Exhibit 10.1

 

THIRD AMENDMENT TO LEASE AGREEMENT

 

THIS  THIRD AMENDMENT TO LEASE AGREEMENT (“Third Amendment”) is entered into as
of the 24th day of August, 2005, by and between ProLogis North American
Properties Fund I LLC, as successor-in-interest to ProLogis Development Services
Incorporated (“Landlord”) and 1-800 CONTACTS INC. (“Tenant”).

 

WITNESSETH:

 

WHEREAS, Landlord (or its predecessor-in-interest) and Tenant have entered into
a Lease, dated as of the 13th day of  October, 1998, as amended by that certain
First Amendment to Lease Agreement dated 9th day of October 2000, and as further
amended by that certain Second Amendment to Lease Agreement dated 1st  day of
March 2002 (the Lease and all amendments thereto shall collectively hereinafter
be referred to as the “Lease”) pursuant to which Landlord leased to Tenant
certain premises located at 1130 South 3800 West Salt Lake City, UT 84104 (the
“Premises”); and,

 

WHEREAS, Landlord and Tenant desire to extend the term of the Lease and
otherwise modify the Lease on the terms and conditions set forth below.

 

NOW THEREFORE, in consideration of Ten Dollars ($10.00) and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Landlord and Tenant agree as follows:

 

1.             The Lease Term is extended for thirty six (36) months, such that
the Lease shall terminate on the 31st day of December, 2008 (the “Extension
Period”).  All of the terms and conditions of the Lease shall remain in full
force and effect during the Extension Period except as otherwise modified
herein.

 

2.             The Monthly Base Rent during the Extension Period shall be as
follows:

 

January 1, 2006 – January 31, 2006

 

$0.00

February 1, 2006 – June 30, 2007

 

$23,436.00 per month

July 1, 2007 – December 31, 2008

 

$24,273.00 per month

 

3.             In addition to the Monthly Base Rent as set forth above, Tenant
shall remain obligated for the payment of Operating Expenses during the
Extension Period in accordance with the terms of the Lease.

 

4.             Landlord hereby consents to certain Tenant-Made Alterations to be
made by Tenant to the Premises, subject to Landlord’s approval of the scope of
work and final plans and specifications related thereto, which such approval
shall not be unreasonably withheld.  Landlord shall contribute up to a maximum
amount totaling $20,925 (the “Allowance”) toward such Tenant-Made Alterations. 
Payment of the Allowance shall be made by Landlord to Tenant within 30 days
following (i) completion of such agreed upon Tenant-Made Alterations,
(ii) Landlord’s receipt of Tenant’s invoice substantiating the costs related
thereto, (iii) Landlord’s receipt of final lien waivers from all contractors and
subcontractors who did work in connection with such Tenant-Made Alterations, and
(iv) Landlord’s receipt of a copy of the final permit approved by the applicable
governing authority to the extent required for such Tenant-Made Alterations. 
Landlord shall be under no obligation to pay for any other Tenant-Made
Alterations to the Premises or for any costs in connection with such alterations
in excess of the Allowance.  Further, such Allowance shall only be available for
Tenant’s use through December 31, 2006, and Tenant hereby waives any and all
rights to any unused portion of the Allowance remaining as of January 1, 2007.

 

5.             Tenant’s parking rights as granted under the Lease shall be
revised to reflect that Tenant shall be entitled to park in those areas as
designated on Exhibit A attached hereto and made a part hereof.  Further, in the
event that Landlord develops additional parking on vacant land within the
Project or expands existing parking areas within the Project (collectively,
“Additional Parking”) and the purpose of such Additional Parking is for the use
thereof to be in common by tenants in the Project on a nonreserved and
nonexclusive basis, Tenant shall have the right to the use of such Additional
Parking.  This provision shall not apply if such Additional Parking is developed
by Landlord for the exclusive use of another tenant.  Further, notwithstanding
the foregoing, if Tenant determines that it requires additional parking within
the Project, Landlord shall use commercially reasonable efforts to (but shall
not be obligated to) accommodate such additional parking requirements.

 

6.             The second paragraph of Paragraph 6 of the Lease, “Operating
Expenses”, shall be revised to include the following:

 

“Landlord shall provide Tenant within 90 days following the final day of the
calendar year Landlord’s itemized year-end common area maintenance
reconciliation reports which reference and include all applicable Operating
Expenses for such year.  Upon Tenant’s written request (which request must be
made within 60 days following Tenant’s receipt of Landlord’s reconciliation
report as described in the preceding sentence), Landlord shall provide
photocopies of invoices of major expenditures, as well as other standard
Landlord reports to substantiate such costs, for the expenses as provided in
such reconciliation reports.”

 

7.             Tenant shall be granted one (1) 2-year renewal option and one
(1) 3-year renewal option beyond the expiration of the Extension Period pursuant
to the provisions of Addendum 1 attached hereto.  Further, if Tenant exercises
its right to extend the Extension Period pursuant to the provisions of Addendum
1 attached hereto, Tenant

 

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may reduce the square footage of the Premises by either 17,850 rentable square
feet or 31,000 rentable square feet (each referred to as the “Reduced
Premises”), as shown on Exhibit B attached hereto, upon the giving of no less
than 6 months’ prior written notice to Landlord.  In the event that Tenant
elects to reduce the square footage of the Premises pursuant to the provisions
contained herein, then Landlord shall prepare and Tenant shall execute an
amendment to the Lease confirming the reduction of the square footage of the
Premises and the other provisions applicable thereto.  It is the express intent
of the parties that Tenant’s right to reduce the square footage of the Premises
as set forth herein shall not be applicable at any time during the Extension
Period.

 

8.             If, at any time during the Extension Period and any renewals
thereof as set forth in Addendum 1, other premises within the ProLogic Park
Crossroads Corporate Center (the “Building”) become available (except as the
same relates to the tenant then occupying such space (or its affiliates)) (the
“Offered Space”), Landlord shall provide Tenant written notice of the
availability of such Offered Space (the “Offered Space Notice”).  If Tenant
desires to expand into such Offered Space, Tenant shall provide Landlord with
written notice thereof (“Expansion Notice”) within 5 business days of receipt of
the Offered Space Notice.  Effective for a period of ninety (90) days following
Landlord’s receipt of such Expansion Notice, Tenant shall be granted a right of
first offer on such Offered Space pursuant to the provisions of Addendum 2
attached hereto.

 

9.             Except as modified herein, the Lease, and all of the terms and
conditions thereof, shall remain in full force and effect.

 

10.           Any obligation or liability whatsoever of ProLogis, a Maryland
real estate investment trust, which may arise at any time under the Lease or
this Agreement or any obligation or liability which may be incurred by it
pursuant to any other instrument, transaction or undertaking contemplated
hereby, shall not be personally binding upon, nor shall resort for the
enforcement thereof be had to the property of, its trustees, directors,
shareholders, officers, employees, or agents regardless of whether such
obligation or liability is in the nature of contract, tort or otherwise.

 

IN WITNESS WHEREOF, the parties hereto have signed this Third Amendment to Lease
Agreement as of the day and year first above written.

 

 

 

 

LANDLORD:

 

 

 

 

 

PROLOGIS NORTH AMERICAN PROPERTIES
FUND I LLC, a Delaware limited liability company

 

 

 

 

 

By:

ProLogis Management Incorporated,

 

 

 

its Manager

 

 

 

 

 

 

 

 

By:

/s/ W. Scott Lamson

 

 

 

Name:

W. Scott Lamson

 

 

 

Title:

Senior Vice President

 

 

 

 

 

 

 

 

 

TENANT:

 

 

 

 

 

1-800 CONTACTS INC.

 

 

 

 

 

 

 

 

 

By:

/s/ Kale Carlile

 

 

 

Name:

Kale Carlile

 

 

 

Title:

Vice President of purchasing and supply chain

 

 

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ADDENDUM 1

 

TWO RENEWAL OPTIONS

 

ATTACHED TO AND A PART OF THE THIRD AMENDMENT TO LEASE AGREEMENT
DATED AUGUST 24, 2005, BETWEEN
PROLOGIS NORTH AMERICAN PROPERTIES FUND I LLC
AND
1-800 CONTACTS, INC.

 

(a)           Provided that as of the time of the giving of the First Extension
Notice and the Commencement Date of the First Extension Term, (x) Tenant is the
Tenant originally named herein, (y) Tenant actually occupies at least 50% of the
Premises initially demised under this Lease and any space added to the Premises,
and (z) no Event of Default exists or would exist but for the passage of time or
the giving of notice, or both; then Tenant shall have the right to extend the
Lease Term for an additional term of 2 years (such additional term is
hereinafter called the “First Extension Term”) commencing on January 1, 2009
(hereinafter referred to as the “Commencement Date of the First Extension
Term”).  Tenant shall give Landlord notice (hereinafter called the “First
Extension Notice”) of its election to extend the term of the Lease Term no later
than March 31, 2008.

 

(b)           Provided that as of the time of the giving of the Second Extension
Notice and the Commencement Date of the Second Extension Term, (x) Tenant is the
Tenant originally named herein, (y) Tenant actually occupies at least 50% of the
Premises initially demised under this Lease and any space added to the Premises,
and (z) no Event of Default exists or would exist but for the passage of time or
the giving of notice, or both and provided Tenant has exercised its option for
the First Extension Term; then Tenant shall have the right to extend the Lease
Term for an additional term of 3 years (such additional term is hereinafter
called the “Second Extension Term”) commencing on January 1, 2011 (hereinafter
referred to as the “Commencement Date of the Second Extension Term”).  Tenant
shall give Landlord notice (hereinafter called the “Second Extension Notice”) of
its election to extend the term of the Lease Term no later than March 31, 2010,
but no earlier than December 31, 2009.

 

(c)           The Base Rent payable by Tenant to Landlord during the First
Extension Term shall be $25,110.00 during the time period of January 1, 2009
through November 30, 2010 and shall be $0.00 for the time period of December 1,
2010 through December 31, 2010.

 

(d)           The Base Rent payable by Tenant to Landlord during the Second
Extension Term shall be the lesser of $25,100.00 or (i) 95% of the Fair Market
Rent, as defined and determined pursuant to Paragraphs (e), (f), and (g) below.

 

(e)           The term “Fair Market Rent” shall mean the Base Rent, expressed as
an annual rent per square foot of floor area, which Landlord would have received
from leasing the Premises for the Second Extension Term to an unaffiliated
person which is not then a tenant in the Project, assuming that such space were
to be delivered in “as-is” condition, and taking into account the rental which
such other tenant would most likely have paid for such premises, including
market escalations.  Fair Market Rent means only the rent component defined as
Base Rent in the Lease and does not include reimbursements and payments by
Tenant to Landlord with respect to Operating Expenses and other items payable or
reimbursable by Tenant under the Lease.  In addition to its obligation to pay
Base Rent (as determined herein), Tenant shall continue to pay and reimburse
Landlord as set forth in the Lease with respect to such Operating Expenses and
other reimbursable items with respect to the Premises.  The arbitration process
described below shall be limited to the determination of the Base Rent and shall
not affect or otherwise reduce or modify the Tenant’s obligation to pay or
reimburse Landlord for such Operating Expenses and other reimbursable items.

 

(f)            Landlord shall notify Tenant of its determination of the Fair
Market Rent (which shall be made in Landlord’s sole discretion) for the Second
Extension Term within 10 days following receipt of the Second Extension Notice,
and Tenant shall advise Landlord of any objection within 10 days of receipt of
Landlord’s notice.  Failure to respond within the 10-day period shall constitute
Tenant’s rejection of such Fair Market Rent.  If Tenant objects or rejects such
Fair Market Rent, Landlord and Tenant shall commence negotiations to attempt to
agree upon the Fair Market Rent within 30 days of Landlord’s receipt of Tenant’s
objection notice or Tenant’s rejection of such Fair Market Rent.  If the parties
cannot agree, each acting in good faith but without any obligation to agree,
then the Lease Term shall not be extended and shall terminate on its scheduled
termination date and Tenant shall have no further right hereunder or any remedy
by reason of the parties’ failure to agree unless Tenant or Landlord invokes the
arbitration procedure provided below to determine the Fair Market Rent.

 

(g)           Arbitration to determine the Fair Market Rent shall be in
accordance with the Real Estate Valuation Arbitration Rules of the American
Arbitration Association.  Unless otherwise required by state law, arbitration
shall be conducted in the metropolitan area where the Project is located by a
single arbitrator unaffiliated with either party.  Either party may elect to
arbitrate by sending written notice to the other party and the Regional Office
of the American Arbitration Association within 5 days after the 30-day
negotiating period provided in Paragraph (f), invoking the binding arbitration
provisions of this paragraph.  Landlord and Tenant shall each submit to the
arbitrator their respective proposal of Fair Market Rent.  The arbitrator must
choose between the Landlord’s proposal and the Tenant’s proposal and may not
compromise between the two or select some other amount.  The cost of the
arbitration shall be paid by Tenant if the Fair Market Rent is that proposed by
Landlord and by Landlord if the Fair Market Rent is that proposed by Tenant.  If
the arbitrator has not determined the Fair Market Rent as of the end of the
First Extension Term, Tenant shall pay the Base Rent in effect under the Lease
as of the end of the First Extension Term until the Fair Market Rent is
determined as provided herein.  Upon such determination, Landlord and Tenant
shall make the appropriate adjustments to the payments between them.

 

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(h)           The parties consent to the jurisdiction of any appropriate court
to enforce the arbitration provisions of this Addendum and to enter judgment
upon the decision of the arbitrator.

 

(i)            Except for the Base Rent as determined above, Tenant’s occupancy
of the Premises during the First Extension Term and the Second Extension Term
shall be on the same terms and conditions as are in effect on December 31, 2008
and December 31, 2010, respectively; provided, however, Tenant shall have no
further right to any allowances, credits or abatements or any options to expand,
contract, renew or extend the Lease.

 

(j)            If Tenant does not give the First Extension Notice within the
period set forth in paragraph (a) above, Tenant’s right to extend the Lease Term
for the First Extension Term and the Second Extension Term shall automatically
terminate.  If Tenant does not give the Second Extension Notice within the
period set forth in paragraph (b) above, Tenant’s right to extend the Lease Term
for the Second Extension Term shall automatically terminate.  Time is of the
essence as to the giving of the First Extension Notice and Second Extension
Notice and the notice of Tenant’s objection under Paragraph (f).

 

(k)           Landlord shall have no obligation to refurbish or otherwise
improve the Premises for the First Extension Term or the Second Extension Term. 
The Premises shall be tendered on the Commencement Date of the First Extension
Term and Second Extension Term in “as-is” condition.

 

(l)            If the Lease is extended for either the First Extension Term or
Second Extension Term, then Landlord shall prepare and Tenant shall execute an
amendment to the Lease confirming the extension of the Lease Term and the other
provisions applicable thereto (the “Amendment”).

 

(m)          If Tenant exercises its right to extend the term of the Lease for
the First Extension Term  or Second Extension Term pursuant to this Addendum,
the term  “Lease Term” as used in the Lease, shall be construed to include, when
practicable, the First Extension Term or Second Extension Term, as applicable,
except as provided in (i) above.

 

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ADDENDUM 2

 

RIGHT OF FIRST OFFER

 

ATTACHED TO AND A PART OF THE THIRD AMENDMENT TO LEASE AGREEMENT
DATED AUGUST 24, 2005, BETWEEN
PROLOGIS NORTH AMERICAN PROPERTIES FUND I LLC
AND
1-800 CONTACTS, INC.

 

(a)           “Offered Space” shall mean any space which becomes available for
lease (except as the same relates to the tenant then occupying such space (or
its affiliates)) within the Building.

 

(b)           Provided that as of the date of the giving of the Expansion
Notice, (x) Tenant is the Tenant originally named herein, (y) Tenant actually
occupies at least 50% of the Premises originally demised under this Lease and
any premises added to the Premises, and (z) no Event of Default or event which
but for the passage of time in the giving of notice, or both, would constitute
an Event of Default has occurred and is continuing, if at any time during the
Extension Period and any renewals thereof as set forth in Addendum 1 of this
Third Amendment any lease for any portion of the Offered Space shall expire,
then Landlord, before offering such Offered Space to anyone, shall offer to
Tenant the right, effective for 90 days from receipt of the Expansion Notice, to
include the Offered Space within the Premises on the same terms and conditions
upon which Landlord intends to offer the Offered Space for lease.

 

(c)           Such offer shall be made by Landlord to Tenant in a written notice
(hereinafter called the “First Offer Notice”) which offer shall designate the
Offered Space and shall specify the terms which Landlord intends to offer with
respect to any such Offered Space.  Tenant may accept the offer set forth in the
First Offer Notice by delivering to Landlord an unconditional acceptance
(hereinafter called “Tenant’s Acceptance”) of such offer within 5 business days
after delivery by Landlord of the First Offer Notice to Tenant.  Time shall be
of the essence with respect to the giving of Tenant’s Acceptance.  If Tenant
does not accept (or fails to timely accept) an offer made by Landlord pursuant
to the provisions of this Addendum with respect to the Offered Space designated
in the First Offer Notice, Landlord shall be under no further obligation with
respect to such Offered Space by reason of this Addendum, except as otherwise
provided for herein.

 

 (d)          If Tenant at any time declines any Offered Space offered by
Landlord, Tenant shall be deemed to have irrevocably waived all further rights
to such Offered Space under this Addendum, and Landlord shall be free to lease
the Offered Space to third parties including on terms which may be less
favorable to Landlord than those offered to Tenant; provided, however, if
Landlord intends to lease the Offered Space to a proposed party on terms which
are less than 95% of the terms as those first offered to Tenant, then Tenant
shall have a second right to lease the Offered Space upon all the terms and
conditions as offered to such proposed party.  Such second offer shall be made
by Landlord to Tenant in a written notice (hereinafter called the “Second Offer
Notice”) which offer shall designate the space being offered and shall specify
the terms for such Offered Space which shall be the same as those set forth to
such proposed party.  Tenant may accept the offer set forth in the Second Offer
Notice by delivering to Landlord an unconditional acceptance (hereinafter called
“Tenant’s Second Acceptance”) of such offer within 5 business days after
delivery by Landlord of the Second Offer Notice to Tenant.  Time shall be of the
essence with respect to the giving of Tenant’s Second Acceptance.  If Tenant
does not accept (or fails to timely accept) such second offer made by Landlord
pursuant to the provisions of this Addendum with respect to the Offered Space
designated in the Second Offer Notice, Landlord shall be under no further
obligation with respect to such Offered Space by reason of this Addendum.  In
order to send the Second Offer Notice, Landlord does not need to have negotiated
a complete lease with such proposed party but may merely have agreed upon the
material economic terms for the Offered Space, and Tenant must make its decision
with respect to the Offered Space as long as it has received a description of
such material economic terms.

 

(e)           Notwithstanding anything contained herein to the contrary,
Landlord shall be obligated to give an Offered Space Notice to Tenant any time
Offered Space becomes available during the Extension Period.

 

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