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Asset Purchase Agreement - GETTY REALTY CORP /MD/ - 3-27-2003

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Asset Purchase Agreement - GETTY REALTY CORP /MD/ - 3-27-2003 Powered By Docstoc
					EXHIBIT 10.19 ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT is dated February 3, 2003, by and between JEMS OF NEW ENGLAND, INC., a Massachusetts corporation ("JEMS"), formerly known as Marane Oil Corporation ("Marane"), CHARLEX, INC., a Massachusetts corporation ("Charlex"), JEMS ENTERPRISES, INC., a Massachusetts corporation formerly known as Marane Enterprises, Inc. ("Enterprises"), and ROBBINS REALTY CORP., a Massachusetts corporation ("Robbins") (JEMS, Charlex, Enterprises and Robbins are collectively referred to herein as the "Seller"), and GETTY PROPERTIES CORP., a Delaware corporation, or its nominee ("Buyer"). PREMISES A. Seller is currently engaged in the business of owning and leasing retail gasoline stations, including the gasoline stations listed on Exhibit A hereto (individually a "Station" collectively the "Stations"). B. Buyer is currently the tenant at the Stations pursuant to that certain Net Lease dated as of May 31, 1991 between the Seller as landlord and Donna Oil, Inc., predecessor in interest to Buyer, as tenant (the "Lease"). B. Seller desires to sell, transfer and assign to the Buyer and the Buyer wishes to purchase and acquire from Seller, all of Seller's rights, title and interest in the Stations and to certain machinery and equipment and related assets located at the Stations. AGREEMENTS: In consideration of the above premises and the covenants and agreements contained herein, Buyer and Seller agree as follows: 1

SECTION 1 DEFINED TERMS The following terms shall have the following meanings in this Agreement: 1.1 "Assets" means the tangible and intangible assets owned and used or useful in connection with the conduct of the business or operations of the Stations, which assets are being sold, transferred, or otherwise conveyed to Buyer hereunder, as specified in detail in Section 2.1. 1.2 "Closing" means the consummation of the transaction contemplated by this Agreement in accordance with the provisions of Section 8.1. 1.3 "Closing Date" means the date of the Closing specified in Section 8.1. 1.4 "Consents" means all of the consents, permits or approvals of government authorities and other third parties necessary to transfer the Assets to Buyer or otherwise to consummate the transaction contemplated hereby. 1.5 "Environmental Escrow Agreement" shall mean the Environmental Escrow Agreement entered into pursuant to Section 6.5 hereof. 1.6 "Excluded Assets" shall mean those assets described or set forth in Section 2.2 herein.

SECTION 1 DEFINED TERMS The following terms shall have the following meanings in this Agreement: 1.1 "Assets" means the tangible and intangible assets owned and used or useful in connection with the conduct of the business or operations of the Stations, which assets are being sold, transferred, or otherwise conveyed to Buyer hereunder, as specified in detail in Section 2.1. 1.2 "Closing" means the consummation of the transaction contemplated by this Agreement in accordance with the provisions of Section 8.1. 1.3 "Closing Date" means the date of the Closing specified in Section 8.1. 1.4 "Consents" means all of the consents, permits or approvals of government authorities and other third parties necessary to transfer the Assets to Buyer or otherwise to consummate the transaction contemplated hereby. 1.5 "Environmental Escrow Agreement" shall mean the Environmental Escrow Agreement entered into pursuant to Section 6.5 hereof. 1.6 "Excluded Assets" shall mean those assets described or set forth in Section 2.2 herein. 1.7 "Licenses" means all of the operating licenses, permits, and other authorizations and any other federal, state or local governmental authorities, if any, required in connection with the ownership of the Stations or any Assets, including without limitation tank registration permits. 1.8 "Permitted Liens" means liens and encumbrances on the title to the Real Property reasonably acceptable to Buyer and appearing on the Title Commitments which do not adversely affect Buyer's intended use of the Stations, as disclosed on Schedule 3.5 hereto. 2

1.9 "Personal Property" means all petroleum marketing and convenience store fixtures, tanks, machinery and equipment, including but not limited to pumps, lifts, coolers, freezers, shelving, display units, cash registers, self serve consoles, tank monitoring equipment, tools, furniture, office equipment, spare parts, and other tangible personal property which are owned by Seller and used as of the date hereof in the conduct of the business or operations of the Stations, including without limitation all fixtures, furnishings and equipment and materials located at the Seller's premises at Sutton Mobil, Singletary Avenue, Sutton, Massachusetts and 183 Southwest Cutoff, Worcester, Massachusetts. 1.10 "Purchase Price" means the purchase price specified in Section 2.4. 1.11 "Real Property" means all of the fee estates and buildings and other improvements thereon, easements, licenses, rights to access, right-of-way, and other real property interests owned by Seller and identified on Schedule 3.5. 1.12 "Section 1031 Exchange Funds" means the funds actually delivered to Seller in accordance with the provisions of Section 8.4. 1.13 "USTs" means all in service underground storage tanks and related piping as set forth and identified on Schedule 1.13. SECTION 2 SALE AND PURCHASE OF ASSETS

1.9 "Personal Property" means all petroleum marketing and convenience store fixtures, tanks, machinery and equipment, including but not limited to pumps, lifts, coolers, freezers, shelving, display units, cash registers, self serve consoles, tank monitoring equipment, tools, furniture, office equipment, spare parts, and other tangible personal property which are owned by Seller and used as of the date hereof in the conduct of the business or operations of the Stations, including without limitation all fixtures, furnishings and equipment and materials located at the Seller's premises at Sutton Mobil, Singletary Avenue, Sutton, Massachusetts and 183 Southwest Cutoff, Worcester, Massachusetts. 1.10 "Purchase Price" means the purchase price specified in Section 2.4. 1.11 "Real Property" means all of the fee estates and buildings and other improvements thereon, easements, licenses, rights to access, right-of-way, and other real property interests owned by Seller and identified on Schedule 3.5. 1.12 "Section 1031 Exchange Funds" means the funds actually delivered to Seller in accordance with the provisions of Section 8.4. 1.13 "USTs" means all in service underground storage tanks and related piping as set forth and identified on Schedule 1.13. SECTION 2 SALE AND PURCHASE OF ASSETS 2.1 Agreement to Sell and Buy. Subject to the terms and conditions set forth in this Agreement, Seller hereby agrees to transfer and deliver to Buyer on the Closing Date, and Buyer agrees to purchase and receive all right, title and interest of Seller in the following owned by Seller on the Closing Date (collectively the "Assets") which Assets are to be conveyed, free and clear of any claims, liabilities, mortgages, liens, pledges, conditions, charges, or encumbrances 3

of any nature whatsoever and occupants or tenants other than the current tenants or subtenants as set forth on Schedule 2.1, except for Permitted Liens, which Assets are more specifically described as follows: (a) The Real Property; (b) The Licenses, if any, to the extent transferable: (c) Security deposits, if any, being held by Seller or its affiliates pursuant to the Net Lease; (d) The Personal Property; (e) The USTs; (f) All of the Seller's intangible assets, which relate to the Stations, including without limitation, technical information and data, machinery and equipment warranties, maps, computer discs and tapes, plans, diagrams, blueprints, and schematics, including filings with environmental authorities which relate to the Stations, if any, except such intangible assets which are primarily used in connection with Seller's other properties not being transferred hereunder, or such intangible assets which constitute proprietary information of Seller; (g) All choses in action and rights under warranties of Seller relating to the Stations or the Assets, if any; (h) All claims, choses in action and rights of action of Seller against third parties for damages to, encroachment on, and condemnation actions pertaining to the Real Property, excluding therefrom any rights of Seller with respect to the taking of 544 Millbury Street, Worcester;

of any nature whatsoever and occupants or tenants other than the current tenants or subtenants as set forth on Schedule 2.1, except for Permitted Liens, which Assets are more specifically described as follows: (a) The Real Property; (b) The Licenses, if any, to the extent transferable: (c) Security deposits, if any, being held by Seller or its affiliates pursuant to the Net Lease; (d) The Personal Property; (e) The USTs; (f) All of the Seller's intangible assets, which relate to the Stations, including without limitation, technical information and data, machinery and equipment warranties, maps, computer discs and tapes, plans, diagrams, blueprints, and schematics, including filings with environmental authorities which relate to the Stations, if any, except such intangible assets which are primarily used in connection with Seller's other properties not being transferred hereunder, or such intangible assets which constitute proprietary information of Seller; (g) All choses in action and rights under warranties of Seller relating to the Stations or the Assets, if any; (h) All claims, choses in action and rights of action of Seller against third parties for damages to, encroachment on, and condemnation actions pertaining to the Real Property, excluding therefrom any rights of Seller with respect to the taking of 544 Millbury Street, Worcester; 4

(i) Insurance proceeds received by Seller for losses for damage to the Assets between the date hereof and the Closing Date, except with respect with a claim by Seller against ITT Hartford with respect to the properties identified on Schedule 2.1 (i); (j) All inventory books and records relating exclusively to the ownership of the Stations, and all records required by law to be kept; and (k) All intangible assets of Seller relating to the Stations not specifically described above (except for Excluded Assets and also to the extent excluded above). 2.2 Excluded Assets. Other than the Assets described in Section 2.1 hereof, Seller and Buyer expressly understand and agree that Seller is not hereunder selling, assigning, transferring, conveying or delivering to Buyer any other assets, properties, rights, contracts, claims or liabilities. 2.3 Excluded Liabilities. Seller and Buyer agree that Seller shall retain, and Buyer shall not assume or become liable, for any debts, liabilities or obligations of Seller relating to (i) the ownership and operation of the Assets or Seller's business prior to the Closing, (ii) Seller's obligation pursuant to Section 6.5 hereof, (iii) any Stations and related Personal Property and Licenses which are withdrawn from this Agreement pursuant to Section 6.9 hereof, and (iii) any other assets or liabilities not specifically assumed by Buyer (collectively, the "Excluded Liabilities"). 2.4 Purchase Price. The Purchase price shall be Thirteen Million One Hundred Thousand Dollars ($13,100,000.00). The Purchase Price shall be adjusted to reflect any adjustments or prorations made and agreed to at Closing as provided in Section 2.5 . 2.5 Adjustments and Prorations. Rents under the Lease shall be apportioned as of the Closing Date. Prepaid last month rent, prepaid rent, security deposits or other deposits of a 5

(i) Insurance proceeds received by Seller for losses for damage to the Assets between the date hereof and the Closing Date, except with respect with a claim by Seller against ITT Hartford with respect to the properties identified on Schedule 2.1 (i); (j) All inventory books and records relating exclusively to the ownership of the Stations, and all records required by law to be kept; and (k) All intangible assets of Seller relating to the Stations not specifically described above (except for Excluded Assets and also to the extent excluded above). 2.2 Excluded Assets. Other than the Assets described in Section 2.1 hereof, Seller and Buyer expressly understand and agree that Seller is not hereunder selling, assigning, transferring, conveying or delivering to Buyer any other assets, properties, rights, contracts, claims or liabilities. 2.3 Excluded Liabilities. Seller and Buyer agree that Seller shall retain, and Buyer shall not assume or become liable, for any debts, liabilities or obligations of Seller relating to (i) the ownership and operation of the Assets or Seller's business prior to the Closing, (ii) Seller's obligation pursuant to Section 6.5 hereof, (iii) any Stations and related Personal Property and Licenses which are withdrawn from this Agreement pursuant to Section 6.9 hereof, and (iii) any other assets or liabilities not specifically assumed by Buyer (collectively, the "Excluded Liabilities"). 2.4 Purchase Price. The Purchase price shall be Thirteen Million One Hundred Thousand Dollars ($13,100,000.00). The Purchase Price shall be adjusted to reflect any adjustments or prorations made and agreed to at Closing as provided in Section 2.5 . 2.5 Adjustments and Prorations. Rents under the Lease shall be apportioned as of the Closing Date. Prepaid last month rent, prepaid rent, security deposits or other deposits of a 5

similar nature and interest unpaid and owing thereon, if any, held or required to be held under the Lease shall be accounted for by Seller and paid or credited to Buyer against the Purchase Price at the Closing. The provisions of this Section 2.5 shall survive the Closing. In the event any prorations or apportionments made under this Section 2.5 shall prove to be incorrect for any reason, then any party shall be entitled to an adjustment to correct the same. Any item which cannot be finally prorated because of the unavailability of the information shall be tentatively prorated on the basis of the best data then available and re-prorated when the information is available. Notwithstanding the foregoing, there shall be no adjustment for, and Seller shall remain solely liable with respect to any contracts or leases or any other obligation or liability not specifically assumed by Buyer pursuant to this Agreement. Seller shall also remain responsible for and shall pay any transfer tax and/or documentary stamps tax payable by reason of the delivery or recording of deeds delivered to Buyer pursuant to this Agreement. Any adjustments or prorations will, insofar as feasible, be determined and paid on the Closing Date. 2.6 Assumption of Liabilities and Obligations. As of the Closing Date, Buyer shall pay, discharge, perform and assume (i) all of the obligations and liabilities of Seller under the assigned Licenses insofar as they related to the time period after the Closing Date, and arising out of events occurring after the Closing Date, (ii) all obligations and liabilities arising out of events occurring after the Closing Date related to Buyer's ownership of the Assets or its conduct of the business or operations of the Stations after the Closing Date, and (iii) all obligations and liabilities which become due and owing after the Closing Date for which Buyer receives a proration adjustment hereunder (the "Assumed Liabilities"). All other obligations and liabilities 6

similar nature and interest unpaid and owing thereon, if any, held or required to be held under the Lease shall be accounted for by Seller and paid or credited to Buyer against the Purchase Price at the Closing. The provisions of this Section 2.5 shall survive the Closing. In the event any prorations or apportionments made under this Section 2.5 shall prove to be incorrect for any reason, then any party shall be entitled to an adjustment to correct the same. Any item which cannot be finally prorated because of the unavailability of the information shall be tentatively prorated on the basis of the best data then available and re-prorated when the information is available. Notwithstanding the foregoing, there shall be no adjustment for, and Seller shall remain solely liable with respect to any contracts or leases or any other obligation or liability not specifically assumed by Buyer pursuant to this Agreement. Seller shall also remain responsible for and shall pay any transfer tax and/or documentary stamps tax payable by reason of the delivery or recording of deeds delivered to Buyer pursuant to this Agreement. Any adjustments or prorations will, insofar as feasible, be determined and paid on the Closing Date. 2.6 Assumption of Liabilities and Obligations. As of the Closing Date, Buyer shall pay, discharge, perform and assume (i) all of the obligations and liabilities of Seller under the assigned Licenses insofar as they related to the time period after the Closing Date, and arising out of events occurring after the Closing Date, (ii) all obligations and liabilities arising out of events occurring after the Closing Date related to Buyer's ownership of the Assets or its conduct of the business or operations of the Stations after the Closing Date, and (iii) all obligations and liabilities which become due and owing after the Closing Date for which Buyer receives a proration adjustment hereunder (the "Assumed Liabilities"). All other obligations and liabilities 6

of Seller, including (i) any obligations under any contract or leases not specifically assumed under this Agreement, (ii) any claims or pending litigation or proceedings relating to the ownership of the Stations on or prior to the Closing Date and (iii) all environmental obligations as set forth in Section 6.5 hereof, shall be retained by Seller. The obligations of the parties under this Section 2.6 shall survive the Closing and the delivery of the deed. 2.7 Allocation of Purchase Price. The Purchase Price shall be allocated, for purposes of Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"), among the Assets, as shall be agreed to by the parties prior to the Closing Date among, including, but not limited to, the following categories: Real Property, Personal Property, USTs, Trademarks and Assumed Leases. Neither party hereto shall take a position on any tax return or other filing with any federal, state or local authority that is inconsistent with such allocation. SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer as follows: 3.1 Organization, Standing and Authority. Each Seller is a corporation duly formed, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and is duly qualified to conduct its business in the Commonwealth of Massachusetts and the State of Rhode Island and Providence Plantations, as applicable, which are the only jurisdictions where the conduct of the business or operations of the Stations requires such qualification and the failure to so qualify would have a material adverse effect such Seller. Each Seller has all requisite corporate power and authority to own, lease, and use its Real Property and the Assets as presently owned, leased, and used. Each Seller has all requisite corporate power and authority to execute and deliver this Agreement and the documents contemplated hereby, and to perform and 7

of Seller, including (i) any obligations under any contract or leases not specifically assumed under this Agreement, (ii) any claims or pending litigation or proceedings relating to the ownership of the Stations on or prior to the Closing Date and (iii) all environmental obligations as set forth in Section 6.5 hereof, shall be retained by Seller. The obligations of the parties under this Section 2.6 shall survive the Closing and the delivery of the deed. 2.7 Allocation of Purchase Price. The Purchase Price shall be allocated, for purposes of Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"), among the Assets, as shall be agreed to by the parties prior to the Closing Date among, including, but not limited to, the following categories: Real Property, Personal Property, USTs, Trademarks and Assumed Leases. Neither party hereto shall take a position on any tax return or other filing with any federal, state or local authority that is inconsistent with such allocation. SECTION 3 REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer as follows: 3.1 Organization, Standing and Authority. Each Seller is a corporation duly formed, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and is duly qualified to conduct its business in the Commonwealth of Massachusetts and the State of Rhode Island and Providence Plantations, as applicable, which are the only jurisdictions where the conduct of the business or operations of the Stations requires such qualification and the failure to so qualify would have a material adverse effect such Seller. Each Seller has all requisite corporate power and authority to own, lease, and use its Real Property and the Assets as presently owned, leased, and used. Each Seller has all requisite corporate power and authority to execute and deliver this Agreement and the documents contemplated hereby, and to perform and 7

comply with all of the terms, covenants and conditions to be performed and complied with by such Seller, hereunder and thereunder. No Seller is a participant in any joint venture or partnership with any other person or entity with respect to any part of the Stations' operations or the Assets. 3.2 Authorization and Binding Obligation. The execution, delivery, and performance of this Agreement by each Seller has been duly authorized by all necessary corporate action on the part of each Seller. This Agreement has been duly executed and delivered by each Seller and constitutes the legal, valid, and binding obligations of such Seller, enforceable against such Seller in accordance with its terms except as the enforceability hereof may be affected by bankruptcy, insolvency, or similar laws affecting creditors' rights generally, or by court-applied equitable remedies. 3.3 Absence of Conflicting Agreements. The execution, delivery, and performance of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (i) does not require the consent of any third party; (ii) will not conflict with any provision of the articles of Incorporation and By-Laws of any Seller; (iii) will not conflict with, result in a breach of or constitute a default under, any law, judgment, order, ordinance, decree, rule, regulation or ruling of any court or governmental instrumentality, which is applicable to any Seller; (iv) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any material agreement, instrument, License or permit to which any Seller is a party or by which any Seller may be bound; or (v) will not voluntarily create any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon the Assets. 8

3.4 Licenses. Each Seller has all Licenses necessary to enable the continued ownership of its Stations and its Assets as presently owned, if any. Schedule 3.4 includes a true and complete list of the Licenses. Each Seller has

comply with all of the terms, covenants and conditions to be performed and complied with by such Seller, hereunder and thereunder. No Seller is a participant in any joint venture or partnership with any other person or entity with respect to any part of the Stations' operations or the Assets. 3.2 Authorization and Binding Obligation. The execution, delivery, and performance of this Agreement by each Seller has been duly authorized by all necessary corporate action on the part of each Seller. This Agreement has been duly executed and delivered by each Seller and constitutes the legal, valid, and binding obligations of such Seller, enforceable against such Seller in accordance with its terms except as the enforceability hereof may be affected by bankruptcy, insolvency, or similar laws affecting creditors' rights generally, or by court-applied equitable remedies. 3.3 Absence of Conflicting Agreements. The execution, delivery, and performance of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (i) does not require the consent of any third party; (ii) will not conflict with any provision of the articles of Incorporation and By-Laws of any Seller; (iii) will not conflict with, result in a breach of or constitute a default under, any law, judgment, order, ordinance, decree, rule, regulation or ruling of any court or governmental instrumentality, which is applicable to any Seller; (iv) will not conflict with, constitute grounds for termination of, result in a breach of, constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any material agreement, instrument, License or permit to which any Seller is a party or by which any Seller may be bound; or (v) will not voluntarily create any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon the Assets. 8

3.4 Licenses. Each Seller has all Licenses necessary to enable the continued ownership of its Stations and its Assets as presently owned, if any. Schedule 3.4 includes a true and complete list of the Licenses. Each Seller has delivered to Buyer true and complete copies of each of the Licenses listed on Schedule 3.4. Such Licenses are issued in the name of Seller and are in full force and effect. 3.5 Title to and Condition of Real Property. (a) Schedule 3.5(a) contains a list of the Real Property owned by each Seller at which the Stations are located. Except as set forth on Schedule 3.5(a), each Seller has, and on the Closing Date will have, good, clear, record and marketable title to their respectively owned Real Property in fee simple absolute, free and clear of all liens, mortgages, pledges, covenants, easements, restrictions, encroachments, leases, charges, and other claims and encumbrances, except for Permitted Liens. (b) Seller has provided copies of all surveys and plot plans in its possession for all Real Property listed on Schedule 3.5(a). All buildings, USTs, Personal Property, cesspools, leaching fields, driveways, garages, means of access and other improvements included in the Assets are located entirely on the Real Property listed in Schedule 3.5(a). and do not encroach upon or under any property of any other person or entity, and no buildings, structures, personal property or other improvements encroach upon or under the Real Property from adjacent properties except as disclosed on Schedule 3.5(b). Each Seller enjoys peaceful and quiet possession of its respectively owned Real Property. (c) Except as disclosed on Schedule 3.5(c), no Seller has received any written notice of violations of any applicable zoning, building, health, traffic, subdivision or flood control 9

regulation, ordinance or other law, order, regulation or requirement relating to any of the Real Property and to the knowledge of each Seller there are no such violations. (d) No Seller has knowledge of any breaches, liens, encumbrances, easements, rights of way, building or use restrictions, exceptions, reservations or limitations which in any material respect interfere with or impair the present and continued use, possession or quiet enjoyment of the Real Property and Assets in the usual and normal conduct of the Stations.

3.4 Licenses. Each Seller has all Licenses necessary to enable the continued ownership of its Stations and its Assets as presently owned, if any. Schedule 3.4 includes a true and complete list of the Licenses. Each Seller has delivered to Buyer true and complete copies of each of the Licenses listed on Schedule 3.4. Such Licenses are issued in the name of Seller and are in full force and effect. 3.5 Title to and Condition of Real Property. (a) Schedule 3.5(a) contains a list of the Real Property owned by each Seller at which the Stations are located. Except as set forth on Schedule 3.5(a), each Seller has, and on the Closing Date will have, good, clear, record and marketable title to their respectively owned Real Property in fee simple absolute, free and clear of all liens, mortgages, pledges, covenants, easements, restrictions, encroachments, leases, charges, and other claims and encumbrances, except for Permitted Liens. (b) Seller has provided copies of all surveys and plot plans in its possession for all Real Property listed on Schedule 3.5(a). All buildings, USTs, Personal Property, cesspools, leaching fields, driveways, garages, means of access and other improvements included in the Assets are located entirely on the Real Property listed in Schedule 3.5(a). and do not encroach upon or under any property of any other person or entity, and no buildings, structures, personal property or other improvements encroach upon or under the Real Property from adjacent properties except as disclosed on Schedule 3.5(b). Each Seller enjoys peaceful and quiet possession of its respectively owned Real Property. (c) Except as disclosed on Schedule 3.5(c), no Seller has received any written notice of violations of any applicable zoning, building, health, traffic, subdivision or flood control 9

regulation, ordinance or other law, order, regulation or requirement relating to any of the Real Property and to the knowledge of each Seller there are no such violations. (d) No Seller has knowledge of any breaches, liens, encumbrances, easements, rights of way, building or use restrictions, exceptions, reservations or limitations which in any material respect interfere with or impair the present and continued use, possession or quiet enjoyment of the Real Property and Assets in the usual and normal conduct of the Stations. (e) Seller has no knowledge of any pending or proposed municipal betterments for which a lien could be imposed on the Real Property. (f) Each parcel of Real Property has a certificate of occupancy issued by the applicable local zoning or permitting authority permitting the current use of such Real Property. 3.6 Title to and Condition of Personal Property. (a) All of the Assets are owned and on the Closing Date will be owned by each respective Seller free and clear of all liens, pledges, mortgages, security interests or other encumbrances. All such Assets, subject to normal wear and tear, will be in the same condition on the Closing Date as on the date hereof. (b) There will, at the time of Closing, be no service contracts in effect and affecting the Stations with parties with whom Seller has dealt and under which Buyer will be obligated to pay any sums from and after the time of Closing; 3.7 Consents. No consent, approval, permit or authorization of, or declaration to or filing with any governmental or regulatory authority, or any other third party is required (i) to permit any Seller to consummate this Agreement and the transactions contemplated hereby, (ii) to permit any Seller to assign or transfer the Real Property or Assets to Buyer, or (iii) to enable 10

Buyer to conduct the business or operations of the Stations in essentially the same manner as such business or

regulation, ordinance or other law, order, regulation or requirement relating to any of the Real Property and to the knowledge of each Seller there are no such violations. (d) No Seller has knowledge of any breaches, liens, encumbrances, easements, rights of way, building or use restrictions, exceptions, reservations or limitations which in any material respect interfere with or impair the present and continued use, possession or quiet enjoyment of the Real Property and Assets in the usual and normal conduct of the Stations. (e) Seller has no knowledge of any pending or proposed municipal betterments for which a lien could be imposed on the Real Property. (f) Each parcel of Real Property has a certificate of occupancy issued by the applicable local zoning or permitting authority permitting the current use of such Real Property. 3.6 Title to and Condition of Personal Property. (a) All of the Assets are owned and on the Closing Date will be owned by each respective Seller free and clear of all liens, pledges, mortgages, security interests or other encumbrances. All such Assets, subject to normal wear and tear, will be in the same condition on the Closing Date as on the date hereof. (b) There will, at the time of Closing, be no service contracts in effect and affecting the Stations with parties with whom Seller has dealt and under which Buyer will be obligated to pay any sums from and after the time of Closing; 3.7 Consents. No consent, approval, permit or authorization of, or declaration to or filing with any governmental or regulatory authority, or any other third party is required (i) to permit any Seller to consummate this Agreement and the transactions contemplated hereby, (ii) to permit any Seller to assign or transfer the Real Property or Assets to Buyer, or (iii) to enable 10

Buyer to conduct the business or operations of the Stations in essentially the same manner as such business or operations are presently conducted. 3.8 Trademarks. There are no claims or proceedings pending or, to the knowledge of any Seller, threatened against any Seller asserting that the ownership or use by such Seller of any of the Trademarks infringes the rights of any other person, and no Seller has knowledge of ownership or any use thereof by any Seller that may, without notice or lapse of time or both, give rise to such a claim. No Seller has licensed or otherwise assigned any interest in Trademarks to any third party. 3.9 Insurance. Schedule 3.9 comprises a true and complete list, in all material respects, of all insurance policies of each Seller as of the date hereof. As of the date hereof, all policies of insurance listed on Schedule 3.9 are in full force and effect. 3.10 Reports. All returns, reports and statements which any Seller (solely in its capacity as the owner of any Station) is currently required to file with any governmental agency have been filed, and all reporting requirements of the governmental authorities having jurisdiction thereof have been complied with; all of such reports, returns and statements are complete and correct in all material respects as filed. 3.11 Taxes. Each Seller has filed or caused to be filed all federal income tax returns and all other federal, state, county, local or city tax returns which are required to be filed, and it has paid or cause to be paid all taxes shown on said returns or on any tax assessment received by it to the extent that such taxes have become due. To the best of each Seller's knowledge, no events have occurred which could impose on Buyer any transferee liability for any taxes, penalties or interest due or to become due from any Seller. 3.12 Claims, Legal Actions. Except as set forth in Schedules 3.12 and 3.14, no Seller

Buyer to conduct the business or operations of the Stations in essentially the same manner as such business or operations are presently conducted. 3.8 Trademarks. There are no claims or proceedings pending or, to the knowledge of any Seller, threatened against any Seller asserting that the ownership or use by such Seller of any of the Trademarks infringes the rights of any other person, and no Seller has knowledge of ownership or any use thereof by any Seller that may, without notice or lapse of time or both, give rise to such a claim. No Seller has licensed or otherwise assigned any interest in Trademarks to any third party. 3.9 Insurance. Schedule 3.9 comprises a true and complete list, in all material respects, of all insurance policies of each Seller as of the date hereof. As of the date hereof, all policies of insurance listed on Schedule 3.9 are in full force and effect. 3.10 Reports. All returns, reports and statements which any Seller (solely in its capacity as the owner of any Station) is currently required to file with any governmental agency have been filed, and all reporting requirements of the governmental authorities having jurisdiction thereof have been complied with; all of such reports, returns and statements are complete and correct in all material respects as filed. 3.11 Taxes. Each Seller has filed or caused to be filed all federal income tax returns and all other federal, state, county, local or city tax returns which are required to be filed, and it has paid or cause to be paid all taxes shown on said returns or on any tax assessment received by it to the extent that such taxes have become due. To the best of each Seller's knowledge, no events have occurred which could impose on Buyer any transferee liability for any taxes, penalties or interest due or to become due from any Seller. 3.12 Claims, Legal Actions. Except as set forth in Schedules 3.12 and 3.14, no Seller 11

has been served with any claim, legal action, counterclaim, suit, arbitration, governmental investigation or other legal, administrative or tax, or condemnation or taking proceeding, nor any order, decree or judgment, that is in progress or pending, nor to the knowledge of any Seller has any such matter been threatened, against or relating to any Seller, the Real Property, Assets, or the Stations, nor does any Seller know of any basis for the same that would materially impair the value of the Real Property or Assets in the hands of Buyer after the Closing. 3.13 Compliance with Laws. To the best knowledge of each Seller, each Seller has complied in all material respects with (i) the Licenses, if any, and (ii) all applicable federal, state and local laws, rules and regulations and ordinances. To the best knowledge of each Seller, neither the ownership nor use of the Stations materially conflicts with rights of any other person, firm or corporation. 3.14 Environmental Matters. Except as set forth in Schedule 3.14: (a) The USTs and Real Property are, to the best of each Seller's knowledge, in compliance with all applicable Environmental Laws. "Environmental Laws" means any and all Federal, state or local laws, statues, rules, regulations, plans, ordinances, codes, licenses or other restrictions relating to health, safety or the environment, including without limitation the Federal Comprehensive Environmental Response, Compensation and Liability Act, the Clean Air Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the Occupational Health and Safety Act and Massachusetts General Laws Chapter 21E and the Rhode Island Hazardous Waste Management Act of 1978, R.I.G.L. Section 23-19.1-4 et seq. and any and all other related Rhode Island statutes, rules, and regulations. (b) No Seller has received any written notice of violation, alleged violation, noncompliance, liability or potential liability regarding environmental matters or compliance 12

has been served with any claim, legal action, counterclaim, suit, arbitration, governmental investigation or other legal, administrative or tax, or condemnation or taking proceeding, nor any order, decree or judgment, that is in progress or pending, nor to the knowledge of any Seller has any such matter been threatened, against or relating to any Seller, the Real Property, Assets, or the Stations, nor does any Seller know of any basis for the same that would materially impair the value of the Real Property or Assets in the hands of Buyer after the Closing. 3.13 Compliance with Laws. To the best knowledge of each Seller, each Seller has complied in all material respects with (i) the Licenses, if any, and (ii) all applicable federal, state and local laws, rules and regulations and ordinances. To the best knowledge of each Seller, neither the ownership nor use of the Stations materially conflicts with rights of any other person, firm or corporation. 3.14 Environmental Matters. Except as set forth in Schedule 3.14: (a) The USTs and Real Property are, to the best of each Seller's knowledge, in compliance with all applicable Environmental Laws. "Environmental Laws" means any and all Federal, state or local laws, statues, rules, regulations, plans, ordinances, codes, licenses or other restrictions relating to health, safety or the environment, including without limitation the Federal Comprehensive Environmental Response, Compensation and Liability Act, the Clean Air Act, the Safe Drinking Water Act, the Toxic Substances Control Act, the Occupational Health and Safety Act and Massachusetts General Laws Chapter 21E and the Rhode Island Hazardous Waste Management Act of 1978, R.I.G.L. Section 23-19.1-4 et seq. and any and all other related Rhode Island statutes, rules, and regulations. (b) No Seller has received any written notice of violation, alleged violation, noncompliance, liability or potential liability regarding environmental matters or compliance 12

with Environmental Laws with regard to the Real Property, Stations or Assets nor has any of the Real Property been assigned a Release Tracking Number by the Massachusetts Department of Environmental Protection. (c) To the best knowledge of each Seller, Hazardous Materials have not been transported or disposed of from the Stations or Real Property in violation of, or in a manner or to a location which gives rise to liability under, Environmental Laws, nor have any Hazardous Materials been generated, treated, stored or disposed of at, on or under any of the Stations or Real Property in violation of, or in a manner that would give rise to liability under, any applicable Environmental Laws. "Hazardous Materials" means any toxic or hazardous wastes, substances, products, pollutants or materials of any kind, including, without limitation, petroleum and petroleum products, MTBE and other additives, and asbestos, or any other wastes, substances, products, pollutants or material regulated under any Environmental Laws. (d) There are no judicial proceedings or governmental or administrative actions pending, demand letters sent pursuant to M.G.L. Chapter 21E or, to the knowledge of any Seller, threatened under any Environmental Law to which such Seller is or will be named as a party with respect to the Stations or Real Property, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Stations or Real Property. (e) To the best of each Seller's knowledge, there has been no release or threat of release of Hazardous Materials at or from the Stations or Real Property, or arising from or related to the operations of the Stations in connection with the Real Property. 3.15 Full Disclosure. No representation or warranty made by any Seller herein nor any 13

certificate, document or other instrument furnished or to be furnished by any Seller pursuant hereto contains or will contain any untrue statement of a material fact made intentionally or in bad faith, or will omit to state any

with Environmental Laws with regard to the Real Property, Stations or Assets nor has any of the Real Property been assigned a Release Tracking Number by the Massachusetts Department of Environmental Protection. (c) To the best knowledge of each Seller, Hazardous Materials have not been transported or disposed of from the Stations or Real Property in violation of, or in a manner or to a location which gives rise to liability under, Environmental Laws, nor have any Hazardous Materials been generated, treated, stored or disposed of at, on or under any of the Stations or Real Property in violation of, or in a manner that would give rise to liability under, any applicable Environmental Laws. "Hazardous Materials" means any toxic or hazardous wastes, substances, products, pollutants or materials of any kind, including, without limitation, petroleum and petroleum products, MTBE and other additives, and asbestos, or any other wastes, substances, products, pollutants or material regulated under any Environmental Laws. (d) There are no judicial proceedings or governmental or administrative actions pending, demand letters sent pursuant to M.G.L. Chapter 21E or, to the knowledge of any Seller, threatened under any Environmental Law to which such Seller is or will be named as a party with respect to the Stations or Real Property, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Stations or Real Property. (e) To the best of each Seller's knowledge, there has been no release or threat of release of Hazardous Materials at or from the Stations or Real Property, or arising from or related to the operations of the Stations in connection with the Real Property. 3.15 Full Disclosure. No representation or warranty made by any Seller herein nor any 13

certificate, document or other instrument furnished or to be furnished by any Seller pursuant hereto contains or will contain any untrue statement of a material fact made intentionally or in bad faith, or will omit to state any material fact known to any Seller and required to make the statements herein or therein not misleading. Seller has not failed to furnish to Buyer any contract or agreement relating to the Stations or any amendments thereto which will be binding on Buyer from and after the time of Closing, or any information which would be material to the ownership or operation by Buyer of the Real Property as it exists presently or at the time of Closing and Seller has disclosed to Buyer in writing all material adverse information of which Seller is aware, if any, concerning the physical condition of the Real Property. Notwithstanding that the Buyer will have the opportunity to conduct its due diligence with respect to the Real Property and the Assets under Section 6.7 below, the Buyer's conduct of said due diligence does not vitiate Seller's obligation to make full and complete disclosure hereunder. SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: 4.1 Organization, Standing and Authority. Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and Buyer shall be, at Closing, qualified to conduct business in the Commonwealth of Massachusetts and the State of Rhode Island and Providence Plantations. Buyer has all requisite corporate power and authority to execute and deliver this Agreement and the documents contemplated hereby, and to perform and comply with all of the terms, covenants, and conditions to be performed and complied with by Buyer hereunder and thereunder. 4.2 Authorization and Binding Obligation. The execution, delivery and performance 14

of this Agreement by Buyer has been duly authorized by all necessary corporate action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer and constitutes the legal, valid, and binding

certificate, document or other instrument furnished or to be furnished by any Seller pursuant hereto contains or will contain any untrue statement of a material fact made intentionally or in bad faith, or will omit to state any material fact known to any Seller and required to make the statements herein or therein not misleading. Seller has not failed to furnish to Buyer any contract or agreement relating to the Stations or any amendments thereto which will be binding on Buyer from and after the time of Closing, or any information which would be material to the ownership or operation by Buyer of the Real Property as it exists presently or at the time of Closing and Seller has disclosed to Buyer in writing all material adverse information of which Seller is aware, if any, concerning the physical condition of the Real Property. Notwithstanding that the Buyer will have the opportunity to conduct its due diligence with respect to the Real Property and the Assets under Section 6.7 below, the Buyer's conduct of said due diligence does not vitiate Seller's obligation to make full and complete disclosure hereunder. SECTION 4 REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller as follows: 4.1 Organization, Standing and Authority. Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and Buyer shall be, at Closing, qualified to conduct business in the Commonwealth of Massachusetts and the State of Rhode Island and Providence Plantations. Buyer has all requisite corporate power and authority to execute and deliver this Agreement and the documents contemplated hereby, and to perform and comply with all of the terms, covenants, and conditions to be performed and complied with by Buyer hereunder and thereunder. 4.2 Authorization and Binding Obligation. The execution, delivery and performance 14

of this Agreement by Buyer has been duly authorized by all necessary corporate action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer and constitutes the legal, valid, and binding obligations of Buyer, enforceable against Buyer in accordance with its terms except as the enforceability hereof may be affected by bankruptcy, insolvency, or similar laws affecting creditors' rights generally, or by courtapplied equitable remedies. 4.3 Absence of Conflicting Agreements. The execution, delivery, and performance of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (i) does not require the consent of any third party, (ii) will not conflict with the Articles of Incorporation or By-laws of Buyer, (iii) will not conflict with, result in a breach of, or constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any material agreement, instrument, licenses, or permit to which Buyer is a party or by which Buyer may be bound. 4.4 Full Disclosure. No representation or warranty made by Buyer herein nor any certificate, document or other instrument furnished or to be furnished by Buyer pursuant hereto contains or will contain any untrue statement of a material fact made intentionally or in bad faith, or intentionally or in bad faith omits or will omit to state any material fact known to Buyer and required to make the statements herein or therein not misleading. 4.5 Litigation. There is no action, suit, investigation or other proceeding pending or, to Buyer's knowledge, threatened which may adversely affect Buyer's ability to perform in accordance with the terms of this Agreement, and Buyer is unaware of any facts which could reasonably result in any such proceeding. SECTION 5 15

COVENANTS OF SELLER

of this Agreement by Buyer has been duly authorized by all necessary corporate action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer and constitutes the legal, valid, and binding obligations of Buyer, enforceable against Buyer in accordance with its terms except as the enforceability hereof may be affected by bankruptcy, insolvency, or similar laws affecting creditors' rights generally, or by courtapplied equitable remedies. 4.3 Absence of Conflicting Agreements. The execution, delivery, and performance of this Agreement and the documents contemplated hereby (with or without the giving of notice, the lapse of time, or both): (i) does not require the consent of any third party, (ii) will not conflict with the Articles of Incorporation or By-laws of Buyer, (iii) will not conflict with, result in a breach of, or constitute a default under, or accelerate or permit the acceleration of any performance required by the terms of, any material agreement, instrument, licenses, or permit to which Buyer is a party or by which Buyer may be bound. 4.4 Full Disclosure. No representation or warranty made by Buyer herein nor any certificate, document or other instrument furnished or to be furnished by Buyer pursuant hereto contains or will contain any untrue statement of a material fact made intentionally or in bad faith, or intentionally or in bad faith omits or will omit to state any material fact known to Buyer and required to make the statements herein or therein not misleading. 4.5 Litigation. There is no action, suit, investigation or other proceeding pending or, to Buyer's knowledge, threatened which may adversely affect Buyer's ability to perform in accordance with the terms of this Agreement, and Buyer is unaware of any facts which could reasonably result in any such proceeding. SECTION 5 15

COVENANTS OF SELLER 5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or with the prior written consent of Buyer, not to be unreasonably withheld, between the date hereof and the Closing Date, Seller shall abide by the following negative and affirmative covenants: A. Negative Covenants. No Seller shall do any of the following: (1) Disposition of Assets. Sell, assign, lease, market or otherwise transfer or dispose of any of the Assets, except for assets consumed or disposed of in the ordinary course of business, where no longer used or useful in the business or operations of the Stations or in connection with the acquisition of replacement property of equivalent kind and value; (2) Encumbrances. Create, assume or permit to exist any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon the Real Property or Assets, except for those in existence on the date of this Agreement, disclosed in Schedule 3.5 hereto; (3) Licenses. Do any act or fail to do any act which might result in the expiration, revocation, suspension or modification of any of the Licenses, or fail to prosecute with due diligence any applications to any governmental authority in connection with the ownership of the Stations; (4) Rights. Waive any material right relating to the Stations, Real Property or the Assets; or (5) No Inconsistent Action. Knowingly take any action which is inconsistent with its obligations hereunder or which could hinder or delay the consummation of the transaction contemplated by this Agreement. B. Affirmative Covenants. Each Seller shall do the following: 16

COVENANTS OF SELLER 5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or with the prior written consent of Buyer, not to be unreasonably withheld, between the date hereof and the Closing Date, Seller shall abide by the following negative and affirmative covenants: A. Negative Covenants. No Seller shall do any of the following: (1) Disposition of Assets. Sell, assign, lease, market or otherwise transfer or dispose of any of the Assets, except for assets consumed or disposed of in the ordinary course of business, where no longer used or useful in the business or operations of the Stations or in connection with the acquisition of replacement property of equivalent kind and value; (2) Encumbrances. Create, assume or permit to exist any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance of any nature whatsoever upon the Real Property or Assets, except for those in existence on the date of this Agreement, disclosed in Schedule 3.5 hereto; (3) Licenses. Do any act or fail to do any act which might result in the expiration, revocation, suspension or modification of any of the Licenses, or fail to prosecute with due diligence any applications to any governmental authority in connection with the ownership of the Stations; (4) Rights. Waive any material right relating to the Stations, Real Property or the Assets; or (5) No Inconsistent Action. Knowingly take any action which is inconsistent with its obligations hereunder or which could hinder or delay the consummation of the transaction contemplated by this Agreement. B. Affirmative Covenants. Each Seller shall do the following: 16

(1) Access to Information. Upon prior notice, allow Buyer and its authorized representatives reasonable access at mutually agreeable times at Buyer's expense during normal business hours to all books, records, Leases and documents relating to the ownership of the Stations for the purpose of audit and inspection, and furnish or cause to be furnished to Buyer or its authorized representatives all information with respect to the ownership of the Stations as Buyer may reasonably request, it being understood that the rights of Buyer hereunder shall not be exercised in such a manner as to unreasonably interfere with the business of any Seller; provided that neither the furnishing of such information to Buyer or its representatives nor any investigation made heretofore or hereafter by Buyer shall affect Buyer's rights to rely on any representation or warranty made by any Seller in this Agreement, each of which shall survive any furnishing or information or any investigation. (2) Insurance. Maintain the existing insurance policies on the Stations, Real Property and the Assets; (3) Consents. Cooperate with Buyer in obtaining the Consents; (4) Compliance with Laws. Comply in all material respects with the all laws, rules and regulations to which each Seller, the Real Property, Stations and the Assets are subject. (5) Form 1099. At Closing, each Seller shall file Form 1099 (information return) with respect to the sale of its Real Property contemplated by this Agreement (if such filing is required). 5.2 Post-Closing Covenants. After the Closing, each Seller will take such actions, and execute and deliver to Buyer such further deeds, bills of sale, or other transfer documents as, in the reasonable opinion of counsel for Buyer and Seller, may be necessary to ensure, complete and evidence the full and effective transfer of the Real Property and Assets to Buyer pursuant to 17

(1) Access to Information. Upon prior notice, allow Buyer and its authorized representatives reasonable access at mutually agreeable times at Buyer's expense during normal business hours to all books, records, Leases and documents relating to the ownership of the Stations for the purpose of audit and inspection, and furnish or cause to be furnished to Buyer or its authorized representatives all information with respect to the ownership of the Stations as Buyer may reasonably request, it being understood that the rights of Buyer hereunder shall not be exercised in such a manner as to unreasonably interfere with the business of any Seller; provided that neither the furnishing of such information to Buyer or its representatives nor any investigation made heretofore or hereafter by Buyer shall affect Buyer's rights to rely on any representation or warranty made by any Seller in this Agreement, each of which shall survive any furnishing or information or any investigation. (2) Insurance. Maintain the existing insurance policies on the Stations, Real Property and the Assets; (3) Consents. Cooperate with Buyer in obtaining the Consents; (4) Compliance with Laws. Comply in all material respects with the all laws, rules and regulations to which each Seller, the Real Property, Stations and the Assets are subject. (5) Form 1099. At Closing, each Seller shall file Form 1099 (information return) with respect to the sale of its Real Property contemplated by this Agreement (if such filing is required). 5.2 Post-Closing Covenants. After the Closing, each Seller will take such actions, and execute and deliver to Buyer such further deeds, bills of sale, or other transfer documents as, in the reasonable opinion of counsel for Buyer and Seller, may be necessary to ensure, complete and evidence the full and effective transfer of the Real Property and Assets to Buyer pursuant to 17

this Agreement. SECTION 6 SPECIAL COVENANTS AND AGREEMENTS 6.1 Broker. Buyer and Seller each represents and warrants to each other that neither it nor any person or entity acting on its behalf has incurred any liability for any finders' or brokers' fees or commissions in connection with the transaction contemplated by this Agreement. The provision hereof shall survive the Closing hereunder. 6.2 Confidentiality. Except as specifically set forth herein, each party hereto will keep confidential any information which is obtained from the other party in connection with the transaction contemplated hereby and which is not readily available to members of the general public, and will not use such information for any purpose other than in furtherance of the transactions contemplated hereby. In the event this Agreement is terminated and the purchase and sale contemplated hereby abandoned, each party will return to the other party all documents, work papers and other written material obtained by it in connection with the transaction contemplated hereby. If a disclosure is required by law, the disclosing party shall make reasonable efforts to afford the other party an opportunity to review and comment on the proposed disclosure prior to the making of such disclosure. Notwithstanding the foregoing, upon the execution of this Agreement by both parties, Buyer shall have the ability to make a public statement and/or press release with respect to this Agreement and the transactions contemplated hereby, which public statement and/or press release shall be mutually agreed to in form and substance by both parties hereto prior to its release. 6.3 Cooperation. Buyer and Seller shall cooperate fully with each other and their respective counsel and accountants in connection with any actions required to be taken as part of 18

their respective obligations under this Agreement, and Buyer and Seller shall execute such other documents as

this Agreement. SECTION 6 SPECIAL COVENANTS AND AGREEMENTS 6.1 Broker. Buyer and Seller each represents and warrants to each other that neither it nor any person or entity acting on its behalf has incurred any liability for any finders' or brokers' fees or commissions in connection with the transaction contemplated by this Agreement. The provision hereof shall survive the Closing hereunder. 6.2 Confidentiality. Except as specifically set forth herein, each party hereto will keep confidential any information which is obtained from the other party in connection with the transaction contemplated hereby and which is not readily available to members of the general public, and will not use such information for any purpose other than in furtherance of the transactions contemplated hereby. In the event this Agreement is terminated and the purchase and sale contemplated hereby abandoned, each party will return to the other party all documents, work papers and other written material obtained by it in connection with the transaction contemplated hereby. If a disclosure is required by law, the disclosing party shall make reasonable efforts to afford the other party an opportunity to review and comment on the proposed disclosure prior to the making of such disclosure. Notwithstanding the foregoing, upon the execution of this Agreement by both parties, Buyer shall have the ability to make a public statement and/or press release with respect to this Agreement and the transactions contemplated hereby, which public statement and/or press release shall be mutually agreed to in form and substance by both parties hereto prior to its release. 6.3 Cooperation. Buyer and Seller shall cooperate fully with each other and their respective counsel and accountants in connection with any actions required to be taken as part of 18

their respective obligations under this Agreement, and Buyer and Seller shall execute such other documents as may be necessary and desirable to the implementation and consummation of this Agreement, and otherwise use their best efforts to consummate the transaction contemplated hereby and to fulfill their obligations hereunder. 6.4 Risk of Loss. A. The risk of loss, damage or impairment of any of the Real Property and Assets caused through the action or inaction of Seller or any representative or agent of Seller shall be borne by Seller at all times prior to the completion of the Closing. B. The risk of loss resulting from confiscation or condemnation of any of the Real Property and Assets shall be borne by Seller at all times prior to the completion of the Closing. C. In the event of any damage or destruction of the Real Property or Assets described in Section 6.4A above, if such Real Property or Assets have not been restored or replaced and the Station's normal and usual operations resumed prior to closing, or restoration or replacement has not been initiated with prompt completion scheduled, if the cost of restoration equals or exceeds the sum of $30,000.00, Buyer may either withdraw the Station from the terms of this Agreement and the Purchase Price shall be reduced by the withdrawal value allocated to such withdrawn Station pursuant to Schedule 6.9, or terminate this Agreement forthwith without any further obligation hereunder by written notice to Seller. Alternatively, Buyer may, at its option, proceed to close this Agreement and complete the restoration and replacement of such damaged Real Property or Assets after the Closing Date, in which event Seller shall deliver to Buyer all insurance proceeds received in connection with such damage or destruction to the extent not already expended by Seller arising in connection with such restoration and replacement. 6.5 Environmental Matters. 19

their respective obligations under this Agreement, and Buyer and Seller shall execute such other documents as may be necessary and desirable to the implementation and consummation of this Agreement, and otherwise use their best efforts to consummate the transaction contemplated hereby and to fulfill their obligations hereunder. 6.4 Risk of Loss. A. The risk of loss, damage or impairment of any of the Real Property and Assets caused through the action or inaction of Seller or any representative or agent of Seller shall be borne by Seller at all times prior to the completion of the Closing. B. The risk of loss resulting from confiscation or condemnation of any of the Real Property and Assets shall be borne by Seller at all times prior to the completion of the Closing. C. In the event of any damage or destruction of the Real Property or Assets described in Section 6.4A above, if such Real Property or Assets have not been restored or replaced and the Station's normal and usual operations resumed prior to closing, or restoration or replacement has not been initiated with prompt completion scheduled, if the cost of restoration equals or exceeds the sum of $30,000.00, Buyer may either withdraw the Station from the terms of this Agreement and the Purchase Price shall be reduced by the withdrawal value allocated to such withdrawn Station pursuant to Schedule 6.9, or terminate this Agreement forthwith without any further obligation hereunder by written notice to Seller. Alternatively, Buyer may, at its option, proceed to close this Agreement and complete the restoration and replacement of such damaged Real Property or Assets after the Closing Date, in which event Seller shall deliver to Buyer all insurance proceeds received in connection with such damage or destruction to the extent not already expended by Seller arising in connection with such restoration and replacement. 6.5 Environmental Matters. 19

(a) Cleanup Responsibility. The Buyer and Seller acknowledge that all of the Stations have undergone various levels of environmental assessment and remediation. Nothing in this Agreement shall be construed to diminish or otherwise alter the Seller's obligations with respect to the remediation of the Stations as set forth in that certain Asset Purchase Agreement dated April 16, 1991 between Donna Oil Corp., predecessor in interest to Buyer and Marane, and their affiliated entities (the "1991 Agreement"). Seller shall remain responsible for any contamination at the Stations arising from previously unknown underground storage tanks. (b) Due Diligence. Seller shall allow Buyer, at its sole cost and expense, to take soil and groundwater samples and such additional tests as Buyer may deem appropriate to assist in its evaluation of the Stations during the Due Diligence Period described in Section 6.7 below. Buyer agrees to provide Seller with copies of all environmental reports prepared on each of the Stations in connection therewith and upon request, any additional correspondence, data or other information relating to the environmental condition of the Stations. Buyer shall have the right to terminate its obligations under this Agreement prior to the expiration of the Due Diligence Period if Buyer is not satisfied in its sole discretion with the environmental condition of any of the Real Properties. (c) Environmental Escrow. Twelve (12) of the Stations ("the 12 Stations"), listed on Schedule 6.5 hereto are in various stages of assessment and cleanup by Seller. Seller agrees to deposit $2,150,000.00 of the Purchase Price (the "Escrow Amount") into an escrow account to pay for future environmental response costs (the "Escrow Account") at the 12 Stations and such other liabilities of the Seller as more specifically set forth in the Environmental Escrow Agreement. At Closing, the parties hereto shall execute the Environmental Escrow Agreement 20

in the form of Exhibit B hereto and the Escrow Amount shall be deposited into the Escrow Account (d) Environmental Insurance. Seller may obtain a "cost cap" environmental insurance policy or similar insurance product covering environmental response costs at the 12 Stations in excess of the Escrow Amount. Buyer agrees

(a) Cleanup Responsibility. The Buyer and Seller acknowledge that all of the Stations have undergone various levels of environmental assessment and remediation. Nothing in this Agreement shall be construed to diminish or otherwise alter the Seller's obligations with respect to the remediation of the Stations as set forth in that certain Asset Purchase Agreement dated April 16, 1991 between Donna Oil Corp., predecessor in interest to Buyer and Marane, and their affiliated entities (the "1991 Agreement"). Seller shall remain responsible for any contamination at the Stations arising from previously unknown underground storage tanks. (b) Due Diligence. Seller shall allow Buyer, at its sole cost and expense, to take soil and groundwater samples and such additional tests as Buyer may deem appropriate to assist in its evaluation of the Stations during the Due Diligence Period described in Section 6.7 below. Buyer agrees to provide Seller with copies of all environmental reports prepared on each of the Stations in connection therewith and upon request, any additional correspondence, data or other information relating to the environmental condition of the Stations. Buyer shall have the right to terminate its obligations under this Agreement prior to the expiration of the Due Diligence Period if Buyer is not satisfied in its sole discretion with the environmental condition of any of the Real Properties. (c) Environmental Escrow. Twelve (12) of the Stations ("the 12 Stations"), listed on Schedule 6.5 hereto are in various stages of assessment and cleanup by Seller. Seller agrees to deposit $2,150,000.00 of the Purchase Price (the "Escrow Amount") into an escrow account to pay for future environmental response costs (the "Escrow Account") at the 12 Stations and such other liabilities of the Seller as more specifically set forth in the Environmental Escrow Agreement. At Closing, the parties hereto shall execute the Environmental Escrow Agreement 20

in the form of Exhibit B hereto and the Escrow Amount shall be deposited into the Escrow Account (d) Environmental Insurance. Seller may obtain a "cost cap" environmental insurance policy or similar insurance product covering environmental response costs at the 12 Stations in excess of the Escrow Amount. Buyer agrees it shall negotiate in good faith with Seller and cooperate with Seller in Seller's undertaking to obtain said "cost cap" environmental insurance policy or similar insurance product upon terms mutually agreeable to both parties (the "Insurance Policy"). The rights and obligations of the parties with respect to the proceeds of the Insurance Policy shall be governed by the Environmental Escrow Agreement. All premiums for any Insurance Policy so obtained shall be paid by the Seller. (e) Reimbursements Under Chapter 21J. The parties acknowledge that M.G.L. C. 21J ("Chapter 21J") may provide for reimbursement of the response costs at the 12 Stations and each party recognizes the rights of the other to seek reimbursement under Chapter 21J. Buyer agrees to diligently prosecute with the Chapter 21J Board reimbursement for the environmental response costs at the 12 Stations. Any 21J reimbursements received by Buyer or Seller shall be deposited into the Escrow Account and released to Seller pursuant to the terms of the Environmental Escrow Agreement. The parties shall cooperate with each other in complying with the requirements for obtaining reimbursement under Chapter 21J. Reimbursements pending before the 21J Board as of the date of this Agreement are excluded from this Agreement. 6.6 Licenses. To the extent Seller is a holder of any License, Seller agrees to assign and transfer to Buyer all Licenses that are transferable and will use its best efforts to assist Buyer in obtaining all of the foregoing where not assignable. 21

6.7 Buyer's Due Diligence and Seller's Delivery of Schedules. This Agreement and Buyer's obligation under this Agreement are subject to and contingent upon Buyer, within sixty (60) days of the full execution of this Agreement (the "Due Diligence Period") conducting any and all due diligence in connection with the purchase of the Real Property, including without limitation, (i) reviewing the status of the zoning of the Stations and Buyer's satisfaction with respect to the state thereof; (ii) obtaining surveys of each parcel of Real Property; (iii) conducting building and zoning analyses; (iv) conducting its environmental due diligence pursuant to Section 6.5; and (v) obtaining title insurance commitments for each Real Property location to be purchased hereunder, which commitments shall provide that upon recordation or filing of

in the form of Exhibit B hereto and the Escrow Amount shall be deposited into the Escrow Account (d) Environmental Insurance. Seller may obtain a "cost cap" environmental insurance policy or similar insurance product covering environmental response costs at the 12 Stations in excess of the Escrow Amount. Buyer agrees it shall negotiate in good faith with Seller and cooperate with Seller in Seller's undertaking to obtain said "cost cap" environmental insurance policy or similar insurance product upon terms mutually agreeable to both parties (the "Insurance Policy"). The rights and obligations of the parties with respect to the proceeds of the Insurance Policy shall be governed by the Environmental Escrow Agreement. All premiums for any Insurance Policy so obtained shall be paid by the Seller. (e) Reimbursements Under Chapter 21J. The parties acknowledge that M.G.L. C. 21J ("Chapter 21J") may provide for reimbursement of the response costs at the 12 Stations and each party recognizes the rights of the other to seek reimbursement under Chapter 21J. Buyer agrees to diligently prosecute with the Chapter 21J Board reimbursement for the environmental response costs at the 12 Stations. Any 21J reimbursements received by Buyer or Seller shall be deposited into the Escrow Account and released to Seller pursuant to the terms of the Environmental Escrow Agreement. The parties shall cooperate with each other in complying with the requirements for obtaining reimbursement under Chapter 21J. Reimbursements pending before the 21J Board as of the date of this Agreement are excluded from this Agreement. 6.6 Licenses. To the extent Seller is a holder of any License, Seller agrees to assign and transfer to Buyer all Licenses that are transferable and will use its best efforts to assist Buyer in obtaining all of the foregoing where not assignable. 21

6.7 Buyer's Due Diligence and Seller's Delivery of Schedules. This Agreement and Buyer's obligation under this Agreement are subject to and contingent upon Buyer, within sixty (60) days of the full execution of this Agreement (the "Due Diligence Period") conducting any and all due diligence in connection with the purchase of the Real Property, including without limitation, (i) reviewing the status of the zoning of the Stations and Buyer's satisfaction with respect to the state thereof; (ii) obtaining surveys of each parcel of Real Property; (iii) conducting building and zoning analyses; (iv) conducting its environmental due diligence pursuant to Section 6.5; and (v) obtaining title insurance commitments for each Real Property location to be purchased hereunder, which commitments shall provide that upon recordation or filing of deeds, for the issue of ALTA Form owner's title insurance policies at standard rates (the "Title Policies") insuring fee title to the Real Property to the Buyer or its assignees, free and clear of all liens and encumbrances other than Permitted Liens, that would materially affect Buyer's ability to operate the Stations as are currently being operated and, in any event, Seller's interest in the Real Property transferred hereunder shall be conveyed free of mortgages, mechanics liens, security interests and other similar forms of financial obligations or financial liabilities, excepting liens for real property taxes which are not yet due and payable. The Title Policies shall insure over any matter only to the extent that affirmative insurance shall be provided as Buyer may reasonably require and to Buyer's satisfaction and at no additional premium. Upon Buyer's review of the title commitments, Buyer shall notify Seller of any exceptions to title which must be cured by Seller. A copy of the title commitments being sent to Seller shall be adequate notice to Seller of any exceptions to title. Seller acknowledges that Buyer has agreed to execute this Agreement without having had the opportunity to review any of the schedules referenced in this Agreement (the "Schedules"). 22

Seller agrees to deliver to Buyer final Schedules to this Agreement not later than thirty (30) days after the execution of this Agreement. Buyer shall have until the expiration of the Due Diligence Period to review said Schedules and withdraw any Station from this Agreement based on matters disclosed on said Schedules. Seller, upon receipt of a copy of the title commitments, and receipt of notice from Buyer of any environmental issues (other than those environmental issues identified under the Environmental Escrow Agreement), zoning, building or survey defect, shall diligently endeavor to cure, or to make arrangements reasonably satisfactory to Buyer to cure any such defect, provided however, Seller shall not be required to expend more than $100,000 in

6.7 Buyer's Due Diligence and Seller's Delivery of Schedules. This Agreement and Buyer's obligation under this Agreement are subject to and contingent upon Buyer, within sixty (60) days of the full execution of this Agreement (the "Due Diligence Period") conducting any and all due diligence in connection with the purchase of the Real Property, including without limitation, (i) reviewing the status of the zoning of the Stations and Buyer's satisfaction with respect to the state thereof; (ii) obtaining surveys of each parcel of Real Property; (iii) conducting building and zoning analyses; (iv) conducting its environmental due diligence pursuant to Section 6.5; and (v) obtaining title insurance commitments for each Real Property location to be purchased hereunder, which commitments shall provide that upon recordation or filing of deeds, for the issue of ALTA Form owner's title insurance policies at standard rates (the "Title Policies") insuring fee title to the Real Property to the Buyer or its assignees, free and clear of all liens and encumbrances other than Permitted Liens, that would materially affect Buyer's ability to operate the Stations as are currently being operated and, in any event, Seller's interest in the Real Property transferred hereunder shall be conveyed free of mortgages, mechanics liens, security interests and other similar forms of financial obligations or financial liabilities, excepting liens for real property taxes which are not yet due and payable. The Title Policies shall insure over any matter only to the extent that affirmative insurance shall be provided as Buyer may reasonably require and to Buyer's satisfaction and at no additional premium. Upon Buyer's review of the title commitments, Buyer shall notify Seller of any exceptions to title which must be cured by Seller. A copy of the title commitments being sent to Seller shall be adequate notice to Seller of any exceptions to title. Seller acknowledges that Buyer has agreed to execute this Agreement without having had the opportunity to review any of the schedules referenced in this Agreement (the "Schedules"). 22

Seller agrees to deliver to Buyer final Schedules to this Agreement not later than thirty (30) days after the execution of this Agreement. Buyer shall have until the expiration of the Due Diligence Period to review said Schedules and withdraw any Station from this Agreement based on matters disclosed on said Schedules. Seller, upon receipt of a copy of the title commitments, and receipt of notice from Buyer of any environmental issues (other than those environmental issues identified under the Environmental Escrow Agreement), zoning, building or survey defect, shall diligently endeavor to cure, or to make arrangements reasonably satisfactory to Buyer to cure any such defect, provided however, Seller shall not be required to expend more than $100,000 in the aggregate to remedy any such issues or defects. If Seller is unable to cure any such defect related to title, zoning, survey or any other defect other than environmental defects, then, at the election of Buyer, Buyer may either withdraw the Station from the terms of this Agreement and the Purchase Price shall be reduced by the withdrawal value allocated to such withdrawn Station pursuant to Schedule 6.9, or this Agreement shall terminate and the parties hereto shall have no further obligations hereunder. Notwithstanding anything to the contrary contained in this paragraph, if Seller in good faith determines that the costs to cure any such defects will be in excess of $100,000, Seller shall have no obligation hereunder to expend any amount of money to cure any defects, except as specifically set forth herein, in which case Buyer shall have the ability to either (i) accept the Station or Stations in their then condition, (ii) withdraw any Station it is otherwise entitled to withdraw under the terms of this Agreement or (iii) terminate this Agreement. In the event Buyer is unable to obtain, after diligent efforts, a final survey of any parcel of Real Property prior to the Closing Date, Seller agrees to execute any confirmatory deed or 23

corrective deed required by the issuer of the applicable Title Policy to correct any discrepancy found in the legal description for any such parcel of Real Property 6.8 Employees. Buyer shall not be obligated to employ any of Seller's employees or assume any of Seller's employment plans. Seller agrees that it will be solely responsible for any severance or other benefits owed to its employees. In the event, however, that Buyer does offer employment to any of Seller's employees, any such employment relationship shall be at will and none of Seller's employment plans or practices shall apply to Buyer.

Seller agrees to deliver to Buyer final Schedules to this Agreement not later than thirty (30) days after the execution of this Agreement. Buyer shall have until the expiration of the Due Diligence Period to review said Schedules and withdraw any Station from this Agreement based on matters disclosed on said Schedules. Seller, upon receipt of a copy of the title commitments, and receipt of notice from Buyer of any environmental issues (other than those environmental issues identified under the Environmental Escrow Agreement), zoning, building or survey defect, shall diligently endeavor to cure, or to make arrangements reasonably satisfactory to Buyer to cure any such defect, provided however, Seller shall not be required to expend more than $100,000 in the aggregate to remedy any such issues or defects. If Seller is unable to cure any such defect related to title, zoning, survey or any other defect other than environmental defects, then, at the election of Buyer, Buyer may either withdraw the Station from the terms of this Agreement and the Purchase Price shall be reduced by the withdrawal value allocated to such withdrawn Station pursuant to Schedule 6.9, or this Agreement shall terminate and the parties hereto shall have no further obligations hereunder. Notwithstanding anything to the contrary contained in this paragraph, if Seller in good faith determines that the costs to cure any such defects will be in excess of $100,000, Seller shall have no obligation hereunder to expend any amount of money to cure any defects, except as specifically set forth herein, in which case Buyer shall have the ability to either (i) accept the Station or Stations in their then condition, (ii) withdraw any Station it is otherwise entitled to withdraw under the terms of this Agreement or (iii) terminate this Agreement. In the event Buyer is unable to obtain, after diligent efforts, a final survey of any parcel of Real Property prior to the Closing Date, Seller agrees to execute any confirmatory deed or 23

corrective deed required by the issuer of the applicable Title Policy to correct any discrepancy found in the legal description for any such parcel of Real Property 6.8 Employees. Buyer shall not be obligated to employ any of Seller's employees or assume any of Seller's employment plans. Seller agrees that it will be solely responsible for any severance or other benefits owed to its employees. In the event, however, that Buyer does offer employment to any of Seller's employees, any such employment relationship shall be at will and none of Seller's employment plans or practices shall apply to Buyer. 6.9 Withdrawal of a Station. If a Station is to be withdrawn from the sale prior to Closing for any reason permitted under this Agreement, Buyer shall advise Seller of such withdrawal, in writing, and at Closing the Purchase Price shall be reduced by the withdrawal value allocated to such Station as set forth in Schedule 6.9 hereto. The withdrawal includes the Real Property, Assets, Licenses and Personal Property associated with such Station. SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER 7.1 Conditions of Obligations of Buyer. All obligations of Buyer at the Closing hereunder are subject to the fulfillment prior to and at the Closing Date of each of the following conditions: A. Representations and Warranties. The representations and warranties of Seller in this Agreement shall be true and complete in all material respects at and as of the Closing Date, as though such representations and warranties were made at and as of such time, except for changes contemplated by this Agreement. 24

B. Covenants and Conditions. Seller shall have in all material respects performed and complied with the covenants, agreements, and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date. C. Consents. Each of the Consents shall have been duly obtained by Buyer.

corrective deed required by the issuer of the applicable Title Policy to correct any discrepancy found in the legal description for any such parcel of Real Property 6.8 Employees. Buyer shall not be obligated to employ any of Seller's employees or assume any of Seller's employment plans. Seller agrees that it will be solely responsible for any severance or other benefits owed to its employees. In the event, however, that Buyer does offer employment to any of Seller's employees, any such employment relationship shall be at will and none of Seller's employment plans or practices shall apply to Buyer. 6.9 Withdrawal of a Station. If a Station is to be withdrawn from the sale prior to Closing for any reason permitted under this Agreement, Buyer shall advise Seller of such withdrawal, in writing, and at Closing the Purchase Price shall be reduced by the withdrawal value allocated to such Station as set forth in Schedule 6.9 hereto. The withdrawal includes the Real Property, Assets, Licenses and Personal Property associated with such Station. SECTION 7 CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER 7.1 Conditions of Obligations of Buyer. All obligations of Buyer at the Closing hereunder are subject to the fulfillment prior to and at the Closing Date of each of the following conditions: A. Representations and Warranties. The representations and warranties of Seller in this Agreement shall be true and complete in all material respects at and as of the Closing Date, as though such representations and warranties were made at and as of such time, except for changes contemplated by this Agreement. 24

B. Covenants and Conditions. Seller shall have in all material respects performed and complied with the covenants, agreements, and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date. C. Consents. Each of the Consents shall have been duly obtained by Buyer. D. Licenses. To the extent applicable, Seller shall be the holder of the Licenses, and there shall not have been any modification of any of such Licenses which has an adverse effect on the Stations or the conduct of Seller's business or operations. No proceeding shall be pending the effect of which would be to revoke, cancel, fail to renew, suspend or modify adversely any of the Licenses. E. Deliveries. Seller shall have made or stand willing and able to make all the deliveries to Buyer set forth in Section 8.2 hereof. F. Due Diligence. Buyer shall have completed, to its sole satisfaction, the investigations contemplated by Section 6 hereof or otherwise in this Agreement and shall have determined that the Assets are satisfactory and the information provided by Seller, is satisfactory to Buyer. G. Withdrawal. Buyer shall not have elected to withdraw, under Section 6.9 hereof, more than 15 Stations, it being fully understood and agreed by Seller that Buyer shall not be obligated to close if there remain less than 27 Stations. 7.2 Conditions to Obligations of Seller. The obligations of Seller at the Closing hereunder are subject to the fulfillment prior to and at the Closing Date of each of the following conditions: A. Representations and Warranties. The representations and warranties of Buyer contained in this Agreement shall be true and complete in all material respects at and as of the 25

B. Covenants and Conditions. Seller shall have in all material respects performed and complied with the covenants, agreements, and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date. C. Consents. Each of the Consents shall have been duly obtained by Buyer. D. Licenses. To the extent applicable, Seller shall be the holder of the Licenses, and there shall not have been any modification of any of such Licenses which has an adverse effect on the Stations or the conduct of Seller's business or operations. No proceeding shall be pending the effect of which would be to revoke, cancel, fail to renew, suspend or modify adversely any of the Licenses. E. Deliveries. Seller shall have made or stand willing and able to make all the deliveries to Buyer set forth in Section 8.2 hereof. F. Due Diligence. Buyer shall have completed, to its sole satisfaction, the investigations contemplated by Section 6 hereof or otherwise in this Agreement and shall have determined that the Assets are satisfactory and the information provided by Seller, is satisfactory to Buyer. G. Withdrawal. Buyer shall not have elected to withdraw, under Section 6.9 hereof, more than 15 Stations, it being fully understood and agreed by Seller that Buyer shall not be obligated to close if there remain less than 27 Stations. 7.2 Conditions to Obligations of Seller. The obligations of Seller at the Closing hereunder are subject to the fulfillment prior to and at the Closing Date of each of the following conditions: A. Representations and Warranties. The representations and warranties of Buyer contained in this Agreement shall be true and complete in all material respects at and as of the 25

Closing Date, except for changes contemplated by this Agreement, as though such representations and warranties were made at and as of such time. B. Covenants and Conditions. Buyer shall have in all material respects performed and complied with the covenants, agreements, and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date. C. Deliveries. Buyer shall have made or stand willing and able to make all the deliveries set forth in Section 8.3 hereto. SECTION 8 CLOSING AND CLOSING DELIVERIES 8.1 Closing. The closing shall take place on a date, to be mutually agreed to, no later than May 2, 2003 (the "Closing Date"). Closing shall be held at the offices of Burns & Levinson LLP, Boston, Massachusetts or such other place as shall be mutually agreed to by Buyer and Seller, or, if mutually agreed upon by the parties, shall be an escrow closing via the mail. Notwithstanding the foregoing, Buyer shall have the option to close on the three (3) Stations identified on Schedule 8.1 on or before March 19, 2003, provided Buyer notifies Seller in writing on or before March 9, 2003 that it is prepared to close on said Stations and further provided that Buyer delivers to Seller the allocated Purchase Price for said Stations upon delivery of the deeds and other applicable documents set forth in Section 8.2 by Seller to Buyer. 8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall deliver to Buyer the following, in form and substance reasonably satisfactory to Buyer and its counsel: (a) Transfer Documents. Duly executed quitclaim deeds substantially in the form attached hereto as Exhibit C

Closing Date, except for changes contemplated by this Agreement, as though such representations and warranties were made at and as of such time. B. Covenants and Conditions. Buyer shall have in all material respects performed and complied with the covenants, agreements, and conditions required by this Agreement to be performed or complied with by it prior to or on the Closing Date. C. Deliveries. Buyer shall have made or stand willing and able to make all the deliveries set forth in Section 8.3 hereto. SECTION 8 CLOSING AND CLOSING DELIVERIES 8.1 Closing. The closing shall take place on a date, to be mutually agreed to, no later than May 2, 2003 (the "Closing Date"). Closing shall be held at the offices of Burns & Levinson LLP, Boston, Massachusetts or such other place as shall be mutually agreed to by Buyer and Seller, or, if mutually agreed upon by the parties, shall be an escrow closing via the mail. Notwithstanding the foregoing, Buyer shall have the option to close on the three (3) Stations identified on Schedule 8.1 on or before March 19, 2003, provided Buyer notifies Seller in writing on or before March 9, 2003 that it is prepared to close on said Stations and further provided that Buyer delivers to Seller the allocated Purchase Price for said Stations upon delivery of the deeds and other applicable documents set forth in Section 8.2 by Seller to Buyer. 8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall deliver to Buyer the following, in form and substance reasonably satisfactory to Buyer and its counsel: (a) Transfer Documents. Duly executed quitclaim deeds substantially in the form attached hereto as Exhibit C naming Buyer or Buyer's designee as grantee therein, bills of sale substantially in the form attached hereto as Exhibit D, and assignments and other transfer 26

documents which shall be sufficient to vest title to the Real Property and Assets in the name of Buyer or its permitted designees (including without limitation Leemilt's Petroleum, Inc. and Power Test Realty Company Limited Partnership), free and clear of any claims, liabilities, mortgages, liens, pledges, conditions, charges, or encumbrances of any nature whatsoever, except for Permitted Liens or matters disclosed on any Schedule attached hereto. (b) 1031 Exchange Documents. Such 1031 Exchange Documents executed by Seller as may be reasonably required by the Qualified Intermediary (as defined in Section 8.4 herein). (c) Non-Foreign Affidavit. Buyer shall have received from each Seller an IRS Non-Foreign Person affidavit in a form satisfactory to counsel and in compliance with the United States Internal Revenue Code Withholding Section. (d) Officer's Certificate. Certificates, dated as of the Closing Date, executed by duly authorized officers of each Seller, certifying: (i) that the representations and warranties of such Seller contained in this Agreement are true and complete in all material respects as of the Closing Date, as though made on and as of that date, except for changes contemplated by this Agreement and except for representations and warranties made as of a specific date which shall be certified true and complete in all material respects as of such date; and (ii) that such Seller has, in all material respects, performed its obligations and complied with its covenants set forth in this Agreement to be performed and complied with prior to or on the Closing Date. (e) Secretary's Certificate. Certificates, dated as of the Closing Date, executed by the Secretary or Clerk of each Seller: (i) certifying that the resolutions, as attached to such certificate, were duly adopted by such Seller's shareholders and Board of Directors, authorizing and approving the execution of this Agreement by such Seller and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and

documents which shall be sufficient to vest title to the Real Property and Assets in the name of Buyer or its permitted designees (including without limitation Leemilt's Petroleum, Inc. and Power Test Realty Company Limited Partnership), free and clear of any claims, liabilities, mortgages, liens, pledges, conditions, charges, or encumbrances of any nature whatsoever, except for Permitted Liens or matters disclosed on any Schedule attached hereto. (b) 1031 Exchange Documents. Such 1031 Exchange Documents executed by Seller as may be reasonably required by the Qualified Intermediary (as defined in Section 8.4 herein). (c) Non-Foreign Affidavit. Buyer shall have received from each Seller an IRS Non-Foreign Person affidavit in a form satisfactory to counsel and in compliance with the United States Internal Revenue Code Withholding Section. (d) Officer's Certificate. Certificates, dated as of the Closing Date, executed by duly authorized officers of each Seller, certifying: (i) that the representations and warranties of such Seller contained in this Agreement are true and complete in all material respects as of the Closing Date, as though made on and as of that date, except for changes contemplated by this Agreement and except for representations and warranties made as of a specific date which shall be certified true and complete in all material respects as of such date; and (ii) that such Seller has, in all material respects, performed its obligations and complied with its covenants set forth in this Agreement to be performed and complied with prior to or on the Closing Date. (e) Secretary's Certificate. Certificates, dated as of the Closing Date, executed by the Secretary or Clerk of each Seller: (i) certifying that the resolutions, as attached to such certificate, were duly adopted by such Seller's shareholders and Board of Directors, authorizing and approving the execution of this Agreement by such Seller and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect; and (ii) 27

providing, as attachments thereto, a certificate of good standing certified by the Secretary of State of the Commonwealth of Massachusetts or the Secretary of State of Rhode Island, as applicable; as of a date not more than fifteen (15) days before the Closing Date and by such Seller's Secretary or Clerk as of the Closing Date, and a copy of such Seller's Articles of Incorporation and By Laws as in effect on the date hereof, certified by such Seller's Secretary or Clerk as of the Closing Date. (f) Licenses. Contracts. Business Records. Etc. Copies, if available, of all Licenses, Assumed Leases, blueprints, schematics, working drawings, plans, projections, statistics, engineering records, and all files and records used by each Seller in connection with its ownership of the Stations. (g) Taxes Paid. Tax Clearance Letter and/or Tax Lien Waiver. An Affidavit of the Treasurer of Seller stating that all taxes and creditors of the Sellers have been paid together with evidence of such payments. A Tax Clearance Letter and/or Tax Lien Waiver, if applicable, issued by the appropriate Department of Revenue or comparable agency of each state in which a Station or Assets are located. (h) Environmental Escrow Agreement. The Environmental Escrow Agreement duly executed by Seller and the escrowed funds deposited into the Escrow Account. (i) Transfer or Conveyance Taxes or Document Stamps. Such amounts as are necessary to pay for Seller's obligations with respect to transfer or conveyance taxes or documentary stamps. Such amount may either be delivered by Seller at Closing, or credited to Buyer against the Purchase Price at Closing. (j) Title Insurance Documents. Such other documents as the Buyer's title company may require (including but not limited to conveyance or transfer tax forms, gap indemnities, 28

providing, as attachments thereto, a certificate of good standing certified by the Secretary of State of the Commonwealth of Massachusetts or the Secretary of State of Rhode Island, as applicable; as of a date not more than fifteen (15) days before the Closing Date and by such Seller's Secretary or Clerk as of the Closing Date, and a copy of such Seller's Articles of Incorporation and By Laws as in effect on the date hereof, certified by such Seller's Secretary or Clerk as of the Closing Date. (f) Licenses. Contracts. Business Records. Etc. Copies, if available, of all Licenses, Assumed Leases, blueprints, schematics, working drawings, plans, projections, statistics, engineering records, and all files and records used by each Seller in connection with its ownership of the Stations. (g) Taxes Paid. Tax Clearance Letter and/or Tax Lien Waiver. An Affidavit of the Treasurer of Seller stating that all taxes and creditors of the Sellers have been paid together with evidence of such payments. A Tax Clearance Letter and/or Tax Lien Waiver, if applicable, issued by the appropriate Department of Revenue or comparable agency of each state in which a Station or Assets are located. (h) Environmental Escrow Agreement. The Environmental Escrow Agreement duly executed by Seller and the escrowed funds deposited into the Escrow Account. (i) Transfer or Conveyance Taxes or Document Stamps. Such amounts as are necessary to pay for Seller's obligations with respect to transfer or conveyance taxes or documentary stamps. Such amount may either be delivered by Seller at Closing, or credited to Buyer against the Purchase Price at Closing. (j) Title Insurance Documents. Such other documents as the Buyer's title company may require (including but not limited to conveyance or transfer tax forms, gap indemnities, 28

owner's affidavits, tax lien waivers, resolutions and good standing certificates) to issue the Title Policies referenced in Section 6.7 above with all required endorsements in form and substance satisfactory to Buyer. 8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall deliver to Seller the following, in form :and substance reasonably satisfactory to Seller and its counsel: (a) Purchase Price. The Purchase Price as provided in Section 2.4, (i) less any amounts to be deposited into the Environmental Escrow Agreement, (ii) less the Section 1031 Exchange Funds which shall be paid to Seller by the Qualified Intermediary as provided in Section 8.4 below, and (iii) less any amounts for Stations withdrawn pursuant to Section 6.9 hereto; (b) Officer's Certificate. A certificate, dated as of the Closing Date, executed by the President or Vice President of Buyer, certifying (i) that the representations and warranties of Buyer contained in this Agreement are true and complete in all material respects as of the Closing Date, except for changes contemplated by this Agreement, as though made on and as of that date, and (ii) that Buyer has, in all material respects, performed its obligations and complied with its covenants set forth in this Agreement to be performed or complied with on or prior to the Closing Date; (c) Secretary's Certificate. A certificate, dated as of the Closing Date, executed by Buyer's Secretary: (i) certifying that the resolutions, as attached to such certificate, were duly adopted by Buyer's Board of Directors, authorizing and approving the execution of this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect; and (ii) a copy of the corporate charter, Articles of 29

Incorporation and Bylaws of Buyer as in effect on the date hereof, certified by Buyer's secretary as of the Closing Date;

owner's affidavits, tax lien waivers, resolutions and good standing certificates) to issue the Title Policies referenced in Section 6.7 above with all required endorsements in form and substance satisfactory to Buyer. 8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall deliver to Seller the following, in form :and substance reasonably satisfactory to Seller and its counsel: (a) Purchase Price. The Purchase Price as provided in Section 2.4, (i) less any amounts to be deposited into the Environmental Escrow Agreement, (ii) less the Section 1031 Exchange Funds which shall be paid to Seller by the Qualified Intermediary as provided in Section 8.4 below, and (iii) less any amounts for Stations withdrawn pursuant to Section 6.9 hereto; (b) Officer's Certificate. A certificate, dated as of the Closing Date, executed by the President or Vice President of Buyer, certifying (i) that the representations and warranties of Buyer contained in this Agreement are true and complete in all material respects as of the Closing Date, except for changes contemplated by this Agreement, as though made on and as of that date, and (ii) that Buyer has, in all material respects, performed its obligations and complied with its covenants set forth in this Agreement to be performed or complied with on or prior to the Closing Date; (c) Secretary's Certificate. A certificate, dated as of the Closing Date, executed by Buyer's Secretary: (i) certifying that the resolutions, as attached to such certificate, were duly adopted by Buyer's Board of Directors, authorizing and approving the execution of this Agreement and the consummation of the transaction contemplated hereby and that such resolutions remain in full force and effect; and (ii) a copy of the corporate charter, Articles of 29

Incorporation and Bylaws of Buyer as in effect on the date hereof, certified by Buyer's secretary as of the Closing Date; (d) Environmental Escrow Agreement. The Environmental Escrow Agreement duly executed by Buyer and the escrowed funds deposited into the Escrow Account. 8.4 Section 1031 Exchange Funds. Prior to the Closing Date, LandAmerica Exchange Company (the "Qualified Intermediary") shall deliver to Seller such amount as instructed by Buyer from funds the Qualified Intermediary received in a transaction intended by Buyer to qualify as an exchange described in Section 1031 of the United States Internal Revenue Code. SECTION 9 RIGHTS OF BUYER AND SELLER ON THE TERMINATION OR BREACH 9.1 Termination Rights. This Agreement may be terminated by either Buyer or Seller if the terminating party is not then in breach of any material provision of this Agreement, upon written notice to the other party , upon the occurrence of any of the following: (a) If on the Closing Date (i) any of the conditions precedent to the obligations of the terminating party set forth in Section 7 of this Agreement shall not have been materially satisfied, and (ii) satisfaction of such condition shall not have been waived by the terminating party; (b) If the Closing shall not have occurred within 120 days from the date of this Agreement, provided however, if Buyer has identified any issues or defects under Section 6.7 and provided Seller with notice thereof within the Due Diligence Period, and Seller is using diligent good faith efforts to cure or remedy such issue or defect, then the Closing shall be extended for an additional period not to exceed thirty (30) days; (d) If Buyer and Seller agree in writing to terminate the Agreement; 30

Incorporation and Bylaws of Buyer as in effect on the date hereof, certified by Buyer's secretary as of the Closing Date; (d) Environmental Escrow Agreement. The Environmental Escrow Agreement duly executed by Buyer and the escrowed funds deposited into the Escrow Account. 8.4 Section 1031 Exchange Funds. Prior to the Closing Date, LandAmerica Exchange Company (the "Qualified Intermediary") shall deliver to Seller such amount as instructed by Buyer from funds the Qualified Intermediary received in a transaction intended by Buyer to qualify as an exchange described in Section 1031 of the United States Internal Revenue Code. SECTION 9 RIGHTS OF BUYER AND SELLER ON THE TERMINATION OR BREACH 9.1 Termination Rights. This Agreement may be terminated by either Buyer or Seller if the terminating party is not then in breach of any material provision of this Agreement, upon written notice to the other party , upon the occurrence of any of the following: (a) If on the Closing Date (i) any of the conditions precedent to the obligations of the terminating party set forth in Section 7 of this Agreement shall not have been materially satisfied, and (ii) satisfaction of such condition shall not have been waived by the terminating party; (b) If the Closing shall not have occurred within 120 days from the date of this Agreement, provided however, if Buyer has identified any issues or defects under Section 6.7 and provided Seller with notice thereof within the Due Diligence Period, and Seller is using diligent good faith efforts to cure or remedy such issue or defect, then the Closing shall be extended for an additional period not to exceed thirty (30) days; (d) If Buyer and Seller agree in writing to terminate the Agreement; 30

(e) If there shall be in effect a non-appealable order of a court of competent jurisdiction permanently prohibiting the consummation of the transactions contemplated hereby. (f) If more than 15 Stations have been withdrawn from this transaction pursuant to Section 6.9 hereof. Upon termination: (i) if neither party hereto is in breach of any material provision of this Agreement, the parties hereto shall not have any further liability to each other hereunder; (ii) if Seller shall be in breach of any material provision of this Agreement, Buyer shall have only the rights and remedies provided in Section 9.3 or (iii) if Buyer shall be in breach of any material provision of this Agreement, Seller shall have only the rights and remedies provided in Section 9.2 hereof. 9.2 Seller Damages. In the event this Agreement is terminated by Seller due to a material breach by Buyer of its representations, warranties, covenants and other obligations under this Agreement, then Seller shall have all remedies at law and in equity, other than consequential damages and loss of profits, against Buyer with respect to such breach. 9.3 Buyer Damages. The parties recognize that in the event Seller should refuse to perform under the provisions of this Agreement, monetary damages would not be adequate. Buyer shall therefore be entitled, in addition to any other remedies which may be available, including money damages, to obtain specific performance of the terms of this Agreement. In the event of any action to enforce this Agreement, Seller hereby waives the defense that there is an adequate remedy at law. 31

(e) If there shall be in effect a non-appealable order of a court of competent jurisdiction permanently prohibiting the consummation of the transactions contemplated hereby. (f) If more than 15 Stations have been withdrawn from this transaction pursuant to Section 6.9 hereof. Upon termination: (i) if neither party hereto is in breach of any material provision of this Agreement, the parties hereto shall not have any further liability to each other hereunder; (ii) if Seller shall be in breach of any material provision of this Agreement, Buyer shall have only the rights and remedies provided in Section 9.3 or (iii) if Buyer shall be in breach of any material provision of this Agreement, Seller shall have only the rights and remedies provided in Section 9.2 hereof. 9.2 Seller Damages. In the event this Agreement is terminated by Seller due to a material breach by Buyer of its representations, warranties, covenants and other obligations under this Agreement, then Seller shall have all remedies at law and in equity, other than consequential damages and loss of profits, against Buyer with respect to such breach. 9.3 Buyer Damages. The parties recognize that in the event Seller should refuse to perform under the provisions of this Agreement, monetary damages would not be adequate. Buyer shall therefore be entitled, in addition to any other remedies which may be available, including money damages, to obtain specific performance of the terms of this Agreement. In the event of any action to enforce this Agreement, Seller hereby waives the defense that there is an adequate remedy at law. 31

SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, AND INDEMNIFICATION 10.1 Representations and Warranties. Except with respect to representations made by Seller under Section 3.14 which representations and warranties shall survive without limitation, and except with respect to representations made by Seller under Section 3.12, which representations and warranties shall survive the Closing Date for a period of three (3) years, all representations and warranties contained in this Agreement or in the documents delivered at Closing shall be deemed continuing representations and warranties, and shall survive the Closing Date for a period of nine (9) months ( the "Survival Period "). Any investigations by or on behalf of any party hereto shall not constitute a waiver as to enforcement of any representation or warranty contained herein. 10.2 Indemnification by Seller. Seller shall indemnify and hold Buyer harmless against and with respect to, and shall reimburse Buyer for: (a) Any and all losses, liabilities or damages resulting from any untrue representation, breach of warranty or nonfulfillment of any covenants by Seller contained herein or in any certificate, delivered to Buyer hereunder; (b) Any and all obligations of Seller not assumed by Buyer pursuant to the terms hereof; (c) Any and all losses, liabilities, damages, actions, claims, notices or penalties resulting from Seller's acts or omissions concerning the ownership of the Stations, Real Property or Assets prior to the Closing Date; (d) Any and all losses, liabilities, damages, actions, claims, notices or penalties for which the Seller is responsible arising under the 1991 Agreement; 32

(e) Any and all actions, suits, proceedings, claims, demands, assessments, judgments, and reasonable costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or, incurred in investigating or attempting to avoid the same or to oppose the imposition thereof.

SECTION 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES, AND INDEMNIFICATION 10.1 Representations and Warranties. Except with respect to representations made by Seller under Section 3.14 which representations and warranties shall survive without limitation, and except with respect to representations made by Seller under Section 3.12, which representations and warranties shall survive the Closing Date for a period of three (3) years, all representations and warranties contained in this Agreement or in the documents delivered at Closing shall be deemed continuing representations and warranties, and shall survive the Closing Date for a period of nine (9) months ( the "Survival Period "). Any investigations by or on behalf of any party hereto shall not constitute a waiver as to enforcement of any representation or warranty contained herein. 10.2 Indemnification by Seller. Seller shall indemnify and hold Buyer harmless against and with respect to, and shall reimburse Buyer for: (a) Any and all losses, liabilities or damages resulting from any untrue representation, breach of warranty or nonfulfillment of any covenants by Seller contained herein or in any certificate, delivered to Buyer hereunder; (b) Any and all obligations of Seller not assumed by Buyer pursuant to the terms hereof; (c) Any and all losses, liabilities, damages, actions, claims, notices or penalties resulting from Seller's acts or omissions concerning the ownership of the Stations, Real Property or Assets prior to the Closing Date; (d) Any and all losses, liabilities, damages, actions, claims, notices or penalties for which the Seller is responsible arising under the 1991 Agreement; 32

(e) Any and all actions, suits, proceedings, claims, demands, assessments, judgments, and reasonable costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or, incurred in investigating or attempting to avoid the same or to oppose the imposition thereof. (f) Seller's obligations hereunder shall survive the delivery of the deed and the Closing of the transactions contemplated hereunder. 10.3 Indemnification by Buyer. Buyer shall indemnify and hold Seller harmless against and with respect to, and shall reimburse Seller for: (a) Any and all losses, liabilities or damages resulting from any untrue representation, breach of warranty or nonfulfillment of any covenants by Buyer contained herein or in any certificate delivered to Seller hereunder; (b) Any and all losses, liabilities or damages resulting from Buyer's ownership of the Stations, Real Property or Assets on or after the Closing Date, including any and all liabilities or obligations arising under the assigned Licenses, or the Assumed Leases which relate to events occurring after the Closing Date or otherwise assumed by Buyer under this Agreement; and (c) Any and all actions, suits, proceedings, claims, demands, assessments, judgments, and reasonable costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof. (d) Any and all losses, liabilities, damages, actions, claims, notices or penalties for which the Buyer is responsible arising under the 1991 Agreement; 33

10.4 Procedures for Indemnification. The procedures for indemnification shall be as follows:

(e) Any and all actions, suits, proceedings, claims, demands, assessments, judgments, and reasonable costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or, incurred in investigating or attempting to avoid the same or to oppose the imposition thereof. (f) Seller's obligations hereunder shall survive the delivery of the deed and the Closing of the transactions contemplated hereunder. 10.3 Indemnification by Buyer. Buyer shall indemnify and hold Seller harmless against and with respect to, and shall reimburse Seller for: (a) Any and all losses, liabilities or damages resulting from any untrue representation, breach of warranty or nonfulfillment of any covenants by Buyer contained herein or in any certificate delivered to Seller hereunder; (b) Any and all losses, liabilities or damages resulting from Buyer's ownership of the Stations, Real Property or Assets on or after the Closing Date, including any and all liabilities or obligations arising under the assigned Licenses, or the Assumed Leases which relate to events occurring after the Closing Date or otherwise assumed by Buyer under this Agreement; and (c) Any and all actions, suits, proceedings, claims, demands, assessments, judgments, and reasonable costs and expenses, including reasonable legal fees and expenses, incident to any of the foregoing or incurred in investigating or attempting to avoid the same or to oppose the imposition thereof. (d) Any and all losses, liabilities, damages, actions, claims, notices or penalties for which the Buyer is responsible arising under the 1991 Agreement; 33

10.4 Procedures for Indemnification. The procedures for indemnification shall be as follows: A. The party claiming the indemnification (the "Claimant") shall promptly give notice to the party from whom indemnification is claimed (the "Indemnifying Party") of any claim, whether between the parties or brought by a third party , specifying (i) the factual basis for such claim, and (ii) the amount of the claim. If the claim relates to an action, suit or proceeding filed by a third party against Claimant, such notice shall be given by Claimant within five (5) days after written notice of such action, suit or proceeding was given to Claimant. B. Following receipt of notice from the Claimant of a claim, the Indemnifying Party shall have thirty (30) days to make such investigation of the claim as the Indemnifying Party deems necessary or desirable. For the purposes of such investigation, the Claimant agrees to make available to the Indemnifying Party and/or its authorized representative(s) the information relied upon by the Claimant to substantiate the claim. If the Claimant and the Indemnifying Party agree at or prior to the expiration of said thirty (30) day period (or any mutually agreed upon extension thereof) to the validity and amount of such claim, or if the Indemnifying Party does not respond to such notice, the Indemnifying Party shall immediately pay to the Claimant the full amount of the claim. If the Claimant and the Indemnifying party do not agree within said period (or any mutually agreed upon extension thereof) , the Claimant may seek appropriate legal remedy. C. With respect to any claim by a third party as to which the Claimant is entitled to indemnification hereunder, the Indemnifying Party shall have the right at its own expense, to participate in or assume control of the defense of such claim, and the Claimant shall cooperate fully with the Indemnifying party subject to reimbursement for reasonable actual out-of-pocket 34

expenses, including reasonable attorneys fees, incurred by the Claimant as the result of a request by the Indemnifying party. If the Indemnifying party elects to assume control of the defense of any third-party claim, the Claimant shall have the right to participate in the defense of such claim at its own expense.

10.4 Procedures for Indemnification. The procedures for indemnification shall be as follows: A. The party claiming the indemnification (the "Claimant") shall promptly give notice to the party from whom indemnification is claimed (the "Indemnifying Party") of any claim, whether between the parties or brought by a third party , specifying (i) the factual basis for such claim, and (ii) the amount of the claim. If the claim relates to an action, suit or proceeding filed by a third party against Claimant, such notice shall be given by Claimant within five (5) days after written notice of such action, suit or proceeding was given to Claimant. B. Following receipt of notice from the Claimant of a claim, the Indemnifying Party shall have thirty (30) days to make such investigation of the claim as the Indemnifying Party deems necessary or desirable. For the purposes of such investigation, the Claimant agrees to make available to the Indemnifying Party and/or its authorized representative(s) the information relied upon by the Claimant to substantiate the claim. If the Claimant and the Indemnifying Party agree at or prior to the expiration of said thirty (30) day period (or any mutually agreed upon extension thereof) to the validity and amount of such claim, or if the Indemnifying Party does not respond to such notice, the Indemnifying Party shall immediately pay to the Claimant the full amount of the claim. If the Claimant and the Indemnifying party do not agree within said period (or any mutually agreed upon extension thereof) , the Claimant may seek appropriate legal remedy. C. With respect to any claim by a third party as to which the Claimant is entitled to indemnification hereunder, the Indemnifying Party shall have the right at its own expense, to participate in or assume control of the defense of such claim, and the Claimant shall cooperate fully with the Indemnifying party subject to reimbursement for reasonable actual out-of-pocket 34

expenses, including reasonable attorneys fees, incurred by the Claimant as the result of a request by the Indemnifying party. If the Indemnifying party elects to assume control of the defense of any third-party claim, the Claimant shall have the right to participate in the defense of such claim at its own expense. D. If a claim, whether between the parties or by a third party, requires immediate action, the parties will make all reasonable efforts to reach a decision with respect thereto as expeditiously as possible. E. If the Indemnifying Party does not elect to assume control or otherwise participate in the defense of any third party claim, it shall be bound by the results obtained in good faith by the Claimant with respect to such claim and the Indemnifying Party shall promptly reimburse Claimant for its defense costs including reasonable attorney's and other legal fees and the fees of consultants used in the defense of Claimant. F. The indemnification rights provided in Sections 10.2 and 10.3 shall extend to the shareholders, directors, officers, partners employees and representatives, successors and assigns of the Claimant although for the purpose of the procedures set forth in this Section 10.4, any indemnification claims by such parties shall be made by and through the Claimant. 10.5 Maintenance of Existence and Net Worth. In connection with the obligations of the Seller under this Section 10, each Seller hereby agrees to continuously maintain its corporate existence and continuously maintain a positive Net Worth as follows: (a) For the period commencing on the Closing Date through and including the day before the first anniversary of the Closing Date, Seller's Net Worth shall be maintained at $2,500,000.00; 35

(b) For the period commencing on the first anniversary of the Closing Date through and including the day before the second anniversary of the Closing Date, Seller's Net Worth shall be maintained at $2,000,000.00; (c) For the period commencing on the second anniversary of the Closing Date though and including the day before the third anniversary of the Closing Date, Seller's Net Worth shall be maintained at $1,500,000.00;

expenses, including reasonable attorneys fees, incurred by the Claimant as the result of a request by the Indemnifying party. If the Indemnifying party elects to assume control of the defense of any third-party claim, the Claimant shall have the right to participate in the defense of such claim at its own expense. D. If a claim, whether between the parties or by a third party, requires immediate action, the parties will make all reasonable efforts to reach a decision with respect thereto as expeditiously as possible. E. If the Indemnifying Party does not elect to assume control or otherwise participate in the defense of any third party claim, it shall be bound by the results obtained in good faith by the Claimant with respect to such claim and the Indemnifying Party shall promptly reimburse Claimant for its defense costs including reasonable attorney's and other legal fees and the fees of consultants used in the defense of Claimant. F. The indemnification rights provided in Sections 10.2 and 10.3 shall extend to the shareholders, directors, officers, partners employees and representatives, successors and assigns of the Claimant although for the purpose of the procedures set forth in this Section 10.4, any indemnification claims by such parties shall be made by and through the Claimant. 10.5 Maintenance of Existence and Net Worth. In connection with the obligations of the Seller under this Section 10, each Seller hereby agrees to continuously maintain its corporate existence and continuously maintain a positive Net Worth as follows: (a) For the period commencing on the Closing Date through and including the day before the first anniversary of the Closing Date, Seller's Net Worth shall be maintained at $2,500,000.00; 35

(b) For the period commencing on the first anniversary of the Closing Date through and including the day before the second anniversary of the Closing Date, Seller's Net Worth shall be maintained at $2,000,000.00; (c) For the period commencing on the second anniversary of the Closing Date though and including the day before the third anniversary of the Closing Date, Seller's Net Worth shall be maintained at $1,500,000.00; (d) For the period commencing on the third anniversary of the Closing Date through and including the day before the fourth anniversary of the Closing Date, Seller's Net Worth shall be maintained at $1,000,000.00; (e) For the period commencing on the fourth anniversary of the Closing Date through and including the day before the fifth anniversary of the Closing Date, Seller's Net Worth shall be maintained at $500,000.00; and (f) On the Fifth Anniversary of the Closing Date Seller shall no longer be required to maintain a positive Net Worth hereunder. For the purposes of this Section 10.5, "Net Worth" shall mean the aggregate sum of Seller's assets minus the aggregate of Seller's liabilities on a consolidated basis. SECTION 11 MISCELLANEOUS 11.1 Notices. All notices, demands, and requests required or permitted to be given under the provisions of this Agreement shall be (i) in writing, (ii) delivered by (a) personal delivery, (b) commercial overnight delivery, (c) registered or certified mail, return receipt requested, or (d) facsimile transmission with hard copy sent by certified mail, (iii) deemed to 36

have been given on the date of personal delivery, upon receipt if by facsimile or the date set forth in the records

(b) For the period commencing on the first anniversary of the Closing Date through and including the day before the second anniversary of the Closing Date, Seller's Net Worth shall be maintained at $2,000,000.00; (c) For the period commencing on the second anniversary of the Closing Date though and including the day before the third anniversary of the Closing Date, Seller's Net Worth shall be maintained at $1,500,000.00; (d) For the period commencing on the third anniversary of the Closing Date through and including the day before the fourth anniversary of the Closing Date, Seller's Net Worth shall be maintained at $1,000,000.00; (e) For the period commencing on the fourth anniversary of the Closing Date through and including the day before the fifth anniversary of the Closing Date, Seller's Net Worth shall be maintained at $500,000.00; and (f) On the Fifth Anniversary of the Closing Date Seller shall no longer be required to maintain a positive Net Worth hereunder. For the purposes of this Section 10.5, "Net Worth" shall mean the aggregate sum of Seller's assets minus the aggregate of Seller's liabilities on a consolidated basis. SECTION 11 MISCELLANEOUS 11.1 Notices. All notices, demands, and requests required or permitted to be given under the provisions of this Agreement shall be (i) in writing, (ii) delivered by (a) personal delivery, (b) commercial overnight delivery, (c) registered or certified mail, return receipt requested, or (d) facsimile transmission with hard copy sent by certified mail, (iii) deemed to 36

have been given on the date of personal delivery, upon receipt if by facsimile or the date set forth in the records of the delivery service or on the return receipt, and (iv) addressed as follows: If to Seller: JEMS of New England, Inc. 47 Harvard Street Worcester, MA 01609 Attn: Howard E. Stempler, Esq. with a copy (which shall not constitute notice) to: Howard E. Stempler, Esq. JEMS of New England, Inc. 47 Harvard Street Worcester, MA 01609 Fax: (508) 797-9327 If to Buyer: Getty Properties Corp. 125 Jericho Turnpike, Suite 103 Jericho, New York 11753 Attn: Real Estate Dept. Fax: (516) 478-5492

have been given on the date of personal delivery, upon receipt if by facsimile or the date set forth in the records of the delivery service or on the return receipt, and (iv) addressed as follows: If to Seller: JEMS of New England, Inc. 47 Harvard Street Worcester, MA 01609 Attn: Howard E. Stempler, Esq. with a copy (which shall not constitute notice) to: Howard E. Stempler, Esq. JEMS of New England, Inc. 47 Harvard Street Worcester, MA 01609 Fax: (508) 797-9327 If to Buyer: Getty Properties Corp. 125 Jericho Turnpike, Suite 103 Jericho, New York 11753 Attn: Real Estate Dept. Fax: (516) 478-5492 with a copy (which shall not constitute notice) to: Getty Properties Corp. 125 Jericho Turnpike Jericho, New York 11753 Attn: Legal Dept. Fax: (516) 478-5490 And with a copy (which shall not constitute notice) to: Burns & Levinson LLP 125 Summer Street Boston, MA 02110 37

Attn: David E. Grossman, Esq. Fax: (617) 345-3299 or to such other or additional persons and addresses as the parties may from time to time designate, in a writing delivered in accordance with this Section 11.1. 11.2 Benefit and Binding Effect. Neither party hereto may assign this Agreement without the prior written consent of the other party hereto, except that Buyer may assign its rights and obligations under this Agreement to any affiliated entity, following which assignment Buyer shall be released from all of its obligations hereunder. This

Attn: David E. Grossman, Esq. Fax: (617) 345-3299 or to such other or additional persons and addresses as the parties may from time to time designate, in a writing delivered in accordance with this Section 11.1. 11.2 Benefit and Binding Effect. Neither party hereto may assign this Agreement without the prior written consent of the other party hereto, except that Buyer may assign its rights and obligations under this Agreement to any affiliated entity, following which assignment Buyer shall be released from all of its obligations hereunder. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. 11.3 Governing Law. This Agreement shall be governed, construed, and enforced in accordance with the laws of the Commonwealth of Massachusetts. 11.4 Headings. The headings here are included for ease of reference only and shall not control or affect the meaning or construction of the provisions of this Agreement. 11.5 Gender and Number. Words used herein, regardless of the gender and number specifically used, shall be deemed and construed to include any other gender, masculine, feminine or neuter; and any other number, singular or plural, as the context required. 11.6 Entire Agreement. This Agreement, all schedules and exhibits hereto, and all documents and certificates to be delivered by the parties pursuant hereto collectively represent the entire understanding and agreement between Buyer and Seller with respect to the subject matter hereof. All schedules and exhibits attached to this Agreement shall be deemed part of this Agreement and incorporated herein, where applicable, as if fully set forth herein. This Agreement supersedes all prior negotiations between Buyer and Seller, and all letters of intent and other writings related to such negotiations, and cannot be amended, supplemented or 38

modified except by an agreement in writing which makes specific reference to this Agreement or an agreement delivered pursuant hereto, as the case may be, and which is signed by the party against which enforcement of any such amendment, supplement or modification is sought. 11.7 Waiver of Compliance: Consents. Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, representation, warranty, covenant, agreement or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, representation, warranty , covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 11.7. 11.8 Severability. If any provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable or any extent, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the greater extent permitted by law. 11.9 Counterparts. This Agreement may be signed in any number of counterparts with the same effect as if the signature on each such counterpart were upon the same instrument and/or by facsimile signatures, provided the original signatures shall be thereafter promptly delivered to the party entitled thereto. Any party hereto shall be fully protected in relying upon facsimile delivery of this Agreement which is believed by such party, in good faith, to be genuine. 39

modified except by an agreement in writing which makes specific reference to this Agreement or an agreement delivered pursuant hereto, as the case may be, and which is signed by the party against which enforcement of any such amendment, supplement or modification is sought. 11.7 Waiver of Compliance: Consents. Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, representation, warranty, covenant, agreement or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, representation, warranty , covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 11.7. 11.8 Severability. If any provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable or any extent, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the greater extent permitted by law. 11.9 Counterparts. This Agreement may be signed in any number of counterparts with the same effect as if the signature on each such counterpart were upon the same instrument and/or by facsimile signatures, provided the original signatures shall be thereafter promptly delivered to the party entitled thereto. Any party hereto shall be fully protected in relying upon facsimile delivery of this Agreement which is believed by such party, in good faith, to be genuine. 39

IN WITNESS WHEREOF, this Agreement has been executed by Buyer and Seller as of the day and year first above written.
SELLER: JEMS OF NEW ENGLAND, INC. By: /s/ HOWARD STEMPLER --------------------------------Name: Howard Stempler Title: President

JEMS ENTERPRISES, INC. By: /s/ HOWARD STEMPLER --------------------------------Name: Howard Stempler Title: President

ROBBINS REALTY CORP. By: /s/ HOWARD STEMPLER --------------------------------Name: Howard Stempler Title: President

CHARLEX, INC.
By: /s/ HOWARD STEMPLER --------------------------------Name: Howard Stempler Title: President

IN WITNESS WHEREOF, this Agreement has been executed by Buyer and Seller as of the day and year first above written.
SELLER: JEMS OF NEW ENGLAND, INC. By: /s/ HOWARD STEMPLER --------------------------------Name: Howard Stempler Title: President

JEMS ENTERPRISES, INC. By: /s/ HOWARD STEMPLER --------------------------------Name: Howard Stempler Title: President

ROBBINS REALTY CORP. By: /s/ HOWARD STEMPLER --------------------------------Name: Howard Stempler Title: President

CHARLEX, INC.
By: /s/ HOWARD STEMPLER --------------------------------Name: Howard Stempler Title: President

BUYER:

GETTY PROPERTIES CORP. By: /s/ LEO LIEBOWITZ --------------------------------Name: Leo Liebowitz Title: President

40

EXHIBITS TO ASSET PURCHASE AGREEMENT A. List of Stations B. Environmental Escrow Agreement C. Quitclaim Deed D. Bill of Sale 41

SCHEDULES TO ASSET PURCHASE AGREEMENT 1.13 USTs by Station

EXHIBITS TO ASSET PURCHASE AGREEMENT A. List of Stations B. Environmental Escrow Agreement C. Quitclaim Deed D. Bill of Sale 41

SCHEDULES TO ASSET PURCHASE AGREEMENT 1.13 USTs by Station 2.1(i) ITT Hartford Insurance Claims 3.4 Licenses 3.5(a) List of Real Property 3.5(b) Encroachments 3.5(c) Violation Notices
3.8 3.9 3.12 3.14 6.8 8.1 Trademarks Insurance Policies Claims; Legal Actions Environmental Matters Withdrawal Value List of Stations Closing by March 19, 2003 and the Allocated Purchase Price Amount

42

EXHIBIT A
Station No. ----------Address -------

43 44

EXHIBIT B ENVIRONMENTAL ESCROW AGREEMENT Agreement made this ____ day of ______, 2003 by and among JEMS OF NEW ENGLAND, INC., formerly

SCHEDULES TO ASSET PURCHASE AGREEMENT 1.13 USTs by Station 2.1(i) ITT Hartford Insurance Claims 3.4 Licenses 3.5(a) List of Real Property 3.5(b) Encroachments 3.5(c) Violation Notices
3.8 3.9 3.12 3.14 6.8 8.1 Trademarks Insurance Policies Claims; Legal Actions Environmental Matters Withdrawal Value List of Stations Closing by March 19, 2003 and the Allocated Purchase Price Amount

42

EXHIBIT A
Station No. ----------Address -------

43 44

EXHIBIT B ENVIRONMENTAL ESCROW AGREEMENT Agreement made this ____ day of ______, 2003 by and among JEMS OF NEW ENGLAND, INC., formerly known as Marane Oil Corporation, ROBBINS REALTY CORP. and JEMS ENTERPRISES, INC., formerly known as Marane Enterprises, Inc., and CHARLEX, INC., all Massachusetts corporations, (collectively "Seller"), GETTY PROPERTIES CORP., a Delaware corporation, ("Buyer"), and Randi Young Filip, Attorney, as Escrow Agent. W I T N E S S E T H: WHEREAS, pursuant to the Asset Purchase Agreement dated February 3, 2003, between Seller and Buyer (the "Agreement") Seller agreed to sell and Buyer agreed to purchase certain Stations and Assets (as such terms are defined in the Agreement) owned by Seller; and WHEREAS, 12 of the Stations, listed on Exhibit A attached hereto ("Remediation Stations"), are in the process of assessment and/or remediation under the Massachusetts Contingency Plan, 310 CMR 40.0000 et. seq.

EXHIBIT A
Station No. ----------Address -------

43 44

EXHIBIT B ENVIRONMENTAL ESCROW AGREEMENT Agreement made this ____ day of ______, 2003 by and among JEMS OF NEW ENGLAND, INC., formerly known as Marane Oil Corporation, ROBBINS REALTY CORP. and JEMS ENTERPRISES, INC., formerly known as Marane Enterprises, Inc., and CHARLEX, INC., all Massachusetts corporations, (collectively "Seller"), GETTY PROPERTIES CORP., a Delaware corporation, ("Buyer"), and Randi Young Filip, Attorney, as Escrow Agent. W I T N E S S E T H: WHEREAS, pursuant to the Asset Purchase Agreement dated February 3, 2003, between Seller and Buyer (the "Agreement") Seller agreed to sell and Buyer agreed to purchase certain Stations and Assets (as such terms are defined in the Agreement) owned by Seller; and WHEREAS, 12 of the Stations, listed on Exhibit A attached hereto ("Remediation Stations"), are in the process of assessment and/or remediation under the Massachusetts Contingency Plan, 310 CMR 40.0000 et. seq. ("MCP"); and WHEREAS, pursuant to the Agreement, the parties have this date delivered to Escrow Agent a deposit in the sum of Two Million One Hundred Fifty Thousand ($2,150,000.00) Dollars (the "Initial Deposit") which amount represents the Initial Estimated Costs (as defined below) and which amount shall be deposited into an interest bearing trust account as set forth in paragraph (j) below (the "Escrow Account"). The Initial Deposit, as such amount may increase or decrease pursuant to the terms hereof is referred to as the "Deposit"; and WHEREAS, Escrow Agent is willing to hold the Deposit as set forth in this agreement. NOW, THEREFORE, it is agreed as follows: (a) Seller and Buyer hereby designate Randi Young Filip, Attorney, as escrow agent (the "Escrow Agent") to receive, hold and disburse, subject to the provisions of this agreement and the Agreement, the Deposit, and Escrow Agent, by her signature at the foot hereof, agrees to act as such escrow agent subject to the provisions hereof. (b) Seller and Buyer have agreed on the estimated cost to closure for each of the Remediation Stations for consulting fees and remediation work undertaken by the Contractor (as defined below), Department of Environment Protection regulatory fees, 21J reimbursement application fees and any other environmental response costs relating to the Remediation Stations, plus Buyer's administrative costs, in the amounts set forth on Exhibit B attached hereto (as such pertains to an individual Remediation Station, the "Initial Estimated Cost", and as to more than one Remediation Station, the "Initial Estimated Costs"). An Initial Estimated Cost with respect to a Remediation Station may increase or decrease in connection with any revision of such Remediation Station's Remediation Plan (as defined below) pursuant to the provisions of paragraph (c) below, and such Initial Estimated Cost, as it may be so modified, is herein referred to as the "Estimated Cost". Notwithstanding the foregoing, Buyer and Seller agree that the

44

EXHIBIT B ENVIRONMENTAL ESCROW AGREEMENT Agreement made this ____ day of ______, 2003 by and among JEMS OF NEW ENGLAND, INC., formerly known as Marane Oil Corporation, ROBBINS REALTY CORP. and JEMS ENTERPRISES, INC., formerly known as Marane Enterprises, Inc., and CHARLEX, INC., all Massachusetts corporations, (collectively "Seller"), GETTY PROPERTIES CORP., a Delaware corporation, ("Buyer"), and Randi Young Filip, Attorney, as Escrow Agent. W I T N E S S E T H: WHEREAS, pursuant to the Asset Purchase Agreement dated February 3, 2003, between Seller and Buyer (the "Agreement") Seller agreed to sell and Buyer agreed to purchase certain Stations and Assets (as such terms are defined in the Agreement) owned by Seller; and WHEREAS, 12 of the Stations, listed on Exhibit A attached hereto ("Remediation Stations"), are in the process of assessment and/or remediation under the Massachusetts Contingency Plan, 310 CMR 40.0000 et. seq. ("MCP"); and WHEREAS, pursuant to the Agreement, the parties have this date delivered to Escrow Agent a deposit in the sum of Two Million One Hundred Fifty Thousand ($2,150,000.00) Dollars (the "Initial Deposit") which amount represents the Initial Estimated Costs (as defined below) and which amount shall be deposited into an interest bearing trust account as set forth in paragraph (j) below (the "Escrow Account"). The Initial Deposit, as such amount may increase or decrease pursuant to the terms hereof is referred to as the "Deposit"; and WHEREAS, Escrow Agent is willing to hold the Deposit as set forth in this agreement. NOW, THEREFORE, it is agreed as follows: (a) Seller and Buyer hereby designate Randi Young Filip, Attorney, as escrow agent (the "Escrow Agent") to receive, hold and disburse, subject to the provisions of this agreement and the Agreement, the Deposit, and Escrow Agent, by her signature at the foot hereof, agrees to act as such escrow agent subject to the provisions hereof. (b) Seller and Buyer have agreed on the estimated cost to closure for each of the Remediation Stations for consulting fees and remediation work undertaken by the Contractor (as defined below), Department of Environment Protection regulatory fees, 21J reimbursement application fees and any other environmental response costs relating to the Remediation Stations, plus Buyer's administrative costs, in the amounts set forth on Exhibit B attached hereto (as such pertains to an individual Remediation Station, the "Initial Estimated Cost", and as to more than one Remediation Station, the "Initial Estimated Costs"). An Initial Estimated Cost with respect to a Remediation Station may increase or decrease in connection with any revision of such Remediation Station's Remediation Plan (as defined below) pursuant to the provisions of paragraph (c) below, and such Initial Estimated Cost, as it may be so modified, is herein referred to as the "Estimated Cost". Notwithstanding the foregoing, Buyer and Seller agree that the

Initial Deposit shall be the only sum contributed by Seller to the Escrow Account, excluding those sums deposited into the Escrow Account from 21J reimbursement amounts received pursuant hereto. (c) Buyer, through and in conjunction with its contractor, Delta Environmental Consultants Inc. (together with any future contractor employed by Buyer, the "Contractor") shall manage and direct the cleanup of the Remediation Stations in accordance with the cleanup plans developed, and to be developed or revised, annually and/or from time to time in connection with the review of said remediation plans, jointly between Buyer and Seller, for the Remediation Stations (the "Remediation Plans"). The Buyer shall submit to the Escrow Agent for payment all

EXHIBIT B ENVIRONMENTAL ESCROW AGREEMENT Agreement made this ____ day of ______, 2003 by and among JEMS OF NEW ENGLAND, INC., formerly known as Marane Oil Corporation, ROBBINS REALTY CORP. and JEMS ENTERPRISES, INC., formerly known as Marane Enterprises, Inc., and CHARLEX, INC., all Massachusetts corporations, (collectively "Seller"), GETTY PROPERTIES CORP., a Delaware corporation, ("Buyer"), and Randi Young Filip, Attorney, as Escrow Agent. W I T N E S S E T H: WHEREAS, pursuant to the Asset Purchase Agreement dated February 3, 2003, between Seller and Buyer (the "Agreement") Seller agreed to sell and Buyer agreed to purchase certain Stations and Assets (as such terms are defined in the Agreement) owned by Seller; and WHEREAS, 12 of the Stations, listed on Exhibit A attached hereto ("Remediation Stations"), are in the process of assessment and/or remediation under the Massachusetts Contingency Plan, 310 CMR 40.0000 et. seq. ("MCP"); and WHEREAS, pursuant to the Agreement, the parties have this date delivered to Escrow Agent a deposit in the sum of Two Million One Hundred Fifty Thousand ($2,150,000.00) Dollars (the "Initial Deposit") which amount represents the Initial Estimated Costs (as defined below) and which amount shall be deposited into an interest bearing trust account as set forth in paragraph (j) below (the "Escrow Account"). The Initial Deposit, as such amount may increase or decrease pursuant to the terms hereof is referred to as the "Deposit"; and WHEREAS, Escrow Agent is willing to hold the Deposit as set forth in this agreement. NOW, THEREFORE, it is agreed as follows: (a) Seller and Buyer hereby designate Randi Young Filip, Attorney, as escrow agent (the "Escrow Agent") to receive, hold and disburse, subject to the provisions of this agreement and the Agreement, the Deposit, and Escrow Agent, by her signature at the foot hereof, agrees to act as such escrow agent subject to the provisions hereof. (b) Seller and Buyer have agreed on the estimated cost to closure for each of the Remediation Stations for consulting fees and remediation work undertaken by the Contractor (as defined below), Department of Environment Protection regulatory fees, 21J reimbursement application fees and any other environmental response costs relating to the Remediation Stations, plus Buyer's administrative costs, in the amounts set forth on Exhibit B attached hereto (as such pertains to an individual Remediation Station, the "Initial Estimated Cost", and as to more than one Remediation Station, the "Initial Estimated Costs"). An Initial Estimated Cost with respect to a Remediation Station may increase or decrease in connection with any revision of such Remediation Station's Remediation Plan (as defined below) pursuant to the provisions of paragraph (c) below, and such Initial Estimated Cost, as it may be so modified, is herein referred to as the "Estimated Cost". Notwithstanding the foregoing, Buyer and Seller agree that the

Initial Deposit shall be the only sum contributed by Seller to the Escrow Account, excluding those sums deposited into the Escrow Account from 21J reimbursement amounts received pursuant hereto. (c) Buyer, through and in conjunction with its contractor, Delta Environmental Consultants Inc. (together with any future contractor employed by Buyer, the "Contractor") shall manage and direct the cleanup of the Remediation Stations in accordance with the cleanup plans developed, and to be developed or revised, annually and/or from time to time in connection with the review of said remediation plans, jointly between Buyer and Seller, for the Remediation Stations (the "Remediation Plans"). The Buyer shall submit to the Escrow Agent for payment all charges in connection with the Estimated Costs. The Escrow Agent shall promptly pay these charges or reimburse Buyer or its agent for charges Buyer or its agent has incurred in connection with the Estimated Costs in

Initial Deposit shall be the only sum contributed by Seller to the Escrow Account, excluding those sums deposited into the Escrow Account from 21J reimbursement amounts received pursuant hereto. (c) Buyer, through and in conjunction with its contractor, Delta Environmental Consultants Inc. (together with any future contractor employed by Buyer, the "Contractor") shall manage and direct the cleanup of the Remediation Stations in accordance with the cleanup plans developed, and to be developed or revised, annually and/or from time to time in connection with the review of said remediation plans, jointly between Buyer and Seller, for the Remediation Stations (the "Remediation Plans"). The Buyer shall submit to the Escrow Agent for payment all charges in connection with the Estimated Costs. The Escrow Agent shall promptly pay these charges or reimburse Buyer or its agent for charges Buyer or its agent has incurred in connection with the Estimated Costs in accordance with the provisions of paragraph (d) below. In the event that any state or federal environmental agency or third party claimant has made an environmental claim or given notice of an environmental claim against Buyer or Seller, which claim or notice is made in connection with Seller's environmental obligations as seller under the April 16, 1991 Asset Purchase Agreement between Getty Petroleum Corp. and Donna Oil Corp., et al, (the "1991 Agreement") and Seller has failed to respond to or to defend said claim or notice, and as a result Buyer, as the present owner of the Stations (as such term is defined in the Agreement) is forced to expend money to respond to, remediate or defend such claim, the Deposit may be used by Buyer, in its sole discretion to respond to, remediate or defend said claim consistent with the procedures set forth in paragraph (d) below. (d) The Escrow Agent shall forward copies of invoices to Seller for review prior to disbursement of funds from the Escrow Account for the payment of said invoices. In the event Seller objects to the payment of any item included on said invoice and notifies Escrow Agent of its objection in writing within ten (10) days of its receipt of said invoice from the Escrow Agent, Escrow Agent shall not be authorized to pay such invoice and the Buyer and Seller will work together in good faith to resolve the disputed items on the invoice. In the event Escrow Agent is not notified by Seller of its objection to payment of said invoice within such ten (10) day period, Escrow Agent shall be authorized to pay the invoice and the Seller shall be deemed to have waived any right to object to payment of said invoice. Escrow Agent shall provide Seller with copies of the monthly trust account statement or reconciliation of the Escrow Account within ten (10) days after her receipt thereof. (e) Any 21J reimbursement amounts received by Buyer or Seller in connection with reimbursement of the Estimated Costs for the Remediation Stations shall be deposited into the Escrow Account. Provided there is no continuing, unwaived breach or violation hereunder or under the Agreement or under the environmental provisions of the 1991 Agreement, and further provided no environmental liability insurance has been procured for the Remediation Stations, upon the issuance of a Response Action Outcome Report achieving a Permanent Solution, as defined by the MCP (an "RAO") for a Remediation Station, Buyer shall authorize Escrow Agent to disburse forty percent (40%) of any 21J reimbursement amounts deposited in the Escrow Account with respect to such Remediation Station to Seller. Notwithstanding the foregoing and provided there is no continuing, unwaived breach or violation hereunder 2

or under the Agreement or under the environmental provisions of the 1991 Agreement, in the event Seller is able to obtain an environmental liability insurance policy acceptable to Buyer limiting Seller's liability with respect to the Remediation Stations to a fixed amount, Buyer and Seller will agree to adjust the amount of the Deposit to the amount of the Seller's retained liability as set forth in said environmental liability insurance policy and any future 21J reimbursement amounts received by Buyer shall be paid from the Escrow Account to Seller to the extent that the payment of such 21J reimbursement amounts does not cause the balance of the Escrow Account to fall below the amount of Seller's remaining retained liability under said environmental liability insurance policy. (f) Provided there is no continuing, unwaived breach or violation hereunder or under the Agreement or the environmental provisions of the 1991 Agreement, five (5) years after the date of issuance of an RAO with respect to any Remediation Station, Buyer shall authorize the Escrow Agent to release the remainder of the Estimated Cost for such Remediation Station remaining in the Escrow Account, if any, plus the balance of the 21J reimbursement amounts deposited in the Escrow Account for such Remediation Station. Five (5) years after the date of issuance of the RAO for the twelfth (12th) and final Remediation Station, all funds remaining in the

or under the Agreement or under the environmental provisions of the 1991 Agreement, in the event Seller is able to obtain an environmental liability insurance policy acceptable to Buyer limiting Seller's liability with respect to the Remediation Stations to a fixed amount, Buyer and Seller will agree to adjust the amount of the Deposit to the amount of the Seller's retained liability as set forth in said environmental liability insurance policy and any future 21J reimbursement amounts received by Buyer shall be paid from the Escrow Account to Seller to the extent that the payment of such 21J reimbursement amounts does not cause the balance of the Escrow Account to fall below the amount of Seller's remaining retained liability under said environmental liability insurance policy. (f) Provided there is no continuing, unwaived breach or violation hereunder or under the Agreement or the environmental provisions of the 1991 Agreement, five (5) years after the date of issuance of an RAO with respect to any Remediation Station, Buyer shall authorize the Escrow Agent to release the remainder of the Estimated Cost for such Remediation Station remaining in the Escrow Account, if any, plus the balance of the 21J reimbursement amounts deposited in the Escrow Account for such Remediation Station. Five (5) years after the date of issuance of the RAO for the twelfth (12th) and final Remediation Station, all funds remaining in the Escrow Account shall be disbursed to Seller. (g) Escrow Agent shall not be liable to either Seller or Buyer in connection with her performance as escrow agent hereunder, except for gross negligence or willful neglect. Escrow Agent agrees to serve without compensation. (h) In the event of a dispute with respect to the Deposit, Escrow Agent shall have the right, upon notice to Buyer and Seller, to surrender the Deposit plus all accrued interest to a court of competent jurisdiction for such disposition as may be directed by such court. (i) Except as set forth in paragraph (g) above, upon delivery of the entire Deposit plus accrued interest to either Seller pursuant to paragraph (f) or a court of competent jurisdiction pursuant to paragraph (h) of this agreement, Escrow Agent shall be relieved of all liability, responsibility or obligation with respect to or arising out of the Deposit and any and all of its obligations arising therefrom. (j) The Escrow Account shall be an interest-bearing trust account at J. P. Morgan Chase Bank. After the initial investment of the Deposit into Escrow Account, the Deposit shall be invested based upon the joint instructions of Seller and Buyer. In that regard, Seller and Buyer will advise Escrow Agent, in writing, of the investment instructions for the Deposit, to consist of money market funds for daily liquidity and/or longer term Treasury, Government Agency and Corporate Obligations with mutually acceptable investment grade ratings. Escrow Agent shall not be responsible for the rate or amount of interest paid by such bank or realized from any investment. Escrow Agent, in following the instructions of Seller and Buyer, shall not be responsible or liable to the parties hereto in the event that any portion of the Deposit cannot be released when request is made, due to the fact that it is tied up in longer term funds or for any other reason beyond the reasonable control of Escrow Agent. 3

(k) In the event that the Escrow Agent withdraws as Escrow Agent whether because of a change of employment or otherwise, Buyer shall designate a replacement Escrow Agent who shall be reasonably acceptable to Seller. Any replacement Escrow Agent(s) shall accept his/her appointment as Escrow Agent upon the same terms and conditions set forth in this Agreement. (l) All defined terms herein shall have the meanings ascribed to them in the Agreement. (m) Notwithstanding anything contained to the contrary herein, Buyer's undertaking of the management of the remediation work in connection with said Remediation Stations is on Seller's behalf and shall in no way be considered an assumption of liability on the part of Buyer with respect to the environmental condition of the Remediation Stations. (n) Except as expressly set forth herein, nothing contained herein shall be deemed to limit the liability of the Seller for environmental remediation costs for the Remediation Stations, whether such costs are paid from the Escrow Account, or otherwise.

(k) In the event that the Escrow Agent withdraws as Escrow Agent whether because of a change of employment or otherwise, Buyer shall designate a replacement Escrow Agent who shall be reasonably acceptable to Seller. Any replacement Escrow Agent(s) shall accept his/her appointment as Escrow Agent upon the same terms and conditions set forth in this Agreement. (l) All defined terms herein shall have the meanings ascribed to them in the Agreement. (m) Notwithstanding anything contained to the contrary herein, Buyer's undertaking of the management of the remediation work in connection with said Remediation Stations is on Seller's behalf and shall in no way be considered an assumption of liability on the part of Buyer with respect to the environmental condition of the Remediation Stations. (n) Except as expressly set forth herein, nothing contained herein shall be deemed to limit the liability of the Seller for environmental remediation costs for the Remediation Stations, whether such costs are paid from the Escrow Account, or otherwise. (o) In no event shall any shareholder, director, officer, or agent of Buyer or Seller be held personally liable for any cost or expense associated or in any way related to this Environmental Escrow Agreement. This provision shall survive the closing of the transactions contemplated hereunder and under the Agreement and shall be binding upon the Buyer and Seller, their affiliates, assigns, creditors, transferees, receivers, fiduciaries, shareholders and successors in interest. IN WITNESS WHEREOF, the parties have executed this Environmental Escrow Agreement as of the day and year first above written. JEMS OF NEW ENGLAND, INC. By:______________________________ Name: Title: ROBBINS REALTY CORP. By:_____________________________ Name: Title: JEMS ENTERPRISES, INC. 4

By:_____________________________ Name: Title: CHARLEX, INC. By:_____________________________ Name: Title: GETTY PROPERTIES CORP. By:_____________________________ Name: Leo Liebowitz Title: President

By:_____________________________ Name: Title: CHARLEX, INC. By:_____________________________ Name: Title: GETTY PROPERTIES CORP. By:_____________________________ Name: Leo Liebowitz Title: President THE FOREGOING IS AGREED TO AND RECEIPT OF THE DEPOSIT IS ACKNOWLEDGED: Randi Young Filip, as Attorney Escrow Agent 5

. . . GETTY REALTY CORP. AND SUBSIDIARIES SELECTED FINANCIAL DATA
For the years ended December 31, ------------------------2002 2001 ----------------67,157 2,488 --------69,645 36,163 ---------36,163 ---------36,163 1.44 ---------1.44 1.866 1.65 $ 68,322 2,153 --------70,475 32,083 (36,648)(b) --------68,731 ---------68,731 3.18 ---------3.18 5.9750(c) 5.2750(c) $ For the eleven months ended December 31, 2000 (a) -------------53,916 378 --------54,294 18,950 7,875 --------11,075 ---------11,075 .47 ---------.47 1.775 .60 $

(in thousands, except per share amounts) OPERATING DATA: Revenues from rental properties Other income, net Total revenues Earnings from continuing operations before income taxes (Benefit) provision for income taxes Earnings from continuing operations Net earnings from discontinued operations Net earnings Diluted earnings per common share: Continuing operations Discontinued operations Net earnings Cash dividends declared per share: Preferred Common BALANCE SHEET DATA: Real estate before accumulated depreciation Total assets Total debt

----200 ----58 4 ----63 26 11 ----15 ----15 $

-----

1

308,054 282,491 923

311,352 288,188 997

313,037 255,725 49,969

316 260 43

. . . GETTY REALTY CORP. AND SUBSIDIARIES SELECTED FINANCIAL DATA
For the years ended December 31, ------------------------2002 2001 ----------------67,157 2,488 --------69,645 36,163 ---------36,163 ---------36,163 1.44 ---------1.44 1.866 1.65 $ 68,322 2,153 --------70,475 32,083 (36,648)(b) --------68,731 ---------68,731 3.18 ---------3.18 5.9750(c) 5.2750(c) $ For the eleven months ended December 31, 2000 (a) -------------53,916 378 --------54,294 18,950 7,875 --------11,075 ---------11,075 .47 ---------.47 1.775 .60 $

(in thousands, except per share amounts) OPERATING DATA: Revenues from rental properties Other income, net Total revenues Earnings from continuing operations before income taxes (Benefit) provision for income taxes Earnings from continuing operations Net earnings from discontinued operations Net earnings Diluted earnings per common share: Continuing operations Discontinued operations Net earnings Cash dividends declared per share: Preferred Common BALANCE SHEET DATA: Real estate before accumulated depreciation Total assets Total debt Shareholders' equity Adjusted Funds From Operations (d): Earnings from continuing operations before income taxes Preferred stock dividends Earnings from continuing operations before income taxes applicable to common shareholders Depreciation and amortization Gains on sales of real estate Funds from operations Straight line rent Adjusted funds from operations

----200 ----58 4 ----63 26 11 ----15 ----15 $

-----

1

308,054 282,491 923 233,426

311,352 288,188 997 237,773

313,037 255,725 49,969 128,099

316 260 43 141

36,163 (5,350) ---------

$

32,083 (5,088)(e) ---------

$

18,950 (5,098) ---------

$

26 (5 -----

$

30,813 9,016 (1,153) --------38,676 (6,728) --------$ 31,948 =========

26,995 9,281 (990) --------35,286 (8,388) --------$ 26,898 =========

13,852 9,196 (1,106) --------21,942 ---------$ 21,942 =========

20 10 (3 ----28 ----$ 28 =====

NUMBER OF PROPERTIES: Owned Leased Total properties

739 310 --------1,049

744 335 --------1,079

753 344 --------1,097

----1

(a) The Company's fiscal year end changed to December 31 from January 31, effective December 31, 2000. (b) Represents a tax benefit due to the reversal of previously accrued income taxes that the Company would no longer be required to pay as a REIT. (c) Includes $4.20 and $4.15 "earnings and profits" cash distribution paid on August 2, 2001 to preferred and

common shareholders, respectively. (d) Funds from operations ("FFO") is a non-GAAP measure and is defined as earnings from continuing operations applicable to common shareholders before income taxes, depreciation and amortization, extraordinary items, and gains or losses on sales of real estate. Adjusted funds from operations ("AFFO") is a non-GAAP measure and is defined as FFO less straight line rent. AFFO does not represent cash generated from operating activities in accordance with generally accepted accounting principles, and therefore should not be considered an alternative for net income or as a measure of liquidity. (e) Excludes $4.20 "earnings and profits" cash distribution paid on August 2, 2001 to preferred shareholders. 6

GETTY REALTY CORP. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL We are a real estate company specializing in the ownership and leasing of service stations, convenience stores and petroleum marketing terminals. We lease 972 of our 1,049 properties on a long-term net basis to Getty Petroleum Marketing Inc. ("Marketing"), which was spun-off to our shareholders in March 1997. In December 2000, Marketing was acquired by a subsidiary of OAO Lukoil ("Lukoil"), one of Russia's largest oil companies. Our financial results largely depend on rental income from Marketing and other tenants and are materially dependent upon the ability of Marketing to meet its obligations under the master lease entered into on February 1, 1997 and amended and restated effective December 9, 2000 (the "Master Lease"). Marketing has made all required monthly rental payments under the Master Lease when due. On August 1, 2001, we closed a public offering of 8,855,000 shares of our common stock. A portion of the $131.5 million net proceeds of the offering was used to pay a $64.1 million special one-time "earnings and profits" (as defined in the Internal Revenue Code) cash distribution to preferred and common shareholders and $37.4 million was used to repay substantially all of our mortgage debt and outstanding lines of credit. In addition, on August 1, 2001, our shareholders approved a charter amendment to include ownership limitations typical for real estate investment trusts ("REITs") and accordingly, we elected to be taxed as a REIT under the federal income tax laws beginning January 1, 2001. As a result, during 2001, we recorded a nonrecurring tax benefit of $36.6 million to reverse previously accrued income tax liabilities that we would no longer be required to pay as a REIT. As a REIT, we are not subject to federal corporate income tax on the taxable income we distribute to our shareholders. In order to continue to qualify for taxation as a REIT, we are required, among other things, to distribute at least 90% of our taxable income to shareholders each year. In order to initially qualify for REIT status, we were required to make a distribution to shareholders in an amount at least equal to our accumulated earnings and profits from the years we operated as a taxable corporation. On December 12, 2000, our Board of Directors approved a change in our fiscal year end to December 31 from January 31. The change resulted in an eleven-month accounting period ending December 31, 2000. In order to make the following discussion of our results of operations more meaningful, the results of operations for the twelve months ended December 31, 2001 have been compared to the recast results of operations for the twelve months ended December 31, 2000, and the results of operations for the eleven months ended December 31, 2000 have been compared to the results of operations for the eleven months ended December 31, 1999. RESULTS OF OPERATIONS Twelve months ended December 31, 2002 compared to twelve months ended December 31, 2001 Revenues from rental properties for the twelve months ended December 31, 2002 ("fiscal 2002") and 2001 ("fiscal 2001") were $67.2 million and $68.3 million, respectively. Approximately $58.1 million and $57.5 million

GETTY REALTY CORP. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL We are a real estate company specializing in the ownership and leasing of service stations, convenience stores and petroleum marketing terminals. We lease 972 of our 1,049 properties on a long-term net basis to Getty Petroleum Marketing Inc. ("Marketing"), which was spun-off to our shareholders in March 1997. In December 2000, Marketing was acquired by a subsidiary of OAO Lukoil ("Lukoil"), one of Russia's largest oil companies. Our financial results largely depend on rental income from Marketing and other tenants and are materially dependent upon the ability of Marketing to meet its obligations under the master lease entered into on February 1, 1997 and amended and restated effective December 9, 2000 (the "Master Lease"). Marketing has made all required monthly rental payments under the Master Lease when due. On August 1, 2001, we closed a public offering of 8,855,000 shares of our common stock. A portion of the $131.5 million net proceeds of the offering was used to pay a $64.1 million special one-time "earnings and profits" (as defined in the Internal Revenue Code) cash distribution to preferred and common shareholders and $37.4 million was used to repay substantially all of our mortgage debt and outstanding lines of credit. In addition, on August 1, 2001, our shareholders approved a charter amendment to include ownership limitations typical for real estate investment trusts ("REITs") and accordingly, we elected to be taxed as a REIT under the federal income tax laws beginning January 1, 2001. As a result, during 2001, we recorded a nonrecurring tax benefit of $36.6 million to reverse previously accrued income tax liabilities that we would no longer be required to pay as a REIT. As a REIT, we are not subject to federal corporate income tax on the taxable income we distribute to our shareholders. In order to continue to qualify for taxation as a REIT, we are required, among other things, to distribute at least 90% of our taxable income to shareholders each year. In order to initially qualify for REIT status, we were required to make a distribution to shareholders in an amount at least equal to our accumulated earnings and profits from the years we operated as a taxable corporation. On December 12, 2000, our Board of Directors approved a change in our fiscal year end to December 31 from January 31. The change resulted in an eleven-month accounting period ending December 31, 2000. In order to make the following discussion of our results of operations more meaningful, the results of operations for the twelve months ended December 31, 2001 have been compared to the recast results of operations for the twelve months ended December 31, 2000, and the results of operations for the eleven months ended December 31, 2000 have been compared to the results of operations for the eleven months ended December 31, 1999. RESULTS OF OPERATIONS Twelve months ended December 31, 2002 compared to twelve months ended December 31, 2001 Revenues from rental properties for the twelve months ended December 31, 2002 ("fiscal 2002") and 2001 ("fiscal 2001") were $67.2 million and $68.3 million, respectively. Approximately $58.1 million and $57.5 million of these rentals received in fiscal 2002 and in fiscal 2001, respectively, were from properties leased to Marketing under the Master Lease. In addition, revenues from rental properties include $6.7 million and $8.4 million of deferred rental revenue recognized in fiscal 2002 and fiscal 2001, respectively, as required by generally accepted accounting principles ("GAAP"), related to the 2% future annual rent increases due from Marketing under the terms of the Master Lease. The aggregate minimum rent due over the initial 15-year term of the Master Lease is recognized on a straight-line basis rather than when due. Other income was $2.5 million for fiscal 2002 as compared with $2.2 million for fiscal 2001. The $0.3 million increase was due, in part, to higher gains on dispositions of properties of $0.2 million. Rental property expenses, which are principally comprised of rent expense and real estate and other state and local taxes, were $12.0 million for fiscal 2002, an increase of $0.5 million from fiscal 2001. The increase was primarily due to additional state and local taxes for certain states that do not conform to the federal REIT

provisions, partially offset by a decrease in rent expense due to a reduction in the number of properties leased. Environmental expenses for fiscal 2002 were $8.7 million, a decrease of $2.1 million from fiscal 2001. Fiscal 2002 environmental expenses include a net change in estimated remediation costs of $6.6 million, a $2.5 million decrease from the prior year. The decrease in the net change in estimated environmental costs was principally due to lower changes in estimated remediation costs, partially offset by a reduction in expected recoveries from underground storage tank funds related to both past and future environmental spending. 7

GETTY REALTY CORP. AND SUBSIDIARIES Continued The decrease in net change in estimated remediation costs was partially offset by an increase of amounts accrued for environmental litigation of $0.6 million. General and administrative expenses for fiscal 2002 were $3.7 million, a decrease of $1.3 million from fiscal 2001. The decrease was primarily due to a $0.9 million net reduction in insurance loss reserves established under the Company's self-funded insurance program that was terminated in 1997, partially offset by acquisition related expenses recognized in fiscal 2002. The decrease in general and administrative expenses was also attributable to nonrecurring expenses relating to the amendment of our charter and debt repayment incurred in fiscal 2001. Increased employee related expenses incurred in fiscal 2002 were substantially offset by reduced service fees paid to Marketing. Included in general and administrative expenses for fiscal 2001 is $226,000 of net fees paid to Marketing for certain administrative and technical services performed by Marketing under a services agreement. Substantially all of these services were discontinued as of April 1, 2001. Depreciation and amortization for fiscal 2002 was $9.0 million, a decrease of $0.3 million from fiscal 2001, as a result of certain assets becoming fully depreciated and dispositions of properties. Interest expense was $132,000 for fiscal 2002, a decrease of $1.8 million from fiscal 2001, due to the repayment of substantially all of our mortgage debt and outstanding lines of credit during the third quarter of fiscal 2001. Twelve months ended December 31, 2001 compared to twelve months ended December 31, 2000 Revenues from rental properties for the twelve months ended December 31, 2001 and 2000 ("recast calendar 2000") were $68.3 million and $58.8 million, respectively. Approximately $57.5 million and $56.2 million of these rentals received in fiscal 2001 and recast calendar 2000, respectively, were from properties leased to Marketing under the Master Lease. In addition, revenues from rental properties included $8.4 million of deferred rent receivable recognized in fiscal 2001. Other income was $2.2 million for fiscal 2001 as compared with $0.3 million for recast calendar 2000. The $1.9 million increase was due, in part, to higher interest income of $0.4 million from short-term investments resulting from investing the balance of the net proceeds of the common stock offering. The increase was also due to a severance charge of $0.9 million and expenses related to the amendment of the Master Lease of $0.6 million, both of which were recorded in recast calendar 2000. Rental property expenses were $11.4 million in fiscal 2001, a decrease of $0.6 million from recast calendar 2000 due to a reduction in the number of properties leased and an increase in refunds received for contested real estate taxes. Environmental expenses for fiscal 2001 were $10.8 million, an increase of $1.6 million from recast calendar 2000. Fiscal 2001 environmental expenses include a change in estimated remediation costs of $9.2 million, a $2.4 million increase from recast calendar 2000. The change in estimated remediation costs for fiscal 2001 was primarily due to the completion of assessment phases for a substantial number of properties. In addition, certain states adopted more stringent environmental regulations resulting in increased remediation costs. The fiscal 2001 increase in environmental expenses was also due to increased professional fees of $0.8 million. These increases

GETTY REALTY CORP. AND SUBSIDIARIES Continued The decrease in net change in estimated remediation costs was partially offset by an increase of amounts accrued for environmental litigation of $0.6 million. General and administrative expenses for fiscal 2002 were $3.7 million, a decrease of $1.3 million from fiscal 2001. The decrease was primarily due to a $0.9 million net reduction in insurance loss reserves established under the Company's self-funded insurance program that was terminated in 1997, partially offset by acquisition related expenses recognized in fiscal 2002. The decrease in general and administrative expenses was also attributable to nonrecurring expenses relating to the amendment of our charter and debt repayment incurred in fiscal 2001. Increased employee related expenses incurred in fiscal 2002 were substantially offset by reduced service fees paid to Marketing. Included in general and administrative expenses for fiscal 2001 is $226,000 of net fees paid to Marketing for certain administrative and technical services performed by Marketing under a services agreement. Substantially all of these services were discontinued as of April 1, 2001. Depreciation and amortization for fiscal 2002 was $9.0 million, a decrease of $0.3 million from fiscal 2001, as a result of certain assets becoming fully depreciated and dispositions of properties. Interest expense was $132,000 for fiscal 2002, a decrease of $1.8 million from fiscal 2001, due to the repayment of substantially all of our mortgage debt and outstanding lines of credit during the third quarter of fiscal 2001. Twelve months ended December 31, 2001 compared to twelve months ended December 31, 2000 Revenues from rental properties for the twelve months ended December 31, 2001 and 2000 ("recast calendar 2000") were $68.3 million and $58.8 million, respectively. Approximately $57.5 million and $56.2 million of these rentals received in fiscal 2001 and recast calendar 2000, respectively, were from properties leased to Marketing under the Master Lease. In addition, revenues from rental properties included $8.4 million of deferred rent receivable recognized in fiscal 2001. Other income was $2.2 million for fiscal 2001 as compared with $0.3 million for recast calendar 2000. The $1.9 million increase was due, in part, to higher interest income of $0.4 million from short-term investments resulting from investing the balance of the net proceeds of the common stock offering. The increase was also due to a severance charge of $0.9 million and expenses related to the amendment of the Master Lease of $0.6 million, both of which were recorded in recast calendar 2000. Rental property expenses were $11.4 million in fiscal 2001, a decrease of $0.6 million from recast calendar 2000 due to a reduction in the number of properties leased and an increase in refunds received for contested real estate taxes. Environmental expenses for fiscal 2001 were $10.8 million, an increase of $1.6 million from recast calendar 2000. Fiscal 2001 environmental expenses include a change in estimated remediation costs of $9.2 million, a $2.4 million increase from recast calendar 2000. The change in estimated remediation costs for fiscal 2001 was primarily due to the completion of assessment phases for a substantial number of properties. In addition, certain states adopted more stringent environmental regulations resulting in increased remediation costs. The fiscal 2001 increase in environmental expenses was also due to increased professional fees of $0.8 million. These increases were partially offset by a decrease in environmental litigation expenses of $1.6 million compared to recast calendar 2000. General and administrative expenses for fiscal 2001 were $4.9 million, an increase of $1.3 million from recast calendar 2000. The increase is attributable to nonrecurring expenses relating to the amendment of our charter and debt repayment, as well as higher legal fees and increased employee related expenses, partially offset by reduced service fees paid to Marketing. Included in general and administrative expenses for fiscal 2001 and recast calendar 2000 are $226,000 and $635,000, respectively, of net fees paid to Marketing for certain administrative and technical services performed by Marketing under a services agreement. Substantially all of these services were discontinued as of April 1, 2001.

Depreciation and amortization for fiscal 2001 was $9.3 million, a decrease of $0.8 million from recast calendar 2000, as a result of certain assets becoming fully depreciated and dispositions of properties. Interest expense was $1.9 million for fiscal 2001, a decrease of $1.7 million from recast calendar 2000, due to lower average borrowings outstanding and the repayment of substantially all of our mortgage debt and outstanding lines of credit during the third quarter of fiscal 2001. 8

GETTY REALTY CORP. AND SUBSIDIARIES continued Eleven months ended December 31, 2000 compared to eleven months ended December 31, 1999 Revenues from rental properties for the eleven months ended December 31, 2000 ("fiscal December 2000") and 1999 ("fiscal December 1999") were $53.9 million and $54.0 million, respectively. Approximately $51.5 million and $51.7 million of these rentals for fiscal December 2000 and fiscal December 1999, respectively, were from properties leased to Marketing under the Master Lease. Other income was $0.4 million for fiscal December 2000 as compared with $5.0 million for fiscal December 1999. The $4.6 million decrease was due to lower gains on dispositions of properties of $2.2 million, a severance charge of $0.9 million and expenses related to the amendment of the Master Lease of $0.6 million. In addition, fiscal December 1999 included the settlement of a lawsuit resulting in the elimination of a $1.2 million reserve. Rental property expenses decreased from fiscal December 1999 by $0.1 million to $11.0 million for fiscal December 2000 due to a reduction in the number of properties leased. Environmental expenses for fiscal December 2000 were $8.5 million, an increase of $2.4 million from fiscal December 1999. Fiscal December 2000 included a change in estimated remediation costs of $6.8 million associated with contamination discovered at properties where we retained responsibility for environmental remediation and revisions to estimates at other properties where remediation was ongoing. Fiscal December 1999 environmental expenses totaled $6.1 million, of which $4.4 million represented a change in estimated remediation costs or revisions to prior estimates. Fiscal December 2000 also included $1.2 million of expenses related to environmental litigation compared to $0.7 million for fiscal December 1999. General and administrative expenses for fiscal December 2000 were $3.3 million, a decrease of $2.0 million from fiscal December 1999. The decrease was principally due to a reduction in employee related expenses, legal fees, and retrospective insurance charges relating to the spun-off petroleum marketing business. Included in general and administrative expenses for fiscal December 2000 and fiscal December 1999 are $582,000 and $696,000, respectively, of net fees paid to Marketing for certain administrative and technical services performed by Marketing under a services agreement. Depreciation and amortization for fiscal December 2000 was $9.2 million, a decrease of $0.4 million from fiscal December 1999 as a result of certain assets becoming fully depreciated and dispositions of properties. Interest expense was $3.4 million and $2.5 million for fiscal December 2000 and fiscal December 1999, respectively. The increase was due to higher average borrowings outstanding and higher average interest rates. LIQUIDITY AND CAPITAL RESOURCES Our principal sources of liquidity are available cash and equivalents, the cash flows from our business and a short-term uncommitted line of credit with a bank. Management believes that dividend payments and cash requirements for our business, including environmental remediation expenditures, capital expenditures and debt service, can be met by cash flows from operations, available cash and equivalents and the credit line. As of December 31, 2002, we had a line of credit amounting to $25.0 million, of which $3.3 million was utilized for outstanding letters of credit. Borrowings under the line of credit are unsecured and bear interest at the prime rate or, at our option, LIBOR plus 1.25%. The line of credit is subject to annual renewal in August 2003 at the

GETTY REALTY CORP. AND SUBSIDIARIES continued Eleven months ended December 31, 2000 compared to eleven months ended December 31, 1999 Revenues from rental properties for the eleven months ended December 31, 2000 ("fiscal December 2000") and 1999 ("fiscal December 1999") were $53.9 million and $54.0 million, respectively. Approximately $51.5 million and $51.7 million of these rentals for fiscal December 2000 and fiscal December 1999, respectively, were from properties leased to Marketing under the Master Lease. Other income was $0.4 million for fiscal December 2000 as compared with $5.0 million for fiscal December 1999. The $4.6 million decrease was due to lower gains on dispositions of properties of $2.2 million, a severance charge of $0.9 million and expenses related to the amendment of the Master Lease of $0.6 million. In addition, fiscal December 1999 included the settlement of a lawsuit resulting in the elimination of a $1.2 million reserve. Rental property expenses decreased from fiscal December 1999 by $0.1 million to $11.0 million for fiscal December 2000 due to a reduction in the number of properties leased. Environmental expenses for fiscal December 2000 were $8.5 million, an increase of $2.4 million from fiscal December 1999. Fiscal December 2000 included a change in estimated remediation costs of $6.8 million associated with contamination discovered at properties where we retained responsibility for environmental remediation and revisions to estimates at other properties where remediation was ongoing. Fiscal December 1999 environmental expenses totaled $6.1 million, of which $4.4 million represented a change in estimated remediation costs or revisions to prior estimates. Fiscal December 2000 also included $1.2 million of expenses related to environmental litigation compared to $0.7 million for fiscal December 1999. General and administrative expenses for fiscal December 2000 were $3.3 million, a decrease of $2.0 million from fiscal December 1999. The decrease was principally due to a reduction in employee related expenses, legal fees, and retrospective insurance charges relating to the spun-off petroleum marketing business. Included in general and administrative expenses for fiscal December 2000 and fiscal December 1999 are $582,000 and $696,000, respectively, of net fees paid to Marketing for certain administrative and technical services performed by Marketing under a services agreement. Depreciation and amortization for fiscal December 2000 was $9.2 million, a decrease of $0.4 million from fiscal December 1999 as a result of certain assets becoming fully depreciated and dispositions of properties. Interest expense was $3.4 million and $2.5 million for fiscal December 2000 and fiscal December 1999, respectively. The increase was due to higher average borrowings outstanding and higher average interest rates. LIQUIDITY AND CAPITAL RESOURCES Our principal sources of liquidity are available cash and equivalents, the cash flows from our business and a short-term uncommitted line of credit with a bank. Management believes that dividend payments and cash requirements for our business, including environmental remediation expenditures, capital expenditures and debt service, can be met by cash flows from operations, available cash and equivalents and the credit line. As of December 31, 2002, we had a line of credit amounting to $25.0 million, of which $3.3 million was utilized for outstanding letters of credit. Borrowings under the line of credit are unsecured and bear interest at the prime rate or, at our option, LIBOR plus 1.25%. The line of credit is subject to annual renewal in August 2003 at the discretion of the bank. On August 1, 2001, we closed a public offering of 8,855,000 shares of our common stock at a price of $16.00 per share. The net proceeds of the offering of $131.5 million were used to pay a $64.1 million special one-time earnings and profits cash distribution to shareholders. We used $17.5 million of the net proceeds to repay all amounts then outstanding under our lines of credit and $19.9 million to retire a mortgage loan. The remaining $30.0 million of the net proceeds will be used for general corporate purposes. At a special meeting of shareholders held on August 1, 2001, our shareholders approved a charter amendment

containing ownership limitations typical for REITs. We elected to be taxed as a REIT under the federal income tax laws beginning January 1, 2001. As a REIT, we are required, among other things, to distribute at least 90% of our taxable income to shareholders each year. We presently intend to pay common stock dividends of $0.4125 per quarter ($1.65 per share on an annual basis), and commenced doing so with the quarterly dividend declared in September 2001. We presently intend to pay quarterly dividends of $0.44375 per share of preferred stock ($1.775 per share on an annual basis) until dividends declared per share of common stock in any calendar year exceed $1.5691, at which time preferred shareholders will participate in the excess common stock dividends 9

GETTY REALTY CORP. AND SUBSIDIARIES Continued declared for the calendar year on an "as converted" basis. Payment of dividends is subject to market conditions, our financial condition, the distribution preferences of our preferred stock and other factors, and therefore cannot be assured. We declared cash common stock dividends of $0.4125 for each of the quarters during fiscal 2002 and for the last two quarters of fiscal 2001 and $0.15 per share for the first two quarters of fiscal 2001 and for each of the quarters during fiscal December 2000. We also declared quarterly preferred stock dividends of $0.44375 per share during each of these calendar and fiscal periods, except that the dividend for the last quarter of fiscal 2002 was $0.53523 per share (consisting of a stated quarterly dividend of $0.44375 plus $0.09148 based on the participation feature discussed above). A special one-time earnings and profits distribution was paid in August 2001 to holders of Getty common stock and Series A Preferred stock. Common shareholders received $4.15 per share and Series A Preferred shareholders received $4.20 per share. These dividends aggregated $40.7 million for fiscal 2002, $90.7 million for fiscal 2001 and $12.8 million for fiscal December 2000, respectively. 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. In March and June 2000, the Board approved the purchase of up to an aggregate of 500,000 and 300,000 additional shares of Common and Preferred Stock, respectively. From December 1999 through December 31, 2000, we repurchased 1,019,298 shares of Common Stock and 23,030 shares of Preferred Stock at an aggregate cost of $12.7 million. The remaining balance of these shares held in treasury was cancelled in December 2002. Capital expenditures, including acquisitions, for fiscal 2002, 2001 and fiscal December 2000 amounted to $2.8 million, $0.5 million and $1.3 million, respectively, which included $0.2 million and $0.4 million for fiscal 2001 and fiscal December 2000, respectively, for the replacement of underground storage tanks and vapor recovery facilities at gasoline stations. Expenditures with respect to replacement of these items had been our responsibility after the spin-off at certain properties where we retained environmental liabilities and obligations. On February 3, 2003, we entered into a definitive asset purchase agreement to acquire 42 retail service station and convenience store properties that we have been leasing for the past twelve years. The aggregate purchase price for these properties is approximately $13.1 million. Forty of the locations are subleased to Marketing under the Master Lease through at least 2015. Rental property expenses for fiscal 2002 includes approximately $1.3 million of rent expense relating to these properties. The leases are subject to scheduled rent escalations and renewal options through 2056. Since the seller has agreed to indemnify us for historical environmental costs, our exposure to environmental remediation expenses should not change because of the acquisition. CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS Our significant contractual obligations and commitments and our other commercial commitments are comprised of long-term debt, operating lease payments due to landlords and estimated environmental remediation expenditures, net of estimated recoveries from state underground storage tank funds. In addition, as a REIT we are required to pay dividends equal to at least 90% of our taxable income in order to continue to qualify as a REIT. Our contractual obligations and commercial commitments are summarized below (in thousands):

GETTY REALTY CORP. AND SUBSIDIARIES Continued declared for the calendar year on an "as converted" basis. Payment of dividends is subject to market conditions, our financial condition, the distribution preferences of our preferred stock and other factors, and therefore cannot be assured. We declared cash common stock dividends of $0.4125 for each of the quarters during fiscal 2002 and for the last two quarters of fiscal 2001 and $0.15 per share for the first two quarters of fiscal 2001 and for each of the quarters during fiscal December 2000. We also declared quarterly preferred stock dividends of $0.44375 per share during each of these calendar and fiscal periods, except that the dividend for the last quarter of fiscal 2002 was $0.53523 per share (consisting of a stated quarterly dividend of $0.44375 plus $0.09148 based on the participation feature discussed above). A special one-time earnings and profits distribution was paid in August 2001 to holders of Getty common stock and Series A Preferred stock. Common shareholders received $4.15 per share and Series A Preferred shareholders received $4.20 per share. These dividends aggregated $40.7 million for fiscal 2002, $90.7 million for fiscal 2001 and $12.8 million for fiscal December 2000, respectively. 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. In March and June 2000, the Board approved the purchase of up to an aggregate of 500,000 and 300,000 additional shares of Common and Preferred Stock, respectively. From December 1999 through December 31, 2000, we repurchased 1,019,298 shares of Common Stock and 23,030 shares of Preferred Stock at an aggregate cost of $12.7 million. The remaining balance of these shares held in treasury was cancelled in December 2002. Capital expenditures, including acquisitions, for fiscal 2002, 2001 and fiscal December 2000 amounted to $2.8 million, $0.5 million and $1.3 million, respectively, which included $0.2 million and $0.4 million for fiscal 2001 and fiscal December 2000, respectively, for the replacement of underground storage tanks and vapor recovery facilities at gasoline stations. Expenditures with respect to replacement of these items had been our responsibility after the spin-off at certain properties where we retained environmental liabilities and obligations. On February 3, 2003, we entered into a definitive asset purchase agreement to acquire 42 retail service station and convenience store properties that we have been leasing for the past twelve years. The aggregate purchase price for these properties is approximately $13.1 million. Forty of the locations are subleased to Marketing under the Master Lease through at least 2015. Rental property expenses for fiscal 2002 includes approximately $1.3 million of rent expense relating to these properties. The leases are subject to scheduled rent escalations and renewal options through 2056. Since the seller has agreed to indemnify us for historical environmental costs, our exposure to environmental remediation expenses should not change because of the acquisition. CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS Our significant contractual obligations and commitments and our other commercial commitments are comprised of long-term debt, operating lease payments due to landlords and estimated environmental remediation expenditures, net of estimated recoveries from state underground storage tank funds. In addition, as a REIT we are required to pay dividends equal to at least 90% of our taxable income in order to continue to qualify as a REIT. Our contractual obligations and commercial commitments are summarized below (in thousands):
Total -------$ 43,962 923 -------$ 44,885 ======== $ 29,603 (15,428) -------$ 14,175 ======== 2003 -------$ 10,125 79 -------$ 10,204 ======== $ 9,254 (4,929) -------$ 4,325 ======== 2004 -------$ 9,042 74 -------$ 9,116 ======== $ 5,121 (2,630) -------$ 2,491 ======== 2005 -------$ 7,512 285 -------$ 7,797 ======== $ 4,247 (1,780) -------$ 2,467 ======== 2006 -------$ 5,271 30 -------$ 5,301 ======== $ 3,303 (1,591) -------$ 1,712 ======== 20 ---$ 3 ---$ 3 ==== $ 1 (1 ---$ ====

Operating leases Long-term debt Total contractual obligations Environmental remediation expenditures Recoveries from state underground storage tank funds Net environmental remediation expenditures

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10

GETTY REALTY CORP. AND SUBSIDIARIES continued We lease substantially all of our properties on a long-term basis to Marketing under the Master Lease. The Master Lease is a "triple-net" lease, with Marketing directly responsible for the cost of all taxes, maintenance, repair, insurance, environmental remediation and other operating expenses. We estimate that Marketing makes annual real estate tax payments for properties leased under the Master Lease of approximately $10.0 million and makes additional payments for other operating expenses related to our properties, including environmental remediation costs other than those liabilities that were retained by us. These costs are not reflected in our consolidated financial statements. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our accompanying consolidated financial statements include the accounts of Getty Realty Corp. and our whollyowned subsidiaries. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in its financial statements. We have made our best estimates and judgments relating to certain amounts that are included in our financial statements, giving due consideration to the accounting policies selected and materiality. We do not believe that there is a great likelihood that materially different amounts would be reported related to the application of the accounting policies described below. Application of these accounting policies, however, involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Our accounting policies are described in note 1 to the consolidated financial statements. We believe the more critical of our accounting policies are as follows: Revenue recognition--We earn revenue primarily from operating leases with Marketing and other tenants. We recognize income under the Master Lease with Marketing on the straight-line method, which effectively recognizes contractual lease payments evenly over the initial fifteen-year term of the lease. A critical assumption in applying this accounting method is that the tenant will make all contractual lease payments during the initial lease term and that the deferred rent receivable of $15.1 million recorded as of December 31, 2002 will be collected when due, in accordance with the 2% annual rent escalations provided for in the Master Lease. Accordingly, we may be required to reverse a portion of the recorded deferred rent receivable if it becomes apparent that a property will be disposed of before the end of the initial lease term or if Marketing fails to make its contractual lease payments. Impairment of long-lived assets--Real estate assets represent "long-lived" assets for accounting purposes. We review the recorded value of long-lived assets for impairment in value whenever any events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. We may become aware of indicators of potentially impaired assets upon tenant or landlord lease renewals, upon receipt of notices of potential governmental takings and zoning issues, or upon other events that occur in the normal course of business that would cause us to review the operating results of the property. We believe our real estate assets are not carried at amounts in excess of their estimated net realizable fair value amounts. Income taxes--Our future financial results generally will not reflect provisions for current or deferred federal income taxes since we elected to be taxed as a REIT effective January 1, 2001. Our intention is to operate in a manner that will allow us to continue to be taxed as a REIT and, as a result, we do not expect to pay substantial corporate-level federal income taxes. Many of the REIT requirements, however, are highly technical and complex. If we were to fail to meet the requirements, we may be subject to federal income tax. Certain states do not follow the federal REIT rules and we have included provisions for these taxes in rental property expenses. Environmental costs and recoveries from state underground storage tank funds--We provide for estimated future costs for known environmental remediation requirements when it is probable that a liability has been incurred and the amount of remediation costs can be reasonably estimated (see "Environmental Matters" below). Frequently

GETTY REALTY CORP. AND SUBSIDIARIES continued We lease substantially all of our properties on a long-term basis to Marketing under the Master Lease. The Master Lease is a "triple-net" lease, with Marketing directly responsible for the cost of all taxes, maintenance, repair, insurance, environmental remediation and other operating expenses. We estimate that Marketing makes annual real estate tax payments for properties leased under the Master Lease of approximately $10.0 million and makes additional payments for other operating expenses related to our properties, including environmental remediation costs other than those liabilities that were retained by us. These costs are not reflected in our consolidated financial statements. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our accompanying consolidated financial statements include the accounts of Getty Realty Corp. and our whollyowned subsidiaries. The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in its financial statements. We have made our best estimates and judgments relating to certain amounts that are included in our financial statements, giving due consideration to the accounting policies selected and materiality. We do not believe that there is a great likelihood that materially different amounts would be reported related to the application of the accounting policies described below. Application of these accounting policies, however, involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Our accounting policies are described in note 1 to the consolidated financial statements. We believe the more critical of our accounting policies are as follows: Revenue recognition--We earn revenue primarily from operating leases with Marketing and other tenants. We recognize income under the Master Lease with Marketing on the straight-line method, which effectively recognizes contractual lease payments evenly over the initial fifteen-year term of the lease. A critical assumption in applying this accounting method is that the tenant will make all contractual lease payments during the initial lease term and that the deferred rent receivable of $15.1 million recorded as of December 31, 2002 will be collected when due, in accordance with the 2% annual rent escalations provided for in the Master Lease. Accordingly, we may be required to reverse a portion of the recorded deferred rent receivable if it becomes apparent that a property will be disposed of before the end of the initial lease term or if Marketing fails to make its contractual lease payments. Impairment of long-lived assets--Real estate assets represent "long-lived" assets for accounting purposes. We review the recorded value of long-lived assets for impairment in value whenever any events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. We may become aware of indicators of potentially impaired assets upon tenant or landlord lease renewals, upon receipt of notices of potential governmental takings and zoning issues, or upon other events that occur in the normal course of business that would cause us to review the operating results of the property. We believe our real estate assets are not carried at amounts in excess of their estimated net realizable fair value amounts. Income taxes--Our future financial results generally will not reflect provisions for current or deferred federal income taxes since we elected to be taxed as a REIT effective January 1, 2001. Our intention is to operate in a manner that will allow us to continue to be taxed as a REIT and, as a result, we do not expect to pay substantial corporate-level federal income taxes. Many of the REIT requirements, however, are highly technical and complex. If we were to fail to meet the requirements, we may be subject to federal income tax. Certain states do not follow the federal REIT rules and we have included provisions for these taxes in rental property expenses. Environmental costs and recoveries from state underground storage tank funds--We provide for estimated future costs for known environmental remediation requirements when it is probable that a liability has been incurred and the amount of remediation costs can be reasonably estimated (see "Environmental Matters" below). Frequently the best estimate of cost for a component of the liability can only be identified as a range, and no amount within the range is a better estimate of the liability than any other amount. In that circumstance, GAAP requires that the minimum of the range be accrued for that cost component. Since environmental exposures are difficult to assess and estimate and knowledge about these liabilities is not known upon the occurrence of a single event, but rather is gained over a continuum of events, we believe that it is appropriate that our accrual estimates are adjusted as

the remediation treatment progresses, as circumstances change and as environmental contingencies become more clearly defined and reasonably estimable. Recoveries of environmental costs from state underground storage tank remediation funds, with respect to past and future spending, are accrued as income based on estimated recovery rates when such recoveries are considered probable. A critical assumption in accruing for these recoveries 11

GETTY REALTY CORP. AND SUBSIDIARIES Continued is that the state underground storage tank fund programs will be administered and funded in the future in a manner that is consistent with past practices and that future environmental spending will be eligible for reimbursement under these programs. ENVIRONMENTAL MATTERS We are subject to numerous existing federal, state and local laws and regulations, including matters relating to the protection of the environment. Currently, environmental expenses are principally attributable to remediation, monitoring and governmental agency reporting incurred in connection with contaminated properties. In prior periods, a larger portion of the expenses also included soil disposal and the replacement or upgrading of underground storage tanks ("USTs") to meet federal, state and local environmental standards, as well as routine monitoring and tank testing. Under the Master Lease with Marketing, and in accordance with leases with other tenants, we agreed to bring the leased properties with known environmental contamination to regulatory or contractual closure ("Closure") in an economical manner and, thereafter, transfer all future environmental risks to our tenants. Generally, upon achieving Closure at an individual property, our environmental liability under the lease for that property will be satisfied and future remediation obligations will be the responsibility of our tenant. We have agreed to pay all costs relating to, and to indemnify Marketing for, environmental liabilities and obligations scheduled in the Master Lease. We will continue to collect recoveries from certain state UST remediation funds related to these environmental liabilities. We have also agreed to provide limited environmental indemnification to Marketing for pre-existing environmental conditions at six terminals owned by us. Under the indemnification agreement, Marketing will pay the first $1.5 million of costs and expenses incurred in connection with remediating any such pre-existing conditions, Marketing will share equally with us the next $8.5 million of those costs and expenses and Marketing will pay all additional costs and expenses over $10.0 million. Our indemnification responsibility under this agreement is capped at $4.25 million and expires in December 2010. We have not accrued a liability for this indemnification agreement since it is uncertain that any significant amounts will be required to be paid under the agreement. 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 in accordance with GAAP. The environmental remediation liability is estimated based on the level and impact of contamination for each property. The accrued liability is the aggregate of the best estimate of cost for each component of the liability. If the best estimate of cost for a component of the liability can only be identified as a range, and no amount within the range is a better estimate than any other amount, the minimum of the range is accrued for that cost component. Recoveries of environmental costs from state underground storage tank remediation funds, with respect to both past and future environmental spending, are accrued as income based on estimated recovery rates when such recoveries are considered probable. 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 our liability for probable and reasonably estimable environmental remediation costs, on a property by property basis, we consider among other things, enacted laws and regulations, assessments of contamination and the quality of information available, currently available technologies for treatment, alternative methods of remediation and prior experience. These accrual estimates are subject to significant change, and are

GETTY REALTY CORP. AND SUBSIDIARIES Continued is that the state underground storage tank fund programs will be administered and funded in the future in a manner that is consistent with past practices and that future environmental spending will be eligible for reimbursement under these programs. ENVIRONMENTAL MATTERS We are subject to numerous existing federal, state and local laws and regulations, including matters relating to the protection of the environment. Currently, environmental expenses are principally attributable to remediation, monitoring and governmental agency reporting incurred in connection with contaminated properties. In prior periods, a larger portion of the expenses also included soil disposal and the replacement or upgrading of underground storage tanks ("USTs") to meet federal, state and local environmental standards, as well as routine monitoring and tank testing. Under the Master Lease with Marketing, and in accordance with leases with other tenants, we agreed to bring the leased properties with known environmental contamination to regulatory or contractual closure ("Closure") in an economical manner and, thereafter, transfer all future environmental risks to our tenants. Generally, upon achieving Closure at an individual property, our environmental liability under the lease for that property will be satisfied and future remediation obligations will be the responsibility of our tenant. We have agreed to pay all costs relating to, and to indemnify Marketing for, environmental liabilities and obligations scheduled in the Master Lease. We will continue to collect recoveries from certain state UST remediation funds related to these environmental liabilities. We have also agreed to provide limited environmental indemnification to Marketing for pre-existing environmental conditions at six terminals owned by us. Under the indemnification agreement, Marketing will pay the first $1.5 million of costs and expenses incurred in connection with remediating any such pre-existing conditions, Marketing will share equally with us the next $8.5 million of those costs and expenses and Marketing will pay all additional costs and expenses over $10.0 million. Our indemnification responsibility under this agreement is capped at $4.25 million and expires in December 2010. We have not accrued a liability for this indemnification agreement since it is uncertain that any significant amounts will be required to be paid under the agreement. 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 in accordance with GAAP. The environmental remediation liability is estimated based on the level and impact of contamination for each property. The accrued liability is the aggregate of the best estimate of cost for each component of the liability. If the best estimate of cost for a component of the liability can only be identified as a range, and no amount within the range is a better estimate than any other amount, the minimum of the range is accrued for that cost component. Recoveries of environmental costs from state underground storage tank remediation funds, with respect to both past and future environmental spending, are accrued as income based on estimated recovery rates when such recoveries are considered probable. 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 our liability for probable and reasonably estimable environmental remediation costs, on a property by property basis, we consider among other things, enacted laws and regulations, assessments of contamination and the quality of information available, currently available technologies for treatment, alternative methods of remediation and prior experience. These accrual estimates are subject to significant change, and are adjusted as the remediation treatment progresses, as circumstances change and as these contingencies become more clearly defined and reasonably estimable. As of December 31, 2002, we have remediation action plans in place for 348 (85%) of the 411 properties for which we retained environmental responsibility. Sixty-three properties (15%) remain in the assessment phase, which when completed will likely result in a change in estimate for those properties. As of December 31, 2002 and 2001, we had accrued $27.9 million and $27.3 million, respectively, as

management's best estimate for probable and reasonably estimable environmental remediation costs. As of December 31, 2002 and 2001, we had also recorded $13.4 million and $14.3 million, respectively, as management's best estimate for recoveries from state UST remediation funds related to environmental obligations and liabilities. It is possible that estimated aggregate future cash expenditures for environmental remediation from 2003 through 2012 could approximate $29.6 million, or approximately $14.2 million on a net basis after estimated recoveries 12

GETTY REALTY CORP. AND SUBSIDIARIES continued from state UST remediation funds of approximately $15.4 million. We estimate that approximately 75 properties will not have Closure at the end of this period and that spending and recoveries will continue after 2012, although at amounts significantly reduced from current levels. Neither the aggregate cash expenditure nor the accrued environmental remediation costs, nor their related recoveries, have been adjusted for inflation or discounted to present value. It is possible that net cash expenditures estimated through 2012, and thereafter, could exceed the net amount accrued as of December 31, 2002. During 2003, we estimate that our net environmental spending will be approximately $4.3 million and our business plan for 2003 reflects a net change in estimated remediation costs of approximately $5.0 million. In view of the uncertainties associated with environmental expenditures, however, we believe it is possible that future actual net expenditures could be substantially higher than these estimates. Adjustments to accrued liabilities for environmental remediation costs will be reflected in our financial statements as they become probable and reasonably estimable as defined by GAAP. For fiscal 2002, fiscal 2001 and fiscal December 2000, net environmental expenses included in our consolidated statements of operations amounted to $8.7 million, $10.8 million and $8.5 million, respectively, which amounts were net of probable recoveries from state UST remediation funds. Although environmental costs may have a significant impact on results of operations for any single fiscal year or interim period, we believe that such costs will not have a material adverse effect on our longterm 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. We cannot predict if state underground storage tank fund programs will be administered and funded in the future in a manner that is consistent with past practices and if future environmental spending will continue to be eligible for reimbursement under these programs. 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 that of our tenants, and could require substantial additional expenditures for future remediation. NEW ACCOUNTING PRONOUNCEMENTS In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. ("SFAS") 141, "Business Combinations" and SFAS 142, "Goodwill and Other Intangible Assets." SFAS 141 requires the purchase method of accounting to be used for all business combinations initiated after June 30, 2001 and addresses the initial recognition and measurement of goodwill and other intangible assets acquired. SFAS 142 requires that goodwill not be amortized but instead be measured for impairment at least annually, or when events indicate that there may be an impairment. We adopted SFAS 142 effective January 1, 2002. In June 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement Obligations." SFAS 143 requires that obligations associated with the retirement of tangible long-lived assets be recognized at their fair value if the asset retirement obligation results from the normal operation of those assets and a reasonable estimate of fair value can be made. SFAS 143 requires increasing the value of the related long-lived asset, if any, to the extent of the asset retirement liability initially recognized and, thereafter, reducing the value of the asset as additional depreciation expense. Upon adoption of SFAS 143, we will use a present value technique to measure certain of our environmental remediation obligations and the related recoveries from state underground storage tank funds.

GETTY REALTY CORP. AND SUBSIDIARIES continued from state UST remediation funds of approximately $15.4 million. We estimate that approximately 75 properties will not have Closure at the end of this period and that spending and recoveries will continue after 2012, although at amounts significantly reduced from current levels. Neither the aggregate cash expenditure nor the accrued environmental remediation costs, nor their related recoveries, have been adjusted for inflation or discounted to present value. It is possible that net cash expenditures estimated through 2012, and thereafter, could exceed the net amount accrued as of December 31, 2002. During 2003, we estimate that our net environmental spending will be approximately $4.3 million and our business plan for 2003 reflects a net change in estimated remediation costs of approximately $5.0 million. In view of the uncertainties associated with environmental expenditures, however, we believe it is possible that future actual net expenditures could be substantially higher than these estimates. Adjustments to accrued liabilities for environmental remediation costs will be reflected in our financial statements as they become probable and reasonably estimable as defined by GAAP. For fiscal 2002, fiscal 2001 and fiscal December 2000, net environmental expenses included in our consolidated statements of operations amounted to $8.7 million, $10.8 million and $8.5 million, respectively, which amounts were net of probable recoveries from state UST remediation funds. Although environmental costs may have a significant impact on results of operations for any single fiscal year or interim period, we believe that such costs will not have a material adverse effect on our longterm 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. We cannot predict if state underground storage tank fund programs will be administered and funded in the future in a manner that is consistent with past practices and if future environmental spending will continue to be eligible for reimbursement under these programs. 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 that of our tenants, and could require substantial additional expenditures for future remediation. NEW ACCOUNTING PRONOUNCEMENTS In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. ("SFAS") 141, "Business Combinations" and SFAS 142, "Goodwill and Other Intangible Assets." SFAS 141 requires the purchase method of accounting to be used for all business combinations initiated after June 30, 2001 and addresses the initial recognition and measurement of goodwill and other intangible assets acquired. SFAS 142 requires that goodwill not be amortized but instead be measured for impairment at least annually, or when events indicate that there may be an impairment. We adopted SFAS 142 effective January 1, 2002. In June 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement Obligations." SFAS 143 requires that obligations associated with the retirement of tangible long-lived assets be recognized at their fair value if the asset retirement obligation results from the normal operation of those assets and a reasonable estimate of fair value can be made. SFAS 143 requires increasing the value of the related long-lived asset, if any, to the extent of the asset retirement liability initially recognized and, thereafter, reducing the value of the asset as additional depreciation expense. Upon adoption of SFAS 143, we will use a present value technique to measure certain of our environmental remediation obligations and the related recoveries from state underground storage tank funds. Changes in net environmental liabilities resulting from the passage of time will be recorded as accretion expense in the statement of operations. We believe that the cumulative effect of adopting SFAS 143 effective January 1, 2003, as required, will not have a significant impact on our financial position and results of operations. In addition, we estimate that accretion expense will approximate $1.1 million in 2003. The accretion expense may be partially offset by a lower net change in estimated remediation costs than would have been recognized prior to the adoption of SFAS 143. In October 2001, the FASB issued SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 provides guidance on the recognition of impairment losses on long-lived assets, redefines

discontinued operations and addresses how the results of a discontinued operation are to be measured and presented. We adopted SFAS 144 effective January 1, 2002. In April 2002, the FASB issued SFAS 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS 145 eliminates the requirement that gains and losses from the extinguishment of debt be classified as an extraordinary item. Further, SFAS 145 eliminates an inconsistency 13

GETTY REALTY CORP. AND SUBSIDIARIES Continued between the accounting for sale-leaseback transactions and certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS 145 also makes several other technical corrections. We adopted SFAS 145 effective April 1, 2002. In July 2002, the FASB issued SFAS 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS 146 states that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred and not at the date of an entity's commitment to a plan, as previously required. The provisions of SFAS 146 will be applied for exit and disposal activities that are initiated after December 31, 2002. We adopted SFAS 146 effective October 1, 2002. In November 2002, the FASB issued FASB Interpretation No. ("FIN") 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." FIN 45 requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee regardless if the guarantor receives separately identifiable consideration. We adopted FIN 45 effective December 31, 2002. In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based Compensation--Transition and Disclosure--an amendment of SFAS 123." SFAS 148 provides alternative transition methods for a voluntary change to the fair value basis of accounting for stock-based employee compensation. SFAS 148 requires disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation, description of transition method utilized and the effect of the method used on reported results. We adopted SFAS 148 effective December 31, 2002. We will voluntarily change to the fair value basis of accounting for stock-based employee compensation effective January 1, 2003, which we believe will not have a significant impact on our financial position and results of operations. In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest Entities." FIN 46 provides guidance on identifying entities for which control is achieved through means other than through voting rights and how to determine if the entity should be consolidated. In addition, FIN 46 requires all enterprises with a significant interest in the entity to make additional disclosures. We adopted FIN 46 effective December 31, 2002. The adoption of SFAS 141, SFAS 142, SFAS 144, SFAS 145, SFAS 146, SFAS 148, FIN 45 and FIN 46 has not had a significant effect, individually or in the aggregate, on our financial position or results of operations. 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," "projects," "estimates" and similar expressions, we intend to identify forward-looking statements. These forwardlooking 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 tenant and on rentals from companies engaged in the petroleum marketing and convenience store businesses;

GETTY REALTY CORP. AND SUBSIDIARIES Continued between the accounting for sale-leaseback transactions and certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS 145 also makes several other technical corrections. We adopted SFAS 145 effective April 1, 2002. In July 2002, the FASB issued SFAS 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS 146 states that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred and not at the date of an entity's commitment to a plan, as previously required. The provisions of SFAS 146 will be applied for exit and disposal activities that are initiated after December 31, 2002. We adopted SFAS 146 effective October 1, 2002. In November 2002, the FASB issued FASB Interpretation No. ("FIN") 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." FIN 45 requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee regardless if the guarantor receives separately identifiable consideration. We adopted FIN 45 effective December 31, 2002. In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based Compensation--Transition and Disclosure--an amendment of SFAS 123." SFAS 148 provides alternative transition methods for a voluntary change to the fair value basis of accounting for stock-based employee compensation. SFAS 148 requires disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation, description of transition method utilized and the effect of the method used on reported results. We adopted SFAS 148 effective December 31, 2002. We will voluntarily change to the fair value basis of accounting for stock-based employee compensation effective January 1, 2003, which we believe will not have a significant impact on our financial position and results of operations. In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest Entities." FIN 46 provides guidance on identifying entities for which control is achieved through means other than through voting rights and how to determine if the entity should be consolidated. In addition, FIN 46 requires all enterprises with a significant interest in the entity to make additional disclosures. We adopted FIN 46 effective December 31, 2002. The adoption of SFAS 141, SFAS 142, SFAS 144, SFAS 145, SFAS 146, SFAS 148, FIN 45 and FIN 46 has not had a significant effect, individually or in the aggregate, on our financial position or results of operations. 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," "projects," "estimates" and similar expressions, we intend to identify forward-looking statements. These forwardlooking 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 tenant and on rentals from companies engaged in the petroleum marketing and convenience store businesses; competition for properties and tenants; risk of tenant non-renewal; the effects of regulations; our expectations as to the cost of completing environmental remediation; and the impact of our electing to be taxed as a REIT, including subsequent failure to qualify as a REIT and future dependence on external sources of capital. 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 that 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. 14

GETTY REALTY CORP. AND SUBSIDIARIES ENVIRONMENTAL REMEDIATION OVERVIEW We manage our environmental remediation obligations with the assistance of Delta Environmental Consultants, an international environmental consulting firm. Environmental remediation projects are typically broken down into specific "lifecycle phases" ranging from preliminary monitoring through closure activities. Chart 1 details our actual environmental remediation spending on a gross basis and net of reimbursements from state underground storage tank funds for each of our last three fiscal years. Chart 2 details the lifecycle phase distribution of the 411 properties for which we retain responsibility as of December 31, 2002, as well as the projected gross environmental remediation spending (on a cash basis) through 2012 and our current environmental reserve amount attributable to each lifecycle phase. Chart 3 details our net projected environmental remediation spending through 2012. These projections are subject to significant variations; see "Environmental Matters" in Management's Discussion and Analysis on page 12. [PERFORMANCE CHART 1] Actual Environmental Remediation Spending (in thousands)
-------------------------------------------------------------------------------December 31, 2000(2) December 31, 2001 December 31, 2002 -------------------------------------------------------------------------------Gross Spending (1) $14,579 $12,730 $8,546 -------------------------------------------------------------------------------Reimbursements $ 2,699 $ 5,171 $3,431 -------------------------------------------------------------------------------Net Spending $11,880 $ 7,559 $5,115 --------------------------------------------------------------------------------

(1) Includes remediation spending only. Does not include legal fees, consulting fees and legal settlement costs. (2) 2000 Figures are based on an 11 month fiscal year. [PERFORMANCE CHART 2] Accrued Environmental Remediation Costs and Projected Gross Spending by Lifecycle Phase (in thousands, except number of properties)
--------------------------------------------------------------------------------------------------------Preliminary Remedial Action Plan Operation & Monitoring Assessment Implementation Maintenance --------------------------------------------------------------------------------------------------------Number of Properties 4 59 19 128 --------------------------------------------------------------------------------------------------------Projected Gross Spending Through 2012(*) $47 $4,211 $3,759 $15,758 --------------------------------------------------------------------------------------------------------Accrued Environmental Remediation Costs as of 12/31/02 $47 $3,824 $3,657 $15,746 ---------------------------------------------------------------------------------------------------------

GETTY REALTY CORP. AND SUBSIDIARIES ENVIRONMENTAL REMEDIATION OVERVIEW We manage our environmental remediation obligations with the assistance of Delta Environmental Consultants, an international environmental consulting firm. Environmental remediation projects are typically broken down into specific "lifecycle phases" ranging from preliminary monitoring through closure activities. Chart 1 details our actual environmental remediation spending on a gross basis and net of reimbursements from state underground storage tank funds for each of our last three fiscal years. Chart 2 details the lifecycle phase distribution of the 411 properties for which we retain responsibility as of December 31, 2002, as well as the projected gross environmental remediation spending (on a cash basis) through 2012 and our current environmental reserve amount attributable to each lifecycle phase. Chart 3 details our net projected environmental remediation spending through 2012. These projections are subject to significant variations; see "Environmental Matters" in Management's Discussion and Analysis on page 12. [PERFORMANCE CHART 1] Actual Environmental Remediation Spending (in thousands)
-------------------------------------------------------------------------------December 31, 2000(2) December 31, 2001 December 31, 2002 -------------------------------------------------------------------------------Gross Spending (1) $14,579 $12,730 $8,546 -------------------------------------------------------------------------------Reimbursements $ 2,699 $ 5,171 $3,431 -------------------------------------------------------------------------------Net Spending $11,880 $ 7,559 $5,115 --------------------------------------------------------------------------------

(1) Includes remediation spending only. Does not include legal fees, consulting fees and legal settlement costs. (2) 2000 Figures are based on an 11 month fiscal year. [PERFORMANCE CHART 2] Accrued Environmental Remediation Costs and Projected Gross Spending by Lifecycle Phase (in thousands, except number of properties)
--------------------------------------------------------------------------------------------------------Preliminary Remedial Action Plan Operation & Monitoring Assessment Implementation Maintenance --------------------------------------------------------------------------------------------------------Number of Properties 4 59 19 128 --------------------------------------------------------------------------------------------------------Projected Gross Spending Through 2012(*) $47 $4,211 $3,759 $15,758 --------------------------------------------------------------------------------------------------------Accrued Environmental Remediation Costs as of 12/31/02 $47 $3,824 $3,657 $15,746 ---------------------------------------------------------------------------------------------------------

[PERFORMANCE CHART 3] Projected Environmental

Remediation Spending Through 2012* (in thousands, except number of properties)
--------------------------------------------------------------------------------------------------------2003 2004 2005 2006 2007 2008 2009 2010 2011 --------------------------------------------------------------------------------------------------------Gross Spending $ 9,254 $ 5,121 $ 4,247 $ 3,303 $ 1,963 $ 1,323 $ 1,003 $ 1,077 $ 831 --------------------------------------------------------------------------------------------------------Reimbursements $ 4,929 $ 2,630 $ 1,780 $ 1,591 $ 1,082 $ 770 $ 504 $ 425 $ 484 --------------------------------------------------------------------------------------------------------Net Spending $ 4,325 $ 2,491 $ 2,467 $ 1,712 $ 881 $ 553 $ 499 $ 652 $ 347 --------------------------------------------------------------------------------------------------------Property Count 411 351 297 250 171 139 114 94 76 ---------------------------------------------------------------------------------------------------------

- This projection does not represent "reasonably estimable and probable" spending as defined by GAAP. - 2012 gross spending includes closure costs that will occur in 2012 and beyond. - Reimbursement for spending in 2012 and earlier which is projected to be received in 2013 and beyond is included with 2012 reimbursement receipts in the chart above. * Figures not adjusted for present value or inflation. 15

GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
Eleven months ended December 31, -----------2000 -------$ 53,916 378 -------54,294 -------10,980 8,498 3,257 9,196 3,413 -------35,344 -------18,950 7,875 -------11,075 5,098 -------$ 5,977 ======== $ $ .47 .47 12,818 12,818

Year ended December 31, --------------------2002 2001 --------------Revenues: Revenues from rental properties Other income, net Total revenues Expenses: Rental property expenses Environmental expenses, net General and administrative expenses Depreciation and amortization Interest expense Total expenses Earnings before income taxes (Benefit) provision for income taxes Net earnings Preferred stock dividends Net earnings applicable to common shareholders Net earnings per common share: Basic Diluted Weighted average common shares outstanding: Basic Diluted $ 67,157 2,488 -------69,645 -------11,975 8,668 3,691 9,016 132 -------33,482 -------36,163 --------36,163 5,350 -------$ 30,813 ======== $ $ 1.44 1.44 21,436 21,446 $ 68,322 2,153 -------70,475 -------11,433 10,808 4,944 9,281 1,926 -------38,392 -------32,083 (36,648) -------68,731 17,124 -------$ 51,607 ======== $ $ 3.18 3.18 16,237 16,244

GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
Eleven months ended December 31, -----------2000 -------$ 53,916 378 -------54,294 -------10,980 8,498 3,257 9,196 3,413 -------35,344 -------18,950 7,875 -------11,075 5,098 -------$ 5,977 ======== $ $ .47 .47 12,818 12,818

Year ended December 31, --------------------2002 2001 --------------Revenues: Revenues from rental properties Other income, net Total revenues Expenses: Rental property expenses Environmental expenses, net General and administrative expenses Depreciation and amortization Interest expense Total expenses Earnings before income taxes (Benefit) provision for income taxes Net earnings Preferred stock dividends Net earnings applicable to common shareholders Net earnings per common share: Basic Diluted Weighted average common shares outstanding: Basic Diluted $ 67,157 2,488 -------69,645 -------11,975 8,668 3,691 9,016 132 -------33,482 -------36,163 --------36,163 5,350 -------$ 30,813 ======== $ $ 1.44 1.44 21,436 21,446 $ 68,322 2,153 -------70,475 -------11,433 10,808 4,944 9,281 1,926 -------38,392 -------32,083 (36,648) -------68,731 17,124 -------$ 51,607 ======== $ $ 3.18 3.18 16,237 16,244

The accompanying notes are an integral part of these consolidated financial statements. 16

GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
December 31, ----------------------2002 2001 ---------------ASSETS: Real Estate: Land Buildings and improvements

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

$ 135,372 172,682 --------308,054 (93,986) --------214,068 33,726 5,193 15,116 13,396 992

$ 134,71 176,63 -------311,35 (89,24 -------222,11 37,52 4,81 8,38 14,27 1,07

GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
December 31, ----------------------2002 2001 ---------------ASSETS: Real Estate: Land Buildings and improvements

Less--accumulated depreciation Real estate, net Cash and equivalents Mortgages and accounts receivable, net Deferred rent receivable Recoveries from state underground storage tank funds, net Prepaid expenses and other assets Total assets Liabilities and Shareholders' Equity: Mortgages payable Dividends payable Accounts payable and accrued expenses Environmental remediation costs Total liabilities Commitments and contingencies (notes 4, 5 and 7) Shareholders' 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 2,865,768 at December 31, 2002 and 2,888,798 at December 31, 2001 Common stock, par value $.01 per share; authorized 50,000,000 shares; issued 21,442,299 at December 31, 2002 and 22,441,168 at December 31, 2001 Paid-in capital Dividends paid in excess of earnings Preferred stock held in treasury, at cost; 23,030 shares at December 31, 2001 Common stock held in treasury, at cost; 1,018,848 shares at December 31, 2001 Total shareholders' equity Total liabilities and shareholders' equity

$ 135,372 172,682 --------308,054 (93,986) --------214,068 33,726 5,193 15,116 13,396 992 --------$ 282,491 ========= 923 10,379 9,839 27,924 --------49,065 ========= $

$ 134,71 176,63 -------311,35 (89,24 -------222,11 37,52 4,81 8,38 14,27 1,07 -------$ 288,18 ======== 99 10,10 12,01 27,29 -------50,41 ======== $

71,644

72,22

214 186,664 (25,096) ----------233,426 --------$ 282,491 =========

22 198,57 (20,53 (43 (12,27 -------237,77 -------$ 288,18 ========

The accompanying notes are an integral part of these consolidated financial statements. 17

GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Eleven months ended December 31, -----------2000 ---------

Year ended December 31, -----------------------2002 2001 -----------------

GETTY REALTY CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Eleven months ended December 31, -----------2000 --------$ 11,075

Year ended December 31, -----------------------2002 2001 ----------------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 Gain on dispositions of real estate Deferred rental revenue Changes in assets and liabilities: Mortgages and accounts receivable, net Recoveries from state underground storage tank funds, net Prepaid expenses and other assets Accounts payable and accrued expenses Environmental remediation costs Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures Property acquisitions Proceeds from dispositions of real estate Net cash provided by investing activities CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings (repayments) under credit lines, net Repayment of mortgages payable Cash dividends paid Net proceeds from common stock offering Stock options and treasury stock, net Net cash used in financing activities Net increase (decrease) in cash and equivalents Cash and equivalents at beginning of period Cash and equivalents at end of period $ 36,163 $ 68,731

9,016 -(1,153) (6,728) (374) 880 80 (2,179) 632 --------36,337 --------(86) (2,735) 3,000 --------179 ---------(74) (40,451) -212 --------(40,313) --------(3,797) 37,523 --------$ 33,726 =========

9,281 (36,479) (990) (8,388) 653 (2,319) 4,435 (2,611) 3,921 --------36,234 --------(536) -2,201 --------1,665 --------(27,000) (21,972) (83,757) 131,522 108 --------(1,099) --------36,800 723 --------$ 37,523 =========

9,196 4,093 (1,106) -552 (2,074) (3,060) (227) (3,053) --------15,396 --------(1,133) (155) 2,879 --------1,591 --------12,200 (6,224) (10,874) -(12,017) --------(16,915) --------72 651 --------$ 723 =========

Supplemental disclosures of cash flow information Cash paid (refunded) during the period for: Interest Income taxes, net Recoveries from state underground storage tank funds Environmental remediation costs

$

132 662 (3,431) 8,545

$

2,102 (3,632) (5,171) 12,730

$

3,721 6,988 (2,699) 14,579

The accompanying notes are an integral part of these consolidated financial statements. 18

GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation: The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of Getty Realty Corp. and its wholly-owned subsidiaries (the "Company"). The Company is a real estate investment trust ("REIT") specializing in the ownership and leasing of service stations, convenience stores and petroleum marketing terminals. The Company manages and evaluates its operations as a single segment. All significant intercompany accounts and transactions have been eliminated. Change in Year-End: On December 12, 2000, the Company's Board of Directors approved a change in the fiscal year end to December 31 from January 31. The change resulted in an eleven-month accounting period ending December 31, 2000. For additional information regarding the change in year-end, see note 12. 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 assets are 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. Use of Estimates, Judgments and Assumptions: The financial statements have been prepared in conformity with GAAP, which requires management to make its best estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. While all available information has been considered, actual results could differ from those estimates, judgments and assumptions. Estimates, judgments and assumptions underlying the accompanying consolidated financial statements include, but are not limited to, deferred rent receivable, recoveries from state underground storage tank funds, environmental remediation costs, depreciation, impairment of long-lived assets, litigation, accrued expenses and income taxes. 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 of its petroleum marketing business (see note 2), the Company was self-insured for workers' compensation, general liability and vehicle liability up to predetermined amounts above which thirdparty insurance applied. Since the spin-off, the Company has maintained insurance coverage subject to certain 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. The accrued liability is the aggregate of the best estimates of cost for each component of the liability. If the best estimate of costs for a component of the liability can only be identified as a range, and no amount within the range is a better estimate than any other amount, the minimum of the range is accrued for that cost component. Recoveries of environmental costs from state underground storage tank remediation funds, with respect to past and future spending, are accrued as income based on estimated recovery rates when such recoveries are considered probable. Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of: Assets are written down to fair value when events and circumstances indicate that the assets might be impaired and the projected undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. Assets held for disposal are written down to fair value less disposition costs.

19

GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Income Taxes: The Company and its subsidiaries file a consolidated federal income tax return. Effective January 1, 2001, the Company elected to qualify, and believes it is operating so as to qualify, as a REIT for federal income tax purposes. Accordingly, the Company generally will not be subject to federal income tax, provided that distributions to its shareholders equal at least the amount of its REIT taxable income as defined under the Internal Revenue Code. If the Company sells any property within ten years after its REIT election that is not exchanged for a like-kind property, it will be taxed on the built-in gain realized from such sale at the highest corporate rate. This ten-year built-in gain tax period will end in 2011. Deferred income taxes were 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 when the Company was taxed as a C-corp. In order to initially qualify for REIT status, the Company was required, among other items, to make a distribution to shareholders in an amount at least equal to its accumulated "earnings and profits" (as defined in the Internal Revenue Code) from the years it operated as a taxable corporation. On August 1, 2001, the Company paid the earnings and profits distribution to its shareholders with a portion of the net proceeds of its 8.9 million share common stock offering (see note 3), in an amount that the Company estimated was required in order for it to qualify as a REIT (see note 5). Accordingly, in the third quarter of 2001, the Company recorded a nonrecurring tax benefit to reverse previously accrued income tax liabilities that it would no longer be required to pay as a REIT. Revenue Recognition: The Company earns rental income under operating leases with tenants. Minimum lease rentals are recognized on a straight-line basis over the term of the leases. The cumulative difference between lease revenue recognized under this method and the contractual lease payment terms is recorded as deferred rent receivable on the consolidated balance sheet. 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 10,000 shares and 7,000 shares for the years ended December 31, 2002 and 2001, respectively. For the years ended December 31, 2002 and 2001 and the eleven months ended December 31, 2000, conversion of the Series A Participating Convertible Redeemable Preferred Stock into common stock utilizing the if-converted method would have been antidilutive, and therefore conversion was not assumed for purposes of computing diluted earnings per common share. Stock-Based Compensation: The Company accounts for its stock option plan (see note 10) using the intrinsic value method. Had compensation cost for the Company's stock option plan been accounted for using the fair value method, the Company's stock based employee compensation expense, net of tax effects, net earnings and net earnings per share on a basic and diluted basis would have been as follows (in thousands except per share amounts):
Year ended December 31, 2002 ----------------------As Reported Pro Forma ------------------Stock-based employee compensation expense, net of tax effects in 2000 Net earnings Net earnings per common share $ -36,163 1.44 $ 124 36,039 1.43 Year ended December 31, 2001 ------------------As Reported Pro Forma ------------------$ 122 68,731 3.18 $ 356 68,497 3.16 Eleve Decemb ------As Repo ------$ 11,0 .

(*) The Company elected to be taxed as a REIT effective January 1, 2001. Prior thereto the Company was taxed as a C-corp., and accordingly, the amounts presented for the eleven months ended December 31, 2000 are net of tax effects.

GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Income Taxes: The Company and its subsidiaries file a consolidated federal income tax return. Effective January 1, 2001, the Company elected to qualify, and believes it is operating so as to qualify, as a REIT for federal income tax purposes. Accordingly, the Company generally will not be subject to federal income tax, provided that distributions to its shareholders equal at least the amount of its REIT taxable income as defined under the Internal Revenue Code. If the Company sells any property within ten years after its REIT election that is not exchanged for a like-kind property, it will be taxed on the built-in gain realized from such sale at the highest corporate rate. This ten-year built-in gain tax period will end in 2011. Deferred income taxes were 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 when the Company was taxed as a C-corp. In order to initially qualify for REIT status, the Company was required, among other items, to make a distribution to shareholders in an amount at least equal to its accumulated "earnings and profits" (as defined in the Internal Revenue Code) from the years it operated as a taxable corporation. On August 1, 2001, the Company paid the earnings and profits distribution to its shareholders with a portion of the net proceeds of its 8.9 million share common stock offering (see note 3), in an amount that the Company estimated was required in order for it to qualify as a REIT (see note 5). Accordingly, in the third quarter of 2001, the Company recorded a nonrecurring tax benefit to reverse previously accrued income tax liabilities that it would no longer be required to pay as a REIT. Revenue Recognition: The Company earns rental income under operating leases with tenants. Minimum lease rentals are recognized on a straight-line basis over the term of the leases. The cumulative difference between lease revenue recognized under this method and the contractual lease payment terms is recorded as deferred rent receivable on the consolidated balance sheet. 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 10,000 shares and 7,000 shares for the years ended December 31, 2002 and 2001, respectively. For the years ended December 31, 2002 and 2001 and the eleven months ended December 31, 2000, conversion of the Series A Participating Convertible Redeemable Preferred Stock into common stock utilizing the if-converted method would have been antidilutive, and therefore conversion was not assumed for purposes of computing diluted earnings per common share. Stock-Based Compensation: The Company accounts for its stock option plan (see note 10) using the intrinsic value method. Had compensation cost for the Company's stock option plan been accounted for using the fair value method, the Company's stock based employee compensation expense, net of tax effects, net earnings and net earnings per share on a basic and diluted basis would have been as follows (in thousands except per share amounts):
Year ended December 31, 2002 ----------------------As Reported Pro Forma ------------------Stock-based employee compensation expense, net of tax effects in 2000 Net earnings Net earnings per common share $ -36,163 1.44 $ 124 36,039 1.43 Year ended December 31, 2001 ------------------As Reported Pro Forma ------------------$ 122 68,731 3.18 $ 356 68,497 3.16 Eleve Decemb ------As Repo ------$ 11,0 .

(*) The Company elected to be taxed as a REIT effective January 1, 2001. Prior thereto the Company was taxed as a C-corp., and accordingly, the amounts presented for the eleven months ended December 31, 2000 are net of tax effects. 20

The fair value of the options granted during the years ended December 31, 2002 and 2001 and the eleven months ended December 31, 2000 were estimated as $0.56, $1.79 and $4.11 per share, respectively, on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:
Eleven months ended December 31, ------------2000 ------------4.1% 35% 5.2% 7

Expected Dividend Yield Expected volatility Risk-free interest rate Expected life of options (years)

Year ended December 31, -------------------2002 2001 ---------------9.0% 10.2% 18% 35% 3.6% 4.5% 7 7

New Accounting Pronouncements: In July 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. ("SFAS") 141, "Business Combinations" and SFAS 142, "Goodwill and Other Intangible Assets." SFAS 141 requires the purchase method of accounting to be used for all business combinations initiated after June 30, 2001 and addresses the initial recognition and measurement of goodwill and other intangible assets acquired. SFAS 142 requires that goodwill not be amortized but instead be measured for impairment at least annually, or when events indicate that there may be an impairment. The Company adopted SFAS 142 effective January 1, 2002. In June 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement Obligations." SFAS 143 requires that obligations associated with the retirement of tangible long-lived assets be recognized at their fair value if the asset retirement obligation results from the normal operation of those assets and a reasonable estimate of fair value can be made. SFAS 143 requires increasing the value of the related long-lived asset, if any, to the extent of the asset retirement liability initially recognized and, thereafter, reducing the value of the asset as additional depreciation expense. Upon adoption of SFAS 143, the Company will use a present value technique to measure certain environmental remediation obligations and the related recoveries from state underground storage tank funds. Changes in net environmental liabilities resulting from the passage of time will be recorded as accretion expense in the statement of operations. The Company believes that the cumulative effect of adopting SFAS 143 effective January 1, 2003, as required, will not have a significant impact on the Company's financial position and results of operations. In addition, the Company estimates that accretion expense will approximate $1.1 million in 2003. The accretion expense may be partially offset by a lower net change in estimated remediation costs than would have been recognized prior to the adoption of SFAS 143. In October 2001, the FASB issued SFAS 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS 144 provides guidance on the recognition of impairment losses on long-lived assets, redefines discontinued operations and addresses how the results of a discontinued operation are to be measured and presented. The Company adopted SFAS 144 effective January 1, 2002. In April 2002, the FASB issued SFAS 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS 145 eliminates the requirement that gains and losses from the extinguishment of debt be classified as an extraordinary item. Further, SFAS 145 eliminates an inconsistency between the accounting for sale-leaseback transactions and certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS 145 also makes several other technical corrections. The Company adopted SFAS 145 effective April 1, 2002. 21

GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In July 2002, the FASB issued SFAS 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS 146 states that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred and not at the date of an entity's commitment to a plan, as

GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS In July 2002, the FASB issued SFAS 146, "Accounting for Costs Associated with Exit or Disposal Activities." SFAS 146 states that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred and not at the date of an entity's commitment to a plan, as previously required. The provisions of SFAS 146 will be applied for exit and disposal activities that are initiated after December 31, 2002. The Company adopted SFAS 146 effective October 1, 2002. In November 2002, the FASB issued FASB Interpretation No. ("FIN") 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." FIN 45 requires that upon issuance of a guarantee, the guarantor must recognize a liability for the fair value of the obligation it assumes under that guarantee regardless if the guarantor receives separately identifiable consideration. The Company adopted FIN 45 effective December 31, 2002. In December 2002, the FASB issued SFAS 148, "Accounting for Stock-Based Compensation-Transition and Disclosure--an amendment of FAS 123." SFAS 148 provides alternative transition methods for a voluntary change to the fair value basis of accounting for stock-based employee compensation. SFAS 148 requires disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation, description of transition method utilized and the effect of the method used on reported results. The Company adopted SFAS 148 effective December 31, 2002. The Company will voluntarily change to the fair value basis of accounting effective January 1, 2003, which the Company believes will not have a significant impact on the Company's financial position and results of operations. In January 2003, the FASB issued FIN 46, "Consolidation of Variable Interest Entities." FIN 46 provides guidance on identifying entities for which control is achieved through means other than through voting rights and how to determine if the entity should be consolidated. In addition, FIN 46 requires all enterprises with a significant interest in the entity to make additional disclosures. The Company adopted FIN 46 effective December 31, 2002. The adoption of SFAS 141, SFAS 142, SFAS 144, SFAS 145, SFAS 146, SFAS 148, FIN 45 and FIN 46 has not had a significant effect, individually or in the aggregate, on the Company's financial position or results of operations. 2. SPIN-OFF The Company leases substantially all of its properties on a long-term net basis to Getty Petroleum Marketing Inc. ("Marketing"), which was spun-off to the Company's shareholders as a separate publicly held company in March 1997. In December 2000, Marketing was acquired by a subsidiary of OAO Lukoil, one of Russia's largest oil companies. 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 a Reorganization and Distribution Agreement, Master Lease Agreement, Tax Sharing Agreement, Services Agreement and Trademark License Agreement. Under the Services Agreement, Marketing provided certain administrative and technical services to the Company and the Company provided certain limited services to Marketing. Substantially all of the services provided pursuant to the Services Agreement were discontinued as of April 1, 2001. 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 $226,000 for the year ended December 31, 2001 and $582,000 for the eleven months ended December 31, 2000, and are included in general and administrative expenses in the consolidated statements of operations. 22

GETTY REALTY CORP. AND SUBSIDIARIES CONTINUED 3. STOCK OFFERING On August 1, 2001, the Company closed a public offering of 8,855,000 shares of its common stock (including exercise of the underwriters' over-allotment option) at a price of $16.00 per share. A portion of the $131,522,000 net proceeds of the offering was used to pay a $64,162,000 special one-time "earnings and profits" cash distribution to shareholders. The special distribution of $4.15 per common share and $4.20 per Series A preferred share was paid on August 2, 2001. Purchasers of Getty common stock in the public offering did not receive any portion of the special distribution on any of the shares of common stock they purchased. The Company used $17,512,000 of the net proceeds from the offering to repay all amounts then outstanding under its lines of credit and $19,837,000 to retire a mortgage loan. The remaining $30,011,000 of the net proceeds will be used for general corporate purposes. 4. LEASES The Company and Marketing are parties to an amended and restated Master Lease Agreement (the "Master Lease"), which became effective on December 9, 2000. As of December 31, 2002, the Master Lease included 963 service station and convenience store properties and nine distribution terminals and bulk plants, 301 of which are leased by the Company from third parties. The Master Lease has an initial term of fifteen years commencing December 9, 2002, and generally provides Marketing with options for three renewal terms of ten years each and a final renewal option of three years and ten months extending to 2049 (or such shorter initial or renewal term as the underlying lease may provide). The Master Lease includes provisions for 2% annual rent escalations. The Master Lease is a unitary lease and, accordingly, Marketing's exercise of renewal options must be on an "all or nothing" basis. The Master Lease is a "triple-net" lease, with Marketing responsible for the cost of all taxes, maintenance, repair, insurance and other operating expenses. In general, Marketing remains responsible for any violations of nonenvironmental laws that existed prior to the time of the amendment of the Master Lease. The Company has agreed to indemnify Marketing for certain violations. The Company's indemnification responsibility for certain violations is capped at $1.375 million and expired in December 2002 unless curing of any violation commenced prior to such date. The Company has agreed to indemnify Marketing for certain pre-existing environmental conditions at six terminals which are owned by the Company. Under the agreement, Marketing will pay the first $1.5 million of costs and expenses incurred in connection with remediating any such pre-existing conditions, Marketing and the Company will share equally the next $8.5 million of those costs and expenses and Marketing will pay all additional costs and expenses over $10.0 million. The Company's indemnification responsibility for certain pre-existing environmental conditions at six terminals is capped at $4.25 million and expires in December 2010. The Company has not accrued a liability for these indemnification agreements since it is uncertain that any significant amounts will be required to be paid under the agreements. Under the Master Lease, the Company also continues to have additional ongoing environmental remediation obligations for 319 scheduled properties as of December 31, 2002 (see note 7). The Company estimates that Marketing makes annual real estate tax payments for properties leased under the Master Lease of approximately $10.0 million and makes additional payments for other operating expenses related to these properties, including environmental remediation costs other than those liabilities that were retained by the Company. These costs, which have been assumed by Marketing under the terms of the Master Lease, are not reflected in the consolidated financial statements. 23

GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company and Marketing entered into revised trademark license agreements in December 2000, providing

GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company and Marketing entered into revised trademark license agreements in December 2000, providing for an exclusive license to Marketing for use of certain of the Company's trademarks, service marks and trade names (including the name "Getty") used in connection with Marketing's business within Marketing's current marketing territory and a non-exclusive license in the remaining United States subject to a gallonage-based royalty. The trademark agreements have the same termination date as the Master Lease. Revenues from rental properties for the years ended December 31, 2002 and 2001 and the eleven months ended December 31, 2000 were $67,157,000, $68,322,000 and $53,916,000, respectively, of which $58,104,000, $57,469,000 and $51,524,000, respectively, were received from Marketing under the Master Lease. In addition, revenues from rental properties for the years ended December 31, 2002 and 2001 includes $6,728,000 and $8,388,000, respectively, of deferred rental revenue accrued due to recognition of rental revenue under the Master Lease on a straight-line basis. Future minimum annual rentals receivable from Marketing under the Master Lease and from other tenants, which have terms in excess of one year as of December 31, 2002, are as follows (in thousands):
Other Tenants -------$ 2,115 1,869 1,482 1,160 802 2,892 -------$ 10,320 ========

Year ending December 31, 2003 2004 2005 2006 2007 Thereafter

Marketing --------$ 58,648 59,009 59,707 60,305 60,040 486,845 -------$784,554 ========

Total -------$ 60,763 60,878 61,189 61,465 60,842 489,737 -------$794,874 ========

Rent expense, substantially all of which consists of minimum rentals on non-cancelable operating leases, amounted to $10,805,000, $11,036,000 and $10,273,000 for the years ended December 31, 2002 and 2001 and the eleven months ended December 31, 2000, respectively, and is included in rental property expenses. Rent received under subleases for the years ended December 31, 2002 and 2001 and the eleven months ended December 31, 2000 was $17,373,000, $18,034,000 and $16,955,000, respectively. The Company has obligations to lessors under noncancelable operating leases which have terms (excluding renewal term options) in excess of one year, principally for gasoline stations and convenience stores. Substantially all of these leases contain renewal options and rent escalation clauses. The leased properties have a remaining lease term averaging over 17 years, including renewal options. Future minimum annual rentals payable under such leases, excluding renewal options, are as follows (in thousands):
Year ending December 31, 2003 2004 2005 2006 2007 Thereafter

$10,125 9,042 7,512 5,271 3,107 8,905 ------$43,962 =======

24

GETTY REALTY CORP. AND SUBSIDIARIES

GETTY REALTY CORP. AND SUBSIDIARIES CONTINUED 5. COMMITMENTS AND CONTINGENCIES In order to qualify as a REIT, among other items, the Company paid a $64,162,000 special one-time "earnings and profits" (as defined in the Internal Revenue Code) cash distribution to shareholders in August 2001. Determination of accumulated earnings and profits for federal income tax purposes is extremely complex. Should the Internal Revenue Service successfully assert that the Company's accumulated earnings and profits were greater than the amount distributed, the Company may fail to qualify as a REIT; however, the Company may avoid losing its REIT status by paying a deficiency dividend to eliminate any remaining accumulated earnings and profits. The Company may have to borrow money or sell assets to pay such a deficiency dividend. 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. Temporary cash investments are held in an institutional money market fund and federal agency discount notes. The Company leases substantially all of its properties on a long-term net basis to Marketing under a Master Lease (see note 4). Marketing operated substantially all of the Company's petroleum marketing businesses when it was spun-off to the Company's shareholders as a separate publicly held company in March 1997. In December 2000, Marketing was acquired by a subsidiary of OAO Lukoil, one of Russia's largest oil companies. The Company's financial results depend largely on rental income from Marketing, and to a lesser extent on rental income from other tenants, 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 petroleum marketing margins and rental income from its dealers. The petroleum marketing industry has been and continues to be volatile and highly competitive. Marketing has made all required monthly rental payments under the Master Lease when due. 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 the petroleum marketing business. These matters are not expected to have a material adverse effect on the Company's financial condition or results of operations. 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. As of December 31, 2002 and December 31, 2001, the Company's consolidated balance sheets included, in accounts payable and accrued expenses, $1,602,000 and $2,179,000, respectively, relating to insurance obligations that may be deemed to have arisen prior to the spin-off of the Marketing business. The Company's consolidated statements of operations for the years ended December 31, 2002 and 2001 and for the eleven months ended December 31, 2000 included, in general and administrative expenses, charges (credits) of $(873,000), $225,000 and $285,000, respectively, for insurance. Since the spin-off, the Company has maintained insurance coverage subject to certain deductibles. 6. DEBT Mortgages payable consists of $923,000 of real estate mortgages, bearing interest at a weighted average interest rate of 7.45%, due in varying amounts through May 1, 2015. Aggregate principal payments in subsequent years for real estate mortgages are as follows: 2003--$79,000; 2004--$74,000; 2005--$285,000; 2006--$30,000; 2007--$30,000 and $425,000 thereafter. These mortgages payable are collateralized by real estate having an aggregate net book value of approximately $1,134,000 as of December 31, 2002. As of December 31, 2002, the Company had an uncommitted line of credit with a bank in the amount of $25,000,000, of which $3,300,000 was utilized in the form of outstanding letters of credit relating to insurance obligations. Borrowings under the line of credit are unsecured and bear interest at the bank's prime rate or, at the Company's option, LIBOR plus 1.25%. The line of credit is subject to annual renewal in August 2003 at the discretion of the bank.

25

GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. ENVIRONMENTAL REMEDIATION COSTS The Company is subject to numerous existing federal, state and local laws and regulations, including matters relating to the protection of the environment. Currently, environmental expenses are principally attributable to remediation, monitoring, and governmental agency reporting incurred in connection with contaminated properties. In prior periods a larger portion of the expenses also included soil disposal and the replacement or upgrading of underground storage tanks ("USTs") to meet federal, state and local environmental standards, as well as routine monitoring and tank testing. For the years ended December 31, 2002 and 2001 and the eleven months ended December 31, 2000, net environmental expenses included in the Company's consolidated statements of operations were $8,668,000, $10,808,000 and $8,498,000, respectively, which amounts were net of estimated recoveries from state UST remediation funds. Under the Master Lease with Marketing, and in accordance with our leases with our other tenants, the Company agreed to bring the leased properties with known environmental contamination to regulatory or contractual closure ("Closure") in an economical manner, and thereafter, transfer all future environmental risks to its tenants. Generally, upon achieving Closure at each individual property, the Company's environmental liability under its lease for that property will be satisfied and future remediation obligations will be the tenant's responsibility. The Company has agreed to pay all costs relating to, and to indemnify Marketing for, environmental liabilities and obligations scheduled in the Master Lease. The Company will continue to collect recoveries from state UST remediation funds related to these environmental liabilities. The environmental remediation liability is estimated based on the level and impact of contamination for each property. The accrued liability is the aggregate of the best estimate of cost for each component of the liability. If the best estimate of cost for a component of the liability can only be identified as a range, and no amount within the range is a better estimate than any other amount, the minimum of the range is accrued for that cost component. 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 liability for probable and reasonably estimable environmental remediation costs, the Company considers among other things, enacted laws and regulations, assessments of contamination and the quality of information available, currently available technologies for treatment, alternative methods of remediation and prior experience. These accrual estimates are subject to significant change, and are adjusted as the remediation treatment progresses, as circumstances change, and as these contingencies become more clearly defined and reasonably estimable. As of December 31, 2002 and 2001, the Company had accrued $27,924,000 and $27,292,000, respectively, as management's best estimate for probable and reasonably estimable environmental remediation costs. As of December 31, 2002 and 2001, the Company had also recorded $13,396,000 and $14,276,000, respectively, as management's best estimate for recoveries from state UST remediation funds related to environmental obligations and liabilities. It is possible that estimated aggregate cash expenditures for environmental remediation from 2003 through 2012 could approximate $29.6 million or approximately $14.2 million on a net basis after estimated recoveries from state UST remediation funds of approximately $15.4 million. The Company estimates that approximately 75 properties will not have Closure at the end of this period and that spending and recoveries will continue after 2012, although at amounts significantly reduced from current levels. Neither the aggregate cash expenditure estimate nor the accrued environmental remediation costs, nor their related recoveries, have been adjusted for inflation or discounted to present value. It is possible that net cash expenditures estimated through 2012, and thereafter, could exceed the net amount accrued as of December 31, 2002. In view of the uncertainties associated with environmental expenditures, however, the Company believes it is possible that future actual net expenditures could be substantially higher than these estimates. Adjustments to

GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. ENVIRONMENTAL REMEDIATION COSTS The Company is subject to numerous existing federal, state and local laws and regulations, including matters relating to the protection of the environment. Currently, environmental expenses are principally attributable to remediation, monitoring, and governmental agency reporting incurred in connection with contaminated properties. In prior periods a larger portion of the expenses also included soil disposal and the replacement or upgrading of underground storage tanks ("USTs") to meet federal, state and local environmental standards, as well as routine monitoring and tank testing. For the years ended December 31, 2002 and 2001 and the eleven months ended December 31, 2000, net environmental expenses included in the Company's consolidated statements of operations were $8,668,000, $10,808,000 and $8,498,000, respectively, which amounts were net of estimated recoveries from state UST remediation funds. Under the Master Lease with Marketing, and in accordance with our leases with our other tenants, the Company agreed to bring the leased properties with known environmental contamination to regulatory or contractual closure ("Closure") in an economical manner, and thereafter, transfer all future environmental risks to its tenants. Generally, upon achieving Closure at each individual property, the Company's environmental liability under its lease for that property will be satisfied and future remediation obligations will be the tenant's responsibility. The Company has agreed to pay all costs relating to, and to indemnify Marketing for, environmental liabilities and obligations scheduled in the Master Lease. The Company will continue to collect recoveries from state UST remediation funds related to these environmental liabilities. The environmental remediation liability is estimated based on the level and impact of contamination for each property. The accrued liability is the aggregate of the best estimate of cost for each component of the liability. If the best estimate of cost for a component of the liability can only be identified as a range, and no amount within the range is a better estimate than any other amount, the minimum of the range is accrued for that cost component. 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 liability for probable and reasonably estimable environmental remediation costs, the Company considers among other things, enacted laws and regulations, assessments of contamination and the quality of information available, currently available technologies for treatment, alternative methods of remediation and prior experience. These accrual estimates are subject to significant change, and are adjusted as the remediation treatment progresses, as circumstances change, and as these contingencies become more clearly defined and reasonably estimable. As of December 31, 2002 and 2001, the Company had accrued $27,924,000 and $27,292,000, respectively, as management's best estimate for probable and reasonably estimable environmental remediation costs. As of December 31, 2002 and 2001, the Company had also recorded $13,396,000 and $14,276,000, respectively, as management's best estimate for recoveries from state UST remediation funds related to environmental obligations and liabilities. It is possible that estimated aggregate cash expenditures for environmental remediation from 2003 through 2012 could approximate $29.6 million or approximately $14.2 million on a net basis after estimated recoveries from state UST remediation funds of approximately $15.4 million. The Company estimates that approximately 75 properties will not have Closure at the end of this period and that spending and recoveries will continue after 2012, although at amounts significantly reduced from current levels. Neither the aggregate cash expenditure estimate nor the accrued environmental remediation costs, nor their related recoveries, have been adjusted for inflation or discounted to present value. It is possible that net cash expenditures estimated through 2012, and thereafter, could exceed the net amount accrued as of December 31, 2002. In view of the uncertainties associated with environmental expenditures, however, the Company believes it is possible that future actual net expenditures could be substantially higher than these estimates. Adjustments to accrued liabilities for environmental remediation costs will be reflected in the Company's financial statements as they become probable and reasonably estimable as defined by GAAP. Although future environmental expenses

may have a significant impact on results of operations for any single fiscal year or interim period, the Company currently believes that such costs will not have a material adverse effect on the Company's long-term financial position. 26

GETTY REALTY CORP. AND SUBSIDIARIES CONTINUED 8. INCOME TAXES In the third quarter of 2001, the Company elected to be taxed as a REIT effective January 1, 2001, and recorded a nonrecurring tax benefit of approximately $36.6 million to reverse accrued income tax liabilities that it would no longer be required to pay as a REIT. Deferred income taxes were 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 when the Company was taxed as a C-corp. Net cash paid for income taxes for the year ended December 31, 2002 of $662,000 includes amounts related to state and local income taxes for jurisdictions that do not follow the federal tax rules, which are provided for in rental property expenses. Net cash paid for income taxes also includes audit settlements for periods when the Company was taxed as a C-corp. The C-corp. provision for income taxes of $7,875,000 for the eleven months ended December 31, 2000 consisted of current federal taxes of $2,435,000, deferred federal taxes of $3,638,000, current state taxes of $667,000 and deferred state taxes of $1,135,000. The C-corp. provision for income taxes is higher than the $6,594,000 expected provision at the statutory federal income tax rate due to $1,175,000 of state and local income taxes, net of federal benefit, and $106,000 of other items. 9. SHAREHOLDERS' EQUITY A summary of the changes in shareholders' equity for the years ended December 31, 2002 and 2001 and the eleven months ended December 31, 2000 is as follows (in thousands, except per share amounts):
Preferred Stock --------------Shares Amount ------ ------2,889 $72,220 Common Stock --------------Shares Amount ----------13,567 $ 136 Retained Earnings (Deficit) --------$ 3,114 11,075

BALANCE, JANUARY 31, 2000 Net earnings Cash dividends: Common--$.60 per share Preferred--$1.775 per share Purchase of preferred stock for treasury Purchase of common stock for treasury, net BALANCE, DECEMBER 31, 2000 Net earnings Cash dividends: Common--$5.275 per share Preferred--$5.975 per share Issuance of treasury stock Stock offering, net of costs Stock options BALANCE, DECEMBER 31, 2001 Net earnings Cash dividends: Common--$1.65

Paid-in Capital -------$ 67,036

(7,672) (5,098)

-----2,889

-----72,220

-----13,567

-----136

-------67,036

--------1,419 68,731

(73,563) (17,124) 8,855 19 -----22,441 88 -----224 1 131,434 104 -------198,575

-----2,889

-----72,220

--------(20,537) 36,163

GETTY REALTY CORP. AND SUBSIDIARIES CONTINUED 8. INCOME TAXES In the third quarter of 2001, the Company elected to be taxed as a REIT effective January 1, 2001, and recorded a nonrecurring tax benefit of approximately $36.6 million to reverse accrued income tax liabilities that it would no longer be required to pay as a REIT. Deferred income taxes were 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 when the Company was taxed as a C-corp. Net cash paid for income taxes for the year ended December 31, 2002 of $662,000 includes amounts related to state and local income taxes for jurisdictions that do not follow the federal tax rules, which are provided for in rental property expenses. Net cash paid for income taxes also includes audit settlements for periods when the Company was taxed as a C-corp. The C-corp. provision for income taxes of $7,875,000 for the eleven months ended December 31, 2000 consisted of current federal taxes of $2,435,000, deferred federal taxes of $3,638,000, current state taxes of $667,000 and deferred state taxes of $1,135,000. The C-corp. provision for income taxes is higher than the $6,594,000 expected provision at the statutory federal income tax rate due to $1,175,000 of state and local income taxes, net of federal benefit, and $106,000 of other items. 9. SHAREHOLDERS' EQUITY A summary of the changes in shareholders' equity for the years ended December 31, 2002 and 2001 and the eleven months ended December 31, 2000 is as follows (in thousands, except per share amounts):
Preferred Stock --------------Shares Amount ------ ------2,889 $72,220 Common Stock --------------Shares Amount ----------13,567 $ 136 Retained Earnings (Deficit) --------$ 3,114 11,075

BALANCE, JANUARY 31, 2000 Net earnings Cash dividends: Common--$.60 per share Preferred--$1.775 per share Purchase of preferred stock for treasury Purchase of common stock for treasury, net BALANCE, DECEMBER 31, 2000 Net earnings Cash dividends: Common--$5.275 per share Preferred--$5.975 per share Issuance of treasury stock Stock offering, net of costs Stock options BALANCE, DECEMBER 31, 2001 Net earnings Cash dividends: Common--$1.65 per share Preferred--$1.8665 per share Issuance of treasury stock Cancellation of treasury stock Stock options

Paid-in Capital -------$ 67,036

(7,672) (5,098)

-----2,889

-----72,220

-----13,567

-----136

-------67,036

--------1,419 68,731

(73,563) (17,124) 8,855 19 -----22,441 88 -----224 1 131,434 104 -------198,575

-----2,889

-----72,220

--------(20,537) 36,163

(35,372) (5,350) 1 (23) (576) (1,019) 20 (10) (12,120) 208

BALANCE, DECEMBER 31, 2002

-----2,866 ======

-----$71,644 ======

-----21,442 ======

-----$214 ======

-------$186,664 ========

--------$ (25,096)(a) =========

BALANCE, JANUARY 31, 2000 Net earnings Cash dividends: Common--$.60 per share Preferred--$1.775 per share Purchase of preferred stock for treasury Purchase of common stock for treasury, net BALANCE, DECEMBER 31, 2000 Net earnings Cash dividends: Common--$5.275 per share Preferred--$5.975 per share Issuance of treasury stock Stock offering, net of costs Stock options BALANCE, DECEMBER 31, 2001 Net earnings Cash dividends: Common--$1.65 per share Preferred--$1.8665 per share Issuance of treasury stock Cancellation of treasury stock Stock options BALANCE, DECEMBER 31, 2002

Preferred Stock Held in Treasury, at Cost -----------------Shares Amount ----------(1) $ (14)

Common Stock Held in Treasury, at Cost -----------------Shares Amount -----------(60) $ (681)

Total -------$141,811 11,075

(7,672) (5,098) (22) (416) (959) -----(1,019) (11,601) ------(12,282) (416) (11,601) -------128,099 68,731

-----(23)

-----(430)

(73,563) (17,124) 4 131,522 104 -------237,773 36,163

3

-----(23)

-----(430)

-----(1,019)

------(12,279)

(35,372) (5,350) 4 -208 -------$233,426 ========

3 23 ------====== 430 -----$ -====== 1,019 ------====== 12,276 ------$ -=======

(a) Net of $103,803 transferred from retained earnings to common stock and paid-in capital as a result of accumulated stock dividends. 27

GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 on an "as converted basis," the cash dividends declared per share of common stock for the calendar year. 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 liquidation, dissolution or winding up of the Company, holders of the preferred stock will have the right to a liquidation preference in the amount of $25.00 per share, plus accumulated, accrued and unpaid dividends, before any

GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 on an "as converted basis," the cash dividends declared per share of common stock for the calendar year. 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 liquidation, dissolution or winding up of the Company, holders of the preferred stock will have the right to a liquidation preference 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 approximated $118,000, $94,000 and $87,000 for the years ended December 31, 2002 and 2001 and the eleven months ended December 31, 2000, 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 (see note 1). 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. The following is a schedule of stock option prices and activity relating to the Company's Plan:
YEAR ENDED Year ended Eleven mo DECEMBER 31, December 31, Dece ---------------------------------------------------------------2002 2001 2 ---------------------------------------------------WEIGHTED Weighted AVERAGE Average NUMBER EXERCISE Number Exercise Number OF SHARES PRICE of Shares Price of Shares --------------------------------------318,349 $ 19.47 404,740 $ 20.24 373,740 69,500 18.30 69,500 16.15 53,750 (46,055) 15.78 (64,250) 14.29 -(16,996) 23.36 (91,641) 23.99 (22,750) -----------------------------------324,798 $ 19.05 318,349 $ 19.47 404,740 ======== ======== ======== ======== ======== 180,736 $ 20.88 205,162 $ 21.95 319,678 ======== ======== ======== ======== ======== 662,580 715,084 692,943 ======== ======== ========

Outstanding at beginning of period Granted Exercised Cancelled Outstanding at end of period Exercisable at end of period Available for grant at end of period

28

GETTY REALTY CORP. AND SUBSIDIARIES

GETTY REALTY CORP. AND SUBSIDIARIES CONTINUED The following table summarizes information concerning options outstanding and exercisable at December 31, 2002:
Options Outstanding ---------------------------------------------------------------------Weighted Average Remaining Range of Number Contractual Weighted Average Exercise Prices Outstanding Life (Years) Exercise Price ------------------------------------------------------$11.125-$14.50 54,065 7 $13.14 16.15 - 18.30 151,875 9 17.23 24.06 118,858 2 24.06 -------------------------------------324,798 ========= Options Exercisable -----------------------------

Number Exercisable ----------30,503 31,375 118,858 --------180,736 =========

Weighted Average Exercise Price ---------------$12.83 16.63 24.06 ----------

11. QUARTERLY FINANCIAL DATA The following is a summary of the quarterly interim results of operations for the years ended December 31, 2002 and 2001 (unaudited as to interim information) (in thousands, except per share amounts):
THREE MONTHS ENDED ----------------------------------------------------------MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, ----------------------------------------$ 16,877 $ 16,802 $ 16,746 $ 16,732 9,258 9,306 8,973 8,626 9,258 9,306 8,973 8,626 .37 .37 .36 .33

YEAR ENDED DECEMBER 31, 2002 Revenues from rental properties Earnings before income taxes Net earnings Diluted earnings per common share (a)

Year Ended December 31, 2001 Revenues from rental properties Earnings before income taxes Net earnings Diluted earnings per common share (a)

Three months ended ----------------------------------------------------------March 31, June 30, September 30, December 31, ----------------------------------------$ 17,146 $ 17,092 $ 16,971 $ 17,113 7,539 9,285 8,593 6,666 4,332 5,461 52,272 6,666 .24 .33 2.11 .25

(a) After giving effect to quarterly preferred stock dividends aggregating $5,350 and $5,088 for the years ended December 31, 2002 and 2001, respectively, and the portion of the one-time earnings and profits distribution paid to preferred shareholders in the third quarter of 2001 of $12,036. (b) Includes a benefit for income taxes of $36,648 due to the reversal of previously accrued income taxes that the Company would no longer be required to pay as a REIT. 29

GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12. RECAST AND TRANSITION PERIOD COMPARATIVE DATA The following table presents certain financial information comparing the audited results presented in the

GETTY REALTY CORP. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12. RECAST AND TRANSITION PERIOD COMPARATIVE DATA The following table presents certain financial information comparing the audited results presented in the consolidated statements of operations to the comparable unaudited prior periods (in thousands except per share amounts):
Year ended December 31, -------------------------2001 2000 --------------------(unaudited) $ 68,322 $ 58,822 =========== =========== $ 32,083 $ 20,628 (36,648) 8,699 --------------------68,731 11,929 17,124 5,098 --------------------$ 51,607 $ 6,831 =========== =========== $ $ 3.18 3.18 16,237 16,244 $ $ .53 .53 12,880 12,880 Eleven months ended December 31, ------------------------2000 1999 --------------------(unaudited) $ 53,916 $ 53,983 =========== =========== $ 18,950 $ 24,427 7,875 10,378 --------------------11,075 14,049 5,098 5,128 --------------------$ 5,977 $ 8,921 =========== =========== $ $ .47 .47 12,818 12,818 $ $ .66 .66 13,567 13,569

Revenues from rental properties Earnings before income taxes (Benefit) provision for income taxes Net earnings Preferred stock dividends Net earnings applicable to common shareholders Net earnings per common share: Basic Diluted Weighted average common shares outstanding: Basic Diluted

13. SUBSEQUENT EVENT On February 3, 2003, the Company entered into a definitive asset purchase agreement to acquire 42 retail service station and convenience store properties that it has been leasing for the past twelve years. The aggregate purchase price for these properties is approximately $13.1 million. Forty of the locations are subleased to Marketing under the Master Lease through at least 2015. Rental property expenses for the year ended December 31, 2002 includes approximately $1.3 million of rent expense relating to these properties. The initial terms of these leases expire in 2006 and are, thereafter, subject to renewal term options and scheduled rent escalations through 2056. The seller has agreed to indemnify the Company for historical environmental costs, and accordingly, the Company's exposure to environmental remediation expenses should not change because of the acquisition. 30

GETTY REALTY CORP. AND SUBSIDIARIES REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders 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 December 31, 2002 and 2001, and the results of their operations and their cash flows for the years ended December 31, 2002 and 2001 and the eleven months ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on

GETTY REALTY CORP. AND SUBSIDIARIES REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders 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 December 31, 2002 and 2001, and the results of their operations and their cash flows for the years ended December 31, 2002 and 2001 and the eleven months ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America. 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 of America, 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 our opinion.
/s/ PricewaterhouseCoopers LLP New York, New York February 3, 2003

31

GETTY REALTY CORP. AND SUBSIDIARIES CAPITAL STOCK Our common stock is traded on the New York Stock Exchange (symbol: "GTY"). At December 31, 2002, there were approximately 9,400 holders of record of our common stock. The price range of our common stock and cash dividends declared with respect to each share of common stock during the years ended December 31, 2002 and 2001 was as follows:
Price Range -------------------High Low --------------$ 19.47 $ 19.10 19.10 18.60 18.53 18.19 18.69 18.33 $ 20.00 22.05 21.79 15.45 $ 16.55 15.50 14.00 14.20

Period Ending December 31, 2002 September 30, 2002 June 30, 2002 March 31, 2002 December 31, 2001 September 30, 2001 June 30, 2001 March 31, 2001

Cash Dividends Per Share -------------$ .41250 .41250 .41250 .41250 $ .41250 4.56250(a) .15 .15

Our Series A preferred stock is traded on the New York Stock Exchange (symbol: "GTY PrA"). At December 31, 2002, there were approximately 400 holders of record of our preferred stock. The price range of our Series A preferred stock and cash dividends declared with respect to each share of preferred stock during the years ended December 31, 2002 and 2001 was as follows:
Price Range --------------------

Cash Dividends

GETTY REALTY CORP. AND SUBSIDIARIES CAPITAL STOCK Our common stock is traded on the New York Stock Exchange (symbol: "GTY"). At December 31, 2002, there were approximately 9,400 holders of record of our common stock. The price range of our common stock and cash dividends declared with respect to each share of common stock during the years ended December 31, 2002 and 2001 was as follows:
Price Range -------------------High Low --------------$ 19.47 $ 19.10 19.10 18.60 18.53 18.19 18.69 18.33 $ 20.00 22.05 21.79 15.45 $ 16.55 15.50 14.00 14.20

Period Ending December 31, 2002 September 30, 2002 June 30, 2002 March 31, 2002 December 31, 2001 September 30, 2001 June 30, 2001 March 31, 2001

Cash Dividends Per Share -------------$ .41250 .41250 .41250 .41250 $ .41250 4.56250(a) .15 .15

Our Series A preferred stock is traded on the New York Stock Exchange (symbol: "GTY PrA"). At December 31, 2002, there were approximately 400 holders of record of our preferred stock. The price range of our Series A preferred stock and cash dividends declared with respect to each share of preferred stock during the years ended December 31, 2002 and 2001 was as follows:
Price Range -------------------High Low --------------$ 25.50 $ 25.45 23.65 23.57 23.21 23.13 23.23 23.18 $ 23.40 26.14 25.05 20.90 $ 21.10 20.10 20.00 19.75

Period Ending December 31, 2002 September 30, 2002 June 30, 2002 March 31, 2002 December 31, 2002 September 30, 2002 June 30, 2002 March 31, 2002

Cash Dividends Per Share -------------$ .53523 .44375 .44375 .44375 $ .44375 4.64350 (a) .44375 .44375

(a) Includes a $4.15 and $4.20 special one-time earnings and profits cash distribution paid on August 2, 2001 to common and preferred shareholders, respectively. 32

. . . EXHIBIT 21. Subsidiaries of the Company.
Subsidiary ---------Getty Properties Corp. AOC Transport, Inc. Getty TM Corp. GettyMart Inc. Leemilt's Flatbush Avenue, Inc. State of Incorporation ---------------------Delaware Delaware Maryland Delaware New York

. . . EXHIBIT 21. Subsidiaries of the Company.
Subsidiary ---------Getty Properties Corp. AOC Transport, Inc. Getty TM Corp. GettyMart Inc. Leemilt's Flatbush Avenue, Inc. Leemilt's Petroleum, Inc. Slattery Group Inc. Power Test Realty Company Limited Partnership* State of Incorporation ---------------------Delaware Delaware Maryland Delaware New York New York New Jersey New York

* 99% owned by the Company, representing the limited partner units, and 1% owned by Getty Properties Corp., representing the general partner interest.

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) and on Form S-3 (No. 333-63060) of Getty Realty Corp. of our report dated February 3, 2003 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 February 3, 2003 relating to the financial statement schedule, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers New York, New York March 27, 2003

EXHIBIT 99.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Getty Realty Corp. (the "Company") hereby certifies, to such officer's knowledge, that: (i) the Annual Report on Form 10-K of the Company for the annual period ended December 31, 2002 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: March 27, 2003

By: /s/ LEO LIEBOWITZ ----------------------------------Leo Liebowitz President and Chief Executive Officer

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) and on Form S-3 (No. 333-63060) of Getty Realty Corp. of our report dated February 3, 2003 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 February 3, 2003 relating to the financial statement schedule, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers New York, New York March 27, 2003

EXHIBIT 99.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Getty Realty Corp. (the "Company") hereby certifies, to such officer's knowledge, that: (i) the Annual Report on Form 10-K of the Company for the annual period ended December 31, 2002 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: March 27, 2003

By: /s/ LEO LIEBOWITZ ----------------------------------Leo Liebowitz President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Getty Realty Corp. and will be retained by Getty Realty Corp. and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EXHIBIT 99.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Getty Realty Corp.(the "Company") hereby certifies, to such officer's knowledge, that: (i) the Annual Report on Form 10-K of the Company for the annual period ended December 31, 2002 (the

EXHIBIT 99.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Getty Realty Corp. (the "Company") hereby certifies, to such officer's knowledge, that: (i) the Annual Report on Form 10-K of the Company for the annual period ended December 31, 2002 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: March 27, 2003

By: /s/ LEO LIEBOWITZ ----------------------------------Leo Liebowitz President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Getty Realty Corp. and will be retained by Getty Realty Corp. and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

EXHIBIT 99.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Getty Realty Corp.(the "Company") hereby certifies, to such officer's knowledge, that: (i) the Annual Report on Form 10-K of the Company for the annual period ended December 31, 2002 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: March 27, 2003

By: /s/ THOMAS J. STIRNWEIS --------------------------Thomas J. Stirnweis Corporate Controller and Treasurer

A signed original of this written statement required by Section 906 has been provided to Getty Realty Corp. and will be retained by Getty Realty Corp. and furnished to the Securities and Exchange Commission or its staff upon

EXHIBIT 99.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Getty Realty Corp.(the "Company") hereby certifies, to such officer's knowledge, that: (i) the Annual Report on Form 10-K of the Company for the annual period ended December 31, 2002 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: March 27, 2003

By: /s/ THOMAS J. STIRNWEIS --------------------------Thomas J. Stirnweis Corporate Controller and Treasurer

A signed original of this written statement required by Section 906 has been provided to Getty Realty Corp. and will be retained by Getty Realty Corp. and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.