Exhibit 10.4


 


THIRD AMENDMENT TO LEASE


 


This Third Amendment to
Lease (“Third Amendment”) is made
and entered into as of the 8th day of July, 2005 by and between
KILROY REALTY, L.P., a Delaware limited partnership (“Landlord”),
and FAVRILLE, INC., a Delaware corporation (“Tenant”).


 


R  E
C  I  T  A  L  S:


 


A.                                   Landlord
and Tenant entered into that certain Office Lease dated January 31, 2003
(the “Office Lease”), as amended
by that certain First Amendment to Lease dated July 7, 2004 (the “First Amendment”), and that certain Second
Amendment to Lease dated October 11, 2004 (the “Second Amendment”)
(the Office Lease, the First Amendment and the Second Amendment are,
collectively, the “Lease”),
whereby Landlord leased to Tenant and Tenant leased from Landlord (i) those
certain premises (the “Original Premises”)
known as Suite 150 and consisting of a total of approximately 48,502 rentable
square feet of space located on the first (1st) and
second (2nd) floors of the building located at 10421 Pacific
Center Court, San Diego, California (the “Building”),
(ii) those certain premises (the “First
Expansion Premises”) consisting of 13,987 rentable square feet of
space located on the second (2nd) floor of the Building, and (iii)
those certain premises (the “Second Expansion
Premises”) known as Suite 125 and consisting of approximately 7,000
rentable square feet of warehouse space located on the first (1st)
floor of the Building (the Original Premises, the First Expansion Premises and
the Second Expansion Premises are, collectively, the “Existing Premises”).


 


B.                                     Tenant
desires to terminate its month-to-month lease of the Second Expansion Premises
and further expand the Existing Premises to include a total of 17,287 rentable
square feet of space consisting of the remainder of the first (1st)
floor of the Building (which 17,287 rentable square feet of space includes the
Second Expansion Premises and shall hereinafter be referred to, collectively,
as the “Third Expansion Premises”),
and to make other modifications to the Lease, and in connection therewith,
Landlord and Tenant desire to amend the Lease on such terms and conditions as
are hereinafter provided.


 


A  G
R  E  E  M  E  N  T


 


NOW, THEREFORE, in
consideration of the foregoing Recitals and the mutual covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows.


 


1.                                       Terms.  All undefined terms when used herein shall
have the same respective meanings as are given such terms in the Lease unless
expressly provided otherwise in this Third Amendment.


 


KILROY REALTY


Pacific Corporate Center


[Third Amendment -
Favrille, Inc.]


 





















 


2.                                       Termination of Second Amendment.  Upon the full execution and delivery of this
Third Amendment, Tenant’s month-to-month lease of the Second Expansion Premises
shall be terminated and the Second Amendment shall be of no further force and
effect.


 


3.                                       Third Expansion Premises.  Effective as of  the date which is the earlier to occur of (i)
the date Tenant commences business in the Third Expansion Premises, and (ii)
the date of substantial completion of the “Landlord Work” (as that term is
defined in Section 5, below), which date is anticipated to be August 1,
2005 (the “Third Expansion Premises
Commencement Date”), Tenant shall lease from Landlord and Landlord
shall lease to Tenant the Third Expansion Premises.  Consequently, effective upon the Third
Expansion Premises Commencement Date, the “Premises,” as that term is defined
in the Lease, shall consist of the Original Premises, the First Expansion
Premises and the Third Expansion Premises. 
Landlord and Tenant hereby acknowledge and agree that the rentable
square footage of the Third Expansion Premises shall be as set forth herein and
shall not be subject to re-measurement or modification.


 


4.                                       Third Expansion Term.  Tenant shall lease the Third Expansion
Premises for a period of five (5) years (the “Third
Expansion Term”).  The Third
Expansion Term shall commence upon the Third Expansion Premises Commencement
Date and shall expire on the day immediately preceding the fifth (5th)
anniversary of the Third Expansion Premises Commencement Date; provided,
however, if the Third Expansion Premises Commencement Date shall be other than
the first day of a calendar month, then the Third Expansion Term shall expire
on the last day of the month in which the fifth (5th)
anniversary of the Third Expansion Premises Commencement Date occurs (as
applicable, the “Third Expansion Term
Expiration Date”).


 


5.                                       Rent.


 


4.1                                 Base Rent.  Commencing on the Third Expansion Premises
Commencement Date and continuing throughout the Third Expansion Term, Tenant
shall pay Annual Base Rent for the Third Expansion Premises as set forth below:


 




	
  Period During Third

  Expansion Term

  	
   

  	
  Annual

  Base Rent

  	
   

  	
  Monthly

  Installment

  of Base Rent

  	
   

  	
  Approximate Monthly Base

  Rental Rate Per Rentable

  Square Foot of the Third

  Expansion Premises

  	
   

  
	
  Year 1

  	
   

  	
  $

  	
  162,000.00

  	
   

  	
  $

  	
  13,500.00

  	
  * 

  	
  $

  	
  0.781

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Year 2

  	
   

  	
  $

  	
  167,670.00

  	
   

  	
  $

  	
  13,972.50

  	
   

  	
  $

  	
  0.808

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Year 3

  	
   

  	
  $

  	
  173,538.48

  	
   

  	
  $

  	
  14,461.54

  	
   

  	
  $

  	
  0.837

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Year 4

  	
   

  	
  $

  	
  179,612.28

  	
   

  	
  $

  	
  14,967.69

  	
   

  	
  $

  	
  0.866

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Year 5

  	
   

  	
  $

  	
  185,898.73

  	
   

  	
  $

  	
  15,491.56

  	
   

  	
  $

  	
  0.896

  	
   

  






 


*                 Notwithstanding
anything to the contrary set forth in this Section
4.1, the Monthly


 


2





















 


Installment of Base Rent for Year 1 of the Third
Expansion Term was agreed upon by Landlord and Tenant. In all subsequent years
during the Third Expansion Term, the Monthly Installment of Base Rent was
calculated using three and 1⁄2 percent (3.5%) annual increases over the previous
year’s Monthly Installment of Base Rent. For all periods during the Third
Expansion Term, the Approximate Monthly Base Rental Rate Per Rentable Square
Foot of the Third Expansion Premises was calculated by dividing the Monthly
Installment of Base Rent by the actual square footage of the Third Expansion
Premises (i.e., 17,287 rentable square feet).


 


4.2                                 Additional Rent.  Except as specifically set forth in this Section 4.2,
during the Third Expansion Term, Tenant shall pay Tenant’s Share of Direct
Expenses for the Third Expansion Premises in accordance with the terms of Article
4 of the Lease and this Third Amendment. 
Notwithstanding anything to the contrary set forth in the Lease, as
hereby amended, for purposes of calculating the amount of Tenant’s Share of
Direct Expenses which Tenant shall pay in connection with the Third Expansion
Premises, Tenant’s Share shall equal 21.763%.


 


6.                                       Improvements in the Third Expansion Premises.  Except as provided herein, Landlord shall not
be obligated to provide or pay for any improvement work or services related to
the improvement of the Third Expansion Premises, and Tenant shall accept the
Third Expansion Premises in its presently existing, “as-is” condition.  Notwithstanding the foregoing, Landlord
shall, at Landlord’s sole cost and expense: 
(i) re-carpet the carpeted areas of the Third Expansion Premises , and
(ii) re-paint the interior painted walls of the Third Expansion Premises (the
foregoing items (i) and (ii) shall be known collectively as the “Landlord Work”).  All such Landlord Work shall be completed to
Landlord’s “building standard.”  Landlord
and Tenant hereby agree that, except for the Landlord Work, any Alterations
constructed in the Third Expansion Premises shall be completed pursuant to the
terms and conditions of Article 8 of the Office Lease.


 


7.                                       Parking.  Commencing on the Third Expansion Premises
Commencement Date, and continuing throughout the remainder of the Third
Expansion Term, Tenant shall be entitled to use, without charge, three (3)
unreserved parking spaces per 1,000 rentable square feet of the Third Expansion
Premises.  Tenant’s use of such
additional parking spaces shall be subject to all of the terms and condition of
Article 28 of the Lease.


 


8.                                       Tenant’s Signage.  Commencing on the Third Expansion Premises
Commencement Date, and continuing throughout the remainder of the Third
Expansion Term, Tenant shall have the right, at Tenant’s sole cost, to install
Tenant’s name and/or logo on one (1) additional slot on the Building Monument
Sign.  The rights granted to Tenant in
this Section 7 shall be subject to all of the terms and condition
of Article 23 of the Lease.


 


9.                                       Security  Deposit. 
Notwithstanding any contrary provision of the Lease, as of the Third
Expansion Premises Commencement Date, the Security Deposit held by Landlord
shall be increased to equal One Hundred Sixty-Six Thousand Eighteen and 27/100
Dollars ($166,018.27).  Landlord and
Tenant acknowledge that Tenant has previously delivered to Landlord and
Landlord currently holds the sum of One Hundred Fifty-Two Thousand Five Hundred
Eighteen and 27/100 Dollars ($152,518.27) as security for the faithful
performance by Tenant of the


 


3





















 


terms, covenants and conditions of the Lease.  Concurrent with Tenant’s execution and
delivery of this Third Amendment to Landlord, Tenant shall deposit with
Landlord an amount equal to Thirteen Thousand Five Hundred and No/100 Dollars
($13,500.00) to be held by Landlord as part of the Security Deposit.  The L-C Amount shall not be affected by this
Third Amendment.


 


10.                                 Brokers.  Landlord and Tenant hereby warrant to each
other that they have had no dealings with any real estate broker or agent in
connection with the negotiation of this Third Amendment except CB Richard
Ellis, Inc. and Colliers International (the “Brokers”),
and that they know of no other real estate broker or agent who is entitled to a
commission in connection with this Third Amendment.  Each party agrees to indemnify and defend the
other party against and hold the other party harmless from any and all claims,
demands, losses, liabilities, lawsuits, judgments, and costs and expenses
(including, without limitation, reasonable attorneys’ fees) with respect to any
leasing commission or equivalent compensation alleged to be owing on account of
the indemnifying party’s dealings with any real estate broker or agent other
than the Brokers.  The terms of this Section 9
shall survive the expiration or earlier termination of this Third Amendment.


 


11.                                 Tenant’s Right of First Refusal.  Landlord and Tenant hereby acknowledge and
agree that, commencing on the Third Expansion Premises Commencement Date, and
continuing thereafter for the remainder of the Lease Term, the terms of Section 1.3
of the Lease (Right of First Refusal) shall not be applicable to the Third
Expansion Premises and, therefore, Section 1.3 of the Lease shall
be null and void and of no force or effect with respect to the Third Expansion
Premises.


 


12.                                 No Further Modification.  Except as specifically set forth in this
Third Amendment, all of the terms and provisions of the Lease shall remain
unmodified and in full force and effect. 
In the event of any conflict between the terms and conditions of the
Lease and the terms and conditions of this Third Amendment, the terms and
conditions of this Third Amendment shall prevail.


 


[signature page to follow]


 


4





















 


IN WITNESS WHEREOF,
Landlord and Tenant have caused this Third Amendment to be executed on the day
and date first above written.


 


	
   

  	
  “LANDLORD”:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KILROY REALTY, L.P.,

  	
   

  
	
   

  	
  a Delaware limited
  partnership

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Kilroy Realty
  Corporation,

  	
   

  
	
   

  	
   

  	
  a Maryland corporation,

  	
   

  
	
   

  	
   

  	
  General Partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey C. Hawken

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
  Executive Vice
  President & COO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nadine K. Kirk

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
  VP – Legal
  Administration

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  “TENANT”:

  
	
   

  	
   

  
	
   

  	
  FAVRILLE, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tamara A. Seymour

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John P. Longenecker

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
  President & CEO

  	
   

  
															



 


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