sc13da308009003_02272015.htm

0000921895-15-000514.txt : 20150227 0000921895-15-000514.hdr.sgml : 20150227 20150227131658 ACCESSION NUMBER: 0000921895-15-000514 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20150227 DATE AS OF CHANGE: 20150227 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SHUTTERFLY INC CENTRAL INDEX KEY: 0001125920 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PHOTOFINISHING LABORATORIES [7384] IRS NUMBER: 943330068 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-82470 FILM NUMBER: 15656597 BUSINESS ADDRESS: STREET 1: 2800 BRIDGE PARKWAY CITY: REDWOOD CITY STATE: CA ZIP: 94065 BUSINESS PHONE: 650-610-5200 MAIL ADDRESS: STREET 1: 2800 BRIDGE PARKWAY CITY: REDWOOD CITY STATE: CA ZIP: 94065 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Marathon Partners Equity Management, LLC CENTRAL INDEX KEY: 0001353311 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: ONE GRAND CENTRAL PLACE STREET 2: 60 EAST 42ND STREET, SUITE 2306 CITY: NEW YORK STATE: NY ZIP: 10165 BUSINESS PHONE: 212-490-0399 MAIL ADDRESS: STREET 1: ONE GRAND CENTRAL PLACE STREET 2: 60 EAST 42ND STREET, SUITE 2306 CITY: NEW YORK STATE: NY ZIP: 10165 FORMER COMPANY: FORMER CONFORMED NAME: MARATHON PARTNERS EQUITY MANAGEMENT, LLC DATE OF NAME CHANGE: 20140513 FORMER COMPANY: FORMER CONFORMED NAME: CIBELLI CAPITAL MANAGEMENT LLC DATE OF NAME CHANGE: 20060405 FORMER COMPANY: FORMER CONFORMED NAME: Cibelli Capital Management LLC DATE OF NAME CHANGE: 20060214 SC 13D/A 1 sc13da308009003_02272015.htm AMENDMENT NO. 3 TO THE SCHEDULE 13D sc13da308009003_02272015.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No. 3)1

Shutterfly, Inc.

(Name of Issuer)

Common Stock, $0.0001 par value per share

(Title of Class of Securities)

82568P304

(CUSIP Number)

MARIO D. CIBELLI

C/O MARATHON PARTNERS EQUITY MANAGEMENT, LLC

One Grand Central Place

60 East 42nd Street, Suite 2306

New York, New York 10165

(212) 490-0399

ANDREW FREEDMAN, ESQ.

OLSHAN FROME WOLOSKY LLP

Park Avenue Tower

65 East 55th Street

New York, New York 10022

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

February 26, 2015

(Date of Event Which Requires Filing of This Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box ¨.

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See § 240.13d-7 for other parties to whom copies are to be sent.

_______________

1 The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP NO. 82568P304

1	NAME OF REPORTING PERSON Marathon Partners L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION New York
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER -0-
	8	SHARED VOTING POWER 1,245,000
	9	SOLE DISPOSITIVE POWER -0-
	10	SHARED DISPOSITIVE POWER 1,245,000
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,245,000*
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 3.3%
14	TYPE OF REPORTING PERSON PN

* Includes 120,000 Shares underlying call options exercisable within 60 days hereof.

CUSIP NO. 82568P304

1	NAME OF REPORTING PERSON Marathon Focus Fund L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER -0-
	8	SHARED VOTING POWER 179,200
	9	SOLE DISPOSITIVE POWER -0-
	10	SHARED DISPOSITIVE POWER 179,200
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 179,200*
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Less than 1%
14	TYPE OF REPORTING PERSON PN

* Includes 29,200 Shares underlying call options exercisable within 60 days hereof.

CUSIP NO. 82568P304

1	NAME OF REPORTING PERSON Marathon Partners 4x6 Fund, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER -0-
	8	SHARED VOTING POWER 627,500
	9	SOLE DISPOSITIVE POWER -0-
	10	SHARED DISPOSITIVE POWER 627,500
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 627,500*
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.7%
14	TYPE OF REPORTING PERSON PN

* Includes 27,500 Shares underlying call options exercisable within 60 days hereof.

CUSIP NO. 82568P304

1	NAME OF REPORTING PERSON Cibelli Research & Management, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER -0-
	8	SHARED VOTING POWER 806,700
	9	SOLE DISPOSITIVE POWER -0-
	10	SHARED DISPOSITIVE POWER 806,700
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 806,700*
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.1%
14	TYPE OF REPORTING PERSON OO

* Includes 56,700 Shares underlying call options exercisable within 60 days hereof.

CUSIP NO. 82568P304

1	NAME OF REPORTING PERSON Marathon Partners Equity Management, LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER -0-
	8	SHARED VOTING POWER 2,051,700
	9	SOLE DISPOSITIVE POWER -0-
	10	SHARED DISPOSITIVE POWER 2,051,700
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,051,700*
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.4%
14	TYPE OF REPORTING PERSON IA

* Includes 176,700 Shares underlying call options exercisable within 60 days hereof.

CUSIP NO. 82568P304

1	NAME OF REPORTING PERSON Mario D. Cibelli
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS PF, AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER 4,800
	8	SHARED VOTING POWER 2,051,700
	9	SOLE DISPOSITIVE POWER 4,800
	10	SHARED DISPOSITIVE POWER 2,051,700
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,056,500*
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.4%
14	TYPE OF REPORTING PERSON IN

* Includes 176,700 Shares underlying call options exercisable within 60 days hereof.

CUSIP NO. 82568P304

1	NAME OF REPORTING PERSON Marwan Fawaz
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER -0-
	8	SHARED VOTING POWER -0-
	9	SOLE DISPOSITIVE POWER -0-
	10	SHARED DISPOSITIVE POWER -0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON -0-
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0%
14	TYPE OF REPORTING PERSON IN

CUSIP NO. 82568P304

1	NAME OF REPORTING PERSON Thomas D. Hughes
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP		(a) o (b) o
3	SEC USE ONLY
4	SOURCE OF FUNDS
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) OR 2(e)		¨
6	CITIZENSHIP OR PLACE OF ORGANIZATION USA
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH	7	SOLE VOTING POWER -0-
	8	SHARED VOTING POWER -0-
	9	SOLE DISPOSITIVE POWER -0-
	10	SHARED DISPOSITIVE POWER -0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON -0-
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES		o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0%
14	TYPE OF REPORTING PERSON IN

CUSIP NO. 82568P304

The following constitutes Amendment No. 3 to the Schedule 13D filed by the undersigned (“Amendment No. 3”). This Amendment No. 3 amends the Schedule 13D as specifically set forth herein.

Item 2.

Identity and Background.

Item 2 is hereby amended and restated to read as follows:

(a)

This statement is filed by:

(i)

Marathon Partners L.P., a New York limited partnership (“Partners LP”), with respect to the Shares directly and beneficially owned by it;

(ii)

Marathon Focus Fund L.P., a Delaware limited partnership (“Focus Fund”), with respect to the Shares directly and beneficially owned by it;

(iii)

Marathon Partners 4x6 Fund, L.P., a Delaware limited partnership (“4x6 Fund”), with respect to the Shares directly and beneficially owned by it;

(iv)

Cibelli Research & Management, LLC, a Delaware limited liability company (“Cibelli Research”), as the general partner of each of Focus Fund and 4x6 Fund;

(v)

Marathon Partners Equity Management, LLC, a Delaware limited liability company (“Marathon Partners”), as the investment manager of each of Partners LP, Focus Fund and 4x6 Fund and the general partner of Partners LP;

(vi)

Mario D. Cibelli, as managing member of each of Cibelli Research and Marathon Partners and as a nominee for election to the Board of Directors of the Issuer (the “Board”);

(vii)

Marwan Fawaz, as a nominee for election to the Board; and

(viii)

Thomas D. Hughes, as a nominee for election to the Board.

Each of the foregoing is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Each of the Reporting Persons is party to that certain Joint Filing and Solicitation Agreement as further described in Item 6. Accordingly, the Reporting Persons are hereby filing a joint Schedule 13D.

(b) The address of the principal office of each of Partners LP, Focus Fund, 4x6 Fund, Cibelli Research, Marathon Partners and Mr. Cibelli is One Grand Central Place, 60 East 42nd Street, Suite 2306, New York, New York 10165. The principal business address of Mr. Fawaz is c/o Sarepta Advisors, LLC, 7315 Sagebrush Drive, Parker, CO 80138. The principal business address of Mr. Hughes is c/o Cedar Grove Investments, LLC, 1301 2nd Ave., Suite 2850, Seattle, WA 98101.

(c) The principal business of each of Partners LP, Focus Fund and 4x6 Fund is investing in securities. The principal business of Cibelli Research is serving as the general partner to each of Focus Fund and 4x6 Fund. The principal business of Marathon Partners is acting as the investment manager of Partners LP, Focus Fund and 4x6 Fund and the general partner of Partners LP. The principal occupation of Mr. Cibelli is serving as the managing member of each of Cibelli Research and Marathon Partners. The principal occupation of Mr. Fawaz is serving as the Founder and Principal of Sarepta Advisors, LLC, a strategic advisory and consulting group supporting the TMT sector. The principal occupation of Mr. Hughes is serving as a Partner of Cedar Grove Investments, LLC, an early-stage venture firm based in Seattle with personal focus on e-commerce.

CUSIP NO. 82568P304

(d) No Reporting Person has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

(e) No Reporting Person has, during the last five years, been party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Partners LP is organized under the laws of the State of New York. Each of Focus Fund, 4x6 Fund, Cibelli Research and Marathon Partners is organized under the laws of the State of Delaware. Messrs. Cibelli, Fawaz and Hughes are citizens of the United States of America.

Item 3.

Source and Amount of Funds or Other Consideration.

Item 3 is hereby amended and restated to read as follows:

The Shares purchased by each of Partners LP, Focus Fund and 4x6 Fund were purchased with working capital (which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business) in open market purchases. The aggregate purchase price of the 1,125,000 Shares beneficially owned by Partners LP is approximately $39,006,808, excluding brokerage commissions. The aggregate purchase price of certain call options exercisable into 120,000 Shares beneficially owned by Partners LP is approximately $578,925, excluding brokerage commissions. The aggregate purchase price of the 150,000 Shares beneficially owned by Focus Fund is approximately $5,708,231, excluding brokerage commissions. The aggregate purchase price of certain call options exercisable into 29,200 Shares beneficially owned by Focus Fund is approximately $169,985, excluding brokerage commissions. The aggregate purchase price of the 600,000 Shares beneficially owned by 4x6 Fund is approximately $27,860,136, excluding brokerage commissions. The aggregate purchase price of certain call options exercisable into 27,500 Shares beneficially owned by 4x6 Fund is approximately $168,839, excluding brokerage commissions.

The Shares held in Mr. Cibelli’s personal accounts and in the accounts of his family members were purchased in the open market with personal funds. The aggregate purchase price of the 4,800 Shares held in Mr. Cibelli’s personal accounts and in the accounts of his family members is approximately $131,489, excluding brokerage commissions.

Item 4.

Purpose of Transaction.

Item 4 is hereby amended to add the following:

On February 26, 2015, Marathon Partners delivered a letter to the Issuer’s Chairman, Philip A. Marineau, and the Board, highlighting its concerns with the Issuer’s executive compensation plan, capital allocation and M&A strategy, as well as various aspects of its operating performance. In the letter, Marathon Partners expressed its strong belief that the Board needs to be immediately reconstituted with directors that have the experience, qualifications and stockholder-oriented mindset to address these concerns as well as oversee and implement the changes necessary to unlock and drive substantial value at the Issuer. A copy of the letter is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

CUSIP NO. 82568P304

To that end, on February 26, 2015, Partners LP delivered a letter to the Issuer nominating Mario D. Cibelli, Marwan Fawaz and Thomas D. Hughes (the “Nominees”) for election to the Board at the Issuer’s 2015 annual meeting of stockholders (the “Annual Meeting”). The Reporting Persons have engaged, and intend to continue to engage, in discussions with management and the Board of the Issuer regarding Board representation and the composition of the Issuer’s Board, generally, and Marathon Partners remains prepared to engage in a continued constructive dialogue with the Board.

Item 5.

Interest in Securities of the Issuer.

Items 5(a)-(c) are hereby amended and restated to read as follows:

The aggregate percentage of Shares reported owned by each person named herein is based upon 37,749,639 Shares outstanding, as of February 11, 2015, which is the total number of Shares outstanding as reported in the Issuer’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 18, 2015.

A.	Partners LP

(a)

As of the close of business on February 26, 2015, Partners LP beneficially owned 1,245,000 Shares, including 120,000 Shares underlying certain call options.

Percentage: Approximately 3.3%

(b)

1. Sole power to vote or direct vote: 0

2. Shared power to vote or direct vote: 1,245,000

3. Sole power to dispose or direct the disposition: 0

4. Shared power to dispose or direct the disposition: 1,245,000

(c)

The transactions in the Shares by Partners LP during the past sixty days are set forth in Schedule A and are incorporated herein by reference.

B.	Focus Fund

(a)

As of the close of business on February 26, 2015, Focus Fund beneficially owned 179,200 Shares, including 29,200 Shares underlying certain call options.

Percentage: Less than 1%

CUSIP NO. 82568P304

(b)

1. Sole power to vote or direct vote: 0

2. Shared power to vote or direct vote: 179,200

3. Sole power to dispose or direct the disposition: 0

4. Shared power to dispose or direct the disposition: 179,200

(c)

The transactions in the Shares by Focus Fund during the past sixty days are set forth in Schedule A and are incorporated herein by reference.

4x6 Fund

(a)

As of the close of business on February 26, 2015, 4x6 Fund beneficially owned 627,500 Shares, including 27,500 Shares underlying certain call options.

Percentage: Approximately 1.7%

(b)

1. Sole power to vote or direct vote: 0

2. Shared power to vote or direct vote: 627,500

3. Sole power to dispose or direct the disposition: 0

4. Shared power to dispose or direct the disposition: 627,500

(c)

The transactions in the Shares by 4x6 Fund during the past sixty days are set forth in Schedule A and are incorporated herein by reference.

D.	Cibelli Research

(a)

Cibelli Research, as the general partner of each of Focus Fund and 4x6 Fund, may be deemed the beneficial owner of the (i) 179,200 Shares owned by Focus Fund and (ii) 627,500 Shares owned by 4x6 Fund.

Percentage: Approximately 2.1%

(b)

1. Sole power to vote or direct vote: 0

2. Shared power to vote or direct vote: 806,700

3. Sole power to dispose or direct the disposition: 0

4. Shared power to dispose or direct the disposition: 806,700

(c)

Cibelli Research has not entered into any transactions in the Shares during the past sixty days. The transactions in the Shares on behalf of each of Focus Fund and 4x6 Fund during the past sixty days are set forth in Schedule A and are incorporated herein by reference.

E.	Marathon Partners

(a)

Marathon Partners, as the investment manager of each of Partners LP, Focus Fund and 4x6 Fund and the general partner of Partners LP, may be deemed the beneficial owner of the (i) 1,245,000 Shares owned by Partners LP; (ii) 179,200 Shares owned by Focus Fund and (iii) 627,500 Shares owned by 4x6 Fund.

Percentage: Approximately 5.4%

CUSIP NO. 82568P304

(b)

1. Sole power to vote or direct vote: 0

2. Shared power to vote or direct vote: 2,051,700

3. Sole power to dispose or direct the disposition: 0

4. Shared power to dispose or direct the disposition: 2,051,700

(c)

Marathon Partners has not entered into any transactions in the Shares during the past sixty days. The transactions in the Shares on behalf of each of Partners LP, Focus Fund and 4x6 Fund during the past sixty days are set forth in Schedule A and are incorporated herein by reference.

F.	Mr. Cibelli

(a)

As of the close of business on February 26, 2015, 4,800 Shares were held in Mr. Cibelli’s personal accounts and in the accounts of his family members. Mr. Cibelli, as the managing member of each of Cibelli Research and Marathon Partners, may be deemed the beneficial owner of the (i) 1,245,000 Shares owned by Partners LP; (ii) 179,200 Shares owned by Focus Fund and (iii) 627,500 Shares owned by 4x6 Fund.

Percentage: Approximately 5.4%

(b)

1. Sole power to vote or direct vote: 4,800

2. Shared power to vote or direct vote: 2,051,700

3. Sole power to dispose or direct the disposition: 4,800

4. Shared power to dispose or direct the disposition: 2,051,700

(c)

Mr. Cibelli has not entered into any transactions in the Shares during the past sixty days. The transactions in the Shares on behalf of each of Partners LP, Focus Fund and 4x6 Fund, during the past sixty days are set forth in Schedule A and are incorporated herein by reference.

G.	Messrs. Fawaz and Hughes

(a)

As of the close of business on February 26, 2015, Messrs. Fawaz and Hughes did not own any Shares.

Percentage: 0%

(b)

1. Sole power to vote or direct vote: 0

2. Shared power to vote or direct vote: 0

3. Sole power to dispose or direct the disposition: 0

4. Shared power to dispose or direct the disposition: 0

(c)

Neither of Messrs. Fawaz and Hughes has entered into any transactions in the Shares during the past sixty days.

Each Reporting Person, as a member of a “group” with the other Reporting Persons for the purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, may be deemed the beneficial owner of the Shares directly owned by the other Reporting Persons. Each Reporting Person disclaims beneficial ownership of such Shares except to the extent of his or its pecuniary interest therein.

CUSIP NO. 82568P304

Item 6.

Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Item 6 is hereby amended to add the following:

Partners LP purchased in the over the counter market American-style call options referencing an aggregate of (i) 9,400 Shares, which have an exercise price of $50.00 per Share and expire on March 20, 2015, (ii) 10,600 Shares, which have an exercise price of $45.00 per Share and expire on March 20, 2015 and (iii) 100,000 Shares, which have an exercise price of $40.00 per Share and expire on June 19, 2015.

Partners LP sold short in the over the counter market American-style call options referencing an aggregate of 100,000 Shares, which have an exercise price of $45.00 per Share and expire on June 19, 2015.

Focus Fund purchased in the over the counter market American-style call options referencing an aggregate of (i) 1,700 Shares, which have an exercise price of $50.00 per Share and expire on March 20, 2015, and (ii) 27,500 Shares, which have an exercise price of $40.00 per Share and expire on June 19, 2015.

Focus Fund sold short in the over the counter market American-style call options referencing an aggregate of 27,500 Shares, which have an exercise price of $45.00 per Share and expire on June 19, 2015.

4x6 Fund purchased in the over the counter market American-style call options referencing an aggregate of 27,500 Shares, which have an exercise price of $40.00 per Share and expire on June 19, 2015.

4x6 Fund sold short in the over the counter market American-style call options referencing an aggregate of 27,500 Shares, which have an exercise price of $45.00 per Share and expire on June 19, 2015.

On February 26, 2015, the Reporting Persons entered into a Joint Filing and Solicitation Agreement pursuant to which, among other things, (i) they agreed to the joint filing on behalf of each of them of statements on Schedule 13D, and any amendments thereto, with respect to the securities of the Issuer, (ii) they agreed to solicit proxies or written consents for the election of the Nominees to the Board at the Annual Meeting (the “Solicitation”), and (iii) Marathon Partners (as defined therein) agreed to pay directly all pre-approved expenses incurred in connection with the Solicitation. A copy of the Joint Filing and Solicitation Agreement is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Pursuant to letter agreements, Partners LP has agreed to indemnify each of Messrs. Fawaz and Hughes against any and all claims of any nature arising from the Solicitation and any related transactions. A form of the indemnification letter agreement is attached hereto as Exhibit 99.3 and is incorporated herein by reference.

Partners LP has agreed to compensate Messrs. Fawaz and Hughes for being named as and serving as nominees for election as directors of the Issuer pursuant to letter agreements (the “Compensation Letter Agreements”). Under the Compensation Letter Agreements, Partners LP has agreed to pay each of Messrs. Fawaz and Hughes (i) $10,000 in cash upon submission of the Nomination Letter to the Issuer and (ii) $10,000 in cash upon the filing of a definitive proxy statement with the SEC by Partners LP relating to the Solicitation.

CUSIP NO. 82568P304

Pursuant to the Compensation Letter Agreements, each of Messrs. Fawaz and Hughes agreed to use the after-tax proceeds from such compensation to acquire securities of the Issuer (the “Nominee Shares”) at such time that Messrs. Fawaz and Hughes shall determine. If elected or appointed to serve as a director of the Board, each of Messrs. Fawaz and Hughes agreed not to sell, transfer or otherwise dispose of any Nominee Shares within two years of their election or appointment as a director; provided, however, in the event that the Issuer enters into a business combination with a third party, each of Messrs. Fawaz and Hughes may sell, transfer or exchange the Nominee Shares in accordance with the terms of such business combination. A form of the Compensation Letter Agreements is attached hereto as Exhibit 99.4 and is incorporated herein by reference.

Item 7.

Material to be Filed as Exhibits.

Item 7 is hereby amended to add the following exhibits:

99.1

Letter to the Chairman and Board of Directors, dated February 26, 2015.

99.2

Joint Filing and Solicitation Agreement by and between Marathon Partners Equity Management, LLC, Marathon Partners L.P., Marathon Focus Fund L.P., Marathon Partners 4x6 Fund, L.P., Cibelli Research & Management, LLC, Mario D. Cibelli, Thomas D. Hughes and Marwan Fawaz, dated February 26, 2015.

99.3

Form of Indemnification Letter Agreement.

99.4

Form of Compensation Letter Agreement.

99.5

Powers of Attorney.

CUSIP NO. 82568P304

SIGNATURES

After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: February 27, 2015

Marathon Partners L.P

By:	Marathon Partners Equity Management, LLC, its General Partner

By:	/s/ Mario D. Cibelli
	Name:	Mario D. Cibelli
	Title:	Managing Member

Marathon Focus Fund L.P.

By:	Cibelli Research & Management, LLC, its General Partner

By:	/s/ Mario D. Cibelli
	Name:	Mario D. Cibelli
	Title:	Managing Member

Marathon Partners 4x6 Fund, L.P.

By:	Cibelli Research & Management, LLC, its General Partner

By:	/s/ Mario D. Cibelli
	Name:	Mario D. Cibelli
	Title:	Managing Member

Cibelli Research & Management, LLC

By:	/s/ Mario D. Cibelli
	Name:	Mario D. Cibelli
	Title:	Managing Member

Marathon Partners Equity Management, LLC

By:	/s/ Mario D. Cibelli
	Name:	Mario D. Cibelli
	Title:	Managing Member



	/s/ Mario D. Cibelli
	MARIO D. CIBELLI, Individually and as Attorney-in-Fact for Marwan Fawaz and Thomas D. Hughes

CUSIP NO. 82568P304

SCHEDULE A

Transactions in Securities of the Issuer During the Past Sixty Days

Nature of the Transaction

Amount of Securities

Purchased/(Sold)

Price ($)

Date of

Purchase / Sale

MARATHON PARTNERS L.P.

Purchase of June 2015 Call Option ($40 Strike Price)	150	5.3400	01/05/2015
Sale of June 2015 Call Option ($45 Strike Price)*	(150)	3.0533	01/05/2015
Purchase of June 2015 Call Option ($40 Strike Price)	250	4.8652	01/06/2015
Sale of June 2015 Call Option ($45 Strike Price)*	(250)	2.6704	01/06/2015
Sale of January 2015 Call Option ($40 Strike Price)	(250)	0.9552	01/07/2015
Sale of June 2015 Call Option ($45 Strike Price)*	(150)	2.6183	01/07/2015
Purchase of June 2015 Call Option ($40 Strike Price)	150	4.7233	01/07/2015
Purchase of January 2015 Call Option ($45 Strike Price)**	250	0.0898	01/07/2015
Purchase of June 2015 Call Option ($40 Strike Price)	50	4.4600	01/08/2015
Purchase of January 2015 Call Option ($45 Strike Price)**	500	0.1594	01/08/2015
Sale of June 2015 Call Option ($45 Strike Price)*	(50)	2.3850	01/08/2015
Sale of January 2015 Call Option ($40 Strike Price)	(500)	1.1032	01/08/2015
Purchase of January 2015 Call Option ($45 Strike Price)**	200	0.1325	01/09/2015
Sale of January 2015 Call Option ($40 Strike Price)	(200)	1.8575	01/09/2015
Sale of January 2015 Call Option ($40 Strike Price)	(300)	1.6633	01/12/2015
Purchase of January 2015 Call Option ($45 Strike Price)**	300	0.0967	01/12/2015

* Represents a short sale.

** Represents a purchase to cover short position.

CUSIP NO. 82568P304

Sale of January 2015 Call Option ($40 Strike Price)	(496)	2.7563	01/13/2015
Purchase of January 2015 Call Option ($45 Strike Price)**	500	0.1341	01/13/2015
Sale of January 2015 Call Option ($40 Strike Price)*	(4)	2.7563	01/13/2015
Sale of January 2015 Call Option ($40 Strike Price)	(500)	2.8141	01/14/2015
Purchase of June 2015 Call Option ($40 Strike Price)	150	5.9693	01/14/2015
Sale of June 2015 Call Option ($45 Strike Price)*	(150)	3.3950	01/14/2015
Sale of Common Stock#	(400)	40.0000	01/14/2015
Purchase of January 2015 Call Option ($45 Strike Price)**	500	0.2680	01/14/2015
Purchase of Common Stock##	400	40.0000	01/14/2015
Purchase of March 2015 Call Option ($45 Strike Price)	106	2.1000	01/28/2015
Purchase of March 2015 Call Option ($50 Strike Price)	87	0.6500	01/28/2015
Purchase of March 2015 Call Option ($50 Strike Price)	7	0.6000	01/29/2015

MARATHON FOCUS FUND L.P.

Purchase of June 2015 Call Option ($40 Strike Price)	100	5.9693	01/14/2015
Sale of June 2015 Call Option ($45 Strike Price)*	(100)	3.3950	01/14/2015
Sale of June 2015 Call Option ($45 Strike Price)*	(150)	3.5365	01/15/2015
Purchase of June 2015 Call Option ($40 Strike Price)	150	6.1585	01/15/2015

* Represents a short sale.

# Represents a sale of Common Stock pursuant to the counterparty’s exercise of call options written by Marathon Partners L.P.

** Represents a purchase to cover short position.

## Represents a purchase of Common Stock pursuant to Marathon Partners L.P.’s exercise of January 2015 call options.

CUSIP NO. 82568P304

Sale of June 2015 Call Option ($45 Strike Price)*	(25)	3.7200	01/22/2015
Purchase of June 2015 Call Option ($40 Strike Price)	25	6.5200	01/22/2015
Purchase of March 2015 Call Option ($50 Strike Price)	17	0.6500	01/28/2015

MARATHON PARTNERS 4X6 FUND, L.P.

Purchase of June 2015 Call Option ($40 Strike Price)	100	5.9693	01/14/2015
Sale of June 2015 Call Option ($45 Strike Price)*	(100)	3.3950	01/14/2015
Purchase of June 2015 Call Option ($40 Strike Price)	150	6.1585	01/15/2015
Sale of June 2015 Call Option ($45 Strike Price)*	(150)	3.5365	01/15/2015
Purchase of June 2015 Call Option ($40 Strike Price)	25	6.5200	01/22/2015
Sale of June 2015 Call Option ($45 Strike Price)*	(25)	3.7200	01/22/2015
Purchase of Common Stock	20,000	45.8889	02/20/2015

* Represents a short sale.

EX-99.1 2 ex991to13da308009003_022715.htm LETTER TO THE CHAIRMAN AND BOARD OF DIRECTORS ex991to13da308009003_022715.htm

Exhibit 99.1

Marathon Partners Equity Management, LLC

One Grand Central Place

60 East 42nd Street, Suite 2306

New York, New York 10165

February 26, 2015

Shutterfly, Inc.

2800 Bridge Parkway

Redwood City, CA 94065

Attn: Philip A. Marineau

Chairman of the Board of Directors

Cc:	Board of Directors

Dear Phil,

Marathon Partners Equity Management, LLC, together with its affiliates (“Marathon Partners”), currently owns approximately 5.45% of the outstanding shares of common stock of Shutterfly, Inc. (“Shutterfly” or the “Company”), making us one of the Company’s largest stockholders. Under separate cover, we have delivered a formal notice of our nomination of a slate of three director candidates, including myself and two highly qualified independent nominees, Marwan Fawaz and Thomas D. Hughes, for election to the Board of Directors of Shutterfly (the “Board”) at the 2015 Annual Meeting of Stockholders.

As you know, we have been active and supportive stockholders of Shutterfly for almost seven years. Over the past year and a half, we have tried to engage constructively with you and members of the management team and Board to discuss our views and concerns regarding the direction of the Company as well as opportunities to create value for Shutterfly stockholders. We have become increasingly frustrated with Shutterfly’s executive compensation plan, capital allocation and M&A strategy, as well as various aspects of the Company’s operating performance. While we had intended to keep our dialogue private, we have become very discouraged by the Company’s failure to substantively address these important issues in a timely manner. We now believe that Board representation is the clearest path to addressing these concerns as opposed to continued private dialogue with members of management and the Board. Our director nominees, whose bios are included below, are uniquely qualified to act as agents for change on behalf of all Shutterfly stockholders. We believe a greater sense of urgency for creating stockholder value is required at the Board level to best position the Company and its owners for long-term success.

In the coming weeks, we will address in more detail the specific areas for improvement at Shutterfly and the opportunities that we believe could drive substantial stockholder value if acted upon. One topic of particular concern that we would like to highlight is the Company’s executive compensation plan. We believe the vast majority of Shutterfly stockholders are gravely disappointed with various aspects of the plan due to its inability to strongly align stockholder and management interests, including:

lack of incentives encouraging long-term stock ownership by executives;

excessive awards based upon revenue and EBITDA growth as opposed to metrics that more directly increase stockholder value, such as free cash flow per share and earnings per share; and

lack of accountability for the results of acquisitions and investments.

The recent out-of-cycle grant of approximately $7 million of restricted stock units (RSUs) to Shutterfly’s CEO, Jeffrey T. Housenbold, on November 20, 2014 was particularly troubling. Not only did the Company grant these RSUs at a time when Board members were well aware of stockholder concerns on executive compensation and after an evaluation process that did not result in the successful sale of the Company, but it did so just prior to the critical holiday selling season. We have difficulty envisioning the set of circumstances that would cause directors to support and approve this excessive and unusually timed grant.

As you know, stockholder frustration with Shutterfly has been building over the past few years. These concerns have manifested themselves in a dramatic decrease in the stockholder approval rate of the Company’s ‘say on pay’ proposal. In fact, Shutterfly’s rate of approval has deteriorated from approximately 98% of the votes cast in favor of the “say on pay” proposal at its 2011 Annual Meeting of Stockholders to just under 50% of the votes cast at its 2014 Annual Meeting of Stockholders, as displayed in the chart below.

Year % of shares voted FOR ‘Say on Pay’

2011 97.7%

2012 63.5%

2013 54.4%

2014 49.8%

Shutterfly’s corporate governance profile is not viewed favorably by independent sources. Institutional Shareholder Services Inc. (“ISS”), a leading proxy voting advisory firm, shares our serious concerns regarding the Company’s poor corporate governance practices, particularly in the area of executive compensation, assigning Shutterfly a Governance QuickScore of 9, the second worst rating possible reserved for companies that maintain problematic stockholder unfriendly corporate governance practices. In fact, ISS has not only recommended against the Company’s ‘say on pay’ proposal for the past three years, but also assigned Shutterfly a Governance QuickScore of 10 in the “Compensation” category, indicating the highest level of concern.

Shutterfly stockholders have endured a multi-year investment period with expenses and capital expenditures outpacing revenues coupled with an elevated level of M&A activity of yet unknown value. Management has continued to be very well compensated over this period. These investments have been made based upon the premise that enterprise value would increase. We believe it is time for Shutterfly stockholders to reap the rewards of their investments through properly structured management incentives.

It is our strong belief that the Board needs to be immediately reconstituted with directors that have the experience, qualifications and stockholder-oriented mindset to oversee and implement the changes necessary to unlock and drive substantial value at Shutterfly. We believe our nominees have the relevant skills and experience necessary to improve the Company’s corporate governance practices and management incentive structures. We hope that you will take advantage of this opportunity to constructively engage with us in order to reconstitute the Board with the most qualified directors for the benefit of all stockholders and to address the concerns that we and others have expressed.

Marathon Partners’ Highly Qualified Nominees:

Mario D. Cibelli is the Managing Member of Marathon Partners Equity Management, LLC (f/k/a Cibelli Capital Management, L.L.C.), an investment management firm, which he founded in January 2001 and has managed since its inception. Mr. Cibelli has been in the investment business since 1990. From June 1990 to October 1991, Mr. Cibelli worked for Gabelli Asset Management Company (“GAMCO”), a diversified global financial services company offering an extensive range of investment capabilities. After GAMCO, he joined Prudential Securities, a financial services firm, from October 1991 to October 1993 in the Capital Markets group as an analyst. From October 1993 until June 2013, Mr. Cibelli was employed by Robotti & Company in various positions, including as a research analyst, institutional salesperson and most recently, as a portfolio manager for certain managed accounts from January 2001 until June 2013. Robotti & Company is a value-oriented firm that has specialized in smaller company investing since 1983. Mr. Cibelli received his Bachelor of Science in Business Management degree from the School of Management at Binghamton University.

Marwan Fawaz serves as the Founder and Principal of Sarepta Advisors, LLC, a strategic advisory and consulting group supporting the TMT sector, which he founded in January 2012. He has also served as a Principal of Fawaz Consulting Services, LLC, a consulting firm, since June 2011. From June 2012 to May 2013, Mr. Fawaz served as an Executive Vice President at Motorola Mobility, Inc., a division of Google, Inc., where he also served as the Chief Executive Officer of the Motorola Home Division overseeing vision, strategy and operations. From August 2006 through March 2011, Mr. Fawaz was the Chief Technology Officer at Charter Communications, Inc. (NASDAQ: CHTR)(“Charter”), a leading broadband communications company, where he also served as its Executive Vice President of Strategy/Operations from March 2010 to March 2011 and as Executive Vice President and Chief Technology Officer from August 2006 to February 2010. Mr. Fawaz served as an executive officer of Charter during the pendency of its Chapter 11 cases in 2009. From March 2003 until July 2006, Mr. Fawaz served as Senior Vice President and Chief Technology Officer of Adelphia Communications Corporation, which filed a petition under Chapter 11 of the Bankruptcy Code in June 2002. From April 2002 to March 2003, he served as Investment Specialist/Technology Analyst for Vulcan, Inc. and as Regional Vice President of Operations for the Northwest Region of Charter from July 2001 to March 2002. Prior to that, Mr. Fawaz served as the Chief Technology Officer of Infinity Broadband, Inc. from 2000 to 2001. He began his career at Times Mirror Cable Television, Inc. and also held engineering leadership roles at MediaOne, Inc. Mr. Fawaz currently serves as a member of the Board of Directors of Synacor, Inc. (NASDAQ: SYNC), a leading provider of start experiences (startpages and homescreens), TV Everywhere, Identity Management (IDM), and various cloud-based services across multiple devices for cable, satellite, telecom and consumer electronics companies, a position he has held since December 2011. He has also served as Chairman of the Board of Directors of One World Labs, a Cyber security intelligence firm, since November 2012. In addition, Mr. Fawaz has served as an advisory board member of Liberty Global International, a cable and broadband company, since September 2013, and Guavus, a big data analytics SaaS company, since March 2012. Mr. Fawaz received a B.S. degree in Electrical Engineering and a M.S. degree in Electrical/Communication-Engineering from California State University—Long Beach.

Thomas D. Hughes currently serves as a Partner of Cedar Grove Investments, LLC, an early-stage venture firm based in Seattle with personal focus on e-commerce, which he co-founded in 1999. From September 2013 to October 2014, Mr. Hughes served as the Vice President of Flickr, an image hosting and video hosting website owned by Yahoo! Inc., where he was responsible for all revenue and product management for Flickr business initiatives. From 1991 to 1998, Mr. Hughes served as President of PhotoDisc, Inc. (n/k/a Getty Images, Inc.) (“PhotoDisc”), which he co-founded and helped build into a highly profitable company until it was acquired by Getty Images, Inc., at which point he was employed by Getty Images, Inc. until 1999. While at PhotoDisc, Mr. Hughes built the first e-commerce site for selling photos with credit card transactions and delivery in real time, which became one of the first commercially viable ecommerce sites worldwide. He also served on PhotoDisc’s Board of Directors. Prior to PhotoDisc, he served as President of Northshore Publishing Systems, Inc., a value added retailer of PC’s, imagesetters, software and equipment for the publishing industry, from 1984 to 1991. Mr. Hughes currently serves as a member of the Board of Directors of Treering.com, a creator of yearbooks for the Internet generation, a position he has held since September 2011. He previously served as a member of the Boards of Directors or as an advisor to the Boards of Directors of Loudeye, Inc., a leading encoding company in the then-emerging video and music services industry that was later sold to Nokia, from 1999 to 2001, Avenue A, Inc./aQuantive, an online advertising, planning and metrics-based media firm that was later sold to Microsoft, from 1998 to 2001, Vacationspot.com, an ecommerce vacation site that was later sold to Expedia, from 1998 to 2001, Avolo.com, a central exchange for real-time airplane parts, from 2000 to 2003, and RPI Print Inc., a producer of on-demand private-label personalized photo books, greeting cards and stationery for retailers, from July 2011 to September 2013. Mr. Hughes received a B.A. degree in History from the University of Washington.

Thank you,

/s/ Mario Cibelli

Mario Cibelli

Managing Member

Marathon Partners Equity Management, LLC

EX-99.2 3 ex992to13da308009003_022715.htm JOINT FILING AND SOLICITATION AGREEMENT ex992to13da308009003_022715.htm

Exhibit 99.2

JOINT FILING AND SOLICITATION AGREEMENT

WHEREAS, certain of the undersigned are stockholders, direct or beneficial, of Shutterfly, Inc., a Delaware corporation (the “Company”);

WHEREAS, Marathon Partners Equity Management, LLC, Marathon Partners L.P., Marathon Focus Fund L.P., Marathon Partners 4x6 Fund, L.P., Cibelli Research & Management, LLC, Mario D. Cibelli (collectively, “Marathon Partners”), Marwan Fawaz and Thomas D. Hughes wish to form a group for the purpose of seeking representation on the Board of Directors of the Company (the “Board”) at the 2015 annual meeting of stockholders of the Company (including any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof, the “2015 Annual Meeting”) and for the purpose of taking all other action necessary to achieve the foregoing.

NOW, IT IS AGREED, this 26th day of February, 2015 by the parties hereto:

1. In accordance with Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), each of the undersigned (collectively, the “Group”) agrees to the joint filing on behalf of each of them of statements on Schedule 13D, and any amendments thereto, with respect to the securities of the Company. Each member of the Group shall be responsible for the accuracy and completeness of his/its own disclosure therein, and is not responsible for the accuracy and completeness of the information concerning the other members, unless such member knows or has reason to know that such information is inaccurate. Marathon Partners or its representative shall provide each member of the Group with copies of all Schedule 13D filings and other public filings to be filed on behalf of such member at least 24 hours prior to the filing or submission thereof.

2. So long as this agreement is in effect, each of the undersigned shall provide written notice to Olshan Frome Wolosky LLP (“Olshan”) of (i) any of their purchases or sales of securities of the Company; or (ii) any securities of the Company over which they acquire or dispose of beneficial ownership. Notice shall be given no later than 24 hours after each such transaction.

3. Each of the undersigned agrees to form the Group for the purpose of (i) soliciting proxies or written consents for the election of the persons nominated by Marathon Partners to the Board at the 2015 Annual Meeting, (ii) taking such other actions as the parties deem advisable, and (iii) taking all other action necessary or advisable to achieve the foregoing.

4. Marathon Partners shall have the right to pre-approve all expenses incurred in connection with the Group’s activities and agrees to pay directly all such pre-approved expenses.

5. Each of the undersigned agrees that any SEC filing, press release or stockholder communication proposed to be made or issued by the Group or any member of the Group in connection with the Group’s activities set forth in Section 3 shall be first approved by Marathon Partners, or its representatives, which approval shall not be unreasonably withheld.

6. The relationship of the parties hereto shall be limited to carrying on the business of the Group in accordance with the terms of this Agreement. Such relationship shall be construed and deemed to be for the sole and limited purpose of carrying on such business as described herein. Nothing herein shall be construed to authorize any party to act as an agent for any other party, or to create a joint venture or partnership, or to constitute an indemnification. Nothing herein shall restrict any party’s right to purchase or sell securities of the Company, as he/it deems appropriate, in his/its sole discretion, provided that all such sales are made in compliance with all applicable securities laws.

7. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute but one and the same instrument, which may be sufficiently evidenced by one counterpart.

8. In the event of any dispute arising out of the provisions of this Agreement or their investment in the Company, the parties hereto consent and submit to the exclusive jurisdiction of the Federal and State Courts in the State of New York.

9. Any party hereto may terminate his/its obligations under this Agreement on 24 hours’ written notice to all other parties, with a copy by fax to Andrew Freedman at Olshan, Fax No. (212) 451-2222 or email to afreedman@olshanlaw.com.

10. Each party acknowledges that Olshan shall act as counsel for both the Group and Marathon Partners and its affiliates relating to their investment in the Company.

11. Each of the undersigned parties hereby agrees that this Agreement shall be filed as an exhibit to a Schedule 13D pursuant to Rule 13d-1(k)(1)(iii) under the Exchange Act.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.

	MARATHON PARTNERS EQUITY MANAGEMENT, LLC

	By:	/s/ Mario D. Cibelli
	Name:	Mario D. Cibelli
	Title:	Managing Member

	MARATHON PARTNERS L.P. By: Marathon Partners Equity Management, LLC, its General Partner

	By:	/s/ Mario D. Cibelli
	Name:	Mario D. Cibelli
	Title:	Managing Member

	MARATHON FOCUS FUND L.P. By: Cibelli Research & Management, LLC, its General Partner

	By:	/s/ Mario D. Cibelli
	Name:	Mario D. Cibelli
	Title:	Managing Member

	MARATHON PARTNERS 4X6 FUND, L.P. By: Cibelli Research & Management, LLC, its General Partner

	By:	/s/ Mario D. Cibelli
	Name:	Mario D. Cibelli
	Title:	Managing Member

	CIBELLI RESEARCH & MANAGEMENT, LLC

	By:	/s/ Mario D. Cibelli
	Name:	Mario D. Cibelli
	Title:	Managing Member


	/s/ Mario D. Cibelli
	MARIO D. CIBELLI



	/s/ Thomas D. Hughes
	THOMAS D. HUGHES



	/s/ Marwan Fawaz
	MARWAN FAWAZ

EX-99.3 4 ex993to13da308009003_022715.htm FORM OF INDEMNIFICATION LETTER AGREEMENT ex993to13da308009003_022715.htm

Exhibit 99.3

MARATHON PARTNERS L.P.

c/o Marathon Partners Equity Management, LLC

One Grand Central Place

60 East 42nd Street, Suite 2306

New York, New York 10165

February ___, 2015

Re: Shutterfly, Inc.

Dear ______:

Thank you for agreeing to serve as a nominee for election to the Board of Directors of Shutterfly, Inc. (the “Company”) in connection with the proxy solicitation that Marathon Partners L.P. and its affiliates (collectively, “Marathon Partners”) is considering undertaking to nominate and elect directors at the Company’s 2015 annual meeting of stockholders, or any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof (the “Marathon Partners Solicitation”). Your outstanding qualifications, we believe, will prove a valuable asset to the Company and all of its stockholders. This letter (“Agreement”) will set forth the terms of our agreement.

Marathon Partners agrees to jointly and severally indemnify and hold you harmless against any and all claims of any nature, whenever brought, arising from the Marathon Partners Solicitation and any related transactions, irrespective of the outcome; provided, however, that you will not be entitled to indemnification for claims arising from your gross negligence, willful misconduct, intentional and material violations of law, criminal actions or material breach of the terms of this agreement; provided further, that upon your becoming a director of the Company, this indemnification shall not apply to any claims made against you in your capacity as a director of the Company. This indemnification will include any and all losses, liabilities, damages, demands, claims, suits, actions, judgments, or causes of action, assessments, costs and expenses, including, without limitation, interest, penalties, reasonable attorneys’ fees, and any and all reasonable costs and expenses incurred in investigating, preparing or defending against any litigation, commenced or threatened, any civil, criminal, administrative or arbitration action, or any claim whatsoever, and any and all amounts paid in settlement of any claim or litigation asserted against, resulting, imposed upon, or incurred or suffered by you, directly or indirectly, as a result of or arising from the Marathon Partners Solicitation and any related transactions (each, a “Loss”).

In the event of a claim against you pursuant to the prior paragraph or the occurrence of a Loss, you shall give Marathon Partners prompt written notice of such claim or Loss (provided that failure to promptly notify Marathon Partners shall not relieve us from any liability which we may have on account of this Agreement, except to the extent we shall have been materially prejudiced by such failure). Upon receipt of such written notice, Marathon Partners will provide you with counsel to represent you. Such counsel shall be reasonably acceptable to you. In addition, you will be reimbursed promptly for all Losses suffered by you and as incurred as provided herein. Marathon Partners may not enter into any settlement of loss or claim without your consent unless such settlement includes a release of you from any and all liability in respect of such claim.

You hereby agree to keep confidential and not disclose to any party, without the consent of Marathon Partners, any confidential, proprietary or non-public information (collectively, “Information”) of Marathon Partners, its affiliates or members of its Schedule 13D group which you have heretofore obtained or may obtain in connection with your service as a nominee hereunder. Notwithstanding the foregoing, Information shall not include any information that is publicly disclosed by Marathon Partners, its affiliates or members of its Schedule 13D group or any information that you can demonstrate is now, or hereafter becomes, through no act or failure to act on your part, otherwise generally known to the public.

Notwithstanding the foregoing, if you are required by applicable law, rule, regulation or legal process to disclose any Information you may do so provided that you first promptly notify Marathon Partners so that Marathon Partners or any member thereof may seek a protective order or other appropriate remedy or, in Marathon Partners’ sole discretion, waive compliance with the terms of this Agreement. In the event that no such protective order or other remedy is obtained or Marathon Partners does not waive compliance with the terms of this Agreement, you may consult with counsel at the cost of Marathon Partners and you may furnish only that portion of the Information which you are advised by counsel is legally required to be so disclosed and you will request that the party(ies) receiving such Information maintain it as confidential.

All Information, all copies thereof, and any studies, notes, records, analysis, compilations or other documents prepared by you containing such Information, shall be and remain the property of Marathon Partners and, upon the request of a representative of Marathon Partners, all such information shall be returned or, at Marathon Partners’ option, destroyed by you, with such destruction confirmed by you to Marathon Partners in writing.

This letter agreement shall be governed by the laws of the State of New York, without regard to the principles of the conflicts of laws thereof.

* * *

If you agree to the foregoing terms, please sign below to indicate your acceptance.

Very truly yours,

MARATHON PARTNERS L.P. By: Marathon Partners Equity Management, LLC, its General Partner

By:
Name:	Mario D. Cibelli
Title:	Managing Member

ACCEPTED AND AGREED:

________________________

EX-99.4 5 ex994to13da308009003_022715.htm FORM OF COMPENSATION LETTER AGREEMENT ex994to13da308009003_022715.htm

Exhibit 99.4

MARATHON PARTNERS L.P.

c/o Marathon Partners Equity Management, LLC

One Grand Central Place

60 East 42nd Street, Suite 2306

New York, New York 10165

February ___, 2015

Dear _______:

This letter sets forth our mutual agreement with respect to compensation to be paid to you for your agreement to be named and serve as a nominee of Marathon Partners L.P. (“Marathon Partners”) for election as a director of Shutterfly, Inc. (the “Company”) at the Company’s 2015 annual meeting of stockholders (including any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof, the “Annual Meeting”).

In consideration of your agreement to be named and serve as nominee of Marathon Partners for election as a director of the Company at the Annual Meeting, the undersigned hereby agrees to pay you (i) $10,000 in cash upon Marathon Partners submitting a letter to the Company nominating you for election as a director of the Company (with such payment to be made as soon as reasonably practicable after you have been nominated) and (ii) $10,000 in cash upon the filing by Marathon Partners of a definitive proxy statement with the U.S. Securities and Exchange Commission (the “Proxy Statement”) relating to a solicitation of proxies in favor of your election as a director of the Company at the Annual Meeting. You hereby agree to use the after-tax proceeds from such compensation, or an equivalent amount of other funds, to acquire securities of the Company (the “Nominee Shares”) at such time that you shall determine, but in any event no later than 14 days after receipt of such compensation; provided, however, in the event you are unable to transact in the securities of the Company due to possession of material non-public information or any other limitation or restriction, you shall have 14 days from the first date that you can transact in the securities of the Company to acquire such securities. If elected or appointed to serve as a director of the Company’s Board, you agree not to sell, transfer or otherwise dispose of any Nominee Shares within two (2) years of your election or appointment as a director; provided, however, in the event that the Company enters into a business combination with a third party, you may sell, transfer or exchange the Nominee Shares in accordance with the terms of such business combination.

The validity, interpretation, construction and performance of this letter agreement shall be governed by the laws of the State of New York, without regard to its principles of conflict of laws, and by applicable laws of the United States. The parties hereto consent to the jurisdiction of the New York State and United States courts located in New York County, New York for the resolution of any disputes hereunder and agree that venue shall be proper in any such court notwithstanding any principle of forum non conveniens and that service of process on the parties hereto in any proceeding in any such court may be effected in the manner provided herein for the giving of notices. The parties hereto waive trial by jury in respect of any such proceeding.

This letter agreement shall bind and inure to the benefit of you and your heirs, successors and assigns.

This letter agreement may be executed in counterparts, each of which shall be deemed an original, and all of which, taken together, shall constitute one and the same instrument.

MARATHON PARTNERS L.P. By: Marathon Partners Equity Management, LLC, its General Partner

By:
Name:	Mario D. Cibelli
Title:	Managing Member

Accepted and Agreed to:

______________________

EX-99.5 6 ex995to13da308009003_022715.htm POWERS OF ATTORNEY ex995to13da308009003_022715.htm

Exhibit 99.5

POWER OF ATTORNEY

Know all by these presents, that the undersigned hereby constitutes and appoints Mario D. Cibelli, the undersigned’s true and lawful attorney-in-fact, to take any and all action in connection with (i) the undersigned’s beneficial ownership of, or participation in a group with respect to, securities of Shutterfly, Inc. (the “Company”) directly or indirectly beneficially owned by Marathon Partners L.P. or any of its affiliates (collectively, the “Marathon Partners Group”) and (ii) any proxy solicitation of the Marathon Partners Group to elect the Marathon Partners Group’s slate of director nominees to the board of directors of the Company at the 2015 annual meeting of stockholders of the Company (the “Solicitation”). Such action shall include, but not be limited to:

1. executing for and on behalf of the undersigned any Schedule 13D, and amendments thereto, filed by the Marathon Partners Group that are required to be filed under Section 13(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) and the rules thereunder in connection with the undersigned’s beneficial ownership of, or participation in a group with respect to, securities of the Company or the Solicitation;

2. executing for and on behalf of the undersigned all Forms 3, 4 and 5 required to be filed under Section 16(a) of the Exchange Act and the rules thereunder in connection with the undersigned’s beneficial ownership of, or participation in a group with respect to, securities of the Company or the Solicitation;

3. executing for and on behalf of the undersigned all Joint Filing and Solicitation Agreements or similar documents pursuant to which the undersigned shall agree to be a member of the Marathon Partners Group;

4. performing any and all acts for and on behalf of the undersigned that may be necessary or desirable to complete and execute any such document, complete and execute any amendment or amendments thereto, and timely file such form with the United States Securities and Exchange Commission and any stock exchange or similar authority; and

5. taking any other action of any type whatsoever in connection with the Solicitation, including entering into any settlement agreement, that in the opinion of such attorney-in-fact, may be of benefit to, in the best interest of, or legally required by, the undersigned, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney-in-fact may approve in such attorney-in-fact's discretion.

The undersigned hereby grants to such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary, or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact’s substitutes, shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorney-in-fact, in serving in such capacity at the request of the undersigned, is not assuming any of the undersigned's responsibilities to comply with Section 13(d), Section 16 or Section 14 of the Exchange Act.

This Power of Attorney shall remain in full force and effect until the undersigned is no longer a member of the Marathon Partners Group unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorney-in-fact.

IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 26th day of February 2015.

	/s/ Marwan Fawaz
	MARWAN FAWAZ

POWER OF ATTORNEY

IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this 26th day of February 2015.

	/s/ Thomas D. Hughes
	THOMAS D. HUGHES