EMPLOYMENT
AGREEMENT
This Employment
Agreement (this “
Agreement ”) is made by and between
Salon.com , a
Delaware corporation (the “
Company ”) and Richard Gingras (“
Executive ”). This Agreement is
effective as of May 1, 2009 (the “ Effective
Date ”).
1.
Employment Period
. The Company agrees to employ Executive, and
Executive hereby agrees to accept such employment, subject to the
terms and conditions of this Agreement, for the period commencing
on the Effective Date and ending on the date that Executive’s
employment with the Company terminates (the “
Termination Date ”) (such period, the “
Employment Period ”) pursuant to the provisions
of Section 4 of this Agreement.
(a)
Position and Duties. During the Employment
Period, Executive shall serve as Chief Executive Officer of the
Company, with such duty, authority and responsibility as are
commensurate with such position and assigned by the Company’s
board of directors. During the Employment Period,
Executive will devote Executive’s best efforts and
substantially all of Executive’s business time and attention
to the business of the Company (except for vacation periods and
reasonable periods of absence for illness or incapacity as
permitted by the Company’s general employment policies and
the terms of this Agreement).
(i)
Base Salary. During the Employment Period,
Executive shall receive a base salary (“ Base
Salary ”) of $230,000, payable in accordance with the
Company’s standard payroll practices and subject to standard
payroll deductions and withholdings.
(ii)
Annual Performance Bonus . For each fiscal
year, Executive will be eligible to receive a target annual bonus
based upon the Company’s achievement of revenue and profit
goals (“ Target Annual Bonus
”). The Company’s Compensation Committee has
the discretion to interpret goals, performance, and final payment
amounts. Executive’s initial Target Annual Bonus
is 50% of Executive’s Base Salary. Executive will
be eligible to receive a pro rata performance bonus for fiscal
2010.
(iii)
Stock Options. It is the intent of the parties
that the Company grant Executive options to purchase the
Company’s common stock comprising 10% of the Company’s
fully diluted equity (the “ Initial Grant
”) measured as of the closing of the Company’s next
financing of $3,000,000 or more (the “
Financing ”). The Initial Grant
shall qualify as incentive stock options to the maximum extent
permitted under applicable law.
(A)
First Component of the Initial Grant . The first
component of the Initial Grant shall be 1,416,211 stock options (
i.e. , 8% of the Company’s fully diluted equity
measured as of the date of grant), which shall be granted as soon
as reasonably practicable following Executive’s first date of
employment with the Company.
(B)
Completion of the Initial Grant . The remainder
of the Initial Grant shall comprise such amount of Company stock
options as are necessary to ensure that the entire Initial Grant
comprises 10% of the Company’s fully diluted equity measured
as of the closing of the Financing, which grant shall be made as
soon as reasonably practicable following the closing of the
Financing.
(C)
Vesting . Vesting on the Initial Grant shall
commence on Executives first date of employment with the Company
(the “ Vesting Commencement Date ”) and
one-fourth (1/4 th )
of the shares subject to the Initial Grant shall vest and become
exercisable on the first anniversary of the Vesting Commencement
Date and one-forty-eighth (1/48) of the Initial Grant shall vest
and become exercisable in a series of thirty-six (36) successive
equal monthly installments measured from the first anniversary of
the Vesting Commencement Date. For the avoidance of
doubt, all stock options constituting the entire Initial Grant
shall vest in accordance with this schedule ( i.e. , a
four-year period starting on the Vesting Commencement Date)
notwithstanding the actual date of grant of the second component of
the Initial Grant.
(D)
Post-Termination Exercise Period
. Notwithstanding anything to the contrary contained in
the Plan or any stock option agreement, the exercise period of the
options comprising the Initial Grant following Executive’s
termination of employment shall be twelve (12) months.
(E)
Other Terms . Except as otherwise provided
herein, the stock options comprising the Initial Grant and the
Company’s common stock purchased upon exercise of such stock
options shall be subject to the terms of the Plan and the stock
option agreement and such other agreements pursuant to which they
may be granted and/or exercised.
(iv)
Consulting Services . The parties acknowledge
that Executive has been providing services to the Company in a
consulting capacity prior to the Effective Date. In
consideration for such services, the Company has agreed to pay
Executive (i) $32,000 within five (5) days following the Effective
Date and (ii) 110,345 shares of restricted stock vesting
January 1, 2010 (the “ Restricted Stock
”) to be granted as soon as reasonably practicable following
the Effective Date.
(v)
Registration . The Company shall register the
Initial Grant and the Restricted Stock on a Form S-8 as soon as
reasonably practicable following the dates of grant of each
component of such equity awards.
(vi)
Employee Benefit Plans. Except as otherwise expressly
provided herein, during the Employment Period, Executive shall be
entitled to participate in all employee benefit, vacation and other
plans, policies and programs for which Executive is eligible under
the terms and conditions of such plans, policies and programs which
may be in effect from time to time and which the Company generally
makes available to its executives; provided, however, that
Executive shall be entitled to no less than four weeks (20 working
days) of paid days off during each calendar year.
(c)
Insurance . During the Employment Period and
during any statute of limitations period thereafter, the Company
will maintain industry standard directors and officers insurance
coverage for its executives generally in an amount to be determined
by the Company’s board of directors.
(d)
Other Terms and Conditions. The employment
relationship between the parties shall be governed by the general
employment policies and procedures of the Company, including (but
not limited to) those relating to the protection of confidential
information and assignment of inventions; provided, however,
that when the terms of this Agreement differ from or are in
conflict with the Company’s general employment policies or
procedures, this Agreement shall control. Executive
agrees to abide by all of the Company’s policies and
procedures in effect from time to time, and further agrees to
continue to abide by the terms and conditions of the Employee
Confidentiality and Inventions Assignment Agreement between
Executive and the Company, entered into on contemporaneously
herewith and attached hereto as Exhibit A
. Executive’s duties under the Employee
Confidentiality and Inventions Assignment Agreement shall survive
termination of Executive’s employment with the
Company.
(a)
Activities . During the Employment Period,
Executive will not, without the Company’s express written
consent, (i) engage in any employment or business activity other
than for the Company or (ii) solicit the business of any client or
customer of the Company (other than on behalf of the Company);
provided that Executive may devote reasonable time and
attention to (x) serving as a director, advisory board member,
trustee or member of any committee of any company or other entity
with the prior approval of the Company’s board of directors,
which approval shall not be unreasonably withheld, (y) engaging in
charitable or community activities and (z) managing his
personal investments and affairs, to the extent that such services
or activities do not substantially interfere with the performance
of Executive’s duties under this Agreement.
(b)
No Conflicts . During the Employment Period,
Executive agrees not to acquire, assume or participate in, directly
or indirectly, any position, investment or interest adverse to or
in conflict with the interest of the Company, its business or
prospects, financial or otherwise; provided , however
, that this provision shall not prohibit Executive from making a
passive investment not exceeding 1% of the outstanding equity
securities of any publicly-traded company.
4.
Termination Of Employment;
Change in Control .
(a)
At-Will Employment . Executive’s employment
relationship with the Company is at-will, and either Executive or
the Company may terminate that employment relationship at any time
and for any reason, with or without Cause (as defined below) upon
giving ten (10) calendar days written notice to the other
party; provided, however, that the Company may effect an
immediate termination of this Agreement upon a termination for
Cause. This at-will employment relationship cannot be
changed except in writing signed by the Executive and a duly
authorized officer of the Company.
(b)
Cause . For purposes of this Agreement,
Executive’s employment will be deemed to be terminated for
“Cause” if his termination occurs for any of the
following reasons:
(i) his
conviction of any felony involving the Company or any crime
involving fraud or dishonesty;
(ii) any
unauthorized use or willful disclosure of the Company’s
material proprietary information which has a materially adverse
effect on the Company’s business or reputation;
(iii) any
intentional misconduct or gross negligence on Executive’s
part which has a materially adverse effect on the Company’s
business or reputation; or
(iv) Executive’s
willful and continued failure to substantially perform the duties,
functions and responsibilities of his executive position (other
than any such failure resulting from his incapacity due to
Disability or any such actual or anticipated failure resulting from
his resignation for Good Reason) after a written demand for
substantial performance is delivered to Executive by the Board,
which demand specifically identifies the manner in which the Board
believes that he has not substantially performed his duties, and
which performance is not substantially corrected by him within 30
days of receipt of such demand. For purposes of the previous
sentence, no act or failure to act on Executive’s part shall
be deemed “willful” unless done, or omitted to be done,
by him not in good faith and without reasonable belief that his
action or omission was in the best interest of the
Company.
Notwithstanding
the foregoing, Executive shall not be deemed to have been
terminated for Cause unless and until there shall have been
delivered to him a copy of a resolution duly adopted by the
affirmative vote of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after reasonable
notice to Executive and an opportunity for him, together with his
counsel, to be heard before the Board), finding that, in the good
faith opinion of the Board, Executive was guilty of conduct set
forth above in clause (i), (ii), (iii) or (iv) of the first
sentence of this paragraph and specifying the particulars thereof
in detail.
(c)
Good Reason . For purposes of this Agreement,
“ Good Reason ” means that Executive
voluntarily resigns within ninety (90) days following the
expiration of any cure period (as discussed below) following the
occurrence of any of the following events, without
Executive’s written consent:
