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As filed with the Securities and Exchange Commission on January 27, 1997
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10/A
Amendment No. 2
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or 12(g) of
the Securities Exchange Act of 1934
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GETTY PETROLEUM MARKETING INC.
(Exact name of registrant as specified in its charter)
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Maryland 11-3339235
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
125 Jericho Turnpike
Jericho, New York 11753
(Address of principal executive office) (Zip Code)
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Registrant's telephone number, including area code:
(516) 338-6000
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Securities to be registered pursuant to Section 12(b) of the Act:
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TITLE OF CLASS NAME OF EACH EXCHANGE ON
TO BE SO REGISTERED WHICH CLASS IS TO BE REGISTERED
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Common Stock, $.01 par value New York Stock Exchange
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Securities to be registered pursuant to Section 12(g) of the Act:
None
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GETTY PETROLEUM MARKETING INC.
INFORMATION INCLUDED IN INFORMATION STATEMENT AND
INCORPORATED IN FORM 10 BY REFERENCE.
CROSS-REFERENCE SHEET BETWEEN INFORMATION SHEET AND
ITEMS ON FORM 10.
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ITEM
NO. ---- ITEM CAPTION LOCATION IN INFORMATION STATEMENT
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1. Business............................. "SUMMARY OF CERTAIN INFORMATION,"
"INTRODUCTION," "THE DISTRIBUTION,"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS,"
and "BUSINESS."
2. Financial Information................ "SUMMARY OF CERTAIN INFORMATION," "SELECTED
CONSOLIDATED FINANCIAL INFORMATION," and
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
3. Properties........................... "RELATIONSHIP BETWEEN GETTY AND MARKETING AFTER
THE DISTRIBUTION -- Master Lease Agreement" and
"BUSINESS."
4. Security Ownership of Certain
Beneficial Owners and Management... "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS" and "MANAGEMENT -- Security Ownership of
Directors, Executive Officers and 5% Owners."
5. Directors and Executive Officers..... "MANAGEMENT," and "LIABILITY AND IN-
DEMNIFICATION OF OFFICERS AND DIRECTORS."
6. Executive Compensation............... "MANAGEMENT -- Director Compensation" and
"EXECUTIVE COMPENSATION."
7. Certain Relationships and Related
Transactions....................... "SUMMARY OF CERTAIN INFORMATION,"
"INTRODUCTION," "THE DISTRIBUTION," "RISK
FACTORS," "RELATIONSHIP BETWEEN GETTY AND
MARKETING AFTER THE DISTRIBUTION" and "CERTAIN
TRANSACTIONS."
8. Legal Proceedings.................... "BUSINESS -- Legal Proceedings" and "INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS."
9. Market Price of and Dividends on the
Registrant's Common Equity and
Related Stockholder Matters........ "SUMMARY OF CERTAIN INFORMATION,"
"INTRODUCTION," "THE DISTRIBUTION -- Listing and
Trading of Marketing Common Stock," "RISK
FACTORS -- No Prior Market for Marketing Common
Stock," "RISK FACTORS -- Dividend Policy,"
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS," "DIVIDEND POLICY," and "MANAGEMENT --
Security Ownership of Directors, Executive
Officers and 5% Owners."
10. Recent Sales of Unregistered
Securities......................... Not applicable.
11. Description of Registrant's
Securities to be Registered........ "DESCRIPTION OF CAPITAL STOCK."
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ITEM
NO. ---- ITEM CAPTION LOCATION IN INFORMATION STATEMENT
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12. Indemnification of Directors
and Officers....................... "LIABILITY AND INDEMNIFICATION OF DIRECTORS AND
OFFICERS."
13. Financial Statements and
Supplementary Data................. "SUMMARY OF CERTAIN INFORMATION," "RISK
FACTORS," "SELECTED CONSOLIDATED FINANCIAL
INFORMATION," "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" and "INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS."
14. Changes in and Disagreements with Ac-
countants on Accounting and
Financial Disclosure............... Not Applicable.
15. Financial Statements and Exhibits
(a) Financial Statements......... "INDEX TO CONSOLIDATED FINANCIAL STATEMENTS."
(b) Exhibits
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EXHIBIT
NO. ------- ITEM
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*2.1 Form of Reorganization and Distribution Agreement between the
Registrant and Getty Petroleum Corp.
**3.1 Articles of Incorporation of the Registrant as currently in effect.
**3.2 Form of Articles of Incorporation of the Registrant, as amended, to
be in effect as of the Record Date.
**3.4 By-Laws of the Registrant.
10.1 Form of Reorganization and Distribution Agreement between the
Registrant and Getty Petroleum Corp. (filed as Exhibit 2.1).
*10.2 Form of Master Lease Agreement between the Registrant and Getty
Petroleum Corp.
**10.3 Form of Tax Sharing Agreement between the Registrant and Getty
Petroleum Corp.
**10.4 Form of Services Agreement between the Registrant and Getty Petroleum
Corp.
*10.5 Form of Trademark License Agreement between Registrant and Getty
Petroleum Corp.
**10.6 Form of Registrant's 1997 Stock Option and Award Plan.
**10.7 Form of Registrant's Employee Stock Ownership Plan.
**10.8 Form of Stock Option Reformation Agreement between the Registrant and
Getty Petroleum Corp.
**10.9 Form of Registrant's Retirement and Profit Sharing Plan.
**10.10 Form of Supplemental Retirement Plan for Executives of the Registrant
and Participating Subsidiaries.
**22 List of Subsidiaries of the Registrant.
**99.1 Consent of Prospective Director of the Registrant.
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* Supersedes version previously filed.
**Previously filed.
<PAGE> 4
GETTY PETROLEUM CORP.
125 JERICHO TURNPIKE
JERICHO, NEW YORK 11753
January 31, 1997
To the Stockholders of Getty Petroleum Corp:
Getty Petroleum Corp. ("Getty") currently owns all of the outstanding
shares of common stock of Getty Petroleum Marketing Inc. ("Marketing"), which
Getty has formed to hold and operate its petroleum marketing and related
businesses. The enclosed Information Statement contains information regarding
the distribution of the common stock of Marketing to the stockholders of Getty
(the "Distribution"). If you are a holder of Getty common stock on January 31,
1997, the record date for the Distribution, you will receive one (1) share of
Marketing common stock for each share of Getty common stock you own on that
date. Holders of Getty shares on the record date will not be required to make
any payment or take any other action in order to receive Marketing shares in the
Distribution. We expect that Marketing stock certificates will be mailed
beginning on or about February 11, 1997.
The principal effect of the Distribution will be to separate Getty's real
estate business from its petroleum marketing business. After the Distribution,
each business will be conducted by a separate, publicly held corporation, and
Getty will change its name to "Getty Realty Corp."
The Board of Directors of Getty, which approved the Distribution on
December 12, 1996, believes that the Distribution will enhance stockholder
values over the long term by allowing Getty and Marketing to concentrate on
their respective businesses, allowing Marketing to establish more meaningful and
effective equity-based employee compensation packages, and providing each
company with greater flexibility in pursuing its independent business
objectives. The petroleum marketing business of Marketing and the real estate
business of Getty have distinct investment, operating and financial
characteristics. The Getty Board of Directors believes that the Distribution
will enable the investment community to analyze more effectively the investment
characteristics, performance and future prospects of each business, enhancing
the likelihood that each will achieve appropriate market recognition of its
value. The Board of Directors of Getty has unanimously approved the
Distribution.
Details of the Distribution and other important information, including a
description of the business and management of Marketing after the Distribution,
are set forth in the accompanying Information Statement, which should be
reviewed carefully by stockholders. Stockholder approval of the Distribution is
not required, and we are not soliciting your proxy.
Stockholders of Getty with inquiries related to the Distribution should
contact John J. Fitteron, Senior Vice President, Treasurer and Chief Financial
Officer of Getty, at (516) 338-6000.
Sincerely yours,
Leo Liebowitz
Chairman and Chief Executive Officer
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PRELIMINARY INFORMATION STATEMENT DATED JANUARY 27, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION AND AMENDMENT
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INFORMATION STATEMENT
------------------------------
GETTY PETROLEUM MARKETING INC.
COMMON STOCK
($.01 PAR VALUE)
This Information Statement is being furnished in connection with a special
distribution (the "Distribution") by Getty Petroleum Corp. ("Getty") of one (1)
share of common stock, $.01 par value ("Marketing Common Stock"), of Getty
Petroleum Marketing Inc. ("Marketing") for each share of Getty common stock,
$.10 par value (the "Getty Common Stock"), held of record as of the close of
business on January 31, 1997 (the "Record Date"). The Distribution will result
in 100% of the outstanding shares of Marketing Common Stock being distributed to
the holders of Getty Common Stock. On January 31, 1997 (the "Distribution
Date"), Getty will deliver all of the issued and outstanding shares of Marketing
Common Stock to American Stock Transfer and Trust Company, as distribution agent
(the "Distribution Agent"), which in turn will distribute such shares to the
holders of Getty Common Stock as of the Record Date. It is expected that
certificates representing shares of Marketing Common Stock will be mailed by the
Distribution Agent on or about February 11, 1997. See "INTRODUCTION" and "THE
DISTRIBUTION -- Manner of Effecting the Distribution." Holders of Getty Common
Stock on the Record Date will not be required to make any payment or take any
other action to receive Marketing Common Stock in the Distribution. On the
Distribution Date, Getty will change its name to Getty Realty Corp.
Marketing is a newly formed company that, at the time of the Distribution,
will own the businesses and assets of, and will be responsible for the
obligations and liabilities associated with, the petroleum marketing business
and the New York Mid-Hudson Valley home heating oil business, both of which are
currently conducted by Getty and its subsidiaries. There is no established
public trading market for Marketing Common Stock, although it is expected that a
"when-issued" trading market will develop on or about the Record Date.
Application has been made to list the Marketing Common Stock on The New York
Stock Exchange under the symbol "GPM." See "THE DISTRIBUTION -- Listing and
Trading of Marketing Common Stock."
------------------------------
NO VOTE OF STOCKHOLDERS IS REQUIRED IN CONNECTION WITH THE DISTRIBUTION.
NO PROXIES ARE BEING SOLICITED, AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY OTHER FEDERAL OR STATE AUTHORITY, NOR HAS SUCH
COMMISSION OR OTHER AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
INFORMATION STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS INFORMATION STATEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES.
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The date of this Information Statement is January 31, 1997
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TABLE OF CONTENTS
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PAGE
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SUMMARY OF CERTAIN INFORMATION......................................................... 1
SUMMARY CONSOLIDATED FINANCIAL INFORMATION............................................. 4
INTRODUCTION........................................................................... 5
RISK FACTORS........................................................................... 6
THE DISTRIBUTION....................................................................... 9
General.............................................................................. 9
Background and Reasons for the Distribution.......................................... 9
Future Management of Marketing....................................................... 11
Manner of Effecting the Distribution................................................. 11
Listing and Trading of Marketing Common Stock........................................ 11
Federal Income Tax Aspects of the Distribution....................................... 12
Regulatory Approvals................................................................. 12
Reasons For Furnishing the Information Statement..................................... 12
RELATIONSHIP BETWEEN GETTY AND MARKETING AFTER THE DISTRIBUTION........................ 13
Reorganization and Distribution Agreement............................................ 13
Master Lease Agreement............................................................... 14
Tax Sharing Agreement................................................................ 16
Services Agreement................................................................... 16
Trademark License Agreement.......................................................... 17
Board of Directors and Management.................................................... 17
Financing -- Credit Lines............................................................ 17
SELECTED CONSOLIDATED FINANCIAL INFORMATION............................................ 18
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS........................................................................... 19
DIVIDEND POLICY........................................................................ 23
BUSINESS............................................................................... 23
General.............................................................................. 23
Operating Strategy................................................................... 24
Distribution......................................................................... 24
Product Supply....................................................................... 26
Marketing............................................................................ 26
Competition.......................................................................... 27
Regulation........................................................................... 27
Personnel............................................................................ 28
Legal Proceedings.................................................................... 28
MANAGEMENT............................................................................. 29
EXECUTIVE COMPENSATION................................................................. 32
Stock Option Plans................................................................... 33
Employee Stock Ownership Plan........................................................ 34
Miscellaneous Benefit Plans.......................................................... 35
CERTAIN TRANSACTIONS................................................................... 35
DESCRIPTION OF CAPITAL STOCK........................................................... 36
LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS................................ 38
ADDITIONAL INFORMATION................................................................. 39
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS............................................. F-1
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SUMMARY OF CERTAIN INFORMATION
This summary is qualified by the more detailed information set forth
elsewhere in this Information Statement, which should be read in its entirety.
Unless the context otherwise requires, (i) references in the Information
Statement to Getty and Marketing shall include Getty's and Marketing's
respective subsidiaries, (ii) references in this Information Statement to
Marketing prior to the Distribution Date shall refer to the petroleum marketing
business as operated by Getty, (iii) references in this Information Statement to
Getty refer to Getty Petroleum Corp. prior to the Distribution Date and to Getty
Realty Corp. on and after such date, and (iv) references to a fiscal year are to
the twelve-month period ended January 31 of such year. Certain capitalized terms
used in this summary are defined elsewhere in this Information Statement.
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Distributing Company............. Getty Petroleum Corp., a Delaware corporation ("Getty").
On the Distribution Date, Getty will change its name to
Getty Realty Corp. ("Realty").
Distributed Company.............. Getty Petroleum Marketing Inc., a Maryland corporation
("Marketing"), which on the Distribution Date will own the
petroleum marketing business and the New York Mid-Hudson
Valley home heating oil business, both previously
conducted by Getty.
The Distribution................. On the Distribution Date, all of the outstanding shares of
Marketing Common Stock will be delivered to the
Distribution Agent. On or about February 11, 1997, the
Distribution Agent will mail stock certificates
representing shares of Marketing Common Stock to holders
of record of Getty Common Stock as of the Record Date. See
"THE DISTRIBUTION -- Manner of Effecting the
Distribution."
Record Date...................... Close of business on January 31, 1997 (the "Record Date").
Distribution Date................ Close of business on January 31, 1997 (the "Distribution
Date").
Distribution Ratio............... Each Getty stockholder will receive one share of common
stock, $.01 par value, of Marketing (the "Marketing Common
Stock") for each share of common stock, $.10 par value, of
Getty (the "Getty Common Stock") owned on the Record Date.
Shares to be Distributed......... Based on the number of shares of Getty Common Stock
outstanding on December 27, 1996, approximately 12,675,000
shares of Marketing Common Stock will be issued to Getty
stockholders in the Distribution. The shares to be
distributed to Getty stockholders, together with
approximately 667,000 shares to be issued to the Getty
Petroleum Marketing Employee Stock Ownership Plan (the
"Marketing ESOP"), will constitute all of the shares of
Marketing Common Stock outstanding immediately after the
Distribution.
Distribution Agent............... American Stock Transfer and Trust Company (the
"Distribution Agent").
Fractional Share Interests....... Fractional shares will not be distributed. Any fractional
shares will be aggregated and sold in the public market by
the Distribution Agent and the aggregate cash proceeds
will be distributed ratably to those shareowners entitled
to fractional interests. See "THE DISTRIBUTION -- Manner
of Effecting the Distribution."
No Payment Required.............. Getty stockholders will not be required to make any
payment or to take any other action to receive their
portion of the Distribution. See "THE DISTRIBUTION --
Manner of Effecting the Distribution."
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Conditions to the Distribution... The Distribution is conditioned upon, among other things,
declaration of the special dividend by the Board of
Directors of Getty (the "Getty Board") and a private
letter ruling from the Internal Revenue Service (the
"IRS") in form and substance satisfactory to the Board of
Directors of Getty (the "Getty Board"). See "-- Tax
Consequences." The private letter ruling was issued by the
IRS on September 11, 1996. The Getty Board has reserved
the right to waive any conditions to the Distribution or,
even if the conditions to the Distribution are satisfied,
to abandon, defer or modify the Distribution at any time
prior to the Distribution Date. See "INTRODUCTION" and
"THE DISTRIBUTION -- Manner of Effecting the
Distribution."
Reasons for the Distribution..... The Distribution will formally separate Getty's petroleum
marketing business from its real estate business. After
the Distribution, each business will be conducted by a
separate, publicly held corporation. The Getty Board
believes that the Distribution will (i) enable the
management of each company to concentrate its attention
and financial resources on the core businesses of such
company, (ii) facilitate the adoption of a broad-based
equity compensation plan for Marketing whereby Marketing
can more efficiently and meaningfully incentivize its
employees and (iii) enhance stockholder value over the
long term by allowing the investment community to analyze
more effectively the investment characteristics,
performance and future prospects of the two distinct
business groups. The Getty Board also believes that the
Distribution will provide each company with greater
flexibility in pursuing its independent business
objectives. See "THE DISTRIBUTION -- Background and
Reasons for the Distribution."
Tax Consequences................. The Getty Board has conditioned the Distribution on
receipt of a private letter ruling from the IRS to the
effect, among other things, that receipt of shares of
Marketing Common Stock by holders of Getty Common Stock
will be tax free. On September 11, 1996, the IRS issued a
private letter ruling (the "Tax Ruling") confirming the
foregoing, as well as to confirm the treatment, for
Federal income tax purposes, of certain other matters
pertaining to the Distribution.
Trading Market................... There is currently no public market for Marketing's Common
Stock. Application has been made to list the Marketing
Common Stock on The New York Stock Exchange. See "THE
DISTRIBUTION -- Listing and Trading of Marketing Common
Stock" and "RISK FACTORS -- No Prior Market for Marketing
Common Stock."
Marketing........................ Marketing was incorporated under the laws of Maryland on
October 1, 1996. Following the Distribution Date,
Marketing will own and operate the petroleum marketing
business and the New York Mid-Hudson Valley home heating
oil business, both currently owned and operated by Getty.
See "BUSINESS."
Principal Office of Marketing.... The principal executive offices of Marketing are located
at 125 Jericho Turnpike, Jericho, New York 11753.
Board of Directors............... Getty, as the sole stockholder of Marketing, has elected
the following persons to constitute the Board of Directors
of Marketing as of the Distribution Date: Messrs. Leo
Liebowitz, Milton Safenowitz, Ronald E. Hall, Richard E.
Montag and Matthew J. Chanin. See "MANAGEMENT."
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Risk Factors..................... See "RISK FACTORS" for a discussion of factors that should
be considered in connection with the Marketing Common
Stock received in the Distribution.
Preliminary Transactions......... Prior to the Distribution, Getty intends to transfer to
Marketing the stock of certain subsidiaries engaged in the
petroleum marketing and New York Mid-Hudson Valley home
heating oil businesses (collectively, the "Transferred
Subsidiaries"), as well as certain other assets associated
with petroleum marketing operations.
Financing........................ Marketing has established facilities for letters of credit
and lines of credit. See "RELATIONSHIP BETWEEN GETTY AND
MARKETING AFTER THE DISTRIBUTION -- Financing -- Credit
Lines."
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SUMMARY CONSOLIDATED FINANCIAL INFORMATION
The following summary consolidated financial information of Marketing
should be read in conjunction with Marketing's historical and pro forma
consolidated financial statements and the notes thereto, included elsewhere in
this Information Statement. The following consolidated financial information
relates to the business of Marketing as it was operated as part of Getty and is
derived from the consolidated historical financial statements of Marketing. The
consolidated financial statements of Marketing are derived from the consolidated
historical financial statements of Getty and may not reflect the financial
position or results of operations that would have been obtained had Marketing
been a separate, publicly held company during such periods.
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NINE MONTHS ENDED
FISCAL YEARS ENDED JANUARY 31, OCTOBER 31,
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1992 1993 1994 1995 1996 1995 1996
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(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
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OPERATING DATA:
Revenues............................. $1,121,176 $906,656 $776,285 $753,735 $791,194 $598,249 $642,225
Net earnings (loss).................. (16,658) (7,303) 1,818 (2,434) 3,664(a) 1,701(a) (2,092)
Pro forma net earnings (loss)(b)..... 3,302(c) (2,575)
Pro forma net earnings (loss) per
share(b)(d)........................ .25(c) (.19)
BALANCE SHEET DATA AT END OF PERIOD:
Total assets......................... $ 131,208 $112,413 $111,515 $117,097 $124,498 $123,638 $128,879
Working capital (deficit)............ 13,208 (18,215) (16,425) (23,221) (8,723) (14,447) (17,162)
Pro forma working capital(e)......... 1,100
Stockholders' equity................. 70,813 39,811 41,991 37,061 50,311 46,809 44,027
Pro forma stockholders' equity(e).... 62,289
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(a) Includes charge of $282, or $.02 per share, from the cumulative effect of
adopting Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of."
(b) Pro forma net earnings (loss) reflect additional rent to be paid to Getty by
Marketing as provided for in the Master Lease and estimated costs Marketing
will incur in operating as a separate public company. Commencing February 1,
1997, Marketing will recognize a charge to operating results over a
five-year period relating to the Marketing ESOP and will also recognize a
charge to operations relating to certain change of control agreements. Such
charges, which are not reflected in the pro forma consolidated financial
statements, will be based on the value of the Marketing Common Stock in the
future and, as such, are not currently determinable.
(c) Excludes charge of $282, or $.02 per share, described in note (a).
(d) Pro forma net earnings (loss) per share is computed by dividing net earnings
(loss) by the weighted average number of shares of Marketing Common Stock
that would have been outstanding during the period had the Distribution
taken place as of the beginning of such period and had an additional 667,000
shares associated with the Marketing ESOP been issued.
(e) Pro forma working capital and stockholders' equity reflect a cash transfer
from Getty in an amount sufficient to provide Marketing with net working
capital of approximately $1.1 million in accordance with the Distribution
Agreement.
4
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INTRODUCTION
The Board of Directors of Getty Petroleum Corp., a Delaware corporation
("Getty"), has declared a special distribution (the "Distribution") of one share
of common stock, $.01 par value ("Marketing Common Stock"), of Getty Petroleum
Marketing Inc., a Maryland corporation ("Marketing"), for each share of Getty
common stock, $.10 par value ("Getty Common Stock"), held of record as of the
close of business on January 31, 1997 (the "Record Date"). Getty will effect the
Distribution on January 31, 1997 (the "Distribution Date") by delivering all of
the issued and outstanding shares of Marketing Common Stock to American Stock
Transfer and Trust Company, as the distribution agent (the "Distribution
Agent"), for transfer and distribution to the holders of record of Getty Common
Stock as of the Record Date. It is expected that certificates representing
shares of Marketing Common Stock will be mailed to Getty stockholders beginning
on or about February 11, 1997.
The principal effect of the Distribution will be to separate Getty's
petroleum marketing business from its real estate business. After the
Distribution, each business will be conducted by a separate, publicly held
corporation. Marketing will own and operate the petroleum marketing business and
own the New York Mid-Hudson Valley home heating oil business operated by its
subsidiary, Kingston Oil Supply Corp. ("KOSCO"), and Getty will retain and
continue to own and operate the real estate business and the Pennsylvania and
Maryland home heating oil business. See "BUSINESS." The Distribution is intended
to enhance stockholder value over the long term by allowing Getty and Marketing
to concentrate on their respective businesses, by facilitating the adoption of a
broad-based equity compensation plan for Marketing through which Marketing can
more efficiently and meaningfully incentivize its employees and by enabling the
investment community to analyze more effectively the investment characteristics,
performance and future prospects of the two distinct business groups. The
Distribution is also intended to provide each company with greater flexibility
in pursuing its independent business objectives.
For a description of risk factors in connection with the Distribution and
the related transactions described in this Information Statement, see "RISK
FACTORS."
Marketing was formed as a subsidiary of Getty on October 1, 1996. There has
been no trading market in Marketing Common Stock. However, application has been
made to list the Marketing Common Stock on The New York Stock Exchange (the
"NYSE") under the symbol "GPM," and a "when-issued" trading market is expected
to develop on or about the Record Date. See "THE DISTRIBUTION -- Listing and
Trading of Marketing Common Stock" and "RISK FACTORS -- No Prior Market for
Marketing Common Stock."
In consideration for Getty's transfer to Marketing of the petroleum
marketing business and the New York Mid-Hudson Valley home heating oil business,
Marketing issued to Getty all of the outstanding shares of Marketing Common
Stock and assumed certain obligations and liabilities relating to the
transferred businesses. See "THE DISTRIBUTION."
The Distribution does not require stockholder approval and the Getty Board
may abandon, defer or modify the Distribution prior to the Distribution Date.
Marketing stockholders will not be entitled to appraisal rights in connection
with the Distribution.
The principal executive offices of Marketing are located at 125 Jericho
Turnpike, Jericho, New York 11753; telephone number (516) 338-6000.
5
<PAGE> 12
RISK FACTORS
Stockholders should note the following risk factors, as well as the other
information contained in this Information Statement.
VOLATILITY OF MARKETING MARGINS
Marketing's earnings and cash flow from operations depend upon rental
income from dealers and the sale of refined petroleum products at marketing
margins sufficient to cover fixed and variable expenses. Marketing has no crude
oil reserves or refining capacity. Marketing has entered into agreements with
Northeast and Mid-Atlantic suppliers for the purchase of refined petroleum
products. Substantially all of Marketing's supply contracts are for a term of
one year.
Historically, petroleum prices have been subject to extreme volatility and
there have been periodic shortages followed by periods of oversupply. A large,
rapid increase in petroleum prices would adversely affect Marketing's
profitability if Marketing's sales prices were not similarly increased or if
automobile consumption of gasoline were to significantly decline. No assurance
can be given that petroleum prices will not fluctuate greatly or that petroleum
products will continue to be available from multiple sources or available at all
in times of shortage. Management believes, however, that based on its experience
during times of shortage, Marketing will continue to have the ability to acquire
petroleum products on competitive terms due in part to the large volume of its
purchases and its storage capacity at its distribution terminals.
Petroleum products are commodities whose prices depend on numerous factors
beyond Marketing's control that affect the supply of and demand for petroleum
products, such as changes in domestic and foreign economies, political affairs
and production levels, the availability of imported oil, the marketing of
competitive fuels, the extent of government regulation and expected and actual
weather conditions. The prices paid by Marketing for its products are affected
by global, national and regional factors, such as petroleum pipeline capacity,
local market conditions and competition and the level of operations of
refineries. A large, rapid increase in refined petroleum prices would adversely
affect Marketing's operating margins if the increased cost of petroleum products
could not be passed on to Marketing's customers. Although Marketing believes,
based on its experience during periods of shortage, that it will continue to
have the ability to acquire petroleum products on competitive terms due in part
to the large volume of its purchases and its substantial storage capacity at its
distribution terminals, no assurance can be given that Marketing will be able to
negotiate favorable prices for petroleum products or that adequate supplies will
be available to it during times of shortage. In recent years, prices of refined
products have fluctuated substantially. Accordingly, Marketing's earnings are
subject to substantial fluctuations, as reflected in Marketing's financial
statements. Moreover, after the Distribution, Marketing's rental expense will be
substantially higher than that of Getty prior to the Distribution, and
Marketing's post-Distribution earnings may be more volatile and lower than
Getty's pre-Distribution earnings. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and "INDEX TO CONSOLIDATED
FINANCIAL STATEMENTS."
PETROLEUM MARKETING IS A MATURE INDUSTRY
The petroleum marketing industry is a mature one, with only limited growth
in total demand for the product foreseen. Marketing expects the overall demand
for petroleum products to grow about 2% annually over the next several years,
with year to year industry volumes being impacted primarily by travel patterns.
Therefore, Marketing's ability to grow within the industry depends on its
ability to acquire new distributors, open new retail outlets, refurbish and
expand existing outlets and acquire new customers through effective marketing.
There can be no assurance that in the future Marketing will be able to (i) find
attractive acquisition candidates and acquire such candidates on economically
acceptable terms, or (ii) increase same service station sales through
refurbished or expanded service stations or through improved marketing.
ENERGY EFFICIENCY AND TECHNOLOGY TRENDS MAY AFFECT DEMAND FOR PETROLEUM PRODUCTS
Retail customers use petroleum primarily as a motor fuel, and Marketing's
sales therefore depend in part on the level of motor fuel consumption. Marketing
is not able to predict the effect that future conservation
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measures, technological advances in transportation or the use of alternative
fuels might have on Marketing's operations.
COMPETITION
Marketing believes that, based on the number of locations served, it is
currently one of the largest independent marketers of petroleum products in the
United States. Petroleum marketing is highly competitive, and Marketing competes
with a substantial number of integrated oil companies and other companies who
may have greater assets, financial resources and sales. Accordingly, Marketing's
earnings may be adversely affected by the marketing policies of such companies,
which may have greater flexibility to withstand price changes than Marketing.
COMPETITION AND VOLATILITY IN THE HOME HEATING OIL BUSINESS
The business of marketing and selling home heating oil has historically
been an intensely competitive one, due not only to the presence of other home
heating oil retailers and suppliers in the New York Mid-Hudson Valley area, but
also to the availability of other types of home heating fuels, such as natural
gas. The profitability of the home heating oil business is also subject to
fluctuations in the regional climate, as the demand for home heating oil is
generally linked to the severity of any particular winter. Furthermore, a large,
rapid increase in the cost of home heating oil prices would adversely affect
Marketing's profitability if Marketing's sales prices were not similarly
increased or if consumption of home heating oil were to significantly decline as
a result of such price increases. The price of home heating oil fluctuates
widely, and no assurances can be given with respect to consumers' continued use
of home heating oil in the New York Mid-Hudson Valley, the level of consumption
of home heating oil in this region during any given winter season, or the
ability of Marketing to negotiate favorable prices for home heating oil from its
suppliers.
REGULATION
The petroleum products industry is subject to numerous federal, state and
local laws and regulations. Although Marketing believes that the costs related
to compliance with those laws and regulations have not had and are not expected
to have a material adverse effect on the competitive or financial position of
Marketing, such costs may have a significant impact on results of operations or
liquidity for any single period.
Marketing is not a refiner and, therefore, is not subject to the Petroleum
Marketing Practices Act ("PMPA"), a federal law, with respect to its Getty(R)
branded stations. However, pursuant to Marketing's agreements with approximately
one-half of its Getty dealers and distributors, Marketing has voluntarily
extended to them coverage under PMPA. Under PMPA, Marketing complies with
certain notice requirements (generally 90 days) and extends nondiscriminatory
contracts to certain of its Getty licensed dealers and distributors, whose
franchises cannot be terminated or not renewed unless certain PMPA imposed
prerequisites are met as provided in Marketing's agreements. Although a licensed
dealer or distributor who is covered by PMPA is not required to renew his or her
franchise, because Marketing has agreed to comply with PMPA with respect to such
dealers and distributors, Marketing is required to renew the franchises of such
dealers and distributors who elect to renew. However, franchisees may be
terminated or not renewed for violating certain provisions of Marketing's
agreements as permitted under PMPA. The PMPA permitted grounds for termination
or non-renewal include, among other things, non-payment of rent, misuse of
trademark, bankruptcy, criminal misconduct, condemnation and expiration of an
underlying lease. Also, Marketing may elect to non-renew with a franchisee upon
a determination made in good faith that the franchise relationship is
uneconomical to Marketing. In such latter instance, Marketing must, in
accordance with PMPA, offer to the franchisee the right to purchase Marketing's
leasehold interest in the property at a bona fide price. Under the terms of the
Master Lease with Realty, Marketing would be required to offer to assign its
leasehold interest in the property (including all renewal options) to the
franchisee who is covered by PMPA.
In addition, Marketing's operations are governed by numerous federal, state
and local environmental laws and regulations affecting all aspects of its
operations. Among these laws are (i) requirements to dispense reformulated
gasoline in accordance with the Clean Air Act, (ii) restrictions imposed on the
amount of hydrocarbon vapors which may enter the air at Marketing's terminals
and service stations, (iii) OSHA and other laws regulating terminal employee
exposure to benzene and other hazardous materials,
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<PAGE> 14
(iv) requirements to report to governmental authorities discharges of petroleum
products into the environment and, under certain circumstances, to remediate the
soil and/or groundwater contamination pursuant to governmental order and
directive, (v) requirements to remove and replace underground storage tanks
which have exceeded governmental-mandated age limitations and (vi) the
requirement to provide a certificate of financial responsibility with respect to
claims relating to underground storage tank failures.
NO OPERATING HISTORY AS AN INDEPENDENT COMPANY
Marketing does not have an operating history as an independent public
company, and there is no assurance that it will be profitable as a stand-alone
company. For the nine months ended October 31, 1996, Marketing had a net loss of
approximately $2.1 million. The business of Marketing has historically relied on
Getty for various financial and administrative services. After the Distribution,
Marketing will maintain its own lines of credit, banking relationships and
administrative functions.
DIVIDEND POLICY
Marketing's dividend policy will be established by the Board of Directors
of Marketing (the "Marketing Board") from time to time based on the results of
operations and financial condition of Marketing and such other business
considerations as the Marketing Board considers relevant. Subject to the
foregoing, Marketing may declare and pay dividends after the Distribution,
although there can be no assurance that any dividends will be paid in the
future.
POTENTIAL CONFLICTS
The post-closing relationships between Getty and Marketing may cause the
interests of such companies to conflict. Potential sources of such conflict
include (i) Marketing's leasing of substantially all of its service station and
terminal properties from Getty pursuant to an agreement that allows Getty to
terminate Marketing's rights with respect to such properties upon the occurrence
of certain events of default, (ii) Marketing's licensing of the Getty trademark
from Getty under an agreement that terminates upon the occurrence of certain
events of default and that allows Getty to license the Getty trademark for use
by third parties on a non-exclusive basis in states in which Marketing is not
then doing business and (iii) Getty's retention of and agreement to pay for and
indemnify Marketing with respect to all scheduled pre-closing environmental
liabilities and obligations, all scheduled future upgrades (the "Upgrades")
necessary to cause underground storage tanks (such tanks, including related
piping, underground pumps, wiring and monitoring devices, the "USTs") to conform
to the 1998 federal standards for USTs (the "1998 Standards"), and all
environmental liabilities and obligations arising out of discharges with respect
to Properties (as defined below) containing USTs that have not been upgraded to
meet the 1998 Standards ("Nonupgraded USTs") that are discovered prior to the
date such USTs are upgraded to meet the 1998 Standards, with Marketing being
responsible for and indemnifying Getty with respect to all other environmental
obligations and liabilities. See "RELATIONSHIP BETWEEN GETTY AND MARKETING AFTER
THE DISTRIBUTION -- Master Lease Agreement" and "-- Trademark License
Agreement." In addition, Mr. Leo Liebowitz will serve as a director, chief
executive officer and Chairman of Marketing and as director, chief executive
officer and president of Getty, and Mr. Milton Safenowitz will also serve as a
director of Marketing and of Getty. Messrs. Liebowitz and Safenowitz will own
shares in both companies following the Distribution. In addition, all other
present directors and officers of Getty will own shares and have options to
purchase shares of both companies following the Distribution.
NO PRIOR MARKET FOR MARKETING COMMON STOCK
There has been no prior trading market for Marketing Common Stock and there
can be no assurance as to the prices at which Marketing Common Stock will trade
before or after the Distribution Date. Until Marketing Common stock is fully
distributed and an orderly market develops, the prices at which Marketing Common
Stock trades may fluctuate significantly. Prices for Marketing Common Stock will
be determined in the trading markets and may be influenced by many factors,
including the depth and liquidity of the market for Marketing Common Stock,
investor perceptions of Marketing and its business, Marketing's dividend policy,
and general economic and market conditions. See "THE DISTRIBUTION -- Listing and
Trading of Marketing Common Stock."
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<PAGE> 15
EFFECTS ON GETTY COMMON STOCK
After the Distribution, Getty Common Stock will continue to be listed on
the NYSE, and traded on certain other exchanges. As a result of the
Distribution, the trading prices of Getty Common Stock are likely to be lower
than the trading prices of Getty Common Stock immediately prior to the
Distribution. The aggregate trading prices of Getty Common Stock and Marketing
Common Stock after the Distribution may be less than, equal to or greater than
the trading prices of Getty Common Stock prior to the Distribution. In addition,
until the market has fully analyzed the operations of Getty without the
Marketing Business, the prices at which the Getty Common Stock trades may
fluctuate significantly.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
Getty has received a Tax Ruling from the IRS to the effect that, among
other things, for United States federal income tax purposes the Distribution
will be tax-free under Section 355 of the Code. See "THE DISTRIBUTION -- Federal
Income Tax Aspects of the Distribution." The continuing validity of the Tax
Ruling is subject to certain factual representations and assumptions. Marketing
is not aware of any facts or circumstances which should cause such
representations and assumptions to be untrue. The Tax Sharing Agreement (as
defined below) provides that neither Getty nor Marketing is to take any action
inconsistent with, nor fail to take any action required by, the request for the
Tax Ruling or the Tax Ruling unless required to do so by law or permitted to do
so by the prior written consent of the other party or, in certain circumstances,
a supplemental ruling. Getty and Marketing have agreed to indemnify each other
with respect to any tax liability resulting from their respective failures to
comply with such provisions. See "RELATIONSHIP BETWEEN GETTY AND MARKETING AFTER
THE DISTRIBUTION -- Tax Sharing Agreement."
CERTAIN ANTI-TAKEOVER FEATURES
Certain provisions of Maryland statutory law could discourage potential
acquisition proposals and could delay or prevent a change in control of
Marketing. Such provisions could diminish the opportunities for a stockholder to
participate in tender offers, including tender offers at a price above the then
current market value of the Marketing Common Stock. See "DESCRIPTION OF CAPITAL
STOCK -- Common Stock."
THE DISTRIBUTION
GENERAL
On the Distribution Date, Getty intends to distribute all of the
outstanding shares of Marketing Common Stock to holders of record on the Record
Date of Getty Common Stock. Each holder of Getty Common Stock will receive one
share of Marketing Common Stock for each share of Getty Common Stock held on the
Record Date. Holders of Getty Common Stock on the Record Date will not be
required to make any payment or to take any other action to receive their
portion of the Distribution.
BACKGROUND AND REASONS FOR THE DISTRIBUTION
The Board of Directors of Getty has determined, for the reasons set forth
below, to separate Getty into two publicly held companies: Marketing, a newly
formed corporation which will own and operate the petroleum marketing business
and the New York Mid-Hudson Valley home heating oil business, and Getty, which
will continue to own and operate the real estate business and the home heating
oil business in Pennsylvania and Maryland.
The Board of Directors of Getty believes that over the long term the
Distribution will benefit Getty's stockholders and each of Getty's current
businesses.
The petroleum marketing business of Marketing and the real estate business
of Getty have distinctly different investment, operating and financial
characteristics. Marketing's earnings largely depend on its ability to sell
petroleum products on a wholesale and retail level in a volatile industry at
product margins and in quantities sufficient to cover its fixed and variable
expenses. Marketing's variable costs, operating margins and earnings have varied
significantly over time and will likely continue to do so. In contrast, Getty's
earnings will depend on its receipt of rent from Marketing, its receipt of rent
for properties leased to other third parties, and
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<PAGE> 16
its ability to acquire and lease real estate at rates sufficient to cover its
costs. Although numerous factors beyond Getty's control have and will likely
continue to affect its earnings, Getty's earnings have historically been and are
likely to continue to be less volatile than those of Marketing.
Separate management teams addressing distinct business issues will manage
the two businesses, and separation of the businesses should result in greater
focus of the management teams on the core strengths that make each business
successful. In particular, the Distribution will allow both Marketing and Getty
to offer their employees more meaningful and effective equity-based employee
compensation packages. The Distribution will allow Marketing to adopt a
broad-based compensation plan (including the Marketing ESOP) through which it
can more efficiently and meaningfully incentivize all its employees by creating
equity-based incentives more directly correlated to the performance of the
Marketing business. Similarly, the Distribution will allow Getty to provide its
employees with incentive plans that better relate to the performance of its real
estate business.
In addition, the Board of Directors of Getty believes that Marketing's
post-Distribution capital structure and business focus should help it better
compete. For example, over the past few years, Marketing has divested
nonstrategic and uneconomic retail outlets and has increased the average
gasoline volume per retail outlet in each of the past five years. As a result of
the Distribution, Marketing will have no long-term debt and no known material
environmental liabilities, which liabilities will remain the responsibility of
Getty. Getty will retain responsibility for properties that are not related to
the petroleum marketing business. The Board of Directors of Getty believes that
these changes should permit Marketing's management to focus more fully on its
core business.
The Getty Board of Directors believes that the Distribution will enable the
investment community to analyze more effectively the individual investment
characteristics, performance and future prospects of the petroleum marketing
business of Marketing and the real estate business of Getty, enhancing the
likelihood that each of Marketing and Getty will achieve more appropriate market
recognition of its value.
Although Marketing's post-Distribution net rental expense may cause its
earnings to be lower and more volatile than Getty's pre-Distribution earnings,
Getty's management believes that the Distribution provides each company with
rental income and expenses appropriate to the characteristics of its business.
Under the Master Lease, Marketing will pay approximately $24 million more in
annual rent to Getty than it currently receives in annual rent from third
parties. Such net rental payment reduces the amount of, and increases the
volatility of, Marketing's earnings. Marketing's payments to Getty under the
Master Lease exceed its expected receipt of rental income from third parties
primarily because (i) Marketing's payments to Getty include rent for 10
distribution terminals and bulk plants, and for retail outlets that are not
subleased but are operated by Marketing or by management contractors and (ii)
Getty leases to Marketing at lease rates intended to approximate fair market
rates that would be negotiated by unrelated parties engaged solely in a real
estate transaction, whereas, consistent with petroleum industry practice,
Marketing generally leases its retail outlets at lower, but competitive, rates
to dealers in anticipation of also realizing profits on the sale of petroleum
products. Thus, Getty's management believes that Marketing's net rental expense
approximates the sum of the fair market rental value of those facilities not
subleased by Marketing and the reduced rentals offered to dealers in
anticipation of realizing profits on the sale of petroleum products.
In connection with its formulation and adoption of the Distribution, the
Board of Directors of Getty consulted with Credit Suisse First Boston, which
conducted analyses of the businesses of Getty and Marketing based on information
provided by management. The Board of Directors of Getty did not request or
receive from Credit Suisse First Boston any opinion as to the fairness from a
financial point of view of the Distribution to stockholders of Getty or any
other opinion relating to the Distribution.
A stockholder will have the same ownership interest in both Getty and
Marketing (except for dilution caused by the issuance of Marketing Common Stock
to the Marketing ESOP) after the Distribution as he or she had in Getty before
the Distribution. However, as a result of the Distribution, current stockholders
and prospective investors will have the ability to make separate investment
decisions regarding each business.
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<PAGE> 17
The Distribution will be reflected in Getty's financial statements as a
charge against stockholders' equity. The pro forma consolidated effect on Getty
of the Distribution, if it had occurred on October 31, 1996, would have been to
reduce Getty's assets by approximately $147.1 million and stockholders' equity
by approximately $62.3 million.
FUTURE MANAGEMENT OF MARKETING
Following the Distribution, it is presently intended that Marketing's
petroleum marketing business will continue to be operated with substantially the
same operating management and personnel as at present. See "MANAGEMENT."
MANNER OF EFFECTING THE DISTRIBUTION
In connection with the Distribution, all of the outstanding shares of
Marketing Common Stock will be delivered to the Distribution Agent for transfer
and distribution to the holders of record of Getty Common Stock as of the Record
Date. It is expected that certificates representing shares of Marketing Common
Stock will be mailed by the Distribution Agent to Getty stockholders beginning
on or about February 11, 1997.
The Board of Directors of Getty has reserved the right to abandon, defer or
modify the Distribution and the related transactions described in this
Information Statement at any time prior to 11:59 p.m., New York time, on the day
immediately preceding the Distribution Date.
No holder of Getty Common Stock will be required to pay any cash or other
consideration for the shares of Marketing Common Stock received in the
Distribution or surrender or exchange shares of Getty Common Stock in order to
receive Marketing Common Stock. The Distribution will not affect the number of,
or the rights attaching to, outstanding shares of Getty Common Stock. All shares
of Marketing Common Stock will be fully paid and non-assessable and the holders
of those shares will not be entitled to preemptive rights. See "DESCRIPTION OF
CAPITAL STOCK -- Common Stock."
No certificates or scrip representing fractional shares of Marketing Common
Stock will be issued to Getty stockholders as part of the Distribution. If, as a
result of the Distribution, any Getty stockholder would own fractional shares of
Marketing Common Stock, the Distribution Agent will aggregate such fractional
shares into whole shares and sell them in the open market at then prevailing
prices on behalf of such stockholders, and such stockholders will receive
instead a cash payment in the amount of their pro rata share of the sale
proceeds. Such sales are expected to be made on, or as soon as practicable
after, the Distribution Date.
LISTING AND TRADING OF MARKETING COMMON STOCK
There is not currently a public market for Marketing Common Stock. Prices
at which Marketing Common Stock may trade prior to the Distribution on a
"when-issued" basis or after the Distribution cannot be predicted. Until the
Marketing Common Stock is fully distributed and an orderly market develops, the
prices at which trading in such stock occurs may fluctuate significantly. The
prices at which Marketing Common Stock trades will be determined by the
marketplace and may be influenced by many factors, including, among others, the
depth and liquidity of the market for Marketing Common Stock, investor
perception of Marketing and the industries in which Marketing participates,
Marketing's dividend policy and general economic and market conditions. See
"RISK FACTORS -- No Prior Market for Marketing Common Stock."
Marketing has applied to list the Marketing Common Stock on The New York
Stock Exchange. Marketing initially will have approximately 3,000 stockholders
of record based upon the number of stockholders of record of Getty as of
December 27, 1996. For certain information regarding options to purchase
Marketing Common Stock that will be outstanding after the Distribution, see
"RELATIONSHIP BETWEEN MARKETING AND GETTY AFTER THE DISTRIBUTION --
Reorganization and Distribution Agreement."
Getty received a no-action letter from the Staff of the Securities and
Exchange Commission (the "Commission Staff") on December 9, 1996, confirming,
among other things, Getty's view that the Distribution of Marketing Common Stock
does not require registration under the Securities Act of 1933, as amended (the
"Securities Act"). Based on such no-action letter, it is Marketing's belief that
Marketing
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Common Stock distributed to Getty's stockholders in the Distribution will be
freely transferable, except for securities received by persons who may be deemed
to be "affiliates" of Getty within the meaning of Rule 144 of the Securities
Act, which persons may not publicly offer or sell Marketing Common Stock
received in connection with the Distribution except pursuant to a registration
statement under the Securities Act or pursuant to Rule 144 (without regard to
holding period requirements thereunder).
FEDERAL INCOME TAX ASPECTS OF THE DISTRIBUTION
On September 11, 1996, the IRS issued a ruling to Getty providing, among
other things, that the Distribution will qualify as a tax free spin-off under
Section 355 of the Internal Revenue Code of 1986, as amended (the "Code"), and
that, for Federal income tax purposes:
(1) No gain or loss will be recognized by (and no amount will be
included in the income of) a holder of Getty Common Stock upon the receipt
of Marketing Common Stock in the Distribution.
(2) The aggregate basis of the Getty Common Stock and the Marketing
Common Stock in the hands of the stockholders of Getty immediately after
the Distribution will be the same as the aggregate basis of the Getty
Common Stock held immediately before the Distribution, allocated in
proportion to the fair market value of each.
(3) Any stockholder of Getty receiving cash in lieu of fractional
Marketing Common Stock will recognize gain or loss equal to the difference
between the amount of cash received and the basis such stockholder would
have had in the fractional Marketing Common Stock.
(4) The holding period of the Marketing Common Stock received by the
stockholders of Getty will include the holding period of Getty Common Stock
with respect to which the Distribution will be made, provided that such
stockholder held the Getty Common Stock as a capital asset on the
Distribution Date.
(5) No gain or loss will be recognized by Getty upon the
Distribution.
The summary of federal income tax consequences set forth above does not
purport to cover all federal income tax consequences that may apply to all
categories of stockholders. All stockholders should consult their own tax
advisors regarding the particular federal, foreign, state and local tax
consequences of the Distribution to such stockholders.
For a description of the Tax Sharing Agreement pursuant to which Getty and
Marketing have provided for various tax matters, see "RELATIONSHIP BETWEEN
MARKETING AND GETTY AFTER THE DISTRIBUTION -- Tax Sharing Agreement."
REGULATORY APPROVALS
Marketing does not believe that any material federal or state regulatory
approvals will be necessary in connection with the Distribution other than motor
fuel and terminal licenses and permits that have been obtained or will have been
obtained prior to the Distribution or that Marketing expects to receive in due
course thereafter (and for which temporary arrangements have been made).
REASONS FOR FURNISHING THE INFORMATION STATEMENT
This Information Statement is being furnished by Getty solely to provide
information to Getty stockholders who will receive Marketing Common Stock in the
Distribution. It is not, and is not to be construed as, an inducement or
encouragement to buy or sell any securities of Getty or Marketing. The
information contained in this Information Statement is believed by Getty and
Marketing to be accurate as of the date set forth on its cover. Changes may
occur after that date, and neither Getty nor Marketing will update the
information except in the normal course of their respective public disclosure
practices.
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RELATIONSHIP BETWEEN GETTY AND MARKETING
AFTER THE DISTRIBUTION
For purposes of governing certain relationships between Getty and Marketing
after the Distribution and providing for an orderly transition, Getty and
Marketing have entered into or will enter into various agreements, including
those described below. Copies of certain of the agreements are included as
exhibits to Marketing's Registration Statement on Form 10 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), relating to the Marketing
Common Stock, and the following discussions with respect to such agreements are
qualified in their entirety by reference to the agreements as filed.
REORGANIZATION AND DISTRIBUTION AGREEMENT
Getty and Marketing have entered into a Reorganization and Distribution
Agreement (the "Distribution Agreement"), which provides for, among other
things, the principal corporate transactions required to effect the
Distribution, the transfer to Marketing of the assets of the petroleum marketing
business and the stock of the Transferred Subsidiaries, the division between
Getty and Marketing of certain liabilities and obligations, the distribution by
Getty of all outstanding shares of Marketing Common Stock to Getty stockholders
and certain other agreements governing the relationship between Getty and
Marketing after the Distribution.
Subject to certain exceptions, the Distribution Agreement provides for,
among other things, assumptions of obligations and liabilities and
cross-indemnities designed to allocate, effective as of the Distribution Date,
financial responsibility for the obligations and liabilities arising out of or
in connection with the Marketing business to Marketing and its subsidiaries, and
financial responsibility for the obligations and liabilities arising out of or
in connection with the real estate business to Getty and its subsidiaries;
provided, however, that Getty shall retain all liabilities relating to (i)
scheduled pre-closing environmental liabilities and obligations, (ii) scheduled
future Upgrades for Nonupgraded USTs, and (iii) environmental liabilities and
obligations arising out of discharges with respect to Properties containing
Nonupgraded USTs that are discovered prior to the date such USTs are upgraded to
meet the 1998 Standards. Marketing will be responsible for all other
environmental liabilities and obligations relating to USTs or otherwise. The
agreements to be executed in connection with the Distribution Agreement set
forth certain specific allocations of other liabilities between Getty and
Marketing. See "-- Tax Sharing Agreement" below.
Under the Distribution Agreement, Getty will retain all cash and equivalent
balances of Getty and its subsidiaries except for an amount sufficient to
provide Marketing with net working capital of approximately $1.1 million. The
remaining cash necessary to provide Marketing with net working capital of $1.1
million will be transferred to Marketing upon the determination of Marketing's
net working capital as of January 31, 1997, which determination is expected to
be made no later than February 28, 1997.
To avoid adversely affecting the intended tax consequences of the
Distribution and related transactions, the Distribution Agreement provides that,
until the second anniversary of the Distribution Date, Marketing must obtain an
opinion of counsel reasonably satisfactory to Getty or a supplemental tax ruling
before Marketing may make certain material dispositions of its assets, engage in
certain repurchases of Marketing capital stock or cease the active, independent
conduct of its business with its own employees. Marketing does not expect these
limitations to inhibit significantly its operations, growth opportunities or
ability to respond to unanticipated developments. Getty must also obtain an
opinion of counsel reasonably satisfactory to Marketing or a supplemental tax
ruling before Getty may engage in similar transactions during such period. See
"RISK FACTORS -- Certain Federal Income Tax Considerations." Getty does not
expect these limitations to inhibit significantly its operations, growth
opportunities or ability to respond to unanticipated developments.
The Distribution Agreement also provides that each of Marketing and Getty
will be granted access to certain records and information in the possession of
the other, and requires the retention by each of Marketing and Getty for a
period of ten years following the Distribution of all such information in its
possession, and thereafter requires that each party give the other prior notice
of its intention to dispose of such information. In addition, the Distribution
Agreement provides for the allocation of shared privileges with respect to
certain information (including, for example, the attorney-client privilege) and
requires each of Marketing and Getty to obtain the consent of the other prior to
waiving any shared privilege.
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The Distribution Agreement also provides for the allocation of certain
responsibilities with respect to employee compensation and benefits and labor
matters. The Distribution Agreement provides that, effective as of the
Distribution Date, Marketing will, or will cause one or more of its subsidiaries
to, assume or retain, as the case may be, all obligations and liabilities of
Getty, to the extent unpaid as of the Distribution Date, under employee benefit
plans, policies, arrangements, contracts and agreements, including collective
bargaining agreements, with respect to employees who, on or after the
Distribution Date, will be employees of Marketing or its subsidiaries. The
Distribution Agreement also provides that, effective as of the Distribution
Date, Getty will, or will cause one or more of its subsidiaries to, assume or
retain, as the case may be, all obligations and liabilities of Getty, to the
extent unpaid as of the Distribution Date, under employee benefit plans,
policies, arrangements, contracts and agreements, including collective
bargaining agreements, with respect to employees who on or after the
Distribution Date will be employees of Getty.
In addition, the Distribution Agreement provides that, immediately prior to
the Distribution, each current holder of an option to acquire shares of Getty
pursuant to Getty's 1985, 1988 or 1991 Stock Option Plans will receive, in
exchange therefor, two separately exercisable options: one to purchase shares of
Getty Common Stock (a "Getty Option") and one to purchase Marketing Common Stock
(a "Marketing Option"), each exercisable for the same number of shares and
containing terms substantially equivalent in the aggregate to those of such
holder's pre-Distribution option. The exercise price for each Getty Option and
Marketing Option will be set so as to preserve the Aggregate Spread (as defined
below) in value attributed to the options currently held by holders, such
determination to be based on the average of the closing trading prices over a
designated 10 trading-day period with respect to Getty Common Stock and
Marketing Common Stock. The "Aggregate Spread" of an option is an amount
representing the difference between the exercise price of an option and the
price of a share of Getty Common Stock immediately prior to the Distribution
multiplied by the number of shares underlying such option.
The Distribution Agreement provides that, except as otherwise set forth
therein or in any related agreement, all costs and expenses in connection with
the Distribution will be charged to the party for whose benefit the expenses are
incurred.
MASTER LEASE AGREEMENT
Getty and Marketing have entered into a Master Lease Agreement (the "Master
Lease") under which service station and convenience store properties and
terminal facilities (the "Properties") are leased or subleased by Getty as the
Lessor to Marketing as the Lessee. The Properties will be used for gasoline
sales, convenience stores, and other complementary lawful uses in conjunction
with the sale of petroleum products or convenience store items, except when the
provisions of any underlying lease are more restrictive. Marketing may sublet
any property, provided that Marketing remains fully responsible for a
sublessee's performance and, except in cases of economic abandonment (as
described below), a sublease for uses other than those described above will
require Getty's consent. Except for certain environmental and UST obligations
described below, the Master Lease will be a "triple-net" lease, with Marketing
assuming responsibility for the cost of all taxes, maintenance, repairs,
insurance and other operating expenses.
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The Properties leased or subleased by Getty to Marketing pursuant to the
Master Lease are as follows:
<TABLE>
<CAPTION>
NUMBER OF
DISTRIBUTION TERMINATION DATE UNDER
NUMBER OF TERMINALS AND THE MASTER LEASE (NOT
SERVICE STATIONS BULK PLANTS INCLUDING RENEWALS)
---------------- --------------- ------------------------
<S> <C> <C> <C>
Owned by Getty and Leased to Marketing........ 358 2 January 31, 2012
Leased by Getty from Power Test Realty Company
Limited Partnership* and
Subleased to Marketing...................... 265 5 January 31, 2012
Leased by Getty from Third Parties and
Subleased to Marketing...................... 414 3 Various dates coincident
with the termination
dates of the applicable
underlying leases, but
not later than January
31, 2012
----- --
1,037 10
</TABLE>
- ---------------
*See "CERTAIN TRANSACTIONS."
Rent for each of the Properties has been set using the fair market value of
each such Property, assuming the USTs have been upgraded to meet the 1998
Standards and such Properties are free of known environmental contamination,
since Getty is to be responsible for all such costs. Rent for each Property will
increase at the end of each five-year period by the net increase in the Consumer
Price Index for all items in the Northeast Region for such five-year period,
such increase not to exceed fifteen percent (15%). Rents for all Properties are
payable in advance on the first day of the month. The initial term of the Master
Lease is (i) fifteen years with respect to Properties owned in fee by Getty and
leased to Marketing and Properties leased by Getty from Power Test Realty
Company Limited Partnership and subleased to Marketing and (ii) the length of
time remaining under underlying lease terms (which ranges from one to fifteen
years under the Master Lease) with respect to other Properties leased by Getty
from other third parties and subleased to Marketing. See "CERTAIN TRANSACTIONS."
The Master Lease terms for each category of Properties described above also
include four ten-year renewal options (or, with respect to category (ii), such
shorter period as the underlying lease may provide), which may be exercised by
Marketing with two years advance notice on an individual property basis for all
Properties then subject to the Master Lease. For the subleased Properties, Getty
has agreed to use reasonable efforts to extend the underlying lease terms upon
conditions acceptable to Marketing. In the event that Marketing desires not to
renew the sublease upon terms (including any underlying lease term extensions
negotiated by Getty) available to it, Getty may extend or renew the lease and
sublease the property to a third party after the end of Marketing's term. The
Bylaws of Marketing contain a provision requiring that the renewal of leases
under the Master Lease, including the exercise of any renewal options, must be
approved by a majority of Directors, including, for so long as Outside Directors
(as defined below) are required to constitute a majority of the Board of
Directors, a majority of such Outside Directors. See "-- Board of Directors and
Management."
The Master Lease provides that if during the lease term, Marketing
determines that any of the leased premises have become uneconomic or unsuitable
for their use as a service station or convenience store and has discontinued use
of the Property or intends to discontinue use of the Property as a service
station or convenience store within one year of the date of said determination,
Marketing shall have the right to sublet the Property for any lawful use without
Getty's consent and, prior to the commencement of any such sublease term,
Marketing shall remove any USTs on the Property and thereafter perform all
requisite environmental investigations and/or remediations. Marketing shall have
the right of economic abandonment with respect to no more than ten Properties
during any fiscal year of the lease term. Marketing shall have no right of
economic abandonment for the terminal premises and the premises subject to third
party leases.
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<PAGE> 22
Getty may terminate Marketing's right to possession of the Properties upon
the occurrence of an event of default, including a failure of Marketing to pay
rent due under the Master Lease timely or to comply with its covenants under the
Distribution Agreement.
Getty has agreed to deliver all Properties with active gasoline sales
licenses and permits, and to assist Marketing in the re-registration of all
licenses and permits in the name of Marketing as operator of the locations and
as owner of the underground tanks related thereto. The Master Lease provides
that Marketing may make any alterations consistent with the use of the
Properties as gasoline stations/convenience stores. Any other alterations
require Getty's consent, which will not be unreasonably withheld.
Pursuant to the Master Lease, Getty will be responsible and pay for, and
indemnify Marketing against, all pre-closing liabilities, including
environmental remediation and other matters specifically identified on the
relevant Master Lease schedule. Getty has also agreed to undertake to have all
USTs in compliance with federal underground storage tank regulations not later
than December 22, 1998. Since rental rates under the Master Lease assume that
the Properties comply with the 1998 Standards, in the event that Getty fails to
make the expenditures required for underground storage tank and environmental
compliance, Marketing will have the right to offset the costs of compliance
against its rental obligations under the Master Lease.
Marketing has agreed, pursuant to the Master Lease, to indemnify Getty
against, and be responsible for, all post-closing liabilities, except all
scheduled pre-closing environmental liabilities and obligations, all scheduled
future Upgrades to Nonupgraded USTs, and all environmental liabilities and
obligations arising out of discharges with respect to Properties containing
Nonupgraded USTs that are discovered prior to the date such USTs are upgraded to
meet the 1998 Standards.
TAX SHARING AGREEMENT
Getty and Marketing have entered into a tax sharing agreement (the "Tax
Sharing Agreement") that defines the parties' rights and obligations with
respect to filing of returns, payments, deficiencies and refunds of federal,
state and other income, franchise or motor fuel taxes relating to Getty's
business for tax years prior to and including the Distribution and with respect
to certain tax attributes of Getty after the Distribution. In general, with
respect to periods ending on or before the last day of the taxable year in which
the Distribution occurs, Getty is responsible for (i) filing both consolidated
federal tax returns for the Getty affiliated group and combined or consolidated
state tax returns for any group that includes a member of the Getty affiliated
group, including in each case Marketing and its subsidiaries for the relevant
periods of time that such companies were members of the applicable group, and
(ii) paying the taxes relating to such returns (including any subsequent
adjustments resulting from the redetermination of such tax liabilities by the
applicable taxing authorities). Marketing is responsible for filing returns and
paying taxes relating to any member of the Marketing affiliated group for
periods that begin before and end after the Distribution and for periods that
begin after the Distribution. Getty and Marketing have agreed to cooperate with
each other and to share information in preparing such tax returns and in dealing
with other tax matters.
SERVICES AGREEMENT
Pursuant to the terms of the Distribution Agreement, and as a condition
precedent to the consummation of the transactions contemplated thereby, Getty
and Marketing have entered into a Services Agreement (the "Services Agreement"),
under the terms of which Marketing will provide certain administrative and
technical services to Getty and Getty will provide certain limited services to
Marketing. The term of the Services Agreement is two years, except that it may
be earlier terminated in whole or in part by either party upon 120 days' notice.
The types of services to be provided pursuant to the Services Agreement by
Marketing, through its employees, include financial reporting, accounting, data
processing, tax, legal, treasury, credit, office services, insurance, human
resources, engineering and environmental. The monthly fees to be paid by Getty
for each type of service are set forth in the Services Agreement and may change
dependent upon the level of activity with respect to any service compared to the
level prior to the execution of the Services Agreement.
Getty will provide certain services on a transition basis to Marketing
pursuant to the Services Agreement, including acting as agent for Marketing with
respect to certain motor fuel licenses or permits pending their
16
<PAGE> 23
transfer to Marketing and for collection of certain amounts via electronic funds
transfer due from Getty dealers whose distribution contracts will be transferred
to Marketing.
Marketing estimates that the net fees to be paid by Getty to Marketing for
services performed (after deducting the fees paid by Marketing to Getty for
services provided by Getty) will initially be approximately $80,000 per month,
which amount takes into account Marketing's additional costs related to
providing such services, and will decline as the services performed decrease.
Getty presently expects that most of such services will be provided by Marketing
for approximately one year.
TRADEMARK LICENSE AGREEMENT
Getty and Marketing have entered into a Trademark License Agreement (the
"Trademark License Agreement") providing for the license to Marketing of certain
Getty trademarks, service marks and trade names, including the name "Getty" (the
"Licensed Marks") used in connection with Marketing's business. Under the
Trademark License Agreement, Getty granted to Marketing an exclusive,
royalty-free license to use the Licensed Marks within the territory specified in
the Trademark License Agreement. Subject to the consent of Getty, which consent
is not to be unreasonably withheld, Marketing may sublicense the Licensed Marks
to retailers or wholesalers of petroleum and other related products within the
territory, including but not limited to service station retailers, jobbers and
distributors, subject to the terms of the Trademark License Agreement. The term
of the Trademark License Agreement will be 55 years. In the event that the
Master Lease terminates prior thereto, then commencing on the termination date,
the license shall become non-exclusive in all areas, including the territory
specified in the Trademark License Agreement, and Marketing shall pay to Getty a
rental fee for the use and maintenance of Getty signage and related items based
on gross revenues generated and/or gallonage sold under the Licensed Marks at a
rate customary and reasonable in the trade. Under the Trademark License
Agreement, Marketing has an option to expand the license on a non-exclusive
basis to additional states within the United States in which Marketing may
expand its marketing business. In the event that Marketing were to exercise any
option to expand the licensed territory, Marketing would be obligated to pay a
signage rental fee determined as described above.
BOARD OF DIRECTORS AND MANAGEMENT
Initially, the Marketing Board will consist of five directors. Following
the Distribution, Mr. Leo Liebowitz and Mr. Milton Safenowitz will serve as
directors of Marketing and will continue to serve as directors of Getty. The
Bylaws of Marketing (the "Marketing Bylaws") provide that a majority of the
entire Board of Directors may increase or decrease the number of directors,
provided that the number thereof shall never be less than the minimum number
required by Maryland General Corporation Law (the "MGCL"), nor more than
fifteen. The tenure of office of any director shall not be affected by any
increase or decrease in the number of directors. The Marketing Bylaws also
require that until the earlier of (i) such time as Mr. Leo Liebowitz, Mr. Milton
Safenowitz and Mr. Milton Cooper and their related parties collectively own less
than 15% of the voting stock of Getty or Marketing or (ii) the Master Lease
terminates or expires, a majority of the Marketing Board shall be comprised of
persons (the "Outside Directors") who are neither (x) owners of voting stock in
excess of 5% of the outstanding voting stock of Getty nor (y) directors or
officers of Getty. See "MANAGEMENT -- Security Ownership of Directors, Executive
Officers and 5% Owners." As a result, following the Distribution, three members
of the five person Marketing Board will be Outside Directors.
Although Mr. Liebowitz will serve as President and Chief Executive Officer
of both Marketing and Getty, it is not currently anticipated that at the time of
and subsequent to the Distribution any other persons will serve as officers of
both companies. It is anticipated that the majority of Getty's officers and
employees will become officers and employees of Marketing, whose services will
thereafter become available to Getty pursuant to the Services Agreement. See
"MANAGEMENT."
FINANCING -- CREDIT LINES
Marketing has obtained uncommitted lines of credit in an aggregate amount
of $50 million to meet its working capital needs. See "MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS -- Liquidity and
Capital Resources."
17
<PAGE> 24
SELECTED CONSOLIDATED FINANCIAL INFORMATION
GETTY PETROLEUM MARKETING INC.
The following selected consolidated financial information of Marketing
should be read in conjunction with the consolidated historical and pro forma
financial statements and notes thereto included elsewhere in this Information
Statement. Selected consolidated financial information relates to the business
of Marketing as it was operated by Getty. The following selected consolidated
financial data are derived from the consolidated historical financial statements
of Marketing for the five fiscal years ended January 31, 1996 and the unaudited
consolidated historical financial statements of Marketing for the nine months
ended October 31, 1996 and 1995. In the opinion of management, the unaudited
consolidated financial statements at October 31, 1996 and 1995 reflect all
adjustments (consisting of normal recurring accruals) necessary to present
fairly the financial position and results of operations of Marketing for such
interim periods. The consolidated financial statements of Marketing are derived
from the consolidated historical financial statements of Getty and may not
reflect the financial position or results of operations that would have been
obtained had Marketing been a separate, publicly held company.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
FISCAL YEAR ENDED JANUARY 31, OCTOBER 31,
------------------------------------------------------ -------------------
1992 1993 1994 1995 1996 1995 1996
---------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales................................. $1,094,316 $878,937 $747,667 $723,875 $758,887 $574,021 $617,168
Rental income............................. 24,819 27,324 28,443 29,860 32,025 23,949 24,904
Other income.............................. 2,041 395 175 -- 282 279 153
---------- -------- -------- -------- -------- -------- --------
1,121,176 906,656 776,285 753,735 791,194 598,249 642,225
---------- -------- -------- -------- -------- -------- --------
Cost of sales (excluding depreciation and
amortization)........................... 1,100,740 880,606 738,261 721,354 750,680 569,354 619,930
Selling, general and administrative
expenses................................ 33,256 25,580 23,262 22,588 20,702 15,846 15,403
Restructuring charges..................... -- -- -- 1,846 -- -- --
Interest expense.......................... 212 302 226 285 388 291 352
Depreciation and amortization............. 12,616 11,491 11,718 11,640 13,099 9,580 10,159
---------- -------- -------- -------- -------- -------- --------
1,146,824 917,979 773,467 757,713 784,869 595,071 645,844
---------- -------- -------- -------- -------- -------- --------
Earnings (loss) before provision (credit)
for income and cumulative effect of
accounting change....................... (25,648) (11,323) 2,818 (3,978) 6,325 3,178 (3,619)
Provision (credit) for income taxes....... (8,990) (4,020) 1,000 (1,544) 2,379 1,195 (1,527)
---------- -------- -------- -------- -------- -------- --------
Earnings (loss) before cumulative effect
of accounting change.................... (16,658) (7,303) 1,818 (2,434) 3,946 1,983 (2,092)
Cumulative effect of accounting
change(a)............................... -- -- -- -- (282) (282) --
---------- -------- -------- -------- -------- -------- --------
Net earnings (loss)....................... $ (16,658) $ (7,303) $ 1,818 $ (2,434) $ 3,664 $ 1,701 $ (2,092)
========== ======== ======== ======== ======== ======== ========
Pro forma net earnings (loss)(b).......... $ 3,302(c) $ (2,575)
======== ========
Pro forma per share data(b)(d):
Net earnings (loss) per share........... $.25(c) $(.19)
======== ========
Weighted average shares outstanding..... 13,315 13,340
======== ========
BALANCE SHEET DATA AT END OF PERIOD:
Total assets.............................. $ 131,208 $112,413 $111,515 $117,097 $124,498 $123,638 $128,879
Working capital (deficit)................. 13,208 (18,215) (16,425) (23,221) (8,723) (14,447) (17,162)
Pro forma working capital(e).............. 1,100
Stockholders' equity...................... 70,813 39,811 41,991 37,061 50,311 46,809 44,027
Pro forma stockholders' equity(e)......... 62,289
</TABLE>
- ---------------
(a) Represents charge of $282, or $.02 per share, from the cumulative effect of
adopting Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed Of."
(b) Pro forma net earnings (loss) reflect additional rent to be paid to Getty
by Marketing as provided for in the Master Lease and additional costs
Marketing will incur in operating as a separate public company. Commencing
February 1, 1997, Marketing will recognize a charge to operating results
over a five-year period relating to the Marketing ESOP and will also
recognize a charge to operations relating to certain change in control
agreements. Such charges, which are not reflected in the pro forma
consolidated financial statements, will be based on the value of the
Marketing Common Stock in the future and, as such, are not currently
determinable.
(c) Excludes charge of $282, or $.02 per share, described in note (a).
(d) Pro forma per share data is computed by dividing earnings (loss) by the
weighted average number of shares of Marketing Common Stock that would have
been outstanding during the period had the Distribution taken place as of
the beginning of such period and had an additional 667,000 shares
associated with the Marketing ESOP been issued.
(e) Pro forma working capital and stockholders' equity reflect a cash transfer
from Getty in an amount sufficient to provide Marketing with net working
capital of approximately $1.1 million in accordance with the Distribution
Agreement.
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<PAGE> 25
GETTY PETROLEUM MARKETING INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The following discussion should be read in conjunction with the
consolidated financial statements of Marketing appearing elsewhere in this
Information Statement. The results set forth in the consolidated financial
statements of Marketing should not be taken as indicative of future operations.
Marketing's results of operations in future periods will reflect certain
expenses not incurred in prior periods associated with operating and reporting
as a separate, publicly held company.
The consolidated financial statements contained in this Information
Statement have been prepared on the basis that the assets and liabilities of the
petroleum marketing business were transferred using historical carrying values
as recorded by Getty, and Marketing's results of operations and cash flows were
derived from Marketing's historical financial statements. Assets, liabilities,
revenues and expenses were specifically identified as being related to either
the business of Marketing or Realty, except that Marketing's results of
operations include allocations of certain selling, general and administrative
expenses, namely employee benefits, payroll taxes and travel and entertainment
expenses. These expenses were allocated based on number of personnel and
salaries specifically identified to Marketing. Management believes these
allocations to be reasonable.
Assets, liabilities, revenues and expenses were specifically identified as
being related to either the business of Marketing or Realty for the year ended
January 31, 1996 and the nine months ended October 31, 1996 as follows (in
thousands):
<TABLE>
<CAPTION>
FISCAL YEAR ENDED NINE MONTHS ENDED
JANUARY 31, 1996 OCTOBER 31, 1996
----------------------- -----------------------
MARKETING REALTY MARKETING REALTY
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Total assets.................. $124,498 $136,968 $128,879 $145,239
Total liabilities............. 74,187 76,705 84,852 75,038
Revenues...................... 791,194 90,837(a) 642,225 62,929(a)
Expenses...................... 784,869(a)(b) 75,640(b) 645,844(a)(b) 51,428(b)
</TABLE>
- ---------------
(a) Includes $55,130 and $42,132 of rental payments paid by Marketing to Realty
for the fiscal year ended January 31, 1996 and the nine months ended October
31, 1996, respectively.
(b) Includes $1,546 and $1,348 of selling, general and administration expenses
allocated from Realty to Marketing for the fiscal year ended January 31,
1996 and the nine months ended October 31, 1996, respectively.
OVERVIEW AND OUTLOOK
Marketing's revenues are derived primarily from its operations in the motor
fuel marketing business. Marketing is one of the nation's largest independent
marketers of petroleum products; it distributes, markets and sells gasoline and
diesel fuel to the general public through a network of 1,574 Getty and other
branded retail outlets (also referred to as service stations) located in 12
Northeastern and Mid-Atlantic states. Approximately 30% of the service stations
also have convenience food stores. Marketing purchases its gasoline, fuel oil
and related petroleum products from a number of Northeast and Mid-Atlantic
suppliers. These products are delivered by cargo ship, barge, pipeline and truck
to Marketing's 10 storage and distribution terminals and bulk plants, all of
which are located in Marketing's distribution region. Marketing distributes and
markets its product to retail outlets through its distribution network and truck
transportation fleet of 141 vehicles. Marketing engages in activities such as
negotiating the prices and terms of the purchase of the gasoline and diesel
fuel, developing the prices, terms and methods of selling the products to
consumers and operators of motor fuel service stations, monitoring compliance by
the service station operators with Getty standards and providing marketing
services to the operators.
Marketing derives revenues from its wholesale petroleum marketing and
distribution business, which involves the sale of gasoline, fuel oil, diesel
fuel and kerosene from distribution terminals and bulk plants in truckload,
barge and pipeline quantities, as well as from its home heating oil business,
which involves the
19
<PAGE> 26
purchase, storage, transportation and sale of fuel oil, kerosene, propane and
oil burner and related services to residential and commercial customers in the
New York Mid-Hudson Valley.
The distribution of motor fuels accounted for approximately 96% of net
sales in each of the three fiscal years ended January 31, 1996. Petroleum
products are commodities whose prices depend on numerous factors beyond
Marketing's control. The prices paid by Marketing for its products are affected
by global, national and regional factors and may vary substantially over time.
From time to time, competitive market conditions may limit Marketing's ability
to pass on to its customers large, rapid changes in the price Marketing pays for
its product and accordingly, its operating margins may vary substantially.
Because Marketing's operating margins may vary significantly from time to time
while its rental expense and certain of its other expenses do not, Marketing's
earnings may fluctuate substantially.
RESULTS OF OPERATIONS
Nine months ended October 31, 1996 compared to nine months ended October 31,
1995
Marketing's net sales for the nine months ended October 31, 1996
were $617.2 million as compared with $574.0 million for the same period last
year or an increase of 7.5%. Of the 7.5% increase in net sales, two-thirds was
attributable to an increase in sales prices and the balance was due to an
increase in sales volume. Average selling prices increased by 5% and retail
gallonage sold increased by 30.3 million gallons or 5.6% to 570.4 million
gallons, partially offset by a 13.3 million gallon or 7.1% decrease in wholesale
gallonage sold to 174.7 million gallons. The average gasoline volume per retail
outlet increased by 6.3% in the nine month period ended October 31, 1996. Gross
profit before depreciation and amortization (excluding rental and other income)
was a loss of $2.8 million for the nine months ended October 31, 1996 compared
to a profit of $4.7 million in the comparable period last year. This $7.5
million decrease in gross profit was principally due to lower retail product
margins of approximately 1.1 cents per gallon or $6.9 million, a LIFO inventory
charge of $4.0 million and a decrease of $0.3 million from a wholesale sales
volume decrease of 13.3 million gallons during the nine months ended October 31,
1996. This decrease was partially offset by increased retail sales volumes of
30.3 million gallons or $2.9 million and an increase in wholesale product
margins of approximately 0.5 cents per gallon or $1.0 million. The LIFO
inventory charge was the result of product cost increases of approximately 16
cents per gallon from January 31, 1996 to October 31, 1996.
Marketing's earnings 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
by Marketing as well as the price of petroleum products sold have fluctuated
widely in the past. As a result of the historic volatility of product margins
and the fact that they are affected by numerous diverse factors, it is
impossible to predict future margin levels. Marketing 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 for the nine months ended October 31, 1996 amounted to $24.9
million as compared with $23.9 million for the nine months ended October 31,
1995. The 4.0% 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 $0.2 million for the nine months ended October 31, 1996,
which was comparable to the nine months ended October 31, 1995.
Selling, general and administrative expenses for the nine months ended
October 31, 1996 amounted to $15.4 million, which was comparable to the $15.8
million for the nine months ended October 31, 1995.
Depreciation and amortization was $10.2 million for the nine months ended
October 31, 1996 compared to $9.6 million for the nine months ended October 31,
1995. The increase was due to higher depreciation as a result of additions to
equipment and improvements to facilities.
The results for the nine months ended October 31, 1995 reflect a charge to
earnings of $0.3 million relating to assets held for disposal for the cumulative
effect of adopting at the end of that fiscal year Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
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<PAGE> 27
In October 1995, SFAS No. 123, "Accounting for Stock-Based Compensation"
was issued. The Statement, which becomes effective in fiscal 1997, defines a
fair value based method of accounting for employee stock options and allows
companies to continue to measure compensation cost for such options by using the
intrinsic value based method of accounting prescribed in Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25").
Marketing plans to account for its stock-based employee compensation plans under
APB No. 25 and effective with the fiscal 1997 consolidated financial statements
will present, in the footnotes, as required under SFAS No. 123, pro forma
disclosures of net income and earnings per share as if the fair value method had
been applied.
Fiscal year ended January 31, 1996 compared to fiscal year ended January 31,
1995
Marketing's net sales for the year ended January 31, 1996 ("fiscal 1996")
were $758.9 million as compared with $723.9 million for the year ended January
31, 1995 ("fiscal 1995"). The increase in net sales of 4.8% was primarily a
result of an increase in average selling prices of 9.6%, partially offset by
lower sales volume. Wholesale gallonage sold decreased by 18.8% or 58.9 million
gallons (primarily bulk sales) to 254.1 million gallons, partially offset by a
1.9% or 13.9 million gallon increase in retail gallonage sold to 741.7 million
gallons through 6.1% fewer outlets. The average gasoline volume per retail
outlet increased by 9%. Gross profit before depreciation and amortization
(excluding rental and other income) was $8.2 million in fiscal 1996 compared to
$2.5 million in the prior fiscal year. This $5.7 million increase in gross
profit was principally due to higher wholesale product margins of approximately
$3.0 million and gross profit of approximately $1.6 million from increased
retail sales volumes.
Rental income of $32.0 million in fiscal 1996 increased 7.3% over fiscal
1995 rental income of $29.9 million. 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.
Selling, general and administrative expenses in fiscal 1996 amounted to
$20.7 million, a decrease of $1.9 million from the prior year. The decrease was
principally due to lower expenses as a result of the October 1994 restructuring.
Depreciation and amortization in fiscal 1996 amounted to $13.1 million, an
increase of $1.5 million over the prior year. The increase was due to higher
depreciation as a result of additions to equipment and improvements to
facilities. The current fiscal year also included $0.3 million of additional
depreciation relating to operating assets as a result of the adoption of SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of."
In addition to the above-mentioned $0.3 million charge to depreciation
expense for operating assets, Marketing also separately reported, for assets
held for disposal, the cumulative effect of the change in accounting principle
related to SFAS No. 121 as a charge to earnings of $0.3 million in the
consolidated statement of operations.
Fiscal year ended January 31, 1995 compared to fiscal year ended January 31,
1994
Marketing's net sales for fiscal 1995 were $723.9 million as compared with
$747.7 million in the year ended January 31, 1994 ("fiscal 1994") or a decrease
of 3.2%. Of the 3.2% decrease in net sales, two-thirds was attributable to a
decrease in sales volume and the balance was due to a decrease in sales prices.
Wholesale gallonage sold decreased by 11.9% or 42.2 million gallons to 313.1
million gallons and average selling prices decreased by 1%. This was partially
offset by a 2.7% or 19.2 million gallon increase in retail gallonage sold to
727.8 million gallons through 7.8% fewer outlets. Gross profit before
depreciation and amortization (excluding rental and other income) was $2.5
million in fiscal 1995 compared to $9.4 million in the prior fiscal year. This
$6.9 million decrease in gross profit was principally due to lower retail gross
margins of approximately 1.7 cents per gallon or $12.0 million, partially offset
by gross profit of $2.2 million realized from increased retail sales volumes and
lower net credit card expenses of $1.2 million.
Rental income of $29.9 million in fiscal 1995 increased 5.0% over fiscal
1994 rental income of $28.4 million. 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.
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<PAGE> 28
Selling, general and administrative expenses in fiscal 1995 amounted to
$22.6 million, a decrease of $0.7 million from the prior year. The decrease
principally occurred in the fourth quarter of fiscal 1995 as a result of a
restructuring of Marketing's organization and operations in October 1994.
During fiscal 1995, pre-tax charges of $1,846,000 were recorded to provide
for severance and other costs associated with the October 1994 restructuring of
Marketing's organization and its operations. The restructuring charges included
$1,171,000 for severance and related benefits resulting from a 6% reduction in
the work force and $675,000 for other costs. Other costs include $203,000
related to cancellation of computer equipment leases, $168,000 related to
computer system modifications, $141,000 related to the reduction of office
space, $100,000 related to legal fees and $63,000 for other miscellaneous costs.
Marketing's consolidated balance sheets as of January 31, 1996 and 1995 included
an accrual of $326,000 and $1,048,000, respectively, relating to the
restructuring. The remaining accrual of $326,000 at January 31, 1996 relates to
severance and related benefits payable through October 1999.
Depreciation and amortization was $11.6 million in fiscal 1995 which was
comparable to the amount in fiscal 1994.
LIQUIDITY AND CAPITAL RESOURCES
As of October 31, 1996, Marketing's working capital deficit amounted to
$17.2 million as compared to a deficit of $8.7 million at January 31, 1996.
Marketing's working capital deficits result from its historical practice of
transferring substantially all of its cash balances to Getty for centralized
cash management purposes. However, under the Distribution Agreement, Marketing
will receive cash from Getty in an amount sufficient to provide Marketing with
net working capital of approximately $1.1 million. Such cash amount will be paid
upon the determination of Marketing's net working capital as of January 31,
1997, which determination is expected to be made no later than February 28,
1997. See Unaudited Pro Forma Consolidated Financial Statements.
Marketing has been able to operate its business with negative working
capital, principally because most sales are for cash and payment terms have been
received from vendors and for gasoline taxes. Marketing's principal sources of
liquidity are cash flows from operations, which amounted to $18 million during
the nine months ended October 31, 1996. Management believes that cash
requirements for operations, including payments under the Master Lease Agreement
and capital expenditures, can be met by cash flows from operations, cash and
cash equivalents and credit lines. Marketing has obtained uncommitted lines of
credit with two banks in the aggregate amount of $50 million through January
1998, which may be utilized for working capital borrowings and letters of
credit. Borrowings under such lines of credit are unsecured and will bear
interest at the applicable bank's prime rate or, at Marketing's option, 1.1%
above LIBOR. Such lines of credit are subject to renewal at the discretion of
the banks. These banks have historically provided similar lines of credit to
Getty in an aggregate amount of $60 million.
During fiscal 1996, Marketing concluded agreements with a number of
Northeast suppliers, replacing the previous supply agreement with Phibro Energy
USA, Inc. which was phased out through August 31, 1995. As a result, during
fiscal 1996 cash was utilized principally for higher inventory levels and lower
product payable balances, partially offset by higher gasoline taxes payable. The
benefits of the new supply agreements included improved logistics and greater
flexibility which has become increasingly important with the introduction of
reformulated gasolines. Also contributing to higher inventory and lower accounts
receivable balances in fiscal 1996 was an increase in the number of commission
lessee accounts (for which Marketing owns the inventory at the retail outlets),
and a decrease in the number of wholesale customers (which have longer credit
terms).
Marketing and Realty have entered into a Master Lease Agreement under which
1,037 retail outlets and 10 terminal facilities will be leased or subleased by
Realty as the lessor to Marketing as the lessee. During the first year following
the Distribution, the annual rental under the Master Lease will be approximately
$56.9 million, compared to approximately $56.1 million for the fiscal year ended
January 31, 1997.
Marketing's capital expenditures for the years ended January 31, 1996, 1995
and 1994 amounted to $15.9 million, $16.8 million and $14.3 million,
respectively, which included $8.6 million, $6.5 million and $7.7 million,
respectively, for the replacement of USTs. Marketing's capital expenditures for
the nine months ended October 31, 1996 amounted to $13.8 million, which included
$7.4 million for UST replacements.
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<PAGE> 29
Marketing's capital expenditures also include discretionary expenditures to
improve the image of the service stations, to improve the terminal facilities
and for routine replacement of service station equipment at existing and newly
acquired locations. Pursuant to the Distribution Agreement, commencing February
1, 1997, expenditures with respect to tank replacements required to meet the
1998 Standards will be the responsibility of and will be paid by Getty.
ENVIRONMENTAL MATTERS
Environmental expenses are predominantly attributable to the replacement or
upgrading of USTs, which has been the responsibility of Getty. Getty has agreed
to pay all costs relating to, and to indemnify Marketing for, all scheduled
pre-closing environmental liabilities and obligations, all scheduled future
Upgrades to Nonupgraded USTs, and all environmental liabilities and obligations
arising out of discharges with respect to Properties containing Nonupgraded USTs
that are discovered prior to the date such USTs are upgraded to meet the 1998
Standards. Marketing has agreed to indemnify Getty and its successors from and
against, among other things, all other liabilities and obligations with respect
to USTs and environmental matters. Marketing cannot estimate its future
environmental expenses because it cannot predict the number or the magnitude of
discharges or releases from its USTs that may be discovered in the future or the
cost of remediation relating thereto. Environmental costs of Marketing included
in the historical financial statements were $1.6 million, $1.6 million and $1.2
million for the fiscal years ended January 31, 1996, 1995 and 1994,
respectively. Future environmental expenses of Marketing, though not currently
known or ascertainable, are expected to be significantly lower than Getty's
aggregate historical expenses (approximately $14.3 million, $11.8 million and
$9.7 million for the fiscal years ended January 31, 1996, 1995 and 1994,
respectively) since USTs have been or will be upgraded at Getty's expense by
December 22, 1998.
Marketing cannot predict what environmental legislation or regulation may
be enacted in the future or how existing laws or regulations will be
administered or interpreted with respect to products or activities to which they
have not previously been applied. Compliance with more stringent laws or
regulations as well as more vigorous enforcement policies of the regulatory
agencies or stricter interpretation of existing laws which may develop in the
future, could have an adverse effect on the financial position or operations of
Marketing and could require substantial additional expenditures for future
remediation or the installation and operation of required environmental or
pollution control systems and equipment.
DIVIDEND POLICY
The payment and amount of cash dividends on Marketing Common Stock after
the Distribution will be subject to the discretion of the Marketing Board.
Marketing's dividend policy will be reviewed by Marketing's Board of Directors
from time to time as may be appropriate and payment of dividends on Marketing
Common Stock will depend upon Marketing's financial position, capital
requirements and other factors as the Marketing Board deems relevant. Subject to
the foregoing, Marketing may declare and pay dividends after the Distribution,
although there can be no assurance that any dividends will be paid in the future
or at what level.
BUSINESS
Getty Petroleum Marketing Inc. was incorporated in Maryland on October 1,
1996, to be the successor to the petroleum marketing and New York Mid-Hudson
Valley home heating oil businesses of Getty. Its principal executive offices are
located at 125 Jericho Turnpike, Jericho, New York 11753. Unless otherwise
indicated, references in this section to Marketing refer to the petroleum
marketing business of Getty intended to be owned and operated by Marketing after
the Distribution, and references in this section to Getty refer to Getty
Petroleum Corp. prior to the Distribution Date and Getty Realty Corp. on and
subsequent to the Distribution Date.
GENERAL
Marketing, together with its subsidiaries, is one of the nation's largest
independent marketers of petroleum products. Marketing serves retail and
wholesale customers through a distribution and marketing network of 1,574
Getty(R) and other branded retail outlets (also referred to as "service
stations") located in 12 Northeastern and Mid-Atlantic states, of which
approximately 30% have convenience food stores.
23
<PAGE> 30
Marketing stores and distributes petroleum products from 10 distribution
terminals and bulk plants. Marketing purchases gasoline, fuel oil and related
petroleum products from a number of Northeast and Mid-Atlantic suppliers. These
products are delivered by cargo ship, barge, pipeline and truck to Marketing's
distribution terminals and bulk plants located in Marketing's marketing region.
Through its truck transportation fleet of 141 vehicles and its distribution
network, Marketing markets and distributes such products throughout its 12 state
marketing region. Of the 1,574 retail outlets supplied by Marketing at October
31, 1996, approximately 65% are held by Marketing under long-term leases or
subleases with Getty and certain of its subsidiaries. The remaining retail
outlets purchase petroleum products from Marketing under contract as licensed
Getty dealers or from licensed Getty distributors who purchase Getty products
from Marketing. The distribution of motor fuels accounted for approximately 96%
of net sales in each of the three fiscal years ended January 31, 1996. Marketing
also sells on a wholesale basis gasoline, fuel oil, diesel fuel and kerosene
from distribution terminals and bulk plants in truckload, barge and pipeline
quantities and sells fuel oil, kerosene, propane and oil burner and related
services to residential, commercial and governmental customers in New York's
Mid-Hudson Valley.
Marketing and its predecessors have been in the petroleum marketing
business for over 40 years. Mr. Leo Liebowitz, Chairman and Chief Executive
Officer and a director of Marketing, and Mr. Milton Safenowitz, a director and
former executive vice president of Marketing's predecessors, entered the
petroleum marketing business in 1955 with one service station and have pursued a
strategy of expanding the business principally through acquisitions. Prior to
1985, Marketing's predecessors had expanded into five states under various brand
names, principally Power Test. On February 1, 1985, Marketing's predecessors
acquired the marketing and distribution assets of Getty Oil Company in the
Northeastern and Mid-Atlantic states from a subsidiary of Texaco Inc. The Getty
acquisition included the Getty(R) trademark and trade name and added service
stations, distribution terminals and a wholesale heating oil and middle
distillate marketing network in six states.
During the period from 1985 to 1991, Marketing's predecessors continued to
expand by acquiring numerous small regional distributors, service stations and
convenience food stores. In addition to adding locations through fee ownership
and leasing, Marketing's predecessors continued to implement its program of
adding non-petroleum products and revenue enhancing services at retail outlets
in its marketing network, particularly convenience food stores, automotive
repairs and car washes. Commencing in 1992, Marketing's predecessors implemented
a comprehensive program of evaluating retail outlets to determine the long-term
viability of certain locations as gasoline stations. Over the last five years,
this process has resulted in the divestment of non-strategic and uneconomic
retail outlets. Pursuant to the terms of the Master Lease between Getty and
Marketing, executed as part of the Distribution, Marketing will, except for
certain locations presently leased to third parties for non-Getty brand uses,
lease from Getty those retail outlets which are owned by Getty and certain of
its subsidiaries at the time of the Distribution and sublease from Getty those
retail outlets which are leased by Getty and certain of its subsidiaries at the
time of the Distribution.
OPERATING STRATEGY
Marketing's operating strategy is to market motor fuels through service
stations operated by independent Getty-licensed dealers, many of whom sublease
Marketing's service stations and convenience stores. Marketing's dealers either
buy their petroleum products from Marketing or from licensed Getty distributors
who purchase Getty products from Marketing, or sell Marketing's petroleum
products and receive a commission. Marketing views each of its retail outlets as
a "profit center" and believes that independent operators, with greater
financial incentive than salaried employees, generally operate retail outlets
more economically. Moreover, the leasing and subleasing of retail outlets to
independent operators has provided Marketing with a steady and increasing source
of rental income and has enabled Marketing to reduce its direct operating costs.
Marketing directly operated two retail outlets at October 31, 1996
utilizing salaried employees. While Marketing seeks to sublease retail outlets
to independent operators, it historically retains a small number of such company
operated outlets. These outlets permit management to keep abreast of changes in
retail marketing, to assist in providing practical guidance to independent
dealers and to test new products and concepts.
Certain of the outlets have convenience food stores, automotive repair
centers and car washes. Marketing receives higher rentals from such Properties
as a result of such additional uses.
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<PAGE> 31
Marketing intends to expand its retail operations by purchasing or leasing
new sites, either from Getty or from third parties, and by entering into supply
agreements with third parties. Under the Master Lease and other agreements,
Getty has no obligation to procure and lease new properties to Marketing.
DISTRIBUTION
The retail outlets sell gasoline, diesel fuel and other related petroleum
products (such as motor oil and lubricants) under Marketing's brand name
"Getty(R)" or, to a limited extent, under other brand names, in the states of
Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New
Jersey, New York, Pennsylvania, Rhode Island, Vermont, and Virginia.
As of October 31, 1996, Marketing had 1,574 Getty and other branded retail
outlets as follows:
(i) 2 company operated retail outlets which are operated by salaried
employees;
(ii) 263 sublessee dealer operated retail outlets (dealers who sublease
retail outlets and purchase their petroleum products from Marketing);
(iii) 677 commission sublessee dealer operated retail outlets (dealers who
sublease retail outlets and receive a commission for sale of
Marketing's petroleum products);
(iv) 95 retail outlets operated by management contractors (dealers who
operate Marketing's retail outlets pursuant to a management contract);
(v) 111 contract dealer retail outlets (dealers who purchase their
petroleum products from Marketing or sell Marketing's petroleum
products on a commission basis but do not sublease retail outlets from
Marketing); and
(vi) 36 distributors who purchase their petroleum products from Marketing,
which distributors in turn supply the petroleum product requirements
of 426 retail outlets.
The table below summarizes the aggregate additions and deletions to the
number of retail outlets during each of the three fiscal years ended January 31,
1996 and the nine months ended October 31, 1996:
<TABLE>
<CAPTION>
RETAIL OUTLETS RETAIL OUTLETS
AT BEGINNING AT END
FISCAL YEAR OF PERIOD ADDITIONS DELETIONS OF PERIOD
- -------------------------------------------------- -------------- --------- --------- --------------
<S> <C> <C> <C> <C>
1997 (through October 31, 1996)................... 1,625 8 59 1,574(a)
1996.............................................. 1,751 7 133 1,625
1995.............................................. 1,865 8 122 1,751
1994.............................................. 2,110 5 250 1,865
</TABLE>
- ---------------
(a) Includes 278 retail outlets operated by Uni-Marts, Inc.
Marketing generally extends three-year lease terms to its dealers, except
for new dealers, who generally receive a one-year trial lease. Such leases
generally provide for fixed rentals at competitive rates. In addition, most
leases provide for an additional rental if the dealer fails to sell certain
minimum quantities of gasoline during a month. The lessee of a retail outlet is
generally responsible for payment of utilities and for all maintenance and
repairs, except for structural and marketing equipment repairs and capital
improvements, which are performed by Marketing.
Marketing distributes its petroleum products from 10 distribution terminals
and bulk plants, two of which are controlled by Getty through fee ownership and
leased to Marketing pursuant to the terms of the Master Lease, and eight of
which are controlled by Getty on long-term net lease basis and are subleased to
Marketing pursuant to the terms of the Master Lease. These distribution
terminals and bulk plants are located in New York, New Jersey, Rhode Island,
Pennsylvania, and Connecticut, and have an aggregate storage capacity of
approximately 57 million gallons. The terminals located in East Providence,
Rhode Island and Rensselaer, New York are deep-water terminals, capable of
handling large vessels. In addition, Marketing utilizes additional terminals
pursuant to thruput and storage agreements with unrelated parties. A substantial
portion of the petroleum products are transported to retail outlets by
Marketing's truck transportation fleet subsidiary, whose drivers are compensated
in part on an incentive-based system.
25
<PAGE> 32
On December 27, 1996, Uni-Marts, Inc. ("Uni-Marts") notified Getty that,
effective December 31, 1997, it would not renew its various leases and subleases
of approximately 100 service station properties from Getty or the existing
petroleum supply agreement between Getty and Uni-Marts with respect to such
service stations and certain additional service stations owned or operated by
Uni-Marts. Uni-Marts subsequently advised Getty by letter that it may be
interested in negotiating and entering into revised arrangements. While Getty
has preliminarily discussed such matters with Uni-Marts, there can be no
assurance that any revised terms will be agreed upon. On the Distribution Date,
Marketing will become a party to the existing supply agreement and the sublessor
or sub-sublessor under the leases and subleases with Uni-Marts. In the event the
parties do not agree upon any revised arrangements prior to December 31, 1997,
Marketing believes that it will be able to re-lease the approximately 100
affected service station properties. The loss of motor fuel product sales to
Uni-Marts pursuant to the existing supply agreement, if not replaced, could have
a material adverse effect on Marketing's revenues. Marketing believes such loss
of product sales would not impact its operating income because the affected
leased service station properties should be re-leased to retail dealers at
higher retail product margins to be realized by Marketing than the current lower
wholesale product margins under the supply agreement with Uni-Marts. Net sales
and rental income attributable to the Uni-Marts agreement amounted to $76.8
million (or 10.1% of net sales) and $4.6 million (or 14.3% of rental income),
respectively, for the year ended January 31, 1996 and $66.5 million (or 10.8% of
net sales) and $3.4 million (or 13.8% of rental income), respectively, for the
nine months ended October 31, 1996.
Marketing also sells, through its KOSCO subsidiary, home heating oil,
propane (LPG) and related services directly to approximately 26,600 retail and
commercial customers in the New York Mid-Hudson Valley. In addition, Marketing
is a wholesale supplier of #2 heating oil (also known as "home heating oil") in
the Northeast, supplying heating oil to dealers who deliver to residences and
commercial accounts. Diesel fuel and kerosene are marketed both to distributors
of such products and directly by Marketing to retail outlets and consumers.
PRODUCT SUPPLY
Marketing, through its predecessors, has entered into agreements with a
number of Northeast and Mid-Atlantic suppliers for the purchase of refined
petroleum products. These agreements typically have one-year terms, and prices
under the agreements are generally based on formulas which are tied to the New
York Harbor price for the petroleum product being purchased. Marketing has no
crude oil reserves or refining capacity.
Historically, petroleum prices have been subject to extreme volatility and
there have been periodic shortages followed by periods of oversupply. No
assurance can be given that petroleum prices will not fluctuate greatly or that
petroleum products will continue to be available from multiple sources or
available at all in times of shortage. Furthermore, a large, rapid increase in
petroleum prices could adversely affect Marketing's margins and/or profitability
if Marketing's sales prices could not be increased or automobile consumption of
gasoline were to significantly decline as a result of such price increases.
Management believes, however, that, based upon its experience during times of
shortage, Marketing will continue to have the ability to acquire petroleum
products on competitive terms due in part to the large volume of its purchases
and the storage capacity at its distribution terminals.
MARKETING
In order to provide efficient service to retail dealers and other
customers, Marketing is divided into four marketing regions. Marketing's
regional marketing personnel provide significant guidance, counseling and
assistance to Marketing's dealers, including advice on retail operations. The
marketing personnel also supervise the company operated retail outlets.
Marketing provides advertising and promotional support to its retail
outlets. Both radio and newspaper media are utilized, and promotional programs
are implemented on an ongoing basis.
Marketing has a co-branded Getty MasterCard, and accepts Visa, MasterCard,
Discover, Diners Club and American Express credit cards and "NYCE" and "MAC"
debit cards. In addition, Marketing has a Getty
26
<PAGE> 33
fleet fueling card and accepts certain other fleet fueling cards, all of which
have tracking programs which provide cost control data to fleet customers.
COMPETITION
Marketing believes that, based on the number of locations served, it is
currently one of the largest independent marketers of petroleum products in the
United States. Petroleum marketing is highly competitive, and Marketing competes
with a substantial number of integrated oil companies and other companies who
may have greater assets, financial resources and sales. Accordingly, Marketing's
earnings may be adversely affected by the marketing policies of such companies,
which may have greater flexibility to withstand price changes than Marketing.
Marketing competes for new dealers and distributors primarily on the basis of
Getty brand acceptance, location, supply, price and marketing support. The
retail outlets in Marketing's marketing network compete primarily on the basis
of Getty brand acceptance, location, customer service, appearance of the retail
outlet and price.
REGULATION
The petroleum products industry is subject to numerous federal, state and
local laws and regulations. Although compliance with those laws and regulations
may have a significant impact on results of operations or liquidity for any
single period, Marketing believes that the costs related to such compliance have
not had and are not expected to have a material adverse effect on the
competitive or financial position of Marketing.
Marketing is not a refiner and, therefore, is not subject to the PMPA with
respect to its Getty branded stations. However, pursuant to Marketing's
agreements with approximately one-half of its Getty dealers and distributors,
Marketing has voluntarily extended to them coverage under PMPA. Under PMPA,
Marketing complies with certain notice requirements (generally 90 days) and
extends nondiscriminatory contracts to certain of its Getty licensed dealers and
distributors, whose franchises cannot be terminated or not renewed unless
certain PMPA imposed prerequisites are met as provided in Marketing's
agreements. Although a licensed dealer or distributor who is covered by PMPA is
not required to renew his or her franchise, because Marketing has agreed to
comply with PMPA with respect to such dealers or distributors, Marketing is
required to renew the franchises of such dealers and distributors who elect to
renew. However, franchisees may be terminated or not renewed for violating
certain provisions of Marketing's agreements as permitted under PMPA. The PMPA
permitted grounds for termination or non-renewal include, among other things,
non-payment of rent, misuse of trademark, bankruptcy, criminal misconduct,
condemnation and expiration of an underlying lease. Also, Marketing may elect to
non-renew with a franchisee upon a determination made in good faith that the
franchise relationship is uneconomical to Marketing. In such latter instance,
Marketing must, in accordance with PMPA, offer to the franchisee the right to
purchase Marketing's leasehold interest in the property at a bona fide price.
Under the terms of the Master Lease with Realty, Marketing would be required to
offer to assign its leasehold interest in the property (including all renewal
options) to the franchisee who is covered by PMPA.
In addition, Marketing's operations are governed by numerous federal, state
and local environmental laws and regulations. Among these laws are (i)
requirements to dispense reformulated gasoline in accordance with the Clean Air
Act, (ii) restrictions imposed on the amount of hydrocarbon vapors which may
enter the air at Marketing's terminals and service stations, (iii) OSHA and
other laws regulating terminal employee exposure to benzene and other hazardous
materials, (iv) requirements to report to governmental authorities discharges of
petroleum products into the environment and, under certain circumstances, to
remediate the soil and/or groundwater contamination pursuant to governmental
order and directive, (v) requirements to remove and replace underground storage
tanks which have exceeded governmental-mandated age limitations and (vi) the
requirement to provide a certificate of financial responsibility with respect to
claims relating to underground storage tank failures.
Environmental expenses are predominantly attributable to the replacement or
upgrading of USTs, which has been the responsibility of Getty. The aggregate
environmental expenses of Getty amounted to approximately $14.3 million, $11.8
million and $9.7 million for the fiscal years ended January 31, 1996, 1995 and
1994, respectively. Getty has agreed to pay all costs relating to, and to
indemnify Marketing for, all scheduled pre-closing environmental liabilities and
obligations, all scheduled future Upgrades to Nonupgraded USTs,
27
<PAGE> 34
and all environmental liabilities and obligations arising out of discharges with
respect to Properties containing Nonupgraded USTs that are discovered prior to
the date such USTs are upgraded to meet the 1998 Standards. Marketing has agreed
to indemnify Getty and its successors from and against, among other things, all
other liabilities and obligations with respect to USTs and environmental
matters. Marketing cannot estimate its future environmental expenses because it
cannot predict the number or the magnitude of discharges or releases from its
USTs that may be discovered in the future or the cost of remediation relating
thereto. Future environmental expenses of Marketing, though not currently known
or ascertainable, are expected to be significantly lower than Getty's historical
expenses since USTs have been or will be upgraded at Getty's expense by December
22, 1998.
Marketing believes that it is in substantial compliance with federal, state
and local provisions enacted or adopted pertaining to environmental matters.
Although Marketing is unable to predict what legislation or regulations may be
adopted in the future with respect to environmental protection and waste
disposal, existing legislation and regulations have had no material adverse
effect on its competitive position.
PERSONNEL
As of October 31, 1996, Marketing had 544 employees, of which 222
employees, consisting of truck drivers and service technicians, are represented
by Amalgamated Local Union 355. Marketing considers its relationships with its
employees and the union to be satisfactory.
LEGAL PROCEEDINGS
In 1991, the State of New York brought an action in Albany County against
KOSCO, Marketing's subsidiary, seeking reimbursement in the amount of $189,000
for clean-up costs incurred at a service station. The State is also seeking
penalties of $200,000 and interest. There has been no activity in this
proceeding in the past several years. The only other legal proceedings pending
against Marketing are certain personal injury and property damage proceedings
pending against Marketing's trucking subsidiary and against KOSCO. These
proceedings are not expected, individually or in the aggregate, to have a
material adverse effect on Marketing's financial position or results of
operations. Moreover, pursuant to the Distribution Agreement, Getty has agreed
to defend all existing proceedings and indemnify Marketing and its subsidiaries
with respect thereto. Pursuant to the Distribution Agreement, Getty will retain
liability for current proceedings relating to the pre-Distribution operation of
the business of Marketing including the aforementioned trucking subsidiary and
KOSCO. In the event any plaintiff in such a proceeding should seek to add
Marketing as a defendant, Getty will, pursuant to the Distribution Agreement,
indemnify and defend Marketing in such proceeding.
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<PAGE> 35
MANAGEMENT
DIRECTORS
Pursuant to the Marketing Bylaws, the Board of Directors has fixed the
number of directors at five persons. Getty, as the sole stockholder of
Marketing, has elected or intends to elect the five persons named in the table
below to constitute the entire Marketing Board. Messrs. Leo Liebowitz and Milton
Safenowitz are also currently directors of Getty. The current term of each
director named below began with his election in 1996 and will expire at the next
annual meeting of the stockholders of Marketing.
Set forth below is a list of the names and ages of, and certain
biographical information concerning, the persons expected to be directors of
Marketing immediately after the Distribution, including information concerning
their principal occupations for the past five years.
<TABLE>
<CAPTION>
NAME AND AGE YEAR ELECTED PRINCIPAL OCCUPATIONS FOR PAST FIVE YEARS
- ----------------------- ------------ ------------------------------------------------------
<S> <C> <C>
Leo Liebowitz - 69 1996 President, Chief Executive Officer and Director of
Getty since 1971. Director, President and Treasurer of
CLS General Partnership Corp., the general partner of
Power Test Investors Limited Partnership.
Milton Safenowitz - 69 1996 Director of Getty since 1971 and Executive Vice
President of Getty until February 1990. Director,
Executive Vice President and Assistant Secretary of
CLS General Partnership Corp.
Ronald E. Hall - 64 1996 Chairman of the Board of Howell Corporation, a company
engaged primarily in the exploration, production,
acquisition and development of oil and gas properties,
since 1995. Formerly President and Chief Executive
Officer of CITGO Petroleum Corporation ("CITGO"), from
1985 to 1995. Director of CITGO from 1990 to 1995.
Richard E. Montag - 64 1996 Vice President - Development of the Richard E. Jacobs
Group, a regional shopping mall developer, since 1982.
Matthew J. Chanin - 42 1996 Senior Managing Director of Prudential Capital Group,
an investment unit of the Prudential Insurance Company
of America ("Prudential") since 1995. Has served in
other executive and management positions with
Prudential for more than the past five years.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS
There will be three standing committees of the Board of Directors of
Marketing: the Audit Committee, the Nominating Committee and the Compensation
and Benefits Committee, each comprised of one or more directors. The members of
these committees will be appointed on or about the Distribution Date.
The primary purpose of the Audit Committee will be to (i) select the firm
of independent accountants that will audit the consolidated financial statements
of Marketing and its subsidiaries, (ii) discuss the scope and the results of the
audit with the accountants and (iii) discuss Marketing's financial accounting
and reporting principles. The Audit Committee will also examine the summary
reports of the internal auditors of Marketing and discuss the adequacy of
Marketing's financial controls with the independent accountants and with
management.
The Nominating Committee will recommend candidates to the Board for
election as officers, recommend nominees for election to the Board and review
the role, composition and structure of the Board and its committees. The
Nominating Committee will consider nominees recommended by stockholders upon
submission in writing to the Secretary of Marketing with the names of such
nominees, together with their qualifications for service as a director of
Marketing.
The Compensation and Benefits Committee (the "Compensation Committee") will
administer the Incentive Compensation Plan, the Supplemental Retirement Plan,
the Marketing ESOP and the Stock Option Plan, and will review the compensation
of the directors and officers of Marketing.
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<PAGE> 36
DIRECTOR COMPENSATION
Directors will be compensated for their services according to a standard
arrangement authorized by resolution of the Marketing Board. An annual retainer
fee of $12,000 will be paid to each director, and a committee and board meeting
fee of $1,000 will also be paid to each director for each meeting attended.
Directors who are employees of Marketing will not receive retainers or board
meeting fees.
EXECUTIVE OFFICERS
Set forth below is a list of the names and ages of all persons who will be
executive officers of Marketing immediately after the Distribution, indicating
their positions with Marketing and their principal occupations during the past
five years. Except for Mr. Liebowitz, all such persons will resign as officers
of Getty on the Distribution Date.
<TABLE>
<CAPTION>
NAME AND AGE PRINCIPAL OCCUPATIONS FOR PAST FIVE YEARS
- ------------------------ ----------------------------------------------------------------
<S> <C>
Leo Liebowitz - 69...... Chairman, Chief Executive Officer, President and Director of
Marketing. President, Chief Executive Officer and Director of
Getty since 1971.
Alvin A. Smith - 58..... Senior Vice President and Chief Operating Officer of Marketing.
Senior Vice President and Chief Operating Officer of Getty since
1994. Mr. Smith has been a Senior Vice President of Getty since
1985 and became Chief Operating Officer in 1994. Prior thereto,
he was employed at Getty Oil Company as Wholesale Manager and
Petroleum Manager.
James R. Craig - 45..... Vice President-Marketing of Marketing. Vice President-Marketing
of Getty since 1987. He joined Getty in 1982 as a District
Manager and became Manager - Retail Sales in 1984. Prior to
joining Getty, he was a Regional Manager of Amerada Hess Corp.
Michael K. Hantman - Vice President and Corporate Controller of Marketing. Vice
45.................... President and Corporate Controller of Getty since 1991. He
joined Getty in 1985 as Corporate Controller. Prior to joining
Getty, he was a Principal at Arthur Young & Company, an
international accounting firm.
Samuel M. Jones - 60.... Vice President, Corporate Secretary and General Counsel of
Marketing. Vice President, Corporate Secretary and General
Counsel of Getty since 1994. Mr. Jones joined Getty in 1986 as
Vice President and General Counsel and assumed the additional
position of Corporate Secretary in 1994. Prior to joining Getty,
he was a Senior Attorney with Texaco Inc.
</TABLE>
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND 5% OWNERS
Included in the following table is the number of shares of Marketing Common
Stock to be beneficially owned (or deemed to be beneficially owned) immediately
after the Distribution by each of the persons expected to be a director of
Marketing, by each of the executive officers listed above under "MANAGEMENT --
Executive Officers," and by all of the persons expected to be directors or
executive officers of Marketing as a group, based on the number of shares of
Getty Common Stock expected to be held on the Distribution Date, and each other
person expected to own of record or beneficially more than 5% of the outstanding
Marketing Common Stock. Such number of shares includes exercisable options or
options to become exercisable within 60 days with respect to Marketing Common
Stock. On December 13, 1996, each of Messrs. Hall and Montag, in their capacity
as directors of Marketing, received options with respect to 15,000 shares of
Getty Common Stock, which options will be exercisable beginning December 13,
1997. Such options will be exchanged for options with respect to Getty Common
Stock and Marketing Common Stock immediately prior to the Distribution. See
"EXECUTIVE COMPENSATION -- Stock Option Plans."
30
<PAGE> 37
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNERS, AMOUNT AND NATURE OF PERCENT
DIRECTORS AND OFFICERS BENEFICIAL OWNERSHIP(1) OF CLASS(2)
- --------------------------------------------------------------- ----------------------- -----------
<S> <C> <C>
Leo Liebowitz.................................................. 2,478,290(3) 18.58%
Milton Safenowitz.............................................. 2,210,719(4) 16.57%
James R. Craig................................................. 87,958(5) *
Michael K. Hantman............................................. 77,955(5) *
Samuel M. Jones................................................ 91,654(5) *
Alvin A. Smith................................................. 191,295(5) 1.39%
Ronald E. Hall................................................. 0 *
Richard E. Montag.............................................. 26,762(6) *
Matthew J. Chanin.............................................. 0 *
Directors and executive officers as a group (9 persons)........ 5,214,109 37.83%
Getty Petroleum Marketing Inc. Employee Stock Ownership Plan... 667,000 5.00%
Milton Cooper.................................................. 1,059,538(7) 7.94%
</TABLE>
- ------------------
* Total shares beneficially owned constitute less than one percent of the
outstanding shares.
(1) Unless otherwise indicated, each person has sole voting and dispositive
power with respect to the shares shown.
(2) The percentage is determined by dividing the number of shares shown by the
aggregate number of shares of Marketing Common Stock expected to be
outstanding immediately after the Distribution and the shares of Marketing
Common Stock which may be acquired within 60 days.
(3) Includes 166,410 shares held in trust for children, 230,977 shares held by
his wife for which beneficial ownership is disclaimed and 30,724 shares
held by a charitable foundation.
(4) Includes 2,034,601 shares held by Irrevocable Trust for Milton Safenowitz
and 176,118 shares held by Irrevocable Trust for the benefit of his wife.
(5) Gives effect to the vesting of outstanding Getty stock options held by such
individual pursuant to certain "change of control" agreements. See
"EXECUTIVE COMPENSATION."
(6) Includes 10,190 shares held by his wife for which beneficial ownership is
disclaimed.
(7) Includes 10,311 shares held in a partnership of which he is a partner,
2,013 shares held by his wife for which beneficial ownership is disclaimed
and 160,000 shares held by a charitable foundation.
With the exception of Leo Liebowitz, whose address is care of Getty
Petroleum Corp., 125 Jericho Tpke., Jericho, New York 11753, Milton Safenowitz,
whose address is 7124 Queenferry Cr., Boca Raton, Florida 33496, Milton Cooper,
whose address is care of Kimco Realty Corporation, 3333 New Hyde Park Road,
Suite 100, New Hyde Park, New York 11042-0020, and the Getty Petroleum Marketing
Inc. Employee Stock Ownership Plan, whose address is 125 Jericho Tpke., Jericho,
New York 11753, management knows of no other person owning of record or
beneficially more than 5% of the outstanding Marketing Common Stock.
31
<PAGE> 38
EXECUTIVE COMPENSATION
The following table sets forth, as to the Chief Executive Officer and the
other four most highly compensated executive officers of Getty that will become
executive officers of Marketing immediately after the Distribution, information
concerning the compensation paid by Getty for services in all capacities to
Getty and its subsidiaries to or for the benefit of such persons during the
periods indicated.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
LONG TERM
FISCAL YEAR ENDED JANUARY 31 COMPENSATION AWARDS
----------------------------------------------------------------------------------
--------------------------------------
OTHER ANNUAL RESTRICTED ALL OTHER
NAME AND PRINCIPAL SALARY BONUS COMPENSATION STOCK AWARDS OPTIONS COMPENSATION
POSITION YEAR $ $ ($)(1) ($) (#) ($)(2)
- ---------------------- ---- ------- ------- ------------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
LEO LIEBOWITZ......... 1996 404,103 263,000 59,886
Director, President 1995 387,228 164,500 60,713
and Chief Executive 1994 384,860 193,950 53,564
Officer
ALVIN A. SMITH........ 1996 301,192 190,700 15,000 45,373
Senior Vice President 1995 268,606 99,000 15,000 40,353
and Chief Operating 1994 261,615 107,247 5,000 35,496
Officer
SAMUEL M. JONES....... 1996 163,307 115,000 15,000 26,629
Vice President, 1995 154,646 79,000 10,000 26,616
General Counsel and 1994 146,808 87,432 5,000 21,532
Corporate Secretary
JAMES R. CRAIG........ 1996 145,537 125,000 15,000 24,419
Vice President 1995 137,843 79,000 10,000 24,260
1994 122,354 87,432 5,000 18,665
MICHAEL K. HANTMAN.... 1996 115,667 110,000 15,000 21,787
Vice President and 1995 110,274 79,000 10,000 22,458
Corporate Controller 1994 106,972 87,432 5,000 17,394
</TABLE>
- ---------------
(1) None of the Executive Officers listed received perquisites or other
personal benefits that exceeded the lesser of $50,000 or 10% of the salary
and bonus for such officer.
(2) All other compensation includes Getty's contributions to the defined
contribution retirement profit sharing plan, matching contributions under
the company's 401(k) savings plan, Getty's contributions to the
Supplemental Retirement Plan for executives and term life insurance
premiums as follows:
<TABLE>
<CAPTION>
FISCAL YEAR DEFINED COMPANY SUPPLEMENTAL
ENDED CONTRIBUTION MATCH RETIREMENT TERM LIFE
JANUARY 31 RETIREMENT PLAN 401(K) PLAN PLAN INSURANCE
----------- --------------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Leo Liebowitz......................... 1996 $ 2,388 $ -- $ 55,319 $ 2,179
1995 2,394 -- 56,140 2,179
1994 4,140 -- 47,245 2,179
Alvin A. Smith........................ 1996 2,388 4,620 34,410 3,955
1995 2,394 4,620 29,859 3,480
1994 4,140 4,481 23,395 3,480
Samuel M. Jones....................... 1996 2,388 4,629 17,499 2,113
1995 2,394 4,611 17,507 2,104
1994 3,310 4,367 11,751 2,104
James R. Craig........................ 1996 2,388 3,486 16,668 1,877
1995 2,394 3,478 16,546 1,842
1994 2,898 3,405 10,520 1,842
Michael K. Hantman.................... 1996 2,388 3,458 14,179 1,762
1995 2,394 3,422 14,915 1,727
1994 2,557 3,195 9,915 1,727
</TABLE>
32
<PAGE> 39
In December 1994, Getty entered into agreements (collectively, the "Change
of Control Agreements") with its non-director officers and certain key
employees, wherein Getty agreed to make certain payments under certain
circumstances upon a "change of control" of Getty. Under such circumstances,
Getty also agreed that all Getty stock options granted to such officer or key
employee would immediately vest, and made provision to allow such individual to
exercise his or her options within three years of the "change of control" for
the officers, and a shorter period for key employees, and to preserve the
economic value of his or her options. In December 1995, Getty amended the Change
of Control Agreements to treat a spin-off or similar transaction involving a
substantial portion of Getty's marketing or real estate business or assets as a
"change of control." Accordingly, a "change of control" will, for purposes of
the Change of Control Agreements, be deemed to occur on the Distribution Date.
Marketing intends to pay those officers and key employees who become employees
of Marketing compensation at least comparable to the compensation which Getty
paid them prior to the Distribution. In the event that Marketing does not pay
comparable compensation to any such individual or any such individual does not
become an employee of either Getty or Marketing (or ceases to be an employee of
Getty or Marketing for any reason other than for cause) after the Distribution
Date, then for the 36-month period after the Distribution Date for officers, and
a shorter period of time for those certain key employees, Getty will pay to each
such individual over the applicable period an amount not less than the average
annual sum of such individual's (i) base salary, (ii) benefits under any
incentive or bonus plan and (iii) the total amount of employer contributions
(other than elective salary deferrals) made to the individual's account under
401(k) and other deferred compensation plans, based upon the requisite period
prior to the "change of control." The compensation to be paid to an officer or
key employee pursuant to a Change of Control Agreement will be reduced by the
amount of compensation, if any, such officer or key employee receives from
Marketing or from any other employer during the covered period. Marketing
intends to fully perform Getty's obligations under the Change of Control
Agreements with respect to those individuals who will become either an officer
or employee of Marketing.
STOCK OPTION PLANS
The following table sets forth as to the persons named in the Executive
Compensation Table additional information with respect to Getty stock options
granted during the fiscal year ended January 31, 1996:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
% OF TOTAL OPTIONS PRICE APPRECIATION
GRANTED TO EMPLOYEES EXERCISE OR FOR OPTION TERM
OPTIONS IN FISCAL YEAR ENDED BASE PRICE EXPIRATION ------------------
NAME GRANTED 1/31/96 ($/SHARE) DATE 5% ($) 10% ($)
- --------------------------- ------- -------------------- ------------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Leo Liebowitz.............. -- -- -- -- -- --
Alvin A. Smith............. 15,000 12.71% $13.875 12/8/05 130,889 331,698
Samuel M. Jones............ 15,000 12.71 13.875 12/8/05 130,889 331,698
James R. Craig............. 15,000 12.71 13.875 12/8/05 130,889 331,698
Michael K. Hantman......... 15,000 12.71 13.875 12/8/05 130,889 331,698
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information as to Getty stock options
exercised by each of the named executive officers of Getty during the fiscal
year ended January 31, 1996 and the value of Getty stock options held by such
officers at year-end measured in terms of the closing price of Getty Common
Stock on
33
<PAGE> 40
January 31, 1996. No Getty stock options were exercised by the named executive
officers in the fiscal year ended January 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED OPTIONS AT FISCAL VALUE OF UNEXERCISED IN-THE-MONEY
YEAR END(#) OPTIONS/SARS AT FISCAL YEAR END($)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE(1) UNEXERCISABLE(1)
- -------------------------------- --------------------------------------- ----------------------------------
<S> <C> <C>
Leo Liebowitz................... -- --
-- --
Alvin A. Smith.................. 143,798 $207,193
34,375 40,390
Samuel M. Jones................. 50,651 58,353
27,500 24,061
James R. Craig.................. 50,134 61,224
27,500 24,061
Michael K. Hantman.............. 40,935 49,755
26,875 22,577
</TABLE>
- -------------------------
(1) Pursuant to the Change in Control Agreements, all unexercisable options held
by the named executive officers will become exercisable on the Distribution
Date.
As described under "RELATIONSHIP BETWEEN GETTY AND MARKETING AFTER THE
DISTRIBUTION--Reorganization and Distribution Agreement," immediately prior to
the Distribution, each director, officer and key employee who is a holder of an
option to acquire shares of Getty pursuant to Getty's 1985, 1988 and 1991 Stock
Option Plans will receive, in exchange therefor, two separately exercisable
options: one to purchase shares of Getty Common Stock (a "Getty Option") and one
to purchase Marketing Common Stock (a "Marketing Option"), each exercisable for
the same number of shares and containing terms substantially equivalent in the
aggregate to those of such holder's pre-Distribution option. The exercise price
for each Getty Option and Marketing Option will be set so as to preserve the
Aggregate Spread in value attributed to the options currently held by such
directors, officers and key employees. See "RELATIONSHIP BETWEEN GETTY AND
MARKETING AFTER THE DISTRIBUTION -- Reorganization and Distribution Agreement."
EMPLOYEE STOCK OWNERSHIP PLAN
In connection with the Distribution, Marketing will establish a leveraged
Employee Stock Ownership Plan (the "Marketing ESOP") that will purchase newly
issued shares of Marketing Common Stock from Marketing equal to five percent of
the outstanding shares of Marketing. The Marketing ESOP will purchase such
newly-issued shares from Marketing using the proceeds of a loan to be made by
Marketing to the Marketing ESOP. The Marketing ESOP loan will be repaid over a
five-year period, and Marketing will contribute annually to the Marketing ESOP
the funds required to repay such loan. The principal amount of the Marketing
ESOP loan is expected to be equal to the number of shares purchased by the
Marketing ESOP (approximately 667,000) multiplied by the purchase price per
share (determined on the basis of the value of the Marketing Common Stock). It
is expected that the repayment of the Marketing ESOP loan will result in
projected allocations to participants' accounts of an aggregate of approximately
133,400 shares of Marketing Common Stock per year, allocated in proportion to
compensation. Marketing expects that the five percent of the outstanding stock
of Marketing purchased by the Marketing ESOP will be allocated to covered
employees over a five-year period. Commencing February 1, 1997, Marketing will
recognize a charge to operating results over a five-year period relating to the
Marketing ESOP. Such charge will be based on the value of the Marketing Common
Stock in the future and, as such, is not currently determinable. See Note 9 to
the consolidated financial statements.
34
<PAGE> 41
MISCELLANEOUS BENEFIT PLANS
Marketing will establish the same benefit plans which Getty presently has
in effect: The Getty Petroleum Marketing Inc. Retirement (401(k)) and Profit
Sharing Plan (the "401(k) Plan"), a medical and dental plan, a flexible spending
plan, group life and disability insurance, and, for the officers of Marketing, a
non-qualified Supplemental Retirement Plan for Executives (the "Supplemental
Plan").
Under the 401(k) Plan, Marketing will contribute to each participating
employee an amount equal to 50% of such employee's contribution but in no event
more than 3% of such employee's compensation. Any annual discretionary
contribution to the 401(k) Plan will be determined by Marketing's Board of
Directors. Under the Supplemental Plan (which is not qualified for purposes of
Section 401(a) of the Internal Revenue Code of 1986, as amended), a
participating executive may receive in his trust account an amount equal to 10%
of his compensation, reduced by the amount of any contributions allocated to
such executive under the 401(k) Plan. The amounts paid to the trustee under the
Supplemental Plan may be used to satisfy claims of general creditors in the
event of Marketing's or any of its subsidiaries' bankruptcy. The trustee shall
not cause the Supplemental Plan to be other than "unfunded" for purposes of the
Employee Retirement Income Security Act of 1974, as amended. An executive's
account shall vest in the same manner as under the 401(k) Plan and shall be paid
upon termination of employment. Under the Supplemental Plan, the Board of
Directors may, during any fiscal year, elect not to make any payment to the
account of any or all executives.
Pursuant to a long-standing arrangement, in the event of the death of Mr.
Liebowitz, benefits in an amount equal to twelve months' salary will be paid to
his estate. In the event of termination of Mr. Liebowitz's employment due to
illness or incapacity for a period of one year or longer, benefits equal to
twenty-four months' salary will be payable to Mr. Liebowitz.
CERTAIN TRANSACTIONS
THE PARTNERSHIP
In 1985, Power Test Investors Limited Partnership (the "Partnership") was
formed as a public master limited partnership and capitalized by a rights
offering to all Getty stockholders. The Partnership is the limited partner in
Power Test Realty Company Limited Partnership (the "Operating Partnership"),
which was also formed in 1985 and which purchased the Northeast and Mid-Atlantic
petroleum marketing assets of Getty Oil Company from Texaco Inc. The Operating
Partnership leased these assets to Getty on a long-term net basis.
CLS General Partnership Corp., a Delaware corporation ("CLS"), is the sole
general partner of both the Partnership and the Operating Partnership. The three
stockholders of CLS are Messrs. Liebowitz, Safenowitz and Cooper (the "Principal
Holders"), who are also directors and stockholders of Getty and stockholders of
Marketing. Messrs. Liebowitz and Safenowitz are also directors of Marketing and
Mr. Liebowitz serves as Chief Executive Officer of Getty and Marketing. See
"MANAGEMENT." As of October 31, 1996, the Principal Holders beneficially owned
an aggregate of 3,103,131 (48%) of the general and limited partnership interests
in the Partnership.
Marketing does not have (nor did Getty have) any ownership interest in the
Partnership, the Operating Partnership or any of its assets. Neither the
Partnership nor the Operating Partnership conducts any substantial activities
other than those related to the ownership and leasing to Getty of the former
Getty Oil Company assets, substantially all of which Marketing subleases from
Getty.
THE MASTER LEASE AND RELATED AGREEMENTS
Pursuant to the Master Lease, Marketing anticipates that it will make, on
an annual basis, net lease payments to Getty aggregating approximately $57
million commencing in fiscal 1998. See "RELATIONSHIP BETWEEN GETTY AND MARKETING
AFTER THE DISTRIBUTION -- Master Lease Agreement," and Note 4 to the
consolidated financial statements.
35
<PAGE> 42
In addition to the Master Lease, Getty and Marketing have entered into,
among other things, certain licensing, service and tax sharing agreements. See
"RELATIONSHIP BETWEEN GETTY AND MARKETING AFTER THE DISTRIBUTION."
DESCRIPTION OF CAPITAL STOCK
The following summary of the terms of the stock of Marketing does not
purport to be complete and is subject to and qualified in its entirety by
reference to the Marketing Charter (as defined herein) and the Marketing Bylaws,
copies of which have been filed as exhibits to this Registration Statement on
Form 10.
GENERAL
Marketing's authorized capital stock presently consists of 1,000 shares of
Marketing Common Stock, of which 1,000 shares are issued and outstanding and are
owned by Getty. Prior to the Distribution, Marketing's Charter will be amended
by the Marketing Board and by Getty, as sole stockholder of Marketing. Under
such amended Charter, which will be substantially in the form set forth in
Exhibit 3.2 to this Form 10 (the "Marketing Charter"), the total number of
shares of all classes of stock that Marketing will have authority to issue will
be 40,000,000, 30,000,000 of which will be shares of Marketing Common Stock and
10,000,000 of which will be shares of preferred stock, $.01 par value per share
(the "Marketing Preferred Stock"). Based on the number of shares of Getty Common
Stock outstanding at December 27, 1996, approximately 12,675,000 shares of
Marketing Common Stock, constituting approximately 42% of the then authorized
Marketing Common Stock, will be issued to Getty and distributed by Getty to its
stockholders in the Distribution. In addition, approximately 667,000 shares of
Marketing Common Stock will be issued to the Marketing ESOP at the time of the
Distribution. See "EXECUTIVE COMPENSATION -- Employee Stock Ownership Plan." All
of the shares of Marketing Common Stock issued in the Distribution and to the
Marketing ESOP will be validly issued, fully paid and non-assessable and have no
preemptive rights.
COMMON STOCK
All shares of Marketing Common Stock will be duly authorized, fully paid
and nonassessable. Subject to the preferential rights of any other shares or
series of stock, holders of shares of Marketing Common Stock are entitled to
receive dividends on such stock if, as and when authorized and declared by the
Marketing Board out of assets legally available therefor and to share ratably in
the assets of Marketing legally available for distribution to its stockholders
in the event of its liquidation, dissolution or winding up after payment of or
adequate provision for all known debts and liabilities of Marketing.
Each outstanding share of Marketing Common Stock entitles the holder to one
vote on all matters submitted to a vote of stockholders, including the election
of directors and, except as provided with respect to any other class or series
of stock, the holders of such shares will possess the exclusive voting power.
There is no cumulative voting in the election of directors, which means that the
holders of a majority of the outstanding shares of Marketing Common Stock can
elect all of the directors then standing for election and the holders of the
remaining shares will not be able to elect any directors.
Holders of shares of Marketing Common Stock have no preference, conversion,
exchange, sinking fund, redemption or appraisal rights and have no preemptive
rights to subscribe for any securities of Marketing. Shares of Marketing Common
Stock will have equal dividend, liquidation and other rights.
Under the MGCL, a Maryland corporation generally cannot dissolve, amend its
charter, merge, sell all or substantially all of its assets, engage in a share
exchange or engage in similar transactions outside the ordinary course of
business unless approved by the affirmative vote of stockholders holding at
least two thirds of the shares entitled to vote on the matter unless a lesser
percentage (but not less than a majority of all of the votes entitled to be cast
on the matter) is set forth in the corporation's charter. The Marketing Charter
provides for approval by a majority of all the votes entitled to be cast in such
situations. With respect to the phrase "all or substantially all," the words
"substantially all" are not defined in the MGCL, there are only a limited number
of cases interpreting the meaning of such words and the few cases doing so rely
heavily on the particular facts
36
<PAGE> 43
and circumstances thereof. It is therefore difficult to state with certainty
when a Maryland corporation may be required to obtain stockholder approval for a
sale of assets. There can be no assurance that, if presented with a particular
situation, a Maryland court (or a court appropriately applying Maryland law)
would find that a sale of more than 50% of the assets of a corporation was the
sale of "substantially all" of the assets of the corporation requiring
stockholder approval.
Under the MGCL, certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset transfer or
issuance or reclassification of equity securities) between a Maryland
corporation and any person who beneficially owns ten percent or more of the
voting power of the corporation's shares or an affiliate of the corporation who,
at any time within the two-year period prior to the date in question, was the
beneficial owner of ten percent or more of the voting power of the then
outstanding voting stock of the corporation (an "Interested Stockholder") or an
affiliate of such an Interested Stockholder are prohibited for five years after
the most recent date on which the Interested Stockholder becomes an Interested
Stockholder. Thereafter, any such business combination must be recommended by
the board of directors of such corporation and approved by the affirmative vote
of at least (a) 80% of the votes entitled to be cast by holders of outstanding
shares of voting stock of the corporation and (b) two-thirds of the votes
entitled to be cast by holders of voting stock of the corporation other than
shares held by the Interested Stockholder with whom (or with whose affiliate)
the business combination is to be effected, unless, among other conditions, the
corporation's common stockholders receive a minimum price (as defined in the
MGCL) for their shares and the consideration is received in cash or in the same
form as previously paid by the Interested Stockholder for its shares. These
provisions of the MGCL do not apply, however, to business combinations that are
approved or exempted by the board of directors of the corporation prior to the
time that the Interested Stockholder becomes an Interested Stockholder. These
provisions of the MGCL could delay, defer or prevent a transaction or a change
in control of Marketing that might involve a premium price for holders of
Marketing Common Stock or otherwise be in their best interest.
The Marketing Charter authorizes the Marketing Board to reclassify any
unissued shares of Marketing Common Stock into other classes or series of
classes of stock and to establish the number of shares in each class or series
and to set the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends or other distributions, qualifications
or terms or conditions of redemption for each such class or series.
The transfer agent and registrar for the Marketing Common Stock will be
American Stock Transfer and Trust Company.
PREFERRED STOCK
The Marketing Charter will provide that the Marketing Board is authorized
to provide for the issuance of shares of Marketing Preferred Stock, from time to
time, and to fix the designations, preferences, conversion or other rights,
voting powers, restrictions, dividends and other distributions, qualifications
or terms or conditions of redemption of such series.
POWER TO ISSUE ADDITIONAL SHARES OF COMMON STOCK AND PREFERRED STOCK
Marketing believes that the power of the Marketing Board to issue
additional authorized but unissued shares of Marketing Common Stock and
Marketing Preferred Stock and to classify or reclassify unissued shares of
Marketing capital stock and thereafter to cause Marketing to issue such
classified or reclassified shares of stock will provide Marketing with increased
flexibility in structuring possible future financings and acquisitions and in
meeting other needs which may arise. The additional classes or series, as well
as the Marketing Common Stock and Marketing Preferred Stock, will be available
for issuance without further action by Marketing's stockholders, unless such
action is required by applicable law or the rules of any stock exchange or
automated quotation system on which Marketing's securities may be listed or
traded. Although the Marketing Board has no intention at the present time of
doing so, it could authorize Marketing to issue a class or series that could,
depending upon the terms of such class or series, delay, defer or prevent
37
<PAGE> 44
a transaction or a change in control of Marketing that might involve a premium
price for holders of Marketing Common Stock or otherwise be in their best
interests.
LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
The MGCL permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from (a) actual receipt of an improper benefit or profit in money,
property or services or (b) active and deliberate dishonesty established by a
final judgment as being material to the cause of action. The Marketing Charter
contains such a provision which limits such liability to the maximum extent
permitted by Maryland law.
The Marketing Charter authorizes Marketing, to the maximum extent permitted
by Maryland law, to obligate itself to indemnify and to pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to (a) any
present or former director or officer or (b) any individual who, while a
director of Marketing and at the request of Marketing, serves or has served
another corporation, partnership, joint venture, trust, employee benefit plan or
any other enterprise as a director, officer, partner or trustee of such
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise from and against any claim or liability to which such person may
become subject or which such person may incur by reason of his or her status as
a present or former director or officer of Marketing. The Marketing Bylaws
obligate Marketing, to the maximum extent permitted by Maryland law, to
indemnify and to pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to (a) any present or former director or officer who
is made a party to the proceeding by reason of his or her service in that
capacity or (b) any individual who, while a director of Marketing and at the
request of Marketing, serves or has served another corporation, partnership,
joint venture, trust, employee benefit plan or any other enterprise as a
director, officer, partner or trustee of such corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise and who is made a
party to the proceeding by reason of his or her service in that capacity. The
Marketing Charter and Marketing Bylaws also permit Marketing to indemnify and
advance expenses to any person who served a predecessor of Marketing in any of
the capacities described above and to any employee or agent of Marketing or a
predecessor of Marketing.
The MGCL requires a corporation (unless its charter provides otherwise,
which Marketing's Charter does not) to indemnify a director or officer who has
been successful, on the merits or otherwise, in the defense of any proceeding to
which he or she is made a party by reason of his or her service in that
capacity. The MGCL permits a corporation to indemnify its present and former
directors and officers, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their service in
those or other capacities unless it is established that (a) the act or omission
of the director or officer was material to the matter giving rise to the
proceeding and (i) was committed in bad faith or (ii) was the result of active
and deliberate dishonesty, (b) the director or officer actually received an
improper personal benefit in money, property or services or (c) in the case of
any criminal proceeding, the director or officer had reasonable cause to believe
that the act or omission was unlawful. However, a Maryland corporation may not
indemnify a present or former director or officer for an adverse judgment in a
suit by or in the right of the corporation. In addition, the MGCL requires
Marketing, as a condition to advancing expenses, to obtain (a) a written
affirmation by the director or officer of his or her good faith belief that he
or she has met the standard of conduct necessary for indemnification by
Marketing as authorized by the Bylaws and (b) a written statement by or on his
or her behalf to repay the amount paid or reimbursed by Marketing if it shall
ultimately be determined that the standard of conduct was not met.
In addition, Marketing has entered or will enter into an indemnification
agreement ("Indemnification Agreement") with each of its directors. The
Indemnification Agreement provides for the prompt indemnification and
advancement of expenses, including attorneys' fees and other costs, to the
fullest extent permitted by law of a director against expenses and obligations
paid or incurred in connection with investigating, defending, being a witness or
participating in (including on appeal) any threatened, pending or completed
action, suit or
38
<PAGE> 45
proceeding related to the fact that such director is or was a director, officer,
partner, employee, agent, or fiduciary of Marketing or is or was serving at the
request of Marketing as a director, officer, partner, employee, trustee, agent
or fiduciary of another corporation, partnership, joint venture, employee
benefit plan trust or other enterprise, or by reason of anything done or not
done by a director in any such capacity.
The Indemnification Agreement also provides (i) that a director is
automatically entitled to indemnification for expenses to the extent the
director is successful in defending any indemnifiable claim whether on the
merits or otherwise, (ii) that Marketing has the burden of proving that a
director is not entitled to indemnification in any particular case and that
certain presumptions that may otherwise be drawn against a director seeking
indemnification in connection with the termination of actions or proceedings are
negated, except that the termination of an action or proceeding by conviction or
a plea of nolo contendere (or its equivalent) creates a presumption that the
director is not entitled to indemnification, (iii) a mechanism through which a
director may seek court relief in the event that the Marketing Board (or other
person or body appointed by the Marketing Board) determines that the director
would not be permitted to be indemnified under applicable law (and therefore is
not entitled to indemnification under the Indemnification Agreement), (iv) that
a director is entitled to indemnification against all expenses (including
attorneys' fees) incurred in seeking to collect an indemnification claim or
advancement of expenses from Marketing or incurred in seeking to recover under a
directors' and officers' liability insurance policy, (v) that after there has
been a change in control in Marketing, all Marketing determinations regarding a
right to indemnification, and the right to advancement of expenses, shall be
made by independent legal counsel, and (vi) that prior to a change in control of
Marketing, a director shall not be entitled to indemnification pursuant to the
Indemnification Agreement in connection with an action, suit or proceeding
initiated by the director against Marketing, or its directors or officers unless
Marketing joins in or consents to the action, suit or proceeding, except as
provided in Section 3 of the Indemnification Agreement.
Directors' rights under the Indemnification Agreement are not exclusive of
any other rights they may have under Maryland law, directors' or officers'
liability insurance, the Marketing Bylaws or otherwise. However, the
Indemnification Agreement does prevent double payment.
The Indemnification Agreement, although not requiring the maintenance of
directors' and officers' liability insurance, does require that the directors be
provided with maximum coverage reasonably economically available if there is
such a policy. Finally, the Indemnification Agreement provides that, if
Marketing pays a director pursuant to the Indemnification Agreement, Marketing
will be subrogated to the director's rights to recover from third parties.
ADDITIONAL INFORMATION
Marketing has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form 10 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") with respect to the Marketing
Common Stock described herein. This Information Statement does not contain all
of the information set forth in the Registration Statement and the exhibits and
schedules thereto. Further information may be obtained from the Registration
Statement and such exhibits and schedules. Copies of these documents may be
inspected at and obtained at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Regional
Offices of the Commission at 7 World Trade Center, Suite 1300, New York, New
York 10048 and at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Such reports and other documents may be obtained from the web site that the
Commission maintains at http://www.sec.gov. Copies of such information can also
be obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. Application has
been made to list the Marketing Common Stock on the NYSE, subject to official
notice of issuance, under the symbol "GPM." Reports and other information
concerning Marketing Common Stock can also be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005.
Following the Distribution, Marketing will be required to comply with the
reporting requirements of the Exchange Act and will file annual, quarterly and
other reports with the Commission. Additionally, Marketing
39
<PAGE> 46
will be subject to the proxy solicitation requirements of the Exchange Act and
will furnish annual reports containing audited financial statements to its
stockholders in connection with its annual meetings of stockholders.
No person is authorized to give any information or to make any
representations other than those contained in this Information Statement. Any
other information or representations given or made must not be relied upon as
having been authorized. This Information Statement does not constitute an offer
to sell or a solicitation of an offer to buy any securities. The delivery of
this Information Statement must not under any circumstances be construed as an
implication that there has been no change in the affairs of Marketing subsequent
to the date of this Information Statement.
40
<PAGE> 47
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS:
REPORT OF INDEPENDENT ACCOUNTANTS.................................................... F-2
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statements of Operations for the fiscal years ended January 31, 1996,
1995 and 1994................................................................... F-3
Consolidated Balance Sheets as of January 31, 1996 and 1995....................... F-4
Consolidated Statements of Cash Flows for the fiscal years ended January 31, 1996,
1995 and 1994................................................................... F-5
Notes to Consolidated Financial Statements........................................ F-6
UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
Consolidated Statements of Operations for the nine months ended October 31, 1996
and 1995......................................................................... F-15
Consolidated Balance Sheet as of October 31, 1996................................. F-16
Consolidated Statements of Cash Flows for the nine months ended October 31, 1996
and 1995......................................................................... F-17
Notes to Unaudited Consolidated Interim Financial Statements...................... F-18
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS:
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION............................... F-21
Pro Forma Consolidated Statements of Operations for the fiscal year ended January
31, 1996 and for the nine months ended October 31, 1996.......................... F-22
Notes to Unaudited Pro Forma Consolidated Statements of Operations................ F-23
Pro Forma Consolidated Balance Sheet as of October 31, 1996....................... F-24
Notes to Unaudited Pro Forma Consolidated Balance Sheet........................... F-25
</TABLE>
F-1
<PAGE> 48
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of Getty Petroleum Marketing Inc.:
We have audited the accompanying consolidated balance sheets of GETTY
PETROLEUM MARKETING INC. and SUBSIDIARIES as of January 31, 1996 and 1995, and
the related consolidated statements of operations and cash flows for each of the
three years in the period ended January 31, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Getty Petroleum
Marketing Inc. and Subsidiaries as of January 31, 1996 and 1995, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended January 31, 1996, in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, the
Company changed its method of accounting for the impairment of long-lived assets
in fiscal 1996.
Coopers & Lybrand L.L.P.
New York, New York
November 6, 1996, except for
Notes 6, 9 and 12, as to which
the date is January 13, 1997.
F-2
<PAGE> 49
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JANUARY 31,
--------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Net sales..................................................... $758,887 $723,875 $747,667
Rental income................................................. 32,025 29,860 28,443
Other income.................................................. 282 -- 175
-------- -------- --------
791,194 753,735 776,285
-------- -------- --------
Cost of sales (excluding depreciation and amortization)....... 750,680 721,354 738,261
Selling, general and administrative expenses.................. 20,702 22,588 23,262
Depreciation and amortization................................. 13,099 11,640 11,718
Restructuring charges......................................... -- 1,846 --
Interest expense.............................................. 388 285 226
-------- -------- --------
784,869 757,713 773,467
-------- -------- --------
Earnings (loss) before provision (credit) for income taxes and
cumulative effect of accounting change...................... 6,325 (3,978) 2,818
Provision (credit) for income taxes........................... 2,379 (1,544) 1,000
-------- -------- --------
Earnings (loss) before cumulative effect of accounting
change...................................................... 3,946 (2,434) 1,818
Cumulative effect of accounting change........................ (282) -- --
-------- -------- --------
Net earnings (loss)........................................... $ 3,664 $ (2,434) $ 1,818
======== ======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE> 50
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
JANUARY 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents............................................... $ 676 $ 2,449
Accounts receivable, less allowance
for doubtful accounts of $1,225
in 1996 and $1,336 in 1995...................................... 12,194 14,688
Inventories........................................................ 19,917 9,985
Deferred income taxes.............................................. 2,220 2,188
Prepaid expenses and other
current assets.................................................. 2,827 2,943
-------- --------
Total current assets....................................... 37,834 32,253
Property and equipment, at cost, less
accumulated depreciation and amortization.......................... 84,116 82,227
Other assets......................................................... 2,548 2,617
-------- --------
TOTAL ASSETS............................................... $124,498 $117,097
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................... $ 23,378 $ 36,194
Accrued expenses................................................... 9,265 11,023
Gasoline taxes payable............................................. 13,914 8,257
-------- --------
Total current liabilities.................................. 46,557 55,474
Deferred income taxes................................................ 13,789 11,500
Other, principally deposits.......................................... 13,841 13,062
Commitments and contingencies (Notes 4 and 6)
Stockholders' equity................................................. 50,311 37,061
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................. $124,498 $117,097
======== ========
</TABLE>
See accompanying notes.
F-4
<PAGE> 51
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JANUARY 31,
----------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)...................................... $ 3,664 $ (2,434) $ 1,818
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Cumulative effect of accounting change................. 282 -- --
Depreciation and amortization.......................... 13,099 11,640 11,718
Deferred income taxes.................................. 2,257 659 1,804
(Gain) loss on dispositions of property and
equipment........................................... (12) 235 79
Changes in assets and liabilities:
Accounts receivable.................................... 2,494 1,437 2,789
Inventories............................................ (9,932) (1,156) (485)
Prepaid expenses and other current assets.............. 25 (40) 725
Other assets........................................... (46) 278 198
Accounts payable, accrued expenses and
gasoline taxes payable.............................. (8,917) 8,089 (5,722)
Other, principally deposits............................ 779 1,027 866
-------- -------- --------
Net cash provided by operating activities........... 3,693 19,735 13,790
-------- -------- --------
Cash flows from investing activities:
Capital expenditures................................... (15,858) (16,787) (14,306)
Proceeds from dispositions of equipment................ 806 500 365
-------- -------- --------
Net cash used in investing activities............... (15,052) (16,287) (13,941)
-------- -------- --------
Cash flows from financing activities:
Net cash transferred from (to) Getty................... 9,586 (2,496) 362
-------- -------- --------
Net cash provided by (used in) financing
activities........................................ 9,586 (2,496) 362
-------- -------- --------
Net increase (decrease) in cash and equivalents.......... (1,773) 952 211
Cash and equivalents at beginning of year................ 2,449 1,497 1,286
-------- -------- --------
Cash and equivalents at end of year...................... $ 676 $ 2,449 $ 1,497
======== ======== ========
Supplemental disclosure of cash flow information
Cash paid during the year for interest................. $ 388 $ 285 $ 226
</TABLE>
See accompanying notes.
F-5
<PAGE> 52
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
Getty Petroleum Marketing Inc., a Maryland corporation ("Marketing"), was
formed on October 1, 1996 as a wholly-owned subsidiary of Getty Petroleum Corp.
("Getty"). Getty plans to separate its petroleum marketing business from its
real estate business at the close of business on or about January 31, 1997 with
each business to be conducted by a separate, publicly held corporation. In order
to effect the separation of these businesses, Getty will transfer to Marketing
the assets and liabilities of the petroleum marketing business and the New York
Mid-Hudson Valley home heating oil business previously conducted by a subsidiary
of Getty, and distribute all of the common shares of Marketing to the
stockholders of Getty (the "Distribution"). The Distribution is expected to be
at the rate of one share of common stock of Marketing (the "Marketing Common
Stock") for each share of Getty common stock. Getty will retain and continue to
own and operate the real estate business and the Pennsylvania and Maryland home
heating oil business previously conducted by another subsidiary. After the
Distribution, Getty will change its name to Getty Realty Corp. ("Realty" or
"Getty").
The consolidated financial statements of Marketing contained herein have
been prepared on the basis that the assets and liabilities of the petroleum
marketing business were transferred using historical carrying values as recorded
by Getty, and Marketing's results of operations and cash flows were derived from
Getty's historical financial statements. Marketing's results of operations
include allocations of certain selling, general and administrative expenses,
namely employee benefits, payroll taxes and travel and entertainment expenses.
Employee benefits, payroll taxes and travel and entertainment expenses were
allocated to Marketing based on number of personnel and salaries specifically
identified to Marketing. Selling, general and administrative expenses allocated
to Marketing from Getty were $1,546,000, $1,348,000 and $1,776,000 for the
fiscal years ended 1996, 1995 and 1994, respectively. Management believes these
allocations to be reasonable. The financial information is not necessarily
indicative of the financial results that would have occurred had Marketing been
operated as a separate, stand-alone entity during the reporting periods nor is
it necessarily indicative of future results. However, Management believes that
these allocated amounts approximate what the expense would have been on a
stand-alone basis and that any additional costs, excluding additional rent
associated with the Master Lease (see Note 4), would have been immaterial.
Getty uses a centralized approach to cash management. As a result, cash and
equivalents (other than actual cash on hand) were not allocated to Marketing in
the consolidated financial statements. However, under the Distribution Agreement
(as defined below), Marketing will receive cash from Getty in an amount
sufficient to provide Marketing with net working capital of $1.1 million. Such
cash amount will be paid upon the determination of Marketing's net working
capital as of January 31, 1997, which determination is expected to be made no
later than February 28, 1997.
Environmental expenses in the historical periods have been predominantly
attributable to the replacement or upgrading of USTs (as defined below), which
has been the responsibility of Getty. Getty has agreed to pay all costs relating
to, and to indemnify Marketing for, all scheduled pre-closing environmental
liabilities and obligations, all scheduled future upgrades (the "Upgrades")
necessary to cause underground storage tanks (such tanks, including related
piping, underground pumps, wiring and monitoring devices, the "USTs") to conform
to the 1998 federal standards for USTs (the "1998 Standards"), and all
environmental liabilities and obligations arising out of discharges with respect
to properties containing USTs that have not been upgraded to meet the 1998
Standards that are discovered prior to the date such USTs are upgraded to meet
the 1998 Standards. Marketing will be responsible for and will indemnify Getty
with respect to all other environmental obligations and liabilities. No amounts
have been included for these other environmental obligations and liabilities as
they are not currently ascertainable, since Marketing cannot predict the number
or the magnitude of discharges or releases from its USTs that may be discovered
in the future or the cost of remediation relating thereto. Environmental costs
of Marketing included in the historical financial statements were $1.6 million,
$1.6 million and $1.2 million for the fiscal years ended January 31, 1996, 1995
and 1994, respectively. Future environmental expenses of Marketing, though not
currently known or ascertainable, are expected to be significantly lower than
the aggregate amounts recorded by Getty ($14.3 million, $11.8 million
F-6
<PAGE> 53
and $9.7 million for the years ended January 31, 1996, 1995 and 1994,
respectively), since USTs have been or will be upgraded at Getty's expense by
December 22, 1998.
As part of the separation of the petroleum marketing business from the real
estate business, Marketing and Realty have entered into various agreements which
address the allocation of assets and liabilities between them and govern future
relationships, including a Reorganization and Distribution Agreement (the
"Distribution Agreement"), a Master Lease Agreement, a Tax Sharing Agreement, a
Services Agreement and a Trademark License Agreement.
Getty and Marketing have entered into a Services Agreement (the "Services
Agreement"), under the terms of which Marketing will provide certain
administrative and technical services to Getty and Getty will provide certain
limited services to Marketing. Marketing estimates that the net fees to be paid
by Getty to Marketing for services performed (after deducting the fees paid by
Marketing to Getty for services provided by Getty) will initially be
approximately $80,000 per month, which amount takes into account Marketing's
additional costs related to providing such services, and will decline as the
services performed decrease. Getty presently expects that most of such services
will be provided by Marketing for approximately one year.
The following schedule summarizes intercompany transactions between
Marketing and Realty for the three years ended January 31, 1996, 1995 and 1994
(in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- -------
<S> <C> <C> <C>
Rent expense paid to Realty..................... $55,130 $55,352 $55,900
Selling, general and administrative expenses
allocated to Marketing........................ 1,546 1,348 1,776
Income taxes paid to (received from) Realty..... 122 (2,203) (804)
Net cash transferred from (to) Realty........... 9,586 (2,496) 362
</TABLE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation: The consolidated financial statements include the accounts
of Marketing and its wholly-owned subsidiaries. Marketing is principally engaged
in the marketing and distribution of petroleum products in 12 Northeastern and
Mid-Atlantic states. All significant intercompany accounts and transactions have
been eliminated.
Use of Estimates: The 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 results could differ from those estimates.
Cash and Equivalents: Marketing considers highly liquid investments
purchased with an original maturity of three months or less to be cash
equivalents.
Inventories: Inventories, primarily finished petroleum products, are
principally accounted for under the lower of last-in, first-out ("LIFO") cost or
market. Marketing enters into product exchange agreements with various parties
to improve its supply logistics and reduce its delivery costs. Net product
exchange positions with other companies are reflected in inventory and are
generally immaterial. Marketing may take positions in the futures market as part
of its overall purchasing strategy in order to reduce the risk associated with
price fluctuations. Gains and losses on futures contracts are included as a part
of product costs and have been immaterial for each of the three years in the
period ended January 31, 1996. As of January 31, 1996, outstanding futures
contracts were immaterial.
Property and Equipment: Expenditures for renewals and betterments are
capitalized; maintenance and repairs are charged to income when incurred. When
fixed assets are sold or retired, the cost and related accumulated depreciation
and amortization are eliminated from the respective accounts and any gain or
loss is credited or charged to income.
Depreciation and Amortization: Depreciation of fixed assets is computed on
the straight-line method based upon the estimated useful lives of the assets.
Leasehold improvements are amortized on the straight-line method over the
shorter of the term of the lease or the useful life of the related asset.
F-7
<PAGE> 54
Environmental Costs: The estimated future costs for known environmental
remediation requirements are accrued when it is probable that a liability has
been incurred and the amount of remediation costs can be reasonably estimated.
Income Taxes: Deferred income taxes are provided for the effect of items
which are reported for income tax purposes in years different from that in which
they are recorded for financial statement purposes.
Revenue Recognition: Revenue is recognized from sales when product
ownership is transferred to the customer and from rentals as earned.
Accounting Change: In fiscal 1996, Marketing adopted Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The Statement
requires that assets used in operations be written down to fair value when
events and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amount of those assets. SFAS No. 121 also requires that assets held
for disposal be written down to fair value less costs to sell. Marketing
continually evaluates retail outlets to determine the profitability and
long-term viability of certain locations as gasoline stations or convenience
stores, which results in the divestment of non-strategic and uneconomic retail
outlets through sale, lease assignment or lease termination. Marketing estimates
fair value and costs to sell based on the best information available, including
discounted cash flows and comparable market values, in making whatever
estimates, judgments and projections are considered necessary.
Accordingly, in fiscal 1996, Marketing recorded a pre-tax charge of
$267,000 relating to operating assets, which is included in depreciation and
amortization expense. In addition, Marketing reported the cumulative effect of
the change in accounting principle relating to assets held for disposal as an
after-tax charge to earnings of $282,000 in the consolidated statement of
operations. As of January 31, 1996, the net book value of marketing equipment
and leasehold improvements at locations held for disposal amounted to $617,000.
The impact of these retail outlets on the results of operations of Marketing was
not material for each of the three years in the period ended January 31, 1996.
While these retail outlets are being actively marketed, the disposal period may
exceed one year for some locations.
3. INVENTORIES
As of January 31, 1996, 1995 and 1994, the carrying value of Marketing's
LIFO inventories approximated the first-in, first-out ("FIFO") method or
replacement cost.
4. LEASES
Marketing and Realty have entered into a Master Lease Agreement (the
"Master Lease") under which 1,037 retail outlets and 10 terminal facilities (the
"Properties") are leased or subleased by Realty as the lessor to Marketing as
the lessee. The Properties will be used for gasoline sales, convenience store
uses and other complementary or related lawful uses in conjunction with the sale
of petroleum products and convenience store items, except when the provisions of
any underlying lease are more restrictive. Marketing may sublet any property,
provided that Marketing remains fully responsible for a sublessee's performance
and, except in cases of economic abandonment (as described below), a sublease
for non-petroleum purposes will require Getty's consent. Except for certain
environmental obligations, and obligations pertaining to USTs, the Master Lease
will be a "triple-net" lease, with Marketing retaining responsibility for all
taxes, maintenance, repairs and insurance. For financial statement purposes,
such Master Lease has been recorded as an operating lease.
Rent for each of the Properties has been set using the fair market value of
each such Property, assuming the USTs have been upgraded to meet the 1998
Standards and such Properties are free of known environmental contamination,
since Getty is to be responsible for all such costs. Rent for each Property will
increase at the end of each five-year period by the net increase in the Consumer
Price Index for all items in the Northeast Region for such five-year period,
such increase not to exceed fifteen percent (15%). Rents for all Properties are
payable in advance on the first day of the month. The initial term of the Master
Lease is (i) fifteen years with respect to Properties owned in fee by Getty and
leased to Marketing, and Properties leased by Getty from Power Test Realty
Company Limited Partnership and subleased to Marketing and (ii) the length of
time remaining under underlying lease terms (which ranges from one to fifteen
years under
F-8
<PAGE> 55
the Master Lease) with respect to Properties leased by Getty from other third
parties and subleased to Marketing. The Master Lease terms for each category of
Properties described above also include four ten-year renewal options (or, with
respect to category (ii), such shorter period as the underlying lease may
provide), which may be exercised by Marketing with two years advance notice on
an individual property basis for all Properties then subject to the Master
Lease. For the subleased Properties, Getty has agreed to use reasonable efforts
to extend the underlying lease terms upon conditions acceptable to Marketing. In
the event that Marketing desires not to renew the sublease upon terms (including
any underlying lease term extension negotiated by Getty) available to it, Getty
may extend or renew the lease and sublease the property to a third party after
the end of Marketing's term.
The Master Lease provides that if during the lease term, Marketing
determines that any of the leased premises have become uneconomic or unsuitable
for their use as a service station or convenience store and has discontinued use
of the property or intends to discontinue use of the property as a service
station or convenience store within one year of the date of said determination,
Marketing shall have the right to sublet the property for any lawful use without
Getty's consent and, prior to the commencement of any such sublease term,
Marketing shall remove any USTs on the Property and thereafter perform all
requisite environmental investigations and/or remediations. Marketing shall have
the right of economic abandonment with respect to no more than ten properties
during any fiscal year of the lease term. Marketing shall have no right of
economic abandonment for the terminal premises and the premises subject to third
party leases.
Rent expense paid to Realty, which is included in cost of sales, amounted
to $55,130,000, $55,352,000 and $55,900,000 for the years ended January 31,
1996, 1995 and 1994, respectively. Future minimum annual rentals under
noncancelable operating leases which have terms in excess of one year as of
January 31, 1996, payable to Realty, are as follows (in thousands):
<TABLE>
<CAPTION>
YEARS ENDED JANUARY 31,
- --------------------------------------------------------------------------------
<S> <C>
1997............................................................................ $ 56,070
1998............................................................................ 56,859
1999............................................................................ 56,298
2000............................................................................ 55,651
2001............................................................................ 55,350
Thereafter...................................................................... 561,356
--------
$841,584
========
</TABLE>
Rent income received under subleases amounted to $32,025,000, $29,860,000
and $28,443,000 for the years ended January 31, 1996, 1995 and 1994,
respectively. Substantially all of these subleases have remaining terms which
range from one to three years. Although there is no assurance that these
subleases will be renewed, no significant difficulty has been experienced in
subleasing retail outlets.
5. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
DEPRECIABLE
1996 1995 LIFE (YEARS)
-------- -------- ------------
<S> <C> <C> <C>
Equipment................................................ $153,005 $138,655 10 to 15
Motor vehicles........................................... 3,014 4,495 3 to 10
Furniture and fixtures................................... 1,566 1,537 10
Leasehold improvements................................... 1,197 1,158 See Note 2
-------- --------
158,782 145,845
Less, accumulated depreciation and amortization.......... 74,666 63,618
-------- --------
$ 84,116 $ 82,227
======== ========
</TABLE>
F-9
<PAGE> 56
6. COMMITMENTS AND CONTINGENCIES
The petroleum products industry is subject to numerous existing federal,
state and local laws and regulations. Although compliance with such laws and
regulations may have a significant impact on results of operations or liquidity
for any single period, Marketing believes that the costs related to such
compliance have not had and are not expected to have a material adverse effect
on the competitive or financial position of Marketing.
On September 16, 1996, Getty entered into an Agreement with the New York
State Department of Taxation and Finance (the "Department"), settling the
license revocation proceedings brought by the Department whereby Getty's
wholly-owned subsidiary Getty Terminals Corp.'s ("Getty Terminals") licenses and
permits for its three New York State terminals and its New York motor fuels and
diesel distributor licenses would be terminated. The revocation proceedings were
the result of the 1990 conviction of Getty Terminals for federal gasoline excise
tax evasion and conspiracy in 1985. Under the terms of the Agreement, Getty's
wholly-owned subsidiary, Kingston Oil Supply Corp. ("KOSCO") will be permitted
to assume all of the storage and distribution activities and operations now
performed by Getty Terminals in New York. KOSCO will have six months in which to
obtain new or amended licenses and permits and, upon the issuance thereof, Getty
Terminals will surrender its licenses and permits. KOSCO's Board of Directors
will consist of three persons, one of whom shall be an independent director, and
KOSCO shall provide periodic reports to the Department relating to New York tax
laws. The Agreement shall terminate on September 15, 1999. Under the terms of
the settlement, Getty and its subsidiaries are not required to pay any penalties
or fines. Prior to the Distribution, Marketing will become a party to the
Agreement. The implementation of the settlement will have no adverse impact on
the results of operations, financial condition or liquidity of Marketing,
including the ability to sell motor fuels in New York or operate its New York
State terminals.
Marketing is subject to various legal proceedings in the ordinary course of
business. Such proceedings are not expected to have a material adverse effect on
Marketing's financial condition or results of operations. Pursuant to the
Distribution Agreement, Getty has agreed to defend all existing proceedings and
indemnify Marketing with respect thereto.
In order to minimize Marketing's exposure to credit risk associated with
financial instruments, Marketing places its temporary cash investments with high
credit quality institutions and, by policy, limits the amount invested with any
one institution other than the U.S. Government. Except for one customer,
Uni-Marts, Inc. ("Uni-Marts"), which represents approximately 10% of Marketing's
net sales for each of the three years in the period ended January 31, 1996,
concentration of credit risk with respect to trade receivables generally is
limited due to the large number of customers comprising Marketing's customer
base.
On December 27, 1996, Uni-Marts notified Getty that, effective December 31,
1997, it would not renew its various leases and subleases of approximately 100
service station properties from Getty or the existing petroleum supply agreement
between Getty and Uni-Marts with respect to such service stations and certain
additional service stations owned or operated by Uni-Marts. Uni-Marts
subsequently advised Getty by letter that it may be interested in negotiating
and entering into revised arrangements. While Getty has preliminarily discussed
such matters with Uni-Marts, there can be no assurance that any revised terms
will be agreed upon. In the event the parties do not agree upon any revised
arrangements prior to December 31, 1997, Marketing believes that it will be able
to re-lease the approximately 100 affected service station properties. The loss
of motor fuel product sales to Uni-Marts pursuant to the existing supply
agreement, if not replaced, could have a material adverse effect on Marketing's
revenues. Marketing believes such loss of product sales would not impact its
operating income because the affected leased service station properties should
be re-leased to retail dealers at higher retail product margins to be realized
by Marketing than the current lower wholesale product margins under the supply
agreement with Uni-Marts. Net sales and rental income attributable to the
Uni-Marts agreement amounted to $76.8 million (or 10.1% of net sales) and $4.6
million (or 14.3% of rental income), respectively, for the year ended January
31, 1996.
F-10
<PAGE> 57
Marketing'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 by Marketing as well as the price of petroleum products sold
have fluctuated widely in the past. As a result of the historic volatility of
product margins and the fact that they are affected by numerous diverse factors,
it is impossible to predict future margin levels.
7. INCOME TAXES
Getty and Marketing have entered into a Tax Sharing Agreement that defines
the parties' rights and obligations with respect to filing of returns, payments,
deficiencies and refunds of federal, state and other income, franchise or motor
fuel taxes relating to Getty's business for tax years prior to and including the
Distribution and with respect to certain tax attributes of Getty after the
Distribution. In general, the Tax Sharing Agreement provides that Getty will be
responsible for all federal, state and local tax liabilities that relate to
periods (or portions thereof) ending on or prior to the Distribution. For
periods subsequent to the Distribution, Marketing will file its own tax returns.
The provision for income taxes is reflected in the consolidated financial
statements as if Marketing had been operating on a stand-alone basis.
Marketing's provision (credit) for income taxes is summarized as follows
(in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ------- -------
<S> <C> <C> <C>
Current...................................................... $ 122 $(2,203) $ (804)
Deferred..................................................... 2,257 659 1,804
------ ------- -------
Provision (credit) for income taxes.......................... $2,379 $(1,544) $ 1,000
====== ======= =======
</TABLE>
The tax effects of temporary differences which comprise the deferred tax
assets and liabilities are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Property and equipment............................................... $(13,889) $(11,636)
Accruals............................................................. 1,626 1,736
Inventories.......................................................... 694 588
-------- --------
Net deferred tax liabilities......................................... $(11,569) $ (9,312)
======== ========
</TABLE>
The following is a reconciliation of the expected statutory federal income
tax provision (credit) and the actual provision (credit) for income taxes (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ------- ------
<S> <C> <C> <C>
Expected provision (credit) at statutory federal income tax
rate........................................................ $2,214 $(1,392) $ 986
State and local income taxes, net of federal benefit.......... 183 (182) 138
Other......................................................... (18) 30 (124)
------ ------- ------
Provision (credit) for income taxes........................... $2,379 $(1,544) $1,000
====== ======= ======
</TABLE>
8. STOCKHOLDERS' EQUITY
Marketing's authorized capital stock presently consists of 1,000 shares of
Marketing Common Stock, of which 1,000 shares are issued and outstanding and are
owned by Getty. Prior to the Distribution, Marketing's articles of incorporation
will be amended by the Marketing Board and by Getty, as sole stockholder of
Marketing. Under such amended articles, the total number of shares of all
classes of stock that Marketing will have authority to issue will be 40,000,000,
30,000,000 of which will be shares of Marketing Common Stock, $.01 par value per
share, and 10,000,000 of which will be shares of preferred stock, $.01 par value
per share. Based on the estimated number of shares of Getty Common Stock
outstanding as of the Distribution, approximately 12,675,000 shares of Marketing
Common Stock will be issued to stockholders of Getty. In addition, approximately
667,000 shares of Marketing Common Stock will be issued to the Marketing ESOP at
the time of the Distribution (See Note 9).
F-11
<PAGE> 58
A summary of the changes in stockholders' equity for the three years ended
January 31, 1996 is as follows (in thousands):
<TABLE>
<S> <C>
Balance, February 1, 1993........................................................ $39,811
Net income....................................................................... 1,818
Net cash transferred from Getty.................................................. 362
-------
Balance, January 31, 1994........................................................ 41,991
Net loss......................................................................... (2,434)
Net cash transferred to Getty.................................................... (2,496)
-------
Balance, January 31, 1995........................................................ 37,061
Net income....................................................................... 3,664
Net cash transferred from Getty.................................................. 9,586
-------
Balance, January 31, 1996........................................................ $50,311
=======
</TABLE>
9. EMPLOYEE BENEFIT PLANS
Effective after the Distribution, Marketing will have a retirement and
profit sharing plan with deferred 401(k) savings plan provisions (the
"Retirement Plan") for non-union employees meeting certain service requirements
and a Supplemental Plan for executives. Under the terms of these plans, the
annual discretionary contributions to the plans are determined by the Board of
Directors. Under the Retirement Plan, employees may make voluntary contributions
and Marketing has elected to match an amount equal to 50% of such contributions
but in no event more than 3% of the employee's eligible compensation. Under the
Supplemental Plan, a participating executive may receive an amount equal to 10%
of his compensation, reduced by the amount of any contributions allocated to
such executive under the Retirement Plan. Contributions, net of forfeitures,
made by Getty under the comparable Getty retirement plan and supplemental plan
in respect of persons who will be Marketing employees approximated $569,000,
$606,000 and $622,000 for the years ended January 31, 1996, 1995 and 1994,
respectively. In addition, Marketing has contributed $346,000, $334,000 and
$283,000 to a union welfare plan for the years ended January 31, 1996, 1995 and
1994, respectively. Such amounts are included in the accompanying consolidated
statements of operations.
In connection with the Distribution, Marketing will establish a leveraged
Employee Stock Ownership Plan (the "Marketing ESOP") that will purchase newly
issued shares of Marketing Common Stock from Marketing equal to five percent of
the outstanding shares of Marketing. The Marketing ESOP will purchase such
newly-issued shares from Marketing using the proceeds of a loan to be made by
Marketing to the Marketing ESOP. The Marketing ESOP loan will be repaid over a
five-year period, and Marketing will contribute annually to the Marketing ESOP
the funds required to repay such loan. The principal amount of the Marketing
ESOP loan is expected to be equal to the number of shares purchased by the
Marketing ESOP (approximately 667,000) multiplied by the purchase price per
share (determined on the basis of the value of the Marketing Common Stock). It
is expected that the repayment of the Marketing ESOP loan will result in
projected allocations to participants' accounts of an aggregate of approximately
133,400 shares of Marketing Common Stock per year, allocated in proportion to
compensation. Marketing expects that the five percent of the outstanding stock
of Marketing purchased by the Marketing ESOP will be allocated to covered
employees over a five-year period. Commencing February 1, 1997, Marketing will
recognize a charge to operating results over a five-year period relating to the
Marketing ESOP. Such charge will be based on the value of the Marketing Common
Stock in the future and, as such, is not currently determinable.
Immediately prior to the Distribution, each current holder of an option to
acquire shares of Getty Common Stock pursuant to Getty's 1985, 1988 and 1991
Stock Option Plans will receive, in exchange therefor, two separately
exercisable options: one to purchase shares of Getty Common Stock (a "Getty
Option") and one to purchase Marketing Common Stock (a "Marketing Option"), each
exercisable for the same number of shares and containing substantially
equivalent terms as the pre-Distribution option. The exercise price of each
Getty Option and Marketing Option (each, a "Replacement Option") will be set so
as to preserve the Aggregate Spread (as defined below) in value attributed to
the options currently held by such directors, officers and key employees. The
"Aggregate Spread" is an amount representing the difference between the exercise
price of an option and the price of a share of Getty Common Stock immediately
prior to the Distribution multiplied by the number of shares underlying such
option. Certain presently unexercisable options covering a total of 224,594
shares will become
F-12
<PAGE> 59
immediately exercisable at the date of the Distribution for persons covered by
certain "change of control" agreements. Accordingly, Marketing will recognize a
charge to operating results at the date of the Distribution equal to the product
of the number of such options and the difference between their exercise price
and the market price. Since the charge will be based on the value of the
Marketing Common Stock in the future, such amount is not currently determinable.
The Marketing Stock Option Plan authorizes Marketing to grant options to
purchase shares of Marketing Common Stock. The aggregate number of shares of
Marketing Common Stock which may be made the subject of options under the
Marketing Stock Option Plan will not exceed 1,300,000 shares, subject to further
adjustment for stock dividends and stock splits, of which approximately
1,080,000 shares will be subject to issuance upon the exercise of Replacement
Options (as described above) and the balance will be available for future option
grants. Except with respect to certain of the Replacement Options, which will be
immediately exercisable, the Marketing Stock Option Plan provides that options
are exercisable starting one year from the date of grant, on a cumulative basis
at the annual rate of 25 percent of the total number of shares covered by the
option.
The following is a schedule of stock option prices and activity relating to
the Getty Petroleum Corp. Stock Option Plans for the three years ended January
31, 1996. Subsequent to the Distribution, the exercise price of each Getty
option and Marketing option will be set so as to preserve the Aggregate Spread
(as defined above) in value attributed to the options currently held by the
holders:
<TABLE>
<CAPTION>
1985 PLAN 1988 PLAN 1991 PLAN
----------------------- ----------------------- -----------------------
NUMBER GETTY STOCK NUMBER GETTY STOCK NUMBER GETTY STOCK
OF OPTION PRICE OF OPTION PRICE OF OPTION PRICE
SHARES PER SHARE SHARES PER SHARE SHARES PER SHARE
------- ------------- ------- ------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at February 1,
1993.................... 207,159 $10.49-14.09 256,523 $11.12-18.62 214,275 $10.88-12.38
Granted................... 80,000 12.25-13.13
Exercised................. (9,833) 10.49 (2,500) 11.12 (1,250) 12.38
Cancelled................. (8,052) 10.49-14.09 (15,014) 11.12-18.62 (12,325) 10.88-12.38
------- ------------ ------- ------------ ------- ------------
Outstanding at January 31,
1994.................... 189,274 10.49-14.09 239,009 11.12-18.62 280,700 10.88-13.13
Granted................... 107,250 10.88
Exercised................. (1,245) 10.49-14.09 (250) 11.12 (125) 10.88
Cancelled................. (1,217) 14.09 (926) 17.12-18.62 (1,250) 10.88
------- ------------ ------- ------------ ------- ------------
Outstanding at January 31,
1995.................... 186,812 10.49-14.09 237,833 11.12-18.62 386,575 10.88-13.13
Granted................... 64,500 13.88 63,500 13.88
Exercised................. (2,500) 11.12 (5,500) 10.88
Cancelled................. (991) 10.49-14.09 (1,551) 11.12-18.62 (1,250) 10.88-12.38
------- ------------ ------- ------------ ------- ------------
Outstanding at January 31,
1996.................... 185,821 $10.49-14.09 298,282 $11.12-18.62 443,325 $10.88-13.88
======= ============ ======= ============ ======= ============
Exercisable at January 31,
1996.................... 185,821 $10.49-14.09 298,282* $11.12-18.62 390,997* $10.88-13.13
======= ============ ======= ============ ======= ============
Available for grant at
January 31, 1996........ -- 207 49,800
======= ======= =======
</TABLE>
- ---------------
* Includes options which become exercisable as of the date of the Distribution.
On December 13, 1996 additional options were granted for 151,400 shares with an
option price of $14.75 per share.
F-13
<PAGE> 60
10. QUARTERLY FINANCIAL DATA
The following is a summary of the quarterly results of operations for the
years ended January 31, 1996 and 1995 (unaudited as to quarterly information):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------- YEAR ENDED
FISCAL 1996: APRIL 30 JULY 31 OCTOBER 31 JANUARY 31 JANUARY 31
- ------------------------------------ -------- -------- ---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues............................ $194,967 $187,796 $215,486 $192,945 $ 791,194
Gross profit (loss)(a).............. (1,789) 2,425 4,031 3,540 8,207
Depreciation and amortization....... 3,095 3,146 3,339 3,519 13,099
Earnings (loss) before income taxes
and cumulative effect of
accounting change................. (2,113) 1,756 3,535 3,147 6,325
Net earnings (loss)................. (1,600)(b) 1,101 2,200 1,963 3,664(b)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------- YEAR ENDED
FISCAL 1995: APRIL 30 JULY 31 OCTOBER 31 JANUARY 31 JANUARY 31
- ------------------------------------ -------- -------- ---------- ---------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues............................ $170,136 $182,869 $198,240 $202,490 $ 753,735
Gross profit (loss)(a).............. (1,222) (8,084) 4,626 7,201 2,521
Depreciation and amortization....... 2,770 2,868 3,037 2,965 11,640
Earnings (loss) before income
taxes............................. (2,127) (8,992) 1,179 5,962 (3,978)
Net earnings (loss)................. (1,301) (5,502) 721 3,648 (2,434)
</TABLE>
- ---------------
(a) Gross profit (loss) is calculated as net sales (excluding rental and other
income) less cost of sales (excluding depreciation and amortization).
(b) Includes charge to earnings of $282 from the cumulative effect of adopting
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of."
11. RESTRUCTURING
During fiscal 1995, pre-tax charges of $1,846,000 were recorded to provide
for severance and other costs associated with restructuring Marketing's
organization and its operations. The restructuring charges included $1,171,000
for severance and related benefits resulting from a 6% reduction in the work
force, and $675,000 for other costs. Other costs include $203,000 related to
cancellation of computer equipment leases, $168,000 related to computer system
modifications, $141,000 related to the reduction of office space, $100,000
related to legal fees and $63,000 for other miscellaneous costs. Marketing's
consolidated balance sheets as of January 31, 1996 and 1995 included an accrual
of $326,000 and $1,048,000, respectively, relating to the restructuring. The
remaining accrual of $326,000 at January 31, 1996 relates to severance and
related benefits payable through October 1999.
12. SUBSEQUENT EVENT
In January 1997, Marketing obtained uncommitted lines of credit with two
banks in the aggregate amount of $50,000,000 through January 1998, which may be
utilized for working capital borrowings and letters of credit. Borrowings under
such lines of credit are unsecured and will bear interest at the applicable
bank's prime rate or, at Marketing's option, 1.1% above LIBOR.
F-14
<PAGE> 61
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED OCTOBER 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Net sales............................................................ $617,168 $574,021
Rental income........................................................ 24,904 23,949
Other income......................................................... 153 279
-------- --------
642,225 598,249
-------- --------
Cost of sales (excluding depreciation and amortization).............. 619,930 569,354
Selling, general and administrative expenses......................... 15,403 15,846
Depreciation and amortization........................................ 10,159 9,580
Interest expense..................................................... 352 291
-------- --------
645,844 595,071
-------- --------
Earnings (loss) before provision (credit) for income taxes and
cumulative effect of accounting change............................. (3,619) 3,178
Provision (credit) for income taxes.................................. (1,527) 1,195
-------- --------
Earnings (loss) before cumulative effect of accounting change........ (2,092) 1,983
Cumulative effect of accounting change............................... -- (282)
-------- --------
Net earnings (loss).................................................. $ (2,092) $ 1,701
======== ========
</TABLE>
See accompanying notes.
F-15
<PAGE> 62
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
OCTOBER
31, 1996
--------
<S> <C>
ASSETS
Current assets:
Cash and equivalents.......................................................... $ 937
Accounts receivable, less allowance
for doubtful accounts of $1,302............................................ 13,559
Inventories................................................................... 20,275
Deferred income taxes......................................................... 1,657
Prepaid expenses and other
current assets............................................................. 2,674
--------
Total current assets.................................................. 39,102
Property and equipment, at cost, less
accumulated depreciation and amortization..................................... 87,614
Other assets.................................................................... 2,163
--------
TOTAL ASSETS.......................................................... $128,879
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................................................. $ 28,821
Accrued expenses.............................................................. 11,247
Gasoline taxes payable........................................................ 16,196
--------
Total current liabilities............................................. 56,264
Deferred income taxes........................................................... 14,125
Other, principally deposits..................................................... 14,463
Stockholders' equity............................................................ 44,027
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............................ $128,879
========
</TABLE>
See accompanying notes.
F-16
<PAGE> 63
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED
OCTOBER 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss).................................................. $ (2,092) $ 1,701
Adjustments to reconcile net earnings (loss) to net cash provided by
operating activities:
Cumulative effect of accounting change............................. -- 282
Depreciation and amortization...................................... 10,159 9,580
Deferred income taxes.............................................. 899 560
Gain on dispositions of property and equipment..................... (95) (61)
Changes in assets and liabilities:
Accounts receivable................................................ (1,365) 4,073
Inventories........................................................ (358) (8,556)
Prepaid expenses and other current assets.......................... 153 (294)
Other assets....................................................... 385 (55)
Accounts payable, accrued expenses and gasoline taxes payable...... 9,707 (4,821)
Other, principally deposits........................................ 622 598
-------- --------
Net cash provided by operating activities....................... 18,015 3,007
-------- --------
Cash flows from investing activities:
Capital expenditures............................................... (13,843) (12,753)
Proceeds from dispositions of equipment............................ 281 419
-------- --------
Net cash used in investing activities........................... (13,562) (12,334)
-------- --------
Cash flows from financing activities:
Net cash transferred from (to) Getty............................... (4,192) 8,047
-------- --------
Net cash provided by (used in) financing activities............. (4,192) 8,047
-------- --------
Net increase (decrease) in cash and equivalents...................... 261 (1,280)
Cash and equivalents at beginning of period.......................... 676 2,449
-------- --------
Cash and equivalents at end of period................................ $ 937 $ 1,169
======== ========
Supplemental disclosure of cash flow information
Cash paid during the year for interest............................. $ 352 $ 291
</TABLE>
See accompanying notes.
F-17
<PAGE> 64
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The unaudited consolidated financial statements included herein have been
prepared by Getty Petroleum Marketing Inc. ("Marketing") on the same basis as
the audited financial statements, and include all adjustments (consisting of
normal recurring accruals) which are, in the opinion of management, necessary
for a fair presentation of the results of operations for the interim periods
ended October 31, 1996 and 1995, pursuant to the rules and regulations of the
Securities and Exchange Commission.
Marketing, a Maryland corporation, was formed on October 1, 1996 as a
wholly-owned subsidiary of Getty Petroleum Corp. ("Getty"). Getty plans to
separate its petroleum marketing business from its real estate business at the
close of business on or about January 31, 1997 with each business to be
conducted by a separate, publicly held corporation. In order to effect the
separation of these businesses, Getty will transfer to Marketing the assets and
liabilities of the petroleum marketing business and the New York Mid-Hudson
Valley home heating oil business previously conducted by a subsidiary of Getty,
and distribute all of the common shares of Marketing to the stockholders of
Getty (the "Distribution"). The Distribution is expected to be at the rate of
one share of common stock of Marketing (the "Marketing Common Stock") for each
share of Getty common stock (the "Getty Common Stock"). Getty will retain and
continue to own and operate the real estate business and the Pennsylvania and
Maryland home heating oil business previously conducted by another subsidiary.
After the Distribution, Getty will change its name to Getty Realty Corp.
("Realty" or "Getty").
The consolidated financial statements of Marketing contained herein have
been prepared on the basis that the assets and liabilities of the petroleum
marketing business were transferred using historical carrying values as recorded
by Getty, and Marketing's results of operations and cash flows were derived from
Getty's historical financial statements. Marketing's results of operations
include allocations of certain selling, general and administrative expenses,
namely employee benefits, payroll taxes and travel and entertainment expenses.
Employee benefits, payroll taxes and travel and entertainment expenses were
allocated to Marketing based on number of personnel and salaries specifically
identified to Marketing. Selling, general and administrative expenses allocated
to Marketing from Getty were $1,348,000 and $1,171,000 for the nine month
periods ended October 31, 1996 and October 31, 1995, respectively. Management
believes these allocations to be reasonable. The financial information is not
necessarily indicative of the financial results that would have occurred had
Marketing been operated as a separate, stand-alone entity during the reporting
period nor is it necessarily indicative of future results. However, Management
believes that these allocated amounts approximate what the expense would have
been on a stand-alone basis and that any additional costs, excluding additional
rent associated with the Master Lease, would have been immaterial.
Getty uses a centralized approach to cash management. As a result, cash and
equivalents (other than actual cash on hand) were not allocated to Marketing in
the consolidated financial statements. However, under the Distribution
Agreement, Marketing will receive cash balances from Getty, as of the close of
business on the date of the Distribution, in an amount sufficient to provide
Marketing with net working capital of $1.1 million.
Environmental expenses in the historical periods have been predominantly
attributable to the replacement or upgrading of USTs (as defined below), which
has been the responsibility of Getty. Getty has agreed to pay all costs relating
to, and to indemnify Marketing for, all scheduled pre-closing environmental
liabilities and obligations, all scheduled future upgrades necessary to cause
underground storage tanks (such tanks, including related piping, underground
pumps, wiring and monitoring devices, the "USTs") to conform to the 1998 federal
standards for USTs (the "1998 Standards"), and all environmental liabilities and
obligations arising out of discharges with respect to properties containing USTs
that have not been upgraded to meet the 1998 Standards that are discovered prior
to the date such USTs are upgraded to meet the 1998 Standards. Marketing will be
responsible for and will indemnify Getty with respect to all other environmental
obligations and liabilities. No amounts have been included for these other
environmental obligations and liabilities as they are not currently
ascertainable, since Marketing cannot predict the number or the magnitude of
discharges or
F-18
<PAGE> 65
releases from its USTs that may be discovered in the future or the cost of
remediation relating thereto. Environmental costs of Marketing included in the
historical financial statements were $1.2 million and $1.2 million for the nine
months ended October 31, 1996 and 1995, respectively. Future environmental
expenses of Marketing, though not currently known or ascertainable, are expected
to be significantly lower than the aggregate amounts recorded by Getty ($6.8
million and $11.2 million for the nine months ended October 31, 1996 and 1995,
respectively, which amounts were net of $6.1 million and $1.1 million for the
nine months ended October 31, 1996 and 1995, respectively, for recoveries
against certain state underground tank funds), since USTs have been or will be
upgraded at Getty's expense by December 22, 1998.
The results of operations for the interim periods ended October 31, 1996
and 1995 are not necessarily indicative of the results to be expected for the
full fiscal years.
2. ACCOUNTING CHANGE
The consolidated statement of operations for the nine months ended October
31, 1995 includes an after-tax charge to earnings of $282,000 for the cumulative
effect of adopting, at the end of that fiscal year, Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of" relating to assets held for
disposal.
3. INVENTORIES
Inventories, primarily finished petroleum products, are principally
accounted for under the lower of last-in, first-out ("LIFO") cost or market. Due
to changes in product costs during the nine months ended October 31, 1996,
Marketing recorded a LIFO inventory reserve of $3,955,000, which increased cost
of sales and decreased pre-tax income by such amount. During the prior year's
comparable period, there was no LIFO inventory charge.
4. STOCKHOLDERS' EQUITY
A summary of the changes in stockholders' equity for the nine months ended
October 31, 1996 is as follows (in thousands):
<TABLE>
<S> <C>
Balance, February 1, 1996.................................. $50,311
Net loss................................................... (2,092)
Net cash transferred to Getty.............................. (4,192)
-------
Balance, October 31, 1996.................................. $44,027
=======
</TABLE>
5. EMPLOYEE BENEFIT PLANS
In connection with the Distribution, Marketing will establish a leveraged
Employee Stock Ownership Plan (the "Marketing ESOP") that will purchase newly
issued shares of Marketing Common Stock from Marketing equal to five percent of
the outstanding shares of Marketing. The Marketing ESOP will purchase such
newly-issued shares from Marketing using the proceeds of a loan to be made by
Marketing to the Marketing ESOP. The Marketing ESOP loan will be repaid over a
five-year period, and Marketing will contribute annually to the Marketing ESOP
the funds required to repay such loan. The principal amount of the Marketing
ESOP loan is expected to be equal to the number of shares purchased by the
Marketing ESOP (approximately 667,000) multiplied by the purchase price per
share (determined on the basis of the value of the Marketing common stock). It
is expected that the repayment of the Marketing ESOP loan will result in
projected allocations to participants' accounts of an aggregate of approximately
133,400 shares of Marketing Common Stock per year, allocated in proportion to
compensation. Marketing expects that the five percent of the outstanding stock
of Marketing purchased by the Marketing ESOP will be allocated to covered
employees over a five-year period. Commencing February 1, 1997, Marketing will
recognize a charge to operating results over a five-year period relating to the
Marketing ESOP. Such charge will be based on the value of the Marketing Common
Stock in the future and, as such, is not currently determinable.
F-19
<PAGE> 66
Immediately prior to the Distribution, each current holder of an option to
acquire shares of Getty Common Stock pursuant to Getty's 1985, 1988 and 1991
Stock Option Plans will receive, in exchange therefor, two separately
exercisable options: one to purchase shares of Getty Common Stock (a "Getty
Option") and one to purchase Marketing Common Stock (a "Marketing Option"), each
exercisable for the same number of shares and containing substantially
equivalent terms as the pre-Distribution option. The exercise price of each
Getty Option and Marketing Option will be set so as to preserve the Aggregate
Spread (as defined below) in value attributed to the options currently held by
such directors, officers and key employees. The "Aggregate Spread" is an amount
representing the difference between the exercise price of an option and the
price of a share of Getty Common Stock immediately prior to the Distribution
multiplied by the number of shares underlying such option. Certain presently
unexercisable options covering a total of 224,594 shares will become immediately
exercisable at the date of the Distribution for persons covered by certain
"change of control" agreements. Accordingly, Marketing will recognize a charge
to operating results at the date of the Distribution equal to the product of the
number of such options and the difference between their exercise price and the
market price. Since the charge will be based on the value of the Marketing
Common Stock in the future, such amount is not currently determinable.
F-20
<PAGE> 67
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
Getty Petroleum Marketing Inc., a Maryland corporation ("Marketing"), was
formed on October 1, 1996 as a wholly-owned subsidiary of Getty Petroleum Corp.
("Getty"). Getty plans to separate its petroleum marketing business from its
real estate business at the close of business on or about January 31, 1997 with
each business to be conducted by a separate, publicly held corporation. In order
to effect the separation of these businesses, Getty will transfer to Marketing
the assets and liabilities of the petroleum marketing business and the New York
Mid-Hudson Valley home heating oil business previously conducted by a subsidiary
of Getty, and distribute all of the common shares of Marketing to the
stockholders of Getty (the "Distribution"). The Distribution is expected to be
at the rate of one share of common stock of Marketing (the "Marketing Common
Stock") for each share of Getty common stock. Getty will retain and continue to
own and operate the real estate business and the Pennsylvania and Maryland home
heating oil business previously conducted by another subsidiary. After the
Distribution, Getty will change its name to Getty Realty Corp.
The historical consolidated financial statements of Marketing reflect
periods during which Marketing did not operate as a separate, publicly held
company. The historical consolidated financial statements of Marketing contained
herein have been prepared on the basis that the assets and liabilities of the
petroleum marketing and related business were transferred using historical
carrying values as recorded by Getty and present Marketing's financial position
and results of operations as derived from Getty's historical financial
statements. Therefore, such historical consolidated financial statements may not
reflect the consolidated results of operations or financial position that would
have existed had Marketing operated as a separate, publicly held company.
The following unaudited pro forma consolidated financial statements of
Marketing contain adjustments to the historical consolidated balance sheet as of
October 31, 1996 and the historical consolidated statements of operations for
the fiscal year ended January 31, 1996 and for the nine months ended October 31,
1996 as if the Distribution had occurred on October 31, 1996 for purposes of the
pro forma consolidated balance sheet and on February 1, 1995 for purposes of the
pro forma consolidated statements of operations.
THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS ARE PROVIDED FOR
COMPARATIVE PURPOSES ONLY AND DO NOT PURPORT TO BE INDICATIVE OF THE RESULTS
WHICH ACTUALLY WOULD HAVE BEEN OBTAINED IF THE ABOVE-MENTIONED TRANSACTIONS HAD
BEEN EFFECTED ON THE DATES INDICATED OR OF THE RESULTS WHICH MAY BE OBTAINED IN
THE FUTURE. THE INFORMATION PROVIDED IN THE UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE HISTORICAL CONSOLIDATED FINANCIAL STATEMENTS OF MARKETING
AND THE NOTES THERETO CONTAINED ELSEWHERE IN THIS INFORMATION STATEMENT. THE
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS DO NOT CONTAIN ALL
DISCLOSURES REQUIRED BY GENERALLY ACCEPTED ACCOUNTING PRINCIPLES.
F-21
<PAGE> 68
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JANUARY 31, 1996 NINE MONTHS ENDED OCTOBER 31, 1996
----------------------------------------- ---------------------------------------
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net sales................... $ 758,887 $ -- $758,887 $ 617,168 $ -- $617,168
Rental income............... 32,025 -- 32,025 24,904 -- 24,904
Other income................ 282 960(a) 1,242 153 720(a) 873
-------- ------- -------- -------- ----- --------
791,194 960 792,154 642,225 720 642,945
-------- ------- -------- -------- ----- --------
Cost of sales (excluding
depreciation and
amortization)............. 750,680 789(b) 751,469 619,930 592(b) 620,522
Selling, general and
administrative expenses... 20,702 1,260(a)(c) 21,962 15,403 945(a)(c) 16,348
Depreciation and
amortization.............. 13,099 -- 13,099 10,159 -- 10,159
Interest expense............ 388 -- 388 352 -- 352
-------- ------- -------- -------- ----- --------
784,869 2,049 786,918 645,844 1,537 647,381
-------- ------- -------- -------- ----- --------
Income (loss) before
provision (credit) for
income taxes.............. 6,325 (1,089) 5,236 (3,619) (817) (4,436)
Provision (credit) for
income taxes.............. 2,379 (445)(d) 1,934 (1,527) (334)(c) (1,861)
-------- ------- -------- -------- ----- --------
Net earnings (loss)......... $ 3,946(e) $ (644) $ 3,302 (e) $ (2,092) $(483) $ (2,575)
======== ======= ======== ======== ===== ========
Per share data:
Net earnings (loss)
per share............... $ .25 (e) $ (.19)
======== ========
Weighted average shares
outstanding............. 13,315 (f) 13,340 (f)
======== ========
</TABLE>
See accompanying notes to unaudited pro forma consolidated statements of
operations.
F-22
<PAGE> 69
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The unaudited pro forma consolidated statements of operations have been
derived from the historical financial statements of Marketing and reflect
certain pro forma adjustments as if the Distribution had been effected as of
February 1, 1995.
(a) Getty and Marketing have entered into a Services Agreement (the
"Services Agreement"), under which Marketing will provide certain administrative
and technical services to Getty and Getty will provide certain limited services
to Marketing. Marketing estimates that the net fees to be paid by Getty to
Marketing for services performed (after deducting the fees paid by Marketing to
Getty for services provided by Getty) will initially be approximately $80,000
per month, which amount takes into account Marketing's additional costs related
to providing such services, and will decline as the services performed decrease.
It is estimated that the difference between the net fees and additional costs
will not have a material impact on Marketing's results of operations. Getty
presently expects that most of such services will be provided by Marketing for
approximately one year.
(b) Represents additional rent paid to Getty by Marketing as provided for
in the Master Lease Agreement between the parties.
(c) Selling, general and administrative expenses include additional
incremental administrative costs Marketing will incur, such as audit, stock
exchange listing and transfer agent fees, annual report costs and board of
directors' costs as a result of operating as a separate, publicly held company.
(d) Represents the adjustment to the tax provision (benefit) due to the net
effect of the pro forma adjustments described above at the statutory tax rate of
40.9%.
(e) Excludes charge of $282,000, or $.02 per share, from the cumulative
effect of adopting Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of."
(f) In connection with the Distribution, Marketing will establish a
leveraged Employee Stock Ownership Plan (the "Marketing ESOP") that will
purchase newly issued shares of Marketing Common Stock from Marketing equal to
five percent of the outstanding shares of Marketing. The pro forma weighted
average number of shares of common stock outstanding during the fiscal year
ended January 31, 1996 and nine months ended October 31, 1996 includes weighted
average shares outstanding (based on Getty's weighted average shares
outstanding) plus 667,000 shares to reflect the issuance of the Marketing ESOP
shares.
Commencing February 1, 1997, Marketing will recognize a charge to operating
results relating to the Marketing ESOP over a five-year period. Such charge will
be based on the value of the Marketing Common Stock in the future and, as such,
is not currently determinable and, therefore, is not reflected in the unaudited
pro forma consolidated statements of operations.
A "change in control" will be deemed to have occurred as a result of the
Distribution pursuant to certain agreements entered into by Getty in December
1994 with its non-director officers and certain key employees. Under the
agreements, all Getty stock options granted to such officers or key employees
would immediately vest and would be exercisable for three years for such
officers and a shorter period for such key employees. Accordingly, for certain
of such options covering a total of 224,594 shares, Marketing will recognize a
charge to operating results at the Distribution Date, representing the
difference between the exercise price and the market price multiplied by the
number of such options. Since the charge will be based on the value of the
Marketing Common Stock in the future, such amount is not currently determinable
and has not been included in the unaudited pro forma consolidated statements of
operations.
Environmental expenses in the historical periods have been predominantly
attributable to the replacement or upgrading of USTs (as defined below), which
has been the responsibility of Getty. Getty has agreed to pay all costs relating
to, and to indemnify Marketing for, all scheduled pre-closing environmental
liabilities and obligations, all scheduled future upgrades (the "Upgrades")
necessary to cause underground storage tanks (such tanks, including related
piping, underground pumps, wiring and monitoring devices, the "USTs") to conform
to the 1998 federal standards for USTs (the "1998 Standards"), and all
environmental liabilities and obligations arising out of discharges with respect
to properties containing USTs that have not been upgraded to meet the 1998
Standards that are discovered prior to the date such USTs are upgraded to meet
the 1998 Standards. Marketing will be responsible for and will indemnify Getty
with respect to all other environmental obligations and liabilities. No amounts
have been included in the unaudited pro forma consolidated financial statements
for these other environmental obligations and liabilities as they are not
currently ascertainable, since Marketing cannot predict the number or the
magnitude of discharges or releases from its USTs that may be discovered in the
future or the cost of remediation relating thereto.
F-23
<PAGE> 70
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF OCTOBER 31, 1996
(in thousands)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents...................................... $ 937 $ 18,262(a) $ 19,199
Accounts receivable, net.................................. 13,559 -- 13,559
Inventories............................................... 20,275 -- 20,275
Deferred income taxes..................................... 1,657 -- 1,657
Prepaid expenses and other current assets................. 2,674 -- 2,674
-------- -------- --------
Total current assets................................... 39,102 18,262 57,364
Property and equipment, net................................. 87,614 -- 87,614
Other assets................................................ 2,163 -- 2,163
-------- -------- --------
TOTAL ASSETS........................................... $ 128,879 $ 18,262 $ 147,141
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 28,821 $ -- $ 28,821
Accrued expenses.......................................... 11,247 -- 11,247
Gasoline taxes payable.................................... 16,196 -- 16,196
-------- -------- --------
Total current liabilities.............................. 56,264 -- 56,264
Deferred income taxes....................................... 14,125 -- 14,125
Other, principally deposits................................. 14,463 -- 14,463
Stockholders' equity........................................ 44,027 18,262(a) 62,289
-------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............. $ 128,879 $ 18,262 $ 147,141
======== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma consolidated balance sheet.
F-24
<PAGE> 71
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
The unaudited pro forma consolidated balance sheet has been derived from
the historical financial statements of Marketing and reflects certain pro forma
adjustments as if the Distribution had been effected as of October 31, 1996.
(a) Represents cash to be received from Getty in an amount sufficient to
provide Marketing with net working capital of approximately $1.1 million in
accordance with the Distribution Agreement.
In connection with the Distribution, Marketing will establish the Marketing
ESOP that will purchase newly issued shares of Marketing Common Stock from
Marketing equal to five percent of the outstanding shares of Marketing. In
connection therewith, Marketing common stock and paid-in capital will increase
by the fair value of such shares purchased. This increase in stockholders'
equity will be offset by an equal amount for the related note receivable from
the Marketing ESOP. As such amounts will be based on the value of the Marketing
Common Stock in the future, they are not currently determinable and, therefore,
are not reflected in the unaudited pro forma consolidated balance sheet.
F-25
<PAGE> 72
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of Getty Petroleum Marketing Inc.:
In connection with our audits of the consolidated financial statements of
Getty Petroleum Marketing Inc. and Subsidiaries as of January 31, 1996 and 1995,
and for each of the three years in the period ended January 31, 1996, which
financial statements are included in this Form 10/A, we have also audited the
financial statement schedule on page II-2.
In our opinion, the financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents fairly, in
all material respects, the information required to be included therein.
Coopers & Lybrand L.L.P.
New York, New York
November 6, 1996, except for Notes 6, 9 and 12, as to which
the date is January 13, 1997.
II-1
<PAGE> 73
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
FOR THE YEARS ENDED JANUARY 31, 1996, 1995 AND 1994
(in thousands)
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING END OF
OF PERIOD ADDITIONS DEDUCTIONS PERIOD
---------- --------- ---------- ----------
<S> <C> <C> <C> <C>
1996:
Allowance for doubtful accounts*............ $1,336 $ 493 $604 $1,225
====== ==== ==== ======
1995:
Allowance for doubtful accounts*............ $1,379 $ 313 $356 $1,336
====== ==== ==== ======
1994:
Allowance for doubtful accounts*............ $1,467 $ 495 $583 $1,379
====== ==== ==== ======
</TABLE>
- -------------------------
* Relates to accounts receivable.
II-2
<PAGE> 74
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date: January 27, 1997
GETTY PETROLEUM MARKETING INC.
By: /s/ Leo Liebowitz
-------------------------------------
Leo Liebowitz
Chairman and Chief Executive
Officer
II-3
<PAGE> 75
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------------------------
<C> <S>
2.1 Form of Reorganization and Distribution Agreement between the Registrant and Getty
Petroleum Corp.
10.2 Form of Master Lease Agreement between the Registrant and Getty Petroleum Corp.
10.5 Form of Trademark License Agreement between the Registrant and Getty Petroleum
Corp.
</TABLE>
<PAGE> 1
EXHIBIT 2.1
REORGANIZATION AND
DISTRIBUTION AGREEMENT
between
GETTY PETROLEUM CORP.
and
GETTY PETROLEUM MARKETING INC.
dated as of
February 1, 1997
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS ................................................. 2
Section 1.01 General ............................................. 2
Section 1.02 Terms Defined Elsewhere in Agreement ................ 14
ARTICLE II - TRANSFER OF ASSETS ........................................ 14
Section 2.01 Merger of Aero into Getty ........................... 14
Section 2.02 Transfer of Assets to Marketing ..................... 14
Section 2.03 Transfers Not Effected Prior to the Distribution .... 15
Section 2.04 Cooperation Regarding Assets ........................ 16
Section 2.05 No Representations or Warranties; Consents .......... 17
Section 2.06 Conveyancing and Assumption Instruments ............. 18
ARTICLE III - ASSUMPTION AND SATISFACTION OF LIABILITIES ................ 21
Section 3.01 Assumption and Satisfaction of Liabilities .......... 21
ARTICLE IV - THE DISTRIBUTION ........................................... 21
Section 4.01 Cooperation Prior to the Distribution ............... 21
Section 4.02 Getty Board Action; Conditions Precedent
to the Distribution ................................. 22
Section 4.03 The Distribution .................................... 24
ARTICLE V - INDEMNIFICATION ............................................. 24
Section 5.01 Indemnification by Getty ............................ 24
Section 5.02 Indemnification by Marketing ........................ 25
Section 5.03 Insurance Proceeds .................................. 25
Section 5.04 Procedure for Indemnification ....................... 26
Section 5.05 Remedies Cumulative ................................. 30
Section 5.06 Survival of Indemnities ............................. 30
i
<PAGE> 3
ARTICLE VI - CERTAIN ADDITIONAL MATTERS ................................ 30
Section 6.01 Marketing Board ................................... 30
Section 6.02 Resignations; Getty Board .......................... 31
Section 6.03 Certificate Charter and Bylaws ..................... 31
Section 6.04 Employee Stock Ownership Plan ...................... 31
Section 6.05 Certain Post-Distribution Transactions ............. 32
Section 6.06 Corporate Name ..................................... 33
ARTICLE VII - ACCESS TO INFORMATION AND SERVICES ....................... 33
Section 7.01 Provision of Corporate Records ..................... 33
Section 7.02 Access to Information .............................. 34
Section 7.03 Production of Witnesses ........................... 34
Section 7.04 Reimbursement ...................................... 35
Section 7.05 Retention of Records ............................... 35
Section 7.06 Confidentiality .................................... 35
Section 7.07 Privileged Matters ................................. 36
ARTICLE VIII - INSURANCE ............................................... 39
Section 8.01 Policies and Rights Included Within
the Marketing Assets ............................... 39
Section 8.02 Post-Distribution Date Claims ...................... 40
Section 8.03 Administration and Reserves ........................ 40
Section 8.04 Agreement for Waiver of Conflict and
Shared Defense ..................................... 42
Section 8.05 Surety Bonds and Letters of Credit ................. 42
ARTICLE IX - MISCELLANEOUS ............................................. 43
Section 9.01 Complete Agreement; Construction ..................... 43
Section 9.02 Expenses ............................................. 44
Section 9.03 Governing Law ........................................ 44
Section 9.04 Notices .............................................. 44
Section 9.05 Amendments ........................................... 45
Section 9.06 Successors and Assigns ............................... 45
Section 9.07 Termination ......................................... 45
Section 9.08 Subsidiaries ......................................... 45
Section 9.09 No Third-Party Beneficiaries ........................ 45
Section 9.10 Titles and Headings .................................. 45
Section 9.11 Exhibits and Schedules ............................... 46
ii
<PAGE> 4
Section 9.12 Legal Enforceability................................... 46
Section 9.13 Consent of Parties..................................... 46
iii
<PAGE> 5
SCHEDULE OF EXHIBITS
Exhibit A: Getty Pro Forma Balance Sheet
Exhibit B: Marketing Bylaws - See Exhibit 3.4 to Form 10/A
Exhibit C: Marketing Restated Articles of Incorporation - See Exhibit 3.2
to Form 10/A
Exhibit D: Marketing Pro Forma Balance Sheet
Exhibit E: Master Lease between Marketing and Getty - See Exhibit 10.2 to
Form 10/A
Exhibit F: Office Space License between Getty and Marketing
Exhibit G: Services Agreement between Marketing and Getty - See Exhibit
10.4 to Form 10/A
Exhibit H: Tax Sharing Agreement between Marketing and Getty - See Exhibit
10.3 to Form 10/A
Exhibit I: Trademark License Agreement between Marketing and Getty - See
Exhibit 10.5 to Form 10/A
iv
<PAGE> 6
LIST OF SCHEDULES
Schedule 1.01(a) Environmental Liabilities
Schedule 1.01(b) Upgrades
Schedule 1.01(c) Marketing Equipment
Schedule 1.01(d) Shared Policies
Schedule 2.06 Conveyance and Assumption Instruments
Schedule 4.01 Consents
v
<PAGE> 7
___________________, 1997
REORGANIZATION AND DISTRIBUTION AGREEMENT
This REORGANIZATION AND DISTRIBUTION AGREEMENT (this "Agreement") is
made this 1st day of February, 1997 between Getty Petroleum Corp., a Delaware
corporation ("Getty"), and Getty Petroleum Marketing Inc. a Maryland corporation
and a wholly-owned subsidiary of Getty ("Marketing").
RECITALS
WHEREAS, Getty, directly and through subsidiaries, (i) acquires,
develops, leases and disposes of real estate (the "Real Estate Business"),
purchases, stores, transports and sells home heating oil to residential and
commercial customers in Pennsylvania and Maryland (the "Aero Home Heating Oil
Business"), and (ii) purchases, stores, markets and distributes gasoline and
diesel fuel in 12 Northeastern and Middle Atlantic States and purchases, stores,
transports and sells home heating oil to residential and commercial customers in
the New York Mid-Hudson Valley (which businesses described in this clause (ii)
are more specifically defined herein as the "Marketing Business");
WHEREAS, the Board of Directors of Getty has determined that it is in
the best interests of Getty to separate the Aero Home Heating Oil Business and
the Real Estate Business on the one hand, and the Marketing Business on the
other hand, and, in order to effect such separation, to transfer to Marketing
the stock of certain Getty subsidiaries principally engaged in the Marketing
Business and certain other assets relating principally to the Marketing Business
(collectively, the "Asset Transfers"), and thereafter to distribute all of the
outstanding shares of common stock, par value $.01 per share, of Marketing to
the holders of Getty common stock (the "Distribution");
<PAGE> 8
WHEREAS, Getty has effected (i) certain preliminary transfers and
corporate restructurings and (ii) the elimination of all intercompany and
intracompany receivables, payables and loans between entities that will be part
of Getty and its subsidiaries after the Distribution and entities that will be
part of Marketing and its subsidiaries after the Distribution, which
transactions are not contingent upon consummation of the Distribution and will
not be undone if the Distribution does not occur; and
WHEREAS, in connection with the Distribution, Getty and Marketing have
determined that it is necessary and desirable to set forth the principal
corporate transactions required to effect the Asset Transfers and the
Distribution, and to set forth the agreements that will govern certain matters
following the Distribution.
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 General. As used in this Agreement, the following terms
shall have the following meanings:
Action: Any action, claim, suit, arbitration, inquiry, proceeding or
investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
Aero: Aero Oil Company, a Pennsylvania corporation.
Affiliate: With respect to any specified Person, means any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person. For purposes of this
definition, "control," when used with
2
<PAGE> 9
respect to any Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing. Notwithstanding
the foregoing, (i) the Affiliates of Getty shall not include Marketing, the
Marketing Subsidiaries or any other Person that would be an Affiliate of Getty
by reason of Getty's ownership of the capital stock of Marketing prior to the
Distribution or the fact that any officer or director of Marketing or any of
the Marketing Subsidiaries shall also serve as an officer or director of Getty
or any of the Retained Subsidiaries, and (ii) the Affiliates of Marketing shall
not include Getty, the Retained Subsidiaries or any other Person that would be
an Affiliate of Marketing by reason of Getty's ownership of the capital stock
of Marketing prior to the Distribution or the fact that any officer or director
of Marketing or any of the Marketing Subsidiaries shall also serve as an
officer or director of Getty or any of the Retained Subsidiaries.
Agent: The distribution agent appointed by Getty to distribute the
Marketing Common Stock pursuant to the Distribution.
Claims Administration: The processing of pre-Distribution claims made
under the Policies (including Self Insurance Programs), including the reporting
of claims to the insurance carrier, management and defense of claims and
providing for appropriate releases upon settlement of claims.
Code: The Internal Revenue Code of 1986, as amended.
Commission: The Securities and Exchange Commission.
Conveyancing and Assumption Instruments: Collectively, the various
agreements, instruments and other documents to be entered into to effect the
Asset Transfers
3
<PAGE> 10
and the assumption of Liabilities in the manner contemplated by this Agreement
and the Related Agreements.
Distribution Date: The date determined by the Getty Board as the date
on which the Distribution shall be effected.
Distribution Record Date: The date established by the Getty Board as
the date for taking a record of the Holders of Getty Common Stock entitled to
participate in the Distribution.
Employee Stock Ownership Plan: The Employee Stock Ownership Plan of
Getty Petroleum Marketing Inc.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Financing Obligations: All (i) indebtedness for borrowed money, (ii)
obligations evidenced by bonds, notes, debentures or similar instruments, (iii)
obligations under capitalized leases and deferred purchase arrangements, (iv)
reimbursement or other obligations relating to letters of credit or similar
arrangements, and (v) obligations to guarantee, directly or indirectly, any of
the foregoing types of obligations on behalf of others.
Gasway: Gasway, Inc., a New York corporation.
Getty Board: The Board of Directors of Getty.
Getty Books and Records: The books and records (including
computerized records, ledgers, files and software) of Getty and the Retained
Subsidiaries and all books and records owned by Getty and its Subsidiaries which
relate to the Retained Business, are necessary to operate the Retained Business,
or are required by law to be retained by Getty, including, without limitation,
all such books and records relating to Retained Employees, all
4
<PAGE> 11
files relating to any Action pertaining to the Retained Liabilities, original
corporate minute books, stock ledgers and certificates and corporate seals, and
all licenses, leases, agreements and filings, relating to Getty, the Retained
Subsidiaries or the Retained Business (but not including the Marketing Books
and Records, provided that Getty shall have access to, and shall have the right
to obtain duplicate copies of, the Marketing Books and Records in accordance
with the provisions of Article VII).
Getty Common Stock: The common stock, par value $0.10 per share, of
Getty.
Getty Group: Getty and the Retained Subsidiaries, collectively.
Getty Pro Forma Balance Sheet: The Pro Forma Consolidated Balance
Sheet for Getty, after giving effect to the Distribution, as of October 31,
1996 attached hereto as Exhibit A.
Highspire Assets: All tangible and intangible personal property and
equipment that Aero owns or to which it has rights and that is located at or
used in connection with the operation of the property is known as the Highspire
Terminal.
Holders: The holders of record of Getty Common Stock as of the
Distribution Record Date.
HSR Act: The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
Indemnified Environmental Liabilities: All Liabilities relating to
(i) the pre-closing environmental liabilities and obligations set forth on
Schedule 1.01(a) hereto, (ii) all future upgrades set forth on Schedule 1.01(b)
hereto necessary to cause USTs to conform to the 1998 federal standards for
USTs, and (iii) all environmental liabilities and obligations arising out of
discharges with respect to the properties containing USTs that have not been
upgraded to conform to the 1998 federal standards for USTs, that are discovered
prior to the date such USTs are upgraded to meet the 1998 federal standards.
5
<PAGE> 12
Insurance Administration: With respect to each Policy, the accounting
for premiums, retrospectively rated premiums, defense costs, adjuster's fees,
indemnity payments, deductibles and retentions as appropriate under the terms
and conditions of such Policy; and the reporting to excess insurance carriers of
any losses or claims in accordance with Policy provisions, and the distribution
of Insurance Proceeds as contemplated by this Agreement.
Insurance Proceeds: Those moneys (i) received by an insured from an
insurance carrier or (ii) paid by an insurance carrier on behalf of an insured,
in either case net of any applicable premium adjustment, retrospectively-rated
premium, deductible, retention, cost or reserve paid or held by or for the
benefit of such insured.
Insured Claims: Those Liabilities that, individually or in the
aggregate, are covered within the terms and conditions of any of the Policies,
whether or not subject to deductibles, co-insurance, uncollectability or
retrospectively rated premium adjustments, but only to the extent that such
Liabilities are within applicable Policy limits, including aggregates.
IRS: The Internal Revenue Service.
KOSCO: Kingston Oil Supply Corp., a New York corporation.
Liabilities: Any and all debts, liabilities and obligations, absolute
or contingent, matured or unmatured, liquidated or unliquidated, accrued or
unaccrued, known or unknown, whenever arising, including all costs and expenses
relating thereto, and including, without limitation, those debts, liabilities
and obligations arising under any law, rule, regulation, Action, threatened
Action, order or consent decree of any governmental
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entity or any award of any arbitrator of any kind, and those arising under any
contract, commitment or undertaking.
Marketing Adjustment Amount: The difference between the Marketing
Initial Target Net Working Capital and the Marketing Initial Net Working
Capital.
Marketing Balance Sheet: The Consolidated Balance Sheet for Marketing
as of October 31, 1996 attached hereto as Exhibit D.
Marketing Board: The Board of Directors of Marketing.
Marketing Books and Records: The books and records (including
computerized records, ledgers, files and software) of Marketing and the
Marketing Subsidiaries and all books and records owned by Getty and its
Subsidiaries that relate to the Marketing Business or are necessary to operate
the Marketing Business including, without limitation, all such books and records
relating to Marketing Employees, all files relating to any Action being assumed
by Marketing as part of the Marketing Liabilities, original corporate minute
books, stock ledgers and certificates and corporate seals, and all licenses,
leases, agreements and filings relating to Marketing, the Marketing Subsidiaries
or the Marketing Business (but not including the Getty Books and Records,
provided that Marketing shall have access to, and have the right to obtain
duplicate copies of, the Getty Books and Records in accordance with the
provisions of Article VII).
Marketing Business: The businesses conducted by Marketing and the
Marketing Subsidiaries and the businesses conducted pursuant to or utilizing the
Marketing Assets, including without limitation (i) the purchase, storage,
distribution, marketing and sale of gasoline and diesel fuel and other related
products at wholesale and through terminals and
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a retail service station network and (ii) the purchase, storage, transportation
and sale of home heating oil to residential and commercial customers in the New
York Mid-Hudson Valley.
Marketing Bylaws: The Bylaws of Marketing, substantially in the form
of Exhibit B, to be in effect at the Distribution Date.
Marketing Charter: The Articles of Incorporation of Marketing,
substantially in the form of Exhibit C, to be in effect at the Distribution
Date.
Marketing Common Stock: The common stock, par value $.01 per share,
of Marketing.
Marketing Employees: The persons employed by the Marketing Group on
the Distribution Date, all of whom (except those employed pursuant to union
contracts or to agreements providing for continued employment upon a change in
control of Getty) are at will employees.
Marketing Equipment: Certain equipment of Getty relating to the
storage, distribution and marketing of motor fuel, including the tanks (other
than the Retained USTs), racks, signs, motor fuel pumps, canopies and associated
equipment described on Schedule 1.01(c) hereto.
Marketing Group: Marketing and the Marketing Subsidiaries,
collectively.
Marketing Initial Cash Balance: The amount of cash sufficient to
cause Marketing Initial Net Working Capital to equal Marketing Initial Target
Net Working Capital.
Marketing Initial Net Working Capital: The excess of the book value
of the current assets of the Marketing Group over the book value of the current
liabilities of the
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Marketing Group as of the Distribution Date, as determined in accordance with
Section 2.06(b) hereof.
Marketing Initial Target Net Working Capital: $1,100,000.
Marketing Liabilities: (i) All of the Liabilities of the Marketing
Group under, or to be retained or assumed by Marketing or any of the Marketing
Subsidiaries pursuant to, this Agreement or any of the Related Agreements, (ii)
all Liabilities for payment of outstanding drafts of Getty attributable to the
Marketing Business existing as of the Distribution Date, and (iii) all other
Liabilities arising out of or in connection with any of the Marketing Assets or
the Marketing Business, determined on a basis consistent with the determination
of the Liabilities of Marketing included on the Marketing Balance Sheet (but
excluding (i) all Indemnified Environmental Liabilities and (ii) any Financing
Obligations of Getty or any of the Retained Subsidiaries, except to the extent
otherwise set forth above or reflected in the Marketing Balance Sheet).
Marketing Policies: All Policies, current or past, which are owned or
maintained by or on behalf of Getty or any of its Affiliates or predecessors,
that relate to the Marketing Business but do not relate to the Retained
Business, and which Policies are either maintained by the Marketing Group or
assignable to the Marketing Group.
Marketing Security Deposits: Any claim to or right in (i) monies
deposited with third parties to secure the performance of any obligation of
Getty, Marketing or any of their subsidiaries incurred in connection with the
Marketing Business or any Marketing Asset and (ii) monies deposited with Getty
by motor fuel station operators or dealers.
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Marketing Subsidiaries: The Transferred Subsidiaries and all
Subsidiaries of Marketing or the Transferred Subsidiaries at the time of the
Distribution.
Master Lease: The Master Lease between Marketing and Getty, which
agreement shall be entered into on or before the Distribution Date in
substantially the form of Exhibit E hereto.
NYSE: The New York Stock Exchange, Inc.
Office Space License: The Office Space License between Marketing and
Getty, which agreement shall be entered into on or prior to the Distribution
Date in substantially the form of Exhibit F hereto.
Person: Any individual, corporation, partnership, association, trust,
estate or other entity or organization, including any governmental entity or
authority.
Petro: PT Petro Corp., a New York corporation.
Policies: Insurance policies and insurance contracts of any kind
(each a "Policy") relating to the Marketing Business or the Retained Business as
conducted prior to the Distribution Date, including without limitation primary
and excess policies, comprehensive general liability policies, and automobile
and workers' compensation insurance policies, together with the rights, benefits
and privileges thereunder.
Privileged Information: All Information as to which Getty, Marketing
or any of their Subsidiaries are entitled to assert the protection of a
Privilege.
Privileges: All privileges that may be asserted under applicable law
including, without limitation, privileges arising under or relating to the
attorney-client relationship (including but not limited to the attorney-client
and work product privileges), the accountant-client privilege, and privileges
relating to internal evaluative processes.
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Related Agreements: All of the agreements, instruments,
understandings, assignments or other arrangements which are entered into in
connection with the transactions contemplated hereby and which are set forth in
a writing, including, without limitation, the Conveyancing and Assumption
Instruments, the Master Lease, the Tax Sharing Agreement, the Trademark License
Agreement, the Services Agreement and the Office Space License.
Retained Assets: The assets of Getty other than the Marketing Assets,
including without limitation (i) the capital stock of the Retained Subsidiaries,
(ii) assets relating to the Retained Business, determined on a basis consistent
with the determination of assets included on the Getty Pro Forma Balance Sheet,
(iii) all of the assets expressly allocated to Getty or any of the Retained
Subsidiaries under this Agreement or the Related Agreements, and (iv) any other
assets of Getty and its Affiliates relating to the Retained Business.
Retained Business: The businesses conducted by Getty and its
Affiliates other than the Marketing Business, including without limitation the
Aero Home Heating Oil Business and the Real Estate Business.
Retained Employees: The persons employed by the Getty Group on the
Distribution Date, all of whom (except those employed pursuant to union
contracts or to agreements providing for continued employment upon a change in
control of Getty) are at will employees.
Retained Liabilities: (i) All of the Liabilities arising out of or in
connection with the Retained Assets or the Retained Business determined on a
basis consistent with the determination of the Liabilities of Getty included on
the Getty Pro Forma Consolidated Balance Sheet, (ii) all of the Liabilities of
Getty under, or to be retained or assumed by
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Getty or any of the Retained Subsidiaries pursuant to, this Agreement
or any of the Related Agreements, (iii) any Financing Obligations not
constituting Marketing Liabilities, (iv) any Liabilities arising out of the
settlement of lawsuits relating to the Distribution (other than those
Liabilities that constitute Marketing Liabilities), (v) all Liabilities for the
payment of outstanding drafts of Getty attributable to the Retained Business
existing as of the Distribution Date, (vi) all Indemnified Environmental
Liabilities, and (vii) all other Liabilities of Getty not constituting
Marketing Liabilities.
Retained Policies: All Policies, current or past, that are owned or
maintained by or on behalf of any member of the Getty Group (or any of its
predecessors) which relate to the Retained Business but do not relate to the
Marketing Business.
Retained Subsidiaries: All Subsidiaries of Getty, except Marketing
and the Marketing Subsidiaries.
Retained USTs: The USTs that, pursuant to Section 7.6 of the Master
Lease, are retained by Getty after the Distribution Date.
Securities Act: The Securities Act of 1933, as amended.
Services Agreement: The Services Agreement, which shall be entered
into between Getty and Marketing on or prior to the Distribution Date in
substantially the form attached hereto as Exhibit G.
Shared Policies: All Policies, current or past, that are owned or
maintained by or on behalf of Getty or any of its Subsidiaries or their
respective predecessors that relate to both the Retained Business and the
Marketing Business, and all other Policies not constituting Marketing Policies
or Retained Policies, as specified on Schedule 1.01(d) hereto.
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Subsidiary: With respect to any Person, (a) any corporation of which at
least a majority in interest of the outstanding voting stock (having by the
terms thereof voting power under ordinary circumstances to elect a majority of
the directors of such corporation, irrespective of whether or not at the time
stock of any other class or classes of such corporation shall have or might
have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned or controlled by such Person, by one or
more Subsidiaries of such Person, or by such Person and one or more of its
Subsidiaries, or (b) any non-corporate entity in which such Person, one or more
Subsidiaries of such Person, or such Person and one or more Subsidiaries of
such Person, directly or indirectly, at the date of determination thereof, has
at least majority ownership interest.
Tax Ruling: The private letter ruling issued by the Internal Revenue
Service on September 11, 1996, with respect to certain tax matters relating to
the Distribution.
Tax Sharing Agreement: The Tax Sharing Agreement between Marketing and
Getty, which agreement shall be entered into on or prior to the Distribution
Date in substantially the form of Exhibit H attached hereto.
Terminals: Getty Terminals Corp., a New York corporation.
Trademark License Agreement: The Trademark License Agreement between Getty
and Marketing, pursuant to which Getty will license certain intellectual
property rights to Marketing, which agreement shall be entered into on or prior
to the Distribution Date in substantially the form of Exhibit I attached
hereto.
Transferred Subsidiaries: Terminals, KOSCO, Gasway and Petro.
Transferred Subsidiary Stock: All of the issued and outstanding capital
stock of the Transferred Subsidiaries.
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UST: An underground storage tank including related piping, underground
pumps, wiring and monitoring devices.
Section 1.02 Terms Defined Elsewhere in Agreement.
Each of the following terms is defined in the Section set forth opposite
such term:
Term Section
---- -------
Aero Home Heating Oil Business Recitals
Asset Transfers Recitals
Consents 4.01
Corporate Expenses 2.06
Current Assets 2.06
Current Liabilities 2.06
Distribution Recitals
Excess Revolving Credit Facilities Balance 2.06
Form 10 Registration Statement 4.01
Getty Recitals
Indemnifiable Loss 5.01
Indemnifying Party 5.03
Indemnitee 5.03
Information 7.02
Marketing Recitals
Marketing Assets 2.02
Marketing Indemnitees 5.01
Marketing Self Insurance Liabilities 8.06
Real Estate Business Recitals
Retained Self Insurance Liabilities 8.06
Third-Party Claim 5.04
Working Capital Accounts 2.06
Working Capital Balance 2.06
ARTICLE II
TRANSFER OF ASSETS
Section 2.01 Merger of Aero into Getty. Prior to the Distribution
Date, Getty shall take or cause to be taken all actions necessary to cause Aero
to (i) TRANSFER CERTAIN OF ITS ASSETS TO CERTAIN SUBSIDIARIES AND (ii) MERGE
INTO GETTY. PRIOR TO THE MERGER OF AERO INTO GETTY, GETTY SHALL TAKE OR CAUSE
TO BE TAKEN ALL ACTIONS NECESSARY TO CAUSE THE TRANSFER, ASSIGNMENT, DELIVERY,
AND CONVEYANCE TO MARKETING OR THE MARKETING SUBSIDIARIES OF ALL OF AERO'S
RIGHT, TITLE AND INTEREST IN THE MARKETING ASSETS, INCLUDING WITHOUT
LIMITATION THE HIGHSPIRE ASSETS, AND MARKETING SHALL TAKE OR CAUSE TO BE TAKEN
ALL ACTIONS NECESSARY TO CAUSE THE ASSUMPTION BY MARKETING OR THE MARKETING
SUBSIDIARIES OF THE MARKETING LIABILITIES.
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Section 2.02 Transfer of Assets to Marketing. Prior to the
Distribution Date, Getty shall take or cause to be taken all actions necessary
to cause the transfer, assignment, delivery and conveyance to Marketing or the
Marketing Subsidiaries of all of Getty's and its Subsidiaries' right, title and
interest in the Marketing Assets, and Marketing shall take or cause to be taken
all actions necessary to cause the assumption by Marketing or the Marketing
Subsidiaries of the Marketing Liabilities. The "Marketing Assets" shall consist
of the following assets:
(i) the Transferred Subsidiary Stock;
(ii) the Marketing Security Deposits;
(iii) the Marketing Books and Records;
(iv) the Marketing Equipment;
(v) all licenses and permits relating to the Marketing
Business, to the extent such licenses and permits are
transferable;
(vi) all of the other assets to be assigned to Marketing under
this Agreement or the Related Agreements; and
(vii) all other assets (including, without limitation, all
accounts receivable, deferred income taxes, prepaid
expenses, reserves and other current assets) relating
to the Marketing Business, determined on a basis
consistent with the determination of the assets
included on the Marketing Balance Sheet.
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Section 2.03 Transfers Not Effected Prior to the Distribution. To the
extent that any transfers contemplated by this Article II shall not have been
fully effected on the Distribution Date, the parties shall cooperate to effect
such transfers as promptly as shall be practicable following the Distribution
Date. Nothing herein shall be deemed to require the transfer of any assets or
the assumption of any Liabilities that by their terms or operation of law
cannot be transferred or assumed; provided, however, that Getty and Marketing
and their respective Subsidiaries and Affiliates shall cooperate in seeking to
obtain any necessary consents or approvals for the transfer of all assets and
Liabilities contemplated to be transferred pursuant to this Article II. In the
event that any such transfer of assets or Liabilities has not been consummated
as of the Distribution Date, the party retaining such asset or Liability shall
thereafter hold such asset in trust for the use and benefit of the party
entitled thereto (at the expense of the party entitled thereto) and retain such
Liability for the account of the party by whom such Liability is to be assumed
pursuant hereto, and take such other actions as may be reasonably required in
order to place the parties, insofar as reasonably possible, in the same
position as would have existed had such asset been transferred or such
Liability been assumed as contemplated hereby. As and when any such asset or
Liability becomes transferable, such transfer and assumption shall be effected
forthwith. The parties agree that, except as described in this section below,
as of the Distribution Date, each party hereto shall be deemed to have acquired
complete and sole beneficial ownership over all of the assets, together with
all rights, powers and privileges incidental thereto, and shall be deemed to
have assumed in accordance with the terms of this Agreement all of the
Liabilities, and all duties, obligations and responsibilities incidental
thereto, which such party is entitled to acquire or required to assume pursuant
to the terms of this Agreement.
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Section 2.04 Cooperation Regarding Assets. In the case that at any
time after the Distribution Date, Marketing reasonably determines that any of
the Retained Assets are essential for the conduct of the Marketing Business, or
Getty reasonably determines that any of the Marketing Assets are essential for
the conduct of the Retained Business, and the nature of such assets makes it
impracticable for Marketing or Getty, as the case may be, to obtain substitute
assets or to make alternative arrangements on commercially reasonable terms to
conduct their respective businesses, and reasonable provisions for the use
thereof are not already included in the Related Agreements, then Marketing (with
respect to the Marketing Assets) and Getty (with respect to the Retained Assets)
shall cooperate to make such assets available to the other party on commercially
reasonable terms, as may be reasonably required for such party to maintain
normal business operations (provided that such assets shall be required to be
made available only until such time as the other party may reasonably obtain
substitute assets or make alternative arrangements on commercially reasonable
terms to permit it to maintain normal business operations).
Section 2.05 No Representations or Warranties; Consents. Each of the
parties hereto understands and agrees that no party hereto is, in this Agreement
or in any other agreement or document contemplated by this Agreement or
otherwise, representing or warranting in any way (i) as to the value or freedom
from encumbrance of, or any other matter concerning, any assets of such party or
(ii) as to the legal sufficiency to convey title to any asset transferred
pursuant to this Agreement or any Related Agreement, including, without
limitation, any Conveyancing or Assumption Instruments. It is also agreed and
understood that there are no warranties, express or implied, as to the
merchantability or fitness of any of the assets either transferred to or
retained by the parties, as the case may
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be, and all such assets shall be "as is, where is" and "with all
faults" (provided, however, that the absence of warranties shall have no effect
upon the allocation of Liabilities under this Agreement). Similarly, each
party hereto understands and agrees that no party hereto is, in this Agreement
or in any other agreement or document contemplated by this Agreement or
otherwise, representing or warranting in any way that the obtaining of any
consents or approvals, the execution and delivery of any amendatory agreements
and the making of any filings or applications contemplated by this Agreement
will satisfy the provisions of any or all applicable laws or judgments or other
instruments or agreements relating to such assets. Notwithstanding the
foregoing, the parties shall use their good faith efforts to obtain all
consents and approvals, to enter into all reasonable amendatory agreements and
to make all filings and applications which may be reasonably required for the
consummation of the transactions contemplated by this Agreement, and shall take
all such further reasonable actions as shall be reasonably necessary to
preserve for each of the Marketing Group and the Getty Group, to the greatest
extent feasible, the economic and operational benefits of the allocation of
assets and Liabilities provided for in this Agreement. In case at any time
after the Distribution Date any further action is necessary or desirable to
carry out the purposes of this Agreement, the proper officers and directors of
each party to this Agreement shall take all such necessary or desirable action.
Section 2.06 Conveyancing and Assumption Instruments. In connection
with the Asset Transfers and the assumptions of Liabilities contemplated by this
Agreement, the parties shall execute or cause to be executed by the appropriate
entities the Conveyancing and Assumption Instruments in such forms as the
parties shall reasonably agree, including the assignment of franchise rights and
the assignment and assumption of existing agreements as
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set forth in Schedule 2.06 hereto. The transfer of capital stock shall be
effected by means of delivery of stock certificates and executed stock powers
and notation on the stock record books of the corporation or other legal
entities involved and, to the extent required by applicable law, by notation on
public registries.
(a) Cash Allocation on the Distribution Date. No cash shall be
transferred on the Distribution Date. In the event the actual cash balances
of Marketing and its Subsidiaries as of the Distribution are less than the
Marketing Initial Cash Balance, the amount of the deficiency shall be recorded
in the accounts of Marketing as of the Distribution Date as a payable from
Getty to Marketing (which payable will be paid as promptly as practicable
after the determination of such amount pursuant to Section 2.06(b)) and in the
event the actual Cash balances of Marketing and its Subsidiaries as of the
Distribution Date exceeds the Marketing Initial Cash Balance, the amount of
such excess shall be recorded in the accounts of Getty and Marketing as of the
Distribution Date as a payable from Marketing to Getty (which payable will be
paid as promptly as practicable following the determination of such amount
pursuant to Section 2.06(b)).
(b) Post-Distribution Adjustment. Within [30] days of the
Distribution Date, Marketing shall prepare a combining balance sheet of the
Marketing Group showing the Marketing Initial Net Working Capital and the
Marketing Adjustment Amount. If the
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Marketing Adjustment Amount exceeds zero, Getty shall promptly pay to Marketing
such Marketing Adjustment Amount. If the Marketing Adjustment Amount is less
than zero, Marketing shall promptly pay to Getty such Marketing Adjustment
Amount.
(c) Cash Management After the Distribution Date. Marketing shall
separate from Getty, and establish and maintain a cash management system and
accounting records with respect to the Marketing Business effective as of 12:01
a.m. on the day following the Distribution Date; thereafter, (i) any payments by
Getty or its Retained Subsidiaries on behalf of Marketing or the Marketing
Subsidiaries in connection with the Marketing Business shall be recorded in the
accounts of the Marketing Group as a payable from the Marketing Group to the
Getty Group; (ii) any payments by Marketing or the Marketing Subsidiaries on
behalf of Getty or its Retained Subsidiaries in connection with the Retained
Business shall be recorded in the accounts of the Getty Group as a payable from
the Getty Group to the Marketing Group; (iii) any cash payments received by
Getty and the Retained Subsidiaries relating to the Marketing Business or the
Marketing Assets shall be recorded in the accounts of the Getty Group as a
payable from the Getty Group to the Marketing Group; (iv) any cash payments
received by Marketing or the Marketing Subsidiaries relating to the Retained
Business or the Retained Assets shall be recorded in the accounts of the
Marketing Group as a payable from the Marketing Group to the Getty Group; (v)
Marketing and Getty shall make adjustments for late deposits, checks returned
for not sufficient funds and other post-Distribution Date transactions as shall
be reasonable under the circumstances consistent with the purpose and intent of
this Agreement; and (vi) the net balance due to the Getty Group or the Marketing
Group, as the case may be, in respect of the aggregate amounts of clauses (i),
(ii), (iii), (iv) and (v) shall be paid by Marketing or
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Getty, as appropriate, as promptly as practicable. For purposes of this
Section 2.06(c), the parties contemplate that the Retained Business and the
Marketing Business, including but not limited to the administration of accounts
payable and accounts receivable, will be conducted in the normal course.
(d) Audit and Disputes. All transactions contemplated in this
Section 2.06 shall be subject to audit by the parties, and any dispute
thereunder shall be resolved by an independent firm of certified public accounts
mutually acceptable to Getty and Marketing, whose decision shall be final and
unappealable.
ARTICLE III
ASSUMPTION AND SATISFACTION OF LIABILITIES
Section 3.01 Assumption and Satisfaction of Liabilities. Except as
set forth in the Tax Sharing Agreement, the Master Lease or other Related
Agreements, effective as of and after the Distribution Date, (a) Marketing
shall, and/or shall cause the Marketing Subsidiaries to, assume, pay, perform,
and discharge in due course all of the Marketing Liabilities and (b) Getty
shall, and/or shall cause the Retained Subsidiaries to, pay, perform and
discharge in due course all of the Retained Liabilities.
ARTICLE IV
THE DISTRIBUTION
Section 4.01 Cooperation Prior to the Distribution.
(a) Getty and Marketing have prepared, and Marketing has filed with
the Commission, a Form 10 registration statement with respect to the
registration under the Exchange Act of the Marketing Common Stock (the "Form 10
Registration Statement").
(b) Getty and Marketing shall cooperate in preparing, filing with the
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Commission and causing to become effective any registration statements or
amendments thereto which are appropriate to reflect the establishment of, or
amendments to, the Employee Stock Ownership Plan and any employee benefit plans
and other plans contemplated by the Agreement.
(c) Getty and Marketing shall take all such action as may be necessary or
appropriate under the securities or blue sky laws of states or other political
subdivisions of the United States in connection with the transactions
contemplated by this Agreement and the Related Agreements.
(d) Getty and Marketing shall prepare, and Marketing shall file and pursue,
an application to permit the listing of Marketing Common Stock on the NYSE.
(e) Getty and Marketing shall make any requisite filings under the HSR
Act.
(f) Getty and Marketing shall use all reasonable efforts to obtain any
third-party consents or approvals necessary or desirable in connection with the
transactions contemplated hereby, including without limitation the consents or
approvals set forth on Schedule 4.01 hereto ("Consents").
(g) Getty and Marketing will use all reasonable efforts to take, or cause
to be taken, all actions, and to do, or cause to be done, all things necessary
or desirable under applicable law, to consummate the transactions contemplated
under this Agreement.
Section 4.02. Getty Board Action; Conditions Precedent to the Distribution
The Getty Board shall, in its discretion, establish the Distribution Record Date
and the Distribution Date and any appropriate procedures, including establishing
the exchange ratio,
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in connection with the Distribution. In no event shall the Distribution occur
unless the following conditions shall have been satisfied:
(i) the transactions contemplated by Sections 2.01 and 2.02 shall have been
consummated in all material respects;
(ii) Getty shall have modified its existing stock option plans and/or
amended option grants thereunder to insure that the Distribution does not
adversely affect the current holders of options under those plans;
(iii) the Marketing Common Stock shall have been approved for listing on
the NYSE, subject to official notice of issuance;
(iv) the Marketing Board, comprised as contemplated by Section 6.01, shall
have been elected by Getty, as sole stockholder of Marketing, and the Marketing
Charter and Marketing Bylaws shall have been adopted and shall be in effect;
(v) the Marketing Board shall have established the Employee Stock Ownership
Plan;
(vi) the Form 10 Registration Statement shall have become effective under
the Exchange Act;
(vii) the Tax Ruling shall have been granted in form and substance
satisfactory to the Getty Board, in its sole discretion;
(viii) a favorable no-action letter shall have been obtained from the
Securities and Exchange Commission regarding issuance of Marketing Common Stock
and certain other matters;
(ix) any applicable waiting period under the HSR Act shall have expired (or
been earlier terminated);
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(x) Getty and Marketing shall have obtained all Consents and any other
consents, the failure of which to obtain would, in the determination of the
Getty Board, have a material adverse effect on Getty or Marketing; and
(xi) Getty and Marketing shall have entered into the Related Agreements;
provided, however, that (i) any such condition may be waived by the Getty Board
in its sole discretion upon the advice of counsel, and (ii) the satisfaction of
such conditions shall not create any obligation on the part of Getty or any
other party hereto to effect the Distribution or in any way limit Getty's power
of termination set forth in Section 9.07 or alter the consequences of any such
termination from those specified in such Section.
Section 4.03 The Distribution. On the Distribution Date, subject to the
conditions and rights of termination set forth in this Agreement, Getty shall
deliver to the Agent a share certificate representing all of the then
outstanding shares of Marketing Common Stock owned by Getty and shall instruct
the Agent to distribute, on or as soon as practicable following the Distribution
Date, such Marketing Common Stock to the Holders. Marketing agrees to provide
all share certificates that the Agent shall require in order to effect the
Distribution.
ARTICLE V
INDEMNIFICATION
Section 5.01 Indemnification by Getty. Except as otherwise expressly
set forth in a Related Agreement, Getty shall indemnify, defend and hold
harmless Marketing and each of the Marketing Subsidiaries, and each of their
respective directors, officers, employees, agents and Affiliates and each of the
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heirs, executors, successors and assigns of any of the foregoing (the "Marketing
Indemnitees") from and against the Retained Liabilities.
Section 5.02 Indemification by Marketing. Except as otherwise expressly
set forth in a Related Agreement, Marketing shall indemnify, defend and hold
harmless Getty and each of the Retained Subsidiaries, and each of their
directors, officers, employees, agents and Affiliates and each of the heirs,
executors, successors and assigns of any of the foregoing (the "Getty
Indemnitees") from and against the Marketing Liabilities.
Section 5.03. Insurance Proceeds. The amount that any party (an
"Indemnifying Party") is or may be required to pay to any other Person (an
"Indemnitee") pursuant to Section 5.01 or Section 5.02 shall be reduced
(including, without limitation, retroactively) by any Insurance Proceeds or
other amounts actually recovered by or on behalf of such Indemnitee in reduction
of the related Indemnifiable Loss. If an Indemnitee shall have received the
payment required by this Agreement from an Indemnifying Party in respect of an
Indemnifiable Loss and shall subsequently actually receive Insurance Proceeds,
or other amounts in respect of such Indemnifiable Loss as specified above, then
such Indemnitee shall pay to such Indemnifying Party a sum equal to the amount
of such Insurance Proceeds or other amounts actually received.
Section 5.04 Procedure for Indemnification.
(a) Except as may be set forth in a Related Agreement, if an Indemnitee
shall receive notice or otherwise learn of the assertion by a Person (including,
without limitation, any governmental entity) who is not a party to this
Agreement or to any of the Related Agreements of any claim or of the
commencement by any such Person of any Action (a "Third-Party Claim") with
respect to which an Indemnifying Party may be obligated to
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provide indemnification pursuant to this Agreement, such Indemnitee shall give
such Indemnifying Party written notice thereof promptly after becoming aware of
such Third-Party Claim; provided, that the failure of any Indemnitee to give
notice as required by this Section 5.04 shall not relieve the Indemnifying of
its obligations under this Article V, except to the extent that such
Indemnifying Party is prejudiced by such failure to give notice. Such notice
shall describe the Third-Party Claim in reasonable detail, and shall indicate
the amount (estimated if necessary) of the Indemnifiable Loss that has been or
may be sustained by such Indemnitee.
(b) An Indemnifying Party may elect to defend or to seek to settle or
compromise, at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel, any Third-Party Claim, provided that the Indemnifying Party
must confirm in writing that it agrees that Indemnitee is entitled to
indemnification hereunder in respect of such Third-Party Claim. Within 30 days
of the receipt of notice from an Indemnitee in accordance with Section 5.04(a)
(or sooner, if the nature of such Third-Party Claim so requires), the
Indemnifying Party shall notify the Indemnitee of its election whether to assume
responsibility for such Third-Party Claim (provided that if the Indemnifying
Party does not so notify the Indemnitee of its election within 30 days after
receipt of such notice from the Indemnitee, the Indemnifying Party shall be
deemed to have elected not to assume responsibility for such Third-Party Claim),
and such Indemnitee shall cooperate in the defense or settlement or compromise
of such Third-Party Claim. After notice from an Indemnifying Party to an
Indemnitee of its election to assume responsibility for a Third-Party Claim,
such Indemnifying Party shall not be liable to such Indemnitee under this
Article V for any legal or other expenses (except expenses approved in advance
by the Indemnifying
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Party) subsequently incurred by such Indemnitee in connection with the defense
thereof; provided, that if the defendants in any such claim include both the
Indemnifying Party and one or more Indemnitees and in such Indemnitees'
reasonable judgment a conflict of interest between such Indemnitees and such
Indemnifying Party exists in respect of such claim, such Indemnitees shall have
the right to employ separate counsel and in that event the reasonable fees and
expenses of such separate counsel (but not more than one separate counsel
reasonably satisfactory to the Indemnifying Party) shall be paid by such
Indemnifying Party. If an Indemnifying Party elects not to assume
responsibility for a Third-Party Claim (which election may be made only in the
event of a good faith dispute that a claim was inappropriately tendered under
Section 5.01 or 5.02, as the case may be) such Indemnitee may defend or (subject
to the following sentence) seek to compromise or settle such Third-Party Claim.
Notwithstanding the foregoing, an Indemnitee may not settle or compromise any
claim without prior written notice to Indemnifying Party, which shall have the
option within ten days following the receipt of such notice (i) to disapprove
the settlement and assume all past and future responsibility for the claim,
including reimbursing the Indemnitee for prior expenditures in connection with
the claim, or (ii) to disapprove the settlement and continue to refrain from
participation in the defense of the claim, in which event the Indemnifying Party
shall have no further right to contest the amount or reasonableness of the
settlement if the Indemnitee elects to proceed therewith, or (iii) to approve
the amount of the settlement, reserving the Indemnifying Party's right to
contest the Indemnitee's right to indemnity, or (iv) to approve and agree to pay
the settlement. In the event the Indemnifying Party makes no response to such
written notice from the Indemnitee, the Indemnifying Party shall be deemed to
have elected option (ii).
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(c) If an Indemnifying Party chooses to defend or to seek to compromise any
Third-Party Claim, the Indemnitee shall make available to such Indemnifying
Party any personnel and any books, records or other documents within its control
or which it otherwise has the ability to make available that are necessary or
appropriate for such defense.
(d) Notwithstanding anything else in this Section 5.04 to the contrary, an
Indemnifying Party shall not settle or compromise any Third-Party Claim unless
such settlement or compromise contemplates as an unconditional term thereof the
giving by such claimant or plaintiff to the Indemnitee of a written release from
all liability in respect of such Third-Party Claim (and provided further that
such settlement may not provide for any non-monetary relief by Indemnitee
without the written consent of Indemnitee). In the event the Indemnitee shall
notify the Indemnifying Party in writing that such Indemnitee declines to accept
any such settlement or compromise, such Indemnitee may continue to contest such
Third-Party Claim, free of any participation by such Indemnifying Party, at such
Indemnitee's sole expense. In such event, the obligation of such Indemnifying
Party to such Indemnitee with respect to such Third-Party Claim shall be equal
to (i) the costs and expenses of such Indemnitee prior to the date such
Indemnifying Party notifies such Indemnitee of the offer to settle or compromise
(to the extent such costs and expenses are otherwise indemnifiable hereunder)
plus (ii) the lesser of (A) the amount of any offer of settlement or compromise
which such Indemnitee declined to accept or (B) the actual out-of-pocket amount
such Indemnitee is obligated to pay subsequent to such date as a result of such
Indemnitee's continuing to pursue such Third-Party Claim.
(e) Any claim on account of an Indemnifiable Loss which does not result
from a Third-Party Claim shall be asserted by written notice given by the
Indemnitee to the
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applicable Indemnifying Party. Such Indemnifying Party shall
have a period of 15 days after the receipt of such notice within which to
respond thereto. If such Indemnifying Party does not respond within such
15-day period, such Indemnifying Party shall be deemed to have refused to
accept responsibility to make payment. If such Indemnifying Party does not
respond within such 15-day period or rejects such claim in whole or in part,
such Indemnitee shall be free to pursue such remedies as may be available to
such party under applicable law or under this Agreement.
(f) In addition to any adjustments required pursuant to Section 5.03, if
the amount of any Indemnifiable Loss shall, at any time subsequent to the
payment required by this Agreement, be reduced by recovery, settlement or
otherwise, the amount of such reduction, less any expenses incurred in
connection therewith, shall promptly be repaid by the Indemnitee to the
Indemnifying Party.
(g) In the event of payment by an Indemnifying Party to any Indemnitee in
connection with any Third-Party Claim, such Indemnifying Party shall be
subrogated to and shall stand in the place of such Indemnitee as to any events
or circumstances in respect of which such Indemnitee may have any right or claim
relating to such Third-Party Claim against any claimant or plaintiff asserting
such Third-Party Claim. Such Indemnitee shall cooperate with such Indemnifying
Party in a reasonable manner, and at the cost and expense of such Indemnifying
Party, in prosecuting any subrogated right or claim.
Section 5.05 Remedies Cumulative. The remedies provided in this Article V
shall be cumulative and shall not preclude assertion by any Indemnitee of any
other rights or the seeking of any and all other remedies against any
Indemnifying Party.
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Section 5.06. Survival of Indemnities. The obligations of each of
Marketing and Getty under this Article V shall survive the sale or other
transfer by it of any assets or businesses or the assignment by it of any
Liabilities, with respect to any Indemnifiable Loss of the other related to such
assets, businesses or Liabilities.
ARTICLE VI
CERTAIN ADDITIONAL MATTERS
Section 6.01 Marketing Board. Marketing and Getty shall take all actions
which may be required to constitute, effective as of the Distribution Date, the
following persons as the directors of Marketing: (i) Ronald E. Hall, Richard E.
Montag and Matthew J. Chanin (none of whom shall be officers, directors or
owners of more than 5% of the outstanding voting stock of Getty) and (ii) Leo
Liebowitz and Milton Safenowitz.
Section 6.02 Resignations; Getty Board.
(a) Marketing shall cause all of its directors and Marketing Employees to
resign, effective as of the Distribution Date, from all boards of directors or
similar governing bodies of Getty or any of its Retained Subsidiaries on which
they serve, and from all positions as officers or employees of Getty or any of
its Retained Subsidiaries in which they serve, except (i) Leo Liebowitz shall
serve as a director, President and Chief Executive Officer of Getty and as a
director and Chief Executive Officer of Marketing and as an officer or director
of certain of the Marketing Subsidiaries and certain of the Retained
Subsidiaries, (ii) Milton Safenowitz shall serve as a director of Marketing and
certain of the Marketing Subsidiaries and as a director of Getty and certain of
the Retained Subsidiaries and (iii) as set forth in the Services Agreement.
Getty shall cause all of its directors and the Retained Employees to resign from
all boards of directors or similar governing bodies of Marketing or
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any of its subsidiaries on which they serve, and from all positions as officers
or employees of Marketing or any of its subsidiaries in which they serve, except
to the extent specified in the preceding sentence.
Section 6.03 Charter and Bylaws. On or prior to the Distribution Date,
Marketing shall adopt the Marketing Charter and the Marketing Bylaws, and shall
file the Marketing Charter with the Secretary of State of the State of
Maryland.
Section 6.04 Employee Stock Ownership Plan. On or prior to the
Distribution Date, Marketing shall approve and take all steps necessary to
establish the Employee Stock Ownership Plan.
Section 6.05 Certain Post-Distribution Transactions.
(a) Marketing. Marketing shall, and shall cause each of the Marketing
Subsidiaries to, comply with each representation and statement made, or to be
made, to any taxing authority in connection with any ruling obtained, or to be
obtained, by Getty Marketing acting together, from any such taxing authority
with respect to any transaction contemplated by this Agreement; neither
Marketing nor any of the Marketing Subsidiaries shall take or omit any action
inconsistent therewith, unless, (i) required to do so by law, (ii) permitted to
do so by the prior written consent of Getty, or (iii) pursuant to a favorable
supplemental ruling letter reasonably satisfactory to Getty that such act or
omission would not adversely affect the tax consequences of the Distribution to
Getty or the stockholders of Getty, as set forth in any ruling issued by any
taxing authority. Neither Marketing nor any of the Marketing Subsidiaries has a
present intention to take or omit any such action.
(b) Getty. Getty shall, and shall cause each of the Retained Subsidiaries
to, comply with each representation and statement made, or to be made, to any
taxing
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authority in connection with any ruling obtained, by Getty and Marketing
acting together, from any such taxing authority with respect to any transaction
contemplated by this Agreement; neither Getty nor any of the Retained
Subsidiaries shall take or omit any action inconsistent therewith, unless, (i)
required to do so by law, (ii) permitted to do so by the prior written consent
of Marketing, or (iii) pursuant to a favorable supplemental ruling letter
reasonably satisfactory to Marketing that such act or omission would not
adversely affect the tax consequences of the Distribution to Marketing or the
stockholders of Marketing, as set forth in any ruling issued by any taxing
authority. Neither Getty nor any of the Retained Subsidiaries has a present
intention to take or omit any such action.
Section 6.06 Corporate Name. Effective as of the Distribution Date, Getty
shall change its corporate name to "Getty Realty Corp.," either by statutory
merger or by action of the stockholders. All references to Getty herein shall
be references to such corporation both before and after such corporate name
change.
ARTICLE VII
ACCESS TO INFORMATION AND SERVICES
Section 7.01 Provision of Corporate Records.
(a) Except as may otherwise be provided in a Related Agreement, Getty shall
arrange as soon as practicable following the Distribution Date, to the extent
not previously delivered in connection with the transactions contemplated in
Article II, for the transportation (at Marketing's cost) to Marketing of the
Marketing Books and Records in its possession, except to the extent such items
are already in the possession of Marketing or a Marketing Subsidiary. Such
Marketing Books and Records shall be the property of
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Marketing, but shall be available to Getty for review and duplication until
Getty shall notify Marketing in writing that such records are no longer of use
to Getty.
(b) Except as otherwise provided in a Related Agreement, Marketing shall
arrange as soon as practicable following the Distribution Date, to the extent
not previously delivered in connection with the transactions contemplated in
Article II, for the transportation (at Getty's cost) to Getty of the Getty Books
and Records in its possession, except to the extent such items are already in
the possession of Getty. The Getty Books and Records shall be the property of
Getty, but shall available to Marketing for review and duplication until
Marketing shall notify Getty in writing that such records are no longer of use
to Marketing.
Section 7.02 Access to Information. Except as otherwise provided in a
Related Agreement, from and after the Distribution Date, Getty shall afford to
Marketing and its authorized accountants, counsel and other designated
representatives reasonable access (including using reasonable efforts to give
access to persons or firms possessing information) and duplicating rights
during normal business hours to all records, books, contracts, instruments,
computer data, software and systems and other data and information relating to
pre-Distribution operations (collectively, "Information") within Getty's
possession insofar as such access is reasonably required by Marketing for the
conduct of its business, subject to appropriate restrictions for classified or
Privileged Information. Similarly, except as otherwise provided in a Related
Agreement, Marketing shall afford to Getty and its authorized accountants,
counsel and other designated representatives reasonable access (including using
reasonable efforts to give access to persons or firms possessing information)
and duplicating rights during normal business hours to Information within
Marketing's possession, insofar as such is reasonably required by
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Getty for the conduct of its business, subject to appropriate restrictions for
classified or Privileged Information. Information may be requested under this
Article VII for the legitimate business purposes of either party, including
without limitation, audit, accounting, claims (including claims for
indemnification hereunder), litigation and tax purposes, as well as for purposes
of fulfilling disclosure and reporting obligations and for performing this
Agreement and the transactions contemplated hereby.
Section 7.03 Production of Witnesses. At all times from and after the
Distribution Date, each of Marketing and Getty shall use reasonable efforts to
make available to the other, upon written request, its and its subsidiaries'
officers, directors, employees and agents as witnesses to the extent that such
persons may reasonably be required in connection with any Action.
Section 7.04 Reimbursement. Except to the extent otherwise contemplated
in any Related Agreement, a party providing Information or witness services to
the other party under this Article VII shall be entitled to receive from the
recipient, upon the presentation of invoices therefor, payments of such amounts,
relating to supplies, disbursements and other out-of-pocket expenses (at cost)
and direct and indirect expenses of employees who are witnesses or otherwise
furnish assistance (at cost), as may be reasonably incurred in providing such
Information or witness services.
Section 7.05. Retention of Records. Except as otherwise required by law or
agreed to in a Related Agreement or otherwise in writing, each of Getty and
Marketing may destroy or otherwise dispose of any of the Information (including
information that is material Information and is not contained in other
Information retained by Getty or Marketing, as the case may be) at any time
after the tenth anniversary of this Agreement, provided that, prior
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to such destruction or disposal, (a) it shall provide no less than 90 or more
than 120 days prior written notice to the other, specifying in reasonable detail
the Information proposed to be destroyed or disposed of and (b) if a recipient
of such notice shall request in writing prior to the scheduled date for such
destruction or disposal that any of the Information proposed to be destroyed or
disposed of be delivered to such requesting party, the party proposing the
destruction or disposal shall promptly arrange for the delivery of such of the
Information as was requested at the expense of the party requesting such
Information.
Section 7.06 Confidentiality. Each of Getty and its Subsidiaries on the
one hand, and Marketing and its Subsidiaries on the other hand, shall hold, and
shall cause its consultants advisors to hold, in strict confidence, all
Information concerning the other in its possession or furnished by the other or
the other's representatives pursuant to this Agreement (except to the extent
that such Information has been (i) in the public domain through no fault of such
party or (ii) later lawfully acquired from other sources by such party), and
each party shall not release or disclose such Information to any other person,
except its auditors, attorneys, financial advisors, rating agencies, bankers and
other consultants and advisors, unless compelled to disclose by judicial or
administrative process or, as reasonably advised by its counsel, by other
requirements of law, or unless such Information is reasonably required to be
disclosed in connection with (x) any litigation with any third-parties or
litigation between the Getty Group and the Marketing Group, (y) any contractual
agreement to which the Getty Group or the Marketing Group are currently parties,
or (z) in exercise of either parties' rights hereunder.
Section 7.07 Privileged Matters. Getty and Marketing recognize that legal
and other professional services that have been and will be provided prior to the
Distribution
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Date have been and will be rendered for the benefit of both the Getty Group and
the Marketing Group and that both the Getty Group and the Marketing Group should
be deemed to be the client for the of asserting all Privileges. To allocate the
interests of each party in the Privileged Information, the parties agree as
follows:
(a) Getty shall be entitled, in perpetuity, to control the assertion or
waiver of all Privileges in connection with Privileged Information which
relates solely to the Retained Business, whether or not the Privileged
Information is in the possession of or under the control of Getty or Marketing.
Getty shall also be entitled, in perpetuity, to control the assertion or waiver
of all Privileges in connection with Privileged Information that relates solely
to the subject matter of any claims constituting Retained Liabilities, now
pending or which may be asserted in the future, in any lawsuits or other
proceedings initiated against or by Getty, whether or not the Privileged
Information is in the possession of or under the control of Getty or Marketing.
(b) Marketing shall be entitled, in perpetuity, to control the assertion or
waiver of all Privileges in connection with Privileged Information which
relates solely to the Marketing Business, whether or not the Privileged
Information is in the possession of or under the control of Getty or Marketing.
Marketing shall also be entitled, in perpetuity, to control the assertion or
waiver of all Privileges in connection with Information which relates solely to
the subject matter of any claims constituting Marketing Liabilities, now pending
or which may be asserted in the future, in any lawsuits or other proceedings
initiated against or by Marketing, whether or not the Privileged Information is
in the possession of Marketing or under the control of Getty or Marketing.
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(c) Getty and Marketing agree that they shall have a shared Privilege, with
equal right to assert or waive, subject to the restrictions in this Section
7.07, with respect to all Privileges not allocated pursuant to the terms of
Sections 7.07(a) and (b). (All Privileges relating to any claims, proceedings,
litigation, disputes, or other matters which involve both Getty and Marketing in
respect of which Getty and Marketing retain any responsibility or liability
under this Agreement, shall be subject to a shared Privilege.)
(d) No party may waive any Privilege which could be asserted under any
applicable law, and in which the other party has a shared Privilege, without the
consent of the other party, except to the extent reasonably required in
connection with any litigation with third-parties or as provided in subsection
(e) below. Consent shall be in writing, or shall be deemed to be granted unless
written objection is made within twenty (20) days after notice upon the other
party requesting such consent.
(e) In the event of any litigation or dispute between a member of the Getty
Group and a member of the Marketing Group, either party may waive a Privilege in
which the other party has a shared Privilege, without obtaining the consent of
the other party, provided that such waiver of a shared Privilege shall be
effective only as to the use of Information with respect to the litigation or
dispute between the Getty Group and the Marketing Group, and shall not operate
as a waiver of the shared Privilege with respect to third-parties.
(f) If a dispute arises between the parties regarding whether a Privilege
should be waived to protect or advance the interest of either party, each party
agrees that it shall negotiate in good faith, shall endeavor to minimize any
prejudice to the rights of the other party, and shall not unreasonably withhold
consent to any request for waiver by the
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other party. Each party specifically agrees that it will not withhold consent
to waiver for any purpose except to protect its own legitimate interests.
(g) Upon receipt by any party of any subpoena, discovery or other request
which arguably calls for the production or disclosure of Information subject to
a shared Privilege or as to which the other party has the sole right hereunder
to assert a Privilege, or if any party obtains that any of its current or former
directors, officers, agents or employees have received any subpoena, discovery
or other requests which arguably calls for the production or disclosure of such
Privileged Information, such party shall promptly notify the other party of the
existence of the request and shall provide the other party a reasonable
opportunity to review the Information and to assert any rights it may have under
this Section 7.07 or otherwise to prevent the production or disclosure of such
Privileged Information.
(h) The transfer of the Marketing Books and Records and the Getty Books and
Records and other Information between Getty and its Subsidiaries and Marketing
and its Subsidiaries, is made in reliance on the agreement of Getty and
Marketing, as set forth in Sections 7.06 and 7.07, to maintain the
confidentiality of Privileged Information and to assert and maintain all
applicable Privileges. The access to information being granted pursuant to
Sections 7.01 and 7.02 hereof, the agreement to provide witnesses and
individuals pursuant to Section 7.03 hereof and the transfer of Privileged
Information between Getty and its Subsidiaries and Marketing and its
Subsidiaries pursuant to this Agreement shall not be deemed a waiver of any
Privilege that has been or may be asserted under this Agreement or otherwise.
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ARTICLE VIII
INSURANCE
Section 8.01. Policies and Rights Included Within the Marketing Assets.
Without limiting the generality of the definition of the Marketing Assets set
forth in Section 2.02 or the effect of Section 2.02, the Marketing Assets shall
include (a) any and all rights of an insured party under each of the Shared
Policies, specifically including rights of indemnity and the right to be
defended by or at the expense of the insurer, with respect to all injuries,
losses, liabilities, damages and expenses incurred or claimed to have been
incurred on or prior to the Distribution Date by any party in or in connection
with the conduct of the Marketing Business or, to the extent any claim is made
against Marketing or any of its subsidiaries, the Retained Business, and which
injuries, losses, liabilities, damages and expenses may arise out of insured or
insurable occurrences or events under one or more of the Shared Policies;
provided, however, that except as provided in Section 8.05 below, nothing in
this clause shall be deemed to constitute (or to reflect) the assignment of the
Shared Policies, or any of them, to Marketing and (b) the Marketing Policies.
Section 8.02 Post-Distribution Date Claims. If, subsequent to the
Distribution Date, any person, corporation, firm or entity shall assert a claim
against Marketing or any Marketing Subsidiary with respect to any injury, loss,
liability, damage or expense incurred or claimed to have been incurred prior to
the Distribution Date in or in connection with the conduct of the Marketing
Business or, to the extent any claim is made against Marketing or any of its
Subsidiaries or the Marketing Business, and which injury, loss, liability,
damage or expense may arise out of insured or insurable occurrences or events
under one or more of the Shared Policies, Getty shall at the time such claim is
asserted be
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deemed to assign, without need of further documentation, to Marketing any and
all rights of an insured party under the applicable Shared Policy with respect
to such asserted claim, specifically including rights of indemnity and the right
to be defended by or at the expense of the insurer; provided, however, that
except as provided in Section 8.05 below nothing in this sentence shall be
deemed to constitute (or to reflect) the assignment of the Shared Policies, or
any of them, to Marketing.
Section 8.03 Administration and Reserves
(a) Notwithstanding the provisions of Article III, but subject to any
contrary provisions of the Master Lease or the Services Agreement, from and
after the Distribution Date:
(i) Marketing shall be responsible for the (A) Insurance
Administration of the Marketing Policies, and (B) Claims Administration
with respect to the Marketing Liabilities; provided, that the
administration of the Marketing Policies by Marketing is in no way intended
to limit, inhibit, or preclude any right to insurance coverage for any
Insured Claim of a named insured under the Marketing Policies, including
but not limited to, Getty and any of its operations, Subsidiaries and
Affiliates;
(ii) Getty shall conduct (A) Insurance Administration of the Shared
Policies, and (B) Claims Administration with respect to the Retained
Liabilities; provided that the administration of the Shared Policies by
Getty is in no way intended to limit, inhibit, or preclude any right to
insurance coverage for any Insured Claim of a named insured under the
Shared Policies, including but not limited to, Marketing and any of its
operations, subsidiaries and Affiliates;
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(iii) Marketing shall be entitled to any reserves established by Getty
or any of its Subsidiaries, or the benefit of reserves held by any
insurance carrier, with respect to the Marketing Liabilities; and
(iv) Getty shall be entitled to any reserves established by Getty or
any of its Subsidiaries, or the benefit of reserves held by any insurance
carrier, with respect to the Retained Liabilities.
(b) Insurance Premiums. Getty shall have the right but not the obligation
to pay the premiums, to the extent that Marketing does not pay premiums with
respect to Marketing Liabilities (retrospectively-rated or otherwise), with
respect to Shared Policies and the Retained Policies, as required under the
terms and conditions of the respective Policies, whereupon Marketing shall
forthwith reimburse Getty for that portion of such premiums paid by Getty as are
attributable to the Marketing Liabilities. Unless otherwise agreed by the
parties hereto, Getty shall purchase (subject to a 50% reimbursement by
Marketing within 15 days of its receipt of invoice) continued coverage under its
director and officer liability insurance policy for a period no longer than 180
days following the Distribution Date for claims relating to periods prior to the
Distribution Date.
(c) Allocation of Insurance Proceeds. Insurance Proceeds received with
respect to claims, costs and expenses under the Policies shall be paid to
Marketing with respect to the Marketing Liabilities and to Getty with respect to
the Retained Liabilities. Payment of the allocable portions of indemnity costs
of Insurance Proceeds resulting from the liability policies will be made to the
appropriate party upon receipt from the insurance carrier. In the event that
the aggregate limits on any Shared Policies are exceeded, the parties agree to
provide an equitable allocation of Insurance Proceeds received after the
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Distribution Date based upon their respective bona fide claims. The parties
agree to use their best efforts to cooperate with respect to insurance matters.
Section 8.04 Agreement for Waiver of Conflict and Shared
Defense. In the event that Insured Claims of both Marketing and Getty exist
relating to the same occurrence, Marketing and Getty agree to jointly defend
and to waive any conflict of interest necessary to the conduct of that joint
defense. Nothing in this paragraph shall be construed to limit or otherwise
alter in any way the indemnity obligations of the parties to this Agreement,
including those created by this Agreement, by operation of law or otherwise.
Section 8.05 Surety Bonds. Schedule 8.05 sets forth the
surety bonds posted by the Getty Group to secure obligations for state motor
fuel licenses (the "Surety Bonds"). Marketing shall use its reasonable best
efforts to replace such Surety Bonds with bonds posted by Marketing. Prior to
the replacement of such Surety Bonds the parties' respective obligations with
respect to such Surety Bonds shall be as follows: (i) the parties shall keep
such Surety Bonds in place after the Distribution to secure obligations
relating to periods preceding the Distribution Date for such time as may be
required by law, (ii) the obligations secured by the Surety Bonds will remain a
direct obligation of Getty; provided, however, that Marketing shall be
responsible for payment of all such obligations constituting Marketing
Liabilities (and shall reimburse Getty for any payment made directly by Getty
with respect to such Marketing Liabilities) and Getty shall be responsible for
all such obligations constituting Retained Liabilities (and shall reimburse
Marketing for any payments made directly by Marketing on behalf of such
Retained Liabilities), consistent with the allocation of Marketing Liabilities
and Retained Liabilities set forth herein; (iii) Marketing shall execute a
guarantee pursuant to which Marketing will guarantee 100% of the obligations
secured by such Surety
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Bonds (subject to reimbursement by Getty for any payments made by Marketing
with respect to Retained Liabilities) and (iv) Marketing will reimburse Getty
for Marketing's pro rata share of any premiums required to be paid to keep such
Surety Bonds outstanding.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Complete Agreement; Construction. This
Agreement, including the Schedules and Exhibits and the Related Agreements and
other agreements and documents referred to herein, shall constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and shall supersede all previous negotiations, commitments and writings
with respect to such subject matter. Notwithstanding any other provisions in
this Agreement to the contrary, in the event and to the extent that there shall
be a conflict between any provision of this Agreement and any provision of a
Related Agreement, then the provision in the applicable Related Agreement shall
control.
Section 9.02 Expenses. Except as otherwise set forth in
this Agreement or any Related Agreement, all costs and expenses in connection
with the preparation, execution, delivery and implementation of this Agreement,
the Distribution and with the consummation of the transactions contemplated by
this Agreement shall be charged to the party for whose benefit the expenses are
incurred, with any expenses which cannot be allocated on such basis to be split
equally between the parties.
Section 9.03 Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to the principles of conflicts of laws thereof.
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Section 9.04 Notices. All notices and other
communications hereunder shall be in writing and shall be delivered by hand or
mailed by registered or certified mail (return receipt requested) to the
parties at the following addresses (or at such other addresses for a party as
shall be specified by like notice) and shall be deemed given on the date on
which such notice is received:
To Marketing:
Getty Petroleum Marketing Inc.
125 Jericho Turnpike
Jericho, New York 11753
Attention: President
To Getty:
Getty Realty Corp.
125 Jericho Turnpike
Jericho, New York 11753
Attention: President
Section 9.05 Amendments. This Agreement may not be
modified or amended except by an agreement in writing signed by the parties.
Section 9.06 Successors and Assigns. This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties and their respective successors and permitted assigns.
Section 9.07 Termination. This Agreement may be
terminated and the Distribution abandoned at any time prior to the Distribution
Date by and in the sole discretion of the Getty Board without the approval of
Marketing. In the event of such termination, no party shall have any liability
to any other party pursuant to this Agreement.
Section 9.08 Subsidiaries. Each of the parties hereto
shall cause to be performed, and hereby guarantees the performance of, all
actions, agreements and obligations
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set forth herein to be performed by any Subsidiary of such party which is
contemplated to be a Subsidiary of such party on and after the Distribution
Date.
Section 9.09 No Third-Party Beneficiaries. Except for the
provisions of Article V relating to Indemnities, this Agreement is solely for
the benefit of the parties hereto and their respective Subsidiaries and
Affiliates and should not be deemed to confer upon third- parties any remedy,
claim, Liability, reimbursement, claim of action or other right in excess of
those existing without reference to this Agreement.
Section 9.10 Titles and Headings. Titles and headings to
sections herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 9.11 Exhibits and Schedules. The Exhibits and
Schedules shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein.
Section 9.12 Legal Enforceability. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. Without
prejudice to any rights or remedies otherwise available to any party hereto,
each party hereto acknowledges that damages would be an inadequate remedy for
any breach of the provisions of this Agreement and agrees that the obligations
of the parties hereunder shall be specifically enforceable.
45
<PAGE> 52
9.13 Consent of Parties. The Parties hereby consent to
the jurisdiction of the New York Supreme Court, Nassau County, or the United
States District Court for the Eastern District of New York for all purposes.
46
<PAGE> 53
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the day and year first above written.
GETTY PETROLEUM CORP.
By:
----------------------------------
Title:
-------------------------------
GETTY PETROLEUM MARKETING INC.
By:
----------------------------------
Title:
-------------------------------
47
<PAGE> 54
EXHIBIT A
GETTY REALTY CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF OCTOBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 28,153 ($18,262)(a) $ 9,891
Short-term investments 535 - 535
Accounts receivable, net 2,309 - 2,309
Inventories 1,651 - 1,651
Deferred income taxes 3,269 - 3,269
Prepaid expenses and other
current assets 3,824 - 3,824
-------- --------- --------
39,741 (18,262) 21,479
Property, plant and equipment, net 97,300 - 97,300
Other assets 8,198 - 8,198
-------- --------- --------
TOTAL ASSETS $145,239 ($18,262) $126,977
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt
and capital lease obligations $ 10,108 - $ 10,108
Accounts payable 2,689 - 2,689
Accrued expenses 22,999 - 22,999
Gasoline taxes payable 77 - 77
-------- --------- --------
Total current liabilities 35,873 - 35,873
Long-term debt 15,652 - 15,652
Obligations under capital leases 18,153 - 18,153
Deferred income taxes 4,173 - 4,173
Other, principally deposits 1,187 - 1,187
Stockholders' equity 70,201 ($18,262)(a) 51,939
-------- --------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $145,239 ($18,262) $126,977
======== ======== ========
</TABLE>
The unaudited pro forma consolidated balance sheet has been derived from the
historical financial statements of Getty Realty Corp. and reflects certain pro
forma adjustments as if the Distribution had been effected as of October 31,
1996.
(a) Represents cash to be transferred to Marketing in an amount
sufficient to provide Marketing with net working capital of approximately $1.1
million in accordance with the Distribution Agreement.
<PAGE> 55
EXHIBIT D
GETTY PETROLEUM MARKETING INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF OCTOBER 31, 1996
(in thousands)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents...................................... $ 937 $ 18,262(a) $ 19,199
Accounts receivable, net.................................. 13,559 -- 13,559
Inventories............................................... 20,275 -- 20,275
Deferred income taxes..................................... 1,657 -- 1,657
Prepaid expenses and other current assets................. 2,674 -- 2,674
-------- -------- --------
Total current assets................................... 39,102 18,262 57,364
Property and equipment, net................................. 87,614 -- 87,614
Other assets................................................ 2,163 -- 2,163
-------- -------- --------
TOTAL ASSETS........................................... $ 128,879 $ 18,262 $ 147,141
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 28,821 $ -- $ 28,821
Accrued expenses.......................................... 11,247 -- 11,247
Gasoline taxes payable.................................... 16,196 -- 16,196
-------- -------- --------
Total current liabilities.............................. 56,264 -- 56,264
Deferred income taxes....................................... 14,125 -- 14,125
Other, principally deposits................................. 14,463 -- 14,463
Stockholders' equity........................................ 44,027 18,262(a) 62,289
-------- -------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............. $ 128,879 $ 18,262 $ 147,141
======== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma consolidated balance sheet.
<PAGE> 56
EXHIBIT F
#58752
JERICHO OFFICE SPACE LICENSE AGREEMENT
AGREEMENT made this 1st day of February, 1997 between GETTY REALTY CORP.,
formerly known as Getty Petroleum Corp., hereinafter called "Licensor", having
its principal office at 125 Jericho Turnpike, Jericho, New York 11753 and GETTY
PETROLEUM MARKETING INC., hereinafter called "Licensee", with an office at 125
Jericho Turnpike, Jericho, New York 11753.
RECITAL:
On February 23, 1987, Licensor, as Tenant, entered into a lease with Donald E.
Axinn, as Landlord, hereinafter called "Landlord", for certain office space in
the building located at 125 Jericho Turnpike, Jericho, New York 11753,
hereinafter called the "Lease", and such Lease has been subsequently amended.
Licensee acknowledges receipt of the Lease and all amendments thereto.
Licensee desires to license such premises on a joint-use basis with Licensor.
NOW, THEREFORE, For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is mutually agreed as follows:
1. Licensor hereby licenses to Licensee and Licensee hereby licenses from
Licensor the portion of the premises located at 125 Jericho Turnpike, Jericho,
New York 11753, more fully described on Schedule "A" annexed hereto and made a
part hereof, together with the equipment listed on Schedule "B" annexed hereto
and made a part hereof, pursuant to the terms, conditions and limitations set
forth herein. The premises shall be used jointly with Licensor and Licensor's
employees and invitees.
2. The term of this license, hereinafter called the "License", shall be for a
period of four (4) years and eleven (11) months, commencing on February 1,
1997, and ending on December 31, 2001, except that either party shall have the
right at any time to terminate this License upon not less than thirteen (13)
months notice to the other party. In the event that Licensee is the
terminating party, Licensee shall pay to Licensor, upon the effective date of
termination, an amount equal to 90% of the amount to be paid by Licensor to
Landlord under Paragraph "7(b)" of the Lease. In the event that Licensor is
the terminating party, Licensor shall pay 100% of such amount owed to Landlord.
In the event that Licensor is the terminating party, Licensee shall have the
option subject to Landlord's consent, to continue to remain in occupancy of the
office space, and Licensor shall use its best efforts to obtain Landlord's
consent to the assignment of the Lease to Licensee or to the subletting of the
office space to Licensee. If such consent is obtained Licensor shall be
relieved from the obligation to pay the amount due under Paragraph "7(b)" of
the Lease. Licensee shall be solely responsible for any obligations under the
Lease thereafter, including, without limitation, early termination penalties.
3. Licensee shall pay the following consideration (the "Consideration") for
the use of said premises:
$36,500.00 per month plus the amount due each month pursuant to Paragraph
"4" hereof.
The Consideration shall be paid in advance on the first day of each
calendar month, without
1
<PAGE> 57
notice or demand and without any set off or deduction whatsoever. Licensee
agrees that the Consideration shall be payable in monthly installments and that
if any monthly installment thereof shall be due and unpaid for ten (10) days
after notice of such default has been delivered to Licensee, Licensor shall
then have the right to terminate this License and pursue its remedies at equity
or law, including eviction, ejectment or dispossess, under Paragraph "21"
hereof or otherwise. At Licensor's option, Consideration, additional
Consideration and any other sums due and owing under this License shall be paid
by electronic wire transfer of funds or by electronic funds transfer. Licensee
shall execute and deliver to Licensor such forms or authorizations as may be
necessary for electronic wire transfers or electronic funds transfers.
4. Licensee shall pay to Licensor monthly, as additional Consideration, (i)
90% all taxes and sewer assessments which shall be imposed or assessed upon,
Licensor as Tenant under the Lease, and (ii) 90% of Licensor's share of
operating expenses under the Lease. Licensee shall be responsible for the
payment of all personal property taxes, if any, to the appropriate taxing
authority.
5. Licensor shall pay directly to the appropriate authority, all sewer charges
(other than assessments) and all charges for gas, electricity, telephone, heat
and hot water, provided, however, if Licensee increases Licensor's use of any
utility in any material respect, Licensee shall pay, as additional
Consideration, the incremental cost of such utility to Licensor.
6. Licensor shall provide to Licensee the insurance coverage in the same
manner and amounts set forth in the Lease between Licensor, as Tenant, and
Donald E. Axinn, as Landlord, dated February 23, 1987.
7. Subject to such uses being lawful, Licensee shall use and occupy the
premises for general office purposes, in compliance with the Lease and all
zoning regulations, the building code and all applicable laws, rules and
regulations. Licensee must obtain, at its own expense, all government licenses
or permits required for the lawful conduct of Licensee's business on the
premises and Licensee will, at all times, comply with the terms of such
licenses or permits.
8. Licensee shall not use the premises, or any part thereof, for any other use
not provided for in paragraph "7" hereof, without Licensor's prior written
consent.
9. Subject to the terms of the Lease, Licensor, at its expense, shall make
structural repairs deemed necessary by it to keep the premises in good
operating condition, provided that repairs are due to ordinary wear or to
damage by the elements and without any abatement of Consideration for the
interruption caused thereby.
10. Licensor shall also, at its expense, maintain the premises and the
equipment included on Schedule "B" in good, safe and operating condition and
promptly make all repairs or replacements which are not the responsibility of
Landlord under the Lease or of Licensee or are occasioned by the negligence or
misconduct of its employees, agents and customers, which repairs or
replacements shall be in quality and class equal to or better than the work or
installations existing at the time that the damage or injury occurred.
Licensee shall commit no act of waste to the premises or improvements.
11. If Licensee shall fail to comply with its obligations under the last
sentence of paragraph "10" hereof,
2
<PAGE> 58
Licensor or its agent may enter upon any portion of the premises occupied by
Licensee in order to take such remedial action as is necessary and may charge
the cost of repair to Licensee as additional Consideration due with Licensee's
next monthly installment of Consideration. Licensee's failure to pay such
charges shall be treated as a failure to pay Consideration when due and subject
to the same remedies.
12. Licensor shall not be required to render any services to Licensee or to
make any repairs or replacements to the premises except those specifically
described in this License.
13. Licensor and Licensee agree that this License is only a license and shall
not be construed as a sublease, or confer any rights of a sublease.
14. This License is subject and subordinate to the Lease and to all mortgages
or other security instruments which may now or hereafter affect this License or
the premises, and to all renewals, modifications, consolidations, replacements
and extensions thereof. This clause shall be self-operative and no further
instrument of subordination shall be required by any ground or underlying
tenant or by any mortgagee. In confirmation of such subordination, Licensee
shall execute promptly any certificate that Licensor may request.
15. Licensee shall comply promptly with the terms of the Lease and all present
and future laws, codes and ordinances and other notices, requirements, orders,
regulations and recommendations (whatever the nature thereof) of all
governmental authorities and recommendations of the board of fire underwriters
or any insurance organizations, associations or companies in the respect to the
premises and Licensee will not knowingly do or commit, or suffer to be done or
committed anywhere in the premises, any act or thing contrary to the Lease or
any of the laws, ordinances, notices, requirements, orders, regulations and
recommendations referred to herein.
16. Licensee shall place no signs on the premises which do not relate to
Licensee's business without first obtaining Licensor's prior written consent.
All signs shall be in compliance with the Lease and all applicable laws.
Licensee shall pay the charges, if any, for all sign permits.
17. Licensee agrees that it will take no action that would violate the
provisions of the Lease.
18. (a) Licensee shall quit and surrender peaceably and quietly, to Licensor,
its agent or attorney, possession of the premises at the expiration or other
termination of this License, in good condition, except for ordinary wear and
tear. If upon termination of this License or abandonment of the premises by
Licensee, Licensee abandons or leaves any personal property or equipment at the
premises, such equipment or property shall be conclusively deemed abandoned and
Licensor shall have the right, without notice to Licensee, to store or
otherwise dispose of the property or equipment at Licensee's sole cost, expense
and risk, without being liable in any respect to Licensee. Licensee agrees
that any such disposition by Licensor shall be conclusively deemed to be
commercially reasonable.
(b) If Licensee holds over or remains in possession of the premises
after the expiration of the term of the License, or after any prior termination
thereof, without any written agreement being made or entered into between
Licensor and Licensee, such holding over or continued possession shall be
deemed
3
<PAGE> 59
to be a license from month to month at a monthly Consideration equal to two (2)
times the then last monthly installments payable during the term, and otherwise
upon the terms and conditions of this License, and such license shall be
terminable at the end of any month by either party upon written notice
delivered to the other party at least thirty (30) days prior to the end of such
month. Nothing herein shall be construed as to permit Licensee to hold over or
remain in possession beyond the expiration or termination of the Lease.
19. Licensee shall not do any act, or make any contract, which may create or
be a foundation for any lien (including mechanics or materialman's liens) or
other encumbrance upon any interest of Landlord or Licensor in the premises.
If any such lien be filed, Licensee, within fifteen (15) days or as soon as
reasonably possible after notice of filing shall cause any such lien or
encumbrance to be discharged of record.
20. Licensee shall make no additions, changes, alterations or improvements to
the premises without first submitting detailed plans and specifications and
obtaining Licensor's prior written consent. Any alterations or additions to
any buildings or permanent improvements authorized by Licensor shall be made in
a good, workmanlike manner, in compliance with all applicable laws, rules and
regulations and at Licensor's option shall upon installation become the
property of Licensor and Licensee shall have no right or interest therein
except to continue to use same during the remainder of the term of this
License. At the request of Licensor, Licensee shall at its own cost and
expense remove all alterations, improvements, and additions not acceptable to
or desired by Licensor, from the premises and Licensee shall repair all damage
caused by such installation and removal. Any costs incurred by Licensor in
removing or disposing of fixtures or repairing damage shall be additional
Consideration due hereunder.
21. Licensor and Licensee agree that each of the provisions of this License is
a material and substantial condition of the agreement between the parties
relating to the license for use of the premises. Licensor may immediately
terminate this License, upon two (2) days written notice, upon the failure of
Licensee to cure a default within ten (10) days of notice of default from
Licensor, and in any manner resume full possession of the premises; in the
event the Licensee does not comply with any one of the terms and conditions of
this License, the Lease, or upon any grounds provided in any applicable law,
statute, rule or regulation including by way of illustration but not limited to
the happening of the following event:
a) If any insolvency or receivership proceedings are instituted by or
against Licensee or Licensee makes any general assignment for the benefit of
creditors, or a receiver or trustee is appointed for Licensee or for any of
Licensee's assets, or a judgment is entered against Licensee, or if any
attachment, execution or like process is issued against the Licensee or any of
Licensee's assets.
22. In the event of any default by Licensee, re-entry by Licensor, expiration
or termination of this License or dispossess by summary proceeding or
otherwise, Licensee shall be responsible for the following:
a) Consideration up to the time of such re-entry, dispossess or
expiration of the term of this License;
b) Consideration for the balance of the full term, all of which shall be
accelerated and due
4
<PAGE> 60
and payable as of the date of default, re-entry by Licensor, termination
of this License or entry of a judgment of possession, whichever date
first occurs;
c) The payment of all sums incurred by Licensor in putting the premises
in good order or preparing the same for re-licensing, including brokerage
and advertising fees;
d) Reasonable attorney's fees and expenses resulting from Licensor
enforcing any of the remedies described above, or in the enforcement of
this License or in defending any claim brought against Licensor by
Licensee against which Licensor successfully defends; and
e) In addition, Licensor shall have such other remedies as are then
available to it by law. Licensor is under no obligation to mitigate
damages.
No right or remedy granted or reserved unto Licensor hereunder shall be
deemed to be exclusive of any other or additional right or remedy available to
Licensor at law or in equity or under statute.
23. Licensee shall not assign, sub-license, pledge, mortgage or otherwise
transfer the premises, or any part thereof, without first obtaining Licensor's
written consent which consent Licensor may, in its sole discretion, withhold
with or without cause. In the event of any such assignment or sub-licensing,
by new license agreement or otherwise, Licensee shall continue to remain
jointly and severally liable with its transferee to Licensor for the
performance of all of Licensee's obligations for the remainder of the term of
this License.
24. This License is subject and subordinate to all of the terms, provisions
and conditions of the Lease with Landlord, and if such Lease shall be
cancelled or terminated, this License shall be automatically terminated or
cancelled, without any liability on the part of Licensor to Licensee.
25. The parties hereto waive trial by jury in any action, proceeding or
counterclaim brought by either of the parties hereto against the other (except
for personal injury or property damage) on any matters whatsoever arising out
of or in any way connected with this License, the relationship of Licensor and
Licensee, Licensee's use of or occupancy of the premises, or any other
statutory remedy. In the event Licensor or Landlord commences any dispossess
proceeding for possession of the premises, Licensee will not interpose any
counterclaim of any nature or description in such proceeding.
26. Licensee agrees to defend, indemnify and hold Licensor and Landlord,
their affiliates, officers, directors, employees and agents harmless from and
against any and all losses, claims, demands, suits, actions, judgments, fines
or payments for, or in connection with, any accident, injury or damage
whatsoever caused to any person or property arising, directly or indirectly,
out of the business conducted at the premises or on any of the sidewalks
adjoining the same, or arising, directly or indirectly, from any violation of
any law, agency ruling or regulation, or from any act or omission of Licensee
or any sublicensee and their respective, servants, agents, customers, employees
or contractors, and from and against all costs, expenses and liabilities
incurred in connection with any such claim or proceeding brought thereon.
Licensee's obligations under this paragraph shall survive expiration or
termination of this License. Licensor shall have no responsibility whatsoever
for any damage, vandalism or theft of
5
<PAGE> 61
Licensee's property.
27. Licensee agrees that the liability of the Licensor under this License and
all matters pertaining to or arising out of the License and the use and
occupancy of the licensed premises, shall be limited to Licensor's interest in
the premises, and in no event shall Licensee make any claim against or seek to
impose any personal liability upon any individual, general or limited partner
of any partnership, or principal of any firm or corporation that may now or
hereafter become the Licensor.
28. If the whole or any substantial part of the premises shall be acquired or
condemned by eminent domain or for any public or quasi-public use or purpose,
then, and in that event, the term of this License shall cease and terminate
from the date of title vesting and Licensee shall have no claim against
Licensor for the value of any unexpired term of this License. No part of any
award shall belong to Licensee.
29. Should any of Licensee's checks, electronic wire transfers or electronic
funds transfers be dishonored, stopped or returned for any reason after
delivery or transfer to Licensor, Licensee agrees to pay to Licensor an
administrative service charge equal to the greater of $50.00 or three (3%)
percent of the amount of any such check or attempted transfer, to cover
Licensor's costs and expenses. Any money owed by Licensee to Licensor after
the due date shall bear interest at the rate of the lesser of 1 1/2% per month
(18% annual percentage rate), or the maximum interest rate permitted by law.
30. Licensor does not, in any way, represent or warrant the fitness of the
premises for the use contemplated by Licensee and it shall be Licensee's
obligation to make same fit at its sole cost and expense. Licensee
acknowledges that it has inspected the premises and accepts the same in its
present condition "AS IS".
31. Licensee warrants and represents to Licensor that it has dealt with no
broker, real estate salesman, or person acting as broker or finder, in
connection with this License. Licensee shall defend, indemnify and hold
harmless Licensor of and from any and all claims, liabilities and/or damages
which are based upon a claim by any broker, person, firm, or corporation for
brokerage commission and/or other compensation by reason of having dealt with
Licensee. The provisions hereof shall survive the expiration or termination of
this License.
32. All notices and other communications which are required shall be given by
hand or by Certified Mail, Return Receipt Requested, to the parties at their
respective addresses first written above, or to the Licensee at the premises or
to such other address as either party may designate by hand or like Certified
Mail. Any such notice shall take effect at the time of the mailing thereof.
33. Licensor's right to require strict performance shall not be affected by
any previous waiver or course of dealings.
34. Licensor shall not be liable for failure to give possession of the
premises upon the commencement date by reason of the fact that the premises are
not ready for occupancy or because a prior licensee or any other person is
wrongfully holding over or is in wrongful possession, or for any other reason.
The
Consideration shall not commence until possession is given or is available, but
the term herein shall not
6
<PAGE> 62
be extended.
35. This License shall be binding upon and inure to the benefit of the parties
hereto, their respective heirs, successors and assigns.
36. No waiver, modification, change or alteration of the provisions of this
License, or any of the rights or remedies of either of the parties hereto shall
be valid, unless such waiver, modification, change or alteration is in writing,
and signed by the party against whom enforcement is sought.
37. This License shall be construed in accordance with the laws of the State
of New York.
38. In the event any provision of this License is declared illegal, invalid,
or unenforceable or contrary to law, it shall not affect any other part.
39. The parties have set forth in this License their entire understanding
relating to the premises, there is no other agreement or understanding between
the parties relating to the premises, except as expressly set forth herein.
40. Licensee has fully read this License before signing same and is in full
agreement with its terms. The person signing this License on behalf of
Licensee certifies that he/she is authorized by Licensee to execute this
License on behalf of Licensee and to bind Licensee to its terms.
41. Licensee shall not record this License or any notice or memorandum
thereof.
GETTY REALTY CORP.
______________________ By: ______________________________
Witness President, Licensor
GETTY PETROLEUM MARKETING INC.
______________________ By: ______________________________
Witness President, Licensee
7
<PAGE> 63
SCHEDULE 1.01(a)
Environmental Liabilities
NON-INVEST-ENVIRONMENTAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
95141 MILLSTONE NJ
96904 MIDDLETOWN RI
97126 HAZLETON PA
97192 EDDINGTON PA
98326 BRONXVILLE NY
98351 NANUET NY
98440 WEST HURLEY NY
98442 S. DURHAM NY
98444 GANESVOORT NY
98455 TIVOLI NY
98461 SAUGERTIES NY
98535 ELMHURST NY
98967 BRONX NY
13 sites
1
<PAGE> 64
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
7 JAMAICA NY
8 REGO PARK NY
16 OZONE PARK NY
17 BROOKLYN NY
20 BRONX NY
22 CORONA NY
24 BRONX NY
38 OCEANSIDE NY
54 BRIGHTWATERS NY
61 MIDDLE ISLAND NY
74 WHITE PLAINS NY
75 WHITE PLAINS NY
77 NEW ROCHELLE NY
78 YONKERS NY
79 HARTSDALE NY
82 OSSINING NY
91 ELMSFORD NY
93 PELHAM MANOR NY
100 MAHWAH NJ
101 VALLEY COTTAGE NY
102 PEEKSKILL NY
103 PORT CHESTER NY
104 LARCHMONT NY
110 MEDFORD NY
111 BRONX NY
114 BRONX NY
115 BRONX NY
116 ELMSFORD NY
117 MAMARONECK NY
121 YONKERS NY
126 BROOKLYN NY
128 BROOKLYN NY
138 YONKERS NY
146 MAHOPAC NY
157 POUGHKEEPSIE NY
159 CARMEL NY
160 MARLBORO NY
163 LAKE KATRINE NY
169 WAPPINGERS FALLS NY
174 STONY POINT NY
177 HIGHLAND NY
178 KINGSTON NY
179 POUGHKEEPSIE NY
181 HOWARD BEACH NY
182 LAGRANGEVILLE NY
186 BRONX NY
195 STATEN ISLAND NY
200 S. ISLAND NY
210 BRONX NY
214 JAMAICA NY
2
<PAGE> 65
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
218 MIDDLE VILLAGE NY
219 LONG ISLAND CITY NY
223 BROOKLYN NY
225 ROCKAWAY PARK NY
228 BROOKLYN NY
229 BROOKLYN NY
234 STATEN ISLAND NY
235 S. ISLAND NY
240 SPRINGFIELD GDNS. NY
252 MT. VERNON NY
254 NORTH BRUNSWICK NJ
257 BRONX NY
258 BRONX NY
261 BRONX NY
264 BRONX NY
266 BRONX NY
268 BRONX NY
270 BRONX NY
271 BRONX NY
272 BRONX NY
275 BRONX NY
276 BRONX NY
277 BRONX NY
278 YONKERS NY
288 ATLANTIC HIGHLANDS NJ
301 N. TARRYTOWN NY
304 OLD BRIDGE NJ
307 BREWSTER NY
312 FLUSHING NY
319 MAHWAH NJ
322 VALLEY COTTAGE NY
323 BRONX NY
324 S. ISLAND NY
325 BRIARCLIFF MANOR NY
326 BRONX NY
329 BRONX NY
331 BRONX NY
332 BRONX NY
334 BROOKLYN NY
336 BROOKLYN NY
339 NEW YORK NY
340 NEW YORK NY
341 NEW YORK NY
342 GLENDALE NY
343 OZONE PARK NY
344 LIC NY
357 N. BABYLON NY
358 PELHAM NY
360 SMITHTOWN NY
361 ASTORIA NY
3
<PAGE> 66
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
362 S. ISLAND NY
363 CEDARHURST NY
366 LAKE RONKONKOMA NY
370 KEYPORT NJ
377 NEW CITY NY
379 W. HAVERSTRAW NY
396 STATEN ISLAND NY
411 BROOKLYN NY
421 BROOKLYN NY
425 W. ISLIP NY
429 RONKONKOMA NY
444 BAYSHORE NY
460 BETHPAGE NY
523 TOMS RIVER NJ
535 N. BABYLON NY
544 WHITE PLAINS NY
545 SAUGERTIES NY
546 WOODSIDE NY
547 OZONE PARK NY
548 HICKSVILLE NY
549 BRONX NY
561 S. ISLAND NY
564 BROOKLYN NY
568 LIC NY
570 WHITE PLAINS NY
571 N. WHITE PLAINS NY
572 HAWTHORNE NY
573 PLEASANTVILLE NY
574 PATTERSON NY
576 YONKERS NY
577 YONKERS NY
578 RYE NY
579 OSSINING NY
580 BRANFORD CT
581 BRIDGEPORT CT
583 COVENTRY CT
587 FRANKLIN CT
589 MANCHESTER CT
590 MERIDEN CT
595 NEW MILFORD CT
596 NORTH HAVEN CT
598 NORWICH CT
600 WAUREGAN CT
604 TERRYVILLE CT
607 UNION CITY CT
611 WATERFORD CT
613 WESTPORT CT
615 WOODBRIDGE CT
619 AGAWAM MA
624 GRANBY MA
4
<PAGE> 67
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
625 GREAT BARRINGTON MA
628 MONSON MA
633 PITTSFIELD MA
635 SOUTH HADLEY MA
637 SPRINGFIELD MA
638 SPRINGFIELD MA
647 OSSINING NY
649 BROOKLYN NY
660 LAKEWOOD NJ
667 PARAMUS NJ
673 PLEASANTVILLE NJ
676 GLEN HEAD NY
677 NEW ROCHELLE NY
679 TORRINGTON CT
680 N. BRANFORD CT
685 DOBBS FERRY NY
687 WOLCOTT CT
688 PLAINVILLE CT
709 BROOKLYN NY
751 FAIRLESS HILLS PA
752 PHILADELPHIA PA
6130 NEW HAVEN CT
6722 BLOOMFIELD CT
6725 SIMSBURY CT
6742 RIDGEFIELD CT
6743 BRIDGEPORT CT
6744 NORWALK CT
6746 BRIDGEPORT CT
6748 BRIDGEPORT CT
6749 BRIDGEPORT CT
6751 BRIDGEPORT CT
6753 BRIDGEPORT CT
6754 BRIDGEPORT CT
6756 BRIDGEPORT CT
6762 DARIEN CT
6764 WESTPORT CT
6765 STAMFORD CT
6766 HAMDEN CT
6768 STAMFORD CT
6772 COS COB CT
6776 STRATFORD CT
6777 MILFORD CT
6778 STRATFORD CT
6782 FAIRFIELD CT
6811 BRISTOL CT
6813 BROOKFIELD CT
6817 TORRINGTON CT
6819 NORWALK CT
6826 HARTFORD CT
6831 NEW HAVEN CT
5
<PAGE> 68
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
6836 BRIDGEPORT CT
6837 WILTON CT
6850 W. HARTFORD CT
6853 ENFIELD CT
6862 STRATFORD CT
6864 EAST HARTFORD CT
6871 AVON CT
8608 WILMINGTON DE
8635 NEW CASTLE DE
8637 ST. GEORGES DE
8641 WILMINGTON DE
8667 NEWARK DE
8669 WILMINGTON DE
28206 LISBON ME
28215 WESTBROOK ME
28226 WINDHAM ME
28231 AUGUSTA ME
29721 BALTIMORE MD
29763 RANDALLSTOWN MD
30161 MILFORD MA
30315 S. WEYMOUTH MA
30326 GARDNER MA
30327 STOUGHTON MA
30332 METHUEN MA
30344 RANDOLPH MA
30351 ROCKLAND MA
30352 WATERTOWN MA
30363 WEYMOUTH MA
30374 DEDHAM MA
30375 HINGHAM MA
30392 ASHLAND MA
30409 HYDE PARK MA
30412 PITTSFIELD MA
30436 WORCESTER MA
30438 NEW BEDFORD MA
30439 TAUNTON MA
30466 CLINTON MA
30468 FOXBORO MA
30472 GROVELAND MA
30488 HYANNIS MA
30506 HOLYOKE MA
30518 GROVELAND MA
30524 FALMOUTH MA
30537 SOMERSET MA
30545 METHUEN MA
30546 ROCKLAND MA
30548 WILLIAMSTOWN MA
30551 FAIRHAVEN MA
30552 BELLINGHAM MA
30558 SEEKNOK MA
6
<PAGE> 69
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
30559 WALPOLE MA
30561 N. ANDOVER MA
30562 WESTFORD MA
30600 LOWELL MA
30601 FRAMINGHAM MA
30602 AUBURN MA
30603 METHUEN MA
30604 AMESBURY MA
30605 GEORGETOWN MA
30606 IPSWICH MA
30607 SALISBURY MA
30609 BEVERLY MA
30611 HAVERHILL MA
30612 CHATHAM MA
30618 LOWELL MA
30619 METHUEN MA
30621 NEWBURYPORT MA
30623 ORLEANS MA
30624 PEABODY MA
30627 SALEM MA
30629 TEWKSBURY MA
30630 TWIN MILL (WAREHAM) MA
30631 FALMOUTH MA
30632 W. YARMOUTH MA
30633 WESTFORD MA
30635 YARMOUTH MA
30636 BRIDGEWATER MA
30644 CANTON MA
30646 STOUCHTON MA
30651 WORCESTER MA
30652 AUBURN MA
30653 BARRE MA
30654 WORCESTER MA
30655 BROCKTON MA
30656 MILLBURY MA
30658 WORCESTER MA
30660 DUDLEY MA
30663 WORCESTER MA
30664 HYANNIS MA
30665 LEOMINSTER MA
30666 WORCESTER MA
30668 WORCESTER MA
30669 NORTH BOROUGH MA
30670 POCASSET MA
30671 CLINTON MA
30672 W. BOYLSTON MA
30673 WORCESTER MA
30674 SOUTHBRIDGE MA
30675 WORCESTER MA
30676 S. YARMOUTH MA
7
<PAGE> 70
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
30677 STERLING MA
30679 WORCESTER MA
30680 FRAMINGHAM MA
30682 WAREHAM MA
30683 WESTBOROUGH MA
30684 HARWICHPORT MA
30685 WORCESTER MA
30686 WORCESTER MA
30687 FITCHBURG MA
30688 WORCESTER MA
30689 CHERRY VALLEY MA
30690 FRAMINGINGHAM MA
30692 SOUTHBRIDGE MA
30693 OXFORD MA
30694 WORCESTER MA
30696 FITCHBURG MA
30697 WORCESTER MA
30700 FRAMINGHAM MA
30702 MILFORD MA
30704 UXBRIDGE MA
30710 WORCESTER MA
55211 DERRY NH
55234 PLAISTOW NH
55235 GILFORD NH
55236 SOMERSWORTH NH
55237 SALEM NH
55238 LONDONDERRY NH
55239 ROCHESTER NH
55241 HAMPTON NH
55245 NASHUA NH
55246 PELHAM NH
55247 PEMBROKE NH
55249 ROCHESTER NH
55250 ROCHESTER NH
55251 SALEM NH
55252 SEABROOK NH
55253 SOMERSWORTH NH
55254 EXETER NH
55256 CANDIA NH
55257 EPPING NH
55258 EPSOM NH
55261 MILFORD NH
55264 PORTSMOUTH NH
55265 PORTSMOUTH NH
55267 SALEM NH
55268 SEABROOK NH
56003 MCAFEE NJ
56005 HAMBURG NJ
56009 WEST MILFORD NJ
56028 WILLINGBORO NJ
8
<PAGE> 71
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
56039 NUTLEY NJ
56046 TOMS RIVER NJ
56051 WALL TOWNSHIP NJ
56056 UNION NJ
56062 CRANBURY NJ
56064 SPOTSWOOD NJ
56065 NEW BRUNSWICK NJ
56075 ELIZABETH NJ
56079 BAYONNE NJ
56084 BASKING RIDGE NJ
56086 DEPTFORD NJ
56088 SEWELL NJ
56101 TRENTON NJ
56102 LODI NJ
56113 SPRING LAKE NJ
56116 CLIFTON NJ
56117 SEWELL NJ
56132 ASBURY PARK NJ
56142 PATERSON NJ
56149 BRICK TOWNSHIP NJ
56156 OCEAN CITY NJ
56157 WHITING NJ
56169 MONTVALE NJ
56215 NEPTUNE NJ
56230 NEWARK NJ
56251 NESHANIC STATION NJ
56253 PINE HILL NJ
56258 TUCKERTON NJ
56260 W. DEPTFORD NJ
56262 ATCO NJ
56263 SOMERVILLE NJ
56271 MATAWAN NJ
56276 FORT LEE NJ
56803 BERGENFIELD NJ
56809 RAHWAY NJ
56815 LINDEN NJ
56818 BLOOMFIELD NJ
56821 SOUTH ORANGE NJ
56844 NUTLEY NJ
56852 ENGLEWOOD NJ
56868 CLIFTON NJ
56871 JERSEY CITY NJ
56873 WATCHUNG NJ
56877 GREEN VILLAGE NJ
56891 BLOOMFIELD NJ
56893 PARLIN NJ
56896 COLONIA NJ
56897 N. BERGEN NJ
56915 RIDGEWOOD NJ
56919 WAYNE NJ
9
<PAGE> 72
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
56921 WASHINGTON NJ
56922 PARAMUS NJ
56924 GARFIELD NJ
56925 JERSEY CITY NJ
56926 FORT LEE NJ
56933 BELFORD NJ
56935 EATONTOWN NJ
56939 MONMOUTH BCH NJ
56962 TRENTON NJ
56987 BEVERLY NJ
56999 WEST ORANGE NJ
58006 ROCKVILLE CENTRE NY
58007 GLENDALE NY
58012 BELLAIRE NY
58014 BRONX NY
58015 BROOKLYN NY
58018 BAYSIDE NY
58019 YONKERS NY
58021 DOBBS FERRY NY
58022 N. MERRICK NY
58025 WHITE PLAINS NY
58027 GREAT NECK NY
58031 GLEN HEAD NY
58034 PT. WASHINGTON NY
58041 WESTBURY NY
58042 TUCKAHOE NY
58046 EAST HILLS NY
58049 YONKERS NY
58053 BROOKLYN NY
58069 LYNBROOK NY
58071 ST. ALBANS NY
58072 RHINEBECK NY
58073 RIDGEWOOD NY
58077 BROOKLYN NY
58079 BROOKLYN NY
58087 BAYSHORE NY
58092 ARDSLEY NY
58101 YONKERS NY
58108 WHITE PLAINS NY
58111 SCARSDALE NY
58112 EASTCHESTER NY
58114 NEW ROCHELLE NY
58119 BROOKLYN NY
58121 NEW ROCHELLE NY
58123 BROOKLYN NY
58154 BRONX NY
58161 YONKERS NY
58173 GLENVILLE NY
58184 YONKERS NY
58205 NEW YORK NY
10
<PAGE> 73
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
58218 ALBANY NY
58220 LONG ISLAND CITY NY
58254 ALBANY NY
58260 RENSSELAER NY
58263 MT. KISCO NY
58297 SALT POINT NY
58315 ROTTERDAM NY
58329 OSSINING NY
58347 ELLENVILLE NY
58367 CHATHAM NY
58393 HYDE PARK NY
58401 SHRUB OAK NY
58409 NEW YORK NY
58411 EAST MEADOW NY
58415 BROOKLYN NY
58441 STATEN ISLAND NY
58442 STATEN ISLAND NY
58471 CEDARHURST NY
58505 BRONX NY
58513 BRONX NY
58514 NEW YORK NY
58526 OZONE PARK NY
58532 MT. VERNON NY
58535 PELHAM MANOR NY
58542 NEW YORK NY
58543 FREEPORT NY
58547 ASTORIA NY
58548 MOHEGAN LAKE NY
58553 STATEN ISLAND NY
58557 E. ELMHURST NY
58558 STATEN ISLAND NY
58563 MERRICK NY
58567 GUILDERLAND CTR. NY
58573 WANTAGH NY
58574 SMITHTOWN NY
58582 TROY NY
58584 BROOKLYN NY
58585 ARVERNE NY
58587 REGO PARK NY
58592 NEW YORK NY
58596 MIDDLETOWN NY
58598 OCEANSIDE NY
58602 MANHASSET NY
58605 HOWARD BEACH NY
58616 BRONX NY
58703 SCHENECTADY NY
58704 BALLSTON SPA NY
58705 BALLSTON SPA NY
58710 COLONIE NY
58711 DELMAR NY
11
<PAGE> 74
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
58712 ELLENVILLE NY
58713 FT. EDWARD NY
58714 FT. PLAIN NY
58715 GLENS FALLS NY
58716 GLOVERSVILLE NY
58718 HALFMOON NY
58719 GREEN ISLAND NY
58720 HANCOCK NY
58721 HYDE PARK NY
58722 LATHAM NY
58723 BALLSTON SPA NY
58724 MELROSE NY
58725 MILLERTON NY
58726 NEW WINDSOR NY
58727 NISKAYUNA NY
58730 PLEASANT VALLEY NY
58731 POUGHKEEPSIE NY
58733 QUEENSBURY NY
58735 ROTTERDAM NY
58737 GUILDERLAND NY
58739 S. GLENS FALLS NY
58740 TROY NY
58741 WARRENSBURG NY
58743 HUDSON FALLS NY
58744 MECHANICVILLE NY
58745 ALBANY NY
58750 MECHANICVILLE NY
58751 NEWBURGH NY
58753 KINGSTON NY
58754 RENSSELAER NY
58759 RHINEBECK NY
58760 PORT EWEN NY
58761 CATSKILL NY
58762 CATSKILL NY
58764 CATSKILL NY
58766 HUDSON NY
58768 SAUGERTIES NY
58769 FREEHOLD NY
58770 COXSACKIE NY
58771 GREENVILLE NY
58772 QUARRYVILLE NY
58774 MONSEY NY
58776 KINGSTON NY
58780 RENSSELAER NY
58785 MENANDS NY
58786 HOUSICK FALLS NY
58788 BREWSTER NY
58790 BARDONIA NY
58793 VALATIE NY
58794 CAIRO NY
12
<PAGE> 75
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
58796 VISTA NY
58797 LEEDS NY
58798 POUGHKEEPSIE NY
58802 PINE BUSH NY
58804 COPAKE NY
58806 RED HOOK NY
58808 W. TAGHKANIC NY
58812 RAVENA NY
58822 CROTON FALLS NY
67101 BANGOR PA
67215 PHILADELPHIA PA
67227 ALLENTOWN PA
67243 BRYN MAWR PA
67244 CONSHOHOCKEN PA
67249 PHILADELPHIA PA
67253 HUNTINGDON VALLEY PA
67254 FEASTERVILLE PA
67255 PHILADELPHIA PA
67258 PHILADELPHIA PA
67265 PHILADELPHIA PA
67266 PHILADELPHIA PA
67269 HATBORO PA
67271 HAVERTOWN PA
67272 MEDIA PA
67274 PHILADELPHIA PA
67275 MILMONT PARK PA
67276 PHILADELPHIA PA
67278 ALDAN PA
67282 BRISTOL PA
67288 TREVOSE PA
67298 HAVERTOWN PA
67299 ABINGTON PA
67301 HATBORO PA
67367 CLIFTON HIGHTS PA
67381 ALDAN PA
67396 MEDIA PA
67398 ROSLYN PA
67401 CLIFTON HIGHTS PA
67402 PHILADELPHIA PA
67405 MORRISVILLE PA
67409 PHILADELPHIA PA
67415 PHOENIXVILLE PA
67416 LEVITTOWN PA
67418 LANGHORNE PA
67419 POTTSTOWN PA
67422 BOYERTOWN PA
67423 QUAKERTOWN PA
67425 SOUDERTON PA
67426 LANSDALE PA
67431 FURLONG PA
13
<PAGE> 76
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
67432 COOPERSBURG PA
67433 DOYLESTOWN PA
67434 RICHBORO PA
67435 PENNDEL PA
67436 WEST CHESTER PA
67437 NORRISTOWN PA
67531 TRAPPE PA
67580 GETTYSBURG PA
67598 LINWOOD PA
67599 ELIZABETHTOWN PA
67601 NORTH HILLS PA
67602 NEWTOWN SQUARE PA
67604 ALLENTOWN PA
67607 PHILADELPHIA PA
67610 PHILADELPHIA PA
67615 PHILADELPHIA PA
67617 PALMER TOWNSHIP PA
67623 FARIFIELD PA
67624 NEW OXFORD PA
67626 LITTLESTOWN PA
67627 HANOVER PA
67635 YORK PA
67636 DOVER PA
67638 GLEN ROCK PA
67639 CARLISLE PA
67640 CARLISLE PA
67641 BOILING SPRINGS PA
67647 HANOVER PA
67649 BIGLERVILLE PA
67650 NEW OXFORD PA
67654 HARRISBURG PA
68002 MIDDLETOWN RI
68007 PROVIDENCE RI
68120 EAST PROVIDENCE RI
68611 PAWTUCKET RI
68619 CRANSTON RI
68622 PAWTUCKET RI
68623 BARRINGTON RI
68629 WARWICK RI
68642 PORTSMOUTH RI
69004 EPHRATA PA
69005 DAUPHIN PA
69010 YORK PA
69012 GETTYSBURG PA
69016 POTTSVILLE PA
69019 POTTSVILLE PA
69406 ALLENTOWN PA
69407 LANCASTER PA
69408 BETHLEHEM PA
69409 EASTON PA
14
<PAGE> 77
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
69415 BETHLEHEM PA
69416 LANCASTER PA
69417 SCHAEFFERSTOWN PA
69419 HAMBURG PA
69420 READING PA
69421 MILLERSVILLE PA
69422 MANHEIM PA
69424 MOUNTVILLE PA
69425 EBENEZER PA
69426 BETHLEHEM PA
69428 INTERCOURSE PA
69430 REINHOLDS PA
69431 BOYERTOWN PA
69436 WEST GROVE PA
69439 OXFORD PA
69440 POTTSTOWN PA
69443 EPHRATA PA
69444 READING PA
69445 ROBESONIA PA
69449 YORK PA
69466 KENHORST PA
69472 LEOLA PA
69476 SHREWSBURY PA
69483 RED LION PA
69484 READING PA
69485 ROTHSVILLE PA
69495 HARRISBURG PA
69497 ADAMSTOWN PA
69503 LANCASTER PA
69504 NEW HOLLAND PA
69505 CHRISTIANA PA
69507 LANCASTER PA
69672 READING PA
69673 WYOMISSING HILLS PA
69676 ST.CLAIR PA
69680 REIFFTON PA
69681 W. READING PA
69682 ARENDTSVILLE PA
69683 MOHNTON PA
69684 ST.THOMAS PA
69685 CARLISLE PA
69688 BONNEAUVILLE PA
69690 MCCONNELLBURG PA
76112 BENNINGTON VT
694 sites
15
<PAGE> 78
SCHEDULE 1.01(b)
Upgrades
NON-INVEST-CAPITAL
LOCATION
- ---------------------------------------
# CITY STATE
- ---------------------------------------
96904 MIDDLETOWN RI
97192 EDDINGTON PA
98175 LYNBROOK NY
98326 BRONXVILLE NY
4 sites
INVESTMENT-CAPITAL
LOCATION
- ---------------------------------------
# CITY STATE
- ---------------------------------------
6 BROOKLYN NY
7 JAMAICA NY
8 REGO PARK NY
20 BRONX NY
22 CORONA NY
24 BRONX NY
61 MIDDLE ISLAND NY
74 WHITE PLAINS NY
79 HARTSDALE NY
82 OSSINING NY
91 ELMSFORD NY
102 PEEKSKILL NY
104 LARCHMONT NY
111 BRONX NY
115 BRONX NY
117 MAMARONECK NY
121 YONKERS NY
126 BROOKLYN NY
128 BROOKLYN NY
138 YONKERS NY
146 MAHOPAC NY
157 POUGHKEEPSIE NY
160 MARLBORO NY
163 LAKE KATRINE NY
174 STONY POINT NY
177 HIGHLAND NY
178 KINGSTON NY
181 HOWARD BEACH NY
186 BRONX NY
195 S. ISLAND NY
200 S. ISLAND NY
223 BROOKLYN NY
229 BROOKLYN NY
234 S. ISLAND NY
235 S. ISLAND NY
240 SPRINGFIELD GDNS. NY
252 MT. VERNON NY
264 BRONX NY
266 BRONX NY
270 BRONX NY
272 BRONX NY
275 BRONX NY
276 BRONX NY
277 BRONX NY
278 YONKERS NY
301 N. TARRYTOWN NY
307 BREWSTER NY
312 FLUSHING NY
323 BRONX NY
324 S. ISLAND NY
1
<PAGE> 79
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
341 NEW YORK NY
342 GLENDALE NY
343 OZONE PARK NY
344 LIC NY
350 SPRING VALLEY NY
361 ASTORIA NY
362 S. ISLAND NY
396 S. ISLAND NY
411 BROOKLYN NY
421 BROOKLYN NY
544 WHITE PLAINS NY
545 SAUGERTIES NY
546 WOODSIDE NY
547 OZONE PARK NY
561 S. ISLAND NY
564 BROOKLYN NY
568 LIC NY
570 WHITE PLAINS NY
572 HAWTHORNE NY
573 PLEASANTVILLE NY
576 YONKERS NY
577 YONKERS NY
578 RYE NY
579 OSSINING NY
587 FRANKLIN CT
617 AGAWAM MA
618 FEEDING HILLS MA
619 AGAWAM MA
624 GRANBY MA
625 G. BARRINGTON MA
626 HADLEY MA
627 LANESBORO MA
628 MONSON MA
629 NORTH ADAMS MA
630 NORTH ADAMS MA
631 PALMER MA
632 PITTSFIELD MA
633 PITTSFIELD MA
637 SPRINGFIELD MA
638 SPRINGFIELD MA
640 SPRINGFIELD MA
641 SPRINGFIELD MA
643 WESTFIELD MA
647 OSSINING NY
649 BROOKLYN NY
685 DOBBS FERRY NY
709 BROOKLYN NY
6130 NEW HAVEN CT
6744 NORWALK CT
6765 STAMFORD CT
2
<PAGE> 80
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
6772 COS COB CT
6822 MANCHESTER CT
6853 ENFIELD CT
8605 NEW CASTLE DE
8608 WILMINGTON DE
8635 NEW CASTLE DE
8637 ST. GEORGES DE
8641 WILMINGTON DE
8644 WILMINGTON DE
8645 CLAYMONT DE
8659 NEWARK DE
8667 NEWARK DE
8671 WILMINGTON DE
28032 PORTLAND ME
28215 WESTBROOK ME
29721 ROCKDALE MD
29763 RANDALSTOWN MD
29812 ABERDEEN MD
30161 MILFORD MA
30312 AGAWAM MA
30315 S. WEYMOUTH MA
30317 WEST ROXBURY MA
30324 MAYNARD MA
30327 STOUGHTON MA
30331 ARLINGTON MA
30339 BELMONT MA
30351 ROCKLAND MA
30352 WATERTOWN MA
30355 READING MA
30361 DORCHESTER MA
30363 WEYMOUTH MA
30392 ASHLAND MA
30393 WOBURN MA
30404 BELMONT MA
30412 PITTSFIELD MA
30429 N. ATTLEBORO MA
30436 WORCESTER MA
30439 TAUNTON MA
30445 FALL RIVER MA
30457 WORCESTER MA
30458 WEBSTER MA
30466 CLINTON MA
30468 FOXBORO MA
30471 WORCESTER MA
30472 CLINTON MA
30515 BOSTON MA
30521 NEWTON MA
30524 FALMOUTH MA
30537 SOMERSET MA
30545 METHUEN MA
3
<PAGE> 81
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
30546 ROCKLAND MA
30548 WILLIAMSTOWN MA
30551 FAIRHAVEN MA
30557 TAUNTON MA
30558 SEEKONK MA
30559 WALPOLE MA
30561 N. ANDOVER MA
30562 WESTFORD MA
30600 LOWELL MA
30601 FRAMINGHAM MA
30603 METHUEN MA
30604 AMESBURY MA
30605 GEORGETOWN MA
30606 IPSWICH MA
30607 SALISBURY MA
30609 BEVERLY MA
30610 BILLERICA MA
30612 CHATHAM MA
30615 HARWICH MA
30616 IPSWICH MA
30618 LOWELL MA
30619 METHUEN MA
30621 NEWBURYPORT MA
30623 ORLEANS MA
30624 PEABODY MA
30625 QUINCY MA
30626 REVERE MA
30627 SALEM MA
30629 TEWKSBURY MA
30630 TWIN MILL MA
30631 FALMOUTH MA
30633 WESTFORD MA
30636 BRIDGEWATER MA
30644 CANTON MA
30646 STOUGHTON MA
30647 MEDFORD MA
30648 DORCHESTER MA
30649 STOUGHTON MA
30651 WORCESTER MA
30653 BARRE MA
30654 WORCESTER MA
30655 BROCKTON MA
30656 MILLBURY MA
30658 WORCESTER MA
30660 DUDLEY MA
30662 FRANKLIN MA
30663 WORCESTER MA
30665 LEOMINSTER MA
30666 WORCESTER MA
30668 WORCESTER MA
4
<PAGE> 82
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
30669 NORTHBOROUGH MA
30670 POCASSET MA
30671 CLINTON MA
30672 W. BOYLSTON MA
30674 SOUTHBRIDGE MA
30675 WORCESTER MA
30676 S. YARMOUTH MA
30677 STERLING MA
30678 SUTTON MA
30679 WORCESTER MA
30680 FRAMINGHAM MA
30682 WAREHAM MA
30683 WESTBOROUGH MA
30684 HARWICHPORT MA
30685 WORCESTER MA
30686 WORCESTER MA
30687 FITCHBURG MA
30688 WORCESTER MA
30689 CHERRY VALLEY MA
30690 FRAMINGHAM MA
30692 SOUTHBRIDGE MA
30693 OXFORD MA
30696 FITCHBURG MA
30697 WORCESTER MA
30698 ORANGE MA
30702 MILFORD MA
30704 UXBRIDGE MA
30709 WORCESTER MA
30710 WORCESTER MA
30711 AUBURN MA
30712 WALTHAM MA
30713 LOWELL MA
55237 SALEM NH
55238 LONDONBERRY NH
55244 MERRINACK NH
55245 NASHUA NH
55247 PEMBROKE NH
55249 ROCHESTER NH
55251 SALEM NH
55254 EXETER NH
55257 EPPING NH
55258 EPSOM NH
55259 EXETER NH
55261 MILFORD NH
55265 PORTSMOUTH NH
55274 PELHAM NH
56161 LITTLE FERRY NJ
56230 NEWARK NJ
58007 GLENDALE NY
58012 BELLAIRE NY
5
<PAGE> 83
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
58014 BRONX NY
58015 BROOKLYN NY
58018 BAYSIDE NY
58049 YONKERS NY
58053 BROOKLYN NY
58071 ST. ALBANS NY
58077 BROOKLYN NY
58079 BROOKLYN NY
58085 BAYSIDE NY
58108 WHITE PLAINS NY
58111 SCARSDALE NY
58114 NEW ROCHELLE NY
58119 BROOKLYN NY
58121 NEW ROCHELLE NY
58154 BRONX NY
58173 GLENVILLE NY
58205 NEW YORK NY
58218 ALBANY NY
58220 LONG ISLAND CITY NY
58254 ALBANY NY
58260 RENSSELAER NY
58315 ROTTERDAM NY
58329 OSSINING NY
58347 ELLENVILLE NY
58367 CHATHAM NY
58409 NEW YORK NY
58415 BROOKLYN NY
58441 STATEN ISLAND NY
58443 STATEN ISLAND NY
58505 BRONX NY
58513 BRONX NY
58514 NEW YORK NY
58526 OZONE PARK NY
58542 NEW YORK NY
58547 ASTORIA NY
58557 E. ELMHURST NY
58567 GUILDERLAND CTR. NY
58582 TROY NY
58584 BROOKLYN NY
58585 ARVERNE NY
58587 REGO PARK NY
58592 NEW YORK NY
58596 MIDDLETOWN NY
58605 HOWARD BEACH NY
58703 SCHENECTADY NY
58704 BALLSTON SPA NY
58705 BALLSTON SPA NY
58710 COLONIE NY
58711 DELMAR NY
58712 ELLENVILLE NY
6
<PAGE> 84
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
58714 FT. PLAIN NY
58715 GLENS FALLS NY
58716 GLOVERSVILLE NY
58718 CLIFTON PARK NY
58719 GREEN ISLAND NY
58720 HANCOCK NY
58721 HYDE PARK NY
58722 LATHAM NY
58723 BALLSTON SPA NY
58724 MELROSE NY
58725 MILLERTON NY
58726 NEW WINDSOR NY
58727 NISKAYUNA NY
58730 PLEASANT VLLY NY
58731 POUGHKEEPSIE NY
58733 QUEENSBURY NY
58735 ROTTERDAM NY
58737 SCHNECTADY NY
58739 S. GLENS FALLS NY
58740 TROY NY
58741 WARRENSBURG NY
58743 HUDSON FALLS NY
58744 MECHANICVILLE NY
58750 MECHANICVILLE NY
58751 NEWBURGH NY
58753 KINGSTON NY
58754 RENSSELAER NY
58760 PORT EWEN NY
58761 CATSKILL NY
58762 CATSKILL NY
58766 HUDSON NY
58768 SAUGERTIES NY
58769 FREEHOLD NY
58771 GREENVILLE NY
58772 QUARRYVILLE NY
58780 RENSSELAER NY
58785 MENANDS NY
58786 HOOSICK FALLS NY
58793 VALATIE NY
58797 LEEDS NY
58802 PINE BUSH NY
58804 COPAKE NY
58806 RED HOOK NY
58808 W. TAGHKANIC NY
58809 MIDDLE ISLAND NY
58812 RAVENA NY
58822 CROTON FALLS NY
67101 BANGOR PA
67215 PHILADELPHIA PA
67227 ALLENTOWN PA
7
<PAGE> 85
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
67249 PHILADELPHIA PA
67261 PHILADELPHIA PA
67265 PHILADELPHIA PA
67266 PHILADELPHIA PA
67276 PHILADELPHIA PA
67299 ABINGTON PA
67398 ROSLYN PA
67402 PHILADELPHIA PA
67409 PHILADELPHIA PA
67416 LEVITTOWN PA
67423 QUAKERTOWN PA
67425 SOUDERTON PA
67432 COOPERSBURG PA
67531 TRAPPE PA
67580 GETTYSBURG PA
67596 PARADISE PA
67597 PHILADELPHIA PA
67599 ELIZABETHTOWN PA
67604 ALLENTOWN PA
67610 PHILADELPHIA PA
67616 PHILADELPHIA PA
67624 NEW OXFORD PA
67626 LITTLESTOWN PA
67627 HANOVER PA
67632 LONGSTOWN PA
67633 YORK PA
67636 DOVER PA
67638 GLEN ROCK PA
67639 CARLISLE PA
67641 BOILING SPGS. PA
67654 HARRISBURG PA
68007 PROVIDENCE RI
68120 E. PROVIDENCE RI
68646 WAKEFIELD RI
69002 READING PA
69004 EPHRATA PA
69005 DAUPHIN PA
69006 DOUGLASVILLE PA
69010 YORK PA
69012 GETTYSBURG PA
69016 POTTSVILLE PA
69019 POTTSVILLE PA
69406 ALLENTOWN PA
69408 BETHLEHEM PA
69409 WASTON PA
69415 BETHLEHEM PA
69416 LANCASTER PA
69417 SCAFFERSTOW PA
69419 HAMBURG PA
69420 READING PA
8
<PAGE> 86
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
69421 MILLERSVILLE PA
69422 MANHEIN PA
69425 EBENEZER PA
69426 BETHELEM PA
69428 INTERCOURSE PA
69430 REINHOLDS PA
69431 BOYERTOWN PA
69439 OXFORD PA
69440 POTTSTOWN PA
69443 EPHRATA PA
69444 READING PA
69445 ROBERSONIA PA
69449 YORK PA
69466 KENHORST PA
69472 LEOLA PA
69476 SHREWSBURY PA
69483 RED LION PA
69484 READING PA
69493 HANOVER PA
69495 HARRISBURG PA
69497 ADAMSTOWN PA
69503 LANCASTER PA
69504 NEW HOLLAND PA
69505 CHRISTIANA PA
69507 LANCASTER PA
69673 WYOMISSING HILLS PA
69676 ST. CLAIR PA
69681 W. READING PA
69682 ARDENTSVILLE PA
69683 HOHNTON PA
69684 ST. THOMAS PA
69685 CARLISLE PA
69688 BONNEAUVILLE PA
69690 MCCONNELLSBURG PA
71002 ROCKY MOUNT VA
71004 BLACKSBURG VA
71009 VINTON VA
71010 ROANOKE VA
71011 RIDGEWAY VA
71028 FIEDALE VA
71030 MARTISNSILLE VA
71031 ROANOKE VA
71033 ROANOKE VA
71054 RICH CREEK VA
71055 DANVILLE VA
71090 ROANOKE VA
71108 ROANOKE VA
71109 ROANOKE VA
71110 SALEM VA
71112 STANLEYTOWN VA
9
<PAGE> 87
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
71113 MARTINSVILLE VA
71120 ROANOKE VA
71173 RICHMOND VA
71177 DALEVILLE VA
71178 BRISTOL VA
71213 MARTINSVILLE VA
71215 CHESAPEAKE VA
71216 VIRGINIA BCH VA
71218 VIRGINIA BCH VA
71220 HAMPTON VA
71222 PORTSMOUTH VA
71250 NEWPORT NEWS VA
71251 VIRGINIA BCH VA
71252 VIRGINIA BCH VA
71255 VIRGINIA BCH VA
71257 VIRGINIA BCH VA
71262 HAMPTON VA
71264 STERLING PARK VA
71270 PORTSMOUTH VA
71288 CHRISTIANASBR VA
71293 VIRGINIA BCH VA
71294 MAHASSAS PK VA
76112 BENNINGTON VT
473 sites
10
<PAGE> 88
SCHEDULE 1.01(c)
Marketing Equipment
Net Book Value of Marketing Assets to be Transferred by Getty Petroleum Corp.
to Getty Petroleum Marketing Inc. By Location
as of January 31, 1997
Location Address Net Book Value
- -------- ------- --------------
[Computer-generated report to be issued after the close of the books for
January 1997]
1
<PAGE> 89
SCHEDULE 1.01(d)
Shared Policies
[will be supplied upon request]
<PAGE> 90
Schedule 2.06
Conveyance and Assumption Instruments
[See attached]
<PAGE> 91
BILL OF SALE
This is a Bill of Sale from Aero Oil Company, a Pennsylvania corporation
(the "Assignor"), with central offices located at 125 Jericho Turnpike,
Jericho, New York 11753, to Getty Petroleum Marketing Inc., a Maryland
corporation (the "Assignee"), with central offices located at 125 Jericho
Turnpike, Jericho, New York 11753, pursuant to the Reorganization and
Distribution Agreement, dated as of January 31, 1997 (the "Agreement"), between
the Assignor's sole shareholder and Assignee. Capitalized terms used herein,
unless otherwise defined, have the meaning given them in the Agreement.
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Assignor does hereby sell, assign, transfer, convey,
deliver and contribute to Assignee, its successors and assigns, to have and to
hold forever, all of its rights, title and interest in and to all of its
tangible personal property, of every kind and description, that, as determined
on a basis consistent with that used in the determination of the assets
included on the Marketing Balance Sheet, relate to the Marketing Business (the
"Marketing Assets"), including but not limited to the equipment described on
Exhibit A attached hereto, subject to all mortgages, pledges, liens, leases,
charges, encumbrances and adverse claims of any kind and character, except that
Assignee shall be entitled to the benefits of the representations, warranties,
and indemnities set forth in the Agreement with respect to such Marketing
Assets.
From and after the Distribution Date, upon request of Assignee, Assignor
shall duly execute, acknowledge and deliver all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and assurances as may
be reasonably required to convey to and vest in Assignee and protect its
rights, title and interest in enjoyment of all the Marketing Assets of the
Assignor and as may be appropriate or otherwise to carry out the transactions
contemplated by the Agreement and this Bill of Sale.
IN WITNESS WHEREOF, and intending to be legally bound, the undersigned
have duly executed and delivered this Bill of Sale as of this ___ day of
January, 1997.
AERO OIL COMPANY
Attest:
_______________________ By: __________________________________
Title: ________________________
ACCEPTED:
GETTY PETROLEUM MARKETING INC.
Attest:
________________________ By: ___________________________________
Title: __________________________
<PAGE> 92
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of January __, 1997, between
Aero Oil Company, a Pennsylvania corporation (the "Assignor"), with a central
office located at 125 Jericho Turnpike, Jericho, New York 11753, and Getty
Petroleum Marketing Inc., a Maryland corporation (the "Assignee"), with a
central office located at 125 Jericho Turnpike, Jericho, New York 11753.
W I T N E S S E T H:
WHEREAS, Assignee and the sole shareholder of Assignor have entered into a
Reorganization and Distribution Agreement dated as of January 31, 1997 (the
"Agreement"), providing, among other things, for transfer by Assignor to
Assignee of the Marketing Assets (as such term is defined in the Agreement) of
Assignor, including but not limited to certain intangible personal property of
Assignor;
WHEREAS, this Assignment and Assumption Agreement is being delivered
immediately prior to and is a condition precedent to the closing of the
distribution contemplated in the Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Capitalized Terms. Capitalized terms used but not defined herein shall
have the respective meanings set forth in the Agreement.
2. Assignment. Assignor hereby assigns, transfers and conveys to Assignee,
subject to the terms and conditions contained in the Agreement, on and as of
the date hereof, and Assignee hereby accepts and assumes, all of Assignor's
obligations, right, title and interest in, to and under all intangible personal
property that Assignor owns or in which it has rights and that, as determined
on a basis consistent with that used in the determination of assets included on
the Marketing Balance Sheet, relate to the Marketing Business, including but
not limited to accounts receivable, choses in action, rights to payment or
performance, rights and obligations arising under or in connection with chattel
paper, documents, instruments, deposit accounts, money, licenses and permits
(to the extent assignable under applicable law), trademarks, copyrights, trade
names, patents, claims for refunds of deposits or prepaid expenses, puts,
options, investment property, contracts and contract rights, leases and
leasehold interests, with all rights, powers, privileges and obligations of
Seller thereunder, excepting therefrom only Retained Assets.
3. Assumption of Liabilities. Assignee hereby assumes and agrees timely
and diligently fully to satisfy, perform, pay and discharge all Liabilities of
Assignor relating to the assets conveyed hereunder except Retained Liabilities.
4. Miscellaneous. This Assignment and Assumption Agreement shall inure to
the benefit of, and be enforceable against, each of the Assignor, the Assignee
and their respective successors and assigns.
<PAGE> 93
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Assignment and Assumption Agreement on the date first above written.
Attest: AERO OIL COMPANY
_______________________ By: __________________________________
Title: __________________________
Attest: GETTY PETROLEUM MARKETING INC.
________________________ By: __________________________________
Title: __________________________
2
<PAGE> 94
BILL OF SALE
This is a Bill of Sale from Getty Petroleum Corp., a Delaware
corporation (the "Assignor"), with central offices located at 125 Jericho
Turnpike, Jericho, New York 11753, to Getty Petroleum Marketing Inc., a
Maryland corporation (the "Assignee"), with central offices located at 125
Jericho Turnpike, Jericho, New York 11753, pursuant to the Reorganization and
Distribution Agreement, dated as of January 31, 1997 (the "Agreement"), between
the Assignor and Assignee. Capitalized terms used herein, unless otherwise
defined, have the meaning given them in the Agreement.
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Assignor does hereby sell, assign, transfer, convey,
deliver and contribute to Assignee, its successors and assigns, to have and to
hold forever, all of its rights, title and interest in and to all of its
tangible personal property, of every kind and description, that, as determined
on a basis consistent with that used in the determination of the assets included
on the Marketing Balance Sheet, relate to the Marketing Business (the "Marketing
Assets"), including but not limited to the Marketing Books and the records and
the equipment described on Exhibit A attached hereto, subject to all mortgages,
pledges, liens, leases, charges, encumbrances and adverse claims of any kind and
character, except that Assignee shall be entitled to the benefits of the
representations, warranties, and indemnities set forth in the Agreement with
respect to such Marketing Assets.
From and after the Distribution Date, upon request of Assignee, Assignor
shall duly execute, acknowledge and deliver all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and assurances as may
be reasonably required to convey to and vest in Assignee and protect its
rights, title and interest in enjoyment of all the Marketing Assets of the
Assignor and as may be appropriate or otherwise to carry out the transactions
contemplated by the Agreement and this Bill of Sale.
IN WITNESS WHEREOF, and intending to be legally bound, the undersigned
have duly executed and delivered this Bill of Sale as of this ___ day of
January, 1997.
GETTY PETROLEUM CORP.
Attest:
_______________________ By: __________________________________
Title: ________________________
ACCEPTED:
GETTY PETROLEUM MARKETING INC.
Attest:
________________________ By: __________________________________
Title: ________________________
<PAGE> 95
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of January __, 1997, between
Getty Petroleum Corp., a Delaware corporation (the "Assignor"), with a central
office located at 125 Jericho Turnpike, Jericho, New York 11753, and Getty
Petroleum Marketing Inc., a Maryland corporation (the "Assignee"), with a
central office located at 125 Jericho Turnpike, Jericho, New York 11753.
W I T N E S S E T H:
WHEREAS, Assignor and Assignee have entered into a Reorganization and
Distribution Agreement dated as of January 31, 1997 (the "Agreement"),
providing, among other things, for transfer by Assignor to Assignee of the
Marketing Assets (as such term is defined in the Agreement) of Assignor,
including but not limited to all intangible personal property of Assignor;
WHEREAS, this Assignment and Assumption Agreement is being delivered
immediately prior to and is a condition precedent to the closing contemplated
in the Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Capitalized Terms. Capitalized terms used but not defined herein shall
have the respective meanings set forth in the Agreement.
2. Assignment. Assignor hereby assigns, transfers and conveys to Assignee,
subject to the terms and conditions contained in the Agreement, on and as of
the date hereof, and Assignee hereby accepts and assumes, all of Assignor's
obligations, right, title and interest in, to and under all intangible personal
property that Assignor owns or in which it has rights and that, as determined
on a basis consistent with that used in the determination of assets included on
the Marketing Balance Sheet, relate to the Marketing Business, including but
not limited to the Marketing Security Deposits, accounts receivable, choses in
action, rights to payment or performance, rights and obligations arising under
or in connection with chattel paper, documents, instruments, deposit accounts,
money, licenses and permits (to the extent assignable under applicable law),
trademarks, copyrights, trade names, patents, claims for refunds of deposits or
prepaid expenses, puts, options, investment property, contracts and contract
rights, leases and leasehold interests, with all rights, powers, privileges and
obligations of Seller thereunder, excepting therefrom only Retained Assets.
3. Assumption of Liabilities. Assignee hereby assumes and agrees timely
and diligently fully to satisfy, perform, pay and discharge all Liabilities of
Assignor except Retained Liabilities.
4. Miscellaneous. This Assignment and Assumption Agreement shall inure to
the benefit of, and be enforceable against, each of the Assignor, the Assignee
and their respective successors and assigns.
<PAGE> 96
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Assignment and Assumption Agreement on the date first above written.
Attest: GETTY PETROLEUM CORP.
_______________________ By: __________________________________
Title: _________________________
Attest: GETTY PETROLEUM MARKETING INC.
________________________ By: __________________________________
Title: _________________________
2
<PAGE> 97
BILL OF SALE
This is a Bill of Sale from Aero Oil Company, a Pennsylvania corporation
(the "Assignor"), with central offices located at 125 Jericho Turnpike, Jericho,
New York 11753, to Getty Terminals Corp., a New York corporation (the
"Assignee"), with central offices located at 125 Jericho Turnpike, Jericho, New
York 11753, pursuant to the Reorganization and Distribution Agreement, dated as
of January 31, 1997 (the "Agreement"), between the Assignor's sole shareholder
and Assignee. Capitalized terms used herein, unless otherwise defined, have the
meaning given them in the Agreement.
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Assignor does hereby sell, assign, transfer, convey,
deliver and contribute to Assignee, its successors and assigns, to have and to
hold forever, all of its rights, title and interest in and to all of its
tangible personal property, of every kind and description, located at the
facility known as the Highspire Terminal (the "Highspire Assets"), subject to
all mortgages, pledges, liens, leases, charges, encumbrances and adverse
claims of any kind and character, except that Assignee shall be entitled to
the benefits of the representations, warranties, and indemnities set forth in
the Agreement with respect to such Highspire Assets.
From and after the Distribution Date, upon request of Assignee, Assignor
shall duly execute, acknowledge and deliver all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney and assurances as may
be reasonably required to convey to and vest in Assignee and protect its
rights, title and interest in enjoyment of all the Highspire Assets of the
Assignor and as may be appropriate or otherwise to carry out the transactions
contemplated by the Agreement and this Bill of Sale.
IN WITNESS WHEREOF, and intending to be legally bound, the undersigned
have duly executed and delivered this Bill of Sale as of this ___ day of
January, 1997.
AERO OIL COMPANY
Attest:
_______________________ By: __________________________________
Title: ________________________
ACCEPTED:
GETTY TERMINALS CORP.
Attest:
________________________ By: __________________________________
Title: ________________________
<PAGE> 98
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of January __, 1997, between
Aero Oil Company, a Pennsylvania corporation (the "Assignor"), with a central
office located at 125 Jericho Turnpike, Jericho, New York 11753, and Getty
Terminals Corp., a New York corporation (the "Assignee"), with a
central office located at 125 Jericho Turnpike, Jericho, New York 11753.
W I T N E S S E T H:
WHEREAS, the sole shareholder of each of Assignor and Assignee has entered
into a Reorganization and Distribution Agreement dated as of January 31, 1997
(the "Agreement"), providing, among other things, for transfer by Assignor to
Assignee of all intangible personal property of Assignor relating to the
facility known as the Highspire Terminal (the "Highspire Terminal");
WHEREAS, this Assignment and Assumption Agreement is being delivered
prior to and is a condition precedent to the closing of the distribution
contemplated in the Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Capitalized Terms. Capitalized terms used but not defined herein shall
have the respective meanings set forth in the Agreement.
2. Assignment. Assignor hereby assigns, transfers and conveys to
Assignee, subject to the terms and conditions contained in the Agreement, on and
as of the date hereof, and Assignee hereby accepts and assumes, all of
Assignor's obligations, right, title and interest in, to and under all
intangible personal property that Assignor owns or in which it has rights and
that relate to the Highspire Terminal, including but not limited to accounts
receivable, choses in action, rights to payment or performance, rights and
obligations arising under or in connection with chattel paper, documents,
instruments, deposit accounts, money, licenses and permits (to the extent
assignable under applicable law), trademarks, copyrights, trade names, patents,
claims for refunds of deposits or prepaid expenses, puts, options, investment
property, contracts and contract rights, leases and leasehold interests, with
all rights, powers, privileges and obligations of Assignor thereunder, excepting
therefrom only Retained Assets.
3. Assumption of Liabilities. Assignee hereby assumes and agrees timely
and diligently fully to satisfy, perform, pay and discharge all Liabilities of
Assignor relating to the assets conveyed hereunder except Retained Liabilities.
4. Miscellaneous. This Assignment and Assumption Agreement shall inure to
the benefit of, and be enforceable against, each of the Assignor, the Assignee
and their respective successors and assigns.
<PAGE> 99
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Assignment and Assumption Agreement on the date first above written.
Attest: AERO OIL COMPANY
_______________________ By: __________________________________
Title: _________________________
Attest: GETTY TERMINALS CORP.
________________________ By: __________________________________
Title: ________________________
2
<PAGE> 100
SCHEDULE 4.01
Consents
AGREEMENTS WHERE CONSENT TO ASSIGNMENT IS REQUIRED
<TABLE>
<CAPTION>
Agreement Parties to Agreement Date Subject of Agreement Other
---------- -------------------- ---- -------------------- -----
<S> <C> <C> <C> <C> <C>
1. Advertising Agreement NY Yankee Partnership 12/1/95 Advertising at Yankee Stadium
& GPC
2. Wright Express Corporation/ Wright Express Corporation 10/14/86 Co-branded fleet fueling card
GPC Charge Card Agreement & GPC and credit card program
3. Transnet, Inc. Transaction Transnet, Inc. & GPC 03/31/93 Processing transaction data
Processing Services Agr't from credit card, debit,
& check payments
4. VeriFone Finance Equipment VeriFone Finance & GPC 03/25/94 Lease of Omni 395 265K Lease #3823
Leasing Agreement terminals, P250 printers
& Pin Pad 101's
5. VeriFone Finance Equipment VeriFone Finance & GPC 09/10/93 Lease of Omni 395 265K Lease #2145
Leasing Agreement terminals, P250 printers
& Pin Pad 101's
6. Midlantic Bank, National Midlantic Bank, National 11/17/94 Getty's participation in
Association Merchant Agr't Association & GPC network to settle eft fund
transfers
7. Fuel Marketing Agreement International Automated 05/31/95 Getty's participation in
Energy Systems, Inc. & GPC national network of fleet
vehicle fueling facilities;
IAES fleet cards
8. Agreement Interlink Network, Inc. 09/27/95 Getty's acceptance of
& GPC Interlink brand debit cards
at Getty locations
9. Lease York & Aero Oil 11/29/93 Lease of four Mack Tractors Assign from
(MD) Aero Oil to PT Petro
10. Lease GECC & Aero Oil 10/21/94 Lease of two Heil Tank Assign from
Trailers (PA) Aero Oil to PT Petro
11. Lease GECC & Aero Oil 11/23/94 Lease of three Heil Tank Assign from
Trailers (PA) Aero Oil to PT Petro
12. Lease GECC & Aero Oil 12/21/94 Lease of three Mack tractors Assign from
(PA) Aero Oil to PT Petro
13. Lease GE Capital Fleet Services 12/01/96 Lease on one Mack CH 613 Assign from Aero
& Aero Oil Tractor (MD) Oil to PT Petro
14. Lease of Computer Equipment StorageTek & GPC 07/01/93 Lease of Tape Cartridge-Sys. Notice of cancellation
38 sent to Lessor
15. Lease of Computer Equipment Norwest(6) & GPC 12/31/94 Lease of DASD-AS 400
16. Lease of Computer Equipment Norwest(6) & GPC 04/01/96 Lease of DASD-AS 400
17. Lease of Computer Equipment Norwest(6) & GPC 12/96 Lease of CPU AS 400 IBM New lease for 36 mos.
signed 12/96
18. Lease of Copier Machine Xerox & GPC 05/94 Lease of Model 5100
19. Lease of Copier Machine Xerox & GPC 03/95 Lease of Model CS Pro 6000
20. Lease Verifone Finance & GPC 09/93 Lease of 650 POS Terminals
21. Lease Verifone Finance & GPC 10/93 Lease of 850 POS Terminals
22. Lease Verifone Finance & GPC 12/93 Lease of 200 POS Terminals
23. Lease Pitney Bowes & GPC 12/96 Lease of Mailing Machine,
Powerstacker, Folder, Feeder,
Inserter & Scale
24. Merchant Services Agreement Discover Card Services & GPC 05/15/89
25. Agreement Mastercard & GPC
26. Agreement Visa & GPC
27. Agreement NYCE & GPC
</TABLE>
1
<PAGE> 1
EXHIBIT 10.2
MASTER LEASE
DATED
FEBRUARY 1, 1997
BETWEEN
GETTY REALTY CORP., AS LANDLORD,
AND
GETTY PETROLEUM MARKETING INC., AS TENANT
<PAGE> 2
TABLE OF CONTENTS
Paragraph Page
1 Definitions............................................ 2
2 Term................................................... 8
3 Rent................................................... 9
4 Additional Payments by Tenant; Impositions............ 10
5 Use................................................... 11
6 Compliance with Law................................... 12
7 Maintenance and Alterations........................... 12
8 Prohibited Liens...................................... 14
9 Hazardous Substances; Environmental Indemnification... 14
10 Indemnification; Liability of Landlord................ 15
11 Right of Contest...................................... 17
12 Insurance............................................. 18
13 Damage or Destruction................................. 20
14 Condemnation.......................................... 20
15 Transfers by Landlord................................. 21
16 Transfers by Tenant; Dealer Leases.................... 22
17 Quiet Enjoyment....................................... 23
18 Default by Tenant; Remedies........................... 24
19 Termination........................................... 28
<PAGE> 3
Paragraph Page
20 Notices.......................................................... 28
21 No Broker........................................................ 28
22 Economic Abandonment............................................. 29
23 Third Party Leases............................................... 29
24 Waivers.......................................................... 30
25 Further Assurances; Additional Deliveries........................ 30
26 Miscellaneous.................................................... 31
27 Interpretation; Execution and Application of Lease............... 32
_____________
<PAGE> 4
MASTER LEASE
ATTACHMENTS:
Exhibit "A" = Legal Description
Exhibit "B" = Third Party Lease locations
Exhibit "C" = Permitted Exceptions
Exhibit "D" = Premises with Non-complying UST's
Exhibit "E" = Premises with Ongoing Remediations
Exhibit "F" = Dealers in Default
Schedule 1 - Initial Term Fixed Rent
<PAGE> 5
INDEX OF DEFINED TERMS
DEFINED TERM PAGE
------------ ----
Additional Rent ....................... 2
Business Day .......................... 2
Casualty .............................. 2
Certifying Party ...................... 30
Clean-Up Obligor ...................... 15
Commencement Date...................... 2
Condemnation .......................... 2
Construction Work ..................... 2
Contest ............................... 17
County ................................ 2
Dealers ............................... 1
Default ............................... 2
Distribution Agreement................. 1
Equipment Liens ....................... 2
Environmental Law...................... 3
Estoppel Certificate................... 3
Event of Default ...................... 23
Fee Estate ............................ 3
Fee Mortgage .......................... 3
Fixed Rent ............................ 9
Government ............................ 3
Hazardous Substances................... 3
Hazardous Substances Discharge......... 4
Impositions ........................... 4
Include ............................... 33
Including ............................. 33
Indemnify ............................. 4
Indemnitee ............................ 4
Indemnitor ............................ 5
Initial Term .......................... 8
Insubstantial Condemnation............. 5
Land .................................. 1
Landlord .............................. 5
Law ................................... 5
Laws .................................. 5
Lease ................................. 1
Leasehold Estate ...................... 5
i
<PAGE> 6
INDEX OF DEFINED TERMS (continued)
DEFINED TERM PAGE
------------ ----
Legal Costs ............... 5
Monetary Default .......... 5
Non-Monetary Default ...... 5
Notice .................... 5
Notice of Default ......... 5
Permitted Exceptions ...... 1
Person .................... 6
Petroleum Terminal ........ 6
Premises .................. 6
Prime Rate ................ 6
Prohibited Liens .......... 6
Renewal Option ............ 6
Renewal Term .............. 8
Rent ...................... 6
Requesting Party .......... 30
Service Station ........... 6
State ..................... 6
Sublease .................. 7
Substantial Condemnation... 7
Subtenant ................. 7
Subtenants ................ 7
Temporary Condemnation..... 7
Tenant .................... 7
Term ...................... 8
Termination Date .......... 7
Third Party Lease ......... 7
Third Party Lessor ........ 7
Transfer .................. 21
Unavoidable Delay ......... 7
UST ....................... 8
Waiver of Subrogation ..... 8
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This MASTER LEASE (the "Lease") is made and entered into on February 1, 1997
(the "Commencement Date"), between Getty Realty Corp., a Delaware corporation
whose address is 125 Jericho Turnpike, Jericho, New York 11753 ("Landlord"),
and Getty Petroleum Marketing Inc., a Maryland corporation whose address is
125 Jericho Turnpike, Jericho, New York 11753 ("Tenant").
R E C I T A L S
A. Landlord holds good and marketable fee simple absolute title to the
lands described in EXHIBIT A, (the "Land"), together with: (a) all buildings,
structures and other improvements and appurtenances presently located on the
Land; (b) all right, title and interest of Landlord, if any, in and to the land
lying in the bed of any street or highway in front of or adjoining the Land to
the center line of such street or highway; (c) the appurtenances and all the
estate and rights of Landlord in and to the Land; (d) any strips or gores
adjoining the Land; and (e) all right, title and interest of Landlord, if any,
in and to any furnishings, fixtures, equipment or other personal property
attached or appurtenant to any improvements located on the Land which are not
being transferred to Tenant on the date hereof (all, collectively, together
with the properties set forth in Exhibit B, the "Premises") subject only to the
estates, interests, liens, charges and encumbrances set forth in EXHIBIT C (the
"Permitted Exceptions").
B. Landlord (including certain of its subsidiaries) is the lessee of
certain Premises described in EXHIBIT B (the "Third Party Leases").
C. The Premises consist of Petroleum Terminals and Service Stations.
D. Landlord and Tenant have entered into that certain Reorganization and
Distribution Agreement dated as of _______, 1997 (the "Distribution
Agreement") transferring to Tenant the Marketing Assets and Marketing Business
(as such terms are defined in the Distribution Agreement) in anticipation of a
distribution by Landlord of the common stock of Tenant to the stockholders of
Landlord.
E. In accordance with the Distribution Agreement, Landlord desires to
lease or sublease the Premises to Tenant, and Tenant desires to lease or
sublease the Premises from Landlord, most of which Service Station Premises are
subject to the tenancies of lessee-dealers ("Dealers").
F. The parties desire to enter into this Lease to set forth their rights
and obligations relating to the Premises.
NOW, THEREFORE, in exchange for good and valuable consideration, Landlord
hereby leases and subleases the Premises to Tenant and Tenant hereby takes and
hires the Premises from Landlord, subject only to the Permitted Exceptions, and
the Dealers' tenancies, for the Term (as hereinafter defined), upon the terms
and conditions of this Lease.
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1 Definitions.
The following definitions shall apply throughout this Lease, in addition
to any other definitions elsewhere in this Lease. An Index of Defined Terms
follows the signature page.
1.1 Additional Rent. The term "Additional Rent" means any and all sums
and payments that this Lease requires Tenant to pay to Landlord, except Fixed
Rent. Additional Rent shall also include all Impositions.
1.2 Business Day. A "Business Day" means any weekday on which banks in
the State of New York are generally open to conduct regular banking business
with bank personnel.
1.3 Casualty. A "Casualty" means any damage or destruction affecting any
or all structures or other improvements located on the Premises.
1.4 Commencement Date. February 1, 1997 for all Premises, except for
those Premises requiring consent to a sublease from a Third Party Lessor, which
shall commence on such later date upon which consent is obtained.
1.5 Condemnation. A "Condemnation" means any taking of the Premises or
any part of the Premises by condemnation or by exercise of any right of eminent
domain, or by any similar proceeding or act of any Government.
1.6 Construction Work. The term "Construction Work" means any
alteration, modification, demolition, or other construction or reconstruction
work, or the construction or reconstruction of any new improvements, or repair
of any existing improvements, located on, under or at the Premises.
1.7 County. The "County" means the county where the Premises are
located.
1.8 Default. A "Default" means any Monetary Default or Non-Monetary
Default.
1.9 Equipment Liens. The term "Equipment Liens" means purchase-money
security interests, financing leases, personal property liens, and similar
arrangements (including the corresponding UCC-1 financing statements) relating
to Tenant's acquisition, encumbering or financing of personal property,
fixtures or equipment used in connection with the operation of any business on
the Premises not prohibited by this Lease, any Third Party Lease or any Fee
Mortgage on the Premises, that are leased, purchased pursuant to conditional
sale or installment sale arrangements, encumbered by a security agreement made
by Tenant, or used under licenses, such as convenience food store equipment,
gasoline marketing equipment, UST's, furniture, fixtures and equipment,
telephone, telecommunications and facsimile transmission equipment, point of
sale equipment, televisions, radios, and computer systems, provided that each
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Equipment Lien encumbers or otherwise relates to only the property financed or
otherwise provided by the secured party under such Equipment Lien.
1.10 Environmental Law. The term "Environmental Law" shall mean any Law
related to environmental conditions on, under, or about the Premises, or
arising from use or occupancy of the Premises, including soil, air and ground
water conditions, or governing the use, generation, storage, transportation,
disposal, release, clean-up or control of Hazardous Substances in, on, at, to
or from the Premises.
1.11 Estoppel Certificate. An "Estoppel Certificate" means a statement
in writing containing any or all of the following statements (identifying in
reasonable detail any exceptions that may exist at the time), as requested by
either party: (a) this Lease has not been amended, constitutes the entire
agreement between Landlord and Tenant relating to the Premises, and is in full
force and effect; (b) neither Landlord nor Tenant is in default under this
Lease and to the best of the signer's knowledge no facts or circumstances exist
that, with the passage of time or the giving of notice, would constitute
defaults under this Lease by Landlord or Tenant; (c) Tenant has paid all Rent
to date; (d) the Commencement Date or any other then-ascertainable date
relevant to this Lease; and (d) such other matters as either party shall
reasonably request.
1.12 Fee Estate. The "Fee Estate" means Landlord's fee estate in the
Premises or any part of the Premises or any direct or indirect interest in such
fee estate or, in the case of Premises owned by a Third Party Lessor, the fee
estate of such Third Party Lessor.
1.13 Fee Mortgage. A "Fee Mortgage" means any mortgage, deed of trust,
deed to secure debt, assignment, security interest, pledge, financing statement
or any other instrument(s) or agreement(s) intended to grant security for any
obligation encumbering the Fee Estate, as entered into, renewed, modified,
amended, extended or assigned from time to time during the Term.
1.14 Fixed Rent. Fixed Rent shall include all rent payable under
Section 3.1 including Rent payable to Third Party Lessors.
1.15 Government. The term "Government" means each and every applicable
governmental authority, department, agency, bureau or other entity or
instrumentality having jurisdiction over the Premises, including the federal
government of the United States, the State government and any subdivisions and
municipalities thereof, including the County government, and all other
applicable governmental authorities and subdivisions thereof.
1.16 Hazardous Substances. The term "Hazardous Substances" shall include
flammable substances, explosives, radioactive materials, asbestos,
polychlorinated biphenyls, chemicals known to cause cancer or reproductive
toxicity, pollutants, contaminants, hazardous wastes, medical wastes, toxic
substances or related materials, petroleum and petroleum products, and
substances declared to be hazardous or toxic by Environmental Law.
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1.17 Hazardous Substances Discharge. The term "Hazardous Substances
Discharge" shall mean any deposit, spill, discharge, or other release of
Hazardous Substances that occurs at or from the Premises or that arises at any
time from the use, occupancy or operation of the Premises or any activities
conducted therein.
1.18 Impositions. The term "Impositions" means all taxes, special and
general assessments, water rents, rates and charges, commercial rent taxes, UST
fees and taxes, sewer rents and other impositions and charges of every kind and
nature whatsoever with respect to the Premises, that may be assessed, levied,
confirmed, imposed or become a lien on the Premises (other than on account of
any actions or omissions of Landlord or Third Party Lessor or conditions
existing on, at or with respect to the Premises before the Commencement Date)
by or for the benefit of any Government with respect to any period during the
Term together with any taxes and assessments that may be levied, assessed or
imposed by any Government upon the gross income arising from any Rent or in
lieu of or as a substitute, in whole or in part, for taxes and assessments
imposed upon or related to the Premises and commonly known as real estate
taxes. Notwithstanding the foregoing, all such obligations of a lessee in a
Third Party Lease are also Impositions. The term "Impositions" shall, however,
not include any of the following, all of which Landlord shall pay before
delinquent or payable only with a penalty: (a) any franchise, income, excess
profits, estate, inheritance, succession, transfer, gift, corporation,
business, capital levy, or profits tax, or license fee, of Landlord, (b) the
incremental portion of any of the items listed in this paragraph that would not
have been levied, imposed or assessed but for any sale or other direct or
indirect transfer of the Fee Estate or of any interest in Landlord during the
Term, (c) any charges that would not have been payable but for any act or
omission of Landlord or conditions existing on, at or with respect to the
Premises before the Commencement Date, (d) any charges that are levied,
assessed or imposed against the Premises during the Term based on the recapture
or reversal of any previous tax abatement or tax subsidy, or compensating for
any previous tax deferral or reduced assessment or valuation, or based on a
miscalculation or misdetermination of any charge(s) of any kind imposed or
assessed with respect to the Premises, relating to any period(s) before the
Commencement Date, and (e) interest, penalties and other charges with respect
to items "a" through "d."
1.19 Indemnify. Wherever this Lease provides that a party shall
"Indemnify" another from or against a particular matter, such term means that
the Indemnitor shall indemnify the Indemnitee (and the owner of the Fee Estate
and their respective partners, officers, directors, agents and employees) and
defend and hold the Indemnitee (and the owner of the Fee Estate and their
respective partners, officers, directors, agents and employees) harmless from
and against any and all loss, cost, claims, liability, penalties, judgments,
damage or other injury, detriment, or expense (including Legal Costs, interest
and penalties) reasonably incurred or suffered by the Indemnitee (and its
partners, officers, directors, agents and employees) on account of the matter
that is the subject of such indemnification or in enforcing the Indemnitor's
indemnity.
1.20 Indemnitee. An "Indemnitee" is a party that is entitled to be
Indemnified pursuant to this Lease.
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1.21 Indemnitor. An "Indemnitor" is a party that agrees to Indemnify
another party pursuant to this Lease.
1.22 Insubstantial Condemnation. An "Insubstantial Condemnation" means
any Condemnation other than a Substantial Condemnation.
1.23 Landlord. Getty Realty Corp. and certain of its subsidiaries, who
have approved this Lease on the signature page hereof.
1.24 Law. The term "Law" or "Laws" means all laws, ordinances,
requirements, orders, directives, rules and regulations of any applicable
Government affecting the development, improvement, alteration, use,
maintenance, operation or occupancy of the Premises or any part of the
Premises, whether in force at the Commencement Date or passed, enacted or
imposed at some time in the future, subject in all cases, however, to all
applicable waivers, variances and exemptions limiting the application of the
foregoing to the Premises.
1.25 Leasehold Estate. The "Leasehold Estate" means Tenant's leasehold
estate under this Lease, upon and subject to all the terms and conditions of
this Lease, and any Third Party Lease affecting the Premises, or any part of
such leasehold estate or any direct or indirect interest in such leasehold
estate.
1.26 Legal Costs. "Legal Costs" means all reasonable costs and expenses
incurred by a party to this Lease in connection with any legal proceeding,
including reasonable attorneys' fees, consultant's fees, court costs, and
expenses.
1.27 Monetary Default. A "Monetary Default" means any failure by Tenant
to pay any Rent or other sum(s) of money, including Additional Rent payable
pursuant to this Lease, when and as required to be paid pursuant to this Lease.
1.28 Non-Monetary Default. A "Non-Monetary Default" means any failure by
Tenant to comply with any terms or provisions of, or perform as required, by
this Lease, other than a Monetary Default.
1.29 Notice. The term "Notice" means any notice, demand, request,
election, designation, or consent, including any of the foregoing relating to a
Default or alleged Default, that is permitted, required or desired to be given
by either party in connection with this Lease. Notices shall be delivered, and
shall become effective, only in accordance with the requirements of Paragraph
20.
1.30 Notice of Default. A "Notice of Default" means any Notice from one
party to the other claiming or giving Notice of a Default or alleged Default by
the recipient.
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1.31 Person. "Person" is an individual, corporation or partnership,
including without limitation, Power Test Realty Company Limited Partnership.
1.32 Petroleum Terminal. "Petroleum Terminal" is a Premises which is a
terminal for the storage and distribution of petroleum products either owned or
leased by Landlord or one of its subsidiaries.
1.33 Premises. Each property listed in Exhibits A and B and,
collectively, all of the properties listed in Exhibits A and B, except for
those properties which may be deleted from time to time by Substantial
Condemnation, or by the expiration of a Third Party Lease or by not exercising
a Renewal Option.
1.34 Prime Rate. The "Prime Rate" means the prime rate or equivalent
"base" or "reference" rate for corporate loans that, at Landlord's election, by
Notice to Tenant, is: (a) published from time to time in the Wall Street
Journal; (b) announced from time to time by Chase Manhattan Bank, New York, New
York, or any other large United States "money center" commercial bank
designated by Landlord; or (c) if such rate is no longer so published or
announced, then a reasonably equivalent rate published by an authoritative
third party designated by Landlord. Notwithstanding anything to the contrary
in this paragraph, the Prime Rate shall never exceed the highest rate of
interest legally permitted to be charged in transactions of the character of
this Lease between parties of a character similar to Landlord and Tenant.
1.35 Prohibited Liens. A "Prohibited Lien" means any mechanic's,
vendor's, laborer's or material supplier's statutory lien or other similar lien
arising by reason of work, labor, services, equipment or materials supplied, or
claimed to have been supplied, to Tenant, which lien either: (a) is filed
against the Fee Estate or (b) is filed against the Leasehold Estate and, upon
termination of this Lease, would under the law of the State attach to the Fee
Estate. Notwithstanding anything to the contrary in this Lease, an Equipment
Lien shall not constitute a Prohibited Lien and nothing in this Lease shall
prohibit Tenant from creating, or require Tenant to remove, any Equipment Lien
except upon termination of this Lease.
1.36 Renewal Option. The right to renew the Lease as provided in Section
2.1 for each Premises individually.
1.37 Rent. The "Rent" means Fixed Rent and Additional Rent.
1.38 Service Station. A Premises which is currently used to sell motor
fuels or convenience store items or both, and in some instances is used for
motor vehicle repairs and/or other services ancillary to the sale of motor
fuels or convenience store items.
1.39 State. The "State" means the State where the Premises are located.
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1.40 Sublease. The term "Sublease" means any sublease of the Premises or
any part of the Premises, or any other agreement or arrangement (including a
license agreement or concession agreement) made by Tenant granting any third
party the right to occupy, use or possess any portion of the Premises. The
leases to the Dealers assigned under Paragraph 16.2 are Subleases.
1.41 Substantial Condemnation. A "Substantial Condemnation" means any
Condemnation that, in Tenant's reasonable judgment, renders the remaining
portion of the Premises unsuitable for the conduct of Tenant's business as a
gasoline service station and/or convenience store or such other permitted,
lawful use at the time of the Condemnation. Tenant may waive its right to
treat as a Substantial Condemnation any Condemnation that would otherwise
qualify as such.
1.42 Subtenant. The term "Subtenant" means any person having rights of
occupancy, use or possession under a Sublease, and any concessionaires and
licensees that Tenant elects to treat as Subtenants. The Dealers are
Subtenants.
1.43 Temporary Condemnation. A "Temporary Condemnation" means a
Condemnation relating to the temporary right to use or occupy the Premises or
any part of the Premises.
1.44 Tenant. Getty Petroleum Marketing Inc. and for certain Premises
located in the Mid-Hudson Valley, Kingston Oil Supply Corp.
1.45 Termination Date. The "Termination Date" means the date when this
Lease terminates or expires (i) for any Premises for which a Renewal Option is
not exercised, (ii) for Third Party Leases upon their expiration date, and
(iii) for all Premises, whether pursuant to the expiration of the Term as
provided for in this Lease or pursuant to Landlord's exercise of remedies upon
occurrence of an Event of Default.
1.46 Third Party Lease. A lease between a Third Party Lessor and Landlord
or a subsidiary of Landlord for the Premises.
1.47 Third Party Lessor. A Person who owns Premises and leases it to
Landlord or a subsidiary of Landlord. Power Test Realty Company Limited
Partnership is a Third Party Lessor.
1.48 Unavoidable Delay. The term "Unavoidable Delay" means a delay in
the performance of any obligation under this Lease (excluding in any case any
obligation to pay money) arising from or on account of any cause whatsoever
beyond the reasonable control of the person required to perform, including
strikes, labor troubles, litigation, Casualty, Condemnation, accidents, Laws,
governmental preemption, war, riots, and other causes beyond such party's
reasonable control, whether similar to or dissimilar to the causes specifically
enumerated in this
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paragraph. In no event shall Unavoidable Delay be deemed to include any delay
caused by a person's financial condition.
1.49 UST. An underground storage tank including related piping,
underground pumps, wiring and their monitoring devices.
1.50 Waiver of Subrogation. A "Waiver of Subrogation" means a provision
in, or endorsement to, any insurance policy required by this Lease, by which
the insurance carrier agrees to waive all rights of recovery by way of
subrogation against either party to this Lease in connection with any loss
covered by such insurance policy.
2 Term.
2.1 Initial Term and Renewal Term(s). The initial term of this Lease
(the "Initial Term") shall commence on the Commencement Date. The Initial Term
shall continue until 11:59 p.m. on January 31, 2012, unless terminated sooner.
Except as provided in Paragraph 23.3, Tenant shall have the absolute and
unconditional right and option (each such right and option, a "Renewal Option")
to extend and renew this Lease as to any or all of the Premises upon the same
terms and conditions (except for rental) as this Lease, for four (4) additional
successive periods (each, a "Renewal Term") following expiration of the Initial
Term. Tenant shall exercise each Renewal Option, if at all, by giving Landlord
Notice thereof (in compliance with this Lease) at least two (2) years before
the first day of the corresponding Renewal Term. Wherever this Lease refers to
the "Term," such reference means the Initial Term as extended from time to
time, pursuant to Tenant's Renewal Option(s), to include one or more Renewal
Term(s), so that upon Tenant's exercise of any Renewal Option(s), the "Term"
shall include the corresponding Renewal Term(s). At the expiration or
termination of (i) the Lease as applicable to any Premises and (ii) the final
Renewal Term provided for below, Tenant shall have no further rights to renew
or extend this Lease (x) as it applies to any Premises not previously extended
or renewed and (y) at the expiration of the final Renewal Term. The Renewal
Options and Renewal Terms are as follows:
2.1.1 First Renewal Term. The first Renewal Term shall be for a period
of ten (10) years beginning on February 1, 2012 and ending on January 31, 2022.
2.1.2 Second Renewal Term. The second Renewal Term shall be for a period
of ten (10) years beginning on February 1, 2022 and ending on January 31, 2032.
2.1.3 Third Renewal Term. The third Renewal Term shall be for a period
of ten (10) years beginning on February 1, 2032 and ending on January 31, 2042.
2.1.4 Fourth Renewal Term. The fourth and final Renewal Term shall be
for a period of ten (10) years beginning on February 1, 2042 and ending on
January 31, 2052.
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2.2. Default by Tenant. Tenant's Renewal Options shall remain effective
notwithstanding Tenant's Default, unless and until all cure periods available
to Tenant shall have expired without cure and Landlord shall have terminated
this Lease. Provided only that this Lease has not been terminated, there shall
be no conditions (express or implied) to Tenant's exercise of any Renewal
Option(s) (except as set forth in Section 23.3 as it pertains to a Third Party
Lease).
2.3 Title to Improvements and Personal Property. Notwithstanding
anything to the contrary in this Lease, except for certain USTs referred to in
Paragraph 7.6, and except for property owned by third parties, all
improvements constructed by Tenant and all personal property and equipment
located in, on or at the Premises or otherwise constituting part of the
Premises shall at all times during the Term be owned by, and shall belong to,
Tenant. All the benefits and burdens of ownership of the foregoing shall be
and remain in Tenant during the Term.
3 Rent.
3.1 Fixed Rent. Throughout the Term and all Renewal Terms, Tenant shall
pay Landlord, without notice or demand, in lawful money of the United States of
America, at Landlord's office or as Landlord shall otherwise designate, a net
annual rental (the "Fixed Rent") as follows:
3.1.1. Calculation of Fixed Rent. During the Initial Term and all
Renewal Terms, Fixed Rent shall be $______ per month all as more fully set
forth in Schedule 1 and as adjusted in this Article 3. The Fixed Rent during
the Initial Term and all Renewal Terms shall be reduced at the time that any
Premises may be deleted from the Lease by Substantial Condemnation, or by the
expiration or termination of a Third Party Lease described in Exhibit B by the
amount of Fixed Rent set forth on Schedule 1(as it may be increased pursuant to
Paragraph 3.1.2) attributable to such deleted Premises. The Fixed Rent during
any Renewal Term shall be reduced by the amount of Fixed Rent set forth on
Schedule 1 (as it may be increased pursuant to Paragraph 3.1.2) attributable to
all Premises for which Renewal Options have not been exercised by Tenant.
3.1.2. CPI Increases. At the end of the fifth (5th) Lease year (in the
first instance, on February 1, 2002) and at the end of each five (5) year
period thereafter during the Term and all Renewal Terms the Fixed Rent in
effect at the end of each such five (5) year period shall be increased by an
amount equal to all increases in the Consumer Price Index, Northeast Region or
the successor index thereto ("CPI"), over the prior five (5) year period (such
CPI increase to be computed on the Fixed Rent in effect for the relevant
January before the February 1 when the increase is to be effective); provided,
however, that in no event shall any one increase exceed fifteen (15%) percent
of the Fixed Rent in effect before the applicable February 1 increase effective
date. If the relevant CPI index is not yet available on any February 1 when an
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increase is to be effective, the Rent will be adjusted retroactively when such
CPI index becomes available.
3.2 Payment; Proration; Etc. Tenant shall pay Fixed Rent in equal
monthly installments in advance on the first day of each month. Rent for
partial months at the beginning or end of the Term shall be prorated based on
the number of days in such month within the Term divided by the total number of
days in the entire month. Tenant shall pay all Rent payable to Landlord by wire
transfer of currently available federal funds to Landlord's bank account as
designated by Landlord.
3.3 Additional Rent. In addition to Fixed Rent, Tenant shall pay
Landlord, as additional rent under this Lease, all Additional Rent within twenty
(20) days after receipt of invoice therefor or as otherwise set forth in
Paragraph 4.
3.4 No Allocation to Personal Property. None of the Rent provided for
under this Lease is allocable to any personal property included in the Premises.
3.5 Offsets. Tenant shall pay all Rent without offset, defense, claim,
counterclaim, reduction, deduction, or exercise of recoupment rights of any kind
whatsoever, except that notwithstanding anything to the contrary in this Lease,
Tenant shall be entitled to offset against Rent an amount equal to any of the
following obligations required to be performed by Landlord to the extent
Landlord fails to perform any such obligation after Notice and demand:
3.5.1 Landlord's obligation pursuant to Paragraph 7.6 to upgrade or
replace the UST's at the locations set forth in Exhibit D, to the extent Tenant
is required to expend monies therefor; and
3.5.2 Landlord's obligation pursuant to Paragraph 7.6 to comply in all
material respects with Environmental Laws at the locations set forth in Exhibit
D and Exhibit E, to the extent Tenant is required to expend monies to achieve
such compliance.
4 Additional Payments by Tenant; Impositions.
4.1 Landlord's Net Return. The parties intend that this Lease shall
constitute a "net lease," so that the Rent shall provide Landlord with "net"
return for the Term, free of any expenses or charges with respect to the
Premises, except as specifically provided in this Lease. Accordingly, Tenant
shall pay as Additional Rent and discharge, before failure to pay the same shall
create a material risk of forfeiture or give rise to a penalty, each and every
item of expense, of every kind and nature whatsoever, related to or arising from
the Premises, or by reason of or in any manner connected with or arising from
the development, leasing, operation, management, maintenance, repair, use or
occupancy of the Premises or any portion of the Premises. Notwithstanding
anything to the contrary in this Lease, Tenant shall not be required to pay any
of the following incurred by Landlord: (a) principal, interest, or other charges
payable under any
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Fee Mortgage; (b) depreciation, amortization, brokerage commissions, financing
or refinancing costs, management fees or leasing expenses incurred by Landlord
with respect to the Fee Estate or the Premises; (c) consulting, overhead,
travel, legal, staff, and other similar costs incidental to Landlord's ownership
of the Premises, other than Legal Costs that Tenant has expressly agreed to pay;
(d) any costs arising from or pursuant to any instrument or agreement affecting
the Premises that is not a Permitted Exception and to which Landlord is a party
and Tenant is not a party; and (e) the obligations of Landlord set forth in
Paragraphs 7.6 and 9.3.
4.2 Impositions. For any period within the Term (with daily proration for
periods partially within the Term and partially outside the Term), Tenant shall
pay and discharge, before failure to pay the same shall create a material risk
of forfeiture or give rise to a penalty, all Impositions. Tenant shall also pay
all interest and penalties assessed by any Government on account of late payment
of any Imposition, unless such late payment was caused by Landlord's failure to
remit an Imposition (paid to Landlord by Tenant) in accordance with Tenant's
reasonable instructions or Landlord's failure to promptly forward Tenant a copy
of a tax bill received by Landlord, in which case Landlord shall pay such
interest and penalties. Tenant shall within a reasonable time after Notice from
Landlord provide Landlord with reasonable proof that Tenant has paid any
Imposition(s) that this Lease requires Tenant to have paid.
4.3 Assessments in Installments. To the extent that may be permitted by
law or by a Third Party Lease, Tenant shall have the right to apply for
conversion of any assessment to cause it to be payable in installments. After
such conversion, Tenant shall pay and discharge only such installments of such
assessment as shall become due and payable during the Term.
4.4 Direct Payment by Landlord. If any Imposition or other item of Rent
is required to be paid directly by Landlord, then: (a) Landlord appoints Tenant
as Landlord's attorney in fact for the purpose of making such payment; and (b)
if the person entitled to receive such payment refuses to accept it from Tenant,
then Tenant shall give Landlord Notice of such fact and shall remit payment of
such Imposition to Landlord in a timely manner accompanied by reasonable
instructions as to the further remittance of such payment. Landlord shall with
reasonable promptness comply with Tenant's reasonable instructions and shall
Indemnify Tenant against Landlord's failure to do so.
4.5 Utilities. Tenant shall pay all fuel, gas, light, power, water,
sewage, garbage disposal, telephone and other utility charges, and the expenses
of installation, maintenance, use and service in connection with the foregoing,
relating to the Premises during the Term.
5 Use.
Tenant may use (a) a Service Station Premises for a gasoline service
station/convenience store, and (b) a Petroleum Terminal Premises for the storage
and distribution of petroleum products, and any other lawful purpose but only in
conjunction with the foregoing permitted uses. In using the Premises, Tenant
shall comply with all restrictions and mandates set forth in
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the Permitted Exceptions or a Third Party Lease where applicable. Tenant shall
not have any obligation to actually operate the Premises or otherwise conduct
business of any nature thereon and Tenant may discontinue operation of the
Premises at any time or from time to time except as may be required under a
Third Party Lease, Fee Mortgage or instances where a license(s) or permit(s) or
the continued use may be in jeopardy in which event Tenant shall continue
operation to the extent necessary to protect the license(s) or permit(s), or as
required pursuant to a Third Party Lease or a Fee Mortgage.
6 Compliance with Law.
Tenant shall during the Term, at Tenant's expense: (a) observe and comply
with all Laws affecting the Premises; (b) procure every permit, license,
certificate or other authorization required in connection with the lawful and
proper maintenance, operation, use and occupancy of the Premises or required in
connection with any Construction Work or improvements erected on the Premises
and (c) comply with all such permits, licenses, certificates and other
authorizations. Notwithstanding the foregoing, Tenant shall have the right to
contest any such Laws in accordance with this Lease.
7 Maintenance and Alterations.
7.1 Obligation to Maintain. During the Term, Tenant shall, except as
otherwise expressly provided in this Lease, keep and maintain the Premises and
every portion thereof in good order, condition and repair, subject to Casualty
and Condemnation (governed by separate applicable provisions of this Lease),
reasonable wear and tear, and any other conditions that this Lease does not
require Tenant to repair. Tenant's obligations to maintain the Premises shall
extend to all repairs that the Premises (including plumbing, heating, air
conditioning, ventilating, electrical, lighting, fixtures, walls, roof,
foundations, ceilings, floors, windows, doors, plate glass, skylights,
landscaping, driveways, parking lots, fences and signs located in, on or at the
Premises, together with any sidewalks and parkways adjacent to the Premises) may
require from time to time during the Term, whether structural or nonstructural,
foreseen or unforeseen, including such repairs as may be required by conditions
in existence at the Commencement Date and those Tenant is obligated to perform
under Paragraph 7.6.
7.2 Tenant's Right to Perform Alterations. At Tenant's sole cost and
expense and subject to the provisions of any Third Party Lease or Fee Mortgage,
Tenant shall have the right to perform any Construction Work relating to the
Premises, without Landlord's consent, as Tenant shall consider necessary or
appropriate. Tenant shall perform all Construction Work in a good,
professional, safe, and workmanlike manner, using licensed and insured
contractors in compliance with Law.
7.3 Plans and Specifications. To the extent that Tenant performs or
causes to be performed any Construction Work and obtains plans and
specifications or surveys (including working plans and specifications and
"as-built" plans and specifications and surveys) for such
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Construction Work, Tenant shall promptly upon Landlord's request provide
Landlord, for Landlord's information only, with a true and complete copy of such
plans and specification(s) or survey(s), subject to the terms of any agreement
between Tenant and the applicable outside architect, engineer or surveyor.
(Tenant shall exercise reasonable efforts to cause its agreements with such
outside professionals to permit the deliveries described in this paragraph.)
7.4 Excavations. If an excavation shall be made (or authorized) upon land
adjacent to the Land, then at Tenant's election Tenant shall either: (a) afford
to the person causing or authorized to cause such excavation, license to enter
the Premises, in accordance with Tenant's reasonable instructions, to perform
such work as such person shall reasonably deem necessary or desirable, and as
Tenant shall reasonably approve, to preserve and protect the Premises from
injury or damage and to support the same by proper foundations, or (b) perform
or cause to be performed, without cost or expense to Landlord in its capacity as
Landlord under this Lease, work of the nature described in clause (a) to the
extent reasonably necessary under the circumstances. Tenant shall not, by
reason of any excavations or work described in this paragraph, have any claim
against Landlord in its capacity as Landlord under this Lease for damages or for
Indemnity or for suspension, diminution, abatement or reduction of any Rent.
7.5 Cooperation by Landlord. Upon Tenant's request, subject to the
provisions of any Fee Mortgage, Landlord shall, without cost to Landlord,
promptly join in and execute (or assist Tenant in obtaining the requisite
consent of a Third Party Lessor) any instruments including, but not limited to,
applications for building permits, demolition permits, alteration permits,
consents, zoning, rezoning or use approvals, amendments and variances,
easements, encumbrances, and/or liens (excluding Mortgages) against the Premises
(Fee Estate and Leasehold Estate), and such other instruments as Tenant may from
time to time request in connection with Construction Work or to enable Tenant
from time to time to use and operate the Premises in accordance with this Lease,
provided each of the foregoing is in reasonable and customary form and does not
cause the Fee Estate to be encumbered as security for any obligation and does
not otherwise expose the Fee Estate to any material risk of forfeiture during
the Term. Tenant shall reimburse Landlord's Legal Costs and all other
out-of-pocket costs incurred in performing under this paragraph.
7.6 UST'S. Landlord shall retain responsibility for the maintenance and
repair of UST's at the Premises set forth in EXHIBIT D hereto, which UST's are
leased to Tenant hereunder. Tenant shall be responsible for the repair and
maintenance and replacement of all other UST's which were transferred to Tenant
on the date hereof. At the time the replacement or upgrading of the UST's is
completed at the Premises set forth in Exhibit D so that the UST's meet the
requirements of Law effective December 22, 1998, Landlord shall no longer be
responsible for the maintenance, repair or replacement of such UST's and,
except for Landlord's obligation under Paragraph 9.3 to remediate, Tenant shall
be solely responsible therefor. In the event that Tenant exercises the Renewal
Option for the First Renewal Term for certain Premises, under Paragraph 2.1, at
that time Landlord shall by a quitclaim Bill of Sale (disclaiming all
warranties, express and implied, including merchantability and fitness) transfer
the UST's under such
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Premises to Tenant for nominal consideration, except that the foregoing shall
not apply to any USTs owned by Third Party Lessors.
8 Prohibited Liens.
8.1 Tenant's Covenant. Tenant shall not suffer or permit any Prohibited
Lien to be filed. If a Prohibited Lien is filed then Tenant shall, within 30
days after receiving Notice from Landlord of such filing (but in any case within
15 days after receipt of Notice from Landlord of commencement of foreclosure
proceedings), commence and then prosecute appropriate action to cause such
Prohibited Lien to be paid, discharged or bonded. Nothing in this Lease shall
be construed to restrict Tenant's right to contest the validity of any
Prohibited Lien and to pursue Tenant's position to a final judicial
determination. The mere existence of a Prohibited Lien shall not be construed
as a default under this Lease unless Tenant fails to take action as aforesaid.
8.2 Protection of Landlord. Notice is hereby given that Landlord shall
not be liable for any labor or materials furnished or to be furnished to Tenant
upon credit, and that no mechanic's or other lien for any such labor or
materials shall attach to or affect the Fee Estate. Nothing in this Lease shall
be deemed or construed in any way to constitute Landlord's consent or request,
express or implied, by inference or otherwise, to any contractor, subcontractor,
laborer, equipment or material supplier for the performance of any labor or the
furnishing of any materials or equipment for any improvement, alteration or
repair of, or to, the Premises, or any part of the Premises, nor as giving
Tenant any right, power or authority to contract for, or permit the rendering
of, any services, or the furnishing of any materials that would give rise to the
filing of any liens against the Fee Estate. Tenant shall Indemnify Landlord
against any Construction Work performed on the Premises for or by Tenant,
including any Prohibited Lien arising from such Construction Work.
9 Hazardous Substances; Environmental Indemnification.
9.1 Restrictions. Tenant shall not cause or permit to occur after the
Commencement Date: (a) any material violation of any Environmental Law; or (b)
the use, generation, release, manufacture, refining, production, processing,
storage or disposal of any Hazardous Substance on, under, or about the Premises,
or the transportation to or from the Premises of any Hazardous Substance, except
to the extent that such use (i) is reasonably necessary for the conduct of
Tenant's business in accordance with acceptable industry standards for the
petroleum industry in which Tenant operates and (ii) complies in all material
respects with all applicable Environmental Laws.
9.2 Landlord's Representation. Except for the Premises set forth on
Exhibit D and Exhibit E, Landlord represents and warrants to Tenant that as of
the Commencement Date to the knowledge of Landlord the Premises comply in all
material respects with all Environmental Laws.
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9.3 Compliance; Clean-Up; Environmental Indemnification. Landlord shall
retain responsibility for the ongoing remediations at the Premises, set forth on
EXHIBIT E. Except as provided in the following sentence, Tenant shall, at
Tenant's expense, comply with all applicable Environmental Laws to the extent
such compliance is necessitated by events occurring after the Commencement Date.
Landlord shall, at Landlord's expense, comply with all applicable Environmental
Laws (a) to the extent such compliance is necessitated by events that occurred
before the Commencement Date, and (b) affecting the Premises (i) set forth on
Exhibit D until such time as the UST's have either been replaced or upgraded to
comply with the Law requiring compliance by December 22, 1998 and all
remediation has been completed until such time as Government closure has been
received for such Premises whether or not the Hazardous Substances Discharge
being remediated was discovered during the upgrade or replacement of the USTs,
and (ii) set forth on Exhibit E until all remediation has been completed to
Government closure. Except as expressly set forth hereinabove, any Hazardous
Substances Discharge discovered after the Commencement Date shall be deemed to
be an event that occurred after, and not before, the Commencement Date
notwithstanding the fact that the discharge causing the contamination may have
occurred in whole or in part before the Commencement Date. Any party required
by this paragraph to comply with Environmental Laws (the "Clean-Up Obligor")
shall, at the Clean-Up Obligor's own expense, make all submissions to, provide
all information required by, and otherwise fully comply with all requirements of
any Government arising under Environmental Laws with which such Clean-Up Obligor
is required to comply. If any Government requires any clean-up plan or clean-up
measures on account of Hazardous Substances Discharges for which a Clean-Up
Obligor is responsible, such Clean-Up Obligor shall, at its own expense, prepare
and submit the required plans and all related bonds and other financial
assurances and shall promptly and diligently carry out all such clean-up plans.
Any Clean-Up Obligor shall promptly provide the other party with all information
reasonably requested by such other party regarding the Clean-Up Obligor's use,
generation, storage, transportation or disposal of Hazardous Substances in, at,
or about the Premises and the remediation efforts undertaken.
9.4 Indemnity. Tenant shall Indemnify Landlord against any Hazardous
Substances Discharge for which Tenant is responsible under Paragraph 9.3.
Landlord shall Indemnify Tenant against any Hazardous Substances Discharge for
which Landlord is responsible under Paragraph 9.3.
10 Indemnification; Liability of Landlord.
10.1 Mutual Indemnity Obligations. Landlord and Tenant shall each
Indemnify the other against: (a) any wrongful act, wrongful omission or
negligence of the Indemnitor (and, in the case of (i) Tenant, that of any of
Tenant's Subtenants, and (ii) Landlord, that of any Third Party Lessor ) or its
or their partners, directors, officers, or employees; and (b) any breach or
default by the Indemnitor under this Lease. In addition to and without limiting
the generality of the foregoing indemnity, Tenant shall Indemnify Landlord and
Third Party Lessors against all the following matters (except to the extent any
claim arises from any wrongful act, wrongful
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omission or negligence of Landlord or any Third Party Lessor): (w) the operation
or occupancy of the Premises; (x) any Construction Work performed during the
Term; (y) the condition of the Premises or any street, curb or sidewalk
adjoining the Premises, whether or not such condition existed before the
Commencement Date; or of any vaults, tunnels, passageways or space under,
adjoining or appurtenant to the Premises whether or not such condition existed
before the Commencement Date; and (z) any accident, injury or damage whatsoever
caused to any person occurring during the Term, in or on the Premises or upon or
under the sidewalks adjoining the Premises. Notwithstanding anything to the
contrary in this Lease, neither party shall be required to Indemnify the other
party from or against such other party's intentional acts or negligence. This
paragraph is not intended to cover Environmental Laws and Hazardous Substances
Discharges, which are covered in Paragraph 9.
10.2 Liability of Landlord. Tenant is and shall be in exclusive control
and possession of the Premises during the Term as provided in this Lease.
Landlord shall not be liable for any injury or damage to any property or to any
person occurring on or about the Premises nor for any injury or damage to any
property of Tenant, or of any other person, during the Term. The provisions of
this Lease permitting Landlord to enter and inspect the Premises are intended to
allow Landlord to be informed as to whether Tenant is complying with the
agreements, terms, covenants and conditions of this Lease, and to the extent
permitted by this Lease, to perform such acts required by Landlord under this
Lease and of Tenant as Tenant shall fail to perform. Such provisions shall not
be construed to impose upon Landlord any obligation, liability or duty to third
parties, but nothing in this Lease shall be construed to exculpate, relieve or
Indemnify Landlord from or against any obligation, liability or duty of Landlord
to third parties existing at or before the Commencement Date.
10.3 Indemnification Procedures. Wherever this Lease requires an
Indemnitor to Indemnify an Indemnitee, the following procedures and requirements
shall apply:
10.3.1 Prompt Notice. The Indemnitee shall give the Indemnitor
prompt Notice of any claim. To the extent, and only to the extent, that both
(a) the Indemnitee fails to give prompt Notice and (b) the Indemnitor is
thereby prejudiced, the Indemnitor shall, except as otherwise required under a
Third Party Lease, be relieved of its indemnity obligations under this Lease.
10.3.2 Selection of Counsel. The Indemnitor shall be required to
select counsel reasonably acceptable to the Indemnitee. Counsel to the
Indemnitor's insurance carrier shall be deemed satisfactory. Indemnitee may
have its own counsel, at Indemnitee's expense, consult with Indemnitor's
counsel.
10.3.3 Settlement. The Indemnitor may, with the consent of the
Indemnitee, not to be unreasonably withheld, settle the claim, except that no
consent by the Indemnitee shall be required as to any settlement by which (x)
the Indemnitor procures (by payment, settlement, or otherwise) a release of the
Indemnitee pursuant to which the Indemnitee is not required to make
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any payment whatsoever to the claimant, (y) neither the Indemnitee nor the
Indemnitor acting on behalf of the Indemnitee makes any admission of liability,
and (z) the continued effectiveness of this Lease is not jeopardized in any way.
10.4 Insurance Proceeds. The Indemnitor's obligations shall be reduced by
net insurance proceeds actually collected by the Indemnitee on account of the
loss.
10.5 Survival. All indemnities set forth in the Lease shall survive the
termination or expiration of the Lease.
11 Right of Contest.
11.1 Tenant's Right. Notwithstanding anything to the contrary in this
Lease, Tenant shall have the right to contest, at its sole expense, by
appropriate legal proceedings diligently conducted in good faith, the amount or
validity of any Imposition or Prohibited Lien; the valuation, assessment or
reassessment (whether proposed or final) of the Premises for purposes of real
estate taxes; the validity of any Law or the application of any Law to the
Premises; or the validity or merit of any claim against which Tenant is required
to Indemnify Landlord under this Lease (any of the foregoing, a "Contest").
Tenant may defer payment of the contested Imposition or compliance with the
contested Law or performance of any other contested obligation pending the
outcome of the Contest, provided that such deferral does not subject the
Premises to any risk of imminent forfeiture or Fee Mortgage Foreclosure or
Landlord to any risk of criminal liability.
11.2 Landlord's Obligations and Protections. Landlord shall not be
required to join in any Contest unless a Law shall require that such Contest be
brought in the name of Landlord or any owner of the Fee Estate. In such case,
Landlord shall cooperate with Tenant, as Tenant shall reasonably request, so as
to permit such Contest to be brought in Landlord's name. Tenant shall pay all
reasonable costs and expenses (including Legal Costs) incident to a Contest.
Tenant shall Indemnify Landlord against any Contest brought by Tenant.
11.3 Miscellaneous. Tenant shall be entitled to any refund of any
Imposition (and penalties and interest paid by Tenant) based upon Tenant's prior
overpayment of such Imposition, whether such refund is made during or after the
Term. Upon termination of Tenant's Contest of an Imposition, Tenant shall pay
the amount of such Imposition (if any) as has been finally determined in such
Contest to be due, together with any costs, interest, penalties or other
liabilities in connection with such Imposition. Upon final determination of
Tenant's Contest of a Law, Tenant shall comply with such final determination.
Landlord shall not enter any objection to any Contest. Tenant's right to contest
any Imposition or the valuation, assessment or reassessment of the Premises for
tax purposes shall not be to the exclusion of Landlord, and Landlord shall have
the right to contest the foregoing upon notice to Tenant.
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12 Insurance.
12.1 Tenant to Insure. Tenant shall, at Tenant's sole cost and expense,
during the Term, maintain the following insurance (or its then reasonably
available equivalent) or such greater coverage as may be required by a Third
Party Lease:
12.1.1 Building. Building insurance providing coverage for the
Premises and all equipment, fixtures, and machinery at or in the Premises,
against loss, damage, and destruction by fire and other hazards encompassed
under broad form coverage as may be customary for like properties in the County
(but Tenant shall in no event be required to maintain earthquake or war risk
insurance) from time to time during the Term, in an amount not less than 80% of
the replacement value of the insurable buildings, structures, improvements and
equipment (excluding excavations and foundations) located at the Premises, but
in any event sufficient to avoid co-insurance. To the extent customary for like
properties at the time, such insurance shall include coverage for explosion of
steam and pressure boilers and similar apparatus located at the Premises; an
"increased cost of construction" endorsement; and an endorsement covering
demolition and cost of debris removal.
12.1.2 Liability. General public liability insurance against claims
for personal injury, death or property damage occurring upon, in or about the
Premises and adjoining streets and passageways. The coverage under all such
liability insurance shall be at least $50 million in the aggregate for any Lease
year, $5 million in respect of injury or death to a single person, and at least
$10 million, in respect of any one accident, and not less than full replacement
value for property damage. Landlord shall be entitled from time to time, upon
180 days' Notice to Tenant, to increase the dollar limits set forth in this
paragraph, subject to the following limitations, which shall be cumulative: (a)
such increased limits shall never exceed the limits initially set forth plus an
increase proportionate to the increase in the consumer price index from the
Commencement Date to the adjustment date, rounded to the nearest $1,000,000; (b)
such limits shall never exceed the limits customarily maintained for similar
commercial properties located in the County; and (c) Landlord shall not be
entitled to increase such limits more frequently than once every three years.
12.1.3 Workers' Compensation. Workers' compensation insurance
covering all persons employed in connection with any Construction Work or
operation of the Premises, and with respect to whom any claim could be asserted
against Landlord or the Fee Estate.
12.1.4 Other. All other insurance as Tenant determines appropriate
in the exercise of Tenant's reasonable business judgment.
12.2 Nature of Insurance Program. Tenant may provide any insurance
required by this Lease pursuant to a "blanket" or "umbrella" insurance policy,
provided that (i) such policy or a certificate of such policy shall specify the
amount(s) of the total insurance allocated to the
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Premises, which amount(s) shall not be subject to reduction on account of claims
made with respect to other properties and (ii) such policy otherwise complies
with this Lease.
12.3 Policy Requirements and Endorsements. All insurance policies
required by this Lease shall contain (by endorsement or otherwise) the following
provisions:
12.3.1 Additional Insureds. Liability insurance policies shall name
as additional insureds Landlord, its subsidiaries, Third Party Lessors and Fee
Mortgagees.
12.3.2 Primary Coverage. All policies shall be written as primary
policies not contributing with or in excess of any coverage that Landlord may
carry.
12.3.3. Tenant's Acts or Omissions. Each policy shall include, if
available without additional cost, a provision that any act or omission of
Tenant shall not prejudice any party's rights (other than Tenant's) under such
insurance coverage.
12.3.4 Contractual Liability. Policies of liability insurance shall
contain contractual liability coverage, relating to Tenant's indemnity
obligations under this Lease, to the extent ordinarily insured.
12.3.5 Insurance Carrier Standards. Each insurance carrier shall be
authorized to do business in the State and shall have a "Best's" rating of at
least B+-VI.
12.3.6 Notice to Landlord. The insurance carrier shall undertake to
give Landlord 60 days' prior Notice of cancellation or amendment. Failure to
give such Notice shall not adversely affect the rights or increase the
obligations of the insurance carrier.
12.4 Deliveries to Landlord. Upon Notice to such effect by Landlord,
Tenant shall deliver to Landlord and Third Party Lessors certificates and or
certified copies of the insurance policies required by this Lease, endorsed
"Paid" or accompanied by other evidence that the premiums for such policies have
been paid, at least thirty days before expiration of any then current policy.
12.5 Tenant's Inability to Obtain Insurance. So long as (a) any
insurance required by this Lease should, after diligent effort by Tenant, be
unobtainable at commercially reasonable rates through no act or omission by
Tenant and (b) Tenant shall obtain the maximum insurance reasonably obtainable
and give Notice to Landlord of the extent of Tenant's inability to obtain any
insurance required to be maintained under this Lease, then unless Tenant's
inability to procure and maintain such insurance results from some activity or
conduct not within Tenant's reasonable control, Tenant's obligation to procure
and maintain such insurance as is unobtainable shall be excused, but only so
long as conditions (a) and (b) are satisfied. Notwithstanding the foregoing, if
Tenant, after diligent effort, is unable to obtain any insurance required by
this
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Lease, Landlord shall have the right to obtain such insurance and shall charge
the cost of such insurance to Tenant as Additional Rent.
12.6 Waiver of Certain Claims. To the extent that Landlord or Tenant
purchases any hazard insurance relating to the Premises, the party purchasing
such insurance shall attempt to cause the insurance carrier to agree to a Waiver
of Subrogation. If any insurance policy cannot be obtained with a Waiver of
Subrogation, or a Waiver of Subrogation is obtainable only by the payment of an
additional premium, then the party undertaking to obtain the insurance shall
give Notice of such fact to the other party. The other party shall then have 10
Business Days after receipt of such Notice either to place the insurance with a
company that is reasonably satisfactory to the other party and that will issue
the insurance with a Waiver of Subrogation at no additional cost, or to agree to
pay the additional premium if such a policy can be obtained only at additional
cost. To the extent that the parties actually obtain insurance with a Waiver of
Subrogation, the parties release each other, and their respective authorized
representatives, from any claims for damage to any person or the Premises that
are caused by or result from risks insured against under such insurance
policies, but only to the extent of the available insurance proceeds.
12.7 No Representation of Adequate Coverage. Neither party makes any
representation, or shall be deemed to have made any representation, that the
limits, scope, or form of insurance coverage specified in this Article are
adequate or sufficient.
13 Damage or Destruction.
13.1 Notice; No Rent Abatement. Tenant shall promptly give Landlord
Notice of any Casualty. There shall be no abatement or reduction of Fixed Rent
or Additional Rent on account of a Casualty. Tenant shall with reasonable
promptness restore the damaged improvements as nearly as may be practicable to
their condition, quality, and class immediately prior to such Casualty, with
such changes or alterations (including demolition) as Tenant shall elect to
make in conformity with this Lease, all at Tenant's sole cost and expense.
13.2 Adjustment of Claims; Use of Insurance Proceeds. Tenant shall be
solely responsible for the adjustment of any insurance claim. All proceeds of
building or hazard insurance shall be paid to Tenant to be held and applied in
compliance with this Lease.
14 Condemnation.
14.1 Substantial Condemnation. If a Substantial Condemnation of any
Premises shall occur, then this Lease shall terminate as to such Premises as of
the effective date of such Substantial Condemnation, such Premises shall be
deemed to be deleted from Exhibit A or Exhibit B, and the Rent shall be reduced
accordingly. The proceeds of the Substantial Condemnation shall belong
entirely to Landlord or Third Party Lessor, other than such award(s) as Tenant
may be entitled to receive for moving expenses, trade fixtures and the like,
provided
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that such awards to Tenant do not reduce Landlord's share of the award or
conflict with a Third Party Lease.
14.2 Insubstantial Condemnation. If an Insubstantial Condemnation at any
Premises shall occur, then subject to the terms of any Fee Mortgage to the
contrary, any award or awards shall be paid to Tenant to be applied first to
repair, restoration or reconstruction of any remaining part of the improvements
not so taken. If the award(s) for any such Insubstantial Condemnation is not
sufficient to pay for said repair, restoration or reconstruction, Tenant shall
be responsible for completing same at Tenant's sole cost and expense. Tenant
shall perform such repair, restoration or reconstruction in accordance with
applicable requirements of this Lease. The balance of any such award or awards
remaining after the repair, restoration or reconstruction shall be distributed
to Landlord. From and after the effective date of the Insubstantial
Condemnation, Fixed Rent shall be adjusted as follows. New Fixed Rent shall
equal Fixed Rent, as it would have been determined without regard to the
Insubstantial Condemnation, multiplied by a fraction whose numerator is the
total value of the Premises after the Insubstantial Condemnation and whose
denominator is the total value of the Premises immediately before the effective
date of such Insubstantial Condemnation and without considering such
Insubstantial Condemnation or the expectation thereof.
14.3 Temporary Condemnation. If a Temporary Condemnation shall occur with
respect to any Premises, Rent shall not abate and, subject to the terms of any
Fee Mortgage or Third Party Lease to the contrary, Tenant will be entitled to
receive any award or payment.
14.4 Other Governmental Action. In the event of any action by any
Government not resulting in a Condemnation but creating a right to compensation,
such as the changing of the grade of any street upon which the Premises abut,
then this Lease shall continue in full force and effect without reduction or
abatement of Rent and subject to the terms of any Fee Mortgage or Third Party
Lease to the contrary, Tenant shall be entitled to receive the award or payment
made in connection with such action.
14.5 Prompt Notice. If either party becomes aware of any Condemnation or
threatened or contemplated Condemnation, then such party shall promptly give
Notice thereof to the other party.
15 Transfers by Landlord.
15.1 Landlord's Right to Convey. Landlord shall be entitled to convey the
Fee Estate of any Premises from time to time subject to the terms and conditions
of this Lease. Without limiting Tenant's remedies on account of any such
transaction, if Landlord conveys the Fee Estate in violation of this paragraph,
then: (x) such transaction shall be null, void, and of no force or effect; (y)
notwithstanding the foregoing, Tenant shall be entitled to equitable relief
requiring the cancellation and rescission of such transaction; and (z) Tenant
shall be entitled to have such
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violating Premises deleted from this Lease. Any conveyance of the Fee Estate
shall not terminate or impair any of the grantor's obligations as Landlord under
this Lease.
15.2 Landlord's Mortgages. This Lease shall be subject and subordinate to
all existing Fee Mortgages. This Lease and the Leasehold Estate hereunder shall
be subject and subordinate to all subsequent Fee Mortgages and the rights of
holders of such Fee Mortgages where a non-disturbance agreement is obtained
whereunder Tenant's rights under this Lease will not be disturbed upon any
foreclosure or other exercise of remedies under a Fee Mortgage, and provides
such other similar assurances as Tenant shall reasonably request. This Lease
and Leasehold Estate hereunder shall be prior and superior to all subsequent Fee
Mortgages where a non-disturbance agreement has not been obtained, except as
otherwise set forth in a Third Party Lease.
15.3 Zoning Lots. Without Tenant's prior written consent, which Tenant
shall not unreasonably withhold, Landlord shall not enter into any agreement or
instrument by which the Premises are combined with any other real property for
purposes of any Law governing zoning, bulk, development rights, or any similar
matter, or by which any rights arising under such Laws to develop the Premises
are transferred to any other real property.
16 Transfers by Tenant and Dealer Leases.
16.1 Tenant's Limited Right. Tenant may not assign, mortgage, pledge or
transfer all of this Lease (collectively, a "Transfer") without Landlord's
consent, which consent shall not be unreasonably withheld provided that the
assignee is no less credit worthy than Tenant. Tenant may not assign any
part(s) of this Lease and it is deemed reasonable for Landlord to refuse to
grant its consent therefor. Any permitted assignee of Tenant shall assume all
obligations and liabilities of Tenant under this Lease and if not so assumed,
Tenant shall continue to remain liable and responsible under this Lease. In no
event shall Tenant be relieved from its liabilities and obligations incurred or
accruing prior to the assignment. Tenant shall promptly notify Landlord of the
completion of any approved Transfer.
16.2 Dealer Leases. Landlord hereby assigns to Tenant, and Tenant hereby
assumes Landlord's interest in any leases of the Premises to all Dealers. From
the Commencement Date to the end of the Term, Tenant shall be entitled to all
rentals paid by Dealers and during such period Tenant shall perform all of the
obligations under each such Dealer lease attributable to lessor therein. Except
for those Dealer leases set forth in EXHIBIT F, to Landlord's knowledge,
Landlord represents that all such Dealer leases are currently in full force and
effect and that there are no defaults by any party under the terms of such
leases.
16.3 Tenant's Right to Sublet. Subject to the terms of any Third Party
Lease, Tenant may enter into a Sublease for the permitted uses set forth in
Paragraph 5, extend, renew or modify any Sublease, consent to any subleasing (or
further levels of subleasing) (all of which shall be within the defined term
"Sublease," and the occupants thereunder shall all be deemed "Subtenants"),
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terminate any Sublease or evict any Subtenant, all without Landlord's consent.
The term of any Sublease (including renewal options thereof,) shall not extend
beyond the Term (including only any Renewal Options previously exercised by
Tenant). If Tenant enters into any Sublease, then such Sublease shall be
subordinate to this Lease. If Tenant desires to enter into a Sublease for a use
other than the permitted uses set forth in Paragraph 5, any such Sublease shall
require Landlord's consent, which, except as provided in the following sentence
or under any Third Party Lease, shall not be unreasonably withheld. Landlord
may withhold consent to a Sublease if it, in its sole judgment, it determines
that (i) valuable licenses and permits will be lost as a result of the proposed
Sublease or (ii) Tenant's intended new use for the Premises will make the
premises materially less valuable. In the event that Landlord grants its
consent to a Sublease for lawful purposes other than the permitted uses set
forth in Paragraph 5, before commencing such new Sublease Tenant shall at its
expense remove all UST's and contaminated soil, if any, before the commencement
of the Sublease term. Thereafter, Tenant shall at its expense complete all
environmental investigations and/or remediations as may be required by
governmental authorities. Tenant hereby assigns, transfers and sets over to
Landlord all of Tenant's right, title, and interest in and to each Sublease
entered into by Tenant from time to time, together with all subrents or other
sums of money due and payable under such Sublease and all security deposited
with Tenant under such Sublease. Such assignment shall, however, become
effective and operative only if this Lease shall expire or be terminated or
canceled, or if Landlord re-enters or takes possession of the Premises pursuant
to this Lease, following (in either case) the expiration of all applicable cure
periods. Notwithstanding the foregoing, Tenant agrees, that upon the request of
Landlord, all subtenancies, as specified by Landlord, for the sale of petroleum
products will be terminated before the expiration, termination or cancellation
of this Lease.
16.4 Leasehold Mortgages. Notwithstanding anything in this Lease to the
contrary, Tenant shall not have the right, without Landlord's consent, to
execute and deliver Leasehold Mortgage(s) encumbering this Lease and the
Leasehold Estate.
16.5 No Release. No Transfer or Sublease shall affect or reduce any of
Tenant's obligations or Landlord's rights under this Lease. All obligations of
Tenant under this Lease shall continue in full force and effect notwithstanding
any Sublease or Transfer.
17 Quiet Enjoyment.
Landlord covenants that, so long as Landlord has not terminated this Lease
on account of an Event of Default by Tenant, Tenant shall and may peaceably and
quietly have, hold and enjoy the Premises for the Term without molestation or
disturbance by or from Landlord or anyone claiming by or through Landlord or
having title to the Premises paramount to Landlord, and free of any encumbrance
created or suffered by Landlord, except Permitted Exceptions, provided, however,
that the foregoing shall not apply if Landlord loses possession under a Third
Party Lease for any reason other than Landlord's default thereunder.
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18 Default by Tenant; Remedies.
18.1 Definition of "Event of Default." The term "Event of Default" shall
mean and refer to the occurrence of any one or more of the following
circumstances:
18.1.1 Monetary Default. If a Monetary Default shall occur and the
Monetary Default shall continue for 10 days after Landlord has given Tenant
Notice of such Monetary Default, specifying in reasonable detail the amount of
money required to be paid by Tenant and the nature of such payment. Monetary
Defaults shall include, without limitation, failure by Tenant to pay any item
of Rent, Additional Rent or any other charge or sum required to be paid by
Tenant hereunder.
18.1.2 Non-Monetary Default. Except for those Non-Monetary Defaults
set forth below which cannot be cured within 30 days, if a Non-Monetary Default
shall occur and the Non-Monetary Default shall continue and not be remedied by
Tenant within 30 days after Landlord shall have delivered to Tenant a Notice
describing the same in reasonable detail, or, in the case of a Non-Monetary
Default that cannot with due diligence be cured within 30 days from such Notice,
if Tenant shall not (x) within 30 days from Landlord's Notice advise Landlord of
Tenant's intention to take all reasonable steps necessary to remedy such
Non-Monetary Default, (y) duly commence the cure of such Non-Monetary Default
within such period, and then diligently prosecute to completion the remedy of
the Non-Monetary Default and (z) complete such remedy within a reasonable time
under the circumstances.
Non-Monetary Defaults shall include, without limitation, (a) if Tenant
shall make an assignment for the benefit of its creditors; (b) if any petition
shall be filed against Tenant in any court, whether or not pursuant to any
statute of the United States or of any State, in any bankruptcy, reorganization,
composition, extension, arrangement or insolvency proceedings, and Tenant shall
thereafter be adjudicated bankrupt, or if such proceedings shall not be
dismissed within ninety (90) days after the institution of the same; or if any
such petition shall be so filed by Tenant or a liquidator; (c) if, in any
proceeding, a receiver, receiver and manager, trustee or liquidator be appointed
for all or any portion of Tenant's property, and such receiver, receiver and
manager, trustee or liquidator shall not be discharged within ninety (90) days
after the appointment of such receiver, receiver and manager, trustee or
liquidator; (d)Tenant shall fail to perform any covenant required by the
Distribution Agreement which failure shall continue beyond such cure periods, if
any, as are provided for in such Distribution Agreement; or (e) a default under
any Third Party Lease or under the provisions of a Fee Mortgage which affect
Tenant's use of the Premises.
18.2 Remedies. If an Event of Default occurs, then Landlord shall, at
Landlord's option, have any or all of the following remedies, all of which shall
be cumulative (so that Landlord's exercise of one remedy shall not preclude
Landlord's exercise of another remedy), in addition to such other remedies as
may be available at law or in equity or pursuant to any other terms of this
Lease. Landlord's remedies shall include, without limitation:
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18.2.1 Termination of Tenant's Rights. Landlord may terminate
Tenant's right to possession of the Premises by any lawful means, in which case
this Lease and the Term shall terminate (and such date of termination shall be
the Termination Date) and Tenant shall immediately surrender possession of all
of the Premises to Landlord.
18.2.2 Taking of Possession. Landlord may re-enter and take
possession of any or all of the Premises with or without process of law and
remove Tenant, with or without having terminated this Lease. This is intended
to constitute an express right of re-entry on Landlord's part.
18.2.3 Security Devices. Landlord may change the locks and other
security devices providing admittance to the Premises.
18.2.4 Conditional Limitation. Landlord may serve upon Tenant a
10-day notice of cancellation and termination of this Lease. Upon the
expiration of such 10-day period, this Lease and the Term shall automatically
and without any action by anyone terminate, expire and come to an end, by the
mere lapse of time, as fully and completely as if the expiration of such 10-day
period were the Termination Date. The passage of such 10-day period constitutes
the limit beyond which Tenant's tenancy no longer exists. Tenant shall then
quit and surrender the Premises to Landlord but Tenant shall remain liable as
provided for in this Lease. It is a conditional limitation of this Lease that
the Term shall terminate and expire as set forth in this paragraph. This
paragraph is intended to establish a conditional limitation and not a condition
subsequent.
18.2.5 Injunction of Tenant's Breaches. Landlord shall be entitled
to obtain a court order enjoining Tenant from continuing conduct constituting a
breach of Tenant's covenants in this Lease. Tenant specifically acknowledges
that damages would not constitute an adequate remedy for Tenant's breach of any
non-monetary covenant contained in this Lease.
18.2.6 Damages. Landlord may recover from Tenant all damages
incurred by Landlord by reason of Tenant's default, including the costs of
recovering possession, reletting the Premises, and any and all other damages
legally recoverable by Landlord. Such damages shall include, at Landlord's
election, either (a) the Rent provided for in this Lease, when and as due and
payable pursuant to this Lease, less (in the case of this clause "b" only)
Landlord's actual proceeds of reletting net of Landlord's actual reasonable
costs of reletting, or (b) the entire amount of Rent due for the entire Term (or
Renewal Term if applicable) shall accelerate and immediately become due and
payable. Landlord may recover such damages at any time after Tenant's default,
including after expiration of the Term.
18.2.7 Continue Lease. Landlord may at Landlord's option maintain
Tenant's right to possession, in which case this Lease shall continue in effect
and Landlord shall be entitled to continue to enforce this Lease, including the
right to collect Rent and the right to any remedies for nonpayment.
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18.3 Mitigation of Damages. Landlord agrees to take all commercially
reasonable steps necessary or appropriate to mitigate any damages that Landlord
may suffer on account of an Event of Default under this Lease. Without limiting
the preceding sentence, Landlord shall diligently endeavor to relet the Premises
under any circumstances where such reletting would mitigate Landlord's damages.
18.4 Tenant's Late Payments. If Tenant makes any payment required under
this Lease after such payment is first due and payable, then in addition to any
other remedies Landlord may have under this Lease, and without reducing or
adversely affecting any of Landlord's other rights and remedies, Tenant shall
pay Landlord within 10 days after demand interest on such late payment, at an
interest rate equal to the Prime Rate plus 3%, beginning on the date such
payment was first due and payable and continuing until the date when Tenant
actually makes such payment.
18.5 Landlord's Right to Cure. If Tenant shall at any time fail to make
any payment or perform any other act on its part to be made or performed
pursuant to this Lease, then Landlord, after ten (10) Business Days' Notice to
Tenant, or with such notice (if any) as is reasonably practicable under the
circumstances in case of an emergency, and without waiving or releasing Tenant
from any obligation of Tenant or from any default by Tenant and without waiving
Landlord's right to take such action as may be permissible under this Lease as a
result of such Default, may (but shall be under no obligation to) make such
payment or perform such act on Tenant's part to be made or performed pursuant to
this Lease. Landlord may enter upon the Premises for such purpose, and take all
such action on the Premises, as may be reasonably necessary under the
circumstances, but in doing so shall not unreasonably interfere with the conduct
of operations on the Premises by Tenant or anyone claiming through Tenant and
shall comply with Tenant's reasonable instructions. Tenant shall reimburse
Landlord, as Additional Rent (within 10 days after Notice from Landlord
accompanied by reasonable backup documentation), for all reasonable sums paid by
Landlord and all costs and expenses reasonably incurred by Landlord, together
with Landlord's Legal Costs, in connection with the exercise of Landlord's cure
rights under this paragraph.
18.6 Holding Over. The parties recognize and agree that if for any reason
or no reason Tenant remains in the Premises after the Termination Date, then
Landlord will suffer injury that is substantial, difficult or impossible to
measure accurately. Therefore, if both (a) Tenant remains in the Premises after
the Termination Date (for any month or partial month), for any reason or no
reason, and (b) either (i) Landlord at any time gives Tenant Notice that
Landlord elects to require Tenant to pay the liquidated damages described in
this paragraph or (ii) as of the date 31 days after the Termination Date,
Landlord has not commenced holdover proceedings against Tenant or otherwise
proceeded to remove Tenant from the Premises, then in addition to any other
rights or remedies available to Landlord, Tenant shall pay to Landlord, as
liquidated damages and not as a penalty, for each month (or portion of a month)
during which Tenant holds over in the Premises after the Termination Date, a sum
equal to: 120% (for the first month or partial month of holding over), 140% (for
the second month or partial month of holding over),
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and 150% (for each subsequent month or partial month of holding over) times the
Rent, including Additional Rent, payable under this Lease for the month in which
the Termination Date occurs.
18.7 Legal Costs. Provided in each and every case that Landlord
prevails, Tenant shall pay Landlord, as Additional Rent, all Legal Costs and any
other out-of-pocket costs incurred by Landlord on account of any litigation or
dispute between Landlord and Tenant, or claim made by Landlord against Tenant,
arising from this Lease, a Third Party Lease or the landlord-tenant relationship
under this Lease, or on account of Landlord's enforcement of this Lease upon
Tenant's default. In addition, subject to the same proviso, Tenant shall
reimburse Landlord for all Legal Costs and any other out-of-pocket costs
incurred by Landlord in any litigation to enforce or interpret this Lease or
seek declaratory or injunctive relief against Tenant in connection with this
Lease; to exercise Landlord's remedies against Tenant upon an Event of Default
under this Lease or pursuant to Law; to regain or attempt to regain possession
of the Premises or otherwise terminate this Lease; and in any proceeding under
the federal bankruptcy code, or under any similar statute affecting Tenant.
18.8 Waivers. Landlord and Tenant irrevocably waive all rights to trial
by jury in any action, proceeding, counterclaim or other litigation arising out
of or relating to this Lease, the relationship of Landlord and Tenant under this
Lease, the enforcement of this Lease, Tenant's use or occupancy of the Premises,
any claim of injury or damage arising between Landlord and Tenant, or any
actions of Landlord in connection with or relating to the enforcement of this
Lease. Tenant waives any right of redemption provided for by Law.
18.9 Accord and Satisfaction; Partial Payments. No payment by Tenant or
receipt by Landlord of a lesser amount than the amount required to be paid by
Tenant under this Lease shall be deemed to be other than a payment on account by
Tenant, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment of Rent be deemed an accord or satisfaction.
Landlord may accept any such check or payment without prejudice to Landlord's
right to recover the balance of such Rent or pursue any other remedy for
nonpayment, including termination of this Lease and commencement of a summary
dispossess proceeding. Notwithstanding any endorsement on any check or any
statement to the contrary in any letter accompanying any check or payment,
Landlord shall apply any partial payments of back Rent made by Tenant to the
oldest outstanding Rent under this Lease, except to the extent Landlord elects
otherwise in its sole and absolute discretion.
18.10 Cross-Default. Any default by Tenant under the Distribution
Agreement which remains uncured during the applicable grace period, shall be an
Event of Default under this Lease. In addition, any default under a Third Party
Lease which remains uncured during the applicable grace period shall be an Event
of Default under this Lease and any default under this Lease pertaining to a
single or to multiple Premises shall be an Event of Default pertaining to all
Premises.
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19 Termination.
Upon the Termination Date for any or all Premises, all improvements
(including UST's) constituting part of the Premises shall become Landlord's
property (subject to Permitted Exceptions), and Tenant shall deliver to
Landlord possession of the Premises, in good condition and state of repair free
of violations of Law and Environmental Laws, free of Hazardous Substances and
free of all Subleases and tenancies except as otherwise set forth in Paragraph
16.3. In addition, upon such termination Tenant shall assign to Landlord,
without recourse, all assignable licenses and permits affecting the Premises
and all assignable contracts, warranties and guarantees then in effect relating
to the Premises, together with all unpaid insurance awards and rights against
insurance carriers as to then-existing insurance claims relating to the
Premises. In addition, Tenant shall deliver to Landlord any unapplied building
insurance proceeds in Tenant's possession. Tenant's personal property and
equipment not removed from the Premises within 30 days after the Termination
Date shall be deemed abandoned. Tenant shall continue to completion after the
Termination Date any environmental remediations as required by Environmental
Law and shall continue to pay Rent (including Additional Rent) for any Premises
which are rendered substantially unusable because of the remediation
activities.
20 Notices.
All Notices shall be in writing and shall be addressed to Landlord and
Tenant as set forth below. Notices shall be (i) delivered personally to the
addresses set forth below, (ii) by Federal Express or other courier service to
the addresses set forth below, in which case they shall be deemed delivered on
the date of delivery (or when delivery has been attempted twice, as evidenced
by the written report of the courier service) to the address(es) set forth
below; or (iii) sent by certified mail, return receipt requested, in which case
they shall be deemed delivered three Business Days after deposit in the United
States mail, provided that no postal strike is then in effect. Either party
may change its address by giving
Notice in compliance with this Lease. Notice of such a change shall be
effective only upon receipt. The addresses of the parties are:
Landlord: 125 Jericho Turnpike, Jericho, New York 11753
Attention: Real Estate Manager
Tenant: 125 Jericho Turnpike, Jericho, New York 11753
Attention: President
21 No Broker.
Landlord and Tenant each represents and warrants to each other that it did
not engage any broker or finder in connection with this Lease and that no
person is entitled to any commission or finder's fee on account of any
agreements or arrangements made by such party with any broker or
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finder. Each party shall Indemnify the other party against any breach of the
foregoing representation by the Indemnitor.
22 Economic Abandonment.
If during the Term Tenant determines that a Service Station Premises has
become uneconomic or unsuitable for its own use and occupancy and Tenant has
discontinued use of the Service Station Premises or intends to discontinue use
of the Service Station Premises for a period of not less than one year from the
date of said determination, Tenant shall have the right to cease selling motor
fuels and sublease such Service Station Premises for any lawful use by giving
notice to Landlord of Tenant's intention so to sublease. Said notice shall be
delivered to Landlord at least sixty (60) days prior to the effective date of
such termination specified in said notice and shall be accompanied by a
certificate of an officer of Tenant to the effect that Tenant has determined
that the Service Station Premises has become uneconomic or unsuitable for its
then use and occupancy as a service station/convenience store and the Tenant
has discontinued or intends to discontinue use of the Service Station Premises
for a period of not less than one (1) year from the date of said determination.
Any such Sublease shall be subject to Paragraph 16.3 except that Landlord's
consent shall not be required. Prior to the commencement of such sublease term
Tenant shall remove the UST's and any contaminated soil, and thereafter Tenant
shall perform all requisite environmental investigations and/or remediations.
Tenant shall be limited to ten (10) economic abandonments (non-cumulative)
during any lease year during the Term. For Petroleum Terminal Premises and
the Premises subject to Third Party Leases, Tenant shall have no right of
economic abandonment under this Paragraph or otherwise.
23 Third Party Leases.
23.1 Subordination: Conflict. The rights of Tenant hereunder are at all
times subject to the terms and provisions of the Third Party Leases and Tenant
agrees to perform all of Landlord's obligations, as lessee, to be performed by
it under the Third Party Leases' initial terms and all renewal terms except
that Landlord shall remit the rent due to the Third Party Lessors. In the
event that there is any conflict between the terms and conditions of this Lease
and the terms and conditions of any Third Party Lease, the terms and conditions
of the Third Party Lease shall control. In the event that the Third Party
Lease is terminated for any reason, Tenant acknowledges and agrees that the
term of this Lease as applicable to the Third Party Lease Premises shall end 30
days prior to the termination of the Third Party Lease. Landlord disclaims any
warranties, express or implied, that it has the right pursuant to the Third
Party Lease to enter into this Lease.
23.2 Renewal Options. Landlord has the right to exercise all renewal
options under all Third Party Leases and Tenant has the right, but not the
obligation, to sublease any such Premises during any such Third Party Leases
renewal options. Tenant is not obligated to sublease any such Premises after
the first to occur of (i) the end of the term of the Third Party Lease in
effect on the date hereof, or (ii) January 31, 2012. In the event that Tenant
elects to
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continue to sublease such Premises beyond the end of the term of a Third Party
Lease, Tenant shall give Landlord notice of such election not less than 60 days
prior to the date that notice is due to Third Party Lessor and Landlord agrees
to give such notice to the Third Party Lessor pursuant to the terms of the Third
Party Lease.
23.3 Renewals. Landlord covenants and agrees that from time to time it
will use all commercially reasonable efforts to renew all Third Party Leases
which expire on or prior to the end of the Initial Term or applicable Renewal
Term (where such Third Party Leases do not contain Renewal Options) on terms and
conditions acceptable to both Landlord and Tenant. Tenant shall advise
Landlord not less than one (1) year prior to the expiration of a Third Party
Lease if Tenant does not desire to continue its tenancy at such Premises, in
which event Landlord will not renew the Third Party Lease for that Premises for
Tenant's use but may renew for Landlord's other purposes, including subleasing
to a third party. In the event that Tenant does not give Landlord the notice as
aforesaid. Tenant shall be deemed to have agreed to renew the Lease as to such
Premises on the terms and conditions negotiated by Landlord with the Third Party
Lessor. In the event that Tenant does give Landlord the notice as aforesaid,
the Lease as to such Premises shall expire and terminate at the end of the then
current term of the applicable Third Party Lease.
24 Waivers.
24.1 No Waiver by Silence. Failure of either party to complain of any
act or omission on the part of the other party shall not be deemed a waiver by
the noncomplaining party of any of its rights under this Lease. No waiver by
either party at any time, express or implied, of any breach of any provisions of
this Lease shall be a waiver of a breach of any other provision of this Lease or
a consent to any subsequent breach of the same or any other provision. No
acceptance by Landlord of any partial payment shall constitute an accord or
satisfaction but shall only be deemed a part payment on account.
24.2 No Landlord's Lien. Landlord confirms and acknowledges that
Landlord has no lien or security interest in any personal property of Tenant
located in, on or at the Premises, and that such personal property shall not
constitute security for payment of any Rent. If, at any time after the
Commencement Date, any statute or principle of law would grant Landlord any such
lien or security interest, then Landlord hereby waives the benefit of any such
statute and such lien. Landlord further agrees to execute such documentation,
in recordable form, as Tenant shall reasonably require to confirm the foregoing
waiver.
25 Further Assurances; Additional Deliveries.
25.1 Estoppel Certificates. At any time and from time to time, upon not
less than 10 Business Days' prior written request by either party to this Lease
(the "Requesting Party"), the other party to this Lease (the "Certifying
Party") shall execute, acknowledge and deliver to the Requesting Party (or
directly to a third party whose name and address are provided by the
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requesting party) up to four original counterparts of an Estoppel Certificate.
Any Estoppel Certificate may be relied upon by any third party to whom an
Estoppel Certificate is required to be directed.
25.2 Equipment Liens. If at any time or from time to time Tenant desires
to enter into or grant any Equipment Liens, then upon Tenant's request Landlord
shall enter into such customary documentation (with a detailed description) with
respect to the property leased or otherwise financed or encumbered pursuant to
such Equipment Liens as Tenant shall request, providing for matters such as the
following: (a) Landlord's waiver of the right to take possession of such
property upon occurrence of an Event of Default; and (b) customary agreements by
Landlord to enable the secured party to repossess such property without damage
to the Premises in the event of a default by Tenant permitting such secured
party to exercise remedies under its Equipment Lien. Any such Equipment Lien
shall be subordinate to this Lease. Notwithstanding the foregoing, Landlord
shall have no obligation to approve Equipment Liens for subtenants and Tenant
shall prevent its subtenants from creating any Equipment Liens.
25.3 Further Assurances. Each party agrees to execute and deliver such
further documents, and perform such further acts, as may be reasonably necessary
to achieve the intent of the parties with respect to Tenant's leasing of the
Premises from Landlord, as set forth in this Lease.
26 Miscellaneous.
26.1 Force Majeure. Each party's obligation to perform or observe any
term, condition, covenant or agreement on such party's part to be performed or
observed pursuant to this Lease (other than any obligation to pay money when
due) shall be suspended during such time as such performance or observance is
prevented or delayed by reason of any Unavoidable Delay.
26.2 Performance Under Protest. If a dispute arises regarding
performance of any obligation under this Lease, the party against which such
obligation is asserted shall have the right to perform it under protest, which
shall not be regarded as voluntary performance. A party that shall have
performed under protest shall have the right to institute appropriate
proceedings to recover any amount paid or the reasonable cost of otherwise
complying with any such obligation, together with interest at the Prime Rate on
funds expended.
26.3 Legal Costs, Generally. If either party prevails in any
litigation or other dispute relating to the enforcement or interpretation of
this Lease, then the losing party shall promptly after Notice (accompanied by
reasonable backup documentation), reimburse the prevailing party's Legal Costs
incurred in such litigation or other dispute.
26.4 Access. Landlord and its agents, representatives and designees
shall have the right to enter the Premises upon reasonable notice to Tenant
during regular business hours, and in accordance with Tenant's reasonable
instructions, for the purpose of complying with Landlord's
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specific obligations pursuant to this Lease and for the purpose of curing
Tenant's defaults of which Landlord shall have given Tenant prior Notice or to
exhibit the Premises in connection with the mortgaging or sale of the Fee Estate
in compliance with this Lease. In entering the Premises pursuant to this
paragraph, Landlord and its designees shall use reasonable efforts not to
interfere with the conduct of operations on the Premises by Tenant or anyone
claiming through Tenant, and shall comply with Tenant's reasonable instructions.
Landlord shall Indemnify Tenant against any claims arising from Landlord's entry
upon the Premises pursuant to this paragraph or any other provision of this
Lease permitting Landlord to enter the Premises (except upon termination of this
Lease).
26.5 Vault Space. Any vaults and other areas now existing or subsequently
built extending beyond the building line of the Premises are not included within
the Premises, but Tenant may occupy and use the same during the Term, subject to
applicable Laws and payment of all applicable Impositions. No revocation by any
Government of any license or permit to maintain and use any such vaults shall in
any way affect this Lease or the Rent due and owing hereunder.
26.6 No Third Party Beneficiaries. Nothing in this Lease shall be deemed
to confer upon any person (other than Landlord, Tenant, Third Party Lessors or
Fee Mortgagees) any right to insist upon, or to enforce against Landlord or
Tenant, the performance or observance by either party of its obligations under
this Lease.
26.7 Amendment. Any modification or amendment to this Lease must be in
writing signed by Landlord and Tenant.
26.8 Partial Invalidity. If any term or provision of this Lease or the
application of such term or provision to any party or circumstance shall to any
extent be invalid or unenforceable, then the remainder of this Lease, or the
application of such term or provision to persons or circumstances other than
those as to which it is invalid or unenforceable, shall not be affected by such
invalidity. All remaining provisions of this Lease shall be valid and be
enforced to the fullest extent permitted by law.
26.9 Successors and Assigns. This Lease shall bind and benefit Landlord
and Tenant and their successors and assigns, but this shall not limit or
supersede any transfer restrictions contained in this Lease.
27 Interpretation; Execution and Application of Lease.
27.1 Governing Law. This Lease and its interpretation and performance
shall be governed, construed and regulated by the laws of the State of New York,
without regard to principles of conflict of laws.
27.2 Counterparts. This Lease may be executed in counterparts.
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27.3 Reasonableness. Wherever this Lease states that approval by either
party shall not be unreasonably withheld: (a) such approval shall not be
unreasonably delayed or conditioned; and (b) no withholding of approval shall be
deemed reasonable unless withheld by Notice specifying reasonable grounds, in
reasonable detail, for such withholding of approval, and indicating specific
reasonable changes in the proposal under consideration that would cause such
proposal to be acceptable.
27.4 Interpretation. No inference in favor of or against any party shall
be drawn from the fact that such party has drafted any portion of this Lease.
The parties have both participated substantially in the negotiation, drafting
and revision of this Lease with representation by counsel and such other
advisers as they have deemed appropriate. The words "include" and "including"
shall be construed to be followed by the words: "without limitation."
27.5 Delivery of Drafts. Neither Landlord nor Tenant shall be bound by
this Lease unless and until each party shall have executed at least one
counterpart of this Lease and delivered such executed counterpart to the other
party. The submission of draft(s) of this Lease or comment(s) on such drafts
shall not bind either party in any way and such draft(s) and comment(s) shall
not be considered in interpreting this Lease.
27.6 Captions. The captions of this Lease are for convenience and
reference only and in no way affect this Lease.
27.7 Entire Agreement. This Lease contains all the terms, covenants and
conditions relating to Tenant's leasing of the Premises. There are no separate
understandings or agreements, oral or written, between Landlord and Tenant
relating to the Premises or Tenant's use or occupancy of the Premises, except
for the Distribution Agreement.
IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Lease on the day
and year first above written.
LANDLORD
GETTY REALTY CORP.
By: ________________
Leo Liebowitz
Its: President
33
,
34
<PAGE> 40
LEEMILT'S PETROLEUM, INC., as holder of the Fee Estate to some of the Premises
hereby consents to this Lease.
LEEMILT'S PETROLEUM, INC.
By: ____________________________
GETTYMART INC., as lessee of a Third Party Lease to some of the Premises,
hereby consents to this Lease.
GETTYMART INC.
By: ____________________________
GETTY TERMINALS CORP., as lessee of a Third Party Lease to some of the
Premises, hereby consents to this Lease.
GETTY TERMINALS CORP.
By: ____________________________
DONNA OIL CORP., as lessee of a Third Party Lease to some of the Premises,
hereby consents to this Lease.
DONNA OIL CORP.
By: __________________________
34
<PAGE> 41
TENANT
GETTY PETROLEUM
MARKETING INC.
By: _________________
Its: President
KINGSTON OIL SUPPLY CORP., with respect to certain premises located in the
Mid-Hudson Valley as set forth on Exhibit B hereto.
KINGSTON OIL SUPPLY CORP.
By:_____________________________
35
<PAGE> 42
EXHIBIT A
LEGAL DESCRIPTION
[WILL BE SUPPLIED UPON REQUEST]
<PAGE> 43
GETTY PETROLEUM CORP. Real Estate Department
EXHIBIT B
THIRD PARTY LEASE LOCATIONS
<TABLE>
<CAPTION>
Location Zip
Number Address Town STATE Code
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
16 98-21 ROCKAWAY BLVD OZONE PARK NY 11417
54 172 HOWELLS RD BAYSHORE NY 11706
58 4101 HEMPSTEAD TPKE BETHPAGE NY 11714
74 43 LAKE STREET WHITE PLAINS NY 10600
75 481 MAMARONECK AVE WHITE PLAINS NY 10600
77 758 PELHAM RD NEW ROCHELLE NY 10805
78 1800 CENTRAL AVE YONKERS NY 10700
79 25 HARTSDALE AVE HARTSDALE NY 10530
81 410 FIFTH AVE. NEW ROCHELLE NY 10800
91 40 N. STONE AVE ELMSFORD NY 10523
102 2311 CROMPOUND ROAD PEEKSKILL NY 10566
103 200 WESTCHESTER AVE PORT CHESTER NY 10573
104 2385 BOSTON RD. LARCHMONT NY 10538
111 245 EAST 138 STREET BRONX NY 10454
114 2453 WESTCHESTER AVE BRONX NY 10461
115 3400-08 BAYCHESTER AVE BRONX NY 10475
116 128 EAST MAIN ST ELMSFORD NY 10523
117 946 BOSTON POST RD. MAMARONECK NY 10543
121 1115 YONKERS AVE YONKERS NY 10704
122 481 CENTRAL AVE YONKERS NY 10704
126 4302 FT HAMILTON PWY BROOKLYN NY 11219
128 2504 HARWAY AVE BROOKLYN NY 11214
138 159 BRONX RIVER ROAD YONKERS NY 10700
152 3337 BOSTON RD BRONX NY 10469
177 443 RT. 9W HIGHLAND NY 12528
181 161-15 CROSS BAY BLVD HOWARD BEACH NY 11414
200 13 CLARKE AVE STATEN ISLAND NY 10306
235 1820 RICHMOND ROAD STATEN ISLAND NY 10306
240 146-93 GUY BREWER BLVD SPRINGFIELD GARDENS NY 11434 1
249 524 CONEY ISLAND AVE BROOKLYN NY 11218
254 1700 GEORGES RD. RT 130 NORTH BRUNSWICK NJ 08902
271 3501 BOSTON RD BRONX NY 10456
319 120 MOFFATT ROAD MAHWAH NJ 07430
323 3083 WEBSTER AVE BRONX NY 10467
350 69 PASCACK ROAD SPRING VALLEY NY 10977
353 163-10 PIDGEON MEADOW ROAD FLUSHING NY 11358
354 RT 25 & RAYNOR RD RIDGE NY 11961
355 HOWELLS RD & UDALL RD WEST ISLIP NY 11795
357 450 WYANDANCH AVE N. BABYLON NY 11703
358 185 EAST LINCOLN AVE PELHAM NY 10803
361 101-06 ASTORIA BLVD. ASTORIA NY 11369
362 1212 VICTORY BLVD STATEN ISLAND NY 10301
363 350 ROCKAWAY TPKE CEDARHURST NY 11516
365 1324 EAST PUTNAM AVE OLD GREENWICH CT 06870
366 440 HAWKINS AVE LAKE RONKONKOMA NY 11779
396 1842 VICTORY BLVD STATEN ISLAND NY 10314
443 219 NORTH MAIN STREET SAYVILLE NY 11782
523 1741 RT 37 W TOMS RIVER NY 08753
544 190 AQUEDUCT ROAD WHITE PLAINS NY 10606
545 SIMMONS PLAZA RT 9W SAUGERTIES NY 12477
546 56-02 BROADWAY WOODSIDE NY 11377
547 89-15 ROCKAWAY BLVD OZONE PARK NY 11417
</TABLE>
<PAGE> 44
GETTY PETROLEUM CORP. Real Estate Department
THIRD PARTY LEASE LOCATIONS
<TABLE>
<CAPTION>
Location Zip
Number Address Town STATE Code
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
548 395 NO.NEWBRIDGE ROAD HICKSVILLE NY 11801
549 1220 EAST 233RD STREET BRONX NY 10466
550 176 MCGUINESS BLVD. BROOKLYN NY 11222
561 387 RICHMOND AVE STATEN ISLAND NY 10302
570 69 BANK STREET WHITE PLAINS NY 10606
571 660 N.BROADWAY, RTE. 22 N. WHITE PLAINS NY 10600
572 476 COMMERCE & RTE 141 HAWTHORNE NY 10532
573 1 PLEASANTVILLE ROAD PLEASANTVILLE NY 10570
574 ROUTE 22 PATTERSON NY 12563
576 313 TUCKAHOE ROAD YONKERS NY 10700
577 719 BRONX RIVER RD YONKERS NY 10700
578 1 BOSTON POST RD RYE NY 10580
579 185 NORTH HIGHLAND AVE OSSINING NY 10562
580 30 MAIN STREET BRANFORD CT 06405
583 RTES. 44A&I-31 COVENTRY CT 06238
595 222 DANBURY RD NEW MILFORD CT 06776
596 195 STATE STREET NORTH HAVEN CT 06473
611 ROUTE 32 WATERFORD CT 06385
613 1830 E. STATE STREET WESTPORT CT 06880
615 1649 LITCHFIELD TURNPIKE WOODBRIDGE CT 06525
617 18 SPRINGFIELD STREET AGAWAM MA 01001
619 824 SUFFIELD ST. & SILVER AGAWAM MA 01001
631 3133 PARK AVE & THORNDYKE PALMER MA 01069
652 R.D.#1 ROUTE 130 BEVERLY NJ 08010
654 669 SOMERSET STREET SOMERSET NJ 08873
655 4431 ROUTE 9 FREEHOLD NJ 07728
659 RTE 440 & DANFORTH AVE JERSEY CITY NJ 07303
661 100 WHITE HORSE PIKE LAWNSIDE NJ 08045 2
664 953 18TH AVE NEWARK NJ 07106
665 1292 RT 22 EAST N. PLAINFIELD NJ 07060
667 639 RTE 17 SOUTH PARAMUS NJ 07652
671 410 RT 22 WEST UNION NJ 07083
673 6718 BLACK HORSE PIKE PLEASANTVILLE NJ 08232
679 154 SOUTH MAIN STREET TORRINGTON CT 06790
681 1258 MIDDLE COUNTRY RD SELDEN NY 11784
685 2 ASHFORD AVE. DOBBS FERRY NY 10522
687 47 WOLCOTT RD. WOLCOTT CT 06716
688 301 EAST & WHITING STS PLAINVILLE CT 06062
703 530 FRANKLIN AVE FRANKLIN SQUARE NY 11010
704 4030 MERRICK ROAD SEAFORD NY 11783
751 630 LINCOLN HWY RT 1 FAIRLESS HILLS PA 19030
752 1201 IVY HILL RD PHILADELPHIA PA 19150
6766 3050 WHITNEY AVE HAMDEN CT 06514
6771 1046 BOSTON POST ROAD GUILFORD CT 06437
6772 147 POST ROAD COS COB CT 06807
6774 419 WASHINGTON AVE NORTH HAVEN CT 06473
6811 774 FARMINGTON AVE BRISTOL CT 06010
6817 1294 E. MAIN ST. TORRINGTON CT 06790
6819 206 MAIN AVE. NORWALK CT 06851
6824 250 HOPE STREET STAMFORD CT 06906
6850 210 SOUTH STREET W. HARTFORD CT 06110
6851 241 WHITE STREET DANBURY CT 06810
</TABLE>
<PAGE> 45
GETTY PETROLEUM CORP. Real Estate Department
THIRD PARTY LEASES
<TABLE>
<CAPTION>
Location Zip
Number Address Town STATE Code
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
6853 126 SOUTH ROAD ENFIELD CT 06082
6856 1707 STANLEY STREET NEW BRITAIN CT 06053
6864 1022 BURNSIDE AVENUE EAST HARTFORD CT 06108
6865 749 MAIN STREET WATERTOWN CT 06795
6870 1500 CORBIN AVENUE NEW BRITAIN CT 06053
6871 441 WEST AVON ROAD AVON CT 06001
6872 339 OLD HARTFORD ROAD COLCHESTER CT 06415
8605 129 NORTH DUPONT HIGHWAY NEW CASTLE DE 19720
8635 BASIN ROAD & FRENCHTOWN NEW CASTLE DE 19720
28200 990 LISBON STREET LEWISTON ME 04240
28227 393 WESTERN AVENUE AUGUSTA ME 04330
28230 53 BROAD STREET AUBURN ME 04210
28231 210 CIVIC CENTER DRIVE AUGUSTA ME 04332
29812 409 W BEL AIR AVE (GETTY) ABERDEEN MD 21001
30161 61 MAIN STREET MILFORD MA 01757
30361 191 TALBOT AVE DORCHESTER MA 02124
30439 286 BROADWAY TAUNTON MA 02780
30471 626 CHANDLER ST. WORCESTER MA 01602
30515 331 BENNINGTON ST BOSTON MA 02128
30518 299 MAIN ST. GROVELAND MA 01830
30537 1258 WILBUR AVE SOMERSET MA 02725
30557 63 BROADWAY TAUNTON MA 02780
30562 1 OAK HILL ROAD WESTFORD MA 01886
30601 701 COCHITUATE ROAD FRAMINGHAM MA 01701
30644 1158 WASHINGTON STREET CANTON MA 02021
30646 825 WASHINGTON STREET STOUGHTON MA 02072
30647 151 MAIN STREET MEDFORD MA 02115 3
30648 321 ADAMS STREET DORCHESTER MA 02121
30649 452 CANTON STREET STOUGHTON MA 02072
30651 487 PARK AVE WORCESTER MA 01610
30652 860 SOUTHBRIDGE ST. AUBURN MA 01501
30653 2 SUMMER ST & JAMES ST BARRE MA 01005
30654 390 BELMONT STREET WORCESTER MA 01604
30655 548 MAIN STREET BROCKTON MA 02401
30656 54 CANAL STREET MILLBURY MA 01527
30657 1177 NO. MAIN STREET CLINTON MA 01510
30658 974 SOUTHBRIDGE STREET WORCESTER MA 01610
30660 10 WEST MAIN STREET DUDLEY MA 01570
30661 880 WATER STREET FITCHBURG MA 01420
30662 71 EAST CENTRAL STREET FRANKLIN MA 02038
30663 77 HIGHLAND STREET WORCESTER MA 01605
30664 199 FALMOUTH ROAD HYANNIS MA 02601
30665 288 CENTRAL STREET LEOMINSTER MA 01453
30666 248 LINCOLN STREET WORCESTER MA 01605
30668 544 MILLBURY STREET WORCESTER MA 01607
30669 48 WEST MAIN STREET NORTHBOROUGH MA 01532
30670 373 BARLOWS LANDING ROAD POCASSET MA 02559
30671 676 MAIN STREET CLINTON MA 01510
30672 21 WEST BOYLSTON STREET WEST BOYLSTON MA 01583
30673 1429 GRAFTON STREET WORCESTER MA 01604
30674 176 WORCESTER RD. SOUTHBRIDGE MA 01550
30675 959 SOUTHBRIDGE STREET WORCESTER MA 01610
</TABLE>
<PAGE> 46
GETTY PETROLEUM CORP. Real Estate Department
THIRD PARTY LEASES
<TABLE>
<CAPTION>
Location Zip
Number Address Town STATE Code
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
30676 1308 STATE HWY (RTE. 28) S. YARMOUTH MA 02664
30677 WORCESTER ROAD STERLING MA 01564
30678 SINGLETARY AVENUE SUTTON MA 01590
30679 1107 PLEASANT STREET WORCESTER MA 01602
30680 516 UNION AVENUE FRAMINGHAM MA 01701
30681 RT.140,MAIN ST. & HARTFORD PK UPTON MA 01568
30682 377 MAIN STREET WAREHAM MA 02571
30683 11 MILK STREET WESTBOROUGH MA 01581
30684 570 MAIN STREET HARWICHPORT MA 02646
30685 30 CHANDLER STREET WORCESTER MA 01609
30686 193 SOUTHWEST CUTOFF WORCESTER MA 01604
30687 942 SOUTH STREET FITCHBURG MA 01420
30688 702 WEST BOYLSTON STREET WORCESTER MA 01606
30689 200 MAIN STREET CHERRY VALLEY MA 01611
30690 112 WAVERLY STREET (RT 135) FRAMINGHAM MA 01701
30691 90 WORCESTER STREET N. GRAFTON MA 01536
30692 333 EAST MAIN STREET SOUTHBRIDGE MA 01550
30693 109 SOUTH MAIN STREET OXFORD MA 01540
30694 54 STAFFORD STREET WORCESTER MA 01603
30695 223 MAIN STREET ATHOL MA 01331
30696 267 MECHANIC STREET FITCHBURG MA 01420
30697 1264 GRAFTON STREET WORCESTER MA 01604
30698 8 WEST MAIN STREET ORANGE MA 01364 4
30699 45 BALLARD STREET WORCESTER MA 01607
30700 1660 WORCESTER ROAD FRAMINGHAM MA 01772
30701 299 MAPLE STREET MARLBOROUGH MA 01752
30702 CAPE ROAD (RT. 140) & WATER ST MILFORD MA 01757
30709 294 BELMONT STREET WORCESTER MA 01604
30710 350 GREENWOOD STREET WORCESTER MA 01607
30711 321 SOUTHBRIDGE STREET AUBURN MA 01501
30712 156 CRESCENT STREET WALTHAM MA 02154
30713 274 HIGH STREET LOWELL MA 01852
30714 365 LAFAYETTE ROAD SALISBURY MA 01960
30715 ROUTE 125 & SALEM STREET ANDOVER MA 01810
30716 308 THACHER STREET ATTLEBORO MA 02703
55252 LAFAYETTE & NEW ZEALAND SEABROOK NH 03874
55269 330 SOUTH MAIN STREET PENACOOK NH 03303
55274 32 BRIDGE STREET PELHAM NH 03076
56011 ACKERMAN AND RANDOLPH CLIFTON NJ 07011
56015 1508 NORTH KINGS HIGHWAY CHERRY HILL NJ 08002
56039 278 BLOOMFIELD AVENUE NUTLEY NJ 07110
56046 RTE 166 PRESIDENTIAL ROAD TOMS RIVER NJ 08753
56047 661 BLOOMFIELD AVE NUTLEY NJ 07110
56049 SPRINGFIELD & PLAINFIELD BERKELEY HGTS NJ 07922
56055 738 CEDAR LANE TEANECK NJ 07666
56057 RT. 35 & SUNSET AVE. OCEAN TOWNSHIP NJ 07712
56079 1061 BROADWAY (53RD ST.) BAYONNE NJ 07002
56084 8 STONEHOUSE ROAD BASKING RIDGE NJ 07920
56093 713 PLAINFIELD AVENUE BERKELEY HGTS NJ 07922
56096 SPRINGSIDE & WOODLANE RDS. WESTAMPTON TWP NJ 08060
56102 MAIN & UNION STREETS LODI NJ 07644
56108 BENNETT & KEARNY AVENUE KEARNY NJ 07032
</TABLE>
<PAGE> 47
GETTY PETROLEUM CORP. Real Estate Department
THIRD PARTY LEASES
<TABLE>
<CAPTION>
Location Zip
Number Address Town STATE Code
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
56112 745 CONVERY BLVD PERTH AMBOY NJ 08861
56116 VALLEY ROAD & FENNER CLIFTON NJ 07011
56136 45 RIDGE ROAD (5TH AVENUE) LYNDHURST NJ 07071
56138 104 SOUTH AVE. (3RD AVE.) FANWOOD NJ 07023
56145 4413 U. S. HIGHWAY 9 FREEHOLD NJ 07728
56149 91 BRICK BLVD. BRICK TWP NJ 08723
56161 449 ROUTE 46 EAST LITTLE FERRY NJ 07643
56169 128 CHESTNUT RIDGE RD & LAKE MONTVALE NJ 07645
56195 345 ROUTE 22 E. GREENBROOK NJ 08812
56251 1371 ROUTE 202 NORTH NESHANIC STATION NJ 08853
56254 2222 PARK AVE S. PLAINFIELD NJ 07080
56255 2501 BRIDGE AVE. PT. PLEASANT NJ 08742
56271 RT 516 & HIGGINS ROAD MATAWAN NJ 07747
56275 1942 LINCOLN HWY EDISON NJ 08817
56276 1490 BERGEN BOULEVARD FORT LEE NJ 07024
56280 320 OLD HOOK RD AND CARVER AVE. WESTWOOD NJ 07675
56288 PO BOX 360 SWEDESBORO NJ 08085
56809 762 ST GEORGES AVE RAHWAY NJ 07065
56815 2 W. ST. GEORGE AVE LINDEN NJ 07036
56821 252 IRVINGTON AVE. SOUTH ORANGE NJ 07079
56848 85 DODD STREET EAST ORANGE NJ 07017
56852 134 NJ RT. #4 (EAST BOUND) ENGLEWOOD NJ 07631
56853 225 DIAMOND BRIDGE AVENUE HAWTHORNE NJ 07506
56862 RARITAN RD.& CENTRAL CLARK NJ 07066
56867 MAIN ST & STATION RD MADISON NJ 07940
56868 526 ALLWOOD ROAD (BLOOMFI CLIFTON NJ 07012
56871 450 NEW YORK AVE JERSEY CITY NJ 07307
56872 39 CENTRAL AVE. JERSEY CITY NJ 07306
56881 U.S. RT #46 (MILL) ELMWOOD PARK NJ 07407
56882 58 GREENBROOK RD.(GROVE S N. PLAINFIELD NJ 07060
56909 RIVER RD. & MADISON NEW MILFORD NJ 07646
56924 MIDLAND & OUTWATER GARFIELD NJ 07026
58014 5510 BROADWAY BRONX NY 10463
58015 8202 7TH AVENUE BROOKLYN NY 11228
58019 286 ASHBURTON AVE YONKERS NY 10701
58024 80 HORACE HARDING BLVD. GREAT NECK NY 11020
58025 1169 KNOLLWOOD ROAD WHITE PLAINS NY 10603 5
58034 601 PORT WASHINGTON BLVD PT. WASHINGTON NY 11050
58041 635 OLD COUNTRY ROAD WESTBURY NY 11590
58042 308 COLUMBUS AVE TUCKAHOE NY 10707
58043 950 FRONT ST. (GREENGROVE UNIONDALE NY 11553
58044 SUNRISE HIGHWAY & HARRISON BALDWIN NY 11510
58053 9616 FLATLANDS AVE. BROOKLYN NY 11236
58054 490 PULASKI ROAD GREENLAWN NY 11740
58064 1880 FRONT STREET EAST MEADOW NY 11554
58069 510 SCRANTON AVE LYNBROOK NY 11563
58072 ROUTES 9 AND 9G RHINEBECK NY 12572
58073 60-41 METROPOLITAN AVE. RIDGEWOOD NY 11227
58081 65 EAST PULASKI RD HUNTINGTON STATION NY 11746
58092 657 SAWMILL RIVER RD ARDSLEY NY 10502
58101 774 TUCKAHOE RD. YONKERS NY 10710
58121 67 QUAKER RIDGE RD. NEW ROCHELLE NY 10804
</TABLE>
<PAGE> 48
GETTY PETROLEUM CORP. Real Estate Department
THIRD PARTY LEASES
<TABLE>
<CAPTION>
Location Zip
Number Address Town STATE Code
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
58146 11 FLANDERS RD. RIVERHEAD NY 11901
58181 734 PARK AVENUE HUNTINGTON NY 11743
58205 63 8TH AVE. NEW YORK NY 10014
58263 280 E. MAIN ST MT. KISCO NY 10549
58297 RD #1 BOX 179 SALT POINT NY 12578
58409 119 WEST 145TH ST NEW YORK NY 10039
58411 1 MERRICK AVE. EAST MEADOW NY 11554
58471 675 CENTRAL AVE. CEDARHURST NY 11516
58514 4116 BROADWAY (174TH ST.) NEW YORK NY 10033
58526 118-01 ROCKAWAY BLVD OZONE PARK NY 11420
58542 152 10TH AVE. NEW YORK NY 10011
58547 34-02 31ST ST. ASTORIA NY 11102
58548 RT 6 & LEXINGTON AV MOHEGAN LAKE NY 10547
58553 5931 AMBOY ROAD (BETHUNE) STATEN ISLAND NY 10309
58557 76-19 21ST AVE. E. ELMHURST NY 11370
58563 MERRICK ROAD & WYNSUM AVE MERRICK NY 11566
58567 456 ROUTE 146 GUILDERLAND CENTER NY 12085
58568 360 CENTRAL AVE. (CLAREND VALLEY STREAM NY 11580
58572 255 LAKE AVE. ST. JAMES NY 11780
58573 3287 MERRICK RD WANTAGH NY 11793
58574 241 TERRY ROAD SMITHTOWN NY 11787
58583 1331 NORTH GRAND AVENUE BALDWIN NY 11510
58584 607 EAST NEW YORK AVENUE BROOKLYN NY 11230
58585 73-01 BEACH CHANNEL ARVERNE NY 11692 6
58587 61-01 WOODHAVEN BLVD. REGO PARK NY 11374
58592 242 DYCKMAN STREET NEW YORK NY 10034
58599 1386 WANTAGH AVENUE WANTAGH NY 11793
58602 540 PLANDOME RD. MANHASSET NY 11030
58603 1784 BROADWAY HEWLETT NY 11557
58605 78-01 LINDEN BLVD. HOWARD BEACH NY 11414
58616 1895 BRUCKNER BOULEVARD BRONX NY 10472
58703 1372 UNION ST & BRANDYWINE AVE SCHENECTADY NY 12363
58730 RT. 44, DUTCHESS TPKE. PLEASANT VALLEY NY 12569
58744 ROUTE 146 MECHANICVILLE NY 12118
58746 247 PINE HOLLOW RD OYSTER BAY NY 11771
58750 60 N CENTRAL AVE MECHANICVILLE NY 12118
58752 125 JERICHO TPKE JERICHO NY 11753
58753 784 ULSTER AVE MALL KINGSTON NY 12401
58754 320 COLUMBIA ST RENSSELAER NY 12144
58755 272-276 EAST STRAND KINGSTON NY
58756 224-270 EAST STRAND KINGSTON NY
58758 181-207 EAST STRAND KINGSTON NY
58759 RT 9 RHINEBECK NY
58760 N. BROADWAY PORT EWEN NY 12466
58761 LOWER MAIN STREET; PO BOX 351 CATSKILL NY
58762 RT 23 & 385 CATSKILL NY 12414
58763 1 AMOS POST RD. CATSKILL NY 12414
58764 RT 9W & W. BRIDGE STREET CATSKILL NY 12414
58766 124 FAIRVIEW AVE HUDSON NY 12534
58767 124 FAIRVIEW AVE HUDSON NY 12534
58768 RT 32 AND 212 SAUGERTIES NY 12477
58769 RT 32 FREEHOLD NY 12431
</TABLE>
<PAGE> 49
GETTY PETROLEUM CORP. Real Estate Department
THIRD PARTY LEASES
<TABLE>
<CAPTION>
Location Zip
Number Address Town STATE Code
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
58770 115 MANSION STREET COXSACKIE NY 12051
58771 RTS 32 & 81 GREENVILLE NY 12083
58772 RT 32 QUARRYVILLE SAUGERTIES NY 12477
58774 165 RT 59 MONSEY NY 10952
58776 1146 ULSTER AVENUE KINGSTON NY 12401
58780 1208 WASHINGTON AVE RENSSELAER NY 12144
58786 RT 22 HOUSICK FALLS NY 12090
58790 330 RT 304 N BARDONIA NY 10954
58796 RTE 123 SMITH RIDGE ROAD S. SALEM NY 10590
58797 RT 23 LEEDS NY 12451
58798 252 INNIS AVENUE POUGHKEEPSIE NY 12603
58802 111 MAIN STREET PINE BUSH NY 12566
58804 CHURCH STREET COPAKE NY 12516
58806 RT 9 & ST. JOHN STREET RED HOOK NY 12571
58808 RT 82 WEST TAGHKANIC NY 12534
58812 RT 9W & RT 143 RAVENA NY 12143
58813 BAILEY ST. W. COXSACKIE NY
58817 449 MAIN STREET YAPHANK NY 11980
58818 311 LARKFIELD ROAD EAST NORTHPORT NY 11731 7
58822 ROUTE 22 - HARDSCRABBLE ROAD CROTON FALLS NY 10519
58826 7101 ROUTE 212 SAUGERTIES NY 12477
67101 62 BLUE VALLEY ROAD BANGOR PA 18013
67416 3796 OXFORD VALLEY RD LEVITTOWN PA 19057
67418 2391 DURHAM RD. (NEWPORTVI LANGHORNE PA 19047
67432 ROUTE #309 & FAIRMOUNT ST. COOPERSBURG PA 18036
67434 778 2ND STREET PIKE RICHBORO PA 18954
67435 192 DURHAM RD. PENNDEL PA 19047
67597 6142 RISING SUN AVE. PHILADELPHIA PA 19111
67601 2711 LIMEKILN PIKE NORTH HILLS PA 19038
67602 RT 3 & BISHOP HOLLOW RD NEWTOWN SQUARE PA 19073
67603 2324 N GEORGE ST (GETTY) YORK PA 17402
67604 827 HANOVER AVENUE ALLENTOWN PA 18103
67607 7002 WOODLAND AVENUE PHILADELPHIA PA 19142
67610 5302-04 RISING SUN AVENUE PHILADELPHIA PA 19120
67611 550 SOUTH MAIN STREET SHREWSBURY PA 17361
67615 900 E. HUNTING PARK AVENUE PHILADELPHIA PA 19124
67616 2242 BRIDGE STREET PHILADELPHIA PA 19137
67617 3650 WILLIAM PENN HWY (GETTY) PALMER TOWNSHIP PA 18043
67647 918 YORK STREET (GETTY) HANOVER PA 17331
67649 HANOVER & S. MAIN STREET-GETTY BIGLERVILLE PA 17307
67655 601 U.S. ROUTE 15 NORTH DILLSBURG PA 17019
67660 133 WAYNE STREET READING PA 19607
68005 1188 CUMBERLAND HILL ROAD WOONSOCKET RI 02895
68007 1271 BROAD STREET PROVIDENCE RI 02905
68008 585 TIOGUE AVE. COVENTRY RI 02816
68642 3381 E. MAIN RD. PORTSMOUTH RI 02871
68644 1837 MAIN ROAD (RT.#77) TIVERTON RI 02878
69404 RTE 23-332 BLUE BALL PA 17506
69405 105N 8TH STREET READING PA 19601
69406 634-646 N FRONT STREET ALLENTOWN PA 18102
69409 13TH & NORTHAMPTON STREETS EASTON PA 18042
69415 505 BROADWAY BETHLEHEM PA 18015
</TABLE>
<PAGE> 50
THIRD PARTY LEASES
<TABLE>
<CAPTION>
Location Zip
Number Address Town STATE Code
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
69421 473 N. GEORGE STREET MILLERSVILLE PA 17551
69422 191 N. MAIN STREET MANHEIM PA 17545
69428 NEWPORT ROAD INTERCOURSE PA 17534
69430 RTE 897 REINHOLDS PA 17569
69431 832 E. PHILADELPHIA STREET BOYERTOWN PA 19512
69436 761 GAP NEWPORT PIKE WEST GROVE PA 19390
69438 1370 LANCASTER AVE COLUMBIA PA 17512
69440 1001 BUCHERT ROAD POTTSTOWN PA 19464
69441 451 E. PHILADELPHIA STREET YORK PA 17403
69443 644 EAST MAIN STREET EPHRATA PA 17522
69444 1000 CHESTNUT STREET READING PA 19602
69445 2 WEST PENN STREET ROBESONIA PA 19561
69447 629 WEST ORANGE STREET LANCASTER PA 17602
69449 1105 HANOVER AVENUE YORK PA 17404
69472 327 WEST MAIN STREET LEOLA PA 17540
69479 1704 NEW HOLLAND AVENUE LANCASTER PA 17601
69484 W. GREENWICH & SCHYLKILL READING PA 19601
69486 1701 WHITEFORD ROAD YORK PA 17402
69493 834 YORK STREET HANOVER PA 17331
69495 7710 ALLENTOWN BLVD HARRISBURG PA 17122
69497 RT 272 POPLAR STREET ADAMSTOWN PA 19501
69501 1125 ROOSEVELT AVENUE YORK PA 17404
69507 1201 LITITZ PIKE LANCASTER PA 17601
69684 20 HADE ROAD ST. THOMAS PA 17252
69685 1070 TRINDLE ROAD CARLISLE PA 17013
69688 45 E. HANOVER ST BONNEAUVILLE PA 17325
69690 ROUTE 16 MCCONNELLSBURG PA 17233
71002 ROUTE 1 BOX 1960 ROCKY MOUNT VA 24034
71004 1704 SO. MAIN STREET BLACKSBURG VA 24060
71009 HIGHWAY 24 EAST VINTON VA 24016
71010 2702 COLONIAL AVE ROANOKE VA 24015
71011 ROUTE 3 BOX 702 RIDGEWAY VA 24148
71028 RT. 1 BOX 1070, APPALACHIAN DR. FIELDALE VA 24089 8
71030 1506 MEMORIAL BLVD. MARTINSVILLE VA 24112
71031 1219 JAMISON AVENUE,SE ROANOKE VA 24013
71032 2214 ELECTRIC RD., SW ROANOKE VA 24018
71033 3842 SHENANDOAH AVE. ROANOKE VA 24017
71054 1724 WESTOVER DRIVE RICH CREEK VA 24147
71055 WESTOVER DR.& SCHUMATE ST. DANVILLE VA 24541
71090 3058 SALEM TURNPIKE,NW ROANOKE VA 24014
71103 1202 SOUTH JEFFERSON ST ROANOKE VA 24016
71108 931 GUS NICKS BLVD. ROANOKE VA 24013
71109 1115 MAIN STREET ROANOKE VA 24015
71110 THOMPSON MEMERIAL BLVD. & CLAY SALEM VA 24153
71112 ROUTE 57, RURAL RT.3 STANLEYTOWN VA 24168
71113 RT 2 BOX 1 MARTINSVILLE VA 24112
71120 3542 ORANGE AVENUE, NE ROANOKE VA 24012
71173 7000 THREE CHOPT RD RICHMOND VA 23226
71177 RT 1, BOX 202 DALEVILLE VA 24083
71178 340 EAST VALLEY DR. BRISTOL VA 24201
71193 13625 GENITO RD.(BRANDERMILL) MIDLOTHIAN VA 23113
71204 1167 WOODHAVEN DRIVE RICHMOND VA 23224
</TABLE>
<PAGE> 51
THIRD PARTY LEASES
<TABLE>
<CAPTION>
Location Zip
Number Address Town STATE Code
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
71212 3901 GRAHAM PARK ROAD TRIANGLE VA 22026
71213 RT. 10, BOX 42 MARTINSVILLE VA 24112
71215 1148 VOLVO PARKWAY CHESAPEAKE VA 23320
71216 1901 S. INDEPENDENCE BLVD VIRGINIA BEACH VA 23456
71218 401 GREEN MEADOWS DRIVE VIRGINIA BEACH VA 23462
71220 120 W. MERCURY BLVD. HAMPTON VA 23669
71222 4100 GEORGE WASHINGTON HWY. PORTSMOUTH VA 23702
71225 1196 INDIAN LAKES BLVD. VIRGINIA BEACH VA 23464
71250 12836 JEFFERSON AVE. NEWPORT NEWS VA 23602
71251 1099 INDEPENDENCE BLVD. VIRGINIA BEACH VA 23455
71252 5636 PRINCESS ANNE RD. VIRGINIA BEACH VA 23462
71255 3001 SALINA DRIVE VIRGINIA BEACH VA 23452
71257 801 SOUTH LYNNHAVEN RD. VIRGINIA BEACH VA 23452 9
71262 1306 NORTH KING ST. HAMPTON VA 23669
71264 209 E. HOLLY AVENUE STERLING PARK VA 22170
71288 ROUTE 4, BOX 569 CHRISTIANBERG VA 24073
71293 601 NEWTOWN RD. VIRGINIA BEACH VA 23462
71294 99 MANASSAS DRIVE MANASSAS PARK VA 22111
71704 5420 PETERS CREEK RD. ROANOKE VA 24019
432 LEASED LOCATIONS
</TABLE>
<PAGE> 52
EXHIBIT C
Permitted Exceptions
Fleet Bank Mortgages, Crossland Mortgages and numerous purchase money mortgages
Any new mortgages which are entered into on an arms-length basis the principal
amount of which does not exceed the fair market value of the property mortgaged
Utility Easements
1
<PAGE> 53
EXHIBIT D
PREMISES WITH NON-COMPLYING UST'S
INVESTMENT-CAPITAL
LOCATION
- ---------------------------------------
# CITY STATE
- ---------------------------------------
6 BROOKLYN NY
7 JAMAICA NY
8 REGO PARK NY
20 BRONX NY
22 CORONA NY
24 BRONX NY
61 MIDDLE ISLAND NY
74 WHITE PLAINS NY
79 HARTSDALE NY
82 OSSINING NY
91 ELMSFORD NY
102 PEEKSKILL NY
104 LARCHMONT NY
111 BRONX NY
115 BRONX NY
117 MAMARONECK NY
121 YONKERS NY
126 BROOKLYN NY
128 BROOKLYN NY
138 YONKERS NY
146 MAHOPAC NY
157 POUGHKEEPSIE NY
160 MARLBORO NY
163 LAKE KATRINE NY
174 STONY POINT NY
177 HIGHLAND NY
178 KINGSTON NY
181 HOWARD BEACH NY
186 BRONX NY
195 S. ISLAND NY
200 S. ISLAND NY
223 BROOKLYN NY
229 BROOKLYN NY
234 S. ISLAND NY
235 S. ISLAND NY
240 SPRINGFIELD GDNS. NY
252 MT. VERNON NY
264 BRONX NY
266 BRONX NY
270 BRONX NY
272 BRONX NY
275 BRONX NY
276 BRONX NY
277 BRONX NY
278 YONKERS NY
301 N. TARRYTOWN NY
307 BREWSTER NY
312 FLUSHING NY
323 BRONX NY
324 S. ISLAND NY
1
<PAGE> 54
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
341 NEW YORK NY
342 GLENDALE NY
343 OZONE PARK NY
344 LIC NY
350 SPRING VALLEY NY
361 ASTORIA NY
362 S. ISLAND NY
396 S. ISLAND NY
411 BROOKLYN NY
421 BROOKLYN NY
544 WHITE PLAINS NY
545 SAUGERTIES NY
546 WOODSIDE NY
547 OZONE PARK NY
561 S. ISLAND NY
564 BROOKLYN NY
568 LIC NY
570 WHITE PLAINS NY
572 HAWTHORNE NY
573 PLEASANTVILLE NY
576 YONKERS NY
577 YONKERS NY
578 RYE NY
579 OSSINING NY
587 FRANKLIN CT
617 AGAWAM MA
618 FEEDING HILLS MA
619 AGAWAM MA
624 GRANBY MA
625 G. BARRINGTON MA
626 HADLEY MA
627 LANESBORO MA
628 MONSON MA
629 NORTH ADAMS MA
630 NORTH ADAMS MA
631 PALMER MA
632 PITTSFIELD MA
633 PITTSFIELD MA
637 SPRINGFIELD MA
638 SPRINGFIELD MA
640 SPRINGFIELD MA
641 SPRINGFIELD MA
643 WESTFIELD MA
647 OSSINING NY
649 BROOKLYN NY
685 DOBBS FERRY NY
709 BROOKLYN NY
6130 NEW HAVEN CT
6744 NORWALK CT
6765 STAMFORD CT
2
<PAGE> 55
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
6772 COS COB CT
6822 MANCHESTER CT
6853 ENFIELD CT
8605 NEW CASTLE DE
8608 WILMINGTON DE
8635 NEW CASTLE DE
8637 ST. GEORGES DE
8641 WILMINGTON DE
8644 WILMINGTON DE
8645 CLAYMONT DE
8659 NEWARK DE
8667 NEWARK DE
8671 WILMINGTON DE
28032 PORTLAND ME
28215 WESTBROOK ME
29721 ROCKDALE MD
29763 RANDALSTOWN MD
29812 ABERDEEN MD
30161 MILFORD MA
30312 AGAWAM MA
30315 S. WEYMOUTH MA
30317 WEST ROXBURY MA
30324 MAYNARD MA
30327 STOUGHTON MA
30331 ARLINGTON MA
30339 BELMONT MA
30351 ROCKLAND MA
30352 WATERTOWN MA
30355 READING MA
30361 DORCHESTER MA
30363 WEYMOUTH MA
30392 ASHLAND MA
30393 WOBURN MA
30404 BELMONT MA
30412 PITTSFIELD MA
30429 N. ATTLEBORO MA
30436 WORCESTER MA
30439 TAUNTON MA
30445 FALL RIVER MA
30457 WORCESTER MA
30458 WEBSTER MA
30466 CLINTON MA
30468 FOXBORO MA
30471 WORCESTER MA
30472 CLINTON MA
30515 BOSTON MA
30521 NEWTON MA
30524 FALMOUTH MA
30537 SOMERSET MA
30545 METHUEN MA
3
<PAGE> 56
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
30546 ROCKLAND MA
30548 WILLIAMSTOWN MA
30551 FAIRHAVEN MA
30557 TAUNTON MA
30558 SEEKONK MA
30559 WALPOLE MA
30561 N. ANDOVER MA
30562 WESTFORD MA
30600 LOWELL MA
30601 FRAMINGHAM MA
30603 METHUEN MA
30604 AMESBURY MA
30605 GEORGETOWN MA
30606 IPSWICH MA
30607 SALISBURY MA
30609 BEVERLY MA
30610 BILLERICA MA
30612 CHATHAM MA
30615 HARWICH MA
30616 IPSWICH MA
30618 LOWELL MA
30619 METHUEN MA
30621 NEWBURYPORT MA
30623 ORLEANS MA
30624 PEABODY MA
30625 QUINCY MA
30626 REVERE MA
30627 SALEM MA
30629 TEWKSBURY MA
30630 TWIN MILL MA
30631 FALMOUTH MA
30633 WESTFORD MA
30636 BRIDGEWATER MA
30644 CANTON MA
30646 STOUGHTON MA
30647 MEDFORD MA
30648 DORCHESTER MA
30649 STOUGHTON MA
30651 WORCESTER MA
30653 BARRE MA
30654 WORCESTER MA
30655 BROCKTON MA
30656 MILLBURY MA
30658 WORCESTER MA
30660 DUDLEY MA
30662 FRANKLIN MA
30663 WORCESTER MA
30665 LEOMINSTER MA
30666 WORCESTER MA
30668 WORCESTER MA
4
<PAGE> 57
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
30669 NORTHBOROUGH MA
30670 POCASSET MA
30671 CLINTON MA
30672 W. BOYLSTON MA
30674 SOUTHBRIDGE MA
30675 WORCESTER MA
30676 S. YARMOUTH MA
30677 STERLING MA
30678 SUTTON MA
30679 WORCESTER MA
30680 FRAMINGHAM MA
30682 WAREHAM MA
30683 WESTBOROUGH MA
30684 HARWICHPORT MA
30685 WORCESTER MA
30686 WORCESTER MA
30687 FITCHBURG MA
30688 WORCESTER MA
30689 CHERRY VALLEY MA
30690 FRAMINGHAM MA
30692 SOUTHBRIDGE MA
30693 OXFORD MA
30696 FITCHBURG MA
30697 WORCESTER MA
30698 ORANGE MA
30702 MILFORD MA
30704 UXBRIDGE MA
30709 WORCESTER MA
30710 WORCESTER MA
30711 AUBURN MA
30712 WALTHAM MA
30713 LOWELL MA
55237 SALEM NH
55238 LONDONBERRY NH
55244 MERRINACK NH
55245 NASHUA NH
55247 PEMBROKE NH
55249 ROCHESTER NH
55251 SALEM NH
55254 EXETER NH
55257 EPPING NH
55258 EPSOM NH
55259 EXETER NH
55261 MILFORD NH
55265 PORTSMOUTH NH
55274 PELHAM NH
56161 LITTLE FERRY NJ
56230 NEWARK NJ
58007 GLENDALE NY
58012 BELLAIRE NY
5
<PAGE> 58
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
58014 BRONX NY
58015 BROOKLYN NY
58018 BAYSIDE NY
58049 YONKERS NY
58053 BROOKLYN NY
58071 ST. ALBANS NY
58077 BROOKLYN NY
58079 BROOKLYN NY
58085 BAYSIDE NY
58108 WHITE PLAINS NY
58111 SCARSDALE NY
58114 NEW ROCHELLE NY
58119 BROOKLYN NY
58121 NEW ROCHELLE NY
58154 BRONX NY
58173 GLENVILLE NY
58205 NEW YORK NY
58218 ALBANY NY
58220 LONG ISLAND CITY NY
58254 ALBANY NY
58260 RENSSELAER NY
58315 ROTTERDAM NY
58329 OSSINING NY
58347 ELLENVILLE NY
58367 CHATHAM NY
58409 NEW YORK NY
58415 BROOKLYN NY
58441 STATEN ISLAND NY
58443 STATEN ISLAND NY
58505 BRONX NY
58513 BRONX NY
58514 NEW YORK NY
58526 OZONE PARK NY
58542 NEW YORK NY
58547 ASTORIA NY
58557 E. ELMHURST NY
58567 GUILDERLAND CTR. NY
58582 TROY NY
58584 BROOKLYN NY
58585 ARVERNE NY
58587 REGO PARK NY
58592 NEW YORK NY
58596 MIDDLETOWN NY
58605 HOWARD BEACH NY
58703 SCHENECTADY NY
58704 BALLSTON SPA NY
58705 BALLSTON SPA NY
58710 COLONIE NY
58711 DELMAR NY
58712 ELLENVILLE NY
6
<PAGE> 59
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
58714 FT. PLAIN NY
58715 GLENS FALLS NY
58716 GLOVERSVILLE NY
58718 CLIFTON PARK NY
58719 GREEN ISLAND NY
58720 HANCOCK NY
58721 HYDE PARK NY
58722 LATHAM NY
58723 BALLSTON SPA NY
58724 MELROSE NY
58725 MILLERTON NY
58726 NEW WINDSOR NY
58727 NISKAYUNA NY
58730 PLEASANT VLLY NY
58731 POUGHKEEPSIE NY
58733 QUEENSBURY NY
58735 ROTTERDAM NY
58737 SCHNECTADY NY
58739 S. GLENS FALLS NY
58740 TROY NY
58741 WARRENSBURG NY
58743 HUDSON FALLS NY
58744 MECHANICVILLE NY
58750 MECHANICVILLE NY
58751 NEWBURGH NY
58753 KINGSTON NY
58754 RENSSELAER NY
58760 PORT EWEN NY
58761 CATSKILL NY
58762 CATSKILL NY
58766 HUDSON NY
58768 SAUGERTIES NY
58769 FREEHOLD NY
58771 GREENVILLE NY
58772 QUARRYVILLE NY
58780 RENSSELAER NY
58785 MENANDS NY
58786 HOOSICK FALLS NY
58793 VALATIE NY
58797 LEEDS NY
58802 PINE BUSH NY
58804 COPAKE NY
58806 RED HOOK NY
58808 W. TAGHKANIC NY
58809 MIDDLE ISLAND NY
58812 RAVENA NY
58822 CROTON FALLS NY
67101 BANGOR PA
67215 PHILADELPHIA PA
67227 ALLENTOWN PA
7
<PAGE> 60
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
67249 PHILADELPHIA PA
67261 PHILADELPHIA PA
67265 PHILADELPHIA PA
67266 PHILADELPHIA PA
67276 PHILADELPHIA PA
67299 ABINGTON PA
67398 ROSLYN PA
67402 PHILADELPHIA PA
67409 PHILADELPHIA PA
67416 LEVITTOWN PA
67423 QUAKERTOWN PA
67425 SOUDERTON PA
67432 COOPERSBURG PA
67531 TRAPPE PA
67580 GETTYSBURG PA
67596 PARADISE PA
67597 PHILADELPHIA PA
67599 ELIZABETHTOWN PA
67604 ALLENTOWN PA
67610 PHILADELPHIA PA
67616 PHILADELPHIA PA
67624 NEW OXFORD PA
67626 LITTLESTOWN PA
67627 HANOVER PA
67632 LONGSTOWN PA
67633 YORK PA
67636 DOVER PA
67638 GLEN ROCK PA
67639 CARLISLE PA
67641 BOILING SPGS. PA
67654 HARRISBURG PA
68007 PROVIDENCE RI
68120 E. PROVIDENCE RI
68646 WAKEFIELD RI
69002 READING PA
69004 EPHRATA PA
69005 DAUPHIN PA
69006 DOUGLASVILLE PA
69010 YORK PA
69012 GETTYSBURG PA
69016 POTTSVILLE PA
69019 POTTSVILLE PA
69406 ALLENTOWN PA
69408 BETHLEHEM PA
69409 WASTON PA
69415 BETHLEHEM PA
69416 LANCASTER PA
69417 SCAFFERSTOW PA
69419 HAMBURG PA
69420 READING PA
8
<PAGE> 61
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
69421 MILLERSVILLE PA
69422 MANHEIN PA
69425 EBENEZER PA
69426 BETHELEM PA
69428 INTERCOURSE PA
69430 REINHOLDS PA
69431 BOYERTOWN PA
69439 OXFORD PA
69440 POTTSTOWN PA
69443 EPHRATA PA
69444 READING PA
69445 ROBERSONIA PA
69449 YORK PA
69466 KENHORST PA
69472 LEOLA PA
69476 SHREWSBURY PA
69483 RED LION PA
69484 READING PA
69493 HANOVER PA
69495 HARRISBURG PA
69497 ADAMSTOWN PA
69503 LANCASTER PA
69504 NEW HOLLAND PA
69505 CHRISTIANA PA
69507 LANCASTER PA
69673 WYOMISSING HILLS PA
69676 ST. CLAIR PA
69681 W. READING PA
69682 ARDENTSVILLE PA
69683 HOHNTON PA
69684 ST. THOMAS PA
69685 CARLISLE PA
69688 BONNEAUVILLE PA
69690 MCCONNELLSBURG PA
71002 ROCKY MOUNT VA
71004 BLACKSBURG VA
71009 VINTON VA
71010 ROANOKE VA
71011 RIDGEWAY VA
71028 FIEDALE VA
71030 MARTISNSILLE VA
71031 ROANOKE VA
71033 ROANOKE VA
71054 RICH CREEK VA
71055 DANVILLE VA
71090 ROANOKE VA
71108 ROANOKE VA
71109 ROANOKE VA
71110 SALEM VA
71112 STANLEYTOWN VA
9
<PAGE> 62
INVESTMENT-CAPITAL
LOCATION
- ------------------------------------
# CITY STATE
- ------------------------------------
71113 MARTINSVILLE VA
71120 ROANOKE VA
71173 RICHMOND VA
71177 DALEVILLE VA
71178 BRISTOL VA
71213 MARTINSVILLE VA
71215 CHESAPEAKE VA
71216 VIRGINIA BCH VA
71218 VIRGINIA BCH VA
71220 HAMPTON VA
71222 PORTSMOUTH VA
71250 NEWPORT NEWS VA
71251 VIRGINIA BCH VA
71252 VIRGINIA BCH VA
71255 VIRGINIA BCH VA
71257 VIRGINIA BCH VA
71262 HAMPTON VA
71264 STERLING PARK VA
71270 PORTSMOUTH VA
71288 CHRISTIANASBR VA
71293 VIRGINIA BCH VA
71294 MAHASSAS PK VA
76112 BENNINGTON VT
473 SITES
10
<PAGE> 63
EXHIBIT E
PREMISES WITH ONGOING REMEDIATIONS
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
7 JAMAICA NY
8 REGO PARK NY
16 OZONE PARK NY
17 BROOKLYN NY
20 BRONX NY
22 CORONA NY
24 BRONX NY
38 OCEANSIDE NY
54 BRIGHTWATERS NY
61 MIDDLE ISLAND NY
74 WHITE PLAINS NY
75 WHITE PLAINS NY
77 NEW ROCHELLE NY
78 YONKERS NY
79 HARTSDALE NY
82 OSSINING NY
91 ELMSFORD NY
93 PELHAM MANOR NY
100 MAHWAH NJ
101 VALLEY COTTAGE NY
102 PEEKSKILL NY
103 PORT CHESTER NY
104 LARCHMONT NY
110 MEDFORD NY
111 BRONX NY
114 BRONX NY
115 BRONX NY
116 ELMSFORD NY
117 MAMARONECK NY
121 YONKERS NY
126 BROOKLYN NY
128 BROOKLYN NY
138 YONKERS NY
146 MAHOPAC NY
157 POUGHKEEPSIE NY
159 CARMEL NY
160 MARLBORO NY
163 LAKE KATRINE NY
169 WAPPINGERS FALLS NY
174 STONY POINT NY
177 HIGHLAND NY
178 KINGSTON NY
179 POUGHKEEPSIE NY
181 HOWARD BEACH NY
182 LAGRANGEVILLE NY
186 BRONX NY
195 STATEN ISLAND NY
200 S. ISLAND NY
210 BRONX NY
214 JAMAICA NY
1
<PAGE> 64
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
218 MIDDLE VILLAGE NY
219 LONG ISLAND CITY NY
223 BROOKLYN NY
225 ROCKAWAY PARK NY
228 BROOKLYN NY
229 BROOKLYN NY
234 STATEN ISLAND NY
235 S. ISLAND NY
240 SPRINGFIELD GDNS. NY
252 MT. VERNON NY
254 NORTH BRUNSWICK NJ
257 BRONX NY
258 BRONX NY
261 BRONX NY
264 BRONX NY
266 BRONX NY
268 BRONX NY
270 BRONX NY
271 BRONX NY
272 BRONX NY
275 BRONX NY
276 BRONX NY
277 BRONX NY
278 YONKERS NY
288 ATLANTIC HIGHLANDS NJ
301 N. TARRYTOWN NY
304 OLD BRIDGE NJ
307 BREWSTER NY
312 FLUSHING NY
319 MAHWAH NJ
322 VALLEY COTTAGE NY
323 BRONX NY
324 S. ISLAND NY
325 BRIARCLIFF MANOR NY
326 BRONX NY
329 BRONX NY
331 BRONX NY
332 BRONX NY
334 BROOKLYN NY
336 BROOKLYN NY
339 NEW YORK NY
340 NEW YORK NY
341 NEW YORK NY
342 GLENDALE NY
343 OZONE PARK NY
344 LIC NY
357 N. BABYLON NY
358 PELHAM NY
360 SMITHTOWN NY
361 ASTORIA NY
2
<PAGE> 65
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
362 S. ISLAND NY
363 CEDARHURST NY
366 LAKE RONKONKOMA NY
370 KEYPORT NJ
377 NEW CITY NY
379 W. HAVERSTRAW NY
396 STATEN ISLAND NY
411 BROOKLYN NY
421 BROOKLYN NY
425 W. ISLIP NY
429 RONKONKOMA NY
444 BAYSHORE NY
460 BETHPAGE NY
523 TOMS RIVER NJ
535 N. BABYLON NY
544 WHITE PLAINS NY
545 SAUGERTIES NY
546 WOODSIDE NY
547 OZONE PARK NY
548 HICKSVILLE NY
549 BRONX NY
561 S. ISLAND NY
564 BROOKLYN NY
568 LIC NY
570 WHITE PLAINS NY
571 N. WHITE PLAINS NY
572 HAWTHORNE NY
573 PLEASANTVILLE NY
574 PATTERSON NY
576 YONKERS NY
577 YONKERS NY
578 RYE NY
579 OSSINING NY
580 BRANFORD CT
581 BRIDGEPORT CT
583 COVENTRY CT
587 FRANKLIN CT
589 MANCHESTER CT
590 MERIDEN CT
595 NEW MILFORD CT
596 NORTH HAVEN CT
598 NORWICH CT
600 WAUREGAN CT
604 TERRYVILLE CT
607 UNION CITY CT
611 WATERFORD CT
613 WESTPORT CT
615 WOODBRIDGE CT
619 AGAWAM MA
624 GRANBY MA
3
<PAGE> 66
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
625 GREAT BARRINGTON MA
628 MONSON MA
633 PITTSFIELD MA
635 SOUTH HADLEY MA
637 SPRINGFIELD MA
638 SPRINGFIELD MA
647 OSSINING NY
649 BROOKLYN NY
660 LAKEWOOD NJ
667 PARAMUS NJ
673 PLEASANTVILLE NJ
676 GLEN HEAD NY
677 NEW ROCHELLE NY
679 TORRINGTON CT
680 N. BRANFORD CT
685 DOBBS FERRY NY
687 WOLCOTT CT
688 PLAINVILLE CT
709 BROOKLYN NY
751 FAIRLESS HILLS PA
752 PHILADELPHIA PA
6130 NEW HAVEN CT
6722 BLOOMFIELD CT
6725 SIMSBURY CT
6742 RIDGEFIELD CT
6743 BRIDGEPORT CT
6744 NORWALK CT
6746 BRIDGEPORT CT
6748 BRIDGEPORT CT
6749 BRIDGEPORT CT
6751 BRIDGEPORT CT
6753 BRIDGEPORT CT
6754 BRIDGEPORT CT
6756 BRIDGEPORT CT
6762 DARIEN CT
6764 WESTPORT CT
6765 STAMFORD CT
6766 HAMDEN CT
6768 STAMFORD CT
6772 COS COB CT
6776 STRATFORD CT
6777 MILFORD CT
6778 STRATFORD CT
6782 FAIRFIELD CT
6811 BRISTOL CT
6813 BROOKFIELD CT
6817 TORRINGTON CT
6819 NORWALK CT
6826 HARTFORD CT
6831 NEW HAVEN CT
4
<PAGE> 67
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
6836 BRIDGEPORT CT
6837 WILTON CT
6850 W. HARTFORD CT
6853 ENFIELD CT
6862 STRATFORD CT
6864 EAST HARTFORD CT
6871 AVON CT
8608 WILMINGTON DE
8635 NEW CASTLE DE
8637 ST. GEORGES DE
8641 WILMINGTON DE
8667 NEWARK DE
8669 WILMINGTON DE
28206 LISBON ME
28215 WESTBROOK ME
28226 WINDHAM ME
28231 AUGUSTA ME
29721 BALTIMORE MD
29763 RANDALLSTOWN MD
30161 MILFORD MA
30315 S. WEYMOUTH MA
30326 GARDNER MA
30327 STOUGHTON MA
30332 METHUEN MA
30344 RANDOLPH MA
30351 ROCKLAND MA
30352 WATERTOWN MA
30363 WEYMOUTH MA
30374 DEDHAM MA
30375 HINGHAM MA
30392 ASHLAND MA
30409 HYDE PARK MA
30412 PITTSFIELD MA
30436 WORCESTER MA
30438 NEW BEDFORD MA
30439 TAUNTON MA
30466 CLINTON MA
30468 FOXBORO MA
30472 GROVELAND MA
30488 HYANNIS MA
30506 HOLYOKE MA
30518 GROVELAND MA
30524 FALMOUTH MA
30537 SOMERSET MA
30545 METHUEN MA
30546 ROCKLAND MA
30548 WILLIAMSTOWN MA
30551 FAIRHAVEN MA
30552 BELLINGHAM MA
30558 SEEKNOK MA
5
<PAGE> 68
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
30559 WALPOLE MA
30561 N. ANDOVER MA
30562 WESTFORD MA
30600 LOWELL MA
30601 FRAMINGHAM MA
30602 AUBURN MA
30603 METHUEN MA
30604 AMESBURY MA
30605 GEORGETOWN MA
30606 IPSWICH MA
30607 SALISBURY MA
30609 BEVERLY MA
30611 HAVERHILL MA
30612 CHATHAM MA
30618 LOWELL MA
30619 METHUEN MA
30621 NEWBURYPORT MA
30623 ORLEANS MA
30624 PEABODY MA
30627 SALEM MA
30629 TEWKSBURY MA
30630 TWIN MILL (WAREHAM) MA
30631 FALMOUTH MA
30632 W. YARMOUTH MA
30633 WESTFORD MA
30635 YARMOUTH MA
30636 BRIDGEWATER MA
30644 CANTON MA
30646 STOUCHTON MA
30651 WORCESTER MA
30652 AUBURN MA
30653 BARRE MA
30654 WORCESTER MA
30655 BROCKTON MA
30656 MILLBURY MA
30658 WORCESTER MA
30660 DUDLEY MA
30663 WORCESTER MA
30664 HYANNIS MA
30665 LEOMINSTER MA
30666 WORCESTER MA
30668 WORCESTER MA
30669 NORTH BOROUGH MA
30670 POCASSET MA
30671 CLINTON MA
30672 W. BOYLSTON MA
30673 WORCESTER MA
30674 SOUTHBRIDGE MA
30675 WORCESTER MA
30676 S. YARMOUTH MA
6
<PAGE> 69
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
30677 STERLING MA
30679 WORCESTER MA
30680 FRAMINGHAM MA
30682 WAREHAM MA
30683 WESTBOROUGH MA
30684 HARWICHPORT MA
30685 WORCESTER MA
30686 WORCESTER MA
30687 FITCHBURG MA
30688 WORCESTER MA
30689 CHERRY VALLEY MA
30690 FRAMINGHAM MA
30692 SOUTHBRIDGE MA
30693 OXFORD MA
30694 WORCESTER MA
30696 FITCHBURG MA
30697 WORCESTER MA
30700 FRAMINGHAM MA
30702 MILFORD MA
30704 UXBRIDGE MA
30710 WORCESTER MA
55211 DERRY NH
55234 PLAISTOW NH
55235 GILFORD NH
55236 SOMERSWORTH NH
55237 SALEM NH
55238 LONDONDERRY NH
55239 ROCHESTER NH
55241 HAMPTON NH
55245 NASHUA NH
55246 PELHAM NH
55247 PEMBROKE NH
55249 ROCHESTER NH
55250 ROCHESTER NH
55251 SALEM NH
55252 SEABROOK NH
55253 SOMERSWORTH NH
55254 EXETER NH
55256 CANDIA NH
55257 EPPING NH
55258 EPSOM NH
55261 MILFORD NH
55264 PORTSMOUTH NH
55265 PORTSMOUTH NH
55267 SALEM NH
55268 SEABROOK NH
56003 MCAFEE NJ
56005 HAMBURG NJ
56009 WEST MILFORD NJ
56028 WILLINGBORO NJ
7
<PAGE> 70
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
56039 NUTLEY NJ
56046 TOMS RIVER NJ
56051 WALL TOWNSHIP NJ
56056 UNION NJ
56062 CRANBURY NJ
56064 SPOTSWOOD NJ
56065 NEW BRUNSWICK NJ
56075 ELIZABETH NJ
56079 BAYONNE NJ
56084 BASKING RIDGE NJ
56086 DEPTFORD NJ
56088 SEWELL NJ
56101 TRENTON NJ
56102 LODI NJ
56113 SPRING LAKE NJ
56116 CLIFTON NJ
56117 SEWELL NJ
56132 ASBURY PARK NJ
56142 PATERSON NJ
56149 BRICK TOWNSHIP NJ
56156 OCEAN CITY NJ
56157 WHITING NJ
56169 MONTVALE NJ
56215 NEPTUNE NJ
56230 NEWARK NJ
56251 NESHANIC STATION NJ
56253 PINE HILL NJ
56258 TUCKERTON NJ
56260 W. DEPTFORD NJ
56262 ATCO NJ
56263 SOMERVILLE NJ
56271 MATAWAN NJ
56276 FORT LEE NJ
56803 BERGENFIELD NJ
56809 RAHWAY NJ
56815 LINDEN NJ
56818 BLOOMFIELD NJ
56821 SOUTH ORANGE NJ
56844 NUTLEY NJ
56852 ENGLEWOOD NJ
56868 CLIFTON NJ
56871 JERSEY CITY NJ
56873 WATCHUNG NJ
56877 GREEN VILLAGE NJ
56891 BLOOMFIELD NJ
56893 PARLIN NJ
56896 COLONIA NJ
56897 N. BERGEN NJ
56915 RIDGEWOOD NJ
56919 WAYNE NJ
8
<PAGE> 71
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
56921 WASHINGTON NJ
56922 PARAMUS NJ
56924 GARFIELD NJ
56925 JERSEY CITY NJ
56926 FORT LEE NJ
56933 BELFORD NJ
56935 EATONTOWN NJ
56939 MONMOUTH BCH NJ
56962 TRENTON NJ
56987 BEVERLY NJ
56999 WEST ORANGE NJ
58006 ROCKVILLE CENTRE NY
58007 GLENDALE NY
58012 BELLAIRE NY
58014 BRONX NY
58015 BROOKLYN NY
58018 BAYSIDE NY
58019 YONKERS NY
58021 DOBBS FERRY NY
58022 N. MERRICK NY
58025 WHITE PLAINS NY
58027 GREAT NECK NY
58031 GLEN HEAD NY
58034 PT. WASHINGTON NY
58041 WESTBURY NY
58042 TUCKAHOE NY
58046 EAST HILLS NY
58049 YONKERS NY
58053 BROOKLYN NY
58069 LYNBROOK NY
58071 ST. ALBANS NY
58072 RHINEBECK NY
58073 RIDGEWOOD NY
58077 BROOKLYN NY
58079 BROOKLYN NY
58087 BAYSHORE NY
58092 ARDSLEY NY
58101 YONKERS NY
58108 WHITE PLAINS NY
58111 SCARSDALE NY
58112 EASTCHESTER NY
58114 NEW ROCHELLE NY
58119 BROOKLYN NY
58121 NEW ROCHELLE NY
58123 BROOKLYN NY
58154 BRONX NY
58161 YONKERS NY
58173 GLENVILLE NY
58184 YONKERS NY
58205 NEW YORK NY
9
<PAGE> 72
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
58218 ALBANY NY
58220 LONG ISLAND CITY NY
58254 ALBANY NY
58260 RENSSELAER NY
58263 MT. KISCO NY
58297 SALT POINT NY
58315 ROTTERDAM NY
58329 OSSINING NY
58347 ELLENVILLE NY
58367 CHATHAM NY
58393 HYDE PARK NY
58401 SHRUB OAK NY
58409 NEW YORK NY
58411 EAST MEADOW NY
58415 BROOKLYN NY
58441 STATEN ISLAND NY
58442 STATEN ISLAND NY
58471 CEDARHURST NY
58505 BRONX NY
58513 BRONX NY
58514 NEW YORK NY
58526 OZONE PARK NY
58532 MT. VERNON NY
58535 PELHAM MANOR NY
58542 NEW YORK NY
58543 FREEPORT NY
58547 ASTORIA NY
58548 MOHEGAN LAKE NY
58553 STATEN ISLAND NY
58557 E. ELMHURST NY
58558 STATEN ISLAND NY
58563 MERRICK NY
58567 GUILDERLAND CTR. NY
58573 WANTAGH NY
58574 SMITHTOWN NY
58582 TROY NY
58584 BROOKLYN NY
58585 ARVERNE NY
58587 REGO PARK NY
58592 NEW YORK NY
58596 MIDDLETOWN NY
58598 OCEANSIDE NY
58602 MANHASSET NY
58605 HOWARD BEACH NY
58616 BRONX NY
58703 SCHENECTADY NY
58704 BALLSTON SPA NY
58705 BALLSTON SPA NY
58710 COLONIE NY
58711 DELMAR NY
10
<PAGE> 73
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
58712 ELLENVILLE NY
58713 FT. EDWARD NY
58714 FT. PLAIN NY
58715 GLENS FALLS NY
58716 GLOVERSVILLE NY
58718 HALFMOON NY
58719 GREEN ISLAND NY
58720 HANCOCK NY
58721 HYDE PARK NY
58722 LATHAM NY
58723 BALLSTON SPA NY
58724 MELROSE NY
58725 MILLERTON NY
58726 NEW WINDSOR NY
58727 NISKAYUNA NY
58730 PLEASANT VALLEY NY
58731 POUGHKEEPSIE NY
58733 QUEENSBURY NY
58735 ROTTERDAM NY
58737 GUILDERLAND NY
58739 S. GLENS FALLS NY
58740 TROY NY
58741 WARRENSBURG NY
58743 HUDSON FALLS NY
58744 MECHANICVILLE NY
58745 ALBANY NY
58750 MECHANICVILLE NY
58751 NEWBURGH NY
58753 KINGSTON NY
58754 RENSSELAER NY
58759 RHINEBECK NY
58760 PORT EWEN NY
58761 CATSKILL NY
58762 CATSKILL NY
58764 CATSKILL NY
58766 HUDSON NY
58768 SAUGERTIES NY
58769 FREEHOLD NY
58770 COXSACKIE NY
58771 GREENVILLE NY
58772 QUARRYVILLE NY
58774 MONSEY NY
58776 KINGSTON NY
58780 RENSSELAER NY
58785 MENANDS NY
58786 HOUSICK FALLS NY
58788 BREWSTER NY
58790 BARDONIA NY
58793 VALATIE NY
58794 CAIRO NY
11
<PAGE> 74
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
58796 VISTA NY
58797 LEEDS NY
58798 POUGHKEEPSIE NY
58802 PINE BUSH NY
58804 COPAKE NY
58806 RED HOOK NY
58808 W. TAGHKANIC NY
58812 RAVENA NY
58822 CROTON FALLS NY
67101 BANGOR PA
67215 PHILADELPHIA PA
67227 ALLENTOWN PA
67243 BRYN MAWR PA
67244 CONSHOHOCKEN PA
67249 PHILADELPHIA PA
67253 HUNTINGDON VALLEY PA
67254 FEASTERVILLE PA
67255 PHILADELPHIA PA
67258 PHILADELPHIA PA
67265 PHILADELPHIA PA
67266 PHILADELPHIA PA
67269 HATBORO PA
67271 HAVERTOWN PA
67272 MEDIA PA
67274 PHILADELPHIA PA
67275 MILMONT PARK PA
67276 PHILADELPHIA PA
67278 ALDAN PA
67282 BRISTOL PA
67288 TREVOSE PA
67298 HAVERTOWN PA
67299 ABINGTON PA
67301 HATBORO PA
67367 CLIFTON HIGHTS PA
67381 ALDAN PA
67396 MEDIA PA
67398 ROSLYN PA
67401 CLIFTON HIGHTS PA
67402 PHILADELPHIA PA
67405 MORRISVILLE PA
67409 PHILADELPHIA PA
67415 PHOENIXVILLE PA
67416 LEVITTOWN PA
67418 LANGHORNE PA
67419 POTTSTOWN PA
67422 BOYERTOWN PA
67423 QUAKERTOWN PA
67425 SOUDERTON PA
67426 LANSDALE PA
67431 FURLONG PA
12
<PAGE> 75
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
67432 COOPERSBURG PA
67433 DOYLESTOWN PA
67434 RICHBORO PA
67435 PENNDEL PA
67436 WEST CHESTER PA
67437 NORRISTOWN PA
67531 TRAPPE PA
67580 GETTYSBURG PA
67598 LINWOOD PA
67599 ELIZABETHTOWN PA
67601 NORTH HILLS PA
67602 NEWTOWN SQUARE PA
67604 ALLENTOWN PA
67607 PHILADELPHIA PA
67610 PHILADELPHIA PA
67615 PHILADELPHIA PA
67617 PALMER TOWNSHIP PA
67623 FARIFIELD PA
67624 NEW OXFORD PA
67626 LITTLESTOWN PA
67627 HANOVER PA
67635 YORK PA
67636 DOVER PA
67638 GLEN ROCK PA
67639 CARLISLE PA
67640 CARLISLE PA
67641 BOILING SPRINGS PA
67647 HANOVER PA
67649 BIGLERVILLE PA
67650 NEW OXFORD PA
67654 HARRISBURG PA
68002 MIDDLETOWN RI
68007 PROVIDENCE RI
68120 EAST PROVIDENCE RI
68611 PAWTUCKET RI
68619 CRANSTON RI
68622 PAWTUCKET RI
68623 BARRINGTON RI
68629 WARWICK RI
68642 PORTSMOUTH RI
69004 EPHRATA PA
69005 DAUPHIN PA
69010 YORK PA
69012 GETTYSBURG PA
69016 POTTSVILLE PA
69019 POTTSVILLE PA
69406 ALLENTOWN PA
69407 LANCASTER PA
69408 BETHLEHEM PA
69409 EASTON PA
13
<PAGE> 76
INVESTMENT-ENVIRONMENTAL
LOCATION
- -------------------------------------
# CITY STATE
- -------------------------------------
69415 BETHLEHEM PA
69416 LANCASTER PA
69417 SCHAEFFERSTOWN PA
69419 HAMBURG PA
69420 READING PA
69421 MILLERSVILLE PA
69422 MANHEIM PA
69424 MOUNTVILLE PA
69425 EBENEZER PA
69426 BETHLEHEM PA
69428 INTERCOURSE PA
69430 REINHOLDS PA
69431 BOYERTOWN PA
69436 WEST GROVE PA
69439 OXFORD PA
69440 POTTSTOWN PA
69443 EPHRATA PA
69444 READING PA
69445 ROBESONIA PA
69449 YORK PA
69466 KENHORST PA
69472 LEOLA PA
69476 SHREWSBURY PA
69483 RED LION PA
69484 READING PA
69485 ROTHSVILLE PA
69495 HARRISBURG PA
69497 ADAMSTOWN PA
69503 LANCASTER PA
69504 NEW HOLLAND PA
69505 CHRISTIANA PA
69507 LANCASTER PA
69672 READING PA
69673 WYOMISSING HILLS PA
69676 ST.CLAIR PA
69680 REIFFTON PA
69681 W. READING PA
69682 ARENDTSVILLE PA
69683 MOHNTON PA
69684 ST.THOMAS PA
69685 CARLISLE PA
69688 BONNEAUVILLE PA
69690 MCCONNELLBURG PA
76112 BENNINGTON VT
694 SITES
14
<PAGE> 77
EXHIBIT F
DEALERS/LESSEES IN DEFAULT
AS OF JANUARY 31, 1997
Region 1
00631 Daniel P. Belanger Palmer, Ma.
30654 Howard Rhone Worcester, Ma.
Region 2
06722 Sydney Tulloch Bloomfield, Ct.
06826 Salvatore Dilciano Hartford, Ct.
58146 Manjit Josen Riverhead, N.Y.
58295 Pt. Jefferson Car Care Port Jefferson, N.Y.
Region 3
00195 Frank & David Esposito Staten Island, N.Y.
00396 Stacy Celiberti Staten Island, N.Y.
58558 Santorelli & Reggiero Staten Island, N.Y.
00654 Aslam Kahn Somerset, N.J.
56065 Karl Jordan New Brunswick, N.J.
56906 George Koenemund Old Bridge, N.J.
Region 4
00114 M. Moreno/M. Anazagasty Bronx, N.Y.
00329 J. Guzman Bronx, N.Y.
00350 Pascack Little Star Spring Valley, N.Y.
00379 Jagdish Patel W. Haverstraw, N.Y.
58161 Odel Getty Inc. Yonkers, N.Y.
58513 E.L. Grant Hway Bronx, N.Y.
58730 D&K Virk Lts. Pleasant Valley, N.Y.
00572 Darren Mancusi Oakhurst, N.J.
56925 Androus Corp. Jersey City, N.J.
95713 J. Czaja/J. Mocasrski Jersey City, N.J.
1
<PAGE> 78
SCHEDULE 1
[TO EXHIBIT-10.2]
SCHEDULE OF
INITIAL TERM FIXED RENT
BY INDIVIDUAL PROPERTY
[WILL BE SUPPLIED UPON REQUEST]
<PAGE> 1
EXHIBIT 10.5
TRADEMARK LICENSE AGREEMENT
THIS LICENSE AGREEMENT, effective as of the _______ day of _____, 1997, is
entered into by and between: Getty Realty Corp. (hereinafter called "REALTY"),
a corporation organized and existing under the laws of the State of Delaware,
located at 125 Jericho Turnpike, Jericho, New York 11753 and Getty Petroleum
Marketing Inc. (hereinafter called "MARKETING"), a corporation organized and
existing under the laws of the State of Maryland, located at 125 Jericho
Turnpike, Jericho, New York 11753.
WHEREAS, REALTY is the owner of certain trademarks, service marks and
trade names that have been utilized in, among other businesses, the motor fuel
marketing business; WHEREAS, REALTY has subleased various motor fuel outlet
properties to MARKETING under certain net lease agreements (hereinafter
collectively called, the "Master Lease");
WHEREAS, REALTY seeks to license certain trademarks, service marks and
trade names to MARKETING for use in its marketing business;
WHEREAS, MARKETING wishes to license those trademarks, service marks and
trade names from REALTY for use in its marketing business on those terms;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises hereinafter set forth, the parties agree as follows:
1. DEFINITIONS
A. "Licensed Marks" shall mean the trademarks, service marks or trade
names listed on Schedule A attached hereto.
<PAGE> 2
B. "Licensed Territory" shall mean the following states of the United
States: Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut,
New York, New Jersey, Pennsylvania, Delaware, Maryland and Virginia, plus any
additional states added to the Licensed Territory pursuant to the Grant of
Option(s) to MARKETING described in Paragraph 15, below.
C. "Marketing Business" shall mean: (i) the purchase, storage,
distribution, marketing, and sale of gasoline, diesel fuel and other related
products at wholesale and through terminals and a retail service station
network; (ii) the operation of convenience stores; and (iii) the purchase,
storage, transportation and sale of home heating oil to residential and
commercial customers in mid-Hudson Valley, New York. By way of example,
"Marketing Business" does not include the home heating oil business previously
carried on by the Aero Oil Company or the real estate business previously
carried on by Getty Petroleum Corp., both of which are currently being carried
on by REALTY.
2. GRANT OF LICENSE A. Subject to the terms and conditions set out
herein, REALTY grants to MARKETING an exclusive, payment-free, license to use
the Licensed Marks in the Licensed Territory in connection with its Marketing
Business. MARKETING may incorporate its business under the name "Getty
Petroleum Marketing Inc." MARKETING accepts the license subject to the terms and
conditions of this License Agreement.
B. Subject to the consent of REALTY, which consent shall not be
unreasonably withheld, MARKETING may sublicense the Licensed Marks to retailers
or wholesalers of petroleum and other related products and operators of
convenience stores, including but not limited to service station retailers,
jobbers and distributors, but only subject
2
<PAGE> 3
to the terms and conditions of this License Agreement all of which shall be
equally binding on the sublicensees. In determining the reasonableness of a
refusal to consent to a sublicense, the parties shall be guided by the
following considerations: (i) the parties shall not knowingly take any action
which would materially tarnish the image or cause a material adverse impact on
the value of the Licensed Marks; and (ii) the parties shall not permit the
indiscriminate proliferation of sublicensees which would cause the Licensed
Marks to lose significance as a source of origin. In connection with any
sublicense granted hereunder, the sublicensee shall be required to agree in
writing to be bound by and comply with all the terms and conditions of this
License Agreement. REALTY hereby consents to the sublicenses of the Licensed
Marks set out in Schedule B hereto and authorizes MARKETING to make amendments
and revisions in those sublicenses that are not of a material nature.
3. OWNERSHIP OF MARKS
MARKETING acknowledges REALTY's ownership of the Licensed Marks.
MARKETING agrees that it will do nothing inconsistent with such ownership and
that all use of the Licensed Marks by MARKETING shall inure to the benefit of,
and be on behalf of, REALTY. MARKETING agrees that nothing in this License
Agreement shall give MARKETING any right, title or interest in the Licensed
Marks other than the right to use the Licensed Marks in accordance with this
License Agreement. MARKETING agrees that it will not attack the title of
REALTY to the Licensed Marks or attack the validity of this License Agreement.
4. QUALITY STANDARDS
MARKETING agrees that the nature and quality of all services rendered by
MARKETING in connection with the Licensed Marks; all goods sold by MARKETING
3
<PAGE> 4
under the Licensed Marks; and all related advertising, promotional and other
related uses of the Licensed Marks by MARKETING shall conform to reasonable
standards set by and be under the control of REALTY. MARKETING agrees that the
quality of all such services, goods, and advertising and promotional materials
associated with the Licensed Marks shall be of the same high-level quality as
previously associated with the Licensed Marks. MARKETING further agrees that
the quality of all such services, goods, and advertising, promotional and other
related uses of the Licensed Marks shall conform with the standards,
specifications, and instructions as established by REALTY or such subsequent
standards, specifications, or instructions reasonably comparable thereto
promulgated by MARKETING subject to the approval of REALTY, such approval not
to be unreasonably withheld. Without limiting the foregoing, MARKETING agrees
to comply with the standards, specifications, and instructions set out in
Schedule C hereto, as may be modified from time to time in accordance with this
paragraph. If MARKETING intends to use the Licensed Marks on a new product
within the ambit of a particular registration it shall request approval for
such new product from REALTY at least thirty (30) days prior to initiating such
new product use, and such approval shall not be unreasonably withheld by
REALTY. REALTY shall provide MARKETING with notice of approval or
non-approval, as the case may be, within thirty (30) days of the receipt of the
notice with respect to MARKETING's intended new product.
5. QUALITY MAINTENANCE
MARKETING agrees to cooperate with REALTY in facilitating REALTY's control
of the nature and quality of goods, services and related uses associated with
the
4
<PAGE> 5
Licensed Marks, to permit reasonable inspection of MARKETING's operations,
and to supply REALTY with specimens of all uses of the Licensed Marks upon
request. MARKETING shall comply with all applicable laws and regulations and
will obtain all appropriate government approvals pertaining to the sale,
distribution and advertising of goods and services covered by this License
Agreement. REALTY shall have the right to enter and inspect service stations
of MARKETING that use the Licensed Marks. REALTY shall have the right to
receive from MARKETING, upon request and without charge, a reasonable number of
samples of products sold by MARKETING as well as labels, promotional materials,
advertising materials, sales materials and related materials using any of the
Licensed Marks.
6. FORM OF USE
MARKETING agrees to use the Licensed Marks only in the form, manner and
trade dress and with appropriate legends as prescribed from time to time by
REALTY, and not to use any other trademark, trade name, trade dress, or service
mark in combination with any of the Licensed Marks without prior written
approval of REALTY. REALTY hereby approves of the use of the Licensed Marks
used in combination with other trademarks, trade names, trade dress, or service
marks set out in Schedule D hereto. MARKETING shall submit to REALTY for prior
approval, all new or revised labels which are a material departure from those
presently used at least sixty (60) days prior to initiating use of a revised
or new label. REALTY's approval shall not be unreasonably withheld. REALTY
shall provide MARKETING with notice of approval or non-approval, as the case
may be, within
5
<PAGE> 6
thirty (30) days of the receipt of the notice with respect to MARKETING's
intended new or revised label.
7. TRADEMARK NOTICES
MARKETING will utilize on its products bearing the Licensed Marks,
packaging and advertising, whatever lawful notice is reasonably requested in
writing by REALTY in order to protect the Licensed Marks and properly designate
REALTY's legal ownership thereof. Without limiting the foregoing, MARKETING
agrees to utilize, where commercially practicable, a notice sufficient to
indicate that the utilized Licensed Mark is a registered trademark of Getty
Realty Corp. If REALTY does not request a particular trademark notice,
MARKETING shall utilize such notice as in the opinion of its counsel is
appropriate in order to protect the Licensed Marks and properly designate
REALTY's legal ownership thereof and the fact of registration thereof.
However, MARKETING shall advise REALTY of such intended notice, and make any
changes thereto reasonably requested by REALTY.
8. APPROVALS/PROTECTION OF THE LICENSED MARKS
In discharging their respective rights and obligations with respect to
Paragraphs 4, 5, 6, or 7 above, the parties shall be guided by the following
consideration: The parties shall not knowingly take any action which would
materially tarnish the image or cause a material adverse impact on the value of
the Licensed Marks including, without limitation, the indiscriminate
proliferation of uses of the Licensed Marks which would cause any of the
Licensed Marks to lose significance as a source of origin. If there is any
dispute as to either party's obligations with respect to Paragraphs 4, 5, 6, or
7 above, or the application thereof, the parties shall promptly consult to
resolve the matter. If the parties
6
<PAGE> 7
cannot resolve the matter, the dispute shall be submitted to arbitration in
accordance with paragraph 16 below and the arbitrator in that case shall be
guided by the same considerations described above in this Paragraph 8.
9. CONFLICTING TRADEMARKS
MARKETING will not at any time adopt or use, without REALTY's prior
written consent, any word, mark, or designation which is similar or likely to
be confused with any of the Licensed Marks.
10. FUTURE DOCUMENTS, RECORDING
AND TRADEMARK MAINTENANCE
A. The parties agree to cooperate in the execution and delivery, from
time to time, throughout the term of this License Agreement, of any documents
that may be reasonably required or desirable to effectuate and carry out the
purpose and intent of this License Agreement. Such documents shall include
instruments required to file, renew, protect, perfect and/or maintain the
Licensed Marks and REALTY's ownership therein, or to provide for the granting
of any license hereunder. Without limiting the generality of the foregoing,
REALTY shall enter MARKETING or its local designee or cause MARKETING or its
local designee to be entered as a registered user of the Licensed Marks
wherever necessary or desirable, and MARKETING and/or its local designee shall,
upon written request, execute such registered user agreements.
B. Except as provided in Paragraph 11 B below with respect to infringement
of the Licensed Marks by third parties, REALTY shall take such action as is
reasonably required or desirable to obtain and maintain appropriate protection
of the Licensed Marks applicable to MARKETING's business. Except as provided
in Paragraph 11 B below with respect to infringement of the Licensed Marks by
third parties, REALTY shall bear the
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full cost of all trademark filings, renewals, registered user entries and
actions to protect, perfect or maintain the Licensed Marks applicable to the
Marketing Business, including the attorney's and local agent's fees, taxes,
government filing and other fees.
11. INFRINGEMENT AND OTHER ACTIONS
A. The parties shall promptly notify each other of any claim that is
asserted, and of any action or proceeding that is threatened or commenced, in
which a third party (i) challenges MARKETING's right to use any of the Licensed
Marks, or (ii) alleges that any Licensed Mark infringes the trademark or trade
name rights of such third party, or (iii) in which the revocation, cancellation
or declaration of invalidity of any of the Licensed Marks is sought. REALTY
and MARKETING shall consult with respect to each such claim, action, or
proceeding, the assertion of counterclaims thereto and the settlement thereof
and shall jointly defend, in the name of REALTY and/or in the name of
MARKETING, each such action or proceeding that is commenced. If an action or
proceeding brought by a third party concerns the registrations and/or products
of both REALTY and MARKETING, both REALTY and MARKETING shall be responsible
for their pro rata share of legal expenses incurred in defending such action or
proceeding, said pro rata share to be determined by the proportion of products
and/or registrations at issue in the third party action or proceeding. If
there is a disagreement as to the appropriate pro rata share of legal expenses
to be borne by each party, the matter shall be submitted to arbitration in
accordance with paragraph 16 below. If the claim or action concerns only
products and/or registrations of MARKETING, MARKETING shall bear all legal
expenses incurred in defending such actions and proceedings and bear all
damages and costs, if any, recovered by the third party.
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B. REALTY and MARKETING will each undertake commercially reasonable efforts
to learn of any unauthorized uses of the Licensed Marks. Promptly upon
receiving notice or knowledge thereof, the parties shall notify each other of
any infringement or other violation by a third party of any of the Licensed
Marks. REALTY and MARKETING shall consult with respect to any such infringement,
and any action or proceeding, including opposition and cancellation actions,
that may be brought against such infringement. REALTY shall exercise its
discretion with respect to taking appropriate action including the bringing of
actions at REALTY's expense in the name of REALTY and/or MARKETING, but shall
not be obligated to take any action or institute any proceedings. If such
action or proceeding is commenced by REALTY, it shall promptly notify MARKETING
and MARKETING shall cooperate, including the defense of counterclaims, and
REALTY shall bear the expenses of MARKETING except for fees charged by any
attorneys retained solely by MARKETING in connection with such cooperation.
MARKETING shall be given an opportunity to participate with counsel of its
choice bearing its own legal and other costs.
In the event that REALTY determines not to commence such action or
proceeding at its expense, it shall promptly notify MARKETING. MARKETING may
then, at its expense, initiate such action or proceedings in its capacity as a
licensee of such Licensed Marks, provided however, that MARKETING must obtain
the prior written approval of REALTY regarding commencement of such action, such
consent not to be unreasonably withheld. The foregoing notwithstanding, in the
event of any unauthorized use of the Licensed Marks by one of MARKETING'S
sublicensees, MARKETING shall undertake efforts to cause the unauthorized use to
stop. In the event those efforts are
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unsuccessful, MARKETING shall, at its expense, initiate such action or
proceedings in its capacity as a licensee of such Licensed Marks with respect to
such unauthorized use. REALTY shall cooperate with MARKETING in any such
proceeding or action, including the defense of any counterclaims, and MARKETING
shall bear the expenses of REALTY, except for fees charged by any attorneys
retained solely by REALTY in connection with such cooperation. REALTY may, if
not a party, join in, with counsel of its own choice, bearing its own legal and
other costs. The party bringing any action or proceeding under this
sub-paragraph (B) shall keep the other party informed of the proceedings and
give the other party an opportunity to participate in any settlements, but the
final decision whether to settle the action or proceeding shall be made by the
party bringing the action or proceeding, subject to the approval of REALTY (if
not a party), such approval not to be unreasonably withheld. If within ten (10)
business days or such shorter time period as shall be reasonably practicable
under the circumstances REALTY does not approve a proposed settlement
recommended by MARKETING in good faith, REALTY shall be deemed to have taken
over responsibility for the action or proceeding, including subsequent legal
fees, awards against REALTY or MARKETING and expenses relating thereto. No
settlement by either party shall bind the other to make any payment or suffer
any loss of existing or future rights without such other party's consent, which
shall not be unreasonably withheld. Any recovery in such action or proceeding
shall be applied first to reimburse the party or parties for its or their legal
expenses in maintaining such action or proceeding. The excess shall belong to
the party maintaining the action or proceeding at the time such recovery is
awarded. If the action is brought jointly and the recovery is not sufficient to
reimburse REALTY and MARKETING
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for their legal expenses in such action, the unreimbursed portion of such legal
expenses shall be borne equally by each party.
12. TERM
This License Agreement shall continue in force and effect until
February 1, 2052 unless sooner terminated as provided for herein. Except as
provided in Paragraph 15 hereof, the license shall remain exclusive and
payment-free for so long as the Master Lease entered into between the parties
hereto of even date is in effect. In the event that the Master Lease
terminates prior to February 1, 2052, then this license shall, commencing on
the date that the Master Lease terminates, become: a) non-exclusive in all
areas, including the Licensed Territory; and b) a payment-bearing license
pursuant to which MARKETING shall pay to REALTY a rental fee for the use and
maintenance of Getty signage and related items based on the gross revenues
generated and/or gallonage sold under the Licensed Marks at a rate that is
reasonable and customary in the trade to be agreed in writing between the
parties. In the event that the parties are unable to agree to the rental fee,
the dispute shall be submitted to arbitration in accordance with Paragraph 16
below.
13. TERMINATION AND BREACH
This License Agreement shall be terminated: a) in the event of any
affirmative act of insolvency by MARKETING; or b) upon the appointment of any
receiver or trustee to take possession of the properties of MARKETING. REALTY
shall have the right to terminate this License Agreement either a) upon a
material default by MARKETING under the Master Lease which is not cured within
the cure periods specified therein; or b) upon a material default by MARKETING
with respect to its obligations under the Reorganization and Distribution
Agreement between the parties of even date which is not
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Rcured within the cure periods specified therein. In the event of any other
breach or threatened breach of this License Agreement, notice shall be given
and the parties shall promptly consult in good faith to cure such breach, with
the party at fault being given an adequate period of time to remedy the matter.
If such breach is not cured within sixty (60) days of the notice, the matter
may be submitted to arbitration in accordance with paragraph 16 below, which
may include a determination whether a material breach has occurred and/or been
cured. In the event the arbitrator determines that a material breach has
occurred, the arbitrator shall not be authorized to terminate this License
Agreement (except in the case of a material breach by MARKETING which creates a
substantial likelihood of loss of rights in the Licensed Marks) but shall be
authorized to issue any other order or award any other relief deemed
appropriate, including, without limitation, injunctive relief.
In the event of a material breach by MARKETING which creates a substantial
likelihood of loss of rights in the Licensed Marks, the arbitrator shall be
authorized to issue any order awarding any relief deemed appropriate,
including, without limitation, injunctive relief, and further providing that in
the event MARKETING fails to comply with the relief ordered within a specified
period of time, the license shall be terminated.
14. EFFECT OF TERMINATION
Upon termination of this License Agreement, MARKETING agrees: a) to
immediately discontinue all use of the Licensed Marks and any term confusingly
similar thereto, and to delete the same from its corporate or business name; b)
to cooperate with REALTY or its appointed agent to apply to the appropriate
authorities to cancel any recording of this License Agreement from all
government records; c) to destroy all printed materials and signs bearing any
of the Licensed Marks; d) that all rights in the Licensed
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Marks and the good will connected therewith shall remain the property of
REALTY; and (e) to cause all sub-licenses to terminate and all sublicensees to
immediately discontinue all use of the Licensed Marks and any term confusingly
similar thereto, and to delete the same from their respective business names,
if applicable.
15. GRANT OF OPTION(S)
In addition to the rights and obligations described above, and
subject to the terms and conditions set out herein, REALTY hereby grants to
MARKETING an option(s) that may be exercised at any time and from time-to-time
during the term hereof to expand the above-defined Licensed Territory to
include any other state of the United States in which MARKETING conducts its
Marketing Business. In the event that MARKETING exercises its option(s) to
expand the Licensed Territory to any additional states, all of the terms and
conditions of this License Agreement shall apply to such additional states,
except as follows: a) the licenses for the additional states shall be for
durations to be mutually agreed upon between the parties hereto but in no event
shorter than the term of the license granted within the Licensed Territories;
b) the license will be non-exclusive within those additional states; and c)
MARKETING will pay to REALTY a rental fee for the use and maintenance of Getty
signage and related items sales within those states based on the gross revenues
generated and/or gallonage sold under the Licensed Marks. These additional
terms will be agreed to in writing between the parties. In the event the
parties are unable to agree to these terms, then any dispute shall be submitted
to arbitration in accordance with Paragraph 16 below.
16. ARBITRATION
Any controversy or claim arising out of, or relating to this License
Agreement or its interpretation, performance or nonperformance or any breach
thereof, which the parties
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are unable to resolve between themselves, shall first be submitted to a single
arbitrator who shall be knowledgeable in marketing and trademark matters. The
arbitrator shall be mutually appointed by the parties, and shall not be bound
by rules of the American Arbitration Association, but shall adopt such
procedures as shall appear appropriate to expedite decision making, in order
that disputes may be resolved within commercially reasonable time periods. If
the parties cannot agree on the selection of the arbitrator, the arbitrator
shall be selected by The American Arbitration Association. Each party shall
bear its own costs in any such proceeding. The decision of the arbitrator
shall be final and binding upon the parties and may be enforced in any court of
competent jurisdiction.
17. GENERAL PROVISIONS
A. Assignability: This license may be assigned by either party to the
successor in interest or assignee of substantially all of its business or
assets, or the surviving party of any merger or consolidation to which it is a
party provided that the assignee of any assignment assumes all the assignor's
obligations hereunder. Apart from any assignment permissible under the
preceding sentences of this paragraph 17.1, MARKETING may not otherwise assign
the license granted herein or the obligations undertaken herein without the
prior written consent of REALTY, which consent shall not be unreasonably
withheld.
B. Notices: Any notice, approval, consent or other communication required
or permitted hereunder shall be in writing and shall be given by personal
delivery or telecopy, with acknowledgement of receipt, or by prepaid registered
mail, return receipt requested, addressed to the party at its address first
above written, to the attention of its General Counsel, or to any other address
that either party may subsequently designate, by notice in accordance with this
paragraph. Notices and other communications hereunder shall be
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deemed effective one (1) day after dispatch if personally delivered or
telecopied, and three (3) days after dispatch, if posted, subject to proof of
delivery.
C. Waiver: The waiver by any party of a breach or default of any
provision of this License Agreement by the other party shall not constitute a
waiver by such party of any succeeding breach of the same or other provision;
nor shall any delay or omission on the part of either party to exercise or
avail itself of any right, power or privilege that it has or may have
hereunder, operate as a waiver of any such right, power or privilege by such
party.
D. Governing Law: This License Agreement shall be governed by, subject
to and construed under the laws of the State of New York.
E. Unenforceability: In the event that any term, clause or provision of
this License Agreement shall be construed to be or adjudged invalid, void or
unenforceable, such term, clause or provision shall be construed as severed
from this License Agreement, and the remaining terms, clauses and provisions
shall remain in effect.
F. Association: The parties, by this License Agreement, do not intend to
create a partnership, principal/agent, master/servant, franchisor/franchisee,
or joint venture relationship, and nothing in this License Agreement shall be
construed as creating such a relationship between the parties. The parties
agree that this License Agreement does not create any franchise relationship
between them that is subject to the provisions of the Petroleum Marketing
Practices Act or any similar state or local government law.
G. Counterparts: This License Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all such
counterparts together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this License Agreement
to be executed as of the day and year first above written.
GETTY REALTY CORP.
By:_______________________
Title:____________________
Date:_____________________
GETTY PETROLEUM MARKETING INC.
By:_______________________
Title:____________________
Date:_____________________
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SCHEDULE A
TRADEMARK LICENSE AGREEMENT
Trademarks, Service Marks and Trade Names
Getty Petroleum Marketing Inc.
Getty Supply Corp.
Getty Terminals Corp.
Also see attached list of Trademarks and Service Marks
<PAGE> 18
TRADE-MARKS AND SERVICE MARKS AND REGISTRATION NUMBERS
GETTY (Plain Lettering)
Registration No. 958,055
GETTY & DESIGN (Helvetic Script)
Registration No. 947,471
G & DESIGN (Helvetic Script)
Registration No. 957,175
GETTY PREMIUM
Registration No. 1,030,492
GETTY...THE VALUE LEADER IN FINE GASOLINES...AND MORE!
Registration No. 1,628,635
GETTY MART & DESIGN
Registration No. 1,480,165
GETTYMART...THE VALUE LEADER IN FINE PRODUCTS...AND MORE!
Registration No. 1,714,174
GETTY EXPRESS CHARGE
Registration No. 1,742,185
EXPRESS CHARGE
Registration No. 1,811,433
GETTY...THE VALUE LEADER IN FINE PRODUCTS...AND MORE
Registration No. 1,678,820
GETTY FLEET SMART
Registration No. 1,956,050
G (STYLIZED)
Registration No. 2,029,061
GETTY
Application Serial No. 74/330,713
GETTY AND DESIGN
Application Serial No. 74/330,714
GETTY ENERGY AND POWER
Application Pending.
"DV2"
Registration No. 1,680,938
POWER TEST & DESIGN
Registration No. 932,015
<PAGE> 19
POWER TEST
Registration No. 933,404
Registration No. 917,523
POWER TEST IN RECTANGLE
Registration No. 1,297,298
POWER TEST SHOWN DIAGONALLY
Registration No. 1,298,066
KWIK FARMS & DESIGN
Registration No. 1,288,389
<PAGE> 20
SCHEDULE B
LICENSED MARKS
WHICH MAY BE SUBLICENSED
See attached list.
<PAGE> 21
TRADE-MARKS AND SERVICE MARKS AND REGISTRATION NUMBERS
GETTY (Plain Lettering)
Registration No. 958,055
GETTY & DESIGN (Helvetic Script)
Registration No. 947,471
G & DESIGN (Helvetic Script)
Registration No. 957,175
GETTY PREMIUM
Registration No. 1,030,492
GETTY...THE VALUE LEADER IN FINE GASOLINES...AND MORE!
Registration No. 1,628,635
GETTY MART & DESIGN
Registration No. 1,480,165
GETTYMART...THE VALUE LEADER IN FINE PRODUCTS...AND MORE!
Registration No. 1,714,174
GETTY EXPRESS CHARGE
Registration No. 1,742,185
EXPRESS CHARGE
Registration No. 1,811,433
GETTY...THE VALUE LEADER IN FINE PRODUCTS...AND MORE
Registration No. 1,678,820
GETTY FLEET SMART
Registration No. 1,956,050
G (STYLIZED)
Registration No. 2,029,061
GETTY
Application Serial No. 74/330,713
GETTY AND DESIGN
Application Serial No. 74/330,714
GETTY ENERGY AND POWER
Application Pending.
"DV2"
Registration No. 1,680,938
POWER TEST & DESIGN
Registration No. 932,015
<PAGE> 22
POWER TEST
Registration No. 933,404
Registration No. 917,523
POWER TEST IN RECTANGLE
Registration No. 1,297,298
POWER TEST SHOWN DIAGONALLY
Registration No. 1,298,066
KWIK FARMS & DESIGN
Registration No. 1,288,389
<PAGE> 23
SCHEDULE C
STANDARDS AND SPECIFICATIONS
COMMINGLING
(a) Purchaser shall not mix any other product with Seller's Getty branded
product or mix one grade of Getty branded product with another grade of
Getty branded product or adulterate it in any way, except that, with
Seller's written consent, Purchaser may blend Getty Unleaded Regular and
Getty Premium so as to achieve a mid-grade of gasoline. Purchaser shall
not use the Getty trademarks, trade names, brand names, labels,
insignias, symbols or imprints in connection with the storage, handling,
dispensing or sale of any adulterated, mixed or substituted products.
(b) Purchaser will not allow or permit any of the operators of the stations
identified in Exhibit B, or any other approved station to sell Getty
branded products which are mislabeled, misbranded or contaminated, or
Getty product which has been commingled with a non-Getty supplied product
or substance, which is to be sold as a Getty branded product; nor will
Purchaser allow or permit the commingling of leaded with unleaded
gasoline; nor will Purchaser allow or permit the sale of unleaded
gasoline as leaded gasoline; nor will it allow the commingling of
different grades of Getty gasoline.
TRADEMARK PROTECTION
(a) Purchaser shall not sell gasoline or other petroleum products received
from any source other than the Getty brand of gasoline purchased directly
from Seller under the trademarks, service marks, trade names, brand
names, labels, insignias, symbols or imprints of Seller or used by Seller
in its business.
(b) Purchaser will not allow or permit any Getty branded gasoline stations
identified in Exhibit B or elsewhere to receive from any source other
than the Getty brand of product purchased directly from Seller any
product where that product is sold under the Getty trademarks, service
marks, trade names, brand names, labels, insignias, symbols or imprints
of Seller or used by Seller in its business.
EXCLUSIVITY - Purchaser shall sell only the Getty brand of product to
the stations identified in Exhibit B, and shall not sell a non-Getty brand of
gasoline. Nor will it allow or permit any operator of any Getty branded station
to purchase other than Seller's branded Getty product.
COMPLIANCE WITH LAW - Purchaser shall comply with all present and future
laws, orders and regulations of all governmental authorities with respect
to the storage and sale of products from any of the stations identified
in Exhibit B and in connection with the use of any equipment located thereon.
UNLEADED GASOLINES - Purchaser acknowledges that it shall be its
responsibility that unleaded gasoline is not contaminated and meats the
specifications of all governmental authorities. It shall not mix or allow
unleaded Getty gasoline to be mixed with any gasolines containing lead.
(a) Purchaser agrees that it will defend, indemnify and hold Seller harmless
from and against all present and future claims, demands, suits,
proceedings, and litigation arising out of any alleged liability for
Purchaser's storage of unleaded Getty gasolines in or through any
container, tank, pump, pipe or other element of its gasoline storage or
distribution system or the introduction of leaded gasoline into any motor
vehicle tank or compartment which is labeled "UNLEADED GASOLINE ONLY.";
Purchaser further agrees that it will, on Seller's demand, promptly pay
all losses, costs, damages, obligations, judgments, fines, penalties,
expenses and fees suffered or incurred by Seller by reason of any such
claims, demands, suits, actions, proceedings, or litigation, except those
which are caused by the sole negligence of Seller or its employees.
(b) Seller represents that unleaded Getty gasolines purchased by Purchaser
from Seller shall conform to Seller's specifications for same at the time
of delivery. Purchaser shall notify Seller immediately of any claim for
variance in quality, and Seller shall have an opportunity to inspect and
investigate at any time thereafter. Failure of Purchaser to so notify
Seller or to cooperate in any investigation shall operate as a waiver of
any and all claims by the Purchaser hereunder.
(c) In the event that Purchaser sells unleaded Getty gasolines to any other
person, firm or company for resale under Seller's corporate, trade or
brand name, Purchaser shall obtain from every such buyer for Seller's
benefit in writing the warranty and agreements stated in this Paragraph
13 and shall hold Seller harmless and indemnify Seller from any penalty,
cost, judgment, loss, fine or expense, including, but not limited to,
attorney's fees and court costs, which Seller may incur as the result of
the breach of the obligations of the Purchaser or any person, firm or
company buying Seller's gasolines for resale from Purchaser.
<PAGE> 24
RETAIL OUTLETS SUPPLIED BY PURCHASER - In the event Purchaser sells the
Getty branded gasolines to any other person, firm or company for resale under
Seller's corporate, trademark or trade names, Purchaser shall obtain from each
buyer its written contractual obligations requiring such other person, firm or
company to comply with the terms and obligations imposed upon Purchaser
pursuant to Paragraphs 9, 10, 11, 12, 13 and 15 of this Agreement. Purchaser
shall obtain from each and every buyer the written contractual right for Seller
and its employees and agents to enter such buyer's place or places of business
to make such inspections, to obtain such samples or to conduct such tests
necessary to determine compliance. This shall include examination of such
buyer's books and records of the purchase and sale and inventory of products.
MONITORING COMPLIANCE
(a) At Seller's option, Seller may require, after reasonable notice, that
Purchaser shall take, keep and maintain continuous meter readings of
all gasoline dispensing pumps located at each of the stations identified
in Exhibit B, and shall periodically examine the records of the station
operators of purchases and sales of products to determine that they are
not purchasing a non-Getty brand of gasoline. Purchaser shall take such
other necessary steps as may be reasonably requested by Seller, including
the placing of "seals" on the totalizer mechanisms of the dispensing
pumps to insure that they are tamper-proof. The meter readings for each
station shall be taken on a monthly basis for each station to determine
whether or not that station has sold more gasoline than was purchased by
Purchaser from Seller. The records of the meter readings shall be kept
by Purchaser for at least three (3) years from the date of taking, and
shall be made available to Seller, for inspection by its agents and
representatives, at any time. Upon Purchaser receiving information that
a station listed in Exhibit B has been selling more gasoline than was
purchased from Seller and delivered by Seller, Purchaser shall
immediately notify Seller in writing and shall supply Seller with any
documentary evidence. Purchaser shall thereupon terminate any
contractual arrangement with the operator of the station and either
operate the station itself or obtain a new operator.
(b) Seller, by its agents or designated representatives, shall have the
right to enter any business premises of Purchaser at any time during
normal business hours during the term of this Agreement and then for a
period of four (4) years after the expiration of this Agreement, to
inspect records, including but not limited to, documents evidencing the
purchase, transportation, delivery, inventory or sale of gasoline, or
such records compiled in accordance with Paragraph 15(a) above.
(c) Purchaser will allow Seller, its employees or agents, to enter
Purchaser's place of business at any time to make such inspections and
to obtain such samples or conduct such tests as may, in Seller's
judgment, be reasonably required to confirm that Purchaser is complying
with all its obligations under this Agreement, and Purchaser will
cooperate with Seller in any investigation of any alleged violations of
such obligations. In the event Purchaser sells Getty products to any
other person, firm, or company for resale under Seller's corporate, trade
or brand name, Purchaser shall obtain for every such buyer the written
contractual right for Seller, and for Purchaser and for their employees
or agents, to enter such buyer's place or places of business at any
reasonable time to make such inspections, to obtain such samples or
conduct such tests as necessary to determine that said unleaded Getty
gasolines comply with all relevant State and Federal regulations relating
to unleaded gasoline.
(d) Purchaser agrees and warrants that Purchaser will sample and test the
lead content of all gasoline in the storage tanks on any station listed
in Exhibit B containing unleaded Getty gasolines on a frequent and
regular basis, to assure that said products are in compliance with
relevant Federal Environmental Protection Agency Regulations pertaining
to unleaded gasoline. In the event that Purchaser sells unleaded Getty
gasolines to any other person, firm or company for resale under Seller's
corporate, trade or brand name, Purchaser shall likewise sample and test
on a regular and frequent basis and the lead content of such buyer's
unleaded Getty gasoline storage facilities. Purchaser shall keep accurate
records of all such samples and tests, and such records shall be
reasonably made available to Seller upon demand. Purchaser shall
immediately notify Seller if its tests indicate the presence of lead in
excess of amounts allowed by law in any unleaded Getty gasoline storage
facility, shall not sell or distribute said gasolines as unleaded, and
shall cause any such buyer to cease selling said gasolines as unleaded.
In the event Purchaser discovers any contamination, Purchaser shall make
every reasonable effort to inspect and correct any deficiency in its
gasoline storage and handling facilities, and shall cause any such buyer
to so inspect, and correct any such deficiency. In the event that
Purchaser does not have the facilities to test for lead content, it shall
so advise Seller and Seller may enter Purchaser's premises at any time to
conduct such test.
<PAGE> 25
MINIMUM STANDARDS - Purchaser recognizes that it is in the interest of
the parties to this Agreement for Purchaser to affirmatively conduct its
business to reflect favorably on the parties and to further promote public
acceptance of Seller's brand names, trademarks, products and services. In
recognition of such objectives, Purchaser agrees to conduct its operations and
cause its retail outlets and/or those served by Purchaser to be operated during
the term of the Agreement in accordance with the minimum standards set forth in
Exhibit C attached hereto and made part hereof.
In the event Purchaser or those supplied by him do not meet Seller's minimum
standards as set forth on Exhibit C, or if a retail facility served by
Purchaser is abandoned or unoccupied for a period of 30 days, Purchaser will
cause upon written demand by Seller, Getty identification to be removed from
such location(s) or automotive equipment (including painting over identifying
Getty colors) promptly, but no later than within five (5) days following the
date of the demand. Removal will be at Purchaser's expense. If Getty
identification is not removed within such time, Seller may, in addition to any
other right it has, cause the removal and charge Purchaser's account, who shall
reimburse Seller.
PAINTING - Purchaser shall at its expense paint all station and marketing
equipment for the dispensing of products, covered by this Agreement, in colors
and designs approved by Seller. Should the exterior appearance of any of
Purchaser's service stations require painting and the same is determined by
Seller to be detrimental to the Getty image, if Purchaser has not painted
after 20 days notice, Seller, at its option, shall have the right to paint
such service station and charge Purchaser for the cost of such painting,
who shall reimburse Seller. Upon termination of this Agreement, Purchaser shall
forthwith obliterate and discontinue the use of Getty's color schemes.
<PAGE> 26
EXHIBIT C
MINIMUM STANDARDS
Purchaser agrees to conduct its operation and the operations of retail outlets
owned, operated and/or served by Purchaser in accordance with the following
minimum standards.
1. PURCHASER'S OPERATIONS
(a) Purchaser will maintain its place of business inside and out,
including storage tanks, warehouse buildings, loading racks,
improvements and facilities thereon, in a good, clean, neat, safe,
painted, operative and first class condition and in accordance with
all applicable laws, rules and regulations.
(b) Purchaser will maintain all automotive equipment used in its
business in good, clean, safe, painted, operative and first class
condition and in compliance with all applicable laws, rules, and
regulations. Said equipment will be identified in accordance with
Seller's identification specifications as may be issued from time
to time.
(c) In the conduct of its operations, Purchaser will take reasonable
action to promote Seller's trade names and trademarks and the
branded products they represent and not operate its business in a
manner detrimental to the trademarks or trade names of Seller.
Purchaser shall provide in any agreement with retail outlets which
it serves that such retail outlet will not sell products other than
those of Getty under Getty's brand names or trademarks and if
such retail outlet does so, Purchaser shall provide in such
agreement the right to remove Getty's trademarks and identification
from such retail outlet.
(d) In the conduct of its operations, Purchaser will provide prompt,
efficient, courteous and diligent service to its retail outlets
and other customers.
2. RETAIL OUTLETS OPERATED AND/OR SERVED BY PURCHASER
(a) Premises including buildings, rest rooms, driveways, sidewalks,
grass or planting areas, and storage areas will be maintained
inside and out in good, clean, neat, safe and healthful condition
with all necessary painting and repairs being made thereto.
(b) Retail outlets will be equipped to provide services comparable
with competitive outlets of similar type, age and style. All
equipment will be kept neat, clean and in good repair. Pumps and
dispensers which dispense Seller's products shall be properly
identified with Seller's product decals and other decals which may
be required by applicable laws, rules and regulations. Seller's
trademarks, signs, logos and other identification will be kept
clean, in good repair and painted when required according to
Seller's specifications.
(c) Purchaser's operators or retailers, including employees at
retail outlets served by Purchaser, will at all times present a
good personal appearance, observe clean, neat and safe working
habits, render prompt, courteous and honest treatment to customers
and take reasonable action to promote Seller's trade names and
trademarks and the branded products they represent.
3. ADVERTISING
Purchaser shall obtain Seller's approval on signs and advertising
including color schemes.
<PAGE> 27
SCHEDULE D
LICENSED MARKS USED IN COMBINATION WITH OTHERS
WEX (Wright Express)
Uni-Marts
MBNA MasterCard
GasCard
Signs in conjunction with American Express, MasterCard, et al.
