Exhibit 10.1

 

 

699 Eighth Street

San Francisco

California 94103

company.zynga.com

 

 

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July 26, 2016

 

VIA EMAIL

 

Matthew Bromberg

 

 

Re:Offer of Employment by Zynga Inc.

 

Dear Matthew:

 

I am very pleased to confirm our offer to you of employment with Zynga Inc., a
Delaware corporation (“Zynga” or the “Company”), in the position of Chief
Operating Officer, reporting to the Company’s Chief Executive Officer.  The
terms of our offer and the benefits currently provided by the Company are as
follows:

 

1. Starting Salary and Location. Your starting base salary will be five hundred
thousand dollars ($500,000) per year, less deductions and withholdings required
by law, and will be subject to periodic review and adjustment for increases but
not decreases, in accordance with the Company’s then-current policies.  You will
be located in the Company’s San Francisco, California office.  

 

2. Annual Bonus. For the 2016 fiscal year, you will be eligible to participate
in the Company’s then-applicable bonus program, with a Target Bonus equal to one
hundred percent (100%) of your annual base salary and a maximum bonus equal to
two hundred percent (200%) of your annual base salary, subject to the terms,
conditions, and eligibility requirements of that program; provided, however that
for the 2016 fiscal year, you will be guaranteed to receive no less than the
Target Bonus, pro-rated for the number of days you are employed by the Company
in fiscal year 2016. For fiscal years after 2016, and conditioned upon your
continued employment, you will be eligible to participate in the Company’s
then-applicable bonus program, if any, subject to the terms, conditions, and
eligibility requirements of that program. Other than with respect to fiscal year
2016, whether you receive an annual bonus for any given bonus period, and the
amount of any such bonus, will be determined by the Company in its sole
discretion based upon the Company’s achievement of its performance benchmarks
and your individual performance during the applicable bonus period, as described
in more detail in its then-applicable bonus program.

 

 

 

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3. Signing Bonus. You will receive a one-time signing bonus in the amount of
three-hundred fifty thousand dollars ($350,000), less deductions and
withholdings required by law. This bonus will be paid on or before the second
regularly scheduled payroll date following your Start Date. If the Company
terminates your employment with Cause (as defined below) or you voluntarily
terminate your employment with the Company for a reason other than Constructive
Termination (as defined below), in either case prior to the one-year anniversary
of your Start Date, you will be required to reimburse Zynga Inc. the full amount
of this signing bonus. If the Company terminates your employment with Cause (as
defined below) or you voluntarily terminate your employment with the Company for
a reason other than Constructive Termination (as defined below), in either case
on or between the one-year anniversary of your Start Date and the two-year
anniversary of your Start Date, you will be required to reimburse Zynga Inc. a
pro rata portion of this signing bonus, based on the number of days you worked
for Zynga between your Start Date and the two-year anniversary of your Start
Date.

4. Benefits.  You will be eligible to participate in the regular health
insurance and other employee benefit plans established by the Company for its
employees, as amended from time to time, subject to the terms and conditions of
those plans and programs. The Company reserves the right to change, cancel, or
otherwise modify, in its sole discretion, the terms and conditions of its
benefit plans at any time in the future, with or without notice.  

 

5. Confidentiality.  As an employee of the Company, you will have access to
certain confidential information of the Company and you may, during the course
of your employment, develop certain information or inventions that will be the
property of the Company.  To protect the interests of the Company, this offer of
employment is contingent upon your signing the Company’s standard Employee
Invention Assignment and Confidentiality Agreement.  We wish to impress upon you
that we do not want you to, and we hereby direct you not to, bring with you any
confidential or proprietary information of any former employer or other entity
or to violate any other obligations you may have to any former employer or other
entity.  You represent that your signing of this offer letter, any agreements
concerning ZSUs (as defined below) or stock options granted to you under the
Plan (as defined below), the Company’s Employee Invention Assignment and
Confidentiality Agreement, and your employment with the Company, will not
violate any agreement currently in place between you and current or past
employers or other entities.

 

6. Zynga Stock Units.

 

a.Subject to the terms and conditions of the Company’s applicable equity
incentive plan in effect at the time of grant (the “Plan”), you will be eligible
to receive an award of Zynga stock units (“ZSUs”) representing the opportunity
to acquire two-million, five-hundred thousand (2,500,000) shares of the
Company’s Class A common stock. The right to vesting and settlement of a ZSU
award will be subject to your continued service, the restrictions set forth in
the Plan, the terms of the ZSU agreement between you and the Company as approved
by the Board of Directors (the “Board”), or a committee appointed by the Board,
compliance with applicable securities and other laws, and satisfaction of the
Vesting Criteria. For purposes of the foregoing, the “Vesting Criteria” means a
five (5) year vesting term with the following conditions: (x) the vesting
commencement date will occur on the 15th day of the month immediately following
your Start Date (as defined below); (y) the award vests as to twenty percent
(20%) of the ZSUs (rounded down to the nearest whole ZSU) on the first
anniversary of the vesting commencement date, with the balance vesting as to as
to five percent (5%) of the ZSUs (rounded down to the nearest whole ZSU except
for the last vesting installment) each three (3) months thereafter; and (z) in
each case subject to your continued service. Each installment of the ZSUs that
vests is a “separate payment” for purposes of Treasury Regulations Section
1.409A-2(b)(2). Settlement of any vested ZSUs will occur no later than the 15th
day of the third calendar month of the year following the year in which the
installment of ZSUs is no longer subject to a “substantial risk of forfeiture”
(within the meaning of

 

CONFIDENTIAL

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Treasury Regulations Section 1.409A-1(d)) or, if required for compliance with
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), by
no later than December 31st of the calendar year in which the installment of
ZSUs are no longer subject to a substantial risk of forfeiture (subject to any
delay in payment required by a Separation from Service). 

 

b.Subject to the terms and conditions of the Plan and subject to the terms and
conditions of the ZSU agreement relating to the Target ZSUs (as defined below)
(the “Target ZSU Agreement”) between you and the Company as approved by the
Board, you will receive an award of ZSUs representing the opportunity to acquire
up to five-hundred thousand (500,000) shares of the Company’s Class A common
stock (“Target ZSUs”) with the actual percentage of the Target ZSUs that you
will receive set forth in the Target ZSU Agreement based on the Company
achieving certain performance conditions (as more fully detailed in the Target
ZSU Agreement) related to 2017 Bookings (defined below) and (ii) 2017 Adjusted
EBITDA Margin (defined below).(the “Performance Conditions”)   

 

For purposes of this Section 6.b., “2017 Bookings” means bookings as described
under the heading “Key Financial Metrics” and as reported in the Company’s Form
10-K for the 2017 fiscal year and “2017 Adjusted EBITDA Margin” means a/b where
“a” is the Company’s Adjusted EBITDA for the 2017 fiscal year as described under
the heading “Key Financial Metrics” and as reported in the Company’s Form 10-K
for the 2017 fiscal year and “b” is the Company’s 2017 Bookings.  The
Compensation Committee of the Board shall have sole discretion to determine and
certify that each Performance Condition has been met.

 

Notwithstanding anything to the contrary, if the Company does not achieve at
least one of the Performance Conditions, then on the Determination Date the
award will immediately be cancelled and no payment will be made with respect to
the award.

 

Subject to approval of the Board or a committee appointed by the Board, in the
event of a Change in Control as defined in the Severance Benefit Plan (as
defined in Section 8), 100% of the Target ZSUs shall be deemed outstanding and
subject to the acceleration provisions of the Severance Benefit Plan.

 

7. Stock Options.  Subject to approval of the Board (or a committee appointed by
the Board), you will receive an option to purchase five million (5,000,000)
shares of the Company’s Class A common stock in the aggregate (the “Options”).
If approved, the Options will be granted on the 15th day of the month following
your Start Date with the Company, and will have an exercise price equal to the
fair market value on the date of grant.  The Options will have a ten (10) year
term from their date of grant in which they can be exercised (subject to your
continued service and the vesting provisions described below) and will be
subject to the terms and conditions of the Plan, and option agreement(s) between
you and the Company in the form approved by the Board (or a committee appointed
by the Board).  The Options will have a five (5) year vesting schedule with the
following conditions: (x) their vesting commencement date will occur on the 15th
day of the month following your Start Date; (y) the Options will vest as to
twenty percent (20%) of the shares subject to the Options (rounded down to the
nearest whole share) on the first anniversary of the vesting commencement date,
with the balance vesting as to five percent (5%) of the shares subject to the
Options (rounded down to the nearest whole share except for the last vesting
installment) each three (3) months thereafter; and (z) in each case subject to
your continued service.

 

8. Executive Severance Plan. Subject to approval of the Board or a committee
appointed by the Board, you will be eligible to participate in the Zynga Inc.
Change in Control Severance Benefit Plan (or any successor thereto) (the
“Severance Benefit Plan”), subject to the terms and conditions thereof;
provided, however, that if the severance benefits you would receive under
Section 9 below are greater than the severance benefits you would receive under
the Severance Benefit Plan, you will receive the

 

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severance benefits outlined Section 9 below in lieu of any severance benefits
under the Severance Benefit Plan.

 

9. Severance for Non-Change in Control.  If you suffer a Separation from Service
(within the meaning of Treasury Regulation Section 1.409A-1(h)) due to: (i) the
Company terminating your employment without Cause, or (ii) your Constructive
Termination, then subject to your (A) continuing to comply with your obligations
under this letter and your Employee Invention Assignment and Confidentiality
Agreement, and (B) delivering to the Company an effective general release of
claims in favor of the Company, as to which the seven (7)-day revocation period
has expired (without your having revoked) within 60 days following your
Separation from Service (the date on which such revocation period expires, the
“Release Revocation Date”), then the Company will provide you with the following
severance benefits:

 

a.The Company will pay you an amount equal to one times (1x) your annual base
salary at the time of your termination, plus a pro-rated bonus for the fiscal
year in which your termination occurs (based on your Target Bonus for the fiscal
year in which you have a Separation from Service) (collectively, the “Separation
Payments”).  The Separation Payments will be subject to applicable payroll
deductions and tax withholdings and paid in a lump sum on the first regular
payroll date which is (A) on or following the Release Revocation Date, if the
60th day following your Separation from Service falls in the same calendar year
as your Separation from Service, or (B) in the calendar year following your
Separation from Service, if the Release Revocation Date occurs in the same
calendar year as your Separation from Service and the 60th day following your
Separation from Service falls in the calendar year following your Separation
from Service, the Company will pay you in a lump sum the Separation Payments
that you would have received on or prior to such regular payroll date under the
original schedule but for the delay while waiting for such payment, with the
balance of the Separation Payments being paid as originally scheduled.

 

b.If you timely elect continued coverage under COBRA, the Company will pay the
COBRA premiums to continue your coverage (including coverage for your eligible
dependents, if applicable) for twelve (12) months following your Separation from
Service (with such payments to end if you become eligible for group health
insurance coverage through a new employer or you cease to be eligible for COBRA
continuation coverage for any reason), provided that the cost of such coverage
will be reported to the tax authorities as taxable income to you.

 

c.The Company will accelerate the vesting of the ZSUs and the Options such that
the shares that would have vested in the one (1) year period following your
Separation from Service had your employment not been terminated, if any, shall
be deemed fully vested on your termination date, and you shall have three months
following your Separation from Service to exercise your vested Options.

 

10. Definitions.  For purposes of this letter, the definitions of “Cause” and
“Constructive Termination” shall be as follows:

 

“Cause” means, with respect to you (i) any willful, material violation of any
law or regulation applicable to the business of the Company, conviction for, or
guilty plea to, a felony or a crime involving moral turpitude, or any willful
perpetration of a common law fraud; (ii) commission of an act of personal
dishonesty that involves material personal profit in connection with the Company
or any other entity having a business relationship with the Company; (iii) any
material breach of any provision of any agreement or understanding between the
Company and you regarding the terms of service as an employee, officer,
director, or consultant to the Company, including without limitation, the
willful and continued failure or refusal to perform the material duties required
an employee, officer, director or consultant of the Company, or a breach of any

 

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applicable invention assignment and confidentiality agreement or similar
agreement between the Company and you; (iv) willful disregard of a material
policy of the Company so as to cause material loss, damage, or injury to the
property, reputation, or employees of the Company; or (v) any other misconduct
that is materially injurious to the financial condition or business reputation
of, or is otherwise materially injurious to, the Company.  An event, action, or
omission by you will not give the Company grounds to involuntarily terminate
your employment for Cause unless (A) the Company gives you written notice within
30 days after the initial existence of such event, action, or omission that the
event, action, or omission by you would give the Company grounds to terminate
your employment for Cause, and (B) if capable of being reversed, remedied or
cured, such event, action or omission is not reversed, remedied or cured, as the
case may be, by you within 30 days of receiving such written notice from the
Company.

 

“Constructive Termination” means the voluntary termination of employment with
the Company by you resulting in a Separation from Service after one of the
following is undertaken without your written consent: (i) the assignment to you
of any duties or responsibilities that results in a material diminution in your
employment role as the Chief Operating Officer of the Company as in effect
immediately prior to the date of such actions; (ii) the Company changes its
Chief Executive Officer within the first two anniversary years immediately
following your Start Date; or (iii) a non-temporary relocation of your business
office to a location that increases your one way commute by more than 35 miles
from the primary location at which you perform duties as of immediately prior to
the date of such action. An event or action by the Company will not give you
grounds to voluntarily terminate employment as a Constructive Termination unless
(A) you give the Company written notice within 30 days after the initial
existence of such event or action that the event or action by the Company would
give you such grounds to so terminate employment, (B) such event or action is
not reversed, remedied or cured, as the case may be, by the Company as soon as
possible but in no event later than within 30 days of receiving such written
notice from you, and (C) you terminate employment within 90 days following the
end of the cure period.

 

11. Potential Code Section 280G Reductions.

 

a.Anything to the contrary herein notwithstanding, in the event that it shall be
determined that any payment, distribution, or other action by the Company or any
of its affiliates to or for your benefit (whether paid or payable or distributed
or distributable pursuant to the terms of this letter or otherwise) (a
“Payment”), would result in an “excess parachute payment” within the meaning of
Section 280G(b)(i) of the Code, and the value determined in accordance with
Section 280G(d)(4) of the Code of the Payments, net of all taxes imposed on you
(the “Net After-Tax Amount”) that you would receive would be increased if the
Payments were reduced, then the Payments shall be reduced by an amount (the
“Reduction Amount”) so that the Net After-Tax Amount after such reduction is
greatest.  For purposes of determining the Net After-Tax Amount, you shall be
deemed to (i) pay federal income taxes at the highest marginal rates of federal
income taxation for the calendar year in which the Payment is to be made, and
(ii) pay applicable state and local income taxes at the highest marginal rate of
taxation for the calendar year in which the Payment is to be made, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes.

 

b.Subject to the provisions of this Section 11(b), all determinations required
to be made under this Section 11, including the Net After-Tax Amount and the
Reduction Amount pursuant to Section 11(a), and the assumptions to be utilized
in arriving at such determinations, shall be made by a nationally recognized
accounting firm selected by the Company prior to a “Change in Control” as
defined in the Severance Benefit Plan (the “Accounting Firm”), which shall
provide detailed supporting calculations both to the Company and you within
fifteen (15) business days of the receipt of notice from

 

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you that there has been a Payment, or such earlier time as is requested by the
Company.  Anything in this letter to the contrary notwithstanding, the Reduction
Amount shall not exceed the amount of the Payments that the Accounting Firm
determines reasonably may be characterized as “parachute payments” under Section
280G of the Code.  Payments with respect to ZSUs shall be reduced first,
followed by Options and then any cash payments (with the reduction occurring
first with respect to amounts that are not “deferred compensation” within the
meaning of Section 409A of the Code and then with respect to amounts that are).
Any determination by the Accounting Firm shall be binding upon the Company and
you. 

 

12. 409A.  It is intended that all of the benefits and payments under this
letter satisfy, to the greatest extent possible, the exemptions from the
application of Code Section 409A provided under Treasury Regulations 1.409A
1(b)(4), 1.409A 1(b)(5) and 1.409A 1(b)(9), and this letter will be construed to
the greatest extent possible as consistent with those provisions.  If not so
exempt, this letter (and any definitions hereunder) will be construed in a
manner that complies with Section 409A, and incorporates by reference all
required definitions and payment terms.  For purposes of Code Section 409A
(including, without limitation, for purposes of Treasury Regulation Section
1.409A 2(b)(2)(iii)), your right to receive any installment payments under this
letter (whether severance payments, reimbursements or otherwise) will be treated
as a right to receive a series of separate payments and, accordingly, each
installment payment hereunder will at all times be considered a separate and
distinct payment.  Notwithstanding any provision to the contrary in this letter,
if you are deemed by the Company at the time of your Separation from Service to
be a “specified employee” for purposes of Code Section 409A(a)(2)(B)(i), and if
any of the payments upon Separation from Service set forth herein and/or under
any other agreement with the Company are deemed to be “deferred compensation”,
then if delayed commencement of any portion of such payments is required to
avoid a prohibited distribution under Code Section 409A(a)(2)(B)(i) and the
related adverse taxation under Section 409A, the timing of the payments upon a
Separation from Service will be delayed as follows: on the earlier to occur of
(i) the date that is six months and one day after the effective date of your
Separation from Service, and (ii) the date of the your death (such earlier date,
the “Delayed Initial Payment Date”), the Company will (A) pay to you a lump sum
amount equal to the sum of the payments upon Separation from Service that you
would otherwise have received through the Delayed Initial Payment Date if the
commencement of the payments had not been delayed pursuant to this paragraph,
and (B) commence paying the balance of the payments in accordance with the
applicable payment schedules set forth above. No interest will be due on any
amounts so deferred.

 

13. At Will Employment.  While we look forward to a long and profitable
relationship, should you decide to accept our offer, you will be an at-will
employee of the Company, which means the employment relationship can be
terminated by either of us for any reason, at any time, with or without prior
notice, and with or without cause.  In addition, the Company may change your
compensation, benefits, duties, assignments, reporting line, responsibilities,
location of your position, ability to work remotely, or any other terms and
conditions of your employment at any time, to adjust to the changing needs of
our dynamic company.  Any statements or representations to the contrary (and any
statements contradicting any provision in this letter) are
ineffective.  Further, your participation in any stock incentive or benefit
program is not to be regarded as assuring you of continued employment for any
particular period of time.  Any modification or change in your at-will
employment status may only occur by way of a written employment agreement signed
by you and the CEO of the Company.  

 

14. Conflict of Interest.  Prior to starting employment, you will disclose to
the Company, in writing, any other gainful employment, business or activity that
you are currently associated with or participate in that competes, directly or
indirectly, with the Company.  During your employment, you agree not to engage
in any employment, business or activity that is in any way competitive with the
business or proposed business of the Company, which materially interferes with
the performance of your job duties, or creates a conflict of interest.  You also
may not assist any other person or organization in

 

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competing with the Company or in preparing to engage in competition with the
business or proposed business of the Company.  By your signature below, you
represent that you have disclosed to the Company any outside employment,
business or activity in which you currently engage and intend to continue to
engage during your employment with Zynga.  Failure to make disclosures is
considered a material representation that you are not engaged or associated with
any such outside activities at the beginning of employment.  You will be
responsible to comply with Zynga’s Conflict of Interest Policy, including
updated disclosures of such outside activities, at all times during employment.

 

15. Authorization to Work.  This offer is also contingent upon proof of identity
and work eligibility. Please note that because of employer regulations adopted
in the Immigration Reform and Control Act of 1986, within three (3) business
days of starting your new position you will need to present documentation
demonstrating that you have authorization to work in the United States.  If you
have questions about this requirement, which applies to U.S. citizens and
non-U.S. citizens alike, you may contact our personnel office.

 

16. Entire Agreement.  This offer letter and the documents referred to herein
constitute the entire agreement and understanding of the parties with respect to
the subject matter of this offer, and (1) supersede any and all prior
understandings and agreements, whether oral or written, between or among the
parties hereto with respect to the specific subject matter hereof and (2)
supersede and replace any and all prior offer letters for employment by the
Company and terms contained therein.  If any term herein is unenforceable in
whole or in part, the remainder shall remain enforceable to the extent permitted
by law.

 

17. Acceptance. Your anticipated start date will be no later than August 8,
2016. The date on which you commence employment shall be your “Start Date” for
purposes of this offer letter.  If you decide to accept our offer, and I hope
you will, please sign the enclosed copy of this letter in the space indicated
and return it to me.  Your signature will acknowledge that you have read and
understood and agreed to the terms and conditions of this offer letter and the
attached documents, if any.    

 

Should you have anything else that you wish to discuss, please do not hesitate
to call me.  We look forward to the opportunity to welcome you to the Company.

 

 

 

Very truly yours,

 

ZYNGA INC.

 

 

By:

/s/ Devang Shah

 

 

Devang Shah

 

 

Senior Vice President, General Counsel, and Secretary

 

 

Delivered contemporaneously/incorporated:  Employee Invention Assignment and
Confidentiality Agreement

 

 

 

 

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I have read and understood this offer letter and hereby acknowledge, accept and
agree to the terms as set forth above and further acknowledge that no other
commitments were made to me as part of my employment offer except as
specifically set forth herein.

 

/s/ Matthew Bromberg

 

July 27, 2016

Matthew Bromberg

 

Date signed

 

 

 

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