Exhibit 10.4


 


UNITED ONLINE, INC.


 


RESTRICTED STOCK UNIT ISSUANCE AGREEMENT


 


RECITALS


 


A.            The
Board has adopted the Plan for the purpose of retaining the services of
selected Employees and consultants and other independent advisors who provide
services to the Corporation (or any Parent or Subsidiary).


 


B.            Participant
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 issuance of shares
of Common Stock to the Participant under the Stock Issuance Program.


 


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


 


NOW, THEREFORE,
it is hereby agreed as follows:


 


1.     Grant of
Restricted Stock Units. 
The Corporation hereby awards to the Participant, as of the Award Date,
Restricted Stock Units under the Plan. Each Restricted Stock Unit represents
the right to receive one share of Common Stock on the vesting date of that
unit. The number of shares of Common Stock subject to the awarded Restricted
Stock Units, the applicable vesting schedule for those shares, the dates
on which those vested shares shall become issuable to Participant and the
remaining terms and conditions governing the award (the “Award”) shall be as
set forth in this Agreement.


 


AWARD
SUMMARY


 


	
  Award Date:

  	
   

  	
                                          ,
  200

  
	
   

  	
   

  	
   

  
	
  Number of Shares
  Subject to Award:

  	
   

  	
                          
  shares of Common Stock (the “Shares”)

  
	
   

  	
   

  	
   

  
	
  Vesting
  Schedule:

  	
   

  	
  The Shares shall
  vest in a series of one or more installments as follows:                                                   .
  However, one or more Shares may be subject to accelerated vesting in
  accordance with the provisions of Paragraph 5 [ALTERNATIVE: Paragraphs 4 and
  6] of this Agreement.

  
	
   

  	
   

  	
   

  
	
  Issuance
  Schedule

  	
   

  	
  The Shares in
  which the Participant vests in accordance with the foregoing Vesting Schedule will
  be issuable immediately upon vesting, subject to the Corporation’s collection
  of the applicable Withholding Taxes. The procedures pursuant to which the
  applicable Withholding Taxes are to be collected are set forth in Paragraph 8
  of this Agreement.

  



 


2.     Limited
Transferability.  Prior to
actual receipt of the Shares which vest hereunder, the Participant may not
transfer any interest in the Award or the underlying Shares. Any Shares which
vest hereunder but which otherwise remain unissued at the time of the
Participant’s death may be transferred pursuant to the provisions of the
Participant’s will or the laws of inheritance or to the Participant’s
designated beneficiary or beneficiaries of this Award. The Participant may also
direct the


 





















 


Corporation
to issue the stock certificates for any Shares which in fact vest and become
issuable under the Award during his or her lifetime to one or more designated
family members or a trust established for the Participant and/or his or her
family members. The Participant may make such a beneficiary designation or
certificate directive at any time by filing the appropriate form with the Plan
Administrator or its designee.


 


3.     Cessation of
Service.  Except as
otherwise provided in Paragraph 5 [ALTERNATIVE: Paragraphs 4 and 6] below,
should the Participant cease Service for any reason prior to vesting in one or
more Shares subject to this Award, then the Award will be immediately cancelled
with respect to those unvested Shares, and the number of Restricted Stock Units
will be reduced accordingly.  The
Participant shall thereupon cease to have any right or entitlement to receive
any Shares under those cancelled units.


 


ALTERNATIVE 1 (Paragraphs 4-8):


 


4.     Stockholder Rights and Dividend Equivalents


 


(a)           The holder of this
Award shall not have any stockholder rights, including voting or dividend
rights, with respect to the Shares subject to the Award until the Participant
becomes the record holder of those Shares following their actual issuance upon
the Corporation’s collection of the applicable Withholding Taxes.


 


(b)           Notwithstanding the
foregoing, should any dividend or other distribution, whether regular or
extraordinary and whether payable in cash, shares of Common Stock or other
property, be declared and paid on the outstanding Common Stock while one or
more Shares remain subject to this Award (i.e., those Shares are not otherwise
issued and outstanding for purposes of entitlement to the dividend or
distribution), then the following provisions shall govern the Participant’s
interest in that dividend or distribution:


 


(i)            If the dividend is a
regularly-scheduled cash dividend on the Common Stock, then the Participant
shall be entitled to a current cash distribution from the Corporation equal to
the cash dividend the Participant would have received with respect to the
Shares at the time subject to this Award had those Shares actually been issued
and outstanding and entitled to that cash dividend. Each cash dividend
equivalent payment under this subparagraph (i) shall be paid within five (5) business
day following the payment of the actual cash dividend on the outstanding Common
Stock, subject to the Corporation’s collection of all applicable federal, state
and local income and employment withholding taxes.


 


(ii)           For any other dividend
or distribution, a special book account shall be established for the
Participant and credited with a phantom dividend equivalent to the actual
dividend or distribution which would have been paid on the Shares at the time
subject to this Award had they been issued and outstanding and entitled to that
dividend or distribution.  As the Shares
subsequently vest hereunder, the phantom dividend equivalents so credited to
those Shares in the book account shall be distributed to the Participant (in
the same form the actual dividend or distribution was paid to the holders of
the Common Stock entitled to that dividend or distribution) concurrently with
the issuance of the vested Shares to which those phantom dividend equivalents
relate.  However, each such distribution
shall be subject to the Corporation’s collection of the Withholding Taxes
applicable to that distribution.


 


5.     Change of Control.


 


(a)           Any Restricted Stock
Units subject to this Award at the time of a Change in Control may be assumed
by the successor entity or otherwise continued in full force and effect or may


 


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be
replaced with a cash incentive program of the successor entity which preserves
the Fair Market Value of the unvested shares of Common Stock subject to the
Award at the time of the Change in Control and provides for subsequent payout
of that value in accordance with the vesting schedule applicable to the
Award. In the event of such assumption or continuation of the Award or such
replacement of the Award with a cash incentive program, no accelerated vesting
of the Restricted Stock Units shall occur at the time of the Change in Control.


 


(b)           In the event the Award
is assumed or otherwise continued in effect, the Restricted Stock Units subject
to the Award shall be adjusted immediately after the consummation of the Change
in Control so as to apply to the number and class of securities into which the
Shares subject to those units immediately prior to the Change in Control would
have been converted in consummation of that Change in Control had those Shares
actually been issued and outstanding at that time.  To the extent the actual holders of the
outstanding Common Stock receive cash consideration for their Common Stock in
consummation of the Change in Control, the successor corporation (or parent
entity) may, in connection with the assumption or continuation of the
Restricted Stock Units subject to the Award at that time, 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 the Change in Control
transaction, provided the substituted common stock is readily tradable on an
established U.S. securities exchange or market.


 


(c)           Any Restricted Stock
Units which are assumed or otherwise continued in effect in connection with a
Change in Control or replaced with a cash incentive program under Paragraph 5(a) shall
be subject to accelerated vesting in accordance with the following provisions:


 


If an
Involuntary Termination of the Participant’s Service occurs within twelve (12)
months after the Change in Control event, then the Participant shall
immediately vest in an additional number of Shares equal to the greater of (i) twenty-five
percent (25%) of the total number of Shares subject to the Award or (ii) the
additional number of Shares in which the Participant would have been vested at
the time of such Involuntary Termination had he or she completed an additional
period of Service equal in duration to the actual period of Service completed
by the Participant between February 15, 2005 and the date of such
Involuntary Termination.  In no event,
however, shall the number of Shares which vest on such an accelerated basis
exceed the number of Shares unvested immediately prior to the date of the
Participant’s Involuntary Termination.


 


(d)           If the Restricted Stock
Units subject to this Award at the time of the Change in Control are not
assumed or otherwise continued in effect or replaced with a cash incentive
program in accordance with Paragraph 5(a), then those units will vest immediately
prior to the closing of the Change in Control. 
The Shares subject to those vested units will be issued immediately upon
such vesting (or otherwise converted into the right to receive the same
consideration per share of Common Stock payable to the other stockholders of
the Corporation in consummation of that Change in Control), subject to the
Corporation’s collection of the applicable Withholding Taxes pursuant to the
provisions of Paragraph 7.


 


(e)           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.


 


6.     Adjustment in
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 the total
number and/or class of securities


 


3





















 


issuable pursuant to this Award in order to reflect
such change and thereby preclude a dilution or enlargement of benefits
hereunder.


 


7.     Issuance of
Shares of Common Stock.


 


(a)           As soon as
administratively practicable following each date one or more Shares vest in
accordance with the provisions of this Agreement, the Corporation shall issue
to or on behalf of the Participant a certificate (which may be in electronic
form) for the shares of Common Stock which vest on that date under the Award
and shall concurrently distribute to the Participant any phantom dividend
equivalents with respect to those Shares, subject in each instance to the
Corporation’s collection of the applicable Withholding Taxes. The Corporation
shall collect the Withholding Taxes with respect to the distributed phantom
dividend equivalents by withholding a portion of that distribution equal to the
amount of the applicable Withholding Taxes, with the cash portion of the
distribution to be the first portion so withheld.  Until such time as the Corporation provides
the Participant with notice to the contrary, the Corporation shall collect the
Withholding Taxes with respect to the vested Shares through an automatic Share
withholding procedure pursuant to which the Corporation will withhold,
immediately as the Shares vest under the Award, a portion of those vested
Shares with a Fair Market Value (measured as of the vesting date) equal to the
amount of such Withholding Taxes (the “Share Withholding Method”); provided, however, that the amount of any Shares so
withheld shall not exceed the amount necessary to satisfy the Corporation’s
required tax withholding obligations using the minimum statutory withholding
rates for federal and state tax purposes, including payroll taxes, that are
applicable to supplemental taxable income. Participant shall be notified in
writing in the event such Share Withholding Method is no longer available.


 


(b)           Should any Shares vest
under the Award at time the Share Withholding Method is not available, then the
Withholding Taxes shall be collected from the Participant through either of the
following alternatives:


 


•        the Participant’s delivery
of his or her separate check payable to the Corporation in the amount of such
Withholding Taxes, or


 


•        the use of the proceeds
from a next-day sale of the Shares issued to the Participant, provided and only
if (i) such a sale is permissible under the Corporation’s trading policies
governing the sale of Common Stock, (ii) the Participant makes an
irrevocable commitment, on or before the vesting date for those Shares, to
effect such sale of the Shares and (iii) the transaction is not otherwise
deemed to constitute a prohibited loan under Section 402 of the
Sarbanes-Oxley Act of 2002.


 


(c)           Except as
otherwise provided in Paragraph 5 or Paragraph 7(a), the settlement of all
Restricted Stock Units which vest under the Award shall be made solely in shares
of Common Stock.  In no event, however,
shall any fractional shares be issued. 
Accordingly, the total number of shares of Common Stock to be issued at
the time the Award vests shall, to the extent necessary, be rounded down to the
next whole share in order to avoid the issuance of a fractional share.


 


8.     (Intentionally
Omitted)


 


ALTERNATIVE 2 (Paragraphs 4-8):


 


4.     Accelerated Vesting.  The following special vesting acceleration
provisions shall be in effect for the Award and shall be in addition to the vesting
acceleration provisions of Paragraph 6(c) of this Agreement:


 


4





















 


(a)           Should the Participant’s
Service terminate by reason of death or permanent disability, then all the
Shares at the time subject to this Award shall immediately vest.


 


(b)           Should the Participant’s
Service be terminated by the Corporation (or any Parent or Subsidiary) other
than for Cause under circumstances which would not otherwise trigger the
vesting acceleration provisions of Paragraph 6(c), then the Participant shall
immediately vest in the additional number of Shares in which the Participant
would have been vested at the time of such termination if (i) the
Participant had completed an additional twelve (12) months of Service and (ii) the
Shares subject to this Award had vested in successive equal monthly
installments over the duration of the Vesting Schedule.


 


ALTERNATIVE:


 


(b)           Should the Participant’s
Service be terminated at any time by the Corporation (or any Parent or
Subsidiary) other than for Cause, then all the Shares at the time subject to
this Award shall immediately vest.


 


5.     Stockholder Rights and Dividend Equivalents


 


(a)           The holder of this
Award shall not have any stockholder rights, including voting or dividend
rights, with respect to the Shares subject to the Award until the Participant
becomes the record holder of those Shares following their actual issuance upon
the Corporation’s collection of the applicable Withholding Taxes.


 


(b)           Notwithstanding the
foregoing, should any dividend or other distribution, whether regular or
extraordinary and whether payable in cash, shares of Common Stock or other
property, be declared and paid on the outstanding Common Stock while one or
more Shares remain subject to this Award (i.e., those Shares are not otherwise
issued and outstanding for purposes of entitlement to the dividend or
distribution), then the following provisions shall govern the Participant’s
interest in that dividend or distribution:


 


(i)            If the dividend is a
regularly-scheduled cash dividend on the Common Stock, then the Participant
shall be entitled to a current cash distribution from the Corporation equal to
the cash dividend the Participant would have received with respect to the
Shares at the time subject to this Award had those Shares actually been issued
and outstanding and entitled to that cash dividend. Each cash dividend
equivalent payment under this subparagraph (i) shall be paid within five (5) business
day following the payment of the actual cash dividend on the outstanding Common
Stock, subject to the Corporation’s collection of all applicable federal, state
and local income and employment withholding taxes.


 


(ii)           For any other dividend
or distribution, a special book account shall be established for the Participant
and credited with a phantom dividend equivalent to the actual dividend or
distribution which would have been paid on the Shares at the time subject to
this Award had they been issued and outstanding and entitled to that dividend
or distribution.  As the Shares
subsequently vest hereunder, the phantom dividend equivalents so credited to
those Shares in the book account shall be distributed to the Participant (in
the same form the actual dividend or distribution was paid to the holders of
the Common Stock entitled to that dividend or distribution) concurrently with
the issuance of the vested Shares to which those phantom dividend equivalents
relate.  However, each such distribution
shall be subject to the Corporation’s collection of the Withholding Taxes
applicable to that distribution.


 


5





















 


6.     Change of Control.


 


(a)           Any Restricted Stock
Units subject to this Award at the time of a Change in Control may be assumed
by the successor entity or otherwise continued in full force and effect or may
be replaced with a cash incentive program of the successor entity which
preserves the Fair Market Value of the unvested shares of Common Stock subject
to the Award at the time of the Change in Control and provides for subsequent
payout of that value in accordance with the vesting schedule applicable to
the Award. In the event of such assumption or continuation of the Award or such
replacement of the Award with a cash incentive program, no accelerated vesting
of the Restricted Stock Units shall occur at the time of the Change in Control.


 


(b)           If the Award is assumed
or otherwise continued in effect, the Restricted Stock Units subject to the
Award shall be adjusted immediately after the consummation of the Change in
Control so as to apply to the number and class of securities into which the
Shares subject to those units immediately prior to the Change in Control would
have been converted in consummation of that Change in Control had those Shares
actually been issued and outstanding at that time.  To the extent the actual holders of the
outstanding Common Stock receive cash consideration for their Common Stock in
consummation of the Change in Control, the successor corporation (or parent entity)
may, in connection with the assumption or continuation of the Restricted Stock
Units subject to the Award at that time and with the Participant’s prior
written consent, 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 the Change in Control transaction, provided the substituted common
stock is readily tradable on an established U.S. securities exchange or market.


 


(c)           Any Restricted Stock
Units which are assumed or otherwise continued in effect in connection with a
Change in Control or replaced with a cash incentive program in accordance with
Paragraph 6(a) shall be subject to accelerated vesting in accordance with
the following provision:


 


Should
the Participant’s Service be Involuntarily Terminated in connection with or
following the Change in Control event, then the Participant shall immediately
vest in all of the unvested Shares at the time subject to the Award.


 


(d)           If the Restricted Stock
Units subject to this Award at the time of the Change in Control are not
assumed or otherwise continued in effect or replaced with a cash incentive
program in accordance with Paragraph 6(a), then those units will vest
immediately prior to the closing of the Change in Control.  The Shares subject to those vested units will
be issued immediately upon such vesting (or otherwise converted into the right
to receive the same consideration per share of Common Stock payable to the
other stockholders of the Corporation in consummation of that Change in
Control), subject to the Corporation’s collection of the applicable Withholding
Taxes pursuant to the provisions of Paragraph 8.


 


(e)           Should the accelerated
vesting of the Shares pursuant to the provisions of this Paragraph 6 result in
a parachute payment under Code Section 280G, then the Participant shall be
entitled to the Code Section 4999 tax gross-up payment provided under his
Employment Agreement, whether or not that Employment Agreement with such
gross-up payment provision is in effect at the time of such accelerated
vesting.  Accordingly, the Code Section 4999
tax gross-up payment provisions of the Participant’s Employment Agreement are
hereby incorporated by reference into this Agreement and shall form part of the
terms and provisions of this Agreement as if expressly set forth herein.


 


6





















 


(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
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 the total
number and/or class of securities issuable pursuant to this Award in order to
reflect such change and thereby preclude a dilution or enlargement of benefits
hereunder.


 


8.     Issuance of
Shares of Common Stock.


 


(a)           As soon as
administratively practicable following each date one or more Shares vest in
accordance with the provisions of this Agreement, the Corporation shall issue
to or on behalf of the Participant a certificate (which may be in electronic
form) for the shares of Common Stock which vest on that date under the Award
and shall concurrently distribute to the Participant any phantom dividend
equivalents with respect to those Shares, subject in each instance to the
Corporation’s collection of the applicable Withholding Taxes. The Corporation
shall collect the Withholding Taxes with respect to the distributed phantom dividend
equivalents by withholding a portion of that distribution equal to the amount
of the applicable Withholding Taxes, with the cash portion of the distribution
to be the first portion so withheld. 
Until such time as the Corporation provides the Participant with notice
to the contrary, the Corporation shall collect the Withholding Taxes with
respect to the vested Shares through an automatic Share withholding procedure
pursuant to which the Corporation will withhold, immediately as the Shares vest
under the Award, a portion of those vested Shares with a Fair Market Value
(measured as of the vesting date) equal to the amount of such Withholding Taxes
(the “Share Withholding Method”); provided, however,
that the amount of any Shares so withheld shall not exceed the amount necessary
to satisfy the Corporation’s required tax withholding obligations using the
minimum statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to supplemental taxable income.
Participant shall be notified in writing in the event such Share Withholding
Method is no longer available.


 


(b)           Should any Shares vest
under the Award at time the Share Withholding Method is not available, then the
Withholding Taxes shall be collected from the Participant through either of the
following alternatives:


 


•              the
Participant’s delivery of his or her separate check payable to the Corporation
in the amount of such Withholding Taxes, or


 


•              the
use of the proceeds from a next-day sale of the Shares issued to the
Participant, provided and only if (i) such a sale is permissible under the
Corporation’s trading policies governing the sale of Common Stock, (ii) the
Participant makes an irrevocable commitment, on or before the vesting date for
those Shares, to effect such sale of the Shares and (iii) the transaction
is not otherwise deemed to constitute a prohibited loan under Section 402
of the Sarbanes-Oxley Act of 2002.


 


(c)           Except as
otherwise provided in Paragraph 6 and Paragraph 8(a), the settlement of all
Restricted Stock Units which vest under the Award shall be made solely in
shares of Common Stock.  In no event,
however, shall any fractional shares be issued. 
Accordingly, the total number of shares of Common Stock to be issued at
the time the Award vests shall, to the extent necessary, be rounded down to the
next whole share in order to avoid the issuance of a fractional share.


 


7





















 


9.     Compliance with
Laws and Regulations. The issuance of shares of Common Stock
pursuant to the Award shall be subject to compliance by the Corporation and
Participant with all applicable requirements of law relating thereto and with
all applicable regulations of any stock exchange (or the Nasdaq National
Market, if applicable) on which the Common Stock may be listed for trading at
the time of such issuance.


 


10.   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 Participant shall be in writing and addressed to Participant at the address
indicated below Participant’s signature line on this Agreement.  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.


 


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


 


12.   Construction.  This Agreement and the Award 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 the Award.


 


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


 


IN WITNESS WHEREOF, the
parties have executed this Agreement on the day and year first indicated above.


 


	
   

  	
  UNITED ONLINE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  PARTICIPANT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


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APPENDIX A


 


DEFINITIONS


 


The following definitions
shall be in effect under the Agreement:


 


A.    Agreement
shall mean this Restricted Stock Unit Issuance Agreement.


 


B.    Award
shall mean the award of restricted stock units made to the Participant pursuant
to the terms of this Agreement.


 


C.    Award Date
shall mean the date the restricted stock units are awarded to Participant
pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the
Agreement.


 


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


 


E.     Cause  shall have the meaning
assigned to such term in the Employment Agreement.


 


F.     Change in Control
shall mean a change in ownership or control of the Corporation effected through
any of the following transactions:


 


(i)            a
merger or consolidation approved by the Corporation’s stockholders, unless
securities possessing 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
substantially in the same proportion, by the persons who beneficially owned the
Corporation’s outstanding voting securities immediately prior to such
transaction,


 


(ii)           the
sale, transfer or other disposition of all or substantially all of the
Corporation’s assets approved by the Corporation’s stockholders,


 


(iii)          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 1934
Act) 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


 


(iv)          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 (A) have been Board members continuously since
the beginning of such period or (B) 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 (A) who were still in office at the time
the Board approved such election or nomination.


 


A-1





















 


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


 


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


 


I.      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 shall by appropriate action adopt the Plan.


 


J.     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.


 


K.    Employment Agreement  shall mean the
Amended and Restated Employment Agreement between the Participant and the
Corporation dated as of January 27, 2004 and as in effect on the date of
the Award. 


 


L.     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 National Market, then the
Fair Market Value shall be the closing selling price per share of Common Stock,
as such price is reported by the National Association of Securities Dealers. 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.


 


(ii)           If
the Common Stock is at the time listed on any Stock Exchange, then the Fair
Market Value shall be 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.


 


M.   Involuntarily Terminated  shall have
the meaning assigned to that term in the Employment Agreement.


 


N.            1934 Act shall mean the Securities
Exchange Act of 1934, as amended from time to time.


 


O.    Participant
shall mean the person to whom the Award is made pursuant to the Agreement.


 


P.     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.


 


A-2





















 


Q.    Plan
shall mean the Corporation’s 2001 Stock Incentive Plan, as amended and
restated.


 


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


 


S.     Service
shall mean the Participant’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 a consultant or independent advisor. For purposes
of this Agreement, Participant shall be deemed to cease Service immediately
upon the occurrence of the either of the following events: (i) Participant
no longer performs services in any of the foregoing capacities for the
Corporation (or any Parent or Subsidiary) or (ii) the entity for which
Participant performs such services ceases to remain a Parent or Subsidiary of
the Corporation, even though Participant may subsequently continue to perform
services for that entity. Service shall not be deemed to cease during a period
of military leave, sick leave or other personal leave approved by the
Corporation; provided, however, that
except to the extent otherwise required by law or expressly authorized by the
Plan Administrator, no Service credit shall be given for vesting purposes for
any period the Participant is on a leave of absence.


 


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


 


U.    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.


 


V.    Withholding Taxes
shall mean the federal, state and local income taxes and the employee portion
of the federal, state and local employment taxes required to be withheld by the
Corporation in connection with the issuance of the shares of Common Stock which
vest under of the Award and any phantom dividend equivalents distributed with
respect to those shares.


 


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