**Exhibit 10.2**

** **

**UNITED ONLINE, INC.**

**2001 STOCK INCENTIVE PLAN**

 

# **ARTICLEONE**

# **GENERALPROVISIONS**

## **I.              PURPOSE****OF****THE****PLAN**

This Plan is intended to promote the interests of theCorporation by providing eligible persons in the Corporation’s service with theopportunity to acquire a proprietary interest, or otherwise increase theirproprietary interest, in the Corporation as an incentive for them to remain insuch service.

Capitalized terms shall have the meanings assigned tosuch terms in the attached Appendix.

## **II.            STRUCTURE****OF****THE****PLAN**

### A.    ThePlan shall be divided into four separate equity incentive programs:

·              the Discretionary Option GrantProgram under which eligible persons may, at the discretion of the PlanAdministrator, be granted options to purchase shares of Common Stock,

·              the Salary Investment Option GrantProgram under which eligible employees may elect to have         a portion of their base salary invested each year in specialoption grants,

·              the Stock Issuance Program underwhich eligible persons may, at the discretion of the Plan Administrator, beissued shares of Common Stock directly, either through the immediate purchaseof such shares or as a bonus for services rendered the Corporation (or anyParent or Subsidiary), and

·              the Director Fee Option Grant Programunder which non-employee Board members may elect to have all or any portion oftheir annual retainer fee otherwise payable in cash applied to a special stockoption grant.

B.            Theprovisions of Articles One and Six shall apply to all equity programs under thePlan and shall govern the interests of all persons under the Plan.

**III.           ADMINISTRATION****OF****THE****PLAN**

A.            ThePrimary Committee and the Board shall have concurrent authority to administerthe Discretionary Option Grant and Stock Issuance Programs with respect toSection 16 Insiders.  Administration ofthe Discretionary Option Grant and Stock Issuance Programs with respect to allother persons eligible to participate in those programs may, at the Board’s 

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discretion, be vested in the Primary Committee or aSecondary Committee, or the Board may retain the power to administer thoseprograms with respect to all such persons. However, any discretionary option grants or stock issuances for membersof the Primary Committee must be authorized by a disinterested majority of theBoard.

### B.    Membersof the Primary Committee or any Secondary Committee shall serve for such periodof time as the Board may determine and may be removed by the Board at anytime.  The Board may also at any timeterminate the functions of any Secondary Committee and reassume all powers andauthority previously delegated to such committee.

### C.    EachPlan Administrator shall, within the scope of its administrative functionsunder the Plan, have full power and authority (subject to the provisions of thePlan) to establish such rules and regulations as it may deem appropriate forproper administration of the Discretionary Option Grant and Stock IssuancePrograms and to make such determinations under, and issue such interpretationsof, the provisions of those programs and any outstanding options or stockissuances thereunder as it may deem necessary or advisable.  Decisions of the Plan Administrator withinthe scope of its administrative functions under the Plan shall be final andbinding on all parties who have an interest in the Discretionary Option Grantand Stock Issuance Programs under its jurisdiction or any option or stockissuance thereunder.

### D.    ThePrimary Committee shall have the sole and exclusive authority to determinewhich Section 16 Insiders and other highly compensated Employees shall beeligible for participation in the Salary Investment Option Grant Program forone or more calendar years.  However, alloption grants under the Salary Investment Option Grant Program shall be made inaccordance with the express terms of that program, and the Primary Committeeshall not exercise any discretionary functions with respect to the optiongrants made under that program.

### E.     Serviceon the Primary Committee or the Secondary Committee shall constitute service asa Board member, and members of each such committee shall accordingly beentitled to full indemnification and reimbursement as Board members for theirservice on such committee.  No member ofthe Primary Committee or the Secondary Committee shall be liable for any act oromission made in good faith with respect to the Plan or any option grants orstock issuances under the Plan.

### F.     Administrationof the Director Fee Option Grant Program shall be self-executing in accordancewith the terms of that program, and no Plan Administrator shall exercise anydiscretionary functions with respect to any option grants or stock issuancesmade under such program.

## **IV.           ELIGIBILITY**

### A.    Thepersons eligible to participate in the Discretionary Option Grant and StockIssuance Programs are as follows:

#### 1.     Employees,

#### 2.     non-employeemembers of the Board or the board of directors of any Parent or Subsidiary, and

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#### 3.     independentcontractors who provide services to the Corporation (or any Parent orSubsidiary).

### B.    OnlyEmployees who are Section 16 Insiders or other highly compensated individualsshall be eligible to participate in the Salary Investment Option Grant Program.

### C.    EachPlan Administrator shall, within the scope of its administrative jurisdictionunder the Plan, have full authority to determine, (1) with respect to theoption grants under the Discretionary Option Grant Program, which eligiblepersons are to receive such grants, the time or times when those grants are tobe made, the number of shares to be covered by each such grant, the status ofthe granted option as either an Incentive Option or a Non-Statutory Option, thetime or times when each option is to become exercisable, the vesting schedule(if any) applicable to the option shares and the maximum term for which theoption is to remain outstanding and (2) with respect to stock issuances underthe Stock Issuance Program, which eligible persons are to receive suchissuances, the time or times when the issuances are to be made, the number ofshares to be issued to each Participant, the vesting schedule (if any)applicable to the issued shares and the consideration for such shares.

### D.    ThePlan Administrator shall have the absolute discretion either to grant optionsin accordance with the Discretionary Option Grant Program or to effect stockissuances in accordance with the Stock Issuance Program.

### E.     Non-employeeBoard members shall be eligible to participate in the Director Fee Option GrantProgram.  In no event, however, shall anon-employee Board member be eligible for such participation if that individualwould be required, whether contractually or otherwise, to transfer theownership of the option grant received under that program, or any economicinterest in such grant, to any venture fund or other entity with which he orshe is at the time affiliated.

## **V.            STOCK****SUBJECT****TO****THE****PLAN**

### A.    Thestock issuable under the Plan shall be shares of authorized but unissued orreacquired Common Stock, including shares repurchased by the Corporation on theopen market.  The number of shares ofCommon Stock reserved for issuance over the term of the Plan shall not exceed9,477,779 shares.  Such reserve shallconsist of the shares that remain available for issuance immediately prior to thePlan Effective Date under the Predecessor Plans, including the shares subjectto outstanding options under those Predecessor Plans, as well as 1,300,000shares due to the automatic share reserve increase that occurred on January 2,2002.

### B.    Thenumber of shares of Common Stock available for issuance under the Plan shallautomatically increase on the first trading day of January each calendar yearduring the term of the Plan, beginning with calendar year 2002, by an amountequal to four percent (4%) of the total number of shares of Common Stockoutstanding on the last trading day in December of the immediately precedingcalendar year, but in no event shall any such annual increase exceed 1,300,000shares.

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### C.    Noone person participating in the Plan may receive options, separatelyexercisable stock appreciation rights and direct stock issuances for more than2,000,000 shares of Common Stock in the aggregate per calendar year.

### D.    Sharesof Common Stock subject to outstanding options (including options transferredto this Plan from the Predecessor Plans) shall be available for subsequentissuance under the Plan to the extent (1) those options expire or terminate forany reason prior to exercise in full or (2) the options are cancelled inaccordance with the cancellation-regrant provisions of Article Two.  Unvested shares issued under the Plan andsubsequently cancelled or repurchased by the Corporation at the original issueprice paid per share, pursuant to the Corporation’s repurchase rights under thePlan shall be added back to the number of shares of Common Stock reserved forissuance under the Plan and shall accordingly be available for reissuancethrough one or more subsequent option grants or direct stock issuances underthe Plan.  However, should the exerciseprice of an option under the Plan be paid with shares of Common Stock or shouldshares of Common Stock otherwise issuable under the Plan be withheld by theCorporation in satisfaction of the withholding taxes incurred in connectionwith the exercise of an option or the vesting of a stock issuance under thePlan, then the number of shares of Common Stock available for issuance underthe Plan shall be reduced by the gross number of shares for which the option isexercised or which vest under the stock issuance, and not by the net number ofshares of Common Stock issued to the holder of such option or stockissuance.  Shares of Common Stockunderlying one or more stock appreciation rights granted pursuant to the Planshall *not* be available for subsequent issuanceunder the Plan if the stock appreciation right is exercised.

### E.     Ifany change is made to the Common Stock by reason of any stock split, stockdividend, recapitalization, combination of shares, exchange of shares or otherchange affecting the outstanding Common Stock as a class without theCorporation’s receipt of consideration, appropriate adjustments shall be madeby the Plan Administrator to (1) the maximum number and/or class of securitiesissuable under the Plan, (2) the maximum number and/or class of securities forwhich any one person may be granted stock options, separately exercisable stockappreciation rights and direct stock issuances under the Plan per calendaryear, (3) the number and/or class of securities and the exercise price pershare in effect under each outstanding option under the Plan, (4) the numberand/or class of securities and price per share in effect under each outstandingoption transferred to this Plan from the Predecessor Plans and (5) the maximumnumber and/or class of securities by which the share reserve is to increaseautomatically each calendar year pursuant to the provisions of Section V.B ofthis Article One.  Such adjustments tothe outstanding options are to be effected in a manner which shall preclude theenlargement or dilution of rights and benefits under such options.  The adjustments determined by the PlanAdministrator shall be final, binding and conclusive.

### F.     Outstandingawards granted pursuant to the Plan shall in no way affect the right of theCorporation to adjust, reclassify, reorganize or otherwise change its capitalor business structure or to merge, consolidate, dissolve, liquidate or sell ortransfer all or any part of its business or assets.

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# **ARTICLETWO**

# **DISCRETIONARYOPTION GRANT PROGRAM**

## **I.              OPTION****TERMS**

Each option shall be evidenced by one or moredocuments in the form approved by the Plan Administrator; *provided,however*, that each such document shall comply with the termsspecified below.  Each documentevidencing an Incentive Option shall, in addition, be subject to the provisionsof the Plan applicable to such options.

### A.    **Exercise Price**.

#### 1.     Theexercise price per share shall be fixed by the Plan Administrator.

#### 2.     Theexercise price shall become immediately due upon exercise of the option andshall, subject to the provisions of Section I of Article Seven and thedocuments evidencing the option, be payable in one or more of the formsspecified below:

##### (i)            cash or check madepayable to the Corporation,

##### (ii)           shares of CommonStock held for the requisite period necessary to avoid a charge to theCorporation’s earnings for financial reporting purposes and valued at FairMarket Value on the Exercise Date, or

##### (iii)          to the extent theoption is exercised for vested shares, through a special sale and remittanceprocedure pursuant to which the Optionee shall concurrently provide irrevocableinstructions to (a) a Corporation-designated brokerage firm to effect theimmediate sale of the purchased shares and remit to the Corporation, out of thesale proceeds available on the settlement date, sufficient funds to cover theaggregate exercise price payable for the purchased shares plus all applicableFederal, state and local income and employment taxes required to be withheld bythe Corporation by reason of such exercise and (b) the Corporation to deliver thecertificates for the purchased shares directly to such brokerage firm in orderto complete the sale.

Except to the extent such sale and remittanceprocedure is utilized, payment of the exercise price for the purchased sharesmust be made on the Exercise Date.

### B.    **Exercise and Term of Options**.Each option shall be exercisable at such time or times, during such period andfor such number of shares as shall be determined by the Plan Administrator andset forth in the documents evidencing the option.  However, no option shall have a term inexcess of ten (10) years measured from the option grant date.

### C.    **Effect of Termination ofService**.

#### 1.     Thefollowing provisions shall govern the exercise of any options granted pursuantto the Discretionary Option Grant Program that are outstanding at the time ofthe Optionee’s cessation of Service:

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#### (i)            Any optionoutstanding at the time of the Optionee’s cessation of Service shall remainexercisable for such period of time thereafter as shall be determined by thePlan Administrator and set forth in the documents evidencing the option, but nosuch option shall be exercisable after the expiration of the option term.

##### (ii)           Any optionoutstanding at the time of the Optionee’s death and exercisable in whole or inpart at that time may be subsequently exercised by the personal representativeof the Optionee’s estate or by the person or persons to whom the option istransferred pursuant to the Optionee’s will or the laws of inheritance or bythe Optionee’s designated beneficiary or beneficiaries of that option.

##### (iii)          Should the Optionee’sService be terminated for Misconduct or should the Optionee otherwise engage inMisconduct while options granted pursuant to this Article Two are outstanding,then all of those options shall terminate immediately and cease to beoutstanding.

##### (iv)          During theapplicable post-Service exercise period, the option may not be exercised in theaggregate for more than the number of vested shares for which the option isexercisable on the date of the Optionee’s cessation of Service.  Upon the expiration of the applicableexercise period or (if earlier) upon the expiration of the option term, theoption shall terminate and cease to be outstanding for any vested shares for whichthe option has not been exercised.  However,the option shall, immediately upon the Optionee’s cessation of Service,terminate and cease to be outstanding to the extent the option is not otherwiseat that time exercisable for vested shares.

#### 2.     ThePlan Administrator shall have complete discretion, exercisable either at thetime an option is granted or at any time while the option remains outstanding,to:

##### (i)            extend the periodof time for which the option is to remain exercisable following the Optionee’scessation of Service from the limited exercise period otherwise in effect forthat option to such greater period of time as the Plan Administrator shall deemappropriate, but in no event beyond the expiration of the option term, and/or

##### (ii)           permit the optionto be exercised, during the applicable post-Service exercise period, not onlywith respect to the number of vested shares of Common Stock for which suchoption is exercisable at the time of the Optionee’s cessation of Service butalso with respect to one or more additional installments in which the Optioneewould have vested had the Optionee continued in Service.

### D.    **Stockholder Rights**. The holder of anoption shall have no stockholder rights with respect to the shares subject tothe option until such person shall have exercised the option, paid the exerciseprice and become a holder of record of the purchased shares.

### E.     **Repurchase Rights**. The PlanAdministrator shall have the discretion to grant options which are exercisablefor unvested shares of Common Stock. Should the Optionee cease Service while such shares are unvested, theCorporation shall have the right to repurchase, at the 

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### exercise price paid per share, any or all of those unvestedshares.  The terms upon which suchrepurchase right shall be exercisable (including the period and procedure forexercise and the appropriate vesting schedule for the purchased shares) shallbe established by the Plan Administrator and set forth in the documentevidencing such repurchase right.

### F.     **Limited Transferability of Options**.During the lifetime of the Optionee, options shall be exercisable only by theOptionee and shall not be assignable or transferable other than by will or bythe laws of inheritance following the Optionee’s death.  However, the Plan Administrator may permit anassignment, in whole or in part, during the Optionee’s lifetime, of aNon-Statutory Option, if such assignment is in connection with the Optionee’sestate plan and is to one or more members of the Optionee’s immediate family orto a trust established exclusively for one or more such family members.  The assigned portion may only be exercised bythe person or persons who acquire a proprietary interest in the option pursuantto the assignment.  The terms applicableto the assigned portion shall be the same as those in effect for the optionimmediately prior to such assignment and shall be set forth in such documentsissued to the assignee as the Plan Administrator may deem appropriate.  Notwithstanding the foregoing, the Optioneemay also designate one or more persons as the beneficiary or beneficiaries ofhis or her outstanding options under this Article Two, and any outstandingoptions shall, in accordance with such designation, automatically betransferred to such beneficiary or beneficiaries upon the Optionee’sdeath.  Such beneficiary or beneficiariesshall take the transferred options subject to all the terms and conditions ofthe applicable agreement evidencing each such transferred option, including(without limitation) the limited time period during which the option may beexercised following the Optionee’s death.

## **II.            INCENTIVE****OPTIONS**

The terms specified below shall be applicable to allIncentive Options.  Except as modified bythe provisions of this Section II, all the provisions of Articles One, Two andSix shall be applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options whenissued under the Plan shall not be subject to the terms of this Section II.

### A.    **Eligibility**. Incentive Options may onlybe granted to Employees.

### B.    **Dollar Limitation**.  The aggregate Fair Market Value of the sharesof Common Stock (determined as of the respective date or dates of grant) forwhich one or more options granted to any Employee under the Plan (or any otheroption plan of the Corporation or any Parent or Subsidiary) may for the firsttime become exercisable as Incentive Options during any one calendar year shallnot exceed the sum of One Hundred Thousand Dollars ($100,000).

To the extent the Employee holds two (2) or more suchoptions which become exercisable for the first time in the same calendar year,the foregoing limitation on the exercisability of such options as IncentiveOptions shall be applied on the basis of the order in which such options aregranted.

### C.    **10% Stockholder**.  If any Employee to whom an Incentive Optionis granted is a 10% Stockholder, then the exercise price per share shall not beless than one hundred ten 

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### percent (110%) of the Fair Market Value per share of Common Stock onthe option grant date, and the option term shall not exceed five (5) yearsmeasured from the option grant date.

## **III.           CORPORATE****TRANSACTION**/**CHANGE****IN****CONTROL**

### A.    Inthe event of any Corporate Transaction, the shares of Common Stock at the timesubject to each outstanding option granted under this Discretionary OptionGrant Program shall automatically vest in full so that each such option shall,immediately prior to the effective date of the Corporate Transaction, becomeexercisable for all the shares of Common Stock at the time subject to suchoption and may be exercised for any or all of those shares as fully vestedshares of Common Stock.  However, anoutstanding option shall *not* becomevested on such an accelerated basis if and to the extent: (1) such option is,in connection with the Corporate Transaction, to be assumed by the successorcorporation (or parent thereof) or (2) such option is to be replaced with acash incentive program of the successor corporation which preserves the spreadexisting at the time of the Corporate Transaction on any shares for which theoption is not otherwise at that time exercisable and provides for subsequentpayout in accordance with the same exercise/vesting schedule applicable tothose option shares or (3) the acceleration of such option is subject to otherlimitations imposed by the Plan Administrator at the time of the option grant.

### B.    Alloutstanding repurchase rights under the Discretionary Option Grant Programshall automatically terminate, and the shares of Common Stock subject to thoseterminated rights shall immediately vest in full, in the event of any CorporateTransaction, except to the extent: (1) those repurchase rights are to beassigned to the successor corporation (or parent thereof) in connection withsuch Corporate Transaction or (2) such accelerated vesting is precluded byother limitations imposed by the Plan Administrator at the time the repurchaseright is issued.

### C.    Immediatelyfollowing the consummation of the Corporate Transaction, all outstandingoptions granted pursuant to the Discretionary Option Grant Program shallterminate and cease to be outstanding, except to the extent assumed by thesuccessor corporation (or parent thereof).

### D.    Eachoption granted pursuant to the Discretionary Option Grant Program which isassumed in connection with a Corporate Transaction shall be appropriatelyadjusted, immediately after such Corporate Transaction, to apply to the numberand class of securities which would have been issuable to the Optionee inconsummation of such Corporate Transaction had the option been exercisedimmediately prior to such Corporate Transaction.  Appropriate adjustments to reflect suchCorporate Transaction shall also be made to (1) the exercise price payable pershare under each outstanding option, *provided* theaggregate exercise price payable for such securities shall remain the same, (2)the maximum number and/or class of securities available for issuance over theremaining term of the Plan and (3) the maximum number and/or class ofsecurities for which any one person may be granted stock options, separatelyexercisable stock appreciation rights and direct stock issuances under the Planper calendar year and (4) the maximum number and/or class of securities bywhich the share reserve is to increase automatically each calendar year.  To the extent the holders of Common Stockreceive cash consideration for their Common Stock in consummation of theCorporate Transaction, with the 

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### Plan Administrator’s consent prior to the consummation of the CorporateTransaction, the successor corporation may, in connection with the assumptionof the outstanding options under the Discretionary Option Grant Program,substitute one or more shares of its own common stock with a fair market valueequivalent to the cash consideration paid per share of Common Stock in suchCorporate Transaction.

### E.     Amongits discretionary powers, the Plan Administrator shall have the ability tostructure an option (either at the time the option is granted or at any timewhile the option remains outstanding) so that the option shall becomeimmediately exercisable and some or all of the shares subject to that optionshall automatically become vested (and some or all of the repurchase rights ofthe Corporation with respect to the unvested shares subject to that optionshall immediately terminate) upon the occurrence of a Corporate Transaction, aChange in Control, any other event or the Optionee’s Involuntary Terminationwithin a designated period of time following any of these events.

### F.     Theportion of any Incentive Option accelerated in connection with a CorporateTransaction or Change in Control shall remain exercisable as an IncentiveOption only to the extent the applicable One Hundred Thousand Dollar ($100,000)limitation is not exceeded.  To theextent such dollar limitation is exceeded, the accelerated portion of suchoption shall be exercisable as a Non-Statutory Option under the Federal taxlaws.

## **IV.           CANCELLATION****AND****REGRANT****OF****OPTIONS**

The Plan Administrator shall have the authority toeffect, at any time and from time to time, with the consent of the affectedoption holders, the cancellation of any or all outstanding options under theDiscretionary Option Grant Program (including outstanding options incorporatedfrom the Predecessor Plans) and to grant in substitution new options coveringthe same or different number of shares of Common Stock.

## **V.            STOCK****APPRECIATION****RIGHTS**

### A.    ThePlan Administrator shall have full power and authority to grant to selectedOptionees tandem stock appreciation rights and/or limited stock appreciation rights.

### B.    Thefollowing terms shall govern the grant and exercise of tandem stockappreciation rights:

#### 1.     Oneor more Optionees may be granted the right, exercisable upon such terms as thePlan Administrator may establish, to elect between the exercise of theunderlying option for shares of Common Stock and the surrender of that optionin exchange for a distribution from the Corporation in an amount equal to theexcess of (a) the Fair Market Value (on the option surrender date) of thenumber of shares in which the Optionee is at the time vested under thesurrendered option (or surrendered portion thereof) over (b) the aggregateexercise price payable for such shares.

#### 2.     Nosuch option surrender shall be effective unless it is approved by the PlanAdministrator, either at the time of the actual option surrender or at anyearlier time.  If the surrender is soapproved, then the distribution to which the Optionee shall be entitled may be 

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#### made in shares of Common Stock valued at Fair Market Value on theoption surrender date, in cash, or partly in shares and partly in cash, as thePlan Administrator shall in its sole discretion deem appropriate.

#### 3.     Ifthe surrender of an option is not approved by the Plan Administrator, then theOptionee shall retain whatever rights the Optionee had under the surrenderedoption (or surrendered portion thereof) on the option surrender date and mayexercise such rights at any time prior to the *later*of (a) five (5) business days after the receipt of the rejection notice or (b)the last day on which the option is otherwise exercisable in accordance withthe terms of the documents evidencing such option, but in no event may suchrights be exercised more than ten (10) years after the option grant date.

### C.    Thefollowing terms shall govern the grant and exercise of limited stockappreciation rights:

#### 1.     Oneor more Section 16 Insiders may be granted limited stock appreciation rightswith respect to their outstanding options.

#### 2.     Uponthe occurrence of a Hostile Take-Over, each individual holding one or moreoptions with such a limited stock appreciation right shall have theunconditional right (exercisable for a thirty (30)-day period following suchHostile Take-Over) to surrender each such option to the Corporation.  In return for the surrendered option, theOptionee shall receive a cash distribution from the Corporation in an amountequal to the excess of (A) the Take-Over Price of the shares of Common Stock atthe time subject to such option (whether or not the Optionee is otherwise vestedin those shares) over (B) the aggregate exercise price payable for thoseshares.  Such cash distribution shall bepaid within five (5) days following the option surrender date.

#### 3.     Atthe time such limited stock appreciation right is granted, the Plan Administratorshall pre-approve any subsequent exercise of that right in accordance with theterms of this Paragraph C. Accordingly, no further approval of the PlanAdministrator or the Board shall be required at the time of the actual optionsurrender and cash distribution.

 

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# **ARTICLETHREE**

# **SALARYINVESTMENT OPTION GRANT PROGRAM**

## **I.              OPTION****GRANTS**

The Primary Committee shall have the sole andexclusive authority to determine the calendar year or years (if any) for whichthe Salary Investment Option Grant Program is to be in effect and to select theSection 16 Insiders and other highly compensated Employees eligible toparticipate in the Salary Investment Option Grant Program for such calendaryear or years.  Each selected individualwho elects to participate in the Salary Investment Option Grant Program must,prior to the start of each calendar year of participation, file with the PlanAdministrator (or its designate) an irrevocable authorization directing theCorporation to reduce his or her base salary for that calendar year by anamount not less than Ten Thousand Dollars ($10,000.00) nor more than FiftyThousand Dollars ($50,000.00). Each individual who files such a timelyauthorization shall automatically be granted an option under the SalaryInvestment Option Grant Program on the first trading day in January of thecalendar year for which the salary reduction is to be in effect.

## **II.            OPTION****TERMS**

Each option shall be a Non-Statutory Option evidencedby one or more documents in the form approved by the Plan Administrator; *provided, however*, that each such document shall comply withthe terms specified below.

### A.    **Exercise Price**.

#### 1.     Theexercise price per share shall be thirty-three and one-third percent (33-1/3%)of the Fair Market Value per share of Common Stock on the option grant date.

#### 2.     Theexercise price shall become immediately due upon exercise of the option andshall be payable in one or more of the alternative forms authorized under theDiscretionary Option Grant Program. Except to the extent the sale and remittance procedure specifiedthereunder is utilized, payment of the exercise price for the purchased sharesmust be made on the Exercise Date.

### B.    **Number of Option Shares**. The number ofshares of Common Stock subject to the option shall be determined pursuant tothe following formula (rounded down to the nearest whole number):

X = A  ̧(B x 66-2/3%), where

X is the number ofoption shares,

A is the dollaramount of the reduction in the Optionee’s base salary for the calendar year tobe in effect pursuant to this program, and

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 B is the Fair Market Value per share of CommonStock on the option grant date.

### C.    **Exercise and Term of Options**. Theoption shall become exercisable in a series of twelve (12) successive equalmonthly installments upon the Optionee’s completion of each calendar month ofService in the calendar year for which the salary reduction is in effect.  Each option shall have a maximum term of ten(10) years measured from the option grant date.

### D.    **Effect of Termination of Service**.Should the Optionee cease Service for any reason while one or more optionsgranted under this Article Three are outstanding, then each such option shallremain exercisable, for any or all of the shares for which the option isexercisable at the time of such cessation of Service, until the *earlier* of (i) the expiration of the ten (10)-year optionterm or (ii) the expiration of the three (3)-year period measured from the dateof such cessation of Service.  Should theOptionee die while one or more options granted under this Article Three are outstanding,then each such option may be exercised, for any or all of the shares for whichthe option is exercisable at the time of the Optionee’s cessation of Service(less any shares subsequently purchased by Optionee prior to death), by thepersonal representative of the Optionee’s estate or by the person or persons towhom the option is transferred pursuant to the Optionee’s will or the laws ofinheritance or by the designated beneficiary or beneficiaries of suchoption.  Such right of exercise shall lapse,and the option shall terminate, upon the *earlier* of (i)the expiration of the ten (10)-year option term or (ii) the three (3)-yearperiod measured from the date of the Optionee’s cessation of Service.  However, the option shall, immediately uponthe Optionee’s cessation of Service for any reason, terminate and cease toremain outstanding with respect to any and all shares of Common Stock for whichthe option is not otherwise at that time exercisable.

## **III.           CORPORATE****TRANSACTION**/ **CHANGE****IN****CONTROL**/ **HOSTILE****TAKE**-**OVER**

### A.    Inthe event of any Corporate Transaction while the Optionee remains in Service,the shares of Common Stock at the time subject to each outstanding optiongranted under this Salary Investment Option Grant Program shall automaticallyvest in full so that each such option shall, immediately prior to the effectivedate of the Corporate Transaction, become exercisable for all the shares ofCommon Stock at the time subject to such option and may be exercised for any orall of those shares as fully-vested shares of Common Stock.  Each such outstanding option shall terminateimmediately following the Corporate Transaction, except to the extent assumedby the successor corporation (or parent thereof) in such CorporateTransaction.  Any option so assumed andshall remain exercisable for the fully-vested shares until the *earlier* of (i) the expiration of the ten (10)-year optionterm or (ii) the expiration of the three (3)-year period measured from the dateof the Optionee’s cessation of Service.

### B.    Inthe event of a Change in Control while the Optionee remains in Service, theshares of Common Stock at the time subject to each outstanding option grantedunder this Salary Investment Option Grant Program shall automatically vest infull so that each such option shall, immediately prior to the effective date ofthe Change in Control, become exercisable for all the shares of Common Stock atthe time subject to such option and may be exercised for any or all of thoseshares as fully-vested shares of Common Stock. Such option shall remain exercisable until 

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### the *earliest* to occur of (i) the expirationof the ten (10)-year option term, (ii) the expiration of the three (3)-yearperiod measured from the date of the Optionee’s cessation of Service, (iii) thetermination of the option in connection with a Corporate Transaction or (iv)the surrender of the option in connection with a Hostile Take-Over.

### C.    Uponthe occurrence of a Hostile Take-Over, the Optionee shall have a thirty(30)-day period in which to surrender to the Corporation each outstandingoption granted him or her under the Salary Investment Option GrantProgram.  The Optionee shall in return beentitled to a cash distribution from the Corporation in an amount equal to theexcess of (i) the Take-Over Price of the shares of Common Stock at the timesubject to the surrendered option (whether or not the option is otherwise atthe time exercisable for those shares) over (ii) the aggregate exercise pricepayable for such shares.  Such cashdistribution shall be paid within five (5) days following the surrender of theoption to the Corporation.  The PrimaryCommittee shall, at the time the option with such limited stock appreciationright is granted under the Salary Investment Option Grant Program, pre-approveany subsequent exercise of that right in accordance with the terms of thisParagraph C. Accordingly, no further approval of the Primary Committee or theBoard shall be required at the time of the actual option surrender and cashdistribution.

### D.    Eachoption granted pursuant to the Salary Investment Option Grant Program which isassumed in connection with a Corporate Transaction shall be appropriatelyadjusted, immediately after such Corporate Transaction, to apply to the numberand class of securities which would have been issuable to the Optionee inconsummation of such Corporate Transaction had the option been exercisedimmediately prior to such Corporate Transaction.  Appropriate adjustments shall also be made tothe exercise price payable per share under each outstanding option, providedthe aggregate exercise price payable for such securities shall remain thesame.  To the extent the holders ofCommon Stock receive cash consideration for their Common Stock in consummationof the Corporate Transaction, with the Plan Administrator’s consent prior tothe consummation of the Corporate Transaction, the successor corporation may,in connection with the assumption of the outstanding options under the SalaryInvestment Option Grant Program, substitute one or more shares of its owncommon stock with a fair market value equivalent to the cash consideration paidper share of Common Stock in such Corporate Transaction.

## **IV.           REMAINING****TERMS**

The remaining terms of each option granted under theSalary Investment Option Grant Program shall be the same as the terms in effectfor option grants made under the Discretionary Option Grant Program.

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# **ARTICLE FOUR**

# **STOCKISSUANCE PROGRAM**

## **I.              STOCK****ISSUANCE****TERMS**

Shares of Common Stock may be issued under the StockIssuance Program through direct and immediate issuances without any interveningoption grants.  Each such stock issuanceshall be evidenced by a Stock Issuance Agreement which complies with the termsspecified below.  Shares of Common Stockmay also be issued under the Stock Issuance Program pursuant to share rightawards which entitle the recipients to receive those shares upon the attainmentof designated performance goals or the satisfaction of specified Servicerequirements.

### A.    **Purchase Price**.

#### 1.     Thepurchase price per share shall be fixed by the Plan Administrator.

#### 2.     Subjectto the provisions of Section I of Article Seven, shares of Common Stock may beissued under the Stock Issuance Program for any of the following items ofconsideration which the Plan Administrator may deem appropriate in eachindividual instance:

##### (i)            cash or check madepayable to the Corporation, or

##### (ii)           past servicesrendered to the Corporation (or any Parent or Subsidiary).

### B.    **Vesting Provisions**.

#### 1.     Sharesof Common Stock issued under the Stock Issuance Program may, in the discretionof the Plan Administrator, be fully and immediately vested upon issuance or mayvest in one or more installments over the Participant’s period of Service orupon attainment of specified performance objectives.  The elements of the vesting scheduleapplicable to any unvested shares of Common Stock issued under the StockIssuance Program shall be determined by the Plan Administrator and incorporatedinto the Stock Issuance Agreement.  Sharesof Common Stock may also be issued under the Stock Issuance Program pursuant toshare right awards which entitle the recipients to receive those shares uponthe attainment of designated performance goals or the satisfaction of specifiedService requirements.

#### 2.     Anynew, substituted or additional securities or other property (including moneypaid other than as a regular cash dividend) which the Participant may have theright to receive with respect to the Participant’s unvested shares of CommonStock by reason of any stock dividend, stock split, recapitalization,combination of shares, exchange of shares or other change affecting theoutstanding Common Stock as a class without the Corporation’s receipt ofconsideration shall be issued subject to (i) the same vesting requirementsapplicable to the Participant’s unvested shares of Common Stock and (ii) suchescrow arrangements as the Plan Administrator shall deem appropriate.

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#### 3.     TheParticipant shall have full stockholder rights with respect to any shares ofCommon Stock issued to the Participant under the Stock Issuance Program,whether or not the Participant’s interest in those shares is vested.  Accordingly, the Participant shall have theright to vote such shares and to receive any regular cash dividends paid onsuch shares.

#### 4.     Shouldthe Participant cease to remain in Service while one or more shares of CommonStock issued under the Stock Issuance Program are unvested or should theperformance objectives not be attained with respect to one or more suchunvested shares of Common Stock, then those shares shall be immediatelysurrendered to the Corporation for cancellation, and the Participant shall haveno further stockholder rights with respect to those shares.  To the extent the surrendered shares were previouslyissued to the Participant for consideration paid in cash or cash equivalent(including the Participant’s purchase-money indebtedness), the Corporationshall repay to the Participant the cash consideration paid for the surrenderedshares and shall cancel the unpaid principal balance of any outstandingpurchase money note of the Participant attributable to the surrendered shares.

#### 5.     ThePlan Administrator may in its discretion waive the surrender and cancellationof one or more unvested shares of Common Stock which would otherwise occur uponthe cessation of the Participant’s Service or the non-attainment of theperformance objectives applicable to those shares.  Such waiver shall result in the immediatevesting of the Participant’s interest in the shares of Common Stock as to whichthe waiver applies.  Such waiver may beeffected at any time, whether before or after the Participant’s cessation ofService or the attainment or non-attainment of the applicable performanceobjectives.

#### 6.     Outstandingshare right awards under the Stock Issuance Program shall automaticallyterminate, and no shares of Common Stock shall actually be issued insatisfaction of those awards, if the performance goals or Service requirementsestablished for such awards are not attained or satisfied.  The Plan Administrator, however, shall havethe discretionary authority to issue shares of Common Stock under one or moreoutstanding share right awards as to which the designated performance goals orService requirements have not been attained or satisfied.

## **II.            CORPORATE****TRANSACTION**/**CHANGE****IN****CONTROL**

### A.    Allof the Corporation’s outstanding repurchase rights under the Stock IssuanceProgram shall terminate automatically, and all the shares of Common Stocksubject to those terminated rights shall immediately vest in full, in the eventof any Corporate Transaction, except to the extent (1) those repurchase rightsare to be assigned to the successor corporation (or parent thereof) inconnection with such Corporate Transaction or (2) such accelerated vesting isprecluded by other limitations imposed in the Stock Issuance Agreement.

### B.    ThePlan Administrator shall have the discretionary authority to structure one ormore of the Corporation’s repurchase rights under the Stock Issuance Program sothat those rights shall automatically terminate in whole or in part, and theshares of Common Stock subject to those terminated rights shall immediatelyvest, upon the occurrence of a Corporate Transaction, a Change in Control, anyother event or the Participant’s Involuntary Termination within a designatedperiod of time following any of these events.

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# **ARTICLEFIVE**

# **DIRECTORFEE OPTION GRANT PROGRAM**

## **I.              OPTION****GRANTS**

The Primary Committee shall have the sole andexclusive authority to determine the calendar year or years for which theDirector Fee Option Grant Program is to be in effect.  For each such calendar year the program is ineffect, each non-employee Board member may irrevocably elect to apply all orany portion of the annual retainer fee otherwise payable in cash for his or herservice on the Board for that year to the acquisition of a special option grantunder this Director Fee Option Grant Program. Such election must be filed with the Corporation’s Chief FinancialOfficer prior to the first day of the calendar year for which the annualretainer fee which is the subject of that election is otherwise payable.  Each non-employee Board member who files sucha timely election shall automatically be granted an option under this DirectorFee Option Grant Program on the first trading day in January in the calendaryear for which the annual retainer fee which is the subject of that electionwould otherwise be payable in cash.

In no event, however, shall a non-employee Boardmember be eligible to receive an option grant under the Director Fee OptionGrant Program if that individual would be required, whether contractually orotherwise, to transfer the ownership of the grant, or any economic interest insuch grant, to any venture fund or other entity with which he or she is at thetime affiliated.

## **II.            OPTION****TERMS**

Each option shall be a Non-Statutory Option governedby the terms and conditions specified below.

### A.    **Exercise Price**.

#### 1.     Theexercise price per share shall be thirty-three and one-third percent (33-1/3%)of the Fair Market Value per share of Common Stock on the option grant date.

#### 2.     Theexercise price shall become immediately due upon exercise of the option andshall be payable in one or more of the alternative forms authorized under theDiscretionary Option Grant Program. Except to the extent the sale and remittance procedure specifiedthereunder is utilized, payment of the exercise price for the purchased sharesmust be made on the Exercise Date.

### B.    **Number of Option Shares**.  The number of shares of Common Stock subjectto the option shall be determined pursuant to the following formula (roundeddown to the nearest whole number):

### X = A  ̧(B x 66-2/3%), where

X is the number ofoption shares,

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A is the portionof the annual retainer fee subject to the non-employee Board member’s election,and

B is the FairMarket Value per share of Common Stock on the option grant date.

### C.    **Exercise and Term of Options**. Theoption shall become exercisable in a series of twelve (12) successive equalmonthly installments upon the Optionee’s completion of each calendar month ofBoard service during the calendar year in which the option is granted. Eachoption shall have a maximum term of ten (10) years measured from the optiongrant date.

### D.    **Limited Transferability of Options**.Each option under this Article Five may, in connection with the Optionee’sestate plan, be assigned in whole or in part during the Optionee’s lifetime toone or more members of the Optionee’s immediate family or to a trustestablished exclusively for one or more such family members.  The assigned portion may only be exercised bythe person or persons who acquire a proprietary interest in the option pursuantto the assignment.  The terms applicableto the assigned portion shall be the same as those in effect for the optionimmediately prior to such assignment and shall be set forth in such documentsissued to the assignee as the Plan Administrator may deem appropriate.  The Optionee may also designate one or morepersons as the beneficiary or beneficiaries of his or her outstanding optionsunder this Article Five, and any outstanding options shall, in accordance withsuch designation, automatically be transferred to such beneficiary orbeneficiaries upon the Optionee’s death. Such beneficiary or beneficiaries shall take the transferred options subjectto all the terms and conditions of the applicable agreement evidencing eachsuch transferred option, including (without limitation) the limited time periodduring which the option may be exercised following the Optionee’s death.

### E.     **Termination of Board Service**.  Should the Optionee cease Board service forany reason (other than death or Permanent Disability) while one or more optionsgranted under this Director Fee Option Grant Program are outstanding, then eachsuch option shall remain exercisable, for any or all of the shares for whichthe option is exercisable at the time of such cessation of Board service, untilthe *earlier* of (i) the expiration of the ten(10)-year option term or (ii) the expiration of the three (3)-year periodmeasured from the date of such cessation of Board service.  However, each option granted pursuant to thisDirector Fee Option Grant Program that is outstanding at the time of theOptionee’s cessation of Board service shall immediately terminate and cease toremain outstanding with respect to any and all shares of Common Stock for whichthe option is not otherwise at that time exercisable.

### F.     **Death or Permanent Disability**.  Should the Optionee’s service as a Boardmember cease by reason of death or Permanent Disability, then each outstandingoption granted pursuant to this Director Fee Option Grant Program shallimmediately become exercisable for all the shares of Common Stock at the timesubject to that option, and the option may be exercised for any or all of thoseshares as fully-vested shares until the *earlier* of (1)the expiration of the ten (10)-year option term or (2) the expiration of thethree (3)-year period measured from the date of such cessation of Boardservice.  To the extent such option isexercisable at the time of the Optionee’s death, that option may be exercisedby the personal representative of the Optionee’s estate or by the person orpersons to whom the option is transferred pursuant to the 

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### Optionee’s will or the laws of inheritance or by the designated beneficiaryor beneficiaries of such option.

Should the Optionee die after cessation of Boardservice but while one or more options granted under this Director Fee OptionGrant Program are outstanding, then each such option may be exercised, for anyor all of the shares for which the option is exercisable at the time of theOptionee’s cessation of Board service (less any shares subsequently purchasedby Optionee prior to death), by the personal representative of the Optionee’sestate or by the person or persons to whom the option is transferred pursuantto the Optionee’s will or the laws of inheritance or by the designatedbeneficiary or beneficiaries of such option. Such right of exercise shall lapse, and the option shall terminate, uponthe *earlier* of (1) the expiration of the ten(10)-year option term or (2) the three (3)-year period measured from the dateof the Optionee’s cessation of Board service.

## **III.           CORPORATE****TRANSACTION**/**CHANGE****IN****CONTROL**/**HOSTILE****TAKE**-**OVER**

### A.    Inthe event of any Corporate Transaction while the Optionee remains a Boardmember, each outstanding option granted pursuant to this Director Fee OptionGrant Program shall automatically vest in full so that each such option shall,immediately prior to the effective date of the Corporate Transaction, becomeexercisable for all the shares of Common Stock at the time subject to suchoption and may be exercised for any or all of those shares as fully-vestedshares of Common Stock.  Each suchoutstanding option shall terminate immediately following the CorporateTransaction, except to the extent assumed by the successor corporation (orparent thereof) in such Corporate Transaction. Any option so assumed and shall remain exercisable for the fully-vestedshares until the *earlier* of (1) the expiration ofthe ten (10)-year option term or (2) the expiration of the three (3)-yearperiod measured from the date of the Optionee’s cessation of Board service.

### B.    Inthe event of a Change in Control while the Optionee remains in Service, eachoutstanding option granted pursuant to this Director Fee Option Grant Programshall automatically vest in full so that each such option shall immediatelybecome exercisable for all of the shares of Common Stock at the time subject tosuch option and may be exercised for any or all of those shares as fully-vestedshares of Common Stock.  Such optionshall remain exercisable until the *earliest* tooccur of (1) the expiration of the ten (10)-year option term, (2) theexpiration of the three (3)-year period measured from the date of the Optionee’scessation of Board service, (3) the termination of the option in connectionwith a Corporate Transaction or (4) the surrender of the option in connectionwith a Hostile Take-Over.

### C.    Uponthe occurrence of a Hostile Take-Over, the Optionee shall have a thirty(30)-day period in which to surrender to the Corporation each outstandingoption granted him or her under the Director Fee Option Grant Program.  The Optionee shall in return be entitled to acash distribution from the Corporation in an amount equal to the excess of (1)the Take-Over Price of the shares of Common Stock at the time subject to eachsurrendered option (whether or not the option is otherwise at the timeexercisable for those shares) over (2) the aggregate exercise price payable forsuch shares.  Such cash distributionshall be paid within five (5) days following the surrender of the option to theCorporation.  No approval or consent ofthe Board or 

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### any Plan Administrator shall be required at the time of the actualoption surrender and cash distribution.

### D.    Eachoption granted pursuant to the Director Fee Option Grant Program which isassumed in connection with a Corporate Transaction shall be appropriatelyadjusted, immediately after such Corporate Transaction, to apply to the numberand class of securities which would have been issuable to the Optionee inconsummation of such Corporate Transaction had the option been exercisedimmediately prior to such Corporate Transaction.  Appropriate adjustments shall also be made tothe exercise price payable per share under each outstanding option, providedthe aggregate exercise price payable for such securities shall remain thesame.  To the extent the holders ofCommon Stock receive cash consideration for their Common Stock in consummationof the Corporate Transaction, with the Plan Administrator’s consent prior tothe consummation of the Corporate Transaction, the successor corporation may,in connection with the assumption of the outstanding options under the DirectorFee Option Grant Program, substitute one or more shares of its own common stockwith a fair market value equivalent to the cash consideration paid per share ofCommon Stock in such Corporate Transaction.

## **IV.           REMAINING****TERM1S**

The remaining terms of each option granted under thisDirector Fee Option Grant Program shall be the same as the terms in effect foroption grants made under the Discretionary Option Grant Program.

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# **ARTICLESIX**

# **MISCELLANEOUS**

## **I.              FINANCING**

The Plan Administrator may permit any Optionee orParticipant to pay the option exercise price under the Discretionary OptionGrant Program or the purchase price of shares issued under the Stock IssuanceProgram by delivering a full-recourse, interest bearing promissory note payablein one or more installments.  The termsof any such promissory note (including the interest rate and the terms ofrepayment) shall be established by the Plan Administrator in its sole discretion.  In no event may the maximum credit availableto the Optionee or Participant exceed the sum of (A) the aggregate optionexercise price or purchase price payable for the purchased shares (less the parvalue of those shares) plus (B) any Federal, state and local income andemployment tax liability incurred by the Optionee or the Participant inconnection with the option exercise or share purchase.

## **II.            TAX****WITHHOLDING**

### A.    TheCorporation’s obligation to deliver shares of Common Stock upon the exercise ofoptions or the issuance or vesting of such shares under the Plan shall besubject to the satisfaction of all applicable Federal, state and local incomeand employment tax withholding requirements.

### B.    ThePlan Administrator may, in its discretion, provide any or all holders ofNon-Statutory Options or unvested shares of Common Stock under the Plan (otherthan the options granted to non-employee Board members or independentcontractors) with the right to use shares of Common Stock in satisfaction ofall or part of the Withholding Taxes to which such holders may become subjectin connection with the exercise of their options or the vesting of theirshares.  Such right may be provided toany such holder in either or both of the following formats:

#### 1.     StockWithholding:  The election to havethe Corporation withhold, from the shares of Common Stock otherwise issuableupon the exercise of such Non-Statutory Option or the vesting of such shares, aportion of those shares with an aggregate Fair Market Value equal to thepercentage of the Withholding Taxes (not to exceed one hundred percent (100%))designated by the holder.

#### 2.     StockDelivery:  The election to deliver tothe Corporation, at the time the Non-Statutory Option is exercised or theshares vest, one or more shares of Common Stock previously acquired by suchholder (other than in connection with the option exercise or share vestingtriggering the Withholding Taxes) with an aggregate Fair Market Value equal tothe percentage of the Withholding Taxes (not to exceed one hundred percent(100%)) designated by the holder.

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## **III.           SHARE****ESCROW**/**LEGENDS**

Unvested shares may, in the Plan Administrator’sdiscretion, be held in escrow by the Corporation until the Participant’s or theOptionee’s interest in such shares vests or may be issued directly to theParticipant or the Optionee with restrictive legends on the certificatesevidencing those unvested shares.

## **IV.           EFFECTIVE****DATE****AND****TERM****OF****THE****PLAN**

### A.    ThePlan shall become effective immediately on the Plan Effective Date.  However, the Salary Investment Option GrantProgram and the Director Fee Option Grant Program shall not be implementeduntil such time as the Primary Committee may deem appropriate.  Options may be granted under the DiscretionaryOption Grant at any time on or after the Plan Effective Date.

### B.    ThePlan shall serve as the successor to the Predecessor Plans, and no furtheroption grants or direct stock issuances shall be made under those PredecessorPlans after the Plan Effective Date.  Alloptions outstanding under the Predecessor Plans on the Plan Effective Dateshall be transferred to the Plan at that time and shall be treated asoutstanding options under the Plan. However, each outstanding option so incorporated shall continue to begoverned solely by the terms of the documents evidencing such option, and noprovision of the Plan shall be deemed to affect or otherwise modify the rightsor obligations of the holders of such incorporated options with respect totheir acquisition of shares of Common Stock.

### C.    Oneor more provisions of the Plan, including (without limitation) theoption/vesting acceleration provisions of Article Two relating to CorporateTransactions and Changes in Control, may, in the Plan Administrator’sdiscretion, be extended to one or more options incorporated from thePredecessor Plans which do not otherwise contain such provisions.

### D.    Unlessterminated by the Board prior to such time, the Plan shall terminate upon thetenth anniversary of the Plan’s adoption by the Board.  Should the Plan terminate when options and/orunvested shares are outstanding, such awards shall continue in effect inaccordance with the provisions of the documents evidencing such grants orissuances.

## **V.            AMENDMENT****OF****THE****PLAN**

### A.    TheBoard shall have complete and exclusive power and authority to amend or modifythe Plan in any or all respects. However, no such amendment or modification shall adversely affect therights and obligations with respect to stock options or unvested stockissuances at the time outstanding under the Plan unless the Optionee or theParticipant consents to such amendment or modification.  In addition, certain amendments may requirestockholder approval pursuant to applicable laws or regulations.

### B.    Optionsto purchase shares of Common Stock may be granted under the DiscretionaryOption Grant and Salary Investment Option Grant Programs and shares of CommonStock may be issued under the Stock Issuance Program that are in each instancein excess of the number of shares then available for issuance under the Plan,provided any excess shares actually issued under those programs shall be heldin escrow until the number of shares of 

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### Common Stock available for issuance under the Plan is sufficientlyincreased either by (1) the automatic annual share reserve increase set forthin Section V.B. of Article One or (2) the stockholder approval of an amendmentof the Plan sufficiently increasing the share reserve.  Grants made against an automatic annual sharereserve increase will not qualify as Incentive Options if the Fair Market Valueof the Common Stock is higher on the date such increase is effected than it wason the date of grant.  If stockholderapproval is required and is not obtained within twelve (12) months after thedate the first excess issuances are made against the contingent increase, then(i) any unexercised options granted on the basis of such excess shares shallterminate and cease to be outstanding and (ii) the Corporation shall promptlyrefund to the Optionees and the Participants the exercise or purchase pricepaid for any excess shares issued under the Plan and held in escrow, togetherwith interest (at the applicable Short Term Federal Rate) for the period theshares were held in escrow, and such shares shall thereupon be automaticallycancelled and cease to be outstanding.

## **VI.           USE****OF****PROCEEDS**

Any cash proceeds received by the Corporation from thesale of shares of Common Stock under the Plan shall be used for any corporatepurpose.

## **VII.         REGULATORY****APPROVALS**

### A.    Theimplementation of the Plan, the granting of any stock option under the Plan andthe issuance of any shares of Common Stock (i) upon the exercise of any grantedoption or (ii) under the Stock Issuance Program shall be subject to theCorporation’s procurement of all approvals and permits required by regulatoryauthorities having jurisdiction over the Plan, the stock options granted underit and the shares of Common Stock issued pursuant to it.

### B.    Noshares of Common Stock or other assets shall be issued or delivered under thePlan unless and until there shall have been compliance with all applicablerequirements of Federal and state securities laws, including the filing andeffectiveness of the Form S-8 registration statement for the shares of CommonStock issuable under the Plan, and all applicable listing requirements of anyStock Exchange (or the Nasdaq Stock Market, if applicable) on which CommonStock is then listed for trading.

## **VIII.        NO****EMPLOYMENT**/**SERVICE****RIGHTS**

Nothing in the Plan shall confer upon the Optionee orthe Participant any right to continue in Service for any period of specificduration or interfere with or otherwise restrict in any way the rights of theCorporation (or any Parent or Subsidiary employing or retaining such person) orof the Optionee or the Participant, which rights are hereby expressly reservedby each, to terminate such person’s Service at any time for any reason, with orwithout cause.

###  

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**APPENDIX**

The following definitions shall be in effect under thePlan:

### A.            **Board** shall mean the Corporation’sBoard of Directors.

### B.            **Change in Control** shall mean a changein ownership or control of the Corporation effected through either of thefollowing transactions:

#### 1.     theacquisition, directly or indirectly by any person or related group of persons(other than the Corporation or a person that directly or indirectly controls,is controlled by, or is under common control with, the Corporation), ofbeneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) ofsecurities possessing more than fifty percent (50%) of the total combinedvoting power of the Corporation’s outstanding securities pursuant to a tenderor exchange offer made directly to the Corporation’s stockholders, or

#### 2.     achange 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, byreason of one or more contested elections for Board membership, to be comprisedof individuals who either (A) have been Board members continuously since thebeginning of such period or (B) have been elected or nominated for election asBoard members during such period by at least a majority of the Board membersdescribed in clause (A) who were still in office at the time the Board approvedsuch election or nomination.

### C.            **Code** shall mean the Internal RevenueCode of 1986, as amended.

### D.            **Common Stock** shall mean the Corporation’scommon stock.

### E.             **Corporate Transaction** shall mean eitherof the following stockholder approved transactions to which the Corporation isa party:

#### 1.     amerger, consolidation or reorganization approved by the Corporation’sstockholders, unless securities representing more than fifty percent(50%) of the total combined voting power of the voting securities of thesuccessor corporation are immediately thereafter beneficially owned, directlyor indirectly and in substantially the same proportion, by the persons whobeneficially owned the Corporation’s outstanding voting securities immediatelyprior to such transaction, or

#### 2.     anystockholder-approved transfer or other disposition of all or substantially allof the Corporation’s assets.

### F.             **Corporation** shall mean United Online,Inc., a Delaware corporation, and any corporate successor to all orsubstantially all of the assets or voting stock of United Online, Inc. whichhas by appropriate action assumed the Plan.

### G.            **Director Fee Option Grant Program** shallmean the special stock option grant in effect for non-employee Board membersunder Article Five of the Plan.

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### H.            **Discretionary Option Grant Program**shall mean the discretionary option grant program in effect under Article Twoof the Plan.

### I.              **Eligible Director** mean a non-employeeBoard member eligible to participate in the Director Fee Option Grant Programin accordance with the eligibility provisions of Articles One and Five of thePlan.

### J.             **Employee** shall mean an individual whois in the employ of the Corporation (or any Parent or Subsidiary), subject tothe control and direction of the employer entity as to both the work to beperformed and the manner and method of performance.

### K.            **Exercise Date** shall mean the date onwhich the Corporation shall have received written notice of the optionexercise.

### L.             **Fair Market Value** per share of CommonStock on any relevant date shall be determined in accordance with the followingprovisions:

#### 1.     Ifthe Common Stock is at the time traded on the Nasdaq Stock Market, then theFair Market Value shall be the closing selling price per share of Common Stockon the date in question, as such price is reported by the National Associationof Securities Dealers on the Nasdaq Stock Market.  If there is no closing selling price for theCommon Stock on the date in question, then the Fair Market Value shall be theclosing selling price on the last preceding date for which such quotationexists.

#### 2.     Ifthe Common Stock is at the time listed on any Stock Exchange, then the FairMarket Value shall be the closing selling price per share of Common Stock onthe date in question on the Stock Exchange determined by the Plan Administratorto be the primary market for the Common Stock, as such price is officiallyquoted in the composite tape of transactions on such exchange.  If there is no closing selling price for theCommon Stock on the date in question, then the Fair Market Value shall be theclosing selling price on the last preceding date for which such quotationexists.

### M.           **Hostile Take-Over** shall mean theacquisition, directly or indirectly, by any person or related group of persons(other than the Corporation or a person that directly or indirectly controls,is controlled by, or is under common control with, the Corporation) ofbeneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securitiespossessing more than fifty percent (50%) of the total combined voting power ofthe Corporation’s outstanding securities pursuant to a tender or exchange offermade directly to the Corporation’s stockholders which the Board does notrecommend such stockholders to accept.

### N.            **Incentive Option** shall mean an optionwhich satisfies the requirements of Code Section 422.

### O.            **Involuntary Termination** shall mean,except as otherwise determined by the Plan Administrator, the termination ofthe Service of any individual which occurs by reason of:

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#### 1.     suchindividual’s involuntary dismissal or discharge by the Corporation (or anyParent or Subsidiary) for reasons other than Misconduct, or

#### 2.     suchindividual’s voluntary resignation following (A) a material reduction in thescope of his or her day to day responsibilities at the Corporation (or anyParent or Subsidiary), it being understood that a change in such individual’stitle shall not, in and of itself, be deemed a material reduction, (B) areduction in his or her base salary or (C) a relocation of such individual’splace of employment by more than fifty (50) miles, provided and only if suchchange, reduction or relocation is effected by the Corporation (or any Parentor Subsidiary) without the individual’s consent.

### P.             **Misconduct** shall mean the commission ofany act of fraud, embezzlement or dishonesty by the Optionee or Participant,any unauthorized use or disclosure by such person of confidential informationor trade secrets of the Corporation (or any Parent or Subsidiary), or any otherintentional misconduct by such person adversely affecting the business oraffairs of the Corporation (or any Parent or Subsidiary) in a materialmanner.  The foregoing definition shallnot be deemed to be inclusive of all the acts or omissions which theCorporation (or any Parent or Subsidiary) may consider as grounds for thedismissal or discharge of any Optionee, Participant or other person in theService of the Corporation (or any Parent or Subsidiary).

### Q.            **1934 Act** shall mean the SecuritiesExchange Act of 1934, as amended.

### R.            **Non-Statutory Option** shall mean anoption not intended to satisfy the requirements of Code Section 422.

### S.             **Optionee** shall mean any person to whoman option is granted under the Discretionary Option Grant, Salary InvestmentOption Grant or Director Fee Option Grant Program.

### T.            **Parent** shall mean any corporation(other than the Corporation) in an unbroken chain of corporations ending withthe Corporation, provided each corporation in the unbroken chain (other thanthe Corporation) owns, at the time of the determination, stock possessing fiftypercent (50%) or more of the total combined voting power of all classes ofstock in one of the other corporations in such chain.

### U.            **Participant** shall mean any person whois issued shares of Common Stock under the Stock Issuance Program.

### V.            **Permanent Disability or Permanently Disabled**shall mean the inability of the Optionee or the Participant to engage in anysubstantial gainful activity by reason of any medically determinable physicalor mental impairment which can be expected to result in death or has lasted orcan be expected to last for a continuous period of twelve (12) months ormore.  However, solely for purposes ofthe Director Fee Option Grant Program, Permanent Disability or PermanentlyDisabled shall mean the inability of the non-employee Board member to performhis or her usual duties as a Board member by reason of any medicallydeterminable physical or mental impairment expected to result in death or to beof continuous duration of twelve (12) months or more.

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### W.           **Plan** shall mean the United Online, Inc.2001 Stock Incentive Plan, as set forth in this document.

### X.            **Plan Administrator** shall mean theparticular entity, whether the Primary Committee, the Board or the SecondaryCommittee, which is authorized to administer the Discretionary Option Grant andStock Issuance Programs with respect to one or more classes of eligiblepersons, to the extent such entity is carrying out its administrative functionsunder those programs with respect to the persons under its jurisdiction.

### Y.            **Plan Effective Date** shall mean the datethe merger of NetZero, Inc. and NZ Acquisition Corp. and the merger of JunoOnline Services, Inc. and JO Acquisition Corp. become effective as contemplatedby the Agreement and Plan of Merger, by and among NetZero, Inc., Juno OnlineServices, Inc., United Online, Inc. and the other parties thereto, dated as ofJune 7, 2001.

### Z.            **Predecessor Plans** shall mean the JunoOnline Services, Inc. 1999 Stock Incentive Plan, the NetZero, Inc. 1999 StockIncentive Plan, the AimTV, Inc. 1999 Employee Stock Option Plan and the 1999RocketCash Corporation Stock Option Plan, as each such plan is in effectimmediately prior to the Plan Effective Date.

### AA.        **Primary Committee** shall mean thecommittee of two (2) or more non-employee Board members appointed by the Boardto administer the Discretionary Option Grant and Stock Issuance Programs withrespect to Section 16 Insiders and to administer the Salary Investment OptionGrant Program solely with respect to the selection of the eligible individualswho may participate in such program.

### BB.          **Salary Investment Option Grant Program**shall mean the salary investment option grant program in effect under ArticleThree of the Plan.

### CC.          **Secondary Committee** shall mean acommittee of one or more Board members appointed by the Board to administer theDiscretionary Option Grant and Stock Issuance Programs with respect to eligiblepersons other than Section 16 Insiders.

### DD.         **Section 16 Insider** shall mean anofficer or director of the Corporation subject to the short-swing profitliabilities of Section 16 of the 1934 Act.

### EE.  **        Service**shall mean the performance of services for the Corporation (or any Parent orSubsidiary) by a person in the capacity of an Employee, a non-employee memberof the board of directors or an independent contractor, except to the extentotherwise specifically provided in the documents evidencing the option grant orstock issuance.

### FF.  **        StockExchange** shall mean either the American Stock Exchange or theNew York Stock Exchange.

### GG.          **Stock Issuance Agreement** shall mean theagreement entered into by the Corporation and the Participant at the time ofissuance of shares of Common Stock under the Stock Issuance Program.

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### HH.         **Stock Issuance Program** shall mean thestock issuance program in effect under Article Four of the Plan.

### II.            **Subsidiary** shall mean any corporation(other than the Corporation) in an unbroken chain of corporations beginningwith the Corporation, provided each corporation (other than the lastcorporation) in the unbroken chain owns, at the time of the determination,stock possessing fifty percent (50%) or more of the total combined voting powerof all classes of stock in one of the other corporations in such chain.

### JJ.            **Take-Over Price** shall mean the *greater* of (i) the Fair Market Value per share of CommonStock on the date the option is surrendered to the Corporation in connectionwith a Hostile Take-Over or (ii) the highest reported price per share of CommonStock paid by the tender offeror in effecting such Hostile Take-Over.  However, if the surrendered option is anIncentive Option, the Take-Over Price shall not exceed the clause (i) price pershare.

### KK.         **10% Stockholder** shall mean the owner ofstock (as determined under Code Section 424(d)) possessing more than tenpercent (10%) of the total combined voting power of all classes of stock of theCorporation (or any Parent or Subsidiary).

### LL.          **Withholding Taxes** shall mean theFederal, state and local income and employment withholding taxes to which theholder of Non-Statutory Options or unvested shares of Common Stock may becomesubject in connection with the exercise of those options or the vesting ofthose shares.

 

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