Exhibit 10.17

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is made and entered into effective
the 6th day of December, 2010 by and between United Online, Inc., a Delaware
corporation (the “Company”), with principal corporate offices at 21301 Burbank
Boulevard, Woodland Hills, California 91367, and Mark R. Goldston, whose address
is 21301 Burbank Boulevard, Woodland Hills California 91367 (“Employee”).

 

WHEREAS, Employee and the Company had previously entered into an employment
agreement (the “Prior Agreement”) effective April 3, 2007, amended as of
August 22, 2007 and amended and restated effective as of January 1, 2009;

 

WHEREAS, effective as of the date hereof, Employee and the Company desire to
enter into a new employment agreement to replace the Prior Agreement.

 

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 hereto agree as follows:

 

1.                                      EMPLOYMENT

 

1.1                                 The Company hereby agrees to continue to
employ Employee, and Employee hereby accepts such continued employment, on the
terms and conditions set forth herein, commencing the date hereof and continuing
through December 21, 2015 (as extended pursuant to Section 1.2 below, the
“Term”), unless this Agreement expires or Employee is terminated earlier as
provided in Section 4 below.  Employee’s place of employment shall be the in the
greater Los Angeles metropolitan area.

 

1.2                                 On December 21, 2011 and on each succeeding
December 21, the term of this Agreement shall automatically be extended for one
additional year unless, on or prior to September 21 of the relevant year, either
Employee or the Company has delivered a notice that such automatic extension
shall not occur.

 

2.                                      DUTIES OF EMPLOYEE

 

2.1                                 Employee shall serve as the Chief Executive
Officer and, if elected to the Board of Directors of the Company (the “Board”),
as Chairman of the Board.  During Employee’s service as Chairman of the Board
Employee shall also serve as Chairman of the Company.  In these capacities,
Employee shall perform such customary, appropriate and reasonable executive
duties as are usually performed by the Chief Executive Officer and Chairman,
including such executive duties as are delegated to him from time to time by the
Board or a committee thereof.

 

2.2                                 Employee agrees to devote Employee’s good
faith, full time, attention, skill and efforts to the performance of his duties
for the Company during the Term; provided, however, this paragraph shall not
preclude Employee from writing and promoting books or other published materials,
engaging in civic, charitable or religious activities, or from serving on boards
of directors of companies or organizations that do not present any conflict with
the interests of the Company or otherwise adversely affect Employee’s
performance of the services required under this Agreement.  This Agreement also
shall not be interpreted to prohibit Employee from making personal investments
(including the purchase of interests in professional sports teams) and
overseeing or participating in management of entities

 

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controlled by him or his immediate family if those activities do not materially
interfere with the services required under this Agreement and do not present any
conflict with the interests of the Company.

 

3.                                      COMPENSATION AND OTHER BENEFITS

 

3.1                                 Base Salary.  During the Term, the Company
shall pay to Employee a base salary per fiscal year equal to Employee’s current
base salary (the “Base Salary”), with payments to be made in accordance with the
Company’s standard payment policy and subject to such withholding as may be
required by law.  Employee’s Base Salary shall be increased to include any
increases in Employee’s base salary as approved by the Board, but may not be
reduced during the Term without Employee’s written consent.

 

3.2                                 Bonus.  During the Term, Employee shall also
be eligible to receive an annual target bonus of 100% of Employee’s base salary
for each fiscal year (the “Annual Bonus”), less withholding required by law,
based on performance criteria established by the Board provided that this target
shall not be deemed to establish a maximum bonus and the Board or its
compensation committee may award a bonus equal to more than 100% of Base
Salary.  Employee’s Annual Bonus shall be increased to include any increases in
Employee’s Annual Bonus as approved by the Board.  Employee shall not be
eligible to receive any unpaid Annual Bonus if his employment hereunder is
terminated pursuant to either Section 4.1 or if Employee voluntarily resigns. 
Employee’s bonus awards shall be paid in no event later than the 15th day of the
third month following the end of the taxable year (of the Company or Employee,
whichever is later) in which such bonus award is earned.

 

3.3                                 Vacation.  Employee shall be entitled to
five (5) weeks paid vacation per year in accordance with the Company’s vacation
policies.

 

3.4                                 Other Benefits.  During the Term, Employee
shall be entitled to participate in all group life, health, medical, dental or
disability insurance or other employee, health and welfare benefits made
available generally to other executives of the Company.  If Employee elects to
participate in any of such plans, Employee’s portion of the premium(s) will be
deducted from Employee’s paycheck.

 

3.5                                 Business Expenses.  The Company shall
promptly reimburse Employee for all reasonable and necessary business expenses
incurred by Employee in connection with the business of the Company and the
performance of his duties under this Agreement, subject to Employee providing
the Company with reasonable documentation thereof.  Any such reimbursements paid
to Employee shall be made in no event later than the end of the calendar year
following the calendar year in which the expenses were incurred and any amounts
so reimbursed in any one calendar year shall not affect the amounts reimbursable
in any other calendar year. Employee’s right to receive such reimbursements may
not be exchanged or liquidated for any other benefit.

 

3.6                                 Board of Directors.  If Employee is elected
to the Board, Employee shall serve as Chairman of the Board.  Employee’s
appointments as Chairman and as a member of the Board will automatically
terminate upon the termination of Employee’s employment with the Company for any
reason.

 

4.                                      TERMINATION

 

4.1                                 Termination for Cause.

 

(a)                                  Termination “for cause” is defined as
follows:  (1) if Employee is convicted of, or enters a plea of nolo contendere
to, a felony, including any act of moral turpitude that

 

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adversely impacts the Company or any of its subsidiaries, (2) if Employee
commits an act of actual fraud, embezzlement, theft or similar dishonesty
against the Company or any of its subsidiaries that adversely and materially
impacts the Company or any of its subsidiaries, (3) if Employee commits any
willful misconduct or gross negligence resulting in material harm to the Company
or any of its subsidiaries, or (4) if Employee fails, after receipt of detailed
written notice and after receiving a period of at least thirty (30) days
following such notice to cure such failure, to use his reasonable good faith
efforts to follow the reasonable and lawful direction of the Board and to
perform his obligations hereunder.

 

The Company may terminate this Agreement immediately (except as required by
clause 4.1(a)(4) above) for any of the reasons stated in Section 4.1(a) by
giving written notice to Employee without prejudice to any other remedy to which
the Company may be entitled.  The notice of termination shall specify the
grounds for termination.  If Employee’s employment hereunder is terminated “for
cause” pursuant to this Section 4.1, Employee shall be entitled to receive
hereunder his accrued but unpaid Base Salary and vacation pay through the date
of termination, and reimbursement for any expenses as set forth in Section 3.5,
through the date of termination, but shall not be entitled to receive any unpaid
portion of the Annual Bonus or any other amount except for amounts earned under
any plan (including criteria for the Annual Bonus) but not yet paid as of the
date of termination.

 

4.2                                 Termination Without Cause.  If Employee’s
employment is terminated without “cause” as defined in Section 4.1(a) or he is
Involuntarily Terminated, he will be eligible for the severance benefits set
forth in Section 4.3.

 

4.3                                 Severance Payments and Other Benefits Upon
Termination Without Cause or Involuntary Termination.  If the Company terminates
Employee’s employment hereunder without cause, or if Employee is Involuntarily
Terminated, the Company (or its successor, as the case may be) shall pay to
Employee (i) any accrued but unpaid Base Salary and vacation through the date of
termination and (ii) reimbursement for any expenses as set forth in Section 3.5,
through the date of termination.  Additionally, subject to Employee entering
into and not revoking a release of claims in favor of the Company and abiding by
the non-solicitation provisions set forth in Section 5 below, the Company (or
its successor, as the case may be) shall pay to Employee a severance payment
(the “Severance Payment”) equal to the sum of (x)  the Bonus Amount (as defined
below), prorated through the date of termination, and (y) a severance payment in
an amount equal to three times the sum of Employee’s Base Salary and the Bonus
Amount, payable in one lump sum on the date of termination, subject to
withholding as may be required by law.  For the purposes of Section 4.3(x) and
Section 4.3(y) above, the term “Bonus Amount” shall mean 100% of Employee’s then
current Base Salary or, in the event of Involuntary Termination, the greater of
100% of Employee’s then current Base Salary, or the Annual Bonus paid to
Employee for the preceding fiscal year.  The release required as a condition to
Employee’s entitlement to such Severance Payment shall be a comprehensive
agreement releasing the Company and its officers, directors, employees,
stockholders, subsidiaries, affiliates, representatives and other related
parties from all claims that Employee may have with respect to such parties
relating to Employee’s employment with the Company and the termination of that
employment relationship and containing such customary other and additional terms
as the Company reasonably deems satisfactory and must be delivered within
twenty-one (21) days (or forty-five (45) days if such longer period is required
under applicable law) after the date of Employee’s termination of employment. 
The Severance Payment to which Employee accordingly becomes entitled hereunder
will be made to Employee in a lump sum on the third business day following the
expiration of the maximum applicable review/delivery and revocation periods with
respect to the required release or as soon as administratively practicable
thereafter, but in no event later than the sixtieth (60th) day following the
date of Employee’s termination of employment.

 

With respect to Employee’s outstanding options to purchase shares of the
Company’s Common Stock (“Option Awards”), restricted unit awards covering shares
of the Company’s Common

 

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Stock (the “Restricted Unit Awards”) and restricted shares of the Company’s
Common Stock (the “Restricted Shares”), if Employee’s employment is terminated
without cause or due to Employee’s death or permanent disability, or if Employee
is Involuntarily Terminated:

 

(i)                                     Each Option Award will become vested and
exercisable with respect to all non-vested shares;

 

(ii)                                  Each Restricted Unit Award (including the
Sign-On Restricted Unit Award granted pursuant to the Prior Agreement) will
become vested with respect to all non-vested shares, except to the extent
otherwise provided in any Restricted Unit Award granted after the date this
Agreement is effective, and any shares which so vest shall be issued in
accordance with the terms of the applicable award agreement; and

 

(iii)                               The Company’s repurchase option will lapse
with respect to all Restricted Shares.

 

If Employee is Involuntarily Terminated, to the extent permitted under
Section 409A of the Internal Revenue Code of 1986, as amended, (the “Code”), all
of Employee’s options to purchase the Company’s Common Stock shall be
exercisable for a one (1) year period following the date of termination (or
until expiration of their term, if earlier).

 

Employee shall be deemed terminated without cause if Employee resigns following
a material breach by the Company of its obligations hereunder; provided,
however, (i) Employee shall first provide the Company with written notice of
such breach within ninety (90) days after the conduct occurs giving rise to such
breach, (ii) the Company shall have thirty (30) days following such notice to
cure such breach and (iii) Employee’s termination of employment must occur
within one hundred eighty (180) days following the initial existence of such
breach.  Employee shall be deemed “Involuntarily Terminated” if (i) the Company
or any successor to the Company terminates Employee’s employment without cause
in connection with or following a Change in Control; or (ii) in connection with
or following a Change in Control there is (a) a material decrease in Employee’s
authorities, duties or responsibilities (it being deemed to be a material
decrease in authorities, duties and/or responsibilities if Employee is not
offered and provided the position of Chairman of the Board of Directors and
Chief Executive Officer of the Company or its successor as well as the acquiring
and ultimate parent entity, if any, following a Change in Control), (b) a
material decrease in pay and/or benefits from those provided by the Company
immediately prior to the Change in Control, (c) a requirement that Employee
re-locate out of the greater Los Angeles metropolitan area, or (d) a failure by
any successor to Company to confirm in writing that this Agreement remains in
full force and effect; provided, however, (i) Employee shall first provide the
Company with written notice of the occurrence of the conduct constituting the
grounds for such involuntary termination within ninety (90) days after the
occurrence of such conduct,  (ii) the Company shall have thirty (30) days
following such notice to cure such conduct, and (iii) Employee terminates his
employment with the Company within one hundred eighty (180) days following the
initial occurrence of such conduct.

 

“Change in Control” shall mean a change in ownership or control of the Company
effected through any of the following transactions: (i) the closing of a merger,
consolidation or other reorganization approved by the Company’s stockholders in
which a change in ownership or control of the Company is effected through the
acquisition by any person or group of persons comprising a “group” within the
meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Company or a person
that, prior to such transaction, directly or indirectly controls, is controlled
by or is under common control with, the Company) of beneficial ownership (within
the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company’s

 

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outstanding securities (as measured in terms of the power to vote with respect
to the election of Board members), (ii) the closing of a sale, transfer or other
disposition of all or substantially all of the Company’s assets, (iii) the
closing of any transaction or series of related transactions pursuant to which
any person or any group of persons comprising a “group” within the meaning of
Rule 13d-5(b)(1) of the 1934 Act (other than the Company or a person that, prior
to such transaction or series of related transactions, directly or indirectly
controls, is controlled by or is under common control with, the Company)
acquires directly or indirectly (whether as a result of a single acquisition or
by reason of one or more acquisitions within the twelve (12)-month period ending
with the most recent acquisition) beneficial ownership (within the meaning of
Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent
(50%) of the total combined voting power of the Company’s securities (as
measured in terms of the power to vote with respect to the election of Board
members) outstanding immediately after the consummation of such transaction or
series of related transactions, whether such transaction involves a direct
issuance from the Company or the acquisition of outstanding securities held by
one or more of the Company’s existing stockholders, (iv) a merger,
recapitalization, consolidation, or other transaction to which the Company is a
party or a sale, transfer or other disposition of all or substantially all of
the Company’s assets if, in either case, the members of the Board immediately
prior to consummation of the transaction do not, upon consummation of the
transaction, constitute at least a majority of the board of directors of the
surviving entity or the entity acquiring the Company’s assets, as the case may
be, or a parent thereof, or (v) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a majority of the
Board members ceases by reason of one or more contested elections for Board
membership to be comprised of individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have been appointed or
nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in office
at the time the Board approved such appointment or nomination.

 

5.                                      NON-SOLICITATION

 

For the eighteen (18) month period following the termination of Employee’s
employment with the Company (but only if Employee has received the Severance
Payment specified in Section 4.3 above with respect to a termination of
Employee’s employment prior to a Change in Control) (the “Restricted Period”)
Employee shall not directly or indirectly solicit or recruit for employment, any
person or persons who are employed by Company or any of its subsidiaries or
affiliates, or who were so employed at any time within a period of twelve (12)
months immediately prior to the date Employee’s employment terminated, or
otherwise interfere with the relationship between any such person and the
Company; nor will Employee assist anyone else in recruiting any such employee to
work for another company or business or discuss with any such person his or her
leaving the employ of the Company or engaging in a business activity in
competition with the Company.

 

6.                                      LIMITATION ON PAYMENTS

 

Notwithstanding any other provision of this Agreement, if any payment or benefit
received or to be received by Employee (including any payment or benefit
received pursuant to this Agreement or otherwise) would be (in whole or part)
subject to the excise tax imposed by Section 4999 of the Code, or any successor
provision thereto, or any similar tax imposed by state or local law, or any
interest or penalties with respect to such excise tax (such tax or taxes,
together with any such interest and penalties, are hereafter collectively
referred to as the “Excise Tax”), then the cash payments provided to Employee
under this Agreement shall first be reduced, with each such payment to be
reduced pro-rata but without any change in the payment date and with the
Severance Payment to be the first such cash payments so reduced, and then, if
necessary, the accelerated vesting of Employee’s equity awards pursuant to the
provisions of this Agreement shall be reduced in the same chronological order in
which those awards were made, but only to the extent necessary to assure that
Employee receives only the

 

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greater of (i)  the amount of those payments and benefits which would not
constitute a parachute payment under Section 280G of the Code or (ii)  the
amount which yields Employee the greatest after-tax amount of benefits after
taking into account any Excise Tax imposed on the payments and benefits provided
Employee hereunder (or on any other payments or benefits to which Employee may
become entitled in connection with any change in control or ownership of the
Company or the subsequent termination of Employee’s employment with the
Company).

 

7.                                      ASSIGNMENT

 

Neither the Company nor Employee may assign this Agreement or any rights or
obligations hereunder except as provided herein.  The Company may assign this
Agreement and all of its rights and obligations hereunder to any successor to
the business of the Company.  This Agreement will be binding upon the Company
and its successors and assigns.  In the event of a Change in Control, the
Company shall cause this Agreement to be assumed by the Company’s successor as
well as any acquiring or ultimate parent entity, if any, following any Change in
Control, and all references herein to the “Company” shall be deemed to include
such successor or assignee.

 

8.                                      MISCELLANEOUS

 

8.1                                 This Agreement supersedes any and all other
agreements, either oral or in writing, between the parties hereto with respect
to the employment of Employee by the Company and constitutes the entire
agreement between the Company and Employee with respect to its subject matter.

 

8.2                                 This Agreement may not be amended,
supplemented, modified or extended, except by written agreement which expressly
refers to this Agreement, which is signed by of the parties hereto and which is
authorized by the Company’s Board.

 

8.3                                 This Agreement is made in and shall be
governed by the laws of California, without giving effect to its
conflicts-of-law principles.

 

8.4                                 If any provision of this Agreement is held
by an arbitrator or a court of competent jurisdiction to conflict with any
federal, state or local law, or to be otherwise invalid or unenforceable, such
provision shall be construed in a manner so as to maximize its enforceability
while giving the greatest effect as possible to the parties’ intent.  To the
extent any provision cannot be construed to be enforceable, such provision shall
be deemed to be eliminated from this Agreement and of no force or effect and the
remainder of this Agreement shall otherwise remain in full force and effect and
be construed as if such portion had not been included in this Agreement.

 

8.5                                 Employee represents and warrants to the
Company that there is no restriction or limitation, by reason of any agreement
or otherwise, upon Employee’s right or ability to enter into this Agreement and
fulfill his obligations under this Agreement.

 

8.6                                 All notices and other communications
required or permitted hereunder shall be in writing and shall be mailed by
first-class mail, postage prepaid, registered or certified, or delivered either
by hand, by messenger or by overnight courier service, and addressed to the
receiving party at the respective address set forth in the heading of this
Agreement, or at such other address as such party shall have furnished to the
other party in accordance with this Section 8.6 prior to the giving of such
notice or other communication.

 

8.7                                 Notwithstanding any provision to the
contrary in this Agreement, no payment or distribution under this Agreement
which constitutes an item of deferred compensation under Section 409A of the
Code and becomes payable by reason of Employee’s termination of employment

 

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with the Company will be made to Employee unless Employee’s termination of
employment constitutes a “separation from service” (as such term is defined in
Treasury Regulations issued under Section 409A of the Code).  For purposes of
this Agreement, each amount to be paid or benefit to be provided shall be
construed as a separate identified payment for purposes of Section 409A of the
Code.  In addition, no payment or benefit which constitutes an item of deferred
compensation under Section 409A of the Code and becomes payable by reason of
Employee’s separation from service will be made to Employee prior to the earlier
of (i) the first day of the seventh (7th) month measured from the date of such
separation from service or (ii) the date of Employee’s death, if Employee is
deemed at the time of such separation from service to be a specified employee
(as determined pursuant to Code Section 409A and the Treasury Regulations
thereunder) and such delayed commencement is otherwise required in order to
avoid a prohibited distribution under Code Section 409A(a)(2).  Upon the
expiration of the applicable Section 409A deferral period, all payments and
benefits deferred pursuant to this Section 8.7 (whether they would have
otherwise been payable in a single sum or in installments in the absence of such
deferral) shall be credited with interest at a rate equal to the Company’s cost
of funds and shall be paid provided to Employee in a lump sum on the first day
of the seventh (7th) month after the date of Employee’s separation from service
or, if earlier, the first day of the month immediately following the date the
Company receives proof of Employee’s death. Any remaining payments or benefits
due under this Agreement will be paid in accordance with the normal payment
dates specified for them herein.

 

8.8                                 The Severance Payment and benefits under
this letter agreement are intended, where possible, to comply with the “short
term deferral exception” and the “involuntary separation pay exception” to Code
Section 409A. Accordingly, the provisions of this Agreement applicable to the
Severance Payment described in Section 4.3 and the accelerated vesting of
Employee’s equity awards and the issuance of shares of the Company’s common
stock thereunder and the determination of Employee’s separation from service due
to termination of Employee’s employment without cause or Employee’s Involuntary
Termination shall be applied, construed and administered so that those payments
and benefits qualify for one or both of those exceptions, to the maximum extent
allowable.  However, to the extent any payment or benefit to which Employee
becomes entitled under this Agreement is deemed to constitute an item of
deferred compensation subject to the requirements of Code Section 409A, the
provisions of this Agreement applicable to that payment or benefit shall be
applied, construed and administered so that such payment or benefit is made or
provided in compliance with the applicable requirements of Code Section 409A. In
addition, should there arise any ambiguity as to whether any other provisions of
this letter agreement would contravene one or more applicable requirements or
limitations of Code Section 409A and the Treasury Regulations thereunder, such
provisions shall be interpreted, administered and applied in a manner that
complies with the applicable requirements of Code Section 409A and the Treasury
Regulations thereunder.

 

8.9                                 Any compensation deferred by Employee
pursuant to one or more non-qualified deferred compensation plans or
arrangements of the Company subject to Section 409A of the Code and not
otherwise expressly addressed by the terms of this Agreement, shall be paid at
such time and in such form of payment as set forth in each applicable plan or
arrangement governing the payment of any such deferred amounts.

 

8.10                           Any amounts paid or payable to Employee pursuant
to this Agreement or the Company’s equity or compensation plans shall be subject
to recovery or clawback to the extent required by any applicable law or any
applicable securities exchange listing standards.

 

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IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement on
the date specified therefor below.

 

 

UNITED ONLINE, INC.

 

 

 

 

 

 

 

By:

/s/ Robert Berglass

 

Name:

Robert Berglass

 

Title:

Lead Independent Director,

 

 

Compensation Committee Chair of

 

 

United Online, Inc.

 

 

 

 

Dated:

December 6, 2010

 

 

 

 

 

 

 

By:

/s/ Charles B. Ammann

 

Name:

Charles B. Ammann

 

Title:

EVP and General Counsel

 

 

 

 

Dated:

December 6, 2010

 

 

 

 

 

 

 

MARK R. GOLDSTON

 

 

 

 

 

 

 

/s/ Mark R. Goldston

 

 

 

 

 

 

 

Dated:

December 6, 2010

 

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