Document:

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

 

2

 

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:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

8

 

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.

 

A-3Exhibit 10.8

 

CLASSMATES ONLINE, INC.

 

2004 STOCK PLAN

 

Amended and Restated as of April 22,
2005

 

Assumed
and Administered by UNITED ONLINE, INC.

 

1.     Purposes of
the Plan. The purposes of this Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to Employees, Directors and Consultants and to promote the
success of the Company’s business. Options granted under the Plan may be
Incentive Stock Options or Nonstatutory Stock Options, as determined by the
Administrator at the time of grant, subject to the limitations of Section 7.
Stock Purchase Rights and Stock Appreciation Rights may also be granted under
the Plan.

 

2.     Assumption of
Plan.  The Plan was originally
implemented by Classmates Online, Inc. and assumed by the Company in
connection with its acquisition of Classmates Online, Inc. pursuant to
that certain Agreement and Plan of Merger by and among the Company, Classmates
Online, Inc. and Mariner Acquisition Corp. dated October 23, 2004
(the “Merger Agreement”).  In connection
with such assumption, each outstanding option under the Plan was assumed by the
Company and converted into an option to acquire shares of the Company’s common
stock at an adjusted exercise price per share. Both the number of shares
subject to each such option and the exercise price payable per share have been
adjusted to reflect the exchange ratio in effect for the exchange of Classmates
Online, Inc. shares for shares of the Company’s common stock pursuant to
the Merger Agreement.  All assumed
options continue to be governed by the terms and provisions of the agreements
in effect for those options immediately prior to their assumption by the
Company, except for certain adjustments specified in the document evidencing
the Company’s assumption of each such option. 
The Company has also assumed the unallocated share reserve existing
under the Plan immediately prior to the Company’s acquisition of Classmates
Online, Inc.  However, such share
reserve has been adjusted to reflect the exchange ratio in effect under the
Merger Agreement.

 

3.     Definitions.
As used herein, the following definitions shall apply:

 

(a)   “Administrator” means
the Board or any of its Committees as shall be administering the Plan in
accordance with Section 5 hereof.

 

(b)   “Applicable Laws” means
the requirements relating to the administration of equity compensation plans
under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common Stock is
listed or quoted and the applicable laws of any other country or jurisdiction
where Options, Stock Appreciation Rights or Stock Purchase Rights are granted
under the Plan.

 

(c)   “Board” means the Board
of Directors of the Company.

 

(d)   “Change in Control”
means a change in ownership or control of the Company effected 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

 

 

Exchange
Act) 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 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.

 

(e)   “Code” means the
Internal Revenue Code of 1986, as amended.

 

(f)    “Committee” means a
committee of Directors or of other individuals satisfying Applicable Laws
appointed by the Board in accordance with Section 5 hereof.

 

(g)   “Common Stock” means the
Common Stock of the Company.

 

(h)   “Company” means United
Online, Inc., a Delaware corporation which has assumed the Plan in
connection with its acquisition of Classmates Online, Inc.

 

(i)    “Consultant” means any
person who is engaged by the Company or any Parent or Subsidiary to render
consulting or advisory services to such entity.

 

(j)    “Corporate Transaction”
means either of the following stockholder approved transactions to which the
Company is a party:

 

(i)            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

 

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

 

(k)   “Director” means a
member of the Board.

 

(l)    “Disability” means
total and permanent disability as defined in Section 22(e)(3) of the
Code.

 

(m)  “Employee” means any
person, including officers and Directors, employed by the Company or any Parent
or Subsidiary of the Company. Neither service as a Director nor payment of a
director’s fee by the Company shall be sufficient to constitute employment” by
the Company.

 

(n)   “Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 

(o)   “Fair Market Value”
means, as of any date, the value of Common Stock determined as follows:

 

2

 

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

 

(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 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.

 

(p)   “Hostile Tender-Offer” shall mean 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 Exchange Act) 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 which the Board does not recommend such stockholders to accept.

 

(q)   “Incentive Stock Option”
means an Option intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code.

 

(r)    “Involuntary Termination”
shall mean the termination of Optionee’s Service by reason of:

 

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

 

(ii)           Optionee’s voluntary
resignation following (A) a material reduction in the scope of his or her
day-to-day responsibilities at the Company (or any Parent or Subsidiary), it
being understood that a change in Optionee’s title shall not, in and of itself,
be deemed a material reduction, (B) a reduction in Optionee’s base salary
or (C) a relocation of Optionee’s place of employment by more than fifty
(50) miles, provided and only if such change, reduction or relocation is
effected by the Company (or any Parent or Subsidiary) without Optionee’s
consent.

 

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

 

(t)    “Nonstatutory Stock Option”
means an Option not intended to qualify as an Incentive Stock Option.

 

(u)   “Option” means a stock
option granted pursuant to the Plan.

 

3

 

(v)   “Option Agreement” means
a written or electronic agreement between the Company and an Optionee
evidencing the terms and conditions of an individual Option grant. The Option
Agreement is subject to the terms and conditions of the Plan.

 

(w)  “Option Exchange Program”
means a program under which outstanding Options are surrendered or cancelled in
exchange for new Options (which may have lower exercise prices and different
terms), Stock Purchase Rights, and/or cash. The terms and conditions of any
Option Exchange Program will be determined by the Administrator in its sole
discretion.

 

(x)    “Optioned Stock” means
the Common Stock subject to an Option, Stock Appreciation Right or Stock
Purchase Right.

 

(y)   “Optionee” means the
holder of an outstanding Option, Stock Appreciation Right or Stock Purchase
Right granted under the Plan.

 

(z)    “Parent” means a “parent
corporation,” whether now or hereafter existing, as defined in Section 424(e) of
the Code.

 

(aa) “Plan” means this 2004
Stock Plan.

 

(bb) “Restricted Stock” means
Shares issued pursuant to a Stock Purchase Right or Shares of restricted stock
issued pursuant to an Option.

 

(cc) “Restricted Stock Purchase
Agreement” means a written agreement between the Company and the Optionee
evidencing the terms and restrictions applying to Shares purchased under a
Stock Purchase Right. The Restricted Stock Purchase Agreement is subject to the
terms and conditions of the Plan.

 

(dd) “Section 16 Insider” shall mean an officer or director of the Company subject to
the short-swing profit liabilities of Section 16 of the 1934 Act.

 

(ee) “Securities Act” means the
Securities Act of 1933, as amended.

 

(ff)   “Service” means the
performance of services to the Company by a Service Provider.

 

(gg) “Service Provider” means
an Employee, Director or Consultant.

 

(hh) “Share” means a share of
the Common Stock, as adjusted in accordance with Section 15 below.

 

(ii)   “Stock Appreciation Right”
means any Tandem Right or Limited Right granted pursuant to the provisions of Section 13
of the Plan.

 

(jj)   “Stock Appreciation Right
Agreement” means a written or electronic agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Stock
Appreciation Right award. The Stock Appreciation Right Agreement is subject to
the terms and conditions of the Plan.

 

(kk) “Stock Exchange” means
either the American Stock Exchange or the New York Stock Exchange.

 

(ll)   “Stock Purchase Right”
means a right to purchase Common Stock pursuant to Section 12 below.

 

4

 

(mm)    “Subsidiary”
means a “subsidiary corporation,” whether now or hereafter existing, as defined
in Section 424(f) of the Code.

 

(nn)     “Take-Over
Price” shall mean the greater of (i) the
Fair Market Value per Share on the date the option is surrendered to the
Company in connection with a Hostile Take-Over or, if applicable, (ii) the
highest reported price per Share paid by the tender offeror in effecting such
Hostile Take-Over..

 

4.     Stock Subject
to the Plan.  Subject to the
provisions of Section 15 of the Plan, the maximum aggregate number of
Shares that may be issued under the Plan is limited to 952,533 Shares (as
adjusted for the exchange ratio in effect under the Merger Agreement and
subject to further adjustment pursuant to Section 14 below) plus any
additional Shares subject to options outstanding under the Classmates Online
1999 Stock Plan and assumed by the Company pursuant to the Merger Agreement
which expire or terminate for any reason prior to exercise in full or are
surrendered pursuant to an Option Exchange Program. However, the maximum number
of Shares that may be issued pursuant to Incentive Stock Options over the term
of the Plan shall in no event exceed 1,159,682 Shares (as adjusted to reflect
the exchange ratio in effect under the Merger and subject to further adjustment
pursuant to Section 15 below); provided, however, that no further
Incentive Stock Options shall be granted under the Plan after November 16,
2004. The Shares may be authorized but unissued, or reacquired Common Stock.

 

If an Option or other
award granted under this Plan becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program,
the unissued Shares that were subject thereto shall become available for future
grant or issuance under the Plan (unless the Plan has terminated). Shares that
have actually been issued under the Plan, upon exercise of either an Option
(including options granted under the Classmates Online, Inc. 1999 Stock
Plan) or Stock Purchase Right, and that are subsequently reacquired by the
Company pursuant to any forfeiture provision or right to repurchase unvested
shares upon an Optionee’s cessation of Service shall be returned to the Plan
and shall become available for future distribution under the Plan.  Shares as to which one or more Stock
Appreciation Rights are exercised shall not be available for subsequent
issuance under the Plan.

 

5.     Administration
of the Plan.

 

(a)   Administrator. The Plan
shall be administered by the Board or a Committee appointed by the Board, which
Committee shall be constituted to comply with Applicable Laws.

 

(b)   Powers of the Administrator.
Subject to the provisions of the Plan and, in the case of a Committee, the
specific duties delegated by the Board to such Committee, and subject to the
approval of any relevant authorities, the Administrator shall have the
authority in its discretion:

 

(i)            to determine the Fair
Market Value;

 

(ii)           to select the Service
Providers to whom Options, Stock Appreciation Rights and Stock Purchase Rights
may from time to time be granted hereunder;

 

(iii)          to determine the number
of Shares to be covered by each such award granted hereunder;

 

(iv)          to approve forms of
agreement for use under the Plan;

 

(v)           to determine the terms
and conditions of any Option, Stock Appreciation Right or Stock Purchase Right
granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options, Stock Appreciation Rights
or Stock Purchase Rights may

 

5

 

be
exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option, Stock Appreciation Right or Stock Purchase
Right or the Common Stock relating thereto, based in each case on such factors
as the Administrator, in its sole discretion, shall determine;

 

(vi)          to reduce the exercise
price of any Option or Stock Purchase Right to the then current Fair Market
Value if the Fair Market Value of the Common Stock covered by such Option or
Stock Purchase Right shall have declined since the date the Option or Stock
Purchase Right was granted;

 

(vii)         to institute an Option
Exchange Program;

 

(viii)        to prescribe, amend and
rescind rules and regulations relating to the Plan, including rules and
regulations relating to sub-plans established for the purpose of satisfying
applicable foreign laws;

 

(ix)           to allow Optionees to
satisfy withholding tax obligations by electing to have the Company withhold
from the Shares to be issued upon exercise of an Option, Stock Appreciation
Right or Stock Purchase Right that number of Shares having a Fair Market Value
equal to the minimum amount required to be withheld. The Fair Market Value of
the Shares to be withheld shall be determined on the date that the amount of
tax to be withheld is to be determined. All elections by Optionees to have
Shares withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable;

 

(x)            to construe and
interpret the terms of the Plan and awards granted pursuant to the Plan; and

 

(xi)           to make all other
determinations, in its sole discretion, necessary or desirable for the
administration of the Plan.

 

(c)   Effect of Administrator’s
Decision. All decisions, determinations and interpretations of the
Administrator shall be final and binding on all Optionees.

 

6.     Eligibility.
Nonstatutory Stock Options, Stock Appreciation Rights and Stock Purchase Rights
may be granted to Service Providers. 
Incentive Stock Options may be granted only to Employees.  In no event will any Options, Stock
Appreciation Rights or Stock Purchase Rights be granted to individuals who were
employed by United Online, Inc. or any Subsidiary (other than Classmates
Online, Inc. and any subsidiary of Classmates Online, Inc.) on or
before November 17, 2004.

 

7.     Limitations.

 

(a)   Incentive Stock Option Limit.
Each Option shall be designated in the Option Agreement as either an Incentive
Stock Option or a Nonstatutory Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first
time by the Optionee during any calendar year (under all plans of the Company
and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated
as Nonstatutory Stock Options. For purposes of this Section 7(a),
Incentive Stock Options shall be taken into account in the order in which they
were granted. The Fair Market Value of the Shares shall be determined as of the
time the Option with respect to such Shares is granted. Notwithstanding the
foregoing, no Incentive Stock Options will be granted under the Plan following
the assumption of the Plan by United Online on November 17, 2004.

 

6

 

(b)   At-Will Employment.
Neither the Plan nor any Option, Stock Appreciation Right or Stock Purchase
Right shall confer upon any Optionee any right with respect to continuing the
Optionee’s relationship as a Service Provider with the Company, nor shall it
interfere in any way with his or her right or the Company’s right to terminate
such relationship at any time, with or without cause, and with or without
notice.

 

8.     Term of Plan.
Unless sooner terminated under Section 17, the Plan shall continue in
effect for a term of ten (10) years from the later of (i) the effective
date of the Plan or (ii) the earlier of the most recent Board or
shareholder approval of an increase in the number of Shares reserved for
issuance under the Plan.

 

9.     Term of
Option. The term of each Option shall be stated in the Option Agreement;
provided, however, that the term shall be no more than ten (10) years from
the date of grant thereof. In the case of an Incentive Stock Option granted to
an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5) years
from the date of grant or such shorter term as may be provided in the Option
Agreement.

 

10.   Option Exercise
Price and Consideration.

 

(a)   Exercise Price. The per
Share exercise price for the Shares to be issued upon exercise of an Option
shall be such price as is determined by the Administrator, but shall be subject
to the following:

 

(i)            In the case of an
Incentive Stock Option

 

(A)          granted to an Employee
who, at the time of grant of such Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant.

 

(B)           granted to any other
Employee, the per Share exercise price shall be no less than 100% of the Fair
Market Value per Share on the date of grant.

 

(ii)           In the case of a
Nonstatutory Stock Option, the per Share exercise price shall be no less than
85% of the Fair Market Value per Share on the date of grant; provided, however,
that if, at the time of the grant of such Option, the Optionee owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the exercise price shall be
no less than 110% of the Fair Market Value per Share on the date of grant.

 

(iii)          Notwithstanding the
foregoing, Options may be granted with a per Share exercise price other than as
required above pursuant to a merger or other corporate transaction.

 

(b)   Forms of Consideration.
The consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of, without
limitation, (1) cash, (2) check, (3) consideration received by
the Company under a cashless exercise program implemented by the Company in
connection with the Plan, (4) one of the alternative forms of
consideration outlined below, or (5) any combination of the foregoing
methods of payment. In making its determination as to whether to accept an
alternative form of consideration, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company. The alternative forms of consideration that the Administrator may
consider are as follows:

 

7

 

(i)            Other Shares.
The Administrator may determine, in its sole discretion, that it will accept
other Shares that are already owned by the Optionee as consideration, provided
that such Shares have been owned by the Optionee for more than six (6) months
on the date of surrender and have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which such Option
shall be exercised. Such Shares shall be surrendered to the Company in good
form for transfer. The Optionee shall not surrender Shares if such action would
cause the Company to recognize compensation expense (or additional compensation
expense) with respect to the Option for financial reporting purposes.

 

(ii)           Promissory Note.
The Administrator may determine, in its sole discretion, that it will accept a
full-recourse, interest bearing promissory note from the Optionee as
consideration, provided that the promissory note shall bear a market rate of
interest, but in no event less than the minimum rate (if any) required to avoid
the imputation of additional interest under the Code and that the Shares issued
as a result of the exercise of the Option shall be pledged as security for
payment of the principal amount of the promissory note and interest thereon.
Subject to the foregoing, the Administrator, in its sole discretion, shall
specify the term, interest rate, amortization requirements (if any) and other
provisions of such promissory note.

 

11.   Exercise of
Option.

 

(a)   Procedure for Exercise;
Rights as a Shareholder. Any Option granted hereunder shall be exercisable
according to the terms hereof at such times and under such conditions as
determined by the Administrator and set forth in the Option Agreement. An Option
may not be exercised for a fraction of a Share. Options shall become
exercisable at a rate determined by the Administrator, in its sole discretion,
which shall be set forth in the Option Agreement.

 

An Option shall be deemed
exercised when the Company receives (i) written or electronic notice of
exercise (in accordance with the Option Agreement) from the person entitled to
exercise the Option.  Except to the
extent the Option is exercised through cashless exercise program, the notice
shall be accompanied by full payment for the Shares with respect to which the
Option is exercised.  Full payment may
consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 15 of the Plan.

 

Exercise of an Option in
any manner shall result in a decrease in the number of Shares thereafter
available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.

 

(b)   Termination of Relationship
as a Service Provider. If an Optionee ceases to be a Service Provider for
any reason other than for Misconduct or as a result of Optionee’s Disability or
death, then his or her Option may be exercised within the period of time
following such termination specified in the Option Agreement, to the extent
that the Option is vested on the date of termination (but in no event later
than the expiration of the term of the Option as set forth in the Option
Agreement). If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall immediately revert to the Plan. If, after termination, the
Optionee does not

 

8

 

exercise
his or her Option as to the vested Shares within the time specified in the
applicable option agreement, then the Option shall terminate as to those
Shares, and such Shares shall thereupon revert to the Plan.

 

(c)   Termination for Misconduct.
If an Optionee’s Service with the Company is terminated for Misconduct, the
Optionee’s Option shall immediately terminate, the Optionee shall not have the
right to exercise his or her Option, and all of the Shares covered by the
Option (including those that have vested) shall revert to the Plan.

 

(d)   Disability of Optionee.
If an Optionee ceases to be a Service Provider as a result of the Optionee’s
Disability, then his or her Option may be exercised within the period of time
following such termination specified in the Option Agreement, to the extent the
Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement).
If, on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option as to the vested Shares within the time specified in
the applicable option agreement, then the Option shall terminate as to those
Shares, and such Shares shall thereupon revert to the Plan.

 

(e)   Death of Optionee. If an
Optionee dies while a Service Provider, the Option may be exercised within the
period of time following such termination specified in the Option Agreement, to
the extent that the Option is vested on the date of death (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement).  If the Optionee dies while
holding the Option, then such Option may, within the applicable post-
termination exercise period, be exercised by the Optionee’s designated
beneficiary, provided such beneficiary has been designated prior to Optionee’s
death in a form acceptable to the Administrator. If no such beneficiary has
been designated by the Optionee, then such Option may be exercised by the
personal representative of the Optionee’s estate or by the person(s) to whom
the Option is transferred pursuant to the Optionee’s will or in accordance with
the laws of descent and distribution. If, at the time of death, the Optionee is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall immediately revert to the Plan. If the Option is
not exercised as to the vested Shares within the time specified in the
applicable option agreement, then the Option shall terminate as to those
Shares, and such Shares shall thereupon revert to the Plan.

 

12.   Stock Purchase
Rights.

 

(a)   Rights to Purchase.
Stock Purchase Rights may be issued either alone, in addition to, or in tandem
with other awards granted under the Plan and/or cash awards made outside of the
Plan. After the Administrator determines that it will offer Stock Purchase
Rights under the Plan, it shall advise the offeree in writing or electronically
of the terms, conditions and restrictions related to the offer, including the
number of Shares that such person shall be entitled to purchase, the price to
be paid (which shall not be less than one hundred percent (100%) of the Fair
Market Value per Share on the award date), and the time within which such
person must accept such offer. The offer shall be accepted by execution of a
Restricted Stock Purchase Agreement in the form determined by the
Administrator.

 

(b)   Repurchase Option.
Unless the Administrator determines otherwise, the Restricted Stock Purchase
Agreement shall grant the Company a repurchase option exercisable within 90
days after the voluntary or involuntary termination of the purchaser’s Service
with the Company for any reason (including death or disability). The purchase
price for Shares repurchased pursuant to the Restricted Stock Purchase
Agreement shall be the lower of (i) the Fair Market Value of the Shares
repurchased and (ii) the original price paid by the purchaser and may be
paid by cancellation of any indebtedness of the purchaser to the Company. The
repurchase option shall lapse at such rate as the Administrator may determine.

 

9

 

(c)   Other Provisions. The
Restricted Stock Purchase Agreement shall contain such other terns, provisions
and conditions not inconsistent with the Plan as may be determined by the
Administrator in its sole discretion.

 

(d)   Rights as a Shareholder.
Once the Stock Purchase Right is exercised, the purchaser shall have rights
equivalent to those of a shareholder and shall be a shareholder when his or her
purchase is entered upon the records of the duly authorized transfer agent of
the Company. No adjustment shall be made for a dividend or other right for which
the record date is prior to the date the Stock Purchase Right is exercised,
except as provided in Section 15 of the Plan.

 

13.   Stock
Appreciation Rights.

 

(a)   Authority.  The Administrator shall have full power and
authority, exercisable in its sole discretion, to grant stock appreciation
rights in accordance with this Section 13 to selected Optionees or other
individuals eligible to receive option grants under the Plan.

 

(b)   Types.  Two types of stock appreciation rights shall
be authorized for issuance under this Section 13: (i) tandem stock
appreciation rights (“Tandem Rights”) and (ii) limited stock appreciation
rights (“Limited Rights”).

 

(i)            Tandem Rights.  The following terms and conditions shall
govern the grant and exercise of Tandem Rights.

 

One or more Optionees may be granted a Tandem Right,
exercisable upon such terms and conditions as the Administrator may establish,
to elect between the exercise of the underlying stock option for Shares or the
surrender of that option in exchange for a distribution from the Company in an
amount equal to the excess of (i) the Fair Market Value (on the option
surrender date) of the number of Shares in which the Optionee is at the time
vested under the surrendered option (or surrendered portion thereof) over (ii) the
aggregate exercise price payable for such vested Shares.

 

No such option surrender shall be effective unless it is
approved by the Administrator, either at the time of the actual option
surrender or at any earlier time.  If the
surrender is so approved, then the distribution to which the Optionee shall
accordingly become entitled under this Section 13 may be made in Shares
valued at Fair Market Value on the option surrender date, in cash, or partly in
Shares and partly in cash, as the Administrator shall in its sole discretion
deem appropriate.

 

If the surrender of an option is not approved by the
Administrator, then the Optionee shall retain whatever rights the Optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of (i) five (5) business days after the
receipt of the rejection notice or (ii) the last day on which the option
is otherwise exercisable in accordance with the terms of the instrument evidencing
such option, but in no event may such rights be exercised more than ten (10) years
after the date of the option grant.

 

(ii)           Limited Rights.  The following terms and conditions shall
govern the grant and exercise of Limited Rights under this Section 13:

 

One or more Section 16 Insiders may, in the
Administrator’s sole discretion, be granted Limited Rights with respect to
their outstanding options under this Section 13.

 

Upon the occurrence of a Hostile Tender-Offer, the Section 16
Insider shall have the unconditional right (exercisable for a thirty (30)-day
period following such Hostile Tender-Offer) to

 

10

 

surrender each option with such a Limited Right to the
Company. The Section 16 Insider shall in return be entitled to a cash
distribution from the Company in an amount equal to the excess of (i) the
Tender-Offer Price of the number of Shares in which the Optionee is at the time
vested under the surrendered option (or surrendered portion thereof) over (ii) the
aggregate exercise price payable for those vested Shares. Such cash
distribution shall be made within five (5) days following the option
surrender date.

 

The Administrator shall pre-approve, at the time such
Limited Right is granted, the subsequent exercise of that right in accordance
with the terms of the grant and the provisions of this Section 13.  No additional approval of the Administrator
or the Board shall be required at the time of the actual option surrender and
cash distribution.  Any unsurrendered
portion of the option shall continue to remain outstanding and become
exercisable in accordance with the terms of the instrument evidencing such
grant.

 

(c)   Post-Service Exercise.  The provisions governing the exercise of
Tandem and Limited Stock Appreciation Rights following the cessation of the
recipient’s Service shall be substantially the same as those set forth in Section 11
for the options granted under the Plan.

 

(d)   Reduction in Share Reserve.  The exercise of any Tandem or Limited Stock
Appreciation Right shall result in a reduction to the number of Shares
thereafter available for issuance under the Plan, by the gross number of Shares
as to which the Stock Appreciation Right is exercised and not by the net number
of Shares actually issued in connection with such exercise.

 

14.   Limited
Transferability of Options, Stock Appreciation Rights and Stock Purchase Rights.
Unless determined otherwise by the Administrator, Options, Stock Appreciation
Rights and Stock Purchase Rights may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or
the laws of descent and distribution, and may be exercised during the lifetime
of the Optionee, only by the Optionee. If the Administrator in its sole discretion
makes an Option, Stock Appreciation Right or Stock Purchase Right transferable,
such Option, Stock Appreciation Right or Stock Purchase Right may only be
transferred (i) by will, (ii) by the laws of descent and
distribution, or (iii) to family members (as determined pursuant to the
regulations governing S-8 registration statements under the Securities Act)
through gifts or domestic relations orders.

 

15.   Adjustments;
Dissolution or Liquidation.

 

(a)   Adjustments. In the
event that any stock split, stock dividend, recapitalization, combination of
Shares, exchange of Shares or other change affecting the Shares as a class
without the Company’s receipt of consideration, the Administrator, in order to
prevent diminution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, shall make appropriate
adjustments to the number and class of Shares that may be delivered under the
Plan, and/or the number, class, and exercise or base price of Shares covered by
each outstanding Option, Stock Appreciation Right or Stock Purchase Right.

 

(b)   Dissolution or Liquidation.
In the event of the proposed dissolution or liquidation of the Company, the
Administrator shall notify each Optionee as soon as practicable prior to the
effective date of such proposed transaction. To the extent it has not been
previously exercised, an Option, Stock Appreciation Right or Stock Purchase
Right will terminate immediately prior to the consummation of such proposed
action.

 

16.   Corporate
Transaction/Change in Control.

 

(a)   In the event of any Corporate
Transaction, the shares of Common Stock at the time subject to each outstanding
Option or Stock Appreciation Right shall automatically vest in full so that

 

11

 

each
such Option or Stock Appreciation Right shall, immediately prior to the
effective date of the Corporate Transaction, become exercisable as to all the
shares of Common Stock at the time subject to such Option or Stock Appreciation
Right and may be exercised with respect to any or all of those shares as fully
vested shares of Common Stock.  However,
an outstanding Option or Stock Appreciation Right shall not
become vested on such an accelerated basis if and to the extent:  (i) such Option or Stock Appreciation
Right is, in connection with the Corporate Transaction, to be assumed by the
successor corporation (or parent thereof) or otherwise continued in full force
and effect or (ii) such Option or Stock Appreciation Right is to be
replaced with a cash incentive program of the successor corporation which
preserves the spread existing at the time of the Corporate Transaction on any
Shares for which the Option or Stock Appreciation Right is not otherwise at
that time exercisable and provides for subsequent payout in accordance with the
same exercise/vesting schedule applicable to those Shares or (iii) the
acceleration of such Option or Stock Appreciation Right is subject to other
limitations imposed by the Administrator at the time of the Option grant.

 

(b)   All outstanding repurchase
rights shall automatically terminate, and the shares of Common Stock subject to
those terminated rights shall immediately vest in full, in the event of any
Corporate Transaction, except to the extent: 
(i) those repurchase rights are to be assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction
or (ii) such accelerated vesting is precluded by other limitations imposed
by the Administrator at the time the repurchase right is issued.  All repurchase rights outstanding at the time
of a Change in Control shall continue in full force and effect, subject to
adjustment pursuant to Paragraph 15(d) below.

 

(c)   Immediately following the
consummation of the Corporate Transaction, all outstanding Options or Stock
Appreciation Rights shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation (or parent thereof) or otherwise
continued in full force and effect.

 

(d)   Each Option which is assumed in
connection with a Corporate Transaction shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply to the number and class
of securities which would have been issuable to the Optionee in consummation of
such Corporate Transaction had the Option been exercised immediately prior to
such Corporate Transaction.  Appropriate
adjustments to reflect such Corporate Transaction shall also be made to (i) the
exercise price payable per share under each outstanding Option, provided the
aggregate exercise price payable for such securities shall remain the same, (ii) the
maximum number and/or class of securities available for issuance over the
remaining term of the Plan and (iii) the maximum number and/or class of
securities which may be issued pursuant to Incentive Stock Options.  To the extent the holders of Common Stock
receive cash consideration for their Common Stock in consummation of the
Corporate Transaction, with the Administrator’s consent the successor
corporation may, in connection with the assumption of the outstanding Options,
substitute one or more shares of its own common stock with a fair market value
equivalent to the cash consideration paid per share of Common Stock in such
Corporate Transaction.

 

(e)   Among its discretionary powers,
the Administrator shall have the ability to structure an Option or Stock
Appreciation Right (either at the time the Option or Stock Appreciation Right
is granted or at any time while the Option or Stock Appreciation Right remains
outstanding) so that the Option or Stock Appreciation Right shall vest and
become immediately exercisable as to all or a portion of the shares subject to
that Option or Stock Appreciation Right (and the Company’s repurchase rights as
to all or a portion of the unvested Shares subject to that Option shall
immediately terminate) upon the occurrence of a Corporate Transaction, a Change
in Control or the Optionee’s Involuntary Termination within a designated period
of time following such Corporate Transaction or Change in Control.

 

17.   Time of
Granting Options, Stock Appreciation Rights and Stock Purchase Rights. The
date of grant of an Option, Stock Appreciation Right or Stock Purchase Right
shall, for all purposes, be the date

 

12

 

on which the Administrator makes the determination
granting such Option, Stock Appreciation Right or Stock Purchase Right, or such
later date as is determined by the Administrator. Notice of the determination
shall be given to each Service Provider to whom an Option, Stock Appreciation
Right or Stock Purchase Right is so granted within a reasonable time after the
date of such grant.

 

18.   Amendment and
Termination of the Plan.

 

(a)   Amendment and Termination.
The Board may at any time amend, alter, suspend or terminate the Plan.

 

(b)   Shareholder Approval.
The Board shall obtain shareholder approval of any Plan amendment to the extent
necessary and desirable to comply with Applicable Laws.

 

(c)   Effect of Amendment or
Termination. No amendment, alteration, suspension or termination of the
Plan shall impair the rights of any Optionee, unless mutually agreed otherwise
between the Optionee and the Administrator, which agreement must be in writing
and signed by the Optionee and the Company. Termination of the Plan shall not
affect the Administrator’s ability to exercise the powers granted to it
hereunder with respect to Options, Stock Appreciation Rights and Stock Purchase
Rights granted under the Plan prior to the date of such termination.

 

19.   Conditions Upon
Issuance of Shares. Shares shall not be issued pursuant to the exercise of
an Option, Stock Appreciation Right or Stock Purchase Right unless the exercise
of such award and the issuance and delivery of such Shares shall comply with
Applicable Laws and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

 

20.   Inability to
Obtain Authority. The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not
have been obtained.

 

21.   Reservation of
Shares. The Company, during the term of this Plan, shall at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.

 

13

 

IN WITNESS WHEREOF, the
Company, by its duly authorized officer, has executed this Plan (as assumed and
administered by the Company) on the date indicated above.

 

 

	
   

  	
  UNITED ONLINE,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ FREDERIC A.
  RANDALL, JR.

  	
   

  
	
   

  	
  Name:

  	
  Frederic A.
  Randall, Jr.

  
	
   

  	
  Title:

  	
  EVP, General
  Counsel and Secretary

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