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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For quarter ended July 31, 1997 Commission file number 1-14990
GETTY PETROLEUM MARKETING INC.
(Exact name of registrant as specified in its charter)
MARYLAND 11-3339235
- ------------------------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 Jericho Turnpike, Jericho, New York 11753
- ---------------------------------------- ------
(Address of principal executive offices) (Zip Code)
(516) 338 - 6000
----------------
(Registrant's telephone number, including area code)
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
Registrant has 13,610,690 shares of Common Stock, par value $.01 per share,
outstanding as of July 31, 1997.
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GETTY PETROLEUM MARKETING INC.
INDEX
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION Page Number
- ------------------------------ -----------
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of July 31, 1997 and
January 31, 1997 1
Consolidated Statements of Operations for the three and
six months ended July 31, 1997 and 1996 2
Consolidated Statements of Cash Flows for the
six months ended July 31, 1997 and 1996 3
Notes to Consolidated Financial Statements 4 - 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6 - 8
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 9
</TABLE>
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GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
July 31, January 31,
- ------------------------------------------------------------------------------------------------
Assets: 1997 1997
- ------------------------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and equivalents $ 6,632 $ 7,517
Accounts receivable, net 15,796 15,195
Inventories 22,795 15,944
Deferred income taxes 2,992 967
Prepaid expenses and other current assets 2,364 5,592
-------- --------
Total current assets 50,579 45,215
Property and equipment, at cost, less
accumulated depreciation and amortization 88,176 88,049
Other assets 2,001 2,236
-------- --------
Total assets $140,756 $135,500
======== ========
- ------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity:
- ------------------------------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 22,803 $24,659
Accrued expenses 8,853 6,765
Gasoline taxes payable 16,363 12,691
-------- --------
Total current liabilities 48,019 44,115
Deferred income taxes 20,081 19,632
Other, principally deposits 17,702 17,212
Stockholders' equity:
Preferred stock, par value $.01 per share; authorized
10,000,000 shares for issuance in series (none of which is issued) - -
Common stock, par value $.01 per share; authorized
30,000,000 shares; issued 13,610,690 at July 31, 1997
and 1,000 at January 31, 1997 136 -
Paid-in capital 60,756 54,541
Retained deficit (2,931) -
Unearned ESOP stock (626,545 shares at
July 31, 1997) (3,007) -
-------- --------
Total stockholders' equity 54,954 54,541
-------- --------
Total liabilities and stockholders' equity $140,756 $135,500
======== ========
</TABLE>
See accompanying notes.
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GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Three months ended July 31, Six months ended July 31,
- -----------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $213,699 $213,221 $430,626 $408,494
Rental income 8,660 8,210 17,225 16,601
Other income 392 42 823 107
-------------------- --------------------
222,751 221,473 448,674 425,202
-------------------- --------------------
Cost of sales (excluding depreciation and amortization) 217,906 204,707 431,708 405,726
Selling, general and administrative expenses 8,738 5,370 14,038 10,293
Change of control charge - - 637 -
Depreciation and amortization 3,362 3,371 6,660 6,702
Interest expense 187 125 409 259
-------------------- --------------------
230,193 213,573 453,452 422,980
-------------------- --------------------
Earnings (loss) before provision (credit)
for income taxes (7,442) 7,900 (4,778) 2,222
Provision (credit) for income taxes (2,951) 3,324 (1,847) 935
-------------------- --------------------
Net earnings (loss) ($4,491) $4,576 ($2,931) $1,287
==================== ====================
Net earnings (loss) per share ($0.33) $0.36 ($0.22) $0.10
==================== ====================
Weighted average shares outstanding 13,661 12,676 13,367 12,672
==================== ====================
</TABLE>
See accompanying notes.
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GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six months ended
July 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) ($2,931) $1,287
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Depreciation and amortization 6,660 6,702
Deferred income taxes (1,576) 390
ESOP charge 221 -
Gain on dispositions of equipment (32) (72)
Changes in assets and liabilities:
Accounts receivable (601) 1,541
Inventories (6,851) (3,086)
Prepaid expenses and other current assets 3,221 1,414
Other assets 214 260
Accounts payable, accrued expenses and
gasoline taxes payable 3,904 1,745
Other, principally deposits 490 418
----------------------------
Net cash provided by operating activities 2,719 10,599
----------------------------
Cash flows from investing activities:
Capital expenditures (6,774) (8,640)
Proceeds from dispositions of equipment 47 274
----------------------------
Net cash used in investing activities (6,727) (8,366)
----------------------------
Cash flows from financing activities:
Stock options and common stock 3,123 -
Net cash transferred to Getty Realty Corp. - (2,164)
----------------------------
Net cash provided by (used in) financing activities 3,123 (2,164)
----------------------------
Net increase (decrease) in cash and equivalents (885) 69
Cash and equivalents at beginning of period 7,517 676
----------------------------
Cash and equivalents at end of period $6,632 $745
============================
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $213 $259
Income taxes, net 742 -
</TABLE>
See accompanying notes.
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<PAGE> 6
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General:
The accompanying consolidated financial statements include the accounts of
Getty Petroleum Marketing Inc. and its wholly-owned subsidiaries (the
"Company"). The consolidated financial statements have been prepared in
conformity with generally accepted accounting principles and include amounts
that are based on management's best estimates and judgments. While all
available information has been considered, actual amounts could differ from
those estimates. The consolidated financial statements are unaudited but, in
the opinion of management, reflect all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation. These statements should
be read in conjunction with the consolidated financial statements and related
notes which appear in the Company's Annual Report on Form 10-K for the fiscal
year ended January 31, 1997.
On March 21, 1997, the Company became a separate publicly-held company
upon its spin-off from Getty Petroleum Corp., now known as Getty Realty Corp.
Stockholders of record of Getty Realty Corp. on March 21, 1997 received a
tax-free dividend of one share of the Company's common stock for each share of
common stock of Getty Realty Corp.
2. Earnings (loss) per share:
Earnings (loss) per share is computed by dividing net earnings (loss) by
the weighted average number of shares of common stock outstanding during the
period. Common stock equivalents are not included in earnings (loss) per share
computations since their effect is immaterial or anti-dilutive.
3. Employee Stock Ownership Plan:
In connection with the spin-off, the Company established a leveraged
Employee Stock Ownership Plan (the "ESOP") that purchased newly issued shares
of Common Stock equal to five percent of the outstanding shares of the Company.
The ESOP purchased such newly-issued shares from the Company using the proceeds
of a loan made by the Company to the ESOP. The ESOP loan will be repaid over a
five-year period, and the Company will contribute annually to the ESOP the
funds required to repay such loan. The principal amount of the ESOP loan is
equal to the number of shares purchased by the ESOP (671,298) multiplied by the
purchase price per share ($4.80) or $3,222,000. It is expected that the
repayment of the ESOP loan will result in projected allocations to
participants' accounts of an aggregate of 134,260 shares of Common Stock per
year, allocated in proportion to compensation. The Company expects that the
Common Stock purchased by the ESOP will be allocated to covered employees over
a five-year period which commenced on April 1, 1997. In connection therewith,
the Company recognized a charge of $221,000 during the six months ended July
31, 1997, which charge is included in selling, general and administrative
expenses in the consolidated statement of operations.
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4. Stockholders' equity:
A summary of the changes in stockholders' equity for the six months ended
July 31, 1997 is as follows (in thousands):
<TABLE>
<CAPTION>
Retained
Common Paid-in Earnings
Stock Capital (Deficit) ESOP Total
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance,
January 31, 1997 $ - $54,541 $ - $ - $ 54,541
Distribution of stock
in spin-off 128 (128) -
Net loss (2,931) (2,931)
Issuance of stock
to ESOP 7 3,215 (3,222) -
ESOP stock committed
to be released 6 215 221
Issuance of common stock 8 8
Stock options 1 3,114 3,115
-------------------------------------------------------
Balance,
July 31, 1997 $136 $60,756 ($2,931) ($3,007) $54,954
=======================================================
</TABLE>
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<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations - Quarter ended July 31, 1997 compared with quarter
ended July 31, 1996
Net sales for the second fiscal quarter ended July 31, 1997 were $213.7
million as compared with $213.2 million for the same quarter last year, an
increase of .2%. The increase in net sales was attributable to an 8.8%
increase in sales volume offset by a 7.9% decrease in average selling prices.
The increase in sales volume was primarily due to an increase in retail
gallonage sold of 15.5 million gallons or 8.0% to 207.8 million gallons. The
average gasoline volume per retail outlet increased by 9.5%. The Company
incurred a gross loss before depreciation and amortization (excluding rental
and other income) of $4.2 million for the quarter ended July 31, 1997 compared
to a gross profit of $8.5 million in the comparable period last year. The
decrease of $12.7 million was principally due to a decrease in retail margins
which resulted from product cost increases during the quarter and lagging sales
prices due to competitive market conditions. Product cost increases were
attibuted to unscheduled refinery shutdowns coupled with increased demand.
The Company's financial results depend largely on retail marketing margins
and rental income from its dealers. The petroleum marketing industry has been
and continues to be volatile and highly competitive. The cost of petroleum
products purchased as well as the price of petroleum products sold have
fluctuated widely. As a result of the historical volatility of product margins
and the fact that they are affected by numerous diverse factors, it is
impossible to predict future margin levels. The Company believes that it has
only been modestly affected by inflation since increased costs are passed along
to its customers to the extent permitted by competition.
Rental income was $8.7 million for the three months ended July 31, 1997,
an increase of 5.5% over rental income of $8.2 million for the comparable
period last year. The increase was about equally due to rent escalations
provided under existing lease agreements, lease renewals, and higher rentals as
a result of improvements to the facilities.
Other income was $.4 million for the three months ended July 31, 1997 as
compared to less than $.1 million for the quarter ended July 31, 1996. The
increase was primarily due to $.2 million of net fees received from Getty Realty
Corp. under a services agreement and $.1 million of additional
investment income.
Selling, general and administrative expenses were $8.7 million for the
three months ended July 31, 1997 as compared to $5.4 million for the quarter
ended July 31, 1996. The increase was primarily due to $3.5 million of expense
relating to stock options resulting from appreciation of the Company's stock
price.
Depreciation and amortization was $3.4 million for both of the three month
periods ended July 31, 1997 and 1996.
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<PAGE> 9
Results of Operations - Six months ended July 31, 1997 compared with six
months ended July 31, 1996
Net sales for the six months ended July 31, 1997 were $430.6 million as
compared with $408.5 million for the same period last year, an increase of
5.4%. The increase in net sales was attributable to a 6.2% increase in sales
volume partially offset by a .8% decrease in average selling prices. The
increase in sales volume was primarily due to a 20.9 million gallon (5.6%)
increase in retail gallonage sold to 395.3 million gallons. The average
gasoline volume per retail outlet increased by 6.5%. The Company incurred a
gross loss before depreciation and amortization (excluding rental and other
income) of $1.1 million for the six months ended July 31, 1997 compared to a
gross profit of $2.8 million in the comparable period last year. The decrease
of $3.9 million was principally due to a decrease in retail margins as compared
with the comparable period last year.
Rental income was $17.2 million for the six months ended July 31, 1997, an
increase of 3.8% over rental income of $16.6 million for the comparable period
last year. The increase was about equally due to rent escalations provided
under existing lease agreements, lease renewals and higher rentals as a result
of improvements to the facilities.
Other income was $.8 million for the six months ended July 31, 1997 as
compared to $.1 million for the six months ended July 31, 1996. The increase
was primarily due to $.5 million of net fees received from Getty Realty Corp.
under a services agreement and $.2 million of additional investment
income.
Selling, general and administrative expenses were $14.0 million for the
six months ended July 31, 1997 as compared to $10.3 million for the six months
ended July 31, 1996. The increase was primarily due to $4.0 million of expense
relating to stock options resulting from appreciation of the Company's stock
price.
The Company recorded a charge for the six months ended July 31, 1997 of
$.6 million related to certain "change of control" agreements related to the
spin-off.
Depreciation and amortization was $6.7 million for both of the six month
periods ended July 31, 1997 and 1996.
Liquidity and Capital Resources
As of July 31, 1997, working capital amounted to $2.6 million as compared
to $1.1 million as of January 31, 1997. The increase was primarily due to
working capital generated during the period from operations, partially offset
by $6.8 million of capital expenditures.
-7-
<PAGE> 10
The Company's principal sources of liquidity are cash flows from
operations, which amounted to $2.7 million during the six months ended July 31,
1997, and its unsecured lines of credit. Management believes that cash
requirements for operations, including payments to Getty Realty Corp. under the
Master Lease and capital expenditures, can be met by cash flows from
operations, available cash and equivalents and credit lines. The Company has
uncommitted lines of credit from three banks in the aggregate amount of $60
million, which may be utilized for working capital borrowings and letters of
credit. Borrowings under such lines of credit are unsecured and bear interest
at the applicable bank's prime rate or, at the Company's option, a rate tied to
the banks' cost of funds or LIBOR plus 1.1%. Such lines of credit, which were
unused as of July 31, 1997, are subject to renewal at the discretion of the
banks.
The Company's capital expenditures for the six months ended July 31, 1997
amounted to $6.8 million. The Company's capital expenditures include
discretionary expenditures to improve the image of the service stations, to
improve the terminal facilities and for replacement of service station
equipment. Pursuant to agreements with Getty Realty Corp. entered into in
connection with the spin-off, expenditures with respect to tank replacements
required to meet 1998 federal environmental standards and certain environmental
liabilities and obligations are the responsibility of, and will be paid by,
Getty Realty Corp.
Termination of Uni-Marts Agreement
The termination of the leases and supply contract with Uni-Marts, Inc.
will occur on December 31, 1997. It is anticipated that a substantial number
of the 109 properties currently leased to Uni-Marts will be leased, on an
individual basis, to new operators. Those that are not leased will be operated
by the Company until such time as new operators are in place. As a result of
the termination of the supply contract pursuant to which the Company supplies
an additional 190 Uni-Marts controlled locations, the Company's sales of
petroleum products will be reduced by approximately 88 million gallons per
annum, or about 8% of the Company's total annual volume, partially offset by
anticipated increased volume at Getty controlled locations presently leased to
Uni-Marts. Product sales to Uni-Marts have been on a lower margin, wholesale
basis, and the loss of sales volume will be substantially offset by higher
retail margin sales at these Getty-controlled locations, most of which
locations will be leased to individual operators.
The Company has options to purchase the Uni-Marts equipment at the
Getty locations for fair market value. Uni-Marts has indicated that the
equipments' value is currently estimated to be $6.8 million, but the Company
believes that the value is substantially lower. The value of any equipment
purchased from Uni-Marts or other sources will either be sold to, or included
in the rental rates charged to, new operators.
There will be certain start-up costs, most of which will be incurred
during the fourth quarter of this fiscal year and the first quarter of next
year. However, the Company does not believe that the loss of the Uni-Marts
leases and supply contract will have a material adverse effect on the financial
condition of the Company.
Election of New President
Mr. Vincent J. DeLaurentis was elected President of the Company,
effective August 4, 1997. Mr. DeLaurentis previously had been an executive of
Sun Oil Company, Inc. Mr. Leo Liebowitz, who resigned as President, continues
to be Chairman and Chief Executive Officer.
-8-
<PAGE> 11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Designation of Exhibit
in this Quarterly Report
on Form 10-Q Description of Exhibit
------------ ----------------------
[S] [C]
10.12 Vincent J. DeLaurentis Employment
Agreement dated as of July 10, 1997.
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GETTY PETROLEUM MARKETING INC.
(Registrant)
Dated: September 11, 1997 BY: /s/ Michael K. Hantman
--------------------------
(Signature)
MICHAEL K. HANTMAN
Vice President and
Corporate Controller
(Principal Financial and
Accounting Officer)
Dated: September 11, 1997 BY: /s/ Leo Liebowitz
--------------------------
(Signature)
LEO LIEBOWITZ
Chief Executive Officer
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<PAGE> 1
Exhibit 10.12
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of July 10, 1997, and effective as of August 4,
1997 is made by and between Getty Petroleum Marketing Inc., a Maryland
corporation (the "Company"), and Vincent J. DeLaurentis (the "Executive").
RECITALS:
A. It is the desire of the Company to assure itself of the
management services of the Executive by engaging the Executive as
President of the Company.
B. The Executive desires to commit himself to serve the Company
on the terms herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the parties hereto agree as follows:
1. Certain Definitions.
(a) "Base Salary" is defined in Section 4(a).
(b) "Benefits" is defined in Section 4(d).
(c) "Board" means the Board of Directors of the Company.
(d) "Bonus" is defined in Section 4(b).
(e) "Change in Control" means the occurrence of any of the
following:
(i) the Company is merged, consolidated or reorganized into or
with another corporation or other legal person, and as a result of
such merger, consolidation or reorganization less than fifty
percent of the combined voting power of the then outstanding
securities of such resulting corporation or person immediately
after such transaction are held in the aggregate by the holders of
voting stock of the Company immediately prior to such transaction; or
(ii) the Company sells or otherwise transfers all or
substantially all of its assets to another corporation or other legal
person, and as a result of such sale or transfer less than fifty
percent of the combined voting power of the then outstanding voting
stock of such corporation or person immediately after such sale or
transfer is held in the aggregate by the holders of voting stock of
the Company immediately prior to such sale or transfer.
(f) "Committee" shall mean the Compensation Committee of the
Board.
(g) "Disability" shall mean the absence of the Executive
from theExecutive's duties to the Company on a full-time basis for a
period of 120 consecutive days as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a
<PAGE> 2
physician selected by the Company and acceptable to the Executive or the
Executive's legal representative (such agreement as to acceptability not to
be withheld unreasonably).
(h) "Effective Date" shall mean August 4, 1997.
(i) "Stock Option Plan" means the 1997 Stock Plan of Getty
Petroleum
Marketing Inc.
(j) "Stock Option" is defined in Section 4(c).
(k) "Term of Employment" is defined in Section 2.
2. Employment. The Company shall employ the Executive and the
Executive shall enter the employ of the Company in the position set forth in
Section 3 and upon the other terms and conditions herein provided. The initial
term of Executive's employment with the Company (the "Initial Term") shall
commence on the Effective Date and end on the second anniversary thereof. After
the Initial Term, the term of employment hereunder shall automatically be
extended for successive one-year periods (collectively with the Initial Term,
the "Term") unless either the Company or the Executive shall give written notice
of non-renewal at least 90 days prior to the then scheduled expiration of the
Term.
3. Position and Duties.
(a) During the Term of Employment, the Executive shall serve as the
President of the Company with such authority and duties as are
customarily enjoyed and performed by a person holding the position of
President in a similar business or enterprise, subject to the overall
authority and supervision of the Board.
(b) During the Term of Employment, the Executive shall devote all his
working time and efforts to the business and affairs of the Company and
will not enter the employ of or serve as a consultant to, or in any way
perform any services with or without compensation for, any other person,
business or organization, where such conduct would be inconsistent with,
in competition with, or prevent the Executive from carrying out, his
duties to the Company, without the prior written consent of the Board.
4. Compensation and Related Matters.
(a) Base Salary. During the Term of Employment, the Executive shall
receive a base salary ("Base Salary") at a rate of $300,000 per annum,
payable no less frequently than monthly, subject to increases at the
discretion of the Committee; provided, however, that the Executive shall
be eligible for a formal salary review on the date that is six months
after the Effective Date.
(b) Bonus. Upon the completion of each 12-month period of employment
during the Term, the Executive shall be eligible to receive a performance
bonus in an amount no greater than the annual rate of Base Salary as in
effect on the first day of such 12-month period. The amount of the
bonus, if any, will be determined by the Committee based upon the
Company's and the Executive's achievement of performance objectives
established by the Committee upon recommendation of the Chairman of the
Board.
2
<PAGE> 3
(c) Stock Option. As of July 10, 1997, the Company shall grant the
Executive an option to purchase 75,000 shares of the Company's common
stock (the "Stock Options"). The Stock Option shall be granted pursuant
to the Stock Option Plan and shall be evidenced and governed by a written
Stock Option Agreement. The exercise price of the Stock Option will be
the fair market value of a share of the Company's common stock on July
10,1997, as determined pursuant to the Stock Option Plan, and the Stock
Option shall become exercisable with respect to 15,000 shares on each of
the first five anniversaries of the Effective Date, subject to the terms
and conditions of the Stock Option Agreement.
(d) Benefits. During the Term of Employment, the Executive shall be
entitled to participate in or receive benefits under any employee
benefit plan or other arrangement made available by the Company on terms
no less favorable than those generally applicable to senior executives of
the Company, subject to and on a basis consistent with the terms,
conditions and overall administration of such plan or arrangement.
(e) Expenses. The Company shall promptly reimburse the Executive for
all reasonable travel and other business expenses incurred by the
Executive in the performance of his duties to the Company hereunder.
(f) No Waiver. The Executive shall also be entitled to such other
benefits or terms of employment as are provided by law.
(g) Relocation Expenses.
(i) The Executive shall be reimbursed for reasonable actual
expenses incurred by him in moving and settlement of his personal
property from his current principal residence in Pennsylvania to a
residence near the Company's Executive offices in Jericho, New
York, including closing costs for the sale of his current principal
residence. Such reimbursement shall be made to the extent that the
Executive properly accounts therefor in accordance with the
Company's reimbursement practices.
(ii) The Executive agrees to relocate to the environs of the
Company's headquarters as soon as practicable, but in no event
later than three (3) months after the Effective Date.
5. Change in Control. If the Executive's employment shall terminate by
reason of a Change in Control, the Company shall reimburse the Executive for
reasonable actual expenses incurred by him in relocating his personal property
from his then current principal residence to a residence in Pennsylvania. Such
reimbursement shall be made to the extent that the Executive properly accounts
therefor in accordance with the Company's reimbursement practices.
6. Non-Disclosure of Confidential Information. The Executive
acknowledges that during his employment he will have access to:
(a) confidential or secret plans, programs, documents, agreements,
internal management reports, financial information or other material
relating to the business, services or activities of the Company, and
3
<PAGE> 4
(b) trade secrets, market reports, customer investigations, customer
lists and other similar information that is proprietary information of
the Company (collectively referred to as "Confidential Information").
The Executive acknowledges that such Confidential Information as is
acquired and used by the Company is a special, valuable and unique asset of the
Company. In addition, all records, files and other materials obtained by the
Executive in the course of his employment with the Company shall remain the
property of the Company. The Executive will not use Confidential Information
or property of the Company for his own benefit or the benefit of any person or
entity with which he may be associated. The Executive will not disclose any
Confidential Information to any person, firm, corporation, association or other
entity for any reason or purpose whatsoever without the prior written consent
of the Company. The obligations of this Section shall not apply to (i)
information that enters the public domain without a breach of this Agreement by
the Executive or (ii) information developed by or known to the Executive
independently of disclosure to him by the Company.
7. Non-Competition. The Executive shall be prohibited for one year
following termination of employment with the Company for any reason from
providing services to, or owning any interest in (other than beneficial
ownership of not more than 5% of the outstanding voting stock of any publicly
traded company), any entity which competes with the Company in any geographic or
product market.
8. Non-Solicitation. During the Term of Employment and for two years
thereafter, Executive shall not (i) induce or attempt to induce any employee of
the Company to leave the employ of the Company, or in any way interfere with
the relationship between the Company and any employee thereof, (ii) hire
directly or through another entity any person who was an employee of the
Company at any time during the Term, or (iii) induce or attempt to induce any
customer, supplier, licensee or other business relation of the Company to cease
doing business with the Company, or in any way interfere with the relationship
between any such customer, supplier, licensee or business relation and the
Company.
9. Disputes.
(a) Any dispute or controversy arising under, out of, in connection
with or in relation to this Agreement shall be finally determined and
settled by arbitration in New York, New York in accordance with the rules
and procedures of the American Arbitration Association, and judgment upon
the award may be entered in any court having jurisdiction thereof.
(b) The prevailing party in any such proceeding shall be entitled to
collect from the other party, all legal fees and expenses reasonably
incurred in connection therewith.
10. Binding on Successors. This Agreement shall be binding upon and
inure to the benefit of the Company, the Executive and their respective
successors, assigns, personnel and legal representatives, executors,
administrators, heirs, distributees, devisees and legatees, as applicable.
11. Governing Law. This Agreement is being made and executed in and is
intended to be performed in the State of New York, and shall be governed,
construed, interpreted and enforced in accordance with the substantive laws of
the State of New York.
4
<PAGE> 5
12. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
13. Notices. Any notice, request, claim, demand, document and other
communication hereunder to any party shall be effective upon receipt (or
refusal of receipt) and shall be in writing and delivered personally or sent by
telex, telecopy, or certified or registered mail, postage prepaid, as follows:
If to the Company, to the attention of Leo Liebowitz at:
125 Jericho Turnpike
Jericho, New York 11753
If to the Executive, to him at the address set forth below under his
signature;
or at any other address as any party shall have specified by notice
in writing to the other parties.
14. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.
15. Entire Agreement. The terms of this Agreement are intended by the
parties to be the final expression of their agreement with respect to the
employment of the Executive by the Company and may not be contradicted by
evidence of any prior or contemporaneous agreement. The parties further intend
that this Agreement shall constitute the complete and exclusive statement of
its terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding to vary the terms of this
Agreement.
16. Amendments; Waivers. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by the Executive and the
Company. By an instrument in writing similarly executed, the Executive or the
Company may waive compliance by the other party with any provision of this
Agreement that such other party was or is obligated to comply with or perform,
provided, however, that such waiver shall not operate as a waiver of, or
estoppel with respect to, any other or subsequent failure. No failure to
exercise and no delay in exercising any right, remedy, or power hereunder
preclude any other or further exercise of any other right, remedy, or power
provided herein or by law or in equity.
17. No Inconsistent Actions; Cooperation.
(a) The parties hereto shall not voluntarily undertake or fail to
undertake any action or course of action inconsistent with the provisions
or essential intent of this Agreement. Furthermore, it is the intent of
the parties hereto to act in a fair and reasonable manner with respect to
the interpretation and application of the provisions of this Agreement.
(b) Each of the parties hereto shall cooperate and take such actions,
and execute such other documents as may be reasonably requested by the
other in order to carry out the provisions and purposes of this
Agreement.
5
<PAGE> 6
18. No Alienation of Benefits. To the extent permitted by law the
benefits provided by this Agreement shall not be subject to garnishment,
attachment or any other legal process by the creditors of the Executive, his
beneficiary or his estate.
[signature page follows]
6
<PAGE> 7
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
EXECUTIVE
/s/ Vincent J. DeLaurentis
------------------------------
Vincent J. DeLaurentis
Address
GETTY PETROLEUM MARKETING INC.,
a Maryland corporation
By: /s/ Leo Liebowitz, Pres.
---------------------------
7
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<PERIOD-END> JUL-31-1997
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0
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<INCOME-PRETAX> (4,778)
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<NET-INCOME> (2,931)
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