CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE OF ALL CLAIMS
Exhibit
10.40
AND
GENERAL RELEASE OF ALL CLAIMS
This
Confidential Separation Agreement and General Release of All Claims (“Separation
Agreement”) are made by and between Salon Media Group, Inc. (“Company”) and
Xxxxxxxxxxx Xxxxxxx (“Executive”) with respect to the following
facts:
A. Executive
was employed by Company as its Chief Executive Officer.
B. Executive’s
employment ceased effective September 22, 2008 (“Separation Date”).
C. Executive
and Company are parties to three stock option agreements, two of which are dated
June 6, 2006 and a third which is dated December 7, 2006, granting Executive the
right to purchase 50,000, 200,000 and 25,000 shares, respectively, of Company
Common Stock (the “Options”).
D. The
parties desire to settle all claims and issues that have, or could have been
raised, in relation to Executive’s employment with Company and arising out of or
in any way related to the acts, transactions or occurrences between Executive
and Company to date, including, but not limited to, Executive’s employment with
Company or the termination of that employment, on the terms set forth
below.
THEREFORE,
in consideration of the promises and mutual agreements hereinafter set forth, it
is agreed by and between the undersigned as follows:
1. Severance
Package. Executive and Company are parties to an Employment
Agreement dated as of June 5, 2008 as amended as of September 13, 2007
(collectively the “Employment Agreement”). Pursuant to the
terms of the Employment Agreement, in exchange for a release of claims in favor
of the Company, the Company agrees to provide Executive with the following
payments and benefits (“Severance Package”). Executive acknowledges
and agrees that this Severance Package constitutes adequate legal consideration
for the promises and representations made by him in this Separation
Agreement.
1.1 Severance
Payment. Company agrees to pay Executive the equivalent of
twelve (12) months base salary, or Two Hundred and Thirty Thousand Dollars
($230,000.00), less all appropriate federal and state income and employment
taxes (“Severance Payment”). The Severance Payment will be made in
accordance with the following schedule: (i) One Hundred and Fifteen Thousand
Dollars ($115,000) will be paid on the date that is six (6) months after the
Separation Date of this Agreement (“Initial Severance Payment Date”);
and (ii) One Hundred and Fifteen Thousand Dollars ($115,000) will be paid in
twelve (12) equal installments in accordance with Company’s regular payroll
schedule, beginning the first regular pay date immediately following the Initial
Severance Payment Date.
1.2 Bonus
Payment In addition, Company agrees to pay Executive a
partial bonus for fiscal year 2008 in the amount of Twenty Three Thousand Nine
Hundred Seventy Three Dollars ($23,973.00), less all appropriate federal and
state income and employment taxes (“Bonus Payment”). The Bonus
Payment will be paid in a lump sum within ten (10) business days following the
Effective Date of this Agreement.
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1.3 Continuation of Group Health
Benefits. Executive will continue to receive group health
insurance benefits on the same terms as during Executive’s employment for the
earlier of (i) twelve (12) months following the Separation Date
and (ii) the date on which Executive becomes entitled to comparable benefits
provide by another employer, provided Company’s insurance carrier allows for
such benefits continuation. In the event Company’s insurance carrier
does not allow such coverage continuation, Company agrees to pay the premiums
required to continue Executive’s group health care coverage for the twelve-month
period, under the applicable provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”), provided that Executive timely elects to
continue and remains eligible for these benefits under COBRA, and does not
obtain health coverage through another employer during this
period. Thereafter, Executive will be solely responsible for payment
of COBRA premiums.
1.4
Accelerated Stock
Option Vesting. All unvested shares of Common Stock
subject to the Options shall become immediately vested in full and exercisable
in accordance with their terms. Executive agrees and acknowledges
that he is not entitled to any acceleration of the vesting of Executive’s
restricted stock award dated December 6, 2007.
1.5 Neutral
Reference. In response to any inquiries for employment
references that are directed to Company’s Human Resources Department, Company
will provide only Executive’s dates of employment and positions
held.
1.6 Resignation. Company
agrees to characterize Executive’s separation as a voluntary
resignation. If asked by any third parties about Executive’s
employment with the Company, Executive shall respond that he resigned from
employment with the Company.
1.7 Reimbursement of Business
Expenses. Executive shall be reimbursed for any reasonable and
necessary expenses incurred by him in connection with his employment with the
Company through the Separation Date in accordance with applicable Company
expense reimbursement policies, provided that any requests for such
reimbursement must be made in writing within thirty (30) days after the
effective date of this Agreement. Any such request shall relate
only to appropriately documented business expenses incurred by Employee in
performance of his duties in accordance with Company's established practices.
The Company shall make the payment to Executive for any outstanding reasonable
and necessary expenses as soon as possible but not later than ten (10) business
days after Executive submits such expenses for reimbursement.
2. Transition
Assistance. During the two month period following the
Separation Date, Executive agrees to make himself available, as needed, without
any additional compensation, to answer business-related questions by telephone
or in person as deemed necessary by Company. Company’s request for
Executive’s assistance during this time shall take into consideration his
personal and business commitments and the amount of notice provided to him. The
Company will reimburse Executive for pre-approved, reasonable out-of-pocket
travel (including travel and accommodations), and other incidental expenses,
that he incurs as a result of his assistance pursuant to this paragraph. In
addition, in the event that such transitional assistance exceeds fifteen (15)
hours of Executive’s time, the Company will compensate Executive for time spent
at the hourly rate of $150.00 per hour.
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3. General
Release.
3.1 Executive
unconditionally, irrevocably and absolutely releases and discharges Company and
TriNet Corporation (“TriNet”), and any parent and subsidiary corporations,
divisions and affiliated corporations, partnerships or other affiliated entities
of Company and TriNet, past and present, as well as Company’s and TriNet’s
employees, officers, directors, agents, successors and assigns (collectively,
“Released Parties”), from all claims related in any way to the transactions or
occurrences between them to date, to the fullest extent permitted by law,
including, but not limited to, Executive’s employment with Company, the
termination of Executive’s employment, and all other losses, liabilities,
claims, charges, demands and causes of action, known or unknown, suspected or
unsuspected, arising directly or indirectly out of or in any way connected with
Executive’s employment with Company. This release is intended to have
the broadest possible application and includes, but is not limited to, any tort,
contract, common law, constitutional or other statutory claims, including, but
not limited to alleged violations of the California Labor Code or the federal
Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964 and the
California Fair Employment and Housing Act, the Americans with Disabilities Act,
and all claims for attorneys’ fees, costs and expenses.
3.2 Executive
acknowledges that he may discover facts or law different from, or in addition
to, the facts or law that he knows or believes to be true with respect to the
claims released in this Separation Agreement and agrees, nonetheless, that this
Separation Agreement and the release contained in it shall be and remain
effective in all respects notwithstanding such different or additional facts or
the discovery of them.
3.3 Executive
declares and represents that he intends this Separation Agreement to be complete
and not subject to any claim of mistake, and that the release herein expresses a
full and complete release and Executive intends the release herein to be final
and complete. Executive executes this release with the full knowledge
that this release covers all possible claims against the Released Parties, to
the fullest extent permitted by law.
3.4 Executive
expressly waives Executive’s right to recovery of any type, including damages or
reinstatement, in any administrative or court action, whether state or federal,
and whether brought by Executive or on Executive’s behalf, related in any way to
the matters released herein.
3.5 Notwithstanding the above, nothing in
this letter is intended to release or waive any rights Executive has under
COBRA, to unemployment insurance benefits (it being understood that the Company
shall not contest Executive’s application for unemployment insurance benefits),
any accrued pension benefits or any other vested benefit under any employee plan
in which Executive was a participant prior to termination, or any rights to
defense and indemnity under the Indemnity Agreement between Executive and the
Company dated June 20, 2006, or any corporate bylaw, resolution, policy or
practice.
4. California Civil Code
Section 1542 Waiver. Executive expressly acknowledges and
agrees that all rights under Section 1542 of the California Civil Code are
expressly waived. That section provides:
A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS OR HER FAVOR AT THE
TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY
AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.
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5. Representation Concerning
Filing of Legal Actions. Executive represents that, as of the
date of this Separation Agreement, he has not filed any lawsuits, charges,
complaints, petitions, claims or other accusatory pleadings against Company or
any of the other Released Parties in any court or with any governmental
agency. Executive further agrees that, to the fullest extent
permitted by law, he will not prosecute, nor allow to be prosecuted on his
behalf, in any administrative agency, whether state or federal, or in any court,
whether state or federal, any claim or demand of any type related to the matters
released above, it being the intention of the parties that with the execution of
this release, the Released Parties will be absolutely, unconditionally and
forever discharged of and from all obligations to or on behalf of Executive
related in any way to the matters discharged herein.
6. Nondisparagement. Executive
agrees that he will not make any voluntary statements, written or oral, or cause
or encourage others to make any such statements that defame, disparage or in any
way criticize the personal and/or business reputations, practices or conduct of
Company or any of the other Released Parties. Likewise, the Company,
through its employees and affiliates with actual ability to speak on the matter,
agrees that it will not make any voluntary statements, written or oral, or cause
or encourage others to make any such statements that defame, disparage or in any
way criticize the personal and/or business reputations, practices or conduct of
Executive.
7. Confidentiality. Executive
agrees to abide by all the surviving provisions of the Employment Agreement and
the employee nondisclosure and assignment agreement Executive executed when he
joined the Company, including but not limited to, promises to protect all
confidential and proprietary (i.e. non-public) information of Company and
promises not to solicit any of Company’s employees for a period of six (6)
months after his termination.
8. Return of Company
Property. By signing this Separation Agreement, Executive
represents and warrants that he will have returned to Company on or before the
Separation Date, all Company property, including all confidential and
proprietary information, as described in paragraph 7 and all materials and
documents containing trade secrets and copyrighted materials, including all
copies and excerpts of the same.
9. Enforcement. If
Executive breaches any of the terms in paragraphs 6, 7, or 8 above or their
subparts, Company will immediately cease making the separation payments
described in subparagraphs 1.1 and 1.2 above, to the extent
those payments have not yet been made. This shall in no way limit Company’s
right to pursue all legal and equitable remedies available to it as a result of
Executive’s breach of this Separation Agreement.
10. Arbitration of
Disputes. The parties agree to arbitrate any and all disputes
arising out of or relating to the enforcement of this Separation Agreement, or
for the breach hereof, or the interpretation hereof. The arbitration
will be conducted in San Francisco, California and shall be before a single,
neutral arbitrator selected by the parties. If the parties are unable
to agree on a single neutral arbitrator, the arbitrator shall be selected in
accordance with the rules of the American Arbitration Association for Employment
Disputes. The arbitrator shall have the power to enter any award that
could be entered by a judge of a trial court of the State of California, and
only such power, and shall follow the law. The parties agree to abide
by and perform any award rendered by the arbitrator. The arbitrator
shall issue the award in writing and therein state the essential findings and
conclusions on which the award is based. Judgment on the award may be
entered in any court having jurisdiction thereof. In no event shall
the demand for arbitration be made after the date when institution of legal or
equitable proceedings based on such claim, dispute or other matter in question
would be barred by the applicable statute of limitations. This
agreement to arbitrate shall be specifically enforceable under the prevailing
arbitration law, and shall be in accordance with the procedures established for
arbitration in the California Code of Civil Procedure. The parties
understand that by agreeing to arbitrate their disputes, they are giving up
their right to have their disputes heard in a court of law and, if applicable,
by a jury. The Company shall bear the costs and expenses of any
mediation and/or arbitration. The arbitrator shall have the authority
to award attorneys’ fees and costs to the prevailing party.
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11. No
Admissions. By entering into this Separation Agreement, the
Released Parties make no admission that they have engaged, or are now engaging,
in any unlawful conduct. The parties understand and acknowledge that
this Separation Agreement is not an admission of liability and shall not be used
or construed as such in any legal or administrative proceeding.
12. Severability. In
the event any provision of this Separation Agreement shall be found
unenforceable by an arbitrator or a court of competent jurisdiction, the
provision shall be deemed modified to the extent necessary to allow
enforceability of the provision as so limited, it being intended that Company
shall receive the benefits contemplated herein to the fullest extent permitted
by law. If a deemed modification is not satisfactory in the judgment
of such arbitrator or court, the unenforceable provision shall be deemed
deleted, and the validity and enforceability of the remaining provisions shall
not be affected thereby.
13. Applicable
Law. The validity, interpretation and performance of this
Separation Agreement shall be construed and interpreted according to the laws of
the United States of America and the State of California.
14. Binding on
Successors. The parties agree that this Separation Agreement
shall be binding on, and inure to the benefit of, his or its successors, heirs
and/or assigns.
15. Full
Defense. This Separation Agreement may be pled as a full and
complete defense to, and may be used as a basis for an injunction against, any
action, suit or other proceeding that may be prosecuted, instituted or attempted
by Executive in breach hereof. Executive agrees that in the event an
action or proceeding is instituted by the Released Parties in order to enforce
the terms or provisions of this Separation Agreement, the Released Parties shall
be entitled to an award of reasonable costs and attorneys’ fees incurred in
connection with enforcing this Separation Agreement.
16. Good
Faith. The parties agree to do all things necessary and to
execute all further documents necessary and appropriate to carry out and
effectuate the terms and purposes of this Separation Agreement.
17. Entire Agreement;
Modification. This Separation Agreement, including the Options
associated grant documents herein incorporated by reference and any
confidentiality or proprietary rights agreement signed by Executive, is intended
to be the entire agreement between the parties and supersedes and cancels any
and all other and prior agreements, written or oral, between the parties
regarding this subject matter. It is agreed that there are no
collateral agreements or representations, written or oral, regarding the terms
and conditions of Executive’s separation of employment with Company and
settlement of all claims between the parties other than those set forth in this
Separation Agreement. This Separation Agreement may be amended only by a written
instrument executed by all parties hereto.
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18. Effective
Date. Company shall provide Executive with seven (7) business
days to consider this Agreement and to execute and return a copy of this
Agreement to the Company (the “Effective Date”).
THE
PARTIES TO THIS SEPARATION AGREEMENT HAVE READ THE FOREGOING SEPARATION
AGREEMENT AND FULLY UNDERSTAND EACH AND EVERY PROVISION CONTAINED
HEREIN. WHEREFORE, THE PARTIES HAVE EXECUTED THIS SEPARATION
AGREEMENT ON THE DATES SHOWN BELOW.
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Dated:
11/14/08
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By: /s/ Xxxxxxxxxxx
Xxxxxxx
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Xxxxxxxxxxx
Xxxxxxx
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SALON
MEDIA GROUP, INC.
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Dated:
11/13/08
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By: /s/ Xxxxxx X.
Xxxxxxx
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Xxxxxx
X. Xxxxxxx
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Chief
Financial Officer
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