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Published: 2008-03-26

1995 Stock Option Plan - Salon Internet Inc.



 
                             SALON INTERNET, INC.

                            1995 STOCK OPTION PLAN

                     (AS AMENDED THROUGH JANUARY 27, 1997)


     1.   ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
          --------------------------------------- 

          1.1  ESTABLISHMENT.  The Salon Internet, Inc. 1995 Stock Option Plan
(the 'PLAN') is hereby established effective as of December 12, 1995 (the
'EFFECTIVE DATE').

          1.2  PURPOSE.  The purpose of the Plan is to advance the interests of
the Participating Company Group and its shareholders by providing an incentive
to attract, retain and reward persons performing services for the Participating
Company Group and by motivating such persons to contribute to the growth and
profitability of the Participating Company Group.

          1.3  TERM OF PLAN.  The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan and the agreements
evidencing Options granted under the Plan have lapsed.  However, all Options
shall be granted, if at all, within ten (10) years from the earlier of the date
the Plan is adopted by the Board or the date the Plan is duly approved by the
shareholders of the Company.

     2.   DEFINITIONS AND CONSTRUCTION.
          ---------------------------- 

          2.1  DEFINITIONS.  Whenever used herein, the following terms shall
have their respective meanings set forth below:

               (a) 'BOARD' means the Board of Directors of the Company. If one
or more Committees have been appointed by the Board to administer the Plan,
'Board' also means such Committee(s).

               (b) 'CODE' means the Internal Revenue Code of 1986, as amended,
and any applicable regulations promulgated thereunder.

               (c) 'COMMITTEE' means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the Committee shall have all of the powers of
the Board granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any
applicable limitations imposed by law.

               (d) 'COMPANY' means Salon Internet, Inc., a California
corporation, or any successor corporation thereto.

                                       1

 
               (e) 'CONSULTANT' means any person, including an advisor, engaged
by a Participating Company to render services other than as an Employee or a
Director.

               (f) 'DIRECTOR' means a member of the Board or of the board of
directors of any other Participating Company.

               (g) 'EMPLOYEE' means any person treated as an employee (including
an officer or a Director who is also treated as an employee) in the records of a
Participating Company; provided, however, that neither service as a Director nor
payment of a director's fee shall be sufficient to constitute employment for
purposes of the Plan.

               (h) 'EXCHANGE ACT' means the Securities Exchange Act of 1934, as
amended.

               (i) 'FAIR MARKET VALUE' means, as of any date, the value of a
share of stock or other property as determined by the Board, in its sole
discretion, or by the Company, in its sole discretion, if such determination is
expressly allocated to the Company herein.

               (j) 'INCENTIVE STOCK OPTION' means an Option intended to be (as
set forth in the Option Agreement) and which qualifies as an incentive stock
option within the meaning of Section 422(b) of the Code.

               (k) 'INSIDER' means an officer or a Director of the Company or
any other person whose transactions in Stock are subject to Section 16 of the
Exchange Act.

               (l) 'NONSTATUTORY STOCK OPTION' means an Option not intended to
be (as set forth in the Option Agreement) or which does not qualify as an
Incentive Stock Option.

               (m) 'OPTION' means a right to purchase Stock (subject to
adjustment as provided in Section 4.2) pursuant to the terms and conditions of
the Plan. An Option may be either an Incentive Stock Option or a Nonstatutory
Stock Option.

               (n) 'OPTIONEE' means a person who has been granted one or more
Options.

               (o) 'OPTION AGREEMENT' means a written agreement between the
Company and an Optionee setting forth the terms, conditions and restrictions of
the Option granted to the Optionee and any shares acquired upon the exercise
thereof.

               (p) 'PARENT CORPORATION' means any present or future 'parent
corporation' of the Company, as defined in Section 424(e) of the Code.

               (q) 'PARTICIPATING COMPANY' means the Company or any Parent
Corporation or Subsidiary Corporation.

               (r) 'PARTICIPATING COMPANY GROUP' means, at any point in time,
all corporations collectively which are then Participating Companies.

                                       2

 
               (s) 'RULE 16B-3' means Rule 16b-3 under the Exchange Act, as
amended from time to time, or any successor rule or regulation.

               (t) 'STOCK' means the common stock, without par value, of the
Company, as adjusted from time to time in accordance with Section 4.2.

               (u) 'SUBSIDIARY CORPORATION' means any present or future
'subsidiary corporation' of the Company, as defined in Section 424(f) of the
Code.

               (v) 'TEN PERCENT OWNER OPTIONEE' means an Optionee who, at the
time an Option is granted to the Optionee, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of a
Participating Company within the meaning of Section 422(b)(6) of the Code.

          2.2  CONSTRUCTION.  Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan.  Except when otherwise indicated by the context, the
singular shall include the plural, the plural shall include the singular, and
the term 'or' shall include the conjunctive as well as the disjunctive.

     3.   ADMINISTRATION.
          -------------- 

          3.1  ADMINISTRATION BY THE BOARD.  The Plan shall be administered by
the Board, including any duly appointed Committee of the Board.  All questions
of interpretation of the Plan or of any Option shall be determined by the Board,
and such determinations shall be final and binding upon all persons having an
interest in the Plan or such Option.  Any officer of a Participating Company
shall have the authority to act on behalf of the Company with respect to any
matter, right, obligation, determination or election which is the responsibility
of or which is allocated to the Company herein, provided the officer has
apparent authority with respect to such matter, right, obligation, determination
or election.

          3.2  POWERS OF THE BOARD.  In addition to any other powers set forth
in the Plan and subject to the provisions of the Plan, the Board shall have the
full and final power and authority, in its sole discretion:

               (a) to determine the persons to whom, and the time or times at
which, Options shall be granted and the number of shares of Stock to be subject
to each Option;

               (b) to designate Options as Incentive Stock Options or
Nonstatutory Stock Options;

               (c) to determine the Fair Market Value of shares of Stock or
other property;

               (d) to determine the terms, conditions and restrictions
applicable to each Option (which need not be identical) and any shares acquired
upon the exercise thereof, including, without limitation, (i) the exercise price
of the Option, (ii) the method of payment for shares purchased upon the exercise
of the Option, (iii) the method for satisfaction of any tax

                                       3

 
withholding obligation arising in connection with the Option or such shares,
including by the withholding or delivery of shares of stock, (iv) the timing,
terms and conditions of the exercisability of the Option or the vesting of any
shares acquired upon the exercise thereof, (v) the time of the expiration of the
Option, (vi) the effect of the Optionee's termination of employment or service
with the Participating Company Group on any of the foregoing, and (vii) all
other terms, conditions and restrictions applicable to the Option or such shares
not inconsistent with the terms of the Plan;

               (e) to approve one or more forms of Option Agreement;

               (f) to amend, modify, extend, or renew, or grant a new Option in
substitution for, any Option or to waive any restrictions or conditions
applicable to any Option or any shares acquired upon the exercise thereof;

               (g) to amend the exercisability of any Option or the vesting of
any shares acquired upon the exercise thereof, including with respect to the
period following an Optionee's termination of employment or service with the
Participating Company Group;

               (h) to prescribe, amend or rescind rules, guidelines and policies
relating to the Plan, or to adopt supplements to, or alternative versions of,
the Plan, including, without limitation, as the Board deems necessary or
desirable to comply with the laws of, or to accommodate the tax policy or custom
of, foreign jurisdictions whose citizens may be granted Options; and

               (i) to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Option Agreement and to make all other
determinations and take such other actions with respect to the Plan or any
Option as the Board may deem advisable to the extent consistent with the Plan
and applicable law.

          3.3  DISINTERESTED ADMINISTRATION.  With respect to participation by
Insiders in the Plan, at any time that any class of equity security of the
Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall
be administered in compliance with the 'disinterested administration'
requirements of Rule 16b-3.

     4.   SHARES SUBJECT TO PLAN.
          ---------------------- 

          4.1  MAXIMUM NUMBER OF SHARES ISSUABLE.  Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be three million seven hundred fifty thousand
(3,750,000) and shall consist of authorized but unissued or reacquired shares of
Stock or any combination thereof.  If an outstanding Option for any reason
expires or is terminated or canceled or shares of Stock acquired, subject to
repurchase, upon the exercise of an Option are repurchased by the Company, the
shares of Stock allocable to the unexercised portion of such Option, or such
repurchased shares of Stock, shall again be available for issuance under the
Plan.

          4.2  ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.  In the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar

                                       4

 
change in the capital structure of the Company, appropriate adjustments shall be
made in the number and class of shares subject to the Plan and to any
outstanding Options and in the exercise price of any outstanding Options. If a
majority of the shares which are of the same class as the shares that are
subject to outstanding Options are exchanged for, converted into, or otherwise
become (whether or not pursuant to an Ownership Change Event, as defined in
Section 8.1) shares of another corporation (the 'NEW SHARES'), the Board may
unilaterally amend the outstanding Options to provide that such Options are
exercisable for New Shares. In the event of any such amendment, the number of
shares subject to, and the exercise price per share of, the outstanding Options
shall be adjusted in a fair and equitable manner as determined by the Board, in
its sole discretion. Notwithstanding the foregoing, any fractional share
resulting from an adjustment pursuant to this Section 4.2 shall be rounded up or
down to the nearest whole number, as determined by the Board, and in no event
may the exercise price of any Option be decreased to an amount less than the par
value, if any, of the stock subject to the Option. The adjustments determined by
the Board pursuant to this Section 4.2 shall be final, binding and conclusive.

     5.   ELIGIBILITY AND OPTION LIMITATIONS.
          ---------------------------------- 

          5.1  PERSONS ELIGIBLE FOR OPTIONS.  Options may be granted only to
Employees, Consultants, and Directors.  For purposes of the foregoing sentence,
'Employees' shall include prospective Employees to whom Options are granted in
connection with written offers of employment with the Participating Company
Group, and 'Consultants' shall include prospective Consultants to whom Options
are granted in connection with written offers of engagement with the
Participating Company Group.  Eligible persons may be granted more than one (1)
Option.

          5.2  DIRECTORS SERVING ON COMMITTEE.  At any time that any class of
equity security of the Company is registered pursuant to Section 12 of the
Exchange Act, no member of a Committee established to administer the Plan in
compliance with the 'disinterested administration' requirements of Rule 16b-3,
while a member, shall be eligible to be granted an Option.

          5.3  OPTION GRANT RESTRICTIONS.  Any person who is not an Employee on
the effective date of the grant of an Option to such person may be granted only
a Nonstatutory Stock Option.  An Incentive Stock Option granted to a prospective
Employee upon the condition that such person become an Employee shall be deemed
granted on the date such person commences service with a Participating Company,
with an exercise price determined as of such date in accordance with Section
6.1.

          5.4  FAIR MARKET VALUE LIMITATION.  To the extent that the aggregate
Fair Market Value of stock with respect to which options designated as Incentive
Stock Options are exercisable by an Optionee for the first time during any
calendar year (under all stock option plans of the Participating Company Group,
including the Plan) exceeds One Hundred Thousand Dollars ($100,000), the portion
of such options which exceeds such amount shall be treated as Nonstatutory Stock
Options.  For purposes of this Section 5.4, options designated as Incentive
Stock Options shall be taken into account in the order in which they were
granted, and the Fair Market Value of stock shall be determined as of the time
the option with respect to such stock is

                                       5

 
granted. If the Code is amended to provide for a different limitation from that
set forth in this Section 5.4, such different limitation shall be deemed
incorporated herein effective as of the date and with respect to such Options as
required or permitted by such amendment to the Code. If an Option is treated as
an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by
reason of the limitation set forth in this Section 5.4, the Optionee may
designate which portion of such Option the Optionee is exercising and may
request that separate certificates representing each such portion be issued upon
the exercise of the Option. In the absence of such designation, the Optionee
shall be deemed to have exercised the Incentive Stock Option portion of the
Option first.

     6.   TERMS AND CONDITIONS OF OPTIONS.  Options shall be evidenced by
          -------------------------------                                
Option Agreements specifying the number of shares of Stock covered thereby, in
such form as the Board shall from time to time establish.  Option Agreements may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the following terms and conditions:

          6.1  EXERCISE PRICE.  The exercise price for each Option shall be
established in the sole discretion of the Board; provided, however, that (a) the
exercise price per share for an Incentive Stock Option shall be not less than
the Fair Market Value of a share of Stock on the effective date of grant of the
Option, (b) the exercise price per share for a Nonstatutory Stock Option shall
be not less than eighty-five percent (85%) of the Fair Market Value of a share
of Stock on the effective date of grant of the Option, and (c) no Option granted
to a Ten Percent Owner Optionee shall have an exercise price per share less than
one hundred ten percent (110%) of the Fair Market Value of a share of Stock on
the effective date of grant of the Option.  Notwithstanding the foregoing, an
Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or substitution for
another option in a manner qualifying under the provisions of Section 424(a) of
the Code.

          6.2  EXERCISE PERIOD.  Options shall be exercisable at such time or
times, or upon such event or events, and subject to such terms, conditions,
performance criteria, and restrictions as shall be determined by the Board and
set forth in the Option Agreement evidencing such Option; provided, however,
that (a) no Option shall be exercisable after the expiration of ten (10) years
after the effective date of grant of such Option, (b) no Incentive Stock Option
granted to a Ten Percent Owner Optionee shall be exercisable after the
expiration of five (5) years after the effective date of grant of such Option,
and (c) no Option granted to a prospective Employee or prospective Consultant
may become exercisable prior to the date on which such person commences service
with a Participating Company.

                                       6

 
          6.3  PAYMENT OF EXERCISE PRICE.

               (a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check, or
cash equivalent, (ii) by tender to the Company of shares of Stock owned by the
Optionee having a Fair Market Value (as determined by the Company without regard
to any restrictions on transferability applicable to such stock by reason of
federal or state securities laws or agreements with an underwriter for the
Company) not less than the exercise price, (iii) by the assignment of the
proceeds of a sale or loan with respect to some or all of the shares being
acquired upon the exercise of the Option (including, without limitation, through
an exercise complying with the provisions of Regulation T as promulgated from
time to time by the Board of Governors of the Federal Reserve System) (a
'CASHLESS EXERCISE'), (iv) by the Optionee's promissory note in a form approved
by the Company, (v) by such other consideration as may be approved by the Board
from time to time to the extent permitted by applicable law, or (vi) by any
combination thereof. The Board may at any time or from time to time, by adoption
of or by amendment to the standard forms of Option Agreement described in
Section 7, or by other means, grant Options which do not permit all of the
foregoing forms of consideration to be used in payment of the exercise price or
which otherwise restrict one or more forms of consideration.

               (b) TENDER OF STOCK. Notwithstanding the foregoing, an Option may
not be exercised by tender to the Company of shares of Stock to the extent such
tender of Stock would constitute a violation of the provisions of any law,
regulation or agreement restricting the redemption of the Company's stock.
Unless otherwise provided by the Board, an Option may not be exercised by tender
to the Company of shares of Stock unless such shares either have been owned by
the Optionee for more than six (6) months or were not acquired, directly or
indirectly, from the Company.

               (c) CASHLESS EXERCISE. The Company reserves, at any and all
times, the right, in the Company's sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for the exercise of
Options by means of a Cashless Exercise.

               (d) PAYMENT BY PROMISSORY NOTE. No promissory note shall be
permitted if the exercise of an Option using a promissory note would be a
violation of any law. Any permitted promissory note shall be on such terms as
the Board shall determine at the time the Option is granted. The Board shall
have the authority to permit or require the Optionee to secure any promissory
note used to exercise an Option with the shares of Stock acquired upon the
exercise of the Option or with other collateral acceptable to the Company.
Unless otherwise provided by the Board, if the Company at any time is subject to
the regulations promulgated by the Board of Governors of the Federal Reserve
System or any other governmental entity affecting the extension of credit in
connection with the Company's securities, any promissory note shall comply with
such applicable regulations, and the Optionee shall pay the unpaid principal and
accrued interest, if any, to the extent necessary to comply with such applicable
regulations.

                                       7

 
          6.4  TAX WITHHOLDING.  The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the exercise of an
Option, or to accept from the Optionee the tender of, a number of whole shares
of Stock having a Fair Market Value, as determined by the Company, equal to all
or any part of the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Participating Company Group with respect to such
Option or the shares acquired upon the exercise thereof.  Alternatively or in
addition, in its sole discretion, the Company shall have the right to require
the Optionee, through payroll withholding, cash payment or otherwise, including
by means of a Cashless Exercise, to make adequate provision for any such tax
withholding obligations of the Participating Company Group arising in connection
with the Option or the shares acquired upon the exercise thereof.  The Company
shall have no obligation to deliver shares of Stock or to release shares of
Stock from an escrow established pursuant to the Option Agreement until the
Participating Company Group's tax withholding obligations have been satisfied by
the Optionee.

          6.5  REPURCHASE RIGHTS.  Shares issued under the Plan may be subject
to a right of first refusal, one or more repurchase options, or other conditions
and restrictions as determined by the Board in its sole discretion at the time
the Option is granted.  The Company shall have the right to assign at any time
any repurchase right it may have, whether or not such right is then exercisable,
to one or more persons as may be selected by the Company.  Upon request by the
Company, each Optionee shall execute any agreement evidencing such transfer
restrictions prior to the receipt of shares of Stock hereunder and shall
promptly present to the Company any and all certificates representing shares of
Stock acquired hereunder for the placement on such certificates of appropriate
legends evidencing any such transfer restrictions.

     7.   STANDARD FORMS OF OPTION AGREEMENT.
          ---------------------------------- 

          7.1  INCENTIVE STOCK OPTIONS.  Unless otherwise provided by the Board
at the time the Option is granted, an Option designated as an 'Incentive Stock
Option' shall comply with and be subject to the terms and conditions set forth
in the form of Incentive Stock Option Agreement adopted by the Board
concurrently with its adoption of the Plan and as amended from time to time.

          7.2  NONSTATUTORY STOCK OPTIONS.  Unless otherwise provided by the
Board at the time the Option is granted, an Option designated as a 'Nonstatutory
Stock Option' shall comply with and be subject to the terms and conditions set
forth in such standard form of Nonstatutory Stock Option Agreement as may be
adopted by the Board and as amended from time to time.

          7.3  STANDARD TERM OF OPTIONS.  Except as otherwise provided in
Section 6.2 or by the Board in the grant of an Option, any Option granted
hereunder shall have a term of ten (10) years from the effective date of grant
of the Option.

          7.4  AUTHORITY TO VARY TERMS.  The Board shall have the authority from
time to time to vary the terms of any of the standard forms of Option Agreement
described in this Section 7 either in connection with the grant or amendment of
an individual Option or in connection with the authorization of a new standard
form or forms; provided, however, that the

                                       8

 
terms and conditions of any such new, revised or amended standard form or forms
of Option Agreement shall be in accordance with the terms of the Plan. Such
authority shall include, but not by way of limitation, the authority to grant
Options which are immediately exercisable subject to the Company's right to
repurchase any unvested shares of Stock acquired by an Optionee upon the
exercise of an Option in the event such Optionee's employment or service with
the Participating Company Group is terminated for any reason, with or without
cause and the authority to grant Options which are exercisable for a number of
shares having a Fair Market Value (as determined by the Company) equal to the
difference between the exercise price for the total number of shares of Stock
then available under the Option and the Fair Market Value of the total number of
shares of Stock then available under the Option.

     8.   TRANSFER OF CONTROL.
          ------------------- 

          8.1  DEFINITIONS.

               (a) An 'OWNERSHIP CHANGE EVENT' shall be deemed to have occurred
if any of the following occurs with respect to the Company:

                   (i)   the direct or indirect sale or exchange in a single or
series of related transactions by the shareholders of the Company of more than
fifty percent (50%) of the voting stock of the Company;

                   (ii)  a merger or consolidation in which the Company is a
party;

                   (iii) the sale, exchange, or transfer of all or substantially
all of the assets of the Company; or

                   (iv)  a liquidation or dissolution of the Company.

               (b) A 'TRANSFER OF CONTROL' shall mean an Ownership Change Event
or a series of related Ownership Change Events (collectively, the 'TRANSACTION')
wherein the shareholders of the Company immediately before the Transaction do
not retain immediately after the Transaction, in substantially the same
proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the 'TRANSFEREE
CORPORATION(S)'), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.

          8.2  EFFECT OF TRANSFER OF CONTROL ON OPTIONS.  In the event of a
Transfer of Control, the surviving, continuing, successor, or purchasing
corporation or parent corporation

                                       9

 
thereof, as the case may be (the 'ACQUIRING CORPORATION'), may either assume the
Company's rights and obligations under outstanding Options or substitute for
outstanding Options substantially equivalent options for the Acquiring
Corporation's stock. Any Options which are neither assumed or substituted for by
the Acquiring Corporation in connection with the Transfer of Control nor
exercised as of the date of the Transfer of Control shall terminate and cease to
be outstanding effective as of the date of the Transfer of Control.
Notwithstanding the foregoing, shares acquired upon exercise of an Option prior
to the Transfer of Control and any consideration received pursuant to the
Transfer of Control with respect to such shares shall continue to be subject to
all applicable provisions of the Option Agreement evidencing such Option except
as otherwise provided in such Option Agreement. Furthermore, notwithstanding the
foregoing, if the corporation the stock of which is subject to the outstanding
Options immediately prior to an Ownership Change Event described in Section
8.1(a)(i) constituting a Transfer of Control is the surviving or continuing
corporation and immediately after such Ownership Change Event less than fifty
percent (50%) of the total combined voting power of its voting stock is held by
another corporation or by other corporations that are members of an affiliated
group within the meaning of Section 1504(a) of the Code without regard to the
provisions of Section 1504(b) of the Code, the outstanding Options shall not
terminate unless the Board otherwise provides in its sole discretion.

     9.   PROVISION OF INFORMATION.  At least annually, copies of the
          ------------------------                                   
Company's balance sheet and income statement for the just completed fiscal year
shall be made available to each Optionee and purchaser of shares of Stock upon
the exercise of an Option.  The Company shall not be required to provide such
information to persons whose duties in connection with the Company assure them
access to equivalent information.

     10.  NONTRANSFERABILITY OF OPTIONS.  During the lifetime of the
          -----------------------------                             
Optionee, an Option shall be exercisable only by the Optionee or the Optionee's
guardian or legal representative.  No Option shall be assignable or transferable
by the Optionee, except by will or by the laws of descent and distribution.

     11. TRANSFER OF COMPANY'S RIGHTS.  In the event any Participating
         ----------------------------                                 
Company assigns, other than by operation of law, to a third person, other than
another Participating Company, any of the Participating Company's rights to
repurchase any shares of Stock acquired upon the exercise of an Option, the
assignee shall pay to the assigning Participating Company the value of such
right as determined by the Company in the Company's sole discretion.  Such
consideration shall be paid in cash.  In the event such repurchase right is
exercisable at the time of such assignment, the value of such right shall be not
less than the Fair Market Value of the shares of Stock which may be repurchased
under such right (as determined by the Company) minus the repurchase price of
such shares.  The requirements of this Section 11 regarding the minimum
consideration to be received by the assigning Participating Company shall not
inure to the benefit of the Optionee whose shares of Stock are being
repurchased.  Failure of a Participating Company to comply with the provisions
of this Section 11 shall not constitute a defense or otherwise prevent the
exercise of the repurchase right by the assignee of such right.

     12.  INDEMNIFICATION. In addition to such other rights of indemnification
          ---------------
as they may have as members of the Board or officers or employees of the
Participating Company Group,

                                       10

 
members of the Board and any officers or employees of the Participating Company
Group to whom authority to act for the Board is delegated shall be indemnified
by the Company against all reasonable expenses, including attorneys' fees,
actually and necessarily incurred in connection with the defense of any action,
suit or proceeding, or in connection with any appeal therein, to which they or
any of them may be a party by reason of any action taken or failure to act under
or in connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.

     13.  TERMINATION OR AMENDMENT OF PLAN.  The Board may terminate or
          --------------------------------                             
amend the Plan at any time.  However, subject to changes in the law or other
legal requirements that would permit otherwise, without the approval of the
Company's shareholders, there shall be (a) no increase in the maximum aggregate
number of shares of Stock that may be issued under the Plan (except by operation
of the provisions of Section 4.2), (b) no change in the class of persons
eligible to receive Incentive Stock Options, and (c) no expansion in the class
of persons eligible to receive Nonstatutory Stock Options.  In any event, no
termination or amendment of the Plan may adversely affect any then outstanding
Option or any unexercised portion thereof, without the consent of the Optionee,
unless such termination or amendment is required to enable an Option designated
as an Incentive Stock Option to qualify as an Incentive Stock Option or is
necessary to comply with any applicable law or government regulation.

     14.  SHAREHOLDER APPROVAL.  The Plan or any increase in the maximum
          --------------------                                          
number of shares of Stock issuable thereunder as provided in Section 4.1 (the
'MAXIMUM SHARES') shall be approved by the shareholders of the Company within
twelve (12) months of the date of adoption thereof by the Board.  Options
granted prior to shareholder approval of the Plan or in excess of the Maximum
Shares previously approved by the shareholders shall become exercisable no
earlier than the date of shareholder approval of the Plan or such increase in
the Maximum Shares, as the case may be.

     IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing is the Salon Internet, Inc. 1995 Stock Option Plan as duly
adopted by the Board on December 12, 1995, and amended by the Board through
January 27, 1997.


                                    /s/ Secretary
                                    ----------------------------------
                                    Secretary

                                       11

 
                                 PLAN HISTORY
                                 ------------


December 12, 1995   Board adopts Plan, with an initial reserve of 800,000
                    shares.

December 12, 1995   Shareholders approve Plan, with an initial reserve of
                    800,000 shares.

December 2, 1996    Board approves increase in share reserve to 1,750,000
                    shares.

December 2, 1996    Shareholders approve increase in share reserve to 1,750,000
                    shares.

January 27, 1997    Board approves increase in share reserve to 3,750,000
                    shares.

January 27, 1997    Shareholders approve increase in share reserve to 3,750,000
                    shares.