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Guaranty Agreement - GETTY REALTY CORP /MD/ - 4-28-2000

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Guaranty Agreement - GETTY REALTY CORP /MD/ - 4-28-2000 Powered By Docstoc
					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

-2payment 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

-2payment 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"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

-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.

-4SECTION 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

-4SECTION 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

-5the 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

-5the 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

-6Guaranty, 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

-6Guaranty, 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-ofpocket 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

-7Agreement. 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,

-7Agreement. 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(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

-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.

-9SECTION 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

-9SECTION 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.

-10SECTION 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

-10SECTION 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.

-11SECTION 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

-11SECTION 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

-12income 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

-12income 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

-13notice 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

-13notice 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

-14acquired 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

-14acquired 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,

-15Treasurer 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]

-15Treasurer 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]

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

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

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

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-

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

-2Agreement, 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]

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 ---------------------------------

-2Agreement, 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]

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

SELECTED FINANCIAL DATA

GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA (in thousands, except per share amounts) Total revenues Earnings (loss) from continuing operations before income taxes and cumulative effect of accounting change Net earnings (loss) Diluted earnings (loss) per common share: Continuing operations Discontinued operations Net earnings (loss) Cash dividends per share: Preferred Common Total assets Years ended January 31, ---------------------------------------------------------2000 1999 1998 (a) 1997 (a) 199 -------------------------------------$ 63,859 $ 61,341 $ 62,817 $ 892,456 $ 7

26,105 15,014 .73 -.73 1.775 .40 260,752

12,838 10,056 .17 .19 .36 1.775 .40 261,084

13,546(b) 7,944 .59 .01 .60 -.12 265,661

(14,395)(c) (9,176) (.74) .01 (.72) -.12 290,664

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

SELECTED FINANCIAL DATA

GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA (in thousands, except per share amounts) Total revenues Earnings (loss) from continuing operations before income taxes and cumulative effect of accounting change Net earnings (loss) Diluted earnings (loss) per common share: Continuing operations Discontinued operations Net earnings (loss) Cash dividends per share: Preferred Common Total assets Total debt Stockholders' equity Years ended January 31, ---------------------------------------------------------2000 1999 1998 (a) 1997 (a) 199 -------------------------------------$ 63,859 $ 61,341 $ 62,817 $ 892,456 $ 7

26,105 15,014 .73 -.73 1.775 .40 260,752 43,993 141,811

12,838 10,056 .17 .19 .36 1.775 .40 261,084 39,742 138,031

13,546(b) 7,944 .59 .01 .60 -.12 265,661 40,526 138,593

(14,395)(c) (9,176) (.74) .01 (.72) -.12 290,664 41,592 100,472

(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.

SELECTED FINANCIAL DATA

GETTY REALTY CORP. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL DATA (in thousands, except per share amounts) Total revenues Earnings (loss) from continuing operations before income taxes and cumulative effect of accounting change Net earnings (loss) Diluted earnings (loss) per common share: Continuing operations Discontinued operations Net earnings (loss) Cash dividends per share: Preferred Common Total assets Total debt Stockholders' equity Years ended January 31, ---------------------------------------------------------2000 1999 1998 (a) 1997 (a) 199 -------------------------------------$ 63,859 $ 61,341 $ 62,817 $ 892,456 $ 7

26,105 15,014 .73 -.73 1.775 .40 260,752 43,993 141,811

12,838 10,056 .17 .19 .36 1.775 .40 261,084 39,742 138,031

13,546(b) 7,944 .59 .01 .60 -.12 265,661 40,526 138,593

(14,395)(c) (9,176) (.74) .01 (.72) -.12 290,664 41,592 100,472

(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 $.06 per share from the cumulative effect of adopting Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for LongLived Assets to be Disposed Of." PRO FORMA SUPPLEMENTAL FINANCIAL HIGHLIGHTS AND SELECTED DATA (Unaudited)
(in thousands, except number of properties) FISCAL YEAR ENDED JANUARY 31, Revenues from rental properties Other income Total revenues Adjusted EBITDA (f) Net earnings Capital expenditures AS OF JANUARY 31, Real estate before accumulated depreciation Total assets Capitalization: Total debt Stockholders' equity Total capitalization NUMBER OF PROPERTIES: Owned Leased Total properties 2000 -------$ 58,889 4,970 -------63,859 41,519 15,014 14,979 1999 -------$ 58,869 2,472 -------61,341 39,874 10,056 25,222 1998(e) -------$ 59,449 3,368 -------62,817 41,516 6,213 11,259 1997(e) -------$ 58,653 1,570 -------60,223 45,259 6,049 6,913 1996(e ------$ 57,17 5,72 ------62,90 41,04 8,97 6,26

316,002 260,752 43,993 141,811 -------185,804 757 361 -------1,118

307,793 261,084 39,742 138,031 -------177,773 740 379 -------1,119

284,092 265,661 40,526 138,593 -------179,119 736 404 -------1,140

190,524 155,164 41,592 45,931 -------87,523 441 732 -------1,173

183,62 150,50 51,58 60,26 ------111,84 43 73 ------1,17

(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

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

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

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.

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

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,

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

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

CONSOLIDATED STATEMENTS OF OPERATIONS

GETTY REALTY CORP. AND SUBSIDIARIES
For the years ended Janua ---------------------------2000 1999 ------------------58,889 4,970 ---------63,859 ----------63,859 ---------12,126 6,813 5,642 10,425 2,748 ----------37,754 ---------26,105 11,091 ---------15,014 ---------$ 58,869 2,472 ---------61,341 ----------61,341 ---------12,910 17,320 6,129 9,418 2,726 ----------48,503 ---------12,838 5,337 ---------7,501 ---------$ $ -

(in thousands, except per share amounts) Revenues: Revenues from rental properties Other income

Equity in earnings of Getty Petroleum Marketing Inc.

-

Rental property expenses Environmental and maintenance expenses General and administrative expenses Depreciation and amortization Interest expense Change of control charge

-

Earnings from continuing operations before provision for income taxes Provision for income taxes Net earnings from continuing operations

-

Discontinued operations: Earnings (loss) from operations, net of income taxes Gain on disposal, net of income taxes Net earnings from discontinued operations Net earnings Preferred stock dividends Net earnings applicable to common stockholders

---------------------15,014 5,128 ---------$ 9,886 ==========

(119) 2,674 ---------2,555 ---------10,056 5,128 ---------$ 4,928 ==========

-

$ =

Basic earnings per common share: Continuing operations Discontinued operations Net earnings Diluted earnings per common share: Continuing operations Discontinued operations Net earnings Weighted average common shares outstanding: Basic Diluted

$

.73 -.73

$

.17 .19 .36

$

.73 -.73

.17 .19 .36

13,563 13,565

13,566 13,571

(*) 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

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS

GETTY REALTY CORP. AND SUBSIDIARIES
January 31, ---------------------2000 1999 -----------------

(in thousands, except share data) ASSETS: Real Estate: Land Buildings and improvements

Less--accumulated depreciation and amortization Real estate, net Cash and equivalents Mortgages and accounts receivable, net Recoveries from state underground storage tank funds Prepaid expenses and other assets Total assets

$ 136,039 179,963 --------316,002 74,502 --------241,500 651 6,024 9,883 2,694 --------$ 260,752 =========

$ 131,976 175,817 --------307,793 68,045 --------239,748 657 6,975 10,369 3,335 --------$ 261,084 =========

LIABILITIES AND STOCKHOLDERS' EQUITY: Borrowings under credit lines Mortgages payable Accounts payable and accrued expenses Environmental remediation costs Deferred income taxes Income taxes payable Total liabilities

$

14,800 29,193 12,440 26,424 36,084 ---------118,941 ---------

$

4,500 35,242 18,042 34,251 30,210 808 --------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 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 Paid-in capital Retained earnings (deficit) Preferred stock held in treasury, at cost (700 shares at January 31, 2000) Common stock held in treasury, at cost (59,916 shares at January 31, 2000) Total stockholders' equity Total liabilities and stockholders' equity

72,220

72,220

136 67,036 3,114 (14) (681) --------141,811 --------$ 260,752 =========

136 67,021 (1,346) ----------138,031 --------$ 261,084 =========

See accompanying notes. 12

CONSOLIDATED STATEMENTS OF CASH FLOWS

GETTY REALTY CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

GETTY REALTY CORP. AND SUBSIDIARIES
For the years ended January 31, -------------------------------2000 1999 1998 ---------------------$ 15,014 $ 10,056 $ 7,944

(in thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization Deferred income taxes Net earnings from discontinued operations Gain on dispositions of real estate Equity in net earnings of Getty Petroleum Marketing Inc. Change of control charge Stock option (credit) charge Changes in assets and liabilities, net of effect of acquisitions and dispositions: Mortgages and accounts receivable Recoveries from state underground storage tank funds Prepaid expenses and other assets Accounts payable and accrued expenses Environmental remediation costs Income taxes payable Net cash provided by continuing operating activities Net cash provided by (used in) discontinued operations Net cash provided by operating activities

10,425 5,874 -(3,255) ----

9,418 491 (2,555) (1,495) --(110)

9,514 (1,061) (95) (730) (1,731) 2,166 6,432

951 486 478 (5,602) (7,827) (808) -------15,736 --------15,736 --------

547 5,018 327 (484) (4,046) 808 -------17,975 (1,916) -------16,059 --------

(940) 830 (1,184) (1,878) (7,837) (1,426) -------10,004 1,636 -------11,640 --------

CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures Property acquisitions Proceeds from disposition of discontinued operations Proceeds from dispositions of real estate Cash from acquisition of Power Test Investors Limited Partnership, net Net cash used in investing activities

(4,817) (10,162) -6,220 --------(8,759) --------

(18,860) (6,362) 7,661 3,419 --------(14,142) --------

(8,057) (3,202) -2,234 1,757 -------(7,268) --------

CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under credit lines Mortgage borrowings Repayment of mortgages payable Payments under capital lease obligations Cash dividends Stock options, common and treasury stock, net Net cash used in financing activities Net decrease in cash and equivalents Cash and equivalents at beginning of year Cash and equivalents at end of year Supplemental disclosures of cash flow information Cash paid during the year for: Interest Income taxes, net

10,300 -(6,049) -(10,554) (680) -------(6,983) -------(6) 657 -------$ 651 ========

4,500 -(5,284) -(10,554) 46 -------(11,292) -------(9,375) 10,032 -------$ 657 ========

-306 (5,287) (6,373) (1,577) 7,208 -------(5,723) -------(1,351) 11,383 -------$ 10,032 ========

$

2,438 6,628

$

2,794 4,653

$

5,009 3,834

See accompanying notes. 13

13

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 whollyowned 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.

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 whollyowned 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 ifconverted method would have been antidilutive and therefore conversion was not assumed for purposes of computing diluted earnings per common share. 14

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, ---------------------1998 -----$2,931 1,200 -----$1,731 ======

(in thousands) Earnings before income taxes Provision for income taxes Net earnings

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, -----------------------

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, ---------------------1998 -----$2,931 1,200 -----$1,731 ======

(in thousands) Earnings before income taxes Provision for income taxes Net earnings

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 ($2,674,000 after-tax). Summary operating results of the discontinued heating oil operations is as follows:
Years ended January 31, ----------------------1999 1998 --------------$ 18,169 $ 27,022 ======== ======== $ 4,373(a) $ 164 1,818 69 --------------$ 2,555 $ 95 ========= ========

(in thousands) Revenues Earnings before income taxes Provision for income taxes Net earnings

(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

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 Lessees

Years ending January 31,

Marketing

Total

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 $57,001,000, respectively, was received from Marketing under the Master Lease. Future minimum annual rentals receivable from Marketing under the Master Lease and from other lessees, which have initial terms in excess of one year as of January 31, 2000, are as follows (in thousands):
Other Lessees --------$ 2,289 1,878 1,494 1,209 930 4,563 --------$ 12,363 =========

Years ending January 31, -----------------------2001 2002 2003 2004 2005 Thereafter

Marketing --------$ 56,103 55,696 55,121 54,297 53,661 359,177 --------$ 634,055 =========

Total -------$ 58,392 57,574 56,615 55,506 54,591 363,740 -------$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 2002 2003 2004 2005 Thereafter

$10,936 9,775 8,228 6,958 5,663 15,313 ------$56,873 =======

16

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 $4,361,000, respectively, relating to insurance obligations arising prior to the spin-off of the Marketing business. The Company's financial results largely depend on rental income from Marketing and to a lesser extent on other lessees and sublessees, and are therefore materially dependent upon the ability of Marketing to meet its obligations under the Master Lease. Marketing's financial results depend largely on retail marketing margins and rental income from its dealers. The petroleum marketing industry has been and continues to be volatile and highly competitive. The Company, however, does not anticipate that Marketing will have difficulty in making all required rental payments for the foreseeable future. 6. DEBT Mortgages payable consists of (in thousands):
2000 -------$ 4,184 22,970 2,039 -------$ 29,193 ======== -$

Mortgage loan due through November 1, 2000 Mortgage loan due through March 1, 2005 Real estate mortgages, bearing interest at a weighted average interest rate of 8.11%, due in varying amounts through May 1, 2019

-$ ==

Aggregate principal payments in subsequent fiscal years are as follows (in thousands): 2001--$6,409; 2002--

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 $4,361,000, respectively, relating to insurance obligations arising prior to the spin-off of the Marketing business. The Company's financial results largely depend on rental income from Marketing and to a lesser extent on other lessees and sublessees, and are therefore materially dependent upon the ability of Marketing to meet its obligations under the Master Lease. Marketing's financial results depend largely on retail marketing margins and rental income from its dealers. The petroleum marketing industry has been and continues to be volatile and highly competitive. The Company, however, does not anticipate that Marketing will have difficulty in making all required rental payments for the foreseeable future. 6. DEBT Mortgages payable consists of (in thousands):
2000 -------$ 4,184 22,970 2,039 -------$ 29,193 ======== -$

Mortgage loan due through November 1, 2000 Mortgage loan due through March 1, 2005 Real estate mortgages, bearing interest at a weighted average interest rate of 8.11%, due in varying amounts through May 1, 2019

-$ ==

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

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 ------$11,091 --------1999 -----$5,337 (84) 1,902 ------

Continuing operations Discontinued operations: Operations Disposal

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 ------$11,091 ---------------$11,091 ======= 1999 -----$5,337 (84) 1,902 -----1,818 -----$7,155 ======

Continuing operations Discontinued operations: Operations Disposal

Provision for income taxes

The provision for income taxes is comprised as follows (in thousands):
2000 ------Federal: Current Deferred State and local: Current Deferred $ 2,260 5,817 735 2,279 1999 -----$5,314 (120) 966 995

Provision for income taxes

------$11,091 =======

-----$7,155 ======

18

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 -------$(46,893) 11,080 2,723 (2,994) -------$(36,084) ======== 199 ----$(44, 13, 1, (1, ----$(30, =====

Real estate Environmental remediation costs, net Other accruals Other Net deferred tax liabilities

The following is a reconciliation of the expected statutory federal income tax provision and the actual provision for income taxes (in thousands):
2000 ------$ 9,137 1,959 (5) ------$11,091 ======= 1999 -----$5,910 1,288 (43) -----$7,155 ====== 1 -$4

Expected provision at statutory federal income tax rate State and local income taxes, net of federal benefit Other Provision for income taxes

-$5 ==

9. STOCKHOLDERS' EQUITY A summary of the changes in stockholders' equity for the three years ended January 31, 2000 is as follows:

(in thousands, except per share amounts) Balance, February 1, 1997 Net earnings Spin-off of Marketing Cash dividends-Common--$.12 per share Issuance of treasury stock, net Stock options Merger transaction Balance, January 31, 1998 Net earnings Cash dividends: Common--$.40 per share Preferred--$1.775 per share Issuance of common stock Stock options Balance, January 31, 1999 Net earnings Cash dividends:

Preferred Stock ------------------Shares Amount ---------------$ --

Common Stock ------------------Shares Amount --------------13,583 $ 1,358

Paid-In Capital -------$120,293 (56,272)

Retained Earnings (Deficit) --------$ (7,215) 7,944

2,889 -------2,889

72,220 -------72,220

863 (883) -------13,563

(1,577) (1) 87 15,679 (1,309) (12,614) -------- -------- --------136 67,085 (848) 10,056 (5,426) (5,128)

-------2,889

-------72,220

2 1 -------13,566

-------136

33 (97) -------- --------67,021 (1,346) 15,014

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 -------$(46,893) 11,080 2,723 (2,994) -------$(36,084) ======== 199 ----$(44, 13, 1, (1, ----$(30, =====

Real estate Environmental remediation costs, net Other accruals Other Net deferred tax liabilities

The following is a reconciliation of the expected statutory federal income tax provision and the actual provision for income taxes (in thousands):
2000 ------$ 9,137 1,959 (5) ------$11,091 ======= 1999 -----$5,910 1,288 (43) -----$7,155 ====== 1 -$4

Expected provision at statutory federal income tax rate State and local income taxes, net of federal benefit Other Provision for income taxes

-$5 ==

9. STOCKHOLDERS' EQUITY A summary of the changes in stockholders' equity for the three years ended January 31, 2000 is as follows:

(in thousands, except per share amounts) Balance, February 1, 1997 Net earnings Spin-off of Marketing Cash dividends-Common--$.12 per share Issuance of treasury stock, net Stock options Merger transaction Balance, January 31, 1998 Net earnings Cash dividends: Common--$.40 per share Preferred--$1.775 per share Issuance of common stock Stock options Balance, January 31, 1999 Net earnings Cash dividends: Common--$.40 per share Preferred--$1.775 per share Purchase of preferred stock for treasury Purchase of common stock for treasury, net Stock options

Preferred Stock ------------------Shares Amount ---------------$ --

Common Stock ------------------Shares Amount --------------13,583 $ 1,358

Paid-In Capital -------$120,293 (56,272)

Retained Earnings (Deficit) --------$ (7,215) 7,944

2,889 -------2,889

72,220 -------72,220

863 (883) -------13,563

(1,577) (1) 87 15,679 (1,309) (12,614) -------- -------- --------136 67,085 (848) 10,056 (5,426) (5,128)

-------2,889

-------72,220

2 1 -------13,566

-------136

33 (97) -------- --------67,021 (1,346) 15,014 (5,426) (5,128)

--------

--------

1 --------

--------

15 --------

---------

Balance, January 31, 2000

2,889 ========

$ 72,220 ========

13,567 ========

$ 136 ========

$ 67,036 ========

$ 3,114( =========

(in thousands, except per share amounts) Balance, February 1, 1997 Net earnings Spin-off of Marketing Cash dividends-Common--$.12 per share Issuance of treasury stock, net Stock options Merger transaction Balance, January 31, 1998 Net earnings Cash dividends: Common--$.40 per share Preferred--$1.775 per share Issuance of common stock Stock options Balance, January 31, 1999 Net earnings Cash dividends: Common--$.40 per share Preferred--$1.775 per share Purchase of preferred stock for treasury Purchase of common stock for treasury, net Stock options Balance, January 31, 2000

Common Stock Held in Treasury, at Cost -----------------Shares Amount Total -------- -------- -------(886) $(13,964) $100,472 7,944 (56,272) (1,577) 40 15,766 72,220 -------138,593 10,056 (5,426) (5,128) 33 (97) -------138,031 15,014 (5,426) (5,128) (14) (681) 15 -------- -------- -------(60) $ (681) $141,811 ======== ======== ======== (60) (681)

3 883 ---------

41 13,923 ---------

---------

---------

(a) Net of $103,803 transferred from retained earnings to common stock and paid-in capital as a result of accumulated stock dividends. 19

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

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

CONTINUED

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 ---------------------Weighted Number Average of Exercise Shares Price -----------------Outstanding at beginning of year 358,119 $ 22.63 Granted 41,750 11.13 Exercised (1,102) 13.23 Cancelled (25,027) 24.06 -----------------Outstanding at end of year 373,740 $ 21.27 ========= ========== Exercisable at end of year 287,336 $ 22.91 ========= ========== Available for grant at end of year 723,943 ========= ========== 1999 ----------------------Weighted Number Average of Exercise Shares Price -----------------363,553 $ 23.15 --(b) -(1,215) 10.89 (4,219) 22.43 -----------------358,119 $ 22.63 ========= ========== 277,706 $ 23.14 ========= ========== 740,666 ========= ========== 1998 ---------------We Number A of Ex Shares Pr -----------1,014,226 $ 349,236 (864,535) (135,374) -----------363,553 $ ========== === 242,779 $ ========== === 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 --------------------------------------------Weighted Average Weighted Remaining Average Number Contractual Exercise Outstanding Life (Years) Price ----------------------------53,750 9 $ 11.05 50,000 8 17.19 269,990 5 24.06 ----------------------------373,740 =========== Options Exercisable -------------------------Weight Avera Exerci Pric -----$ 10 17 24 ------

Range of Exercise Prices --------------$9.56-14.40 17.19 24.06

Number Exercisable ----------12,000 25,000 250,336 ----------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 -----------------------As Reported Pro Forma ------------------1999 -----------------------As Reported Pro Forma ------------------1998 ---------------As Reported Pr ------------

Net earnings (in thousands) Net earnings per common share

$

15,014 $ .73(a)

14,190 $ .67(a)

10,056 $ .36(a)

9,054 $ .29(a)

7,944 .60

$

(a) After giving effect to preferred stock dividends of $5,128. 21

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 -----3.6% 34% 6.7% 7 1998 -----0.5% 35% 5.5% 7

Expected dividend yield Expected volatility Risk-free interest rate Expected life of options (years)

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 -----------------------------------------------------April 30 July 31 October 31 January 31 ----------------------------------

Fiscal 2000:

(in thousands, except per share amounts) Revenues from rental properties Earnings before income taxes Net earnings Diluted earnings per common share (a)

$ 14,760 5,759 3,343 .15

$

14,666 6,350 3,686 .18

$

14,628 7,710 4,460 .23

$

14,835 6,286 3,525 .17

Fiscal 1999: (in thousands, except per share amounts) Revenues from rental properties Earnings from continuing operations before income taxes Net earnings from continuing operations Net earnings (loss) from discontinued operations Net earnings Diluted earnings (loss) per common share:

Three months ended -----------------------------------------------------April 30 July 31 October 31 January 31 ---------------------------------$ 14,795 5,769 3,306 223 3,529 $ 14,733 3,505 2,048 (147) 1,901 $ 14,711 1,486 861 (137) 724 $ 14,630 2,078 1,286 2,616 3,902

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 -----3.6% 34% 6.7% 7 1998 -----0.5% 35% 5.5% 7

Expected dividend yield Expected volatility Risk-free interest rate Expected life of options (years)

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 -----------------------------------------------------April 30 July 31 October 31 January 31 ----------------------------------

Fiscal 2000:

(in thousands, except per share amounts) Revenues from rental properties Earnings before income taxes Net earnings Diluted earnings per common share (a)

$ 14,760 5,759 3,343 .15

$

14,666 6,350 3,686 .18

$

14,628 7,710 4,460 .23

$

14,835 6,286 3,525 .17

Fiscal 1999: (in thousands, except per share amounts) Revenues from rental properties Earnings from continuing operations before income taxes Net earnings from continuing operations Net earnings (loss) from discontinued operations Net earnings Diluted earnings (loss) per common share: Continuing operations (a) Discontinued operations

Three months ended -----------------------------------------------------April 30 July 31 October 31 January 31 ---------------------------------$ 14,795 5,769 3,306 223 3,529 .15 .02 -------.17 ======== $ 14,733 3,505 2,048 (147) 1,901 .06 (.01) --------.05 ========= $ 14,711 1,486 861 (137) 724 (.03) (.01) ---------(.04) ========== $ 14,630 2,078 1,286 2,616 3,902 -.19 ---------.19 ==========

Net earnings (loss)

(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

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors

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

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 ---------------------High Low ---------- ---------$ 13 $ 10 13/16 14 7/16 12 1/16 14 7/8 13 5/16 15 5/8 12 1/2 16 18 22 24 1/2 11/16 5/16 3/4 12 13 18 22 1/8 1/4 1/2 1/4

Quarter Ending -------------January 31, 2000 October 31, 1999 July 31, 1999 April 30, 1999 January 31, 1999 October 31, 1998 July 31, 1998 April 30, 1998

Cash Dividends Per Share -------------$.10 .10 .10 .10 .10 .10 .10 .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

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 ---------------------High Low ---------- ---------$ 13 $ 10 13/16 14 7/16 12 1/16 14 7/8 13 5/16 15 5/8 12 1/2 16 18 22 24 1/2 11/16 5/16 3/4 12 13 18 22 1/8 1/4 1/2 1/4

Quarter Ending -------------January 31, 2000 October 31, 1999 July 31, 1999 April 30, 1999 January 31, 1999 October 31, 1998 July 31, 1998 April 30, 1998

Cash Dividends Per Share -------------$.10 .10 .10 .10 .10 .10 .10 .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 -----------------High Low -------- -------$ 20 1/4 $19 1/16 20 5/8 19 3/4 20 1/8 19 1/8 21 19 3/8 22 24 27 29 20 18 1/4 23 1/2 26 1/2

Quarter Ending -------------January 31, 2000 October 31, 1999 July 31, 1999 April 30, 1999 January 31, 1999 October 31, 1998 July 31, 1998 April 30, 1998

Cash Dividends Per Share -------------$.44375 .44375 .44375 .44375 .44375 .44375 .44375 .44375

24
Exhibit 21. Subsidiaries of the Company. ----------------------------------------SUBSIDIARY ---------GETTY PROPERTIES CORP. AOC TRANSPORT, INC. DONNA OIL CORP. GETTYMART INC. LEEMILT'S FLATBUSH AVENUE, INC. LEEMILT'S PETROLEUM, INC. RECO PETROLEUM, INC. STATE OF INCORPORATION ------------Delaware Delaware New York Delaware New York New York Pennsylvania

Exhibit 21. Subsidiaries of the Company. ----------------------------------------SUBSIDIARY ---------GETTY PROPERTIES CORP. AOC TRANSPORT, INC. DONNA OIL CORP. GETTYMART INC. LEEMILT'S FLATBUSH AVENUE, INC. LEEMILT'S PETROLEUM, INC. RECO PETROLEUM, INC. ROSEDALE HOLDING, LLC* SLATTERY GROUP INC. ENERGY RESOURCE & RECOVERY CORPORATION HSCO GROUP, INC. POWER TEST REALTY COMPANY LIMITED PARTNERSHIP** STATE OF INCORPORATION ------------Delaware Delaware New York Delaware New York New York Pennsylvania Delaware New Jersey New York New York 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

EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33345249 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

ARTICLE 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. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES

12 MOS JAN 31 2000 JAN 31 2000 651 0

EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 33345249 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

ARTICLE 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. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS BASIC EPS DILUTED

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

ARTICLE 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. MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS BASIC EPS DILUTED

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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