Document:

Exhibit 10.11

AMENDED
AND RESTATED

UNITED
ONLINE, INC.

SEVERANCE
BENEFIT PLAN

AND

SUMMARY
PLAN DESCRIPTION

 

 

 

 

Term of Plan:  January 1, 2007 — January 1, 2010

 

UNITED
ONLINE, INC. SEVERANCE BENEFIT PLAN

AND

SUMMARY PLAN DESCRIPTION

I.              INTRODUCTION

United Online, Inc. (the “Company”)
grants severance pay to terminated full-time employees only under limited
circumstances.  The Company retains the
right to amend, modify or terminate its severance pay policy at any time, in
whole or part, and to determine employee eligibility for severance pay and the
amount of severance pay at its sole discretion; provided, however, that this
Plan may not be amended, modified or terminated within eighteen (18) months
following the consummation of a Transaction (as defined below) with respect to
eligible employees as of the Closing of a Transaction.

This Plan shall only
apply to United Online, Inc., NetZero, Inc., Juno Online Services, Inc., Juno
Internet Services, Inc., United Online Web Services, Inc., United Online
Advertising Network, Inc., United Online Communications, Inc., Classmates
Online, Inc., Classmates Media, Inc., Classmates International, Inc., and
MyPoints.com, Inc.  It shall not apply to
any other subsidiary, parent or affiliated company unless the Chief Executive
Officer of United Online, Inc. so extends the application of this Plan in a
written addendum hereto.   This Plan
shall not apply to any covered subsidiary, including NetZero, Inc., Juno Online
Services, Inc., Juno Internet Services, Inc., United Online Web
Services, Inc., United Online Advertising Network, Inc., United Online
Communications, Inc., Classmates Online, Inc., Classmates Media, Inc.,
Classmates International, Inc., and MyPoints.com, Inc. following the time such
subsidiary ceases to be a direct or indirect wholly-owned subsidiary of United
Online.

This Severance Benefit
Plan (the “Plan”) supersedes all obligations, agreements or policies regarding
severance pay, except such terms as are set forth in a written agreement signed
by an authorized officer of the Company. 
This Plan supplements any written agreements to provide all terms that
are not expressly incorporated into the written agreement.  The purpose of severance pay is to provide
economic help to compensate for periods of unemployment due to job loss from
reduction in force.

This Plan is designed to
be an “employee welfare benefit plan,” as defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and is
governed by ERISA.  This document constitutes
both the official plan document and the required summary plan description under
ERISA.

II.            ELIGIBILITY

    A.        Eligibility Criteria.

You generally  are
eligible for benefits under
the Plan if you satisfy each of the following conditions:

1.             You
are a full-time U.S. employee of United Online, Inc., NetZero, Inc., Juno
Online Services, Inc., Juno Internet Services, Inc., United Online Web
Services, Inc., United Online Advertising Network, Inc., United Online
Communications, Inc., Classmates Online, Inc., Classmates Media, Inc.,
Classmates International, Inc. or MyPoints.com, Inc.

2.             You
are either (i) notified during the term of the Plan (that is, the period
commencing January 1, 2007 and ending January 1, 2010 or such other period as
the Company may determine in its sole discretion) that, as a result of a
reduction-in-force 

 2
 

decision by Company that eliminates your position, your employment is
terminated (“Layoff Termination”), or (ii) Involuntarily Terminated in
connection with or within eighteen (18) months following a Change in Control or
a Corporate Transaction (together referenced in this Plan as a “Transaction”).

For purposes of this Plan, “Involuntary Termination” or “Involuntarily
Terminated” means the following:  (i) you
are terminated by the Company or any successor to the Company for reasons other
than misconduct (as defined below) within eighteen (18) months following a
Transaction; or (ii) you voluntarily resign in connection with or following a
Transaction that results in either (A) a reduction in your base salary from
that provided by the Company immediately prior to the Transaction or (B) a
relocation of your primary place of employment by more than fifty (50) miles;
provided, however, that an Involuntary Termination occurs only if the change in
salary or relocation is effected without your consent.

Unless otherwise determined by the Chief Executive Officer of United
Online, Inc., these provisions shall only apply to a Change in Control or
Corporate Transaction (as defined below) with respect to United Online, Inc.

For purposes of this Plan, “Change in Control” shall mean the event of
a change in ownership or control of United Online, Inc. affected through either
of the following transactions:

(i)            the
acquisition, directly or indirectly, by any person or related group of persons
(other than the Company or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) 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 Company’s outstanding securities pursuant to
a tender or exchange offer made directly to the Company’s stockholders, or

(ii)           a
change in the composition of the Company’s Board of Directors (“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.

For purposes of this Plan, “Corporate Transaction” shall mean either of
the following stockholder-approved transactions to which the Company is a
party:

(i)            a
merger or consolidation in which the record and beneficial ownership of
securities possessing more than fifty percent (50%) of the total combined
voting power of the Company’s outstanding securities are transferred, both
beneficially and of record, to a person or persons different from the persons
holding those securities immediately prior to such transaction (for example, it
will not be a Corporate Transaction if following the transaction the Company is
directly or indirectly (including through a parent or one or more subsidiaries)
controlled by the person or persons who controlled 50% of the Company’s
outstanding securities prior to such transaction), or

(ii)           the
sale, transfer or other disposition of all or substantially all of the Company’s
assets in complete liquidation or dissolution of the Company.

 3
 

 

For purposes of this Plan, “Misconduct” means the (i) commission of any
act of fraud, embezzlement or dishonesty, (ii) any unauthorized use or
disclosure of confidential information or trade secrets of the Company (or any
Parent or Subsidiary), (iii) any intentional misconduct adversely affecting the
business or affairs of the Company (or any parent or subsidiary of the
Company), or (iv) failure to use reasonable efforts to follow reasonable
directives or instructions of a manager or supervisor after written notice of
such failure that specifies in detail the reasons for such failure and a chance
to remedy such failure.

3.             In
the event that no Transaction has occurred, you are not offered an alternate
position with the Company within fifty (50) miles of either your residence or
your most recent work place.

4.             You have signed a form of confidential/proprietary/trade
secret information, non-disclosure and inventions assignment agreement(s) with
the Company, or with a predecessor of the Company, that covers the period of
your employment with the Company (and/or with a predecessor of the Company).

5.             You have returned to the Company all Company documents
created and received by you during your employment (electronic and paper) with
the exception only of your personal copies of documents evidencing your hire,
termination, compensation, benefits and stock options, and any other documents
you have received as a shareholder of the Company or any parent or subsidiary
of the Company.

6.             If you previously received an advance(s) for business
travel and entertainment expenses, (i) you have properly completed and
submitted an expense reimbursement form(s) and supporting receipts to your
manager within fifteen (15) days after your Layoff Termination, (ii) your
manager has approved your expenses, and (iii) you have repaid (via check
payable to “United Online, Inc.”) any amount advanced but not used.

7.             You have met with your manager and: (i) you have
transitioned your work and information concerning your work to your manager;
and  (ii) you have provided your manager
with all passwords and passcodes you have created for documents, email and
electronic files that you created or used on Company’s computers and computer
systems.

8.             You have returned to the Company all items of property
received by you for your use during employment with the Company including, but
not limited to, any laptops, computer equipment, software programs, cell
phones, keys and passes, and credit and calling cards.

9.             You have signed the General Release of All Claims:

·                  a
copy of which is attached as Exhibit 1 if you are under age forty (40), and you
have signed that document within seven (7) days after you received it.

·                  a
copy of which is attached as Exhibit 2 if you are age forty (40) or older, and
you have signed that document within forty-five (45) days of the date you
received it and you have not revoked it within seven (7) days after you have
signed it.

10.           You are not
in one of the excluded categories listed below.

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    B.        Criteria for Exclusion from
Eligibility.

You  are  not eligible
for severance benefits under this Plan if any of the following apply:

1.             You
are a temporary, leased or seasonal employee of United Online, Inc., NetZero,
Inc., Juno Online Services, Inc., Juno Internet Services, Inc., United Online
Web Services, Inc., United Online Advertising Network, Inc., United Online
Communications, Inc., Classmates Online, Inc., Classmates Media, Inc.,
Classmates International, Inc. or MyPoints.com, Inc.

2.             You
work for United Online, Inc., NetZero, Inc., Juno Online Services, Inc., Juno
Internet Services, Inc., United Online Web Services, Inc., United Online
Advertising Network, Inc., United Online Communications, Inc., Classmates
Online, Inc., Classmates Media, Inc., Classmates International, Inc. or
MyPoints.com, Inc. as an independent contractor, consultant, or agent under a
written contract or purchase order or you are otherwise classified as such by
the Company (whether or not such classification is upheld on governmental,
judicial or other review.)

3.             You
resign your employment with United Online, Inc., NetZero, Inc., Juno Online
Services, Inc., Juno Internet Services, Inc., United Online Web Services, Inc.,
United Online Advertising Network, Inc., United Online Communications, Inc.,
Classmates Online, Inc., Classmates Media, Inc., Classmates International, Inc.
or MyPoints.com, Inc. (other than a resignation constituting an Involuntary
Termination as defined above).

4.             You terminate your employment prior to the date of
termination set by the Company in its notice of termination (other than in
instances involving Involuntary Termination). 
Company has sole discretion to select your termination date in
circumstances not involving an Involuntary Termination following a Transaction,
and failure to work through the termination date may render you ineligible for
severance benefits.  Vacation may be
taken between the date you receive notice of termination and your termination
date only with the prior written approval of senior management.

5.             You are terminated for reasons unrelated to an
economically motivated reduction in force and under circumstances that do not
constitute an Involuntary Termination.

6.             In situations other than an Involuntary Termination
following a Transaction, you are terminated for unsatisfactory performance,
negligence in performance of your duties, misconduct, or violation of a policy
of the Company or any subsidiary of the Company.

7.             In situations other than an Involuntary Termination following
a Transaction, you are dismissed prior to the effective date of your Layoff
Termination for a reason other than your Layoff Termination (including, but not
limited to, any reason such as unsatisfactory performance, violation of
applicable company policy or procedures, insubordination, misconduct, or the
unauthorized use or disclosure of confidential information or trade secrets of
the Company or any parent or subsidiary of the Company), whether or not you
already received notice of your Layoff Termination that would otherwise qualify
you for severance benefits under this Plan.

8.             In situations other than an Involuntary Termination
following a Transaction, you are offered comparable employment by a company or
entity that acquires, merges with, acquires some or all of the assets of, or
otherwise carries on the business of the Company relating to your
employment.  For purposes of this
provision “comparable employment”

 5
 

means employment within 50 miles of your prior
employment site and at least 100% of your prior base pay.

9.             Your termination results from long-term or permanent
disability that renders you unable to perform your essential job functions even
with accommodation or your death.

10.           You
are covered by any other written severance or separation pay plan or
arrangement with the Company, or any subsidiary of the Company, or by an
employment or other agreement with the Company or any subsidiary of the Company
that provides for severance or separation pay/benefits in a lump sum or in
installment payments following termination of your employment, including, but
not limited to, the Juno Online Services, Inc. Key Employee Retention Policy,
the Juno Online Services, Inc. Employee Separation Plan, the Juno Online
Services, Inc. Transition Plan or the NetZero, Inc. Severance Benefit Plan.

11.           The Plan Administrator determines, in
its sole discretion, that your receipt of severance benefits would not under
the circumstances further the purposes of the Plan or would otherwise be
inappropriate and not in the best interests of the Company, provided, however,
that this provision shall not apply following a Transaction.

III.           HOW
THE PLAN WORKS

    A.        Timing of Severance Benefits 

If you meet the
eligibility criteria of Section II and are eligible for benefits under the
Plan, you will receive or will begin to receive your separation benefits as
soon as administratively feasible, but no later than thirty (30) days after all
conditions for receipt of benefits under this Plan have been satisfied.

    B.        Severance Benefits Guidelines

The benefit for which you
are eligible under the Plan depends on your position, your base pay, your
length of service, the type of termination, and whether you are entitled to
receive prior notice of your termination under the terms of the Worker
Adjustment and Retraining Notification Act (“WARN Act”).  No severance benefit will be paid to
employees who fail to comply with or meet the eligibility conditions stated
above, including, but not limited to, execution of a full Release in the form
attached to this Plan.

The actual benefit for
which you are eligible generally will be determined in accordance with the
guidelines set forth below.

1.     Severance Benefit
Guideline for Employees Not Entitled to WARN Act Notice:  If you are not entitled to advance notice of
your termination pursuant to the provisions of the WARN Act, this section
outlines your severance benefit guideline.

1(a)         For employees other than Executive Vice
Presidents, Senior Vice Presidents or Vice Presidents, the severance benefit
shall depend on whether you are terminated in connection with, or within
eighteen (18) months following, a Transaction as follows:  For termination not in connection with, or
not within eighteen (18) months following a Transaction, the severance benefit
for employees who are not entitled to prior notice of layoff under the WARN Act
is one week’s base pay for each full $20,000 of annual base pay, and an
additional one week’s base pay for each full six (6) month period of employment
completed prior to termination up to a maximum of five (5) weeks of base
pay.  For example, an employee with 

 6
 

a $40,000 per year base
salary who has been employed continuously for four years would be eligible for
a severance benefit equal to seven (7) weeks of base pay.

1(b)         For a termination in connection with or
within eighteen (18) months following a Transaction, the severance benefit for
employees who are not entitled to prior notice of layoff under the WARN Act is
one week’s base pay for each full $10,000 of annual base pay which the employee
was receiving prior to the Transaction (or, if greater, the base pay such
employee was receiving before the termination) and an additional one week’s
base pay for each full six (6) month period of employment completed prior to
termination up to five (5) weeks of base pay. 
For example, an employee with a $40,000 per year base salary who has
been employed continuously for four years would be eligible for a severance
benefit equal to nine (9) weeks of base pay.

1(c)         The severance benefit amount for
Executive Vice Presidents shall be one year of base pay.  The severance benefit amount for Senior Vice
Presidents and Vice Presidents shall be six (6) months of base pay.  The amounts for Executive Vice Presidents,
Senior Vice Presidents and Vice Presidents shall apply regardless of whether
the termination is related to or following a Transaction.  Whether an employee is a Executive Vice
President, Senior Vice President or Vice President will be based upon such
employee’s title as of the date of termination or, if following a Transaction,
the employee’s title immediately preceding the Transaction.  It shall be solely in Company’s discretion to
change employees’ titles.

2.     Severance Benefit
Guideline for Employees Entitled to Notice Under the WARN Act.  If you are entitled to prior
notice of your termination pursuant to the provisions of the WARN Act, the
severance benefit guideline is as follows: 
The severance benefit amount is the greater of (a) the amount for
which you would be eligible under section B1 above (if you had not been
entitled to WARN Act notice) minus eight weeks’ base pay, or (b) one week’s
base pay.  For example, the benefit
guideline for a person who has been employed for five years with a base salary
of $100,000 who is not terminated in connection with a Transaction would be two
weeks’ base pay.  The benefit guideline
for a person who has been employed for three years with a base salary of
$60,000 would be one week’s base pay.

3.     Base Pay Amount.  For the purpose of the Severance
Payment Benefit, “base pay” means your base salary or regular hourly wage rate
in effect immediately prior to your receipt of written notice of your layoff
termination, or in the case of a termination within 18 months following a
Transaction, the greater of (i) your base salary or regular wage rate
immediately prior to the Transaction, and (ii) your base salary or regular wage
rate at the time of notice of termination. 
Base Pay will be calculated based on the average number of hours you
were scheduled to work each week during the last six (6) months of your
employment.  For example, the base pay of
an employee earning $15 per hour and working an average of 30 hours per week
would be $450 per week. “Base Pay” does not include variable forms of
compensation such as, but not limited to, overtime, shift differentials,
bonuses, incentive compensation, commissions, expenses or expense allowances.

4.     Payment of Benefits.  If you are eligible for severance
pay benefits, the severance amount will be paid as follows:  If you are not
terminated within 18 months following a Transaction, your severance benefit
will be paid in bi-weekly or semi-monthly installments based on the time
periods set by the Employer.  If your
termination occurs within 18 months following a Transaction, you will be paid
in one lump sum within one week following return of your release and expiration
of any applicable revocation period (if you are 40 or over, you will receive
the lump sum within two weeks following return of your signed release so long
as you do not revoke the release).  The
Severance Payment Benefit will be subject to legally required tax withholdings
and all other applicable payroll deductions. 
Such withholdings and deductions 

 7
 

may not include 401k Plan
contributions or other elective benefit and benefit plan contributions as
participation in such benefits and plans terminate upon termination of
employment.

5.     Administrator
Discretion.  The Plan
Administrator may, as it deems appropriate and in its sole discretion,
authorize severance benefits in an amount different from that set forth in the
Severance Benefit Guidelines.  Under
certain circumstances, the Plan Administrator may, in its sole discretion,
waive or modify, with respect to one or more employees or classes of employees,
the eligibility requirements for severance benefits or modify the amount of
severance benefits.  The foregoing shall
not apply in connection with, or following, a Transaction.

6.     Miscellaneous.  Regardless of whether you meet the
eligibility criteria of Section II and are eligible for benefits under the
Plan, you will be subject to the following rights and obligations in connection
with your Layoff Termination:

·                  In
your final paycheck, you will receive a lump sum payment for your salary or
wages through your termination date, and all your accrued but unused vacation.

·                  As
of the effective date of your Layoff Termination, you will cease participation
in all employee benefits and benefits Company makes available to its employees,
in accordance with the terms and conditions of such benefits and benefit plans.

·                  In
accordance with COBRA, you and/or your eligible dependents may elect temporary
continuation coverage under the Company’s group health benefit plans (medical,
dental and/or vision), provided that
you timely elect such coverage and you timely pay the full amount of premiums
due.  In connection with your layoff
termination, you and your eligible dependents will be provided with COBRA
election forms and a notice that describes your rights to, and the terms and
conditions of, temporary continuation coverage under COBRA.  These documents will be provided separately.

·                  During
the limited post-termination period and pursuant to the procedures specified in
your stock option agreement(s), you may purchase those stock options that
vested on or prior to the effective date of your Layoff Termination.

·                  You
will receive information describing unemployment insurance benefits separately.

IV.           OTHER
IMPORTANT INFORMATION

    A.        Plan Administration.  As the Plan Administrator, the Company has
full discretionary authority to administer and interpret the Plan, including
discretionary authority to determine eligibility for participation and for
benefits under the Plan, the amount of benefits (if any) payable per
participant, and to interpret terms of the Plan, provided, however, that the
Plan Administrator shall not have discretion to change the severance amount or
payment terms following a Transaction. 
The Plan Administrator may delegate any or all of its administrative
duties to Company personnel.  Any such
delegation will carry with it the full discretionary authority of the Plan
Administrator to carry out the delegated duties.  Any determination by the Plan Administrator
or its delegate will be final and conclusive upon all persons.  The Company, as the Plan Administrator, will
indemnify and hold harmless any person to whom it delegates its
responsibilities; provided, however, such person does not act with gross
negligence or willful 

 8
 

misconduct.  The
Company hereby delegates the duties of the Plan Administrator to the Company’s
Chief Executive Officer or his designee.

    B.        Benefits.  All benefits will be paid from the general
assets of the Company.  The Company is
not required to and will not establish a trust to fund the Plan.  The benefits provided under this Plan are not
assignable and may be conditioned upon your compliance with any confidentiality
agreement you have entered into with the Company or upon your compliance with
any Company policy or program.  The
payment of benefits under this Plan does not increase the benefits due to you
under any other benefit plan or Company policy.

    C.        Claims Procedure.

1.             Application for Benefits.  If you believe you are incorrectly denied a
benefit or are entitled to a greater benefit than the benefit you receive under
the Plan, you may submit a signed, written application to the Plan
Administrator within ninety (90) days the effective date of your Layoff
Termination.

2.             Denial of Application for Benefits.  In the event that your application for
benefits is denied in whole or in part, the Plan Administrator must notify you,
in writing, of the denial of the application, and of your right to review the
denial.  The written notice of denial
will be set forth in a manner designed to be understood by you, and will
include specific reasons for the denial, specific references to the Plan
provision upon which the denial is based, a description of any information or
material that the Plan Administrator needs to complete the review and an
explanation of the Plan’s review procedure. 
This written notice will be given to you within ninety (90) days after
the Plan Administrator receives the application, unless special circumstances
require an extension of time, in which case, the Plan Administrator has up to
an additional ninety (90) days for processing the application.  If an extension of time for processing is
required, written notice of the extension will be furnished to you before the
end of the initial ninety (90) day period. 
This notice of extension will describe the special circumstances
necessitating the additional time and the date by which the Plan Administrator
is to render its decision on the application. 
If written notice of denial of the application for benefits is not
furnished within the specified time, the application shall be deemed to be
denied.  You will then be permitted to
appeal the denial in accordance with the review procedure described below.

3.             Request for Review.  If your application for benefits is denied
(or deemed denied), in whole or in part, you (or your authorized
representative) may appeal the denial by submitting a request for a review to
the Plan Administrator within sixty (60) days after the application is denied
(or deemed denied).  The Plan
Administrator will give you (or your representative) an opportunity to review
pertinent documents in preparing a request for a review.  A request for a review shall be in
writing.  A request for review must set
forth all of the grounds on which it is based, all facts in support of the
request and any other matters that you feel are pertinent.  The Plan Administrator may require you to
submit additional facts, documents or other material as it may find necessary
or appropriate in making its review.

4.             Decision on Review.  The Plan Administrator will act on each
request for review within sixty (60) days after receipt of the request, unless
special circumstances require an extension of time (not to exceed an additional
60 days) for processing the request for a review.  If an extension for review is required,
written notice of the extension will be furnished to you within the initial
sixty (60) day period.  The Plan
Administrator will give prompt, written notice of its decision to you.  In the event that the Plan Administrator
confirms the denial of the application for benefits in whole or in part, the
notice will outline, in a manner calculated to be understood by you, the
specific reasons for the decision and the Plan provisions upon which the 

 9
 

decision is based. 
If written notice of the Plan Administrator’s decision is not given to
you within the time prescribed in this subsection (4), the application will be
deemed denied on review.

5.             Exhaustion of Remedies.  No legal action for benefits under the Plan
may be brought until: (i) you have submitted a written application for benefits
in accordance with the procedures described by Section IV.C.1., above;  (ii) you have been notified by the Plan
Administrator that the application is denied (or the application is deemed
denied due to the Plan Administrator’s failure to act on it within the
established time period);  (iii) you have
filed a written request for a review of the application in accordance with the
appeal procedure described in Section IV.C.3., above;  and (iv) you have been notified in writing
that the Plan Administrator has denied the appeal (or the appeal is deemed to
be denied due to the Plan Administrator’s failure to take any action on the
claim within the time prescribed by Section IV.C.4., above).

    D.        Plan Terms.  This Plan supersedes any and all prior
separation, severance and salary continuation arrangements, programs and plans
which were previously offered by the Company to eligible employees of this
Plan, except such terms as are set forth in a written agreement signed by an
authorized officer of the Company or any subsidiary of the Company.  This policy supplements any written
agreements to provide all terms that are not expressly set forth in the written
agreement.

    E.         Plan Amendment or Termination.  The Company reserves the right to change,
suspend or discontinue all or any part of this Plan at any time and shall do so
in writing signed by the Chief Executive Officer of the Company, provided,
however, that the Plan may not be amended, modified or terminated within eighteen
months following the consummation of a Transaction with respect to eligible
employees under the Plan as of the closing of the Transaction.  Other than during the eighteen (18) month
period following a Transaction with respect to eligible employees as of the
closing of a Transaction, provisions of the Plan are intended to serve as mere
guidelines for the payment of benefits under certain prescribed circumstances
and are not intended to provide any employee with a vested right to benefits.  Accordingly, any termination or amendment of
the Plan may be made effective immediately with respect to any benefits not yet
paid, whether or not prior notice of such amendment or termination has been
given to affected employees.  This Plan
terminates by its own terms when all benefits hereunder have been paid.

    F.         Taxes and Other Payroll Deductions.  Company will withhold taxes and all other
applicable payroll deductions from any Severance Payment Benefit made under
this Plan.  The Company may also offset
from any Severance Payment Benefit any amounts owed to the Company.

    G.        No Right to Employment.  No provision of this Plan is intended to
provide you or any other employee with any right to continue employment with
Company or otherwise affect the right of the Company, which right is hereby
expressly reserved, to terminate the employment of any individual at any time
for any reason, without cause.

V.            STATEMENT
OF ERISA RIGHTS

As a participant in the
United Online, Inc. Severance Benefit Plan (the “Plan”), you are entitled to
certain rights and protections under the Employment Retirement Income Security
Act of 1974, as amended (“ERISA”).  ERISA
provides that all Plan participants shall be entitled to:

1.               Examine,
without charge, at the Plan Administrator’s office, all Plan documents,
including all documents filed by the Plan with the U.S. Department of Labor,
such as plan descriptions.

 10
 

 

2.               Obtain
copies of all Plan documents and other Plan information upon written request to
the Plan Administrator.  The Plan Administrator
may make a reasonable charge for the copies.

In addition to creating
rights for certain employees of the Company under the Plan, ERISA imposes
obligations upon the people who are responsible for the operation of the
Plan.  The people who operate the Plan
(called “fiduciaries”) have a duty to do so prudently and in the interest of
the Company’s employees who are covered by the Plan.

No one, including your
employer or any other person, may terminate your employment or otherwise
discriminate against you in any way to prevent you from obtaining a benefit to
which you are entitled under the Plan or from exercising your rights under
ERISA.

If your claim for a
benefit under this Plan is denied in whole or in part, you must receive a
written explanation of the reason for the denial.  You have the right to have the Plan
Administrator review and reconsider your claim. 
Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request materials from
the Plan and do not receive them within thirty (30) days, you may file suit in
a federal court.  In such a case, the
court may require the Plan Administrator to provide the materials and pay you
up to $110 a day until you receive the materials, unless the materials were not
sent because of reasons beyond the control of the Plan Administrator.  If you have a claim for a benefit under this
Plan that is denied or ignored, in whole or in part, you may file suit in a
federal or a state court.  If it should
happen that the Plan fiduciaries misuse the Plan’s assets (if any) or if you
are discriminated against for asserting your rights, you may seek assistance
from the U.S. Department of Labor or you may file suit in a federal court.  The court will decide who should pay court
costs and legal fees.  If you are
successful in your lawsuit, the court may order the party you have sued to pay
your legal costs, including attorney fees. 
However, if you lose, the court may order you to pay these costs and
fees, for example, if it finds that your claim or suit is frivolous.

If you have any questions
about the Plan, this statement or your rights under ERISA, you should contact
the Plan Administrator or the nearest Area Office of the Pension and Welfare
Benefits Administration, U.S. Department of Labor, listed in your local
telephone directory or contact the Division of Technical Assistance and
Inquiries, Pension and Welfare Benefits Administration, U.S. Department of
Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210.

 11
 

 

ADDITIONAL
PLAN INFORMATION

	
  Plan Sponsor:

  	
  United Online, Inc.

  
	
   

  	
   

  
	
  Plan Name:

  	
  The United Online, Inc. Severance Benefit Plan

  
	
   

  	
   

  
	
  Employer
  Identification Number

  	
  77-0575839

  
	
   

  	
   

  
	
  Plan Number:

  	
  5 01

  
	
   

  	
   

  
	
  Plan Year:

  	
  January 1, 2007 through January 1, 2010

  
	
   

  	
   

  
	
  Plan Administrator:

  	
  United Online, Inc.

  
	
   

  	
  21301 Burbank Blvd.

  
	
   

  	
  Woodland Hills, CA 91367

  
	
   

  	
  Telephone: (818) 287-3000

  
	
   

  	
   

  
	
  Direct Inquiries
  to:

  	
  Plan Administrator

  
	
   

  	
  c/o General Counsel

  
	
   

  	
  United Online, Inc.

  
	
   

  	
  21301 Burbank Blvd.

  
	
   

  	
  Woodland Hills, CA 91367

  
	
   

  	
  Telephone: (818)
  287-3000

  
	
   

  	
   

  
	
  Agent for
  Service of Legal Process:

  	
  Plan Administrator or

  
	
   

  	
  United Online’s Executive Vice President and

  
	
   

  	
  General Counsel

  
	
   

  	
   

  
	
  Type of Plan:

  	
  Severance Plan / Employee Welfare Benefit Plan

  
	
   

  	
   

  
	
  Plan Costs:

  	
  The cost of the plan is paid by United Online, Inc.

  

 

 12Exhibit 10.12

EMPLOYMENT
AGREEMENT

This Employment Agreement (the “Agreement”) is made and entered into
effective as of the 3rd day of April 2007 by and between United Online, Inc., a
Delaware corporation (the “Company”), with principal corporate offices at 21301
Burbank Boulevard, Woodland Hills, California 91367, and Mark R. Goldston,
whose address is 21301 Burbank Boulevard, Woodland Hills California 91367 (“Employee”).

WHEREAS, Employee had previously entered into an employment agreement
(the “Prior Agreement”) effective March 20, 1999, with NetZero, Inc., a
wholly-owned subsidiary of the Company; and

WHEREAS, the Prior Agreement was amended in July 1999, February 9,
2001, October 1, 2003, and January 27, 2004,

WHEREAS, Employee and the Company have terminated the Prior Agreement.

NOW THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

1.                                      EMPLOYMENT

1.1           The
Company hereby agrees to employ Employee, and Employee hereby accepts such
employment, on the terms and conditions set forth herein, commencing the date
hereof and continuing through March 1, 2011 (the “Term”), unless terminated
earlier as provided in Section 4 below. 
Employee’s place of employment shall be the in the greater Los Angeles
metropolitan area.

2.                                      DUTIES OF
EMPLOYEE

2.1           Employee
shall serve as the Chief Executive Officer and Chairman of the Company.  In this capacity, Employee shall perform such
customary, appropriate and reasonable executive duties as are usually performed
by the Chief Executive Officer and Chairman, including such duties as are
delegated to him from time to time by the Board of Directors of the Company or
a committee thereof (the “Board”). 
Employee shall report directly to the Company’s Board.

2.2           Employee
agrees to devote Employee’s good faith, full time, attention, skill and efforts
to the performance of his duties for the Company during the Term; provided, 

  
  
 

however,
this paragraph shall not preclude Employee from writing and promoting books or
other published materials, engaging in civic, charitable or religious
activities, or from serving on boards of directors of companies or
organizations that do not present any conflict with the interests of the
Company or otherwise adversely affect Employee’s performance of the services
required under this Agreement.  This
Agreement also shall not be interpreted to prohibit Employee from making
personal investments (including the purchase of interests in professional
sports teams) if those activities do not materially interfere with the services
required under this Agreement.

3.                                      COMPENSATION AND
OTHER BENEFITS

3.1           Base
Salary.  During the Term, the Company
shall pay to Employee a base salary per fiscal year equal to Employee’s current
base salary (the “Base Salary”), with payments to be made in accordance with
the Company’s standard payment policy and subject to such withholding as may be
required by law.  Employee’s Base Salary
shall be increased to include any increases in Employee’s base salary as
approved by the Board, but may not be reduced during the Term without Employee’s
written consent other than in connection with a general salary reduction
applicable to senior executives of the Company generally.

3.2           Bonus.  During the Term, Employee shall also be
eligible to receive an annual target cash bonus of 100%  of
Employee’s base salary for each fiscal year (the “Annual Bonus”), less
withholding required by law, based on performance criteria established by the
Board provided that this target shall not be deemed to establish a maximum
bonus and the Board or its compensation committee may award a bonus equal to
more than 100% of Base Salary.  Employee’s
Annual Bonus shall be increased to include any increases in Employee’s Annual
Bonus as approved by the Board.  Employee
shall not be eligible to receive any unpaid Annual Bonus if his employment
hereunder is terminated pursuant to either Section 4.1 or if Employee
voluntarily resigns.

3.3           Sign-On
Restricted Unit Grant.  Employee
shall be granted a restricted unit award covering 750,000 shares of the Company’s
common stock, par value $0.0001 per share (the “Sign-On Restricted Unit Award”),
with a per share purchase price equal to par value for an aggregate cash
purchase price of Seventy-Five Dollars ($75.00).  Except as otherwise provided in this
Agreement, the Sign-On Restricted Unit Award shall vest in full on February 15,  2011. 
Except as otherwise provided in this Agreement, the Sign-On Restricted
Unit Award shall be granted pursuant to and subject to the terms and conditions
of the Company’s 2001 Stock Incentive Plan and form of restricted unit
agreement previously approved by the Board. 
The Company agrees that, unless required by applicable law, no amendment
to the 2001 Stock Incentive Plan will eliminate the ability of Employee to
satisfy income tax withholding obligations by the surrender of shares to the
Company in any manner that would affect the Sign-on Restricted Unit Award or
any shares which are part of such award, and that unless required by applicable
law, the Company will not exercise its discretion under the 2001 Stock
Incentive Plan, or any applicable award agreement, to eliminate or limit
Employee’s ability to satisfy income tax 

  
  
 

withholding
obligations by the surrender of shares of Company’s (or its successor’s) common
stock with respect to equity awards granted prior to the date hereof.

3.4           Vacation.  Employee shall be entitled to five (5) weeks
paid vacation per year in accordance with the Company’s vacation policies.

3.5           Other
Benefits.  During the Term, Employee
shall be entitled to participate in all group life, health, medical, dental or
disability insurance or other employee, health and welfare benefits made available
generally to other executives of the Company. 
If Employee elects to participate in any of such plans, Employee’s
portion of the premium(s) will be deducted from Employee’s paycheck.

3.6           Business
Expenses.  The Company shall promptly
reimburse Employee for all reasonable and necessary business expenses incurred
by Employee in connection with the business of the Company and the performance
of his duties under this Agreement, subject to Employee providing the Company
with reasonable documentation thereof.

3.7           Board
of Directors.  Employee shall be
Chairman of the Company and also a member and chairman of the Company’s Board
of Directors.  Employee’s appointments as
Chairman and as a member of the Board will automatically terminate upon the
termination of Employee’s employment with the Company for any reason.

4.                                      TERMINATION

4.1           Termination
for Cause.

(a)     Termination “for
cause” is defined as follows:  (1) if
Employee is convicted of, or enters a plea of nolo
contendere to, a felony, including any act of moral turpitude that
adversely impacts the Company or any of its subsidiaries, (2) if Employee
commits an act of actual fraud, embezzlement, theft or similar dishonesty
against the Company or any of its subsidiaries that adversely and materially
impacts the Company or any of its subsidiaries, (3) if Employee commits any
willful misconduct or gross negligence resulting in material harm to the
Company or any of its subsidiaries, or (4)  if Employee
fails, after receipt of detailed written notice and after receiving a period of
at least thirty (30) days following such notice to cure such failure, to use
his reasonable good faith efforts to follow the reasonable and lawful direction
of the Company’s Board of Directors and to perform his obligations hereunder.

(b)     The Company may
terminate this Agreement immediately (except as required by clause 4.1(a)(4)
above) for any of the reasons stated in Section 4.1(a) by giving written notice
to Employee without prejudice to any other remedy to which the Company may be
entitled.  The notice of termination
shall specify the grounds for termination. 
If Employee’s 

  
  
 

employment
hereunder is terminated “for cause” pursuant to this Section 4.1, Employee
shall be entitled to receive hereunder his accrued but unpaid Base Salary and
vacation pay through the date of termination, and reimbursement for any
expenses as set forth in Section 3.6, through the date of termination, but
shall not be entitled to receive any unpaid portion of the Annual Bonus or any
other amount except for amounts earned under any plan (including criteria for
the Annual Bonus) but not yet paid as of the date of termination.

4.2           Termination
Without Cause.  If Employee’s
employment is terminated without “cause” as defined in Section 4.1(a) or he is
Involuntarily Terminated, he will be eligible for the severance benefits set
forth in Section 4.3.

4.3           Severance
Payments and Other Benefits Upon Termination Without Cause or Involuntary
Termination.  If the Company
terminates Employee’s employment hereunder without cause, or if Employee is
Involuntarily Terminated, the Company (or its successor, as the case may be)
shall pay to Employee (i) any accrued but unpaid Base Salary and vacation
through the date of termination and (ii) reimbursement for any expenses as set
forth in Section 3.6, through the date of termination.  Additionally, subject to Employee entering
into and not revoking a release of claims in favor of the Company and abiding
by the non-competition and non-solicitation provisions set forth in Section 5
below, the Company (or its successor, as the case may be) shall pay to Employee
(x) Employee’s Annual Bonus, prorated through the date of termination, and (y)
a severance payment in an amount equal to three times the sum of Employee’s
Base Salary and Annual Bonus, payable in one lump sum on the date of
termination, subject to withholding as may be required by law.  For the purposes of Section 4.3(x) and
Section 4.3(y) above, Annual Bonus shall mean 100% of Employee’s then current
Base Salary or, in the event of Involuntary Termination, the greater of 100% of
Employee’s then current Base Salary, or the Annual Bonus paid to Employee for
the preceding fiscal year.

With respect to Employee’s outstanding options to purchase
shares of the Company’s Common Stock (“Option Awards”), restricted unit awards
covering shares of the Company’s Common Stock (the “Restricted Unit Awards”)
and restricted shares of the Company’s Common Stock (the “Restricted Shares”),
if Employee’s employment is terminated without cause or due to Employee’s death
or permanent disability, or if Employee is Involuntarily Terminated:

(i) Each
Option Award will become vested and exercisable with respect to all non-vested
shares;

(ii)
Each Restricted Unit Award (including the Sign-On Restricted Unit Award) will
become vested with respect to all non-vested shares; and

(iii)
The Company’s repurchase option will lapse with respect to all Restricted
Shares.

  
  
 

 

If Employee is Involuntarily
Terminated, to the extent permitted under Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”), all of Employee’s options to purchase
the Company’s Common Stock shall be exercisable for a one (1) year period
following the date of termination.

As used in this Section 4.3, Employee shall be deemed
terminated without cause if Employee resigns following a breach by the Company
of its obligations hereunder; provided, however, in the event of an
unintentional breach by the Company, Employee shall provide the Company with
written notice of such breach and the Company shall have fifteen (15) days
following such notice to cure such breach. 
As used in this Section 4.3, Employee shall be deemed “Involuntarily
Terminated” if (i) the Company or any successor to the Company terminates
Employee’s employment without cause in connection with or following a Corporate
Transaction; or (ii) in connection with or following a Corporate Transaction
there is both (A) (a) a decrease in Employee’s title or responsibilities (it
being deemed to be a decrease in title and/or responsibilities if Employee is
not offered and provided the position of Chairman of the Board of Directors and
Chief Executive Officer of the Company or its successor as well as the
acquiring and ultimate parent entity, if any, following a Corporate
Transaction), (b) a decrease in pay and/or benefits from those provided by the
Company immediately prior to the Corporate Transaction, (c) a requirement that
Employee re-locate out of the greater Los Angeles metropolitan area, or (d) a
failure by any successor to Company to confirm in writing that this Agreement
remains in full force and effect and (B) Employee terminates his employment
with the Company within 180 days following a Corporate Transaction.

“Corporate Transaction” shall mean:  (a) a change in ownership or control of the
Company effected through the acquisition, directly or indirectly, by any person
or related group of persons (other than the Company or a person that directly
or indirectly controls, is controlled by, or is under common control with, the
Company), 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 Company’s outstanding securities; (b) 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; (c) a merger, consolidation or reorganization
approved by the Company’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 Company’s outstanding voting securities
immediately prior to such transaction; or (d) any stockholder-approved transfer
or other disposition of all or substantially all of the Company’s assets.

  
  
 

 

5.                                      NON-COMPETITION;
NON-SOLICITATION

5.1           For the
eighteen (18) month period following the termination of Employee’s employment
with the Company (but only if Employee has received the severance payments
specified in Section 4.3 above) (the “Restricted Period”), Employee shall not
directly engage in, or manage or direct persons engaged in, a Competitive
Business Activity (as defined below) anywhere in the Restricted Territory (as
defined below); provided, that the Restricted Period shall terminate if the
Company terminates operations or if the Company no longer engages in any
Competitive Business Activity.  The term “Competitive
Business Activity” shall mean the business of 
providing consumers with dial-up Internet access services (free or
pay).  The term “Restricted Territory”
shall mean each and every county, city or other political subdivision of the
United States in which the Company is engaged in business or providing its
services.  The Company agrees that
providing services to a company or entity that is involved in a Competitive
Business Activity but which services are unrelated to the Competitive Business
Activity shall not be deemed a violation of this Agreement.  For the purposes of damages to the Company
with respect to any breach of this Section 5, the value of Employee’s
obligations to the Company under this Section 5 equals 37.5% of the cash
severance payment in Section 4.3(iv) above.

5.2           During the
Restricted Period, Employee shall not directly or indirectly solicit or recruit
for employment, any person or persons who are employed by Company or any of its
subsidiaries or affiliates, or who were so employed at any time within a period
of twelve (12) months immediately prior to the date Employee’s employment
terminated, or otherwise interfere with the relationship between any such
person and the Company; nor will Employee assist anyone else in recruiting any
such employee to work for another company or business or discuss with any such
person his or her leaving the employ of the Company or engaging in a business
activity in competition with the Company.

6.                                      GROSS-UP PAYMENT

If the aggregate of all payments or benefits made or provided to
Employee under this Agreement and under all other plans and programs of the
Company (the “Aggregate Payment”) is determined to constitute a “parachute
payment,” as such term is defined in Section 280G(b)(2) of the Code, the
Company shall pay to Employee, prior to or coincident with the time any excise
tax imposed by Section 4999 of the Code (the “Excise Tax”) is payable with
respect to such Aggregate Payment, an additional amount that, after the
imposition of all penalties, income, excise and other federal, state and local
taxes thereon, is equal to the sum of the Excise Tax on the Aggregate Payment
and interest and penalties imposed with respect to the Excise Tax and such
additional amount (the “Gross-Up Payment”). 
For example, if the Excise Tax imposed with respect to the Aggregate
Payment equals $1,000,000, and all penalties, income, excise and other federal,
state and local taxes on the Gross-Up Payment equal $2,333,333, the Gross-Up
Payment will be $3,333,333.  The
determination of whether the Aggregate Payment constitutes a parachute payment
and, if so, the amount to be paid to Employee and the time of payment pursuant
to this Section 6 shall be made by an independent auditor (the “Auditor”)
selected and 

  
  
 

paid by the Company and reasonably acceptable to
Employee.  The Auditor shall be a
nationally recognized United States public accounting firm.  For purposes of determining the amount of the
Gross-Up Payment, Employee shall be deemed to pay income tax at the highest
marginal rates of federal, state and local income taxation in the calendar year
in which the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes.

In the event that the Excise Tax is finally determined to be less than
the amount taken into account hereunder in calculating the Gross-Up Payment,
Employee shall repay to the Company, within five (5) business days following
the time that the amount of such reduction in the Excise Tax is finally
determined, the portion of the Gross-Up Payment attributable to such reduction
plus that portion of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income and employment taxes imposed on the Gross-Up
Payment being repaid by Employee, to the extent that such repayment results in
a reduction in the Excise Tax and a dollar-for-dollar reduction in Employee’s
taxable income and wages for purposes of federal, state and local income and
employment taxes, plus interest on the amount of such repayment at 120% of the
rate provided in section 1274(b)(2)(B) of the Code.  In the event that the Excise Tax is
determined to exceed the amount taken into account hereunder in calculating the
Gross-Up Payment (including by reason of any payment the existence or amount of
which cannot be determined at the time of the payment of the Gross-Up Payment),
the Company shall make an additional Gross-Up Payment in respect of such excess
(plus any interest, penalties or additions payable by Employee with respect to
such excess) within five (5) business days following the time that the amount
of such excess is finally determined. 
Employee and the Company shall cooperate with each other in connection
with any proceeding or claim relating to the existence or amount of liability
for Excise Tax, and all expenses incurred by Employee in connection therewith
shall be paid by the Company promptly upon notice of demand from Employee.

7.                                      ASSIGNMENT

Neither the Company nor Employee may assign this Agreement or any
rights or obligations hereunder.  This
Agreement will be binding upon the Company and its successors and assigns.  In the event of a Corporate Transaction, the
Company shall cause this Agreement to be assumed by the Company’s successor as
well as any acquiring or ultimate parent entity, if any, following any
Corporate Transaction.

8.                                      MISCELLANEOUS

8.1           This
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto with respect to the employment of Employee by the
Company and constitutes the entire agreement between the Company and Employee
with respect to its subject matter.

  
  
 

 

8.2           This
Agreement may not be amended, supplemented, modified or extended, except by
written agreement which expressly refers to this Agreement, which is signed by
of the parties hereto and which is authorized by the Company’s Board.

8.3           This
Agreement is made in and shall be governed by the laws of California, without
giving effect to its conflicts-of-law principles.

8.4           If any
provision of this Agreement is held by an arbitrator or a court of competent
jurisdiction to conflict with any federal, state or local law, or to be
otherwise invalid or unenforceable, such provision shall be construed in a
manner so as to maximize its enforceability while giving the greatest effect as
possible to the parties’ intent.  To the
extent any provision cannot be construed to be enforceable, such provision
shall be deemed to be eliminated from this Agreement and of no force or effect
and the remainder of this Agreement shall otherwise remain in full force and
effect and be construed as if such portion had not been included in this
Agreement.

8.5           Employee
represents and warrants to the Company that there is no restriction or
limitation, by reason of any agreement or otherwise, upon Employee’s right or
ability to enter into this Agreement and fulfill his obligations under this
Agreement.

8.6           All
notices and other communications required or permitted hereunder shall be in
writing and shall be mailed by first-class mail, postage prepaid, registered or
certified, or delivered either by hand, by messenger or by overnight courier
service, and addressed to the receiving party at the respective address set
forth in the heading of this Agreement, or at such other address as such party
shall have furnished to the other party in accordance with this Section 8.6
prior to the giving of such notice or other communication.

8.7           It is
intended that this Agreement shall comply with the provisions of section 409A
of the Code and the Treasury Regulations relating thereto so as not to subject
Employee to the payment of additional taxes and interest under section 409A of
the Code.  In furtherance of this intent,
this Agreement shall be interpreted, operated, and administered in a manner
consistent with these intentions, and to the extent that any regulations or
other guidance issued under section 409A of the Code would result in Employee
being subject to payment of additional income taxes or interest under section
409A of the Code, Employee and the Company agree to amend this Agreement in
order to avoid the application of such taxes or interest under section 409A of
the Code.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of

  
  
 

 

the first date written above.

	
  

  	
   

  	
  UNITED ONLINE, INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Charles S. Hilliard

  
	
   

  	
   

  	
   

  	
   

  	
  Charles S. Hilliard

  President and Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MARK R. GOLDSTON

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Mark R. Goldston

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