Document:

Exhibit
10.05

 

DEMAND MEDIA, INC.

2010 INCENTIVE AWARD PLAN

 

STOCK OPTION GRANT NOTICE AND 

STOCK OPTION AGREEMENT

 

Demand
Media, Inc., a Delaware corporation (the “Company”), pursuant
to its 2010 Incentive Award Plan (the “Plan”), hereby
grants to the individual listed below (the “Optionee”), an
option to purchase the number of shares of the common stock of the Company (“Common  Stock”),
set forth below (the “Option”).  This Option is subject to all of the
terms and conditions set forth herein and in the Stock Option Agreement
attached hereto as Exhibit A (the “Stock
Option Agreement”) and the Plan, which are incorporated
herein by reference.  Unless otherwise
defined herein, the terms defined in the Plan shall have the same defined
meanings in this Grant Notice and the Stock Option Agreement.

 

	
  Optionee:

  	
   

  	
   

  	
   

  	
   

  
	
  Grant Date:

  	
   

  	
   

  	
   

  	
   

  
	
  Vesting Commencement Date:

  	
   

  	
   

  	
   

  	
   

  
	
  Exercise Price per Share:

  	
   

  	
  $[   ] /Share

  	
   

  	
   

  
	
  Total Exercise Price:

  	
   

  	
  $

  	
   

  	
   

  
	
  Total Number of Shares 

  Subject to the Option:

  	
   

  	
  shares

  	
   

  	
   

  
	
  Expiration Date:

  	
   

  	
   

  	
   

  	
   

  

 

	
  Type
  of Option:

  	
   

  	
  o

  	
   

  	
  Incentive
  Stock Option

  	
   

  	
  o

  	
   

  	
  Non-Qualified
  Stock Option

  
	
   

  	
   

  	
   

  
	
  Vesting
  Schedule:

  	
   

  	
  [To
  be set forth in individual agreement]

  
	
   

  	
   

  	
   

  
	
  Termination

  	
   

  	
  The
  Option shall terminate on the Expiration Date set forth above or, if earlier,
  in accordance with the terms of the Stock Option Agreement.

  

 

By
his or her signature, the Optionee agrees to be bound by the terms and
conditions of the Plan, the Stock Option Agreement and this Grant Notice.  The Optionee has reviewed the Stock Option
Agreement, the Plan and this Grant Notice in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Grant
Notice and fully understands all provisions of this Grant Notice, the Stock
Option Agreement and the Plan.  The
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 relating to the Option.

 

	
  DEMAND MEDIA, INC.

  	
  OPTIONEE

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
  Print
  Name:

  	
   

  	
   

  	
  Print Name:

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  

 

 

EXHIBIT A

 

TO STOCK OPTION GRANT NOTICE

 

STOCK OPTION AGREEMENT

 

Pursuant
to the Stock Option Grant Notice (the “Grant Notice”) to which
this Stock Option Agreement (this “Agreement”) is attached,
Demand Media, Inc., a Delaware corporation (the “Company”), has
granted to the Optionee an option under the Company’s 2010 Incentive Award Plan
(the “Plan”) to purchase the number of shares of
Common Stock indicated in the Grant Notice.

 

ARTICLE I.

 

GENERAL

 

1.1           Incorporation of Terms of
Plan.  The Option is subject to the
terms and conditions of the Plan which are incorporated herein by
reference.  In the event of any
inconsistency between the Plan and this Agreement, the terms of the Plan shall
control.

 

ARTICLE II.

 

GRANT OF OPTION

 

2.1           Grant of Option.  In consideration of the Optionee’s past
and/or continued employment with or service to the Company or a Subsidiary and
for other good and valuable consideration, effective as of the Grant Date set
forth in the Grant Notice (the “Grant Date”), the
Company irrevocably grants to the Optionee the Option to purchase any part or
all of an aggregate of the number of shares of Common Stock set forth in the
Grant Notice, upon the terms and conditions set forth in the Plan and this
Agreement.  Unless designated as a
Non-Qualified Stock Option in the Grant Notice, the Option shall be an
Incentive Stock Option to the maximum extent permitted by law.

 

2.2           Exercise Price.  The exercise price of the shares of Common
Stock subject to the Option shall be as set forth in the Grant Notice, without
commission or other charge; provided,
however, that the price per share
of the shares of Common Stock subject to the Option shall not be less than 100%
of the Fair Market Value of a share of Common Stock on the Grant Date.  Notwithstanding the foregoing, if this Option
is designated as an Incentive Stock Option and the Optionee is a Greater Than
10% Stockholder as of the Grant Date, the price per share of the shares of Common
Stock subject to the Option shall not be less than 110% of the Fair Market
Value of a share of Common Stock on the Grant Date.

 

2.3           Consideration to the Company.  In consideration of the grant of the Option
by the Company, the Optionee agrees to render faithful and efficient services
to the Company or any Subsidiary. 
Nothing in the Plan or this Agreement shall confer upon the Optionee any
right to continue in the employ or service of the Company or any Subsidiary or
shall interfere with or restrict in any way the rights of the Company and its
Subsidiaries, which rights are hereby expressly reserved, to discharge or
terminate the services of the Optionee at any time for any reason whatsoever,
with or without Cause, except to the extent expressly provided otherwise in a
written agreement between the Company or a Subsidiary and the Optionee.

 

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ARTICLE III.

 

PERIOD OF EXERCISABILITY

 

3.1           Commencement of
Exercisability.

 

(a)           Subject to Sections 3.2,
3.3, 5.10 and 5.14 hereof, the Option shall become vested and exercisable in
such amounts and at such times as are set forth in the Grant Notice[, including
any applicable vesting acceleration provisions contained therein].

 

(b)           No portion of the Option
which has not become vested and exercisable at the date of the Optionee’s
Termination of Service shall thereafter become vested and exercisable, except
as may be otherwise provided by the Administrator or as set forth in a written
agreement between the Company and the Optionee.

 

3.2           Duration of Exercisability.  The installments provided for in the vesting
schedule set forth in the Grant Notice are cumulative.  Each such installment which becomes vested
and exercisable pursuant to the vesting schedule set forth in the Grant Notice
shall remain vested and exercisable until it becomes unexercisable under Section 3.3
hereof.

 

3.3           Expiration of Option.  The Option may not be exercised to any extent
by anyone after the first to occur of the following events:

 

(a)           The Expiration Date set
forth in the Grant Notice;

 

(b)           If this Option is designated
as an Incentive Stock Option and the Optionee is a Greater Than 10% Stockholder
as of the Grant Date, the expiration of five (5) years from the Grant
Date;

 

(c)           The expiration of [three (3) months
from the date of the Optionee’s Termination of Service] [such other period
approved by the Board, Committee or authorized subcommittee thereof with
respect to an individual option grant)], unless such termination occurs by
reason of the Optionee’s death or disability (as determined by the
Administrator) or by the Company for Cause;

 

(d)           The expiration of one (1) year
from the date of the Optionee’s Termination of Service by reason of the
Optionee’s death or disability (as determined by the Administrator) [such other
period approved by the Board, Committee or authorized subcommittee thereof with
respect to an individual option grant]; or

 

(e)           [The start of business on
the date of the Optionee’s Termination of Service by the Company for Cause.]

 

The
Optionee acknowledges that an Incentive Stock Option exercised more that three (3) months
after the Optionee’s Termination of Employment, other than by reason of death
or disability, will be taxed as a Non-Qualified Stock Option.

 

3.4           Special Tax Consequences.  The Optionee acknowledges that, to the extent
that the aggregate Fair Market Value (determined as of the time the Option is
granted) of all shares of Common Stock with respect to which Incentive Stock
Options, including the Option, are exercisable for the first time by the Optionee
in any calendar year exceeds $100,000, the Option and such other options shall
be Non-Qualified Stock Options to the extent necessary to comply with the
limitations imposed by Section 422(d) of the Code.  The Optionee further acknowledges that the rule set
forth in the preceding sentence

 

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shall be applied by taking the Option and other “incentive
stock options” into account in the order in which they were granted, as
determined under Section 422(d) of the Code and the Treasury
Regulations thereunder.

 

ARTICLE IV.

EXERCISE OF OPTION

 

4.1           Person Eligible to Exercise.  Except as provided in Sections 5.2(b) and
5.2(c) hereof, during the lifetime of the Optionee, only the Optionee may
exercise the Option or any portion thereof. 
After the death of the Optionee, any exercisable portion of the Option
may, prior to the time when the Option becomes unexercisable under Section 3.3
hereof, be exercised by the Optionee’s personal representative or by any person
empowered to do so under the deceased Optionee’s will or under the
then-applicable laws of descent and distribution.

 

4.2           Partial Exercise.  Any exercisable portion of the Option or the
entire Option, if then wholly exercisable, may be exercised in whole or in part
at any time prior to the time when the Option or portion thereof becomes
unexercisable under Section 3.3 hereof. 
However, the Option shall not be exercisable with respect to fractional
shares.

 

4.3           Manner of Exercise.  The Option, or any exercisable portion
thereof, may be exercised solely by delivery to the Secretary of the Company
(or any third party administrator or other person or entity designated by the
Company) of all of the following prior to the time when the Option or such
portion thereof becomes unexercisable under Section 3.3 hereof:

 

(a)           A written or electronic
notice complying with the applicable rules established by the
Administrator stating that the Option, or a portion thereof, is exercised.  The notice shall be signed by the Optionee or
other person then entitled to exercise the Option or such portion of the
Option;

 

(b)           Full payment of the exercise
price and applicable withholding taxes to the stock administrator of the
Company for the shares of Common Stock with respect to which the Option, or
portion thereof, is exercised, in a manner permitted by Section 4.4
hereof;

 

(c)           Any other written
representations or documents as may be required in the Administrator’s sole
discretion to effect compliance with all applicable provisions of the Securities
Act, the Exchange Act, any other federal, state or foreign securities laws or
regulations, the rules of any securities exchange or automated quotation
system on which the shares of Common Stock are listed, quoted or traded or any
other applicable law; and

 

(d)           In the event the Option or
portion thereof shall be exercised pursuant to Section 4.1 hereof by any
person or persons other than the Optionee, appropriate proof of the right of
such person or persons to exercise the Option.

 

Notwithstanding
any of the foregoing, the Company shall have the right to specify all
conditions of the manner of exercise, which conditions may vary by country and
which may be subject to change from time to time.

 

4.4           Method of Payment.  Payment of the exercise price shall be by any
of the following, or a combination thereof, at the election of the Optionee:

 

(a)           Cash;

 

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(b)           Check;

 

(c)           With the consent of the
Administrator, delivery of a written or electronic notice that the Optionee has
placed a market sell order with a broker with respect to shares of Common Stock
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,
that payment of such proceeds is then made to the Company upon settlement of
such sale;

 

(d)           With the consent of the
Administrator, surrender of other shares of Common Stock which have been owned by
the Optionee for such period of time as may be required by the Administrator in
order to avoid adverse accounting consequences and having a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the shares of
Common Stock with respect to which the Option or portion thereof is being
exercised;

 

(e)           With the consent of the
Administrator, surrendered shares of Common Stock 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 shares of Common Stock with respect to which the Option
or portion thereof is being exercised; or

 

(f)            With the consent of the
Administrator, such other form of legal consideration as may be acceptable to
the Administrator.

 

4.5           Conditions to
Issuance of Stock Certificates.  The shares of Common Stock deliverable upon
the exercise of the Option, or any portion thereof, may be either previously
authorized but unissued shares of Common Stock, treasury shares of Common Stock
or issued shares of Common Stock which have then been reacquired by the
Company.  Such shares of Common Stock
shall be fully paid and nonassessable. 
The Company shall not be required to issue or deliver any certificates
or make any book entries evidencing shares of Common Stock purchased upon the exercise of the Option or
portion thereof prior to fulfillment of the conditions set forth in Section 11.4
of the Plan.

 

4.6           Rights as Stockholder.  The holder of the Option shall not be, nor
have any of the rights or privileges of, a stockholder of the Company in
respect of any shares of Common Stock purchasable upon the exercise of any part
of the Option unless and until such shares of Common Stock shall have been
issued by the Company to such holder (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the
Company).  No adjustment will be made for
a dividend or other right for which the record date is prior to the date the shares
of Common Stock are issued, except as provided in Section 14.2 of the
Plan.

 

ARTICLE V.

 

OTHER PROVISIONS

 

5.1           Administration.  The Administrator shall have the power to
interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules.  All actions taken and all interpretations and
determinations made by the Administrator in good faith shall be final and
binding upon the Optionee, the Company and all other interested persons.  No member of the Administrator or the Board
shall be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan, this Agreement or the Option.

 

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5.2           Transferability of Option.  Except as otherwise set forth in the Plan:

 

(a)           The Option may not be sold,
pledged, assigned or transferred in any manner other than by will or the laws
of descent and distribution or, subject to the consent of the Administrator,
pursuant to a DRO, unless and until the Option has been exercised and the
shares underlying the Option have been issued, and all restrictions applicable
to such shares have lapsed;

 

(b)           The Option shall not be
liable for the debts, contracts or engagements of the Optionee or the Optionee’s
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, hypothecation, encumbrance, assignment or any
other means whether such disposition be voluntary or involuntary or by
operation of law by judgment, levy, attachment, garnishment or any other legal
or equitable proceedings (including bankruptcy) unless and until the Option has
been exercised, and any attempted disposition thereof shall be null and void
and of no effect, except to the extent that such disposition is permitted by Section 5.2(a) hereof;
and

 

(c)           During the lifetime of the
Optionee, only the Optionee may exercise the Option (or any portion thereof),
unless it has been disposed of pursuant to a DRO; after the death of the
Optionee, any exercisable portion of the Option may, prior to the time when
such portion becomes unexercisable under the Plan or this Agreement, be
exercised by the Optionee’s personal representative or by any person empowered
to do so under the deceased Optionee’s will or under the then applicable laws
of descent and distribution.

 

(d)           Notwithstanding any other
provision in this Agreement, the Optionee may, in the manner determined by the
Administrator, designate a beneficiary to exercise the rights of the Optionee
and to receive any distribution with respect to the Option upon the Optionee’s
death.  A beneficiary, legal guardian,
legal representative, or other person claiming any rights pursuant to the Plan
is subject to all terms and conditions of the Plan and this Agreement, except
to the extent the Plan and this Agreement otherwise provide, and to any
additional restrictions deemed necessary or appropriate by the
Administrator.  If the Optionee is
married or a domestic partner in a domestic partnership qualified under
applicable law and resides in a community property state, a designation of a
person other than the Optionee’s spouse or domestic partner, as applicable, as
his or her beneficiary with respect to more than 50% of the Optionee’s interest
in the Option shall not be effective without the prior written consent of the
Optionee’s spouse or domestic partner. 
If no beneficiary has been designated or survives the Optionee, payment
shall be made to the person entitled thereto pursuant to the Optionee’s will or
the laws of descent and distribution. 
Subject to the foregoing, a beneficiary designation may be changed or
revoked by the Optionee at any time provided the change or revocation is filed
with the Administrator prior to the Optionee’s death.

 

5.3           Tax Consultation.  Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee’s the grant, vesting and/or
exercise of the Option, and/or with the purchase or disposition of the shares
of Common Stock subject to the Option. 
Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of such
shares and that Optionee is not relying on the Company for any tax advice.

 

5.4           Adjustments.  The Optionee acknowledges that the Option is
subject to modification and termination in certain events as provided in this
Agreement and Article 14 of the Plan.

 

5.5           Notices.  Any notice to be given under the terms of
this Agreement to the Company shall be addressed to the Company in care of the
Secretary of the Company at the address given beneath the signature of the
Company’s authorized officer on the Grant Notice, and any notice to be given to
the

 

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Optionee shall be addressed to the Optionee at the
address given beneath the Optionee’s signature on the Grant Notice.  By a notice given pursuant to this Section 5.5,
either party may hereafter designate a different address for notices to be
given to that party.  Any notice which is
required to be given to the Optionee shall, if the Optionee is then deceased,
be given to the person entitled to exercise his or her Option pursuant to Section 4.1
hereof by written notice under this Section 5.5.  Any notice shall be deemed duly given when
sent via email or when sent by certified mail (return receipt requested) and
deposited (with postage prepaid) in a post office or branch post office
regularly maintained by the United States Postal Service.

 

5.6           Optionee’s Representations.  If the shares of Common Stock purchasable
pursuant to the exercise of this Option have not been registered under the
Securities Act or any applicable state laws on an effective registration
statement at the time this Option is exercised, the Optionee shall, if required
by the Company, concurrently with the exercise of all or any portion of this
Option, make such written representations as are deemed necessary or
appropriate by the Company and/or its counsel.

 

5.7           Titles.  Titles are provided herein for convenience
only and are not to serve as a basis for interpretation or construction of this
Agreement.

 

5.8           Governing Law.  The laws of the State of Delaware shall
govern the interpretation, validity, administration, enforcement and
performance of the terms of this Agreement regardless of the law that might be
applied under principles of conflicts of laws.

 

5.9           Conformity to Securities
Laws.  The Optionee acknowledges that
the Plan and this Agreement are intended to conform to the extent necessary
with all provisions of the Securities Act and the Exchange Act and any and all
regulations and rules promulgated by the Securities and Exchange
Commission thereunder, and state securities laws and regulations.  Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the Option is granted and may be
exercised, only in such a manner as to conform to such laws, rules and
regulations.  To the extent permitted by
applicable law, the Plan and this Agreement shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.

 

5.10         Amendments, Suspension and
Termination.  To the
extent permitted by the Plan, this Agreement may be wholly or partially amended
or otherwise modified, suspended or terminated at any time or from time to time
by the Committee or the Board, provided,
however, that, except as may otherwise be provided by the Plan, no
amendment, modification, suspension or termination of this Agreement shall
adversely affect the Option in any material way without the prior written
consent of the Optionee.

 

5.11         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 in this Article 5, this Agreement shall be binding upon
the Optionee and his or her heirs, executors, administrators, successors and
assigns.

 

5.12         Notification of Disposition.  If this Option is designated as an Incentive
Stock Option, the Optionee shall give prompt notice to the Company of any
disposition or other transfer of any shares of Common Stock acquired under this
Agreement if such disposition or transfer is made (a) within two years
from the Grant Date with respect to such shares of Common Stock or (b) within
one year after the transfer of such shares of Common Stock to the
Optionee.  Such notice shall specify the
date of such disposition or other transfer and the amount realized, in cash,
other property, assumption of indebtedness or other consideration, by the
Optionee in such disposition or other transfer.

 

A-6

 

5.13         Limitations Applicable to Section 16
Persons.  Notwithstanding any other
provision of the Plan or this Agreement, if the Optionee is subject to Section 16
of the Exchange Act, the Plan, the Option and this Agreement shall be subject
to any additional limitations set forth in any applicable exemptive rule under
Section 16 of the Exchange Act (including any amendment to Rule 16b-3
of the Exchange Act) that are requirements for the application of such
exemptive rule.  To the extent permitted
by applicable law, this Agreement shall be deemed amended to the extent
necessary to conform to such applicable exemptive rule

 

5.14         Not a Contract of Employment.  Nothing in this Agreement or in the Plan
shall confer upon the Optionee any right to continue to serve as an employee or
other service provider of the Company or any of its Subsidiaries.

 

5.15         Entire Agreement.  The Plan, the Grant Notice and this Agreement
(including all Exhibits thereto) constitute the entire agreement of the parties
and supersede in their entirety all prior undertakings and agreements of the
Company and the Optionee with respect to the subject matter hereof.

 

5.16         Section 409A.  Notwithstanding any other provision of the  Plan, this Agreement or the Grant Notice, the Plan, this
Agreement and the Grant Notice shall be interpreted in accordance with the
requirements of Section 409A of the Code (together with any Department of
Treasury regulations and other interpretive guidance issued thereunder,
including without limitation any such regulations or other guidance that may be
issued after the date hereof, “Section 409A”).   The Administrator may, in its discretion,
adopt such amendments to the Plan, this Agreement or the Grant Notice or adopt
other policies and procedures (including amendments, policies and procedures
with retroactive effect), or take any other actions, as the Administrator
determines are necessary or appropriate to comply with the requirements of Section 409A.

 

A-7Exhibit 10.06

 

DEMAND MEDIA INC. 2006 EQUITY INCENTIVE PLAN

RESTRICTED STOCK PURCHASE AGREEMENT

 

This
restricted stock purchase agreement (the “Agreement”) is made between
[NAME] (together with any permitted transferee, “Purchaser”) and Demand
Media, Inc. (the “Company”), as [DATE] (the “Grant Date”),
pursuant to and subject to the terms and conditions of the Company’s Amended
and Restated 2006 Equity Incentive Plan (as amended from time to time, the “Plan”).

 

RECITALS

 

WHEREAS, the
Company maintains the Plan, pursuant to which the Company desires to issue to
Purchaser certain shares of common stock, par value $.0001 per share, of the
Company (the “Restricted Stock”) on the terms and conditions set forth
in this Agreement;

 

NOW,
THEREFORE, in consideration of the mutual agreements set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company hereby grants the Restricted Stock designated
in Section 1 below to Purchaser subject to the terms, conditions and
restrictions set forth herein. 
Capitalized terms used herein and not defined shall have the meanings
provided in the Plan.

 

1.                                       Grant of Stock; Vesting.

 

(a)                                  Subject to the forfeiture and deemed
repurchase provisions contained in Section 2 below and all other terms,
conditions and restrictions contained in this Agreement and the Plan, the
Company hereby grants to Purchaser [NUMBER] shares of Restricted Stock (the “Shares”),
to be granted in consideration of past and/or future services provided and/or
to be provided to the Company by Purchaser. 
The Shares shall vest and cease to be subject to forfeiture and deemed
repurchase in accordance with the provisions of Section 1(b) below
(each such Share, which, from time to time, continues to be subject to
forfeiture and deemed repurchase, an “Unvested Share”).

 

(b)                                 The Shares shall vest and cease to be
subject to forfeiture and deemed repurchase [with respect to [# = 25%] Shares
on the first anniversary of the Grant Date and with respect to an additional [#
= 1/48th] Shares on each monthly anniversary of the Grant Date
thereafter until all Shares are vested, subject to Purchaser’s continued
employment through each such date, provided, that
if a Change of Control shall occur and either (i) Purchaser remains
employed by the Company through the six-month anniversary of such Change of
Control, or (ii) the Company terminates Purchaser’s employment other than
for Cause prior to such six-month anniversary (in either case, an “Acceleration
Event”), then, in either case, immediately prior to the Acceleration Event,
the greater of (A) [# = 25%] 

 

 

Shares or (B) fifty percent (50%) of the remaining Unvested Shares
shall vest and cease to be subject to forfeiture and deemed repurchase and, provided further, that if the Company terminates Purchaser’s
employment other than for Cause after an Acceleration Event described in clause
(i) above, an additional [# = 12.5%] Shares (or such lesser number of
Unvested Shares remaining)](1) shall vest and cease to be subject to
forfeiture and deemed repurchase (each date on which any Shares vest and cease
to be subject to forfeiture and deemed repurchase in accordance with this Section 1(b),
a “Vesting Date”).

 

2.                                       Forfeiture; Deemed Repurchase. 
If Purchaser terminates employment for any reason prior to such time as
any Shares vest in accordance with Section 1(b) above (after taking
into account any accelerated vesting that may be occur in connection with
Purchaser’s termination of employment, if any), all Unvested Shares shall
automatically be forfeited and deemed to be repurchased by the Company (without
payment therefor) upon such termination of employment in accordance with the
Joint Escrow Instructions of the Company and Purchaser attached as Exhibit A
hereto.(2)

 

3.                                       Transfer Restrictions. 
Purchaser hereby agrees that, as a condition to the purchase of the
Shares hereunder, (i) Purchaser shall not, for as long as the Shares
remain Unvested Shares, sell, transfer, dispose of, hypothecate, pledge or
otherwise encumber the Shares, and (ii) the Shares shall be subject to the
terms and conditions of this Agreement, including without limitation, the
provisions of Sections 5 and 6 below.  The transfer or sale of any of the Shares shall further be
subject to any restrictions imposed under any applicable state or federal
securities laws and, without limiting the generality of any other provision of
this Agreement, the provisions of Section 11 of the Plan.  Notwithstanding the foregoing, Purchaser may
transfer any Shares to any one or more Permitted Transferees (as such term is defined in the Plan), subject to the
restrictions set forth in Section 11 of the Plan. Any Permitted Transferee
shall hold the Shares subject to all the provisions hereof and shall
acknowledge the same by signing a copy of this Agreement.

 

4.                                       Escrow.

 

(a)                                  Purchaser hereby authorizes and
directs the Secretary of the Company, or such other person designated by the
Company, to transfer any Shares forfeited in accordance with Section 2
above from Purchaser to the Company.

 

(b)                                 To insure the availability for
delivery of the Shares upon Purchaser’s 

 

(1)  This is Demand’s standard vesting formula, which should be
adjusted as appropriate.  In certain
circumstances, it may be appropriate to link vesting to continued “Service
Provider” status (rather than employment) in order to cause vesting to continue
while serving as a director or consultant.

 

(2)  Forfeiture provisions may need to be adjusted to accommodate
any post-termination vesting that may occur.

 

2

 

forfeiture
thereof, Purchaser hereby appoints the Secretary of the Company, or any other
person designated by the Company as escrow agent, as its attorney-in-fact to
sell, assign and transfer unto the Company, such Shares, if any, forfeited by
Purchaser in accordance with Section 2 above and shall, upon execution of
this Agreement, deliver and deposit with the Secretary of the Company, or such
other person designated by the Company, the share certificates representing any
and all Unvested Shares, together with the stock assignment duly endorsed in
blank.  The share certificates
representing the Unvested Shares and the stock assignment shall be held by the
Secretary in escrow, pursuant to the Joint Escrow Instructions of the Company
and Purchaser attached as Exhibit A hereto, until the first to
occur of (i) Purchaser’s forfeiture of such Shares in accordance with Section 2
above, (ii) the date on which such Shares cease to be Unvested Shares, or (iii) this
Agreement ceasing to be in effect. 
Promptly following the date on which any Shares cease to be Unvested
Shares, the escrow agent shall deliver to Purchaser the certificate or
certificates representing such Shares in the escrow agent’s possession
belonging to Purchaser, and the escrow agent shall be discharged of all further
obligations hereunder; provided, that
the escrow agent shall nevertheless retain such certificate or certificates if
so required pursuant to other restrictions imposed pursuant to this Agreement.

 

(c)                                  The Company, or its designee, shall
not be liable for any act it may do or omit to do with respect to holding the
Shares in escrow and while acting in good faith and in the exercise of its
judgment.

 

5.                                       Take-Along Rights.

 

(a)                                  Approved Sale. 
If the Board shall deliver a notice to Purchaser (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, Purchaser 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 Purchaser’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, including without limitation any Unvested Shares, shall be further
subject to the terms of the Plan, including without limitation Section 14
of the Plan.  Purchaser will take all
necessary and desirable 

 

3

 

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 5 shall not require Purchaser 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) Purchaser 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. 
Purchaser will bear Purchaser’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
Purchaser on Purchaser’s own behalf will not be considered costs of the
transaction hereunder.

 

(b)                                 Share Delivery. 
At the consummation of the Approved Sale, Purchaser shall, if
applicable, deliver certificates representing the Shares to be transferred,
duly endorsed 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 Purchaser shall so represent and warrant.

 

6.                                       Company’s Right of First Refusal. Before any Shares held by Purchaser
or any permitted transferee (each, a “Holder”) may be sold, pledged,
assigned, hypothecated, transferred, or otherwise disposed of (including
transfer by gift or operation of law), in any case in accordance with Section 3
above (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 (the “Right of
First Refusal”).

 

(a)                                  Notice of Proposed Transfer. 
The Holder of the Shares shall deliver to the Company a written notice (the
“Notice”) stating:  (i) the
Holder’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; 

 

4

 

and
(iv) the bona fide cash price or other consideration for which the Holder
proposes to Transfer the Shares (the “Offered Price”), and the Holder
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 the Holder 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)                                  Holder’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 the Holder 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 of this Section and of Section 5 above 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 future purchase or transferee agrees in writing to be
bound by the provisions of this Section and of Section 5 above.  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 

 

5

 

contained
in this Section notwithstanding, the Transfer of any or all of the Shares
during Purchaser’s lifetime or on Purchaser’s death by will or intestacy to
Purchaser’s Immediate Family or a trust for the benefit of Purchaser’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 of this Section (including
the Right of First Refusal) and Section 5 above and there shall be no
further Transfer of such Shares except in accordance with the terms of this Section 6.

 

(g)                                 Termination of Right of
First Refusal.  The Right of First Refusal shall
terminate as to all Shares upon the first to occur of (i) the Public
Trading Date, or (ii) a Change of Control.

 

7.                                       Rights as Stockholder. 
Except as otherwise provided herein, upon delivery of the Shares to the
escrow holder pursuant to Section 4 above, Purchaser shall have all the
rights of a stockholder with respect to said Shares, subject to the forfeiture
provisions and any other restrictions herein, including the right to vote the
Shares and to receive all dividends or other distributions paid or made with
respect to the Shares.

 

8.                                       Legends.  The share
certificate(s) evidencing the Restricted Stock issued hereunder shall be
endorsed with the following legend, or such other legend as the Company may
deem necessary or advisable, in its sole discretion (in addition to any legend
required under applicable state 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 REPURCHASE RIGHTS,
FORFEITURE PROVISIONS, RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL
OPTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN A RESTRICTED
STOCK PURCHASE AGREEMENT AND/OR A STOCKHOLDER AGREEMENT 

 

6

 

BETWEEN THE
ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, COPIES OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. 
SUCH REPURCHASE RIGHTS, FORFEITURE PROVISIONS, TRANSFER RESTRICTIONS AND
RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

 

9.                                       Securities Law Representations. 
Purchaser shall, as a condition to and concurrently with this grant of
Restricted Stock, deliver to the Company its Investment Representation
Statement in the form attached hereto as Exhibit B.

 

10.                                 Survival of Terms. 
This Agreement shall apply to and bind Purchaser and the Company and
their respective permitted assignees and transferees, heirs, legatees,
executors, administrators and legal successors.

 

11.                                 Tax Representations. 
Purchaser understands that Purchaser may suffer adverse tax consequences
as a result of Purchaser’s purchase or disposition of the Shares.  Purchaser represents that Purchaser has
consulted with any tax consultants Purchaser deems advisable in connection with
the purchase or disposition of the Shares and that no action or representation
by the Company shall be construed as the giving of tax advice and Purchaser is
not relying on the Company for any tax advice. 
Purchaser understands that Purchaser will recognize ordinary income for
federal income tax purposes under Section 83 of the Code as and when the
Shares vest in accordance herewith. 
Purchaser understands that Purchaser may elect to be taxed for federal
income tax purposes at the time the Shares are purchased rather than as and when
the Shares vest by filing an election under Section 83(b) of the Code
with the Internal Revenue Service within thirty (30) days from the date of
purchase. A form of election under Section 83(b) of the Code is
attached to the Grant Notice as Exhibit C.  PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER’S
SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO TIMELY FILE THE ELECTION UNDER SECTION 83(b) IF
PURCHASER ELECTS TO MAKE SUCH A FILING, EVEN IF PURCHASER REQUESTS THE COMPANY
OR ITS REPRESENTATIVES TO MAKE SUCH A FILING ON PARTICIPANT’S BEHALF. PURCHASER
FURTHER ACKNOWLEDGES AND UNDERSTANDS THAT PURCHASER SHALL BE REQUIRED TO
SATISFY, AND SHALL BE SOLELY LIABLE FOR, ALL APPLICABLE FEDERAL, STATE, LOCAL
AND FOREIGN TAX WITHHOLDING OBLIGATIONS ASSOOCIATED WITH THE SHARES AND
PURCHASER HEREBY AGREES TO PAY SUCH WITHHOLDING AMOUNTS TO THE COMPANY AT SUCH
TIMES AND IN SUCH FORM AS COMPANY SHALL REQUIRE FOR PURPOSES OF TIMELY
SATISFYING SUCH WITHHOLDING OBLIGATIONS.

 

12.                                 Governing Law; Severability. 
This Agreement (including any claim or controversy arising out of or
relating to this Agreement) shall be construed, interpreted and the rights of
the parties determined in accordance with the laws of the State of California
without reference to any choice of law provisions thereof that would result in
the application of any law other than the law of the State of California.  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.

 

7

 

13.                                 No Right to Continue as Service
Provider. Nothing in the Plan or in this Agreement shall confer upon Purchaser
any right to continue as a Service Provider, or shall interfere with or restrict
in any way the rights of the Company, which are hereby expressly reserved, to
discharge Purchaser at any time for any reason whatsoever, with or without
Cause, except to the extent expressly provided otherwise in a written agreement
between Purchaser and the Company.

 

14.                 Conformity to Securities Laws. 
Purchaser acknowledges that this Agreement is
intended to conform to the extent necessary with all applicable federal and
state securities laws and regulations. 
Notwithstanding anything herein to the contrary, this Agreement shall be
administered, and the Shares are to be issued, only in such a manner as to
conform to such laws, rules and regulations.  To the extent permitted by applicable law,
this Agreement shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.

 

8

 

Purchaser
represents that Purchaser has read this Agreement and the Plan and is familiar
with their terms and provisions. 
Purchaser hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board upon any questions arising under the
Plan or this Agreement.

 

IN
WITNESS WHEREOF, this Agreement is deemed made as of the date first set forth
above.

 

	
   

  	
  DEMAND MEDIA, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  Richard Rosenblatt

  
	
   

  	
   

  	
  Title:
  Chairman and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
   

  

 

9

 

EXHIBIT A

 

JOINT ESCROW INSTRUCTIONS

 

[DATE]

 

Corporate
Secretary

Demand Media, Inc.

1333 Second
Street, Suite 100

Santa
Monica, CA 90401

 

Dear
[        ]:

 

As
Escrow Agent for both Demand Media, Inc. (together with any assignee of
the “Company”) and the undersigned purchaser of common stock of the
Company (“Purchaser”), you are hereby authorized and directed to hold
the documents delivered to you pursuant to the terms of that certain Restricted
Stock Purchase Agreement (the “Agreement”) between the Company and
Purchaser, dated [DATE] in accordance with the following instructions:

 

1.                                       In the event the Purchaser forfeits
any of the shares of restricted stock granted to Purchaser pursuant to the
Agreement (the “Shares”) as provided in the Agreement, the Company shall
give to you notice of such forfeiture.

 

2.                                       Upon receipt of a notice from the
Company of forfeiture of Shares by Purchaser and deemed repurchase by the
Company, you are directed (a) to date the stock assignments necessary for
the transfer in question, (b) to fill in the number of shares being
forfeited and transferred to the Company, and (c) to deliver the same,
together with the certificate evidencing the shares of stock to be transferred,
to the Company.

 

3.                                       Purchaser irrevocably authorizes the
Company to deposit with you any certificates evidencing shares of stock to be
held by you hereunder and any additions and substitutions to said shares as
defined in the Agreement.  Purchaser does
hereby irrevocably constitute and appoint you as Purchaser’s attorney-in-fact
and agent for the term of this escrow to execute with respect to such
securities all documents necessary or appropriate to make such securities
negotiable and to complete any transaction herein contemplated, including but
not limited to the filing with any applicable state blue sky authority of any
required applications for consent to, or notice of transfer of, the
securities.  Subject to the provisions of
this Section 3, Purchaser shall exercise all rights and privileges of a
stockholder of the Company while the shares are held by you.

 

4.                                       Following each Vesting Date (as
defined in the Agreement), you will deliver to Purchaser a certificate or
certificates representing the aggregate number of Shares first vesting on such
Vesting Date.

 

5.                                       If at the time of termination of this
escrow you should have in your possession 

 

10

 

any documents,
securities, or other property belonging to Purchaser, you shall deliver all of
the same to Purchaser and shall be discharged of all further obligations
hereunder.

 

6.                                       Your duties hereunder may be altered,
amended, modified or revoked only by a writing signed by all of the parties
hereto.

 

7.                                       You shall be obligated only for the
performance of such duties as are specifically set forth herein and may rely
and shall be protected in relying or refraining from acting on any instrument
reasonably believed by you to be genuine and to have been signed or presented
by the proper party or parties.  You
shall not be personally liable for any act you may do or omit to do hereunder
as Escrow Agent or as attorney-in-fact for Purchaser while acting in good
faith, and any act done or omitted by you pursuant to the advice of your own
attorneys shall be conclusive evidence of such good faith.

 

8.                                       You are hereby expressly authorized to
disregard any and all warnings given by any of the parties hereto or by any
other person or corporation, excepting only orders or process of courts of law
and are hereby expressly authorized to comply with and obey orders, judgments
or decrees of any court.  In case you
obey or comply with any such order, judgment or decree, you shall not be liable
to any of the parties hereto or to any other person, firm or corporation by
reason of such compliance, notwithstanding any such order, judgment or decree
being subsequently reversed, modified, annulled, set aside, vacated or found to
have been entered without jurisdiction.

 

9.                                       You shall not be liable in any respect
on account of the identity, authorities or rights of the parties executing or
delivering or purporting to execute or deliver the Agreement or any documents
or papers deposited or called for hereunder.

 

10.                                 You shall not be liable for the
expiration of any rights under any applicable state, federal or local statute
of limitations or similar statute or regulation with respect to these Joint
Escrow Instructions or any documents deposited with you.

 

11.                                 You shall be entitled to employ such
legal counsel and other experts as you may deem necessary properly to advise
you in connection with your obligations hereunder, may rely upon the advice of
such counsel, and may pay such counsel reasonable compensation therefor.

 

12.                                 Your responsibilities as Escrow Agent
hereunder shall terminate if you shall cease to be an officer or agent of the
Company or if you shall resign by written notice to each party.  In the event of any such termination, the
Company shall appoint a successor Escrow Agent.

 

13.                                 If you reasonably require other or
further instruments in connection with these Joint Escrow Instructions or
obligations in respect hereto, the necessary parties hereto shall join in
furnishing such instruments.

 

14.                                 It is understood and agreed that
should any dispute arise with respect to the delivery and/or ownership or right
of possession of the securities held by you hereunder, you are authorized and
directed to retain in your possession without liability to anyone all or any
part of 

 

11

 

said securities until
such disputes shall have been settled either by mutual written agreement of the
parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or
defend any such proceedings.

 

15.                                 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 Post Office, by
registered or certified mail with postage and fees prepaid, addressed to each
of the other parties thereunto entitled at the following addresses or at such
other addresses as a party may designate by ten (10) days’ advance written
notice to each of the other parties hereto.

 

	
  COMPANY:

  	
  Demand
  Media, Inc.

  
	
   

  	
  1333 Second
  Street, Suite 100

  
	
   

  	
   

  
	
   

  	
  Santa
  Monica, CA 90401

  
	
   

  	
   

  
	
  PURCHASER:

  	
  [NAME]

  
	
   

  	
  [ADDRESS]

  
	
   

  	
   

  
	
  ESCROW
  AGENT:

  	
  Corporate
  Secretary

  
	
   

  	
  Demand
  Media, Inc.

  
	
   

  	
  1333 Second
  Street, Suite 100

  
	
   

  	
  Santa
  Monica, CA 90401

  

 

16.                                 By signing these Joint Escrow
Instructions, you become a party hereto only for the purpose of said Joint
Escrow Instructions; you do not become a party to the Agreement.

 

17.                                 This instrument shall be binding upon
and inure to the benefit of the parties hereto, and their respective successors
and permitted assigns.

 

18.                                 These Joint Escrow Instructions shall
be governed by, and construed and enforced in accordance with, the laws of the
State of California, excluding that body of law pertaining to conflicts of law.

 

12

 

	
   

  	
  DEMAND MEDIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  Matthew Polesetsky

  
	
   

  	
   

  	
  Title:
  Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [NAME]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Escrow
  Agent:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Matthew
  Polesetsky, Secretary of Demand

  
	
   

  	
  Media, Inc.

  

 

13

 

EXHIBIT B

 

INVESTMENT REPRESENTATION STATEMENT

 

	
  PURCHASER

  	
  :

  	
   

  
	
   

  	
   

  	
   

  
	
  COMPANY

  	
  :

  	
  DEMAND
  MEDIA, INC.

  
	
   

  	
   

  	
   

  
	
  SECURITY

  	
  :

  	
  COMMON STOCK

  
	
   

  	
   

  	
   

  
	
  AMOUNT

  	
  :

  	
   

  

 

In connection with the purchase of
the above-listed securities (the “Securities”), the undersigned
Purchaser represents to the Company the following:

 

1.               Purchaser 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.  Purchaser is acquiring these Securities for
investment for Purchaser’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”).

 

2.               Purchaser 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 Purchaser’s investment intent as expressed herein.  Purchaser further 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.  Purchaser further
acknowledges and understands that the Company is under no obligation to
register the Securities.  Purchaser
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.

 

3.               Purchaser 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.  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 (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 

 

14

 

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.

 

4.               In the event that the Company does not qualify under
Rule 701 at the time of purchase of the Securities, then the Securities
may be resold 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.

 

5.               Purchaser 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.  Purchaser understands that no assurances can
be given that any such other registration exemption will be available in such
event.

 

6.               Purchaser understands and acknowledges that the Company will
rely upon the accuracy and truth of the foregoing representations and Purchaser
hereby consents to such reliance.

 

	
   

  	
  Signature of
  Purchaser:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:  [NAME]

  

 

 

Date: [DATE]

 

15

 

EXHIBIT C

 

FORM OF
83(b) ELECTION AND INSTRUCTIONS

 

These
instructions are provided to assist you if you choose to make an election under
Section 83(b) of the Internal Revenue Code, as amended, with respect
to the shares of common stock, par value $0.0001, of Demand Media, Inc.
transferred to you.  You should consult with your personal tax advisor as
to whether an election of this nature will be in your best interests in light
of your personal tax situation.

 

An executed
original of the Section 83(b) election must be filed with the
Internal Revenue Service not later than 30 days after the date the shares are
granted to you.  Please Note: There is no
remedy for failure to file on time.  The
steps outlined below should be followed to ensure the election is mailed and
filed correctly and in a timely manner. 
If you make the Section 83(b) election, the election is
irrevocable.

 

In order to
make a Section 83(b) Election:

 

1.       Complete the Section 83(b) Election Form (attached
as Attachment 1 to this Exhibit) and make four (4) copies of the signed
election form.  Your spouse, if any,
should sign the Section 83(b) Election Form as well.

 

2.       Prepare the cover letter to the Internal Revenue Service
(sample letter attached as Attachment 2 to this Exhibit).

 

3.       Send the cover letter with the originally executed Section 83(b) Election
Form and one (1) copy via certified mail, return receipt requested to
the Internal Revenue Service at the address of the Internal Revenue Service
where you file your personal tax returns. 
We suggest that you have the package date-stamped at the post
office.  The post office will provide you
with a white certified receipt that includes a dated postmark.  Enclose a self-addressed, stamped envelope so
that the Internal Revenue Service may return a date-stamped copy to you.  However, your postmarked receipt is your
proof of having timely filed the Section 83(b) election if, for any
reason, you do not receive confirmation from the Internal Revenue Service.

 

4.       One (1) copy of the Section 83(b) Election Form and
cover letter must be sent to Demand Media, Inc. for its records and one (1) copy
must be attached to your federal income tax return for the applicable calendar
year.

 

5.       Retain the Internal Revenue Service file stamped copy (when
returned) for your records.

 

Please consult
your personal tax advisor for the address of the office of the Internal Revenue
Service to which you should mail your election form.

 

16

 

ATTACHMENT
1 TO EXHIBIT C

 

ELECTION
UNDER INTERNAL REVENUE CODE SECTION 83(b)

 

The
undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer’s gross
income for the current taxable year the amount of any compensation taxable to
taxpayer in connection with taxpayer’s receipt of shares (the “Shares”)
of Common Stock, par value $0.0001 per share, of Demand Media, Inc. (the “Company”).

 

1.                                       The name, address and taxpayer identification number of the
undersigned taxpayer are:

 

 

 

 

SSN:

 

The name,
address and taxpayer identification number of the Taxpayer’s spouse are (complete
if applicable):

 

                                                      

 

SSN:

 

Description
of the property with respect to which the election is being made:

 

(          ) shares of
Common Stock, par value $0.0001 per share, of

 

 

the Company.

 

The
date on which the property was transferred was [DATE].  The taxable year to which this election
relates is calendar year [YEAR].

 

Nature
of restrictions to which the property is subject:

 

The Shares are
subject to forfeiture if unvested as of the date of termination of employment,
directorship or consultancy with the Company.

 

The fair market value at the time of
transfer (determined without regard to any lapse restrictions, as defined in
Treasury Regulation Section 1.83-3(a)) of the Shares was
$                      
per Share.

 

The
amount paid by the taxpayer for Shares
was                       per
share.

 

A
copy of this statement has been furnished to the Company.

 

	
  Dated: [      ]

  	
  Taxpayer
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  The undersigned spouse of Taxpayer joins in this
  election. (Complete if applicable).

  
	
   

  	
   

  
	
  Dated: [      ]

  	
  Spouse’s
  Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature(s) Notarized
  by:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

ATTACHMENT
2 TO EXHIBIT C

 

SAMPLE
COVER LETTER TO INTERNAL REVENUE SERVICE

[DATE]

 

VIA
CERTIFIED MAIL

RETURN RECEIPT REQUESTED

 

Internal
Revenue Service

[Address where taxpayer files returns]

 

	
  Re:

  	
  Election under
  Section 83(b) of the Internal Revenue Code of 1986

  
	
   

  	
  Taxpayer:

  
	
   

  	
  Taxpayer’s Social Security
  Number:

  
	
   

  	
  Taxpayer’s Spouse:

  
	
   

  	
  Taxpayer’s Spouse’s Social
  Security Number:

  

 

Ladies and
Gentlemen:

 

Enclosed
please find an original and one copy of an Election under Section 83(b) of
the Internal Revenue Code of 1986, as amended, being made by the taxpayer
referenced above. Please acknowledge receipt of the enclosed materials by
stamping the enclosed copy of the Election and returning it to me in the
self-addressed stamped envelope provided herewith.

 

	
   

  	
  Very Truly
  Yours,

  
	
   

  	
   

  
	
   

  	
   

  

 

Enclosures

 

cc:                                 Demand Media, Inc.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}]]