Operations and Lease Agreement

OPERATIONS / LEASE AGREEMENT


between


KC PARTNERSHIP, A FLORIDA GENERAL PARTNERSHIP


(Landlord)


and


PERIMETER FORD, INC., A DELAWARE CORPORATION


(Tenant)


Perimeter


================================================================================


LEASE AGREEMENT 2
TABLE OF CONTENTS
Page
---- ARTICLE 1 LEASE OF PROPERTY . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Parties Relationship and Property Interests . . . . 1
Section 1.2 Premises Leased . . . . . . . . . . . . . . . . . . 1
Section 1.3 Premises Defined . . . . . . . . . . . . . . . . . 1
Section 1.4 Habendum . . . . . . . . . . . . . . . . . . . . . 1


ARTICLE 2 TERM OF LEASE . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.1 Initial Term and Commencement . . . . . . . . . . . 1
Section 2.2 Lease Year . . . . . . . . . . . . . . . . . . . . 2
Section 2.3 Lease Month . . . . . . . . . . . . . . . . . . . . 2
Section 2.4 Renewal Term . . . . . . . . . . . . . . . . . . . 2


ARTICLE 3 RENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 3.1 Base Rent . . . . . . . . . . . . . . . . . . . . . 2
Section 3.2 Additional Rent and Rent . . . . . . . . . . . . . 3
Section 3.3 Payment of Rent . . . . . . . . . . . . . . . . . . 3
Section 3.4 Late Charge . . . . . . . . . . . . . . . . . . . . 3
Section 3.5 Adjustment to Rent for Ford Improvements . . . . . 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


ARTICLE 5 IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5.1 Alterations . . . . . . . . . . . . . . . . . . . . 4
Section 5.2 Mechanic's and Materialmen's Liens . . . . . . . . 4
Section 5.3 Ownership of Improvements . . . . . . . . . . . . . 5
Section 5.4 Asbestos . . . . . . . . . . . . . . . . . . . . . 5


ARTICLE 6 USE, ENVIRONMENTAL, MAINTENANCE, AND REPAIRS . . . . . . . . 5
Section 6.1 Use . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 6.2 Environmental . . . . . . . . . . . . . . . . . . . 6
Section 6.3 Maintenance and Repairs . . . . . . . . . . . . . . 9
Section 6.4 Americans with Disabilities Act . . . . . . . . . . 10


ARTICLE 7 INSURANCE AND INDEMNITY . . . . . . . . . . . . . . . . . . 10
Section 7.1 Building Insurance . . . . . . . . . . . . . . . . 10
Section 7.2 Liability Insurance . . . . . . . . . . . . . . . . 11
Section 7.3 Policies . . . . . . . . . . . . . . . . . . . . . 11


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Section 7.4 Tenant's Indemnity . . . . . . . . . . . . . . . . 11
Section 7.5 Landlord's Indemnity . . . . . . . . . . . . . . . 11
Section 7.6 Subrogation . . . . . . . . . . . . . . . . . . . . 12


ARTICLE 8 CASUALTY; CONDEMNATION; SURVIVAL OF LEASE . . . . . . . . . 12
Section 8.1 Tenant's Obligation to Restore . . . . . . . . . . 12
Section 8.2 Restoration and Deposit of Funds . . . . . . . . . 13
Section 8.3 Notice of Damage . . . . . . . . . . . . . . . . . 15
Section 8.4 Total Taking . . . . . . . . . . . . . . . . . . . 15
Section 8.5 Partial Taking . . . . . . . . . . . . . . . . . . 15
Section 8.6 Temporary Taking . . . . . . . . . . . . . . . . . 15
Section 8.7 Notice of Taking, Cooperation . . . . . . . . . . . 15
Section 8.8 Survival of Operations / Lease Agreement Upon
Termination of Ford Leases . . . . . . . . . . . . 16


ARTICLE 9 TENANT'S FINANCING . . . . . . . . . . . . . . . . . . . . . 16
Section 9.1 Tenant's Right to Encumber . . . . . . . . . . . . 16
Section 9.2 Tenant's Mortgage . . . . . . . . . . . . . . . . . 16


ARTICLE 10 WARRANTY OF TITLE AND PEACEFUL POSSESSION . . . . . . . . . 17
Section 10.1 Warranty As to Encumbrances . . . . . . . . . . . . 17
Section 10.2 Landlord's Mortgage . . . . . . . . . . . . . . . . 18
Section 10.3 Representations of Landlord . . . . . . . . . . . . 18


ARTICLE 11 DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . 20
Section 11.1 Default . . . . . . . . . . . . . . . . . . . . . . 20
Section 11.2 Remedies . . . . . . . . . . . . . . . . . . . . . 21


ARTICLE 12 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 22
Section 12.1 Notices. . . . . . . . . . . . . . . . . . . . . . 22
Section 12.2 Performance of Other Party's Obligations . . . . . 22
Section 12.3 Modification and Non-Waiver . . . . . . . . . . . . 23
Section 12.4 Governing Law . . . . . . . . . . . . . . . . . . . 23
Section 12.5 Number and Gender; Captions; References . . . . . . 23
Section 12.6 CPI . . . . . . . . . . . . . . . . . . . . . . . 23
Section 12.7 Estoppel Certificate . . . . . . . . . . . . . . . 23
Section 12.8 Severability . . . . . . . . . . . . . . . . . . . 24
Section 12.9 Attorney Fees . . . . . . . . . . . . . . . . . . . 24
Section 12.10 Surrender of Premises; Holding Over . . . . . . . 24
Section 12.11 Relation of Parties . . . . . . . . . . . . . . . 24
Section 12.12 Force Majeure . . . . . . . . . . . . . . . . . . 24
Section 12.13 Non-Merger . . . . . . . . . . . . . . . . . . . . 24
Section 12.14 Entireties . . . . . . . . . . . . . . . . . . . . 24
Section 12.15 Recordation . . . . . . . . . . . . . . . . . . . 25
Section 12.16 Successors and Assigns . . . . . . . . . . . . . . 25
Section 12.17 Landlord's Joinder . . . . . . . . . . . . . . . . 25
Section 12.18 No Third Parties Benefitted . . . . . . . . . . . 25


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Section 12.19 Survival . . . . . . . . . . . . . . . . . . . . . 25
Section 12.20 Perpetuities . . . . . . . . . . . . . . . . . . . 25
Section 12.21 Transfer of Landlord's Interest . . . . . . . . . 25
Section 12.22 Tenant's Right To Assign . . . . . . . . . . . . . 25
Section 12.23 Past Due Amounts . . . . . . . . . . . . . . . . . 26
Section 12.24 Independent Counsel . . . . . . . . . . . . . . . 26
Section 12.25 Cooperation with Landlord's Lender. . . . . . . . 26


ARTICLE 13 OPTION TO PURCHASE PREMISES . . . . . . . . . . . . . . . . 26
Section 13.1 Right of First Refusal . . . . . . . . . . . . . . 26
Section 13.2 Option . . . . . . . . . . . . . . . . . . . . . . 27
Section 13.3 Specific Performance . . . . . . . . . . . . . . . 29


ARTICLE 14 ARBITRATION . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 14.1 Arbitration Provisions . . . . . . . . . . . . . . 29


ARTICLE 15 SUBORDINATION AND ATTORNMENT . . . . . . . . . . . . . . . . 30
Section 15.1 Subordination . . . . . . . . . . . . . . . . . . . 30
Section 15.2 Attornment . . . . . . . . . . . . . . . . . . . . 30


iv 5


EXHIBITS


EXHIBIT A Description of Land EXHIBIT B Exceptions to Title to Land


v 6
OPERATIONS / LEASE AGREEMENT


This Operations / Lease Agreement ("LEASE") is entered into as of the 16th day of March, 1998, between KC PARTNERSHIP, A FLORIDA GENERAL PARTNERSHIP as ("LANDLORD"), and PERIMETER FORD, INC., a Delaware corporation ("TENANT").


ARTICLE 1
LEASE OF PROPERTY


SECTION 1.1 PARTIES RELATIONSHIP AND PROPERTY INTERESTS. Landlord is the owner of the real property subject to this Lease and as hereinafter defined in Section 1.2. By instrument entitled "LEASE AGREEMENT" Owner leased the Premises to Ford Leasing Development Company (the "MAIN LEASE"). A "SHORT FORM LEASE" regarding the Main Lease was recorded at Deed Book 10561, Page 435, Public Records of Fulton County, Georgia (the "MAIN LEASE NOTICE"). Ford Leasing Development Company ("FORD LEASING") has entered into a Sublease Agreement (the "FORD SUBLEASE") wherein Ford Leasing has subleased the Premises to Tenant. The Main Lease and Ford Sublease do not set forth numerous provisions which more particularly define the rights and obligations of the herein Landlord and Tenant. Landlord and Tenant, by execution of this Lease hereby memorialize such rights and obligations. Except as otherwise indicated herein and/or enumerated in a revised agreement being executed and pertaining to the Main Lease and Ford Sublease among the parties hereto, Comerica Bank, Perimeter Ford and Ford Leasing, the terms and conditions hereof shall prevail over the Sublease. For purposes of this Lease, the terms "LANDLORD" and "TENANT" shall define the parties hereto as, and the term sublease and/or lease shall symbolize the agreement and the relationship of the parties, and except for the intervening provisions of any agreements entered into with Ford Leasing, the parties hereto are acting as landlord and tenant.


SECTION 1.2 PREMISES LEASED. Landlord leases to Tenant, and Tenant leases from Landlord the real property and premises described on EXHIBIT A (the "LAND"), including but not limited to all of the rights, interests, estates, and appurtenances thereto, all improvements thereon, and all other rights, titles, interests, and estates, if any, in adjacent streets and roads.


SECTION 1.3 PREMISES DEFINED. All of the Land, properties, rights, estates, appurtenances, and interests leased to Tenant pursuant to Section 1.2, together with all improvements now or hereafter constructed thereon, are hereinafter collectively referred to as the "PREMISES".


SECTION 1.4 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


SECTION 2.1 INITIAL TERM AND COMMENCEMENT. The initial term ("INITIAL TERM") of this Lease shall commence on the date hereof ("COMMENCEMENT DATE") and unless sooner terminated pursuant to the terms of this Lease, the initial term of this Lease shall expire on the "EXPIRATION DATE" (herein so called), which shall be (i) the last day of the one hundred twentieth (120th) Lease Month from and after the first day of the calendar month following the Commencement Date. 7
SECTION 2.2 LEASE YEAR. A "LEASE YEAR" shall mean a twelve (12) Lease Month period commencing with the first day of the calendar month following the Commencement Date or any anniversary date thereof.


SECTION 2.3 LEASE MONTH. 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.


SECTION 2.4 RENEWAL TERM.


(a) If on the Expiration Date and the date Tenant notifies Landlord of its intention to renew the term of this Lease (as provided below), (i) Tenant has not been given notice of default under this Lease, based upon a Default as hereinafter defined, and (ii) this Lease is in full force and effect, then Tenant, shall have and may exercise an option to renew this Lease for four (4) additional terms (each, a "RENEWAL TERM") of five (5) years each, upon the same Rent (hereinafter defined), as adjusted pursuant to the terms of Section 3.1, and other terms and conditions contained in this Lease. Whenever used in this Lease, "TERM", unless modified or specifically noted otherwise in the applicable context, shall mean the Initial Term together with each Renewal Term to the extent Tenant has exercised any option with respect to any Renewal Term.


(b) If Tenant desires to renew this Lease, Tenant must notify Landlord in writing of its intention to renew on or before the date which is at least six (6) months but no more than twelve (12) months prior to the Expiration Date or the expiration date of any Renewal Term, as the case may be.


ARTICLE 3
RENT


SECTION 3.1 BASE RENT. Subject to the terms and provisions contained in this Section 3.1, Tenant shall pay Landlord monthly "BASE RENT" (herein so called) of Fifty Seven Thousand Two Hundred Fifty and no/100 Dollars ($57,250.00), in advance on or before the first day of each Lease Month during the Term, subject to adjustment as hereafter provided. If the Term commences on a day other than the first day of a calendar month, or ends on a day other than the last day of a calendar month, then the Base Rent for such month shall be 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 3.1 plus an amount equal to one-half (1/2) of the product obtained by multiplying: (i) the original monthly Base Rent specified in this Section 3.1 by (ii) the percentage increase in the CPI from the Commencement Date through the January 1st prior to the Adjustment Date. "ADJUSTMENT DATE" shall be the first day of the first Lease Month of each Renewal Term. The term "CPI" shall have the meaning specified therefor in Section 12.6.


Tenant shall also pay at the same times and places as the rental installments such Georgia State Sales Tax, other such applicable taxes due on rentals and all other sums due hereunder either city, state, county or federal as may be in effect from time to time.


2 8
SECTION 3.2 ADDITIONAL RENT AND RENT. All amounts required to be paid by Tenant under the terms of this Lease, other than Base Rent, are herein from time to time collectively referred to as "ADDITIONAL RENT." Base Rent and Additional Rent are herein collectively referred to as "RENT."


SECTION 3.3 PAYMENT OF RENT. Base Rent shall be payable to Landlord at the original or changed address of Landlord as set forth in Section 12.1 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 (defined below), then Tenant shall have the right, but not the obligation, to pay to Landlord's Financing Lender (defined below) any sums due and owing on such Landlord's Financing and all such payments by Tenant shall reduce the amount of Rent owing to Landlord. Additional Rent shall be paid as herein set forth.


SECTION 3.4 LATE CHARGE. Any rent or other sum which is not paid within fifteen (15) days after the date due shall bear interest at the Default Rate from the date when the same is payable under the terms of this Lease until the same shall be paid.


SECTION 3.5 ADJUSTMENT TO RENT FOR FORD IMPROVEMENTS. Landlord and Tenant recognize that Ford Leasing or its related entities ("FORD") may from time to time require that structural improvements to the Premises be made as a condition to the continuation of a Ford Dealership upon the Premises. In the event that Ford requires that such structural improvements be made to the Premises, Landlord shall, at its expense, construct such improvements. The Base Rent due pursuant to Section 3.1 hereinabove shall be increased by an amount equal to the costs of the improvements required by Ford, amortized over a fifteen (15) year period. The new Base Rent shall commence effective the next monthly period following the completion of the required improvements.


ARTICLE 4
TAXES; UTILITIES


SECTION 4.1 IMPOSITIONS DEFINED. "IMPOSITIONS" means all real estate and ad valorem taxes, and associated levies, including penalties levied for failure of Tenant to pay any of same in a timely manner, which shall or may during the Term be assessed, levied 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, the appurtenances thereto or the sidewalks, streets, or vaults adjacent thereto. 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").


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, Tenant may pay such Imposition in installments as and when such


3 9 installments become due. Tenant shall, if so requested, deliver to Landlord evidence of payment of all Impositions Tenant is obligated to pay hereunder, concurrently with the making of such payment.


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. All taxes must be paid prior to the date they become delinquent. In the event that the property subject to this Agreement is encumbered by financing, the Tenant shall pay all taxes within the timeframe established by such lender.


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, refuse, sewer service charges, or other similar charges levied or charged against, or in connection with, the Premises.


ARTICLE 5
IMPROVEMENTS


SECTION 5.1 ALTERATIONS. At any time and from time to time during the Term, Tenant may perform such alteration, renovation, repair, refurbishment, and other work (herein such matters being collectively 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 alterations, 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) 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; (iv) After commencement, such construction or work shall be prosecuted with due diligence to its completion; and (v) With the prior written consent of Landlord, which consent 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 notice, 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.


SECTION 5.2 MECHANIC'S AND MATERIALMEN'S LIENS. Tenant shall have no right, authority, or power to bind Landlord or any interest of Landlord in the Premises for any claim for labor or for material or for any other charge or expense incurred in construction of any Improvements or performing any alteration, renovation, repair, refurbishment, or other work with regard thereto, nor to render Landlord's


4 10 interest in the Premises liable for any lien or right of lien for any labor, materials, or other charge or expense incurred in connection therewith, and Tenant shall in no way be considered as the agent of Landlord in the construction, erection, or operation of any such Improvements. If any liens or claims for labor or materials supplied or claimed to have been supplied to the Premises shall be filed against the interest of the Landlord, Tenant shall promptly pay or bond such liens to Landlord's reasonable satisfaction or otherwise obtain the release or discharge thereof.


SECTION 5.3 OWNERSHIP OF IMPROVEMENTS. During the Term all currently existing Improvements shall be solely the property of Landlord. All other Improvements created by Alterations 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 trade fixtures, 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. Nothing hereinabove withstanding to the contrary, any lifts or hydraulics installed upon the Premises by Tenant, whether as an original installation or replacement, shall remain on the Premises and shall become the property of the Landlord upon the expiration or termination of this Lease.


SECTION 5.4 ASBESTOS. Landlord shall remain fully liable and responsible for any asbestos and other Hazardous Substances as hereinafter defined present on any portion of the Premises prior to the date of this Lease even if such asbestos is in an unfriable or undisturbed state on the date of this Lease and Tenant thereafter disturbs such materials in any manner including, without limitation, in connection with any Alterations performed by Tenant on the Premises. If Tenant intentionally disturbs or causes to be disturbed by any contractor or other party any asbestos presently located on the Premises of which Tenant has actual knowledge, then any such disturbance of such asbestos shall only be done in accordance with all laws, regulations, ordinances, or requirements of any Governmental Authority having jurisdiction in the Premises including, without limitation, those which govern the disposition of Hazardous Substances. Any expenses associated with correction of such disturbance caused by the Tenant or its contractors shall be borne by the Tenant.


ARTICLE 6
USE, ENVIRONMENTAL, MAINTENANCE, AND REPAIRS


SECTION 6.1 USE.


Subject to the terms and provisions hereof, Tenant may use and enjoy the Premises for the sale, lease, trade, repair or service of motor or other vehicles and other uses 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 any laws, regulations, ordinances, or requirements of any Governmental Authority having jurisdiction in the Premises including, without limitation, those which relate to Hazardous Substances.


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SECTION 6.2 ENVIRONMENTAL.


(a) For purposes of this Lease, the term "HAZARDOUS SUBSTANCE" means (i) any substance, product, waste or other material of any nature whatsoever which is or becomes listed, regulated, or addressed pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9601, et seq. ("CERCLA"); the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq. ("RCRA"); the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Clean Water Act, 33 U.S.C. Section 1251 et seq.; the Federal Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Federal Clean Water Act, 33 U.S.C. Section 1151 et seq.; the National Environmental Policy Act, 42 U.S.C. Section 1857 et seq.; the Regulations of the Environmental Protection Agency, 33 C.F.R. and 40 C.F.R.; applicable state, county and city codes and statues or any other federal, ...