Document:

EXHIBIT 4.2.80
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                          SECURITIES PURCHASE AGREEMENT

         THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made as of
February 10, 2004 between Salon Media Group, Inc., a Delaware corporation (the
"Company"), and each of the signatories hereto (each, the "Purchaser"). The
parties hereby agree as follows:

                                     RECITAL

         On the terms and subject to the conditions set forth herein, Purchaser
is willing to purchase from the Company, and the Company is willing to sell to
Purchaser, the number shares of the Company's Series C Preferred Stock (the
"Shares"), and a warrant substantially in the form attached hereto as Exhibit A
(the "Warrant") to purchase the number of shares of the Company's Common Stock
(the "Warrant Shares"), set forth opposite Purchaser's name on Schedule A
hereto.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the foregoing, and the
representations, warranties, and conditions set forth below, the parties hereto,
intending to be legally bound, hereby agree as follows:

         1. Sale and Issuance of the Shares; Consideration. Subject to the terms
and conditions hereof, at the Closing (as defined below), the Company will issue
and sell to the Purchaser and the Purchaser will purchase from the Company the
Shares at a purchase price of $800 per share (the "Purchase Price") and, for no
additional consideration, the Warrant. In consideration for the Shares and
Warrant, the Purchaser at the Closing will pay the appropriate purchase price by
delivery of a check, payable to the order of the Company, or by wire transfer at
such Closing.

         The Purchaser shall not sell or transfer any of the Shares, Warrant or
Warrant Shares (collectively, the "Securities") other than to an affiliate of
Purchaser prior to the first anniversary of the Closing Date. Any such affiliate
shall be subject to such restriction on transfer. For the purposes of this
Agreement, an "affiliate" shall mean any partner, limited partner or member of
Purchaser or any person or entity that directly or indirectly through one or
more intermediaries controls or is controlled by or is under common control with
Purchaser.

         2. Agreement of the Company and Purchaser. The Company and the
Purchaser, having adverse interests and as a result of arm's length bargaining,
agree that:

            (1) Neither the Purchaser nor any affiliated company has rendered
any services to the Company in connection with this Agreement;

            (2) The Warrant is not being issued as compensation;

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            (3) The aggregate fair market value of the Shares, if issued apart
from the Warrant and the aggregate fair market value of the Warrant, if issued
apart from the Shares, are set forth herein; and

            (4) All tax returns and other information returns of each party
relative to this Agreement and Warrant issued pursuant hereto shall consistently
reflect the matters agreed to in (1) through (3) above.

         3. Closing; Delivery.

            3.1 Closing. The initial closing of the sale and purchase of the
Shares and the Warrant (the "Closing") shall take place at the offices of Gray
Cary Ware & Freidenrich LLP, 2000 University Avenue, East Palo Alto, California
94303 on the date hereof or such later date as shall be mutually acceptable to
the Company and the Purchaser (the "Closing Date"). At any time after the date
hereof, the Company may sell all authorized but unissued Shares not sold at the
initial Closing to subsequent purchasers, including the issuance of a Warrant
for no additional consideration. Such purchases of Shares and Warrants shall be
made by each subsequent purchaser by executing counterpart signature pages to
this Agreement, making such purchaser a party and bound by the terms and
conditions of this Agreement. Any shares of Series C Preferred Stock sold
pursuant to this Section 3.1 shall be deemed to be "Shares" for all purposes
under this Agreement and any purchasers thereof shall be deemed to be
"Purchasers" under this Agreement. Each sale of additional Shares and Warrants
pursuant to this Section 3.1 shall be deemed a "Closing" for purposes hereunder.
Schedule A to this Agreement shall be updated to reflect the number of Shares
and Warrants purchased at each Closing and the parties purchasing such Shares
and Warrants.

            3.2 Delivery. At Closing, on the terms and subject to the conditions
hereof, Purchaser shall pay to the Company, by check or wire transfer of
immediately available funds, by delivery of evidence of the indebtedness of the
Company to be cancelled, the aggregate Purchase Price, and in exchange for and
upon receipt or confirmation of such payment, the Company will issue and deliver
to Purchaser a stock certificate representing the Shares purchased by Purchaser
and a Warrant for the Warrant Shares.

         4. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchaser that:

            4.1 Organization and Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to carry on its
businesses as now conducted and as proposed to be conducted.

            4.2 Corporate Power. The Company has all requisite corporate power
necessary for the authorization, execution and delivery of this Agreement and
the Warrant, to sell and issue the Shares hereunder, and to carry out and
perform all of its obligations under the terms of this Agreement, the Warrant
and the Certificate of Designation of Preferences and Rights of the Series C
Preferred Stock (the "Certificate of Designation"), and to carry on its business
as presently conducted and as presently proposed to be conducted, and such other

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agreements and instruments. Each of the Agreement and the Warrant is a valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as the same may be limited by bankruptcy, insolvency, moratorium, and
other laws of general application affecting the enforcement of creditors'
rights.

            4.3 Capitalization. As of November 30, 2003, the authorized capital
stock of the Company is Fifty million (50,000,000) shares of Common Stock and
Five million (5,000,000) shares of Preferred Stock, and there are issued and
outstanding (i) 14,155,276 shares of the Common Stock, (ii) 819 shares of Series
A Preferred Stock, (iii) 125 shares of Series B Preferred Stock, (iv) no shares
of Series C Preferred Stock, (v) warrants to purchase an aggregate of 18,352,954
shares of Common Stock, and (vi) options to purchase 4,981,289 shares of Common
Stock granted to employees pursuant to the Company's 1995 Stock Option Plan. All
such issued and outstanding shares have been duly authorized and validly issued,
are fully paid and nonassessable, and were issued in compliance with all
applicable state and federal laws concerning the issuance of securities.

            4.4 Authorization.

                (1) Corporate Action. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the sale and
issuance of the Shares and the authorization, execution and performance of the
Company's obligations hereunder and under the Warrant has been taken.

                (2) Valid issuance. The Securities, when issued in compliance
with the provisions of this Agreement and the Warrant, will be validly issued,
fully paid and nonassessable and will be free of restrictions on transfer other
than restrictions under the Warrant and under applicable federal and state
securities laws.

            4.5 Compliance with Other Instruments. The execution, delivery and
performance of and compliance with this Agreement or the Warrant by the Company,
and the issuance and sale of Securities, will not result in any violation of the
Certificate of Incorporation or Bylaws of the Company.

            4.6 Offering. In reliance on the representations and warranties of
the Purchaser in Section 6 hereof, the offer, sale and issuance of Securities in
conformity with the terms of this Agreement and the Warrant will not result in a
violation of the Securities Act of 1933, as amended (the "Securities Act"), or
any state securities laws, including the qualification or registration
requirements of applicable blue sky laws.

            4.7 Company Reports; Disclosure

                (a) Company Reports. For the purposes of this Agreement, the
term "Company Reports" shall mean, collectively, each registration statement,
report, proxy statement or information statement filed with the Securities and
Exchange Commission (the "SEC") since January 1, 1999, in the form (including
exhibits, annexes and any amendments thereto) filed with the SEC. As of their
respective dates, the Company Reports complied in all material respects with the
requirements of the Securities Act and the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and did not contain any untrue statement of a

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material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading. Nothing has occurred since November 13,
2003 which would require the filing of any additional report or of any amendment
to any of the Company Reports with the SEC, or which would cause any of the
Company Reports to contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading.

                (b) Disclosure. No representation or warranty by the Company in
this Agreement, or in any document or certificate furnished or to be furnished
to the Purchaser pursuant hereto or in connection with the transactions
contemplated hereby, when taken together, contains or will contain any untrue
statement of a material fact or omits or will omit to state a material fact
necessary to make the statements made herein and therein, in the light of the
circumstances under which they were made herein and therein, in the light of the
circumstances under which they were made, not misleading. The Company has either
filed with the SEC or fully provided the Purchaser with all the information
necessary for the Purchaser to decide whether to purchase the Shares.

         5. Representations and Warranties of the Purchaser and Restrictions on
transfer Imposed by the Securities Act. Purchaser represents and warrants to the
Company as to itself as follows:

            5.1 Power. Purchaser has all requisite corporate power necessary for
the authorization, execution and delivery of the Agreement and Warrant to which
it is a party. Each of the Agreement and the Warrant to which the Purchaser is a
party is a valid and binding obligation of the Purchaser, enforceable against
the Purchaser in accordance with its terms, except as the same may be limited by
bankruptcy, insolvency, moratorium, and other laws of general application
affecting the enforcement of creditors' rights.

            5.2 Authorization. All corporate action on the part of the
Purchaser, its officers, directors and stockholders necessary for the
authorization, execution and performance of the Purchaser's obligations
hereunder and under the Warrant to which it is a party have been taken.

            5.3 Compliance with Other Instruments. The execution, delivery and
performance of and compliance with this Agreement and the Warrant to which
Purchaser is a party will not result in any violation of or default in any
material respect under the terms of any mortgage, indenture, contract,
agreement, instrument, judgment or decree to which the Purchaser is a party or
is otherwise subject.

            5.4 Consents. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority or other
third party on the part of the Purchaser is required in connection with the
valid execution and delivery of the Warrant to which it is a party.

            5.5 Investment Intent. This Agreement is made with the Purchaser in
reliance upon the Purchaser's representation to the Company, evidenced by the
Purchaser's execution of

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this Agreement, that the Purchaser is acquiring the Shares for investment for
the Purchaser's own account, and not with a view to, or for resale in connection
with, any distribution or public offering thereof within the meaning of the
Securities Act.

            5.6 Shares Not Registered. The Purchaser understands and
acknowledges that the offering of the Shares and Warrant issued pursuant to this
Agreement will not be registered under the Securities Act or qualified under
applicable blue sky laws on the grounds that the offering and sale of securities
contemplated by this Agreement are exempt from registration under the Securities
Act and exempt from qualifications available under applicable blue sky laws, and
that the Company's reliance upon such exemptions is predicated upon the
Purchaser's representations set forth in this Agreement. The Purchaser
acknowledges and understands that, except for transfers to Affiliates of the
Purchaser, the Securities must be held for at least 12 months after Closing and
thereafter indefinitely unless the Securities are registered under the
Securities Act and qualified under applicable blue sky laws or an exemption from
such registration and such qualification is available.

            5.7 Knowledge and Experience. The Purchaser (i) has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of the Purchaser's prospective investment in the Shares;
(ii) has the ability to bear the economic risks of the Purchaser's prospective
investment; and (iii) has not been offered the Shares by any form of
advertisement, article, notice or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any such media.

            5.8 Accredited Investor. The Purchaser is an "accredited investor"
as that term is defined in Rule 501(a) under the Securities Act.

            5.9 Legends. Each certificate representing the Shares may be
endorsed with the following legends:

                (1) Federal Legend. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT") AND ARE "RESTRICTED SECURITIES" AS DEFINED IN RULE 144
PROMULGATED UNDER THE ACT. THE SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR
OTHERWISE DISTRIBUTED EXCEPT (i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SHARES UNDER THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR
(iii) PURSUANT TO AN OPINION OF COUNSEL, THAT SUCH REGISTRATION OR COMPLIANCE IS
NOT REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION.

                (2) Other Legends. Any other legends required by applicable
state blue sky laws. The Company need not register a transfer of legended
Shares, and may also instruct its transfer agent not to register the transfer of
the Shares, unless the conditions specified in each of the foregoing legends are
satisfied.

            5.10 Removal of Legend and Transfer Restrictions. Any legend
endorsed on a certificate pursuant to subsection 5.9(1) and the stop transfer
instructions with respect to such

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legend Shares shall be removed, and the Company shall issue a certificate
without such legend to the holder of such Shares if such Shares are registered
under the Securities Act and a prospectus meeting the requirements of Section 10
of the Securities Act is available or if such holder satisfies the requirements
of Rule 144(k).

         6. Conditions to Closing.

            6.1 Conditions to the Purchaser's Obligations. The obligation of the
Purchaser to purchase the Securities at the Closing is subject to the
fulfillment to the Purchaser's satisfaction, on or prior to the Closing Date, of
the following conditions, any of which may be waived by the Purchaser.

                (1) Representations and Warranties Correct; Performance of
Obligations. The representations and warranties made by the Company in Section 4
hereof shall be true and correct when made, and shall be true and correct in all
material respects on the Closing Date with the same force and effect as if they
had been made on and as of said date (except to the extent any such
representation or warranty expressly speaks of an earlier date). The Company
shall have performed in all material respects all obligations and conditions
herein required to be performed or observed by it on or prior to the Closing
Date.

                (2) Warrant. The Company shall have executed the Warrant.

         7. Conditions to Obligations of the Company. The Company's obligation
to sell and issue the shares at the Closing is subject to the fulfillment to the
satisfaction of the Company on or prior to the Closing Date of the following
condition, which may be waived by the Company: The representations and
warranties made by the Purchaser in Section 5 hereof shall be true and correct
when made, and shall be true and correct on the Closing Date with the same force
and effect as if they had been made on and as of said date (except to the extent
any such representation or warranty expressly speaks of an earlier date). The
Purchaser shall have performed in all material respects all obligations and
conditions herein required to be performed or observed by it on or prior to the
Closing Date.

         8. Affirmative Covenants of the Company - Registration Rights. The
Company represents that, within two hundred fifteen (215) days from the initial
closing, the Company will file a registration statement covering the shares of
Common Stock issued upon conversion of the Shares, and will use its best efforts
to cause such registration statement to be declared effective as soon as
possible thereafter.

         9. Miscellaneous.

            9.1 Governing Law. This Agreement shall be governed in all respects
by the laws of the State of California.

            9.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive the Closing of the transactions
contemplated hereby, notwithstanding any investigation made by the Purchaser.
All statements as to factual matters contained in any certificates or other
instrument delivered by or on behalf of the Company pursuant hereto or in

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connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder as of the date of such
certificate or instrument.

            9.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.

            9.4 Entire Agreement. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof and
they supersede, merge and render void every other prior written and/or oral
understanding or agreement among or between the parties hereto.

            9.5 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be delivered personally,
mailed by first class mail, postage prepaid, or delivered by courier or
overnight delivery, addressed (a) if to the Purchaser, to the address such
Purchaser shall have furnished to the Company in writing or (b) if to the
Company, at 22 Fourth Street, 16th Floor, San Francisco, CA 94103 Attention:
Chief Financial Officer, or at such other address as the Company shall have
furnished to the Purchaser in writing. Notices that are mailed shall be deemed
received five days after deposit in the United States mail.

            9.6 Severability. In case any provision of this Agreement shall be
found by a court of law to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions of this Agreement shall
not n any way be affected or impaired thereby.

            9.7 Finder's Fees and Other Fees.

                (1) The Company (i) represents and warrants that it has retained
no finder or broker in connection with the transactions contemplated by this
Agreement and, (ii) hereby agrees to indemnify and to hold the Purchaser
harmless from and against any liability for commission or compensation in the
nature of a finder's fee to any broker or other person or firm (and the costs
and expenses of defending against such liability or asserted liability) for
which the Company, or any of its employees or representatives, are responsible.

                (2) Each Purchaser (i) represents and warrants that it has
retained no finder or broker in connection with the transactions contemplated by
this Agreement and (ii) hereby agrees to indemnify and to hold the Company
harmless from and against any liability for any commission or compensation in
the nature of a finder's fee to any broker or other person or firm (and the
costs and expenses of defending against such liability or asserted liability)
for which such Purchaser, or any of its employees or representatives, are
responsible.

            9.8 Expenses. The Company and each Purchaser shall each bear their
own expenses and legal fees in connection with the consummation of this
transaction.

            9.9 Titles and Subtitles. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

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            9.10 Non-Recourse. No partner, limited partner, member, officer,
director, shareholder, employee or agent or other holder of an ownership
interest in any party to this Agreement shall have any liability in respect of
any such party's obligations under this Agreement by reason of his or her status
as such partner, limited partner, member, officer, director, shareholder,
employee or agent or other holder of an ownership interest in any party to this
Agreement. The obligations under this Agreement shall be limited to the assets
of each of the Purchaser and shall not exceed the Purchase Price.

            9.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

            9.12 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to the Company or to any holder of any
securities issued or to be issued hereunder shall impair any such right, power
or remedy of the Company or such holder, nor shall it be construed to be a
waiver of any breach or default under this Agreement, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any delay or omission to exercise any right, power or remedy or any waiver
of any single breach or default be deemed a waiver of any other right, power or
remedy or breach or default theretofore or thereafter occurring. All remedies,
either under this Agreement, or by law otherwise afforded to the Company or any
holder, shall be cumulative and not alternative.

            9.13 Attorneys' Fees. If any action at law or in equity is necessary
to enforce or interpret the terms of any of the Transaction Agreements, the
prevailing party shall be entitled to reasonable attorneys' fees, costs and
disbursements in addition to any other relief to which such party may be
entitled.

            9.14 Venue. The parties hereby irrevocably submit to the
jurisdiction of the courts of the State of California and the Federal courts of
the United States of America located in the State of California solely in
respect of the interpretation and enforcement of the provisions of the Warrant,
and in respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that the Warrant may not be enforced in or by such courts, and the parties
hereto irrevocably agree that all claims with respect to such action or
proceeding shall be heard and determined in such a California state or Federal
court. The parties hereby consent to and grant any such court jurisdiction over
the person of such parties and over the subject matter of such dispute and agree
that mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 9.5 hereof shall be valid ad
sufficient service thereof.

            [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

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         IN WITNESS WHEREOF, the parties hereto have executed this Securities
Purchase Agreement as of the date first written above.

                                         SALON MEDIA GROUP, INC.

                                         By: /s/ Elizabeth Hambrecht
                                             -----------------------
                                             Elizabeth Hambrecht
                                             President & Chief Financial Officer

          [COUNTERPART SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

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                                                  PURCHASER

                                                  By:
                                                     -------------------------

                                                  Name:
                                                       -----------------------

          [COUNTERPART SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

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                                   SCHEDULE A
                                   ----------

PURCHASER                           PURCHASE PRICE    SHARES     WARRANT SHARES
----------------------------------  --------------    ------     --------------

Shea Ventures LLC                     200,000.00        250         600,000
The Hambrecht 1980 Revocable Trust    100,000.00        125         300,000
WR Hambrecht+Co Inc,                  100,000.00        125         300,000
                                    -------------------------------------------

TOTAL                                 400,000.00        500       1,200,000EXHIBIT 4.2.81
                                                                  --------------

EXCEPT AS OTHERWISE PROVIDED IN THIS WARRANT, THE SECURITIES EVIDENCED BY THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (i) THERE IS
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH SECURITIES, (ii)
THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT, OR (iii) THE COMPANY
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT.

                             SALON MEDIA GROUP, INC.
                          COMMON STOCK PURCHASE WARRANT

     1. Price and Number of Shares Subject to Warrant. FOR VALUE RECEIVED and
subject to the terms and conditions herein set forth, ______________, (the
"Purchaser"), is entitled to purchase from Salon Media Group, Inc., a Delaware
corporation (the "Company"), at any time after 5:00 p.m. California time on
February 10, 2004 and before the termination of this Warrant pursuant to Section
12 below, at a price per share equal to $0.0345, as adjusted in accordance with
Section 3 below (the "Warrant Price"), that number of shares indicated in
Section 2 below of fully paid and nonassessable shares of the Common Stock of
the Company, as adjusted pursuant to Section 3 (the "Warrant Shares").

     2. Number of Warrant Shares. The number of Warrant Shares for which this
Warrant is exercisable is equal to _____________.

     3. Adjustment of Warrant Price and Warrant Shares. The number of Warrant
Shares issuable upon the exercise of this Warrant and the exercise price thereof
shall be subject to adjustment from time to time, and the Company agrees to
provide notice upon the happening of certain events, as follows:

          (a) Merger, Sale of Assets, etc. If at any time the Company proposes
to (i) consolidate with or merge with or sell or convey all or substantially all
of its assets to any other corporation or entity, or (ii) distribute stock,
securities or other assets to the holders of Common Stock in exchange for their
shares of the Company's Common Stock, then the Company shall give the holder of
this Warrant thirty (30) days advance notice of the effective date of such
transaction and to the extent the Warrant has not been exercised in full by the
effective date of such transaction, this Warrant shall terminate. The foregoing
notwithstanding, a merger or consolidation of the Company with or into another
corporation after which the shareholders of the Company immediately prior to
such transaction hold more than fifty percent (50%) of the voting power of the
surviving entity, shall not result in termination of this Warrant; instead this
Warrant shall be exchanged for a warrant of the surviving corporation that shall
entitle the holder hereof to acquire upon the exercise thereof the number of
shares of stock or other property to which the holder of the number of Warrant
Shares which are subject to this

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Warrant on the effective date of the merger would have been entitled to receive
for such securities under the terms of the merger.

          (b) Reclassification, etc. If the Company at any time shall, by
subdivision, combination or reclassification of securities or otherwise, change
any of the securities to which purchase rights under this Warrant exist into the
same or a different number of securities of any class or classes, this Warrant
shall thereafter entitle its holder to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities which were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change. If shares of the class of the Company's stock for which this Warrant is
being exercised are subdivided or combined into a greater or smaller number of
shares of stock, the Warrant Price shall be proportionately reduced in the case
of subdivision of shares or proportionately increased in the case of combination
of shares, in both cases by the ratio which the total number of shares of such
class of stock to be outstanding immediately after such event bears to the total
number of shares of such class of stock outstanding immediately prior to such
event.

          (c) Adjustment for Dividends in Stock. In case at any time or from
time to time on or after the date hereof the holders of the shares of the
Company's capital stock of the same class and series as the Warrant Shares (or
any shares of stock or other securities at the time receivable upon the exercise
of this Warrant) shall have received, or, on or after the record date fixed for
the determination of eligible shareholders, shall have become entitled to
receive, without payment therefor, other or additional stock of the Company by
way of dividend, then and in each case, the holder of this Warrant shall, upon
the exercise hereof, be entitled to receive, in addition to the number of
Warrant Shares receivable thereupon, and without payment of any additional
consideration therefor, the amount of such other or additional stock of the
Company which such holder would hold on the date of such exercise had it been
the holder of record of such Warrant Shares on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock receivable
by it as aforesaid during such period, giving effect to all adjustments called
for during such period by paragraph (c) of this Section 3.

          (d) Adjustment of Warrant Price.

               (i) Special Definitions. For purposes of this Section 3(d), the
following definitions shall apply:

                    (A) "OPTIONS" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities (as defined below).

                    (B) "CONVERTIBLE SECURITIES" shall mean any evidences of
indebtedness, shares or other securities convertible into or exchangeable for
Common Stock.

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                    (C) "ADDITIONAL SHARES OF COMMON STOCK" shall mean all
shares of Common Stock issued (or, pursuant to Section 3(d) below, deemed to be
issued) by the Company after the Warrant Issue Date (as defined below), other
than shares of Common Stock issued or issuable:

                    (I) upon conversion of shares of Preferred Stock;

                    (II) to officers, directors or employees of, or consultants
to, the Company pursuant to a warrant, stock grant, option agreement or plan,
purchase plan or other employee stock incentive program or agreement approved by
the Board of Directors, up to a maximum number of shares of Common Stock
(assuming full conversion of any such convertible securities into Common Stock)
equal to 25% of the then outstanding shares of the Company's Common Stock and
Preferred Stock (as converted);

                    (III) in connection with the acquisition by the Company of
another business entity or majority ownership thereof approved by the Board of
Directors;

                    (IV) to lease companies, real estate lessors, banks or
financial institutions, whether shares or warrants, in connection with any lease
or debt financing transaction approved by the Board of Directors;

                    (V) upon exercise of warrants outstanding as of the Warrant
Issue Date (as defined hereafter);

                    (VI) in connection with a transaction described in Section
3(d)(vi);

                    (VII) in connection with a strategic investment and/or
acquisition of technology or intellectual property approved by the Board of
Directors;

                    (VIII) by way of dividend or other distribution on shares of
Common Stock excluded from the definition of Additional Shares of Common Stock
by the foregoing clauses (I) through (VII).

                    (D) "WARRANT ISSUE DATE" shall mean the date on which the
Warrant was first issued by the Company.

               (ii) No Adjustment of Warrant Price. No adjustment in the Warrant
Price shall be made with respect to the issuance of Additional Shares of Common
Stock unless the consideration per share for an Additional Share of Common Stock
issued or deemed to be issued by the Company is less than the Warrant Price in
effect on the date of, and immediately prior to, such issue.

               (iii) Deemed Issue of Additional Shares of Common Stock. In the
event the Company at any time or from time to time after the Warrant Issue Date
shall issue any Options or Convertible Securities or shall fix a record date for
the determination of holders

                                        3
<PAGE>

of any class of securities entitled to receive any such Options or Convertible
Securities, then the maximum number of shares (as set forth in the instrument
relating thereto without regard to any provisions contained therein for a
subsequent adjustment of such number) of Common Stock issuable upon the exercise
of such Options or, in the case of Convertible Securities, the conversion or
exchange of the Convertible Securities shall be deemed to be Additional Shares
of Common Stock issued as of the time of the issuance of such Option or
Convertible Security or, in case such a record date shall have been fixed, as of
the close of business on such record date:

                    (A) except as provided in Section 3(d)(iii)(B) and
3(d)(iii)(C) below, no further adjustment in the Warrant Price shall be made
upon the subsequent issue of Convertible Securities or shares of Common Stock
upon the exercise of such Options or conversion or exchange of such Convertible
Securities;

                    (B) if such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any change in the
consideration payable to the Company, or change in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange thereof (other
than under or by reason of provisions designed to protect against dilution), a
Warrant Price computed upon the original issue thereof (or upon the occurrence
of a record date with respect thereto) and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects such
Options or the rights of conversion or exchange under such Convertible
Securities;

                    (C) upon the expiration of any such Options or Convertible
Securities, the Warrant Price, to the extent in any way affected by or computed
using such Options or Convertible Securities, shall be recomputed to reflect the
issuance of only the number of shares of Common Stock actually issued upon the
exercise of such Options or Convertible Securities; and

                    (D) no readjustment pursuant to Section 3(d)(iii) clauses
(B) and (C) above shall have the effect of increasing the Warrant Price to an
amount which exceeds the lower of (1) the Warrant Price on the original
adjustment date or (2) the Warrant Price that would have resulted from any
issuance of Additional Shares of Common Stock between the original adjustment
date and such readjustment date.

               (iv) Adjustment of Warrant Price Upon Issuance of Additional
Shares of Common Stock Below Purchase Price. In the event this Corporation shall
issue Additional Shares of Common Stock (including Additional Shares of Common
Stock deemed to be issued pursuant to Section 3(d)(iii)), after the Warrant
Issue Date, without consideration or for a consideration per share less than the
Warrant Price in effect on the date of and immediately prior to such issue (such
issuance price being referred to herein as the "DILUTION PRICE"), then and in
each such event the Warrant Price shall automatically be adjusted as set forth
in this Section 3(d)(iv), unless otherwise provided in this Section 3(d)(i).

                    (A) Adjustment Formula. Whenever the Conversion Price is
adjusted by Section 3(d)(iv), the new Warrant Price shall be determined by
multiplying the Warrant Price then in effect by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding immediately
prior to such issue plus the number of

                                        4
<PAGE>

shares of Common Stock which the aggregate consideration received by the Company
for the total number of Additional Shares of Common Stock so issued would
purchase at such Warrant Price in effect immediately prior to such issuance, and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issues plus the number of such additional
shares of Common Stock so issued. For the purposes of this paragraph, the number
of outstanding shares of Common Stock shall be deemed to include the Common
Stock issuable on conversion of all other outstanding Preferred Stock, upon
conversion or exercise of any other outstanding Convertible Securities and upon
exercise of all vested Options (and assuming conversion of Convertible
Securities issuable upon exercise of Options).

               (v) Determination of Consideration. For purposes of this Section
3(d), the consideration received by the Company for the issue of any Additional
Shares of Common Stock shall be computed as follows:

                    (A) Cash and Property: Such consideration shall:

                         (1) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Company before deducting any reasonable
discounts, commissions or other expenses allowed, paid or incurred by the
Company for any underwriting or otherwise in connection with the issuance and
sale thereof;

                         (2) insofar as it consists of property other than cash,
be computed at the fair value thereof at the time of such issue, as determined
by Board in the good faith exercise of its reasonable business judgment; and

                         (3) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other assets of the Company
for consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (1) and (2) above, as determined in
good faith by the Board.

                    (B) Options and Convertible Securities. The consideration
per share received by the Company for Additional Shares of Common Stock deemed
to have been issued pursuant to Section 3(d), relating to Options and
Convertible Securities, shall be determined by dividing:

                         (1) the total amount, if any, received or receivable by
the Company as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Company upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by

                                        5
<PAGE>

                         (2) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number) issuable upon the
exercise of such Options or the conversion or exchange of such Convertible
Securities.

     4. No Stockholder Rights. This Warrant, by itself, as distinguished from
any shares purchased hereunder, shall not entitle its holder to any of the
rights of a stockholder of the Company.

     5. Exercise of Warrant. This Warrant may be exercised in whole or part by
the holder, at any time after the date hereof and prior to the termination of
this Warrant, by the surrender of this Warrant, together with the Notice of
Exercise attached hereto as Attachment 1, duly completed and executed at the
principal office of the Company, accompanied by payment in full of the Warrant
Price in cash or by check with respect to the Warrant Shares being purchased.
This Warrant shall be deemed to have been exercised immediately prior to the
close of business on the date of its surrender for exercise as provided above,
and the person entitled to receive the Warrant Shares issuable upon such
exercises shall be treated for all purposes as holder of such shares of record
as of the close of business on such date. As promptly as practicable after such
date, the Company shall issue and deliver to the person or persons entitled to
receive the same a certificate or certificates for the number of full Warrant
Shares issuable upon such exercise.

     6. Conversion. In lieu of exercising this Warrant or any portion hereof by
paying cash, the holder hereof shall have the right to convert this Warrant or
any portion hereof and receive Warrant Shares by executing and delivering to the
Company at its principal office the written notice of conversion in the form
attached hereto as Attachment 2, respectively, specifying the portion of the
Warrant to be converted, and accompanied by this Warrant. The number of Warrant
Shares to be issued upon such conversion shall be computed using the following
formula:

            X = (P)(Y)(A-B)/A

            Where                   X = the number of Warrant Shares to be
                                        issued to the holder for the portion of
                                        the Warrant being converted.

                                    P = the portion in the form of a fraction of
                                        the Warrant being converted.

                                    Y = the total number of Warrant Shares
                                        issuable upon exercise of the Warrant in
                                        full.

                                    A = the fair market value of one Warrant
                                        Share which shall mean the last reported
                                        sale price per share of the Common Stock
                                        as reported on the Nasdaq National
                                        Market (or if the Common Stock is not
                                        then listed on the Nasdaq National
                                        Market, then such last reported sale
                                        price on a national securities exchange
                                        or other nationally recognized exchange
                                        or trading system) on the day upon which
                                        the holder delivered its notice of
                                        conversion to the Company, or if no

                                        6
<PAGE>
                                        such price is reported on such day, such
                                        price on the next preceding business day
                                        for which such price is reported.

                                    B = the Warrant Price on the day upon which
                                        the holder delivered its notice of
                                        conversion to the Company.

Any portion of this Warrant that is converted shall be immediately canceled.

     7. Certificate of Adjustment. Whenever the Warrant Price or number or type
of securities issuable upon exercise of this Warrant is adjusted, as herein
provided, the Company shall deliver to the record holder of this Warrant a
certificate of an officer or other authorized person of the Company setting
forth the nature of such adjustment and a brief statement of the facts requiring
such adjustment.

     8. Sale or Transfer of Warrant. The Purchaser shall not sell or transfer
this Warrant other than to an affiliate of Purchaser. For the purposes of this
Agreement, an "Affiliate" shall mean any partner, limited partner or member of
Purchaser or any person or entity that directly or indirectly through one or
more intermediaries controls or is controlled by or is under common control with
Purchaser.

     9. Successors and Assigns. The terms and provisions of this Warrant shall
inure to the benefit of, and be binding upon the Company, its successors and
assigns. This Warrant cannot be assigned by Purchaser, except to an Affiliate,
without the express written consent of the Company.

     10. Representations and Covenants of the Company. The Company makes the
following representations and covenants:

          (a) Authorization. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Warrant, the performance of all obligations of
the Company hereunder and thereunder, and the authorization, issuance (or
reservation for issuance), sale and delivery of the Warrant Shares issuable
hereunder has been taken or will be taken prior to the Closing, and this Warrant
constitutes valid and legally binding obligations of the Company, enforceable in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) to the extent the indemnification provisions
contained in this Warrant may be limited by applicable federal or state
securities laws.

          (b) Valid Issuance of Common Stock. The Warrant Shares issuable
hereunder, when issued, sold and delivered in accordance with the terms of this
Warrant for the consideration expressed herein, will be duly and validly issued,
fully paid and nonassessable, and will be free of restrictions on transfer other
than restrictions on transfer under this Warrant and under applicable state and
federal securities laws.

          (c) Company Action. The Company will at all times during the term of
this Warrant act in good faith to assist in the carrying out of all of the
provisions of this

                                        7
<PAGE>

Warrant. The Company will at all times during the term of the Warrant take any
and all action as may be necessary or appropriate to protect the exercise of the
rights of the Purchaser under this Warrant.

     11. Representations and Covenants of the Purchaser. This Warrant has been
entered into by the Company in reliance upon the following representations and
covenants of the Purchaser:

          (a) Investment Purpose. The right to acquire Common Stock contained
herein will be acquired for investment and not with a view to the sale or
distribution of any part thereof, and the Purchaser has no present intention of
selling or engaging in any public distribution of the same except pursuant to a
registration or exemption.

          (b) Private Issue. The Purchaser understands (i) that the Common Stock
issuable upon exercise of the purchase rights under this Warrant is not
registered under the Securities Act of 1933 Act or qualified under applicable
state securities laws on the ground that the issuance contemplated by this
Warrant will be exempt from the registration and qualifications requirements
thereof, and (ii) that the Company's reliance on such exemption is predicated on
the representations set forth in this Section.

          (c) Financial Risk. The Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment, and has the ability to bear the economic risks of its
investment.

          (d) Accredited Investor. Purchaser is an "accredited investor" within
the meaning of SEC Rule 501 of Regulation D, as presently in effect.

          (e) Authorization. This Warrant constitutes the Purchaser's valid and
legally binding obligation, enforceable in accordance with its terms.

          (f) Disclosure of Information. Purchaser believes it has received all
the information it considers necessary or appropriate for deciding whether to
purchase the rights under this Warrant. Purchaser further represents that it has
had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the Warrant and the Common Stock issuable
upon exercise of the purchase rights thereunder.

          (g) Investment Experience. Purchaser is an investor in securities of
companies and acknowledges that it is able to fend for itself, can bear the
economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Company's stock. If other than an individual,
Purchaser also represents that it has not been organized for the purpose of
acquiring the rights under this Warrant.

          (h) Legends. It is understood that the Common Stock issuable upon
exercise of the rights under this Warrant may bear one or all of the following
legends:

                                        8
<PAGE>

               (i) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND ARE
"RESTRICTED SECURITIES" AS DEFINED IN RULE 144 PROMULGATED UNDER THE ACT. THE
SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED EXCEPT
(i) IN CONJUNCTION WITH AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER
THE ACT OR (ii) IN COMPLIANCE WITH RULE 144, OR (iii) PURSUANT TO AN OPINION OF
COUNSEL, THAT SUCH REGISTRATION OR COMPLIANCE IS NOT REQUIRED AS TO SAID SALE,
OFFER OR DISTRIBUTION."

               (ii) Any legend required by the laws of the State of California
or other states, including any legend required by the California Department of
Corporations and Sections 417 and 418 of the Corporations Code.

     12. Termination. Unless otherwise terminated pursuant to Section 3(a)
above, this Warrant shall terminate at 5:00 p.m., California time, on the third
anniversary of the date hereof.

     13. Notices. Unless otherwise provided, any notice required or permitted
under this Warrant shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or upon deposit with
the United States Post Office, by registered or certified mail, postage prepaid
and addressed to the party to be notified at the address supplied by Purchaser
to the Company or at such other address as Purchaser shall designate by ten days
advance written notice to the Company.

     14. Miscellaneous. This Warrant shall be governed by the laws of the State
of California, as such laws are applied to contracts to be entered into and
performed entirely in California by California residents. The headings in this
Warrant are for purposes of convenience and reference only, and shall not be
deemed to constitute a part hereof. Any provision of this Warrant may be
amended, waived or modified upon the written consent of the Company, and the
Purchaser; provided, however that each other Purchaser of a Warrant shall, at
its option, be entitled to amend, waive or modify the Warrant held by such
Purchaser in a similar manner.

                                        9
<PAGE>

Upon delivery of written notice to the Company by the Purchaser, this Warrant
shall be deemed amended, waived or modified in the same manner as any other
Warrant. Any amendment or waiver effected in accordance with this Section 14
shall be binding upon the Company, the Purchaser and each transferee of this
Warrant.

                                    SALON MEDIA GROUP, INC.

                                    Signed: /s/ Elizabeth Hambrecht

                                    Printed: Elizabeth Hambrecht

                                    Title: President and Chief Financial Officer

                                       10

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