Real Property Purchase Agreement

REAL PROPERTY PURCHASE AGREEMENT



 
                                 EXHIBIT 10.32


                            CAPITAL AUTOMOTIVE L.P.
                            -----------------------

                        REAL PROPERTY PURCHASE AGREEMENT
                        --------------------------------



                       Kline Chevrolet Sales Corporation



                                January 12, 1998

 
                               TABLE OF CONTENTS




                                                                           Page 
 
                                                                   
I.      PURCHASE AND SALE................................................  -1-
            1.1   Certain Definitions....................................  -1-
            1.2   Agreement to Purchase and Sell.........................  -2-
            1.3   Encumbrances...........................................  -2-
            1.4   Purchase Price.........................................  -2-
            1.5   Capitalized Terms......................................  -3-
                                                                             
II.     OPERATION OF PROPERTY THROUGH CLOSING............................  -3-
            2.1   Business Practice......................................  -3-
            2.2   No Sale or Encumbrance.................................  -3-
            2.3   Leases, Service Contracts and Management Contracts.....  -3-
            2.4   Termination of Leases; New Company Leases..............  -4-
            2.5   Compliance.............................................  -4-
            2.6   Notice of Inaccuracy or Incompleteness.................  -4-
            2.7   Access.................................................  -4-
            2.8   Insurance..............................................  -4-
            2.9   Fulfillment of Obligation..............................  -4-
            2.10  Financial Statements and Reports.......................  -5-
                                                                             
III.    STATUS OF TITLE TO PROPERTY......................................  -5-
            3.1   State of Title.........................................  -5-
            3.2   Preliminary Evidence of Title..........................  -5-
            3.3   Title Defects..........................................  -7-
                                                                             
IV.     CLOSING PRORATIONS AND ADJUSTMENTS...............................  -7-
            4.1   Prorations and Adjustments.............................  -7-
                                                                             
V.      CLOSING..........................................................  -8-
            5.1   Closing Date...........................................  -9-
            5.2   Closing Documents......................................  -9-
            5.3   Conditions to the Partnership's Obligation to Close.... -12-
            5.4   Conditions to the Seller's Obligation to Close......... -13-
            5.5   Transaction Costs...................................... -14-
                                                                             
VI.     CASUALTY LOSS AND CONDEMNATION................................... -14-
            6.1   Casualty............................................... -15-
            6.2   Condemnation or Taking................................. -15-

 
                                     -ii-

 
 

                                                                     
VII.    REPRESENTATIONS AND WARRANTIES OF THE SELLERS.................... -15-
             7.1  Organization........................................... -15-
             7.2  Authority.............................................. -15-
             7.3  Interest in Properties................................. -16-
             7.4  No Defaults............................................ -16-
             7.5  No Litigation; No Condemnation......................... -17-
             7.6  No Violation........................................... -17-
             7.7  Required Obligations................................... -18-
             7.8  Condition of Properties................................ -18-
             7.9  Warranties............................................. -18-
             7.10 Utilities.............................................. -18-
             7.11 Zoning................................................. -18-
             7.12 Improvements........................................... -18-
             7.13 Environmental Matters.................................. -18-
             7.14 Insurance.............................................. -21-
             7.15 Compliance............................................. -21-
             7.16 Leases................................................. -21-
             7.17 Service Contracts; Management Contracts................ -22-
             7.18 Permits................................................ -23-
             7.19 [Intentionally Omitted]................................ -23-
             7.20 Tax Matters............................................ -23-
             7.21 Taxes.................................................. -23-
             7.22 Special Filings........................................ -23-
             7.23 Books and Records...................................... -23-
             7.24 No Brokers............................................. -23-
             7.25 All Material Information............................... -23-
             7.26 Survival of Warranties................................. -24-
                                                                             
VIII.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE                
        PARTNERSHIP ..................................................... -24-
             8.1  Organization, Good Standing and Qualification.......... -24-
             8.2  Authorization.......................................... -24-
             8.3  No Violation........................................... -25-
             8.4  Tax Status............................................. -25-
             8.5  No Litigation.......................................... -25-
             8.6  No Brokers............................................. -25-
             8.7  Survival............................................... -25-
                                                                             
IX.     COVENANTS........................................................ -26-
             9.1  Covenants of the Company and the Partnership........... -26-
             9.2  Covenants of the Sellers and the Contributing Entities. -27-
             9.3  [Intentionally Omitted]................................ -28-

 
                                     -iii-

 
 

                                                                     
X.      DUE DILIGENCE PERIOD............................................. -28-
            10.1  Due Diligence Period................................... -28-
            10.2  Access to Properties and Materials..................... -28-
            10.3  Adjustment Following Due Diligence..................... -28-
                                                                             
XI.     DEFAULTS AND REMEDIES............................................ -29-
            11.1  Indemnification by Sellers............................. -29-
            11.2  Remedies............................................... -30-
            11.3  Indemnification by the Company and the Partnership..... -31-
            11.4  Indemnification Procedures............................. -32-
                                                                             
XII.    MISCELLANEOUS.................................................... -34-
            12.1  Assignment............................................. -34-
            12.2  Entire Agreement....................................... -35-
            12.3  Notices................................................ -35-
            12.4  Governing Law.......................................... -36-
            12.5  Litigation Costs....................................... -36-
            12.6  Counterparts........................................... -36-
            12.7  Offer and Acceptance................................... -36-


                                     - iv -

 
                                    EXHIBITS

     2.4(a)         Form of  Company Lease
     2.4(c)         Guaranty and Subordination Agreement
     5.2.1(m)       Opinion of Seller's Counsel
     5.2.2(d)       Opinion of Company Counsel
 
                                   SCHEDULES

     1.2            Schedule of Properties; Ownership Interests in Properties
                    and Purchase Price
     2.1            Prior Occupants
     7.4            Other Agreements
     7.8            Condition of Properties
     7.13.5(a)      The Treatment, Storage and Disposal Locations for Substances
                    of Concern
     7.13.5(b)      Storage Tanks
     7.13.5(c)      Existence of Asbestos
     7.13.5(f)      Environmental Permits and Authorizations
     7.14           Insurance
     7.17           Service Contracts and Management Contracts
 

                                      -v-

 
                            CAPITAL AUTOMOTIVE L.P.

                        REAL PROPERTY PURCHASE AGREEMENT
                        --------------------------------

          THIS REAL PROPERTY PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of this 12th day of January 1998, by and among KLINE CHEVROLET
SALES CORPORATION, a Virginia corporation, ("Seller," sometimes referred to
herein as "Sellers"), and CAPITAL AUTOMOTIVE L.P., a Delaware limited
partnership (the "Partnership"), having offices at 1925 North Lynn Street, Suite
306, Arlington, Virginia 22209, and CAPITAL AUTOMOTIVE REIT, a Maryland real
estate investment trust (the "Company"), having offices at 1925 North Lynn
Street, Suite 306, Arlington, Virginia 22209 on its own behalf and as the
general partner of the Partnership.


                                    RECITALS
                                    --------

          A.   The Sellers are the legal and beneficial owners of all of the
interests in fee simple title to all of the real property and improvements set
forth on such Schedule 1.2 hereto (including the residual interests in any
              ------------                                                
tenant improvements thereon), which are individually referred to as a "Property"
and collectively, the "Properties."  Such Properties are identified on Schedule
                                                                       --------
1.2  by street address and property tax identification number, or if such
----                                                                     
Properties constitute more than one parcel, by the several applicable property
tax identification numbers.

          B.   Each Seller desires to sell all of its interest in each of the
Properties to the Partnership and the Partnership desires to purchase all of the
Sellers' interests in such Properties.

          NOW THEREFORE, in consideration of and in reliance upon the above
Recitals, the terms, covenants and conditions contained in this Agreement, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:


          1.   PURCHASE AND SALE
               -----------------

               1.1  Certain Definitions.  For purposes of this Agreement:
                    -------------------                                      

               1.1.1    "Mortgage Debt" means the aggregate amount of mortgage
                        indebtedness, if any, encumbering the Propteries as set
                        forth opposite the description of each Property on
                        Schedule 1.2.
                        ------------ 

               1.1.2    "Purchase Price" means the amount, in U.S. dollars, that
                        is the purchase price of each Property, as identified on
                        Schedule 1.2 for each such Property.
                        -------------                        

 
               1.1.3    "Affiliate" means with respect to any Person, (i) any
                        Person that holds direct or indirect beneficial
                        ownership (as defined in Rule 13d-3 under the Securities
                        Exchange Act of 1934, as amended) of voting securities
                        or other voting interests representing at least five
                        percent (5%) of the outstanding voting power of a Person
                        or equity securities or other equity interests
                        representing at least five percent (5%) of the
                        outstanding equity securities or interests in a Person,
                        or (ii) any Person that directly, or indirectly through
                        one or more intermediaries, controls, or is controlled
                        by, or is under common control with such Person.

               1.1.4    A "Person" shall mean and include natural persons,
                        corporations, limited partnerships, general
                        partnerships, joint stock companies, joint ventures,
                        associations, companies, trusts, banks, trust companies,
                        land trusts, business trusts, Indian tribes or other
                        organizations, whether or not legal entities, and
                        governments and agencies and political subdivisions
                        thereof.

               1.1.5    For purposes of this Agreement, the "knowledge" of a
                        Person shall mean the actual knowledge of such Person's
                        officers, senior executives, managing partners, general
                        partners, majority shareholders, key employees or their
                        equivalents.

               1.2  Agreement to Purchase and Sell.  Subject to the terms 
                    ------------------------------           
and conditions of this Agreement, at the Closing (as hereinafter defined), each
Seller shall sell, transfer and convey to the Partnership, and the Partnership
shall purchase and accept from the Sellers, all of the Sellers' right, title and
interest in and to the Properties identified on Schedule 1.2, excluding items of
                                                ------------                    
movable personal property attached to such Properties that relate to the
business conducted on such Properties and may readily be removed from such
Properties without material damage whether or not such items are "fixtures,"
("Excluded Personal Property").

               1.3  Encumbrances.  The Partnership shall acquire each
                    ------------                                     
Property free and clear of all liabilities, obligations and commitments of
Sellers and free and clear of all liens and encumbrances other than Permitted
Exceptions.

               1.4  Purchase Price.   On the terms and subject to the
                    --------------                                   
conditions of this Agreement, at the Closing Sellers shall sell, transfer,
convey, assign and deliver to the Partnership, and the Partnership shall
purchase and accept from Sellers all the right, title and interest of Sellers to
and under the Properties for an aggregate purchase price (the "Aggregate
Purchase Price") in an amount equal to:

                                      -2-

 
                    EIGHT MILLION FIVE HUNDRED THOUSAND AND 00/100 U.S. Dollars
                    ($8,500,000).

The Aggregate Purchase Price will be adjusted pursuant to Sections 3.3, 
5.2.1(k), 5.2.1(l), 6.1, 6.2, 10.3 as applicable.

               1.5  Capitalized Terms.  Capitalized terms used in this Agreement
                    -----------------                                           
that are not otherwise defined herein shall have the meanings required by
context.

          II.  OPERATION OF PROPERTY THROUGH CLOSING
               -------------------------------------

               Through the Closing Date:

               2.1  Business Practice.  Except as otherwise provided in this
                    -----------------                                       
Article 2, the Sellers shall continue, or shall cause any Affiliate, tenant, or
third party managing, maintaining or occupying, as the case may be, any of the
Properties (referred to herein individually as a "Prior Occupant" and
collectively as the "Prior Occupants") to continue, to manage, to maintain and
to operate the Properties in accordance with sound and prudent business
practices and keep the Properties and the tangible personal property thereon in
good condition and repair, ordinary wear and tear excepted.  The Sellers shall
instruct such Prior Occupant not to make any change in its management,
maintenance or operation of the Properties or in its normal and customary other
practices.  The Prior Occupants are identified on Schedule 2.1 to this
                                                  ------------        
Agreement.

               2.2  No Sale or Encumbrance.  None of the Sellers shall sell,
                    ----------------------                                  
mortgage, pledge, hypothecate or otherwise transfer or dispose of all, or any
part of any Property or any interest therein, nor shall any Seller initiate,
consent to, approve or otherwise take any action with respect to zoning or any
other governmental rules or regulations presently applicable to all or any part
of any Property, nor shall any Seller permit any new limited or general
partners, shareholders or members to be admitted to any Seller.

               2.3  Leases, Service Contracts and Management Contracts.
                    -------------------------------------------------- 
Except as provided in Section 2.4, the Sellers shall not, nor shall they cause
or permit any Prior Occupant to, terminate, modify, extend, amend or renew any
Lease (as defined in Section 4.1.3 hereof), Service Contract (as defined in
Section 7.17 hereof), or Management Contract (as defined in Section 7.17 hereof)
or enter into any new Lease (other than the Company Lease pursuant to Section
2.4 of this Agreement) or Service Contract without the prior written consent of
the Company or the Partnership; provided, however, that the failure of the
Company or the Partnership to object to any such action within thirty (30) days
after written notice to it by Seller shall be deemed to reflect the Company's or
the Partnership's consent thereto. Notwithstanding the foregoing, all Service
Contracts and Management Contracts relating to the respective Properties shall
remain in effect after the Closing Date, except for those Service Contracts and
Management Contracts that the Partnership requires, in writing, to be terminated
as of the Closing Date.

                                      -3-

 
               2.4  Termination of Leases; New Company Leases.  On or prior
                    -----------------------------------------            
to the Closing Date, the Sellers shall cause the termination of all Leases.  In
consideration for the termination of that certain lease by and between Kline
Chevrolet Sales Corporation and James M. Kline dated June 1, 1991, the
Partnership shall, at the Closing, pay Two Million Dollars ($2,000,000) of the
Aggregate Purchase Price to James M. Kline (the "Kline Lease Termination
Payment") and pay the remaining Six Million Five Hundred Thousand Dollars
($6,500,000) to the Seller.  Not later than five (5) days  before the Closing
Date (as defined herafter), the Sellers shall cause the Prior Occupant of each
Property, or an Affiliate thereof, to execute and deliver to the Partnership an
occupancy lease with the Partnership for each of the Properties substantially in
the form attached hereto as Exhibit 2.4(a) (referred to hereafter individually
                            --------------                                    
as a "Company Lease" and collectively as the "Company Leases"), on terms and
conditions (including Rent (as defined in such Company Lease)) acceptable to the
Partnership. The Base Annual Rent (as defined in the Company Lease) called for
under the Company Lease for each Property shall be eleven and three-tenths
percent (11.3%) of the Purchase Price for such Property (the "Rate of Return").
The effective date of such Company Leases shall be the Closing Date.  The
Company Leases shall be guaranteed by Kline Imports Chesapeake, Inc., a Virginia
corporation, using a Guaranty and Subordination Agreement substantially in the
form attached hereto as Exhibit 2.4(c).
                        -------------- 

               2.5  Compliance.  None of the Sellers shall knowingly take or
                    ----------                                              
fail to take any action that will cause the Properties to fail to comply with
any federal, state, municipal and other governmental laws, ordinances,
requirements, rules, regulations, notices, codes and orders, or any agreements,
covenants, conditions, easements and restrictions currently in effect relating
to the Properties.

               2.6  Notice of Inaccuracy or Incompleteness.  The Sellers 
                    --------------------------------------     
shall promptly give written notice to the Company of the occurrence of any event
of which Sellers have knowledge and which may materially and adversely affect
the completeness or accuracy of any representation or warranty made or to be
made by Sellers under or pursuant to this Agreement.

               2.7  Access.  The Sellers shall cause the Company and the
                    ------                                              
Partnership and its representatives to have reasonable access to the Properties,
subject to the prior rights, if any, of any Prior Occupant; provided, however,
that without the consent of the Seller, the representatives of the Partnership
shall not disclose to any Prior Occupant the existence of this Agreement or the
transactions contemplated hereby.

               2.8  Insurance.  The Sellers shall cause the existing 
                    ---------                                      
insurance coverages on the Properties and the business of the Sellers to be
maintained in full force and effect through the Closing Date.

               2.9  Fulfillment of Obligation.  To the extent any Seller is
                    -------------------------                              
obligated, pursuant to any contract, agreement, covenant, lease, including any
Lease, or other understanding entered into prior to the date hereof with any
Prior Occupant, governmental subdivision or any other

                                      -4-

 
third party, to effect any construction, make any improvements or take any
action, the Sellers shall cause any such construction, improvements and/or
action to be taken, completed and fully paid for by such Seller, at its expense,
prior to the Closing Date. No such obligation shall be unfulfilled, and no
liability for or payment in respect of any such obligation shall be unsatisfied
as of the Closing Date.

               2.10 Financial Statements and Reports.  The Sellers shall
                    --------------------------------      
provide to the Company financial statements, agings of accounts receivable, and
other financial, operating or statistical information for each Property upon any
reasonable request of the Company, and the general partner or chief financial
officer, as the case may be, of each Seller shall certify that, to the best of
his or its knowledge, such financial statements and other reports are true,
accurate and complete in all material respects.


          III. STATUS OF TITLE TO PROPERTY
               ---------------------------

               3.1  State of Title. At Closing, the Sellers shall own,
                    --------------                                    
beneficially and of record, good and marketable fee simple title to the
Properties, subject only to the mortgages creating the Mortgage Debt listed on
Schedule 1.2 hereto and those easements, covenants, conditions, restrictions and
------------                                                                    
other matters affecting title as set forth in the land Title Commitments, UCC
Searches and/or Surveys to be delivered to the Partnership hereunder and found
to be acceptable to the Partnership under Section 3.3 hereto (the "Scheduled
Exceptions").  The Mortgage Debt and Scheduled Exceptions are referred to
collectively herein as the "Permitted Exceptions."

               3.2  Preliminary Evidence of Title.  Within no more than 30
                    -----------------------------       
days after the date hereof, the Sellers and the Partnership shall obtain, in a
form acceptable to the Partnership, the following documents to evidence the
condition of the title to each of the Properties:

               3.2.1    Commitments (the "Title Commitments") to the Partnership
                        for ALTA Form B (1987) Owner's Title Insurance Policies
                        committing to insure, at standard rates, title to each
                        Property as being good and marketable, subject only to
                        the Permitted Exceptions, in the amount of the Purchase
                        Price of each such Property, issued by a title company
                        acceptable to the Company and the Partnership (the
                        "Title Insurer"). The Title Commitments shall be
                        effective as of the Closing Date, and shall reflect that
                        fee simple title is held by the respective Seller. Each
                        Owner's Title Insurance Policy to be issued to the
                        Partnership at Closing pursuant to Section 7.2.2 below
                        ("Title Insurance Policies") shall contain an extended
                        coverage endorsement over the general or standard
                        exceptions which are a part of the printed form of the
                        policy and subject only to the Permitted Exceptions.
                        Each Title Insurance Policy

                                      -5-

 
                        shall, in addition, (a) include provisions for co-
                        insurance, in such amounts of liability acceptable to
                        the Partnership and the Company; (b) not contain any
                        survey exception, (c) not contain any exceptions for (i)
                        liens for labor or material, whether or not of record,
                        (ii) parties in possession (other than Prior Occupants
                        under the Leases, solely as such Prior Occupants), (iii)
                        unrecorded easements, and (iv) taxes and special
                        assessments not shown on the public records, (d) provide
                        for the following endorsements: (i) an access
                        endorsement insuring that there is direct and
                        unencumbered access to the land from all adjacent public
                        streets and roads, (ii) a survey endorsement insuring
                        that all foundations in place as of the date of such
                        policy are within the lot lines and applicable setback
                        lines, that the improvements do not encroach on
                        adjoining land or any easements, and that there are no
                        encroachments of improvements from adjoining land on any
                        or the Properties or any part thereof, (iii) an ALTA
                        Form 3.1 zoning endorsement insuring that the Properties
                        are zoned for the buildings and the operation thereof as
                        contemplated by the terms and provisions of this
                        Agreement, (iv) [intentionally omitted], (v) a statement
                        that each Property constitutes a separate lot of record
                        and is separately assessed for real estate tax purposes,
                        (vi) an endorsement commonly referred to as a "Fairway
                        endorsement," providing among other things, that the
                        Title Insurer waives any defense based on a dissolution
                        or termination of the insured partnership or the
                        formation of a new partnership solely by reason of one
                        or more transfers of all or any part of the partnership
                        interests of any one or more of the general partners of
                        the insured to the Company or the Partnership and/or any
                        one or more of the limited partners of the insured,
                        and/or the transfer of any one or more of the limited
                        partner's interests to the current general partner, the
                        Company or the Partnership, and (vii) such other
                        endorsements as the Partnership and the Company may
                        reasonably require.

               3.2.2    Written results of searches reflecting any liens,
                        judgements, tax liens, bankruptcies, and open dockets
                        (the "UCC Searches"), conducted by a company reasonably
                        acceptable to the Partnership. The UCC Searches shall
                        name each Seller, Prior Occupant, and Property, and
                        shall search the appropriate land records and central
                        filing office for Uniform Commercial Code financing
                        statements.

                                      -6-

 
               3.2.3    Legible copies of all documents of record referred to in
                        any Title Commitment or disclosed by the UCC Searches,
                        and all other documents evidencing or, to the extent in
                        the possession or control of the Sellers, relating to,
                        matters reflected in any Title Commitment or the UCC
                        Searches.

               3.2.4    Current ALTA/ACSM land title surveys of each of the
                        Properties (the "Surveys") dated on or after the date of
                        this Agreement, certified to the Partnership and the
                        Title Insurer (and such other persons or entities as the
                        Partnership may designate) by a surveyor registered in
                        the State where the Property is located. Each Survey
                        shall be in form and substance acceptable to the
                        Partnership and the Title Insurer.

               3.3  Title Defects.  The Partnership shall have the right to
                    -------------                                          
review the Title Commitments, UCC Searches and Surveys (or any revision or
update of any of them) and to require the Seller to remove, correct, and cure
any defects in the title or other such matters relating to the title that the
Partnership determines, in its sole discretion, are unacceptable. The
Partnership shall notify the Sellers in writing within ten (10) business days
after the Partnership receives the last of the Title Commitments, UCC Searches
or Surveys, as the case may be, of any such defects or matters that the
Partnership finds to be unacceptable, and, within sixty (60) days from the
receipt of notice, such Sellers shall, (i) as to any such exception or other
matter of a nonmonetary nature, use reasonable efforts to remove, correct and
cure such defects or such other matters, and (ii) as to any such defect or other
matter of a monetary nature, cause such lien or encumbrance or other matter to
be discharged and released, in each case to the reasonable satisfaction of the
Partnership. If such Seller fails to remove, correct and cure such defects or
such other matters, the Partnership may (within ten (10) business days), at its
option and as its exclusive remedy, (x) terminate this Agreement, in which event
this Agreement, without further action of the parties, shall become null and
void and neither party shall have any further rights or obligations under this
Agreement, or (y) terminate this Agreement with respect to such Property and
reduce the Aggregate Purchase Price by the Purchase Price for such Property with
respect to which the Seller fails to correct and cure such defects or other such
matters. If the Partnership fails to make any such election within the ten (10)
business day period, the Partnership shall be deemed to have elected the option
contained in clause (y).

          IV.  CLOSING PRORATIONS AND ADJUSTMENTS
               ----------------------------------

               4.1  Prorations and Adjustments.  All prorations and 
                    --------------------------                  
adjustments (the "Prorations") with respect to each Property, for the period up
to and through the Closing Date, shall be the responsibility of or belong to the
Sellers and all Prorations for the period after the Closing Date shall be the
responsibility of or belong to the tenant under the applicable Company Lease.
The Company and the Partnership shall have no responsibility for, and will
receive no benefit from, the

                                      -7-


 
Prorations, and the Seller shall have liability for such Prorations. Such
Prorations shall include, but not be limited to, the following:

               4.1.1    real estate and personal property taxes and assessments;

               4.1.2    common area maintenance fees and reimbursements for
                        prior years property taxes payable by Prior Occupants;

               4.1.3    the rent payable by Prior Occupants under leases in
                        effect immediately prior to the Closing Date (the
                        "Leases") as set forth on Schedule 2.1 hereto;
                                                  ------------        

               4.1.4    the full amount of security deposits paid under the
                        Leases, together with interest thereon if required by
                        law or otherwise;

               4.1.5    water, electric, telephone and all other utility and
                        fuel charges (those that are meter read will be read by
                        the appropriate utility and service transferred as of
                        the Closing Date);

               4.1.6    amounts due and prepayments under the Service Contracts;

               4.1.7    assignable license and permit fees;

               4.1.8    other expenses of operation and similar items; and

               4.1.9    all or any other disbursements, payments, and
                        obligations relating to the Property.

               4.1.10   notwithstanding the foregoing, any refunds of real or
                        personal property taxes for tax years beginning prior to
                        the Closing Date shall belong to Sellers, and if paid to
                        the Partnership shall be promptly refunded by the
                        Partnership to Sellers in cash.

               4.1.11   with respect to Mortgage Debt, at the time of Closing,
                        all obligations accrued up to the Closing Date, whether
                        the same shall constitute principal, interest, or other
                        payments, shall be paid by the Seller by way of a
                        reduction to the Aggregate Purchase Price in the amount
                        of such obligations.


          V.   CLOSING
               -------
                                      -8-

 
               5.1  Closing Date.  The closing of the transactions contemplated
                    ------------                                               
by this Agreement (the "Closing") shall occur at the offices of Wilmer, Cutler &
Pickering, 2445 M Street, N.W. Washington, D.C. 20037-1420, at 10:00 a.m. on
March 13, 1998, or such other time or place as shall follow the closing of the
initial public offering of Initial Shares of the Company pursuant to the
Registration Statement, provided that all conditions to Closing have been
satisfied or waived, or at such other time and place as the Sellers and the
Company shall agree in writing, provided however, that under no circumstances
shall the Closing occur later than May 31, 1998 (and if Closing does not occur
by such date, Seller shall have the option to terminate this Agreement).  The
"Closing Date" shall be the date of the Closing.

               5.2  Closing Documents
                    -----------------

               5.2.1    Sellers.  Not later than five (5) business days
                        -------                                        
                        prior to the Closing Date, the Sellers shall deliver to
                        the Company and the Partnership the following:

                        a.     deeds and assignments for the Properties;

                        b.     executed copies of all Company Leases, effective
                               at Closing;

                        c.     any affidavits, certificates and other documents
                               (including without limitation non-imputation
                               affidavits and/or certificates) that are
                               reasonably necessary for the Title Insurer to
                               issue the Owner's Title Insurance Policies in the
                               form and condition required by this Agreement;
 
                        d.     evidence satisfactory to the Partnership that all
                               mortgages and other indebtedness secured by the
                               Properties that are not being specifically
                               assumed by the Partnership have been paid in full
                               or arrangements to pay off the Mortgage Debt have
                               been made that are satisfactory to the
                               Partnership and the Title Insurer;

                        e.     for each Seller that is a corporation, a
                               corporate resolution authorizing the transactions
                               contemplated by this Agreement, a certificate of
                               good standing, a certified copy of its articles
                               or certificate of incorporation and bylaws, and a
                               certificate of incumbency certifying the titles
                               and signatures of the corporate officers
                               authorized to consummate the

                                      -9-

 
                      transactions contemplated hereunder on behalf of Seller
                      and such other evidence of such Seller's power and
                      authority as the Company or Partnership reasonably
                      requests;

                  f.  for each Seller that is a partnership or a limited
                      liability company, a partnership resolution authorizing
                      the transactions contemplated by this Agreement, a
                      certificate of good standing, a certified copy of the
                      partnership or operating agreement governing such Seller,
                      and a certificate of incumbency certifying the titles and
                      signatures of the general partners or members authorized
                      to consummate the transactions contemplated hereunder on
                      behalf of such Seller and such other evidence of power and
                      authority of such Seller as the Company or Partnership
                      reasonably requests;

                  g.  for each Seller, an affidavit stating, under penalty of
                      perjury, its U.S. taxpayer identification number and that
                      it is not a foreign person within the meaning of Section
                      1445 of the Internal Revenue Code of 1986, as amended (the
                      "Code");

                  h.  [Intentionally Omitted]

                  i.  copies certified by the Sellers to be, to Sellers'
                      knowledge, complete and accurate in all respects of all of
                      the original Leases, written Service Contracts and
                      Management Contracts and any and all building plans,
                      surveys, site plans, engineering plans and studies,
                      utility plans, landscaping plans, development plans,
                      specifications drawings, marketing artwork, construction
                      drawings, soil tests, complete warranty book including all
                      contractors and subcontractors and other documentation
                      concerning all or any part of each Property to the extent
                      that any of the foregoing documents are in the possession
                      or control of Sellers;

                  j.  any bonds, warranties or guaranties which are in any way
                      applicable to any Property or any part thereof 

                                     -10-

 
                      to the extent any of the foregoing are in the possession
                      or control of Sellers;

                  k.  If the Company or Partnership shall so request, each
                      Seller shall deliver to the Company a letter (an "Estoppel
                      Letter") in a form acceptable to the Company, dated not
                      more than thirty (30) days prior to the Closing Date, from
                      each Prior Occupant under each Lease. The Estoppel Letter
                      shall be fully completed in a manner reasonably
                      satisfactory to the Company, and with no modifications
                      other than those reasonably acceptable to the Company. In
                      the event Estoppel Letters in form and content reasonably
                      satisfactory to the Company are not received by the
                      Company and the Partnership within the time prescribed
                      herein, then the Partnership and the Company, at their
                      option and as a non-exclusive remedy, upon notice to the
                      Sellers, may immediately terminate this Agreement.

                  l.  [Intentionally Omitted]

                  m.  an opinion of Seller's counsel substantially in the form
                      attached hereto as Exhibit 5.2.1(m); and
                                         ----------------     

                  n.  all other documents reasonably required by the Partnership
                      or the Company in connection with the transactions
                      contemplated by this Agreement, provided that such
                      documents do not require Sellers to make representations,
                      warranties and covenants additional to those required by
                      this Agreement.

        5.2.2  Partnership.  At the Closing, the Partnership shall deliver
               -----------                                        
               the following:

                  a.  The Aggregate Purchase Price and the Kline Lease
                      Termination Payment in immediately available funds;

                  b.  for the Company, a resolution of its Board of Trustees
                      authorizing the transactions contemplated hereby and a
                      certificate of good standing from the 

                                     -11-

 
                      State Department of Assessments and Taxation of the State
                      of Maryland;

                  c.  for the Partnership, evidence of the Partnership's
                      authorization of the transactions contemplated hereby and
                      a certified copy of the Partnership Agreement and a
                      Certificate of Limited Partnership certified by the
                      Secretary of State of Delaware; and

                  d.  an opinion of Wilmer, Cutler & Pickering, substantially in
                      the form attached hereto as Exhibit 5.2.2(d);
                                                  ---------------- 

                  e.  all other documents reasonably required by the Sellers in
                      connection with the transactions contemplated by this
                      Agreement, provided that such documents do not require the
                      Partnership or the Company to make representations,
                      warranties and covenants additional to those required by
                      this Agreement.

        5.3    Conditions to the Partnership's Obligation to Close.  At the
               ---------------------------------------------------         
option of the Partnership, the obligations of the Company and the Partnership
under this Agreement are subject to the satisfaction of the following conditions
(unless explicitly waived in writing):

        5.3.1     Each Seller shall have terminated such existing Management
                  Contracts that Partnership has required, in writing, to be
                  terminated prior to the Closing Date.

        5.3.2     Each Seller shall have terminated all Leases prior to the
                  Closing Date.

        5.3.3     Each Seller shall have terminated such existing Service
                  Contracts that the Partnership has required, in writing, to be
                  terminated prior to the Closing Date.

        5.3.4     Each and every representation and warranty of the Sellers
                  contained in this Agreement is true, correct and complete in
                  all material respects as of the date hereof and at all times
                  through the Closing Date.

                                     -12-

 
        5.3.5     The Sellers shall have fully performed and satisfied each and
                  every material obligation, term and condition to be performed
                  and satisfied by them under this Agreement.

        5.3.6     All consents, authorizations, certificates, Estoppel Letters,
                  Lender's Estoppel Certificates and approvals required to be
                  obtained by the Sellers in connection with the Agreement shall
                  have been obtained, including but not limited to all consents,
                  approvals and authorizations (without any conditions or
                  requirements) required to be obtained under any Mortgage, deed
                  of trust or other instrument relating to any of the Properties
                  or pursuant to which any of the Sellers are bound in order to
                  complete the transactions contemplated under this Agreement.

        5.3.7     The Company shall have previously closed its initial public
                  offering.

        5.3.8     The Sellers shall have paid in full such Mortgage Debt and
                  other indebtedness secured by the Properties as required by
                  the Company and Partnership and shall have provided the
                  Company and Partnership with satisfactory evidence thereof,
                  and to the extent that such Mortgage Debt is to be paid off
                  following Closing, the mortgagee shall deliver pay-off letters
                  to the Company and the Partnership.

        5.3.9     The condition of the Property shall not have materially
                  changed.

        5.3.10    The Partnership shall have received an Owner's Title Insurance
                  Policy (or marked-up commitment therefor) for each Property
                  insuring fee simple title to such Property in the amount of
                  the fair market value of such Property subject only to
                  Permitted Exceptions, and otherwise in the form and condition
                  required by this Agreement.

        5.3.11    Delivery by Sellers of a "bring-down" certificate stating that
                  the representations and warranties continue to be true as of
                  the Closing Date.

        5.3.12    The Sellers shall have delivered to the Company all closing
                  documents required by Section 5.2.1 hereof.

                                     -13-

 
        5.4    Conditions to the Seller's Obligation to Close.  The
               ----------------------------------------------      
obligations of the Seller under this Agreement are subject to the satisfaction
of the following conditions (unless explicitly waived in writing):

        5.4.1     Each of the representations and warranties of the Partnership
                  contained in this Agreement is true, correct and complete as
                  of the date hereof and at all times through the Closing Date.

        5.4.2     The Partnership and the Company shall have fully performed and
                  satisfied each and every obligation, term and condition to be
                  performed and satisfied by them under this Agreement.

        5.4.3     The Company shall have completed its initial public offering
                  pursuant to the Registration Statement.

        5.4.4     All consents, authorizations and approvals required to have
                  been obtained by the Seller, the Company and the Partnership
                  in connection with this Agreement shall have been obtained.

        5.5    Transaction Costs.
               ----------------- 

        5.5.1     The Sellers shall pay all costs (including, but not limited
                  to, any recordation and transfer taxes, surveys, title
                  insurance (including all special endorsements reasonably
                  required), searches made pursuant to Section 3.2.2 hereof,
                  fees and expenses of going to record) in connection with the
                  transfer by the Sellers of the Properties (collectively
                  referred to as the "Closing Costs"). The Company and the
                  Partnership shall bear the cost of their due diligence
                  activities and shall pay their own attorneys' fees.
 
        5.5.2     The Sellers shall pay all assumption fees, prepayment
                  penalties, premiums, lender's consent fees or other such
                  charges ("Consent Fees") imposed in connection with the
                  transactions contemplated hereby, and all Consent Fees imposed
                  by all other lenders in connection with the transactions
                  contemplated hereby.

        5.5.3     Except as specified above and elsewhere in this Agreement,
                  each party shall bear and pay its expenses in connection with
                  this Agreement and the transactions contemplated herein,
                  including the fees of their respective professional advisors.

                                     -14-

 
     VI.  CASUALTY LOSS AND CONDEMNATION
          ------------------------------

          6.1       Casualty.  Prior to Closing, all risk of loss shall belong
                    --------                                                  
to the Sellers. If, prior to Closing, the Properties be destroyed or materially
damaged by fire or other casualty, the Partnership may, at its option, either
(i) require the appropriate Sellers to repair such damage prior to Closing to
the reasonable satisfaction of the Partnership, at no cost or expense to the
Company or the Partnership, in which event the proceeds of any insurance
applicable thereto shall be paid to the Seller and the Seller shall have the
right to postpone the Closing until such repairs are completed, or (ii) itself
settle the loss under all policies of insurance applicable to the destruction or
damage and receive the proceeds of insurance applicable thereto, and the Seller
shall, at Closing and thereafter, execute and deliver to the Partnership all
required proofs of loss, assignments of claims and other similar items.
Notwithstanding anything herein to the contrary, in the event such loss or
casualty shall constitute a total or substantial loss or casualty or, in the
opinion of the Company, in its sole discretion, shall render the Property
unsuitable for its intended purpose for a period of ninety (90) days or longer,
then the Company and the Partnership, at their option, may terminate this
Agreement.

          6.2       Condemnation or Taking.  If, prior to Closing, any Property
                    ----------------------                                     
or any part thereof shall be condemned or taken and such condemnation or taking
materially interferes with the existing business use of the Property, the
Company and the Partnership may (i) terminate this Agreement as to all the
Properties or (ii) complete the transactions contemplated by this Agreement
notwithstanding such condemnation.  If the Company and the Partnership elect to
complete the transactions contemplated hereby, the Partnership shall be entitled
to receive the condemnation proceeds and the appropriate Seller shall, at
Closing and thereafter, execute and deliver to the Partnership and the Company
all required assignments of claims and other similar items.  If the Partnership
and the Company elect to terminate this Agreement, then upon written notice to
the Sellers and without further action of the parties, this Agreement shall
become null and void and no party shall have any rights or obligations under
this Agreement.


     VII. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
          ---------------------------------------------

          The Sellers, jointly and severally, represent and warrant to the
Company and the Partnership that, except as described on the Schedules attached
                                                             ---------         
hereto and incorporated by reference herein, the following are true, complete
and correct as of the date of this Agreement.

          7.1       Organization.  Each Seller is duly organized and validly
                    ------------                                            
existing and in good standing under the laws of the Commonwealth of Virginia,
and has all requisite power and authority to own or lease and operate its
properties (including the Properties) and assets and conduct its business in the
manner in which they are being owned or leased and operated and conducted, as
the case may be.  Each Seller is duly qualified and authorized and is in good
standing in all jurisdictions where its ownership, lease or operation of assets
and properties (including the Properties) or the conduct of its business
requires such qualification or authorization.

                                     -15-

 
          7.2       Authority.  The execution and delivery of this Agreement and
                    ---------                                                   
all agreements, documents and instruments contemplated hereby and the
performance of all transactions contemplated herein or therein, have been duly
and validly authorized by all requisite partnership, corporate or trust action,
as the case may be, and by the general partners, board of directors,
stockholders, or trustees of each Seller, as the case may be.  This Agreement
and the agreements, documents and instruments executed and delivered in
connection herewith constitute the legal, valid and binding obligations of the
Sellers, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity) and except
to the extent that rights to indemnification and sale and purchase under or
contemplated by this Agreement or such other agreements may be limited by
federal or state securities laws or public policy relating thereto.  To the
knowledge of the Sellers, none of the Sellers are required to obtain any
consent, authorization, approval or waiver from any governmental agency or
authority or from any third party (except for consent of franchisors or holders
of any Mortgage Debt) in connection with the execution and delivery of, and the
performance of the obligations to be performed under, this Agreement and the
documents and instruments executed and delivered in connection herewith, or if
any of the foregoing is required, it has been obtained.

          7.3       Interest in Properties.  Each Seller is the record and
                    ----------------------                                
beneficial owner of, and has good and marketable and insurable fee simple title
to, the interests in the Properties set forth opposite such Seller's name on
Schedule 1.2, free and clear of all liens, options, adverse claims or
------------                                                         
encumbrances, except the Permitted Exceptions and the Kline Lease and the sub-
lease by and between Kline Chevrolet Sales Corporation and Kline Imports
Chesapeake, Inc., dated June 1, 1991, and Schedule 1.2 is true, accurate and
                                          ------------                      
complete in all material respects as to each Seller.  Between the date hereof
and the Closing Date, no liens, claims or encumbrances will be created by Seller
or permitted to be created by Seller on any Property other than the Permitted
Exceptions.  Prior to or at the Closing all monetary encumbrances on any
Property, other than the Permitted Exceptions, shall be duly canceled, removed
and discharged of record (or satisfactory provisions are made therefor), and
proof thereof satisfactory to the Title Insurer, the Company and the Partnership
shall be delivered to the Company and the Partnership.  Except for  Prior
Occupants, there are no parties in possession of any part of the Properties as
of the Closing Date, and there are no other rights of possession, or agreements
providing for the sale, assignment or transfer of title to any Property or
portion thereof (other than this Agreement),  which have been granted to any
third parties.  Such Seller has the full power, capacity and authority to sell,
transfer and assign the legal and equitable ownership of his/her or its interest
to the Partnership as provided in this Agreement, and the Sellers have not
entered into any agreement and have no knowledge of any agreement or
understanding to issue any additional interests in any Seller to any other
person or entity.

          7.4       No Defaults.  (a) No Seller is in default of any of its
                    -----------                                            
material obligations under any agreement, franchise, license, contract, deed,
mortgage, lease, instrument, certificate, affidavit or covenant affecting title
to the Properties; (b) there are no contracts or 

                                     -16-

 
agreements, such as maintenance, service, or utility contracts affecting title
to the Properties other than the Service Contracts, and no party to such
contracts is in material default or breach under the terms and conditions
thereof; and (c) there are no contracts or agreements between Seller and any
third party for the management or leasing of any Property other than the
Management Contracts and no such contract is in material default or breach under
the terms and conditions thereof, and there will be no leasing commission due
and owing, or to become due and owing, in connection with any of the Leases; and
(d) except for the Permitted Exceptions, the Service Contracts and the
Management Contracts, there are no contracts, agreements, liabilities, claims or
obligations of any kind or nature relating to title to the Properties and to
which any Seller will be bound or the Properties will be subject after the
Closing except as expressly described in Schedule 7.4 attached hereto.
                                         ------------                 

          7.5       No Litigation; No Condemnation.  There are no actions,
                    ------------------------------                        
suits, proceedings or claims pending, or to the knowledge of any Seller,
threatened or contemplated, with respect to or in any manner affecting the
Properties, or any Seller's interest therein; or the ability of any Sellers to
complete the transactions contemplated by this Agreement or which could prevent
any Seller from satisfying its obligations under this Agreement. No Seller has
received written notice of any pending or threatened condemnation or similar
proceedings or special assessments affecting the Properties, or any part
thereof.

          7.6       No Violation.  The execution and delivery of this Agreement
                    ------------                                               
and the agreements, documents and instruments executed and delivered in
connection herewith, the consummation of the transactions contemplated hereby or
thereby, and the operation of any Property shall not: (a) except for the consent
of franchisors or holders of any Mortgage Debt that may be required, conflict
with, or result in a breach of, the terms, conditions or provisions of, or
constitute a default under, any agreement, contract, mortgage, deed, lease,
license, franchise or instrument to which any Seller is a party or is subject or
to which any Property is subject; (b) to Sellers' knowledge, violate any
agreement, contract, mortgage, deed, lease, license, franchise, restriction,
easement, restrictive covenant, or instrument to which any Seller or any
Property is subject; (c) to Sellers' knowledge, constitute a violation of any
applicable code, resolution, law, statute, regulation, ordinance, rule,
judgment, decree or order applicable to Seller; (d) with respect to each Seller
that is an entity, violate any provision of its charter, bylaws or other
organizational document; (e) except as to any indebtedness in respect of which
the consent of the lender shall have been obtained prior to the Closing Date or
that will be paid-off at the Closing, result in the acceleration of any
indebtedness or any encumbrance pertaining to any Seller or any Property, or the
cancellation of any contract, agreement, franchise, license, instrument or lease
pertaining to any Property (other than as specifically requested by the Company
or the Partnership pursuant to this Agreement); or (f) except as to any
Permitted Exceptions, result in the creation of any lien, encumbrance or
security interest upon any Property.  None of the Sellers have received any
written notice of any material violation (both as to condition of the Property
and use) of any applicable laws, statutes, ordinances, codes (including, but not
limited to, zoning, building, subdivision, pollution, environmental protection,
water disposal, health, fire and safety engineering codes, and laws and
regulations with respect to 

                                     -17-

 
the submetering of any utilities serving any Property), and the rules and
regulations of, by governmental authority having jurisdiction over the
Properties.

          7.7       Required Obligations.  The Sellers have paid and performed
                    --------------------                                      
all material obligations relating to the Properties required to have been paid
or performed prior to the date hereof and prior to the Closing Date, including
but not limited to all principal installments, interest payments, taxes,
penalties and other charges in connection with all indebtedness relating to or
secured by any of the Properties or an interest in any of the Properties.

          7.8       Condition of Properties.  Except as disclosed on Schedule
                    -----------------------                          --------
7.8, no officer or general manager of Seller has been notified that the
---                                                                    
structural, mechanical, electrical, plumbing, roofing and other major systems on
any Property and items of equipment and components located thereon, require to
be replaced or are in need of material repair.

          7.9       Warranties.  The Sellers have not released or modified any
                    ----------                                                
warranties of builders, contractors, manufacturers or other tradespersons that
have been given to any Seller without the consent of the Company or the
Partnership.

          7.10       Utilities.  Usable sanitary and storm sewers and public
                    ---------                                              
water, and electrical utilities (collectively, the "Utilities") of adequate
capacity required for the operation of the Properties as presently operated, are
installed in, and are duly connected to, the Properties and can be used without
any charge except the normal user charges for sanitary sewers and the normal and
usual charges imposed for public water, gas and electric utilities.

          7.11       Zoning.  To Sellers knowledge, each Property is currently
                    ------                                                   
located in areas zoned for its current use, which classification permits the
development, use and operation of the improvements on such Property as such
improvements currently are being used.  The Sellers have no knowledge of any
threat of, and have not received written notice of, any proceeding to change
adversely or down-zone the existing zoning classification as to any portion of
any Property.

          7.12       Improvements.  To Sellers' knowledge, all improvements on
                    ------------                                             
the Properties have been constructed in accordance with, and substantially
comply with, all requirements of all applicable laws, ordinances, regulations
and orders, including without limitation applicable zoning, building and fire
safety codes and all restrictive covenants, if any, and other easements,
encumbrances or agreements affecting title to any Properties or improvements.
For purposes of this Section 7.12, "substantially" means that Sellers shall not
be permitted to engage in even de minimis non-compliance with applicable laws,
ordinance, regulations and orders if such de minimis non-compliance could result
in any governmental, administrative or other authority executing any penalty,
fine, remedy or other disciplinary action against such Seller or such Seller's
Business (as defined in the Company Lease).

               7.13  Environmental Matters.
                     --------------------- 

                                     -18-

 
               7.13.1   For purposes of this Agreement:

                        a.   "Environmental Claim" means any claim, action,
                             cause of action, investigation, or notice (written
                             or oral) by any person or entity alleging potential
                             liability (including, without limitation, potential
                             liability for investigatory costs, cleanup costs,
                             governmental response costs, natural resource
                             damages, property damages, personal injuries, or
                             civil or criminal penalties) arising out of or
                             resulting from (i) the actual or alleged presence
                             or release into the environment of any Substance of
                             Concern at any location, whether or not owned or
                             operated by the Seller, or (ii) circumstances
                             forming the basis of any actual or alleged
                             violation of any Environmental Law.

                        b.   "Environmental Laws" means all federal, state,
                             local, and foreign laws and regulations relating to
                             pollution or protection of human health or the
                             environment (including, without limitation, ambient
                             air, surface water, ground water, wetlands, land
                             surface, subsurface strata, and indoor and outdoor
                             workplace), including, without limitation, (i) laws
                             and regulations relating to emissions, discharges,
                             releases, or threatened releases of Substances of
                             Concern, and (ii) common law principles of tort
                             liability.

                        c.   "Substances of Concern" means chemicals,
                             pollutants, contaminants, wastes, toxic substances,
                             hazardous substances, radioactive materials or
                             genetically modified organisms, which are, have
                             been or become regulated by any federal, state or
                             local government authority including, without
                             limitation, (i) petroleum or any fraction thereof,
                             (ii) asbestos, (iii) any substance or material
                             defined as a "hazardous substance" pursuant to (S)
                             101 of the Comprehensive Environmental Response,
                             Compensation, and Liability Act (42 U.S.C. (S)
                             9601), or (iv) any substance or material defined as
                             a "hazardous chemical" pursuant to the federal

                                     -19-

 
                             Hazard Communication Standard (29 C.F.R. (S)
                             1910.1200).

               7.13.2   To the Sellers' knowledge, each Seller and Property are
                        in full compliance with all applicable Environmental
                        Laws, which compliance includes, but is not limited to,
                        possession by each Seller of all permits and other
                        governmental authorizations required under applicable
                        Environmental Laws, and compliance with the terms and
                        conditions thereof. No Seller has received any
                        communication (written or oral), whether from a
                        governmental authority, citizens group, employee or
                        otherwise, that alleges that such Seller or Property is
                        not in full compliance with the Environmental Laws, and,
                        to the Sellers' best knowledge after review of the
                        records of the corporation, there are no circumstances
                        that may prevent or interfere with such full compliance
                        in the future.

               7.13.3   There is no Environmental Claim pending or threatened
                        against any Seller or, to each Seller's best knowledge
                        after  review of the records of the corporation,
                        against any person or entity whose liability for any
                        Environmental Claim any Seller has retained or assumed
                        either contractually or by operation of law.

               7.13.4   To the Sellers' knowledge, there are no past or present
                        actions, activities, circumstances, conditions, events
                        or incidents, including, without limitation, the
                        release, emission, discharge, presence, or disposal of
                        any Substance of Concern, at or relating to any of the
                        Properties that could form the basis of any
                        Environmental Claim against any Seller or, to each
                        Seller's best knowledge after due inquiry, against any
                        person or entity whose liability for any Environmental
                        Claim any Seller has retained or assumed either
                        contractually or by operation of law.

               7.13.5   Without in any way limiting the generality of the
                        foregoing, to the best of any Seller's knowledge, (a)
                        all on-site and off-site locations where any Seller has
                        treated, disposed, or arranged for the disposal of
                        Substances of Concern or stored hazardous wastes (as
                        defined under the Resource Conservation and Recovery Act
                        or analogous state laws) are identified in Schedule
                                                                   --------
                        7.13.5(a); (b) all underground and aboveground storage
                        ---------
                        tanks, whether or not currently in use, 

                                     -20-

 
                        and the capacity and contents of such tanks, located on
                        any of the Properties are identified in Schedule
                                                                --------
                        7.13.5(b), and, except as set forth in Schedule 
                        ---------                              --------
                        7.13.5(b), no underground or above ground storage tank
                        ---------
                        that has been removed from any Property, or that is
                        currently located at any Property, has leaked or is
                        leaking; (c) except as set forth on Schedule 7.13.5(c),
                                                            ------------------
                        there is no asbestos contained in or forming part of any
                        building, building component, structure or office space
                        on any Property; (d) no polychlorinated biphenyls (PCBs)
                        are used or stored on any Property; (e) the Sellers have
                        previously provided to the Company copies of all
                        environmental audit reports, Phase I and Phase II
                        investigation reports, technical reports regarding
                        environmental sampling results, and similar
                        environmental reports in the possession of the Sellers
                        or their contractors or agents relating to any Property;
                        and (f) all permits and other governmental
                        authorizations currently held by any Seller for any
                        Property pursuant to the Environmental Laws are
                        identified in Schedule 7.13.5(f).
                                      ------------------ 

               7.14     Insurance.  Schedule 7.14 contains a complete and 
                        ---------   -------------
correct description of all policies of insurance presently maintained by the
Sellers with respect to all Properties and the operations thereof. To the
knowledge of the Sellers, each Seller and Property is in compliance with the
requirements of each such policy, there is no violation of any of the provisions
thereof, and each such policy is in full force and effect. No Seller has
received from any insurance company which carries underwriters insurance on any
Property, or any Board of Fire Underwriters, any notice of any defect or
inadequacy in connection with any Property or its operation which, since the
date of such notice, has not been corrected.

               7.15     Compliance.  To each Seller's knowledge, each Seller has
                        ----------                                              
complied in all material respects with all laws, ordinances, rules, regulations
and orders of all governmental authorities applicable to the ownership,
management, operation, construction, maintenance and repair of any Property.

               7.16     Leases.
                        ------ 

               7.16.1   Copies of all Leases for each of the Properties and all
                        parts thereof, as amended through the date hereof have
                        been made available to the Company and the Partnership;
                        such copies are and shall be, in all material respects,
                        true, accurate and complete records of all agreements
                        and understandings with respect to the use or lease of
                        all or any portion of any of the Properties or otherwise
                        constituting Leases that are currently 

                                     -21-

 
                        outstanding including all amendments and modifications
                        thereto.

               7.16.2   Schedule 2.1 contains a true, complete and correct list
                        ------------                              
                        of all current Leases for the Properties or any part
                        thereof.

               7.16.3   No Prior Occupant has an option or right of refusal to
                        purchase any Property or any part thereof.

               7.16.4   Except as specified in the Estoppel Letter approved by
                        the Company and sent to a Prior Occupant, no Prior
                        Occupant is entitled to any rebate, concession,
                        deduction or offset.

               7.16.5   [Intentionally Omitted]

               7.16.6   No Prior Occupant has any claim or basis for any claim
                        for reduction, deduction or set-off against the landlord
                        or the rent under such Lease.

               7.16.7   No Prior Occupant has refused to execute and deliver the
                        Company Lease at Closing, or no Prior Occupant has
                        refused to vacate its premises or such Property, or
                        otherwise to cease occupancy of its premises or such
                        Property.

               7.16.8   Except as set forth on Schedule 2.1, the Seller is the
                                               ------------            
                        landlord under the Leases.

               7.17     Service Contracts; Management Contracts.  Schedule 7.17
                        ---------------------------------------   -------------
is a list of all contracts affecting or pertaining to the Properties or Sellers'
Business that have a monetary obligation of at least $50,000 per year and are
not cancellable without penalty by Sellers upon notice of one year or less,
including union, purchase, service and maintenance agreements, leasing
agreements, listing agreements, equipment leases and any other agreements,
contracts, licenses and permits affecting or pertaining to the Properties or any
part thereof and of employment contracts in excess of $100,000 per year (the
"Service Contracts"), and of all management contracts relating to the Properties
(the "Management Contracts"). No Seller is a party to any licenses or leases of
personal property or any other contracts or agreements, written or oral, of any
kind or character, relating to the management, operation, maintenance or repair
of any Property, or otherwise, except for the Leases, the Service Contracts and
the Management Contracts. The Sellers have performed all obligations required to
be performed by them and are not in default under any of the Service Contracts.
Each of the Service Contracts is in full force and effect and constitutes the
legal, valid and binding obligation of the respective parties thereto,
enforceable in accordance with its terms, and has not been modified, amended or
extended. Each of the Management Contracts is in full force and 

                                     -22-

 
effect and constitutes the legal, valid and binding obligation of the respective
parties thereto, enforceable in accordance with its terms, and has not been
modified, amended or extended.

               7.18     Permits.  All permits, licenses, inspections and other
                        -------                                               
approvals from all applicable governmental authorities having jurisdiction over
each Seller and Property that are necessary in connection with the operation of
the use, ownership and operation of each Property as it is currently used, have
been obtained and are in full force and effect.

               7.19     [Intentionally Omitted]

               7.20     Tax Matters.  The Sellers have relied solely on their 
                        -----------
own counsel for advice on any and all federal, state and local tax matters
relating to this Agreement and the transactions contemplated herein and have not
relied on any advice or representations of the Company, the Partnership, or
their counsel with respect to any federal, state and local tax matters relating
to this Agreement or the transactions contemplated herein.

               7.21     Taxes.  The Sellers have filed all federal, state and 
                        ----- 
local tax returns required to be filed by the Sellers. With respect to any
periods prior to the Closing Date, each Seller (i) has no knowledge of any
unpaid taxes that would create a lien on any Property, and (ii) has paid in full
all taxes and assessments payable or is diligently pursing with the appropriate
authority any dispute such Seller has regarding any unpaid taxes or assessments
as of the Closing Date.

               7.22     Special Filings.  No Seller is required to submit any
                        ---------------                                      
notice, report or other filing to any governmental or regulatory authority in
connection with the execution, delivery or performance of this Agreement or any
document or instrument executed and delivered in connection herewith or the
consummation of the transactions contemplated hereby other than the filing of
the tax returns required by the terms of this Agreement; and no consent,
approval or authorization of any governmental or regulatory authority is
required to be obtained by any Seller in connection with the execution, delivery
or performance of this Agreement or the consummation of the transactions
contemplated hereby.

               7.23     Books and Records.  The books and records of each Seller
                        -----------------                                       
with respect to each Property, all of which have been or will be made available
to the Company and the Partnership, are, and will be at all times until Closing,
complete and correct in all material respects. All of such books and records
shall be delivered to the Company prior to the Closing.

               7.24     No Brokers.  No Seller has dealt with any agent, 
                        ---------- 
broker or other person acting pursuant to express or implied authority of any
Seller (each a "Broker"), and no person or entity is entitled to a commission or
finder's fee in connection with the sale and purchase described by this
Agreement or will be entitled to make any claim against the Company, or the
Partnership for a commission or finder's fee by reason of any Seller having
engaged such Broker.

                                     -23-

 
               7.25  All Material Information.  With respect to all information,
                     ------------------------                                   
statements, representations and warranties made herein, any agreements or
documents contemplated hereby, any schedules or exhibits hereto, and any
certificates or instruments delivered in connection herewith, the Sellers hereby
represent and warrant that, to Sellers' knowledge, no information, statement,
representation or warranty herein or therein contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances in which
made, not misleading; or necessary in order to provide the Partnership or the
Company with true, accurate and complete information.

               7.26  Survival of Warranties, Representations and Covenants.  The
                     -----------------------------------------------------      
representations, warranties and covenants of Sellers made in this Agreement
shall survive the Closing and consummation of the transactions contemplated
hereby, and shall remain in full force and effect thereafter only to the extent
that the Partnership or the Company provides the Seller with written notice of
any breach, violation or right to indemnification thereunder within a period
ending twenty-four (24) months from the date of this Agreement, except that in
the case of any claim arising out of the representantions or warranties herein
relating to Section 7.13 (Environmental Matters) and Section 7.21 (Taxes) shall
survive the closing in each case until the applicable statute of limitations has
run.  After Closing, neither the Company nor the Partnership shall prosecute any
claim against any Seller for a breach of the foregoing representations and
warranties if the Company or the Partnership obtained knowledge of such breach
prior to Closing.


        VIII.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PARTNERSHIP
               -----------------------------------------------------------------

        The Partnership and the Company, jointly and severally, represent and
warrant to the Seller that the following are true, complete and correct as of
the date of this Agreement and as of the Closing:

               8.1   Organization, Good Standing and Qualification.  Each of the
                     ---------------------------------------------              
Company and the Partnership (i) is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(ii) has all requisite power and authority to carry on its business and own or
lease and operate its assets and properties in the manner in which it is being
conducted and owned or leased and operated, as the case may be, and (ii) is duly
qualified to transact business and is in good standing in all jurisdictions
where its ownership, lease or operation of its properties or assets or the
conduct of its business requires such qualification.

               8.2   Authorization. The execution and delivery of this Agreement
                     -------------
and all agreements, documents and instruments contemplated hereby and the
performance of all transactions contemplated herein or therein, have been duly
and validly authorized by all requisite action by the Company and its board of
trustees; and by all requisite action of the Partnership. This Agreement and the
agreements, documents and instruments executed and delivered in connection
herewith constitute the legal, valid and binding obligation of each of the
Company and the 


                                    - 24 -

 
Partnership, enforceable in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity) and except
to the extent that rights to indemnification and sale and purchase under or
contemplated by this Agreement or such other agreements may be limited by
federal or state securities laws or public policy relating thereto. To the
knowledge of the Partnership, the Partnership is not required to obtain any
consent, authorization, approval or waiver from any governmental agency or
authority or from any third party in connection with the execution and delivery
of, and the performance of the obligations to be performed under, this Agreement
and the documents and instruments executed and delivered in connection herewith,
or if any of the foregoing is required, it has been obtained.

          8.3       No Violation.   The execution and delivery of this Agreement
                    -------------                                               
and the agreements, documents and instruments executed and delivered in
connection herewith, the consummation of the transactions hereby or thereby, and
the operation of any Property shall not: (i) conflict with, violate, or result
in a breach of, the terms, conditions or provisions of, or constitute a default
under, any agreement, contract, Mortgage, deed, lease, license, franchise or
instrument to which the Company or the Partnership is a party or is subject;
(ii) constitute a violation of any applicable code, resolution, law, statute,
regulation, ordinance, rule, judgment, decree or order to the Company or the
Partnership; or (iii) violate any provision of the organizational documents of
the Company or the Partnership.

          8.4       Tax Status.  As of the Closing, the Partnership will be
                    ----------                                             
qualified as a partnership for Federal income tax purposes, and the Company will
be qualified as a real estate investment trust organized under the laws of the
State of Maryland.

          8.5       No Litigation.  Neither the Partnership nor the Company is
                    -------------                                             
involved in any pending or, to its knowledge, threatened litigation that would
materially or adversely effect its operations or financial condition or the
ability to perform under this Agreement or the Partnership Agreement.

          8.6       No Brokers.  Neither the Partnership nor the Company has
                    ----------                                              
dealt with any agent, broker or other person acting pursuant to express or
implied authority of either such party, and no person or entity is entitled to a
commission or finder's fee in connection with the transactions contemplated by
this Agreement or will be entitled to make any claim against any Seller for a
commission or finder's fee by reason of the Company or the Partnership having
engaged him/her/it.

          8.7       Survival.  The representations and warranties of the Company
                    --------                                                    
and the Partnership made in this Section 11 shall survive the Closing and
consummation of the transactions contemplated hereby, and shall remain in full
force and effect so long as the Seller provides the Company or the Partnership
with written notice of any breach, violation or right to indemnification
thereunder within a period ending twenty-four (24) months from the date of this
Agreement.  After 


                                    - 25 -

 
Closing, the Seller shall not prosecute any claim against the Company or the
Partnership for a breach of the foregoing representations and warranties if the
Seller obtained knowledge of such breach prior to Closing.


          IX.  COVENANTS
               ---------

               9.1  Covenants of the Company and the Partnership.  Each of the
                    --------------------------------------------              
Company and the Partnership hereby covenants as follows:

               9.1.1    If this Agreement is terminated for any reason, (a)
                        the Partnership and the Company shall promptly
                        return to Sellers all materials furnished by
                        Sellers to the Partnership and the Company pursuant
                        to this Agreement, and (b) the Partnership and the
                        Company shall promptly restore the Properties to
                        substantially the same condition in which they
                        existed immediately before any physical tests
                        conducted by or on behalf of the Partnership and
                        the Company pursuant to the purposes of this
                        Agreement.
               
               9.1.2    Prior to the Closing Date, except as may be
                        required to be disclosed by law (including federal
                        and state securities laws, and the rules and
                        regulations thereunder), regulation or legal
                        process, or unless otherwise consented to in
                        writing by the Sellers, which consent shall not be
                        unreasonably withheld, the Partnership and the
                        Company shall keep all information learned by the
                        Partnership and the Company in connection with the
                        Properties or any operation thereof confidential.
               
               9.1.3    In connection with inspection of the Properties,
                        the Partnership and the Company shall not
                        unreasonably interfere with any Prior Occupants or
                        any Seller's business operations.
               
               9.1.4    [Intentionally Omitted]
               
               9.1.5    [Intentionally Omitted]
               
               9.1.6    The parties acknowledge and agree that the Sellers
                        and their affiliates are required under this
                        Agreement and the Company Leases to provide to the
                        Company certain confidential financial information
                        (the "Confidential Information") with respect to
                        the business conducted on the Leased Properties.
                        The Company agrees to use the Confidential
                        Information 


                                    - 26 -

 
                             solely for the purposes of monitoring compliance
                             with the terms of this Agreement and the Company
                             Leases, and the Confidential Information shall be
                             disclosed only to those of the Company's employees,
                             advisors and consultants to whom it is necessary
                             for such purposes. Moreover, the Company will use
                             its best efforts to implement policies and
                             procedures at the Board of Trustees level so as to
                             minimize the disclosure of Confidential Information
                             to Trustees having interest in businesses that
                             compete with the Sellers and their affiliates.

                    9.1.7    Between the date of this Agreement and the Closing
                             Date, the Partnership and the Company will use
                             their best efforts to cause the conditions in this
                             Agreement to be satisfied.

                    9.2   Covenants of the Sellers and the Contributing
                          ---------------------------------------------
Entities. The Sellers hereby covenant and agree as follows:
--------

                    9.2.1    If this Agreement is terminated as to all
                             Properties for any reason, the Sellers shall
                             promptly return to the Company or the Partnership,
                             as the case may be, all materials furnished by the
                             Company or the Partnership, to such Sellers
                             pursuant to this Agreement.

                    9.2.2    Each Seller shall keep all information relating to
                             the Partnership or the Company or any operation
                             thereof confidential.

                    9.2.3    In the event that facts or circumstances are
                             discovered or develop that could form the basis of
                             an Environmental Claim with respect to a specific
                             Property or Properties, the Seller(s) of such
                             Property or Properties shall take all actions
                             necessary to fully address such circumstances,
                             including, without limitation, providing notice to
                             appropriate governmental authorities; conducting
                             environmental studies, sampling and testing
                             procedures; taking remedial action; and modifying
                             operations or physical facilities to otherwise
                             eliminate potential liability and ensure full
                             compliance with the Environmental Laws. Without
                             limiting the foregoing, each Seller shall ensure
                             that it has identified any underground storage
                             tanks ("USTs") used in conjunction with its
                             operations and that all registration,
                             investigation, remedial action and technical
                             upgrade requirements have been complied with fully
                             in respect of each such UST, provided 


                                    - 27 -

 
                             that if the cost to Seller to remediate any
                             environmental problem pursuant to this Section
                             9.2.3 exceeds Three Hundred Fifty Thousand Dollars
                             ($350,000), Seller shall have the option to
                             terminate this Agreement and this Agreement shall
                             become null and void.

                    9.2.4    Between the date of this Agreement and the Closing
                             Date, Sellers shall use their best efforts to cause
                             the conditions in this Agreement to be satisfied.

                    9.3   [Intentionally Omitted]


               X.   DUE DILIGENCE PERIOD
                    --------------------

                    10.1  Due Diligence Period. The period from the date hereof
                          --------------------
until the Closing Date is referred to herein as the "Due Diligence Period."

                    10.2  Access to Properties and Materials.  During the Due
                          ----------------------------------                 
Diligence Period and upon twenty-four (24) hours prior notice, the Company and
the Partnership and their agents, engineers, surveyors, appraisers, auditors,
counsel and other representatives shall have the right to enter upon the
Properties to inspect, examine, survey, obtain engineering inspections and
environmental studies, appraise, and otherwise do that which, in the opinion of
the Partnership and the Company, is necessary to determine the boundaries,
acreage and condition of the Properties and to determine the suitability of the
Properties for the uses intended by the Partnership (including, without
limitation, inspect, review and copy any and all documents in the possession or
control of Sellers, or their respective agents, contractors or employees, and
which pertain to the construction, ownership, title, use, occupancy or operation
of the Properties or any part thereof).  During the Due Diligence Period, the
Sellers, at their expense and at such times as will not unreasonably interfere
with the business being conducted on the Property or hinder the Partnership's
due diligence review, shall make available to the Company and the Partnership
copies or originals of all of their respective books, files and records relating
in any way to the Properties, complete copies (or originals when requested) of
all title information and title insurance policies, easements, leases, brokerage
agreements, licenses, permits, surveys, zoning information, environmental
reports, structural reports, violation or default notices, contracts, tax bills
and assessments, information regarding pending or threatened claims, suits or
proceedings, and all consents and other documents required to be obtained for
the completion of the transactions contemplated hereunder.  The Company and
Partnership shall indemnify and hold harmless Sellers for any injury to any
person or to property or damage to the Property arising out of an conduct of the
Company's or the Partnership's representatives, agents or employees while
conducting due diligence activities on any of the Properties and this indemnity
shall survive this Agreement.


                                    - 28 -

 
          10.3   Adjustment Following Due Diligence. Notwithstanding anything to
                 ----------------------------------
the contrary contained in this Agreement, if the Company or Partnership
determines that one or more representations or warranties or any information
included on any Schedule relating to any Property is incomplete or
                -------- 
inaccurate in any material respect the Company shall have as its exclusive
remedy for such incompleteness or inaccuracies the option to: (a) proceed with
the transactions contemplated hereby, or (b) declare this Agreement null and
void in which case no party shall have any rights or obligations under this
Agreement.


     XI.  DEFAULTS AND REMEDIES
          ---------------------

          11.1   Indemnification by Sellers. The Sellers, jointly and severally
                 --------------------------   
(each, for purposes of Sections 11.1 and 11.2, a "Seller Indemnifying Party"),
shall indemnify, defend and hold harmless the Partnership, the Company and their
respective shareholders, partners, trustees, officers, agents, representatives,
employees, Affiliates, successors and assigns (collectively, for purposes of
this paragraph, the "Company Indemnified Parties") from and against any and all
losses, damages, claims, liabilities, actions, suits, proceedings and costs and
expenses of investigation or defense thereof, including attorneys' fees payable
as incurred, arising out of or relating to any (a) misrepresentation or breach
of warranty by any Seller or nonfulfillment of any covenant or agreement to be
performed or complied with by such Seller under this Agreement and any
agreement, document, instrument, certificate, schedule or exhibit contemplated
hereby; (b) [intentionally omitted] (c) any debts, liabilities or obligations
(whether known or unknown, disputed or undisputed, fixed, contingent or
otherwise) associated with or relating to any of the Sellers, their officers,
directors, partners, trustees or Affiliates or the Properties, or secured by any
of the Sellers, or by any of the Properties, except those specified on Schedule
                                                                       --------
7.19 hereto, including any obligations under any of the Leases, Service
----
Contracts and Management Contracts, to the extent any such obligation was to be
performed prior to the Closing Date, or was to be performed after the Closing
Date as a result of a breach or default under any of the Leases or Service
Contracts by any Seller or its Affiliates prior to the Closing Date; (d) to the
extent the remedies of the Partnership or the Company are not othewise limited
by this Agreement, any action taken, or any failure to act, by any Seller in
connection with this transaction and the transactions contemplated herein
constituting a breach of this Agreement or any agreement, document or instrument
contemplated hereby or a breach of a duty owed to any person, including, without
limitation, any action taken to redeem or otherwise liquidate the interest of
certain holders in anticipation of the transactions contemplated herein, to the
extent such action or failure to act results in a violation (or alleged
violation) of applicable laws or of the fiduciary duties owed to such holders;
(e) pollution or threat to human health or the environment, or any Environmental
Claim against any person or entity whose liability for such Environmental Claim
any Seller has assumed or retained either contractually or by operation of law,
that is related in any way to any of the Properties, including, without
limitation, all on-site and off-site activities relating to any of the
Properties involving Substances of Concern, and that occurred, existed, arises
out of conditions or circumstances that occurred or existed, or was caused, in
whole or in part, on or before the Closing Date, whether or not the pollution or
threat to human health or the environment, or the existence of any Environmental
Claim, is known to any 


                                    - 29 -

 
Seller; (f) regardless of whether it arises as a breach of any representation or
warranty, any debts, liabilities or obligations of any Seller (whether known or
unknown, disputed or undisputed, fixed, contingent or otherwise) of, associated
with or relating to any asset or property other than the Properties, except
those specified on Schedule 7.19 hereto; and (g) any and all damages and
                   -------------
expenses incident to any of the foregoing or to the enforcement of this Section
11.1. Notwithstanding the foregoing, if there is any breach of Sellers'
representations, warranties or covenants contained in this Agreement that the
Tenant under the Company Lease would have the obligation to cure or remedy
pursuant to terms and conditions of the Company Lease, Sellers shall not be
required to indemnify the Company or the Partnership for such breaches under
this Agreement.

               11.2  Remedies.
                     -------- 

               11.2.1     [Intentionally Omitted]

               11.2.2     Each Seller Indemnifying Party shall be fully
                          responsible and jointly and severally liable for any
                          of the following and any and all losses, damages,
                          claims, liabilities, actions, suits, proceedings and
                          costs and expenses of defense thereof, including
                          attorneys' fees payable as incurred, arising out of or
                          relating to: (a) each representation and warranty made
                          by each Seller hereunder relating to or associated
                          with title such Seller's interest in any Property and
                          such Seller's ability to convey such Seller's interest
                          as contemplated by this Agreement; (b) regardless of
                          whether it arises as a breach of any representation or
                          warranty, any debts, liabilities or obligations
                          (whether known or unknown, disputed or undisputed,
                          fixed, contingent or otherwise) of, associated with or
                          relating to any of the Sellers, or the Properties, or
                          secured by any of the Sellers or by any of the
                          Properties, except those specified on Schedule 7.19
                                                                -------------
                          hereto, and (c) regardless of whether it arises as a
                          breach of any representation or warranty, any debts,
                          liabilities or obligations of the Sellers (whether
                          known or unknown, disputed or undisputed, fixed,
                          contingent or otherwise) of, associated with or
                          relating to any other asset or property other than the
                          Properties, except those specified on Schedule 7.19
                                                                -------------
                          hereto.

          11.2.3          Each Seller hereby represents, warrants, covenants and
                          agrees that it presently has, a tangible net worth
                          (such term meaning net worth exclusive of the value
                          (if any) of goodwill, going concern value and similar
                          assets, but inclusive of the value of shares of stock,
                          interests in partnerships and other business
                          

                                     -30-

 
                          enterprises and similar assets) of not less than the
                          Aggregate Purchase Price, minus all Mortgage Debt for
                          all Properties being acquired by the Partnership
                          pursuant to this Agreement; and Seller, on behalf of
                          itself and its successors, further covenants that it
                          shall maintain a tangible net worth of no less than
                          two million dollars ($2,000,000) (U.S.) for a period
                          of no less than two (2) years following the Closing of
                          the transactions contemplated herein; and James M.
                          Kline covenants that he shall personally cause the
                          Sellers and their successors to maintain a tangible
                          net worth of no less than two million dollars
                          ($2,000,000) (U.S.) for a period of no less than two
                          (2) years following the Closing of the transactions
                          contemplated herein, and shall (to the extent of two
                          million dollars ($2,000,000) (U.S.)) jointly and
                          severally indemnify the Company and the Partnership
                          (according to Section 11.1 hereto) for any and all
                          breaches of the Sellers' representations, warranties
                          and covenants hereunder for such two (2) year period
                          if (i) the Sellers and/or their successors fail to
                          maintain such tangible net worth or (ii) the Sellers
                          and/or their successors file for bankruptcy
                          (voluntarily or involuntarily), make an assignment for
                          the benefit of creditors, or otherwise become
                          insolvent; provided that, with respect only to the
                          joint and several indemnity of James M. Kline, the
                          recovery from James M. Kline shall not exceed the
                          difference between two million dollars ($2,000,000)
                          (U.S.) and the actual tangible net worth of Seller if
                          less than $2,000,000. The covenants contained in this
                          Section 11.2.3 shall survive the Closing of the
                          transactions contemplated by this Agreement.

          11.3       Indemnification by the Company and the Partnership.  The
                     --------------------------------------------------      
Company and the Partnership (each, for purposes of this Section 11.3, a "Company
Indemnifying Party") shall indemnify, defend and hold harmless each Seller and
their respective shareholders, partners, directors, officers, partners, agents,
employees, Affiliates, successors and assigns (collectively, for purposes of
this paragraph, "Seller Indemnified Parties") from and against any and all
losses, damages, claims, liabilities, actions, suits, proceeds and costs and
expenses of defense therefore, including attorneys' fees payable as incurred,
arising out of or relating to any (a) misrepresentation or breach of warranty by
such Company Indemnifying Party or nonfulfillment of any covenant or agreement
to be performed or complied with by such Company Indemnifying Party under this
Agreement; (b) untrue or incomplete statement (or allegation by a third party of
an untrue or incomplete statement) of a material fact contained in any statement
or information provided by such Company Indemnifying Party or based on any
omission (or allegation by a third party of an untrue or incomplete statement)
to state therein a material fact required to be stated therein or other
information necessary to make the statements therein not misleading, to the
extent such alleged 


                                     -31-

 
untrue or incomplete statement or omission was made with the Company's or the
Partnership's knowledge that the statement was untrue or incomplete or omitted
to state a material fact; (c) any debts, liabilities or obligations (whether
known or unknown, disputed or undisputed, fixed, contingent or otherwise)
specified on Schedule 7.19 hereto or arising and incurred after the Closing Date
             -------------
(other than as a result of a breach by any Seller of any representation,
warranty, covenant or agreement hereunder), including the obligations under any
Service Contracts that survive the Closing Date, to the extent any such
obligation is to be performed after the Closing Date, except to the extent any
such obligation is to be performed after the Closing Date as a result of a
breach or default under any of the Leases or Service Contracts by the Seller
prior to the Closing Date; and (d) any and all damages and expenses incident to
any of the foregoing or to the enforcement of this Section 11.3.

          11.4       Indemnification Procedures. All claims for indemnification
                     --------------------------                                
under this Article 14 shall be asserted and resolved as follows:

          11.4.1           In the event that any Seller Indemnified Party or
                           Company Indemnified Party (the "Indemnified Party")
                           has a Claim against any Seller Indemnifying Party or
                           Company Indemnifying Party obligated to provide
                           indemnification pursuant to Sections 11.1 or 11.2
                           hereof, on the one hand, or Section 11.3 hereof, on
                           the other hand (the "Indemnifying Party"), which does
                           not involve a claim being asserted against or sought
                           to be collected by a third party, the Indemnified
                           Party shall with reasonable promptness send a written
                           notice (the "Claim Notice") with respect to such
                           claim to the Indemnifying Party. If the Indemnifying
                           Party does not notify the Indemnified Party within
                           the fifteen days thereafter (the "Notice Period")
                           that the Indemnifying Party disputes such claim, the
                           amount of such claim shall be conclusively deemed a
                           liability of the Indemnifying Party hereunder. In
                           case an objection is made in writing in accordance
                           with this Section 11.4.1, the Indemnified Party shall
                           have thirty (30) days to respond in a written
                           statement to the objection. If after such thirty (30)
                           day period there remains a dispute as to any claims,
                           the parties shall attempt in good faith for sixty
                           (60) days to agree upon the rights of the respective
                           parties with respect to each of such claims. If the
                           parties should so agree, a memorandum setting forth
                           such agreement shall be prepared and signed by both
                           parties.
          
          11.4.2           In the event that any claim for which the
                           Indemnifying Party would be liable to an Indemnified
                           Party hereunder is asserted, or any action or
                           proceeding commenced, against an Indemnified Party by
                           a third party, the Indemnified Party 


                                     -32-

 
                           shall with reasonable promptness notify the 
                           Indemnifying Party of such claim, specifying the
                           nature of such claim and the amount or the estimated
                           amount thereof to the extent then feasible (which
                           estimate shall not be conclusive of the final amount
                           of such Claim) (the "Third Party Claim Notice"). The
                           Indemnifying Party shall have 30 days from the
                           receipt of the Claim Notice (the "Third Party Notice
                           Period") to notify the Indemnified Party (a) whether
                           or not such party disputes the liability to the
                           Indemnified Party hereunder with respect to such
                           claim and (b) if such party does not dispute such
                           liability, whether or not the Indemnifying Party
                           desires, at the sole cost and expense of the
                           Indemnifying Party, to defend against such claim,
                           provided that such party is hereby authorized (but
                           not obligated) prior to and during Third Party Notice
                           Period to file any motion, answer or other pleading
                           and to take any other action which the Indemnifying
                           Party shall deem necessary or appropriate to protect
                           the Indemnifying Party's interests. In the event that
                           the Indemnifying Party notifies the Indemnified Party
                           within the Third Party Notice Period that the
                           Indemnifying Party does not dispute the Indemnifying
                           Party's obligation to indemnify hereunder and desires
                           to defend the Indemnified Party against such claim,
                           except as hereinafter provided, such party shall have
                           the right to defend by appropriate proceedings. No
                           non-monetary settlement of any such matter shall be
                           entered into without the written consent of the
                           Indemnified Party, which consent shall not be
                           unreasonably withheld; provided that, unless the
                           Indemnified Party otherwise agrees in writing, such
                           party may not settle any matter (in whole or in part)
                           unless such settlement includes a complete and
                           unconditional release of the Indemnified Party. If
                           the Indemnified Party desires to participate in, but
                           not control, any such defense or settlement the
                           Indemnified Party may do so at its sole cost and
                           expense. If the Indemnifying Party elects not to
                           defend the Indemnified Party against claim, whether
                           by failure of such party to give the Indemnified
                           Party timely notice as provided above or otherwise,
                           then the Indemnified Party, without any rights
                           against such party, may settle or defend against any
                           such claim in the Indemnified Party's sole discretion
                           and the Indemnified Party shall be entitled to
                           recover from the Indemnifying Party the amount of any
                           settlement or judgment to the extent the Indemnified
                           Party is entitled to indemnification and, on an on-
                           going basis, all indemnifiable 

                                     -33-

 
                           costs and expenses of the Indemnified Party with
                           respect thereto, including interest from the date
                           such costs and expenses were incurred.

          11.4.3           If at any time, in the reasonable opinion of the
                           Indemnified Party, notice of which shall be given in
                           writing to the Indemnifying Party, any such claim
                           seeks material prospective or other relief which
                           could have a materially adverse effect on the assets,
                           liabilities, financial condition, results of
                           operations or business prospects of any Indemnified
                           Party or in the reasonable opinion of counsel for the
                           Indemnified Party a conflict exists, the Indemnified
                           Party shall have the right to control or assume (as
                           the case may be) the defense of any such claim and
                           the amount of any judgment or settlement and the
                           reasonable costs and expenses of defense shall be
                           included as part of the indemnification obligations
                           of the Indemnifying Party hereunder. If the
                           Indemnified Party should elect to exercise such
                           right, the Indemnifying Party shall have the right to
                           participate in, but not control, the defense of such
                           claim or demand at the sole cost and expense of the
                           Indemnifying Party.

          11.4.4           Nothing herein shall be deemed to prevent the
                           Indemnified Party from making a claim, and an
                           Indemnified Party may make a claim hereunder, for
                           potential or contingent claims or demands provided
                           the Claim Notice or Third Party Claim Notice, as the
                           case may be, sets forth the specific basis for any
                           such potential or contingent claim or demand to the
                           extent then feasible and the Indemnified Party has
                           reasonable grounds to believe that such a claim or
                           demand may be made.

          11.4.5           The Indemnified Party's failure to give reasonably
                           prompt notice as required by this Section 11.4 of any
                           actual, threatened or possible claim, demand, action
                           or proceeding which may give rise to a right of
                           indemnification hereunder shall not relieve the
                           Indemnifying Party of any liability which the
                           Indemnifying Party may have to the Indemnified Party
                           unless the failure to give such notice materially and
                           adversely prejudiced the Indemnifying Party or
                           increases the amount of indemnification which the
                           Indemnifying Party is obligated to pay hereunder. In
                           any such event, the amount of indemnification which
                           the Indemnified Party will be entitled to receive
                           hereunder shall be reduced to an amount which the

                                     -34-

 
                           Indemnified Party would have been entitled to receive
                           had such notice been timely.


         XII.  MISCELLANEOUS
               -------------

                12.1 Assignment.  Neither this Agreement nor any interest
                     ----------                                          
hereunder may be assigned or transferred by any Seller without the prior written
consent of the Company or the Partnership.  As of the Closing Date, the Company
or the Partnership may assign, transfer or demise any or all of its interest in
any Property to any Affiliate (the "Permitted Transferees") without the prior
consent of the Sellers.

                12.2 Entire Agreement.  Any prior agreement or understanding
                     ----------------                                       
among the parties concerning the subject matter hereof is hereby superseded.
This Agreement constitutes the entire agreement among the parties with respect
to the subject matter hereof and the transactions contemplated herein and shall
not be modified or amended except in a written document signed by all of the
parties hereto.  This Agreement shall be for the benefit of and shall be binding
on the parties hereto, their heirs, successors, personal representatives, and
assigns.

                12.3 Notices.  All notices or other communications required or
                     -------                                                  
permitted under this Agreement shall be in writing and delivered personally or
by registered or certified mail, return receipt requested, postage prepaid, or
by a nationally recognized overnight courier (such as Federal Express) with
receipted delivery.  Notices to the parties shall be addressed as follows:

     If to the Sellers:

     Kline Chevrolet Sales Corporation
     c/o Magnus Group Ltd.
     1350 Connecticut Avenue, N.W.
     Suite 1225
     Washington, D.C.  20036

with a copy to:

     Kaufman & Conoles, A Professional Corporation
     2000 Nations Bank Center
     One Commercial Place
     Norfolk, Virginia  23514-3037
     Attention: William R. Van Buren, III, Esq.
 
If to the Partnership or to the Company:

     Capital Automotive REIT

                                     -35-

 
     1925 North Lynn Street
     Suite 306
     Arlington, Virginia 22209
     Attention: Thomas D. Eckert, President and Chief Executive Officer

With a copy to:

     Wilmer, Cutler & Pickering
     2445 M Street, N.W.
     Washington, DC  20037
     Attention: George P. Stamas, Esq.

     All notices given in accordance with the terms hereof shall be deemed
effective (a) if delivered in person or by overnight courier, on the business
day it is delivered, and (b if sent by registered or certified mail, three (3)
business days after deposit with the U.S. mail.  Any party hereto may change its
address by written notice to all parties hereto sent in accordance with the
terms of this Section and any such Notice of change of address shall be
effective five (5) days after delivery.

          12.4  Governing Law.  This Agreement shall be governed and interpreted
                -------------                                                   
in accordance with the laws of the Commonwealth of Virginia without regard to
its principles of conflicts of laws, and any action brought under or arising out
of this Agreement or the matters relating hereto shall be submitted to the
jurisdiction of the United States District Court for the Eastern District of
Virginia.  Each party acknowledges and agrees to such jurisdiction.

          12.5  Litigation Costs.  If there is any legal action or proceeding
                ----------------                                             
between the parties hereto arising from or based upon this Agreement, the
unsuccessful party to such action or proceeding shall pay to the prevailing
party all litigation costs and expenses, including reasonable attorneys' fees,
incurred by such prevailing party in such action or proceeding and in any appeal
in connection therewith, and if such prevailing party recovers a judgment in any
such action, proceeding or appeal, such costs, expenses and attorneys' fees
shall be included in as part of such judgment.

          12.6  Counterparts.  This Agreement may be executed in any number of
                ------------                                                  
identical counterparts, any or all of which may contain the signatures of fewer
than all of the parties but all of which shall be taken together as a single
instrument.

          12.7  Offer and Acceptance. This Agreement constitutes an offer by the
                --------------------  
Company and the Partnership which must be accepted, by delivery to the Company
of a duly signed and completed signature page hereof, by all of the Sellers
within five (5) days after the date this Agreement is signed by the Company and
the Partnership.  If, within such time period, less than all of the persons
owning any interest in a Seller shall have signed this Agreement, then the
Seller and the Property owned by such Seller shall, at the sole option of the
Company, be excluded from the sale and purchase hereunder, this Agreement shall
remain in full force and effect as to the other 

                                     -36-

 
Sellers and Properties, and an appropriate adjustment shall be made with respect
to the relevant Property, in which case the Aggregate Purchase Price shall be
reduced by the Purchase Price of such Property as provided in this Agreement; if
after the expiration of such time period all of the Sellers execute this
Agreement, the Company, at its sole option, may elect to re-include, or may
continue to exclude, any such Seller and Property.

 
           [THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK]



                                     -37-

 
          IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal, with the intention that it be a sea ed instrument, as of the date
set forth above.

WITNESS                          CAPITAL AUTOMOTIVE REIT


By:  /s/ J.B. Watkins            By:  /s/ Thomas D. Eckert            (SEAL)
     --------------------------      ---------------------------------

Name: J. B. Watkins              Name:  Thomas D. Eckert
                                 Title:President and Chief Executive Officer

                                 CAPITAL AUTOMOTIVE L.P.

WITNESS                          By: Capital Automotive REIT, as General Partner
 

By:  /s/ J.B. Watkins            By: /s/ Thomas D. Eckert             (SEAL)
     --------------------------      ---------------------------------
Name: J. B. Watkins                 Name:  Thomas D. Eckert
                                    Title: President and Chief Executive Officer
 

WITNESS                          SELLER:
                                 KLINE CHEVROLET SALES CORPORATION

 
By:   /s/ Stacy Cummings         By:     /s/ James M. Kline           (SEAL)
     --------------------------          -----------------------------
Name:     Stacy Cummings         Name:     James M. Kline
Title:    Vice President         Title:    Chairman of the Board
                                 Address:  c/o The Magnus Group Ltd.
                                           1350 Connecticut Avenue, N.W.
                                           Suite 1225
                                           Washington, D.C. 20036
                                 Telephone #: (202) 828-1000
                                 Facsimile #: (202) 296-8092
                                 Social Security # or TIN:________________
 

     EXECUTING INDIVIDUALLY AS TO SECTION 11.2.3



     By: /s/ James M. Kline
         ----------------------------
     Name:  James M. Kline


                                     -38-

 
                                EXHIBIT 2.4(a)
                        (Form of Kline Lease Agreement)




                                LEASE AGREEMENT
                                ---------------

                                    BETWEEN
                                    -------

                       CAPITAL AUTOMOTIVE L.P., LANDLORD
                       ---------------------------------

                                      AND
                                      ---

                   KLINE CHEVROLET SALES CORPORATION, TENANT
                   -----------------------------------------


                          DATED: ______________, 1998

 

                                                                       
ARTICLE I    
              LEASE AGREEMENT, LEASED PROPERTY AND TERM........................1
              1.01                Lease Agreement..............................1
              1.02                Contingent Upon Acquisition of the Leased 
                                  Property.....................................2
              1.03                Term.........................................3
              1.04                Holding Over.................................3
              1.05                Surrender....................................4
                                 
ARTICLE II    RENT.............................................................4
              2.01                Base Rent....................................4
              2.02                Payment......................................4
              2.03                Security Deposit.............................4
              2.04                Base Annual Rent Adjustment..................5
              2.05                Additional Rent..............................5
              2.06                Place(s) of Payment of Rent; Direct Payment 
                                  of Additional Rent...........................5
                                                                               5
              2.07                Net Lease....................................5
              2.08                No Termination, Abatement, Etc...............5
 
ARTICLE III   IMPOSITIONS AND UTILITIES........................................6
              3.01                Payment of Impositions.......................6
              3.02                Definition of Impositions....................7
              3.03                Utilities....................................8
              3.04                Escrow of Impositions........................8
              3.05                Discontinuance of Utilities..................9
              3.06                Liens........................................9
 
ARTICLE IV    INSURANCE........................................................9
              4.01                Insurance....................................9
              4.02                Insurance Limits............................11
              4.03                Insurance Requirements......................11
              4.04                Replacement Cost............................12
              4.05                Blanket Policy..............................12
              4.06                No Separate Insurance.......................12
              4.07                Waiver of Subrogation.......................12
              4.08                Mortgages...................................13
              4.09                Other Insurance Requirements................13
 

 
 
                                                                       
ARTICLE V     INDEMNITY; SUBSTANCES OF CONCERN................................13
              5.01                Tenant's Indemnification....................13
              5.02                Substances of Concern.......................14
              5.03                Audits......................................16
              5.04                Landlord's Option Re: Compliance............17
              5.05                Environmental Indemnification...............17
              5.06                Tenant's Cleanup Obligation.................18
              5.07                Existing Environmental Conditions...........18
              5.08                Survival of Tenant's Obligations ...........18
 
ARTICLE VI    USE AND ACCEPTANCE OF PREMISES..................................18
              6.01                Use of Leased Properties....................18
              6.02                Acceptance of Leased Properties.............19
              6.03                Conditions of Use and Occupancy.............19
              6.04                Financial Statements and Other Information..19
 
ARTICLE VII   REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS.............22
              7.01                Maintenance.................................20
              7.02                Compliance with Laws........................21
              7.03                Required Alterations........................21
              7.04                Mechanics' Liens............................21
              7.05                Replacements of Fixtures....................21
              7.06                Encroachments; Restrictions.................22
 
ARTICLE VIII  ALTERATIONS AND SIGNS; TENANT'S PROPERTY;CAPITAL ADDITIONS TO
              THE LEASED PROPERTIES ..........................................22
              8.01                Tenant's Right to Construct.................22
              8.02                Scope of Right..............................23
              8.03                Cooperation of Landlord.....................24
              8.04                Commencement of Construction................24
              8.05                Rights in Tenant Improvements...............25
              8.06                Personal Property...........................25
              8.07                Requirements for the Tenant's Personal 
                                  Property....................................25
              8.08                Financings of Capital Additions to a Leased
                                  Property....................................27
 
ARTICLE IX    DEFAULTS AND REMEDIES...........................................27
              9.01                Events of Default...........................27
 

                                     -ii-

 
 
                                                                    
            9.02                  Remedies....................................29
            9.03                  Right of Set-Off............................32
            9.04                  Performance of Tenant's Covenants...........32
            9.05                  Late Charge.................................32
            9.06                  Litigation; Attorneys' Fees.................33
            9.07                  Remedies Cumulative.........................33
            9.08                  Escrows and Application of Payments.........33
            9.09                  Power of Attorney...........................34

ARTICLE X                                                                     
            DAMAGE AND DESTRUCTION............................................34
            10.01                 General.....................................34
            10.02                 Landlord's Inspection.......................35
            10.03                 Landlord's Costs............................35
            10.04                 Rent Abatement..............................35
            10.05                 Substantial Damage During Lease Term........36
            10.06                 Damage Near End of Term.....................36
            10.07                 Risk of Loss................................37

ARTICLE XI
            CONDEMNATION......................................................37
            11.01                 Total Taking................................37
            11.02                 Partial Taking..............................37
            11.03                 Restoration.................................37
            11.04                 Landlord's Inspection.......................38
            11.05                 Award Distribution..........................38
            11.06                 Temporary Taking............................38

ARTICLE XII
            REPRESENTATIONS, WARRANTIES AND FINANCIAL COVENANTS...............39
            12.01                  Organization and Qualification.............39
            12.02                  Material Agreements........................40
            12.03                  Changes in Condition.......................40
            12.04                  Franchises, Licenses, etc..................40
            12.05                  Litigation.................................41
            12.06                  Authorization and Enforceability...........41
            12.07                  No Legal Obstacle to Lease.................41
            12.08                  Certain Business Representations...........42
            12.09                  Certain Financial Covenants................43
            12.10                  Cash Flow Coverage Ratio Covenant..........43
            12.11                  Disclosure.................................44
            12.12                  Covenant Not to Acquire....................44

 

                                     -iii-

 
 
 

ARTICLE XIII               
                                                                    
              ASSIGNMENT AND SUBLETTING; ATTORNMENT...........................44
              13.01               Prohibition Against
                                  Subletting and Assignment...................44
              13.02               Changes of Control..........................44
              13.03               Operating/Service Agreements................45
              13.04               Assignment..................................46
              13.05               REIT Limitations............................46
              13.06               Attornment..................................47
              13.07               Severance and Spin-Off......................47

ARTICLE XIV
              ARBITRATION.....................................................48
              14.01               Controversies...............................48
              14.02               Appointment of Arbitrators..................48
              14.03               Arbitration Procedure.......................48
              14.04               Expenses....................................48
              14.05               Enforcement of the Arbitration Award........49

ARTICLE XV
              QUIET ENJOYMENT, SUBORDINATION,
              ATTORNMENT, ESTOPPEL CERTIFICATES...............................49
              15.01               Quiet Enjoyment.............................49
              15.02               Landlord Mortgages; Subordination...........49
              15.03               Attornment..................................50
              15.04               Estoppel Certificates.......................50
              15.05               Waiver of Landlord's Lien...................51

ARTICLE XVI
              RIGHT OF FIRST OFFER............................................51
              16.01               Right of First Offer During Lease Term or
                                  Extension Term..............................51
              16.02               Right to Purchase at End of an
                                  Extension Term..............................52
              16.03               Option to Purchase Vacant Lot...............53

ARTICLE XVII
              MISCELLANEOUS...................................................53
              17.01               Notices.....................................53
              17.02               Advertisement of a Leased Property..........54
              17.03               Landlord's Access...........................55
              17.04               Entire Agreement............................55
              17.05               Severability................................55
              17.06               Captions and Headings.......................55
              17.07               Governing Law...............................55

 

                                     -iv-

 
 
                                                                       
              17.08               Memorandum of Lease or Certain
                                  Rights Under the Lease......................55
              17.09               Waiver......................................55
              17.10               Assignment; Binding Effect..................56
              17.11               Consents and Approvals......................56
              17.12               Single Property.............................56
              17.13               Modification................................56
              17.14               Incorporation by Reference..................56
              17.15               No Merger...................................56
              17.16               Force Majeure...............................56
              17.17               Laches......................................57
              17.18               Waiver of Jury Trial........................57
              17.19               Permitted Contests..........................57
              17.20               Construction of Lease.......................58
              17.21               Counterparts................................58
              17.22               Relationship of Landlord and Tenant.........58

 

                                      -v-
 

 
                                   SCHEDULES

     A                        Leased Properties and Initial Base Rent
     B                        Permitted Liens
     12.02                          Material Agreements
     12.03                          Changes in Condition


                                   EXHIBITS

     2.02                           Payment Account Information
     2.04                           Base Annual Rent Adjustment
     5.07                           Environmental Reports
     15.02                          Form of Subordination and Non-Disturbance
Agreement

                                     -vi-

 
                                LEASE AGREEMENT

          This Lease Agreement ("Lease") dated as of the ___ day of ___________,
1998 by and between CAPITAL AUTOMOTIVE L.P., a Delaware limited partnership
("Landlord"), having its principal office at 1925 North Lynn, Suite 306,
Arlington, Virginia, and KLINE CHEVROLET SALES CORPORATION, a Virginia
corporation, having its principal office at c/o Magnus Group, Ltd. 1350
Connecticut Avenue, Suite 1225, Washington, D.C. 20036 ("Tenant").

                                    RECITALS

          WHEREAS, Tenant or an Affiliate (as hereafter defined) has conveyed or
will convey to Landlord certain parcels of real estate and improvements thereon
upon which Tenant engages or will engage in motor vehicle retail and/or motor
vehicle related businesses (the "Business"), which parcels of real estate and
improvements thereon are described on Schedule A attached hereto and
incorporated herein by reference (each hereinafter a "Leased Property" or
collectively, the "Leased Properties"), and Landlord and Tenant desire to
provide for the lease by Landlord to Tenant of the Leased Properties; and

          WHEREAS, Landlord and Tenant desire that each of the Leased Properties
shall be the subject of this Lease and be used by Tenant in its operation of the
Business; and

          WHEREAS, this Lease provides that additional real estate and
improvements thereon may be made subject to the operation and effect of this
Lease, upon execution by Landlord and Tenant of a Lease Supplement designating
each such additional property as a Leased Property hereunder.

          NOW, THEREFORE, in consideration of the foregoing premises and of
their respective agreements and undertakings herein, and of other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, Landlord and Tenant agree as follows:

                                   ARTICLE I
                   LEASE AGREEMENT, LEASED PROPERTY AND TERM

          1.01      Lease Agreement.  Landlord does hereby let and lease unto
                    ---------------                                          
Tenant, and Tenant does hereby take and hire from Landlord, the Leased
Properties, which shall respectively consist of:

          (a)       The parcels of land described and located at the addresses
                    listed in Schedule A hereto, as more particularly described
                    therein, together with any additional parcels of real estate
                    and improvements thereon subsequently designated as a Leased
                    Property by the parties pursuant to a Lease Supplement as
                    provided for herein, together with all rights, titles,
                    appurtenant interests, covenants, licenses, privileges and
                    benefits thereto belonging, and any easements, rights-of-
                    way, rights of ingress or egress or other interests in, on,
                    or to any land, highway, street, road or avenue, open or
                    proposed, in, on, across, in 

 
                    front of, abutting or adjoining such real property
                    including, without limitation, any strips and gores adjacent
                    to or lying between such real estate and any adjacent real
                    estate (the "Land");

          (b)       All buildings, improvements, structures and Fixtures (as
                    hereinafter defined) now located or to be located or to be
                    constructed on the Land, including, without limitation,
                    sidewalks, landscaping, parking lots and structures, roads,
                    drainage and all above ground and underground utility
                    structures and conduits (on-site or off-site), equipment
                    systems and other so-called "infrastructure" improvements
                    (the "Improvements");

          (c)       All equipment, machinery, fixtures, and other items of real
                    and/or personal property, including all components thereof,
                    located in, on or used in connection with, and permanently
                    affixed to or incorporated into, the Improvements,
                    including, without limitation, all furnaces, boilers,
                    heaters, electrical equipment, heating, plumbing, lighting,
                    ventilating, refrigerating, incineration, air and water
                    pollution control, waste disposal, air-cooling and air-
                    conditioning systems and apparatus, sprinkler systems and
                    fire and theft protection equipment, and similar systems,
                    all of which, to the greatest extent permitted by law, are
                    hereby deemed to constitute real estate, together with all
                    replacements, modifications, alterations and additions
                    thereto (collectively the "Fixtures"); and

          (d)       All easements, rights and appurtenances relating to the Land
                    and the Improvements.

          SUBJECT, HOWEVER, to the liens, encumbrances, restrictions,
agreements, and other title matters listed or specifically referred to in
Schedule B ("Permitted Exceptions").

          The Leased Properties shall however exclude all furniture, equipment,
inventory and items of moveable personal property attached to the Land or
Improvements that relate to the business being conducted on the Leased Property
which items may readily be removed without material damage to the Land and
Improvements whether or not such items might legally be considered to be
"fixtures" (all of which are owned by Tenant and shall hereinafter be defined as
the "Excluded Personal Property").

          1.02      Contingent Upon Acquisition of the Leased Property.  In the
                    --------------------------------------------------         
event this Lease is executed prior to the conveyance by Tenant or an Affiliate
of the Leased Property to Landlord, the parties acknowledge that the
effectiveness of this Lease in respect of such Leased Property is contingent
upon the closing of such conveyance (the "Commencement Date").  The Commencement
Date shall be the date of conveyance of the Leased Property and the parties
agree to execute an addendum to this Lease stating the Commencement Date.

                                      -2-

 
          1.03      Term.  The initial term of this Lease (the "Term") shall be
                    ----                                                       
for a fixed term of One Hundred and Twenty (120) months commencing on the
Commencement Date.  The initial term for any Leased Property designated in a
Lease Supplement shall begin on the date of such Lease Supplement and expire at
the end of the Term or then current Extension Term (as hereafter defined), as
the case may be.  Provided that no Event of Default (as defined in Section 9.01
hereof) shall exist and be continuing, Tenant shall have the right to extend
this Lease for the Leased Properties as a group, at Tenant's option, for one One
Hundred and Twenty (120) month renewal term from the expiration of the Term (the
"First Extension Term") and such renewal shall be automatic unless notice from
Tenant to the contrary is given to Landlord no later than twelve (12) months
prior to the end of the Term.  In addition, Tenant shall have the right to
extend this Lease for the Leased Properties as a group at Tenant's option, for a
second One Hundred and Twenty (120) month renewal term from the expiration of
the First Extension Term (the "Second Extension Term", each an "Extension Term",
and collectively with the First Extension Term, the "Extension Terms"), and such
renewal shall be automatic unless notice from Tenant to the contrary is given to
Landlord no later than twelve (12) months prior to the end of the First
Extension Term, provided that no Event of Default (as defined in Section 9.01
hereof) shall exist and be continuing.  Notwithstanding anything else to the
contrary in this Agreement, the Rent during the Second Extension Term shall be
the Fair Market Rent (as hereafter defined) for the Leased Property.  Fair
Market Rent shall be determined as soon as possible after the expiration of the
period during which Tenant could elect not to renew after the First Extension
Term, on the basis of appraisals of independent appraisers selected in
accordance with the provisions of Section 16.02(b).  Tenant shall have the
right, in its sole discretion, to rescind the exercise of Tenant's option to
extend the Lease for the Second Extension Term during a period of five (5)
business days after the determination of the Fair Market Rent.  If Tenant shall
fail to exercise the right to rescind within such five (5) day period, the
election to extend shall be irrevocable and the Fair Market Rent so determined
shall be the Base Annual Rent during the Second Extension Term notwithstanding
any changes in the market rental rates, whether upward or downward, which may
occur after such determination.  However, notwithstanding anything else in this
Agreement, Fair Market Rent shall become the Base Annual Rent (as defined
hereafter) and shall be subject to Base Annual Rent Adjustments as set forth in
Section 2.04.

          1.04      Holding Over.  Should Tenant, without the express consent of
                    ------------                                                
Landlord, continue to hold and occupy any Leased Property after the expiration
or earlier termination of the Term or any Extension Term, as the case may be,
such holding over beyond the Term and the acceptance or collection of Rent (as
defined hereinafter) by Landlord shall operate and be construed as creating a
tenancy from month-to-month and not for any other term whatsoever.  During any
such holdover period Tenant shall pay to Landlord for each month (or portion
thereof) Tenant remains in such Leased Property, in lieu of the Base Annual Rent
(as defined hereafter) for such Leased Property, an amount equal to the sum of
one-twelfth (1/12) of (i) one hundred seven percent (107%) of such Base Annual
Rent (the "Holdover Rate"), and (ii) as applicable, one hundred percent (100%)
of the Additional Rent (as defined hereinafter) for such Leased Property and
Other Additional Rent (as defined hereinafter) for such Leased Property, each as
in effect on the expiration date.  Said month-to-month tenancy may be terminated
by Landlord by giving Tenant thirty (30) days written 

                                      -3-

 
notice, and at any time thereafter Landlord may re-enter and take possession of
such Leased Property.

          1.05      Surrender.  Except as a result of (a) Tenant Improvements
                    ---------                                                
and Capital Additions (as defined hereinafter); (b) normal and reasonable wear
and tear (subject to the obligation of Tenant to maintain each Leased Property
in good order and repair during the Term); and (c) casualty, taking or other
damage and destruction not required to be repaired by Tenant, Tenant shall
surrender and deliver up each Leased Property at the expiration or termination
of the Term or the Extension Term therefor (Tenant shall not be in breach of
this Lease if, at the termination of the Lease, it is diligently pursuing
repairs that the Lease requires Tenant to make but cannot be completed prior to
the expiration of the Lease, provided however, that Tenant hereby shall have the
continuing obligation to complete such repairs), as the case may be, broom
clean, in good order and repair, free of the Excluded Personal Property and any
additional items of Tenant's personal property (together with the Excluded
Personal Property, the "Tenant's Personal Property"), all of which Tenant shall
remove prior to such surrender and delivery, and in as good order and condition
as of the Commencement Date.


                                   ARTICLE II
                                      RENT

          2.01      Base Rent.  Tenant shall pay Landlord annual base rent (the
                    ---------                                                  
"Base Annual Rent") as to the Leased Property for each year during the Term or
the Extension Term (each such year a "Lease Year"), which Base Annual Rent shall
be subject to upward adjustment pursuant to Section 2.04.  In the first Lease
Year, Base Annual Rent shall be in the amount set forth on Schedule A (the
"Initial Base Annual Rent"), paid to Landlord in twelve equal monthly
installments.

          2.02      Payment.  Tenant shall pay Landlord the Base Annual Rent as
                    -------                                                    
to the Leased Property for each Lease Year, without notice, demand, set-off or
counterclaim in advance, in lawful money of the United States of America and
payable in consecutive monthly installments commencing on the Commencement Date
and thereafter on the first day of each month during the Term.  Tenant will, to
the extent that such method of payment is compatible with its business
practices, make such payments by direct deposit of immediately available funds
to the account set forth in Exhibit 2.02 (which Exhibit 2.02 may be modified by
Landlord from time to time upon Notice (as hereafter defined) to Tenant).

          2.03      Security Deposit.  Prior to the Commencement Date, Tenant
                    ----------------                                         
shall deliver to Landlord an amount equal to one-twelfth (1/12th) of the Base
Annual Rent, which amount shall be held by Landlord as security (the "Security
Deposit") for the performance of Tenant's payment and other obligations under
this Lease.  At Tenant's option, Tenant may deliver one-half of the Security
Deposit in immediately available funds and one-half of the Security Deposit in
the form of a letter of credit, provided that such letter of credit is in form
and substance acceptable to Landlord.  Upon an Event of Default and the
continuance thereof, Landlord shall have the right, but not the obligation, 

                                      -4-

 
to apply the Security Deposit as set forth in Section 9.08. Landlord shall
return the Security Deposit, without interest, after expiration of this Lease,
if Tenant has fully and faithfully carried out all of the terms, covenants and
conditions hereof. In the event that Landlord eliminates its standard business
policy of requiring security deposits from tenants, then Landlord shall refund
the Security Deposit to Tenant within thirty (30) days of such policy change.

           2.04   Base Annual Rent Adjustment.
                  --------------------------- 

                  (a)  The Base Annual Rent shall be adjusted during the Lease
                       Term or the Extension Terms under the procedures set
                       forth in Exhibit 2.04 (the "Base Annual Rent
                       Adjustment").
 
                  (b)  As used in Exhibit 2.04, the "Index" shall mean the CPI-U
                       published by the United States Department of Labor,
                       Bureau of Labor Statistics Consumer Price Index for All
                       Urban Consumers, U.S. City Average. If at any time during
                       the Term or the Extension Term, as the case may be, the
                       Index shall be discontinued, Landlord shall select a
                       substitute index, being an existing official index
                       published by the Bureau of Labor Statistics or its
                       successor or another, similar governmental agency, which
                       index is most nearly equivalent to the Index.

           2.05   Additional Rent.  As to each Leased Property, in addition to
                  ---------------                                             
the Base Annual Rent, Tenant shall pay all other amounts, liabilities,
obligations and Impositions (as hereinafter defined) which Tenant assumes or
agrees to pay under this Lease and any fine, penalty, interest, charge, expense
and cost which may be added for nonpayment or late payment of such items
(collectively, the "Additional Rent").

           2.06   Place(s) of Payment of Rent; Direct Payment of Additional
                  ---------------------------------------------------------
Rent.  The Base Annual Rent and Additional Rent are hereinafter referred to as
-----                                                                         
"Rent."  Landlord shall have all legal, equitable and contractual rights, powers
and remedies provided in this Lease or by statute or otherwise in the case of
nonpayment of the Rent for each Leased Property. Tenant shall make all payments
of Rent at Landlord's address set forth in Section 17.01 or as Landlord may
otherwise from time to time direct in writing, or, if Landlord shall direct
Tenant, directly to a bank account specified by Landlord to Tenant in writing.
At the direction of the Landlord, Tenant shall make payments of Additional Rent
directly to the person or persons to whom such amount is owing at the time and
times when such payments are due, and Tenant shall give to Landlord such
evidence of such direct payments as Landlord shall reasonably request.

           2.07   Net Lease.  This Lease shall be deemed and construed to be
                  ----------                                                
an "absolute net lease" or "triple net lease," (i.e. that Tenant shall pay all
costs and expenses related to the ownership and operations of each Leased
Property, thereby leaving all Rent as an absolutely net return to Landlord) and
as to each Leased Property, Tenant shall pay all Rent in connection with such
Leased Property throughout the Term and any Extension Term, without abatement,
deduction or set-off.

                                      -5-

 
          2.08      No Termination, Abatement, Etc.  Except as otherwise
                    -------------------------------                     
specifically provided herein, Tenant shall remain bound by this Lease in
accordance with its terms. Except as otherwise specifically provided herein,
Tenant shall not, without the prior written consent of Landlord, modify,
surrender or terminate this Lease as to any Leased Property, nor seek nor be
entitled to any abatement, deduction, deferment or reduction of Rent, or set-off
against the Rent as to any Leased Property for any reason whatsoever.  Except as
specifically provided herein, the obligations of Landlord and Tenant shall not
be affected by reason of:  (a) the lawful or unlawful prohibition of, or
restriction upon, Tenant's use of any Leased Property, or any part thereof, the
interference with such use by any person, corporation, partnership or other
entity, or by reason of eviction by paramount title; (b) any claim which Tenant
has or might have against Landlord or by reason of any default or breach of any
warranty by Landlord under this Lease or any other agreement between Landlord
and Tenant, or to which Landlord and Tenant are parties; (c) any bankruptcy,
insolvency, reorganization, composition, readjustment, liquidation, dissolution,
winding up or other proceeding affecting Landlord or any assignee or transferee
of Landlord; (d) any damage to, or destruction of, any Leased Property or any
portion thereof for whatever cause, or any taking of the Leased Property or any
portion thereof; or (e) any other cause, whether similar or dissimilar to any of
the foregoing, other than a discharge of Tenant from any such obligations as a
matter of law.  Except as otherwise specifically provided herein, and to the
maximum extent permitted by law, Tenant hereby specifically waives all rights,
including but not limited to any rights under any statute relating to rights of
tenants in the jurisdictions where the Leased Properties are located, which may
now be conferred upon it by law, relating to:  (a) the modification, surrender
or termination of this Lease, or the quitting or surrender of any Leased
Property or any portion thereof; (b) any abatement, reduction, suspension or
deferment of the Rent or other sums payable by Tenant hereunder; or (c) any
rights of redemption.  As to each Leased Property, the obligations of Landlord
and Tenant hereunder shall be separate and the Rent and all other sums shall
continue to be payable in all events unless the obligations to pay the same
shall be terminated pursuant to the express provisions of this Lease or by
termination of this Lease other than by reason of an Event of Default.


                                  ARTICLE III
                           IMPOSITIONS AND UTILITIES

          3.01      Payment of Impositions.  Subject to the adjustments set
                    ----------------------                                 
forth herein, Tenant shall pay, in the manner set forth in Section 3.04, as
Additional Rent, to the Landlord an amount equal to the amount necessary to pay
all Impositions (as hereinafter defined) that may be levied or become a lien on
any Leased Property or any part thereof at any time (whether prior to or during
the Term, but not that arise and are assessed after the end of the Term of the
Lease), without regard to prior ownership of said Leased Property, before the
same becomes delinquent.  Tenant's obligation to pay such Impositions shall be
deemed absolutely fixed upon the date such Impositions become a lien upon any
Leased Property or any part thereof.  Tenant, at its expense, shall prepare and
file all tax returns and reports in respect of any Imposition as may be required
by governmental authorities, provided, however, that Tenant shall provide to
Landlord copies of all filings of such tax returns or reports in respect of any
real or personal property owned by Landlord.  Tenant shall be 

                                      -6-

 
entitled to any refund due in respect of such Impositions from any taxing
authority if no Event of Default shall have occurred hereunder and be
continuing. Any refunds in respect of such Impositions retained by Landlord due
to an Event of Default shall be applied as provided in Section 9.08. Landlord
and Tenant shall, upon request of the other, provide such data as is maintained
by the party to whom the request is made with respect to a Leased Property as
may be necessary to prepare any required tax returns and reports. In the event
governmental authorities classify any property covered by this Lease as personal
property, Landlord and Tenant shall file all personal property tax returns in
such jurisdictions where it may legally so file with respect to their respective
owned personal property. Landlord, to the extent it possesses the same, and
Tenant, to the extent it possesses the same, will provide the other party, upon
request, with cost and depreciation records necessary for filing such returns or
reports for any property so classified as personal property. To the extent that
Landlord is legally required to file personal property tax returns, Tenant will
be provided with copies of assessment notices indicating a value in excess of
the reported value in sufficient time for Tenant to file a protest. Tenant may,
upon notice to Landlord, at Tenant's option and at Tenant's sole cost and
expense, protest, appeal, or institute such other proceedings as Tenant may deem
appropriate to effect a reduction of real estate or personal property
assessments and Landlord, at Tenant's expense as aforesaid, shall fully
cooperate with Tenant in such protest, appeal, or other action. Tenant shall
provide Landlord copies of all materials filed or presented in connection with
any such proceeding. Tenant shall promptly reimburse Landlord for all taxes paid
by Landlord, which were not paid with deposits received from Tenant, upon
receipt of billings accompanied by copies of a bill therefor and payments
thereof which identify the property with respect to which such payments are
made. Impositions imposed with respect to the tax-fiscal period during which the
Term commences and terminates as to each Leased Property shall be adjusted and
prorated between Landlord and Tenant on a per diem basis, with Tenant being
obligated to pay its pro rata share from and including the Commencement Date to
and including the expiration or termination date of the Term or Extension Term,
as the case may be, whether or not such Imposition is imposed before or after
such commencement or termination, and Tenant's obligation to pay its prorated
share thereof shall survive such termination. Tenant shall also pay to Landlord
a sum equal to the amount which Landlord may be caused to pay of any privilege
tax, sales tax, gross receipts tax, rent tax, occupancy tax or like tax
(excluding any tax based on net income), hereinafter levied, assessed, or
imposed by any federal, state, city, county or municipal or other local
governmental authority, or any subdivision thereof, upon or measured by rent or
other consideration required to be paid by Tenant under this Lease.

          3.02      Definition of Impositions.  "Impositions" means,
                    -------------------------                       
collectively:  (a) taxes (including without limitation, all real estate and
personal property ad valorem (whether assessed as part of the real estate or
separately assessed as unsecured personal property), sales and use, business or
occupation, single business, gross receipts, transaction, privilege, rent or
similar taxes, but not including income or franchise or excise taxes payable
with respect to Landlord's receipt of Rent); (b) assessments, whether in the
nature of a special assessment or otherwise (including, without limitation, all
assessments for public improvements or benefits, whether or not commenced or
completed prior to the date hereof and whether or not to be completed within the
Term or any Extension Term, as the case may be); (c) water, sewer or other rents
and charges, excises, tax levies, 

                                      -7-

 
and fees (including, without limitation, license, permit, inspection,
authorization and similar fees); (d) to the extent they may become a lien on a
Leased Property, all taxes imposed on Tenant's operations of such Leased
Property including without limitation, employee withholding taxes, income taxes
and intangible taxes; and (e) all other governmental charges, in each case
whether general or special, ordinary or extraordinary, or foreseen or unforseen,
of every character in respect of each Leased Property or any part thereof, the
Business conducted by Tenant thereon, and/or the Rent (including all interest
and penalties thereon due to any failure in payment by Tenant), which at any
time prior to, during or in respect of the Term or any Extension Term, as the
case may be, hereof may be assessed or imposed on or in respect of or be a lien
upon (i) Landlord or Landlord's interest in any Leased Property or any part
thereof; (ii) any Leased Property or any part thereof or any rent therefrom or
any estate, right, title or interest therein; or (iii) any occupancy, operation,
use or possession of, or sales from, or activity conducted on, or in connection
with any Leased Property or the leasing or use of any Leased Property or any
part thereof. Tenant shall not, however, be required to pay: (x) any tax based
on net income (whether denominated as a franchise or capital stock or other tax)
imposed on Landlord or (y) except as provided in Section 13.01, any tax imposed
with respect to the sale, exchange or other disposition by Landlord of a Leased
Property or the proceeds thereof; provided, however, that if any tax,
assessment, tax levy or charge which Tenant is obligated to pay pursuant to the
first sentence of this definition and which is in effect at any time during the
Term hereof is totally or partially repealed, and a tax, assessment, tax levy or
charge set forth in clause (x) or (y) immediately above is levied, assessed or
imposed expressly in lieu thereof Tenant shall then pay such tax, levy, or
charge set forth in said clause (x) or (y).

          3.03      Utilities.  Tenant shall contract for, in its own name, and
                    ---------                                                  
will pay, as Additional Rent all taxes, assessments, charges/deposits, and bills
for utilities, including without limitation charges for water, gas, oil,
sanitary and storm sewer, electricity, telephone service, trash collection, and
all other utilities which may be charged against the occupant of the
Improvements during the Term.

          3.04      Escrow of Impositions. Unless waived by written notice from
                    ---------------------                                      
Landlord to Tenant, Tenant shall thereafter deposit with Landlord on the first
day of each month during the Term hereof and any Extension Term, as the case may
be, a sum equal to one-twelfth (1/12th) of the Impositions annually assessed
against such Leased Property which sums shall be used by Landlord toward payment
of such Impositions.  If, at the end of any applicable tax year, any such funds
held by Landlord are insufficient to make full payment of taxes or other
Impositions for which such funds are held, Tenant, on demand, shall pay to
Landlord any additional funds necessary to pay and discharge in full the
obligations of Tenant pursuant to the provisions of this Section.  If, however,
at the end of any applicable tax year, such funds held by Landlord are in excess
of the total payment required to satisfy taxes or other Impositions for which
such funds are held, Landlord shall apply such excess amounts to a tax and
Imposition escrow fund for the next tax year.  With respect to each Leased
Property, if any such excess exists following the expiration or earlier
termination of this Lease, and subject to Section 8.08 below, Landlord shall
promptly refund such excess amounts to Tenant.  The receipt by Landlord of the
payment of such Impositions by and from Tenant shall only 

                                      -8-

 
be as an accommodation to Tenant and the taxing authorities, and shall not be
construed as rent or income to Landlord, Landlord serving, if at all, only as a
conduit for delivery purposes.

          3.05      Discontinuance of Utilities.  Landlord will not be liable
                    ---------------------------                              
for damages to person or property or for injury to, or interruption of, business
for any discontinuance of utilities at any Leased Property nor will such
discontinuance in any way be construed as an eviction of Tenant from such Leased
Property or cause an abatement of Rent as to such Leased Property or operate to
release Tenant from any of Tenant's obligations as to such Leased Property under
this Lease. Notwithstanding the forgoing, however, Landlord shall be liable for
damages to person or property or for injury to, or interruption of business, for
any discontinuance of utilities at any Leased Property, in the event and to the
extent, such damages or injury are caused by the wilful misconduct of the
Landlord.

          3.06      Liens.  Subject to Section 17.19 relating to contests,
                    -----                                                 
Tenant shall not directly or indirectly create or allow to remain, and will
promptly discharge at its expense, any lien, encumbrance, attachment, title
retention agreement or claim upon any Leased Property or any attachment, levy,
claim or encumbrance in respect of any Rent provided under this Lease, not
including, however:  (a) this Lease; (b) utility easements and road rights-of-
way in the customary form (i) provided the same do not adversely affect the
intended use of the Leased Properties (including the Improvements) and do not
create a material adverse effect on the value of the Leased Properties or (ii)
which result solely from the action or inaction of Landlord; (c) zoning and
building laws or ordinances, provided they do not prohibit the use of the Leased
Properties for the Business and so long as the Leased Properties are in
compliance with same; (d) such encumbrances as are subsequently consented to in
writing by Landlord, but excluding liens in respect of Impositions required to
be paid under Section 3.01;  (e) liens for Impositions so long as (i) the same
are not yet payable or are payable without the addition of any fine or penalty
or (ii) such liens are being contested as permitted under Section 17.19; and (f)
other encumbrances, easements, rights of way or liens (i) provided the same do
not adversely affect the intended use of the Leased Properties (including the
Improvements) and do not create a material adverse effect on the value of the
Leased properties, or (ii) which result solely from the action or inaction of
Landlord.


                                   ARTICLE IV
                                   INSURANCE

          4.01      Insurance.  Tenant shall, at Tenant's expense, keep the
                    ---------                                              
Improvements, Fixtures, and other components of each Leased Property insured
against the following risks:

                    (a)  Loss or damage by fire with extended coverage
                         (including windstorm and subsidence), vandalism and
                         malicious mischief, sprinkler leakage and all other
                         physical loss perils commonly covered by "All Risk" (or
                         equivalent coverage) insurance in an amount not less
                         than one hundred percent (100%) of the then full
                         replacement cost thereof (as 

                                      -9-

 
                    hereinafter defined). Such policy shall include an agreed
                    amount endorsement if available at a reasonable cost. Such
                    policy shall also include endorsements for contingent
                    liability for operation of building laws, demolition costs,
                    and increased cost of construction.

               (b)  Loss or damage by explosion of steam boilers, pressure
                    vessels, or similar apparatus, now or hereafter installed on
                    any Leased Property, in commercially reasonable amounts
                    acceptable to Landlord.

               (c)  Loss of rent under a rental income or Business interruption
                    insurance policy covering risk of loss during the first
                    twelve (12) months of reconstruction necessitated by the
                    occurrence of any hazards described in Sections 4.01(a) or
                    4.01(b), above, and which causes an abatement of Rent as
                    provided in Article X hereof, in an amount sufficient to
                    prevent Landlord or Tenant from becoming a co-insurer, and
                    containing endorsements for extended period of indemnity and
                    premium adjustment, and written with an agreed amount
                    clause, if the insurance provided for in this clause (c) is
                    available.

               (d)  If the Land or any portion thereof related to a Leased
                    Property is located in whole or in part within a designated
                    flood plain area, loss or damage caused by flood in
                    commercially reasonable amounts acceptable to Landlord.

               (e)  Loss or damage commonly covered by blanket crime insurance
                    including employee dishonesty, loss of money orders or paper
                    currency, depositor's forgery, and loss of property accepted
                    by Tenant for safekeeping, in commercially reasonable
                    amounts acceptable to Landlord.

               (f)  Workers' compensation insurance as required by statute in
                    respect of any work or other operations on or about each
                    Leased Property.

               (g)  Comprehensive liability insurance as to each Leased Property
                    in amounts equal to the greater of (i) One Million Dollars
                    ($1,000,000) for each occurrence and Two Million Dollars
                    ($2,000,000) in the aggregate, or (ii) the limits of
                    liability generally required under the franchise agreements
                    or other agreements pursuant to which Tenant operates the
                    Businesses conducted on or about each Leased Property.

               (h)  Commercial comprehensive catastrophic liability insurance
                    with limits of liability of not less than the greater of (i)
                    Five Million ($5,000,000) and (ii) the limits of liability
                    generally required under 

                                     -10-

 
                        the franchise agreements or other agreements pursuant to
                        which Tenant operates the Businesses conducted on or
                        about each Leased Property.

                    (i) upon Landlord's request, earthquake insurance in an
                        amount not less than the full insurable value of each
                        Leased Property.

                    (j) During the period when any addition, alteration,
                        construction, installation or demolition is being made
                        or performed to any part of the Leased Property,
                        contingent liability, public liability, completed value,
                        builder's risk (non-reporting form) workers'
                        compensation and other insurance as is deemed prudent by
                        Landlord.

          4.02      Insurance Limits.  Deductible provisions for the insurance
                    ----------------                                          
required under Section 4.01(a) shall not exceed Twenty-Five Thousand Dollars
($25,000) per location per occurrence and One Hundred Thousand Dollars
($100,000) aggregate per occurrence; under clause(d),  Twenty-Five Thousand
Dollars ($25,000) per occurrence, except that if federal flood insurance is
available then such deductible shall not be greater than the lowest deductible
available with respect to such federal flood insurance; under clause (g),
Twenty-Five Thousand Dollars ($25,000) per occurrence; under clause (h), Twenty-
Five Thousand Dollars ($25,000) per occurrence; and under clause (j), Twenty-
Five Thousand Dollars ($25,000) per occurrence.

           4.03     Insurance Requirements.  The following provisions shall
                    -----------------------                                
apply to all insurance coverages required hereunder:

                    (a) The carriers of all policies shall have a Best's Rating
                        of "A-" or better and a Best's Financial Category of XII
                        or larger and shall be authorized to do insurance
                        business in the jurisdiction in which the Leased
                        Property is located.

                    (b) Tenant shall be the "named insured" and Landlord and any
                        mortgagee of Landlord shall be an "additional named
                        insured" on each policy, except for the insurance
                        required in Section 4.01(e) and 4.01(f) hereof.

                    (c) Tenant shall deliver to Landlord certificates or
                        policies showing the required coverages and
                        endorsements. Each policy or certificate of insurance
                        shall provide that such policy or certificate (i) may
                        not be canceled, (ii) may not lapse for failure to
                        renew, and (iii) no material change or reduction in
                        coverage may be made, without at least thirty (30) days'
                        prior written notice to Landlord.

                                     -11-

 
                    (d) The policies shall contain a severability of interest
                        and/or cross-liability endorsement, provide that the
                        acts or omissions of Tenant will not invalidate
                        Landlord's coverage, and provide that Landlord shall not
                        be responsible for payment of premiums.

                    (e) All loss adjustment shall require the written consent of
                        Landlord and Tenant, as their interests may appear.

                    (f) At least (30) thirty days prior to the expiration of
                        each policy, Tenant shall deliver to Landlord a
                        certificate showing renewal of such policy and payment
                        of the annual premium therefor.

          Landlord shall have the right to review the insurance coverages
required hereunder with Tenant from time to time, to obtain the input of third
party professional insurance advisors (at Landlord's expense) with respect to
such insurance coverages, and to consult with Tenant in Tenant's annual review
and renewal of such insurance coverages.  All insurance coverages hereunder
shall be in such form, substance and amounts as are customary or standard in
Tenant's industry, but at a minimum shall comply with the requirements set forth
herein.

          4.04      Replacement Cost.  The term "full replacement cost" means
                    ----------------                                         
the actual replacement cost of the Improvements from time to time including
increased cost of construction, with no reductions or deductions.  Tenant shall,
not later than thirty (30) days after the anniversary of each policy of
insurance, increase the amount of the replacement cost endorsement for the
Improvements to the extent necessary to reflect increased costs of construction.
If Tenant makes any Permitted Alterations (as hereinafter defined) to any Leased
Property, Landlord may have such full replacement cost redetermined at any time
after such Permitted Alterations are made, regardless of when the full
replacement cost was last determined.

          4.05      Blanket Policy.  Tenant may carry the insurance required by
                    --------------                                             
this Article under a blanket policy of insurance, provided that the coverage
afforded Tenant will not be reduced or diminished or otherwise be different from
that which would exist under a separate policy meeting all of the requirements
of this Lease and the Landlord approves the form of the policy.

          4.06      No Separate Insurance.  Tenant shall not take out separate
                    ----------------------                                    
insurance concurrent in form or contributing in the event of loss with that
required in this Article, or increase the amounts of any then existing insurance
by securing an additional policy or additional policies, unless all parties
having an insurable interest in the subject matter of the insurance, including
Landlord and any mortgagees, are included therein as additional named insureds
or loss payees, the loss is payable under said insurance in the same manner as
losses are payable under this Lease, and such additional insurance is not
prohibited by the existing policies of insurance required pursuant to this
Article.  Tenant shall immediately notify Landlord of the taking out of such
separate insurance or the increasing of any of the amounts of the existing
insurance by securing an additional policy or additional policies.  The term
"mortgages" as used in this Lease includes, but is not limited 

                                     -12-

 
to, Deeds of Trust and the term "mortgagees" includes, but is not limited to,
trustees and beneficiaries under a Deed of Trust.

          4.07      Waiver of Subrogation.  Each party hereto hereby waives any
                    ---------------------                                      
and every claim which arises or may arise in its favor and against the other
party hereto during the Term or any Extension Term or renewal thereof, for any
and all loss of, or damage to, any of its property located within or upon, or
constituting a part of, any Leased Property, which loss or damage is covered by
valid and collectible insurance policies, to the extent that the insurance
company covers the loss and makes payment under the applicable insurance policy.
Said mutual waiver shall be in addition to, and not in limitation or derogation
of, any other waiver or release contained in this Lease with respect to any loss
or damage to property of the parties hereto.  Inasmuch as the said waivers will
preclude the assignment of any aforesaid claim by way of subrogation (or
otherwise) to an insurance company (or any other person), each party hereto
agrees to obtain insurance policies that permit claims thereunder to be waived
in advance, so long as such endorsement is available at a reasonable cost.

          4.08      Mortgages.  The following provisions shall apply if Landlord
                    ---------                                                   
now or hereafter places a mortgage on any Leased Property or any part thereof:
(a) Tenant shall obtain a standard form of mortgage clause insuring the interest
of the mortgagee; (b) Tenant shall deliver evidence of insurance to such
mortgagee; (c) loss adjustment shall require the consent of the mortgagee but
such consent shall not be unreasonably withheld and may not include any
requirement that the funds be paid to mortgagee in lieu of reconstruction; and
(d) Tenant shall obtain such other coverages and provide such other information
and documents as may be reasonably required by the mortgagee.

          4.09      Other Insurance Requirements.  Notwithstanding anything in
                    ----------------------------                              
this Lease to the contrary and not by way of limitation, in addition to the
types and amounts of insurance required to be carried by Tenant herein, Tenant
covenants to insure and continue in effect such types and amounts of insurance
as the Tenant shall be required to carry pursuant to any contract, agreement,
instrument, statute, law, rule or regulation relating to the use of the Leased
Property and the operations of any Business or other activities thereon,
including noncancellable written notice to mortgagee.

                                   ARTICLE V
                        INDEMNITY; SUBSTANCES OF CONCERN

          5.01      Tenant's Indemnification.  Subject to Section 4.07, Tenant
                    ------------------------                                  
hereby agrees to indemnify and hold harmless Landlord, its agents, and employees
from and against any and all demands, claims, causes of action, fines,
penalties, damages (including punitive and consequential damages), losses,
liabilities (including strict liability), judgments, costs and expenses
(including, without limitation, attorneys' fees, court costs, and the costs set
forth in Section 9.06) (the "Claims") incurred during the Term of the Lease and
in connection with or arising from: (a) the use, condition, operation or
occupancy of the Leased Properties; (b) any activity, work, or thing done, or
permitted or suffered by Tenant in, on or about the Leased Properties; (c) any
acts, omissions, or negligence 

                                     -13-

 
of Tenant or any person claiming under Tenant, or the contractors, agents,
employees, invitees, or visitors of Tenant or any such person; (d) any breach,
violation, or nonperformance by Tenant or any person claiming under Tenant or
the employees, agents, contractors, invitees, or visitors of Tenant or of any
such person, of any term, representation, warranty, covenant, or provision of
this Lease or any law, ordinance, or governmental requirement of any kind; (e)
any injury or damage to the person, property or Business of Tenant, its
employees, agents, contractors, invitees, visitors, or any other person entering
upon any Leased Property; (f) any accident, injury to or death of persons or
loss or damage to any item of property occurring on or about any Leased
Property; (g) any Environmental Law or any pollution or other threat to human
health or the environment at, arising out of or relating to any Leased Property
as set forth in Section 5.05, and (h) any brokers' or agents' fees and
commissions that Tenant incurs. If any action or proceeding is brought against
Landlord, its employees, or agents by reason of any such demand, claim, or cause
of action, Tenant, upon notice from Landlord, will defend the same at Tenant's
expense with counsel reasonably satisfactory to Landlord. In the event Landlord
reasonably determines that its interests and the interests of Tenant in any such
action or proceeding are not substantially the same and that Tenant's counsel
cannot adequately represent the interests of Landlord therein, Landlord shall
have the right to hire separate counsel in any such action or proceeding and the
reasonable costs thereof shall be paid for by Tenant. Tenant's indemnification
obligations with respect to a Claim shall survive the expiration or earlier
termination of this Lease until the later of (i) two (2) years from the date
hereof, or (ii) the expiration of the period ninety (90) days after the date on
which Landlord has actual knowledge of the existence of such Claim, provided,
however, that Tenant's indemnification obligations shall survive the expiration
or earlier termination of this Lease until ninety (90) days after the expiration
of the applicable statute of limitations for Claims incurred in connection with,
arising out of, or related to (i) Section 5.01(g) or (ii) the failure to pay, as
provided for in this Agreement, any Imposition. Notwithstanding the foregoing
provisions of this Section 5.01, Tenant shall have no obligation to indemnify
Landlord for any Claims arising out of the actions or omissions of Landlord, or
Landlord's agents, employees or representatives.

           5.02     Substances of Concern.
                    --------------------- 

                    (a)  For purposes of this Section 5:

                         (i) "Substances of Concern" means, without limitation,
                             chemicals, pollutants, contaminants, wastes, toxic
                             substances, radioactive materials or genetically
                             modified organisms, which are, have been or become
                             regulated by any federal, state or local government
                             authority including, without limitation, (1)
                             petroleum or any fraction thereof, (2) asbestos,
                             (3) any substance or material defined as a
                             "hazardous substance" pursuant to (S) 101 of the
                             Comprehensive Environmental Response Compensation
                             and Liability Act (42 U.S.C. (S) 9601), or (4) any
                             substance or material defined as a 

                                     -14-

 
                        "hazardous chemical" pursuant to the federal Hazard
                        Communication Standard (29 C.F.R. (S) 1910.1200).

                   (ii) "Environmental Laws" means all federal, state, local,
                        and foreign laws and regulations relating to pollution
                        or protection of human health or the environment
                        (including, without limitation, ambient air, surface
                        water, ground water, wetlands, land surface, subsurface
                        strata, and indoor and outdoor workplace), including,
                        without limitation, (1) laws and regulations relating to
                        emissions, discharges, releases, or threatened releases
                        of Substances of Concern, and (2) common law principles
                        of tort liability.

               (b) Tenant shall not, either with or without negligence, injure,
                   overload, deface, damage or otherwise harm any Leased
                   Property or any part or component thereof; commit any
                   nuisance; permit the emission of any Substances of Concern;
                   allow the release or other escape of any biologically or
                   chemically active substances or materials or other Substances
                   of Concern so as to impregnate, impair or in any manner
                   affect, even temporarily, any element or part of any Leased
                   Property or neighboring property, or allow the storage or use
                   of such substances or materials in any manner not sanctioned
                   by law and by reasonable standards prevailing in the
                   automobile retail and related industries for the storage and
                   use of such substances or materials; nor shall Tenant permit
                   the occurrence of objectionable noise or odors; or make,
                   allow or suffer any waste whatsoever to any Leased Property.
                   Landlord may inspect each Leased Property from time to time,
                   and Tenant will cooperate with such inspections.

               (c) Notwithstanding the foregoing, Tenant anticipates using,
                   storing and disposing of certain Substances of Concern in
                   connection with operation of its Business. Such Substances of
                   Concern include, but are not limited to, the following: motor
                   oil, waste motor oil and filters, transmission fluid,
                   antifreeze, refrigerants, waste paint and lacquer thinner,
                   batteries, solvents, lubricants, degreasing agents, gasoline
                   and diesel fuels. Tenant shall ascertain and comply fully
                   with all applicable Environmental Laws and environmental
                   standards and requirements set by federal, state or local
                   laws, rules, regulations or governmental directives related
                   to the Leased Properties or Tenant's use or occupancy of the
                   Leased Property ("Environmental Standards"), including but
                   not limited to any laws or standards (a) regulating the use,
                   storage, generation or disposal of Substances of Concern, (b)
                   regulating the monitoring or use of any underground or

                                     -15-

 
                   aboveground storage tanks at the Leased Properties, or (c)
                   establishing any permitting, notification or reporting
                   requirements. As promptly as practicable after the
                   Commencement Date (but in no event later than 120 days
                   thereafter), Tenant shall establish and implement a program
                   of compliance with all applicable Environmental Laws and
                   Environmental Standards ("Environmental Compliance Program").
                   Tenant shall update such Environmental Compliance Program
                   every three (3) years during the Term. Tenant shall submit
                   its Environmental Compliance Program and each update thereto
                   to Landlord; provided, however, such submittal shall not
                   relieve Tenant of its obligations pursuant to this Section 5.
                   Tenant's Environmental Compliance Program shall include a
                   program for monitoring Tenant's compliance with Environmental
                   Laws and Environmental Standards and a plan for correcting
                   immediately any incident of noncompliance. Tenant shall
                   comply with its Environmental Compliance Program.

               (d) In the event of any noncompliance with any Environmental Laws
                   or Environmental Standards or any spill, release or discharge
                   of Substances of Concern in a reportable quantity under
                   federal, state or local law, Tenant shall:

                   (i)   give Landlord immediate notice of the incident by
                         telephone or facsimile, providing as much detail as
                         possible. Such notice shall be provided to Landlord's
                         National Dealership Real Estate Manager or to such
                         other person as Landlord shall designate in accordance
                         with Section 16.01 below;

                   (ii)  as soon as possible, but no later than seventy-two (72)
                         hours, after discovery of an incident of noncompliance,
                         submit a written report to Landlord, identifying the
                         source or case of the noncompliance or spill, release
                         or discharge (including the names and quantities of any
                         Substances of Concern involved) and the method or
                         action required to correct the problem; and

                   (iii) cooperate with Landlord or its designated agents or
                         contractors with respect to the investigation and
                         correction of such problem.

               Tenant shall also be solely responsible for providing any notice
to any federal, state or local governmental authority required by applicable
laws and regulations as a result of such incident.

                                     -16-

 
          5.03      Audits.  Landlord shall have the right to conduct, at its
                    ------                                                   
expense, periodic audits of Tenant's compliance with the Environmental
Compliance Program and management of Substances of Concern at the Leased
Properties and/or periodic tests of air, soil, surface water or groundwater at
or near the Leased Properties.  Landlord shall not be obligated to provide
Tenant with the results of any audit or tests unless Tenant requests them in
writing or such results are the basis for a claim by Landlord that Tenant has
breached its obligations under this Lease or a demand by Landlord that Tenant
modify its Environmental Compliance Program or operations or remediate or remove
a spill, release or discharge of Substances of Concern in accordance with
Section 5.06 below. Tenant agrees promptly to modify its Environmental
Compliance Program or the conduct of its operations in accordance with
Landlord's reasonable recommendations directed at improvement of Tenant's
handling, use and disposal of Substances of Concern  in, on or from any Leased
Property. If, as a result of an environmental audit performed by Landlord with
respect to any Leased Property, Landlord reasonably determines in its judgment
that alterations or improvements of equipment or buildings located on the Leased
Property are necessary, Tenant shall perform such alterations or improvements as
are reasonable under the circumstances and pay all costs and expenses relating
thereto.   If Tenant shall fail to pay any such costs or expenses, Tenant shall
deposit with Landlord the full amount necessary to pay such costs in full within
ten (10) days of Landlord's demand. Nothing contained herein shall be construed
to obligate or require Landlord to perform any audits, tests, inquiry or
investigation.  Should Landlord elect or be required to disclose to Tenant the
results of any audit or tests, Landlord shall not be liable in any way for the
truth or accuracy of such information.

          5.04      Landlord's Option Re: Compliance.  If Tenant, after notice
                    --------------------------------                          
from Landlord, fails to comply with or perform any of its obligations pursuant
to this Section 5, including, but not limited to, obligations to clean up
spills, releases or discharges, Landlord may, but shall not be obligated to,
perform such obligations and Tenant shall pay Landlord within ten (10) days of
demand Landlord's costs therefor, including any overhead and administrative
costs.

          5.05      Environmental Indemnification.  Tenant shall indemnify and
                    -----------------------------                             
hold harmless Landlord from and against all demands, claims, causes of action,
fines, penalties, damages (including punitive and consequential damages),
losses, liabilities (including strict liability), judgments, and expenses
(including, without limitation, attorneys' fees, court costs, and the costs set
forth in Section 9.06) imposed upon or asserted against Tenant, Landlord or any
Leased Property on account of any Environmental Law (irrespective of whether
there has occurred any violation of any Environmental Law) relating to any
Leased Property, including (a) response costs and costs of removal and remedial
action incurred by the United States Government or any state or local
governmental unit to any other person or entity, or damages from injury to or
destruction or loss of natural resources, including the reasonable costs of
assessing such injury, destruction or loss, incurred pursuant to any
Environmental Law, (b) costs and expenses of abatement, investigation, removal,
remediation, correction or cleanup, fines, damages, response costs or penalties
which arise from the provisions of any Environmental Law, (c) liability for
personal injury or property damage arising under any statutory or common-law
tort theory, including damages assessed for the maintenance of a public or
private nuisance or for carrying on of a dangerous activity, (d) liability by
reason of a breach of 

                                     -17-

 
an environmental representation or warranty by Tenant, and (e) failure of Tenant
to complete in a timely manner alterations or improvements of equipment or
buildings located on the Leased Property deemed necessary or advisable by
Landlord pursuant to Section 5.03 in a manner acceptable to Landlord.
Notwithstanding anything to the contrary contained in this Lease, Tenant shall
have no obligation to indemnify Landlord for any releases of Substances of
Concern, or remove or remediate any Substances of Concern released by, the
actions of Landlord, or Landlord's agents, employees or representatives.

          5.06      Tenant's Cleanup Obligation.  If any spill, release or
                    ---------------------------                           
discharge of Substances of Concern occurs on, at or from the Leased Properties
during the Term, Tenant shall promptly take all actions, at its sole expense, as
are necessary to remove or remediate such spill, release or discharge and to
bring the Leased Property into compliance with the Environmental Laws, provided
that Landlord's approval of such action shall first be obtained, which approval
shall not be unreasonably withheld so long as such actions would not potentially
have any material adverse effect on the Leased Property.

          5.07      Existing Environmental Conditions.  Tenant acknowledges that
                    ---------------------------------                           
it has had the opportunity to review the Environmental Reports attached hereto
as Exhibit 5.07.  Tenant hereby represents that it has reviewed and is aware of
the matters disclosed in the Environmental Reports.

                    As a material consideration for Landlord's willingness to
enter into this Lease, Tenant, for itself and its Affiliates, and each of their
shareholders, directors, officers, employees, agents, contractors,
representatives, insurers, successors and assigns hereby waives and releases
Landlord and its Affiliates and each of their shareholders, directors, officers,
employees, representatives, agents, contractors, representatives, insurers,
successors and assigns from any and all claims, demands, liabilities, costs,
expenses, causes of action and rights of action whatsoever, past, present or
future, known or unknown, suspected or unsuspected, which arise out of or relate
in any way to the violation of Environmental Laws or the use, storage,
treatment, disposal, presence, spill, release, or discharge of Substances of
Concern at, on or from the Leased Properties before the Commencement Date
(collectively, the "Released Claims").

                    In the event that Landlord is ordered by a governmental
agency, or determines that it is in its best interest, to remedy any violation
of Environmental Laws or to remove or remediate any Substances of Concern
present on, under or about the Leased Properties on the Commencement Date, or
spilled, released or discharged on, at or from the Leased Properties before the
Commencement Date, Tenant shall immediately upon notice from Landlord take all
actions, at Tenant's sole expense, to promptly complete such removal or
remediation.

         5.08       Survival of Tenant's Obligations.  Tenant's obligations
                    --------------------------------                       
under this Section 5 shall survive the expiration or earlier termination of this
Lease.  During any period of time employed by Tenant after the termination of
this Lease to complete the removal from the Leased Property of any Substances of
Concern, if the premises are not rentable for uses contemplated under this
Lease, 

                                     -18-

 
Tenant shall continue to pay the full amount of Rent due under this Lease, which
Rent shall be prorated daily for the final month of such period of time.


                                   ARTICLE VI
                         USE AND ACCEPTANCE OF PREMISES

          6.01      Use of Leased Properties.  For so long as this Lease is in
                    ------------------------                                  
effect (including following any sublease or assignment thereof), Tenant shall
use and occupy each Leased Property exclusively for the purpose of conducting
the Business or for any other legal purpose for which such Leased Property is
being used as of the Commencement Date, and for no other purpose without the
prior written consent of Landlord.  Tenant shall obtain and maintain all
approvals, licenses, and consents needed to use and operate the Leased
Properties for such purposes. Tenant shall promptly deliver to Landlord complete
copies of surveys, examinations, certification and licensure inspections,
compliance certificates, and other similar reports issued to Tenant by any
governmental agency.

          6.02      Acceptance of Leased Properties.  Except as otherwise
                    -------------------------------                      
specifically provided in this Lease, Tenant acknowledges (i) Tenant and its
agents have had an opportunity to inspect each Leased Property; (ii) Tenant has
found each Leased Property fit for Tenant's use; (iii) delivery of each Leased
Property to Tenant is in an "as-is" condition; (iv) Landlord is not obligated to
make any improvements or repairs to any Leased Property; and (v) the roof,
walls, foundation, heating, ventilating, air conditioning, telephone, sewer,
electrical, mechanical, utility, plumbing, and other portions of each Leased
Property are in good working order.  Tenant waives any claim or action against
Landlord with respect to the condition of any  Leased Property.  LANDLORD MAKES
NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, IN RESPECT OF THE LEASED
PROPERTIES OR ANY PART THEREOF, EITHER AS TO ITS FITNESS FOR USE, DESIGN OR
CONDITION OR ANY PARTICULAR USE OR PURPOSE OR OTHERWISE, AS TO QUALITY OR THE
MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT, IT BEING AGREED THAT ALL SUCH
RISKS ARE TO BE BORNE BY TENANT.

          6.03      Conditions of Use and Occupancy.  Tenant agrees that during
                    -------------------------------                            
the Term it shall use and keep each Leased Property in a careful, safe and
proper manner; not commit or suffer waste thereon; not use or occupy any Leased
Property for any unlawful purposes; not use or occupy any Leased Property or
permit the same to be used or occupied, for any purpose or business deemed extra
hazardous on account of fire or otherwise; keep each Leased Property in such
repair and condition as may be required by the local board of health, or other
city, state or federal authorities, free of all cost to Landlord; not permit any
acts to be done which will cause the cancellation, invalidation, or suspension
of any insurance policy; and permit Landlord and its agents to enter upon each
Leased Property at all reasonable times after notice to Tenant to examine the
condition thereof.  In addition, at any time and from time to time upon not less
than fifteen (15) days prior written notice, Tenant shall permit Landlord and
any mortgagee or lender and their authorized representatives, to inspect the
Leased Properties during normal Business hours, provided that such inspections
shall not unreasonably interfere with Business of Tenant.

                                     -19-

 
          6.04      Financial Statements and Other Information.  Tenant shall
                    ------------------------------------------               
provide Landlord and any mortgagee or lender regularly (or more often as may be
reasonably requested by Landlord in writing), the following financial
information: (a) as to each Leased Property within thirty (30) days after each
fiscal quarter during the Term or any Extension Term, as the case may be,
(except the fourth quarter), Tenant-prepared financial statements prepared in
accordance with generally accepted accounting principles ("GAAP"), excluding
lifo provisions and income tax provisions, consistently applied; and (b) as to
each Leased Property and itself, Tenant shall use its best efforts to provide
Landlord within ninety (90) days after the end of each fiscal year of Tenant
during the Term or any Extension Term, as the case may be, and in no event later
than one hundred and twenty (120) days after the end of each fiscal year of
Tenant during the Term or any Extension Term, as the case may be, financial
statements, audited, reviewed or compiled by a certified public accountant (the
"Annual Financial Statements").  Tenant shall also deliver to Landlord such
additional financial information as Landlord may reasonably request, provided
the same is of a type normally maintained by Tenant or can be obtained without
undue cost or burden on Tenant's personnel and does not constitute information
which Tenant reasonably determines to be proprietary or confidential.
Additionally, upon Landlord's request, Tenant shall provide Landlord with copies
of Tenant's annual capital expenditure budgets for each Leased Property and any
reports generated by Tenant regarding maintenance and repairs of each Leased
Property. The parties acknowledge and agree that the Sellers and their
affiliates are required under this Agreement and the Company Leases to provide
to the Company certain confidential financial information (the "Confidential
Information") with respect to the business conducted on the Leased Properties.
The Company agrees to use the Confidential Information solely for the purposes
of monitoring compliance with the terms of this Agreement and the Company
Leases, and the Confidential Information shall be disclosed only to those of the
Company's employees, advisors and consultants to whom it is necessary for such
purposes. Moreover, the Company will use its best efforts to implement policies
and procedures at the Board of Trustees level so as to minimize the disclosure
of Confidential Information to Trustees having interest in businesses that
compete with the Sellers and their affiliates.


                                  ARTICLE VII
              REPAIRS, COMPLIANCE WITH LAWS, AND MECHANICS' LIENS

          7.01      Maintenance.  Tenant shall maintain each Leased Property in
                    -----------                                                
good order, repair and appearance, and repair each Leased Property, including
without limitation, all interior and exterior, structural and nonstructural
repairs and replacements to the roof, foundations, exterior walls, building
systems, HVAC systems, parking areas, sidewalks, water, sewer and gas
connections, pipes, and mains.  Tenant shall pay as Additional Rent the full
cost of such maintenance, repairs, and replacements, however the Tenant shall
have the right to require Landlord to pay for repairs, maintenance or
replacements that would cost in excess of $50,000 and have Landlord adjust the
Base Annual Rent upwards by multiplying such amount expended by eleven and
30/100 percent (11.3%); provided that if the Tenant exercises this right within
one year of the end of the Term or any Extension Term, Tenant shall renew this
Lease for the upcoming Extension Term (if Tenant exercises this right within one
year of the end of the Second Extension Term, Tenant shall renew this 

                                    - 20 -

 
Lease for a Third Extension Term at a rental rate determined by the procedures
for determining the rental rate for the Second Extension Term). Tenant shall
maintain all drives, sidewalks, parking areas, and lawns on or about each Leased
Property in a clean and orderly condition, free of accumulations of dirt,
rubbish, snow and ice. Tenant shall permit Landlord to inspect each Leased
Property at all reasonable times, and shall implement all reasonable suggestions
of Landlord as to the maintenance and repair of each Leased Property.

          7.02      Compliance with Laws.  Tenant shall comply with all laws,
                    --------------------                                     
ordinances, orders, rules, regulations, and other governmental requirements
relating to the use, condition, or occupancy of each Leased Property, whether
now or hereafter enacted and in force including without limitation:  (a)
licensure requirements for operation of the Business; (b) requirements of any
board of casualty insurance underwriters or insurance service office for any
other similar body having jurisdiction over any Leased Property; (c) all zoning
and building codes; and (d) Environmental Laws.  At Landlord's request, from
time to time, Tenant shall deliver to Landlord copies of certificates or permits
evidencing compliance with such laws, including without limitation, copies of
any applicable licenses, certificates of occupancy and building permits.  Tenant
shall provide Landlord with copies of any notice from any governmental authority
alleging any non-compliance by Tenant or any Leased Property with any of the
foregoing requirements and such evidence as Landlord may reasonably require of
Tenant's remediation thereof.  Tenant hereby agrees to defend, indemnify and
hold Landlord, its agents, and employees from and against any and all demands,
claims, causes of action, fines, penalties, liabilities (including strict
liability), judgments, costs and expenses (including, without limitation,
attorneys' fees, court costs, and the costs set forth in Section 9.06) resulting
from any failure by Tenant to comply with any laws, ordinances, rules,
regulations, and other governmental requirements.

          7.03      Required Alterations.  Tenant shall, at Tenant's sole cost
                    --------------------                                      
and expense, make any additions, changes, improvements or alterations to each
Leased Property, including structural alterations, which may be required by any
governmental authorities, including those required to continue to satisfy any
licensure requirements related to the operation of the Business, whether such
changes are required by Tenant's use, changes in the law, ordinances, or
governmental regulations, defects existing as of the date of this Lease, or any
other cause whatsoever.  Tenant shall provide thirty (30) days prior written
notice to Landlord of any changes to a Leased Property pursuant to this Section
7.03 which involve changes to the structural integrity thereof or materially
affect the operational capabilities thereof.  All such additions, changes,
improvements or alterations shall be deemed to be a Tenant Improvement and shall
comply with all laws relating to such alterations and with the provisions of
Section 8.01.

          7.04      Mechanics' Liens.  Tenant shall have no authority to permit
                    ----------------                                           
or create a lien against Landlord's interest in any Leased Property, and Tenant
shall post notices or file such documents as may be required to protect
Landlord's interest in each Leased Property against liens. Tenant hereby agrees
to defend, indemnify, and hold Landlord harmless from and against any mechanics'
liens against any Leased Property by reason of work, labor services or materials
supplied or claimed to have been supplied on or to such Leased Property.  Tenant
shall immediately remove, 

                                    - 21 -

 
bond-off, or otherwise obtain the release of any mechanics' lien filed against
any Leased Property. Tenant shall pay all expenses in connection therewith,
including without limitation, damages, interest, court costs and reasonable
attorneys' fees.

          7.05      Replacements of Fixtures.  Tenant shall not remove Fixtures
                    -------------------------                                  
from any  Leased Property except to replace such Fixtures with other items used
for similar or analogous purposes, which replacement items are of equal or
greater quality and value.  Items being replaced by Tenant may be removed and
shall become the property of Tenant and items replacing the same shall be and
remain the property of Landlord.  Tenant shall execute, upon written request
from Landlord, any and all documents necessary to evidence Landlord's ownership
of the Fixtures and replacements therefor. Tenant may not finance replacements
by security agreement or equipment lease unless:  (a) Landlord has consented to
the terms and conditions of the equipment lease or security agreement; (b) the
equipment lessor or lender has entered into a non-disturbance agreement with
Landlord upon terms and conditions acceptable to Landlord, including without
limitation (i) Landlord shall have the right (but not the obligation) to assume
such security agreement or equipment lease upon the occurrence of an Event of
Default by Tenant hereunder; (ii) the equipment lessor or lender shall promptly
notify Landlord of any default by Tenant under the equipment lease or security
agreement and give Landlord a reasonable opportunity to cure such default; and
(iii) Landlord shall have the right to assign its rights under the equipment
lease, security agreement, or non-disturbance agreement; (c) the equipment
lessor or lender shall subordinate its security interest to the security
interest of any of Landlord's lessors, mortgagors or lenders, whether now
created or hereafter existing, and (d) Tenant shall, within ten (10) days after
receipt of an invoice from Landlord, reimburse Landlord for all costs and
expenses incurred in reviewing and approving the equipment lease, security
agreement, and non-disturbance agreement, including without limitation,
reasonable attorneys' fees and costs.

          7.06      Encroachments; Restrictions.  If any of the Improvements
                    ---------------------------                             
shall, at any time, encroach upon any property, street or right-of-way adjacent
to a Leased Property, or shall violate the agreements or conditions contained in
any restrictive covenant or other agreement affecting a Leased Property, other
than one which is created or consented to by Landlord without Tenant's consent,
or shall impair the rights of others under an easement or right-of-way to which
a Leased Property is subject, other than one which is created or consented to by
Landlord without Tenant's consent, then promptly upon the request of Landlord or
at the request of any person affected by any such encroachment, violation or
impairment, Tenant shall, at its expense, subject to its right to contest the
existence of any encroachment, violation or impairment and in such case, in the
event of an adverse final determination, either (a) obtain valid and effective
waivers or settlements of all claims, liabilities and damages resulting from
each such encroachment, violation or impairment, whether the same shall affect
Landlord or Tenant or (b) make such changes in the Improvements and take such
other actions as shall be necessary to remove such encroachment and to end such
violation or impairment, including, if necessary, the alteration of
improvements.  Any such alteration shall be made in conformity with the
requirements of Article VIII.

                                    - 22 -

 
                                 ARTICLE VIII
                   ALTERATIONS AND SIGNS; TENANT'S PROPERTY;
                  CAPITAL ADDITIONS TO THE LEASED PROPERTIES

          8.01      Tenant's Right to Construct.  As to each Leased Property,
                    ---------------------------                              
during the Term of this Lease or any Extension Term, as the case may be, so long
as no Event of Default shall have occurred and be continuing as to such Leased
Property, Tenant may make Capital Additions (as defined herein), or other
alterations, additions, changes and/or improvements to such Leased Property as
deemed necessary or useful to operate such Leased Property for Tenant's Business
(individually, a "Tenant Improvement," or collectively, the "Tenant
Improvements").  "Capital Additions" shall mean the construction of one or more
new buildings or one or more additional structures annexed to any portion of any
of the Improvements on a Leased Property, which are constructed on any parcel
or portion of the Land comprising a Leased Property, including the construction
of a new floor, or the repair, replacement, restoration, remodeling or
rebuilding of the Improvements or any portion thereof on a Leased Property which
are not normal, ordinary or recurring to maintain such Leased Property.  Except
as otherwise agreed to by Landlord herein or otherwise in writing, any such
Tenant Improvement or Capital Addition shall be made at Tenant's sole expense
and shall become the property of Landlord upon termination of this Lease.
Unless made on an emergency basis to prevent injury to person or property, as to
each Leased Property, Tenant must obtain Landlord's prior written approval, such
approval not to be unreasonably withheld or delayed, for any Capital Addition or
for any Tenant Improvement which is not a Capital Addition and which has a cost
of more than One Hundred Thousand Dollars ($100,000) or a cost which, when
aggregated with the costs of all such Tenant Improvements on such Leased
Property in a given Lease Year, would cause the total costs of all such Tenant
Improvements on such Leased Property to exceed Two Hundred Fifty Thousand
Dollars ($250,000).  Additionally, in connection with any Tenant Improvement,
including any Capital Addition, Tenant shall provide Landlord with copies of any
plans and specification therefor, Tenant's budget relating thereto, any required
governmental permits or approvals, any construction contracts or agreements
relating thereto, and any other information relating to such Tenant Improvement
as Landlord shall reasonably request.

          8.02      Scope of Right.  Subject to Section 8.01 herein and Section
                    --------------                                             
7.03 concerning required alterations, at Tenant's cost and expense, Tenant shall
have the right to:

               (a)  seek any governmental approvals, including building permits,
                    licenses, conditional use permits and any certificates of
                    need that Tenant requires to construct any Tenant
                    Improvement;

               (b)  erect upon each Leased Property such Tenant Improvements as
                    Tenant deems desirable;

                                    - 23 -

 
               (c)  make additions, alterations, changes and improvements in any
                    Tenant Improvement so erected; and

               (d)  engage in any other lawful activities that Tenant determines
                    are necessary or desirable for the development of each
                    Leased Property in accordance with the Tenant's Business;

provided, however, Tenant shall not make any Tenant Improvement which would, in
Landlord's reasonable judgment, impair the value of the Leased Property or the
Tenant's Business without Landlord's prior written consent and provided, further
that Tenant shall not be permitted to create a mortgage, lien or any other
encumbrance on any Leased Property without Landlord's prior written consent.

          8.03      Cooperation of Landlord.  Landlord shall cooperate with
                    -----------------------                                
Tenant and take such actions, including the execution and delivery to Tenant of
any applications or other documents, reasonably requested by Tenant in order to
obtain any governmental permits, licenses or approvals sought by Tenant to
construct any Tenant Improvement within fifteen (15) business days following the
later of:  (a) the date Landlord receives Tenant's request or (b) the date of
delivery of any such application or document to Landlord; provided, the taking
of such action by Landlord, including the execution of said applications or
documents, shall be without cost to Landlord (or if there is a cost to Landlord,
such cost shall be reimbursed by Tenant), shall not cause Landlord to be in
violation of any law, ordinance or regulation, and shall not be deemed a waiver
by Landlord of any of its rights or of any of Tenant's obligations, including
but not limited to indemnification.

           8.04     Commencement of Construction.  Tenant agrees that:
                    ----------------------------                      

               (a)  Tenant shall diligently seek all governmental approvals
                    relating to the construction of any Tenant Improvement;

               (b)  Once Tenant begins the construction of any Tenant
                    Improvement, Tenant shall diligently oversee any such
                    construction to completion in accordance with applicable
                    insurance requirements and the laws, rules and regulations
                    of all governmental bodies or agencies having jurisdiction
                    over the subject Leased Property;

               (c)  Landlord shall have the right at any time and from time to
                    time to post and maintain upon each Leased Property such
                    notices as may be necessary to protect Landlord's interest
                    from mechanics' liens, materialmen's liens or liens of a
                    similar nature;

               (d)  Tenant shall not suffer or permit any mechanics' liens or
                    any other claims or demands arising from the work of
                    construction of any Tenant Improvement to be enforced
                    against any Leased Property or 

                                    - 24 -

 
                    any part thereof, and Tenant agrees to hold Landlord, its
                    agents and employees and said Leased Property free and
                    harmless from all demands, claims, causes of action, fines,
                    penalties, damages (including punitive and consequential
                    damages), losses, liabilities (including strict liability),
                    judgments, costs and expenses (including, without
                    limitation, attorneys' fees, court costs, and the costs set
                    forth in Section 9.06) incurred in connection with or
                    arising therefrom;

               (e)  All work shall be performed in a satisfactory and
                    workmanlike manner consistent with standards in the
                    industry; and

               (f)  Subject to Section 8.08 in the case of Capital Additions,
                    Tenant shall not secure any construction or other financing
                    for the Tenant Improvements which is secured by a portion of
                    any Leased Property without Landlord's prior written
                    consent, and any such financing (i) shall not exceed the
                    cost of the Tenant Improvements, (ii) [intentionally
                    omitted] (iii) shall be limited solely to Tenant's interest
                    in the subject Leased Property.

          8.05      Rights in Tenant Improvements.  Notwithstanding anything to
                    ------------------------------                             
the contrary in this Lease, all Tenant Improvements existing on the Leased
Property or constructed upon each Leased Property pursuant to Section 8.01, any
and all subsequent additions thereto and alterations and replacements thereof
shall be the sole and absolute property of Tenant during the Term and any
Extension Term, as the case may be, of this Lease (in respect of such Leased
Property).  Upon the expiration or early termination of this Lease in respect of
a Leased Property, all such Tenant Improvements located thereon shall become the
property of Landlord.  Without limiting the generality of the foregoing, prior
to the expiration or early termination of this Lease in respect of a Leased
Property, Tenant shall be entitled to all federal and state income tax benefits
associated with all Tenant Improvements located on such Leased Property.

          8.06      Personal Property.  Tenant shall install, place, and use on
                    -----------------                                          
each Leased Property such fixtures, furniture, equipment, inventory and other
personal property in addition to the Fixtures as may be required or as Tenant
may, from time to time, deem necessary or useful to operate such Leased Property
in the operation of the Business.

          8.07      Requirements for the Tenant's Personal Property.  Tenant
                    -----------------------------------------------         
shall comply with all of the following requirements in connection with the
Tenant's Personal Property:

               (a)  RESERVED.

               (b)  The Tenant's Personal Property shall be installed in a good
                    and workmanlike manner, in compliance with all governmental
                    laws, 

                                    - 25 -

 
                    ordinances, rules, and regulations and all insurance
                    requirements, and be installed free and clear of any
                    mechanics' liens.

               (c)  Tenant shall, at Tenant's sole cost and expense, maintain,
                    repair, and replace the Tenant's Personal Property.

               (d)  Tenant shall, at Tenant's sole cost and expense, keep the
                    Tenant's Personal Property insured against loss or damage by
                    fire, vandalism and malicious mischief, sprinkler leakage,
                    and other physical loss perils commonly covered by fire and
                    extended coverage, boiler and machinery, and difference in
                    conditions insurance (which insurance shall meet the
                    requirements of Section 4.03 hereof) in an amount not less
                    than the full replacement cost thereof or such other amount
                    as appears on a schedule submitted by Tenant to Landlord,
                    which schedule shall be subject to Landlord's approval, and
                    Tenant shall use the proceeds from any such policy for the
                    repair and replacement of such items of Tenant's Personal
                    Property; provided, however, that if Landlord fails to
                    object to the schedule so submitted by Tenant within five
                    (5) business days of Landlord's receipt of such schedule,
                    Landlord's approval of such schedule shall be deemed given.

               (e)  Tenant shall pay all Impositions and other taxes applicable
                    to Tenant's Personal Property.

               (f)  If Tenant's Personal Property is damaged or destroyed by
                    fire or otherwise, Tenant shall promptly repair or replace
                    Tenant's Personal Property unless Tenant is entitled to and
                    elects to terminate the Lease pursuant to Section 10.05.

               (g)  As to each Leased Property, unless an Event of Default (or
                    any event which, with the giving of notice or lapse of time,
                    or both, would constitute an Event of Default) has occurred
                    and remains uncured beyond any applicable grace period,
                    Tenant may remove Tenant's Personal Property from such
                    Leased Property from time to time provided that:  (i) the
                    items removed are not required or necessary to operate the
                    Business on such Leased Property (unless such items are
                    being replaced by Tenant) and (ii) Tenant promptly repairs
                    any damage to such Leased Property resulting from the
                    removal of Tenant's Personal Property.

               (h)  As to each Leased Property, Tenant shall remove all of
                    Tenant's Personal Property upon the termination or
                    expiration of the Lease and shall promptly repair any damage
                    to such Leased Property resulting 

                                    - 26 -

 
                    from the removal thereof to the reasonable satisfaction of
                    Landlord; provided, however, if Tenant fails to remove
                    Tenant's Personal Property from such Leased Property within
                    thirty (30) days after the termination or expiration of this
                    Lease with respect thereto, then Tenant shall be deemed to
                    have abandoned such items of Tenant's Personal Property, all
                    of which shall become the property of Landlord, and Landlord
                    may remove, store and dispose of such property and Tenant
                    shall have no claim or right against Landlord for such
                    property or the value thereof regardless of the disposition
                    thereof by Landlord. Tenant shall pay Landlord, upon demand,
                    all expenses incurred by Landlord in removing, storing, and
                    disposing of such items of Tenant's Personal Property and
                    repairing any damage caused by such removal. Tenant's
                    obligations hereunder shall survive the termination or
                    expiration of this Lease as to such Leased Property.

               (i)  Tenant shall perform its obligations under any equipment
                    lease or security agreement for Tenant's Personal Property.

          8.08      Financings of Capital Additions to a Leased Property.
                    ----------------------------------------------------- 
Landlord may, but shall be under no obligation to, provide or arrange
construction, permanent or other financing for any Capital Addition proposed to
be made to a Leased Property by Tenant.  Any financing so provided by Landlord
shall be made in accordance with, and subject to, a written Addendum to this
Lease.


                                  ARTICLE IX
                             DEFAULTS AND REMEDIES

          9.01      Events of Default.  The occurrence of any one or more of the
                    -----------------                                           
following shall be an event of default ("Event of Default") hereunder:

               (a)  Tenant fails to pay in full any installment of Rent, or any
                    other monetary obligation payable by Tenant to Landlord
                    hereunder, within ten (10) days after the due date thereof
                    and after written notice thereof and an opportunity to cure
                    within a ten (10) day period after such notice is given to
                    Tenant by Landlord.  In the event of Tenant's failure to
                    make timely payment of such obligations two (2) times during
                    any twelve (12) month period, each subsequent such failure
                    within the twelve (12) months immediately following such
                    second failure shall immediately constitute an Event of
                    Default, and Landlord shall not be required to provide
                    notice thereof, nor shall Tenant have any further
                    opportunity to cure such failure;

                                    - 27 -

 
               (b)  Tenant fails to observe and perform any covenant (other than
                    the covenant in respect of insurance set forth in Article
                    IV), condition or agreement hereunder to be performed by
                    Tenant (except those described in Section 9.01(a) of this
                    Lease) and such failure continues for a period of twenty
                    (20) days after written notice thereof is given to Tenant by
                    Landlord; or if, by reason of the nature of such default,
                    the same cannot with due diligence be remedied within said
                    twenty (20) days, such failure will not be deemed to
                    continue if Tenant proceeds promptly and with due diligence
                    to remedy the failure and diligently completes the remedy
                    thereof; provided, however, said cure period will not extend
                    beyond forty (40) days if the facts or circumstances giving
                    rise to the default are creating a further harm to Landlord
                    or the subject Leased Property and Landlord makes a good
                    faith determination that Tenant is not undertaking remedial
                    steps under the terms of this Lease;

               (c)  If Tenant:  (i) admits in writing its inability to pay its
                    debts generally as they become due; (ii) files a petition in
                    bankruptcy or a petition to take advantage of any insolvency
                    act; (iii) makes an assignment for the benefit of its
                    creditors; (iv) is unable to pay its debts as they mature;
                    (v) consents to the appointment of a receiver of itself or
                    of the whole or any substantial part of its property; or
                    (vi) files a petition or answer seeking reorganization or
                    arrangement under the federal bankruptcy laws or any other
                    applicable law or statute of the United States of America or
                    any state thereof;

               (d)  If Tenant, on insolvency proceedings or on a petition in
                    bankruptcy filed against it, is adjudicated as bankrupt or a
                    court of competent jurisdiction enters an order or decree
                    appointing, without the consent of Tenant, a receiver of
                    Tenant of the whole or substantially all of its property, or
                    approving a petition filed against it seeking reorganization
                    or arrangement of Tenant under the federal bankruptcy laws
                    or any other applicable law or statute of the United States
                    of America or any state thereof, and such judgment, order or
                    decree is not vacated, dismissed or set aside within sixty
                    (60) days from the date of the entry thereof;

               (e)  If the estate or interest of Tenant in a Leased Property or
                    any part thereof is levied upon or attached in any
                    proceeding and the same is not vacated or discharged within
                    fifteen (15) days after commencement thereof (unless Tenant
                    is contesting such lien or attachment in accordance with
                    this Lease) or if such estate or interest 

                                    - 28 -

 
                    of Tenant is assigned, conveyed or involuntarily transferred
                    in violation of this Lease;

               (f)  Any representation or warranty of a material nature made by
                    Tenant on behalf of itself or an Affiliate in this Lease or
                    in any certificate, demand or request made pursuant hereto
                    proves to be incorrect, in any material respect and is not
                    cured within the time specified in Section 9.01(b) hereto,
                    as of the date of issuance or making thereof and Landlord
                    notifies Tenant of its knowledge of such incorrectness
                    within six months of discovery.  Tenant shall not be deemed
                    to be in breach of such represention or warranty if the
                    representation or warranty has been made true by Tenant's
                    cure as of the time of the cure;

               (g)  Conviction of Tenant or an Affiliate of a crime or offense
                    constituting a felony in the jurisdiction in which committed
                    or under federal law which conviction results in the
                    termination of the franchise.

               (h)  Termination or relinquishment of the franchise or license
                    pursuant to which Tenant or an Affiliate conducts business
                    on or from any Leased Property, provided that such event
                    shall not constitute an Event of Default if (i) no other
                    Event of Default enumerated in this Section 9.01 shall occur
                    and be continuing, and (ii) at a date no later than twenty-
                    four (24) months following such date of termination or
                    relinquishment, Tenant or an Affiliate has entered into
                    written new or amended franchises or licenses for operation
                    of motor vehicle retail or motor vehicle related businesses
                    at such Leased Property satisfactory to Landlord in its
                    discretion applying commercially reasonable standards;

               (i)  [Intentionally Omitted]

               (j)  A final, non-appealable judgment or judgments for the
                    payment of money not fully covered (excluding deductibles)
                    by insurance is rendered against Tenant and the same remains
                    undischarged, unvacated, unbonded, unappealed or unstayed
                    for a period of thirty (30) consecutive days;

               (k)  Tenant shall fail to observe the covenant in respect to
                    insurance under Article IV provided Landlord shall have
                    provided notice of such failure to Tenant and Tenant shall
                    have failed to cure such failure within three (3) business
                    days of such notice; or

                                    - 29 -

 
               (l)  Except contemporaneously with or after the effective date of
                    a permitted assignment meeting the requirements of Article
                    XIII, if Tenant is liquidated or dissolved, or begins
                    proceedings toward liquidation or dissolution, or in any
                    manner permits the sale or divestiture of substantially all
                    of its assets.

          9.02      Remedies.  To the extent an Event of Default is applicable
                    --------                                                  
only to a specific Leased Property or specific Leased Properties (in accordance
with Section 9.01 above), the remedies set forth herein shall be exercisable
solely with respect to such Leased Property or Leased Properties, and shall not
be exercisable with respect to any other Leased Property.  To the extent an
Event of Default constitutes an Event of Default as to all of the Leased
Properties (in accordance with Section 9.01 above), the remedies set forth
herein shall be exercisable with respect to all of the Leased Properties.
Subject to the foregoing provisions, Landlord may exercise any one or more of
the following remedies upon the occurrence of an Event of Default:

               (a)  Landlord may terminate this Lease, exclude Tenant from
                    possession of the subject Leased Property and use reasonable
                    efforts to lease the subject Leased Property to others.  If
                    this Lease is terminated pursuant to the provisions of this
                    subparagraph (a) with respect to one or more, but less than
                    all, of the Leased Properties identified on Schedule A
                    hereto, Tenant will remain liable to Landlord for the Rent
                    for all of the Leased Properties identified on Schedule A
                    and other sums then due and for the balance of the Term as
                    if the Lease had not been terminated with respect to the
                    subject Leased Property, less the net proceeds, if any, of
                    any re-letting of the subject Leased Property by Landlord
                    subsequent to such termination, after deducting all
                    Landlord's expenses in connection with such re-letting,
                    including without limitation, the expenses set forth in this
                    Section 9.02. Notwithstanding the termination of this Lease
                    with respect to a subject Leased Property, Tenant shall pay
                    to Landlord all amounts due as Rent, and such other amounts
                    then due, under this Lease on the days that such Rent and
                    such other amounts become due and payable as required by
                    this Lease.

               (b)  Without demand or notice, Landlord may re-enter and take
                    possession of the subject Leased Property or any part
                    thereof; and repossess such Leased Property as of Landlord's
                    former estate; and expel Tenant and those claiming through
                    or under Tenant from such Leased Property; and, remove the
                    effects of both or either, without being deemed guilty of
                    any manner of trespass and without prejudice to any remedies
                    for arrears of Rent or preceding breach of covenants or
                    conditions.  If Landlord elects to re-enter, as provided in
                    this paragraph (b) or if Landlord takes possession of such
                    Leased Property 

                                    - 30 -

 
                    pursuant to legal proceedings or pursuant to any notice
                    provided by law, Landlord may, from time to time, without
                    terminating any portion of this Lease, re-let such Leased
                    Property or any part of such Leased Property, either alone
                    or in conjunction with other portions of the Improvements of
                    which such Leased Property are a part, in Landlord's name
                    but for the account of Tenant, for such term or terms (which
                    may be greater or less than the period which would otherwise
                    have constituted the balance of the Term of this Lease) and
                    on such terms and conditions (which may include concessions
                    of free rent, and the alteration and repair of such Leased
                    Property) as Landlord, in its uncontrolled discretion, may
                    determine. Landlord may collect and receive the Rents for
                    such Leased Property. Landlord will not be responsible or
                    liable for any failure to re-let such Leased Property, or
                    any part of such Leased Property, or for any failure to
                    collect any Rent due upon such re-letting; provided that
                    Landlord has used reasonable efforts to re-let. No such re-
                    entry or taking possession of such Leased Property by
                    Landlord will be construed as an election on Landlord's part
                    to terminate this Lease unless a written notice of such
                    intention is given to Tenant. No notice from Landlord under
                    this Lease or under a forcible entry and detainer statute or
                    similar law will constitute an election by Landlord to
                    terminate this Lease unless such notice specifically says
                    so. Landlord reserves the right following any such re-entry
                    or re-letting, or both, to exercise its right to terminate
                    this Lease by giving Tenant such written notice, and, in
                    that event such Lease will terminate as specified in such
                    notice.

               (c)  If Landlord elects to take possession of a Leased Property
                    according to subparagraph (b) of this Section 9.02 without
                    terminating this Lease, Tenant will pay Landlord (A) the
                    Rent and other sums which would be payable under this Lease
                    with respect to such Leased Property if such repossession
                    had not occurred, less (B) the net proceeds, if any, of any
                    re-letting of such Leased Property after deducting all of
                    Landlord's expenses incurred in connection with such re-
                    letting, including without limitation, all repossession
                    costs, brokerage commissions, legal expense, attorneys'
                    fees, expense of employees, alteration, remodeling, repair
                    costs, and expense of preparation for such re-letting. If,
                    in connection with any re-letting, any resulting lease term
                    for the subject Leased Property extends beyond the existing
                    Term or Extension Term, as the case may be, or such Leased
                    Property covered by such re-letting includes areas which are
                    not part of such Leased Property, a fair apportionment of
                    the Rent received from such re-letting and the expenses
                    incurred in connection with such re-letting will be made in
                    determining the net proceeds 

                                    - 31 -

 
                    received from such re-letting. In addition, in determining
                    the net proceeds from such re-letting, any rent concessions
                    will be apportioned over the term of the new lease. Tenant
                    will pay such amounts to Landlord monthly on the days on
                    which the Rent and all other amounts owing under this Lease
                    would have been payable if possession had not been retaken,
                    and Landlord will be entitled to receive the rent and other
                    amounts from Tenant on each such day. Notwithstanding
                    anything herein to the contrary, Landlord, at its option,
                    may collect and apply any Rent received from such re-letting
                    in accordance herewith and in such case shall remit any
                    balance thereof to Tenant. Landlord shall incur no liability
                    or obligation to Tenant arising out of the collection or
                    application of Rent by Landlord hereunder. Landlord shall
                    use reasonable efforts to re-let.

               (d)  Landlord may re-enter the applicable Leased Property and
                    have, repossess and enjoy such Leased Property as if this
                    Lease had not been made, and in such event, Tenant and its
                    successors and assigns shall remain liable for any
                    contingent or unliquidated obligations or sums owing at the
                    time of such repossession.

               (e)  Landlord may take whatever action at law or in equity as may
                    appear necessary or desirable to collect the Rent and other
                    amounts payable hereunder with respect to the subject Leased
                    Property then due and thereafter to become due, or to
                    enforce performance and observance of any obligations,
                    agreements or covenants of Tenant under this Lease.

          9.03      Right of Set-Off.  Landlord may, and is hereby authorized by
                    -----------------                                           
Tenant, at any time and from time to time, after advance notice to Tenant, to
set-off and apply any and all sums held by Landlord in respect of a Leased
Property, including all sums held in any escrow for Impositions, any
indebtedness of Landlord to Tenant, and any claims by Tenant against Landlord,
against any obligations of Tenant under this Lease in respect of such Leased
Property and against any claims by Landlord against Tenant, whether or not
Landlord has exercised any other remedies hereunder. Landlord shall set-off and
apply such sums first, to delinquent real estate taxes, unless such taxes are
being protested in good faith and no lien has attached to any Leased Property
with respect thereto, second, to currently due and owing real estate taxes, and
next, to other Tenant's obligations in the order which Landlord may determine.
The rights of Landlord under this Section are in addition to any other rights
and remedies Landlord may have against Tenant.

          9.04      Performance of Tenant's Covenants.  Landlord may, without
                    ---------------------------------                        
waiving or releasing any obligation of Tenant, and without waiving or releasing
any obligation or default, perform any obligation of Tenant which Tenant has
failed to perform within fifteen (15) business days after Landlord has sent a
written notice to Tenant informing it of its specific failure (provided 

                                    - 32 -

 
no such notice shall be required if Landlord has previously notified Tenant of
such failure under the provisions of Section 9.01). In the event Landlord deems,
in its discretion, that Tenant's failure to perform such obligation has given
rise to an emergency situation, Landlord may perform such obligation without
waiving or releasing any obligation of Tenant, and without waiving or releasing
any obligation or default; provided, however, that Landlord shall notify Tenant
of such performance as soon as it is reasonably practicable to do so. Tenant
shall reimburse Landlord on demand, as Additional Rent, for any expenditures
thus incurred by Landlord and shall pay interest thereon at the New York Prime
Rate.

          9.05      Late Charge.  Any payment not made by Tenant for more than
                    -----------                                               
five (5) business days after the due date shall be subject to a late charge
payable by Tenant as Rent of four percent (2%) of the amount of such overdue
payment.   Notwithstanding the foregoing, in the event that Tenant's payment is
not made more than five (5) business days after the due date more than two (2)
times during any twelve (12) month period, any such subsequent overdue payments
within the twelve (12) months immediately following such second failure shall be
subject to a late charge payable by Tenant as Rent of seven percent (7%) of the
amount of such overdue payment.

          9.06      Litigation; Attorneys' Fees.  Within ten (10) days after
                    ----------------------------                            
Tenant has knowledge of any litigation or other proceeding related to or arising
out of this Agreement or the Leased Property in which claims are asserted in an
amount in excess of $50,000, that (1) may be instituted against Tenant, (2) may
be instituted against any Leased Property to secure or recover possession
thereof, or (3) may affect the title to or the interest of Landlord in any
Leased Property, Tenant shall give written notice thereof to Landlord.  In the
event that Landlord determines that Tenant has failed to give adequate
cooperation or information with respect to any such litigation, investigation,
receivership, administrative, bankruptcy, insolvency or other similar
proceeding, Landlord may, after notice to Tenant, undertake such investigation
or proceeding and Tenant shall pay all reasonable costs and expenses (the
"Costs") related thereto that are incurred by Landlord, whether or not Landlord
has received notice from Tenant of such investigation or proceeding, and whether
or not an Event of Default has actually occurred or has been declared and
thereafter cured, which Costs shall include, without limitation:  (a) the fees,
expenses, and costs of any litigation, investigation, receivership,
administrative, bankruptcy, insolvency or other similar proceeding; (b)
reasonable attorney, paralegal, consulting and witness fees and disbursements;
and (c) the expenses, including, without limitation, lodging, meals, and
transportation, of Landlord and its employees, agents, attorneys, and witnesses
in investigating or preparing for litigation, administrative, bankruptcy,
insolvency or other similar proceedings and attendance at hearings, depositions,
and trials in connection therewith.  Within ten (10) days of Landlord's
presentation of an invoice of Costs incurred by Landlord pursuant to the
preceeding sentence or otherwise incurred by Landlord in enforcing or preserving
Landlord's rights under this Lease, whether or not an Event of Default has
actually occurred or has been declared and thereafter cured, Tenant shall pay
all such Costs.  All such Costs as incurred shall be deemed to be Additional
Rent under this Lease.

                                    - 33 -

 
          9.07      Remedies Cumulative.  The remedies of Landlord herein are
                    -------------------                                      
cumulative to and not in lieu of any other remedies available to Landlord at law
or in equity.  The use of, or failure to use, any one remedy shall not be taken
to exclude or waive the right to use any other remedy.

          9.08      Escrows and Application of Payments.  As security for the
                    -----------------------------------                      
performance of its obligations hereunder, Tenant hereby assigns to Landlord all
its right, title and interest in and to all monies escrowed with Landlord under
this Lease and all deposits with utility companies, taxing authorities, and
insurance companies; provided, however, that Landlord shall not exercise its
rights hereunder with respect to any Leased Property until an Event of Default
has occurred in respect of such Leased Property.  Any payments received by
Landlord under any provisions of this Lease during the existence, or continuance
of an Event of Default shall be applied to Tenant's obligations, first, to
delinquent real estate taxes, unless such taxes are being protested in good
faith and no lien has attached to any Leased Property with respect thereto,
second, to currently due and owing real estate taxes, and next, to other
Tenant's obligations in the order which Landlord may determine.

          9.09      Power of Attorney.  Tenant hereby irrevocably and
                    -----------------                                
unconditionally appoints Landlord, or Landlord's authorized officer, agent,
employee or designee, as Tenant's true and lawful attorney-in-fact, to act,
after an Event of Default, for Tenant in Tenant's name, place, and stead, and
for Tenant's and Landlord's use and benefit, to execute, deliver and file all
applications and any and all other necessary documents or things, to effect a
transfer, reinstatement, renewal and/or extension of any and all licenses and
other governmental authorizations issued to Tenant in connection with Tenant's
operation of the Leased Properties, and to do any and all other acts incidental
to any of the foregoing.  Tenant irrevocably and unconditionally grants to
Landlord as its attorney-in-fact full power and authority to do and perform,
after an Event of Default, every act necessary and proper to be done in the
exercise of any of the foregoing powers as fully as Tenant might or could do if
personally present or acting, with full power of substitution, hereby ratifying
and confirming all that said attorney shall lawfully do or cause to be done by
virtue hereof.  This power of attorney is coupled with an interest and is
irrevocable prior to the full performance of Tenant's obligations hereunder.


                                   ARTICLE X
                            DAMAGE AND DESTRUCTION

          10.01     General.  Tenant shall notify Landlord if any Leased
                    -------                                             
Property is damaged or destroyed by reason of fire or any other cause.  Tenant
shall promptly repair, rebuild, or restore such Leased Property, at Tenant's
expense, so as to make such Leased Property at least equal in value to such
Leased Property existing immediately prior to such occurrence and as nearly
similar to it in character as is practicable and reasonable.  Before beginning
such repairs or rebuilding, or executing any contracts in connection with such
repairs or rebuilding, Tenant will submit for Landlord's approval, which
approval Landlord will not unreasonably withhold or delay, complete and detailed
plans and specifications for such repairs or rebuilding.  Promptly after
receiving Landlord's approval of the plans and specifications, Tenant will begin
such repairs or rebuilding and will oversee the 

                                    - 34 -

 
repairs and rebuilding to completion with diligence, subject, however, to
strikes, lockouts, acts of God, embargoes, governmental restrictions, and other
causes beyond Tenant's reasonable control. Landlord will make available to
Tenant the net proceeds of any fire or other casualty insurance paid to Landlord
for such repair or rebuilding as the same progresses, after deduction of any
costs of collection, including attorneys' fees. Payment will be made against
properly certified vouchers of a competent architect in charge of the work and
approved by Landlord. Prior to commencing the repairing or rebuilding, Tenant
shall deliver to Landlord for Landlord's approval a schedule setting forth the
estimated monthly draws for such work. Landlord will contribute to such payments
out of the insurance proceeds an amount equal to the proportion that the total
net amount received by Landlord from insurers bears to the total estimated cost
of the rebuilding or repairing, multiplied by the payment by Tenant on account
of such work. Landlord may, however, withhold ten percent (10%) from each such
payment and shall disburse such amount after: (a) the work of repairing or
rebuilding is completed and proof has been furnished to Landlord that no lien or
liability has attached or will attach to such Leased Property or to Landlord in
connection with such repairing or rebuilding and (b) Tenant has obtained a
certificate of use and occupancy (or its functional equivalent) for the portion
of such Leased Property being repaired or rebuilt. Upon the completion of
rebuilding or repairing and the furnishing of such proof, the balance of the net
proceeds of such insurance payable to Tenant on account of such repairs or
rebuilding will be paid to Tenant. Tenant will obtain and deliver to Landlord a
temporary or final certificate of occupancy before such Leased Property is
reoccupied for any purpose. Tenant shall complete such repairs or rebuilding
free and clear of mechanic's or other liens, and in accordance with the building
codes and all applicable laws, ordinances, regulations, or orders of any state,
municipal, or other public authority affecting the repairs or rebuilding, and
also in accordance with all requirements of the insurance rating organization,
or similar body. Any remaining proceeds of insurance after such restoration will
be Tenant's property.

          10.02     Landlord's Inspection.  During the progress of such repairs
                    ----------------------                                     
or rebuilding, Landlord and its architects and engineers may, from time to time,
inspect the subject Leased Property and will be furnished, if required by them,
with copies of all plans, shop drawings, and specifications relating to such
repairs or rebuilding.  Tenant will keep all plans, shop drawings, and
specifications available, and Landlord and its architects and engineers may
examine them at all reasonable times. If, during such repairs or rebuilding,
Landlord and its architects and engineers determine that the repairs or
rebuilding are not being done in accordance with the approved plans and
specifications, Landlord will give prompt notice in writing to Tenant,
specifying in detail the particular deficiency, omission, or other respect in
which Landlord claims such repairs or rebuilding do not accord with the approved
plans and specifications.  Upon the receipt of any such notice, Tenant will
cause corrections to be made to any deficiencies, omissions, or such other
respect.  Tenant's obligations to supply insurance, according to Article IV,
will be applicable to any repairs or rebuilding under this Section 10.02.

          10.03     Landlord's Costs.  Tenant shall, within fifteen (15) days
                    ----------------                                         
after receipt of an invoice from Landlord, pay the reasonable costs, expenses,
and fees of any architect or engineer employed by Landlord to review any plans
and specifications and to supervise and approve any 

                                    - 35 -

 
construction, or for any services rendered by such architect or engineer to
Landlord as contemplated by any of the provisions of this Lease, or for any
services performed by Landlord's attorneys in connection therewith; provided,
however, that Landlord will consult with Tenant and notify Tenant of the
estimated amount of such expenses.

          10.04     Rent Abatement.  In the event that the provisions of Section
                    --------------                                              
10.01 above shall become applicable as to any Leased Property, and subject to
the last sentence of this Section 10.04, the applicable Base Annual Rent shall
be abated or reduced proportionately during any period in which, by reason of
such damage or destruction, there is substantial interference with the operation
of the Business of Tenant in such Leased Property, having regard to the extent
to which Tenant may be required to discontinue any Business on such Leased
Property, and such abatement or reduction shall continue for the period
commencing with such destruction or damage and ending with the substantial
completion by Tenant of such work or repair and/or reconstruction.  In the event
that only a portion of any Leased Property is rendered untenantable or incapable
of such use, the Base Annual Rent payable hereunder in respect thereof shall be
reduced proportionately considering the extent to which the Tenant is unable to
practicably use the Leased Property for Business.  Tenant shall use reasonably
diligent efforts to make the Leased Property tenantable and capable of such use.
Notwithstanding any other provision hereof, such rental abatement shall be
limited to the amount of any rental or Business interruption insurance proceeds
actually received by Landlord under Article IV.

          10.05     Substantial Damage During Lease Term.  Provided Tenant has
                    ------------------------------------                      
fully complied with Section 4.01 hereof (including actually maintaining in
effect rental value insurance or Business interruption insurance provided for in
clause (c) thereof) and has satisfied the conditions of the last sentence of
this Section 10.05, if, at any time during the Term or any Extension Term, as
the case may be, of this  Lease, any Leased Property is so damaged by fire or
otherwise that it is Completely Destroyed or Partially Destroyed (as such terms
are hereafter defined), Tenant may, within one hundred and eighty (180) days
after such damage, give notice of its election to terminate this Lease with
respect to such Leased Property and, subject to the further provisions of this
Section, this Lease will cease with respect to such Leased Property on the
thirtieth (30th) day after the delivery of such notice.  If the Lease is so
terminated, Tenant will have no obligation to repair, rebuild or replace such
Leased Property, and the entire insurance proceeds will belong to Landlord.  If
the Lease is not so terminated, Tenant shall rebuild such Leased Property in
accordance with Section 10.01.  If Tenant elects to terminate this Lease
pursuant to this Section 10.05, Tenant will pay (or cause to be paid) to
Landlord, an amount equal to the excess amount, if any, of the book value of the
damaged property as shown in Landlord's financial statements as of the date of
such termination, over the amount of all insurance proceeds received by
Landlord.  A Leased Property shall be deemed to be "Completely Destroyed" if
there is sufficient damage to such Leased Property that Landlord and Tenant
agree to its classification as such.  A Leased Property shall be deemed to be
"Partially Destroyed" if, as a result of damages to it, a substantial part of
the Business (as determined by a reasonable dealer in the trade, in light of
standard trade practices) cannot be conducted on it within one hundred and
eighty (180) days of the occurrence of such damages.  In the event that Landlord
and Tenant are unable to agree to a determination of whether any Leased Property
is Completely 

                                    - 36 -

 
Destroyed, Partially Destroyed or otherwise, such determination shall be made
pursuant to the Arbitration provisions set forth in Article XIV.

          10.06     Damage Near End of Term.  Notwithstanding any provisions of
                    -----------------------                                    
Sections 10.01 or 10.05 to the contrary, if damage to or destruction of any
Leased Property occurs during the last twenty-four (24) months of the Term, and
if such damage or destruction renders the Leased Property Completely Destroyed
or Partially Destroyed, either party shall have the right to terminate this
Lease as to such Leased Property by giving notice to the other within thirty
(30) days after the date of damage or destruction, in which event Landlord shall
be entitled to retain the insurance proceeds and Tenant shall pay to Landlord on
demand the amount of any deductible or uninsured loss arising in connection
therewith; provided, however, that any such notice given by Landlord shall be
void and of no force and effect if Tenant exercises an available option for an
Extension Term with respect to such Leased Property pursuant to provisions of
this Lease within ten (10) business days following receipt of such termination
notice.

          10.07     Risk of Loss.  Notwithstanding anything herein to the
                    ------------                                         
contrary, during the Term or any Extension Term, as the case may be, the risk of
loss of or decrease in the enjoyment and beneficial use of the Leased Properties
in consequence of the damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise is assumed by Tenant, and Landlord
shall in no event be answerable or accountable therefor except in the case of
gross negligence, willful misconduct or breach of this Lease by Landlord
resulting in such damage or destruction.  In addition, all risk of loss or
decrease in enjoyment and beneficial use in consequence of foreclosures,
attachments, levies or executions is assumed by Tenant except for foreclosure
due to Landlord's indebtedness.


                                  ARTICLE XI
                                 CONDEMNATION

          11.01     Total Taking.  If at any time during the Term or any
                    ------------                                        
Extension Term, as the case may be, any Leased Property is totally and
permanently taken by right of eminent domain or by conveyance made in response
to the threat of the exercise of such right ("Condemnation"), this Lease shall
terminate as to such Leased Property on the Date of Taking (which shall mean the
date the condemning authority has the right to possession of the property being
condemned), and Tenant shall promptly pay all outstanding applicable Rent and
other charges through the date of termination, provided, however, this Lease
shall not so terminate if the Condemnation occurred due to the failure of Tenant
to maintain such Leased Property as required by Article VII hereof or other
applicable provisions hereof, whether or not such failure on the part of Tenant
constituted an Event of Default hereunder at the time of the Condemnation.
Landlord shall reimburse to Tenant any Rent paid in advance for any period after
the Condemnation.
 
          11.02     Partial Taking.  If a portion of a Leased Property is taken
                    --------------                                             
by Condemnation, this Lease shall remain in effect as to such Leased Property if
such Leased Property is not thereby 

                                    - 37 -

 
rendered Unsuitable for the continuation of Tenant's Business on that Leased
Property (which shall mean that such Leased Property is in such a state or
condition such that in the good faith judgment of Tenant, reasonably exercised,
it cannot be used on a commercially practicable basis in the operation of the
Business), but if such Leased Property is thereby rendered Unsuitable for the
continuation of Tenant's Business on that Leased Property, this Lease shall
terminate as to such Leased Property on the Date of Taking, provided such
Condemnation was not as a result of Tenant's failure to maintain such Leased
Property as provided for in Section 11.01.

          11.03     Restoration.  If there is a partial taking of any Leased
                    -----------                                             
Property and this  Lease remains in full force and effect pursuant to Section
11.02, Landlord shall retain the amount of any Landlord Award (as hereafter
defined) received by Landlord, Landlord shall apply such Landlord Award to
accomplish all necessary restoration to the Leased Property, and any excess
after such application shall be retained by Landlord.  If there is a partial
taking of any Leased Property and this Lease remains in full force and effect
pursuant to Section 11.02, Tenant shall retain the amount of any Tenant Award
(as hereafter defined) received by Tenant, Tenant shall apply such Tenant Award
to accomplish all necessary restoration of Tenant's property, and any excess
after such application shall be retained by Tenant.  Notwithstanding anything in
this Section to the contrary, in the event that there is a partial taking of any
Leased Property and this  Lease remains in full force and effect pursuant to
Section 11.02, and there is a single Award with respect to such partial taking,
then the Landlord and Tenant shall use their good faith efforts to determine the
proper apportionment of such Award (as hereafter defined) to restoration of
Landlord's and Tenant's respective properties.  In the event that the parties
are unable to agree on such apportionment within thirty (30) days, the parties
shall submit to arbitration of an apportionment subject to the arbitration
provisions set forth in Article XIV.

          11.04     Landlord's Inspection.  During the progress of such
                    ---------------------                              
restoration, Landlord and its architects and engineers may, from time to time,
inspect the subject Leased Property and will be furnished, if required by them,
with copies of all plans, shop drawings, and specifications relating to such
restoration.  Tenant will keep all plans, shop drawings, and specifications
available, and Landlord and its architects and engineers may examine them at all
reasonable times.  If, during such restoration, Landlord and its architects and
engineers determine that the restoration is not being done in accordance with
the approved plans and specifications, Landlord will give prompt notice in
writing to Tenant, specifying in detail the particular deficiency, omission, or
other respect in which Landlord claims such restoration does not accord with the
approved plans and specifications.  Upon the receipt of any such notice, Tenant
will cause corrections to be made to any deficiencies, omissions, or such other
respect.  Tenant's obligations to supply insurance, according to Article IV,
will be applicable to any restoration under this Section.

          11.05     Award Distribution.  In the event that there is a total or
                    ------------------                                        
partial Condemnation of a Leased Property then the Landlord and Tenant shall use
their good faith efforts to determine the proper apportionment of such Award to
Landlord's and Tenant's respective properties.  In the event that the parties
are unable to agree on such apportionment within thirty (30) days, the parties
shall submit to arbitration of an apportionment subject to the arbitration
provisions set forth in Article 

                                    - 38 -

 
XIV. If there is a Condemnation which results in the termination of this Lease,
then only for purposes of determining an apportionment of the condemnation
proceeds, Tenant's leasehold interest shall not be construed to have terminated.

          11.06     Temporary Taking.  The taking of any Leased Property, or any
                    ----------------                                            
part thereof, by military or other public authority shall constitute a taking by
Condemnation only when the use and occupancy by the taking authority has
continued for longer than twenty four (24) months. During any such twenty-four
(24) month period, which shall be a temporary taking, all the provisions of this
Lease shall remain in full force and effect as to such Leased Property with no
abatement of rent payable by Tenant hereunder.  In the event of any such
temporary taking, the entire amount of any such Award made for such temporary
taking allocable to the Term hereof, whether paid by way of damages, Rent or
otherwise, shall be paid to Tenant.


                                  ARTICLE XII
              REPRESENTATIONS, WARRANTIES AND FINANCIAL COVENANTS

          Tenant hereby represents, warrants and covenants to Landlord as
follows:

          12.01     Organization and Qualification.
                    ------------------------------ 

          (a)       Tenant is a Virginia corporation duly organized, validly
                    existing and in good standing under the laws of its state of
                    incorporation or organization, with all power and authority,
                    corporate or otherwise, necessary to:  (i) enter into and
                    perform this Lease and (ii) own and lease its assets and
                    properties, and conduct its Business, as it is now being
                    conducted or proposed to be conducted.  Tenant is duly
                    qualified as a foreign corporation or other entity, as the
                    case may be, to conduct its Business and own and lease its
                    assets and properties, and is in good standing, in each
                    jurisdiction where the character of its assets and
                    properties owned or held under lease or the nature of its
                    Business makes such qualification necessary or advisable,
                    and is duly qualified and licensed under all laws,
                    regulations, ordinances or orders of public or governmental
                    authorities, or otherwise to carry on its Business and own
                    or lease its assets and properties in the places and in the
                    manner in which they are owned, leased or conducted or
                    proposed to be owned, leased or conducted, except where the
                    failure to be so organized, qualified and in good standing
                    or to have such authority, qualification or licensing could
                    not result in a Material Adverse Change.  Complete and
                    correct copies of Tenant's Charter, as in effect on the date
                    hereof, and Tenant's by-laws, also as in effect on the date
                    hereof, have been delivered to Landlord.

          (b)       Each Affiliate that conducts operations or business on or
                    from any Leased Property, whether now or at any time in the
                    future, is duly organized, validly 

                                    - 39 -

 
                    existing and in good standing under the laws of its
                    organization, with all power and authority, corporate or
                    otherwise, necessary to own and lease its assets and
                    properties, and conduct its business, as it is now being
                    conducted or proposed to be conducted. Each Affiliate is
                    duly qualified as a foreign corporation or other entity, as
                    the case may be, to do business and own and lease its assets
                    and properties, and is in good standing, in each
                    jurisdiction where the character of its assets and
                    properties owned or held under lease or the nature of its
                    activities or business makes such qualification necessary or
                    advisable, and is duly qualified and licensed under all
                    laws, regulations, ordinances or orders or public or
                    governmental authorities or otherwise to carry on its
                    business and own or lease its assets and properties in the
                    places and in the manner in which they are owned, leased or
                    is conducted or proposed to be owned, leased or conducted,
                    except where the failure to be so organized, qualified and
                    in good standing or to have such authority, qualification or
                    licensing could not result in a Material Adverse Change.

          "Material Adverse Change" since a particular specified date, or a date
which may be specified from the circumstances existing immediately prior to the
happening of a specified event or occurrence, or, if no date or event is
specified, with reference to the most recent Annual Financial Statements
delivered pursuant to this Lease, means a material adverse change in the
Business, assets, properties, franchises, financial condition or income of
Tenant or the operations,  business, assets, properties, franchises, financial
condition, income or prospects of any Affiliate, whether or not such event or
occurrence is an Event of Default.

          "Affiliate" means with respect to any Person, (i) any Person that
holds direct or indirect beneficial ownership (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) of voting securities or other
voting interests representing at least five percent (5%) of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least five percent (5%) of the outstanding equity securities or
interests in a Person, or (ii) any Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with such Person.

          A "Person" shall mean and include natural persons, corporations,
limited partnerships, general partnerships, joint stock companies, joint
ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts, Indian tribes or other organizations, whether or not legal
entities, and governments and agencies and political subdivisions thereof.

          12.02     Material Agreements.  Schedule 12.02 is a complete list of
                    -------------------                                       
all agreements to which Tenant is a party that are material to the ownership and
use of the Leased Property or the operation of Tenant's Business (meaning (i)
those agreements that have a monetary obligation of at least $50,000 per year
and are not cancellable without penalty by Sellers upon notice of one year or
less  and (ii) employment contracts of $100,000 or more per annum), and Tenant
has delivered to 

                                    - 40 -

 
Landlord a copy of each of these agreements (including all exhibits, schedules
and amendments thereto).

          12.03     Changes in Condition.  Since the date of the latest Annual
                    ---------------------                                     
Financial Statements, no Material Adverse Change has occurred between such date
and the date hereof, and neither Tenant nor any Affiliate has entered into any
material transaction outside the ordinary course of its or their operations or
business, including the Business, except as set forth in Schedule 12.03 and the
matters contemplated by this Lease.

          12.04     Franchises, Licenses, etc.  Tenant and its subsidiaries own,
                    --------------------------                                  
or have sufficient interests in, all franchises, trademarks, trademark rights,
trade names, trade name rights, copyrights, licenses, permits, authorizations
and other rights as are necessary for the conduct of Tenant's Business and its
subsidiaries' businesses as now conducted or proposed to be conducted by Tenant
or any Affiliate, as well as rights under any agreement under which Tenant or
its subsidiaries has access to confidential information used by Tenant or its
subsidiaries in Tenants' Business or the businesses of its subsidiaries, as the
case may be (collectively, the "Intellectual Property").  All Intellectual
Property is in full force and effect in all material respects, and Tenant and
its subsidiaries are in substantial compliance with the foregoing without any
conflict with the valid rights of others, which has resulted, or could be
reasonably likely to result in any Material Adverse Change.  Neither Tenant nor
any Affiliate has violated, or received any communication that by conducting its
Business or any Affiliate's businesses, it or any Affiliate would violate any
franchises, licenses, patents, trademarks, service marks, trade names,
copyrights, trade secrets, proprietary rights or processes of any other Person
(as hereafter defined) nor is Tenant or any Affiliate aware of any such
violations.  No event has occurred which permits, or after notice or lapse of
time or both would permit, the revocation or termination of any such license,
franchise or other right or affect the rights of Tenant or any Affiliate so as
to result in or reasonably be likely to result in any Material Adverse Change.
There is no litigation or other proceeding or dispute or, to the knowledge of
Tenant or any Affiliate, threat thereof with respect to the validity or, where
applicable, the extension or renewal, of any of the foregoing which has
resulted, or could result, in any Material Adverse Change.

          12.05     Litigation.  No litigation, at law or in equity, or any
                    -----------                                            
proceeding before any court, board or other governmental or administrative
agency or any arbitrator or other forum of alternative dispute resolution is
pending or, to the knowledge of Tenant or any Affiliate, threatened which
involves any risk of any final judgment, order or liability which, after giving
effect to any applicable insurance, has resulted, or could result, in any
Material Adverse Change or which seeks to enjoin the execution and consummation
of this Lease and the performance of Tenant's obligations hereunder.  No
judgment, decree or order of any court, board or other governmental or
administrative agency or any arbitrator has been issued against or binds Tenant
or any Affiliate, which has resulted, or could result, in any Material Adverse
Change.

          12.06     Authorization and Enforceability.  Tenant has taken all
                    ---------------------------------                      
corporate or other action required to execute, deliver and perform this Lease.
This Lease constitutes the legal, valid and binding obligation of Tenant and is
enforceable against Tenant in accordance with its terms.


                                    - 41 -

 
          12.07     No Legal Obstacle to Lease. Neither the execution and
                    --------------------------
delivery of this Lease nor the performance of any obligation hereunder has
constituted or resulted in or will constitute or result in:

                    (a) any breach, violation of, conflict with, default under
                        or termination of any agreement, contract, mortgage,
                        instrument, deed or lease to which Tenant or any
                        Affiliate is a party or by which it or they are bound;

                    (b) the violation of or conflict with any law, statute,
                        ordinance, judgment, decree, order, rule or regulation
                        applicable to Tenant, any Affiliate, any Improvements or
                        any Leased Property; or

                    (c) any violation of or conflict with Tenant's or any
                        Affiliate's Charter or By-Laws or other organizational
                        documents, as the case may be.

          No approval, authorization or other action by, or declaration to or
filing with, any governmental or administrative authority or any other Person is
required to be obtained or made by Tenant in connection with the execution,
delivery and performance of this Lease.
 
          12.08     Certain Business Representations:
                    -------------------------------- 

                    (a) Labor Relations. No dispute or controversy between
                        ---------------
                        Tenant or any Affiliate and its or their employees has
                        resulted in, or is reasonably likely to result in, any
                        Material Adverse Change, and neither Tenant nor any
                        Affiliate anticipates that its relationships with its
                        unions or employees will result, or are reasonably
                        likely to result, in any Material Adverse Change. Tenant
                        and each Affiliate is in compliance in all material
                        respects with all federal and state laws relating to
                        employees and labor relations, including, but not
                        limited to, laws relating to health and safety in the
                        workplace, non-discrimination in employment and the
                        payment of wages.

                    (b) Antitrust. Tenant and each Affiliate is in compliance in
                        ---------
                        all material respects with all federal and state
                        antitrust laws relating to Tenant's Business and the
                        subsidiaries' businesses and the geographic
                        concentration thereof.

                    (c) Consumer Protection. Neither Tenant nor any Affiliate is
                        -------------------
                        in violation of any rule, regulation, order, or
                        interpretation of any rule, regulation or order of the
                        Federal Trade Commission (including truth-in-lending) or
                        other federal, state or local public or governmental

                                    - 42 -

 
                        authority or agency, with which the failure to comply,
                        in the aggregate, has resulted in, could result in, a
                        Material Adverse Change.

                    (d) Future Expenditures. Neither Tenant nor any Affiliate,
                        -------------------
                        anticipates that further expenditures, if any, by Tenant
                        or any Affiliate needed to meet the provisions of any
                        federal, state or foreign governmental statutes, orders,
                        rules or regulation could result in any Material Adverse
                        Change.

                    (e) Benefit Liabilities. Neither Tenant nor any ERISA
                        ------------------- 
                        Affiliate maintains, contributes to, or is obligated to
                        contribute to, nor has Tenant or any ERISA Affiliate
                        maintained, contributed to, been obligated to contribute
                        to, or had any direct, indirect, or contingent liability
                        with respect to, any Title IV Plan (as hereafter
                        defined). Each Tenant Benefit Plan has been maintained
                        in compliance with its terms and with applicable laws
                        (including specifically the Code and the Employee
                        Retirement Income Security Act of 1974 ("ERISA").
                        "Tenant Benefit Plan" means any plan, fund, or other
                        similar program described in Section 3(2) of ERISA and
                        established or maintained or with respect to which
                        Tenant and/or any ERISA Affiliate has an obligation to
                        contribute for the benefit of its employees (or for
                        which Tenant could be directly or contingently liable).
                        "Title IV Plan" means an "employee benefit plan" (as
                        defined in Section 3(3) of ERISA) that is subject to
                        Title IV of ERISA and is or has been established or
                        maintained, by Tenant or any ERISA Affiliate, or to
                        which contributions are, have been, or should have been
                        made. "ERISA Affiliate" means any trade or business,
                        whether or not incorporated, that, together with Tenant,
                        is or has been under common control, within the meaning
                        of Section 414(b), (c), (m), or (o) of the Code or
                        Section 4001 of ERISA.

          12.09     Certain Financial Covenants.  Tenant or an Affiliate, as
                    ---------------------------
applicable, is in compliance in all material respects with all financial
covenants required to be maintained pursuant to any franchise or other agreement
pursuant to which Tenant or such Affiliate operates its business, except in such
respects as shall not result in any franchisor under any franchise or operating
agreement to which Tenant is a party taking any action that could result in a
Material Adverse Change.

          12.10     Cash Flow Coverage Ratio Covenant.  On the date of this
                    ---------------------------------                      
Lease and measured at a date that is twenty-four (24) months following such date
(each a "Cash Flow Measurement Date"), and on each anniversary date  that is
twenty-four (24) months following a prior Cash Flow Measurement Date, Tenant
shall have maintained a Cash Flow Coverage Ratio of not less than 1.5 to 1.0
based on the Annual Financial Statements to be delivered to Landlord in
accordance with 

                                    - 43 -

 
Section 6.04 hereof. "Cash Flow Coverage Ratio" means the aggregate of net
income before taxes plus mortgage interest, rent expense, depreciation,
compensation of principals of the Business, management fees plus the annual LIFO
adjustment and other non-cash expenses, less recurring capital expenditures and
gain (loss) on sale of real estate, dividends and/or profits taken out of Tenant
divided by the aggregate of the Tenant's obligations under this Lease.
Notwithstanding anything herein to the contrary, in the event that Tenant shall
not be in compliance with this covenant at a Cash Flow Measurement Date or
Tenant shall have knowledge of such non-compliance prior to any Cash Flow
Measurement Date, the Tenant shall have the right to cure such breach through
any reasonable commercial means, including, but not limited to, providing
guarantees acceptable to Landlord, increasing capital, or cross collateralizing
with any other property of Tenant or an Affiliate, provided that such breach is
cured within one hundred and eighty (180) days after Notice by Landlord to
Tenant of the existence of such breach.

          12.11     Disclosure.  To Tenant's knowledge, this Lease does not
                    ----------                                             
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make any statement contained herein not misleading in
light of the circumstances under which it was made.  To Tenant's knowledge,
there is no event, fact or occurrence that has resulted in any Material Adverse
Change.

          12.12     Covenant Not to Acquire.  Tenant covenants and agrees that
                    -----------------------                                   
during the Term and any Extension Term, as the case may be, Tenant and its
controlling shareholders or its or their Affiliates will not acquire, directly
or indirectly, more that 9.90% of the outstanding common shares of beneficial
interest of Capital Automotive REIT.  Tenant covenants and agrees that it will
divest itself of such shares of Capital Automotive REIT as may be necessary to
satisfy the limitations of this Section 12.12.



                                 ARTICLE XIII
                     ASSIGNMENT AND SUBLETTING; ATTORNMENT

          13.01     Prohibition Against Subletting and Assignment.  Subject to
                    ---------------------------------------------             
Section 13.03, Tenant shall not, without the prior written consent of Landlord,
or upon compliance with any conditions established by Landlord, in its sole
discretion, assign, mortgage, pledge, hypothecate, encumber or otherwise
transfer (except to an Affiliate) this Lease or any interest herein, or sublease
all or any part of any Leased Property (except to an Affiliate, including, but
not limited to, Kline Imports Chesapeake, Inc.), or suffer or permit this Lease
or the leasehold estate created hereby or any other rights arising hereunder to
be assigned, transferred, mortgaged, pledged, hypothecated or encumbered, in
whole or in part, whether voluntarily, involuntarily or by operation of law.
For purposes of this Section 13.01, an assignment of this Lease shall be deemed
to include any Change of Control of Tenant, as if such Change of Control were an
assignment of the Lease.  In the event that (i) Landlord shall withhold any
consent to any assignment or transfer of this Lease or any interest herein, and
(ii) such assignee or transferee is approved by the relevant manufacturer for
continuation as a franchisee, there shall be a presumption that such assignment
or transfer was 

                                    - 44 -

 
reasonable and Landlord shall have the burden of rebutting such presumption and
of proving that such consent was in fact reasonably withheld (or that such
conditions were reasonable).

          13.02     Changes of Control.  A Change of Control requiring the
                    ------------------                                    
consent of Landlord shall mean:

                    (a) the issuance and/or sale by Tenant or the sale by any
                        shareholder or equity holder of Tenant of a Controlling
                        (which shall mean, as applied to any Person, the
                        possession, directly or indirectly, of the power to
                        direct or cause the direction of the management and
                        policies of such Person, whether through the ownership
                        of voting securities, by contract or otherwise) interest
                        in Tenant to a Person other than an Affiliate of Tenant,
                        other than in either case a distribution to the public
                        pursuant to an effective registration statement under
                        the Securities Act of 1933, as amended (a "Registered
                        Offering");but not including a transfer upon death of
                        any shareholder to any family member of such
                        shareholder, trust created for the benefit of family
                        members, or the personal representative of such
                        shareholder;

                    (b) the sale, conveyance or other transfer of all or
                        substantially all of the assets of Tenant (whether by
                        operation of law or otherwise) provided, however, that
                        no Change of Control shall be deemed to have occurred in
                        the event of the transfer of assets as a result of the
                        death of a person involved in the Business, so long as
                        the transferee is approved by the manufacturer for the
                        continuation of the Business (any sale of all or
                        substantially all of the assets of Tenant within two (2)
                        years after the death of a person involved in the
                        Business shall be deemed to have occured as a result of
                        the death of such person); or

                    (c) any transaction pursuant to which Tenant is merged with
                        or consolidated into another entity (other than an
                        entity owned and Controlled by an Affiliate), and Tenant
                        is not the surviving entity.

          13.03     Operating/Service Agreements.
                    -----------------------------

                    (a) Permitted Agreements. Tenant shall, without Landlord's
                        prior approval, be permitted to enter into such
                        operating/service agreements for portions of each Leased
                        Property to various licensees in connection with
                        Tenant's Business as are customarily associated with or
                        incidental to the operation of such Leased Property,
                        which agreements may be in the nature of a sublease
                        agreement.

                                    - 45 -

 
                    (b) Terms of Agreements. Each operating/service agreement
                        -------------------
                        concerning a Leased Property shall be subject and
                        subordinate to the provisions hereof. No agreement made
                        as permitted by Section 13.03(a) shall affect or reduce
                        any of the obligations of Tenant hereunder, and all such
                        obligations shall continue in full force and effect as
                        if no agreement had been made. No agreement shall impose
                        any additional obligations on Landlord hereunder.

                    (c) Copies. Tenant shall, within ten (10) days after the
                        ------
                        execution and delivery of any operating/service
                        agreement permitted by Section 13.03(a), deliver a
                        duplicate original thereof to Landlord.

                    (d) Assignment of Rights in Agreements.  As security for
                        ----------------------------------                  
                        performance of its obligations hereunder, Tenant hereby
                        grants, conveys and assigns to Landlord all right, title
                        and interest of Tenant in and to all operating/service
                        agreements now in existence or hereinafter entered into
                        for each Leased Property, and all extensions,
                        modifications and renewals thereof and all rents, issues
                        and profits therefrom, to the extent the same are
                        assignable by Tenant. Landlord hereby grants to Tenant a
                        license to collect and enjoy all rents and other sums of
                        money payable under any such agreement; provided,
                        however, that Landlord shall have the absolute right at
                        any time after the occurrence and continuance of an
                        Event of Default upon notice to Tenant and any vendors
                        or licensees to revoke said license and to collect such
                        rents and sums of money and to retain the same. Tenant
                        shall not (i) after the occurrence and continuance of an
                        Event of Default, consent to, cause, or allow, any
                        material modification or alteration of any of the terms,
                        conditions or covenants of any of the agreements or the
                        termination thereof, without the prior written approval
                        of Landlord nor (ii) accept any rents (other than
                        customary security deposits) more than thirty (30) days
                        in advance of the accrual thereof nor permit anything to
                        be done, the doing of which, nor omit or refrain from
                        doing anything, the omission of which, will or could be
                        a breach of or default in the terms of any of the
                        agreements.

                    (e) Licenses, Etc.  For purposes of Section 13.03, the
                        -------------                                     
                        operating/service agreements shall mean any licenses,
                        concession arrangements, or other arrangements relating
                        to the possession or use of all or any part of any
                        Leased Property.

          13.04     Assignment.  If Landlord shall withhold its consent to any
                    ----------                                                
assignment or if Landlord shall have established conditions to approval of any
assignment but such conditions shall not have been complied with, to the
satisfaction of  Landlord, such assignment shall not in any way 

                                    - 46 -

 
impair the continuing primary liability of Tenant hereunder. No consent to any
assignment in a particular instance shall be deemed to be a general waiver of
the prohibition set forth in Article XIII. Any assignment shall be solely of
Tenant's entire interest in this Lease with respect to the subject Leased
Property or Leased Properties. Any assignment or other transfer of all or any
portion of Tenant's interest in this Lease in contravention of Article XIII
shall be voidable at Landlord's option.

          13.05     REIT Limitations.
                    ---------------- 

                    (a) Anything contained herein to the contrary
                        notwithstanding, Tenant shall not: (a) sublet or assign
                        a Leased Property or this Lease on any basis such that
                        the rental or other amounts to be paid by the sublessee
                        or assignee thereunder would be based, in whole or in
                        part, on the income or profits derived by the business
                        activities of the sublessee or assignee; (b) sublet or
                        assign a Leased Property or this Lease to any Person
                        that, under Section 856(d)(2)(B) of the Internal Revenue
                        Code of 1986, as amended (the "Code"), Landlord or its
                        general partner owns, directly or indirectly (by
                        applying constructive ownership rules set forth in
                        Section 856(d) (5) of the Code, a ten percent (10%) or
                        greater interest; or (c) sublet or assign a Leased
                        Property or this Lease in any other manner or otherwise
                        derive any income which could cause any portion of the
                        amounts received by Landlord pursuant hereto or any
                        sublease to fail to qualify as "rents from real
                        property" within the meaning of Section 856(d) of the
                        Code, or which could cause any other income received by
                        Landlord to fail to qualify as income described in
                        Section 856(c) (2) of the Code. The requirements of this
                        Section 13.05 shall likewise apply to any further
                        subleasing by any subtenant.

                    (b) Tenant acknowledges that Capital Automotive REIT, a
                        Maryland real estate investment trust and the general
                        partner of Landlord (the "Company"), intends to elect to
                        be taxed as a real estate investment trust (a "REIT")
                        under the Code. Tenant shall not do anything which would
                        adversely affect the Company's status as a REIT. Tenant
                        hereby agrees to modifications of this Lease which do
                        not materially adversely affect Tenant's rights and
                        liabilities if such modifications are required to retain
                        or clarify the Company's status as a REIT.

          13.06     Attornment.  Tenant shall insert in each sublease permitted
                    ----------                                                 
under Section 13.03(a) provisions to the effect that:  (a) such sublease is
subject and subordinate to all of the terms and provisions of this Lease and to
the rights of Landlord hereunder; (b) [intentionally omitted] and (c) in the
event the sublessee receives a written notice from Landlord or Landlord's
assignees, if any, stating that Tenant is in default under this Lease, the
sublessee shall thereafter be obligated to pay all rentals accruing under said
sublease directly to the party giving such notice, or as such party may 

                                     -47-

 
direct. All rentals received from the sublessee by Landlord or Landlord's
assignees in respect of a Leased Property, if any, as the case may be, shall be
credit against the amounts owing by Tenant hereunder with respect to such Leased
Property.

          13.07     Severance and Spin-Off.  If at any time while this Lease is
                    ----------------------                                     
in effect any Leased Property shall be utilized by Tenant in the operation of
more than one automobile franchise, then provided that there is no existing
Event of Default and there exists no condition which, with the passage of time,
could become an Event of Default, Tenant shall have the right (the "Spin-Off
Right") to sever and spin-off one or more parcels (each referred to as a
"Spin-Off Parcel") of the Leased Property from this Lease, subject to compliance
with the requirements of Section 13.08.

          13.08     Assignment.  If the Leased Property is not a separate
                    ----------                                           
subdivided lot, Landlord may condition its approval of an assignment upon Tenant
showing that there are appropriate provisions (such as a condominium regime,
subdivision, and/or reciprocal easements, lender and/or franchisor consents if
necessary, and separate tax lots) which allow the Leased Property to be
separately owned and operated without interference from or dependence upon,
another person as to items such as access, real estate taxes, or utilities.


                                  ARTICLE XIV
                                  ARBITRATION

          14.01     Controversies.  Except with respect to the payment of Rent
                    -------------                                             
hereunder, which shall be subject to the provisions of Section 9.02, in the
event a controversy arises between the parties as to any of the requirements of
this Lease or the performance hereunder, which the parties are unable to
resolve, the parties agree to waive the remedy of litigation (except for
extraordinary relief in an emergency situation) and agree that such controversy
or controversies shall be determined by arbitration as hereafter provided in
this Article.

          14.02     Appointment of Arbitrators.  The party or parties requesting
                    --------------------------                                  
arbitration shall serve upon the other a demand therefor, in writing, specifying
in detail the controversy and matter(s) to be submitted to arbitration before
the American Arbitration Association.  The selection of arbitrators shall be
conducted pursuant to the rules for resolution of commercial disputes
promulgated by the American Arbitration Association.  The party or parties
giving notice shall request a listing of available arbitrators from the American
Arbitration Association, and each party shall respond in the selection process
within fifteen (15) days after each receipt of such listings until a panel of
three (3) arbitrators has been designated.  If either party fails to respond
within fifteen (15) days, it is agreed that the American Arbitration Association
may make such selections as are necessary to complete the panel of three (3)
arbitrators.

          14.03     Arbitration Procedure.  Within five (5) business days after
                    ---------------------                                      
the selection of the arbitration panel, the arbitrators shall give written
notice to each party as to the time and the place of each meeting, which shall
be held in Washington, D.C., at which the parties may appear and be 


                                     -48-

 
heard, which shall be no later than fifteen (15) days after certification of the
arbitration panel. The parties specifically waive discovery, and further waive
the applicability of rules of evidence or rules of procedure in the proceedings.
The applicable rules shall be those in effect at the time for the resolution of
commercial disputes promulgated by the American Arbitration Association. The
arbitrators shall take such testimony and make such examination and
investigations as the arbitrators reasonably deem necessary. The decision of the
arbitrators shall be in writing signed by a majority of the panel which decision
shall be final and binding upon the parties to the controversy. Provided,
however, in rendering their decisions and making awards, the arbitrators shall
not add to, subtract from or otherwise modify the provisions of this Lease.

          14.04     Expenses.  The expenses of the arbitration shall be assessed
                    --------                                                    
by the arbitrators and specified in the written decision. In the absence of a
determination or assessment of expenses of the arbitration procedure in the
award, all of the expenses of such arbitration shall be divided equally between
Landlord and Tenant. Each party in interest shall be responsible for and pay the
fees, costs and expenses of its own counsel, unless the arbitration award
provides for an assessment of reasonable attorneys' fees and costs.

          14.05     Enforcement of the Arbitration Award.  There shall be no
                    ------------------------------------                    
appeal from the decision of the arbitrators, and upon the rendering of an award,
any party thereto may file the arbitrators' decision in the United States
District Court for the Eastern District of Virginia for enforcement as provided
by applicable law.


                                  ARTICLE XV
                        QUIET ENJOYMENT, SUBORDINATION,
                       ATTORNMENT, ESTOPPEL CERTIFICATES

          15.01     Quiet Enjoyment.  So long as Tenant performs all of its
                    ---------------                                        
obligations under this Lease, Tenant's possession of the Leased Properties will
not be disturbed by or through Landlord.

          15.02     Landlord Mortgages; Subordination.  Subject to Section
                    ---------------------------------                     
15.03, without the consent of Tenant, Landlord may, from time to time, directly
or indirectly, create or otherwise cause to exist any liens, encumbrances,
security interests or title retention agreements on any Leased Property, or any
portion thereof or any interest therein, whether to secure any borrowing or
other means of financing or refinancing. Tenant shall execute, acknowledge and
deliver to Landlord, at any time and from time to time upon demand by Landlord
or any mortgagee or any holder of any mortgage or other instrument described in
this Section, without cost to Landlord, a Subordination and Non-Disturbance
Agreement in the form attached hereto as Exhibit 15.02, which provides that (i)
Tenant's rights hereunder are subordinate to any ground lease or underlying
lease, first mortgage, first deed of trust, or other first lien against any
Leased Property, together with any renewal, consolidation, extension,
modification, or replacement thereof, which now or at any subsequent time
affects any Leased Property or any interest of Landlord in any Leased Property,
except to the extent that 

                                     -49-

 
any such instrument expressly provides that this Lease is superior, and except
to the extent that any such instrument provides for a dispostion of insurance or
condemnation proceeds other than as provided in this Lease; and (ii) in the
event such party succeeds to Landlord's interest under the Lease and provided
that no Event of Default by Tenant exists, such party will recognize all of
Tenant's rights under the Lease and will not disturb Tenant's possession, use or
occupancy of the subject Leased Property. If Tenant fails or refuses to execute,
acknowledge, and deliver such Subordination and Non-Disclosure Agreement within
ten (10) business days after written demand, then Landlord shall send to Tenant
a second written demand. If Tenant fails or refuses to execute, acknowledge and
deliver such Subordination and Non-Disturbance Agreement within ten (10) days
after such second written demand, then Landlord or such successor in interest
may execute, acknowledge and deliver such Subordination and Non-Disturbance
Agreement on behalf of Tenant as Tenant's attorney-in-fact. Tenant hereby
constitutes and irrevocably appoints Landlord, its successors and assigns, as
Tenant's attorney-in-fact to execute, acknowledge, and deliver on behalf of
Tenant the Subordination and Non-Disturbance Agreement. This power of attorney
is coupled with an interest and is irrevocable.

          15.03     Attornment.  If any holder of any mortgage, indenture, deed
                    ----------                                                 
of trust, or other similar instrument described in Section 15.02 succeeds to
Landlord's interest in any Leased Property, Tenant will pay to such holder all
Rent subsequently payable hereunder as to such Leased Property. Tenant shall,
upon request of anyone succeeding to the interest of Landlord, automatically
become the tenant of, and attorn to, such successor in interest without changing
this Lease. The successor in interest will not be bound by: (a) any payment of
Rent for more than one (1) month in advance; (b) any amendment or modification
hereof made without its written consent; (c) any claim against Landlord arising
prior to the date on which the successor succeeded to Landlord's interest; or
(d) any claim or offset of Rent against Landlord.

          15.04     Estoppel Certificates.  At the request of either party, or
                    ---------------------                                     
any mortgagee or purchaser of a Leased Property or any interest therein,
Landlord or Tenant, as the case may be, shall execute, acknowledge, and deliver
an estoppel certificate, in recordable form, in favor of the other party or any
mortgagee or purchaser of any Leased Property certifying the following as to
such Leased Property: (a) that this Lease is unmodified and in full force and
effect, or if there have been modifications that the same is in full force and
effect as modified and stating the modifications; (b) the date to which Rent and
other charges have been paid; (c) that neither Tenant nor Landlord is in default
nor is there any fact or condition which, with notice or lapse of time, or both,
would constitute a default, if that be the case, or specifying any existing
default; (d) that Tenant has accepted and occupies such Leased Property; (e)
that Tenant has no defenses, set-offs, deductions, credits, or counterclaims
against Landlord, if that be the case, or specifying such that exist; (f) that
Landlord has no outstanding construction or repair obligations; and (g) such
other information as may reasonably be requested by Landlord or any mortgagee or
purchaser. Any purchaser or mortgagee may rely on this estoppel certificate. If
Landlord or Tenant, as the case may be, fails to deliver the estoppel
certificates to the other party within ten (10) business days after the request
of Landlord or Tenant, as the case may be, then Landlord or Tenant, as the case
may be, shall request such delivery a second time. If Landlord or Tenant, as the
case may be, fails to deliver the estoppel certificates to Landlord within ten
(10) days after such second request by Landlord or Tenant, as the

                                     -50-

 
case may be, then Landlord or Tenant, as the case may be, shall be deemed to
have certified that: (a) this Lease is in full force and effect and has not been
modified, or that this Lease has been modified as set forth in the certificate
delivered to Landlord or Tenant, as the case may be; (b) Tenant has not prepaid
any Rent or other charges except for the current month; (c) Tenant has accepted
and occupies such Leased Property; (d) neither Tenant nor Landlord is in default
nor is there any fact or condition which, with notice or lapse of time, or both,
would constitute a default; (e) Landlord has no outstanding construction or
repair obligation; and (f) Tenant has no defenses, set-offs, deductions,
credits, or counterclaims against Landlord. Landlord and Tenant each appoints
the other as Landlord's or Tenant's (as the case may be) attorney-in-fact to
execute, acknowledge and deliver on Landlord's or Tenant's (as the case may be)
behalf any estoppel certificate which Landlord or Tenant, as the case may be,
does not object to within twenty (20) days after Landlord or Tenant, as the case
may be, sends the certificate to Landlord or Tenant, as the case may be. This
power of attorney is coupled with an interest and is irrevocable.

          15.05     Waiver of Landlord's Lien.  Landlord agrees to and does
                    -------------------------                              
hereby Waiver its Landlord's lien and any other rights that it may have with
respect to property or assets representing the security or collateral under
Tenant's "floor-plan" or equipment financing or leasing or similar financing
arrangements, during the Term or any Extension Term. Landlord shall, upon
request by any such lender, execute an acknowledgment of such waiver.



                                  ARTICLE XVI
                             RIGHT OF FIRST OFFER

           16.01    Right of First Offer During Lease Term or Extension Term.
                    ---------------------------------------------------------

                    (a)  If and when during the Term or Extension Term, as the
                         case may be, Landlord shall decide to sell the Leased
                         Properties to a Person who is not an Affiliate of
                         Landlord (the "Decision to Sell"), provided that no
                         Event of Default has occurred and is continuing under
                         the Lease, Landlord shall notify Tenant in writing
                         within ten (10) business days after Landlord makes a
                         Decision to Sell. Tenant shall have ten (10) business
                         days thereafter in which to notify Landlord in writing
                         of its desire to purchase the Leased Properties. If
                         Tenant shall give such notice, Tenant shall have a
                         period of thirty (30) days within which to make a
                         written offer to purchase the property (the "First
                         Offer"). The First Offer must set forth the purchase
                         price, deposit amounts and closing date and any and all
                         other terms and conditions being proposed by Tenant.

                    (b)  Within thirty (30) days of receipt of the First Offer,
                         Landlord shall give Tenant written notice of its
                         acceptance or rejection thereof. If 

                                     -51-

 
                         accepted, Tenant shall, within five (5) days after
                         receipt of the acceptance notice, make the deposit
                         called for in the First Offer and the parties shall
                         proceed to contract and closing upon the terms thereof.
                         If the First Offer is rejected, then, subject to the
                         provisions of subsections (c) and (d) of this Section
                         16.01, Tenant shall have no further rights under this
                         Section 16.01 with respect to the purchase of the
                         Leased Properties during the Term or Extension Term, as
                         the case may be.

                    (c)  If Landlord shall reject the First Offer, for a one
                         year period thereafter it may proceed to sell the
                         Leased Properties, subject to the Lease and the
                         remaining Term or Extension Term thereof, as the case
                         may be, to any third party, provided (i) the purchase
                         price of such sale shall exceed that specified in the
                         First Offer, or (ii) if the purchase price of such sale
                         does not exceed that specified in the First Offer, the
                         terms of such sale, taken together, are more favorable
                         to Landlord, in Landlord's reasonable judgement, than
                         those of the First Offer. There shall be a presumption
                         that Landlord's judgment was reasonable and Tenant
                         shall have the burden of rebutting such presumption and
                         of proving that such judgment was in fact unreasonable.

                    (d)  If no sale is effected by Landlord within the period
                         specified in subsection (c) above, then if Landlord
                         thereafter desires to sell the Leased Properties, the
                         procedure set forth in subsections (a), (b) and (c)
                         shall be followed.

                    (e)  This option shall terminate in any event twenty (20)
                         years after the death of the last descendant of George
                         Herman Walker Bush, former President of the United
                         States, living at the time of execution of this Lease.

                                     -52-

 
           16.02    Right to Purchase at End of an Extension Term.
                    ----------------------------------------------
 
                    (a)  Landlord hereby grants the Tenant the right and option
                         to purchase the Leased Properties (the "Option to
                         Purchase") at an amount equal to the Property
                         Consideration (as hereafter defined) upon termination
                         of either Extension Term of this Lease. The Option to
                         Purchase shall not be granted if Tenant does not extend
                         the Term of this Lease pursuant to Section 1.03 or if
                         on the Option Exercise Date (as hereafter defined) an
                         Event of Default with respect to any Leased Property
                         exists and has not been cured. The Tenant shall notify
                         Landlord in writing of its intent to exercise this
                         Option to Purchase, at least thirty (30) days prior to
                         the end of an Extension Term of this Lease (the "Option
                         Exercise Date").

                    (b)  The consideration to be paid for the Leased Properties
                         upon exercise of the Option to Purchase (the "Property
                         Consideration") shall be the Appraised Value (as
                         hereafter defined) determined by (1) an independent
                         appraiser, who is a member of the Appraisal Institute,
                         and will be selected by Landlord, (the "Landlord MAI
                         Appraiser"), (2) a second appraiser, who is a member of
                         the Appraisal Institute, and will be selected by the
                         Tenant (the "Tenant MAI Appraiser"), and (3) a third
                         MAI Appraiser selected by agreement of the Landlord MAI
                         Appraiser and the Tenant MAI Appraiser (the "Third MAI
                         Appraiser") (each an "Appraiser" and, collectively, the
                         "Appraisers"). Landlord and Tenant shall, as promptly
                         as possible, but in no event later than ten (10) days
                         following the Option Exercise Date, select its
                         respective Appraiser. The Third MAI Appraiser shall be
                         selected no later than five (5) days after the
                         selection of the other Appraisers. The costs of the
                         Appraisers' appraisals shall be shared equally by the
                         parties. As promptly as possible but in no event later
                         than sixty (60) days after selection of the Third
                         Appraiser, each Appraiser shall deliver his or her
                         written report of the Appraisers' determination of the
                         fair market value of the Leased Property, which
                         determination shall be based, for each Leased Property,
                         upon the highest and best use of such Leased Property,
                         taking into consideration the location of such Leased
                         Property and other properties comparable thereto. The
                         "Appraised Value" of the Real Property shall be equal
                         to the arithmetic mean of the two (2) fair market value
                         determinations of the Appraisers that are closest in
                         value. In the event that the values of (i) the
                         difference between the highest appraisal value and the
                         next lower appraisal value, and (ii) the difference
                         between the lowest appraisal value and the next higher
                         appraisal value, are equal, then the 

                                     -53-

 
                         "Appraised Value" shall be equal to the arithmetic mean
                         of the fair market value determinations of all
                         Appraisers.

                    (c)  Upon determination of the Property Consideration,
                         Landlord and Tenant agree to cooperate to close the
                         sale and purchase of the Leased Property entirely for
                         cash on an "as is, where as basis" and with no
                         warranties by Landlord other than in a special warranty
                         deed, within forty-five (45) days after the date of
                         determination of the Property Consideration (the
                         "Option Closing Period"). If the sale and purchase of
                         the Leased Property does not close within the Option
                         Closing Period due to Tenant's default, Landlord shall
                         have no further obligations to Tenant pursuant to this
                         Section 16.02 (a).

          16.03     Option to Purchase Vacant Lot.  Beginning at the end of the
                    -----------------------------                              
fifth year of the Term, Tenant shall have the option to purchase from Landlord
the vacant lot at the rear of 1485 and 1501 South Military Highway, Chesapeake,
Virginia, having a property tax identification number of 0200000000031, for the
greater of (i) One Million Five Hundred Fifty-Two Thousand Four Hundred Fifty
and 00/100 U.S. Dollars ($1,552,450) or (ii) the fair market value of such
property as determined according to the procedures of Section 16.02 of this
Agreement.


                                 ARTICLE XVII
                                 MISCELLANEOUS

          17.01     Notices.  Landlord and Tenant hereby agree that all notices,
                    -------                                                     
demands, requests, and consents (hereinafter "Notices") required to be given
pursuant to the terms of this Lease shall be in writing and shall be addressed
as follows:

          If to Tenant:

          Kline Chevrolet Sales Corp.
          c/o Magnus Group, Ltd.
          1350 Connecticut Avenue, N.W.
          Suite 1225
          Washington, D.C.  20036
          Attention: James M. Kline

          With a copy to:

          Kaufman & Canoles, A Professional Corporation
          2000 Nations Bank Center
          One Commercial Place
          Norfolk, Virginia, 23514


                                     -54-

 
          Attention: William R. Van Buren, III, Esq.

          If to Landlord:

          Capital Automotive L.P.
          1925 North Lynn Street
          Suite 306
          Arlington, Virginia 22209
          Attention: Thomas D. Eckert

          With a copy to:

          Wilmer, Cutler & Pickering
          2445 M Street, N.W.
          Washington, D.C. 20037
          Attention:  George P. Stamas, Esq.

and shall be served by: (a) personal delivery; (b) certified mail, return
receipt requested, postage prepaid; or (c) nationally recognized overnight
courier. All notices shall be deemed to be given upon the earlier of actual
receipt or three (3) days after mailing, or one (1) business day after deposit
with the overnight courier. Any Notices meeting the requirements of this Section
shall be effective, regardless of whether or not actually received. Landlord or
Tenant may change its notice address at any time by giving the other party
Notice of such change. Any such Notice of change of address shall be effective
five (5) days after delivery.

          17.02     Advertisement of a Leased Property.  In the event the
                    ----------------------------------                   
parties hereto have not executed a renewal lease, or agreed to the Extension
Term, as to the Leased Property within twelve (12) months prior to the
expiration of the Term or an Extension Term, as the case may be, then Landlord
or its agent shall have the right to enter such Leased Property at all
reasonable times for the purpose of exhibiting such Leased Property to others
and to place upon such Leased Property for and during the period commencing one-
hundred thirty five (135) days prior to the expiration of the Term or an
Extension Term, as the case may be, "for sale" or "for rent" notices or signs.

          17.03     Landlord's Access.  Landlord, or its designated agents or
                    -----------------                                        
contractors, shall have the right to enter upon each Leased Property, upon
reasonable prior notice to Tenant, for purposes of inspecting the same and
assuring Tenant's compliance with this Lease provided, any such entry by
Landlord shall be subject to all rules, guidelines and procedures prescribed by
Tenant in connection therewith. Landlord shall not be allowed entry to a Leased
Property unless accompanied by such of Tenant's personnel as Tenant shall
require and which Tenant shall promptly provide.

                                     -55-

 
          17.04     Entire Agreement.  This Lease contains the entire agreement
                    ----------------                                           
between Landlord and Tenant with respect to the subject matter hereof. No
representations, warranties, and agreements have been made by Landlord or Tenant
except as set forth in this Lease.

          17.05     Severability.  If any term or provision of this Lease is
                    ------------                                            
held by Landlord to be invalid or unenforceable as to a Leased Property, such
holding shall not affect the remainder of this Lease as to such Leased Property,
or the validity or enforceability of this Lease as to any other Leased Property,
and the same shall remain in full force and effect, unless such holding
substantially deprives Tenant of the use of such Leased Property or Landlord of
the Rents therefor, in which case this Lease shall forthwith terminate as to
such Leased Property as if by expiration of the Term or an Extension Term, as
the case may be, but shall remain in full force and effect with respect to each
other Leased Property.

          17.06     Captions and Headings.  The captions and headings are
                    ----------------------                               
inserted only as a matter of convenience and for reference and in no way define,
limit or describe the scope of this Lease or the intent of any provision hereof.

          17.07     Governing Law.  This Lease shall be construed under the laws
                    -------------                                               
of the State of Virginia (without application of choice of law provisions).

          17.08     Memorandum of Lease or Certain Rights Under the Lease.
                    -----------------------------------------------------  
Landlord and Tenant agree that a record of this Lease or of certain rights under
this Lease may be recorded by either party in a memorandum of lease approved by
Landlord and Tenant with respect to each Leased Property. The party recording
such memorandum must bear all costs of such recording.

          17.09     Waiver.  No waiver by Landlord of any condition or covenant
                    ------                                                     
herein contained, or of any breach of any such condition or covenant, shall be
held or taken to be a waiver of any subsequent breach of such covenant or
condition, or to permit or excuse its continuance or any future breach thereof
or of any condition or covenant, nor shall the acceptance of Rent by Landlord at
any time when Tenant is in default in the performance or observance of any
condition or covenant herein be construed as a waiver of such default, or of
Landlord's right to terminate this Lease or exercise any other remedy granted
herein on account of such default.

          17.10     Assignment; Binding Effect.  Except as otherwise set forth
                    --------------------------                                
herein, this Lease shall not be assignable by Tenant, without the prior written
consent of Landlord. This Lease will be binding upon and inure to the benefit of
the heirs, successors, personal representatives, and permitted assigns of
Landlord and Tenant.

          17.11     Consents and Approvals.   In each instance in this Lease 
                    ----------------------
where the Landlord is required or permitted to give a consent or approval, or to
make a determination, the Landlord's decision and any conditions thereon must be
reasonable under the circumstances. Except as provided in Sections 8.07(d) and
13.01, there shall be a presumption that each such decision and any conditions
thereon by Landlord was in fact reasonable, and Tenant shall have the burden of
proof

                                     -56-

 
in any attempt to rebut that presumption. With respect to Sections 8.07(d) and
13.01, there shall be a presumption that each such decision and any conditions
thereon by Landlord was in fact unreasonable, and Landlord shall have the burden
of proof in any attempt to rebut that presumption.

          17.12     Single Property.  Throughout the form of this Lease there 
                    ---------------
are references to "Leased Properties." If, in fact, there is only one Leased
Property being leased hereunder, all such references shall, without further
action, be deemed amended to refer solely to such Leased Property and all
provisions relating to Leased Properties, including remedies applicable to only
one Leased Property, shall likewise be amended to the extent necessary, but only
to the extent necessary, to give effect to the fact that there is only one
Leased Property.

          17.13     Modification.  This Lease may only be modified by a writing
                    ------------                                               
signed by both Landlord and Tenant.

          17.14     Incorporation by Reference.  All schedules and exhibits
                    ---------------------------                             
referred to in this Lease are incorporated herein by reference.

          17.15     No Merger.  As to each Leased Property, the surrender of
                    ---------                                               
this Lease by Tenant or the cancellation of this Lease by agreement of Tenant
and Landlord or the termination of this Lease on account of Tenant's default
will not work a merger, and will, at Landlord's option, terminate any subleases
or operate as an assignment to Landlord of any subleases. Landlord's option
under this paragraph will be exercised by notice to Tenant and all known
subtenants of such Leased Property.

          17.16     Force Majeure.  In the event either of the parties shall be
                    -------------                                              
delayed or hindered in, or prevented from, the performance of any act required
under this Lease by reasons of strikes, lock-outs, labor troubles, inability to
procure materials, fire or other catastrophe, failure of power, an act of the
other party, restrictive governmental laws or regulations, riots, insurrection,
war or other reason of like nature beyond the reasonable control of the party
delayed in performing work or doing any act required under this Lease, then the
performance of such act shall be excused for the period of the delay and the
time for the performance of such act shall be extended for the period of such
delay. Notwithstanding the foregoing sentence, this Section 17.16 shall not
operate to excuse Tenant, nor shall Tenant in any event be excused, from prompt
payment of Rent and other monetary obligations under this Lease due to Landlord
from Tenant or to excuse the Tenant from its obligation to carry insurance as
required under this Lease, nor shall this Section 17.16 operate to excuse Tenant
from performing any act required under any franchise agreement or any other
third party agreement, which failure of performance of such act would cause
Tenant to be in default of such franchise agreement or other third party
agreement.

          17.17     Laches.  No delay or omission by either party hereto to
                    -------                                                
exercise any right or power accruing upon any noncompliance or default by the
other party with respect to any of the terms hereof shall impair any such right
or power or be construed to be a waiver thereof.

                                     -57-

 
          17.18     Waiver of Jury Trial.  To the extent that there is any claim
                    --------------------                                        
by one party against the other that is not to be settled by arbitration as
provided in Article XIV hereof, Landlord and Tenant waive trial by jury in any
action, proceeding or counterclaim brought by either of them against the other
on all matters arising out of this Lease or the use and occupancy of any Leased
Property (except claims for personal injury or property damage). If Landlord
commences any summary proceeding for nonpayment of Rent, Tenant will not
interpose, and waives the right to interpose, any counterclaim in any such
proceeding.

          17.19     Permitted Contests.  Tenant, on its own or on Landlord's
                    -------------------                                     
behalf (or in Landlord's name), but at Tenant's expense, may contest, by
appropriate legal proceedings conducted in good faith and with due diligence,
the amount or validity or application, in whole or in part, of any Imposition or
any legal requirement or insurance requirement or any lien, attachment, levy,
encumbrance, charge or claim provided that: (a) in the case of an unpaid
Imposition, lien, attachment, levy, encumbrance, charge or claim, the
commencement and continuation of such proceedings shall suspend the collection
thereof from Landlord and from the subject Leased Property; (b) neither the
subject Leased Property nor any Rent therefrom nor any part thereof or interest
therein would be in any immediate danger of being sold, forfeited, attached or
lost; (c) in the case of a legal requirement, Landlord would not be in any
immediate danger of civil or criminal liability for failure to comply therewith
pending the outcome of such proceedings; (d) in the event that any such contest
shall involve a sum of money or potential loss in excess of Twenty Five Thousand
Dollars ($25,000), Tenant shall deliver to Landlord and its counsel an opinion
of Tenant's counsel to the effect set forth in clauses (a), (b) and (c), to the
extent applicable; (e) in the case of a legal requirement and/or an Imposition,
lien, encumbrance, or charge, Tenant shall give such reasonable security as may
be demanded by Landlord to insure ultimate payment of the same and to prevent
any sale or forfeiture of a subject Leased Property or the Rent in respect
thereof by reason of such nonpayment or noncompliance; provided, however, the
provisions of this Section shall not be construed to permit Tenant to contest
the payment of Rent (except as to contests concerning the method of computation
or the basis of levy of any Imposition or the basis for the assertion of any
other claim) or any other sums payable by Tenant to Landlord hereunder; (f) in
the case of an insurance requirement, the coverage required by Article IV shall
be maintained; and (g) if such contest be finally resolved against Landlord or
Tenant, Tenant shall, as Additional Rent due hereunder, promptly pay the amount
required to be paid, together with all interest and penalties accrued thereon,
or comply with the applicable legal requirement or insurance requirement.
Landlord, at Tenant's expense, shall execute and deliver to Tenant such
authorizations and other documents as may be reasonably required in any such
contest, and, if reasonably requested by Tenant or if Landlord so desires,
Landlord shall join as a party therein. Tenant hereby agrees to indemnify and
hold harmless Landlord, its officers, trustees, employees, shareholders,
affiliates and agents from and against any and all demands, claims, causes of
action, fines, penalties, damages (including punitive and consequential
damages), losses, liabilities (including strict liability), judgments, costs and
expenses (including, without limitation, attorneys' fees, court costs, and the
costs set forth in Section 9.06) that may be incurred in connection with or
arise from any such contest.

                                     -58-

 
          17.20     Construction of Lease.  This Lease has been reviewed by
                    ---------------------                                  
Landlord and Tenant and their respective professional advisors. Landlord and
Tenant believe that this Lease is the product of all their efforts, that they
express their agreement, and agree that they shall not be interpreted in favor
of either Landlord or Tenant or against either Landlord or Tenant merely because
of any party's efforts in preparing such documents.

          17.21     Counterparts.  This Lease may be executed in duplicate
                    -------------                                         
counterparts, each of which shall be deemed an original hereof or thereof.

          17.22     Relationship of Landlord and Tenant.  The relationship of
                    -----------------------------------                      
Landlord and Tenant is the relationship of lessor and lessee. Landlord and
Tenant are not partners, joint venturers, or associates.








               {remainder of this page left intentionally blank}


                                     -59-

 
        IN WITNESS WHEREOF, the parties hereto have executed this Lease or
caused the same to be executed by their respective duly authorized officers as
of the date first set forth above.

                    CAPITAL AUTOMOTIVE L.P.

                    By:  Capital Automotive REIT,
                         Its General Partner

                         By:
                            ---------------------------
                         Name:  Thomas D. Eckert
                         Title: President and Chief Executive Officer

                    KLINE CHEVROLET SALES CORP.
 

                    By:
                       --------------------------------
                    Name:  James M. Kline
                    Title: Chairman of the Board
 

                                     -60-

 
                    LEASE AGREEMENT EXHIBITS AND SCHEDULES

                                   SCHEDULES

     A              Leased Properties
     B              Permitted Liens
     12.02          Material Agreements
     12.03          Changes in Condition

 
                                   EXHIBITS

     2.02           Payment Account Information
     2.04           Base Annual Rent Adjustment
     5.07           Environmental Reports
     15.02          Form of Subordination and Non-Disturbance Agreement

 
                                  SCHEDULE A
                                  ----------

                               Leased Properties


Leased Properties:

Three parcels of land located in the City of Chesapeake, Virginia, comprising
approximately twenty-five (25) acres, together with the buildings and other
improvements constructed on the land. The land fronts on South Military Highway,
Old Greenbrier Road and Providence Road. The property address is 1495 to1501
South Military Highway, Chesapeake, Virginia 23320. The property tax
identification numbers are 0200000000034 and 020000000031.

Initial Base Annual Rent:

$960,000

 
                                 EXHIBIT 2.02
                                 ------------

                          Payment Account Information

     Wiring instructions for the Landlord's operating account are as follows:

     FIRST UNION NATIONAL BANK OF VIRGINIA
     CHARLOTTE, NC
     ABA# 051400549

     For Credit to:  CAPITAL AUTOMOTIVE REIT, Operating Account
                     Account # 2050000478240

 
                                 EXHIBIT 2.04
                                 ------------

                          Base Annual Rent Adjustment

     The Base Annual Rent shall be increased, effective as of the commencement
of the second Lease Year and as of each subsequent Lease Year by an amount equal
to the Initial Base Rent multiplied by one hundred percent (100%) of the change
in the Index during the immediately preceding one (1) year period; provided,
however, that, in the event that the above-calculated adjustment is greater than
three percent (3%), such adjustment shall be equal to three percent (3%), and if
the above-calculated adjustment is less than one percent (1%), such adjustment
shall be equal to one percent (1%).

 
SUBORDINATION AND NON-DISTURBANCE AGREEMENT
-------------------------------------------


     THIS AGREEMENT is made as of this ___ day of __________, 1997, among
_____________, a ___________ organized under the laws of the State of
_____________ ("Lender"), __________________ ("Tenant"), and CAPITAL AUTOMOTIVE
L.P., a Delaware limited partnership ("Landlord").

                                  WITNESSETH:
                                  -----------

     WHEREAS, Landlord and Tenant have entered into a certain Lease, dated
____________________ , which lease and all amendments, modifications,
assignments, subleases  and other agreements related thereto are attached hereto
as Exhibit A and incorporated herein by this reference (collectively, the
   ---------                                                             
"Lease"), which Lease relates to the premises described therein (the
"Premises"), and

     WHEREAS, Lender has made or has committed to make a first mortgage loan to
Landlord in the principal amount not to exceed $_________ (the "Loan"), the Loan
being secured by a mortgage, deed of  trust or security deed (collectively, the
"Mortgage") and an assignment(s) of leases and rents from Landlord to Lender
covering the Premises; and

     WHEREAS, Tenant has agreed that the Lease shall be subject and subordinate
to the Mortgage held by Lender, provided Tenant is assured of continued
occupancy of the Premises under the terms of the Lease;

     NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the sum of Ten Dollars ($10.00) and other good and valuable
considerations, the receipt and sufficiency of which are hereby acknowledged,
and notwithstanding anything in the Lease to the contrary, it is hereby agreed
as follows:

     1.   Subordination of Lease.  Lender, Tenant and Landlord do hereby
          ----------------------                                        
covenant and agree that the Lease with all rights, options, liens and charges
created thereby, is and shall continue to be subject and subordinate in all
respects to the Mortgage and to any renewals, modifications, consolidations,
replacements and extensions thereof and to all advancements made thereunder.

     2.   Nondisturbance of Tenant.  Lender does  hereby agree with Tenant that,
          ------------------------                                              
in the event Lender becomes the owner of the Premises by foreclosure, conveyance
in lieu of foreclosure or otherwise, so long as Tenant complies with and
performs its obligations under the Lease, (a) Lender will take no action which
will interfere with or disturb Tenant's possession or use of the Premises or
other rights under the Lease, and (b) the Premises shall be subject to the Lease
and Lender shall recognize Tenant as the tenant of the Premises for the
remainder of the terms of the Lease in accordance with the provisions thereof,
provided, however, that Lender shall not be subject to any offsets or defenses
which Tenant might have against any prior landlord except those which arose
under the provisions of the Lease out of such landlord's default and accrued
after Tenant had notified Lender and given Lender the opportunity to cure same
as hereinbelow provided, nor shall Lender 

 
be liable for any act or omission of any prior landlord, nor shall Lender be
bound by any rent or additional rent which Tenant might have paid for more than
the current month to any prior landlord nor shall it be bound by any amendment
or modification of the Lease made without its consent.

     3.   Attornment by Tenant.  Tenant does hereby agree with Lender that, in
          --------------------                                                
the event Lender becomes the owner of the Premises by foreclosure, conveyance in
lieu of foreclosure or otherwise, then Tenant shall attorn to and recognize
Lender as the landlord under the Lease for the remainder of the term thereof,
and Tenant shall perform and observe its obligations thereunder, subject only to
the terms and conditions of the Lease.  In such event, Lender shall not be
liable for any act or omission of any prior landlord, liable for return of the
security deposit unless same was actually delivered to Lender, bound by any
amendment to or assignment of the Lease made without its consent, bound by any
rent paid more than thirty (30) days in advance, or be subject to any set-off or
defense Tenant might have had against any prior landlord.  Tenant further
covenants and agrees to execute and deliver upon request of Lender or its
assigns, an appropriate Agreement of Attornment to Lender and any subsequent
titleholder of the Premises.

     4.   Acknowledgment of Acquisition Rights. Lender acknowledges that Tenant
          ------------------------------------                                 
has certain purchase rights under the lease.  So long as Tenant complies with
the provisions of the Lease, Lender acknowledges that Tenant may exercise such
rights and Lender will honor such rights so long as Tenant pays the acquisition
price to Lender or otherwise obtains a release from Lender.

     5.   Curative Rights, Modification of Lease, and Advance Payment of Rent.
          -------------------------------------------------------------------  
So long as the Mortgage remains outstanding and unsatisfied:

     (a)  Tenant will mail or deliver to Lender, at the address and in the
manner hereinbelow provided, a copy of all notices permitted or required to be
given to the Landlord by Tenant under and pursuant to the terms and provisions
of the Lease. At any time before the rights of the Landlord shall have been
forfeited or adversely affected because of any default of the Landlord, or
within the time permitted the Landlord for curing any default under the Lease as
therein provided, Lender may, but shall have no obligation to, pay any taxes and
assessments, make any repairs and improvements, make any deposits or do any
other act or thing required of the Landlord by the terms of the Lease; and all
payments so made and all things so done and performed by Lender shall be as
effective to prevent the rights of the Landlord from being forfeited or
adversely affected because of any default under the Lease as the same would have
been if done and performed by the Landlord.

     (b)  Tenant will not consent to the modification of the Lease, nor to the
termination thereof, without the prior written consent of Lender, such consent
not to be unreasonably withheld or delayed, nor will Tenant pay any rent under
the Lease more than thirty (30) days in advance.

     6.   Consent to Assignment.  Tenant acknowledges that Landlord will execute
          ---------------------                                                 
and deliver to Lender an assignment of the Lease as security for the Loan, and
Tenant hereby expressly consents to such assignment.

     7.   Limitation of Liability.  Lender shall have no liability whatsoever
          -----------------------                                            
hereunder prior to becoming the owner of the Premises; and Tenant agrees that if
Lender becomes the owner of the

 
Premises, Tenant shall look solely to the estate or interest of Lender in the
Premises for satisfaction of any obligation which may be or become owing by
Lender to Tenant hereunder or under the Lease.

     8.   Landlord and Tenant Certifications.  Landlord and Tenant hereby
          ----------------------------------                             
certify to Lender that the Lease has been duly executed by Landlord and Tenant
and is in full force and effect, that the Lease and any modifications and
amendments specified herein are a complete statement of the agreement between
Landlord and Tenant with respect to the leasing of the Premises, and the Lease
has not been modified or amended except as specified herein; that to the
knowledge of Landlord and Tenant, no party to the Lease is in default
thereunder; that no rent under the Lease has been paid more than thirty (30)
days in advance of its due date; and that Tenant, as of this date, has no
charge, lien or claim of offset under the Lease, or otherwise, against the rents
or other charges due or to become due thereunder.

     9.   Tenant Estoppel Certifications.  With the knowledge that Lender, as
          ------------------------------                                  
beneficiary of the mortgage encumbering the premises, will place substantial
reliance thereon in connection with the closing and funding of the Loan, Tenant
hereby makes the following certifications:

     (a)  The term of the Lease commenced on ________, 19__, and will terminate
on ______________.

     (b)  The Lease, as described above, has not been modified, amended,
assigned or subleased except as set forth in Exhibit A attached hereto, and is
                                             ---------                        
in good standing and in full force and effect.

     (c)  The Lease provides for rental payments over the term of the Lease, all
as specifically provided in the Lease. No rent under the Lease has been paid
more than thirty (30) days in advance of the due date of same. For the year
____, monthly payments, which are due on the first (1st) day of each month, are
as follows:


Basic Rent -        $________


     Payment of the above amount was timely made for the months of ______,
___and _____, ____, and the next payment of the above amount will be due on
________, ____.  In addition to the above amount, certain additional sums are
due to Landlord from Tenant under the Lease, all as specifically set forth in
the Lease.

     (d)  Tenant has paid a security deposit under the Lease.

     (e)  To Tenant's knowledge there are no defaults by Landlord under the
Lease and there are no existing circumstances which, with the passage of time,
or notice, or both, would give rise to a default under the Lease.

 
          (f)  Tenant has accepted and is occupying the Premises, and Landlord
has no unperformed obligation under the Lease to construct any improvements for
the Tenant related to the Premises.

          (g)  Tenant has no charge, lien, claim of set-off or defense against
rents or other charges due or to become due under the Lease or otherwise under
any of the terms, conditions, or covenants contained therein.

          (h)  Tenant has received no notice from any insurance company of any
defects or inadequacies in the Premises or in any part thereof which would
adversely affect the insurability of the Premises.

          (i)  Except as provided in the Lease, Tenant does not have any right
or option to purchase the Premises.

          (j)  Except as provided in the Lease, Tenant does not have any rights
or options to renew the Lease or to lease additional space in any building owned
by the Landlord.

          10.  Tenant Covenants.
               ---------------- 

          (a)  From and after the date hereof, Tenant will not pay any rent
under the Lease more than thirty (30) days in advance of its due date.

          (b)  From and after the date hereof, so long as there shall be any
assignment of Landlord's interest in the Lease to Lender, or any successor
thereto, Tenant will not:  consent to the modification of the Lease nor to the
termination thereof without the prior written consent of the Lender or any
successor holder of the Loan or the Mortgage which consent shall not be
unreasonably withheld or delayed (either of them being called "Mortgagee"), nor
seek to terminate the Lease by reason of any act or omission of Landlord until
Tenant shall have given written notice of such act or omission to such
Mortgagee's last address furnished Tenant) and until a reasonable period of time
shall have elapsed following the giving of such notice, during which period the
Mortgagee shall have the right, but not the obligation, to remedy such act or
omission.

          (c)  Upon written notice of the default by Landlord under any of the
loan documents held by Mortgagee and assignment of the Landlord's interest under
the Lease by Landlord to Mortgagee, Tenant, if Mortgagee so requests, will
recognize such Mortgagee as the Landlord under the Lease and will thereafter pay
rent and other sums to Mortgagee (or to the party designated by the Mortgagee in
writing) in accordance with the terms of the Lease, and, in such event, such
Mortgagee will not be liable for any act or omission of any prior lessor, liable
for return of the security deposit unless same was actually delivered to
Mortgagee, bound by any amendment to or assignment of the Lease made without its
consent, bound by any rent paid more than thirty (30) days in advance, or be
subject to any set-off or defense Tenant might have had against any prior
lessor.

 
          11.  Notices.  Unless and except as otherwise specifically provided
               -------                                                       
herein, any and all notices, elections, approvals, consents, demands, requests
and responses thereto ("Communications") permitted or required to be given under
this Agreement shall be in writing, signed by or on behalf of the party giving
the same, and shall be deemed to have been properly given and shall be effective
upon the earlier of receipt thereof or three (3) days after deposit thereof in
the United States mail, postage prepaid, certified with return receipt
requested, to the other party at the address of such other party set forth
hereinbelow or at such other address within the continental United States as
such other party may designate by notice specifically designated as a notice of
change of address and given in accordance herewith; provided, however, that the
time period in which a response to any Communication must be given shall
commence on the date of receipt thereof, and provided further that no notice of
change of address shall be effective with respect to Communications sent prior
to the time of receipt of such change.  Receipt of Communications hereunder
shall occur upon actual delivery (whether by mail, facsimile transmission,
messenger, courier service, or otherwise) to an individual party or to an
officer, member, or general or limited partner of a party or to any agent or
employee of such party at the address of such party set forth hereinbelow,
subject to change as provided hereinabove.  An attempted delivery in accordance
with the foregoing, acceptance of which is refused or rejected, shall be deemed
to be and shall constitute receipt; and an attempted delivery in accordance with
the foregoing by mail, messenger, or courier service (whichever is chosen by the
sender) which is not completed because of changed address of which no notice was
received by the sender in accordance with this provision prior to the sending of
the Communication shall also be deemed to be and constitute receipt.  Any
Communication, if given to Lender, must be addressed as follows, subject to
change as provided hereinabove:


                                  -------------------------
                                  -------------------------

and, if given to Tenant, must be addressed as follows, subject to change as
provided hereinabove:

                                  -------------------------
                                  -------------------------
                                  -------------------------

and, if given to Landlord, must be addressed as follows, subject to change as
provided hereinabove:

                                  Capital Automotive, L.P.

                                  -------------------------
                                  -------------------------

          12.  Miscellaneous.  This Agreement shall be binding upon and inure to
               -------------                                                    
the benefit of the parties hereto and their respective heirs, legal
representatives, successors, successors-in-title and assigns.  When used herein,
the term "Landlord" or "landlord" refers to Landlord and to any successor to the
interest of Landlord under the Lease.

 
                     [THIS SPACE INTENTIONALLY LEFT BLANK]

 
          IN WITNESS WHEREOF, the parties hereto have executed this Agreement
under seal as of the date first above written.

                                       LENDER:

Signed, sealed and delivered
in the presence of:                    By:
                                       Title:

-------------------------------        -----------------------------
Witness                                (CORPORATE SEAL)



                                       TENANT:

Signed, sealed and delivered
in the presence of:                    By:
                                       Title:

-------------------------------        -----------------------------
Witness                                (CORPORATE SEAL)


                                       LANDLORD:

Signed, sealed and delivered
in the presence of:                    By:
                                       Title:

-------------------------------        -----------------------------
Witness                                (PARTNERSHIP SEAL)

 
                                   EXHIBIT A


Lease Dated __________ from ________________ to _______________ with Exhibit A
attached, all in the form attached hereto as Attachment to Exhibit A.
                                             ------------------------

 
County of  ________________________:
                                         SS:
State of __________________________:

          This is to certify that on this ____ day of ________, 1997, personally
appeared before me, a notary public of the County (City) aforesaid, known to me
(or satisfactorily identified to me) to be the individual signing on behalf of
Lender in the capacity stated by his signature, and that he acknowledged the
within document to be the act and deed of the Lender.



                                    -------------------------------
                                    Notary Public

                                    My commission expires:

 
County of  ___________________:
                                         SS:
State of _____________________:

          This is to certify that on this ____ day of _________, 1997,
personally appeared before me, a notary public of the County (City) aforesaid,
known to me (or satisfactorily identified to me) to be the individual signing on
behalf of Tenant in the capacity stated by his signature, and that he
acknowledged the within document to be the act and deed of the Tenant.



                                    --------------------------------
                                    Notary Public

                                    My commission expires:

 
County of _____________________
                                     SS:
State of ______________________

          This is to certify that on this ____ day of _______, 1997, personally
appeared before me, a notary public of the County (City) aforesaid, known to me
(or satisfactorily identified to me) to be the individual signing on behalf of
Landlord in the capacity stated by his signature, and that he acknowledged the
within document to be the act and deed of the Landlord.



                                    -------------------------------
                                    Notary Public

                                    My commission expires:

 
                            CAPITAL AUTOMOTIVE REIT
                         1925 North Lynn Street, #306
                          Arlington, Virginia 22209


                               January 10, 1998


Good News Salisbury, Inc.
Attention: Roy L. Meyers, Jr.
2013 N. Salisbury Blvd.
Salisbury, Maryland 21801

Dear Mr. Meyers:

          We hereby agree that the escrow of Impositions pursuant to Section
3.04 of the Lease Agreement is irrevocably waived.

          We hereby further agree that the joint and several indemnity to be
provided by Roy L. Meyers, Jr. and Charlotte Meyers in Section 11.2.3(ii) under
each of the Real Property Purchase Agreements shall not exceed, in the aggregate
under both Agreements together, $2,000,000, less the amounts, if any, paid by
the Sellers that counts against the obligation of Roy L. Meyers, Jr. and
Charlotte Meyers under Section 11.2.3 of both Agreements together.

          We acknowledge that you would not enter into the Real Property
Purchase Agreement if we had not agreed to the waiver of the escrow of
Impositions and the agreement to aggregate the joint and several indemnity set
forth above.  The waiver pursuant to this letter shall be binding upon us and
our successors and assigns.


                                         Capital Automotive L.P.


                                         By:  Capital Automotive REIT,
                                              its General Partner


                                         By: /s/ Thomas D. Eckert
                                                 Thomas D. Eckert,
                                                 President and Chief Executive
                                                 Officer

 
                                EXHIBIT 2.4(c)
                                --------------

                     Guaranty and Subordination Agreement


          THIS GUARANTY AND SUBORDINATION AGREEMENT (this "Agreement"), made as
of the __ day of January, 1998, by  Kline Imports Chesapeake, Inc., a Virginia
corporation ("Guarantor"), in favor of Capital Automotive, L.P., a Delaware
limited partnership ("Landlord").

                                  WITNESSETH:
                                  ---------- 

          WHEREAS, Landlord has this day entered into a lease (the "Lease") of
certain Properties identified on Schedule A hereto (individually a "Property"
and collectively the "Properties") with  Kline Chevrolet Sales Corporation, a
Virginia corporation ("Tenant"), this Agreement being attached to the Lease;

          WHEREAS, Tenant is an affilate of Guarantor; and

          WHEREAS, Landlord has required, as a condition to entering into the
Lease, Guarantor to be a guarantor of each and every obligation imposed upon
Tenant by the Lease.

          NOW, THEREFORE, to induce Landlord to enter into the Lease and in
consideration of the foregoing premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Guarantor, for itself, its successors and assigns, hereby covenants and agrees
for the benefit of Landlord, as follows:

          1.   Guaranty.  Guarantor does hereby unconditionally and irrevocably
               --------                                                        
guarantee to Landlord the full, complete and timely performance of all
obligations imposed on Tenant by the terms of the Lease, including, but  not
limited to, the full, complete and timely payment of rent and all other sums due
by Tenant under the Lease, and the payment as required by the Lease of all
damages to Landlord which may result from Tenant's breach of any provision of
the Lease, including, but not limited to, those relating to damage to any
Property or the leased premises.

          2.   Guaranty of Payment and Performance.  Guarantor acknowledges and
               -----------------------------------                             
agrees that this is a guaranty of payment and performance and not mere
collection.  The liability of Guarantor under this Agreement shall be direct and
immediate and not conditional or contingent upon the pursuit of any remedies
against Tenant or any other person or entity.  Guarantor waives any right to
require that an action be brought against Tenant or any other person or entity.
In the event, on account of the Bankruptcy Reform Act of 1978, as amended, or
any other debtor relief law (whether statutory, common law, case law or
otherwise) of any jurisdiction whatsoever, now or hereafter in effect, which may
be or become applicable, Tenant shall be relieved of the Lease or any debt,
obligation or liability as provided in the Lease, Guarantor shall nevertheless
be fully liable for the complete and timely performance of all obligations
imposed on Tenant by the Lease throughout the entire term of the Lease, all to
the same extent as if Guarantor had been the original tenant thereunder and the
Lease shall be deemed unaffected by any such relief granted to Tenant.  In the

 
event of a default under the Lease which is not cured within any applicable
grace or cure period, Landlord shall have the right to enforce its rights,
powers and remedies thereunder or hereunder, in any order to the maximum extent
permitted by law, and all rights, powers and remedies provided thereunder or
hereunder or by law or in equity.  If the obligations guaranteed hereby are
partially performed, paid or discharged by reason of the exercise of any of the
remedies available to Landlord, this Agreement shall nevertheless remain in full
force and effect, and Guarantor shall continue to be liable for all remaining
obligations guaranteed hereby, even though any rights which Guarantor may have
against Tenant may be destroyed or dismissed by the exercise of any such remedy.

          3.   Waivers by Guarantor.  To the extent permitted by law, Guarantor
               --------------------                                            
hereby waives and agrees not to assert or take advantage of:

       (a) Any right to require Landlord to proceed against Tenant or any other
person or entity or to proceed against or exhaust any security held by Landlord
at any time or to pursue any other remedy in Landlord's power or under any other
agreement before proceeding against Guarantor;

       (b) Any defense that may arise by reason of the incapacity, lack of
authority, death or disability of any other person or persons or the failure of
Landlord to file or enforce a claim against the estate (in administration,
bankruptcy or any other proceeding) of any other person or persons:

       (c) Any defense based upon an election of remedies by Landlord;

       (d) Any right or claim or right to cause a marshaling of the assets of
Tenant or Guarantor;

       (e) Any invalidity, irregularity or unenforceability, in whole or in
part, of any one or more provisions of the Lease;

       (f) Any modification of the Lease or of any obligation of Tenant
thereunder by amendments to the Lease, by waivers granted by Landlord or by
operation of law or by action of any court, whether pursuant to the Bankruptcy
Reform Act of 1978, as amended, or any other debtor relief law (whether
statutory, common law, case law or otherwise) of any jurisdiction whatsoever,
now or hereafter in effect, or otherwise.

     4.  Subordination.  Guarantor and those parties signing below for the
         -------------                                                    
purpose of being bound by this Section 4 (collectively, "Section 4 Signers)
hereby unconditionally and irrevocably subordinate (i) all payments due or to
become due by Tenant to the Section 4 Signers, or any of them, by reason of any
and all debts or other obligations, including the obligation to pay salaries or
other compensation (collectively "Debt Payments") and (ii) the receipt of all
dividends or other distributions of any kind or nature (collectively,
"Distributions") to the payment of all sums due or to become due by Tenant to
Landlord under the Lease, including the payment of Rent and all 

                                     -18-

 
damages due by reason of Tenant's breach of the Lease; provided, however, that
for so long as there shall be no existing Event of Default under the Lease,
after the payment of each monthly installment of Rent, the Section 4 Signers
shall be entitled to receive Debt Payments due for such month.
 
     5.  Termination of Guaranty.  This Guaranty shall terminate if at any time
         -----------------------                                               
during the term or any extension term of the Lease, Guarantor (having entered
into a sub-lease with Tenant under the Lease) shall assign its sub-lease under
the Lease to an unaffiliated third party (and such assignment shall be consented
to by Landlord).  This termination clause shall not be effective if Guarantor
does not enter into a sub-lease under the Lease.  The termination of this
Guaranty by reason of Guarantor's assignment of its sub-lease under the Lease
shall in no manner effect, nor be construed to effect, Guarantor's obligations
hereunder against any default under the Lease by Tenant that shall have occured
prior to the termination of this Guaranty.
 
     6.  General Provisions.
         ------------------ 

         (a) Survival. This Agreement shall be deemed to be continuing in nature
             --------
and shall remain in full force and effect and shall survive the exercise of any
remedy by Landlord under the Lease;

         (b) No Subrogation; No Recourse Against Landlord.  Notwithstanding the
             --------------------------------------------                      
satisfaction by Guarantor of any liability hereunder, Guarantor's rights of
subrogation, contribution, reimbursement or indemnity, if any, or any right of
recourse to or with respect to the assets or property of Tenant, shall be
subject and subordinate to the rights of Landlord.

         (c) Entire Agreement; Amendment; Severability.  This Agreement contains
             -----------------------------------------                          
the entire agreement between the parties respecting the matters herein set forth
and supersedes all prior agreements, whether written or oral, between the
parties respecting such matters.  Any amendments or modifications hereto, in
order to be effective, shall be in writing and executed by Landlord and
Guarantor.  A determination that any provision of this Agreement is
unenforceable or invalid shall not affect the enforceability or validity of any
other provision, and any determination that the application of any provision of
this Agreement to any person or circumstance is illegal or unenforceable shall
not affect the enforceability or validity of such provision as it may apply to
any other persons or circumstances.

         (d) Governing Law: Binding Effect; Waiver of Acceptance. This Agreement
             ---------------------------------------------------
shall be governed by and construed in accordance with the laws of the State of
Virginia without regard to conflicts of laws principles thereof. This Agreement
shall bind Guarantor, it successors and assigns (but in the event of an
assignment, Guarantor shall not be relieved of its obligations hereunder), and
shall inure to the benefit of Landlord, its successors and assigns. Guarantor
hereby waives any acceptance of this Agreement by Landlord and this Agreement
shall immediately be binding upon Guarantor.

                                     -19-

 
           (e)   Notice.  All notices, demands, requests or other communications
                 ------
to be sent by one party to the other hereunder or required by law shall be in
writing and shall be deemed to have been validly given or served by delivery of
the same in person to the intended addressee, or certified mail or by depositing
the same with Federal Express or another reputable private courier service for
next business day delivery to the intended addressee at its address set forth in
the last section of this Agreement or at such other address as may be designated
by such party as herein provided. All notices, demands and requests shall be
effective upon such personal delivery, or one (1) business day after being
deposited with the private courier service, or two (2) business days after being
deposited in the United States mail as required above. Rejection or other
refusal to accept or the inability to deliver because of changed address of
which no notice was given as herein required shall be deemed to be receipt of
the notice, demand or request sent. By giving to the other party hereto at least
seven (7) days' prior written notice thereof in accordance with the provisions
hereof, each party shall have the right from time to time to change their
respective addresses and each shall have the right to specify as its address any
other address within the United States of America.

           (f)   No Waiver; Time of Essence.  The failure of either party to
                 --------------------------
enforce any of the respective rights or remedies hereunder, or to promptly
enforce any such rights or remedies, shall not constitute a waiver thereof nor
give rise to any estoppel against such party nor excuse any of the parties
hereto from their respective obligations hereunder. Any waiver of such right or
remedy must be in writing and signed by the party to be bound and must expressly
state that such right or remedy has been or thereby is waived. This Agreement is
subject to enforcement at law or in equity, including actions for damages or
specific performance. Time is of the essence hereof.

           (g)   Captions for Convenience.  The captions and headings of the
                 ------------------------
section and paragraphs of this Agreement are for convenience of reference only
and shall not be construed in interpreting the provisions hereof.

           (h)   Attorney's Fees.  In the event it is necessary for Landlord to
                 ---------------
retain the services of an attorney or any other consultants in order to enforce
this Agreement, or any portion hereof, Guarantor shall promptly pay to Landlord
any and all costs and expenses, including, without limitation, attorney's fees,
incurred by Landlord as a result thereof and such costs, fees and expenses shall
be included in the costs of the case to the extent the Landlord wins the issue
under contest.

           (i)   Successive Actions.  Separate and successive actions may be
                 ------------------
brought hereunder to enforce any of the provisions hereof at any time and from
time to time. No action hereunder shall preclude any subsequent action, and
Guarantor hereby waives any covenants to the maximum extent permitted by law not
to assert any defense in the nature of splitting of causes of action or merger
of judgments.

           (j)   Reliance.  Landlord would not enter into the Lease without this
                 --------                                                       
Agreement. Accordingly, Guarantor intentionally, irrevocably and unconditionally
enters into the covenants and agreements as set forth above and understand that,
in reliance upon and in consideration of such covenants and agreements, the
Lease has been made.

                                     -20-

 
     4.    Notices:  The following addresses shall be used for notice purposes:
           -------                                                             

           If to Guarantor:

           Kline Imports Chesapeake, Inc.
           c/o The Magnus Group Ltd.
           1350 Connecticut Avenue, N.W.
           Suite 1225
           Washington, D.C. 20036

           with a copy to:

           Kaufman & Canoles, A Professional Corporation
           2000 Nations Bank Center
           One Commercial Place
           Norfolk, Virginia, 23514
           Attention: William R. Van Buren, III, Esq.

           If to Landlord:
 
           Capital Automotive L.P.
           1925 North Lynn Street, Suite 306
           Arlington, Virginia  22209

           With copies to:
 
           Wilmer, Cutler & Pickering
           2445 M Street, N.W.
           Washington, D.C. 20037-1420
           Attention: George P. Stamas

                                     -21-

 
     IN WITNESS WHEREOF, Guarantor has executed this Agreement under seal as of
the day and year first above written:

                                       GUARANTOR:

ATTEST/WITNESS:
                           
                                       -----------------------------------
----------------------------------     By:    James M. Kline
Name:                                  Title: Chairman of the Board
     -----------------------------


                                     -22-

 
                               EXHIBIT 5.2.1(M)



Capital Automotive REIT
1925 North Lynn Street
Suite 306
Arlington, VA 22209

Attention:   Thomas D. Eckert, President and
                 Chief Executive Officer

RE:  Purchase Agreement ("Agreement") made as of __________ __, 1998 between
     _____________________, ____________________ and ___________________
     (individually a "Seller" and collectively the "Sellers"), Capital
     Automotive REIT, on its own behalf and as sole general partner of Capital
     Automotive L.P. (the "Landlord")

Ladies and Gentlemen:

We have acted as special counsel to the Sellers, in connection with the entering
into of the Agreement. You have asked for our opinion concerning certain matters
relating to the Agreement.

We have examined the original (or photostatic copies) of the executed
counterparts of the Agreement.

We have also examined the following organizational documents related to the
Sellers (the "Organizational Documents"):

(i)   The certificate of incorporation or certificate of limited partnership, as
the case may be, of each of the corporate or partnership Sellers, certified by
the Secretary of State of ________ on _______________;

(ii)  The bylaws or limited partnership agreement, as the case may be, of each
of the corporate or partnership Sellers, certified to be true and correct by an
authorized signing officer of each of the corporate or partnership Sellers as of
________________;

(iii) Certificates from the Secretary of State of the States of _______,
_________ and __________ indicating that each of the REIT, partnership and
Sellers is in good standing in the State of its organization or formation; and

                                     -23-

 
(iv)  A certified copy of resolutions adopted by the unanimous written consent
of the board of directors of each of the corporate Sellers or the board of
directors of the general partner of each of the partnership Sellers authorizing
the execution and delivery by each of the corporate or partnership Sellers of
the Agreement.

The opinions in paragraphs 1 and 7 below are based solely on our review of the
Organizational Documents.

In reaching the opinions set forth below, we have assumed that (i) each entity
that is a party to the Agreement (other than one of the Sellers) is a duly
organized or duly formed entity and is validly existing and in good standing,
(ii) each party to the Agreements (other than one of the Sellers) has duly and
validly executed and delivered each instrument, document and agreement to which
it is a signatory and that its obligations are its legal, valid and binding
obligations, enforceable in accordance with their respective terms, (iii) each
person executing any instrument, document or agreement on behalf of any party
(other than one of the Sellers) is duly authorized to do so, and (iv) each
natural person executing any instrument, document or agreement referred to in
this letter is legally competent to do so.

In our examination of Agreement for purposes of this letter, we have assumed
that (i) all signatures on the Agreement submitted to us for examination are
genuine, (ii) any original Agreement submitted to us for examination is
authentic, and (iii) all copies of the Agreement submitted to us for examination
conform to the original.

The opinions expressed in this letter concern only the effect of the laws of the
States of _______, _______ and _______ it being understood, however, that we are
not admitted to practice law in such States.  We express no opinion on the
applicability of the law of any other jurisdiction.  We assume no obligation to
supplement or modify this opinion if any applicable law changes in any manner.

Based on, and in reliance upon, the foregoing, and subject to the qualifications
stated herein, it is our opinion that:

     1.    Each of the Sellers is a corporation or limited partnership duly
organized or formed, validly existing and in good standing under the laws of the
State of its organization or formation.

     2.    Each of the corporate Sellers has the requisite corporate power to
execute and deliver, and to perform its obligations under, the Agreement.

     3.    The general partner of each of the partnership Sellers has the
requisite corporate power and authority to own its properties and carry on its
business and to execute and deliver, and to perform its obligations under, the
Agreement, and to execute and deliver on behalf of such partnership Seller, and
to bind such partnership Seller to, the Agreement.

                                     -24-

 
     4.    The execution and delivery by each corporate Seller of the Agreement
have been duly authorized by all necessary corporate actions of such Seller.

     5.    The execution, delivery and performance of the Agreement by the
general partner of each partnership Seller on behalf of such partnership Seller
have been duly authorized by all necessary corporate actions, and the
individuals executing the Agreement on behalf of such general partner have been
duly authorized to do so.

     6.    The execution, delivery, and performance by each corporate Seller of
the Agreement will not violate the charter or bylaws of such Seller.

     7.    The execution and delivery by the general partner of each partnership
Seller, and such general partner's performance of its obligations under, the
Agreement on behalf of each partnership Seller will not violate such partnership
Seller's Organizational Documents.

     8.    The Agreement has been duly executed and delivered by each Seller and
is the legal, valid and binding obligation of each Seller, enforceable against
each Seller in accordance with its terms.

     The opinions set forth above are subject to the following qualifications:

     (a)   The validity, binding nature and enforceability of the Agreement may
be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws or equitable principles relating to or affecting the
rights of creditors or other obligees generally.

     (b)   The validity, binding nature and enforceability of the Agreement may
be limited by applicable principles of equity, whether such principles are
applied by a court of equity or a court of law, and we express no opinion on
whether a court would grant specific performance, injunctive relief or any other
equitable remedy.

     (c)   A court could refuse to enforce the Landlord's remedies under the
Agreement by reason of (i) a waiver by the Landlord, (ii) unconscionable conduct
by the Landlord, (iii) the exercise of remedies by the Landlord without
providing adequate notice to one of the Sellers or its default and a reasonable
opportunity to cure the default, (iv) the court's determination that one of the
Contributors is entitled to an opportunity to be heard by the court before the
Landlord is entitled to exercise any remedies, (v) the court's determination
that a remedy is a penalty or is unconscionable, (vi) the court's determination
that the Landlord is seeking to exercise remedies with respect to a breach that
is immaterial or that does not adversely affect the Landlord or the Landlord's
security, (vii) defenses arising from the Landlord's failure to act in
accordance with the terms and conditions of the Agreement, (viii) defenses
arising as a consequence of the passage of time (e.g., laches or statutes of
limitation), (ix) defenses arising as a result of the Landlord's failure to act
in a commercially reasonable manner or in good faith, or (x) public policy
considerations.

                                     -25-

 
     (d)   We express no opinion with respect to any of the following provisions
if they are contained in the Agreement: (i) any provisions under which any of
the Sellers waives any of their legal or equitable rights except to the extent
the waived rights are expressly waivable pursuant to a statute or constitutional
provision, (ii) any provisions entitling the Landlord to obtain reimbursement
for attorneys' fees and other costs incurred by the Landlord, (iii) any
severability provision, (iv) any provision to the effect that rights or remedies
are not exclusive, that every right or remedy is cumulative and may be exercised
in addition to or with any other right or remedy or that the election of a
particular remedy does not preclude recourse to one or more other remedies, (v)
any provision which purports to affect jurisdiction or venue of any specified
court or courts, or which purports to establish evidentiary standards, or (vi)
any provision that purports to grant the Landlord relief from any provisions of
the Bankruptcy Code.

The opinions expressed in this letter are solely for the use of the parties to
whom this letter is addressed (or the successors or assigns of the Landlord
under the Agreement). These opinions may not be relied on by any other persons,
may not be quoted in whole or in part, and may not be filed with any
governmental agency, in each case without our express prior written approval.
The opinions expressed in this letter are limited to the matters set forth in
this opinion, and no other opinions should be inferred beyond the matters
expressly stated.

                                       Very truly yours,


                                     -26-

 
EXHIBIT 5.2.2(d)
----------------

       Opinion of Wilmer, Cutler & Pickering to be Delivered at Closing:

1.   The Company is a corporation duly organized or formed, validly existing and
in good standing under the laws of the State of Delaware.

2.   The Partnership is a limited partnership duly organized or formed, validly
existing and in good standing under the laws of the State of Maryland.

3.   Each of the Company and the Partnership has the requisite corporate or
partnership power (respectively) to execute and deliver, and to perform its
obligations under, the Agreement.

4.   The general partner of the Partnership has the requisite partnership power
and authority to carry on its business and to execute an deliver, and to perform
its obligations under, the Agreement and to execute and deliver on behalf of
such Partnership, and to bind the Partnership to, the Agreement.

5.   The execution and delivery by each of the Company and the Partnership has
been duly authorized by all necessary corporate or partnership actions
(respectively).

6.   The execution, delivery and performance of the Agreement by the general
partner of the Partnership on behalf of the Partnership have been duly
authorized by all necessary partnership actions, and the individuals executing
the Agreement on behalf of such general partner have been duly authorized to do
so.

7.   The execution, delivery and performance by the Company will not violate the
charter or bylaws of the Company.

8.   The execution, delivery and performance by the general partner of the
Partnership, and such general partner's performance of its obligations under,
the Agreement on behalf of the Partnership will not violate the Partnerships
Organizational Documents.

9.   The Agreement has been duly executed and delivered by each of the
Partnership and the Company and is the legal, valid and binding obligation of
each, enforceable against each in accordance with its terms, except to the
extent that enforcement may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, arrangement, moratorium or similar laws, or by
equitable principles, relating to or limiting rights or creditors generally.

                                     -27-

 
                               EXHIBIT 5.2.1(m)
                               ----------------

                          Opinion of Seller's Counsel


     Seller shall deliver at Closing, an opinion of counsel substantially in the
form to be delivered by Wilmer, Cutler & Pickering pursuant to Exhibit 5.2.2(d)
hereto.


                                     -28-

 
                                  Schedule 1.2
                                       to
                        Real Property Purchase Agreement
                                    between
                   Kline Chevrolet Sales Corporation, Seller,
                                      and
                    Capital Automotive L.P., the Partnership
                                      and
                      Capital Automotive REIT, the Company

Description of Property:
----------------------- 

Seller           Kline Chevrolet Sales Corporation
------           c/o The Magnus Group, Ltd.
                 1350 Connecticut Avenue, N.W.
                 Suite 1225
                 Washington, D.C.  20036

Property:        a.     Three parcels of land located in the City of Chesapeake,
--------                Virginia, comprising approximately twenty-five (25)
                        acres, together with the buildings and other
                        improvements constructed on the land. The land fronts on
                        S. Military Highway, Old Greenbrier Road and Providence
                        Road

                 b.     Address:   1495-1501 S. Military Highway, Chesapeake,
                        Virginia 23320

                 c.     Tax parcel numbers:   0200000000034 and 0200000000031

Purchase Price:  Eight Million Five Hundred Thousand Dollars ($8,500,000) (of
--------------   which $2,000,000 is to be paid to James M. Kline in
                 consideration of the termination of the lease between Kline
                 Chevrolet Sales Corporation, as landlord, and James M. Kline,
                 as tenant, dated June 1, 1991)

Mortgages:              a.    Parcels A & B (together, approximately 11 acres) -
---------                     Deed of trust securing $5,560,000 loan from Toyota
                              Motor Credit Corporation ("TMCC"); current balance
                              $2,818,960.55.

                                     -29-

 
                        b.    Parcel C (approximately 14 acres) - Deed of trust
                              securing $1,234,956 loan from TMCC; current
                              balance $_____________.


                                     -30-

 
                                 Schedule 2.1
                                      to
                       Real Property Purchase Agreement
                                    between
                  Kline Chevrolet Sales Corporation, Seller,
                                      and
                   Capital Automotive L.P., the Partnership
                                      and
                     Capital Automotive REIT, the Company


Prior Occupants:
--------------- 

                  1.          Kline Imports Chesapeake, Inc.
                              c/o The Magnus Group, Ltd.
                              1350 Connecticut Avenue, N.W.
                              Suite 1225
                              Washington, D.C.  20036

                  2.          James M. Kline
                              c/o The Magnus Group, Ltd.
                              1350 Connecticut Avenue, N.W.
                              Suite 1225
                              Washington, D.C.  20036
 

                                     -31-

 
                                 Schedule 7.4
                                      to
                       Real Property Purchase Agreement
                                    between
                  Kline Chevrolet Sales Corporation, Seller,
                                      and
                   Capital Automotive L.P., the Partnership
                                      and
                     Capital Automotive REIT, the Company


Other Agreements:
---------------- 

                 None


                                     -32-

 
                                  Schedule 7.8
                                       to
                        Real Property Purchase Agreement
                                    between
                   Kline Chevrolet Sales Corporation, Seller,
                                      and
                    Capital Automotive L.P., the Partnership
                                      and
                      Capital Automotive REIT, the Company


Condition of Properties:
----------------------- 

                   None


                                     -33-

 
                                Schedule 7.13.5
                                       to
                        Real Property Purchase Agreement
                                    between
                   Kline Chevrolet Sales Corporation, Seller,
                                      and
                    Capital Automotive L.P., the Partnership
                                      and
                      Capital Automotive REIT, the Company


Substances of Concern:
--------------------- 

(a)  On-site and off-site locations for treatment or disposal of Substances of
     Concern:

          None, except as disclosed on Exhibit A to this Schedule.

(b)  Underground and Aboveground storage tanks:

          None, except as disclosed on Exhibit A to this Schedule.

(c)  Location and description of asbestos within any buildings, structures or
     office space:

          None, except as disclosed on Exhibit A to this Schedule.

(f)  Environmental Permits and Authorizations:

     (i)  Occupancy permits - City of Chesapeake
     (ii) Business licenses - City of Chesapeake
     (iii)  New and Used Car Dealer licenses - Commonwealth of Virginia,
          Division of Motor Vehicles


                                     -34-