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EXHIBIT 99.39
STAN LEE MEDIA, INC.
15821 Ventura Boulevard, Suite 675
Encino, CA 91436
Telephone: (818) 461-1757
Fax: (818) 461-1760
June 12, 2000
VIA FACSIMILE TRANSMISSION
Mr. Kenneth Williams
457 Cuesta Way
Los Angeles, CA 90077
Dear Ken:
On behalf of Stan Lee Media, Inc. (the "Company"), I am pleased to offer you the
position of President and Chief Executive Officer of the Company, and membership
on the Company's Board of Directors. This letter confirms the material terms of
the employment agreement (the "Agreement") between you and the Company and,
unless and until a more formal agreement is signed, this letter shall constitute
a binding agreement between you and the Company, upon the following terms:
1. Term: The term of this Agreement shall be three (3) years,
commencing not later than July 15, 2000 (the "Commencement
Date").
2. Officer/Board Position: You will serve as the Company's President
and Chief Executive Officer, and shall be a member of the
Company's Board of Directors (provided that you shall serve ex
officio on the Board of directors until such time as the
Company's articles of incorporation are amended through merger or
otherwise, which the Company will use its best efforts to
accomplish as soon as practicable). You shall report to the
Company's Board of Directors. You shall be the most senior
executive at the Company, and all other senior executives will
report ultimately to you. You will have the powers normally held
by a President and Chief Executive Officer, including, without
limitation, the power to hire and fire employees of the Company,
and the power to select the Company's attorneys, accountants
(subject to audit committee approval), consultants and bankers,
all subject to normal oversight by the Company's board of
directors.
3. Compensation and Benefits:
a. Annual Base Compensation: For the first year, initially
$250,000, payable in accordance with the Company's
standard payroll policies, increasing to $350,000 upon
Company securing equity or convertible debt financing
resulting in a gross offering by the Company of not less
than $20,000,000 (the "Financing"); for the second and
third years, annual base compensation of $400,000.
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Mr. Kenneth Williams
June 12, 2000
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b. Annual Bonuses:
i. Guaranteed: Company shall pay you a guaranteed
annual bonus equal to twenty-five percent (25%) of
your then annual base compensation, payable on each
anniversary of the Commencement Date.
ii. Performance Bonus: Company shall pay you an
additional annual performance bonus up to
twenty-five percent (25%) of your then annual base
compensation subject to attainment of target
milestones to be mutually negotiated in good faith,
payable not later than 45 days following each
anniversary of the Commencement Date.
c. Equity Participation:
i. Restricted Stock: Company hereby grants you a
number of shares of restricted stock equal to one
half of one percent (0.5%) of the Company's issued
and outstanding common stock, vesting as follows:
twenty-five percent (25%) of said restricted stock
vesting at the earlier to occur of (x) successful
consummation of the Financing, and (y) six (6)
months following the Commencement Date, with the
balance of said restricted stock vesting 1/30th
monthly over the remainder of the Term. You and the
Company shall cooperate in making a Section 83(b)
election in respect of such stock. The Company
shall make "gross up" cash payments to you to the
extent required to satisfy your tax liabilities
resulting from such grant and gross up (but not any
tax liabilities resulting from the ultimate sale of
such restricted stock).
ii. Options: Company hereby grants you options to
purchase up to eight percent (8%) of the Company's
issued and outstanding common stock, exercisable at
a purchase price equal to $9.50, the closing price
of the Company's common stock on the OTC bulletin
board on the date upon which you and the Company
reached agreement on the principal terms of your
employment. Such options shall vest as follows:
twenty-five percent (25%) of said options vesting
at the earlier to occur of (x) successful
consummation of the Financing, and (y) six (6)
months following the Commencement Date, with the
balance of said options (75%) vesting 1/30th
monthly over the remainder of the Term. Such
options shall have a term of 10 years from the
Commencement
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Mr. Kenneth Williams
June 12, 2000
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Date.
A. Financing of Option Exercise.
Company shall provide you with a
non-recourse loan to finance your
option exercises, secured by the
stock so purchased and repayable
upon the earlier to occur of the
sale of the underlying stock or
expiration of the Term. You shall
also have the right to perform a
"cashless exercise" of such options.
B. Anti-dilution Protection. No
anti-dilution protection except (i)
customary anti-dilution protection
for stock splits, stock dividends,
mergers, recapitalizations and
similar transactions, and (ii) if
stock or stock warrants, options to
purchase shares or the like are
granted to a third party for
services during the first 18 months
after the Commencement Date (unless
you have been previously terminated
for Cause), then a number of
additional securities necessary to
maintain your percentage ownership
in the Company against dilution
caused from such grant shall be
issued to you on identical terms to
those contained herein, except that
the exercise price of such shares,
options or the like shall be equal
to the price granted to such third
party and such shares shall vest at
a rate equal to the lesser of your
rate of vesting and the rate of
vesting granted to such new hire.
d. Benefits/Perquisites: You shall be entitled to receive
benefits at a level and in a manner consistent with your
position as President and Chief Executive Officer of a
small, public Internet content company. In addition,
Company shall provide you with a monthly automobile
allowance of $1,600, and related perquisites consistent
with your position as the President and Chief Executive
Officer of a public company, including without limitation,
a home computer, cellular telephone, and Internet
connectivity, to be mutually negotiated in good faith. You
shall be named as an insured under the Company's directors
and officers insurance policies, and the Board of
directors shall take such action as is necessary to ensure
that you are irrevocably entitled to indemnification by
the Company, to the greatest extent permitted under
applicable law, against
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Mr. Kenneth Williams
June 12, 2000
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any and all claims, the costs of defense or conduct of
such claims, including the costs of counsel, retained by
you. Such right of indemnification shall survive any
termination of your employment with the Company.
e. Reimbursement of Attorneys' Fees: Company shall pay or
reimburse you for attorneys' fees incurred in connection
with the negotiation and preparation of this Agreement and
other ancillary or more formal agreements as contemplated
hereby, in an amount not to exceed $25,000.
If, during your employment with the Company there is a Change of
Control (as defined below) all of your options and restricted stock shall vest
and become immediately exercisable. "Change of Control" shall mean the
occurrence of any of the following events:
(a) an acquisition of any voting securities (or securities
convertible or exchangeable for voting securities) of the Company (the "Voting
Securities) by any "person" (as the term "person" is used for purposes of
Section 13(d) or Section 14(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) immediately after which such person has
"beneficial ownership" (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) ("Beneficial Ownership") of or otherwise is entitled to obtain (by
virtue of any option, conversion right, etc.) more than 50% or more of the
combined voting power of the Company's then outstanding Voting Securities;
provided, however, in determining whether a Change in Control has occurred,
Voting Securities that are acquired in a Non-Control Acquisition (as hereinafter
defined) shall not constitute an acquisition that would cause a Change in
Control. "Non-Control Acquisition" shall mean an acquisition by (A) an employee
benefit plan (or a trust forming a part thereof) maintained by (1) the Company
or (2) any corporation, partnership or other person of which a majority of its
voting power or its equity securities or equity interest is owned directly or
indirectly by the Company (a "Subsidiary"), (B) the Company or any Subsidiary,
or (C) any person in connection with a Non-Control Transaction (as hereinafter
defined);
(b) the individuals who constitute the Board of Directors of the
Company as of the date hereof (the "Incumbent Board") cease for any reason to
constitute a majority of the Board of Directors; provided, however, that if the
election, or nomination for election by the Company's stockholders, of any new
director was approved by a vote of at least two-thirds of the Incumbent Board,
such new director shall be considered as a member of the Incumbent Board;
provided, further, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a result of
either an actual or threatened "election contest" (as described in Rule 14a-11
promulgated under the Exchange Act) (an "Election Contest") or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Board of Directors (a "Proxy Contest") including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest; or
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Mr. Kenneth Williams
June 12, 2000
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(c) approval by stockholders of the Company of: (A) a merger,
consolidation, share exchange or reorganization involving the Company, unless
(1) the stockholders of the Company, immediately before such merger,
consolidation, share exchange or reorganization, own, directly or indirectly
immediately following such merger, consolidation, share exchange or
reorganization, more than 50% of the combined voting power of the outstanding
voting securities of the corporation that is the successor in such merger,
consolidation, share exchange or reorganization (the "Surviving Company") in
substantially the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation, share exchange or reorganization,
(2) the individuals who were members of the Incumbent Board immediately prior to
the execution of the agreement providing for such merger, consolidation, share
exchange or reorganization constitute at least two-thirds of the members of the
board of directors of the Surviving Company, and (3) no persons (other than the
Company or any Subsidiary, any employee benefit plan (or any trust forming a
part thereof) maintained by the Company, the Surviving Company or any
Subsidiary, or any person who, immediately prior to such merger, consolidation,
share exchange or reorganization had Beneficial Ownership of 15% or more of the
then outstanding Voting Securities) have Beneficial Ownership of 15% or more of
the combined voting power of the Surviving Company's then outstanding voting
securities (a transaction described in clauses (1) through (3) is referred to
herein as "Non-Control Transaction"); (B) a complete liquidation or dissolution
of the Company; or (C) an agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any person (other than a
transfer to a Subsidiary). Any material diminution in the rights granted to the
Company by Stan Lee or his affiliates shall be deemed to be a disposition of
substantial assets.
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any person (a "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
that, by reducing the number of Voting Securities outstanding, increases the
proportional number of shares Beneficially Owned by such Subject Person,
provided that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities by the Company,
and after such share acquisition by the Company, such Subject Person becomes the
Beneficial Owner of any additional Voting Securities that increases the
percentage of the then outstanding Voting Securities Beneficially Owned by such
Subject Person, then a Change in Control shall occur.
Alternatively, if your employment with the Company is
involuntarily terminated by the Company other than for Cause (as defined below),
one hundred percent (100%) of your unvested options and restricted stock shall
vest and become immediately exercisable (in addition to any shares that already
have vested over the time period between your Commencement Date and the
termination of your employment). "Cause" means: (a) your breach of any of the
material terms of your employment, including without limitation, willful and
repeated failure to comply
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Mr. Kenneth Williams
June 12, 2000
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with the lawful directions of the Company's Board of Directors, provided that
you shall receive written notice of such conduct and at least 30 days to cure
before any discharge is effected; (b) gross negligence or willful misconduct in
your performance of your duties to the Company; (c) commission of fraud against,
or misappropriation of material property belonging to the Company; or (d) your
commission of a felony or any criminal act which the Company determines is
likely to be materially detrimental to the Company's business or reputation.
Termination by either party shall not release or discharge either party from any
obligation, debt or liability which may previously have occurred and remains to
be performed upon the date of termination.
In the event of your death during the Term, (i) the Company shall
provide for insurance coverage to provide your beneficiaries with an aggregate
death benefit of $5 million, and (ii) in addition to any options or restricted
stock that shall have vested as of such date, your vesting shall be accelerated
to the same extent as if you had continued working for the lesser of (a) one
year, and (b) the remainder of the term of this agreement. In the event of your
inability to perform your duties by reason of mental or physical disorder or
injury for a period of 180 days, which shall constitute a "long-term
disability," (i) the Company shall provide for insurance coverage (subject to
its ability to obtain such coverage on customary terms at reasonable rates) to
provide you with 50% of your base salary, plus guaranteed bonus for the duration
of the Term (such amount being net of any other insurance benefits that you are
entitled to receive under the Company's or any state disability plan), and (ii)
in addition to any options or restricted stock that shall have vested as of such
date, your vesting shall be accelerated to the same extent as if you had
continued working for the lesser of (a) one year, and (b) the remainder of the
term of this agreement.
We hope that you and the Company will find mutual satisfaction
with your employment. All of us at the Company are very excited about you
joining our team and look forward to a beneficial and rewarding relationship.
Nevertheless, employees have the right to terminate their employment at any time
with or without cause or notice, and the Company reserves for itself the equal
right. In the event that your employment is terminated by the Company without
Cause, in addition to any other provisions hereof, you will be entitled to
receive your then-current base salary and guaranteed bonus for the remaining
Term, without a duty of mitigation by you or a right of offset by the Company in
the event of your subsequent employment. The Company shall pay 50% of such
amount in a lump sum within 30 days of such termination, with the remainder paid
in accordance with the Company's standard payroll policy (presently twice a
month). The Company may, at its sole election, elect to accelerate such payments
and pay you in a lump sum. If the Company exercises this right and makes full
payment in a lump sum, the parties shall also enter into a mutual release of
claims upon such termination without Cause, which shall release each party from
claims made by or obligations owed to the other party. Upon Company's
termination of this Agreement, the Company will also provide you with such
medical benefits as required under COBRA (at its expense).
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Mr. Kenneth Williams
June 12, 2000
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The Company requests that you complete its standard
Confidentiality and Invention Assignment Agreement, prior to commencing
employment, the failure of which shall constitute "Cause" for termination, and
shall render this agreement void and of no force or effect. In part, that
agreement requires, generally, that a departing employee refrain from using or
disclosing the Company's Confidential Information (as defined in the agreement)
received during your employment in a manner detrimental to the business
interests of the Company or certain of its employees. The agreement does not
prevent a former employee from using his or her general knowledge and experience
-- no matter when or how gained -- in any new field or position. If you have any
questions about the Agreement, please call me.
In addition, by accepting this offer, you grant the Company the
exclusive and perpetual right, but not the obligation, to use your name,
photograph, likeness and biographical data in connection with its business
operations, in any format or version, by any means and in any media, whether now
or hereafter known or developed; provided that the Company may not use or
license the use of your name and likeness as a direct or indirect endorsement of
any commercial product or service. Immediately following receipt of your
executed counterpart to this Agreement, we will jointly prepare a press release
for distribution over the commercial wire service networks announcing your
joining our Company.
The provisions of this letter agreement shall prevail over the
terms of any option or benefit plan maintained by the Company in the event of
any conflict therewith (e.g., vested stock and options shall not be divested for
any reason). The rights and obligations of the parties hereunder shall be
nondelegable, and nonassignable, except that the Company may assign its rights
and benefits to an entity which holds, directly or indirectly, all or
substantially all of the Company's assets.
We both agree that any dispute arising with respect to your
employment, the termination of that employment, or a breach of any covenant of
good faith and fair dealing related to your employment, shall be conclusively
settled by binding arbitration, at the request of either party, in accordance
with the Engagement Dispute Resolution Procedures of the American Arbitration
Association in Los Angeles County, California. The claims covered by this
agreement to arbitrate include, without limitation, claims for wages and other
compensation, claims for breach of contract, tort claims, claims for
discrimination and harassment (including statutory claims), and claims for
violation of any federal, state or other governmental law, statute, regulation,
or ordinance. The arbitrator shall also have the authority to award costs and
legal fee to the substantially prevailing party. The provisions of Section
1283.05 of the California Code of Civil Procedure are incorporated herein by
reference.
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Mr. Kenneth Williams
June 12, 2000
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This letter and the Confidentiality and Invention Assignment
Agreement contain the entire agreement with respect to your employment. The
terms of this offer may only be changed by written agreement. Should you have
any questions with regard to any of the items indicated above, please call me.
Kindly indicate your consent to the terms contained in this offer letter by
signing and returning a copy to me.
Very truly yours,
/s/ STEPHEN M. GORDON
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STEPHEN M. GORDON,
Executive Vice President - Operations
ACCEPTED AND AGREED:
/s/ KENNETH WILLIAMS
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Kenneth Williams
Date: June 22, 2000.
