Document:

Exhibit 10.17

 

DEMAND MEDIA INC. 2006 EQUITY INCENTIVE PLAN 

RESTRICTED STOCK PURCHASE AGREEMENT

 

This restricted stock
purchase agreement (the “Agreement”) is made between Charles Hilliard
(together with any permitted transferee, “Purchaser”) and Demand Media, Inc.
(the “Company”), as of June 1, 2007, pursuant to and subject to the
terms and conditions of the Company’s 2006 Equity Incentive Plan (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; Lapse of Restrictions.

 

(a)                     Subject to the Repurchase
Option (as defined in Section 2 below) and all other terms, conditions and
restrictions contained in this Agreement and the Plan and Purchaser’s execution
of a joinder to that certain Amended and Restated Stockholders’ Agreement among
the Company and certain of its stockholders, dated as of September 27,
2006 (as may be amended from time to time, the “Stockholders’ Agreement”),
the Company hereby grants to Purchaser 1,750,000 shares of Restricted Stock
(the “Shares”). The purchase price to be paid by Purchaser to the
Company for the Shares shall be $.0001 per Share. The Shares shall vest and cease
to be subject to the Repurchase Option in accordance with the provisions of Section l(b) below
(each such Share, which, from time to time, continues to be subject to the
Repurchase Option, an “Unvested Share”):

 

(b)                    The “Vesting Condition”
shall be waived and deemed satisfied (i) upon grant with respect to
127,604 Shares, (ii) with respect to 36,458 Shares, on each monthly
anniversary of the Start Date (as defined in the employment agreement, dated May 9,
2007, between Purchaser and the Company (the “Employment Agreement”))
until February 1, 2011 and (iii) with respect to the remaining 18,244
Shares, on February 15, 2011, provided
that Purchaser continues to be a Service Provider on each such date,
provided further,  that (i) if Purchaser’s employment
with the Company is terminated by the Company without Cause (as defined in the
Employment Agreement), by Purchaser for Good Reason (as defined in the

 

 

Employment Agreement) or due
to Purchaser’s death or Disability (as defined in the Employment Agreement),
then the Vesting Condition shall be waived and deemed satisfied with respect to
four hundred thirty-seven thousand, five hundred (437,500) Shares immediately
prior to any such termination, and (ii) upon the occurrence of a Change of
Control Vesting Date (as defined in the Employment Agreement), the Vesting
Condition shall be waived and deemed satisfied with respect to all of the
Shares immediately prior to such Change of Control Vesting Date, except that,
notwithstanding the foregoing, if a Subject Transaction (as defined in the
Employment Agreement) that is consummated within 6 months of the Start Date
constitutes a Change of Control and results in the accelerated vesting and
lapsing of restrictions applicable to less than all of the shares granted under
the Restricted Stock Purchase Agreement between the Company and Richard
Rosenblatt, dated April 18, 2006 (the “Founder’s Grant”), then the
Vesting Condition shall instead be waived and deemed satisfied on the Change of
Control Vesting Date with respect to a number of Shares equal to the product of
(A) the number of Unvested Shares immediately prior to the Change of
Control Vesting Date, times (B) a fraction, the numerator of which equals
the number of shares that vest and cease to be subject to restrictions under
the Founder’s Grant as a result of such Change of Control, and the denominator
of which equals the number of shares that remained unvested under the Founder’s
Grant immediately prior to such accelerated vesting (each date on which the
Vesting Condition is waived and deemed satisfied in accordance with this Section 1(b),
a “Vesting Date”).

 

2.             Repurchase Option.

 

(a)                     If Purchaser’s employment
terminates for any reason prior to such time as the Vesting Condition shall be
satisfied with respect to all Shares (after taking into account any
acceleration of the Vesting Condition with respect to such Shares), the Company
shall, for a period of ninety (90) days following the earlier to occur of (i) the
six-month anniversary of the date on which Purchaser’s employment terminates,
or (ii) the consummation of a Change of Control (as defined in the
Employment Agreement), have the right and option to purchase from Purchaser or
Purchaser’s personal representative, as the case may be, any or all Shares that
have not satisfied the Vesting Condition as of such applicable date at a per
Share purchase price equal to the original per Share purchase price paid by
Purchaser (collectively, the “Repurchase Option”).

 

2

 

(b)                    The Company may exercise the
Repurchase Option by delivering personally or by registered mail, to Purchaser
(or Purchaser’s legal representative, as the case may be), a notice in writing
indicating the Company’s intention to exercise the Repurchase Option and
setting forth a date for closing not later than sixty (60) days from the
mailing of such notice. The closing of any purchase pursuant to the Repurchase
Option shall take place at the Company’s office. At such closing, the holder of
the certificates of Shares being transferred pursuant to the exercise of the
Repurchase Option shall deliver the share certificate or certificates
evidencing such Shares, and the Company shall deliver the purchase price
specified in Section 2(a) therefor.

 

(c)                     At its option, the Company
may elect to make payment for any Shares it acquires upon exercise of the
Repurchase Option at a bank selected by the Company. The Company shall avail
itself of this option by a notice in writing to Purchaser stating the name and
address of the bank, date of closing, and waiving the closing at the Company’s
office.

 

3.             Stockholders’ Agreement; Transfer Restrictions.
Purchaser hereby agrees that, as a condition to the purchase of the Shares, (i) he
shall execute and be bound by the terms of the Stockholders’ Agreement (in
addition to the terms and conditions of this Agreement and the Plan), and (ii) he
shall not, for as long as the Shares remain Unvested Shares, sell, transfer,
dispose of, hypothecate, pledge or otherwise encumber the Shares. 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. 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 the Shares as to which a Repurchase Option has been
exercised from Purchaser to the Company.

 

(b)                    To insure the availability
for delivery of the Shares upon the Company’s exercise of the Repurchase
Option, 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 of Restricted Stock, if
any, repurchased by the Company pursuant to the Repurchase Option 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

 

3

 

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) the
Company’s exercise of its Repurchase Option with respect to any such Shares, (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.             Rights as Stockholder. Except as otherwise
provided herein, upon delivery of the Shares to the escrow holder pursuant to Section 4,
Purchaser shall have all the rights of a stockholder with respect to said
Shares, subject to the Repurchase Option 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.

 

6.             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,
RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE ISSUER
OR ITS ASSIGNEE(S) AS SET FORTH IN A RESTRICTED STOCK

 

4

 

PURCHASE
AGREEMENT AND/OR A STOCKHOLDER AGREEMENT 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, TRANSFER RESTRICTIONS AND RIGHT
OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

 

7.             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.

 

8.             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.

 

9.             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 restrictions on the Shares lapse. In this context, “restriction”
includes the Repurchase Option set forth in Section 2(a) above.
Participant understands that Participant may elect to be taxed for federal
income tax purposes at the time the Shares are purchased rather than as and
when the Repurchase Option lapses 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), EVEN IF PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON PARTICIPANT’S
BEHALF.

 

10.           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.

 

11.           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,

 

5

 

except to the extent
expressly provided otherwise in a written agreement between Purchaser and the
Company.

 

12.           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.

 

6

 

Purchaser represents that he
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:

  	
  /s/
  Richard Rosenblatt

  
	
   

  	
   

  	
  Name: Richard Rosenblatt 

  
	
   

  	
   

  	
  Title: Chairman and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PURCHASER

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Charles Hilliard

  
	
   

  	
  Charles Hilliard

  

 

7

 

 

EXHIBIT A

 

JOINT ESCROW INSTRUCTIONS

 

June 1,
2007

 

Corporate Secretary 

Demand Media, Inc. 

1454 Third Street Promenade 

Santa Monica, CA 90401

 

Dear Shawn:

 

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 June 1, 2007 in accordance with
the following instructions:

 

1.             In the event the Company exercises a Repurchase Option
as provided in the Agreement, the Company shall give to you and Purchaser a
written notice specifying the number of shares to be purchased, the purchase
price, and the time for a closing hereunder at the principal office of the
Company. Purchaser and the Company hereby irrevocably authorize and direct you
to close the transaction contemplated by such notice in accordance with the
terms of said notice.

 

2.             At the closing, you are directed (a) to date the
stock assignments necessary for the transfer in question, (b) to fill in
the number of shares being transferred, and (c) to deliver the same,
together with the certificate evidencing the shares of stock to be transferred,
to the Company, against the simultaneous delivery to you of the purchase price
(by cash, a check, or some combination thereof) for the number of shares being
purchased pursuant to the exercise of the Company’s Repurchase Option.

 

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, you will deliver to
Purchaser a certificate or

 

8

 

certificates representing
the aggregate number of shares held or issued pursuant to the Agreement that
cease to be subject to a Company Repurchase Option.

 

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

 

9

 

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 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. 

  1454 Third Street Promenade 

  Santa Monica, CA 90401

  
	
   

  	
   

  
	
  PURCHASER:

  	
  Charles Hilliard 

  2112 Marshbrook Road 

  Thousand Oaks, CA 91361

  
	
   

  	
   

  
	
  ESCROW AGENT:

  	
  Corporate Secretary 

  Demand Media, Inc. 

  1454 Third Street Promenade 

  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.

 

10

 

	
   

  	
  DEMAND MEDIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Shawn Colo

  
	
   

  	
   

  	
  Name: Shawn Colo 

  
	
   

  	
   

  	
  Title: Secretary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PURCHASER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Charles Hilliard

  
	
   

  	
  Charles Hilliard

  
	
   

  	
   

  
	
   

  	
  Escrow Agent:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Shawn Colo

  
	
   

  	
  Shawn Colo

  

 

11

 

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: (1) 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

 

12

 

defined under the Securities
Exchange Act of 1934, as amended); and, in the case of an affiliate, (2) the
availability of certain public information about the Company, (3) the
amount of Securities being sold during any three (3) month period not
exceeding the limitations specified in Rule 144(e), and (4) 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 one year 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, in the case
of acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two (2) years, the
satisfaction of the conditions set forth in sections (1), (2), (3) and (4) 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:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Charles Hilliard

  
	
   

  	
  Name: Charles Hilliard

  

 

 

Date: June 1, 2007

 

13Exhibit
10.18

 

DEMAND
MEDIA, INC.

 

2006 EQUITY
INCENTIVE PLAN

 

STOCK
OPTION AGREEMENT

 

Demand Media, Inc. (the “Company”),
pursuant to its 2006 Equity Incentive Plan (the “Plan”), hereby grants
to Optionee listed below (“Optionee”), an option to purchase the number
of shares of the Company’s Common Stock set forth below (the “Option”),
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:

  	
   

  	
  Michael Blend

  
	
   

  	
   

  	
   

  
	
  Date of Stock Option Agreement:

  	
   

  	
  May 29, 2008

  
	
   

  	
   

  	
   

  
	
  Date of Grant:

  	
   

  	
  May 14, 2008

  
	
   

  	
   

  	
   

  
	
  Exercise Price per Share:

  	
   

  	
  $2.35

  
	
   

  	
   

  	
   

  
	
  Total Number of Shares Granted:

  	
   

  	
  500,000 Shares

  
	
   

  	
   

  	
   

  
	
  Total Exercise Price:

  	
   

  	
  $1,175,000.00

  

 

Type of
Option:    Incentive Stock Option

 

Term/Expiration Date: The
Term/Expiration Date of this Option shall be June 1, 2013, provided, that (i) if a Liquidity
Event (as defined below) shall occur prior to June 1, 2013, then the Term/Expiration
Date of this Option shall instead be the later of the thirteen-month
anniversary of the consummation of the  Liquidity Event or June 1,
2013, and (ii) if an IPO (as defined below) shall  occur prior to
June 1, 2013, then the Term/Expiration Date of this Option shall instead
be the later to occur of (A) the thirtieth day following the  VWAP  Determination  Date (as defined below) applicable to the first Fiscal
Quarter (as defined below) immediately after the expiration of any applicable
Market Standoff Period (as defined in Section 4, below), or
(B) June 1, 2013.

 

Vesting
Schedule:               This  Option  shall vest and become
exercisable as follows:

 

(i)            If
a Liquidity Event occurs prior to
June 1,  2013, subject
to Optionee’s continued employment with the Company through the first anniversary
of the consummation of such Liquidity Event, this Option shall  vest
and  become
exercisable with respect to all Shares  subject hereto on the first
anniversary of such Liquidity Event, provided,
that if, within ninety days prior to or within twelve months after
the consummation of a Liquidity Event, Optionee’s employment is terminated by
the Company without Cause (as defined in the employment agreement dated
August 1, 2006 between Optionee and the Company, as amended (the “Employment
Agreement”)), or terminates due to Optionee’s death or Disability (as
defined below), this Option shall vest and become 

 

 

exercisable with respect to all Shares subject
hereto immediately prior to any such termination;

 

(ii) If (a) prior to June 1, 2013, the Company engages in an
initial public offering of its Common Stock pursuant to an effective
registration statement under the Securities Act (an “IPO”), and
(b) either (1) during any Company fiscal quarter beginning after the
expiration of any applicable Market Stand-Off Period mid ending prior to
June 1, 2013 or (2) if no such Company fiscal quarter meets the
requirements of the preceding Section (ii)(b)(1), during only the Company
fiscal quarter beginning immediately after the expiration of any applicable
Market Standoff Period (any such period, in either case, a “Fiscal Quarter”),
the average of the daily volume weighted average price of the Common Stock for
such Fiscal Quarter (such average, the “VWAP”) equals or exceeds the
VWAP levels set forth in the table below, then this Option shall vest and
become exercisable with respect to the number of Shares set forth opposite the
applicable VWAP levels specified in the table below on the date that the
Administrator determines the VWAP for such Fiscal Quarter, but in any event, no
later than five business days after the end of any such Fiscal Quarter (each
such date, a “VWAP Determination Date”), subject to Optionee’s continued
employment with the Company through such VWAP Determination Date, provided, that if, following an IPO
occurring on or prior to June 1, 2013, Optionee’s employment is terminated
by the Company without Cause or terminates due to Optionee’s death or total and
permanent Disability, this Option shall vest and become exercisable on the
first VWAP Determination Date immediately following such termination of
employment, if any, with respect to that number of Shares, if any, with respect
to which this Option would have vested on such VWAP Determination Date had
Optionee remained employed with the Company through such date:

 

	
  If, during a Fiscal Quarter, the

  Common Stock attains VWAP of:

  	
   

  	
  Then this Option shall
  vest and become

  exercisable, on the applicable VWAP

  Determination Date, with respect to:

  	
   

  
	
  $12 or more*

  	
   

  	
  166,667 Shares*

  	
   

  
	
  $13 or more*

  	
   

  	
  166,667 Shares*

  	
   

  
	
  $14 or more*

  	
   

  	
  166,666 Shares*

  	
   

  

 

*Without
limiting the generality of Section 14 of the Plan, the amounts set forth
in this table shall be appropriately adjusted to reflect common stock dividends,
combinations, splits, reverse splits and similar transactions.

 

For the avoidance of doubt, if the Company’s Common
Stock attains a VWAP during any Fiscal Quarter that satisfies multiple VWAP
targets (to the extent that this Option remains unvested and Optionee remains
employed by the Company through the applicable VWAP Determination Date (except
as otherwise provided above)), this Option shall vest and become exercisable
with respect to the cumulative Shares subject to the multiple VWAP targets, but
shall not, in any event vest and become exercisable with respect to the Shares
subject to any particular VWAP target more than once. By way of

 

2

 

example and not limitation, if the Common Stock
attains VWAP of $14 during the first Fiscal Quarter, then this Option shall
vest and become exercisable with respect to all 500,000 Shares subject hereto
on the first VWAP Determination Date, but if the Common Stock attains VWAP of
$13 during each of the first two Fiscal Quarters and a VWAP of at least $14
during the third Fiscal Quarter (assuming more than one Fiscal Quarter occurs),
this Option shall vest and become exercisable with respect to (i) 333,333
Shares on the first VWAP Determination Date, (ii) no additional Shares on
the second VWAP Determination Date, and (iii) an additional 166,666 Shares
on the third VWAP Determination Date.

 

For purposes of this Stock Option Agreement, “Liquidity
Event” shall mean a Change of Control in which both (A) the total
consideration received by the Company’s stockholders (including by way of
distribution in the case of an asset sale transaction) is no less than $10 per
Share of Common Stock (or, if applicable, per Share of Common Stock underlying
any Common Stock equivalents such as convertible preferred stock) (as adjusted
for any Common Stock dividends, combinations, splits, reverse splits or similar
transactions), and (B) the consideration received by the Company’s
stockholders in such transaction is in the form of cash, cash equivalents or
freely tradable securities that the Company’s stockholders are able to transfer
or sell without restrictions (other than restrictions that may be applicable to
employees or executive officers of the Company in their capacities as such and
other than restrictions arising under Rule 145 of the Securities Act).

 

Termination Period: If Optionee’s
employment terminates for any reason prior to Optionee’s exercise of the
Option, in whole or in part, the exercisability of the Option in connection
with and following Optionee’s termination of employment shall be governed by
Sections 7,  8, 9 and 10 of the Agreement below.

 

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

 

This Option is intended to qualify as an Incentive
Stock Option as defined in Section 422 of the Code; provided, 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 this Option, become 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, and shall
instead 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.

 

3

 

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

 

(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, except as expressly provided
in Section (ii) of the Vesting Schedule, Shares subject to this
Option shall vest based on Optionee’s continued employment with the Company.

 

(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 employment, the exercisability of
the Option is governed by Sections 7, 8, 9 and 10 below.

 

(iv)        In no event may this Option be exercised
after the Term/Expiration Date set forth in the Notice of Grant.

 

(b)           Method of Exercise. This Option shall be
exercisable by written Notice (substantially in the form attached hereto as Exhibit A
or in such other form as the Administrator may prescribe). The Notice must
state the number of Shares for which the Option is being exercised, and must
contain such other representations and agreements with respect to such Shares
as may be required by the Company. 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 this 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. Upon exercise of this Option, Optionee shall execute a joinder to the
Third Amended and Restated Stockholders’ Agreement among the Company and
certain or its stockholders, dated as of March 3, 2008 (as such agreement
may be further amended and/or restated from time to time) with respect to the
Shares underlying this Option.

 

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
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

 

4

 

of the Company during the l80-day period (or such longer period as may
be requested in writing by the Managing Underwriter and agreed to in writing by
the Company, but which period shall not, in any event, exceed 270 days) (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 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)        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, that
payment of such proceeds is then made to the Company upon settlement of such
sale; or

 

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

 

5

 

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.             Resignation: Termination Without Cause. If
Optionee’s employment with the Company terminates due to Optionee’s resignation
or due to a termination by the Company without Cause (excluding any termination
due to Optionee’s death or Disability), (a) if such termination occurs
prior to an IPO and/or due to Optionee’s voluntary resignation, the Option
shall, to the extent vested as of the date on which Optionee’s employment so
terminates (taking into consideration any vesting that may occur in connection
with such termination), remain exercisable through and including the thirtieth
day after Optionee’s employment so terminates, (b) if such termination
occurs on or after an IPO due to Optionee’s termination by the Company without
Cause, the Option shall remain exercisable through and including the thirtieth
day after the VWAP Determination Date immediately following such termination of
employment (including with respect to any portion of the Option that may vest
and become exercisable on such VWAP Determination Date), provided, that in no event shall any
portion of the Option remain exercisable beyond the Term/Expiration Date set
forth in the Notice of Grant. To the extent that the Option has not vested or
if Optionee does not exercise the Option following a termination of employment
described in this Section 7, in either case, within the timeframe
specified in this Section 7, the Option shall terminate.

 

8.             Termination for Cause. If Optionee’s employment
is terminated by the Company for Cause, the Option shall terminate as of the
start of business on the date of Optionee’s termination, regardless of whether
the Option is then vested and/or exercisable with respect to any Shares, and
shall not in any event vest or be exercisable thereafter.

 

9.             Disability of Optionee. If Optionee’s employment
terminates as a result of Optionee’s total and permanent disability as defined
in Code Section 22(e)(3) (“Disability”), to the extent vested
as of the date on which Optionee’s employment so terminates (taking into
consideration any vesting that may occur in connection with such termination)
and to the extent that the Option may vest and become exercisable on the first
VWAP Determination Date immediately following such a termination of employment
(only if an IPO has occurred prior to such termination), the Option shall
remain exercisable for six months from such date of termination (but in no
event later than the Term/Expiration Date set forth in the Notice of Grant). To
the extent that the Option has not vested or if Optionee does not exercise the
Option following a termination of employment described in this Section 9,
in either case, within the timeframe specified in this Section 9, the
Option shall terminate.

 

10.           Death of Optionee. If Optionee’s employment
terminates as a result of Optionee’s death, to the extent vested as of the date
on which Optionee’s employment so terminates (taking into consideration any
vesting that may occur in connection with such termination) and to the extent
that the Option may vest and become exercisable on the first VWAP Determination
Date immediately following such a termination of employment (only if an IPO has
occurred prior to such termination), the Option shall remain exercisable for
six months following the date of death (but in no event later than the
Term/Expiration Date set forth in the

 

6

 

Notice of Grant) by Optionee’s estate or by a person who acquires the
right to exercise the Option by bequest or inheritance. To the extent that the
Option has not vested or if the Option is not exercised by a permitted
transferee following a termination of employment described in this
Section 10, in either case, within the timeframe specified in this
Section 10, the Option shall terminate.

 

11.           Non-Transferability of Option. This Option may not
be transferred in any manner except by will or by the laws of descent or
distribution. The Option 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.

 

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

 

13.           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.

 

14.           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.

 

15.           No Right to Continue as Service Provider. Nothing
in the Plan or in this Stock Option Agreement shall confer upon Optionee any
right to 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)

 

7

 

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: Chairman and CEO

  

 

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF
SHARES PURSUANT TO THE OPTION HEREOF IS EARNED, EXCEPT TO THE LIMITED EXTENT
EXPRESSLY PROVIDED IN SECTION (II) OF THE VESTING SCHEDULE, 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 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 Stock Option Agreement in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Stock Option Agreement 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: June 16, 2008

  	
  By:

  	
  /s/ Michael Blend

  
	
   

  	
  Name: Michael Blend

  
	
   

  	
   

  
	
   

  	
  Address:

  

 

8

 

 

 

FIRST
AMENDMENT TO DEMAND MEDIA, INC.

STOCK OPTION AGREEMENT

 

THIS FIRST AMENDMENT, dated as of
February 10, 2010 (the “Amendment
Effective Date”), is entered into by and between Demand Media, Inc.,
a Delaware corporation (the “Company”) and
Michael Blend (the “Executive”). All
capitalized terms used herein but not defined shall have the meanings provided
in the Stock Option Agreement, dated May [ ], 2007, by and between the
Company and the Executive (the “Option
Agreement”).

 

RECITALS

 

WHEREAS, the Company and
the Executive previously entered into the Option Agreement, which sets forth
the terms and conditions of a grant to the Executive of certain stock options;
and

 

WHEREAS, the Company and
the Executive mutually desire to amend the Option Agreement to change certain
vesting terms applicable to the Option.

 

NOW, THEREFORE, the Company and
the Executive hereby agree that, effective as of the Amendment Effective Date,
in consideration of the covenants contained herein and other for good and
valuable consideration, the receipt of which is hereby acknowledged, the Option
Agreement is hereby amended as follows:

 

1.              The “Term/Expiration Date” set forth in the
“Notice of Stock Option Grant” is hereby deleted and replaced in its entirety
with the following:

 

“Term/Expiration Date: The
Term/Expiration Date of this Option shall be June 1, 2013, provided, that (i) if a Liquidity
Event (as defined below) shall occur prior to June 1, 2013, then the
Term/Expiration Date of this Option shall instead be the later of the thirteen-month
anniversary of the consummation of the Liquidity Event or June 1, 2013,
and (ii) if an IPO (as defined below) shall occur prior to June 1,
2013, then the Term/Expiration Date of this Option shall instead be the later
to occur of (A) the thirteen-month anniversary of the IPO, or
(B) June 1, 2013.”

 

2.              Section (ii) of
the “Vesting Schedule” and all
paragraphs that follow Section (ii) but precede the “Termination Period” provisions set forth
in the “Notice of Stock Option Grant” are hereby deleted and replaced in their
entirety with the following:

 

“(ii) If (A) prior to June 1, 2013, the Company engages in an
initial public offering of its Common Stock pursuant to an effective
registration statement under the Securities Act (an “IPO”), and (B) the
average closing price of a share of Common Stock on the primary exchange on
which such Common Stock is traded (or, if the Common Stock is regularly quoted
by a recognized securities dealer but selling prices are not reported, the mean
between the high bid and low asked prices for a share of the Common Stock)
during any thirty-calendar-day period following the IPO (which period may
include the date of the IPO) equals

 

 

or exceeds ten dollars ($10) (appropriately adjusted
to reflect Common Stock dividends, combinations, splits, reverse splits and
similar transactions), then the Option shall vest and become exercisable with
respect to all Shares subject hereto on the first calendar day following any
such thirty-day period, subject to Optionee’s continued employment with the
Company through such vesting date, provided,
that if Optionee’s employment is terminated by the Company without
Cause or terminates due to Optionee’s death or total and permanent Disability,
the Option shall vest and become exercisable on the first date during the
twelve-month period immediately following such termination of employment on
which the Option would have vested pursuant to this clause (ii) had
Optionee remained employed through such date (if any).

 

For purposes of this Stock Option Agreement, “Liquidity
Event” shall mean a Change of Control in which both (A) the total
consideration received by the Company’s stockholders (including by way of
distribution in the case of an asset sale transaction) is no less than $10 per
Share of Common Stock (or, if applicable, per Share of Common Stock underlying
any Common Stock equivalents such as convertible preferred stock) (as adjusted
for any Common Stock dividends, combinations, splits, reverse splits or similar
transactions), and (B) the consideration received by the Company’s
stockholders in such transaction is in the form of cash, cash equivalents or
freely tradable securities that the Company’s stockholders are able to transfer
or sell without restrictions (other than (i) restrictions that may be
applicable to employees or executive officers of the Company in their
capacities as such, (ii) restrictions arising under Rule 145 of the
Securities Act and (iii) restrictions resulting from a contractual lock-up
not to exceed 180 days if the total market capitalization of the issuer of the
securities to which such lock-up applies (on a post-transaction basis) exceeds
$3.0 billion).”

 

3.              Section 7 of the Option
Agreement is hereby deleted and replaced in its entirety with
the following:

 

“7.           Resignation; Termination Without Cause. If
Optionee’s employment with the Company terminates due to Optionee’s resignation
or due to a termination by the Company without Cause (excluding any termination
due to Optionee’s death or Disability), (a) if such termination occurs due
to Optionee’s resignation, the Option shall, to the extent vested as of the
date on which Optionee’s employment so terminates (taking into consideration
any vesting that may occur in connection with such termination), remain
exercisable through and including the thirtieth day after Optionee’s employment
so terminates (but in no event later than the Term/Expiration Date set forth in
the Notice of Grant) or (b) if such termination occurs due to Optionee’s
termination by the Company without Cause, the Option shall remain exercisable,
to the extent vested (including with respect to any portion of the Option that
may vest and become exercisable following such termination of employment
pursuant to clause (i) of the Vesting Schedule set forth in the Notice of
Grant if a Liquidity Event occurs or pursuant to clause (ii) of the
Vesting Schedule set forth in the Notice of Grant if an IPO occurs or has occurred),
through and including the thirteen-month anniversary of such date of
termination (but in no event later than the Term/Expiration Date set forth in
the Notice of Grant). To the extent that the Option has not vested or if
Optionee does not exercise the Option following a termination

 

 

of employment described in this Section 7, in
either case, within the timeframe specified in this Section 7, the Option
shall terminate.”

 

4.              Section 9 of the Option
Agreement is hereby deleted and replaced in its entirety with
the following:

 

“9.           Disability of Optionee. If Optionee’s employment
terminates as a result of Optionee’s total and permanent disability as defined
in Code Section 22(e)(3) (“Disability”), to the extent vested
as of the date on which Optionee’s employment so terminates (taking into
consideration any vesting that may occur in connection with such termination),
the Option shall remain exercisable for a period of six months from such date
of termination (but in no event later than the Term/Expiration Date set forth
in the Notice of Grant), provided, that
to the extent that the Option has not vested as of the date on which Optionee’s
employment so terminates but may vest and become exercisable following such
termination of employment pursuant to clause (i) of the Vesting Schedule
set forth in the Notice of Grant if a Liquidity Event occurs or pursuant to
clause (ii) of the Vesting Schedule set forth in the Notice of Grant if an
IPO occurs or has occurred, the Option shall remain exercisable (including with
respect to any portion of the Option that may vest and become exercisable
following such termination of employment) through and including the date that
is the earlier to occur of (y) the six month anniversary of the date that
the Option vests and (z) the thirteen-month anniversary of such date of
termination (but in no event later than the Term/Expiration Date set forth in
the Notice of Grant). To the extent that the Option has not vested or if
Optionee does not exercise the Option following a termination of employment
described in this Section 9, in either case, within the timeframe
specified in this Section 9, the Option shall terminate.

 

5.              Section 10 of the
Option Agreement is hereby deleted and replaced in its entirety with
the following:

 

“10.         Death of Optionee. If Optionee’s employment
terminates as a result of Optionee’s death, to the extent vested as of the date
on which Optionee’s employment so terminates (taking into consideration any
vesting that may occur in connection with such termination) the Option shall
remain exercisable for a period of six months from such date of termination
(but in no event later than the Term/Expiration Date set forth in the Notice of
Grant) by Optionee’s estate or by a person who acquires the right to exercise
the Option by bequest or inheritance; provided,
that to the extent that the Option has not vested as of the date on
which Optionee’s employment so terminates but may vest and become exercisable
following such termination of employment pursuant to clause (i) of the
Vesting Schedule set forth in the Notice of Grant if a Liquidity Event occurs
or pursuant to clause (ii) of the Vesting Schedule set forth in the Notice
of Grant if an IPO  occurs or has occurred, the Option
shall remain exercisable (including with respect to any portion of the Option
that may vest and become exercisable following such termination of employment)
by Optionee’s estate (or by a person who acquires the right to exercise the
Option by bequest or inheritance) through and including the date that is the
earlier to occur of (y) the six month anniversary of the date that the
Option vests and (z) the thirteen-month anniversary of such date of
termination (but in no event later than the Term/Expiration Date set forth in
the Notice of Grant). To the extent that the Option has

 

 

not vested or if the Option is not exercised by a
permitted transferee following a termination of employment described in this
Section 10, in either case, within the timeframe specified in this Section 10,
the Option shall terminate.

 

Except as expressly modified by the terms of this
First Amendment to the Option Agreement, the terms and conditions of the Option
Agreement shall remain in full force and effect.

 

[Signature page follows]

 

 

IN WITNESS WHEREOF, the Company and
the Executive agree to the terms of this First Amendment to the Option
Agreement, effective as of the Amendment Effective Date.

 

 

	
   

  	
   

  	
  Sincerely,

  
	
   

  	
   

  	
   

  
	
   

  	
  DEMAND MEDIA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Rosenblatt

  
	
   

  	
  Name:

  	
  Richard Rosenblatt

  
	
   

  	
  Title:

  	
  Chairman, CEO and
  Co-Founder

  

 

 

AGREED AND ACCEPTED:

 

	
  /s/ Michael Blend

  	
   

  	
  February 10, 2010

  
	
  Michael Blend

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"}]]