Document:

Exhibit 4.02

 

DEMAND
MEDIA, INC.

 

THIRD
AMENDED AND RESTATED STOCKHOLDERS’ AGREEMENT

 

Dated
March 3, 2008

 

i

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  1.

  	
  Certain Definitions

  	
  2

  
	
   

  	
   

  	
   

  
	
  2.

  	
  Representations and Warranties

  	
  8

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Registration Rights

  	
  8

  
	
  3.1

  	
  Request for Registration

  	
  8

  
	
  3.2

  	
  Registration on Form S-3

  	
  10

  
	
  3.3

  	
  Company Registration

  	
  11

  
	
  3.4

  	
  Registration Procedures

  	
  12

  
	
  3.5

  	
  Information by Holder

  	
  14

  
	
  3.6

  	
  Indemnification

  	
  15

  
	
  3.7

  	
  Expenses of Registration

  	
  17

  
	
  3.8

  	
  Rule 144 Reporting

  	
  18

  
	
  3.9

  	
  Limitations on Subsequent
  Registration Rights

  	
  18

  
	
  3.10

  	
  Procedure for Underwriter
  Cutbacks

  	
  18

  
	
  3.11

  	
  Standoff Agreement

  	
  19

  
	
  3.12

  	
  Termination of Rights

  	
  20

  
	
  3.13

  	
  Transfer of Registration Rights

  	
  20

  
	
  3.14

  	
  Qualified Financing

  	
  20

  
	
   

  	
   

  	
   

  
	
  4.

  	
  Restrictions on Transfer

  	
  21

  
	
  4.1

  	
  Joinder; Securities Laws
  Compliance

  	
  21

  
	
  4.2

  	
  Securities Laws and Transfer
  Legends

  	
  21

  
	
  4.3

  	
  Right of First Offer

  	
  22

  
	
  4.4

  	
  Co-Sale Right

  	
  23

  
	
  4.5

  	
  Competitors

  	
  25

  
	
   

  	
   

  	
   

  
	
  5.

  	
  Sale of the Company

  	
  25

  
	
   

  	
   

  	
   

  
	
  6.

  	
  Voting Agreement

  	
  25

  
	
  6.1

  	
  Obligations to Vote Voting Shares
  for Specific Nominee

  	
  25

  
	
  6.2

  	
  Obligations to Vote Voting Shares
  for Removal of Director

  	
  28

  

 

ii

 

	
  6.3

  	
  Changes in Size of Board

  	
  29

  
	
  6.4

  	
  Voting Agreement Legend

  	
  29

  
	
   

  	
   

  	
   

  
	
  7.

  	
  Preemptive Rights

  	
  29

  
	
   

  	
   

  	
   

  
	
  8.

  	
  Affirmative Covenants of the Company

  	
  30

  
	
  8.1

  	
  Delivery of Financial Information

  	
  30

  
	
  8.2

  	
  D&O
  Insurance

  	
  31

  
	
  8.3

  	
  Stock Options

  	
  32

  
	
  8.4

  	
  Restrictions on Transfer

  	
  32

  
	
  8.5

  	
  Proprietary Information

  	
  32

  
	
  8.6

  	
  Director Indemnification
  Agreements

  	
  32

  
	
  8.7

  	
  Board and Officer Covenant

  	
  32

  
	
  8.8

  	
  Environmental Covenant

  	
  32

  
	
  8.9

  	
  Employment Covenant

  	
  32

  
	
   

  	
   

  	
   

  
	
  9.

  	
  Confidentiality

  	
  33

  
	
   

  	
   

  	
   

  
	
  10.

  	
  Miscellaneous

  	
  33

  
	
  10.1

  	
  Transfers in Violation of
  Agreement

  	
  33

  
	
  10.2

  	
  Governing Law

  	
  33

  
	
  10.3

  	
  Equitable Relief

  	
  34

  
	
  10.4

  	
  Successors in Interest

  	
  34

  
	
  10.5

  	
  Entire Agreement

  	
  34

  
	
  10.6

  	
  Notices, Etc.

  	
  34

  
	
  10.7

  	
  Delays or Omissions

  	
  35

  
	
  10.8

  	
  Dispute Resolution Fees

  	
  35

  
	
  10.9

  	
  Counterparts

  	
  35

  
	
  10.10

  	
  Severability

  	
  35

  
	
  10.11

  	
  Titles and Subtitles

  	
  35

  
	
  10.12

  	
  Amendment and Waiver

  	
  36

  
	
  10.13

  	
  Additional Parties; After
  Acquired Shares

  	
  36

  
	
  10.14

  	
  Termination of Prior
  Stockholders’ Agreement

  	
  37

  
	
  10.15

  	
  Termination

  	
  37

  
	
  10.16

  	
  Waiver of Trial By Jury

  	
  37

  

 

iii

 

DEMAND
MEDIA, INC.

 

THIRD
AMENDED AND RESTATED STOCKHOLDERS’ AGREEMENT

 

This Third Amended and Restated Stockholders’ Agreement (the “Agreement”) is made as of March 3,
2008 among Demand Media, Inc., a Delaware corporation (the “Company”), and the stockholders
listed on Exhibit A hereto (the “Stockholders”).

 

RECITALS

 

WHEREAS, the Company and the Stockholders desire to enter into this
Agreement to provide for certain transfer and voting obligations related to the
Shares, among other matters;

 

WHEREAS, each Stockholder owns, directly or indirectly, the Shares set
forth opposite such Stockholder’s name on Exhibit A, as it shall be
adjusted from time to time by the Company to the extent necessary to accurately
reflect exchanges, redemptions, capital contributions, the issuance of
additional Shares or similar events;

 

WHEREAS, the Company and certain of the Stockholders (collectively, the
“Existing Parties”) are parties to the Second Amended and Restated
Stockholders’ Agreement dated as of September 10, 2007 (the “Prior
Stockholders’ Agreement”);

 

WHEREAS, the Existing Parties desire to amend and restate the Prior
Stockholders’ Agreement in accordance with Section 10.12 of the Prior
Stockholders’ Agreement;

 

WHEREAS, Section 10.12 of the Prior Stockholders’ Agreement vested
the authority to amend the Prior Stockholders’ Agreement in the holders of 55%
of the then outstanding Preferred Stock and Common Stock (if any) issued upon
conversion of the Preferred Stock (voting together as a single class and not as
separate series on an as converted to Common Stock basis) and provided that any
such amendment would be binding upon all parties to the Prior Stockholders’
Agreement;

 

WHEREAS, the holders of 55% of the outstanding Preferred Stock (voting
together as a single class and not as separate series on an as converted to
Common Stock basis) desire to amend and restate the Prior Agreement in its
entirety and are entering into this Agreement, making this Agreement binding
upon all of the parties to the Prior Stockholders’ Agreement; and

 

WHEREAS, the Company and the Stockholders contemplate that certain
future holders of Shares and rights to acquire Shares shall also become parties
to this Agreement by agreeing to the terms and conditions set forth herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt, sufficiency and adequacy of which are
hereby acknowledged, the parties hereto that are parties to the Prior
Stockholders’ Agreement hereby agree that the Prior Stockholders’ Agreement
shall be amended and restated in its entirety with this Agreement, and the
parties hereto, intending to be legally bound hereby, further agree as follows:

 

 

1.                                       Certain Definitions.  As
used in this Agreement, the following terms have the following respective
meanings:

 

“3i Permitted Transferee” means 3i Group plc or any Affiliate of
3i Group plc or any entity or vehicle including a partnership in which 3i Group
plc and/or its affiliate has a majority economic interest and which is managed
by 3i Group plc or any of its Affiliates.

 

“Affiliate” means
as applied to any Person, any other Person directly or indirectly controlling,
controlled by, or under common control with, that Person.  For the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlling,” “controlled by”
and “under common control with”), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.  For purposes of this definition, a Person
shall be deemed to be “controlled by” a Person if such Person possesses,
directly or indirectly, the power to vote 50% or more of the securities having
ordinary voting power for the election of members of the board of directors,
board of managers or similar governing body of such Person.

 

“Approved Sale”
means the sale of the Company, in a single transaction or a series of related
transactions (a) pursuant to which one or more third parties proposes to
acquire all or substantially all of the equity and voting power of the Company
(whether by merger, consolidation, recapitalization, reorganization, purchase
of the outstanding capital stock of the Company or otherwise) or all or substantially
all of the consolidated assets of the Company, (b) which has been approved
by (i) the Board and (ii) the Requisite Preferred Holders and (c) pursuant
to which all holders of Shares receive with respect thereto (whether in such
transaction or, with respect to an asset sale, upon a subsequent liquidation)
the amount of consideration that they would be entitled to receive (with
respect to the aggregate consideration that is paid or distributed to
equityholders in such transaction) under the Company’s Fourth Restated
Certificate of Incorporation (as amended and/or restated from time to time) in
a Liquidation.

 

“Board” means the
board of directors of the Company.

 

“Business Day” means any day during which the New York Stock
Exchange is open for trading.

 

“Common Holders” means holders of Common Stock (in their
capacities as such).

 

“Common Stock” means the common stock of the Company, par value
$0.0001 per share (or any securities into which such Common Stock is
converted).

 

“Common Stock Equivalents”
means the Company’s Common Stock and securities convertible into, or
exchangeable for, or exercisable into, shares of Common Stock.

 

“Competitor”
means Person who is primarily engaged in and/or derives a material portion of
its revenue from directly or through a majority owned subsidiary (i) the
domain name registrar business, (ii) the domain name traffic monetization
business (including domain name parking, domain name auctions and buying and
selling domain name portfolios) and/or (iii) operation of media websites  in any state of the United States or elsewhere.  In addition, each of 

 

2

 

the entities listed on Schedule 1 hereto (and
their respective Affiliates) shall be deemed Competitors of the Company for
purposes of this Agreement.

 

“ENOM Merger Agreement” means the Agreement and Plan of Merger
dated April 27, 2006 by and among the Company, Mediabloxx Merger Sub, Inc.,
ENOM Ventures, Inc., Paul Stahura, Jim Beaver and the Stahura Family
Revocable Trust.

 

“Exchange Act” means the
Securities Exchange Act of 1934, as amended, or any similar successor federal
statute, and the rules and regulations thereunder, all as the same shall
be in effect from time to time.

 

“Form S-3 Initiating
Holders” means any Stockholders who in the aggregate hold not less
than ten percent (10%) of the shares of the Registrable Securities then
outstanding and who propose to register securities, the aggregate offering
price of which, net of underwriting discounts and commissions, is no less than $500,000.

 

“GS” means Goldman Sachs Investment Partners Master Fund, L.P.

 

“GS Permitted Transferee” means GS or any Affiliate of GS or any
entity or vehicle including a partnership in which GS and/or its affiliate has
a majority economic interest and which is managed by GS or any of its
Affiliates.

 

“Initiating Holders”
means Stockholders (i) who in the aggregate hold not less than twenty
percent (20%) of the shares of the Registrable Securities then outstanding, (ii) which
include at least two Stockholders that are not Affiliates of each other who
each beneficially own and each propose to register at least 3,500,000 shares of
Registrable Securities (as adjusted for any stock dividend, stock split,
combination or other similar recapitalization with respect to the Common Stock)
and (iii) who propose to register securities, the aggregate offering price
of which, net of underwriting discounts and commissions, exceeds $5,000,000.

 

“Initial IPO” means the Company’s first underwritten public
offering of Common Stock pursuant to the Securities Act.

 

“Liquidation” shall have the meaning assigned to such term in
the Company’s Fourth Restated Certificate of Incorporation.

 

“Major Holder” means a Stockholder which together with such
Stockholder’s Affiliates owns at least 500,000 shares of Common Stock (on an as
converted to Common Stock basis and as adjusted for any stock dividend, stock
split, combination or other similar recapitalization with respect to Common
Stock).

 

“New Securities” means any shares of capital stock of the
Company, including Common Stock and Preferred Stock, whether authorized or not,
and rights, options or warrants to purchase said shares of capital stock, and
securities of any type whatsoever that are, or may become, convertible into capital
stock; provided, however, that the term “New Securities” does not
include (i) any securities issued pursuant to the Purchase Agreement; (ii) securities
issued to employees, consultants, officers, and directors of the Company, if
such issuance is approved by the Board; (iii) securities issued upon
conversion of convertible securities (including the Series A 

 

3

 

Preferred, Series B Preferred, Series C
Preferred, Series D Preferred and Series D-1 Preferred) or issued
pursuant to any rights or agreements, including, without limitation, options
and warrants; provided that the Company shall have complied with Section 7
below with respect to the initial sale or grant by the Company of such
convertible securities, rights or agreements, or provided that such convertible
securities, rights or agreements existed on or prior to the date hereof; (iv) securities
issued in connection with any stock split, stock dividend, or recapitalization
by the Company; (v) securities
issued pursuant to the acquisition of another business or entity by the Company
by merger, purchase of assets or shares, or other reorganization if such
issuance is approved by the Board; (vi) securities issued in connection
with obtaining lease financing, whether issued to a lessor, guarantor, or other
person, if such issuance is approved by the Board; (viii) securities
issued to vendors or customers of the Company, or to other persons in similar
commercial arrangements with the Company, if such issuance is approved by the
Board; (ix) securities issued in connection with corporate partnering
transactions, if such issuance is approved by the Board; and (x) any
right, option, or warrant to acquire any security convertible into the
securities excluded from the definition of New Securities pursuant to clauses (i) through
(ix) above.

 

“Other Stockholder” means Persons other than Stockholders who,
by virtue of agreements with the Company, are entitled to include their
securities in certain registrations hereunder.

 

“Permitted Transfer”
means the Transfer of Shares by a Stockholder to: (a) the Company; (b) any
subsidiary of the Company; (c) another Stockholder; (d) any Affiliate
of such Stockholder; (e) to one or more Persons in an Approved Sale; (f) in
the case of 3i Technology Partners III L.P. (“3i”), to any 3i Permitted
Transferee; or (g) in the case of GS, to any GS Permitted Transferee.  For purposes of this definition, the term “Affiliate”
shall include, with respect to individual Stockholders, if any, (i) a spouse
or descendant of such individual, (ii) any trust or family partnership or
other entity (in each case, organized under the laws of the United States or
any political subdivision thereof) whose beneficiaries or owners shall solely
be such individual and/or such individual’s spouse and/or any Person related by
blood or adoption to such individual or such individual’s spouse, and (iii) the
estate of such individual.

 

“Person” means
any individual, corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture, estate, trust,
association, organization, labor union, or other entity or governmental body.

 

“Preferred Holders” means the Series A Holders, the Series B
Holders, the Series C Holders, the Series D Holders and the Series D-1
Holders.

 

“Preferred Stock” means the Series A Preferred, the Series B
Preferred, the Series C Preferred, the Series D Preferred, the Series D-1
Preferred and any other series of preferred stock of the Company.

 

“Purchase Agreement” means the Series D-1 Preferred Stock
Purchase Agreement dated as of March 3, 2008 among the Company and the
parties set forth on Exhibit A thereto and the other investors who are or
become parties thereto, as such agreement may be amended from time to time.

 

4

 

“Qualified Financing” means the consummation of (a) a
firmly underwritten public offering pursuant to the Securities Act on Form S-1
(as defined in the Securities Act) or any successor form of Common Stock with
aggregate gross proceeds to the Company of not less than $100,000,000 or (b) a
Rule 144A Offering of Common Stock with aggregate gross proceeds to the
Company of not less than $150,000,000, in each case with a per share offering
price of not less than $5.7765 (as adjusted for any stock dividend, stock
split, combination or other similar recapitalization with respect to the Common
Stock).

 

The terms “register”,
“registered” and “registration” refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.

 

“Registration Expenses”
shall mean all expenses incurred by the Company in complying with Sections
3.2, 3.3 and 3.4 hereof, including, without limitation, all
registration, qualification, listing and filing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company, fees
and disbursements of one counsel for all of the Stockholders registering
securities in any given registration,
blue sky fees and expenses, and the expense of any special audits incident to
or required by any such registration (but excluding the compensation of regular
employees of the Company which shall be paid in any event by the Company), but
shall not include Selling Expenses.

 

“Registrable Securities”
shall mean (i) shares of Common Stock held by a Stockholder or issued or
issuable pursuant to the exercise or conversion of Common Stock Equivalents
(including Series A Preferred, Series B Preferred, Series C
Preferred, Series D Preferred, Series D-1 Preferred (following
conversion thereof to Series D Preferred) or warrants to purchase Common
Stock or Common Stock Equivalents) held by a Stockholder and (ii) any
Common Stock of the Company issued as a dividend or other distribution with
respect to or in exchange for or in replacement of the shares referenced in
clause (i) above; provided, however, that Common Stock or
other securities shall only be treated as Registrable Securities if and so long
as they (A) have not been sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, (B) have
not been sold in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act under Section 4(1) thereof
so that all transfer restrictions and restrictive legends with respect thereto
are removed upon the consummation of such sale, (C) have not been
transferred in a transaction pursuant to which the registration rights are not
also assigned in accordance with Section 3.13 hereof, or (D) with respect to all shares held
by a Stockholder, during the applicable period, are not eligible for sale under
Rule 144 of the Securities Act (or any similar or successor rule) during
any one ninety (90) day period.

 

“Requisite Preferred Holders” shall mean the holders of an
aggregate of more than 55% of the then outstanding Preferred Stock and Common
Stock (if any) issued upon conversion of the Preferred Stock (voting together
as a single class and not as separate series on an as converted to Common Stock
basis).

 

“Rule 144”
means Rule 144 as promulgated by the SEC under the Securities Act, as such
Rule may be amended from time to time, or any similar successor rule that
may be promulgated by the SEC.

 

5

 

“Rule 144A”
means Rule 144A as promulgated by the SEC under the Securities Act, as
such Rule may be amended from time to time, or any similar successor rule that
may be promulgated by the SEC.

 

“Rule 144A Offering” means an offering of Common Stock or
Common Stock Equivalents (or securities into which Common Stock is convertible)
pursuant to Rule 144A following which the offered securities are traded on
the GSTrUE (or on a similar platform, exchange or trading system).

 

“Rule 145”
means Rule 145 as promulgated by the SEC under the Securities Act, as such
Rule may be amended from time to time, or any similar successor rule that
may be promulgated by the SEC.

 

“Sale” (and related words “Sell” and “Sold”) means
a Transfer for value.

 

“SEC” means the Securities and
Exchange Commission.

 

“Securities Act”
means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder or any similar federal statute and the rules and
regulations of the SEC thereunder, all as the same shall be in effect at the
time.

 

“Selling Expenses”
shall mean all underwriting discounts and selling commissions applicable to the
securities registered by the Stockholders and all fees and disbursements of
counsel for any Stockholder, other than the fees and disbursements of one
counsel for all of the Stockholders registering securities in any given
registration as provided in the definition of “Registration Expenses” above.

 

“Series A Holders” means the holders of Series A
Preferred (in their capacities as such).

 

“Series B Holders” means the holders of Series B
Preferred (in their capacities as such).

 

“Series C Holders” means the holders of Series C
Preferred (in their capacities as such).

 

“Series D Holders” means the holders of Series D
Preferred (in their capacities as such).

 

“Series D-1 Holders” means the holders of Series D-1
Preferred (in their capacities as such).

 

“Series A Preferred”
means the Series A Preferred Stock of the Company, par value $0.0001 per
share.

 

“Series B Preferred”
means the Series B Preferred Stock of the Company, par value $0.0001 per
share.

 

6

 

“Series C Preferred”
means the Series C Preferred Stock of the Company, par value $0.0001 per
share.

 

“Series D Preferred”
means the Series D Preferred Stock of the Company, par value $0.0001 per
share.

 

“Series D-1 Preferred”
means the Series D-1 Preferred Stock of the Company, par value $0.0001 per
share.

 

“Shares” means
all Common Stock Equivalents of the Company held by any Stockholder that is a
party to this Agreement, whether now owned or hereafter acquired.

 

“Sponsors” means each of (i) Spectrum so long as it is
entitled to designate a director under Section 6.1(a)(i), (ii) Oak
so long as it is entitled to designate a director under Section 6.1(a)(ii),
(iii) Generation so long as it is entitled to designate a director under Section 6.1(a)(iii),
(iv) 3i so long as it is entitled to designate a director under Section 6.1(a)(iv) and
(v) GS so long as it is entitled to designate a director under Section 6(a)(v).

 

“Stockholder” means each of the stockholders listed on Exhibit A
(so long as such Person remains a stockholder) and each other Person that
becomes a stockholder hereunder pursuant to Section 10.13.

 

“Subsidiary” means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares
of stock entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof is at the time owned
or controlled, directly or indirectly, by that Person or one or more of the
other Subsidiaries of that Person or a combination thereof, or (ii) if a
partnership, limited liability company, association or other business entity, a
majority of the partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that Person or a combination thereof.  For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a partnership, limited
liability company, association or other business entity if such Person or
Persons shall be allocated a majority of partnership, limited liability
company, association or other business entity gains or losses or shall be or
control or have the right to appoint, as the case may be, the managing
director, manager, board of directors, a general partner or other governing
body of such partnership, limited liability company, association or other
business entity by means of ownership interest, agreement or otherwise.

 

“Transfer” shall mean any sale, transfer, assignment, pledge or
other disposition of any Shares other than by operation of law (except where
the primary purpose of the action that is by operation of law is to circumvent
the transfer restrictions of this Agreement).

 

“Voting Preferred Stock” means all shares of Series A
Preferred, Series B Preferred, Series C Preferred and Series D
Preferred and any other series of Preferred Stock having the right to vote in
the election of directors of the Company.

 

7

 

“Voting Shares”
means all shares of Common Stock and any other shares of capital stock of the
Company having the right to vote as a single class with the Common Stock.

 

2.                                       Representations and Warranties.  Each Stockholder hereby represents and
warrants to the Company and to each other Stockholder that (a) such
Stockholder (i) with respect to Stockholders that are not individuals, is
duly formed and validly existing in good standing under the laws of the
jurisdiction in which it is organized, with all requisite power and authority
to carry on its business and (ii) has full power and authority to execute,
deliver and perform its obligations under this Agreement and (b) the
execution and delivery of this Agreement has been duly and validly authorized,
and all necessary action has been taken, to make this Agreement a valid and
binding obligation of such Stockholder, enforceable in accordance with its
terms, except that the enforcement thereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors’ rights generally and to general principles of
equity (regardless of whether such enforcement is considered in a proceeding in
equity or at law).

 

3.                                       Registration Rights.

 

3.1                                 Request for
Registration.

 

(a)                                  If the Company
shall receive from Initiating Holders a written request that the Company effect
any registration, qualification, or compliance, the Company will:

 

(i)                     promptly deliver written
notice of the proposed registration, qualification, or compliance to all other
Stockholders; and

 

(ii)                  as soon as practicable, use
its best efforts to effect such registration, qualification, or compliance
(including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under applicable blue sky
or other state securities laws, and appropriate compliance with applicable
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any Stockholder or Stockholders joining in
such request as are specified in a written request delivered to the Company
within twenty (20) days after delivery of such written notice from the Company;
provided, however, that the Company shall not be obligated to
take any action to effect any such registration, qualification, or compliance
pursuant to this Section 3.1(a):

 

(A)                              Prior to the
earlier of: (i) five (5) years
following the date of this Agreement, and (ii) six months following the
effective date of the consummation of the first underwritten public offering of
the Common Stock pursuant to the Securities Act;

 

(B)                                After the
Company has effected two (2) such
registrations pursuant to this Section 3.1, such registrations have
been declared or ordered effective, and the securities offered pursuant to such
registrations have been sold;

 

8

 

(C)                                During the
period starting with the date sixty (60) days prior to the Company’s estimated
date of filing of, and ending on a date one hundred and eighty (180) days after
the effective date of, a registration initiated by the Company; provided
that the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective and that the Company’s
estimate of the date of filing such registration statement is made in good
faith;

 

(D)                               In any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act;

 

(E)                                 If in the good
faith judgment of the Board, such registration would be seriously detrimental
to the Company and the Board concludes, as a result, that it is essential to
defer the filing of such registration statement at such time, and the Company
thereafter delivers to the Initiating Holders a certificate, signed by the
President or Chief Executive Officer of the Company, stating that in the good
faith judgment of the Board it would be seriously detrimental to the Company or
its stockholders for a registration statement to be filed in the near future,
then the Company’s obligation to use its best efforts to register, qualify, or
comply under this Section 3.1 shall be deferred for a period not to
exceed ninety (90) days from the delivery of the written request from the
Initiating Holders; provided, however, that the Company may not
utilize this right and the deferral right provided for in Section 3.2(b) more
than twice in any twelve (12) month period;

 

(F)                                 If the
Initiating Holders propose to dispose of shares of Registrable Securities which
may be immediately registered on Form S-3 pursuant to a request made under
Section 3.2 hereof.

 

Subject to the foregoing clauses (A) through (F), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.  The registration
statement filed pursuant to the request of the Initiating Holders may, subject
to the provisions of Section 3.1(c) and Section 3.10
hereof, include other securities of the Company with respect to which
registration rights have been granted, and may include securities being sold
for the account of the Company.

 

(b)                                 Underwriting.  If the registration pursuant to this Section 3.1
is underwritten, the right of any Stockholder to participate in such
registration shall be conditioned upon such Stockholder’s participation in such
underwriting and the inclusion of such Stockholder’s Registrable Securities in
the underwriting to the extent provided herein. 
A Stockholder may elect to include in such underwriting all or a part of
the Registrable Securities held by such Stockholder.

 

(c)                                  Procedures.  If the Company shall request inclusion in any
registration pursuant to this Section 3.1 of securities being sold
for its own account, or if other Persons shall request inclusion in any
registration pursuant to this Section 3.1, the Initiating Holders
shall, on behalf of all Stockholders, offer to include such securities in the
underwriting 

 

9

 

and may condition such offer on such other
Persons’ acceptance of the applicable provisions of this Section 3
(including without limitation Section 3.11).  The Company shall (together with all
Stockholders or other Persons proposing to distribute their securities through
such underwriting) enter into and perform its obligations under an underwriting
agreement in customary form with the managing underwriter selected for such
underwriting by a majority in interest of the Initiating Holders (which
managing underwriter shall be reasonably acceptable to the Company).  Notwithstanding any other provision of this Section 3.1,
if the managing underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares to be included in the underwriting or
registration shall be allocated as set forth in Section 3.10.  If any Person who has requested inclusion in
such registration as provided above disapproves of the terms of the
underwriting, such Person shall be excluded therefrom by written notice delivered
by the Company or the managing underwriter. 
Any Registrable Securities and/or other securities so excluded or
withdrawn shall also be withdrawn from registration.

 

3.2                                 Registration on
Form S-3.

 

(a)                                  Qualification on Form S-3.  Following consummation of the first
underwritten public offering of Common Stock pursuant to the Securities Act,
the Company shall use its best efforts to qualify for registration on Form S-3
or any comparable or successor form and shall use its best efforts to
thereafter maintain its qualification to use such form(s).  To that end the Company shall register
(whether or not required by law to do so) its Common Stock under the Exchange
Act in accordance with the provisions of the Exchange Act following the
effective date of the first registration of any securities of the Company on Form S-1
or any comparable or successor form or forms.

 

(b)                                 Request for Registration on Form S-3.  After the Company has qualified for the use
of Form S-3, if the Company shall receive from Form S-3 Initiating
Holders a written request that the Company effect a registration on Form S-3
the Company will:

 

(i)                     promptly deliver written
notice of the proposed registration to all other Stockholders; and

 

(ii)                  as soon as practicable, use
its best efforts to effect such registration, qualification, or compliance
(including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under applicable blue sky
or other state securities laws, and appropriate compliance with applicable
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any Stockholder or Stockholders joining in
such request as are specified in a written request delivered to the Company
within twenty (20) days after delivery of such written notice from the Company;
provided, however, that the Company shall not be obligated to
take any action to effect any such registration, qualification, or compliance
pursuant to this Section 3.2:

 

10

 

(A)                              If the Company
has effected any such registration during the preceding 12-month period;

 

(B)                                During the
period starting with the date sixty (60) days prior to the Company’s estimated
date of filing of, and ending on a date one hundred and eighty (180) days after
the effective date of, a registration initiated by the Company; provided
that the Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become effective and that the
Company’s estimate of the date of filing such registration statement is made in
good faith;

 

(C)                                In any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification, or compliance unless the Company is already subject to service
in such jurisdiction and except as may be required by the Securities Act;

 

(D)                               If in the good
faith judgment of the Board, such registration would be seriously detrimental
to the Company and the Board concludes, as a result, that it is essential to
defer the filing of such registration statement at such time, and the Company
thereafter delivers to the From S-3 Initiating Holders a certificate, signed by
the President or Chief Executive Officer of the Company, stating that in the
good faith judgment of the Board it would be seriously detrimental to the
Company or its stockholders for a registration statement to be filed in the
near future, then the Company’s obligation to use its best efforts to register,
qualify, or comply under this Section 3.2 shall be deferred for a
period not to exceed ninety (90) days from the date of delivery of the written
request from the Form S-3 Initiating Holders; provided, however,
that the Company may not utilize this right and the deferral right provided for
in Section 3.1(a)(ii)(F) more than twice in any twelve (12)
month period.

 

(c)                                  Underwriting;
Procedure.  If a
registration requested under this Section 3.2 is for an
underwritten offering, the provisions of Section 3.1(b) and 3.1(c) shall
apply to such registration.

 

3.3                                 Company
Registration.

 

(a)                                  Notice of
Registration.  If the
Company shall determine to register any of its securities, either for its own
account or the account of a security holder or holders other than (A) a
registration pursuant to Section 3.1 or 3.2 hereof, (B) a
registration relating solely to employee benefit plans, or (C) a
registration relating solely to a Rule 145 transaction, the Company will:

 

(i)                     promptly deliver to each
Stockholder written notice thereof; and

 

(ii)                  include in such registration
(and any related qualification under blue sky laws or other compliance), except
as set forth in Section 3.3(b) below, and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests made by any Stockholder and delivered to the Company within ten (10) days
after the written notice is delivered by the Company.  Such written request may include all or a
portion of a Stockholder’s Registrable Securities.

 

11

 

(b)                                 Underwriting; Procedures.  If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Stockholders as a part of the written notice given
pursuant to Section 3.3(a)(i). 
In such event, the right of any Stockholder to registration pursuant to
this Section 3.3 shall be conditioned upon such Stockholder’s
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein.  All Stockholders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other Stockholders distributing their securities through such underwriting)
enter into and perform their obligations under an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company.  Notwithstanding any other
provision of this Section 3.3 if the managing underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten, the managing underwriter may exclude all Registrable
Securities from, or limit the number of Registrable Securities to be included
in, the registration and underwriting. 
The Company shall so advise all holders of securities requesting
registration, and the number of shares of Registrable Securities (if any) that
are entitled to be included in the registration and underwriting shall be
allocated as set forth in Section 3.10.  If any Person who has requested inclusion in
such registration as provided above disapproves of the terms of the
underwriting, such Person shall be excluded therefrom by written notice
delivered by the Company or the managing underwriter.  Any Registrable Securities and/or other
securities so excluded or withdrawn shall also be withdrawn from registration.

 

(c)                                  Right to Terminate
Registration.  The Company
shall have the right to terminate or withdraw any registration initiated by it
under this Section 3.3 prior to the effectiveness of such
registration, whether or not any Stockholder has elected to include securities
in such registration.

 

3.4                                 Registration
Procedures.  In the case
of each registration, qualification, or compliance effected by the Company
pursuant to this Section 3, the Company will keep each Stockholder
advised in writing as to the initiation of each registration, qualification,
and compliance and as to the completion thereof and, at its expense, the
Company will use its best efforts to:

 

(a)                                  Prepare and file with the
SEC a registration statement with respect to such securities and use its best
efforts to cause such registration statement to become and remain effective for
at least ninety (90) days or until the distribution described in the
registration statement has been completed, whichever occurs first; provided,
however, that (i) such 90-day period shall be extended for a period
of time equal to the period the Stockholder refrains from selling any
securities included in such registration at the request of an underwriter of
common stock or other securities of the Company, and (ii) in the case of
any registration of Registrable Securities on Form S-3 which are intended
to be offered on a continuous or delayed basis, such 90-day period shall be
extended, if necessary, to keep the registration statement effective until all
such Registrable Securities are sold, however in no event longer than one year
from the effective date of the registration statement provided that if
applicable rules under the Securities Act governing the obligation to file
a post-effective amendment permit, in lieu of filing a post-effective amendment
which (A) includes any prospectus required by Section 10(a)(3) of
the Securities Act or (B) reflects facts or events representing a material
or fundamental change in the information set forth in the registration
statement, then the incorporation by reference of 

 

12

 

information required to be included in (A) and
(B) above shall be contained in reports filed pursuant to Section 13
or 15(d) of the Exchange Act in the registration statement;

 

(b)                                 Furnish to the Stockholders
participating in such registration and to the underwriters of the securities
being registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus, and such other documents
as such underwriters may reasonably request in order to facilitate the public
offering of such securities;

 

(c)                                  Prepare and file with the
SEC such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statements as may be
necessary to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement;

 

(d)                                 Notify each seller of
Registrable Securities covered by such registration statement at any time when
a prospectus relating thereto is required to be delivered under the Securities Act
of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or incomplete in the
light of the circumstances then existing, and at the request of any such
seller, prepare and furnish to such seller promptly a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchaser of such shares,
such prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or incomplete in the light of the
circumstances then existing;

 

(e)                                  Use its best efforts to
register and qualify the securities covered by such registration statement
under such other securities or blue sky laws of such jurisdictions as shall be
reasonably requested by the Stockholders; provided that the Company
shall not be required in connection therewith or as a condition thereto (i) to
file a general consent to service of process in any such states or jurisdictions
unless the Company is already subject to service in such jurisdiction and
except as may be required by the Securities Act or (ii) to qualify to do
business in any such state or jurisdiction;

 

(f)                                    Cause all such Registrable
Securities to be listed on each securities exchange on which similar publicly
traded securities issued by the Company are then listed;

 

(g)                                 Provide a transfer agent and
registrar for all Registrable Securities and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration;

 

(h)                                 Use its best efforts to
furnish, at the request of any Stockholder requesting registration of
Registrable Securities pursuant to this Section 3, on the date that
such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 3, if such
securities are being sold through underwriters, or, if such securities are not
being sold through underwriters, on the date that the registration statement
with 

 

13

 

respect to such securities becomes effective,
(i) an opinion, dated such date, of the counsel representing the Company
for the purposes of such registration, in form and substance as is customarily
given to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Stockholders requesting registration of
Registrable Securities and (ii) a letter, dated such date, from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Stockholders requesting registration of Registrable
Securities (to the extent the then-applicable standards of professional conduct
permit said letter to be addressed to the Stockholders).

 

(i)                                     The Company agrees that, if
any Stockholder could reasonably be deemed to be an “underwriter”, as defined
in Section 2(a)(11) of the Securities Act, in connection with the
registration statement in respect of any registration of the Company’s
securities of any Stockholder pursuant to this Agreement, and any amendment or
supplement thereof (any such registration statement or amendment or supplement
a “Stockholder Underwriter Registration Statement”), then the Company will
cooperate with such Stockholder in allowing such Stockholder to conduct
customary “underwriter’s due diligence” with respect to the Company and satisfy
its obligations in respect thereof.  In
addition, at any such Stockholder’s request, the Company will furnish to such
Stockholder, on the date of the effectiveness of any Stockholder Underwriter
Registration Statement and thereafter from time to time on such dates as such
Stockholder may reasonably request, (i) a letter, dated such date, from
the Company’s independent certified public accountants in form and substance as
is customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to such Stockholder, and (ii) an
opinion, dated as of such date, of counsel representing the Company for
purposes of such Stockholder Underwriter Registration Statement, in form, scope
and substance as is customarily given in an underwritten public offering,
including a standard “10b-5” negative assurances for such offering, addressed
to such Stockholder; provided, however, that with respect to any placement
agent, the Company’s obligations with respect to this Section 3.4(i) shall
be limited to one time, with an additional bring-down request within 30 days of
the date of such documents.  The Company
will also permit legal counsel to such Stockholder to review and comment upon
any such Stockholder Underwriter Registration Statement at least five Business
Days prior to its filing with the SEC and all amendments and supplements to any
such Stockholder Underwriter Registration Statement within a reasonable number
of days prior to their filing with the SEC and the Company will consider in
good faith any comments that such counsel may reasonably request.

 

3.5                                 Information by
Holder.  The Stockholder or
Stockholders of Registrable Securities included in any registration shall
furnish to the Company such information regarding such Stockholder or
Stockholders, the Registrable Securities held by them, and the distribution
proposed by such Stockholder or Stockholders as the Company may reasonably
request in writing and as shall be required in connection with any registration,
qualification, or compliance referred to in this Section 3, and the
refusal to furnish such information in all material respects by any Stockholder
or Stockholders shall relieve the Company of its obligations in this Section 3
with respect to such Stockholder or Stockholders.  Furthermore, the Company shall have no
obligation with respect to any registration requested pursuant to Section 3.1
or Section 3.2 of this Agreement if, as a result of the application
of the preceding sentence, the number of shares or the anticipated aggregate
offering price of the Registrable Securities to be included in the 

 

14

 

registration does not equal or exceed the
number of shares or the anticipated aggregate offering price required to
originally trigger the Company’s obligation to initiate such registration as
specified in the definition of “Initiating Holders” or “Form S-3
Initiating Holders,” whichever is applicable.

 

3.6                                 Indemnification.

 

(a)                                  To the extent
permitted by law, the Company will indemnify each Stockholder, each of its
officers, directors, partners, legal counsel, and accountants, and each Person
controlling such Stockholder within the meaning of Section 15 of the
Securities Act, with respect to which registration, qualification, or
compliance has been effected pursuant to this Section 3, and each
underwriter, if any, and each Person who controls any underwriter within the
meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages, or liabilities (or actions, proceedings, or settlements in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration statement,
prospectus, offering circular, or other document (including any related
registration statement, notification, or the like), or any amendment or
supplement thereto, incident to any such registration, qualification, or
compliance, or based on any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading
(including without limitation, as a result of such Stockholder being named an
underwriter or deemed underwriter), or any violation by the Company of the
Securities Act or the Exchange Act, any rule or regulation promulgated
under the Securities Act or the Exchange Act, or any state securities law, rule or
regulation, in each case applicable to the Company in connection with any such
registration, qualification, or compliance, and the Company will reimburse each
such Stockholder, each of its officers, directors, partners, legal counsel, and
accountants, and each Person controlling such Stockholder, each such
underwriter and each Person who controls any such underwriter, for any legal
and any other expenses reasonably incurred in connection with investigating,
preparing, defending, or settling any such claim, loss, damage, liability, or
action, as such expenses are incurred; provided that the Company will
not be liable in any such case to the extent that any such claim, loss, damage,
liability, or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by such
Stockholder, controlling person, or underwriter and stated to be specifically
for use therein.  It is agreed that the
indemnity agreement contained in this Section 3.6 shall not apply
to amounts paid in settlement of any such loss, claim, damage, liability, or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld).

 

(b)                                 To the extent
permitted by law, each Stockholder will, if Registrable Securities held by such
Stockholder are included in the securities as to which such registration,
qualification, or compliance is being effected, indemnify the Company, each of
its directors, officers, partners, legal counsel, and accountants, and each
underwriter, if any, of the Company’s securities covered by such a registration
statement, each Person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act, and each other such
Stockholder and Other Stockholder, each of their officers, directors, and
partners, and each Person controlling such Stockholder or Other Stockholder
within the meaning of Section 15 of the Securities Act, against all
claims, losses, damages, and liabilities (or actions in respect 

 

15

 

thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular, or other
document, or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse the Company, each other such Stockholder and
Other Stockholder, each of their directors, officers, partners, legal counsel,
and accountants, Persons controlling the Company and other such Stockholders
and Other Stockholders, and each such underwriter, and each Person who controls
such underwriters for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability, or action, as such expenses are incurred, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular, or other document in reliance upon
and in conformity with written information furnished to the Company by such
Stockholder and stated to be specifically for use therein; provided, however,
that the obligations of such Stockholder hereunder shall not apply to amounts
paid in settlement of any such claims, losses, damages, or liabilities (or
actions in respect thereof) if such settlement is effected without the consent
of such Stockholder (which consent shall not be unreasonably withheld); provided
that in no event shall any indemnity under this Section 3.6 exceed
the net proceeds received by such Stockholder in such offering.

 

(c)                                  Each party
entitled to indemnification under this Section 3.6 (the “Indemnified Party”) shall give
notice to the party required to provide indemnification (the “Indemnifying Party”) promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom; provided
that counsel for the Indemnifying Party, who shall conduct the defense of such
claim or litigation, shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld), and the Indemnified Party may participate
in such defense at such party’s expense, and provided  further
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this Section 3
unless the failure to give such notice is materially prejudicial to an
Indemnifying Party’s ability to defend such action.  Notwithstanding the foregoing, an Indemnified
Party (together with all other Indemnified Parties that may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to a conflict of interest between
such Indemnified Party and any other party represented by such counsel in such
proceeding.  No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.  Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.

 

(d)                                 If the
indemnification provided for in this Section 3.6 is held by a court
of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any claim, loss, damage, liability, or expense referred to therein,
then the Indemnifying Party, in lieu 

 

16

 

of indemnifying such Indemnified Party hereunder,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such claim, loss, damage, liability, or expense in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party on the
one hand and the Indemnified party on the other in connection with the
statements or omissions that resulted in such claim, loss, damage, liability,
or expense, as well as any other relevant equitable considerations.  The relative fault of the Indemnifying Party
and of the Indemnified Party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission to state a material fact related to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties’ relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.  The Company
and the Stockholders agree that it would not be just and equitable if
contribution pursuant to this Section 3.6 were based solely upon
the number of entities from whom contribution was requested or by any other
method of allocation which does not take account of the equitable
considerations referred to above.  In no
event shall any contribution by a Stockholder under this Section 3.6
exceed the net proceeds received by such Stockholder in such offering.

 

(e)                                  The amount paid
or payable by an Indemnified Party as a result of the losses, claims, damages,
and liabilities referred to above in this Section 3.6 shall be
deemed to include any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any such action
or claim, subject to the provisions of Section 3.6(c).  No Person guilty of fraudulent
misrepresentation (within the meaning of the Securities Act) shall be entitled
to contribution from any Person who was not guilty of such fraudulent
misrepresentation.

 

(f)                                    Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with the underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall control.

 

(g)                                 The obligations
of the Company and Stockholders under this Section 3.6 shall
survive the completion of any offering of Registrable Securities in a
registration statement.

 

3.7                                 Expenses of Registration.  All Registration Expenses shall be borne by
the Company; provided, however, that if the Stockholders bear the
Registration Expenses for any registration proceeding begun pursuant to Section 3.1
and subsequently withdrawn by the Stockholders registering shares therein, such
registration proceeding shall not be counted as a requested registration
pursuant to Section 3.1. 
Furthermore, in the event that a withdrawal by the Stockholders is based
upon material adverse information relating to the Company that is different
from the information known or reasonably available (upon request from the
Company or otherwise) to the Stockholders requesting registration at the time
of their request for registration under Section 3.1, such
registration proceeding shall not be counted as a requested registration
pursuant to Section 3.1, even though the Stockholders do not bear
the Registration Expenses for such registration.  All Selling Expenses relating to securities
registered on behalf of the Stockholders shall be borne by the holders of the
registered securities included in such registration pro rata on the basis of
the number of shares so registered; provided, that the amount 

 

17

 

of any stock transfer taxes applicable to the
securities registered by the Stockholders shall be allocated to the Stockholders
based upon such Stockholders’ actual liability for such stock transfer taxes.

 

3.8                                 Rule 144 Reporting.  With a view to making available the benefits
of certain rules and regulations of the SEC which may at any time permit
the sale of the Restricted Securities to the public without registration after
such time as a public market exists for the Common Stock of the Company and the
Common Stock has been registered under the Exchange Act, the Company agrees to
use its best efforts to:

 

(a)                                  Make and keep
public information available, as those terms are understood and defined in Rule 144,
at all times after the effective date that the Company becomes subject to the
reporting requirements of the Securities Act or the Exchange Act;

 

(b)                                 File with the
SEC in a timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements); and

 

(c)                                  So long as a
Stockholder owns any Restricted Securities, to furnish to the Stockholder
forthwith upon request a written statement by the Company as to its compliance
with the reporting requirements of Rule 144 and of any other reporting
requirements of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company as a Stockholder may reasonably request in availing
itself of any rule or regulation of the SEC allowing a Stockholder to sell
any such securities without registration.

 

3.9                                 Limitations on
Subsequent Registration Rights.  From and after the date hereof, the Company
shall not, without the prior written consent (i) of the Requisite
Preferred Holders and (ii) if such action would disproportionately
adversely affect any Sponsor (in relation to the other Sponsors), of such
adversely affected Sponsor, enter into any agreement granting any holder or
prospective holder of any securities of the Company registration rights the
terms of which are more favorable than the registration rights granted to
Stockholders hereunder; provided that this Section 3.9 shall
not prohibit additional Stockholders from becoming parties to this Agreement
(and being holders of Registrable Securities). 
No stockholder of the Company shall be granted registration rights
similar to those described in Section 3.3 which would reduce the
number of shares includable by the holders of Registrable Securities in such
registration without (i) the consent of the Requisite Preferred Holders
and (ii) if such action would disproportionately adversely affect any
Sponsor (in relation to the other Sponsors), the consent of such adversely
affected Sponsor.

 

3.10                           Procedure for
Underwriter Cutbacks.  In any
circumstance in which all of the Registrable Securities and other shares of
Common Stock of the Company with registration rights (the “Other Shares”) requested to be
included in a registration on behalf of Stockholders or Other Stockholders
cannot be so included as a result of limitations of the aggregate number of
shares of Registrable Securities and Other Shares that may be so included, the
number of shares 

 

18

 

of Registrable Securities and Other Shares
that may be so included shall be allocated among the Stockholders and Other
Stockholders requesting inclusion of shares pro rata based upon the total number
of Registrable Securities or Other Shares held by such Stockholders and Other
Stockholders, respectively; provided, however, if any Stockholder
or Other Stockholder does not request inclusion of the maximum number of shares
of Registrable Securities or Other Shares allocated to such Stockholder or
Other Stockholder pursuant to the above-described procedure, the portion of
such Stockholder’s or Other Stockholder’s allocation that would have been
included had such Stockholders or Other Stockholders requested inclusion of
such Registrable Securities or Other Shares shall be reallocated among those
requesting Stockholders and Other Stockholders whose allocations did not
satisfy their requests pro rata on the basis of total number of shares of
Registrable Securities and Other Shares held by such Stockholders and Other
Stockholders, and this procedure shall be repeated until all shares of
Registrable Securities and Other Shares which may be included in the
registration on behalf of the Stockholders and Other Stockholders have been so
allocated.  In the case of registrations
under Sections 3.1 or 3.2 hereof, the Company shall not limit the
number of shares of Registrable Securities to be included in a registration
pursuant to this Agreement in order to include in such registration securities
registered for the Company’s own account (it being understood that the Company
may limit the number of shares of Registrable Securities to be included in a
registration under Section 3.3 of this Agreement in order to
include in such registration securities to be registered for the Company’s
account).

 

3.11                           Standoff
Agreement.

 

(a)                                  Standoff
Period; Agreement.  Each
Stockholder agrees in connection with (i) a registration of the Company’s
securities pursuant to its Initial IPO and (ii) the Company’s first Rule 144A
Offering (if such Rule 144A Offering occurs prior to the Initial IPO)
that, upon request of the underwriters managing any underwritten offering of
the Company’s securities (or of the initial purchasers or placement agents
managing any Rule 144A Offering), not to sell, make any short sale of,
loan, pledge or otherwise hypothecate or encumber, grant any option for the
purchase of, or otherwise dispose of any Shares (other than those included in
the registration and Permitted Transfers pursuant to which the transferee
agrees to be bound by the lock-up agreement contemplated by this Section 3.11)
without the prior written consent of such underwriters (or initial purchasers
or placement agents), as the case may be, for such period of time (not to
exceed one hundred eighty (180) days from the effective date of such
registration) as may be requested by such managing underwriters (or initial
purchasers or placement agents).  Each
Stockholder agrees to execute a customary lockup agreement consistent with the
foregoing at the request of the underwriters in any underwritten offering of
the Company’s securities (or of the initial purchasers or placement agents in
any Rule 144A Offering).

 

(b)                                 Limitations.  The restrictions described in Section 3.11(a) shall
only be applicable to Stockholders if all the officers, directors and 1%
stockholders of the Company enter into similar agreements and in the event any
such Person, or any Stockholder, is released from such obligations, all Stockholders
shall be released from their respective obligations on a pro rata basis.

 

19

 

3.12                           Termination of
Rights.  The rights of any particular
Stockholder to cause the Company to register securities under Sections 3.1,
3.2, and 3.3 shall terminate with respect to such Stockholder on
the second anniversary of the
effective date of a Qualified Financing; provided that, in the case of a
Qualified Financing that is a Rule 144A Offering, the rights of any
particular Stockholder to cause the Company to register securities under Sections
3.1, 3.2 and 3.3 shall terminate with respect to such Stockholder
on the second anniversary of a public offering of the Common Stock (not by
reason of Rule 144A) with gross offering proceeds to the Company in excess
of $75,000,000 or as a result of which the aggregate market value of the public
float of the Company exceeds $100,000,000.

 

3.13                           Transfer of
Registration Rights.  The rights
to cause the Company to register securities granted to any party hereto under Section 3
may be assigned by a Stockholder only to a transferee or assignee of not less
than 100,000  shares of Registrable Securities (as adjusted for any
stock dividend, stock split, combination or other similar recapitalization),
provided that the Company is given written notice at the time of or within a
reasonable time after said assignment, stating the name and address of the
transferee or assignee and identifying the securities with respect to which
such registration rights are being assigned, and, provided further, that the
assignee of such rights assumes in writing the obligations of such Stockholder
under this Section 3. 
Notwithstanding the foregoing, no such minimum share assignment
requirement shall be necessary for an assignment by a Stockholder (A) which
is a partnership to its partners in accordance with partnership interests, (B) which
is a limited liability company to members in accordance with their interest in
the limited liability company, (C) which is a corporation to its
shareholders in accordance with their interests in the corporation, or (D) to
the Stockholder’s Affiliates; provided, in each case, that the Company
is given written notice at the time of or within a reasonable time after said
assignment, stating the name and address of the transferee or assignee and
identifying the securities with respect to which such registration rights are
being assigned, and, provided further, that the assignee of such rights assumes
in writing the obligations of such Stockholder under this Agreement.

 

3.14                           Qualified
Financing.  Each of the
Stockholders agrees that, in the event the Board of Directors of the Company
and the Requisite Preferred Holders shall have authorized the Company to
commence a process which is reasonably expected to lead to the consummation of
a Qualified Financing, such Stockholder shall reasonably cooperate with the
Company to do and perform, or cause to be done and performed, all such
reasonable acts and things (including voting such Stockholder’s Shares at a
meeting of Stockholders or by written consent), and shall execute and deliver
all such reasonable agreements, certificates, consents, instruments and
documents, as the Board of Directors shall reasonably request and determine are
reasonably necessary for consummating such Qualified Financing; provided
that no Stockholder shall be required to (i) sell its Shares owned by it
in the Qualified Financing, (ii) cause the member of the Board nominated
by such Stockholder to sign the Form S-1 or any other document in
connection with such Qualified Financing or (iii) take any action that is
inconsistent with any provision of this Agreement.  Without limiting the generality of the
foregoing, in the event the Company commences a process which is reasonably
expected to lead to the consummation of a Rule 144A Offering that is a
Qualified Financing, the Stockholders agree to take such actions as may be
necessary to adopt such amendments to the Company’s certificate of
incorporation as may be reasonably necessary to complete such Qualified
Financing including amendments converting the Company’s then outstanding Common
Stock into a class of capital stock that is different 

 

20

 

from the class of securities to be offered in
the Qualified Financing if such amendments are reasonably necessary to complete
such Qualified Financing. Notwithstanding the foregoing, in the event of any
conversion of Preferred Stock pursuant to a Rule 144A Offering that is a
Qualified Financing, the shares of Common Stock issued upon such conversion
shall be the same class of Common Stock for all holders of Preferred Stock and
shall be convertible into the securities sold in a Qualified Financing on the
same terms for all such shares of Common Stock.

 

4.                                       Restrictions on Transfer.

 

4.1                                 Joinder;
Securities Laws Compliance.  Each Stockholder agrees not to Transfer all
or any portion of Shares held by it unless (a) the prospective transferee
has agreed in writing for the benefit of the Company and the Stockholders to
become a party to this Agreement and be bound by all the terms and conditions
hereof by executing and delivering to the Company a joinder to this Agreement
in the form attached hereto as Exhibit B (a “Joinder”), (b) such
Stockholder shall have notified the Company of the proposed Transfer, shall
have furnished the Company with a detailed statement of the circumstances
surrounding the proposed Transfer, and, if reasonably requested by the Company,
shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such Transfer will not require registration
under the Securities Act and (c) such Stockholder shall have complied with
the provisions of this Section 4.

 

4.2                                 Securities Laws
and Transfer Legends.  Each
certificate representing Shares shall be stamped or otherwise imprinted with
legends substantially in the following forms (in addition to any legend
required under applicable state securities laws or the Company’s charter
documents):

 

“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”).  THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT, OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY
TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

“THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF A
STOCKHOLDERS’ AGREEMENT AND MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE
REQUIREMENTS OF SUCH AGREEMENT, A COPY OF WHICH IS ON FILE WITH THE SECRETARY
OF THE COMPANY.  NO TRANSFER OF SUCH
SHARES WILL BE MADE ON THE BOOKS OF THE COMPANY UNLESS ACCOMPANIED BY EVIDENCE
OF COMPLIANCE WITH THE TERMS OF SUCH AGREEMENT AND BY AN AGREEMENT OF THE TRANSFEREE
TO BE BOUND BY THE RESTRICTIONS SET FORTH THEREIN.  

 

21

 

BY
ACCEPTING ANY INTEREST IN THESE SHARES THE PERSON HOLDING SUCH INTEREST SHALL
BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SUCH
AGREEMENT, INCLUDING THOSE RELATING TO THE VOTING OF SAID SHARES.”

 

4.3                                 Right of First
Offer.

 

(a)                                  Notice of Sale.  Prior to the earlier of a Qualified Financing
or an Approved Sale, should any Stockholder (the “Selling Stockholder”) propose to Transfer any Shares (the “Transfer
Shares”), other than in a Permitted Transfer or in a Transfer with respect
to which the provisions of Section 4.3 of the Prior Stockholders’
Agreement have previously been waived by the Company and the Requisite Preferred
Holders (as defined in the Prior Stockholders’ Agreement), such Selling
Stockholder shall promptly deliver a written notice (the “Transfer Notice”) describing the number and
type of Transfer Shares to be Transferred and the minimum price per share at
which the Transfer Share are proposed to be Transferred (the “Minimum Price”)
to the Company, the Series A Holders, the Series C Holders, the Series D
Holders and the Series D-1 Holders.

 

(b)                                 Company Right
of First Offer.  The Company
shall have the option, exercisable upon written notice to the Selling
Stockholders within fifteen (15) days after delivery of the Transfer Notice to
purchase some or all of the Transfer Shares for the Minimum Price.  As used herein, “Non-Company Transfer
Shares” means the number of Transfer Shares not subscribed for by the
Company pursuant to this Section 4.3(b).

 

(c)                                  Series A
Holders, Series C Holders, Series D Holders and Series D-1
Holders Right of First Offer.  In the event that the Company declines to
exercise in full its right of first offer set forth in Section 4.3(b) above,
the Series A Holders, the Series C Holders, the Series D Holders
and the Series D-1 Holders (other than the Selling Stockholder)
(collectively, the “ROFO Holders”) shall have the option, exercisable upon
written notice (an “Acceptance Notice”) to the Selling Stockholder
within thirty (30) days after delivery of the Transfer Notice to purchase a
number of the Non-Company Transfer Shares (“Right of First Offer”).  Each ROFO Holder that elects to deliver an
Acceptance Notice shall specify in the Acceptance Notice the number of
Non-Company Transfer Shares that such ROFO Holder is willing to acquire (which
may be in excess of (but not less than) such ROFO Holder’s ROFO Pro Rata Share
(as defined below)).  Each such ROFO
Holder so electing shall be entitled and obligated to purchase for the Minimum
Price set forth in the Transfer Notice, a number of Non-Company Transfer Shares
equal to the sum of (a) the amount of such ROFO Holder’s ROFO Pro Rata
Share of the Non-Company Transfer Shares, and (b) to the extent a ROFO
Holder elected to purchase more than its ROFO Pro Rata Share of the Non-Company
Transfer Shares, the lesser of (i) such ROFO Holder’s proportionate share
of any remaining Non-Company Transfer Shares other than those Non-Company
Transfer Shares to be purchased by accepting ROFO Holders pursuant to clause (a) above
(based upon the relative ROFO Pro Rata Share of each ROFO Holder electing to
purchase more than its ROFO Pro Rata Share of the Non-Company Transfer Shares),
or (ii) that number of Non-Company Transfer Shares equal to the number of
shares such ROFO Holder elected to purchase minus
such ROFO Holder’s ROFO Pro Rata Share of Non-Company Transfer Shares (it being
understood that the allocation procedures contemplated by 

 

22

 

this clause (ii) shall be repeated until
all Non-Company Transfer Shares that the electing ROFO Holders desire to
purchase have been allocated).  If the
ROFO Holders and the Company collectively elect not to purchase all of the
Transfer Shares, then the Selling Stockholder shall have the right to Transfer
the portion of the Transfer Shares not subscribed for by the Company and the
ROFO Holders pursuant to terms and conditions no more favorable to the
transferee than the terms set forth in the Transfer Notice (and for a purchase
price per share not less than the Minimum Price) for a ninety (90) day period
after the ROFO Holders elect not to purchase all of the Non-Company Transfer Shares.  Any Transfer Shares not Transferred during
such ninety (90) day period shall thereupon again be subject to the provisions
of this Section 4.3.  As used
herein “ROFO Pro Rata Share” means the number of Non-Company Transfer
Shares multiplied by a fraction, the numerator of which the number of Shares of
Series A Preferred, Series C Preferred, Series D Preferred and Series D-1
Preferred (in each case on an as converted to Common Stock basis (assuming
conversion of the Series D-1 Preferred to Series D Preferred)) then
held by such ROFO Holder on the date of such Transfer Notice and the
denominator of which is the total number of outstanding Shares of Series A
Preferred, Series C Preferred, Series D Preferred and Series D-1
Preferred (in each case on an as converted to Common Stock basis (assuming
conversion of the Series D-1 Preferred to Series D Preferred)) held
by all ROFO Holders other than the Selling Stockholder on the date of such
Transfer Notice.

 

4.4                                 Co-Sale Right.

 

(a)                                  In the event
that any Stockholder proposes to Transfer Preferred Stock or Common Stock, as
applicable, held by it in one or more related transactions, other than in a
Permitted Transfer or in a Transfer with respect to which the provisions of Section 4.4
of the Prior Stockholders’ Agreement have previously been waived by the Company
and the Requisite Preferred Holders (as defined in the Prior Stockholders’
Agreement), and the Right of First Offer set forth in Section 4.3
above (if applicable) was not fully exercised (such that all Transfer Shares
proposed to be Transferred will not be Transferred to the Company and/or the
ROFO Holders), then the Selling Stockholder will, via written notice, inform
the ROFO Holders of such fact and permit each ROFO Holder to participate in the
Transfer of such Transfer Shares (other than Transfer Shares being Transferred
to the Company or the ROFO Holders pursuant to Section 4.3) at the
same price, and upon the same terms and conditions specified in the Transfer
Notice in accordance with the provisions of this Section 4.4.  Such written notice is hereinafter referred
to as the “Co-Sale Notice.”  The
Co-Sale Notice: (i) shall specify the number of Transfer Shares to be
Transferred by the Selling Stockholder (other than Transfer Shares being
Transferred to the Company or the ROFO Holders pursuant to Section 4.3),
the sale price, the purchasers and all other terms of the Transfer;
(ii) shall be titled “Co-Sale Notice”; and (iii) shall be delivered
to each ROFO Holder not less than twenty (20) days prior to the proposed date
of Transfer.

 

(b)                                 Each ROFO
Holder shall then have the option, exercisable upon written notice to the
Selling Stockholder within fifteen (15) days after delivery of the Co-Sale
Notice, to participate in the Transfer of Transfer Shares by the Selling
Stockholder pursuant to the specified terms and conditions of the Co-Sale
Notice, up to such ROFO Holder’s Co-Sale Pro Rata Portion (as defined below) of
the Transfer Shares proposed to be Transferred by the Selling Stockholder
(other than Transfer Shares being Transferred to the Company or the ROFO
Holders pursuant to Section 4.3). 
To the extent a ROFO Holder exercises such co-sale right, the number 

 

23

 

of Transfer Shares which the Selling Stockholder
may sell pursuant to the Co-Sale Notice shall be correspondingly reduced.  Each ROFO Holder that elects to exercise its
co-sale rights is referred to herein as a “Participant.”  A
Participant’s “Co-Sale Pro Rata
Portion” means with respect to each Transfer of Transfer Shares by a
Selling Stockholder, (i) the total number of Transfer Shares being
Transferred or sold by the Selling Stockholder (other than Transfer Shares
being Transferred to the Company or the ROFO Holders pursuant to Section 4.3)
multiplied by (ii) a fraction, the numerator of which is equal to the sum
of the number of shares of Common Stock Equivalents (on an as converted basis)
then held by such Participant on the date of the Co-Sale Notice and the
denominator of which is the sum of the total number of shares of Common Stock
Equivalents (on an as converted basis) then held by all Participants and the
Selling Stockholder on the date of the Co-Sale Notice.

 

(c)                                  Each
Participant shall effect its participation in the Transfer by promptly delivering
to the Selling Stockholder for Transfer to the prospective purchaser one or
more certificates, properly endorsed for transfer, which represent the type and
number of Shares which such Participant elects to Transfer.  The Selling Stockholder shall hold such
certificates in escrow pending the closing of the sale to the prospective
purchaser.  If the proposed Transfer is
cancelled for any reason, the Selling Stockholder shall promptly return all
certificates held in escrow to the respective Participants who delivered them
to the Selling Stockholder.  Upon written
request and surrender of a certificate representing Shares at the offices of
the Company by a Participant, the Company shall reissue certificates representing
the Shares in the same name as the surrendered certificate and in such
denominations as the Participant may reasonably request in order to deliver a
certificate to the Selling Stockholder which represents the type and number of
Shares which such Participant elects to sell.

 

(d)                                 The stock
certificate or certificates that each Participant delivers to the Selling
Stockholder pursuant to Section 4.4(c) shall be Transferred to
the prospective purchaser in consummation of the sale of the Shares pursuant to
the terms and conditions specified in the Co-Sale Notice, and the Selling
Stockholder shall concurrently therewith remit to such Participant that portion
of the sale proceeds to which such Participant is entitled by reason of its
participation in such sale.  To the
extent that any prospective purchaser prohibits such assignment or otherwise
refuses to purchase shares or other securities from a Participant exercising
its rights of co-sale hereunder, the Selling Stockholder shall not sell to such
prospective purchaser or purchasers any Shares unless and until, simultaneously
with such sale, the Selling Stockholder shall purchase such shares or other
securities from such Participant on the same terms as described in the Co-Sale
Notice.

 

(e)                                  Each ROFO
Holder that exercises its co-sale right pursuant to Section 4.4(b) and
becomes a Participant hereby agrees that, he, she or it shall, and will, become
a party to, and execute, at the reasonable request of the Selling Stockholder,
any customary agreements affecting the sale of such Shares and agreed to by the
Selling Stockholder, so long as the terms of such agreements which impose
obligations on such Participants are no more onerous than similar terms in such
agreement imposing obligations on the Selling Stockholder; provided that
in no event shall the Participants be required to make any representations and
warranties (i) jointly and severally with any Stockholder or (ii) other
than reasonable and customary representations and warranties relating to
authority, enforceability, title to its Shares, investment intent and
securities laws matters.

 

24

 

4.5                                 Competitors.  In addition to the transfer restrictions set
forth in Section 4.2, Section 4.3 and Section 4.4
above and other than pursuant to an Approved Sale, no Stockholder may Transfer
Shares to a Competitor without the approval of the Board.

 

5.                                       Sale of the Company.

 

5.1                                 Prior to a
Qualified Financing, in the event of an Approved Sale, each Stockholder will
(a) consent to and raise no objections against the Approved Sale or the
process pursuant to which the Approved Sale was arranged, (b) waive any
dissenter’s rights and other similar rights, and (c) if the Approved Sale
is structured as a sale of securities, each Stockholder will agree to sell its
Shares on the terms and conditions of the Approved Sale.  Each Stockholder will take all necessary and
desirable lawful actions as directed by the Board and the Stockholders
approving the Approved Sale in connection with the consummation of any Approved
Sale, including, without limitation, executing the applicable purchase
agreement and providing the applicable indemnification included therein on a
pro rata basis (based upon the consideration to be received by each such
Stockholder); provided that this Section 5.1 shall not
require any Stockholder to indemnify the purchaser in an Approved Sale for
breaches of the representations, warranties or covenants of the Company or any
other selling Stockholder, or any representations and warranties (i) made
jointly and severally with any Stockholder, (ii) related to the operation
or business of the Company or any subsidiary thereof, or (iii) other than
reasonable and customary representations and warranties relating to authority,
enforceability, title to its Shares, investment intent and securities laws
matters, except to the extent such an indemnity is provided for in (and limited
to) a post-closing escrow or other pro rata holdback arrangement (based on
proceeds to be received) of cash or stock paid in connection with the Approved
Sale.  In the event that the terms of any
such Approved Sale require the establishment of an escrow or other pro rata
holdback arrangement for the purpose of satisfying indemnity claims or other
contingencies, then any Stockholder who is required to sell its Shares pursuant
to this Section 5.1 shall be required to participate ratably in any
such escrow or other pro rata holdback arrangement so long as the liability of
such Stockholder does not exceed the amount of the proceeds received by such
Stockholder in connection with such sale of Shares.

 

5.2                                 All
Stockholders will bear their pro rata portion (based upon the amount of
consideration to be received by each such Stockholder) 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 and are not otherwise paid
by the Company or the acquiring party. 
Costs incurred by any Stockholder on its own behalf will not be considered
costs of the transaction hereunder.

 

6.                                       Voting Agreement.  Each
Stockholder agrees to hold all of its Voting Shares, subject to, and to vote
the Voting Shares in accordance with, the provisions of this Section 6.

 

6.1                                 Obligations to
Vote Voting Shares for Specific Nominee.

 

(a)                                  Subject to Section 6.1(c),
the Stockholders agree that:

 

(i)                     for so long as Spectrum
Equity Investors V, L.P. and Spectrum V Investment Managers’ Fund, L.P., and
their Affiliates (collectively, “Spectrum”) 

 

25

 

continue to hold at least either (A) 19,947,858
shares of Common Stock (assuming conversion of all Voting Preferred Stock held
by Spectrum and as adjusted for any stock dividend, stock split, combination or
other similar recapitalization with respect to Common Stock) or (B) 12% of
the outstanding shares of Common Stock (on a fully diluted basis and assuming
conversion of all shares of Preferred Stock into Common Stock), Spectrum shall
be entitled to nominate one (1) member of the Board (the “Spectrum
Nominee”), who shall initially be Victor Parker;

 

(ii)                  for so long as Oak
Investment Partners XI, L.P. and Oak Investment Partners XII, L.P. and their
Affiliates (collectively, “Oak”) continues to hold at least (A) 30,315,952
shares of Common Stock (assuming conversion of all Voting Preferred Stock held
by Oak and as adjusted for any stock dividend, stock split, combination or
other similar recapitalization with respect to Common Stock) or (B) 12% of
the outstanding shares of Common Stock (on a fully diluted basis and assuming
conversion of all shares of Preferred Stock into Common Stock), Oak shall be
entitled to nominate one (1) member of the Board (the “Oak Nominee”),
who shall initially be Fred Harman;

 

(iii)               for so long as Generation
Partners II LP and Generation Members’ Fund II LP and their Affiliates
(collectively, “Generation”) continues to hold at least (A) 5,600,000
shares of Common Stock (assuming conversion of all Voting Preferred Stock held
by Generation and as adjusted for any stock dividend, stock split, combination
or other similar recapitalization with respect to Common Stock) or (B) 12%
of the outstanding shares of Common Stock (on a fully diluted basis and
assuming conversion of all shares of Preferred Stock into Common Stock),
Generation shall be entitled to nominate one (1) member of the Board (the “Generation
Nominee”), who shall initially be John Hawkins;

 

(iv)              for so long as 3i and any 3i
Permitted Transferees continue to hold at least (A) 9,604,761 shares of
Common Stock (assuming conversion of all Voting Preferred Stock held by 3i and
its Affiliates and any stock dividend, stock split, combination or other
similar recapitalization with respect to Common Stock) or (B) 12% of the
outstanding shares of Common Stock (on a fully diluted basis and assuming
conversion of all shares of Preferred Stock into Common Stock), 3i shall be
entitled to nominate one (1) member of the Board (the “3i Nominee”),
who shall initially be Robin Murray;

 

(v)                 for so long as GS and any GS
Permitted Transferees continue to hold in the aggregate at least 3% of the
outstanding shares of Common Stock (on a fully diluted basis and assuming
conversion of all shares of Preferred Stock into Common Stock), GS shall be
entitled to nominate one (1) member of the Board (the “GS Nominee” and
collectively with the Spectrum Nominee, the Oak Nominee, the Generation Nominee
and the 3i Nominee, the “Investor Directors” and each an “Investor
Director”)), who shall initially be Gaurav Bhandari;

 

(vi)              until the date (the “Stahura
Designation End Date”) that is the later to occur of (i) the date that
Paul Stahura is no longer employed as an executive officer of the Company and (ii) the
date that Paul Stahura and his Affiliates (collectively, “Stahura”) no
longer own at least 3% of the outstanding shares of Common Stock (on a fully
diluted basis and assuming conversion of all shares of Preferred Stock into
Common Stock), Stahura shall be 

 

26

 

entitled to nominate one (1) member of
the Board (the “Stahura Nominee”), who shall initially be Paul Stahura;

 

(vii)           one (1) member of the
Board shall be the Chief Executive Officer of the Company (the “CEO Director”),
who shall initially be Richard Rosenblatt;

 

(viii)        following the Stahura
Designation End Date (and provided the Stahura Nominee shall have resigned or
been removed from the Board unless the individual that is the Stahura Nominee
becomes the ENOM Nominee pursuant to this clause (viii)), holders of a majority
of the Series B Preferred (voting as a single class) issued in connection
with the ENOM Merger Agreement (“ENOM Majority Holders”) shall be
entitled to nominate one (1) member of the Board (the “ENOM Nominee”),
who shall be subject to the reasonable approval of the Requisite Preferred
Holders, until such date as the ENOM Majority Holders and their Affiliates no
longer own at least 5% of the outstanding shares of Common Stock (on a fully
diluted basis and assuming conversion of all shares of Preferred Stock into
Common Stock);

 

(ix)                up to four (4) members
of the Board (the “At-Large Nominees”) who (i) (unless otherwise
provided below) are independent directors (within the meaning of Rule 4200(a)(15)
of the NASDAQ Marketplace Rules) and are not otherwise affiliated with the
Company, 3i, Spectrum, Oak, Generation or GS (the “At-Large Nominee Criteria”)
and (ii) have relevant industry experience shall be designated as
follows:  Any individual satisfying the
At-Large Nominee Criteria may be nominated as an At-Large Nominee by an
Investor Director, and the election of such individual to the Board shall be
subject to the affirmative vote of a two thirds of the members of the Board,
including a majority of the Investor Directors. 
At Spectrum’s election, William Collatos will continue to serve on the
Board until the second At-Large Nominee designated pursuant to this Section 6.1(a)(ix) is
elected to the Board.

 

(b)                                 At any annual
or special meeting called, or in connection with any other action (including
the execution of written consents) taken for the purpose of electing directors
to the Board, each of the Stockholders agrees to vote or to cause to be voted,
in person or by proxy, all of its Voting Shares in a manner that would elect
the At-Large Nominees, the Spectrum Nominee, the Oak Nominee, the Generation Nominee,
the 3i Nominee, the Stahura Nominee (or the ENOM Nominee, if applicable), the
GS Nominee and CEO Director designated pursuant to Section 6.1(a) above.  The Company shall pay the reasonable
out-of-pocket expenses incurred by each Board member designated pursuant to
this Section 6.1 in connection with attending meetings of the Board
and any committee thereof.

 

(c)                                  In the event
the Board determines to launch a process to effect a Qualified Financing (other
than a Rule 144A Offering) (a “Public Offering Process”), then, the
three Sponsors holding the most shares of capital stock of the Company (on an
as converted to Common Stock basis) as of the date a lead underwriter is
appointed with respect to such Public Offering Process shall notify the Company
whether they elect to retain their right to designate an Investor Director
pursuant to this Agreement (any such Sponsor that retains such right, a “Designating
Sponsor”).  If all three of such
Sponsors elect to become Designating Sponsors, then each remaining Sponsor that
is not a Designating Sponsor shall cause the Investor Director designated by it
to resign from the Board immediately prior to consummation of such Qualified
Financing (other than a Rule 144A Offering).  If one or more of such three Sponsors elects
not to 

 

27

 

become a Designating Sponsor, then (i) the
Sponsor having the next largest equity interest in the Company (based on the
number of shares of Common Stock held by it on an as converted basis) shall
notify the Company whether such Sponsor elect(s) to retain the right to
designate an Investor Director and thereby become a Designating Sponsor (or if
such Sponsor declines to be a Designating Sponsor, then the remaining Sponsor
may become a Designating Sponsor) and (ii) each Sponsor that is not a
Designating Sponsor shall cause the Investor Director designated by it to
resign from the Board immediately prior to consummation of such Qualified
Financing.

 

(d)                                 In the event (i) the
Company consummates a Rule 144A Offering that is a Qualified Financing and
thereafter the Board determines to launch a process to effect an Initial IPO
(an “IPO Process”) and (ii) the Board consists of more than three
Investor Directors at such time, then the three Sponsors holding the most
shares of capital stock of the Company (on an as converted to Common Stock
basis) as of the date a lead underwriter is appointed with respect to such IPO
Process (whose designees as Investor Directors are serving on the Board at such
time) shall notify the Company whether the Investor Directors originally
designated by them intend to remain on the Board following such Initial IPO
(any such Sponsor that notifies the Company that the Investor Director
designated by it intends to remain on the Board, a “Continuing Sponsor”).  If all three of such Sponsors elect to become
Continuing Sponsors, then each other Sponsor that is not a Continuing Sponsor
shall cause the Investor Director designated by it to resign from the Board
promptly upon consummation of such Initial IPO (to the extent an Investor
Director originally designated by such Sponsor is serving on the Board at such
time).  If one or more of such three
Sponsors elects not to become a Continuing Sponsor, then (i) the Sponsor
having the next largest equity interest in the Company (based on the number of
shares of Common Stock held by it on an as converted basis) whose designee as
Investor Director is serving on the Board at such time shall notify the Company
whether the Investor Director designated by it intends to remain on the Board
following the Initial IPO, in which case such Sponsor shall become a Continuing
Sponsor (or if such Sponsor declines to be a Continuing Sponsor, then the
remaining Sponsor (if any) whose designee as an Investor Director is serving on
the Board at such time may become a Continuing Sponsor) and (ii) each
Sponsor that is not a Continuing Sponsor shall cause any Investor Director
designated by it that is then serving on the Board to resign from the Board
promptly upon consummation of such Initial IPO. 
For the avoidance of doubt, this Section 6.1(d) shall not
apply at any time following consummation of a Qualified Financing that there
are three or fewer Investor Directors remaining on the Board, and nothing in
this Section 6.1(d) shall confer the right upon any Sponsor to
designate a director following consummation of a Qualified Financing.

 

(e)                                  Notwithstanding
the foregoing provisions of this Section 6.1, the Stockholders will
not be obligated to vote their Voting Shares to elect (and may vote their
shares to remove) any individual that has been indicted for a felonious act (so
long as said indictment is pending) or convicted of a felony, or that has
engaged in an act of fraudulent conduct against the Company.

 

6.2                                 Obligations to
Vote Voting Shares for Removal of Director.  In the event that Spectrum, Oak, Generation,
Stahura (or the ENOM Holders, if applicable), 3i or GS determines that the
Board nominee designated by such Person(s) should be removed from the
Board (or if two thirds of the Board (excluding the At-Large Nominee in
question), including a majority of the Investor Directors, determine that an
At-Large Nominee should be removed from 

 

28

 

the Board), each of the Stockholders agrees
to vote or to cause to be voted, in person or by proxy, all of its Voting
Shares in a manner that would (i) cause the removal of such Director,
whether at any annual or special meeting called, or, in connection with any
other action (including the execution of written consents) taken for the
purpose of removing such director, and (ii) install, in lieu of such
Person, such new Person on the Board as may be designated by the applicable
Stockholders (or by the Board in the case of At-Large Nominees), in accordance
with Section 6.1 above.

 

6.3                                 Changes in Size of Board.  In the event the size of the Board would need
to be increased or decreased from its current size of nine (9) directors
in order to reflect the number of directors designated in accordance with the
provisions of Section 6.1 (e.g. upon designation of At-Large Directors or
as a result of a decrease in the size of the Board resulting from Section 6.1(c)),
then the Board may, by majority vote, reset the number of directors in a manner
that is consistent with Section 6.1 (or to the extent the Board of
Directors fails to so reset the number of directors, the Stockholders shall
vote all of their Voting Shares to reset the number of directors such that the
size of the Board reflects the number of directors designated in accordance
with the provisions of Section 6.1).

 

6.4                                 Voting
Agreement Legend.  Each
certificate representing any of the Voting Shares shall be marked by the
Company with the legend set forth in Section 4.2 of this Agreement.

 

7.                                       Preemptive Rights. 
Prior to a Qualified Financing, each time the Company proposes to sell
New Securities, the Company shall (unless the provisions of this Section 7
are waived pursuant to Section 10.12 hereof) also make an offering
of such New Securities to the Preferred Holders in accordance with the
following provisions:

 

(a)                                  The Company
shall deliver a notice to each Preferred Holder describing the type of New
Securities, stating the number to be offered and the price and the terms on
which it proposes to offer such New Securities. 
Such notice shall be sent to the addresses set forth in the records of
the Company.

 

(b)                                 Within fifteen
(15) days after delivery of the notice, each Preferred Holder may elect to
purchase, at the price and on the terms specified in the notice, up to its Pro
Rata Portion of such New Securities by delivering written notice of such
election to the Company within such fifteen (15) days and stating therein the
number of New Securities to be purchased.

 

(c)                                  If a Preferred
Holder fails to agree to purchase its full Pro Rata Portion within such fifteen
(15) day period, the Company will give the Preferred Holders who did so agree
(the “Electing Purchasers”) notice of the number of New Securities which
were not subscribed for.  Such notice may
be by telephone if followed by notice via overnight courier with next day
delivery or notice via facsimile or electronic mail as provided in Section 10.6.  The Electing Purchasers shall have five (5) Business
Days from the date of such telephonic notice to agree to purchase their
respective Pro Rata Portion of the unpurchased New Securities.  The Company shall continue the process set
forth in this Section 7(c) until all of the unpurchased 

 

29

 

New Securities subject to this Section 7
are purchased or all Electing Purchasers decline to purchase the remaining
unpurchased New Securities.

 

(d)                                 Any shares
referred to in the notice that are not elected to be purchased as provided in Section 7(b) and
Section 7(c) above may, during the ninety (90) day period
thereafter, be offered by the Company to any other Person(s) at a price
not less than, and on terms no more favorable to the offeree than, those
specified in the Company’s notice.  To
the extent the Company has not sold the New Securities within such ninety (90)
day period, the Company shall not thereafter issue or sell any New Securities
without first offering such New Securities to the Preferred Holders in the
manner provided above.

 

(e)                                  As used in this
Section 7, “Pro Rata
Portion” means the ratio that (x) the sum of the number of
shares of the Company’s Preferred Stock held by a Stockholder bears to (y) the
sum of the total number of shares of the Company’s Preferred Stock then
outstanding.

 

8.                                       Affirmative Covenants of the Company.  Prior to a Qualified Financing, the Company
hereby covenants and agrees as follows:

 

8.1                                 Delivery of
Financial Information.  The
Company shall furnish to each Major Holder the following reports:

 

(a)                                  Monthly
Financial Statements.  As soon as
practicable after the end of each calendar month, and in any event within
thirty (30) days thereafter, the Company shall cause to be delivered to each
Major Holder unaudited consolidated balance sheets of the Company as of the end
of each calendar month, and consolidated statements of income and cash flow for
such period and for the current fiscal year to date, compared against the
Company’s business plan and operating budget.

 

(b)                                 Quarterly
Financial Statements.  As soon as
available, but not later than 45 days after the end of each quarter of each
fiscal year of the Company, the Company shall cause to be delivered to each
Major Holder unaudited consolidated financial statements of the Company, which
shall include a statement of cash flows and statement of operations for such
quarter and a balance sheet as at the last day thereof, each prepared in
accordance with GAAP (except as set forth in the notes thereto), and setting
forth in each case in comparative form the figures for the corresponding
quarterly periods of the previous fiscal year, subject to changes resulting
from normal year-end adjustments, all in reasonable detail and certified by the
principal financial or accounting officer of the Company, except that such
financial statements need not contain the notes required by generally accepted
accounting principles.

 

(c)                                  Annual Audit.  As soon as available, but not later than 120
days after the end of each fiscal year of the Company, the Company shall cause
to be delivered to each Major Holder the audited consolidated financial
statements of the Company, which shall include a statement of cash flows and
statement of operations for such fiscal year and a balance sheet as at the last
day thereof, each prepared in accordance with GAAP (except as set forth in the
notes thereto), and accompanied by the report of a “big four” accounting
firm.  In addition, during such period,
the Company shall cause to be delivered to each Major Holder copies of all 

 

30

 

material management letters or similar
reports prepared for or delivered to the management of the Company by its
independent accountants.

 

(d)                                 Budget;
Business Plan.  As soon as
practicable, but in any event not less than thirty (30) days prior to the end
of each fiscal year of the Company, the Company shall cause to be delivered to
each Major Holder (A) an operating budget for the next fiscal year,
prepared on a monthly basis, including balance sheets and sources and
applications of funds statements for such months, and with reasonable
promptness after preparation, any other budgets or revised budgets prepared by
the Company and (B) a business plan for the next fiscal year, prepared on
a monthly basis, and with reasonable promptness after preparation, any other
business plan or revised business plan prepared by the Company.

 

(e)                                  Subsidiaries.  If for any period the Company shall have any
subsidiary or subsidiaries whose accounts are consolidated with those of the
Company, then in respect of such period the financial statements delivered
pursuant to the foregoing clauses shall be consolidated (and consolidating if
normally prepared by the Company) financial statements of the Company and all
such consolidated subsidiaries.

 

(f)                                    Inspection
Rights.  The Company shall afford to
each Major Holder and to each of their respective employees, counsel and other
authorized representatives, during normal business hours, access, upon
reasonable advance notice, to all of the books, records and properties of the Company,
and to make copies of such records and permit such Persons to discuss all
aspects of the Company with any officers, employees or accountants of the
Company, and the Company shall provide to each Major Holder such other
information (in writing if so requested) regarding the assets, properties,
operations, business affairs and financial condition of the Company as each
Major Holder may reasonably request; provided, however, that such
investigation and preparation of responses shall not unreasonably interfere
with the operations of the Company. 
During such period, the Company will instruct its independent public
accountants to discuss such aspects of the financial condition of the Company
with each Major Holder and their respective representatives as such Major
Holder may reasonably request, and to permit each Major Holder and their
respective representatives to inspect, copy and make extracts from such
financial statements, analyses, work papers, and other documents and
information (including electronically stored documents and information)
prepared by such accountants with respect to the Company as each Major Holder
may reasonably request.

 

8.2                                 D&O Insurance.  The
Company has directors and officers insurance policies for each of the directors
and officers, in a minimum amount of $2,000,000 which will cover any new
director; provided, however, that such insurance will not be
obtained if (a) such coverage is not available at commercially reasonable
rates and (2) a majority of the Board, including the Investor Directors,
agrees not to obtain such insurance.  The
Company shall pay all premiums due on such insurance policies as they become
due.  The Company shall not make any
material alteration to the terms of, or the coverage provided by, such policy
(other than to increase the coverage or make the terms of such insurance policy
more favorable to the Company’s directors and officers) without the consent of
each Sponsor for so long as such Sponsor has the right to designate a director
pursuant to Section 6.1(a).

 

31

 

8.3                                 Stock Options.  Unless otherwise approved by the Requisite
Preferred Holders, all stock options issued after the date of this Agreement to
employees, directors, consultants and other service providers shall have an
exercise or purchase price, as applicable, equal to the fair market value on
the date of grant of the shares of Common Stock underlying such options, as
determined by the Board and consistent with past practices.

 

8.4                                 Restrictions on
Transfer.  Unless
otherwise approved by the Requisite Preferred Holders, all purchases of shares
of Common Stock of the Company after the date of this Agreement by employees,
directors, consultants and other service providers shall be pursuant to a form
of agreement which provides (a) that, except for certain estate planning
transactions, any shares of unvested Common Stock may not be transferred by
such holder and (b) for a right of first refusal in favor of the Company
on all transfers of vested Common Stock (except for certain estate planning
transactions).  For the avoidance of
doubt, the issuance of shares of Common Stock upon the conversion of the Shares
shall not be considered a “purchase of shares of Common Stock” subject to the
foregoing restrictions.

 

8.5                                 Proprietary
Information.  Each person
who has become an officer, employee, consultant or contractor of the Company
(unless such person became an officer, employee, consultant or contractor of
the Company through an acquired entity) has entered into the Company’s standard
form of Confidential Information and Invention Assignment Agreement
substantially in the form attached hereto as Exhibit D and each person who
becomes an officer, employee, consultant or contractor of the Company after the
date of the Agreement shall be required to enter Confidential Information and
Development Agreement in the form attached hereto as Exhibit D or in such
other form as shall be approved by the Board.

 

8.6                                 Director
Indemnification Agreements.  The Company shall enter into an
indemnification agreement with each member of the Board, a copy of which is
attached as Exhibit E.

 

8.7                                 Board and
Officer Covenant.  The Company
shall deliver to each of its officers and directors on the date hereof, and to
each officer and director appointed or elected after the date hereof, a notice,
in the form attached hereto as Exhibit C regarding Section B.9
of the Company’s Fourth Amended and Restated Certificate of Incorporation in
effect on the date hereof, or in the case of any such officer or director
appointed or elected after the date hereof, at the time of such appointment or
election.

 

8.8                                 Environmental
Covenant.  The Company
shall use its commercially reasonable efforts to continue to comply in all
material respects with any applicable statute, law or regulation relating to
the environment or occupational health and safety.

 

8.9                                 Employment
Covenant.  The Company
shall use its commercially reasonable efforts to continue to comply in all
material respects with any applicable statute, law or regulation relating to
equal employment opportunity and other laws related to employment, including
but not limited to, the health and safety of such employees and any labor
rights of such employees.

 

32

 

9.                                       Confidentiality.  Each
Stockholder agrees to maintain the confidentiality of any confidential and
proprietary information of the Company obtained by it (including, without
limitation, any material nonpublic information) (“Confidential Information”);
provided, however, that
Confidential Information shall not include any information that (i) is or
becomes generally available to the public other than as a result of a
disclosure by the receiving party or its representatives, (ii) is already
in the receiving party’s possession, provided that such information is not
subject to a contractual, legal or fiduciary obligation of confidentiality for
the benefit of the Company, or (iii) becomes available to the receiving
party on a non-confidential basis from a source other than the Company or any
of its affiliates or representatives, provided that such source is not
bound by a contractual, legal or fiduciary obligation to keep such information
confidential for the benefit of the Company. 
The foregoing will not prohibit a Stockholder from disclosing Confidential
Information (x) to the extent it is required to do so by applicable law so
long as such Stockholder provides the Company immediate notice of the
Confidential Information that it is legally required to disclose and takes
appropriate steps to preserve the confidentiality of such information to the
extent reasonably practicable (including by, for example, cooperating with the
Company to seek an appropriate protective order) or (y) to its attorneys,
accountants, consultants, and other professionals to the extent necessary to
obtain their services in connection with monitoring its investment in the
Company, or to any Affiliate (or
employee thereof), partner, member, stockholder, employee or wholly owned
subsidiary of such Stockholder in the ordinary course of business, provided
that any such Person (other than an employee or Affiliate (or employee
thereof)) that is not under a pre-existing confidentiality obligation with
respect to such Confidential Information that is similar in scope to the
provisions in this Section 9 shall first agree in writing to be
bound by terms no less restrictive than those provided for in this Section 9
in respect of such Confidential Information; provided further that if a
Stockholder provides Confidential Information to its employees or Affiliates
(or employees thereof), such Stockholder shall be responsible for using
commercially reasonable efforts to ensure that such employee or Affiliate
maintains the confidentiality of such Confidential Information in accordance
with this Section 9; and provided further that Confidential
Information may not be disclosed to a Competitor in reliance on this clause
(y).  Notwithstanding the foregoing, each
of GS and 3i may, to the extent required and upon advance written notice to the
Company, disclose such information concerning the Company as may be required to
be disclosed to any regulator/stock exchange to which GS or 3i or their
respective Affiliates are subject, so long as GS or 3i or their Affiliates take
appropriate steps to limit the amount of Confidential Information that is
disclosed. Such notice shall state the information to be disclosed, the party
to whom such information is to be disclosed, the date such disclosure is to be
made and the reason such disclosure is required.

 

10.                                 Miscellaneous.

 

10.1                           Transfers in
Violation of Agreement.  Any
Transfer or attempted Transfer of any Shares in violation of any provision of
this Agreement shall be null and void, and the Company shall not record such
Transfer on its books or treat any purported transferee of such Shares as the
owner of such shares for any purpose.

 

10.2                           Governing Law.  This Agreement shall be governed in all
respects by the laws of the State of Delaware, without regard to choice of laws
or conflict of laws provisions thereof.

 

33

 

10.3                           Equitable Relief.  The parties acknowledge that
the remedy at law for any breach or violation of the provisions of this
Agreement shall be inadequate and that, in the event of any such breach or
violation, the Company and/or the Stockholders shall be entitled to injunctive
relief in addition to any other remedy, at law or in equity, to which it may be
entitled.

 

10.4                           Successors in
InterestExcept as otherwise provided herein, the provisions
of this Agreement shall be binding upon the successors in interest to any of
the Shares.  The Company shall not permit
the Transfer of any of the Shares on its books or issue a new certificate
representing any of the Voting Shares unless and until the Person to whom such
security is to be Transferred shall have executed a Joinder pursuant to Section 4.1.

 

10.5                           Entire
Agreement.  This
Agreement (together, in the case of the Company and GS only, with the letter
dated September 10, 2007 between the Company and GS) constitutes the full and
entire understanding and agreement among the parties with regard to the
subjects hereof and thereof.

 

10.6                           Notices, Etc.  All notices, requests, demands, claims, and
other communications hereunder shall be in writing and shall be delivered by
certified or registered mail (first class postage pre-paid), guaranteed
overnight delivery, electronic mail transmission, or facsimile transmission, to
the following addresses, electronic mail addresses and Fax numbers (or to such
other addresses, electronic mail addresses or Fax numbers which a Stockholder
shall subsequently designate in writing to the Company or which the Company
shall subsequently designate in writing to the Stockholders):

 

(a)                                  if to a
Stockholder to the address, email address or facsimile number set forth on such
Stockholder’s signature page hereto:

 

(b)                                 if to the
Company to:

 

	
  Demand
  Media, Inc.

  
	
  1333
  Second Street, Suite 100

  
	
  Santa
  Monica, CA 90401

  
	
  Attn:
  Matthew Polestesky

  
	
  Tel:
  (310) 394-6406

  
	
  Fax:
  (310) 394-6499

  
	
  Email:
  mpolestesky @demandmedia.com

  
	
   

  
	
  -and-

  
	
   

  
	
  Demand
  Media, Inc.

  
	
  15801
  Northeast 24th

  
	
  Bellevue,
  WA 98008

  
	
  Attn:
  Sarah Akhtar

  
	
  Tel:
  (425) 274-4500

  
	
  Fax:
  (425) 974-4795

  
	
  Email:
  sarah@demandmedia.com

  

 

34

 

	
  With
  copies to:

  
	
   

  
	
  W.
  Alex Voxman, Esq.

  
	
  Latham &
  Watkins LLP

  
	
  633
  West Fifth Street, Suite 4000

  
	
  Los
  Angeles, CA 90071

  
	
  Fax:
  (213) 891-8763

  
	
  Email:
  alex.voxman@lw.com

  

 

Each
such notice or other communication shall for all purposes of this Agreement be
treated as effective or having been given when delivered if delivered by hand,
by messenger or by courier, or if sent by registered or certified mail, upon
receipt, or if sent by facsimile, upon confirmation of receipt, or if sent by
electronic mail, upon receipt by the recipient (whether or not such recipient
has actually opened or read such electronic mail).

 

10.7                           Delays or
Omissions.  No delay or
omission to exercise any right, power, or remedy accruing to any party to this
Agreement upon any breach or default of a party to this Agreement shall impair
any such right, power, or remedy of a non-breaching party, nor shall it be
construed to be a waiver of any such breach or default, or an acquiescence
therein, or of any similar breach or default thereafter occurring; nor shall
any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring.  Any waiver, permit, consent, or approval of
any kind or character on the part of any party of any breach or default under
this Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing or as provided in this
Agreement.  All remedies, either under
this Agreement or by law or otherwise afforded to any party, shall be
cumulative and not alternative.

 

10.8                           Dispute
Resolution Fees.  If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be entitled to reasonable attorney’s
fees, costs, and disbursements in addition to any other relief to which such
party may be entitled.

 

10.9                           Counterparts.  This Agreement may be executed in any number
of counterparts and signatures may be delivered by facsimile, each of which may
be executed by less than all parties, each of which shall be enforceable
against the parties actually executing such counterparts, and all of which
together shall constitute one instrument.

 

10.10                     Severability.  If any provision of this Agreement becomes or
is declared by a court of competent jurisdiction to be illegal, unenforceable,
or void, portions of such provision, or such provision in its entirety, to the
extent necessary, shall be severed from this Agreement and the balance of this
Agreement shall be enforceable in accordance with its terms.

 

10.11                     Titles and
Subtitles.  The titles
and subtitles used in this Agreement are used for convenience only and are not
to be considered in construing or interpreting this Agreement.

 

35

 

10.12                     Amendment and
Waiver.  Any provision of this
Agreement may be amended or waived (either generally or in a particular
instance and either retroactively or prospectively) with the written consent of
the Requisite Preferred Holders; provided, that, (i) if
(A) the Company proposes to sell New Securities in a sale with respect to
which the provisions of Section 7 of the Agreement are to be
amended or waived and (B) one or more Sponsors is/are offered a disproportionate
right to participate in such sale relative to the other Sponsors (based on the
number of shares of Common Stock held by each Sponsor assuming conversion of
all Preferred Stock to Common Stock), then any waiver of the provisions of Section 7
of this Agreement shall also require the affirmative vote of (a) if
applicable, the Sponsors holding a majority of the Series C Preferred that
are not offered the right to participate in such sale on such disproportionate
basis, (b) if applicable, the Sponsors holding a majority of the Series D
Preferred that are not offered the right to participate in such sale on such
disproportionate basis and (c) if applicable, the Sponsors holding a
majority of the Series D-1 Preferred that are not offered the right to
participate in such sale on such disproportionate basis, (ii) if any other
provision of this Agreement is amended or waived in a manner that adversely
affects the obligations or rights of a Sponsor in a manner disproportionately
different in any material respects than the other Sponsors, such amendment or
waiver shall also require the consent of such Sponsor, and (iii) any
amendment or waiver of Section 6.1(a) adversely affecting a
Sponsor’s right to designate an Investor Director shall also require the consent
of the applicable Sponsor so long as such Sponsor continues to hold a number of
Shares that would entitle such Sponsor to designate an Investor Director
pursuant to Section 6.1(a). 
Any amendment or waiver effected in accordance with this paragraph shall
be binding upon each Stockholder and the Company.  In addition, the Company may waive
performance of any obligation owing to it, as to some or all of the
Stockholders, or agree to accept alternatives to such performance, without
obtaining the consent of any Stockholder.

 

10.13                     Additional
Parties; After Acquired Shares.  Any Person who holds Common Stock Equivalents
and is not already a party to this Agreement may sign a Joinder at the request
of the Requisite Preferred Holders and become a “Stockholder” subject to the
terms and conditions of this Agreement without need of any additional approvals
from the Stockholders; provided that if any Person not a party to this
Agreement becomes a holder of 1,000,000 or more shares of Common Stock or
Common Stock Equivalents (on an as converted basis) after acquiring 100,000 or
more shares of Common Stock or Common Stock Equivalents after the date hereof
(other than shares of Common Stock acquired (i) by exercising options if
subject to restrictions on Transfers in accordance with the Company’s standard
restrictions on Transfers of Common Stock issued upon the exercise of options
or (ii) through a grant of restricted Common Stock subject to restrictions
on Transfers in accordance with the Company’s standard restrictions on
Transfers relating to grants of restricted Common Stock), the Company shall not
permit such Person to become a stockholder unless such Person shall become a
party to this Agreement by executing a Joinder as a condition to receiving such
securities unless this requirement is waived by the Requisite Preferred
Holders.  In addition, any Person that
acquires Common Stock Equivalents from another Stockholder in accordance with Section 4.1
shall become a “Stockholder” hereunder without the need of any additional
approval from the Stockholders.  Any
Common Stock Equivalents acquired by any Stockholder after the date hereof
shall become “Shares” for all purposes under this Agreement.

 

36

 

10.14                     Termination of
Prior Stockholders’ Agreement.  The Prior Stockholders’ Agreement is hereby
terminated and amended and restated as provided herein.  Such termination and restatement is effective
upon execution of this Agreement by the Company and the holders of at least 55%
of the then outstanding Preferred Stock and Common Stock (if any) issued upon
conversion of the Preferred Stock (voting together as a single class and not as
separate series on an as converted to Common Stock basis), pursuant to section
10.12 of the Prior Stockholders’ Agreement. 
Upon such execution, all provisions of, rights granted and covenants
made in the Prior Stockholders’ Agreement are hereby waived, released and
terminated in their entirety and shall have no further force or effect.

 

10.15                     Termination.  This Agreement shall terminate upon the
occurrence of any one of the following events:

 

(a)                                  Upon the
consummation of an Approved Sale;

 

(b)                                 The execution
of a written instrument by the Company and the Requisite Preferred Holders, which terminates this Agreement; provided, that the rights to designate a director
pursuant to Section 6(a) hereof may not be terminated with
respect to any Sponsor, or Paul Stahura or the ENOM Majority Holders, as
applicable, without the prior written consent of such Sponsor, or Paul Stahura
or such ENOM Majority Holders, as applicable (unless, in any such case, such
Sponsor, or Paul Stahura or such ENOM Majority Holders, as applicable, no
longer has the right to designate a director); provided, further,
that if the termination of this Agreement is in the context of an amendment and
restatement of this Agreement before or within 12 months following such
termination or the execution of a similar agreement among the Requisite
Preferred Holders (and any other holders) before or within 12 months following
such termination, the provisions of clauses (i) through (iii) of Section 10.12
shall apply;

 

(c)                                  The
consummation of a Qualified Financing (except that (i) the provisions of Section 3
and any corresponding provisions of Section 1 and Section 10
shall survive the consummation of a Qualified Financing in accordance with
their terms and (ii) the provisions of Section 6.1(d) and any
corresponding provisions of Section 1 and Section 10 shall survive
the consummation of a Qualified Financing that is a Rule 144A) Offering in
accordance with their terms until such time as there are three or fewer
Investor Directors serving on the Board); and

 

(d)                                 With respect to
any Stockholder, at such time as such Stockholder no longer owns any Shares.

 

The termination of this Agreement for any reason shall not affect any
right or remedy existing hereunder prior to the effective date of its
termination.

 

10.16                     Waiver of Trial
By Jury.  TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES AND
AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY
TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY 

 

37

 

HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.

 

[THIS SPACE LEFT BLANK
INTENTIONALLY]

 

38

 

IN WITNESS WHEREOF, the parties have executed
this Stockholders’ Agreement as of the date first above written.

 

	
   

  	
  DEMAND
  MEDIA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard Rosenblatt

  
	
   

  	
   

  	
  Name:
  Richard Rosenblatt

  
	
   

  	
   

  	
  Title:
  Chairman and CEO

  

 

S-1

 

SIGNATURE PAGE TO

TO

DEMAND MEDIA, INC.

THIRD AMENDED & RESTATED STOCKHOLDERS’ AGREEMENT

 

The undersigned hereby executes and delivers the Demand Media, Inc.
Third Amended & Restated Stockholders’ Agreement (the “Agreement”) to which this
Signature Page is attached effective as of the date of the Agreement,
which Agreement and Signature Page, together with all counterparts of such
Agreement and signature pages of the other Stockholders named in such
Agreement, shall constitute one and the same document in accordance with the
terms of such Agreement.

 

	
   

  	
  SPECTRUM
  V INVESTMENT MANAGERS’ FUND, L.P.

  
	
   

  	
   

  
	
   

  	
  By:
  SEA V Management LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Victor Parker

  
	
   

  	
  Name:
  Victor Parker

  
	
   

  	
  Title:
  Managing Director

  
	
   

  	
   

  
	
   

  	
  Address:
  333 Middlefield Rd., Ste. 200

  
	
   

  	
                 Menlo
  Park, CA 94025

  
	
   

  	
   

  
	
   

  	
  Facsimile:
  (415) 464-4601

  
	
   

  	
  Email:   vic@spectrumequity.com

  
	
   

  	
   

  
	
   

  	
  SPECTRUM
  EQUITY INVESTORS V, L.P.

  
	
   

  	
   

  
	
   

  	
  By:
  Spectrum Equity Associates V, L.P., its General Partner

  
	
   

  	
  By:
  SEA V Management LLC, its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Victor Parker

  
	
   

  	
  Name:
  Victor Parker

  
	
   

  	
  Title:
  Managing Director

  
	
   

  	
   

  
	
   

  	
  Address:
  333 Middlefield Rd., Ste. 200

  
	
   

  	
                 Menlo
  Park, CA 94025

  
	
   

  	
   

  
	
   

  	
  Facsimile:
  (415) 464-4601

  
	
   

  	
  Email:  vic@spectrumequity.com

  

 

 

SIGNATURE PAGE TO

TO

DEMAND MEDIA, INC.

THIRD AMENDED & RESTATED STOCKHOLDERS’ AGREEMENT

 

The undersigned hereby executes and delivers the Demand Media, Inc.
Third Amended & Restated Stockholders’ Agreement (the “Agreement”) to which this
Signature Page is attached effective as of the date of the Agreement,
which Agreement and Signature Page, together with all counterparts of such
Agreement and signature pages of the other Stockholders named in such
Agreement, shall constitute one and the same document in accordance with the
terms of such Agreement.

 

	
   

  	
  OAK
  INVESTMENT PARTNERS XI, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Frederic W. Harman

  
	
   

  	
   

  	
  Name:
  Frederic W. Harman

  
	
   

  	
   

  	
  Title:
  Managing Member of Oak Associates XI, LLC

  
	
   

  	
   

  	
  General
  Partner of Oak Investment Partners, XI, Limited Partnership

  
	
   

  	
   

  
	
   

  	
  Address:
  525 University Ave, Ste. 1300

  
	
   

  	
                 Palo
  Alto, CA 94304

  
	
   

  	
   

  
	
   

  	
  Facsimile:
  (650) 328-6345

  
	
   

  	
  Email:
       fred@oakvc.com

  
	
   

  	
   

  
	
   

  	
  OAK
  INVESTMENT PARTNERS XII, L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Frederic W. Harman

  
	
   

  	
   

  	
  Name:
  Frederic W. Harman

  
	
   

  	
   

  	
  Title:
  Managing Member of Oak Associates XII, LLC

  
	
   

  	
   

  	
  General
  Partner of Oak Investment Partners, XII, Limited Partnership

  
	
   

  	
   

  
	
   

  	
  Address:
  525 University Ave, Ste. 1300

  
	
   

  	
                 Palo
  Alto, CA 94304

  
	
   

  	
   

  
	
   

  	
  Facsimile:
  (650) 328-6345

  
	
   

  	
  Email:
       fred@oakvc.com

  

 

 

SIGNATURE PAGE TO

TO

DEMAND MEDIA, INC.

THIRD AMENDED& RESTATED STOCKHOLDERS’ AGREEMENT

 

The undersigned hereby executes and delivers the Demand Media, Inc.
Third Amended & Restated Stockholders’ Agreement (the “Agreement”) to which this
Signature Page is attached effective as of the date of the Agreement,
which Agreement and Signature Page, together with all counterparts of such
Agreement and signature pages of the other Stockholders named in such
Agreement, shall constitute one and the same document in accordance with the
terms of such Agreement.

 

	
   

  	
  GENERATION
  CAPITAL PARTNERS II LP

  
	
   

  	
   

  
	
   

  	
  By:
  Generation Partners II LLC, its general partner

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John A. Hawkins

  
	
   

  	
   

  	
  Name:
  John A. Hawkins

  
	
   

  	
   

  	
  Title:
  Managing Member

  
	
   

  	
   

  
	
   

  	
  Address:
  One Greenwich Office Part

  
	
   

  	
                 Greenwich,
  CT 06831

  
	
   

  	
   

  
	
   

  	
  Facsimile:
  (203) 422-8250

  
	
   

  	
  Email:      Hawkins@generation.com

  
	
   

  	
   

  
	
   

  	
  GENERATION
  MEMBERS’ FUND II LP

  
	
   

  	
   

  
	
   

  	
  By:
  Generation Partners II LLC, its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  John a. Hawkins

  
	
   

  	
   

  	
  Name:
  John A. Hawkins

  
	
   

  	
   

  	
  Title:
  Managing Member

  
	
   

  	
   

  
	
   

  	
  Address:
  One Greenwich Office Part

  
	
   

  	
                 Greenwich,
  CT 06831

  
	
   

  	
   

  
	
   

  	
  Facsimile:
  (203) 422-8250

  
	
   

  	
  Email:      Hawkins@generation.com

  

 

 

SIGNATURE PAGE TO

TO

DEMAND MEDIA, INC.

THIRD AMENDED & RESTATED STOCKHOLDERS’ AGREEMENT

 

The undersigned hereby executes and delivers the Demand Media, Inc.
Third Amended & Restated Stockholders’ Agreement (the “Agreement”) to which this
Signature Page is attached effective as of the date of the Agreement,
which Agreement and Signature Page, together with all counterparts of such
Agreement and signature pages of the other Stockholders named in such
Agreement, shall constitute one and the same document in accordance with the
terms of such Agreement.

 

	
   

  	
  3i
  TECHNOLOGY PARTNERS III L.P.

  
	
   

  	
   

  
	
   

  	
  By:
  3i Technology Corporation, its general partner

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Robin Murray

  
	
   

  	
   

  	
  Name:
  Robin Murray

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:
  275 Middlefield Road, Suite 200

  
	
   

  	
                 Menlo
  Park, CA 94025

  
	
   

  	
   

  
	
   

  	
  Facsimile:
  650-470-3201

  
	
   

  	
   

  
	
   

  	
  Email:
      robin.murray@3i.com

  
				

 

 

SIGNATURE PAGE TO

TO

DEMAND MEDIA, INC.

THIRD AMENDED & RESTATED STOCKHOLDERS’ AGREEMENT

 

The undersigned hereby executes and delivers the Demand Media, Inc.
Third Amended & Restated Stockholders’ Agreement (the “Agreement”) to which this
Signature Page is attached effective as of the date of the Agreement,
which Agreement and Signature Page, together with all counterparts of such
Agreement and signature pages of the other Stockholders named in such
Agreement, shall constitute one and the same document in accordance with the
terms of such Agreement.

 

 

	
   

  	
  GOLDMAN
  SACHS INVESTMENT PARTNERS MASTER FUND, L.P.

  
	
   

  	
   

  
	
   

  	
  By:
  Goldman Sachs Investment Partners GP, LLC, its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Gaurav Bhandari

  
	
   

  	
   

  	
  Name:
  Gaurav Bhandari

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  c/o
  Goldman Sachs Investment

  
	
   

  	
   

  	
  Strategies,
  LLC

  
	
   

  	
   

  	
  85
  Broad Street.

  
	
   

  	
   

  	
  New
  York, NY 10004

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Email:
  Gaurav.Bhandari@gs.com

  
	
   

  	
  Michelle.Barone@gs.com

  
	
   

  	
  christopher.dawe@gs.com

  
				

 

 

SIGNATURE PAGE TO

TO

DEMAND MEDIA, INC.

THIRD AMENDED & RESTATED STOCKHOLDERS’ AGREEMENT

 

The undersigned hereby executes and delivers the Demand Media, Inc.
Third Amended & Restated Stockholders’ Agreement (the “Agreement”) to which this
Signature Page is attached effective as of the date of the Agreement,
which Agreement and Signature Page, together with all counterparts of such
Agreement and signature pages of the other Stockholders named in such
Agreement, shall constitute one and the same document in accordance with the
terms of such Agreement.

 

	
   

  	
  RICHARD
  ROSENBLATT

  
	
   

  	
   

  
	
   

  	
  /s/
  Richard Rosenblatt

  
	
   

  	
   

  
	
   

  	
  Address:
  c/o Demand Media, Inc.

  
	
   

  	
                 1333
  Second Street, Suite 100

  
	
   

  	
                 Santa
  Monica, CA 90401

  
	
   

  	
   

  
	
   

  	
  Facsimile:
  (310) 394-6499

  
	
   

  	
  Email:
       Richard@demandmedia.com

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ROSENBLATT
  2007 GRANTOR RETAINED ANNUITY TRUST, DATED JULY 12, 2007

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Richard Rosenblatt

  
	
   

  	
   

  	
  Name:
  Richard Rosenblatt

  
	
   

  	
   

  	
  Title:
  Trustee

  
	
   

  	
   

  
	
   

  	
  Address:
  c/o Demand Media, Inc.

  
	
   

  	
                 1333
  Second Street, Suite 100

  
	
   

  	
                 Santa
  Monica, CA 90401

  
	
   

  	
   

  
	
   

  	
  Facsimile:
  (310) 394-6499

  
	
   

  	
  Email:
       Richard@demandmedia.com

  

 

 

SIGNATURE PAGE TO

TO

DEMAND MEDIA, INC.

THIRD AMENDED & RESTATED STOCKHOLDERS’ AGREEMENT

 

The undersigned hereby executes and delivers the Demand Media, Inc.
Third Amended & Restated Stockholders’ Agreement (the “Agreement”) to which this
Signature Page is attached effective as of the date of the Agreement,
which Agreement and Signature Page, together with all counterparts of such
Agreement and signature pages of the other Stockholders named in such
Agreement, shall constitute one and the same document in accordance with the
terms of such Agreement.

 

	
   

  	
  STAHURA
  FAMILY TRUST

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Paul Stahura

  
	
   

  	
   

  	
  Name:

  	
  Paul
  Stahura

  
	
   

  	
   

  	
  Title:

  	
  Trustee

  
	
   

  	
   

  
	
   

  	
  Address:
  c/o Paul Stahura.

  
	
   

  	
                 15801
  Northeast 24th

  
	
   

  	
                 Bellevue,
  WA 98008

  
	
   

  	
   

  
	
   

  	
  Facsimile:
  (425) 974-4795

  
	
   

  	
  Email:
      paul@demandmedia.com

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PAUL
  A. STAHURA 2007 GRANTOR RETAINED ANNUITY TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Paul Stahura

  
	
   

  	
   

  	
  Name:

  	
  Paul
  Stahura

  
	
   

  	
   

  	
  Title:

  	
  Trustee

  
	
   

  	
   

  
	
   

  	
  Address:
  c/o Paul Stahura.

  
	
   

  	
                 15801
  Northeast 24th

  
	
   

  	
                 Bellevue,
  WA 98008

  
	
   

  	
   

  
	
   

  	
  Facsimile:
  (425) 974-4795

  
	
   

  	
  Email:     paul@demandmedia.com

  

 

 

	
   

  	
  FLORENCE
  STAHURA 2007 GRANTOR RETAINED ANNUITY TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Paul Stahura

  
	
   

  	
   

  	
  Name:

  	
  Paul
  Stahura

  
	
   

  	
   

  	
  Title:

  	
  Trustee

  
	
   

  	
   

  
	
   

  	
  Address:
  c/o Paul Stahura.

  
	
   

  	
                 15801
  Northeast 24th

  
	
   

  	
                 Bellevue,
  WA 98008

  
	
   

  	
   

  
	
   

  	
  Facsimile:
  (425) 974-4795

  
	
   

  	
  Email:
      paul@demandmedia.com

  

 

 

SIGNATURE PAGE TO

TO

DEMAND MEDIA, INC.

THIRD AMENDED & RESTATED STOCKHOLDERS’ AGREEMENT

 

The undersigned hereby executes and delivers the Demand Media, Inc.
Third Amended & Restated Stockholders’ Agreement (the “Agreement”) to which this
Signature Page is attached effective as of the date of the Agreement,
which Agreement and Signature Page, together with all counterparts of such
Agreement and signature pages of the other Stockholders named in such
Agreement, shall constitute one and the same document in accordance with the
terms of such Agreement.

 

	
   

  	
   

  
	
   

  	
  (Print Name of Stockholder)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Facsimile:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Email:

  	
   

  
				

 

 

EXHIBIT A

 

SCHEDULE OF STOCKHOLDERS

 

1

 

EXHIBIT B

 

FORM OF
JOINDER TO

DEMAND
MEDIA, INC.

THIRD
AMENDED & RESTATED STOCKHOLDERS’ AGREEMENT

 

THIS JOINDER to the Third Amended & Restated Stockholders’
Agreement, dated as of March 3, 2008 by and among Demand Media, Inc.,
a Delaware corporation (the “Company”),
and certain Stockholders of the Company, as such agreement may have been or may
be amended from time to time (the “Agreement”),
is made and entered into as of the date set forth on the signature page hereto
by and between the Company and the undersigned holder of the Company’s Shares
(the “Stockholder”).  Capitalized terms used herein but not
otherwise defined shall have the meanings set forth in the Agreement.

 

WHEREAS, Stockholder is acquiring Shares or rights to acquire Shares,
and the Agreement and the Company require Stockholder, as a holder of such
interests, to become a party to the Agreement, and Stockholder agrees to do so
in accordance with the terms hereof.

 

NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Joinder hereby agree as
follows:

 

1.             Agreement to be
Bound.  Stockholder hereby agrees
that upon execution of this Joinder, he, she or it shall become a party to the
Agreement and shall be fully bound by, and subject to, all of the covenants,
terms and conditions of the Agreement as though an original party thereto and
shall be deemed a “Stockholder” for all purposes thereof.

 

2.             Successors and
Assigns.  Except as otherwise
provided herein, this Joinder shall bind and inure to the benefit of and be
enforceable by the Company and its successors and assigns and Stockholder and
any subsequent holders of Shares and the respective successors and assigns of
each of them, so long as they hold any Shares.

 

3.             Counterparts.  This Joinder may be executed in separate
counterparts each of which shall be an original and all of which taken together
shall constitute one and the same agreement.

 

4.             Notices.  For purposes of Section 10.6 of
the Agreement, all notices, demands or other communications to the Stockholder
shall be directed to the address, email, or facsimile of such Stockholder as
set forth on the signature page hereto.

 

5.             Descriptive
Headings.  The
descriptive headings of this Joinder are inserted for convenience only and do
not constitute a part of this Joinder.

 

*   *   *  
*   *

 

1

 

SIGNATURE PAGE TO

JOINDER TO

DEMAND MEDIA, INC.

THIRD AMENDED & RESTATED STOCKHOLDERS’ AGREEMENT

 

The undersigned hereby executes and delivers the Demand Media, Inc.
Third Amended & Restated Stockholders’ Agreement (the “Agreement”) to which this
Signature Page is attached effective as of the date of the Agreement, which
Agreement and Signature Page, together with all counterparts of such Agreement
and signature pages of the other Stockholders named in such Agreement,
shall constitute one and the same document in accordance with the terms of such
Agreement.

 

	
   

  	
  Date
  of Joinder:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (Print Name of Stockholder)

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  (Signature)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Facsimile:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Email:

  	
   

  
					

 

 

EXHIBIT C

 

Notice Regarding European Directive on Data Protection

 

This
Notice of Section B.9 of the Fourth Amended and Restated Certificate of
Incorporation of Demand Media, Inc. (the “Company”) is being delivered to
you pursuant to Section 8.7 of that certain Third Amended and Restated
Stockholders’ Agreement, dated March 3, 2008 (the “Stockholders’ Agreement”)
by and among the Company, the Stockholders (as defined therein).

 

3i Group plc, a holding company of one of the Company’s Series C
Preferred Stock and Series D Preferred Stock holders (collectively, the ‘3i
Entities’), is incorporated in Europe and is subject to a European Directive on
data protection (as enshrined by UK Act of Parliament in The Data Protection
Act of 1998) (the ‘Directive’).  The
primary effect of the Directive is to prohibit the processing of personal data
without notification and consent. 
Because it is possible that the 3i Entities may be deemed to have
processed personal data within the meaning of the Directive in connection with
their investments in portfolio companies, the 3i Entities require each of their
portfolio companies to insert certain standard language regarding the Directive
into such portfolio company’s certificate of incorporation.  The language regarding the Directive
contained in the Company’s Restated Certificate of Incorporation is set forth
in Exhibit A hereto.

 

 

EXHIBIT D

 

Confidential Information and Development Agreement

 

 

EXHIBIT E

 

Indemnification Agreements

 

 

SCHEDULE 1

 

Competitors

 

Scripps

IAC

Disney

Time Warner

Google

Yahoo

About.com /New York Times

Associated Content

CNET

GoDaddy.com, Inc.

Howstuffworks.com

iReit

Marchex

Name Media

Oversee.net

Internet Brands

Videojug.com

WikiHowExhibit 10.03

 

AMENDED AND RESTATED

 

DEMAND MEDIA, INC.

 

2006 EQUITY INCENTIVE PLAN

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  PURPOSES OF THE PLAN

  	
  1

  
	
  2.

  	
  DEFINITIONS

  	
  1

  
	
  3.

  	
  STOCK SUBJECT TO THE PLAN

  	
  5

  
	
  4.

  	
  ADMINISTRATION OF THE PLAN

  	
  6

  
	
  5.

  	
  ELIGIBILITY

  	
  7

  
	
  6.

  	
  LIMITATIONS

  	
  8

  
	
  7.

  	
  TERM OF PLAN

  	
  9

  
	
  8.

  	
  TERM OF OPTION

  	
  9

  
	
  9.

  	
  OPTION EXERCISE PRICE AND CONSIDERATION

  	
  9

  
	
  10.

  	
  EXERCISE OF OPTION

  	
  10

  
	
  11.

  	
  NON-TRANSFERABILITY OF OPTIONS AND STOCK PURCHASE RIGHTS

  	
  13

  
	
  12.

  	
  NO RIGHTS AS STOCKHOLDERS

  	
  14

  
	
  13.

  	
  STOCK PURCHASE RIGHTS

  	
  14

  
	
  14.

  	
  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER OR ASSET
  SALE

  	
  15

  
	
  15.

  	
  TIME OF GRANTING OPTIONS AND STOCK PURCHASE RIGHTS

  	
  17

  
	
  16.

  	
  AMENDMENT AND TERMINATION OF THE PLAN

  	
  17

  
	
  17.

  	
  STOCKHOLDER APPROVAL

  	
  18

  
	
  18.

  	
  INABILITY TO OBTAIN AUTHORITY

  	
  18

  
	
  19.

  	
  RESERVATION OF SHARES

  	
  18

  
	
  20.

  	
  INFORMATION TO HOLDERS OF OPTIONS

  	
  18

  
	
  21.

  	
  REPURCHASE PROVISIONS

  	
  19

  
	
  22.

  	
  PARTICIPANT REPRESENTATIONS

  	
  19

  
	
  23.

  	
  CODE SECTION 409A

  	
  19

  
	
  24.

  	
  GOVERNING LAW

  	
  20

  
	
  25.

  	
  RESTRICTIONS ON SHARES

  	
  20

  
	
  26.

  	
  LOCK-UP AGREEMENT

  	
  20

  
	
  27.

  	
  SEVERABILITY

  	
  20

  

 

 

AMENDED AND RESTATED DEMAND MEDIA, INC.

 

2006 EQUITY INCENTIVE PLAN

 

Amended and Restated as of June 26,
2008

 

1.               Purposes of the Plan.  The purposes of the Amended and Restated
Demand Media, Inc. 2006 Equity Incentive Plan are to attract and retain
the best available personnel for positions of substantial responsibility, to
provide additional incentives to Employees, Directors and Consultants and to
promote the success of the Company’s business. 
This Amended and Restated Demand Media, Inc. 2006 Equity Incentive
Plan amends and restates in its entirety the Original Plan.  Options granted under the Plan may be
Incentive Stock Options or Non-Qualified Stock Options, as determined by the
Administrator at the time of grant. 
Stock Purchase Rights may also be granted under the Plan.

 

2.               Definitions.  As used herein, the following definitions
shall apply:

 

(a)                                  “Administrator”
means the Board or the Committee, as applicable, responsible for conducting the
general administration of the Plan in accordance with Section 4 hereof; provided, that in the case of the administration of the Plan
with respect to awards granted to Independent Directors, the term “Administrator”
shall refer to the Board.

 

(b)                                 “Applicable
Laws” means the requirements relating to the administration of stock option
plans under U.S. state corporate laws, U.S. federal and state securities laws,
the Code, any stock exchange or quotation system on which the Common Stock is
listed or quoted and the applicable laws of any foreign country or jurisdiction
where Options or Stock Purchase Rights are granted under the Plan.

 

(c)                                  “Board”
means the Board of Directors of the Company.

 

(d)                                 “Cause,”
with respect to any Holder, means “Cause” as defined in such Holder’s
employment agreement with the Company if such an agreement exists and contains
a definition of Cause, or, if no such agreement exists or such agreement does
not contain a definition of Cause, then Cause means (i) the Holder’s
unauthorized use or disclosure of confidential information or trade secrets of
the Company or any other material breach of a written agreement between the
Holder and the Company, including without limitation a material breach of any
employment or confidentiality agreement; (ii) the Holder’s indictment for,
or the entry of a plea of guilty or nolo contendere by the Holder to, a felony
under the laws of the United States or any state thereof or any crime involving
dishonesty or moral turpitude; (iii) the Holder’s gross negligence or
willful misconduct or the Holder’s willful or repeated failure or refusal to
substantially perform assigned duties after receiving notification thereof from
the Company; (iv) any act of fraud, embezzlement, material
misappropriation or dishonesty committed by the Holder against the Company; or
(v) any acts, omissions or statements by a Holder which the Company
reasonably determines to be materially detrimental or damaging to the
reputation, operations, prospects or business relations of the Company.

 

 

(e)                                  “Change of
Control” means any of the following transactions:  (a) the sale of all or substantially all
of the assets of the Company and its Subsidiaries to another person or entity
(other than to a Subsidiary of the Company); (b) any merger or
consolidation of the Company into or with another corporation or entity in
which holders of the capital stock of the Company immediately prior to the
consummation of the transaction hold, directly or indirectly, immediately
following the consummation of the transaction, less than 50% of the capital
stock in the surviving entity in such transaction; or (c) any other
transaction, including the sale by the Company of new shares of its capital
stock or a transfer of existing shares of capital stock of the Company, the
result of which is that a third party not an affiliate of the Company or its
stockholders (or group of third parties not an affiliate of the Company or its
stockholders) acquires or holds capital stock of the Company representing a
majority of the Company’s outstanding voting power.  Notwithstanding the foregoing, prior to the
Public Trading Date, no transaction or series of substantially contemporaneous
transactions shall constitute a Change of Control if (i) the capital
stockholders of the Company immediately prior to such transaction(s) continue,
immediately after such transaction(s), (A) to own, directly or indirectly,
thirty percent (30%) or more of the voting power of the surviving entity, and (B) to
continue to have the right to designate a majority of the members of the Board
of Directors of the surviving entity, (ii) the Company’s Chief Executive
Officer immediately prior to such transaction(s) continues to serve the
surviving entity (or, if the surviving entity is a wholly owned subsidiary of a
parent company, to serve the highest parent company in the chain of wholly
owned subsidiaries) in such office after the consummation of the
transaction(s), and (iii) the executive officers of the Company (executive
vice president or higher) immediately prior to such transaction(s) continue
to constitute a majority of the executive officers of the surviving entity (or,
if the surviving entity is a wholly owned subsidiary of a parent company, to
constitute a majority of the executive officers of the highest parent company
in the chain of wholly owned subsidiaries) after the consummation of such
transaction(s).

 

(f)                                    “Code”
means the Internal Revenue Code of 1986, as amended, or any successor statute
or statutes thereto, including any regulations and other official guidance
promulgated under any such statute. 
Reference to any particular section of the Code shall include any
successor section.

 

(g)                                 “Committee”
means a committee appointed by the Board in accordance with Section 4
hereof.

 

(h)                                 “Common
Stock” means the common stock of the Company, par value $0.0001.

 

(i)                                     “Company”
means Demand Media, Inc., a Delaware corporation.

 

(j)                                     “Consultant”
means any consultant or advisor if: (i) the consultant or adviser renders
bona fide services to the Company or any Parent or Subsidiary of the Company;
(ii) the services rendered by the consultant or advisor are not in
connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market for
the Company’s securities; and (iii) the consultant or 

 

2

 

advisor is a natural person
who has contracted directly with the Company or any Parent or Subsidiary of the
Company to render such services.

 

(k)                                  “Director”
means a member of the Board.

 

(l)                                     “Employee”
means any person, including an Officer or Director, who is an employee (as
defined in accordance with Section 3401(c) of the Code) of the
Company or any Parent or Subsidiary of the Company.  A Service Provider shall not cease to be an
Employee in the case of (i) any leave of absence approved by the Company
or (ii) transfers between locations of the Company or between the Company,
its Parent, any Subsidiary, or any successor. 
For purposes of Incentive Stock Options, no such leave of absence may
exceed ninety (90) days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. 
Neither service as a Director nor payment of a director’s fee by the
Company shall be sufficient, by itself, to constitute “employment” by the
Company.

 

(m)                               “Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto, including any rules and other
official guidance promulgated under any such statute.  Reference to any particular section of the
Exchange Act shall include any successor section.

 

(n)                                 “Fair Market
Value” means, as of any date, the value of a share of Common Stock
determined as follows:

 

(i)                                     If the Common
Stock is listed on any established stock exchange, the Fair Market Value shall
be the closing sales price of a share of Common Stock, as reported in the Wall Street Journal (or such other source as the
Administrator deems reliable) for such date or, if no sale occurred on such
date, the first trading date immediately prior to such date during which a sale
occurred;

 

(ii)                                  If the Common
Stock is regularly quoted by a recognized securities dealer but selling prices
are not reported, the Fair Market Value shall be the mean between the high bid
and low asked prices for a share of the Common Stock on such date or, if no
sale occurred on such date, the first date immediately prior to such date on
which bid and asked prices, as applicable, are reported by such quotation
system; or

 

(iii)                               In the absence
of an established market for the Common Stock, the Fair Market Value shall be
determined in good faith by the Administrator.

 

(o)                                 “Holder”
means a person who has been granted or awarded an Option or Stock Purchase
Right or who holds Shares acquired pursuant to the exercise of an Option or
Stock Purchase Right.

 

(p)                                 “Incentive
Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and which is
designated as an Incentive Stock Option by the Administrator.

 

(q)                                 “Independent
Director” means a Director who is not an Employee of the Company.

 

3

 

(r)                                    “Non-Qualified
Stock Option” means an Option (or portion thereof) that is not designated
as an Incentive Stock Option by the Administrator, or which is designated as an
Incentive Stock Option by the Administrator but fails to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

 

(s)                                  “Officer”
means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

 

(t)                                    “Option”
means a stock option granted pursuant to the Plan.

 

(u)                                 “Option
Agreement” means a written agreement between the Company and a Holder
evidencing the terms and conditions of an individual Option grant.  All Option Agreements are subject to the
terms and conditions of the Plan.

 

(v)                                 “Original
Plan” means the Demand Media, Inc. 2006 Equity Incentive Plan (as
amended prior to the date of this Plan) which was initially adopted by the
Board on April 18, 2006 and approved by the Company’s stockholders on April 26,
2006.

 

(w)                               “Parent”
means any corporation, whether now or hereafter existing (other than the
Company), in an unbroken chain of corporations ending with the Company if each
of the corporations other than the last corporation in the unbroken chain owns
stock possessing more than fifty percent of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

 

(x)                                   “Plan”
means this Amended and Restated Demand Media, Inc.  2006
Equity Incentive Plan.

 

(y)                                 “Public
Trading Date” means the first date upon which Common Stock of the Company
is listed (or approved for listing) upon notice of issuance on any securities
exchange or designated (or approved for designation) upon notice of issuance as
a national market security on an interdealer quotation system.

 

(z)                                   “Restricted
Stock” means Shares acquired pursuant to the exercise of an unvested Option
in accordance with Section 10(i) hereof or pursuant to a Stock
Purchase Right granted under Section 13 hereof.

 

(aa)                            “Restricted
Stock Purchase Agreement” means a written agreement between the Company and
a Holder evidencing the terms and conditions of the issuance of Restricted
Stock.  All Restricted Stock Purchase
Agreements are subject to the terms and conditions of the Plan.

 

(bb)                          “Rule 16b-3”
means that certain Rule 16b-3 under the Exchange Act, as such Rule may
be amended from time to time.

 

(cc)                            “Securities
Act” means the Securities Act of 1933, as amended, or any successor statute
or statutes thereto, including any rules and other official guidance 

 

4

 

promulgated under any such
statute.  Reference to any particular
section of the Securities Act shall include any successor section.

 

(dd)                          “Service
Provider” means an Employee, Director or Consultant.  The Administrator, in its sole discretion,
shall determine the effect of all matters and questions relating to an
individual’s status as a Service Provider for purposes of the Plan, including
without limitation, the question of whether and when an individual ceases to be
a Service Provider, whether an individual ceases to be a Service Provider where
the Service Provider changes classification between Employee, Director and/or
Consultant, or where there is a simultaneous reemployment or continuing
employment, directorship or consultancy of such individual by the Company or
any Subsidiary or Parent, and whether any particular leave of absence
constitutes a termination of an individual’s status as a Service Provider.

 

(ee)                            “Share”
means a share of Common Stock, as may be adjusted in accordance with
Section 14 hereof.

 

(ff)                                “Stock
Purchase Right” means a right to purchase Common Stock pursuant to
Section 13 hereof.

 

(gg)                          “Stock
Restriction Agreement” means an agreement other than an Option Agreement
(including any related exercise notice) or Restricted Stock Purchase Agreement
that provides for any of the restrictions described in Section 25 below.

 

(hh)                          “Subsidiary”
means any corporation, whether now or hereafter existing (other than the
Company), in an unbroken chain of corporations beginning with the Company if
each of the corporations other than the last corporation in the unbroken chain
owns stock possessing more than fifty percent of the total combined voting
power of all classes of stock in one of the other corporations in such chain.

 

3.               Stock Subject to the Plan.  Subject to the provisions of Section 14
hereof, the shares of stock subject to Options or Stock Purchase Rights shall
be shares of Common Stock.  Subject to
the provisions of Section 14 hereof, the maximum aggregate number of
Shares which may be issued upon exercise of such Options or Stock Purchase
Rights is 45,000,000 Shares.  Shares
issued upon exercise of Options or Stock Purchase Rights may be authorized but
unissued, or reacquired Common Stock. 
Subject to the limitations of this Section 3, if an Option or Stock
Purchase Right expires or becomes unexercisable without having been exercised
in full, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated).  Subject to the limitations
of this Section 3, Shares which are delivered by the Holder or withheld by
the Company upon the exercise of an Option or Stock Purchase Right under the
Plan, in payment of the exercise price thereof or tax withholding thereon, may
again be optioned, granted or awarded hereunder.  If Shares of Restricted Stock are repurchased
by the Company at their original purchase price, such Shares shall become
available for future grant under the Plan. 
Notwithstanding the provisions of this Section 3, no Shares may
again be optioned, granted or awarded if such action would cause an Incentive
Stock Option to fail to qualify as an Incentive Stock Option under Section 422
of the Code.

 

5

 

4.               Administration of the Plan.

 

(a)                                  Administrator.  Unless and until the Board delegates
administration to a Committee as set forth below, the Plan shall be
administered by the Board.  The Board may
delegate administration of the Plan to a Committee or Committees of one or more
members of the Board, and the term “Committee” shall refer to any person or
persons to whom such authority has been delegated.  If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, including the power to
delegate to a subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board shall
thereafter be to the Committee or subcommittee), subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. 
Notwithstanding the foregoing, however, from and after the Public
Trading Date, a Committee of the Board shall administer the Plan and the
Committee shall consist solely of two or more Independent Directors each of
whom is both an “outside director,” within the meaning of Section 162(m) of
the Code, and a “non-employee director” within the meaning of Rule 16b-3,
and qualifies as “independent” within the meaning of any applicable stock
exchange listing requirements.  Within
the scope of its authority, the Board or the Committee may (i) delegate to
a committee of one or more members of the Board who are not “outside directors”
within the meaning of Section 162(m) of the Code, the authority to
grant awards under the Plan to eligible persons who are either (1) not
then “covered employees,” within the meaning of Section 162(m) of the
Code and are not expected to be “covered employees” at the time of recognition
of income resulting from such award or (2) not persons with respect to
whom the Company wishes to comply with Section 162(m) of the Code
and/or (ii) delegate to a committee of one or more members of the Board
who are not “non-employee directors,” within the meaning of Rule 16b-3,
the authority to grant awards under the Plan to eligible persons who are not
then subject to Section 16 of the Exchange Act.  The Board may abolish the Committee at any
time and revest in the Board the administration of the Plan.  Appointment of Committee members shall be
effective upon acceptance of appointment. Committee members may resign at any
time by delivering written notice to the Board. 
Vacancies in the Committee may only be filled by the Board.  Notwithstanding the foregoing, the full
Board, acting by a majority of its members in office, shall conduct the general
administration of the Plan with respect to Options or Restricted Stock granted
to Independent Directors.

 

(b)                                 Powers of the
Administrator.  Subject to
the provisions of the Plan and the specific duties delegated by the Board to
such Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority in its sole discretion:

 

(i)                                     to determine
the Fair Market Value;

 

(ii)                                  to select the
Service Providers to whom Options and Stock Purchase Rights may from time to
time be granted hereunder;

 

(iii)                               to determine
the number of Shares to be covered by each such award granted hereunder;

 

6

 

(iv)                              to approve
forms of agreement for use under the Plan;

 

(v)                                 to determine
the terms and conditions of any Option or Stock Purchase Right granted
hereunder (such terms and conditions include, but are not limited to, the
exercise price, the time or times when Options or Stock Purchase Rights may
vest or be exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right or the Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine);

 

(vi)                              to determine
whether to offer to buyout a previously granted Option as provided in
subsection 10(j) and to determine the terms and conditions of such offer
and buyout (including whether payment is to be made in cash or Shares);

 

(vii)                           to prescribe,
amend and rescind rules and regulations relating to the Plan, including rules and
regulations relating to sub-plans established for the purpose of qualifying for
preferred tax treatment under foreign tax laws;

 

(viii)                        to allow
Holders to satisfy withholding tax obligations by electing to have the Company
withhold from the Shares to be issued upon exercise of an Option or Stock
Purchase Right that number of Shares having a Fair Market Value equal to the
minimum amount required to be withheld based on the statutory withholding rates
for federal and state tax purposes that apply to supplemental taxable
income.  The Fair Market Value of the
Shares to be withheld shall be determined on the date that the amount of tax to
be withheld is to be determined.  All
elections by Holders to have Shares withheld for this purpose shall be made in
such form and under such conditions as the Administrator may deem necessary or
advisable;

 

(ix)                                to amend the
Plan or any Option or Stock Purchase Right granted under the Plan as provided
in Section 16 hereof; and

 

(x)                                   to construe and
interpret the terms of the Plan and awards granted pursuant to the Plan and to
exercise such powers and perform such acts as the Administrator deems necessary
or desirable to promote the best interests of the Company which are not in
conflict with the provisions of the Plan.

 

(c)                                  Effect of
Administrator’s Decision.  All
decisions, determinations and interpretations of the Administrator shall be
final and binding on all Holders.

 

5.               Eligibility.

 

(a)                                  Non-Qualified
Stock Options and Stock Purchase Rights may be granted to Service
Providers.  Incentive Stock Options may
be granted only to Employees of the Company or of a “parent corporation” or “subsidiary
corporation” thereof within the meaning of Section 424(e) and 424(f),
respectively, of the Code.  If otherwise
eligible, a Service Provider who has been granted an Option or Stock Purchase
Right may be granted additional Options or Stock Purchase Rights.

 

7

 

(b)                                 In order to
assure the viability of awards granted to Service Providers in foreign
countries, the Administrator may provide for such special terms as it may
consider necessary or appropriate to accommodate differences in local law, tax
policy, or custom.  Moreover, the
Administrator may approve such supplements to, or amendments, restatements, or
alternative versions of, the Plan as it may consider necessary or appropriate
for such purposes without thereby affecting the terms of the Plan as in effect
for any other purpose; provided,
that no such supplements, amendments, restatements, or alternative versions
shall increase the share limitations contained in Sections 3 and 6(c) of
the Plan.

 

6.               Limitations.

 

(a)                                  Each Option
shall be designated by the Administrator in the applicable Option Agreement as
either an Incentive Stock Option or a Non-Qualified Stock Option.  However, notwithstanding such designations,
to the extent that the aggregate Fair Market Value of Shares subject to a
Holder’s Incentive Stock Options and other incentive stock options granted by
the Company or any “parent corporation” or “subsidiary corporation” thereof
within the meaning of Section 424(e) and 424(f), respectively, of the
Code, which become exercisable for the first time during any calendar year
(under all plans of the Company or any “parent corporation” or “subsidiary
corporation” thereof within the meaning of Section 424(e) and 424(f),
respectively, of the Code) exceeds $100,000, such excess Options or other
options shall be treated as Non-Qualified Stock Options.  For purposes of this Section 6(a), Incentive
Stock Options shall be taken into account in the order in which they were
granted, and the Fair Market Value of the Shares shall be determined as of the
time of grant.

 

(b)                                 Neither the
Plan, any Option nor any Stock Purchase Right shall confer upon a Service
Provider any right with respect to continuing the Service Provider’s
employment, directorship or consulting relationship with the Company, nor shall
they interfere in any way with the Service Provider’s right or the Company’s
right to terminate such employment, directorship or consulting relationship at
any time, with or without Cause.

 

(c)                                  No Service
Provider shall be granted, in any calendar year, Options or Stock Purchase
Rights to purchase more than 10,000,000 Shares (subject to adjustment as
provided in Section 14 hereof); provided, that
the foregoing limitation shall not apply prior to the Public Trading Date and,
following the Public Trading Date, the foregoing limitation shall not apply
until the earliest of: (i) the first material modification of the Plan
(including any increase in the number of shares reserved for issuance under the
Plan in accordance with Section 3 hereof); (ii) the issuance of all
of the shares of Common Stock reserved for issuance under the Plan; (iii) the
expiration of the Plan; (iv) the first meeting of stockholders at which
Directors of the Company are to be elected that occurs after the close of the
third calendar year following the calendar year in which occurred the first
registration of an equity security of the Company under Section 12 of the
Exchange Act; or (v) such other date required by Section 162(m) of
the Code and the rules and regulations promulgated thereunder.  The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company’s capitalization
as described in Section 14 hereof. 
For purposes of this Section 6(c), if an Option is canceled in the
same calendar year it was granted (other 

 

8

 

than in connection with a
transaction described in Section 14 hereof), the canceled Option will be
counted against the limit set forth in this Section 6(c).  For this purpose, if the exercise price of an
Option is reduced, the transaction shall be treated as a cancellation of the
Option and the grant of a new Option.

 

7.               Term of Plan.  The Plan, as amended and restated, shall
become effective upon (i) its adoption by the Board and (ii) its
approval by stockholders in accordance with the requirements of Section 422(b)(1) of
the Code, and shall continue in effect until it is terminated under Section 16
hereof.  Prior to the effectiveness of this
Plan, the Original Plan shall remain in effect. 
No Options or Stock Purchase Rights may be issued under the Plan after
the tenth (10th) anniversary of the earlier of (i) the date upon which the
Plan, as amended and restated, is adopted by the Board or (ii) the date
the Plan, as amended and restated, is approved by the stockholders.

 

8.               Term of Option.  The term of each Option shall be stated in
the Option Agreement; provided, that
the term shall be no more than ten (10) years from the date of grant thereof.  In the case of an Incentive Stock Option
granted to a Holder who, at the time the Option is granted, owns (or is treated
as owning under Section 424 of the Code) stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
“parent corporation” or “subsidiary corporation” thereof within the meaning of Section 424(e) and
424(f), respectively, of the Code, the term of the Option shall be no more than
five (5) years from the date of grant or such shorter term as may be
provided in the Option Agreement.

 

9.               Option Exercise Price and
Consideration.

 

(a)                                  The per share
exercise price for the Shares to be issued upon exercise of an Option shall not
be less than 100% of the Fair Market Value on the date of grant (or, with
respect to Incentive Stock Options or to the extent required to comply with
Applicable Law, in the case of an Option granted to a Service Provider who, at
the time of grant of such Option, owns stock representing more than 10% of the
voting power of all classes of stock of the Company or any “parent corporation”
or “subsidiary corporation” thereof within the meaning of Section 424(e) and
424(f), respectively, of the Code, the per share exercise price shall not be
less than 110% of the Fair Market Value on the date of grant).  Notwithstanding the foregoing, Options may be
granted with a per share exercise price other than as required above pursuant
to a merger or other corporate transaction approved by the Board, provided, that no alternative exercise price shall be
substituted to the extent that any such substitution would cause (i) any
Options to constitute “nonqualified deferred compensation” within the meaning
of Code Section 409A, or (ii) any Incentive Stock Options to cease to
qualify as Incentive Stock Options.

 

(b)                                 The
consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the
Administrator.  Such consideration may
consist of (1) cash, (2) check, (3) with the consent of the
Administrator, 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,
(4) with the consent of the Administrator, shares of Common Stock, duly
endorsed for transfer to the Company, which have been held for such period of 

 

9

 

time as may be required by
the Administrator in order to avoid adverse accounting consequences to the
Company and having a Fair Market Value on the date of delivery equal to the
aggregate exercise price of the Option or exercised portion thereof,
(5) with the consent of the Administrator, surrendered Shares then
issuable upon 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, (6) with the consent of the Administrator, property of
any kind which constitutes good and valuable consideration, (7) with the
consent of the Administrator, delivery of a notice that the Holder has placed a
market sell order with a broker with respect to Shares then issuable upon
exercise of the Options 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 Option exercise price, provided, that
payment of such proceeds is then made to the Company upon settlement of such
sale, or (8) with the consent of the Administrator, any combination of the
foregoing methods of payment. 
Notwithstanding any other provision of the Plan to the contrary, after
the Public Trading Date, no Participant who is a Director or an “executive
officer” of the Company within the meaning of Section 13(k) of the
Exchange Act shall be permitted to pay the exercise price of an Option, or
continue any extension of credit with respect to the exercise price of an
Option, with a loan from the Company or a loan arranged by the Company in
violation of Section 13(k) of the Exchange Act.

 

10.         Exercise of Option.

 

(a)                                  Vesting;
Fractional Exercises.  Options
granted hereunder shall become vested and exercisable according to the terms
hereof at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement.  An Option may not be exercised for a fraction
of a Share.

 

(b)                                 Deliveries upon
Exercise.  All or a
portion of an exercisable Option shall be deemed exercised upon delivery of all
of the following to the Secretary of the Company or his or her office:

 

(i)                                     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 Holder or
other person then entitled to exercise the Option or such portion of the
Option;

 

(ii)                                  Such
representations and documents as the Administrator, in its sole discretion,
deems necessary or advisable to effect compliance with Applicable Laws.  The Administrator may, in its sole
discretion, also take whatever additional actions it deems appropriate to
effect such compliance, including, without limitation, placing legends on share
certificates and issuing stop transfer notices to agents and registrars;

 

(iii)                               Upon the exercise of all or a portion of an unvested
Option pursuant to Section 10(i) below, a Restricted Stock Purchase
Agreement in a form determined by the Administrator and signed by the Holder or
other person then entitled to exercise the Option or such portion of the
Option; and

 

10

 

(iv)                              In the event
that the Option shall be exercised pursuant to Section 10(g) below by
any person or persons other than the Holder, appropriate proof of the right of
such person or persons to exercise the Option, as determined in the sole
discretion of the Administrator.

 

(c)                                  Conditions to
Delivery of Share Certificates.  The Company shall not be required to issue or
deliver any certificate or certificates for Shares purchased upon the exercise
of any Option or portion thereof prior to fulfillment of all of the following
conditions:

 

(i)                                     The admission
of such Shares to listing on all stock exchanges on which such class of stock
is then listed;

 

(ii)                                  The completion
of any registration or other qualification of such Shares under any state or
federal law, or under the rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body which the Administrator
shall, in its sole discretion, deem necessary or advisable;

 

(iii)                               The obtaining
of any approval or other clearance from any domestic or foreign governmental
agency which the Administrator shall, in its sole discretion, determine to be
necessary or advisable;

 

(iv)                              The lapse of
such reasonable period of time following the exercise of the Option as the
Administrator may establish from time to time for reasons of administrative
convenience;

 

(v)                                 The receipt by
the Company of full payment for such Shares, including payment of any
applicable withholding tax, which in the sole discretion of the Administrator
may be in the form of consideration used by the Holder to pay for such Shares
under Section 9(b) hereof, subject to Section 4(b)(viii) hereof;
and

 

(vi)                              The Holder’s
consent to such terms and conditions and execution of any agreements as the
Administrator may require pursuant to Section 25 below.

 

(d)                                 Termination of
Relationship as a Service Provider.  If a Holder ceases to be a Service Provider
other than by reason of a termination by the Company for Cause or the Holder’s
disability or death, such Holder may exercise his or her Option within such
period of time as is specified in the applicable Option Agreement to the extent
that the Option is vested on the date of termination (taking into consideration
any vesting that may occur in connection with such termination); provided, that to the extent required by Applicable Law,
prior to the Public Trading Date, such period of time shall not be less than
thirty (30) days (but in no event later than the expiration of the term of the
Option as set forth in the Option Agreement). 
In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for thirty (30) days following the date of the Holder’s
termination.  If, on the date of
termination, the Holder is not vested as to his or her entire Option (taking
into consideration any vesting that may occur in connection with such
termination), the Shares covered by the unvested portion of the Option shall
immediately cease to be issuable under the Option and shall again become
available for issuance under 

 

11

 

the Plan.  If, after termination, the Holder does not
exercise his or her Option within the time period specified herein, the Option
shall terminate, and the Shares covered by such Option shall again become
available for issuance under the Plan.

 

(e)                                  Termination for
Cause.  If a Holder ceases to be a
Service Provider by reason of a termination by the Company for Cause, the
Option shall terminate upon the date of the Holder’s termination by the Company
for Cause, regardless of whether the Option is then vested and/or exercisable
with respect to any Shares.

 

(f)                                    Disability of
Holder.  If a Holder ceases to be a
Service Provider as a result of the Holder’s disability, the Holder may
exercise his or her Option within such period of time as is specified in the
applicable Option Agreement to the extent that the Option is vested on the date
of termination (taking into consideration any vesting that may occur in
connection with such termination); provided, that
to the extent required by Applicable Law, prior to the Public Trading Date,
such period of time shall not be less than six (6) months (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement).  In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
twelve (12) months following the date of the Holder’s termination.  In the case of an Incentive Stock Option, if
such disability is not a “disability” as such term is defined in
Section 22(e)(3) of the Code, such Incentive Stock Option shall
automatically cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Non-Qualified Stock Option from and after the
date which is three (3) months and one (1) day following the date of
such termination.  If, on the date of
termination, the Holder is not vested as to his or her entire Option (taking
into consideration any vesting that may occur in connection with such termination),
the Shares covered by the unvested portion of the Option shall immediately
cease to be issuable under the Option and shall again become available for
issuance under the Plan.  If, after
termination, the Holder does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall again become available for issuance under the Plan.

 

(g)                                 Death of Holder.  If a Holder dies while a Service Provider,
the Option may be exercised within such period of time as is specified in the
applicable Option Agreement to the extent that the Option is vested on the date
of death (taking into consideration any vesting that may occur in connection
with such termination); provided, that
to the extent required by Applicable Law, prior to the Public Trading Date,
such period of time shall not be less than six (6) months (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement), by the Holder’s estate or by a person who acquires the right to
exercise the Option by bequest or inheritance in accordance with Section 11
below, but only to the extent that the Option is vested on the date of death
(taking into consideration any vesting that may occur in connection with such
termination).  In the absence of a
specified time in the Option Agreement, the Option shall remain exercisable for
twelve (12) months following the date of the Holder’s termination.  If, at the time of death, the Holder is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall immediately cease to be issuable under the Option
and shall again become available for issuance under the Plan.  Subject to Section 11 below, the Option
may be exercised by the executor or administrator of the Holder’s estate or, if

 

12

 

none, by the person(s) entitled
to exercise the Option under the Holder’s will or the laws of descent or
distribution.  If the Option is not so
exercised within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall again become available for issuance under
the Plan.

 

(h)                                 Extension of
Exercisability.  The
Administrator may provide in a Holder’s Option Agreement that if the exercise
of the Option following the termination of the Holder’s status as a Service
Provider or the Holder’s tender of already-owned Shares or the sale of Shares
pursuant to a “cashless exercise” in connection with such exercise would
violate applicable federal or state securities laws, then the Option shall not
terminate until the earlier to occur of (i) the expiration of the term of
the Option or (ii) the expiration of a period of three (3) months
immediately following the first date on which the exercise of the Option (or
such tender of already-owned Shares or sale of Shares pursuant to a “cashless
exercise”) would not be in violation of such securities laws, as determined by
the Administrator.

 

(i)                                     Early
Exercisability.  The
Administrator may provide in the terms of a Holder’s Option Agreement that the
Holder may, at any time before the Holder’s status as a Service Provider
terminates, exercise the Option in whole or in part prior to the full vesting
of the Option; provided, that subject to Section 21
hereof, Shares acquired upon exercise of an Option which has not fully vested
may be subject to any forfeiture, transfer or other restrictions as the
Administrator may determine in its sole discretion.

 

(j)                                     Buyout
Provision.  The
Administrator may at any time offer to buyout for a payment in cash or Shares,
an Option previously granted, based on such terms and conditions as the
Administrator shall, in its sole discretion, establish and communicate to the
Holder at the time that such offer is made.

 

11.         Non-Transferability of
Options and Stock Purchase Rights.  Options, Stock Purchase Rights and, prior to
exercise, the Shares underlying Options or Stock Purchase Rights, may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of (each, a “Transfer”)
in any manner, including through any short position, any “put equivalent
position” or any “call equivalent position” (each within the meaning of the rules promulgated
under the Exchange Act),  provided, that
with the consent of the Administrator, a Holder may Transfer any such award (i) to
the Company, (ii) to a Permitted Transferee (as defined below) through a
gift or domestic relations order, (iii) to a guardian or executor of the
Holder upon such Holder’s death or disability or (iv) in connection with a
Change of Control or other acquisition transaction involving the Company if,
after such transaction, the Option or Stock Purchase Right so Transferred will
no longer be outstanding and the Company will no longer be relying on the
exemption provided under Rule 12h-1(f) of the Exchange Act, further
provided that any transferee under clause (ii) or (iii) above
shall not be permitted to make any further Transfers of such Options, Stock
Purchase Rights and, prior to exercise, the Shares underlying Options or Stock
Purchase Rights (other than in accordance with this Section 11).  Options and Stock Purchase Rights may be
exercised, during the lifetime of the Holder, only by the Holder.  Notwithstanding the foregoing, if the
Administrator, in its sole discretion, so provides in a Restricted Stock
Purchase Agreement, a Holder may Transfer Restricted Stock to any one or more
Permitted Transferees, subject to the following terms and conditions: (i) any
Restricted 

 

13

 

Stock Transferred to a Permitted Transferee
shall not be assignable or Transferable by the Permitted Transferee; (ii) any
Restricted Stock which is Transferred to a Permitted Transferee shall continue
to be subject to all the terms and conditions of the Restricted Stock as are
applicable to the original Holder or as authorized in writing by the
Administrator; and (iii) the Holder and the Permitted Transferee shall
execute any and all documents required by the Administrator, including, without
limitation documents to (A) confirm the status of the transferee as a
Permitted Transferee, (B) satisfy any requirements for an exemption for
the Transfer under applicable federal and state securities laws and (C) evidence
the Transfer.  For purposes of this Section 11,
“Permitted Transferee” shall mean, with respect to a Holder, any child,
stepchild, grandchild, parents, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships, any person sharing the Holder’s household (other than a tenant
or employee), a trust in which these persons (or the Holder) control more than
50% of the beneficial interest, a foundation in which these persons (or the
Holder) control the management of assets, and any other entity in which these
persons (or the Holder) own more than fifty percent of the voting interests.

 

12.         No Rights as Stockholders.  Holders shall not be, nor have any of the
rights or privileges of, stockholders of the Company in respect of any shares
purchasable upon the exercise of any part of an Option unless and until
certificates representing such shares have been issued by the Company to such
Holders.

 

13.         Stock Purchase Rights.

 

(a)                                  Rights to
Purchase.  Stock
Purchase Rights may be issued either alone, in addition to, or in tandem with
Options granted under the Plan and/or cash awards made outside of the
Plan.  After the Administrator determines
that it will offer Stock Purchase Rights under the Plan, it shall advise the
offeree in writing of the terms, conditions and restrictions related to the
offer, including the number of Shares that such person shall be entitled to
purchase, the price to be paid, and the time within which such person must
accept such offer.  The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the form
determined by the Administrator.

 

(b)                                 Repurchase
Right.  Unless the Administrator
determines otherwise, the Restricted Stock Purchase Agreement shall grant the
Company the right to repurchase Shares acquired upon exercise of a Stock
Purchase Right upon the termination of the purchaser’s status as a Service
Provider for any reason.  The purchase
price for Shares repurchased by the Company pursuant to such repurchase right
and the rate at which such repurchase right shall lapse shall be determined by
the Administrator in its sole discretion, and shall be set forth in the
Restricted Stock Purchase Agreement.

 

(c)                                  Other
Provisions.  The Restricted
Stock Purchase Agreement shall contain such other terms, provisions and
conditions not inconsistent with the Plan as may be determined by the
Administrator in its sole discretion which may include, without limitation,
first refusal rights, co-sale rights, drag-along rights, redemption provisions
and/or lock-up provisions.  The issuance
of any Shares pursuant to a Stock Purchase Right shall be conditioned upon and
subject to the Holder’s consent to such terms and conditions and 

 

14

 

execution of such agreements
as the Administrator may require pursuant to Section 25 below.

 

(d)                                 Rights as a
Shareholder.  Once the
Stock Purchase Right is exercised, the purchaser shall have rights equivalent
to those of a shareholder and shall be a shareholder when his or her purchase
is entered upon the records of the duly authorized transfer agent of the
Company.  No adjustment shall be made for
a dividend or other right for which the record date is prior to the date the
Stock Purchase Right is exercised, except as provided in Section 14
hereof.

 

14.         Adjustments upon Changes in
Capitalization, Merger or Asset Sale.

 

(a)                                  In the event
that the Administrator determines that any dividend or other distribution
(whether in the form of cash, Common Stock, other securities, or other
property), recapitalization, reclassification, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, liquidation, dissolution, or sale, transfer, exchange or other
disposition of all or substantially all of the assets of the Company, or
exchange or other disposition of Common Stock or other securities of the
Company, issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other similar corporate transaction or event
affects the Common Stock such that an adjustment becomes appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended by the Company to be made available under the Plan or with respect to
any Option, Stock Purchase Right or Restricted Stock, then the Administrator
shall make proportionate adjustments to any or all of the following in order to
prevent such dilution or enlargement:

 

(i)                                     the number and kind
of shares of Common Stock (or other securities or property) with respect to
which Options, Stock Purchase Rights or Restricted Stock may be granted or
awarded (including, but not limited to, adjustments of the limitations in Section 3
hereof on the maximum number and kind of shares which may be issued and
adjustments of the maximum number of Shares that may be purchased by any Holder
in any calendar year pursuant to Section 6(c) hereof);

 

(ii)                                  the number and
kind of shares of Common Stock (or other securities or property) subject to
outstanding Options, Stock Purchase Rights or Restricted Stock; and

 

(iii)                               the grant or
exercise price with respect to any Option or Stock Purchase Right.

 

(b)                                 In the event of
any transaction or event described in subsection (a) above, the
Administrator, in its sole discretion, and on such terms and conditions as it
deems appropriate, either by the terms of the Option, Stock Purchase Right or
Restricted Stock or by action taken prior to the occurrence of such transaction
or event and either automatically or upon the Holder’s request, is hereby
authorized to take any one or more of the following actions whenever the
Administrator determines that such action is appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended by the 

 

15

 

Company to be made available
under the Plan or with respect to any Option, Stock Purchase Right or
Restricted Stock granted or issued under the Plan or to facilitate such
transaction or event:

 

(i)                                     To provide for
either (A) the purchase of all or any portion of such Option, Stock
Purchase Right or Restricted Stock for an amount of cash equal to the amount
that could have been obtained upon the exercise of such Option or Stock
Purchase Right (or portion thereof) or realization of the Holder’s rights had
such Option, Stock Purchase Right or Restricted Stock (or portion thereof) been
currently exercisable or payable or fully vested or (B) the replacement of
such Option, Stock Purchase Right or Restricted Stock (or portion thereof) with
other awards, rights or property, including without limitation cash awards,
selected by the Administrator in its sole discretion, which replacement awards
may be subject to vesting or the lapsing of restrictions, as applicable, on
terms no less favorable to the affected Holder than the terms of any Option,
Stock Purchase Right or Restricted Stock for which such replacement award is
substituted;

 

(ii)                                  To provide that
such Option or Stock Purchase Right shall be exercisable as to all or any
portion of the shares covered thereby and that some or all shares of such
Restricted Stock shall cease to be subject to restrictions, notwithstanding
anything to the contrary in the Plan or the provisions of such Option or Stock
Purchase Right;

 

(iii)                               To provide that
all or any portion of such Option, Stock Purchase Right or Restricted Stock be
assumed by the successor or survivor corporation or entity, or a parent or
subsidiary thereof, or be substituted for by similar options, rights or awards
covering the stock of the successor or survivor corporation or entity, or a
parent or subsidiary thereof, with appropriate adjustments as to the number and
kind of shares and prices;

 

(iv)                              To make
adjustments in the number and type of shares of Common Stock (or other
securities or property) subject to outstanding Options, Restricted Stock or
Stock Purchase Rights, and/or in the terms and conditions of (including the
grant or exercise price), and the criteria included in, outstanding Options,
Stock Purchase Rights or Restricted Stock or Options, Stock Purchase Rights or
Restricted Stock which may be granted in the future; and

 

(v)                                 To provide that
immediately upon the consummation of such event, such Option or Stock Purchase
Right shall not be exercisable and shall terminate; provided,
that for a period of time prior to such event specified in the sole discretion
of the Administrator, such Option or Stock Purchase Right shall be exercisable
as to all Shares covered thereby, and the restrictions imposed under an Option
Agreement or Restricted Stock Purchase Agreement upon some or all Shares may be
terminated and, in the case of Restricted Stock, some or all shares of such
Restricted Stock may cease to be subject to repurchase, notwithstanding
anything to the contrary in the Plan or the provisions of such Option, Stock
Purchase Right or Restricted Stock Purchase Agreement.

 

(c)                                  Subject to Section 3
hereof, the Administrator may, in its sole discretion, include such further provisions
and limitations in any Option, Stock Purchase Right, or Restricted Stock as it
may deem equitable and in the best interests of the Company.

 

16

 

(d)                                 If the Company
undergoes a Change of Control, then any surviving corporation or entity or
acquiring corporation or entity, or affiliate of such corporation or entity,
may assume any or all Options, Stock Purchase Rights or Restricted Stock
outstanding under the Plan or may substitute comparable stock, cash or other
awards (including an award to acquire the same consideration paid to the
stockholders in the transaction described in this subsection) for those
outstanding under the Plan, which substituted awards may be subject to vesting
or the lapsing of restrictions, as applicable, on terms no less favorable to
the affected Holder than the terms of any Option, Stock Purchase Right or
Restricted Stock for which such new award is substituted.  In the event any surviving corporation or
entity or acquiring corporation or entity in a Change of Control, or affiliate
of such corporation or entity, does not assume such Options, Stock Purchase
Rights or Restricted Stock or does not substitute similar stock, cash or other
awards for those outstanding under the Plan, then with respect to (i) Options,
Stock Purchase Rights or Restricted Stock held by participants in the Plan
whose status as a Service Provider has not terminated prior to such event, the
vesting of such Options, Stock Purchase Rights or Restricted Stock (and, if
applicable, the time during which such awards may be exercised) shall be
accelerated and made fully exercisable and all restrictions thereon shall lapse
not later than immediately prior to the closing of the Change of Control (and
the Options or Stock Purchase Rights terminated if not exercised prior to the
closing of such Change of Control), and (ii) any other Options or Stock
Purchase Rights outstanding under the Plan, such Options or Stock Purchase
rights shall be terminated if not exercised prior to the closing of the Change
of Control.

 

(e)                                  The existence
of the Plan, any Option Agreement or Restricted Stock Purchase Agreement and
the Options or Stock Purchase Rights granted hereunder shall not affect or
restrict in any way the right or power of the Company or the stockholders of
the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company’s capital structure or its
business, any merger or consolidation of the Company, any issue of stock or of
options, warrants or rights to purchase stock or of bonds, debentures,
preferred or prior preference stocks whose rights are superior to or affect the
Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.

 

15.         Time of Granting Options and
Stock Purchase Rights.  The
date of grant of an Option or Stock Purchase Right shall, for all purposes, be
the date on which the Administrator makes the determination granting such
Option or Stock Purchase Right, or such other date as is determined by the
Administrator.  Notice of the
determination shall be given to each Service Provider to whom an Option or
Stock Purchase Right is so granted within a reasonable time after the date of
such grant.

 

16.         Amendment and Termination of
the Plan.

 

(a)                                  Amendment and
Termination.  The Board
may at any time wholly or partially amend, alter, suspend or terminate the
Plan.  However, without approval of the
Company’s stockholders given within twelve (12) months before or after the
action by the 

 

17

 

Board, no action of the
Board may, except as provided in Section 14 hereof, increase the limits
imposed in Section 3 hereof on the maximum number of Shares which may be
issued under the Plan or extend the term of the Plan under Section 7
hereof.

 

(b)                                 Stockholder
Approval.  The Board
shall obtain stockholder approval of any Plan amendment to the extent necessary
to comply with Applicable Laws.

 

(c)                                  Effect of
Amendment or Termination.  No
amendment, alteration, suspension or termination of the Plan shall impair the
rights of any Holder, unless mutually agreed otherwise between the Holder and
the Administrator, which agreement must be in writing and signed by the Holder
and the Company.  Termination of the Plan
shall not affect the Administrator’s ability to exercise the powers granted to
it hereunder with respect to Options, Stock Purchase Rights or Restricted Stock
granted or awarded under the Plan prior to the date of such termination.

 

17.         Stockholder Approval.  The Original Plan, including certain amendments
thereto, has previously been approved by the Company’s stockholder’s and shall
remain in effect until the Plan, as amended and restated, is approved by the
Company’s stockholders.

 

18.         Inability to Obtain
Authority.  The
inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

 

19.         Reservation of Shares.  The Company, during the term of this Plan,
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

 

20.         Information to Holders of
Options.  The Company shall provide each
Holder who has been granted an Option with the information described in Rules 701(e)(3),
(4), and (5) under the Securities Act no less frequently than every six (6) months,
provided, that (i) the
Company shall have no obligation to provide such information prior to the first
date on which the Company, or any Parent or Subsidiary of the Company, relies
on Rule 12h-1(f) of the Exchange Act for an exemption from
registration under the Exchange Act and (ii) the Company shall have no
obligation to provide such information after the earliest to occur of (a) the
Public Trading Date, (b) the date on which the Company otherwise becomes
subject to registration under the Exchange Act, or (c) the date on which
the Company is exempt from registration under the Exchange Act without relying
on Rule 12h-1(f) of the Exchange Act. 
The financial statements included in such information shall not be more
than 180 days old, and the provision of the information contemplated by this Section 20
shall be subject to each such Holder agreeing, in a form acceptable to the
Company, to keep the information to be provided pursuant to this Section 20
confidential.  The information required
by this Section 20 shall be provided to Holders by either physical or
electronic delivery or by written notice to the Holders of the availability of
the information on an Internet site that may be password-protected and of any
password needed to access the information. 
For the avoidance of doubt, if a Holder does not agree to keep the 

 

18

 

information to be provided pursuant to this Section 20
confidential, then the Company may elect not to provide such Holder any
information under this Section 20.

 

21.         Repurchase Provisions.  In addition to any rights the Company may
have under applicable Restricted Stock Purchase Agreements, the Administrator
in its sole discretion may provide that the Company may repurchase Shares
acquired upon exercise of an Option or Stock Purchase Right upon the occurrence
of certain specified events, including, without limitation, a Holder’s
termination as a Service Provider, divorce, bankruptcy or insolvency; provided, that any such repurchase right shall be set forth
in the applicable Option Agreement or Restricted Stock Purchase Agreement or in
such other agreement as the Administrator may determine and, provided further, that to the extent required to comply with
Applicable Laws, any such repurchase right set forth in an Option or Stock
Purchase Right granted prior to the Public Trading Date shall be upon the
following terms: if the repurchase option gives the Company the right to
repurchase the shares upon termination as a Service Provider at not less than
the Fair Market Value of the shares to be purchased on the date of termination
of status as a Service Provider, then (A) the right to repurchase shall be
exercised for cash or cancellation of purchase money indebtedness for the
shares within six months after termination of status as a Service Provider (or
in the case of shares issued upon exercise of Options or Stock Purchase Rights
after such date of termination, within six months after the date of the
exercise), and (B) the right terminates when the shares become publicly
traded.

 

22.         Participant Representations.  The Company may require a Plan participant,
as a condition to the grant or exercise of, or acquisition of stock under, any
Option or Stock Purchase Right, (i) to give written representations
satisfactory to the Company as to the participant’s knowledge and experience in
financial and business matters, and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and to give written representations
satisfactory to the Company that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of acquiring
or exercising the Option or Stock Purchase Right; (ii) to give written
representations satisfactory to the Company stating that the participant is
acquiring the stock subject to the Option or Stock Purchase Right for the
participant’s own account and not with any present intention of selling or
otherwise distributing the stock; and (iii) to give such other written
representations as are deemed necessary or appropriate by the Company and its
counsel.  The foregoing requirements, and
any representations given pursuant to such requirements, shall be inoperative
if (A) the issuance of the shares upon the exercise or acquisition of
stock under the applicable Option or Stock Purchase Right has been registered
under a then currently effective registration statement under the Securities
Act or (B) as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws.  The Company may, upon advice of counsel to
the Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the
transfer of the stock.

 

23.         Code Section 409A.  To the extent applicable, the Plan and award
agreements shall be interpreted in accordance with Section 409A of the
Code and Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any 

 

19

 

such regulations or other guidance that may
be issued after the effective date of the Plan. 
Notwithstanding any provision of the Plan to the contrary, in the event
that following the effective date of the Plan the Administrator determines that
any award may be subject to Section 409A of the Code and related
Department of Treasury guidance (including such Department of Treasury guidance
as may be issued after the effective date of the Plan), the Administrator may
adopt such amendments to the Plan and the applicable award agreement or adopt
other policies and procedures (including amendments, policies and procedures
with retroactive effect), or take any other actions, that the Administrator
determines are necessary or appropriate to (a) exempt the award from Section 409A
of the Code and/or preserve the intended tax treatment of the benefits provided
with respect to the award, or (b) comply with the requirements of Section 409A
of the Code and related Department of Treasury guidance.

 

24.         Governing Law.  The validity and enforceability of this Plan
shall be governed by and construed in accordance with the laws of the State of California
without regard to otherwise governing principles of conflicts of law.

 

25.         Restrictions on Shares.  Shares purchased upon the exercise of an
Option or Stock Purchase Right 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, bring-along rights, redemption and co-sale rights and voting
requirements.  Such terms and conditions
may, in the Administrator’s sole discretion, be contained in the applicable
Option Agreement, Restricted Stock Purchase Agreement, Exercise Notice, Stock
Restriction Agreement, Stockholders Voting Agreement or in such other agreement
as the Administrator shall determine, in each case in a form determined by the
Administrator in its sole discretion. 
The issuance of such Shares shall be conditioned on the Holder’s consent
to such terms and conditions and the Holder’s entering into such agreement or
agreements.

 

26.         Lock-Up Agreement.  Each Holder agrees, if so requested by the
Company and an underwriter of shares of Common Stock in connection with any
public offering of the Company, not to directly or indirectly offer, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of or
otherwise dispose of or transfer any shares held by it for such period, not to
exceed one hundred eighty (180) days following the effective date of the
relevant registration statement filed under the Securities Act in connection
with the Company’s initial public offering of Common Stock or ninety (90) days
following the effective date of the relevant registration statement filed under
the Securities Act in connection with any other public offering of Common
Stock, in each case as such underwriter shall specify reasonably and in good
faith.

 

27. Severability.  If any provision of this Plan shall be held
to be illegal, invalid or unenforceable under any applicable law, then such
contravention or invalidity shall not invalidate the entire Plan and the
remainder of the provisions shall remain in full force and effect and in no way
shall be affected, impaired or invalidated. 
Such defective provision shall be deemed to be modified to the extent
necessary to render it legal, valid and enforceable, and if no 

 

20

 

such modification shall render it legal,
valid and enforceable, then this Plan shall be construed as if not containing
the provision held to be invalid.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

21

 

*                                         *                                         *

 

I
hereby certify that the Plan was duly adopted by the Board of Directors of
Demand Media, Inc. on June 12, 2008.

 

Executed
at Santa Monica, California on this 3 day of July, 2008.

 

	
   

  	
  By:

  	
  /s/
  Richard Rosenblatt

  
	
   

  	
   

  	
  Name:
  Richard Rosenblatt

  
	
   

  	
   

  	
  Title:
  Chairman and CEO

  

 

*                                         *                                         *

 

I
hereby certify that the foregoing Plan was approved by the stockholders of
Demand Media, Inc. on June 26 2008.

 

Executed
at Santa Monica, California on this 3 day of July, 2008.

 

	
   

  	
  By:

  	
  /s/
  Shawn Colo

  
	
   

  	
   

  	
  Name:
  Shawn Colo

  
	
   

  	
   

  	
  Title:
  Secretary

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"}]]