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Exhibit 10.1  

 
 

155 FEDERAL STREET
  
    Boston, Massachusetts
  
    LEASE
  
    By and Between
  
    KNH REALTY TRUST
  
    and
  
    POINT THERAPEUTICS, INC.    
    

  

 
 

TABLE OF CONTENTS    
    

	Reference Data	 	iii
	

I—	
 	

Parties and Premises	
 	

1
	

II—	
 	

Term	
 	

1
	

III—	
 	

Rent and Other Charges	
 	

1
	

 	
 	

        3.01—Yearly Fixed Rent	
 	

1
	

 	
 	

        3.02—Definition of Operating Costs	
 	

1
	

 	
 	

        3.03—Tenant's Share of Operating Costs	
 	

3
	

 	
 	

        3.04—Tax Increase	
 	

3
	

 	
 	

        3.05—Payments on Account	
 	

4
	

 	
 	

        3.06—Late Charge and Interest Clause	
 	

4
	

IV—	
 	

Construction of Premises	
 	

4
	

V—	
 	

Electricity	
 	

5
	

VI—	
 	

Services Provided by Landlord	
 	

5
	

VII—	
 	

Tenant's Covenants	
 	

6
	

VIII—	
 	

Subordination And Non-Disturbance	
 	

8
	

IX—	
 	

Casualty and Taking	
 	

9
	

X—	
 	

Landlord's Remedies	
 	

10
	

XI—	
 	

Waiver of Subrogation	
 	

10
	

XII—	
 	

Tenant Estoppel	
 	

10
	

XIII—	
 	

Miscellaneous	
 	

11
	

 	
 	

        13.01—Waivers	
 	

11
	

 	
 	

        13.02—Notices	
 	

11
	

 	
 	

        13.03—Successors and Assigns	
 	

11
	

 	
 	

        13.04—Definition of "Tenant"	
 	

11
	

 	
 	

        13.05—Notice of Lease	
 	

11
	

 	
 	

        13.06—Headings	
 	

11
	

 	
 	

        13.07—Hold Over	
 	

11
	

 	
 	

        13.08—Letter of Credit	
 	

12
	

 	
 	

        13.09—Option To Extend	
 	

13
	

 	
 	

        13.10—Expansion Space Right of First Offer	
 	

14
	

 	
 	

Exhibit A—Plan of Leased Area	
 	

 
	

 	
 	

Exhibit B—Rules and Regulations	
 	

 
	

 	
 	

Exhibit C—Landlord's Work	
 	

 
	

 	
 	

Exhibit D—Subordination, Non-disturbance, and Attornment Agreement	
 	

 

ii

 
 
 

REFERENCE DATA    
    

        As used in this lease, the following terms shall have the respective meanings set forth below: 

	Lease Execution Date:	 	March 16, 2005
	Tenant:	 	Point Therapeutics, Inc. a Delaware corporation
	Tenant's Original Address:	 	125 Summer Street, Boston, MA 02110
	Term Commencement Date:	 	June 15, 2005
	Leased Area:	 	Approximately 14,493 rentable square feet located on the 4th floor, as shown in Exhibit A, attached hereto.
	Escalation Factor:	 	7.62%
	Expiration Date:	 	June 14, 2010.
	Rent Commencement Date:	 	December 1, 2005
	Yearly Fixed Rent rate:	 	$27.00 per RSF per annum.
	Yearly Fixed Rent amount:	 	$32,609.25 per month; $391,311.00 per year.
	Operating Cost Base / Real Estate Tax Base:	 	Tenant shall pay as additional rent its proportionate share of any increases in Building operating expenses above a base of actual operating costs incurred during Calendar Year 2006 and its proportionate share of any
increases in real estate taxes above a Fiscal Year of 2006 tax based upon a fully occupied Building
	Letter of Credit:	 	$300,000.00.
	Signage:	 	Building standard signage shall be installed at Landlord's expense in the Building lobby directory and at the Tenant entrance.
	Access:	 	Twenty-four hours per day seven days per week.
	Permitted Use:	 	General office use.
	Brokerage:	 	Tenant Warrants and represents that it has dealt with no other broker or agent in this transaction other than Lincoln Property Company and NAI/Hunneman Commercial Company.

iii

 
 

ARTICLE I—PARTIES AND PREMISES    
    

        JOHN F. POWER, JOHN NILES and LOUIS H. HAMEL, JR., Trustees of KNH REALTY TRUST under Declaration of Trust dated January 29, 1981 and recorded with Suffolk
County Registry of Deeds at Book 9664, Page 114, as from time to time amended (hereinafter referred to as "Landlord"), hereby leases unto Tenant the Leased Area (hereinafter referred to as the
"Premises") to be contained in the Building (hereinafter referred to as the "Building") known and numbered as 155 Federal Street, Boston, Massachusetts, substantially as shown on the plan attached
hereto as Exhibit A and made a part hereof, provided, however, that Landlord excepts and reserves from said Premises and to Landlord all hallways, stairways, shaftways, mechanical areas, and
elevators serving other parts of said Building together with the right to maintain, use, repair and replace pipes, ducts, wires, meters and any other equipment, machinery, apparatus and fixtures
located in said Premises and serving other parts of said Building. Tenant shall have the right, in common with others so entitled, to use the common areas and facilities of the Building, which serve
the Premises, including without limitation the loading dock and freight elevator. For all purposes of this lease said Premises shall be deemed to contain the Premises Net Rentable Floor Area and said
Building shall be deemed to contain a total of 190,365 square feet of net rentable floor area as reasonably determined by Landlord using BOMA (Building Owners and Manager Association) measurement
standards typically used in the downtown Boston office market. Said Premises shall be used by Tenant only for the Permitted Use. 

 
 

ARTICLE II—TERM    
    

        TO HAVE AND TO HOLD said Premises for the term commencing on the Term Commencement Date and ending on the Expiration Date, unless sooner terminated as herein
provided. Notwithstanding the foregoing, in the event that Landlord shall not have completed the Landlord's Work (as described in the first paragraph of Article IV) on or before the Term
Commencement Date, the Term Commencement Date, Rent Commencement Date and the Expiration Date shall be extended by the period of any such delay and the parties shall enter into an agreement in
recordable form setting forth the Term Commencement Date, Rent Commencement Date, and the Expiration Date as so extended, but Landlord shall not be liable for such delay, nor shall the validity of
this lease or the obligations of Tenant hereunder be otherwise affected. 

 
 

ARTICLE III—RENT AND OTHER CHARGES    
    

3.01—Yearly Fixed Rent  

        Tenant shall pay Yearly Fixed Rent in installments equal to the Monthly Payment in advance on the first day of each month during the term hereof. The Monthly
Payment shall be prorated for portions of a calendar month at the beginning or end of said term and shall be adjusted in proportion to adjustments of Yearly Fixed Rent. All rent and other payments
shall be made to Landlord or to such agent and at such place as Landlord shall from time to time in writing designate, the following being now so designated: Boston Federal Associates c/o Farley White
Management Company, LLC 155 Federal Street, Suite 1200 Boston, Massachusetts 02110 

3.02—Definition of Operating Costs  

        Landlord will determine as of the last day of each calendar year the operating costs per annum of the Building and all exterior courtyards, sidewalks, landscaping
and the like located outside of the Building but being related thereto (hereinafter referred to in toto for purposes of this Section as the "Building") including without limitation: 

        (a)   all
salaries, wages, fringe benefits, payroll taxes and workmen's compensation insurance premiums related thereto of and for Landlord's employees engaged in the
operation of the Building; 

        (b)   all
costs, including moneys paid to utility companies and the City of Boston, related to providing electricity, heat, air-conditioning, steam and water
(including sewer charges or rentals) to the Building; 

 

        (c)   all
costs of any insurance carried by Landlord related to the Building, including without limitation any fire, casualty, pressure vessel and liability insurance; 

        (d)   all
costs, including material and equipment costs, for cleaning and janitorial services (including window cleaning); 

        (e)   all
costs of repair, replacement and other work relating to the maintenance of the Building including without limitation all such work necessary to keep the heating and
air-conditioning equipment, elevators and other portions of the Building in a first-class condition; and 

        (f)    costs
of all service contracts, management fees and all other reasonable expenses related to the foregoing items (a) through (e) of the Building incurred
by Landlord. 

        For
purposes of the preceding definition, such operating costs shall specifically include the cost (amortized with interest on such reasonable basis as Landlord shall determine) of any
capital improvement or replacement (including without limitation any equipment installed as a fixture) made by Landlord for the purpose of (a) reducing other operating costs or
(b) complying with any governmental requirement (including without limitation any law, ordinance, regulation or bylaw) which was not applicable to the initial construction of the Building. As
of the Lease execution date, Landlord is not aware of any outstanding government compliance matters that would result in a Building recoverable operating cost. 

        For
purposes of the preceding definition, such operating costs shall specifically exclude the following items: 

        a)    interest
and principal payments on mortgage debt; 

        b)    capital
improvements other than those described above; 

        c)     ground
rental payments; 

        d)    depreciation
of the Building; 

        e)    salaries
and other compensation of executive officers of the Landlord; 

        f)     income
or franchise taxes or other such taxes imposed or measured by the income of the Landlord from the operation of the Building; 

        g)     legal
expenses incurred in connection with enforcing tenant lease obligations and negotiations with prospective tenants; 

        h)    any
expenditure for which the Landlord has been reimbursed by a third party such as an insurance company; 

        i)     advertising,
promotional and marketing expenses; 

        j)     real
estate brokerage and leasing commissions; 

        k)    expenses
in connection with repairs or other work occasioned by the exercise of the right of eminent domain; 

        l)     debt
costs or the costs of financing or refinancing; 

        m)   Landlord's
general partnership overhead not related to management of the building; 

        n)    contributions
to operating expense reserves; and, 

        o)    bad
debt loss, rent loss or reserves for bad debt or rent loss. 

2

 

        Landlord
agrees to keep books and records showing operating costs in accordance with a system of accounts and accounting practices consistently maintained on a
year-to-year basis to assist Landlord in making such determination. 

        Provided
that Tenant shall have first paid all of amounts due and payable by Tenant pursuant to this Article III and upon written notice of Tenant within 30 days of the
receipt of a final statement (but not
more than once with respect to any Operating Year), Tenant may cause Landlord's books and records to be audited with respect to operating costs and Tenant charges applicable to the Building for such
Operating Year. The audit shall be performed within 30 days of Landlord's receipt of notice by a certified public accountant selected by Tenant at Tenant's sole cost and expense and at a
mutually agreeable time and place where the books and records are customarily kept by the Landlord (or property manager) in the ordinary course. During such time of audit Tenant shall pay its full
share of operating expenses. If it is determined that there are any amounts owed Tenant or Landlord as a result of said audit, such amount shall be reimbursed to the other within 30 days of
said audit results. Tenant shall keep the results of any such audit confidential and shall not disclose the results of such inspection nor the content of such books and records with any third party
other than Tenant's consultants and attorneys. Failure of Tenant to provide Landlord with a written request to review such books and records in a timely manner pursuant to this Article 3 with
respect to each Operating Year shall be deemed a waiver of Tenant's rights hereunder with respect to such Operating Year. 

3.03—Tenant's Share of Operating Costs  

        In the event such determination results in an increase in such operating costs per annum over the Operating Cost Base, Tenant shall pay as additional rent an
amount, which shall be equal to that figure obtained by multiplying such increase in operating costs by the Escalation Factor. The procedure for payment of such additional rent shall be as follows: 

        A.    Following
the end of each calendar year during the term of this lease, Landlord shall deliver to Tenant a certificate signed by Landlord setting forth: 

        (a)   the
increase in operating costs for such calendar year over the Operating Cost Base; 

        (b)   Tenant's
share thereof; and 

        (c)   a
statement that books and records with respect to operating costs have been maintained in accordance with Section 3.02 of this lease. 

        B.    If
such certificate shows an increase in operating costs for the calendar year to which it relates over the Operating Cost Base, Tenant shall pay to Landlord as
additional rent within ten (10) days after the date of delivery of such certificate an amount equal to Tenant's share of such increase less any amounts previously paid by Tenant as additional
rent on account of such increase. Such payment shall be prorated with respect to any partial calendar year included in the term hereof. 

3.04—Tax Increase  

        Tenant shall also pay to Landlord as additional rent hereunder Tenant's share of the amount of the increase in any tax year in the total of all real estate taxes
assessed and levied on the Building and the parcel of land on which it is located over and above the Tax Base. Tenant's share of such increase in taxes shall be an amount, which shall be equal to the
amount obtained by multiplying any such increase by the Escalation Factor. Payment of Tenant's share of any increase in taxes, less any amounts previously paid by Tenant as additional rent on account
of such increase, shall be made. in installments proportionate to the installments in which said taxes are payable by Landlord, within fifteen (15) days after Landlord shall have delivered to
Tenant a certificate signed by Landlord setting forth the amount payable by Tenant, to which certificate there shall be attached a legible copy of the applicable tax bill. In the event Landlord is
required to pay any taxing authority any amounts which are in lieu of real 

3

 

estate
taxes, such amounts shall be treated as increases in real estate taxes hereunder provided, however, that this sentence shall never be interpreted as meaning that Tenant has any responsibility
to pay any increases in Landlord's city, state or federal income taxes. Such payment shall be prorated with respect to any partial tax year included in the term hereof. In the event that Landlord
receives any refund of any tax increase of which Tenant has paid a share pursuant hereto, the same proportionate share of such refund, less the reasonable cost of securing the same, shall be credited
against outstanding rent or other charges due from Tenant, if any, and any balance shall be refunded to Tenant. 

3.05—Payments on Account  

        Tenant shall, when requested by Landlord and with each Monthly Payment, make such payments in advance as Landlord shall reasonably determine to be sufficient to
provide in the aggregate a fund adequate to pay, when due, all additional rent required pursuant to Sections 3.03 and 3.04. Any deficiency shall be payable within the time set forth in said Sections,
and any surplus shall be credited against outstanding rent or other charges due from Tenant, if any, and any balance shall be refunded to Tenant. 

3.06—Late Charge and Interest Clause  

        If any monthly payment remains outstanding for more than of three (3) days after the date it is due, the Tenant shall pay to the Landlord an administrative
fee equal to five (5) percent of the unpaid amount. In addition, Tenant shall pay to the Landlord interest at a rate of 1.5% per month on all sums
whatever becoming due under this lease, and not paid within ten (10) days after their due date, if called upon the Landlord to do so. 

 
 

ARTICLE IV—CONSTRUCTION OF PREMISES    
    

        Prior to the delivery of said Premises to Tenant pursuant to Article II, Landlord shall perform in a good and workmanlike manner the work described in
Exhibit C, "Landlord's Work". Landlord agrees to use reasonable efforts to substantially complete Landlord's Work (substantially complete shall mean that the Premises is available for occupancy
and the work is complete with the exception of minor punch list items) by the Term Commencement Date, subject to delays beyond Landlord's reasonable control and delays caused by Tenant. Landlord shall
not be liable to Tenant or any other party, and Tenant's obligations shall not be reduced hereunder in the event that the work is not substantially complete by the Term Commencement Date. All other
work necessary to prepare said Premises for occupancy by Tenant shall be performed by Tenant at its own expense. 

        For
Tenant's work, if any, plans and/ or specifications shall be submitted to Landlord and must be approved by Landlord prior to commencement of any such work. Landlord shall have ten
(10) days from the date of receipt of the plans to reasonably approve or disapprove said plans and specifications. In the event of disapproval, Landlord shall give prompt written notice of the
same to Tenant and Tenant shall, as soon as possible thereafter, submit new plans and specifications for Landlord's approval corrected so as to reasonably satisfy Landlord's objections. Landlord
agrees to cooperate reasonably with Tenant in the correction of disapproved plans and specifications. If the Landlord fails to approve or disapprove Tenant's plans in a timely manner, then Tenant's
plans shall be deemed approved. 

        All
of Tenant's work shall be done at Tenant's sole risk and expense. Landlord shall not be a party to, nor incur any liability as a result of, any contract to perform Tenant's work. All
of Tenant's work shall be done by such contractors, labor and means so that, as far as may be possible, such work shall be done without interruption on account of strikes, work stoppages or similar
causes or delay. Tenant shall immediately remedy any mechanics' or materialmen's liens that may be attached to the Premises as a result of Tenant's work. 

4

 

        Tenant's
work shall be performed on behalf of Tenant by a general contractor reasonably approved by Landlord at Landlord's sole discretion. Prior to the commencement of Tenant's work,
Tenant shall submit to Landlord a copy of the contract between the Tenant and Tenant's general contractor, a copy of the general contractor's certificate of insurance with limits reasonably
satisfactory to Landlord naming Landlord and Landlord's property management agent as additional insureds, and when applicable, a copy of a building permit issued by the City of Boston. Upon completion
of the work,
Tenant shall deliver to Landlord a certificate of use and occupancy from the Boston Building Department. 

        The
installation of furniture, telephone equipment and wiring, office equipment, shelving, and decorations, etc., may be performed by a contractor selected by Tenant and approved by
Landlord, which approval shall not be unreasonably withheld. 

 
 

ARTICLE V—ELECTRICITY    
    

        Tenant shall be separately metered and shall purchase the electrical energy required by Tenant for operation of the lighting fixtures, equipment, appliances, and
supplemental A/C equipment in the Premises directly from the public utility company serving the Building. Landlord shall not be liable in any way to Tenant for any failure or defect in the supply or
character of electrical energy furnished to said Premises by reason of any requirement, act or omission of said public utility company. Tenant's use of electrical energy in said Premises shall not at
any time exceed the capacity of any of the electrical conductors and equipment in or otherwise serving said Premises. 

 
 

ARTICLE VI—SERVICES PROVIDED BY LANDLORD    
    

        Landlord shall furnish the following services: 

        (a)   heat
and air-conditioning to maintain the Premises at comfortable temperatures, during the regular business hours of 8:00 AM to 6:00 PM Monday through Friday
and Saturdays from 8:00 AM until 1:00 PM, provided, however, that Landlord agrees to provide, at $60.00 per hour, heating and/or air-conditioning for the Premises on other than regular
business hours but only in the event Tenant gives notice to Landlord that Tenant will require such off-hours heating and/or air-conditioning by 3:00 P.M. of the business
day preceding the day on which such off-hours services will be required by Tenant; 

        (b)   elevator
service, which may be reduced after business hours and on weekends and holidays as demand permits; 

        (c)   water
for ordinary drinking, cleaning, lavatory and toilet facilities; 

        (d)   cleaning
and janitor service equal in scope, quality and frequency to that provided in first-class office Buildings in the City of Boston; and 

        (e)   repairs
necessary to maintain the roof and other structural portions of the Building and the common areas and facilities serving the Premises in as good condition as the
same are in at the commencement of said term, damage by fire or casualty and reasonable use and wear excepted. 

        Landlord
shall not be liable to anyone for interruption in or cessation of any service rendered to the Premises or Building or agreed to by the terms of this lease, due to any accident,
the making of repairs, alteration or improvements, labor difficulties, trouble in obtaining fuel, electricity, service or supplies from the sources from which they are usually obtained for said
Building, or any cause beyond the Landlord's reasonable control. 

        In
the event Tenant wishes to provide outside services for the Premises over and above those services to be provided by Landlord as set forth herein, Tenant shall first obtain the prior
written approval of Landlord for the installation and/ or utilization of such services. "Outside services" shall 

5

 

include
but shall not be limited to cleaning and moving services, television and so-called "canned music" services, security services, cafeteria services and the like. In the event
Landlord approves the installation and/or utilization of such services, such installation, utilization, maintenance and repair shall be at Tenant's sole cost, risk and expense. 

 
 

ARTICLE VII—TENANT'S COVENANTS    
    

        Tenant acknowledges by entry thereupon that said Premises are in good and satisfactory order, repair and condition, and covenants during such time as Tenant holds
any part of said Premises: 

        (a)   to
pay, when due, all rent and other charges set forth herein; 

        (b)   to
keep said Premises in as good repair and condition as the same are in at the commencement of said term, or may be put in thereafter, damage by fire or unavoidable
casualty and reasonable use and wear excepted, and, at the termination of this lease, peaceably to yield up said Premises and all additions and alterations thereto in such good order, repair and
condition, first removing all goods and effects not attached to the Premises and any customary trade fixtures (unless Tenant is in default hereunder and Landlord has not requested the removal of such
fixtures), restoring said Premises to their former condition and repairing all other damage caused by such removal, and leaving the Premises broom clean; 

        (c)   not
to injure, deface or overload said Premises or Building; not to permit on said Premises any auction sale, inflammable fluids, chemicals, nuisance, objectionable
noises or odor; not to permit the use of said Premises for any purpose other than set forth herein or any use thereof which is improper, offensive, contrary to law or ordinance, or liable to
invalidate or increase the premiums for any insurance on the Building or its contents or liable to render necessary any alterations or additions to the Building; 

        (d)   not
to obstruct in any manner any portion of the Building not hereby demised or the sidewalks or approaches to said Building or any inside or outside windows or doors;
and to conform to all reasonable rules and security regulations now or hereafter made by Landlord and noticed to Tenant for the care and use of said Premises, the Building, its facilities and
approaches; 

        (e)   not
to assign this lease or make any sublease or other occupancy arrangement without on each occasion obtaining prior written consent of Landlord which consent shall not
be unreasonably withheld, delayed, or conditioned. In the event of a proposed assignment or subletting, Landlord shall also have the right, by notice to Tenant, to terminate this Lease in the event of
an assignment as to all of the Premises and, in the event of a sublease, as to the subleased portion of the Premises and to require that all or part, as the case may be, of the Premises be surrendered
to Landlord for the balance of the Term (collectively "Recapture the Lease"). Notwithstanding the previous sentence, if, before entering into a proposed assignment or sublease, Tenant gives written
notice to Landlord of Tenant's intention to sublease or assign, and Landlord does not, within fifteen (15) business days after Landlord's actual receipt of such written notice and all
information requested by Landlord relating to such proposed assignment or subletting, inform Tenant that Landlord intends to Recapture the Lease, then Landlord may not Recapture the Lease by reason of
such proposed assignment or subletting, provided that: (i) if Landlord consents to the proposed assignment or subletting, Tenant shall complete such assignment or sublease within one hundred
twenty (120) days after the end of such thirty (30) day period, and (ii) nothing contained in this Section e shall be deemed to waive any of Landlord's rights to approve or
disapprove a sublet or assignment. 

        Notwithstanding
the foregoing, Tenant may assign its entire interest under this Lease to an Affiliate of Tenant without the consent of Landlord, provided that all of the following
conditions are satisfied and provided an Assumption Document (hereafter defined) is executed by the assignee and delivered to Landlord (a "Permitted Transfer"): (i) Tenant is not in default
under this Lease beyond 

6

 

applicable
notice and/or cure periods, (ii) Tenant's successor shall have a net worth which is at least equal to $100,000,000, (iii) Tenant shall give Landlord written notice not less
than fifteen (15) days prior to the effective date of the proposed purchase, merger, consolidation, or reorganization. Tenant's notice to Landlord shall include information and documentation
showing that each of the above conditions has been satisfied, and (iv) Tenant shall deliver to Landlord a recordable instrument satisfactory to Landlord (an "Assumption Document") containing a
covenant of assumption of all of the obligations of Tenant hereunder by the transferee running to Landlord and all persons claiming by, through or under Landlord. 

        For
purposes hereof, (i) the term "Affiliate of Tenant" shall mean any entity which is controlled by, controls, or is under common control with Tenant or a successor to Tenant by
purchase, merger, consolidation or reorganization; (ii) the term "control" shall mean ownership of not less than 51% of all shares of stock, partnership or membership interests in the
controlled entity, including, without limitation, not less than 51% of all voting or management interests therein. 

        (f)    not
to install any fixtures or otherwise make any alterations or additions, nor to permit the making of any holes in any part of said Building, not to paint or place any
signs, aerials or flagpoles, or the like, visible from outside of said Premises, not to permit anyone except the Tenant (including its employees, agents, and advisors) to use any part of the Premises
for desk space or for the mailing privileges without on each occasion obtaining prior written consent of Landlord; 

        (g)   to
save Landlord harmless and indemnified from any injury, loss, claim or damage to any person or property while on said Premises if not due to negligence or willful
misconduct of Landlord, and to any person or property anywhere occasioned by any omission, neglect or default of Tenant, or of employees or visitors of Tenant; 

        (h)   not
to move any safe, heavy equipment, freight, bulky matter or heavy fixtures in or out of the Building except at such times and in such manner as Landlord shall
designate after written request from Tenant; and to place and maintain business machines and mechanical equipment in such settings as will most effectively reduce noise and vibration; 

        (i)    not
to place a load upon any floor of the Premises in excess of 75 pounds live load per square foot or in violation of what is allowed by law; 

        (j)    to
carry and maintain in full force from the date upon which Tenant first enters the Premises for any reason, throughout the Lease Term, and thereafter so long as Tenant
is in occupancy of any part of the Premises, (a) a policy of commercial general liability insurance, written on an occurrence basis and including contractual liability coverage to cover any
liabilities assumed under this Lease, insuring against all claims for injury to or death of persons or damage to property on or about the Premises or arising out of the use of the Premises, including
products liability, and completed operations liability, and (b) automobile liability insurance covering all owned vehicles, hired vehicles, and all other non-owned vehicles. Each
such policy shall designate Tenant as a named insured and Landlord, its managing agent, and any mortgagees (as may be set forth in a notice given from time to time by Landlord) shall be named as
additional insureds, as their interests appear. 

        Each
such policy shall expressly provide that it shall not expire or be amended or canceled without at least thirty (30) days' prior written notice to Landlord in each instance
and that the interests of Landlord there under or therein shall not be affected by any breach by Tenant of any policy provision, and a duplicate original or certificate thereof shall be delivered to
Landlord. The minimum limits of liability of such insurance shall be bodily injury and property damage combined single limit of $3,000,000 per occurrence. The Landlord shall have the right from time
to time to increase such minimum limits upon notice to Tenant, provided that any such increase shall provide for coverage in amounts similar to like coverage being carried on like property in the
greater Boston area. 

7

 

        To
carry and maintain in full force from the date upon which Tenant first enters the Premises for any reason, throughout the Lease Term, and thereafter so long as Tenant is in occupancy
of any part of the Premises, a policy insuring any leasehold improvements paid for by Tenant and all fixtures, equipment, and other personal property of Tenant against damage or destruction by fire or
other casualty in an amount equal to the full replacement cost of such property. Tenant shall also maintain insurance against such other hazards as may from time to time reasonably be required by
Landlord or the holder of any mortgage on the Premises, provided that such insurance is customarily carried in the area in which the Premises are located on property similar to the Building and that
Tenant receives written notice specifying all such additional insurance as may be required. At Landlord's request, any such policies of insurance shall name any such mortgagee as loss payee under a
standard mortgagee's clause. 

        (k)   to
hold all property of Tenant, including Tenant's fixtures, furniture, equipment and the like, at Tenant's own risk and to pay when due all municipal, county or state
taxes assessed during the term of this lease against any leasehold interest or personal property of any kind owned or placed in, upon or about said Premises by Tenant; 

        (l)    to
permit Landlord or its designees to examine the Premises at reasonable times, and, if Landlord shall so elect, to make any repairs or additions Landlord may
reasonably deem necessary, and, at Tenant's expense to remove any alterations, additions, signs, awnings, aerials or flagpoles, or the like, not consented to in writing; and to show the Premises to
prospective purchasers, lenders and tenants; and to keep affixed to any suitable part of the Premises during the three months preceding the expiration of said term appropriate notices for letting or
selling; 

        (m)  to
permit Landlord at any time or times to decorate and to make, at its own expense, repairs, alterations and additions, structural or otherwise, in or to the Building
or any part thereof, and during such operations to take into and through said Premises or any part of the Building all materials required and to close or temporarily suspend operation of entrances,
doors, corridors, elevators or other facilities, Landlord agreeing, however, that it will endeavor to carry out such work in a manner which will cause Tenant minimum inconvenience; 

        (n)   to
pay Landlord's expenses, including reasonable attorney's fees, incurred in enforcing any obligation of this lease which has not been complied with; 

        (o)   not
to install any vending machines in the Premises without first obtaining Landlord's written approval; and 

        (p)   to
comply with all rules and regulations which Landlord may establish from time to time for the orderly and efficient management and operation of the Building, including
without limitation those rules and regulations attached hereto as Exhibit B and made a part hereof. 

 
 

ARTICLE VIII—SUBORDINATION AND NON-DISTURBANCE    
    

        This Lease shall be subject and subordinate to any mortgage ("Mortgage") or ground lease ("Ground Lease") now or hereinafter placed on or affecting the Lot, the
Building, or both, or any portion or portions thereof or interest therein, which are separately and together hereinafter in this Article VIII referred to as the "affected premises," and to each
advance made or hereafter to be made under any Mortgage, and to all renewals, modifications, consolidations, replacements and extensions thereof and all substitutions of any Mortgage or Ground Lease. 

8

  

        In the event that any mortgagee or its successor in title or any ground lessor shall succeed to the interest of Landlord, then Tenant shall and does hereby agree to attorn to such
mortgagee or successor or ground lessor and to recognize such mortgagee or successor or ground lessor as its Landlord. Any claim by Tenant under the Lease against the mortgagee or such successor or
ground lessor shall be satisfied solely out of the mortgagee's or such successor's or ground lessor's interest in the Premises and Tenant shall not seek recovery against or out of any other assets of
mortgagee or such successor or ground lessor. 

        Within
three (3) business days after the Lease Execution Date, Landlord shall initiate a request to the mortgagee and Landlord shall thereafter use commercially diligent efforts
to obtain from the mortgagee on Tenant's behalf an agreement on the part of such mortgagee to not disturb Tenant's rights of possession hereunder in substantially the form attached hereto as
Exhibit D with such changes therein that the parties thereto reasonably agree. 

        At
any other time during the Term of the Lease and conditioned upon Tenant not being in default under any of the terms of this Lease, subsequent to the Term Commencement Date and upon
Tenant's delivery of an estoppel certificate accepting the Premises and acknowledging that Landlord has completed the Landlord's Work in accordance with the provisions hereof, Landlord shall use
commercially diligent efforts to obtain from any mortgagee or ground lessor on Tenant's behalf an agreement on the part of such mortgagee or ground lessor to not disturb Tenant's rights of possession
hereunder in substantially the form attached hereto as Exhibit D with such changes therein that the parties thereto reasonably agree. 

        Notwithstanding
the foregoing, any mortgagee may at its election subordinate its Mortgage to this Lease without the consent or approval of Tenant. This Article 8 shall be
self-operative. Notwithstanding the foregoing, Tenant agrees to execute and deliver promptly any certificates or instruments reasonably requested by Landlord or any mortgagee or ground
lessor to carry out or evidence the subordination and attornment agreements contained in this Article 8. 

 
 

ARTICLE IX—CASUALTY AND TAKING    
    

        In case the Premises or Building, or any substantial part thereof, shall be taken by any exercise of the right of eminent domain or shall be materially destroyed
or damaged by fire or unavoidable casualty or by action of any public or other authority, or shall suffer any material direct or consequential damage for which Landlord and Tenant, or either of them,
shall be entitled to compensation by reason of anything done in pursuant of any public or other authority during this lease or any extension thereof, then this lease shall terminate at the election of
Landlord, which election may be made notwithstanding Landlord's entire interest may have been divested; and if Landlord shall not so elect, then in case of such taking, destruction or damage rendering
the Premises unfit for use and occupation, a just proportion of said rent according to the nature and extent of the injury shall be abated until the Premises, or in the case of a partial taking what
may remain thereof, shall have been put in proper condition for use and occupation. Except for any relocation award payable directly to Tenant, Landlord reserves and excepts all rights to damages to
said Premises and Building and the leasehold hereby created, now accrued or hereafter accruing by reason of anything lawfully done in pursuance of any public or other authority; and by way of
confirmation, Tenant grants to Landlord all Tenant's rights to such damages and covenants to execute and deliver such further instruments of assignment thereof as Landlord may from time to time
request. Landlord shall give Tenant notice of its decision to terminate this lease or restore said Premises within sixty (60) days after any occurrence giving rise to Landlord's right to so
terminate or restore. 

9

 

 
 

ARTICLE X—LANDLORD'S REMEDIES    
    

        If Tenant shall neglect or fail to make any payment of rent or other charges within five (5) days of the due date thereof, or if Tenant shall fail to cure
a default in the performance of any other of Tenant's covenants within thirty (30) days after date of notice of such default from Landlord or if the Premises shall be abandoned, or if the
leasehold hereby created shall be taken on execution, or by other process of law, or if any assignment shall be made of Tenant's property for the benefit of creditors, or if a receiver, guardian,
conservator, trustee in bankruptcy or similar officer shall be appointed by a court of competent jurisdiction to take charge of all or any part of Tenant's property, or if a petition is filed by
Tenant under any bankruptcy or insolvency law, or if a petition is filed against Tenant under any bankruptcy, or insolvency law and the same shall not be dismissed within sixty (60) days from
the date upon which is filed, then, and in any of said cases, Landlord lawfully may immediately or at any time thereafter declare the term of this lease ended and enter upon the Premises and repossess
the same and expel Tenant and those claiming through or under Tenant and remove their effects, without prejudice to any remedies which might otherwise be used for arrears of rent or previous breach of
covenant; and Tenant covenants that in case of such termination, Tenant will forthwith pay to Landlord as damages a sum equal to the amount by which the rent and other payments called for hereunder
for the remainder of the original term and of any extension thereof exceed the fair rental value of said Premises (as determined through a commercially reasonable appraisal process) for the remainder
of the
original term and of any extension thereof, and, in addition thereto, will during the remainder of the original term and of any extension thereof, pay to Landlord on the last day of each calendar
month the difference, if any, between the rental which would have been due for such month had there been no such termination and the sum of the amount being received by Landlord as rent from occupants
of the Premises, if any, and the applicable prorated amount of the damages previously paid to Landlord. 

        Without
thereby affecting any other right or remedy hereunder, at its sole option Landlord may cure for Tenant's account any default by Tenant hereunder which remains uncured after
thirty (30) days' notice of the default from Landlord to Tenant; and the cost to Landlord thereto shall be deemed to be additional rent and shall be added to the installment of rent next
accruing or to any subsequent installment of rent, at Landlord's election. 

        Any
and all rights and remedies which Landlord may have under this lease or by operation of law, either at law or in equity, upon any breach, shall be distinct, separate, and cumulative
and shall not be deemed inconsistent with each other; and no one of them, whether or not exercised by Landlord, shall be deemed to be in exclusion of any other, and any two or more of all such rights
and remedies may be exercised at the same time. 

 
 

ARTICLE XI—WAIVER OF SUBROGATION    
    

        Landlord and Tenant shall each use its best efforts to cause all policies of fire, extended coverage, and other physical damage insurance covering the Premises,
the Building, and any property therein to contain the insurers' waiver of subrogation and consent to pre-loss waiver of rights over by the insured. Effective only when permitted by the
policy or when use of its good faith efforts could have obtained such a clause at no additional cost or premium (unless the other party agrees to pay the same), Landlord and Tenant respectively waive
all claims and rights to recover against the other in event of insured loss or damage to the extent of insurance proceeds collected by the damaged party. 

 
 

ARTICLE XII—TENANT ESTOPPEL    
    

        Promptly at Landlord's request from time to time Tenant shall furnish to Landlord (or as Landlord may direct) Tenant's written and duly signed certification that
this lease is in full force and effect without amendment (or with such changes as may then be effective, which shall be stated in the 

10

 

certificate),
that Tenant has no defense, offset, or counterclaim against its rent payment or other obligations hereunder, the dates to which rent and other charges have been paid, and that neither
Landlord nor Tenant is in default under this lease (or specifying any default of either party in detail in the certificate). Any prospective purchaser or mortgagee may rely on such certifications. 

 
 

ARTICLE XIII—MISCELLANEOUS    
    

13.01—Waivers  

        No consent or waiver, express or implied, by either party, to or of any breach of any covenant, condition or duty of the other, shall be construed as consent, or
waiver to or any other breach of the same or other covenant, condition or duty. 

13.02—Notices  

        Any notice from Landlord to Tenant or from Tenant to Landlord shall be deemed duly served if mailed by certified mail or overnight express mail with receipt of
delivery, if to Tenant, at said Premises after the term of this lease has commenced and, prior to that time Tenant's Original Address or if to Landlord at the place from time to time established for
the payment of rent. Any notices served on the Tenant shall be to the attention of the then-current Chief Financial Officer of Tenant with a copy to the then-current General
Counsel of Tenant. Notices to Tenant may also be duly served in hand. 

13.03—Successors and Assigns  

        The covenants and agreements of Landlord and Tenant shall run with the land and be binding upon and inure to the benefit of them and their respective heirs,
executors, administrators, successors and assigns, but no covenant or agreement of Landlord, express or implied, shall be binding upon any person except for defaults occurring during such person's
period of ownership nor binding individually upon any fiduciary, any shareholder or any trustee or beneficiary under any trust. 

13.04—Definition of "Tenant"  

        If Tenant is more than one person or party Tenant's obligations shall be joint and several. Unless repugnant to the context, "Landlord" and "Tenant" mean the
person or persons, natural or corporate, named above as Landlord and Tenant respectively, and their respective heirs, executors, administrators, successors and assigns (subject to Landlord's consent
where required herein). 

13.05—Notice of Lease  

        Landlord and Tenant agree that this lease shall not be recorded. If either party desires to enter into a Notice of Lease for recording purposes, the other shall
promptly execute such Notice of Lease in statutory form. 

13.06—Headings 

        The headings herein contained are for convenience and shall not be construed a part of this lease. 

13.07—Hold Over  

        If Tenant holds over in occupancy of the Premises after the expiration of the Term, Tenant shall become a tenant at sufferance only, at a rental rate equal to one
hundred and fifty (150%) percent of the Rent in effect at the end of the Term for the first 60 days after the term expiration and thereafter at two hundred (200%) of the Rent in effect at the
end of the end of the Term, and otherwise subject to the terms and conditions herein specified, so far as applicable, and shall be liable for all damages sustained by Landlord on account of such
holding over. This Section shall not operate as a waiver of 

11

 

any
right of reentry provided in this Lease, and Landlord's acceptance of rent after expiration of the Term or earlier termination of this Lease shall not constitute consent to a holdover or result in
a renewal. If Tenant fails to surrender the Premises upon the expiration of the Term or earlier termination despite demand by Landlord to do so, Tenant shall indemnify and hold Landlord harmless from
all loss or liability, including, without limitation, any claim made by any succeeding tenant resulting from such failure. 

13.08—Letter of Credit.  

        Within fourteen (14) days of the Lease Execution Date Tenant shall deliver to Landlord an unconditional, irrevocable and transferable letter of credit,
naming Landlord and its successors and assigns as beneficiary, in the amount of Three Hundred Thousand U.S. Dollars ($ 300,000.00) (the "Letter of
Credit"), which shall be held by Landlord or its agent, as security, for the full and faithful performance of Tenant's obligation herewith. The Letter of Credit shall be issued by a commercial bank
headquartered in the continental United States of America (or other bank satisfactory to and approved by Landlord) which has capital assets of at least $1,000,000,000 and capital reserves of at least
$250,000,000, and which is a member of the Federal Reserve System ("Issuing Bank"). Upon the occurrence of any default by Tenant hereunder, Tenant agrees that Landlord may from time to time, without
prejudice to any other remedy, make demand for the principal amount of the Letter of Credit to the extent necessary to make good any damage, injury, expense incurred by Landlord by virtue of such
default and/or to pay any damages payable to Landlord by virtue of such default, and may thereafter apply such proceeds to any such damage, injury or expense. Tenant shall not have the right to call
upon Landlord to draw upon the Letter of Credit to cure any default or fulfill any obligation of Tenant, but such use shall be solely in the discretion of Landlord. Upon any conveyance of the Premises
by Landlord to Landlord's grantee or transferee, the Letter of Credit thereon may be assigned by Landlord to Landlord's grantee or transferee and Tenant shall cooperate to the extent necessary to
effect such assignment. Upon any such assignment, Tenant hereby releases Landlord herein named of any and all liability with respect to the Letter of Credit, its application and return, and Tenant
agrees to look solely to such grantee or transferee. It is further understood that this provision shall also apply to subsequent grantees and transferees. 

        In
addition, Landlord shall return the Letter of Credit to Tenant within thirty (30) days after the expiration of the initial Term of this Lease or the termination of this lease
provided that at such time there exists no breach of any undertaking of Tenant. In the event that the Issuing Bank closes or threatens to close during the Term, Tenant shall immediately deliver a
letter of credit to replace the Letter of Credit (if then held by Landlord) (the "Original Letter of Credit"), which letter of credit (the "Substitute Letter of Credit") shall be identical in form and
substance to the Original Letter of Credit unless Landlord in its sole but reasonable discretion approves any discrepancies. The Substitute Letter of Credit shall be issued by a commercial bank
headquartered in the continental United States of America (or other bank satisfactory to and approved by Landlord) which has capital assets of at least $1,000,000,000 and capital reserves of at least
$250,000,000, and which is a member of the Federal Reserve System. Tenant's failure to deliver the Substitute Letter of Credit to Landlord within fifteen 15 business days of written demand from
Landlord shall constitute a material breach and default hereunder, which shall entitle Landlord to exercise any of the rights and remedies set forth in this Lease. Furthermore, if the Letter of Credit
or Substitute Letter of Credit, as the case may be, has an expiration date that occurs prior to the date which is thirty (30) days after the expiration of the initial Term of this Lease, and
the Landlord receives notice that the Letter of Credit or Substitute Letter of Credit, as the case may be, will not be extended beyond such expiration date, Landlord may draw upon the full amount of
the Letter of Credit or Substitute Letter of Credit, as the case may be, and thereafter hold such amount as a security deposit otherwise subject to the terms hereof, for the full and faithful
performance of Tenant's obligation herewith or Landlord may hold Tenant in default of it's obligations under this lease and pursue all of its remedies under said lease. Upon the request of 

12

 

Landlord,
from time to time, Tenant shall make arrangements satisfactory to Landlord in its reasonable discretion for the transfer of any Letter of Credit to any successor landlord or mortgagee of the
Property, and from any such mortgagee to Landlord or any successor mortgagee. 

        Any
security deposit held by Landlord or its agent, as security, for and during the Term, shall be returned to Tenant within thirty (30) days after the expiration of the Term or
the termination of this lease provided there exists no breach of any undertaking of Tenant. Upon the occurrence of any default by Tenant hereunder, Tenant agrees that Landlord may apply all or any
part of the Security Deposit together with accrued interest, if any, thereon to any obligation of Tenant hereunder. If all or any portion of the security deposit is applied to any obligation of Tenant
hereunder, Tenant shall immediately upon request by Landlord restore the security deposit to its original amount. Tenant shall not have the right to call upon Landlord to apply all or any part of the
security deposit to cure any default or fulfill any obligation of Tenant, but such use shall be solely in the discretion of Landlord. Upon any conveyance of the Premises by Landlord to Landlord's
grantee or transferee, the security deposit together with accrued interest, if any, thereon may be delivered by Landlord to Landlord's grantee or transferee. Upon any such delivery, Tenant hereby
releases Landlord herein named of any and all liability with respect to the security deposit, its application and return, and Tenant agrees to look solely to such grantee or transferee. 

13.09 Option to Extend  

        Tenant may elect to extend the Term of this Lease for one (1) five- (5) year period (the "Extension Term"), by giving Landlord notice of
such election no later than nine (9) months prior to the Expiration Date. Such extension shall be upon the terms, covenants, and conditions contained in this Lease except that Tenant shall
have no further right to extend the Lease Term and except that the Base Rent for the Extension Term shall be at fair market rent for comparable space in comparable properties in the downtown Boston
area and not less than the then current Base Rent. 

        If
Landlord and Tenant are unable to agree on the amount of such fair market rent by the date that is thirty (30) days after the date of Tenant's election notice based on rental
rates and terms for comparable space in the downtown Boston area, then Landlord shall promptly specify in writing the rent (the Landlord's Rental Rate") at which Landlord is willing to lease the
Premise for the Extension Term and Tenant shall promptly specify in writing the rent (the "Tenant's Rental Rate") which Tenant is willing to pay for the Premises for the Extension Term and the amount
of the fair market rent shall be established by appraisal in the following manner. The Landlord and Tenant shall each appoint one appraiser and the two appraisers so appointed shall determine the fair
market rent within thirty days of Tenant's election notice. If such appraisers are unable to agree on the amount of such fair market rent within such 30-day period, they shall appoint a
third appraiser within ten (10) days of the expiration of such period, who shall be instructed to select, as between the rents chosen by the two appraisers, the rent that is closest to the
third appraiser's estimate of Fair Market Rent. The fair market rent shall be the amount so selected by the third appraiser and shall be conclusive on the Landlord and Tenant. 

        Each
party shall bear the cost of its appraiser. If the rental rate as so determined is equal to or greater than Landlord's Rental Rate, then Tenant shall pay the entire cost of the
third appraiser and if such rate as so determined is equal to or less than Tenant's Rental Rate, then Landlord shall pay the entire cost of the third appraiser. If the rate is between the Landlord's
Rental Rate and the Tenant's Rental Rate, then Landlord and Tenant shall share the cost equally. 

        Until
such time as the fair market rent is so determined, Tenant shall continue to pay Base Rent at the rate of $391,311.00 per annum in monthly installments of $32,609.25 with
appropriate adjustment once the fair market rent is determined. The third appraiser's estimate shall be based on the data supplied and used by the original two appraisers and the findings made by the
third appraiser shall be set forth in writing. 

13

 

3.10 Right of First Offer  

        Tenant shall have during the initial Term a right of first offer to lease any contiguous space on the 3rd, 4th or 5th
floor of the Building on the following terms and conditions: 

        a)    After
Landlord receives significant interest from any party to lease all or any portion of the Offer Space, Landlord shall notify Tenant in writing (the "Offer Notice")
of the terms and conditions upon which Landlord is willing to lease such space (the "Offer Space") to Tenant which terms shall include rent at a fair market rate. 

        b)    Within
five business (5) days after the receipt of the Offer Notice, Tenant shall accept or reject the offer stated therein (failure to respond shall be deemed to
be a rejection); 

        c)     If
Tenant accepts the offer set forth in the Offer Notice, the parties shall execute an amendment to this Lease to incorporate the Offer Space within the Premises on the
terms set forth in the Offer Notice. If Tenant rejects or is deemed to have rejected the offer set forth in the Offer Notice, Landlord shall thereafter have the right to lease the Offer Space to a
third party on any terms the Landlord deems advisable for a rent and additional rent not more than 15% more favorable than that offered to Tenant in the Offer Notice. Landlord may offer one five
(5) year renewal option to any party leasing the Offer Space. 

        WITNESS
the execution hereof in duplicate under seal as of the Execution Date. 

	 	 	LANDLORD:    KNH REALTY TRUST
	

 	
 	
By:	

/s/  JOHN F. POWER        
 John F. Power

Trustee
	

 	
 	
TENANT:    POINT THERAPEUTICS, INC.
	

 	
 	
By:	

/s/  MICHAEL P. DUFFY      
 By: Michael P. Duffy

Its: Senior Vice President and Secretary

14

QuickLinks

155 FEDERAL STREET Boston, Massachusetts LEASE By and Between KNH REALTY TRUST and POINT THERAPEUTICS, INC.

TABLE OF CONTENTS

REFERENCE DATA

ARTICLE I—PARTIES AND PREMISES

ARTICLE II—TERM

ARTICLE III—RENT AND OTHER CHARGES

ARTICLE IV—CONSTRUCTION OF PREMISES

ARTICLE V—ELECTRICITY

ARTICLE VI—SERVICES PROVIDED BY LANDLORD

ARTICLE VII—TENANT'S COVENANTS

ARTICLE VIII—SUBORDINATION AND NON-DISTURBANCE

ARTICLE IX—CASUALTY AND TAKING

ARTICLE X—LANDLORD'S REMEDIES

ARTICLE XI—WAIVER OF SUBROGATION

ARTICLE XII—TENANT ESTOPPEL

ARTICLE XIII—MISCELLANEOUSQuickLinks
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Exhibit 10.5  

 
 

EMPLOYMENT AGREEMENT

THIS
EMPLOYMENT AGREEMENT (this "Agreement") is made as of February 21, 2005 between 1-800 CONTACTS, INC., a Delaware corporation (the "Company"), and John R. Murray (the
"Executive"). This Agreement shall be deemed to be effective as of February 21, 2005 (the "Effective Date"). 

        In
consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows: 

        1.    Employment.    The Company shall employ Executive, and Executive hereby accepts employment with the Company,
upon the terms and conditions set forth in this Agreement, for the period beginning on the Effective Date and ending as provided in paragraph 4 hereof (the "Employment Period"). 

        2.    Position and Duties.    

	(a)
	During
the Employment Period Executive shall serve as Chief Information Officer for the Company and shall have the normal duties, responsibilities and authority of such position.

	(b)
	Executive
shall report to the Company's President and such other persons as the board of directors ("the Board") may direct from time to time, and Executive shall devote his best
efforts and his full business time and attention (except for permitted vacation periods and reasonable periods of illness or other incapacity) to the business and affairs of the Company and its
Subsidiaries (as hereinafter defined). Executive shall perform his duties and responsibilities to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner.

	(c)
	For
purposes of this Agreement, "Subsidiaries" shall mean any corporation of which the securities having a majority of the voting power in electing directors are, at the times of
determination, owned by the Company, directly or through one or more Subsidiaries. 

        3.    Base Salary and Benefits.    

	(a)
	During
the first year of the Employment Period, Executive's base salary shall be $180,000 per annum (the "Base Salary"), which salary shall be payable in regular installments in
accordance with the Company's general payroll practices and shall be subject to customary withholding. Thereafter, the Base Salary shall be such higher rate as the Board may designate from time to
time. As used in this Agreement, the term "Base Salary" shall be deemed to include any such increases as may be designated from time to time by corporate management. During the Employment Period,
Executive shall be entitled to participate in all of the Company's employee benefit programs for which management employees of the Company and its Subsidiaries are generally eligible (including the
Company's stock option program).

	(b)
	In
addition to the Base Salary, the Board will award an annual bonus of up to 60% of the Executive's Base Salary to Executive following the end of each fiscal year during the
Employment Period upon the Company achieving certain operating targets as determined by the Board at the beginning of each fiscal year during the Employment Period. In addition to the Base Salary and
any bonuses payable to Executive pursuant to this paragraph, Executive shall be entitled to the following benefits during the Employment Period:

	(i)
	10,000
restricted shares as an initial grant. These shares shall vest 20 percent over five years. Share price will be $.01. Additional 5,000 shares to be granted
upon 

 

successful
completion of one year of employment with Company. These shares will also vest 20 percent each year over five years. In the event of a change of control, vesting will change from
five years so that any remaining unvested shares will vest over the two years following the closing of the transaction. In the event of a change of control with a subsequent termination due to the
change in control (a double trigger), except for Cause, vesting will be immediate. see Exhibit A; and 

	(ii)
	A
maximum of four weeks vacation each year (20 working days) with salary in addition to holidays, subject to additional vacation time either upon executive approval or
according to the Company vacation policy; and

	(iii)
	Reimbursement
for travel, entertainment and other business expenses reasonably incurred by Executive; and

	(iv)
	Paid
Life insurance (1 times Annual Salary) (Supplemental Life available); and

	(v)
	Paid
medical coverage for self, spouse and dependents; and

	(vi)
	Dental
and Vision coverage available; and

	(vii)
	Paid LTD;
and

	(viii)
	401(k)—Company
will match 50% up to 6% deferral—eligibility after six months of employment; and

	(ix)
	$400
per month house cleaning allowance (must be used for house cleaning). 

        4.    Termination.    

	(a)
	The
Employment Period shall continue until earlier of (i) the fourth anniversary of the Effective Date (the "Expiration Date")
or (ii) Executive's resignation, death or disability or other incapacity (as determined by the Board in its good faith judgment) or until the Board determines in its good faith judgment that
termination of Executive's employment is in the best interests of the Company. Notwithstanding the foregoing, the Employment Period shall be automatically extended for an additional year unless either
the Company or the Executive delivers written notice to the other within 60 days of the Expiration Date of its or his intention not to extend the Employment Period. In the event of Executive's
resignation of employment for any reason, (other than a breach by the Company of paragraph 2(a)) or termination for Cause (as defined herein), Executive shall not be entitled to receive his
Base Salary or any fringe benefits for any period after the termination of the Employment Period. Upon any other termination of the Employment Period, Executive shall be entitled to receive
(i) his Base Salary and health benefits for a period of 12 months thereafter, and (ii) following the end of the fiscal year in which Executive's employment would have been
entitled if he remained employed by the Company or its Subsidiaries for the entire fiscal year (the "Bonus Amount"), (A) 50% of the Bonus Amount if such termination occurs in the first six
months of such fiscal year or (B) 100% of the Bonus Amount if such termination occurs in the second six months of such fiscal year.

	(b)
	For
purposes of this Agreement, "Cause" shall mean (i) the willful and continued failure by Executive to perform his duties of the position set forth herein or his continued
failure to perform duties reasonably requested or reasonably prescribed by the Board, (ii) the engaging by Executive in conduct which is materially monetarily injurious to the Company or any of
its Subsidiaries, (iii) gross negligence or willful misconduct by Executive in the performance of his duties which results in, or causes, material monetary harm to the Company or any of its
Subsidiaries, or (iv) Executive's commission of a felony or other 

2

 

civil
or criminal offense involving moral turpitude. In the case of (i), (ii) and (iii) above, finding of Cause for termination shall be made only after reasonable notice to Executive
and an opportunity for Executive, together with counsel (if requested by executive), to be heard before the Board. 

        5.    Confidential Information.    Executive acknowledges that the information, observations, data, strategic and
development plans, financial condition, business plans, co-developer identities, business records, customer lists, clients and suppliers, project records, market reports, employee lists
and business manuals, policies and procedures, information relating to processes, technologies of theory and all other information which may be disclosed or obtained by Executive while employed by the
Company and its Subsidiaries concerning the business or affairs of the Company or any other Subsidiary ("Confidential Information") are the property of the Company or such Subsidiary. Therefore,
Executive agrees that he shall not disclose to any unauthorized person or use for his own purposes any Confidential Information without the prior written consent of the Board, unless and to
the extent that the aforementioned matters become generally known to and available for use by the public other than as a result of Executive's acts or omissions. Executive shall deliver to the Company
at the termination of the Employment Period, or at any other time the Company may request, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and other documents and
data (and copies or reproductions thereof) relating to the Confidential Information, Work Product (as defined below) or the business of the Company or any Subsidiary which he may then possess or have
under his control. 

        6.    Inventions and Patents.    In accordance with UCA §34-39-1 et. seq.,
Executive acknowledges that any invention or part thereof conceived, developed, reduced to practice, or created by Executive which is: 

	(a)
	conceived,
developed, reduced to practice, or created by Executive:

	(i)
	within
the scope of his employment;

	(ii)
	on
Company's or its Subsidiaries' time; or

	(iii)
	with
the aid, assistance, or use of any of Company's or its Subsidiaries' property, equipment, facilities, supplies, resources, or intellectual property;

	(b)
	the
result of any work, services, or duties performed by Executive for Company or its Subsidiaries;

	(c)
	related
to the industry or trade of the Company or its Subsidiaries; or

	(d)
	related
to the current or demonstrably anticipated business, research, or development of the Company or its Subsidiaries is an ("Employment invention") and belongs to the Company or
such Subsidiary.

	(e)
	("Intellectual
property") means any and all patents, trade secrets, know-how, technology, confidential information, ideas, copyrights, trademarks, and service marks and
any and all rights, applications, and registrations relating to them.

	(f)
	Executive
shall promptly disclose such Employment invention to the Board and perform all actions reasonably requested by the Board (whether during or after the Employment Period) to
establish and confirm such ownership (including, without limitation, assignments, consents, powers of attorney and other instruments). 

        7.    Non-Compete, Non-Solicitation.    

	(a)
	In
further consideration of the compensation to be paid to Executive hereunder, Executive acknowledges that in the course of his employment with the Company he shall 

3

 

become
familiar with the Company's trade secrets and with other Confidential Information concerning the Company and its Subsidiaries and that his services shall be of special, unique and extraordinary
value to the Company and its Subsidiaries. Therefore, Executive agrees that, during the Employment Period and for two years thereafter (the "Noncompete
Period"), he shall not without the express written consent of the Company, directly or indirectly own any interest in, manage, control, participate in, consult with, advise,
render services for, or in any manner engage in any activity competing with the businesses of the Company or its Subsidiaries within any geographical area in which the Company or its Subsidiaries
engage or plan to engage in such businesses as of the date of the termination of Executive's employment. Nothing herein shall prohibit Executive from being a passive owner of not more than 2% of the
outstanding stock of any class of a corporation which is publicly traded, so long as Executive has no active participation in the business of such corporation. 

	(b)
	During
the Noncompete Period, Executive shall not directly or indirectly through another entity (i) hire any person who was an employee of the Company or any Subsidiary at any
time during the three-month period prior to the expiration of the Employment Period or (ii) induce or attempt to induce any customer, supplier, licensee, licensor, franchisee or other business
relation of the Company or any Subsidiary to cease doing business with the Company or such Subsidiary, or in any way interfere with the relationship between any such customer, supplier, licensee or
business relation and the Company or any Subsidiary (including, without limitation, making any negative statements or communications about the Company or its Subsidiaries) which interference causes
material monetary damage to the Company or its Subsidiaries. 

        8.    Enforcement.    If, at the time of enforcement of paragraph 5, 6, 7 or 8 of this Agreement, a court holds
that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographical area reasonable under such circumstances
shall be substituted for the stated period, scope or area. Because Executive's services are unique and because Executive has access to Confidential Information and Work Product, the parties hereto
agree that money damages would not be an adequate remedy for any breach of this Agreement. Therefore, in the event of a breach or threatened breach of this Agreement, the Company or its successors or
assigns may, in addition to all other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance and/or injunctive or other relief in order to
enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security). In addition, in the event of an alleged breach or violation by Executive of paragraph 7,
the Noncompete Period shall be tolled until such breach or violation has been duly cured. Executive agrees that the restrictions contained in paragraph 7 are reasonable. 

        9.    Other Businesses.    As long as Executive is employed by the Company or any of its Subsidiaries, Executive
agrees that he will not, except with the express written consent of the Board, become engaged in, or render services for, any business other than the business of the Company, any of its Subsidiaries
or any corporation or partnership in which the Company or any of its Subsidiaries have an equity interest; provided, that Executive may devote a de minimis portion of his time to engaging in, or
rendering services for, any such business if such activities do not in any material way interfere with the performance by Executive of his obligations hereunder and such activities do not in any way
materially and adversely affect the Company. Executive shall notify the Company prior to engaging in any such activities. Nothing contained in this paragraph 9 shall limit the provisions of
paragraph 7 above. 

        10.    Executive's Representations.    Executive hereby represents and warrants to the Company that (i) the
execution, delivery and performance of this Agreement by Executive do not and shall not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, (ii) Executive is not a party 

4

 

to
or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the
Company, this Agreement shall be the valid and binding obligation of Executive, enforceable in accordance with its terms. Executive hereby acknowledges and represents that he fully understands the
terms and conditions contained herein. 

        11.    Survival.    Paragraphs 5, 6, 7 and 8 and paragraphs 11 through 19 shall survive and continue in full force in
accordance with their terms notwithstanding any termination of the Employment Period. 

        12.    Notices.    Any notice provided for in this Agreement shall be in writing and shall be either personally
delivered, or mailed by first class mail, return receipt requested, to the recipient at the address below indicated: 

 Notices to Executive: 

John
R. Murray

3575 West Maynard Court

Riverton, UT 84065 

 Notices to the Company: 

1-800
CONTACTS, INC.

66 E. Wadsworth Park Drive, 3rd Floor

Draper, Utah 84020

Attn: Board of Directors

Fax: 1-801-924-9909 

or
such other address or to the attention of such other person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement shall be deemed
to have been given when so delivered or mailed. 

        13.    Severability.    Whenever possible, each provision of this Agreement shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained herein. 

        14.    Complete Agreement.    This Agreement, those documents expressly referred to herein and other documents of even
date herewith embody the complete agreement and understanding among the
parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. 

        15.    No Strict Construction.    The language used in this Agreement shall be deemed to be the language chosen by the
parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party. 

        16.    Counterparts.    This Agreement may be executed in separate counterparts, each of which is deemed to be an
original and all of which taken together constitute one and the same agreement. 

        17.    Successors and Assigns.    This Agreement is intended to bind and inure to the benefit of and be enforceable by
Executive, the Company and their respective heirs, successors and assigns, except that Executive may not assign his rights or delegate his obligations hereunder without the prior written consent of
the Company. 

5

 

        18.    Choice of Law.    All issues and questions concerning the construction, validity, enforcement and
interpretation of this Agreement and the exhibits and schedules hereto shall be governed by, and construed in accordance with, the laws of the State of Utah, without giving effect to any choice of law
or conflict of law rules or provisions (whether of the State of Utah or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Utah. 

        19.    Amendment and Waiver.    The provisions of this Agreement may be amended or waived only with the prior written
consent of the Company and Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this
Agreement. 

        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above. 

	 	 	1-800 CONTACTS, INC.
	

 	
 	

By:	

	 	 	 	Name:	Brian Bethers
	 	 	 	Its:	President & CFO
	

 	
 	

 	

 John R. Murray

6

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EMPLOYMENT AGREEMENT

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