Exhibit 10.32
[Salon logo]
June 5, 2006
Xxxxxxxxxxx Xxxxxxx
00 Xxxx 00xx Xxxxxx, Xxx. 0X
Xxx Xxxx, Xxx Xxxx 00000
Re: Employment Agreement
Dear Xxxxxxxxxxx:
On behalf of Salon Media Group, Inc. (the "Company"), I am pleased to
confirm our verbal offer of employment to you for the position of Senior Vice
President - Publisher, reporting to Xxxxxxxxx Xxxxxxxxx. This letter agreement
(this "Agreement") sets out the terms of your employment with the Company, which
will start on June 6, 2006 (the "Start Date").
You will be paid a starting base salary of $8,333.33 semi-monthly ($200,000
on an annualized basis), less applicable tax and other withholdings in
accordance with the Company's normal payroll procedure. You will also be
eligible to participate in various Company fringe benefit plans, including group
health insurance, 401(k), and vacation programs.
Upon your acceptance of this agreement and the commencement of your
employment on the Start Date, the Company will promptly reimburse you for up to
$5,000 for legal costs you have incurred in connection with negotiating the
terms of this Agreement. You acknowledge and agree that such costs will be
treated as additional compensation and be subject to applicable withholding.
You will be entitled to a bonus plan for Fiscal Year 2007 (April 1, 2006
through March 31, 2007) to be mutually agreed upon within thirty days of the
Start Date.
Subject to the approval of the Company's Board of Directors, you will be
granted an option to purchase 4,000,000 shares of Company common stock under the
Company's 2004 Stock Plan at an exercise price equal to the fair market value of
that stock on your option grant date. Your option will vest over a period of
four years from the date of grant (25% one year after the date of grant and 1/48
per month thereafter), and will be subject to the terms and conditions of the
Company's 2004 Stock Plan and standard form of stock option agreement, which you
will be required to sign as a condition of receiving the option.
Subject to the approval of the Company's Board of Directors, you will be
granted an option to purchase 1,000,000 shares of Company common stock at an
exercise price equal to the fair market value of that stock on your option grant
date, pursuant to an agreement to be approved by the Company's Board of
Directors. This option will vest over a period of four years from the date of
grant (25% one year after the date of grant and 1/48 per month thereafter), and
will be subject to the terms and conditions per the form of the Non Plan
Agreement attached herewith.
If the goals to be mutually agreed upon within forty-five days of the Start
Date are attained, you will be eligible to receive 5,000,000 shares of
restricted stock during your employment with the Company. The shares of
restricted stock will vest over a period of four years from the date of grant
(one fourth for each year after the date of grant). As the Company does not now
have an equity compensation plan that allows for the granting of shares of
restricted stock, the Company will solicit approval of such a plan by the
Company's Board of Directors and stockholders no later than December 31, 2007.
The vesting of all shares subject to options and shares of restricted stock
described above will be subject to your continued service to the Company during
the time periods specified.
Your employment with the Company is "at will"; it is for no specified term,
and may be terminated by you or the Company at any time, with or without cause
or advance notice.
The Company may terminate your employment under this Agreement, with or
without Cause, at any time. In the event of a termination of your employment by
the Company for a reason other than "Cause" (as defined below), your death or
your "Disability" (as defined below), or a termination of your employment by you
for a "Good Reason" (as defined below), provided that you execute and deliver a
full general release of all known and unknown claims that you may then have
against the Company arising out of or any way related to your employment or
termination of employment with the Company, you will be entitled to receive the
following: (i) a "Severance Payment" in an amount equal to twelve (12) months of
your then current Base Salary, less applicable withholding, payable in
accordance with the Company's regular payroll cycle and in equal installments
over a twelve month period (the "Severance Period") commencing either
immediately following the date of such termination of employment or a later date
as you and the Company may agree is necessary or desirable; (ii) if you are
covered under the Company's group health plan as of the date of termination of
your employment and as a result of the termination of employment you suffer a
loss of benefits under such group health plan, and you timely elect to continue
group health benefits under applicable law (COBRA), the Company will reimburse
you for any COBRA premiums you pay for COBRA coverage for the period from the
date of termination of employment until the earlier of (A) the date on which you
first become covered under another employer's group health plan, or (B) the date
that is twelve (12) months after the date of termination of your employment (the
"COBRA Payments"); (iii) an amount equal to the bonus that you would have earned
for the then current fiscal year under your then applicable bonus plan if the
Company's then current fiscal year were deemed ended (and you were deemed
employed on but not after) the date of such termination and (iv) if such a
termination of employment occurs before six months after the Start Date, 12.5%
of the shares subject to then outstanding options held by you shall be fully
vested and exercisable as of the date of termination of your employment; (v) if
such a termination of employment occurs at least six months after the Start Date
but before one year after the Start Date, vesting of 50% of the shares subject
to then outstanding options held by you shall be fully vested and exercisable as
of the date of termination of your employment; (vi) and if such a termination of
employment occurs at least one year after the Start Date, 100% of then
outstanding options held by you shall be fully vested and exercisable as of the
date of termination of your employment.
For the purposes of this Agreement, "Cause" shall mean the occurrence of
one or more of the following: (1) your theft, dishonesty, willful misconduct,
breach of fiduciary duty for personal profit, or falsification of any Company
documents or records; (2) your material failure to abide by the Company's code
of conduct or other policies (including, without limitation, policies relating
to confidentiality and reasonable workplace conduct); (3) your unauthorized use,
misappropriation, destruction or diversion of any tangible or intangible asset
or corporate opportunity of the Company (including, without limitation, your
willful improper use or disclosure of the Company's confidential or proprietary
information); (4) any intentional act by you which has a material detrimental
effect on the Company's reputation or business; (5) your repeated failure or
inability to perform any reasonable assigned duties after written notice from
the Company of, and a reasonable opportunity to cure, such failure or inability;
or (6) your conviction (including any plea of guilty or nolo contendere) of any
criminal act involving fraud, dishonesty, misappropriation or moral turpitude,
or which impairs your ability to perform your duties with the Company.
For the purposes of this Agreement, "Good Reason" shall mean the occurrence of
one or more of the following without your consent:
(a) A material and adverse change in your duties or responsibilities;
(b) The Company's failure to pay your base salary or bonus when due;
(c) The Company's failure to grant you the stock options described above;
(d) The Company's failure to grant you the restricted stock award
described above after you have attained the performance goals which
are a condition for receiving such grant (which conditions, as
described above, shall be established by mutual agreement within
thirty (30) days of the Start Date);
(e) A relocation of your principal place of employment by more than 50
miles from your principal place of employment; or
(f) The willful violation by the Company of any of its material
obligations under this Agreement;
provided, that in each case Good Reason shall only exist if you have provided
the Company with prompt written notice of your view that a "Good Reason" has
occurred and your intention to resign for Good Reason, and the Company does not
within thirty (30) days following receipt of such notice cure the adverse effect
of the event that you have asserted to be "Good Reason" for termination.
For the purposes of this Agreement, "Disability" shall mean an illness, injury
or other incapacitating condition as a result of which you are substantially
unable to perform the services required to be performed under this letter
agreement, with or without reasonable accommodation, for (i) one hundred twenty
five (125) consecutive days (or, if longer, such period as is then required by
law); or (ii) a period or periods aggregating more than one hundred eighty (180)
days (or, if longer, such period as is then required by law) in any period of
twelve (12) consecutive months.
In the event of a "Change in Control" (as defined below) all the shares
subject to then outstanding options held by you shall be fully vested and
exercisable.
For the purposes of this Agreement, "Change of Control" is defined as any
one of the following occurrences:
(a) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act")), other than a trustee or
other fiduciary holding securities of Company under an employee benefit plan of
Company, becomes the "beneficial owner" (as defined in Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly, of the securities of Company
representing more than 50% of (A) the outstanding shares of common stock of
Company or (B) the combined voting power of the Company's then-outstanding
securities; or
(b) The sale or disposition of all or substantially all of Company's assets
(or any transaction having similar effect is consummated); or
(c) Company is party to a merger or consolidation that results in the
holders of voting securities of Company outstanding immediately prior thereto
failing to continue to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of Company or such surviving
entity outstanding immediately after such merger or consolidation; or
(d) The dissolution or liquidation of Company.
The Company and you hereby agree that all controversies, claims or disputes
arising out of or relating to this Agreement, your employment and/or the
termination of your employment shall be settled by binding arbitration. The
costs of the arbitration shall be borne by the party who does not prevail in the
dispute or as otherwise determined by the arbitrator(s) in their sole
discretion.
As a condition of your employment, you will be required to sign the
Company's standard form of employee nondisclosure and assignment agreement, and
to provide the Company with documents establishing your identity and right to
work in the United States. Those documents must be provided to the Company
within three days after the Start Date.
This Agreement and the non-disclosure and stock option agreements referred
to above constitute the entire agreement between you and the Company regarding
the terms and conditions of your employment with the Company, and they supersede
all prior negotiations, representations or agreements between you and the
Company. The provisions of this Agreement regarding "at will" employment may
only be modified by a document signed by you and an authorized representative of
the Company.
Xxxxxxxxxxx, we look forward to working with you at the Company. Please
sign and date this Agreement on the spaces provided below to acknowledge your
acceptance of the terms of this Agreement.
Sincerely,
Salon Media Group, Inc.
By /s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx
Chief Financial Officer and Secretary
I agree to and accept employment with Salon Media Group, Inc. on the terms
and conditions set forth in this Agreement.
Date: June 6, 2006 /s/ Xxxxx Xxxxxxx
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Xxxxxxxxxxx Xxxxxxx
