Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of May 15, 2019, is
entered into by and between Leaf Group Ltd., a Delaware corporation (the
“Company”), and Brian Gephart (the “Executive”).

 

WHEREAS, the Company desires to employ the Executive as Chief Accounting Officer
and to enter into an agreement embodying the terms of such employment; and

 

WHEREAS, the Executive desires to accept such employment with the Company,
subject to the terms and conditions of this Agreement.

 

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1.                                      Employment Period.  Subject to the
provisions for earlier termination hereinafter provided, the Executive’s
employment hereunder shall be for a term (the “Employment Period”) commencing on
June 3, 2019 (the “Effective Date”) and ending on the third (3rd) anniversary of
the Effective Date.  The Executive’s employment hereunder is terminable at will
by the Company or by the Executive at any time (for any reason or for no
reason), subject to the provisions of Section 4 hereof.  This Agreement is
effective as of the Effective Date.

 

2.                                      Terms of Employment.

 

(a)                                 Position and Duties.

 

(i)            During the Employment Period, the Executive shall serve as Chief
Accounting Officer, reporting to the Chief Financial Officer or his or her
designee, and shall perform such duties as are usual and customary for such
position.  At the Company’s request, the Executive shall serve the Company
and/or its subsidiaries and affiliates in other capacities in addition to the
foregoing consistent with the Executive’s role as Chief Accounting Officer of
the Company.  In the event that the Executive, during the Employment Period,
serves in any one or more of such additional capacities, the Executive’s
compensation shall not be increased beyond that specified in
Section 2(b) hereof.  In addition, in the event the Executive’s service in one
or more of such additional capacities is terminated, the Executive’s
compensation, as specified in Section 2(b) hereof, shall not be diminished or
reduced in any manner as a result of such termination provided that the
Executive otherwise remains employed under the terms of this Agreement.

 

(ii)           During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive may be entitled, the Executive
agrees to devote the Executive’s full business time and attention to the
business and affairs of the Company.

 

(iii)          During the Employment Period, the Executive shall perform the
services required by this Agreement at the Company’s principal offices located
in Santa Monica, California (the “Principal Location”), except for travel to
other locations as may be necessary to fulfill the Executive’s duties and
responsibilities hereunder.

 

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(b)                                 Compensation, Benefits, etc.

 

(i)            Base Salary.  During the Employment Period, the Executive shall
receive a base salary equal to two hundred sixty-five thousand dollars
($265,000) per annum (the “Base Salary”).  The Base Salary shall be reviewed
annually by the Compensation Committee (the “Compensation Committee”) of the
Company’s Board of Directors (the “Board”) and may be increased from time to
time by the Compensation Committee in its sole discretion.  The Base Salary
shall be paid in installments in accordance with the Company’s applicable
payroll practices, as in effect from time to time, but no less often than
monthly.

 

(ii)           Annual Bonus.  In addition to the Base Salary, the Executive
shall be eligible to earn, for each fiscal year of the Company ending during the
Employment Period, a discretionary cash performance bonus (an “Annual Bonus”)
under the Company’s bonus plan or program applicable to senior Executives.  The
Executive’s target Annual Bonus (the “Target Bonus”) shall initially be set at
thirty percent (30%) of the Base Salary actually paid for such year.  The actual
amount of the Annual Bonus shall be determined on the basis of the attainment of
Company performance metrics and/or individual performance objectives, in each
case, as established and approved by the Board or the Compensation Committee (or
their designee) in its sole discretion. Payment of any Annual Bonus(es), to the
extent any Annual Bonus(es) become payable, will be contingent upon the
Executive’s continued employment through the applicable payment date, which
shall occur on the date on which annual bonuses are paid generally to the
Company’s similarly situated executives.

 

(iii)          Equity Awards.

 

(A)                               Restricted Stock Unit Award.  Subject to
approval by the Compensation Committee, the Company agrees to grant to Executive
thirty thousand (30,000) restricted stock units with respect to the Company’s
common stock (the “RSUs”) under the Company’s Amended & Restated 2010 Incentive
Award Plan, as amended from time to time (the “Plan”), following Executive’s
start date.  Subject to Section 4(c) hereof and the Executive’s continued
employment with the Company through the applicable vesting dates, such RSU award
shall vest over three (3) years with one-third (1/3) vesting on the first
anniversary of the date on which such RSUs are granted and the remaining
two-thirds (2/3) vesting in twenty-four (24) substantially equal monthly
installments commencing on each monthly anniversary thereafter.

 

(B)                               Agreements.  The RSUs shall be granted to
Executive under the Plan, and shall collectively constitute the “Equity
Awards”.  The terms and conditions of the Equity Awards, including the vesting
commencement dates and any restrictions thereon, shall be set forth in separate
award agreements entered into by the Company and Executive which shall evidence
the grant of the Equity Awards (the “Equity Award Agreements”).  The RSUs shall
be governed in all respects by the terms and conditions of the Plan.

 

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(iv)          Incentive, Savings and Retirement Plans.  During the Employment
Period, the Executive shall be eligible to participate in all other incentive
plans, practices, policies and programs, and all savings and retirement plans,
practices, policies and programs, in each case that are available generally to
similarly-situated executives of the Company.  In addition, during the
Employment Period the Executive shall be eligible, at the Company’s discretion,
to receive periodic equity incentive awards from the Company, including under
any annual equity incentive program that may be established by the Company for
its senior executives, as may be in effect from time to time.

 

(v)           Welfare Benefit Plans.  During the Employment Period, the
Executive and the Executive’s dependents shall be eligible to participate in the
welfare benefit plans, practices, policies and programs (including, as
applicable, medical, dental, disability, employee life, group life and
accidental death insurance plans and programs) maintained by the Company for its
similarly-situated executives.

 

(vi)          Expenses.  During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable business expenses
incurred by the Executive in accordance with the policies, practices and
procedures of the Company provided to similarly-situated executives of the
Company.

 

(vii)         Fringe Benefits.  During the Employment Period, the Executive
shall be entitled to such fringe benefits and perquisites as are provided by the
Company to its similarly-situated executives from time to time, in accordance
with the policies, practices and procedures of the Company, and shall receive
such additional fringe benefits and perquisites as the Company may, in its
discretion, from time-to-time provide.  Nothing contained in Sections
2(b)(iv)-(v) hereof or this Section 2(b)(vii) shall, or shall be construed to,
obligate the Company to adopt or maintain any incentive, savings, retirement,
welfare, fringe benefit or other plan(s) or program(s) at any time.

 

(viii)        Vacation, Personal or Sick Days.  During the Employment Period,
the Executive shall not be entitled to a fixed number of paid vacation, personal
or sick days per year.  As a salaried employee, the Company expects the
Executive to use the Executive’s judgment to take time off from work for
vacation or other personal time in a manner consistent with getting the
Executive’s work done in a timely fashion, providing excellent service to the
Company’s customers and partners and avoiding inconveniencing the Executive’s
co-workers.

 

3.                                      Termination of Employment.

 

(a)                                 Death or Disability.  The Executive’s
employment shall terminate automatically upon the Executive’s death during the
Employment Period.  Either the Company or the Executive may terminate the
Executive’s employment in the event of the Executive’s Disability during the
Employment Period.  For purposes of this Agreement, “Disability” shall mean a
disability as determined under the Company’s applicable long-term disability
plan that prevents the Executive from performing the Executive’s duties under
this Agreement (even with a reasonable accommodation by the Company) for a
period of six (6) months or more or, if no such plan applies, as determined in
the reasonable discretion of the Company.

 

(b)                                 Cause.  The Company may terminate the
Executive’s employment during the Employment Period for Cause or without Cause. 
For purposes of this Agreement, “Cause” shall have the meaning set forth in the
Plan.

 

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(c)                                  Termination by the Executive.  The
Executive’s employment may be terminated by the Executive for any reason,
including with Good Reason in connection with a Change in Control (as defined in
the Plan).  For purposes of this Agreement, “Good Reason” shall mean the
occurrence of any one or more of the following events in connection with a
Change in Control, in any case, without the Executive’s prior written consent,
unless the Company fully corrects the circumstances constituting Good Reason
(provided such circumstances are capable of correction) as provided below:

 

(i)            a demotion or material diminution of the Executive’s position,
authority, duties or responsibilities (other than any insubstantial action not
taken in bad faith and which is promptly remedied by the Company upon notice by
the Executive); provided that “Good Reason” does not include a change in title,
authority, duties and/or responsibilities following a Change in Control (as
defined in the Plan) if (A) the Executive’s new title is that of a senior
officer of the entity surviving such Change in Control (or, if applicable, its
parent company if such entity has a parent company) reporting directly to an
executive officer of the entity surviving such Change in Control (or, if
applicable, its parent company, if such entity has a parent company), and the
Executive’s authority, duties and responsibilities are commensurate with such
title or (B) (1) the entity surviving such Change in Control (or, if applicable,
its parent company if such entity has a parent company) continues to operate the
Company’s principal businesses as a separate unit, division or subsidiary or
combines the Company’s principal businesses with one of its existing units,
divisions or subsidiaries and (2) the Executive’s new title is that of a senior
officer of such unit, division or subsidiary reporting directly to an executive
officer of such unit, division or subsidiary (or to an executive officer of the
entity surviving the Change in Control or parent company thereof) and (in either
case) the Executive’s authority, duties and responsibilities are commensurate
with such title and similar in scope (with respect to such unit, division or
subsidiary) to the authority, duties and responsibilities of the Executive prior
to the Change in Control;

 

(ii)           a requirement that the Executive report to work more than thirty
(30) miles from the Company’s Principal Location (not including normal business
travel required of the Executive’s position) or, to the extent such requirement
would not constitute a material change in the geographic location at which the
Executive must perform services under this Agreement within the meaning of
Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), such
higher number of miles from the Company’s Principal Location as would constitute
a material change in the geographic location at which the Executive must perform
services under this Agreement within the meaning of Section 409A of the Code;

 

(iii)          a material reduction in the Executive’s base salary; or

 

(iv)          a material breach by the Company of its obligations hereunder.

 

Notwithstanding the foregoing, the Executive will not be deemed to have resigned
for Good Reason unless (1) the Executive provides the Company with written
notice setting forth in reasonable detail the facts and circumstances claimed by
the Executive to constitute Good Reason within sixty (60) days after the date of
the occurrence of any event that the Executive knows or should reasonably have
known to constitute Good Reason, (2) the Company fails to cure such acts or
omissions within thirty (30) days following its receipt of such notice, and (3)
the effective date of the Executive’s termination for Good Reason occurs no
later than sixty (60) days after the expiration of the Company’s cure period.

 

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(d)                                 Notice of Termination.  Any termination by
the Company for Cause, or by the Executive for Good Reason, shall be
communicated by a Notice of Termination to the other parties hereto given in
accordance with Section 10(b) hereof.  For purposes of this Agreement, a “Notice
of Termination” means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent
applicable, sets forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive’s employment under the
provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date
(which date shall be not more than sixty (60) days after the giving of such
notice).  The failure by the Executive or the Company to set forth in the Notice
of Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive’s or the
Company’s rights hereunder.

 

(e)                                  Termination of Offices and Directorships. 
Upon termination of the Executive’s employment for any reason, unless otherwise
specified in a written agreement between the Executive and the Company, the
Executive shall be deemed to have resigned from all offices, directorships, and
other employment positions if any, then held with the Company, and shall take
all actions reasonably requested by the Company to effectuate the foregoing.

 

4.                                      Obligations of the Company upon
Termination.

 

(a)                                 Without Cause, For Good Reason, Death or
Disability.  Subject to Section 4(d) hereof, if the Executive incurs a
“separation from service” from the Company (within the meaning of
Section 409A(a)(2)(A)(i) of the Code, and Treasury Regulation
Section 1.409A-1(h)) (a “Separation from Service”) during the Employment Period
(such date, the “Date of Termination”) by reason of (1) a termination of the
Executive’s employment by the Company without Cause; (2) a termination of the
Executive’s employment by the Executive for Good Reason; or (3) a termination of
the Executive’s employment by reason of the Executive’s death or Disability
(each of (1), (2) and (3), a “Qualifying Termination”):

 

(i)            The Executive (or the Executive’s estate or beneficiaries, if
applicable) shall be paid, in a single lump-sum payment on the date of the
Executive’s termination of employment, the aggregate amount of the Executive’s
earned but unpaid Base Salary and accrued but unpaid vacation pay (if any)
through the date of such termination (the “Accrued Obligations”), in each case,
to the extent not previously paid.

 

(ii)           In addition, subject to Section 4(d) hereof and the Executive’s
(or the Executive’s estate’s or beneficiaries’, if applicable) timely execution
and non-revocation of a Release (as described below), the Executive (or the
Executive’s estate or beneficiaries, if applicable) shall be paid:

 

(A)                               an amount equal to six (6) months’ of the Base
Salary in effect on the Date of Termination, payable on the sixtieth (60th) day
following the Date of Termination; and

 

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(B)                               any unpaid Annual Bonus to which the Executive
would have become entitled for any fiscal year of the Company that ends on or
before the Date of Termination had the Executive remained employed through the
payment date, payable in a single lump-sum payment on the date on which annual
bonuses are paid to the Company’s senior executives generally for such calendar
year, but in no event later than March 15th of the calendar year immediately
following the calendar year in which the Date of Termination occurs, with the
actual date within such period determined by the Company in its sole discretion.

 

(iii)          In addition, subject to Section 4(d) hereof and conditioned upon
the Executive’s timely execution and non-revocation of a Release, during the
period commencing on the Date of Termination and ending on the six (6)-month
anniversary of the Date of Termination or, if earlier, the date on which the
Executive becomes eligible for coverage under the group health plan of a
subsequent employer (of which eligibility the Executive hereby agrees to give
prompt notice to the Company) (in any case, the “COBRA Period”), subject to the
Executive’s valid election to continue healthcare coverage under Section 4980B
of the Code and the regulations thereunder, the Company shall continue to
provide the Executive and the Executive’s eligible dependents with coverage
under its group health plans at the same levels and the same cost to the
Executive as would have applied if the Executive’s employment had not been
terminated based on the Executive’s elections in effect on the Date of
Termination, provided, however, that (1) if any plan pursuant to which such
benefits are provided is not, or ceases prior to the expiration of the period of
continuation coverage to be, exempt from the application of Section 409A of the
Code under Treasury Regulation Section 1.409A-1(a)(5), or (2) the Company is
otherwise unable to continue to cover the Executive under its group health plans
(including without limitation, Section 2716 of the Public Health Service Act),
then, in either case, an amount equal to each remaining Company subsidy shall
thereafter be paid to the Executive as currently taxable compensation in
substantially equal monthly installments over the continuation coverage period
(or the remaining portion thereof).

 

The payments and benefits described in the preceding Sections 4(a)(ii) and
(iii) are referred to herein as the “Severance.”  Notwithstanding the foregoing,
it shall be a condition to the Executive’s (or the Executive’s estate’s or
beneficiaries’, if applicable) right to receive the Severance that the Executive
(or the Executive’s estate or beneficiaries, if applicable) execute and deliver
to the Company an effective release of claims in the form then used by the
Company (the “Release”) within any applicable review period following the Date
of Termination and that the Executive (or the Executive’s estate or
beneficiaries, if applicable) not revoke such Release during any applicable
revocation period.

 

(b)                                 For Cause, Without Good Reason or Other
Terminations.  If the Company terminates the Executive’s employment for Cause,
the Executive terminates the Executive’s employment without Good Reason, or the
Executive’s employment terminates for any other reason not enumerated in this
Section 4, in any case, during the Employment Period, the Company shall pay to
the Executive the Accrued Obligations in cash within thirty (30) days after the
Date of Termination (or by such earlier date as may be required by applicable
law).

 

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(c)                                  Equity Vesting in Connection with a Change
in Control.  In addition to any payments or benefits due to the Executive under
Section 4(a) above (if any), subject to and conditioned upon the Executive’s
timely execution and non-revocation of a Release, if the Executive’s employment
is terminated by reason of a Qualifying Termination and a Change in Control
(A) occurs on or within ninety (90) days after the Date of Termination or
(B) has occurred within one (1) year before the Date of Termination, all
outstanding compensatory equity awards that have not yet vested shall
conditionally vest and, as applicable, become exercisable on the later of the
Date of Termination and the date of such Change in Control (and such vesting
shall become unconditional upon such execution and non-revocation of a
Release); provided, however, that if the Executive fails to timely execute or
revokes the Release, all such conditionally vested awards (and any shares
received in respect of such awards) shall be forfeited upon such failure or
revocation (subject to repayment by the Company to the Executive of any amounts
(if any) paid by the Executive with respect to shares underlying such
conditionally vested awards).  For the avoidance of doubt, if a Qualifying
Termination occurs prior to a Change in Control, all outstanding, unvested
compensatory equity awards that would otherwise terminate on the Date of
Termination shall remain outstanding and eligible to vest solely upon a Change
in Control occurring within ninety (90) days after the Date of Termination (but
shall not otherwise vest following the Date of Termination) and shall terminate
on the ninetieth (90th) day following the Date of Termination if a Change in
Control has not occurred on or prior to such ninetieth (90th) day (or such
earlier expiration date applicable to the award (other than due to a termination
of employment)).

 

(d)                                 Six-Month Delay.  Notwithstanding anything
to the contrary in this Agreement, no compensation or benefits, including
without limitation any severance payments or benefits payable under Section 4
hereof, shall be paid to the Executive during the six (6)-month period following
the Executive’s “separation from service” (within the meaning of
Section 409A(a)(2)(A)(i) of the Code) if the Company determines that paying such
amounts at the time or times indicated in this Agreement would be a prohibited
distribution under Section 409A(a)(2)(B)(i) of the Code.  If the payment of any
such amounts is delayed as a result of the previous sentence, then on the first
business day following the end of such six (6)-month period (or such earlier
date upon which such amount can be paid under Section 409A of the Code without
resulting in a prohibited distribution, including as a result of the Executive’s
death), the Company shall pay the Executive a lump-sum amount equal to the
cumulative amount that would have otherwise been payable to the Executive during
such period.

 

(e)                                  Exclusive Benefits.  Except as expressly
provided in this Section 4 and subject to Section 5 hereof, the Executive shall
not be entitled to any additional payments or benefits upon or in connection
with the Executive’s termination of employment.

 

(f)                                   Equity Award Agreements.  For the
avoidance of doubt, nothing contained in this Agreement is intended to result in
any vesting terms that are less favorable to the Executive than those contained
in any applicable equity award agreement and, to the extent that the vesting
terms contained in any such award agreement are more favorable to the Executive
than those provided herein, including, without limitation, this Section 4, the
terms of such award agreement shall control.

 

5.                                      Non-Exclusivity of Rights.  Amounts
which are vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of or any contract or
agreement with the Company at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.

 

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6.             Excess Parachute Payments, Limitations on Payments.

 

(a)                                 Best Pay Cap. Notwithstanding any other
provision of this Agreement, in the event that any payment or benefit received
or to be received by the Executive (including any payment or benefit received in
connection with a termination of the Executive’s employment, whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement) (all
such payments and benefits, including the payments and benefits under Section 4
hereof, being hereinafter referred to as the “Total Payments”) would be subject
(in whole or part), to excise tax imposed under Section 4999 of the Code (the
“Excise Tax”), then, after taking into account any reduction in the Total
Payments provided by reason of Section 280G of the Code in such other plan,
arrangement or agreement, the cash severance payments under this Agreement shall
first be reduced, and the noncash severance payments hereunder shall thereafter
be reduced, to the extent necessary so that no portion of the Total Payments is
subject to the Excise Tax but only if (i) the net amount of such Total Payments,
as so reduced (and after subtracting the net amount of federal, state and local
income taxes on such reduced Total Payments and after taking into account the
phase out of itemized deductions and personal exemptions attributable to such
reduced Total Payments) is greater than or equal to (ii) the net amount of such
Total Payments without such reduction (but after subtracting the net amount of
federal, state and local income taxes on such Total Payments and the amount of
Excise Tax to which the Executive would be subject in respect of such unreduced
Total Payments and after taking into account the phase out of itemized
deductions and personal exemptions attributable to such unreduced Total
Payments).  The Total Payments shall be reduced in the following order:
(A) reduction of any cash severance payments otherwise payable to the Executive
that are exempt from Section 409A of the Code; (B) reduction of any other cash
payments or benefits otherwise payable to the Executive that are exempt from
Section 409A of the Code, but excluding any payments attributable to any
acceleration of vesting or payments with respect to any equity award that are
exempt from Section 409A of the Code; (C) reduction of any other payments or
benefits otherwise payable to the Executive on a pro-rata basis or such other
manner that complies with Section 409A of the Code, but excluding any payments
attributable to any acceleration of vesting and payments with respect to any
equity award that are exempt from Section 409A of the Code; and (D) reduction of
any payments attributable to any acceleration of vesting or payments with
respect to any equity award that are exempt from Section 409A of the Code, in
each case beginning with payments that would otherwise be made last in time.

 

(b)                                 Certain Exclusions. For purposes of
determining whether and the extent to which the Total Payments will be subject
to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment
of which the Executive shall have waived at such time and in such manner as not
to constitute a “payment” within the meaning of Section 280G(b) of the Code
shall be taken into account; (ii) no portion of the Total Payments shall be
taken into account which, in the written opinion of an independent, nationally
recognized accounting firm (the “Accounting Firm”), does not constitute a
“parachute payment” within the meaning of Section 280G(b)(2) of the Code
(including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating
the Excise Tax, no portion of such Total Payments shall be taken into account
which, in the opinion of the Accounting Firm, constitutes reasonable
compensation for services actually rendered, within the meaning of
Section 280G(b)(4)(B) of the Code, in excess of the “base amount” (as defined in
Section 280G(b)(3) of the Code) allocable to such reasonable compensation; and
(iii) the value of any non-cash benefit or any deferred payment or benefit
included in the Total Payments shall be determined by the Accounting Firm in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code.

 

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7.                                      Confidential Information and
Non-Solicitation.  The Executive also hereby acknowledges that, as a condition
of employment with the Company under the terms of this Agreement, Executive
must, concurrently herewith, enter into the Leaf Group Confidential Information
and Development Agreement, containing confidentiality and other protective
covenants (the “Confidentiality Agreement”).

 

8.                                      Representations.  The Executive hereby
represents and warrants to the Company that (a) the Executive is entering into
this Agreement voluntarily and that the performance of the Executive’s
obligations hereunder will not violate any agreement between the Executive and
any other person, firm, organization or other entity, and (b) the Executive is
not bound by the terms of any agreement with any previous employer or other
party to refrain from competing, directly or indirectly, with the business of
such previous employer or other party that would be violated by the Executive’s
entering into this Agreement and/or providing services to the Company pursuant
to the terms of this Agreement.

 

9.                                      Successors.

 

(a)                                 This Agreement is personal to the Executive
and, without the prior written consent of the Company, shall not be assignable
by the Executive otherwise than by will or the laws of descent and
distribution.  This Agreement shall inure to the benefit of and be enforceable
by the Executive’s legal representatives.

 

(b)                                 This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.

 

(c)                                  The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the Company to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place.  As used in this Agreement, “Company” shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

 

10.                               Miscellaneous.

 

(a)                                 Governing Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of
California, without reference to principles of conflict of laws.  The captions
of this Agreement are not part of the provisions hereof and shall have no force
or effect.

 

(b)                                 Notices.  All notices and other
communications hereunder shall be in writing and shall be given by hand delivery
to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:

 

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If to the Executive:  at the Executive’s most recent address on the records of
the Company.

 

If to the Company:

 

Leaf Group Ltd.

1655 26th Street
Santa Monica, CA 90404

Attn: General Counsel

 

or to such other address as either party shall have furnished to the other in
writing in accordance herewith.  Notice and communications shall be effective
when actually received by the addressee.

 

(c)                                  Sarbanes-Oxley Act of 2002. 
Notwithstanding anything herein to the contrary, if the Company determines, in
its good faith judgment, that any transfer or deemed transfer of funds hereunder
is likely to be construed as a personal loan prohibited by Section 13(k) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the
rules and regulations promulgated thereunder, then such transfer or deemed
transfer shall not be made to the extent necessary or appropriate so as not to
violate the Exchange Act and the rules and regulations promulgated thereunder.

 

(d)                                 Section 409A of the Code.

 

(i)  To the extent applicable, this Agreement shall be interpreted in accordance
with Section 409A of the Code and Department of Treasury regulations and other
interpretive guidance issued thereunder.  Notwithstanding any provision of this
Agreement to the contrary, if the Company determines that any compensation or
benefits payable under this Agreement may be subject to Section 409A of the Code
and related Department of Treasury guidance, the Company shall work in good
faith with the Executive to adopt such amendments to this Agreement or adopt
other policies and procedures (including amendments, policies and procedures
with retroactive effect), or take any other actions, that the Company determines
are necessary or appropriate to avoid the imposition of taxes under Section 409A
of the Code, including without limitation, actions intended to (i) exempt the
compensation and benefits payable under this Agreement from Section 409A of the
Code, and/or (ii) comply with the requirements of Section 409A of the Code and
related Department of Treasury guidance; provided, however, that this
Section 10(d) shall not create an obligation on the part of the Company to adopt
any such amendment, policy or procedure or take any such other action, nor shall
the Company have any liability for failing to do so.

 

(ii)  Any right to a series of installment payments pursuant to this Agreement
is to be treated as a right to a series of separate payments.  To the extent
permitted under Section 409A of the Code, any separate payment or benefit under
this Agreement or otherwise shall not be deemed “nonqualified deferred
compensation” subject to Section 409A of the Code and Section 4(d) hereof to the
extent provided in the exceptions in Treasury Regulation Section 1.409A-1(b)(4),
Section 1.409A-1(b)(9) or any other applicable exception or provision of
Section 409A of the Code.

 

10

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(iii)  To the extent that any payments or reimbursements provided to the
Executive under this Agreement, including, without limitation, pursuant to
Section 2(b)(vii) hereof, are deemed to constitute compensation to the Executive
to which Treasury Regulation Section 1.409A-3(i)(1)(iv) would apply, such
amounts shall be paid or reimbursed reasonably promptly, but not later than
December 31 of the year following the year in which the expense was incurred. 
The amount of any such payments eligible for reimbursement in one year shall not
affect the payments or expenses that are eligible for payment or reimbursement
in any other taxable year, and the Executive’s right to such payments or
reimbursement of any such expenses shall not be subject to liquidation or
exchange for any other benefit.

 

(e)                                  Severability.  The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.

 

(f)                                   Withholding.  The Company may withhold
from any amounts payable under this Agreement such Federal, state, local or
foreign taxes as shall be required to be withheld pursuant to any applicable law
or regulation.

 

(g)                                  No Waiver.  The Executive’s or the
Company’s failure to insist upon strict compliance with any provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 3(c) hereof, shall not
be deemed to be a waiver of such provision or right or any other provision or
right of this Agreement.

 

(h)                                 Entire Agreement.  As of the Effective Date,
this Agreement, together with the Confidentiality Agreement, any arbitration
agreement, and the Equity Award Agreements and any prior equity award agreements
constitutes the final, complete and exclusive agreement between the Executive
and the Company with respect to the subject matter hereof and replaces and
supersedes any and all other agreements, offers or promises, whether oral or
written, by any member of the Company and its subsidiaries and affiliates, or
representative thereof.

 

(i)                                     Amendment.  No amendment or other
modification of this Agreement shall be effective unless made in writing and
signed by the parties hereto.

 

(j)                                    Counterparts.  This Agreement and any
agreement referenced herein may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but which together shall
constitute one and the same instrument.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and,
pursuant to the authorization from the Board, the Company has caused these
presents to be executed in its name on its behalf, all as of the day and year
first above written.

 

 

LEAF GROUP LTD.,

 

a Delaware corporation

 

 

 

 

By:

/s/ Jill Angel

 

 

Name:

Jill Angel

 

 

Title:

Executive Vice President, People

 

 

 

 

“EXECUTIVE”

 

 

 

 

/s/ Brian Gephart

 

 

Brian Gephart

 

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