-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T1RTv0KxyFg6gY+RkwjTcqy3vzVhFL+gHkAJJzIUTkHEuCjZH1eFAoVtRj4eBTBX Uty0bX/lKXLAzDo/YvtUBg== 0000950124-00-002570.txt : 20000516 0000950124-00-002570.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950124-00-002570 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20000131 FILED AS OF DATE: 20000428 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GETTY REALTY CORP /MD/ CENTRAL INDEX KEY: 0001052752 STANDARD INDUSTRIAL CLASSIFICATION: 5171 IRS NUMBER: 113412575 STATE OF INCORPORATION: MD FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-13777 FILM NUMBER: 611890 BUSINESS ADDRESS: STREET 1: 125 JERICHO TURNPIKE CITY: JERICHO STATE: NY ZIP: 11753 BUSINESS PHONE: 5163382600 MAIL ADDRESS: STREET 1: 125 JERICHO TURNPIKE CITY: JERICHO STATE: NY ZIP: 11753 10-K405 1 FORM 10-K405 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE - - - - --- ACT OF 1934 For the fiscal year ended JANUARY 31, 2000 ---------------- OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - - - - --- EXCHANGE ACT OF 1934 Commission file number 001-13777 GETTY REALTY CORP. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Maryland 11-3412575 - - - - ------------------------------- -------------------- (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 125 Jericho Turnpike, Jericho, New York 11753 - - - - --------------------------------------- ------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: 516-338-2600 Securities registered pursuant to Section 12(b) of the Act: Name of each exchange on Title of each class which registered - - - - ----------------------------- ------------------------- Common Stock, $.01 par value New York Stock Exchange Series A Participating Convertible Redeemable Preferred Stock, $.01 par value New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None ---------------- (Title of Class) Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by nonaffiliates (7,018,419 shares of common stock and 1,738,420 shares of preferred stock) of the Company was $119,886,961 as of April 18, 2000. The registrant had outstanding 12,812,009 shares of common stock and 2,884,068 shares of preferred stock as of April 18, 2000. DOCUMENTS INCORPORATED BY REFERENCE
Document Part of Form 10-K -------- ----------------- Annual Report to Stockholders for the fiscal year ended January 31, 2000 (the "Annual Report")(pages 6 through 24). II Definitive Proxy Statement for the 2000 Annual Meeting of Stockholders (the "Proxy Statement") which will be filed by the registrant on or prior to 120 days following the end of the registrant's fiscal year ended January 31, 2000 pursuant to Regulation 14A. III
================================================================================ 2 PART I Item 1. Business General Getty Realty Corp. is the largest real estate company in the U. S. specializing in the ownership, leasing and management of gasoline station/convenience store properties. Prior to the 1997 spinoff of our petroleum marketing business, we were also one of the nation's largest independent marketers of petroleum products, serving retail and wholesale customers through a distribution and marketing network of Getty(R) and other branded retail outlets (also referred to as service stations) located in 12 Northeastern and Middle-Atlantic states. On March 21, 1997, we completed the spinoff of our petroleum marketing business to our stockholders (the "Spinoff"), who received a tax-free dividend of one share of common stock of Getty Petroleum Marketing Inc. ("Marketing") for each share of our common stock. Marketing held the assets and liabilities of our petroleum marketing business and New York Mid-Hudson Valley home heating oil business. Shortly thereafter, we changed our name from Getty Petroleum Corp. to Getty Realty Corp. In December 1998, we sold our remaining heating oil business, Aero Oil Company. As a result, we are now engaged in the ownership, leasing and management of real estate properties, most of which are gasoline/convenience store properties leased on a long-term net basis to Marketing. For additional information regarding the Spinoff and the sold heating oil business, see Notes 2 and 3 to the consolidated financial statements contained in the accompanying Annual Report. Reorganization On January 30, 1998, we reorganized as a Maryland corporation. At that time, Getty Realty Corp., a Delaware corporation, changed its name to Getty Properties Corp. and became a wholly- owned subsidiary of our new Maryland company. When we refer to the Company, we mean Getty Realty Corp., a Maryland corporation, and for periods prior to January 30, 1998, we mean Getty Realty Corp., a Delaware corporation (also referred to as "Old Getty"). In connection with the reorganization, stockholders of Old Getty received one share of common stock of the Company for each share of Old Getty's common stock tendered for exchange. Our Company's common stock is listed on the New York Stock Exchange under the symbol GTY. Merger with Power Test Investors Limited Partnership and Issuance of Preferred Stock On January 30, 1998, we also acquired Power Test Investors Limited Partnership (the "Partnership"), as a result of which we acquired fee title to 295 properties which Old Getty had previously leased from the Partnership. See "Item 2. Properties" below. In that transaction, 2,888,798 shares of our Series A Participating Convertible Redeemable Preferred Stock, $.01 par value, ("Preferred Stock") were issued to the former unitholders of the Partnership and to CLS General Partnership Corp., the Partnership's general partner. On February 11, 1998, the 2 3 Preferred Stock commenced trading on the New York Stock Exchange under the symbol GTY PrA. Real Estate Business We specialize in the ownership and leasing of properties in the petroleum industry, since we have substantial knowledge and expertise in this industry. In view of current conditions in both the financial markets and retail gasoline service station real estate markets, we have decided to focus primarily on managing our existing portfolio of gasoline service stations, terminals and related properties in a more cost effective manner, and to utilize free cash flow and capital resources to increase dividend payments to shareholders and to selectively repurchase our equity. On February 1, 1997, we entered into a Master Lease Agreement with Marketing (the "Master Lease") under which, as of January 31, 2000, 1,013 service station and convenience store properties and 9 distribution terminals and bulk plants were leased or subleased by the Company as the lessor to Marketing as the lessee. The initial term of the Master Lease is 15 years, with four ten-year renewal options (or with respect to leased properties, such a shorter period as the underlying lease may provide). The Master Lease is a "triple-net" lease, so Marketing is responsible for the cost of all taxes, maintenance, repairs, insurance and other operating expenses. Rent for each of the properties was set using the then fair market value of each property, assuming the properties were free of certain environmental conditions for which we are responsible. We received lease payments from Marketing aggregating approximately $56.4 million (or 96% of the $58.9 million total revenues we received from all of our rental properties) during the fiscal year ended January 31, 2000. We are materially dependent upon the ability of Marketing to meet its obligations under the Master Lease. 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; however, we do not anticipate that Marketing will have difficulty making all required rental payments for the foreseeable future. As of January 31, 2000, we owned or leased 72 additional properties not included under the Master Lease, most of which are leased for non-petroleum use. We also owned 24 properties being held for disposition. Regulation We are subject to numerous federal, state and local laws and regulations. The costs related to compliance with those laws and regulations have not had and are not expected to have a material adverse effect on our financial position, although these costs may have a significant impact on our results of operations or liquidity for any single fiscal year or interim period. Petroleum properties are governed by numerous federal, state and local environmental laws and regulations. These laws have included (i) requirements to report to governmental authorities discharges of petroleum products into the environment and, under certain circumstances, to 3 4 remediate the soil and/or groundwater contamination pursuant to governmental order and directive, (ii) requirements to remove and replace underground storage tanks that have exceeded governmental-mandated age limitations and (iii) the requirement to provide a certificate of financial responsibility with respect to claims relating to underground storage tank failures. Environmental expenses have been attributable to remediation, monitoring, soil disposal and governmental agency reporting (collectively "Remediation Costs") incurred in connection with contaminated sites and the replacement or upgrading of underground storage tanks, related piping, underground pumps, wiring and monitoring devices (collectively "USTs") to meet federal, state and local environmental standards, as well as routine monitoring and tank testing. Under the Master Lease, we committed to a program to bring scheduled leased properties to regulatory closure and, thereafter, transfer all environmental risks to Marketing. We believe that we are in substantial compliance with federal, state and local provisions enacted or adopted pertaining to environmental matters. Although we are 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 our competitive position. See "Item 3. Legal Proceedings." Personnel As of January 31, 2000, we had 10 employees. Under a Services Agreement, Marketing provides certain administrative and technical services to us and we provide certain services to Marketing. We paid net fees to Marketing for services performed (after deducting the fees paid by Marketing to us for services provided) of $749,000 for the year ended January 31, 2000 and $960,000 for each of the years ended January 31, 1999 and 1998. These fees are included in general and administrative expenses in our consolidated statements of operations. Special Factors Regarding Forward-Looking Statements Certain statements in this Annual Report on Form 10-K may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When we use the words "believes", "expects", "plans", "estimates" and similar expressions, we intend to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance and achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, but are not limited to: risks associated with owning and leasing real estate generally; dependence on Marketing as a lessee and on rentals from companies engaged in the petroleum marketing and convenience store businesses; competition for locations and tenants; risk of tenant non-renewal; the effects of regulation; the Company's expectations as to the cost of completing environmental remediation; and potential effects of Year 2000 issues. For a more detailed discussion of risk factors, see the information set forth under the caption "Risk Factors" in our Proxy 4 5 Statement/Prospectus dated January 13, 1998. As a result of these and other factors, we may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely effect our business, financial condition, operating results and stock price. An investment in our preferred and common stocks involves various risks, including those mentioned above and elsewhere in this report and those which are detailed from time to time in our other filings with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements, which reflect our view only as of the date hereof. We undertake no obligation to publicly release revisions to these forward- looking statements that reflect future events or circumstances or the occurrence of unanticipated events. Item 2. Properties The properties we owned in fee or leased for each of the five fiscal years ended January 31, 2000 are as follows: January 31, -------------------------------------------- 2000 1999 1998 1997 1996 ----- ----- ----- ----- ----- Owned 757 740 736 441 439 Leased 361 379 404 732 734 ----- ----- --- ----- ----- Total 1,118 1,119 1,140 1,173 1,173 ===== ===== ===== ===== ===== The following table sets forth information regarding lease expirations for the properties: Fiscal Year Number of Leases Expiring (a) Percent of Total - - - - ----------- ----------------------------- ---------------- 2001 24 6.6% 2002 59 16.3 2003 52 14.4 2004 41 11.4 2005 42 11.6 Thereafter 143 39.7 --- ------ 361 100.0% === ====== (a) The lease expiration schedule does not take give effect to lease renewal or extension options. 5 6 On January 30, 1998, we acquired the Partnership, a publicly traded real estate limited partnership, in a transaction accounted for as a purchase. As a result of the transaction, we acquired 295 fee properties, consisting of 290 service station and convenience store properties and five terminals, that we previously leased from the Partnership. As of January 31, 2000, we owned in fee six distribution terminals and leased three bulk plants (on a long-term net lease basis) located in New York, New Jersey, Rhode Island and Connecticut. These terminals and bulk plants have an aggregate storage capacity of approximately 48 million gallons. The terminals located in East Providence (Rhode Island) and Rensselaer (New York) are deep-water terminals, capable of handling large vessels. The nine distribution terminals and bulk plants are leased or sub-leased to Marketing. As of January 31, 2000, we leased approximately 32,000 square feet of office space at 125 Jericho Turnpike, Jericho, New York, where we currently maintain our corporate headquarters. Most of this space has been subleased to Marketing. We believe that substantially all of our owned and leased properties are in good condition. For a description of our lease arrangements with Marketing, see discussion above under the caption "Real Estate Business." Item 3. Legal Proceedings (a) Information in response to this item is incorporated herein by reference from Note 5 of the Notes to Consolidated Financial Statements set forth on page 17 of the Annual Report. In 1991, the State of New York brought an action in the New York State Supreme Court in Albany County against one of our former subsidiaries seeking reimbursement in the amount of $189,000 for cleanup 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. In 1993, the State of New York asserted a claim against us for cleanup costs incurred at a service station and for statutory penalties. In 1994, an action was filed in New York State Supreme Court in Albany County against us and other parties to recover $522,000 for cleanup costs and unspecified penalties and interest. In 1994, one of our subsidiaries was served with an Amended Complaint naming the subsidiary as one of many defendants in the Keystone Superfund case pending in the U.S. District Court for the Middle District of Pennsylvania. The Complaint pertained to the subsidiary's miscellaneous office refuse and used furnace air and oil filters which were disposed of at the site. In 1995, another subsidiary was brought into the same action pertaining to convenience store refuse. In August 1997, we paid into escrow $40,000 in full settlement. The settlement has been approved by the United States Environmental Protection Agency, but has not yet been approved by the Court. 6 7 In 1995, Pennsauken Solid Waste Management Authority, its successor-in-interest, the Pollution Control Financing Authority of Camden County and the Township of Pennsauken, New Jersey commenced an action for unspecified amounts against certain defendants for all costs and damages incurred for the remediation of the Pennsauken Sanitary Landfill. In November 1996, one of the defendants filed a third party complaint in the Superior Court of New Jersey, Camden County, against its former customers, including our former construction company subsidiary, seeking indemnification from the third party defendants for all costs it incurred or will incur in response to the release of hazardous substances in the landfill plus attorneys' fees. We believe that any exposure is not material because the quantities of construction fill deposited at the waste site were small. In June 1998, we were sued as a third-party defendant in the Superfund case of U.S. v. Champion Chemical Co. and Imperial Oil Co., pending in the U.S. District Court for New Jersey. Our defense is being conducted by Texaco Inc., which has agreed to fully indemnify us. In August 1998, we were sued as a third-party defendant in the Superfund case of U.S. v. Manzo, pending in the U. S. District Court for New Jersey. Our defense is also being conducted by Texaco Inc., which has agreed to fully indemnify us. Both matters involve time periods prior to 1985, when we purchased the properties from Texaco Inc. pursuant to an agreement under which Texaco is obligated to indemnify us for environmental matters of this kind. In December 1998, the New York State Department of Environmental Conservation filed an administrative complaint against us for civil penalties for alleged groundwater contamination and gasoline migration into a residence basement in April 1997. The action was filed in response to a citizen's lawsuit filed against us in the U.S. District Court for the Southern District of New York. In September 1999, the State of New York filed a lawsuit against us in the New York State Supreme Court in Albany County, seeking reimbursement of $1,300,000 (plus interest and penalties) spent to clean up a discharge that allegedly occurred at a Company service station. We contend that the discharge occurred at a contiguous service station, the owner of which is a party to the lawsuit and against whom we asserted a cross-claim. Two lawsuits brought by the State of New York in 1986, seeking reimbursement for cleanup costs incurred at two service stations on Long Island, were settled during the fourth quarter of fiscal 2000. Various parties participated in the settlement of the two cases and we contributed $133,000 towards the settlements. A lawsuit brought by the State of New York in 1993, seeking reimbursement for cleanup costs incurred at a service station on Long Island, was settled during the first quarter of fiscal 2000. We contributed $292,500 to the settlement, together with a contribution made by the former owner of another nearby service station. 7 8 Two lawsuits brought by the State of New York in 1996, seeking reimbursement for cleanup costs incurred at two service stations in New York City, were settled during the fourth quarter of fiscal 2000. We paid $700,000 to settle the two cases. A lawsuit brought by the State of New York in 1998, seeking reimbursement for cleanup costs incurred at a house to which our former subsidiary delivered home heating oil, was settled in the fourth quarter of fiscal 2000 by our paying $280,000. Item 4. Submission of Matters to a Vote of Security Holders No matter was submitted to a vote of security holders during the fourth quarter of our fiscal year ended January 31, 2000. Executive Officers of Registrant The following table lists the executive officers of Getty Realty as of January 31, 2000, their respective ages, the offices and positions held and the year in which each was elected an officer of the Company or its predecessor.
Name Age Position Officer Since ---- --- -------- ------------- Leo Liebowitz 72 President and Chief Executive Officer 1971 John J. Fitteron 58 Senior Vice President, Treasurer and Chief Financial Officer 1986
Mr. Liebowitz has been President and Chief Executive Officer and a director since 1971. He is also the Chairman, Chief Executive Officer and a director of Marketing. Mr. Liebowitz is a director of the Regional Banking Advisory Board of Chase Banking Corp. Mr. Fitteron joined Getty in 1986 as Senior Vice President and Chief Financial Officer and assumed the additional position of Treasurer in 1994. Prior to joining Getty, he was a Senior Vice President at Beker Industries Corp., a chemical and natural resource company. Management is not aware of any family relationships between the executive officers. 8 9 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters Information in response to this item is incorporated herein by reference from material under the heading "Capital Stock" on page 24 of the Annual Report. Item 6. Selected Financial Data Information in response to this item is incorporated herein by reference from material under the heading "Selected Financial Data" on page 6 of the Annual Report. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Information in response to this item is incorporated herein by reference from material under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 7 through 10 of the Annual Report. Item 7A. Market Risk Information in response to this item is incorporated herein by reference from Note 5 of the Notes to Consolidated Financial Statements set forth on page 17 of the Annual Report. Item 8. Financial Statements and Supplementary Data Information in response to this item is incorporated herein by reference from the financial information set forth on pages 11 through 24 of the Annual Report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 9 10 PART III Item 10. Directors and Executive Officers of the Registrant Information with respect to directors in response to this item is incorporated herein by reference from material under the headings "Election of Directors" and "Compliance with Section 16(a) of the Securities Exchange Act of 1934" on pages 2, 5 and 14, respectively, of the Proxy Statement. Information regarding executive officers is included in Part I hereof. Item 11. Executive Compensation Information in response to this item is incorporated herein by reference from material under the headings "Directors' Meetings, Committees and Executive Officers" and "Compensation" through, and including the material under the heading "Compensation Committee Interlocks and Insider Participation" on pages 5 through 9 of the Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management Information in response to this item is incorporated herein by reference from material under the heading "Beneficial Ownership of Capital Stock" on pages 3 and 4 of the Proxy Statement. Item 13. Certain Relationships and Related Transactions Information in response to this item is incorporated herein by reference from material under the heading "Certain Transactions" on page 11 of the Proxy Statement. 10 11 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) 1. Financial statements The financial statements listed in the Index to Financial Statements and Financial Statement Schedules on page 12 are filed as part of this annual report. 2. Financial statement schedule The financial statement schedule listed in the Index to Financial Statements and Financial Statement Schedules on page 12 is filed as part of this annual report. 3. Exhibits The exhibits listed in the Exhibit Index on pages 15 through 22 are filed as part of this annual report. 4. Reports on Form 8-K None. 11 12 GETTY REALTY CORP. INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES COVERED BY REPORT OF INDEPENDENT ACCOUNTANTS Items 14(a) 1 & 2
Reference Form 10-K 2000 Annual (pages) Report (pages) ------------------------------ Data incorporated by reference from attached 2000 Annual Report to Stockholders of Getty Realty Corp.: Report of Independent Accountants 23 Consolidated Statements of Operations for the years ended January 31, 2000, 1999 and 1998 11 Consolidated Balance Sheets as of January 31, 2000 and 1999 12 Consolidated Statements of Cash Flows for the years ended January 31, 2000, 1999 and 1998 13 Notes to Consolidated Financial Statements 14 - 22 Report of Independent Accountants - Supplemental Schedule 13 Schedule II - Valuation and Qualifying Accounts and Reserves for the years ended January 31, 2000, 1999 and 1998 14 All other schedules are omitted for the reason that they are either not required, not applicable, not material or the information is included in the consolidated financial statements or notes thereto. The financial statements listed in the above index which are included in the 2000 Annual Report to Stockholders are hereby incorporated by reference. With the exception of the pages listed in the above index and the information incorporated by reference included in Part II, Items 5, 6, 7, 7A and 8, the 2000 Annual Report to Stockholders is not deemed filed as part of this report.
12 13 REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors and Stockholders of Getty Realty Corp.: Our audits of the consolidated financial statements referred to in our report dated March 9, 2000 appearing in the fiscal 2000 Annual Report to Shareholders of Getty Realty Corp. (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the financial statement schedule listed in Item 14(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. PricewaterhouseCoopers LLP New York, New York March 9, 2000 13 14 GETTY REALTY CORP. and SUBSIDIARIES SCHEDULE II - VALUATION and QUALIFYING ACCOUNTS and RESERVES for the years ended January 31, 2000, 1999 and 1998 (in thousands) Balance at Balance at beginning end of of period Additions Deductions period --------- --------- ---------- ------ 2000: Allowance for doubtful accounts* $112 $ 56 $ 10 $158 ==== ==== ====== ==== 1999: Allowance for doubtful accounts* $171 $113 $ 172 $112 ==== ==== ======= ==== 1998: Allowance for doubtful accounts* $1,369 $68 $1,266(a) $171 ====== === ====== ==== *Relates to accounts receivable. (a) Includes $1,185 transferred to Marketing in connection with the Spinoff. 14 15 EXHIBIT INDEX GETTY REALTY CORP. Annual Report on Form 10-K for the fiscal year ended January 31, 2000 ------------------------------------------ Exhibit No. Description - - - - ------- ----------- 1.1 Agreement and Plan of Reorganization and Merger, dated as of December 16, 1997 (the "Merger Agreement") by and among Getty Realty Corp., Power Test Investors Limited Partnership and CLS General Partnership Corp. Filed as Exhibit 2.1 to Company's Registration Statement on Form S-4, filed on January 12, 1998 (File No. 333-44065), included as Appendix A to the Joint Proxy Statement/Prospectus that is a part thereof, and incorporated herein by reference. 3.1 Articles of Incorporation of Getty Realty Holding Corp. ("Holdings"), now known as Getty Realty Corp., filed December 23, 1997. Filed as Exhibit 3.1 to Company's Registration Statement on Form S-4, filed on January 12, 1998 (File No. 333-44065), included as Appendix D to the Joint Proxy Statement/Prospectus that is a part thereof, and incorporated herein by reference. 3.2 Articles Supplementary to Articles of Incorporation of Holdings, filed January 21, 1998. Filed as Exhibit 3.2 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 3.3 By-Laws of Holdings. Filed as Exhibit 3.2 to Company's Registration Statement on Form S-4, filed on January 12, 1998 (File No. 333-44065), included as Appendix F to the Joint Proxy Statement/Prospectus that is a part thereof, and incorporated herein by reference. 15 16 3.4 Articles of Amendment of Holdings, changing its name to Getty Realty Corp., filed January 30, 1998. Filed as Exhibit 3.4 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 4.1 $35,000,000 reducing revolving Loan Agreement between Leemilt's Petroleum, Inc. and Bank of New England, N.A. dated as of December 7, 1987, and related Guaranty Agreement, dated as of December 7, 1987, by and between Getty Petroleum Corp. (now known as Getty Properties Corp.) and Bank of New England, N.A. Filed as Exhibit 4.7 to the Quarterly Report on Form 10-Q for the quarter ended October 31, 1987 (File No. 1-8059) of Getty Petroleum Corp., and incorporated herein by reference. 4.2 Amended and Restated Loan Agreement between Leemilt's Petroleum, Inc. and Fleet Bank of Massachusetts, N.A., as successor to Bank of New England, N.A., dated as of October 31, 1995 (the "Leemilt's Loan"). Filed as Exhibit 4.8 to the Annual Report on Form 10-K for the fiscal year ended January 31, 1996 (File No. 1-8059) of Getty Petroleum Corp. and incorporated herein by reference. 4.3 First Amendment to Amended and Restated Loan Agreement between Leemilt's Petroleum, Inc. and Fleet National Bank (formerly known as Fleet Bank of Massachusetts, N.A.) dated as of April 18, 1997. Filed as Exhibit 4.3 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 4.4 Second Amendment to Amended and Restated Loan Agreement between Leemilt's Petroleum, Inc. and Fleet National Bank dated as of January 30, 1998. Filed as Exhibit 4.4 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 4.5 Amended and Restated Loan Agreement between Power Test Realty Company Limited Partnership ("PT Realty") and Fleet Bank of Massachusetts, N.A. dated as of October 31, 1995 (the "PT Realty Loan"). Filed as Exhibit 10.27 to Power Test Investors Limited Partnership's ("PT Investors") Annual Report on Form 10-K for the fiscal year ended December 31, 1995 (File No. 0-14557) and incorporated herein by reference. 16 17 4.6 First Amendment to Amended and Restated Loan Agreement between PT Realty and Fleet National Bank dated as of April 18, 1997. Filed as Exhibit 4.6 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 4.7 Second Amendment to Amended and Restated Loan Agreement between PT Realty and Fleet National Bank dated as of January 30, 1998. Filed as Exhibit 4.7 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 4.8 Third Amendment to Amended and Restated Loan Agreement between PT Realty and Fleet National Bank dated as of March 1, 2000. * 4.9 Second Amended and Restated Master Note between PT Realty and Fleet National Bank dated as of March 1, 2000. * 10.1 Retirement and Profit Sharing Plan (amended and restated as of September 19, 1996), adopted by the Company on December 16, 1997. Filed as Exhibit 10.2(b) to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1997 (File No. 1-8059) and incorporated herein by reference. 10.2 1998 Stock Option Plan, effective as of January 30, 1998. Filed as Exhibit 10.1 to Company's Registration Statement on Form S-4, filed on January 12, 1998 (File No. 333-44065), included as Appendix H to the Joint Proxy Statement/Prospectus that is a part thereof, and incorporated herein by reference. 10.3 Asset Purchase Agreement among Power Test Corp. (now known as Getty Properties Corp.), Texaco Inc., Getty Oil Company and Getty Refining and Marketing Company, dated as of December 21, 1984. Filed as Exhibit 2(a) to the Current Report on Form 8-K of Power Test Corp., filed February 19, 1985 (File No. 1-8059) and incorporated herein by reference. 17 18 10.4 Trademark License Agreement among Power Test Corp., Texaco Inc., Getty Oil Company and Getty Refining and Marketing Company, dated as of February 1, 1985. Filed as Exhibit 2(b) to the Current Report on Form 8-K of Power Test Corp., filed February 19, 1985 (File No. 1-8059) and incorporated herein by reference. 10.5 Three Party Lease Agreement among Getty Realty Corp. (now known as Getty Properties Corp.), Leemilt's Petroleum, Inc. and Fleet National Bank dated as of April 18, 1997, amending and restating the Lease dated February 1, 1985 between Leemilt's Petroleum, Inc., as lessor, and Getty Petroleum Corp. (now known as Getty Properties Corp.), as lessee. Filed as Exhibit 10.5 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 10.6 Amendment to Three Party Lease Agreement among Getty Properties Corp., Leemilt's Petroleum, Inc. and Fleet National Bank dated as of January 30, 1998. Filed as Exhibit 10.6 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 10.7 Amended and Restated Hazardous Waste and PMPA Indemnification Agreement, dated as of October 31, 1995, among Getty Petroleum Corp. (now known as Getty Properties Corp.), Power Test Realty Company Limited Partnership and Fleet Bank of Massachusetts, N.A. Filed as Exhibit 10.17 to the Annual Report on Form 10-K for the fiscal year ended January 31, 1996 (File No. 1-8059) of Getty Petroleum Corp. and incorporated herein by reference. 10.8 Affirmation and Acknowledgement of Amended and Restated Hazardous Waste and PMPA Indemnification Agreement, between Getty Realty Corp. and Fleet National Bank dated as of April 18, 1997. Filed as Exhibit 10.8 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 18 19 10.9 Second Affirmation and Acknowledgement of Amended and Restated Hazardous Waste and PMPA Indemnification Agreement between the Company and Fleet National Bank, dated as of January 30, 1998. Filed as Exhibit 10.9 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 10.9A Third Affirmation and Acknowledgment of Amended and Restated Hazardous Waste and PMPA Indemnification Agreement between the Company and Fleet National Bank, dated as of March 1, 2000. * 10.10 Amended and Restated Guaranty Agreement, dated as of October 31, 1995, between Getty Petroleum Corp. and Fleet Bank of Massachusetts, N.A. pertaining to the Leemilt's Loan. Filed as Exhibit 10.10 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 10.11 Affirmation and Acknowledgment of Amended and Restated Guaranty Agreement between Getty Realty Corp. and Fleet National Bank, dated as of April 18, 1997, pertaining to the Leemilt's Loan. Filed as Exhibit 10.11 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 10.12 Guaranty Agreement between the Company and Fleet National Bank, dated as of January 30, 1998, pertaining to the Leemilt's Loan. Filed as Exhibit 10.12 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 10.13 Guaranty Agreement between the Company and Fleet National Bank, dated as of January 30, 1998, pertaining to the PT Realty Loan. Filed as Exhibit 10.13 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 19 20 10.14 Guaranty Agreement between Getty Properties Corp. and Fleet National Bank dated as of January 30, 1998, pertaining to the PT Realty Loan. Filed as Exhibit 10.14 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 10.15 Form of Indemnification Agreement between the Company and its directors. Filed as Exhibit 10.15 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 10.16 Supplemental Retirement Plan for Executives of the Company (then known as Getty Petroleum Corp.) and Participating Subsidiaries (adopted by the Company on December 16, 1997). Filed as Exhibit 10.22 to the Annual Report on Form 10-K for the fiscal year ended January 31, 1990 (File No. 1-8059) of Getty Petroleum Corp. and incorporated herein by reference. 10.17 Form of Agreement dated December 9, 1994 between Getty Petroleum Corp. and its non-director officers and certain key employees regarding compensation upon change in control. Filed as Exhibit 10.23 to the Annual Report on Form 10-K for the fiscal year ended January 31, 1995 (File No. 1-8059) of Getty Petroleum Corp. and incorporated herein by reference. 10.18 Form of Agreement dated as of March 7, 1996 amending Agreement dated as of December 9, 1994 between Getty Petroleum Corp. (now known as Getty Properties Corp.) and its non-director officers and certain key employees regarding compensation upon change in control (See Exhibit 10.17). Filed as Exhibit 10.27 to the Annual Report on Form 10-K for the fiscal year ended January 31, 1996 (File No. 1-8059) of Getty Petroleum Corp. and incorporated herein by reference. 10.19 Form of letter from Getty Petroleum Corp. dated April 8, 1997, confirming that a change of control event had occurred pursuant to the change of control agreements. (See Exhibits 10.17 and 10.18). Filed as Exhibit 10.19 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 20 21 10.20 Form of Agreement dated March 9, 1998, from the Company to certain officers and key employees, adopting the prior change of control agreements, as amended, and further amending those agreements. (See Exhibits 10.17, 10.18 and 10.19). Filed as Exhibit 10.20 to Company's Annual Report on Form 10-K for the fiscal year ended January 31, 1998 (File No. 001-13777) and incorporated herein by reference. 10.21 Form of Master Lease Agreement dated February 1, 1997 between Getty Petroleum Corp. (now known as Getty Properties Corp.) and Getty Petroleum Marketing Inc. Filed as Exhibit 10.28 to the Annual Report on Form 10-K for the fiscal year ended January 31, 1997 (File No. 1-8059) of Getty Petroleum Corp. and incorporated herein by reference. 10.22 Form of Reorganization and Distribution Agreement between Getty Petroleum Corp. (now known as Getty Properties Corp.) and Getty Petroleum Marketing Inc. dated as of February 1, 1997. Filed as Exhibit 10.29 to the Annual Report on Form 10-K for the fiscal year ended January 31, 1997 (File No. 1-8059) of Getty Petroleum Corp. and incorporated herein by reference. 10.23 Form of Trademark License Agreement between Getty Petroleum Corp. (now known as Getty Properties Corp.) and Getty Petroleum Marketing Inc. Filed as Exhibit 10.30 to the Annual Report on Form 10-K for the fiscal year ended January 31, 1997 (File No. 1-8059) of Getty Petroleum Corp. and incorporated herein by reference. 10.24 Form of Services Agreement dated as of February 1, 1999 between Getty Realty Corp. and Getty Petroleum Marketing Inc. Filed as Exhibit 10.24A to the Annual Report on Form 10-K for the fiscal year ended January 31, 1999 (File No. 1-8059) of Getty Realty Corp, and incorporated herein by reference. 10.25 Form of Tax Sharing Agreement between Getty Petroleum Corp. (now known as Getty Properties Corp.) and Getty Petroleum Marketing Inc. Filed as Exhibit 10.32 to the Annual Report on Form 10-K for the fiscal year ended January 31, 1997 (File No. 1-8059) of Getty Petroleum Corp. and incorporated herein by reference. 21 22 10.26 Form of Stock Option Reformation Agreement made and entered into as of March 21, 1997 by and between Getty Petroleum Corp. (now known as Getty Properties Corp.) and Getty Petroleum Marketing Inc. Filed as Exhibit 10.33 to the Annual Report on Form 10-K for the fiscal year ended January 31, 1997 (File No. 1-8059) of Getty Petroleum Corp. and incorporated herein by reference. 10.27 Guarantee Agreement between the Company and Fleet National Bank, dated as of March 1, 2000, pertaining to the PT Realty Loan. * 10.28 Guarantee Agreement between Getty Properties Corp. and Fleet National Bank dated as of March 1, 2000, pertaining to the PT Realty Loan. * 10.29 Third Affirmation and Acknowledgement of Amended and Restated Three Party Lease Agreement among Getty Realty Corp., PT Realty and Fleet National Bank dated as of March 1, 2000. * 13 Annual Report to Stockholders for the fiscal year ended January 31, 2000. * 21 Subsidiaries of the Company. * 23 Consent of Independent Accountants. * 27 Financial Data Schedule. * - - - - ----------------------- *Filed herewith 22 23 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Getty Realty Corp. ------------------ (Registrant) By /s/ JOHN J. FITTERON ------------------------------ John J. Fitteron, Senior Vice President, Treasurer and Chief Financial Officer April 28, 2000 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. By /s/ LEO LIEBOWITZ By /s/ JOHN J. FITTERON ------------------------------------ ------------------------------ Leo Liebowitz, President, John J. Fitteron, Chief Executive Officer Senior Vice President, and Director Treasurer and Chief Financial April 28, 2000 Officer (Principal Financial and Accounting Officer) April 28, 2000 By /s/ MILTON COOPER By /s/ PHILIP E. COVIELLO --------------------------- ------------------------------ Milton Cooper, Philip E. Coviello, Director Director April 28, 2000 April 28, 2000 By /s/ HOWARD SAFENOWITZ By /s/ WARREN G. WINTRUB ------------------------ ------------------------------ Howard Safenowitz, Warren G. Wintrub, Director Director April 28, 2000 April 28, 2000 23 EX-4.8 2 3RD AMENDMENT TO AMENDED & RESTATED LOAN AGREEMENT 1 THIRD AMENDMENT TO THE AMENDED AND RESTATED LOAN AGREEMENT This THIRD Amendment to the AMENDED AND RESTATED LOAN AGREEMENT (this "THIRD AMENDMENT"), dated as of March 1, 2000, is by and between POWER TEST REALTY COMPANY LIMITED PARTNERSHIP, a New York limited partnership having its principal office at 125 Jericho Turnpike, Jericho, New York 11753 (the "BORROWER") and FLEET NATIONAL BANK (successor in interest to Fleet Bank of Massachusetts, N.A.), a national banking association having its principal place of business at 100 Federal Street, Boston, Massachusetts 02110 (the "BANK"). WHEREAS, the Borrower and the Bank are parties to that certain Amended and Restated Loan Agreement, dated as of October 31, 1995, as amended by that certain First Amendment to the Amended and Restated Loan Agreement, dated as of April 18, 1997, as further amended by that certain Second Amendment to the Amended and Restated Loan Agreement dated as of January 30, 1998 (as so amended, the "LOAN AGREEMENT"), pursuant to which the Bank, upon certain terms and conditions, has made a loan to the Borrower; WHEREAS, the Borrower has requested that certain provisions of the Loan Agreement be amended in order, among other things, to extend the term of the loan; and WHEREAS, the Bank, subject to the terms and provisions hereof, has agreed to amend the Loan Agreement in order to provide for the foregoing matters; NOW, THEREFORE, the Borrower and the Bank hereby agree as follows: SECTION 1. DEFINED TERMS. Capitalized terms used in this Third Amendment without definition that are defined in the Loan Agreement shall have the meanings set forth in the Loan Agreement. 2 -2- SECTION 2. AMENDMENT TO LOAN AGREEMENT. Subject to the satisfaction of the conditions precedent set forth in Section 5 hereof, the Loan Agreement is hereby amended as follows: SECTION 2.1. The following definitions are hereby added to Section 1 of the Loan Agreement in the proper alphabetical order: Primary Stations means those Stations located in Delaware, Pennsylvania and New York and set forth in Schedule PS hereto. Second Amended Master Note has the meaning set forth in Section 2.2 hereof. Secondary Stations means those Stations which are not Primary Stations, as set forth in Schedule SS hereto. Updated Appraisal Report, an appraisal report of Akerson & Wiley to the Bank dated February 16, 2000 Updated Appraised Value, with respect to any Station, means the appraised value of such Station as set forth in the Updated Appraisal Report SECTION 2.2. The definitions of Marketing and Master Note in Section 1 of the Loan Agreement are hereby deleted in their entirety. SECTION 2.3. All references in the Loan Agreement to the "Master Note" shall be deemed to be references to the "Second Amended Master Note." SECTION 2.4. The definition of Funded Debt to EBITDA Ratio is hereby deleted in its entirety and the following definition is substituted in place thereof: Funded Debt to EBITDA Ratio means the ratio of (i) Realty's funded indebtedness for borrowed money (including obligations with respect to leases which would be capitalized) as carried on the consolidated balance sheet of Realty in accordance with generally accepted accounting principles, other than trade debt or similar obligations incurred in the ordinary course of business, on the last day of each fiscal quarter to (ii) Realty's Earnings Before Interest, Taxes, Depreciation and Amortization, for the period of four 3 -3- consecutive fiscal quarters, ending on the last day of the fiscal quarter referred to in clause (i) above. SECTION 2.5. All references to "Marketing" in the Loan Agreement are hereby deleted. In addition, Exhibit F to the Loan Agreement (Master Lease Agreement with Marketing) is hereby deleted. SECTION 2.6. In the definition of Loan in Section 1 of the Loan Agreement, the amount "$31,844,998.23" is hereby deleted and the amount "$22,619,574.61" is substituted in place thereof. SECTION 2.7. In the definition of Maturity Date in Section 1 of the Loan Agreement, the date "November 1, 2000" is hereby deleted and the date "March 1, 2005" is substituted in place thereof. SECTION 2.8. In Section 2.1 of the Loan Agreement, the amount "$31,844,998.23" is hereby deleted and the amount "$22,619,574.61" is substituted in place thereof. SECTION 2.9. Section 2.2 of the Loan Agreement is hereby deleted in its entirety and the following provision is substituted in place thereof: SECTION 2.2 The Master Note. The Loan shall be evidenced by the Second Amended and Restated Master Note of the Borrower in the principal amount of $22,619,574.61 dated as of the date hereof (the "Second Amended Master Note"). SECTION 2.10. Section 2.3(b) of the Loan Agreement is hereby amended by deleting the table set forth therein in its entirety and replacing it with the following new table: FUNDED DEBT TO EBITDA RATIO INTEREST RATE --------------------------- ------------- .50x or less to 1 LIBOR Rate + 0.750% .51x - .75x to 1 LIBOR Rate + 0.875% .76x - 1.00x to 1 LIBOR Rate + 1.000% 1.01x - 1.24x to 1 LIBOR Rate + 1.125% 1.25x - 1.49x to 1 LIBOR Rate + 1.250% 1.50x - 1.74x to 1 LIBOR Rate + 1.375% 1.75x - 1.99x to 1 LIBOR Rate + 1.500% 2.00x - 2.49x to 1 LIBOR Rate + 1.625% 2.50x or greater to 1 LIBOR Rate + 1.750% 4 -4- SECTION 2.11. Section 2.4 of the Loan Agreement is hereby deleted in its entirety and the following provision is substituted in place thereof: SECTION 2.4 Repayment of Principal. The principal amount of the Loan shall be repaid in fifty-nine (59) consecutive monthly installments payable on the first day of each calendar month of each calendar year, commencing on April 1, 2000 to and including February 1, 2005, in the amount of $175,000 monthly, with the Balloon Payment of $12,294,574.61 due on the Maturity Date (as reduced by any prepayments of principal by the Borrower). The entire principal amount of the Loan outstanding after the payment scheduled to be made on February 1, 2005, as reduced by any prepayments of principal by the Borrower, together with all accrued interest and any other amounts owing to the Bank by the Borrower in connection with the Loan, shall be paid in full on the Maturity Date (the "Balloon Payment"). SECTION 2.12. Section 6.13 of the Loan Agreement is hereby deleted in its entirety and the following provision is substituted in place thereof: SECTION 6.13. Sale of Stations. (A) The Borrower will not sell any Primary Station except upon the election of the Borrower of one of the following: (a) repayment of the Loan in an amount at least equal to the Updated Appraised Value of such Primary Station, or (b) the substitution of one or more gasoline station properties with an Appraised Value (such appraisal to be paid for by the Borrower in the case of Stations that are purchased, and the Updated Appraisal Report sets forth the value in the case of the substitution of a Secondary Station) equal to or greater than the Updated Appraised Value of the Primary Station sold. Prior to the sale of any Primary Station, in the case of repayment under clause (a) above, the Borrower shall pay to the Bank an amount at least equal to the Updated Appraised Value for such Primary Station. Promptly after receipt of such payment pursuant to clause (a), the Bank will release the Mortgage relating to the Primary Station to be sold. Any station(s) substituted for a Primary Station in accordance with the provisions of this Section 6.13 shall, prior to or at the time 5 -5- of such sale, be made subject to a Mortgage on terms equivalent to those in effect with regard to the Primary Station sold. Upon satisfaction of the conditions for substitution hereunder, any substituted station shall become a Primary Station hereunder and, where the Bank has not previously released the Primary Station as provided herein, the Bank shall release the Mortgage relating to the Primary Station to be sold. All properties designated for substitution shall either be (i) purchased from third parties at a price which approximates its fair market value, provided that the Appraised Value of such property or properties shall be equal to or greater than the Updated Appraised Value of the Primary Station for which it is substituted, and the Borrower shall provide to the Bank upon its request any information relating to the property to be purchased and any agreements or instruments in connection therewith, or (ii) any of the Secondary Stations which have not been released from their Mortgages, provided that the Borrower obtains a current date down endorsement to the existing title insurance policy for such Secondary Station showing no new encumbrances other than liens permitted under Section 6.2. (B) Upon the Borrower's written request from time to time, the Bank will discharge its Mortgage on any Secondary Station, provided the Borrower covenants that during the term of this Loan, as it may be extended, and so long as the Borrower shall continue to own such Secondary Station, such Secondary Station shall remain free of mortgage liens and any other security interests, other than liens permitted under Section 6.2. SECTION 3. AFFIRMATION OF BORROWER. The Borrower hereby affirms its absolute and unconditional promise to pay to the Bank the Loan and all other amounts due under the Notes and the Loan Agreement, as amended hereby, at the times and in the amounts provided for therein. The Borrower confirms and agrees that the obligations of the Borrower to the Bank under the Loan Agreement, as amended hereby, remain secured by and entitled to the benefits of the Loan Documents as amended and in effect from time to time. SECTION 4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and warrants to the Bank that the representations and warranties of the Borrower set forth in the Loan Agreement were true and correct when made with respect to the Loan Agreement as in effect as of 6 -6- such time and continue to be true and correct on and as of the date hereof as if made on the date hereof. SECTION 5. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Third Amendment shall be subject to the delivery to the Bank by (or on behalf of) the Borrower, contemporaneously with the execution hereof, of the following, in form and substance satisfactory to the Bank: (a) A Second Amended Master Note executed and delivered by the Borrower; (b) A Third Affirmation and Acknowledgment of Amended and Restated Hazardous Waste and PMPA Indemnification Agreement executed by Properties; (c) A Third Affirmation and Acknowledgment of Three Party Lease Agreement executed by Properties; (d) A favorable opinion from Samuel M. Jones, Esq. or Randi Young Filip, Esq., each a counsel to the Borrower, Realty and Properties, addressed to the Bank and dated the date of the execution and delivery of this Third Amendment, in form, scope and substance satisfactory to the Bank; (e) Certified copies of all documents relating to the authorization and execution of this Third Amendment and the documents contemplated hereby and related authority and organizational documents of the Borrower, Realty and Properties as the Bank may request; (f) A Guaranty Agreement executed and delivered by Realty in form, scope and substance satisfactory to the Bank; (g) A Guaranty Agreement executed and delivered by Properties in form, scope and substance satisfactory to the Bank; (h) The Updated Appraisal Report which the Bank can use to verify that the ratio of the Loan to the Updated Appraisal Value of the Primary Stations does not exceed seventy percent (70%); and (i) Any other document or instrument the Bank may reasonably request. SECTION 6. MISCELLANEOUS PROVISIONS. (a) Except as otherwise expressly provided by this Third Amendment, all of the terms, conditions and provisions of the Loan 7 -7- Agreement shall remain the same. It is declared and agreed by each of the parties hereto that the Loan Agreement, as amended hereby, shall continue in full force and effect, and that this Third Amendment and the Loan Agreement shall be read and construed as one instrument. (b) THIS THIRD AMENDMENT IS INTENDED TO TAKE EFFECT AS AN AGREEMENT UNDER SEAL AND SHALL BE CONSTRUED ACCORDING TO AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. (c) This Third Amendment may be executed in any number of counterparts, and all such counterparts shall together constitute but one instrument. In making proof of this Third Amendment it shall not be necessary to produce or account for more than one counterpart signed by each party hereto by and against which enforcement hereof is sought. (d) Headings or captions used in this Third Amendment are for convenience of reference only and shall not define or limit the provisions hereof. (e) The Borrower hereby agrees to pay to the Bank, on demand by the Bank, all out-of-pocket costs and expenses incurred or sustained by any Person in connection with the preparation of this Third Amendment (including legal fees). [Remainder of Page Intentionally Left Blank] 8 IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be made by their duly authorized officers as a sealed instrument as of the date first set forth at the beginning of this Third Amendment. POWER TEST REALTY COMPANY LIMITED PARTNERSHIP By: Getty Properties Corp., its General Partner By: /s/ John J. Fitteron ----------------------------- Name: John J. Fitteron Title: Senior Vice President, Treasurer and Chief Financial Officer FLEET NATIONAL BANK, successor in interest to Fleet Bank of Massachusetts, N.A. By: /s/ Michael A. Palmer ----------------------------- Name: Michael A. Palmer Title: Vice President EX-4.9 3 SECOND AMENDED & RESTATED MASTER NOTE 1 SECOND AMENDED AND RESTATED MASTER NOTE $22,619,574.61 Date: March 1, 2000 FOR VALUE RECEIVED, the undersigned, POWER TEST REALTY COMPANY LIMITED PARTNERSHIP, a limited partnership organized under the laws of New York (hereinafter, together with its successors in title and assigns, called the "Borrower"), by this promissory note (hereinafter called this "Note"), absolutely and unconditionally promises to pay to the order of FLEET NATIONAL BANK, a national banking association organized under the laws of the United States of America (successor to Fleet Bank of Massachusetts, N.A. ("Fleet"), which was successor by name change to Fleet National Bank of Boston, which was the successor in interest to the Federal Deposit Insurance Corporation, as Receiver for New Bank of New England, N.A., which was the successor in interest to the Federal Deposit Insurance Corporation, as Receiver for Bank of New England, N.A.) (hereinafter, together with its successors in title and assigns, called the "Bank") at the Bank's head offices at 100 Federal Street, Boston, Massachusetts 02110, the principal sum of Twenty-Two Million Six Hundred Nineteen Thousand Five Hundred Seventy-Four and 61/100 Dollars ($22,619,574.61), or, if less, the aggregate unpaid principal amount of the Loan (as defined in the Loan Agreement) made by the Bank to the Borrower pursuant to the Third Amendment to the Amended and Restated Loan Agreement between the Bank and the Borrower dated as of even date herewith (hereinafter, as executed, or if further varied, amended, modified or supplemented from time to time, as so further varied, amended, modified or supplemented, called the "Loan Agreement"). This Note is issued in order to further amend and restate the Borrowers Amended and Restated Master Note dated October 31, 1995 (the "Original Note"), executed and delivered to Fleet in connection with the Loan Agreement between the Borrower and Fleet dated as of October 31, 1995, as amended by First Amendment to the Amended and Restated Loan Agreement dated as of April 18, 1997, as further amended by Second Amendment to the Amended and Restated Loan Agreement dated as of January 30, 1998, and is not issued in payment, satisfaction or 2 -2- cancellation of the obligations evidenced by the Original Note, all of which will be deemed to be continued and to be evidenced by this Note, and is secured by the Bank's mortgage liens and security interests in property of the Borrower created pursuant to the agreements and instruments executed and delivered by the Borrower in connection with such Loan Agreement. The issuance of this Note by the Borrower shall in no way release, impair or interrupt the continued perfection and priority of such mortgage liens and security interests in favor of the Bank as collateral security for the obligations of the Borrower evidenced hereby. The Borrower promises to pay interest on the principal sum outstanding hereunder from time to time from the date hereof until the said principal sum or the unpaid portion thereof shall have become due and payable at the rates and terms in all cases in accordance with the terms of the Loan Agreement. The entire principal amount of this Note shall be payable by the Borrower to the holder hereof in fifty-nine (59) consecutive monthly installments of principal on the first day of each month, commencing on April 1, 2000 to and including February 1, 2005, in the amount of $175,000 monthly, with the Balloon Payment of $12,294,574.61 due on March 1, 2005 (the "Maturity Date"), as reduced by any prepayments of principal by the Borrower. On the Maturity Date, there shall become absolutely due and payable hereunder, and the Borrower hereby promises to pay to the Bank, the balance (if any) of the principal hereof then remaining unpaid, all of the unpaid interest accrued hereon and all (if any) other amounts payable on or in respect of this Note or the indebtedness evidenced hereby. Each overdue amount (whether of principal, interest or otherwise) payable on or in respect of this Note or the indebtedness evidenced hereby shall (to the extent permitted by applicable law) bear interest, from the date on which such amount shall have become due and payable in accordance with the terms hereof to the date on which such amount shall be paid to the Bank (whether before or after judgment), at the rate of interest in effect from time to time in accordance with the Loan Agreement. The unpaid interest accrued on each overdue amount in accordance with the foregoing terms of this Paragraph shall become absolutely due and payable by the Borrower to the Bank on demand by the Bank. Interest on each overdue amount will continue to accrue, as provided by the foregoing terms of this Paragraph, and will (to the extent permitted by applicable law) be compounded monthly until the obligations 3 -3- of the Borrower in respect of the payment of such overdue amount shall be discharged (whether before or after judgment). All computations of interest payable as provided in this Note shall be made by the Bank on the basis of the actual number of days elapsed divided by 360. This Note has been executed and delivered to the Bank by the Borrower pursuant to the Loan Agreement. Under Section 3-104 of the Uniform Commercial Code of Massachusetts, this Note is not a negotiable instrument. Should all or any part of the indebtedness represented by this Note be collected by action at law, or in bankruptcy, insolvency, receivership or other court proceedings, or should this Note be placed in the hands of attorneys for collection after default, the Borrower hereby promises to pay to the Bank, upon demand by the holder hereof at any time, in addition to principal, interest and all (if any) other amounts payable on or in respect of this Note or the indebtedness evidenced hereby, all court costs and reasonable attorneys' fees and all other reasonable collection charges and expenses incurred or sustained by or on behalf of the holder of this Note. The Borrower hereby irrevocably authorizes and empowers any attorney or attorneys or the Prothonotary or Clerk of any Court of record in the Commonwealth of Pennsylvania, or in any other jurisdiction which permits the entry of judgment by confession, at any time after ten (10) days notice to the Borrower, to appear for the Borrower in such Court in an appropriate action there brought or to be brought against the Borrower at the suit of the Bank on this Note, with or without complaint or declaration filed, as of any term or time, and therein to CONFESS OR ENTER JUDGMENT against the Borrower for all sums due by the Borrower to the Bank under this Note and the other Loan Documents (as defined in the Loan Agreement), with or without acceleration of maturity, including all costs and attorneys' fees. For so doing, this Note or a copy hereof verified by affidavit shall be a sufficient warrant. The authority to confess judgment granted herein shall not be exhausted by any exercise thereof but may be exercised from time to time and at any time as of any term and for any amount authorized herein. The Borrower expressly authorizes the entry of repeated judgments under this Paragraph notwithstanding any prior entry of judgment in the same or any other court for the same obligation or any part thereof. THE BORROWER ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED BY COUNSEL IN CONNECTION WITH THE 4 -4- EXECUTION AND DELIVERY OF THIS NOTE AND THAT IT UNDERSTANDS THIS PROVISION FOR CONFESSION OF JUDGMENT, AND WAIVES ANY RIGHT TO NOTICE OR A HEARING WHICH IT MIGHT OTHERWISE HAVE BEFORE ENTRY OF JUDGMENT. The Borrower hereby absolutely and irrevocably waives notice of acceptance, presentment, notice of demand, notice of nonpayment, protest, notice of protest, notice of dishonor, suit and all other conditions precedent in connection with the delivery, acceptance, collection and/or enforcement of this Note or any collateral security therefor, and assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of collateral and to the addition or release of any other party or person primarily or secondarily liable. No delay or omission on the part of the Bank or any holder hereof in exercising any right hereunder shall operate as a waiver of such right or of any other rights of the Bank or such holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar or waiver of the same or any other right on any future occasion. THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN SS.10 OF THE LOAN AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT. This Note is intended to take effect as a sealed instrument. This Note has been executed and delivered to the Bank by the Borrower in Boston, Massachusetts. 5 IN WITNESS WHEREOF, this SECOND AMENDED AND RESTATED MASTER NOTE has been duly executed by the undersigned, POWER TEST REALTY COMPANY LIMITED PARTNERSHIP, on the day and in the year first above written. POWER TEST REALTY COMPANY LIMITED PARTNERSHIP By: Getty Properties Corp., its General Partner By: /s/ John J. Fitteron --------------------------- Name: John J. Fitteron Title: Senior Vice President, Treasurer and Chief Financial Officer EX-10.09(A) 4 THIRD AFFIRMATION AND ACKNOWLEDGMENT 1 THIRD AFFIRMATION AND ACKNOWLEDGMENT OF AMENDED AND RESTATED HAZARDOUS WASTE AND PMPA INDEMNIFICATION AGREEMENT This THIRD AFFIRMATION AND ACKNOWLEDGMENT OF AMENDED AND RESTATED HAZARDOUS WASTE AND PMPA INDEMNIFICATION AGREEMENT (this "THIRD AFFIRMATION") is made as of this 1st day of March, 2000 by Getty Properties Corp., a Delaware corporation ("PROPERTIES"), successor by merger and name change to Getty Realty Corp. ("REALTY"), which was successor by merger and name change to Getty Petroleum Corp. ("GETTY"). WITNESSETH: WHEREAS, Getty duly authorized, executed and delivered that certain Amended and Restated Hazardous Waste and PMPA Indemnification Agreement dated as of October 31, 1995 by and among Getty, Fleet Bank of Massachusetts, N.A., predecessor in interest to Fleet National Bank (the "BANK"), and Power Test Realty Company Limited Partnership (the "BORROWER") (the "INDEMNIFICATION AGREEMENT"); WHEREAS, Realty affirmed its obligations under the Indemnification Agreement pursuant to an Affirmation and Acknowledgment of Amended and Restated Hazardous Waste and PMPA Indemnification Agreement dated as of April 18, 1997 (the "AFFIRMATION"); WHEREAS, Properties affirmed its obligations under the Indemnification Agreement pursuant to a Second Affirmation and Acknowledgment of Amended and Restated Hazardous Waste and PMPA Indemnification Agreement dated as of January 30, 1998 (the "SECOND AFFIRMATION"); WHEREAS, the execution and delivery of this Third Affirmation is a condition precedent to the Bank's and the Borrower's agreement to enter into that certain Third Amendment to the Amended and Restated Loan Agreement of even date herewith (the "THIRD AMENDMENT"); 2 -2- NOW, THEREFORE, for good and valuable consideration paid and in consideration of the promises herein, the receipt and sufficiency of which are hereby acknowledged, Properties agrees as follows: 1. Properties hereby affirms and acknowledges (i) the continued validity of the Indemnification Agreement, as amended by the Affirmation and the Second Affirmation and (ii) that the Indemnification Agreement, as amended by the Affirmation and the Second Affirmation, remains in full force and effect. Properties agrees that the obligations of Properties to the Bank under the Indemnification Agreement, as amended by the Affirmation and the Second Affirmation, and the terms and provisions of the Indemnification Agreement, as amended by the Affirmation, the Second Affirmation and hereby, are hereby ratified, affirmed and incorporated herein by reference, with the same force and effect as if set forth herein in their entirety. Properties consents to the amendments set forth in the Second Amendment. 2. This Third Affirmation shall be construed according to and governed by the laws of the Commonwealth of Massachusetts. [Remainder of Page Intentionally Left Blank] 3 IN WITNESS WHEREOF, Properties has caused this Third Affirmation to be made by its duly authorized officer as a sealed instrument as of the date first set forth above. GETTY PROPERTIES CORP. By: /s/ John J. Fitteron ------------------------------ Name: John J. Fitteron Title: Senior Vice President, Treasurer and Chief Financial Officer Agreed and Accepted: FLEET NATIONAL BANK By: /s/ Michael A. Palmer -------------------------- Name: Michael A. Palmer Title: Vice President EX-10.27 5 GUARANTEE AGREEMENT 1 GUARANTY AGREEMENT This GUARANTY AGREEMENT (this "GUARANTY"), dated as of March 1, 2000, by and between GETTY REALTY CORP., a Maryland corporation having its principal place of business at 125 Jericho Turnpike, Jericho, New York 11753 (the "GUARANTOR") and FLEET NATIONAL BANK (the "BANK"). In order to induce the Bank to amend its loan arrangement with Power Test Realty Company Limited Partnership, a New York limited partnership (the "BORROWER"), which loan arrangement is set forth in an Amended and Restated Loan Agreement dated as of October 31, 1995 by and between the Borrower and Fleet Bank of Massachusetts, N.A., predecessor in interest to the Bank, as amended by that certain First Amendment to the Amended and Restated Loan Agreement dated as of April 18, 1997, as further amended by that certain Second Amendment to the Amended and Restated Loan Agreement dated as of January 30, 1998, as further amended by that certain Third Amendment to the Amended and Restated Loan Agreement of even date herewith (as amended, the "LOAN AGREEMENT"), the Guarantor is entering into this Guaranty with the Bank pursuant to which the Guarantor guarantees the payment and performance in full of all of the Obligations (as that term is hereinafter defined). Accordingly, in consideration of the Bank's consent as aforesaid and its amendment of its loan arrangement with the Borrower and in consideration of the premises and of the covenants herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: Section 1. Definitions. The following terms shall have the meanings set forth in this Section 1 hereof or elsewhere in the provisions of this Guaranty referred to below: "BANK" means Fleet National Bank. "BORROWER" means Power Test Realty Company Limited Partnership, a New York limited partnership. "CONTINGENT LIABILITIES" means any guaranties, endorsements, agreements to purchase or provide funds for the 2 -2- payment of obligations of others, or other liabilities which would be classified as contingent in accordance with generally accepted accounting principles consistently applied, excluding, however, endorsements of checks or other negotiable instruments for deposit or collection in the ordinary course of business. "GUARANTOR" means Getty Realty Corp., a Maryland corporation. "GUARANTY" means this Guaranty Agreement as originally executed, or, if this Guaranty Agreement is amended, modified or supplemented, as so amended, modified or supplemented. "LOAN" means the loan from the Bank to the Borrower pursuant to the terms of the Loan Agreement. "LOAN AGREEMENT" means the Amended and Restated Loan Agreement dated as of October 31, 1995 between the Borrower and Fleet Bank of Massachusetts, N.A., predecessor in interest to the Bank, as amended by that certain First Amendment to the Amended and Restated Loan Agreement dated as of April 18, 1997, as further amended by that certain Second Amendment to the Amended and Restated Loan Agreement dated as of January 30, 1998, as further modified by that certain Third Amendment to the Amended and Restated Loan Agreement of even date herewith, or if further amended, modified or supplemented, as so further amended, modified or supplemented. "NOTES" means, collectively, the Master Note and the Collateral Note(s), or if amended, modified or supplemented, as so amended, modified or supplemented, and any note issued in exchange for or replacement of any such note pursuant to the terms of the Loan Agreement. "OBLIGATIONS" means all indebtedness, obligations and liabilities, direct or indirect, matured or unmatured, primary or secondary, certain or contingent, of the Borrower to the Bank for the payment of money now or hereafter owing or incurred (including, without limitation, reasonable costs and expenses incurred by the Bank in attempting to collect or enforce any of the foregoing) which are chargeable to the Borrower and which arise under or pursuant to the Loan Agreement or the Notes, accrued in each case to the date of payment hereunder, and "OBLIGATION" means any one of the Obligations. 3 -3- "OTHER BUSINESS(ES)" has the meaning set forth in Section 16.2 hereof. "PERSON" means any individual, corporation, partnership, trust, unincorporated association, joint stock company or other legal entity or organization and any government or agency or political subdivision thereof. "SUBSIDIARY" means, with respect to any Person that is not an individual, any other present or future corporation or other legal entity a majority of whose outstanding capital stock or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions is at the time owned directly or indirectly by such Person. All other capitalized terms used herein which are defined in the Loan Agreement have the meanings ascribed to them therein, unless they are expressly otherwise defined herein. Section 2. Guaranty of Payment. Section 2.1. Guaranty of Payment of Obligations. The Guarantor hereby unconditionally guarantees to the Bank the payment in full of each Obligation, when and as such Obligation becomes due and payable in accordance with the terms of the Loan Agreement and the Notes, whether such Obligation is outstanding on the date hereof or arises or is incurred hereafter. The guaranty hereby made by the Guarantor is an absolute, unconditional and continuing guaranty of the full and punctual payment by the Borrower of all of the Obligations in accordance with the terms of the Loan Agreement and not of their collectibility only and is in no way conditioned upon any requirement that the Bank first attempt to collect any of the Obligations from the Borrower or resort to any other security, collateral or other means of obtaining payment of any of the Obligations which the Bank now has or may acquire after the date hereof, or upon any other contingency whatsoever. Section 2.2. Payments. If the Borrower shall fail to make any payment of any Obligation punctually when and as such obligation shall become due and payable and such failure shall continue beyond the period of grace, if any, applicable thereto, then the Guarantor hereby agrees to make such payment of such Obligation, in funds immediately available to the Bank, upon written demand by the Bank. 4 -4- Section 2.3. Continuing Security of this Guaranty. This Guaranty and the rights, remedies, powers and privileges of the Bank hereunder shall not in any way be prejudiced or affected by an intermediate payment by the Borrower of any part of the Obligations. This Guaranty and the obligations of the Guarantor hereunder shall be in addition to and shall not in any way be prejudiced or affected by any other collateral or other security or guarantees now or hereafter held by the Bank for all or any part of the Obligations, and every right, remedy, power or privilege given to the Bank hereunder shall be in addition to and not a limitation of any and every other right, remedy, power or privilege vested in the Bank under any other collateral. No assurances, security or payment of any of the Obligations which is avoided under any enactment relating to bankruptcy, liquidation or insolvency, and no release, settlement or discharge given or made by the Bank on the faith of any such assurance, security or payment shall prejudice or affect the right of the Bank to recover from the Guarantor to the full extent of the guaranty hereby made by the Guarantor as if such assurance, security, payment, release, settlement or discharge (as the case may be) had never been given or made. Section 3. Demands for Payment. Each demand for payment pursuant to Section 2.2 hereof shall be made in accordance with the terms of Section 18 hereof. Demands for payment hereunder may be made on any number of occasions. A dated statement signed by an officer of the Bank and setting forth the amount of the Obligations at the time owing to the Bank, or (as the case may be) setting forth the amount of the obligations at the time owing by the Guarantor to the Bank pursuant to Section 9 hereof, shall, save for manifest error, be prima facie evidence thereof as between the Guarantor and the Bank in any legal proceedings against the Guarantor in connection with this Guaranty. Section 4. Waivers of Notice, Assent, Etc. The Guarantor hereby waives notice of acceptance of this Guaranty, notice of any and all loans or advances made or other financial accommodations extended to the Borrower by the Bank under the Loan Agreement, notice of the occurrence of any default or of any demand upon the Borrower for any payment under the Loan Agreement, notice of any action at any time taken or omitted by the Bank under or in respect of the Loan Agreement or any of the Obligations, any requirement of diligence or to mitigate damages and, generally, all demands, notices and other formalities of every kind in connection with this Guaranty (except as otherwise expressly provided hereby), the Loan Agreement or any of the Obligations. The Guarantor hereby assents to, and waives notice of, any extension or postponement of 5 -5- the time for the payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by the Bank at any time or times in respect of any default by the Borrower in the performance or satisfaction of any term, covenant, condition or provision of the Loan Agreement, any amendment, modification or waiver to the Loan Agreement, the Notes or any other Loan Document, any and all other indulgences whatsoever by the Bank in respect of any of the Obligations or otherwise, the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations, the addition, substitution or release, in whole or in part, of any person or persons (other than the Borrower) primarily or secondarily liable in respect of any of the Obligations or any other events or circumstances which might constitute a legal or equitable discharge of a surety or guaranty. Without limitation of the generality of the foregoing, the Guarantor assents to any other action or delay in acting or failure to act on the part of the Bank, including, without limitation, any failure strictly or diligently to assert any right or pursue any remedy or to mitigate damages or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section 4 hereof, afford grounds for terminating, discharging or relieving the Guarantor, in whole or in part, from any of its absolute and unconditional obligations hereunder, it being the intention of the Guarantor that, so long as any of the Obligations remains unsatisfied, the obligations of the Guarantor hereunder shall not be discharged except by payment and then only to the extent of such payment. The obligations of the Guarantor hereunder shall not be diminished or rendered unenforceable by any bankruptcy, winding up, reorganization, arrangement, liquidation or similar proceeding with respect to the Borrower, the Guarantor or the Bank. The guaranty hereby made by the Guarantor shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of the Borrower, the Guarantor or the Bank. Section 5. Place and Mode of Payments. Each payment by the Guarantor under or in respect of this Guaranty shall be made to the Bank in immediately available and freely transferable funds at the Bank's office at One Federal Street, Boston, Massachusetts 02110, Attention: Michael A. Palmer, Vice President. Section 6. Set-off. Regardless of the adequacy of any collateral or other means of obtaining prepayment of the Obligations, the Bank may at any time and without prior notice to the Guarantor set-off the whole or any portion or portions of any or all deposits and other sums credited by or due from the Bank to the Guarantor against amounts payable under this 6 -6- Guaranty, whether or not any other person or persons could also withdraw money therefrom. The Bank will promptly thereafter notify the Guarantor of any such set-off. Section 7. Freedom to Deal with Borrower and Other Banks. The Bank shall be at liberty, without giving notice to or obtaining the assent of the Guarantor and without relieving the Guarantor of any liability hereunder, to deal with the Borrower and with each other party who now is or after the date hereof becomes liable in any manner for any of the Obligations, in such manner as the Bank in its sole discretion deems fit, and to this end the Guarantor agrees that the Bank may in its sole discretion do any or all of the following things: (a) extend credit, make loans and afford other financial accommodations to the Borrower at such times, in such amounts and on such terms as the Bank may approve, (b) vary the terms and grant extensions or renewals of any present or future indebtedness or obligation to the Bank of the Borrower or of any such other party, (c) grant time, waivers and other indulgences in respect thereto, (d) vary, exchange, release or discharge, wholly or partially, or delay in or abstain from perfecting and enforcing any security or guaranty or other means of obtaining payment of any of the Obligations which the Bank now have or acquire after the date hereof, (e) accept partial payments from the Borrower or any such other party, (f) release or discharge, wholly or partially, any endorser or guarantor, and (g) compromise or make any settlement or other arrangement with the Borrower or any such other party. Section 8. Election of Remedies. This Guaranty may be enforced by the Bank from time to time as often as occasion therefor may arise and without any requirement on the part of the Bank first to exercise any rights against the Borrower or any other person or to exhaust any remedies available to the Bank against the Borrower or any other person or to resort to any collateral or security for any of the Obligations which is in the possession or under the control of the Bank or to resort to any other source or means of obtaining payment or enforcing payment of the Obligations or any of them. Section 9. Expenses. The Guarantor hereby agrees to pay upon demand by the Bank all reasonable out-of-pocket costs and expenses, including, but not limited to, court costs and expenses and the fees and disbursements of lawyers, incurred or expended by the Bank in connection with the enforcement of this Guaranty, together with interest on amounts recoverable under this Section 9 hereof from the time such amounts become due until payment at the rate applicable to amounts overdue under the Loan 7 -7- Agreement. The covenant contained in this Section 9 hereof shall survive the payment in full of all of the Obligations. Section 10. Further Assurances. The Guarantor will, at any time and from time to time, upon request by the Bank, take or cause to be taken any action and execute and deliver such, if any, further documents as, in the reasonable opinion of the Bank, are necessary in order to give full effect to this Guaranty and to preserve the rights, powers, privileges and remedies of the Bank hereunder. Section 11. Waiver of Certain Defenses. The Guarantor hereby absolutely and irrevocably waives, to the fullest extent permitted by law, any and all defenses which may now or hereafter exist in respect of its obligations hereunder by virtue of any statute of limitations, stay or moratorium law or other similar law now or hereafter in effect. Section 12. Unenforceability of Obligations Against Borrower, Etc. It is hereby agreed as a separate and independent stipulation that, if for any reason the Borrower ceases to have any legal obligation to discharge the Obligations or any of them, or if any of the moneys included in the Obligations have become irrecoverable from the Borrower by operation of law or for any other reason, or if any of the Obligations become unenforceable against the Borrower by operation of law or for any other reason, this Guaranty and the obligations of the Guarantor hereunder shall nevertheless be binding on the Guarantor to the same extent as if the Guarantor at all times prior to demand by the Bank for payment hereunder had been, and at the time of, such demand was, the principal debtor on all of such Obligations. Section 13. Amendments and Waivers. Neither this Guaranty nor any term hereof may be changed, waived, discharged or terminated except by an instrument in writing signed by the Bank and the Guarantor expressly referring to this Guaranty and to the provisions so changed, waived, discharged or terminated. No such waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon. No course of dealing by the Bank and no delay or omission on the part of the Bank in exercising any right or remedy hereunder shall operate as a waiver of that or any other right or remedy hereunder or otherwise be prejudicial thereto. Section 14. Representations and Warranties of the Guarantor. The Guarantor represents and warrants to the Bank that on and as of the date hereof: 8 -8- (a) Organization; Good Standing. The Guarantor (i) is a corporation duly organized, validly existing and in good standing under the laws of Maryland, (ii) has all requisite corporate power to own its property and conduct its business as now conducted and as presently contemplated, and (iii) is in good standing and is duly authorized to do business in each jurisdiction where the nature of its properties or its business requires such qualification and in which failure so to qualify would materially adversely affect its business or financial condition. (b) Authorization. The execution, delivery and performance of this Guaranty and the transactions contemplated hereby (i) are within the corporate authority of the Guarantor, (ii) have been duly authorized by all proper corporate proceedings required to make this Guaranty the valid and enforceable obligation it purports to be, (iii) will not contravene any provision of law, the charter documents or by-laws of the Guarantor or any other material agreement, instrument or undertaking binding upon the Guarantor, and (iv) do not require any approval or consent of, or filing with, any governmental agency or authority. (c) Enforceability. Upon execution by the parties hereto, this Guaranty will be the valid and legally binding obligation of the Guarantor, enforceable against it in accordance with the terms hereof, except to the extent that the enforcement of the rights and remedies of the Bank may be subject to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally the enforcement of creditors' rights and remedies, and the availability of equitable remedies may be subject to the discretion of the court before which any proceeding thereof is brought. Section 14.2. Governmental Approvals. No approval or consent or filing with any governmental agency or authority is required to make valid and legally binding the execution, delivery or performance by the Guarantor of this Guaranty. Section 14.3. Intentionally Deleted. Section 14.4. Intentionally Deleted. Section 14.5. Compliance With Other Instruments, Laws, Etc. The Guarantor is not in violation of any provision of its charter documents or by-laws or any agreement or instrument to which it may be subject or by which it or any of its properties may be bound or any decree, order, 9 -9- judgment, or any statute, license, rule or regulation, in any of the foregoing cases in a manner which could result in the imposition of substantial penalties or materially and adversely affect the financial condition, properties or business of the Guarantor. Section 14.6. Governmental Approvals. The execution, delivery and performance by the Guarantor of this Guaranty and the transactions contemplated hereby do not require the approval or consent of, or filing with, any governmental agency or authority other than those already obtained. Section 14.7. Litigation. There is no action, suit or proceeding at law or in equity or by or before any governmental instrumentality or other agency now pending or, to the knowledge of the Guarantor, threatened against or affecting the Guarantor, or any properties or rights of the Guarantor, which, if adversely determined, would materially impair the ability of the Guarantor to carry on its business substantially as now conducted or would materially adversely affect the financial condition of the Guarantor. Section 14.8. Chief Executive Offices. Until the Bank receives notice of a change, the chief executive offices of the Guarantor and the offices where all the records and books of account of the Guarantor are kept shall be located at 125 Jericho Turnpike, Jericho, New York 11753. Section 14.9. Indebtedness. No instrument evidencing or relating to any indebtedness of the Guarantor contains any restriction prohibiting the Guarantor from incurring any other indebtedness or Contingent Liabilities or any provision requiring the Guarantor to maintain any minimum level of net worth or comply with any other financial covenants. Section 14.10. True Copies of Charter Documents. The Guarantor has furnished or caused to be furnished to the Bank true and complete copies of the charter documents and by-laws of the Guarantor, together with any amendments thereto. Section 14.11. Guaranteed Pension Plans. The Guarantor does not contribute to any Guaranteed Pension Plans. The Guarantor does not contribute to any multiemployer pension plans. Section 14.12. Disclosure. No material representation or warranty made by the Guarantor in any Loan Document or in any agreement, instrument, document, certificate, statement or letter furnished to the Bank by or on behalf of the Guarantor in connection with any of the transactions contemplated by any of the Loan Documents contains any untrue 10 -10- statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances in which they are made. There is no fact known to any officer of the Guarantor which materially adversely affects, or which, in the best judgment of any officer of the Guarantor, would in the future materially adversely affect, the financial position, business, operations or affairs of the Guarantor. Section 15. Affirmative Covenants. The Guarantor covenants and agrees that, so long as any of the Loan, the Master Note, any Collateral Note or the Chase Note is outstanding, or any Obligations are outstanding: Section 15.1. Conduct of Business. The Guarantor will: (a) do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory), and franchises, licenses, material trademarks and service marks, and copyrights; and (b) keep true and accurate records and books of account, prepared in accordance with generally accepted accounting principles, consistently applied; (c) cause all of its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Guarantor may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times, and continue to engage primarily in the business now conducted by it and in related businesses, except as may be otherwise permitted under Section 16.2 hereof. Section 15.2. Compliance with Agreements and Contracts. The Guarantor will observe, conform to and comply with the provisions of its charter documents and by-laws, all leases, and all agreements and instruments by which it or any of its properties may be bound. Section 15.3. Compliance with Law. The Guarantor will (a) comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, noncompliance with which would have a materially adverse effect on the business, operations or financial condition of the Guarantor or the ability of the Guarantor to fulfill its 11 -11- obligations under this Guaranty and (b) promptly obtain, maintain, apply for renewal, and not allow to lapse, any authorization, consent, approval, license or order, and accomplish any filing or registration with, any court or judicial, administrative or governmental authority, which may be or may become necessary in order that it perform all of its obligations under this Guaranty and in order that the same may be valid and binding and effective in accordance with its terms and in order that the Bank may be able freely to exercise and enforce any and all of its rights under this Guaranty. Section 15.4. Notification of Material Litigation, Default, Etc. The Guarantor will promptly notify the Bank of (a) the commencement of any litigation or administrative proceeding initiated against it (if it has knowledge of the same) which is likely to involve any material risk of any material judgment or liability not substantially covered by insurance or which may otherwise result in a materially adverse change in the assets, financial condition or business of the Guarantor, and (b) the occurrence of any default. The Guarantor will promptly give notice to the Bank of the occurrence of any material default under any material instrument or agreement to which the Guarantor (if it has knowledge of the same) is a party, and if any person shall give any written notice or take any other action in respect of a claimed default under any other material evidence of indebtedness, indenture, note or other obligation as to which the Guarantor is a party or obligor, whether as principal or surety, the Guarantor shall promptly give written notice thereof to the Bank, describing the notice or action and the nature of the claimed default. Section 15.5. Financial Statements, Certificates and Other Information. The Guarantor will furnish to the Bank: (a) as soon as available but in any event within forty-five (45) days after the end of each of the first three fiscal quarters in any fiscal year of the Guarantor, an unaudited consolidated balance sheet for the Guarantor and its Subsidiaries as at the end of such quarter, and an unaudited consolidated statement of income and statement of changes in financial position for the Guarantor and its Subsidiaries for the period commencing with the end of the preceding fiscal year and ending with the end of such quarter, together with a certificate of the chief financial officer of the Guarantor stating that such financial statements fairly present the financial condition of the Guarantor and its Subsidiaries as of the date thereof and have been prepared in accordance with generally accepted accounting principles consistently applied, subject, however, to audit and year-end adjustments; 12 -12- (b) as soon as available but in any event within ninety (90) days after the end of each fiscal year, an audited consolidated balance sheet for the Guarantor and its Subsidiaries as at the end of such fiscal year, and an audited consolidated statement of income and statement of changes in financial position for the Guarantor and its Subsidiaries for such fiscal year, prepared in accordance with generally accepted accounting principles consistently applied, in each case accompanied by the opinion of and report by PricewaterhouseCoopers LLP or other independent certified public accountants of nationally recognized standing selected by the Guarantor and acceptable to the Bank, such opinion to be unqualified as to scope limitations imposed by the Guarantor, and otherwise, without qualification except as therein noted; (c) accompanying each set of financial statements of the Guarantor furnished pursuant to paragraph (a) or (b) above, an Officer's Certificate stating that a review of the activities of the Guarantor and the Borrower during the period covered by such financial statements has been made under the supervision of the signer with a view to determining whether, during such period, each of the Guarantor and the Borrower has kept, observed, performed and fulfilled each and every covenant and condition of each of the Loan Documents to which it is a party and either (i) stating that, to the best of his knowledge and belief, there neither exists on the date of such certificate, nor existed during such period, any default under any existing loan or credit agreement to which the Guarantor or the Borrower is a party, or (ii) if any such default under any existing loan or credit agreement to which the Guarantor or the Borrower is a party existed or exists, specifying the nature thereof, the period of existence thereof and what action the Guarantor or the Borrower, as appropriate, has taken, is taking or proposes to take with respect thereto; (d) accompanying each set of financial statements of the Guarantor set forth in paragraph (b) above, a certificate of the accounting firm stating that they have read a copy of this Guaranty and that, in the course of their regular audit of the business of the Guarantor, which was conducted in accordance with generally accepted auditing standards, nothing has come to their attention that caused them to believe that any default under any existing loan or credit agreement to which the Guarantor or the Borrower is a party has occurred during the fiscal year in question or exists at the date of such certificate or, if in the opinion of such firm a default 13 -13- under any existing loan or credit agreement to which the Guarantor or the Borrower is a party has so existed or exists, a statement as to the nature thereof; (e) contemporaneously with the filing or mailing thereof, copies of such other financial statements or reports as the Guarantor shall send to its stockholders, and copies of all regular, and periodic and other reports which the Guarantor may be required to file with the Securities and Exchange Commission or any other governmental commission, department, board, bureau or agency, federal or state (including without limitation all reports on Forms 10-K, 10-Q and 8-K); and (f) with reasonable promptness, such other information relating to the business or financial affairs of the Guarantor as the Bank may reasonably request. Section 15.6. Notice of Material Change. The Guarantor will promptly notify the Bank of any materially adverse change in its financial condition, business or operations. Section 15.7. Inspection of Properties and Books. The Bank or any of its designated representatives shall have the right to visit and inspect any of the properties of the Guarantor, to examine the books of account of the Guarantor, and to discuss the affairs, finances and accounts of the Guarantor with, and to be advised as to the same by, its officers, all at such reasonable times and intervals as the Bank may desire. Section 15.8. ERISA. The Guarantor will promptly notify the Bank of any Reportable Event (other than a Reportable Event as to which the Pension Benefit Guaranty Corporation has waived the applicable 30-day notice requirement pursuant to the provisions of ERISA) or any notice of termination of any Plan under Sections 4041 or 4042 of ERISA. The Guarantor shall not permit any employee pension benefit plan (as that term is defined in Section 3 of ERISA) maintained by the Guarantor to (a) engage in any "prohibited transaction" as such term is defined in Section 4975 of the Code which might result in a material liability for the Guarantor, or (b) incur any "accumulated funding deficiency", as such term is defined in Section 302 of ERISA, whether or not waived, or (c) terminate any such benefit plan in a manner which could result in the imposition of any material lien or encumbrance on the assets of the Guarantor under Section 4068 of ERISA. 14 -14- Section 15.9. Maintenance of Office. The Guarantor will maintain its chief executive office in Jericho, New York, or at such other place in the United States of America as the Guarantor shall designate upon written notice to the Bank, where notices, presentations and demands to or upon the Guarantor in respect of this Guaranty may be made. Section 15.10. Further Assurances. The Guarantor shall at any time or from time to time execute and deliver such further instruments and take such further action as may reasonably be requested by the Bank, in each case further and more perfectly to effect the purposes of this Guaranty. Section 16. Negative Covenants. The Guarantor covenants and agrees that, so long as any of the Loans, the Master Note or any Collateral Note is outstanding, or any Obligations are outstanding: Section 16.1. Merger or Sale of Assets. The Guarantor will not: (a) consolidate or merge with or into any other Person unless (i) after giving effect to such consolidation or merger, no default exists and (ii) the Guarantor is the surviving corporation of such consolidation or merger; or (b) sell, lease, transfer or otherwise dispose of all or any substantial portion of its assets; or (c) at any time transfer, assign or hypothecate any of its partnership interests or rights in respect of the Borrower; provided, however, the Guarantor shall have the right at any time to consolidate or merge with or into Getty Properties Corp., a Delaware corporation, without having to obtain the consent of the Bank. Section 16.2. Lines of Business. The Guarantor will not directly or indirectly through a Subsidiary engage in any business other than the acquisition, management, leasing, financing and disposition of petroleum and convenience store related real estate, the retail and wholesale distribution of petroleum products, the operation of convenience stores or other retail businesses related to the operation of gasoline service stations and convenience stores or other businesses which can reasonably be conducted at gasoline service stations or convenience stores, except that the Guarantor may engage in any other business (each an "OTHER BUSINESS" and collectively "OTHER BUSINESSES") acquired by the Guarantor if the aggregate purchase price (including any direct or 15 -15- contingent liabilities assumed by the Guarantor in connection with such acquisition) for such Other Business, plus the aggregate purchase prices (including assumed liabilities) for all Other Businesses previously acquired by the Guarantor, does not exceed $25,000,000. The Bank shall have the right to approve all purchase price allocations made in connection with any such acquisition of an Other Business or Other Businesses as the same relate to compliance with this Section 16.2. Section 16.3. Acquisitions. The Guarantor will provide the Bank with reasonable advance notice of any proposed acquisitions of assets or stock of Other Businesses (whether directly by the Guarantor or indirectly through a Subsidiary of the Guarantor) with respect to which the aggregate purchase price (including any assumption of liabilities) is $25,000,000 or more as set forth in Section 16.2 hereof and will provide to the Bank all information relating to such transactions as may be reasonably requested by the Bank. Section 16.4. Interest Rate Protection Arrangements. The Guarantor will not, and will not permit the Borrower to, enter into any interest rate protection arrangements with respect to the Loans with any Person other than the Bank, unless the Guarantor shall have first requested the Bank to enter into an interest rate protection arrangement on terms and conditions proposed in good faith by the Borrower and the Bank shall have declined such request. Section 17. Survival of Covenants. All covenants, agreements, representations and warranties made herein shall be deemed to have been relied on by the Bank notwithstanding any investigation made by the Bank or on its behalf, and shall survive the execution and delivery of this Guaranty. Section 18. Notices, Etc. (a) The Bank shall provide the Guarantor with a copy of each notice sent to the Borrower pursuant to Section 7 of the Loan Agreement. No failure of the Bank to provide any such notice shall operate to relieve the Guarantor of any of its obligations hereunder. (b) Except as otherwise expressly provided herein, all notices and other communications made or required to be given pursuant to this Guaranty shall be deemed delivered if in writing (or in the form of a telecopy confirmed by letter) addressed as provided below and if either (i) actually delivered at said address, or (ii) in the case of a letter, five Business Days shall have elapsed after the same shall have been deposited in the United States mails, postage prepaid and registered or certified: 16 -16- (x) if to the Guarantor, at 125 Jericho Turnpike, Jericho, New York 11753, Attention: John J. Fitteron, Senior Vice President, Treasurer and Chief Financial Officer, or at such other address for notice as the Guarantor shall last have furnished in writing to the Person giving the notice; or (y) if to the Bank, at 100 Federal Street, Boston, Massachusetts 02110, Attention: Michael A. Palmer, Vice President, or at such other address for notice as the Bank shall last have furnished in writing to the Person giving the notice. Section 19. Governing Law; Miscellaneous. This Guaranty is intended to take effect as a sealed instrument to be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts and shall inure to the benefit of the Bank and its successors and assigns, and shall be binding on the Guarantor and the Guarantor's successors, assigns and legal representatives. The descriptive headings of the sections hereof have been inserted herein for convenience of reference only and shall not define or limit the provisions hereof. Section 20. Counterparts. This Guaranty may be executed in any number of counterparts, but all of such counterparts together shall constitute one and the same agreement. In making proof of this Guaranty, it shall not be necessary to produce or account for more than one counterpart hereof executed by each of the parties hereto. [Remainder of Page Intentionally Left Blank] 17 IN WITNESS WHEREOF, this Guaranty has been executed by or on behalf of the parties hereto as an instrument under seal as of the day first above written. GETTY REALTY CORP. By: /s/ John J. Fitteron --------------------------------- Name: John J. Fitteron Title: Senior Vice President, Treasurer and Chief Financial Officer FLEET NATIONAL BANK By: /s/ Michael A. Palmer --------------------------------- Name: Michael A. Palmer Title: Vice President EX-10.28 6 GUARANTEE AGREEMENT 1 GUARANTY AGREEMENT This GUARANTY AGREEMENT (this "GUARANTY"), dated as of March 1, 2000, by and between GETTY PROPERTIES CORP., a Delaware corporation having its principal place of business at 125 Jericho Turnpike, Jericho, New York 11753 (the "GUARANTOR") and FLEET NATIONAL BANK (the "BANK"). In order to induce the Bank to amend its loan arrangement with Power Test Realty Company Limited Partnership, a New York limited partnership (the "BORROWER"), which loan arrangement is set forth in an Amended and Restated Loan Agreement dated as of October 31, 1995 by and between the Borrower and Fleet Bank of Massachusetts, N.A., predecessor in interest to the Bank, as amended by that certain First Amendment to the Amended and Restated Loan Agreement dated as of April 18, 1997, as further amended by that certain Second Amendment to the Amended and Restated Loan Agreement dated as of January 30, 1998, as further amended by that certain Third Amendment to the Amended and Restated Loan Agreement of even date herewith (as amended, the "LOAN AGREEMENT"), the Guarantor is entering into this Guaranty with the Bank pursuant to which the Guarantor guarantees the payment and performance in full of all of the Obligations (as that term is hereinafter defined). Accordingly, in consideration of the Bank's consent as aforesaid and its amendment of its loan arrangement with the Borrower and in consideration of the premises and of the covenants herein contained and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: SECTION 1. Definitions. The following terms shall have the meanings set forth in thissection 1 hereof or elsewhere in the provisions of this Guaranty referred to below: "BANK" means Fleet National Bank. "BORROWER" means Power Test Realty Company Limited Partnership, a New York limited partnership. "CONTINGENT LIABILITIES" means any guaranties, endorsements, agreements to purchase or provide funds for the 2 -2- payment of obligations of others, or other liabilities which would be classified as contingent in accordance with generally accepted accounting principles consistently applied, excluding, however, endorsements of checks or other negotiable instruments for deposit or collection in the ordinary course of business. "GUARANTOR" means Getty Properties Corp., a Delaware corporation. "GUARANTY" means this Guaranty Agreement as originally executed, or, if this Guaranty Agreement is amended, modified or supplemented, as so amended, modified or supplemented. "LOAN" means the loan from the Bank to the Borrower pursuant to the terms of the Loan Agreement. "LOAN AGREEMENT" means the Amended and Restated Loan Agreement dated as of October 31, 1995 between the Borrower and Fleet Bank of Massachusetts, N.A., predecessor in interest to the Bank, as amended by that certain First Amendment to the Amended and Restated Loan Agreement dated as of April 18, 1997, as further amended by that certain Second Amendment to the Amended and Restated Loan Agreement dated as of January 30, 1998, as further modified by that certain Third Amendment to the Amended and Restated Loan Agreement of even date herewith, or if further amended, modified or supplemented, as so further amended, modified or supplemented. "NOTES" means, collectively, the Master Note and the Collateral Note(s), or if amended, modified or supplemented, as so amended, modified or supplemented, and any note issued in exchange for or replacement of any such note pursuant to the terms of the Loan Agreement. "OBLIGATIONS" means all indebtedness, obligations and liabilities, direct or indirect, matured or unmatured, primary or secondary, certain or contingent, of the Borrower to the Bank for the payment of money now or hereafter owing or incurred (including, without limitation, reasonable costs and expenses incurred by the Bank in attempting to collect or enforce any of the foregoing) which are chargeable to the Borrower and which arise under or pursuant to the Loan Agreement or the Notes, accrued in each case to the date of payment hereunder, and "OBLIGATION" means any one of the Obligations. 3 -3- "OTHER BUSINESS(ES)" has the meaning set forth in section 16.2 hereof. "PERSON" means any individual, corporation, partnership, trust, unincorporated association, joint stock company or other legal entity or organization and any government or agency or political subdivision thereof. "SUBSIDIARY" means, with respect to any Person that is not an individual, any other present or future corporation or other legal entity a majority of whose outstanding capital stock or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions is at the time owned directly or indirectly by such Person. All other capitalized terms used herein which are defined in the Loan Agreement have the meanings ascribed to them therein, unless they are expressly otherwise defined herein. SECTION 2. Guaranty of Payment. SECTION 2.1. Guaranty of Payment of Obligations. The Guarantor hereby unconditionally guarantees to the Bank the payment in full of each Obligation, when and as such Obligation becomes due and payable in accordance with the terms of the Loan Agreement and the Notes, whether such Obligation is outstanding on the date hereof or arises or is incurred hereafter. The guaranty hereby made by the Guarantor is an absolute, unconditional and continuing guaranty of the full and punctual payment by the Borrower of all of the Obligations in accordance with the terms of the Loan Agreement and not of their collectibility only and is in no way conditioned upon any requirement that the Bank first attempt to collect any of the Obligations from the Borrower or resort to any other security, collateral or other means of obtaining payment of any of the Obligations which the Bank now has or may acquire after the date hereof, or upon any other contingency whatsoever. SECTION 2.2. Payments. If the Borrower shall fail to make any payment of any Obligation punctually when and as such obligation shall become due and payable and such failure shall continue beyond the period of grace, if any, applicable thereto, then the Guarantor hereby agrees to make such payment of such Obligation, in funds immediately available to the Bank, upon written demand by the Bank. 4 -4- SECTION 2.3. Continuing Security of this Guaranty. This Guaranty and the rights, remedies, powers and privileges of the Bank hereunder shall not in any way be prejudiced or affected by an intermediate payment by the Borrower of any part of the Obligations. This Guaranty and the obligations of the Guarantor hereunder shall be in addition to and shall not in any way be prejudiced or affected by any other collateral or other security or guarantees now or hereafter held by the Bank for all or any part of the Obligations, and every right, remedy, power or privilege given to the Bank hereunder shall be in addition to and not a limitation of any and every other right, remedy, power or privilege vested in the Bank under any other collateral. No assurances, security or payment of any of the Obligations which is avoided under any enactment relating to bankruptcy, liquidation or insolvency, and no release, settlement or discharge given or made by the Bank on the faith of any such assurance, security or payment shall prejudice or affect the right of the Bank to recover from the Guarantor to the full extent of the guaranty hereby made by the Guarantor as if such assurance, security, payment, release, settlement or discharge (as the case may be) had never been given or made. SECTION 3. Demands for Payment. Each demand for payment pursuant to section 2.2 hereof shall be made in accordance with the terms of section 18 hereof. Demands for payment hereunder may be made on any number of occasions. A dated statement signed by an officer of the Bank and setting forth the amount of the Obligations at the time owing to the Bank, or (as the case may be) setting forth the amount of the obligations at the time owing by the Guarantor to the Bank pursuant to section 9 hereof, shall, save for manifest error, be prima facie evidence thereof as between the Guarantor and the Bank in any legal proceedings against the Guarantor in connection with this Guaranty. SECTION 4. Waivers of Notice, Assent, Etc. The Guarantor hereby waives notice of acceptance of this Guaranty, notice of any and all loans or advances made or other financial accommodations extended to the Borrower by the Bank under the Loan Agreement, notice of the occurrence of any default or of any demand upon the Borrower for any payment under the Loan Agreement, notice of any action at any time taken or omitted by the Bank under or in respect of the Loan Agreement or any of the Obligations, any requirement of diligence or to mitigate damages and, generally, all demands, notices and other formalities of every kind in connection with this Guaranty (except as otherwise expressly provided hereby), the Loan Agreement or any of the Obligations. The Guarantor hereby assents to, and waives notice of, any extension or postponement of 5 -5- the time for the payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by the Bank at any time or times in respect of any default by the Borrower in the performance or satisfaction of any term, covenant, condition or provision of the Loan Agreement, any amendment, modification or waiver to the Loan Agreement, the Notes or any other Loan Document, any and all other indulgences whatsoever by the Bank in respect of any of the Obligations or otherwise, the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of the Obligations, the addition, substitution or release, in whole or in part, of any person or persons (other than the Borrower) primarily or secondarily liable in respect of any of the Obligations or any other events or circumstances which might constitute a legal or equitable discharge of a surety or guaranty. Without limitation of the generality of the foregoing, the Guarantor assents to any other action or delay in acting or failure to act on the part of the Bank, including, without limitation, any failure strictly or diligently to assert any right or pursue any remedy or to mitigate damages or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this SECTION 4 hereof, afford grounds for terminating, discharging or relieving the Guarantor, in whole or in part, from any of its absolute and unconditional obligations hereunder, it being the intention of the Guarantor that, so long as any of the Obligations remains unsatisfied, the obligations of the Guarantor hereunder shall not be discharged except by payment and then only to the extent of such payment. The obligations of the Guarantor hereunder shall not be diminished or rendered unenforceable by any bankruptcy, winding up, reorganization, arrangement, liquidation or similar proceeding with respect to the Borrower, the Guarantor or the Bank. The guaranty hereby made by the Guarantor shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of the Borrower, the Guarantor or the Bank. SECTION 5. Place and Mode of Payments. Each payment by the Guarantor under or in respect of this Guaranty shall be made to the Bank in immediately available and freely transferable funds at the Bank's office at One Federal Street, Boston, Massachusetts 02110, Attention: Michael A. Palmer, Vice President. SECTION 6. Set-off. Regardless of the adequacy of any collateral or other means of obtaining prepayment of the Obligations, the Bank may at any time and without prior notice to the Guarantor set-off the whole or any portion or portions of any or all deposits and other sums credited by or due from the Bank to the Guarantor against amounts payable under this 6 -6- Guaranty, whether or not any other person or persons could also withdraw money therefrom. The Bank will promptly thereafter notify the Guarantor of any such set-off. SECTION 7. Freedom to Deal with Borrower and Other Banks. The Bank shall be at liberty, without giving notice to or obtaining the assent of the Guarantor and without relieving the Guarantor of any liability hereunder, to deal with the Borrower and with each other party who now is or after the date hereof becomes liable in any manner for any of the Obligations, in such manner as the Bank in its sole discretion deems fit, and to this end the Guarantor agrees that the Bank may in its sole discretion do any or all of the following things: (a) extend credit, make loans and afford other financial accommodations to the Borrower at such times, in such amounts and on such terms as the Bank may approve, (b) vary the terms and grant extensions or renewals of any present or future indebtedness or obligation to the Bank of the Borrower or of any such other party, (c) grant time, waivers and other indulgences in respect thereto, (d) vary, exchange, release or discharge, wholly or partially, or delay in or abstain from perfecting and enforcing any security or guaranty or other means of obtaining payment of any of the Obligations which the Bank now have or acquire after the date hereof, (e) accept partial payments from the Borrower or any such other party, (f) release or discharge, wholly or partially, any endorser or guarantor, and (g) compromise or make any settlement or other arrangement with the Borrower or any such other party. SECTION 8. Election of Remedies. This Guaranty may be enforced by the Bank from time to time as often as occasion therefor may arise and without any requirement on the part of the Bank first to exercise any rights against the Borrower or any other person or to exhaust any remedies available to the Bank against the Borrower or any other person or to resort to any collateral or security for any of the Obligations which is in the possession or under the control of the Bank or to resort to any other source or means of obtaining payment or enforcing payment of the Obligations or any of them. SECTION 9. Expenses. The Guarantor hereby agrees to pay upon demand by the Bank all reasonable out-of-pocket costs and expenses, including, but not limited to, court costs and expenses and the fees and disbursements of lawyers, incurred or expended by the Bank in connection with the enforcement of this Guaranty, together with interest on amounts recoverable under this section 9 hereof from the time such amounts become due until payment at the rate applicable to amounts overdue under the Loan 7 -7- Agreement. The covenant contained in this section 9 hereof shall survive the payment in full of all of the Obligations. SECTION 10. Further Assurances. The Guarantor will, at any time and from time to time, upon request by the Bank, take or cause to be taken any action and execute and deliver such, if any, further documents as, in the reasonable opinion of the Bank, are necessary in order to give full effect to this Guaranty and to preserve the rights, powers, privileges and remedies of the Bank hereunder. SECTION 11. Waiver of Certain Defenses. The Guarantor hereby absolutely and irrevocably waives, to the fullest extent permitted by law, any and all defenses which may now or hereafter exist in respect of its obligations hereunder by virtue of any statute of limitations, stay or moratorium law or other similar law now or hereafter in effect. SECTION 12. Unenforceability of Obligations Against Borrower, Etc. It is hereby agreed as a separate and independent stipulation that, if for any reason the Borrower ceases to have any legal obligation to discharge the Obligations or any of them, or if any of the moneys included in the Obligations have become irrecoverable from the Borrower by operation of law or for any other reason, or if any of the Obligations become unenforceable against the Borrower by operation of law or for any other reason, this Guaranty and the obligations of the Guarantor hereunder shall nevertheless be binding on the Guarantor to the same extent as if the Guarantor at all times prior to demand by the Bank for payment hereunder had been, and at the time of, such demand was, the principal debtor on all of such Obligations. SECTION 13. Amendments and Waivers. Neither this Guaranty nor any term hereof may be changed, waived, discharged or terminated except by an instrument in writing signed by the Bank and the Guarantor expressly referring to this Guaranty and to the provisions so changed, waived, discharged or terminated. No such waiver shall extend to or affect any obligation not expressly waived or impair any right consequent thereon. No course of dealing by the Bank and no delay or omission on the part of the Bank in exercising any right or remedy hereunder shall operate as a waiver of that or any other right or remedy hereunder or otherwise be prejudicial thereto. SECTION 14. Representations and Warranties of the Guarantor. The Guarantor represents and warrants to the Bank that on and as of the date hereof: 8 -8- (a) Organization; Good Standing. The Guarantor (i) is a corporation duly organized, validly existing and in good standing under the laws of Delaware, (ii) has all requisite corporate power to own its property and conduct its business as now conducted and as presently contemplated, and (iii) is in good standing and is duly authorized to do business in each jurisdiction where the nature of its properties or its business requires such qualification and in which failure so to qualify would materially adversely affect its business or financial condition. (b) Authorization. The execution, delivery and performance of this Guaranty and the transactions contemplated hereby (i) are within the corporate authority of the Guarantor, (ii) have been duly authorized by all proper corporate proceedings required to make this Guaranty the valid and enforceable obligation it purports to be, (iii) will not contravene any provision of law, the charter documents or by-laws of the Guarantor or any other material agreement, instrument or undertaking binding upon the Guarantor, and (iv) do not require any approval or consent of, or filing with, any governmental agency or authority. (c) Enforceability. Upon execution by the parties hereto, this Guaranty will be the valid and legally binding obligation of the Guarantor, enforceable against it in accordance with the terms hereof, except to the extent that the enforcement of the rights and remedies of the Bank may be subject to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally the enforcement of creditors' rights and remedies, and the availability of equitable remedies may be subject to the discretion of the court before which any proceeding thereof is brought. SECTION 14.2. Governmental Approvals. No approval or consent or filing with any governmental agency or authority is required to make valid and legally binding the execution, delivery or performance by the Guarantor of this Guaranty. SECTION 14.3. Financial Statements. The Guarantor has furnished to the Bank the unaudited consolidated financial statements of the Guarantor as at January 31, 2000. Such financial statements were prepared in accordance with generally accepted accounting principles (except for requisite footnotes) applied on a consistent basis and fairly present the financial position of the Guarantor as at the respective dates thereof and its respective results of operations for the fiscal year or quarter then ended. 9 -9- SECTION 14.4. No Material Changes. Since January 31, 2000, there has been no materially adverse change in the assets, liabilities, financial condition or business of the Guarantor. SECTION 14.5. Compliance With Other Instruments, Laws, Etc. The Guarantor is not in violation of any provision of its charter documents or by-laws or any agreement or instrument to which it may be subject or by which it or any of its properties may be bound or any decree, order, judgment, or any statute, license, rule or regulation, in any of the foregoing cases in a manner which could result in the imposition of substantial penalties or materially and adversely affect the financial condition, properties or business of the Guarantor. SECTION 14.6. Governmental Approvals. The execution, delivery and performance by the Guarantor of this Guaranty and the transactions contemplated hereby do not require the approval or consent of, or filing with, any governmental agency or authority other than those already obtained. SECTION 14.7. Litigation. There is no action, suit or proceeding at law or in equity or by or before any governmental instrumentality or other agency now pending or, to the knowledge of the Guarantor, threatened against or affecting the Guarantor, or any properties or rights of the Guarantor, which, if adversely determined, would materially impair the ability of the Guarantor to carry on its business substantially as now conducted or would materially adversely affect the financial condition of the Guarantor. SECTION 14.8. Chief Executive Offices. Until the Bank receives notice of a change, the chief executive offices of the Guarantor and the offices where all the records and books of account of the Guarantor are kept shall be located at 125 Jericho Turnpike, Jericho, New York 11753. SECTION 14.9. Indebtedness. No instrument evidencing or relating to any indebtedness of the Guarantor contains any restriction prohibiting the Guarantor from incurring any other indebtedness or Contingent Liabilities or any provision requiring the Guarantor to maintain any minimum level of net worth or comply with any other financial covenants. SECTION 14.10. True Copies of Charter Documents. The Guarantor has furnished or caused to be furnished to the Bank true and complete copies of the charter documents and by-laws of the Guarantor, together with any amendments thereto. 10 -10- SECTION 14.11. Guaranteed Pension Plans. The Guarantor does not contribute to any Guaranteed Pension Plans. The Guarantor does not contribute to any multiemployer pension plans. SECTION 14.12. Disclosure. No material representation or warranty made by the Guarantor in any Loan Document or in any agreement, instrument, document, certificate, statement or letter furnished to the Bank by or on behalf of the Guarantor in connection with any of the transactions contemplated by any of the Loan Documents contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading in light of the circumstances in which they are made. There is no fact known to any officer of the Guarantor which materially adversely affects, or which, in the best judgment of any officer of the Guarantor, would in the future materially adversely affect, the financial position, business, operations or affairs of the Guarantor. SECTION 15. Affirmative Covenants. The Guarantor covenants and agrees that, so long as any of the Loan, the Master Note, any Collateral Note or the Chase Note is outstanding, or any Obligations are outstanding: SECTION 15.1. Conduct of Business. The Guarantor will: (a) do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, rights (charter and statutory), and franchises, licenses, material trademarks and service marks, and copyrights; and (b) keep true and accurate records and books of account, prepared in accordance with generally accepted accounting principles, consistently applied; (c) cause all of its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Guarantor may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times, and continue to engage primarily in the business now conducted by it and in related businesses, except as may be otherwise permitted under section 16.2 hereof. 11 -11- SECTION 15.2. Compliance with Agreements and Contracts. The Guarantor will observe, conform to and comply with the provisions of its charter documents and by-laws, all leases, and all agreements and instruments by which it or any of its properties may be bound. SECTION 15.3. Compliance with Law. The Guarantor will (a) comply with all laws, rules, regulations, orders, writs, judgments, injunctions, decrees or awards to which it may be subject, noncompliance with which would have a materially adverse effect on the business, operations or financial condition of the Guarantor or the ability of the Guarantor to fulfill its obligations under this Guaranty and (b) promptly obtain, maintain, apply for renewal, and not allow to lapse, any authorization, consent, approval, license or order, and accomplish any filing or registration with, any court or judicial, administrative or governmental authority, which may be or may become necessary in order that it perform all of its obligations under this Guaranty and in order that the same may be valid and binding and effective in accordance with its terms and in order that the Bank may be able freely to exercise and enforce any and all of its rights under this Guaranty. SECTION 15.4. Notification of Material Litigation, Default, Etc. The Guarantor will promptly notify the Bank of (a) the commencement of any litigation or administrative proceeding initiated against it (if it has knowledge of the same) which is likely to involve any material risk of any material judgment or liability not substantially covered by insurance or which may otherwise result in a materially adverse change in the assets, financial condition or business of the Guarantor, and (b) the occurrence of any default. The Guarantor will promptly give notice to the Bank of the occurrence of any material default under any material instrument or agreement to which the Guarantor (if it has knowledge of the same) is a party, and if any person shall give any written notice or take any other action in respect of a claimed default under any other material evidence of indebtedness, indenture, note or other obligation as to which the Guarantor is a party or obligor, whether as principal or surety, the Guarantor shall promptly give written notice thereof to the Bank, describing the notice or action and the nature of the claimed default. SECTION 15.5. Financial Statements, Certificates and Other Information. The Guarantor will furnish to the Bank: (a) as soon as available but in any event within ninety (90) days after the end of each fiscal year, an unaudited consolidated balance sheet for the Guarantor and its Subsidiaries as at the end of such fiscal year, and an unaudited consolidated statement of 12 -12- income and statement of changes in financial position for the Guarantor and its Subsidiaries for such fiscal year, prepared in accordance with generally accepted accounting principles consistently applied (except for the exclusion of footnotes related thereto), together with a certificate of the chief financial officer of the Guarantor stating that such financial statements fairly present the financial condition of the Guarantor and its Subsidiaries as of the date thereof and have been prepared in accordance with generally accepted accounting principles consistently applied (except for the exclusion of footnotes related thereto); and (b) with reasonable promptness, such other information relating to the business or financial affairs of the Guarantor as the Bank may reasonably request. SECTION 15.6. Notice of Material Change. The Guarantor will promptly notify the Bank of any materially adverse change in its financial condition, business or operations. SECTION 15.7. Inspection of Properties and Books. The Bank or any of its designated representatives shall have the right to visit and inspect any of the properties of the Guarantor, to examine the books of account of the Guarantor, and to discuss the affairs, finances and accounts of the Guarantor with, and to be advised as to the same by, its officers, all at such reasonable times and intervals as the Bank may desire. SECTION 15.8. ERISA. The Guarantor will promptly notify the Bank of any Reportable Event (other than a Reportable Event as to which the Pension Benefit Guaranty Corporation has waived the applicable 30-day notice requirement pursuant to the provisions of ERISA) or any notice of termination of any Plan under Sections 4041 or 4042 of ERISA. The Guarantor shall not permit any employee pension benefit plan (as that term is defined in Section 3 of ERISA) maintained by the Guarantor to (a) engage in any "prohibited transaction" as such term is defined in Section 4975 of the Code which might result in a material liability for the Guarantor, or (b) incur any "accumulated funding deficiency", as such term is defined in Section 302 of ERISA, whether or not waived, or (c) terminate any such benefit plan in a manner which could result in the imposition of any material lien or encumbrance on the assets of the Guarantor under Section 4068 of ERISA. SECTION 15.9. Maintenance of Office. The Guarantor will maintain its chief executive office in Jericho, New York, or at such other place in the United States of America as the Guarantor shall designate upon written 13 -13- notice to the Bank, where notices, presentations and demands to or upon the Guarantor in respect of this Guaranty may be made. SECTION 15.10. Further Assurances. The Guarantor shall at any time or from time to time execute and deliver such further instruments and take such further action as may reasonably be requested by the Bank, in each case further and more perfectly to effect the purposes of this Guaranty. SECTION 16. Negative Covenants. The Guarantor covenants and agrees that, so long as any of the Loans, the Master Note or any Collateral Note is outstanding, or any Obligations are outstanding: SECTION 16.1. Merger or Sale of Assets. The Guarantor will not: (a) consolidate or merge with or into any other Person unless (i) after giving effect to such consolidation or merger, no default exists and (ii) the Guarantor is the surviving corporation of such consolidation or merger; or (b) sell, lease, transfer or otherwise dispose of all or any substantial portion of its assets; or (c) at any time transfer, assign or hypothecate any of its partnership interests or rights in respect of the Borrower; provided, however, the Guarantor shall have the right at any time to consolidate or merge with or into Getty Realty Corp., a Maryland corporation, without having to obtain the consent of the Bank. SECTION 16.2. Lines of Business. The Guarantor will not directly or indirectly through a Subsidiary engage in any business other than the acquisition, management, leasing, financing and disposition of petroleum and convenience store related real estate, the retail and wholesale distribution of petroleum products, the operation of convenience stores or other retail businesses related to the operation of gasoline service stations and convenience stores or other businesses which can reasonably be conducted at gasoline service stations or convenience stores, except that the Guarantor may engage in any other business (each an "OTHER BUSINESS" and collectively "OTHER BUSINESSES") acquired by the Guarantor if the aggregate purchase price (including any direct or contingent liabilities assumed by the Guarantor in connection with such acquisition) for such Other Business, plus the aggregate purchase prices (including assumed liabilities) for all Other Businesses previously 14 -14- acquired by the Guarantor, does not exceed $25,000,000. The Bank shall have the right to approve all purchase price allocations made in connection with any such acquisition of an Other Business or Other Businesses as the same relate to compliance with this section 16.2. SECTION 16.3. Acquisitions. The Guarantor will provide the Bank with reasonable advance notice of any proposed acquisitions of assets or stock of Other Businesses (whether directly by the Guarantor or indirectly through a Subsidiary of the Guarantor) with respect to which the aggregate purchase price (including any assumption of liabilities) is $25,000,000 or more as set forth in Section 16.2 hereof and will provide to the Bank all information relating to such transactions as may be reasonably requested by the Bank. SECTION 16.4. Interest Rate Protection Arrangements. The Guarantor will not, and will not permit the Borrower to, enter into any interest rate protection arrangements with respect to the Loans with any Person other than the Bank, unless the Guarantor shall have first requested the Bank to enter into an interest rate protection arrangement on terms and conditions proposed in good faith by the Borrower and the Bank shall have declined such request. SECTION 17. Survival of Covenants. All covenants, agreements, representations and warranties made herein shall be deemed to have been relied on by the Bank notwithstanding any investigation made by the Bank or on its behalf, and shall survive the execution and delivery of this Guaranty. SECTION 18. Notices, Etc. (a) The Bank shall provide the Guarantor with a copy of each notice sent to the Borrower pursuant to section 7 of the Loan Agreement. No failure of the Bank to provide any such notice shall operate to relieve the Guarantor of any of its obligations hereunder. (b) Except as otherwise expressly provided herein, all notices and other communications made or required to be given pursuant to this Guaranty shall be deemed delivered if in writing (or in the form of a telecopy confirmed by letter) addressed as provided below and if either (i) actually delivered at said address, or (ii) in the case of a letter, five Business Days shall have elapsed after the same shall have been deposited in the United States mails, postage prepaid and registered or certified: (x) if to the Guarantor, at 125 Jericho Turnpike, Jericho, New York 11753, Attention: John J. Fitteron, Senior Vice President, 15 -15- Treasurer and Chief Financial Officer, or at such other address for notice as the Guarantor shall last have furnished in writing to the Person giving the notice; or (y) if to the Bank, at 100 Federal Street, Boston, Massachusetts 02110, Attention: Michael A. Palmer, Vice President, or at such other address for notice as the Bank shall last have furnished in writing to the Person giving the notice. SECTION 19. Governing Law; Miscellaneous. This Guaranty is intended to take effect as a sealed instrument to be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts and shall inure to the benefit of the Bank and its successors and assigns, and shall be binding on the Guarantor and the Guarantor's successors, assigns and legal representatives. The descriptive headings of the sections hereof have been inserted herein for convenience of reference only and shall not define or limit the provisions hereof. SECTION 20. Counterparts. This Guaranty may be executed in any number of counterparts, but all of such counterparts together shall constitute one and the same agreement. In making proof of this Guaranty, it shall not be necessary to produce or account for more than one counterpart hereof executed by each of the parties hereto. [Remainder of Page Intentionally Left Blank] 16 IN WITNESS WHEREOF, this Guaranty has been executed by or on behalf of the parties hereto as an instrument under seal as of the day first above written. GETTY PROPERTIES CORP. By: /s/ John J. Fitteron ------------------------------ Name: John J. Fitteron Title: Senior Vice President, Treasurer and Chief Financial Officer FLEET NATIONAL BANK By: /s/ Michael A. Palmer ------------------------------ Name: Michael A. Palmer Title: Vice President EX-10.29 7 THIRD AFFIRMATION AND ACKNOWLEDGMENT 1 THIRD AFFIRMATION AND ACKNOWLEDGMENT OF AMENDED AND RESTATED THREE PARTY LEASE AGREEMENT This THIRD AFFIRMATION AND ACKNOWLEDGMENT OF AMENDED AND RESTATED THREE PARTY LEASE AGREEMENT (this "THIRD AFFIRMATION") is made as of this 1st day of March, 2000 by Getty Properties Corp., a Delaware corporation ("PROPERTIES"), successor by merger and name change to Getty Realty Corp. ("REALTY"), which was successor by merger and name change to Getty Petroleum Corp. ("GETTY"). WITNESSETH: WHEREAS, Getty duly authorized, executed and delivered that certain Amended and Restated Three Party Lease Agreement dated as of October 31, 1995 by and among Getty, Fleet Bank of Massachusetts, N.A., predecessor in interest to Fleet National Bank (the "BANK"), and Power Test Realty Company Limited Partnership (the "BORROWER") (the "LEASE Agreement"); WHEREAS, Realty affirmed its obligations under the Lease Agreement pursuant to an Affirmation and Acknowledgment of Amended and Restated Three Party Lease Agreement dated as of April 18, 1997 (the "AFFIRMATION"); WHEREAS, Properties affirmed its obligations under the Lease Agreement pursuant to a Second Affirmation and Acknowledgment of Amended and Restated Three Party Lease Agreement dated as of January 30, 1998 (the "SECOND Affirmation"); WHEREAS, the execution and delivery of this Third Affirmation is a condition precedent to the Bank's and the Borrower's agreement to enter into that certain Third Amendment to the Amended and Restated Loan Agreement of even date herewith (the "THIRD AMENDMENT"); NOW, THEREFORE, for good and valuable consideration paid and in consideration of the promises herein, the receipt and sufficiency of which are hereby acknowledged, Properties agrees as follows: 1. Properties hereby affirms and acknowledges (i) the continued validity of the Lease Agreement, as amended by the Affirmation and the Second Affirmation and (ii) that the Lease 2 -2- Agreement, as amended by the Affirmation and the Second Affirmation, remains in full force and effect. Properties agrees that the obligations of Properties to the Bank under the Lease Agreement, as amended by the Affirmation, the Second Affirmation and hereby, and the terms and provisions of the Lease Agreement, as amended by the Affirmation and the Second Affirmation, are hereby ratified, affirmed and incorporated herein by reference, with the same force and effect as if set forth herein in their entirety. Properties consents to the amendments set forth in the Third Amendment. 2. This Third Affirmation shall be construed according to and governed by the laws of the Commonwealth of Massachusetts. [Remainder of Page Intentionally Left Blank] 3 IN WITNESS WHEREOF, Properties has caused this Third Affirmation to be made by its duly authorized officer as a sealed instrument as of the date first set forth above. GETTY PROPERTIES CORP. By: /s/ John J. Fitteron --------------------------------- Name: John J. Fitteron Title: Senior Vice President, Treasurer and Chief Financial Officer Agreed and Accepted: FLEET NATIONAL BANK By: /s/ Michael A. Palmer ----------------------------- Name: Michael A. Palmer Title: Vice President EX-13 8 ANNUAL REPORT TO STOCKHOLDERS 1 SELECTED FINANCIAL DATA ------------------------- GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA Years ended January 31, ---------------------------------------------------------------- (in thousands, except per share amounts) 2000 1999 1998 (a) 1997 (a) 1996 (a) --------- --------- ---------- ---------- ---------- Total revenues $ 63,859 $ 61,341 $ 62,817 $ 892,456 $ 798,967 Earnings (loss) from continuing operations before income taxes and cumulative effect of accounting change 26,105 12,838 13,546(b) (14,395)(c) 21,058 Net earnings (loss) 15,014 10,056 7,944 (9,176) 12,634(d) Diluted earnings (loss) per common share: Continuing operations .73 .17 .59 (.74) .97(d) Discontinued operations -- .19 .01 .01 .02 Net earnings (loss) .73 .36 .60 (.72) 1.00(d) Cash dividends per share: Preferred 1.775 1.775 -- -- -- Common .40 .40 .12 .12 .06 Total assets 260,752 261,084 265,661 290,664 275,006 Total debt 43,993 39,742 40,526 41,592 51,586 Stockholders' equity 141,811 138,031 138,593 100,472 110,574
(a) Includes financial results of the petroleum marketing business prior to its spin-off to the Company's stockholders on March 21, 1997. (b) Includes $7,918 of aggregate pre-tax charges consisting of $8,683 of stock compensation expense and $2,166 of change of control charges, net of $2,931 of equity in earnings of petroleum marketing business for the period from February 1, 1997 to March 21, 1997. (c) Includes pre-tax charges aggregating $28,677 consisting of $21,182 related to revision of estimate of future environmental remediation costs, $5,802 related to the settlement of a dispute involving the Company's former construction company subsidiary and $1,693 of expenses related to the spin-off transaction. (d) Includes after-tax charge of $794 or $.06 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." PRO FORMA SUPPLEMENTAL FINANCIAL HIGHLIGHTS AND SELECTED DATA (Unaudited)
(in thousands, except number of properties) 2000 1999 1998(e) 1997(e) 1996(e) -------- -------- -------- -------- -------- FISCAL YEAR ENDED JANUARY 31, Revenues from rental properties $ 58,889 $ 58,869 $ 59,449 $ 58,653 $ 57,177 Other income 4,970 2,472 3,368 1,570 5,726 -------- -------- -------- -------- -------- Total revenues 63,859 61,341 62,817 60,223 62,903 Adjusted EBITDA (f) 41,519 39,874 41,516 45,259 41,048 Net earnings 15,014 10,056 6,213 6,049 8,970(d) Capital expenditures 14,979 25,222 11,259 6,913 6,260 AS OF JANUARY 31, Real estate before accumulated depreciation 316,002 307,793 284,092 190,524 183,621 Total assets 260,752 261,084 265,661 155,164 150,508 Capitalization: Total debt 43,993 39,742 40,526 41,592 51,586 Stockholders' equity 141,811 138,031 138,593 45,931 60,263 -------- -------- -------- -------- -------- Total capitalization 185,804 177,773 179,119 87,523 111,849 NUMBER OF PROPERTIES: Owned 757 740 736 441 439 Leased 361 379 404 732 734 -------- -------- -------- -------- -------- Total properties 1,118 1,119 1,140 1,173 1,173
(e) Excludes the petroleum marketing business which was spun-off on March 21, 1997. This data is presented for informational purposes only and is not necessarily indicative of the financial results that would have occurred had Realty been operated as separate, stand-alone entity during such periods nor is the information presented necessarily indicative of future results. (f) Adjusted EBITDA is defined as earnings from continuing operations before interest expense, income taxes, depreciation and amortization, adjusted to exclude environmental expense, stock option, change of control and litigation items and other income (except mortgage receivable interest income). Adjusted EBITDA provides additional information for evaluating financial results and is presented solely as a supplemental measure. Adjusted EBITDA is not intended to represent cash flow and should not be construed as an alternative to either cash flow, net income, or any other measure of financial performance presented in accordance with generally accepted accounting principles. 6 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ------------------------------------------ GETTY REALTY CORP. AND SUBSIDIARIES GENERAL Prior to the spin-off of its petroleum marketing business to stockholders on March 21, 1997, Getty Realty Corp. was principally engaged in the ownership and leasing of real estate as well as the marketing and distribution of petroleum products. In December 1998, we sold the Pennsylvania and Maryland heating oil business. The results of operations of the heating oil business have been reclassified as discontinued in the accompanying financial statements for the years ended January 31, 1999 and 1998. We are now a real estate company specializing in service stations, convenience stores and petroleum marketing terminals. We lease most of our properties on a long-term net basis to the spun-off company, Getty Petroleum Marketing Inc. ("Marketing"). In order to make the following discussion of our results of operations more meaningful, the financial results of the spun-off petroleum marketing business and the sold heating oil business, which is shown as a discontinued operation, have been excluded from the narrative presented below. The net earnings of Marketing included in the accompanying consolidated statement of operations for the period prior to its spin-off, February 1, 1997 to March 21, 1997, were $1.7 million. The net earnings of the discontinued heating oil business were $2.6 million and $0.1 million for the fiscal years ended January 31, 1999 and 1998, respectively. See Notes 2 and 3 to the consolidated financial statements for separate financial information relating to the spun-off petroleum marketing business and the discontinued heating oil business. Our financial results largely depend on rental income from Marketing and other lessees and sublessees. Our financial results are materially dependent upon the ability of Marketing to meet its obligations under the master lease entered into on February 1, 1997 (the "Master Lease"); however, we do not anticipate that Marketing will have difficulty in making all required rental payments in the foreseeable future. RESULTS OF OPERATIONS FISCAL YEAR ENDED JANUARY 31, 2000 COMPARED TO FISCAL YEAR ENDED JANUARY 31, 1999 Revenues from rental properties for each of the years ended January 31, 2000 ("fiscal 2000") and 1999 ("fiscal 1999") were $58.9 million. Approximately $56.4 million of these rentals for each fiscal year were from properties leased to Marketing under the Master Lease. Other income was $5.0 million for fiscal 2000 as compared with $2.5 million for fiscal 1999. The $2.5 million increase was primarily due to higher gains on dispositions of real estate of $1.8 million and the settlement of a lawsuit resulting in the elimination of a $1.2 million reserve, partially offset by lower investment income. Rental property expenses, which are principally comprised of rent expense and real estate taxes, decreased from fiscal 1999 by $0.8 million (6.1%) to $12.1 million for fiscal 2000 due to a reduction in the number of properties leased. Environmental and maintenance expenses for fiscal 2000 were $6.8 million, a decrease of $10.5 million from the prior year. The current year included an environmental charge of $6.6 million, of which $4.4 million represented a change in estimated remediation costs associated with contamination discovered during work performed to meet certain federal underground storage tank standards and revisions to estimates at other sites where remediation is ongoing. The prior year included an environmental charge of $16.9 million, of which $14.8 million represented a change in estimated remediation costs or revisions to prior estimates. General and administrative expenses for fiscal 2000 were $5.6 million, a decrease of $0.5 million from the prior year. The decrease was principally due to lower legal and professional fees, partially offset by a higher retrospective insurance charge relating to the spun-off petroleum marketing business. Included in general and administrative expenses for fiscal 2000 and 1999 are $749 thousand and $960 thousand, respectively, of net fees paid by the Company to Marketing for certain administrative and technical services performed under a services agreement. Depreciation and amortization for fiscal 2000 was $10.4 million, an increase of $1.0 million over the prior year as a result of capital expenditures and property acquisitions. Interest expense for fiscal 2000 was $2.7 million, comparable to fiscal 1999. 7 3 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ---------------------------------------------- GETTY REALTY CORP. AND SUBSIDIARIES FISCAL YEAR ENDED JANUARY 31, 1999 COMPARED TO FISCAL YEAR ENDED JANUARY 31, 1998 Revenues from rental properties for fiscal 1999 were $58.9 million, a 1.0% decrease from the $59.4 million realized for the year ended January 31, 1998 ("fiscal 1998"). Approximately $56.4 million and $57.0 million of these rentals for fiscal 1999 and 1998, respectively, were from properties leased to Marketing under the Master Lease. Other income was $2.5 million for fiscal 1999 as compared with $3.4 million for fiscal 1998. The $0.9 million decrease was primarily due to $0.7 million of management fees for administrative and other services provided to Power Test Investors Limited Partnership ("PTI") in fiscal 1998, which were eliminated as a result of the merger of PTI into the Company on January 30, 1998. Rental property expenses, which are principally comprised of rent expense and real estate taxes, decreased from fiscal 1998 by $0.7 million (5.0%) to $12.9 million for fiscal 1999 due to a decrease in the number of properties leased. Environmental and maintenance expenses for fiscal 1999 were $17.3 million, an increase of $8.7 million from the prior year. Fiscal 1999 included an environmental charge of $16.9 million, of which $14.8 million represented a change in estimated remediation costs associated with contamination discovered during work performed to meet the federal underground storage tank standards and revisions to estimates on previously identified sites where remediation is ongoing. The prior year included an environmental charge of $8.3 million, of which $6.2 million represented a change in estimated remediation costs or revisions to prior estimates. General and administrative expenses for fiscal 1999 were $6.1 million, a decrease of $7.2 million from the prior year. The decrease was principally due to a charge of $8.7 million recorded during fiscal 1998 for stock compensation resulting from a change in the Company's stock price, partially offset by higher insurance costs, legal and other professional fees during fiscal 1999. Depreciation and amortization for fiscal 1999 was $9.4 million, comparable to fiscal 1998. Interest expense for fiscal 1999 was $2.7 million, a decrease of $2.3 million from the prior year. The decrease was principally due to the elimination of capitalized lease obligations as a result of the merger of PTI into the Company on January 30, 1998. During fiscal 1998, the Company recorded a charge of $2.2 million related to change of control agreements in connection with the spin-off of Marketing. LIQUIDITY AND CAPITAL RESOURCES Our principal sources of liquidity are cash flows from our business and short-term uncommitted lines of credit with two banks. Management believes that cash requirements for our business, including capital expenditures and debt service can be met by cash flows from operations, available cash and equivalents and credit lines. As of January 31, 2000, we had lines of credit amounting to $25 million, which may be utilized for working capital borrowings and letters of credit. As of January 31, 2000, we were utilizing $14.8 million of the lines of credit for short-term borrowings and $3.1 million in connection with outstanding letters of credit. Borrowings under the lines of credit are unsecured and bear interest at the prime rate or, at our option, LIBOR plus 1.0% or 1.1%. The lines of credit are subject to renewal at the discretion of the banks. Although we expect that the existing sources of liquidity will be sufficient to meet our expected business and debt service requirements, we may be required to obtain additional sources of capital in the future, which we believe are available. In order to improve cash flow for fiscal 2001, we recently negotiated an extension of the maturity date of a $23 million mortgage loan from November 1, 2000 to March 1, 2005. The mortgage loan calls for monthly principal payments of $175,000 with the balance payable on maturity in 2005. During fiscal 2000 and 1999, we declared quarterly cash common stock dividends of $.10 per share and quarterly preferred stock dividends of $.44375 per share. These dividends aggregated $10.6 million for each of fiscal 2000 and 1999. During the first quarter of fiscal 2001, the Board increased the quarterly cash common stock dividend to $.15 per share. 8 4 continued --------------------------------- GETTY REALTY CORP. AND SUBSIDIARIES In December 1999, the Board of Directors authorized the purchase, from time to time, in the open market or in private transactions, of up to an aggregate of 300,000 shares of Common Stock and Series A Participating Convertible Redeemable Preferred Stock. As of January 31, 2000, we had repurchased 60,016 shares of common stock and 700 shares of preferred stock at an aggregate cost of $0.7 million. In February 2000, we completed this stock buyback program, which resulted in the repurchase of 295,600 shares of common stock and 4,400 shares of preferred stock at an aggregate cost of $3.6 million. In March 2000, the Board approved the purchase of up to an aggregate of 500,000 additional shares of the Company's common and preferred stock. As of April 18, 2000, we had repurchased 460,186 shares of common and preferred stock at an aggregate cost of $5.8 million. Capital expenditures, including acquisitions, for fiscal 2000, 1999 and 1998 were $15.0 million, $25.2 million and $11.3 million, respectively, including $4.7 million, $17.9 million and $8.0 million, respectively, for the replacement of underground storage tanks and vapor recovery facilities at gasoline stations. These expenditures and certain environmental liabilities and obligations continue to be our responsibility after the spin-off. ENVIRONMENTAL MATTERS We are subject to numerous federal, state and local laws and regulations, including matters relating to the protection of the environment. Environmental expenses have been attributable to remediation, monitoring, soil disposal and governmental agency reporting (collectively, "Remediation Costs") incurred in connection with contaminated sites and the replacement or upgrading of underground storage tanks, related piping, underground pumps, wiring and monitoring devices (collectively, "USTs") to meet federal, state and local environmental standards, as well as routine monitoring and tank testing. Under the Master Lease with Marketing, we committed to a program to bring the leased properties with known environmental problems to regulatory closure and, thereafter, transfer all future environmental risks to Marketing. Upon achieving closure of each individual site, our environmental liability under the Master Lease for that site will be satisfied, and future remediation obligations will be the responsibility of Marketing. We have agreed to pay all costs relating to, and to indemnify Marketing for, all known pre-spin-off environmental liabilities and obligations as scheduled in the Master Lease, and all other environmental liabilities and obligations arising out of discharges with respect to properties containing USTs that had not been upgraded to meet the 1998 federal standards that were discovered prior to the date the USTs were upgraded to meet the 1998 federal standards (collectively, the "Realty Environmental Liabilities"). We collect recoveries from state UST remediation funds related to the Realty Environmental Liabilities. Environmental exposures are difficult to assess and estimate for numerous reasons, including the extent of contamination, alternative treatment methods that may be applied, location of the property which subjects it to differing local laws and regulations and their interpretations, as well as the time it takes to remediate contamination. In developing the estimates of environmental remediation costs, we consider, among other things, enacted laws and regulations, assessments of contamination, currently available technologies for treatment, alternative methods of remediation and prior experience. These estimates are subject to change as these contingencies become more clearly defined and remediation treatment progresses. For fiscal 2000, 1999 and 1998, net environmental expenses included in our consolidated statements of operations were $6.6 million, $16.9 million and $8.3 million, respectively, which amounts were net of probable recoveries from state UST remediation funds. 9 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ------------------------------------------------ GETTY REALTY CORP. AND SUBSIDIARIES As of January 31, 2000 and 1999, we had accrued $26.4 million and $34.3 million, respectively, as management's best estimate for environmental remediation costs. As of January 31, 2000 and 1999, we had also recorded $9.9 million and $10.4 million, respectively, as management's best estimate for recoveries from state UST remediation funds related to environmental obligations and liabilities. In view of the uncertainties associated with environmental expenditures, however, we believe it is possible that such expenditures could be substantially higher. Any additional amounts will be reflected in our financial statements as they become known. Although environmental costs may have a significant impact on results of operations for any single fiscal year or interim period, we believe that these costs will not have a material adverse effect on our financial position. We cannot predict what environmental legislation or regulations 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 our financial position or operations or our lessees and could require us to make substantial additional expenditures for future remediation or the installation and operation of required environmental or pollution control systems and equipment. YEAR 2000 We implemented a comprehensive program to address the Year 2000 issues which was completed as of December 31, 1999. As a result of these efforts, we have not experienced any disruptions to our systems or operations. The cost of these Year 2000 efforts was not material since most of the work was performed by Marketing personnel pursuant to the administrative services agreement. Although unlikely, the possibility still exists that interruptions to our systems could occur from the Year 2000 issue. SPECIAL FACTORS REGARDING FORWARD-LOOKING STATEMENTS Certain statements in this Annual Report may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When we use the words "believes," "expects," "plans," "estimates" and similar expressions, we intend to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance and achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, but are not limited to: risks associated with owning and leasing real estate generally; dependence on Marketing as a lessee and on rentals from companies engaged in the petroleum marketing and convenience store businesses; competition for locations and tenants; risk of tenant non-renewal; the effects of regulation; our expectations as to the cost of completing environmental remediation; and potential effects of Year 2000 issues. As a result of these and other factors, we may experience material fluctuations in future operating results on a quarterly or annual basis, which could materially and adversely affect our business, financial condition, operating results and stock price. An investment in our stock involves various risks, including those mentioned above and elsewhere in this report and those which are detailed from time to time in our other filings with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements, which reflect our view only as of the date hereof. We undertake no obligation to publicly release revisions to these forward-looking statements that reflect future events or circumstances or reflect the occurrence of unanticipated events. 10 6 CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------------- GETTY REALTY CORP. AND SUBSIDIARIES
For the years ended January 31, ------------------------------------- (in thousands, except per share amounts) 2000 1999 1998(*) ---------- ---------- ---------- Revenues: Revenues from rental properties $ 58,889 $ 58,869 $ 59,449 Other income 4,970 2,472 3,368 ---------- ---------- ---------- 63,859 61,341 62,817 Equity in earnings of Getty Petroleum Marketing Inc. -- -- 2,931 ---------- ---------- ---------- 63,859 61,341 65,748 ---------- ---------- ---------- Rental property expenses 12,126 12,910 13,583 Environmental and maintenance expenses 6,813 17,320 8,634 General and administrative expenses 5,642 6,129 13,297 Depreciation and amortization 10,425 9,418 9,514 Interest expense 2,748 2,726 5,008 Change of control charge -- -- 2,166 ---------- ---------- ---------- 37,754 48,503 52,202 ---------- ---------- ---------- Earnings from continuing operations before provision for income taxes 26,105 12,838 13,546 Provision for income taxes 11,091 5,337 5,697 ---------- ---------- ---------- Net earnings from continuing operations 15,014 7,501 7,849 ---------- ---------- ---------- Discontinued operations: Earnings (loss) from operations, net of income taxes -- (119) 95 Gain on disposal, net of income taxes -- 2,674 -- ---------- ---------- ---------- Net earnings from discontinued operations -- 2,555 95 ---------- ---------- ---------- Net earnings 15,014 10,056 7,944 Preferred stock dividends 5,128 5,128 -- ---------- ---------- ---------- Net earnings applicable to common stockholders $ 9,886 $ 4,928 $ 7,944 ========== ========== ========== Basic earnings per common share: Continuing operations $ .73 $ .17 $ .60 Discontinued operations -- .19 .01 Net earnings .73 .36 .60 Diluted earnings per common share: Continuing operations .73 .17 .59 Discontinued operations -- .19 .01 Net earnings .73 .36 .60 Weighted average common shares outstanding: Basic 13,563 13,566 13,152 Diluted 13,565 13,571 13,348
(*) Includes financial results of the petroleum marketing business prior to its spin-off to the Company's stockholders on March 21, 1997. See accompanying notes. 11 7 CONSOLIDATED BALANCE SHEETS --------------------------------- GETTY REALTY CORP. AND SUBSIDIARIES
January 31, ---------------------- (in thousands, except share data) 2000 1999 --------- --------- ASSETS: Real Estate: Land $ 136,039 $ 131,976 Buildings and improvements 179,963 175,817 --------- --------- 316,002 307,793 Less--accumulated depreciation and amortization 74,502 68,045 --------- --------- Real estate, net 241,500 239,748 Cash and equivalents 651 657 Mortgages and accounts receivable, net 6,024 6,975 Recoveries from state underground storage tank funds 9,883 10,369 Prepaid expenses and other assets 2,694 3,335 --------- --------- Total assets $ 260,752 $ 261,084 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY: Borrowings under credit lines $ 14,800 $ 4,500 Mortgages payable 29,193 35,242 Accounts payable and accrued expenses 12,440 18,042 Environmental remediation costs 26,424 34,251 Deferred income taxes 36,084 30,210 Income taxes payable -- 808 --------- --------- Total liabilities 118,941 123,053 --------- --------- Commitments and contingencies (Notes 4 and 5) Stockholders' equity: Preferred stock, par value $.01 per share; authorized 20,000,000 shares for issuance in series of which 3,000,000 shares are classified as Series A Participating Convertible Redeemable Preferred; issued 2,888,798 at January 31, 2000 and 1999 72,220 72,220 Common stock, par value $.01 per share; authorized 50,000,000 shares; issued 13,567,335 at January 31, 2000 and 13,566,233 at January 31, 1999 136 136 Paid-in capital 67,036 67,021 Retained earnings (deficit) 3,114 (1,346) Preferred stock held in treasury, at cost (700 shares at January 31, 2000) (14) -- Common stock held in treasury, at cost (59,916 shares at January 31, 2000) (681) -- --------- --------- Total stockholders' equity 141,811 138,031 --------- --------- Total liabilities and stockholders' equity $ 260,752 $ 261,084 ========= =========
See accompanying notes. 12 8 CONSOLIDATED STATEMENTS OF CASH FLOWS --------------------------------- GETTY REALTY CORP. AND SUBSIDIARIES
For the years ended January 31, -------------------------------- (in thousands) 2000 1999 1998 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 15,014 $ 10,056 $ 7,944 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 10,425 9,418 9,514 Deferred income taxes 5,874 491 (1,061) Net earnings from discontinued operations -- (2,555) (95) Gain on dispositions of real estate (3,255) (1,495) (730) Equity in net earnings of Getty Petroleum Marketing Inc. -- -- (1,731) Change of control charge -- -- 2,166 Stock option (credit) charge -- (110) 6,432 Changes in assets and liabilities, net of effect of acquisitions and dispositions: Mortgages and accounts receivable 951 547 (940) Recoveries from state underground storage tank funds 486 5,018 830 Prepaid expenses and other assets 478 327 (1,184) Accounts payable and accrued expenses (5,602) (484) (1,878) Environmental remediation costs (7,827) (4,046) (7,837) Income taxes payable (808) 808 (1,426) -------- -------- -------- Net cash provided by continuing operating activities 15,736 17,975 10,004 Net cash provided by (used in) discontinued operations -- (1,916) 1,636 -------- -------- -------- Net cash provided by operating activities 15,736 16,059 11,640 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (4,817) (18,860) (8,057) Property acquisitions (10,162) (6,362) (3,202) Proceeds from disposition of discontinued operations -- 7,661 -- Proceeds from dispositions of real estate 6,220 3,419 2,234 Cash from acquisition of Power Test Investors Limited Partnership, net -- -- 1,757 -------- -------- -------- Net cash used in investing activities (8,759) (14,142) (7,268) -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under credit lines 10,300 4,500 -- Mortgage borrowings -- -- 306 Repayment of mortgages payable (6,049) (5,284) (5,287) Payments under capital lease obligations -- -- (6,373) Cash dividends (10,554) (10,554) (1,577) Stock options, common and treasury stock, net (680) 46 7,208 -------- -------- -------- Net cash used in financing activities (6,983) (11,292) (5,723) -------- -------- -------- Net decrease in cash and equivalents (6) (9,375) (1,351) Cash and equivalents at beginning of year 657 10,032 11,383 -------- -------- -------- Cash and equivalents at end of year $ 651 $ 657 $ 10,032 ======== ======== ======== Supplemental disclosures of cash flow information Cash paid during the year for: Interest $ 2,438 $ 2,794 $ 5,009 Income taxes, net 6,628 4,653 3,834
See accompanying notes. 13 9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -------------------------------- GETTY REALTY CORP. AND SUBSIDIARIES 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Consolidation: The consolidated financial statements include the accounts of Getty Realty Corp. and its wholly-owned subsidiaries (the "Company"). The Company is a real estate company specializing in the ownership and leasing of service stations, convenience stores and petroleum marketing terminals. All significant intercompany accounts and transactions have been eliminated. Prior to the spin-off of its petroleum marketing business to its stockholders on March 21, 1997, the Company was principally engaged in the ownership and leasing of real estate as well as the marketing and distribution of petroleum products. In December 1998, the Company sold its heating oil business, Aero Oil Company. The Company now leases most of its properties on a long-term net basis to the spun-off company, Getty Petroleum Marketing Inc. ("Marketing"). The consolidated statement of operations of the Company for the year ended January 31, 1998 includes the financial results of the Marketing business under the caption "Equity in earnings of Getty Petroleum Marketing Inc." for the period from February 1, 1997 to March 21, 1997. For additional information regarding the spin-off, see Note 2. The results of operations of the heating oil business have been reclassified as discontinued in the accompanying financial statements for the years ended January 31, 1999 and 1998. For additional information regarding the sold heating oil business, see Note 3. 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: The Company considers highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Real Estate: Real estate assets are stated at cost less accumulated depreciation and amortization. When real estate is sold or retired, the cost and related accumulated depreciation and amortization is eliminated from the respective accounts and any gain or loss is credited or charged to income. Expenditures for maintenance and repairs are charged to income when incurred. Depreciation and Amortization: Depreciation of real estate is computed on the straight-line method based upon the estimated useful lives of the assets which generally range from 16 to 25 years for buildings and improvements. Insurance: Prior to the spin-off, the Company was self-insured for workers' compensation, general liability and vehicle liability up to predetermined amounts above which third-party insurance applies. Since the spin-off, the Company has maintained insurance coverage subject to modest deductibles. Accruals are based on claims experience and actuarial assumptions followed in the insurance industry. Due to uncertainties inherent in the estimation process, actual losses could differ from accrued amounts. 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. Recoveries of environmental costs, principally from state underground storage tank remediation funds, are accrued as income when such recoveries are considered probable. Accruals are adjusted as further information develops or circumstances change. 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 rentals as earned. Earnings per Common Share: Basic earnings per common share is computed by dividing net earnings less preferred dividends by the weighted average number of common shares outstanding during the year. Diluted earnings per common share also gives effect to the potential dilution from the exercise of stock options in the amounts of 2,000 shares, 5,000 shares and 196,000 shares for the years ended January 31, 2000, 1999 and 1998, respectively. For the years ended January 31, 2000 and 1999, conversion of the Series A Participating Convertible Redeemable Preferred stock (which was issued on January 30, 1998) into common stock utilizing the if-converted method would have been antidilutive and therefore conversion was not assumed for purposes of computing diluted earnings per common share. 14 10 continued --------------------------------- GETTY REALTY CORP. AND SUBSIDIARIES 2. SPIN-OFF On March 21, 1997, the Company spun-off its petroleum marketing business to its stockholders. The Company retained its real estate business and leased most of its properties on a long-term net basis to Marketing. As part of the separation of the petroleum marketing business from the real estate business, the Company and Marketing entered into various agreements which addressed the allocation of assets and liabilities between them and govern future relationships. These agreements include the Reorganization and Distribution Agreement, Master Lease Agreement, Tax Sharing Agreement and Trademark License Agreement. Under the Services Agreement, Marketing provides certain administrative and technical services to the Company and the Company provides certain services to Marketing. The net fees paid by the Company to Marketing for services performed (after deducting the fees paid by Marketing to the Company for services provided by the Company) were $749,000 for the year ended January 31, 2000 and $960,000 for each of the years ended January 31, 1999 and 1998 and are included in general and administrative expenses in the consolidated statements of operations. The following is a summary of the financial results of the Marketing business included in the accompanying consolidated statement of operations for the fiscal 1998 period from February 1, 1997 to March 21, 1997. The financial information is presented for informational purposes only and is not necessarily indicative of the financial results that would have occurred had Marketing been operated as a separate, stand-alone entity during that period.
Year ended January 31, ---------------------- (in thousands) 1998 ------ Earnings before income taxes $2,931 Provision for income taxes 1,200 ------ Net earnings $1,731 ======
3. DISCONTINUED OPERATIONS In December 1998, the Company sold its heating oil and propane business, Aero Oil Company. Proceeds from the sale were $7,661,000 and resulted in a pre-tax gain of $4,576,000 ($2,674,000 after-tax). Summary operating results of the discontinued heating oil operations is as follows:
Years ended January 31, ----------------------- (in thousands) 1999 1998 -------- -------- Revenues $ 18,169 $ 27,022 ======== ======== Earnings before income taxes $ 4,373(a) $ 164 Provision for income taxes 1,818 69 -------- -------- Net earnings $ 2,555 $ 95 ========= ========
(a) Includes pre-tax gain of $4,576 on disposal of the business. 4. LEASES Effective February 1, 1997, the Company and Marketing entered into the Master Lease Agreement (the "Master Lease") under which, as of January 31, 2000, 1,013 retail outlets and 9 terminal facilities (the "Properties") were leased or subleased by the Company as the lessor to Marketing as the lessee. The Properties are 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 requires the Company's consent. The Master Lease is a "triple-net" lease, under which Marketing is responsible for all taxes, maintenance, repairs and insurance, except for certain retained environmental obligations, and obligations pertaining to certain underground storage tanks, related piping, underground pumps, wiring and monitoring devices (collectively, the "USTs"). For financial statement purposes, the Master Lease has been accounted for as an operating lease. 15 11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -------------------------------- GETTY REALTY CORP. AND SUBSIDIARIES Rent for each of the Properties was set using the fair market value of each Property, assuming the USTs had been upgraded to meet the 1998 federal standards and the Properties were free of known environmental contamination, since the Company is responsible for these items known at the date of the spin-off. Rent for each Property will increase at the end of each five-year period, commencing February 1, 2002, by the net increase in the Consumer Price Index for all items in the Northeast Region during the period, but not more than 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 the Company and leased to Marketing and (ii) the length of time remaining (which ranges up to fifteen years under the Master Lease) with respect to Properties leased by the Company from third parties and subleased to Marketing. The Master Lease includes four ten-year renewal options (or, with respect to category (ii) above, a shorter period as provided in the underlying lease), 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, the Company 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 the Company) available to it, the Company 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 has the right to sublet the Property for any lawful use without the Company's consent. However, prior to the commencement of any sublease term, Marketing must remove any USTs on the Property and thereafter perform all requisite environmental investigations and/or remediations. Marketing has this right of economic abandonment with respect to no more than ten Properties during any fiscal year of the lease term. Marketing has no right of economic abandonment for the terminal facilities and the premises subject to third-party leases. Revenues from rental properties for the years ended January 31, 2000, 1999 and 1998, were $58,889,000, $58,869,000 and $59,449,000, respectively, of which $56,363,000, $56,411,000 and $57,001,000, respectively, was received from Marketing under the Master Lease. Future minimum annual rentals receivable from Marketing under the Master Lease and from other lessees, which have initial terms in excess of one year as of January 31, 2000, are as follows (in thousands):
Other Years ending January 31, Marketing Lessees Total - - - - ------------------------ --------- --------- -------- 2001 $ 56,103 $ 2,289 $ 58,392 2002 55,696 1,878 57,574 2003 55,121 1,494 56,615 2004 54,297 1,209 55,506 2005 53,661 930 54,591 Thereafter 359,177 4,563 363,740 --------- --------- -------- $ 634,055 $ 12,363 $646,418 ========= ========= ========
The Company has obligations to lessors under noncancelable operating leases which have terms (excluding options) in excess of one year, principally for gasoline stations. Substantially all of these leases contain renewal options and escalation clauses. Future minimum annual rentals payable under such leases are as follows (in thousands):
Years ending January 31, - - - - ------------------------ 2001 $10,936 2002 9,775 2003 8,228 2004 6,958 2005 5,663 Thereafter 15,313 ------- $56,873 =======
16 12 CONTINUED ----------------------------- GETTY REALTY CORP. AND SUBSIDIARIES 5. COMMITMENTS AND CONTINGENCIES The Company is subject to various legal proceedings and claims which arise in the ordinary course of its business. In addition, the Company has retained responsibility for all pre-spin-off legal proceedings and claims relating to Marketing's business. These matters are not expected to have a material adverse effect on the Company's financial condition or results of operations. In order to minimize the Company's exposure to credit risk associated with financial instruments, the Company 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. Prior to the spin-off, the Company was self-insured for workers' compensation, general liability and vehicle liability up to predetermined amounts above which third-party insurance applies. Since the spin-off, the Company has maintained insurance coverage subject to modest deductibles. The Company's consolidated statements of operations for the fiscal years ended January 31, 2000, 1999 and 1998 included, in general and administrative expense, charges of $1,362,000, $518,000 and $161,000, respectively, for insurance. As of January 31, 2000 and 1999, the Company's consolidated balance sheets included, in accounts payable and accrued expenses, $2,269,000 and $4,361,000, respectively, relating to insurance obligations arising prior to the spin-off of the Marketing business. The Company's financial results largely depend on rental income from Marketing and to a lesser extent on other lessees and sublessees, and are therefore materially dependent upon the ability of Marketing to meet its obligations under the Master Lease. 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 Company, however, does not anticipate that Marketing will have difficulty in making all required rental payments for the foreseeable future. 6. DEBT Mortgages payable consists of (in thousands):
2000 1999 -------- -------- Mortgage loan due through November 1, 2000 $ 4,184 $ 8,344 Mortgage loan due through March 1, 2005 22,970 24,730 Real estate mortgages, bearing interest at a weighted average interest rate of 8.11%, due in varying amounts through May 1, 2019 2,039 2,168 -------- -------- $ 29,193 $ 35,242 ======== ========
Aggregate principal payments in subsequent fiscal years are as follows (in thousands): 2001--$6,409; 2002--$2,230; 2003--$2,680; 2004--$2,211; 2005--$2,539 and $13,124 thereafter. As of January 31, 2000, the mortgage loan due through November 1, 2000 provides for interest at LIBOR plus .875% to 1.75% per annum, depending on the ratio of Funded Debt, as defined. Based on such ratio as of January 31, 2000, the interest rate is LIBOR plus 1.0% which amounted to 6.86%. Principal payments are $218,000 per month through October 1, 2000 with the balance of $2,222,000 due on November 1, 2000. The mortgage loan due March 1, 2005, as amended on March 1, 2000, provides for interest at LIBOR plus .75% to 1.75% per annum, depending on the ratio of Funded Debt, as defined. Based on such ratio as of January 31, 2000, the interest rate would have been LIBOR plus 1.125% which amounts to 6.98%. Principal payments are $175,000 per month through February 1, 2005, with the balance of $12,295,000 due on March 1, 2005. Certain mortgages payable are collateralized by real estate having an aggregate net book value of approximately $73,890,000 as of January 31, 2000. As of January 31, 2000, the Company had uncommitted lines of credit with two banks in the aggregate amount of $25,000,000, of which $14,800,000 was utilized for short-term borrowings and $3,053,000 was utilized in the form of outstanding letters of credit relating to insurance obligations. Borrowings under the lines of credit are unsecured and bear interest at the bank's prime rate or, at the Company's option, 1.0% to 1.1% above LIBOR. The lines of credit are subject to renewal at the discretion of each bank. 17 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ---------------------------- GETTY REALTY CORP. AND SUBSIDIARIES 7. ENVIRONMENTAL REMEDIATION COSTS The Company is subject to numerous federal, state and local laws and regulations, including matters relating to the protection of the environment. Environmental expenses have been attributable to remediation, monitoring, soil disposal and governmental agency reporting (collectively, "Remediation Costs") incurred in connection with contaminated sites and the replacement or upgrading of USTs to meet federal, state and local environmental standards, as well as routine monitoring and tank testing. For the years ended January 31, 2000, 1999 and 1998, net environmental expenses included in the Company's consolidated statements of operations were $6,648,000, $16,905,000 and $8,255,000, respectively, which amounts were net of probable recoveries from state UST remediation funds. Under the Master Lease, the Company committed to a program to bring the leased properties with known environmental problems to regulatory closure and, thereafter, transfer all future environmental risks to Marketing. The Company has agreed to pay all costs relating to, and to indemnify Marketing for, all known pre-spin-off environmental liabilities and obligations as scheduled in the Master Lease, and all other environmental liabilities and obligations arising out of discharges with respect to properties containing USTs that had not been upgraded to meet the 1998 federal standards that were discovered prior to the date the USTs were upgraded to meet the 1998 federal standards. The Company collects recoveries from state UST remediation funds related to these environmental obligations. As of January 31, 2000 and 1999, the Company had accrued $26,424,000 and $34,251,000, respectively, as management's best estimate for environmental remediation costs. As of January 31, 2000 and 1999, the Company had also recorded $9,883,000 and $10,369,000, respectively, as management's best estimate for recoveries from state UST remediation funds related to environmental obligations and liabilities. In view of the uncertainties associated with environmental expenditures, however, the Company believes it is possible that such expenditures could be substantially higher. Any additional amounts will be reflected in the Company's financial statements as they become known. Although future environmental expenditures may have a significant impact on results of operations for any single fiscal year or interim period, the Company currently believes that these costs will not have a material adverse effect on the Company's financial position. 8. INCOME TAXES The provision for income taxes is summarized as follows (in thousands):
2000 1999 1998 ------- ------ ------ Continuing operations $11,091 $5,337 $5,697 Discontinued operations: Operations -- (84) 69 Disposal -- 1,902 -- ------- ------ ------ -- 1,818 69 ------- ------ ------ Provision for income taxes $11,091 $7,155 $5,766 ======= ====== ======
The provision for income taxes is comprised as follows (in thousands):
2000 1999 1998 ------- ------ ------ Federal: Current $ 2,260 $5,314 $2,697 Deferred 5,817 (120) 1,557 State and local: Current 735 966 990 Deferred 2,279 995 522 ------- ------ ------ Provision for income taxes $11,091 $7,155 $5,766 ======= ====== ======
18 14 CONTINUED ----------------------------- GETTY REALTY CORP. AND SUBSIDIARIES The tax effects of temporary differences which comprise the deferred tax assets and liabilities are as follows (in thousands):
2000 1999 -------- -------- Real estate $(46,893) $(44,028) Environmental remediation costs, net 11,080 13,257 Other accruals 2,723 1,576 Other (2,994) (1,015) -------- -------- Net deferred tax liabilities $(36,084) $(30,210) ======== ========
The following is a reconciliation of the expected statutory federal income tax provision and the actual provision for income taxes (in thousands):
2000 1999 1998 ------- ------ ------ Expected provision at statutory federal income tax rate $ 9,137 $5,910 $4,661 State and local income taxes, net of federal benefit 1,959 1,288 994 Other (5) (43) 111 ------- ------ ------ Provision for income taxes $11,091 $7,155 $5,766 ======= ====== ======
9. STOCKHOLDERS' EQUITY A summary of the changes in stockholders' equity for the three years ended January 31, 2000 is as follows:
Preferred Stock Held in Treasury, Preferred Stock Common Stock Retained at Cost ------------------- ------------------- Paid-In Earnings ----------------- (in thousands, except per share amounts) Shares Amount Shares Amount Capital (Deficit) Shares Amount -------- -------- -------- -------- -------- --------- -------- -------- Balance, February 1, 1997 -- $ -- 13,583 $ 1,358 $120,293 $ (7,215) -- $ -- Net earnings 7,944 Spin-off of Marketing (56,272) Cash dividends-- Common--$.12 per share (1,577) Issuance of treasury stock, net (1) Stock options 863 87 15,679 Merger transaction 2,889 72,220 (883) (1,309) (12,614) -------- -------- -------- -------- -------- --------- -------- -------- Balance, January 31, 1998 2,889 72,220 13,563 136 67,085 (848) -- -- Net earnings 10,056 Cash dividends: Common--$.40 per share (5,426) Preferred--$1.775 per share (5,128) Issuance of common stock 2 33 Stock options 1 (97) -------- -------- -------- -------- -------- --------- -------- -------- Balance, January 31, 1999 2,889 72,220 13,566 136 67,021 (1,346) -- -- Net earnings 15,014 Cash dividends: Common--$.40 per share (5,426) Preferred--$1.775 per share (5,128) Purchase of preferred stock for treasury (1) (14) Purchase of common stock for treasury, net Stock options 1 15 -------- -------- -------- -------- -------- --------- -------- -------- Balance, January 31, 2000 2,889 $ 72,220 13,567 $ 136 $ 67,036 $ 3,114(a) (1) $ (14) ======== ======== ======== ======== ======== ========= ======== ======== Common Stock Held in Treasury, at Cost ------------------ (in thousands, except per share amounts) Shares Amount Total -------- -------- -------- Balance, February 1, 1997 (886) $(13,964) $100,472 Net earnings 7,944 Spin-off of Marketing (56,272) Cash dividends-- Common--$.12 per share (1,577) Issuance of treasury stock, net 3 41 40 Stock options 15,766 Merger transaction 883 13,923 72,220 -------- -------- -------- Balance, January 31, 1998 -- -- 138,593 Net earnings 10,056 Cash dividends: Common--$.40 per share (5,426) Preferred--$1.775 per share (5,128) Issuance of common stock 33 Stock options (97) -------- -------- -------- Balance, January 31, 1999 -- -- 138,031 Net earnings 15,014 Cash dividends: Common--$.40 per share (5,426) Preferred--$1.775 per share (5,128) Purchase of preferred stock for treasury (14) Purchase of common stock for treasury, net (60) (681) (681) Stock options 15 -------- -------- -------- Balance, January 31, 2000 (60) $ (681) $141,811 ======== ======== ========
(a) Net of $103,803 transferred from retained earnings to common stock and paid-in capital as a result of accumulated stock dividends. 19 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ----------------------------- GETTY REALTY CORP. AND SUBSIDIARIES On January 30, 1998, the Company and Power Test Investors Limited Partnership (the "Partnership"), a publicly traded real estate limited partnership, completed a merger transaction to combine their assets and operations. In connection with the merger, unitholders of the Partnership received 2,888,798 shares of Series A Participating Convertible Redeemable Preferred Stock of the Company in exchange for their Partnership units. Each share of preferred stock has voting rights of and is convertible into 1.1312 shares of common stock of the Company and pays stated cumulative dividends of $1.775 per annum, or if greater, the per share dividends paid on common stock. Commencing February 1, 2001, the Company may redeem all or a portion of the preferred stock at a purchase price of $25.00 per share plus accumulated, accrued and unpaid dividends, if the closing price of the Company's common stock exceeds $22.10 per share for a period of ten cumulative trading days within 90 days prior to the date of notice of redemption. In the event of a liquidation, dissolution or winding up of the Company, holders of the preferred stock will have the right to liquidation preferences in the amount of $25.00 per share, plus accumulated, accrued and unpaid dividends, before any payment to holders of the Company's common stock. 10. EMPLOYEE BENEFIT PLANS The Company has a retirement and profit sharing plan with deferred 401(k) savings plan provisions (the "Retirement Plan") for 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. Also, under the Retirement Plan, employees may make voluntary contributions and the Company 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 compensation, reduced by the amount of any contributions allocated to such executive under the Retirement Plan. Contributions, net of forfeitures, under the plans were approximately $102,000, $126,000 and $89,000 for the years ended January 31, 2000, 1999 and 1998, respectively. These amounts are included in the accompanying consolidated statements of operations. The Company has a Stock Option Plan (the "Plan") which authorizes the Company to grant options to purchase shares of the Company's common stock. The aggregate number of shares of the Company's common stock which may be made the subject of options under the Plan may not exceed 1,100,000 shares, subject to further adjustment for stock dividends and stock splits. The 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. Immediately prior to the spin-off of its petroleum marketing business, each holder of an option to acquire shares of the Company's common stock received, in exchange therefor, two separately exercisable options: one to purchase shares of the Company's common stock (a "Realty Option") and one to purchase shares of 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 Realty Option and Marketing Option was set so as to preserve the Aggregate Spread (as defined below) in value attributed to the options held. The "Aggregate Spread" was an amount representing the difference between the exercise price of an option and the price of a share of Company common stock immediately prior to the spin-off multiplied by the number of shares underlying the option. Unexercisable options covering a total of 223,587 shares became immediately exercisable at the date of the spin-off for persons covered by change of control agreements. Accordingly, in the year ended January 31, 1998, the Company recognized a charge to earnings of $2,166,000 at the date of the spin-off equal to the product of the number of these options and the difference between their exercise price and the then market price. 20 16 CONTINUED ------------------------------- GETTY REALTY CORP. AND SUBSIDIARIES The following is a schedule of stock option prices and activity relating to the Company's stock option plan for the three years ended January 31, 2000:
2000 1999 1998 ---------------------- ----------------------- ----------------------- Weighted Weighted Weighted Number Average Number Average Number Average of Exercise of Exercise of Exercise Shares Price Shares Price Shares Price (a) --------- ---------- --------- ---------- ---------- ---------- Outstanding at beginning of year 358,119 $ 22.63 363,553 $ 23.15 1,014,226 $ 10.28 Granted 41,750 11.13 --(b) -- 349,236 23.65 Exercised (1,102) 13.23 (1,215) 10.89 (864,535) 10.15 Cancelled (25,027) 24.06 (4,219) 22.43 (135,374) 11.06 --------- ---------- --------- ---------- ---------- ---------- Outstanding at end of year 373,740 $ 21.27 358,119 $ 22.63 363,553 $ 23.15 ========= ========== ========= ========== ========== ========== Exercisable at end of year 287,336 $ 22.91 277,706 $ 23.14 242,779 $ 23.29 ========= ========== ========= ========== ========== ========== Available for grant at end of year 723,943 740,666 736,447 ========= ========== ========= ========== ========== ==========
(a) In connection with the spin-off, each Realty Option was reformed into separate options for Realty common stock and Marketing common stock. The exercise price of each reformed Realty Option represents 77.29% of the original exercise price. (b) On December 14, 1998, the Company repriced 50,000 options granted in fiscal 1998 with an exercise price of $21.313 per share to $17.188 per share, as compared to the then market price of $13.063 per share. The following table summarizes information concerning options outstanding and exercisable at January 31, 2000:
Options Outstanding Options Exercisable --------------------------------------------- ----------------------------- Weighted Average Weighted Weighted Remaining Average Average Range of Number Contractual Exercise Number Exercise Exercise Prices Outstanding Life (Years) Price Exercisable Price - - - - --------------- ----------- ------------ -------- ----------- --------- $9.56-14.40 53,750 9 $ 11.05 12,000 $ 10.81 17.19 50,000 8 17.19 25,000 17.19 24.06 269,990 5 24.06 250,336 24.06 ----------- ------------ -------- ----------- --------- 373,740 287,336 =========== ===========
The Company accounts for its stock-based employee compensation plans under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." The Company recorded a stock compensation charge (credit) of ($199,000) and $8,683,000 for the years ended January 31, 1999 and 1998, respectively, since certain options required variable plan accounting treatment. Had compensation cost for the Company's Plan been determined based upon the fair value methodology prescribed under SFAS No. 123, "Accounting for Stock-Based Compensation," the Company's net earnings and net earnings per common share on a diluted basis would have been reduced as follows:
2000 1999 1998 ------------------------ ------------------------ ----------------------- As Reported Pro Forma As Reported Pro Forma As Reported Pro Forma ----------- --------- ----------- --------- ----------- --------- Net earnings (in thousands) $ 15,014 $ 14,190 $ 10,056 $ 9,054 $ 7,944 $ 7,513 Net earnings per common share .73(a) .67(a) .36(a) .29(a) .60 .56
(a) After giving effect to preferred stock dividends of $5,128. 21 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------- GETTY REALTY CORP. AND SUBSIDIARIES The fair value of the options granted during the years ended January 31, 2000 and 1998 were estimated as $3.57 and $10.32 per share, respectively, on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:
2000 1998 ------ ------ Expected dividend yield 3.6% 0.5% Expected volatility 34% 35% Risk-free interest rate 6.7% 5.5% Expected life of options (years) 7 7
11. QUARTERLY FINANCIAL DATA The following is a summary of the quarterly results of operations for the years ended January 31, 2000 and 1999 (unaudited as to quarterly information):
Three months ended Year ended ---------------------------------------------------------------- Fiscal 2000: April 30 July 31 October 31 January 31 January 31 -------- --------- ---------- ---------- ---------- (in thousands, except per share amounts) Revenues from rental properties $ 14,760 $ 14,666 $ 14,628 $ 14,835 $ 58,889 Earnings before income taxes 5,759 6,350 7,710 6,286 26,105 Net earnings 3,343 3,686 4,460 3,525 15,014 Diluted earnings per common share (a) .15 .18 .23 .17 .73
Three months ended Year ended ---------------------------------------------------------------- Fiscal 1999: April 30 July 31 October 31 January 31 January 31 -------- --------- ---------- ---------- ---------- (in thousands, except per share amounts) Revenues from rental properties $ 14,795 $ 14,733 $ 14,711 $ 14,630 $ 58,869 Earnings from continuing operations before income taxes 5,769 3,505 1,486 2,078 12,838 Net earnings from continuing operations 3,306 2,048 861 1,286 7,501 Net earnings (loss) from discontinued operations 223 (147) (137) 2,616 2,555 Net earnings 3,529 1,901 724 3,902 10,056 Diluted earnings (loss) per common share: Continuing operations (a) .15 .06 (.03) -- .17 Discontinued operations .02 (.01) (.01) .19 .19 -------- --------- ---------- ---------- ---------- Net earnings (loss) .17 .05 (.04) .19 .36 ======== ========= ========== ========== ==========
(a) After giving effect to preferred stock dividends of $1,282 for each of the four quarters, aggregating $5,128 for each of the years ended January 31, 2000 and 1999. 22 18 REPORT OF INDEPENDENT ACCOUNTANTS ----------------------------- To the Board of Directors and Stockholders of Getty Realty Corp.: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations and cash flows present fairly, in all material respects, the financial position of Getty Realty Corp. and Subsidiaries (the "Company") at January 31, 2000 and 1999, and the results of their operations and their cash flows for each of the three years in the period ended January 31, 2000, in conformity with accounting principles generally accepted in the United States. 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 of these statements in accordance with auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. /s/ PRICEWATERHOUSECOOPERS LLP New York, New York March 9, 2000 23 19 CAPITAL STOCK --------------------------- GETTY REALTY CORP. AND SUBSIDIARIES Our common stock is traded on the New York Stock Exchange (symbol: "GTY"). At April 18, 2000, there were approximately 2,700 holders of record of our common stock. The price range of our common stock and cash dividends paid with respect to each share of common stock during the past two fiscal years were as follows:
Price Range ---------------------- Cash Dividends Quarter Ending High Low Per Share - - - - -------------- ---------- ---------- -------------- January 31, 2000 $ 13 $ 10 13/16 $.10 October 31, 1999 14 7/16 12 1/16 .10 July 31, 1999 14 7/8 13 5/16 .10 April 30, 1999 15 5/8 12 1/2 .10 January 31, 1999 16 1/2 12 1/8 .10 October 31, 1998 18 11/16 13 1/4 .10 July 31, 1998 22 5/16 18 1/2 .10 April 30, 1998 24 3/4 22 1/4 .10
Our Series A preferred stock commenced trading in February 1998 on the New York Stock Exchange (symbol: "GTY PrA"). At April 18, 2000, there were approximately 400 holders of record of our Series A preferred stock. The price range of our Series A preferred stock and cash dividends paid with respect to each share of our Series A preferred stock during the past two fiscal years were as follows:
Price Range ------------------ Cash Dividends Quarter Ending High Low Per Share - - - - -------------- -------- -------- -------------- January 31, 2000 $ 20 1/4 $19 1/16 $.44375 October 31, 1999 20 5/8 19 3/4 .44375 July 31, 1999 20 1/8 19 1/8 .44375 April 30, 1999 21 19 3/8 .44375 January 31, 1999 22 20 .44375 October 31, 1998 24 18 1/4 .44375 July 31, 1998 27 23 1/2 .44375 April 30, 1998 29 26 1/2 .44375
24 EX-21 9 SUBSIDIARIES OF THE COMPANY 1 Exhibit 21. Subsidiaries of the Company. - - - - ----------------------------------------- STATE OF SUBSIDIARY INCORPORATION ---------- ------------- GETTY PROPERTIES CORP. Delaware AOC TRANSPORT, INC. Delaware DONNA OIL CORP. New York GETTYMART INC. Delaware LEEMILT'S FLATBUSH AVENUE, INC. New York LEEMILT'S PETROLEUM, INC. New York RECO PETROLEUM, INC. Pennsylvania ROSEDALE HOLDING, LLC* Delaware SLATTERY GROUP INC. New Jersey ENERGY RESOURCE & RECOVERY CORPORATION New York HSCO GROUP, INC. New York POWER TEST REALTY COMPANY LIMITED PARTNERSHIP** New York - - - - ---------- *50% ownership **99% owned by the Company, representing the limited partner units, and 1% owned by Getty Properties Corp., representing the general partner interest. 24 EX-23 10 CONSENT OF INDEPENDENT ACCOUNTANTS 1 EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-45249 and 333-45251) of Getty Realty Corp. of our report dated March 9, 2000 relating to the financial statements, which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated March 9, 2000 relating to the financial statement schedule, which appears in this Form 10-K. PricewaterhouseCoopers LLP New York, New York March 9, 2000 EX-27 11 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF GETTY REALTY CORP. AND SUBSIDIARIES AS OF JANUARY 31, 2000 AND FOR THE YEAR THEN ENDED AND IS QUALIFIED IN ITS ENTRIETY BY REFERENCE TO SUCH CONSOLIDATED FINANCIAL STATEMENTS. 1,000 12-MOS JAN-31-2000 JAN-31-2000 651 0 6,182 158 0 0 316,002 74,502 260,752 0 43,993 136 0 72,220 69,455 260,752 0 63,859 0 29,364 0 48 2,748 26,105 11,091 15,014 0 0 0 15,014 .73 .73
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