Exhibit 10.01

 
March 20, 2009
 
Kathryn Olson
3 Circle Avenue
Mill Valley, CA 94941
 
 
Re:
Transition Agreement

 
Dear Kathryn:
 
This letter confirms our agreement about your transition from Shutterfly, Inc.
(the “Company”).
 
Transition Period:  Your last day of employment with the Company will be June 5,
2009 (the “Separation Date”).  You are expected to continue working for the
Company on a full-time basis through April 3, 2009.  From April 4, 2009 until
the Separation Date (the “Transition Period”), you will not be required to
report to work, but will perform assigned projects and provide transitional
assistance upon request.  I will provide you with additional information about
these special projects, which are expected to include:
 
·  
Regular transition meetings with Jeff Housenbold

 
·  
Positioning – including Brand Qualitative Objectives, Discussion Guide,
Implications Products & Services and Positioning Statements, Communication
Briefs

 
·  
Segmentation – Target Segment and Implications

 
·  
Photography Strategy

 
·  
Q1 2009 Personnel Reviews

 
During the Transition Period, you will continue to receive your current base
salary and maintain your current coverage under the Company’s group benefit
plans, subject to the terms and conditions of that plan.  Additionally, the
Restricted Stock Units granted to you under the Notice of Restricted Stock Award
dated June 2, 2008, and the incentive stock options and non-qualified stock
options granted to you under the Notice of Stock Option Grant dated
May 31, 2007, will continue to vest during the Transition Period, in accordance
with the applicable Award Agreements and the 2006 Equity Incentive Plan under
which they were granted.  You will remain eligible to participate in the
Company’s quarterly bonus plan for Q1, but will not be eligible to participate
in this Plan in Q2 or thereafter, as participation is conditioned on active,
full-time employment through the regular payment date.
 
Separation Date:  On the Separation Date, you will be paid all outstanding
salary amounts and any accrued, but unused, paid time off.  If you seek
reimbursement of any business expenses, you agree to submit your final expense
reimbursement statement by the Separation Date, along with receipts or other
supporting documentation.  The Company will reimburse valid business expenses in
accordance with its standard expense reimbursement policies.
 
Severance Eligibility:  Following the Separation Date, you will be eligible for
severance benefits in accordance with Section 1 of your Amendment to Offer
Letter dated December 31, 2008, a copy of which is attached as Exhibit A (the
“Amendment”).  The Amendment provides that your receipt of these severance
benefits is conditioned on your execution of a general release of claims.  A
copy of this General Release of Claims is attached as Exhibit B for your
reference.  However, please note that Exhibit B may be signed no earlier than
your Separation Date.
 
At-Will Status/Early Termination:  This Transition Agreement does not modify the
at-will nature of your employment with the Company.  However, in the event the
Company finds it necessary to terminate your employment without Cause (as
defined in the Amendment) prior to the Separation Date, the Company will (1)
continue to pay your base salary from the date of such termination through the
Separation Date (the “Early Termination Period”) and (2) if you timely elect to
continue your Company group health plan coverage under COBRA, the Company will
reimburse you upon submission of written proof of premium payment for your COBRA
premiums for the Early Termination Period.
 
Initial Release of Claims.  In exchange for these transition benefits, you
completely release the Company, its affiliated, related, parent or subsidiary
entities, and its and their present and former directors, officers, and
employees (the “Released Parties”) from any and all claims you may now have or
have ever had against any of them, including, but not limited to, any claims
arising under Title VII of the Civil Rights Act of 1964, the WARN Act or any
state counterpart, the California Fair Employment and Housing Act, the Age
Discrimination in Employment Act (“ADEA”), or any other claims for violation of
any federal, state, or municipal laws, and any and all claims for attorneys’
fees and costs (the “Released Claims”).1  The parties intend for this release to
be enforced to the fullest extent permitted by law.  You understand that you are
not waiving any right or claim that cannot be waived as a matter of law, such as
workers’ compensation or unemployment insurance benefits.  The parties also
agree that you are not waiving or releasing any rights under the Amendment, the
Notice of Restricted Stock Award and Award Agreement (Restricted Stock Units)
dated June 2, 2008, or the Notice of Stock Option Grant and Stock Option Award
Agreement dated May 31, 2007.
 
Entire Agreement.  This Transition Agreement and the Amendment contain all of
our agreements and understandings and fully supersede any prior agreements or
understandings that we may have had regarding your employment with the Company
or its termination, with the exception of the Employee Invention Assignment and
Confidentiality Agreement that you signed as a condition of your
employment.  This Agreement is governed by California law and may be amended
only in a written document signed by you and the Company’s President.  If any
term in this Agreement is unenforceable, the remainder of the Agreement will
remain enforceable.
 
Consideration and Revocation Periods.  Please note that you have 21 days to
consider this Agreement (but may sign it earlier if you wish) and that you can
consult an attorney in doing so.  In addition, you can revoke this Agreement
within 7 days of signing it by sending me a certified letter to that
effect.  This Agreement shall not become effective or enforceable until the
7-day revocation period has expired.
 
If you have any questions, please feel free to call me.  We appreciate your
continued assistance during this transition.
 

Very truly yours,
/s/Jeff Housenbold
Jeff Housenbold

ACCEPTED AND AGREED:

 

 Dated: March 25, 2009   /s/Kathryn Olson       
Kathryn Olson
 

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1 You agree that because this release specifically covers known and unknown
claims, you waive your rights under Section 1542 of the California Civil Code,
or under any comparable law of any other jurisdiction.  Section 1542 states:  “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.”
 

 
 

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EXHIBIT A
 

Amendment to Offer Letter

This Amendment to Offer Letter (this “Amendment”) is entered into as of
December 31, 2008, by and between Shutterfly, Inc. (the “Company”) and Kathryn
Olson (“you”) (collectively, the “parties”).  This Amendment modifies certain
provisions of your offer letter from the Company dated May 17, 2007 (the “Offer
Letter”).
 
1. Severance.  The parties agree that the following provisions shall replace and
supersede any provisions of the Offer Letter related to severance benefits:
 
Severance
If your employment is terminated by the Company without Cause (as defined
below), other than within twelve (12) months following a Corporate Transaction
(as defined in the Plan):
 
(1) a severance payment in the amount equal to six (6) months of your final base
pay rate, and less applicable withholding taxes and regular deductions, payable
in a lump sum (“Severance”);
 
(2) the post-termination exercise period for your Company stock options will be
extended from three (3) months to twelve (12) months following your termination
date; and
 
(3) if you are covered under the Company’s group health plan as of the
termination date and timely elect to continue your group coverage under COBRA,
the Company will reimburse you upon submission of written proof of premium
payment for up to 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 the Company’s receipt of your
COBRA election notice and ending on the earlier of (i) the date you become
covered under another group or individual health plan, or (ii) the last day of
the six-month period described above.  You will be solely responsible for making
your 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 your behalf.
 
Your receipt of the foregoing severance benefits is conditioned on you having
first executed, and not revoked, a general release of claims in favor of the
Company (in a form prescribed by the Company) and the return of all Company
property.  The Severance will be paid in the form of a lump sum, in accordance
with the Company’s standard payroll procedures, commencing within sixty (60)
days following your “separation from service,” as defined under Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”) (subject to a
six-month delay if you are a “specified employee” as defined under the Treasury
Regulations under Section 409A of the Code and such delay is required to avoid
the penalty taxes that otherwise may be imposed by Section 409A of the
Code).  The parties intend that the foregoing Severance be provided in a manner
consistent with Section 1.409A-1(b)(9) of the Treasury regulations such that the
Severance will be exempt from Code Section 409A, and the Offer Letter (as
amended) and shall be administered and operated in conformity with this
intention.
 
“Cause” means your (i) gross negligence or willful misconduct in the performance
of your duties after a notice is delivered to you that specifically identifies
the manner in which the Company believes you have engaged in gross negligence or
willful misconduct and you have been provided with thirty (30) days to cure any
alleged gross negligence or willful misconduct in the performance of your
duties; (ii) commission of any act of fraud or material dishonesty with respect
to the Company; (iii) conviction of, or plea of guilty or “no contest” to, a
felony or a crime of moral turpitude or dishonesty; (iv) material breach of any
proprietary information and inventions agreement with the Company, including the
Employee Invention Assignment and Confidentiality Agreement, or any other
unauthorized use or disclosure of the Company’s confidential information or
trade secrets; or (v) repeated failure to perform the duties reasonably assigned
to you after your receipt of written notification of such failure and a
reasonable opportunity to cure such failure, which shall not be less than thirty
(30) days following such notice.
 
2. Change in Control Benefits.  The parties agree that the following provisions
shall replace and supersede any provisions of the Offer Letter related to
benefits available in the event of a Corporate Transaction or other change in
ownership or control of the Company:
 
Change in Control Benefits
In the event of your Termination (as defined below), within twelve (12) months
following a Corporate Transaction (as defined in the Plan), you will receive (A)
items (1) and (2) of the Severance (on the terms and conditions provided above)
and (B) if the Company’s equity awards are assumed in the Corporate Transaction,
accelerated vesting of the number of your then-unvested Company stock option
shares and restricted stock units that would have vested during the twelve (12)
months following the date of such termination (collectively, the “Change in
Control Benefits”).  The Change in Control Benefits would be provided in lieu of
any other severance-related benefits for which you may be eligible.  Your
receipt of the Change in Control Benefits is conditioned on you having first
executed, and not revoked, a general release of claims in favor of the Company
(in a form prescribed by the Company) and the return of all Company property.
 
“Termination” means (a) a termination of your employment by the Company or its
successor without Cause or (b) your resignation within three (3) months
following an event constituting Good Reason, provided that you have given
written notice to the Company of such event within forty-five (45) days of its
occurrence and the Company has failed to cure such event within thirty (30) days
following receipt of such notice.  For purposes of this paragraph, “Good Reason”
means (i) a material reduction or change in your duties and responsibilities as
in effect immediately prior to the Corporate Transaction; (ii) the relocation of
the Company’s corporate office at which you work by more than fifty (50) miles
from its location immediately prior to such Corporate Transaction, which
materially increases your commuting distance or (iii) a material reduction in
your annual compensation, including base salary and bonus.
 
3. Miscellaneous.  This Amendment, together with the Offer Letter (as amended)
and other agreements referenced therein, contain the entire agreement between
you and the Company concerning your employment with the Company, and supersede
any previous agreements or understandings, whether written or oral.  The parties
acknowledge and agree that this Amendment does not affect the at-will nature of
your employment relationship with the Company.  This Amendment may be amended
solely in a written document executed on behalf of both parties.
 
IN WITNESS WHEREOF, the parties hereby execute this Amendment to Offer Letter as
of the date first above written.
 
SHUTTERFLY, INC.
By:   /s/Jeff
Housenbold                                                           
Jeff Housenbold
President & CEO
/s/Kathryn Olson
Kathryn Olson

 
 

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EXHIBIT B
 
GENERAL RELEASE OF CLAIMS
 
This General Release of Claims is executed by Kathryn Olson (“you”), in
accordance with your Amendment to Offer Letter with Shutterfly, Inc., dated
December 31, 2008 (the “Amendment”).
 
     In return for the severance benefits set forth in Section 1 of the
Amendment, you hereby release Shutterfly, Inc., its affiliated, related, parent
or subsidiary corporations, and its and their present and former directors,
officers, and employees (the “Released Parties”) from all claims of any kind,
known and unknown,2 which you may now have or have ever had against any of them,
or arising out of your relationship with any of them, including all claims
arising from your employment or the termination of your employment, whether
based on contract, tort, statute, local ordinance, regulation or any comparable
law in any jurisdiction (“Released Claims”).  By way of example and not in
limitation, the Released Claims shall include any claims arising under Title VII
of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Worker
Adjustment and Retraining Notification Act, the Age Discrimination in Employment
Act, and the California Fair Employment and Housing Act, or any other comparable
state or local law, as well as any claims asserting wrongful termination, breach
of contract, breach of the covenant of good faith and fair dealing, negligent or
intentional misrepresentation, and defamation and any claims for attorneys’
fees.  The parties intend for this release to be enforced to the fullest extent
permitted by law.  You understand that you are not waiving any right or claim
that cannot be waived as a matter of law, such as workers' compensation or
unemployment insurance benefits.  Additionally, you are not waiving or releasing
your rights to severance benefits in accordance with the Amendment or your right
to exercise any vested Restricted Stock Units granted to you under the Notice of
Restricted Stock Award and Award Agreement (Restricted Stock Units) dated
June 2, 2008, or any vested stock options granted to you under the Notice of
Stock Option Grant and Stock Option Award Agreement dated May 31, 2007.
 
    You agree not to file or initiate any lawsuit concerning the Released
Claims.  You understand that this paragraph does not prevent you from filing a
charge with or participating in an investigation by a governmental
administrative agency; provided, however, that you hereby waive any right to
receive any monetary award resulting from such a charge or investigation.
 
    You acknowledge that the release of claims under the Age Discrimination in
Employment Act (“ADEA”) is subject to special waiver protection.  Therefore, you
acknowledge the following:  (a) you have had 21 days to consider this General
Release of Claims (but may sign it at any time beforehand if you so desire); (b)
you can consult an attorney in doing so; (c) you can revoke this General Release
of Claims within seven (7) days of signing it by sending a certified letter to
that effect to Peter Navin at 2800 Bridge Parkway, Redwood City CA 94065; and
that (d) this General Release of Claims shall not become effective or
enforceable and no severance benefits shall be provided until the 7-day
revocation period has expired.
 
    The parties agree that this General Release of Claims and the Amendment
contain all of our agreements and understandings with respect to their subject
matter, and may not be contradicted by evidence of any prior or contemporaneous
agreement.  This General Release of Claims shall be governed by the laws of the
State of California.  If any provision of this General Release of Claims or its
application to any person, place, or circumstance is held by a court of
competent jurisdiction to be invalid, unenforceable, or void, the remainder of
this General Release of Claims and such provision as applied to other person,
places, and circumstances will remain in full force and effect.
 
Please note that this General Release of Claims may be signed no earlier than
the Separation Date, and that your eligibility for severance benefits is
conditioned upon meeting the terms set forth in the Amendment.
 

/s/Kathryn
Olson                                                                                 Date:  March
25, 2009
Kathryn Olson

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2 You further agree that because this Release Certificate specifically covers
known and unknown claims, you waive your rights under Section 1542 of the
California Civil Code or under any other comparable law of another jurisdiction
that limits a general release to claims that are known to exist at the date of
this release.  Section 1542 of the California Civil Code states as follows:  “A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.”