Exhibit 10.32

 

FIRST AMENDMENT
TO
EMPLOYMENT AGREEMENT

 

This amendment dated and effective January 1, 2009 (this “Amendment”), amends
that certain Employment Agreement dated as of August 15, 2007 (the “Original
Agreement”) by and between United Online, Inc. (the “Company”), and Robert J.
Taragan.  Capitalized terms used and not otherwise defined herein shall have the
respective meanings set forth in the Original Agreement.

 

RECITALS

 

WHEREAS, Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), places certain restrictions, among other things, as to the timing of
distributions from nonqualified deferred compensation plans and arrangements;
and

 

WHEREAS, the parties desire to amend the Original Agreement to comply with
Section 409A of the Code and to reflect the change in Mr. Taragan’s position.

 

NOW, THEREFORE, in consideration of the mutual promises set forth herein, the
parties hereto hereby agree as follows:

 

1.                                       The first sentence of Section 1 of the
Original Agreement is hereby removed and replaced in its entirety as follows:

 

                                                “You will serve as President of
the Company’s Communications segment and report to the Chief Executive Officer
of the Company.”

 

2.                                       Two new sentences are hereby added to
the end of Section 2(c) of the Original Agreement, as follows:

 

                                                “In no event shall any expense
be reimbursed later than the end of the calendar year following the calendar
year in which that expense was incurred, and the amounts reimbursed in any one
calendar year shall not affect the amounts reimbursable in any other calendar
year.  Your right to receive such reimbursements may not be exchanged or
liquidated for any other benefit.”

 

3.                                       A new sentence is hereby added to the
end of Section 3 of the Original Agreement, as follows:

 

                                                “Your annual bonus award shall
in no event be paid later than the 15th day of the third month following the end
of your taxable year or, if later, the end of the Company’s taxable year  in
which such bonus award is earned.”

 

4.                                       A new sentence is hereby added to the
end of each of Section 4(b) and 4(c) of the Original Agreement, as follows:

 

“Except as otherwise expressly provided in the agreement evidencing a
particular  restricted stock unit award, the shares of common stock underlying
the restricted stock units that vest on such an accelerated basis will be issued
to you on the first business day, within the sixty (60)-day period following the
date of your cessation from service as a result of your termination “without
cause” (as

 

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defined below) or your resignation for “good reason” (as defined below), on
which the executed Release required of you pursuant to Section 7(b) is effective
and enforceable in accordance with its terms following any applicable revocation
period, or as soon thereafter as administratively practicable, but in no event
later than the last business day of that sixty (60)-day period on which such
Release is effective and enforceable.”

 

5.                           The first paragraph of Section 7(b) of the Original
Agreement is hereby amended in its entirety to read as follows:

 

“If (i) your employment is terminated by the Company “without cause” (as defined
below) prior to August 15, 2010, (ii) you execute and deliver to the Company,
within twenty-one (21) days  (or forty-five (45) days to the extent such longer
period is required under applicable law) after the effective date of your
termination of employment, a comprehensive agreement releasing the Company and
its officers, directors, employees, stockholders, subsidiaries, affiliates,
representatives and other parties and containing such other and additional terms
as the Company deems satisfactory (the “Release”) and (iii) such Release becomes
effective and enforceable after the expiration of any applicable revocation
period under federal or state law, then the Company will pay you a separation
payment (the “Separation Payment”) equal to the sum of (i) twelve (12) months of
your then current monthly base salary, (ii) your Annual Bonus (as defined
below), and (iii) a prorated portion of your Annual Bonus (as defined below)
based upon the time elapsed between December 31 of the preceding year and your
date of termination.  In addition, notwithstanding the fourth sentence of
Section 3 above but contingent upon your delivery of an effective and
enforceable Release in accordance with the foregoing provisions of this Section
7(b), if the date of such termination occurs following the end of a fiscal year
and prior to the date that you would have otherwise been entitled to be paid
your annual bonus for that fiscal year, the Company will pay you an amount equal
to the annual bonus that you would have received had you remained employed by,
and in good standing with, the Company through the date the annual bonus for
that fiscal year is paid in the following fiscal year, with that amount to be
paid at the same time and manner that such payment would have paid to you had
you remained employed through such date, but in no event later than the last day
of the fiscal year immediately following fiscal year for which such bonus is
earned.

 

Payment of this Separation Payment and the additional bonus amount (if any)
under this Section 7(b) and the accelerated vesting of your equity awards under
Section 4, will each be contingent upon the satisfaction of the following
requirements: (i) you execute and deliver to the Company on a timely basis your
required Release in accordance with this Section 7(b), (ii) such Release becomes
effective and enforceable after the expiration of any applicable revocation
period under federal or state law and (iii) you continue to comply with the
Proprietary Information and Inventions Agreement and the restricted covenants
set forth in Section 9 below.

 

The Separation Payment under this Section 7(b) will be payable in a series of
twelve (12) successive equal monthly installments, beginning on the first
regular payday for the Company’s salaried employees, within the sixty (60)-day
period following the date of your “separation from service” (as such term is
defined in Treasury Regulations issued under Code Section 409A) as a result of
your termination “without cause” (as defined below), on which your executed
Release is effective and enforceable in accordance with its terms following any
applicable revocation period, or as soon thereafter as administratively
practicable, but in no event later than the last day of that sixty (60)-day
period on which such Release is effective and enforceable.  Your right to each
such monthly installment of the Separation Payment shall be deemed, for purposes
of Section 409A of the Code, to be a right to a series of separate payments.”

 

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6.                                       The last paragraph of Section 7(b) of
the Original Agreement is hereby deleted and replaced in its entirety as
follows:

 

“If any payment or benefit received or to be received by you (including any
payment or benefit received pursuant to this letter agreement or otherwise)
would be (in whole or part) subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended (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 you under
this letter 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 monthly
installments of the Separation Payment to be the first such cash payments so
reduced, and then, if necessary, the accelerated vesting of your equity awards
pursuant to the provisions of this letter agreement shall be reduced in the same
chronological order in which those awards were made, but only to the extent
necessary to assure that you receive only the greater of (i)  the amount of
those payments and benefits which would not constitute a parachute payment under
Code Section 280G or (ii)  the amount which yields you the greatest after-tax
amount of benefits after taking into account any Excise Tax imposed on the
payments and benefits provided you hereunder (or on any other payments or
benefits to which your may become entitled in connection with any change in
control or ownership of the Company or the subsequent termination of your
employment with the Company).”

 

7.                                       The first sentence of Section 7(c) is
hereby deleted and replaced with the following:

 

“If your employment is terminated as a result of your death or Disability, the
Company will be obligated to pay the Accrued Obligations to you, your estate or
beneficiaries (as the case may be) on your termination date or as soon as
administratively practicable thereafter, but in no event later than sixty (60)
days after the date of such termination.”

 

8.                                       The definition of “good reason” as set
forth in Section 7(d) of the Original Agreement is hereby deleted and replaced
in its entirety as follows:

 

“‘good reason’ means:

 

(i)                      a material reduction in your base salary without your
prior written consent;

 

(ii)                   a material reduction in your authority, duties or
responsibilities, without your prior written consent, unless such reduction is
effected at the request of Mark R. Goldston;

 

(iii)                a material change in the geographic location at which you
must perform services (the parties acknowledge that you are currently required
to perform services at 21301 Burbank Boulevard, Woodland Hills, CA 91367)
without your prior consent; or

 

(iv)                  any material un-waived breach by the Company of the terms
of this letter agreement; provided however, that with respect to any of the
clause (i) — (iv) events above, you will not be deemed to have resigned for good
reason unless (A) you provide written notice to the Company of the existence of
the good reason event within ninety (90) days after its initial occurrence,
(B) the Company is provided with thirty (30) days in which to cure such good
reason event, and (C) your termination of employment is effected within one
hundred eighty (180) days following the occurrence of the non-cured clause (i) —
(iv) event.”

 

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9.                                       Section 7(e) of the Original Agreement
is hereby removed and replaced in its entirety as follows:

 

“(e)                            Notwithstanding any provision in this letter
agreement to the contrary (other than Section 7(f) below), no payment or
distribution under this letter agreement which constitutes an item of deferred
compensation under Section 409A of the Code and becomes payable by reason of
your termination of employment with the Company will be made to you until you
incur a “separation from service” (as such term is defined in Treasury
Regulations issued under Section 409A of the Code) in connection with such 
termination of employment.  For purposes of this letter agreement, each amount
to be paid or benefit to be provided you shall be treated as a separate
identified payment or benefit 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
your  separation from service will be made to you 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 your  death, if you are 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 deferral period, all payments and benefits deferred
pursuant to this Section 7(e) (whether they would have otherwise been payable in
a single sum or in installments in the absence of such deferral) shall be paid
or provided to you in a lump sum on the first day of the seventh (7th) month
after the date of your separation from service or, if earlier, the first day of
the month immediately following the date the Company receives proof of your
death. Any remaining payments or benefits due under this letter agreement will
be paid in accordance with the normal payment dates specified herein.”

 

7.                                       A new Section 7(f) is hereby added as
follows:

 

“(f)                              Notwithstanding Section 7(e) above, the
following provisions shall also be applicable to you if you are a specified
employee at the time of your separation of service:

 

(i)                               Any payments or benefits which become due and
payable to you during the period beginning with the date of your separation from
service and ending on March 15 of the following calendar year shall not be
subject to the holdback provisions of Section 7(e) and shall accordingly be paid
as and when they become due and payable under this letter agreement in
accordance with the short-term deferral exception to Code Section 409A.

 

(ii)                            The remaining portion of the payments and
benefits to which you become entitled under this letter agreement, to the extent
they do not in the aggregate exceed the dollar limit described below and are
otherwise scheduled to be paid no later than the last day of the second calendar
year following the calendar year in which your  separation from service occurs,
shall  not be subject to any deferred commencement date under Section 7(e) and
shall be paid to you as they become due and payable under this letter
agreement.  For purposes of this subparagraph (ii), the applicable dollar
limitation will be equal to two times the lesser of (i) your annualized
compensation (based on your annual rate of pay for the calendar year preceding
the calendar year of your separation from service, adjusted to reflect any
increase during that calendar year which was expected to continue indefinitely
had such separation from service not occurred) or (ii) the

 

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compensation limit under Section 401(a)(17) of the Code as in effect in the year
of such  separation from service.  To the extent the portion of the severance
payments and benefits to which you would otherwise be entitled under this letter
agreement during the deferral period under Section 7(e) exceeds the foregoing
dollar limitation, such excess shall be paid in a lump sum upon the expiration
of that deferral period, in accordance with the deferred payment provisions of
Section 7(e), and the remaining severance payments and benefits (if any) shall
be paid in accordance with the normal payment dates specified for them herein.”

 

8.                                       Except as modified by this Amendment,
all the terms and provisions of the Original Agreement shall continue in full
force and effect.

 

 

(Signature Page Follows)

 

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

 

 

 

UNITED ONLINE, INC.

 

 

 

 

By:

/s/ Mark R. Goldston

 

 

Mark R. Goldston

 

 

Chairman, President and Chief Executive Officer

 

 

 

 

Dated: December 19, 2008

 

 

 

 

 

 

 

By:

/s/ Robert J. Taragan

 

 

Robert J. Taragan

 

 

 

 

 

 

 

Dated: December 22, 2008

 

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