**Exhibit 10.1**

 

# THIRD AMENDMENT TO LEASE AGREEMENT

 

THIS  THIRD AMENDMENT TO LEASE AGREEMENT (“ThirdAmendment”) is entered into as of the 24th day of August, 2005,by and between ProLogis North American Properties Fund I LLC, assuccessor-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 Agreementdated 9th day of October 2000, and as further amended by thatcertain Second Amendment to Lease Agreement dated 1st  day of March 2002 (the Lease and allamendments thereto shall collectively hereinafter be referred to as the “Lease”)pursuant to which Landlord leased to Tenant certain premises located at 1130South 3800 WestSalt Lake City,UT84104 (the “Premises”);and,

 

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

 

NOWTHEREFORE, in consideration of Ten Dollars ($10.00) and other good and valuableconsideration, the receipt and sufficiency of which is hereby acknowledged, theLandlord and Tenant agree as follows:

 

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

 

2.             TheMonthly 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.             Inaddition to the Monthly Base Rent as set forth above, Tenant shall remainobligated for the payment of Operating Expenses during the Extension Period inaccordance with the terms of the Lease.

 

4.             Landlordhereby consents to certain Tenant-Made Alterations to be made by Tenant to thePremises, subject to Landlord’s approval of the scope of work and final plansand specifications related thereto, which such approval shall not beunreasonably withheld.  Landlord shallcontribute up to a maximum amount totaling $20,925 (the “Allowance”) towardsuch Tenant-Made Alterations.  Payment ofthe Allowance shall be made by Landlord to Tenant within 30 days following (i) completionof such agreed upon Tenant-Made Alterations, (ii) Landlord’s receipt ofTenant’s invoice substantiating the costs related thereto, (iii) Landlord’sreceipt of final lien waivers from all contractors and subcontractors who didwork in connection with such Tenant-Made Alterations, and (iv) Landlord’sreceipt of a copy of the final permit approved by the applicable governingauthority to the extent required for such Tenant-Made Alterations.  Landlord shall be under no obligation to payfor any other Tenant-Made Alterations to the Premises or for any costs inconnection with such alterations in excess of the Allowance.  Further, such Allowance shall only beavailable for Tenant’s use through December 31, 2006, and Tenant herebywaives any and all rights to any unused portion of the Allowance remaining asof January 1, 2007.

 

5.             Tenant’sparking rights as granted under the Lease shall be revised to reflect thatTenant shall be entitled to park in those areas as designated on Exhibit Aattached hereto and made a part hereof. Further, in the event that Landlord develops additional parking onvacant land within the Project or expands existing parking areas within theProject (collectively, “Additional Parking”) and the purpose of such AdditionalParking is for the use thereof to be in common by tenants in the Project on anonreserved and nonexclusive basis, Tenant shall have the right to the use ofsuch Additional Parking.  This provisionshall not apply if such Additional Parking is developed by Landlord for theexclusive use of another tenant. Further, notwithstanding the foregoing, if Tenant determines that itrequires additional parking within the Project, Landlord shall use commerciallyreasonable efforts to (but shall not be obligated to) accommodate suchadditional parking requirements.

 

6.             Thesecond paragraph of Paragraph 6 of the Lease, “Operating Expenses”, shall berevised to include the following:

 

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

 

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

 

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

 

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

 

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

 

10.           Anyobligation or liability whatsoever of ProLogis, a Maryland real estateinvestment trust, which may arise at any time under the Lease or this Agreementor any obligation or liability which may be incurred by it pursuant to anyother instrument, transaction or undertaking contemplated hereby, shall not bepersonally binding upon, nor shall resort for the enforcement thereof be had tothe property of, its trustees, directors, shareholders, officers, employees, oragents regardless of whether such obligation or liability is in the nature ofcontract, tort or otherwise.

 

INWITNESS WHEREOF, the parties hereto have signed this Third Amendment to LeaseAgreement 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 AGREEMENTDATED AUGUST 24, 2005, BETWEENPROLOGIS NORTH AMERICAN PROPERTIES FUND I LLCAND1-800 CONTACTS, INC.

 

(a)           Providedthat as of the time of the giving of the First Extension Notice and theCommencement Date of the First Extension Term, (x) Tenant is the Tenantoriginally named herein, (y) Tenant actually occupies at least 50% of thePremises initially demised under this Lease and any space added to thePremises, and (z) no Event of Default exists or would exist but for thepassage of time or the giving of notice, or both; then Tenant shall have the rightto extend the Lease Term for an additional term of 2 years (such additionalterm is hereinafter called the “First Extension Term”) commencing on January 1,2009 (hereinafter referred to as the “Commencement Date of the FirstExtension Term”).  Tenant shall giveLandlord notice (hereinafter called the “First Extension Notice”) of itselection to extend the term of the Lease Term no later than March 31,2008.

 

(b)           Providedthat as of the time of the giving of the Second Extension Notice and theCommencement Date of the Second Extension Term, (x) Tenant is the Tenantoriginally named herein, (y) Tenant actually occupies at least 50% of thePremises initially demised under this Lease and any space added to thePremises, and (z) no Event of Default exists or would exist but for thepassage of time or the giving of notice, or both and provided Tenant hasexercised its option for the First Extension Term; then Tenant shall have theright to extend the Lease Term for an additional term of 3 years (suchadditional term is hereinafter called the “Second Extension Term”)commencing on January 1, 2011 (hereinafter referred to as the “CommencementDate of the Second Extension Term”). Tenant shall give Landlord notice (hereinafter called the “SecondExtension Notice”) of its election to extend the term of the Lease Term nolater than March 31, 2010, but no earlier than December 31, 2009.

 

(c)           The BaseRent 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)           TheBase Rent payable by Tenant to Landlord during the Second Extension Term shallbe the lesser of $25,100.00 or (i) 95% of the Fair Market Rent, as definedand determined pursuant to Paragraphs (e), (f), and (g) below.

 

(e)           Theterm “Fair Market Rent” shall mean the Base Rent, expressed as an annualrent per square foot of floor area, which Landlord would have received fromleasing the Premises for the Second Extension Term to an unaffiliated personwhich is not then a tenant in the Project, assuming that such space were to bedelivered in “as-is” condition, and taking into account the rental which suchother tenant would most likely have paid for such premises, including marketescalations.  Fair Market Rent means onlythe rent component defined as Base Rent in the Lease and does not includereimbursements and payments by Tenant to Landlord with respect to OperatingExpenses and other items payable or reimbursable by Tenant under theLease.  In addition to its obligation topay Base Rent (as determined herein), Tenant shall continue to pay andreimburse Landlord as set forth in the Lease with respect to such OperatingExpenses and other reimbursable items with respect to the Premises.  The arbitration process described below shallbe limited to the determination of the Base Rent and shall not affect orotherwise reduce or modify the Tenant’s obligation to pay or reimburse Landlordfor such Operating Expenses and other reimbursable items.

 

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

 

(g)           Arbitrationto determine the Fair Market Rent shall be in accordance with the Real EstateValuation Arbitration Rules of the American Arbitration Association.  Unless otherwise required by state law,arbitration shall be conducted in the metropolitan area where the Project islocated by a single arbitrator unaffiliated with either party.  Either party may elect to arbitrate by sendingwritten notice to the other party and the Regional Office of the AmericanArbitration Association within 5 days after the 30-day negotiating periodprovided in Paragraph (f), invoking the binding arbitration provisions of thisparagraph.  Landlord and Tenant shalleach submit to the arbitrator their respective proposal of Fair MarketRent.  The arbitrator must choose betweenthe Landlord’s proposal and the Tenant’s proposal and may not compromisebetween the two or select some other amount. The cost of the arbitration shall be paid by Tenant if the Fair MarketRent is that proposed by Landlord and by Landlord if the Fair Market Rent isthat proposed by Tenant.  If thearbitrator has not determined the Fair Market Rent as of the end of the FirstExtension Term, Tenant shall pay the Base Rent in effect under the Lease as ofthe end of the First Extension Term until the Fair Market Rent is determined asprovided herein.  Upon suchdetermination, Landlord and Tenant shall make the appropriate adjustments to thepayments between them.

 

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(h)           Theparties consent to the jurisdiction of any appropriate court to enforce thearbitration provisions of this Addendum and to enter judgment upon the decisionof the arbitrator.

 

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

 

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

 

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

 

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

 

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

 

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ADDENDUM 2

 

RIGHT OF FIRST OFFER

 

ATTACHED TO AND A PART OF THE THIRD AMENDMENT TO LEASE AGREEMENTDATED AUGUST 24, 2005, BETWEENPROLOGIS NORTH AMERICAN PROPERTIES FUND I LLCAND1-800 CONTACTS, INC.

 

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

 

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

 

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

 

 (d)          IfTenant at any time declines any Offered Space offered by Landlord, Tenant shallbe deemed to have irrevocably waived all further rights to such Offered Spaceunder this Addendum, and Landlord shall be free to lease the Offered Space tothird parties including on terms which may be less favorable to Landlord thanthose offered to Tenant; provided, however, if Landlord intends to lease theOffered Space to a proposed party on terms which are less than 95% of the termsas those first offered to Tenant, then Tenant shall have a second right tolease the Offered Space upon all the terms and conditions as offered to suchproposed party.  Such second offer shallbe made by Landlord to Tenant in a written notice (hereinafter called the “SecondOffer Notice”) which offer shall designate the space being offered andshall specify the terms for such Offered Space which shall be the same as thoseset forth to such proposed party.  Tenantmay accept the offer set forth in the Second Offer Notice by delivering toLandlord an unconditional acceptance (hereinafter called “Tenant’s Second Acceptance”)of such offer within 5 business days after delivery by Landlord of the SecondOffer Notice to Tenant.  Time shall be ofthe essence with respect to the giving of Tenant’s Second Acceptance.  If Tenant does not accept (or fails to timelyaccept) such second offer made by Landlord pursuant to the provisions of thisAddendum with respect to the Offered Space designated in the Second OfferNotice, Landlord shall be under no further obligation with respect to such OfferedSpace by reason of this Addendum.  Inorder to send the Second Offer Notice, Landlord does not need to havenegotiated a complete lease with such proposed party but may merely have agreedupon the material economic terms for the Offered Space, and Tenant must makeits decision with respect to the Offered Space as long as it has received adescription of such material economic terms.

 

(e)           Notwithstandinganything contained herein to the contrary, Landlord shall be obligated to givean Offered Space Notice to Tenant any time Offered Space becomes availableduring the Extension Period.

 

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