Company, Inc., Enbridge Energy Limited Partnership and Enbridge Pipelines Inc.

Enbridge Cash Collateral Agreement shall mean that certain Security and Agency Agreement among Enbridge and United Refining Company dated as of August 25, 2003, as such agreement is modified, amended, restated or supplemented from time to time with the consent of the Agent.

Enbridge Pipeline shall mean that pipeline transportation system owned and/or operated by Enbridge used by any Loan Party to ship Inventory through one or more of the following Canadian provinces: Alberta, Saskatchewan, Manitoba and Ontario, as well as through the United States.

Environmental Complaint shall mean any written complaint setting forth a cause of action for personal or property damage or natural resource damage or equitable relief, order, notice of violation, citation, request for information issued pursuant to any Environmental Laws by an Official Body, subpoena or other written notice of any type relating to, arising out of, or issued pursuant to, any of the Environmental Laws or any Environmental Conditions, as the case may be.

Environmental Conditions shall mean any conditions of the environment, including the workplace, the ocean, natural resources (including flora or fauna), soil, surface

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water, groundwater, any actual or potential drinking water supply sources, substrata or the ambient air, relating to or arising out of, or caused by, the use, handling, storage, treatment, recycling, generation, transportation, release, spilling, leaking, pumping, emptying, discharging, injecting, escaping, leaching, disposal, dumping, threatened release or other management or mismanagement of Regulated Substances resulting from the use of, or operations on, any Property.

Environmental Laws shall mean all federal, state, local and foreign Laws and regulations, including permits, licenses, authorizations, bonds, orders, judgments and consent decrees issued, or entered into, pursuant thereto, relating to pollution or protection of human health or the environment or employee safety in the workplace.

ERISA shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.

ERISA Group shall mean, at any time, the Borrowers and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with the Borrowers, are treated as a single employer under Section 414 of the Internal Revenue Code.

Euro-Rate shall mean, with respect to the Loans comprising any Borrowing Tranche to which the Euro-Rate Option applies for any Interest Period, the interest rate per annum determined by the Agent by dividing (the resulting quotient rounded upwards, if necessary, to the nearest  ¹/100th of 1% per annum) (i) the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which US dollar deposits are offered by leading banks in the London interbank deposit market), or the rate which is quoted by another source selected by the Agent which has been approved by the British Bankers’ Association as an authorized information vendor for the purpose of displaying rates at which US dollar deposits are offered by leading banks in the London interbank deposit market (an “Alternate Source”), at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period as the London interbank offered rate for U.S. Dollars for an amount comparable to such Borrowing Tranche and having a borrowing date and a maturity comparable to such Interest Period (or if there shall at any time, for any reason, no longer exist a Bloomberg Page BBAM1 (or any substitute page) or any Alternate Source, a comparable replacement rate determined by the Agent at such time (which determination shall be conclusive absent manifest error)), by (ii) a number equal to 1.00 minus the Euro-Rate Reserve Percentage. The Euro-Rate may also be expressed by the following formula:

		Average of London interbank offered rates quoted
		by Bloomberg or appropriate successor as shown on
Euro-Rate	=	Bloomberg Page BBAM1
		1.00 – Euro-Rate Reserve Percentage

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The Euro-Rate shall be adjusted with respect to any Loan to which the Euro-Rate Option applies that is outstanding on the effective date of any change in the Euro-Rate Reserve Percentage as of such effective date. The Agent shall give prompt notice to the Borrowers of the Euro-Rate as determined or adjusted in accordance herewith, which determination shall be conclusive absent manifest error.

Euro-Rate Option shall mean the option of the Borrowers to have Revolving Credit Loans bear interest at the rate and under the terms and conditions set forth in subsection 3.1.1(ii).

Euro-Rate Reserve Percentage shall mean the maximum percentage (expressed as a decimal rounded upward to the nearest  ¹/100 of 1%) as determined by the Agent which is in effect during any relevant period, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the reserve requirements (including supplemental, marginal and emergency reserve requirements) with respect to eurocurrency funding (currently referred to as “Eurocurrency Liabilities”) of a member bank in such System.

Event of Default shall mean any of the events described in Section 8.1 and referred to therein as an “Event of Default.”

Executive Order No. 13224 shall mean the Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

Expiration Date shall mean, with respect to the Revolving Credit Commitments, November 27, 2011.

Federal Funds Effective Rate for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed and rounded upward to the nearest  ¹/100 of 1%) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced.

Federal Funds Open Rate for any day shall mean the rate per annum (based on a year of 360 days and actual days elapsed) which is the daily federal funds open rate as quoted by ICAP North America, Inc. (or any successor) as set forth on the Bloomberg Screen BTMM for that day opposite the caption “OPEN” (or on such other substitute Bloomberg Screen that displays such rate), or as set forth on such other recognized electronic source used for the purpose of displaying such rate as selected by the Agent (an “Alternate Source”) (or if such rate for such day does not appear on the Bloomberg Screen BTMM (or any substitute

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screen) or on any Alternate Source, or if there shall at any time, for any reason, no longer exist a Bloomberg Screen BTMM (or any substitute screen) or any Alternate Source, a comparable replacement rate determined by the Agent at such time (which determination shall be conclusive absent manifest error); provided however, that if such day is not a Business Day, the Federal Funds Open Rate for such day shall be the daily federal funds open rate as determined pursuant to this sentence on the immediately preceding Business Day. If and when the Federal Funds Open Rate changes, the rate of interest with respect to any advance to which the Federal Funds Open Rate applies will change automatically without notice to the Borrower, effective on the date of any such change.

Financial Projections shall have the meaning assigned to that term in subsection 5.1.9(ii).

GAAP shall mean generally accepted accounting principles as are in effect from time to time, subject to the provisions of Section 1.3, and applied on a consistent basis both as to classification of items and amounts.

Governmental Acts shall have the meaning assigned to that term in Section 2.8.8.

Guarantor shall mean each of the parties to this Agreement which has executed the Guaranty Agreement and any other party which joins this Agreement as a Guarantor after the date hereof.

Guarantor Joinder shall mean a joinder by a Person as a Guarantor under this Agreement, the Guaranty Agreement and the other Loan Documents in the form of Exhibit 1.1(G)(1).

Guaranty of any Person shall mean any obligation of such Person guaranteeing or in effect guaranteeing any liability or obligation of any other Person in any manner, whether directly or indirectly, including any agreement to indemnify or hold harmless any other Person, any performance bond or other suretyship arrangement and any other form of assurance against loss, except endorsement of negotiable or other instruments for deposit or collection in the ordinary course of business.

Guaranty Agreement shall mean the Guaranty and Suretyship Agreement dated as of July 12, 2002, executed and delivered by each of the Guarantors to the Agent for the benefit of the Banks.

Hedging Obligations shall mean with respect to any Person, (i) 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, and (ii) the obligations of such Person pursuant to any commodities futures contracts for the purchase or sale of crude oil, gasoline or any motor fuel constituent or refinery feed stock.

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Hedging Contracts shall mean hedging agreements or arrangements related to Hedging Obligations entered into by any Loan Party in the ordinary course of business and not for speculative purposes.

Historical Statements shall have the meaning assigned to that term in subsection 5.1.9(i).

Inactive Subsidiary shall mean any Subsidiary of the Borrowers which has no assets or liabilities and does not conduct business. The Inactive Subsidiaries are listed on Schedule 5.1.3.

Indebtedness shall mean, as to any Person at any time, any and all indebtedness, obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such Person for or in respect of: (i) borrowed money, (ii) amounts raised under or liabilities in respect of any note purchase or acceptance credit facility, (iii) reimbursement obligations (contingent or otherwise) under any letter of credit, currency swap agreement, interest rate swap, cap, collar or floor agreement or other interest rate management device, (iv) any other transaction (including capitalized leases and conditional sales agreements) having the commercial effect of a borrowing of money entered into by such Person to finance its operations or capital requirements (but not including trade payables and accrued expenses incurred in the ordinary course of business which are not represented by a promissory note or other evidence of indebtedness and which are not more than sixty (60) days past due), or (v) any Guaranty of Indebtedness for borrowed money; provided that any Indebtedness of any Loan Party that is Guaranteed by another Loan Party shall only be counted once in the covenants of the Loan Parties hereunder.

Indenture shall mean that certain Indenture dated as of August 6, 2004, among United Refining, the Subsidiary Guarantors named therein, and Bank of New York, as trustee, as the same may be amended, restated, supplemented or modified from time to time in accordance with Section 7.2.14.

Ineligible Security shall mean any security which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.

Insolvency Proceeding shall mean, with respect to any Person, (a) a case, action or proceeding with respect to such Person (i) before any court or any other Official Body under any bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or otherwise relating to the liquidation, dissolution, winding-up or relief of such Person, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other similar arrangement in respect of such Person’s creditors, generally, or any substantial portion of its creditors, undertaken under any Law.

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Intercompany Subordination Agreement shall mean a Subordination Agreement dated as of July 12, 2002 among the Loan Parties in favor of the Agent and the Banks.

Interest Period shall have the meaning assigned to such term in Section 3.2.

Interest Rate Option shall mean any Euro-Rate Option or Base Rate Option.

Internal Revenue Code shall mean the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect.

Inventory shall mean any and all crude oil, motor gasoline and asphalt, Retail Store Inventory (if such Inventory is subject to the Banks’ Prior Security Interest) including without limitation goods in transit, wheresoever located (including without limitation pipelines whether leased or owned) and whether now owned or hereafter acquired by a Loan Party, which are or may at any time be held as raw materials, finished goods, work-in-process, and all supplies or materials used or consumed in a Loan Party’s business of producing crude oil, asphalt and motor gasoline or held for sale or lease, including, without limitation, (a) all such property the sale or other disposition of which has given rise to Accounts and which has been returned to or repossessed or stopped in transit by a Loan Party, and (b) all packing, shipping and advertising materials relating to all or any such property, provided, however, motor gasoline after it is processed and leaves the refinery facility located in Warren, Pennsylvania shall be excluded from Inventory. All Inventory as defined above or in the Security Agreement, and whether or not Qualified Inventory, shall be subject to the Banks’ Prior Security Interest.

Investment Consideration shall mean the amount of cash paid by the Loan Parties, liabilities or other obligations, whether contingent or otherwise, assumed or incurred in connection with any investment, including without limitation loans, advances or capital contributions in any other Person, any Guaranty of obligations of another Person, all purchases (or other acquisitions for consideration) by any Loan Party of Indebtedness, capital stock or other securities of any other Person.

JP Morgan shall mean JP Morgan (f/ka Chase Lincoln Bank).

JP Morgan Lockbox shall mean that certain lockbox maintained by United Refining with JP Morgan pursuant to that certain lockbox agreement dated as of August 25, 1992.

Labor Contracts shall mean all employment agreements, employment contracts, collective bargaining agreements and other agreements among any Loan Party or Subsidiary of a Loan Party and its employees.

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Law shall mean any law (including common law), constitution, statute, treaty, regulation, rule, ordinance, opinion, release, ruling, order, injunction, writ, decree or award of any Official Body.

Letter of Credit shall have the meaning assigned to that term in Section 2.8.1.

Letter of Credit Borrowing shall mean an extension of credit resulting from a drawing under any Letter of Credit which shall not have been reimbursed on the date when made and shall not have been converted into a Revolving Credit Loan under Section 2.8.3.2.

Letter of Credit Fee shall mean the Letter of Credit fee based on the Average Unused Availability then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Letter of Credit Fee” computed in accordance with the parameters set forth on Schedule 1.1(A).

Letters of Credit Outstanding shall mean at any time the sum of (i) the aggregate undrawn face amount of outstanding Letters of Credit, and (ii) the aggregate amount of all unpaid and outstanding Reimbursement Obligations.

Lien shall mean any mortgage, deed of trust, pledge, lien, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing).

LLC (ALL) shall mean Central New York Materials, LLC, a New York limited liability company.

LLC (SEM) shall mean Vulcan-Koch Asphalt Marketing, LLC, a Delaware limited liability company, and on and after May 31, 2005, Vulcan-SemMaterials Asphalt Marketing, LLC, a Delaware limited liability company.

LLC Agreement (ALL) shall mean that certain Operating Agreement entered into by and between United Refining and All States Asphalt, Inc., a Massachusetts corporation.

LLC Agreement (SEM) shall mean the Vulcan-Koch Asphalt Marketing, LLC Limited Liability Company Agreement entered into by and between United Refining and Koch Materials Company dated June 1, 2001, with SemMaterials, L.P. acquiring the fifty percent (50%) interest owned by Koch Materials Company in the LLC (SEM) on or about May 31, 2005.

LLC Interests shall have the meaning given to such term in Section 5.1.3.

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Loan Documents shall mean this Agreement, the Agent’s Letter, the Guaranty Agreement, the Intercompany Subordination Agreement, the Notes, the Lockbox Agreements, the Security Agreement, the Wire Transfer Agreements, the Letters of Credit, Hedging Contracts to which any Bank or Affiliate of any Bank is a party, and any other instruments, certificates or documents delivered or contemplated to be delivered hereunder or thereunder or in connection herewith or therewith, as the same may be supplemented or amended from time to time in accordance herewith or therewith, and Loan Document shall mean any of the Loan Documents.

Loan Parties shall mean the Borrowers and the Guarantors.

Loan Request shall have the meaning given to such term in Section 2.4.

Loans shall mean collectively, and Loan shall mean separately, all Revolving Credit Loans and Swing Loans, or any Revolving Credit Loan or Swing Loan.

Lockbox Agreements shall mean collectively any lockbox agreements between the Borrowers and PNC, National City and JP Morgan referred to in the definitions of the PNC Lockbox, National City Lockbox and JP Morgan Lockbox, respectively.

Lockboxes shall mean collectively the PNC Lockbox, National City Lockbox and JP Morgan Lockbox.

Material Adverse Change shall mean any set of circumstances or events which (a) has or could reasonably be expected to have any material adverse effect whatsoever upon the validity or enforceability of this Agreement or any other Loan Document, (b) is or could reasonably be expected to be material and adverse to the business, properties, assets, financial condition, results of operations or prospects of the Loan Parties taken as a whole, (c) impairs materially or could reasonably be expected to impair materially the ability of the Loan Parties taken as a whole to duly and punctually pay or perform its Indebtedness, or (d) impairs materially or could reasonably be expected to impair materially the ability of the Agent or any of the Banks, to the extent permitted, to enforce their legal remedies pursuant to this Agreement or any other Loan Document.

Material Contract shall have the meaning assigned to such term in Section 5.1.19.

Month, with respect to an Interest Period under the Euro-Rate Option, shall mean the interval between the days in consecutive calendar months numerically corresponding to the first day of such Interest Period. If any Euro-Rate Interest Period begins on a day of a calendar month for which there is no numerically corresponding day in the month in which such Interest Period is to end, the final month of such Interest Period shall be deemed to end on the last Business Day of such final month.

Multiemployer Plan shall mean any employee benefit plan which is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA and to which a Borrower or any member of the ERISA Group is then making or accruing an obligation to make contributions or, within the preceding five Plan years, has made or had an obligation to make such contributions.

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Multiple Employer Plan shall mean a Plan which has two or more contributing sponsors (including a Borrower or any member of the ERISA Group) at least two of whom are not under common control, as such a plan is described in Sections 4063 and 4064 of ERISA.

National City shall mean National City Bank, successor to National City Bank of Pennsylvania.

National City Lockbox shall mean that certain lockbox maintained by United Refining with National City pursuant to that certain lockbox agreement dated as of July 1, 1991.

Notes shall mean the Revolving Credit Notes and the Swing Loan Note.

Notices shall have the meaning assigned to that term in Section 10.6.

Obligation shall mean any obligation or liability of any of the Loan Parties to the Agent, any of the Banks or Affiliates of the Banks, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, under or in connection with this Agreement, the Notes, the Letters of Credit, the Agent’s Letter or any other Loan Document.

Official Body shall mean any national, federal, state, provincial, local or other government or political subdivision or any agency, authority, bureau, central bank, commission, department or instrumentality of either, or any court, tribunal, grand jury or arbitrator, in each case whether foreign or domestic.

Other Permitted Investment shall have the meaning given to such term in Section 7.2.4(v).

Participation Advance shall mean, with respect to any Bank, such Bank’s payment in respect of its participation in a Letter of Credit Borrowing according to its Ratable Share pursuant to Section 2.8.4.

Partnership Interests shall have the meaning given to such term in Section 5.1.3.

PBGC shall mean the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor.

Permitted Acquisition shall have the meaning assigned to such term in Section 7.2.6.

Permitted Investments shall mean:

(i) direct obligations of the United States of America or any agency or instrumentality thereof or obligations backed by the full faith and credit of the United States of America maturing in twelve (12) months or less from the date of acquisition;

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(ii) commercial paper maturing in 180 days or less, rated not lower than A-1 by Standard & Poor’s or P-1 by Moody’s Investors Service, Inc. on the date of acquisition.;

(iii) demand deposits, time deposits or certificates of deposit maturing within one year in commercial banks whose obligations are rated A-1, A or the equivalent or better by Standard & Poor’s on the date of acquisition; and

(iv) mutual funds which hold exclusively investments described in clauses (i), (ii) or (iii) above.

Permitted Liens shall mean:

(i) Liens for taxes, assessments, or similar charges, incurred in the ordinary course of business and which are not yet due and payable;

(ii) Pledges or deposits made in the ordinary course of business to secure payment of workmen’s compensation, or to participate in any fund in connection with workmen’s compensation, unemployment insurance, old-age pensions or other social security programs;

(iii) Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens, securing obligations incurred in the ordinary course of business that are not yet due and payable and Liens of landlords securing obligations to pay lease payments that are not yet due and payable or in default;

(iv) Liens incurred or good-faith pledges or deposits made in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business, including without limitation, (1) statutory Liens in favor of Enbridge on inventory of the Borrowers in the pipeline of Enbridge , provided that to the extent the Inventory upon which such Liens exist is included in the Borrowing Base, such Liens are subject to the Enbridge Cash Collateral Agreement, and (2) consensual liens on cash of the Borrowers granted by the Borrowers pursuant to the Enbridge Cash Collateral Agreement in amounts not exceeding the amount of the obligations of the Borrower due to Enbridge as determined by Enbridge;

(v) Encumbrances consisting of zoning restrictions, easements or other restrictions on the use of real property, none of which materially impairs the use of such property or the value thereof, and none of which is violated in any material respect by existing or proposed structures or land use;

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(vi) Liens, security interests and mortgages in favor of the Agent for the benefit of the Banks;

(vii) Liens on property leased by any Loan Party or Subsidiary of a Loan Party under capital and operating leases securing obligations of such Loan Party or Subsidiary to the lessor under such leases;

(viii) Any Lien existing on the date of this Agreement and described on Schedule 1.1(P), securing Indebtedness then existing and any Lien on the same asset securing Indebtedness which refinances the Indebtedness securing such Lien provided that the principal amount secured thereby is not increased, and no additional assets become subject to such Lien;

(ix) Purchase Money Security Interests and Liens on assets other than Collateral to the extent permitted under Section 7.2.1(v); and

(x) The following, (A) if the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings diligently conducted so long as levy and execution thereon have been stayed and continue to be stayed, or (B) if a final judgment is entered and such judgment is discharged, bonded or stayed (and continue to be stayed for all times thereafter) within thirty (30) days of entry, and in either case they do not affect the Collateral or, in the aggregate, materially impair the ability of any Loan Party to perform its Obligations hereunder or under the other Loan Documents:

(1) Claims, Liens or encumbrances upon, and defects of title to, real or personal property other than the Collateral, including any attachment of personal or real property or other legal process prior to adjudication of a dispute on the merits; and

(2) Liens resulting from final judgments or orders described in Section 8.1.6; and

(3) Environmental Liens in respect of environmental clean-up costs alleged to be due as presently or prospectively authorized under any federal or state law, provided Borrowers shall have contested the lawfulness or amount of any such lien in good faith, provided further that the amount thereof, together with the Liens resulting from final judgments or orders described in Section 8.1.6 does not exceed $2,500,000;

(xi) any Lien granted to a commodity broker in connection with an account created and maintained by United Refining to engage in the trading of futures contracts on a recognized exchange for the purpose or reducing the price risk associated with holding or purchasing crude oil and refined petroleum products inventory; provided that, (x) any such Lien shall be confined solely to futures contracts permitted by clause (y) below and to cash equivalents in an amount not exceeding $5,000,000 on deposit in such account and (y) with respect to such account, neither United Refining nor any Subsidiary shall enter into any

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obligations in any hedging transactions, the effect of which would be to cause more than 2,500,000 barrels of crude oil or more than 2,500,000 barrels of refined petroleum products to be at any time subject to fixed-price contracts to which United Refining or any Subsidiary is a party. A contract for the purchase of crude oil or refined petroleum products shall not be deemed to be a “fixed-price contract” for purposes of the proviso to the immediately preceding sentence if the price thereunder is based upon and varies with Canadian price postings for the same or a similar commodity, prices for the same or a similar commodity on the New York Mercantile Exchange or any other index which reflects market prices;

(xii) any Lien on an asset acquired in a Permitted Acquisition provided that (a) the asset is not of the category of any of the assets described in the definition of “Collateral” contained in the Security Agreement, (b) such Lien secures Indebtedness incurred in connection with or assumed in such Permitted Acquisition, and (c) such Lien secures Indebtedness which is included in the determination of Acquisition Consideration; provided however, that at such time as such assets are permitted under the Indenture to be pledged as Collateral hereunder and the Borrowers elect to or are required to have such assets pledged as security for the Obligations hereunder, liens on such assets (other than in favor of the Agent and the Banks) shall not be permitted hereunder;

(xiii) Cash collateral securing surety bonds issued in the ordinary course of the business of the Loan Parties.

Permitted Voluntary Dissolution shall have the meaning assigned to such term in Section 7.1.1.

Person shall mean any individual, corporation, partnership, limited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, or any other entity.

Plan shall mean at any time an employee pension benefit plan (including a Multiple Employer Plan, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 of the Internal Revenue Code and either (i) is maintained by any member of the ERISA Group for employees of any member of the ERISA Group, or (ii) has at any time within the preceding five years been maintained by any entity which was at such time a member of the ERISA Group for employees of any entity which was at such time a member of the ERISA Group.

PNC Bank shall mean PNC Bank, National Association, its successors and assigns.

PNC Lockbox shall mean that certain lockbox maintained by United Refining with the Agent pursuant to that certain lockbox agreement dated as of February 7, 1993.

Potential Default shall mean any event or condition which with notice, passage of time or a determination by the Agent or the Required Banks, or any combination of the foregoing, would constitute an Event of Default.

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Principal Office shall mean the main banking office of the Agent in Pittsburgh, Pennsylvania.

Prior Security Interest shall mean a valid and enforceable perfected first-priority security interest under the Uniform Commercial Code or in the Personal Property Security Act of the province of either Alberta, Saskatchewan, Manitoba or Ontario, as the case may be, in the Collateral which is subject only to Liens for taxes not yet due and payable to the extent such prospective tax payments are given priority by statute or Purchase Money Security Interests as permitted hereunder or to Permitted Liens.

Prohibited Transaction shall mean any prohibited transaction as defined in Section 4975 of the Internal Revenue Code or Section 406 of ERISA for which neither an individual nor a class exemption has been issued by the United States Department of Labor.

Property shall mean all real property, both owned and leased, of any Loan Party or Subsidiary of a Loan Party.

Purchase Money Security Interest shall mean Liens upon tangible personal property securing loans to any Loan Party or Subsidiary of a Loan Party or deferred payments by such Loan Party or Subsidiary for the purchase of such tangible personal property.

Purchasing Bank shall mean a Bank which becomes a party to this Agreement by executing an Assignment and Assumption Agreement.

Qualified Accounts shall mean any Accounts of any Borrower which the Agent in its sole discretion reasonably exercised determines to have met all of the minimum requirements set forth on Schedule 1.1(Q)(i).

Qualified Enbridge Pipeline Inventory shall mean Qualified Inventory located in the Enbridge Pipeline.

Qualified Inventory shall mean any Inventory of any Borrower which the Agent in its sole discretion reasonably exercised determines to have met all of the minimum requirements set forth on Schedule 1.1(Q)(ii) and if such Inventory is located in the Enbridge Pipeline, shall meet the following additional requirements: (i) all current filings or recordations under Canadian Law necessary to perfect Agent’s security interest in such Inventory shall be in effect, (ii) notice of Agent’s Lien on such Inventory has been provided to Enbridge as required by any Tariff governing the transmission of such Inventory, (iii) the Banks shall have been provided with a legal opinion of Canadian counsel confirming that Agent has a perfected security interest in such Inventory, and (iv) the transmission costs and tariffs associated with such Inventory shall be subject to the Enbridge Cash Collateral Agreement pursuant to which a Loan Party has granted to Enbridge cash collateral or a letter of credit sufficient to pay such transmission costs and tariffs. Inventory which meets such requirements shall be valued for purposes of computing the Borrowing Base at the lower of:

(i) its book value on a FIFO basis or

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(ii) its market value which shall be

(1) its Appraised Value if such Inventory is Retail Store Inventory or

(2) computed as follows if such Inventory is not Retail Store Inventory: by multiplying the quantity of such Qualified Inventory by the unit price per volume reported on the date of computation by (a) Oil Price Information Services for products if such Inventory consists of refining products or Poten and Partners, Inc. for asphalt if such Inventory consists of asphalt, and (b) the New York Mercantile Exchange if such Inventory consists of crude oil; the market value of crude oil computed pursuant to this clause (ii)(2)(b) shall be reduced by the applicable crude stream discounts for oil pricing.

Ratable Share shall mean the proportion that a Bank’s Revolving Credit Commitment bears to the Revolving Credit Commitments of all of the Banks.

Regulated Substances shall mean any substance, including any solid, liquid, semisolid, gaseous, thermal, thoriated or radioactive material, refuse, garbage, wastes, chemicals, petroleum products, byproducts, coproducts, impurities, dust, scrap, heavy metals, defined as a “hazardous substance,” “pollutant,” “pollution,” “contaminant,” “hazardous or toxic substance,” “extremely hazardous substance,” “toxic chemical,” “toxic waste,” “hazardous waste,” “industrial waste,” “residual waste,” “solid waste,” “municipal waste,” “mixed waste,” “infectious waste,” “chemotherapeutic waste,” “medical waste,” or “regulated substance” or any related materials, substances or wastes as now or hereafter defined pursuant to any Environmental Laws, ordinances, rules, regulations or other directives of any Official Body, the generation, manufacture, extraction, processing, distribution, treatment, storage, disposal, transport, recycling, reclamation, use, reuse, spilling, leaking, dumping, injection, pumping, leaching, emptying, discharge, escape, release or other management or mismanagement of which is regulated by the Environmental Laws.

Regulation U shall mean Regulation U, T or X as promulgated by the Board of Governors of the Federal Reserve System, as amended from time to time.

Reimbursement Obligation shall have the meaning assigned to such term in Section 2.8.3.2.

Reportable Event shall mean a reportable event described in Section 4043 of ERISA and regulations thereunder with respect to a Plan or Multiemployer Plan.

Required Banks shall mean:

(A) if there are one (1) or two (2) Banks, Required Banks shall mean all of the Banks, or

(B) if there are more than (2) Banks, the Required Banks shall mean:

(i) if there are no Loans, Reimbursement Obligations or Letter of Credit Borrowings outstanding, Banks whose Revolving Credit Commitments aggregate at least fifty-one percent (51%) of the Revolving Credit Commitments of all of the Banks, or

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(ii) if there are Loans, Reimbursement Obligations or Letter of Credit Borrowings outstanding, any Bank or group of Banks if the sum of the Loans, Reimbursement Obligations and Letter of Credit Borrowings of such Banks then outstanding aggregates at least fifty-one percent (51%) of the total principal amount of all of the Loans, Reimbursement Obligations and Letter of Credit Borrowings then outstanding. Reimbursement Obligations and Letter of Credit Borrowings shall be deemed, for purposes of this definition, to be in favor of the Agent and not a participating Bank if such Bank has not made its Participation Advance in respect thereof and shall be deemed to be in favor of such Bank to the extent of its Participation Advance if it has made its Participation Advance in respect thereof.

Required Share shall have the meaning assigned to such term in Section 4.9.

Retail Assets Perfection Period shall commence when the Loan Parties have, to the satisfaction of the Agent as confirmed by the Agent in writing, granted to the Agent for the benefit of the Banks Prior Security Interests in all of the Inventory located at retail stores (which is not Retail Store Inventory) and Retail Store Inventory located at, or arising from (in the case of Accounts), the Loan Parties’ retail locations, and shall terminate if the Agent for the benefit of the Banks shall cease to have such a Prior Security Interest in such assets.

Retail Store Inventory shall mean the grocery and related products located at the retail locations of the Loan Parties.

Revolving Credit Commitment shall mean, as to any Bank at any time, the amount initially set forth opposite its name on Schedule 1.1(B) in the column labeled “Amount of Commitment for Revolving Credit Loans,” and thereafter on Schedule I to the most recent Assignment and Assumption Agreement, and Revolving Credit Commitments shall mean the aggregate Revolving Credit Commitments of all of the Banks.

Revolving Credit Loans shall mean collectively, and Revolving Credit Loan shall mean separately, all Revolving Credit Loans or any Revolving Credit Loan made by the Banks or one of the Banks to a Borrower or in the aggregate to the Borrowers pursuant to Section 2.1 or 2.8.3.

Revolving Credit Notes shall mean collectively, and Revolving Credit Note shall mean separately, all the Revolving Credit Notes of the Borrowers in the form of Exhibit 1.1(R) evidencing the Revolving Credit Loans together with all amendments, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part.

Revolving Facility Usage shall mean at any time the sum of the Revolving Credit Loans outstanding, the Swing Loans outstanding and the Letters of Credit Outstanding.

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Schedule of Accounts shall mean for each Borrower a detailed, aged trial balance of all then-existing Accounts in form and substance satisfactory to Agent, specifying in each case the names, addresses, face amount and dates of invoice(s) for each Account Debtor obligated on an Account so listed and, if requested by the Agent, copies of proof of delivery and customer statements and the original copy of all documents, including, without limitation, repayment histories and present status reports, and such other matters and information relating to the status of the Accounts and/or the Account Debtors so scheduled as the Agent may from time to time reasonably request.

Schedule of Inventory shall mean for each Borrower a current schedule of Inventory in form and substance satisfactory to the Agent on a FIFO basis, itemizing and describing the kind, type, quality and quantity of Inventory, as determined by physical counts taken annually, such Borrower’s costs therefor and selling price thereof, and the weekly withdrawals therefrom and additions thereto.

Section 20 Subsidiary shall mean the Subsidiary of the bank holding company controlling any Bank, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities.

Security Agreement shall mean the Security Agreement dated as of July 12, 2002 executed and delivered by each of the Loan Parties to the Agent for the benefit of the Banks.

Senior Unsecured Notes shall mean the $350,000,000 of 10.50% Series A Senior Notes due 2012 issued by United Refining and the Subsidiary Guarantors (as defined under the Indenture), as the same may be amended, restated, supplemented or modified from time to time in accordance with Section 7.2.14.

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

Settlement Date shall mean November 21, 2008, and thereafter shall mean Thursday of each week (if such day is a Business Day and, if not, the next succeeding Business Day) and any other Business Day on which the Agent elects to effect settlement pursuant to Section 2.5.3 or Section 4.9.

SFAS 133 means Statements of Financial Accounting Standards No. 133, as amended, “Accounting for Derivative Instruments and Hedging Activities”.

Shares shall have the meaning assigned to that term in Section 5.1.2.

Standard & Poor’s shall mean Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

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Standby Letter of Credit shall mean a Letter of Credit issued to support obligations of one or more of the Loan Parties, contingent or otherwise, which finance the working capital and business needs of the Loan Parties incurred in the ordinary course of business.

Subsidiary of any Person at any time shall mean (i) any corporation or trust of which fifty percent (50%) or more (by number of shares or number of votes) of the outstanding capital stock or shares of beneficial interest normally entitled to vote for the election of one or more directors or trustees (regardless of any contingency which does or may suspend or dilute the voting rights) is at such time owned directly or indirectly by such Person or one or more of such Person’s Subsidiaries, (ii) any partnership of which such Person is a general partner or of which fifty percent (50%) or more of the partnership interests is at the time directly or indirectly owned by such Person or one or more of such Person’s Subsidiaries, (iii) any limited liability company of which such Person is a member or of which fifty percent (50%) or more of the limited liability company interests is at the time directly or indirectly owned by such Person or one or more of such Person’s Subsidiaries, or (iv) any corporation, trust, partnership, limited liability company or other entity which is controlled by such Person or one or more of such Person’s Subsidiaries.

Subsidiary Shares shall have the meaning assigned to that term in Section 5.1.3.

Swing Loan Commitment shall mean PNC Bank’s commitment to make Swing Loans to the Borrowers pursuant to Section 2.1.2 hereof in an aggregate principal amount up to $20,000,000.

Swing Loan Note shall mean the Swing Loan Note of the Borrowers in the form of Exhibit 1.1(S) evidencing the Swing Loans together with all amendments, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part.

Swing Loan Request shall mean a request for Swing Loans made in accordance with Section 2.4.2 hereof.

Swing Loans shall mean collectively and Swing Loan shall mean separately all Swing Loans or any Swing Loan made by PNC Bank to the Borrowers pursuant to Section 2.1.2 hereof.

Tariff shall mean any one or more of the following (i) the National Energy Board tariffs described as: (a) NEB No. 229 Enbridge Pipelines Inc. Tolls Applying on Crude Petroleum, Natural Gas Liquids and Refined Petroleum Products; and (b) NEB No. 228 Enbridge Pipelines Inc., Crude Petroleum Tariff; and/or (ii) the Federal Energy Regulatory Commission tariffs described as: (a) FERC No. 3 Enbridge Energy, Limited Partnership Rules and Regulations Governing the Transportation of Crude Petroleum by Pipeline; and (b) FERC No. 4 Enbridge Energy, Limited Partnership Local Tariff Applying On Crude Petroleum and Natural Gas Liquids, as any such tariffs may be amended, modified, supplemented or replaced from time to time.

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Tax Sharing Agreement shall mean that certain Tax Sharing Agreement dated June 9, 1997, among the Borrowers and certain Subsidiaries and Affiliates of the Borrowers.

Transferor Bank shall mean the selling Bank pursuant to an Assignment and Assumption Agreement.

Uniform Commercial Code shall have the meaning assigned to that term in Section 5.1.16.

Unused Availability shall mean at any time, the excess of the amount of the Borrowing Base over the Revolving Facility Usage.

USA Patriot Act shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

Week shall mean the time period commencing with the opening of business on a Thursday and ending on the end of business the following Wednesday.

Wire Transfer Agreements shall mean the Agreements in the form of Exhibit 1.1(W) entered into among the Agent, the Borrowers and National City or JP Morgan upon request by the Agent; such agreements provide that JP Morgan or National City, as the case may be, shall, upon request by the Agent, wire transfer into the Cash Collateral Account the funds received in (i) the JP Morgan Lockbox, the related deposit account at JP Morgan or such other collection accounts as requested by Agent, and (ii) the National City Lockbox or the related deposit account at National City or such other collection accounts requested by Agent, in each case within 24 hours of their receipt thereof.

1.2 Construction.

Unless the context of this Agreement otherwise clearly requires, the following rules of construction shall apply to this Agreement and each of the other Loan Documents:

1.2.1 Number; Inclusion.

references to the plural include the singular, the plural, the part and the whole; “or” has the inclusive meaning represented by the phrase “and/or,” and “including” has the meaning represented by the phrase “including without limitation”;

1.2.2 Determination.

references to “determination” of or by the Agent or the Banks shall be deemed to include good-faith estimates by the Agent or the Banks (in the case of quantitative determinations) and good-faith beliefs by the Agent or the Banks (in the case of qualitative determinations), and such determination shall be conclusive absent manifest error;

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1.2.3 Agent’s Discretion and Consent.

whenever the Agent or the Banks are granted the right herein to act in its or their sole discretion or to grant or withhold consent such right shall be exercised in good faith;

1.2.4 Documents Taken as a Whole.

the words “hereof,” “herein,” “hereunder,” “hereto” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document as a whole and not to any particular provision of this Agreement or such other Loan Document;

1.2.5 Headings.

the section and other headings contained in this Agreement or such other Loan Document and the Table of Contents (if any) preceding this Agreement or such other Loan Document are for reference purposes only and shall not control or affect the construction of this Agreement or such other Loan Document or the interpretation thereof in any respect;

1.2.6 Implied References to This Agreement.

article, section, subsection, clause, schedule and exhibit references are to this Agreement or other Loan Document, as the case may be, unless otherwise specified;

1.2.7 Persons.

reference to any Person includes such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement or such other Loan Document, as the case may be, and reference to a Person in a particular capacity excludes such Person in any other capacity;

1.2.8 Modifications to Documents.

reference to any agreement (including this Agreement and any other Loan Document together with the schedules and exhibits hereto or thereto), document or instrument means such agreement, document or instrument as amended, modified, replaced, substituted for, superseded or restated;

1.2.9 From, To and Through.

relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding,” and “through” means “through and including”; and

1.2.10 Shall; Will.

references to “shall” and “will” are intended to have the same meaning.

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1.3 Accounting Principles.

Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation where appropriate), and all accounting or financial terms shall have the meanings ascribed to such terms by GAAP; provided, however, that all accounting terms used in Section 7.2 [Negative Covenants] (and all defined terms used in the definition of any accounting term used in Section 7.2 shall have the meaning given to such terms (and defined terms) under GAAP as in effect on the date hereof applied on a basis consistent with those used in preparing the Historical Statements referred to in subsection 5.1.9(i) [Historical Statements]. In the event of any change after the date hereof in GAAP, and if such change would result in the inability to determine compliance with the financial covenants set forth in Section 7.2 based upon a Borrower’s regularly prepared financial statements by reason of the preceding sentence, then the parties hereto agree to endeavor, in good faith, to agree upon an amendment to this Agreement that would adjust such financial covenants in a manner that would not affect the substance thereof, but would allow compliance therewith to be determined in accordance with such Borrower’s financial statements at that time.

2. REVOLVING CREDIT LOAN FACILITIES

2.1 Revolving Credit Commitments; Swing Loan Commitment.

2.1.1 Revolving Credit Commitments.

Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, each Bank severally agrees to make revolving credit loans (“Revolving Credit Loans”) to the Borrowers at any time or from time to time on or after the date hereof to the Expiration Date, provided that after giving effect to such Loan and subject to Section 10.1.4, the aggregate amount of Loans from such Bank shall not exceed such Bank’s Revolving Credit Commitment minus such Bank’s Ratable Share of the Letters of Credit Outstanding and outstanding Swing Loans. Within such limits of time and amount and subject to the other provisions of this Agreement, each Borrower may borrow, repay and reborrow pursuant to this Section 2.1.

2.1.2 Swing Loan Commitment.

Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, and in order to facilitate loans and repayments between Settlement Dates, PNC Bank may, at its option, cancelable at any time for any reason whatsoever, make swing loans (the “Swing Loans”) to the Borrowers at any time or from time to time after the date hereof to, but not including, the Expiration Date, in an aggregate principal amount up to but not in excess of the Swing Loan Commitment, provided that the aggregate principal amount of PNC Bank’s Swing Loans and the Revolving Credit Loans of all the Banks at any one time outstanding plus the Letters of Credit Outstanding shall not exceed the Revolving Credit Commitments of all the Banks. Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrowers may borrow, repay and reborrow pursuant to this Section 2.1.2.

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2.2 Nature of Banks’ Obligations With Respect to Revolving Credit Loans.

Each Bank shall be obligated to participate in each request for Revolving Credit Loans pursuant to Section 2.4 [Revolving Credit Loan Requests] in accordance with its Ratable Share. The aggregate of each Bank’s Revolving Credit Loans outstanding hereunder to the Borrowers at any time shall never exceed its Revolving Credit Commitment minus its Ratable Share of the Letters of Credit Outstanding. The obligations of each Bank hereunder are several. The failure of any Bank to perform its obligations hereunder shall not affect the Obligations of the Borrowers to any other party nor shall any other party be liable for the failure of such Bank to perform its obligations hereunder. The Banks shall have no obligation to make Revolving Credit Loans hereunder on or after the Expiration Date.

2.3 Commitment Fees.

Accruing from the date hereof until the Expiration Date, the Borrowers, jointly and severally, agree to pay to the Agent for the account of each Bank, as consideration for such Bank’s Revolving Credit Commitment hereunder, a nonrefundable commitment fee (the “Commitment Fee”) on the average daily difference between the amount of (i) such Bank’s Revolving Credit Commitment, as the same may be constituted from time to time (for purposes of this computation, PNC Bank’s Swing Loans shall be deemed to be borrowed amounts under PNC Bank’s Revolving Credit Commitment), and (ii) such Bank’s Loans and Ratable Share of the Letters of Credit. The Commitment Fee shall be equal to (x) 0.250% per annum if the average daily amount of outstanding Loans and Letters of Credit in the applicable fiscal quarter is greater than $75,000,000 in the aggregate, or (y) 0.375% per annum if the average daily amount of outstanding Loans and Letters of Credit in the applicable fiscal quarter is equal to or less than $75,000,000 in the aggregate. All Commitment Fees shall be computed on the basis of a year of 360 days and actual days elapsed and shall be payable in arrears on the first Business Day of each January, April, July and October after the date hereof and on the Expiration Date or upon acceleration of the Notes.

2.4 Revolving Credit Loan Requests; Swing Loan Requests.

2.4.1 Revolving Credit Loan Requests

Except as otherwise provided herein, a Borrower may from time to time prior to the Expiration Date request the Banks to make Revolving Credit Loans, or renew or convert the Interest Rate Option applicable to existing Revolving Credit Loans pursuant to Section 3.2 [Interest Periods], by delivering to the Agent, not later than 12:00 noon, Pittsburgh time, (i) three (3) Business Days prior to the proposed Borrowing Date with respect to the making of Revolving Credit Loans to which the Euro-Rate Option applies or the conversion to or the renewal of the Euro-Rate Option for any Loans; and (ii) the same Business Day as either the proposed Borrowing Date with respect to the making of a Revolving Credit Loan to which the Base Rate Option applies or the last day of the preceding Interest Period with respect to the conversion to the Base Rate Option for any Loan, of a duly completed request therefor

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substantially in the form of Exhibit 2.4.1 or a request by telephone immediately confirmed in writing by letter, facsimile or telex in such form (each, a “Loan Request”), it being understood that the Agent may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Loan Request shall be irrevocable and shall specify (i) the proposed Borrowing Date; (ii) the aggregate amount of the proposed Loans comprising each Borrowing Tranche, which shall be in integral multiples of $500,000 and not less than $2,000,000 for each Borrowing Tranche to which the Euro-Rate Option applies and not less than the lesser of $1,000,000 or the maximum amount available for Borrowing Tranches to which the Base Rate Option applies; (iii) whether the Euro-Rate Option or Base Rate Option shall apply to the proposed Loans comprising the applicable Borrowing Tranche; and (iv) in the case of a Borrowing Tranche to which the Euro-Rate Option applies, an appropriate Interest Period for the Loans comprising such Borrowing Tranche.

2.4.2 Swing Loan Requests.

Except as otherwise provided herein, the Borrowers may from time to time prior to the Expiration Date request PNC Bank to make Swing Loans by delivery to PNC Bank not later than 1:00 o’clock p.m. Pittsburgh time on the proposed Borrowing Date of a duly completed request therefor substantially in the form of Exhibit 2.4.2 hereto or a request by telephone immediately confirmed in writing by letter, facsimile or telex (each, a “Swing Loan Request”), it being understood that the Agent may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Swing Loan Request shall be irrevocable and shall specify the proposed Borrowing Date and the principal amount of such Swing Loan, which shall be not less than $100,000 and in multiples of $100,000.

2.5 Making Revolving Credit Loans and Swing Loans.

2.5.1 Making Revolving Credit Loans.

The Agent shall, promptly after receipt by it of a Loan Request pursuant to Section 2.4.1 [Revolving Credit Loan Requests], notify the Banks of its receipt of such Loan Request specifying: (i) the proposed Borrowing Date and the time and method of disbursement of the Revolving Credit Loans requested thereby; (ii) the amount and type of each such Revolving Credit Loan and the applicable Interest Period (if any); and (iii) the apportionment among the Banks of such Revolving Credit Loans as determined by the Agent in accordance with Section 2.2 [Nature of Banks’ Obligations with Respect to Revolving Credit Loans]. Each Bank shall remit the principal amount of each Revolving Credit Loan to the Agent such that the Agent is able to, and the Agent shall, to the extent the Banks have made funds available to it for such purpose and subject to Section 6.2 [Each Additional Loan or Letter of Credit], fund such Revolving Credit Loans to the Borrower requesting such Revolving Credit Loans in U.S. Dollars and immediately available funds at the Principal Office prior to 2:00 p.m., Pittsburgh time, on the applicable Borrowing Date, provided that if any Bank fails to remit such funds to the Agent in a timely manner, the Agent may elect in its sole discretion to fund with its own funds the Revolving Credit Loans of such Bank on such Borrowing Date, and such Bank shall be subject to the repayment obligation in Section 9.16 [Availability of Funds].

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2.5.2 Making Swing Loans.

So long as PNC Bank elects to make Swing Loans, PNC Bank shall, after receipt by it of a Swing Loan Request pursuant to Section 2.4.2, fund such Swing Loan to the Borrower in U.S. Dollars and immediately available funds at the Principal Office prior to 3:00 o’clock p.m. Pittsburgh time on the Borrowing Date.

2.5.3 Borrowings to Repay Swing Loans.

PNC may, at its option, exercisable at any time for any reason whatsoever, demand repayment of the Swing Loans, and each Bank shall make a Revolving Credit Loan in an amount equal to such Bank’s Ratable Share of the aggregate principal amount of the outstanding Swing Loans, provided that no Bank shall be obligated in any event to make Revolving Credit Loans, which when taken together with its Ratable Share of Letters of Credit Outstanding, exceed its Revolving Credit Commitment. Revolving Credit Loans made pursuant to the preceding sentence shall bear interest at the Base Rate Option and shall be deemed to have been properly requested in accordance with Section 2.4.1 without regard to any of the requirements of that provision. PNC shall provide notice to the Banks (which may be telephonic or written notice by letter, facsimile or telex) that such Revolving Credit Loans are to be made under this Section 2.5.3 and of the apportionment among the Banks, and the Banks shall be unconditionally obligated to fund such Revolving Credit Loans (whether or not the conditions specified in Section 6.2 are then satisfied) by the time PNC so requests, which shall not be later than 4:00 p.m. Pittsburgh time on the Business Day upon which the Banks receive such notice from PNC prior to 1:00 p.m. Pittsburgh time.

2.6 Notes.

2.6.1 Revolving Credit Notes.

The Obligation of each Borrower to repay the aggregate unpaid principal amount of the Revolving Credit Loans made to it by each Bank, together with interest thereon, shall be evidenced by a Revolving Credit Note in substantially the form of Exhibit 1.1(R) payable to the order of such Bank in a face amount equal to the Revolving Credit Commitment of such Bank.

2.6.2 Swing Loan Note.

The obligation of the Borrowers to repay the unpaid principal amount of the Swing Loans made to it by PNC Bank together with interest thereon shall be evidenced by a demand promissory note of the Borrowers in substantially the form of Exhibit 1.1(S) payable to the order of PNC Bank in a face amount equal to the Swing Loan Commitment.

2.7 Use of Proceeds.

The proceeds of the Revolving Credit Loans shall be used for general corporate purposes, permitted acquisitions, ongoing capital expenditure needs and working capital and in accordance with Section 7.1.10 [Use of Proceeds].

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2.8 Letter of Credit Subfacility.

2.8.1 Issuance of Letters of Credit.

A Borrower may request the issuance of a letter of credit (each a “Letter of Credit”) on behalf of itself or another Loan Party by delivering to the Agent a completed application and agreement for letters of credit in such form as the Agent may specify from time to time by no later than 10:00 a.m., Pittsburgh time, at least three (3) Business Days, or such shorter period as may be agreed to by the Agent, in advance of the proposed date of issuance. Each Letter of Credit shall be either a Standby Letter of Credit or a Commercial Letter of Credit. Subject to the terms and conditions hereof and in reliance on the agreements of the other Banks set forth in this Section 2.8, the Agent will issue a Letter of Credit, provided that each Letter of Credit shall (A) have a maximum maturity of twelve (12) months from the date of issuance, and (B) in no event expire later than ten (10) Business Days prior to the Expiration Date and providing that in no event shall (i) the Letters of Credit Outstanding exceed, at any one time, $50,000,000, or (ii) the Revolving Facility Usage exceed, at any one time the lesser of, (a) the Revolving Credit Commitments or (b) subject to Section 10.1.4, the Borrowing Base minus $10,000,000.

2.8.2 Letter of Credit Fees.

The Borrowers jointly and severally shall pay (i) to the Agent for the ratable account of the Banks the Letter of Credit Fee, and (ii) to the Agent for its own account, a fronting fee as set forth in the Agent’s Letter, which fees shall be computed on the daily average Letters of Credit Outstanding and shall be payable quarterly in arrears commencing with the first Business Day of each July, October, January and April following issuance of each Letter of Credit and on the Expiration Date. The Borrowers shall also pay to the Agent for the Agent’s sole account the Agent’s then-in-effect customary fees (excluding fees in the nature of fronting fees which are addressed in the preceding sentence) and administrative expenses payable with respect to the Letters of Credit as the Agent may generally charge or incur from time to time in connection with the issuance, maintenance, modification (if any), assignment or transfer (if any), negotiation and administration of Letters of Credit.

2.8.3 Disbursements, Reimbursement.

2.8.3.1 Immediately upon the Issuance of each Letter of Credit, each Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Agent a participation in such Letter of Credit and each drawing thereunder in an amount equal to such Bank’s Ratable Share of the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively.

2.8.3.2 In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the Agent will promptly notify the Borrowers. Provided that they shall have received such notice, the Borrowers shall reimburse (such obligation to reimburse the Agent shall sometimes be referred to as a “Reimbursement Obligation”) the Agent prior to 12:00 noon, Pittsburgh time, on each date that an amount is paid by the Agent under any Letter of Credit (each such date, a “Drawing Date”) in an amount equal

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to the amount so paid by the Agent. In the event the Borrowers fail to reimburse the Agent for the full amount of any drawing under any Letter of Credit by 12:00 noon, Pittsburgh time, on the Drawing Date, the Agent will promptly notify each Bank thereof, and the Borrowers shall be deemed to have requested that Revolving Credit Loans be made by the Banks under the Base Rate Option to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilized portion of the Revolving Credit Commitment and subject to the conditions set forth in Section 6.2 [Each Additional Loan or Letter of Credit] other than any notice requirements. Any notice given by the Agent pursuant to this Section 2.8.3.2 may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice.

2.8.3.3 Each Bank shall upon any notice pursuant to Section 2.8.3.2 make available to the Agent an amount in immediately available funds equal to its Ratable Share of the amount of the drawing, whereupon the participating Banks shall (subject to Section 2.8.3.4) each be deemed to have made a Revolving Credit Loan under the Base Rate Option to the Borrowers in that amount. If any Bank so notified fails to make available to the Agent for the account of the Agent the amount of such Bank’s Ratable Share of such amount by no later than 2:00 p.m., Pittsburgh time, on the Drawing Date, then interest shall accrue on such Bank’s obligation to make such payment, from the Drawing Date to the date on which such Bank makes such payment (i) at a rate per annum equal to the Federal Funds Effective Rate during the first three days following the Drawing Date, and (ii) at a rate per annum equal to the rate applicable to Loans under the Base Rate Option on and after the fourth day following the Drawing Date. The Agent will promptly give notice of the occurrence of the Drawing Date, but failure of the Agent to give any such notice on the Drawing Date or in sufficient time to enable any Bank to effect such payment on such date shall not relieve such Bank from its obligation under this Section 2.8.3.3.

2.8.3.4 With respect to any unreimbursed drawing that is not converted into Revolving Credit Loans under the Base Rate Option to the Borrowers in whole or in part as contemplated by Section 2.8.3.2, because of a Borrower’s failure to satisfy the conditions set forth in Section 6.2 [Each Additional Loan or Letter of Credit] other than any notice requirements or for any other reason, a Borrower shall be deemed to have incurred from the Agent a Letter of Credit Borrowing in the amount of such drawing. Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to the Revolving Credit Loans under the Base Rate Option. Each Bank’s payment to the Agent pursuant to Section 2.8.3.3 shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing and shall constitute a Participation Advance from such Bank in satisfaction of its participation obligation under this Section 2.8.3.

2.8.4 Repayment of Participation Advances.

2.8.4.1 Upon (and only upon) receipt by the Agent for its account of immediately available funds from a Borrower (i) in reimbursement of any payment made by the Agent under the Letter of Credit with respect to which any Bank has made a Participation Advance to the Agent, or (ii) in payment of interest on such a payment

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made by the Agent under such a Letter of Credit, the Agent will pay to each Bank, in the same funds as those received by the Agent, the amount of such Bank’s Ratable Share of such funds, except the Agent shall retain the amount of the Ratable Share of such funds of any Bank that did not make a Participation Advance in respect of such payment by Agent.

2.8.4.2 If the Agent is required at any time to return to any Loan Party, or to a trustee, receiver, liquidator, custodian or any official in any Insolvency Proceeding, any portion of the payments made by any Loan Party to the Agent pursuant to Section 2.8.4.1 in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Bank shall, on demand of the Agent, forthwith return to the Agent the amount of its Ratable Share of any amounts so returned by the Agent plus interest thereon from the date such demand is made to the date such amounts are returned by such Bank to the Agent, at a rate per annum equal to the Federal Funds Effective Rate in effect from time to time.

2.8.5 Documentation.

Each Loan Party agrees to be bound by the terms of the Agent’s application and agreement for letters of credit and the Agent’s written regulations and customary practices relating to letters of credit, though such interpretation may be different from the such Loan Party’s own. In the event of a conflict between such application or agreement and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct, the Agent shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following any Loan Party’s instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto.

2.8.6 Determinations to Honor Drawing Requests.

Subject to Section 10.8, in determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, the Agent shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit.

2.8.7 Nature of Participation and Reimbursement Obligations.

Each Bank’s obligation in accordance with this Agreement to make the Revolving Credit Loans or Participation Advances, as contemplated by Section 2.8.3, as a result of a drawing under a Letter of Credit, and the Obligations of each Borrower to reimburse the Agent upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.8 under all circumstances, including the following circumstances:

(i) any set-off, counterclaim, recoupment, defense or other right which such Bank may have against the Agent, a Borrower or any other Person for any reason whatsoever;

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(ii) the failure of any Loan Party or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in Section 2.1 [Revolving Credit Commitments], 2.4 [Loan Requests], 2.5 [Making Loans] or 6.2 [Each Additional Loan or Letter of Credit] or as otherwise set forth in this Agreement for the making of a Revolving Credit Loan, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of the Banks to make Participation Advances under Section 2.8.3;

(iii) any lack of validity or enforceability of any Letter of Credit;

(iv) any claim of breach of warranty that might be made by any Loan Party or any Bank against any beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense or other right which any Loan Party or any Bank may have at any time against a beneficiary, successor beneficiary any transferee or assignee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), the Agent or its Affiliates or any Bank or any other Person or, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Loan Party or Subsidiaries of a Loan Party and the beneficiary for which any Letter of Credit was procured);

(v) the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provisions of services relating to a Letter of Credit, in each case even if the Agent or any of the Agent’s Affiliates has been notified thereof;

(vi) payment by the Agent under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit;

(vii) the solvency of, or any acts of omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit;

(viii) any failure by the Agent or any of Agent’s Affiliates to issue any Letter of Credit in the form requested by any Loan Party, unless the Agent has received written notice from such Loan Party of such failure within three Business Days after the Agent shall have furnished such Loan Party a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice;

(ix) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of any Loan Party or Subsidiaries of a Loan Party;

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(x) any breach of this Agreement or any other Loan Document by any party thereto;

(xi) the occurrence or continuance of an Insolvency Proceeding with respect to any Loan Party;

(xii) the fact that an Event of Default or a Potential Default shall have occurred and be continuing;

(xiii) the fact that the Expiration Date shall have passed or this Agreement or the Revolving Credit Commitments hereunder shall have been terminated; and

(xiv) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing.

2.8.8 Indemnity.

In addition to amounts payable as provided in Section 9.5 [Reimbursement and Indemnification of Agent by the Borrowers], the Borrowers hereby jointly and severally agree to protect, indemnify, pay and save harmless the Agent from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel ) which the Agent may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of any Letter of Credit, other than as a result of (A) the gross negligence or willful misconduct of the Agent as determined by a final judgment of a court of competent jurisdiction, or (B) subject to the following clause (ii), the wrongful dishonor by the Agent of a proper demand for payment made under any Letter of Credit, or (ii) the failure of the Agent to honor a drawing under any such Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or governmental authority (all such acts or omissions herein called “Governmental Acts”).

2.8.9 Liability for Acts and Omissions.

As between any Loan Party and the Agent, or the Agent’s Affiliates, such Loan Party assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, the Agent shall not be responsible for any of the following including any losses or damages to any Loan Party or other Person or property relating therefrom: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if the Agent or the Agent’s Affiliates shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such

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Letter of Credit or any other claim of any Loan Party against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Loan Party and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from causes beyond the control of the Agent or the Agent’s Affiliates, as applicable, including any Governmental Acts, and none of the above shall affect or impair, or prevent the vesting of, any of the Agent’s or the Agent’s Affiliates rights or powers hereunder. Nothing in the preceding sentence shall relieve the Agent from liability for the Agent’s gross negligence or willful misconduct in connection with actions or omissions described in such clauses (i) through (viii) of such sentence. In no event shall the Agent or the Agent’s Affiliates be liable to any Loan Party for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys’ fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit.

Without limiting the generality of the foregoing, the Agent and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by the Agent or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by the Agent or its Affiliate; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on the Agent or its Affiliate in any way related to any order issued at the applicant’s request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “Order”) and honor any drawing in connection with any Letter of Credit that is the subject to such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit.

In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by the Agent or the Agent’s Affiliates under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put the Agent or the Agent’s Affiliates under any resulting liability to the Borrower or any Bank.

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3. INTEREST RATES

3.1 Interest Rate Options.

Each Borrower shall pay interest in respect of the outstanding unpaid principal amount of the Loans as selected by Borrowers from the Base Rate Option or Euro-Rate Option set forth below applicable to the Loans, it being understood that, subject to the provisions of this Agreement, Borrowers may select different Interest Rate Options and different Interest Periods to apply simultaneously to the Loans comprising different Borrowing Tranches and may convert to or renew one or more Interest Rate Options with respect to all or any portion of the Loans comprising any Borrowing Tranche, provided that (i) there shall not be at any one time outstanding more than five (5) Borrowing Tranches in the aggregate among all of the Loans, and (ii) only the Base Rate Option shall apply to Swing Loans. If at any time the designated rate applicable to any Loan made by any Bank exceeds such Bank’s highest lawful rate, the rate of interest on such Bank’s Loan shall be limited to such Bank’s highest lawful rate.

3.1.1 Revolving Credit Interest Rate Options.

Each Borrower shall have the right to select from the following Interest Rate Options applicable to the Revolving Credit Loans:

(i) Base Rate Option: A fluctuating rate per annum (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) equal to the Base Rate plus the Applicable Margin, such interest rate to change automatically from time to time effective as of the effective date of each change in the Base Rate; or

(ii) Euro-Rate Option: A rate per annum (computed on the basis of a year of 360 days and actual days elapsed) equal to the Euro-Rate plus the Applicable Margin.

3.1.2 Rate Quotations.

A Borrower may call the Agent on or before the date on which a Loan Request is to be delivered to receive an indication of the rates then in effect, but it is acknowledged that such projection shall not be binding on the Agent or the Banks nor affect the rate of interest which thereafter is actually in effect when the election is made.

3.2 Interest Periods.

At any time when a Borrower shall select, convert to or renew a Euro-Rate Option, such Borrower shall notify the Agent thereof at least three (3) Business Days prior to the effective date of such Euro-Rate Option by delivering a Loan Request. The notice shall specify an interest period (the “Interest Period”) during which such Interest Rate Option shall apply, such Interest Period to be one, two, three or six Months. Notwithstanding the preceding sentence, the following provisions shall apply to any selection of, renewal of, or conversion to a Euro-Rate Option:

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3.2.1 Ending Date and Business Day.

any Interest Period which would otherwise end on a date which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day;

3.2.2 Amount of Borrowing Tranche.

each Borrowing Tranche of Euro-Rate Loans shall be not less than $2,000,000 and in integral multiples of $500,000 in excess thereof;

3.2.3 Termination Before Expiration Date.

a Borrower shall not select, convert to or renew an Interest Period for any portion of the Loans that would end after the Expiration Date; and

3.2.4 Renewals.

in the case of the renewal of a Euro-Rate Option at the end of an Interest Period, the first day of the new Interest Period shall be the last day of the preceding Interest Period, without duplication in payment of interest for such day.

3.3 Interest After Default.

To the extent permitted by Law, upon the occurrence of an Event of Default and until such time such Event of Default shall have been cured or waived:

3.3.1 Letter of Credit Fees, Interest Rate,

the Letter of Credit Fees shall be increased by two percent (2%) per annum and the rate of interest for each Loan otherwise applicable pursuant to Section 2.8.2 [Letter of Credit Fees] or Section 3.1 [Interest Rate Options], respectively, shall bear interest at a rate per annum equal to the sum of the rate of interest applicable under the Base Rate Option plus an additional two percent (2.0%) per annum;

3.3.2 Other Obligations.

each other Obligation hereunder if not paid when due shall bear interest at a rate per annum equal to the sum of the rate of interest applicable under the Base Rate Option plus an additional two percent (2%) per annum from the time such Obligation becomes due and payable and until it is paid in full.

3.3.3 Acknowledgment.

Each Borrower acknowledges that the increase in rates referred to in this Section 3.3 reflects, among other things, the fact that such Loans or other amounts have become a substantially greater risk given their default status and that the Banks are entitled to additional compensation for such risk; and all such interest shall be payable by Borrowers upon demand by Agent.

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3.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available.

3.4.1 Unascertainable.

If on any date on which a Euro-Rate would otherwise be determined, the Agent shall have determined that:

(i) adequate and reasonable means do not exist for ascertaining such Euro-Rate, or

(ii) a contingency has occurred which materially and adversely affects the London interbank eurodollar market relating to the Euro-Rate, the Agent shall have the rights specified in Section 3.4.3.

3.4.2 Illegality; Increased Costs; Deposits Not Available.

If at any time any Bank shall have determined that:

(i) the making, maintenance or funding of any Loan to which a Euro-Rate Option applies has been made impracticable or unlawful by compliance by such Bank in good faith with any Law or any interpretation or application thereof by any Official Body or with any request or directive of any such Official Body (whether or not having the force of Law), or

(ii) such Euro-Rate Option will not adequately and fairly reflect the cost to such Bank of the establishment or maintenance of any such Loan, or

(iii) after making all reasonable efforts, deposits of the relevant amount in Dollars for the relevant Interest Period for a Loan to which a Euro-Rate Option applies, respectively, are not available to such Bank with respect to such Loan, in the London interbank market,

then the Agent shall have the rights specified in Section 3.4.3.

3.4.3 Agent’s and Bank’s Rights.

In the case of any event specified in Section 3.4.1 above, the Agent shall promptly so notify the Banks and the Borrowers thereof, and in the case of an event specified in Section 3.4.2 above, such Bank shall promptly so notify the Agent and endorse a certificate to such notice as to the specific circumstances of such notice, and the Agent shall promptly send copies of such notice and certificate to the other Banks and the Borrowers. Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given), the obligation of (A) the Banks, in the case of such notice given by the Agent, or (B) such Bank, in the case of such notice given by such Bank, to allow a Borrower to select, convert to

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or renew a Euro-Rate Option shall be suspended until the Agent shall have later notified the Borrowers, or such Bank shall have later notified the Agent, of the Agent’s or such Bank’s, as the case may be, determination that the circumstances giving rise to such previous determination no longer exist. If at any time the Agent makes a determination under Section 3.4.1 and a Borrower has previously notified the Agent of its selection of, conversion to or renewal of a Euro-Rate Option and such Interest Rate Option has not yet gone into effect, such notification shall be deemed to provide for selection of, conversion to or renewal of the Base Rate Option otherwise available with respect to such Loans. If any Bank notifies the Agent of a determination under Section 3.4.2, the Borrowers shall, subject to the Borrowers’ indemnification Obligations under Section 4.6.2 [Indemnity], as to any Loan of the Bank to which a Euro-Rate Option applies, on the date specified in such notice either convert such Loan to the Base Rate Option otherwise available with respect to such Loan or prepay such Loan in accordance with Section 4.4 [Voluntary Prepayments]. Absent due notice from the Borrowers of conversion or prepayment, such Loan shall automatically be converted to the Base Rate Option otherwise available with respect to such Loan upon such specified date.

3.5 Selection of Interest Rate Options.

If a Borrower fails to select a new Interest Period to apply to any Borrowing Tranche of Loans under the Euro-Rate Option at the expiration of an existing Interest Period applicable to such Borrowing Tranche in accordance with the provisions of Section 3.2 [Interest Periods], such Borrower shall be deemed to have converted such Borrowing Tranche to the Base Rate Option commencing upon the last day of the existing Interest Period.

4. PAYMENTS

4.1 Payments.

All payments and prepayments to be made in respect of principal, interest, Commitment Fees, Letter of Credit Fees, Agent’s Fee or other fees or amounts due from a Borrower hereunder shall be payable prior to 11:00 a.m., Pittsburgh time, on the date when due without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by each Borrower, and without set-off, counterclaim or other deduction of any nature, and an action therefor shall immediately accrue. Such payments shall be made to the Agent at the Principal Office for the account of PNC Bank with respect to the Swing Loans and for the ratable accounts of the Banks with respect to the Revolving Credit Loans in U.S. Dollars and in immediately available funds, and the Agent shall promptly distribute such amounts to the Banks in immediately available funds, provided that in the event payments are received by 11:00 a.m., Pittsburgh time, by the Agent with respect to the Loans and such payments are not distributed to the Banks on the same day received by the Agent, the Agent shall pay the Banks the Federal Funds Effective Rate with respect to the amount of such payments for each day held by the Agent and not distributed to the Banks. The Agent’s and each Bank’s statement of account, ledger or other relevant record shall, in the absence of manifest error, be conclusive as the statement of the amount of principal of and interest on the Loans and other amounts owing under this Agreement and shall be deemed an “account stated.”

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4.2 Pro Rata Treatment of Banks.

Each borrowing shall be allocated to each Bank according to its Ratable Share (except to the extent provided in Section 2.5.2), and each selection of, conversion to or renewal of any Interest Rate Option and each payment or prepayment by a Borrower with respect to principal, interest, Revolving Credit Commitment Fees, Letter of Credit Fees, or other fees (except for the Agent’s Fee) or amounts due from such Borrower hereunder to the Banks with respect to the Loans, shall (except as provided in Section 3.4.3 [Agent’s and Bank’s Rights] in the case of an event specified in Section 3.4 [Euro-Rate Unascertainable; Etc.], 4.4.2 [Voluntary Prepayments] or 4.4 [Additional Compensation in Certain Circumstances]) be made in proportion to the applicable Loans outstanding from each Bank and, if no such Loans are then outstanding, in proportion to the Ratable Share of each Bank. Notwithstanding any of the foregoing, each borrowing or payment or prepayment by the Borrowers of principal, interest, fees or other amounts from the Borrowers with respect to Swing Loans shall be made by or to PNC Bank according to Section 2.

4.3 Interest Payment Dates.

Interest on Loans to which the Base Rate Option applies shall be due and payable in arrears on the first Business Day of each calendar month after the date hereof and on the Expiration Date or upon acceleration of the Notes. Interest on Loans to which the Euro-Rate Option applies shall be due and payable on the last day of each Interest Period for those Loans and, if such Interest Period is longer than three (3) Months, also on the 90th day of such Interest Period. Interest on mandatory prepayments of principal under Section 4.5 [Mandatory Prepayments] shall be due on the date such mandatory prepayment is due. Interest on the principal amount of each Loan or other monetary Obligation shall be due and payable on demand after such principal amount or other monetary Obligation becomes due and payable (whether on the stated maturity date, upon acceleration or otherwise).

4.4 Voluntary Prepayments.

4.4.1 Right to Prepay.

Each Borrower shall have the right at its option from time to time to prepay the Loans in whole or part without premium or penalty (except as provided in Section 4.4.2 below or in Section 4.6 [Additional Compensation in Certain Circumstances]):

(i) at any time with respect to any Loan to which the Base Rate Option applies,

(ii) on the last day of the applicable Interest Period with respect to Loans to which a Euro-Rate Option applies, and

(iii) on the date specified in a notice by any Bank pursuant to Section 3.4 [Euro-Rate Unascertainable, Etc.] with respect to any Loan to which a Euro-Rate Option applies.

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Whenever a Borrower desires to prepay any part of the Loans, it shall provide a prepayment notice to the Agent no later than 1:00 p.m. Pittsburgh time on the date of prepayment of Revolving Credit Loans or Swing Loans, setting forth the following information:

(x) the date, which shall be a Business Day, on which the proposed prepayment is to be made; and

(y) the total principal amount of the prepayment which shall not be less than the lesser of: (a) in the case of the Revolving Credit Loans (1) $1,000,000, or (2) the Revolving Credit Loans comprising any Borrowing Tranche if all Revolving Credit Loans comprising such Borrowing Tranche are to be prepaid, and (b) in the case of the Swing Loans (1) $100,000, or (2) the principal amount outstanding on the Swing Loans.

All prepayment notices shall be irrevocable. The principal amount of the Loans for which a prepayment notice is given, together with interest on such principal amount, except with respect to Loans to which the Base Rate Option applies, shall be due and payable on the date specified in such prepayment notice as the date on which the proposed prepayment is to be made. Unless otherwise specified by such Borrower, any prepayments shall be applied first to Loans to which the Base Rate Option applies, then to Loans to which the Euro-Rate Option applies, and thereafter, first to the Revolving Credit Loans, then to the Swing Loans. Any prepayment hereunder shall be subject to the Borrowers’ Obligation to indemnify the Banks under Section 4.6.2 [Indemnity].

4.4.2 Replacement of a Bank.

In the event any Bank (i) gives notice under Section 3.4 [Euro-Rate Unascertainable, Etc.] or Section 4.6.1 [Increased Costs, Etc.], (ii) does not fund Revolving Credit Loans because the making of such Loans would contravene any Law applicable to such Bank, (iii) does not approve any action as to which consent of the Required Banks is requested by a Borrower and obtained hereunder, or (iv) becomes subject to the control of an Official Body (other than normal and customary supervision), then applicable Borrowers shall have the right at their option, with the consent of the Agent, which shall not be unreasonably withheld, to prepay the Loans of such Bank in whole, together with all interest accrued thereon, and terminate such Bank’s Revolving Credit Commitment within ninety (90) days after (w) receipt of such Bank’s notice under Section 3.4 [Euro-Rate Unascertainable, Etc.] or 4.6.1 [Increased Costs, Etc.], (x) the date such Bank has failed to fund Revolving Credit Loans because the making of such Loans would contravene Law applicable to such Bank, (y) the date of obtaining the consent which such Bank has not approved, or (z) the date such Bank became subject to the control of an Official Body, as applicable; provided that each such Borrower shall also pay to such Bank at the time of such prepayment any amounts required under Section 4.6 [Additional Compensation in Certain Circumstances] and any accrued interest due on such amount and any related fees; provided, however, that the Revolving Credit Commitment of such Bank shall be provided by one or more of the remaining Banks or a replacement lender acceptable to the Agent and the Borrowers; provided, further, the remaining Banks shall have no obligation hereunder to increase their Revolving Credit Commitments. Notwithstanding the foregoing, the Agent may only be replaced subject to the requirements of Section 9.14 [Successor Agent] and provided that all Letters of Credit have expired or been terminated or replaced.

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4.4.3 Change of Lending Office.

Each Bank agrees that upon the occurrence of any event giving rise to increased costs or other special payments under Section 3.4.2 [Illegality, Etc.] or 4.6.1 [Increased Costs, Etc.] with respect to such Bank, it will, if requested by a Borrower, use reasonable efforts (subject to overall policy considerations of such Bank) to designate another lending office for any Loans or Letters of Credit affected by such event, provided that such designation is made on such terms that such Bank and its lending office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of such Section. Nothing in this Section 4.4.3 shall affect or postpone any of the Obligations of the Borrowers or any other Loan Party or the rights of the Agent or any Bank provided in this Agreement.

4.5 Reduction of Commitment.

The Borrowers shall have the right at any time and from time to time upon fifteen (15) days’ irrevocable prior written notice to Agent to permanently and ratably reduce, in whole multiples of $5,000,000 of principal up to a maximum aggregate reduction of $25,000,000, the Commitments without penalty or premium, except as hereinafter set forth, provided that any such reduction shall be accompanied by prepayment of the Revolving Credit Notes (together with cash collateralization, if necessary, of the Letters of Credit), together with the full amount of interest accrued on the principal sum to be prepaid (and all amounts referred to in Section 4.6 [Additional Compensation in Certain Circumstances]), to the extent that the aggregate amount thereof then outstanding exceeds the Commitments as so reduced. From the effective date of any such reduction or termination, the obligations of Borrowers to pay the Commitment Fee shall correspondingly be reduced.

4.6 Additional Compensation in Certain Circumstances.

4.6.1 Increased Costs or Reduced Return Resulting From Taxes, Reserves, Capital Adequacy Requirements, Expenses, Etc.

If any Law, guideline or interpretation or any change in any Law, guideline or interpretation or application thereof by any Official Body charged with the interpretation or administration thereof or compliance with any request or directive (whether or not having the force of Law) of any central bank or other Official Body:

(i) subjects any Bank to any tax or changes the basis of taxation with respect to this Agreement, the Notes, the Loans or payments by any Borrower of principal, interest, Revolving Credit Commitment Fees, or other amounts due from any Borrower hereunder or under the Notes (except for taxes on the overall net income of such Bank),

(ii) imposes, modifies or deems applicable any reserve, special deposit or similar requirement against credits or commitments to extend credit extended by, or assets (funded or contingent) of, deposits with or for the account of, or other acquisitions of funds by, any Bank, or

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(iii) imposes, modifies or deems applicable any capital adequacy or similar requirement (A) against assets (funded or contingent) of, or letters of credit, other credits or commitments to extend credit extended by, any Bank, or (B) otherwise applicable to the obligations of any Bank under this Agreement,

and the result of any of the foregoing is to increase the cost to, reduce the income receivable by, or impose any expense (including loss of margin) upon any Bank with respect to this Agreement, the Notes or the making, maintenance or funding of any part of the Loans (or, in the case of any capital adequacy or similar requirement, to have the effect of reducing the rate of return on any Bank’s capital, taking into consideration such Bank’s customary policies with respect to capital adequacy) by an amount which such Bank in its sole discretion deems to be material, such Bank shall from time to time notify the Borrowers and the Agent of the amount determined in good faith (using any averaging and attribution methods employed in good faith) by such Bank to be necessary to compensate such Bank for such increase in cost, reduction of income, additional expense or reduced rate of return. Such notice shall set forth in reasonable detail the basis for such determination. Such amount shall be due and payable by the Borrowers to such Bank thirty (30) Business Days after such notice is given.

4.6.2 Indemnity.

In addition to the compensation required by Section 4.6.1 [Increased Costs, Etc.], the Borrowers shall indemnify, jointly and severally, each Bank against all liabilities, losses or expenses (including loss of margin, any loss or expense incurred in liquidating or employing deposits from third parties and any loss or expense incurred in connection with funds acquired by a Bank to fund or maintain Loans subject to a Euro-Rate Option) which such Bank sustains or incurs as a consequence of any:

(i) payment, prepayment, conversion or renewal of any Loan to which a Euro-Rate Option applies on a day other than the last day of the corresponding Interest Period (whether or not such payment or prepayment is mandatory, voluntary or automatic and whether or not such payment or prepayment is then due),

(ii) attempt by any Borrower to revoke (expressly, by later inconsistent notices or otherwise) in whole or part any Loan Requests under Section 2.4 [Revolving Credit Loan Requests] or Section 3.2 [Interest Periods] or notice relating to prepayments under Section 4.4 [Voluntary Prepayments] or notice relating to Commitment reductions under Section 4.5 [Reduction of Commitment], or

(iii) default by any Borrower in the performance or observance of any covenant or condition contained in this Agreement or any other Loan Document, including any failure of any Borrower to pay when due (by acceleration or otherwise) any principal, interest, Revolving Credit Commitment Fee or any other amount due hereunder.

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If any Bank sustains or incurs any such loss or expense, it shall from time to time notify the applicable Borrowers of the amount determined in good faith by such Bank (which determination may include such assumptions, allocations of costs and expenses and averaging or attribution methods as such Bank shall deem reasonable) to be necessary to indemnify such Bank for such loss or expense. Such notice shall set forth in reasonable detail the basis for such determination. Such amount shall be due and payable, jointly and severally, by the Borrowers to such Bank thirty (30) Business Days after such notice is given.

4.7 Deposit into Lockbox.

Each Borrower shall require Account Debtors whose Accounts represent at least fifty percent (50%) of all Accounts of all Loan Parties to make all payments due from them to such Loan Parties directly to the applicable Lockboxes, the respective deposit accounts at JP Morgan, National City and PNC Bank related to such Lockboxes or such other deposit accounts which are subject to the Wire Transfer Agreements.

4.8 Receipt and Application of Payment; Cash Collateral Account; Collections; Agent’s Right to Notify Account Debtors.

The Provisions of this Section 4.8 shall apply immediately and only upon the occurrence of an Event of Default and for so long as such Event of Default shall be continuing (referred to as a “Triggering Event”). Until the occurrence of a Triggering Event, Agent shall not send notices to the depositaries under the Wire Transfer Agreements directing payments be made by the depositaries to the blocked account located at the Agent.

4.8.1 Receipt and Application of Payment.

So long as any such Triggering Event shall be continuing (i) the Borrowers shall instruct JP Morgan and National City to deposit via wire transfer into the Cash Collateral Account all cash, checks and other items of payment received in the JP Morgan Lockbox or National City Lockbox, as the case may be, within 24 hours of JP Morgan’s or National City’s receipt thereof, (ii) all cash, checks or other items of payment received in the PNC Lockbox shall be immediately deposited into the Cash Collateral Account promptly upon PNC’s receipt thereof, and (iii) the Borrowers shall deposit into the Cash Collateral Account within 24 hours of Borrowers’ receipt thereof all cash, checks or other items of payment received from those Account Debtors not currently making payment into a Lockbox or, promptly upon request of the Agent, shall cause such Account Debtors to deposit such cash, checks or other items of payment directly into one of the Lockboxes. In the event a Borrower (or any of its Affiliates, shareholders, directors, officers, employees, agents or those persons acting for or in concert with a Borrower) shall receive any cash, checks, notes, drafts or other similar items of payment relating to or constituting the Collateral (or proceeds thereof), no later than the first Business Day following receipt thereof, such Borrower shall

(i) deposit or cause the same to be deposited, in kind, in the Cash Collateral Account established by such Borrower with the Agent or such other depository as may be designated in writing by the Agent (the “Depository”), from which account the Agent alone shall have the power of withdrawal, and with respect to which the Depository shall waive any rights of set off, and

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(ii) forward to the Agent, on a daily basis, a collection report in form and substance satisfactory to the Agent and, at the Agent’s request, copies of all such items and deposit slips related thereto.

4.8.2 Cash Collateral Account.

The Agent alone shall have the sole power of withdrawal from the Cash Collateral Account, and at each such time, all cash, notes, checks, drafts or similar items of payment by or for the account of a Borrower shall be the sole and exclusive property of the Banks immediately upon the earlier of the receipt of such items by the Agent or the Depository or the receipt of such items by such Borrower; provided, however, that for the purpose of computing interest hereunder such items shall be deemed to have been collected and shall be applied by the Agent on account of the Revolving Credit Loans outstanding to such Borrower one (1) Business Day after receipt by the Agent (subject to correction for any items subsequently dishonored for any reason whatsoever). Notwithstanding anything to the contrary herein, during each period when this Section 4.8.2 is applicable, all such items of payment shall, solely for purposes of determining the occurrence of such Event of Default, be deemed received upon actual receipt by the Agent, unless the same are subsequently dishonored for any reason whatsoever, and all funds in the Cash Collateral Account, including all payments made by or on behalf of and all credits due a Borrower, may be applied and reapplied in whole or in part to any of the Revolving Credit Loans to the extent and in the manner the Agent deems advisable.

4.8.3 Collections; Agent’s Right to Notify Account Debtors.

The Agent may notify any or all Account Debtors that the Accounts have been assigned to the Banks and that the Banks have a security interest therein, and to direct such Account Debtors to make all payments due from them to each Borrower upon the Accounts directly to the Agent to the Lockboxes or to any other lockbox designated by the Agent. The Agent shall promptly furnish the Borrowers with a copy of any such notice sent. Any such notice, in the Agent’s sole discretion, may be sent on the Borrowers’ stationery, in which event the appropriate Borrower shall co-sign such notice with the Agent. To the extent that any Law or custom or any contract or agreement with any Account Debtor requires notice to or the approval of the Account Debtor in order to perfect such assignment of a security interest in Accounts, each Borrower agrees to give such notice or obtain such approval.

4.9 Settlement Date Procedures.

In order to minimize the transfer of funds between the Banks and the Agent, the Borrowers may borrow, repay and reborrow Swing Loans and PNC Bank may make Swing Loans as provided in Section 2.1.2 hereof during the period between Settlement Dates. Not later than 1:00 p.m. on each Settlement Date, the Agent shall notify each Bank of its Ratable Share of the total of the Revolving Credit Loans and the Swing Loans (each a “Required Share”). Prior to 4:00 p.m., Pittsburgh time, on such Settlement Date, each Bank shall pay to

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the Agent the amount equal to the difference between its Required Share and its Revolving Credit Loans, and the Agent shall pay to each Bank its Ratable Share of all payments made by the Borrower to the Agent with respect to the Revolving Credit Loans. The Agent shall also effect settlement in accordance with the foregoing sentence on the proposed Borrowing Dates for Revolving Credit Loans and may at its option effect settlement on any other Business Day. These settlement procedures are established solely as a matter of administrative convenience, and nothing contained in this Section 4.9 shall relieve the Banks of their obligations to fund Revolving Credit Loans on dates other than a Settlement Date pursuant to Section 2.5.3. The Agent may at any time at its option for any reason whatsoever require each Bank to pay immediately to the Agent such Bank’s Ratable Share of the outstanding Revolving Credit Loans and each Bank may at any time require the Agent to pay immediately to such Bank its Ratable Share of all payments made by the Borrowers to the Agent with respect to the Revolving Credit Loans.

5. REPRESENTATIONS AND WARRANTIES

5.1 Representations and Warranties.

The Loan Parties, jointly and severally, represent and warrant to the Agent and each of the Banks as follows:

5.1.1 Organization and Qualification.

Each Loan Party and each Subsidiary of each Loan Party is a corporation, partnership or limited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of organization. Each Loan Party and each Subsidiary of each Loan Party has the lawful power to own or lease its properties and to engage in the business it presently conducts or proposes to conduct. Each Loan Party and each Subsidiary of each Loan Party is duly licensed or qualified and in good standing in each jurisdiction listed on Schedule 5.1.1 and in all other jurisdictions where the property owned or leased by it or the nature of the business transacted by it or both makes such licensing or qualification necessary, except where failure to be so licensed or qualified could not reasonably be expected to have a material adverse effect on any Loan Party, Subsidiary of any Loan Party, or their respective business operations.

5.1.2 Capitalization and Ownership.

The authorized capital stock of the Borrowers consists of the number of shares as set forth on Schedule 5.1.2 hereto. Schedule 5.1.2 hereto also sets forth the number of shares of issued and outstanding capital stock of such Borrower and the ownership of such shares, and all such shares have been validly issued and are fully paid and nonassessable. There are no options, warrants or other rights outstanding to purchase any shares of the capital stock of such Borrower except as indicated on Schedule 5.1.2.

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5.1.3 Subsidiaries.

Schedule 5.1.3 states the name of each of the Borrowers’ Subsidiaries, its jurisdiction of incorporation, its authorized capital stock, the issued and outstanding shares (referred to herein as the “Subsidiary Shares”) and the owners thereof if it is a corporation, its outstanding partnership interests (the “Partnership Interests”) if it is a partnership and its outstanding limited liability company interests, interests assigned to managers thereof and the voting rights associated therewith (the “LLC Interests”) if it is a limited liability company. The Borrowers and each Subsidiary of the Borrowers has good and marketable title to all of the Subsidiary Shares, Partnership Interests and LLC Interests it purports to own, free and clear in each case of any Lien. All Subsidiary Shares, Partnership Interests and LLC Interests have been validly issued, and all Subsidiary Shares are fully paid and nonassessable. All capital contributions and other consideration required to be made or paid in connection with the issuance of the Partnership Interests and LLC Interests have been made or paid, as the case may be. There are no options, warrants or other rights outstanding to purchase any such Subsidiary Shares, Partnership Interests or LLC Interests except as indicated on Schedule 5.1.3.

5.1.4 Power and Authority.

Each Loan Party has full power to enter into, execute, deliver and carry out this Agreement and the other Loan Documents to which it is a party, to incur the Indebtedness contemplated by the Loan Documents and to perform its Obligations under the Loan Documents to which it is a party, and all such actions have been duly authorized by all necessary proceedings on its part.

5.1.5 Validity and Binding Effect.

This Agreement has been duly and validly executed and delivered by each Loan Party, and each other Loan Document which any Loan Party is required to execute and deliver on or after the date hereof will have been duly executed and delivered by such Loan Party on the required date of delivery of such Loan Document. This Agreement and each other Loan Document constitutes, or will constitute, legal, valid and binding obligations of each Loan Party which is or will be a party thereto on and after its date of delivery thereof, enforceable against such Loan Party in accordance with its terms, except to the extent that enforceability of any of such Loan Document may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforceability of creditors’ rights generally or limiting the right of specific performance.

5.1.6 No Conflict.

Neither the execution and delivery of this Agreement or the other Loan Documents by any Loan Party nor the consummation of the transactions herein or therein contemplated or compliance with the terms and provisions hereof or thereof by any of them will conflict with, constitute a default under or result in any breach of (i) the terms and conditions of the certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents of any Loan Party, or (ii) any Law or any material agreement or instrument or order,

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writ, judgment, injunction or decree to which any Loan Party or any of its Subsidiaries is a party or by which it or any of its Subsidiaries is bound or to which it is subject, or result in the creation or enforcement of any Lien, charge or encumbrance whatsoever upon any property (now or hereafter acquired) of any Loan Party or any of its Subsidiaries (other than Liens granted under the Loan Documents).

5.1.7 Litigation.

There are no actions, suits, proceedings or investigations pending or, to the knowledge of any Loan Party, threatened against such Loan Party or any Subsidiary of such Loan Party at law or equity before any Official Body which individually or in the aggregate may result in any Material Adverse Change, except as described on Schedule 5.1.7. None of the Loan Parties or any Subsidiaries of any Loan Party is in violation of any order, writ, injunction or any decree of any Official Body which may result in any Material Adverse Change.

5.1.8 Title to Properties.

The real property owned or leased by each Loan Party and each Subsidiary of each Loan Party is described on Schedule 5.1.8. Each Loan Party and each Subsidiary of each Loan Party has good and marketable title to or valid leasehold interest in all properties, assets and other rights which it purports to own or lease or which are reflected as owned or leased on its books and records, free and clear of all Liens and encumbrances except Permitted Liens, and subject to the terms and conditions of the applicable leases. All leases of property are in full force and effect without the necessity for any consent which has not previously been obtained upon consummation of the transactions contemplated hereby.

5.1.9 Financial Statements.

(i) Historical Statements. Each Borrower has delivered to the Agent copies of its audited consolidated year-end financial statements for and as of the end of the fiscal year ended August 31, 2007, and copies of its unaudited consolidated quarter-end financial statements for and as of the end of the fiscal quarter ended May 31, 2008 (collectively, the “Historical Statements”). The Historical Statements were compiled from the books and records maintained by each Borrower’s management, are correct and complete in all material respects and fairly represent the consolidated financial condition of such Borrower and its Subsidiaries as of their dates and the results of operations for the fiscal periods then ended and have been prepared in accordance with GAAP consistently applied.

(ii) Financial Projections. Each Borrower has delivered to the Agent annual financial projections of such Borrower and its Subsidiaries for the period September 1, 2008 through August 31, 2011 derived from various assumptions of such Borrower’s management (the “Financial Projections”). The Financial Projections represent what management of the Borrowers believes to be a reasonable range of possible results in light of the history of the business, present and foreseeable conditions and the intentions of such Borrower’s management. The Financial Projections accurately reflect the liabilities of such Borrower and its Subsidiaries upon consummation of the transactions contemplated hereby as of the Closing Date.

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(iii) Accuracy of Financial Statements. None of the Borrowers nor any Subsidiary of any Borrowers has any material liabilities, contingent or otherwise, or forward or long-term commitments that are not disclosed in the Historical Statements or in the notes thereto, and except as disclosed therein, there are no unrealized or anticipated losses since August 31, 2007 from any commitments of the Borrowers or any Subsidiary of the Borrowers which may cause a Material Adverse Change. Since August 31, 2007, no Material Adverse Change has occurred.

5.1.10 Use of Proceeds; Margin Stock; Section 20 Subsidiaries.

5.1.10.1 General.

The Loan Parties intend to use the proceeds of the Loans in accordance with Sections 2.7, and 7.1.10.

5.1.10.2 Margin Stock.

None of the Loan Parties or any Subsidiaries of any Loan Party engages or intends to engage principally, or as one of its important activities, in the business of extending credit for the purpose, immediately, incidentally or ultimately, of purchasing or carrying margin stock (within the meaning of Regulation U). No part of the proceeds of any Loan has been or will be used, immediately, incidentally or ultimately, to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or to refund Indebtedness originally incurred for such purpose, or for any purpose which entails a violation of or which is inconsistent with the provisions of the regulations of the Board of Governors of the Federal Reserve System. None of the Loan Parties or any Subsidiary of any Loan Party holds or intends to hold margin stock in such amounts that more than twenty-five (25%) of the reasonable value of the assets of any Loan Party or Subsidiary of any Loan Party are or will be represented by margin stock.

5.1.10.3 Section 20 Subsidiaries.

The Loan Parties do not intend to use and shall not use any portion of the proceeds of the Loans, directly or indirectly (i) knowingly to purchase any Ineligible Securities from a Section 20 Subsidiary during any period in which such Section 20 Subsidiary makes a market in such Ineligible Securities, (ii) knowingly to purchase during the underwriting or placement period Ineligible Securities being underwritten or privately placed by a Section 20 Subsidiary, or (iii) to make payments of principal or interest on Ineligible Securities underwritten or privately placed by a Section 20 Subsidiary and issued by or for the benefit of any Loan Party or any Subsidiary of any Loan Party.

5.1.11 Full Disclosure.

Neither this Agreement nor any other Loan Document, nor any certificate, statement, agreement or other documents furnished to the Agent or any Bank in connection herewith or therewith, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein, in

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light of the circumstances under which they were made, not misleading. There is no fact known to any Loan Party which materially adversely affects the business, property, assets, financial condition, results of operations or prospects of any Loan Party or Subsidiary of any Loan Party which has not been set forth in this Agreement or in the certificates, statements, agreements or other documents furnished in writing to the Agent and the Banks prior to or at the date hereof in connection with the transactions contemplated hereby.

5.1.12 Taxes.

All federal, state, local and other tax returns required to have been filed with respect to each Loan Party and each Subsidiary of each Loan Party have been filed, and payment or adequate provision has been made for the payment of all taxes, fees, assessments and other governmental charges which have or may become due pursuant to said returns or to assessments received, except to the extent that such taxes, fees, assessments and other charges are being contested in good faith by appropriate proceedings diligently conducted and for which such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made. There are no agreements or waivers extending the statutory period of limitations applicable to any federal income tax return of any Loan Party or Subsidiary of any Loan Party for any period, except as described on Schedule 5.1.12.

5.1.13 Consents and Approvals.

Except for the filing of financing statements in the state, county or provincial filing offices, no consent, approval, exemption, order or authorization of, or a registration or filing with, any Official Body or any other Person is required by any Law or any agreement in connection with the execution, delivery and carrying out of this Agreement and the other Loan Documents by any Loan Party, except as listed on Schedule 5.1.13, all of which shall have been obtained or made on or prior to the Closing Date except as otherwise indicated on Schedule 5.1.13.

5.1.14 No Event of Default; Compliance With Instruments.

No event has occurred and is continuing and no condition exists or will exist after giving effect to the borrowings or other extensions of credit to be made on the Closing Date under or pursuant to the Loan Documents which constitutes an Event of Default or Potential Default. None of the Loan Parties or any Subsidiaries of any Loan Party is in violation of (i) any term of its certificate of incorporation, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents, or (ii) any material agreement or instrument to which it is a party or by which it or any of its properties may be subject or bound where such violation would constitute a Material Adverse Change.

5.1.15 Patents, Trademarks, Copyrights, Licenses, Etc.

Each Loan Party and each Subsidiary of each Loan Party owns or possesses all the material patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises, permits and rights necessary to own and operate its properties and to

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carry on its business as presently conducted and planned to be conducted by such Loan Party or Subsidiary, without known, possible, alleged or actual conflict with the rights of others. All material patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises and permits of each Loan Party and each Subsidiary of each Loan Party are listed and described on Schedule 5.1.15.

5.1.16 Security Interests.

The Liens and security interests granted to the Agent for the benefit of the Banks pursuant to the Security Agreement in the Collateral constitute and will continue to constitute Prior Security Interests under the Uniform Commercial Code as in effect in each applicable jurisdiction (the “Uniform Commercial Code”) or other applicable Law (including Canadian Law) entitled to all the rights, benefits and priorities provided by the Uniform Commercial Code or such Law (including Canadian Law), subject only to Permitted Liens. Upon the filing of financing statements relating to said security interests in each office and in each jurisdiction where required in order to perfect the security interests described above, all such action as is necessary or advisable to establish such rights of the Agent will have been taken, and there will be upon execution and delivery of the Security Agreement, such filings and such taking of possession, no necessity for any further action in order to preserve, protect and continue such rights, except the filing of continuation statements with respect to such financing statements within six months prior to each five-year anniversary of the filing of such financing statements. All filing fees and other expenses in connection with each such action have been or will be paid by the Borrowers.

5.1.17 Insurance.

Schedule 5.1.17 lists all insurance policies and other bonds to which any Loan Party or Subsidiary of any Loan Party is a party, all of which are valid and in full force and effect. No notice has been given or claim made and no grounds exist to cancel or avoid any of such policies or bonds or to reduce the coverage provided thereby. Such policies and bonds provide adequate coverage from reputable and financially sound insurers in amounts sufficient to insure the assets and risks of each Loan Party and each Subsidiary of each Loan Party in accordance with prudent business practice in the industry of the Loan Parties and their Subsidiaries.

5.1.18 Compliance With Laws.

The Loan Parties and their Subsidiaries are in compliance in all material respects with all applicable Laws (other than Environmental Laws which are specifically addressed in Section 5.1.23 [Environmental Matters]) in all jurisdictions in which any Loan Party or Subsidiary of any Loan Party is presently or will be doing business except where the failure to do so would not constitute a Material Adverse Change.

5.1.19 Material Contracts; Burdensome Restrictions.

Schedule 5.1.19 lists all material contracts (the “Material Contracts”) relating to the business operations of each Loan Party and each Subsidiary of any Loan Party,

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including all employee benefit plans and Labor Contracts. All such Material Contracts are valid, binding and enforceable upon such Loan Party or Subsidiary and, to the best of the Loan Parties’ knowledge, each of the other parties thereto in accordance with their respective terms, and there is no default thereunder, to the Loan Parties’ knowledge, with respect to parties other than such Loan Party or Subsidiary. None of the Loan Parties or their Subsidiaries is bound by any contractual obligation, or subject to any restriction in any organization document, or any requirement of Law which could result in a Material Adverse Change.

5.1.20 Investment Companies; Regulated Entities.

None of the Loan Parties or any Subsidiaries of any Loan Party is an “investment company” registered or required to be registered under the Investment Company Act of 1940 or under the “control” of an “investment company” as such terms are defined in the Investment Company Act of 1940 and shall not become such an “investment company” or under such “control.” None of the Loan Parties or any Subsidiaries of any Loan Party is subject to any other federal or state statute or regulation limiting its ability to incur Indebtedness for borrowed money.

5.1.21 Plans and Benefit Arrangements.

Except as set forth on Schedule 5.1.21:

(i) Each Borrower and each other member of the ERISA Group are in compliance in all material respects with any applicable provisions of ERISA with respect to all Benefit Arrangements, Plans and Multiemployer Plans. There has been no Prohibited Transaction with respect to any Benefit Arrangement or any Plan or, to the best knowledge of each Borrower, with respect to any Multiemployer Plan or Multiple Employer Plan, which could result in any material liability of any Borrower or any other member of the ERISA Group. Each Borrower and all other members of the ERISA Group have made when due any and all payments required to be made under any agreement relating to a Multiemployer Plan or a Multiple Employer Plan or any Law pertaining thereto. With respect to each Plan and Multiemployer Plan, each Borrower and each other member of the ERISA Group (i) have fulfilled in all material respects their obligations under the minimum funding standards of ERISA, (ii) have not incurred any liability to the PBGC, and (iii) have not had asserted against them any penalty for failure to fulfill the minimum funding requirements of ERISA.

(ii) To the best of each Borrower’s knowledge, each Multiemployer Plan and Multiple Employer Plan is able to pay benefits thereunder when due.

(iii) Neither any Borrower nor any other member of the ERISA Group has instituted or intends to institute proceedings to terminate any Plan.

(iv) No event requiring notice to the PBGC under Section 302(f)(4)(A) of ERISA has occurred or is reasonably expected to occur with respect to any Plan, and no amendment with respect to which security is required under Section 307 of ERISA has been made or is reasonably expected to be made to any Plan.

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(v) The aggregate actuarial present value of all benefit liabilities (whether or not vested) under each Plan, determined on Financial Accounting Statement 35 basis, as disclosed in, and as of the date of, the most recent actuarial report for such Plan, does not exceed the aggregate fair market value of the assets of such Plan.

(vi) Neither any Borrower nor any other member of the ERISA Group has incurred or reasonably expects to incur any material withdrawal liability under ERISA to any Multiemployer Plan or Multiple Employer Plan. Neither any Borrower nor any other member of the ERISA Group has been notified by any Multiemployer Plan or Multiple Employer Plan that such Multiemployer Plan or Multiple Employer Plan has been terminated within the meaning of Title IV of ERISA and, to the best knowledge of each Borrower, no Multiemployer Plan or Multiple Employer Plan is reasonably expected to be reorganized or terminated within the meaning of Title IV of ERISA.

(vii) To the extent that any Benefit Arrangement is insured, each Borrower and all other members of the ERISA Group have paid when due all premiums required to be paid for all periods through the Closing Date. To the extent that any Benefit Arrangement is funded other than with insurance, each Borrower and all other members of the ERISA Group have made when due all contributions required to be paid for all periods through the Closing Date.

(viii) All Plans, Benefit Arrangements and Multiemployer Plans have been administered in accordance with their terms and applicable Law.

5.1.22 Employment Matters.

Each of the Loan Parties and each of their Subsidiaries is in compliance with the Labor Contracts and all applicable federal, state and local labor and employment Laws, including those related to equal employment opportunity and affirmative action, labor relations, minimum wage, overtime, child labor, medical insurance continuation, worker adjustment and relocation notices, immigration controls and worker and unemployment compensation, where the failure to comply would constitute a Material Adverse Change. There are no outstanding grievances, arbitration awards or appeals therefrom arising out of the Labor Contracts or current or threatened strikes, picketing, handbilling or other work stoppages or slowdowns at facilities of any of the Loan Parties or any of their Subsidiaries which in any case would constitute a Material Adverse Change. Each Borrower has delivered to the Agent true and correct copies of each of the Labor Contracts.

5.1.23 Environmental Matters.

Except as disclosed on Schedule 5.1.23:

(i) None of the Loan Parties or any Subsidiaries of any Loan Party has received any Environmental Complaint from any Official Body or private Person alleging that such Loan Party or Subsidiary or any prior or subsequent owner of any of the Property is a potentially responsible party under the Comprehensive Environmental Response, Cleanup and Liability Act, 42 U.S.C. § 9601, et seq., and none of the Loan Parties has any reason to believe

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that such an Environmental Complaint might be received. There are no pending or, to any Loan Party’s actual knowledge, threatened Environmental Complaints relating to any Loan Party or Subsidiary of any Loan Party or, to any Loan Party’s actual knowledge, any prior or subsequent owner of any of the Property pertaining to, or arising out of, any Environmental Conditions.

(ii) Except for conditions, violations or failures which individually or in the aggregate are not reasonably likely to result in a Material Adverse Change, there are no circumstances at, on or under any of the Property that constitute a breach of or noncompliance with any of the Environmental Laws, and (x) there are no present Environmental Conditions which individually or in the aggregate are reasonably likely to result in a Material Adverse Change nor to any Loan Party’s actual knowledge, past Environmental Conditions at, on or under any of the Property or, to any Loan Party’s actual knowledge, at, on or under adjacent property, which resulted from any Loan Party’s ownership or operations, and (y) nothing has come to the attention of any Loan Party to indicate that there are any past or present Environmental Conditions, at, on, or under adjacent property which resulted from the actions of other persons, in each case (of (x) or (y) above), that prevent compliance with the Environmental Laws at any of the Property.

(iii) Neither any of the Property nor any structures, improvements, equipment, fixtures, activities or facilities thereon or thereunder contain or use Regulated Substances except in compliance with Environmental Laws. There are no processes, facilities, operations, equipment or other activities at, on or under any of the Property, or, to any Loan Party’s knowledge, at, on or under adjacent property, that currently result in the release or threatened release of Regulated Substances onto any of the Property, except to the extent that such releases or threatened releases are not a breach of or otherwise not a violation of the Environmental Laws, or are not likely to result in a Material Adverse Change.

(iv) There are no aboveground storage tanks, underground storage tanks or underground piping associated with such tanks, used for the management of Regulated Substances at, on or under any of the Property that (a) do not have, to the extent required by Environmental Laws, a full operational secondary containment system in place, and (b) are not otherwise in compliance with all applicable Environmental Laws. There are no abandoned underground storage tanks or underground piping associated with such tanks, previously used for the management of Regulated Substances by any Loan Party or any Subsidiaries of any Loan Party or to the best of any Loan Party’s knowledge, any such tanks or piping which had been used by any prior owner or operator of the Property at, on or under any of the Property that have not either been closed in place in accordance with Environmental Laws or removed in compliance with all applicable Environmental Laws, and to the best of each Loan Party’s knowledge no contamination associated with the use of such tanks exists on any of the Property that is not in compliance with Environmental Laws.

(v) Each Loan Party and to the best of any Loan Party’s knowledge, each Subsidiary of any Loan Party has all material permits, licenses, authorizations, plans and approvals necessary under the Environmental Laws for the conduct of the business of such Loan Party or Subsidiary as presently conducted. Each Loan Party and to the best of each Loan Party’s knowledge each Subsidiary of any Loan Party has submitted all material notices, reports and other filings required by the Environmental Laws to be submitted to an Official Body which pertain to past and current operations on any of the Property.

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(vi) Except for violations which individually or in the aggregate are not reasonably likely to result in a Material Adverse Change, all past and present on-site generation, storage, processing, treatment, recycling, reclamation, disposal or other use or management of Regulated Substances at, on, or under any of the Property and all off-site transportation, storage, processing, treatment, recycling, reclamation, disposal or other use or management of Regulated Substances by any Loan Party or to the best of each Loan Party’s knowledge by any other person have been done in accordance with the Environmental Laws.

5.1.24 Senior Debt Status.

The Obligations of each Loan Party under this Agreement, the Notes, the Guaranty Agreement and each of the other Loan Documents to which it is a party do rank and will rank at least pari passu in priority of payment with all other Indebtedness of such Loan Party. There is no Lien upon or with respect to any of the properties or income of any Loan Party or Subsidiary of any Loan Party which secures Indebtedness or other obligations of any Person except for Permitted Liens.

5.1.25 Anti-Terrorism Laws.

5.1.25.1 General.

None of the Loan Parties nor or any Affiliate of any Loan Party, is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

5.1.25.2 Executive Order No. 13224.

None of the Loan Parties, nor or any Affiliate of any Loan Party, or to the knowledge of the Loan Parties their respective agents acting or benefiting in any capacity in connection with the Loans, Letters of Credit or other transactions hereunder, is any of the following (each a “Blocked Person”):

(i) a Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

(ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive Order No. 13224;

(iii) a Person or entity with which any Bank is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

(iv) a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in the Executive Order No. 13224;

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(v) a Person or entity that is named as a “specially designated national” on the most current list published by the United States Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list, or

(vi) a person or entity who is affiliated or associated with a person or entity listed above.

No Loan Party or to the knowledge of any Loan Party, any of its agents acting in any capacity in connection with the Loans, Letters of Credit or other transactions hereunder (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224.

5.2 Updates to Schedules.

Should any of the information or disclosures provided on any of the Schedules attached hereto become outdated or incorrect in any material respect, the Borrowers shall promptly provide the Agent in writing with such revisions or updates to such Schedule as may be necessary or appropriate to update or correct same; provided, however, that no Schedule shall be deemed to have been amended, modified or superseded by any such correction or update, nor shall any breach of warranty or representation resulting from the inaccuracy or incompleteness of any such Schedule be deemed to have been cured thereby, unless and until the Required Banks, in their sole and absolute discretion, shall have accepted in writing such revisions or updates to such Schedule.

6. CONDITIONS OF LENDING AND ISSUANCE OF LETTERS OF CREDIT

The obligation of each Bank to make Loans and of the Agent to issue Letters of Credit hereunder is subject to the performance by each of the Loan Parties of its Obligations to be performed hereunder at or prior to the making of any such Loans or issuance of such Letters of Credit and to the satisfaction of the following further conditions:

6.1 Loans and Letters of Credit made on the Closing Date.

Initial Loans hereunder shall not be made until the conditions set forth in Section 3 of Amendment No. 8 to this Agreement are satisfied.

6.2 Each Additional Loan or Letter of Credit.

At the time of making any Loans or issuing any Letters of Credit other than Loans made or Letters of Credit issued on the Closing Date and after giving effect to the proposed extensions of credit: the representations and warranties of the Loan Parties contained in Article 5 and in the other Loan Documents shall be true on and as of the date of such additional Loan or Letter of Credit with the same effect as though such representations and

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warranties had been made on and as of such date (except representations and warranties which expressly relate solely to an earlier date or time, which representations and warranties shall be true and correct on and as of the specific dates or times referred to therein) and the Loan Parties shall have performed and complied with all covenants and conditions hereof; no Event of Default or Potential Default shall have occurred and be continuing or shall exist; the making of the Loans or issuance of such Letter of Credit shall not contravene any Law applicable to any Loan Party or Subsidiary of any Loan Party or any of the Banks; and each Borrower shall have delivered to the Agent a duly executed and completed Loan Request or application for a Letter of Credit as the case may be.

7. COVENANTS

7.1 Affirmative Covenants.

The Loan Parties, jointly and severally, covenant and agree that until payment in full of the Loans, Reimbursement Obligations and Letter of Credit Borrowings, and interest thereon, expiration or termination of all Letters of Credit, satisfaction of all of the Loan Parties’ other Obligations under the Loan Documents and termination of the Revolving Credit Commitments and Swing Loan Commitment, the Loan Parties shall comply at all times with the following affirmative covenants:

7.1.1 Preservation of Existence, Etc.

Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain its legal existence as a corporation, limited partnership or limited liability company and its license or qualification and good standing in each jurisdiction in which its ownership or lease of property or the nature of its business makes such license or qualification necessary, except as otherwise expressly permitted in Section 7.2.6 [Liquidations, Mergers, Etc.], except that the Borrowers may cause a Subsidiary to dissolve (each a “Permitted Voluntary Dissolution”) and go out of existence if the Subsidiary does not have any material assets and does not conduct any business and the Loan Parties otherwise comply with the covenants herein with respect to such Subsidiary.

7.1.2 Payment of Liabilities, Including Taxes, Etc.

Each Loan Party shall, and shall cause each of its Subsidiaries to, duly pay and discharge all liabilities to which it is subject or which are asserted against it, promptly as and when the same shall become due and payable, or, in the case of trade payables, within 60 days thereafter, including all taxes, assessments and governmental charges upon it or any of its properties, assets, income or profits, prior to the date on which penalties attach thereto, except to the extent that such liabilities, including taxes, assessments or charges, are being contested in good faith and by appropriate and lawful proceedings diligently conducted and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made, but only to the extent that failure to discharge any such liabilities would not result in any additional liability which would adversely affect to a material extent the financial condition of any Loan Party or Subsidiary of any Loan Party or which would affect the Collateral, provided

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that the Loan Parties and their Subsidiaries will pay all such liabilities forthwith upon the commencement of proceedings to foreclose any Lien which may have attached as security therefor, unless the applicable Loan Parties are prohibited by Law for making such payment, in which case such Loan Party shall immediately notify the Agent thereof and make such payment as soon as it is permitted to do so.

7.1.3 Maintenance of Insurance.

Each Loan Party shall, and shall cause each of its Subsidiaries to, insure its properties and assets against loss or damage by fire and such other insurable hazards as such assets are commonly insured (including fire, extended coverage, property damage, workers’ compensation, public liability and business interruption insurance) and against other risks (including errors and omissions) in such amounts as similar properties and assets are insured by prudent companies in similar circumstances carrying on similar businesses, and with reputable and financially sound insurers, including self-insurance to the extent customary, all as reasonably determined by the Agent. At the request of the Agent, the Loan Parties shall deliver to the Agent and each of the Banks (x) on the Closing Date and annually thereafter an original certificate of insurance signed by the Loan Parties’ independent insurance broker describing and certifying as to the existence of the insurance on the Collateral required to be maintained by this Agreement and the other Loan Documents, together with a copy of the endorsement described in the next sentence attached to such certificate, and (y) from time to time a summary schedule indicating all insurance then in force with respect to each of the Loan Parties. Such policies of insurance shall contain endorsements, in form and substance acceptable to the Agent, which shall specify the Agent as an additional insured and lender loss payee as its interests may appear and that such insurance may be cancelled only upon ten (10) days notice to the Agent, with the understanding that any obligation imposed upon the insured (including, without limitation, the liability to pay premiums) shall be the sole obligation of the Loan Parties and not that of the insured. Each Loan Party shall notify the Agent promptly of any occurrence causing a material loss or decline in value of the Collateral owned or leased by such Borrower and the estimated (or actual, if available) amount of such loss or decline. Any monies received by the Agent constituting proceeds of insurance on or relating to the Collateral, may, at the option of the Agent, be applied by the Agent to the payment of the Loans in such manner as the Agent may reasonably determine. Anything hereinabove to the contrary notwithstanding, and subject to the fulfillment of the conditions set forth below, Agent shall remit to Loan Parties insurance proceeds received by Agent during any calendar year under insurance policies procured and maintained by Borrowers which insure the Collateral to the extent such insurance proceeds do not exceed $5,000,000 in the aggregate during such calendar year or $2,500,000 per occurrence. In the event the amount of insurance proceeds received by Agent for any occurrence exceeds $2,500,000, then Agent shall not be obligated to remit the insurance proceeds to Loan Parties until Loan Parties shall provide Agent with evidence reasonably satisfactory to Agent that the insurance proceeds will be used by Borrowers to repair, replace or restore the Collateral which was the subject of the insurable loss. In the event the Loan Parties have previously received (or, after giving effect to any proposed remittance by Agent to Loan Parties would receive) insurance proceeds with respect to Collateral which equal or exceed $5,000,000 in the aggregate during any calendar year, then the Required Banks may, in their sole discretion, either remit the insurance proceeds to the Loan Parties upon the Loan Parties providing the Agent

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with evidence reasonably satisfactory to the Agent that the insurance proceeds will be used by Loan Parties to repair, replace or restore the Collateral which was the subject of the insurable loss, or apply the proceeds to the Obligations in such order as the Agent in its sole discretion shall determine; provided however, that the Loan Parties shall complete any repair, replacement or restoration of the Collateral within 180 days after the receipt of such insurance proceeds (or if unable to complete such repair, replacement or restoration within such period, the Loan Parties, within 180 days after the receipt of such insurance proceeds, shall have entered into commitments to complete such repair, replacement or restoration as soon as commercially reasonable). The agreement of Agent to remit insurance proceeds in the manner above provided shall be subject in each instance to satisfaction of each of the following conditions: (x) no Event of Default or Potential Default shall then have occurred and be continuing, and (y) the Loan Parties shall use such insurance proceeds to repair, replace or restore the Collateral which was the subject of the insurable loss and for no other purpose.

7.1.4 Maintenance of Properties and Leases.

Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, all of those properties useful or necessary to its business, and from time to time, such Loan Party will make or cause to be made all appropriate repairs, renewals or replacements thereof if the failure to do so would constitute a Material Adverse Change.

7.1.5 Maintenance of Patents, Trademarks, Etc.

Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain in full force and effect all patents, trademarks, service marks, trade names, copyrights, licenses, franchises, permits and other authorizations necessary for the ownership and operation of its properties and business if the failure so to maintain the same would constitute a Material Adverse Change.

7.1.6 Visitation Rights.

Each Loan Party shall, and shall cause each of its Subsidiaries to, permit any of the officers or authorized employees or representatives of the Agent or any of the Banks to visit and inspect any of its properties and to examine and make excerpts from its books and records and discuss its business affairs, finances and accounts with its officers, all in such detail and at such times and as often as any of the Banks may reasonably request, provided that each Bank shall provide any such Borrower and the Agent with reasonable notice prior to any visit or inspection and all information acquired in such visits shall be subject to Section 10.12. In the event any Bank desires to conduct an audit of any Loan Party, such Bank shall make a reasonable effort to conduct such audit contemporaneously with any audit to be performed by the Agent.

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7.1.7 Keeping of Records and Books of Account.

Each Borrower shall, and shall cause each Subsidiary of such Borrower to, maintain and keep proper books of record and account which enable such Borrower and its Subsidiaries to issue financial statements in accordance with GAAP and as otherwise required by applicable Laws of any Official Body having jurisdiction over such Borrower or any Subsidiary of such Borrower, and in which full, true and correct entries shall be made in all material respects of all its dealings and business and financial affairs.

7.1.8 Plans and Benefit Arrangements.

Each Borrower shall, and shall cause each other member of the ERISA Group to, comply with ERISA, the Internal Revenue Code and other applicable Laws applicable to Plans and Benefit Arrangements except where such failure, alone or in conjunction with any other failure, would not result in a Material Adverse Change. Without limiting the generality of the foregoing, such Borrower shall cause all of its Plans and all Plans maintained by any member of the ERISA Group to be funded in accordance with the minimum funding requirements of ERISA and shall make, and cause each member of the ERISA Group to make, in a timely manner, all contributions due to Plans, Benefit Arrangements and Multiemployer Plans.

7.1.9 Compliance With Laws.

Each Loan Party shall, and shall cause each of its Subsidiaries to, comply with all applicable Laws, including all Environmental Laws, in all respects, provided that it shall not be deemed to be a violation of this Section 7.1.9 if any failure to comply with any Law would not result in fines, penalties, remediation costs, other similar liabilities or injunctive relief which in the aggregate would constitute a Material Adverse Change.

7.1.10 Use of Proceeds.

The Loan Parties will use the Letters of Credit and the proceeds of the Loans only for general corporate purposes, ongoing capital expenditure needs (to the extent permitted herein), for acquisitions permitted under Section 7.2.6, and for working capital. The Loan Parties will not use the Letters of Credit or the proceeds of the Loans for any purposes which contravene any applicable Law or any provision hereof.

7.1.11 Further Assurances.

Each Loan Party shall, from time to time, at its expense, faithfully preserve and protect the Agent’s Lien on and Prior Security Interest in the Collateral as a continuing first-priority perfected Lien, subject only to Permitted Liens, and shall do such other acts and things as the Agent in its sole discretion may deem necessary or advisable from time to time in order to preserve, perfect and protect the Liens granted under the Loan Documents and to exercise and enforce its rights and remedies thereunder with respect to the Collateral.

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7.1.12 Subordination of Intercompany Loans.

Each Loan Party shall cause any intercompany Indebtedness, loans or advances owed by any Loan Party to any other Loan Party to be subordinated pursuant to the terms of the Intercompany Subordination Agreement.

7.1.13 Tax Sharing.

Borrowers shall not amend or modify in any material manner the Tax Sharing Agreement without the consent of the Required Banks, not to be unreasonably withheld.

7.1.14 Wire Transfer Agreement.

Upon the written request of the Agent during such time as the Borrowers have Unused Availability of less than $25,000,000, the Borrowers shall promptly advise National City, and JP Morgan to enter into a Wire Transfer Agreement in the form attached as Exhibit 1.1(W) hereof, the terms of which shall remain in effect until such time as the Borrowers have Unused Availability equal to or greater than $25,000,000.

7.1.15 [Intentionally Omitted].

7.1.16 Anti-Terrorism Laws.

The Loan Parties and their respective Affiliates and agents shall not (i) conduct any business or engage in any transaction or dealing with any Blocked Person, including making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to the Executive Order No. 13224; or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in the Executive Order No. 13224, the USA Patriot Act or any other Anti-Terrorism Law. The Borrowers shall deliver to Banks any certification or other evidence requested from time to time by any Bank in its sole discretion, confirming the Loan Parties’ compliance with this Section 7.1.16.

7.1.17 [Intentionally Omitted].

7.2 Negative Covenants.

The Loan Parties, jointly and severally, covenant and agree that until payment in full of the Loans, Reimbursement Obligations and Letter of Credit Borrowings and interest thereon, expiration or termination of all Letters of Credit, satisfaction of all of the Loan Parties’ other Obligations hereunder and termination of the Revolving Credit Commitments and Swing Loan Commitment, the Loan Parties shall comply with the following negative covenants:

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7.2.1 Indebtedness.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time create, incur or assume any Indebtedness, except:

(i) Indebtedness under the Loan Documents;

(ii) Indebtedness evidenced by the Senior Unsecured Notes, including any increase in the amount thereof, provided that prior to and after giving effect to such increase, the Borrowers have Unused Availability of not less than $25,000,000 at the time such Indebtedness is incurred;

(iii) Indebtedness as set forth on Schedule 7.2.1; provided there is not an increase in the amount thereof or other significant change in the terms thereof

(iv) Capitalized and operating leases as and to the extent permitted under Section 7.2.18 [Capital Expenditures and Leases];

(v) Indebtedness secured by Purchase Money Security Interests and/or other assets which are not Collateral, provided that the aggregate amount of such Indebtedness does not exceed $20,000,000 at any one time outstanding;

(vi) Indebtedness of a Loan Party to another Loan Party which is subordinated in accordance with the provisions of Section 7.1.12 [Subordination of Intercompany Loans], provided that the aggregate Indebtedness of the Borrowers from their Subsidiaries other than the Borrowers may not exceed $10,000,000 in the aggregate at any time;

(vii) Indebtedness under Hedging Contracts, provided that (1) such Hedging Contracts with respect to hedging of interest rates are related to payment obligations on Indebtedness permitted under this Agreement, (2) the notional principal amount of such Hedging Contracts with respect to hedging of interest rates does not exceed the principal amount of such Indebtedness to which such Hedging Contracts relate, and (3) in each case, the liabilities under such Hedging Contracts which do not represent an actual obligation and for which an offsetting derivative contract has been recorded in the financial statements are recorded in accordance with SFAS 133;

(viii) Indebtedness in respect of bid, performance or surety bonds issued for the account of any of the Loan Parties in the ordinary course of business; and

(ix) Other unsecured Indebtedness provided that after giving effect to such Indebtedness the Borrowers’ Adjusted Fixed Charge Coverage Ratio computed as of the end of the fiscal quarter preceding the fiscal quarter during which such Indebtedness is incurred (“Referenced Quarter”) would be at least 1.5 to 1.0, 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 ending with the Referenced Quarter.

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7.2.2 Liens.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Lien on any of its property or assets, tangible or intangible, now owned or hereafter acquired, or agree or become liable to do so, except Permitted Liens.

7.2.3 Guaranties.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time, directly or indirectly, become or be liable in respect of any Guaranty, or assume, guarantee, become surety for, endorse or otherwise agree, become or remain directly or contingently liable upon or with respect to any obligation or liability of any other Person, except for Guaranties of Indebtedness of the Loan Parties permitted hereunder.

7.2.4 Loans and Investments.

At all times during which the Borrowers have Unused Availability of less than $25,000,000 prior to or after giving effect to any loan, advance, purchase or acquisition described below, each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time make any loan or advance to, or purchase, acquire or own any stock, bonds, notes or securities of, or any partnership interest (whether general or limited) or limited liability company interest in, or any other investment or interest in, or make any capital contribution to, any other Person, or agree, become or remain liable to do any of the foregoing, except:

(i) trade credit extended on usual and customary terms in the ordinary course of business or in connection with any workout or settlement of a trade credit account in the ordinary course of business, provided that such account which is the subject of a workout or settlement is not a Qualified Account;

(ii) advances to employees to meet expenses incurred by such employees in the ordinary course of business;

(iii) Permitted Investments;

(iv) loans to Subsidiaries not exceeding $2,000,000 at any time outstanding, and investments in Subsidiaries not exceeding amounts existing on the date hereof as described on Schedule 7.2.4 hereto;

(v) investments (each an “Other Permitted Investment”) by the Loan Parties directly in any business that is closely related to or complements the business of the Loan Parties, including an entity engaged in the business of petroleum refining and/or retail marketing of refined petroleum products, provided that (1) such business and investment complies with Section 7.2.9, (2) Unused Availability after giving effect to each such investment exceeds $10,000,000, and (3) the sum of the Investment Consideration incurred in connection with all investments plus the Acquisition Consideration incurred in connection with all Permitted Acquisitions after the date the Borrowers have Unused Availability of less than $25,000,000 may not exceed $15,000,000; and

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(vi) investments on the date hereof as set forth on Schedule 7.2.4.

7.2.5 Dividends and Related Distributions.

Each of the Loan Parties may make or pay dividends and distributions on account of or in respect of its shares of capital stock, partnership interests or limited liability company interests on account of the purchase, redemption, retirement or acquisition of its shares of capital stock (or warrants, options or rights therefor), partnership interests or limited liability company interests, if, at the time of such dividend or distribution and after giving effect thereto, the Borrowers have Unused Availability of not less than $25,000,000. If at the time of such dividend or distribution and after giving effect thereto the Borrowers have Unused Availability of less than $25,000,000, each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, make or pay, or agree to become or remain liable to make or pay, any dividend or other distribution of any nature (whether in cash, property, securities or otherwise) on account of or in respect of its shares of capital stock, partnership interests or limited liability company interests on account of the purchase, redemption, retirement or acquisition of its shares of capital stock (or warrants, options or rights therefor), partnership interests or limited liability company interests, except that

(i) the Loan Parties may pay dividends or other distributions payable to another Loan Party; and

(ii) the Loan Parties may pay dividends in any fiscal quarter after the Borrowers deliver their quarterly financial statements and compliance certificate pursuant to Sections 7.3.1 and 7.3.3 for the immediately preceding fiscal quarter, in an aggregate amount not to exceed 50% of the consolidated net income (computed in accordance with GAAP) of the Borrowers for such immediately preceding four fiscal quarters less any dividend payments made during such immediately preceding four fiscal quarters, provided that:

(a) no Potential Default or Event of Default shall exist on the date on which the Borrowers’ make such dividend payment after giving effect to such dividend payment; and

(b) the Borrowers shall demonstrate the fact described in clause (a) immediately above in the compliance certificate which they deliver for such fiscal quarter.

(iii) Provided that no Potential Default or Event of Default exists and is continuing on the date of payment, if any Other Permitted Investment described in and permitted under Section 7.2.4(v) and (vi) is sold for cash or otherwise liquidated or repaid for cash and if the consolidated net income (computed in accordance with GAAP) of the Borrowers for the four fiscal quarters immediately preceding the date of the proposed payment is greater than zero, the Loan Parties may pay dividends (after subtracting from such proposed dividend payment the aggregate amount of dividends paid under this Section 7.2.5(iii) within the immediately preceding four fiscal quarters) in an aggregate amount less than or equal to the lesser of:

(a) the excess of (1) the net cash proceeds from such sale (less the cost of disposition, if any) over (2) the Investment Consideration paid, incurred or given in connection with such Permitted Investment, and

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(b) $2,000,000.

7.2.6 Liquidations, Mergers, Consolidations, Acquisitions.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, dissolve, liquidate or wind-up its affairs, or become a party to any merger or consolidation, or acquire by purchase, lease or otherwise, all or substantially all of the assets or capital stock of any other Person, provided that:

(1) upon prior written notice to the Agent, any Subsidiary of any of the Borrowers (except for the Borrowers) may consolidate with or merge into or sell, transfer, lease or otherwise dispose of all or substantially all of its assets to a Borrower or a wholly-owned Subsidiary of a Borrower if such Borrower or wholly-owned Subsidiary shall be the surviving corporation and if, immediately after giving effect to such transaction, no condition or event shall exist which constitutes an Event of Default or Potential Default; provided however, if such Subsidiary of the Borrower is a Guarantor, it may consolidate with or merge into or sell, transfer, lease or otherwise dispose of all or substantially all of its assets only with or to another Loan Party;

(2) [Intentionally Omitted];

(3) upon prior written notice to the Agent, any Subsidiary of a Borrower may dissolve or merge out of existence if such Subsidiary has no assets and conducts no business; and

(4) any Loan Party may acquire, whether by purchase or by merger, (A) some or all of the ownership interests of another Person or (B) substantially all of the assets of another Person or of a business or division of another Person (each a “Permitted Acquisition”), provided that each of the following requirements is met:

(i) if the Loan Parties are acquiring the ownership interests in such Person, such Person shall execute a Guarantor Joinder and join this Agreement as a Guarantor pursuant to Section 10.18 [Joinder of Guarantors] on or before the date of such Permitted Acquisition;

(ii) the Loan Parties, such Person and its owners, as applicable, shall grant Liens to the Agent in the assets acquired, to the extent they constitute Collateral of such Person, and otherwise comply with Section 10.18 [Joinder of Guarantors] on or before the date of such Permitted Acquisition;

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(iii) the business acquired, or the business conducted by the Person whose ownership interests are being acquired, as applicable, shall be substantially the same as one or more line or lines of business conducted by the Loan Parties and shall comply with Section 7.2.10 [Continuation of or Change in Business];

(iv) no Potential Default or Event of Default shall exist immediately prior to and after giving effect to such Permitted Acquisition;

(v) if after giving effect to such Permitted Acquisition, the Borrowers have Unused Availability of less than $25,000,000, the Borrowers shall demonstrate that it shall be in compliance with the covenants contained in Section 7.2.1 and this Section 7.2.6 after giving effect to such Permitted Acquisition (including in such computation Indebtedness or other liabilities assumed or incurred in connection with such Permitted Acquisition but excluding income earned or expenses incurred by the Person, business or assets to be acquired prior to the date of such Permitted Acquisition) by delivering at least five (5) Business Days prior to such Permitted Acquisition a certificate in the form of Exhibit 7.2.6 evidencing such compliance;

(vi) at all times during which the Borrowers have Unused Availability of less than $25,000,000, the sum of the following paid by the Loan Parties during the time the Borrowers have Unused Availability of less than $25,000,000 shall not exceed $15,000,000: (1) the Acquisition Consideration paid by the Loan Parties for such Permitted Acquisition and all other Permitted Acquisitions, and (2) the Investment Consideration paid by the Loan Parties for all Other Permitted Investments described in Section 7.2.4 (v); provided that the Banks will reasonably consider any request by the Borrowers to make an acquisition which will cause the sum of Permitted Acquisitions and Other Permitted Investments to exceed the $15,000,000 limitation in this clause (vi) and such acquisition may be approved by the Required Banks, and

(vii) the Loan Parties shall deliver to the Agent at least five (5) Business Days before such Permitted Acquisition a pro forma Borrowing Base Certificate demonstrating that after giving effect to such Permitted Acquisition and any Loans outstanding on the date of or made simultaneously with such acquisition, Unused Availability will exceed $10,000,000;

(viii) any Indebtedness assumed or incurred in connection with such Permitted Acquisition must meet the requirements of Clause (viii) of Section 7.2.1 or otherwise be permitted under Section 7.2.1; and

(ix) the Loan Parties shall deliver to the Agent at least five (5) Business Days before such Permitted Acquisition copies of any agreements entered into or proposed to be entered into by such Loan Parties in connection with such Permitted Acquisition and shall deliver to the Agent such other information about such Person or its assets as any Loan Party may reasonably require.

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7.2.7 Dispositions of Assets or Subsidiaries.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, sell, sell and lease back, convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily or involuntarily, any of its properties or assets, tangible or intangible (including sale, assignment, discount or other disposition of accounts, contract rights, chattel paper, equipment or general intangibles with or without recourse or of capital stock, shares of beneficial interest, partnership interests or limited liability company interests of a Subsidiary of such Loan Party), except:

(i) transactions involving the sale of inventory in the ordinary course of business;

(ii) any sale, transfer or lease of assets in the ordinary course of business which is not material in relation to such Loan Party’s or such Subsidiary’s assets, and no longer necessary or required in the conduct of such Loan Party’s or such Subsidiary’s business;

(iii) any sale, transfer or lease of assets by any wholly owned Subsidiary of such Loan Party to another Loan Party;

(iv) any sale, transfer or lease of assets in the ordinary course of business which is replaced by substitute assets acquired or leased, provided such substitute assets, to the extent replacing Collateral, are subject to the Banks’ Prior Security Interest;

(v) any sale, transfer or lease of properties which (a) have become obsolete or (b) have no material net value (after giving effect to the cost of maintaining such properties) and have no use in the business of the Loan Parties; and

(vi) any sale, transfer or lease of assets, other than those specifically excepted pursuant to clauses (i) through (v) above, provided that the aggregate value of the assets subject to all such sales under this Section 7.2.7(vi) does not exceed $25,000,000 in the aggregate.

7.2.8 Affiliate Transactions.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, enter into or carry out any transaction among one another or any of their Affiliates including, without limitation, purchasing property or services from any Affiliate, selling property or services to any Affiliate, reimbursing an Affiliate for expenses (including overhead which an Affiliate incurs), on any Borrower’s behalf, except as permitted in clauses (i) and (ii) below:

(i) The Borrowers may pay up to $2,000,000 during any fiscal year pursuant to the Servicing Agreement.

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(ii) The Borrowers may enter into transactions upon fair and reasonable arms’ length terms and conditions, provided that (a) in the event that the Borrowers have Unused Availability of less than $25,000,000 at the time of entering into such transaction and giving effect thereto, the Borrowers shall fully disclose the proposed terms and conditions of each transaction to the Agent at least ten (10) Business Days prior to the date on which any Borrower enters into such transaction; such disclosure shall be in sufficient detail to demonstrate the Borrowers’ compliance with this Section 7.2.8 to the satisfaction of the Banks and (b) such terms and conditions are in accordance with all applicable Law and are not otherwise prohibited by this Agreement.

7.2.9 Subsidiaries, Partnerships and Joint Ventures.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, own or create directly or indirectly any Subsidiaries other than (i) Borrowers or Guarantors on the Closing Date, (ii) LLC (SEM), (iii) LLC (ALL), (iv) Inactive Subsidiaries set forth on Schedule 5.1.3, and (v) any Subsidiary existing on or formed after the Closing Date, which joins this Agreement as a Guarantor pursuant to Section 10.18 [Joinder of Guarantors], provided that such Subsidiary and the Loan Parties, as applicable, shall grant and cause to be perfected first priority Liens to the Agent for the benefit of the Banks in the Collateral held by such Subsidiary. Except in connection with an Other Permitted Investment permitted pursuant to Section 7.2.4(v) and a Permitted Acquisition permitted pursuant to Section 7.2.6, each of the Loan Parties shall not become or agree to become (i) a general or limited partner in any general or limited partnership, (ii) a member or manager of, or hold a limited liability company interest in, a limited liability company other than the LLC (SEM) and LLC (ALL), or (iii) a joint venturer or hold a joint venture interest in any joint venture.

7.2.10 Continuation of or Change in Business.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, engage in any business other than the refining, transportation, shipping, distribution and sale of petroleum and petroleum products and other motor fuels, additives and constituents of any thereof and the ownership and operation of retail convenience stores and supermarkets and businesses directly related thereto, substantially as conducted and operated by such Loan Party or Subsidiary during the present fiscal year, and such Loan Party or Subsidiary shall not permit any material change in such business.

7.2.11 Plans and Benefit Arrangements.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to:

(i) fail to satisfy the minimum funding requirements of ERISA and the Internal Revenue Code with respect to any Plan;

(ii) request a minimum funding waiver from the Internal Revenue Service with respect to any Plan;

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(iii) engage in a Prohibited Transaction with any Plan, Benefit Arrangement or Multiemployer Plan which, alone or in conjunction with any other circumstances or set of circumstances resulting in liability under ERISA, would constitute a Material Adverse Change;

(iv) [intentionally omitted];

(v) fail to make when due any contribution to any Multiemployer Plan that a Borrower or any member of the ERISA Group may be required to make under any agreement relating to such Multiemployer Plan, or any Law pertaining thereto;

(vi) withdraw (completely or partially) from any Multiemployer Plan or withdraw (or be deemed under Section 4062(e) of ERISA to withdraw) from any Multiple Employer Plan, where any such withdrawal is likely to result in a material liability of a Borrower or any member of the ERISA Group;

(vii) terminate, or institute proceedings to terminate, any Plan, where such termination is likely to result in a material liability to a Borrower or any member of the ERISA Group;

(viii) make any amendment to any Plan with respect to which security is required under Section 307 of ERISA; or

(ix) fail to give any and all notices and make all disclosures and governmental filings required under ERISA or the Internal Revenue Code, where such failure is likely to result in a Material Adverse Change.

7.2.12 Fiscal Year.

Each Borrower shall not, and shall not permit any Subsidiary of such Borrower to, change its fiscal year from the twelve-month period beginning September 1 and ending August 31.

7.2.13 Issuance of Stock.

Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, issue any additional shares of its capital stock or any options, warrants or other rights in respect thereof, except that United Refining may permit a sale, transfer or other disposition of its shares to the extent such sale, transfer or other disposition does not result in an Event of Default under Section 8.1.15.

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,

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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 Indenture, the Senior Unsecured Notes or related agreements if such amendment, refinancing or replacement provides for, or could result in, (a) any acceleration in the principal thereof or any addition or increase, directly or indirectly, in the amount of any principal payment thereunder except and to the extent such addition or increase is permitted under this Agreement, (b) a prohibition or conditioning of the granting of collateral security to the Agent and the Banks hereunder or under any similar agreement, (c) the inclusion of covenants, taken together, that are materially more restrictive to any of the Loan Parties than those contained in the Indenture on the Closing Date, (d) a maturity date earlier than the maturity date contained in the Indenture on the Closing Date, (e) the granting of collateral as security therefor, in the case of each of items (a) through (e) above without obtaining the prior written consent of the Required Banks.

7.2.15 Unused Availability.

The Loan Parties shall not permit Unused Availability at any time to be less than $10,000,000.

7.2.16 Minimum Net Worth.

At all such times during which the Borrowers have Unused Availability of less than $25,000,000, the Loan Parties shall not at any time permit Consolidated Net Worth to be less than the Base Net Worth.

7.2.17 Negative Pledge Covenants.

Except for the restrictions on granting Liens in the Indenture as in effect on the Closing 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.

7.2.18 Capital and Operating Leases.

At all such times during which the Borrowers have Unused Availability of less than $25,000,000, each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, enter into any lease obligation unless (i) payments on account of the lease of assets which if leased would constitute a capitalized lease do not exceed $5,000,000 in the aggregate in the most recent fiscal year of the Borrowers (the “Annual Capital Lease Limit”), (ii) payments on account of the rental or lease of real or personal property do not exceed $16,000,000 in the aggregate in the most recent fiscal year of the Borrowers (the “Annual

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Operating Lease Limit”), and (iii) after giving effect the such capital or operating lease obligation to be incurred, the aggregate payments in any fiscal year on account of capital leases and operating leases shall not exceed either the Annual Capital Lease Limit or the Annual Operating Lease Limit respectively. All such leases shall be made under usual and customary terms and in the ordinary course of business.

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, and (b) 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.

7.2.20 Enbridge Costs; Enbridge Cash Collateral.

Without prior written notice to Agent, the Loan Parties shall not at any time permit the aggregate amount of cash collateral and/or letters of credit outstanding in favor of Enbridge to (i) be less than the amount determined by Enbridge to be adequate security for the obligations of the Loan Parties to Enbridge or (ii) be increased or decreased from the amount of such cash collateral or letters of credit outstanding in favor of Enbridge on the Closing Date. The Loan Parties shall not permit any Loan Party except United Refining to incur fees, expenses or indebtedness to Enbridge.

7.3 Reporting Requirements.

The Loan Parties, jointly and severally, covenant and agree that until payment in full of the Loans, Reimbursement Obligations and Letter of Credit Borrowings and interest thereon, expiration or termination of all Letters of Credit, satisfaction of all of the Loan Parties’ other Obligations hereunder and under the other Loan Documents and termination of the Revolving Credit Commitments and Swing Loan Commitment, the Loan Parties will furnish or cause to be furnished to the Agent and each of the Banks:

7.3.1 Quarterly Financial Statements.

As soon as available and in any event within forty-five (45) calendar days after the end of each of the first three fiscal quarters in each fiscal year, financial statements of the Borrowers consisting of a consolidated and consolidating balance sheet as of the end of such fiscal quarter and related consolidated and consolidating statements of income, stockholders’ equity and cash flows for the fiscal quarter then ended and the fiscal year through that date, all in reasonable detail and certified (subject to normal year-end audit adjustments) by the Chief Executive Officer, President or Chief Financial Officer of each Borrower as having been prepared in accordance with GAAP, consistently applied, and setting forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year.

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7.3.2 Annual Financial Statements.

As soon as available and in any event within ninety (90) days after the end of each fiscal year of the Borrowers, financial statements of the Borrowers consisting of a consolidated and consolidating balance sheet as of the end of such fiscal year and related consolidated and consolidating statements of income, stockholders’ equity and cash flows for the fiscal year then ended, all in reasonable detail and setting forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and certified by independent certified public accountants of nationally recognized standing satisfactory to the Agent. The Banks acknowledge that the Borrowers’ current accountants, BDO Seidman, LLP, are satisfactory. The certificate or report of accountants shall be free of qualifications (other than any consistency qualification that may result from a change in the method used to prepare the financial statements as to which such accountants concur) and shall not indicate the occurrence or existence of any event, condition or contingency which would materially impair the prospect of payment or performance of any covenant, agreement or duty of any Loan Party under any of the Loan Documents. The Loan Parties shall deliver with such financial statements and certification by their accountants a letter of such accountants to the Agent and the Banks substantially (i) to the effect that, based upon their ordinary and customary examination of the affairs of the Borrowers performed in connection with the preparation of such consolidated financial statements, and in accordance with generally accepted auditing standards, they are not aware of the existence of any condition or event which constitutes an Event of Default or Potential Default or, if they are aware of such condition or event, stating the nature thereof and confirming the Borrowers’ calculations with respect to the certificate to be delivered pursuant to Section 7.3.3 [Certificate of the Borrowers] with respect to such financial statements, and (ii) to the effect that the Banks are intended to rely upon such accountant’s certification of the annual financial statements and that such accountants authorize the Loan Parties to deliver such reports and certificate to the Banks on such accountants’ behalf.

7.3.3 Certificate of the Borrowers.

Concurrently with the financial statements of the Borrowers furnished to the Agent and to the Banks pursuant to Sections 7.3.1 [Quarterly Financial Statements] and 7.3.2 [Annual Financial Statements], a certificate of each Borrower signed by the Chief Executive Officer, President or Chief Financial Officer of such Borrower, in the form of Exhibit 7.3.3, to the effect that, except as described pursuant to Section 7.3.5 [Notice of Default], (i) the representations and warranties of such Borrower contained in Article 5 and in the other Loan Documents are true on and as of the date of such certificate with the same effect as though such representations and warranties had been made on and as of such date (except representations and warranties which expressly relate solely to an earlier date or time), and the Loan Parties have performed and complied with all covenants and conditions hereof and thereof, (ii) no Event of Default or Potential Default exists and is continuing on the date of such certificate, and (iii) containing calculations in sufficient detail to demonstrate compliance as of the date of such financial statements with all financial covenants contained in Section 7.2 [Negative Covenants].

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7.3.4 Borrowing Base Certificates, Schedules of Accounts and Inventory, Audits of Accounts and Inventory.

As soon as available but no later than the Second Business Day of each week, a Borrowing Base Certificate, as of the last Business Day of the immediately preceding week, in the form of Exhibit 7.3.4 hereto, appropriately completed, executed and delivered by an Authorized Officer; provided however, if the Borrowers have Unused Availability in excess of $25,000,000 for four consecutive weeks (as reported in the Borrowing Base Certificates), then until such time as the Borrower’s Unused Availability is less than $25,000,000, the Borrowers may submit Borrowing Base Certificates on a monthly basis on the Second Business Day of the first week in each such month as of the last Business Day of the immediately preceding week. The Loan Parties will furnish or cause to be furnished to the Agent and each of the Banks as soon as available but no later than Second Business Day of the first week in each such month as of the last Business Day of the immediately preceding week a Schedule of Accounts and Schedule of Inventory as of the end of the immediately preceding week. The Borrower shall cause to be performed and delivered to the Banks an audit by the Agent or another person acceptable to the Banks of Borrowers’ accounts and inventory two times during each fiscal year of the Borrowers; provided, however, in the event that an Event of Default shall have occurred, such the Agent may require audits more frequently than twice each fiscal year.

7.3.5 Notice of Default.

Promptly after any officer of any Loan Party has learned of the occurrence of an Event of Default or Potential Default, a certificate signed by the Chief Executive Officer, President or Chief Financial Officer of such Loan Party setting forth the details of such Event of Default or Potential Default and the action which the such Loan Party proposes to take with respect thereto.

7.3.6 Notice of Litigation.

Promptly after the commencement thereof, notice of all actions, suits, proceedings or investigations before or by any Official Body or any other Person against any Loan Party or Subsidiary of any Loan Party which relate to the Collateral, involve a claim or series of claims in excess of $2,000,000 or which if adversely determined would constitute a Material Adverse Change.

7.3.7 Certain Events.

Written notice to the Agent:

(i) at least thirty (30) calendar days prior thereto, with respect to any proposed sale or transfer of assets pursuant to Section 7.2.7(iv) or (v);

(ii) within the time limits set forth in Section 7.2.15 [Changes in Organizational Documents], any amendment to the organizational documents of any Loan Party;

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(iii) at least thirty (30) calendar days prior thereto, with respect to any change in any Loan Party’s location(s) from the location(s) set forth in Schedule A to the Security Agreement; and

(iv) at least thirty (30) calendar days prior thereto, with respect to any change in the fiscal year of any Loan Party or its Subsidiaries.

7.3.8 Budgets, Forecasts, Other Reports and Information.

(A) Annual budget and any forecasts or projections of each Borrower, to be supplied not later than the commencement of the fiscal year to which any of the foregoing may be applicable,

(B) Promptly upon their becoming available to any Borrower:

(i) any reports, including management letters, submitted to any Borrower by independent accountants in connection with any annual, interim or special audit,

(ii) any reports, notices or proxy statements generally distributed by any Borrower to its stockholders on a date no later than the date supplied to such stockholders,

(iii) regular or periodic reports, including Forms 10-K, 10-Q and 8-K, registration statements and prospectuses, filed by any Borrower with the Securities and Exchange Commission,

(iv) a copy of any order issued by any Official Body in any proceeding to which any Borrower or any of its Subsidiaries is a party, and

(v) such other reports and information as any of the Banks may from time to time reasonably request. Each Borrower shall also notify the Banks promptly of the enactment or adoption of any Law which may result in a Material Adverse Change.

7.3.9 Notices Regarding Plans and Benefit Arrangements.

7.3.9.1 Certain Events

Promptly upon becoming aware of the occurrence thereof, notice (including the nature of the event and, when known, any action taken or threatened by the Internal Revenue Service or the PBGC with respect thereto) of:

(i) any Reportable Event with respect to any Borrower or any other member of the ERISA Group (regardless of whether the obligation to report said Reportable Event to the PBGC has been waived),

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(ii) any Prohibited Transaction which could subject any Borrower or any other member of the ERISA Group to a civil penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Internal Revenue Code in connection with any Plan, any Benefit Arrangement or any trust created thereunder,

(iii) any assertion of material withdrawal liability with respect to any Multiemployer Plan,

(iv) any partial or complete withdrawal from a Multiemployer Plan by any Borrower or any other member of the ERISA Group under Title IV of ERISA (or assertion thereof), where such withdrawal is likely to result in material withdrawal liability,

(v) any cessation of operations (by any Borrower or any other member of the ERISA Group) at a facility in the circumstances described in Section 4062(e) of ERISA,

(vi) withdrawal by any Borrower or any other member of the ERISA Group from a Multiple Employer Plan,

(vii) a failure by any Borrower or any other member of the ERISA Group to make a payment to a Plan required to avoid imposition of a Lien under Section 302(f) of ERISA,

(viii) the adoption of an amendment to a Plan requiring the provision of security to such Plan pursuant to Section 307 of ERISA, or

(ix) (a) any change in the actuarial assumptions or funding methods used for any Plan, where the effect of such change is to materially increase or materially reduce the unfunded benefit liability or obligation to make periodic contributions or (b) any significant increase in unfunded benefit liability.

7.3.9.2 Notices of Involuntary Termination and Annual Reports.

Promptly after receipt thereof, copies of (a) all notices received by any Borrower or any other member of the ERISA Group of the PBGC’s intent to terminate any Plan administered or maintained by any Borrower or any member of the ERISA Group, or to have a trustee appointed to administer any such Plan; and (b) at the request of the Agent or any Bank, each annual report (IRS Form 5500 series) and all accompanying schedules, the most recent actuarial reports, the most recent financial information concerning the financial status of each Plan administered or maintained by the Borrower or any other member of the ERISA Group, and schedules showing the amounts contributed to each such Plan by or on behalf of the Borrower or any other member of the ERISA Group in which any of their personnel participate or from which such personnel may derive a benefit, and each Schedule B (Actuarial Information) to the annual report filed by any Borrower or any other member of the ERISA Group with the Internal Revenue Service with respect to each such Plan.

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7.3.9.3 Notice of Voluntary Termination

Promptly upon the filing thereof, copies of any Form 5310, or any successor or equivalent form to Form 5310, filed with the PBGC in connection with the termination of any Plan.

7.3.10 Tax Shelter Provisions.

Promptly after any of the Loan Parties determines that it intends to treat any of the Loans, Letters of Credit or related transactions as being a “reportable transaction” as provided in Section 7.1.17

(1) a written notice of such intention to the Agent; and

(2) a duly completed copy of IRS Form 8886 or any successor form.

8. DEFAULT

8.1 Events of Default.

An Event of Default shall mean the occurrence or existence of any one or more of the following events or conditions (whatever the reason therefor and whether voluntary, involuntary or effected by operation of Law):

8.1.1 Payments Under Loan Documents.

Any Borrower shall (i) fail to pay any principal of any Loan (including scheduled installments, mandatory prepayments or the payment due at maturity), Reimbursement Obligation or Letter of Credit Borrowing after such principal becomes due in accordance with the terms hereof or under any other Loan Document, or (ii) fail to pay any interest on any Loan, Reimbursement Obligation or Letter of Credit Borrowing or any other amount owing hereunder or under the other Loan Documents, within three (3) days after such interest or other amount becomes due in accordance with the terms hereof or thereof;

8.1.2 Breach of Warranty.

Any representation or warranty made at any time by any of the Loan Parties herein or by any of the Loan Parties in any other Loan Document, or in any certificate, other instrument or statement furnished pursuant to the provisions hereof or thereof, shall prove to have been false or misleading in any material respect as of the time it was made or furnished;

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8.1.3 Unused Availability.

8.1.3.1 Violation of Section 7.2.15 But Unused Availability Equals or Exceeds $5,000,000.

The Loan Parties shall be in default of the covenant contained in Section 7.2.15 [Unused Availability] (i.e. Unused Availability is less than $10,000,000) and such default shall continue for a period of five (5) Business Days; provided that such five (5)-Business Day period shall not apply if Unused Availability is at any time during such period less than $5,000,000 (and in such event there shall exist an immediate Event of Default pursuant to Section 8.1.3.2 below).

8.1.3.2 Unused Availability Is Less Than $5,000,000.

Unused Availability shall at any time be less than $5,000,000.

8.1.3.3 Subsequent Increase in Unused Availability Cure Does Not Terminate Event of Default.

The Loan Parties acknowledge and agree that if an Event of Default described in Section 8.1.3.1 or 8.1.3.2 shall occur, such Event of Default may not then be cured by the Loan Parties subsequently increasing Unused Availability (above amounts required under such Sections) and such Event of Default shall be deemed to be continuing unless affirmatively waived by the Required Banks.

8.1.4 Breach of Negative Covenants or Visitation Rights.

Any of the Loan Parties shall default in the observance or performance of any covenant contained in Section 7.1.6 [Visitation Rights] or Section 7.2 [Negative Covenants] (except for Section 7.2.15 [Unused Availability]);

8.1.5 Breach of Other Covenants.

Any of the Loan Parties shall default in the observance or performance of any other covenant, condition or provision hereof or of any other Loan Document, and such default shall continue unremedied for a period of twenty five (25) Business Days after any officer of any Loan Party becomes aware of the occurrence thereof (such grace period to be applicable only in the event such default can be remedied by corrective action of the Loan Parties as determined by the Agent in its sole discretion);

8.1.6 Defaults in Other Agreements or Indebtedness.

(i) A default or event of default shall occur at any time under the terms of any other agreement involving borrowed money or the extension of credit or any other Indebtedness under which any Loan Party or Subsidiary of any Loan Party may be obligated as a borrower or guarantor in excess of $2,500,000 in the aggregate, and such breach, default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto, whether waived or not) any indebtedness when due (whether at stated maturity, by acceleration or otherwise) or if such breach or default permits or causes the acceleration of any indebtedness (whether or not such right shall have been waived) or the termination of any commitment to lend; or (ii) Enbridge shall exercise its rights of set off or shall make a claim against or under any Performance Assurance (as such term is defined in the Enbridge Cash Collateral Agreement) under the Enbridge Cash Collateral Agreement;

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8.1.7 Final Judgments or Orders.

Any final judgments or orders for the payment of money in excess of $2,500,000 in the aggregate shall be entered against any Loan Party by a court having jurisdiction in the premises, which judgment is not discharged, vacated, bonded or stayed pending appeal within a period of thirty (30) days from the date of entry;

8.1.8 Loan Document Unenforceable.

Any of the Loan Documents shall cease to be legal, valid and binding agreements enforceable against the party executing the same or such party’s successors and assigns (as permitted under the Loan Documents) in accordance with the respective terms thereof, or shall in any way be terminated (except in accordance with its terms) or become or be declared ineffective or inoperative, or shall in any way be challenged or contested or cease to give or provide the respective Liens, security interests, rights, titles, interests, remedies, powers or privileges intended to be created thereby;

8.1.9 Notice of Lien or Assessment.

A notice of Lien or assessment which is not a Permitted Lien is filed of record with respect to all or any part of any of the Loan Parties’ or any of their Subsidiaries’ assets by the United States or any department, agency or instrumentality thereof, or by any state, county, municipal or other governmental agency, including the PBGC, or any taxes or debts owing at any time or times hereafter to any one of these becomes payable and the same is not paid or bonded within thirty (30) days after the same becomes payable (each an “Continuing Governmental Lien”) and the amount thereof, together with the amount of any other Continuing Governmental Liens which remain unsatisfied exceed $2,500,000;

8.1.10 Insolvency.

Any Loan Party or any Subsidiary of a Loan Party ceases to be solvent or admits in writing its inability to pay its debts as they mature;

8.1.11 Events Relating to Plans and Benefit Arrangements.

Any of the following occurs: (i) any Reportable Event, which the Agent determines in good faith constitutes grounds for the termination of any Plan by the PBGC or the appointment of a trustee to administer or liquidate any Plan, shall have occurred and be continuing; (ii) proceedings shall have been instituted or other action taken to terminate any Plan, or a termination notice shall have been filed with respect to any Plan; (iii) a trustee shall be appointed to administer or liquidate any Plan; (iv) the PBGC shall give notice of its intent to institute proceedings to terminate any Plan or Plans or to appoint a trustee to administer or liquidate any Plan; and, in the case of the occurrence of (i), (ii), (iii) or (iv) above, the Agent determines in good faith that the amount of any Borrower’s liability is likely to exceed 10% of

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its Consolidated Net Worth; (v) any Borrower or any member of the ERISA Group shall fail to make any contributions when due to a Plan or a Multiemployer Plan; (vi) any Borrower or any other member of the ERISA Group shall make any amendment to a Plan with respect to which security is required under Section 307 of ERISA; (vii) any Borrower or any other member of the ERISA Group shall withdraw completely or partially from a Multiemployer Plan; (viii) any Borrower or any other member of the ERISA Group shall withdraw (or shall be deemed under Section 4062(e) of ERISA to withdraw) from a Multiple Employer Plan; or (ix) any applicable Law is adopted, changed or interpreted by any Official Body with respect to or otherwise affecting one or more Plans, Multiemployer Plans or Benefit Arrangements, and with respect to any of the events specified in (v), (vi), (vii), (viii) or (ix), the Agent determines in good faith that any such occurrence would be reasonably likely to materially and adversely affect the total enterprise represented by any Borrower and the other members of the ERISA Group;

8.1.12 Cessation of Business.

Any Loan Party or Subsidiary of a Loan Party ceases to conduct its business as contemplated, except for a Permitted Voluntary Dissolution or as expressly permitted under Section 7.2.6 [Liquidations, Mergers, Etc.] or 7.2.7 [Disposition of Assets or Subsidiaries], or any Loan Party or Subsidiary of a Loan Party is enjoined, restrained or in any way prevented by court order from conducting all or any material part of its business, and such injunction, restraint or other preventive order is not dismissed within thirty (30) days after the entry thereof;

8.1.13 Involuntary Proceedings.

A proceeding shall have been instituted in a court having jurisdiction in the premises seeking a decree or order for relief in respect of any Loan Party or Subsidiary of a Loan Party in an involuntary case under any applicable bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or Subsidiary of a Loan Party for any substantial part of its property, or for the winding-up or liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect for a period of thirty (30) consecutive days or such court shall enter a decree or order granting any of the relief sought in such proceeding; or

8.1.14 Voluntary Proceedings.

Any Loan Party or Subsidiary of a Loan Party shall commence a voluntary case under any applicable bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such Law, shall consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator, conservator (or other similar official) of itself or for any substantial part of its property, shall make a general assignment for the benefit of creditors, shall fail generally to pay its debts as they become due or shall take any action in furtherance of any of the foregoing.

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8.1.15 Change in Control.

Any Person shall sell, transfer or make other disposition of capital stock owned directly or indirectly by John A. Catsimatidis (“Catsimatidis”) of any Loan Party except (i) sales, transfers or dispositions by a Person resulting in not more than a forty-nine percent (49%) change of ownership of the capital stock of any Loan Party owned directly or indirectly by Catsimatidis in the aggregate over the term of this Agreement by such Person, provided that Catsimatidis shall at all times have voting control with respect to all classes of voting stock of each Loan Party; (ii) involuntary transfers by will or similar instrument as a result of death or incapacity (and not pursuant to liquidating sales or subsequent transfers upon receipt by the beneficiaries (the “Beneficiaries”) under such will or instrument); or (iii) pursuant to subsequent transfers by any such Beneficiaries provided that such Beneficiaries collectively retain directly or indirectly not less than fifty-one percent ownership of the capital stock of each Loan Party and such Beneficiaries, collectively, shall at all times have voting control with respect to all classes of voting stock of each Loan Party.

8.2 Consequences of Event of Default.

8.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings.

If an Event of Default specified under Sections 8.1.1 through 8.1.12 and 8.1.15 shall occur and be continuing, the Banks and the Agent shall be under no further obligation to make Loans or issue Letters of Credit, as the case may be, and the Agent may, and upon the request of the Required Banks shall, (i) by written notice to the Borrowers, declare the unpaid principal amount of the Notes then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrowers to the Banks hereunder and thereunder to be forthwith due and payable, and the same shall thereupon become and be immediately due and payable to the Agent for the benefit of each Bank without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, and (ii) require the Borrowers to, and each Borrower shall thereupon, deposit in a non-interest-bearing account with the Agent, as cash collateral for its Obligations under the Loan Documents, an amount equal to the maximum amount currently or at any time thereafter available to be drawn on all outstanding Letters of Credit, and each Borrower hereby pledges to the Agent and the Banks, and grants to the Agent and the Banks a security interest in, all such cash as security for such Obligations. Upon the curing of all existing Events of Default to the satisfaction of the Required Banks, the Agent shall return such cash collateral to the appropriate Borrower.

8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings.

If an Event of Default specified under Section 8.1.13 [Involuntary Proceedings] or 8.1.14 [Voluntary Proceedings] shall occur, the Banks shall be under no further obligations to make Loans hereunder, and the unpaid principal amount of the Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrowers to the Banks hereunder and thereunder shall be immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived.

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8.2.3 Set-off.

If an Event of Default shall occur and be continuing, any Bank to whom any Obligation is owed by any Loan Party hereunder or under any other Loan Document or any participant of such Bank which has agreed in writing to be bound by the provisions of Section 9.13 [Equalization of Banks] and any branch, Subsidiary or Affiliate of such Bank or participant anywhere in the world shall have the right, in addition to all other rights and remedies available to it, without notice to such Loan Party, to set off against and apply to the then unpaid balance of all the Loans and all other Obligations of the Borrowers and the other Loan Parties hereunder or under any other Loan Document any debt owing to, and any other funds held in any manner for the account of, the Borrowers or any Borrower or such other Loan Party by such Bank or participant or by such branch, Subsidiary or Affiliate, including all funds in all deposit accounts (whether time or demand, general or special, provisionally credited or finally credited, or otherwise) now or hereafter maintained by a Borrower or such other Loan Party for its own account (but not including funds held in custodian or trust accounts) with such Bank or participant or such branch, Subsidiary or Affiliate. Such right shall exist whether or not any Bank or the Agent shall have made any demand under this Agreement or any other Loan Document, whether or not such debt owing to or funds held for the account of a Borrower or such other Loan Party is or are matured or unmatured and regardless of the existence or adequacy of any Collateral, Guaranty or any other security, right or remedy available to any Bank or the Agent.

8.2.4 Suits, Actions, Proceedings.

If an Event of Default shall occur and be continuing, and whether or not the Agent shall have accelerated the maturity of Loans pursuant to any of the foregoing provisions of this Section 8.2, the Agent may, on behalf of itself in its capacity as Agent and on behalf of all Banks, proceed to protect and enforce its rights by suit in equity, action at law and/or other appropriate proceeding, whether for the specific performance of any covenant or agreement contained in this Agreement or the other Loan Documents, including as permitted by applicable Law the obtaining of the ex parte appointment of a receiver, and, if such amount shall have become due, by declaration or otherwise, proceed to enforce the payment thereof or any other legal or equitable right of the Agent or any Bank.

8.2.5 Application of Proceeds.

From and after the date on which the Agent has taken any action pursuant to this Section 8.2 and until all Obligations of the Loan Parties have been paid in full, any and all proceeds received by the Agent from any sale or other disposition of the Collateral, or any part thereof, or the exercise of any other remedy by the Agent, shall be applied as follows:

(i) first, to reimburse the Agent and the Banks for out-of-pocket costs, expenses and disbursements, including reasonable attorneys’ and paralegals’ fees and legal expenses, incurred by the Agent or the Banks in connection with realizing on the Collateral or collection of any Obligations of any of the Loan Parties under any of the Loan Documents, including advances made by the Banks or any one of them or the Agent for the

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reasonable maintenance, preservation, protection or enforcement of, or realization upon, the Collateral, including advances for taxes, insurance, repairs and the like and reasonable expenses incurred to sell or otherwise realize on, or prepare for sale or other realization on, any of the Collateral, but excluding Hedging Obligations;

(ii) second, to the repayment of all Indebtedness then due and unpaid of the Loan Parties to the Banks incurred under this Agreement or any of the other Loan Documents with respect to principal, interest, fees and expenses, in such manner as the Agent may determine in its discretion, but excluding Hedging Obligations;

(iii) third, to the repayment of all Indebtedness then due and unpaid of the Loan Parties to the Banks and any Affiliates of the Banks under this Agreement or any of the other Loan Documents with respect to Hedging Obligations and any other Obligations not set forth above; and

(iv) the balance, if any, as required by Law.

8.2.6 Other Rights and Remedies.

In addition to all of the rights and remedies contained in this Agreement or in any of the other Loan Documents, the Agent shall have all of the rights and remedies of a secured party under the Uniform Commercial Code or other applicable Law, all of which rights and remedies shall be cumulative and nonexclusive, to the extent permitted by Law. The Agent may, and upon the request of the Required Banks shall, exercise all post-default rights granted to the Agent and the Banks under the Loan Documents or applicable Law. The enumeration of the foregoing rights and remedies is not intended to be exhaustive and the exercise of any right or remedy shall not preclude the exercise of any other right or remedies provided for herein or otherwise provided by law, all of which shall be cumulative and not alternative.

8.3 Notice of Sale.

Any notice required to be given by the Agent of a sale, lease or other disposition of the Collateral, or any other intended action by the Agent, if given ten (10) days prior to such proposed action, shall constitute commercially reasonable and fair notice thereof to the Borrowers.

9. THE AGENT

9.1 Appointment.

Each Bank hereby irrevocably designates, appoints and authorizes PNC Bank to act as Agent for such Bank under this Agreement and all other Loan Documents and to execute and deliver or accept on behalf of each of the Banks the other Loan Documents. Each Bank hereby irrevocably authorizes, and each holder of any Note by the acceptance of a Note shall be deemed irrevocably to authorize, the Agent to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and any other instruments and

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agreements referred to herein, and to exercise such powers and to perform such duties hereunder as are specifically delegated to or required of the Agent by the terms hereof, together with such powers as are reasonably incidental thereto. PNC Bank agrees to act as the Agent on behalf of the Banks to the extent provided in this Agreement.

None of the Banks designated on the facing page or signature pages of this Agreement as a “Co-Documentation Agent” shall have any right, power, obligation, liability, responsibility, or duty under this Agreement other than those applicable to all Banks as such. Without limiting the foregoing, none of the Banks so identified as a “Co-Documentation Agent” shall have or be deemed to have any fiduciary relationship with any Bank. Each Bank acknowledges that it has not relied and will not rely on any of the Banks so identified in deciding to enter into this Agreement or in taking or not taking action hereunder.

9.2 Delegation of Duties.

The Agent may perform any of its duties hereunder by or through agents or employees (provided such delegation does not constitute a relinquishment of its duties as Agent) and, subject to Sections 9.5 [Reimbursement and Indemnification of Agent by the Borrowers] and 9.6 [Exculpatory Provisions; Limitation of Liability], shall be entitled to engage and pay for the advice or services of any attorneys, accountants or other experts concerning all matters pertaining to its duties hereunder and to rely upon any advice so obtained.

9.3 Nature of Duties; Independent Credit Investigation.

The Agent shall have no duties or responsibilities except those expressly set forth in this Agreement, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist. The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of this Agreement a fiduciary or trust relationship in respect of any Bank; and nothing in this Agreement, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of this Agreement except as expressly set forth herein. Without limiting the generality of the foregoing, the use of the term “agent” in this Agreement with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable Law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. Each Bank expressly acknowledges (i) that the Agent has not made any representations or warranties to it and that no act by the Agent hereafter taken, including any review of the affairs of any of the Loan Parties, shall be deemed to constitute any representation or warranty by the Agent to any Bank; (ii) that it has made and will continue to make, without reliance upon the Agent, its own independent investigation of the financial condition and affairs and its own appraisal of the creditworthiness of each of the Loan Parties in connection with this Agreement and the making and continuance of the Loans hereunder; and (iii) except as expressly provided herein, that the Agent shall have no duty or responsibility, either initially or on a continuing basis, to provide any Bank with any credit or other information with respect thereto, whether coming into its possession before the making of any Loan or at any time or times thereafter.

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9.4 Actions in Discretion of Agent; Instructions From the Banks.

The Agent agrees, upon the written request of the Required Banks, to take or refrain from taking any action of the type specified as being within the Agent’s rights, powers or discretion herein, provided that the Agent shall not be required to take any action which exposes the Agent to personal liability or which is contrary to this Agreement or any other Loan Document or applicable Law. In the absence of a request by the Required Banks, the Agent shall have authority, in its sole discretion, to take or not to take any such action, unless this Agreement specifically requires the consent of the Required Banks or all of the Banks. Any action taken or failure to act pursuant to such instructions or discretion shall be binding on the Banks, subject to Section 9.6 [Exculpatory Provisions, Etc.]. No Bank shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder in accordance with the instructions of the Required Banks. In the absence of such instructions, no Bank shall have any right of action whatsoever against the Agent as a result of the Agent acting or refraining from acting hereunder in the discretion of the Agent and in the absence of Agent’s gross negligence or willful misconduct.

9.5 Reimbursement and Indemnification of Agent by the Borrowers.

The Borrowers, jointly and severally, unconditionally agree to pay or reimburse the Agent and hold the Agent harmless against (a) liability for the payment of all reasonable out-of-pocket costs, expenses and disbursements, including fees and expenses of counsel (including the allocated costs of staff counsel), appraisers and environmental consultants, incurred by the Agent (i) in connection with the development, negotiation, preparation, printing, execution, administration, syndication, interpretation and performance of this Agreement and the other Loan Documents, (ii) relating to any requested amendments, waivers or consents pursuant to the provisions hereof, (iii) in connection with the enforcement of this Agreement or any other Loan Document or collection of amounts due hereunder or thereunder or the proof and allowability of any claim arising under this Agreement or any other Loan Document, whether in bankruptcy or receivership proceedings or otherwise, and (iv) in any workout or restructuring or in connection with the protection, preservation, exercise or enforcement of any of the terms hereof or of any rights hereunder or under any other Loan Document or in connection with any foreclosure, collection or bankruptcy proceedings; and (b) all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent, in its capacity as such, in any way relating to or arising out of this Agreement or any other Loan Documents or any action taken or omitted by the Agent hereunder or thereunder, provided that the Borrowers shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements if the same results from the Agent’s gross negligence or willful misconduct, or if the Borrowers were not given notice of the subject claim and the opportunity to participate in the defense thereof, at their expense (except that the Borrowers shall remain liable to the extent such failure to give notice does not result in a loss to the Borrowers), or if the same results from a compromise or settlement agreement entered into without the consent of the Borrowers, which shall not be unreasonably withheld. In addition, the Borrowers, jointly and severally, agree to reimburse and pay all reasonable out-of-pocket expenses of the Agent’s regular employees and agents (the “Agent’s Auditors”) engaged periodically to perform audits of the Loan Parties’ books, records and business properties.

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9.6 Exculpatory Provisions; Limitation of Liability.

Neither the Agent nor any of its directors, officers, employees, agents, attorneys or Affiliates shall (a) be liable to any Bank for any action taken or omitted to be taken by it or them hereunder, or in connection herewith, including pursuant to any Loan Document, unless caused by its or their own gross negligence or willful misconduct, (b) be responsible in any manner to any of the Banks for the effectiveness, enforceability, genuineness, validity or the due execution of this Agreement or any other Loan Documents or for any recital, representation, warranty, document, certificate, report or statement herein or made or furnished under or in connection with this Agreement or any other Loan Documents, or (c) be under any obligation to any of the Banks to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions hereof or thereof on the part of the Loan Parties, or the financial condition of the Loan Parties, or the existence or possible existence of any Event of Default or Potential Default.

9.7 Reimbursement and Indemnification of Agent by Banks.

Each Bank agrees to reimburse and indemnify the Agent (to the extent not reimbursed by the Borrowers and without limiting the Obligation of the Borrowers to do so) in proportion to its Ratable Share from and against all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements, including attorneys’ fees and disbursements (including the allocated costs of staff counsel) and costs of appraisers and environmental consultants, of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent, in its capacity as such, in any way relating to or arising out of this Agreement or any other Loan Documents or any action taken or omitted by the Agent hereunder or thereunder, provided that no Bank shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (a) if the same result from the Agent’s gross negligence or willful misconduct, or (b) if such Bank was not given notice of the subject claim and the opportunity to participate in the defense thereof, at its expense (except that such Bank shall remain liable to the extent such failure to give notice does not result in a loss to the Bank), or (c) if the same result from a compromise and settlement agreement entered into without the consent of such Bank, which shall not be unreasonably withheld. In addition, each Bank agrees promptly upon demand to reimburse the Agent (to the extent not reimbursed by the Borrowers and without limiting the Obligation of the Borrowers to do so) in proportion to its Ratable Share for all amounts due and payable by the Borrowers to the Agent in connection with the Agent’s periodic audit of the Loan Parties’ books, records and business properties.

9.8 Reliance by Agent.

The Agent shall be entitled to rely upon any writing, telegram, telex or teletype message, resolution, notice, consent, certificate, letter, cablegram, statement, order or other document or conversation by telephone or otherwise believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon the advice and

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opinions of counsel and other professional advisers selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action hereunder unless it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action.

9.9 Notice of Default.

The Agent shall not be deemed to have knowledge or notice of the occurrence of any Potential Default or Event of Default unless the Agent has received written notice from a Bank or a Borrower referring to this Agreement, describing such Potential Default or Event of Default and stating that such notice is a “notice of default.”

9.10 Notices.

The Agent shall promptly send to each Bank a copy of all notices received from any Borrower pursuant to the provisions of this Agreement or the other Loan Documents promptly upon receipt thereof. The Agent shall promptly notify the Borrowers and the other Banks of each change in the Base Rate and the effective date thereof.

9.11 Banks in Their Individual Capacities.

With respect to its Revolving Credit Commitment and the Revolving Credit Loans made by it and any other rights and powers given to it as a Bank hereunder or under any of the other Loan Documents, the Agent shall have the same rights and powers hereunder as any other Bank and may exercise the same as though it were not the Agent, and the term “Banks” shall, unless the context otherwise indicates, include the Agent in its individual capacity. PNC Bank and its Affiliates and each of the Banks and their respective Affiliates may, without liability to account, except as prohibited herein, make loans to, accept deposits from, discount drafts for, act as trustee under indentures of and generally engage in any kind of banking or trust business with the Loan Parties and their Affiliates, in the case of the Agent, as though it were not acting as Agent hereunder and, in the case of each Bank, as though such Bank were not a Bank hereunder. The Banks acknowledge that, pursuant to such activities, the Agent or its Affiliates may (i) receive information regarding the Loan Parties (including information that may be subject to confidentiality obligations in favor of the Loan Parties) and acknowledge that the Agent shall be under no obligation to provide such information to them, and (ii) accept fees and other consideration from the Loan Parties for services in connection with this Agreement and otherwise without having to account for the same to the Banks.

9.12 Holders of Notes.

The Agent may deem and treat any payee of any Note as the owner thereof for all purposes hereof unless and until written notice of the assignment or transfer thereof shall have been filed with the Agent. Any request, authority or consent of any Person who at the time of making such request or giving such authority or consent is the holder of any Note shall be conclusive and binding on any subsequent holder, transferee or assignee of such Note or of any Note or Notes issued in exchange therefor.

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9.13 Equalization of Banks.

The Banks and the holders of any participations in any Notes agree among themselves that, with respect to all amounts received by any Bank or any such holder for application on any Obligation hereunder or under any Note or under any such participation, whether received by voluntary payment, by realization upon security, by the exercise of the right of set-off or banker’s lien, by counterclaim or by any other non-pro rata source, equitable adjustment will be made in the manner stated in the following sentence so that, in effect, all such excess amounts will be shared ratably among the Banks and such holders in proportion to their interests in payments under the Notes, except as otherwise provided in Section 3.4.3 [Agent’s and Bank’s Rights], 4.4.2 [Replacement of a Bank] or 4.6 [Additional Compensation in Certain Circumstances]. The Banks or any such holder receiving any such amount shall purchase for cash from each of the other Banks an interest in such Bank’s Loans in such amount as shall result in a ratable participation by the Banks and each such holder in the aggregate unpaid amount under the Notes, provided that if all or any portion of such excess amount is thereafter recovered from the Bank or the holder making such purchase, such purchase shall be rescinded and the purchase price restored to the extent of such recovery, together with interest or other amounts, if any, required by law (including court order) to be paid by the Bank or the holder making such purchase.

9.14 Successor Agent.

The Agent (i) may resign as Agent or (ii) shall resign if such resignation is requested by the Required Banks (if the Agent is a Bank, the Agent’s Loans and its Revolving Credit Commitment shall be considered in determining whether the Required Banks have requested such resignation) or required by Section 4.4.2 [Replacement of a Bank], in either case of (i) or (ii) by giving not less than thirty (30) days’ prior written notice to the Borrowers. If the Agent shall resign under this Agreement, then either (a) the Required Banks shall appoint from among the Banks a successor agent for the Banks, subject to the consent of the Borrowers, such consent not to be unreasonably withheld, or (b) if a successor agent shall not be so appointed and approved within the thirty (30) day period following the Agent’s notice to the Banks of its resignation, then the Agent shall appoint, with the consent of the Borrowers, such consent not to be unreasonably withheld, a successor agent who shall serve as Agent until such time as the Required Banks appoint and the Borrowers consent to the appointment of a successor agent. Upon its appointment pursuant to either clause (a) or (b) above, such successor agent shall succeed to the rights, powers and duties of the Agent, and the term “Agent” shall mean such successor agent, effective upon its appointment, and the former Agent’s rights, powers and duties as Agent shall be terminated without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement. After the resignation of any Agent hereunder, the provisions of this Article 9 shall inure to the benefit of such former Agent, and such former Agent shall not by reason of such resignation be deemed to be released from liability for any actions taken or not taken by it while it was an Agent under this Agreement.

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9.15 Agent’s Fee.

The Borrowers, jointly and severally, shall pay to the Agent a nonrefundable fee (the “Agent’s Fee”) under the terms of a letter (the “Agent’s Letter”) between the Borrowers and Agent, as amended from time to time.

9.16 Availability of Funds.

The Agent may assume that each Bank has made or will make the proceeds of a Loan available to the Agent unless the Agent shall have been notified by such Bank on or before the later of (1) the close of Business on the Business Day preceding the Borrowing Date with respect to such Loan or (2) two hours before the time the Agent actually funds the proceeds of such Loan to a Borrower (whether using its own funds pursuant to this Section 9.16 or using proceeds deposited with the Agent by the Banks and whether such funding occurs before or after the time the Banks are required to deposit the proceeds of such Loan with the Agent). The Agent may, in reliance upon such assumption (but shall not be required to), make available to such Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Agent by such Bank, the Agent shall be entitled to recover such amount on demand from such Bank (or, if such Bank fails to pay such amount forthwith, upon such demand from a Borrower), together with interest thereon, in respect of each day during the period commencing on the date such amount was made available to such Borrower and ending on the date the Agent recovers such amount, at a rate per annum equal to (i) the Federal Funds Effective Rate during the first three (3) days after such interest shall begin to accrue and (ii) the applicable interest rate in respect of such Loan after the end of such three-day period.

9.17 Calculations.

In the absence of gross negligence or willful misconduct, the Agent shall not be liable for any error in computing the amount payable to any Bank, whether in respect of the Loans, fees or any other amounts due to the Banks under this Agreement. In the event an error in computing any amount payable to any Bank is made, the Agent, the Borrowers and each affected Bank shall, forthwith upon discovery of such error, make such adjustments as shall be required to correct such error, and any compensation therefor will be calculated at the Federal Funds Effective Rate.

9.18 Beneficiaries.

Except as expressly provided herein, the provisions of this Article 9 are solely for the benefit of the Agent and the Banks, and the Loan Parties shall not have any rights to rely on or enforce any of the provisions hereof. In performing its functions and duties under this Agreement, the Agent shall act solely as agent of the Banks and does not assume and shall not be deemed to have assumed any obligation toward, or relationship of agency or trust with or for, any of the Loan Parties. This Section 9.18 is not intended to modify any limit contained in Section 9.8 on the right of the Agent to be indemnified by the Borrowers.

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9.19 No Reliance on Agent’s Customer Identification Program.

Each Bank acknowledges and agrees that neither such Bank, nor any of its Affiliates, participants or assignees, may rely on the Agent to carry out such Bank’s, Affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law, including any programs involving any of the following items relating to or in connection with any of the Loan Parties, their Affiliates or their agents, the Loan Documents or the transactions hereunder or contemplated hereby: (1) any identity verification procedures, (2) any recordkeeping, (3) comparisons with government lists, (4) customer notices or (5) other procedures required under the CIP Regulations or such other Governmental Regulations or such other Laws.

10. MISCELLANEOUS

10.1 Modifications, Amendments or Waivers.

With the written consent of the Required Banks, the Agent, acting on behalf of all the Banks, and the Borrowers, on behalf of the Loan Parties, may from time to time enter into written agreements amending or changing any provision of this Agreement or any other Loan Document or the rights of the Banks or the Loan Parties hereunder or thereunder, or may grant written waivers or consents to a departure from the due performance of the Obligations of the Loan Parties hereunder or thereunder. Any such agreement, waiver or consent made with such written consent shall be effective to bind all the Banks and the Loan Parties, provided, that, without the written consent of all the Banks, no such agreement, waiver or consent may be made which will:

10.1.1 Increase of Commitment; Extension or Expiration Date.

Increase the amount of the Revolving Credit Commitment of any Bank hereunder or extend the Expiration Date;

10.1.2 Extension of Payment; Reduction of Principal Interest or Fees; Modification of Terms of Payment.

Whether or not any Loans are outstanding, extend the time for payment of principal or interest of any Loan (excluding the due date of any mandatory prepayment of a Loan or any mandatory Revolving Credit Commitment reduction in connection with such a mandatory prepayment hereunder, except for mandatory reductions of the Revolving Credit Commitments on the Expiration Date), the Revolving Credit Commitment Fee or any other fee payable to any Bank, or reduce the principal amount of or the rate of interest borne by any Loan or reduce the Revolving Credit Commitment Fee or any other fee payable to any Bank, or otherwise affect the terms of payment of the principal of or interest on any Loan, the Revolving Credit Commitment Fee or any other fee payable to any Bank;

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10.1.3 Release of Collateral or Guarantor.

Except for sales of assets permitted by Section 7.2.7 [Dispositions of Assets or Subsidiaries], release any Collateral consisting of capital stock or other ownership interests of any Loan Party or its Subsidiaries or substantially all of the assets of any Loan Party, any release any Guarantor from its Obligations under the Guaranty Agreement; or

10.1.4 Borrowing Base.

Permit any Loan to be made or Letter of Credit to be issued if after giving effect thereto the Revolving Facility Usage hereunder would exceed either (A) the lesser of 110% of the Borrowing Base or the Borrowing Base plus $5,000,000 for more than thirty (30) consecutive Business Days, or (B) the Revolving Credit Commitments.

10.1.5 Inventory and Accounts Advance Rates.

Increase the advance rates on Inventory or Accounts above the advance rates with respect to such items in effect on the Closing Date.

10.1.6 Miscellaneous.

Amend Section 4.2 [Pro Rata Treatment of Banks], 7.2.5 [Dividends and Related Distributions], 7.2.15 [Unused Availability], 9.6 [Exculpatory Provisions, Etc.] or 9.13 [Equalization of Banks] or this Section 10.1, alter any provision regarding the pro rata treatment of the Banks, change the definition of Required Banks or change any requirement providing for the Banks or the Required Banks to authorize the taking of any action hereunder;

provided, further, that no agreement, waiver or consent which would modify the interests, rights or obligations of the Agent in its capacity as Agent or as the issuer of Letters of Credit shall be effective without the written consent of the Agent.

Notwithstanding (a) the existence of any Potential Default or Event of Default, (b) that any of the applicable conditions precedent set forth in Section 6.2 hereof have not been satisfied or (c) any other provision of this Agreement, including Sections 2.1.1 and 2.8.1, after the Revolving Facility Usage exceeds the Borrowing Base less $10,000,000, Agent may at its discretion and without the consent of the Required Banks, voluntarily permit the outstanding Revolving Facility Usage at any time to exceed the Borrowing Base by the lesser of (i) ten percent (10%) of such Borrowing Base (i.e. the aggregate amount of Revolving Facility Usage may be up to one hundred and ten percent (110%) of the Borrowing Base, subject to clause (ii) of this sentence) or (ii) $5,000,000 for up to thirty (30) consecutive Business Days. For purposes of the preceding sentence, the discretion granted to Agent hereunder shall not preclude involuntary overadvances that may result from time to time due to the fact that the Borrowing Base was unintentionally exceeded for any reason, including, but not limited to, Collateral previously deemed to be either “Qualified Accounts” or “Qualified Inventory”, as applicable, becomes ineligible, collections of Accounts applied to reduce outstanding Revolving Credit Loans are thereafter returned for insufficient funds or overadvances are made to protect or preserve the Collateral. In the event the outstanding Revolving Credit Loans and Swing Loans plus the

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Letters of Credit Outstanding shall exceed the Borrowing Base by more than ten percent (10%), Borrowers shall decrease such excess within one Business Day after the Borrowers learn of such excess. Revolving Credit Loans made or letters of Credit issued after Agent has determined the existence of overadvances not permitted in this Section shall be deemed to be prohibited overadvances and shall be decreased in accordance with the preceding sentence.

10.2 No Implied Waivers; Cumulative Remedies; Writing Required.

No course of dealing and no delay or failure of the Agent or any Bank in exercising any right, power, remedy or privilege under this Agreement or any other Loan Document shall affect any other or future exercise thereof or operate as a waiver thereof, nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power, remedy or privilege preclude any further exercise thereof or of any other right, power, remedy or privilege. The rights and remedies of the Agent and the Banks under this Agreement and any other Loan Documents are cumulative and not exclusive of any rights or remedies which they would otherwise have. Any waiver, permit, consent or approval of any kind or character on the part of any Bank of any breach or default under this Agreement or any such waiver of any provision or condition of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing.

10.3 Reimbursement and Indemnification of Banks by the Borrowers; Taxes.

The Borrowers, jointly and severally, agree unconditionally upon demand to pay or reimburse each Bank (other than the Agent, as to which the Borrowers’ Obligations are set forth in Section 9.5 [Reimbursement and Indemnification of Agent by the Borrowers]) for and to save such Bank harmless against (i) liability for the payment of all reasonable out-of-pocket costs, expenses and disbursements (including fees and expenses of counsel (including allocated costs of staff counsel) for each Bank except with respect to (a) and (b) below) incurred by such Bank (a) in connection with the administration and interpretation of this Agreement, and other instruments and documents to be delivered hereunder, (b) relating to any amendments, waivers or consents pursuant to the provisions hereof, (c) in connection with the enforcement of this Agreement or any other Loan Document or collection of amounts due hereunder or thereunder or the proof and allowability of any claim arising under this Agreement or any other Loan Document, whether in bankruptcy or receivership proceedings or otherwise, and (d) in any workout or restructuring or in connection with the protection, preservation, exercise or enforcement of any of the terms hereof or of any rights hereunder or under any other Loan Document or in connection with any foreclosure, collection or bankruptcy proceedings, and (ii) all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against such Bank, in its capacity as such, in any way relating to or arising out of this Agreement or any other Loan Documents or any action taken or omitted by such Bank hereunder or thereunder, provided that the Borrowers shall not be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (A) if the same result from such Bank’s gross negligence or willful misconduct, or (B) if the Borrowers were not given notice of the subject claim and the opportunity to participate in the defense thereof, at their expense (except that the Borrowers

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shall remain liable to the extent such failure to give notice does not result in a loss to the Borrowers), or (C) if the same result from a compromise or settlement agreement entered into without the consent of the Borrowers, which shall not be unreasonably withheld. The Banks will attempt to minimize the fees and expenses of legal counsel for the Banks which are subject to reimbursement by the Borrowers hereunder by considering the usage of one law firm to represent the Banks and the Agent if appropriate under the circumstances. Each Borrower agrees unconditionally to pay all stamp, document, transfer, recording or filing taxes or fees and similar impositions now or hereafter determined by the Agent or any Bank to be payable in connection with this Agreement or any other Loan Document, and the Borrowers, jointly and severally, agree unconditionally to save the Agent and the Banks harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such taxes, fees or impositions.

10.4 Holidays.

Whenever payment of a Loan to be made or taken hereunder shall be due on a day which is not a Business Day, such payment shall be due on the next Business Day, and such extension of time shall be included in computing interest and fees, except that the Loans shall be due on the Business Day preceding the Expiration Date if the Expiration Date is not a Business Day. Whenever any payment or action to be made or taken hereunder (other than payment of the Loans) shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day (except as provided in Section 3.2 [Interest Periods] with respect to Interest Periods under the Euro-Rate Option), and such extension of time shall not be included in computing interest or fees, if any, in connection with such payment or action.

10.5 Funding by Branch, Subsidiary or Affiliate.

10.5.1 Notional Funding.

Each Bank shall have the right from time to time, without notice to the Borrowers, to deem any branch, Subsidiary or Affiliate (which for the purposes of this Section 10.5 shall mean any corporation or association which is directly or indirectly controlled by or is under direct or indirect common control with any corporation or association which directly or indirectly controls such Bank) of such Bank to have made, maintained or funded any Loan to which the Euro-Rate Option applies at any time, provided that immediately following (on the assumption that a payment were then due from a Borrower to such other office) and as a result of such change, such Borrower would not be under any greater financial obligation pursuant to Section 4.6 [Additional Compensation in Certain Circumstances] than it would have been in the absence of such change. Notional funding offices may be selected by each Bank without regard to such Bank’s actual methods of making, maintaining or funding the Loans or any sources of funding actually used by or available to such Bank.

10.5.2 Actual Funding.

Each Bank shall have the right from time to time to make or maintain any Loan by arranging for a branch, Subsidiary or Affiliate of such Bank to make or maintain

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such Loan subject to the last sentence of this Section 10.5.2. If any Bank causes a branch, Subsidiary or Affiliate to make or maintain any part of the Loans hereunder, all terms and conditions of this Agreement shall, except where the context clearly requires otherwise, be applicable to such part of the Loans to the same extent as if such Loans were made or maintained by such Bank, but in no event shall any Bank’s use of such a branch, Subsidiary or Affiliate to make or maintain any part of the Loans hereunder cause such Bank or such branch, Subsidiary or Affiliate to incur any costs or expenses payable by any Borrower hereunder or require any Borrower to pay any other compensation to any Bank (including any expenses incurred or payable pursuant to Section 4.6 [Additional Compensation in Certain Circumstances]) which would otherwise not be incurred.

10.6 Notices.

Any notice, request, demand, direction or other communication (for purposes of this Section 10.6 only, a “Notice”) to be given to or made upon any party hereto under any provision of this Agreement shall be given or made by telephone or in writing (which includes means of electronic transmission (i.e., “e-mail”) or facsimile transmission or by setting forth such Notice on a site on the World Wide Web (a “Website Posting”) if Notice of such Website Posting (including the information necessary to access such site) has previously been delivered to the applicable parties hereto by another means set forth in this Section 10.6) in accordance with this Section 10.6. Any such Notice must be delivered to the applicable parties hereto at the addresses and numbers set forth under their respective names on Schedule 1.1(B) hereof or in accordance with any subsequent unrevoked Notice from any such party that is given in accordance with this Section 10.6. Any Notice shall be effective:

(i) In the case of hand-delivery, when delivered;

(ii) If given by mail, four days after such Notice is deposited with the United States Postal Service, with first-class postage prepaid, return receipt requested;

(iii) In the case of a telephonic Notice, when a party is contacted by telephone, if delivery of such telephonic Notice is confirmed no later than the next Business Day by hand delivery, a facsimile or electronic transmission, a Website Posting or overnight courier delivery of a confirmatory notice (received at or before noon on such next Business Day);

(iv) In the case of a facsimile transmission, when sent to the applicable party’s facsimile machine’s telephone number if the party sending such Notice receives confirmation of the delivery thereof from its own facsimile machine;

(v) In the case of electronic transmission, when actually received;

(vi) In the case of a Website Posting, upon delivery of a Notice of such posting (including the information necessary to access such web site) by another means set forth in this Section 10.6; and

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(vii) If given by any other means (including by overnight courier), when actually received.

Any Bank giving a Notice to a Loan Party shall concurrently send a copy thereof to the Agent, and the Agent shall promptly notify the other Banks of its receipt of such Notice.

10.7 Severability.

The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction.

10.8 Governing Law.

Each Letter of Credit and Section 2.8 [Letter of Credit Subfacility] shall be subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, as the same may be revised or amended from time to time, and, to the extent not inconsistent therewith, the internal Law of the Commonwealth of Pennsylvania without regard to its conflict of laws principles, and the balance of this Agreement shall be deemed to be a contract under the Law of the Commonwealth of Pennsylvania and for all purposes shall be governed by and construed and enforced in accordance with the internal Law of the Commonwealth of Pennsylvania without regard to its conflict of laws principles.

10.9 Prior Understanding.

This Agreement and the other Loan Documents supersede all prior understandings and agreements, whether written or oral, between the parties hereto and thereto relating to the transactions provided for herein and therein, including any prior confidentiality agreements and commitments, except that this Agreement and the other Loan Documents expressly do not supersede any prior written agreements between Agent and any Bank that by their terms expressly state that they shall supersede the terms of this Agreement and such agreements are binding on the parties thereto (and not on parties which are not a party thereto).

10.10 Duration; Survival.

All representations and warranties of the Loan Parties contained herein or made in connection herewith shall survive the making of Loans and issuance of Letters of Credit and shall not be waived by the execution and delivery of this Agreement, any investigation by the Agent or the Banks, the making of Loans, issuance of Letters of Credit or payment in full of the Loans. All covenants and agreements of the Loan Parties contained in Sections 7.1 [Affirmative Covenants], 7.2 [Negative Covenants] and 7.3 [Reporting Requirements] herein shall continue in full force and effect from and after the date hereof so long as the Borrowers may borrow or request Letters of Credit hereunder and until termination of the Revolving Credit Commitments and payment in full of the Loans and expiration or termination of all

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Letters of Credit. All covenants and agreements of the Borrowers contained herein relating to the payment of principal, interest, premiums, additional compensation or expenses and indemnification, including those set forth in the Notes, Article 4 [Payments] and Sections 9.5 [Reimbursement and Indemnification of Agent by the Borrowers], 9.7 [Reimbursement and Indemnification of Agent by the Banks] and 10.3 [Reimbursement and Indemnification of Banks by the Borrowers; Taxes], shall survive payment in full of the Loans, expiration or termination of the Letters of Credit and termination of the Revolving Credit Commitments.

10.11 Successors and Assigns.

(i) This Agreement shall be binding upon and shall inure to the benefit of the Banks, the Agent, the Loan Parties and their respective successors and assigns, except that none of the Loan Parties may assign or transfer any of its rights and Obligations hereunder or any interest herein. Each Bank may, at its own cost, make assignments of or sell participations in all or any part of its Revolving Credit Commitments and the Loans made by it to one or more banks or other entities, subject to the consent of the Borrowers and the Agent with respect to any assignee, such consent of the Borrowers or the Agent not to be unreasonably withheld, provided that (1) no consent of the Borrowers shall be required in the case of an assignment by a Bank to an Affiliate of such Bank or if any Event of Default shall have occurred and been continuing at the time of any such assignment, and (2) any assignment by a Bank to a Person other than an Affiliate of such Bank may not be made in amounts less than the lesser of $5,000,000 or the amount of the assigning Bank’s Revolving Credit Commitment. In the case of an assignment, upon receipt by the Agent of the Assignment and Assumption Agreement, the assignee shall have, to the extent of such assignment (unless otherwise provided therein), the same rights, benefits and obligations as it would have if it had been a signatory Bank hereunder, the Revolving Credit Commitments shall be adjusted accordingly, and upon surrender of any Note subject to such assignment, each Borrower shall execute and deliver a new Note to the assignee in an amount equal to the amount of the Revolving Credit Commitment assumed by it and a new Revolving Credit Note to the assigning Bank in an amount equal to the Revolving Credit Commitment retained by it hereunder. Any Bank which assigns any or all of its Revolving Credit Commitment or Loans to a Person other than an Affiliate of such Bank shall pay to the Agent a service fee in the amount of $3,500 for each assignment. In the case of a participation, the participant shall have only the rights specified in Section 8.2.3 [Set-off] (the participant’s rights against such Bank in respect of such participation to be those set forth in the agreement executed by such Bank in favor of the participant relating thereto and not to include any voting rights except with respect to changes of the type referenced in Section 10.1.1 [Increase of Commitment, Etc.], 10.1.2 [Extension of Payment, Etc.] or 10.1.3 [Release of Collateral or Guarantor], all of such Bank’s obligations under this Agreement or any other Loan Document shall remain unchanged, and all amounts payable by any Loan Party hereunder or thereunder shall be determined as if such Bank had not sold such participation.

(ii) Any assignee or participant which is not incorporated under the Laws of the United States of America or a state thereof shall deliver to the Borrowers and the Agent the form of certificate described in Section 10.17 [Tax Withholding Clause] relating to federal income tax withholding. Each Bank may furnish any publicly available information

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concerning any Loan Party or its Subsidiaries and any other information concerning any Loan Party or its Subsidiaries in the possession of such Bank from time to time to assignees and participants (including prospective assignees or participants), provided that such assignees and participants agree to be bound by the provisions of Section 10.12 [Confidentiality].

(iii) Notwithstanding any other provision in this Agreement, any Bank may at any time pledge or grant a security interest in all or any portion of its rights under this Agreement, its Note and the other Loan Documents to any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR Section 203.14 without notice to or consent of the Borrowers or the Agent. No such pledge or grant of a security interest shall release the transferor Bank of its obligations hereunder or under any other Loan Document.

10.12 Confidentiality.

10.12.1 General.

The Agent and the Banks each agree to use commercially reasonable efforts to keep confidential all information obtained from any Loan Party or its Subsidiaries which is nonpublic and confidential or proprietary in nature (including any information a Borrower specifically designates as confidential), except as provided below, and to use such information only in connection with their respective capacities under this Agreement and for the purposes contemplated hereby. The Agent and the Banks shall be permitted to disclose such information (i) to outside legal counsel, accountants and other professional advisors who need to know such information in connection with the administration and enforcement of this Agreement, subject to agreement of such Persons to maintain the confidentiality, (ii) to assignees and participants as contemplated by Section 10.11, (iii) to the extent requested by any bank regulatory authority or, with three (3) days prior notice (provided that such notice and the delay resulting thereby is permitted by the applicable Law, subpoena, legal process, investigation or proceeding) to the Borrowers, as otherwise required by applicable Law or by any subpoena or similar legal process, or in connection with any investigation or proceeding arising out of the transactions contemplated by this Agreement, (iv) if it becomes publicly available other than as a result of a breach of this Agreement or becomes available from a source not known to be subject to confidentiality restrictions, or (v) if a Borrower shall have consented to such disclosure. Notwithstanding anything herein to the contrary, the information subject to this Section 10.12.1 shall not include, and the Agent and each Bank may disclose without limitation of any kind, any information with respect to the “tax treatment” and “tax structure” (in each case, within the meaning of Treasury Regulation Section 1.6011-4) of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Agent or such Bank relating to such tax treatment and tax structure; provided that with respect to any document or similar item that in either case contains information concerning the tax treatment or tax structure of the transaction as well as other information, this sentence shall only apply to such portions of the document or similar items that relate to the tax treatment or tax structure of the Loans, Letters of Credit and transactions contemplated hereby.

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10.12.2 Sharing Information With Affiliates of the Banks.

Each Loan Party acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to a Borrower or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Bank or by one or more Subsidiaries or Affiliates of such Bank, and each of the Loan Parties hereby authorizes each Bank to share any information delivered to such Bank by such Loan Party and its Subsidiaries pursuant to this Agreement, or in connection with the decision of such Bank to enter into this Agreement, any such Subsidiary or Affiliate of such Bank, it being understood that any such Subsidiary or Affiliate of any Bank receiving such information shall be bound by the provisions of Section 10.12.1 as if it were a Bank hereunder. Such authorization shall survive the repayment of the Loans and other Obligations and the termination of the Revolving Credit Commitments.

10.13 Counterparts.

This Agreement may be executed by different parties hereto on 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.

10.14 Agent’s or Bank’s Consent.

Whenever the Agent’s or any Bank’s consent is required to be obtained under this Agreement or any of the other Loan Documents as a condition to any action, inaction, condition or event, the Agent and each Bank shall be authorized to give or withhold such consent in its sole and absolute discretion and to condition its consent upon the giving of additional collateral, the payment of money or any other matter.

10.15 Exceptions.

The representations, warranties and covenants contained herein shall be independent of each other, and no exception to any representation, warranty or covenant shall be deemed to be an exception to any other representation, warranty or covenant contained herein unless expressly provided, nor shall any such exceptions be deemed to permit any action or omission that would be in contravention of applicable Law.

10.16 CONSENT TO FORUM; WAIVER OF JURY TRIAL.

EACH LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF THE COURT OF COMMON PLEAS OF ALLEGHENY COUNTY AND THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA, AND WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY CERTIFIED OR REGISTERED MAIL DIRECTED TO SUCH LOAN PARTY AT THE ADDRESSES PROVIDED FOR IN SECTION 10.6 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT THEREOF. EACH LOAN PARTY WAIVES ANY

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OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION INSTITUTED AGAINST IT AS PROVIDED HEREIN AND AGREES NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION OR VENUE. EACH LOAN PARTY, THE AGENT AND THE BANKS HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE COLLATERAL TO THE FULL EXTENT PERMITTED BY LAW.

10.17 Certification From Banks and Participants

10.17.1 Tax Withholding Clause.

Each Bank or assignee or participant of a Bank that is not incorporated under the Laws of the United States of America or a state thereof (and, upon the written request of the Agent, each other Bank or assignee or participant of a Bank) agrees that it will deliver to each of United Refining and the Agent two (2) duly completed appropriate valid Withholding Certificates (as defined under § 1.1441-1(c)(16) of the Income Tax Regulations (the “Regulations”)) certifying its status (i.e. U.S. or foreign person) and, if appropriate, making a claim of reduced, or exemption from, U.S. withholding tax on the basis of an income tax treaty or an exemption provided by the Internal Revenue Code. The term “Withholding Certificate” means a Form W-9; a Form W-8BEN; a Form W-8ECI; a Form W-8IMY and the related statements and certifications as required under § 1.1441-1(e)(2) and/or (3) of the Regulations; a statement described in § 1.871-14(c)(2)(v) of the Regulations; or any other certificates under the Internal Revenue Code or Regulations that certify or establish the status of a payee or beneficial owner as a U.S. or foreign person. Each Bank, assignee or participant required to deliver to United Refining and the Agent a Withholding Certificate pursuant to the preceding sentence shall deliver such valid Withholding Certificate as follows: (A) each Bank which is a party hereto on the Closing Date shall deliver such valid Withholding Certificate at least five (5) Business Days prior to the first date on which any interest or fees are payable by the Borrowers hereunder for the account of such Bank; (B) each assignee or participant shall deliver such valid Withholding Certificate at least five (5) Business Days before the effective date of such assignment or participation (unless the Agent in its sole discretion shall permit such assignee or participant to deliver such valid Withholding Certificate less than five (5) Business Days before such date in which case it shall be due on the date specified by the Agent). Each Bank, assignee or participant which so delivers a valid Withholding Certificate further undertakes to deliver to each of United Refining and the Agent two (2) additional copies of such Withholding Certificate (or a successor form) on or before the date that such Withholding Certificate expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent Withholding Certificate so delivered by it, and such amendments thereto or extensions or renewals thereof as may be reasonably requested by United Refining or the Agent. Notwithstanding the submission of a Withholding Certificate claiming a reduced rate of or exemption from U.S. withholding tax, the Agent shall be entitled to withhold United States federal income taxes at the full 30% withholding rate if in its reasonable judgment it is required to do so under the due diligence requirements imposed upon a withholding agent under § 1.1441-7(b) of the Regulations. Further, the Agent is indemnified under § 1.1461-1(e) of the Regulations against any claims and demands of any Bank or assignee or participant of a Bank for the amount of any tax it deducts and withholds in accordance with regulations under § 1441 of the Internal Revenue Code.

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10.17.2 USA Patriot Act.

Each Bank or assignee or participant of a Bank that is not incorporated under the laws of the United States of America or a state thereof (and is not excepted from the certification requirement contained in Section 313 of the USA Patriot Act and the applicable regulations because it is both (i) an affiliate of a depository institution or foreign bank that maintains a physical presence in the United states or foreign county, and (ii) subject to supervision by a banking authority regulating such affiliated depository institution or foreign bank) shall deliver to the Agent the certification, or, if applicable, recertification, certifying that such Bank is not a “shell” and certifying to other matters as required by Section 313 of the USA Patriot Act and the applicable regulations: (1) within 10 days after the Effective Time, and (2) as such other times as are required under the USA Patriot Act.

10.18 Joinder of Guarantors.

Any Subsidiary of any of the Borrowers which is required to join this Agreement as a Guarantor pursuant to Section 7.2.9 [Subsidiaries, Partnerships and Joint Ventures] shall execute and deliver to the Agent (i) a Guaranty Agreement (for entities which are not Borrowers) or a Guarantor Joinder to such Guaranty Agreement in substantially the form attached hereto as Exhibit 1.1(G)(1) pursuant to which it shall join as a Guarantor each of the documents to which the Guarantors are parties; (ii) documents in the forms described in Section 6.1 [First Loans] modified as appropriate to relate to such Subsidiary including an opinion of counsel for such Subsidiary satisfactory to the Agent addressing the matters described in Exhibit 6.1.4 as such matters relate to such Subsidiary, the documents which it is executing and delivering and the Liens which it is granting; and (iii) documents necessary to grant and perfect Prior Security Interests to the Agent for the benefit of the Banks in all Collateral held by such Subsidiary including executed financing statements and a Security Agreement (for entities which are not Borrowers) in the substantially the form of Exhibit 1.1(S)(1). The Loan Parties shall deliver such Guarantor Joinder and related documents to the Agent: (i) within five (5) Business Days after the date of the filing of such Subsidiary’s articles of incorporation if the Subsidiary is a corporation, the date of the filing of its certificate of limited partnership if it is a limited partnership or the date of its organization if it is an entity other than a limited partnership or corporation and (ii) on or before the date of the Permitted Acquisition if it is organized or acquired in connection with a Permitted Acquisition.

10.19 Judgment Currency.

If for the purposes of obtaining judgment in any court it is necessary to convert a sum due under any of the Loan Documents in any currency (the “Original Currency”) into another currency (the “Other Currency”), each Loan Party hereby agrees, to the fullest extent permitted by law, that the rate of exchange used shall be that at which in accordance with normal banking procedures each Bank could purchase the Original Currency with the Other Currency after any premium and costs of exchange on the Business Day preceding that on which final judgment is given. The obligation of each Loan Party in respect of any sum due

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from such Loan Party to any Bank under any of the Loan Documents shall, notwithstanding any judgment in an Other Currency, whether pursuant to a judgment or otherwise, be discharged only to the extent that, on the business day (being a day on which it is open for business at its principal office in the United States) following receipt by any Bank of any sum adjudged to be so due in such Other Currency, such Bank may in accordance with normal banking procedures purchase the Original Currency with such Other Currency. If the amount of the Original Currency so purchased is less than the sum originally due to such Bank in the Original Currency, each Guarantor agrees, as a separate obligation and notwithstanding any such judgment or payment, to indemnify such Bank against such loss.

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SCHEDULE 1.1(Q)(i)

Qualified Accounts

Upon delivery to the Agent of each Schedule of Accounts, the Agent shall make a determination, in its sole discretion, as to which Accounts listed thereon shall be deemed Qualified Accounts. An Account shall not be considered a Qualified Account unless the Agent determines, in its sole discretion, that such Account has met the following minimum requirements:

(i) the Account represents a complete bona fide transaction for goods sold and delivered or services rendered (but excluding any amounts in the nature of a service charge added to the amount due on an invoice because the invoice has not been paid when due) which requires no further act under any circumstances on the part of any Borrower to make such Account payable by the Account Debtor; the Account arises from an arm’s length transaction in the ordinary course of the Borrowers’ business between a Borrower and an Account Debtor which is not an Affiliate of a Borrower or an officer, stockholder or employee of a Borrower or of any Affiliate of a Borrower, or a member of the family of an officer, stockholder or employee of a Borrower or of any Affiliate of a Borrower; the Borrower to whom such Account is owing is able to bring suit against the Account Debtor through judicial process and there exist no defenses to the enforcement of such Borrower’s remedies against such Account Debtor, and the Account does not represent a progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a contract under which the Account Debtor’s obligation to pay that invoice is subject to Borrower’s completion of further performance under such contract or is subject to the equitable lien of a surety bond issuer;

(ii) the Account shall not (a) if payable on a “net 10 basis” be or have been unpaid more than thirty (30) days from the invoice date; (b) if payable on a “net 30 basis” or basis other than described in the preceding clause (a) be or have been unpaid more than ninety (90) days from the invoice date, (c) be delinquent more than sixty (60) days, or (d) be payable by an Account Debtor (1) more than 50% of whose Accounts have remained unpaid for more than ninety (90) days from the invoice date or are delinquent more than sixty (60) days, or (2) whose Accounts constitute, in the Agent’s determination, an unduly high percentage of the aggregate amount of all outstanding Accounts;

(iii) the goods the sale of which gave rise to the Account were shipped or delivered or provided to the Account Debtor on an absolute sale basis and not on a bill and hold sale basis, a consignment sale basis, a guaranteed sale basis, a sale or return basis, or on the basis of any other similar understanding, and no part of such goods has been returned or rejected;

(iv) the Account is not evidenced by chattel paper or an instrument of any kind;

(v) the Account Debtor with respect to the Account (a) is solvent, (b) is not the subject of any bankruptcy or insolvency proceedings of any kind or of any other proceeding or action, threatened or pending, which might have a materially adverse effect on its business, unless the Agent, in its sole discretion, notifies the Borrower that the Account of such

an Account Debtor can be considered a Qualified Account, and (c) is not, in the sole discretion of the Agent, deemed ineligible for credit for other reasons (including, without limitation, unsatisfactory past experiences of the Borrowers or any of the Banks with the Account Debtor or unsatisfactory reputation of the Account Debtor or the Account Debtor suspends business, makes a general assignment for the benefit of creditors or fails to pay its debts generally as they come due);

(vi) the Account Debtor is not located outside Canada or the United States of America;

(vii) (a) the Account Debtor is not the government of the United States of America or any department, agency or instrumentality thereof, or (b) if the Account Debtor is an entity mentioned in clause (vii)(a), the Federal Assignment of Claims Act (or applicable similar legislation) has been fully complied with so as to validly perfect the Banks’ Prior Security Interest to the Agent’s satisfaction;

(viii) the Account is a valid, binding and legally enforceable obligation of the Account Debtor with respect thereto and is not subject to any dispute, condition, contingency, offset, recoupment, reduction, claim for credit, allowance, adjustment, counterclaim or defense on the part of such Account Debtor, and no facts exist which may provide a basis for any of the foregoing in the present or future;

(ix) the Account is subject to the Agent’s and the Banks’ Prior Security Interest and is not subject to any other Lien, claim, encumbrance or security interest whatsoever;

(x) the Account is evidenced by an invoice or other documentation and arises from a contract which is in form and substance satisfactory to the Agent;

(xi) the appropriate Borrower has observed and complied with all laws of the state in which the Account Debtor or the Account is located which, if not observed and complied with, would deny to such Borrower access to the courts of such state;

(xii) the Account is not subject to any provision prohibiting its assignment or requiring notice of or consent to such assignment;

(xiii) the goods giving rise to the Account were not, at the time of sale thereof, subject to any Lien or encumbrance except the Agent’s and the Banks’ Prior Security Interest;

(xiv) the Account is payable in freely transferable United States Dollars; and

(xv) the Account is not, or should not be, disqualified for any other reason generally accepted in the commercial finance business.

-2-

In addition to the foregoing requirements, Accounts of any Account Debtor which are otherwise Qualified Accounts shall be reduced to the extent of any accounts payable (including, without limitation, the Agent’s estimate of any contingent liabilities) by a Borrower to such Account Debtor (“Contras”) provided that the Agent, in its sole discretion, may determine that none of the Accounts in respect to such Account Debtor shall be Qualified Accounts in the event that there exists an unreasonably large amount of payables owing to such Account Debtor.

Notwithstanding the qualification standards specified above, upon prior notice to the Borrowers, the Agent may at any time or from time to time revise such qualification standards in the exercise of its reasonable credit judgment.

-3-

SCHEDULE 1.1(Q)(ii)

Qualified Inventory

Upon delivery to the Agent of each Schedule of Inventory, the Agent shall make a determination, in its sole discretion, as to which Inventory listed thereon shall be deemed Qualified Inventory. Inventory shall not be considered Qualified Inventory unless the Agent determines, in its sole discretion, that such Inventory has met the following minimum requirements:

(i) the Inventory is either (a) finished goods (b) raw materials other than supplies or (c) work-in-process; but excluding in all cases any goods which have been shipped, delivered, sold by, purchased by or provided to a Borrower on a bill and hold, consignment sale, guaranteed sale, or sale or return basis, or any other similar basis or understanding other than an absolute sale and also excluding all supplies;

(ii) the Inventory is new, of good and merchantable quality, and represents no more than a twelve (12) month supply of such finished goods or raw materials;

(iii) the Inventory is located in the pipeline owned by Kiantone or any other Borrower, or in the Enbridge Pipeline if such Inventory meets the additional requirements for Qualified Enbridge Pipeline Inventory as identified in the definition of Qualified Inventory, or in storage tanks, or, during the Retail Assets Perfection Period, at a retail store located on a site owned by a Borrower or leased by a Borrower if the landlord has executed a landlord’s waiver in the form of Exhibit 1.1(Q) hereto;

(iv) the Inventory is not stored with a bailee, warehouseman, consignee or similar party unless the Agent has given its prior written consent and a Borrower has caused such bailee, warehouseman, consignee or similar party to issue and deliver to the Agent, in the form of Exhibit 1.1(Q) hereto, warehouse receipts or similar type documentation therefor in the Agent’s name, or such party shall have executed and delivered to Agent a waiver and access agreement, in form and substance satisfactory to Agent;

(v) the Inventory is subject to the Agent’s and the Banks’ Prior Security Interest and is not subject to any other Lien; provided, however, Liens on Qualified Enbridge Pipeline Inventory in favor of Enbridge are permitted to the extent that Enbridge has required and received cash collateral, a letter of credit or other credit support in an amount determined by Enbridge;

(vi) the Inventory has not been manufactured in violation of any federal minimum wage or overtime laws, including, without limitation, the Fair Labor Standards Act, 29 U.S.C. § 215(a)(1); and

(vii) the Inventory has not been attached, seized, levied upon or subjected to a writ or distress warrant, or such come within the possession of any receiver,

trustee, custodian or assignee for the benefit of creditors and the same is not cured within ten (10) days thereafter, provided that such 10-day grace period shall apply only if the amount of Inventory affected thereby does not exceed $2,500,000.

(viii) the Inventory is not covered by a negotiable document of title, unless such document has been delivered to Agent with all necessary endorsements, free and clear of all Liens except those in favor of Agent and the Banks;

(ix) the Inventory is not unsalable, defective or otherwise unfit for sale;

(x) the Inventory does not consist of display items or packing or shipping materials, or replacement parts;

(xi) the Inventory is (or upon completion of processing will be) of a type held for sale in the ordinary course of Borrowers’ business;

Notwithstanding the qualification standards specified above, upon prior notice to the Borrowers, the Agent may at any time or from time to time revise such qualification standards in the exercise of its reasonable credit judgment.

SCHEDULE 1.1(A)

PRICING GRID—

VARIABLE PRICING AND FEES BASED ON AVERAGE UNUSED AVAILABILITY

Level	Average Unused Availability	Revolving Credit Base Rate Spread		Revolving Credit Euro- Rate Spread		Letter of Credit Fee
Level I	Greater than $110,000,000	0.00	%	1.75	%	1.50	%
Level II	Greater than $50,000,000 but less than or equal to $110,000,000	0.25	%	2.00	%	1.75	%
Level III	Less than or equal to $50,000,000	0.50	%	2.25	%	2.00	%

For purposes of determining the Applicable Margin and the Letter of Credit Fee:

(a) The Applicable Margin and the Letter of Credit Fee shall be determined on the Closing Date based on the Average Unused Availability computed on such date.

(b) The Applicable Margin and the Letter of Credit Fee shall be recomputed as of the end of each fiscal quarter ending after the Closing Date based on the Average Unused Availability as of such quarter-end. Any increase or decrease in the Applicable Margin or the Letter of Credit Fee computed as of a quarter end shall be effective on the date on which the Compliance Certificate evidencing such computation is due to be delivered under Section 8.3.4.

EXHIBIT 7.3.4

form of

BORROWING BASE CERTIFICATE

[Letterhead of Borrower]

PNC BANK, NATIONAL ASSOCIATION

    as Agent for the Banks party to the

    Credit Agreement referred to below

One PNC Plaza

4th Floor Annex

Pittsburgh, PA 15265

Ladies and Gentlemen:

The undersigned refers to the Amended and Restated Credit Agreement dated as of July 12, 2002 (as amended, supplemented or modified from time to time, the “Credit Agreement”) among UNITED REFINING COMPANY, a Pennsylvania corporation (“United Refining”), UNITED REFINING COMPANY OF PENNSYLVANIA, a Pennsylvania corporation (“United Refining PA”), KIANTONE PIPELINE CORPORATION, a New York corporation (“Kiantone”) and COUNTRY FAIR, INC. (“Country Fair” and hereinafter together with United Refining, United Refining PA and Kiantone, sometimes collectively referred to as the “Borrowers” and individually as a “Borrower”), KWIK FILL CORPORATION (the “Guarantor”), the Banks (as defined in the Credit Agreement) party thereto and PNC BANK, NATIONAL ASSOCIATION, as Agent for such Banks. Terms defined in the Credit Agreement shall have the same meanings assigned to them therein when used herein.

Computation Date:                     , 20     [insert last day of preceding week] [If the computation date is a date prior to the Retail Assets Perfection Period or after the Retail Assets Perfection Period has terminated, use the calculations provided for in Table I below. If the computation date is a date that falls within the Retail Assets Perfection Period use the calculations provided for in Table II below.]

Table I.        We hereby certify to you as follows:

(A)	Cash Portion:
Cash held in Agent’s account which is subject to a security interest			$
(B)	Accounts Portion:
	(1)	Qualified Accounts (excluding any Accounts arising from Retail Stores)	$
		and
	(2)	Qualified Accounts consisting of Accounts arising from retail stores	$
		sum of (1) and (2) $                     multiplied by .85	$
(C)	Inventory Portion:
	(1)	Book value of Inventory (excluding Inventory at Retail Stores) which meets the requirements set forth in the definition of Qualified Inventory and on Schedule 1.1(Q)(ii) to the Credit Agreement on a FIFO basis	$
	(2)	Market Value of Inventory (excluding Inventory at Retail Stores) which meets the requirements set forth on Schedule 1.1(Q)(ii) to the Credit Agreement less applicable crude stream discounts for oil pricing. Such value is computed on Exhibit A (Complete and attach Exhibit A): $
	(3)	Qualified Inventory—
		Lesser of line (1) or (2)	$
	(4)	(i) Qualified Inventory Line (3) multiplied by .70	$
	(5)	$104,000,000
	(6)	Inventory Portion—Lesser of Line 4 or Line 5	$
(D)	Borrowing Base: Sum of Line (A) plus Line (B) plus Line (C)(6)		$
(E)	Amount of Loans and Letters of Credit Outstanding (may not be more than line D)		$

The undersigned confirms as of the date hereof, that no Event of Default has occurred and is continuing.

2

Table II.        We hereby certify to you as follows:

(A)	Cash Portion:
	Cash held in Agent’s account which is subject to a security interest		$
(B)	Accounts Portion:
	(1)	Qualified Accounts(excluding any Accounts arising from Retail Stores)	$
		and
	(2)	Qualified Accounts consisting of Accounts arising from retail stores	$
		sum of (1) and (2) $                     multiplied by .85	$
(C)	Inventory Portion:
	(1)	Book value of Inventory (excluding Retail Store Inventory) which meets the requirements set forth on Schedule 1.1(Q)(ii) to the Credit Agreement on a FIFO basis	$
	(2)	Market Value of Inventory (excluding Retail Store Inventory) which meets the requirements set forth on Schedule 1.1(Q)(ii) to the Credit Agreement less applicable crude stream discounts for oil pricing. Such value is computed on Exhibit A (Complete and attach Exhibit A):	$
	(3)	Lesser of line (1) or (2)	$
	(4)	Line (3) multiplied by .70	$
	(5)	Appraised Value of Qualified Inventory which is Retail Store Inventory	$
	(6)	Line (5) multiplied by .85	$
	(7)	Cost of Qualified Inventory which is Retail Store Inventory	$
	(8)	Line (7) multiplied by .70	$
	(9)	Lesser of line (6) or (8)	$
	(10)	(i)     Line (4) plus Line (9)	$

3

		(ii)    $104,000,000
	(11)	Inventory Portion—(lesser of 10(i) and 10(ii)	$
(D)	Borrowing Base: Sum of Line (A) plus Line (B) plus Line (C)(11)		$
(E)	Amount of Loans and Letters of Credit Outstanding (may not be more than line D)		$

The undersigned confirms as of the date hereof, that no Event of Default has occurred and is continuing.

[SIGNATURE PAGE FOLLOWS]

4

Date:                     , 200    

Very truly yours,

By:

Name:

Title:

5

EXHIBIT A

Market Value of Inventory (excluding Retail Store Inventory and Qualified Enbridge

Pipeline Inventory)

Inventory included in the chart below should include only inventory which meets with the requirements under Schedule 1.1(Q)(ii) and should exclude any inventory which does not meet such requirements.

(1)	(2)	(3)	(4)	(5)	(6)	(7)
Product	Quantity	Pricing Service (either Oil Price Information Services for products or NYMEX)	Price	Gross Value (Product of Column (2) times Column (4))	Less Crude Stream Discounts for Oil Pricing	Net Value (Column (5) less Column (6))
			Total

EXHIBIT B

Market Value of Qualified Enbridge Pipeline Inventory

Inventory included in the chart below should include only inventory which meets with the requirements under the definition of Qualified Inventory and Schedule 1.1(Q)(ii) and should exclude any inventory which does not meet such requirements.

(1)	(2)	(3)	(4)	(5)	(6)	(7)
Product	Quantity	Pricing Service (either Oil Price Information Services for products or NYMEX)	Price	Gross Value (Product of Column (2) times Column (4))	Less Crude Stream Discounts for Oil Pricing	Net Value (Column (5) less Column (6))
			Total

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:	December 1, 2008	Signature:	/s/  John A. Catsimatidis
			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:	December 1, 2008	Signature:	/s/  James E. Murphy
			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, 2008 (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:	December 1, 2008	By:	/s/  John A. Catsimatidis
			John A. Catsimatidis Principal Executive Officer
Dated:	December 1, 2008	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.