Exhibit 10.1

 

CONFIDENTIAL

 

July 2, 2008

 

United Online, Inc.

21301 Burbank Boulevard

Woodland Hills, California  91367

 

Attention: Mark Goldston

 

Re:          $60,000,000 Term Loan

 

Ladies and Gentlemen:

 

Silicon Valley Bank, a California banking corporation (“SVB”) is pleased to
inform United Online, Inc., a Delaware corporation (“Borrower” or “you”), that
it hereby commits to provide a $60 million senior secured term loan (the “Senior
Term Loan”) described in the Summary of Terms and Conditions (as defined below)
and to act as the administrative agent (“Administrative Agent”) for the Senior
Term Loan (the “Term Loan Facility”). After the Closing Date (as defined below),
SVB reserves the right to arrange, in consultation with you, for a syndicate of
financial institutions and institutional investors (including SVB) (each such
financial institution and institutional investor being a “Lender” and,
collectively, the “Lenders”) to participate in the Senior Term Loan and SVB
agrees that it shall not assign any of its commitment or any of its obligations
prior to the Closing Date. Our fees for such services are set forth in the
accompanying confidential fee letter (the “Fee Letter”).  The transaction
contemplated by the Senior Term Loan and the payment of related fees and
expenses (the “Fee and Expense Payments”) and other related transactions are
collectively referred to herein as the “Transaction”.  The Summary of Terms and
Conditions is attached hereto as Annex A (the “Summary of Terms and Conditions”
and, together with this letter and the other annexes and schedules attached
hereto, the “Commitment Letter”).  The term “Credit Parties” as used herein
refers collectively to Borrower and all domestic subsidiaries of Borrower
(excluding UNOL Intermediate, Inc. (“Intermediate Co.”), FTD Group, Inc.
(“Target”) and their subsidiaries) (such domestic subsidiaries of Borrower
(excluding Intermediate Co., Target and their subsidiaries), the “Restricted
Subsidiaries”); provided that Classmates Media Corporation (“CMC”) and its
subsidiaries will be released as a Credit Party in connection with the initial
public offering of CMC (the “Classmates IPO”) as described below.

 

The foregoing commitment is expressly subject only to (i) from December 31, 2007
through the date hereof, there having not been any Purchaser Material Adverse
Effect (as defined in the Agreement and Plan of Merger dated as of April 30,
2008 (the “Merger Agreement”) by and among Borrower, UNOLA Corp., a Delaware
corporation (the “Merger Sub”), and Target, (ii) the satisfaction of the terms
and conditions set forth in this paragraph and Annex B attached hereto, and
(iii) the absence of any competing offering, placement or arrangement for any
debt security or bank financing of Borrower (other than (A) the credit
facilities contemplated by the commitment letter dated as of April 30, 2008 (the
“Wells Fargo Commitment Letter”) among Borrower and Wells Fargo Bank, National
Association and (B) the Purchaser Notes (as defined

 

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in the Merger Agreement (it being understood that the Purchaser Notes will not
be issued if the Senior Term Loan is funded)).

 

Notwithstanding anything in this Commitment Letter or the Fee Letter to the
contrary, (a) the only representations the accuracy of which shall be a
condition to the availability of the Senior Term Loan on the Closing Date shall
be the Specified Representations (as defined below), and (b) the terms of the
documentation for the Senior Term Loan shall be such that they do not impair the
availability of the Senior Term Loan on the Closing Date if the conditions set
forth in the preceding paragraph are satisfied (it being understood that to the
extent any security interest in the intended collateral (other than any
collateral the security interest in which may be perfected by the filing of a
UCC financing statement or the delivery of stock certificates which have been
provided to Borrower) is not provided on the Closing Date after your use of
commercially reasonable efforts to do so, the provision of such perfected
security interest(s) shall not constitute a condition precedent to the
availability of the Senior Term Loan on the Closing Date but shall be required
to be delivered after the Closing Date pursuant to arrangements to be mutually
agreed by the Administrative Agent and the Borrower). As used herein, “Specified
Representations” means representations relating to organizational power and
authority to enter into the documentation relating to the Senior Term Loan, due
execution, delivery and enforceability of such documentation, Federal Reserve
margin regulations and the Investment Company Act, the representations and
warranties set forth in this Commitment Letter relating to Information and
Projections and perfection of and priority of security interests (other than to
the extent any security interest in the intended collateral is not required to
be provided on the Closing Date in accordance with this paragraph) and the
accuracy of the Closing Date Certificate to be delivered pursuant to the terms
of Annex B attached hereto.

 

The Administrative Agent will manage, in consultation with you, all aspects of
the syndication, including decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate, the allocations of the
commitments among potential Lenders, any titles offered to potential Lenders and
the amount and distribution of fees among the Lenders; provided however, any
assignment or participation (or prospects thereof) prior to the earlier to occur
of (i) 90 days following the date that Borrower acquires the Target and (ii) the
termination of the Merger Agreement shall be coordinated with Wells Fargo Bank,
National Association. You agree that no other agents, co-agents or arrangers
will be appointed, no other titles will be awarded and no compensation other
than as expressly set forth herein or in the Fee Letter will be paid in
connection with the Senior Term Loan unless you and we shall so agree. Upon the
Administrative Agent’s request (not to exceed once), you agree to assist the
Administrative Agent with a syndication for up to 90 days after such request.
Without limiting your obligations to assist with syndication efforts as set
forth herein, the Administrative Agent agrees that the completion of syndication
is not a condition to its commitments hereunder or the funding of the Senior
Term Loan. Such assistance shall include (i) your using commercially reasonable
efforts to ensure that the syndication efforts benefit from your lending and
investment banking relationships as well as those of the Credit Parties,
(ii) your using reasonable efforts to make certain members of the Credit
Parties’ management available during regular business hours (upon reasonable
advance notice) to answer questions regarding the Senior Term Loan, (iii) your
using reasonable efforts to make the Credit Parties’ consultants and advisors
available during regular business hours (upon reasonable advance notice) to
answer questions regarding the

 

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Senior Term Loan, (iv) your using reasonable efforts (and using commercially
reasonable efforts to cause the Credit Parties to assist) to provide or cause to
be provided to us information reasonably deemed necessary by us in connection
with such syndication, and (v) the hosting by you and the Borrower of one or
more meetings with prospective Lenders.  The provisions of this paragraph shall
survive termination of this Commitment Letter.

 

You acknowledge that (i) the Administrative Agent on your behalf will make
available certain information on IntraLinks or another similar electronic system
and (ii) certain prospective Lenders may have personnel that do not wish to
receive Private Lender Information (referred to below). You agree, at the
reasonable request of the Administrative Agent and for up to 90 days after such
request, to assist in the preparation of marketing materials and presentations
to be used in connection with the syndication of the Term Loan Facility,
consisting exclusively of information and documentation that is either
(a) publicly available or (b) not material with respect to you, the Target or
their respective subsidiaries or any of their respective securities for purposes
of foreign, United States Federal and state securities laws (all such
information and documentation being “Public Lender Information”). Any
information and documentation that is not Public Lender Information is referred
to herein as “Private Lender Information”. You further agree that each document
to be disseminated by SVB to any Lender in connection with the Term Loan
Facility will, at the request of SVB, be identified by you as either
(x) containing Private Lender Information or (y) containing solely Public Lender
Information. You acknowledge that, unless you notify SVB otherwise, the
following documents contain solely Public Lender Information (unless you notify
us promptly that any such document contains Private Lender Information):
(1) drafts and final definitive documentation with respect to the Term Loan
Facility (other than the separate disclosure schedules referred to therein);
(2) administrative materials prepared by SVB for prospective Lenders (such as a
lender meeting invitation, bank allocation, if any, and funding and closing
memoranda); and (3) notification of changes in the terms of the Term Loan
Facility. The provisions of this paragraph shall survive termination of this
Commitment Letter.

 

You hereby represent that to your knowledge, (i) all written information, other
than the Projections (as defined below), forward looking information and
information of a general economic or industry nature, which has been or is
hereafter made available to us or the other Lenders by you or any of your
representatives in connection with the transactions contemplated hereby (the
“Information”) is or will be, in the case of Information made available after
the date hereof, when taken as a whole, complete and correct in all material
respects and does not or will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements contained
therein not materially misleading in light of the circumstances under which such
statements were or are made, and (ii) all financial projections concerning the
Borrower and the Restricted Subsidiaries that have been or are hereafter made
available to us or the other Lenders by you or any of your representatives in
connection with the transactions contemplated hereby (the “Projections”) have
been or will be, in the case of Projections made available after the date
hereof, prepared in good faith based upon assumptions that are believed by the
preparer thereof to be reasonable at the time made, it being understood and
agreed that the financial projections are not a guarantee of financial
performance and actual results may differ from the Projections and such
differences may be material. Upon SVB’s reasonable request, you agree to
supplement the Information and the Projections from time to time, so that the
representation in the preceding sentence is correct. In arranging and
syndicating the Term Loan

 

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Facility, the Administrative Agent will be using and relying on the Information
and the Projections without independent verification thereof.

 

You hereby agree to pay our reasonable documented costs and expenses (including
the reasonable documented fees and expenses of outside counsel, reasonable
professional fees of consultants and other experts hired upon the request of any
prospective Lender and reasonable out-of-pocket expenses, including without
limitation syndication expenses and Intralinks (or another similar electronic
system) expenses) incurred before or after the date of this Commitment Letter
arising in connection with this Commitment Letter, the Definitive Senior
Financing Documents (as defined in Summary of Terms and Conditions), the
syndication of the Senior Term Loan and the other transactions contemplated
hereby.  You hereby further agree to indemnify and hold harmless Administrative
Agent and each Lender (including SVB) and their respective affiliates and each
director, officer, employee, agent, attorney and affiliate thereof (each such
person, an “indemnified person”) from and against any claims, damages payable to
third parties, liabilities or other expenses to which an indemnified person may
become subject, insofar as such claims, damages payable to third parties,
liabilities (or actions or other proceedings commenced or threatened in respect
thereof) or other expenses arise out of or in any way relate to or result from
the Transaction and the other transactions contemplated by this Commitment
Letter, the Fee Letter, the extension of the financing contemplated hereby, the
Senior Term Loan or any use or intended use of the proceeds of any of the loans
and other extensions of credit contemplated hereby, and to reimburse each
indemnified person for any reasonable documented legal or other expenses
incurred in connection with investigating, defending or participating in any
such investigation, litigation or other proceeding (whether or not any such
investigation, litigation or other proceeding involves claims made between you,
your subsidiaries or any third party and any such indemnified person, and
whether or not any such indemnified person is a party to any investigation,
litigation or proceeding out of which any such expenses arise); provided,
however, that the indemnity and reimbursement obligations contained herein shall
not apply to the extent that it is determined in a final judgment by a court of
competent jurisdiction that such claims, damages payable to third parties,
liabilities or other expenses result from the gross negligence, or willful
misconduct of, or breach of this Commitment Letter or the Fee Letter by, such
indemnified person or any of their directors, officers, employees, agents,
attorneys or affiliates. No indemnified person shall be liable for any damages
arising from the use by others of Information or other materials obtained
through internet, Intralinks or similar information transmission systems in
connection with the Senior Term Loan, except to the extent such damages arise
from such indemnified person’s or any of their directors, officers, employees,
agents, attorneys’ or affiliates’ gross negligence, willful misconduct or breach
of this Commitment Letter or the Fee Letter.  No indemnified person shall be
responsible or liable to any other party or any other person for any indirect,
consequential or special damages. The foregoing provisions of this paragraph
shall be in addition to any rights that any indemnified person may have at
common law or otherwise.  The provisions of this paragraph shall survive
termination of this Commitment Letter.

 

As you know, SVB or its affiliates may from time to time effect transactions,
for its own account or for the accounts of customers, and may hold positions in
loans, options on loans, securities and options on securities, of companies that
may be the subject of the transactions contemplated by this Commitment Letter or
otherwise relate to the Borrower or any of its subsidiaries.

 

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You acknowledge and agree that in connection with all elements of each
transaction contemplated under this Commitment Letter and the Fee Letter
(i) neither SVB nor any of its affiliates has assumed any advisory
responsibility or any other obligation in favor of you or any of the Credit
Parties except the obligations expressly provided for under this Commitment
Letter and the Fee Letter and (ii) SVB and its affiliates, on the one hand, and
you and the Credit Parties, on the other hand, have an arms-length business
relationship that does not directly or indirectly give rise to, nor do you or
any of the Credit Parties rely on, any fiduciary duty on the part of SVB or any
of its affiliates.

 

This Commitment Letter and the Fee Letter are intended solely for your benefit
and nothing in this Commitment Letter or the Fee Letter, express or implied,
shall give any person other than the parties hereto, any beneficial or legal
right, remedy or claim hereunder. Neither this Commitment Letter nor the Fee
Letter is assignable by you, and may not be relied upon by any other person or
entity. Each of this Commitment Letter and the Fee Letter is confidential and
shall not be disclosed by any of the parties hereto to any person other than
Target, Wells Fargo, such party’s, Target’s or Wells Fargo’s accountants,
attorneys and other advisors (in each case, with the fee amounts in the Fee
Letter redacted), and, in the case of SVB and the Administrative Agent, their
affiliates and prospective Lenders, purchasers and assignees, and then only on a
confidential basis and in connection with the Transaction and the related
transactions contemplated herein. Any disclosure to an advisor may be made for
the sole purpose of evaluating and advising on the offer of financing made in
this Commitment Letter. Additionally, any of the parties hereto may make such
disclosures of this Commitment Letter and the Fee Letter as are required by
regulatory authority, law (including the disclosure rules of the Securities and
Exchange Commission) or judicial process or as may be required or appropriate in
response to any summons or subpoena or in connection with any litigation;
provided that such party will use its commercially reasonable efforts to notify
the other parties hereto of any such disclosure prior to making such disclosure.
SVB will use all confidential information provided to it or its affiliates by or
on behalf of you or the Borrower hereunder solely for the purpose of providing
the services which are the subject of this Commitment Letter and shall treat
confidentially all such information; provided that nothing herein shall prevent
SVB or its affiliates from disclosing any such information as required or
requested by regulatory authority, law or judicial process or as may be required
or appropriate in response to any summons or subpoena or in connection with any
litigation or to prospective lenders in connection with the syndication of the
Senior Term Loan; provided that SVB will use its commercially reasonable efforts
to notify you of any such disclosure prior to making such disclosure. SVB hereby
notifies you that pursuant to the requirements of the USA PATRIOT Act, Title III
of Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”), SVB may be
required to obtain, verify and record information that identifies you, which
information would include your name and address and other information that would
allow SVB to identify you in accordance with the Act. Anything to the contrary
contained herein notwithstanding, we hereby consent to your disclosure of a copy
of this Commitment Letter and a copy of the Fee Letter (with fee amounts
redacted) on a confidential basis to the Target and Wells Fargo and their
respective financial and legal advisors for its use in connection with the
evaluation of your proposal for the Transaction.

 

You hereby agree that upon consummation of the Transaction, SVB or any of its
affiliates may place customary “tombstone” advertisements (which may include any
of your trade names or corporate logos) in publications of its choice (including
without limitation

 

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“e-tombstones” published or otherwise circulated in electronic form and related
hyperlinks to your corporate website) at its own expense, subject to your
consent, not to be unreasonably withheld. In addition, you agree that SVB or any
of its affiliates may disclose information about the transaction to market data
collectors and similar service providers to the financing community.

 

Our offer will terminate at 5:00 p.m. (California time) on July 3, 2008, unless
on or before that date you sign and return an enclosed counterpart of this
Commitment Letter and the Fee Letter to Silicon Valley Bank, 5820 Canoga Avenue,
#210, Woodland Hills, CA 91367, attention: Mark Turk. The commitment herein
provided for will also expire on the close of business on October 30, 2008,
however, that any term or provision hereof to the contrary notwithstanding all
of your obligations hereunder and under the Fee Letter in respect of
indemnification, confidentiality and fee and expense reimbursement shall survive
any termination of the commitment pursuant to this paragraph.

 

Notwithstanding anything to the contrary contained herein, your obligations
(including the obligation to indemnify each indemnified person and to pay legal
fees and other expenses) and the representations and covenants under this
Commitment Letter shall remain effective until the execution of the Definitive
Senior Financing Documents and thereafter such obligations, representations and
covenants shall be superseded by those contained in the Definitive Senior
Financing Documents and you shall automatically be released from all liability
under this Commitment Letter upon the execution of the Definitive Senior
Financing Documents. You may terminate this Commitment Letter at any time
subject to the provisions of this paragraph.

 

This Commitment Letter (including the Summary of Terms and Conditions) shall be
governed by, and construed in accordance with, the laws of the State of
California.

 

TO THE EXTENT PERMITTED BY APPLICABLE LAW, YOU, SVB AND THE LENDERS EACH WAIVE
THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS COMMITMENT LETTER, THE FEE LETTER OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS COMMITMENT
LETTER AND THE FEE LETTER.  EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS
COUNSEL.

 

WITHOUT INTENDING IN ANY WAY TO LIMIT THE PARTIES’ AGREEMENT TO WAIVE THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY, if the above waiver of the right to a trial
by jury is not enforceable, the parties hereto agree that any and all disputes
or controversies of any nature between them arising at any time shall be decided
by a reference to a private judge, mutually selected by the parties (or, if they
cannot agree, by the Presiding Judge of the Santa Clara County, California
Superior Court) appointed in accordance with California Code of Civil Procedure
Section 638 (or pursuant to comparable provisions of federal law if the dispute
falls within the exclusive jurisdiction of the federal courts), sitting without
a jury, in Santa Clara County, California; and the parties hereby submit to the
jurisdiction of such court.

 

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The reference proceedings shall be conducted pursuant to and in accordance with
the provisions of California Code of Civil Procedure §§ 638 through 645.1,
inclusive.  The private judge shall have the power, among others, to grant
provisional relief, including without limitation, entering temporary restraining
orders, issuing preliminary and permanent injunctions and appointing receivers. 
All such proceedings shall be closed to the public and confidential and all
records relating thereto shall be permanently sealed.  If during the course of
any dispute, a party desires to seek provisional relief, but a judge has not
been appointed at that point pursuant to the judicial reference procedures, then
such party may apply to the Santa Clara County, California Superior Court for
such relief.  The proceeding before the private judge shall be conducted in the
same manner as it would be before a court under the rules of evidence applicable
to judicial proceedings.  The parties shall be entitled to discovery which shall
be conducted in the same manner as it would be before a court under the rules of
discovery applicable to judicial proceedings.  The private judge shall oversee
discovery and may enforce all discovery rules and order applicable to judicial
proceedings in the same manner as a trial court judge.  The parties agree that
the selected or appointed private judge shall have the power to decide all
issues in the action or proceeding, whether of fact or of law, and shall report
a statement of decision thereon pursuant to the California Code of Civil
Procedure § 644(a).  Nothing in this paragraph shall limit the right of any
party at any time to exercise self-help remedies, foreclose against collateral,
or obtain provisional remedies.  The private judge shall also determine all
issues relating to the applicability, interpretation, and enforceability of this
paragraph.

 

This Commitment Letter constitutes the entire understanding among the parties
hereto with respect to the subject matter hereof and replace and supersede all
prior agreements and understandings, both written and oral, between the parties
hereto with respect to the subject matter hereof. This Commitment Letter may not
be amended or waived except by an instrument in writing signed by each party
hereto. This Commitment Letter may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.

 

We appreciate having been given the opportunity by you to be involved in this
transaction.

 

 

Very truly yours,

 

 

 

SILICON VALLEY BANK, A

 

CALIFORNIA BANKING

 

CORPORATION

 

 

 

 

 

By:

/s/ Mark Turk

 

Title:

Senior Relationship Manager

 

 

 

Commitment Letter

 

 

 

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AGREED AND ACCEPTED as of

the date first written above:

 

UNITED ONLINE, INC.

 

 

 

 

 

 

By:

/s/ Mark R. Goldston

 

Name:

Mark R. Goldston

 

Title:

Chairman, President and

 

 

Chief Executive Officer

 

 

 

 

 

 

 

Commitment Letter

 

 

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ANNEX A

 

United Online, Inc.

$60,000,000 Senior Secured Term Loan

Summary of Terms and Conditions

 

The following summarizes selected terms of the senior term loan (the “Senior
Term Loan”).

 

This Summary of Terms and Conditions is intended merely as an outline of certain
of the material terms of the Senior Term Loan. It does not include descriptions
of all of the terms and other provisions that are to be contained in the
definitive documentation relating to the Senior Term Loan and it is not intended
to limit the scope of discussion and negotiation of any matters not inconsistent
with the specific matters set forth herein; provided however, there shall be no
other conditions other than as set forth in this Commitment Letter (as defined
below) and the Summary of Terms and Conditions. All terms defined in the
commitment letter (the “Commitment Letter”) to which this Summary of Terms and
Conditions is attached and not otherwise defined herein shall have the same
meanings when used herein.

 

Borrower:

 

United Online, Inc. (“Borrower”)

 

 

 

Guarantors:

 

All existing and future subsidiaries of the Borrower (the “Guarantors” and,
together with the Borrower, the “Credit Parties”); provided, however, that
Intermediate Co., Target, their subsidiaries, non-U.S. subsidiaries and,
following a Classmates IPO, CMC and its subsidiaries shall not be required to
deliver guaranties and shall not be Guarantors.

 

 

 

Administrative Agent:

 

Silicon Valley Bank, a California banking corporation (“SVB or “Administrative
Agent”).

 

 

 

Lenders:

 

A syndicate of financial institutions and institutional lenders (including SVB)
acceptable to SVB after consultation with the Borrower.

 

 

 

Closing Date:

 

The date the initial loans are made under the Senior Term Loan (the “Closing
Date”) and not later than October 30, 2008.

 

 

 

Type and Amount:

 

The Term Loan Facility shall consist of a Senior Term Loan.

 

 

 

 

 

Term Loan Facility. The Term Loan Facility will be made available in a single
borrowing on the Closing Date. Once repaid, the term loans made under the Term
Loan Facility may not be reborrowed. Such term loans will have a final maturity
date of four years after the Closing Date and be in an original principal amount
of $60,000,000. The Term Loan Facility shall be repaid in equal quarterly
installments of $3,750,000 beginning December 31, 2008. Any outstanding amounts
shall

 

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be paid on the maturity date.

 

 

 

Purpose:

 

The Senior Term Loan can be used for working capital requirements, to fund the
acquisition of the Target and for other corporate purposes of the Credit Parties
(including investments and acquisitions).

 

 

 

Security:

 

The Senior Term Loan will be secured by first priority perfected liens on
substantially all existing and after-acquired personal property (tangible and
intangible) of the Borrower and the Guarantors, including without limitation all
accounts receivable, inventory, equipment, intellectual property, other personal
property, and owned real property, and a pledge of the capital stock of the
subsidiaries owned by the Borrower and the Guarantors (other than the capital
stock of Intermediate Co., Target and their respective subsidiaries), subject in
each case to such exceptions as may be agreed upon (the “Collateral”); provided,
however, that no more than 66.0% of the equity interests of first-tier non-U.S.
subsidiaries will be required to be pledged as security.

 

 

 

 

 

Notwithstanding the foregoing, the following assets will be excluded from the
Collateral securing the Senior Term Loan: (i) leasehold interests in real
property, (ii) those assets over which the granting of a security interest in
such assets would be prohibited by contract or applicable law, (iii) other
exceptions to be mutually agreed upon or which are usual for facilities of this
type and (iv) fee interests in real property valued at less than $5,000,000.

 

 

 

 

 

The Collateral shall ratably secure the Term Loan Facility.

 

 

 

 

 

Negative pledge on all assets of the Credit Parties, subject to customary
permitted liens to be agreed upon.

 

 

 

Interest Rates:

 

All amounts outstanding under the Senior Term Loan shall bear interest, at the
Borrower’s option, at the Base Rate plus 2.00% or at the reserve adjusted LIBOR
Rate plus 3.50%; provided however, in no event shall the LIBOR Rate be less than
3.00%.

 

 

 

Interest Payments:

 

Monthly for Base Rate Loans; on the last day of selected interest periods (which
shall be one, two, three and six months) for LIBOR Loans (and at the end of
every three months, in the case of interest periods of longer than three
months); and upon

 

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prepayment, in each case payable in arrears and computed on the basis of a
360-day year; provided that interest on Base Rate Loans shall be computed on the
basis of a 365/366 day year for actual days elapsed.

 

 

 

Voluntary Prepayments and Commitment Reductions:

 

The Senior Term Loan may be prepaid in whole or in part without premium or
penalty (LIBOR Loans prepayable only on the last days of related interests
periods or upon payment of any breakage costs actually incurred) and the
Lenders’ commitments relative thereto reduced or terminated upon such notice and
in such amounts as may be agreed upon. Voluntary prepayments of the Term Loan
Facility shall be applied in the inverse order of maturity.

 

 

 

Mandatory Prepayments and Commitment Reductions:

 

Subject to certain exceptions customary and appropriate for financings of this
type (including reinvestment rights) to be agreed upon, the Senior Term Loan
will be prepaid by an amount equal to: (i) the greater of (x) $30 million and
(y) 50% of the net cash proceeds received by the Borrower promptly following the
consummation of the Classmates IPO; and (ii) 50.0% of Excess Cash Flow (as
defined below) for each fiscal quarter, commencing with the quarter ending
March 31, 2009 (and to be paid 45 days after quarter-end (or 90 days in the case
of the fourth quarter of any fiscal year); provided that the required amount of
such Excess Cash Flow prepayment will be reduced on a dollar for dollar basis by
the amount of any voluntary prepayments of the Senior Term Loan made prior to
the end of the fiscal quarter for which any excess cash flow prepayment is
payable. Excess Cash Flow means adjusted Consolidated EBITDA (to be negotiated
and with customary addbacks for similarly situated companies) (“Consolidated
EBITDA”) less cash interest, scheduled amortization of the Term Loan Facility,
cash taxes, capital expenditures to the extent paid in cash, permitted
investments (to be negotiated), cash dividends of up to $0.10 per share per
quarter (to the extent permitted by the Definitive Senior Financing Documents)
and tax payments in connection with the vesting of restricted stock units and
stock grants (to the extent permitted by the Definitive Senior Financing
Documents).

 

All mandatory prepayments of the Term Loan Facility shall be applied in the
inverse order of maturity. Notwithstanding the foregoing, in the case of any
mandatory prepayment to be applied to the Term Loan Facility, the Lenders
thereof may waive the right to receive the amount of such mandatory prepayment.

 

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Representations and Warranties:

 

Customary and appropriate for financings of this type (subject to exceptions to
be determined and with qualifications and caveats customary for facilities of
this nature), limited to the following: due organizations, powers,
qualification, good standing, business subsidiaries, authorization,
enforceability, no conflict, governmental consents, binding obligation,
historical financial condition, no material adverse changes, no restricted
junior payments, title to properties, liens, properties, intellectual property,
litigation/adverse facts, payment of taxes, performance of agreements/material
contracts, governmental regulation, employee benefit plans, certain fees,
compliance with laws and regulations, environmental protection, employee
matters, solvency, perfection and priority of liens securing the Term Loan
Facility, governmental authorization, absence of third-party filings, securities
activities/margin regulations, information regarding collateral, full
disclosure, subordinated indebtedness, reporting to IRS, foreign asset control
regulations, inactivity or immateriality of certain subsidiaries; provided that
such representations and warranties shall, on the Closing Date, be limited in
scope to the Specified Representations and the representations and warranties
related to the Company identified in the third paragraph of the Commitment
Letter to the extent permitted as a condition precedent to the availability of
the Senior Term Loan pursuant thereto.

 

 

 

Financial Covenants:

 

Financial Covenants shall be limited to the following (each to be measured
quarterly based upon Borrower’s consolidated financial statements (excluding
Unrestricted Subsidiaries, as defined below):

 

Leverage Ratio - defined as the ratio of, without duplication, (i) all
obligations of the Borrower and the Restricted Subsidiaries for borrowed money
including but not limited to (a) senior bank debt, senior notes, and
subordinated debt, (b) capital leases, (c) outstanding letters of credit,
(d) guarantees of borrowed money, (e) any obligation owed for all or any part of
the deferred purchase price of property or services (excluding any such
obligations incurred under ERISA), which purchase price is (1) due more than six
months from the date of incurrence of the obligation in respect thereof or
(2) evidenced by a note or similar written instrument, and (f) all indebtedness
secured by any lien on any property or asset owned or held by the Borrower and
the Restricted Subsidiaries regardless of whether the indebtedness secured
thereby shall have been assumed by the Borrower and the Restricted Subsidiaries
or is nonrecourse to the credit of the Borrower and the Restricted Subsidiaries
(subject to exceptions to be agreed upon) to (ii) Consolidated

 

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EBITDA of the Borrower and the Restricted Subsidiaries not in excess of
1.25:1.00. The Leverage Ratio will be tested quarterly with Consolidated EBITDA
being calculated on a rolling four quarter basis.

 

Fixed Charge Coverage Ratio - defined as the ratio of (i) Consolidated EBITDA of
the Borrower and the Restricted Subsidiaries minus the sum of (a) cash taxes and
(b) maintenance capital expenditures (excluding capital expenditures financed
other than from internally generated cash) to (ii) cash interest expense plus
scheduled debt payments (as such scheduled debt payments may be reduced from
time to time by voluntary and mandatory prepayments) of at least the 1.50:1.00.
The Fixed Charge Coverage Ratio will be tested quarterly and calculated on a
trailing four quarter basis (with, for the avoidance of doubt, Consolidated
EBITDA being calculated on a rolling four quarter basis). The foregoing
notwithstanding, for any fiscal quarter after the Closing Date but prior to the
anniversary thereof, the amounts in clause (ii) above for such period shall be
annualized and calculated as follows: from the Closing Date through such fiscal
quarter, such amount during such period shall be divided by the number of days
in such period and then multiplied by 365 days.

 

Minimum Consolidated EBITDA. Consolidated EBITDA as calculated on a trailing
four quarter basis of at least $100,000,000 adjusted to $50,000,000 upon the
Classmates IPO.

 

 

 

Other Covenants:

 

Customary and appropriate affirmative and negative covenants for financing of
this type (subject to exceptions and baskets to be mutually agreed upon and
customary for financings of this nature), limited to the following: affirmative
covenants regarding financial statements and other reports along with compliance
certificates, existence, payment of taxes and claims, maintenance of properties,
insurance, application of proceeds, inspection rights, lender meetings,
compliance with laws, environmental matters, execution of subsidiary guaranty
and personal property collateral documents, matters regarding additional real
property and maintaining primary operating accounts with SVB (subject to SVB
providing reasonable terms and excluding accounts of Intermediate Co., Target,
and their respective subsidiaries); negative covenants limiting other
indebtedness, liens, investments (including limitations on investments in Target
(subject to a TTM cap of $15,000,000), mergers and acquisitions, contingent
obligations, restricted junior payments (dividends, redemptions and payments on

 

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subordinated debt; provided however, tax payments in connection with the vesting
of restricted stock units and stock grants shall be permitted in an amount to be
negotiated), sales of assets, fundamental changes, amendments to related
agreements, fiscal year, transactions with affiliates, conduct of business,
sale-leasebacks, use of proceeds, ERISA liabilities and reporting requirements.

 

The foregoing notwithstanding, so long as no Event of Default has occurred and
is continuing or would result therefrom, the Classmates IPO and the payment of
quarterly dividends up to $0.20/share by United Online, Inc. shall be permitted.
For all purposes of the Definitive Senior Financing Documents, Intermediate Co.,
Target, their respective subsidiaries and, following a Classmates IPO, CMC and
its subsidiaries will be “Unrestricted Subsidiaries” and will not be subject to
the covenants, defaults or representations contained in the Definitive Senior
Financing Documents.

 

 

 

Events of Default:

 

Customary and appropriate for financings of this type (subject to customary and
appropriate grace periods qualifications and caveats), limited to the following:
failure to make payments when due, defaults under indebtedness or contingent
obligations in excess of specified amounts, noncompliance with covenants or any
other provision of the Definitive Senior Financing Documents, breaches of
representations and warranties, bankruptcy, dissolution, judgments in excess of
specified amounts, attachments in excess of specified amounts, ERISA liability
in excess of specified amounts, invalidity of loan documents, invalidity of
guaranties, impairment of security interests in Collateral, repudiation of
Collateral, and Changes of Control (to be defined).

 

 

 

Conditions Precedent to Funding:

 

The Borrower shall have satisfied the conditions set forth in Annex B attached
to the Commitment Letter and the Specified Representations shall be accurate in
all material respects.

 

 

 

Indemnification:

 

The Borrower shall indemnify the Administrative Agent, each Lender and each of
their respective affiliates, directors, officers, agents, attorneys and
employees from and against any losses, claims, damages, liabilities and other
expenses in a manner customary for financings of this type.

 

 

 

Assignments and Participations:

 

The Lenders may assign all or in minimum amounts of $1,000,000 any portion of
their shares of the Senior Term Loan to their affiliates, to other Lenders, or
to one or more financial institutions or institutional lenders that are Eligible
Assignees

 

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(as defined below). The Lenders will have the right to sell participations,
subject to customary limitations on voting rights, in their shares of the Senior
Term Loan.

 

Eligible Assignee shall mean (a) any Lender, (b) an affiliate of any Lender,
(c) an Approved Fund (to be defined) and (d) any other person approved by the
Administrative Agent.

 

 

 

Waivers and Amendments:

 

Amendments and waivers will require the approval of Lenders holding in the
aggregate more than 50% of the Senior Term Loan; provided that the consent of
each Lender directly affected thereby shall be required for (a) increases in the
commitment of such Lender, (b) reductions of principal, interest or fees,
(c) extensions of final and interim scheduled maturities or times for payment of
interest or fees, (d) releases of all or substantially all the Collateral and
(e) releases of all or substantially all of the Guarantors.

 

 

 

Taxes, Reserve Requirements and Indemnities:

 

All payments are to be made free and clear of any present or future taxes (other
than franchise taxes and taxes on overall net income), imposts, assessments,
withholdings, or other deductions whatsoever. Foreign Lenders shall furnish to
the Administrative Agent (for delivery to the Borrower) appropriate certificates
or other evidence of exemption from U.S. federal income tax withholding.

 

The Borrower shall indemnify the Lenders against all increased costs of capital
resulting from reserve requirements or otherwise imposed, in each case subject
to customary increased costs, capital adequacy and similar provisions.

 

 

 

Governing Law and Jurisdiction:

 

The Borrower will submit to the non-exclusive jurisdiction and venue of the
federal and state courts of the State of California and will waive any right to
trial by jury. California law shall govern the Definitive Senior Financing
Documents.

 

 

 

Administrative Agent’s Counsel:

 

Bingham McCutchen LLP

 

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ANNEX B
INITIAL CONDITIONS PRECEDENT

 

The obligation to make the Senior Term Loans under the Term Loan Facility is
subject to the satisfaction of the conditions precedent set forth in the
Commitment Letter and on this Annex B (all terms defined in the Summary of Terms
and Conditions or in the Commitment Letter to which this Annex B is attached and
not otherwise defined herein having the same meanings when used herein).

 

Senior Term Loan

 

The definitive documentation evidencing the Senior Term Loan (the “Definitive
Senior Financing Documents”) shall be prepared by counsel to the Administrative
Agent, shall be in form and substance consistent with the Commitment Letter
(including without limitation the third paragraph thereof) and shall have been
executed and delivered by the Credit Parties. Terms of the Term Loan Facility
not set forth in the Commitment Letter shall be mutually agreed upon by the
Borrower and the Administrative Agent. Such Definitive Senior Financing
Documents shall provide for delivery of the following in customary form: legal
opinions, officers’ certificates, incumbency certificates, compliance
certificates, a solvency certificate from an officer of the Borrower,
resolutions, corporate and public records, guaranties, security agreements,
termination statements, IP security interest grants, foreign pledge agreements
(upon the Administrative Agent’s reasonable request), UCC financing statements,
stock certificates, insurance certificates.

 

 

 

Fees and Expenses:

 

All fees and expenses to be paid to the Administrative Agent or other Agents,
the Administrative Agent and the Lenders as set forth in the Commitment Letter
and the Fee Letter shall have been paid in full in accordance with the terms
thereof.

 

 

 

Financial Statements:

 

The Administrative Agent shall have received (i) audited consolidated balance
sheets and related statements of income, stockholders’ equity and cash flows of
the Borrower and the Restricted Subsidiaries for the three most recently
completed fiscal years ended at least 90 days prior to the Closing Date; and
(ii) unaudited consolidated balance sheets and related statements of income,
stockholders’ equity and cash flows of the Borrower and the Restricted
Subsidiaries for each subsequent fiscal quarter ended at least 45 days prior to
the Closing Date and after the most recently completed fiscal year of the
Borrower for which audited financial statements have been prepared (but in any
event excluding the fourth fiscal quarter of any fiscal year of the Borrower).

 

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Closing Date Certificate:

 

On the Closing Date, the Borrower shall deliver to the Administrative Agent a
Closing Date Certificate signed by the Borrower’s chief financial officer,
demonstrating in reasonable detail that adjusted OIBDA (calculated in a manner
consistent with Borrower’s prior practices) of the Borrower and the Restricted
Subsidiaries for the most recently completed trailing four quarter period ended
prior to the Closing Date for which financial statements are available pursuant
to clauses (i) and (ii) of “Financial Statements” above of not less than
$100,000,000.

 

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