Document:

exv10w54

 

Exhibit 10.54

LEASE AGREEMENT

between

REHCO, L.L.C.,

an Oklahoma limited liability company

(Landlord)

and

BOB HOWARD MOTORS, INC.,

an Oklahoma corporation, doing business as Bob Howard Toyota

(Tenant)

	 	 	 	 	 
	 

	 	Street Address:
	 	13001 N. Kelley, Oklahoma City
	 
	 

	 	Dealership Name:
	 	Bob Howard Toyota Service Facility

 

 

TABLE OF CONTENTS

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

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

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EXHIBITS

	 	 	 
	Exhibit A

	 	Description of Land
	Exhibit B

	 	Exceptions to Title to Land
	Exhibit C

	 	Representations of Landlord
	Exhibit D

	 	Guaranty
	Exhibit E

	 	Construction Exhibit
	Exhibit F

	 	Initial Base Rent Calculation

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LEASE AGREEMENT

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

ARTICLE 1

LEASE OF PROPERTY

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

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

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

ARTICLE 2

TERM OF LEASE

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

ARTICLE 3

RENT

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

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     Section 3.2 Base Rent.

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

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

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

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

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

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

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

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

ARTICLE 4

TAXES; UTILITIES

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

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

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

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

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

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

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

ARTICLE 5

IMPROVEMENTS

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

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

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

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

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

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

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

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

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

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

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

     Section 5.4 Ownership of Improvements.

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

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

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

ARTICLE 6

USE, MAINTENANCE, AND REPAIRS

     Section 6.1 Use.

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

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

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

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

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

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

ARTICLE 7

INSURANCE AND INDEMNITY

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 8

CASUALTY; CONDEMNATION

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

     Section 8.2 Restoration and Deposit of Funds.

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

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

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

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

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

11

 

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

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

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

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

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

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

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

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

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

ARTICLE 9

ASSIGNMENT AND SUBLETTING

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

ARTICLE 10

TENANT’S FINANCING

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 11

WARRANTY OF TITLE AND PEACEFUL POSSESSION

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

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

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

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

ARTICLE 12

DEFAULT AND REMEDIES

15

 

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

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

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

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

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

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

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

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

16

 

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

ARTICLE 13

MISCELLANEOUS

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

	 	 	 	 	 
	 

	 	Landlord:
	 	REHCO, L.L.C.
	 

	 	 	 	P.O. Box 8183
	 

	 	 	 	Oklahoma City, Oklahoma 73083
	 

	 	 	 	Attention: Robert E. Howard II
	 
	 	 	 	 
	 

	 	Tenant:
	 	Bob Howard Motors, Inc.
	 

	 	 	 	c/o Group 1 Automotive, Inc.
	 

	 	 	 	950 Echo Lane, Suite 100
	 

	 	 	 	Houston, Texas 77024
	 

	 	 	 	Attention: John Turner
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Group 1 Automotive, Inc.
	 

	 	 	 	950 Echo Lane, Suite 100
	 

	 	 	 	Houston, Texas 77024
	 

	 	 	 	Attention: Jeffrey M. Cameron,
	 

	 	 	 	Vice President, Legal Counsel and Secretary
	 
	 	 	 	 
	 

	 	and:
	 	Calvert Law Firm
	 

	 	 	 	1041 NW Grand Boulevard
	 

	 	 	 	Oklahoma City, Oklahoma 73118
	 

	 	 	 	Attention: Randall K. Calvert.

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

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

17

 

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

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

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

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

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

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

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

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

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

18

 

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

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

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

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

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

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

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

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

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

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

19

 

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

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

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

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

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

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

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

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

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

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

20

 

ARTICLE 14

OPTION TO PURCHASE PREMISES

     Section 14.1 Right of First Refusal.

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

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

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

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

21

 

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

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

ARTICLE 15

ARBITRATION

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

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

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

	 	By:	 	/s/ Robert E. Howard II 	 	 
	 

	 	 	 	 	 	 
	 

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

	 	By:	 	/s/ Robert T. Ray	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Robert T. Ray, Vice President	 	 

22

 

	 	 	 	 	 	 	 	 	 	 	 
	STATE OF OKLAHOMA

	 	 	 	 	)	 	 	 	 	 
	 

	 	 	 	 	)	 	 	ss.
	 	 
	COUNTY OF OKLAHOMA

	 	 	 	 	)	 	 	 	 	 

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

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	/s/
Lydia Fran Berryhill 
	 

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

	 	No.:	 	04010060 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 
	STATE OF TEXAS

	 	 	 	 	)	 	 	 	 	 
	 

	 	 	 	 	)	 	 	ss.	 	 
	COUNTY OF HARRIS

	 	 	 	 	)	 	 	 	 	 

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

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	/s/
Erin S. Cadoree 
	 

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

	 	No.:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

23

 

EXHIBIT A

DESCRIPTION OF LAND

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

 

 

EXHIBIT B

EXCEPTIONS TO TITLE TO LAND

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

 

 

EXHIBIT C

REPRESENTATIONS OF LANDLORD

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

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

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

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

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

 

 

EXHIBIT D

GUARANTY

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

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

 

 

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

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

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

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

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

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

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

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

	 	 	 	 	 
	 	 	GROUP 1 AUTOMOTIVE, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	          Robert T. Ray, Senior Vice President

 

 

LEASE AGREEMENT

EXHIBIT E

CONSTRUCTION EXHIBIT

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

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

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

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

 

 

LEASE AGREEMENT

EXHIBIT F

INITIAL BASE RENT CALCULATION

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

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

     3. At such time as the Construction Costs can be reasonably estimated by Tenant, Tenant shall
furnish to Landlord an estimate of the Construction Costs, setting out in reasonable detail each of
the elements comprising Construction Costs. When the general contract is entered into for the
construction of the Improvements, Tenant shall furnish to Landlord a copy thereof, and during the
course of construction shall periodically provide to Landlord further information concerning the
Construction Costs as the estimate is adjusted and such other information concerning the
Construction Costs as Landlord shall reasonably request. Promptly after the Facility is
substantially complete, Tenant shall provide to Landlord a computation of the final Construction
Costs and supporting information reasonably requested by Landlord to verify the Construction Costs.
Such computation of the Construction Costs shall establish the Base Rent for the Initial Term to
be paid by Tenant hereunder in accordance with the rent formula set forth below if Landlord
purchases the Facility. Within one hundred eighty (180) days after the Commencement Date, if the
Construction Costs differ from the amount set out in the notice given to Landlord upon substantial
completion of the Facility, Tenant shall provide to Landlord a revised final calculation of the
Construction Costs, which will also be subject to review and approval by Landlord. If there is a
dispute between Tenant and Landlord regarding the Construction Costs, such issue shall be resolved
by binding arbitration as provided in Article 15 of this Lease. If the revised Construction Costs
differ from the final Construction Costs provided to Landlord upon substantial completion of the
Facility, the Base Rent shall be adjusted retroactively to the Commencement Date to take account of
such difference. Any payment required by Tenant of a shortfall in the Base Rent shall be made by
Tenant with the next required installment payment of Base Rent. If Tenant has overpaid Base Rent,
then Landlord shall credit Tenant with the excess amount paid against the next installment of Base
Rent due hereunder.exv10w1

 

Exhibit 10.1

ASSET PURCHASE AGREEMENT

     THIS ASSET PURCHASE AGREEMENT (“Agreement”) is made and entered into as of the 21st day of
February, 2006, by and between Basic Energy Services, L.P., a Delaware limited partnership acting
herein by and through Basic Energy Services GP, LLC, its sole general partner (the “Purchaser”),
and G&L Tool, Ltd., a Texas limited partnership (the “Seller”), DLH Management, LLC, a Texas
limited liability company (the “Manager”) and LJH, Ltd., a Texas limited partnership (the “Owner”).

RECITALS:

     A. The Seller owns and operates an oil and gas fishing and rental tool business based in
Abilene, Texas (the “Business”);

     B. The Manager is the sole general partner of the Seller and the Owner is the sole limited
partner of the Seller.

     C. The Purchaser desires to purchase and acquire, and the Seller desires to sell and transfer,
substantially all of the properties, assets and goodwill comprising the Business, except for the
Excluded Assets (as hereinafter defined);

     NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements
contained in this Agreement, the parties agree as follows:

ARTICLE I

PURCHASE AND SALE

     1.01 Sale and Transfer of Assets. At the Closing, which shall occur on the Closing
Date (both terms as defined in Section 6.01 hereof), and subject to the terms and conditions of
this Agreement, the Seller will grant, sell, convey, assign and deliver to the Purchaser, and the
Purchaser will pay for and accept from the Seller all of the following assets (collectively, the
“Assets”), effective as of 12:01 a.m., Abilene, Texas time on the Closing Date:

	 	(a)	 	All of the tangible and intangible assets of every kind and description (other
than the Excluded Assets) of the Seller used in Seller’s fishing and rental tool
business (the “Business”), including, without limitation all tanks, pumps, reverse
units, blow out preventors, foam units, wash pipe, drill collars and pipe, fishing and
rental tools, and other miscellaneous equipment all as more particularly described on
the inventory listing attached hereto on Exhibit A. The Seller is not selling
and the Purchaser is

	 	 	 
	
Asset Purchase Agreement
	 	
Page 1

 

 

	 	 	 	not purchasing any of the Seller’s cash, deposits, prepayments,
bank accounts, prepaid insurance, bonds, accounts receivable or other assets specifically defined
herein as being excluded from the sale and purchase contemplated by this Agreement,
all of which are referred to herein collectively as (the “Excluded Assets”).
	 
	 	(b)	 	the trucks, trailers, light vehicles, miscellaneous support trucks and other
equipment described on Exhibit B hereto, together with all tools and
accessories located on and used in connection with the same.
	 
	 	(c)	 	all spare components, tools, fittings and accessories, replacements parts and
operating supplies, inventories, all shop equipment, tools, accessories and shop supply
inventories, all office equipment and improvements owned by Seller (the Assets
described under Section 1.01(a), (b) and (c) hereof are sometimes referred to as the
“Tangible Personalty”);
	 
	 	(d)	 	all rights to all licenses, permits, easements and other authorizations or
grants owned by or in favor of the Seller which are in any way used or useful in the
ownership and operation of the Assets and the Business;
	 
	 	(e)	 	all of the Seller’s rights under the lease agreements, contracts and
commitments which are described on Exhibit C attached hereto and made a part
hereof for all purposes (the “Contracts”);
	 
	 	(f)	 	any usable and salable raw materials and supplies of the Seller as of the Closing
(the “Inventory”);
	 
	 	(g)	 	all existing and assignable guaranties and warranties (express or implied)
issued in connection with the purchase, lease, construction, alteration, and/or repair
of any real or personal property included within the Assets;
	 
	 	(h)	 	all information, files, records, data, plans and recorded information,
including supplier lists and customer lists, relating to the ownership and operation of
the Business, provided that the Seller shall be entitled to keep, retain and utilize
copies of all corporate, accounting and tax records maintained by the Seller;
	 
	 	(i)	 	all right, title and interest of the Seller in and to trade names used by the
Seller in the operation of the Business, including, specifically, the name G&L Tool
Company and all variations thereof;
	 
	 	(j)	 	all telephone numbers, facsimile numbers and websites utilized by Seller in the
conduct of the Business;

	 	 	 
	
Asset Purchase Agreement
	 	
Page 2

 

 

	 	(k)	 	all real property owned by Seller, including but not limited to the real
property described on Exhibit D hereto (collectively, the “Real Property”), all
of which will
be conveyed to Purchaser pursuant to a Real Property Purchase Agreement or
Agreements (hereinafter referred to as the “Real Property Purchase Agreement”,
whether one or more), with such Real Property Purchase Agreement or Agreements to be
in substantially the form of that attached hereto or Exhibit E;
	 
	 	(l)	 	all goodwill of the Seller; and
	 
	 	(m)	 	any and all other assets of the Seller other than the Excluded Assets.

     1.02 Purchase Price. At the Closing, in accordance with the terms and conditions of
this Agreement and in reliance on the representations, warranties and covenants of the Seller, the
Manager and the Owner, the Purchaser shall purchase the Assets from the Seller for a total purchase
price (the “Purchase Price”) of Fifty Eight Million and No/100 Dollars ($58,000,000.00). The
portion of the Purchase Price payable to Seller will be reduced by (a) Two Million and No/100
Dollars ($2,000,000.00) which will be placed in escrow as provided in Section 1.05 below (the
“Escrowed Funds”), (b) Fifty One Thousand and No/100 ($51,000.00) which is allocated to the
Non-Competition Agreements to be executed by the Seller, John Teague and the Owner and (c) the
amounts paid by Purchaser to creditors of Seller (if any) pursuant to Seller’s instructions. The
Seller and the Purchaser agree that the Purchase Price will be allocated among the Assets as set
forth on Schedule 1.02 attached hereto and made a part hereof and agree to be bound by such
allocation for federal income tax and all other purposes incident to this Agreement.

     1.03 Additional Adjustments. The Purchase Price will be increased (i) in an amount
required to reimburse Seller for the capital expenditures made by Seller between September 16, 2005
and the date of the execution of this Agreement (all of which expenditures are listed in Schedule
1.02 hereto) and (ii) as is required to reimburse Seller for any other capital expenditures made by
Seller between the date of execution of this Agreement and the Closing Date with Purchaser’s
knowledge and approval (collectively, the “Expenditures Capital Reimbursement Amount”). The amount
by which the Purchase Price will be increased pursuant to the provisions of (i) and (ii)
immediately above will be decreased by an amount equal to 1/60th of the purchase price
paid by Seller for such equipment time the full number of months such equipment is owned by Seller
prior to Closing.

     1.04 Contingent Earn Out Agreement. In addition to the Purchase Price, the Purchaser
agrees that it will pay the Seller up to an additional Twenty One Million and No/100 Dollars
($21,000,000.00) (the “Earn Out Amount”) if the form and conditions of a Contingent Earn Out
Agreement to be executed between Purchaser and Seller at Closing (in substantially in the form of
that attached hereto as Exhibit F, with appropriate insertions) are satisfied.

     1.05 Escrowed Funds. At the closing, Seller, Purchaser and the Escrow Agent (as
defined in the Escrow Agreement) shall enter into an escrow agreement that is substantially
identical in form

	 	 	 
	
Asset Purchase Agreement
	 	
Page 3

 

 

and substance to that attached hereto as Exhibit G (the “Escrow
Agreement”), pursuant to which Purchase shall deposit a portion of the Purchase Price (the
“Escrowed Funds”) equal to the sum Two
Million and No/100 Dollars ($2,000,000.00) with the Escrow Agent (the “Escrow Account”), to serve
as a source of security for the payment of any claims asserted by Purchaser within one hundred
twenty (120) days from the Closing Date against Seller, the Manager and/or the Owner for the breach
of any of their representations, warranties and /or covenants under this Agreement and the
instruments and documents executed by Seller, the Manager and/or the Owner at Closing pursuant
hereto (the “Settlement Period”). The establishment of the Escrow Account and any exercise of
recourse thereon by Purchaser shall not operate or be deemed to operate to limit or restrict any
other legal or equitable rights or remedies available to Purchaser for any such breach by Seller.
Disputes relating to the Escrow Account shall be resolved as set forth in Article VII of this
Agreement and as otherwise provided in the Escrow Agreement.

     1.06 Liabilities Not Assumed. Except for liabilities arising under any Contracts
assumed by Purchaser (the “Assumed Contractual Liabilities”), the Purchaser does not assume or
agree hereunder to pay, perform or discharge any debt, obligation, tax or liability, known or
unknown, contingent or otherwise, of the Seller, the Manager or the Owner of any kind or nature
whatsoever. Without limiting the foregoing, in no event shall the Purchaser assume or incur any
liability or obligation under this Agreement or otherwise in respect of any of the following:

	 	(a)	 	any claim for injury to person or property arising out of events occurring
prior to Closing, regardless of when made or asserted, or which arises out of or is
based upon any express or implied representation, warranty, agreement or guarantee made
(or alleged to have been made) by the Seller, the Manager or the Owner or which is
imposed or asserted to be imposed by operation of law, in connection with any service
performed or product sold or leased by or on behalf of the Seller, the Manager or the
Owner or arising from any actions or inactions of the Seller, the Manager or the Owner
or any events occurring prior to the Closing Date;
	 
	 	(b)	 	any federal, state or local income or other tax payable with respect to the
Business, Assets, properties or operations of the Seller or any member of any
affiliated group of which the Seller is a member or incident to or arising as a
consequence of the negotiation or consummation by the Seller, the Manager and the Owner
of this Agreement and the transaction contemplated hereby, save and except: (i) any
applicable property taxes for the calendar year 2006 which will be prorated by the
parties as of the Closing Date with an appropriate credit to the Purchaser at the
Closing, and (ii) any sales or transfer taxes resulting from the consummation of this
transaction, which will be the responsibility of the Purchaser;
	 
	 	(c)	 	any liability or obligation arising prior to the Closing Date under any law,
ordinance or governmental or regulatory rule or regulation, whether federal, state or
local, to

	 	 	 
	
Asset Purchase Agreement
	 	
Page 4

 

 

	 	 	 	which the Seller or Seller’s business operations, assets or properties are
subject relating to pollution or protection of the environment;
	 
	 	(d)	 	any liability or obligation arising prior to or as a result of the Closing to
any employees, agents or independent contractors of the Seller whether or not employed
by the Purchaser after the Closing Date, or under any benefit arrangement with respect
thereto, including any obligations of the Seller under any defined benefit plan,
employee benefit plan or severance plan; and
	 
	 	(e)	 	any liability or obligation of the Seller, the Manager and the Owner incurred
in connection with the negotiation, preparation and execution of this Agreement and the
transactions contemplated hereby, including fees and expenses of counsel, accountants
and other professionals.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE 

SELLER, THE MANAGER AND THE OWNER

     The Seller, the Manager and the Owner jointly and severally, hereby represent, warrant and
covenant to and with the Purchaser as follows:

     2.01 Existence and Good Standing; No Subsidiaries. The Seller is a limited
partnership organized, validly existing and in good standing under the laws of the State of Texas.
The Seller has all requisite power and authority to carry on the Business now being conducted by
the Seller. The Seller is in good standing and is duly qualified to do business in all
jurisdictions where the character of its properties or assets or the nature or conduct of its
Business makes such qualification necessary including, but not limited to, the states of Oklahoma,
New Mexico and Colorado. The Seller has no subsidiaries.

     2.02 Authority; Enforceability. The Seller, the Manager and the Owner each have full
power, authority and legal right to enter into this Agreement and to consummate the transactions
provided for herein. All actions on the part of the Seller, the Manager and the Owner necessary to
consummate the transaction contemplated by this Agreement and the Real Property Purchase Agreement
have been duly taken as required by applicable law and any applicable agreements. This Agreement
and the Real Property Purchase Agreement have each been, and the other agreements, documents and
instruments required to be delivered by the Seller, the Manager and the Owner in accordance with
the provisions hereof have been or will be, duly executed and delivered by the Seller, the Manager
and the Owner and constitute (or will at Closing constitute) the valid and binding obligations of
the Seller, the Manager and the Owner, enforceable against each of them in accordance with their
terms, except as such enforcement may be limited by bankruptcy, insolvency,

	 	 	 
	
Asset Purchase Agreement
	 	
Page 5

 

 

reorganization,
moratorium or similar laws now or hereafter in effect relating to or limiting creditors’ rights or
by legal principles of general applicability governing the availability of equitable remedies.

     2.03 Absence of Violation or Conflicts. The execution and delivery of this Agreement
and the Real Property Purchase Agreement and the performance by the Seller, the Manager and the
Owner of the transactions contemplated by this Agreement and the Real Property Purchase Agreement
do not and will not (a) violate, conflict with or result in the breach of any term, condition or
provision of, or require the consent of any other person under, (i) any law, ordinance or
governmental rule or regulation known to the Seller, the Manager and the Owner and to which the
Seller, the Manager and the Owner, the Assets or the Business are subject, (ii) any judgment,
order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory
official, body or authority which is known to the Seller, the Manager and the Owner and which is
applicable to either the Seller, the Manager and the Owner, the Assets or the Business, (iii) the
governing documents of or any securities issued by the Seller, or (iv) any mortgage, indenture or
other instrument, document or understanding, oral or written, to which either the Seller, the
Manager or the Owner is a party, by which the Seller, the Manager and the Owner may have rights or
by which the Assets or the Business may be bound or affected, and (b) give any party with rights
thereunder the right to terminate, modify, accelerate or otherwise change the existing rights or
obligations of the Seller thereunder. No authorization, approval or consent of, and no
registration or filing with any governmental or regulatory official, body or authority is required
in connection with the execution, delivery or performance of this Agreement by the Seller, the
Manager or the Owner.

     2.04 Title to Assets. The Seller, the Manager and the Owner have (or will have at
Closing) good, indefeasible and marketable title to all of the properties and assets which are
included in the Assets, specifically including, without limitation, the Real Property, the Tangible
Personalty and the Inventory, with such Assets to be free and clear of all mortgages, liens,
pledges, security interests, charges, claims, rights of first refusals, options, restrictions or
conditions to transfer or assignment, liabilities, obligations and other encumbrances and defects
of title of any nature whatsoever (collectively referred to as “Encumbrances”), except for liens
for current ad valorem or similar taxes which are not yet due and payable (collectively, the
“Permitted Encumbrances”). The Seller has the absolute right to sell the Assets to the Purchaser,
and upon the consummation of the transaction contemplated hereby, the Purchaser will have good and
marketable title to the Assets, free and clear of all encumbrances.

     2.05 Contracts. All Contracts (including lease agreements) to be assumed by the
Purchaser at the Closing are described on attached Exhibit C and the Seller, the Manager
and the Owner have provided or made available to the Purchaser true, correct and complete copies of
all such Contracts, including any amendments or supplements thereto. To the best of the Seller’s,
the Manager’s and the Owner’s knowledge, after reasonable investigation, the Seller is not in
default (nor is there any event which with notice or lapse of time or both would constitute a
default) under any such Contract. No consents or approvals of any person other than the Seller,
the Manager and the Owner are necessary to sell, assign, convey, transfer and deliver any and all
rights and interest in

	 	 	 
	
Asset Purchase Agreement
	 	
Page 6

 

 

and to the Contracts to the Purchaser. There are no agreements with third
parties, either written or verbal, that are material or necessary to the operation of the Business
other than the Contracts.

     2.06 Condition of the Assets. The equipment and other tangible property of Seller is
being sold to Purchaser in its “as is” condition, and Purchaser acknowledges that it has inspected
such equipment and other tangible property being conveyed pursuant hereto and accepts the same in
its current condition, subject to, however, Seller’s, the Manager’s and the Owner’s representations
and warranties that to the best of their knowledge after reasonable investigation, there has been
no change in the condition of the equipment and other tangible property comprising the Assets since
the date of completion of Purchaser’s inspection of the same, normal wear and tear excluded.
Except for the Excluded Assets, the Assets constitute all property, assets and contractual rights
necessary for the conduct of the Business as presently conducted. All of the Assets conform to all
applicable laws governing their use. No notice of any violation of any law, statute, ordinance or
regulation has been received by the Seller, the Manager and the Owner, nor, to the knowledge of the
Seller, the Manager and the Owner, is there any basis for any of the foregoing.

     2.07 Trade Secrets and Customer Lists. The Seller has the right to use, free and
clear of any claims or rights of others, all trade secrets, customer lists and proprietary
information required for the conduct of the Business. The Seller is not using or in any way making
use of any confidential information or trade secrets of any third party, including, without
limitation, any past or present employee of the Seller.

     2.08 Suppliers and Customers. The Seller, the Manager and the Owner have no knowledge
that any of the suppliers or customers of the Seller expect or intend to materially reduce their
business with the Business.

     2.09 Compliance with Law; Authorizations. To the best knowledge of the Seller, the
Manager and the Owner, after reasonable investigation, the Seller has complied with each (and is
not in violation of any), law, ordinance or governmental or regulatory rule or regulation, whether
federal, state, local or foreign, known to the Seller, the Manager and the Owner and to which the
Seller and its Business, operations, assets and properties are subject (“Regulations”). The Seller
owns, holds, possesses or lawfully uses in the operation of the Assets and the Business all
licenses, permits, patents, easements, rights, applications, filings, registrations and other
authorizations (“Authorizations”) which are known to the Seller, the Manager and the Owner and
which are in any manner necessary for such ownership and use by the Seller, free and clear of all
liens, charges, restrictions and Encumbrances and, to the best knowledge of the Seller, the Manager
and the Owner, after reasonable investigation, in compliance with all Regulations. To the best
knowledge of the Seller, the Manager and the Owner, after reasonable investigation, the Seller is
not in default, nor has it received any notice of any claim of default, with respect to any such
Authorization.

     2.10 Litigation. Except for litigation which has been initiated by Seller in an
attempt to collect accounts receivable owed to Seller (all of which litigation, together with the
claims

	 	 	 
	
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underlying the same will be retained by Seller), no litigation, including any arbitration,
investigation or other proceeding of or before any court, arbitrator or governmental or regulatory
official, body or authority, is pending in which the Seller is a party and in which the Seller, the
Manager and the Owner have been served with process or otherwise notified or, to the knowledge of
the Seller, the
Manager and the Owner after reasonable investigation, threatened against the Seller, the
Manager and the Owner which relate to the Assets, the Business or the transactions contemplated by
this Agreement, nor do the Seller, the Manager and the Owner know of any reasonably likely basis
for any such litigation, arbitration, investigation or proceeding, the result of which could
materially adversely affect the Assets, the Business, or the transaction contemplated hereby.
Neither the Seller, the Manager or the Owner is a party to nor subject to the provisions of any
judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which may materially adversely affect the Seller, the
Manager and the Owner, the Assets, the Business, or the transactions contemplated hereby.

2.11 Environmental Matters.

	 	(a)	 	To the best knowledge of the Seller, the Manager and the Owner, after
reasonable investigation, the Assets (including, specifically, the Real Property) are
in compliance with all federal, state and local laws and regulations relating to
pollution or protection of the environment (collectively, “Environmental Laws”),
including, without limitation, Environmental Laws governing emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes into the environment. To the best knowledge of
the Seller, the Manager and the Owner, after reasonable investigation, the Seller has
obtained all permits, licenses and other authorizations that are required under
Environmental Laws with respect to the operation of the Assets and the conduct of the
Business and is in compliance therewith. The Seller has obtained phase one
environmental assessments covering all of its real property, true and correct copies of
which have been furnished to Purchaser. The Seller shall have no obligation to secure
additional environmental assessments at its cost.
	 
	 	(b)	 	There is no civil, criminal or administrative action, suit, demand, claim,
hearing, notice or demand letter, notice of violation, investigation or proceeding
pending in which either the Seller, the Manager or the Owner is a party or in which
either the Seller, the Manager or the Owner has been served with process or otherwise
notified or, to the knowledge of the Seller, the Manager or the Owner has been
threatened against the Seller, the Manager and the Owner based upon any violation or
alleged violation of any Environmental Laws.
	 
	 	(c)	 	The Seller will, at least ten (10) days prior to the Closing in connection with
each tract of the Real Property and each tract of real property leased by Seller,
deliver to Purchaser a Phase I Environmental Assessment covering each of such
properties.

	 	 	 
	
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	 	 	 	The Seller, the Manager and the Owner agree to cooperate reasonably with
the Purchaser in connection with the Purchaser’s application for the transfer, renewal
or issuance of any permits, licenses, approvals or other authorizations or to satisfy
any regulatory requirements involving the transfer of the Business to the Purchaser.

     2.12 Tax and Other Returns and Reports. Neither the Seller, the Manager and the Owner
has received any notice of assessment or proposed assessment in connection with any of the Assets,
the Real Property or the Business and, to the knowledge of the Seller, the Manager and the Owner,
there are no pending tax examinations or tax claims asserted against any of the Assets or the
Business. There are no tax liens (other than any lien for current ad valorem taxes not yet due and
payable) on any of the Assets, the Real Property or the Business.

     2.13 Consents. Neither the Seller, the Manager or the Owner is aware of any consent,
approval, order or authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority or any other person on the part of
the Seller which is required in connection with the completion of the transactions contemplated by
this Agreement and the operation by the Purchaser of the Business in the manner in which it is
currently conducted. The Seller, the Manager and the Owner agree that they will utilize their best
efforts to obtain any required governmental consents on or before the Closing. If the Seller, the
Manager and the Owner, notwithstanding such best efforts, shall fail to obtain such consents by the
Closing Date, the Purchaser, at its option, may elect not to accept the applicable leases,
contracts or other rights for which consent was not obtained whereupon the Purchaser will be
reduced by that portion of the Purchase Price allocated thereto on any allocation schedule
delivered hereunder or such other amount as the parties may agree upon. No such reassignment and
reimbursement will in any way operate to negate, diminish or alter the obligations of the Seller,
the Manager and the Owner hereunder or under their respective Non-Competition Agreements
(hereinafter defined).

    2.14 Financial Matters.

	 	(a)	 	To the best knowledge of the Seller, the Manager and the Owner as of the
Closing Date, the audited financial statements of the Seller as of and for the year
ended December 31, 2004 and the ten (10) month period ended October 31, 2005 (including
the related notes) (the “Audited Financial Statements”) present fairly, in all material
respects, the financial condition of the Seller at the date of the balance sheet
included therein and the results of operations, cash flows and partner’s equity of the
Seller for the respective period set forth therein and have been prepared in accordance
with GAAP. The Audited Financial Statements will not disclose any fact or circumstance
(other than facts or circumstances reflected on the schedules to this Section 2.14)
that could reasonably be expected to materially and adversely affect the business,
prospects, results of operations, assets or financial condition of the Seller.

	 	 	 
	
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	 	(b)	 	Liabilities. Except for the liabilities specifically disclosed by the
Seller to the Purchaser in writing, the Seller has and on the Closing Date will have,
no other material liabilities of any nature, whether accrued, absolute, contingent or
otherwise and whether due or to become due, or arising out of transactions entered
into, or any state of facts existing, prior to the Closing Date which will encumber the
Assets or impair the use, value or ownership thereof by the Purchaser following the
Closing. The Seller, the Manager and the Owner represent and warrant that as of the
date of Closing, there will been no material adverse change in the financial condition,
results of operations, assets, liabilities, business or prospects of the Seller since
October 31, 2005.

     2.15 Absence of Certain Changes. To the best knowledge of the Seller, the Manager and
the Owner since October 31, 2005, there has not been (i) any material amendment, termination or
revocation, or threatened termination, revocation or modification of any license, permit or
franchise required for the continued operation of the Business; (ii) any sale or transfer of the
Assets (other than in the ordinary course of Seller’s Business); (iii) any pledge or subjection to
lien, charge or encumbrance of any kind, of, on or affecting any of the Assets, or (iv) any damage,
destruction or loss of or to the Assets, whether or not covered by insurance.

     2.16 Disclosure. To the best knowledge of the Seller, the Manager and the Owner no
material written statement, representation, warranty or information provided or furnished by or on
behalf of the Seller, the Manager and the Owner to the Purchaser in this Agreement or the Real
Property Purchase Agreement or otherwise in connection with the transactions contemplated by this
Agreement or the Real Property Purchase Agreement contains as of the date made any untrue statement
of a material fact or omits to state any material fact necessary to make the statements herein or
therein not misleading.

     2.17 Expansion Capital Expenditures. All expenditures made by the Seller since
September 16, 2005 that constitute Expansion Capital Reimbursement Amounts have been for equipment
that expanded the capabilities of the Business and none of such expenditures were for purchases of
equipment to replace existing equipment.

ARTICLE III

PURCHASER’S REPRESENTATIONS AND WARRANTIES

     The Purchaser hereby represents and warrants to the Seller, the Manager and the Owner as of
the date hereof as follows:

     3.01 Organization. The Purchaser is a limited partnership duly organized and existing
in good standing, under the laws of the State of Delaware and has the power and authority to carry
on its business as contemplated by this Agreement.

	 	 	 
	
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     3.02 Authority. The Purchaser has full power, authority and legal right to enter into
this Agreement and the Real Property Purchase Agreement and to consummate the transactions
provided for herein and therein. The execution and delivery of this Agreement and the other
instruments specified herein and the consummation of the transaction provided for herein by the
Purchaser have been duly and validly authorized by all necessary action on the part of the
Purchaser and are in compliance with applicable law. This Agreement and the Real Property Purchase
Agreement have been and the other agreements, documents and instruments required to be delivered by
the Purchaser in accordance with the provisions hereof have been or will be, duly executed and
delivered by the Purchaser and constitute (or will at Closing constitute) the valid and binding
obligations of the Purchaser, enforceable against the Purchaser in accordance with their terms,
except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws now or hereafter in effect relating to or limiting creditors’ rights or by legal
principles of general applicability governing the availability of equitable remedies.

     3.03 Absence of Violations or Conflicts. The execution, delivery and performance of
the transactions contemplated by this Agreement and the Real Property Purchase Agreement by the
Purchaser do not and will not violate, conflict with or result in the breach of any term, condition
or provision of, or require the consent of any other person under, (a) any law, ordinance or
governmental rule or regulation known to the Purchaser and to which the Purchaser is subject, (b)
any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which is applicable to the Purchaser (c) the governing
documents of the Purchaser or any securities issued by the Purchaser, or (d) any mortgage,
indenture or other instrument, document or understanding, oral or written, to which the Purchaser
is a party or by which the Purchaser may have rights. No authorization, approval or consent of and
no registration or filing with, any governmental or regulatory official, body or authority is
required in connection with the execution, delivery or performance of this Agreement and the Real
Property Purchase Agreement by the Purchaser.

     3.04 Disclosure. No written statement, representation, warranty or information
provided or furnished by or on behalf of the Purchaser to the Seller in this Agreement or the Real
Property Purchase Agreement or otherwise in connection with the transactions contemplated by this
Agreement or the Real Property Purchase Agreement contains as of the date made any untrue statement
of a material fact or omits to state any material fact necessary to make the statements herein or
therein not misleading.

	 	 	 
	
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ARTICLE IV

INDEMNIFICATIONS

     4.01 General Indemnification by the Seller, the Manager and the Owner. The Seller,
the Manager and the Owner, jointly and severally, agree to indemnify, hold harmless and defend the
Purchaser after the Closing Date against and in respect of any of the following matters that may be
asserted or established:

	 	(a)	 	Any and all damages, losses, expenses, liabilities or deficiencies resulting
from any breach of the warranties, representations and covenants of the Seller, the
Manager and the Owner contained herein or in any instrument executed pursuant hereto;
	 
	 	(b)	 	Any and all damages, losses, expenses, liabilities or deficiencies incurred or
paid by the Purchaser as a result of the nonpayment or assessment of taxes with respect
to the Assets or the Business attributable to periods prior to the Closing Date;
	 
	 	(c)	 	Any and all damages, losses, expenses, liabilities or deficiencies incurred or
paid by the Purchaser as a result of a claim of any kind arising from the ownership or
operation of the Assets or the Business prior to the Closing Date (except for the
Assumed Contractual Liability);
	 
	 	(d)	 	All demands, assessments, judgments, costs and expenses (including reasonable
legal fees and other expenses of litigation, both at the trial and appellate level)
arising from or in connection with any action, suit, proceeding or claim incident to
any of the matters indemnified in subparts (a)-(c) of this Section 4.01.

     4.02 General Indemnification by the Purchaser. The Purchaser agrees to indemnify,
hold harmless, and defend the Seller, the Manager and the Owner after the Closing Date against and
in respect of any of the following matters that may be asserted or established:

	 	(a)	 	Any and all damages, losses, expenses, liabilities or deficiencies resulting
from any breach of the warranties, representations and covenants of the Purchaser
contained herein or in any instrument executed pursuant hereto;
	 
	 	(b)	 	Any and all damages, losses, expenses, liabilities or deficiencies incurred or
paid by the Seller as a result of the Purchaser’s nonpayment of taxes assessed against
the Assets or the Business for periods on and after the Closing Date;
	 
	 	(c)	 	Any and all damages, losses, expenses, liabilities or deficiencies incurred or
paid by the Seller as a result of a claim of any kind arising from the ownership or
operation of the Assets or the Business by the Purchaser on and after the Closing Date;
and

	 	 	 
	
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	 	(d)	 	All demands, assessments, judgments, costs and expenses (including reasonable
legal fees and other expenses of litigation, both at the trial and appellate level)
arising from or in connection with any action, suit, proceeding or claim incident to
any of the matters identified in subparts (a)-(c) of this Section 4.02.

     4.03. Environmental Indemnification by the Seller, the Manager and the Owner. The
Seller, the Manager and the Owner, jointly and severally, agree to indemnify, defend and hold the
Purchaser harmless from and against any and all claims, demands, causes of action, liabilities,
losses, fines, penalties, and/or expenses (including reasonable attorneys’ fees and other expenses
of litigation) which the Purchaser may incur or suffer based upon or arising from any occurrence,
event, circumstance or omission occurring prior to the Closing Date and involving or affecting the
environmental condition of the Assets or those real properties on which Phase I Environmental
Assessments are required under Section 2.11(c) above, including, without limitation, or any such
matters attributable to alleged violations of or non-compliance with Environmental Laws.

     4.04 Limit on Indemnification Obligation. Not withstanding any other provisions of this
Agreement, Purchaser agrees that the aggregate indemnification obligations of Seller, Manager or
Owner to Purchaser for claims asserted shall not exceed Two Million Dollars ($2,000,000.00) and
that the obligation to indemnify will only apply to claims asserted before the second anniversary
of the Closing Date. In addition, the Seller, Manager and Owner will have no obligation to
indemnify Purchaser for environmental claims involving Seller’s owned or leased real property, no
matter when arising.

     4.05 Conditions of Indemnification. The respective obligations and liabilities of the
Seller, the Manager and the Owner and the Purchaser (the “indemnifying party”) to the other (the
“party to be indemnified”) under this Article IV with respect to claims resulting from the
assertion of liability by third parties shall be subject to the following terms and conditions:

	 	(a)	 	Within 20 days (or such earlier time as might be required to avoid prejudicing
the indemnifying party’s position) after receipt of notice of commencement of any
claim, whether meritorious or not, or any action evidenced by service of process or
other legal pleading, the party to be indemnified shall give the indemnifying party
written notice thereof together with a copy of such claim, process or other legal
pleading, and the indemnifying party shall have the right to undertake the defense
thereof by representatives of its own choosing and at its own expenses; provided that
the party to be indemnified may participate in the defense with counsel of its own
choice, the fees and expenses of which counsel shall be paid by the party to be
indemnified unless (i) the indemnifying party has agreed to pay such fees and expenses,
or (ii) the indemnifying party has failed to assume the defense of such claim or
action.
	 
	 	(b)	 	If the indemnifying party, by the 30th day after receipt of notice
of any such claim (or, if earlier, by the 10th day preceding the day on
which an answer or other pleading

	 	 	 
	
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	 	 	 	must be served in order to prevent judgment by
default in favor of the person
asserting such claim), does not elect to defend against such claim, the party to be
indemnified will (upon further notice to the indemnifying party) have the right to
undertake the defense, compromise or settlement of such claim on behalf of and for
the account and risk of the indemnifying party and at the indemnifying party’s
expense, subject to the right of the indemnifying party to assume the defense of
such claims at any time prior to settlement, compromise or final determination
thereof.
	 
	 	(c)	 	Notwithstanding the foregoing, the indemnifying party shall not settle any
claim without the consent of the party to be indemnified unless such settlement
involves only the payment of money and the claimant provides to the party to be
indemnified a release from all liability in respect of such claim. If the settlement
of the claim involves more than the payment of money, the indemnifying party shall not
settle the claim without the prior consent of the party to be indemnified.
	 
	 	(d)	 	The party to be indemnified and the indemnifying party will each cooperate with
all reasonable requests to the other.
	 
	 	(e)	 	Seller, Manager and Owner agree that Purchaser may offset any sums determined o
be due Purchaser under this Article IV against any sums payable to Seller pursuant to
the Contingent Earn Out Agreement.

ARTICLE V

OTHER AGREEMENTS

     5.01 Purchaser’s Due Diligence. Pending Closing, the Purchaser shall have the
complete and unfettered right to inspect, review and audit the Assets and all books, records, data
and other information of the Seller relating to the Assets and the conduct of the Business. All
expenses incurred by the Purchaser relating to its inspection and review of the Assets and the
Business shall be borne and paid exclusively by the Purchaser. The Seller, the Manager and the
Owner will cooperate with the Purchaser in all reasonable respects in facilitating such inspection
and review. Without limiting the foregoing, the Seller, the Manager and the Owner each agree that,
until Closing, they will (a) provide or cause to be provided to the Purchaser or its
representatives, during normal business hours or otherwise, if necessary, full access to all of
Seller’s properties, assets, books, agreements, commitments and records; (b) furnish the Purchaser
and its representatives with such information concerning any of Seller’s operations and affairs as
they may reasonably request; and (c) furnish to the Purchaser true copies of all requested
financial data and operating statements of the Seller.

     5.02 Exclusive Dealing. During the period from the date of this Agreement through the
Closing Date, the Seller, the Manager and the Owner will not, directly or indirectly, encourage,

	 	 	 
	
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initiate or engage in discussions or negotiations with or provide any information to, or enter into
any agreement to sell the Assets or any equity interest in the Seller with, any person, firm,
company or
other entity, other than the Purchaser. The Seller, the Manager and the Owner agree to
promptly notify Purchaser of the receipt and detail of any unsolicited offers received by them
regarding Seller.

     5.03 Employees. Employees of Seller who are engaged in the conduct of Seller’s
Business and who successfully pass Purchaser’s preemployment screening tests and otherwise qualify
for employment by Purchaser and who are actually employed by Purchaser immediately following
Closing will be eligible to participate in Purchaser’s Health Plan, Vision Plan, Group and
Voluntary Life and AD & D Plans, and Supplemental Insurance Plans on the first day of the month
following a ninety (90) day waiting period beginning on the Closing Date. Purchaser will provide
Seller’s employees and their covered dependents, if any, who are participating in Seller’s health
plan at Closing with interim health coverage until they complete the ninety (90) day waiting period
required for participation. Seller’s employee’s length of service with Seller will be honored in
considering their paid time off under Purchaser’s Paid Time Off Program. Except as may be
specifically provided in this Agreement, the Purchaser will assume no liability for any agreements,
arrangements, commitments, pre-existing conditions, policies or understandings of any kind relating
to employment, compensation or benefits for present or former employees of the Seller prior to the
Closing Date, including, but not limited to, severance pay, retirement benefits, accrued vacation
pay or benefits or medical claims incurred or arising before the Closing Date. Without limiting
the foregoing, the Seller shall bear the full cost and expense of any severance expenses and
benefits that result from the termination of any employees of the Seller by Seller. Notwithstanding
the foregoing, Purchaser will assume the liability for accrued vacations for those employees of
Seller who are hired by Purchaser at Closing, provided an appropriate reduction in the Purchase
Price is made for the vacation benefits assumed.

     5.04 Expenses. Except as otherwise provided herein, each party hereto will pay its
own expenses and costs incurred in connection with the negotiation and consummation of this
Agreement, the Real Property Purchase Agreement and the transaction contemplated hereby. The
Purchaser will pay all federal, state and local sales, documentary and other transfer taxes, if
any, due as a result of the purchase, sale or transfer of the Assets.

     5.05 Brokers. Each of the parties hereto shall be solely responsible for any
brokerage commissions or finder’s fees arising from this transaction based upon arrangements made
by or on behalf of such party and agrees to indemnify and hold the other party harmless from any
claims or liabilities (including reasonable attorneys’ fees and court costs) with respect thereto.

     5.06 Loss. If, before the Closing Date, any individual asset making up the Assets is
destroyed, or if there has been damage to any assets making up the Assets which would cost (in the
aggregate) in excess of $25,000.00 to repair or replace and such repair or replacement is not
completed by the Closing Date to the Purchaser’s reasonable satisfaction, then the Purchaser, at
its option, may either (a) proceed to Closing, in which event the Seller shall assign to the
Purchaser at

	 	 	 
	
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Closing all insurance proceeds payable with respect to such loss and the Purchaser
shall receive a credit at Closing against the Purchase Price for any remaining sums necessary to
effectuate such repairs (including, without limitation, applicable deductibles) or (b) terminate
this Agreement, in
which event, except as otherwise expressly provided in this Agreement, neither party shall
have any further rights or obligations hereunder. If, before the Closing Date, there has been
damage to any individual asset making up the Assets which would cost $25,000.00 or less to repair
or replace and such repair or replacement shall not have been completed by the Closing Date to the
Purchaser’s reasonable satisfaction, then the parties shall remain obligated to close this
transaction, but Purchaser shall be entitled to an assignment at Closing of all insurance proceeds
payable with respect to such loss and shall additionally receive a credit at Closing against the
Purchase Price in an amount to be agreed upon by the Purchaser and the Seller for any remaining
sums necessary to effectuate such repairs (including, without limitation, applicable deductibles).

     5.07 Assignment of Contracts. At least ten (10) days prior to Closing, the Purchaser
shall notify the Seller of those Contracts, if any, which the Purchaser desires to assume at
Closing. If the Purchaser does not issue such notification, the Purchaser shall be deemed to have
elected not to assume any of the Contracts at Closing. Any Contracts the Purchaser elects not to
assume will be considered to be Excluded Assets.

     5.08 Accounts Receivable. Purchaser agrees that it will promptly remit to Seller any
and all amounts received by Purchaser in payment of accounts receivable of Seller which are
applicable to the period preceding Closing.

     5.09 Non-Completion Penalty. Purchaser agrees that it will pay Seller the sum of One
Million and No/100 Dollars ($1,000,000.00) if the Basic Energy Services, Inc. Board of Directors
does not approve the acquisition of Seller’s Assets as contemplated by this Agreement for any
reason other than Seller’s inability or refusal to deliver good and unencumbered title to the
Assets to Purchaser. Seller agrees to pay Purchaser the sum of One Million and No/100 Dollars
($1,000,000.00) if it for any reason fails or refuses to sell the Assets to Purchaser as
contemplated by this Agreement.

ARTICLE VI

THE CLOSING

     6.01 Time, Date and Place of Closing. Closing (“the Closing”) of the transactions
contemplated hereby shall take place at the offices of the Seller’s attorney in Abilene, Texas at
10:00 a.m. on or before February 28, 2006, or at such other time and place as the parties may
hereafter mutually agree in writing. Such date or any alternative date selected in accordance with
this Section 6.01 is referred to in this Agreement as the “Closing Date.

	 	 	 
	
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     6.02 Conditions to Obligations of the Purchaser. The obligation of the Purchaser to
close under this Agreement and the Real Property Purchase Agreement is subject to the fulfillment
prior to or at the Closing Date of each of the following conditions, any one or more of which may
be waived by the Purchaser:

	 	(a)	 	The representations, warranties and covenants of the Seller, the Manager and
the Owner contained herein or otherwise delivered pursuant hereto shall be true in all
material respects as of the date when made, shall be deemed to be made again at and as
of the Closing Date, and shall be true at and as of the Closing Date;
	 
	 	(b)	 	The Seller, the Manager and the Owner shall have performed and complied with
all agreements and conditions required by this Agreement and the Real Property Purchase
Agreement to be performed or complied with by the Seller, the Manager and the Owner
prior to or at the Closing Date;
	 
	 	(c)	 	No material adverse change in the Business or in the Assets shall have occurred
between October 31, 2005 and the Closing Date;
	 
	 	(d)	 	No federal, state or local governmental unit, agency, body or authority with
competent jurisdiction over the subject matter shall have given official written notice
of its intention to institute proceedings to prohibit the transaction contemplated by
this Agreement or the Real Property Purchase Agreement, or which would interfere with
the use of the Assets or the operation of the Business;
	 
	 	(e)	 	No judgment, order or decree shall have been rendered by any governmental
authority and no action shall have been instituted or threatened by any person which
has the effect of enjoining or which seeks to enjoin the consummation of the
transaction contemplated by this Agreement or the Real Property Purchase Agreement;
	 
	 	(f)	 	The Seller, the Manager and the Owner shall have delivered to the Purchaser an
opinion of its legal counsel, David L. Hooper, in form and substance reasonably
acceptable to the Purchaser and its counsel, addressing the due and proper
authorization, execution and delivery and the enforceability of this Agreement or the
Real Property Purchase Agreement and the instruments and documents executed in
connection herewith and therewith and such other matters as the Purchaser or its
counsel may reasonably require; and
	 
	 	(g)	 	The Purchaser shall have received the audited and unaudited financial
statements with respect to Seller that are required by Rule 3-05 of Regulation S-X of
the Securities Exchange Act of 1934, as amended, at least twenty (20) business days
prior to the Closing Date. The audited financial statements shall be free of any

	 	 	 
	
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	 		 	qualifications. Both the audited and unaudited financial statements shall conform in
all material respects to the Unaudited Annual Financial Statements and the Unaudited
Interim Financial Statements, as applicable. Purchaser shall have also received any
applicable consents from the independent auditors of Seller required for Purchaser to
file such financial statements with the U.S. Securities and Exchange Commission and to
incorporate them by reference into any outstanding registration
statements of the Purchaser. The cost of payable by Seller to its independent
public accountants for services rendered by such accountants in connection with the
issuance of the Audited Financial Statement and the SAS 100 Reviewed Financial
Statements shall be reimbursed to Seller by Purchaser at Closing.
	 
	 	(h)	 	The Phase One Environmental Assessments delivered by Seller, the Manager and
the Owner to Purchaser pursuant to Section 2.11(c) shall disclose only conditions that
are acceptable to Purchaser or in the alternative, all conditions that are not
acceptable to Purchaser shall have been corrected (at Seller’s expense) to the
satisfaction of Purchaser (provided, however, Seller will have the option to
termination this Agreement if the estimated remediation costs to correct any conditions
disclosed by the Phase One Environmental Assessments exceed 5% of the Purchase Price);
and
	 
	 	(i)	 	All deliveries pursuant to Section 6.04 shall have been made and shall be
reasonably acceptable to the Purchaser.

     6.03 Conditions to Obligations of the Seller, the Manager and the Owner. The
obligation of the Seller, the Manager and the Owner to close under this Agreement and the Real
Property Purchase Agreement is subject to the fulfillment prior to or on the Closing Date of each
of the following conditions, any one or more of which may be waived by the Seller, the Manager and
the Owner:

	 	(a)	 	The representations, warranties and covenants of the Purchaser contained herein
or otherwise delivered pursuant hereto shall be true in all material respects as of the
date when made, shall be deemed to be made again at and as of the Closing Date, and
shall be true at and as of the Closing Date;
	 
	 	(b)	 	The Purchaser shall have performed and complied with all agreements and
conditions required by this Agreement and the Real Property Purchase Agreement to be
performed or complied with by the Purchaser prior to or at the Closing Date;
	 
	 	(c)	 	No federal, state or local governmental unit, agency, body or authority with
competent jurisdiction over the subject matter shall have given official written notice
of its intention to institute proceedings to prohibit the transaction contemplated by
this Agreement or the Real Property Purchase Agreement or which would interfere with
the use of the Assets or the operation of the Business;

	 	 	 
	
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	 	(d)	 	No judgment, order or decree shall have been rendered by any governmental
authority and no action shall have been instituted or threatened by any person which
has the effect of enjoining or which seeks to enjoin the consummation of the
transaction contemplated by this Agreement or the Real Property Purchase Agreement; and
	 
	 	(e)	 	The Purchaser shall have delivered to the Seller, the Manager and the Owner an
opinion of its legal counsel, Lynch, Chappell & Alsup, P.C. in form and substance
reasonably acceptable to the Seller, the Manager and the Owner and their counsel,
addressing the due and proper authorization, execution and delivery and the
enforceability of this Agreement and the Real Property Purchase Agreement and the
instruments and documents executed in connection herewith and therewith and such other
matters as the Seller, the Manager and the Owner or their counsel may reasonably
require; and
	 
	 	(f)	 	All deliveries pursuant to Section 6.05 shall have been made and shall be
reasonably acceptable to Seller, the Manager and the Owner.

     6.04 Deliveries by the Seller, the Manager and the Owner at the Closing. At the
Closing, the Seller, the Manager and the Owner shall execute, acknowledge, and/or deliver, as
appropriate, the following to the Purchaser:

	 	(a)	 	Evidence that all consents necessary in connection with this transaction have
been obtained (which shall consist of the original copies of all consents required to
be obtained in writing and a certificate from the Seller, the Manager and the Owner
stating that all other consents have been obtained);
	 
	 	(b)	 	Evidence that all liens or encumbrances of any kind on the Assets other than
Permitted Encumbrances shall have been released and/or a termination statement shall
have been filed as of the Closing Date;
	 
	 	(c)	 	Certificates of the Seller, the Manager and the Owner, dated as of the Closing
Date, as to the material truth and correctness of all of the representations and
warranties of the Seller, the Manager and the Owner contained in this Agreement;
	 
	 	(d)	 	An officer’s certificate from Seller, the Manager and the Owner, dated as of
the Closing Date, as to the material performance of and compliance by the Seller, the
Manager and the Owner with all covenants of the Seller, the Manager and the Owner
contained in this Agreement;

	 	 	 
	
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	 	(e)	 	A certificate from Seller, dated as of the Closing Date, as to approval of the
transactions contemplated by this Agreement by the Seller, the Manager and the Owner;
	 
	 	(f)	 	Opinion of counsel of David L. Hooper.
	 
	 	(g)	 	A Contingent Earn Out Agreement that is substantially identical in form and
substance to that attached hereto as Exhibit F duly executed by Seller (the
“Contingent Earn Out Agreement”);
	 
	 	(h)	 	An assignment, conveyance and bill of sale substantially identical in form and
substance to that attached hereto as Exhibit H (the “Conveyance”), conveying
the Assets to the Purchaser;
	 
	 	(i)	 	All title certificates and other registration documents necessary to transfer
to the Purchaser the titles to the, motor vehicles, trailers, equipment and other
tangible personalty which are a part of the Assets, including, but not limited to,
those shown on attached Exhibits A and B, to the Purchaser;
	 
	 	(j)	 	Non-competition agreements that are substantially identical in form and
substance to that attached hereto as Exhibit I, duly executed by John Teague,
the Seller, the Manager and the Owner (the “Non-Competition Agreements”);
	 
	 	(k)	 	Employment Agreement that is substantially identical in form and substance to
that attached hereto as Exhibit J, duly executed by Messrs. Troy Meyers and
Rocky Meyers and Ms. Dianne Jones (the “Employment Agreement”);
	 
	 	(l)	 	A Customer/Vendor/Employee Notice that is substantially identical in form and
substance to that attached hereto as Exhibits K-1, K-2 & K-3 duly executed by
the Seller; and
	 
	 	(m)	 	A Special Power of Attorney from Seller authorizing Purchaser to transfer
vehicle titles.

     6.05 Deliveries by the Purchaser at the Closing. At the Closing, the Purchaser shall
execute, acknowledge, and/or deliver, as appropriate, to the Seller, the Manager and the Owner the
following:

	 	(a)	 	An officer’s certificate of the Purchaser, dated as of the Closing Date, as to
the material truth and correctness of all of the representations and warranties of the
Purchaser contained in this Agreement and the Real Property Purchase Agreement;

	 	 	 
	
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	 	(b)	 	An officer’s certificate of the Purchaser, dated as of the Closing Date, as to
the material performance of and compliance by the Purchaser with all covenants of the
Purchaser contained in this Agreement and the Real Property Purchase Agreement;
	 
	 	(c)	 	An officer’s certificate of the Purchaser, dated as of the Closing Date, as to
approval of the transactions contemplated by this Agreement and the Real Property
Purchase Agreement by the general partner of the Purchaser;
	 
	 	(d)	 	The Real Property Purchase Agreement;
	 
	 	(e)	 	The Purchase Price in immediately available funds, less
	 
	 	(f)	 	the portion of the Purchase Price being deposited with the Escrow Agent pursuant to
Section 1.05 and above, and (ii) payments, if any, made by Purchaser to creditors of Seller
pursuant to Seller’s instructions;
	 
	 	(g)	 	Opinion of Counsel of Lynch, Chappell & Alsup, P.C.;
	 
	 	(h)	 	The Contingent Earn Out Agreement;
	 
	 	(i)	 	The Non-Competition Agreements;
	 
	 	(j)	 	The Employment Agreements; and
	 
	 	(k)	 	The Customer/Vendor/Employee Notices.

ARTICLE VII

POST CLOSING REMEDIES OF THE PURCHASER

     7.01 In General. After the Closing, the Purchaser, without limitation of its other
rights and remedies, shall have recourse upon the Escrowed Funds for breaches of the
representations, warranties, covenants and agreements of the Seller, the Manager and the Owner
under this Agreement (including all costs, expenses and attorney’s fees related thereto).

     7.02 Dispute Resolution.

	 	(a)	 	The parties shall attempt in good faith to resolve any controversy or claim
arising out of or relating to this Agreement or the breach hereof, including, without
limitation, any controversies or claims arising out of, under, or with respect to the
retained portion of the Purchase Price, promptly by negotiations between
representatives who have authority to settle the controversy. Any party may give the
other party written

	 	 	 
	
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	 	 	 	notice of any dispute not resolved in the normal course of business
together with a request that the parties meet and confer (“Notice of Dispute”). Within
twenty (20) days after delivery of the Notice of Dispute, the parties or their
representatives shall meet at a mutually acceptable time and place, and thereafter as
often as they reasonably deem necessary, to exchange relevant information and to
attempt to resolve the dispute. If the matter has not been resolved within thirty (30)
days after delivery of the Notice of Dispute, or if the parties fail to meet within
twenty (20) days after delivery of the Notice of Dispute, either party may initiate
mediation of the claim or dispute as provided hereafter.
	 
	 	 	 	If a party or its representative intends to be accompanied at a meeting by an
attorney, the other parties shall be given advance notice of such intention and may
also be accompanied by an attorney. All negotiations pursuant to this clause are
confidential and shall be treated as compromise and settlement negotiations for
purposes of the Federal Rules of Evidence and any state’s rules of evidence.
	 
	 	(b)	 	Mediation. If a claim or controversy has not been resolved by
negotiation as provided in Section 7.02 (a), the parties shall endeavor to settle the
claim or dispute by mediation under the Center for Public Resources (“CPR”) Model
Procedure for Mediation of Business Disputes. A neutral third party will be selected
from the CPR panel of neutrals. If the parties encounter difficulty in agreeing on a
neutral third party, they will seek the assistance of CPR in the selection process.
Mediation under this Section 7.02 (b) will commence within sixty (60) days of the
Notice of Dispute.
	 
	 	(c)	 	Statutes of Limitation Tolled During Meeting and Mediation. All
applicable statutes of limitation and defenses based upon the passage of time shall be
tolled while the procedure specified in Sections 7.02(a) and (b) are pending. The
parties will take such action, if any, required to effectuate such tolling.
	 
	 	(d)	 	Performance To Continue Pending Dispute Resolution. Each party is
required to continue to perform its obligations under this Agreement pending final
resolution of any claim or dispute covered by this Article VII.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

     8.01 Survival. The parties agree that all of the representations, warranties and
covenants contained in this Agreement or in any document, certificate, instrument, schedule or
exhibit delivered pursuant to this Agreement shall survive the Closing and continue to be binding
upon the parties for a period of Thirty Six (36) months following the Closing Date.

	 	 	 
	
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     8.02 Further Assurances; Further Cooperation. The parties to this Agreement shall
undertake to perform their obligations under this Agreement, to satisfy all conditions, and to
cause the transaction contemplated by this Agreement to be carried out in accordance with the terms
of this Agreement. Upon the execution of this Agreement and thereafter, each party shall do such
things as may be reasonably requested by the other party hereto in order more effectively to
consummate or document the transaction contemplated by this Agreement.

     8.03 Notices. Any notice or communication required or permitted hereunder shall be
given in writing, shall refer specifically to the section of this Agreement under which it is given
or to which it is applicable, and shall be sent by (a) personal delivery, (b) expedited delivery
service with proof of delivery, (c) United States mail, postage prepaid, registered or certified
mail, or (d) telecopy
(provided that such telecopy is confirmed by expedited delivery service or by mail in the
manner previously described) addressed as follows:

	 	 	 	 	 
	If to the Seller, the Manager	 	 
	or the Owner:	 	Mr. John Teague, Executive Vice President

2249 S. Treadaway Blvd.

Abilene, Texas 79602

Telephone:   (325) 673-1152

Facsimile:   (325) 672-4588
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Mr. David L. Hooper

P.O. Box 3215

Abilene, Texas 79604

Telephone:   (325) 677-2174

Facsimile:   (325) 675-5434
	 
	 	 	 	 
	 

	 	If to the Purchaser:
	 	Basic Energy Services, L.P.

400 W. Illinois, Suite 800

Midland, Texas 79701

Attn:   Mr. James J. Carter, Executive

Vice President

Telephone:   (432) 620-5500

Facsimile:   (432) 620-5501
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Lynch, Chappell & Alsup, P.C.

300 N. Marienfeld, Suite 700

Midland, Texas 79701

Attn: Mr. James M. Alsup

Telephone:   (432) 683-3351

Facsimile:   (432) 683-2587

	 	 	 
	
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or to such other address or to the attention of such other persons as hereafter shall be designated
in writing by the applicable party sent in accordance herewith. Any such notice or communication
shall be deemed to have been given either at the time of personal delivery or, in the case of
delivery service or mail, as of the date of first attempted delivery at the address and in the
manner provided herein, or in the case of telecopy upon receipt.

     8.04 Binding Effect. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.

     8.05 Captions; Definitions. The titles or captions of articles, sections and
subsections contained in this Agreement are inserted only as a matter of convenience and for
reference and in no way define, limit, extend or describe the scope of this Agreement or the intent
of any provision
hereof. The parties agree to all definitions in the statement of parties to this Agreement
and in the other introductory language to this Agreement.

     8.06 Controlling Law; Amendment; Waiver; Remedies Cumulative. This Agreement shall be
construed and enforced in accordance with the laws of the State of Texas. This Agreement may not
be altered or amended except in writing signed by the Purchaser, the Seller, the Manager and the
Owner. The failure of any party hereto at any time to require performance of any provisions hereof
shall in no manner affect the right to enforce the same. No waiver by any party hereto of any
condition, or of the breach of any term, provision, warranty, representation, agreement or covenant
contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be
deemed or construed as a further or continuing waiver of any such condition or breach or a waiver
of any other condition or of the breach of any other term, provision, warranty, representation,
agreement or covenant herein contained. Except as otherwise expressly provided herein, this
Agreement is performable in Midland County, Texas.

     8.07 Post Closing Access and Audit. The Seller and the Purchaser shall each have
reasonable access to all books and records of the Business, and the parties hereto shall furnish to
each other any information or copies of any document which may be relevant in connection with any
tax matter requiring such information and shall provide such other assistance in this connection as
the parties reasonably request, at no cost to the party to which the request is made. Without
limiting the foregoing, the Seller further agree that, upon request by the Purchaser following
Closing, the Seller will execute and deliver to the Purchaser or its accountants such audit
response letters and further confirmations as the Purchaser or its accountants may reasonably
require for purposes of verification of the accuracy, validity and completeness of all financial
and other information provided or made available by the Seller in connection with the transactions
contemplated by this Agreement. The Seller, the Manager and the Owner further agree that they will
fully cooperate with Purchaser in connection with any audit of the books and records relating to
the conduct of the Business by Seller during the three (3) calendar years preceding the Closing,
provided the cost of such audit is borne by Purchaser.

	 	 	 
	
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     8.08 Entire Agreement. This Agreement constitutes the entire agreement among the
parties hereto with respect to the transaction contemplated and supersedes all prior negotiations.
understandings and agreements, both written and oral, among the parties with respect thereto.

     8.09 No Presumption. Neither this Agreement nor any other agreement between the
parties nor any uncertainty or ambiguity herein or therein shall be construed or resolved using any
presumption against any party hereto or thereto, whether under any rule of construction or
otherwise. On the contrary, this Agreement and the other agreements between the parties have been
reviewed by the parties and their counsel and, in the case of any ambiguity or uncertainty, shall
be construed according to the ordinary meaning of the words used so as to fairly accomplish the
purposes and intentions of all parties hereto.

     8.10 Counterparts. This Agreement may be executed by each party upon a separate copy,
and in such case one counterpart of this Agreement shall consist of enough of such copies to
reflect the signatures of all of the parties to this Agreement. This Agreement shall become
effective when one or more counterparts have been signed by each of the parties to this Agreement
and delivered to each of the other parties to this Agreement. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, and it shall not be necessary
in making proof of this Agreement or the terms of this Agreement to produce or account for more
than one of such counterparts.

(The balance of this page left blank intentionally.)

	 	 	 
	
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     DULY EXECUTED by the parties hereto as of the day and year first above written.

	 	 	 	 	 
	 	 	SELLER:
	 
	 	 	 	 
	 	 	G&L Tool, Ltd.
	 	 	By: DLH Management, L.L.C.
	 
	 	 	 	 
	 

	 	By:	 	/s/ John Teague 
	 

	 	 	 	 
	 

	 	 	 	John Teague, Executive Vice-President
	 
	 	 	 	 
	 	 	MANAGER:
	 
	 	 	 	 
	 	 	DLH Management, L.L.C.
	 
	 	 	 	 
	 

	 	By:	 	/s/ John Teague 
	 

	 	 	 	 
	 

	 	 	 	John Teague, Executive Vice-President
	 
	 	 	 	 
	 	 	OWNER:
	 
	 	 	 	 
	 	 	LJH, Ltd.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Lacy J. Harber 
	 

	 	 	 	 
	 

	 	 	 	Lacy J. Harber, President
	 
	 	 	 	 
	 	 	PURCHASER:
	 
	 	 	 	 
	 	 	BASIC ENERGY SERVICES, L.P.
	 

	 	By:
	 	Basic Energy Services GP, LLC, Its
	 

	 	 	 	General Partner
	 
	 	 	 	 
	 

	 	By:	 	/s/ James J. Carter 
	 

	 	 	 	 
	 

	 	 	 	James J. Carter, Executive Vice-President

	 	 	 
	
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LIST OF EXHIBITS

	 	 	 
	EXHIBIT A

	 	Equipment
	EXHIBIT B

	 	Vehicles and Trailers
	EXHIBIT C

	 	Contracts
	EXHIBIT D

	 	Real Property
	EXHIBIT E

	 	Real Property Purchase Agreement
	EXHIBIT F

	 	Contingent Earn Out Agreement
	EXHIBIT G

	 	Escrow Agreement
	EXHIBIT H

	 	The Conveyance
	EXHIBIT I

	 	Non Competition Agreement
	EXHIBIT J

	 	Employment Agreement
	EXHIBIT K — 1

	 	Letter to Customers
	EXHIBIT K — 2

	 	Letter to Vendors
	EXHIBIT K — 3

	 	Letter to Employees

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