Document:

EXHIBIT 10.2

 

FORM OF

 

TAX MATTERS AGREEMENT

 

This TAX MATTERS AGREEMENT (this “Agreement”), is made and entered into as of [      ], 2014, by and between DEMAND MEDIA, INC., a Delaware corporation (“Demand Media”), and RIGHTSIDE GROUP, LTD., a Delaware corporation (“Rightside”).  All capitalized terms not otherwise defined shall have the meanings set forth in Article I.

 

RECITALS

 

WHEREAS, Demand Media and certain of its subsidiaries have joined in filing consolidated federal Income Tax Returns and certain consolidated, combined or unitary state or local Income Tax Returns;

 

WHEREAS, Demand Media and Rightside have entered into that certain Separation and Distribution Agreement, dated as of the date hereof (the “Separation Agreement”), pursuant to which, among other things, Demand Media will contribute to Rightside the stock of certain subsidiaries and assets and liabilities associated with the Rightside Business and Demand Media will distribute all of the outstanding common stock of Rightside to Demand Media’s stockholders in a transaction intended to qualify for tax-free treatment under Sections 368(a)(1)(D) and 355 of the Code (collectively, the “Spin-off Transactions”);

 

WHEREAS, pursuant to the Spin-off Transactions, Rightside and its subsidiaries will leave the Pre-Spin Group; and

 

WHEREAS, the parties hereto, on behalf of themselves and their Affiliates, wish to provide for (i) the allocation of, and indemnification against, certain liabilities for Taxes, (ii) the preparation and filing of Tax Returns and the payment of Taxes with respect thereto and (iii) certain related matters.

 

NOW THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth below, the parties agree as follows:

 

ARTICLE I.
 DEFINITIONS

 

When used herein the following terms shall have the following meanings:

 

“Affiliate” means, with respect to any entity (the “given entity”), each entity that directly or indirectly, through one or more intermediaries is controlled by the given entity.  For purposes of this definition, “control” means, with respect to any entity, (a) the possession, directly or indirectly, of 50% or more of the voting power or value of outstanding equity interests of such

 

 

entity or (b) the power to direct or cause the direction of management and policies of such entity, whether through ownership of securities, partnership or other ownership interests, by contract or otherwise.  Unless otherwise indicated, the term Affiliate shall refer to Affiliates of a party as determined after the Spin-off Transactions.

 

“Affiliated Group” means, with respect to a Tax Period, (a) an affiliated group of corporations within the meaning of Section 1504(a) of the Code or, for purposes of any state or local Tax matters, any consolidated, combined, unitary or similar group of corporations within the meaning of any similar provisions of Tax law for the jurisdiction in question, and (b) for purposes of any federal, state or local Income Tax matters, any entity owned by a corporation described in clause (a) that is disregarded as separate from its owner for such purposes.

 

“Audit” means any audit, assessment of Taxes, other examination by any Taxing Authority, proceeding or appeal of such a proceeding relating to Taxes, whether judicial or administrative.

 

“Business” means (a) with respect to Demand Media and the Demand Media Group, the Demand Media Business and (b) with respect to Rightside and the Rightside Group, the Rightside Business.

 

“Code” means the Internal Revenue Code of 1986, as amended, or any successor thereto.

 

“Current Allocation Methodology” means the allocation methodology that is set forth in Exhibit A, as applied to Section 2.3(a) Tax Returns.

 

“Demand Media” has the meaning set forth in the preamble to this Agreement.

 

“Demand Media Business” has the meaning set forth in the Separation Agreement.

 

“Demand Media Group” means Demand Media and its Affiliates, excluding any entity that would be a member of the Rightside Group.

 

“Demand Media Affiliated Group” means, for any applicable Tax Period, Demand Media and each entity that is a member of an Affiliated Group for such Tax Period (or portion thereof) with respect to which Demand Media would be the common parent. For the avoidance of doubt, the Demand Media Affiliated Group shall include, for the portion of the Straddle Period that ends on the Distribution Date, Rightside and other entities that will be members of the Rightside Affiliated Group beginning on the day immediately after the Distribution Date.

 

“Demand Media Member” means any entity that would be a member of the Demand Media Group.

 

“Distribution Date” has the meaning set forth in the Separation Agreement.

 

“Final Determination” means (i) a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and unappealable; (ii) a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or comparable

 

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agreements under the laws of other jurisdictions; (iii) any other final settlement with the IRS or other Taxing Authority (including the execution of IRS Form 870-AD, or a comparable form under the laws of other jurisdictions, but excluding any such form that reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for refund or the right of the Taxing Authority to assert a further deficiency); (iv) the expiration of an applicable statute of limitations; or (v) the allowance of a refund or credit, but only after the expiration of all periods during which such refund or credit may be recovered (including by way of offset).

 

“Income Tax” means any and all Taxes based upon or measured by net income (regardless of whether denominated as an “income tax,” a “franchise tax” or otherwise).

 

“Income Tax Return” means a Tax Return relating to an Income Tax.

 

“IRS” means the Internal Revenue Service or any successor thereto.

 

“IRS Ruling” means the letter ruling issued by the IRS on January 31, 2014, in response to the Ruling Request.

 

“Latham Opinion” means the opinion of Latham & Watkins LLP with respect to certain matters relating to qualification of the Spin-off Transactions under Sections 368(a)(1)(D) and 355 of the Code.

 

“Opinion Representation Letters” means the representation letters executed by officers of Demand Media and Rightside and delivered in connection with the Latham Opinion.

 

“Overdue Rate” means a variable rate of interest per annum equal to the Federal short-term rate as established from time to time pursuant to Section 1274(d) of the Code.

 

“Post-Distribution Tax Period” means a Tax Period that begins after the Distribution Date.

 

“Pre-Distribution Tax Period” means a Tax Period that ends on or before the Distribution Date.

 

“Pre-Spin Group” means Demand Media and its Affiliates before the Spin-off Transactions.

 

“Pre-Spin Member” means any entity that was a member of the Pre-Spin Group.

 

“Representative” means, with respect to any person or entity, any of such person’s or entity’s directors, officers, employees, agents, consultants, accountants, attorneys and other advisors.

 

“Responsible Party” means the party responsible for the preparation and filing of a Tax Return pursuant to Section 2.1.

 

“Rightside” has the meaning set forth in the preamble to this Agreement.

 

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“Rightside Business” has the meaning set forth in the Separation Agreement.

 

“Rightside Group” means Rightside and its Affiliates after the Spin-off Transactions.

 

“Rightside Affiliated Group” means Rightside and each entity that would be a member of an Affiliated Group with respect to which Rightside would be the common parent for any Post-Distribution Tax Period.  For purposes of this Agreement, the Rightside Affiliated Group shall exist from and after the beginning of the day immediately after the Distribution Date.

 

“Rightside Member” means any entity that would be a member of the Rightside Group.

 

“Ruling Request” means the private letter ruling request filed by Demand Media with the IRS on August 9, 2013, as supplemented and amended from time to time, with respect to certain federal Income Tax matters relating to the Spin-off Transactions and other related matters.

 

“Section 2.3(a) Tax Return” has the meaning set forth in Section 2.3(a).

 

“Section 355(e) Tax” shall mean any Taxes imposed on the Pre-Spin Group resulting from a Final Determination that Section 355(e) of the Code is applicable to the Spin-off Transactions because the Spin-off Transactions were part of a plan or series of related transactions pursuant to which one or more persons acquired directly or indirectly stock of Demand Media or Rightside representing a “50-percent or greater interest” within the meaning of Section 355(e) of the Code.

 

“Separate Affiliated Group” means, with respect to any corporation, such corporation’s separate affiliated group as defined by Section 355(b)(3) of the Code and the Treasury Regulations promulgated thereunder.

 

“Separation Agreement” has the meaning set forth in the Recitals.

 

“Spin-off Transactions” has the meaning set forth in the Recitals.

 

“Straddle Period” means a Tax Period that begins on or before and ends after the Distribution Date.

 

“Tax” means any federal, state, foreign or local income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty or addition thereto.

 

“Tax Asset” means any Tax Item that has accrued for Tax purposes, but has not been used during a Tax Period, and that could reduce a Tax in another Tax Period, including, but not limited to, a net operating loss, net capital loss, investment tax credit, foreign tax credit, charitable deduction, credit related to alternative minimum tax and any other Tax credit.

 

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“Taxing Authority” means the IRS or any other governmental authority responsible for the administration of any Tax.

 

“Tax Item” means any item of income, gain, loss, deduction, credit, recapture of credit or any other attribute or item (including the adjusted basis of property) that may have the effect of increasing or decreasing any Tax.

 

“Tax Period” means any period prescribed by law or any Taxing Authority for which a Tax Return is required to be filed or a Tax is required to be paid.

 

“Tax Practices” means the policies, procedures and practices customarily and consistently employed by the Pre-Spin Group in the preparation and filing of, and positions taken on, any Tax Returns of the Demand Media Affiliated Group or any Pre-Spin Member (or group thereof) for any Pre-Distribution Tax Period.

 

“Tax Refund” means any refund of Taxes, whether by payment, credit, offset, reduction in Tax or otherwise, plus any interest or other amounts received or payable with respect to such refund.

 

“Tax Return” means any return (including any information return), report, statement, declaration, notice, form, election, estimated Tax filing, claim for refund or other filing (including any amendments thereof and attachments thereto) required to be filed with or submitted to any Taxing Authority with respect any Tax.

 

“Tax Treatment” has the meaning set forth in Section 3.3(a).

 

“Treasury Regulations” means the income tax regulations promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

 

ARTICLE II.
 FILING OF TAX RETURNS AND PAYMENT OF TAXES

 

Section 2.1            Preparation and Filing of Tax Returns.

 

(a)                                 Subject to Section 2.3, Demand Media shall prepare (or caused to be prepared) and timely file (taking into account applicable extensions):

 

(i)                                     all Tax Returns of the Demand Media Affiliated Group or any Pre-Spin Member (or group thereof) for any Pre-Distribution Tax Period other than Tax Returns described in Section 2.1(b)(i);

 

(ii)                                  all Tax Returns of the Demand Media Affiliated Group or any Pre-Spin Member (or group thereof) for any Straddle Period other than Tax Returns described in Section 2.1(b)(ii); and

 

(iii)                               all Tax Returns of the Demand Media Affiliated Group or any Demand Media Member (or group thereof) for all Post-Distribution Tax Periods.

 

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(b)                                 Subject to Section 2.3, Rightside shall prepare (or caused to be prepared) and timely file (taking into account applicable extensions):

 

(i)                                     all Tax Returns for any Pre-Distribution Tax Period that are filed after the Distribution Date that relate solely to the Rightside Group or any Rightside Member (or group thereof);

 

(ii)                                  all Tax Returns for any Straddle Period that relate solely to the Rightside Group or any Rightside Member (or group thereof); and

 

(iii)                               all Tax Returns of the Rightside Affiliated Group or any Rightside Member (or group thereof) for all Post-Distribution Tax Periods.

 

Section 2.2            Provision of Filing Information.  Each party shall cooperate with the Responsible Party in the preparation and filing of all Tax Returns relating to Pre-Distribution Tax Periods and Straddle Periods, including by providing the Responsible Party with (a) all necessary filing information in a manner consistent with past Tax Practices, (b) all other information reasonably requested in connection with the preparation of such Tax Returns, including permission to copy any applicable documents, and (c) such other assistance reasonably necessary or requested for the filing of such Tax Returns.

 

Section 2.3            Advance Review of Tax Returns.

 

(a)                                 At least fifteen (15) business days, or such other reasonable time as mutually agreed to by both parties, prior to the filing of any Tax Return pursuant to Section 2.1(a)(i) or Section 2.1(a)(ii) that includes a Rightside Member (collectively, a “Section 2.3(a) Tax Return”), Demand Media shall provide Rightside with a copy of the portion of such Tax Return that relates to the Rightside Member.

 

(b)                                 Rightside and its Representatives shall have the right to review all related work papers prior to Demand Media’s filing of a Section 2.3(a) Tax Return.  Demand Media shall consult with Rightside and its Representatives regarding Rightside’s comments with respect to such Tax Returns or related work papers and shall in good faith consult with such party in an effort to resolve any differences with respect to (i) the preparation and accuracy of such Tax Returns and their consistency with past Tax Practices and (ii) the recommendations of Rightside and its Representatives for alternative positions with respect to items reflected on such Tax Returns; provided, however, that Demand Media shall not be obligated to consider any recommendation the result of which would materially adversely affect the Taxes of the Demand Media Affiliated Group (or any Demand Media Member) for any Straddle Period or Post-Distribution Tax Period, and Demand Media may condition the acceptance of any such recommendation upon the receipt of appropriate indemnification from Rightside for any increases in Taxes that may result from the adoption of the relevant alternative position.

 

Section 2.4            Consistent Positions on Tax Returns.  The Responsible Party shall prepare all Tax Returns (a) for all Pre-Distribution Tax Periods and Straddle Periods in a manner consistent with past Tax Practices and (b) in a manner consistent with the IRS Ruling, the Ruling

 

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Request and the Latham Opinion, except in either case as otherwise required by changes in applicable law or material underlying facts or as consented by the parties hereto in writing, which consent shall not be unreasonably withheld.

 

Section 2.5            Taxable Year.  The parties agree that, to the extent permitted by applicable law, (a) the Tax Period with respect to federal Income Taxes of the Rightside Members included in the consolidated federal Income Tax Return of the Demand Media Affiliated Group for the Straddle Period that includes the Distribution Date (and all corresponding consolidated, combined, unitary or similar state or local Income Tax Returns of such Affiliated Group) shall end as of the close of the Distribution Date and (b) the Rightside Affiliated Group and each member thereof shall begin a new taxable year for purposes of such federal, state or local Income Taxes as of the beginning of the day after the Distribution Date.  The parties further agree that, to the extent permitted by applicable law, all federal, state, local and foreign Tax Returns shall be filed consistently with this position.

 

Section 2.6            Straddle Period Taxes.  For purposes of this Agreement, Taxes attributable to Straddle Periods shall be allocated between the portion of the Straddle Period ending on the Distribution Date and the portion of the Straddle Period beginning after the Distribution Date, as follows:

 

(a)                                 Income Taxes shall be allocated on the basis of the actual operations and taxable income for each such period, determined by closing the books at the end of the day on the Distribution Date; and

 

(b)                                 Non-Income Taxes shall be allocated by multiplying the amount of such Taxes for the entire Straddle Period by a fraction, the numerator of which is the number of days during the applicable portion of the Straddle Period and the denominator of which is the total number of days in the Straddle Period.

 

Section 2.7            Payment of Taxes.

 

(a)                                 Demand Media shall be liable for and shall pay all Taxes due and payable (including additional Taxes imposed as a result of a Final Determination) with respect to Tax Returns filed by Demand Media pursuant to Section 2.1(a); provided, however, that Demand Media and Rightside shall apportion and allocate the liability with respect to any Section 2.3(a) Tax Returns in accordance with the Current Allocation Methodology.

 

(b)                                 Rightside shall be liable for and shall pay all Taxes due and payable (including additional Taxes imposed as a result of a Final Determination) with respect to Tax Returns filed by Rightside pursuant to Section 2.1(b).

 

(c)                                  Rightside or Demand Media, as applicable, shall pay to the other party the amount required to be paid pursuant to Section 2.7(a) under the Current Allocation Methodology within thirty (30) days after written demand is made by such other party; provided, however, that any such amount shall not be payable earlier than five (5) business days before the date on which the applicable Taxes are required to be paid to the Taxing Authority.

 

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Section 2.8            Amended Returns.  Notwithstanding anything to the contrary in this Agreement, no party may file any amendment to a Section 2.3(a) Tax Return without the other party’s consent, which consent shall not be unreasonably withheld.

 

Section 2.9            Refunds of Taxes.  Demand Media shall apportion and allocate any Tax Refund realized as a result of a Final Determination with respect to any Section 2.3(a) Tax Return filed pursuant to Section 2.1(a)(i) and Section 2.1(a)(ii) in the same proportion as the liability for the Taxes with respect to such Tax Return were apportioned and allocated pursuant to the Current Allocation Methodology.  Any Tax Refund realized as a result of a Final Determination with respect to any Tax Return filed pursuant to Section 2.1(a)(iii) and Section 2.1(b) shall be for the benefit of the Responsible Party.  If Demand Media or Rightside, as applicable, receives a Tax Refund with respect to which the other party is entitled to all or an allocable portion pursuant to this Section 2.9, Demand Media or Rightside, as applicable, shall pay such amount to such other party in accordance with Section 4.1.

 

Section 2.10          Tax Elections.  Nothing in this Agreement is intended to change or otherwise affect any previous tax election made by or on behalf of the Demand Media Affiliated Group (including the election with respect to the calculation of earnings and profits under Section 1552 of the Code and the Treasury Regulations thereunder).  Demand Media, as common parent of the Demand Media Affiliated Group, shall continue to have discretion, reasonably exercised, to make any and all elections with respect to all members of the Demand Media Affiliated Group for all Tax Periods for which it is obligated to file Tax Returns under Section 2.1(a).  Rightside, as common parent of the Rightside Affiliated Group, shall have sole discretion to make any and all elections with respect to all members of the Rightside Affiliated Group for all Tax Periods for which it is obligated to file Tax Returns under Section 2.1(b).

 

Section 2.11          Allocation of Tax Assets.

 

(a)                                 Demand Media and Rightside shall cooperate, each at its own cost and expense, in determining the allocation of any Tax Assets or Tax liabilities among the parties in accordance with the Code and Treasury Regulations (and any applicable state, local and foreign laws). In the absence of controlling legal authority or unless otherwise provided under this Agreement, Tax Assets or Tax liabilities shall be allocated to the legal entity that incurred the cost or burden associated with the creation of such Tax Assets or Tax liabilities. Demand Media and Rightside hereby agree to compute all Taxes for Post-Distribution Tax Periods and Straddle Periods consistently with the determinations made pursuant to this Section 2.11 unless otherwise required by a Final Determination.

 

(b)                                 To the extent that the amount of any Tax Asset is later reduced or increased by a Taxing Authority, or as a result of an Audit or carrybacks of Tax Assets from Post-Distribution Tax Periods of either the Demand Media Affiliated Group or the Rightside Group, such reduction or increase shall be allocated to the party to which such Tax Asset was allocated pursuant to Section 2.11(a).

 

Section 2.12          Certain Expenses.  If Demand Media incurs any expenses payable to outside Tax advisors in connection with the preparation and filing of any Section 2.3(a) Tax

 

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Return, then within thirty (30) days after written demand is made by Demand Media, Rightside shall reimburse Demand Media for Rightside’s share of such expenses, which share shall be apportioned and allocated equally between the Demand Media Group and the Rightside Group for the relevant period.

 

ARTICLE III.
 INDEMNIFICATION

 

Section 3.1            By Demand Media.  Subject to Section 3.3, Demand Media shall indemnify and hold Rightside and each Rightside Member harmless against:

 

(a)                                 any and all Taxes for which Demand Media is liable pursuant to Section 2.7(a) and Section 2.7(c); and

 

(b)                                 any and all increases in the liability for Taxes of the Rightside Group or any Rightside Member (or group thereof) as a result of a Demand Media Member’s material inaccuracies in, or failure to timely provide, such information and assistance specified in Section 2.2.

 

Section 3.2            By Rightside.  Subject to Section 3.3, Rightside shall indemnify and hold Demand Media and each Demand Media Member harmless against:

 

(a)                                 any and all Taxes for which Rightside is liable pursuant to Section 2.7(b) and Section 2.7(c); and

 

(b)                                 any and all increases in the liability for Taxes of the Demand Media Affiliated Group or any Demand Media Member (or group thereof) as a result of a Rightside Member’s material inaccuracies in, or failure to timely provide, such information and assistance specified in Section 2.2.

 

Section 3.3            Tax Treatment of Spin-off Transactions.

 

(a)                                 The parties expressly agree for all purposes to treat the Spin-off Transactions as a tax-free distribution under Sections 368(a)(1)(D) and 355 of the Code in accordance with the IRS Ruling and the Latham Opinion (the “Tax Treatment”).  Each party hereto also expressly agrees to (i) comply with the representations made in the IRS Ruling, the Ruling Request and in the Opinion Representation Letters, (ii) not take any action (unless otherwise required by law) that is inconsistent with the Tax Treatment, and (iii) take any and all reasonable actions to support and defend the Tax Treatment.  Without limiting the generality of the foregoing, Demand Media and Rightside further represent, agree and covenant as follows:

 

(i)                                     The representations and information contained in the Ruling Request and Opinion Representation Letters, insofar as they concern or relate to such party or its Affiliates, are true, correct and complete in all material respects.

 

(ii)                                  From and after the Distribution Date until the second anniversary thereof, such party shall continue to conduct its Business directly or indirectly

 

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through its Separate Affiliated Group.

 

(iii)                               From and after the Distribution Date until the second anniversary thereof, such party shall not take any of the following actions unless prior to taking any such action, it obtains and provides to the other party, a ruling from the IRS or a written opinion from a nationally recognized law firm with expertise in these matters, in form and substance reasonably acceptable to the other party, that such transaction, and any transaction or transactions related thereto, will not affect the qualification of the Spin-off Transactions under Section 355 of the Code and will not cause Section 355(e) of the Code to apply:

 

(A)                               enter into (or, to the extent such party has the right to prohibit such action, permit) any transaction or series of transactions (or any agreement, understanding, arrangement or substantial negotiations, within the meaning of Section 355(e) of the Code and Treasury Regulations Section 1.355-7, to enter into a transaction or series of transactions), as a result of which any person or group of persons would (directly or indirectly) acquire or have the right to acquire from Demand Media or Rightside, as applicable, or one or more holders of its stock, a number of shares of its stock that, together with any shares issued in an equity offering described in clause (B) below, would comprise [     ] or more of (1) the value of all outstanding shares of stock of Demand Media or Rightside, as applicable, as of the date of such transaction or (2) the total combined voting power of all outstanding shares of stock of Demand Media or Rightside, as applicable, as of the date of such transaction, or, with respect to either (1) or (2), in the case of a series of transactions, the date of the last transaction of such series; or

 

(B)                               issue equity of Rightside or Demand Media in an offering in excess, in the aggregate, together with any shares acquired in a transaction described in clause (A) above, of [     ] of (1) the value of all outstanding shares of stock of Demand Media or Rightside, as applicable, as of the date of such transaction or (2) the total combined voting power of all outstanding shares of stock of Demand Media or Rightside, as applicable, as of the date of such transaction, or, with respect to either (1) or (2), in the case of a series of transactions, as of the date of the last transaction of such series.

 

(b)                                 Notwithstanding anything to the contrary in Section 2.7, Section 3.1, Section 3.2 or Section 6.2(c):

 

(i)            If there is a Final Determination that results in the disallowance, in whole or in part, of the Tax Treatment (other than (x) a disallowance which is addressed by Section 3.3(b)(ii) or (y) the Section 355(e) Tax which is addressed by Section 3.3(b)(iii)), then any liability for Taxes of the Pre-Spin

 

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Group as a result of such disallowance shall be divided between Demand Media and Rightside in proportion to their respective fair market values as of the Distribution Date, as determined based on the ratio of the closing stock price of Demand Media ex-dividend in the “when issued” market divided by Demand Media’s closing stock price in the regular-way trading market on the Distribution Date as the proportionate share attributable to Demand Media.  Demand Media shall be liable for, and shall indemnify Rightside and each Rightside Member against, any liability for which Demand Media is responsible pursuant to the preceding sentence, and Rightside shall be liable for, and shall indemnify Demand Media and each Demand Media Member against, any liability for which Rightside is responsible pursuant to the preceding sentence.

 

(ii)                                  (A)          If there is a Final Determination that results in the disallowance, in whole or in part, of the Tax Treatment (other than the Section 355(e) Tax, which is addressed by Section 3.3(b)(iii)), and Demand Media or any Demand Media Member (and neither Rightside nor any Rightside Member) has taken any action after the Distribution Date which action results in such disallowance, then Demand Media shall be liable for, and shall indemnify Rightside and each Rightside Member against, any Taxes of the Pre-Spin Group as a result of such disallowance.

 

(B)                               If there is a Final Determination that results in the disallowance, in whole or in part, of the Tax Treatment (other than the Section 355(e) Tax, which is addressed by Section 3.3(b)(iii)), and Rightside or any Rightside Member (and neither Demand Media nor any Demand Media Member) has taken any action after the Distribution Date which action results in such disallowance, then Rightside shall be liable for, and shall indemnify Demand Media and each other Demand Media Member against, any Taxes of the Pre-Spin Group as a result of such disallowance.

 

(iii)                               (A)          If there is a Final Determination that Section 355(e) of the Code is applicable to the Spin-off Transactions solely because the Spin-off Transactions were part of a plan or series of related transactions pursuant to which one or more persons acquired directly or indirectly Demand Media stock representing a “50-percent or greater interest” within the meaning of Section 355(e), then Demand Media shall be liable for, and shall indemnify Rightside and each Rightside Member against, the Section 355(e) Tax; and

 

(B)                               If there is a Final Determination that Section 355(e) of the Code is applicable to the Spin-off Transactions solely because the Spin-off Transactions were part of a plan or series of related transactions pursuant to which one or more persons acquired directly or indirectly Rightside stock representing a “50-percent or greater interest” within

 

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the meaning of Section 355(e), then Rightside shall pay and be liable for, and shall indemnify Demand Media and each Demand Media Member against, the Section 355(e) Tax.

 

(iv)                              Any such claim for indemnification to effectuate this Section 3.3(b) shall otherwise be governed in the manner specified under this Article III, but shall not affect in any manner the provisions of Article V and Article VI (except as set forth in Section 6.2(a)) with respect to cooperation and control of Audits.

 

Section 3.4                                    Certain Reimbursements.  Each party shall notify the other party of any Taxes paid by it or any of its Affiliates that are subject to indemnification under this Article III.  Any notification pursuant to this Section 3.4 shall include a detailed calculation (including, if applicable, separate allocations of such Taxes between the parties and supporting work papers) and a brief explanation of the basis for indemnification hereunder.  Whenever such a notification is given, the indemnifying party shall pay the amount requested in such notice to the indemnified party in accordance with Article IV, but only to the extent the indemnifying party agrees with such request.  To the extent the indemnifying party disagrees with such request, it shall so notify the indemnified party within thirty (30) days of receipt of such notice, whereupon the parties shall use their best efforts to resolve any such disagreement.  Any indemnification payment made after such thirty (30) day period shall include interest at the Overdue Rate from the date of receipt of the original indemnification notice.

 

Section 3.5                                    Adjustments.  The parties agree to cooperate in good faith, without bias to any Demand Media Member or Rightside Member, to make appropriate adjustments to accomplish the objectives of this Article III.

 

ARTICLE IV.
 METHOD AND TIMING OF
 PAYMENTS REQUIRED BY THIS AGREEMENT

 

Section 4.1                                    Payment in Immediately Available Funds; Interest.  All payments made pursuant to this Agreement shall be made in immediately available funds.  Except as otherwise provided in the Agreement, all payments shall be made within thirty (30) days of receipt of request therefor.  Except as otherwise provided in the Agreement, any payment not made within thirty (30) days of receipt shall thereafter bear interest at the Overdue Rate.

 

Section 4.2                                    Characterization of Payments.  Any payment (other than interest thereon) made hereunder by Demand Media to Rightside, or by Rightside to Demand Media, shall be treated by all parties for all Tax purposes to the extent permitted by law as a non-taxable distribution or capital contribution made prior to the end of the day on the Distribution Date, except to the extent that Demand Media and Rightside treat a payment as the settlement of an intercompany liability (including, without limitation, the settlement of an intercompany liability with respect to the sharing of Tax liabilities pursuant to the Current Allocation Methodology).

 

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ARTICLE V.
 COOPERATION; DOCUMENT RETENTION; CONFIDENTIALITY

 

Section 5.1                                    Provision of Cooperation, Documents and Other Information.  Upon the reasonable request of any party to this Agreement, Demand Media or Rightside, as applicable, shall promptly provide (and shall cause its Affiliates to promptly provide) the requesting party with such cooperation and assistance, documents, and other information as may be necessary or reasonably helpful in connection with (a) the preparation and filing of any Tax Return, (b) the conduct of any Audit involving any Taxes or Tax Returns within the scope of this Agreement or (c) the verification by a party of an amount payable to or receivable from another party.  Such cooperation and assistance shall include, without limitation, (i) the provision of books, records, Tax Returns, documentation or other information relating to any relevant Tax Return, (ii) the execution of any document that may be necessary or reasonably helpful in connection with the filing of any Tax Return, or in connection with any Audit, including, without limitation, the execution of powers of attorney and extensions of applicable statutes of limitations with respect to Tax Returns which Demand Media may be obligated to file on behalf of Rightside Members pursuant to Section 2.1, (iii) the prompt and timely filing of appropriate claims for refund, and (iv) the use of reasonable best efforts to obtain any documentation from a governmental authority or a third party that may be necessary or reasonably helpful in connection with the foregoing.  Each party shall make its employees and facilities available on a mutually convenient basis to facilitate such cooperation.

 

Section 5.2                                    Retention of Books and Records.  Each party to this Agreement shall retain or cause to be retained (and shall cause each of their Affiliates to retain) all Tax Returns and all books, records, schedules, work papers, and other documents relating thereto, until the later of (a) the date seven (7) years from the close of the applicable Tax Period, (b) the expiration of all applicable statutes of limitations (including any waivers or extensions thereof) and (c) the expiration of any retention period required by law (e.g., depreciation or inventory records) or pursuant to any record retention agreement.  The parties hereto shall notify each other in writing of any waivers, extensions or expirations of applicable statutes of limitations.

 

Section 5.3                                    Confidentiality of Documents and Information.  Except as required by law or with the prior written consent of the other party, all Tax Returns, documents, schedules, work papers and similar items and all information contained therein that are within the scope of this Agreement shall be kept confidential by the parties hereto and their Representatives, shall not be disclosed to any other person and shall be used only for the purposes provided herein.

 

ARTICLE VI.
 AUDITS

 

Section 6.1                                    Notification and Status of Audits or Disputes.  Upon the receipt by any party to this Agreement (or any of its Affiliates) of notice of any pending or threatened Audit pertaining to Taxes subject to indemnification under this Agreement, such party shall promptly notify the other party in writing of the receipt of such notice.  Each party to this Agreement shall use reasonable best efforts to keep the other party advised as to the status of any Audits pertaining to Taxes subject to indemnification under this Agreement.  To the extent relating to any such Tax, each party hereto shall promptly furnish the other party with copies of any

 

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inquiries or requests for information from any Taxing Authority or any other administrative, judicial or other governmental authority, as well as copies of any revenue agent’s report or similar report, notice of proposed adjustment or notice of deficiency.

 

Section 6.2                                    Control and Settlement.

 

(a)                                 Demand Media shall have the right to control, and to represent the interests of all affected taxpayers in, any Audit relating, in whole or in part, to any Tax Return filed pursuant to Section 2.1(a)(i) and Section 2.1(a)(ii) and to employ counsel or other advisors of its choice at its own cost and expense; provided, however, that with respect to any issue arising on an Audit of a Section 2.3(a) Tax Return that may have a material adverse effect on Rightside or any Rightside Member (including as a result of Rightside’s indemnification obligations pursuant to Sections 3.3(b)(i), 3.3(b)(ii)(B) and 3.3 (b)(iii)(B)), (i) Demand Media and Rightside shall jointly control the conduct and resolution of such issue, and in no event shall either Demand Media or Rightside settle or otherwise resolve any such issue without the written consent of the other, which consent shall not be unreasonably withheld; (ii) Rightside shall provide Demand Media a written response to any notification by Demand Media of a proposed settlement within ten (10) days of its receipt of such notification; and (iii) if Rightside fails to respond within such ten (10) day period, it shall be deemed to have consented to the proposed settlement.  Each of Demand Media and Rightside shall bear its own costs incurred in participating in any proceeding relating to any Audit under this Section 6.2(a).

 

(b)                                 Rightside shall have the right to control, and to represent the interests of all affected taxpayers in, any Audit relating, in whole or in part, to any Tax Return filed pursuant to Section 2.1(b)(i) and Section 2.1(b)(ii) and to employ counsel or other advisors of its choice at its own cost and expense.

 

(c)                                  The payment of any Taxes as a result of a Final Determination with respect to an Audit, as well as any payments between Demand Media and Rightside with respect to such Taxes to the extent such Audit relates to a Section 2.3(a) Tax Return and the Current Allocation Methodology applies, shall be governed by Section 2.7.

 

Section 6.3                                    Delivery of Powers of Attorney and Other Documents.  Demand Media and Rightside shall execute and deliver to the other party, promptly upon request, powers of attorney authorizing such other party to extend statutes of limitations, receive refunds, negotiate settlements and take such other actions that Demand Media or Rightside, as applicable, reasonably considers to be appropriate in exercising its control rights pursuant to Section 6.2, and any other documents reasonably necessary thereto to effect the exercise of such control rights.

 

ARTICLE VII.
 MISCELLANEOUS

 

Section 7.1                                    Effectiveness.  This Agreement shall be effective from and after the Distribution Date and shall survive until the expiration of any applicable statute of limitations.

 

Section 7.2                                    Entire Agreement.  This Agreement, together with all documents and

 

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instruments referred to herein and therein, constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede and terminate all prior agreements and understandings, both written and oral.

 

Section 7.3                                    Guarantees of Performance.  Each party hereby guarantees the complete and prompt performance by its Affiliates of all of their obligations and undertakings pursuant to this Agreement.  If, subsequent to the consummation of the Spin-off Transactions, either Demand Media or Rightside shall be acquired by another entity (the “acquirer”) such that 50% or more of the acquired corporation’s common stock is held by the acquirer and its affiliates, the acquirer shall, by making such acquisition, simultaneously agree to jointly and severally guarantee the complete and prompt performance by the acquired corporation and any Affiliate of the acquired corporation of all of their obligations and undertakings pursuant to this Agreement and the acquired corporation shall cause such acquirer to enter into an agreement reflecting such guarantee.

 

Section 7.4                                    Severability.  In the event any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.  It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions hereof without including any of such which may hereafter be declared invalid, void or unenforceable.  In the event that any such term, provision, covenant or restriction is hereafter held to be invalid, void or unenforceable, the parties hereto agree to use their best efforts to find and employ an alternate means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction.

 

Section 7.5                                    Waiver.  Neither the failure nor any delay on the part of any party to exercise any right under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right preclude any other or further exercise of the same or any other right, nor shall any waiver of any right with respect to any occurrence be construed as a waiver of such right with respect to any other occurrence.

 

Section 7.6                                    Governing Law.  This Agreement shall be governed and construed in accordance with the laws of the State of Delaware without regard to any applicable conflicts of law principles, except with respect to matters of law concerning the internal corporate or other organizational affairs of any entity which is a party to or subject of this Agreement, and as to those matters the law of the jurisdiction under which the respective entity derives its powers shall govern.

 

Section 7.7                                    Notices.  All notices and other communications required or permitted under this Agreement shall be in writing and shall be duly given when delivered in person, by facsimile (with a confirmed receipt thereof), by messenger or courier service, or by registered or certified mail (postage prepaid, return receipt requested), at the following addresses (or at such other address for a party as shall be specified by like notice):

 

If to Demand Media, to:

 

Demand Media, Inc. 

 

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1655 26th street
 Santa Monica, California 90404
 Attention:  Legal

E-mail: daniel.weinrot@demandmedia.com

Telephone: (310) 394-6400

Facsimile: (310) 395-6249

 

If to Rightside, to:

 

Rightside Group, Ltd.

5808 Lake Washington Blvd., Suite 300

Kirkland, Washington 98033
 Attention:  Legal

E-mail: rick@rightside.co

Telephone: (425) 298-2500

Facsimile: (425) 298-2703

 

Section 7.8                                    Amendments.  This Agreement may be amended at any time only by written agreement executed and delivered by duly authorized officers of Demand Media and Rightside.

 

Section 7.9                                    Successors and Assigns.  Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by either party hereto (by operation of law or otherwise), without the prior written consent of the other party.  All provisions of the Agreement shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.

 

Section 7.10                             No Third-Party Beneficiaries.  This Agreement is solely for the benefit of the parties to this Agreement and their respective Affiliates and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without this Agreement.

 

Section 7.11                             Headings; References.  The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.  All references herein to “Article”, “Sections” or “Exhibits” shall be deemed to be references to Articles or Sections hereof or Exhibits hereto unless otherwise indicated.

 

Section 7.12                             Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original instrument, and all such counterparts shall together constitute one and the same instrument.

 

Section 7.13                             Predecessors and Successors.  To the extent necessary to give effect to the purposes of this Agreement, any reference to any corporation or other entity shall also include any predecessors or successors thereto, by operation of law or otherwise.

 

Section 7.14                             Specific Performance.  The parties hereto acknowledge and agree that irreparable damages will result if this Agreement is not performed in accordance with its terms,

 

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and each party agrees that any damages available at law for a breach of this Agreement would not be an adequate remedy.  Therefore, to the full extent permitted by applicable law, the provisions hereof and the obligations of the parties hereunder shall be enforceable in a court of equity, or other tribunal with jurisdiction, by a decree of specific performance, and appropriate injunctive relief may be applied for and granted in connection therewith.

 

Section 7.15                             Further Assurances.  Subject to the provisions hereof, the parties hereto shall make, execute, acknowledge and deliver such other instruments and documents, and take all such other actions, as may be reasonably required in order to effectuate the purposes of this Agreement and to consummate the transactions contemplated hereby.  Subject to the provisions hereof, each party shall, in connection with entering into this Agreement, performing its obligations hereunder and taking any and all actions relating hereto, comply with all applicable laws, regulations, orders and decrees, obtain all required consents and approvals and make all required filings with any governmental authority (including any regulatory or administrative agency, commission or similar authority) and promptly provide the other party with all such information as it may reasonably request in order to be able to comply with the provisions of this sentence.

 

Section 7.16                             Setoff.  All payments to be made by any party under this Agreement shall be made without setoff, counterclaim or withholding, all of which are expressly waived.

 

Section 7.17                             Expenses.  Except as specifically provided in this Agreement, each party agrees to pay its own costs and expenses resulting from the fulfillment of its respective obligations hereunder.

 

Section 7.18                             Rules of Construction.  Any ambiguities shall be resolved without regard to which party drafted the Agreement.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date above written.

 

 

	
 
    	
DEMAND MEDIA, INC.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
RIGHTSIDE GROUP, LTD.,
    
	
 
    	
a Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
				

 

S-1

 

Exhibit A:

 

Current Allocation Methodology

 

Federal Income Tax

 

With respect to any Section 2.3(a) Tax Returns, the amount of U.S. federal Income Taxes allocable to Rightside shall be the amount of such U.S. federal Income Taxes that the Rightside Affiliated Group would have been required to pay on a consolidated basis if the Rightside Affiliated Group had paid tax on behalf of an affiliated group consisting only of the Rightside Group, as determined in a manner consistent with the following principles:

 

(a)                                 including only Tax Items of members of the Rightside Affiliated Group that were included in the relevant Demand Media Affiliated Group consolidated Tax Return;

 

(b)                                 using all elections, accounting methods and conventions used on the Demand Media Affiliated Group consolidated Tax Return for such period; and

 

(c)                                  applying the effective U.S. federal corporate Income Tax rate applicable to the Demand Media Affiliated Group for such Tax Period.

 

State Income Tax

 

With respect to any Section 2.3(a) Tax Returns, the amount of state or local Income Taxes allocable to Rightside shall be as determined by Demand Media in a manner consistent with the principles set forth under the heading “Federal Income Tax” above (for the avoidance of doubt, using the effective state or local corporate Income Tax rate applicable to the Demand Media Affiliated Group (or other group of Pre-Spin Members) for such applicable state or local jurisdiction, as the case may be).

 

Foreign Income Tax

 

With respect to any Section 2.3(a) Tax Returns, the amount of foreign Income Taxes allocable to Rightside shall be as determined by Demand Media in a manner consistent with the principles set forth under the heading “Federal Income Tax” above.

 

Other Taxes

 

With respect to any Section 2.3(a) Tax Returns, the amount of Taxes, other than U.S. federal Income Taxes, state or local Income Taxes and foreign Income Taxes, allocable to Rightside shall be as determined by Demand Media based on the relative revenues of the Demand Media Group and the Rightside Group for the relevant period.

 

A-1Exhibit 10.4

 

FORM OF

 

INTELLECTUAL PROPERTY ASSIGNMENT AND LICENSE AGREEMENT

 

This INTELLECTUAL PROPERTY ASSIGNMENT AND LICENSE AGREEMENT (“Agreement”) is made and entered into effective as of [           ] (the “Effective Date”), by and between Demand Media, Inc., a Delaware corporation (“Demand Media”), and Rightside Operating Co., a Delaware corporation (“Rightside Opco”).  Demand Media and Rightside Opco are each referred to herein as a “Party” and collectively as the “Parties.”

 

WHEREAS, Demand Media has determined that it would be appropriate, desirable and in the best interests of Demand Media and Demand Media’s stockholders to separate the Domain Services Business (as defined below) from Demand Media’s other businesses (including, without limitation, the Media Business) (the “Separation”) pursuant to and in accordance with the Separation and Distribution Agreement to be entered into by and between Demand Media and Rightside Group Ltd., as may be amended from time to time (the “Separation Agreement”).

 

WHEREAS, the Demand Media Group and the Rightside Opco Group, or their predecessors in interest, have used, and plan to continue to use, the Demand Media Licensed IP and Rightside Opco Licensed IP in association with their respective fields of commercial activity, including in the operation of the Media Business and the Domain Services Business;

 

WHEREAS, in order to effect and consummate the separation contemplated by the Separation Agreement, and to allow the Demand Media Group and Rightside Opco Group to continue using the Demand Media Licensed IP and Rightside Opco Licensed IP, respectively, in the operation of their respective businesses, Demand Media and Rightside Opco desire to enter into this Agreement;

 

NOW THEREFORE, in consideration of the premises and the mutual promises in this Agreement and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by Demand Media and Rightside Opco, Demand Media and Rightside Opco hereby agree as follows:

 

ARTICLE I.
 DEFINITIONS

 

Section 1.01                                       Definitions.  Terms used in this Agreement with initial capital letters have the meaning set forth or cross-referenced below:

 

(a)                                 “Affiliate” shall mean, when used with respect to any specified Person, a Person that directly or indirectly controls, is controlled by, or is under common control with such specified Person.  As used herein, “control” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract or otherwise.  Unless explicitly provided herein to the contrary, for purposes of this Agreement, Demand Media shall be deemed not to be an Affiliate of Rightside Opco or any of its Subsidiaries, and

 

 

Rightside Opco shall be deemed not to be an Affiliate of Demand Media or any of its Subsidiaries (not including Rightside Opco or any of its Subsidiaries).

 

(b)                                 “Agreement” has the meaning set forth in the preamble to this Agreement.

 

(c)                                  “Assigned Patents” shall mean the issued U.S. and foreign patents and patent applications listed on Schedule 1, including all reissues, reexaminations, renewals, divisionals, continuations, continuations-in-part, extensions, and any other patents or patent applications claiming priority to any application in any of the foregoing.

 

(d)                                 “Assigned Software” shall mean any Software owned in whole or in part by any member of the Demand Media Group, and which is intended to be used primarily in, or that primarily relates to, the Domain Services Business, including, without limitation, the Software listed on Schedule 3.

 

(e)                                  “Confidential Information” has the meaning set forth in Section 7.01 of this Agreement.

 

(f)                                   “Demand Media” has the meaning set forth in the preamble to this Agreement.

 

(g)                                  “Demand Media Enforcement Action” has the meaning set forth in Section 3.03(a) of this Agreement.

 

(h)                                 “Demand Media Group” means Demand Media and each Person that is or becomes an Affiliate of Demand Media immediately after the Separation.

 

(i)                                     “Demand Media Licensed IP” shall mean the Licensed Patents, Demand Media Licensed Materials, and Demand Media Licensed Software.

 

(j)                                    “Demand Media Licensed Materials” shall mean any Materials existing as of the Effective Date owned by any Demand Media Group member that are used, or being developed for use, by a Rightside Opco Group member in the Domain Services Business.

 

(k)                                 “Demand Media Licensed Software” shall mean any Software existing as of the Effective Date owned by any Demand Media Group member that is used, or being developed for use, by a Rightside Opco Group member in the Domain Services Business.

 

(l)                                     “Disclosing Party” has the meaning set forth in Section 7.01 of this Agreement.

 

(m)                             “Domain Services Business” shall mean the registrar, registry and domain name monetization business engaged in providing domain name registration, domain name monetization (including monetization of parked domain names and sales of domain names) and related value added services, as well as acquiring domain name registry rights and preparing to provide domain name registry and related services.

 

(n)                                 “Governmental Authority” shall mean any federal, state, local, foreign or international court, government, department, commission, board, bureau, agency, official, or other regulatory, administrative or governmental authority.

 

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(o)                                 “Initial Term” has the meaning set forth in Section 8.01 of this Agreement.

 

(p)                                 “Improvements” means, with respect to a particular work (regardless of whether such work is entitled to protection under applicable intellectual property Law), any and all derivative works of such work as well as any and all modifications, improvements, fixes, enhancements and/or updates made to such work, in each case, whether or not any of the foregoing is entitled to protection under applicable Law.

 

(q)                                 “Law” shall mean all laws, statutes and ordinances and all regulations, rules and other pronouncements of Governmental Authorities having the effect of law of the United States of America, any foreign country, or any domestic or foreign state, province, commonwealth, city, country, municipality, territory, protectorate, possession or similar instrumentality, or any Governmental Authority thereof.

 

(r)                                    “Licensed Patents” shall mean the issued U.S. and foreign patents and patent applications listed on Schedule 2, including all reissues, reexaminations, renewals, divisionals, continuations, continuations-in-part, extensions, and any other patents or patent applications claiming priority to any application in any of the foregoing.

 

(s)                                   “Losses” shall mean all losses, damages, claims, demands, judgments or settlements of any nature or kind, known or unknown, fixed, accrued, absolute or contingent, liquidated or unliquidated, including all reasonable costs and expenses (legal, accounting or otherwise as such costs are incurred) relating thereto, suffered by a Demand Media Indemnitee or a Rightside Opco Indemnitee.

 

(t)                                    “Materials” shall mean documents, specifications, designs, plans, drawings, websites or other tangible works of authorship, including any of the foregoing materials in electronic form, and any copyright rights therein (whether or not registered); except that, Materials does not include Software.

 

(u)                                 “Media Business” shall mean a content and media business that involves the creation of long-lived media content, primarily consisting of text articles and videos, and delivering it along with social media and monetization tools to the Demand Media Group’s owned and operated websites and mobile applications and to its network of customer websites and mobile applications, and providing sites where content or products embodying original content are made available on a subscription or other non-advertising paid basis.

 

(v)                                 “New Demand Media Fields of Use” has the meaning set forth in Section 3.02 of this Agreement.

 

(w)                               “New Rightside Opco Fields of Use” has the meaning set forth in Section 4.04 of this Agreement.

 

(x)                                 “Party” and “Parties” has the meaning set forth in the preamble to this Agreement.

 

(y)                                 “Person” shall mean any natural person, corporation, business trust, limited liability company, joint venture, association, company, partnership or government, or any agency or political subdivision thereof.

 

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(z)                                  “Receiving Party” has the meaning set forth in Section 7.01 of this Agreement.

 

(aa)                          “Recoveries” has the meaning set forth in Section 3.03(a) of this Agreement.

 

(bb)                          “Renewal Term” has the meaning set forth in Section 8.01 of this Agreement.

 

(cc)                            “Representative” shall mean, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants, attorneys and representatives.

 

(dd)                          “Rightside Opco” has the meaning set forth in the preamble to this Agreement.

 

(ee)                            “Rightside Opco Enforcement Action” has the meaning set forth in Section 4.05(a) of this Agreement.

 

(ff)                              “Rightside Opco Group” shall mean Rightside Opco and each Person that is or becomes a Subsidiary of Rightside Opco immediately after the Separation.

 

(gg)                            “Rightside Opco Licensed IP” shall mean the Rightside Opco Licensed Materials and Rightside Opco Licensed Software.

 

(hh)                          “Rightside Opco Licensed Materials” shall mean any Materials existing as of the Effective Date owned by a Rightside Opco Group member that is used, or being developed for use, by a Demand Media Group member in the Media Business.

 

(ii)                                  “Rightside Opco Licensed Software” shall mean any Software existing as of the Effective Date owned by a Rightside Opco Group member that is used, or is being developed for use, by a Demand Media Group member in the Media Business; for the avoidance of doubt, the Assigned Software shall not be considered part of the Rightside Opco Licensed Software.

 

(jj)                                “Separation” has the meaning set forth in the recitals to this Agreement.

 

(kk)                          “Separation Agreement” has the meaning set forth in the recitals to this Agreement.

 

(ll)                                  “Software” shall mean any source or object code instructions for controlling the operation of a central processing unit or computer, but specifically excluding any licensed Third Party software.

 

(mm)                  “Subsidiary” shall mean with respect to any specified Person, any corporation or other legal entity of which such Person or any of its Subsidiaries controls or owns, directly or indirectly, more than 50% of the stock or other equity interests entitled to vote on the election of members to the board of directors or similar governing body or, in the case of a Person with no governing body, more than 50% of the equity or voting interests.

 

(nn)                          “Term” has the meaning set forth in Section 8.01 of this Agreement.

 

(oo)                          “Third Party” shall mean any Person who is not a Party to this Agreement.

 

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ARTICLE II.
 PATENT AND SOFTWARE ASSIGNMENT

 

Section 2.01                                       Patent and Software Assignment.  Demand Media hereby assigns and will cause each other member of the Demand Media Group to assign to Rightside Opco all right, title and interest in and to the Assigned Patents and Assigned Software.  Each Party acknowledges and agrees that the assignment of the Assigned Patents and Assigned Software to Rightside Opco under this Section 2.01 is a capital contribution to Rightside Opco.

 

Section 2.02                                       Covenant Not to Sue.  Notwithstanding anything to the contrary in this Agreement or any other agreement or instrument delivered by Demand Media or Rightside Opco pursuant to this Agreement, Rightside Opco, on behalf of itself and its Affiliates, successors and assigns, agrees not to sue or initiate legal action on any legal theory against any Demand Media Indemnitee (as defined in Section 6.02 below) relating to any past, current or future use by any Demand Media Indemnitee of the Assigned Patents or Assigned Software in a field of use that is similar to, or the same as, the Media Business.

 

ARTICLE III.
 SOFTWARE AND MATERIALS LICENSE TO DEMAND MEDIA GROUP

 

Section 3.01                                       Software and Materials License to Demand Media.  Subject to the terms and conditions set forth in this Agreement, Rightside Opco hereby grants to the Demand Media Group, and will cause each other member of the Rightside Opco Group to grant to the Demand Media Group, a non-exclusive, royalty-free, sub-licensable (subject to Section 9.07), worldwide, fully paid-up right and license during the Term to use, create derivative works of, display or reproduce the Rightside Opco Licensed Software and Rightside Opco Licensed Materials for the Demand Media Groups’ internal business operations or as otherwise used by the Demand Media Group as of the Effective Date.  Each Party acknowledges and agrees that Rightside Opco’s sole consideration for the grant of this license shall be the licenses granted from Demand Media to Rightside Opco under Section 4.01 and Section 4.02 below.

 

Section 3.02                                       Expanded Demand Media Field of Use.  Demand Media may request an expansion of the scope of the licenses granted to it in Section 3.01 to allow for the Rightside Opco Licensed IP to be used by the Demand Media Group other than as currently set forth Section 3.01 (“New Demand Media Fields of Use”).  If such expansion is approved by Rightside Opco, the licenses granted to the Demand Media Group in Section 3.01 shall automatically be amended to allow for the Rightside Opco Licensed IP to be used by the Demand Media Group in such approved New Demand Media Fields of Use.

 

Section 3.03                                       Rightside Opco Licensed IP Enforcement Actions.

 

(a)                                 Demand Media shall have the right to sue in its own name for any infringement, misappropriation, impairment or violation of the Rightside Opco Licensed IP by a Third Party using the Rightside Opco Licensed IP in a field of use that is similar to, or the same as, the Media Business (a “Demand Media Enforcement Action”); provided, however that Demand Media shall not compromise or settle any claim or action regarding the Rightside Opco Licensed IP in any manner that would affect the rights of Rightside Opco without the written consent of

 

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Rightside Opco, which consent shall not be unreasonably withheld.  Demand Media shall provide Rightside Opco with written notice prior to the institution of any Demand Media Enforcement Action.  Unless otherwise agreed upon pursuant to Section 3.03(b), all costs and expenses related to a Demand Media Enforcement Action shall be borne by Demand Media, and Demand Media shall be entitled to all monetary damages, fines, settlement payments, costs, attorneys’ fees, and other amounts (“Recoveries”) awarded to Demand Media as a direct result of a Demand Media Enforcement Action.  Rightside Opco shall, at Demand Media’s expense, cooperate fully and promptly with Demand Media with respect to such Demand Media Enforcement Action, in such manner and to such extent as Demand Media may reasonably request.

 

(b)                                 Within thirty (30) days from Demand Media’s notice to Rightside Opco of Demand Media’s intent to institute a Demand Media Enforcement Action, Rightside Opco shall have the right to provide Demand Media with written notice of its desire to join such enforcement action.  Upon such notice, Demand Media shall take no action with respect to such matter until the Parties have negotiated in good faith an enforcement plan regarding such matter, which enforcement plan shall include the allocation of legal expenses, appointment of legal counsel, and allocation of Recoveries from such action.

 

Section 3.04                                       Ownership of Rightside Opco Licensed IP and Improvements.

 

(a)                                 During the Term and thereafter, Demand Media, its Affiliates, assignees and sublicensees shall not (i) apply to register or cooperate in any effort by any Third Party to register the Rightside Opco Licensed IP anywhere in the world in connection with any products or services, except as specifically permitted under this Agreement; (ii) challenge or participate in any challenge of Rightside Opco’s rights in the Rightside Opco Licensed IP; or (iii) do anything else inconsistent with Rightside Opco’s rights in the Rightside Opco Licensed IP.

 

(b)                                 As between the Parties, Rightside Opco shall exclusively own all right, title and interest in and to any and all Improvements made or created from or based on the Rightside Opco Licensed IP by or on behalf of the Demand Media Group or any of its assignees or sublicensees following the Effective Date.

 

(c)                                  Demand Media shall provide Rightside Opco with written notice of any Improvements made or created from or based on the Rightside Opco Licensed IP by or on behalf of the Demand Media Group or any of its assignees or sublicensees following the Effective Date.  After such notice is provided, such Improvements shall automatically be included in the definition of the Rightside Opco Licensed Materials or Rightside Opco Licensed Software, as applicable, and the licenses granted to the Demand Media Group in Section 3.01 shall automatically be amended to allow the Demand Media Group to use such Improvements under the terms and conditions set forth in such sections.

 

ARTICLE IV.
 PATENT, SOFTWARE AND MATERIALS LICENSE TO RIGHTSIDE OPCO

 

Section 4.01                                       Patent License. Subject to the terms and conditions set forth in this Agreement, Demand Media hereby grants to Rightside Opco under all claims of the Licensed

 

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Patents, an exclusive, royalty-free, sub-licensable (subject to Section 9.07), worldwide fully paid-up right and license during the Term to use, sell, import, improve, modify, maintain, adapt, customize, and/or support any product, apparatus, hardware, software, method, system, and/or technology using the Licensed Patents, solely for the operation of the Domain Services Business.  Each Party acknowledges and agrees that Demand Media’s sole consideration for the grant of this license shall be the license granted from Rightside Opco to Demand Media under Section 3.01.

 

Section 4.02                                       Software and Materials License to Rightside Opco.  Subject to the terms and conditions set forth in this Agreement, Demand Media hereby grants to Rightside Opco, and will cause each other member of the Demand Media Group to grant to Rightside Opco, a non-exclusive, royalty-free, sub-licensable (subject to Section 9.07), worldwide, fully paid-up right and license during the Term to use, create derivative works of, display or reproduce the Demand Media Licensed Software and Demand Media Licensed Materials for Rightside Opco’s internal business operations or as otherwise used by Rightside Opco as of the Effective Date.  Each Party acknowledges and agrees that Demand Media’s sole consideration for the grant of this license shall be the license granted from Rightside Opco to Demand Media under Section 3.01.

 

Section 4.03                                       Maintenance of Licensed Patents.  Demand Media may in its sole discretion cease the maintenance of any Licensed Patents; provided, however, that if Demand Media elects not to pay a maintenance fee on a Licensed Patent, it will provide written notice to that effect to Rightside Opco at least three months before the due date of the next maintenance fee payment thereon, and thereafter, Rightside Opco may elect to pay the applicable maintenance fees.  Further, in the event that Demand Media abandons or otherwise ceases the maintenance of any Licensed Patent, then upon Rightside Opco’s written request, Demand Media shall assign its rights in such abandoned Licensed Patent to Rightside Opco.

 

Section 4.04                                       Expanded Rightside Opco Field of Use.  Rightside Opco may request an expansion of the scope of the licenses granted to it in Section 4.01 and Section 4.02 to allow for the Demand Media Licensed IP to be used by Rightside Opco other than as currently set forth in Section 4.01 and Section 4.02 (“New Rightside Opco Fields of Use”).  If such expansion is approved by Demand Media, the licenses granted to Rightside Opco in Section 4.01 and Section 4.02 shall be amended to allow for the Demand Media Licensed IP to be used by Rightside Opco in such approved New Rightside Opco Fields of Use.

 

Section 4.05                                       Demand Media Licensed IP Enforcement Actions.

 

(a)                                 Rightside Opco shall have the right to sue in its own name for any infringement, misappropriation, impairment or violation of the Demand Media Licensed IP by a Third Party using the Demand Media Licensed IP in a field of use that is similar to, or the same as, the Domain Services Business (a “Rightside Opco Enforcement Action”); provided, however that Rightside Opco shall not compromise or settle any claim or action regarding the Demand Media Licensed IP in any manner that would affect the rights of Demand Media without the written consent of Demand Media, which consent shall not be unreasonably withheld.  Rightside Opco shall provide Demand Media with written notice prior to the institution of any Rightside Opco Enforcement Action.  Unless otherwise agreed upon pursuant to Section 4.05(b), all costs and expenses related to a Rightside Opco Enforcement Action shall be borne by Rightside Opco, and

 

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Rightside Opco shall be entitled to all Recoveries awarded to Rightside Opco as a direct result of a Rightside Opco Enforcement Action.  Demand Media shall, at Rightside Opco’s expense, cooperate fully and promptly with Rightside Opco with respect to such Rightside Opco Enforcement Action, in such manner and to such extent as Rightside Opco may reasonably request.

 

(b)                                 Within thirty (30) days from Rightside Opco’s notice to Demand Media of Rightside Opco’s intent to institute a Rightside Opco Enforcement Action, Demand Media shall have the right to provide Rightside Opco with written notice of its desire to join such enforcement action.  Upon such notice, Rightside Opco shall take no action with respect to such matter until the Parties have negotiated in good faith an enforcement plan regarding such matter, which enforcement plan shall include the allocation of legal expenses, appointment of legal counsel, and allocation of Recoveries from such action.

 

Section 4.06                                       Ownership of Demand Media Licensed IP and Improvements.

 

(a)                                 During the Term and thereafter, Rightside Opco, its Affiliates, assignees and sublicensees shall not (i) apply to register or cooperate in any effort by any Third Party to register the Demand Media Licensed IP anywhere in the world in connection with any products or services, except to reflect Rightside Opco’s exclusive license in such Demand Media Licensed IP during the Term or as otherwise specifically permitted under this Agreement; (ii) challenge or participate in any challenge of Demand Media’s rights in the Demand Media Licensed IP; or (iii) do anything else inconsistent with Demand Media’s rights in the Demand Media Licensed IP.

 

(b)                                 As between the Parties, Demand Media shall exclusively own all right, title and interest in and to any and all Improvements made or created from or based on the Demand Media Licensed IP by or on behalf of Rightside Opco or any of its Affiliates, assignees or sublicensees following the Effective Date.

 

(c)                                  Rightside Opco shall provide Demand Media with written notice of any Improvements made or created from or based on the Demand Media Licensed IP by or on behalf of Rightside Opco or any of its Affiliates, assignees or sublicensees following the Effective Date.  After such notice is provided, such Improvements shall automatically be included in the definition of the Licensed Patents, Demand Media Licensed Materials or Demand Media Licensed Software, as applicable, and the licenses granted to Rightside Opco in Section 4.01 and Section 4.02 shall automatically be amended to allow Rightside Opco to use such Improvements under the terms and conditions set forth in such sections.

 

ARTICLE V.
 REPRESENTATIONS AND WARRANTIES

 

Section 5.01                                       Mutual Representations.  Each Party warrants that it has the right and power to enter into this Agreement, and that the individual signing on such Party’s behalf has full authority to bind it to this Agreement.

 

Section 5.02                                       No Intellectual Property Representations and Warranties.  Each Party acknowledges and agrees that the Assigned Patents, Assigned Software, Rightside Opco

 

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Licensed IP and Demand Media Licensed IP are being furnished “AS IS,” without any representations, warranties, or guarantees of any kind, whatsoever.

 

SECTION 5.03                        DISCLAIMER.  EXCEPT TO THE EXTENT OTHERWISE SET FORTH IN THIS AGREEMENT, EACH PARTY ASSUMES TOTAL RESPONSIBILITY AND RISK FOR ITS RESPECTIVE USE OF THE ASSIGNED PATENTS, ASSIGNED SOFTWARE, RIGHTSIDE OPCO LICENSED IP AND DEMAND MEDIA LICENSED IP.  NEITHER PARTY MAKES, AND EACH PARTY EXPRESSLY DISCLAIMS, ANY EXPRESS OR IMPLIED WARRANTIES OR GUARANTEES OF ANY KIND WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WARRANTIES OF TITLE OR NON-INFRINGEMENT, OR ANY WARRANTY THAT THE ASSIGNED PATENTS, ASSIGNED SOFTWARE, RIGHTSIDE OPCO LICENSED IP OR DEMAND MEDIA LICENSED IP ARE “ERROR FREE” OR ANY WARRANTY OR GUARANTEE THAT THE ASSIGNED PATENTS, ASSIGNED SOFTWARE, RIGHTSIDE OPCO LICENSED IP OR DEMAND MEDIA LICENSED IP ARE FREE OF ANY VIRUSES, TROJAN HORSES, WORMS, TIME BOMBS, CORRUPTED FILES OR OTHER COMPUTER PROGRAMMING THAT IS INTENDED TO DAMAGE, DETRIMENTALLY INTERFERE WITH, SURREPTITIOUSLY INTERCEPT OR EXPROPRIATE ANY SYSTEMS, DATA, PERSONAL INFORMATION OR PROPERTY OF ANOTHER.

 

Section 5.04                                       LIMITATION OF LIABILITY.  IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, COLLATERAL, INCIDENTAL OR PUNITIVE DAMAGES OR LOST PROFITS OR FAILURE TO REALIZE EXPECTED SAVINGS OR OTHER COMMERCIAL OR ECONOMIC LOSS OF ANY KIND, ARISING OUT OF THIS AGREEMENT; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT EITHER PARTY’S INDEMNIFICATION OBLIGATIONS UNDER ARTICLE VI WITH RESPECT TO THIRD PARTY CLAIMS OR UNDER THE SEPARATION AGREEMENT.  THE LIMITATIONS OF LIABILITY CONTAINED IN THIS AGREEMENT ARE A FUNDAMENTAL PART OF THE BASIS OF EACH PARTY’S BARGAIN HEREUNDER, AND NEITHER PARTY WOULD ENTER INTO THIS AGREEMENT ABSENT SUCH LIMITATIONS.

 

ARTICLE VI.
 INDEMNIFICATION

 

Section 6.01                                       Indemnification By Demand Media.  From and after the Effective Date, Demand Media shall indemnify, defend and hold harmless Rightside Opco, and each of Rightside Opco’s Affiliates and Rightside Opco’s and its Affiliates’ directors, officers, employees, agents, successors and assigns (“Rightside Opco Indemnitees”), from and against any and all Losses of the Rightside Opco Indemnitees to the extent arising out of, by reason of or otherwise in connection with (i) the Demand Media Group’s use of the Rightside Opco Licensed IP outside the scope of the Demand Media Group’s rights under this Agreement, (ii) unless otherwise agreed upon pursuant to Section 3.03(b), any Demand Media Enforcement Action, and (iii) any breaches of this Agreement by Demand Media.

 

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Section 6.02                                       Indemnification By Rightside Opco.  From and after the Effective Date, Rightside Opco shall indemnify, defend and hold harmless Demand Media, and each of Demand Media’s Affiliates and Demand Media’s and its Affiliates’ directors, officers, employees, agents, successors and assigns (“Demand Media Indemnitees”), from and against any and all Losses of the Demand Media Indemnitees to the extent arising out of, by reason of or otherwise in connection with (i) Rightside Opco’s use of the Demand Media Licensed IP outside the scope of Rightside Opco’s rights under this Agreement, (ii) unless otherwise agreed upon pursuant to Section 4.05(b), any Rightside Opco Enforcement Action, and (iii) any breaches of this Agreement by Rightside Opco.

 

Section 6.03                                       Indemnification Procedures.  All indemnification procedures and payments shall be governed by Section 5.3 and Section 5.4 of the Separation Agreement, as applicable.

 

ARTICLE VII.
 CONFIDENTIALITY

 

Section 7.01                                       Confidential Information. Each Party (the “Receiving Party”) expressly acknowledges that in connection with this Agreement, the other Party and their Affiliates (collectively, the “Disclosing Party”) may disclose or make available information and material relating to the Disclosing Party’s business or technology which is confidential or proprietary in nature which to the extent disclosed to the Receiving Party is hereinafter referred to as “Confidential Information” of the Disclosing Party provided such information:  (a) is disclosed in writing and conspicuously marked “CONFIDENTIAL” or with words of similar effect; or (b) is disclosed orally after the Effective Date and is identified as confidential information at the time of disclosure.

 

Section 7.02                                       Treatment of Confidential Information.  The Receiving Party shall, and shall cause its respective Representatives to:  (a) take commercially reasonable precautions to protect such Confidential Information consistent with all precautions the Receiving Party usually employs with respect to its own comparable confidential materials; (b) except as expressly provided in this Agreement, not disclose any such Confidential Information to any third Person, except under terms and conditions (including confidentiality, use, and disclosure restrictions) normally used by the Receiving Party to protect its own confidential or proprietary information of a similar nature; and (c) not use or disclose such Confidential Information except as necessary to exercise its rights and perform its obligations under this Agreement in accordance with any applicable restrictions or obligations with respect thereto.

 

Section 7.03                                       Exclusions.  Without granting any right or license, the Disclosing Party agrees that Section 7.02 will not apply with respect to any information that the Receiving Party can document:  (a) is or becomes generally available to the public through no improper action or inaction by the Receiving Party, its Representatives, its Affiliates, or its Affiliates’ Representatives; or (b) was rightfully disclosed to the Receiving Party by a third Person provided the Receiving Party complies with restrictions imposed by the third Person.  The Receiving Party, with prior written notice to the Disclosing Party, may disclose such Confidential Information to the minimum extent possible that is required to be disclosed to a governmental entity or agency, or pursuant to the lawful requirement or request of a governmental entity or

 

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agency, provided that reasonable measures are taken to guard against further disclosure (including without limitation, seeking appropriate confidential treatment or a protective order, or assisting the Disclosing Party to do so) and has allowed the Disclosing Party to participate in any proceeding that requires the disclosure.

 

Section 7.04                                       Publicity.  Neither Party will communicate with the press or public regarding their relationship hereunder, or use the other’s name connected to, this Agreement without the other Party’s prior written consent.

 

ARTICLE VIII.
 TERM AND TERMINATION

 

Section 8.01                                       Term.  The term of this Agreement shall begin on the Effective Date and shall continue for a period of fifteen (15) years from such date (the “Initial Term”).  Thereafter, this Agreement shall automatically renew for successive terms of fifteen (15) years (each, a “Renewal Term”).  Together, the Initial Term and any Renewal Terms shall constitute the “Term” of the License, unless this Agreement is earlier terminated in accordance with the provisions of Section 8.02 or Section 8.03 below, in which case the Term shall end on the effective date of termination.

 

Section 8.02                                       Termination by Mutual Agreement.  Notwithstanding Section 8.01 above, this Agreement shall terminate upon the mutual written approval of both Parties.

 

Section 8.03                                       Termination for Cause.  Notwithstanding Section 8.01 above, and subject to Section 8.04(b), either Party may terminate this Agreement by sending written notice to the other Party if:

 

(a)                                 the other Party is in material breach or default of any of its representations, warranties, covenants or obligations under this Agreement and which breach has remained uncured or otherwise unresolved for a period of 30 days or more following that Party’s receipt of written notice regarding such breach;

 

(b)                                 the other Party purports to assign, delegate or otherwise transfer any of its rights, benefits, powers, duties, responsibilities or obligations under this Agreement other than as expressly permitted under this Agreement; or

 

(c)                                  the other Party makes any assignment or assumption for the benefit of creditors or files a petition in bankruptcy or is adjudged bankrupt or is placed in the hands of a receiver or if the equivalent of any of the proceedings or acts referred to in this clause, though known and/or designated by some other name or term, occurs.

 

Section 8.04                                       Effect of Termination.

 

(a)                                 Except as otherwise expressly provided in this Agreement, upon termination of this Agreement, each Party’s rights hereunder shall terminate, provided, however, that (i) Rightside Opco and its approved sublicensees shall end their use of the Demand Media Licensed IP on or before the date that is six (6) months after the termination of this Agreement; and (ii) the

 

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Demand Media Group and their approved sublicensees shall end their use of the Rightside Opco Licensed IP on or before the date that is six (6) months after the termination of this Agreement.

 

(b)                                 Notwithstanding anything in this Agreement to the contrary, in the event that a Party exercises its rights to terminate this Agreement under Section 8.03, such terminating Party’s rights to use the intellectual property rights licensed to it under this Agreement (in the case of Demand Media, its rights in the Rightside Opco Licensed IP; and in the case of Rightside Opco, its rights in the Demand Media Licensed IP) shall survive for the duration of the Initial Term or if applicable, the Renewal Term, subject to all applicable provisions and automatic renewal rights under this Agreement governing use of such licensed intellectual property rights.

 

Section 8.05                                       Survival.  Notwithstanding Section 8.04(a), and subject to Section 8.04(b), Article I, Article II, Section 3.04(a), Section 3.04(b), Section 4.06(a), Section 4.06(b), Article V, Article VI, Section 8.04, Section 8.05, and Article IX (except for Section 9.01) of this Agreement will survive the expiration or termination of this Agreement.

 

ARTICLE IX.
 GENERAL

 

Section 9.01                                       Further Assurances.  In addition to the actions specifically provided for elsewhere in this Agreement, each Party agrees to execute or cause to be executed and to record or cause to be recorded such other agreements, instruments and other documents, and to take such other action, as reasonably necessary or desirable, to fully effectuate the license grants, intents and purposes of this Agreement.

 

Section 9.02                                       Consideration.  The Parties to this Agreement acknowledge and agree that the licenses, rights and obligations exchanged hereunder by the Parties are of substantially equal value, and accordingly, unless otherwise expressly set forth in this Agreement, no payments or royalties will be due from or to any Party under this Agreement.

 

Section 9.03                                       Relationship of the Parties.  This Agreement shall not be construed to place the Parties in the relationship of legal representatives, partners, joint venturers or agents of or with each other.  No Party shall have any power to obligate or bind the other party in any manner whatsoever, except as specifically provided herein.

 

Section 9.04                                       Amendment.  This Agreement may not be modified or amended, except by an agreement in writing signed by each of the Parties.

 

Section 9.05                                       Entire Agreement.  The Schedules shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.  This Agreement (including the Schedules) and the Separation Agreement constitute the entire agreement between the Parties related to the subject matter of the Agreement and supersede all prior agreements, discussions and understandings between the Parties related to its subject matter.

 

Section 9.06                                       Priority of Agreements.  If there is a conflict between any provision of this Agreement and the Separation Agreement (or any other agreement referred to therein), the provisions of this Agreement will control.

 

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Section 9.07                                       Assignment.  This Agreement shall not be assignable, in whole or in part, directly or indirectly, by any Party, without the prior written consent of the other Party, and any attempt to assign any rights or obligations arising under this Agreement without such consent shall be void; provided, however, that either Party may assign this Agreement (a) to an Affiliate of such Party, or (b) to a purchaser of all or substantially all of the properties and assets of such Party, in each case so long as such assignee expressly assumes, in a written instrument in form reasonably satisfactory to the non-assigning Party, the due and punctual performance or observance of every agreement and covenant of this Agreement on the part of the assigning Party to be performed or observed.  Notwithstanding the foregoing, either Party may sublicense its rights under this Agreement to a third party who is not an Affiliate but solely to allow such third party to use such rights for the furtherance of the sublicensing Party’s internal business operations, and provided, further, that the sublicensing Party shall not be relieved of any of its obligations and covenants hereunder after such sublicense.

 

Section 9.08                                       Successors and Assigns.  The provisions to this Agreement shall be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns.

 

Section 9.09                                       Third Party Beneficiaries.  This Agreement is solely for the benefit of the Parties and their respective Affiliates and shall not be deemed to confer upon any Third Party any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement.

 

Section 9.10                                       Notices.  All notices and other communications hereunder shall be in writing, shall reference this Agreement and shall be hand delivered or mailed by registered or certified mail (return receipt requested) to the Parties at the following addresses (or at such other addresses for a Party, as shall be specified by like notice) and will be deemed given on the date on which such notice is received:

 

To Demand Media:

 

Demand Media, Inc.

1655 26th Street

Santa Monica, CA 90404

Attention: Legal

Email: daniel.weinrot@demandmedia.com

Tel: (310) 394-6400

Fax: (310) 395-6249

 

To Rightside Opco:

 

Rightside Operating Co.

5808 Lake Washington Blvd. N.E., Suite 300

Kirkland, Washington 98033

Attention: General Counsel

Email: rick@rightside.co

Tel: (425) 298-2663

 

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Fax: (425) 298-2763

 

Section 9.11                                       Rules of Construction.  This Agreement will be fairly interpreted in accordance with its terms and without any strict construction in favor of or against either Party.  Moreover, drafts of the Agreement and Schedules shall not be taken into account in interpreting, or establishing the nature or limits of, a Party’s rights and obligations hereunder.  As used herein, terms such as “include”, “including”, “for example”, “such as” and “e.g.,” will mean including without limitation.

 

Section 9.12                                       Title and Headings.  Titles and headings to Sections herein are inserted for convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

 

Section 9.13                                       No Waiver.  A Party does not waive any right under this Agreement by failing to insist on compliance with any of the terms of this Agreement or by failing to exercise any right hereunder.  Any waivers granted hereunder are effective only if recorded in a writing signed by the Party granting such waiver.

 

Section 9.14                                       Severability.  If any provision of this Agreement is determined by any court or governmental authority to be unenforceable, the Parties intend that this Agreement be enforced as if the unenforceable provisions were not present and that any partially valid and enforceable provisions be enforced to the extent that they are enforceable.

 

Section 9.15                                       Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF CALIFORNIA.

 

Section 9.16                                       Dispute Resolution.  The procedures set forth in Article VIII (Dispute Resolution) of the Separation Agreement shall apply to the resolution of all disputes arising under this Agreement.

 

Section 9.17                                       Specific Performance.  From and after the Effective Date, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement, the Parties agree that the Party to this Agreement who is or is to be thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief of its rights under this Agreement, in addition to any and all other rights and remedies at Law or in equity, and all such rights and remedies shall be cumulative.  The Parties agree that, from and after the Effective Date, the remedies at Law for any breach or threatened breach of this Agreement, including monetary damages, are inadequate compensation for any loss, that any defense in any action for specific performance that a remedy at Law would be adequate is hereby waived, and that any requirements for the securing or posting of any bond with such remedy are hereby waived.

 

Section 9.18                                       Counterparts.  This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become

 

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effective when one or more such counterparts have been signed by each of the Parties and delivered to the other Party.

 

[signature page follows]

 

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IN WITNESS WHEREOF, the duly authorized representatives of each of the Parties hereto have executed this Agreement as of the Effective Date.

 

 

	
 
    	
Demand   Media, Inc.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
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Rightside   Operating Co.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
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Signature Page to Intellectual Property Assignment and License Agreement

 

 

Schedule 1

 

Assigned Patents

 

 

Schedule 2

 

Licensed Patents

 

 

Schedule 3

 

Assigned Software

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