Exhibit
10.1


 


 


Discretionary
Option Grant Program


 


UNITED
ONLINE, INC.


2001
STOCK INCENTIVE PLAN


NOTICE OF
GRANT OF STOCK OPTION


 


 


Notice is hereby
given of the following option grant (the “Option”) to purchase shares of the
Common Stock of United Online, Inc.:


	
  Optionee:

   

  	
   

  	
  <Optionee>

  
	
  Grant Date:

   

  	
   

  	
  <Grant Date>

  
	
  Vesting Commencement Date:

   

  	
   

  	
  <Grant Date>

  
	
  Exercise Price:

   

  	
   

  	
  $<Exercise Price> per share

  
	
  Number of Option Shares:

   

  	
   

  	
  <No. of Shares> shares

  
	
  Expiration Date:

   

  	
   

  	
  <Expiration Date>

  
	
  Type of Option:

   

  	
   

  	
  <Type of Option>

  
	
  Date Exercisable:  

   

  	
   

  	
  <Exercise
  Schedule>

  



Vesting Schedule: 
[Thirty three percent (33%) of the Option Shares shall vest upon
Optionee’s completion of one year of Service measured from the Vesting
Commencement Date and the remainder of the Option Shares shall vest in a series
of twenty-four successive equal monthly installments upon Optionee’s completion
of each additional month of Service over the twenty-four month period
thereafter.] OR [Twenty-five percent (25%) of the Option Shares shall vest upon
Optionee’s completion of one year of Service measured from the Vesting
Commencement Date and the remainder of the Option Shares shall vest in a series
of thirty-six successive equal monthly installments upon Optionee’s completion
of each additional month of Service over the thirty-six month period
thereafter.]  The Option shall vest as to
one or more of the Option Shares on an accelerated basis pursuant to the terms
of the Employment Agreement between the Corporation and the Optionee in the event
the Optionee’s Service with the Corporation terminates under certain prescribed
circumstances.  Accordingly, the vesting
acceleration provisions of such Employment Agreement are hereby incorporated
into the Option Agreement for this Option and shall have the same force and
effect as if expressly set forth therein.


 


Optionee understands and agrees that the Option is
granted subject to and in accordance with the terms of the United Online, Inc.
2001 Stock Incentive Plan (the “Plan”). 
Optionee further agrees to be bound by the terms of the Plan and the
terms of the Option as set forth in the Stock Option Agreement attached hereto
as Exhibit A.  Optionee hereby
acknowledges the receipt of a copy of the official prospectus for the Plan in
the form attached hereto as Exhibit B. 
A copy of the Plan is available upon request made to the Corporate
Secretary at the Corporation’s principal offices.


 





















 


Employment at Will. 
Nothing in this Notice or in the attached Stock Option Agreement or in
the Plan shall confer upon Optionee any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Optionee) or of Optionee, which rights are hereby expressly reserved
by each, to terminate Optionee’s Service at any time for any reason, with or
without cause.


Definitions. 
All capitalized terms in this Notice shall have the meaning assigned to
them in this Notice or in the attached Stock Option Agreement.


DATED:  <Grant Date>


 


 


	
  UNITED ONLINE, INC.

  
	
   

  
	
  By:

  	
   

  
	
   

  
	
  Name:

  
	
  Title:

  
	
   

  
	
  OPTIONEE

  
	
   

  
	
  Name:
  <Optionee>

  
	
   

  
	
  Signature:

  	
   

  
	
   

  
	
  Address:

  
			



 


 


 


ATTACHMENTS


Exhibit A - Stock Option
Agreement


Exhibit B — Plan Summary and
Prospectus


 





















 


EXHIBIT A


 


Discretionary
Option Grant Program


 


UNITED
ONLINE, INC.


2001
STOCK INCENTIVE PLAN


STOCK
OPTION AGREEMENT


 


                A.            The Board has adopted the Plan for the purpose of
retaining the services of selected Employees, non-employee members of the Board
(or the board of directors of any Parent or Subsidiary) and independent
contractors who provide services to the Corporation (or any Parent or
Subsidiary).


                B.            Optionee is to render valuable services to the
Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant
to, and is intended to carry out the purposes of, the Plan in connection with
the Corporation’s grant of an option to Optionee.


                C.            All capitalized terms in this Agreement shall have the
meaning assigned to them in the attached Appendix.


NOW,
THEREFORE, it is
hereby agreed as follows:


1.     Grant of Option.  The Corporation hereby grants to Optionee, as
of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice.  The
Option Shares shall be purchasable from time to time during the option term
specified in Paragraph 2 at the Exercise Price.


2.     Option Term.  This option shall expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.


3.     Limited Transferability.


(a)   Except
as otherwise provided in this Paragraph 3, this option shall be neither
transferable nor assignable by Optionee other than by will or the laws of
inheritance following Optionee’s death and may be exercised, during Optionee’s
lifetime, only by Optionee.  However,
Optionee may designate one or more persons as the beneficiary or beneficiaries
of this option, and this option shall, in accordance with such designation,
automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s
death while holding this option.  Such
beneficiary or beneficiaries shall take the transferred option subject to all
the terms and conditions of this Agreement, including (without limitation) the
limited time period during which this option may, pursuant to Paragraph 5, be
exercised following Optionee’s death.


(b)   If
this option is designated a Non-Statutory Option in the Grant Notice, then
(with the Plan Administrator’s consent) this option may be assigned in whole or
in part during Optionee’s lifetime to one or more members of Optionee’s family
or to a trust established for the exclusive benefit of one or more such family
members, to the extent such assignment is in connection with the Optionee’s
estate plan.  The assigned portion shall
be exercisable only by the person or persons who acquire a proprietary interest
in the option pursuant to such assignment. 
The terms applicable to the assigned portion shall be the same as those
in effect for this option immediately prior to such assignment.


4.     Dates of Exercise.  This option shall become exercisable for the
Option Shares in one or more installments as specified in the Grant
Notice.  As the option becomes
exercisable for such installments, those installments shall accumulate, and the
option shall remain exercisable for the


 





















 


accumulated installments until the close of business on the
Expiration Date or sooner termination of the option term under Paragraph 5 or
6.


5.     Cessation of Service.  The option term specified in Paragraph 2
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:


(a)   Should
Optionee cease to remain in Service for any reason (other than death, Permanent
Disability, Misconduct or Involuntary Termination following a Corporate
Transaction or Change in Control) while this option is outstanding, then this
option shall terminate upon the earlier of (i)
the expiration of the three (3) month period measured from the date of such
cessation of Service or (ii) the close of business on the Expiration Date.


(b)   Should
Optionee die while this option is outstanding, then the personal representative
of Optionee’s estate or the person or persons to whom the option is transferred
pursuant to Optionee’s will or the laws of inheritance shall have the right to
exercise this option.  However, if
Optionee has designated one or more beneficiaries of this option, then those
persons shall have the exclusive right to exercise this option following
Optionee’s death.  Any such right to
exercise this option shall lapse, and this option shall terminate, upon the earlier of (i) the expiration of the twelve (12)-month
period measured from the date of Optionee’s death or (ii) the close of business
on the Expiration Date.


(c)   Should
Optionee cease Service by reason of Permanent Disability while this option is
outstanding, then this option shall terminate upon the earlier
of (i) the expiration of the twelve (12) month period measured from the date of
such cessation of Service or (ii) the close of business on the Expiration Date.


(d)   Should
Optionee’s Service terminate by reason of an Involuntary Termination within
twelve (12) months following a Corporate Transaction or Change in Control while
this option is outstanding, then this option shall terminate upon the earlier of (i) the expiration of the twelve (12) month
period measured from the date of the Optionee’s Involuntary Termination or (ii)
the close of business on the Expiration Date.


(e)   During
the limited period of post-Service exercisability, this option may not be
exercised in the aggregate for more than the number of Option Shares for which
the option is exercisable at the time of Optionee’s cessation of Service.  Upon the expiration of such limited exercise
period or (if earlier) upon the Expiration Date, this option shall terminate
and cease to be outstanding for any exercisable Option Shares for which the
option has not been exercised.  However,
this option shall, immediately upon Optionee’s cessation of Service for any
reason, terminate and cease to be outstanding with respect to any Option Shares
for which this option is not otherwise at that time exercisable.


(f)    Should
Optionee’s Service be terminated for Misconduct or should Optionee otherwise
engage in any Misconduct while this option is outstanding, then this option
shall terminate immediately and cease to remain outstanding.


6.     Special
Acceleration of Option.


(a)   This option, to the extent outstanding at the
time of a Corporate Transaction but not otherwise fully exercisable, shall
automatically accelerate so that this option shall, immediately prior to the
effective date of such Corporate Transaction, become exercisable for all of the
Option Shares at the time subject to this option and may be exercised for any or
all of those Option Shares as fully vested shares of Common Stock.  No such acceleration of this option shall
occur, however, if and to the extent: (i) this option is, in connection
with the Corporate Transaction, to be assumed by the successor corporation (or
parent thereof) or (ii) this option is to be replaced with a cash incentive
program of the


 





















 


successor corporation which preserves the spread existing at
the time of the Corporate Transaction on the Option Shares for which this
option is not otherwise at that time exercisable (the excess of the Fair Market
Value of those Option Shares over the aggregate Exercise Price payable for such
shares) and provides for subsequent payout in accordance with the same option
exercise/vesting schedule set forth in the Grant Notice.


(b)   Immediately
following the Corporate Transaction, this option shall terminate and cease to
be outstanding, except to the extent assumed by the successor corporation (or
parent thereof) in connection with the Corporate Transaction.


(c)   If
this option is assumed in connection with a Corporate Transaction, then this
option shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to Optionee in consummation of such Corporate Transaction had the
option been exercised immediately prior to such Corporate Transaction, and
appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same.  To the extent the holders of Common Stock
receive cash consideration for their Common Stock in consummation of the
Corporate Transaction, with the Plan Administrator’s consent prior to the
consummation of the Corporate Transaction, the successor corporation may, in
connection with the assumption of this option, substitute one or more shares of
its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Corporate Transaction.


(d)   This
option shall continue, over Optionee’s period of Service following a Corporate
Transaction in which this option is assumed, to become exercisable for the
Option Shares in one or more installments in accordance with the provisions of
this Agreement and the Grant Notice. 
However, immediately upon an Involuntary Termination of Optionee’s
Service within twelve (12) months following the effective date of that
Corporate Transaction, this option, to the extent outstanding at the time but
not otherwise fully exercisable, shall automatically accelerate as to a part of
the Option Shares so that the total number of Option Shares for which this
option shall be exercisable, after taking such acceleration into account, shall
be equal to the greater of (i) the number of
Option Shares which Optionee could have, in accordance with the normal Exercise
Schedule (after taking into account any prior exercises), exercised this option
at the time of such Involuntary Termination had Optionee completed twice the
amount of Service actually completed by him or her at the time of such
Involuntary Termination (but in no event shall the number of Option Shares for
which this option becomes exercisable on such an accelerated basis exceed the
number of Option Shares for which this option would not have otherwise been
exercisable at the time of such Involuntary Termination in accordance with the
normal Exercise Schedule) or (ii) the number of Option Shares for which the
Option would have become exercisable under the normal Exercise Schedule had the
Optionee actually completed twelve (12) months of Service prior to his or her
Involuntary Termination.


(e)   This option shall not accelerate upon the
occurrence of a Change in Control, and this option shall accordingly, over
Optionee’s period of Service following such Change in Control, continue to
become exercisable for the Option Shares in one or more installments in
accordance with the provisions of this Agreement and the Grant Notice.  However, immediately upon an Involuntary
Termination of Optionee’s Service within twelve (12) months following that
Change in Control, this option, to the extent outstanding at the time but not
otherwise fully exercisable, shall automatically accelerate as to a part of the
Option Shares so that the total number of Option Shares for which this option
shall be exercisable, after taking such acceleration into account, shall be
equal to the greater of (i) the number of
Option Shares which Optionee could have, in accordance with the normal Exercise
Schedule (after taking into account any prior exercises), exercised this option
at the time of such Involuntary Termination had Optionee completed twice the
amount of Service actually completed by him or her at the time of such
Involuntary Termination (but in no event shall the number of Option Shares for
which this option becomes exercisable on such an accelerated basis exceed the
number of Option Shares for which


 





















 


this option would not have otherwise been exercisable at the
time of such Involuntary Termination in accordance with the normal Exercise
Schedule) or (ii) the number of Option Shares for which the Option would have
become exercisable under the normal Exercise Schedule had the Optionee actually
completed twelve (12) months of Service prior to his or her Involuntary
Termination.


(f)    This
Agreement shall not in any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.


7.     Adjustment
in Option Shares.  Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation’s receipt of
consideration, appropriate adjustments shall be made to (a) the total number
and/or class of securities subject to this option and (b) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.


8.     Stockholder Rights.  The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of
record of the purchased shares.


9.     Manner of Exercising Option.


(a)   In
order to exercise this option with respect to all or any part of the Option
Shares for which this option is at the time exercisable, Optionee (or any other
person or persons exercising the option) must take the following actions:


(i)            Execute and deliver to the
Corporation a Notice of Exercise (attached hereto as Exhibit I) for the Option
Shares for which the option is exercised.


(ii)           Pay the aggregate Exercise Price for
the purchased shares in one or more of the following forms:


(A)  cash or
check made payable to the Corporation;


(B)   a
promissory note payable to the Corporation, but only to the extent authorized
by the Plan Administrator in accordance with Paragraph 13;


(C)   shares of
Common Stock held by Optionee (or any other person or persons exercising the
option) for the requisite period necessary to avoid a charge to the
Corporation’s earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date; or


(D)  if the
option is exercised for vested shares, through a special sale and remittance
procedure pursuant to which Optionee (or any other person or persons exercising
the option) shall concurrently provide irrevocable instructions (1) to a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Exercise Price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation by reason of such exercise and (2) to the Corporation to
deliver


 





















 


the certificates for the purchased shares directly to such brokerage
firm in order to complete the sale.


Except to the extent the
sale and remittance procedure is utilized in connection with the option
exercise, payment of the Exercise Price must accompany the Notice of Exercise
delivered to the Corporation in connection with the option exercise.


(iii)          Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if other than
Optionee) have the right to exercise this option.


(iv)          Make appropriate arrangements with the
Corporation (or Parent or Subsidiary employing or retaining Optionee) for the
satisfaction of all Federal, state and local income and employment tax
withholding requirements applicable to the option exercise.


(b)   As
soon as practical after the Exercise Date, the Corporation shall issue to or on
behalf of Optionee (or any other person or persons exercising this option) the
purchased Option Shares, with the appropriate legends affixed thereto.


(c)   In
no event may this option be exercised for any fractional shares.


10.   Compliance
with Laws and Regulations.


(a)   The
exercise of this option and the issuance of the Option Shares upon such
exercise shall be subject to compliance by the Corporation and Optionee with
all applicable requirements of law relating thereto and with all applicable
regulations of any applicable Stock Exchange or the Nasdaq Stock Market on
which the Common Stock may be listed for trading at the time of such exercise
and issuance.


(b)   The
inability of the Corporation to obtain approval from any regulatory body having
authority deemed by the Corporation to be necessary to the lawful issuance and
sale of any Common Stock pursuant to this option shall relieve the Corporation
of any liability with respect to the non-issuance or sale of the Common Stock
as to which such approval shall not have been obtained.


11.   Successors and Assigns.  Except to the extent otherwise provided in
Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of
Optionee’s estate and any beneficiaries of this option designated by Optionee.


12.   Notices.  Any notice required to be given or delivered
to the Corporation under the terms of this Agreement shall be in writing and
addressed to the Corporation at its principal corporate offices.  Any notice required to be given or delivered
to Optionee shall be in writing and addressed to Optionee at the address
indicated on the Corporation’s records. 
All notices shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, postage prepaid and properly addressed to the party
to be notified.


13.   Financing.  The Plan Administrator may, in its absolute
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a full-recourse
promissory note payable to the Corporation. 
The terms of any such promissory note (including the interest rate, the
requirements for collateral and the terms of repayment) shall be established by
the Plan Administrator in its sole discretion.


 





















 


14.   Construction.  This Agreement and the option evidenced
hereby are made and granted pursuant to the Plan and are in all respects
limited by and subject to the terms of the Plan.  All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.


 


15.   Governing Law.  The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Delaware without resort to that State’s conflict-of-laws rules.


16.   Excess Shares.  If the Option Shares covered by this
Agreement exceed, as of the Grant Date, the number of shares of Common Stock
which may without stockholder approval be issued under the Plan, then this
option shall be void with respect to those excess shares, unless stockholder
approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of
the Plan.


17.   Additional Terms Applicable to an Incentive Option.  In the event this option is designated an
Incentive Option in the Grant Notice, the following terms and conditions shall
also apply to the grant:


(a)   This
option shall cease to qualify for favorable tax treatment as an Incentive
Option if (and to the extent) this option is exercised for one or more Option
Shares: (A) more than three (3) months after the date Optionee ceases to be an
Employee for any reason other than death or Permanent Disability or (B) more
than twelve (12) months after the date Optionee ceases to be an Employee by
reason of Permanent Disability.


(b)   No
installment under this option shall qualify for favorable tax treatment as an
Incentive Option if (and to the extent) the aggregate Fair Market Value
(determined at the Grant Date) of the Common Stock for which such installment
first becomes exercisable hereunder would, when added to the aggregate value
(determined as of the respective date or dates of grant) of the Common Stock or
other securities for which this option or any other Incentive Options granted
to Optionee prior to the Grant Date (whether under the Plan or any other option
plan of the Corporation or any Parent or Subsidiary) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars ($100,000)
in the aggregate.  Should such One
Hundred Thousand Dollar ($100,000) limitation be exceeded in any calendar year,
this option shall nevertheless become exercisable for the excess shares in such
calendar year as a Non-Statutory Option.


(c)   Should
the exercisability of this option be accelerated pursuant to the provisions of
Paragraph 6 of this Agreement, then this option shall qualify for favorable tax
treatment as an Incentive Option only to the extent the aggregate Fair Market
Value (determined at the Grant Date) of the Common Stock for which this option
first becomes exercisable in the calendar year in which such acceleration
occurs does not, when added to the aggregate value (determined as of the
respective date or dates of grant) of the Common Stock or other securities for
which this option or one or more other Incentive Options granted to Optionee
prior to the Grant Date (whether under the Plan or any other option plan of the
Corporation or any Parent or Subsidiary) first become exercisable during the
same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the
aggregate.  Should the applicable One
Hundred Thousand Dollar ($100,000) limitation be exceeded in the calendar year
of such acceleration, the option may nevertheless be exercised for the excess
shares in such calendar year as a Non-Statutory Option.


(d)   Should Optionee hold, in addition to this
option, one or more other options to purchase Common Stock which become
exercisable for the first time in the same calendar year as this option, then
the foregoing limitations on the exercisability of such options as Incentive
Options shall be applied on the basis of the order in which such options are
granted.


 





















 


EXHIBIT I


NOTICE OF
EXERCISE


 


FOR
EXERCISES EXECUTED THROUGH THE CORPORATION’S STOCK PLAN ADMINISTRATOR, PLEASE
SEE INSTRUCTIONS AND FORMS POSTED ON SUCH ADMINISTRATOR’S WEBSITE


 


 


I
hereby notify United Online, Inc. (the “Corporation”) that I elect to purchase                     
shares of the Corporation’s Common Stock (the “Purchased Shares”) at the option
exercise price of $                     
per share (the “Exercise Price”) pursuant to that certain option (the “Option”)
granted to me under the United Online, Inc. 2001 Stock Incentive Plan on                     ,
            .


Concurrently
with the delivery of this Exercise Notice to the Corporation, I shall hereby
pay to the Corporation the Exercise Price for the Purchased Shares in
accordance with the provisions of my agreement with the Corporation (or other
documents) evidencing the Option and shall deliver whatever additional
documents may be required by such agreement as a condition for exercise.  Alternatively, I may utilize the special
broker-dealer sale and remittance procedure specified in my agreement to effect
payment of the Exercise Price.


 


	
   

  	
  ,

  	
   

  



Date


 


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Optionee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print name in exact
  manner it is to appear on the stock certificate:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address to which
  certificate is to be sent, if different from address above:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Social Security Number:

  	
   

  	
   

  



 





















 


APPENDIX


 


The
following definitions shall be in effect under the Agreement:


A.    Agreement
shall mean this Stock Option Agreement.


B.    Board
shall mean the Corporation’s Board of Directors.


C.    Change in
Control shall mean the event of a change in ownership or control
of the Corporation effected through either of the following transactions:


(i)            the
acquisition, 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) of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934, as amended) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation’s outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation’s stockholders, or


(ii)           a
change 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, by
reason of one or more contested elections for Board membership, to be comprised
of individuals who either (i) have been Board members continuously since the
beginning of such period or (ii) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (i) who were still in office at the time the Board approved
such election or nomination.


D.    Code
shall mean the Internal Revenue Code of 1986, as amended.


E.     Common
Stock shall mean shares of the Corporation’s common stock.


F.     Corporate
Transaction shall mean either of the following stockholder
approved transactions to which the Corporation is a party:


(i)            a merger, consolidation or
reorganization approved by the Corporation’s stockholders, unless
securities representing more than fifty percent (50%) of the total combined
voting power of the voting securities of the successor corporation are
immediately thereafter beneficially owned, directly or indirectly and in substantially
the same proportion, by the persons who beneficially owned the Corporation’s
outstanding voting securities immediately prior to such transaction, or


(ii)           any stockholder-approved transfer or
other disposition of all or substantially all of the Corporation’s assets.


G.    Corporation
shall mean United Online, Inc., a Delaware corporation, and any successor
corporation to all or substantially all of the assets or voting stock of United
Online, Inc. which has assumed the Plan.


H.    Employee shall mean an
individual who is in the employ of the Corporation (or any Parent or
Subsidiary), subject to the control and direction of the employer entity as to
both the work to be performed and the manner and method of performance.


 


A-1





















 


I.      Exercise
Date shall mean the date on which the option shall have been
exercised in accordance with Paragraph 9 of the Agreement.


J.     Exercise
Price shall mean the exercise price per Option Share as
specified in the Grant Notice.


K.    Exercise
Schedule shall mean the installment schedule specified in the
Grant Notice pursuant to which the option is to become exercisable for the
Option Shares in a series of installments over Optionee’s period of Service.


L.     Expiration
Date shall mean the date on which the option expires as
specified in the Grant Notice.


M.   Fair
Market Value per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:


(i)            If
the Common Stock is at the time traded on the Nasdaq Stock Market, then the
Fair Market Value shall be deemed equal to the closing selling price per share
of Common Stock on the date in question, as the price is reported by the
National Association of Securities Dealers on the Nasdaq Stock Market. If there
is no closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last preceding
date for which such quotation exists, or


(ii)           If
the Common Stock is at the time listed on any Stock Exchange, then the Fair
Market Value shall be deemed equal to the closing selling price per share of
Common Stock on the date in question on the Stock Exchange determined by the
Plan Administrator to be the primary market for the Common Stock, as such price
is officially quoted in the composite tape of transactions on such
exchange.  If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which such
quotation exists.


N.    Grant
Date shall mean the date of grant of the option as specified in
the Grant Notice.


O.    Grant
Notice shall mean the Notice of Grant of Stock Option or the
Certificate of Stock Option Grant accompanying the Agreement or posted on a
website maintained by the Corporation’s stock plan administrator containing the
terms authorized by the Corporation, pursuant to which Optionee has been
informed of the basic terms of the option evidenced hereby.


P.     Incentive
Option shall mean an option which satisfies the requirements of
Code Section 422.


Q.    Involuntary
Termination shall mean the termination of Optionee’s Service by
reason of:


        (i)    Optionee’s involuntary dismissal or discharge by the Corporation
(or any Parent or Subsidiary) for reasons other than Misconduct, or


        (ii)   Optionee’s
voluntary resignation following (A) a material reduction in the scope of his or
her day-to-day responsibilities for the Corporation (or any Parent or
Subsidiary), it being understood that a change in Optionee’s title shall not,
in and of itself, be deemed a material reduction, (B) a reduction in Optionee’s
base salary or (C) a relocation of Optionee’s place of employment by more than
fifty (50)


 


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miles, provided and only if such change, reduction or
relocation is effected by the Corporation (or any Parent or Subsidiary) without
Optionee’s consent.


R.    Misconduct
shall mean the commission of any act of fraud, embezzlement or dishonesty by
Optionee, any unauthorized use or disclosure by Optionee of confidential
information or trade secrets of the Corporation (or any Parent or Subsidiary),
or any other intentional misconduct by Optionee adversely affecting the
business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner.  The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions
which the Corporation (or any Parent or Subsidiary) may consider as grounds for
the dismissal or discharge of Optionee or any other individual in the Service
of the Corporation (or any Parent or Subsidiary).


S.     Non-Statutory
Option shall mean an option not intended to satisfy the
requirements of Code Section 422.


T.    Notice of
Exercise shall mean the notice of exercise in the form attached
hereto as Exhibit I.


U.    Option
Shares shall mean the number of shares of Common Stock subject
to the Option as specified in the Grant Notice; provided, however, that the
Grant Notice may include only a portion of Option Shares subject to the Option
if such Option has been split between an Incentive Option and a Non-Statutory
Option.


V.    Optionee
shall mean the person to whom the option is granted as specified in the Grant
Notice.


W.   Parent
shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.


X.    Permanent
Disability shall mean the inability of Optionee to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or has lasted or
can be expected to last for a continuous period of twelve (12) months or more.


Y.    Plan
shall mean the United Online, Inc. 2001 Stock Incentive Plan.


Z.    Plan
Administrator shall mean either the Board or a committee of the
Board acting in its capacity as administrator of the Plan.


AA.  Service
shall mean the Optionee’s performance of services for the Corporation (or any
Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the
board of directors or an independent contractor.


BB.  Stock
Exchange shall mean the American Stock Exchange or the New York
Stock Exchange.


CC.  Subsidiary
shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each corporation (other
than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.


 


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EXHIBIT
B


PLAN
SUMMARY AND PROSPECTUS