FIRST ADDENDUM TO LEASE

THIS FIRST ADDENDUM TO LEASE is entered into this _______day of ______, 2001, between THE CITY OF ASHLAND, by and through its Council, and the Ashland Parks and Recreation Commission (the "City") and the OREGON SHAKESPEARE FESTIVAL ASSOCIATION, an Oregon non-profit corporation ("OSF").

RECITALS

A. In 2000 City entered into a lease with OSF ("the 2000 lease") which superceded and added property to a 1969 lease. OSF used the added property to construct a new theater and a three-level parking facility.

B. Under the 2000 lease, City owns the parking facility and that facility has now been constructed. The parties desire to amend the lease to remove from the lease that portion of property upon which the structure is located and to clarify other lease provisions relating to this amendment.

City and OSF agree:

1. Recital D of the 2000 lease is modified by deleting the words which are lined through and adding words which are shaded as follows:

D. OSF has proposed to construct, at its expense, an additional theatre and a two-to-three level parking facility on the existing City parking lot. described in the attached Exhibit B (the "Additional Property"), and the The theatre is to be located on the property described in the attached exhibit identified as Addendum Exhibit B ("the Additional Property") and the parking facility is to be located on the property described on the attached exhibit identified as Addendum ExhibitB-1 (the "Parking Facility Property"). City has agreed to make such real property available to OSF for such purposes. The Additional Property is divided into two parts, the "Parking Facility Property" and the "Theatre Property" which includes the space in the Parking Facility Property used for theatre HVAC equipment. City has also agreed to include space in the Parking Facility Property for the new theatre HVAC equipment.

2. Recital G is added to the lease as follows:

G. The City recognizes that it is receiving valuable consideration for the property subject to this lease through the generation of substantial economic benefits for the Ashland community from OSF’s theatre activities, and that these benefits, which include but are not limited to the Transient Occupancy Tax, the Food and Beverage Tax, fees for using the parking structure, and Business License Fees, are enhance by the addition of the new theatre and expansion of parking.

3. Recital H is added to the lease as follows:

H. Pursuant to ORS 271.310, the City specifically determines that this lease furthers the public interest.

4. Paragraph 2 of the 2000 lease is modified by deleting the words which are lined through and adding words which are shaded as follows:

2. PROPERTY. The City does hereby lease to OSF the Original Property and the Additional Property (collectively, the "Property"), together with all improvements thereon except for the parking facility, whether in existence at this time or placed thereon during the term of this Lease or any renewal thereof together with all fixtures and equipment owned by the City and now or hereafter placed upon the Property which may be required or incident to use and operation of the facilities on the Property by OSF, subject; however, to the City's reservation of the air space above the parking facility described in Section 13 below. OSF shall have the exclusive right to utilize approximately 260 square feet of the northeast corner of each floor of the parking facility for the installation, maintenance, and repair of HVAC facilities for the new theatre. OSF shall also have the right to access these facilities over and across the Parking Facility Property and to install, maintain and repair such facilities as may be reasonably necessary to connect the HVAC facilities to the new theater.

5. Paragraph 3 of the 2000 lease is modified by deleting the words which are lined through and adding words which are shaded as follows:

3. USE OF PROPERTY. Except as otherwise provided in Section 13 for the public right of way on the Property as specified in Exhibit C of the 2000 lease, OSF shall have sole and exclusive possession and use of the Property and all improvements, facilities and equipment thereon during the term of this Lease, and any renewal of such term, for theatrical productions or such other theater-related or community uses which are generally consistent with its Corporate Charter. The parties understand that except for the Parking Facility public right of way on the Property, OSF may set policies at its sole discretion regarding use of the Property. It is further understood and agreed that OSF shall grant to civic groups, professional organizations or governmental agencies temporary use of Bowmer Theatre and Carpenter Hall when the OSF theatres are not in use, if such use, at OSF's sole determination, will not interfere with the policies or operation of the activities of OSF, provided however, that OSF receives payment of a reasonable rental based upon the cost of maintenance, operation and services rendered or incurred by OSF in connection with such use. OSF shall allow the public to use the public right of way for ingress and egress to the Parking Facility Property and other adjacent public and private properties.

6. Paragraph 4 of the 2000 lease is modified by deleting the words which are lined through and adding words which are shaded as follows:

4. DEVELOPMENT OF PARKING. OSF shall construct a multi-level parking structure on the Additional Property Parking Facility Property providing approximately 140 parking spaces for the public. This structure shall be completed and open for use on or before the completion of the theater to be built upon the Additional Property. OSF shall not remove any existing public parking on the Additional Property (existing as of the date this lease is effective between the parties) until it has received all necessary approvals and permits to construct the theater and parking facility. Upon the removal of any existing public parking, OSF shall commence construction of the parking facility and shall prosecute it to completion with diligence.

7. Paragraph 5(d) of the 2000 lease is modified by deleting the words which are lined through and adding words which are shaded as follows:

(d) Construction by OSF of the theatre and parking facilities on the Additional property and construction by OSF of the parking facility on the Parking Facility Property.

8. Paragraph of the 2000 lease is modified by deleting the words which are lined through and adding words which are shaded as follows:

6. TITLE TO IMPROVEMENTS AND FIXTURES. All structures and improvements of whatever kind and nature erected or made to the Original Property by OSF during the term of the 1969 Lease or this Lease, together with any and all additions, alterations and permanent fixtures now or hereafter installed upon the Original Property, shall be the Property of the City, except that the City shall have no ownership, title or interest in any machinery, equipment, appurtenances or fixtures placed by OSF in or upon the Original Property which is not actually so affixed as to become an integral part of the buildings or facilities. All structures and improvements of whatever kind and nature erected or made to the Additional Property by OSF during the term of this Lease, together with any and all additions, alterations and permanent fixtures now or hereafter installed upon the Additional Property, shall be the property of OSF during the term of this Lease. All structures and improvements of whatever kind and nature erected on or made to the Parking Facility Property by OSF shall be the property of the City, provided, however, that any HVAC facilities for the new theater installed on the Parking Facility Property shall remain the property of OSF. Upon termination of this Lease, all structures and improvements on the Additional Property and the theater HVAC facilities on the Parking Facility Property, together with any and all additions, alterations and permanent fixtures thereon, shall become the property of the City, except that the City shall have no ownership, title or interest in any machinery, equipment, appurtenances or fixtures placed by OSF in or upon the Additional property which is not actually so affixed as to become an integral part of the buildings or facilities.

ADDENDUM EXHIBIT "B"

"ADDITIONAL PROPERTY"

LEASE DESCRIPTION
OREGON SHAKESPEAREAN FESTIVAL ASSOCIATION

Commencing at the Northwest comer of Lot 2, Block 9, in the City of Ashland, Jackson County, Oregon, according to the official map of said City, adopted by the City Council on November 5, 1888; thence along the Northwesterly boundary of said Lot 2, South 35 o 02' West, 108.70 feet; thence South 55° 18' East, 8.36 feet to the Northwesterly boundary of that parcel of land described in Document No. 92-18504, Official Records, Jackson County, Oregon; thence along said boundary, South 35 ° 02' West, 21.30 feet to the Southwest comer thereof; thence South 55 o 18' East, 10.63 feet; thence South 35 ° 02' Off' West, 53.87 feet to the Point of Beginning; thence South 54° 58' Off' East, 96.92 feet; thence South 35° 02' West, 8.96 feet; thence South 54058' 00" East, 15.31 feet; thence South 35° 02' 00" West, 89.33 feet; thence North 54° 58' 00" West, 15.64 feet; thence South 35° 02' 00" West, 9.17 feet; thence North 54° 58' 00" West, 30.65 feet; thence North 35 o 02' 00" East, 4.22 feet; thence North 54° 58' 00" West, 65.94 feet; thence North 35 ° 02' 00" East 103.24 feet to the Point of Beginning.

October 30, 2001

ADDENDUM EXHIBIT B- 1

"PARKING FACILITY PROPERTY"

LEASE DESCRIPTION
OREGON SHAKESPEAREAN FESTIVAL ASSOCIATION

Commencing at the Northwest comer of Lot 2, Block 9, in the City of Ashland, Jackson County, Oregon, according to the official map of said City, adopted by the City Council on November 5, 1888; thence along the Northwesterly boundary of said Lot 2, South 35 ° 02' West, 108.70 feet; thence South 55 o 18' East, 8.36 feet to the Northwesterly boundary of that parcel of land described in Document No. 92-18504, Official Records, Jackson County, Oregon; thence along said boundary, South 35 ° 02' West, 21.30 feet to the Southwest comer thereof; thence South 55 ° 18' East, 57.64 feet to the Southeasterly boundary of said Lot 2; thence along said Southeasterly boundary, South 35 ° 02' West, 20.00 feet; thence South 55° 18' East, 65.23 feet; thence South 35° 02' 00" West, 43.89 feet to the Point of Beginning; thence South 54° 58' 00" East, 121.04 feet; thence South 35° 02' 00" West, 135.34 feet more or less to the North line of Hargadine Street; thence along said North line, North 54° 41' West, 121.04 feet to a point which is South 35° 02' 00" West of the Point of Beginning; thence North 35° 02' Off' East, 134.74 feet to the Point of Beginning.

October 30, 2001