**Exhibit 10.2**

 

**EIGHTH AMENDMENT TOLEASE**

 

THIS EIGHTH AMENDMENT TO LEASE (“EighthAmendment”) is made and entered into by and between Draper Land LimitedPartnership No. 2, a Utah limited partnership (“Landlord”) and 1-800 CONTACTS,INC., a Delaware corporation (“Tenant”).

 

**Recitals:**

 

A.                                   Landlordand Tenant (formerly known as 1-800-Lens-Now, Inc., a Utah corporation, d/b/a1-800-Contacts) are parties to a Commercial Lease dated November 3,1997.  Said Commercial Lease has beenamended by the following instruments: (i) First Amendment to Lease datedMay 25, 1998; (ii) Second Amendment to Lease dated August 6, 1998;(iii) Third Amendment to Lease dated January 17, 2001; (iv) FourthAmendment to Lease dated January 17, 2001; (v) Fifth Amendment to Leasedated January 17, 2001; (vi) Sixth Amendment to Lease datedJanuary 17, 2001; and (vii) Seventh Amendment to Lease datedMarch 31, 2003.  The CommercialLease and the seven amendments referred to above are hereinafter collectivelyreferred to as the “Lease”.

 

B.                                     TheLease provides for the lease of the Original Premises, the Additional Space,the Expansion Space, the 2nd Expansion Space, the 3rdExpansion Space, the 4th Expansion Space, and the 5thExpansion Space (as such terms are defined in the Lease) (collectively, the“Premises”) in the building located at 66 East Wadsworth Park Drive, BuildingB, Suite #101, Draper, Utah 84020 (the “Building”).

 

C.                                     Landlord andTenant now desire to further amend the Lease in certain respects, includingleasing additional space in the Building to Tenant, all in accordance with andsubject to the terms and conditions set forth herein.

 

**Terms and Conditionsof Agreement:**

 

NOW, THEREFORE, in consideration of themutual promises contained herein and for other good and valuable consideration,the receipt and sufficiency of which are hereby acknowledged, the parties agreeas follows:

 

1.                                       Contingenton Approval by Landlord’s Mortgage Lender. This Eighth Amendment is contingent upon Landlord receiving approvalfrom Landlord’s mortgage lender. Landlord will use its best efforts to obtain such approval promptly.

 

2.                                       EffectiveDate.  This Eighth Amendment shallbecome effective as of September 1, 2003 (the “Effective Date”) unlessLandlord has not received approval from its lender by that date, in which eventthis Amendment will become effective on the date Landlord receives suchapproval.

 

3.                                       Leaseof Suite 200.  Landlord will leaseto Tenant, and Tenant will accept and lease from Landlord, those certainpremises (“Suite 200”) known as Suite 200 of the Building, as depicted onExhibit A-1 attached hereto and incorporated by reference herein, which Suite200

 

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consists of 9,910rentable square feet of office space on the 2nd floor of the Building.  Suite 200 is now occupied by Glyphics Communications,Inc.  Glyphic’s lease for Suite 200expires on November 30, 2003, but Glyphics has stated that it intends tovacate Suite 200 on September 15, 2003. Landlord will deliver possession of Suite 200 to Tenant immediately uponvacation by Glyphics.  Upon vacation byGlyphics, Suite 200 shall be deemed to be part of the “Premises” as defined inthe Lease and Tenant’s use and occupancy of Suite 200 will be subject to all ofthe terms and conditions of the Lease applicable to the Premises.  Tenant shall bear the entire cost of anyalterations or improvements made to Suite 200 to suit Tenant’s needs.

 

4.                                       Leaseof Suite 100.  Landlord will leaseto Tenant, and Tenant will accept and lease from Landlord, those certainpremises (“Suite 100”) known as Suite 100 of the Building, as depicted onExhibit A-2 attached hereto and incorporated by reference herein, which Suite100 consists of 4,149 rentable square feet of office space on the 1st floor ofthe Building.  Suite 100 is now occupiedby Employee Benefit Management Services (“EBMS”), whose lease for Suite 200expires on September 30, 2003. Landlord will deliver possession of Suite 100 to Tenant immediately uponvacation by EBMS.  Upon vacation byEBMS, Suite 100 shall be deemed to be part of the “Premises” as defined in theLease and Tenant’s use and occupancy of Suite 100 will be subject to all of theterms and conditions of the Lease applicable to the Premises.  Tenant shall bear the entire cost of anyalterations or improvements made to Suite 100 to suit Tenant’s needs.

 

5.                                       Leaseof Suite 204.  Another tenant of theBuilding, Bright Trading, currently occupies those certain premises (“Suite204”) known as Suite 204 of the Building, as depicted on Exhibit A-3 attachedhereto and incorporated by reference herein, which Suite 204 consists of 1,812rentable square feet of office space on the second floor of the Building.  Landlord will reach an agreement with BrightTrading (acceptable to Landlord) in which Bright Trading agrees to vacate Suite204 and to relocate to another building in Landlord’s business park.  Tenant agrees to pay all expenses requiredto induce Bright Trading to relocate including, without limitation, incentivessuch as moving expenses or free rent, so long as such expenses do not exceed $20,000.00.After Bright Trading vacates Suite 204 Landlord will lease to Tenant, andTenant will accept and lease from Landlord, all of Suite 204.  In that event, upon vacation by BrightTrading, Suite 204 shall be deemed to be part of the “Premises” as defined inthe Lease and Tenant’s use and occupancy of Suite 204 will be subject to all ofthe terms and conditions of the Lease applicable to the Premises.  Possession of Suite 204 will be delivered toTenant immediately upon vacation by Bright Trading.  Tenant shall bear the entire cost of any alterations orimprovements made to Suite 204 to suit Tenant’s needs.

 

6.                                       Term.  The lease term for all of the Premisesleased in the Building, including the Original Premises, the Additional andExpansion Spaces mentioned in Recital B above, Suites 200 and 100, and, ifapplicable, Suite 204, shall expire at 11:59 p.m. on December 31,2009.  Except as provided in paragraph16 of this Amendment, there will be no option to extend the term as to any ofsaid Premises and paragraph 2(b) of the original Commercial Lease is herebydeleted.

 

7.                                       Rent.  Commencing as of September 1, 2003, therent payable to Landlord shall be $11.50 per rentable square foot in thePremises, which shall be triple net rent to Landlord.

 

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Said rent shall beincreased by two percent (2%) per year, with the first rental increase takingeffect on September 1, 2004, and subsequent annual increases on the samedate each subsequent year.  Rent shall bedue on or before the 1st day of each month during the term.  All rent and other sums due under the Lease(collectively “Rents”) shall be paid in cash, without deduction or offset, toDraper Land Limited Partnership No. 2, 71 East Wadsworth Park Drive, Draper,Utah 84020, Attn: Kip Wadsworth.  Therents for Suites 200, 100, and 204, respectively, shall begin to accrue fromthe date that each of said Suites is delivered by Landlord to Tenant.  Subparagraph 4(a) of the original CommercialLease is hereby deleted.

 

8.                                       Expensesto Be Paid by Tenant.  From andafter the Effective Date, Tenant shall be solely responsible to pay allexpenses related to the Premises, the Building, and associated parking,including, without limitation, all property taxes and assessments, insurance,utilities, maintenance and repairs, capital expenditures, and any improvements(capital or other) desired by Tenant or required by the Lease.  Landlord will assume full responsibility forroof expenditures (capital or other). Capital Expenditures shall mean capitalexpenditures incurred either (i) to reduce Operating Expenses, or (ii) tocomply with any law, order or regulation of any governmental,quasi-governmental, public or other authority enacted (or which otherwise firstbecomes effective) after the Commencement Date.  Costs of capital expenditures shall be amortized over theiruseful life based on contractors or manufacturer’s reasonable information.  Tenant shall be charged the prorata amountof said capital costs based on then remaining term of the lease.  The amount of said costs Tenant shall beresponsible for shall be the percentage derived by dividing the then remainingterm by the useful life of the improvement (ie. 5 years remaining term / a 15year useful life = 33% cost to Tenant).Property taxes, assessments andinsurance will be paid by Landlord in the first instance, and Tenant willreimburse Landlord as provided herein below. All other expenses will be paid directly by Tenant.  Tenant agrees, at its expense, to maintainthe Premises and the Building in good, clean and attractive condition and incompliance with all applicable laws and codes, including without limitationcompliance with the Americans with Disabilities Act (“ADA”).  The Landlord will maintain the roof of thebuilding in good, clean and functional condition and in compliance with allapplicable laws and codes.  Landlordwarrants the building and Premises are in compliance with all applicable lawsand codes, including without limitation compliance with the Americans withDisabilities Act (“ADA”).  Tenant shallalso maintain the parking area, sidewalks, and landscaping adjacent to theBuilding in good, clean and attractive condition and in compliance with allapplicable laws and codes, compliance with the ADA and including repairingasphalt and restriping the parking areas as necessary from time to time.  Tenant shall keep the Building, Premises,parking and landscaped areas in as good condition as they have been kept byLandlord prior to the date of this Amendment. In the event of any failure by Tenant to so maintain the Building,Premises, parking and landscaped areas, and if Tenant fails to cure suchfailure within a reasonable period of time required to cure such failure afterwritten notice from Landlord, Landlord shall have the right (but not theobligation) to cure such failure and Tenant will reimburse Landlord all sumsexpended by Landlord to effect such cure within ten (10) days after invoicing,together with an administrative fee equal to 15% of said sums.  Subparagraph 6(a) of the original CommercialLease is hereby deleted.

 

9.                                       Insuranceand Taxes.  Landlord will continueto maintain fire and hazard insurance covering the Premises and Building, withsuch coverages and in such amounts as may

 

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be required byLandlord’s lender, or as Landlord may deem commercially reasonable.  Landlord will also pay, in the firstinstance, all real property taxes and assessments for the Premises, Buildingand associated parking.  In addition tothe triple net rent described in paragraph 5 above, Tenant will reimburseLandlord for the cost of all such insurance and for said taxes and assessments,together with a management fee in the amount of two percent (2%) of thepremiums, taxes and assessments. Landlord will send invoices to Tenant for all insurance premiums, taxesand assessments paid by Landlord with respect to the Premises, Building, andassociated parking, and the applicable management fee, and Tenant will pay allsuch amounts within ten (10) days after invoicing.

 

10.                                 AdditionalSecurity Deposit.  None is required.

 

11.                                 Parking.  From and after the Effective Date, Tenantwill have the use of five and one-half (5.5) non-reserved stalls for each 1,000usable square feet included in the leased Premises.  The Tenant will have the use of all stalls in the existingparking lot surrounding the Building, not to be less than 316 stalls, with anadditional minimum of 52 stalls to be located elsewhere in the business park,as designated by Landlord, and within a reasonable walking distance to theBuilding.

 

12.                                 Acceptanceof Additional Suites.  Tenant’staking possession of Suites 100, 200, and 204, shall be deemed conclusiveevidence that said premises are in good order and satisfactory condition.  Landlord is under no obligation to alter,remodel, repair or improve any of said premises, the Building or the grounds,and Landlord has made no representations, express or implied, respecting any matteror thing relating to said premises, Building, or the grounds except as may beexpressly stated in the Lease or this Amendment. Any alterations,modifications, or tenant improvements made to Suites 100, 200, and 204, shallbe made at Tenant’s sole cost and expense, and in accordance with therequirements of paragraph 14 below.

 

13.                                 Landlord’sRight to Continue Leases for Antennas and Billboard Sign.  The parties acknowledge that when Tenanttakes possession of Suites 100, 200 and 204, Tenant will be the sole occupantof the Building.  However,notwithstanding any other provisions of the Lease or this Amendment, Landlordwill continue to have the exclusive right to place and maintain antennas on theroof of the Building, and the exclusive right to lease the billboard sign onthe grounds near the Building.  Landlordwill maintain the billboard sign in good, clean and attractive condition andwill fund any and all charges related to this maintenance.

 

14.                                 Designand Construction of Tenant Improvements. Tenant shall have the right, at Tenant’s sole cost and expense, tomodify the Premises and Building in order to integrate Suites 100, 200 and 204into the rest of the Premises, and in order to make the Building and Premisesmore suitable for use by a single Tenant, subject to the following termsand conditions:

 

A.                                   Tenantagrees to have Wadsworth Design Group and Ralph L. Wadsworth ConstructionCompany, Inc. (“Landlord’s Affiliates”) perform the design services and generalconstruction contract for the design and construction of the modifications andimprovements to the Premises and Building.

 

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B.                                     Noalterations, modifications or improvements to the Building or Premises will beperformed without the prior written consent of Landlord (and, if required,Landlord’s lender).  Prior tocommencement of any alterations, modifications or tenant improvements to theBuilding or Premises, Tenant shall submit to Landlord complete plans andspecifications showing the work to be done. Landlord consents to Tenant’s proposal to build out the space on thesecond floor above the existing lobby.

 

C.                                     Allwork performed on behalf of Tenant will be performed by licensedcontractors.  Tenant agrees that allalterations modifications and improvements that it contracts to have performedin the Building must comply with all applicable building codes and allrequirements of state, local or federal laws and agencies having jurisdictionof the Building, Premises or work, including, without limitation, the ADA.

 

D.                                    Tenantwill promptly pay for all work performed and materials supplied, and will keepthe Building and Premises free and clear of any mechanic’s or materialmen’sliens for work that it contracts to have performed.  During the course of construction, Landlord shall have the rightto post notices of non-responsibility on or about the Building or Premises.

 

15.                                 Build-to-SuitOption.  At Tenant’s option,Landlord will allow Tenant to terminate this Lease after April 30, 2006if, but only if, Tenant enters into a Build-to-Suit Lease for a new building tobe constructed by Landlord, subject to the following terms andconditions:

 

A.                                   No such option shallexist while there is any uncured default by Tenant under the terms of theLease.

 

B.                                     At the time thatTenant exercises the option, Tenant’s credit rating must be satisfactory toLandlord (in Landlord’s reasonable discretion) and to the lenders Landlordintends to use for its construction and permanent loans for the newbuilding.  If Tenant’s credit is notsatisfactory, the option may not be exercised. On the other hand, if Tenant’s credit is satisfactory but Landlord isunable to provide 25% equity to satisfy Landlord’s lender within sixty (60)days after the Build –to-Suit lease has been signed, Tenant may immediatelyterminate both the Build-to-Suit Lease and this Lease without any penalty orfurther obligation to Landlord.

 

C.                                     If Tenant desiresto exercise this option and the conditions described in subparagraphs A and Babove are met, Tenant shall give written notice of exercise to Landlord.

 

D.                                    If Tenant exercisesits option hereunder, Landlord and Tenant will enter into a “Build-to-suitLease Agreement” based upon and incorporating the following provisions:  

 

(i)                                                             Thenew building to be constructed by Landlord (the “New Building”) will be locatedon the property known as the “Van Otten Property” which consists ofapproximately 12.87 acres located at approximately 14000 South 200 East inDraper, Utah.  The New Building will beplaced on said

 

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property in such a manner as to allow Landlord to construct otherbuildings on other portions of said property. Site planning must be acceptable to both Landlord and Tenant.

 

(ii)                                                          TheNew Building must contain a minimum of 80,000 square feet of space.

 

(iii)                                                       Thedesign of the New Building must be acceptable to both Tenant and Landlord.  

 

(iv)                                                      Theterm of the Build-to-Suit Lease must be at least 10 years.

 

(v)                                                         Tenantmay become a part-owner of the New Building and the land (hereinafter the “AdjacentLand”) which is required as part of the approved site plan for the NewBuilding.  If Tenant desires to be apart-owner, Tenant may purchase  up to a40% undivided interest in the New Building and Adjacent Land at a price equalto (a) the fair market value of the Adjacent Land, plus (b) Landlord’s cost ofimproving the land and constructing the New Building (including, withoutlimitation, costs of improving land, engineering, zoning, permits, design, andconstruction costs, and including a customary Developer’s fee and GeneralContractor’s fee) (collectively, the “New Building Costs”), multiplied by (c)the percentage interest which Tenant is buying.  If Landlord and Tenant are unable to agree on fair market valueof the Adjacent Land, then Landlord will choose a qualified MAI appraiser toappraise said land, and Tenant will choose a qualified MAI appraiser toappraise said land, and the fair market value agreed to by said appraisers willcontrol.  If said appraisers do notagree on the fair market value, then the two appraisers will choose a thirdqualified MAI appraiser, and the fair market value of the Adjacent Land shallbe conclusively deemed to be the average of the closest two of the threeappraisals.

 

(vi)                                                      Therent under the Build-to-Suit Lease must provide a fair market value basedannual rate of return  to the Landlordbased on Landlord’s share of the fair market value of the Adjacent Land plusLandlord’s share of the New Building Costs. The fair market value annual rate of return shall be negotiated in goodfaith and in accordance with paragraph 5(D)(v) above; this rate shall benegotiated and resolved prior to Tenant occupying the New Building.  The fair market value annual rate of returnwill be comparable to the annual rate of return to landlords for comparableClass A buildings and premises within a reasonable radius to the New Buildingand Adjacent Land.

 

(vii)                                                   Inorder to become a part-owner of the New Building, Tenant must take on the sameobligations assumed by Landlord, including (without limitation) signingconstruction loan documents and permanent loan documents as a

 

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borrower.

 

(viii)                                                IfTenant becomes part-owner of the New Building, Landlord and Tenant will enterinto a cotenancy agreement, property management agreement, and/or similardocumentation appointing Landlord as the controlling manager during thecontinuation of the cotenancy and providing for a management fee to be paid toLandlord for its management of the New Building.  The amount of the management fee will be determined by solicitingproposals from three separate management companies and averaging the three feesto determine the amount of the management fee Landlord will charge.  Said fee will be waived should the Tenantagree to fund and provide said management services at the inception of theBuild-to-Suit Lease.

 

(ix)                                                        IfTenant exercises its Build-to-Suit option hereunder, rent will continue toaccrue under the Lease and will be paid by Tenant until the date that Tenantmoves into the New Building and begins paying rent under the Build-to-SuitLease.

 

16. Extension of Lease. Tenant has a one (1) time right toextend this lease, provided Tenant is not in default (either at the time Tenantgives notice of extension or at the time the extension commences), for one (1)additional five (5) year term.  Tenantmust provide Landlord with a written notification of extension no less thantwelve (12) months prior to the expiration date of this lease.  The lease rate during the lease extensionperiod will be at ninety percent (90%) of the then current market rate forsimilar premises in similar Class “A” buildings within a 5 mile radius of thePremises.  No lease concessions ortenant improvement allowance will be provided by Landlord as part of the termsof the lease extension. Other terms and conditions of the Lease will remainunchanged.

 

17. Termination of Lease. Tenant shall have the right toterminate this lease, provided tenant is not in default, after issuing awritten Termination Notice.  TheTermination Date shall be effective nine (9) months after Landlord’s receipt ofTermination Notice.  In no event shallthe Termination Date occur before 10/1/2007. In exchange for early termination Tenant shall pay Landlord a lump sum TerminationFee of five hundred thousand dollars ($500,000.00).  The Termination Fee shall be due and payable six (6) months afterLandlords receipt of Termination Notice.

 

18. Brokers and Commissions.  Landlord and Tenant acknowledge that PrimeCommercial, Inc. has acted as broker for Landlord, and NAI Utah Commercial hasacted as broker for Tenant in connection with this Amendment.  Each party will compensate its own brokerpursuant to separate agreements between the parties and their respectivebrokers.  Each party represents andwarrants to the other that, other than Prime Commercial, Inc. and NAI UtahCommercial (the “Known Brokers”), the warranting party knows of no real estatebroker or agent who is or might be entitled to compensation in connection withthis Amendment.  Each party, asindemnifying party, agrees to indemnify, defend and hold the other partyharmless from and against any and all liabilities or expenses, includingreasonable attorneys’ fees and costs,

 

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arising out of any claim forbrokerage commissions, finders fees, or similar compensation by anyone otherthan the Known Brokers, which claim is based on any alleged act or agreement ofthe indemnifying party.  Thisindemnification shall survive the termination of the Lease, as amended hereby.

 

19.                                 Miscellaneous.  The Lease, as amended, and this EighthAmendment contain all of the representations, understandings, and agreements ofthe parties with respect to matters contained herein.  The recitals are hereby incorporated into this Amendment.  All capitalized terms used herein and nototherwise defined herein shall have the meanings ascribed to them in theLease.  Each of the individuals who haveexecuted this Amendment represents and warrants that he or she is dulyauthorized to execute this Amendment on behalf of Landlord or Tenant as thecase may be; that all corporate, partnership, trust or other action necessaryfor such party to execute and perform the terms of this Amendment have been dulytaken by such party, and that no other signature and/or authorization isnecessary for such party to enter into and perform the terms of thisAmendment.  Except as provided herein,the terms and conditions of the Lease shall remain the same and in full forceand effect.

 

DATED this             day of                                      ,2003.

 
| Landlord:                                                          | Tenant:                                       |
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|                                                               |                                          |
| Draper Land Limited Partnership No. 2,  a Utah limited partnership | 1-800-Contacts, Inc.,  a Delaware corporation |
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| By:                                                                |                                          |   | By: |   |   |
| Its:                                                               |                                          |   | Its: |   |   |

 

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