rwc3000amendment.htm


                                                                                                                                    

    Exhibit 10.23


     

    


    FIRST AMENDMENT TO
LEASE

    (EXPANSION)

    


    This First Amendment to Lease (the
“Agreement”) is entered into as of April 30, 2007, by and between WESTPORT OFFICE PARK, LLC, a
California limited liability company (“Landlord”), and SHUTTERFLY, INC., a Delaware
corporation ("Tenant"), with respect to the following facts and
circumstances:

    


    A.  Landlord and Tenant are
parties to that certain Lease Agreement dated July 5, 1999 (the “Initial Lease
Agreement), as amended by the Commencement Letter dated September 8, 1999, a
letter agreement dated December 28, 1999, Amendment No. 1 dated January 11,
2000, Amendment No. 2 dated May 21, 2001, Amendment No. 3 dated July 6, 2004,
and Amendment No. 4 (“Amendment No. 4”) dated April 28, 2005 (collectively, the
“Original Lease”), of certain premises (the “Existing Premises”) within the
building commonly known as 2800 Bridge Parkway, Redwood City, California, and
more particularly described in the Original Lease.  Capitalized terms
used and not otherwise defined herein shall have the meanings given those terms
in the Original Lease.

    


    B.  Landlord and Tenant
desire to amend the Original Lease to add additional space on the terms and
conditions provided herein.

    


    IT IS THEREFORE, agreed as
follows:

    


    
      	
              1.  

            	
              As
      used in this Agreement, the following terms have the following
      meanings:

            


    

    


    “3000
Bridge Building” means the commercial office building located at 3000 Bridge
Parkway, Redwood City, California.

    


    “Expansion
Space” means a portion of the 3000 Bridge Building, containing approximately
12,036 square feet of rentable area, commonly known as Suites 102 and 103 and
more particularly shows on Exhibit “A-1”
attached hereto.  For purposes of this Agreement, “rentable area”
shall be calculated pursuant to the Standard Method for Measuring Floor Area in
Office Buildings (ANSI/BOMA Z65.1, 1996).  Notwithstanding anything to
the contrary in this Agreement, the recital of the rentable area herein above
set forth is for descriptive purposes only.  Tenant shall have no
right to terminate the Lease or receive any adjustment or rebate of any Basic
Rent or Additional Rent payable hereunder if said recital is
incorrect.  The Tenant has inspected the Expansion and is fully
familiar with the scope and size thereof and agrees to pay the full Basic Rent
and Additional Rent set forth herein in consideration for the use and occupancy
of said space, regardless of the actual number of squire feet contained
therein.

    


    “Expansion Space Commencement Date”
shall mean June 1, 2007.

    


    


    2. Effective
on the Expansion Space Commencement Date, the Premises shall be expanded to
include the Expansion Space.  Accordingly, effective on the Expansion
Space Commencement Date, the following terms of the Original Lease are amended
as follows:

    


    2.1           The
Expansion Space is added to the Premises such that the Premises shall be
comprised of the Existing Premises and the Expansion Space, and Exhibit “A-1”
attached hereto is hereby added to Exhibit “A” to the
Original Lease.

    


    2.2           Landlord
and Tenant acknowledge that the provisions of Amendment No. 4 with respect to
management fee, tenant maintenance, expenses of operation, management and
maintenance of Common Areas in Buildings, utilities, and taxes that currently
apply in the Original Lease to the Existing Premises are based on Tenant
occupying the entire building in which the Existing Premises is
located.  Accordingly, with respect to the Expansion Space the
following provisions of the Initial Lease Agreement shall apply to the Expansion
Space and the amendments of those sections made after the Initial Lease
Agreement shall not be taken into account in determining Tenant’s obligations
with respect to the Expansion Space: Paragraphs 4D, 4E, 7, 10, 11, and
12.  To the extent any costs are not generally applicable to the
Building and the 3000 Bridge Building or to Common Areas, the amounts of those
costs payable by Tenant shall be determined independently for the Existing
Premises and the Expansion Space.

    


    2.3           Tenant
agrees to pay Landlord a Basic Rent for the Expansion Space in accordance with
the following schedule:

    


    
      	
              Period

            	
              Annual
      Basic Rent

            	
              Monthly
      Basic Rent

            
	
              June
      1, 2007 – June 30, 2007

            	
              N/A

            	
              Abated

            
	
              July
      1, 2007 – June 30, 2008

            	
              $281,642.40

            	
              $23,470.20

            
	
              July
      1, 2008 – June 30, 2009

            	
              $303,357.20

            	
              $25,275.60

            
	
              July
      1, 2009 – May 31, 2010

            	
              N/A

            	
              $27,081.00

            


    

    


    The
Monthly Basic Rent for the second month and estimated Additional Rent for the
first month after the Expansion Space Commencement Date shall be payable upon
the execution of this Agreement.  The Monthly Basic Rent for the
Expansion Space shall be payable in the manner provided for in the Original
Lease.

    


    2.4           Paragraph
6 is amended to increase Tenant’s non-exclusive parking spaces by thirty-nine
(39) spaces, or from one hundred sixty-one (161) spaces to two hundred (200)
spaces.

    


    2.5           The
Term with respect to the Expansion Space shall be coterminous with the Existing
Premises.  In the event that Tenant exercises its extension option or
a termination right under the Original Lease, such extension or termination
shall apply to the entire Premises then subject to the Original Lease (including
the Expansion Space).

    


    3. Tenant
may take possession of the Expansion Space upon the full execution and delivery
of this Agreement.  Tenant’s possession of the Expansion Space prior
to the Expansion Space Commencement Date shall be on all the terms and
conditions of the Original Lease, as amended hereby, except that Tenant shall
not be obligated to pay Basic Rent or Additional Rent.  After the
Expansion Space Commencement Date, Tenant’s obligation with respect to Basic
Rent and Additional Rent shall be provided in the Original Lease, as amended by
this Agreement.

    


    4. Except as
provided in Section 5, below, Tenant shall accept the Expansion Space in its “AS
IS” condition.  Tenant agrees that Landlord has no obligation and has
made no promise to alter, remodel, improve, or repair the Expansion Space, or
any part thereof, or to repair, bring into compliance with applicable laws, or
improve any condition existing in the Expansion Space as of the Expansion Space
Commencement Date.  The taking of possession of the Expansion Space by
Tenant shall be conclusive evidence that the Expansion Space and the Building
were in good and satisfactory condition at the time possession was taken by
Tenant.  Neither Landlord nor Landlord’s agents have made any
representations or promises with respect to the condition of the 3000 Bridge
Building, the Expansion Space, the land upon which the 3000 Bridge Building is
constructed, the present or future suitability or fitness of the Expansion Space
or the 3000 Bridge Building for the conduct of Tenant’s particular business, or
any other matter or thing affecting or related to the 3000 Bridge Building or
the Expansion Space, and no rights, easements or licenses are acquired by Tenant
by implication or otherwise except as expressly set forth in this Original
Lease.  Any improvements or personal property located in the Expansion
Space are delivered without any representation or warranty from Landlord, either
express or implied, of any kind, including without limitation, title,
merchantability, or suitability for a particular purpose.  Tenant
shall deliver to Landlord any modifications to Tenant’s insurance required under
the Original Lease to reflect the addition of the Expansion Space and Tenant’s
entry into the Expansion Space prior to the delivery of possession to
Tenant.

    


    5. Notwithstanding
Section 4, above, Landlord warrants that the roof, structural components of the
Building, HVAC system, electrical and plumbing systems, doors, elevator, parking
lot or site lighting (the “Covered Items”), other than those constructed by
Tenant, shall be in good operating condition on the date possession of the
Premises is delivered to Tenant.  If a non-compliance with such
warranty exists as of the delivery of possession, or if one of such Covered
Items should malfunction or fail within sixty (60) days after the delivery of
possession to Tenant, Landlord shall, as Landlord’s sole obligation with respect
to such matter, promptly after receipt of written notice from Tenant setting
forth in reasonable detail the nature and extent of such non-compliance,
malfunction or failure, rectify the same at Landlord’s expense.  If
Tenant does not give Landlord the required notice within sixty (60) days after
the delivery of possession to Tenant, Landlord shall have no obligation with
respect to that warranty other than obligations regarding the Covered Items set
forth elsewhere in the Lease.

    


    6. Landlord
and Tenant acknowledge that Tenant may desire to make certain Alterations to the
Expansion Space in accordance with Article 9 of the Lease (“Tenant’s
Work”).  So long as no default shall be declared and existing under
the Original Lease (as amended by this Agreement) as of the date Tenant requests
reimbursement of the Allowance (as defined below), Landlord agrees to reimburse
Tenant up to, and not to exceed the sum of One Hundred Eight Thousand Five
Hundred Forty Dollars ($180,540.00) (the “Allowance”) (based on a $15.00 prsf of
the Premises).  Landlord shall pay the Allowance to Tenant upon
delivery to Landlord of “Tenant’s Completion Notice” (as defined below)
according to the terms and conditions of this Section 6.   The
Allowance shall be used to reimburse Tenant for hard and/or soft costs incurred
in connection with Tenant’s Work (“Tenant’s Work Costs”); provided, however, in
no event shall the Allowance be used to pay for any of Tenant’s trade fixtures,
equipment or inventory.  Upon the completion of Tenant’s Work, Tenant
shall submit to Landlord a written notice indicating that Tenant has completed
the construction and performance of Tenant’s work in accordance with the
provisions of Article 9 of the Original Lease, as amended by this Agreement,
which notice shall be accompanied by all of the following (collectively,
“Tenant’s Completion Notice”): (i) copies of paid invoices and final,
unconditional lien waivers from Tenant’s general contractor and all
subcontractors and material suppliers, showing that full payment has been
received for the construction of Tenant’s Work; (ii) certification from Tenant’s
architect that all of Tenant’s Work has been completed substantially in
accordance with the plans and specifications therefor (approved by Landlord, to
the extent Landlord’s approval of such plans and specifications was required
under Article 9 of the Original Lease, as amended by this Agreement) and all
local governmental and quasi-governmental authorities with jurisdiction; and
(iii) a copy of the building permit for Tenant’s Work has been finally
approved.  The Allowance shall be available for a single reimbursement
to Tenant during the period from June 1, 2007 through December 31, 2007 (the
“Window”).  Any portion of the Allowance not requested by Tenant
within the Window shall be deemed forfeited by Tenant and shall no longer be
available for disbursement to or for the account of Tenant.  The
parties understand and agree that under no circumstances shall Landlord, either
by this Agreement or otherwise, have any responsibility for the space planning
design.  In approving of any space planning or construction plans and
specifications, Landlord is doing so only for its own benefit and does not
thereby accept any responsibility that such design and construction has been
completed in conformance with all applicable laws, is free from any errors or
omissions by the professionals completing such work, is suitable for the purpose
for which it is designed or constructed or is otherwise in conformance with
recognized industry standards and requirements for such work.

     

    7. The
following new Paragraph 54 is added to the Lease:

    


        54.           TENANT’S
RIGHT OF FIRST OFFER

    


    54.1           As
used herein, “Offer Space” means any space in the 3000 Bridge
Building.  Landlord shall give Tenant a written notice (the
“Availability Notice”) identifying the particular Offer Space (the “Specific
Offer Space”) that is Available (as defined below).  Landlord shall
not be obligated to given an Availability Notice until Landlord determines that
Landlord shall commence the marketing of any of the Offer Space because such
space shall become Available for lease to third parties.  As used
herein, “Available” means that the space (i) is not part of the Premises, (ii)
is not then subject to a lease, (iii) is not then subject to any rights of
tenant to renew their lease or expand their premises as set forth in their
lease, and (iv) is not then subject to any negotiations between Landlord and an
existing tenant.  Without limiting the foregoing, Offer Space shall
not be Available if it is subject to a renewal or extension right of a tenant,
whether or not such right or extension is pursuant to an express written
provision in its lease, regardless of whether any such renewal or extension is
consummated pursuant to a lease amendment or a new lease.

    


    54.2           The
location and configuration of the Specific Offer Space shall be determined by
Landlord in its reasonable discretion; provided that Landlord shall have no
obligations to designate Specific Offer Space that would result in any space not
included in the Specific Offer Space being not Configured for Leasing (as
defined below).  For purposes of this Lease, “Configured for Leasing”
means the applicable space must have convenient access to the central corridor
on the applicable floor and must have a size and configuration that complies
with all applicable building codes and other laws and is such that Landlord
judges, in its reasonable discretion, that Landlord will be able to lease such
space to a third party.  The Availability Notice shall:

    
      	
               
      

            	
              (a)

            	
              Describe
      the particular Specific Offer Space (including rentable area, useable area
      and location);

               

            


    

    
      	
            	
              (b)

            	
              Include
      an attached floor plan identifying such space;

               

            


      	
            	
              (c)

            	
              
                State
      the date (the “Specific Offer Space Delivery Date”) the space will be
      available for delivery to Tenant; and

                 

              

            


      	
            	
              (d)

            	
              Specify
      the Base Rent for the Specific Offer
Space.

            




    
 

    54.3           If
Tenant wishes to exercise Tenant’s rights set forth in this Article 54 with
respect to the Specific Offer Space, then within five (5) business days of
delivery of the Availability Notice to Tenant, Tenant shall deliver irrevocable
notice to Landlord (the “First Offer Exercise Notice”) offering to lease the
Specific Offer Space on the terms and conditions as may be specified by Landlord
in the Availability Notice.

    


    54.4           In
the event Tenant fails to give a First Offer Exercise Notice in response to any
Availability Notice, Tenant shall have no further rights to receive an
Availability Notice and Tenant’s rights under this Article 54 shall terminate
and Landlord shall be free to lease the Offer Space to anyone on any terms at
any time during the Term, without any obligation to provide Tenant with any
further right to lease that space.

    


    54.5           If
Tenant timely and validly gives the First Offer Exercise Notice in response to
any Availability Notice, Tenant shall have no further rights to receive an
Availability Notice and Tenant’s rights under this Article 54 shall terminate
and Landlord shall be free to lease the Offer Space to anyone on any terms at
any time during the Term, without any obligation to provide Tenant with any
further right to lease that space.

    


    
      	
               
      

            	
              (a)

            	
              The
      Specific Offer Space shall be part of the Premises under this Lease (so
      that the term “Premises” in this Lease shall refer to the space in the
      Premises immediately before the Specific Offer Space Delivery Date plus
      the Specific Offer Space);

               

            


    

    
      	
            	
              (b)

            	
              Base
      Rent for the Specific Offer Space shall be specified in the Availability
      Notice.

               

            


      	
            	
              (c)

            	
              Tenant’s
      lease of the Specific Offer Space shall be on the same terms and
      conditions as affect the original Premises from time to time, except as
      otherwise provided in this section.  Tenant’s obligation to pay
      Rent with respect to the Specific Offer Space shall begin on the Offer
      Space Delivery Date.  The Offer Space shall be leased to Tenant
      in its “as-is” condition and Landlord shall not be required to construct
      improvements in, or contribute any tenant improvement allowance for, the
      Offer Space.  Tenant’s construction of any improvements in the
      Specific Offer Space shall comply with the terms of this Lease concerning
      alterations.

               

            


      	
            	
              (d)

            	
               If
      requested by Landlord, Landlord and Tenant shall confirm in writing the
      addition of the Specific Offer Space to the Premises on the terms and
      conditions set forth in this section, but Tenant’s failure to execute or
      delivery such written confirmation shall not affect the enforceability of
      the First Offer Exercise Notice.

            


    

     

    54.7           Tenant’s
rights and Landlord’s obligations under this Article 54 are expressly subject to
and conditioned upon there not existing a default by Tenant under this Lease,
either at the time of delivery of the First Offer Exercise Notice or at the time
the Specific Offer Space is to be added to the Premises.

    


    54.8           It
is understood and agreed that Tenant’s rights under this Article 54 are personal
to Tenant and not transferable.  In the event of any assignment or
subletting of the Premises or any part thereof, this expansion right shall
automatically terminate and shall thereafter be null and void.

    
 

        8. Except as
otherwise provided herein, all of the terms and conditions of the Original Lease
shall continue to apply during the Extension Term; provided, however, that there
shall be no rent credit, and that there shall be no improvement allowance,
Landlord construction obligations or other initial concessions with respect to
the Extension Term, except as provided in Paragraph 6 of this Agreement, and
Tenant shall have no further option to extend the term.

    
     9. Landlord
hereby represents and warrants to Tenant that it has dealt with no broker,
finder or similar person in connection with this Agreement, and Tenant hereby
represents and warrants to Landlord that it has dealt with no broker, finder or
similar person in connection with this Agreement, other than NAI BT Commercial
(“Landlord’s Broker”) and Studley, Inc. (“Tenant’s Broker”).  Landlord
and Tenant shall each defend and indemnify and hold the other harmless with
respect to all claims, causes of action, liabilities, losses, costs and expenses
(including without limitation attorneys’ fees) arising from a breach of the
foregoing representation and warranty.  The commission with respect to
this Agreement shall be paid to Landlord’s Broker by Landlord pursuant to a
separate agreement.  Landlord’s Broker will pay Tenant’s Broker a
commission pursuant to a separate agreement.  Nothing in this
Agreement shall impose any obligation on Landlord to pay a commission or fee to
any party other than Landlord’s Broker.

        

        10. Time is
of the essence of this Agreement and the provisions contained
herein.

     

        11. As
additional consideration for this Agreement, Tenant hereby certifies
that:

    


    
      	
              (a)

            	
              The
      Original Lease (as amended hereby) is in full force and
      effect.

               

            


    

    
      	
              (b)

            	
              Tenant
      is in possession of the Premises.

               

            


    

    
      	
              (c)

            	
              Rent
      has been paid through April 30, 3007.

               

            


    

    
      	
              (d)

            	
              To
      Tenant’s knowledge, there are no uncured defaults on the part of Landlord
      or Tenant under the Original Lease.

               

            


      	
              (e)

            	
              All
      of Landlord’s obligations with respect to construction of tenant
      improvements in the Premises and payment of Tenant improvement allowance
      have been satisfied, except those provided for in Paragraph 6 of this
      Agreement.

               

            


      	
              (f)

            	
              There
      are no existing offsets or defenses which Tenant has against the
      enforcement of the Original Lease (as amended hereby) by
      Landlord.

               

            


      	
              (g)

            	
              All
      of the representations and warranties of Tenant in the Original Lease are
      hereby remade.

            


    

              

        12. Except as
specifically provided herein, the terms and conditions of the Original Lease as
amended hereby are confirmed and continue in full force and
effect.  This Agreement shall be binding on the heirs, administrators,
successors and assigns (as the case may be) of the parties
hereto.  This Agreement and the attached exhibits, which are hereby
incorporated into and made a part of this Agreement, set forth the entire
agreement between the parties with respect to the matters set forth
herein.  There have been no additional oral or written representations
or agreements.  Under no circumstances shall Tenant be entitled to any
Rent abatement, improvement allowance, leasehold improvements, or other work to
the Premises, or any similar economic incentives that may have been provided to
Tenant in connection with entering into the Original Lease, unless specifically
set forth in this Agreement.  Tenant agrees that neither Tenant nor
its agents or any other parties acting on behalf of Tenant shall disclose any
matters set forth in this Agreement or disseminate or distribute any information
concerning the terms, details or conditions hereof to any person, firm or entity
without obtaining the express written consent of Landlord.  In the
case of any inconsistency between the provisions of the Original Lease and this
Agreement, the provisions of this Agreement shall govern and
control.  Submission of this Agreement by Landlord is not an offer to
enter into this Agreement but rather is a solicitation for such an offer by
Tenant.  Landlord shall not be bound by this Agreement until Landlord
has executed and delivered the same to Tenant.

     

        13. Effective
as of the date hereof, all references to the “Lease” shall refer to the Original
Lease, as amended by this Agreement.

     

        14. To
satisfy compliance with the Employee Retirement Income Security Act of 1974, as
amended, Tenant represents and warrants to Landlord and The Prudential Insurance
Company of America, a New Jersey corporation (“Prudential”), that:

     

               (a) Tenant is
not an “employee benefit plan” (as that term is defined in Section 3(3) of
ERISA); and

     

               (b) Tenant is
not acquiring the Property as a plan asset subject to ERISA but for Tenant’s own
investment account; and

     

               (c) Tenant is
not an “affiliate” of Prudential as defined in Section IV(b) or PTE
90-1;

     

               (d) Tenant is
not a “part in interest” (as that term is defined in Section 3(14) of ERISA) to
the Virginia Retirement System; and

     

               (e) Tenant
agrees to keep the identity of the Virginia Retirement System confidential,
except to the extent that Tenant may be required to disclose such information as
a result of (i) legal process, or (ii) compliance with ERISA or other Laws
governing Tenant’s operations.

    


    


    IN
WITNESS WHEREOF, this Agreement was executed as of the date first above
written.

    


    


    


    Landlord:

    


    WESTPORT OFFICE PARK LLC

    a California limited liability
company

    


    By:           THE
PRUDENTIAL INSURANCE

    COMPANY OF AMERICA, a

    New Jersey corporation, its
member

    


    By:           /s/
JoLynn Chow Miller

    Director & Second Vice
President

    


    


    


    


    


                                    Tenant:

                                                                    SHUTTERFLY,
INC.,

                         a
Delaware corporation

    


     

                                  By:           /s/
Stephen E. Recht

                         Its:           Secretary
& CFO

    


    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    


    EXHIBIT
A-1

    


    EXPANSION
SPACE