Document:

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                       STANDARD INDUSTRIAL LEASE AGREEMENT

     THIS LEASE, made this 14th day of May, 1999, by and between ROBERT PATTILLO
PROPERTIES, INC., a Georgia corporation,  hereinafter referred to as "Landlord";
and GUESS?, INC., a Delaware corporation, hereinafter referred to as "Tenant":

                              W I T N E S S E T H:

Premises

     1.  For and in  consideration  of the  rents,  covenants,  agreements,  and
stipulations  hereinafter  set forth,  to be paid, kept and performed by Tenant,
Landlord  hereby leases and rents to Tenant,  and Tenant hereby leases and takes
upon the terms and conditions  hereinafter set forth, an approximately  371, 440
square  foot  building   shell  (the   "Existing   Shell")  to  be  expanded  by
approximately  135,000  square feet  pursuant to the terms hereof (the  Existing
Shell as so  expanded is  hereinafter  referred  to as the "Building"), and that
certain  real  property  on which the  Existing  Shell is  located,  which  real
property  is located in  Jefferson  County,  Kentucky  and is more  particularly
described by the legal description attached hereto as Exhibit "A" (collectively,
the  "Premises").  Landlord shall acquire the  approximately  seven (7) acres of
real property  described as the "Expansion  Land" on the drawing attached hereto
as  Exhibit  "A-1".  Landlord  covenants  that  such  Expansion  Land  shall  be
sufficiently  large  to  accommodate  the  expansion  of the  Existing  Shell in
accordance with the terms of this Lease.  Upon such  acquisition,  the Expansion
Land shall be  included  within the  Premises  for all  purposes  of this Lease.
Landlord  and  Tenant  agree  to  enter  into  an  amendment  to this  Lease  to
incorporate  a legal  description  of such  Expansion  Land  to be  acquired  by
Landlord.  This Lease is subject to all encumbrances,  easements,  covenants and
restrictions  set forth on Exhibit "A-2" attached  hereto.  Landlord  represents
that the real  property  upon which the Premises is to be located is zoned so as
to permit office, warehouse and distribution center uses.

     Landlord  covenants to file a subdivision  map or take such other necessary
actions as promptly as reasonably  practicable  in order to render the land upon
which the Existing Shell is located,  together with the Expansion  Land, a legal
lot for purposes of applicable law.

Term

     2. To have and to hold for a term to commence on the Commencement  Date (as
defined in Paragraph 4 of the Rider  attached  hereto as Exhibit "C") and to end
at midnight on the last day of the one hundred  twentieth  (120th) full calendar
month after the  Commencement  Date. For purposes of this Lease, the term "Lease
Year" shall mean the period beginning on the Commencement Date and ending on the
date twelve (12) months from and after the Commencement  Date, and each 12-month
period  thereafter,  except  that the  final  Lease  Year  shall  expire  on the
expiration date of the Lease term. [See paragraph 1 of Exhibit "C".]

Rental

     3. (a) Tenant shall pay to Landlord  monthly rental of  $113,949.00  during
Lease Years one (1) through five (5) and monthly  rental of  $128,720.16  during
the Lease Years six (6) through ten (10). Upon completion of Landlord's Work (as
defined in Exhibit  "C"),  Landlord  shall cause its  architects  to measure the
square  footage of the Building (as defined in Exhibit "C")  (measured  from the
exterior faces of all exterior  walls).  If the square footage as so measured is
not 506,440 square feet, the amount of monthly rental  provided for herein shall
be adjusted  based upon such measured  square  footage as follows:  During Lease
Years one (1) through five (5) the monthly  rental shall be  one-twelfth  (1/12)
times such measured  square footage times $2.70,  and during Lease Years six (6)
through (10), the monthly rental shall be one-twelfth (1/12) times such measured
square footage times $3.05. Landlord and Tenant shall enter into an amendment to
this Lease  memorializing  the square  footage of the Building and the resulting
installments of monthly rental. All monthly rental shall be due on the first day
of  each  month,  in  advance,  without  offset  or  demand,  commencing  on the
Commencement  Date.  All  payments  of rental  shall be sent to Robert  Pattillo
Properties,  Inc., P.O. Box 101923, Atlanta,  Georgia 30393-1923,  or such other
address provided to Tenant by Landlord.  Tenant has paid to Landlord $113,949.00
(the  "Prepaid  Rent"),  representing  the  first  month's  rent due  hereunder.
Landlord shall pay to Tenant interest on the Prepaid Rent, which shall accrue at
the rate of eleven  percent  (11%) per annum  beginning  on the date  hereof and
ending on the Commencement  Date. Such accrued interest shall be due and payable
by Landlord to Tenant on the Commencement  Date. If Landlord fails to pay Tenant
such  interest  within  ten (10) days  after  written  demand,  Tenant  shall be
entitled  to offset  against  rent and other sums which  become due from  Tenant
pursuant to the terms hereof an amount  equal to such due and payable  interest.
In the event  Tenant fails to pay rental or any other  payment  called for under
this Lease within ten (10) days of the due date,  Tenant shall pay a late charge
equal to two percent (2%) of the unpaid  amount.  Landlord and Tenant agree that
such  late  charge  is   intended  to   compensate   Landlord   for   additional
administrative charges and other damages incurred by Landlord on account of such
late  payment and not as a penalty.  Landlord  and Tenant  agree that the actual
damages to be suffered by  Landlord  in such event  shall be  difficult,  if not
impossible to ascertain,  and that such late charge is a reasonable  estimate of
such charges and damages.

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     (b) Tenant has deposited $113,949.00 (the "Security Deposit") with Landlord
to secure Tenant's performance of its obligations hereunder.  Landlord shall pay
to Tenant interest on the portion of the Security Deposit (as restored by Tenant
pursuant to the terms hereof) that is not applied against amounts owed by Tenant
to Landlord  pursuant to the terms hereof,  which  interest  shall accrue at the
rate of  eleven  percent  (11%)  per  annum  beginning  on the date  hereof  and
continuing until such time as Tenant shall have been returned the portion of the
Security  Deposit (as restored by Tenant  pursuant to the terms  hereof) that is
not applied  against  amounts  owed by Tenant to Landlord  pursuant to the terms
hereof.  Any interest which has accrued pursuant to the preceding sentence shall
be due and payable  annually on each  anniversary of the  Commencement  Date. If
Landlord  fails to pay any such  interest  within  ten (10) days  after  written
demand,  Tenant  shall be entitled to offset  against  rent and other sums which
become due from Tenant  pursuant to the terms hereof an amount equal to such due
and payable interest.  If Tenant defaults hereunder,  then Landlord may, without
prejudice  to  Landlord's  other  remedies,  apply  part or all of the  Security
Deposit  to cure  Tenant's  default.  If  Landlord  so  uses  part or all of the
Security Deposit,  Tenant shall,  within ten (10) days after written demand, pay
Landlord the amount  necessary  to restore the Security  Deposit to its original
amount.  Except as provided  herein,  Landlord  shall not be required to pay any
interest on said  Security  Deposit and  Landlord  may  commingle  the  Security
Deposit with other funds. If Landlord sells the Premises,  the Security  Deposit
shall be  transferred  to the  purchaser  and Landlord  shall be relieved of any
further liability in relation to the Security  Deposit.  Upon the termination of
this Lease, Landlord may use the Security Deposit to cure any defaults of Tenant
or to reimburse  Landlord for expenses of  repairing,  restoring or cleaning the
Premises.  In the event all or any portion of the Security Deposit remains after
paying  for such  items,  the  remaining  amount  shall be  returned  to Tenant.
Notwithstanding the foregoing, Landlord reserves the right to return at any time
after the date hereof the portion of the Security Deposit (as restored by Tenant
pursuant to the terms hereof) that has not been applied  against amounts owed by
Tenant to Landlord  pursuant to the terms  hereof and be relieved of any further
obligation to pay interest thereon.

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Utility Bills

     4. Tenant shall place utility bills of all types in its name.  Tenant shall
pay all such  bills,  along  with all  charges  and  assessments  pertaining  to
utilities serving the Premises,  including, but not limited to, water and sewer,
natural gas, electricity, fire protection (including sprinkler testing charges),
sanitary charges, drainage service fees or similar charges which are included in
any water or other  utility  bill. If Tenant does not pay such charges when due,
Landlord  may do so.  The  amount  paid by  Landlord  shall be paid by Tenant to
Landlord,  as additional  rental,  within thirty (30) days of demand therefor by
Landlord.

Mortgagee's Rights

     5. Landlord  represents,  warrants and covenants to Tenant that the land on
which the Existing Shell is located is not encumbered by any mortgage or deed of
trust and that the Premises (including the Building and the Expansion Land) will
not be encumbered  by any mortgage,  deed to secure debt or deed of trust on the
Commencement  Date.  Tenant's  rights as to the  Premises  shall be subject  and
subordinate  to any mortgage,  deed of trust or deed to secure debt which may be
placed  upon  the  Premises  by  Landlord  after  the  Commencement  Date.  This
subordination  is intended to be  self-operative,  but only if the mortgagee and
trustee  under trust deeds or mortgages  and the ground  lessor under any ground
lease (herein collectively referred to as "Lender") shall execute and deliver to
Tenant a non-disturbance  agreement which shall be by its terms binding upon its
successors  and assigns  including  any purchaser or transferee at a foreclosure
sale or sale of transfer in lieu of foreclosure  and shall provide,  among other
things,  that Lender  consent to the Lease and that, in the event of foreclosure
of said mortgage or trust deed, as the case may be, or in the event Lender comes
into possession or acquires title to the Premises as a result of the enforcement
or foreclosure of the mortgage,  trust deed,  trust deed note or ground lease or
as a result of any other means,  Lender  agrees to recognize  Tenant and further
agrees that Tenant shall not be disturbed in its  possession of the Premises for
any reason  other than one which would  entitle the  Landlord to  terminate  the
Lease under its terms.  Said  agreement  shall  further  provide that Tenant and
Lender  shall be bound each to the other under all of the terms,  covenants  and
conditions  of the Lease for the balance of the term thereof  remaining  and any
extension or renewal thereof which may be effected in accordance with any option
therefor  in the  Lease,  with the same  force  and  effect  as if they were the
original  Landlord  and  Tenant,  respectively,  under  the  Lease,  subject  to
commercially  reasonable  exceptions of the type  customarily  contained in such
documents.  Without limiting the generality of the foregoing,  in no event shall
any said Lender or purchaser at a  foreclosure  sale or grantee  under a deed in
lieu of foreclosure be bound by the expansion option set forth in paragraph 5 of
the Rider.  Landlord shall apply any rental payments received from Tenant during
any month  pursuant to the terms  hereof to the payment of any  installments  of
indebtedness  which  shall be due and payable  from  Landlord to any such Lender
during such month; provided,  however, Landlord shall not be obligated to pay to
any such Lender the excess of (a) any rental received hereunder during any month
over (b) the  amounts  which  shall be due and  payable by  Landlord to any such
Lender during such month.  If Landlord  fails to pay any such rental  payment to
any such Lender as contemplated by the preceding  sentence,  without  obligating
Landlord to obtain any notice and cure rights from any Lender for the benefit of
Tenant,  Tenant  shall be  entitled  to pay  directly to such Lender any due but
unpaid  amount  which  Landlord  owes such  Lender.  Tenant shall be entitled to
offset  against  rent and any other sum which  shall next become due and payable
from Tenant to Landlord  under this Lease any amounts paid by Tenant to any such
Lender pursuant to the preceding sentence. Should the Lender or any purchaser or
transferee at a foreclosure  sale or sale or transfer in lieu of  foreclosure of
any  other  person  who may come  into  possession  of or  acquire  title to the
Premises as a result of the  enforcement or foreclosure of such mortgage,  trust
deed,  trust deed note or ground lease fail or refuse to  recognize  and assume
this Lease and recognize the rights of Tenant hereunder and agree not to disturb
Tenant as aforesaid,  this Lease (except for the terms of paragraph 5 of Exhibit
"C", which shall be subordinate  to any such  mortgage,  trust deed,  trust deed
note or ground lease) shall be deemed prior and superior to the lien of any such
trust  deed or  mortgage  or ground  lease.  In  addition,  Tenant  shall not be
obligated to attorn to the purchaser or transferee upon any foreclosure  sale or
sale or  transfer  in lieu of  foreclosure  unless and until such  purchaser  or
transferee acknowledges in writing the foregoing privity of contract between it,
as Landlord,  and Tenant.  If requested,  Tenant shall execute a  subordination,
nondisturbance  and attornment  agreement which meets the requirements set forth
in this paragraph.

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Repairs by Tenant

     6. Tenant,  at its sole cost,  shall keep and maintain the Premises (except
portions of the  Premises to be repaired by Landlord  under terms of Paragraph 7
below),   including  without  limitation,   all  paving,  lawn  maintenance  and
landscaping,  in good  order  and  repair.  Tenant  also  agrees to keep in good
repair,  and  replace  if  necessary,  all  systems  pertaining  to water,  fire
protection,  drainage, sewer, electrical, heating, ventilation, air conditioning
and  lighting.  Tenant  agrees to  return  such  systems  to  Landlord  upon the
expiration  or  earlier  termination  of the term of this  Lease in a  condition
comparable to that existing at the Commencement  Date,  reasonable wear and tear
and damage not  otherwise  required to be  repaired  by Tenant  under this Lease
excepted.  Tenant  shall  keep the  Premises  free from all  liens,  charges  or
encumbrances  whatsoever (or shall cause the same to be bonded over or otherwise
removed  within 30 days after  Tenant has  received  written  notice of filing).
Tenant shall have no authority,  express or implied,  to create any lien, charge
or encumbrance upon the interest of the Landlord in the Premises.  Tenant shall,
at its sole cost,  maintain a regularly  scheduled  preventive  maintenance  and
service contract with a maintenance contractor reasonably acceptable to Landlord
for the repair,  maintenance  and servicing of all heating and  air-conditioning
systems and equipment  within the Premises.  If Landlord fails to disapprove any
such  contractor  within two (2) business days after receipt of written  request
from  Tenant,  Landlord  shall  irrevocably  be  deemed  to have  approved  such
contractor  for the repair and  maintenance  work specified in such request from
Tenant.  Tenant shall have the right to contract  with  third-party  contractors
reasonably  acceptable  to Landlord to perform  any  maintenance  or repair work
required  to be  performed  by Tenant  hereunder;  provided,  however,  any such
contractor  shall not be  subject to  approval  by  Landlord  in the event of an
emergency or if such  contractor is to perform  repairs or  maintenance  (or any
series of related  repairs or maintenance)  which costs less than $5,000.00.  If
Landlord fails to disapprove  any contractor  within two (2) business days after
written  request  from  Tenant,  Landlord  shall  irrevocably  be deemed to have
approved such contractor for the repair and  maintenance  work specified in such
request from Tenant.  Upon request by Tenant and at Tenant's sole cost, Landlord
will  arrange for any repair  which is Tenant's  responsibility  pursuant to the
terms  of  this  Lease  to be  performed  by  Landlord's  employees,  agents  or
contractors.  Tenant  shall pay,  as  additional  rent,  the cost of such repair
within thirty (30) days of receipt of a bill therefor from Landlord.

Repairs by Landlord

     7. Except for damage caused by Tenant,  its agent,  employees,  contractors
and invitees  which arises from a risk not generally  insurable by the insurance
carried (and issued by insurance  companies of recognized standing and financial
strength)  or required  to be carried by Landlord  pursuant to the terms of this
Lease or otherwise,  Landlord,  at its sole cost,  shall keep in good repair the
roof  (including  gutters  and  downspouts),   foundation  and  exterior  walls,
exclusive  of  painting,  glass and exterior  doors.  Landlord  shall repair any
damage to the Premises which is caused by Landlord, its agents, representatives,
employees or  contractors  and which would  otherwise be the  responsibility  of
Tenant  hereunder if such damage arises from a risk not  generally  insurable by
any insurance which is carried (and issued by insurance  companies of recognized
standing and financial  strength) by Tenant  pursuant to the terms of this Lease
or otherwise or required to be carried by Tenant  pursuant to the terms  hereof.
Tenant  shall  promptly  notify  Landlord of the need for any repairs  which are
Landlord's responsibility hereunder,  unless Landlord otherwise has knowledge of
the need therefor. Landlord shall be under no duty to make any repairs hereunder
unless Landlord  receives  notice of the need for such repairs,  unless Landlord
otherwise has knowledge of the need therefor.

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Modifications and Alternations to the Premises

     8. Tenant shall make no  modifications,  alterations or improvements to the
Premises,  cut any openings or penetrations in the roof or install any satellite
or communications antennas or other structures without the prior written consent
of Landlord,  which consent shall not be unreasonably  withheld,  conditioned or
delayed; provided,  however, Tenant shall have the right to make non-structural,
interior  modifications,  alterations or  improvements  to the Premises  without
Landlord's  consent.  All  modifications or alterations  shall be completed in a
good,  workmanlike and lien-free  manner in accordance with all applicable codes
and  regulations.  Tenant  shall  have the right to  contract  with  third-party
contractors  reasonably  acceptable  to Landlord  to perform any  modifications,
alterations or improvement  work which Tenant is otherwise  permitted to perform
pursuant to the terms hereof;  provided,  however, any such contractor shall not
be subject to  approval  by  Landlord  in the event of an  emergency  or if such
contractor is to perform any modifications,  alterations or improvements (or any
series of related  modifications,  alterations or improvements) which costs less
than $5,000.00.  If Landlord fails to disapprove any such contractor  within two
(2) business days after written request from Tenant,  Landlord shall irrevocably
be  deemed to have  approved  such  contractor  for the work  specified  in such
request from Tenant.  Upon request by Tenant and at Tenant's sole cost, Landlord
will arrange for any  modification,  alteration or  improvement  consented to by
Landlord be performed by Landlord's  employees,  agents or  contractors.  Tenant
shall pay, as  additional  rent,  the cost of such  modification,  alteration or
improvement within ten (10) days of receipt of a bill therefor from Landlord.

Return of Premises

     9. Tenant  agrees to return the Premises to Landlord at the  expiration  or
prior  termination  of this  Lease  broom  clean and in a  condition  and repair
comparable  to that  existing at the time the Premises was  delivered to Tenant,
reasonable wear and tear, damage by storm, fire, lightning,  earthquake or other
casualty  excepted.  Upon  Landlord's  request,  Tenant  agrees  to  remove  any
modifications,  alterations or  improvements  made by Tenant without  Landlord's
consent  (if  Landlord's  consent  was  required  hereunder)  or  which  are not
typically  found in  industrial  distribution  facilities in the vicinity of the
Premises. Within ten (10) days of written request by Tenant, which request shall
include  plans  and  specifications   for  the  modifications,   alterations  or
improvements  at issue.  Landlord  shall  inform  Tenant  whether  the  proposed
modifications, alterations or improvements will be required to be removed at the
expiration or earlier  termination of the Lease,  and Landlord shall be bound by
such  decision.  Tenant shall remove its personal  property from the Premises at
the  expiration  or prior  termination  of this Lease.  Tenant  shall repair any
damage  caused by such removal.  Notwithstanding  the  foregoing,  at Landlord's
option,  Tenant shall remove, upon the expiration or earlier termination of this
Lease,  the items which are part of Tenant's  initial  build-out  and which are
listed on Exhibit "D" hereto;  provided,  however, Tenant shall not be obligated
to remove any of the "Group  Removal  Items" (as defined on Exhibit  "D") unless
Landlord  requires Tenant to remove all items within the Group Removal Items. If
Tenant  fails to remove any item which it is required to remove  pursuant to the
terms hereof within five (5) days of the  expiration or earlier  termination  of
this Lease,  Landlord may remove such items and Tenant shall reimburse  Landlord
on demand for all costs with such removal.

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Destruction of or Damage to Premises

     10. If the  Premises  are  totally  destroyed  by storm,  fire,  lightning,
earthquake or other casualty,  this Lease shall terminate as of the date of such
destruction  and rental  shall be abated as of such date.  If the  Premises  are
damaged, but not wholly destroyed by any of such casualties,  rental shall abate
in such  proportion as use of Premises has been  destroyed,  and Landlord  shall
restore (i) the Building as modified by the Landlord's  Work and as expanded (if
at all) onto the  Adjacent  Land and (ii) any portion of the  Tenant's  Work for
which  Landlord pays Tenant  pursuant to the terms of paragraph 3 of Exhibit "C"
to substantially  the same condition as existed before such casualty as speedily
as practicable; provided, however, that if the damage shall be so extensive that
the same cannot be reasonably  repaired and restored within nine (9) months from
the date of the casualty, then Tenant may terminate this Lease by giving written
notice to  Landlord  within  thirty  (30) days from the date that  either  party
notifies  the  other  that  such  party  has  determined  that  the  repair  and
restoration  work  cannot  reasonably  be  completed  within such nine (9) month
period. In the event of such termination,  rental shall be abated as of the date
of such casualty.  In no event shall  Landlord be  responsible  for repairing or
restoring the Tenant's Work, any personal  property of Tenant or any alterations
or  improvements  made by Tenant (other than portions of Tenant's Work for which
Landlord has paid Tenant  pursuant to the terms of Exhibit "C").  Tenant's right
of rental  abatement  provided above shall expire on the earlier to occur of (i)
the date on which  Tenant  reopens for  business  in the damaged  portion of the
Premises;  or (ii) the  date on  which  the work  required  to be  performed  by
Landlord pursuant to this paragraph 10 is substantially complete. Subject to all
of the terms and  conditions  of this Lease (but  subject to the rent  abatement
provided  for  in  this   paragraph   10),  so  long  as  Tenant,   its  agents,
representatives,  employees,  contractors  and  invitees do not  interfere  with
Landlord's performance of the work required to be performed by Landlord pursuant
to the  terms  of this  paragraph.  Tenant  shall  have the  right to enter  the
Premises  prior  to the  date  of  substantial  completion  of  such  work to be
performed by Landlord for the purpose of  performing  any work which is Tenant's
responsibility pursuant to the terms of this paragraph.

Indemnity

     11. Except for damage caused by Landlord's negligence or that of Landlord's
agents, representatives, employees or contractors, or the failure of Landlord to
discharge  its  obligations  under this Lease and subject to the  provisions  of
paragraph  27(c) below,  Tenant  agrees to  indemnify,  defend and save harmless
Landlord against all claims, losses, liabilities,  costs and expenses (including
attorney's  fees and costs of litigation)  suffered by Landlord by reason of the
use or  occupancy  of the  Premises  by  Tenant.  Unless  caused  by  Landlord's
negligence  or  that  of  Landlord's  agents,   representatives,   employees  or
contractors or the failure of Landlord to discharge its  obligations  under this
Lease, Landlord shall not be liable to Tenant's employees,  agents,  contractors
or  invitees  for any injury to a person or damage to  property  on or about the
Premises,  or any damage caused by the improvements  becoming out of repair, the
failure or  cessation  of any  utility or by any leakage of gas,  oil,  water or
steam or electricity  emanating from the Premises.  Subject to the provisions of
paragraph 27(c) below,  Landlord  agrees to indemnify,  defend and save harmless
Tenant against all claims,  losses,  liabilities,  costs and expenses (including
attorney's  fees and costs of  litigation)  suffered  by Tenant by reason of the
negligent or willful acts or omissions of Landlord, its agents, representatives,
employees  and   contractors  or  the  failure  of  Landlord  to  discharge  its
obligations under this Lease.

Governmental Orders

     12.  Reference  is made  herein to  paragraphs  2(b) and 3(b) of the Rider,
which provide for the  allocation of  responsibility  with respect to compliance
with laws for the  initial  construction.  Thereafter,  subject  to the terms of
paragraph 15, Tenant  agrees,  at its own expense,  to promptly  comply with all
requirements of any applicable law, ordinance,  statute or regulation applicable
to the Premises or Tenant's  operations  in the Premises  other than  applicable
laws, ordinances,  statutes or regulations which apply to the structural aspects
of the Premises for any reason other than Tenant's specific use or manner of use
of the Premises.

Condemnation

     13.  If the  entire  Premises  or such  portion  thereof  as will  make the
Premises unusable (in Tenant's reasonable opinion) for the purpose herein leased
shall be condemned by any legally  constituted  authority  for any public use or
purpose,  or sold under threat of condemnation,  then this Lease shall terminate
as of the date of such  condemnation  or sale and rental shall be accounted  for
between  Landlord  and  Tenant as of such date.  In the event of a  condemnation
which does not result in the  termination of this Lease,  rental shall be abated
in a fair and  equitable  manner  and  Landlord,  shall  restore  to the  extent
practicable  (i) the Building as modified by the Landlord's Work and as expanded
(if at all) onto the Adjacent Land and (ii) any portion of the Tenant's Work for
which Landlord pays Tenant pursuant to the terms of paragraph 3 of Exhibit "C".
All  condemnation  awards or sales  proceeds  in lieu  thereof  shall  belong to
Landlord;  provided,  however, Tenant shall be entitled to file a separate claim
for its loss,  provided  the filing of such  claim  does not affect or  diminish
Landlord's claim as to such awards or proceeds.  Notwithstanding  the foregoing,
Tenant shall be entitled to any condemnation award,  whether made to Landlord or
Tenant,  which is made for the taking of furniture,  fixtures,  improvements  or
property  placed  on the  Premises  by  Tenant at  Tenant's  expense;  provided,
however,  Tenant shall not be entitled to (and expressly assigns to Landlord all
Tenant's right,  title and interest in and to) any condemnation award based upon
the present or future estate or interest of Tenant in the unexpired Lease term.

Assignment

     14.  Tenant may not assign this Lease or any interest  thereunder or sublet
the Premises in whole or in part or allow all or a portion of the Premises to be
used by a third  party  without the prior  written  consent of  Landlord,  which
consent shall not be unreasonably withheld, conditioned or delayed. If Tenant is
a corporation, partnership, limited liability company or other entity other than
a  corporation  the  shares of which are  publicly  traded on a  national  stock
exchange,  the transfer of more than thirty-five  percent (35%) of the ownership
interests  of  Tenant,  whether  in  one  transaction  or a  series  of  related
transactions,  shall  constitute an assignment  for purposes of this Lease.  Any
assignee (and if Landlord so elects, any subtenant) shall become liable directly
to Landlord for all  obligations  of Tenant  hereunder.  No such  assignment  or
sublease nor any  subsequent  amendment of the Lease shall release Tenant or any
guarantor of Tenant's obligations hereunder.  If such subtenant or assignee pays
rental in excess of the rental due  hereunder  or if Tenant  receives  any other
consideration  on account of any such  assignment or sublease,  Tenant shall pay
Landlord,   as  additional  rent,  one-half  of  such  excess  rental  or  other
consideration upon the receipt thereof;  provided,  however, this sentence shall
not apply to any Permitted Transfer (as defined in paragraph 8 of the Rider).

Hazardous Substances

     15.  Landlord  represents  and warrants that upon  delivery to Tenant,  the
Building and the Premises  shall be free of Hazardous  Materials at levels which
violate  any  applicable  laws,   ordinances  or  regulations.   Landlord  shall
indemnify,  defend and hold Tenant harmless from and against any and all claims,
judgments,  damages,  penalties,  fines,  costs (including  without  limitation,
consultants' fees, experts' fees,  attorney's fees and court costs and all costs
of repair of any portion of the Premises or its contents), liabilities or losses
(other than  consequential  damages  such as lost  profits or loss of  business)
resulting  from any breach of the foregoing  representation  or warranty or from
the  presence  upon the  Premises  of any  Hazardous  Materials  which  were not
introduced by Tenant,  its agents,  representatives,  employees,  contractors or
invitees.  In the event that Landlord breaches the  representation  and warranty
set forth in the first  sentence of this  paragraph 15 and Tenant is deprived of
the use of all or a portion of the  Premises,  Tenant's  obligation  to pay base
rental  pursuant to the terms hereof shall abate in  proportion  to the affected
portion of the Premises  until such time as Tenant is no longer  deprived of the
use of the Premises.

<PAGE>

     Tenant covenants that, without first obtaining  Landlord's written consent,
that neither Tenant, nor any of its agents,  employees,  contractors or invitees
shall cause any Hazardous Materials to be stored, handled,  treated, released or
brought upon or disposed of on the Premises  other than  Hazardous  Materials of
the type  commonly  utilized  by the  operators  of  businesses  in first  class
industrial  or  warehouse  facilities.  Tenant  shall  comply  with  any and all
applicable laws, ordinances,  rules, regulations and requirements respecting the
storage, handling,  treatment,  release, disposal,  presence or use of permitted
Hazardous  Materials in, on or about the  Premises.  "Hazardous  Materials"  for
purposes  of this Lease  shall be  interpreted  broadly to mean any  material or
substance  that is defined,  regulated or classified  under federal,  state,  or
local laws as:  (a) a  "hazardous  substance"  pursuant  to  section  101 of the
Comprehensive Environmental Response,  Compensation and Liability Act, 42 U.S.C.
ss.9601(14),  section 311 of the Federal Water Pollution  Control Act, 33 U.S.C.
ss.1321,  as now or hereafter  amended (or any state or local counterpart of the
foregoing statutes); (b) a "hazardous waste" pursuant to section 1004 or section
3001 of the Resource Conservation and Recovery Act, 42 U.S.C. ss.ss.6903,  6921,
as now or hereafter  amended;  (c) a toxic pollutant under section  307(a)(1) of
the Federal Water Pollution Control Act, 33 U.S.C.ss.1317(a)(1) (or any state or
local  counterpart  of the foregoing  states);  (d) a "hazardous  air pollutant"
under section 112 of the Clean Air Act, 42 U.S.C.  ss.7412,  as now or hereafter
amended (or any state or local  counterpart  of the foregoing  statutes);  (e) a
"hazardous material" under the Hazardous Materials Transportation Uniform Safety
Act of 1990,  49 U.S.C.  App.  ss.1802(4),  as now or hereafter  amended (or any
state or local counterpart of the foregoing statutes); (f) determined to present
the unreasonable risk of injury to health or the  environmental  under the Toxic
Substances Control Act, as amended,  15 U.S.C.  ss.2601 et seq. (or any state or
local counterpart of the foregoing statutes); (g) toxic or hazardous pursuant to
regulations  promulgated now or hereafter under the  aforementioned  laws or any
state or local counterpart to any of the aforementioned  laws; or (h) presenting
a risk to human health or the environment under other applicable federal,  state
or  local  laws,  ordinances,  or  regulations,  as now or as may be  passed  or
promulgated  in the future.  Tenant shall  indemnify,  defend and hold  Landlord
harmless  from and against any and all claims,  judgments,  damages,  penalties,
fines, costs (including without  limitation,  consultants' fees,  experts' fees,
attorney's   fees  and  court   costs),   liabilities   or  losses  (other  than
consequential  damages such as lost  profits,  diminution in the market value of
the Premises,  and lost  opportunities to lease or sell the Premises)  resulting
from  any  breach  of any  promise,  covenant  or  agreement  set  forth in this
paragraph.  Without limiting the generality of the foregoing  indemnity,  in the
event  Landlord  has  reason  to  believe  that the  covenant  set forth in this
paragraph has been violated by Tenant,  Landlord  shall be entitled to take such
actions as  Landlord  deems  necessary  in order to assess,  contain,  delineate
and/or remediate any contamination by such Hazardous  Materials.  If it shall be
determined  that Tenant violated any of the covenants or agreements set forth in
this  paragraph,  any such sums  expended by  Landlord  shall be  reimbursed  by
Tenant,  as  additional  rent,  within  thirty  (30) days of demand  therefor by
Landlord. Upon the expiration or earlier termination of this Lease, Landlord may
cause to be performed environmental studies of the Premises to determine whether
any Hazardous Materials have been stored, handled,  treated,  released,  brought
upon or disposed of on the  Premises  during the term of this Lease in violation
of the terms  hereof.  If any such  study  reveals  any  breach of any  Tenant's
representations,  warranties or covenants  under this paragraph 15, Tenant shall
pay all  costs of such  studies.  The  obligations  of this  Paragraph  15 shall
survive the expiration or earlier termination of this Lease.

Removal of Fixtures

     16. Provided Tenant is not then in default  hereunder beyond any applicable
notice and cure  period,  Tenant may remove all  fixtures  and  equipment  which
Tenant has placed in the Premises,  provided  Tenant  repairs all damages to the
Premises  caused by such removal,  but in on event shall Tenant remove  heating,
ventilating,  air  conditioning,  plumbing,  electrical and lighting systems and
fixtures or dock levelers. In the event this Lease is terminated for any reason,
any property  remaining in or upon the Premises,  at the option of the Landlord,
may either be deemed to become  property of Landlord or Landlord  may dispose of
such property as Landlord deems proper with no obligation to Tenant.

<PAGE>

Default; Remedies

     17. In the event (i) any  payment of rental or other sum due  hereunder  is
not paid as and when due and Tenant fails to cure such  failure  within ten (10)
days after notice of such  delinquency by Landlord to Tenant;  (ii) Tenant shall
fail to comply with any term, provision,  condition,  or covenant of this Lease,
other than an obligation  requiring the payment of rent or other sums  hereunder
and shall not cure such failure  within thirty (30) days after written notice to
the Tenant of such failure to comply (or if such failure cannot by its nature be
cured within such thirty (30) day period.  Tenant shall have reasonable time not
to exceed  ninety  (90) days to cure such  failure,  so long as Tenant  promptly
commences such cure within such thirty (30) day period and thereafter diligently
prosecutes such cure to completion); or (iii) Tenant or any guarantor shall file
a petition under any applicable federal or state bankruptcy or insolvency law or
have any involuntary position filed thereunder against it and the same shall not
be  dismissed or otherwise  terminated  within  ninety (90) days of such filing,
then Landlord shall have the option to do nay one or more of the following:

          (a)  Terminate  this Lease,  in which event Tenant  shall  immediately
surrender the Premises to Landlord. Upon such termination,  Landlord may recover
from Tenant and Tenant agrees to pay to Landlord,  as compensation for all loss,
damage and expense which Landlord may suffer by reason of such termination,  the
following:  (i) the worth at the time of award of the unpaid rent which had been
earned  at the time of  termination;  (ii) the worth at the time of award of the
amount by which the unpaid rent which would have been earned  after  termination
until the time of award  exceeds  the amount of such rental loss that the Tenant
proves could have been  reasonably  avoided;  (iii) subject to clause (ii),  the
worth at the time of ward of the amount by which the unpaid rent for the balance
of the term after the time of award  exceeds the amount of such rental loss that
the  Tenant  proves  could be  reasonably  avoided;  and (iv) any  other  amount
necessary to compensate the Landlord for all the detriment proximately caused by
the Tenant's failure to perform his obligations  under the Lease or which in the
ordinary  course of things  would be likely to result  therefrom.  For  purposes
hereof,  the "worth at the time of award" of the amounts  referred to in clauses
(i) and (ii) above is computed by allowing  interest at a rate equal to the rate
announced by the Wall Street  Journal (or if the Wall Street Journal shall cease
publication of the "prime rate",  such other  publication of comparable  quality
which  shall be  reasonably  acceptable  to  Landlord)  from time to time as the
"prime  rate"  plus 2% per  annum.  The worth at the time of award of the amount
referred to in  paragraph  (iii) is computed by  discounting  such amount by six
percent (6%).

          (b)  Without  terminating  this  Lease,  terminate  Tenant's  right of
possession,  whereupon  rental  shall  continue  to accrue and be owed by Tenant
hereunder.  Thereafter,  at Landlord's option, Landlord may enter upon and relet
all or a  portion  of the  Premises  (or relet the  Premises  together  with any
additional space) for a term longer or shorter than the remaining term hereunder
and  otherwise  on terms  satisfactory  to  Landlord.  Tenant shall be liable to
Landlord for the deficiency, if any, between Tenant's rent hereunder and all net
sums  received by Landlord on account of such  reletting  (after  deducting  all
costs  incurred by Landlord in  connection  with any such  reletting,  including
without  limitation,   tenant  improvement  costs,   brokerage  commissions  and
attorney's fees).

          (c) Pursue a  dispossessory  action  against  Tenant,  in which  event
Tenant shall remain liable for all amounts computed  pursuant to paragraph 17(a)
above.

          (d) Perform any unperformed obligation of Tenant. Any sums expensed by
Landlord shall be repaid by Tenant,  as additional rent, within thirty (30) days
of demand therefor by Landlord.

<PAGE>

     Landlord  agrees to use  reasonable  efforts to relet the  Premises  and to
otherwise  mitigate any damages  arising out of a default on the part of Tenant;
provided,  however,  that  (i)  Landlord  shall  have  no  obligation  to  treat
preferentially  the Premises  compared to other premises  Landlord has available
for leasing in properties owned or managed by Landlord;  (ii) Landlord shall not
be obligated to expend any efforts or any monies  beyond  those  Landlord  would
expend in the ordinary course of leasing properties similar to the Premises; and
(iii) in evaluating a prospective  reletting of the Premises,  the term, rental,
use and the reputation, experience and financial standing of prospective tenants
are factors which Landlord may properly consider.

     Pursuit of any of the foregoing  remedies shall not preclude pursuit of any
other remedies herein provided or any other remedies  provided by law. If either
party  institutes a lawsuit to enforce any of the provisions of this Lease,  the
prevailing parties' reasonable  attorney's fees and court costs shall be paid by
the non-prevailing party.

Entry by Landlord

     18.  Landlord  may post a sign stating that the Premises are "For Lease" or
"For Sale" six (6) months prior to the  termination of this Lease.  Landlord may
enter the  Premises at  reasonable  hours  during the term of this  Lease,  upon
reasonable  advance notice to Tenant, to exhibit same to prospective  purchasers
or tenants and to make repairs  required of Landlord under the terms hereof,  or
to make repairs to Landlord's adjoining property, if any.

Estoppel Certificates

     19. Tenant agrees to furnish  within twenty (20) days of receipt of request
from Landlord or Landlord's  mortgagee a written statement  certifying as to the
then-current status of the Lease; provided,  however, if Tenant fails to respond
to such request  within such twenty (20) day period,  Landlord  shall deliver to
Tenant a second written request for such estoppel certificate,  and Tenant shall
provide such estoppel certificate to Landlord within ten (10) days of receipt of
such second request.  Such estoppel  certificate  shall be in substantially  the
form attached  hereto as Exhibit "B" hereto.  The notice and cure  provisions of
paragraph 17 shall not apply to Tenant's obligations under this paragraph 19.

No Estate in Land

     20. This Lease shall create the relationship of landlord and tenant between
Landlord and Tenant.

Holding Over

21. If Tenant remains in possession of the Premises after expiration of the term
hereof,  with Landlord's  acquiescence and without any express written agreement
of parties,  Tenant shall be a month-to-month tenant upon all the same terms and
conditions as contained in this Lease,  except that the rental rate shall become
one and  one-half  times  the  amount  in  effect at the end of the term of this
Lease,  and there shall be no renewal of this Lease by  operation  of law.  Such
month-to-month  tenancy be  terminable  upon  thirty  (30) days notice by either
party to the  other.  Tenant  waives  any right  that it may have to  additional
notice  pursuant to  applicable  law.  If Tenant  remains in  possession  of the
Premises   after  the   expiration  of  the  term  hereof   without   Landlord's
acquiescence,  Tenant  shall be a tenant  as  sufferance  subject  to  immediate
eviction.  In such event, in addition to paying  Landlord any damages  resulting
from such holdover,  Tenant shall pay rental at the rate of two times the amount
in effect at the end of the term of the Lease. Notwithstanding the foregoing, if
Tenant  vacates the Premises but fails to remove all of its property  therefrom,
Tenant  shall not be deemed to be holding  over  pursuant  to the terms  hereof,
provided, however, Landlord shall have the right to remove all such property and
to store the same at Tenant's expense and risk.

<PAGE>

Miscellaneous

     22. All rights,  powers and  privileges  conferred  hereunder  upon parties
hereto shall be cumulative but not restrictive to those given by law. No failure
of Landlord to exercise any power given  Landlord  hereunder,  or to insist upon
strict  compliance by Tenant with its  obligations  hereunder,  and no custom or
practice of the parties at variance  with the terms  hereof  shall  constitute a
waiver of  Landlord's  right to demand exact  compliance  with the terms hereof.
Time is of the  essence  of this  Lease.  Subject to the terms of  paragraph  14
above,  this Lease  shall be binding  upon and shall inure to the benefit of the
respective  successors and assigns of Landlord and Tenant.  Tenant shall pay and
be liable for all rental,  sales and use taxes, and other similar taxes, if any,
levied or imposed by any city, state,  county or other  governmental  authority.
Such payments shall be paid concurrently with the payment of rental or other sum
due  hereunder  upon  which the tax is based.  This  Lease  contains  the entire
agreement  to the parties  hereto as to the  Premises,  and no  representations,
inducements, promises or agreements, oral or otherwise, between the parties, not
embodied  herein,  shall be of any force or  effect.  If any term,  covenant  or
condition  of this Lease or the  application  thereof to any  person,  entity or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of
this Lease, or the  application of such term,  covenant or condition to persons,
entities  or  circumstances  other than those which or to which used may be held
invalid or unenforceable, shall not be affected thereby, and each term, covenant
or condition of this Lease shall be valid and  enforceable to the fullest extent
permitted by law. The  circulation of one or more drafts of this Lease shall not
constitute  a  reservation  of the Premises or an offer to lease the Premises to
Tenant.  Neither party shall be bound  hereunder until such time as both parties
have signed this Lease.

Notices

         23. Any notice  given  pursuant  to this Lease  shall be in writing and
sent by certified mail, return receipt requested, by hand delivery, by facsimile
transmission or by reputable overnight courier to:

     (a) Landlord:  Robert Pattillo Properties,  Inc. 2987 Clairmont Road, Suite
550, Atlanta, Georgia; Facsimile Number: 404-235-3541,  or at such other address
or to such  other  facsimile  number as  Landlord  may  designate  in writing to
Tenant.

          (b) Tenant:  Guess?,  Inc.,  1444 South Alameda  Street,  Los Angeles,
California 90021; Facsimile number: 213-765-0911, or at such other address or to
such other facsimile number as Tenant may designate in writing to Landlord.

Any notice sent in the manner set forth above shall be deemed sufficiently given
for all  purposes  hereunder  on the day said notice is deposited in the mail if
sent by  certified  mail,  upon  receipt if sent by hand  delivery or  reputable
overnight  courier,  or if  sent  by  facsimile,  on the  date  such  notice  is
transmitted, provided a copy of such notice is sent within two (2) business days
by regular mail to the recipient's address set forth above.

Brokerage

     24. CB Richard Ellis/Nicklies ("Tenant's Broker") has represented Tenant in
connection  with this Lease.  Landlord  shall pay  Tenant's  Broker a commission
pursuant to the terms of a separate  agreement.  Tenant  covenants and agrees to
indemnify and hold the other harmless from any and all loss, liability,  damage,
claim, judgment,  cost and expense (including without limitation attorney's fees
and litigation  costs) that may be incurred or suffered by the other because of
any claim for any fee,  commission or similar  compensation with respect to this
Lease,  made by any broker,  agent or finder other than Tenant's Broker claiming
by, through or under Tenant, whether or not such claim is meritorious.  Landlord
covenants and agrees to indemnify  and hold the other  harmless from any and all
loss, liability,  damage, claim,  judgment,  cost and expense (including without
limitation  attorney's  fees  and  litigation  costs)  that may be  incurred  or
suffered by the other  because of any claim for any fee,  commission  or similar
compensation  with respect to the Lease, made by Tenant's Broker or any broker,
agent or finder  claiming  by,  through or under  Landlord,  whether or not such
claim is meritorious.

<PAGE>

Signs

     25. Subject to any applicable laws, ordinances,  codes,  regulations or any
of the matters set forth on Exhibit  "A-2"  hereto,  Tenant may erect a building
sign on or  about  the  Premises.  Prior to the  expiration  of the term of this
Lease,  Tenant  shall remove any such sign and repair any damage to the building
occasioned by the removal of such sign.

Use of Premises

     26. The Premises  shall be used for any legal purpose,  including,  but not
limited, to use for general offices,  general  merchandising and distribution of
apparel  and  accessories.  The  Premises  shall  not be used  for  any  illegal
purposes,  nor in any  manner  to  create  any  nuisance  or  trespass,  vitiate
Landlord's  insurance  or violate  any  restrictive  covenants  encumbering  the
Premises as of the Commencement Date.

Insurance

     27. (a) Tenant will carry, at Tenant's expense, all-risk insurance coverage
on or self insure all equipment,  inventory, fixtures, furniture, appliances and
other personal property on the Premises. Tenant shall procure, maintain and keep
in full force and effect at all times  during the term of this Lease  commercial
general  liability  insurance  with  respect to the Premises and the conduct and
operation of Tenant's  business  therein,  naming Landlord and its mortgagees as
additional insured parties, with limits of not less than $2,000,000.00 for death
or bodily  injury to one or more  persons in  a single  occurrence  and not less
than $2,000,000 for property  damage.  Such general  liability  insurance policy
shall  contain  broad form  contractual  liability  coverage  covering  Tenant's
indemnities in favor of Landlord provided hereunder.

          (b)  Landlord  will carry,  at Tenant's  expense,  all risk  insurance
coverage on the  Premises  in an amount  equal to 100% of the  replacement  cost
thereof with commercially reasonable  deductibles.  Such insurance shall include
coverage for damage due to earthquake or flood. Landlord shall procure, maintain
and keep in full  force and  effect at all times  during  the term of this Lease
commercial  general  liability  insurance  with respect to the Premises,  naming
Tenant  as  an  additional   insured  party,   with  limits  of  not  less  than
$2,000,000.00  for death or bodily  injury  to one or more  persons  in a single
occurrence  and not less than  $2,000,000  for  property  damage.  Such  general
liability  insurance  policy  shall  contain  broad form  contractual  liability
coverage covering Landlord's  indemnities in favor of Tenant provided hereunder.
Tenant shall pay to  Landlord,  as  additional  rent,  the amount of  Landlord's
premium as to coverages  required by this subparagraph  27(b) within thirty (30)
days after  Landlord  bills  Tenant for the annual  premium for such  insurance.
Tenant's  obligation  as to the  payment  of such  insurance  premiums  shall be
apportioned  on a per diem basis for the years in which the Lease term commences
and terminates.

<PAGE>

          (c) To the fullest  extent  permitted by law,  Landlord and Tenant and
their respective insurance carries waive all right of recovery against the other
and its  officers,  employees and agents and agrees to release the other and its
officers,  employees and agents from  liability for loss or damage  arising from
risks  generally  insurable  by  insurance  carried  (and  issued  by  insurance
companies  of  recognized  standing  and  financial  strength) or required to be
carried by the waiving party pursuant to the terms hereof.

          (d) All  insurance  required to be carried by Tenant shall be effected
under  enforceable  policies  issued by insurers  licensed to do business in the
Commonwealth  of Kentucky.  At least  fifteen (15) days prior to the  expiration
date of any policy procured by Tenant, the certificates for such insurance shall
be delivered by Tenant to Landlord.  Certificates for all insurance  required to
be carried by Tenant pursuant to the terms hereof shall be delivered to Landlord
prior to the  commencement  of the term of this Lease.  All such policies  shall
contain an agreement by the insurers that such policies shall not be canceled or
materially  modified  without at least thirty (30) days prior written  notice to
the  Landlord and to the holder of any  mortgage to whom loss  hereunder  may be
payable.  If Tenant provides any insurance required by this Lease in the form of
a blanket  policy,  Tenant shall furnish proof that such blanket policy complies
in all  respects  with the  provisions  of this  Lease  and  that  the  coverage
thereunder  is at least equal to the  coverage  which would be provided  under a
separate  policy  covering only the Premises.  Landlord agrees to provide Tenant
certificates  evidencing  the  insurance  required to be  maintained by Landlord
pursuant to the terms hereof as promptly as reasonably practicable.

Ad Valorem Taxes

     28.  Tenant shall pay, as addition  rent,  all ad valorem real estate taxes
and  assessments  assessed or levied against the Premises for full taxable years
within the Lease  term and shall pay a per diem  apportionment  thereof  for the
years in which the Lease  commences  and  terminates.  Tenant  shall  remit such
amounts to Landlord  within  thirty  (30) days of notice  from  Landlord of such
amount;  provided,  however, Tenant shall be allowed to take the maximum benefit
of any law allowing real estate taxes or assessments to be paid in installments.
As promptly as reasonably  practicable,  Landlord shall cause the Premises to be
comprised  of one or more tax  parcels  which are  separately  assessed  for tax
purposes.  Until  such  time as the  Premises  is  comprised  of one or more tax
parcels which are  separately  assessed for tax  purposes,  ad valorem taxes and
assessments  as to parcels  covering  other property in addition to the Premises
shall be equitably allocated to the Premises.

Exhibits

<PAGE>

     29. The following  exhibits  attached  hereto  constitute a portion of this
Lease:

                  Exhibit A         Legal Description
                  Exhibit A-1       Description of Expansion Property
                  Exhibit A-2       List of Title Matters
                  Exhibit B         Estoppel Certificate
                  Exhibit C         Rider
                  Exhibit C-1       General Specifications
                  Exhibit C-2       Tenant's Work General Specifications
                  Exhibit D         Items to be Removed
                  Exhibit E         Example of Renewal and Expansion Provisions

     IN WITNESS  WHEREOF,  the parties have  hereunto set their hands and seals,
effective the day and year first above written.

                                    LANDLORD:

                                    ROBERT PATTILLO PROPERTIES, INC.,
                                      a Georgia Corporation

_________________________           By:______________________________
Witness                                Title:________________________

                                                                    (Corp. Seal)

                                    TENANT:

                                    GUESS?, INC., a Delaware corporation

_________________________           By:______________________________
Witness                                Title:________________________

                                                                    (Corp. Seal)
<PAGE>

                                  EXHIBIT "A"
                            Proposed Lot 214 Revised
                               Riverport Phase 3

Being Lot 214, Revised as shown on the Minor Subdivision Plat approved by the
Louisville and Jefferson County Planning Commission on July 22, 1998, as
Docket No. 191-98, and attached to Deed dated July 28, 1998, of record in Deed
Book 7078, Page 695, in the Office of the Clerk of Jefferson County, Kentucky.

                                      -7-
<PAGE>

                                  EXHIBIT "A-1"

                                      -8-
<PAGE>

                                 EXHIBIT "A-2"
                            [List of Title Matters]

1.   State,  County  and  School  District  Taxes  due and  payable  in 1999 and
     thereafter, a lien not yet due and payable.

2.   Conditions,  stipulations,  restrictions,  building  lines  and  easements,
     together with  incidental  rights,  as provided for on the recorded plat of
     Riverport  Phase 3 of record in Plat and  Subdivision  Book 43, Page 93, in
     the Office of the Clerk of Jefferson County, Kentucky.

3.   Declaration of  Restrictions  for Riverport  Complex of record in Deed Book
     6561,  Page 89,  and as  amended  by Fourth  Amendment  to  Declaration  of
     Restrictions of record in Deed Book 7079, Page 548, aforesaid records.

4.   Public Utility,  Sewer,  Drainage and Access  Easement,  100 feet in width,
     granted and shown on the  Minor  Subdivision  Plat  attached to the Deed of
     record in Deed Book 7078, Page 695, aforesaid records.

5.   30' Sanitary Sewer and Drainage Easement centered on southern property line
     as shown on Minor  Subdivision  Plat attached to the Deed of record in Deed
     Book 7078, Page 695, aforesaid records.

                                      -9-

<PAGE>

                                  EXHIBIT "B"

                              ESTOPPEL CERTIFICATE
                                Date: __________

TO:   [Insert Name of Recipient]

     LEASE AGREEMENT dated May __, 1999 ("Lease") by and between ROBERT PATTILLO
PROPERTIES,  a Georgia  corporation  ("Landlord")  and GUESS ?, INC., a Delaware
corporation  ("Tenant")  for the  premises  more fully  described  on Exhibit  A
attached hereto.

     The  undersigned,  as  Tenant,  under the above  referenced  Lease,  hereby
certifies  to the  best  of its  actual  knowledge  as of the  date  hereof  the
following:

     (1) The undersigned has entered into occupancy of the premises described in
said Lease;

     (2) The  Lease is in full  force  and  effect  and has not  been  assigned,
modified, supplemented or amended in any way, except as follows:

________________________________________________________________________________

________________________________________________________________________________

     (3) The commencement date of the Lease is _______________, 19___;

     (4) The expiration date of the Lease is ______________,  provided, however,
Tenant  has  additional  options  to extend  the term of the  Lease as  provided
therein;

     (5) Current annual Base Rent is $__________; ($__________ monthly;

     (6) All  conditions  of the Lease to be performed by Landlord and necessary
to the enforceability of the Lease have been satisfied;

     (7) There are no defaults by either Landlord or Tenant thereunder;

     (8)  No  rents  have  been  paid  in  advance  of  one  (1)  month   except
_______________; and

     (9) There are no existing  defenses or offsets  which the  undersigned  has
against the Landlord.

     (1) There have been no  assignments  of the Lease,  in whole or in part, or
subleases of all or part of the Premises except as follows _____________________
_______________________________________________________________________________.

     Executed the day and date above written.

TENANT:                                 GUESS ?, INC., a Delaware corporation

                                        By:_________________________
                                        Name:_______________________
                                        Title:______________________

                                      -10-
<PAGE>

                                  EXHIBIT "C"

     RIDER TO STANDARD  INDUSTRIAL  LEASE  AGREEMENT DATED MAY ___, 1999, BY AND
BETWEEN ROBERT PATTILLO  PROPERTIES,  INC., A GEORGIA  CORPORATION,  HEREINAFTER
COLLECTIVELY  REFERRED  TO  AS  "LANDLORD";   AND  GUESS  ?,  INC.,  A  DELAWARE
CORPORATION, HEREINAFTER REFERRED TO AS "TENANT";

     This  Rider  is  attached  to and  made  part  of the  referenced  Standard
Industrial Lease Agreement.  In the event of an inconsistency  between the terms
of this Rider and the terms of the  Standard  Industrial  Lease  Agreement,  the
terms of this Rider shall control.

1. Renewal  Options.  Tenant shall have the right to renew the term of the Lease
for two (2)  additional  periods of five (5) years each or if Tenant  shall have
previously  exercised a renewal  option in  connection  with the  exercise of an
expansion  option pursuant to paragraph 5 below,  either of such periods of five
(5) years  less the Stub Term as to the  Expansion  in  question,  as defined in
subparagraph 5(c) below  (individually,  a "Renewal Term" and collectively,  the
"Renewal Terms") by giving Landlord prior written notice six (6) months prior to
the  expiration of the then existing term that Tenant has exercised such renewal
right, subject to the following conditions:

     (a) There shall not be a default or breach beyond any applicable notice and
     cure period under any of the terms or  provisions  of the Lease at the time
     such  notice  is given or at the time of the  commencement  of the  Renewal
     Term.

     (b) Tenant shall occupy the Premises during the Renewal Term under the same
     terms and  conditions as specified in the Lease,  except Tenant shall lease
     the  Premises in their then "as-is"  condition,  the rental for any Renewal
     Term shall be then Market Rate (as defined in Paragraph  1(d)  below),  but
     not less  than the  rental  for the  original  Premises  or  Expansion,  if
     different  and  as  applicable,   in  effect   immediately   prior  to  the
     commencement of such Renewal Term.

     (c) As used herein, the term "CPI Ceiling" shall be an amount determined by
     multiplying  the  monthly  rental  for the first  month of the term of this
     Lease by a  fraction,  the  numerator  of which  shall  be the  Index  most
     recently  published  prior  to the  commencement  of the  Renewal  Term  in
     question (whether such Renewal Term be a 5-year or shorter period of time),
     and the  denominator  of which shall be the Index most  recently  published
     prior to the commencement date of the term of this Lease. In no event shall
     the CPI Ceiling be less than the monthly  rental for the first month of the
     term. As used herein, the term "Index" shall mean the United States, Bureau
     of Labor  Statistics  Consumer Price Index for All Items - All Wage Earners
     and  Clerical  Workers  (base  year  1982-84=100)  applicable  to the  SMSA
     including  Louisville,  Kentucky ("CPI").  If the Index has changed so that
     the base year differs   from that used in this Section,  the Index shall be
     converted in accordance with the conversion  factor published by the United
     States  Department  of Labor,  Bureau of Labor  Statistics,  to the 1982-84
     base. If the Index is  discontinued  or revised during the Lease term, such
     other  governmental index or computation with which it is replaced shall be
     used in order to obtain  substantially the same result as would be obtained
     if the Index had not been discontinued or revised.

     (d) As used herein, the term "Market Rate" shall be initially determined by
     Landlord as (i) the amount of initial  base annual  rental per square  foot
     then being charged in comparable  warehouse/distribution facilities located
     in the  Louisville,  Kentucky  market  (the  "Comparable  Buildings")  (ii)
     together with the annual  escalation  rate, if any, for space comparable to
     the  Premises  and taking into  consideration  all other  relevant  factors
     establishing  similarity or dissimilarity  between the comparable lease and
     the  leasing of the  Premises  to Tenant for the  Renewal  Term, including,
     without  limitation,  escalations  (including  type,  base year and  stop),
     concessions,  length of lease  term,  size and  location  of the  Premises,
     building standard work letter and/or tenant improvement allowances, quality
     and   quantity   of  any   existing   tenant   improvements,   quality  and
     creditworthiness of Tenant,  amenities offered,  location of building,  and
     other generally applicable concessions, allowances, terms and conditions of
     tenancy.  The reference to the foregoing  factors is illustrative  only and
     the  presence  or absence of such  factors  shall be taken into  account in
     determining Market Rate.  Notwithstanding the foregoing,  as to any portion
     of any Renewal  Term falling  between the tenth  (10th) and fifteen  (15th)
     anniversaries  of the  Commencement  Date, the Market Rate shall not exceed
     the CPI Ceiling  with  respect to such period of time;  provided,  however,
     this  limitation  to the amount of the CPI  Ceiling  shall not apply to any
     portion of the Expansion  Term as any Expansion  (i.e.,  the rental payable
     during the  Expansion  Term as to any  Expansion  shall be the Market  Rate
     computed without  reference to the CPI Ceiling).  The  determination of the
     Market  Rate  shall  not  take  into   account  any   permanent   leasehold
     improvements  installed  by  Tenant  the cost of which  shall not have been
     reimbursed by Landlord ("Tenant Owned Improvements")  pursuant to the terms
     of paragraph  3(c)(iv)  below.  If the Market Rate shall be  determined  by
     arbitration  pursuant to subparagraph (e) below, then the arbitrators shall
     be expressly  directed to make such  determination  as if such Tenant Owned
     Improvements did not exist.

                                      -11-
<PAGE>

     (e) Within thirty (30) days after Landlord  receives the notice of Tenant's
     exercise  of the  renewal  option,  Landlord  shall  notify  Tenant  of the
     proposed  Market Rate;  provided,  however,  in no event shall  Landlord be
     obligated to notify  Tenant of the proposed  Market Rate prior to the ninth
     (9th) month before the expiration of the then existing term.  Consequently,
     as to any renewal of the term effected in connection  with  Expansion so as
     to meet the  requirements  set forth in paragraph 5(c) below that ten years
     remain in the term as of the Expansion  Rent  Commencement  Date,  Landlord
     shall not be required to notify Tenant as to the Market Rate as to the Stub
     Term as to the Premises  existing  prior to such  Expansion  until nine (9)
     months  prior to  the  commencement  of such  Stub Term.  In the event that
     Landlord  and  Tenant are not able to agree as to the  Market  Rate  within
     sixty (60) days from Landlord's  receipt of notice of Tenant's  exercise of
     the Renewal Option, the Market Rate shall be determined as follows:

          (i)  Each of the Landlord and Tenant shall within ten (10) days of the
               expiration of the aforementioned sixty (60) day period, select an
               independent  appraiser  who is a  member  of MAI  experienced  in
               appraising real property similar to the land in question.

          (ii) In the event that either Landlord or Tenant fails to appoint such
               an appraiser within such ten (10) day period, the party which has
               appointed such an appraiser  shall notify the party which has not
               appointed an  appraiser.  If the party which failed to appoint an
               appraiser  continues to fail to appoint an appraiser  within five
               (5) days after such notice,  then the appraiser  appointed by the
               party making an appointment shall determine the Market Rate which
               shall be binding on parties hereto.

          (iii)In the event that  Landlord  and Tenant each  appoint a qualified
               appraiser  within  such  ten  (10)  day  period,   then  the  two
               appraisers so appointed shall meet in good faith in an attempt to
               agree  on the  Market  Rate  within  thirty  (30)  days  of  such
               appointment.

          (iv) In the event that the  appraiser  appointed  by Landlord  and the
               appraiser  appointed  by Tenant  cannot  agree on the Market Rate
               within  thirty  (30)  days of the  last  appointment  of such two
               appraisers,  the two appraisers  shall agree on the identity of a
               similarly qualified independent appraiser who is a member of MAI,
               or if the two appraisers  have not agreed on the identity of such
               third  appraiser  within   forty-five  (45)  days  of  such  last
               appointment,  then  a  third  similarly  qualified,   independent
               appraiser  who is a  member  of MAI  shall  be  appointed  by the
               American   Arbitration   Association   in  accordance   with  the
               Commercial   Arbitration   Rules  of  the  American   Arbitration
               Association,  and the decision of such third  appraiser  shall be
               binding.  Such  third  appraiser   shall  make  its  decision  in
               accordance  with the Commercial Arbitration Rules of the American
               Arbitration  Association.  Each  party  shall  pay the  fees  and
               expenses  of the  appraiser  that  such party  appoints,  and the
               parties shall split the fees and expenses of the third appraiser,
               if any.

          (v)  Notwithstanding   any  provision  to  the  contrary,   if  Tenant
               disapproves  of  the  amount  of the  Market  Rate,  in its  sole
               discretion,  Tenant  shall be entitled to rescind the exercise of
               its renewal  option by notice  given to Landlord  within ten (10)
               days  of  the  date  on  which  Tenant  receives  notice  of  the
               determination  of the Market Rate, but only if Tenant  reimburses
               Landlord for all out of pocket  expenses  incurred by Landlord in
               connection   with  such  renewal   process   (including   without
               limitation,  the   cost  of  Landlord's  appraiser   which  would
               otherwise be  Landlord's  cost).  If Tenant fails to provide such
               written  notice within such ten (10) day period,  Tenant shall be
               deemed conclusively to have waived such right of rescission.

     (f)  In the event that Tenant effects two Expansions  pursuant to the terms
          of  paragraph  5 below,  then  the  Renewal  Terms as to the  original
          Premises and the two Expansions may not be coterminous. In such event,
          the Renewal Terms shall be effected in  connection  with the Expansion
          as required by the terms of  paragraph  5(c) below and Tenant shall be
          required to exercise any renewal  options as to any remaining  Renewal
          Terms  such  that  the  term of  this  Lease  shall  at all  times  be
          coterminous as to the entire  Premises  including the  Expansions.  If
          Tenant fails to do so, then the renewal and the  computation of rental
          with respect  thereto may be effected by Landlord by written notice to
          Tenant.  In such  event,  the  amount  of  rental  shall  be  computed
          independently as to each Renewal Term as to the original  Premises and
          each  Expansion.  The example set forth on Exhibit "E" illustrates the
          application of this provision.

     (g)  The failure by Tenant to exercise  any renewal  option shall result in
          the termination of all further options.

                                      -12-

<PAGE>

     (h)  In the event  Tenant  fails to timely  notify  Landlord  in the manner
          herein specified,  Tenant shall be conclusively  deemed to have waived
          its right to enter into any Renewal Term.

     (i)  The renewal options  described in this paragraph 1 shall be assignable
          to an assignee of Tenant's  right,  title and  interest in and to this
          Lease if such assignee is a permitted  assignee  pursuant to the terms
          of this Lease.

2. Landlord's Work. (a) Landlord shall expeditiously  perform the following work
(collectively,  the "Landlord's  Work") in accordance with  the Landlord's Final
Plans  (as  hereinafter  defined)  after  the date on which  both  parties  have
executed this Lease:

          (i)  Landlord shall expand the Existing Shell (as defined in Paragraph
               1 of the Lease) by approximately 135,000 square feet; and

          (ii) Landlord  shall  improve and modify the  Building  (as defined in
               Paragraph 1 of the Lease) in accordance  with the  specifications
               attached hereto as Exhibit C-1.

     (b) Landlord  warrants to Tenant that all building  systems in the Existing
     Shell shall be in good working  order as of the date of delivery to Tenant,
     subject to any  damage  arising  out of any  negligent  or  willful  act of
     Tenant,  its agents,  representatives,  employees or contractors.  Landlord
     further  warrants to Tenant that as of the date of delivery to Tenant,  the
     Building,  as improved by the Landlord's Work (but  specifically  excluding
     the Tenant's  Work),  shall  (subject to paragraph 15 of the Lease)  comply
     with all laws, ordinances, codes and regulations including any provision of
     the Americans  with  Disabilities  Act ("ADA") which apply to any structure
     which is a  "commercial  facility,"  Landlord  not  being  responsible  for
     compliance  with ADA  requirements  applicable  any portion of the Premises
     which by virtue  of  Tenant's  use  constitutes  a "public  accommodation."
     Landlord also warrants the Building,  as improved by the  Landlord's  Work,
     against any defects for a period of one (1) year from and after the date of
     delivery  to  Tenant.  Landlord  shall  assign  to  Tenant  any  assignable
     warranties on building systems within the Premises.  If any such warranties
     are not  assignable,  Landlord shall cooperate with Tenant to permit Tenant
     to benefit from any  warranties  held by Landlord on any  building  systems
     within the Premises.

     (c) The Landlord's Final Plans shall be prepared as follows:

          (i)  Landlord  shall  deliver  to  Tenant no later  than May 7,  1999,
               proposed final plans and specifications (the "Proposed Landlord's
               Final   Plans")   for  the   Landlord's   Work.   The  Plans  and
               Specifications  shall be  consistent  with the  pre-architectural
               specifications (the "General  Specifications") of Landlord's Work
               attached  hereto as Exhibit "C-1".  Within five (5) business days
               after  receipt of the  Proposed  Landlord's  Final  Plans  Tenant
               shall,  in writing,  inform  Landlord of  required  revisions  or
               corrections  thereto.  Tenant's  revisions and corrections to the
               Proposed  Landlord's  Final  Plans shall be limited to any aspect
               thereof  which  is  materially   inconsistent  with  the  General
               Specifications.  Any other  requested  change shall  constitute a
               Change  Order (as defined  below).  In the event Tenant shall not
               inform Landlord of such desired  revisions or corrections  within
               such five (5) business day period, the Proposed  Landlord's Final
               Plans shall be deemed  approved  and  accepted  for the  purposes
               hereof.

          (ii) In the event Tenant shall inform  Landlord of required  revisions
               or corrections to the Proposed  Landlord's Final Plans,  Landlord
               shall revise the Proposed Landlord's Final Plans and shall submit
               the  revised  Proposed  Landlord's  Final  Plans  to  Tenant  for
               Tenant's  approval  within three (3) business days of the receipt
               of Tenant's comments.  Tenant shall have three  (3) business days
               after the receipt of such revised Proposed Landlord's Final Plans
               to  review,  approve or comment  on the  required  provisions  or
               corrections  thereto.  Tenant's  revisions and corrections to any
               revision to the Proposed  Landlord's Final Plans shall be limited
               to any aspect thereof which is materially  inconsistent  with the
               revision(s) requested by Tenant pursuant to the terms hereof. Any
               other  requested  change  shall  constitute  a Change  Order  (as
               defined below).  In the event Tenant shall not inform Landlord of
               such desired  revisions or  corrections  to the revised  Proposed
               Landlord's Final Plans within said three (3) business day period,
               the  revised  Proposed  Landlord's  Final  Plans  shall be deemed
               approved or accepted for the purposes hereof.  This process shall
               continue  until the Proposed  Landlord's  Final Plans are finally
               approved by Landlord and Tenant.

                                      -13-

<PAGE>

          (iii) The  Proposed  Landlord's  Final Plans,  as finally  approved by
                Landlord and Tenant,  shall  collectively  be referred to as the
                "Landlord's Final Plans."

          (iv)  Tenant  shall not be entitled to make any Change  Order  without
                Landlord's  approval,  which approval shall not be  unreasonably
                withheld or delayed.  For purposes hereof,  "Change Order" shall
                mean any alteration,  substitution,  addition or change to or in
                the Landlord's  Final Plans requested by Tenant or any requested
                change to the Proposed Landlord's Final Plans which is deemed to
                be a Change Order pursuant to this  subparagraph (c).  If at any
                time after the Landlord's  Final Plans are approved by Landlord,
                Tenant  desires to make a Change  Order,  Tenant shall submit to
                Landlord a written description of such desired Change Order. Any
                such  Change  Order  shall  be  subject  to   Landlord's   prior
                reasonable  approval.   Landlord  shall  respond  to  Tenant  as
                promptly  as  practicable  with an  estimate of the cost of such
                Change Order (the "Change  Order Effect  Notice").  Within three
                (3) days  after  receipt of such  Change  Order  Effect  Notice,
                Tenant  shall  respond to such Change Order  Effect  Notice,  by
                either  withdrawing such Change Order or authorizing such Change
                Order.  Notwithstanding  the  preceding  sentence,  if  Landlord
                notifies Tenant that such Change Order affects the critical path
                of  construction,  Tenant  shall  respond to such  Change  Order
                Effect  Notice  within 24 hours of receipt of such critical path
                notification,   by  either  withdrawing  such  Change  Order  or
                authorizing  such Change  Order  pursuant to  subparagraph  (iv)
                hereof.  No Change  Order shall be  approved  by Landlord  until
                approved   in   writing   by   Jim   Topple    (the    "Landlord
                Representative").  No Change  Order  shall be approved by Tenant
                until  approved in writing by Tenant's Vice President of Finance
                (the  "Tenant  Representative").  Any Change  Order  approved in
                writing by the Landlord Representative and Tenant Representative
                shall be binding.  A failure by Tenant to so respond to any such
                Change Order Effect  Notice  within three (3) days after receipt
                of such Change Order Effect  Notice shall be deemed a withdrawal
                of such Change Order.  Once the cost and the schedule change, if
                any,  for such Change  Order has been  approved  by Tenant,  all
                references  herein to the  "Landlord's  Final Plans" shall be to
                the Landlord's Final Plans, as changed and modified  pursuant to
                such Change  Order.  Tenant shall pay  Landlord,  as  additional
                rent,  within thirty (30) days of demand the cost of such Change
                Order as disclosed in the Change Order Effect Notice.

          (v)  The target date for the Substantial Completion Date is October 1,
               1999; provided, however, Landlord shall not be liable for failure
               to meet such target date.

3.  Tenant's  Work.  (a) Tenant,  at its sole cost and expense,  shall  complete
Tenant's  build  out of the  Premises  (collectively,  the  "Tenant's  Work") in
accordance with the Tenant's Final Plans (as hereinafter defined).

     (b)  Subject to  paragraph  15 of the Lease,  Tenant  warrants  to Landlord
Tenant shall  complete  Tenant's Work in accordance  with all laws,  ordinances,
codes  and  regulations,   including  without   limitation  the  Americans  with
Disabilities  Act (the "ADA").  Tenant shall also be responsible for causing the
Premises  to comply  with any  provision  of the ADA which  applies  to  "public
accommodations", if Tenant desires to operate all or any portion of the Premises
so as to render the  Premises or any portion  thereof a "public  accommodation."
Unless caused by the negligent or  intentional  acts or omissions of Landlord or
its agents, representatives, employees or contractors or the failure of Landlord
to discharge  its  obligations  under this Lease,  Tenant  agrees to  indemnify,
defend and hold Landlord and Landlord's agents harmless from and against any and
all loss, liability, cost and expense (including without limitation,  attorney's
fees and court costs)  incurred by Landlord or its agents relating in any way to
the performance of Tenant's Work,  including without limitation,  the imposition
of any lien against the Premises or the Building in connection therewith.  In no
event shall  Landlord be deemed to have  consented to the imposition of any lien
against any interest of Landlord on the Building or the Premises.

     (c) The Tenant's Final Plans shall be prepared as follows:

          (i)  Tenant shall prepare proposed final plans and specifications (the
               "Proposed  Tenant's  Final  Plans") for the  Tenant's  Work.  The
               Plans   and   Specifications   shall  be   consistent   with  the
               pre-architectural  specifications  (the  "Tenant's  Work  General
               Specifications")  of  Tenant's  Work  attached  hereto as Exhibit
               "C-2".  Within  five  (5)  business  days  after  receipt  of the
               Proposed Tenant's Final Plans Landlord shall, in writing,  inform
               Tenant of required revisions or corrections  thereto.  Landlord's
               revisions and  corrections  to the Proposed  Tenant's Final Plans
               shall be  limited  to any  aspect  thereof  which  is  materially
               inconsistent  with the Tenant's Work General  Specifications.  In
               the event  Landlord  shall  not  inform  Tenant  of such  desired
               revisions  or  corrections  within  such  five (5)  business  day
               period,  the  Proposed  Tenant's  Final  Plans  shall  be  deemed
               approved and accepted for the purposes hereof.

                                      -14-
<PAGE>

          (ii)  In the event Landlord shall inform Tenant of required  revisions
                or  corrections  to the Proposed  Tenant's  Final Plans,  Tenant
                shall revise the Proposed  Tenant's Final Plans and shall submit
                the revised Proposed Tenant's Final Plans to Tenant for Tenant's
                approval  within  three  (3)  business  days of the  receipt  of
                Tenant's  comments.  Landlord shall have three (3) business days
                after the receipt of such revised Proposed  Tenant's Final Plans
                to review,  approve or comment  on the  required  provisions  or
                corrections thereto. Landlord's revisions and corrections to any
                revision to the Proposed  Tenant's  Final Plans shall be limited
                to any aspect thereof which is materially  inconsistent with the
                revision(s) requested by Tenant pursuant to the terms hereof. In
                the event  Landlord  shall  not  inform  Tenant of such  desired
                revisions or corrections to the revised Proposed  Tenant's Final
                Plans  within said three (3)  business  day period,  the revised
                Proposed  Tenant's  Final  Plans  shall be  deemed  approved  or
                accepted for the purposes  hereof.  This process shall  continue
                until the Proposed  Tenant's Final Plans are finally approved by
                Landlord and Tenant.

          (iii) The Proposed  Tenant's  Final  Plans,  as  finally  approved  by
                Landlord and Tenant,  shall  collectively  be referred to as the
                "Tenant's  Final Plans."  Without the prior  written  consent of
                Landlord,  Tenant  shall not make any  changes  to the  Tenant's
                Final Plans.  Subject to all of the terms and conditions of this
                Lease  (other  than the  obligation  to pay rent) and so long as
                Tenant  its  agents, representatives, employees, contractors and
                invitees do not interfere  with  Landlord's  performance  of the
                Landlord's  Work,  Tenant  shall  have the  right  to enter  the
                Premises  prior  to the  Commencement  Date for the  purpose  of
                performing the Tenant's  Work.  Tenant's Work shall be performed
                by  contractors  reasonably  approved by Landlord (such approved
                contractors   are   hereinafter   referred   to   as   "Tenant's
                Contractors"). If Landlord fails to disapprove any such proposed
                contractor  within two (2) business  days of demand from Tenant,
                such  contract   shall  be  deemed   approved  for  purposes  of
                completing the Tenant's Work.

          (iv) Landlord shall not be entitled to any construction management fee
               or any other  similar fee in connection  with  Tenant's  Work. By
               sending  Tenant  written   notice  designating  which elements of
               Tenant's  Work  Landlord is electing to purchase,  Landlord  will
               have the option  from time to time to pay the Tenant for the cost
               of some or all of the  Tenant's  Work,  whereupon  the  amount of
               monthly  rental  due  hereunder  shall  increase  by  the  amount
               computed  by  multiplying  the amount  paid by Landlord by eleven
               percent  (11%) and  dividing   such  product by twelve  (12).  If
               Landlord   exercises  the  option   described  in  the  preceding
               sentence,  Landlord  and Tenant  shall enter into an amendment to
               this Lease to memorialize  any such payments made by Landlord and
               the resulting return due Landlord.

4.  Commencement  Date.  The term of this lease shall  commence on the date (the
"Commencement  Date")  which is  ninety  (90)  days from and after the date (the
"Substantial Completion Date") on which Landlord obtains a temporary certificate
of occupancy for the Building, as improved by the Landlord's Work (but excluding
any work  performed by Tenant).  The parties shall  execute a written  statement
setting  forth the  Commencement  Date and the date of  expiration of this Lease
promptly after the same shall have been ascertained,  but the  enforceability of
this  Lease  shall  not be  affected  if  either  party  fails to  execute  such
statement.

                                      -15-
<PAGE>

5.  Expansion as to Adjacent Land.

     (a)   Landlord   has  an  option  (the   "Purchase   Option")  to  purchase
     approximately twenty-five (25) acres of real property described as "Lot 215
     Revised"  on the site plan attached  hereto as Exhibit "A-1" (the "Adjacent
     Land") which  includes the Expansion Land (as defined in Paragraph 1 of the
     Lease).  As  part  of its  acquisition  of  the  Expansion  Land,  Landlord
     anticipates  that the  Purchase  Option shall be modified so as to apply to
     the  Adjacent  Land  less  and  except  the  Expansion  Land   (hereinafter
     referred  to  as  the  "Option  Land").  Landlord  agrees  to  perform  its
     obligations  under  the  Purchase  Option so as to keep its  option  rights
     thereunder in full force and effect.  Landlord shall invoice Tenant for the
     cost of keeping the  Purchase  Option in full force and effect,  and Tenant
     shall pay such amounts to Landlord,  as additional rent  hereunder,  within
     thirty (30) days of receipt of any such invoice.  At the request of Tenant,
     Landlord  shall use good faith  efforts  to cause the term of the  Purchase
     Option to be extended so as to be  exercisable  during the entire  original
     ten (10) year term of the  Lease.  Tenant,  within  thirty  (30) days after
     being invoiced  therefor by Landlord,  shall pay all amounts required to be
     paid by Landlord in order  initially  to so extend the term of the Purchase
     Option and thereafter to keep the Purchase Option in full force and effect;
     provided,  however,  Landlord  shall notify Tenant of the terms of any such
     extension of the Purchase  Option in advance of its commitment to so extend
     the Purchase Option,  and Tenant may withdraw its request that the Purchase
     Option be so extended by giving written notice to Landlord  within ten (10)
     days of the receipt of Landlord's  notice,  in which event Tenant shall not
     be  required  to pay to  Landlord  any costs or other  amounts  incurred by
     Landlord in seeking the extension of the Purchase Option or to maintain the
     Purchase  Option beyond the original  term thereof.  At any time during the
     term of this lease,  Tenant may notify  Landlord that it no longer requires
     Landlord to maintain the Purchase  Option in full force and effect,  and in
     such  event,  effective  one  hundred  eighty  (180) days after  Landlord's
     receipt of such notice (or sooner if Landlord causes the Purchase Option to
     terminate),  (i) Tenant's  rights under this paragraph 5 shall  irrevocably
     cease and be of no  further  force and  effect,  and (ii)  Tenant  shall no
     longer be  required to pay to  Landlord  the cost of keeping  the  Purchase
     Option in full  force and  effect,  nor shall  Tenant  thereafter  have any
     rights to the Option Land.

     (b)  Provided  that  there  does not  exist a default  by  Tenant  with all
     applicable  notice and cure  periods  having  expired  without such default
     having been  cured,  Tenant  shall have the option,  at any time during the
     original 10-year term (but no more than two (2) times) by written notice to
     Landlord  ("Tenant's  Election Notice"),  to cause Landlord to exercise its
     option to  purchase  the Option  Land or a portion  thereof  sufficient  to
     effect the  expansion of the Building as  hereinafter  described and expand
     the Building  thereon  (such  expansion is  hereinafter  referred to as the
     "Expansion"),  at  Landlord's  sole cost and  expense,  by a minimum of one
     hundred  fifty-seven  thousand  five  hundred  (157,500)  square feet and a
     maximum of three  hundred  fifteen  thousand  (315,000)  square feet in the
     aggregate,  which  Expansion  shall be  located  on the  north  side of the
     Building  on Lot 215,  as set forth on the Site  Plan.  In any such  event,
     Landlord shall provide a shell building in quality and design comparable to
     the Existing  Shell,  except that  Landlord  shall install no office pod or
     vehicle  parking areas.  The design and build out of the Expansion shall be
     constructed  in the same manner as the design and build out of the Existing
     Shell pursuant to Exhibit  "C-1".  An amendment  documenting  the Expansion
     shall  include  provisions  similar to paragraph 2 of this Rider.  Tenant's
     right to exercise the Expansion two times is subject to the following:  (i)
     Landlord  shall  have  the  reasonable  right  to  approve  the size of any
     Expansion  if it is other than 157,500  square feet or 315,000 square feet;
     and  (ii) if the first Expansion is 315,000 square feet,  there shall be no
     second Expansion.

     (c) Tenant's exercise of the expansion option shall not be effective unless
     Tenant contemporaneously therewith shall exercise an option as to a portion
     of a Renewal Term, an entire Renewal Term or a combination of Renewal Terms
     or portions thereof remaining  unexercised  pursuant to paragraph 1 of this
     Rider so there remains  exactly ten (10) years in the Lease term  effective
     as of Expansion Rent  Commencement Date as to the original Premises and any
     prior Expansion, as well as the current Expansion. If Tenant exercises only
     a portion of a Renewal Term in order to meet the requirement  that ten (10)
     years  remains in the term,  the   remainder  of such  Renewal  Term may be
     exercised  independently  pursuant  to the  terms  of  Paragraph  1  above.
     Tenant's  obligation  to  pay  monthly  rental  as to the  Expansion  shall
     commence  on the  date on  which  temporary  or  permanent  certificate  of
     occupancy  has  been  issued  as to such  Expansion  (the  "Expansion  Rent
     Commencement  Date").  The time period  commencing  on the  Expansion  Rent
     Commencement Date and ending on the last day of the term hereof,  including
     the renewal  options  exercised  in  connection  with the  exercise of such
     expansion option,  is hereinafter  referred to as the "Expansion Term". The
     Expansion Term shall consist of two components:  the "Remaining Term" which
     shall  consist of the remainder of the term hereof prior to the exercise of
     such expansion and renewal options, and the "Stub Term" which shall consist
     of that portion of the Expansion Term remaining  after the Remaining  Term.
     For example,  if Tenant's  obligation to pay  Expansion  Rent occurred when
     there were 7 years  remaining in the original term, then such original term
     would be extended by 3 years so that the term remaining as of such date was
     10 years,  the Remaining Term would be 7 years and the Stub Term would be 3
     years. In such event, as provided in paragraph 1 above,  the first Renewal
     Term remaining to be exercised  pursuant to paragraph 1 would be reduced to
     2 years (5 years  less  Stub  Term of 3 years).  If  Tenant  exercises  its
     expansion right two (2) times,  then the Remaining Term and Stub Term shall
     be determined separately as to each Expansion.

                                      -16-
<PAGE>

     (d) The Expansion  shall be governed by all of the terms and  conditions of
     this  Lease  except  that  amount of  monthly  rental  as to the  Expansion
     ("Expansion  Rent") for the  Expansion  Term  shall be the  Market  Rate as
     determined  pursuant to this  subparagraph (d).  Within thirty (30) days of
     the receipt of Tenant's  Election  Notice,  Landlord shall notify Tenant of
     Landlord's good faith  determination  ("Landlord's  Determination")  of the
     Market  Rate.  Within  thirty  (30)  days  of  the  receipt  of  Landlord's
     Determination, Tenant shall provide Landlord written notice of the approval
     of  Landlord's   Determination.   If  Tenant  disapproves  such  Landlord's
     Determination  and wishes to withdraw  Tenant's  exercise of the  expansion
     option,  Tenant's  written  response  shall so provide,  and in such event,
     Tenant's  exercise of this  expansion  option shall be rescinded  and of no
     effect.  However,  the  provisions of this  Paragraph 5 of this Rider shall
     remain in full force and effect and Tenant shall  thereafter again have the
     right  pursuant to the  provisions  of said  Paragraph  5 to  exercise  the
     expansion  option.  If  Tenant  provides  such  notice  of  disapproval  of
     Landlord's  Determination  and  does  not  withdraw  the  exercise  of such
     expansion option,  then Landlord and Tenant shall determine the Market Rate
     pursuant to the  procedure  described  in  paragraphs  1(d) and (e) of this
     Rider.  In such  event,  the  Market  Rate as to the Stub Term shall not be
     determined at the time of the exercise of the expansion option, but instead
     shall  be  determined   within  the  time  period  specified  in  paragraph
     5(c)(ii)(B)  below.  If Tenant  provides  notice of approval of  Landlord's
     Determination,  then Landlord and Tenant shall execute an amendment to this
     Lease  effecting such  Expansion.  If Tenant fails to respond to Landlord's
     notice of Landlord's Determination within such thirty (30) day period, then
     Tenant  shall  be  conclusively  deemed  to  have  disapproved   Landlord's
     Determination and withdrawn the exercise of its expansion option.

     (e) Monthly rental due during the Expansion Term shall be as follows:

          (i) Monthly  rental  payable as to the Expansion  during the Expansion
          Term shall be the  Expansion  Rent as  provided  in  subparagraph  (d)
          above. If there are two  Expansions,  monthly rental shall be computed
          separately as to each Expansion.

          (ii)  Monthly  rental  payable as to  original  Premises  or the first
          Expansion in the event of a second Expansion shall be as follows:

               (A) Monthly  rental as to the Remaining  Term shall be the amount
               of monthly rental which shall  otherwise be payable  hereunder as
               to the Premises or first  Expansion,  as  applicable,  absent any
               such expansion and renewal.

               (B)  Monthly  rental as to the Stub Term shall be the Market Rate
               as determined pursuant to paragraph 1 hereof except that (i) such
               process  shall be  initiated  by notice  from  Landlord  given to
               Tenant no later than 6 months nor sooner  than 9 months  prior to
               the  commencement of the Stub Term and (ii) Tenant shall not have
               the  right  to  vitiate  the  exercise  of  the  renewal   option
               regardless  of whether  Tenant  approves the Market  Rate,  as so
               determined.

     (f) Landlord's  obligations under this paragraph 5 shall be contingent upon
     (i)  Landlord's  ability to finance the  Expansion on terms and  conditions
     which are then commercially reasonable (which terms shall include a loan to
     value  ratio of not less than 75%,  a debt  service  ratio of not more than
     1.25 based on loan which fully amortizes over a term of not greater than 25
     years);  (ii) the  receipt  of such  approval  and  entitlements  as may be
     necessary for the  development  of the  Expansion;  (iii) Tenant having net
     worth of not less than $100,000,000 and the ratio of Tenant's total debt to
     the  aggregate  balance of Tenant's  total debt plus  equity not  exceeding
     seventy five percent (75%).  The  satisfaction of the financial  conditions
     set forth in  subparagraph  5(f)  shall be evidenced  by audited  financial
     statements or Form 10-Q or other periodic filings with the SEC.

     (g) This  expansion  option  shall  terminate  on first to occur of (i) the
     foreclosure of any mortgage  encumbering  the Premises or the conveyance of
     the Premises in lieu of  foreclosure;  (ii) the  expiration of the original
     ten (10) year term of this Lease;  (iii) the  consummation by Guess ? Inc.,
     the named  tenant,  of a sublease  or  assignment  other  than a  Permitted
     Transfer as defined in paragraph 8 of this Rider.

6.  Declaration.  Tenant shall pay to Landlord,  as additional rental under this
Lease,  within thirty (30) days after receipt of an invoice from  Landlord,  any
sums which  relate to the  Premises  and which,  by virtue of  Tenant's  acts or
omissions,  shall be due and payable from Landlord pursuant to the terms of that
certain  Declaration  of  Restrictions  for Riverport  Complex of record in Deed
Book 6561, Page 89, as amended.

7.  Contingencies.  The Lease is in full force and effect as of the date hereof,
but Tenant shall have the right to terminate the Lease as follows:

     (a) On or  before  June 15,  1999  Landlord  shall  notify  Tenant  whether
     Landlord has acquired the Expansion  Land. If Landlord shall have failed to
     acquire the Expansion Land on or before June 15, 1999,  Tenant and Landlord
     shall  each have the right to  terminate  this Lease by notice to the other
     party given on or before June 18, 1999,  in which event this Lease shall be
     of no  further  force or effect and  neither  party  hereto  shall have any
     further  liability  to the other party.  If Tenant fails to terminate  this
     Lease pursuant to this  paragraph on or before June 18, 1999,  Tenant shall
     be deemed to have waived its right to terminate this Lease pursuant to this
     subparagraph.

                                      -17-

<PAGE>

     (b) Landlord  shall  deliver to Tenant a  copy of any  recorded  covenants,
     conditions and  restrictions  affecting the Expansion Land on or before May
     10, 1999.  Tenant shall have the right to terminate this Lease by notice to
     Landlord  given on or before May 18,  1999,  if Tenant fails to approve any
     matter which adversely  affects title to the Expansion Land, in which event
     this Lease shall be of no further  force or effect and neither party hereto
     shall have any further  liability  to the other  party.  If Tenant fails to
     terminate  this Lease pursuant to this paragraph on or before May 18, 1999,
     Tenant  shall be deemed to have  waived its right to  terminate  this Lease
     pursuant to this subparagraph.

     (c) If the Riverport Board shall not have approved  Landlord's  request for
     an  extension  of its  Purchase  Option  through  June 30, 2003 (as defined
     below) on or before May 15, 1999,  Tenant shall have the right to terminate
     this Lease by notice to Landlord  given on or before May 18, 1999, in which
     event this Lease shall be of no further  force or effect and neither  party
     hereto shall have any further liability to the other party. If Tenant fails
     to  terminate  this Lease  pursuant to this  paragraph on or before May 18,
     1999,  Tenant  shall be deemed to have waived its right to  terminate  this
     Lease pursuant to this subparagraph.

     (d) If Tenant determines that the Existing Shell,  including the structure,
     all systems  therein,  and all  appurtenances  thereto are not suitable for
     Tenant's  proposed use,  Tenant shall notify  Landlord on or before May 18,
     1999,  of the defects  that render the  foregoing  unsuitable  for Tenant's
     proposed  use.  If Tenant  fails to provide  such  notice to Landlord on or
     before May 18,  1999,  Tenant  shall be deemed to have  waived its right to
     terminate  this Lease pursuant to this  subparagraph.  If Tenant gives such
     notice and  Landlord  fails to agree to cure such defects or agrees to cure
     such  defects  but fails to complete  such cure within  thirty (30) days of
     such notice from Tenant,  this Lease shall  terminate  and be of no further
     force and effect and neither party hereto shall have any further  liability
     to the other party.

     (e) Tenant fails to obtain approval from the appropriate local governmental
     authorities  for economic  assistance  under the Kentucky Jobs  Development
     Act, Tenant fails to obtain such approval on or before May 15, 1999, Tenant
     shall be entitled to terminate this Lease by notice given to Landlord on or
     before May 18, 1999, in which event this Lease shall be of no further force
     or effect and neither party hereto shall have any further  liability to the
     other  party.  If Tenant  fails to  terminate  this Lease  pursuant to this
     paragraph on or before May 18, 1999,  Tenant shall be deemed to have waived
     its right to terminate this lease pursuant to this subparagraph.

8. Assignment. Notwithstanding anything to the contrary contained in this Lease,
Tenant shall have the right, without the consent of the Landlord, to assign this
Lease or sublet the Premises to a corporation or other entity which:

     (a) is Tenant's parent  corporation,  so long as such assignee or sublessee
     remains Tenant's parent corporation; or

     (b) is a  wholly-owned  subsidiary  of Tenant,  so long as such assignee or
     sublessee remains a wholly-owned subsidiary of Tenant; or

     (c) is a corporation  of which Tenant or Tenant's parent  corporation  owns
     or the shareholders of Tenant or Tenant's parent  corporation own in excess
     of fifty percent (50%) of the outstanding  capital stock, so long as Tenant
     or Tenant's  parent  corporation  continues to own or the  shareholders  of
     Tenant or Tenant's parent  corporation  continues to own in excess of fifty
     percent  (50%)  of the  outstanding  capital  stock  of  such  assignee  or
     sublessee; or

     (d) as a result of a  consolidation,  merger or other  reorganization  with
     Tenant and/or Tenant's parent  corporation,  shall own all or substantially
     all  of  the  capital  stock  or  assets  of  Tenant  or  Tenant's   parent
     corporation,  but only if such  assignee or  sublessee  has a tangible  net
     worth of not less than $75,000,000.00 immediately before such assignment or
     subletting and such consolidation,  merger or other reorganization does not
     involve any distribution of cash or other assets which would result in such
     assignee or  sublessee  having a net worth less than  $75,000,000.00  after
     such  assignment  or  subletting;  or (e) Acquires or is  acquiring  all or
     substantially  all of the  outstanding  capital  stock of  Tenant or all or
     substantially  all of the assets of Tenant,  but only if such  assignee  or
     sublessee  has a  tangible  net  worth  of  not  less  than  $75,000,000.00
     immediately  before such assignment or subletting and such acquisition does
     not

                                      -18-
<PAGE>

     not involve any distribution of cash or other assets which would result in
     such assignee or  sublessee  having a net worth less than  $75,000,000.00
     after such assignment or subletting; or

     (f)  as  a  result  of  a  change  of  the   domicile   of  Tenant  or  the
     reincorporation  of  Tenant  in  another  jurisdiction  shall  own  all  or
     substantially  all of the assets of Tenant,  but only if such  assignee  or
     sublessee  has a  tangible  net  worth  of  not  less  than  $75,000,000.00
     immediately  before  such  assignment  or  subletting  and such  change  of
     domicile  does not involve any  distribution  of cash or other assets which
     would  result in such  assignee or  sublessee  having a net worth less than
     $75,000,000.00 after such assignment or subletting.

     Any  assignment or subletting  pursuant to a-f above,  inclusive,  shall be
subject to the following conditions: (a) Tenant shall remain fully liable during
the unexpired term of this Lease, unless Tenant shall cease to exist as a result
of any transaction  described in  subparagraphs  (d) or (f) above;  (b) any such
assignment or subletting shall be subject to all of the terms of this Lease; and
(c)  such  assignee  (other  than  a  person  or  entity  that  acquires  all or
substantially  all of the capital stock of Tenant) shall assume all  obligations
of "Tenant" under this Lease from and after the date of such assignment.  Tenant
shall  notify  Landlord  within  thirty  (30)  days of any  such  assignment  or
subletting,  and Tenant shall deliver to Landlord within thirty (30) days of any
such  assignment  a fully  executed,  recordable  form  agreement  from any such
assignee to Landlord  whereby such assignee  (other than a person or entity that
acquires  all or  substantially  all of the capital  stock of Tenant)  agrees to
assume all  obligations  of Tenant  under this  Lease from and after the date of
such assignment.

                                FAMILY TRANSFERS

     The  transfer of shares of stock of Tenant among the  immediate  members of
the family of a shareholder,  to a living trust for estate planning  purposes or
by will or intestacy,  or to existing  shareholders of Tenant or to Tenant shall
not be deemed an assignment of this Lease or the subletting of the Premises.

                            PUBLIC OFFERING/TRADING

     In no event  shall a sale,  issuance  or transfer of the stock of Tenant to
the public or public trading of the stock of Tenant  constitute an assignment of
this Lease or a subletting of the Premises.

                                 HYPOTHECATION

     An  hypothecation  of  shares  of stock of  Tenant  shall not  be deemed an
assignment of this Lease or a subletting of the Premises unless and until either
the person to whom said  shares  have been so  hypothecated  obtain the right to
vote said  shares  for  directors  of  Tenant  prior to any  foreclosure  of any
security  interest in said shares or acquires  all right,  title and interest of
the hypothecator in said shares.

     Any assignment or subletting which is permitted without  Landlord's consent
pursuant to this paragraph 8 is referred to herein as a "Permitted Transfer."

                                      -19-

<PAGE>

                                  EXHIBIT "D"

                                     Guess?
                              Distribution Center
                  Preliminary Pre-Architectural Specifications
                              Dated: April 7, 1999

     Items to be removed at end of lease by Guess? (at the discretion of RPP):

1.      All conveyors (product, trash, etc.)
2.      Personnel catwalks
3.      Personnel lockers (at peak a total of 560 lockers)
4.      All racking
5.      Air compressor lines (terminate at the source and remove)
6.      Electrical lines for equipment (terminate at the source and remove
          conduit)
7.      Specialized computer room features (including: raised flooring,
          special fire protection system)
8.      Cafeteria (4,000 square feet without patio)
9.      Training room (1,000 square feet)
10.     Exercise room (1,000 square feet)
11.     Employee entrance area (9,600 square feet)
12.     Service room area (8,400 square feet)

     Items 7 through  12  (inclusive  of items 7 and 12) are referred to in this
     Lease as the "Group Removal Items."

                                      -22-

<PAGE>

                                  EXHIBIT "E"

     Assume  that  during the second  Lease  Year   Tenant  elects to expand the
Building by 157,500 square feet by exercising its first Expansion right pursuant
to paragraph 5 of this Rider and that the Expansion Rent  Commencement  Date for
such  Expansion  is the first day of the third Lease Year.  Assume  further that
during  the eighth  Lease  Year  Tenant  elects to expand  the  Building   by an
additional 157,500 square feet by exercising its second Expansion right pursuant
to paragraph 5 of this Rider and that the Expansion Rent  Commencement  Date for
such  Expansion  is  the  first  day  of  the  ninth  Lease  Year.  Given  these
assumptions, the following would apply:

(A)   As to the first Expansion:

     (1) Tenant would be required to renew the Lease  pursuant to this paragraph
1 of the Rider in order to extend the term by two years. After such renewal, the
term would expire at the end of the twelfth Lease Year.

     (2) The Remaining Term would begin on the first day of the third Lease Year
and end  on the last day of the  initial  term.  The Stub Term  would be the two
year period of time which is the subject of the renewal option described in item
(1) above (i.e., Lease Years 11-12).  This would result in the next Renewal Term
consisting of Lease Years 13-15, inclusive.

     (3) The rent would be the Market  Rate  during the  Remaining  Term and the
Stub Term.

     (4) As a consequence of the second  Expansion,  Tenant would be required to
exercise  two  Renewal  Terms -- as to Lease  Years  13-15  remaining  after the
renewal referred to Paragraph (A)(1) above and as to the Lease Years 16-18 -- so
as to meet the requirement of paragraph 5(c) of this Rider that the term of this
Lease be extended for ten years as of the Expansion Rent Commencement Date as to
the second  Expansion.  In such  event,  the rent for Lease  Years 13-15 for the
first  Expansion  shall the lesser of the CPI  Ceiling or the  Market  Rate,  as
determined as of the beginning of such three year period  (subject always to the
provisions of paragraph 1(b) of this Rider,  which provide that rent shall never
be less than the rent  applicable  immediately  prior to any  adjustment  in the
rent).  The rent for Lease  Years  16-18 for the  first  Expansion  shall be the
Market Rate,  as  determined  as of the first day of such three year period.  If
Tenant exercises its option to renew as to the last remaining Renewal Term as to
Lease Years 19-20 (i.e.,  renew after the  expiration of the Expansion  Term for
the second  Expansion),  the rent as to the first  Expansion shall be the Market
Rate, as determined as of the first day of such two year period.

(B)  As to the second Expansion:

     (1) Tenant would be required to renew the Lease pursuant to this  paragraph
1  of the Rider in order to extend the term by an  additional  six years so that
it would expire at the end of Lease Year 18. Thus, the ten year period after the
Expansion  Rent  Commencement  Date which Tenant is required to have pursuant to
the terms of  paragraph  5 of this  Rider  shall be  comprised  of the two years
remaining  in the initial ten year term,  the two years of the Stub Term for the
first  Expansion,  three years until the end of the first five year renewal term
and the first three years of the second five year renewal term.

     (2) The Remaining Term would begin on the first day of the ninth Lease Year
and would end on the last day of the Stub Term for the first Expansion. The Stub
Term for the second Expansion would be Lease Years 13-18.

     (3) The rent would be the Market  Rate  during the  Remaining  Term and the
Stub Term.  If Tenant  exercises  its  option to renew as to the last  remaining
Renewal Term as to Lease Years 19-20 (i.e.,  renew after the  expiration  of the
Expansion Term for the second  Expansion),  the rent as to the second  Expansion
shall be the Market  Rate,  as  determined  as of the first day of such two year
period.

(C)  As to the Building (exclusive of the Expansions):

     (1) Rent  increases  pursuant to paragraph 3 of the Lease at the end of the
fifth  Lease  Year.  The term will be renewed as to Lease  Years 11-12 as to the
First Expansion and Lease Years 13-18 as to the Second  Expansion.  During Lease
Years 11-15, the rent shall the lesser of the CPI Ceiling or the Market Rate, as
determined  as of  the  beginning  of  Lease  Year  11  (subject  always  to the
provisions of paragraph 1(b) of this Rider,  which provide that rent shall never
be less than the rent  applicable  immediately  prior to any  adjustment  in the
rent).  During Lease Years 16-18,  if Tenant  exercises it option to renew as to
the last remaining  Renewal Term as to Lease Years 19-20 (i.e.,  renew after the
expiration of the Expansion Term for the second  Expansion),  the rent as to the
first  Expansion  shall be the Market Rate, as determined as of the first day of
such two year  period.  The rent is the Market  Rate,  as  determined  as of the
beginning of Lease Year 16.

                                      -23-

<PAGE>

The following chart further clarifies Exhibit "E":

                         Rent Applicable to Exhibit "E"

<TABLE>
<CAPTION>
Lease Year   1-2       3-5       6-8       8-10       11-12       13-15       16-18       18-20

<S>          <C>       <C>       <C>       <C>        <C>         <C>         <C>         <C>
Original     $2.70/    $2.70     $3.05     $3.05      lesser of   lesser of   Market      Market
Premises     sft.      /sft.     /sft.     /sft.      Market      Market      Rate        Rate
                                                      Rate or     Rate or
                                                      CPI         CPI
                                                      Ceiling     Ceiling

First        N/A       Market    Market    Market     Market      lesser of   Market      Market
Expansion              Rate      Rate      Rate       Rate        Market      Rate        Rate
                                                                  Rate or
                                                                  CPI
                                                                  Ceiling

Second       N/A       N/A       N/A       Market     Market      Market      Market      Market
Expansion                                  Rate       Rate        Rate        Rate        Rate
</TABLE>

                                      -24-<PAGE>

                    ________________________________________

                             SUBSCRIPTION AGREEMENT
                    ________________________________________

                                  BY AND AMONG

                                 STRANDEL INC.

                                  GUESS?, INC.

                                      AND

                       FREEMARK ENTERTAINMENT CORPORATION

                                 July 31, 1999

<PAGE>

                             SUBSCRIPTION AGREEMENT
                             ----------------------

        MEMORANDUM OF AGREEMENT made at Montreal on the 31st day of July, 1999

BY AND AMONG:                   STRANDEL INC., a corporation  incorporated under
                                the laws of Canada, with its registered office
                                at 7077 Park Avenue, Suite 5031, Montreal,
                                Quebec, H3N 1X7,

                                                             the "Corporation");

AND:                            GUESS?, INC., a corporation incorporated under
                                the laws of Delaware, with its registered office
                                at 1444 South Alameda Street, Los Angeles,
                                California, 90021, U.S.A.,

                                                              (the "Purchaser");

AND:                            FREEMARK ENTERTAINMENT CORPORATION, a
                                corporation incorporated under the laws of
                                Canada, with its registered office at 7077
                                Park Avenue, Suite 503, Montreal, Quebec, H3N
                                1X7,

                                                                   ("Freemark").

     WHEREAS the  Purchaser  desires to subscribe for thirty  thousand  (30,000)
Class A Common Shares from the treasury of the Corporation,  in consideration of
an  aggregate  amount  of  three  million  dollars   ($3,000,000)  (the  "Equity
Investment"),  which would  increase its equity  position in the  Corporation to
60%,  at  such  price  and  on  such  terms  as   hereinafter   set  forth  (the
"Subscription"); and

     WHEREAS the Equity  Investment will be used by the Corporation for purposes
of working capital and to become current with trade creditors;

     THIS AGREEMENT  WITNESSETH  THAT, in  consideration of the mutual covenants
herein contained, it is agreed by and between the Parties as follows:

                                   ARTICLE I
                                 INTERPRETATION

     1.1  Definitions.  Where used herein or in any amendments  hereto or in any
communication  required or permitted to be given hereunder,  the following terms
shall have the following  meanings,  respectively,  unless the context otherwise
requires:

(a)  "Agreement"  shall mean this  Subscription  Agreement  and all  instruments
     supplemental  hereto or in  amendment  of  confirmation  hereof;  "herein",
     "hereof",  "hereto",  "hereunder" and similar expressions mean and refer to
     this Agreement and not to any particular  Article,  Section,  Subsection or
     other subdivision;  "Article", "Section", "Subsection" or other subdivision
     of this  Agreement  means and  refers to the  specified  Article,  Section,
     Subsection or other subdivision of this Agreement.

<PAGE>

                                      -2-

(b)  "Closing"   shall  mean  the  delivery  to  the   Purchaser  of  the  share
     certificates  for the Subscribed  Shares and the payment to the Corporation
     of the Subscription Price for the Subscribed Shares at the place of closing
     on the Closing Date.

(c)  "Closing Date" shall have the meaning ascribed thereto at Section 8.1.

(d)  "Financial  Statements"  shall  mean the  Corporation's  audited  financial
     statements  as at  March  31,  1999  and  the  combined  audited  financial
     statements  as at January 30, 1999 of 176995  Canada Inc.,  3032116  Canada
     Inc.,  2996197  Canada  Inc.,  3032507  Canada Inc.,  3098605  Canada Inc.,
     3133320 Canada Inc.,  3133338 Canada Inc., 3138925 Canada Inc. and Spinardi
     Inc.,  copies of which financial  statements are annexed hereto as Schedule
     1.1(d).

(e)  "Indemnified Party" shall have the meaning ascribed thereto at Section 7.3.

(f)  "Indemnifying  Party"  shall have the meaning  ascribed  thereto at Section
     7.3.

(g)  "Intellectual  Property  Rights"  shall mean (i) all  domestic  and foreign
     patents,  trade  marks,  trade  names,  service  marks,  copyrights,  trade
     secrets, inventions,  know-how,  technology,  software, licenses, and other
     intellectual  property,  and (ii) all  registrations  and  applications for
     registration of intellectual  property;  and "Intellectual  Property Right"
     shall mean any one of them.

(h)  "Laws" shall mean:

     (i)  all  constitutions,   treaties,  laws,  statutes,  codes,  ordinances,
          orders, decrees, rule, regulations, and municipal by-laws; and

     (ii) all  judgments,  orders,  writs,  injunctions,   decisions,   rulings,
          decrees, and awards of any governmental authority or body,

     in each case binding on or affecting the Party or Person referred to in the
     context in which such word is used; and "Law" shall mean any one of them.

(i)  "License"  and  "Licenses"  shall  have the  respective  meanings  ascribed
     thereto at Section 3.1(z).

(j)  "Lien"  and  "Liens"  shall mean  any  pledge,  hypothec,   charge,  claim,
     restriction on transfer,  mortgage, security interest or encumbrance of any
     sort.

(k)  "Losses" shall have the meaning ascribed thereto at Section 7.1.

(l)  "Parties" shall mean the Purchaser, Freemark and Strandel; and "Party"
     shall mean any one of them.

(m)  "Person"  shall  mean an  individual,  corporation,  company,  cooperative,
     partnership,  limited liability company, trust, unincorporated association,
     entity with juridicial  personality or governmental  authority or body, and
     pronouns which refer to a Person shall have a similarly extended meaning.

<PAGE>

                                      -3-

(n)  "Reorganization"  shall mean the transfer by the  Purchaser and Freemark of
     all of the issued and  outstanding  shares of the capital of 3535762 Canada
     Inc. to the Corporation according to the terms disclosed in Schedule 1.1(n)
     annexed hereto.

(o)  "Subscribed  Shares"  shall  mean  30,000  Class A Common  Shares  from the
     treasury of the Corporation representing, after giving effect to said share
     subscription, 40% of the issued and outstanding shares of the share capital
     of the Corporation, delivered to the Purchaser.

(p)  "Subscription  Price"  shall have the meaning  ascribed  thereto at Section
     2.1.

(q)  "Subsidiaries"  shall  mean  3535762  Canada  Inc.,  3106021  Canada  Inc.,
     Spinardi  Inc.,  176995 Canada Inc.,  3562786  Canada Inc.,  3138925 Canada
     Inc.,  3032507  Canada  Inc.,  3032116  Canada Inc.,  2996197  Canada Inc.,
     3098605 Canada Inc., 3133320 Canada Inc. and 3133338 Canada Inc.

(r)  "Tax" and "Taxes" shall have the respective  meanings  ascribed  thereto at
     Section 3.1(w).

1.2  Schedules.  The  following is a list of the Schedules  attached  hereto and
incorporated herein by reference:

        Schedule 1.1(d)   -    Financial Statements
        Schedule 1.1(n)   -    Reorganization
        Schedule 3.1(d)   -    No Conflict
        Schedule 3.1(e)   -    Corporate Chart
        Schedule 3.1(f)   -    Subsidiary
        Schedule 3.1(g)   -    No Options
        Schedule 3.1(j)   -    Liabilities
        Schedule 3.1(l)   -    No Changes; No Unusual Transactions
        Schedule 3.1(m)   -    Permitted Liens
        Schedule 3.1(o)   -    Condition and Sufficiency of Assets; Inventory
        Schedule 3.1(p)   -    Place of Business
        Schedule 3.1(q)   -    Intellectual Property Rights
        Schedule 3.1(r)   -    Contracts
        Schedule 3.1(t)   -    Insurance
        Schedule 3.1(u)   -    Bank Accounts
        Schedule 3.1(v)   -    Outstanding Litigation
        Schedule 3.1(w)   -    Tax Matters
        Schedule 3.1(z)   -    Licenses
        Schedule 3.1(bb)  -    Benefit Plans
        Schedule 3.1(cc)  -    Environmental Matters
        Schedule 4.1(c)   -    Form of Unanimous Shareholders Agreement
        Schedule 4.1(d)   -    Form of Employment Agreements
        Schedule 4.1(f)   -    Form of Loan Agreement
        SChedule 4.1(g)   -    Form of Opinion of Counsel for the Corporation

<PAGE>

                                      -4-

                                   ARTICLE II
                                 SUBSCRIPTIONS

2.1  Subscription.  Upon and  subject to the terms and  conditions  hereof,  the
Purchaser  hereby   subscribes  for  the  Subscribed  Shares  for  an  aggregate
subscription   price  equal  to  three   million   dollars   ($3,000,000)   (the
"Subscription Price") all of which shall be allocated to the Subscribed Shares.

2.2  Acceptance.  The  Corporation  hereby   accepts  the  subscription  of  the
Purchaser for the  Subscribed  Shares  indicated in Section 2.1,  subject to the
terms and conditions contained herein.

2.3 Payment of the Subscription Price.  Purchaser hereby acknowledges receipt of
the Subscribed  Shares and the Corporation  hereby  acknowledges  receipt of the
Subscription  Price, by way of certified  cheque or bank draft. It is understood
that the entire  Subscription Price shall be added to the stated capital account
of the Class A Common Shares.

                                  ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Corporation and Freemark.  Each of the
Corporation and Freemark,  on a solidary (joint and several) basis, each waiving
the  benefits  of  division  and  discussion,  represents  and  warrants  to the
Purchaser as follows and  acknowledges  that the  Purchaser is relying upon such
representations  and  warranties  in  connection  with the  subscription  by the
Purchaser of the Subscribed Shares and that the Purchaser would not have entered
into this Agreement without such representations and warranties:

(a)  Due Incorporation. Each of the Corporation, the Subsidiaries and Freemark:

     (i)  is duly incorporated,  validly existing and in good standing under the
          Laws of its jurisdiction of incorporation; and

     (ii) has all  necessary corporate  power and  authority  to own,  lease and
          operate  its  properties  and to conduct  its  business  as and in the
          places where such properties are now owned, leased or operated or such
          business is now conducted.

(b)  Due  Authorization.  Each of the Corporation and Freemark has the necessary
     corporate  power and authority to execute this Agreement and to perform its
     obligations  hereunder.  The  execution  of this  Agreement  by each of the
     Corporation and Freemark and the performance by each of the Corporation and
     Freemark  of its  obligations  hereunder  has been duly  authorized  by all
     necessary  action on their part.  Such  execution and  performance  by the
     Corporation  and  Freemark  does not  require any action or consent of, any
     registration with, or notification to, any Person, or any action or consent
     under any Laws to which each of the  Corporation  and  Freemark is subject,
     except for any such  disclosure  as each of the  Corporation  and  Freemark
     shall  determine to be necessary or appropriate  to comply with  securities
     laws, stock exchange rules and/or covenants in loan agreements.

<PAGE>

                                      -5-

(c)  Enforceability.  This  Agreement  constitutes  a legal,  valid and  binding
     obligation of the Corporation and of Freemark  enforceable  against them in
     accordance  with its terms,  except to the extent that  enforcement  may be
     limited by applicable bankruptcy, insolvency, reorganization, moratorium or
     other similar laws  affecting  creditors'  rights  generally and by general
     principles of equity.

(d)  No Conflict.  The  execution of this  Agreement,  the  consummation  of the
     transactions   contemplated   herein,   the  performance  by  each  of  the
     Corporation and Freemark of its obligations hereunder and the compliance by
     each of the Corporation and Freemark with this Agreement do not:

     (i)  violate,  contravene or breach,  or  constitute a default  under,  the
          constating instruments or by-laws of the Corporation or of Freemark;

     (ii) violate,  contravene  or breach,  or  constitute  a default  under any
          contract, agreement, indenture, instrument, or commitment to which the
          Corporation or the  Subsidiaries  may be a party, or their  properties
          may be  subject,  or by which  either  of them is  bound or  affected,
          except for those agreements listed in Schedule 3.1(d);

     (iii)result in, or give any  Person the right to seek,  or to cause (a) the
          termination,  cancellation,   modification,  amendment,  variation  or
          renegotiation  of any contract,  agreement,  indenture,  instrument or
          commitment  to which the  Corporation  or the  Subsidiaries  or any of
          their  properties may be a party or subject or by which either of them
          is bound or affected,  or (b) the  acceleration  or  forfeiture of any
          term of  payment,  or (c) the loss in whole or in part of any  benefit
          which  would         otherwise   accrue  to  the  Corporation  or  the
          Subsidiaries, except for these agreements listed in Schedule 3.1(d);

     (iv) result in, or  require  the  creation  of any lien, hypothec,  pledge,
          charge,  prior  claim,  security  interest,  adverse  claim  or  other
          encumbrance or right of others of any nature,  whatsoever or howsoever
          arising (individually,  a "Lien" and collectively,  "Liens"), upon any
          of the  Subscribed  Shares  or any of  the  Subscribed  Shares  or any
          property of the Corporation of the Subsidiaries; or

     (v)  violate, contravene or breach any Laws.

(e)  Authorized and Issued  Capital.  The authorized  capital of the Corporation
     consists of an unlimited  number of Class A Common  Shares,  Class B Common
     shares,  Class A  Preferred  shares,   Class B  Preferred  Shares,  Class C
     Preferred  shares and Class D Preferred  shares,  of which thirty  thousand
     (30,000)  Class A Common  Shares  (and no more) have been  (without  giving
     effect  to  the  Subscription)   validly  subscribed  and  issued  and  are
     outstanding as fully paid and non-assessable, free and clear of all Liens.

     Immediately  following  the  issuance  pursuant  hereto  of the  Subscribed
     Shares,  the  Subscribed  Shares  represent  40% of all of the  issued  and
     outstanding shares in the capital of the Corporation.

     All of  the  issued  outstanding  shares  in the  capital  of  each  of the
     Subsidiaries have been validly  subscribed and issued,  and are outstanding
     as  fully  paid  non-assessable,  free  and  clear  of all  Liens  and  are
     beneficially  owned by the Corporation or any of the  Subsidiaries,  as the
     case may be, as the corporate chart sets out in Schedule 3.1(e).

<PAGE>

                                       -6-

(f)  No Subsidiary.  Except as disclosed in Schedule 3.1(f) annexed hereto,  the
     Corporation does not own, directly or indirectly, any shares in the capital
     of any Person and has never had any property interest in any Person.

(g)  No Options.  Except as disclosed in Schedule 3.1(g).  There is no:

     (i)  outstanding  security of the  Corporation  or any of the  Subsidiaries
          convertible or exchangeable or exercisable into any share or shares in
          the capital of the Corporation or any Subsidiary;

     (ii) outstanding   subscription,   option,  warrant,  call,  commitment  or
          agreement obligating the Corporation or the Subsidiaries, presently or
          in the  future,  to issue any share or  shares of its  capital  or any
          security or securities of any class or kind which in any way relate to
          the authorized or issued capital of the Corporation or any Subsidiary;

     (iii)agreement  (other than this Agreement)  which grants to any Person the
          right to purchase or otherwise  acquire any share or shares issued and
          outstanding in the capital of the Corporation or any Subsidiary; or

     (iv) voting trust or voting  agreement  or pooling  agreement or proxy with
          respect  to any  shares  of the  capital  of  the  Corporation  or any
          Subsidiary.

(h)  Books and Records. The minute books of the Corporation and the Subsidiaries
     are complete and accurate and contain copies of all by-laws and resolutions
     passed by the  shareholders  and directors (and any  committees)  since the
     respective  dates  of  their  incorporation;   all  of  which  by-laws  and
     resolutions have been duly passed.

     The share  certificate  books,  registers  of  shareholders,  registers  of
     transfers   and  registers  of  directors  of  the   Corporation   and  the
     Subsidiaries are complete and accurate.

     The financial  books and records of the  Corporation  and the  Subsidiaries
     have been  maintained  in  accordance  with sound  business  practices  and
     fairly,  accurately and completely  present and disclose in accordance with
     generally  accepted  accounting  principles  consistently  applied  (i) the
     financial  position of the Corporation and the  Subsidiaries,  and (ii) all
     material transactions of the Corporation and the Subsidiaries.

(i)  Financial  Statements.  The Financial  Statements  fairly,  accurately  and
     completely present and disclose in all material respects in accordance with
     GAAP (i) the financial position of the Corporation and of the Subsidiaries,
     (ii) the results of operations of the Corporation and the Subsidiaries, and
     (iii) the  changes in the  financial  position of the  Corporation  and the
     Subsidiaries,  all as at the dates and for the  periods  therein  specified
     (except  that in the case of  unaudited  statements,  such  statements  are
     subject to audit and year-end adjustments, and do not have any notes).

<PAGE>

                                      -7-

(j)  Liabilities.   Each  of  the  Corporation  and  the   Subsidiaries  has  no
     liabilities  or  obligations  of any  nature  whatsoever,  whether  direct,
     indirect,  absolute,  contingent or otherwise, except for those liabilities
     or  obligations  (i)  reflected in or reserved  against in their  Financial
     Statements, (ii) incurred after their respective year ends in the usual and
     ordinary  course of business  consistent  with past practice,  or (iii) set
     forth in Schedule 3.1(j) annexed hereto.

(k)  Accounts  Receivable.  All accounts  receivable of the  Corporation and the
     Subsidiaries  are bona fide,  result from the ordinary  course of business,
     have been properly recorded in the ordinary course of business.

(l)  No Changes; No Unusual Transactions. Except as disclosed in Schedule 3.1(l)
     since the last audited  balance sheet date, the Corporation and each of the
     Subsidiaries  has conducted  its business in the ordinary  course and there
     has not been any  material  change  in  either  the  business,  operations,
     properties, or condition of the Corporation and the Subsidiaries taken as a
     whole,  nor any event,  condition on contingency  that could  reasonably be
     expected to result in any such material change.

(m)  Title to Property. The Corporation and each of the Subsidiaries is the sole
     and  unconditional  owner of, and has a good and valid  title to all of its
     assets reflected on the Financial  Statements,  or which have been acquired
     on or after  January 30, 1999 (other than such assets  consumed or disposed
     of on or after January 30, 1999 in the ordinary course of business and in a
     manner  consistent with past practice),  in each case free and clear of all
     Liens, except for the Permitted Liens described in Schedule 3.1(m).

(n)  Immovable.  The Corporation  and the  Subsidiaries do not own any immovable
     property.

(o)  Condition  and  Sufficiency  of Assets;  Inventory.  Except as disclosed in
     Schedule   3.1(o)annexed   hereto,  all  of  the  tangible  assets  of  the
     Corporation and the  Subsidiaries  are (i) in good operating  condition and
     repair, ordinary wear and tear excepted, (ii) not in need of maintenance or
     repairs  (except  ordinary or routine  maintenance  or repairs that are not
     material  in nature  or costs,  individually  or  collectively),  and (iii)
     adequate and sufficient  for the continuing  conduct of the business of the
     Corporation and the Subsidiaries as now conducted.

     All  inventory  of each of the  Corporation  and the  Subsidiaries  is of a
     quality and quantity usable and salable in the ordinary course of business.

(p)  Location;  Place of Business.  Other than inventory in transit and vehicles
     used in the  transportation of such inventory,  each of the Corporation and
     the Subsidiaries does not hold, directly or indirectly, any of its moveable
     or personal  property  anywhere  other than in the  locations  set forth in
     Schedule 3.1(p) annexed hereto.

(q)  Intellectual Property Rights. Other than the license agreement entered into
     with the  Purchaser  or  licenses  related  to the use of  software  in the
     ordinary course of business,  the only Intellectual Property Rights used by
     the  Corporation  and the  Subsidiaries  are related to the use of the name
     Strandel.  The operations of the business do not infringe the  Intellectual
     Property  Rights of any  Person.  No  proceeding  for  infringement  of the
     Intellectual Property Rights of any Person is pending or threatened against
     the Corporation or the  Subsidiaries in connection with the business of any
     of its  affiliates (as defined under the Canada  Business  Corporations
     Act).

<PAGE>
                                      -8-

(r)  Contracts; Leases. Schedule 3.1(r) annexed hereto contains a description of
     all  written  or  oral  contracts,  agreements,  indentures,   instruments,
     commitments  and all the  leases  to which  the  Corporation  or any of the
     Subsidiaries  is a party or by which it is bound other than (i)  involving
     receipts or expenditures of the Corporation of less than $100,000 per annum
     or (ii) verbal  contracts  of  employment  which are  terminable  on notice
     required  by law,  or (iii)  purchase  orders  issued  or  received  in the
     ordinary course of business.

     Except as disclosed in Schedule 3.1(d),  all leases to which the Company or
     any Subsidiary is a party are in good standing and in full force and effect
     without   amendment   thereto,   and  each  of  the   Corporation  and  the
     Subsidiaries,  as the case may be, is entitled to all  benefits  under such
     leases.

(s)  Guarantees. Neither the Corporation nor any Subsidiary is party to or bound
     either  absolutely  or  on  a  contingent  basis  by  any  comfort  letter,
     understanding  or agreement of  guarantee,  indemnification,  assumption or
     endorsement  or any like  commitment  with  respect to the  liabilities  or
     obligations  of  any  Person  (whether   accrued,   absolute  or  otherwise
     contingent), except in the ordinary course of business.

(t)  Insurance.  Schedule  3.1(t) is a true and complete  list of all  insurance
     policies  currently  maintained by or for each of the  Corporation  and the
     Subsidiaries.  The  coverage  under  each such  policy is in full force and
     effect and each of the  Corporation and the  Subsidiaries,  as the case may
     be, is in good standing under such policies.

     The Corporation  and the  Subsidiaries  have not received  notice  of, and
     each  of  Freemark  and  the  Corporation  has no  knowledge  of any  fact,
     condition  or  circumstance  which might  reasonably  form the basis of any
     claim against the Corporation or any of the  Subsidiaries  which (i) is not
     fully covered by insurance  (subject to  deductibles)  maintained by or for
     the  Corporation or any of the  Subsidiaries,  or (ii) could  reasonably be
     expected to result in any  increase in  insurance  premiums  payable by the
     Corporation or any of the Subsidiaries.

(u)  Bank Accounts.  Schedule  3.1(u) annexed hereto sets forth the name of each
     Person with whom each of the Corporation and the Subsidiaries  maintains an
     account or safety  deposit box and the names of all Persons  authorized  to
     draw thereon or to have access thereto.

(v)  Litigation.  Except as disclosed in Schedule 3.1(v) annexed  hereto,  there
     are  (i)  no  actions,  claims,  investigations,   arbitrations,  or  other
     proceedings  pending or, to the  knowledge of Freemark or the  Corporation,
     threatened   against,   any  of  the   Corporation's  or  any  Subsidiary's
     properties,  which if adversely  determined  would have a material  adverse
     effect on the  Corporation  or the  Subsidiaries;  and (ii) no  outstanding
     judgments,  orders,  decrees,  writs,  injunctions,  decisions,  rulings or
     awards against, with respect to, or in any manner affecting the Corporation
     or any of the Subsidiaries or their respective properties.

<PAGE>

                                      -9-

(w)  Tax  Matters.  For the  purposes  of this  Agreement,  the term  "Tax"  or,
     collectively,   "Taxes"  shall  mean  (i)  any  and  all  federal,   state,
     provincial,  municipal,  local and  foreign  taxes,  assessments  and other
     governmental charges, duties,  impositions and liabilities including Canada
     Pension Plan and Provincial  Pension Plan  contributions  and  unemployment
     insurance  contributions and employment insurance  contributions  including
     taxes based upon or measured by gross  receipts,  income,  profits,  sales,
     capital  use and  occupation,  goods  and  services,  and value  added,  ad
     valorem, transfer, franchise,  withholding, payroll, recapture, employment,
     excise and  property  taxes,  together  with all  interest,  penalties  and
     additions  imposed with respect to such amounts and (ii) any  liability for
     the  payment  of any  amounts of the type  described  in clause (i) of this
     Section  3.1(w)  as a  result  of any  express  or  implied  obligation  to
     indemnify  any other  person or as a result  of any  obligations  under any
     agreements  or  arrangements  with any other  person  with  respect to such
     amounts and including any liability for taxes of a predecessor entity.

     (i)  Tax Returns and Audits

          1.   The Corporation and the Subsidiaries have correctly  computed all
               Taxes prepared and duly and timely filed all federal, provincial,
               local and foreign returns, estimates,  information statements and
               reports  ("Tax  Returns"),  required  to be filed  by them,  have
               timely  paid all Taxes  which are due and  payable  and have made
               adequate provision in the Financial Statements for the payment of
               all Taxes that are or may become  payable for any  taxation  year
               ending on or prior to March 31,  1999.  The  Corporation  and the
               Subsidiaries have made adequate and timely  installments of Taxes
               required to be made.

          2.   With respect to any periods for which Tax Returns the Corporation
               and the  Subsidiaries  have not yet been  required to be filed or
               for  which  Taxes  are not yet due and  payable,  they  have only
               incurred  liabilities  for  Taxes in the  ordinary  course of its
               business and in a manner consistent with prior periods.

          3.   All Tax Returns of the Corporation and the Subsidiaries have been
               assessed  through  and  including  each of the dates set forth in
               Schedule 3.1(w), and there are no outstanding waivers,  except as
               set  forth in  Schedule  3.1(w),  of any  limitation  periods  or
               agreements  providing  for an extension of time for the filing of
               any Tax Return or the payment of any Tax by the  Corporation  and
               the Subsidiaries or any outstanding  objections to any assessment
               or reassessment of Taxes. Any  deficiencies  proposed as a result
               of such  assessments or  reassessments of the Tax Returns through
               and  including  the dates set forth in Schedule  3.1(w) have been
               paid  and  settled  with  the  exception  of  the  GST/PST  Taxes
               assessments as set forth in Schedule 3.1(j).

<PAGE>
                                      -10-

          4.   There are no contingent Tax liabilities or any grounds that could
               prompt an assessment  or  reasssessment,  including,  but without
               limitation, aggressive treatment of income, expenses, deductions,
               credits or other  amounts in the filing of earlier or current Tax
               Returns,  nor have the Corporation and the Subsidiaries  received
               any indication from any taxation  authorities  that an assessment
               or reassessment of Tax is proposed.

          5.   The  Corporation  and the  Subsidiaries  have  withheld form each
               payment  made to any of  their  past  and  present  shareholders,
               directors, officers, employees and agents the amount of all Taxes
               and other  deductions  required to be withheld and have paid such
               amounts  when due,  in the form  required  under the  appropriate
               legislation,  or made adequate  provision for the payment of such
               amounts to the proper receiving authorities.

          6.   The  Corporation  and the  Subsidiaries  have collected from each
               receipt  from any of the past and  present  customers  (or  other
               persons  paying   amounts to the  Corporation)  the amount of all
               Taxes  (including  goods and  services tax and  provincial  sales
               taxes) required to be collected and have remitted such Taxes when
               due, in the form required  under the  appropriate  legislation or
               made  adequate  provision  for the  payment of such amount to the
               proper receiving authorities.

          7.   The  Corporation  and the  Subsidiaries  are not  subject  to any
               assessments,  levies, penalties or interest with respect to Taxes
               which will result in any  liability  on  their part in respect of
               any period  ending on or prior to the date hereof,  in  excess of
               the amount to be provided for in the Financial Statement.

          8.   The  Corporation and the  Subsidiaries  have not been and are not
               currently  required  to file  any  returns,  reports,  elections,
               designations or other filings with any taxation authority located
               in any  jurisdiction  outside  Canada or outside the  province of
               Quebec.

          9.   Except as disclosed in Schedule  3.1(w), the Ccorporation and the
               Subsidiaries  have  not  filed  or  been  party  to any  election
               pursuant to Section 83 or 85 of the Income Tax Act (Canada)  (the
               "ITA") or the corresponding provisions of any provincial statute.

          10.  The  Corporation  and  the  Subsidiaries  have  not at  any  time
               benefited  from a  forgiveness  of debt,  except  pursuant to the
               transaction  with  Pantorama   Industries  Inc.  referred  to  in
               Schedule 3.1(l),  or entered into any transaction or  arrangement
               (including  conversion of debt into shares of its share  capital)
               which could have  resulted in the  application  of Section 80 and
               following of the ITA or the relevant provisions of any provincial
               statute.

          11.  Since its data of incorporation,  the Corporation and each of the
               Subsidiaries has been a "Canadian controlled private corporation"
               within  the  meaning  of the  ITA  and  the  relevant  provincial
               legislation.

<PAGE>

                                      -11-

          12.  Except as disclosed in Schedule  3.1(w),  the Corporation and the
               Subsidiaries are not, nor have they been at any time,  associated
               (within  the  meaning  of the  ITA and  the  relevant  provincial
               legislation) with any other corporation.

          13.  The  Corporation  and the  Subsidiaries  have made  available  to
               Purchaser or its legal counsel,  copies of all available foreign,
               federal,  state,  provincial  and local  income and all state and
               local  sales  and use Tax  Returns  for the  Corporation  and the
               Subsidiary filed for all periods since its inception.

          14.  There  are no  Liens  on the  assets  of the  Corporation  or any
               Subsidiaries  relating  to or  attributable  to Taxes  other than
               Liens for Taxes not yet due and payable.

          15.  As of the  Closing,  there will not be any  contract,  agreement,
               plan or arrangement,  including but not limited to the provisions
               of this  Agreement,  covering  any employee or former employee of
               the Corporation  that,  individually or collectively,  could give
               rise to the payment of any amount that would not be deductible by
               the   Corporation  or  the   Subsidiaries  as  an  expense  under
               applicable Law other than  reimbursements  of a reasonable amount
               of  travel,   entertainment   expenses  and  other  nondeductible
               expenses that are commonly paid by similarly situated  businesses
               in reasonable amounts.

          16.  The  Corporation and the  Subsidiaries  tax basis in their assets
               (and the undepreciated  capital cost of such assets) for purposes
               of determining their future amortization,  depreciation and other
               Federal  and  provincial  income  tax  deductions  is  accurately
               reflected on the Corporation's Tax Returns and records.

          17.  The Corporation and the Subsidiaries  have not acquired  property
               or services from, or disposed of property,  or provided  services
               to a person  with whom they do not deal at arm's  length  (within
               the meaning of the ITA and the relevant  provincial  legislation)
               for an amount  that is other than the fair  market  value of such
               property  or  services,  or have been  deemed to have done so for
               purposes of the ITA and the relevant provincial legislation.

(x)  Reorganization.   All  the  steps  and  transactions  contemplated  by  the
     Reorganization  have  been  fully  implemented  and have been  effected  in
     compliance with all Laws and have not caused or resulted, nor shall they as
     at the Closing Date cause or resulted, in any (i) adverse  financial or Tax
     consequences to the Corporation or any of its Subsidiaries, (ii) current or
     deferred  liability to the Corporation or any of its  Subsidiaries or (iii)
     any liability for Taxes,  interest or penalties  under any Tax Laws for the
     Corporation.  All of the assets of the  Corporation  are sufficient for the
     continuing conduct of the business as currently  conducted and as conducted
     in the past. The assets of Corporation include all of the assets and rights
     necessary  for the conduct of the business on a going  forward  basis.  The
     Corporation  shall be  responsible  for the costs and expenses  incurred in
     connection with the preparation of the documents for the  implementation of
     the Reorganization.

<PAGE>

                                      -12-

(y)  Paid-up  Capital.  The  paid-up  capital  for tax  purposes  of each of the
     Subscribed  Shares  is no  less  than  its  stated  capital  for  corporate
     purposes.

(z)  Licenses,  Permits. To the knowledge of the Corporation and Freemark,  each
     of the Corporation and the Subsidiaries has, and is in full compliance with
     and  entitled  to  all  of  the  benefits  under,  all  permits,  licenses,
     certificates of compliance,  consents,  approvals and authorizations of, or
     registrations  with,  any  governmental,  judicial or public  authority  or
     regulatory  body   (collectively,   the  "Licenses",   and  individually  a
     "License")  necessary  or  required to conduct  its  business as  presently
     conducted,  and each License has been  validly  issued and is in full force
     and effect.  Other than as set forth in  Schedule  3.1(z)  annexed  hereto,
     there are no Licenses  required to conduct the business of the  Corporation
     or any of the Subsidiaries as presently conducted.

(aa) Employee Matters. Each of the Corporation and the Subsidiaries has complied
     in all material  respects,  with all applicable Laws relating to employment
     matters, including,  without limitation, any provisions thereof relating to
     wages and hours.

(bb) Benefit  Plans.  Except as set forth in Schedule  3.1(bb)  annexed  hereto,
     neither  the  Corporation  nor any of the  Subsidiaries  is a party  to any
     pension, retirement, bonus, profit sharing, compensation,  incentive, stock
     purchase, stock option, stock appreciation,  severance,  change-of-control,
     savings, thrift, insurance, medical, hospitalization,  disability, death or
     other  similar  program,   or  practice  providing   directors,   officers,
     shareholders or employee benefits (the "Benefit Plans").

(cc) Environmental  Matters.  Except as set forth at  Schedule  3.1(cc)  annexed
     hereto, the Corporation and the Subsidiaries   have at all times conducted,
     held and used, and are continuing to conduct,  hold and use, their affairs,
     business and properties in accordance  with all applicable Laws relating in
     whole or in part to the environment or its protection.

     Except as disclosed at Schedule 3.1(cc) annexed hereto, at no time have nay
     contaminants  been  released,  emitted,   discharged,   deposited,  issued,
     sprayed,  injected,  abandoned,  buried,  spilled,  incinerated,  disposed,
     leaked, poured, emptied,  dumped, or placed on, in under or adjacent to any
     immovable or real property  owned or used by the  Corporation or any of the
     Subsidiaries.

(dd) Compliance  with  Laws.  Except  as may be  specifically  provided  in this
     Section 3.1, each of the Corporation and the  Subsidiaries has complied and
     continues to comply with all Laws in all material respects.

(ee) Full  Disclosure.  The  Corporation  and Freemark have made or caused to be
     made due inquiry with respect to (i) each covenant, agreement,  obligation,
     representation and warranty contained in this Agreement, (ii) the Schedules
     annexed hereto,  and (iii) any certificates or other documents  referred to
     herein or  furnished  to the  Purchaser  pursuant  hereto or in  connection
     herewith,  and none of the aforesaid  covenants,  agreements,  obligations,
     representations,  warranties, Schedules, certificates or documents contains
     any untrue  statement of a material  fact or omits to state a material fact
     necessary to make such representation,  warranty, Schedule,  certificate or
     other document not misleading.

<PAGE>

                                      -13-

(ff) Resident.  The  Corporation  is not a  non-resident  of Canada  within  the
     meaning of the ITA).

3.2  Representations and Warranties of the Purchaser.  The Purchaser  represents
and warrants to the  Corporation and Freemark as follows and  acknowledges  that
the  Corporation  and  Freemark  are  relying  upon  such   representations  and
warranties  in connection  with the sale by the  Corporation  of the  Subscribed
Shares and that the  Corporation  and Freemark  would not have entered into this
Agreement without such representations and warranties:

(a)  Due Incorporation. The Purchaser is duly incorporated, validly existing and
     in good standing under the laws of its  jurisdiction of  incorporation  and
     has the necessary  corporate  power to own or lease its  properties  and to
     carry on its business as such business is presently conducted.

(b)  Due  Authorization.  The Purchase  has the  necessary  corporate  power and
     authority  to  execute  this  Agreement  and  to  perform  its  obligations
     hereunder.  The  execution  of  this  Agreement  by the  Purchaser  and the
     performance  by the Purchaser of its  obligations  hereunder have been duly
     authorized by all necessary  corporate  action on its part.  Such execution
     and performance by the Purchaser does not require any action or consent of,
     any  registration  with, or notification  to, any Person,  or any action or
     consent  under any Laws to which the  Purchaser is subject,  except for any
     such  disclosure  as the  Purchaser  shall  determine  to be  necessary  or
     appropriate  to comply with  securities  laws,  stock exchange rules and/or
     covenants in loan agreements.

(c)  Enforceability.  This  Agreement  constitutes  a legal,  valid and  binding
     obligation of the Purchaser,  enforceable against it in accordance with its
     terms,  except to the extent that  enforcement may be limited by applicable
     bankruptcy,  insolvency,  reorganization,  moratorium or other similar laws
     affecting creditors' rights generally and by general principles of equity.

(d)  No Conflict.  The  execution of this  Agreement,  the  consummation  of the
     transactions  contemplated  herein, the performance by the Purchaser of its
     obligations  hereunder  and  the  compliance  by the  Purchaser  with  this
     Agreement do not violate,  contravene  or breach,  or  constitute a default
     under,  the  constating  instruments or by-laws of the Purchaser or any Law
     applicable to the Purchaser.

(e)  Resident.  The Purchaser is a non-resident  of Canada within the meaning of
     the ITA.

                                   ARTICLE IV
                          COVENANTS OF THE CORPORATION

4.1 Closing.  The  Corporation  hereby  acknowledges  having taken the following
actions on the date hereof at the place of Closing:

(a)  delivered to the  Purchaser  and/or its nominee share  certificates  in its
     name representing the Subscribed Shares;

<PAGE>

                                      -14-

(b)  delivered to the Purchaser  copies of resolutions of the  shareholders  and
     directors of the Corporation (in form and substance reasonably satisfactory
     to the  Purchaser's  legal counsel) (i) authorizing and approving the issue
     of the Subscribed  Shares by the  Corporation  to the Purchaser  and/or its
     nominee  and their  registration  in the name of the  Purchaser  and/or its
     nominee and (ii)  appointing  such new directors,  officers and auditors of
     the Corporation as may be nominated by the Purchaser;

(c)  executed a Unanimous Shareholders Agreement with the Purchaser and Freemark
     substantially in the form of Schedule 4.1(c) annexed hereto;

(d)  executed   employment   agreements  with  Michael   Routtenberg,   Lawrence
     Routtenberg,  Mark Routtenberg and Ginette Godbout in the forms of Schedule
     4.1(d) hereto;

(e)  executed a loan agreement  between the Purchaser and the Corporation in the
     form of Schedule 4.1(f) hereto;

(f)  delivered  to the  Purchaser  a  favourable  opinion of Goodman  Phillips &
     Vineberg substantially in the form of Schedule 4.1(f) annexed hereto.

(g)  delivered  all  such  documentation  to  evidence  the  completion  of  the
     Reorganization as shall be reasonably requested by Purchaser.

                                   ARTICLE V
                   SURVIVAL OF REPRESENTATIONS AND WARRANTIES

5.1 Survival of Representations  and Warranties of the Corporation and Freemark.
The  representations  and  warranties  of each of the  Corporation  and Freemark
contained  in  this  Agreement,  in  the  Schedules  annexed  hereto  or in  any
certificate  of other  document  delivered or given  pursuant to this  Agreement
shall survive the completion of the transactions contemplated by this Agreement,
and notwithstanding such completion or any investigation made by or on behalf of
the  Purchaser or any  knowledge by the  Purchaser of any  incorrectness  in, or
breach of, such representations or warranties,  shall continue in full force and
effect for the benefit of the Purchaser for a period of three (3) years from the
Closing Date;  (i) except for any  representation  and warranty  relating to Tax
matters  which shall survive until ninety (90) days after the last date on which
the relevant tax authority is entitled to assess or reassess the  Corporation or
the  Purchaser   with  respect  to  such  Tax  matters,   (ii)  except  for  any
representation  and warranty in respect of which a claim based on fraud is made,
and (iii) except for the  representations  and warranties  contained in sections
3.1(a),  (b), (c), (e), (g) and (p),  which in each such case shall be unlimited
as to duration.

5.2 Survival of Representations and Warranties of Purchaser. The representations
and  warranties  of  the  Purchaser  contained  in  this  Agreement  or  in  any
certificate  or other  document  delivered or given  pursuant to this  Agreement
shall survive the completion of the transactions contemplated by this Agreement,
and notwithstanding such completion or any investigation made by or on behalf of
the Corporation or any knowledge by the Corporation of any  incorrectness in, or
breach of, such representations or warranties,  shall continue in full force and
effect for the benefit of, such representations or warranties, shall continue in
full force and effect for the benefit of the  Corporation  for a period of three
(3) years from the Closing Date; except for any  representation  and warranty in
respect  of  which  a  claim   based  on  fraud  is  made  and  except  for  the
representations and warranties  contained in sections 3.2(a), (b) and (c), which
in each such case shall be unlimited as to duration.

<PAGE>

                                      -15-

                                   ARTICLE VI
                             CONDITIONS OF CLOSING

6.1  Conditions for  the  Benefit  of the  Purchaser.  The  subscription  of the
Subscribed  Shares in accordance  with the terms of this Amendment is subject to
the following  conditions,  each of which is hereby declared to be the exclusive
benefit of the Purchaser.  The Corporation and Freemark hereby  acknowledge that
each  condition has been  performed or complied with in all respects at or prior
to the date hereof.

(a)  Truth of  Representations  and Warranties of the  Corporation and Freemark.
     The   representations  and  warranties  of  the  Corporation  and  Freemark
     contained in this  Agreement or in any  Schedule  annexed  hereto or in any
     certificate or other document delivered or given pursuant to this Agreement
     (considered  individually and collectively)  shall have been accurate as of
     the date of this  Agreement,  and shall be true and  correct as of the date
     hereof.

(b)  Performance  of  Covenants  by the  Corporation  and  Freemark.  All of the
     covenants,  obligations  and agreements  that each of the  Corporation  and
     Freemark  is  required  to  perform  or to  comply  with  pursuant  to this
     Agreement  at or prior  to the date  hereof  (considered  individually  and
     collectively)  shall have been  performed or complied  with in all material
     respects at or prior to the date hereof.

(c)  Third  Party  Approvals.  There  shall have been  obtained  all  approvals,
     consents and assurances,  in form and substance reasonably  satisfactory to
     the   Purchaser's   legal  counsel,   necessary  in  order  to  permit  the
     transactions  contemplated  herein to be  completed  without  affecting  or
     resulting  in  the  termination,  cancellation,   modification,  amendment,
     variation or renegotiation of this Agreement including, without limitation,
     all  consents  required  (with  the  exception  of the items  disclosed  in
     Schedule  3.1(d))  in order to  consummate  the  transactions  contemplated
     herein which, if not obtained,  could have a material adverse effect on the
     ability of the Corporation and its Subsidiaries to carry on their affairs.

(d)  Litigation. There shall be no actions, claims, investigations, arbitrations
     or other proceedings (whether or not on behalf of the Corporation or any of
     the Subsidiaries)  pending or threatened to restrain,  enjoin or invalidate
     any transaction contemplated by this Agreement.

                                  ARTICLE VII
                                INDEMNIFICATION

7.1  Indemnification  by the  Corporation  and  Freemark.  The  Corporation  and
Freemark,  on a solidary basis,  without right of contribution  each waiving the
benefits of division and discussion,  shall indemnify and hold the Purchaser and
each  of  its  officers,  directors,   employees,  agents,  representatives  and
affiliates (the "Purchaser  Indemnified  Parties") harmless from and against any
and all claims, demands, actions, causes of action,  judgments,  damages, losses
(which  shall  include  any  diminution  in  value  of the  Subscribed  Shares),
liabilities,  costs  or  expenses  (including,  without  limitation,   interest,
penalties  and  reasonable  attorneys'  and  experts'  fees and  disbursements),
including  Tax  liabilities,   suffered  or  incurred  in  connection  with  the
transactions contemplated herein, (collectively, the "Losses") which may be made
against the  Purchaser  Indemnified  Parties or any of the  Corporation  and the
Subsidiaries,  or which any of them may suffer or incur as a result of,  arising
out of or relating to:

<PAGE>

                                      -16-

(a)  any  violation,  contravention  or breach  of any  covenant,  agreement  or
     obligation  of the  Corporation  or  Freemark  under  or  pursuant  to this
     Agreement; or

(b)  any incorrectness in, or breach of, any  representation or warranty made by
     the Corporation or Freemark in Section 3.1, the Schedules annexed hereto or
     in any  certificate or other  document  delivered or given pursuant to this
     Agreement; or

(c)  any liabilities or obligations of the  Corporation,  the Subsidiaries or of
     Freemark of any nature whatsoever arising after the Closing Date in respect
     of any fact, condition or circumstance existing or occurring on or prior to
     the  Closing  Date  (including,  without  limitation,  any  liabilities  or
     obligations of the  Corporation  or any Subsidiary for Taxes due,  together
     with any penalties or interest,  in connection with any period ending on or
     prior  to the  Closing  Date),  save  and  except  for any  liabilities  or
     obligations  arising  after  the  Closing  Date  in  respect  of any  fact,
     condition  or  circumstance  existing on or prior to the Closing Date which
     has been  disclosed  in  writing  to the  Purchaser  prior  to the  Closing
     (including,  without limitation,  by way of disclosure in this Agreement or
     any of the Schedules hereto).

In connection with the foregoing, Freemark hereby waives its right to claim from
the Corporation any amount paid to the Purchaser pursuant to this Article 7.

7.2  Indemnification  by Purchaser.  The Purchaser  shall indemnify and hold the
Corporation  harmless  from and against any Losses which may be made against the
Corporation or which the Corporation may suffer or incur as a result of, arising
out of or relating to:

(a)  any  violation,  contravention  or breach of any  covenant,  agreement,  or
     obligation of the Purchaser under or pursuant to this Agreement; or

(b)  any incorrectness in, breach of, any representation or warranty made by the
     Purchaser  in  Section  3.2,  the  Schedules   annexed  hereto  or  in  any
     certificate  or  other  document   delivered  or  given  pursuant  to  this
     Agreement.

7.3 Obligation to Reimburse. The Party providing indemnification, hereunder (the
"Indemnifying  Party") shall reimbuse, on demand, to the Party being indemnified
hereunder  (the  "Indemnified  Party")  the  amount of any  Losses  suffered  or
incurred by the Indemnified Party, the whole as of the date that the Indemnified
Party incurs any such Losses,  together with interest thereon from the aforesaid
date until payment in full at the rate per annum equal to 8%.

7.4 Notification.  Promptly upon obtaining  knowledge  thereof,  the Indemnified
Party shall  notify the  Indemnifying  Party of any cause which the  Indemnified
Party has determined has given or could give rise to indemnification  under this
Article VII. The omission so to notify the Indemnifying  Party shall not relieve
the  Indemnifying  Party  from any duty to  indemnify  and hold  harmless  which
otherwise  might  exist  with  respect to such  cause  unless  (and only to that
extent)  the  omission  to  notify  materially  prejudices  the  ability  of the
Indemnifying Party to exercise its right to defend provided in this Article VII.

7.5 Defense of Third Party Claim. If any legal proceeding shall be instituted or
any claim or demand shall be asserted by a third party  against the  Indemnified
Party (each a "Third Party Claim"),  then the Indemnifying  Party shall have the
right,  after receipt of the  Indemnified  Party's  notice under Section 7.4 and
upon giving  notice to the  Indemnified  Party  within 30 calendar  days of such
receipt,  to  defend  the Third  Party  Claim at its own cost and  expense  with
counsel of its own selection, provided that:
<PAGE>

                                      -17-

(a)  the  Indemnified  Party  shall  at  all  times  have  the  right  to  fully
     participate in the defense at its own expense; and

(b)  the Third  Party Claim  seeks only  monetary  damages and does not seek any
     injunctive or other relief against the Indemnified Party.

     Amounts payable by the  Indemnifying  Party pursuant to a Third Party claim
shall be paid in accordance  with the terms of the  settlement or, the judgment,
as applicable,  but in any event prior to the expiry of any delay for a judgment
to become executory.

7.6 No Compromise.  The Indemnifying  Party shall not be permitted to compromise
and settle or to cause a  compromise  and  settlement  of any Third Party Claim,
without the prior written consent of the Indemnified Party, unless:

(a)  the terms of the  compromise  and  settlement  require  only the payment of
     money and do not require the Indemnified  Party,  the Corporation or any of
     the  Subsidiaries to admit any of the  Subsidiaries to admit any wrongdoing
     or take or refrain from taking any action; and

(b)  the Indemnified Party receives, as part of the compromise and settlement, a
     legally  binding and  enforceable  unconditional  satisfaction  or release,
     which is in form  and  substance  satisfactory  to the  Indemnified  Party,
     acting reasonably,  from any and all obligations or liabilities it may have
     with respect to the Third Party Claim.

7.7 Failure to Defend.  If the Indemnifying  Party fails within 30 calendar days
from  receipt  of the  notice  of a Third  Party  Claim  to give  notice  of its
intention  to defend the Third Party  Claim in  accordance  with  Section 7.5 or
fails to  promptly  assume  such  defense at any time after such notice has been
given,  then the Indemnifying  Party shall be deemed to have waived its right to
defend the Third Party Claim and the Indemnified Party shall have the right (but
not the obligation) to undertake or to cause the Corporation, Freemark or any of
the  Subsidiaries  to  undertake  the  defense  of the  Third  Party  Claim  and
compromise  and settle the Third Party  Claim on behalf,  for the account and at
the risk and expense of the Indemnifying Party.

<PAGE>

                                      -18-

7.8 Expiration of Indemnification.  The obligation of indemnification set out in
Sections 7.1 and 7.2 shall survive the Closing Date for the period prescribed by
law. The obligation of indemnification  arising from any material  incorrectness
in,  or  material  breach  of,  any  representation  for  warranty  made  by the
Corporation,  Freemark or the Purchaser,  as the case may be, in each case shall
be  subject  to  the  limitations  regarding  survival  of  representations  and
warranties  set  forth in  Section  5.1 or 5.2,  as the  case may be;  provided,
however,  that the obligation of indemnification shall not expire if a claim for
indemnity  is made on or before the  expiration  dates set forth in Sections 5.1
and 5.2.

                                  ARTICLE VIII
                                     CLOSING

8.1 Date, Time and Place of Closing. The Closing shall take place at the offices
of Stikeman,  Elliott,  1155  Rene-Levesque  Blvd.  West, 40th Floor,  Montreal,
Quebec on July 31, 1999 (the "Closing Date") at the hour of 10:00 a.m. (Montreal
time) or at such other  place,  on such other date  and/or at such other time as
may be agreed between the parties.

                                   ARTICLE IX
                                  MISCELLANEOUS

9.1  Announcements.  Any press release,  public  announcement  or publicity with
respect to the  transaction  contemplated  in this Agreement  shall be made only
with the prior written consent of the Parties unless such release,  announcement
or  publicity  is  required  by Law  or the  rules  of any  relevant  securities
exchange, in which case the Party required to make such release, announcement of
publicity shall use it best efforts to obtain approval of the other Party to the
form,   nature  and  extent  of  such  disclosure,   which  approval  shall  not
unreasonably withheld.

9.2 Further Assurances.  Each Party upon the request of the other, whether at or
after the Closing Date,  shall do, execute,  acknowledge and deliver or cause to
be done,  executed,  acknowledged  or delivered  all such further  acts,  deeds,
documents,   assignments,   transfers,   conveyances,  powers  of  attorney  and
assurances  as may be  reasonably  necessary  or  desirable  to effect  complete
consummation of the transactions contemplated by this Agreement.

9.3 Successors in Interest. This Agreement and the provisions hereof shall enure
to the  benefit  of  and be  binding  upon  the  Parties  and  their  respective
successors  and assigns.  Neither the  Corporation  nor Freemark may assign this
Agreement  or any of its  rights and  obligations  hereunder  without  the prior
written consent of the Purchaser.  Notwithstanding the foregoing,  the Purchaser
may assign or transfer  this  Agreement  and all of the  Purchaser's  rights and
obligations  hereunder to an  affiliate  (as defined  under the Canada  Business
Corporations Act).

<PAGE>

                                      -19-

9.4   Notices.   Any  notice,   consent,   authorization,   direction  or  other
communication  required or permitted to be given  hereunder  shall be in writing
and shall be delivered  either by personal  delivery or by telex,  telecopier or
similar telecommunications device and addressed as follows:

(a)   in the case of the Corporation, to it at:

      7077 Park Avenue, Suite 503
      Montreal, Quebec
      H3N 1X7

      Attention:  Mark Routtenberg

      Telecopier:       (514) 270-8028

      and

      Attention:        Brian L. Fleming

      Telecopier:       (213) 744-7817

      and

      Attention:        Glenn A. Weinman

      Telecopier:       (213) 765-0911

(b)   in the case of the Purchaser, to it at:

      Guess?,  Inc.
      1444 South Almeda Street
      Los Angeles, CA
      USA 90021

      Attention:        Brian L. Fleming

      Telecopier:       (213) 744-7817

      and

      Attention:  Glen A. Weinman

      Telecopier:  (213) 765-0911

<PAGE>

                                      -20-

      With a copy to:

      STIKEMAN, ELLIOTT
      1155 Rene-Levesque Blvd. West
      40th Floor
      Montreal, Quebec H3B 3V2

      Attention:        William B. Rosenberg

      Telecopier:       (514) 397-3222

(c)   in the case of Freemark, to it at:

      7077 Park Avenue, Suite 503
      Montreal, Quebec
      H3N 1X7

      Attention:        Mark Routtenberg

      Telecopier:       (514) 270-8028

      With a copy to:

      GOODMAN, PHILLIPS & VINEBERG
      1501, avenue McGill College
      26th Floor
      Montreal, Quebec
      H3A 3N9

      Attention:        Sidney Horn

      Telecopier:       (514) 841-6499

      Any  notice, consent,  authorization,  direction  or  other  communication
delivered as aforesaid  shall be deemed to have been  effectively  delivered and
received, if sent by telex, telecopier or similar  telecommunications  device on
the calendar day next following  receipt of such  transmission or, if delivered,
to have been  delivered  and  received  on the date of such  delivery  provided,
however, that if such date is not a business day then it shall be deemed to have
been  delivered and received on the business day next  following  such deemed to
have been  delivered  and  received  on the  business  day next  following  such
delivery. Either Party may change its address for service by notice delivered as
aforesaid.

9.5  Counterparts.  This Agreement may be executed in one or more  counterparts,
each  of  which  when  so  executed  shall  be  deemed  an  original,  and  such
counterparts together shall constitute one and the same instrument.

9.6  Severability.  Any term of  provision of this  Agreement  that is held by a
court of  competent  jurisdiction  or other  authority  to be  invalid,  void or
unenforceable in any situation in any jurisdiction shall not affect the validity
or  enforceability  of the remaining terms and provisions hereof or the validity
or  enforceability  of the offending term or provision in any other situation or
in any  other  jurisdiction.  If the  final  judgment  of a court  of  competent
jurisdiction  or other authority  declares that any term or provision  hereof is
invalid,  void or  unenforceable,  the parties  agree that the court making such
determination  shall  have the  power to reduce  the  scope,  duration,  area or
applicability of the term of provision,  to delete specific words or phrases, or
to replace any invalid,  void or unenforceable  term of provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term of provision.

<PAGE>

                                      -21-

9.7  Governing  Law. This  Agreement  shall be governed by and  interpreted  and
construed in accordance  with the laws of the Province of Quebec and the laws of
Canada applicable therein.

9.8 Entire Agreement. This Agreement,  including the Schedules and the Unanimous
Shareholders'  Agreement executed concurrently  herewith,  constitute the entire
agreement  between the Parties  pertaining  to the subject  matter  hereof,  and
supersedes all prior agreements, understandings, negotiations and discussions of
the Parties.

9.9 Inconsistency. This Agreement shall override the Schedules annexed hereto to
the extent of any inconsistency.

9.10 Gender.  Any  reference in this  Agreement to any gender shall include both
genders and the neuter,  and words herein  importing  the  singular  number only
shall include the plural and vice-versa.

9.11 Currency.  All of the dollar amounts  mentioned in this Agreement or in the
Schedules annexed hereto shall be in Canadian Funds.

9.12 Headings.  The headings in this  Agreement are inserted for  convenience of
reference only and shall not affect the interpretation hereof.

9.13 Amendment.  No amendment shall be binding unless expressly  provided in any
instrument duly executed by the Parties.

9.14  Waiver.  No  waiver,  whether  by  conduct  or  otherwise,  of  any of the
provisions of this Agreement shall be deemed to constitute a waiver of any other
provisions  (whether  or  not  similar)  nor  shall  such  waiver  constitute  a
continuing  waiver unless  otherwise  expressly  provided in an instrument  duly
executed by the Parties to be bound thereby.

<PAGE>

                                      -22-

IN WITNESS WHEREOF,  the Parties have executed this Agreement on the date and at
the place first above mentioned.

                                   STRANDEL INC.

                                   Per:  /s/ Mark Routtenberg
                                         ---------------------------------------
                                           Mark Routtenberg

                                   GUESS ?, INC.

                                   Per:  ---------------------------------------
                                            Maurice Marciano

                                   FREEMARK ENTERTAINMENT CORPORATION

                                   Per:  /s/ Mark Routtenberg
                                         ---------------------------------------
                                            Mark Routtenberg

<PAGE>

                                      -22-

IN WITNESS WHEREOF,  the Parties have executed this Agreement on the date and at
the place first above mentioned.

                                   STRANDEL INC.

                                   Per:  /s/ Maurice Marciano
                                         ---------------------------------------
                                             Mark Routtenberg

                                   GUESS ?, INC.

                                   Per:  --------------------------------------
                                            Maurice Marciano

                                   FREEMARK ENTERTAINMENT CORPORATION

                                   Per:  ---------------------------------------
                                            Mark Routtenberg

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