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


 





















 


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

  	
   

  
											



 





















 


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.


 





















 


(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.


 





















 


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.