FIRST AMENDMENT TO LEASE

Exhibit 10.3

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE effective as of July 30, 2008 (“First Amendment”) between 1444 Partners, Ltd., a California limited partnership (“Landlord”) and Guess ?, Inc., a Delaware corporation (“Tenant”) amends that certain Lease dated July 29, 1992 between Landlord and Tenant (“Lease”).  Capitalized terms used but not otherwise defined in this First Amendment shall have the respective meanings ascribed to them in the Lease.

WHEREAS, Landlord and Tenant entered into the Lease for the property commonly known as 1444 S. Alameda Street (the “Premises”); and

WHEREAS, Landlord and Tenant desire to extend the term of the Lease and to otherwise amend the Lease on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the covenants and agreements contained in this First Amendment, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the execution of this First Amendment, the parties to this First Amendment agree as follows:

1.              The Basic Lease Provisions on page (i) of the Lease are hereby amended as follows:

(a)            Lease Termination Date:  July 31, 2018;

(b)            Minimum Rent:  Two Million Eight Hundred Fifty-Two Thousand Six Hundred Sixty-Four and 36/100 Dollars ($2,852,664.36) for the period of August 1, 2008 through July 31, 2009, subject to annual increases based on the Index (as defined below);

(c)            Addresses for Notices:  All references in the Lease to:

“1444 Partners, Ltd., a California limited partnership

c/o 1444 Alameda Street, Suite 100

Los Angeles, CA  90021”

are hereby deleted in their entirety and the following shall be submitted in lieu thereof:

“1444 Partners, Ltd., a California limited partnership

144 S. Beverly Drive, Suite 600

Beverly Hills, CA  90212”

All references in the Lease to:

“Stein & Kahan, a law corporation

429 Santa Monica Boulevard, Fifth Floor

Santa Monica, CA  90401

Attn:  William E. Niles, Esq.”

are hereby deleted in their entirety and the following shall be submitted in lieu thereof:

“Rutter Hobbs & Davidoff Incorporated

1901 Avenue of the Stars, Suite 1700

Los Angeles, CA  90067

Attn:  Marc E. Petas, Esq.”

All references in the Lease to:

“Skadden, Arps, Meagher & Flom

300 S. Grand Avenue, #3400

Los Angeles, CA  90071

Attn:  Rand S. April, Esq.”

are hereby deleted in their entirety.

2.             Section 2.01 (“Length of Term”) of the Lease is hereby amended by extending the term of the Lease for an additional ten (10) years and two (2) days; such extended term to commence on July 30, 2008 and end on July 31, 2018 (“Renewal Term”).

3.             The first paragraph of Section 3.01 (“Minimum Rent”) of the Lease is hereby deleted in its entirety and the following shall be submitted in lieu thereof:

“For the period of July 30, 2008 through July 31, 2008, Tenant shall pay to Landlord an amount equal to Fifteen Thousand Three Hundred Thirty-Six and 90/100 Dollars ($15,336.90) as Minimum Rent.  The foregoing amount shall be due and payable by Tenant on July 30, 2008.  Commencing August 1, 2008, Tenant shall pay to Landlord an amount equal to Two Million Eight Hundred Fifty-Two Thousand Six Hundred Sixty-Four and 36/100 Dollars ($2,852,664.36) as Minimum Rent for the period of August 1, 2008 through July 31, 2009, in monthly installments of Two Hundred Thirty-Seven Thousand Seven Hundred Twenty-Two and 03/100 Dollars ($237,722.03), in advance, on the first (1 ^st ) day of each month of said period.  The Minimum Rent shall be increased annually on August 1 of each year of the Renewal Term, beginning with August 1, 2009 (each, an “Adjustment Date”). On each Adjustment Date, the Minimum Rent (as previously adjusted and then in effect) shall be increased by a percentage equal to the percentage increase, if any, in the Index published for the month of May immediately preceding such Adjustment Date over the Index published for the month of May immediately preceding (i) the Renewal Term commencement date in the case of the first Adjustment Date, or

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(ii) the prior Adjustment Date in the case of each subsequent Adjustment Date.  Notwithstanding any decrease in the Index, the Minimum Rent payable as of any Adjustment Date shall in no event be less than the Minimum Rent payable immediately prior to such Adjustment Date.  The term “Index” shall mean the Consumer Price Index for All Urban Consumers, Los Angeles-Riverside-Orange County, CA, subgroup “All Items”, (1982-84=100), published by the United States Department of Labor, Bureau of Labor Statistics.  If the compilation and/or publication of the Index shall be transferred to any other governmental department or bureau or agency or shall be discontinued, then the index most nearly the same as the Index shall be selected and used by Landlord.  Notwithstanding the foregoing, in no event shall Minimum Rent be increased by more than four percent (4%) for any lease year.”

4.                                        The following paragraph shall be added to the end of Section 6.06(c):

“Tenant shall immediately repair all damage resulting from the removal of any such alterations, improvements, remodeling, additions or fixtures and shall restore the Premises to a tenantable condition as reasonably determined by Landlord.  If Tenant shall fail to remove those items described above, Landlord may (but shall not be obligated to), at Tenant’s expense, remove any of such property and store, sell or otherwise deal with such property as permitted by law, at the risk of, expense of and for the account of Tenant, and the proceeds of any sale shall be applied pursuant to law.  Landlord shall in no event be responsible for the value, preservation or safekeeping of any such property.  Tenant hereby waives all claims for damages that may be caused by Landlord’s removing or storing Tenant’s personal property pursuant to this Section, and Tenant hereby indemnifies, and agrees to defend, protect and hold harmless, Landlord from any and all loss, claims, demands, actions, expenses, liability and cost (including reasonable attorneys’ fees and expenses) arising out of or in any way related to such removal or storage.”

5.             Section 15.03 of the Lease (“Refurbish and Upgrade”) is hereby deleted in its entirety.

6.             Landlord hereby grants to Tenant the option (“Option”) to extend the Renewal Term for one additional period of five (5) years (“Option Term”).  Provided Tenant is not then in default, Tenant shall have the right to exercise the Option no later than twelve (12) months, but not more than fifteen (15) months, prior to the Renewal Term expiration date.  Should Tenant fail to timely deliver written notice of the exercise of the Option, then the rights granted herein shall terminate and be of no further force or effect.  The Minimum Rent payable during the Option Term shall be the Prevailing Rent, as defined below.

Within thirty (30) days after Landlord receives written notice of Tenant’s exercise of the Option, Landlord shall notify Tenant of the prevailing monthly rent for a Triple Net Lease (as said term is defined in Section 17.01 of the Lease) for non-sublease, non-expansion space in the city of Los Angeles for lease renewals comparable in size, location and quality to the Premises (“Prevailing Rent”).  Said Prevailing Rent shall become the monthly Minimum Rent for the first year of the Option Term and shall increase annually by a percentage equal to the percentage increase, if any, in the Index (in the manner set forth in Section 3.01 of the Master Lease, provided that in no event shall Minimum Rent be increased by more than five percent (5%)

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for any year in the Option Term).  However, should Tenant object to the Prevailing Rent within fifteen (15) days of Landlord’s delivery of notice thereof, Landlord and Tenant shall attempt, in good faith, to agree upon the Prevailing Rent.  Failure of Tenant to timely deliver to Landlord a written notice of objection to the Prevailing Rent shall conclusively be deemed its approval of Landlord’s proposed Prevailing Rent.  If Landlord and Tenant fail to reach an agreement within fifteen (15) days following the date of Tenant’s objection to the Prevailing Rent, then each party shall set out its opinion of the Prevailing Rent and the matter of Prevailing Rent for similar space in Los Angeles shall be submitted to arbitration as set forth in paragraphs (a) through (g) below:

(a)           Landlord and Tenant shall each appoint one arbitrator who shall by profession be a real estate broker who shall have been active over the ten (10) year period ending on the date of such appointment in the leasing of industrial/commercial properties in the Los Angeles area.  Each such arbitrator shall be appointed within fifteen (15) days after the parties’ failure to agree on Prevailing Rent.

(b)           The two arbitrators so appointed shall, within fifteen (15) days of the date the last arbitrator is appointed, agree upon and appoint a third arbitrator who shall be an MAI appraiser, associated with a nationally recognized appraisal company, but who otherwise shall be qualified under the same criteria set forth hereinabove for qualification of the initial two arbitrators.

(c)           Landlord and Tenant shall each submit its computation of Prevailing Rent to the arbitrators together with evidence supporting such computation. The three arbitrators shall, within thirty (30) days of the appointment of the third arbitrator, reach a decision as to whether the parties shall use Landlord’s or Tenant’s submitted computation of Prevailing Rent and shall notify Landlord and Tenant of their decision. The determination of the arbitrators shall be limited solely to the issue of whether Landlord’s or Tenant’s submitted Prevailing Rent for the Premises is the closest to the actual Prevailing Rent for the Premises (as determined by the arbitrators), taking into account the terms of the respective submittals and the requirements of this Section 6.

(d)           The decision of the majority of the three arbitrators shall be binding upon Landlord and Tenant.

(e)           If either Landlord or Tenant fails to timely appoint an arbitrator, the arbitrator appointed by the other one of them shall reach a decision, notify Landlord and Tenant thereof, and such arbitrator’s decision shall be binding upon Landlord and Tenant.

(f)            If the two arbitrators fail to agree upon and appoint a third arbitrator, then the appointment of the third arbitrator shall be dismissed, and the matter to be decided shall be forthwith submitted to arbitration under the provisions of the American Arbitration Association, but subject to the instructions set forth in this Section 6.

(g)           The costs of arbitration shall be paid by Landlord and Tenant equally.

7.             Tenant acknowledges that Tenant (i) has been, and is, in possession of the Premises pursuant to the Lease and (ii) is fully aware of the condition of the Premises.  Therefore,

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Tenant shall continue to occupy the Premises as of the Renewal Term commencement date in its then existing “As-Is” condition, and, notwithstanding any provision to the contrary contained in the Lease, Landlord shall not be obligated to provide or pay for any improvement work or services related to the improvement of the Premises.  Tenant also acknowledges that neither Landlord, nor any agent of Landlord, has made any representation or warranty regarding the condition of the Premises or the Buildings or with respect to the suitability of the same for the conduct of Tenant’s business.

8.             Notwithstanding anything to the contrary contained in the Lease, upon any default by Tenant, in addition to any other remedies available to Landlord at law or in equity or under the Lease, Landlord shall have the remedy described in California Civil Code Section 1951.4 (Landlord may continue the Lease in effect after Tenant’s breach and abandonment and recover rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations). Accordingly, if Landlord does not elect to terminate the Lease, Landlord may, from time to time, enforce all of its rights and remedies under the Lease, including the right to recover all rent as it becomes due.  Such remedy may be exercised by Landlord without prejudice to its right thereafter to terminate the Lease.

9.             Notwithstanding any provision to the contrary contained in the Lease, Landlord and Tenant acknowledge and agree that the liability of Landlord, for Landlord’s obligations under the Lease, shall be limited to Landlord’s interest in the Buildings and Tenant shall not look to any other property or assets of Landlord or the property or assets of any general or limited partner, member, manager, shareholder, director, officer, trustee, principal, employee or agent of Landlord (collectively, the “Landlord Parties”) in seeking either to enforce Landlord’s obligations under the Lease, or to satisfy a judgment for Landlord’s failure to perform such obligations; and none of the Landlord Parties shall be personally liable for the performance of Landlord’s obligations under the Lease.  In no event shall Landlord be liable for, and Tenant, on behalf of itself and all other subtenants or occupants of the Premises and their respective agents, contractors, subcontractors, employees, invitees or licensees, hereby waives any claim for, any indirect, consequential or punitive damages, including loss of profits or business opportunity, arising under or in connection with the Lease.

11.           If any lender of Landlord requires a modification of any of the terms of the Lease, and such modifications will not increase Tenant’s cost or expense or materially or adversely change Tenant’s rights and obligations under the Lease, the Lease shall be so modified and Tenant shall execute such documents as are reasonably required by Landlord’s lender and shall deliver same to Landlord within ten (10) days after any request therefor.

12.           Effective as of the date hereof, all references in the Lease to “The Prudential Insurance Company of America” or “Prudential,” and to all associated information, are hereby deleted in their entirety and the following is hereby substituted in lieu thereof:  “Landlord’s lender.”

13.           Each party represents and warrants to the other that no broker, agent or finder negotiated or was instrumental in negotiating or consummating this First Amendment.  Each

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party further agrees to defend, indemnify and hold harmless the other party from and against any claim for commission or finder’s fee by any entity who claims or alleges they are entitled to a commission based on the acts of the indemnifying party.

14.           Each party represents and warrants to the other that, as of the date of this First Amendment, each is in full compliance with all terms, covenants and conditions of the Lease and that there are no breaches or defaults under the Lease, and that neither party knows of any events or circumstances which, given the passage of time or notice or both, would constitute a default under the Lease.

15.           In any action to enforce the terms of the Lease, including any suit by Landlord for the recovery of rent or possession of the Premises, the losing party shall pay the successful party a reasonable sum for attorneys’ fees and costs in such suit.  Such attorneys’ fees and costs shall be deemed to have accrued prior to the commencement of such action and shall be paid whether or not such action is prosecuted to judgment.  Should Landlord, without fault on Landlord’s part, be made a party to any litigation instituted by Tenant or by any third party against Tenant, or by or against any person holding under or using the Premises through Tenant, or for the foreclosure of any lien for labor or material furnished to or for Tenant or any such other person or otherwise arising out of or resulting from any act or transaction of Tenant or of any such other person, Tenant covenants to save and hold Landlord harmless from any judgment rendered against Landlord or the Premises, or any part thereof, and from all costs and expenses, including reasonable attorneys’ fees and costs incurred by Landlord in connection with such litigation.

16.           Except as expressly modified by this First Amendment to Lease, the Lease is confirmed and shall continue to be and remain in full force and effect in accordance with its terms.  Any existing or future reference to the Lease and any document or instrument delivered in connection with the Lease shall be deemed to be a reference to the Lease as modified by this First Amendment.  To the extent that anything in this First Amendment is inconsistent with anything in the Lease, this First Amendment shall control.

17.           This First Amendment may be executed in any number of counterparts, each of which, when taken together, shall constitute but one and the same instrument.

18.           This First Amendment shall be governed by and construed in accordance with the laws of the State of California.

[SIGNATURES ON FOLLOWING PAGE]

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IN WITNESS WHEREOF, the parties hereto have caused their respective duly authorized representatives to execute this First Amendment as of the date first above written.

In consideration of the rents and covenants hereinafter set forth, Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord the following described premises upon the following terms and conditions.

BASIC LEASE PROVISIONS

Lease Reference Date: July 29, 1992

Landlord: 1444 Partners, Ltd. a California limited partnership

Tenant: Guess?, Inc., a California corporation

Premises: 1444 South Alameda, Los Angeles, California

Use of Premises: Any lawful purpose.

Lease Term: Sixteen (16) Years

Lease Commencement Date: July 29, 1992

Lease Termination Date: July 29, 2008

Minimum Rent: Two Million Forty Three Thousand Six Hundred Ninety-Nine Dollars and Eighty-Four Cents ($2,043,699.84) for the first lease year subject to annual increases based on the consumer price index.

The Basic Lease Provisions are an integral part of this lease and each reference in this lease to any of the Basic Lease Provisions shall be construed to incorporate all of the terms provided under each such Basic Lease Provision. In the event of any conflict between any Basic Lease Provisions and the balance of the lease, the latter shall control. References to specific sections are for convenience only and designate some of the sections where references to the particular Basic Lease Provisions appear.

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TABLE OF CONTENTS

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ARTICLE I
PREMISES

Section 1.01 - PREMISES DEFINED

Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the property commonly known as 1444 S. Alameda Street located in the City of Los Angeles, State of California, together with all improvements, fixtures, equipment, located thereon, including four buildings with an aggregate of approximately 354,809 square feet, a parking area and all rights of way and easements appurtenant thereto (collectively the “Premises”), for the term, at the rental, and upon all of the conditions and agreements set forth herein. A more particular description of the Premises is attached hereto as Exhibit “A” and by this reference made a part hereof.

ARTICLE II
TERM

Section 2.01 - LENGTH OF TERM

The term of this lease shall be for sixteen (16) years commencing on the Lease Commencement Date, and ending on July      , 2008.

Section 2.02 - COMMENCEMENT DATE

a.        This lease shall commence on July    , 1992 (the “Lease Commencement Date”).

Section 2.03 - LEASE YEAR

A lease year is a period of twelve (12) full calendar months commencing on the Lease Commencement Date and expiring on the last day of the twelfth (12) month thereafter.

ARTICLE III
RENT

Section 3.01 - MINIMUM RENT

Tenant shall pay to Landlord Two Million Forty Three Thousand Six Hundred Ninety-Nine Dollars and Eighty-Four Cents ($2,043,699.84) for the first lease year, in monthly installments of One Hundred Seventy Thousand Three Hundred Eight Dollars and Thirty-Two Cents ($170,308.32), in advance, on the first (1st) day of each month of said lease year. The Minimum Rent shall thereafter be increased annually by the percentage increase, (if any,) in the Bureau of Labor Statistics Consumer Price Index, “All Urban Consumers” (the “Index”), as published by the United States Department of Labor for the Los Angeles/Long Beach/Anaheim metropolitan area (all items). The first increase in the Minimum Rent shall be based on the percentage increase of the Index during the initial lease year, and each lease year thereafter for subsequent annual adjustments. The first such increase shall become effective on the first day of the second lease year and every twelve (12) months thereafter. In no event shall any percentage increase exceed five percent (5%) for any one lease year.

Minimum Rent shall be payable in advance upon the first day of each calendar month without any deduction or offset and without notice or demand at Landlord’s address as set forth in the applicable Basic Lease Provisions or to such other person or at such other place as Landlord may designate by written notice to Tenant. The Minimum Rent for any fractional part of a calendar month at the beginning or end of the lease term shall be a proportionate part of the Minimum Rent for a full calendar month. All rent and additional rent shall be paid in lawful money of the United States which shall be legal tender at the time of payment.

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Section 3.02 - RENT

As used in this lease, the term “rent” shall mean Minimum Rent, and additional rent, and the term “additional rent” shall mean all amounts payable by Tenant pursuant to this lease other than Minimum Rent.

ARTICLE IV
TAXES

Section 4.01 - TAXES

Tenant shall pay directly to the appropriate taxing authority all taxes, as defined below, with respect to the Premises that accrue on or after the Lease Commencement Date. Landlord agrees to deliver to Tenant, upon its own receipt thereof, any tax statement or other notice or official evidence of payment due. If Tenant has paid such taxes, prior to delinquency, Tenant may with Landlord’s prior written consent (which shall not be unreasonably withheld), petition any applicable governmental authority for a reduction in the real property taxes assessed against the real property and the improvements located thereon. Tenant shall also have the right to contest taxes before payment thereof provided that Tenant obtains Landlord’s prior written consent and shall procure and maintain a stay of all proceedings to enforce any collection thereof and provide Landlord with collateral (which is acceptable to Landlord in Landlord’s sole discretion) to secure the payment of the taxes in dispute and any potential penalties and fees related thereto. Tenant shall pay for all expenses related to any such petition and shall indemnify, defend and hold Landlord harmless from and against any expenses or liability arising from Tenant’s actions.

Section  4.02 - DEFINITIONS

(a)       The term “taxes” shall include without limitation:

(i)         All taxes, assessments and governmental charges and surcharges levied upon or with respect to the Premises;

(ii)        All other taxes, assessments and governmental charges and surcharges levied upon or with respect to the fixtures, equipment and other property of Landlord in or about the Premises whether real or personal;

(iii)       Fees and assessments for any governmental service(s) to the Premises, including service payments in lieu of taxes;

(iv)       Dues and assessments payable to any property owners’ association due to Landlord ownership or operation of the Premises;

(v)        Any and all taxes payable by Landlord: (A) upon, allocable to, or measured by or on the gross or net rent payable hereunder, including without limitation any gross receipts or revenues, sales tax or excise tax levied by the State, any political subdivision thereof, or the Federal Government with respect to the receipt of such rent; (B) upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy of the Premises or any portion thereof, including any sales, use or service tax imposed as a result thereof; (C) upon or measured by Tenant’s gross receipts or payroll or the value of Tenant’s equipment, furniture, fixtures, and other personal property of Tenant or leasehold improvements, alterations or additions located in the Premises; or (D) upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises;

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(vi)       All expenses reasonably incurred in seeking reduction by the taxing authorities of the taxes described in clauses (i) through (v) above. Provided, however, that the term “taxes” shall not include any capital gain, franchise, estate, inheritance, succession, capital levy, net income or excess profits taxes imposed upon Landlord except that in the event that real property taxes are withdrawn in whole or in part and any substitute tax is made therefor, such tax shall in any event for the purpose of this lease be considered a tax included in “taxes” pursuant to this Section 4.02 regardless of how denominated or the source from which it is collected.

(b)      Taxes shall include all items identified or described as included in taxes in subsection (a) above, whether or not such items are customary and whether or not such items are within the contemplation of the parties on the date of execution of this lease.

Section 4.03 - OTHER TAXES

Tenant shall be responsible for and shall pay before delinquency all municipal, county or state taxes, levies and fees of every kind and nature, including but not limited to general or special assessments, assessed during the term of this lease against any leasehold interest, leasehold improvements or personal property of any kind, owned by or placed in, upon or about the Premises by Tenant.

ARTICLE V
CONDUCT OF BUSINESS BY TENANT

Section 5.01 - USE OF PREMISES

(a)       Tenant shall use the Premises for the purposes specified in the applicable Basic Lease Provision.

Section 5.02 - RESTRICTIONS ON USE

Tenant shall, at Tenant’s sole cost and expense, promptly comply with all applicable statutes, ordinances, rules, regulations, orders and requirements, in effect prior to the date of this lease or promulgated thereafter, affecting the Premises or regulating the use by Tenant of the Premises and all requirements of all insurance carriers or underwriters providing coverage on the Premises or the contents thereof. Tenant shall not use or permit the use of the Premises in any manner that will tend to create a nuisance or tend to injure the reputation of the Premises or which will invalidate any property damage or liability insurance maintained on the Premises. No auction, fire sale, bankruptcy sale, sidewalk sale, end of lease sale, or going out of business sale may be conducted from the Premises without the written consent of Landlord, which may be withheld in Landlord’s sole discretion.

ARTICLE VI
MAINTENANCE, REPAIRS AND ALTERATIONS

Section 6.01 - LANDLORD’S OBLIGATIONS

(a)       Except for the obligations of Landlord under Section 8 (relating to destruction of the Premises) and under Section 10 (relating to condemnation of the Premises), it is intended by the parties hereto that Landlord shall have no obligation, in any manner whatsoever, to repair and maintain the Premises nor any building or improvement located thereon nor any equipment, whether structural or nonstructural, all of which obligations are intended to be that of the Tenant under this Article 6. Tenant expressly waives the benefit of any statute now or hereinafter in effect which would otherwise afford Tenant the right to make repairs at Landlord’s expense or to terminate this lease because of Landlord’s failure to keep the Premises in good order, condition and repair.

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(b)      Tenant hereby accepts the Premises in their condition existing as of the Lease Commencement Date or the date that Tenant takes possession of the Premises, whichever is earlier, subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises, and any covenants, easements, restrictions or other matters of record, and accepts this lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Tenant acknowledges that neither Landlord nor Landlord’s agent has made any representation or warranty as to the present or future’s suitability of the Premises for the conduct of Tenant’s business.

Section 6.02 - TENANT’S OBLIGATIONS

Tenant shall keep in good order, condition and repair the Premises and every part thereof, structural and nonstructural (whether or not such portion of the Premises requiring repair, or the means of repairing the same are reasonably or readily accessible to Tenant, and whether or not the need for such repairs occurs as a result of Tenant’s use, any prior use, the elements or the age of such portion of the Premises), including, without limiting the generality of the foregoing, all plumbing, heating, air conditioning (Tenant shall procure and maintain, at Tenant’s expense, an air conditioning system maintenance contract), ventilating, electrical, lighting facilities and equipment within the Premises, fixtures, walls (interior and exterior) foundations, ceilings, roofs (interior and exterior), floors, windows, doors, plate glass and skylights and all landscaping, driveways, parking lots, fences and signs located on the Premises and sidewalks and parkways adjacent to the Premises.

Section 6.03 - SURRENDER

See Section 13.17.

Section 6.04 - LANDLORD’S RIGHTS

See Section 12.06.

Section 6.05 - LANDLORD’S OBLIGATIONS

See Section 6.01.

Section 6.06 - ALTERATIONS AND ADDITIONS

(a)       Tenant shall not, without the prior written consent of Landlord, which consent may be withheld in Landlord’s reasonable discretion, make any material alterations, improvements, remodeling or additions to the Premises. The term “material” shall mean any alteration, improvement, remodeling, or additions, the cost of which exceed Twenty-five Thousand Dollars ($25,000.00). Landlord may condition any approval upon such requirements as Landlord reasonably deems appropriate, including requirements as to the manner in which, the time at which and the contractor(s) by whom such work shall be done.

(b)      If Landlord delivers written notice to Tenant to remove from record any lien related to work or materials furnished to or obligations incurred on behalf of Tenant, then within twenty (20) days after delivery of such notice, Tenant shall remove from record, by bonding or otherwise, such lien. Tenant shall discharge any such lien of record immediately upon its filing. Landlord may keep posted on the Premises any notices it deems necessary for protection from such liens. If any lien is not removed from record, by bonding or otherwise, within the twenty (20) day period specified in the first sentence of this Section 6.06(b), Landlord may cause such liens to be released by any means it deems proper, including payment, at Tenant’s expense and without affecting Landlord’s rights.

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(c)  All alterations, improvements, remodeling, additions or fixtures, other than trade fixtures not permanently affixed to the Premises, which may be made or installed in the Premises and which are attached to the floor, walls or ceiling of the Premises and any floor covering which is cemented or otherwise affixed to the floor of the Premises shall be the property of Landlord and shall remain upon and be surrendered with the Premises at the termination of this lease, unless Landlord shall direct Tenant to remove such items, or some of them, by written notice given to Tenant not less than thirty (30) days prior to the expiration of this lease or within ten (10) days after the earlier termination hereof. Tenant shall remove any such items, at Tenant’s cost, prior to the expiration of this lease, or in the event of an early termination, within ten (10) days after Landlord’s notice.

Section 6.07 - CLEANLINESS: WASTE AND NUISANCE

Tenant shall keep the Premises at all times in a neat, clean and sanitary condition, shall neither commit nor permit any waste or nuisance thereon, and shall keep the walks adjacent thereto and the parking lot free from Tenant’s waste or debris. Without limiting the foregoing, Tenant shall keep the Premises free of all graffiti.

ARTICLE VII
INSURANCE AND INDEMNITY

Section 7.01 - LIABILITY INSURANCE

Tenant shall at all times during the term hereof and at Tenant’s sole cost and expense, for the protection of Tenant and Landlord, as their interest may appear, maintain in full force and effect a policy or policies of insurance which afford the following coverages:

(a)                                      Worker’s Compensation in the statutorily required amount, together with employer’s liability coverage with a liability amount not less than One Million Dollars ($1,000,000).

(b)                                     Comprehensive General Liability Insurance with a liability amount not less than Two Million Dollars ($2,000,000) combined single limit for both bodily injury and property damage, personal injury, completed operations, products liability, liquor liability, and owned and non-owned automobile coverage. Tenant shall also maintain umbrella liability coverage in an amount not less than Five Million Dollars ($5,000,000) and excess liability insurance in an amount not less than Twenty Million Dollars ($20,000,000).

(c)                                      The minimum limit of the coverage provided in subsection (b) above may be adjusted upward at the expiration of each third (3rd) lease year as follows: Not less than sixty (60) days prior to the relevant adjustment date, Landlord may designate [                                                    ] or select an insurance brokerage firm, the identity of which shall reasonably acceptable to Tenant (the “Reviewing Broker”), to review Tenant’s then existing liability insurance coverage, to review the then use of the Premises and the claims history with respect thereto and to recommend, in writing, the amount of coverage to be carried by Tenant pursuant to subsection (b). Such recommendation shall be based upon the then use of the Premises and the liability claims history with respect to the Premises and shall be consistent with amounts of coverage generally recommended by such Reviewing Broker for similar types of tenants or users of property with uses similar to that of the Premises in the geographical area which includes the Premises. If the Reviewing Broker shall recommend an increase(s) in the amount of coverage then provided by Tenant under subsection (b), Tenant shall promptly increase its coverage to the recommended amount(s). In no event shall there by any reduction in the amount of coverage provided by Tenant under subsection (b) below the initial amount set forth

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herein, notwithstanding any recommendation by the Reviewing Broker.

(d)                                     Landlord, each of its general partners, and any other persons designated by Landlord and having an insurable interest in the Premises, shall be added as additional insureds pursuant to such policies (although they shall not have any obligations of “named” insureds therein). The insurance required by this Section Article VII shall be the primary insurance as respects Landlord (and any other additional insureds designated by Landlord) and not contributory with any other available insurance. The policy or policies providing the coverage required by subsection (b) above shall contain an endorsement providing, in substance, that “such insurance as afforded hereby for the benefit of the additional insureds shall be primary and any insurance carried by the additional insureds shall be excess and not contributory.” In no event shall the limits of any coverage maintained by Tenant pursuant to this Article VII be considered as limiting the liability of Tenant pursuant to this lease.

Section 7.02 - PROPERTY INSURANCE

(a)                                      Tenant shall at all times during the term hereof, and at its cost and expense, maintain in effect policies of insurance covering (i) all improvements in or to the Premises, providing protection against any item included within the classification “All Risk,” including but not limited to insurance against sprinkler leakage, vandalism and malicious mischief, such insurance to be in an amount no less than the full replacement value of such improvements, which shall be determined at the time the policy is initially obtained, and not less frequently than once every three (3) years thereafter, and such other insurance as may be required by Landlord’s lender, if any, (ii) all personal property of Tenant located in or on the Premises, including but not limited to fixtures, furnishings, equipment, furniture, inventory and stock in trade, in an amount not less than their full replacement value, providing protection against any peril included within the classification “All Risk,” including but not limited to insurance against sprinkler leakage, vandalism and malicious mischief; and (iii) all plate glass on the Premises.

(b)                                     The proceeds of such insurance, so long as this lease remains in effect, shall be held in trust by the insurance carriers and used to repair or replace the parts of the Premises, any improvements thereto and personal property so insured. Upon any termination of this lease pursuant to Sections 8.02 or 8.03, Landlord may keep or apply the proceeds of the insurance required pursuant to clauses (i) and (iii) of Subsection 7.02(a) above, at its discretion; the remaining proceeds shall be the property of Tenant.

(c)                                      Tenant shall at its cost maintain business interruption insurance assuring that the rent payable hereunder will be paid to Landlord for a period of not less than twelve (12) months if the Premises are destroyed or rendered inaccessible.

Section 7.03 - PROPERTY INSURANCE - LANDLORD

Landlord may, but shall not be required to, maintain earthquake and flood insurance insuring the Premises against damage arising from such events. The cost of maintaining all such insurance including any deductible shall be paid for by Tenant, as additional rent.

Section 7.04 - INSURANCE POLICIES

All insurance required to be carried by Tenant hereunder shall be with companies rated A:XIII, or better, in the then most recent version of Best’s Insurance Guide. Tenant shall deliver to Landlord at least five (5) days prior to the time such insurance is first required to be carried by Tenant, and

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thereafter at least thirty (30) days prior to the expiration or renewal date of any policy maintained by Tenant, copies of the policies or certificates evidencing such insurance. All policies and certificates delivered pursuant to this Section shall contain liability limits not less than those set forth in Sections 7.01 and 7.02, shall list the additional insureds and shall specify all endorsements and special coverages required by such Sections. Each such policy shall contain a provision (by endorsement or otherwise) requiring not less than thirty (30) days written notice to Landlord prior to any cancellation, non-renewal or material amendment thereof. For the purposes of this Article VII, the phrase “term of this lease” shall mean the period from the Lease Commencement Date through the later of the expiration or termination of the lease term. Any insurance required pursuant to this lease may be provided by means of a so-called “blanket” policy, so long as the Premises are specifically covered (by rider, endorsement or otherwise) and the policy otherwise complies with the provisions of this lease. The cost of all insurance provided for in this Article VII shall be paid by Tenant directly to the , companies providing the respective policies of insurance.

Section 7.05 - WAIVER OF SUBROGATION

Notwithstanding anything to the contrary contained in this lease, Landlord and Tenant each hereby waive any and all rights of recovery against the other, and against any other tenant or occupant of the Premises and against the officers, employees, agents, representatives, customers and business visitors of such other party and of such other tenant or occupant of the Premises, for loss of or damage to such waiving party or its property or property of others under its control, arising from any cause insured against under any policy of insurance required to be carried by such waiving party pursuant to the provisions of this lease (or any other policy of insurance carried by such waiving party in lieu thereof) at the time of such loss or damage. Landlord and Tenant shall, upon obtaining the policies of insurance which they are required to maintain hereunder, give notice to their respective insurance carrier or carriers that the foregoing mutual waiver of subrogation is contained in this lease. Landlord’s notice hereunder may be a general notice with respect to all leases, including this lease, then or therea