Exhibit 10.01

 

UNITED ONLINE, INC.

2006 MANAGEMENT BONUS PLAN

 

I.                                         PURPOSES OF THE PLAN

 

1.01                                                                          
The United Online, Inc. (“Company”) 2006 Management Bonus Plan (“Plan”) is
established to promote the interests of the Company by creating an incentive
program to (i) attract and retain employees who will strive for excellence, and
(ii) motivate those individuals to set and achieve above-average objectives by
providing them with rewards for contributions to the financial performance of
the Company.

 

II.                                     ADMINISTRATION OF THE PLAN

 

2.01                                                                          
The Plan is hereby adopted by the Company’s Compensation Committee of the Board
of Directors (the “Committee”), and shall be administered by the Committee
pursuant to the powers provided to the Committee by the Board of Directors of
the Company.

 

2.02                                                                          
The interpretation and construction of the Plan and the adoption of rules and
regulations for administering the Plan shall be made by the Committee. Decisions
of the Committee shall be final and binding on all parties who have an interest
in the Plan.

 

III.                                 DETERMINATION OF PARTICIPANTS

 

3.01                                                                          
The following individuals will participate in the Plan:  Mark R. Goldston,
Charles S. Hilliard, Frederic A. Randall, Jr., Gerald J. Popek, Theodore R.
Cahall, Mathew J. Wisk and Robert J. Taragan. An individual shall be eligible to
participate in the Plan if employed by the Company or any of its participating
subsidiaries on the earlier of March 1, 2007 or the date on which bonuses under
this Plan are distributed. If an individual is not employed by the Company or a
participating subsidiary on such date, he will not be eligible to receive a
bonus under the Plan. However, an individual who is on a leave of absence or
whose employment terminates and is then re-hired in the same fiscal year
may remain eligible at the discretion of the Committee, and the Committee
may provide a pro rata bonus. In the event of termination of an individual’s
employment as a result of death or disability, the Committee shall provide the
individual or the individual’s estate with a pro rata bonus.

 

3.02                                                                          
For purposes of the Plan:

 

A.                                   An individual shall be considered an
employee for so long as such individual remains employed by the Company or one
or more subsidiary corporations.

 

B.                                     Each corporation (other than the Company)
in an unbroken chain of corporations beginning with the Company shall be
considered to be a subsidiary of the Company, provided each such corporation
(other than the last corporation in the unbroken chain) owns, at the time of
determination, stock possessing more than fifty percent of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

 

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IV.                                BONUS AWARDS

 

4.01                                                                          
No eligible employee shall earn any portion of a bonus award made hereunder for
any fiscal year until December 31, 2006.

 

4.02                                                                          
The individual bonus awards payable to the participants in the Plan for the 2006
Year shall be based upon the Company’s success in achieving specified revenue
and ADJUSTED OIBDA targets (that is, targets tied to the Company’s operating
income before depreciation and amortization expenses and certain other expenses)
determined by the Committee for that fiscal year (“Revenue Targets” and
“ADJUSTED OIBDA Targets,” collectively, the “Targets”). In determining whether
the Company has achieved the ADJUSTED OIBDA Targets, ADJUSTED OIBDA will be
determined consistent with the Company’s historical methodology for calculating
ADJUSTED OIBDA for financial reporting purposes; provided, however, (1) ADJUSTED
OIBDA shall be calculated before restructuring expenses, merger related
expenses, stock based compensation expenses and other expenses associated with
the relocation of the Company’s headquarters, (2) in determining whether the
Company has achieved an ADJUSTED OIBDA Target, any bonus amounts which accrue
under this Plan shall not be included as an expense in computing  ADJUSTED
OIBDA, (3) any adjustments to ADJUSTED OIBDA attributable to a change in
accounting principles shall be excluded and (4) all items of gain, loss or
expense for such fiscal year determined to be extraordinary or unusual in nature
or infrequent in occurrence, or related to the disposal of a segment of a
business, shall be excluded from ADJUSTED OIBDA. In the event the Company
acquires other companies or businesses during the 2006 fiscal year, all revenues
and ADJUSTED OIBDA contributions as a result of such acquisitions shall be
included in determining whether the Targets have been achieved. In addition, the
participants in this Plan shall be entitled to receive an additional bonus (the
“Acquisition Bonus”) in the event the Company successfully completes and has
taken steps to successfully integrate an acquisition that is approved by the
Board and that fulfills the Company’s strategy of diversifying the Company’s
business beyond Internet access. The acquisition must contribute to revenues and
Adjusted OIBDA. While the bonuses shall be granted if the Company achieves the
Targets and successfully completes and takes steps to successfully integrate a
strategic acquisition, the Committee may use its discretion to award bonuses
based on criteria other than the Targets and an acquisition if the Committee
determines it to be appropriate based on executive performance and other facts
and circumstances, with the goal being to reward performance based upon the
Company’s objectives.

 

4.03                                                                          
The bonuses shall be based on a percentage of each individual’s base salary for
fiscal 2006. For Mark Goldston, he will receive a bonus based on a sliding scale
of up to 160% of his base salary depending upon the Company’s attainment of the
Targets. In addition, Mr. Goldston’s Acquisition Bonus will be 30% of his base
salary. For the other eligible participants, each will receive a bonus based on
a sliding scale of up to 140% of his base salary depending upon the Company’s
attainment of the Targets. In addition, the Acquisition Bonus for each of the
other eligible participants will be 10% of their base salary, except that the
Acquisition Bonus for Mr. Hilliard will be 20% of his base salary and the
Acquisition Bonus for Mr. Randall will be 15% of his base salary. In the event
the Company achieves revenues or ADJUSTED OIBDA that are in between specified
Targets, the Committee may use its discretion to provide an individual an
additional bonus, pro rata or otherwise, based on the Company’s achievement. In
addition, if the Company completes more than one Board approved acquisition
during 2006, the Compensation Committee will determine at the time of the
subsequent acquisition whether an additional

 

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Acquisition Bonus shall be paid with respect to the subsequent acquisition.
Whether an additional Acquisition Bonus will be paid will be determined in the
sole discretion of the Committee. The Committee may also vary the percentage
bonuses in connection with subsequent acquisitions depending on its review of
relevant factors including, without limitation, the size, complexity and
benefits of the subsequent acquisitions.

 

4.04                                                                          
Following completion of the bonus calculation referenced above, the Committee
shall issue a written report containing the final calculation or memorialize
their approval in the minutes of a meeting.

 

V.                                    PAYMENT OF BONUS AWARDS

 

5.01                                                                          
Bonuses shall be paid no later than March 1, 2007. All payments under the Plan
shall be subject to the Company’s collection of all applicable federal, state
and local income and employment withholding taxes.

 

VI.                                GENERAL PROVISIONS

 

6.01                                                                          
The Plan shall become effective when adopted by the Compensation Committee. The
Committee may at any time amend, suspend or terminate the Plan, provided such
action is effected by written resolution.

 

6.02                                                                          
No amounts awarded or accrued under this Plan shall actually be funded, set
aside or otherwise segregated prior to payment. The obligation to pay the
bonuses awarded hereunder shall at all times be an unfunded and unsecured
obligation of the Company. Plan participants shall have the status of general
creditors and shall look solely to the general assets of the Company for the
payment of their bonus awards.

 

6.03                                                                          
No Plan participant shall have the right to alienate, pledge or encumber his/her
interest in this Plan, and such interest shall not (to the extent permitted by
law) be subject in any way to the claims of the employee’s creditors or to
attachment, execution or other process of law.

 

6.04                                                                          
Neither the action of the Company in establishing the Plan, nor any action taken
under the Plan by the Committee, nor any provision of the Plan, shall be
construed so as to grant any person the right to remain in the employ of the
Company or its subsidiaries for any period of specific duration. Rather, each
employee will be employed “at-will,” which means that either such employee or
the Company may terminate the employment relationship at any time for any
reason, with or without cause, subject in each case to any employment agreement
between such person and the Company.

 

6.05                                                                          
This is the full and complete agreement between the eligible employees and the
Company with respect to incentive bonus compensation for the 2006 fiscal year.
This Plan does not supersede, but is supplemental to, any provisions of any
employment agreement to which any of the employees eligible under this Plan
may be party.

 

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