exv10w18



 





Exhibit 10.18




CONFIDENTIAL TREATMENT REQUESTED. CERTAIN PORTIONS OF THIS

DOCUMENT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR

CONFIDENTIAL TREATMENT AND, WHERE APPLICABLE, HAVE BEEN MARKED

WITH AN ASTERISK TO DENOTE WHERE OMISSIONS HAVE BEEN MADE. THE

CONFIDENTIAL MATERIAL HAS BEEN FILED SEPARATELY WITH THE

SECURITIES AND EXCHANGE COMMISSION.




SUPPLY AGREEMENT




          AGREEMENT, made as of April 20, 2007, between ShutterFly, Inc. (“Customer”) and FUJIFILM
U.S.A., Inc. (“Fuji”) (the “Agreement”).




W I T N E S S E T H:




          WHEREAS, Fuji distributes photographic products, including standard and professional color
paper (“Paper”), processing chemistry (“Chemistry”) and the equipment set forth on Exhibit A
attached hereto (“Equipment”); and




          WHEREAS, Customer desires to purchase and Fuji desires to provide all of Customer’s in-house
requirements for Paper and Chemistry exclusively from Fuji, and to purchase Equipment on the terms
set forth in this Agreement solely for use in Customer’s retail web-based operations for the term
hereof; and




          NOW, THEREFORE, Customer and Fuji hereby agree as follows:




     1. Term; Termination.



     1.1 This Agreement shall be in effect for three (3) years, commencing May 1, 2007 (the
“Term”).



     1.2 This Agreement may be terminated prior to expiration of the Term as follows:



          (a) Upon any of the following events either party may give notice of termination, effective
immediately: (i) the other party becomes insolvent or admits its inability to pay its debts
generally as they come due; (ii) any sheriff, marshall, custodian, trustee or receiver is appointed
by order of any court of competent jurisdiction to take charge of or sell any material portion of
the other party’s property; (iii) a case is filed by the other party under the Bankruptcy Code or
any other insolvency law; (iv) a case is filed against the other party without such party’s
application or consent under the Bankruptcy Code or any other insolvency law and such case
continues undismissed for ninety (90) days; (v) the other party makes a general assignment for the
benefit of creditors; or (vi) the other party is dissolved or liquidated or takes any corporate
action for such purpose; or




          (b) Either party may terminate this Agreement if the other shall commit a material breach of
this Agreement and such breach shall continue more than thirty (30) days after written notice of
such breach is given to breaching party.




 









 








     2. Products; Pricing.



          (a) Paper and Chemistry. Customer shall purchase from Fuji or its affiliates all of
Customer’s in-house requirements for Paper (except where Fuji’s Paper is not reasonably compatible
with Customer’s processor or if Fuji is not able to fulfill Customer’s requirements) and Chemistry
(together with Fuji’s Paper, the “Products”) consistent with the pricing terms below and on Exhibit
B attached hereto. The pricing terms set forth below and on Exhibit B attached hereto may be
amended by Fuji from time to time due to improvements in, or changes in the availability of, the
Products, provided, that the price per unit of the Products does not increase. Customer shall use
the Products internally and shall not resell same. This Agreement [*]; accordingly, this Agreement
does not require [*] Fuji’s Paper. However, if chosen, Customer could [*].




          (b) Equipment. The parties hereto agree that Equipment will be provided by Fuji in
accordance with the terms and conditions set forth on Exhibit A attached hereto.




     2.1 Customer shall purchase [*] Paper [*] the applicable list price for an invoice [*], and
shall [*] and mailed to Customer’s billing address. The parties acknowledge that list price [*]
may change from time to time, but Customer’s [*] pricing will remain equivalent to the [*] pricing
[*] offered upon execution of this Agreement.



          In exchange for Customer’s best efforts [*] on Customer’s [*], Customer [*], which is included
in the [*].




          Customer shall purchase [*] Paper [*] the applicable list price for an invoice [*]. No [*]
applies to [*] Paper




     2.2 [*]: (a) For optimized truckload lot size shipments of 4 inch x 1750 foot rolls of bulk
[*] Paper in production pallets of same surface from Fuji’s manufacturing facility located in
Greenwood, South Carolina to Customer’s, Hayward, CA or Charlotte, NC facilities (or any other new
Customer facilities that may open in the United States over the next three (3) years of the
Agreement), there shall be a [*]. (b) For optimized truckload lot size shipments of full
production pallets of same size and surface Paper (other than 4” x 1750’ rolls) from Fuji’s
manufacturing facility located in Greenwood, South Carolina to Customer’s, Hayward, CA facilities,
there shall be [*] (together with subsection (a) of this Section 2.2, the “[*]”). A guide for
planning direct shipment from Fuji’s manufacturing facility located in Greenwood, South Carolina to
Customer’s California and North Carolina facilities (or any other new Customer facilities that may
open in the United States over the next three (3) years of the Agreement) is attached as Exhibit C
hereto.



          For shipments of Paper from Fuji’s distribution centers to Customer, there shall be no [*].
Notwithstanding the foregoing, Paper orders of $1,000 or more shall include surface freight charges
in the Billing Price. The [*], if earned, will be calculated on a quarterly basis and remitted to
Customer within thirty (30) days of calculation in the form of a credit issued to Customer.






 




			
	[*]	 	Confidential treatment requested




 









 










     2.3 All payments shall be due net sixty (60) days from invoice. Freight will be prepaid by
Fuji on shipments of $1,000 or more.



     3. Warranty and Product Return Policy.



          (a) This Agreement does not in any way expand or supersede any warranty of Fuji with respect
to the quality or performance of any product, all of which warranties if any, are enclosed with
such products or set forth in the terms of sale that apply to such products. ANY SUCH WARRANTY (IF
ANY) IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED (INCLUDING, WITHOUT
LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE). FUJI SHALL NOT BE
LIABLE FOR SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES.




          (b) Full credit or replacement will be made only for Products found to be defective in
manufacture, labeling or packaging but such Products may be returned only if the defects are
reported to the Fujifilm Regional Distribution Center serving the Customer’s account within ten
days after receipt of the Products and written authorization is given to return such Products.




     4. Arbitration. All disputes, controversies or differences which arise between the
parties, out of or in relation to or in connection with this Agreement, which cannot be amicably
settled shall be finally settled by arbitration before an arbitrator pursuant to the rules of the
American Arbitration Association. Arbitration may be commenced at any time by the party seeking
resolution by giving written notice to the other party that such dispute has been referred to
arbitration pursuant to the terms of this Section. Arbitration requested by Customer shall be
conducted in New York, New York and arbitration requested by Fuji shall be conducted in San
Francisco, California. The arbitrator shall be selected by the mutual Agreement of the parties,
but if the parties do not so agree within twenty (20) days after the date of the arbitration
notice, the arbitrator shall be selected pursuant to the rules of the American Arbitration
Association. Any award rendered by the arbitrator shall be conclusive and binding upon the
parties. This provision for arbitration shall be specifically enforceable by the parties and the
decision of the arbitrator in accordance herewith shall be final and binding and there shall be no
right of appeal therefrom.



     5. General.



     5.1. Except as provided herein, neither party hereto may assign its rights or delegate its
obligations hereunder without the prior consent of the other party. Any such purported assignment
or delegation, in the absence of such consent, will be void and without effect.



     5.2 Neither party shall be responsible or liable in any way for failure or delay in carrying
out the terms of this Agreement resulting from any cause or circumstances beyond its reasonable
control, including but not limited to, fire, flood, war, labor difficulties, interruption of
transit, accident, explosion, civil commotion, and acts of any governmental authority. No such
failure or delay shall terminate this Agreement, and each party shall complete its obligations
hereunder as promptly as reasonably practicable following cessation of the cause or circumstances of such
failure or delay.



 









 





     5.3 The waiver, express or implied, by either party of any right hereunder will not constitute
a waiver of any other right.



     5.4 All notices, consents, approvals, or other communications hereunder shall be in writing
and shall be deemed given if delivered personally or sent by overnight courier service, or sent by
facsimile or e-mail, promptly confirmed by overnight courier service, as set forth above, addressed
to the parties at the following addresses (or at such other address for a party as shall be
specified by like notice, provided that notice of a change of address shall effective only upon
receipt):



	 	 	 	 	 
	 

	 	If to Fuji:
	 	If to Customer:
	 
	 	 	 	 
	 

	 	FUJIFILM U.S.A., Inc.
	 	Shutterfly, Inc.
	 

	 	200 Summit Lake Drive
	 	2800 Bridge Parkway
	 

	 	Valhalla, New York 10595
	 	Redwood City, CA 94065
	 

	 	Attention: Doug Fachnie
	 	Attn: Chief Financial Officer
	 

	 	Fax: 914-789-8696
	 	Fax: 650-654-1299
	 

	 	Email: dfachnie@fujifilm.com
	 	Email:srecht@shutterfly.com
	 
	 	 	 	 
	 

	 	with copies to (which shall
	 	with copies to (which shall
	 

	 	not constitute notice):
	 	not constitute notice):
	 
	 	 	 	 
	 

	 	FUJIFILM Holdings America Corporation
	 	Shutterfly, Inc.
	 

	 	200 Summit Lake Drive
	 	2800 Bridge Parkway
	 

	 	Valhalla, New York 10595
	 	Redwood City, CA 94065
	 

	 	Attention: Legal Division
	 	Attn: Legal
	 

	 	Fax: (914) 789 8514
	 	Fax: 650-654-1299
	 

	 	Email: jfile@fujifilm.com
	 	Email: legal@shutterfly.com





Any notice, consent, approval and other communication shall be deemed given, in the case of
overnight courier service, on the next business day following its deposit with the courier, and, in
the case of facsimile or e-mail, upon transmission if confirmed by courier as set forth above.




     5.5 The validity, construction and performance of this Agreement will be governed by and
interpreted in accordance with the laws of the State of New York (excluding its rules of conflict
of laws other than Section 5-1401 of the New York General Obligations Law).



     5.6 This Agreement supersedes all prior oral and written communications between the parties
hereto concerning, and constitute their sole and exclusive understanding with respect to, the
subject matter hereof. This Agreement may not be amended except by a writing signed by both
parties hereto.



 









 





[SIGNATURE PAGE FOLLOWS]




 









 








          IN WITNESS WHEREOF, the parties, intending to be legally bound, have caused this Agreement to
be executed by their duly authorized representatives as of the date and year first above written.




	 	 	 	 	 	 	 	 	 
	FUJIFILM U.S.A., INC.	 	 	 	SHUTTERFLY, INC.
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Hiro Saki
	 	 	 	By:
	 	/s/ Stephen E. Recht
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	Hiro Sakai
	 	 	 	Name:
	 	Stephen E. Recht
	Title:

	 	Senior Executive Vice President
	 	 	 	Title:
	 	Chief Financial Officer






 









 





EXHIBIT A




Customer Name indicated on Agreement:   
       ShutterFly, Inc.




Date Agreement Commences:  
          
          
            
      Customer Initials:   
                 



FUJIFILM U.S.A., Inc., 200 Summit Lake Drive, Valhalla, New York 10595-1356, hereinafter
referred to as “ Fuji”, agrees to sell to ShutterFly, Inc. with main offices at 2800 Bridge
Parkway, Redwood City, CA, hereinafter referred to as “Customer”, and Customer agrees to purchase
from Fuji, the Product(s) (as hereinafter defined), upon the terms and conditions herein set forth.



In consideration for Fuji’s agreement to provide Customer temporarily with the Product(s) (as
listed below) at no additional charge, Customer agrees to the terms and conditions set forth
herein, in addition to the terms and conditions set forth in the Agreement.




	 	 	 	 	 
	 	 	PRODUCT	 
	PRODUCT(S) DESCRIPTION	 	PRICE	 
	[*]
	 	[*]     USD
	[*]
	 	[*]     USD
	[*]
	 	[*]     USD





General Terms and Conditions. The term of this Exhibit A shall coincide with the term of the
Agreement. During the term of the Agreement, Customer shall be solely responsible for the upkeep
and maintenance of the Product(s), and if returned to Fuji, shall return the Product(s) in the same
condition in which it was received from Fuji, ordinary wear and tear excepted.



Title to the Product(s) shall remain with Fuji, and such Product(s) shall be returned promptly to
Fuji upon the expiration of the Term (as defined in the Agreement) or earlier termination of the
Agreement, unless Customer elects to purchase such Product(s). Customer shall be entitled to
purchase such Product(s) at the end of the Term or, if both Fuji and Customer mutually consent to
the earlier termination of the Agreement, prior to the end of the Term. In the event Customer so
elects to purchase such Product(s), Customer shall provide written notice thereof to Fuji, after
which Fuji shall invoice Customer for such Product(s) with payment terms of Net 30 days from date
of invoice. The purchase price set forth in such invoice shall be (i) at the applicable Product
Price set forth above if Customer elects to purchase such Product(s) prior to the end of the Term
by mutual consent of the parties or (ii) a price mutually agreed upon by Customer and Fuji if
Customer elects to purchase such Product(s) at the end of the Term. Prices and terms stated in
this Exhibit A are subject to change by Fuji at any time upon thirty (30) days’ prior written
notice to Customer.



Customer hereby authorizes Fuji to execute on its behalf and file a UCC-1 to evidence its retention
of a security interest in the applicable Product.



Customer shall not reproduce, modify or otherwise alter the Product(s), or remove such Product(s)
from the address indicated above, without the express written consent of Fuji.



This Exhibit A does not in any way expand or supersede any warranty of Fuji with respect to the
quality or performance of the Product(s), all of which warranties, if any, are enclosed with such
products when shipped or set forth in the terms of sale that apply to such Products. ANY SUCH
WARRANTY (IF ANY) IS EXCLUSIVE AND IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED (INCLUDING,
WITHOUT LIMITATION, WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE). FUJI
SHALL NOT BE LIABLE FOR SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES ARISING FROM THE PRODUCT(S).



Upon notice by Fuji that Customer breached any of the terms or provisions set forth in the
Agreement, including any failure to pay or to purchase all of its Paper and Chemistry requirements
from Fuji, or upon the reasonable demand of Fuji, Customer shall promptly return to Fuji, or
contact Fuji’s sales representative to arrange for the






 




			
	[*]	 	Confidential treatment requested




 









 









removal of, the Product(s) listed above. In the event Customer does not return, or make such
arrangements for removal of, the Product(s), Fuji may, subject to applicable law, take all actions
necessary to repossess such Product(s), with Customer bearing all reasonable costs thereof incurred
by Fuji in connection with such actions. In addition to any and all other damages permitted by law
or herein, Customer shall become liable to Fuji for payment of rent on each item of the Product(s)
at a rate of $200 per day, commencing five days from the date upon which notice of repossession is
sent by Fuji and continuing until such time as Fuji is allowed to regain possession of the
Product(s).




 









 








EXHIBIT B




CONFIDENTIAL SHUTTERFLY.COM




CHEMICAL PRICE




	 	 	 	 	 	 	 	 	 	 	 
	FUJIFILM	 	Future	 	 	 	 	 	 	 	 
	Material	 	FUJIFILM	 	 	 	Package	 	 	 	[*] Invoice
	#	 	Material #	 	Product Name	 	Unit	 	Unit Makes	 	Price
	[*]

[*]

[*]

[*]

[*]

	 	[*]

[*]

[*]

[*]

[*]
	 	[*]

[*]

[*]

[*]

[*]
	 	55 Gallon Drum

55 Gallon Drum

55 Gallon Drum

55 Gallon Drum

1 Gallon Bottle
	 	212 Gallons

220 Gallons

220 Gallons

7040 Gallons
	 	[*]

[*]

[*]

[*]

[*]








 




			
	[*]	 	Confidential treatment requested




 









 










EXHIBIT C




Truckload Configuration Guideline

For shipments from Fujifilm manufacturing, Greenwood, South Carolina




     Bulk Packaged Product:



     Bulk Packaged paper is in light tight bags only, no protective corrugated shipper provided.



     4"x1750' and 5"x1150' are examples of bulk packaged product.



     24 pallets required to fill truck trailer on one layer, bulk paper cannot be stacked in
transit.



     Standard manufacturing configuration: one size, same surface per pallet (nominal quantity).



     From time to time, some pallets may be less than nominal quantity for production reasons.



     Color paper in widths of 16 inches or wider are boxed, however, like bulk package, they cannot
be stacked



     without significant risk of product damage in transit.





     Box Packaged Product:



     38 pallets required to fill truck trailer with 3.5 to 12 inch widths in standard 610, 575 or
295 foot lengths, on two layers.



     Color paper in widths of 16 inches or wider are boxed, however, like bulk package, they cannot
be stacked




     without significant risk of product damage in transit.




     Standard manufacturing configuration: one size, same surface per pallet (nominal quantity)



     From time to time, some pallets may be less than nominal quantity for production reasons.



     Mixed Box and Bulk Packaged Product:



     A load bar is used to prevent the second layer of boxed product from falling over onto bulk
product.



     There are 24 pallet spaces on the truck floor. Maximum product weight about 43,000 pounds at
this writing.



     The following are examples of permissible shipment configurations, subject to the restrictions
above and precise weight of products ordered:



	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bulk Pallets	 	Box Pallets	 	Total	 	Weight (Aprox)
	24
	 	 	 	 	 	 	24	 	 	 	38,208	 
	22
	 	 	4	 	 	 	26	 	 	 	39,224	 
	20
	 	 	8	 	 	 	28	 	 	 	40,240	 
	18
	 	 	12	 	 	 	30	 	 	 	41,256	 
	16
	 	 	16	 	 	 	32	 	 	 	42,272	 
	14
	 	 	16	 	 	 	30	 	 	 	39,088	 
	12
	 	 	20	 	 	 	32	 	 	 	40,104	 
	10
	 	 	24	 	 	 	34	 	 	 	41,120	 
	8
	 	 	28	 	 	 	36	 	 	 	42,136	 
	6
	 	 	30	 	 	 	36	 	 	 	41,052	 
	4
	 	 	34	 	 	 	38	 	 	 	42,068	 
	2
	 	 	36	 	 	 	38	 	 	 	40,984	 
	0
	 	 	38	 	 	 	38	 	 	 	39,900	 






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May 22, 2007




Shutterfly, Inc.

2800 Bridge Parkway

Redwood City, CA 94065

Attn: Chief Financial Officer




To the Chief Financial Officer:



Reference is made to that. certain Supply Agreement between Shutterfly, Inc. (“Shuttertly”) and
Fuji Hunt Photographic Chemicals, Inc., now known as FUJIFILM Hunt Chemicals U.S.A., Inc. (“Fuji
Hunt”), an affiliate of FUIIFILM U.S.A., Inc, (“FUJIFILM”), dated November 22, 2004 and as amended
May 17, 2005 (the “2004 Supply Agreement”).



The parties hereto acknowledge and agree that pursuant to the 2004 Supply Agreement, title to
Rockwell Hitec HV3 Automatic Chemical Mixer #1 passed to Shutterfly on April 22, 2006.
Furthermore, in consideration of executing the Supply Agreement dated April 20, 2007 by and between
Shutterfly and FUJIFILM (the “2007 Supply Agreement”), Fuji Hunt will transfer title to Rockwell
Hitec HV3 Automatic Chemical Mixer #2 on the effective date of the 2007 Supply Agreement.



The parties hereto also acknowledge and agree that the 2004 Supply Agreement shall terminate on the
effective date of the 2007 Supply Agreement.



This Agreement may be executed in any number of counterparts, each of which when executed and
delivered shall be deemed an original and all of which counterparts, when taken together, shall
constitute one and the same agreement.




- 12 -









 







If the foregoing correctly sets forth our understanding as to the matters covered hereby, please
execute and return to the undersigned the enclosed copy of this letter.




	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	FUJIFILM HUNT CHEMICALS U.S.A., INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Guy M. Poisson
	 

	 	 	 	 
	 	 	Name: Guy M. Poisson
	 	 	Title: Director of Credit and Risk Management






	 	 	 	 	 
	ACCEPTED AND AGREED TO:	 	 
	 
	 	 	 	 
	SHUTTERFLY, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Stephen E. Recht	 	 
	 

	 	 	 	 
	Name: Stephen E. Recht	 	 
	Title: Chief Financial Officer	 	 
	 
	 	 	 	 
	FUJIFILM U.S.A., INC.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 






cc: Shutterfly Legal





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