Document:

sflyexh_10-05.htm

Exhibit 10.05

 

Personal and Confidential

 

 

December 17, 2007

 

 

Peter A. Navin

1819 Polk Street #201

San Francisco, CA 94109

 

RE: Offer of Employment

 

Dear Peter:

 

Shutterfly, Inc. (the “Company” or “Shutterfly”) is pleased to offer you the opportunity to join Shutterfly. You are being offered a position as Vice President Human Resources reporting to me. If you decide to join us, then your anticipated start date will be January 3, 2008.

 

Compensation

 

Your annual base pay will be $215,000, 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 $20,000, 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 90,000 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 February 29, 2008.  Your vesting will begin on your hire 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.

 

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 December 19, 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/Peter A. Navin                                                                           Date:   12/19,
2007

           Peter A. Navin

 

 

Exhibit A: Employee Invention Assignment and Confidentiality Agreementsflyexh_10-06.htm

Exhibit 10.06

 

Amendment to Offer Letter

This Amendment to Offer Letter (this “Amendment”) is entered into as of December 26, 2008, by and between Shutterfly, Inc. (the “Company”) and Peter Navin (“you”) (collectively, the “parties”).  This Amendment modifies certain provisions of your offer letter from the Company
dated December 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
	
Peter Navin

/s/Peter Navin

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