Document:

EX-10.1

 Exhibit 10.1 

August 3, 2015 
 Mr. Greg M. Schwartz 

Zillow Group, Inc. 
 1301 Second Ave., Floor 31 

Seattle, WA 98101 
 Re: Amended and Restated Bonus Letter
Agreement 
 Dear Greg: 
 This amended letter agreement
(“Agreement”) amends and restates in its entirety, as of the date set forth above, that letter agreement previously entered into by and between you and Zillow Group, Inc., a Washington corporation (the
“Company”), effective as of January 1, 2015 (the “Effective Date”). 
 1. Purpose. The purpose
of this Agreement is to set forth the terms and conditions governing your opportunity to earn annual cash-based awards based on achievement of identified revenue measures described below. The bonus opportunities granted under this Agreement are
intended to be cash-based awards under Section 12 of the Zillow Group, Inc. Amended and Restated 2011 Incentive Plan, as amended and/or restated from time to time (the “Plan”). 

2. Term. This Agreement is effective as of the Effective Date and shall remain in effect until the earlier of its termination by the Compensation
Committee of the Board of Directors (the “Compensation Committee”), subject to Section 9 hereof, or your termination of employment or service with the Company (the “Term”). This Agreement does not
guarantee your employment, the terms of which continue to be governed by your employment agreement with the Company. 
 3. Elements of the Bonus
Opportunity. You will be eligible to earn annual cash bonuses (each, a “Bonus”) in the amounts and based on achievement of the performance metrics and during the performance periods set forth below: 

 

	 	a.	Total Revenue Bonus: You will be eligible to receive a $50,000 semi-annual Bonus based on targeted Company total revenue during the applicable performance periods (“Total Revenue”). Total
Revenue will be calculated under U.S. generally accepted accounting principles except as otherwise provided herein. The Compensation Committee will annually approve Total Revenue targets for each of the performance periods January 1 through
June 30 and July 1 through December 31. No amount will be paid with respect to a six-month period if the Total Revenue target is not achieved for such period; provided, however, that if at least 95% of the Total Revenue target is
achieved for a six-month period, the Compensation Committee may, in its discretion, approve a Bonus payment of less than the full amount of the target Bonus for such period. The amount of the Bonus for a six-month period will increase on a straight
percentage basis to the extent Total Revenue exceeds Total Revenue target. Any Bonus payments will be calculated and paid as soon as practicable following completion of the applicable six-month period but in any event by no later than 74 days after
completion of such period. 

	 	b.	Agent Revenue Bonus: You will be eligible to receive a $25,000 semi-annual Bonus based on targeted Agent Revenue during the applicable performance periods. “Agent Revenue” will be
calculated as revenue from Zillow Premier Agent and Trulia agent products. The Compensation Committee will annually approve the targeted Agent Revenue for each of the performance periods January 1 through June 30 and July 1 through
December 31. No amount will be paid with respect to a six-month period if the revenue target is not achieved for such period; provided, however, that if at least 95% of the Agent Revenue target is achieved for a six-month period, the
Compensation Committee may, in its discretion, approve a Bonus payment of less than the full amount of the target Bonus for such period. The amount of the Bonus for a six-month period will increase on a straight percentage basis to the extent that
generated revenue exceeds target. Any Bonus payment will be calculated and paid as soon as practicable after the end of the applicable six-month period but in any event by no later than 74 days after completion of such period. 

 

	 	c.	Other Real Estate Revenue Bonus: You will be eligible to receive a $25,000 semi-annual Bonus based on targeted other real estate revenue (i.e., revenue generated by Rentals, StreetEasy, and Diverse Solutions)
during the applicable performance periods. The Compensation Committee will annually approve the targeted other real estate revenue for each of the performance periods January 1 through June 30 and July 1 through December 31. No
amount will be paid with respect to a six- month period if the revenue target is not achieved for such period; provided, however, that if at least 95% of the targeted Other Real Estate Revenue is achieved for a six-month period, the Compensation
Committee may, in its discretion, approve a Bonus payment of less than the full amount of the target Bonus for such period. The Bonus payment for a six- month period will increase on a straight percentage basis to the extent that generated revenue
exceeds target. Any Bonus payment will be calculated and paid as soon as practicable after the end of the applicable six-month period but in any event by no later than 74 days after completion of such period. 

 

	 	d.	Calculation of Revenue and Compensation Committee Certification. For each of the performance metrics set forth above, the following will be excluded from the calculation of the applicable revenue measure:
(a) revenue generated by Market Leader; and (b) fair value-based purchase accounting adjustments for deferred revenue (if any). At the conclusion of a performance period and prior to the payment of any Bonus for a performance period, the
Compensation Committee will certify in writing the extent to which the performance goals applicable for the performance period were achieved or exceeded, the final amount of the Bonus payable to you with respect to such period, and any other
material terms. 

  

	 	e.	Continued Employment. Payment of any Bonus under this Agreement is subject to your continued employment or service to the Company on a full-time basis through the last day of each applicable performance period
(i.e., the six-month period over which performance for a Bonus payout is measured). Bonuses will be paid in cash in a single, lump sum payment, subject to applicable payroll taxes and tax withholding. 

	 	f.	Dollar Limitations. The total Bonus payouts under this Agreement shall not exceed $2,000,000 in any calendar year. 

4. Recoupment. In the event that revenue upon which a Bonus was calculated is determined to have been overstated as a result of your misconduct, you
will be required to reimburse the Company for any Bonus payment received based upon such revenue and will not be eligible to receive any Bonus payment otherwise accrued but unpaid based upon such revenue. Recoupment of any Bonus shall otherwise be
required to the extent required by applicable law or the terms of a Company’s clawback policy, as then in effect and as it may be amended from time to time (the “Policy”), to the extent that the Policy applies to such
Bonus. 
 5. Assignment. This Agreement is personal to you and cannot be assigned by you. All of the terms and provisions of this Agreement shall be
binding upon and shall inure to the benefit of and be enforceable by the parties hereto and their respective successors and permitted assigns. 
 6.
Administration. The Compensation Committee will administer this Agreement. You understand that the Compensation Committee may adjust revenue targets or other terms set forth herein as a result of acquisitions, divestitures, or other
extraordinary events or conditions during a calendar year. Subject to the last sentence of this Section 6, the Compensation Committee further may adjust the Bonus amounts set forth in Section 3 of this Agreement for calendar years 2016 and
beyond, in its discretion. Any determinations made by the Compensation Committee with respect to this Agreement and any payouts thereunder will be final and binding on you. Notwithstanding anything to the contrary in this Agreement, in the event the
Compensation Committee specifies that bonus opportunities for a performance period under this Agreement are governed by Section 16 of the Plan, the Compensation Committee shall have the power to administer this Agreement in a manner intended to
ensure that this Agreement satisfies all requirements for “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code and any successor provision thereto. 

7. Applicable Law. This Agreement will in all respects, including all matters of construction, validity and performance, be governed by, and construed
and enforced in accordance with, the laws of the State of Washington, without regard to any rules governing conflicts of laws. 
 8. No Trust or Fund.
Each Bonus that may become payable under this Agreement will be paid solely from the general assets of the Company. Nothing in this Agreement should be construed to create a trust or to establish or evidence your claim of any right to payment of
a Bonus other than as an unsecured general creditor with respect to any payment to which you may be entitled. 
 9. Amendment. The Compensation
Committee reserves the right to unilaterally amend, modify or terminate this Agreement at any time, except that any such amendment (other than amendments or adjustments permitted by Section 6 of this Agreement and, for the avoidance of doubt,
Section 16 of the Plan), modification or termination may not, without your written consent, materially adversely affect your rights with respect to any six- month period for which the Compensation Committee has previously approved revenue
targets pursuant to Section 3 of this Agreement. Notwithstanding the foregoing, the Compensation Committee may amend this Agreement at any time as it deems necessary or desirable to avoid adverse tax consequences under Section 409A of the
Internal Revenue Code of 1986, as amended. 

 10. Entire Agreement. This Agreement, on and as of the Effective Date, constitutes the entire agreement
between the Company and you with respect to the subject matter hereof, and all prior or contemporaneous oral or written communications, understandings or agreements between the Company and you with respect to such subject matter (including, without
limitation, the Letter Agreement dated June 16, 2014 by and between you and the Company (the “2014 Letter Agreement”)) are hereby superseded in their entirety, except as otherwise provided herein. For the avoidance of
doubt, the 2014 Letter Agreement shall be deemed terminated as of the Effective Date, provided, however, that those provisions of the 2014 Letter Agreement that must survive in order to give proper effect to their intent shall survive such
termination. This Agreement may be executed in counterparts. 
 11. Severability. If any provision of this Agreement is held to be invalid, illegal
or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision of this Agreement or any action in any other jurisdiction, but this Agreement
will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. 

 IN WITNESS WHEREOF, the parties have executed and entered into this Agreement as of the date first set forth
above. 
  

							
	GREG M. SCHWARTZ	 		 	ZILLOW GROUP, INC.
			
	 /s/ Greg M. Schwartz
	 		 	 /s/ Spencer M. Rascoff

		 		 	Print Name:	 	Spencer M. Rascoff
		 		 	Title:	 	Chief Executive OfficerExhibit 10.1

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of July 28, 2015, is entered into by and between Demand Media, Inc., a Delaware corporation (the “Company”) and Wendy Voong (the “Executive”).

 

WHEREAS, the Company desires to employ the Executive as the Company’s Chief Accounting Officer (“CAO”) and Executive desires to enter into such employment arrangement with the Company.

 

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 commencing on the Effective Date and ending on the fourth (4th) anniversary of the Effective Date (the “Employment Period”).  For purposes of this Agreement, “Effective Date” shall mean August 3, 2015.  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 the Company’s CAO, 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 CAO 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.  Notwithstanding the foregoing, during the Employment Period, it shall not be a violation of this Agreement for the Executive to engage in any of the following activities: (A) serve on boards, committees or similar bodies of charitable or nonprofit organizations, (B) fulfill limited teaching, speaking and writing engagements on a volunteer basis, and/or (C) holding economic interests in companies in which the Executive does not take an operating role (not to exceed a 5% interest in any company), in each case, so long as such activities do not, individually or in the aggregate, materially

 

 

interfere or conflict with the performance of the Executive’s duties and responsibilities under this Agreement.

 

(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.

 

(b)                                 Compensation, Benefits, Etc.

 

(i)                                     Base Salary.  During the Employment Period, the Executive shall receive a base salary equal to two hundred thirty five thousand dollars ($235,000) per annum (the “Base Salary”).  The Base Salary shall be reviewed annually by the Compensation Committee (the “Compensation Committee”) of the Board (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 shall be set at thirty percent (30%) of the Base Salary actually paid for such year; provided, however, that with respect to fiscal year 2015, the Executive’s Annual Bonus shall be equal to ninety thousand eight hundred dollars ($90,800).  The actual amount of the Annual Bonus (except as provided above for fiscal year 2015) 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 Award.

 

(A)                         Stock Option Award.  Subject to approval by the Compensation Committee and the commencement of Executive’s employment, the Company agrees to grant to Executive a nonqualified option to purchase twenty thousand (20,000) shares of the Company’s common stock (the “Stock Option”) under the Company’s 2010 Incentive Award Plan, as amended from time to time (the “Plan”) following the Executive’s start date, with an exercise price equal to the fair market value per share on the date of grant.  Subject to Section 4(a) hereof, the Stock Option shall vest over four years with one quarter (1/4) vesting on the one year anniversary of the Effective Date and one-forty-eighth (1/48) vesting on each monthly

 

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anniversary of the vesting commencement date thereafter, subject to the Executive’s continued employment with the Company through such date.  The terms and conditions of the Stock Option shall, in a manner consistent with this Section 2(b)(iii), be set forth in a separate award agreement in a form prescribed by the Company (the “Stock Option Agreement”), to be entered into by the Company and the Executive, which shall evidence the grant of the Stock Option.  The Stock Option shall be governed in all respects by the terms and conditions of the Plan.

 

(B)                               Restricted Stock Unit Award.  Subject to approval by the Compensation Committee and the commencement of Executive’s employment, the Company agrees to grant to Executive twenty thousand (20,000) restricted stock units with respect to the Company’s common stock (the “RSUs”) under the Plan following Executive’s start date.  Subject to Section 4(a) hereof, the RSUs shall vest over four years with one quarter (1/4) vesting on the first quarterly vesting date following the one year anniversary of the Effective Date and one-sixteenth (1/16) vesting on each quarterly anniversary of the vesting commencement date thereafter, subject to the Executive’s continued employment with the Company through such date.  The terms and conditions of the RSUs shall, in a manner consistent with this Section 2(b)(iii), be set forth in a separate award agreement in a form prescribed by the Company (the “RSU Award Agreement”), to be entered into by the Company and the Executive, which shall evidence the grant of the RSUs.  The RSUs shall be governed in all respects by the terms and conditions of the Plan.

 

(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.

 

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(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.

 

(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 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

 

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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 twenty (20) 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.

 

(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

 

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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 (the “Continuation Amount”), payable on the 60th day following the Date of Termination ; and

 

(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.

 

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(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 dependants 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, 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 substantially the form attached hereto as Exhibit A (the “Release”) within any legally-required review period, if any, 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).

 

(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

 

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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.

 

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,

 

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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 (A) 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 (B) 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, (A) 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; (B) 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 hereby acknowledges that, as a condition of employment with the Company, Executive must, concurrently herewith, enter into the Company 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:

 

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

 

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If to the Company:

 

Demand Media, Inc.

1655 26th Street
 Santa Monica, CA 90404

Attn: General Counsel

 

with a copy to:

 

Latham & Watkins LLP
 355 South Grand Ave. 
 Los Angeles, CA 90071-1560
 Attn: Alex Voxman

 

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

 

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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.

 

(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 equity award agreements, and any arbitration agreement, 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.

 

 

	
 
    	
DEMAND   MEDIA, INC., 
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Sean Moriarty
    
	
 
    	
 
    	
Name:
    	
Sean Moriarty
    
	
 
    	
 
    	
Title:
    	
Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
“EXECUTIVE”
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Wendy Voong
    
	
 
    	
Wendy Voong
    

 

13

 

EXHIBIT A

 

GENERAL RELEASE

 

For valuable consideration, the receipt and adequacy of which are hereby acknowledged, the undersigned does hereby release and forever discharge the “Releasees” hereunder, consisting of Demand Media, Inc., a Delaware corporation (the “Company”) and each of its partners, subsidiaries, associates, affiliates, successors, heirs, assigns, agents, directors, officers, employees, representatives, lawyers, insurers, and all persons acting by, through, under or in concert with them, or any of them, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, losses, costs, attorneys’ fees or expenses, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”), which the undersigned now has or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof.  The Claims released herein include, without limiting the generality of the foregoing, any Claims in any way arising out of, based upon, or related to the employment or termination of employment of the undersigned by the Releasees, or any of them; any alleged breach of any express or implied contract of employment; any alleged torts or other alleged legal restrictions on Releasees’ right to terminate the employment of the undersigned; and any alleged violation of any federal, state or local statute or ordinance including, without limitation, Title VII of the Civil Rights Act of 1964, [the Age Discrimination In Employment Act], the Americans With Disabilities Act, and the California Fair Employment and Housing Act.  Notwithstanding the foregoing, this general release (the “Release”) shall not operate to release any rights or claims of the undersigned (i) to payments or benefits under Section 4(a) of that certain Employment Agreement, dated as of July 28, 2015, between Demand Media, Inc. and the undersigned (the “Employment Agreement”), whichever is applicable to the payments and benefits provided in exchange for this Release, (ii) to payments or benefits under any equity award agreement between the undersigned and the Company, (iii) with respect to Section 2(b)(vi) of the Employment Agreement, (iv) to accrued or vested benefits the undersigned may have, if any, as of the date hereof under any applicable plan, policy, practice, program, contract or agreement with the Company, or (v) to any Claims, including claims for indemnification and/or advancement of expenses, arising under any indemnification agreement between the undersigned and the Company or under the bylaws, certificate of incorporation of other similar governing document of the Company.

 

THE UNDERSIGNED ACKNOWLEDGES THAT THE EXECUTIVE HAS BEEN ADVISED BY LEGAL COUNSEL AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

 

A-1

 

THE UNDERSIGNED, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS THE EXECUTIVE MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

 

[IN ACCORDANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990, THE UNDERSIGNED IS HEREBY ADVISED AS FOLLOWS:

 

(A)                               THE EXECUTIVE HAS THE RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE;

 

(B)                               THE EXECUTIVE HAS TWENTY-ONE (21) DAYS TO CONSIDER THIS RELEASE BEFORE SIGNING IT; AND

 

(C)                               THE EXECUTIVE HAS SEVEN (7) DAYS AFTER SIGNING THIS RELEASE TO REVOKE THIS RELEASE, AND THIS RELEASE WILL BECOME EFFECTIVE UPON THE EXPIRATION OF THAT REVOCATION PERIOD.]

 

The undersigned represents and warrants that there has been no assignment or other transfer of any interest in any Claim which the Executive may have against Releasees, or any of them, and the undersigned agrees to indemnify and hold Releasees, and each of them, harmless from any liability, Claims, demands, damages, costs, expenses and attorneys’ fees incurred by Releasees, or any of them, as the result of any such assignment or transfer or any rights or Claims under any such assignment or transfer.  It is the intention of the parties that this indemnity does not require payment as a condition precedent to recovery by the Releasees against the undersigned under this indemnity.

 

The undersigned agrees that if the Executive hereafter commences any suit arising out of, based upon, or relating to any of the Claims released hereunder or in any manner asserts against Releasees, or any of them, any of the Claims released hereunder, then the undersigned agrees to pay to Releasees, and each of them, in addition to any other damages caused to Releasees thereby, all attorneys’ fees incurred by Releasees in defending or otherwise responding to said suit or Claim.

 

The undersigned further understands and agrees that neither the payment of any sum of money nor the execution of this Release shall constitute or be construed as an admission of any liability whatsoever by the Releasees, or any of them, who have consistently taken the position that they have no liability whatsoever to the undersigned.

 

IN WITNESS WHEREOF, the undersigned has executed this Release this      day of            ,     .

 

 

	
 
    	
 
    
	
Wendy Voong
    	
 
    

 

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