Document:

Exhibit 10.30

 

DEMAND MEDIA INC. 2006 EQUITY INCENTIVE PLAN

RESTRICTED STOCK PURCHASE AGREEMENT

 

This restricted stock purchase agreement (the “Agreement”) is made between Joanne Bradford (together with any permitted transferee, “Purchaser”) and Demand Media, Inc. (the “Company”), as of March 26, 2010 (the “Grant Date”), pursuant to and subject to the terms and conditions of the Company’s Amended and Restated 2006 Equity Incentive Plan (as amended from time to time, the “Plan”).

 

RECITALS

 

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

 

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

 

1.                                      Grant of Stock; Vesting.

 

(a)                                 Subject to the forfeiture and deemed repurchase provisions contained in Section 2 below and all other terms, conditions and restrictions contained in this Agreement and the Plan, the Company hereby grants to Purchaser 400,000 shares of Restricted Stock (the “Shares”), to be granted in consideration of past and/or future services provided and/or to be provided to the Company by Purchaser.  The Shares shall vest and cease to be subject to forfeiture and deemed repurchase in accordance with the provisions of Section 1(b) below (each such Share, which, from time to time, continues to be subject to forfeiture and deemed repurchase, an “Unvested Share”).

 

(b)                                 The Shares shall vest and cease to be subject to forfeiture and deemed repurchase one-fourth (1/4) thereof on each of the first, second, third and fourth anniversaries of the Grant Date, subject to Purchaser’s continued employment through each such date; provided, the Shares are subject to accelerated vesting as set forth in the employment agreement between Optionee and the Company dated March 15, 2010.

 

2.             Forfeiture; Deemed Repurchase.  If Purchaser terminates employment for any reason prior to such time as any Shares vest in accordance with Section 1(b) above (after taking into account any accelerated vesting that may occur in connection with Purchaser’s termination of employment, if any), all Unvested Shares shall automatically be forfeited and deemed to be

 

 

repurchased by the Company (without payment therefor) upon such termination of employment in accordance with the Joint Escrow Instructions of the Company and Purchaser attached as Exhibit A hereto.

 

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

 

4.                                      Escrow.

 

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

 

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

 

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

 

5.             Take-Along Rights.

 

(a)                                 Approved Sale.  If the Board shall deliver a notice to Purchaser (a “Sale Event Notice”) stating that the Board has approved a sale of all or a portion of the Company (an “Approved Sale”) and specifying the name and address of the proposed parties to such transaction and the consideration payable in connection therewith, Purchaser shall (i) consent to and raise no objections against the Approved Sale or the process pursuant to which the Approved Sale was arranged, (ii) waive any dissenter’s rights and other similar rights, and (iii) if the Approved Sale is structured as a sale of securities, agree to sell Purchaser’s Shares on the terms and conditions of the Approved Sale which terms and conditions shall treat all stockholders of the Company equally (on a pro rata basis), except that shares having a liquidation preference may receive an amount of consideration equal to such liquidation preference in addition to the consideration being paid to the holders of shares not having a liquidation preference.  Notwithstanding the foregoing, the sale of the Shares in an Approved Sale, including without limitation any Unvested Shares, shall be further subject to the terms of the Plan, including without limitation Section 14 of the Plan.  Purchaser will take all necessary and desirable lawful actions as directed by the Board and the stockholders of the Company approving the Approved Sale in connection with the consummation of any Approved Sale, including without limitation, the execution of such agreements and such instruments and other actions reasonably necessary to (A) provide the representations, warranties, indemnities, covenants, conditions, non-compete agreements, escrow agreements and other provisions and agreements relating to such Approved Sale and, (B) effectuate the allocation and distribution of the aggregate consideration upon the Approved Sale, provided, that this Section 5 shall not require Purchaser to indemnify the purchaser in any Approved  Sale for breaches of the representations, warranties or covenants of the Company or any other stockholder, except to the extent (x) Purchaser is not required to incur more than its pro rata share of such indemnity obligation (based on the total consideration to be received by all stockholders that are similarly situated and hold the same class or series of capital stock) and (y) such indemnity obligation is provided for and limited to a post-closing escrow or holdback arrangement of cash or stock paid in connection with the Approved Sale.

 

(b)                                 Costs.  Purchaser will bear Purchaser’s  pro rata share (based upon the amount of consideration to be received) of the reasonable costs of any sale

 

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of Shares pursuant to an Approved Sale to the extent such costs are incurred for the benefit of all selling stockholders of the Company and are not otherwise paid by the Company or the acquiring party.  Costs incurred by Purchaser on Purchaser’s own behalf will not be considered costs of the transaction hereunder.

 

(b)                                 Share Delivery.  At the consummation of the Approved Sale, Purchaser shall, if applicable, deliver certificates representing the Shares to be transferred, duly endorsed for transfer and accompanied by all requisite stock transfer taxes, if any, and the Shares to be transferred shall be free and clear of any liens, claims or encumbrances (other than restrictions imposed by this Agreement) and Purchaser shall so represent and warrant.

 

6.             Company’s Right of First Refusal. Before any Shares held by Purchaser or any permitted transferee (each, a “Holder”) may be sold, pledged, assigned, hypothecated, transferred, or otherwise disposed of (including transfer by gift or operation of law), in any case in accordance with Section 3 above (collectively, “Transfer” or “Transferred”), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section (the “Right of First Refusal”).

 

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

 

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

 

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

 

(d)                                 Payment.  Payment of the ROFR Purchase Price shall be made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to

 

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the assignee), or by any combination thereof within thirty (30) days after receipt of the Notice or in the manner and at the times set forth in the Notice.

 

(e)                                  Holder’s Right to Transfer.  If all of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise Transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other Transfer is consummated within one hundred twenty (120) days after the date of the Notice and provided further that any such sale or other Transfer is effected in accordance with any applicable securities laws and the Proposed Transferee agrees in writing that (i) the provisions of this Section and of Section 5 above shall continue to apply to the Shares in the hands of such Proposed Transferee and (ii) that such Proposed Transferee will not transfer the Shares any other purchaser or transferee unless such future purchase or transferee agrees in writing to be bound by the provisions of this Section and of Section 5 above.  If the Shares described in the Notice are not Transferred to the Proposed Transferee within such period, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal as provided herein before any Shares held by the Holder may be sold or otherwise Transferred.

 

(f)                                   Exception for Certain Family Transfers.  Anything to the contrary contained in this Section notwithstanding, the Transfer of any or all of the Shares during Purchaser’s lifetime or on Purchaser’s death by will or intestacy to Purchaser’s Immediate Family or a trust for the benefit of Purchaser’s Immediate Family shall be exempt from the Right of First Refusal. As used herein, “Immediate Family” shall mean spouse, lineal descendant or antecedent, father, mother, brother or sister or stepchild (whether or not adopted).  In such case, the transferee or other recipient shall receive and hold the Shares so Transferred subject to the provisions of this Section (including the Right of First Refusal) and Section 5 above and there shall be no further Transfer of such Shares except in accordance with the terms of this Section 6.

 

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

 

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

 

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8.             Legends.  The share certificate(s) evidencing the Restricted Stock issued hereunder shall be endorsed with the following legend, or such other legend as the Company may deem necessary or advisable, in its sole discretion (in addition to any legend required under applicable state securities laws):

 

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

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN REPURCHASE RIGHTS, FORFEITURE PROVISIONS, RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN A RESTRICTED STOCK PURCHASE AGREEMENT AND/OR A STOCKHOLDER AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, COPIES OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH REPURCHASE RIGHTS, FORFEITURE PROVISIONS, TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

 

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

 

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

 

11.          Tax Representations.  Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares.  Purchaser represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and that no action or representation by the Company shall be construed as the giving of tax advice and Purchaser is not relying on the

 

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Company for any tax advice. Purchaser understands that Purchaser will recognize ordinary income for federal income tax purposes under Section 83 of the Code as and when the Shares vest in accordance herewith. Purchaser understands that Purchaser may elect to be taxed for federal income tax purposes at the time the Shares are purchased rather than as and when the Shares vest by filing an election under Section 83(b) of the Code with the Internal Revenue Service within thirty (30) days from the date of purchase. A form of election under Section 83(b) of the Code is attached to the Grant Notice as Exhibit C. PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO TIMELY FILE THE ELECTION UNDER SECTION 83(b) IF PURCHASER ELECTS TO MAKE SUCH A FILING, EVEN IF PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE SUCH A FILING ON PARTICIPANT’S BEHALF. PURCHASER FURTHER ACKNOWLEDGES AND UNDERSTANDS THAT PURCHASER SHALL BE REQUIRED TO SATISFY, AND SHALL BE SOLELY LIABLE FOR, ALL APPLICABLE FEDERAL, STATE, LOCAL AND FOREIGN TAX WITHHOLDING OBLIGATIONS ASSOOCIATED WITH THE SHARES AND PURCHASER HEREBY AGREES TO PAY SUCH WITHHOLDING AMOUNTS TO THE COMPANY AT SUCH TIMES AND IN SUCH FORM AS COMPANY SHALL REQUIRE FOR PURPOSES OF TIMELY SATISFYING SUCH WITHHOLDING OBLIGATIONS.

 

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

 

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

 

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

 

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

 

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

 

	
 
  	
DEMAND MEDIA, INC.
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
By:
  	
/s/ Richard Rosenblatt
  
	
 
  	
 
  	
Name: Richard Rosenblatt
  
	
 
  	
 
  	
Title: Chairman and CEO
  
	
 
  	
 
  
	
 
  	
 
  
	
 
  	
PURCHASER
  
	
 
  	
 
  
	
 
  	
/s/ Joanne Bradford
  
	
 
  	
Joanne Bradford
  

 

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EXHIBIT A

 

JOINT ESCROW INSTRUCTIONS

 

[DATE]

 

Corporate Secretary

Demand Media, Inc.

1333 Second Street, Suite 100

Santa Monica, CA 90401

 

Dear [        ]:

 

As Escrow Agent for both Demand Media, Inc. (together with any assignee of the “Company”) and the undersigned purchaser of common stock of the Company (“Purchaser”), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Restricted Stock Purchase Agreement (the “Agreement”) between the Company and Purchaser, dated March 26, 2010 in accordance with the following instructions:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15.           Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties thereunto entitled at the following addresses or at such other addresses as a party may designate by ten (10) days’ advance written notice to each of the other parties hereto.

 

	
 
  	
COMPANY:
  	
 
  	
Demand Media, Inc.
  
	
 
  	
 
  	
 
  	
1333 Second Street, Suite 100
  
	
 
  	
 
  	
 
  	
Santa Monica, CA 90401
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
PURCHASER:
  	
 
  	
Joanne Bradford
  
	
 
  	
 
  	
 
  	
140 Derby Lane
  
	
 
  	
 
  	
 
  	
Moraga, CA 94556
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
ESCROW AGENT:
  	
 
  	
Corporate Secretary
  
	
 
  	
 
  	
 
  	
Demand Media, Inc.
  
	
 
  	
 
  	
 
  	
1333 Second Street, Suite 100
  
	
 
  	
 
  	
 
  	
Santa Monica, CA 90401
  

 

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

 

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

 

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

 

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DEMAND MEDIA, INC.
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
By:
  	
 
  
	
 
  	
 
  	
 
  	
Name: Matthew Polesetsky
  
	
 
  	
 
  	
 
  	
Title: Secretary
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
PURCHASER:
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
Joanne Bradford
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
Escrow Agent:
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
Matthew Polesetsky, Secretary of Demand Media, Inc.
  

 

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EXHIBIT B

 

INVESTMENT REPRESENTATION STATEMENT

 

	
PURCHASER
  	
:
  	
JOANNE BRADFORD
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
COMPANY
  	
:
  	
DEMAND MEDIA, INC.
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
SECURITY
  	
:
  	
COMMON STOCK
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
AMOUNT
  	
:
  	
400,000
  	
 
  

 

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

 

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

 

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

 

3.               Purchaser is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.  In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including, in the case of an affiliate, (i) the resale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a

 

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market maker (as said term is defined under the Securities Exchange Act of 1934), (ii) the availability of certain public information about the Company, (iii) the amount of Securities being sold during any three (3) month period not exceeding the limitations specified in Rule 144(e), and (iv) the timely filing of a Form 144, if applicable.

 

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

 

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

 

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

 

	
 
  	
 
  	
Signature of Purchaser:
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
Name: Joanne Bradford
  
	
 
  	
 
  	
 
  
	
Date: March 26, 2010
  	
 
  	
 
  

 

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EXHIBIT C

 

FORM OF 83(b) ELECTION AND INSTRUCTIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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ATTACHMENT 1 TO EXHIBIT C

 

ELECTION UNDER INTERNAL REVENUE CODE SECTION 83(b)

 

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

 

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

 

 

 

 

SSN:

 

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

 

 

 

 

SSN:

 

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

 

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

 

 

the Company.

 

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

 

Nature of restrictions to which the property is subject:

 

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

 

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

 

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

 

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

 

	
Dated: [      ]
  	
 
  	
Taxpayer Signature
  	
 
  

 

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

 

	
Dated: [      ]
  	
 
  	
Spouse’s Signature
  	
 
  

 

 

	
Signature(s) Notarized by:
  	
 
  	
 
  
	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  

 

17

 

ATTACHMENT 2 TO EXHIBIT C

 

SAMPLE COVER LETTER TO INTERNAL REVENUE SERVICE

[DATE]

 

VIA CERTIFIED MAIL
 RETURN RECEIPT REQUESTED

 

Internal Revenue Service
 [Address where taxpayer files returns]

 

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

Taxpayer:

Taxpayer’s Social Security Number:

Taxpayer’s Spouse:

Taxpayer’s Spouse’s Social Security Number:

 

Ladies and Gentlemen:

 

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

 

 

	
 
  	
 
  	
 
  	
Very Truly Yours,
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
Enclosures
  	
 
  	
 
  
	
 
  	
 
  	
 
  	
 
  
	
 
  	
cc:   Demand Media, Inc.Exhibit 10.31

 

DEMAND MEDIA, INC.
 2010 INCENTIVE AWARD PLAN

 

STOCK OPTION GRANT NOTICE AND 
 STOCK OPTION AGREEMENT

 

Demand Media, Inc., a Delaware corporation (the “Company”), pursuant to its 2010 Incentive Award Plan (the “Plan”), hereby grants to the individual listed below (the “Optionee”), an option to purchase the number of shares of the common stock of the Company (“Common  Stock”), set forth below (the “Option”) in full satisfaction of any and all obligations to grant stock options under Section 3(c)(iv) of that certain employment agreement by and between the Company and the Optionee, dated March 15, 2010, as amended August     , 2010 (the “Employment Agreement”).  This Option is subject to all of the terms and conditions set forth herein and in the Stock Option Agreement attached hereto as Exhibit A (the “Stock Option Agreement”) and the Plan, which are incorporated herein by reference.  Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Grant Notice and the Stock Option Agreement. Notwithstanding anything contained herein to the contrary, if the Vesting Commencement Date does not occur on or prior to March 31, 2011, the Option shall terminate and be forfeited.

 

	
Optionee:
  	
 
  	
Joanne Bradford
  
	
 
  	
 
  	
 
  
	
Grant Date:
  	
 
  	
August 3, 2010
  
	
 
  	
 
  	
 
  
	
Vesting Commencement Date:
  	
 
  	
The Effective Date, as defined in the Employment Agreement.
  
	
 
  	
 
  	
 
  
	
Exercise Price per Share:
  	
 
  	
$9.00/Share
  
	
 
  	
 
  	
 
  
	
Total Exercise Price:
  	
 
  	
$1,800,000.00
  
	
 
  	
 
  	
 
  
	
Total Number of Shares Subject to the Option:
  	
 
  	
200,000 shares
  
	
 
  	
 
  	
 
  
	
Expiration Date:
  	
 
  	
August 2, 2020
  

 

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

 

Vesting Schedule:                                            Except as set forth immediately below, the Shares subject to this Option shall vest and become exercisable as provided in Section 3(c)(iv) of the Employment Agreement.

 

Notwithstanding anything contained to the contrary in the Employment Agreement, if (i) the Executive experiences (1) a termination of the Executive’s employment by the Company without Cause (as defined in the Employment Agreement); (2) a termination of the Executive’s employment by the Executive for Good Reason (as defined in the Employment Agreement, subject to the provisions of the following paragraph); or (3) a termination of the Executive’s employment by reason of the Executive’s death or Disability (as defined in the Employment Agreement) (each of (1), (2) and (3), a “Qualifying Termination”), and (ii) a Change in Control (as defined in the Plan) (A) occurs on or within ninety (90) days after the Termination Date (as defined in the Employment Agreement) or (B) has occurred within one (1) year before the Termination Date, subject to and conditioned upon the Executive’s timely execution and non-revocation of an effective release of claims in a form provided by the Company (the “Release”), the Shares subject to this Option shall conditionally vest and

 

 

become exercisable on the later of the Termination Date and the date of such Change in Control (and such vesting shall become unconditional upon such execution and non-revocation of a Release); provided, however, that if the Executive fails to timely execute or revokes the Release, the conditionally vested portion of the Option (and any shares received in respect of such portion of the Option) shall be forfeited upon such failure or revocation (subject to repayment by the Company to the Executive of any amounts (if any) paid by the Executive with respect to shares underlying such conditionally vested portion of the Option).  For the avoidance of doubt, if a Qualifying Termination occurs prior to a Change in Control, the unvested portion of this Option shall remain outstanding and eligible to vest solely upon a Change in Control occurring within ninety (90) days after the Termination Date (but shall not otherwise vest following the Termination Date) and shall terminate on the ninetieth (90th) day following the Termination Date if a Change in Control has not occurred on or prior to such ninetieth (90th) day (or such earlier expiration date provided in Section 3.3 (other than due to a termination of employment)).

 

Notwithstanding anything to the contrary, for purposes of the Option and the Stock Option Agreement, “Good Reason” does not include a change in title, authority, duties and/or responsibilities that occurs within 30 days following a Change in Control if (A) the Optionee’s new title is that of an executive officer of the entity surviving such Change in Control (or, if applicable, its parent company if such entity has a parent company) reporting directly to the Chief Executive Officer of the entity surviving such Change in Control (or, if applicable, its parent company, if such entity has a parent company) and the Optionee’s authority, duties and responsibilities are commensurate with such title or (B) (1) the entity surviving such Change in Control (or, if applicable, its parent company if such entity has a parent company) continues to operate the Company’s principal businesses as a separate unit, division or subsidiary or combines the Company’s principal businesses with one of its existing units, divisions or subsidiaries and (2) the Optionee’s new title is that of the principal revenue officer of such unit, division or subsidiary reporting directly to the principal executive officer of such unit, division or subsidiary (or to an executive officer of the entity surviving the Change in Control or parent company thereof) and (in either case) the Optionee’s authority, duties and responsibilities are commensurate with such title and are similar in scope (with respect to such unit, division or subsidiary) to the authority, duties and responsibilities of the Optionee prior to the Change in Control.

 

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

 

By his or her signature, the Optionee agrees to be bound by the terms and conditions of the Plan, the Stock Option Agreement and this Grant Notice.  The Optionee has reviewed the Stock Option Agreement, the Plan and this Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of this Grant Notice, the Stock Option Agreement and the Plan.  The Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or relating to the Option.

 

 

	
DEMAND MEDIA, INC.
  	
 
  	
OPTIONEE
  
	
 
  	
 
  	
 
  
	
By:
  	
/s/ Richard Rosenblatt
  	
 
  	
By:
  	
/s/ Joanne Bradford
  
	
Print Name:
  	
Richard Rosenblatt
  	
 
  	
Print Name:
  	
Joanne Bradford
  
	
Title:
  	
Chairman & CEO
  	
 
  	
 
  	
 
  
	
Address:
  	
 
  	
 
  	
Address:
  	
 
  
	
 
  	
 
  	
 
  	
 
  	
 
  

 

 

EXHIBIT A

 

TO STOCK OPTION GRANT NOTICE

 

STOCK OPTION AGREEMENT

 

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

 

ARTICLE I.

 

GENERAL

 

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

 

ARTICLE II.

 

GRANT OF OPTION

 

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

 

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

 

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

 

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ARTICLE III.

 

PERIOD OF EXERCISABILITY

 

3.1                                 Commencement of Exercisability.

 

(a)                                  Subject to Sections 3.2, 3.3, 5.10 and 5.14 hereof, the Option shall become vested and exercisable in such amounts and at such times as are set forth in the Employment Agreement, as incorporated herein by the Grant Notice, and as set forth in the Grant Notice.

 

(b)                                 No portion of the Option which has not become vested and exercisable at the date of the Optionee’s Termination of Service shall thereafter become vested and exercisable, except as set forth in Section 3.3 hereof, as may be otherwise provided by the Administrator or as set forth in a written agreement between the Company and the Optionee.

 

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

 

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

 

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

 

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

 

(c)                                  (i) The date that is three (3) months from the date of the Optionee’s Termination of Service by the Company without Cause or by the Optionee for Good Reason or, if a Change in Control occurs on or during the ninety (90)-day period following such Termination of Service, the date that is three (3) months from the date of the Change in Control, or (ii) the date that is three (3) months from the date of the Optionee’s Termination of Service by the Optionee without Good Reason and other than due to death or Disability;

 

(d)                                 The expiration of one (1) year from the date of the Optionee’s Termination of Service by reason of the Optionee’s death or Disability; or

 

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

 

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

 

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

 

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

 

ARTICLE IV.

 

EXERCISE OF OPTION

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(a)                                  Cash;

 

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(b)                                 Check;

 

(c)                                  With the consent of the Administrator, delivery of a written or electronic notice that the Optionee has placed a market sell order with a broker with respect to shares of Common Stock then issuable upon exercise of the Option, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate exercise price; provided, that payment of such proceeds is then made to the Company upon settlement of such sale;

 

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

 

(e)                                  With the consent of the Administrator, surrendered shares of Common Stock issuable upon the exercise of the Option having a Fair Market Value on the date of exercise equal to the aggregate exercise price of the shares of Common Stock with respect to which the Option or portion thereof is being exercised; or

 

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

 

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

 

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

 

ARTICLE V.

 

OTHER PROVISIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.11                           Successors and Assigns.  The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein set forth in this Article 5, this Agreement shall be binding upon the Optionee and his or her heirs, executors, administrators, successors and assigns.

 

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

 

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

 

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

 

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

 

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

 

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