mark_rubashofferletter.htm


    Exhibit 10.20


    
 

    Personal
and Confidential

     

    


     

    November
27, 2007

     

    Mark J.
Rubash

    3392
Monte Sereno Terrace

    Fremont,
CA 94539

    


    RE: Offer
of Employment

     

    Dear
Mark:

     

    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,
Chief Financial Officer reporting to me. If you decide to join us, then your
anticipated start date will be November 29, 2007.

     

    Compensation

     

    Your
annual base pay will be $280,000, 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 2008. 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 $37,500, repayable on a pro-rata basis
if you voluntarily terminate your employment with the Company within twelve (12)
months from your actual employment start date.

     

    Stock
Option

     

    Subject
to the approval of the Company’s Board of Directors, you will be granted a stock
option (the “Option”) to purchase 270,000 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, based on your anticipated
start date above, the grant of your Option is anticipated to occur on November
30, 3007, and this is also anticipated to be your vesting start
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.

     

    Severance

     

    After
expiration of the Introductory Period (defined below), if your employment is
involuntarily terminated without Cause (as defined below), then you will receive
an amount (the “Severance”) equal to six (6) months salary (determined using the
monthly rate in effect on the date of termination of your employment) which will
be paid over the following six (6) months (subject to a six-month delay if such
delay is required to avoid the penalty taxes that may otherwise be imposed by
Section 409A of the Internal Revenue Code of 1986, as amended), provided you
have executed, and not revoked, a general release of claims in favor of the
Company (in a form prescribed by the Company) and returned all Company
property.

     

    “Cause”
shall mean your (i) 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 attached to this letter as Exhibit A, 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 receiving written notification of such failure and a
reasonable opportunity to cure such failure which shall not be less than
30 days following such notice.

     

    Change
in Control Benefits

     

    If the
Company is subject to a Corporate Transaction (as defined in the Plan) and
within the first six (6) months following such Corporate Transaction (1) you
resign because either you are no longer the Chief Financial Officer of the
Company or your role is materially diminished from your role immediately prior
to such Corporate Transaction, (2) you resign because the Company’s corporate
office at which you work is moved at least 50 miles from its location
immediately prior to such Corporate Transaction or (3) your employment is
terminated by the Company, or a successor corporation, other than for Cause (as
defined above), then (A) you will receive the Severance (on the terms and
conditions provided above) and (B) if the Option is assumed in the Corporate
Transaction, on the date of such termination you shall vest in an additional
number of shares as would have vested in the twelve (12) months following the
date of such termination, and the Option shall remain exercisable for the
applicable period specified in the stock option agreement (the Option’s vesting
acceleration and the Severance are collectively referred to as the “Change in
Control Benefits”).  Your receipt of the Change of 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.

     

    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 November 29, 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 by November 29, 2007, we have not received a copy of
this letter executed by you, then we will assume you have decided not to join
the Company.

     

    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/ Mark J.
Rubash                                           Date:   November
27, 2007

            Mark J.
Rubash

     

    Exhibit
A: Employee Invention Assignment and Confidentiality Agreement

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    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 [date].

     

    
      	
              SHUTTERFLY,
      INC.

               

            	
              Employee:

            
	
              By:

            	
              
                /s/
      Jeff Housenbold

              

            	
              
                /s/
      Mark J. Rubash

              

            
	 
      	
              Jeff
      Housenbold

              CEO
      & President

            	
               Mark J.
      Rubash

            


    

    


     

    


     

    


     

     

    


     

    


     

    Signature
Page to Employee Invention Assignment and Confidentiality Agreement

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    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.

     


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    APPENDIX
B

     

    PRIOR
MATTER