Exhibit 10.19

 
Personal and Confidential
 

 
May 17, 2007
 
Kathryn E. Olson
3 Circle Avenue
Mill Valley, CA 94941
 
RE: Offer of Employment
 
Dear Kathryn:
 
Shutterfly, Inc. (the “Company” or “Shutterfly”) is pleased to offer you the
opportunity to join Shutterfly. You are being offered a position as Senior Vice
President and Chief Marketing Officer reporting to me. If you decide to join us,
your start date will be May 31, 2007.
 
Compensation
Your annual base pay will be $250,000, less applicable taxes and withholdings.
You will be paid semimonthly in accordance with the Company’s normal payroll
procedure. Additionally, you will be eligible to participate in the Executive
Bonus Plan to be approved by the Compensation Committee for 2007. Under the
Executive Bonus Plan, it is anticipated that you will be eligible for a bonus of
up to 30% of your base pay based upon you and the Company reaching certain
performance goals.
 
Hire in Bonus
Shutterfly will provide you with a hire in bonus of $50,000 less applicable
withholding.  If you terminate prior to one (1) year of employment you will be
responsible for reimbursing the Company a prorated portion of the bonus.
 
Stock Option
Subject to the approval of the Company’s Board of Directors, you will be granted
a stock option (the “Option”) to purchase 200,000 shares of the Company’s Common
Stock, at an exercise price equal to the fair market value of the Common Stock
on the date the Board grants your Option in accordance with the Board’s stock
option grant procedures.  Since you will be an executive officer, our procedure
provides for stock option grants only four times a year (on February 29, May 31,
August 31 and November 30). Therefore, since your start date is May 31, your
vesting start date and pricing for the option will both occur on such date. Your
Option will be subject to terms, conditions and restrictions similar to those
contained in the Company’s 2006 Equity Incentive Plan (the “Plan”) and the
execution of a stock option agreement adopted pursuant to such Plan.
 
Change in Control
If the Company is subject to a Corporate Transaction (as defined in the Plan)
whereas, (1) you will no longer be the Chief Marketing Officer of Shutterfly, or
(2) your role is materially diminished, or (3) the corporate office is moved 50
miles or more and you choose not to relocate with the Company, then the Company
will agree to pay you severance of six (6) months following the termination of
your employment and accelerate your vesting schedule by 12 months from that
date.   Your severance pay will be paid in accordance with the Company’s
standard payroll procedures.  However, to receive this severance you must (1)
sign a general release (in a form prescribed by the Company) and (b) return all
the Company property.
 
Relocation
Shutterfly will provide reimbursement for actual relocation expenses, not to
exceed $25,000.  Such relocation expenses may include the following: the cost of
packing and unpacking, moving and insuring household goods and personal effects
of your household goods to your new location.  Some of these reimbursed
relocation expenses may be considered income and therefore taxable under federal
and/or state laws.  You are encouraged to seek advice from a personal tax
advisor to determine the impact of relocation income and new location taxes.  If
you voluntarily terminate your employment in the first year of employment you
will be responsible for reimbursing the Company a prorated portion of the
relocation expenses.
 
Benefits
As an employee, you will also be eligible to receive certain employee benefits
including medical and dental coverage. The medical, dental and vision coverage
begin on your date of hire as an employee. Additionally, you are eligible to
participate in the Company’s 401(k) plan. The Company reserves the right to
revise or discontinue any or all of its benefit plans, at any time, in the
Company’s sole discretion. Enclosed is some information on the Company benefit
plans.
 
Holidays
Shutterfly generally observes twelve (12) paid holidays each calendar year. The
holiday schedule may change at management’s discretion.
 
Paid Time Off
In order to allow you flexibility with your free time, the Company has a paid
time off policy. You begin to accrue paid time off on your date of hire. You
will accrue fifteen (15) days of paid time off per year for your first three
(3) years of employment, subject to the paid time off policy.
 
Introductory Period
Your first ninety (90) days of work is known as an “Introductory Period”. This
“getting acquainted” period gives the Company the opportunity to determine your
ability to perform your job. It also provides you with the opportunity to
determine if you are satisfied with the job and the Company.  Either you or the
Company can terminate the employment relationship at any time during or after
the Introductory Period, with or without Cause or advance notice.
 
Employment Eligibility Verification
For purposes of federal immigration law, you will be required to provide to the
Company documentary evidence of your identity and eligibility for employment in
the United States.  Such documentation must be provided to us within three
(3) business days of your date of hire with the Company, or our employment
relationship with you may be terminated.
 
Employment at Will
If you choose to accept this offer, your employment with the Company will be
voluntarily entered into and will be for no specified period. As a result, you
will be free to resign at any time, for any reason, as you deem appropriate. The
Company will have a similar right and may terminate its employment relationship
with you at any time, with or without Cause or advance notice.
 
Acceptance of Offer
To indicate your acceptance of the terms of this offer, please sign and date in
the space provided below and return an executed copy to Shutterfly; 2800 Bridge
Parkway; Redwood City, CA 94065; Attention: Human Resources or via Fax to
(650) 610–5280 no later than May 24, 2007 after which this offer will expire. A
duplicate original is enclosed for your records. In addition to this letter,
your offer of employment is conditioned upon your: (1) completion and signing of
the Shutterfly employment application; (2) successful completion of a background
and reference check and (3) your signing of the Shutterfly Employee Invention
Assignment and Confidentiality Agreement (and any other similar agreements
relating to proprietary rights between you and the Company).
 
In the event of any dispute or claim relating to or arising out of your
employment relationship with the Company, this agreement, or the termination of
your employment with the Company for any reason (including, but not limited to,
any claims of breach of contract, wrongful termination or age, sex, race,
national origin, disability or other discrimination or harassment), all such
disputes shall be fully, finally and exclusively resolved by binding arbitration
conducted by JAMS under JAMS Employment Arbitration Rules and Procedures then in
effect, which are available online at JAMS’ website at www.jamsadr.org You and
the Company hereby waive your respective rights to have any such disputes or
claims tried before a judge or jury.
 
This letter agreement, the Shutterfly Employee Invention Assignment and
Confidentiality Agreement, the Plan and the stock option agreement for the
Option constitute the entire agreement between you and the Company regarding the
terms and conditions of your employment with the Company and together supersede
any prior representations or agreements, whether written or oral. This letter,
along with any agreements herein, may not be modified or amended except by a
written agreement signed by the Chief Executive Officer of the Company.  If we
do not hear from you by May 17, 2007 we will assume you have decided not to join
Shutterfly.
 
We look forward to your positive response and welcoming you to the Shutterfly
team.
 
Sincerely,
 
/s/ Jeff Housenbold
Jeff Housenbold
CEO & President
 
Enclosures
 

 
Acknowledged and Agreed:
 
I agree to and accept employment with Shutterfly on the terms and conditions set
forth in this agreement. I understand and agree that my employment with the
Company is at-will.
 
Signature:  /s/Kathryn E.
Olson                                                      Date:   May 18, 2007
Kathryn E. Olson
 
Start Date: May 31, 2007
 

 
 

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EXHIBIT A
 
EMPLOYEE INVENTION ASSIGNMENT AND
 
CONFIDENTIALITY AGREEMENT
 
In consideration of, and as a condition of my employment with Shutterfly, Inc.,
a Delaware corporation (the “Company”), I hereby represent to, and agree with
the Company as follows:
 

 
1. Purpose of Agreement.  I understand that the Company is engaged in a
continuous program of research, development, production and marketing in
connection with its business and that it is critical for the Company to preserve
and protect its “Proprietary Information” (as defined in Section 7 below), its
rights in “Inventions” (as defined in Section 2 below) and in all related
intellectual property rights.  Accordingly, I am entering into this Employee
Invention Assignment and Confidentiality Agreement (this “Agreement”) as a
condition of my employment with the Company, whether or not I am expected to
create inventions of value for the Company.
 
2. Disclosure of Inventions.  I will promptly disclose in confidence to the
Company all inventions, improvements, designs, original works of authorship,
formulas, processes, compositions of matter, computer software programs,
databases, mask works and trade secrets that I make or conceive or first reduce
to practice or create, either alone or jointly with others, during the period of
my employment, whether or not in the course of my employment, and whether or not
patentable, copyrightable or protectable as trade secrets (the “Inventions”).
 
3. Work for Hire; Assignment of Inventions.  I acknowledge and agree that any
copyrightable works prepared by me within the scope of my employment are “works
for hire” under the Copyright Act and that the Company will be considered the
author and owner of such copyrightable works.  I agree that all Inventions that
(i) are developed using equipment, supplies, facilities or trade secrets of the
Company, (ii) result from work performed by me for the Company, or (iii) relate
to the Company’s business or current or anticipated research and development
(the “Assigned Inventions”), will be the sole and exclusive property of the
Company and are hereby irrevocably assigned by me to the Company.  Attached
hereto as Exhibit A is a list describing all inventions, original works of
authorship, developments and trade secrets which were made by me prior to the
date of this Agreement, which belong to me and which are not assigned to the
Company (“Prior Inventions”).  I acknowledge and agree that if I use any of my
Prior Inventions in the scope of my employment, or include them in any product
or service of the Company, I hereby grant to the Company a perpetual,
irrevocable, nonexclusive, world-wide, royalty-free license to use, disclose,
make, sell, copy, distribute, modify and create works based on, perform or
display such Prior Inventions and to sublicense third parties with the same
rights.
 
4. Labor Code Section 2870 Notice.  I have been notified and understand that the
provisions of Sections 3 and 5 of this Agreement do not apply to any Assigned
Invention that qualifies fully under the provisions of Section 2870 of the
California Labor Code, which states as follows:
 
ANY PROVISION IN AN EMPLOYMENT AGREEMENT WHICH PROVIDES THAT AN EMPLOYEE SHALL
ASSIGN, OR OFFER TO ASSIGN, ANY OF HIS OR HER RIGHTS IN AN INVENTION TO HIS OR
HER EMPLOYER SHALL NOT APPLY TO AN INVENTION THAT THE EMPLOYEE DEVELOPED
ENTIRELY ON HIS OR HER OWN TIME WITHOUT USING THE EMPLOYER’S EQUIPMENT,
SUPPLIES, FACILITIES, OR TRADE SECRET INFORMATION EXCEPT FOR THOSE INVENTIONS
THAT EITHER:  (1) RELATE AT THE TIME OF CONCEPTION OR REDUCTION TO PRACTICE OF
THE INVENTION TO THE EMPLOYER’S BUSINESS, OR ACTUAL OR DEMONSTRABLY ANTICIPATED
RESEARCH OR DEVELOPMENT OF THE EMPLOYER; OR (2) RESULT FROM ANY WORK PERFORMED
BY THE EMPLOYEE FOR THE EMPLOYER.  TO THE EXTENT A PROVISION IN AN EMPLOYMENT
AGREEMENT PURPORTS TO REQUIRE AN EMPLOYEE TO ASSIGN AN INVENTION OTHERWISE
EXCLUDED FROM BEING REQUIRED TO BE ASSIGNED UNDER CALIFORNIA LABOR CODE
SECTION 2870(a), THE PROVISION IS AGAINST THE PUBLIC POLICY OF THIS STATE AND IS
UNENFORCEABLE.
 
5. Assignment of Other Rights.  In addition to the foregoing assignment of
Assigned Inventions to the Company, I hereby irrevocably transfer and assign to
the Company:  (i) all worldwide patents, patent applications, copyrights, mask
works, trade secrets and other intellectual property rights, including but not
limited to rights in databases, in any Assigned Inventions, along with any
registrations of or applications to register such rights; and (ii) any and all
“Moral Rights” (as defined below) that I may have in or with respect to any
Assigned Inventions.  I also hereby forever waive and agree never to assert any
and all Moral Rights I may have in or with respect to any Assigned Inventions,
even after termination of my work on behalf of the Company.  “Moral Rights” mean
any rights to claim authorship of or credit on an Assigned Inventions, to object
to or prevent the modification or destruction of any Assigned Inventions or
Prior Inventions licensed to Company under Section 3, or to withdraw from
circulation or control the publication or distribution of any Assigned
Inventions or Prior Inventions licensed to Company under Section 3, and any
similar right, existing under judicial or statutory law of any country or
subdivision thereof in the world, or under any treaty, regardless of whether or
not such right is denominated or generally referred to as a “moral right.”
 
6. Assistance.  I agree to assist the Company in every proper way to obtain for
the Company and enforce patents, copyrights, mask work rights, trade secret
rights and other legal protections for the Company’s Assigned Inventions in any
and all countries.  I will execute any documents that the Company may reasonably
request for use in obtaining or enforcing such patents, copyrights, mask work
rights, trade secrets and other legal protections.  My obligations under this
paragraph will continue beyond the termination of my employment with the
Company, provided that the Company will compensate me at a reasonable rate after
such termination for time or expenses actually spent by me at the Company’s
request on such assistance.  I appoint the Secretary of the Company as my
attorney-in-fact to execute documents on my behalf for this purpose.
 
7. Proprietary Information.  I understand that my employment by the Company
creates a relationship of confidence and trust with respect to any information
of a confidential or secret nature that may be disclosed to me by the Company or
a third party that relates to the business of the Company or to the business of
any parent, subsidiary, affiliate, customer or supplier of the Company or any
other party with whom the Company agrees to hold information of such party in
confidence (the “Proprietary Information”).  Such Proprietary Information
includes, but is not limited to, Assigned Inventions, marketing plans, product
plans, business strategies, financial information, forecasts, personnel
information, customer lists and data, and domain names.
 
8. Confidentiality.  At all times, both during my employment and after its
termination, I will keep and hold all such Proprietary Information in strict
confidence and trust.  I will not use or disclose any Proprietary Information
without the prior written consent of the Company, except as may be necessary to
perform my duties as an employee of the Company for the benefit of the
Company.  Upon termination of my employment with the Company, I will promptly
deliver to the Company all documents and materials of any nature pertaining to
my work with the Company and, upon Company request, will execute a document
confirming my agreement to honor my responsibilities contained in this
Agreement.  I will not take with me or retain any documents or materials or
copies thereof containing any Proprietary Information.
 
9. No Breach of Prior Agreement.  I represent that my performance of all the
terms of this Agreement and my duties as an employee of the Company will not
breach any invention assignment, proprietary information, confidentiality or
similar agreement with any former employer or other party.  I represent that I
will not bring with me to the Company or use in the performance of my duties for
the Company any documents or materials or intangibles of a former employer or
third party that are not generally available to the public or have not been
legally transferred to the Company.
 
10. Efforts; Duty Not to Compete.  I understand that my employment with the
Company requires my undivided attention and effort during normal business
hours.  While I am employed by the Company, I will not, without the Company’s
express prior written consent, provide services to, or assist in any manner, any
business or third party if such services or assistance would be in direct
conflict with the Company’s business interests.
 
11. Notification.  I hereby authorize the Company to notify third parties,
including, without limitation, customers and actual or potential employers, of
the terms of this Agreement and my responsibilities hereunder.
 
12. Non-Solicitation of Employees/Consultants.  During my employment with the
Company and for a period of one (1) year thereafter, I will not directly or
indirectly solicit away employees or consultants of the Company for my own
benefit or for the benefit of any other person or entity.
 
13. Non-Solicitation of Suppliers/Customers.  During my employment with the
Company and after termination of my employment, I will not directly or
indirectly solicit or take away suppliers or customers of the Company if the
identity of the supplier or customer or information about the supplier or
customer relationship is a trade secret or is otherwise deemed confidential
information within the meaning of California law.
 
14. Name & Likeness Rights.  I hereby authorize the Company to use, reuse, and
to grant others the right to use and reuse, my name, photograph, likeness
(including caricature), voice, and biographical information, and any
reproduction or simulation thereof, in any form of media or technology now known
or hereafter developed (including, but not limited to, film, video and digital
or other electronic media), both during and after my employment, for whatever
purposes the Company deems necessary.
 
15. Injunctive Relief.  I understand that in the event of a breach or threatened
breach of this Agreement by me the Company may suffer irreparable harm and will
therefore be entitled to injunctive relief to enforce this Agreement.
 
16. Governing Law; Severability.  This Agreement will be governed by and
construed in accordance with the laws of the State of California, without giving
effect to its laws pertaining to conflict of laws.  If any provision of this
Agreement is determined by any court or arbitrator of competent jurisdiction to
be invalid, illegal or unenforceable in any respect, such provision will be
enforced to the maximum extent possible given the intent of the parties
hereto.  If such clause or provision cannot be so enforced, such provision shall
be stricken from this Agreement and the remainder of this Agreement shall be
enforced as if such invalid, illegal or unenforceable clause or provision had
(to the extent not enforceable) never been contained in this Agreement.
 
17. Counterparts.  This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered will be deemed an original, and all
of which together shall constitute one and the same agreement.
 
18. Entire Agreement.  This Agreement and the documents referred to herein
constitute the entire agreement and understanding of the parties with respect to
the subject matter of this Agreement, and supersede all prior understandings and
agreements, whether oral or written, between or among the parties hereto with
respect to the specific subject matter hereof.
 
19. Amendment and Waivers.  This Agreement may be amended only by a written
agreement executed by each of the parties hereto.  No amendment of or waiver of,
or modification of any obligation under this Agreement will be enforceable
unless set forth in a writing signed by the party against which enforcement is
sought.  Any amendment effected in accordance with this section will be binding
upon all parties hereto and each of their respective successors and assigns.  No
delay or failure to require performance of any provision of this Agreement shall
constitute a waiver of that provision as to that or any other instance.  No
waiver granted under this Agreement as to any one provision herein shall
constitute a subsequent waiver of such provision or of any other provision
herein, nor shall it constitute the waiver of any performance other than the
actual performance specifically waived.
 
20. Successors and Assigns; Assignment.  Except as otherwise provided in this
Agreement, this Agreement, and the rights and obligations of the parties
hereunder, will be binding upon and inure to the benefit of their respective
successors, assigns, heirs, executors, administrators and legal
representatives.  The Company may assign any of its rights and obligations under
this Agreement.  No other party to this Agreement may assign, whether
voluntarily or by operation of law, any of its rights and obligations under this
Agreement, except with the prior written consent of the Company.
 
21. Further Assurances.  The parties agree to execute such further documents and
instruments and to take such further actions as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
 
22. “At Will” Employment.  I understand that this Agreement does not constitute
a contract of employment or obligate the Company to employ me for any stated
period of time.  I understand that I am an “at will” employee of the Company and
that my employment can be terminated at any time, with or without notice and
with or without cause, for any reason or for no reason, by either the Company or
myself.  I acknowledge that any statements or representations to the contrary
are ineffective, unless put into a writing signed by the Company.  I further
acknowledge that my participation in any stock option or benefit program is not
to be construed as any assurance of continuing employment for any particular
period of time.  This Agreement shall be effective as of the first day of my
employment by the Company, which is May 18, 2007.
 
SHUTTERFLY, INC.
 
Employee:
By:
/s/ Jeff Housenbold
/s/ Kathryn E. Olson
 
Jeff Housenbold
CEO & President
Kathryn E. Olson

 

 

 

 

 

 

 
Signature Page to Employee Invention Assignment and Confidentiality Agreement
 

 
 

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APPENDIX A
 

 
California Labor Code Section 2870.  Application of provision providing that
employee shall assign or offer to assign rights in invention to employer.
 
1.           Any provision in an employment agreement which provides that an
employee shall assign, or offer to assign, any of his or her rights in an
invention to his or her employer shall not apply to an invention that the
employee developed entirely on his or her own time without using the employer’s
equipment, supplies, facilities, or trade secret information except for those
inventions that either:
 
(a)           Relate at the time of conception or reduction to practice of the
invention to the employer’s business, or actual or demonstrably anticipated
research or development of the employer; or
 
(b)           Result from any work performed by the employee for his employer.
 
2.           To the extent a provision in an employment agreement purports to
require an employee to assign an invention otherwise excluded from being
required to be assigned under paragraph 1, the provision is against the public
policy of this state is unenforceable.
 

 
 

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APPENDIX B
 
PRIOR MATTER