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ENVIRONMENTAL INDEMNITY AGREEMENT
This ENVIRONMENTAL INDEMNITY AGREEMENT (together with all Exhibits and Schedules
attached hereto, this "Indemnity Agreement"), effective as of the Restatement
Effective Date, is made and entered into as of November 2, 2000 between Getty
Properties Corp., a Delaware corporation, whose address is 125 Jericho Turnpike,
Jericho, New York 11753 (formerly known as Getty Realty Corp.,) (as further
defined hereinafter, "Landlord"), and Getty Petroleum Marketing Inc., a Maryland
corporation whose address is 125 Jericho Turnpike, Jericho, New York 11753 (as
further defined hereinafter, "Tenant")(together referred to as the "Parties").
RECITALS
A. Contemporaneously with this Indemnity Agreement, the Parties are
executing that certain Consolidated, Amended and Restated Master Lease
(the "Restated Master Lease") and related documents, pursuant to which
Landlord leased to Tenant certain lands and subleased or sub-subleased
to Tenant certain other lands, together with all right, title and
interest of Landlord, if any, in and to certain improvements and
appurtenances (together, the "Premises").
B. Landlord and Tenant desire to allocate risks associated with certain
liabilities, potential liabilities and responsibilities regarding the
environmental condition of certain of the Properties.
NOW, THEREFORE, in exchange for good and valuable consideration and of
the mutual covenants and agreements contained herein, and as a further
inducement to enter the Restated Master Lease, the receipt and sufficiency of
which are hereby acknowledged, the Parties agree as follows:
SECTION I. DEFINITIONS.
1. Any term not otherwise defined herein shall have the meaning assigned
to such term in the Restated Master Lease. For purposes of this
Indemnity Agreement, the following term shall have the following
meaning.
a. "Highspire Petroleum Terminal Property" shall mean, for
purposes of this Indemnity Agreement, any and all land and
Improvements at the Highspire Petroleum Terminal, 911 South
Eisenhower, Middletown, Pennsylvania, except for the land and
Improvements that constitute the terminal loading rack at
which Tenant has rights to obtain fuel through operation of a
cardlock or similar access system.
SECTION II. LANDLORD'S REPRESENTATIONS AND WARRANTIES.
1. Landlord represents and warrants to Tenant that, to the knowledge of
Landlord, as of the date hereof, except for (i) those Service Station
Properties listed on Exhibits D and E to the 1997 Master Lease,
Schedules 2 and 3 and Exhibit C to the Restated Master Lease, and
Schedule 12 and Schedule Z hereto, (ii) those Service Station
Properties and Petroleum Terminal Properties listed on Schedule 7A and
Schedule 7B to that certain Informational Side Letter of even date
herewith between the parties hereto and on Schedule 3.1(r)(ii) to the
Merger Agreement and (iii) those Service Station Properties and
Petroleum Terminal Properties set forth in the July 31, 2000, Project
Summary Binders:
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a. There are no material permits, licenses or other
authorizations for which Landlord is responsible that are
required with respect to the business, operations, assets or
current uses of the Service Station Properties or Petroleum
Terminal Properties under applicable Environmental Laws that
have not been obtained and complied with and are not otherwise
in full force and effect.
b. Except as authorized by the permits, licenses or Environmental
Law: (i) no Hazardous Substances are located on the Service
Station Properties or Petroleum Terminal Properties, nor have
Hazardous Substances been generated, treated, contained,
handled, located, used, manufactured, processed, buried,
incinerated, deposited, stored, discharged, refined, dumped,
disposed, or released on, under or about any part of the
Service Station Properties or Petroleum Terminal Properties by
Landlord or any previous owner, tenant, occupant, or user of
the Premises except as set forth on Schedule 3 to the Restated
Master Lease; and (ii) no Hazardous Substances have migrated
from or to the Service Station Properties or Petroleum
Terminal Properties upon, under or about other properties in
violation of any Environmental Laws.
c. Landlord has not received, and is not aware that there is
proposed or threatened, with respect to the Service Station
Properties or Petroleum Terminal Properties any written
notice, demand, request for information, Claim, proceeding,
citation, complaint, summons, investigation, order, agreement
or litigation alleging violation of Environmental Laws on the
Service Station Properties or Petroleum Terminal Properties,
or alleging the suspected presence or release of Hazardous
Substances thereon, for which Landlord (or Tenant after the
Restatement Effective Date) may be liable.
d. None of the Service Station Properties or Petroleum Terminal
Properties are or have been listed on the National Priorities
List, or any other list, schedule, law, inventory or record of
hazardous or solid waste sites maintained by any federal,
state or local agency, and Landlord has not been designated as
a "potentially responsible party" with respect to any such
sites.
e. Landlord has reported to the applicable Government, to the
extent required by the Environmental Laws, any matter required
to be reported by Landlord under such Environmental Laws.
SECTION III. PETROLEUM TERMINAL PROPERTIES.
1. In the event that one or more of the owned Petroleum Terminal
Properties set forth on Schedule Y hereto is not in compliance in any
respect with any Environmental Law(s) as in effect as of the
Restatement Effective Date or if there are conditions existing at any
Petroleum Terminal Property as of the Restatement Effective Date that
Tenant addresses to ensure continuing compliance, or to mitigate the
cost of continuing compliance, with such Environmental Laws or to
mitigate the potential for future non-compliance with such
Environmental Laws, Tenant and Landlord shall share the actual,
out-of-pocket costs and expenses related to the Remediation and other
compliance-related activities (any such Remediation and other
compliance-related
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activities being referred to herein as the "Preexisting Condition
Terminal Compliance") (Liabilities associated with any Remediation
activities at the Newark Petroleum Terminal Property related to or
arising from the Industrial Sites Recovery Act ("ISRA") shall not be
considered Preexisting Condition Terminal Compliance, but shall be
addressed by Subsection 4 below) as follows:
a. First, Tenant shall pay all costs and expenses incurred in
connection with such Preexisting Condition Terminal Compliance
until the amount so incurred with respect thereto equals
$1,500,000 in aggregate.
b. Second, Landlord and Tenant shall share equally the next
$8,500,000 of such costs and expenses incurred in connection
with such Preexisting Condition Terminal Compliance until the
amount so incurred with respect thereto equals $10,000,000 in
aggregate.
c. Third, to the extent that such costs and expenses incurred in
connection with such Preexisting Condition Terminal Compliance
exceeds $10,000,000, all such costs and expenses shall be
borne by Tenant.
d. Notwithstanding the above, Landlord shall be solely
responsible for the actual, out-of-pocket costs and expenses
related to the Preexisting Condition Terminal Compliance for
the Highspire Petroleum Terminal Property.
The net effect of the foregoing provisions is that, for Petroleum
Terminal Properties other than the Highspire Petroleum Terminal
Property, Landlord shall not pay more than $4,250,000 in connection
with all Preexisting Condition Terminal Compliance. Until the amount
expended with respect to Preexisting Condition Terminal Compliance
exceeds $10,000,000, Tenant shall forward to Landlord copies of all
invoices and bills received by Tenant in connection with such
Preexisting Condition Terminal Compliance and evidence of Tenant's
payment therefor. Within forty-five (45) days after receipt of such
evidence, Landlord shall, if so required pursuant to this Section III,
reimburse Tenant for Landlord's share of the amount paid by Tenant with
respect to such invoices and bills.
2. In connection with any proposed Preexisting Condition Terminal
Compliance contemplated at a time when the costs and expenses incurred
by Tenant for all prior Preexisting Condition Terminal Compliance
expenditures exceed $1,500,000 in aggregate (and Landlord shall not
have paid its maximum amount), Tenant shall furnish to Landlord plans
setting forth the scope of such project and an estimate of the cost
thereof, certified by a reputable environmental engineering firm (a
"Terminal Expenditure Plan").
a. Landlord shall have thirty (30) days from the receipt of any
such Terminal Expenditure Plan either to approve such Terminal
Expenditure Plan or provide Tenant with an alternate Terminal
Expenditure Plan, certified by a reputable environmental
engineering firm, which alternate Terminal Expenditure Plan
shall have the same scope as Tenant's Terminal Expenditure
Plan but may have a lower cost estimate than that set forth in
Tenant's Terminal Expenditure Plan.
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b. If Landlord fails to approve Tenant's Terminal Expenditure
Plan or to provide Tenant with such alternate Terminal
Expenditure Plan within such thirty (30) day period,
Landlord's approval of such Terminal Expenditure Plan shall be
deemed granted.
c. In the event that Landlord provides Tenant with an alternate
Terminal Expenditure Plan, such Preexisting Condition Terminal
Compliance shall be conducted in accordance with such
alternate Terminal Expenditure Plan, unless Tenant reasonably
disapproves of such Terminal Expenditure Plan within seven (7)
days of receipt of the same.
d. If Tenant fails to respond to such alternate Terminal
Expenditure Plan within such seven (7) day period, then
Tenant's approval of such alternate Terminal Expenditure Plan
shall be deemed granted.
e. If Tenant reasonably disapproves of such alternate Terminal
Expenditure Plan and if Landlord and Tenant cannot thereafter
promptly agree on a Terminal Expenditure Plan, such dispute
shall be resolved by an arbitration conducted in accordance
with the applicable provisions set forth in Exhibit F of the
Restated Master Lease.
f. Except as provided in Subsection g. below, all Preexisting
Condition Terminal Compliance shall be conducted in accordance
with the Terminal Expenditure Plan.
g. In the event of an imminent and substantial endangerment or
when, in the reasonable judgment of Tenant, immediate action
is necessary to avoid enforcement activities, or a fine and/or
penalty in excess of $1500 per day or $100,000 in the
aggregate, by an applicable Government, Tenant may take such
action as necessary to respond to the imminent and substantial
endangerment or to avoid enforcement by the applicable
Government, prior to agreement on a Terminal Expenditure Plan
and such action shall not affect in any way Landlord's
obligations under this Section.
All costs and expenses incurred by Landlord related in any way to the
development of an alternate Terminal Expenditure Plan (as contemplated
by subsection a, above) or by Tenant and Landlord related in any way to
arbitration of a dispute concerning a Terminal Expenditure Plan (as
contemplated by subsection e., above) shall not be chargeable as costs
and expenditures hereunder.
3. With respect to any Preexisting Condition Terminal Compliance for which
Notice has been given in good faith prior to the tenth (10th)
anniversary of the Restatement Effective Date, Landlord's obligations
hereunder shall survive and continue in full force and effect until
completion of the Terminal Expenditure Plan or Landlord's fulfillment
of its obligations hereunder, whichever is sooner. Landlord shall have
no liability or obligation whatsoever hereunder with respect to any
Preexisting Condition Terminal Compliance for which Notice has been
received after the tenth (10th) anniversary of the Restatement
Effective Date.
4. Landlord shall be solely responsible for any and all liability or
obligation at the Newark Petroleum Terminal Property related to or
arising from ISRA, except for that liability or obligation under ISRA
created or caused by Tenant after the Restatement Effective Date,
including but not limited to all liability or obligation related in any
way to the Contamination for which Texaco is responsible, or to
Contamination discovered as a result of the sampling for
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which the New Jersey Department of Transportation has given notice and
shall hold Tenant harmless for any such liability or obligation.
Landlord shall retain and continue to exercise whatever rights it may
have to compel a third party to fully discharge any Remediation or
other related obligations the third party may have under ISRA, and
shall remain solely responsible for any associated actual,
out-of-pocket costs and expenses. If Landlord fails to compel such
third party to fully discharge any Remediation or other similar
obligations under ISRA, Landlord shall be fully responsible for the
discharge of such responsibilities.
SECTION IV. TENANT'S OBLIGATIONS.
1. Notwithstanding anything to the contrary herein, in the Restated Master
Lease, or any other agreement, Tenant shall have no liability or
obligation whatsoever, and Landlord shall indemnify and hold Tenant
harmless with respect to any and all allegations, actions, orders,
decrees, suits, demands, demand letters, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities, obligations, taxes, liens,
losses, expenses, and fees (hereinafter "Claims") with respect to a
breach of Landlord's representations in Section II, above, as well as:
a. The Highspire Petroleum Terminal Property;
b. Any Petroleum Terminal Property and Service Station Property
closed, sold or otherwise disposed of prior to
February 1, 1997 (the "Spinoff Transaction");
c. Service Stations Properties closed, sold or otherwise disposed
of after the Spinoff Transaction and before the Restatement
Effective Date, except for the Service Station Properties
identified on Schedule Z hereto;
d. UST Upgrades at the Service Station Properties for which
Landlord is responsible pursuant to Section 7.6 of the
Restated Master Lease; and
e. Remediation activities at the Service Station Properties for
which Landlord is responsible pursuant to Section 9 of the
Restated Master Lease.
2. Notwithstanding anything to the contrary herein, in the Restated Master
Lease, or any other agreement, any condition not in full compliance
with any Environmental Law as of the Restatement Effective Date at any
Service Station Property or Petroleum Terminal Property shall not
operate as a lease default and Tenant shall have no liability or
obligation whatsoever to engage in any Remediation or other
compliance-related activity with respect to any such non-compliance
condition as of the Restatement Effective Date at any such Service
Station Property or Petroleum Terminal Property, except when required
by a bona fide Claim asserted by an applicable Government or a party
other than Landlord or any Landlord affiliate (excluding any Claim
relating to any breach of Landlord's representations in Section II,
above), provided, however, that at any time, in Tenant's sole
discretion, Tenant may engage in any Remediation or other
compliance-related activity with respect to any Service Station
Property or Petroleum Terminal Property. Landlord shall not take any
action (i) reasonably likely to cause an applicable Government or a
party other than Landlord to assert a Claim that seeks such Remediation
or other compliance-related activity or (ii) to compromise, admit any
fact, concede liability or otherwise materially prejudice Tenant's
ability to defend any actual or potential Claim. Tenant shall not be
deemed to be required by a bona fide Claim to take action if Tenant
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has a reasonable, good faith basis for asserting a challenge or defense
and Tenant is, in fact, diligently challenging or defending against
such Claim. So long as Tenant has a reasonable, good faith basis for
asserting a challenge or defense and Tenant is, in fact, diligently
challenging or defending against such Claim, any condition that is the
subject of Tenant's challenge or defense shall not operate as a lease
default.
3. Except as set forth in this Indemnity Agreement and in the Restated
Master Lease, Landlord shall have no liability to Tenant for any
environmental matter related to the Service Station Properties or
Petroleum Terminal Properties.
SECTION V. LANDLORD'S ADDITIONAL OBLIGATIONS.
1. Landlord's Cooperation. Landlord hereby grants Tenant the right to
exercise Landlord's rights to compel each third party listed on
Schedule 12 hereto to discharge fully any Remediation or other similar
obligations that such third party may owe to Landlord pursuant to any
purchase and sale or similar agreement for any of those Properties (a
"Sale Agreement"). Tenant shall comply with all applicable obligations
of Landlord under any Sale Agreement, including, without limitation,
Landlord's obligation to provide for and permit access to the Property
that is the subject matter of such Sale Agreement by such third party
and/or its employees, agents and contractors in the manner set forth in
such Sale Agreement. Such third parties shall be solely responsible for
fulfilling all Remediation and similar obligations, and Landlord shall
under no circumstance have any obligation or liability with respect
thereto, except as may be specifically required by Article 9 of the
Restated Master Lease. If such rights of Landlord under any such Sale
Agreement are not assignable, then Landlord shall cooperate with Tenant
(which cooperation may include, without limitation, litigation) as
Tenant shall reasonably request, and at Tenant's expense (including,
without limitation, Indemnifying Landlord), so as to enforce the
performance of such third party obligations under such Sale Agreement.
2. Restatement Effective Date. Upon the occurrence of the Restatement
Effective Date, Landlord shall deliver to Tenant a certificate
containing representations as of the Restatement Effective Date
substantially identical to those contained in Section II, except that
the Exhibits and Schedules referred to in that Section shall, for the
purposes of such certificate, contain such modifications or amendments
as may be necessary to cause the representations contained in such
certificate to be true and correct as of the Restatement Effective
Date. In no event shall the modifications or amendments serve to cure
any breach of the representations made on the date hereof.
SECTION VI. MISCELLANEOUS PROVISIONS.
1. AMENDMENT AND MODIFICATION. Any amendment or modification to this
Indemnity Agreement must be in writing signed by both of the Parties
hereto.
2. ASSIGNMENT. This Indemnity Agreement and all of the provisions hereof
shall bind and benefit the Parties hereto and their respective
successors and permitted assigns. Nothing in this Indemnity Agreement,
expressed or implied, is intended or shall be construed to confer upon
any person other than the Parties hereto, and their respective
successors and assigns, any right, remedy, or Claim under or by reason
of this Indemnity Agreement or any provision herein contained. Both
Parties have the right to assign (and each successive assignee may
further assign) their rights under this Indemnity Agreement to any
person or entity which such person or entity by acceptance of such
assignment shall be deemed to assume all liabilities, indebtedness and
obligations included in the rights assigned.
3. GOVERNING LAW. This Indemnity Agreement and its interpretation and
performance shall be governed by and construed and regulated in
accordance with the laws of the State of New York, without regard to
principles of conflicts of law.
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4. COUNTERPARTS. This Indemnity Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument and shall
become a binding agreement when one or more of the counterparts have
been signed by each of the Parties and delivered to the other party.
5. AGENT FOR SERVICE OF PROCESS. Tenant hereby irrevocably names and
designates Lukoil Americas Corporation, a Delaware corporation whose
address is 540 Madison Avenue, New York, NY, as Tenant's agent
(Tenant's "Agent") for service of process, including all notices
required to institute any proceeding in any court or in any other way
required to confer personal jurisdiction over Tenant in any court, and
for the receipt of any Notices or other communications required under
this Indemnity Agreement, including any and all Notices under this
Indemnity Agreement issued for the purpose of demanding compliance with
this Indemnity Agreement. Service or demand upon Agent shall be good
and sufficient service and demand upon Tenant for all purposes,
including, without limitation, the purpose of obtaining personal
jurisdiction over Tenant for any legal action or proceeding or for the
purpose of commencing any proceeding. Tenant agrees to take any and all
action necessary to continue Agent's designation in full force and
effect. If Agent becomes unable to act as Agent for any reason then
Tenant shall forthwith irrevocably designate a replacement Agent
satisfying the requirements of this Section that would apply to any
replacement Agent, as set forth in the next sentence. By Notice to
Landlord (but no more frequently than once every six months), Tenant
may substitute in place of Agent any other Person having full-time
business offices and a street address in Manhattan. Tenant agrees that
delivery of any Notice to Agent, or any service of process upon Agent,
in accordance with the notice requirements of this Indemnity Agreement,
shall constitute valid and effective personal service upon Tenant. Any
such Notice or service of process shall be effective in accordance with
the provisions of this Indemnity Agreement relating to Notices. Any
failure of Agent to give any notice of such service of process or
Notice to Tenant shall not impair or affect the validity of such
Notice, service of process, or any judgment rendered in any proceeding
based thereon.
6. ENTIRE AGREEMENT. This Indemnity Agreement embodies the entire
agreement and understanding of the Parties hereto in respect of the
subject matter contained herein. There are no separate understandings
or agreements, oral or written, between the Parties with respect to the
subject matter contained herein. This Indemnity Agreement supersedes
all prior agreements and understandings between the Parties with
respect to such subject matter. The Restated Master Lease contains
certain parallel provisions, but in the event of any conflict between
this Indemnity Agreement and the Restated Master Lease, this Indemnity
Agreement governs and controls.
7. HEADINGS. The article and section headings contained in this Indemnity
Agreement are for convenience and reference purposes only and shall not
affect in any way the meaning or interpretation of this Indemnity
Agreement.
8. SEVERABILITY. If any one or more terms or provisions contained in this
Indemnity Agreement or the application of such terms or provisions
shall, for any reason and to any extent, be held to be invalid, illegal
or unenforceable in any respect, then the remainder of this Indemnity
Agreement, or the application of terms or provisions to persons or
circumstances other than those as to which it is invalid, illegal or
unenforceable, shall not be affected by such invalidity.
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All remaining provisions of this Indemnity Agreement shall be valid and
enforced to the fullest extent permitted by law.
9. FURTHER ASSURANCES. Each party to this Indemnity Agreement agrees to
execute such documents or instruments, and to take such action, as the
other party may reasonably request after the date hereof in order to
effectuate and perfect the indemnification contemplated hereby.
10. THIRD PARTY BENEFICIARY. The Landlord and Tenant are the intended
beneficiaries of this Indemnity Agreement.
11. SUBMISSION TO JURISDICTION. Each of the Parties to this Indemnity
Agreement hereby submits to the exclusive jurisdiction of the United
Stated District Court for the Southern District of New York for
purposes of all legal proceedings arising out of or relating to this
Indemnity Agreement and the estates and relationships created hereby.
If the Parties hereto are unable to submit to the jurisdiction of the
United States District Court for the Southern District of New York
notwithstanding reasonably diligent efforts to do so, then the Parties
shall submit to the exclusive jurisdiction of any New York State court
sitting in New York County, New York. Each of the Parties to this
Indemnity Agreement hereby irrevocably waives, to the fullest extent it
may effectively do so, any objection which it may now or hereafter have
to the laying of venue of any such proceedings brought in any such
court and any Claim that any such proceeding brought in any such court
has been brought in an inconvenient forum.
12. 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
Indemnity Agreement. The Parties have both participated substantially
in the negotiation, drafting and revision of this Indemnity Agreement
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."
13. REMEDIES. Any breach by Tenant of any obligation or undertaking herein
shall not, under any circumstances, absolve Landlord of its obligations
and undertakings herein. The sole remedies available to Landlord upon
breach by Tenant shall be the ability to seek injunctive relief to
ensure compliance and to seek actual damages accrued as a result of the
breach.
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IN WITNESS WHEREOF, the Parties have caused this Indemnity Agreement to be
signed by their respective officers thereunto duly authorized as of the date
above.
Getty Properties Corp.
By: /s/ John Fitteron
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Name: John Fitteron
Title: Senior Vice President
Getty Petroleum Marketing Inc.
By: /s/ Leo Liebowitz
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Name: Leo Liebowitz
Title: Chairman and Chief
Executive Officer
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