Document:

steve_rechtreleaseagmt.htm

    Exhibit 10.21

    SEPARATION
AGREEMENT

    AND
GENERAL RELEASE OF CLAIMS

     

    THIS
SEPARATION AGREEMENT AND GENERAL RELEASE OF CLAIMS (“Agreement”) is entered into
by and between Stephen E. Recht, his heirs, successors, assigns, agents or
representatives of any kind (collectively, “Employee”) and Shutterfly, Inc., its
officers, directors, stockholders, investors, assigns, attorneys, agents,
independent contractors, employees, predecessors, successors, affiliates or
other representatives of any kind (collectively, the “Company”).  This
Agreement will become effective on the eighth day after it is signed by Employee
(the “Effective Date”), provided that Employee has not revoked this Agreement
(by written notice to Doug Appleton, Vice President, Legal at the Company) prior
to that date in accordance with the revocation terms contained
herein.

     

    RECITALS

     

    A. Employee
is employed by the Company as its Chief Financial Officer pursuant to the terms
of an offer letter dated June 23, 2004 (the “Offer Letter”).

     

    B. Employee’s
employment relationship with the Company shall be terminated without
cause.

     

    C. In
accordance with the Offer Letter, Employee is entitled to certain severance
benefits in exchange for signing this Agreement.  In addition,
Employee shall be provided with additional severance benefits not set forth in
the Offer Letter.

     

    Accordingly,
in consideration of the terms, conditions and covenants contained herein, the
parties agree as follows:

     

    1. Termination of Employment; Transition
Period.  Employee’s employment relationship with the Company
shall be terminated as of the earlier of (a) February 9, 2008, or (b) the date
he enters into a working relationship as an employee, independent contractor,
consultant, or other type of worker in exchange for compensation of any kind
(the “Termination Date”), subject to the following provisions:

     

    (a) Through
the Termination Date, Employee will provide continued employment services to the
Company to transition his work to the new Chief Financial Officer for the
Company, as requested by the Company (the “Transition Period”).

     

    (b) In the
event Employee enters into a working relationship as an employee, independent
contractor, consultant, or other type of worker in exchange for compensation of
any kind during the Transition Period, he must notify the Company and the
Termination Date will be as of the date of such notice.

     

    2. Severance
Benefits.  As of the Termination Date, Employee will be paid
all final wages and accrued, unused paid time off that Employee earned during
his employment with the Company through the Termination Date in accordance with
applicable law.

     

    In addition to these mandatory payments
and benefits, upon the Termination Date (provided the Employee has not
terminated this Agreement prior to February 9, 2008 and Employee is not in
breach of this Agreement), Employee shall receive the following severance
benefits:

     

    (a) Severance
payment.  A severance payment in the amount of Two Hundred
Fifty Thousand Dollars ($250,000.00), which is equal to twelve (12) months’ pay
at Employee’s final base pay rate, and less applicable
withholding taxes and regular deductions, payable in a lump sum within three (3)
days following the Termination Date, but no earlier than eight (8) days
following Employee’s execution of this Agreement, provided that Employee has not
revoked this Agreement.

     

    (b) Accelerated Stock
Vesting.  Employee shall vest in such additional number of
shares as would have vested in the twelve (12) months following the Termination
Date.

     

    (c) Bonus.  In the event
that the Company pays bonuses to the senior executive officers of the Company ,
and provided that Employee is providing satisfactory performance in accordance
with this Agreement, Employee shall receive his year-end bonus payment pro-rata
with the other senior executive officers, payable in a lump sum no later than
three (3) days following the Termination Date, but no earlier than eight (8)
days following Employee’s execution of this Agreement, provided that Employee
has not revoked this Agreement.

     

    (d) COBRA premiums.  If
Employee is covered under the Company’s group health plan as of the Termination
Date and he timely elects to continue his group coverage pursuant to
federal/state law (COBRA), the Company will reimburse Employee upon submission
of written proof of premium payment for six (6) months of the applicable COBRA
premiums as COBRA is provided in accordance with the terms of the applicable
plans and the law, beginning on the first of the month following Company’s
receipt of Employee’s COBRA election notice until the earlier of (i) the date
Employee becomes covered under another group or individual health plan, or (ii)
the last day of the six-month period described herein.  Employee shall
at all times be responsible for making his premium payments pursuant to COBRA in
order to maintain such coverage, and the Company shall not be responsible for
making any direct payments to any health care or insurance provider on behalf of
Employee.

     

    Employee
further understands that the severance benefits set forth in Sections 2(a)-(d)
above shall be provided contingent upon Employee’s execution of and compliance
with the terms of this Agreement.  Employee understands and
acknowledges that he shall not be entitled to any payments or benefits from the
Company other than those expressly set forth in this Section 2, and that he
would not be entitled to the payment and benefits set forth in Sections 2(a)-(d)
above in the absence of signing this Agreement

     

    3. General Release.

     

    In
consideration of the severance compensation and benefits to be paid to Employee
pursuant to Section 2(a)-(d) above, Employee and his heirs, successors, assigns,
agents or representatives of any kind fully release the Company, its officers,
directors, stockholders, investors, assigns, attorneys, agents, independent
contractors, employees, predecessors, successors, affiliates or other
representatives of any kind (the “Released Parties”) of and from any and all
claims, liabilities, obligations, demands, actions and causes of action, whether
now known or unknown, that Employee now has, or at any other time had, or shall
or may have against those Released Parties based upon or arising out of any
matter, cause, fact, thing, act or omission whatsoever occurring or existing at
any time up to and including the Effective Date of this Agreement.

     

    This
release includes specifically but not exclusively and without limiting the
generality of the foregoing, any claims of breach of contract, wrongful
termination, retaliation, fraud, defamation, infliction of emotional distress or
discrimination based upon national origin, race, age, sex, sexual orientation,
disability or other personal characteristic protected by state and federal law
or any other form of discrimination or harassment under the Civil Rights Act of
1964, the Age Discrimination In Employment Act of 1967, as amended, the Older
Workers Benefit Protection Act, the Americans with Disabilities Act, the Fair
Employment and Housing Act, the California Labor Code or any other applicable
state or federal law.  However, this Release is not intended to bar
any claims that, by statute, may not be waived, such as claims for workers’
compensation benefits, unemployment insurance benefits, and any challenges to
the validity of Employee’s release of claims under the Age Discrimination in
Employment Act of 1967, as amended, as set forth in this Agreement.

     

    Employee
acknowledges that he has read section 1542 of the Civil Code of the State of
California, which states in full:

     

    A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.

     

    Notwithstanding
Section 1542, Employee agrees that this Agreement shall act as a release of all
past and future claims that may arise from or related to his employment or
termination from employment with the Company, whether such claims are currently
known or unknown, foreseen or unforeseen, contingent or
absolute.  Employee intentionally and specifically waives any rights
he may have under the provisions of Section 1542, as well as under any other
statutes or common law principles of similar effect, and assumes full
responsibility for any injuries, damages, losses or liabilities that he may
hereafter incur with respect to such claims.

     

    4. No Assignment or Transfer; No
Voluntary Participation in Claims.  Employee represents and
warrants that there has been no assignment or other transfer of any interest in
any claim that he may have against the Company and agrees to indemnify and hold
the Company harmless from any liabilities, claims, demands, damages, costs,
expenses and attorneys’ fees incurred by the Company as a result of any
assertion of assignment or transfer.

     

    Employee
agrees that he shall not voluntarily participate in any claim, action,
complaint, or lawsuit considered or brought against the Company, and that he
shall not encourage or solicit other persons or entities to consider or bring
any claim, action, complaint, or lawsuit against the Company, at any time, now
or in the future.  Nothing in this section shall prohibit Employee
from responding to a valid subpoena or other order of a court or agency with
appropriate jurisdiction to compel his response.

    

    5. Review
/ Revocation Period.

     

    (a) Employee
acknowledges and agrees that (i) Employee has read and understands the
terms of this Agreement; (ii) Employee has been advised in writing to
consult with an attorney before executing this Agreement; (iii) that
Employee has obtained and considered such legal counsel as Employee deems
necessary; (iv) that Employee has been given up to twenty-one (21) days to
consider whether or not to enter into this Agreement (although Employee may
elect not to use the full 21-day period at Employee’s option); and (v) that
by signing this Agreement, Employee acknowledges that Employee does so freely,
knowingly, and voluntarily.

     

    (b) This
Agreement shall not become effective or enforceable until the eighth day after
Employee signs this Agreement.  Employee may revoke Employee’s acceptance of
this Agreement within seven (7) days after the date Employee signs
it.  Employee’s revocation must be in writing and received by Doug
Appleton, Vice President, Legal at the Company by 5:00 p.m. Pacific Time on the
seventh day following his execution of this Agreement in order to be
effective.  If Employee does not revoke his acceptance within the
seven (7) day period, Employee’s acceptance of this Agreement shall become
binding and enforceable on the Effective Date and the benefits described above
shall become due and payable in accordance with Section 2.

     

    6. Confidentiality.

     

    (a) Employee
acknowledges and agrees that he shall continue to be bound by and comply with
the terms of the proprietary rights, assignment of inventions and/or
confidentiality agreements between the Company and Employee.

     

    (b) Employee
agrees that he shall not directly or indirectly disclose any of the terms of
this Agreement to anyone other than his immediate family, financial advisors or
legal counsel, except as such disclosure may be required for accounting or tax
reporting purposes or as otherwise may be required by law.

     

    (c)
Employee understands and agrees that he may not use or disclose the Company’s
confidential and proprietary business information learned in the course of his
employment with the Company for his own benefit or for the benefit of any other
person or entity.

     

    7. Return of Employer
Property.  On or before the Termination Date, Employee will
return to the Company, in good working condition, all Company property and
equipment that is in Employee’s possession or control, including, but not
limited to, any files, records, computers, computer equipment, passwords, cell
phones, credit cards, keys, programs, manuals, business plans, financial
records, and all documents (and any copies thereof) that Employee prepared or
received in the course of his employment with the Company.

     

    8. Non-Disparagement; No
Defamation.  Company and Employee agree that they will not, at
any time in the future, make any critical or disparaging statements about the
other (in the case of Employee, he shall not disparage the Company, its
products, services, employees or other agents or representatives), unless such
statements are made truthfully in response to a subpoena or other legal
process.

     

    9. Nonsolicitation of Employees and
Customers.  Employee agrees that for a period of one (1) year
following the Termination Date, he will not, either on his own behalf or on
behalf of another person or entity, by using or disclosing the trade secrets or
confidential, proprietary, or business information of the Company: (a) solicit
or take away employees, independent contractors or consultants of the Company
for the purpose of hiring them or encouraging them to refrain from working for
the Company; or (b) solicit or take away suppliers or customers of the Company
or encourage them to refrain from doing business with the
Company.  Notwithstanding the foregoing, nothing prevents Employee
from soliciting business from any supplier or customer of the Company that is
unrelated to the business conducted by the Company.

     

    10. Attorney’s Fees.  In
the event of any legal action relating to or arising out of this Agreement, the
prevailing party shall be entitled to recover from the losing party its
attorneys’ fees and costs incurred in that action.

     

    11. No Admission of
Liability.  Employee and the Company understand and acknowledge
that this Agreement constitutes a compromise and settlement of disputed
claims.  No action taken by the parties hereto, or either of them,
either previously or in connection with this Agreement, shall be deemed or
construed to be (a) an admission of truth or falsity of any claims
heretofore made or (b) an acknowledgement or admission by either Party of
any fault or liability whatsoever to the other party or to any third
party.

     

    12. Consult with
Attorney.  Each party represents that it has been advised of
his or its right to consult with an attorney and to seek legal representation of
his or its choosing in the execution of this Agreement, and has carefully read
and understands the scope and effect of the provisions of this
Agreement.  Neither party has relied upon any representations or
statements made by the other party hereto which are not specifically set forth
in this Agreement.

     

    13. Miscellaneous.  This
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior negotiations and agreements,
whether written or oral, with the exception of any stock option agreements
between the parties and any agreements described in Section 6(a)
herein.  This Agreement may be modified or amended only with the
written consent of Employee and an authorized officer of the Company, provided,
however, that the Company may amend or modify this Agreement in order to comply
with the provisions of Section 409A of the Internal Revenue Code, to the
extent applicable.  No oral waiver, amendment or modification will be
effective under any circumstances whatsoever.

     

    EMPLOYEE
UNDERSTANDS THAT HE SHOULD CONSULT WITH AN ATTORNEY PRIOR TO SIGNING THIS
AGREEMENT AND THAT HE IS GIVING UP ANY LEGAL CLAIMS HE HAS AGAINST THE PARTIES
RELEASED ABOVE BY SIGNING THIS AGREEMENT.  EMPLOYEE ACKNOWLEDGES THAT
HE IS SIGNING THIS AGREEMENT KNOWINGLY, WILLINGLY AND VOLUNTARILY IN EXCHANGE
FOR THE BENEFITS DESCRIBED HEREIN.

     

    
      	
               

               

              Dated:  December
      10, 2007

            	
               

              By:
      /s/ Stephen E. Recht

                  Stephen
      E. Recht

            
	
               

              Dated:  December
      10, 2007

               

            	
               

              SHUTTERFLY,
      INC.

               

              By: /s/
      Jeff Housenbold

                  Jeff
      Housenbold, President & CEOcltmasterlease.htm

    Exhibit 10.22

    
 

    

    

    

    

    

    

    

    

    

    

    

    

    LEASE
AGREEMENT

    

    

    

    

    

    BY AND
BETWEEN

    

    

    3915
SHOPTON ROAD, LLC

    (AS
LANDLORD)

    

    

    AND

    

    

    SHUTTERFLY,
INC.

    (AS
TENANT)

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    LEASE
AGREEMENT

    

    

    THIS LEASE AGREEMENT (the “Lease”) made
and entered into as of the 22nd day of December, 2006 (the “Lease Date”),
by and between

    

    3915
SHOPTON ROAD, LLC, a North Carolina limited liability company

    

    hereinafter
called “Landlord”; and

    

    SHUTTERFLY,
Inc., a Delaware corporation

    

    hereinafter
called “Tenant”:

    

    W I T N E S S E T H:

    

    In consideration of the mutual
covenants and agreements contained herein, the parties hereto agree for
themselves, their successors and assigns, as follows:

    

    1.           DESCRIPTION OF
PREMISES.  Landlord hereby leases to Tenant, and Tenant hereby
accepts and rents from Landlord, that certain office/warehouse space (the
“Premises”) containing approximately 102,400 rentable square feet located in the
building known as 18-B (the “Building”) in Shopton Ridge Business Park (the
“Business Park”), Charlotte, North Carolina, said Building being located on a
parcel of real property more particularly described on Exhibit ”A”
attached hereto.  For purposes of this Lease, Tenant’s “proportionate
share” shall be one hundred percent (100%).

    

    2.           TERM.  Unless
otherwise adjusted as hereinbelow provided, the term of this Lease shall
commence on the later to occur of April 30, 2007 or upon substantial completion
of Landlord’s Work (the “Commencement Date”) and shall end at midnight on the
date (the “Expiration Date”) which is the last day of the eighty-ninth (89th)
month after the Commencement Date (as same may be adjusted as hereinbelow
provided).  As used herein, the term “Lease Year” shall mean each
consecutive twelve-month period of the Lease term, beginning with the
Commencement Date (as same may be adjusted as hereinbelow provided) or any
anniversary thereof.  Within five (5) days following the Commencement
Date, Tenant shall execute and deliver to Landlord duplicate originals of a
written agreement in the form attached to this Lease as Exhibit
F.

    

    3.           RENTAL.  During
the full term of this Lease, Tenant shall pay to Landlord, without notice,
demand, reduction (except as may be applicable pursuant to paragraph 13 or
paragraph 19 herein or as otherwise provided in this Lease), setoff or any
defense, a total rental (the “Annual Rental”) consisting of the sum total of the
following:

    

    (a)           Minimum
Rental.  Commencing on the first day of the ninth (9th) month
following the Commencement Date (the “Rent Commencement
Date”), as the same may be adjusted pursuant to the last sentence of Section 4
hereof, and continuing through the remainder of the initial eighty-nine (89)
month term of this Lease, Tenant shall pay an annual minimum rental (the
“Minimum Rental”) equal to Six and 48/100 Dollars ($6.48) per rentable square
foot of space in the Premises during Lease Year 1, increasing every year
thereafter during the term at a rate of three percent (3%),  based on
102,400 square feet, including the “free Annual Rent”, as set forth
below.  If the actual square footage of the Premises, as determined by
Landlord’s architect and certified to Landlord and Tenant, shall be greater or
lesser than 102,400 square feet based on the final as-built square footage after
completion of the Improvements described on Exhibit ”C” to
this Lease, then the Minimum Rental shall be adjusted based on the actual square
footage of the Premises.  The Minimum Rental shall be payable in equal
monthly installments, each in advance on or before the first day of each
month.  If the Rent Commencement Date is a date other than the first
day of a calendar month, the Minimum Rental shall be prorated daily from such
date to the first day of the next calendar month and paid on the Rent
Commencement Date.

    

    
      	
              Period

            	
              80,000 SF Space

              Annual Rent

            	
              22,400 SF Space

              Annual Rent

            	
              Total Space

              Annual Amount

            
	
              Months
      1-8

            	
              FREE

            	
              FREE

            	
              FREE

            
	
              Months
      9-13

            	
              $216,000.00

            	
              FREE

            	
              $216,000.00

            
	
              Months
      14-20

            	
              $302,400.00

            	
              $84,672.00

            	
              $387,072.00

            
	
              Months
      21-32

            	
              $533,600.00

            	
              $149,408.00

            	
              $683,008.00

            
	
              Months
      33-44

            	
              $549,600.00

            	
              $153,888.00

            	
              $703,488.00

            
	
              Months
      45-56

            	
              $565,600.00

            	
              $158,368.00

            	
              $723,968.00

            
	
              Months
      57-68

            	
              $582,400.00

            	
              $163,072.00

            	
              $745,472.00

            
	
              Months
      69-80

            	
              $599,200.00

            	
              $167,776.00

            	
              $766,976.00

            
	
              Months
      81-89

            	
              $462,600.00

            	
              129,528.00

            	
              $592,128.00

            

    

    

    (b)           Tenant’s Share of
Taxes.  Subject to the terms set forth in Section 3(j) below,
Tenant shall pay an amount equal to Tenant’s “proportionate share” of ad valorem
taxes (or any tax hereafter imposed in lieu thereof) with respect to the
Building and the Business Park.  Tenant’s share of taxes shall be paid
as provided in subparagraph (e) below.  Provided, any increase in ad
valorem taxes on the Premises as a result of alterations, additions or
improvements made by, for or on account of Tenant shall be reimbursed by Tenant
to Landlord as Additional Rent (as defined below) within thirty (30) days after
receipt of written demand therefor.

    

    (c)           Tenant’s Share of Insurance
Premiums.  Subject to the terms set forth in Section 3(j)
below, Tenant shall pay an amount equal to Tenant’s “proportionate share” of
premiums charged for fire and extended coverage and liability insurance with all
endorsements carried by Landlord on the Building payable for any calendar year
(including any applicable partial calendar year).  Tenant’s
proportionate share of premiums shall be paid as provided in subparagraph (e)
below.

    

    (d)           Tenant’s Share of Common
Area Operating and Maintenance Costs.  Subject to the terms set
forth in Section 3(j) below, Tenant shall pay an amount equal to Tenant’s
“proportionate share” of the reasonable costs for operating and maintaining the
Building’s common areas, including, but not limited to, the cost of grass
mowing, shrub care and general landscaping, irrigation systems, maintenance and
repair to parking and loading areas, driveways, sidewalks, exterior lighting,
garbage collection and disposal, common water and sewer, common plumbing, common
signs and other facilities shared by the various tenants in the Building, the
administrative costs associated therewith including management fees, which shall
be capped at 3% of the Minimal Rental actually collected by Landlord from the
Building during the initial term and any subsequent renewal period(s), and of
the Building’s share of the common area operating and maintenance costs for the
entire Business Park.  Landlord shall use good faith efforts to keep
the operating and maintenance costs in line with costs for other similarly
situated business centers.  Tenant’s proportionate share shall be paid
as provided in subparagraph (e) below.  Notwithstanding any term,
covenant or condition as set forth in this Lease, costs for operating and
maintaining the Building’s common areas and the Business Park’s common areas
(but only during such time as Landlord and/or its affiliate own a majority of
the Business Park and control the operation of the Business Park) shall
specifically exclude the following:

    

    (i)
replacement of capital items (unless amortized over the useful life of such item
according to normal accounting procedures (a) but only to the extent that such
replacements reduce other direct expenses and are made after the Commencement
Date or (b) for replacements that are required under any governmental law or
regulation that was not applicable to the Building as of the Commencement
Date).

    

    (ii)
financing and refinancing costs and principal and interest payments on mortgages
and deeds of trust,

    

    (iii)
costs and expenses covered by insurance,

    

    (iv)
Landlord's insurance deductible,

    

    (v)
depreciation,

    

    (vi)
above market payments made to affiliates of Landlord, inside or related
contractors and executives,

    

    (vii)
income, profit, franchise, rent, sales, gift, estate, succession, inheritance,
foreign ownership, foreign control, transfer, capital levy, and/or personal
property taxes payable by Landlord,

    

    (viii)
any and all costs of Landlord for any clean-up, remediation, environmental
surveys/assessments, compliance with environmental laws, consulting fees,
treatment and monitoring charges, transportation expenses and disposal fees,
etc., and

    

    (ix) rent
under any ground or underlying lease.

    

    (e)           Payment of Proportionate
Share.  Subject to the terms set forth in Section 3(j) below,
Tenant shall pay to Landlord each month, along with Tenant’s installments of
Minimum Rental a sum equal to one-twelfth (1/12) of the amount estimated by
Landlord (in its reasonable discretion) as Tenant’s proportionate share of the
taxes, insurance premiums and common area maintenance costs for each calendar
year during the Lease term (such amounts, together with any other sums payable
by Tenant to Landlord hereunder other than Minimum Rental being referred to as
“Additional Rent”).  Landlord will provide Tenant with Landlord’s
estimate of Tenant’s proportionate share of taxes, insurance premiums and common
area operating and maintenance expenses amount for the year this Lease commences
within sixty (60) days after the Rent Commencement Date and for each future
upcoming calendar year on or before December 31 of each calendar year during the
term hereof.  If Landlord fails to notify Tenant of Tenant’s revised
proportionate share amount by such date, Tenant shall continue to pay the
monthly installments of the proportionate share amount last payable by Tenant
until notified by Landlord of such new estimated amount.  No later
than April 30 of each calendar year of the term, Landlord shall deliver to
Tenant a written statement setting forth the actual amount of Tenant’s
proportionate share for taxes, insurance premiums and all common area operating
and maintenance costs for the preceding calendar year.  Tenant shall
pay the total amount of any balance due shown on such statement within thirty
(30) days after its delivery.  In the event such annual costs and
increases decrease for any such year, Landlord shall, at its sole election,
either reimburse Tenant for any overage paid within ten (10) days after delivery
of such statement, or apply the overage against the monthly installment(s) of
any Annual Rental next due from Tenant until such overage has been recovered by
Tenant.  For the calendar year in which this Lease commences, Tenant’s
proportionate share shall be prorated from the Commencement Date through
December 31 of such year.  Further, Tenant shall be responsible
for the payment of Tenant’s proportionate share of taxes, insurance premiums and
common area operating and maintenance costs for the calendar year in which this
Lease term expires, prorated from January 1 thereof through the Expiration
Date.  Upon the Expiration Date, Tenant shall pay any unpaid estimated
proportionate shares within thirty (30) days after the Expiration Date, which
estimate shall be made by Landlord based upon actual and estimated costs for
such year.

    

    (f)           Tenant’s Share of Mechanical
Maintenance and Inspection Costs.  Pursuant to
Paragraph 10 herein, Tenant shall be responsible, at its sole cost, for
routine mechanical maintenance and inspection services to the heating,
ventilation and air conditioning (“HVAC”) equipment supplying the
Premises.

    

    (g)             Intentionally
deleted.

    

    (h)           Late
Payment.  If any monthly installment of Minimum Rental,
Additional Rent (if any) or any other sum due and payable pursuant to this Lease
remains due and unpaid ten (10) days after said amount becomes due, Tenant shall
pay as Additional Rent hereunder a late payment charge of a sum equal to five
percent (5%) of the unpaid rent or other payment (“Late Charge”).  All
unpaid rent and other sums of whatever nature owed by Tenant to Landlord under
this Lease shall bear interest from the fifteenth (15th) day after the due date
thereof until paid at the lesser of fifteen percent (15%) per annum or the
maximum interest rate per annum allowed by law (“Interest
Charge”).  Acceptance by Landlord of any payment from Tenant hereunder
in an amount less than that which is currently due shall in no way affect
Landlord’s rights under this Lease and shall in no way constitute an accord and
satisfaction.  Notwithstanding the foregoing, for the first two late
payments by Tenant in any Lease Year, Tenant shall have five (5) days from
receipt of written notice from Landlord to make such late payment before such
Late Charge and Interest Charge shall apply.

    

    (i)           Audit.  Tenant
shall have the right, from time to time, to audit Landlord’s books and records
as they relate to any costs and expenses for which Tenant is responsible under
this Lease during the previous calendar year of the Lease term.  Any
such audit shall be conducted during Landlord’s regular business hours at the
offices of Landlord where such records are kept utilizing an independent third
party (which shall be the same entity that Tenant uses for similar auditing
functions for other building(s) owned or leased by Tenant) designated by Tenant,
on a non-contingency basis.  In the event any such audit reveals that
the costs and expenses for which Tenant has paid Tenant’s proportionate share of
such costs relative to any audit period exceed actual costs and expenses for
which Tenant is responsible for paying its proportionate share, either: (i)
Landlord shall credit or refund any overpayment to Tenant within thirty (30)
days of such audit report; or (ii) Tenant shall pay to Landlord any underpayment
within thirty (30) days of such audit report, as applicable.  All
costs and expenses of any such audit shall be paid by Tenant, unless such audit
discloses a discrepancy in the amount of five percent (5%) or more in which case
Landlord shall pay for such audit, up to a maximum amount of
$5,000.  Tenant may perform such an audit no more than once each
calendar year during the Lease term and Tenant shall maintain all information
reviewed during such audit in a confidential manner, only disclosing such
information to Tenant’s accountants, legal counsel, officers and
managers.  Tenant’s right to audit shall in no way relieve Tenant’s
obligations to pay Common Area Expenses due to Landlord within thirty (30) days
after receipt of an invoice therefor.

    

    (j)           Controllable Operating
Expenses Cap.  In no event shall Tenant’s Controllable
Operating Expenses, as defined in herein, for any calendar year from and after
2008 exceed the Controllable Operating Expenses Cap.  As used herein,
the term “Controllable Operating Expenses Cap” shall mean: (i) relative to the
calendar year 2008, the amount obtained by multiplying the amount of
Controllable Operating Expenses for calendar year 2007 by 1.05; and (ii)
relative to each calendar year subsequent to calendar year 2008, the amount
obtained by multiplying the Controllable Operating Expenses Cap for the previous
calendar year by 1.05.  “Controllable Operating Expenses” shall mean
all operating and maintenance costs chargeable pursuant to this Lease other
than: (i) property taxes, including but not limited to, personal and ad valorem
taxes; (ii) cost of all insurance coverage for the Building and the common
areas, including, but not limited to, the cost of fire, casualty, rental
abatement, boiler and machinery, worker’s compensation and liability insurance
applicable to the Building and the common areas and Landlord’s personal property
used in connection therewith; (iii) all charges for gas, water, sewerage
service, electricity and other utilities furnished to the Building and the
common areas; (iv) ice and snow removal; and (v) the Building’s proportionate
share of any and all assessments and other charges payable by Landlord relative
to the Business Park under the terms of any applicable restrictive covenants,
agreements or similar documents.

    

    4.           DELIVERY OF
POSSESSION.  Landlord will deliver the Premises to Tenant on
the Commencement Date, with Landlord’s Work (as defined in Paragraph 1 of
Exhibit ”C”
attached hereto) substantially completed in accordance with the Final Plans and
Specifications (as defined in paragraph 1 of said Exhibit ”C”),
subject to revisions as mutually agreed to in writing by Landlord and Tenant, as
evidenced, if requested by Tenant, by the certification of Landlord’s architect
or other designated engineering  representative.  Tenant
shall be given access to the Premises upon written request to Landlord not more
than sixty (60) days prior to the Commencement Date, for the purposes of
preparing the Premises for Tenant’s use.  With the exception of any
Annual Rental payments due, all terms and conditions of this Lease shall apply
to Tenant upon such occupancy.  Tenant shall coordinate such occupancy
with Landlord and shall not interfere with Landlord’s completion of Landlord’s
Work.  If Landlord for any reason whatsoever cannot substantially
complete Landlord’s Work and deliver possession of the Premises to Tenant on the
Commencement Date as above specified, this Lease shall not be void or voidable
nor shall Landlord be liable to Tenant for any loss or damage resulting
therefrom; but in that event  (except to the extent that any such
delay(s) has been caused by Tenant or its agent(s), employee(s), contractor(s)
or subcontractor(s) (collectively, “Tenant Delay Factors”), and provided that in
each such instance Landlord first gives Tenant written notice that if Tenant
does not so cure its act or omission within two (2) business days the same will
thereafter be considered a Tenant Delay Factor, the Commencement Date shall be
adjusted to be the date when Landlord does in fact substantially complete
Landlord’s Work and deliver possession of the Premises to
Tenant.  Notwithstanding anything herein to the contrary, in the event
Landlord’s Work is not complete by the date which is one hundred twenty (120)
days after the later to occur of: (i) waiver or expiration of the Contingency
(as defined in Section 7 of Exhibit “E” hereof); and (ii) approval by Landlord
and Tenant of space plans and construction drawings for the Premises (such date
referred to herein as the “Delivery Date”), except for reasons of Tenant Delay
Factors or force majeure, which force majeure delays shall only be extended by
up to 45 days, Tenant shall be granted three (3) days of free Minimal Rental for
every day beyond the Delivery Date until Landlord’s Work has been complete, and
the Rent Commencement Date shall be adjusted accordingly.  In the
event Landlord is unable to deliver the Premises by September 30, 2007, Tenant
may terminate this Lease with no further obligation by providing Landlord
written notice on or before October 10, 2007.

    

    5.           ALTERATIONS AND IMPROVEMENTS
BY TENANT.

    

    (a)           Tenant
shall make no structural changes respecting the Premises or the Building and
shall make no changes of any kind respecting the Premises or the Building that
are visible from the exterior of the Premises or the Building, without
Landlord’s approval, which shall not be unreasonably withheld.  Any
interior nonstructural changes or other alterations, additions, or improvements
to the Premises costing in excess of $20,000 in any single instance shall be
made by or on behalf of Tenant only with the prior written consent of Landlord,
which consent shall not be unreasonably withheld or delayed. Prior to any such
consent by Landlord, Tenant shall submit to Landlord reasonably detailed plans
and specifications covering the proposed work.  If Landlord notifies
Tenant of any objections to the proposed alterations, Tenant must (i) revise the
plans and specifications to the extent reasonably necessary to secure the
Landlord’s approval and (ii) submit such revised plans and specifications for
Landlord’s approval.  Tenant shall thereafter have the alterations
performed in accordance with the approved plans and
specifications.  After completion, Tenant shall deliver to Landlord an
“as-built” set of plans and specifications.

    

    (b)           Tenant
shall not permit any lien or claim of lien against the Premises to exist or come
into being as a result of any construction work performed on behalf of or at the
direction of Tenant at the Premises and Tenant shall bond off or release of
record any lien within thirty (30) days of being filed against the
Premises.  Tenant is not Landlord’s agent or nominee in connection
with any construction activities performed by or for Tenant on the Premises and
Landlord shall not be liable for the contracts or liabilities of
Tenant.  Tenant agrees that any damage to the Premises caused by
Tenant’s construction work shall be repaired at Tenant’s sole cost and
expense.  No later than thirty (30) days after completion of any work
in the Premises by Tenant (including, but not limited to, the addition of
equipment, cables or any material that must be inspected), Tenant shall provide
to Landlord (i) an affidavit from the general contractor performing the work
that same has been substantially completed in accordance with the approved plans
and specifications and that all mechanics and materialmen in connection
therewith have been paid in full; (ii) a waiver of lien with respect to such
construction work executed by the general contractor and each subcontractor,
except as to any contractor for which Tenant has obtained a bond to pay any
claims by such persons; and (iii) a certificate of occupancy from the applicable
governmental authorities, if required, evidencing completion of such work in
accordance all applicable laws, codes and ordinances.  In the event a
certificate of occupancy cannot be obtained for the Premises due to any action
or inaction by Tenant, Tenant shall be in default hereunder and must immediately
comply with any and all requirements to obtain a certificate of
occupancy.

    

    (c)           All
alterations, additions or improvements (collectively, “Alterations”), including
without limitation all partitions, walls, railings, carpeting, floor and wall
coverings and other fixtures (excluding, however, Tenant’s trade fixtures as
described in the paragraph entitled “Trade Fixtures and Equipment” below) made
by, for, or at the direction of Tenant shall, at the expiration or earlier
termination of this Lease, become the property of Landlord, , and shall remain
upon the Premises at the expiration or earlier termination of this Lease,
provided, however, that Tenant shall have the right (but not the obligation) to
remove all Alterations and other items in the Premises or the Building (such as
chillers and generators), except that Tenant shall be obligated to remove those
Alterations which Landlord designates in writing for removal at the time
Landlord grants its consent to such Alterations.   Tenant shall
repair any damage caused to the Premises by said removal of
Alterations.

    

    6.           USE OF
PREMISES.

    

    (a)           Tenant
shall use the Premises only for manufacturing, warehousing and distribution,
general office, data center and ancillary uses, and for any other legal
purpose.  Tenant shall comply with all laws, ordinances, orders,
regulations or zoning classifications of any lawful governmental authority,
agency or other public or private regulatory authority (including insurance
underwriters or rating bureaus) having jurisdiction over the Premises
(collectively, “Legal Requirements”) to the extent made necessary by reason of
Tenant’s particular use or occupancy of the Premises.  Tenant shall
not do any act or follow any practice relating to the Premises which shall
constitute a nuisance or detract in any way from the reputation of the
Building.  Tenant’s duties in this regard shall include allowing no
noxious or offensive odors, fumes, gases, smoke, dust, steam or vapors, or any
loud or disturbing noise or vibrations to originate in or emit from the Premises
in excess of  what is commercially reasonable.

    

    (b)           Without
limiting the generality of (a) above, and excepting only office supplies and
cleaning materials used by Tenant in its ordinary day to day business operations
(but not held for sale, storage or distribution) customarily used in facilities
such as the Building, and then only to the extent same are used, stored (but not
any bulk storage), transported, and disposed of strictly in accordance with all
applicable laws, regulations and manufacturer’s recommendations), the Premises
shall not be used for the treatment, storage, transportation to or from, use or
disposal of toxic or hazardous wastes, materials, or substances, or any other
substance that is prohibited, limited or regulated by any governmental or
quasi-governmental authority or that, even if not so regulated, could or does
pose a hazard to health and safety of the occupants of the Building or
surrounding property except for chemicals and other substances used in
connection with Tenant’s photo-developing and merchandising processes and
services provided such chemicals and other substances are brought into the
Premises, used, stored and disposed of in accordance with all Legal Requirements
and Environmental Laws.

    

    (c)           Landlord
hereby represents and warrants to Tenant that as of the Commencement Date, the
Premises and Building shall be in compliance with all applicable Legal
Requirements, including without limitation, Environmental Laws (as hereinafter
defined).

    

    (d)           Tenant
has previously been furnished with a copy of any applicable restrictive
covenants relating to the Building and the Business Park, and Tenant shall abide
by these restrictions in connection with its use of the Premises.

    

    (e)           Tenant
shall exercise due care in its use and occupancy of the Premises and shall not
commit or allow waste to be committed on any portion of the Premises; and at the
expiration or earlier termination of this Lease, Tenant shall deliver the
Premises to Landlord in as good condition as same were on the date of completion
of the Improvements in the Premises or were thereafter placed by Landlord or
Tenant, ordinary wear and tear, condemnation, fire or other casualty and acts of
God and the elements alone excepted.

    

    (f)           Tenant
shall save Landlord harmless from any claims, liabilities, penalties, fines,
costs, expenses or damages resulting from the failure of Tenant to comply with
the provisions of this paragraph 6.  This indemnification shall
survive the termination or expiration of this Lease.

    

    7.           TAXES.

    

    (a)           Tenant
shall pay any taxes, documentary stamps or assessments of any nature imposed or
assessed upon Tenant’s trade fixtures, equipment, machinery, inventory,
merchandise or other personal property located on the Premises and owned by or
in the custody of Tenant as promptly as all such taxes or assessments may become
due and payable without any delinquency.  Tenant shall provide
Landlord with copies of all paid receipts respecting such tax or charge upon
request by Landlord.

    

    (b)           Landlord
shall pay, subject to reimbursement from Tenant as provided in paragraph 3
herein, all ad valorem property taxes which are now or hereafter assessed upon
the Building and the Premises, except as otherwise expressly provided in this
Lease.

    

    8.           FIRE AND EXTENDED COVERAGE
INSURANCE.  Landlord shall maintain and pay for fire insurance,
with extended coverage, covering the Building equal to at least one hundred
percent (100%) of the replacement cost thereof.  Tenant shall not do
or cause to be done or permit on the Premises or in the Building anything deemed
extrahazardous on account of fire and Tenant shall not use the Premises or the
Building in any manner which will cause an increase in the premium rate for any
insurance in effect on the Building or a part thereof.  If, because of
anything done, caused to be done, permitted or omitted by Tenant or its
agent(s), contractor(s), employee(s), invitee(s), licenses(s), servant(s)
subcontractor(s) or subtenant(s) the premium rate for any kind of insurance in
effect on the Building or any part thereof shall be raised, Tenant shall pay
Landlord on demand the amount of any such increase in premium which Landlord
shall pay for such insurance and if Landlord shall demand that Tenant remedy the
condition which caused any such increase in an insurance premium rate, Tenant
shall remedy such condition within five (5) days after receipt of such
demand.  Tenant shall maintain and pay for all fire and extended
coverage insurance on its contents in the Premises, including trade fixtures,
equipment, machinery, merchandise or other personal property belonging to or in
the custody of Tenant.

    

    9.           LANDLORD’S COVENANT TO
REPAIR AND REPLACE.

    

    (a)           During
the term of this Lease, Landlord shall be responsible only for repairs or
replacements, at its sole cost and expense, to the roof, exterior walls, floor
slab, structural members (including foundation and subflooring of the Premises)
and for the central plumbing and electrical systems serving the entire Building
up to the respective applicable points of entry of same into the
Premises.  Landlord’s repairs and replacements shall be made within a
reasonable time.  If the need for such repairs or replacements is the
result of the negligence, misconduct or intentional acts or omissions of Tenant,
its agent(s), contractor(s), employee(s), invitee(s), licensee(s), servant(s),
subcontractor(s) or subtenant(s) and the expense of such repairs or replacements
are not fully covered and paid by Landlord’s insurance, then Tenant shall pay
Landlord the full amount of expenses not covered.  Landlord’s duty to
repair or replace as prescribed in this paragraph shall be Tenant’s sole remedy
and shall be in lieu of all other warranties or guaranties of Landlord, express
or implied.

    

    (b)           Landlord
shall not be liable for any failure to make any repairs or to perform any
maintenance required of Landlord hereunder unless such failure shall persist for
thirty (30) days (except in case of emergency) after written notice from Tenant
setting forth the need for such repair(s) or replacement(s) in reasonable detail
has been received by Landlord.  Except as set forth in the paragraph
of this Lease, entitled “Damage or Destruction of Premises” or elsewhere in this
Lease, there shall be no abatement of rent.  There shall be no
liability of Landlord by reason of any injury to or interference with Tenant’s
business arising from the making of any repairs, replacements, alterations or
improvements to any portion of the Building or the Premises, or to fixtures,
appurtenances and equipment therein, provided that Landlord uses reasonable
efforts to minimize interference with Tenant’s use and occupancy of the
Premises.  In the event of any failure by Landlord to perform any of
its obligations hereunder, Tenant (except in the case of an emergency) shall
take no action without having first given Landlord thirty (30) days written
notice of any such default.  Following such notice and failure by
Landlord to cure, Tenant shall have the right to take the necessary actions to
perform Landlord's uncured obligations hereunder and invoice Landlord for the
actual and reasonable costs and expenses thereof, unless Landlord has diligently
commenced to perform its uncured obligations hereunder within said thirty (30)
day period.  Landlord shall remit payment to Tenant within thirty (30)
days of receipt of a paid invoice and applicable lien waivers from
Tenant.  If Landlord fails to remit payment to Tenant within the
aforesaid thirty (30) day period, Tenant shall have the right to offset and
deduct such sum; such offset not to exceed twenty-five percent (25%) of Minimum
Rental for each month until Tenant is made whole.

    

    10.           TENANT’S COVENANT TO
REPAIR.  Tenant shall be responsible for the repair,
replacement and maintenance in good order and condition of all parts and
components of the Premises, other than those specified for repair, replacement
and maintenance by Landlord above, including without limitation the plumbing,
wiring, electrical systems, HVAC system (subject to the provisions below), glass
and plate glass, and the equipment and machinery constituting fixtures, unless
such repairs or replacements are required as a result of the negligence or
intentional misconduct of Landlord, its agent(s), contractor(s), employee(s),
invitee(s), or subcontractor(s) in which event Landlord shall be responsible for
such repairs.  Tenant’s duty to maintain the HVAC system shall
specifically include the duty to enter into and maintain at Tenant’s sole
expense during the entire term of this Lease a contract(s) for the routine and
periodic maintenance and regular inspection of such HVAC system, the replacement
of filters as recommended and the performance of other recommended periodic
servicing in accordance with applicable manufacturer’s standards and
recommendations.  Such contract (a) shall be with a reputable
contractor reasonably satisfactory to Landlord; (b) shall satisfy the
requirements for routine and periodic maintenance, if any, necessary to keep all
applicable manufacturer’s warranties in full force and effect; and (c) shall
provide that in the event this Lease expires or is earlier terminated for any
reason whatsoever that said contract shall be immediately terminable by Landlord
or Tenant without any cost, expense or other liability on the part of
Landlord.   Notwithstanding, Landlord shall pay up to $1,000 in
each instance toward replacement of the HVAC system, any major component of the
HVAC system(s) and/or any operating system (unless the same is caused by the
negligence of Tenant, its employees, contractors or agents).  In the
event the costs for replacement of any HVAC system, any major component of the
HVAC system(s) and/or any operating system not caused by the negligence of
Tenant, its employees, contractors or agents is greater than $1,000 in each
instance, Landlord shall pay the same which shall be amortized over the useful
life of such replaced system (based upon standard accounting principles) and
charged to Tenant proportionately.  Tenant shall be obligated to pay
all such costs within thirty (30) days after notice from Landlord.

    

    11.           TRADE FIXTURES AND
EQUIPMENT.  Any trade fixtures installed in the Premises at
Tenant’s expense shall remain Tenant’s personal property and Tenant shall have
the right at any time during the term of this Lease to remove such trade
fixtures.  Upon removal of any trade fixtures, Tenant shall
immediately restore the portion of the Premises damaged by such removal to the
condition required by Section 6(e) of this Lease. Any trade fixtures not removed
by Tenant after the expiration or an earlier termination of the Lease shall
become, at Landlord’s sole election, either (i) the property of Landlord, in
which event Landlord shall be entitled to handle and dispose of same in any
manner Landlord deems fit without any liability or obligation to Tenant or any
other third party with respect thereto, or (ii) subject to Landlord’s removing
such property from the Premises and storing same, all at Tenant’s expense and
without any recourse against Landlord with respect thereto.  Without
limiting the generality of the foregoing, the following property shall in no
event be deemed to be “trade fixtures” and Tenant shall not remove any such
property from the Premises under any circumstances, regardless of whether
installed by Landlord or Tenant:  (a) any air conditioning, air
ventilating or heating fixtures or equipment (with the exception of a portable
dehumidifier installed by Tenant in the Premises); (b) any lighting fixtures or
equipment; (c) any dock levelers; (d) any carpeting or other permanent floor
coverings; (e) any paneling or other wall coverings; or (f) plumbing fixtures
and equipment.

    

    12.           UTILITIES.  Tenant
shall pay for all utilities or services related to its use of the Premises,
including, without limitation, electricity, gas, heat, water, sewer, telephone
and janitorial services.  All utilities shall, as of the Commencement
Date, have separate meters at Landlord’s sole
expense.     Landlord shall not be responsible for the
stoppage or interruption of utilities services other than as required by its
limited covenant to repair and replace set forth above, nor shall Landlord be
liable for any damages caused by or from the plumbing and sewer systems,
provided, however, that Annual Rental shall abate if any utility service is not
provided to the Premises for more than five (5) continuous days due to
Landlord’s negligence.  Tenant shall have the right to place a
generator and chiller outside the Premises in a location approved by Landlord
and Tenant.

    

    13.           DAMAGE OR DESTRUCTION OF
PREMISES.  If the Premises are damaged by fire or other
casualty, either in whole or in part, but no part of the Premises is rendered
untenantable for Tenant’s business, Landlord shall cause such damage to be
repaired (to the extent of the Base Building (as hereinafter defined) and
Landlord’s Work) without unreasonable delay and the Annual Rental shall not be
abated.  If by reason of such casualty the Premises are rendered
untenantable in Tenant’s business, either in whole or in part, Landlord shall
cause the damage to be repaired or replaced (to the extent of the Base Building
and Landlord’s Work) without unreasonable delay, and, in the interim, the Annual
Rental shall be proportionately reduced as to such portion of the Premises as is
rendered untenantable.  Any such abatement of rent shall not, however,
create an extension of the term of this Lease.  Provided, however, if by reason
of such casualty, the Premises are rendered untenantable in some material
portion, and the amount of time required to repair the damage using due
diligence is in excess of one hundred twenty (120) days, then either party shall
have the right to terminate this Lease by giving written notice of termination
within sixty (60) days after the date of casualty, and the Annual Rental shall
abate as of the date of such casualty in the event of such
termination.  Notwithstanding the other provisions of this paragraph,
in the event there should be a casualty loss to the Premises to the extent of
fifty percent (50%) or more of their replacement value or if the Premises are
rendered untenantable for the conduct of Tenant’s business operations during the
last twelve (12) months of the initial term or any extended term, either party
may, at its option, terminate this Lease by giving written notice within sixty
(60) days after the date of the casualty and Annual Rental  shall
abate as of the date of such notice.  Except as provided herein,
Landlord shall have no obligation to rebuild or repair in case of fire or other
casualty, and no termination under this paragraph shall affect any rights of
Landlord or Tenant hereunder because of prior defaults of the other
party.  Tenant shall give Landlord immediate notice of any fire or
other casualty in the Premises.

    

    14.           GOVERNMENTAL
ORDERS.  Except as hereinbelow set forth regarding compliance
of the physical structure of the Premises with the applicable requirements of
the Americans with Disabilities Act and the implementing regulations (the “ADA”)
as of the Commencement Date, Tenant agrees, at its own expense, to comply
promptly with all requirements of any legally constituted public authority that
may be in effect from time to time made necessary by reason of Tenant’s
particular use or occupancy of the Premises.  Landlord agrees to
comply promptly with any such requirements if not made necessary by reason of
Tenant’s particular use or occupancy, at its sole cost and
expense.  With regard to the physical structure of the Premises,
Landlord agrees to construct the Premises in compliance with the applicable
requirements of the ADA in effect as of the Commencement Date (it being
understood that under no circumstances shall Tenant be responsible for any costs
incurred to cause the Premises to comply with the ADA, which may include, but is
not limited to, restroom facilities, emergency strobe lights and horns, and
building access).  If it is determined that for any reason Landlord
shall have failed to cause the physical structure of the Premises to be brought
into compliance with the ADA as of the Commencement Date (to at least the
minimum extent required under applicable regulations then in effect), then
Landlord, as its sole obligation, will take the action(s) necessary to cause the
physical structure of the Premises to so comply, and Tenant acknowledges and
agrees that Landlord has and shall have no other obligation or liability
whatsoever to Tenant, or to anyone claiming by or through Tenant, regarding any
failure of the Premises or the activities therein to comply with the applicable
requirements of the ADA.  Landlord and Tenant agree, however, that if
any actions is necessary in order to comply with any of the above requirements
during the last two (2) years of the Lease and such action to comply with any of
the above requirements would cost Landlord in excess of one (1) year’s rent,
then Landlord may terminate this Lease by giving written notice of termination
to Tenant, which termination shall become effective sixty (60) days after
receipt of such notice, and which notice shall eliminate the necessity of
compliance with such requirement by Landlord, unless Tenant shall elect, before
termination becomes effective, to pay to Landlord all costs for the necessary
compliance.

    

    15.           MUTUAL WAIVER OF
SUBROGATION.  For the purpose of waiver of subrogation, the
parties mutually release and waive unto the other all rights to claim damages,
costs or expenses for any injury to property of Landlord or Tenant caused by a
casualty of any type whatsoever in, on or about the Premises  All
insurance policies carried with respect to this Lease, if permitted under
applicable law, shall contain a provision whereby the insurer waives, prior to
loss, all rights of subrogation against either Landlord or Tenant.

    

    16.           SIGNS AND
ADVERTISING.

    

    (a)           Tenant
may install one (1) tenant identification sign in accordance with Building
standards and subject to Landlord's prior written approval (not to be
unreasonably withheld, delayed or conditioned), such sign to be located at or
near the Tenant’s front entrance to the Premises within the
Building.  Tenant shall submit sign drawings to Landlord for approval
prior to fabrication and installation.  The following submission
requirements, in duplicate, constitute the minimum data required: (i) layout,
size, location and color of test; (ii) layout of additional symbols or logo;
(iii) installation details; and (iv) lighting details, if applicable. In the
event Tenant desires any changes to its initial sign, Tenant shall reimburse
Landlord for its actual legal fees for Landlord’s review and approval of a new
sign.  If at any time during the term of this Lease (as same may be
extended) Landlord provides signage on a monument to other tenants in the
Building, Landlord shall at Tenant’s cost provide Tenant with similar signage on
such monument.

    

    (b)           In
order to provide architectural control for the Building, Tenant shall, without
Landlord’s prior written approval, install no other exterior signs, marquees,
billboards, outside lighting fixtures and/or other decorations on the Premises
or the Building.  Landlord shall have the right to remove any such
sign or other decoration and restore fully the Premises at the cost and expense
of Tenant if any such exterior work is done without Landlord’s prior written
approval, which approval Landlord shall be entitled to withhold or deny in its
reasonable discretion.  Tenant shall not permit, allow or cause to be
used in, on or about the Premises any sound production devices, mechanical or
moving display devices, bright lights, or other advertising media, the effect of
which would be visible or audible from the exterior of the Premises, unless
previously approved by the Landlord.

    

    17.           INDEMNIFICATION AND
LIABILITY INSURANCE.

    

    

    (a)           Tenant
shall indemnify and save Landlord harmless against any and all claims, suits,
demands, actions, fines, damages, and liabilities, and all costs and expenses
thereof (including without limitation reasonable attorneys’ fees) arising out of
injury to persons (including death) or property occurring in, on or about, or
arising out of the Premises or other areas in the Building if caused or
occasioned wholly or in part by any act(s) or omission(s) of Tenant, its
agent(s), contractor(s), employee(s), invitee(s), licensee(s), servant(s),
subcontractor(s) or subtenant(s), except if caused by any act(s) or omission(s)
on the part of Landlord, its agent(s), contractor(s),  employee(s),
invitee(s), licensee(s), servant(s) or subcontractor(s).  Tenant shall
give Landlord immediate notice of any such happening causing injury to persons
or property.

    

    (b)           Landlord
shall indemnify and save Tenant harmless against any and all claims, suits,
demands, actions, fines, damages, and liabilities, and all costs and expenses
thereof (including without limitation reasonable attorneys’ fees) arising out of
injury to persons (including death) or property occurring in, on or about, or
arising out of the Premises or other areas in the Building if caused or
occasioned wholly or in part by any act(s) or omission(s) of Landlord, its
agent(s), employee(s), contractor(s), invitee(s), licensee(s), servant(s) or
subcontractor(s), except if caused by any act(s) or omission(s) on the part of
Tenant, its agent(s), contractor(s), employee(s), invitee(s), licensee(s),
servant(s), subcontractor(s) or subtenant(s).  Provided, however,
Landlord shall not be liable for any damage caused or occasioned by or from
water, snow or ice being upon or coming through the roof, trapdoor, walls,
windows, doors, or otherwise in, upon or about the Premises or the Building or
from any damage arising from acts or omissions of tenants or other occupants of
the Building, unless due to negligence of Landlord, its agent(s), contractor(s),
or employee(s), invitee(s), licensee(s), servant(s) or
subcontractor(s).

    

    (c)           (i)
At all times during the term of this Lease, Tenant shall at its own expense keep
in force adequate public liability insurance under the terms of a commercial
general liability policy (occurrence coverage) in the amount of not less than
$2,000,000.00 coverage and with such company(ies) licensed to do business in the
state in which the Premises is located as shall from time to time be reasonably
acceptable to Landlord (and to any lender having a mortgage interest in the
Premises) and naming Landlord as an additional insured (and, if requested by
Landlord from time to time, naming Landlord’s mortgagee as an additional
insured).  Such insurance shall include, without limitation, personal
injury and contractual liability coverage for the performance by Tenant of the
indemnity agreements set forth in this Lease.  Tenant shall first
furnish to Landlord copies of policies or certificates of insurance evidencing
the required coverage prior to the Commencement Date and thereafter prior to
each policy renewal date.  All policies required of Tenant hereunder
shall contain a provision whereby the insurer is not allowed to cancel or change
materially the coverage without first giving thirty (30) days’ written notice to
Landlord, and (ii) at all times during the term of this Lease, Landlord shall at
its own expense keep in force adequate public liability insurance under the
terms of a commercial general liability policy (occurrence coverage) in the
amount of not less than $2,000,000.00 coverage and with such company(ies)
licensed to do business in the state in which the Premises is
located.  Such insurance shall include, without limitation, personal
injury and contractual liability coverage for the performance by Landlord of the
indemnity agreements set forth in this Lease.  Landlord shall first
furnish to Tenant copies of policies or certificates of insurance evidencing the
required coverage upon request.

     

    (d)           The
non-prevailing party shall also pay all costs, expenses and reasonable
attorneys’ fees that may be incurred by the prevailing party in enforcing the
agreements of this Lease, whether incurred as a result of litigation or
otherwise.

    

    18.           LANDLORD’S RIGHT OF
ENTRY.  Provided that Landlord uses reasonable efforts to
minimize interference with Tenant’s use and occupancy of the Premises, Landlord,
and those persons authorized by it, shall have the right to enter the Premises
at all reasonable times and upon  24 hours prior notice (except in the
case of emergency) for the purposes of making repairs, making connections,
installing utilities, providing services to the Premises or for any other
tenant, making inspections or showing the same to prospective purchasers and/or
lenders, as well as at any time in the event of emergency involving possible
injury to property or persons in or around the Premises or the
Building.  Further, during the last three (3) months of the initial or
of any extended term, Landlord and those persons authorized by it shall have the
right at reasonable times and upon reasonable notice to show the Premises to
prospective tenants.

    

    19.           EMINENT
DOMAIN.  If any substantial portion of the Premises is taken
under the power of eminent domain (including any conveyance made in lieu
thereof) or if such taking shall materially impair the normal operation of
Tenant’s business, then either party shall have the right to terminate this
Lease by giving written notice of such termination within thirty (30) days after
such taking.  If neither party elects to terminate this Lease,
Landlord shall repair and restore the Premises (to the extent possible) to
substantially the same condition as the Premises existed immediately prior to
such taking and the Annual Rental shall be proportionately and equitably
reduced.  All compensation awarded for any taking (or the proceeds of
a private sale in lieu thereof) shall be the property of Landlord whether such
award is for compensation for damages to the Landlord’s or Tenant’s interest in
the Premises, and Tenant hereby assigns all of its interest in any such award to
Landlord; provided, however, Landlord shall not have any interest in any
separate award made to Tenant for Tenant’s Alterations, loss of business, moving
expense or the taking of Tenant’s trade fixtures or equipment if a separate
award for such items is made to Tenant and if such separate award does not
reduce the award to Landlord.

    

    20.           EVENTS OF DEFAULT AND
REMEDIES.

    

    (a)           Upon
the occurrence of any one or more of the following events (the “Events of
Default,” any one an “Event of Default”), the party not in default shall have
the right to exercise any rights or remedies available in this Lease, at law or
in equity provided same are exercised in accordance with applicable Legal
Requirements.  Events of Default shall be:

    

    (i)           Tenant’s
failure to pay when due any rental or other sum of money payable hereunder and
such failure is not cured within ten (10) days after written notice
thereof;

    

    (ii)           Failure
by either party to perform any other of the terms, covenants or conditions
contained in this Lease if not remedied within thirty (30) days after receipt of
written notice thereof, or if such default cannot be remedied within such
period, such party does not within thirty (30) days after written notice thereof
commence such act or acts as shall be necessary to remedy the default and shall
not thereafter complete such act or acts within a reasonable time;

    

    (iii)          Tenant
shall become bankrupt or insolvent, or file any debtor proceedings, or file
pursuant to any statute a petition in bankruptcy or insolvency or for
reorganization, or file a petition for the appointment of a receiver or trustee
for all or substantially all of Tenant’s assets and such petition or appointment
shall not have been set aside within ninety (90) days from the date of such
petition or appointment, or if Tenant makes an assignment for the benefit of
creditors, or petitions for or enters into an arrangement; or

    

    (iv)         Tenant
allows its leasehold estate to be taken under any writ of execution and such
writ is not vacated or set aside within ninety (90) days.

    

    (b)           In
addition to its other remedies, Landlord, upon an Event of Default by Tenant,
shall have the immediate right, after any applicable grace period expressed
herein (but in no event upon less than five (5) days prior written notice), to
terminate and cancel this Lease and/or to reenter and remove all persons and
properties from the Premises and dispose of such property as it deems fit, all
without being guilty of trespass or being liable for any damages caused
thereby.  If Landlord reenters the Premises, it may either terminate
this Lease or from time to time without terminating this Lease, Landlord shall
make such alterations and repairs as may be necessary or appropriate to relet
the Premises and relet the Premises upon such terms and conditions as Landlord
deems advisable without any responsibility on Landlord whatsoever to account to
Tenant for any surplus rents collected.  No retaking of possession of
the Premises by Landlord shall be deemed as an election to terminate this Lease
unless a written notice of such intention is given by Landlord to Tenant at the
time of reentry; but, notwithstanding any such reentry or reletting without
termination, Landlord may at any time thereafter elect to terminate for such
previous default.  In the event of an elected termination by Landlord,
whether before or after reentry, Landlord may recover from Tenant damages,
including the costs of recovering the Premises, and Tenant shall remain liable
to Landlord for the total Annual Rental as would have been payable by Tenant
hereunder for the remainder of the term (which may at Landlord’s election be
accelerated to be due and payable in full as of the Event of Default and
recoverable as damages equal to the net present value of future rent, discounted
at the greater of (i) eight percent (8%) or (ii) the then applicable “discount
rate” of the Federal Reserve Bank of Charlotte, North Carolina plus one percent
(1.0%) per annum, less the Market Rate (as defined in Exhibit “E” hereof) of the
Premises for the remainder of the Term) less the rents actually received from
any reletting.  In determining the Annual Rental which would be
payable by Tenant subsequent to default, the Annual Rental for the unexpired
portion of the term shall be equal (on a monthly basis) to the Annual Rental
payable by Tenant immediately prior to the default.  If any rent owing
under this Lease is collected by or through an attorney, Tenant agrees to pay
Landlord’s reasonable attorneys’ fees to the extent allowed by applicable
law.

    

    (c)           In
the case of Tenant's default as contemplated herein, Landlord shall have a duty
to mitigate its damages.

    

    21.           SUBORDINATION.  This
Lease is subject and subordinate to any and all mortgages or deeds of trust now
or hereafter placed on the property of which the Premises are a part, and this
clause shall be self-operative without any further instrument necessary to
effect such subordination; however, if requested by Landlord, Tenant shall
promptly execute and deliver to Landlord any such certificate(s) as Landlord may
reasonably request evidencing subordination of this Lease to or the assignment
of this Lease as additional security for such mortgages or deeds of
trust.  Provided, however, in each case the holder of the mortgage or
deed of trust shall (which in the case of an existing holder of a mortgage or
deed of trust, prior to the Commencement Date) agree that this Lease shall not
be divested by foreclosure or other default proceedings thereunder so long as
Tenant shall not be in default under the terms of this Lease beyond any
applicable cure period set forth herein.  Tenant shall continue its
obligations under this Lease in full force and effect notwithstanding any such
default proceedings under a mortgage or deed of trust and shall attorn to the
mortgagee, trustee or beneficiary of such mortgage or deed of trust, and their
successors or assigns, and to the transferee under any foreclosure or default
proceedings.  Tenant will, upon request by Landlord, execute and
deliver to Landlord or to any other person designated by Landlord, any
instrument or instruments required to give effect to the provisions of this
paragraph.

     

         
22.           ASSIGNING AND
SUBLETTING.  Tenant shall not assign, sublet, mortgage, pledge
or encumber this Lease, the Premises, or any interest in the whole or in any
portion thereof, directly or indirectly, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld, delayed or
conditioned.  If Tenant makes any such assignment, sublease, mortgage,
pledge or encumbrance with Landlord’s written consent, Tenant will still remain
primarily liable for the performance of all terms of this Lease and one-half
(1/2) of any rental or any net fees or charges received by Tenant (after
deduction by Tenant of  Tenant’s third-party brokerage fees, legal
fees, architectural fees, advertising costs and the reasonable costs of
refitting or improving the Premises for the proposed assignee or subtenant, and
free rent and improvement allowances granted, in connection with such
transaction)  in excess of the Annual Rental payable to Landlord
hereunder shall be also paid to Landlord as further rental under this
Lease.  Landlord’s consent to one assignment or sublease will not
waive the requirement of its consent to any subsequent assignment or sublease as
required herein.  Notwithstanding the foregoing, Tenant shall have the
absolute right to assign this Lease and/or sublet any part or all of the
Premises, without the Landlord's consent, to any of Tenant's subsidiary(s),
joint venture partner(s), partnership(s), or other affiliated or related
entity(s), and/or to a successor(s) in interest to any part and/or all of
Tenant's business including, without limitation, a sale of assets ("Permitted
Transfer").  A Permitted Transfer shall include a merger or
consolidation with another entity and/or an assignment or subletting to another
entity which is controlled by Tenant or is under common control of Tenant and
other entity.  Regardless of Landlord's consent, no assignment or
sublease shall release Tenant of Tenant's obligations hereunder.

    

    23.           TRANSFER OF LANDLORD’S
INTEREST.  If Landlord shall sell, assign or transfer all or
any part of its interest in the Premises or in this Lease to a successor in
interest which expressly assumes the obligations of Landlord hereunder, then
Landlord shall thereupon be released or discharged from all covenants and
obligations hereunder which accrue after such sale, assignment or transfer, and
Tenant shall look solely to such successor in interest for performance of all of
Landlord’s obligations which accrue after such sale, assignment or
transfer.  Tenant’s obligations under this Lease shall in no manner be
affected by Landlord’s sale, assignment, or transfer of all or any part of such
interest(s) of Landlord, and Tenant shall thereafter attorn and look solely to
such successor in interest as the Landlord hereunder.

    

    24.           COVENANT OF QUIET
ENJOYMENT.  Landlord represents that it has full right and
authority to lease the Premises and Tenant shall peacefully and quietly hold and
enjoy the Premises for the full term hereof so long as Tenant does not default
in the performance of any of the terms hereof beyond the expiration of any
applicable cure period.

    

    25.           ESTOPPEL
CERTIFICATES.  Within ten (10) business days after a request by
Landlord, Tenant shall deliver a written estoppel certificate, in form supplied
by or acceptable to Landlord, certifying any facts that are then true with
respect to this Lease, including without limitation that this Lease is in full
force and effect, that no default exists on the part of Landlord or Tenant (or
listing such default in case any exists), that Tenant is in possession, that
Tenant has commenced the payment of rent, and that Tenant claims no defenses or
offsets (or listing such defenses or offsets in case any exists) with respect to
payment of rentals under this Lease.  Likewise, within ten (10)
business days after a request by Tenant, Landlord shall deliver to Tenant a
similar estoppel certificate covering such matters as are reasonably required by
Tenant.  Landlord and Tenant shall each agree not to make such request
more than 2 times per calendar year.

    

    26.           LIENS.  

     

          (a) Tenant
shall do all things necessary to prevent the filing of any mechanics’,
materialmen’s or other types of liens whatsoever, against all or any part of the
Premises by reason of any claims made by, against, through or under
Tenant.  If any such lien is filed against the Premises, Tenant shall
either cause the same to be discharged of record within thirty (30) days after
filing or, if Tenant in its discretion and in good faith determines that such
lien should be contested, it shall furnish such security as may be necessary to
prevent any foreclosure proceedings against the Premises during the pendency of
such contest.  If Tenant shall fail to discharge such lien within said
time period or fail to furnish such security, then Landlord may at its election,
in addition to any other right or remedy available to it, discharge the lien by
paying the amount claimed to be due or by procuring the discharge by giving
security or in such other manner as may be allowed by law.  If
Landlord acts to discharge or secure the lien then Tenant shall immediately
reimburse Landlord for all sums paid and all costs and expenses (including
reasonable attorneys’ fees) incurred by Landlord involving such lien together
with interest on the total expenses and costs at the maximum lawful
rate.  It is specifically agreed to by the parties that Tenant is not
acting as an agent for Landlord and that Landlord shall not be liable for the
contracts or liabilities of Tenant.

    

    (b)           Landlord
hereby waives any and all liens Landlord may otherwise be entitled to against
any and all of Tenant’s personal property, equipment and other
assets.

    

    27.           MEMORANDUM OF
LEASE.  If requested by Tenant, Landlord shall execute a
recordable Memorandum or Short Form Lease, prepared at Tenant’s expense,
specifying the exact term of this Lease and such other terms as the parties
shall mutually determine.

    

    28.           FORCE
MAJEURE.  In the event Landlord or Tenant shall be delayed,
hindered or prevented from the performance of any act required hereunder, by
reason of governmental restrictions, scarcity of labor or materials, strikes,
fire, or any other reasons beyond its reasonable control, the performance of
such act shall be excused for the period of delay, and the period for
performance of any such act shall be extended as necessary to complete
performance after the delay period, provided, however, that Landlord’s or
Tenant’s performance of its obligations  under this Lease shall not
otherwise be  affected or diminished .  However, the
provisions of this paragraph shall in no way be applicable to Tenant’s
obligations to pay Annual Rental or Landlord’s or Tenant’s obligations to pay
any other sums, monies, costs, charges or expenses required by this
Lease.

    

    29.           REMEDIES CUMULATIVE --
NONWAIVER.  Unless otherwise specified in this Lease, no remedy
of Landlord or Tenant shall be considered exclusive of any other remedy, but
each shall be distinct, separate and cumulative with other available
remedies.  Each remedy available under this Lease or at law or in
equity may be exercised by Landlord or Tenant from time to time as often as the
need may arise.  No course of dealing between Landlord and Tenant or
any delay or omission of Landlord or Tenant in exercising any right arising from
the other party’s default shall impair such right or be construed to be a waiver
of a default.

    

    30.           HOLDING
OVER.  Tenant shall have the right to holdover in possession of
the Premises for up to six (6) months under the same terms and conditions of
this Lease, with the exception that  Tenant shall be allowed to vacate
the Premises at any time during such six (6) month period after giving Landlord
30 days prior written notice.  After such six (6) month period, if
Tenant continues to remain in possession of the Premises or any part thereof,
whether with or without Landlord’s acquiescence, (i) Tenant shall be deemed only
a tenant at will and there shall be no renewal of this Lease without a written
agreement signed by both parties specifying such renewal, (ii) the “monthly”
rental payable by Tenant during any such tenancy at will period shall be one
hundred twenty-five percent (125%) of the monthly installments of Annual Rental
payable during the final year immediately preceding such expiration, and
(iii)  Tenant shall also remain liable for any and all direct damages
suffered by Landlord as a result of any holdover without Landlord’s unequivocal
written acquiescence.

    

    31.           NOTICES.  Any
notice allowed or required by this Lease shall be deemed to have been
sufficiently served if the same shall be in writing and (i) placed in the United
States mail, via certified mail or registered mail, return receipt requested,
with proper postage prepaid or (ii) delivered to any nationally recognized
overnight courier, and addressed as follows:

    

    
      	
               
      

            	
              AS
      TO LANDLORD:

            	
              Shopton
      Ridge Business Park Limited
Partnership

            

    

    c/o
American Asset Corporation

    3700 Arco
Corporate Drive, Suite 350

    Charlotte,
North Carolina 28273

    

    Attention:                           President
with a copy to General Counsel

    

    AS TO
TENANT:                         Shutterfly,
Inc.

    2800
Bridge Parkway

    Redwood
City, CA 94065

    

    Attention:                           Chief
Financial Officer with a copy to Vice President, Legal

    

    The addresses of Landlord and Tenant
and the party, if any, to whose attention a notice or copy of same shall be
directed may be changed or added from time to time by either party giving notice
to the other in the prescribed manner.

    

    32.           LEASING
COMMISSION.  Landlord and Tenant represent and warrant each to
the other that they have not dealt with any broker(s) or any other person
claiming any entitlement to any commission in connection with this transaction
except American Asset Corporation and Trammel Crow Services, Inc. (the
“Broker”).  Landlord and Tenant agree to indemnify and save each other
harmless from and against any and all claims, suits, liabilities, costs,
judgments and expenses, including reasonable attorneys’ fees, for any leasing
commissions or other commissions, fees, charges or payments resulting from or
arising out of their respective actions in connection with this Lease except as
to Broker.  Landlord agrees to be responsible for the leasing
commission due Broker pursuant to a separate written agreement between Landlord
and Broker, and to hold Tenant harmless respecting same.

    

    33.           MISCELLANEOUS.

    

    (a)           Rules and
Regulations.  Landlord shall have the right from time to time
to prescribe reasonable rules and regulations  (the “Rules and
Regulations”) for Tenant’s use of the Premises and the Building, provided same
do not materially adversely affect Tenant’s use or occupancy of the Premises or
the operation of Tenant’s business.  A copy of Landlord’s current
Rules and Regulations respecting the Premises and the Building is attached
hereto as Exhibit ”D”.  Subject
to paragraph 9 of Exhibit “D” and to paragraph 6 of Exhibit “E” attached hereto,
Tenant shall abide by and use reasonable efforts to actively enforce on all its
employees, agents, invitees and licensees such regulations including without
limitation rules governing parking of vehicles in designated portions of the
Building.

    

    (b)           Evidence of
Authority.  If requested by Landlord, Tenant shall furnish
appropriate legal documentation evidencing the valid existence and good standing
of Tenant and the authority of any parties signing this Lease to act for
Tenant.

    

    (c)           Limitation of Landlord’s
Liability.  If Landlord shall fail to perform any covenant,
term or condition of this Lease upon Landlord’s part to be performed, and, as a
consequence of such default, Tenant shall recover a money judgment against
Landlord, such judgment shall be satisfied solely out of the proceeds of sale
received upon execution of such judgment levied thereon against the right, title
and interest of Landlord in the Building as the same may then be encumbered; and
neither Landlord nor, if Landlord be a partnership, any of the partners
comprising Landlord shall have any personal liability for any
deficiency.  It is understood and agreed that in no event shall Tenant
or any person claiming by or through Tenant have the right to levy execution
against any property of Landlord other than its interest in the Building as
hereinbefore expressly provided.

    

    (d)           Nature and Extent of
Agreement.  This Lease, together with all exhibits hereto,
contains the complete agreement of the parties concerning the subject matter,
and there are no oral or written understandings, representations, or agreements
pertaining thereto which have not been incorporated herein.  This
Lease creates only the relationship of Landlord and Tenant between the parties,
and nothing herein shall impose upon either party any powers, obligations or
restrictions not expressed herein.  This Lease shall be construed and
governed by the laws of the state in which the Premises are
located.

    

    (e)           Binding
Effect.  This Lease shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, successors and
assigns.  This Lease shall not be binding on Landlord until executed
by an authorized representative of Landlord and delivered to
Tenant.  No amendment or modification to this Lease shall be binding
upon Landlord unless same is in writing and executed by an authorized
representative of Landlord.

    

    (f)           Captions and
Headings.  The captions and headings in this Lease are for
convenience and reference only, and they shall in no way be held to explain,
modify, or construe the meaning of the terms of this Lease.

    

    (g)           Intentionally
Deleted.

    

    (h)           Intentionally
Deleted.

    

    (i)           Lease
Review.  The submission of this Lease to Tenant for review does
not constitute a reservation of or option for the Premises, and this Lease shall
become effective as a contract only upon execution and delivery by Landlord and
Tenant.

    

    34.           SEVERABILITY.  If
any term or provision of this Lease or the application thereof to any person or
circumstance shall, to any extent, be invalid or unenforceable, the remainder of
this Lease, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision of this Lease shall
be valid and enforced to the fullest extent permitted by law notwithstanding the
invalidity of any other term or provision hereof.

    

    35.           REVIEW OF
DOCUMENTS.  If, following the execution of this Lease, either
party hereto requests that the other party execute any document or instrument
that is other than (i) a document or instrument the form of which is attached
hereto as an exhibit, or (ii) a document that solely sets forth
facts or circumstances that are then existing and reasonably ascertainable by
the requested party with respect to this Lease (e.g., an estoppel
certificate), then the party making such request shall be responsible for paying
the out-of-pocket costs and expenses, including without limitation, the
attorneys fees, incurred by the requested party in connection with the review
(and, if applicable, the negotiations) related to such document(s) or
instrument(s), regardless of whether such document(s) or instrument(s) is (are)
ever executed by the requested party.  In the event the requesting
party is Tenant, all such costs and expenses incurred by Landlord in connection
with its review and negotiation of any such document(s) or instrument(s) shall
be deemed to be Additional Rental due hereunder and shall be payable by Tenant
promptly upon demand.

    

    36.           SPECIAL
STIPULATIONS.  (Special stipulations shall control if in
conflict with any of the foregoing provisions of this Lease.)  See
Exhibit ”E”
attached hereto and made a part hereof by this reference.

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties have
caused this Lease to be duly executed and sealed pursuant to authority duly
given as of the day and year first above written.

    

    “LANDLORD”

    

    
      	
               
      

            	
              3915
      SHOPTON ROAD, LLC,

            

    

    
      	
               
      

            	
              a
      North Carolina limited liability
company

            

    

    

    

    
      	
               
      

            	
              By:

            	 /s/ Paul L.
      Herndon

    

    Name:
Paul L. Herndon

    Title:
Vice President

    

    

    “TENANT”

    

    SHUTTERFLY, INC., a Delaware
corporation

    

    

    
      	
               
      

            	
              By:

            	/s/Stephen E. Recht

    

    Name:  Stephen
E. Recht

    Title: Chief Financial
Officer

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
“A”

    

    LEGAL
DESCRIPTION OF BUILDING SITE

    

    3915
Shopton Road, LLC

     Lot
4, Shopton Ridge Business Park, Phase 1 Map 2

    6.3152
Acres

    

    Being a
parcel or tract of land located in the City of Charlotte, Mecklenburg County,
North Carolina, and being more particularly described as follows:

    

    BEGINNING
at an existing iron rod in the center of a 60’ ingress and egress easement and
at the southwestern corner of Lot 3 Shopton Ridge, LLC property as recorded in
DB. 17877, Pg. 944 at the Mecklenburg County Register of Deeds said iron being
furthermore located South 80° 34' 16" East 4,696.40 feet (ground distance) from
North Carolina Geodetic Survey control monument “Shopton” (State Plane Grid
Coordinates: N: 523,015.0629, E: 1,413,721.9954) thence from said POINT OF BEGINNING and with
the northern line of Lots 6 and 7 Shopton Ridge Business Park, Phase 1, Map 2 as
recorded in MB. 42, Pg. 915 at the Mecklenburg County Register of Deeds; Thence,
N 88° 53' 05" W for a distance of 674.08 feet to an existing iron pin at the
southeastern corner of  Lot 5 Shopton Ridge Business Park, Phase 1,
Map 2 as recorded in MB. 42, Pg. 915 at the Mecklenburg County Register of
Deeds, thence with the eastern line of the aforesaid property N 01° 06' 55" E
for a distance of 408.27 feet to an existing iron pin on the southern right of
way line of Shopton Road (variable public right of way), thence with the
aforesaid right of way line the following five (5) courses: 1) S 89° 04' 13" E
for a distance of 100.97 feet to a point, 2) S 88° 36' 45" E for a distance of
196.31 feet to a point, 3) S 89° 01' 10" E for a distance of 196.85 feet to a
point, 4)S 88° 49' 27" E for a distance of 107.74 feet to a point, 5) S 88° 55'
16" E for a distance of 72.22 feet to an existing iron rod at the northwestern
corner of  Lot 3 Shopton Ridge, LLC property as recorded in DB. 17877,
Pg. 944 at the Mecklenburg County Register of Deeds, thence with the western
line of the aforesaid property S 01° 06' 55" W a distance of 408.07 feet to
the POINT OF BEGINNING;
containing 275,090 square feet or 6.3152 acres as shown on a survey by R. B.
Pharr & Associates, P.A., dated May 3, 2006 (Map File W-3325).

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
“B”

    

    INTENTIONALLY
DELETED

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
“C”

    

    UPFIT OF
PREMISES

    

    

    1.           LANDLORD’S
WORK

    

    Landlord, at Tenant’s sole cost and
expense (except as provided in paragraph 2 of this Exhibit ”C”)
shall construct all improvements to the Premises which constitute a part of
Landlord’s Work (collectively, the “Improvements”) in a good and workmanlike
manner and in accordance with the Final Plans and Specifications (as hereinafter
defined) and all applicable Legal Requirements.  “Landlord’s Work” shall mean
that certain work related to Tenant’s occupancy of the Premises which shall be
mutually agreed upon by Landlord and Tenant.   Tenant shall
submit to Landlord the proposed floor plan (including description of Landlord’s
Work) on or before December 26, 2006.   Landlord shall within
five (5) business days from receipt deliver to Tenant, in writing, either
approval of the floor plan or detailed comments on any changes reasonably
necessary.   If Landlord responds within such five (5) business
day period, Tenant shall be responsible for obtaining such changes to the floor
plan  as may be agreed upon by the parties and resubmitting for
written approval.    If Landlord fails to respond during
such five (5) business day period (the “Initial Floor Plan Response Period”),
Landlord shall automatically be deemed to have approved the initial floor
plan.   The final floor plan, as approved (or deemed approved) by
both Landlord and Tenant, is herein referred to as the “Initial Floor
Plan”.   If Landlord and Tenant cannot mutually agree upon the
Initial Floor Plan on or before January 15, 2007 (the “Initial Floor Plan
Approval Deadline Date”), Landlord or Tenant shall have the option, to terminate
the Lease.

    

    For
purposes of this Lease, Landlord’s Work shall be deemed “substantially complete”
when (i) Landlord has completed Landlord’s Work except for punchlist items which
do not prevent or materially impair Tenant’s use or occupancy of the Premises,
(ii) Tenant can occupy the Premises for the purpose of carrying on its intended
business therein,  and (iii) Landlord has procured a temporary or
permanent certificate of occupancy for the Premises, which shall allow Tenant to
operate its business within the Premises.  Landlord represents and
warrants that the Building has been constructed in (i) a good and workmanlike
manner, (ii) in accordance with applicable Legal Requirements, and (iii) in
accordance with Landlord’s base building shell specifications per the
architectural drawings dated February 21, 2006 prepared by Merriman Schmitt
which have been approved by both Tenant and Landlord (the “Base
Building”).

    

    Notwithstanding anything contained
herein to the contrary, Tenant (and not Landlord) shall be solely responsible
for any increases in the cost of Landlord’s Work which are attributable to (i)
any change orders requested by Tenant to the Final Plans and Specifications
which are agreed to between Landlord and Tenant and/or (ii) any Tenant Delay
Factors (as described in Paragraph 4 of
the Lease).  Such cost increases (subject to application of the
Improvements Allowance and Additional Tenant Improvement Allowance, each as
hereinafter defined)  shall be payable by Tenant to
Landlord  within 30 days of Landlord’s written demand
therefor.

    

    Landlord shall have the final plans and
specifications (the “Final Plans and Specifications”) for Landlord’s Work
prepared, based upon the Initial Floor Plan, and delivered to Tenant for its
review and approval (which approval shall not be unreasonably withheld) on or
before January 22, 2007.  Such review and approval by Tenant of the
Final Plans and Specifications shall be limited solely to those specific items
that do not materially conform to the Initial Floor Plan.  Tenant,
acting reasonably and in good faith, shall have seven (7) days from Landlord’s
delivery of the Final Plans and Specifications to advise Landlord, in writing,
as to whether or not Tenant desires any changes to the Final Plans and
Specifications.  If Tenant fails to respond during such seven (7) day
period (the “Response Period”), Tenant shall automatically be deemed to have
approved the Final Plans and Specifications.  If Landlord and Tenant
cannot mutually agree upon the Final Plans and Specifications on or before
January 30, 2007 (the “Final Plans Approval Deadline Date”), Landlord or Tenant
shall have the option, to terminate the Lease.

    

    Within
seven (7) business days after the Final Plans and Specifications have been
finally approved (or deemed approved) by Tenant, Landlord shall submit the Final
Plans and Specifications to the contractors for bidding purposes in accordance
with the provisions set forth below.  In the essence of time, Landlord
shall hire DSS Corporation as the general contract for Landlord
Work.  DSS Corporation agrees to competitively bid the work to all
subcontractors and open-book all bids for Tenant and Landlord review and
selection.  DSS Corporation shall receive a “cost plus 5%”
fee.  Tenant shall have the opportunity to review and provide input
concerning the subcontractor bids, which Tenant agrees to do in a timely and
good faith manner.

    

    Tenant acknowledges and agrees that
Tenant Delay Factors, as defined in paragraph 4 of the Lease, shall
include, without limitation, any delays resulting from (i) change orders to the
Final Plans and Specifications requested by Tenant or by those acting for or
under the direction of Tenant; (ii) the performance or completion by Tenant, or
any entity or person employed by Tenant, of any work in or about the Premises or
(iii) the failure of Landlord and Tenant to agree on the Final Plans and
Specifications on or before the Final Plans Approval Deadline Date, provided
that in each such instance Landlord first gives Tenant two (2) business days
notice that if Tenant does not  so cure its act or
omission  the same will thereafter be considered a Tenant Delay
Factor.

    .

    Except to the extent expressly provided
in the Lease, Landlord shall have no liability or obligation whatsoever to
remedy, replace or correct any alleged defects and deficiencies in Landlord’s
Work; provided, however, that Landlord specifically warrants that  (i)
all loading doors will be properly operational for three (3) months after the
Commencement Date, absent any negligence of Tenant, and (ii) Landlord shall
throughout the term of this Lease (as same may be extended) be responsible for
repairing any latent defects in the Improvements at Landlord’s sole
cost.  Landlord shall, to the extent permitted by law, assign all
warranties associated with the Premises to, and cooperate with, Tenant in the
enforcement of any express warranties or guarantees of workmanship or materials
given by any contractors, subcontractors, architects, draftsmen, or materialmen
relative to Landlord’s Work, the roof or any relevant Building
systems.  Notwithstanding anything to the contrary contained herein or
in the Lease, Landlord shall not be responsible, to any extent whatsoever, for
the repair, remediation or correction of any alleged deficiencies or defects in
any materials and workmanship in and concerning Landlord’s Work to the extent
that the existence or occurrence of such defects or deficiencies are the result
of, or due to, any negligent, willful or intentional or other acts or omissions
of Tenant, its agents, employees, contractors, subcontractors, representatives
or invitees.  Tenant may not conduct any activities on the Premises
that would have the effect of rendering any relevant warranties related to the
performance of Landlord’s Work void (unless previously approved by the
Landlord), and if Tenant does conduct any such activities and renders any
relevant warranty void, Landlord will no longer have any obligations under the
terms of the Lease with respect to the component, element or feature of the
Improvements that the warranty voided by Tenant’s activities had previously
covered.  Except as otherwise provided in this Lease, at no time
during the Lease term (as same may be extended pursuant to any renewal option,
if any) shall Tenant have any right, of any nature whatsoever, to withhold the
timely payment of any rental due under the Lease as a result of, or due to, or
because of, any alleged breaches by Landlord under the Lease or the alleged
existence of any defects or deficiencies in the Improvements.

    

    Landlord shall obtain all applicable
licenses, permits and approvals to complete the Tenant Improvements in
accordance with all applicable laws.

    

    Landlord shall give Tenant estimates of
the schedule for completion of the Improvements and thirty (30) days prior
written notice of the anticipated date the Premises will be ready for
occupancy.  Within thirty (30) days following the Commencement Date,
Landlord and Tenant shall mutually conduct a walk-through of the Premises and
compile a punch list which sets forth any corrective work to be performed by
Landlord with respect to the Improvements which Landlord, upon receipt, shall
diligently pursue to correct.

    

    Landlord represents and warrants to
Tenant that as of the Commencement Date:

    

    (i)           the
Premises, including the HVAC, electrical, mechanical, plumbing, sewer and other
systems serving the Premises, shall be in good working order;

    

    (ii)          the
Improvements and the Building shall not violate any covenants or restrictions of
record (if any), or any applicable Legal Requirements having jurisdiction over
the Project, and

    

    (iii)         Landlord
shall deliver the Premises to Tenant clean and free of debris.

    

    Except as
provided in Section 5(c) of the Lease, Tenant shall have no obligation to
restore the Premises to their original condition as of the Commencement Date
upon lease termination or expiration of the Lease.

    

    Landlord agrees that there shall be no
construction management fee payable by Tenant to Landlord to oversee the
construction of the Improvements.

    

    2.           IMPROVEMENTS
ALLOWANCE

    

    Notwithstanding anything to the
contrary herein, Landlord shall contribute an amount (such amount being the
“Improvements Allowance”) not to exceed $16.00 per rentable square foot of the
Premises ($1,638,400.00 based on the rentable square footage of 102,400) towards
the costs incurred by Landlord and/or Tenant in designing, planning and
constructing the Improvements.  In the event the costs incurred in
connection with designing, planning and constructing the Improvements exceed the
Improvements Allowance (subject to application of the Additional Tenant
Improvement Allowance, as hereinafter defined), Tenant shall be solely
responsible for bearing and paying any such excess costs within thirty (30) days
of Landlord’s written demand therefor.  In the event the costs
incurred by Landlord and/or Tenant in connection with designing, planning and
constructing the Improvements are less than the Improvements Allowance, Tenant
shall provide Landlord with written notice prior to August 31, 2007 which may
direct Landlord to pay such excess amounts directly to Tenant’s
contractor/vendors for additional improvements to the Premises conducted by or
for Tenant, or apply such excess amounts against the Minimum Rental payment(s)
next due from Tenant until such excess amounts have been
exhausted.  Without limiting the foregoing, Landlord acknowledges that
“the costs incurred by Landlord and/or Tenant in designing, planning and
construction the Improvements” shall be deemed to include the cost to obtain any
and all (i) operating permit(s) that Tenant may be required to obtain (if any)
in order for Tenant to operate for Tenant’s permitted use as described in
Article 6(a) of this Lease; (ii) construction permits (including costs
associated with any “express review” process); (iii) space planning; (iv)
construction documents; (v) upfit costs; and (vi) any additional costs
associated with the upfit.

    

    3.           ADDITIONAL
TENANT IMPROVEMENT ALLOWANCE

    

    Upon written request to Landlord,
Landlord agrees to provide Tenant with an additional improvement allowance up to
a maximum of $250,000.00 (the “Additional Tenant Improvement Allowance”) to be
used by Tenant for additional improvements to the Premises, and/or furniture,
fixtures or equipment for the Premises.  Any such elected Additional
Tenant Improvement Allowance shall be amortized over the entire eighty-nine (89)
month term at an annual interest rate of ten percent (10%) and paid by Tenant as
part of the Minimum Rent due under the Lease.  Landlord and Tenant
shall amend this Lease as necessary to reflect such increased rent
obligation.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
“D”

    

    RULES AND
REGULATIONS

    

    

    
      	
              1.

            	
              Restricted
      Uses.  Neither the
      Premises nor any part of the common areas of the Building or the Business
      Park shall be used by Tenant for any one or more of the following
      uses:

            

    

    

    
      	
               
      

            	
              (a)

            	
              Agriculture
      or any related use, including any roadside stand for the display and sale
      of agricultural products and any use which involves the raising, breeding,
      or keeping of any animals or
poultry;

            

    

    

    
      	
               
      

            	
              (b)

            	
              Processing
      or slaughter of livestock, swine, poultry or other
  animals;

            

    

    

    
      	
               
      

            	
              (c)

            	
              Manufacture
      of leather goods;

            

    

    

    
      	
               
      

            	
              (d)

            	
              Manufacture
      of explosives or explosive agents;

            

    

    

    
      	
               
      

            	
              (e)

            	
              Manufacture,
      sale, rental, repair or storage of heavy equipment, buses, trucks,
      trailers, automobiles, recreational vehicles and mobile or trailer
      homes;

            

    

    

    
      	
               
      

            	
              (f)

            	
              Unscreened
      outdoor storage, outdoor fabrication or outdoor handling of any machinery,
      parts, material, supplies or
products;

            

    

    

    
      	
               
      

            	
              (g)

            	
              Residential
      uses;

            

    

    

    
      	
               
      

            	
              (h)

            	
              Overnight
      parking of campers, mobile homes, boats, trailers or motor
      homes;

            

    

    

    
      	
               
      

            	
              (i)

            	
              Erecting
      and maintaining structures of a temporary nature, except that during the
      period of construction of improvements to the Premises, Tenant’s
      contractors or subcontractors may be permitted to erect or maintain such
      temporary structures upon Landlord’s prior written
    approval;

            

    

    

    
      	
               
      

            	
              (j)

            	
              Jails,
      prisons, labor camps, penal, detention or correction facilities or
      farms;

            

    

    

    
      	
               
      

            	
              (k)

            	
              Cemeteries
      or mausoleums;

            

    

    

    (l)           Mining,
including the extraction, processing and removal of sand, gravel, stone,
minerals or clay, except for substances used in connection with Tenant’s
photo-developing and merchandising processes and services provided such
chemicals and other substances are brought into the Premises, used, stored and
disposed of in accordance with all Legal Requirements and Environmental
Laws;

    

    
      	
                    
      (m)

            	
              Any
      land fills, any hazardous waste disposal or storage facilities and any
      incinerators;

            

    

    

    
      	
               
      

            	
              (n)

            	
              Racetracks,
      raceways and drag strips; and

            

    

    

    
      	
               
      

            	
              (o)

            	
              Massage
      parlors, topless night clubs or similar business
    operations.

            

    

    

    
      	
               
      

            	
              (p)

            	
              Fast
      food restaurants;

            

    

    

    
      	
               
      

            	
              (q)

            	
              Airports,
      heliports or helistops, bus or train
terminals;

            

    

    

    
      	
               
      

            	
              (r)

            	
              Hotels
      or motels;

            

    

    

    
      	
               
      

            	
              (s)

            	
              Rest
      stops, rest stations or service
stations;

            

    

    

    
      	
               
      

            	
              (t)

            	
              Flea
      markets;

            

    

    

    
      	
               
      

            	
              (u)

            	
              Stadiums;

            

    

    

    
      	
               
      

            	
              (v)

            	
              Adult
      care centers;

            

    

    

    
      	
               
      

            	
              (x)

            	
              Cinemas
      or movie theaters;

            

    

    

    
      	
               
      

            	
              (y)

            	
              Night
      Clubs or bars; and

            

    

    

    
      	
               
      

            	
              (z)

            	
              Amusement
      parks, amusement galleries, arcades or turkey
  shoots.

            

    

    

    
      	
              2.

            	
              Nuisances.  Tenant
      shall not cause any unclean, unhealthy, unsightly or unkempt condition to
      exist in the Premises or in the common areas of the Building or the
      Business Park.  Tenant shall not use the Premises or any portion
      of the common areas of the Building or the Business Park, in whole or in
      part, for the deposit, storage or burial of any property or thing that
      will cause the above-mentioned areas to appear to be in an unclean or
      untidy condition or that will be obnoxious to the eye; nor shall Tenant
      allow any substance, thing, or material to be kept, utilized or carried
      out in the Premises or the common areas of the Building or the Business
      Park that will emit foul or obnoxious odors, fumes, smoke or dust or that
      will cause any vibration or noise or other condition that will or might
      disturb the peace, quiet, safety, comfort, or serenity of the occupants of
      the Building or the Business Park in excess of what is commercially
      reasonable .  No noxious, offensive or illegal trade or activity
      shall be carried out in the Premises or in the common areas of the
      Building or the Business Park.

            

    

    

    
      	
              3.

            	
              Restricted
      Actions on Common Areas of the Building and the Business Park.  Tenant
      shall not cause or allow any cutting of vegetation, dumping, digging,
      filling, destruction or other waste to be committed on the common areas of
      the Building or the Business Park. Tenant shall not cause any obstruction
      of, or allow or cause anything to be kept or stored on, altered,
      constructed or planted in, or removed from the common areas of the
      Building or the Business Park, without Landlord’s prior written
      consent.

            

    

    

    
      	
              4.

            	
              Sign
      Display.  Subject to
      the provisions set forth in Article 16 of the Lease, (i) all signage will
      be coordinated by Landlord throughout the Business Park for uniformity and
      attractiveness, (ii) the size, shape, design, lighting, materials and
      location of all signs shall conform to the uniform signage plan for the
      Business Park, and (iii)  Tenant shall not cause any sign, tag,
      label, picture, advertisement or notice to be displayed, distributed,
      inscribed, painted or affixed by Tenant on any part of the Building, the
      Business Park or the Premises without the prior written consent of
      Landlord, which consent shall not be unreasonably withheld, delayed or
      conditioned.

            

    

    

    
      	
              5.

            	
              Drives
      and Parking Areas.  Subject to
      the provisions set forth in paragraph 6 of Exhibit E to this Lease, (i)
      all parking shall be within marked parking spaces, (ii)  there
      shall be no on-street parking and at no time shall Tenant obstruct drives
      and loading areas intended for the joint use of all tenants of the
      Building, (iii) the drives and parking areas in the Business Park are for
      the joint use of all tenants of the Business Park unless specifically
      marked, (iv) Truck traffic and parking will be restricted to areas
      designated by Landlord, (v)  Tenant, its employees, agents and
      invitees shall comply with reasonable parking rules and regulations as
      they may be posed and distributed from time to time, and
      (vi)  Tenant is responsible for controlling all of its truck
      traffic in accordance with the restrictions and regulations imposed by
      Landlord.

            

    

    

    
      	
              6.

            	
              Storage
      and Trash Disposal.  No
      materials, supplies or equipment belonging to Tenant shall be stored in
      any area of the Building or the Business Park, except inside the
      Premises.  Trash disposal is confined to the receptacles
      provided by Tenant in a location approved by Landlord and no trash
      receptacles may be placed in any other location in the Premises, in the
      Building or in the Business Park

            

    

    

    
      	
              7.

            	
              Locks.  No
      additional locks shall be placed on the doors of the Premises by
      Tenant.  If Tenant changes any existing locks, Tenant shall
      immediately furnish Landlord with two keys to such new
      locks.  Landlord will, without charge, furnish Tenant with two
      keys for each lock existing upon the entrance door when Tenant assumes
      possession of the Premises, with the understanding that, at the
      termination of the Lease, the keys shall be
  returned.

            

    

    

    
      	
              8.

            	
              Improvements,
      Contractors and Service Maintenance.  Subject to
      the provisions set forth in Article 5 of the Lease, (i) Tenant shall not
      make any improvements to the exterior of the Building or the Business Park
      and Tenant shall not make any structural changes or other material
      alterations, additions or improvements to the Premises without the prior
      written consent of Landlord, which such approval shall not be unreasonably
      withheld, (ii)   Tenant will refer all of Tenant’s
      contractors, contractors’ representatives and installation technicians
      rendering any service on or to the Premises to Landlord for Landlord’s
      approval and supervision before performance of any service, and (iii) this
      provision shall apply to all work performed in the Premises, including
      installation of electrical devices and attachments and installations of
      any nature affecting floors, walls, woodwork, trim, windows, ceilings,
      equipment or any other physical portion of the Premises, the Building or
      the Business Park

            

    

    

    
      	
              9.

            	
              Regulations
      for Operation and Use.  Except as
      permitted in this Lease, Tenant shall not place, install or operate in the
      Premises or in any part of the Building or the Business Park any engine,
      stove or machinery, nor shall Tenant conduct any mechanical or cooking
      operations therein, nor place or use in or about the Premises or any part
      of the Building or the Business Park any explosives, gasoline, kerosene,
      oil, acids, caustics or any other flammable, explosive or hazardous
      material, without the prior written consent of
  Landlord.

            

    

    

    
      	
              10.

            	
              Window
      Coverings.  Windows
      facing the Building exterior shall at all times be wholly clear and
      uncovered (except for such blinds or curtains or other window coverings as
      Landlord may provide or approve) so that a full unobstructed view of the
      interior of the Premises may be had from the exterior of the
      Building.

            

    

    

    
      	
              11.

            	
              No
      Violations of Fire Laws or Health Code.  Tenant
      shall not do or permit anything to be done in the Premises, or bring or
      keep anything therein, which will obstruct or interfere with the rights of
      other tenants in the Building or the Business Park or in any other way
      injure them or conflict with any laws relating to fires, or with any
      regulations of the Fire Department or with any insurance policy upon the
      Building or the Business Park, or any part thereof, or conflict with any
      of the rules and ordinances of the Board of
  Health.

            

    

    

    
      	
              12.

            	
              No
      Violations of Laws.  Tenant
      shall promptly and at its expense execute and comply with all laws, rules,
      orders, ordinances, including all applicable zoning ordinances, and
      regulations of the City, County, State or Federal Government, and of any
      department or bureau of any of them and of any other governmental
      authority having jurisdiction over the Premises,  to the extent
      necessary by reason of Tenant’s particular  use or occupancy of
      the Premises or Tenant’s business conducted
      therein.    Landlord hereby represents and warrants
      that Tenant’s intended use of the Premises (as set forth
      in  Section 6(a) of the Lease) is permitted as of right under
      the applicable zoning code.

            

    

    

    
      	
              13.

            	
              No
      Use of Roof.  Neither
      Tenant, nor Tenant’s servants, employees or agents shall go upon the roof
      of the Building without the written consent of Landlord unless necessary
      for Tenant to exercise any of its rights under Section 9(b) of the
      Lease.

            

    

    

    
      	
              14.

            	
              No
      Canvassing.  Canvassing,
      soliciting and peddling in and about the Building and the Business Park is
      prohibited.

            

    

    

    
      	
              15.

            	
              No
      Loud Musical Devices.  Tenant
      shall not operate or permit to be operated any musical or sound producing
      instrument or device inside or outside the Premises which may be heard
      outside the Premises or by other tenants in the Building or the Business
      Park in excess of what is commercially
  reasonable.

            

    

    

    
      	
              16.

            	
              Use
      of Washrooms.  Tenant
      shall not use the washrooms, restrooms, and plumbing fixtures of the
      Premises or the Building, and appurtenances thereto, for any purposes
      other than the purposes for which they were constructed, and Tenant shall
      not deposit any sweepings, rubbish, rags, or other improper substances
      therein.  If Tenant or Tenant’s servants, employees, agents,
      contractors, jobbers, licensees, invitees, guests or visitors cause any
      damage to such washrooms, restrooms, plumbing fixtures or appurtenances,
      such damage shall be repaired, at Tenant’s expense, and Landlord shall not
      be responsible therefor.

            

    

    

    
      	
              17.

            	
              No
      Unpleasant Odors.  Tenant
      shall not cause or permit any unpleasant odors to emanate from the
      Premises, or otherwise interfere, injure or annoy in any way other tenants
      in the Building or the Business Park, or persons conducting business with
      them in excess of what is commercially
  reasonable.

            

    

    

    
      	
              18.

            	
              Disposal
      of Crates.  When
      conditions are such that Tenant must dispose of crates, boxes, etc. on the
      sidewalk or parking areas on the Land, it will be the responsibility of
      Tenant to dispose of same only between the hours of 5:45 p.m. until 7:15
      a.m unless other times are approved by the
  Landlord.

            

    

    

    
      	
              19.

            	
              No
      Food Distribution.  No prepared
      food and/or beverages shall be distributed from the Premises, but,
      notwithstanding the provisions of Paragraph 9
      hereof or this Paragraph 19,
      Tenant may prepare coffee and similar beverages and warm typical luncheon
      items for the consumption of Tenant’s employees and
    invitees.

            

    

    

    
      	
              20.

            	
              Location
      of Improvements.  Tenant will
      not locate furnishings or cabinets adjacent to mechanical or electrical
      access panels or over air conditioning outlets in the Premises so as to
      prevent operating personnel from servicing such units as routine or
      emergency access may require.  Tenant shall be responsible for
      any cost associated with moving such furnishings for Landlord’s access to
      such mechanical or electrical access panels or air conditioning
      outlets.

            

    

    

    
      	
              21.

            	
              Modifications.  Landlord
      shall have the right from time to time to make any and all such reasonable
      modifications and additions to these Rules and Regulations as may be
      necessary for the safety, care, quiet enjoyment and cleanliness of the
      Building and the Business Park.  Tenant agrees to abide by these
      Rules and Regulations and any reasonable modifications and additions as
      are hereafter adopted by Landlord, including, but not limited to,
      modifications made by Landlord as a result of any changes in the city
      zoning ordinance, provided same do not materially adversely affect
      Tenant’s use or occupancy of the Premises or operation of Tenant’s
      business

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
“E”

    

    SPECIAL
PROVISIONS

    

    1.           Moving
Allowance.  Landlord agrees to provide Tenant with a moving
allowance of $0.50 per rentable square foot (“Moving Allowance”) to be paid to
Tenant upon receipt of paid moving expenses in connection with Tenant moving its
personal property from its existing leased space to the
Premises.  This Moving Allowance may also be used for the
Improvements, cabling and furnishing the Premises.  Any unused Moving
Allowance shall be credited to Tenant’s  monthly Minimum Rental
payments next due until such unused Moving Allowance has been
exhausted.

    

    2.           Renewal
Option.  So long as Tenant is not in default under this Lease
beyond any applicable cure period, Tenant is hereby granted the option to renew
the term of the Lease as to the entire Premises for three (3) additional periods
(“Renewal Term”) of either three (3) or five (5) years in length, as Tenant may
elect, to commence at the expiration of the initial Term or each then current
Renewal Term.  Any such renewal of this Lease shall be upon the same
terms and conditions of this Lease, except there shall be one less renewal
option  in each Term and the annual Minimum Rental during the Renewal
Term shall be at the then prevailing Market  Rate (as defined below)
for comparable buildings in Charlotte, North Carolina.

    

    The
“Market Rate” means the rental rate which Landlord and a third party tenant
would agree upon for a new lease, as of the commencement date of such Renewal
Term, taking into consideration the uses permitted under the Lease, the quality,
size, design and location of the Premises, which shall exclude any specialized
improvements added by the Tenant, and the rental for a new lease for comparable
space located in the vicinity.  The Market Rate shall include any
tenant improvements, moving allowances, tenant improvement allowances, abatement
of rentals, leasing commissions or other concessions that are then being offered
by Landlord or other property owners for space comparable to the
Premises.

    

    Tenant
shall notify Landlord of its intent to renew by delivering written notice to
Landlord at least ten (10) months prior to the expiration of the initial Term,
or then current Renewal Term, with Tenant’s election of the length of each such
Renewal Term.  Landlord and Tenant shall then mutually determine the
applicable Minimum Rental which will apply to such Renewal Term within thirty
(30) days after Tenant’s intent notification or such additional time as
necessary.  Tenant shall then exercise its option to renew, if at all,
by delivering written notice to Landlord six (6) months prior to the expiration
of the initial Term, or then current Renewal Term (provided, however, that in no
event shall Tenant be given less than thirty (30) days after the Minimum Rental
has been agreed upon in which to exercise said option), which such renewal shall
be for the length time stated in Tenant’s intent notice and for the Minimum
Rental mutually determined by Landlord and Tenant during the preceding
month.

    

    3.           Termination
Option.  Tenant shall have the right to terminate this lease
(“Termination Right”) with at least six (6) months’ prior written notice to
Landlord at the end of the fifth (5th) year
of the term.  Tenant must exercise this Termination Right, if at all,
within thirty (30) days after the last day of the fifth lease
year.  Prior to the effective date of such termination, Tenant shall
pay to Landlord an amount equal to Landlord’s unamortized costs for this
transaction (including, but not limited to, Tenant Improvement Allowance,
Additional Tenant Improvement Allowance, moving allowance, brokers fees, and
attorney’s fee) plus all amounts needed to cure then existing monetary defaults,
if any.

    

    4.           Rights of First
Refusal.  So long as Tenant is not in default of this Lease
beyond applicable cure periods and Tenant has not exercised its option set forth
in paragraph 5 of this Exhibit  “E”, and subject to any and all prior
rights of first refusal granted for space in the Building as of the date of this
Lease, in the event  any premises in the  to-be-built
adjacent Shopton 18-C building (“Building 18-C”) which is owned by an affiliate
of Landlord becomes available for rent, Landlord shall so notify
Tenant.  Thereupon, Tenant shall, for a period of ten (10) business
days following receipt of such notice, have a right and option to lease such
premises at Market Rent and terms for the intended use for the remainder of the
term of this Lease (as may be extended).  Upon addition of space to
the Premises pursuant to the exercise by Tenant of its option hereunder,
Landlord and Tenant shall execute and deliver an amendment to this Lease
confirming the same (or, at Tenant’s option, enter into a separate lease for
such premises).  Notwithstanding anything in this Lease to the
contrary, the right of first refusal granted to Tenant pursuant to this
paragraph (i) is not applicable during the final twelve (12) months of the
initial Term or any Renewal Term, unless Tenant has exercised its next Renewal
Term, if any, in accordance with this Lease, and (ii) shall have no impact on
Tenant’s right to exercise its Termination Right for the Premises in accordance
with paragraph 3 of this Exhibit “E” (it being understood and agreed that Tenant
shall also terminate the lease for Building 18-C at the same time as the
Premises, if at all, by reimbursing Landlord for all unamortized costs for the
Building 18-C transaction (as described in paragraph 3 of this Exhibit
“E”).

    

    5.           Right of First Refusal on
Building 18-C (50,000 square feet minimum).  So long as Tenant
is not in default of this Lease beyond applicable cure periods, Tenant shall
have the option of leasing a minimum of 50,000 square feet in Building 18-C from
its owner, which is an affiliate of Landlord.  Tenant must exercise
such right, if at all, by providing written notice to Landlord on or before the
date which is three (3) months from the date that Tenant receives notice from
Landlord of the completion of the Building 18-C shell.  The terms and
conditions of any lease in Building18-C shall be on the same terms and
conditions as this Lease (including, without limitation, eight (8) months free
Annual Rental), as may be adjusted based on the actual square footage leased
(i.e. the rental rate and improvement allowance shall be the same per square
foot, but will be adjusted if the lease for Building 18-C is not for 102,400
square feet).  In the event any such lease is executed for space in
Building 18-C (the “18-C Lease”), the Term of this Lease shall be amended to be
a full eighty-nine (89) months from the commencement date of the new 18-C Lease
(at the same 3% annual increases in Minimum Rent) such that both leases are
coterminous. Notwithstanding anything in this Lease to the contrary, the right
of first refusal granted to Tenant pursuant to this paragraph (i) is not
applicable during the final twelve (12) months of the initial Term or any
Renewal Term, unless Tenant has exercised its next Renewal Term, if any, in
accordance with this Lease, and (ii) shall have no impact on Tenant’s right to
exercise its Termination Right for the Premises in accordance with paragraph 3
of this Exhibit “E” (it being understood and agreed that Tenant shall also have
the right to terminate the lease for Building 18-C at the same time as the
Premises by reimbursing Landlord for all unamortized costs for the Building 18-C
transaction (as described in paragraph 3 of this Exhibit “E”).

    

    6.           Right of First Refusal on
Building 18-D (25,000 square feet minimum).  So long as Tenant
is not in default of this Lease beyond applicable cure periods and subject to
any and all prior rights of first refusal granted for space in the Building as
of the date of this Lease, in the event any premises containing at least 25,000
square feet in the to-be-built Shopton 18-D building (“Building 18-D”) which is
owned by an affiliate of Landlord becomes available for rent, Landlord shall so
notify Tenant.  Thereupon, Tenant shall, for a period of ten (10)
business days following receipt of such notice, have a right and option to lease
such premises at Market Rent and terms for the intended use for the remainder of
the term of this Lease (as may be extended).  Upon addition of space
to the Premises pursuant to the exercise by Tenant of its option hereunder,
Landlord and Tenant shall execute and deliver an amendment to this Lease
confirming the same (or,  at  Tenant’s option, enter into a
separate lease for such premises) .  Notwithstanding anything in this
Lease to the contrary, the right of first refusal granted to Tenant pursuant to
this paragraph (i) is applicable at all times during the initial Term (and any
Renewal Term), but is not applicable during the final twelve (12) months of the
initial Term or any Renewal Term unless Tenant has exercised its next Renewal
Term, if any, in accordance with this Lease, and (ii) shall have no impact on
Tenant’s right to exercise its Termination Right for the Premises in accordance
with paragraph 3 of this Exhibit “E” (it being understood and agreed that Tenant
shall also have the right to terminate the lease for Building 18-D at the same
time as the Premises by reimbursing Landlord for all unamortized costs for the
Building 18-D transaction (as described in paragraph 3 of this Exhibit
“E”).

    

    7.           Parking.   During
the term of this Lease (as same may be extended), Tenant shall have the right to
park vehicles in a minimum of 390 unreserved parking stalls on the property
known as Shopton 18B, as reflected on Exhibit “E-1”, which Exhibit “E-1” shall
subsequently be attached hereto after agreed to by Landlord and
Tenant.  Landlord acknowledges that it will work with Tenant to
provide extra parking areas in the rear of the Premises, or work with Tenant to
find a suitable solution such as cross-parking with the adjacent buildings, in
the event there are any parking problems during the term of the Lease to ensure
that Tenant has a minimum of 390 parking stalls in the event Tenant uses some of
the above referenced 390 parking spaces as a truck court.

    

    8.           Contingency.  Tenant’s
obligations under this Lease are contingent upon Tenant  obtaining a
Charlotte-Mecklenburg Business Investment Grant (the “Grant”) from the City of
Charlotte and County of Mecklenburg in an amount of at least $450,000 within
thirty (30) days from the date of this Lease (the “Contingency”).  If
Tenant does not receive the Grant within such thirty (30) day period, Tenant
shall have the right to terminate this Lease by written notice to Landlord, in
which event this Lease shall be null and void, and neither party shall have any
further rights or obligations to the other.

    

    9.           Access.  Tenant
shall have access to the Premises and Building 24 hours per day, 7 days per
week, 365 days per year.

    

    10.           Street
Name.  Upon written request from Tenant, and subject to all
necessary approvals from the City of Charlotte and County of Mecklenburg,
Landlord agrees to promptly (re)name the interior street immediately abutting
the Building to be “Shutterfly Road”, “Shutterfly Street” or other similar name
(containing the word “Shutterfly”) to be agreed upon by Landlord and
Tenant.

    

    11.           Environmental
Matters.

    

    (a)  Definitions.  For
purposes of this Lease:

    

    
      	
               
      

            	
              (1)  The
      term "Environmental Law" shall mean and refer to the Comprehensive
      Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"),
      42 U.S.C. §9601, et seq.; the
      Federal Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C.
      §6901, et
      seq.; the Federal Water Pollution Control Act, 33 U.S.C. §1251,
      et seq.;
      the Clean Air Act, 42 U.S.C. §7401, et seq.; all as
      the same may be from time to time amended, and any other federal, state,
      county, municipal, local or other statute, law, ordinance or regulation
      which relates to or deals with human health or the environment, including,
      without limitation, all regulations promulgated by a regulatory body
      pursuant to any such statute, law, ordinance or
  regulation.

            

    

    

    
      	
               
      

            	
              (2)  The
      terms "Hazardous Substance" and "Hazardous Substances" shall mean and
      refer to asbestos, radon, urea-formaldehyde, polychlorinated biphenyls
      ("PCBs"), or substances containing PCBs, nuclear fuel or materials,
      radioactive materials, explosives, known carcinogens, petroleum products
      and bi-products, and any substance defined as hazardous or toxic or as a
      contaminant or pollutant in, or the release or disposal of which is
      regulated by any Environmental Law.

            

    

    

    (b)  Landlord's Representations
and Warranties.  Landlord
represents that, except as set forth in that certain “Report of Phase I
Environmental Site Assessment Update” dated May 15, 2006 prepared for Landlord
by MACTEC:

    

    
      	
               
      

            	
              (1)  no
      Hazardous Substances are now or have ever been located, produced, treated,
      stored, transported, incorporated, discharged, emitted, released,
      deposited or disposed of in, upon, under, over or from the Building in
      violation of any Environmental Law;

            

    

    

    
      	
               
      

            	
              (2)  no
      threats exist of a discharge, release or emission of Hazardous Substances
      in, upon, under, over or from the Building into the environment in
      violation of any Environmental Law;

            

    

    

    
      	
               
      

            	
              (3)  the
      Building has not ever been used as or for a mine, a landfill, a dump or
      other disposal facility, industrial or manufacturing purposes, auto
      repair, a dry cleaner, or a gasoline service
  station;

            

    

    

    
      	
               
      

            	
              (4)  neither
      the Building nor any part thereof is in violation of any Environmental
      Law, no notice of any such violation or any alleged violation thereof has
      ever been issued or given by any governmental entity or agency, and there
      is not now nor has there ever been any investigation or report involving
      the Building by any governmental entity or agency which is in any way
      related to Hazardous Substances;

            

    

    

    
      	
               
      

            	
              (5)  no
      person, party or private or governmental agency or entity has given any
      notice of or asserted any claim, cause of action, penalty, cost or demand
      for payment or compensation, directly or indirectly, resulting from or
      allegedly resulting from any activity or event described in (1), (2) or
      (4) above;

            

    

    

    
      	
               
      

            	
              (6)  there
      are not now, nor have there ever been, any actions, suits, proceedings or
      damage settlements relating in any way to Hazardous Substances in, upon,
      under, over or from the Building;

            

    

    

    
      	
               
      

            	
              (7)  the
      Building is not listed in the United States Environmental Protection
      Agency's National Priorities List of Hazardous Waste Sites, CERCLIS, or
      any other list of hazardous sites maintained by any federal, state or
      local governmental agency;

            

    

    

    
      	
               
      

            	
              (8)  the
      Building is subject to no lien or claim for lien in favor of any
      governmental entity or agency as a result of any release or threatened
      release of any Hazardous
Substances.

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
“E-1”

    

    Parking

    

    [TO
BE ATTACHED AFTER LEASE EXECUTION ONCE AGREED TO BY PARTIES]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
“F”

    

    

    

    TENANT:                                _________________________

    PROJECT:                                _________________________

    

    

    

    

    

    To:           Landlord

    

    Re:           Lease
Pertaining to ________________________ (the "Project")

    

    

    Ladies
and Gentlemen:

    

    The
undersigned, as tenant ("Tenant"), hereby states and declares as
follows:

    

    1.           Tenant
is the lessee under that certain lease (the "Lease") pertaining to the Project
which is dated _______.

    

    2.           The
Lease is for the following portion of the Project
______________________________(the "Demised Premises") (if the entire Project,
so state):

    

    3.           The
Lease has not been modified or amended except by the following documents (if
none, so state): _________

    

    4.           The
initial term of the Lease commenced on _________, 2____ and shall expire on
______, 2_____, unless sooner terminated in accordance with the terms of the
Lease.

    

    

    

    

    Very
truly yours,

    

    TENANT:

    

    Shutterfly,
Inc.,

    a
Delaware corporation

    

    

    By
___________________________

    Name:
________________________

    Its:
___________________________

    

    AGREED TO
THIS ___ DAY OF ___, 200_:

    

    LANDLORD:

    

    3915
SHOPTON ROAD, LLC

    

    By:
________________________

    Name:
_____________________

    Its:
________________________

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    FIRST
AMENDMENT TO LEASE

    

    

    THIS FIRST AMENDMENT TO LEASE
(this “First Amendment”) is made and entered into as of this 26th day of
February 2007, by and between 3915 SHOPTON ROAD, LLC, a
North Carolina limited liability company (hereinafter referred to as
"Landlord"), and SHUTTERFLY,
INC., a Delaware corporation (hereinafter referred to as
"Tenant").

    

    RECITALS:

    

    A.  Landlord and Tenant have
previously entered into that certain Lease Agreement dated December 22, 2006
(the “Lease”) for the occupancy of approximately 102,400 rentable square feet of
space (the “Premises”) known as building Shopton 18-B, in the Shopton Ridge
Business Park, Charlotte, North Carolina (the “Building”).

    

    B.  Landlord and Tenant
desire to amend the Lease as hereinafter set forth.

    

    NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant do hereby enter into this First Amendment and amend the
Lease as set forth below.  All terms used but not defined herein shall
have the meanings set forth in the Lease.

    

    
      	
               
      

            	
              1.

            	
              Commencement
      Date.  The Commencement Date, which is defined in the
      first sentence of Section 2 of the Lease, is hereby amended to mean “the
      later of May 30, 2007 or upon substantial completion of Phase I of
      Landlord’s Work, as defined in Exhibit “C” attached to this First
      Amendment and made a part hereof.”

            

    

    

    
      	
               
      

            	
              2.

            	
              Delivery of
      Possession.  Section 4 of the Lease is hereby deleted in
      its entirety and the following is substituted in lieu
    thereof:

            

    

    

    “Landlord
will deliver the Premises to Tenant in phases beginning with Phase I delivered
on the Commencement Date, with Landlord’s Work for each Phase (as defined in
Paragraph 1 of Exhibit ”C”
attached hereto) substantially completed in accordance with the Final Plans and
Specifications (as defined in paragraph 1 of said Exhibit ”C”),
subject to revisions as mutually agreed to in writing by Landlord and Tenant, as
evidenced, if requested by Tenant, by the certification of Landlord’s architect
or other designated engineering  representative.  Tenant
shall be given access to the Premises upon written request to Landlord not more
than sixty (60) days prior to the Commencement Date, for the purposes of
preparing the Premises for Tenant’s use.  With the exception of any
Annual Rental payments due, all terms and conditions of this Lease shall apply
to Tenant upon such occupancy.  Tenant shall coordinate such occupancy
with Landlord and shall not interfere with Landlord’s completion of Landlord’s
Work.  If Landlord for any reason whatsoever cannot substantially
complete Landlord’s Work and deliver possession of Phase I to Tenant on the
Commencement Date as above specified, this Lease shall not be void or voidable
nor shall Landlord be liable to Tenant for any loss or damage resulting
therefrom; but in that event  (except to the extent that any such
delay(s) has been caused by Tenant or its agent(s), employee(s), contractor(s)
or subcontractor(s) (collectively, “Tenant Delay Factors”), and provided that in
each such instance Landlord first gives Tenant written notice that if Tenant
does not so cure its act or omission within two (2) business days the same will
thereafter be considered a Tenant Delay Factor, the Commencement Date shall be
adjusted to be the date when Landlord does in fact substantially complete
Landlord’s Work and deliver possession of Phase I to
Tenant.  Notwithstanding anything herein to the contrary, in the event
Landlord’s Work for Phase I is not complete by the date (such date referred to
herein as the “Delivery Date”) which is one hundred twenty (120) days after
approval (or deemed approval) by Landlord and Tenant of the Final Phase I Plans
and Specification (as hereinafter defined), except for reasons of Tenant Delay
Factors or force majeure (which force majeure delays shall only be extended by
up to 90 days), Tenant shall be granted three (3) days of free Minimal Rental
for every day beyond the Delivery Date until Landlord’s Work for Phase I has
been complete, and the Rent Commencement Date shall be adjusted
accordingly.  In the event Landlord is unable to deliver the Premises
by September 30, 2007, Tenant may terminate this Lease with no further
obligation by providing Landlord written notice on or before October 10,
2007.”

    

    
      	
               
      

            	
              3.

            	
              Upfit of the
      Premises.  Exhibit “C” to the Lease, Upfit of the
      Premises, is hereby deleted in its entirety and the revised Exhibit “C”
      attached hereto is substituted in lieu
thereof.

            

    

    

    
      	
               
      

            	
              4.

            	
              Exhibit “E” to the
      Lease.

            

    

    

    a. Section 5
of Exhibit “E” to the Lease is hereby deleted in its entirety and the following
substituted therefor:

    

    “5.           Right of First Refusal on
Building 18-C (50,000 square feet minimum).  So long as Tenant
is not in default of this Lease beyond applicable cure periods, Tenant shall
have the option of leasing a minimum of 50,000 square feet in Building 18-C from
its owner, which is an affiliate of Landlord (“Landlord’s
Affiliate”).  Tenant must exercise such right, if at all, by providing
written notice to Landlord on or before the date which is three (3) months from
the date that Tenant receives notice from Landlord of the completion of the
Building 18-C shell.  The terms and conditions of any lease in
Building 18-C shall (i) be on the same terms and conditions as this Lease
(including, without limitation, eight (8) months free Annual Rental), as may be
adjusted based on the actual square footage leased (i.e. the rental rate and
improvement allowance shall be the same per square foot, but will be adjusted if
the lease for Building 18-C is not for 102,400 square feet), and (ii) (subject
to approval by Landlord, Landlord’s Affiliate, the applicable lenders for
Landlord and Landlord’s Affiliate and further subject to applicable Legal
Requirements) give Tenant the right, at Tenant’s sole cost and expense (subject
to application of the Improvements Allowance and the Additional Tenant
Improvement Allowance, each as hereinafter defined), to (a) block-off the back
side of the driveway between Building 18-C and Building 18-B and create an
enclosed walkway between such buildings as shown on Exhibit “E-2” attached hereto
(the “Walkway”), and (b) lay conduit between such buildings.  Tenant
acknowledges that it will be solely responsible for all maintenance and repair
of the Walkway and upon written demand from Landlord must remove the same at the
expiration or earlier termination of the Lease and restore the parking lot to
its condition prior to installation of the Walkway.  In the event any
such lease is executed for space in Building 18-C (the “18-C Lease”), the Term
of this Lease shall be amended to be a full eighty-nine (89) months from the
commencement date of the new 18-C Lease (at the same 3% annual increases in
Minimum Rent) such that both leases are coterminous. Notwithstanding anything in
this Lease to the contrary, the right of first refusal granted to Tenant
pursuant to this paragraph (i) is not applicable during the final twelve (12)
months of the initial Term or any Renewal Term, unless Tenant has exercised its
next Renewal Term, if any, in accordance with this Lease, and (ii) shall have no
impact on Tenant’s right to exercise its Termination Right for the Premises in
accordance with paragraph 3 of this Exhibit “E” (it being understood and agreed
that Tenant shall also have the right to terminate the lease for Building 18-C
at the same time as the Premises by reimbursing Landlord for all unamortized
costs for the Building 18-C transaction (as described in paragraph 3 of this
Exhibit “E”).”

    

    b.           Section
7 of Exhibit “E” to the Lease is hereby deleted in its entirety and the
following substituted therefor:

    

    “7.           Parking.   During
the term of this Lease (as same may be extended), Tenant shall have the right to
park vehicles in a minimum of 275 unreserved parking stalls on the property
known as Shopton 18B, as reflected on Exhibit “E-1” attached
hereto.  Landlord acknowledges that it will work with Tenant to
provide extra parking areas in the rear of the Premises, or work with Tenant to
find a suitable solution such as cross-parking with the adjacent buildings, in
the event that (i) there are any parking problems during the term of the Lease,
or (ii) Tenant anticipates a short-term increase in the number of parking stalls
required to support peak production periods, or (iii) Tenant determines that it
needs more than 275 parking spaces.  Tenant acknowledges that such 275
parking stalls will be available only until Tenant constructs the Walkway, if at
all, and subsequent to such Walkway construction, Tenant’s parking stalls will
be reduced beyond 275 stalls by the number lost for Tenant’s
Walkway.”

    

    c.           Section
8 (Contingency) of Exhibit “E” to the Lease is hereby deleted in its
entirety.

    

    
      	
               
      

            	
              5.

            	
              Ratification.  Except
      as modified and amended by this First Amendment, all terms and conditions
      of the Lease shall remain in full force and
  effect.

            

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    IN
WITNESS WHEREOF, Landlord and Tenant have executed this Second Amendment as of
the date set forth above.

    

    

    LANDLORD:

    

    3915 SHOPTON ROAD,
LLC,

    a North Carolina limited liability
company

    

    

    

    By:  /s/Paul
Herndon                                         

             Name:
Paul Herndon

             Title:
Vice President

    

    

    

    

    TENANT:

    

    SHUTTERFLY,
INC.,

    a
Delaware corporation

    

    

    

    

    By: /s/Stephen E.
Recht      

    Name: Stephen E.
Recht                                 

    Title: Chief Financial
Officer                                         

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
“C”

    

    Upfit of
Premises

    

    

    1.           LANDLORD’S
WORK

    

    Landlord, at Tenant’s sole cost and
expense (except as provided in paragraph 2 of this Exhibit ”C”)
shall construct all improvements to the Premises which constitute a part of
Landlord’s Work (collectively, the “Improvements”) in a good and workmanlike
manner and in accordance with the Final Plans and Specifications (as hereinafter
defined) and all applicable Legal Requirements.  “Landlord’s Work” shall mean
that certain work related to Tenant’s occupancy of the Premises which shall be
mutually agreed upon by Landlord and Tenant.   Tenant
acknowledges that Landlord’s Work shall proceed in multiple phases (each a
“Phase”).  Tenant has not yet completed final design plans for all
Phases. Landlord and Tenant shall mutually decide upon the scope and completion
date(s) for each of the Phases.

    

    For
purposes of this Lease, Landlord’s Work for each Phase shall be deemed
“substantially complete” when (i) Landlord has completed Landlord’s Work for
such Phase except for punchlist items which do not prevent or materially impair
Tenant’s use or occupancy of such Phase, (ii) Tenant can occupy the completed
Phase for the purpose of carrying on its intended business
therein,  and (iii) Landlord has procured a temporary or permanent
certificate of occupancy for such Phase, which shall allow Tenant to operate its
business within the Phase.  Landlord represents and warrants that the
Building has been constructed in (a) a good and workmanlike manner, (b) in
accordance with applicable Legal Requirements, and (c) in accordance with
Landlord’s base building shell specifications per the architectural drawings
dated February 21, 2006 prepared by Merriman Schmitt which have been approved by
both Tenant and Landlord (the “Base Building”).

    

    Notwithstanding anything contained
herein to the contrary, Tenant (and not Landlord) shall be solely responsible
for any increases in the cost of Landlord’s Work which are attributable to (i)
any change orders requested by Tenant to the Final Plans and Specifications
which are agreed to between Landlord and Tenant and/or (ii) any Tenant Delay
Factors (as described in Paragraph 4 of
the Lease).  Such cost increases (subject to application of the
Improvements Allowance and Additional Tenant Improvement Allowance, each as
hereinafter defined) shall be payable by Tenant to Landlord within 30 days of
Landlord’s written demand therefor.

    

    Landlord shall have the final plans and
specifications prepared for Phase I of Landlord’s Work (the “Final Phase I Plans
and Specifications”) and delivered to Tenant for its review and approval (which
approval shall not be unreasonably withheld) on or before March 13,
2007.    Tenant, acting reasonably and in good faith, shall
have seven (7) days from Landlord’s delivery of the Final Phase I Plans and
Specifications to advise Landlord, in writing, as to whether or not Tenant
desires any changes to the Final Phase I Plans and Specifications.  If
Tenant fails to respond during such seven (7) day period, Tenant shall
automatically be deemed to have approved the Final Phase I Plans and
Specifications.  Landlord, acting reasonably and in good faith, shall
have four (4) business days from Tenant’s delivery of Tenant’s response to
advise Tenant, in writing, as to whether or not Landlord desires any changes to
Tenant’s proposed changes to the Final Phase I Plans and
Specifications.  If Landlord fails to respond during such four (4) day
period, Landlord shall automatically be deemed to have approved Tenant’s
proposed changes to the Final Phase I Plans and Specifications.

    

    Landlord,
acting reasonably and in good faith, shall have seven (7) days from Tenant’s
delivery of the final plans and specifications for the Phases (other than Phase
I) of Landlord’s Work (the “Final Remaining Phases Plans and Specifications”) to
advise Tenant, in writing, as to whether or not Landlord desires any changes to
the Final Remaining Phases Plans and Specifications.  If Landlord
fails to respond during such seven (7) day period, Landlord shall automatically
be deemed to have approved the Final Remaining Phases Plans and
Specifications.  Tenant, acting reasonably and in good faith, shall
have four (4) business days from Landlord’s delivery of Landlord’s response to
advise Landlord, in writing, as to whether or not Tenant desires any changes to
Landlord’s proposed changes to the Final Remaining Phases Plans and
Specifications.  If Tenant fails to respond during such four (4)
business day period, Tenant shall automatically be deemed to have approved
Landlord’s proposed changes to the Final Remaining Phases Plans and
Specifications.  Within seven (7) business days after the Final
Remaining Phases Plans and Specifications have been finally approved (or deemed
approved) by Landlord and Tenant, Landlord shall submit such Final Remaining
Phases Plans and Specifications to the contractors for bidding purposes in
accordance with the provisions set forth below.

    

    The Final
Phase I Plans and Specifications and the Final Remaining Phases Plans and
Specifications, shall sometimes collectively be referred to as the “Final Plans
and Specifications.”

    

    In the
essence of time, Landlord shall hire DSS Corporation as the general contract for
Landlord Work.  DSS Corporation agrees to competitively bid the work
to all subcontractors and open-book all bids for Tenant and Landlord review and
selection.  DSS Corporation shall receive a “cost plus 5%”
fee.  Tenant shall have the opportunity to review and provide input
concerning the subcontractor bids, which Tenant agrees to do in a timely and
good faith manner.

    

    Tenant acknowledges and agrees that
Tenant Delay Factors, as defined in paragraph 4 of the Lease, shall
include, without limitation, any delays resulting from (i) change orders to the
Final Phase I Plans and Specifications or subsequent approved plans and
specifications for the remaining phases of construction, requested by Tenant or
by those acting for or under the direction of Tenant; (ii) the performance or
completion by Tenant, or any entity or person employed by Tenant, of any work in
or about the Premises; (iii) the failure of Tenant to supply adequate
information to Landlord to prepare the Final Phase I Plans and Specifications by
March 13, 2007; or (iv) the failure of Landlord and Tenant to mutually agree on
the Final Phase I Plans and Specifications or subsequent plans and
specifications for the remaining phases of construction in a timely manner,
provided that in each such instance Landlord first gives Tenant two (2) business
days notice that if Tenant does not  so cure its act or
omission  the same will thereafter be considered a Tenant Delay
Factor.

    

    Except to the extent expressly provided
in the Lease, Landlord shall have no liability or obligation whatsoever to
remedy, replace or correct any alleged defects and deficiencies in Landlord’s
Work; provided, however, that Landlord specifically warrants that  (i)
all loading doors will be properly operational for three (3) months after the
Commencement Date, absent any negligence of Tenant, and (ii) Landlord shall
throughout the term of this Lease (as same may be extended) be responsible for
repairing any latent defects in the Improvements at Landlord’s sole
cost.  Landlord shall, to the extent permitted by law, assign all
warranties associated with the Premises to, and cooperate with, Tenant in the
enforcement of any express warranties or guarantees of workmanship or materials
given by any contractors, subcontractors, architects, draftsmen, or materialmen
relative to Landlord’s Work, the roof or any relevant Building
systems.  Notwithstanding anything to the contrary contained herein or
in the Lease, Landlord shall not be responsible, to any extent whatsoever, for
the repair, remediation or correction of any alleged deficiencies or defects in
any materials and workmanship in and concerning Landlord’s Work to the extent
that the existence or occurrence of such defects or deficiencies are the result
of, or due to, any negligent, willful or intentional or other acts or omissions
of Tenant, its agents, employees, contractors, subcontractors, representatives
or invitees.  Tenant may not conduct any activities on the Premises
that would have the effect of rendering any relevant warranties related to the
performance of Landlord’s Work void (unless previously approved by the
Landlord), and if Tenant does conduct any such activities and renders any
relevant warranty void, Landlord will no longer have any obligations under the
terms of the Lease with respect to the component, element or feature of the
Improvements that the warranty voided by Tenant’s activities had previously
covered.  Except as otherwise provided in this Lease, at no time
during the Lease term (as same may be extended pursuant to any renewal option,
if any) shall Tenant have any right, of any nature whatsoever, to withhold the
timely payment of any rental due under the Lease as a result of, or due to, or
because of, any alleged breaches by Landlord under the Lease or the alleged
existence of any defects or deficiencies in the Improvements.

    

    Landlord shall obtain all applicable
licenses, permits and approvals to complete the Tenant Improvements in
accordance with all applicable laws.

    

    Landlord shall give Tenant estimates of
the schedule for completion of each Phase of the Improvements and thirty (30)
days prior written notice of the anticipated date each Phase of the Premises
will be ready for occupancy.  Within thirty (30) days following the
Commencement Date, and thereafter within thirty (30) days following the
completion of each remaining Phase, Landlord and Tenant shall mutually conduct a
walk-through of the Premises and compile a punch list which sets forth any
corrective work to be performed by Landlord with respect to the Improvements
which Landlord, upon receipt, shall diligently pursue to correct.

    

    Landlord represents and warrants to
Tenant with respect to each completed Phase, that as of the date each Phase is
delivered to Tenant:

    

    (i)           such
Phase, including the HVAC, electrical, mechanical, plumbing, sewer and other
systems serving that Phase within the Building, shall be in good working
order;

    

    (ii)           the
Improvements within such completed Phase, and the Building upon completion of
all Phases, shall not violate any covenants or restrictions of record (if any),
or any applicable Legal Requirements having jurisdiction over the Project,
and

    

    (iii)          Landlord
shall deliver each Phase to Tenant clean and free of debris.

    

    Except as
provided in Section 5(c) of the Lease, Tenant shall have no obligation to
restore the Premises to their original condition as of the Commencement Date
upon lease termination or expiration of the Lease.

    

    Landlord agrees that there shall be no
construction management fee payable by Tenant to Landlord to oversee the
construction of the Improvements.

    

    2.           IMPROVEMENTS
ALLOWANCE

    

    Notwithstanding anything to the
contrary herein, Landlord shall contribute an amount (such amount being the
“Improvements Allowance”) not to exceed $16.00 per rentable square foot of the
Premises ($1,638,400.00 based on the rentable square footage of 102,400) towards
the costs incurred by Landlord and/or Tenant in designing, planning and
constructing the Improvements.  In the event the costs incurred in
connection with designing, planning and constructing the Improvements exceed the
Improvements Allowance (subject to application of the Additional Tenant
Improvement Allowance, as hereinafter defined), Tenant shall be solely
responsible for bearing and paying any such excess costs within thirty (30) days
of Landlord’s written demand therefor.  In the event the costs
incurred by Landlord and/or Tenant in connection with designing, planning and
constructing the Improvements are less than the Improvements Allowance, Tenant
shall provide Landlord with written notice prior to August 31, 2007 which may
direct Landlord to pay such excess amounts directly to Tenant’s
contractor/vendors for additional improvements to the Premises conducted by or
for Tenant, or apply such excess amounts against the Minimum Rental payment(s)
next due from Tenant until such excess amounts have been
exhausted.  Without limiting the foregoing, Landlord acknowledges that
“the costs incurred by Landlord and/or Tenant in designing, planning and
construction the Improvements” shall be deemed to include the cost to obtain any
and all (i) operating permit(s) that Tenant may be required to obtain (if any)
in order for Tenant to operate for Tenant’s permitted use as described in
Article 6(a) of this Lease; (ii) construction permits (including costs
associated with any “express review” process); (iii) space planning; (iv)
construction documents; (v) upfit costs; and (vi) any additional costs
associated with the upfit.

    

    3.           ADDITIONAL
TENANT IMPROVEMENT ALLOWANCE

    

    Upon written request to Landlord,
Landlord agrees to provide Tenant with an additional improvement allowance up to
a maximum of $250,000.00 (the “Additional Tenant Improvement Allowance”) to be
used by Tenant for additional improvements to the Premises, and/or furniture,
fixtures or equipment for the Premises.  Any such elected Additional
Tenant Improvement Allowance shall be amortized over the entire eighty-nine (89)
month term at an annual interest rate of ten percent (10%) and paid by Tenant as
part of the Minimum Rent due under the Lease.  Landlord and Tenant
shall amend this Lease as necessary to reflect such increased rent
obligation.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
“E-1”

    

    Parking

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
“E-2”

    

    Enclosed
Walkway

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    SECOND
AMENDMENT TO LEASE

    

    

    THIS SECOND AMENDMENT TO LEASE
(this “Second Amendment”) is made and entered into this 31st day of
October, 2007, by and between 3915 SHOPTON ROAD, LLC, a
North Carolina limited liability company (hereinafter referred to as
"Landlord"), 4015 SHOPTON ROAD,
LLC, a North Carolina limited liability company (“Temporary Landlord”)
and SHUTTERFLY, INC., a
Delaware corporation (hereinafter referred to as "Tenant").

    

    RECITALS:

    

    A.  Landlord and Tenant have
previously entered into that certain Lease Agreement dated December 22, 2006; as
amended by that certain First Amendment to Lease dated February 26, 2006, (as
amended, the “Lease”) for the occupancy of approximately 102,400 rentable square
feet of space (the “Premises”) known as building Shopton 18-B, in the Shopton
Ridge Business Park, Charlotte, North Carolina (the “Building”).

    

    B.  Temporary Landlord owns
that certain building adjacent to the Premises known as Shopton 18-C (the
“Temporary Building”).  Tenant desires to lease temporary storage
space from Temporary Landlord upon the same terms and conditions as the Lease,
except as set forth herein.

    

    C.  Landlord and Tenant
desire to amend the Lease as hereinafter set forth and Temporary Landlord
executes this Second Amendment evidencing its consent and acknowledgement of the
terms and conditions of lease of the Temporary Premises.

    

    NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant do hereby enter into this Second Amendment and amend the
Lease as set forth below.  All terms used but not defined herein shall
have the meanings set forth in the Lease.  All Recitals are
incorporated herein as if fully set forth below.

    

    1. Signage.  Landlord
hereby approves the signage proposal as defined in Exhibit “A” attached to this
Second Amendment and made a part hereof. Tenant agrees to remove said signage
from the Building upon Lease expiration or earlier termination and return any
portion of the Building façade affected by such signage removal to its original
condition, ordinary wear and tear excepted.

    

    2.           Temporary
Premises.  Landlord hereby leases to Tenant, and Tenant hereby
accepts and rents from Landlord, for the period of November 1, 2007 (“Temporary
Premises Commencement Date”) through and including January 31, 2008 (the
“Temporary Premises Term”, that certain office/warehouse space (the “Temporary
Premises”) containing approximately 19,200 rentable square feet as shown on the
attached Exhibit B in the Temporary Building.  Tenant acknowledges
that Landlord shall be permitted to show the Temporary Premises to prospective
tenants upon reasonable notice to Tenant.  Landlord shall use
commercially reasonable efforts not to interfere with Tenant’s use of the
Temporary Premises during such showings.

    

    3.           Temporary Premises
Rent.  During the Temporary Premises Term, Tenant shall pay to
Landlord, without notice, demand, reduction, setoff or any defense, and in
addition to all payments due under the Lease for the Premises: (i) a monthly
rental of $3,200.00; and (ii) Tenant’s prorate share of all taxes, insurance and
common area maintenance costs for the Temporary Space, in advance, on or before
the first day of each month of the Temporary Premises Term.

    

    4.           Temporary Premises
Improvements.  Tenant agrees to accept the Premises in its
“AS-IS”, “WHERE-IS” condition.  Notwithstanding anything in the Lease
regarding approval to the contrary, Tenant may, without any further approval or
notice to Landlord, at Tenant’s sole cost and expense, including all permits, if
any, in a good and workmanlike manner, perform the following improvements in the
Temporary Premises: (i) erect an interior chain-link fence dividing the
Temporary Premises from the remaining premises in the Building, provided,
however, that Tenant shall be responsible for removing the fence upon expiration
of the Temporary Premises Term; (ii) erect an exterior, temporary ramp to the
rear door of the Temporary Premises; and (iii) install floor lamps.

    

    5.           Lease.  With
the exception of anything noted in this Second Amendment, the terms and
conditions of Sections 5 through 35 the Lease shall govern the lease of the
Temporary Premises and both Temporary Landlord and Tenant hereby agree to be
bound by all such terms and conditions, except, with respect to the Temporary
Premises as follows:

    

    
      	
              a.  

            	
              All
      references in the Lease to the “Premises” shall be deemed to mean the
      Temporary Premises;

            

    

    

    
      	
              b.  

            	
              All
      references in the Lease to the “Building” shall be deemed to mean the
      Temporary Building;

            

    

    

    
      	
              c.  

            	
              The
      last sentence of Section 14 (Governmental Orders) is hereby deleted in its
      entirety.

            

    

    

    
      	
              d.  

            	
              Notwithstanding
      anything in the Lease to the contrary, Tenant shall only be obligated to
      insure its personal property stored within the
  Premises.

            

    

    

    
      	
              e.  

            	
              The
      first sentence of Section 9(a) is hereby deleted in its entirety and the
      following substituted therefor:

            

    

    

    “Except
as provided in Article 10 (Tenant’s Covenant to Repair), Landlord, at Landlord's
sole cost and expense, shall keep the entire Building in good repair and
maintenance (including replacements) at all times, for the proper operation of
the Building in a manner generally consistent with the maintenance and repair
(including replacements) of comparable properties, including, without
limitation, the Temporary Premises, the common areas, the Building's windows,
roof, foundation, structure and walls, and mechanical and electrical systems,
which include, but are not limited to, the heating, electrical, air
conditioning, ventilation and plumbing systems.”

    

    
      	
               
      

            	
              f.

            	
              Section
      10 (Tenant’s Covenant to Repair) is hereby deleted in its entirety and the
      following substituted therefor.

            

    

    

    “Except
as provided in Article 9 (Landlord's Covenant to Repair and  Replace),
13 (Damage or Destruction of Premises), 19 (Eminent Domain), and reasonable wear
and tear, Tenant shall at all times repair all damage to the Temporary Premises
caused by Tenants or it employees, contractors, agents and invitees, and return
any portion of the Premises affected by such damage to its original
condition.”

    

    6.            This
Second Amendment may be executed in counterparts, which when taken together,
shall constitute the entire agreement.  Temporary Landlord, Landlord
and Tenant agree that the delivery of an executed copy of this Second Amendment
by facsimile or by email of a *.pdf file with an original to follow shall be
legal and binding and shall have the same force and effect as if an original
executed copy of this Second Amendment had been delivered.

    

    7.            Ratification.  Except
as modified and amended by this Second Amendment, all terms and conditions of
the Lease shall remain in full force and effect.

    

    

    

    

    

    [REMAINDER
OF PAGE LEFT INTENTIONALLY BLANK]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    IN
WITNESS WHEREOF, Landlord and Tenant have executed this Second Amendment as of
the date set forth above.

    

    

    LANDLORD:

    

    3915 SHOPTON ROAD,
LLC,

    a North Carolina limited liability
company

    

    

    

    By:   /s/ Paul
Herndon                                        

             Name:
Paul Herndon

             Title:
Vice President

    

    

    

    

    TENANT:

    

    SHUTTERFLY,
INC.,

    a
Delaware corporation

    

    

    By:   /s/ Stephen E.
Recht        

    Name: Stephen E.
Recht                                                        

    Title:   Chief
Financial
Officer                                                                        

    

    

    

    

    TEMPORARY LANDLORD:

    

    

    4015 SHOPTON ROAD,
LLC,

    a North Carolina limited liability
company

    

    

    

    By:    /s/ Paul
Herndon                                       

             Name:
Paul Herndon

             Title:
Vice President

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    EXHIBIT
“A”

    

    Tenant’s
Signage Proposal

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    EXHIBIT
“B”

    

    Temporary
Premises Floor Plan

     

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ADDENDUM
TO SECOND AMENDMENT TO LEASE

    

    

    THIS ADDENDUM TO SECOND AMENDMENT TO
LEASE (this “Addendum”) is made and entered into this 3rd day of
January, 2008, by and between 3915 SHOPTON ROAD, LLC, a
North Carolina limited liability company (hereinafter referred to as
"Landlord"), 4015 SHOPTON ROAD,
LLC, a North Carolina limited liability company (“Temporary Landlord”)
and SHUTTERFLY, INC., a
Delaware corporation (hereinafter referred to as "Tenant").

    

    RECITALS:

    

    A.  Landlord, Temporary
Landlord and Tenant have previously entered into that certain temporary lease
arrangement more particularly described in the Second Amendment to Lease dated
October 31, 2007; (the “Second Amendment”) between Temporary Landlord, Tenant
and Landlord for the temporary occupancy of approximately 19,200 rentable square
feet of space (the “Temporary Premises”) in the building commonly known as
Shopton 18-C, in the Shopton Ridge Business Park, Charlotte, North Carolina (the
“Building”).

    

    B.  Landlord, Temporary
Landlord and Tenant desire to amend Second Amendment to allow Tenant to remain
in the Premises until March 31, 2008.

    

    NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord, Temporary Landlord and Tenant do hereby enter into this Addendum and
amend the Lease as set forth below.  All terms used but not defined
herein shall have the meanings set forth in the Second Amendment.  All
Recitals are incorporated herein as if fully set forth below.

    

    1.           Temporary
Premises.  Landlord, Temporary Landlord and Tenant hereby amend
the Second Amendment such that the Temporary Premises Term shall expire on March
31, 2008.

    

    2.            Counterpart Execution.  This Amendment
may be executed in counterparts, which when taken together, shall constitute the
entire agreement.  Landlord, Temporary Landlord and Tenant agree that
the delivery of an executed copy of this Addendum by facsimile or by email of a
*.pdf file with an original to follow shall be legal and binding and shall have
the same force and effect as if an original executed copy of this Addendum had
been delivered.

    

    3.            Ratification.  Except
as modified and amended by this Addendum, all terms and conditions of the Second
Amendment shall remain in full force and effect.

    

    

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    IN
WITNESS WHEREOF, Landlord, Temporary Landlord and Tenant have executed this
Addendum as of the date set forth above.

    

    LANDLORD:

    

    3915 SHOPTON ROAD,
LLC,

    a North Carolina limited liability
company

    

    

    

    By:   /s/Paul
Herndon                                        

             Name:
Paul Herndon

             Title:
Vice President

    
 

    

    TENANT:

    

    SHUTTERFLY,
INC.,

    a
Delaware corporation

    

    

    By: /s/Douglas
Appleton          

    Name: Douglas S.
Appleton                                                               

    Title:   VP, Legal                                                                        

    

    

    

    

    TEMPORARY LANDLORD:

    

    

    4015 SHOPTON ROAD,
LLC,

    a North Carolina limited liability
company

    

    

    

    By:   /s/Paul
Herndon                                        

             Name:
Paul Herndon

             Title:
Vice President

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}]]