Amendment to Employment Agreement
Exhibit
10.02
Amendment
to Employment Agreement
This
Amendment (the “Amendment”)
to the Letter Agreement dated January 5, 2005 (the “Agreement”)
by and between you, Xxxxxxx X. Xxxxxxxxxx, and Shutterfly, Inc. (the “Company”),
is effective as of December 8, 2008 (the “Effective
Date”).
Recitals
Whereas,
you and the Company have previously entered into an Agreement dated as of
January 5, 2005, whereby the Company confirmed your employment upon certain
terms and conditions; and
Whereas,
you and the Company agree it is advisable to amend the Agreement in order to
bring such Agreement into compliance with Section 409A of the Internal Revenue
Code of 1986, as amended, (the “Code”)
and its regulations (“Section
409A”),
Now,
Therefore, for good and valuable consideration, the receipt, sufficiency
and adequacy of which is hereby acknowledged, you and the Company hereby agree
to the following changes to the Agreement as follows:
Any
capitalized terms used herein but not defined herein shall have the meanings
ascribed to them in the Agreement.
(1) The
last paragraph of Section 3 is deleted and replaced with the
following:
In the event you terminate
employment with the Company as a result of Involuntary Termination or
Termination without Cause, each as defined below, you may exercise the
outstanding, vested portion of any of your options for Company common stock
during the twenty-four (24) month period commencing on the date of your
termination of employment, provided, however, that in no event may any option be
exercised after its expiration date. In the event you terminate
employment with the Company as the result of Termination for Disability or your
death, the outstanding, vested portion of any of such options may be exercised
during the twelve (12) month period commencing on the date of your Termination
for Disability or your death, provided, however, that in no event may any option
be exercised after its expiration date. In the event you terminate employment
with the Company as a result of Voluntary Termination or Termination for Cause,
you may exercise the outstanding, vested portion of any of such options during
the period allowed under the 1999 Stock Plan.
(2) Section
5(a) is deleted and replaced with the following:
“Good Reason” means your
resignation within three (3) months following a change in your title of
President and CEO or in your reporting to the Board, or a material reduction in
your duties or responsibilities that is inconsistent with your position,
provided, further, that Good Reason shall also include the circumstance where
following a Change of Control, as defined below, you are not the President and
CEO of a successor entity to the Company following a Change in Control (or
otherwise your duties and responsibilities for such successor entity to the
Company are materially reduced from those described in Section 1 herein as would
be applied to the successor entity following a Change of Control); (ii) a
requirement by the Company that you relocate your principal office to a facility
more than 60 (sixty) miles from the Company’s current Redwood City, California
headquarters; or (iii) a material reduction in your annual base salary (other
than in connection with a general decrease in the salary of all executives of
the Company), in any case, without your written consent; provided that you have
given forty-five (45) days written notice to the Company of such occurrence and
thirty (30) days opportunity to cure.
(3) Section
6(b) is deleted and replaced with the following:
In the event of your
Termination without Cause or your Involuntary Termination, you will be entitled
to (i) a lump sum payment equivalent to your then-current base salary for a
period of twelve (12) months and the maximum Target Bonus for the year in which
the termination occurred; and (ii) accelerated vesting of that portion of any
unvested options for Company common stock and restricted stock units for Company
common stock that would have vested over the next twelve (12) months immediately
following such Involuntary Termination or Termination without
Cause.
(4) Section
6(c) is deleted and replaced with the following:
In the event of your
Involuntary Termination or Termination without Cause within twelve (12) months
following the closing of a Change in Control, in lieu of any payment under
Section 6(b) above, you will be entitled to (i) a lump sum payment equivalent to
your then-current base salary for a period of fifteen (15) months and the
maximum Target Bonus for the year in which the termination occurred plus an
additional one fourth (1/4) of the maximum Target Bonus for the year in which
the termination occurred; and (ii) accelerated vesting of all of your unvested
options and restricted stock units.
(5) The
following sentence is added at the end of the first paragraph of Section
9:
Cash severance and other
benefits that are subject to Section 409A of the Code shall be reduced prior to
cash benefits or other benefits that are not subject to Section 409A of the
Code.
(6) The
following is included as a new Section 18:
Section
409A Compliance. To the extent (i) any payments to which you
become entitled under this Agreement, or any agreement or plan referenced
herein, in connection with your termination of employment with the Company
constitute deferred compensation subject to Section 409A of the Code and (ii)
you are deemed at the time of such termination of employment to be a “specified”
employee under Section 409A of the Code, then such payment or payment shall not
be made or commence until the earliest of (i) the expiration of the six
(6)-month period measured from the date of your “separation from service” (as
such term is at the time defined in Treasury Regulations under Section 409A of
the Code with the Company; or (ii) the date of your death following such
separation from service; provided, however, that such deferral shall only be
effected to the extent required to avoid adverse tax treatment to you, including
(without limitation) the additional twenty percent (20%) tax for which you would
otherwise be liable under Section 409A(a)(1)(B) of the Code in the absence of
such deferral. Upon the expiration of the applicable deferral period,
any payments which would have otherwise been made during that period (whether in
a single sum or in installments) in the absence of this paragraph shall be paid
to you or your beneficiary in one lump sum.
If required by Section
409A of the Code, for purposes of this Agreement, no payment will be made to you
upon termination of your employment unless such termination constitutes a
“separation from service” within the meaning of Section 409A of the Code, and
Section 1.409A-1(h) of the regulations thereunder.
Except
as specifically set forth above, all terms and conditions of the Agreement shall
remain in full force and effect. This Amendment shall be deemed to
form an integral part of the Agreement. In the event of any
inconsistency or conflict between the provisions of the Agreement and this
Amendment, the provisions of this Amendment will prevail and
govern.
This
Amendment may be executed in counterparts and, upon delivery of counterparts
which together show the execution by both parties hereto, shall constitute one
agreement which shall inure to the benefit of and be binding upon the parties
hereto.
In
Witness Whereof, the parties hereto have caused this Amendment to be
entered into as of the Effective Date.
| Shutterfly, Inc. | Xxxxxxx X. Xxxxxxxxxx |
| By:/s/Xxxx X. Xxxxxx | By: /s/Xxxxxxx X. Xxxxxxxxxx |
|
Name:
Xxxx X. Xxxxxx
|
|
|
Title:
Senior Vice President, Chief Financial Officer
|
Date:
March 9, 2009
|
