**Exhibit 10.1**

 

**SUBLEASE AGREEMENT**

 

THIS SUBLEASE AGREEMENT (“Sublease”) is entered into this 2ndday of March 2005, by and between UCN, INC., a Delaware corporation fkaBUYERS UNITED, INC. (“Sublessor”), and 1-800 CONTACTS, INC., a Delawarecorporation (“Sublessee”), with reference to the following:

 

A.                                   Sublessor, as tenant, is party to thatcertain Commercial Lease dated September 11, 1996, with 13751 S. WADSWORTHPARK DR., LLC, a Delaware limited liability company, as landlord (“CommercialLease”), for the lease of the entire second floor (commonly known as Suite 200)of Building D located at 13751 South Wadsworth Park Drive, Draper, Utah 84020 (“Premises”),as more particularly described in the Prime Lease.

 

B.                                     The Commercial Lease has been amended by (i) theFirst Amendment to Lease, dated October 24, 1996, (ii) the SecondAmendment to Lease, dated November 1, 1998, (iii) the AssignmentAmendment and Release Agreement, dated December 6, 2002, and (iv) theLease Renewal letter agreement, dated October 26, 2004 (the CommercialLease and all of its amendments are collectively referred to as the “PrimeLease”).  A copy of the Prime Leaseis attached hereto as Exhibit ”A” and made a part hereof.

 

C.                                     Sublessor and Sublessee have agreed thatSublessor shall sublet to Sublessee, and Sublessee shall sublease fromSublessor, the Premises in accordance with the terms of this Sublease.

 

FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency ofwhich are hereby acknowledged, Sublessor and Sublessee hereby covenant andagree as follows:

 

1.                                       Definitions.  Unless otherwise indicatedherein, all capitalized terms used in this Sublease shall have the definitionsassigned to them in the Prime Lease.

 

2.                                       Premises.  Sublessor hereby leases toSublessee, and Sublessee leases from Sublessor, approximately 14,399 squarefeet of space, comprising all of the Premises.

 

3.                                       Term.  The term (“Term”) ofthis Sublease shall commence on March 15, 2005 (“Commencement Date”),and shall end on May 4, 2008, unless sooner terminated pursuant to thisSublease or the Prime Lease.  The Termshall be extended for an additional two year period upon Sublessee’s writtennotification to Sublessor prior to November 4, 2007 that Sublessee desiresto extend the Term hereof.  Upon suchextension of the Sublease, the terms of the Prime Lease and this Sublease shallcontinue in full force and effect, including, for example, the rentalobligations as set forth in the Lease Renewal letter agreement dated October 26,2004.

 

4.                                       Rent.  Sublessee shall pay toSublessor, as monthly rent (“Rent”) for the Premises, in advance on thefirst day of each and every month during the term hereof beginning on April 1,2005, without deduction or offset, the amount equal to the Base Rent set forthin the Prime Lease (as adjusted thereunder, including as set forth in the LeaseRenewal letter agreement dated October 26, 2004).  In addition, Sublessee will pay Sublessor$5,250 for the portion of the rental period beginning on the Commencement Dateand extending through March 31, 2005. All Rent shall be paid by Sublessee to Sublessor in lawful money of theUnited States of America, in

 

----

 

immediately available funds, without notice ordemand, at the address for Sublessor set forth below.  Sublessee shall pay to Sublessor, when due, allAdditional Rent (as defined in the Prime Lease) during the Term including, butnot limited to:  (i) all charges forutilities of any nature incurred at the Premises; and (ii) all real estatetaxes imposed on the Premises; and (iii) the annual installments due underany general or special assessment created and imposed as the result of thebusiness conducted on the Premises; (iv) all personal property taxesassessed against personal property situated on the Premises, and (v) CAM.

 

5.                                       Use.  The Premises shall be used solely for uses permitted by the Prime Lease.

 

6.                                       Late Fees and Interest.  Allinstallments of Rent which are not paid by Sublessee to Sublessor within fifteen(15) days after the same is due (“Delinquency Date”) shall bear interestfrom and after the due date until paid at a rate equal to the lesser of fifteenpercent (15%) per annum or the highest legal rate of interest.  In addition to the foregoing, Sublessee shallalso be responsible for the costs and reasonable attorneys’ fees incurred as aresult of the late payments or non-payments as provided for in the Prime Lease.

 

7.                                       Alterations.  Sublessee shall not make anyalterations, additions, or improvements in excess of $1,000 to the Premiseswithout Landlord’s prior written consent, which shall not be unreasonablywithheld or delayed.  Any alterations toor upon the Premises shall be made by sublessee at sublessee’s sole cost andexpense and any contractor selected by sublessee to make the same shall besubject to Landlord’s reasonable approval.

 

8.                                       Compliance with Laws.  Inconnection with the operation of Sublessee’s business in the Premises,Sublessee shall comply with all applicable governmental laws, statutes, rules,regulations, orders and ordinances.

 

9.                                       Liens.  Sublessee shall not permit thelien of any contractor, subcontractor, mechanic, materialman, laborer,architect or any other person or entity arising out of work, material orservices performed or supplied or contracted for by Sublessee, or thoseclaiming by, through or under it, to be or remain a lien upon the Premises.  Sublessee shall indemnify, defend and holdSublessor and the Premises harmless from any such lien.

 

10.                                 Condition of Premises.

 

(a)                                  Sublesseerepresents to Sublessor that Sublessee has been given the opportunity toinspect the Premises prior to the execution and delivery of this Sublease andhas found the same to be satisfactory for all purposes hereunder and, Sublesseeaccepts the Premises in, their “As Is”, “Where Is” condition, subject to alllegal requirements, and any state of facts which an accurate survey or physicalinspection of the Premises might show, without warranties, either express orimplied, and “with all faults”, including but not limited to both latent andpatent defects.  Sublessee hereby waivesall warranties, express or implied, regarding the title, condition and use ofthe Premises, including, but not limited to any warranty of merchantability orfitness for a particular purpose.

 

(b)                                 Sublessorrepresents to Sublessee that Sublessor will leave in good operating conditionthe generator system, powering system, cooling systems, structural cabling

 

2

----

 

systemsand computer room flooring.  Sublessorfurther represents to Sublessee that the Premises will be left in clean andgood working condition.

 

11.                                 Prime Lease.  This Sublease is subject andsubordinate to the Prime Lease.  Exceptas may be inconsistent with the terms hereof, all the terms, covenants andconditions in the Prime Lease shall be applicable to this Sublease with thesame force and effect as if Sublessor were the landlord under the Prime Leaseand Sublessee were the tenant under the Prime Lease.  Sublessee shall have no right to exercise, andSublessor shall have no obligation to exercise, any options available toSublessor under the Prime Lease or any rights of control or termination underthe Prime Lease.  Sublessee shall neitherdo nor permit anything to be done which would cause the Prime Lease to beterminated or forfeited by reason of any right of termination or forfeiturereserved or vested in Sublessor under the Prime Lease, and Sublessee shallindemnify and hold Sublessor and Landlord harmless from and against all claimsof any kind whatsoever by reason of any breach or default on the part ofSublessee by reason of which the Prime Lease may be terminated orforfeited.  Sublessee represents that ithas read and is familiar with the terms of the Prime Lease.

 

12.                                 Maintenance.  Sublessee covenants andagrees, at its own expense, to maintain the Premises in accordance with theterms of the Prime Lease.

 

13.                                 Insurance.

 

(a)                                  Sublessee waives all claims against Sublessorfor damage to property in, upon or adjoining the Premises, and for injuries topersons in or about said Premises from any cause arising at any time duringTerm, if not attributable to the gross negligence or willful misconduct ofSublessor.  Sublessee, at its sole costsand expense, shall maintain throughout the Term insurance in accordance withthe terms of the Prime Lease.  Sublesseeshall be responsible for the payment of all deductibles in connection with anyand all claims under such insurance policy or policies.

 

(b)                                 Said policies of insurance shall: (i) nameSublessor as one of the insureds thereunder, (ii) be maintained atSublessee’s sole cost and expense; and (iii) contain a clause orendorsement to the effect that the policy may not be terminated or materiallyamended except after 30 days written notice thereof to Sublessor.  Within 30 days of the date of this Sublease,Sublessee shall deliver copies of said policies or certificates of insurance toSublessor.

 

(c)                                  Sublessee agrees to indemnify, defend andhold harmless Sublessor from and against any and all claims, demands, causes ofaction, costs, losses or expenses, including reasonable attorneys’ fees andother legal expenses, or other liabilities for damage to property or injury to,harassment of, or death of any person (including any servant, agent or employeeof Sublessee, and any servant, agent or employee of any third party hired orretained by Sublessee) arising out of or in consequence of Sublessee’s use ofthe Premises, the operation of Sublessee’s business on the Premises (includingany contamination of the Premises or any other property resulting from thepresence or use of hazardous material caused or permitted by Sublessee), or anyother acts or omissions of the Sublessee or any third party hired or retainedby Sublessee (or any servant, agent or employee of any of them).  Sublessee’s obligations hereunder shallsurvive the expiration or earlier termination of this Sublease.

 

3

----

 

14.                                 Default.  Each of the following eventsshall constitute a default by Sublessee under this Sublease: (i) Sublessee’sfailure to pay rent; (ii) Sublessee’s failure to pay any other sums to bepaid by Sublessee hereunder (and not constituting rent), within 10 days afterthe respective due date thereof; (iii) Sublessee shall commit or allow tocontinue any other breach of this Sublease, which shall not have been curedwithin 20 days after written notice from Sublessor specifying the breach;provided, however, that if the breach cannot be cured within 20 days, Sublesseeshall not be in default if, within such 20 day period, Sublessee shall havecommenced to cure said breach and shall continue its efforts with duediligence; (iv) Sublessee shall file, or a third party shall file againstSublessee, a petition in bankruptcy, liquidation, dissolution or reorganizationthat remains undismissed for 60 days; (v) Sublessee shall make a generalassignment for the benefit of all creditors of Sublessee, or (vi) anyEvent of Default under the Prime Lease.

 

15.                                 Remedies.  Upon the occurrence of adefault, Sublessor has the right to use any of the remedies below:

 

(a)                                  Terminate this Sublease and thereuponre-enter and take possession of the Premises by any means provided by law;

 

(b)                                 From time to time, without terminating thisSublease, re-enter (by any means provided by law) and relet the Premises forthe account of Sublessee, upon such reasonable terms and conditions asSublessor may deem advisable or satisfactory, in which event rents received forsuch reletting shall be applied first to the expense of such reletting(including necessary renovations to return the Premises to a conditionequivalent to that of their original condition) and thereafter toward paymentof all sums due or to become due Sublessor hereunder.  If a sufficient sum shall not be realized orsecured from such reletting to pay such sums and other charges, Sublessee shallpay Sublessor any deficiency on a monthly basis.  Sublessor shall not, in any event, berequired to pay Sublessee any surplus of any sums received by Sublessor on areletting of the Premises in excess of the amounts due from Sublessee asprovided in this Sublease, but all such excess shall become the property ofSublessor;

 

(c)                                  Continue this Sublease in full force andeffect to the end of the term, notwithstanding the occurrence of such default,and enforce, by all proper and legal means, Sublessor’s rights herein,including the monthly collection of rent and other amounts due, includingwithout limitation, late payment fees and interest on the amounts due underthis Sublease;

 

(d)                                 Pursue any other remedy available to Landlordunder the Prime Lease; or

 

(e)                                  Pursue any other remedy available at law orequity.  All remedies provided in thisSublease shall be cumulative and nonexclusive.

 

16.                                 Surrender.  Upon the expiration or earliertermination of this Sublease, Sublessee shall deliver the Premises to Sublessorin the same condition as of the date hereof, reasonable wear and tearexcepted.  Sublessee shall reimburseSublessor for and indemnify Sublessor against all damages which Sublessorincurs from Sublessee’s delay in vacating the Premises.

 

4

----

 

Sublessee’s obligations hereunder shall survive theexpiration or earlier termination of this Sublease.

 

17.                                 Holdover.  In the event Sublessee holdsover, following the expiration or termination of this Sublease, Sublessee shallbe deemed to be occupying the Premises as a month-to-month tenant, and shallpay as rent a sum equal to (i) one hundred twenty-five percent (125%) ofthe Rent and (ii) such other charges as are payable hereunder, pro-ratedon a monthly basis.  In no event shallsuch holding over be deemed to create a tenancy from year-to-year nor shalleither Sublessor or Sublessee have the right to create such a tenancy.

 

18.                                 Effective Date. Sublessor and Sublessee acknowledge that Sublessor’s right to sublet thePremises to Sublessee is subject to Sublessor first obtaining the consent ofLandlord, accordingly, this Sublease shall not become effective and shall be ofno force and effect, and the Term shall not commence, until such consent isobtained.

 

19.                                 Assignment; Subletting. Sublessee shall not assign this Sublease nor sublet the Premises, inwhole or in part, without Sublessor’s prior written consent, which shall not beunreasonably withheld or delayed, and shall not permit Sublessee’s interest inthis Sublease to be vested in any third party by operation of law or otherwise.

 

20.                                 Attorneys’ Fees.  Inthe event either Sublessor or Sublessee commences litigation to enforce any ofthe terms and conditions of this Sublease, the unsuccessful party to suchlitigation shall pay, within 10 days of the date when any judgment of any courtof competent jurisdiction shall have become final and all rights of appealtherefrom have expired, all costs and expenses, including reasonable attorneys’fees incurred therein by the successful party (which costs and expenses shallbe included in the amount of the judgment).

 

21.                                 Notices.  All notices, requests,demands,  and other communicationshereunder shall be in writing and shall be given by: (i) establishedexpress delivery service which maintains delivery records; (ii) handdelivery; or; (iii) certified or registered mail, postage prepaid postage,return receipt requested, to the parties at the following addresses, or at suchother address as the parties may designate by written notice in the abovemanner:

 
| To  Sublessor: |   | UCN, Inc.                   |
|----------------|--------|----------------------------------|
|           |   | 14870 Pony  Express Road         |
|           |   | Bluffdale,  UT 84065             |
|           |   | Attention:  David R. Grow        |
|           |   | Fax:  888.888.9115               |
|           |   | Voice:  801.715.5270             |
|           |   |                             |
| To  Sublessee: |   | 1-800  CONTACTS, INC.            |
|           |   | 66 East  Wadsworth Park Drive    |
|           |   | Draper, Utah  84020              |
|           |   | Attention:  Corporate Controller |
|           |   | Fax:  801.924.9605               |
|           |   | Voice:  801.858.2114             |

 

5

----

 

Communications may also be given by fax, provided the communication isconcurrently given by one of the above methods. Notices are effective upon receipt, or upon attempted delivery ifdelivery is refused or if delivery is impossible because of failure to providea reasonable means for accomplishing delivery. Rent shall be paid to Sublessor at the address set forth in thisparagraph.

 

22.                                 Sublessor’s Default.  Inthe case of a default, Sublessor shall commence promptly to cure such defaultimmediately after receipt of written notice from Sublessee specifying the natureof such default and shall complete such cure within twenty (20) daysthereafter, provided that if the nature of the default is such that it cannotbe cured within such twenty (20) day period, Sublessor shall have suchadditional time as may be reasonably necessary to complete its performance solong as Sublessor has proceeded with diligence since its receipt of Sublessee’snotice and is then proceeding with diligence to cure such default.  If Sublessor shall default under the PrimeLease, Sublessee shall have the right, but not the obligation, to cure suchdefault.

 

23.                                 General Provisions.

 

(a)                                  Commissions. Sublessor and Sublessee each hereby represents and warrants to the otherthat it has not entered into any contracts whatsoever with any brokers or findersor in any manner obligated itself to pay any real estate commission or finder’sfee on account of this transaction.  Inconnection with the foregoing, each Party hereby agrees to indemnify and holdthe other harmless from any claim arising out of or related to a breach by suchParty of its representations and warranties herein contained.

 

(b)                                 Relationship of theParties.  Nothing herein shall be deemed or construedby the parties or by any third party as creating the relationship of principaland agent or of partnership or of joint venture between the parties, it beingunderstood and agreed that no provision herein, nor any acts of the parties,shall be deemed to create any relationship between the parties other than therelationship of landlord and tenant.

 

(c)                                  Headings.  Theheadings of the Sections contained herein are for convenience only and do notdefine, limit, or construe their contents.

 

(d)                                 Right of Entry. Sublessor hereby reserves the right for itself, and its duly authorizedagents and representatives, at all reasonable times and upon prior writtennotice to Sublessee, to enter upon the Premises for the purpose of inspectingthe same and showing the same to any prospective tenant, purchaser orencumbrancer, and for all other reasonable purposes.  Nothing contained herein shall imply orimpose any duty on Sublessor to inspect the Premises.

 

(e)                                  Merger.  All prior understandings andagreements between Sublessor and Sublessee are merged within this Sublease,which alone fully and completely sets forth the understanding of the parties;and this Sublease may not be changed or terminated orally or in any mannerother than by a signed written agreement.

 

(f)                                    Waiver.  No waiver of any breach hereofby either Party shall be considered to be a waiver of any other or subsequentbreach.

 

6

----

 

(g)                                 Survival.  Sublessee’s obligations underSections 4, 6, 8, 9, 11, 13, 16, 17 and 20 shall survive the expiration orearlier termination of this Sublease.  All other provisions of this Sublease thatwould normally survive shall survive the expiration or earlier termination ofthis Sublease.

 

(h)                                 Authority.  Theindividuals who execute this Sublease represent and warrant that they are dulyauthorized to execute this Sublease on behalf of Sublessor or Sublessee, as thecase may be, that the parties named are all the necessary and proper parties,and that no other signature, act or authorization is necessary to bind suchentity to the provisions of this Sublease.

 

(i)                                     Successors and Assigns.  Thecovenants and agreements herein contained shall bind and inure to the benefitof Sublessor and Sublessee, and their respective executors, administrators,successors and assigns.

 

(j)                                     Governing Law.  ThisSublease shall be governed by and interpreted in accordance with the laws ofthe State of Utah.

 

(k)                                  Counterparts.  ThisSublease may be executed in any number of counterpart originals, each of whichshall be deemed an original instrument for all purposes, but all of which shallcomprise one and the same instrument. This Sublease may be delivered by facsimile.

 

24.                                 Security Deposit.  Simultaneouslywith the execution of this Sublease, Sublessee shall deposit with Sublessor thesum of $10,000.00 as a security deposit (“Security Deposit”), whichshall be considered as security for the payment and performance of theobligations, covenants, conditions and agreements of Sublessee containedherein.  Sublessor may, without prejudiceto any other remedy, use the Security Deposit to the extent necessary to remedyany default in the payment of Rent or Additional Rent or to satisfy any otherobligation of Sublessee hereunder, and Sublessee shall promptly, on demand,restore the Security Deposit to its original amount.

 

25.                                 Sublessor’s Rent Obligations.  ThisSublease shall not become effective and shall be of no force and effect, andthe Term shall not commence, unless and until all of Sublessor’s rent and otherobligations as set forth under the terms of the Prime Lease are paid andcurrent up through the commencement of the Term.

 

26.                                 Sublease’s Right of Renegotiation. Subsequent to the execution of this Sublease, Sublessee shall have theright to renegotiate and enter into a new lease arrangement regarding thePremises, among other properties, with Landlord, and Sublessor shall cooperatefully by taking any action requested of Sublessor by Lessor and/or Sublessee inorder to effect any renegotiated lease arrangement, including, for example, byagreeing to terminate and/or assign this Sublease.

 

27.                                 Relocation Fee.  Uponthe Commencement Date of this Sublease, Sublessee shall pay to Sublessor thesum of $75,000.00 to offset the costs and expenses to be incurred by Sublessorin moving its business operations from the Premises; provided, however, that ifSublessor’s representations set forth in paragraph 10(b) of this Subleaseare breached, then this

 

7

----

 

$75,000 shall be reduced by the costs and expensesincurred by Sublessee to remedy such breach.

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Sublease asof the dates below written to be effective as of the date first above written.

 
| **SUBLESSOR:**                                             | **SUBLESSEE:**                                |
|------------------------------------------------------------|-----------------------------------------------|
|                                                       |                                          |
| UCN, INC., a Delaware corporation fka  BUYERS UNITED, INC. | 1-800 CONTACTS, INC., a Delaware  corporation |
|                                                       |                                          |
|                                                       |                                          |
| By:                                                        |                                          |   | By: |   |   |
| Print Name:                                                |                                          |   | Print Name: Brian W. Bethers |
| Title:                                                     |                                          |   | Title: President and CFO |
| Date:                                                      |                                          |   | Date: March 2, 2005 |
|                                                            |                                               |  |  |  |  |  |  |  |

 

8

----

 

**CONSENT TO SUBLEASE**

 

Theundersigned, as landlord under the Prime Lease, hereby grants its consent tothe sublease by UCN, Inc. of the Premises to 1-800 CONTACTS, INC.

 

DATED this           dayof                                  ,2005.

 

 
|   | 13751 S. WADSWORTH PARK DR., LLC,  a Delaware limited liability company |
|--------|-------------------------------------------------------------------------|
|   |                                                                    |
|   |                                                                    |
|   | By:                                                                     |   |   |
|   | Print Name:                                                             |   |   |
|   | Its:                                                                    |   |   |
|   | Dated:                                                                  |   |  , 2005 |
|        |                                                                         |  |  |  |  |  |  |

 

9

----

 

**EXHIBIT A**

**TO**

**SUBLEASE AGREEMENT**

 

**(Prime Lease)**

 

The Prime Lease referenced in the foregoing instrument is attachedhereto.

 

----