<PAGE>
                                                                   EXHIBIT 10.37

                                 LEASE AGREEMENT



                                     BETWEEN

                               REHCO EAST, L.L.C.
                                   (LANDLORD)


                                       AND


                        BOB HOWARD AUTOMOTIVE-EAST, INC.
                                    (TENANT)


         Street Address:           9100 Memorial Drive, Tulsa Oklahoma

         Dealership Name:          South Pointe Chevrolet
                                   Subleases to:
                                   Marsat, Inc. (Saturn of Tulsa)
                                   Automobiles of Italy, Inc. (Used Car Lot)
                                   Automobiles of Italy, Inc. (Joe Marina Honda)



<PAGE>

                                 LEASE AGREEMENT

         This Lease Agreement ("LEASE") is entered is entered into as of the
_____ day of October, 2002, between REHCO EAST, L.L.C., an Oklahoma limited
liability company ("LANDLORD"), and BOB HOWARD AUTOMOTIVE-EAST, INC., an
Oklahoma corporation ("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.

         Section 1.4 TERMINATION OF PRIOR LEASE. The Premises was previously
subject to a lease agreement by and between Landlord and Tenant ("PRIOR LEASE").
Immediately upon the execution (and delivery to each other) by Landlord and
Tenant of this Lease, the Prior Lease shall automatically terminate and be of no
further force and effect; provided, however, Landlord and Tenant shall, upon the
request of any party hereto, execute and deliver to each other a written
instrument evidencing such termination. Upon the termination of the Prior Lease
in accordance with the foregoing provisions, this Lease shall supersede and
replace the Prior Lease in its entirety.

                                    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., Tulsa, Oklahoma, time, on the first date to occur of December 31, 2032 or
the Early Termination Date. The EARLY TERMINATION DATE shall be December 31,
2017, December 31, 2022, or December 31, 2027; 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 months prior to the Early Termination Date.

                                    ARTICLE 3
                                      RENT

         Section 3.1 BASE RENT.

         (a) Subject to the terms and provisions contained in this Section 3.1,
Tenant shall pay Landlord monthly Base Rent of Ninety Thousand and no/100
Dollars ($90,000.00), in advance on or before the first day of each calendar
month during the Term, subject to adjustment as hereafter provided. If the Term
commences 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



                                       1
<PAGE>

prorated on the basis of 1/30th of the monthly Base Rent for each day of such
month. Subject to the applicable credit for each P&I Increase provided elsewhere
in this Section 3.1, 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 3.1(a) plus an amount equal to one-half (1/2) of the product obtained by
multiplying: (i) the original monthly Base Rent specified in this Section 3.1
(a) by (ii) the percentage increase in the CPI from the Commencement Date
through the Adjustment Date. "ADJUSTMENT DATE" shall be January 1 of each of the
following years: 2008; 2013; 2018; 2023; and 2028, and the term "CPI" shall have
the meaning specified therefor in Section 13.5.

         In addition to the foregoing adjustment of Base Rent utilizing the CPI
but subject to the other terms of this Section 3.1(a), the Base Rent shall also
be subject to increase upon notification from Landlord to Tenant that the
principal and interest payments on all Existing Debt exceed the Total Base Rent
(such increase in Base Rent being herein defined as the "P&I INCREASE") due to a
fluctuation in the interest rate payable in connection with the Existing Debt.
Such increase shall be equal to the difference between (i) the Total Base Rent
and (ii) the monthly amount necessary for Landlord to pay all required regularly
scheduled monthly principal and interest payments (but excluding balloon
payments and other such payments) on Existing Debt as they become due; provided,
however, if, after any such adjustment to the Base Rent, the required monthly
principal and interest payments on Existing Debt are decreased, then the Base
Rent shall be decreased to the extent of any such decrease in the required
monthly principal and interest payments on Existing Debt until the monthly Base
Rent is equal to the monthly Base Rent that would have been required to be paid
under the terms of this Lease if such increase had not occurred. Such increase
shall be payable on the next monthly Base Rent payment date after such notice
from the Landlord to the Tenant accompanied by copies of written instruments
evidencing the necessity for such increase and any other reasonable
documentation that may be requested by Tenant; provided, however, that Tenant
shall only be required to pay such increase to the Landlord or the applicable
Related Party of Landlord owning the property which is subject to liens securing
the particular indebtedness that has caused a P&I increase. In no event will
Tenant ever be required to pay any such increase to more than one party. Any
such decrease shall be effective from and after the date of any such decrease in
such principal and interest payments, and Landlord shall notify Tenant
immediately of each such decrease. In making the adjustment to the Base Rent
based on the CPI called for in the first paragraph of this Section 3.1, such
adjustment shall be made without reference to or consideration of any portion of
the then current Base Rent attributable to a P&I Increase (Base Rent without the
applicable P&I Increase is herein called "PRIMARY BASE RENT" and Primary Base
Rent as so adjusted by CPI is herein called "ADJUSTED PRIMARY BASE RENT"). After
any such adjustment, and notwithstanding anything to the contrary contained in
this Lease, Tenant shall be required to pay Base Rent under this Lease in an
amount equal to the greater of (i) Adjusted Primary Base Rent or (ii) Primary
Base Rent plus the then applicable P&I Increase. "EXISTING DEBT" shall mean all
of the indebtedness of the Landlord existing on the date hereof, as the same may
be modified, which is secured in whole or in part by mortgages or deeds of trust
covering the Premises and any other property which is leased to Tenant or any
Related Party of Tenant by Landlord or any Related Party of Landlord. "TOTAL
BASE RENT" shall mean the aggregate of all monthly base rent, including the Base
Rent called for in this Lease, which Tenant or any Related Party of Tenant is
obligated to pay to Landlord or any Related Party of Landlord under all leases
by and between Landlord and any Related Party of Landlord and Tenant and any
Related Party of Tenant. "RELATED PART" shall mean any individual or Affiliate
covered under the terms of Section 14.1(a)(i) and (ii).

         Notwithstanding anything to the contrary contained in this Section 3.1
(including, without limitation, the rental adjustment provisions hereof), in no
event shall Tenant be obligated to pay to Landlord Base Rent on or after
December 31, 2012, which at any time exceeds the applicable Fair Market Rental
during the applicable Fair Market Rental Period. "FAIR MARKET RENTAL" shall mean
the amount of base rent for the Premises determined as of the then applicable
Possible Early Termination Date in accordance with the market rental rates for
comparable space prevailing



                                       2
<PAGE>

elsewhere with respect to other properties of similar size, type and age and for
use similar to Tenant's use in the metropolitan area where the Premises are
located (assuming no additional improvements are required to be made to such
space by the landlord thereof). If the Fair Market Rental determined in
accordance with the foregoing is less than eighty percent (80%) of Primary Base
Rent, then the Fair Market Rental shall be deemed to be eighty percent (80%) of
Primary Base Rent. The Fair Market Rental shall be determined, if at all, in
accordance with the provisions of this paragraph upon written notice from
Tenant, in its sole discretion, delivered to Landlord no less than six months
prior to the then next Possible Early Termination Date. "FAIR MARKET RENTAL
PERIOD" shall mean the period immediately following the applicable Possible
Early Termination Date until the next occurring Possible Early Termination Date.
If Landlord and Tenant are unable to agree on the Fair Market Rental no later
than thirty (30) days after notice from Tenant to Landlord delivered in
accordance with the above, then Tenant shall continue to pay the Base Rent then
in effect, subject to a cash adjustment between Landlord and Tenant to reflect
the Fair Market Rental as soon as the Fair Market Rental has been determined,
and such Fair Market Rental shall be determined as follows. Within ten (10) days
after the end of such thirty (30) day period, Landlord and Tenant shall each
select a representative ("REPRESENTATIVE"), each of whom shall be a competent,
qualified, licensed realtor familiar with the rental rates of buildings in the
metropolitan area in which the Premises are located and who is actively engaged
in lease negotiations in such area at the time of his selection and give written
notice to the other identifying its Representative. The two Representatives
first appointed under the terms hereof shall, within five (5) days after receipt
of notification of selection, together select a third Representative possessing
the same qualifications. If (i) within ten (10) days after receiving a written
notice of the appointment of the first Representative the one of Landlord or
Tenant so notified shall have failed either to appoint a Representative or give
written notice of such appointment to the other, or (ii) the two Representatives
shall have been appointed under the terms hereof and shall have failed to select
a third Representative within the above stated five (5) day time period (said
Representative next to be appointed in either event being herein called the
"NEXT REPRESENTATIVE"), the Next Representative shall be appointed by the then
Chief Judge of the United States District Court then having jurisdiction over
the city in which the Premises are located or the city nearest thereto if the
Premises are not located in a city, acting in his personal and not judicial
capacity, upon the application of either Landlord or Tenant. The decision as to
Fair Market Rental made by the majority of the Representatives so appointed
shall be final and binding upon both parties. In the event that the three
Representatives are unable or fail to reach a majority decision in which at
least two Representatives agree within thirty (30) days after all three
Representatives have been appointed, the third Representative shall be dismissed
and a new third Representative appointed in the same manner hereinabove provided
for the appointment of the first third Representative. Such procedure shall be
repeated, if necessary, until a majority of the Representatives shall have
reached a decision. The expense of the Representative appointed by each party
shall be borne by the party appointing such representative, and the expense of
the third Representative shall be borne by both parties equally. The
Representatives shall give prompt notice in writing of their decisions to each
party.

         (b) As used herein, "COMMENCEMENT DATE" means the date hereof 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 3.2 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 collectively referred to as "ADDITIONAL RENT." Base Rent and
Additional Rent are herein collectively referred to as "RENT."

         Section 3.3 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



                                       3
<PAGE>

(defined below), 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
                        IMPOSITIONS, UTILITIES, NET LEASE

         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 extent 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.

         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



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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 assure Landlord the rentals herein
reserved on an absolute net basis.

                                    ARTICLE 5
                                  IMPROVEMENTS

         Section 5.1 ALTERATIONS. 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;



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         (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 5.2 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 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 5.3 OWNERSHIP OF IMPROVEMENTS. During the Term all currently
existing Improvements shall be solely the property of Landlord. 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 5.4 CONDITION OF IMPROVEMENTS. Except as to any asbestos which
may be present, whether friable or unfriable, Tenant acknowledges that it
accepts the Improvements "as-is" and that except for the representations and
warranties expressly set forth in this Lease and in EXHIBIT C hereto, Landlord
makes no representations or warranties as to the condition of the Improvements.
Landlord shall remain fully liable and responsible for the presence of asbestos
on any portion of the Premises prior to the date of this Lease even if such
asbestos is in an unfriable state on the date of this Lease and Tenant
thereafter disturbs such asbestos in any manner including, without limitation,
in connection with any alterations performed by Tenant on the Premises. If
Tenant intentionally disturbs or causes to be disturbed by any contractor or
other party any asbestos presently located on the Premises of which Tenant has
actual knowledge, then any such disturbance



                                       6
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of such asbestos shall only be done in accordance with all laws, regulations,
ordinances, or requirements of any Governmental Authority having jurisdiction in
the Premises including, without limitation, those which govern the disposition
of Hazardous Materials.

                                    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)
and which are disposed of in accordance with all applicable environmental laws,
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.
Section 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



                                       7
<PAGE>

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
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 and Tenant shall have given notice of such failure
and a thirty (30) day opportunity to cure to Landlord's Financing Lender, 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.

                                    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:

         (1) 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.



                                       8
<PAGE>

         (2) Boiler and pressure apparatus insurance to the limit of not less
than $5,000,000 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.

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

         (4) 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.

         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,



                                       9
<PAGE>

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, 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. 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



                                       10
<PAGE>

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, 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, (i) 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 (as hereinafter defined) 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



                                       11
<PAGE>

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
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
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



                                       12
<PAGE>

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 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



                                       13
<PAGE>

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 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.



                                       14
<PAGE>

                                   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, and (iii) 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 subordination non-disturbance 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 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 and no
default remains uncured under the 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

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

         (1) 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;

         (2) 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;



                                       15
<PAGE>

         (3) 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

         (4) 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 11.2, 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:

         (1) 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
(except for sublessees as provided in Section 10.2) 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.

         (2) 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 (except for
sublessees as provided in Section 10.2) 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 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(2),
it may at any time thereafter elect to terminate this Lease as provided in
Section 12.2(1).

         Section 12.3 LANDLORD'S FINANCING LENDER PROTECTIVE PROVISIONS. If a
Default should occur hereunder by Landlord, then Tenant specifically agrees
that:

                  (1) Tenant 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 Landlord's
         Financing Lender, in the manner provided in Section 13.1, and if the
         Landlord's Financing Lender 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



                                       16
<PAGE>

         within such time period, the Landlord's Financing Lender, 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
         Landlord's Financing Lender to effect such cure shall be as fully
         effective to prevent the exercise of any rights, recourses, or remedies
         by Tenant as if done by Landlord; and

                  (2) if the Default is a non-monetary default, the Landlord's
         Financing Lender 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 Landlord under the terms of this Lease, or (ii)
         60 days after the date that the Landlord's Financing Lender has been
         notified of such Default.

                                   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 EAST, L.L.C.
                                    P.O. Box 8183
                                    Edmond, OK 73083
                                    Attention:  Robert E. Howard II
                                    Facsimile (405) 228-0642

            with a copy to:         Calvert Law Firm
                                    1041 N.W. Grand Boulevard
                                    Oklahoma City, OK  73118
                                    Attention: Randall K. Calvert, Esq.
                                    Facsimile (405) 848-5052

                    Tenant:         Group 1 Automotive, Inc.
                                    950 Echo Lane, Suite 100
                                    Houston, Texas 77024
                                    Attention: John T. Turner
                                    Facsimile (713) 647-5800

            with a copy to:         John S. Watson
                                    1001 Fanin, Suite 2300
                                    Houston, Texas  77002
                                    Facsimile (713) 615-5236

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



                                       17
<PAGE>

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 Bank of America (or a comparable rate
of interest if such rate 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.

         As used herein, "CPI" shall mean the Consumer Price Index for All Urban
Consumers, All Items (Base Year 1982-84 = 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 13.6 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;



                                       18
<PAGE>

         (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;

         (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 13.7 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 13.8 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 13.9 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 13.10 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 13.11 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 13.12 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 13.13 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



                                       19
<PAGE>

herein. Any agreements entered into between Landlord and Tenant of even date
herewith are not, however, merged herein.

         Section 13.14 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 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 13.15 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 13.16 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 13.17 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 13.18 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 13.19 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 Bush, former President of the United States of America.

         Section 13.20 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 13.21 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



                                       20
<PAGE>

or her sole and separate properly, and Tenant hereby agrees to make all payments
of Rent accordingly.

         Section 13.22 GUARANTY. Group 1 Automotive, Inc. has executed that
certain Guaranty, a copy of which is attached hereto as EXHIBIT D.

         Section 13.23 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.

         Section 13.24 SECURITY DEPOSIT. Landlord acknowledges the receipt of
Security Deposit in the amount of Forty Thousand Dollars ($40,000)(the "Security
Deposit"), to be held by Landlord with interest as security for the performance
by Tenant of Tenant's covenants and obligations under this Sublease, it being
expressly understood that the Security Deposit is not an advance payment of Rent
or a measure of Landlord's damages in case of default by Tenant. Landlord shall
place the Security Deposit in an interest bearing account at a federally insured
depository institution and, so long as Tenant is not in default of this
Sublease, the interest earned on the Security Deposit shall be paid to Tenant,
and Tenant shall be required to pay the income tax payable in respect of the
interest earned on the Security Deposit. Upon the occurrence of any default,
Landlord may, from time to time, without prejudice to any other remedy provided
herein or provided by law, use such fund to the extent necessary to make good
any arrears of Rent and any other damage, injury, expense or liability caused to
Landlord by such event of default. Following any such application of the
Security Deposit, Tenant shall pay to Landlord on demand the amount so applied
in order to restore the Security Deposit to its original amount. If Tenant is
not then in default hereunder, any remaining balance of such deposit shall be
returned by Landlord to Tenant upon termination of this Sublease.

                                   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 present shareholder, partner, or
member of Landlord, 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, as hereinafter defined, of such
individuals, or (ii) an Affiliate, as hereinafter defined (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



                                       21
<PAGE>

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.

         (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 14.3 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



                                       22
<PAGE>

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 date and year first above written.

                                       "LANDLORD"
                                       REHCO EAST, L.L.C.,
                                       an Oklahoma limited liability company




                                       By: /s/ ROBERT E. HOWARD II
                                          --------------------------------------
                                          Robert E. Howard II, Manager

                                       "TENANT"
                                       BOB HOWARD AUTOMOTIVE-EAST, INC.,
                                       an Oklahoma corporation




                                       By: /s/ SCOTT L. THOMPSON
                                          --------------------------------------
                                          Scott L. Thompson, Vice President



                                       23
<PAGE>

                                    EXHIBIT A
                              (DESCRIPTION OF LAND)

(CHEVROLET FACILITY)

TRACT 1 Lot Two (2), Block One (1) and Lots Five (5), Six (6), Block Two (2),
9100 Memorial Addition to the City of Tulsa, Oklahoma, according to the recorded
plat thereof.

TRACT 2 A tract of land that is part of Lot Two (2), Block Three (3) of 9100
MEMORIAL, an Addition to the City of Tulsa, Tulsa County, State of Oklahoma,
according to the recorded Plat No. 4655, said tract of land being more
particularly described as follows, to-wit:

BEGINNING AT A POINT that is the most Easterly Northeast Corner of said Lot Two
(2); THENCE South 00(degrees) 01' 14" East along the Easterly line thereof for
Two hundred (200.00) feet; THENCE South 89(degrees) 58' 46" West for Two hundred
forty-four and Twenty-five hundredths (244.25) feet to a point on the Westerly
line of said Lot Two (2); THENCE North 00(degrees) 01' 14" West along said
Westerly line for One hundred four and Thirty-three hundredths (104.33) feet to
the Northwest Corner of said Lot Two (2); THENCE North 41(degrees) 01' 46" East
along the Northerly line thereof for Seventy-three and Thirty-three hundredths
(73.33) feet to a point of curve; THENCE Northeasterly and Easterly continuing
along said Northerly line and along a curve to the right, with a central angle
of 48(degrees) 57' 00" and a radius of Two hundred five (205.00) feet for One
hundred seventy-five and Fourteen hundredths (175.14) feet to a point of
tangency; THENCE North 89(degrees) 58' 46" East along said tangency and along
said Northerly line for Eleven and Fifty hundredths (11.50) feet to a point of
curve; THENCE Easterly, Southeasterly and Southerly along the Northeasterly line
of Lot Two (2) and along a curve to the right with a central angle of
90(degrees) 00' 00" and a radius of Thirty (30.00) feet for Forty-seven and
Twelve hundredths (47.12) feet to the POINT OF BEGINNING of said tract of land.

(HONDA FACILITY)

Lot Four (4), Block Two (2), 9100 Memorial Addition to the City of Tulsa,
Oklahoma, according to the recorded plat thereof.

(SATURN FACILITY)

Lot Two (2), Block Two (2), 9100 Memorial Addition to the City of Tulsa,
Oklahoma, according to the recorded plat thereof.

(USED CAR FACILITY)

Lot One (1), Block Two (2), 9100 Memorial Addition to the City of Tulsa,
Oklahoma, according to the recorded plat thereof.



<PAGE>

                                    EXHIBIT B
                          (EXCEPTIONS TO TITLE TO LAND)



1. Easements, setback lines, and restrictions as shown on the plat of 9100
Memorial, Plat No. 4655, as part of P.U.D. No. 405 and as provided for in the
Certificate of Dedication of 9100 Memorial.

2. Subject to Covenants, Conditions, Restrictions, Easements, and Setback Lines
contained in the Certificate of Dedication of 9100 Memorial, dated July 22,
1986, filed July 30, 1986, as part of P.U.D. No. 405, Plat No. 4655, as amended
by instrument dated February 10, 1994, filed April 6, 1994, recorded in Book
5612, Page 68, as amended by instrument dated May 4, 1995, filed November 1,
1995, recorded in Book 5757, Page 1554, as amended by instrument dated October
26, 1995, filed January 22, 1996, recorded in Book 5776, Page 2263.

3. Five foot wide underground utility easement running to the service pedestal
of the building for connection of utilities. (As shown in the Certificate of
Dedication of 9100 Memorial per paragraph 1.2.2 of said Certificate.)

4. Twenty-Five Foot Right-Of-Way Agreement to Williams Pipeline Company, dated
June 7, 1974, filed June 24, 1974, recorded in Book 4125, Page 486, as assigned
by partial assignment of rights-of-way to William Telecommunications Company
dated October 31, 1986, filed November 21, 1986, recorded in Book 4984, Page
1169.

5. Terms, Conditions, and Provisions of Report of Commissioners filed in the
Tulsa County District Court in Case No. C-81-1678, dated September 8, 1981, also
filed December 30, 1981, recorded in Book 4587, Page 672, this documents is for
the present right-of-way of South Memorial Drive and does not affect the
property described hereon.

6. Ten foot wide utility easement to the public dated December 18, 1986, filed
December 29, 1986, recorded in Book 4991, Page 1080.

7. Five foot wide and ten foot wide underground right-of-way easement to Public
Service Company of Oklahoma dated December 4, 1986, filed January 7, 1987,
recorded in Book 4993, Page 1834. (Said underground right-of-way easements are
pictorially shown on Exhibit "1" of said document, the actual location of said
easement is not mathematically described; therefore the easements as shown
hereon is in an approximate location.)

8. Easement, setback lines, and restrictions, as shown on the Plat of 9100
Memorial, Plat No. 4655, as part of P.U.D. No. 405, as filed in the office of
Tulsa County Clerk, and as provided for in the Certificate of Dedication
described above.

9. Covenants, Conditions, Restrictions, Easements and Setback Lines contained in
the Certificate of Dedication of 9100 Memorial, dated July 22, 1986, filed July
30, 1986, as part of the P.U.D. No. 405 in the office of the Tulsa County Clerk,
which does provide for a forfeiture or reversion of interest.

10. A 5' underground utility easement running to the service pedestal of the
building for connection of utilities per paragraph 1.2.2 of the Certificate of
Dedication described above.

11. Encroachment of chin link fence on all sides of Lot 2, Block 1, and rights
of claims, if any, of adjacent property owners, in and to that portion of
property lying between the fence line and that portion of property inside
subject property boundary line on all sides of subject property, as shown on
survey prepared by Sack and Associates, Inc., dated December 13, 1993.

12. Protrusion of 6' wood fence on the west side of Lot 2, Block 1, and rights
of claims, if any,



<PAGE>

of the borrowers or purchasers, in and to that portion of property lying between
the fence line and that portion of property outside the subject property
boundary line on the west side of subject property, as shown on survey prepared
by Sack and Association, Inc., dated December 13, 1993.

12. Curbing and gate posts are located within utility easements throughout
subject property, as shown on survey prepared by Sack and Associates, Inc.,
dated December 13, 1993.

13. Agreement recorded in Book 5486, Page 2580 by and between Anatoly A.
Arutunoff & Robert L. Parmele, Sr., and Cheryl H. Leavitt, Co-Trustees of the An
Landrith Revocable Inter Vivos Trust dated December 20, 1992.



<PAGE>

                                    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) To the knowledge of Landlord, 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) Intentionally blank.

         (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



<PAGE>

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) Except as reflected on the Sisemore Weisz & Associates, Inc.Survey,
dated August 22, 2002,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.



<PAGE>

                                    EXHIBIT D

                                    GUARANTY

         The undersigned, GROUP 1 AUTOMOTIVE, INC., a Delaware corporation
("GUARANTOR"), hereby requests REHCO East, L.L.C., an Oklahoma limited liability
company ("LANDLORD") to enter into that certain Lease dated October ___, 2002,
between Landlord and BOB HOWARD AUTOMOTIVE - EAST, INC., an Oklahoma corporation
("TENANT") ("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 payment,
performance, fulfillment and observance of all of the obligations and
liabilities of Tenant under said Lease ("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.



<PAGE>

         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 below, 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. Guarantor may change its address by giving written notice
to Landlord in accordance with this provision.

         Guarantor:                 Group 1 Automotive, Inc.
                                    950 Echo Lane, Suite 100
                                    Houston, Texas 77024
                                    Attention: John T. Turner
                                    Telecopier (713) 647-5800

         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 Debtor,
2002.

                                       "GUARANTOR"
                                       GROUP 1 AUTOMOTIVE, INC.,
                                       a Delaware corporation


                                       BY:
                                          --------------------------------------
                                          Its:
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