exv10w54



 






Exhibit 10.54




LEASE AGREEMENT




between




REHCO, L.L.C.,

an Oklahoma limited liability company

(Landlord)




and




BOB HOWARD MOTORS, INC.,

an Oklahoma corporation, doing business as Bob Howard Toyota

(Tenant)




	 	 	 	 	 
	 

	 	Street Address:
	 	13001 N. Kelley, Oklahoma City
	 
	 

	 	Dealership Name:
	 	Bob Howard Toyota Service Facility






 









 






TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	ARTICLE 1 LEASE OF PROPERTY	 	 	1	 
	 
	 	Section  1.1	 	Premises Leased	 	 	1	 
	 
	 	Section  1.2	 	Premises Defined	 	 	1	 
	 
	 	Section  1.3	 	Habendum	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 2 TERM OF LEASE	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 3 RENT	 	 	1	 
	 
	 	Section  3.1	 	Construction Period Rent	 	 	1	 
	 
	 	Section  3.3	 	Additional Rent and Rent	 	 	2	 
	 
	 	Section  3.4	 	Payment of Rent	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 4 TAXES; UTILITIES	 	 	3	 
	 
	 	Section  4.1	 	Impositions Defined	 	 	3	 
	 
	 	Section  4.2	 	Tenant’s Obligations	 	 	3	 
	 
	 	Section  4.3	 	Tax Contest	 	 	4	 
	 
	 	Section  4.4	 	Evidence Concerning Impositions	 	 	4	 
	 
	 	Section  4.5	 	Utilities	 	 	4	 
	 
	 	Section  4.6	 	Net Lease	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 5 IMPROVEMENTS	 	 	4	 
	 
	 	Section  5.1	 	Initial Tenant Improvements	 	 	4	 
	 
	 	Section  5.2	 	Alterations	 	 	4	 
	 
	 	Section  5.3	 	Mechanic’s and Materialmen’s Liens	 	 	5	 
	 
	 	Section  5.4	 	Ownership of Improvements	 	 	5	 
	 
	 	Section  5.5	 	Condition of Improvements	 	 	6	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 6 USE, MAINTENANCE, AND REPAIRS	 	 	6	 
	 
	 	Section  6.1	 	Use	 	 	6	 
	 
	 	Section  6.2	 	Maintenance and Repairs by Tenant	 	 	7	 
	 
	 	Section  6.3	 	Maintenance and Repairs by Landlord	 	 	7	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 7 INSURANCE AND INDEMNITY	 	 	7	 
	 
	 	Section  7.1	 	Building Insurance	 	 	7	 
	 
	 	Section  7.2	 	Liability Insurance	 	 	8	 
	 
	 	Section  7.3	 	Policies	 	 	8	 
	 
	 	Section  7.4	 	Tenant’s Indemnity	 	 	8	 
	 
	 	Section  7.5	 	Landlord’’s Indemnity	 	 	9	 
	 
	 	Section  7.6	 	Subrogation	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 8 CASUALTY; CONDEMNATION	 	 	9	 
	 
	 	Section  8.1	 	Tenant’s Obligation to Restore	 	 	9	 
	 
	 	Section  8.2	 	Restoration and Deposit of Funds	 	 	10	 
	 
	 	Section  8.3	 	Notice of Damage	 	 	11	 
	 
	 	Section  8.4	 	Total Taking	 	 	11	 
	 
	 	Section  8.5	 	Partial Taking	 	 	11	 
	 
	 	Section  8.6	 	Temporary Taking	 	 	12	 









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	 	Section  8.7	 	Mortgagee’s Rights	 	 	12	 
	 
	 	Section  8.8	 	Notice of Taking, Cooperation	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 9 ASSIGNMENT AND SUBLETTING	 	 	12	 
	 
	 	Section  9.1	 	Tenant’s Right To Assign	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 10 TENANT’S FINANCING	 	 	13	 
	 
	 	Section  10.1	 	Tenant’s Right to Encumber	 	 	13	 
	 
	 	Section  10.2	 	Mortgagee Protective Provisions	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 11 WARRANTY OF TITLE AND PEACEFUL POSSESSION	 	 	14	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 12 DEFAULT AND REMEDIES	 	 	15	 
	 
	 	Section  12.1	 	Default	 	 	15	 
	 
	 	Section  12.2	 	Remedies	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 13 MISCELLANEOUS	 	 	16	 
	 
	 	Section  13.1	 	Notices	 	 	16	 
	 
	 	Section  13.2	 	Performance of Other Party’s Obligations	 	 	17	 
	 
	 	Section  13.3	 	Modification and Non-Waiver	 	 	17	 
	 
	 	Section  13.4	 	Governing Law	 	 	17	 
	 
	 	Section  13.5	 	Number and Gender; Captions; References	 	 	17	 
	 
	 	Section  13.6	 	CPI	 	 	17	 
	 
	 	Section  13.7	 	Estoppel Certificate	 	 	18	 
	 
	 	Section  13.8	 	Severability	 	 	18	 
	 
	 	Section  13.9	 	Attorney Fees	 	 	18	 
	 
	 	Section  13.10	 	Surrender of Premises; Holding Over	 	 	18	 
	 
	 	Section  13.11	 	Relation of Parties	 	 	18	 
	 
	 	Section  13.12	 	Force Majeure	 	 	18	 
	 
	 	Section  13.13	 	Non-Merger	 	 	19	 
	 
	 	Section  13.14	 	Entireties	 	 	19	 
	 
	 	Section  13.15	 	Recordation	 	 	19	 
	 
	 	Section  13.16	 	Successors and Assigns	 	 	19	 
	 
	 	Section  13.17	 	Landlord’s Joinder	 	 	19	 
	 
	 	Section  13.18	 	No Third Parties Benefitted	 	 	19	 
	 
	 	Section  13.19	 	Survival	 	 	19	 
	 
	 	Section  13.20	 	Perpetuities	 	 	19	 
	 
	 	Section  13.21	 	Transfer of Landlord’s Interest	 	 	20	 
	 
	 	Section  13.22	 	Landlord’s Separate Property	 	 	20	 
	 
	 	Section  13.23	 	Guaranty	 	 	20	 
	 
	 	Section  13.24	 	Past Due Amounts	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 14 OPTION TO PURCHASE PREMISES	 	 	20	 
	 
	 	Section  14.1	 	Right of First Refusal	 	 	20	 
	 
	 	Section  14.2	 	Specific Performance	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE 15 ARBITRATION	 	 	21	 
	 
	 	Section  15.1	 	Arbitration Provisions	 	 	21	 






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EXHIBITS




	 	 	 
	Exhibit A

	 	Description of Land
	Exhibit B

	 	Exceptions to Title to Land
	Exhibit C

	 	Representations of Landlord
	Exhibit D

	 	Guaranty
	Exhibit E

	 	Construction Exhibit
	Exhibit F

	 	Initial Base Rent Calculation






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LEASE AGREEMENT




     This Lease (“Lease”) is entered into effective as of the 1st day of June, 2005 (“Effective
Date”), between REHCO, L.L.C., an Oklahoma limited liability company (“Landlord”), and Bob Howard
Motors, Inc., an Oklahoma corporation d\b\a Bob Howard Toyota (“Tenant”).



ARTICLE 1

LEASE OF PROPERTY




     Section 1.1 Premises Leased. Landlord leases to Tenant, and Tenant leases from Landlord the
real property described on Exhibit A (the “Land”), together with all of Landlord’s rights,
interests, estates, and appurtenances thereto, all improvements thereon, and all other rights,
titles, interests, and estates, if any, of the Landlord in adjacent streets and roads.



     Section 1.2 Premises Defined. All of the Land and the properties, rights, and interests
leased to Tenant pursuant to Section 1.1, together with all improvements now or hereafter
constructed thereon, are hereinafter collectively referred to as the “Premises.”



     Section 1.3 Habendum. To have and to hold the Premises, together with all and singular the
rights, privileges, and appurtenances thereunto attaching or in anywise belonging, exclusively unto
Tenant, its successors and assigns, upon the terms and conditions set forth herein and subject to
the matters set forth on Exhibit B.



ARTICLE 2

TERM OF LEASE




     Unless sooner terminated as herein provided, this Lease shall continue in effect for a term
(“Term”) commencing on the date hereof and ending at 11:59 p.m., Oklahoma City, Oklahoma time, on
the first date to occur of the last day of the three hundred sixtieth (360th) Lease Month from and
after the first day of the calendar month following the Commencement Date or the Early Termination
Date. The “Early Termination Date” (herein so called) shall be the last day of (i) the one
hundred eightieth (180th) Lease Month following the Commencement Date, (ii) the two hundred
fortieth (240th) Lease Month following the Commencement Date, or (ii) the last day of the three
hundredth (300th) Lease Month day of the calendar month following the Commencement Date; whichever
of such dates (each of which dates is herein referred to as a “Possible Early Termination Date”) is
designated by Tenant, in its sole discretion, in a written notice delivered to Landlord no less
than six (6) months prior to the Early Termination Date. A “Lease Month” shall mean a period of
time during the term of this Lease commencing the first day of the calendar month and ending on the
last day of the calendar month. The first Lease Month shall begin on the first day of the calendar
month following the Commencement Date.



ARTICLE 3

RENT




     Section 3.1 Construction Period Rent. Beginning with the Effective Date and until the
Commencement Date (defined below), Tenant shall pay Landlord monthly rent (“Construction Period
Rent”) as if Construction Period Rent were Base Rent (defined below), in an amount equal to Twenty
Thousand Two Hundred Sixty-Five and 16/100 Dollars ($20,265.16) per month.



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     Section 3.2 Base Rent.



     (a) Subject to the terms and provisions contained in this Article 3, Tenant shall pay Landlord
monthly “Base Rent” in advance, on or before the first day of each calendar month following the
Commencement Date, subject to adjustment as hereafter provided. Base Rent shall be calculated
using the formula described in Exhibit F (“Initial Base Rent Calculation”). If the Commencement
Date is on a day other than the first day of a calendar month or ends on a day other than the last
day of a calendar month, then the Base Rent for such month shall be prorated on the basis of one
thirtieth (1/30th) of the monthly Base Rent for each day of such month. If the CPI on any
Adjustment Date shall be greater than the CPI for the Commencement Date, monthly Base Rent
commencing on the Adjustment Date shall be adjusted to be the original monthly Base Rent specified
in this Section 3.2(a) plus an amount equal to one-half (?) of the product obtained by multiplying:
(i) the original monthly Base Rent specified in this Section 3.2 (a) by (ii) the percentage
increase in the CPI from the Commencement Date through the Adjustment Date. “Adjustment Date” shall
be the fifth (5th), tenth (10th), fifteenth (15), twentieth (20) and twenty-fifth (25th)
anniversaries of the first (1st) day of the calendar month following the Commencement Date, and the
term “CPI” shall have the meaning specified therefor in Section 13.5.



     During the Term, none of Landlord’s Financing (defined below) may be modified or refinanced
except in accordance with the following:




(1) Landlord may refinance or modify Landlord’s Financing if the effect of any such
modification does not result in an increase in principal and interest payable by Landlord
during any Lease Year (defined below) which exceeds Primary Base Rent required to be paid by
Tenant during such Lease Year. As an example and not by way of limitation, Landlord may
refinance Landlord’s Financing by (x) increasing the principal amount thereof while
maintaining the amount of the current principal and interest payments (or payments which are
less than the current payments) with respect to Landlord’s Financing but providing for a
balloon payment which is required to be paid after the end of the Term, or (y) maintaining
the amount of the current principal and interest payments on Landlord’s Financing (or
payments which are less than the current payments) but providing for an increased rate of
interest thereunder with an accrual feature permitting Landlord to defer accrued but unpaid
interest by adding the same to the principal balance of Landlord’s Financing so long as the
payment of such accrued but unpaid interest is required to be paid after the end of the
Term. In connection with any refinancing or modification permitted under this clause (i),
Landlord agrees to obtain for Landlord and Tenant from the applicable refinancing lender a
mutual recognition and attornment agreement complying with all of the terms and provisions
of Article 11.




(2) If Landlord desires to refinance or modify Landlord’s Financing in any manner which does
not comply with the requirements of the immediately preceding clause (i), then prior to the
date of such refinancing, Landlord must deliver to Tenant from the refinancing lender a
mutual recognition and attornment agreement complying with all of the terms and provisions
of Article 11.



     (b) As used herein, “Commencement Date” shall be the date Tenant completes construction of the
Facility, and the term “Lease Year” means the 12-month period commencing on the date hereof and
each subsequent 12-month period during the Term.



     Section 3.3 Additional Rent and Rent. All amounts required to be paid by Tenant under the
terms of this Lease, other than Base Rent, are herein from time to time



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collectively referred to as
“Additional Rent.” Base Rent and Additional Rent are herein collectively referred to as “Rent.”




     Section 3.4 Payment of Rent. Base Rent shall be payable to Landlord at the original
or changed address of Landlord as set forth in Section 13.1 or to such other persons or at such
other addresses in the United States of America as Landlord may
designate from time to time in writing to Tenant; however, if Tenant receives notice of a
default under the Landlord’s Financing, then Tenant shall have the right, but not the obligation,
to pay to Landlord’s Financing Lender (defined below) any sums due and owing on such Landlord’s
Financing and all such payments by Tenant shall reduce the amount of Rent owing to Landlord.
Additional Rent shall be paid as herein set forth. Base Rent shall be paid by Tenant in lawful
money of United States of America without notice, demand, or offset except as provided in this
Lease.



ARTICLE 4

TAXES; UTILITIES




     Section 4.1 Impositions Defined. “Impositions” means all taxes, assessments, use and
occupancy taxes, water, storm water and sewer charges, rates and rents, charges for public
utilities, excises, levies, license and permit fees, and other charges by any public authority,
general and special, ordinary and extraordinary, foreseen and unforeseen, of any kind and nature
whatsoever, including penalties levied for failure by Tenant to pay any of same in a timely manner,
which shall or may during the Term be assessed, levied, charged, confirmed or imposed by any
Governmental Authority (defined below) upon (a) the Premises or any part thereof, (b) the buildings
or improvements now or hereafter comprising a part thereof, (c) the appurtenances thereto or the
sidewalks, streets, or vaults adjacent thereto, (d) the rent and income received by or for the
account of Tenant from any sublessees or for any use or occupation of the Premises, (e) such
franchises, licenses, and permits as may be pertinent to the use of the Premises, or (f) any
documents to which the Tenant is a party creating or transferring an interest or estate in the
Premises; in each case, only to the event the same are attributable to the Premises. Impositions
shall not include any income tax, capital levy, estate, succession, inheritance or transfer taxes,
or similar tax of Landlord; any franchise tax imposed upon any owner of the fee of the Premises; or
any income, profits, or revenue tax, assessment, or charge imposed upon the rent or other benefit
received by Landlord under this Lease by any municipality, county, state, the United States of
America, or any other governmental body, subdivision, agency, or authority (all of such foregoing
governmental bodies are collectively referred to herein as “Governmental Authorities”). If at any
time during the Term the present method of taxation shall be so changed that the whole or any part
of the taxes, assessments, levies, impositions or charges now levied, assessed or imposed on real
estate and improvements thereon (herein collectively called “Ad Valorem Taxes”) shall be
discontinued and in whole or partial substitution therefor, taxes, assessments, levies,
impositions, or charges shall be levied, assessed, and/or imposed wholly or partially as a capital
levy or otherwise on the rents received from real estate or the Rents reserved herein or any part
thereof, then such substitute taxes, assessments, levies, impositions, or charges (herein
collectively called “Substitute Taxes”), to the extent so levied, assessed, or imposed, shall be
deemed to be included within the term “Impositions.” Notwithstanding the foregoing, if a
discontinuance occurs as to only a portion of Ad Valorem Taxes and the substitution therefor
provided in the immediately preceding sentence has occurred, then if the remaining Ad Valorem Taxes
are subsequently reduced, then the amounts that Tenant is required to pay with respect to
Substitute Taxes shall be reduced by an amount equal to the fraction, the numerator of which is the
amount of the reduction in the remaining portion of Ad Valorem Taxes over the amount of Ad Valorem
Taxes immediately prior to such reduction.



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     Section 4.2 Tenant’s Obligations. During the Term, Tenant will pay all Impositions
before they become delinquent. Impositions that are payable by Tenant for the tax year in which
this Lease commences as well as during the year in which the Term ends shall be apportioned so that
Tenant shall pay its share of the Impositions payable by Tenant for the portion of such Taxes
allocable to the portion of such year occurring during the Term. Where any Imposition that Tenant
is obligated to pay may be paid pursuant to law in installments and shall only be obligated to pay
such installments that become due during the Term, Tenant may pay such Imposition in installments
as and when such installments become due. Tenant shall, if so requested, deliver to Landlord
evidence of due payment of all Impositions Tenant is obligated to pay hereunder, concurrently with
the making of such payment. If Landlord’s Financing Lender requires Landlord to prepay Ad Valorem
Taxes to Lender or its designee, then upon notification from Landlord to Tenant,
Tenant shall pay to Landlord with each payment of Basic Rent due hereunder an amount equal to
one-twelfth (1/12th) of the estimated Ad Valorem Taxes for the then applicable calendar year. Such
estimate shall be based on the actual Ad Valorem Taxes paid for the Premises for the immediately
preceding calendar year. Notwithstanding anything to the contrary contained in this Lease
including, without limitation, this Section 4.2, Tenant’s obligation to pay Ad Valorem Taxes as
part of Impositions shall be reduced by the amount of any payments made to Landlord in accordance
with the foregoing. In the event that such payments by Tenant exceed the amounts actually paid in
connection with such Ad Valorem Taxes, Landlord shall promptly return the excess to Tenant.
Landlord agrees that to the extent that Landlord has collected any portion of such Ad Valorem Taxes
from Tenant, Landlord shall pay or cause to be paid all such sums to the applicable taxing
authorities on or before the applicable due date thereof to satisfy all applicable Ad Valorem
Taxes, and the remainder shall be returned to Tenant in accordance with the foregoing terms.



     Section 4.3 Tax Contest. Tenant may, at its expense, contest the validity or amount of any
Imposition for which it is responsible, in which event the payment thereof may be deferred, as
permitted by law, during the pendency of such contest, if diligently prosecuted. Landlord shall
cooperate with Tenant in connection with any such contest but Landlord shall not be required to
spend any sums or incur any liability in cooperating with Tenant. Nothing herein contained,
however, shall be construed to allow any Imposition to remain unpaid for such length of time as
would permit the Premises, or any part thereof, to be sold or seized by any Governmental Authority
for the nonpayment thereof



     Section 4.4 Evidence Concerning Impositions. The certificate, advice, bill, or statement
issued or given by the appropriate officials authorized by law to issue the same or to receive
payment of any Imposition of the existence, nonpayment, or amount of such Imposition shall be prima
facie evidence for all purposes of the existence, nonpayment, or amount of such Imposition.



     Section 4.5 Utilities. Tenant shall pay all charges for gas, electricity, light, heat, air
conditioning, power, telephone and other communication services, and all other utilities and
similar services rendered or supplied to the Premises, and all water rents, sewer service charges,
or other similar charges levied or charged against, or in connection with, the Premises.



     Section 4.6 Net Lease. Except as expressly provided herein (including, without limitation,
Section 6.3), Landlord shall not be required to make any expenditure, incur any obligation, or
incur any liability of any kind whatsoever in connection with the Premises or the financing,
construction, maintenance, operation, or repair of the Premises. It is expressly understood and
agreed that this is a completely net lease intended to



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assure Landlord the rentals herein reserved
on an absolute net basis, except as expressly provided herein.




ARTICLE 5

IMPROVEMENTS




     Section 5.1 Initial Tenant Improvements. Tenant shall construct a new Facility (as defined
in Exhibit E) in accordance with the terms and conditions set forth in Exhibit E.



     Section 5.2 Alterations. After completion of the Facility, at any time and from time to time
during the Term, Tenant may perform such alteration, renovation, repair, refurbishment, and other
work (herein such matters being connectively called the “Alterations”) with regard to any
Improvements as Tenant may elect. All buildings, structures, and other improvements located at any
time on the Land are herein called the “Improvements.” Any and all
alteration, renovation, repair, refurbishment, or other work with regard thereto shall be
performed, in accordance with the following “Construction Standards” herein so referenced):



     (i) All such construction or work shall be performed in a good and workmanlike manner
in accordance with good industry practice for the type of work in question;



     (ii) All such construction or work shall be done in compliance with all applicable building
codes, ordinances, and other laws or regulations of Governmental Authorities having jurisdiction;



     (iii) No such construction or work shall be commenced until there shall have been first
obtained all licenses, permits, and authorizations required of all Governmental Authorities having
jurisdiction;



     (iv) Tenant shall have obtained and shall maintain in force and effect the insurance coverage
required in Article 7 with respect to the type of construction or work in question;



     (v) After commencement, such construction or work shall be prosecuted with due diligence to
its completion;



     (vi) Without the prior written consent of Landlord, which shall not be unreasonably withheld
or delayed and shall be deemed given if a request is not approved or denied within thirty (30) days
after receipt, no Alteration shall be made which (x) involves any material repairs or modifications
to the structural portions of the Premises, or (y) would impair the market value, structural
integrity or usefulness of the Premises for the purposes for which the same are presently being
used; and



     (vii) Tenant shall furnish Landlord with a copy of all plans and specifications relating to
each Alteration to the extent that such plans and specifications have been furnished to Tenant.



     Section 5.3 Mechanic’s and Materialmen’s Liens. Tenant shall have no right, authority, or
power to bind Landlord or any interest of Landlord in the Premises for any claim for labor or for
material or for any other charge or expense incurred in construction of any Improvements or
performing any alteration, renovation, repair, refurbishment, or other work with regard thereto,
nor to render Landlord’s interest in the Premises liable for any lien or right of lien for any
labor, materials, or other charge or expense incurred in connection therewith, and Tenant shall in
no way be considered as the



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agent of Landlord in the construction, erection, or operation of any
such Improvements. If any liens or claims for labor or materials supplied or claimed to have been
supplied to the Premises shall be filed, Tenant shall promptly pay or bond such liens to Landlord’s
reasonable satisfaction or otherwise obtain the release or discharge thereof.




     Section 5.4 Ownership of Improvements.



     (a) Landlord shall purchase the Facility from Tenant after substantial completion thereof for
an amount equal to the Construction Costs (as defined in Exhibit F). Within thirty (30) days after
Landlord’s timely delivery of the Purchase Notice (as defined in Exhibit F), the following shall
occur: (i) Landlord shall make cash payment to Tenant in an amount equal to the Construction
Costs; and (ii) Tenant shall execute and deliver to Landlord a bill of sale or other conveyancing
documents reasonably requested by Landlord in order to fully vest title to the Facility in Landlord
free and clear of any liens created by, or permitted to be created by Tenant.



     (b) All other Improvements which may be added by Tenant (which do not constitute
replacements of existing Improvements) shall be the property of Tenant, but at the end of the Term,
all then-existing Improvements shall be the property of Landlord. However, upon expiration or
earlier
termination of this Lease, Tenant shall have the right to remove all movable equipment,
furniture, furnishings and other personal property located in the Premises and other items not
permanently attached to the Premises provided that Tenant repairs any damages caused by the removal
of such items.



     Section 5.5 Condition of Improvements. Upon the purchase of the Facility pursuant to Section
5.4 above, Landlord shall acknowledge that it accepts the Facility “as-is” and, Tenant shall make
no representations or warranties as to the condition of the Facility.



ARTICLE 6

USE, MAINTENANCE, AND REPAIRS




     Section 6.1 Use.



     (a) Subject to the terms and provisions hereof, Tenant may use and enjoy the Premises only for
the sale, lease, trade or repair of motor or other vehicles and other uses in the course of prudent
business practices normally associated therewith including, without limitation, the sale of parts
and services. Without limiting the generality of the foregoing, the provisions relating to use of
the Premises shall be broadly construed to encompass all uses normally associated with premises
occupied by automobile, boat and recreational vehicle dealerships. Tenant shall not use or occupy,
permit the Premises to be used or occupied, nor do or permit anything to be done in or on the
Premises in a manner which would constitute a public or private nuisance, or which would violate
(i) any laws, regulations, ordinances, or requirements of any Governmental Authority having
jurisdiction in the Premises including, without limitation, those which relate to Hazardous
Materials, or (ii) any recorded restrictive covenants covering the Premises provided that such
restrictive covenants do not impair Tenant’s use of the Premises for the purposes set forth herein.



     (b) Tenant covenants and agrees that Tenant shall not at any time maintain on, dispose of or
generate on or discharge or release to or from the Premises, or permit any party in possession
through or under Tenant to maintain on, dispose of, discharge from or generate or release on the
Premises, any Hazardous Materials (hereafter defined), except for (i) any Hazardous Materials that
may be used, generated or maintained in the ordinary course of Tenant’s operations at the Premises
for the use permitted under Section 6.1(a),



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and (ii) any asbestos in any form existing on the
Premises as of the date of this Lease. Subject to the foregoing, Tenant or any party in possession
through or under Tenant or any persons occupying or present on the Premises with the consent of
Tenant shall not at any time discharge from, spill or release to the Premises any Hazardous
Materials. Except for any asbestos in any form existing on the Premises as of the date of this
Lease (the proper disposition of which shall always be the responsibility of Landlord), Tenant
agrees to comply, and to cause all its employees, agents, contractors, invitees, customers and any
other persons occupying or present on the Premises with the consent of Tenant to comply, with all
applicable building codes and other federal, state and municipal laws, directives, orders,
ordinances and regulations (collectively “Laws”) relating to Hazardous Materials with respect to
any use by Tenant of such Hazardous Materials and with all Laws relating to the environment. The
term “Hazardous Materials” as used herein shall include any hazardous waste, hazardous substances
or any pollutant or contaminant as defined by 42 U.S.C.
§ 9601, and any toxic substances,
petroleum, oil, asbestos or other hazardous materials, chemical or substances now or hereafter
regulated by any Laws relating to hazardous or toxic materials, wastes or substances and/or the
environment. The foregoing covenants and agreements of Tenant shall survive the term and expiration
or termination of this Lease, and Tenant shall immediately notify Landlord of its receipt of any
report, citation, notice or other writing by, to or from any governmental or quasi-government
authority and power to regulate or oversee any of the foregoing activities or in any way related to
or connected with Hazardous Materials.




     Section 6.2 Maintenance and Repairs by Tenant. Subject to Tenant’s rights under this Lease
including, without limitation, Article 5 and Article 8, and Landlord’s obligations under this Lease
including, without limitation, the provisions of Section 6.3, Tenant shall maintain the Premises
including, without limitation, the roof (but excluding the structural support components thereof)
and the sidewalks and curbs around the Premises in good order, repair, and condition at all times.
In connection with Tenant’s maintenance of the roof of the Premises, if Tenant replaces any portion
of the roof then such replaced portion shall be deemed by the parties hereto to have a useful life
equal to ten years from the date of completion of such replacement (“Completion Date”). Except as
to any Tenant New Improvements (as defined in Section 6.3), in the event Tenant has replaced any
portion of the roof of the Premises and prior to the end of the ten-year useful life of such
replace portion Tenant has exercised its right to terminate this Lease in accordance with the
provisions contained herein, then Landlord shall pay to Tenant on the date that this Lease is
terminated an amount equal to the cost of such replaced portion of the roof times a fraction, the
numerator of which is 120 minus the number of months from the Completion Date to the date this
Lease is terminated, and the denominator of which is 120.



     Section 6.3 Maintenance and Repairs by Landlord. Landlord shall maintain and repair all
structural portions of the Premises including, without limitation, the foundation, all structural
supports relating to the roof of the Premises and all other structural support components of the
Premises (herein collectively called “Structural Components”). Subject to the immediately
following sentence, Landlord shall not be liable for any failure to make such repairs or to perform
any maintenance unless Landlord fails to commence such repairs within thirty (30) days after its
receipt of written notice of a need for such repairs or maintenance from Tenant and diligently and
continuously prosecutes the completion of such repairs or maintenance on or before one-hundred
eighty (180) days after its receipt of such notice. In connection with any maintenance or repair
obligation of Landlord set forth herein which Landlord fails to perform promptly upon receipt of
notice from Tenant and which is an imminent threat to the health, safety or welfare of any persons
on the Premises (“Emergency Repairs”) and in addition to all other remedies Tenant may have under
this Lease and at law and in equity, Tenant may perform such Emergency Repairs and shall be
entitled to offset the amounts necessary for such



7









 




maintenance against any Rent due under this Lease
in the regular order of payment. If Landlord fails to maintain and repair the Premises in
accordance with the foregoing provisions, then Tenant shall have the option of either (i)
performing such maintenance or repairs and Tenant shall be entitled to credit against the next
accruing monthly rental payments all amounts relating to such maintenance and repairs, (ii)
terminating this Lease by giving written notice thereof to Landlord, except in the case of
Emergency Repairs, which are governed by the foregoing provisions, or (iii) pursuing any and all
other remedies available to Tenant under this Lease, at law or in equity. Notwithstanding anything
to the contrary contained in this Section 6.3, in the event Tenant constructs or causes to be
constructed any new improvements (“Tenant New Improvements”) or causes any of the existing
Structural Components to be modified in any manner, then Landlord shall have no maintenance or
repair obligations with respect to such new improvements or the modified existing Structural
Components to extent so modified by Tenant. The Facility shall not be considered a Tenant New
Improvement for the purposes of this Section 6.3.




ARTICLE 7

INSURANCE AND INDEMNITY




     Section 7.1 Building Insurance. Tenant will, at its cost and expense, keep and maintain in
force the following policies of insurance:



     (a) Insurance on the Improvements against loss or damage by fire and against loss or damage by
any other risk now and from time to time insured against by “extended coverage” provisions of
policies generally in force on improvements of like type in the city in which the Premises are
located, and in builder’s risk completed value form during construction, in amounts sufficient to
provide coverage for the
full insurable value of the Improvements; the policy for such insurance shall have a
replacement cost endorsement or similar provision. “Full insurable value” shall mean actual
replacement value (exclusive of cost of excavation, foundations, and footings below the surface of
the ground or below the lowest basement level), and such full insurable value shall be confirmed
from time to time at the request of Landlord by one of the insurers.



     (b) Boiler and pressure apparatus insurance to the limit of not less than $-0- with
respect to any one accident, such limit to be increased if requested by Landlord by an amount which
may be reasonable at the time. If the Improvements shall be without a boiler plant, no such boiler
insurance will be required.



     (c) Workman’s Compensation Insurance as to Tenant’s employees involved in the construction,
operation, or maintenance of the Premises in compliance with applicable law.



     (d) Such other insurance against other insurable hazards which at the time are commonly
insured against in the case of improvements similarly situated, due regard being given to the
height and type of the Improvements, their construction, location, use, and occupancy.



     Section 7.2 Liability Insurance. Tenant shall secure and maintain in force comprehensive
general liability insurance, including contractual liability specifically applying to the
provisions of this Lease and completed operations liability, with limits of not less than
$6,000,000 with respect to bodily injury or death to any number of persons in any one accident or
occurrence and with respect to property damage in any one accident or occurrence, such limits to be
increased in the event of request by Landlord by an amount which may be reasonable at the time.



8









 





     Section 7.3 Policies. All insurance maintained in accordance with the provisions of this
Article 7 shall be issued by companies reasonably satisfactory to Landlord, the Landlord’s
Financing Lender and all Permitted Mortgagees (hereafter defined), and shall be carried in the name
of both Landlord and Tenant, as their respective interests may appear, and shall contain a
mortgagee clause acceptable to the Landlord’s Financing Lender and the Permitted Mortgagees. All
property policies shall (i) be subject to prior written approval of Landlord, which shall not be
unreasonably withheld or delayed, and (ii) expressly provide that any loss thereunder may be
adjusted with Tenant, Landlord’s Financing Lender and Permitted Mortgagees, but, unless required
otherwise under Landlord’s Financing, shall be payable to Tenant and disbursed as set forth in
Section 8.2. All property and liability insurance policies shall name Landlord as an additional
named insured and shall include contractual liability endorsements. Tenant shall furnish Landlord,
Landlord’s Financing Lender and each Permitted Mortgagee with duplicate originals or copies
certified as being true and correct of all insurance policies required under this Article 7, and
shall furnish and maintain with each of such parties, at all times, a certificate of the insurance
carrier certifying that such insurance shall not be canceled without at least fifteen (15) days
advance written notice to each of such parties.



     Section 7.4 Tenant’s Indemnity. Subject to Section 7.6, Tenant shall indemnify and hold
harmless Landlord, its shareholders, partners, trustees, members, directors, officers, employees
ant its successors ant assigns (the “Indemnified Landlord Parties”), from all claims, suits,
actions, and proceedings whatsoever (“Claims”) which may be brought or instituted on account of or
growing out of any Default and any and all injuries or damages, including death, to persons or
property on the Premises and all losses, liabilities, judgments, settlements, costs, penalties,
damages, and expenses relating thereto, including but not limited to attorneys’ fees and other
costs of defending against, investigating, and settling the Claims, to the extent, but only to
the extent, such Claims are not attributable to (i) events or conditions that occurred or
existed, in whole or in part, prior to the date when Tenant first occupied the Premises or (ii) any
Structural Components that Landlord is required to maintain under the terms of Section 6.3. Tenant
shall assume on behalf of the Indemnified Landlord Parties and conduct with due diligence and in
good faith the defense of all such Claims against any of the Indemnified Landlord Parties. Tenant
may contest the validity of any such Claims, in the name
of Landlord or Tenant, as Tenant may deem appropriate, provided that the expenses thereof
shall be paid by Tenant. The foregoing covenants and agreements of Tenant shall survive the Term
and expiration or termination of this Lease.



     Section 7.5 Landlord’s Indemnity. Subject to Section 7.6, Landlord shall indemnify
and hold harmless Tenant, its shareholders, partners, trustees, members, directors, officers,
employees and its successors and assigns (the “Indemnified Tenant Parties”), from all Claims which
may be brought or instituted on account of or growing out of any default by Landlord of its
obligations under this Lease and all injuries or damages, including death, to persons or property
on the Premises and all losses, liabilities, judgments, settlements, costs, penalties, damages, and
expenses relating thereto, including but not limited to attorneys’ fees and other costs of
defending against, investigating, and settling the Claims, to the extent, but only to the
extent, any such Claims are attributable to or arise out of events or conditions that (i)
existed or occurred, in whole or in part, prior to the date when Tenant first occupied the
Premises, (ii) arise out of the failure of any of Landlord’s representations or warranties made in
this Lease or in Exhibit C to be true and correct or (iii) relate to asbestos in any form which is
present on the Premises prior to the date of this Lease. Landlord shall assume on behalf of the
Indemnified Tenant Parties and conduct with due diligence and in good faith the defense of all
Claims against any of the Indemnified Tenant Parties. Landlord may contest the validity of any
Claims, in the name of Landlord or Tenant, as Landlord may deem appropriate,



9









 




provided that the
expenses thereof shall be paid by Landlord. The foregoing covenants and agreements of Landlord
shall survive the Term and expiration or termination of this Lease.




     Section 7.6 Subrogation. Anything in this Lease to the contrary notwithstanding, Landlord
and Tenant each hereby waives any and all rights of recovery, claims, actions, or causes of action
against the other, its agents, officers, and employees for any loss or damage that may occur to any
improvements located on the Premises, or any part thereof, or any personal property of such party
therein, by reason of fire, the elements, or any other cause which is insured under standard “all
risk of direct loss” insurance policies available in the state in which the Premises are located,
regardless of cause or origin, including negligence of either party hereto, its agents.
officers, or employees. No insurer of one party shall hold any right of subrogation against
the other party as to any such loss or damage.



ARTICLE 8

CASUALTY; CONDEMNATION




     Section 8.1 Tenant’s Obligation to Restore. Following Tenant’s completion of construction as
provided in Section 5.1, in the event of damage to, or destruction of, any Improvements by fire or
other casualty, Tenant shall, to the extent of the insurance proceeds actually received by Tenant
or a Permitted Mortgagee for such purpose, promptly repair, replace, restore, and reconstruct the
same, all in compliance with the provisions of Section 8.2. If insurance proceeds are unavailable
due solely to Tenant’s failure to pay the premiums applicable to the insurance coverage referred to
in Section 7.1, then Tenant shall be obligated to promptly repair, replace, restore, and
reconstruct the Improvements, all in compliance with the provisions of Section 8.2, notwithstanding
the unavailability of insurance proceeds for such purpose. Notwithstanding the foregoing, in the
event of destruction or damage involving more than seventy-five percent (75%) of the interior floor
area of the Improvements which occurs at any time within the last twelve months of the Term, then
Landlord, at its election exercisable by written notice to Tenant within thirty days following such
destruction or damage, shall have the right to cancel this Lease effective as of the date of such
fire or other casualty. In the event of a casualty loss where the Improvements will not be
restored or replaced, the insurance proceeds shall be applied, (1) first, to pay the cost of razing
the Improvements and leveling, cleaning and otherwise putting the Premises in good order, (2)
second, to Landlord’s Financing Lender, (3) third, to the payment to Tenant for any of its
improvements, and (4) fourth, to Landlord, to the extent of any remaining proceeds.



     Section 8.2 Restoration and Deposit of Funds.



     (a) Prior to Tenant commencing any repair, restoration or rebuilding pursuant to
Section 8.1, involving an estimated cost of more than One Hundred Thousand Dollars ($100,000),
Tenant shall submit to Landlord for its approval, which will not be unreasonably withheld or
delayed: (i) plans and specifications therefor, prepared by a licensed architect reasonably
satisfactory to Landlord; (ii) copies of appropriate governmental permits; (iii) an estimate of the
cost of the proposed work, certified to by said architect (iv) a fixed price construction contract
in an amount not in excess of such architect’s estimated cost from a reputable and experienced
general contractor; and (v) satisfactory evidence of sufficient contractor’s comprehensive general
liability insurance covering Landlord, builder’s risk insurance, and workman’s compensation
insurance. Upon completion of any such work by or on behalf of Tenant, Tenant shall provide
Landlord with written evidence, in form and substance reasonably satisfactory to Landlord, showing
that (i) Tenant has paid all contractors for all costs incurred in connection with such repair,
restoration or rebuilding,



10









 




and (ii) that the Premises is not encumbered by any mechanic’s or
materialmen’s liens relating to such repair, restoration or rebuilding.
Regarding Tenant’s obligations with respect to mechanic’s or materialmen’s liens, reference is made herein to all of
the terms and provisions of Section 5.2 in connection with such repair, restoration or rebuilding.




     (b) Provided that: (i) Landlord does not exercise its right to cancel this Lease as provided
in Section 8.1, (ii) the insurer does not deny liability as to the insureds, and (iii) a Default
does not then exist, then all sums arising by reason of such loss under insurance policies
maintained by Tenant, shall be deposited with the Depositary (defined below) to be available to
Tenant for the repair, restoration and rebuilding of the Premises. Tenant shall diligently pursue
the repair, restoration and rebuilding of the improvements in a good and workmanlike manner using
only materials which are of a quality comparable to the quality of the materials used in the
Improvements prior to their destruction or damage. The insurance proceeds will be disbursed to
Tenant by the Depositary after delivery of evidence reasonably satisfactory to the Depositary that
(A) such repairs, restoration, or rebuilding have been completed and effected in compliance with
the plans and specifications for the restoration or rebuilding, (B) no mechanic’s and materialman’s
liens against the Premises have been filed, or that all such liens have been paid or bonded around,
and (C) all payments for work performed and materials purchased as of the date of such disbursement
for which mechanic’s and materialman’s liens might arise have been paid or will be paid from such
disbursement or that all such potential liens have been paid or bonded around. At the option of
Tenant, such proceeds shall be advanced in reasonable installments. Each such installment (except
the final installment) shall be advanced in an amount equal to the cost of the construction work
completed since the last prior advance (or since commencement of work as to the first advance) less
statutorily required retainage in respect of mechanic’s and materialman’s liens or retainage which
may be required by Landlord’s Financing Lender in an amount not to exceed ten percent (10%) of such
cost. The amount of each installment requested shall be certified as being due and owing by
Tenant’s architect in charge, and each request shall include all bills for labor and materials for
which reimbursement is requested and reasonably satisfactory evidence that no lien affidavit has
been placed against the Premises for any labor or material furnished for such work. The final
disbursement, which shall be an amount equal to the balance of the insurance proceeds, shall be
made upon receipt of (C) an architect’s certificate of substantial completion as to the work from
Tenant’s architect, and (D) reasonably satisfactory evidence that all bills incurred in connection
with the work have been paid. The term “Depositary”, as used herein, shall mean either: (i)
Landlord’s Financing Lender, or its designee (provided that Landlord’s Financing Lender is an
institutional lender and its designee is not an Affiliate of Landlord, as defined in Section 14.1,
or related in any other manner to Landlord), or (ii) such other party that is acceptable to
Landlord and Tenant, if there is no such Landlord’s Financing Lender or if such Landlord’s
Financing Lender has refused to act as Depositary.



     (c) If no Default then exists, any excess of money received from insurance policies remaining
with the Depositary after the repair or rebuilding of the Improvements shall, to the extent
required by any
Permitted Mortgagee, be applied to payment of Tenant’s Permitted Mortgage, otherwise any such
proceeds shall be paid to Tenant.



     (d) If Tenant shall not commence the repair or rebuilding of the Improvements within a
period of sixty (60) days after damage or destruction by fire or other casualty and prosecute the
same thereafter with such dispatch as may be necessary to complete the same within a reasonable
period after said damage or destruction occurs, not to exceed two hundred seventy (270) days from
the date of commencement of such repair or rebuilding; then, in addition to all other remedies
Landlord may have either under this Lease, at law or in equity, the money received by and then
remaining in the hands of the



11









 




Depositary shall be paid to and retained by Landlord as security for
the continued performance and observance by Tenant of Tenant’s covenants and agreements hereunder.




     (e) This Lease shall not terminate or be forfeited or be affected in any manner by reason of
damage to, or total, substantial or partial destruction of, the Premises or any part thereof or by
reason of the untenantability of the same or any part thereof, for or due to any reason or cause
whatsoever, and Tenant, notwithstanding any law or statute, present or future, waives any and all
rights to quit or surrender the Premises or any part thereof. Tenant expressly agrees that its
obligations hereunder, including the payment of Rent, shall continue as if the Premises, or any
part thereof, had not been damaged or destroyed, and without abatement, offset, suspension,
diminution or reduction of any kind (except that if Impositions are reduced on account of such
damage or destruction, Tenant shall be obligated to pay only such reduced amount).



     Section 8.3 Notice of Damage. Tenant shall immediately notify Landlord and each Permitted
Mortgagee of any destruction or damage to the Premises.



     Section 8.4 Total Taking. Should the entire Premises be taken (which term, as used in this
Article 8, shall include any conveyance in avoidance or settlement of eminent domain, condemnation,
or other similar proceedings) by any Governmental Authority, corporation, or other entity under the
right of eminent domain, condemnation, or similar right, then Tenant’s right of possession under
this Lease shall terminate as of the date of taking possession by the condemning authority, and the
award therefor will be distributed as follows: (1) first, to the payment of all reasonable fees and
expenses incurred in collecting the award, (2) second, to Landlord’s Financing Lender, and (3)
third, to Landlord and Tenant, to the extent of their interests in the Premises, as the applicable
condemning authority shall determine taking into account certain factors including, without
limitation, the term of the leasehold estate of the Tenant and the ownership interest of Landlord.
After the determination and distribution of the condemnation award as herein provided, the Lease
shall terminate.



     Section 8.5 Partial Taking. Should a portion of the Premises be taken by any
Governmental Authority, corporation, or other entity under the right of eminent domain,
condemnation, or similar right, this Lease shall nevertheless continue in effect as to the
remainder of the Premises unless, in Tenant’s reasonable judgment, so much of the Premises shall be
so taken as to make it economically unsound to use the remainder for the uses and purposes
contemplated hereby, whereupon this Lease shall terminate as of the date of taking of possession by
the condemning authority in the same manner as if the whole of the Premises had thus been taken,
and the award therefor shall be distributed as provided in Section 8.4. In the event of a partial
taking where this Lease is not terminated, all awards payable in respect thereof shall be payable
to Landlord and Tenant, to the extent of their interests in the Premises, as the applicable
condemning authority shall determine taking into account certain factors including, without
limitation, the term of the leasehold estate of the Tenant and the ownership interest of Landlord.
Tenant shall restore and repair the Premises to the extent of the award actually received by Tenant
and there shall be no abatement or reduction in any rental because of such taking or condemnation.
Subject to the foregoing, Tenant shall promptly and diligently proceed to make a complete
architectural unit of the remainder of the Improvements, complying with the procedure set forth in
Section 8.2 (a). For such purpose, and provided that a Default does not then exist, the amount of
the awards to Tenant and Landlord relating to the Improvements, shall be deposited with the
Depositary which shall disburse the awards towards the cost of said repairing or restoration in
accordance with the procedure set forth in Section 8.2. If Tenant does not make a complete
architectural unit of the remainder of



12









 




the Improvements within a reasonable period after such
taking or condemnation, not to exceed two hundred seventy days after Tenant is required to vacate
the Premises and the applicable awards have been made and deposited with the Depositary, then, in
addition to whatever other remedies Landlord may have either under this Lease, at law or in equity,
the money received by and then remaining in the custody of the Depositary shall, at Landlord’s
election, be paid to Landlord, and the remaining portion which was deposited by Tenant with the
Depositary shall be held by Landlord as security for the continued performance and observance by
Tenant of Tenant’s covenants and agreements hereunder; provided, that Landlord shall be obligated
to disburse the amounts received by Landlord from the Depositary in accordance with the foregoing
provisions as if Landlord were the Depositary.




     Section 8.6 Temporary Taking. If the whole or any portion of the Premises shall be taken for
temporary use or occupancy, the Term shall not be reduced or affected and Tenant shall continue to
pay the Rent in full. Except to the extent Tenant is prevented from so doing pursuant to the terms
of the order of the condemning authority, Tenant shall continue to perform and observe all of the
other covenants, agreements, terms, and provisions of this Lease. In the event of any temporary
taking, Tenant shall be entitled to receive the entire amount of any award therefor unless the
period of temporary use or occupancy shall extend beyond the expiration of the Term, in which case
such award shall be apportioned between Landlord and Tenant as of the day of expiration of the Term
in the same ratio that the part of the entire period for such compensation is made falling before
and that part falling after the day of expiration, bear to such entire period.



     Section 8.7 Mortgagee’s Rights. Any Permitted Mortgagee shall, if it so desires, be made a
party to any condemnation proceeding.



     Section 8.8 Notice of Taking, Cooperation. Tenant shall immediately notify Landlord and each
Permitted Mortgagee of the commencement of any eminent domain, condemnation, or other similar
proceedings with regard to Premises. Landlord and Tenant covenant and agree to fully cooperate in
any condemnation, eminent domain, or similar proceeding in order to maximize the total award
receivable in respect thereof.



ARTICLE 9

ASSIGNMENT AND SUBLETTING




     Section 9.1 Tenant’s Right To Assign. Tenant may assign its rights hereunder or sublease all
or a portion of the Premises without Landlord’s prior written approval provided that Tenant shall
remain liable for all liabilities and obligations arising under this Lease. Notwithstanding the
foregoing, if Tenant has assigned or subleased its rights under this Lease to any party other than
an affiliate or subsidiary of Tenant, then, to the extent that the rent paid by any such other
party exceeds the Rent and other amounts, if any, required to be paid by Tenant under the terms of
this Lease, fifty percent (50%) of such excess amounts shall be paid to Landlord upon the receipt
of same by Tenant.



ARTICLE 10

TENANT’S FINANCING




     Section 10.1 Tenant’s Right to Encumber. Tenant shall have the right, from time to time and
at any time, without Landlord’s
consent or joinder, to encumber its interest in this Lease and the leasehold estate hereby
created with one or more deeds of trust, mortgages, or other lien instruments to secure any
borrowings or obligations of Tenant. Any such mortgages, deeds of trust, and/or other lien
instruments, and the indebtedness secured thereby, provided that Landlord has been given notice
thereof as set forth in



13









 




Section 10.2, are herein referred to as “Permitted Mortgagees,” and the
holder or other beneficiary thereof are herein referred to as “Permitted Mortgagees.”




     Section 10.2 Mortgagee Protective Provisions. If Tenant encumbers its interest in
this Lease and the leasehold estate hereby created with liens as above provided, then Tenant shall
notify Landlord thereof, providing with such notice the name and mailing address of the Permitted
Mortgagee in question, Landlord shall upon request, acknowledge receipt of such notice, and for so
long as the Permitted Mortgage in question remains in effect the following shall apply:



     (a) Landlord shall give to the Permitted Mortgagee a duplicate copy of any and all notices
which Landlord gives to Tenant pursuant to the terms hereof, including notices of default, and no
such notice shall be effective until such duplicate copy is actually received by such Permitted
Mortgagee, in the manner provided in Section 13.1.



     (b) There shall be no cancellation, surrender, or modification of this Lease by joint action
of Landlord and Tenant without the prior written consent of the Permitted Mortgagee.



     (c) If a Default should occur hereunder, then Landlord specifically agrees that:




     (1) Landlord shall not enforce or seek to enforce any of its rights, recourses, or
remedies, until a notice specifying the event giving rise to such Default has been received
by the Permitted Mortgagee, in the manner provided in Section 13.1, and if the Permitted
Mortgagee proceeds to cure the Default within a period of 30 days after receipt of such
notice or, as to events of Default which by their very nature cannot be cured within such
time period, the Permitted Mortgagee, to the extent it is able to do so, commences curing
such Default within such time period and thereafter diligently pursues such cure to
completion within 60 days thereafter, then any payments made and all things done by the
Permitted Mortgagee to effect such cure shall be as fully effective to prevent the exercise
of any rights, recourses, or remedies by Landlord as if done by Tenant;




     (2) if the Default is a non-monetary default, the Permitted Mortgagee shall have a
period of time in which to cure such Default equal to the greater of (i) the time period for
such curing that is applicable to Tenant under the terms of this Lease, or (ii) 60 days
after the date that the Permitted Mortgagee has been notified of such Default, provided that
the Permitted Mortgagee cures all defaults relating to the payment of Base Rent and neither
Landlord nor the Premises is or would be liable or subject to any lien, tax, penalty,
expense, liability, or damages because of such Default. If Landlord or the Premises is or
will be liable or subject to any such lien, tax, penalty, expense, liability or damages
because of the Default, then for so long as the Permitted Mortgagee is diligently and with
continuity attempting to secure possession of the Premises (whether by foreclosure or other
procedures), Landlord shall allow the Permitted Mortgagee such time as may be reasonably
necessary under the circumstances to obtain possession of the Premises in order to cure such
Default, which shall not exceed 180 days, and during such time Landlord shall not enforce or
seek to enforce any of its rights, remedies or recourses hereunder, and




     (3) if the Default is a non-monetary default of such a nature that it is not reasonably
susceptible of being cured by the Permitted Mortgagee (as, for example, a non-permitted
assignment by Tenant), then Landlord shall not enforce or seek to enforce any of its rights,
remedies, or recourses hereunder so long as Permitted



14









 




Mortgagee pays all Rent then due and
thereafter keeps the monetary obligations of Tenant hereunder current and complies with
those other provisions of this Lease which, by their nature, Permitted Mortgagee may then
reasonably comply with.




     (d) No Permitted Mortgagee shall be or become liable to Landlord as an assignee of this Lease
until such time as such Permitted Mortgagee, by foreclosure or other procedures, shall either
acquire the rights and interests of Tenant under this Lease or shall actually take possession of
the Premises, and upon such Permitted Mortgagee’s assigning such rights and interests to another
party or upon relinquishment of such possession, as the case may be, such Permitted Mortgagee shall
have no further such liability.



ARTICLE 11

WARRANTY OF TITLE AND PEACEFUL POSSESSION




     Landlord represents, warrants and covenants that (i) the representations and warranties set
forth in Exhibit C are true and correct, (ii) it owns title to the Land and the Premises free and
clear of all liens, claims and encumbrances except the liens described in Exhibit B hereto securing
the financing described therein (“Landlord’s Financing”) and the other encumbrances specifically
described in such Exhibit B, (iii) subject to the terms and provisions of Section 3.2(a), except as
otherwise set forth in this Lease, Landlord’s Financing shall not be modified in any manner without
the prior written consent of Tenant and (iv) the lender providing such Landlord’s Financing
(“Landlord’s Financing Lender”) has executed, caused to be acknowledged (notarized in accordance
with applicable law) and delivered to Landlord and Tenant a mutual recognition and attornment
agreement, in form and substance reasonably satisfactory to Tenant, suitable for recording in the
appropriate records to notify third parties of the existence of such agreement and that the Land
and the Premises are subject thereto. Such agreement shall provide, among other provisions, that
the Tenant’s interest under this Lease shall be subordinate to the Landlord’s Financing and that
the Landlord’s Financing Lender shall (i) give to Tenant a duplicate copy of any and all notices
which Landlord’s Financing Lender gives to Landlord, including notices of default, and no such
notice shall be effective until such duplicate copy is actually received by Tenant in the manner
provided in Section 13.1, (ii) give Tenant the right and opportunity to cure any defaults under the
Landlord’s Financing, and (iii) recognize Tenant’s rights under this Lease in the event of a
foreclosure or deed in lieu thereof so long as Tenant continues to perform its obligations under
this Lease. As used herein, the term (A) “Landlord’s Financing Lender” shall also include any
lender that refinances



Landlord’s Financing, and (B) “Landlord’s Financing” shall include all financings secured by liens
covering all or any portion of the Premises which are permitted under the terms of this Lease.




     Moreover, Landlord covenants that Tenant shall and may peaceably and quietly have, hold,
occupy, use, and enjoy the Premises during the Term, and may exercise all of its rights hereunder,
subject only to the provisions of this Lease and applicable governmental laws, rules, and
regulations; and Landlord agrees to warrant and forever defend Tenant’s right to such occupancy,
use, and effort and the title to the Premises against the claims of any and all persons whomsoever
lawfully claim the same, or any part thereof, by, through or under Landlord, but not otherwise,
subject only to provisions of this Lease and all applicable governmental laws, rules, and
regulations.



     Landlord’s Financing Lender shall not be or become liable to Tenant as an assignee of
Landlord’s interest in this Lease until such time as such Landlord’s Financing Lender, by
foreclosure or other procedures, shall either acquire the rights and interests of Landlord under
this Lease, and upon Landlord’s Financing Lender’s assigning such rights and interests to another
party, Landlord’s Financing Lender shall have no further such liability.



ARTICLE 12

DEFAULT AND REMEDIES




15









 








     Section 12.1 Default. Each of the following shall be deemed a “Default” by Tenant hereunder
and a material breach of this Lease:



     (a) Whenever Tenant shall fail to pay any installment of Rent or any other sum payable by
Tenant to Landlord or any third party under this Lease on the date upon which the same is due to be
paid, and such default shall continue for ten (10) days after Tenant shall have been given a
written notice specifying such default;



     (b) Whenever Tenant shall fail to keep, perform, or observe any of the covenants,
agreements, terms, or provisions contained in this Lease that are to be kept or performed by Tenant
other than with respect to payment of Rent or other liquidated sums of money, and Tenant shall fail
to commence and take such steps as are necessary to remedy the same within thirty (30) days after
Tenant shall have been given a written notice specifying the same, or having so commenced, shall
thereafter fail to proceed diligently and with continuity to remedy the same within one hundred
eighty (180) days after such failure;



     (c) Whenever an involuntary petition shall be filed against Tenant under any bankruptcy or
insolvency law or under the reorganization provisions of any law of like import or whenever a
receiver of Tenant, or of all or substantially all of the property of Tenant, shall be appointed
without acquiescence, and such petition or appointment is not discharged or stayed within sixty
(60) days after the happening of such event; or



     (d) Whenever Tenant shall make an assignment of its property for the benefit of creditors or
shall file a voluntary petition under any bankruptcy or insolvency law, or seek relief under any
other law for the benefit of debtors.



     Section 12.2 Remedies. If a Default occurs, then subject to the rights of any Permitted
Mortgagee as provided in Section 10.2, Landlord may at any time thereafter prior to the curing
thereof and without waiving any other rights hereunder or available to Landlord at law or in equity
(Landlord’s rights being cumulative), do any one or more of the following:



     (a) Landlord may terminate this Lease by giving Tenant written notice thereof, in which event
this Lease and the leasehold estate hereby created and all interest of Tenant and all parties
claiming by, through, or under Tenant shall automatically terminate upon the effective date of such
notice with the same force and effect and to the same extent as if the effective date of such
notice were the day originally fixed in Article 2 hereof for the expiration of the Term; and
Landlord, its agents or representatives, shall have the right, without further demand or notice, to
reenter and take possession of the Premises and remove all persons and property therefrom with or
without process of law, without being deemed guilty of any manner of trespass and without prejudice
to any remedies for arrears of Rent or existing breaches hereof. In the event of such termination,
Tenant shall be liable to Landlord for damages in an amount equal to (A) the discounted present
value of the amount by which the Rent reserved hereunder for the remainder of the stated Term
(assuming that the Term would expire upon the next Possible Early Termination Date) exceeds the
then net fair market rental value of the Premises for such period of time, plus (B) all expenses
incurred by Landlord enforcing its rights hereunder.



     (b) Landlord may terminate Tenant’s right to possession of the Premises and enjoyment of the
rents, issues, and profits therefrom without terminating this Lease or the leasehold estate created
hereby, reenter and take possession of the Premises and remove all persons and property therefrom
with or without process of law, without being deemed guilty of any manner of trespass and without
prejudice to any remedies for arrears of Rent (assuming the Term would expire upon the next
Possible Early Termination Date) or existing breaches hereof, and lease, manage, and operate the
Premises and collect the rents, issues, and profits therefrom all for the account of Tenant, and
credit



16









 




to the satisfaction of Tenant’s obligations hereunder the net rental thus received (after
deducting therefrom all reasonable costs and expenses of repossessing, leasing, managing, and
operating the Premises). If the net rental so received by Landlord exceeds the amounts necessary
to satisfy all of Tenant’s obligations under this Lease, nevertheless Landlord shall retain such
excess. In no event shall Landlord be liable for failure to so lease, manage, or operate the
Premises or collect the rentals due under any subleases and any such failure shall not reduce
Tenant’s liability hereunder. If Landlord elects to proceed under this Section 12.2(b), it may at
any time thereafter elect to terminate this Lease as provided in Section 12.2(a).




ARTICLE 13

MISCELLANEOUS




     Section 13.1 Notices. Any notice provided for or permitted to be given hereunder must
be in writing and may be given by (a) depositing same in the United States Mail, postage prepaid,
registered or certified, with return receipt requested, addressed as set forth in this Section
13.1; (b) delivering the same to the party to be notified; or (c) sending a prepaid telex or
telegram, so addressed. Notice given in accordance herewith shall be effective upon receipt at the
address of the addressee, as evidenced by the executed postal receipt or other receipt for
delivery. For purposes of notice the addresses of the parties hereto shall, until changed, be as
follows:



	 	 	 	 	 
	 

	 	Landlord:
	 	REHCO, L.L.C.
	 

	 	 	 	P.O. Box 8183
	 

	 	 	 	Oklahoma City, Oklahoma 73083
	 

	 	 	 	Attention: Robert E. Howard II
	 
	 	 	 	 
	 

	 	Tenant:
	 	Bob Howard Motors, Inc.
	 

	 	 	 	c/o Group 1 Automotive, Inc.
	 

	 	 	 	950 Echo Lane, Suite 100
	 

	 	 	 	Houston, Texas 77024
	 

	 	 	 	Attention: John Turner
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Group 1 Automotive, Inc.
	 

	 	 	 	950 Echo Lane, Suite 100
	 

	 	 	 	Houston, Texas 77024
	 

	 	 	 	Attention: Jeffrey M. Cameron,
	 

	 	 	 	Vice President, Legal Counsel and Secretary
	 
	 	 	 	 
	 

	 	and:
	 	Calvert Law Firm
	 

	 	 	 	1041 NW Grand Boulevard
	 

	 	 	 	Oklahoma City, Oklahoma 73118
	 

	 	 	 	Attention: Randall K. Calvert.





The parties hereto shall have the right from time to time to change their respective addresses for
purposes of notice hereunder to any other location within the United States by giving a notice to
such effect in accordance with the provisions of this Section 13.1.




     Section 13.2 Performance of Other Party’s Obligations. If either party hereto fails to
perform or observe any of its covenants, agreements, or obligations hereunder for a period of 30
days after notice of such failure is given by the other party, then the other party shall have the
right, but not the obligation, at its sole election (but not as its exclusive remedy), to perform
or observe the covenants, agreements, or obligations which are asserted to have not been performed
or observed at the expense of the failing party and to recover all costs or expenses incurred in
connection therewith, together with interest thereon from the date expended until repaid at an
annual rate (“Default Rate”) equal to the lesser of: (A) three (3) percentage points above the
prime rate of interest established from time to time by Nations Bank (or a comparable rate of
interest if such rate



17









 




of interest is not in effect); or (B) the maximum rate of interest permitted
by applicable law. Any performance or observance by a party pursuant to this Section 13.2 shall
not constitute a waiver of the other party’s failure to perform or observe.




     Section 13.3 Modification and Non-Waiver. No variations, modifications, or changes
herein or hereof shall be binding upon any party hereto unless set forth in a writing executed by
it or by a duly authorized officer or agent. No waiver by either party of any breach or default of
any term, condition, or provision hereof, including without limitation the acceptance by Landlord
of any Rent at any time or in any manner other than as herein provided, shall be deemed a waiver of
any other or subsequent breaches or defaults of any kind, character, or description under any
circumstance. No waiver of any breach or default of any term, condition, or provision hereof shall
be implied from any action of any party, and any such waiver, to be effective, shall be set out in
a written instrument signed by the waiving party.



     Section 13.4 Governing Law. This Lease shall be construed and enforced in accordance with
the laws of the state in which the Premises are located.



     Section 13.5 Number and Gender; Captions; References. Pronouns, wherever used herein, and of
whatever gender, shall include natural persons and corporations and associations of every kind and
character, and the singular shall include the plural wherever and as often as may be appropriate.
Article and Section headings in this Lease are for convenience of reference and shall not affect
the construction or interpretation of this Lease. Whenever the terms “hereof,” “hereby,” “herein,”
or words of similar import are used in this Lease they shall be construed as referring to this
Lease in its entirety rather than to a particular Section or provision, unless the context
specifically indicates to the contrary. Any reference to a particular “Article” or “Section” shall
be construed as referring to the indicated Article or Section of this Lease.



     Section 13.6 CPI. As used herein, “CPI” shall mean the Consumer Price Index for All Urban
Consumers, All Items (Base Year 19 82-84 = 100) published by the United States Department of Labor,
Bureau of Labor Statistics (or if a separate index is published by the Bureau of Labor Statistics
for a metropolitan area within 100 miles of the Premises, then such metropolitan index). If the
Bureau of Labor Statistics substantially revises the manner in which the CPI is determined, an
adjustment shall be made in the revised index which would produce results equivalent, as nearly as
possible to those which would be obtained hereunder if the CPI were not so revised. If the 1982-84
average shall no longer be used as an index of 100, such change shall constitute a substantial
revision. If the CPI becomes unavailable to the public because publication is discontinued, or
otherwise, Tenant shall substitute therefor a comparable index based upon changes in the cost of
living or purchasing power of the consumer dollar published by a governmental agency, major bank
other financial institution, university or recognized financial publisher. If the CPI is available
on a monthly (or alternating monthly) basis, the CPI for the months in which (or immediately
preceding, as the case may be) the Commencement Date and Adjustment Date respectively occur shall
be used.



     Section 13.7 Estoppel Certificate. Landlord and Tenant shall execute and deliver to each
other, promptly upon any request therefor by the other party, a certificate addressed as indicated
by the requesting party and stating:



     (a) whether or not this Lease is in full force and effect;



     (b) whether or not this Lease has been modified or amended in any respect, and submitting
copies of such modifications or amendments;



     (c) whether or not there are any existing defaults hereunder known to the party executing the
certificate, and specifying the nature thereof;



18









 





     (d) whether or not any particular Article, Section, or provision of this Lease has been
complied with; and



     (e) such other matters as may be reasonably requested.



     Section 13.8 Severability. If any provision of this Lease or the application thereof to any
person or circumstance shall, at any time or to any extent, be invalid or unenforceable, and the
basis of the bargain between the parties hereto is not destroyed or rendered ineffective thereby,
the remainder of this Lease, or the application of such provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be affected thereby.



     Section 13.9 Attorney Fees. If litigation is ever instituted by either party hereto
to enforce, or to seek damages for the breach of, any provision hereof, the prevailing party
therein shall be promptly reimbursed by the other party for all attorneys’ fees reasonably incurred
by the prevailing party in connection with such litigation.



     Section 13.10 Surrender of Premises; Holding Over. Upon termination or the expiration of
this Lease, Tenant shall peaceably quit, deliver up, and surrender the Premises. If Tenant does not
surrender possession of the Premises at the end of the Term, such action shall not extend the Term,
Tenant shall be a tenant at sufferance, and during such time of occupancy Tenant shall pay to
Landlord, as damages, an amount equal to twice the amount of Rent that was being paid immediately
prior to the end of the Term. Landlord shall not be deemed to have accepted a surrender of the
Premises by Tenant, or to have extended the Term, other than by execution of a written agreement
specifically so stating.



     Section 13.11 Relation of Parties. It is the intention of Landlord and Tenant to hereby
create the relationship of landlord and tenant, and no other relationship whatsoever is hereby
created. Nothing in this Lease shall be construed to make Landlord and Tenant partners or joint
venturers or to render either party hereto liable for any obligation of the other.



     Section 13.12 Force Majeure. As used herein “Force Majeure” means the occurrence of any
event whereby Landlord or Tenant shall be delayed or prevented from the performance of any act
required hereunder by reason of acts of God, strikes, lockouts, labor troubles, failure or refusal
of governmental authorities or agencies to timely issue permits or approvals or conduct reviews or
inspections, civil disorder, inability to procure materials, restrictive governmental laws or
regulations or other cause without fault and beyond the control of the party obligated (financial
inability excepted). If Tenant or Landlord shall be delayed, hindered, or prevented from
performance of any of its obligations by reason of Force Majeure, the time for performance of such
obligation shall be extended for the period of such delay.



     Section 13.13 Non-Merger. Notwithstanding the fact that fee title to the land and to the
leasehold estate hereby created may, at any time, be held by the same party, there shall be no
merger of the leasehold estate hereby created unless the owner thereof executes and files for
record in the appropriate real property records a document expressly providing for the merger of
such estates.



     Section 13.14 Entireties. This Lease constitutes the entire agreement of the parties hereto
with respect to its subject matter, and all prior agreements with respect thereto are merged
herein. Any agreements entered into between Landlord and Tenant of even date herewith are not,
however, merged herein.



     Section 13.15 Recordation. Landlord and Tenant will, at the request of the other, promptly
execute an instrument in recordable form constituting a short form of this Lease, which shall be
filed for record in the appropriate real property records, or at the request of either party this



19









 




Lease shall be so filed for record. In the event that Tenant has requested such filing and the
Premises are located in a jurisdiction where a tax or assessment will be due and owing based on the
amounts payable by Tenant under this Lease, then Tenant, at its option, may require this Lease to
be amended to provide that the Term shall be an initial term of 10 years from the date hereof with
four options to renew the Term for a period of five years each upon notice to Landlord given at
anytime on or before 180 days before the expiration of the Term, as the same may be extended. All
of the terms and provisions of such modification shall be subject to the written consent of
Landlord and Tenant which shall not be unreasonably withheld or delayed.




     Section 13.16 Successors and Assigns. This Lease shall constitute a real right and
covenant running with the Premises, and shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Whenever a reference is made herein to
either party, such reference shall include the party’s successors and assigns.



     Section 13.17 Landlord’s Joinder. Landlord agrees to join with Tenant in the execution of
such applications for permits and licenses from any Governmental Authority as may be reasonably
necessary or appropriate to effectuate the intents and purposes of this Lease, provided that
Landlord shall not incur or become liable for any obligation as a result thereof.



     Section 13.18 No Third Parties Benefitted. Except as herein specifically and expressly
otherwise provided with regard to notices and opportunities to cure defaults and certain enumerated
rights granted to Permitted Mortgagees, the terms and provisions of this Lease are for the sole
benefit of Landlord and Tenant, and no third party whatsoever, is intended to benefit herefrom.



     Section 13.19 Survival. Any terms and provisions of this Lease pertaining to rights, duties,
or liabilities extending beyond the expiration or termination of this Lease shall survive the end
of the Term.



     Section 13.20 Perpetuities. To the extent that the rule against perpetuities is applicable
thereto, but not otherwise, the rights granted to Tenant in Article 14 hereof shall expire upon the
earlier to occur of (a) the date set forth for expiration of such rights in said Article 14 or (b)
the date which is 21 years after the date of death of the last to die of the following parties:
the last grandchild to survive of the presently living grandchildren of George H.W. Bush, former
President of the United States of America.



     Section 13.21 Transfer of Landlord’s Interest. Subject to the terms of the Landlord’s
Financing, Landlord may freely transfer and/or mortgage its interest in the Premises and under this
Lease from time to time and at any time, provided that any such transfer or mortgage is expressly
made subject to the terms, provisions, and conditions of this Lease, including specifically but
without limitation Tenant’s rights under Article 14, and the transferee or mortgagee agrees to be
bound by the provisions hereof (in the case of a mortgagee, such agreement being contingent upon
the mortgagee actually succeeding to the Landlord’s interest in the Premises and hereunder by
virtue of a foreclosure or conveyance in lieu thereof).



     Section 13.22 Landlord’s Separate Property. If the state in which the Premises are located
is a community property state, Landlord hereby warrants that the Premises are his sole or her sole
and separate properly, and Tenant hereby agrees to make all payments of Rent accordingly.



     Section 13.23 Guaranty. Group 1 Automotive, Inc. has executed that certain Guaranty, a copy
of which is attached hereto as Exhibit D.



     Section 13.24 Past Due Amounts. All amounts required to be paid by Tenant or Landlord under
the terms and provisions of this Lease shall bear interest at the Default Rate from the date due
until paid.



20









 





ARTICLE 14

OPTION TO PURCHASE PREMISES




     Section 14.1 Right of First Refusal.



     (a) If Landlord shall receive a bona fide offer to purchase the Premises during the
Lease term or any renewal thereof from a party other than (i) any person who is the Landlord or is
a shareholder, partner, or member of Landlord on the date hereof, to the extent Landlord is an
entity, and any such person’s or entity’s shareholder’s, partner’s, or member’s immediate family or
any entity in which such individuals, individually or collectively, own an interest and such entity
is subject to the Control (defined below), of such individuals, or (ii) an Affiliate (defined
below) (herein such purchasing party other than an Affiliate and any such person described in
clause (i) is herein called an “Approved Purchaser”), then any contract which may be entered into
between Landlord and a third party purchaser shall provide that the sale shall be subject to
Tenant’s right of refusal set forth in this Section 14.1. If Landlord shall receive such offer or
execute such contract, Landlord shall send to Tenant a true and complete copy of the executed
contract and the complete terms of the offer with Landlord’s certification that it proposes to
accept the offer, and Tenant shall have the option, to be exercised within 30 days after receipt
thereof, to make a contract with Landlord on the same terms and conditions set forth in such third
party contract or offer. If Tenant, after receipt of the third party contract or the terms of the
offer acceptable to Landlord, shall fail to exercise its option within the 30-day period, Landlord
shall have the right to conclude the proposed sale on the same terms as in the offer or contract
originally forwarded to Tenant, provided the sale shall close within 180 days after the period
within which Tenant is required hereby to exercise its option. If the sale shall not close within
said 180 days, Landlord shall repeat the procedure specified in this Paragraph 14.1 before it can
conclude any sale of the Premises. Notwithstanding Tenant’s failure to exercise its option, any
sale of the Premises shall be subject to this Lease. Tenant’s option shall remain in force and be
binding on any party other than an Approved Purchaser to the same extent as if said subsequent
owner were Landlord herein, and said subsequent owner shall be required to do all of the things
required of Landlord in this Lease prior to any such sale of the Premises. “Affiliate” shall mean
and refer to any person or entity controlling, controlled by, or under common control with another
such person or entity. “Control” shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such controlled person or entity;
the ownership, directly or indirectly, of at least fifty-one percent (51%) of the voting securities
of, or possession of the right to vote, in the ordinary direction of its affairs, at least
fifty-one percent (51%) of the voting interest in, any person or entity shall be presumed to
constitute such control.



     (b) If any third party contract or offer for the Premises shall include property other than
the Premises, Tenant’s right of first refusal shall, at its election, be either applicable to the
entire property covered by such contract or offer, or applicable to the Premises only at a purchase
price which shall be that part of the price offered by the third party, which the value of the
Premises shall bear to the value of all the property included in such third party contract or
offer.



     (c) Tenant’s right to purchase shall not be extinguished, canceled or called into operation by
any offer, contract or conveyance which is between a nominee and his principal, or a sole
shareholder and his corporation, or a corporation and its subsidiary or affiliate.



     (d) The price to be paid by Tenant if it exercises its right of first refusal shall include
the amount of any brokerage commission which is actually paid by Landlord at the closing of the
sale to Tenant to the extent, and only to the extent, that such commission is paid to a bona fide
third party agent or broker pursuant to a written listing or brokerage agreement.



21









 





     (e) Tenant may not exercise the option to purchase set forth in Section 14.1(a) above so long
as any Default shall exist or during any period following Tenant’s notice to Landlord of its
intention to terminate this Lease in accordance with Article 2.



     Section 14.2 Specific Performance. It is expressly agreed that the remedy at law for breach
of any of the obligations set forth in this Article 14 is inadequate in view of the complexities
and uncertainties in measuring the actual damages that would be sustained by reason of the failure
of Landlord or Tenant to comply fully with each of such obligations. Accordingly, each of the
aforesaid obligations shall be, and is hereby expressly made, enforceable by specific performance.



ARTICLE 15

ARBITRATION




     Section 15.1 Arbitration Provisions. EXCEPT FOR ANY MATTER RELATING TO TENANT’S REASONABLE
JUDGMENT AS SET FORTH IN SECTION 8.5, ANY CONTROVERSY OR CLAIM BETWEEN THE PARTES HERETO RELATING
TO THIS LEASE, INCLUDING, WITHOUT LIMITATION, ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT,
SHALL, TO THE EXTENT PERMITTED BY APPLICABLE LAW, BE DETERMINED BY BINDING ARBITRATION IN
ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION. SUCH
ARBITRATION SHALL TAKE PLACE IN THE CITY IN WHICH THE PREMISES ARE LOCATED. JUDGMENT UPON ANY
ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION. EXCEPT FOR ANY MATTER RELATING
TO TENANT’S REASONABLE JUDGMENT AS SET FORTH IN SECTION 8.5, ANY PARTY TO THIS LEASE MAY BRING AN
ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING, TO COMPEL ARBITRATION OF ANY CONTROVERSY OR
CLAIM TO WHICH THIS LEASE APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION. ALL
ARBITRATION HEARINGS WILL BE COMMENCED WITHIN NINETY (90) DAYS OF THE DEMAND FOR ARBITRATION;
FURTHER, THE ARBITRATOR SHALL ONLY, UPON SHOWING OF CAUSE, BE PERMITTED TO EXTEND THE COMMENCEMENT
OF SUCH HEARING FOR UP TO AN ADDITIONAL SIXTY (60) DAYS. ALL STATUTES OF LIMITATIONS THAT WOULD
OTHERWISE BE APPLICABLE SHALL) APPLY TO ANY DISPUTES ASSERTED IN ANY ARBITRATION PROCEEDING HEREOF.



     EXECUTED as of the 3rd day of August, 2005.



	 	 	 	 	 	 	 
	 	 	“LANDLORD”	 	 
	 
	 	 	 	 	 	 
	 	 	REHCO, L.L.C.,	 	 
	 	 	an Oklahoma limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Robert E. Howard II 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Robert E. Howard II, Manager/Member	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	“TENANT”	 	 
	 
	 	 	 	 	 	 
	 	 	BOB HOWARD MOTORS, INC.,	 	 
	 	 	an Oklahoma corporation dba Bob Howard Toyota	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Robert T. Ray	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Robert T. Ray, Vice President	 	 






22









 






	 	 	 	 	 	 	 	 	 	 	 
	STATE OF OKLAHOMA

	 	 	 	 	)	 	 	 	 	 
	 

	 	 	 	 	)	 	 	ss.
	 	 
	COUNTY OF OKLAHOMA

	 	 	 	 	)	 	 	 	 	 






     The foregoing instrument was acknowledged before me this 3rd day of August, 2005, by Robert E.
Howard II, Manager/Member of REHCO, L.L.C., an Oklahoma limited liability company, on behalf of
said company.



	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	/s/
Lydia Fran Berryhill 
	 

	 	 	 	 	 	 	 	NOTARY PUBLIC
	(SEAL)
	 	 	 	 	 	 	 	 
	My Commission Expires:	 	 	 	 
	November
5, 2008 	 	 	 	 
	Commission

	 	No.:	 	04010060 	 	 	 	 
	 

	 	 	 	 	 	 	 	 





	 	 	 	 	 	 	 	 	 	 	 
	STATE OF TEXAS

	 	 	 	 	)	 	 	 	 	 
	 

	 	 	 	 	)	 	 	ss.	 	 
	COUNTY OF HARRIS

	 	 	 	 	)	 	 	 	 	 






     The foregoing instrument was acknowledged before me this 3rd day of August, 2005, by Robert T.
Ray, Vice President of Bob Howard Motors, Inc., an Oklahoma corporation, on behalf of said
corporation.



	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	/s/
Erin S. Cadoree 
	 

	 	 	 	 	 	 	 	NOTARY PUBLIC
	(SEAL)
	 	 	 	 	 	 	 	 
	My Commission Expires:	 	 	 	 
	August 20, 2006 
	 	 	 	 
	 	 	 	 	 
	Commission

	 	No.:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 





23









 






EXHIBIT A

DESCRIPTION OF LAND




     A part of the Southeast Quarter (SE/4) of Section Fifteen (15), Township Thirteen (13) North,
Range Three (3) West of the Indian Meridian in Oklahoma County, Oklahoma, more particularly
described as follows: Beginning at the Northeast Corner (NE/C) of said SE/4; Thence South 662.295
feet along the East Section line; Thence West a distance of 990 feet; Thence North 662.295 feet to
the North line of said Southeast Quarter (SE/4); Thence East along the North line of the Southeast
Quarter (SE/4) a distance of 990 feet to the point or place of beginning, LESS AND EXCEPT the West
200 feet of the above described land.



 









 





EXHIBIT B

EXCEPTIONS TO TITLE TO LAND





	1.	 	Easement in favor of the City of Oklahoma City recorded in Book 3227, Page 48, Book 3652,
Page 184, Book 4673, Page 379.
	 
	2.	 	Statutory Right of Way in favor of the State of Oklahoma, along all section lines.
	 
	3.	 	Deed to Oklahoma City and Suburban Railway Company recorded in Book 134, page 431, Corrected
by Deed in Book 122, Page 460.





 









 










EXHIBIT C

REPRESENTATIONS OF LANDLORD




     Landlord represents and warrants to Tenant as of the date of this Lease that:




     (a) The Premises are not subject to any prior lease, easement, adverse claim, or claims of
parties in possession, whether or not shown by the public records, except as set forth on Exhibit
B.



     (b) There is no pending or threatened condemnation action or agreement in lieu thereof which
will or may affect the Premises or any part thereof in any respect whatsoever.



     (c) There is no action, suit or proceeding, including environmental, pending or threatened
against or affecting the Premises or any part thereof.



     (d) The execution, delivery and performance of this Lease by Landlord has been duly authorized
and this Lease is valid and enforceable against Landlord in accordance with its terms.



     (e) Landlord has no knowledge of any fact, action or proceeding, including environmental,
whether actual, pending or threatened, which could result in the modification or termination of the
present zoning classification of the Premises, or the termination of full free and adequate access
to and from the Premises from all adjoining public highways and roads.



     (f) Landlord has not agreed to lease or convey or granted any rights with respect to or any
part of the Premises or any interest therein to any other person or entity except as shown on
Exhibit B.



     (g) The Premises are not subject to any restrictions (recorded or unrecorded), building and
zoning laws or ordinances, or other laws, ordinances, rules, regulations and requirements of any
Governmental Authority having jurisdiction which do or could prohibit the use of the premises as an
automobile dealership.



     (h) Landlord has not received any notice from any Governmental Authority having jurisdiction
over the Premises requiring or specifying any work to be done to the Premises.



     (i) Landlord has no knowledge of any existing, threatened or contemplated action,
circumstances or conditions (including but not limited to subsurface conditions) which would
materially interfere with the development or use of the Premises for an automobile dealership.



     (j) The Premises are in compliance in all material respects with all restrictive covenants and
other restrictions applicable to the Premises and all applicable statutes, ordinances, rules and
regulations (federal, state, county and municipal), including without limitation all zoning,
environmental (with respect to asbestos), building, health, subdivision and “lot split”
regulations. Except as to matters relating to the presence of asbestos contained in the Premises,
if any, the representation and warranty set forth in this clause (j) shall not be applicable to the
matters covered under clause (m) hereinbelow.



     (k) The Premises have public access to and from abutting roadways dedicated to an accepted by
the State, City, or County where the Premises are located.



     (l) To the extent zoning regulations are applicable to the Premises, the Premises are zoned
“I-2 Moderate Industrial” under the Oklahoma City, Oklahoma Zoning Ordinance, and there are no
special or unusual zoning conditions or stipulations applicable to the Premises beyond the face of
the Zoning Ordinance except as set forth in written instruments delivered to Tenant by Landlord
prior to the date of this Lease.



 









 





     (m) To the best of Landlord’s actual knowledge and except as may otherwise be disclosed
to Tenant in any written environmental audit report delivered to Tenant prior to the date of this
Lease, no hazardous wastes, pollutants or toxic substances have been dumped, deposited or buried
upon, in or under the Premises, there have been no leaks of petroleum, toxic or hazardous materials
from any of the underground storage tank facilities and there is no contaminated soil, as defined
by federal, state and/or local laws or regulations, in, upon or under the Premises by reason of any
such wastes, pollutants, toxins, substances, or facilities.



     (n) The Premises have an assured water supply sufficient to permit the operations now being
conducted thereon to be conducted in accordance with all governmental requirements.



     (o) All dimensions in the description to the Premises are net of existing and proposed
rights-of-way, easements and dedications except as set forth on Exhibit B.



     (p) The Premises are not located in a flood plane or a flood hazard area for which flood
insurance would be required or for which flood insurance is available.



 









 





EXHIBIT D

GUARANTY




     The undersigned, GROUP 1 AUTOMOTIVE, INC., a Delaware corporation, hereby requests REHCO,
L.L.C., an Oklahoma limited liability company (“Landlord”) to enter into that certain Lease dated
June 1, 2005 between Landlord and Bob Howard Motors, Inc., an Oklahoma corporation dba Bob Howard
Toyota (“Tenant”) (the “Lease”), and as an inducement to Landlord to do so, and as an additional
consideration therefore, the undersigned hereby (a) guarantees unconditionally to Landlord the
full, faithful and punctual performance, fulfillment and observance of all of the obligations and
liabilities of Tenant under said Lease (the “Tenant Obligations”) throughout the Term, as defined
therein, including the payment of all amounts that may be or become payable by Tenant to or for the
benefit of Landlord under the Lease; (b) subject to the other terms and provisions of this
Guaranty, waives notice of and consents to any and all amendments, extensions and renewals of said
Lease, any and all assignments, subleases and other action that may be permitted thereunder by
Tenant or Landlord, any and all other amendments, extensions, and renewals, any and all other
advances, extensions, settlements, compromises, favors and indulgences, any and all other receipts,
substitutions, additions and releases of persons primarily or secondarily liable, any and all
acceptances by Landlord of negotiable instruments, commercial paper and other property, and agrees
that none of the foregoing, should there be any, shall discharge or affect in any way the liability
of the undersigned hereunder; (c) agrees that all rights and remedies of Landlord under said Lease
and hereunder shall survive and not be affected by any such discharge, moratorium or other relief
granted any person primarily or secondarily liable in any proceeding under federal or state law
relating to bankruptcy, insolvency or the relief or rehabilitation of debtors, or any disaffirmance
or rejection of the Lease in such proceedings, and any consent by Landlord to, or participation by
Landlord in the proceeds of, any assignment, trust or mortgage for the benefit of creditors, or any
composition or arrangement of debts, may be made without the undersigned being discharged or
affected in any way thereby; (d) waives any right to require marshaling or exhaustion of any right
or remedy against any person, collateral or other property; (e) subject to the other terms and
provisions of this Guaranty, waives presentment, demand, protest and notice of default, nonpayment
and protest and all demands, notices and suretyship defenses generally; and (f) agrees that upon
the existence and continuance of a Default under the Lease, Landlord may have and maintain an
action upon this Guaranty against the undersigned and in like manner may have and maintain
successive actions upon this Guaranty for each and every other such continuing Default; the
undersigned expressly agreeing hereby that its obligation hereunder shall not be exhausted by any
such action or by any number of such successive actions until and unless each of the Tenant
Obligations shall have been fully performed.



     This Guaranty shall be absolute and continuing. Landlord shall not be required to pursue any
remedies that it may have against Tenant or pursue any security or other parties as a condition to
the enforcement of this Guaranty. It is understood and agreed that Guarantor may be joined in any
action against Tenant and that recovery may be had against Guarantor in such action, or in any
independent action against Guarantor. This Guaranty shall not in any way be affected or impaired
by reason of Landlord asserting against Tenant any rights or remedies reserved to the Landlord
pursuant to the Lease, or available at law or in equity, including any termination of the Lease or
re-entry into the Premises. If at any time payment of any of the Tenant Obligations under the
Lease is rescinded or must be otherwise restored or returned upon the insolvency, bankruptcy or
reorganization of the Tenant, the obligations of the Guarantor with respect to such payment shall
be reinstated at such time as though such payment had not been made.



 









 





     Until all Tenant Obligations under the Lease are fully paid and satisfied, Guarantor (a) shall
have no right of subrogation against Tenant by reason of Guarantor’s performance under this
Guaranty or monies or obligations owed by Tenant to Guarantor; (b) waives any right to enforce any
remedy which Guarantor now has or may hereafter have against Tenant by reason of Guarantor’s
performance under this Guaranty and (c) subordinates any liability or indebtedness of Tenant now or
hereafter held by or owed to Guarantor to the Tenant Obligations.



     This Guaranty and the obligations of the Guarantor under this Guaranty shall not be
modified, discharged, waived or terminated except by an agreement in writing signed by Guarantor
and Landlord.



     This Guaranty shall bind Guarantor and the successors and assigns of Guarantor. This Guaranty
may be freely assigned, transferred or hypothecated by Landlord and shall run in favor and inure to
the benefit of Landlord, its successors and assigns, and each subsequent holder of Landlord’s
interest under the Lease. References to the term “Tenant” shall be deemed to include Tenant’s
successors and assigns.



     This Guaranty shall be governed by and construed in accordance with Oklahoma law. Guarantor
agrees to be subject to the jurisdiction of the courts of Oklahoma. If this Guaranty is enforced
by suit or otherwise, Guarantor shall reimburse Landlord, upon demand, for all reasonable expenses
incurred in connection therewith, including reasonable attorney’s fees.



     Notices to the Guarantor shall be sent by certified or registered mail to the address of Group
1 Automotive, Inc., 950 Echo Lane, Suite 100, Houston, Texas 77024, and shall be effective upon
being deposited in the United States mail, postage prepaid. Alternatively, notices may be sent by
Federal Express or other recognized delivery service and shall be effective upon delivery to
Guarantor at the same address. Guarantor may change its address by giving written notice to
Landlord in accordance with this provision.



     Guarantor shall have the right to give written notice to Landlord in accordance with the Lease
if at any time subsequent to the execution of this Guaranty, the then current Tenant under the
Lease is not a subsidiary or affiliate of Guarantor. By its acceptance of this Guaranty, Landlord
thereafter agrees to give written notice to Guarantor of any event, which, with the giving of
notice or the passage of time, or both, would constitute a Default under the Lease, and Guarantor
shall have the same grace period afforded to the Tenant under the Lease in which to cure the
default in question.



     Guarantor represents and warrants that it had the legal right and capacity to execute this
Guaranty, and each person executing this Guaranty on behalf of Guarantor covenants and warrants
that he is duly authorized by the board of directors of Guarantor to execute and deliver this
Guaranty on behalf of the Guarantor.



     WITNESS the execution hereof under seal as of the                     day of                                        , 2005.



	 	 	 	 	 
	 	 	GROUP 1 AUTOMOTIVE, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	          Robert T. Ray, Senior Vice President






 









 






LEASE AGREEMENT

EXHIBIT E

CONSTRUCTION EXHIBIT




     1. Construction of Facility. Tenant shall at its sole cost and expense construct and
complete on the Land a facility for a Toyota automobile sales and service center including service
facilities, vehicle parking, landscaping, driveways, signage and related facilities (“Facility”) in
a good and workmanlike manner and in accordance with plans and specifications (“Plan”) prepared by
Tenant, which shall be subject to Landlord’s reasonable approval, in accordance with all
Governmental Requirements. No changes will be made to the Plans without prior written approval of
both parities unless required by the Governmental Authorities or by Gulf States Toyota. In
constructing the Facility, Tenant shall be solely responsible (i) to obtain such governmental
approvals and entitlements as are necessary for the construction of the Facility, (ii) for the
payment of all fees required by Governmental Authorities with jurisdiction over the condition of
the Facility, and (iii) to construct all necessary utility installations and all onsite and offsite
improvements reflected in the Plans or otherwise imposed by Governmental Requirements.



     2. Completion Date. Tenant shall cause the Facility to be substantially completed
(as defined in Paragraph 3 below) within twelve (12) months after commencement of construction,
subject to delays resulting from events of Force Majeure (as defined in Section 13.12 of the
Lease). Tenant shall notify Landlord of the anticipated date of substantial completion at least
thirty (30) days prior thereto. The Commencement Date shall be the earlier to occur of (i) thirty
(30) days after the Facility has been substantially completed or (ii) fourteen (14) months after
commencement of construction, subject to delays resulting from events of force majeure.



     3. Substantial Completion. The Facility shall be deemed substantially complete, and
Tenant shall promptly deliver written notice thereof to Landlord (“Substantial Completion Notice”),
when (i) the Facility is sufficiently complete in accordance with the requirements of this Exhibit
E so that Tenant may under the terms of the Lease occupy and utilize the Facility, (ii) all
building systems to be constructed by Tenant are in good working order except for minor adjustments
which do not impair the utility of the systems or unreasonably
interfere with Tenant’s use thereof,
(iii) a temporary or permanent Certificate of Occupancy has issued, and (iv) all jurisdictional
inspections have been signed off (except for items of an immaterial nature which are not required
for the issuance of a temporary Certificate of Occupancy).



     4. Dispute. Any disputes between the parities relating to any matter referenced in
this Exhibit E shall be resolved by binding arbitration under the Construction Industry Rules of
the American Arbitration Association in Oklahoma City, Oklahoma.



 









 





LEASE AGREEMENT

EXHIBIT F

INITIAL BASE RENT CALCULATION




     1. The Base Rent for the Initial Term shall be calculated as hereinafter set forth based upon
(i) the total cost of construction of all improvements, plus the other items as set forth below
(“Construction Costs”) and (ii) the fair market
value of the Land (“Land Costs”) which is agreed to
be Four Million Fifty-Three Thousand Thirty-Two and 85/100 Dollars ($4,053,032.85). The annual
Base Rent shall be an amount equal to the sum of Construction Costs and the Land Cost multiplied by
a capitalization rate equal to the average yield rate of the ten (10) year United States Treasury
Note over the ten (10) day period preceding the date that is five (5) days prior to the
Commencement Date plus four hundred fifty (450) basis points. Base Rent shall be paid in twelve
(12) equal monthly installments.



     2. The Construction Costs shall include all of the hard and soft costs of construction paid by
Tenant in constructing and completing the Facility as described in Exhibit E of this Lease. Such
costs shall include amounts paid to contractors, subcontractors, or others for construction,
demolition, and permitting. The soft costs shall include all engineering, architect, environmental
and consulting fees; legal fees paid by Tenant in respect of the construction of the Facility; and
surveying, title insurance, insurance costs during the period ending on the Commencement Date,
inspection, loan fees, and loan brokerage fees, if any.



     3. At such time as the Construction Costs can be reasonably estimated by Tenant, Tenant shall
furnish to Landlord an estimate of the Construction Costs, setting out in reasonable detail each of
the elements comprising Construction Costs. When the general contract is entered into for the
construction of the Improvements, Tenant shall furnish to Landlord a copy thereof, and during the
course of construction shall periodically provide to Landlord further information concerning the
Construction Costs as the estimate is adjusted and such other information concerning the
Construction Costs as Landlord shall reasonably request. Promptly after the Facility is
substantially complete, Tenant shall provide to Landlord a computation of the final Construction
Costs and supporting information reasonably requested by Landlord to verify the Construction Costs.
Such computation of the Construction Costs shall establish the Base Rent for the Initial Term to
be paid by Tenant hereunder in accordance with the rent formula set forth below if Landlord
purchases the Facility. Within one hundred eighty (180) days after the Commencement Date, if the
Construction Costs differ from the amount set out in the notice given to Landlord upon substantial
completion of the Facility, Tenant shall provide to Landlord a revised final calculation of the
Construction Costs, which will also be subject to review and approval by Landlord. If there is a
dispute between Tenant and Landlord regarding the Construction Costs, such issue shall be resolved
by binding arbitration as provided in Article 15 of this Lease. If the revised Construction Costs
differ from the final Construction Costs provided to Landlord upon substantial completion of the
Facility, the Base Rent shall be adjusted retroactively to the Commencement Date to take account of
such difference. Any payment required by Tenant of a shortfall in the Base Rent shall be made by
Tenant with the next required installment payment of Base Rent. If Tenant has overpaid Base Rent,
then Landlord shall credit Tenant with the excess amount paid against the next installment of Base
Rent due hereunder.