EXHIBIT
10.1
[THE KNOT LOGO]
August 13,
2008
Mr. John P.
Mueller
Dear
John:
It gives me
great pleasure to confirm our offer for you to join The Knot, Inc.
as Chief Financial Officer , reporting to the Chief
Executive Officer. We expect that your first day of employment will
be September 2, 2008. You will perform those services that are
reasonably associated with this title and position and those
services reasonably assigned to you and that are commensurate with
your position. In this regard, you shall be responsible for The
Knot’s finance, accounting, treasury, tax and economic
planning functions; financial reporting; and communicating with the
investor and analyst community.
Please
understand that this offer is conditional upon our completion of
customary background checks and your signing of a non-disclosure,
non-competition and non-solicitation agreement, as well as your
compliance with the U.S. Citizenship and Immigration Services
regulations requiring the establishment of your identity and right
to work in the United States.
Compensation Terms
If you commence
employment with The Knot, your compensation package would consist
of the following terms. These terms are subject to the approval of
the Compensation Committee of the Board of Directors, upon the
recommendation of The Knot’s management.
Base
Salary
Your annualized
salary rate is $300,000 (“Base Salary”), which will be
paid semi-monthly, on the 15th and on the last workday of the
month. The Compensation Committee shall review your performance and
Base Salary annually for potential increases. Your Base Salary will
be subject to withholding of income, social security and employment
taxes in accordance with The Knot’s normal
practices.
Sign-On
Bonus
You will
receive a grant of 6,000 vested shares of common stock of the
Company, which will be made as soon as possible following the
commencement of your employment, and subject to the standard terms
and conditions of The Knot’s 1999 Stock Incentive Plan and a
stock issuance agreement between you and The Knot. This stock grant
will be subject to withholding of income, social security and
employment taxes in accordance with the Company’s normal
practices.
Incentive Bonus
You will be
eligible to earn an annual cash incentive bonus expressed as a
percentage of Base Salary. Each year, your target and maximum bonus
opportunities will be set by the Compensation Committee. The amount
of your actual bonus will be determined according to your
achievement of certain performance criteria established by the
Compensation Committee. The incentive bonus will be conditioned
upon the other terms and conditions of the incentive compensation
program for executive officers, as may be in effect from time to
time, and is payable following the completion of The Knot’s
annual audit and approval by the Compensation Committee. The
incentive bonus is not guaranteed and is completely discretionary;
you may receive an incentive bonus in one year but not the
next.
Mr. John P.
Mueller
August 13,
2008
Page
2
Notwithstanding
anything to the contrary contained herein, for the year ending
December 31, 2008, you will fully participate in the incentive
compensation program, your target and maximum bonus opportunities
therein will be based on your annualized Base Salary and not on
your actual salary paid for 2008, and you are guaranteed to receive
a bonus of no less than $33,333, payable at the same time as
incentive bonuses are paid to other executive officers, but in no
event later than March 15, 2009.
Restricted Stock Grant
You will
receive a restricted stock grant of 50,000 shares, which will vest
over a four-year term, with the first 25% of the grant vesting on
the first anniversary of the grant, and the balance of the grant
vesting in equal monthly installments thereafter. The restricted
stock grant will be made as soon as possible following the
commencement of your employment, and will be subject to the
standard terms and conditions of The Knot’s 1999 Stock
Incentive Plan and a restricted stock agreement between you and The
Knot. Your restricted stock agreement will provide that if The Knot
is acquired by merger, asset sale or sale of more than 50% of its
voting securities by the stockholders (in each case in accordance
with the definition of “change in control” under the
Stock Incentive Plan), in addition to those shares of restricted
stock that have previously vested before such change in control in
accordance with the regular vesting schedule, an amount of shares
of restricted stock shall vest upon such event equal to the greater
of (1) the shares of restricted stock that would otherwise have
vested during the one year period following the change in control,
and (2) 50% of the shares of restricted stock that are not vested
on the date of the change in control.
Other
Compensation
You will be
eligible to participate in future incentive compensation programs
for executive officers, if and when such programs are established
by the Compensation Committee of the Board of Directors, at a level
commensurate with your position at the time awards are granted and
on the same general terms and conditions as apply to the other
executive officers of The Knot. Without limiting the foregoing,
your participation in future equity grant programs made available
to executive officers will not be reduced as compared to other
executive officers because of your stock grants made pursuant to
this agreement. In addition, in no event will the terms of equity
awards granted to you (including your stock grants made pursuant to
this agreement) with respect to accelerated vesting upon a
“change in control” be less favorable than the terms
made available to any other executive officer, and The Knot will
cause any award to be modified if and as necessary to carry out
this provision.
Severance
If your
employment is involuntarily terminated without cause by The Knot or
a successor entity, or if you resign for “Good Reason,”
you shall receive a lump-sum payment equal to your annualized Base
Salary, at your rate of pay in effect immediately prior to such
termination or resignation, and for 12 months after such
termination or resignation receive all benefits (other than vesting
of any equity award) that were associated with your employment
immediately prior to such termination or resignation (to the extent
and at such levels that these benefits remain available to
employees of The Knot generally during such 12-month period). The
Knot shall pay the lump-sum payment in connection with an
involuntary termination without cause upon such termination, and
the lump-sum payment in connection with a Good Reason resignation
within 10 business days of the end of the Cure Period, as defined
below.
Mr. John P.
Mueller
August 13,
2008
Page
3
An involuntary
termination “without cause” shall mean a termination of
employment other than for death, disability, termination for Cause
or any resignation by you other than a resignation for Good Reason.
“Cause” shall mean (1) your willful failure to
perform