Document:

Exhibit
10.21

 

DEMAND
MEDIA, INC.

 

AMENDED
AND RESTATED 2006 EQUITY INCENTIVE PLAN

 

STOCK
OPTION AGREEMENT

 

Demand Media, Inc. (the “Company”),  pursuant to the Amended and
Restated Demand Media, Inc. 2006 Equity Incentive Plan (as such plan may be
amended and/or restated, the “Plan”),  hereby
grants to Optionee listed below (“Optionee”),  an option to purchase the number of shares of the
Company’s Common Stock (“Shares”)  set
forth below, subject to the terms and conditions of the Plan and this Stock
Option Agreement. Unless otherwise defined herein, the terms defined in the
Plan shall have the same defined meanings in this Stock Option Agreement.

 

I.              NOTICE OF STOCK OPTION GRANT

 

	
  Optionee:

  	
  Shawn Colo

  
	
   

  	
   

  
	
  Date of
  Stock Option Agreement:

  	
  June
        , 2009

  
	
   

  	
   

  
	
  Date of
  Grant:

  	
  June 9, 2009

  
	
   

  	
   

  
	
  Vesting
  Commencement Date:

  	
  April 1, 2009

  
	
   

  	
   

  
	
  Exercise
  Price per Share:

  	
  $4.75

  
	
   

  	
   

  
	
  Total
  Number of Shares Granted:

  	
  250,000 Shares

  
	
   

  	
   

  
	
  Total
  Exercise Price:

  	
  $1,187,500

  
	
   

  	
   

  
	
  Term/Expiration
  Date:

  	
  June 8, 2019

  

 

	
  Type of
  Option:        o Incentive
  Stock Option

  	
  x
  Non-Qualified Stock Option

  

 

Vesting
Schedule:               This Option
shall vest and become exercisable one-forty-eighth (1/48th) of the Shares
subject hereto on each monthly anniversary of the Vesting Commencement Date,
subject to Optionee’s continued status as a Service Provider through each such
vesting date, such that all Shares subject to this Option shall be vested and
exercisable (subject to Optionee’s continued status as a Service Provider) as
of the fourth anniversary of the Vesting Commencement Date, provided, however, that if a Change of
Control shall occur prior to termination of Optionee’s status as a Service
Provider and either (x) Optionee remains a Service Provider through the three
hundred and eightieth (380th) day following the Change of Control or (y) Optionee’s employment is
terminated by the Company without Cause prior to the three hundred and
eightieth (380th) day following
the of the Change of Control, then the Option shall vest in full and become
exercisable with respect to all Shares subject hereto (to the extent not
already vested and exercisable) on the first to occur of the three hundred and
eightieth (380th) day following the of the Change of Control or termination of
Optionee’s employment by the Company without Cause following consummation of a
Change of Control and, provided, further, that
if Optionee’s employment with the Company is terminated by the Company without
Cause upon consummation of or within 90 days prior to the occurrence of a
Change of Control and such termination was at the request of a third party that
has taken steps reasonably calculated to effect a Change of Control or such
termination otherwise arose in connection with a Change of

 

 

Control, as determined in
the reasonable discretion of the Administrator, then the Option shall vest in
full and become exercisable with respect to all Shares subject hereto upon the
consummation of such Change of Control.

 

Termination
Period: Following a termination of Optionee’s status as a
Service Provider, the Option shall remain outstanding and exercisable (to the
extent vested) for a period of thirty (30) days following such termination, provided that (i) if Optionee’s employment
with the Company is terminated without Cause prior to both a Change of Control
and the fourth anniversary of the Vesting Commencement Date, the Option shall
remain outstanding, eligible to vest in accordance with the last proviso in the
Vesting Schedule above, and exercisable (to the extent vested) for a period of
one hundred twenty (120) days following such termination, (ii) if Optionee’s
status as a Service Provider is terminated for Cause at any time, the Option
shall terminate and be forfeited in full as of the start of business on the
date of Optionee’s termination, without regard to the Option’s vested status,
or (iii) if Optionee’s status as a Service Provider is terminated due to
Optionee’s death or total and permanent disability (within the meaning of
Section 22(3)(3) of the Code) at any time, the Option shall remain outstanding
and exercisable (to the extent vested) for a period of six months following
such termination (and, in the case of Optionee’s death, shall be exercisable by
Optionee’s estate or by a person who acquires the right to exercise the Option
by bequest or inheritance).

 

Notwithstanding the
foregoing, (x) except as expressly provided in the Vesting Schedule above with
respect to a Change of Control following a termination of Optionee’s employment
without Cause, in no event shall any portion of the Option vest following
termination of Optionee’s status as a Service Provider, and (y) in no event
shall any portion of the Option be exercisable after the Term/Expiration Date
stated above.

 

II.            AGREEMENT

 

1.             Grant of Option. The Company hereby grants to
Optionee an Option to purchase the number of Shares set forth in the Notice of
Grant, at the exercise price per Share set forth in the Notice of Grant (the “Exercise
Price”). Notwithstanding
anything to the contrary anywhere else in this Stock Option Agreement, the
Option is subject to the terms, definitions and provisions of the Plan adopted
by the Company, which is incorporated herein by reference.

 

If designated in the Notice
of Grant as an Incentive Stock Option, this Option is intended to qualify as an
Incentive Stock Option as defined in Section 422 of the Code; provided, however, that to the extent that
the aggregate Fair Market Value of stock with respect to which Incentive Stock
Options (within the meaning of Code Section 422, but without regard to Code
Section 422(d)), including the Option, are exercisable for the first time by
Optionee during any calendar year, exceeds $100,000, such options shall be
treated as not qualifying under Code Section 422, but rather shall be treated
as Non-Qualified Stock Options to the extent required by Code Section 422. The
rule set forth in the preceding sentence shall be applied by taking options
into account in the order in which they were granted. For purposes of these
rules, the Fair Market Value of stock shall be determined as of the time the
option with respect to such stock is granted.

 

2.             Exercise of Option. This Option is exercisable as
follows:

 

2

 

(a)           Right to Exercise.

 

(i)            This Option shall be exercisable cumulatively according
to the Vesting Schedule set forth in the Notice of Grant. For purposes of this
Stock Option Agreement, Shares subject to this Option shall vest based on
Optionee’s continued status as a Service Provider, except as otherwise
expressly provided in the Vesting Schedule set forth in the Notice of Grant.

 

(ii)           This Option may not be exercised for a fraction of a
Share.

 

(iii)          In the event of Optionee’s death, disability or other
termination of Optionee’s status as a Service Provider, the exercisability of
the Option is governed by Section 7 below and the Termination Provisions set
forth in the Notice of Grant.

 

(iv)          In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in the Notice of Grant.

 

(b)           Method of Exercise. This Option shall be
exercisable by written Notice (substantially in the form attached as Exhibit
A). The Notice must state the number of Shares for which the Option is
being exercised, and such other representations and agreements with respect to
such Shares as may be required by the Company pursuant to the provisions of the
Plan. The Notice must be signed by Optionee and shall be delivered in person or
by certified mail to the Secretary of the Company. The Notice must be
accompanied by payment of the Exercise Price plus payment of any
applicable withholding tax. This Option shall be deemed to be exercised upon
receipt by the Company of such written Notice accompanied by the Exercise Price
and payment of any applicable withholding tax. No Shares shall be issued
pursuant to the exercise of an Option unless such issuance and such exercise
comply with all relevant provisions of law and the requirements of any stock
exchange upon which the Shares may then be listed. Assuming such compliance, for
income tax purposes the Shares shall be considered transferred to Optionee on
the date on which the Option is exercised with respect to such Shares.

 

3.             Optionee’s Representations. If the Shares
purchasable pursuant to the exercise of this Option have not been registered
under the Securities Act or any applicable state laws at the time this Option
is exercised, Optionee shall, if required by the Company, concurrently with the
exercise of all or any portion of this Option, deliver to the Company his or her
Investment Representation Statement in the form attached hereto as Exhibit B
and shall make such other written representations as are deemed necessary or
appropriate by the Company and/or its counsel.

 

4.             Lock-Up Period. Optionee hereby agrees that, if
so requested by the Company or any representative of the underwriters (the “Managing
Underwriter”)  in
connection with any registration of the offering of any securities of the
Company under the Securities Act or any applicable state laws, Optionee shall
not sell or otherwise transfer any Shares or other securities of the Company
during the 180-day period (or such longer period as may be requested in writing
by the Managing Underwriter and agreed to in writing by the Company) (the “Market
Standoff Period”)  following
the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that
such restriction shall apply only to the first registration

 

3

 

statement of the Company to
become effective under the Securities Act that includes securities to be sold
on behalf of the Company to the public in an underwritten public offering under
the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such Market Standoff Period and these restrictions shall be binding on any
transferee of such Shares.

 

5.             Method of Payment. Payment of the Exercise Price
shall be by any of the following, or a combination thereof, at the election of
Optionee:

 

(a)           cash;

 

(b)           check; or

 

(c)           with the consent of the Administrator,

 

(i)            a full recourse promissory note bearing interest (at no
less than such rate as is a market rate of interest and which then precludes
the imputation of interest under the Code), payable upon such terms as may be
prescribed by the Administrator and structured to comply with Applicable Laws;

 

(ii)           surrender of other Shares owned by Optionee which have a
Fair Market Value on the date of surrender equal to the Exercise Price of the
Shares as to which the Option is being exercised;

 

(iii)          surrendered Shares then issuable upon the exercise of the
Option having a Fair Market Value on the date of exercise equal to the
aggregate Exercise Price of the Option or exercised portion thereof;

 

(iv)          property of any kind which constitutes good and valuable
consideration;

 

(v)           delivery of a notice that Optionee has placed a market
sell order with a broker with respect to Shares then issuable upon exercise of
the Option and that the broker has been directed to pay a sufficient portion of
the net proceeds of the sale to the Company in satisfaction of the aggregate
Exercise Price; provided, however, that
payment of such proceeds is then made to the Company upon settlement of such
sale; or

 

(vi)          any combination of the foregoing methods of payment.

 

6.             Restrictions on Exercise. If the issuance of
Shares upon such exercise or if the method of payment for such shares would
constitute a violation of any applicable federal or state securities or other
law or regulation, then the Option may not be exercised. The Company may
require Optionee to make any representation and warranty to the Company as may
be required by any applicable law or regulation before allowing the Option to
be exercised.

 

7.             Termination of Relationship. If Optionee ceases
to be a Service Provider, the exercisability of the Option following
termination of Optionee’s status as a Service Provider shall be governed by the
Termination Period provisions set forth in the Notice of Grant. To the

 

4

 

extent that the Option is
not vested as of the date on which Optionee’s status as a Service Provider
terminates (except as otherwise expressly provided in the Termination Period
provisions set forth in the Notice of Grant), or if Optionee does not exercise
the Option within the time specified in the Termination Period Provisions set
forth in the Notice of Grant, the Option shall terminate.

 

8.             Non-Transferability of Option. This Option may
not be transferred in any manner except by will or by the laws of descent or
distribution. It may be exercised during the lifetime of Optionee only by
Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of Optionee.

 

9.             Term of Option. This Option may be exercised only
within the term set forth in the Notice of Grant.

 

10.           Restrictions on Shares. Optionee hereby agrees that
Shares purchased upon the exercise of the Option shall be subject to such terms
and conditions as the Administrator shall determine in its sole discretion,
including, without limitation, restrictions on the transferability of Shares,
the right of the Company to repurchase Shares, the right of the Company to
require that Shares be transferred in the event of certain transactions, a
right of first refusal in favor of the Company with respect to permitted
transfers of Shares, tag-along rights and take-along rights. Such terms and
conditions may, in the Administrator’s sole discretion, be contained in the
Exercise Notice with respect to the Option or in such other agreement as the
Administrator shall determine and which Optionee hereby agrees to enter into at
the request of the Company.

 

11.           Code Section 409A. Without limiting the generality
of any other provision of this Agreement, Section 23 of the Plan pertaining to
Code Section 409A is hereby explicitly incorporated into this Agreement.

 

12.           No Right to Employment. Nothing in the Plan or in
this Stock Option Agreement shall confer upon Optionee any right to serve or
continue as an Employee, Director or Consultant of the Company or any Parent or
Subsidiary, or shall interfere with or restrict in any way the rights of the
Company or any Parent or Subsidiary, which are hereby expressly reserved, to
discharge Optionee at any time for any reason whatsoever, with or without
Cause, except to the extent expressly provided otherwise in a written
employment agreement between Optionee and the Company or any Parent or
Subsidiary.

 

(Signature
Page Follows)

 

5

 

This Stock Option Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original and all of which shall constitute one document.

 

	
   

  	
  DEMAND
  MEDIA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Rosenblatt

  
	
   

  	
  Name:

  	
  Richard Rosenblatt

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  

 

OPTIONEE ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS EARNED ONLY
BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH THE
ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS STOCK OPTION
AGREEMENT, NOR IN THE COMPANY’S 2006 EQUITY INCENTIVE PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION AS A SERVICE PROVIDER OF THE COMPANY OR ANY PARENT OR
SUBSIDIARY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE
COMPANY’S RIGHT TO TERMINATE OPTIONEE’S SERVICE PROVIDER RELATIONSHIP AT ANY
TIME, WITH OR WITHOUT CAUSE AND WITH OR WITHOUT PRIOR NOTICE.

 

Optionee acknowledges
receipt of a copy of the Plan and represents that he or she is familiar with
the terms and provisions thereof. Optionee hereby accepts this Option subject
to all of the terms and provisions hereof. Optionee has reviewed the Plan and
this Option in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option and fully understands all provisions of
the Option. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Administrator upon any questions
arising under the Plan or this Option. Optionee further agrees to notify the
Company upon any change in the residence address indicated below.

 

	
  Dated:

  	
   

  	
   

  	
  By:

  	
  /s/ Shawn Colo

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Shawn Colo

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  

 

6

 

EXHIBIT A

 

DEMAND
MEDIA, INC.

 

AMENDED
AND RESTATED 2006 EQUITY INCENTIVE PLAN

 

EXERCISE
NOTICE

 

Demand Media, Inc.

Attention: Legal Department

 

1.             Exercise of Option. Effective as of today,
                          ,
                            ,
the undersigned (“Optionee”) hereby elects to exercise Optionee’s option
to purchase
                          
shares of the Common Stock (the “Shares”) of Demand Media, Inc.
(the “Company”) under and pursuant to the Amended and Restated Demand
Media, Inc. 2006 Equity Incentive Plan (as such plan may be amended and/or
restated, the “Plan”) and the Stock Option Agreement dated
                                        (the “Option Agreement”). Capitalized
terms used herein without definition shall have the meanings given in the
Option Agreement.

 

	
  Date of
  Grant:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Number of
  Shares as to which Option is Exercised:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exercise
  Price per Share:

  	
   

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  Total
  Exercise Price:

  	
   

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  Certificate
  to be issued in name of:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Cash
  Payment delivered herewith:

  	
   

  	
  o

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
  Promissory
  note delivered herewith:

  	
   

  	
  o

  	
  $

  

 

Type of
Option:          o Incentive
Stock Option   o Non-Qualified Stock Option

 

2.             Representations of Optionee. Optionee
acknowledges that Optionee has received, read and understood the Plan and the
Option Agreement. Optionee agrees to abide by and be bound by their terms and
conditions.

 

3.             Rights as Stockholder. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to Shares subject to the Option,
notwithstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such stock certificate promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in Section 14
of the Plan. Optionee shall enjoy rights as a stockholder until such time as
Optionee disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal, the Call

 

A-1

 

Right or the Take-Along
Right hereunder (each as defined below). Upon such exercise, Optionee shall
have no further rights as a holder of the Shares so purchased except the right
to receive payment for the Shares so purchased in accordance with the
provisions of this Exercise Notice, and Optionee shall forthwith cause the
certificate(s) evidencing the Shares so purchased to be surrendered to the
Company for transfer or cancellation.

 

4.             Company’s Right of First Refusal. Before any
Shares held by Optionee (including, for purposes of Sections 4, 5 and 6 hereof,
any permitted transferee holding Shares) may be sold, pledged, assigned,
hypothecated, transferred, or otherwise disposed of (including transfer by gift
or operation of law) (collectively, “Transfer” or “Transferred”),
the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section 4
(the “Right of First Refusal”).

 

(a)           Notice of Proposed
Transfer. Optionee shall deliver to the Company a written notice
(the “Notice”) stating: (i) Optionee’s bona fide intention to sell
or otherwise Transfer such Shares; (ii) the name of each proposed
purchaser or other transferee (“Proposed Transferee”); (iii) the
number of Shares to be Transferred to each Proposed Transferee; and (iv) the
bona fide cash price or other consideration for which Optionee proposes to
Transfer the Shares (the “Offered Price”), and Optionee shall offer the
Shares at the Offered Price to the Company or its assignee(s).

 

(b)           Exercise of Right of
First Refusal. Within thirty (30) days after receipt of the Notice,
the Company and/or its assignee(s) may elect in writing to purchase all,
but not less than all, of the Shares proposed to be Transferred to any one or
more of the Proposed Transferees. The purchase price will be determined in
accordance with subsection (c) below.

 

(c)           Purchase Price. The
purchase price (the “ROFR Purchase Price”) for the Shares repurchased
under this Section shall be the Offered Price. If the Offered Price
includes consideration other than cash, the cash equivalent value of the
non-cash consideration shall be determined by the Board in good faith.

 

(d)           Payment. Payment
of the ROFR Purchase Price shall be made, at the option of the Company or its
assignee(s), in cash (by check), by cancellation of all or a portion of any
outstanding indebtedness of Optionee to the Company (or, in the case of
repurchase by an assignee, to the assignee), or by any combination thereof
within thirty (30) days after receipt of the Notice or in the manner and at the
times set forth in the Notice.

 

(e)           Optionee’s Right to
Transfer. If all of the Shares proposed in the Notice to be
transferred to a given Proposed Transferee are not purchased by the Company
and/or its assignee(s) as provided in this Section, then Optionee may sell
or otherwise Transfer such Shares to that Proposed Transferee at the Offered
Price or at a higher price, provided that such sale or other Transfer is
consummated within one hundred twenty (120) days after the date of the Notice
and provided further that any such sale or other Transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that (i) the provisions hereof, including without
limitation the provisions of Sections 4, 5 and 6 hereof, shall continue to
apply to the Shares in the hands of such Proposed Transferee and (ii) that
such Proposed Transferee will not transfer the Shares any other purchaser or
transferee unless such

 

A-2

 

future purchase or
transferee agrees in writing to be bound by the provisions hereof, including
without limitation the provisions of Sections 4, 5 and 6 hereof. If the Shares
described in the Notice are not Transferred to the Proposed Transferee within
such period, a new Notice shall be given to the Company, and the Company and/or
its assignees shall again be offered the Right of First Refusal as provided
herein before any Shares held by the Holder may be sold or otherwise Transferred.

 

(f)            Exception for Certain
Family Transfers. Anything to the contrary contained in this Section 4
notwithstanding, the Transfer of any or all of the Shares during Optionee’s
lifetime or on Optionee’s death by will or intestacy to Optionee’s Immediate
Family or a trust for the benefit of Optionee’s Immediate Family shall be
exempt from the Right of First Refusal. As used herein, “Immediate Family”
shall mean spouse, lineal descendant or antecedent, father, mother, brother or
sister or stepchild (whether or not adopted). In such case, the transferee or
other recipient shall receive and hold the Shares so Transferred subject to the
provisions hereof, including without limitation the provisions of Sections 4, 5
and 6 hereof, and there shall be no further Transfer of such Shares except in
accordance with the terms hereof.

 

(g)           Termination of Right of
First Refusal. The Right of First Refusal shall terminate as to all
Shares upon the Public Trading Date.

 

5.             Company Call Right.

 

(a)           Call Right. If
Optionee ceases to be a Service Provider for any reason, the Company shall have
the right to purchase from Optionee any or all of the Shares then owned by
Optionee (and any or all Shares acquired upon exercise of the Option after the
date on which the Optionee ceases to be a Service Provider) at a per Share
price equal to the Fair Market Value of a Share on the date on which the
Optionee ceases to be a Service Provider (the “Call Right”).

 

(b)           Exercise of Call Right.
The Company may exercise the Call Right by delivering personally or
by registered mail to Optionee (or his transferee or legal representative, as
the case may be), within ninety (90) days after the date on which Optionee
ceases to be a Service Provider (or, in the case of Shares which are acquired
after the date on which Optionee ceases to be a Service Provider, then within
ninety (90) days after the date on which such Shares are acquired), a notice in
writing indicating the Company’s intention to exercise the Call Right and
setting forth a date for closing not later than thirty (30) days from the
mailing of such notice.

 

(c)           Payment. Payment
in respect of the Call Right shall be made, at the option of the Company or its
assignee(s), in cash (by check), by cancellation of all or a portion of any
outstanding indebtedness of the Optionee to the Company, or by any combination
thereof within thirty (30) days after receipt of the Notice or in the manner
and at the times set forth in the Notice.

 

(d)           Closing. The
closing shall take place at the Company’s office. At the closing, Optionee
shall deliver the stock certificate or certificates evidencing the Shares, and
the Company shall deliver the purchase price therefor. At its option, the
Company may elect to make payment for the Shares at a bank selected by the Company.
The Company shall avail itself

 

A-3

 

of this option by a notice
in writing to Optionee stating the name and address of the bank, date of
closing, and waiving the closing at the Company’s office.

 

(e)           Termination of Company
Call Right. If the Company does not elect to exercise the Call Right
conferred above by giving the requisite notice within the time provided in
Subsection (b) above, the Call Right shall terminate. The Call Right shall
terminate as to all Shares upon the Public Trading Date.

 

6.             Company Take-Along Right.

 

(a)           Approved Sale. If
the Board shall deliver a notice to Optionee (a “Sale Event Notice”)
stating that the Board has approved a sale of all or a portion of the Company
(an “Approved Sale”) and specifying the name and address of the proposed
parties to such transaction and the consideration payable in connection
therewith, Optionee shall (i) consent to and raise no objections against
the Approved Sale or the process pursuant to which the Approved Sale was
arranged, (ii) waive any dissenter’s rights and other similar rights, and (iii) if
the Approved Sale is structured as a sale of securities, agree to sell Optionee’s
Shares on the terms and conditions of the Approved Sale which terms and conditions
shall treat all stockholders of the Company equally (on a pro rata basis),
except that shares having a liquidation preference may receive an amount of
consideration equal to such liquidation preference in addition to the
consideration being paid to the holders of shares not having a liquidation
preference. Notwithstanding the foregoing, the sale of the Shares in an
Approved Sale shall be further subject to the terms of the Plan, including
without limitation Section 14 of the Plan. Optionee will take all
necessary and desirable lawful actions as directed by the Board and the
stockholders of the Company approving the Approved Sale in connection with the
consummation of any Approved Sale, including without limitation, the execution
of such agreements and such instruments and other actions reasonably necessary
to (A) provide the representations, warranties, indemnities, covenants,
conditions, non-compete agreements, escrow agreements and other provisions and
agreements relating to such Approved Sale and, (B) effectuate the
allocation and distribution of the aggregate consideration upon the Approved
Sale, provided, that this Section 6
shall not require Optionee to indemnify the purchaser in any Approved Sale for
breaches of the representations, warranties or covenants of the Company or any
other stockholder, except to the extent (x) Optionee is not required to
incur more than its pro rata share of such indemnity obligation (based on the
total consideration to be received by all stockholders that are similarly
situated and hold the same class or series of capital stock) and (y) such
indemnity obligation is provided for and limited to a post-closing escrow or
holdback arrangement of cash or stock paid in connection with the Approved
Sale.

 

(b)           Costs. Optionee
will bear Optionee’s pro rata share
(based upon the amount of consideration to be received) of the reasonable costs
of any sale of Shares pursuant to an Approved Sale to the extent such costs are
incurred for the benefit of all selling stockholders of the Company and are not
otherwise paid by the Company or the acquiring party. Costs incurred by
Optionee on Optionee’s own behalf will not be considered costs of the
transaction hereunder.

 

(c)           Share Delivery. At
the consummation of the Approved Sale, Optionee shall, if applicable, deliver
certificates representing the Shares to be transferred, duly endorsed

 

A-4

 

for transfer and accompanied
by all requisite stock transfer taxes, if any, and the Shares to be transferred
shall be free and clear of any liens, claims or encumbrances (other than
restrictions imposed by this Agreement) and Optionee shall so represent and
warrant.

 

(d)           Termination of Company
Take-Along Right. The Take-Along Right shall terminate as to all
Shares upon the Public Trading Date.

 

7.             Tax Consultation. Optionee understands that
Optionee may suffer adverse tax consequences as a result of Optionee’s purchase
or disposition of the Shares. Optionee represents that Optionee has consulted
with any tax consultants Optionee deems advisable in connection with the
purchase or disposition of the Shares and that Optionee is not relying on the
Company for any tax advice.

 

8.             Lock-Up Period. Optionee hereby agrees that if so
requested by the Company or any representative of the underwriters (the “Managing
Underwriter”) in connection with any registration of the offering of any
securities of the Company under the Securities Act or any applicable state
laws, Optionee shall not sell or otherwise transfer any Shares or other
securities of the Company during the 180-day period (or such longer period as
may be requested in writing by the Managing Underwriter and agreed to in
writing by the Company) (the “Market Standoff Period”) following the
effective date of a registration statement of the Company filed under the
Securities Act; provided, that
such restriction shall apply only to the first registration statement of the
Company to become effective under the Securities Act that includes securities
to be sold on behalf of the Company to the public in an underwritten public
offering under the Securities Act. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period.

 

9.             Restrictive Legends and Stop-Transfer Orders.

 

(a)           Legends. Optionee understands and agrees that the
Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing
ownership of the Shares together with any other legends that may be required by
state or federal securities laws:

 

THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR
ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER THE ACT AND SUCH LAWS OR, IN THE OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR
TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

 

THE SHARES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF
FIRST REFUSAL OPTIONS HELD BY THE

 

A-5

 

ISSUER OR ITS ASSIGNEE(S) AS
SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF
THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF
THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING
ON TRANSFEREES OF THESE SHARES.

 

(b)           Stop-Transfer Notices. Optionee agrees that, in
order to ensure compliance with the restrictions referred to herein, the
Company may issue appropriate “stop transfer” instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.

 

(c)           Refusal to Transfer. The Company shall not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement
or (ii) to treat as owner of such Shares or to accord the right to vote or
pay dividends to any purchaser or other transferee to whom such Shares shall
have been so transferred.

 

10.           Successors and Assigns. The Company may assign any
of its rights under this Agreement to single or multiple assignees, and this
Agreement shall inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer herein set forth, this
Agreement shall be binding upon Optionee and his or her heirs, executors,
administrators, successors and assigns.

 

11.           Interpretation. Any dispute regarding the
interpretation of this Agreement shall be submitted by Optionee or by the
Company forthwith to the Administrator, which shall review such dispute at its
next regular meeting. The resolution of such a dispute by the Administrator
shall be final and binding on the Company and on Optionee.

 

12.           Governing Law; Severability. This Agreement shall
be governed by and construed in accordance with the laws of the State of
California excluding that body of law pertaining to conflicts of law. Should
any provision of this Agreement be determined by a court of law to be illegal
or unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable.

 

13.           Notices. Any notice required or permitted hereunder
shall be given in writing and shall be deemed effectively given upon personal
delivery or upon deposit in the United States mail by certified mail, with
postage and fees prepaid, addressed to the other party at its address as shown
below beneath its signature, or to such other address as such party may
designate in writing from time to time to the other party.

 

14.           Further Instruments. The parties agree to execute
such further instruments and to take such further action as may be reasonably
necessary to carry out the purposes and intent of this Agreement.

 

15.           Delivery of Payment. Optionee herewith delivers to
the Company the full Exercise Price for the Shares, as well as any applicable
withholding tax.

 

A-6

 

16.           Entire Agreement. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan, the Option Agreement
and the Investment Representation Statement constitute the entire agreement of
the parties and supersede in their entirety all prior undertakings and
agreements of the Company and Optionee with respect to the subject matter
hereof.

 

	
  Accepted
  by:

  	
   

  	
  Submitted by:

  
	
   

  	
   

  	
   

  
	
  DEMAND MEDIA, INC.

  	
   

  	
  OPTIONEE

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Street

  
						

 

 

A-7

 

EXHIBIT B

 

INVESTMENT
REPRESENTATION STATEMENT

 

	
  OPTIONEE

  	
  :

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  COMPANY

  	
  :

  	
   

  	
  Demand Media, Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
  SECURITY

  	
  :

  	
   

  	
  Common Stock

  
	
   

  	
   

  	
   

  	
   

  
	
  AMOUNT

  	
  :

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  DATE

  	
  :

  	
   

  	
   

  

 

In connection with the
purchase of the above-listed shares of Common Stock (the “Securities”)  of Demand Media, Inc. (the “Company”),  the undersigned (the “Optionee”)  represents to the Company the
following:

 

(a)           Optionee is aware of the Company’s business affairs and
financial condition and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities.
Optionee is acquiring these Securities for investment for Optionee’s own
account only and not with a view to, or for resale in connection with, any “distribution”
thereof within the meaning of the Securities Act of 1933, as amended (the “Securities
Act”).

 

(b)           Optionee acknowledges and understands that the Securities
constitute “restricted securities” under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee’s investment intent as expressed herein. Optionee
understands that the Securities must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company and any other legend required under applicable
state securities laws.

 

(c)           Optionee is familiar with the provisions of Rule 701
and Rule 144, each promulgated under the Securities Act, which, in
substance, permit limited public resale of “restricted securities” acquired,
directly or indirectly from the issuer thereof, in a non-public offering
subject to the satisfaction of certain conditions. Rule 701 provides that
if the issuer qualifies under Rule 701 at the time of the grant of the
Option to Optionee, the exercise will be exempt from registration under the
Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15 (d) of the Securities Exchange Act
of 1934, ninety

 

B-1

 

(90) days thereafter (or
such longer period as any market stand-off agreement may require) the
Securities exempt under Rule 701 may be resold, subject to the
satisfaction of certain of the conditions specified by Rule 144,
including, in the case of an affiliate, (i) the resale being made through
a broker in an unsolicited “broker’s transaction” or in transactions directly
with a market maker (as said term is defined under the Securities Exchange Act
of 1934), (ii) the availability of certain public information about the
Company, (iii) the amount of Securities being sold during any three (3) month
period not exceeding the limitations specified in Rule 144(e), and (iv) the
timely filing of a Form 144, if applicable.

 

In the event that the
Company does not qualify under Rule 701 at the time of grant of the
Option, then the Securities may be resold beginning ninety (90) days after the
Company becomes subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934 in certain limited circumstances subject to
the provisions of Rule 144, which requires the resale to occur not less
than six months after the later of the date the Securities were sold by the
Company or the date the Securities were sold by an affiliate of the Company,
within the meaning of Rule 144 and the availability of certain public
information about the Company (subject to certain exceptions); and, in the case
of a sale of the Securities by an affiliate, the satisfaction of the conditions
set forth in sections (i), (ii), (iii) and (iv) of the paragraph
immediately above.

 

(d)           Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact
that Rules 144 and 701 are not exclusive, the Staff of the Securities and
Exchange Commission has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rules 144 or 701 will have a substantial burden of proof
in establishing that an exemption from registration is available for such
offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk. Optionee understands
that no assurances can be given that any such other registration exemption will
be available in such event.

 

(e)           Optionee understands and acknowledges that the Company
will rely upon the accuracy and truth of the foregoing representations and
Optionee hereby consents to such reliance.

 

	
   

  	
   

  	
   

  	
  Signature of Optionee:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  
						

 

B-2Exhibit
10.22

 

DEMAND
MEDIA, INC.

 

AMENDED
AND RESTATED 2006 EQUITY INCENTIVE PLAN

 

STOCK
OPTION AGREEMENT

 

Demand Media, Inc. (the “Company”),  pursuant to the Amended and
Restated Demand Media, Inc. 2006 Equity Incentive Plan (as such plan may be
amended and/or restated, the “Plan”),  hereby
grants to Optionee listed below (“Optionee”),  an option to purchase the number of shares
of the Company’s Common Stock (“Shares”)  set
forth below, subject to the terms and conditions of the Plan and this Stock
Option Agreement. Unless otherwise defined herein, the terms defined in the
Plan shall have the same defined meanings in this Stock Option Agreement.

 

I.              NOTICE OF STOCK OPTION GRANT

 

	
  Optionee:

  	
  Larry Fitzgibbon

  
	
   

  	
   

  
	
  Date of
  Stock Option Agreement:

  	
  June
        , 2009

  
	
   

  	
   

  
	
  Date of
  Grant:

  	
  June 9, 2009

  
	
   

  	
   

  
	
  Vesting
  Commencement Date:

  	
  April 1, 2009

  
	
   

  	
   

  
	
  Exercise
  Price per Share:

  	
  $4.75

  
	
   

  	
   

  
	
  Total
  Number of Shares Granted:

  	
  250,000 Shares

  
	
   

  	
   

  
	
  Total
  Exercise Price:

  	
  $1,187,500

  
	
   

  	
   

  
	
  Term/Expiration
  Date:

  	
  June 8, 2019

  

 

	
  Type of
  Option:      o Incentive
  Stock Option

  	
  x
  Non-Qualified Stock Option

  

 

Vesting
Schedule:               This Option
shall vest and become exercisable one-forty-eighth (1/48th) of the Shares
subject hereto on each monthly anniversary of the Vesting Commencement Date,
subject to Optionee’s continued status as a Service Provider through each such
vesting date, such that all Shares subject to this Option shall be vested and
exercisable (subject to Optionee’s continued status as a Service Provider) as
of the fourth anniversary of the Vesting Commencement Date, provided, however, that if a Change of
Control shall occur prior to termination of Optionee’s status as a Service
Provider and either (x) Optionee remains a Service Provider through the three
hundred and eightieth (380th) day following the Change of Control or (y) Optionee’s employment is
terminated by the Company without Cause prior to the three hundred and
eightieth (380th) day following
the of the Change of Control, then the Option shall vest in full and become
exercisable with respect to all Shares subject hereto (to the extent not
already vested and exercisable) on the first to occur of the three hundred and
eightieth (380th) day following
the of the Change of Control or termination of Optionee’s employment by the
Company without Cause following consummation of a Change of Control and, provided, further, that if Optionee’s
employment with the Company is terminated by the Company without Cause upon
consummation of or within 90 days prior to the occurrence of a Change of
Control and such termination was at the request of a third party that has taken
steps reasonably calculated to effect a Change of Control or such termination
otherwise arose in connection with a Change of

 

 

Control, as determined in
the reasonable discretion of the Administrator, then the Option shall vest in
full and become exercisable with respect to all Shares subject hereto upon the
consummation of such Change of Control.

 

Termination
Period: Following a termination of Optionee’s status as a
Service Provider, the Option shall remain outstanding and exercisable (to the
extent vested) for a period of thirty (30) days following such termination, provided that (i) if Optionee’s employment
with the Company is terminated without Cause prior to both a Change of Control
and the fourth anniversary of the Vesting Commencement Date, the Option shall
remain outstanding, eligible to vest in accordance with the last proviso in the
Vesting Schedule above, and exercisable (to the extent vested) for a period of
one hundred twenty (120) days following such termination, (ii) if Optionee’s
status as a Service Provider is terminated for Cause at any time, the Option
shall terminate and be forfeited in full as of the start of business on the
date of Optionee’s termination, without regard to the Option’s vested status,
or (iii) if Optionee’s status as a Service Provider is terminated due to
Optionee’s death or total and permanent disability (within the meaning of
Section 22(3)(3) of the Code) at any time, the Option shall remain outstanding
and exercisable (to the extent vested) for a period of six months following
such termination (and, in the case of Optionee’s death, shall be exercisable by
Optionee’s estate or by a person who acquires the right to exercise the Option
by bequest or inheritance).

 

Notwithstanding the
foregoing, (x) except as expressly provided in the Vesting Schedule above with
respect to a Change of Control following a termination of Optionee’s employment
without Cause, in no event shall any portion of the Option vest following
termination of Optionee’s status as a Service Provider, and (y) in no event
shall any portion of the Option be exercisable after the Term/Expiration Date
stated above.

 

II.            AGREEMENT

 

1.             Grant of Option. The Company hereby grants to
Optionee an Option to purchase the number of Shares set forth in the Notice of
Grant, at the exercise price per Share set forth in the Notice of Grant (the “Exercise
Price”).  Notwithstanding
anything to the contrary anywhere else in this Stock Option Agreement, the Option
is subject to the terms, definitions and provisions of the Plan adopted by the
Company, which is incorporated herein by reference.

 

If designated in the Notice
of Grant as an Incentive Stock Option, this Option is intended to qualify as an
Incentive Stock Option as defined in Section 422 of the Code; provided, however, that to the extent that
the aggregate Fair Market Value of stock with respect to which Incentive Stock
Options (within the meaning of Code Section 422, but without regard to Code
Section 422(d)), including the Option, are exercisable for the first time by
Optionee during any calendar year, exceeds $ 100,000, such options shall be
treated as not qualifying under Code Section 422, but rather shall be treated
as Non-Qualified Stock Options to the extent required by Code Section 422. The
rule set forth in the preceding sentence shall be applied by taking options
into account in the order in which they were granted. For purposes of these
rules, the Fair Market Value of stock shall be determined as of the time the
option with respect to such stock is granted.

 

2.             Exercise of Option. This Option is exercisable as
follows:

 

2

 

(a)           Right to Exercise.

 

(i)            This Option shall be exercisable cumulatively according
to the Vesting Schedule set forth in the Notice of Grant. For purposes of this
Stock Option Agreement, Shares subject to this Option shall vest based on
Optionee’s continued status as a Service Provider, except as otherwise
expressly provided in the Vesting Schedule set forth in the Notice of Grant.

 

(ii)           This Option may not be exercised for a fraction of a
Share.

 

(iii)          In the event of Optionee’s death, disability or other
termination of Optionee’s status as a Service Provider, the exercisability of
the Option is governed by Section 7 below and the Termination Provisions set
forth in the Notice of Grant.

 

(iv)          In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in the Notice of Grant.

 

(b)           Method of Exercise. This Option shall be
exercisable by written Notice (substantially in the form attached as Exhibit
A). The Notice must state the number of Shares for which the Option is
being exercised, and such other representations and agreements with respect to
such Shares as may be required by the Company pursuant to the provisions of the
Plan. The Notice must be signed by Optionee and shall be delivered in person or
by certified mail to the Secretary of the Company. The Notice must be
accompanied by payment of the Exercise Price plus payment of any
applicable withholding tax. This Option shall be deemed to be exercised upon
receipt by the Company of such written Notice accompanied by the Exercise Price
and payment of any applicable withholding tax. No Shares shall be issued
pursuant to the exercise of an Option unless such issuance and such exercise
comply with all relevant provisions of law and the requirements of any stock
exchange upon which the Shares may then be listed. Assuming such compliance,
for income tax purposes the Shares shall be considered transferred to Optionee
on the date on which the Option is exercised with respect to such Shares.

 

3.             Optionee’s Representations. If the Shares
purchasable pursuant to the exercise of this Option have not been registered
under the Securities Act or any applicable state laws at the time this Option
is exercised, Optionee shall, if required by the Company, concurrently with the
exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit
B and shall make such other written representations as are deemed necessary
or appropriate by the Company and/or its counsel.

 

4.             Lock-Up Period. Optionee hereby agrees that, if
so requested by the Company or any representative of the underwriters (the “Managing
Underwriter”)  in
connection with any registration of the offering of any securities of the
Company under the Securities Act or any applicable state laws, Optionee shall not
sell or otherwise transfer any Shares or other securities of the Company during
the 180-day period (or such longer period as may be requested in writing by the
Managing Underwriter and agreed to in writing by the Company) (the “Market
Standoff Period”)  following
the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that
such restriction shall apply only to the first registration

 

3

 

statement of the Company to
become effective under the Securities Act that includes securities to be sold
on behalf of the Company to the public in an underwritten public offering under
the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such Market Standoff Period and these restrictions shall be binding on any
transferee of such Shares.

 

5.             Method of Payment. Payment of the Exercise Price
shall be by any of the following, or a combination thereof, at the election of
Optionee:

 

(a)           cash;

 

(b)           check; or

 

(c)           with the consent of the Administrator,

 

(i)            a full recourse promissory note bearing interest (at no
less than such rate as is a market rate of interest and which then precludes
the imputation of interest under the Code), payable upon such terms as may be
prescribed by the Administrator and structured to comply with Applicable Laws;

 

(ii)           surrender of other Shares owned by Optionee which have a
Fair Market Value on the date of surrender equal to the Exercise Price of the
Shares as to which the Option is being exercised;

 

(iii)          surrendered Shares then issuable upon the exercise of the
Option having a Fair Market Value on the date of exercise equal to the
aggregate Exercise Price of the Option or exercised portion thereof;

 

(iv)          property of any kind which constitutes good and valuable
consideration;

 

(v)           delivery of a notice that Optionee has placed a market
sell order with a broker with respect to Shares then issuable upon exercise of
the Option and that the broker has been directed to pay a sufficient portion of
the net proceeds of the sale to the Company in satisfaction of the aggregate
Exercise Price; provided, however, that
payment of such proceeds is then made to the Company upon settlement of such
sale; or

 

(vi)          any combination of the foregoing methods of payment.

 

6.             Restrictions on Exercise. If the issuance of
Shares upon such exercise or if the method of payment for such shares would
constitute a violation of any applicable federal or state securities or other
law or regulation, then the Option may not be exercised. The Company may
require Optionee to make any representation and warranty to the Company as may
be required by any applicable law or regulation before allowing the Option to
be exercised.

 

7.             Termination of Relationship. If Optionee ceases
to be a Service Provider, the exercisability of the Option following
termination of Optionee’s status as a Service Provider shall be governed by the
Termination Period provisions set forth in the Notice of Grant. To the

 

4

 

extent that the Option is
not vested as of the date on which Optionee’s status as a Service Provider
terminates (except as otherwise expressly provided in the Termination Period
provisions set forth in the Notice of Grant), or if Optionee does not exercise
the Option within the time specified in the Termination Period Provisions set
forth in the Notice of Grant, the Option shall terminate.

 

8.             Non-Transferability of Option. This Option may
not be transferred in any manner except by will or by the laws of descent or
distribution. It may be exercised during the lifetime of Optionee only by
Optionee. The terms of this Option shall be binding upon the executors, administrators,
heirs, successors and assigns of Optionee.

 

9.             Term of Option. This Option may be exercised only
within the term set forth in the Notice of Grant.

 

10.           Restrictions on Shares. Optionee hereby agrees that
Shares purchased upon the exercise of the Option shall be subject to such terms
and conditions as the Administrator shall determine in its sole discretion,
including, without limitation, restrictions on the transferability of Shares,
the right of the Company to repurchase Shares, the right of the Company to
require that Shares be transferred in the event of certain transactions, a
right of first refusal in favor of the Company with respect to permitted
transfers of Shares, tag-along rights and take-along rights. Such terms and
conditions may, in the Administrator’s sole discretion, be contained in the
Exercise Notice with respect to the Option or in such other agreement as the
Administrator shall determine and which Optionee hereby agrees to enter into at
the request of the Company.

 

11.           Code Section 409A. Without limiting the generality
of any other provision of this Agreement, Section 23 of the Plan pertaining to
Code Section 409A is hereby explicitly incorporated into this Agreement.

 

12.           No Right to Employment. Nothing in the Plan or in
this Stock Option Agreement shall confer upon Optionee any right to serve or
continue as an Employee, Director or Consultant of the Company or any Parent or
Subsidiary, or shall interfere with or restrict in any way the rights of the
Company or any Parent or Subsidiary, which are hereby expressly reserved, to
discharge Optionee at any time for any reason whatsoever, with or without
Cause, except to the extent expressly provided otherwise in a written
employment agreement between Optionee and the Company or any Parent or
Subsidiary.

 

(Signature
Page Follows)

 

5

 

This Stock Option Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original and all of which shall constitute one document.

 

	
   

  	
  DEMAND
  MEDIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Rosenblatt

  
	
   

  	
  Name:

  	
  Richard Rosenblatt

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  

 

OPTIONEE ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS EARNED ONLY
BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH THE
ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS STOCK OPTION
AGREEMENT, NOR IN THE COMPANY’S 2006 EQUITY INCENTIVE PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH
RESPECT TO CONTINUATION AS A SERVICE PROVIDER OF THE COMPANY OR ANY PARENT OR
SUBSIDIARY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE
COMPANY’S RIGHT TO TERMINATE OPTIONEE’S SERVICE PROVIDER RELATIONSHIP AT ANY
TIME, WITH OR WITHOUT CAUSE AND WITH OR WITHOUT PRIOR NOTICE.

 

Optionee acknowledges
receipt of a copy of the Plan and represents that he or she is familiar with
the terms and provisions thereof. Optionee hereby accepts this Option subject
to all of the terms and provisions hereof. Optionee has reviewed the Plan and
this Option in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option and fully understands all provisions of
the Option. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Administrator upon any questions
arising under the Plan or this Option. Optionee further agrees to notify the Company
upon any change in the residence address indicated below.

 

	
  Dated:

  	
  6/26/09

  	
   

  	
  By:

  	
  /s/ Larry Fitzgibbon

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Larry Fitzgibbon

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  

 

6

 

EXHIBIT
A

 

DEMAND
MEDIA, INC.

 

AMENDED
AND RESTATED 2006 EQUITY INCENTIVE PLAN

 

EXERCISE
NOTICE

 

Demand Media, Inc.

Attention: Legal Department

 

1.             Exercise of Option. Effective as of today,
                          ,
                            ,
the undersigned (“Optionee”) hereby elects to exercise Optionee’s option
to purchase
                          
shares of the Common Stock (the “Shares”) of Demand Media, Inc. (the “Company”)
under and pursuant to the Amended and Restated Demand Media, Inc. 2006 Equity
Incentive Plan (as such plan may be amended and/or restated, the “Plan”)
and the Stock Option Agreement dated
                                      
(the “Option Agreement”). Capitalized terms used herein without
definition shall have the meanings given in the Option Agreement.

 

	
  Date of
  Grant:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Number of
  Shares as to which Option is Exercised:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exercise
  Price per Share:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  Total
  Exercise Price:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  Certificate
  to be issued in name of:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Cash
  Payment delivered herewith:

  	
  o

  	
  $

  
	
   

  	
   

  	
   

  
	
  Promissory
  note delivered herewith:

  	
  o

  	
  $

  

 

	
  Type of
  Option:        o Incentive
  Stock Option

  	
  o Non-Qualified Stock
  Option

  

 

2.             Representations of Optionee. Optionee
acknowledges that Optionee has received, read and understood the Plan and the
Option Agreement. Optionee agrees to abide by and be bound by their terms and
conditions.

 

3.             Rights as Stockholder. Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to Shares subject to the Option,
notwithstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such stock certificate promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 14 of the Plan. Optionee shall enjoy rights as a stockholder until such
time as Optionee disposes of the Shares or the Company and/or its assignee(s)
exercises the Right of First Refusal, the Call

 

A-1

 

Right or the Take-Along Right
hereunder (each as defined below). Upon such exercise, Optionee shall have no
further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions
of this Exercise Notice, and Optionee shall forthwith cause the certificate(s)
evidencing the Shares so purchased to be surrendered to the Company for
transfer or cancellation.

 

4.             Company’s Right of First Refusal. Before any
Shares held by Optionee (including, for purposes of Sections 4, 5 and 6 hereof,
any permitted transferee holding Shares) may be sold, pledged, assigned,
hypothecated, transferred, or otherwise disposed of (including transfer by gift
or operation of law) (collectively, “Transfer” or “Transferred”),
the Company or its assignee(s) shall have a right of first refusal to purchase
the Shares on the terms and conditions set forth in this Section 4 (the “Right
of First Refusal”).

 

(a)           Notice of Proposed
Transfer. Optionee shall deliver to the Company a written notice
(the “Notice”) stating: (i) Optionee’s bona fide intention to sell or
otherwise Transfer such Shares; (ii) the name of each proposed purchaser or
other transferee (“Proposed Transferee”); (iii) the number of Shares to
be Transferred to each Proposed Transferee; and (iv) the bona fide cash price
or other consideration for which Optionee proposes to Transfer the Shares (the “Offered
Price”), and Optionee shall offer the Shares at the Offered Price to the
Company or its assignee(s).

 

(b)           Exercise of Right of
First Refusal. Within thirty (30) days after receipt of the Notice,
the Company and/or its assignee(s) may elect in writing to purchase all, but
not less than all, of the Shares proposed to be Transferred to any one or more
of the Proposed Transferees. The purchase price will be determined in
accordance with subsection (c) below.

 

(c)           Purchase Price. The
purchase price (the “ROFR Purchase Price”) for the Shares repurchased
under this Section shall be the Offered Price. If the Offered Price includes
consideration other than cash, the cash equivalent value of the non-cash
consideration shall be determined by the Board in good faith.

 

(d)           Payment. Payment
of the ROFR Purchase Price shall be made, at the option of the Company or its
assignee(s), in cash (by check), by cancellation of all or a portion of any
outstanding indebtedness of Optionee to the Company (or, in the case of
repurchase by an assignee, to the assignee), or by any combination thereof
within thirty (30) days after receipt of the Notice or in the manner and at the
times set forth in the Notice.

 

(e)           Optionee’s Right to
Transfer. If all of the Shares proposed in the Notice to be
transferred to a given Proposed Transferee are not purchased by the Company
and/or its assignee(s) as provided in this Section, then Optionee may sell or
otherwise Transfer such Shares to that Proposed Transferee at the Offered Price
or at a higher price, provided that such sale or other Transfer is consummated
within one hundred twenty (120) days after the date of the Notice and provided
further that any such sale or other Transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
(i) the provisions hereof, including without limitation the provisions of
Sections 4, 5 and 6 hereof, shall continue to apply to the Shares in the hands
of such Proposed Transferee and (ii) that such Proposed Transferee will not
transfer the Shares any other purchaser or transferee unless such

 

A-2

 

future purchase or
transferee agrees in writing to be bound by the provisions hereof, including
without limitation the provisions of Sections 4, 5 and 6 hereof. If the Shares
described in the Notice are not Transferred to the Proposed Transferee within
such period, a new Notice shall be given to the Company, and the Company and/or
its assignees shall again be offered the Right of First Refusal as provided
herein before any Shares held by the Holder may be sold or otherwise
Transferred.

 

(f)            Exception for Certain
Family Transfers. Anything to the contrary contained in this Section
4 notwithstanding, the Transfer of any or all of the Shares during Optionee’s
lifetime or on Optionee’s death by will or intestacy to Optionee’s Immediate
Family or a trust for the benefit of Optionee’s Immediate Family shall be
exempt from the Right of First Refusal. As used herein, “Immediate Family”
shall mean spouse, lineal descendant or antecedent, father, mother, brother or
sister or stepchild (whether or not adopted). In such case, the transferee or
other recipient shall receive and hold the Shares so Transferred subject to the
provisions hereof, including without limitation the provisions of Sections 4, 5
and 6 hereof, and there shall be no further Transfer of such Shares except in
accordance with the terms hereof.

 

(g)           Termination of Right of
First Refusal. The Right of First Refusal shall terminate as to all
Shares upon the Public Trading Date.

 

5.             Company Call Right.

 

(a)           Call Right. If
Optionee ceases to be a Service Provider for any reason, the Company shall have
the right to purchase from Optionee any or all of the Shares then owned by
Optionee (and any or all Shares acquired upon exercise of the Option after the
date on which the Optionee ceases to be a Service Provider) at a per Share
price equal to the Fair Market Value of a Share on the date on which the
Optionee ceases to be a Service Provider (the “Call Right”).

 

(b)           Exercise of Call Right.
The Company may exercise the Call Right by delivering personally or
by registered mail to Optionee (or his transferee or legal representative, as
the case may be), within ninety (90) days after the date on which Optionee
ceases to be a Service Provider (or, in the case of Shares which are acquired
after the date on which Optionee ceases to be a Service Provider, then within
ninety (90) days after the date on which such Shares are acquired), a notice in
writing indicating the Company’s intention to exercise the Call Right and
setting forth a date for closing not later than thirty (30) days from the
mailing of such notice.

 

(c)           Payment. Payment
in respect of the Call Right shall be made, at the option of the Company or its
assignee(s), in cash (by check), by cancellation of all or a portion of any
outstanding indebtedness of the Optionee to the Company, or by any combination
thereof within thirty (30) days after receipt of the Notice or in the manner
and at the times set forth in the Notice.

 

(d)           Closing. The
closing shall take place at the Company’s office. At the closing, Optionee
shall deliver the stock certificate or certificates evidencing the Shares, and
the Company shall deliver the purchase price therefor. At its option, the
Company may elect to make payment for the Shares at a bank selected by the
Company. The Company shall avail itself

 

A-3

 

of this option by a notice
in writing to Optionee stating the name and address of the bank, date of
closing, and waiving the closing at the Company’s office.

 

(e)           Termination of Company
Call Right. If the Company does not elect to exercise the Call Right
conferred above by giving the requisite notice within the time provided in
Subsection (b) above, the Call Right shall terminate. The Call Right shall
terminate as to all Shares upon the Public Trading Date.

 

6.             Company Take-Along Right.

 

(a)           Approved Sale. If
the Board shall deliver a notice to Optionee (a “Sale Event Notice”)
stating that the Board has approved a sale of all or a portion of the Company
(an “Approved Sale”) and specifying the name and address of the proposed
parties to such transaction and the consideration payable in connection
therewith, Optionee shall (i) consent to and raise no objections against the
Approved Sale or the process pursuant to which the Approved Sale was arranged,
(ii) waive any dissenter’s rights and other similar rights, and (iii) if the
Approved Sale is structured as a sale of securities, agree to sell Optionee’s
Shares on the terms and conditions of the Approved Sale which terms and
conditions shall treat all stockholders of the Company equally (on a pro rata
basis), except that shares having a liquidation preference may receive an
amount of consideration equal to such liquidation preference in addition to the
consideration being paid to the holders of shares not having a liquidation
preference. Notwithstanding the foregoing, the sale of the Shares in an
Approved Sale shall be further subject to the terms of the Plan, including
without limitation Section 14 of the Plan. Optionee will take all necessary and
desirable lawful actions as directed by the Board and the stockholders of the
Company approving the Approved Sale in connection with the consummation of any
Approved Sale, including without limitation, the execution of such agreements
and such instruments and other actions reasonably necessary to (A) provide the
representations, warranties, indemnities, covenants, conditions, non-compete
agreements, escrow agreements and other provisions and agreements relating to
such Approved Sale and, (B) effectuate the allocation and distribution of the
aggregate consideration upon the Approved Sale, provided, that this Section 6 shall not require Optionee to
indemnify the purchaser in any Approved Sale for breaches of the
representations, warranties or covenants of the Company or any other
stockholder, except to the extent (x) Optionee is not required to incur more
than its pro rata share of such indemnity obligation (based on the total
consideration to be received by all stockholders that are similarly situated and
hold the same class or series of capital stock) and (y) such indemnity
obligation is provided for and limited to a post-closing escrow or holdback
arrangement of cash or stock paid in connection with the Approved Sale.

 

(b)           Costs. Optionee
will bear Optionee’s pro rata share
(based upon the amount of consideration to be received) of the reasonable costs
of any sale of Shares pursuant to an Approved Sale to the extent such costs are
incurred for the benefit of all selling stockholders of the Company and are not
otherwise paid by the Company or the acquiring party. Costs incurred by
Optionee on Optionee’s own behalf will not be considered costs of the
transaction hereunder.

 

(c)           Share Delivery. At
the consummation of the Approved Sale, Optionee shall, if applicable, deliver
certificates representing the Shares to be transferred, duly endorsed

 

A-4

 

for transfer and accompanied
by all requisite stock transfer taxes, if any, and the Shares to be transferred
shall be free and clear of any liens, claims or encumbrances (other than
restrictions imposed by this Agreement) and Optionee shall so represent and
warrant.

 

(d)           Termination of Company
Take-Along Right. The Take-Along Right shall terminate as to all
Shares upon the Public Trading Date.

 

7.             Tax Consultation. Optionee understands that
Optionee may suffer adverse tax consequences as a result of Optionee’s purchase
or disposition of the Shares. Optionee represents that Optionee has consulted
with any tax consultants Optionee deems advisable in connection with the
purchase or disposition of the Shares and that Optionee is not relying on the
Company for any tax advice.

 

8.             Lock-Up Period. Optionee hereby agrees that if so
requested by the Company or any representative of the underwriters (the “Managing
Underwriter”) in connection with any registration of the offering of any
securities of the Company under the Securities Act or any applicable state
laws, Optionee shall not sell or otherwise transfer any Shares or other securities
of the Company during the 180-day period (or such longer period as may be
requested in writing by the Managing Underwriter and agreed to in writing by
the Company) (the “Market Standoff Period”) following the effective date
of a registration statement of the Company filed under the Securities Act; provided, that such restriction shall
apply only to the first registration statement of the Company to become
effective under the Securities Act that includes securities to be sold on
behalf of the Company to the public in an underwritten public offering under
the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such Market Standoff Period.

 

9.             Restrictive Legends and Stop-Transfer Orders.

 

(a)           Legends. Optionee understands and agrees that the
Company shall cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing ownership
of the Shares together with any other legends that may be required by state or
federal securities laws:

 

THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR
ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT
AND SUCH LAWS OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY
TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION
IS IN COMPLIANCE THEREWITH.

 

THE SHARES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF
FIRST REFUSAL OPTIONS HELD BY THE

 

A-5

 

ISSUER OR ITS ASSIGNEE(S) AS
SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF
THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE
ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
TRANSFEREES OF THESE SHARES.

 

(b)           Stop-Transfer Notices. Optionee agrees that, in
order to ensure compliance with the restrictions referred to herein, the
Company may issue appropriate “stop transfer” instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.

 

(c)           Refusal to Transfer. The Company shall not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement
or (ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred.

 

10.           Successors and Assigns. The Company may assign any
of its rights under this Agreement to single or multiple assignees, and this
Agreement shall inure to the benefit of the successors and assigns of the
Company. Subject to the restrictions on transfer herein set forth, this
Agreement shall be binding upon Optionee and his or her heirs, executors,
administrators, successors and assigns.

 

11.           Interpretation. Any dispute regarding the
interpretation of this Agreement shall be submitted by Optionee or by the
Company forthwith to the Administrator, which shall review such dispute at its
next regular meeting. The resolution of such a dispute by the Administrator
shall be final and binding on the Company and on Optionee.

 

12.           Governing Law; Severability. This Agreement shall
be governed by and construed in accordance with the laws of the State of
California excluding that body of law pertaining to conflicts of law. Should
any provision of this Agreement be determined by a court of law to be illegal
or unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable.

 

13.           Notices. Any notice required or permitted hereunder
shall be given in writing and shall be deemed effectively given upon personal
delivery or upon deposit in the United States mail by certified mail, with
postage and fees prepaid, addressed to the other party at its address as shown
below beneath its signature, or to such other address as such party may
designate in writing from time to time to the other party.

 

14.           Further Instruments. The parties agree to execute
such further instruments and to take such further action as may be reasonably
necessary to carry out the purposes and intent of this Agreement.

 

15.           Delivery of Payment. Optionee herewith delivers to
the Company the full Exercise Price for the Shares, as well as any applicable
withholding tax.

 

A-6

 

16.           Entire Agreement. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan, the Option
Agreement and the Investment Representation Statement constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof.

 

	
  Accepted
  by:

  	
   

  	
  Submitted by:

  
	
   

  	
   

  	
   

  
	
  DEMAND MEDIA, INC.

  	
   

  	
  OPTIONEE

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Street

  
					

 

A-7

 

EXHIBIT
B

 

INVESTMENT
REPRESENTATION STATEMENT

 

	
  OPTIONEE

  	
  :

  	
   

  
	
   

  	
   

  	
   

  
	
  COMPANY

  	
  :

  	
  Demand Media, Inc.

  
	
   

  	
   

  	
   

  
	
  SECURITY

  	
  :

  	
  Common Stock

  
	
   

  	
   

  	
   

  
	
  AMOUNT

  	
  :

  	
   

  
	
   

  	
   

  	
   

  
	
  DATE

  	
  :

  	
   

  

 

In connection with the
purchase of the above-listed shares of Common Stock (the “Securities”)  of Demand Media, Inc. (the “Company”),  the undersigned (the “Optionee”)  represents to the Company the
following:

 

(a)           Optionee is aware of the Company’s business affairs and
financial condition and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities.
Optionee is acquiring these Securities for investment for Optionee’s own
account only and not with a view to, or for resale in connection with, any “distribution”
thereof within the meaning of the Securities Act of 1933, as amended (the “Securities
Act”).

 

(b)           Optionee acknowledges and understands that the Securities
constitute “restricted securities” under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee’s investment intent as expressed herein. Optionee
understands that the Securities must be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company and any other legend required under applicable
state securities laws.

 

(c)           Optionee is familiar with the provisions of Rule 701 and
Rule 144, each promulgated under the Securities Act, which, in substance,
permit limited public resale of “restricted securities” acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to Optionee,
the exercise will be exempt from registration under the Securities Act. In the
event the Company becomes subject to the reporting requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, ninety

 

B-1

 

(90) days thereafter (or
such longer period as any market stand-off agreement may require) the
Securities exempt under Rule 701 may be resold, subject to the satisfaction of
certain of the conditions specified by Rule 144, including, in the case of an
affiliate, (i) the resale being made through a broker in an unsolicited “broker’s
transaction” or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934), (ii) the availability of
certain public information about the Company, (iii) the amount of Securities
being sold during any three (3) month period not exceeding the limitations
specified in Rule 144(e), and (iv) the timely filing of a Form 144, if
applicable.

 

In the event that the
Company does not qualify under Rule 701 at the time of grant of the Option,
then the Securities may be resold beginning ninety (90) days after the Company
becomes subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934 in certain limited circumstances subject to the
provisions of Rule 144, which requires the resale to occur not less than six
months after the later of the date the Securities were sold by the Company or
the date the Securities were sold by an affiliate of the Company, within the
meaning of Rule 144 and the availability of certain public information about
the Company (subject to certain exceptions); and, in the case of a sale of the
Securities by an affiliate, the satisfaction of the conditions set forth in
sections (i), (ii), (iii) and (iv) of the paragraph immediately above.

 

(d)           Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact
that Rules 144 and 701 are not exclusive, the Staff of the Securities and
Exchange Commission has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing
that an exemption from registration is available for such offers or sales, and
that such persons and their respective brokers who participate in such
transactions do so at their own risk. Optionee understands that no assurances
can be given that any such other registration exemption will be available in
such event.

 

(e)           Optionee understands and acknowledges that the Company
will rely upon the accuracy and truth of the foregoing representations and
Optionee hereby consents to such reliance.

 

	
   

  	
   

  	
  Signature
  of Optionee:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  	
   

  
							

 

B-2

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