Exhibit 10.03

NOTICE OF INDUCEMENT STOCK OPTION GRANT
SHUTTERFLY, INC.

“Notice of Grant”

GRANT NUMBER: 00004045

You have been granted an Option to purchase shares of Common Stock of the
Company subject to the terms and conditions of this Notice of Stock Option Grant
(the “Notice of Grant”), the attached Stock Option Agreement (the “Option
Agreement”) and your Offer Letter (as defined below), as follows.
Name:    Christopher North    
Address:        
Date of Grant:    May 31, 2016    
Vesting Commencement Date:    May 31, 2016    
Exercise Price per Share:        
Total Number of Shares:    850,000    
Type of Option:    Non-Qualified Stock Option
Expiration Date:
May 31, 2023; This Option expires earlier if your Service terminates earlier, as
described in the Stock Option Agreement.

Vesting Schedule:
This Option becomes exercisable with respect to the first 25% of the Shares
subject to this Option when you complete 12 months of continued employment as
the Chief Executive Officer of the Company from the Vesting Commencement Date;
thereafter, this Option becomes exercisable with respect to an additional 1/48th
of the Shares subject to this Option when you complete each month of continued
employment as the Chief Executive Officer of the Company, except for such
accelerated vesting as set forth in the Offer Letter.

You understand that your employment with the Company is for an unspecified
duration, can be terminated at any time (i.e., is “at-will”), and that nothing
in this Notice, the Option Agreement, or you offer letter of employment from the
Company, dated on or around March 15, 2016 (the “Offer Letter”) changes the
at-will nature of that relationship. By accepting this Option, you and the
Company agree that this Option is granted under and governed by the terms and
conditions of the Notice of Grant, the Option Agreement and the Offer Letter. By
accepting this Option, you consent to electronic delivery as set forth in the
Option Agreement.
PARTICIPANT:    SHUTTERFLY, INC.
Signature:        By:     
Print Name: Christopher North        Name:     
Its:     

1
        

--------------------------------------------------------------------------------

Exhibit 10.03

SHUTTERFLY, INC.
INDUCEMENT AWARD AGREEMENT (STOCK OPTION)
(U.S. FORM)
You have been granted an Option by Shutterfly, Inc. (the “Company”) to purchase
Shares (the “Option”), subject to the terms, restrictions and conditions of your
offer letter of employment from the Company, dated on or around March 15, 2016
(the “Offer Letter”), the Notice of Stock Option Grant (the “Notice of Grant”)
and this Stock Option Agreement (the “Option Agreement”).
1.Grant of Option. You have been granted an Option for the number of shares of
the Company’s Common Stock and the common stock of any successor security
(“Shares”) set forth in the Notice of Grant at the exercise price per Share set
forth in the Notice of Grant (the “exercise price”). This Option is intended to
be treated as a Nonqualified Stock Option (“NSO”).
2.    Termination Period.
(a)    General Rule. Subject to Section 2(b) below, if your Service terminates
for any reason except death or Disability, and other than for Cause, then this
Option will expire at the close of business at Company headquarters on the date
three months after your termination of Service (subject to the expiration
detailed in Section 6). “Service” shall mean you are employed as the Company’s
Chief Executive Officer for the Company. Service ceases upon Termination. If
your Service is terminated for Cause, this Option will expire upon the date of
such termination. The Committee (as defined below) determines when your Service
terminates for all purposes under this Option Agreement. You acknowledge and
agree that the Vesting Schedule may change prospectively in the event that your
service status changes between full and part-time status in accordance with
Company policies relating to work schedules and vesting of awards. You
acknowledge that the vesting of the Shares pursuant to this Notice is earned
only by continuing Service, except as set forth in the Offer Letter.
(b)    Death; Disability; Termination without Cause; Constructive Termination.
If you die before your Service terminates (or you die within three months of
your termination of Service other than for Cause), then this Option will expire
at the close of business at Company headquarters on the date 12 months after the
date of death (subject to the expiration detailed in Section 6). If your Service
terminates because of your Disability, then this Option will expire at the close
of business at Company headquarters on the date 12 months after your termination
date (subject to the expiration detailed in Section 6). If your Service
terminates due to a termination without Cause (as defined in the Offer Letter)
or a Constructive Termination (as defined in the Offer Letter) and you satisfy
the conditions of Section 7 of the Offer Letter, then this Option will expire at
the close of business at Company headquarters on the date 12 months after the
date of such termination (subject to the expiration detailed in Section 6).
(c)    No Notice. You are responsible for keeping track of these exercise
periods following your termination of Service for any reason. The Company will
not provide further notice of such periods. In no event shall this Option be
exercised later than the Expiration Date set forth in the Notice of Grant.
3.    Exercise of Option.
(a)    Right to Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set forth in the Notice of Grant, this
Option Agreement and the Offer Letter. In the event of your death, Disability,
or other cessation of Service, the exercisability of the Option is governed by
the applicable provisions of the Notice of Grant, this Option Agreement and the
Offer Letter. This Option may not be exercised for a fraction of a Share.
(b)    Method of Exercise. This Option is exercisable by delivery of an exercise
notice in a form specified by the Company (the “Exercise Notice”), which shall
state the election to exercise the

2
        

--------------------------------------------------------------------------------

Exhibit 10.03

Option, the number of Shares in respect of which the Option is being exercised
(the “Exercised Shares”), and such other representations and agreements as may
be required by the Company. The Exercise Notice shall be delivered in person, by
mail, via electronic mail or facsimile or by other authorized method to the
Secretary of the Company or other person designated by the Company. The Exercise
Notice shall be accompanied by payment of the aggregate exercise price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of a fully executed Exercise Notice accompanied by the aggregate
exercise price and any applicable tax withholding due upon exercise of the
Option.
(c)    Exercise by Another. If another person wants to exercise this Option
after it has been transferred to him or her in compliance with this Option
Agreement, that person must prove to the Company’s satisfaction that he or she
is entitled to exercise this Option. That person must also complete the proper
Exercise Notice form (as described above) and pay the exercise price (as
described below) and any applicable tax withholding due upon exercise of the
Option (as described below).
4.    Method of Payment. Payment of the aggregate exercise price shall be by any
of the following, or a combination thereof, at your election:
(a)    your personal check, wire transfer, or a cashier’s check;
(b)    certificates for shares of Company stock that you own, along with any
forms needed to effect a transfer of those shares to the Company; the value of
the shares, determined as of the effective date of the Option exercise, will be
applied to the Option exercise price. Instead of surrendering shares of Company
stock, you may attest to the ownership of those shares on a form provided by the
Company and have the same number of shares subtracted from the Option shares
issued to you. However, you may not surrender, or attest to the ownership of,
shares of Company stock in payment of the exercise price of your Option if your
action would cause the Company to recognize compensation expense (or additional
compensation expense) with respect to this Option for financial reporting
purposes;
(c)    cashless exercise through irrevocable directions to a securities broker
approved by the Company to sell all or part of the Shares covered by this Option
and to deliver to the Company from the sale proceeds an amount sufficient to pay
the Option exercise price and any withholding taxes. The balance of the sale
proceeds, if any, will be delivered to you. The directions must be given by
signing a special notice of exercise form provided by the Company; or
(d)    other method authorized by the Company.
5.    Non-Transferability of Option. In general, except as provided below, only
you may exercise this Option prior to your death. You may not transfer or assign
this Option, except as provided below. For instance, you may not sell the right
to this Option or use it as security for a loan. If you attempt to do any of
these things, this Option will immediately become invalid. You may, however,
dispose of this Option in your will or in a beneficiary designation. However, if
this Option is designated as a NSO in the Notice of Grant, then the Committee
may, in its sole discretion, allow you to transfer this Option as a gift to one
or more family members. For purposes of this Option Agreement, “family member”
means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew, mother-in- law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law (including adoptive
relationships), any individual sharing your household (other than a tenant or
employee), a trust in which one or more of these individuals have more than 50%
of the beneficial interest, a foundation in which you or one or more of these
persons control the management of assets, and any entity in which you or one or
more of these persons own more than 50% of the voting interest. In addition, if
this Option is designated as a NSO in the Notice of Grant, then the Committee
may, in its sole discretion, allow you to transfer this Option to your spouse or
former spouse pursuant to a domestic relations order in settlement of marital
property rights. The Committee will allow you to transfer this Option only if
both you and the transferee(s) execute the forms prescribed by the Committee,
which include the consent of the transferee(s) to be bound by this Option
Agreement. This Option may not be transferred in any manner other than by will
or by the laws of

3
        

--------------------------------------------------------------------------------

Exhibit 10.03

descent or distribution or court order and may be exercised during the lifetime
of you only by you, your guardian, or legal representative, as permitted by this
Option Agreement. The terms of this Option Agreement shall be binding upon the
executors, administrators, heirs, successors and assigns of you.
6.    Term of Option. This Option shall in any event expire on the expiration
date set forth in the Notice of Grant, which date is 7 years after the grant
date.
7.    Tax Consequences. You should consult a tax adviser for tax consequences
relating to this Option in the jurisdiction in which you are subject to tax. YOU
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES. You will not be allowed to exercise this Option unless you make
arrangements acceptable to the Company to pay any withholding taxes that may be
due as a result of the Option exercise
8.    Withholding Taxes and Stock Withholding. Regardless of any action the
Company or your actual employer (the “Employer”) takes with respect to any or
all income tax, social insurance, payroll tax, payment on account or other
tax-related withholding (“Tax-Related Items”), you acknowledge that the ultimate
liability for all Tax-Related Items legally due by you is and remains your
responsibility and that the Company and/or the Employer (1) make no
representations or undertakings regarding the treatment of any Tax-Related Items
in connection with any aspect of the Option grant, including the grant, vesting
or exercise of the Option, the subsequent sale of Shares acquired pursuant to
such exercise and the receipt of any dividends; and (2) do not commit to
structure the terms of the grant or any aspect of the Option to reduce or
eliminate your liability for Tax-Related Items. You acknowledge that if you are
subject to Tax-Related Items in more than one jurisdiction, the Company and/or
the Employer may be required to withhold or account for Tax-Related Items in
more than one jurisdiction.
Prior to exercise of the Option, you shall pay or make adequate arrangements
satisfactory to the Company and/or the Employer to satisfy all withholding and
payment on account obligations of the Company and/or the Employer. In this
regard, you authorize the Company and/or the Employer to withhold all applicable
Tax-Related Items legally payable by you from your wages or other cash
compensation paid to you by the Company and/or the Employer. With the Company’s
consent, these arrangements may also include, if permissible under local law,
(a) withholding Shares that otherwise would be issued to you when you exercise
this Option, provided that the Company only withholds the amount of Shares
necessary to satisfy the minimum statutory withholding amount, (b) having the
Company withhold taxes from the proceeds of the sale of the Shares, either
through a voluntary sale or through a mandatory sale arranged by the Company (on
your behalf and you hereby authorize such sales by this authorization), (c) your
payment of a cash amount, or (d) any other arrangement approved by the Company;
all under such rules as may be established by the Committee and in compliance
with the Company’s Insider Trading Policy and 10b5-1 Trading Plan Policy, if
applicable; provided however, that if you are a Section 16 officer of the
Company under the United States Securities Exchange Act of 1934, as amended
Exchange Act (the “Exchange Act”), then the Committee (as constituted in
accordance with Rule 16b-3 under the Exchange Act) shall establish the method of
withholding from alternatives (a)-(d) above, and the Committee shall establish
the method prior to the Tax-Related Items withholding event. The Fair Market
Value (as defined below) of these Shares, determined as of the effective date of
the Option exercise, will be applied as a credit against the withholding taxes.
You shall pay to the Company or the Employer any amount of Tax-Related Items
that the Company or the Employer may be required to withhold as a result of your
Options or your purchase of Shares that cannot be satisfied by the means
previously described. Finally, you acknowledge that the Company has no
obligation to deliver Shares to you until you have satisfied the obligations in
connection with the Tax-Related Items as described in this Section.

For purposes of this Option Agreement, “Fair Market Value” means, as of any
date, the value of a share of the Company’s Common Stock determined as follows:
 
(a)    if such Common Stock is publicly traded and is then listed on a national
securities exchange, its closing price on the date of determination on the
principal national securities exchange on

4
        

--------------------------------------------------------------------------------

Exhibit 10.03

which the Common Stock is listed or admitted to trading as reported in The Wall
Street Journal or such other source as the Board or the Committee deems
reliable;
 
(b)    if such Common Stock is publicly traded but is neither listed nor
admitted to trading on a national securities exchange, the average of the
closing bid and asked prices on the date of determination as reported in The
Wall Street Journal or such other source as the Board or the Committee deems
reliable; or
 
(c)     if none of the foregoing is applicable, by the Board or the Committee in
good faith.

9.    Acknowledgement. The Company and you agree that the Option is granted
under and governed by the Notice of Grant, this Option Agreement, and the Offer
Letter (incorporated by reference). You: (i) acknowledge receipt of a copy of
the Offer Letter and these grant documents, (ii) represent that you have
carefully read and are familiar with their provisions, and (iii) hereby accept
the Option subject to all of the terms and conditions set forth herein and those
set forth in the Notice of Grant and the Offer Letter. Notwithstanding anything
to contrary herein, any determination of the basis for Termination, however,
shall be made in accordance with the definitions and procedures of the Offer
Letter.
10.    Consent to Electronic Delivery of All Option Documents and Disclosures.
By your acceptance of this Option, you consent to the electronic delivery of the
Notice of Grant, this Option Agreement, account statements, prospectuses
required by the Securities and Exchange Commission, U.S. financial reports of
the Company, and all other documents that the Company is required to deliver to
its security holders (including, without limitation, annual reports and proxy
statements) or other communications or information related to the Option.
Electronic delivery may include the delivery of a link to a Company intranet or
the internet site of a third party involved in administering the Option, the
delivery of the document via e-mail or such other delivery determined at the
Company’s discretion. You acknowledge that you may receive from the Company a
paper copy of any documents delivered electronically at no cost if you contact
the Company by telephone, through a postal service or electronic mail at
stock@shutterfly.com. You further acknowledge that you will be provided with a
paper copy of any documents delivered electronically if electronic delivery
fails; similarly, you understand that you must provide on request to the Company
or any designated third party a paper copy of any documents delivered
electronically if electronic delivery fails. Also, you understand that your
consent may be revoked or changed, including any change in the electronic mail
address to which documents are delivered (if you have provided an electronic
mail address), at any time by notifying the Company of such revised or revoked
consent by telephone, postal service or electronic mail at stock@shutterfly.com.
Finally, you understand that you are not required to consent to electronic
delivery.
11.    Compliance with Laws and Regulations. The exercise of this Option will be
subject to and conditioned upon compliance by the Company and you with all
applicable state, federal and foreign laws and regulations and with all
applicable requirements of any stock exchange or automated quotation system on
which the Company’s Common Stock may be listed or quoted at the time of such
issuance or transfer. The Shares issued pursuant to this Option Agreement shall
be endorsed with appropriate legends, if any, determined by the Company.
12.    Governing Law; Severability. If one or more provisions of this Option
Agreement are held to be unenforceable under applicable law, the parties agree
to renegotiate such provision in good faith. In the event that the parties
cannot reach a mutually agreeable and enforceable replacement for such
provision, then (i) such provision shall be excluded from this Option Agreement,
(ii) the balance of this Option Agreement shall be interpreted as if such
provision were so excluded and (iii) the balance of this Option Agreement shall
be enforceable in accordance with its terms. This Option Agreement and all acts
and transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Delaware, without giving effect to principles of conflicts of
law. For purposes of litigating any dispute that may arise directly or
indirectly from the Notice and this Option Agreement, the parties hereby submit
and consent to litigation in the exclusive jurisdiction

5
        

--------------------------------------------------------------------------------

Exhibit 10.03

of the State of California and agree that any such litigation shall be conducted
only in the courts of California in San Francisco County or the federal courts
of the United States for the Northern District of California and no other
courts.
13.    No Rights as Employee, Director or Consultant. Nothing in this Option
Agreement shall affect in any manner whatsoever the right or power of the
Company, or a Parent, Subsidiary or Affiliate of the Company, to terminate your
Service, for any reason, with or without Cause.
14.    Adjustment. In the event of a stock split, a stock dividend or a similar
change in Company stock, the number of Shares covered by this Option and the
exercise price per Share shall be proportionately adjusted, in the same manner
and at the same time as similar adjustments are made under the Company’s 2015
Equity Incentive Plan (the “2015 Plan”), subject to any required action by the
Board or the stockholders of the Company and in compliance with applicable
securities laws; provided that fractions of a Share will not be issued.
15.    Corporate Transactions. Except as otherwise set forth in this Option
Agreement or the Offer Letter, in the event of a Corporate Transaction (as
defined in the 2015 Plan), this Option shall be treated in accordance with
Section 21.1 of the 2015 Plan.
16.    Award Subject to Company Clawback or Recoupment. To the extent permitted
by applicable law, the Option shall be subject to clawback or recoupment
pursuant to any compensation clawback or recoupment policy adopted by the Board
as required by law during the term of your employment or other Service that is
applicable to executive officers (to the extent required by applicable law). In
addition to any other remedies available under such policy, applicable law may
require the cancellation of your Option (whether vested or unvested) and the
recoupment of any gains realized with respect to your Option.
17.    Entire Agreement; Enforcement of Rights. This Option Agreement, the
Notice and the Offer Letter constitute the entire agreement and understanding of
the parties relating to the subject matter herein and supersede all prior
discussions between them. Any prior agreements, commitments or negotiations
concerning this Option are superseded. No modification of or amendment to this
Option Agreement, nor any waiver of any rights under this Option Agreement,
shall be effective unless in writing and signed by the parties to this Option
Agreement. The failure by either party to enforce any rights under this Option
Agreement shall not be construed as a waiver of any rights of such party.
18.    Administration. This Option Agreement will be administered by the either
the majority of the independent members of the Company’s Board of Directors (the
“Board”) or the Compensation Committee of the Board (the “Compensation
Committee”, and either referred to herein as the “Committee”). The Committee
will have full power to implement and carry out this Option Agreement.

BY ACCEPTING THIS OPTION, YOU AGREE TO ALL OF THE TERMS AND CONDITIONS DESCRIBED
ABOVE AND IN THE OFFER LETTER.

6