Exhibit 10.8

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

 

This Amended and Restated Employment Agreement (the "Agreement") is made and
entered into effective as of the 1st day of October 2003, by and between United
Online, Inc., a Delaware corporation (the "Company"), with principal corporate
offices 2555 Townsgate Road, Westlake Village, California 91361, and Charles S.
Hilliard, whose address is 2112 Marsh Brook Road, Lake Sherwood, California
91361 ("Employee").

 

WHEREAS, the Employee had previously entered into an employment agreement (the
"Prior Agreement") effective April 17, 1999, with NetZero, Inc., a wholly-owned
subsidiary of the Company; and

 

WHEREAS, the Prior Agreement was amended effective February 9, 2001 and that,
effective as of the date hereof, the Employee and the Company desire to further
amend the Prior Agreement.

 

NOW THEREFORE, the Employee and the Company hereby amend and restate the Prior
Agreement as follows.

 

1.             Employment.

 

1.1           The Company hereby agrees to employ Employee, and Employee hereby
accepts such employment, on the terms and conditions set forth herein,
commencing the date hereof, and continuing through February 9, 2005 (the
"Term"), unless such employment is terminated earlier as provided in Section 4
below.

 

2.             Duties of Employee.

 

2.1           Employee shall serve as Executive Vice President, Finance and
Chief Financial Officer of the Company.  In this capacity, Employee shall
perform such customary, appropriate and reasonable executive duties as are
usually performed by the Chief Financial Officer, including such duties as are
delegated to him from time to time by the Board of Directors of the Company or a
committee thereof (the "Board").  Employee shall report directly to the
Company’s Chief Executive Officer.

 

2.2           Employee agrees to devote Employee’s full time, attention, skill
and efforts to the performance of his duties for the Company during the Term.

 

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3.             Compensation and Other Benefits.

 

3.1           Base Salary.  During the Term, the Company shall pay to Employee a
base 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.

 

3.2           Bonus.  During the Term, the Employee shall also be eligible to
receive an annual cash bonus of up to 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.  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.

 

3.3           Vacation.  Employee shall be entitled to four (4) weeks paid
vacation in accordance with the Company’s standard vacation policies.

 

3.4           Other Benefits.  Employee shall be eligible to participate, as of
the date of Employee’s employment, 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.

 

4.             Termination.

 

4.1           Termination for Cause.

 

(a)           Termination "for cause" is defined as follows: the Company
terminates Employee’s employment with the Company (1) if Employee is convicted
of a felony or commits an act of moral turpitude, in either case which adversely
impacts the Company, (2) if Employee materially breaches the Company’s
Confidentiality and Proprietary Agreement, or (3) 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 direction of the Company’s Board of
Directors and to perform his

 

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obligations hereunder.

 

(b)           The Company may terminate this Agreement 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.

 

4.2           Termination Without Cause.  If Employee’s employment is terminated
without "cause" as defined in Section 4.1(a), or if Employee is Involuntarily
Terminated (as defined below), 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, (ii) reimbursement for any expenses as set
forth in Section 3.5, through the date of termination and (iii)  a severance
payment in an amount equal to (A) three times Employee’s Base Salary and Annual
Bonus in the event of an Involuntary Termination or (B) four times Employee’s
Base Salary and Annual Bonus in the event Employee’s employment is terminated
without cause, payable in one lump sum on the date of termination, subject to
withholding as may be required by law.  For the purposes of Section 4.2(iii)(A)
above, Annual Bonus shall mean the greater of 75% of Employee’s then current
Base Salary or the Annual Bonus paid to Employee for the preceding fiscal year. 
For the purposes of Section 4.2(iii)(B) above, Annual Bonus shall mean 75% of
Employee’s then current Base Salary.  In addition, if Employee’s employment is
terminated without cause (other than if Employee is Involuntarily Terminated) or
if Employee’s employment is terminated due to death or permanent disability,
Employee will be credited with an additional twelve (12) months of service
toward vesting in all stock options and restricted stock awards then held by
Employee (the "Option Shares") in addition to the service he has accrued toward
vesting through the date of termination.    If Employee is Involuntarily
Terminated, vesting of all Option Shares will be accelerated in full and all
such options shall remain in effect for a one (1) year period following the date
of termination.

 

As used in this Section 4.2, 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 Corporate Transaction
or Change of Control (as defined in the Company’s 1999 Stock Incentive Plan); or
(ii) in connection with or following a Corporate Transaction or Change of
Control there is (a) a decrease in Employee’s title or responsibilities (it
being deemed to be a

 

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decrease in title and/or responsibilities if Employee is not offered the
position of Executive Vice President, Finance and Chief Financial Officer of the
Company or its successor as well as the acquiring and ultimate parent entity, if
any, following the Corporate Transaction or Change of Control), (b) a decrease
in pay and/or benefits from those provided by the Company immediately prior to
the Corporate Transaction or (c) a requirement that Employee re-locate out of
the greater Los Angeles metropolitan area.

 

5.             Noncompetition.  For the eighteen (18) month period following the
termination of Employee’s employment with the Company (but only if Employee has
received the severance payments specified in Section 4.2 above) (the
"Noncompetition Period"), Employee shall not directly engage in, or manage or
direct persons engaged in, a Competitive Business Activity (as defined below)
anywhere in the Restricted Territory (as defined below); provided, that the
Noncompetition Period shall terminate if the Company terminates operations or if
the Company no longer engages in any Competitive Business Activity.  The term
"Competitive Business Activity" shall mean the business of providing consumers
with dial-up Internet access services (free or pay).  The term "Restricted
Territory" shall mean each and every county, city or other political subdivision
of the United States in which the Company is engaged in business or providing
its services.  The Company agrees that providing services to a company or entity
that is involved in a Competitive Business Activity but which services are
unrelated to the Competitive Business Activity shall not be deemed a violation
of this Agreement.  For the purposes of damages to the Company with respect to
any breach of this Section 5, the value of Employee’s obligations to the Company
under this Section 5 equals 37.5% of the cash severance payment in Section
4.2(iii) above.

 

6.             Gross-Up Payment.  If the aggregate of all payments or benefits
made or provided to the Employee under this Agreement and under all other plans
and programs of the Company (the "Aggregate Payment") is determined to
constitute a "parachute payment," as such term is defined in Section 280G(b)(2)
of the Internal Revenue Code of 1986, as amended (the "Code"), the Company shall
pay to the Employee, prior to or coincident with the time any excise tax imposed
by Section 4999 of the Code (the "Excise Tax") is payable with respect to such
Aggregate Payment, an additional amount that, after the imposition of all
penalties, income, excise and other federal, state and local taxes thereon, is
equal to the sum of the Excise Tax on the Aggregate Payment and interest and
penalties imposed with respect to the Excise Tax and such additional amount (the
"Gross-Up Payment").  For example, if the Excise Tax imposed with respect to the
Aggregate Payment equals $1,000,000 and all penalties, income, excise and other
federal, state and local taxes on the Gross-Up Payment equal $2,333,333, the
Gross-Up Payment will be $3,333,333.  The determination of whether the Aggregate
Payment constitutes a parachute payment and, if so, the amount to be paid to the
Employee and the time of payment pursuant to this Section 6 shall be made by an
independent auditor (the "Auditor") selected and paid by the Company and
reasonably acceptable to the Employee.  The Auditor shall be a nationally
recognized United States public accounting firm.  For purposes of

 

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determining the amount of the Gross-Up Payment, the Employee shall be deemed to
pay income tax at the highest marginal rates of federal, state and local income
taxation in the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in federal income taxes which could be obtained from
deduction of such state and local taxes.

 

In the event that the Excise Tax is finally determined to be less than the
amount taken into account hereunder in calculating the Gross-Up Payment, the
Employee shall repay to the Company, within five (5) business days following the
time that the amount of such reduction in the Excise Tax is finally determined,
the portion of the Gross-Up Payment attributable to such reduction plus that
portion of the Gross-Up Payment attributable to the Excise Tax and federal,
state and local income and employment taxes imposed on the Gross-Up Payment
being repaid by the Employee, to the extent that such repayment results in a
reduction in the Excise Tax and a dollar-for-dollar reduction in the Employee’s
taxable income and wages for purposes of federal, state and local income and
employment taxes, plus interest on the amount of such repayment at 120% of the
rate provided in section 1274(b)(2)(B) of the Code.  In the event that the
Excise Tax is determined to exceed the amount taken into account hereunder in
calculating the Gross-Up Payment (including by reason of any payment the
existence or amount of which cannot be determined at the time of the payment of
the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in
respect of such excess (plus any interest, penalties or additions payable by the
Employee with respect to such excess) within five (5) business days following
the time that the amount of such excess is finally determined.  The Employee and
the Company shall cooperate with each other in connection with any proceeding or
claim relating to the existence or amount of liability for Excise Tax, and all
expenses incurred by the Employee in connection therewith shall be paid by the
Company promptly upon notice of demand from the Employee.

 

7.             Assignment.  Neither the Company nor Employee may assign this
Agreement or any rights or obligations hereunder.   This Agreement will be
binding upon the Company and its successors and assigns.  In the event of a
Corporate Transaction or Change of 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 Corporate Transaction or Change of
Control.

 

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, other than the Confidentiality and Proprietary
Agreement, and constitutes the entire agreement between the Company and the
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 each of the parties hereto and which is

 

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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.

 

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

 

 

UNITED ONLINE, INC.

 

 

 

 

 

 

 

By:

  /s/ Mark Goldston

 

 

 

Mark Goldston, Chief Executive Officer

 

 

 

 

 

 

 

 

/s/ Charles S. Hilliard

 

 

 

Charles S. Hilliard

 

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