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EXHIBIT 4.18    
    

 
 

SUPPLEMENT NO. ONE
  TO
  SECOND PRIORITY PLEDGE AGREEMENT    
    

THIS
SUPPLEMENT NO. ONE (this "Supplement") dated as the 30th day of April, 2004, to the SECOND PRIORITY PLEDGE AGREEMENT dated as of May 30, 2003, among PLIANT CORPORATION, a
Utah corporation (the "Issuer"), and each subsidiary of the Issuer listed on Schedule I hereto (each such subsidiary individually a "Subsidiary Pledgor" and collectively, the "Subsidiary
Pledgors"; the Issuer and the Subsidiary Pledgors are referred to collectively herein as the "Pledgors") and WILMINGTON TRUST COMPANY, a Delaware banking corporation ("Wilmington Trust"), as
collateral agent (in such capacity, the "Collateral Agent") for the Secured Parties (as defined in the Second Priority Security Agreement referred to below) 

        A.    Reference
is made to (a) the Indenture dated as of May 30, 2003, (as amended, supplemented or otherwise modified from time to time, the "Indenture"), among
the Issuer, the guarantors party thereto and Wilmington Trust, as trustee (in such capacity, the "Trustee"), (b) the Second Priority Security Agreement dated as of May 30, 2003, (as
amended, supplemented or otherwise modified from time to time, the "Second Priority Security Agreement"), among the Issuer, the grantors party thereto and the Collateral Agent and (c) the
Intercreditor Agreement dated as of May 30, 2003 (as amended, supplemented or otherwise modified from time to time, the "Intercreditor Agreement"), among the Issuer, the Collateral Agent and
the Credit Agent (as defined in the Second Priority Security Agreement). 

        B.    Capitalized
terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Second Priority Pledge Agreement and the Indenture. 

        C.    The
Pledgors have entered into the Second Priority Pledge Agreement pursuant to the terms of the Indenture in order to induce the Trustee to enter into the Indenture and
the Initial Purchasers to
purchase the Notes. Pursuant to Section 4.11 of the Indenture, the Company is required to cause certain of its Subsidiaries to enter into the Second Priority Pledge Agreement as a Subsidiary
Pledgor. Section 24 of the Second Priority Pledge Agreement provides that such Subsidiaries may become Subsidiary Pledgors under the Second Priority Pledge Agreement by execution and delivery
of an instrument in the form of this Supplement. The undersigned Subsidiary (the "New Pledgor") is executing this Supplement in accordance with the requirements of the Indenture to become a Subsidiary
Pledgor under the Second Priority Pledge Agreement as consideration for the purchase of the Notes by the Initial Purchasers and the Holders. 

        Accordingly,
the Collateral Agent and the New Pledgor agree as follows: 

        Section 1.    In accordance with Section 24 of the Second Priority Pledge Agreement, the New Pledgor by its
signature below becomes a Pledgor under the Second Priority Pledge Agreement with the same force and effect as if originally named therein as a Pledgor and the New Pledgor hereby agrees (a) to
all the terms and provisions of the Second Priority Pledge Agreement applicable to it as a Pledgor thereunder and (b) represents and warrants that the representations and warranties made by it
as a Pledgor thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, the New Pledgor, as security for the payment and performance in full of the Obligations (as
defined in the Second Priority Pledge Agreement), does hereby create and grant to the Collateral Agent, its successors and assigns, for the benefit of the Secured Parties, their successors and
assigns, a security interest in and lien on all of the New Pledgor's right, title and interest in and to the Collateral (as defined in the Second Priority Pledge Agreement) of the New Pledgor, subject
to the provisions of the Intercreditor Agreement (as provided in Section 7.25 of the Second Priority Pledge Agreement). Each reference to a "Subsidiary Pledgor" or a "Pledgor" in the Second
Priority Pledge Agreement shall 

 

be
deemed to include the New Pledgor. The Second Priority Pledge Agreement is hereby incorporated herein by reference. 

        Section 2.    The New Pledgor represents and warrants to the Collateral Agent and the other Secured Parties that this
Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms. 

        Section 3.    This Supplement may be executed in counterparts, each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Supplement shall become effective when the Collateral Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Pledgor and the Collateral Agent. Delivery of an
executed signature page to this Supplement by facsimile transmission shall be as effective as delivery of a manually signed counterpart of this Supplement. 

        Section 4.    The New Pledgor hereby represents and warrants that set forth on Schedule I attached hereto is a
true and correct schedule of all its Pledged Securities. 

        Section 5.    Except as expressly supplemented hereby, the Second Priority Pledge Agreement shall remain in full force
and effect. 

        Section 6.    THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 

        Section 7.    In the event any one or more of the provisions contained in this Supplement should be held invalid, illegal
or unenforceable in any respect, neither party hereto shall be required to comply with such provision for so long as such provision is held to be invalid, illegal or unenforceable, but the validity,
legality and enforceability of the remaining provisions contained herein and in the Second Priority Pledge Agreement shall not in any way be affected or impaired (it being understood that the
invalidity of a provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties hereto shall endeavor in
good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions. 

        Section 8.    All communications and notices hereunder shall be in writing and given as provided in Section 15 of
the Second Priority Pledge Agreement. All communications and notices hereunder to the New Pledgor shall be given to it at the address set forth under its signature hereto. 

        Section 9.    The New Pledgor agrees to reimburse the Collateral Agent for its reasonable
out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for the Collateral Agent. 

(signature
page to follow) 

2

 

IN WITNESS WHEREOF, the New Pledgor and the Collateral Agent have duly executed this Supplement to the Second Priority Pledge Agreement as of the day
and year first above written. 

	 	 	UNIPLAST INDUSTRIES CO.
	

 	
 	

By:	
 	

	 	 	 	 	Name:	Brian E. Johnson
	 	 	 	 	Title:	Executive Vice President, Treasurer & Assistant Secretary
	 	 	Address:	 
	 	 	 	 	 	

	

 	
 	

WILMINGTON TRUST COMPANY, as Collateral Agent,
	

 	
 	

By:	
 	

	 	 	 	 	Name:	 
	 	 	 	 	Title:	 

3

 
 
 

SCHEDULE I
  to Supplement No. One to the
  Second Priority Pledge Agreement
  Pledged Securities of the New Pledgor    

 
 

EQUITY INTERESTS    

	Issuer
 
	 	Number of

Certificate
	 	Registered

Owner
	 	Number and

Class of Shares
	 	Percentage

of Shares

	Uniplast U.S., Inc.	 	R-1	 	Uniplast Industries Co.	 	1,000 preferred shares	 	100% (of preferred shares)

 
 

DEBT SECURITIES    

	Issuer
 
	 	Principal

Amount
	 	Date of

Note
	 	Maturity

Date

	Nil	 	 	 	 	 	 

4

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EXHIBIT 4.18

SUPPLEMENT NO. ONE TO SECOND PRIORITY PLEDGE AGREEMENT

SCHEDULE I to Supplement No. One to the Second Priority Pledge Agreement Pledged Securities of the New Pledgor

EQUITY INTERESTS

DEBT SECURITIESExhibit
10.3

 

UNITED
ONLINE, INC.

2001 EMPLOYEE STOCK PURCHASE PLAN

 

(As amended and restated effective
April 22, 2004)

 

I.              PURPOSE OF THE
PLAN

 

This Employee Stock
Purchase Plan is intended to promote the interests of United Online, Inc., a
Delaware corporation, by providing eligible employees with the opportunity to
acquire a proprietary interest in the Corporation through participation in a
payroll deduction based employee stock purchase plan designed to qualify under
Section 423 of the Code.

 

All share numbers in this
document have been adjusted to reflect the 3-for-2 split of the Common Stock
effected on November 3, 2003.

 

Capitalized terms herein
shall have the meanings assigned to such terms in the attached Appendix.

 

II.            ADMINISTRATION
OF THE PLAN

 

The Plan Administrator
shall have full authority to interpret and construe any provision of the Plan
and to adopt such rules and regulations for administering the Plan as it may
deem necessary in order to comply with the requirements of Code Section 423.  Decisions of the Plan Administrator shall be
final and binding on all parties having an interest in the Plan.

 

III.           STOCK SUBJECT TO
PLAN

 

A.            The stock purchasable under the Plan shall be shares
of authorized but unissued or reacquired Common Stock, including shares of
Common Stock purchased on the open market. 
The number of shares of Common Stock reserved for issuance over the term
of the Plan shall be limited to 3,925,025 shares.  Such reserve consists of (i) the shares that remained available
for issuance under the NetZero, Inc. 1999 Employee Stock Purchase Plan
following the purchase of shares on October 31, 2001, (ii) the shares that
remained available for issuance under the Juno ESPP following the purchase of
shares on January 31, 2002, (iii) an additional 906,336 shares due to the
automatic share reserve increase that occurred on January 2, 2002, (iv) an
additional 939,679 shares due to the automatic share reserve increase that
occurred on January 2, 2003, and (v) an additional 959,158 shares due to
the automatic share reserve increase that occurred on January 1, 2004.

 

B.            The number of shares of Common Stock available for
issuance under the Plan shall automatically increase on the first trading day
of January each calendar year during the term of the Plan, beginning with
calendar year 2002 by an amount equal to one and one-half percent (1.5%) of the
total number of shares of Common Stock outstanding on the last trading day in
December of the immediately preceding calendar year, but in no event shall
any such annual increase exceed 975,000 shares.

 

C.            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 (i) the maximum number and class of
securities issuable under the Plan, (ii) the maximum number and class of
securities purchasable per Participant and in the aggregate on any one Purchase
Date, and (iii) the maximum number and/or class of securities by which the
share reserve is to increase automatically each calendar year pursuant to the
provisions of Section III.B of this Article One and (v) the number
and class of securities and the price per share in effect under each
outstanding purchase right in order to prevent the dilution or enlargement of
benefits thereunder.

 

IV.           OFFERING PERIODS

 

A.            Shares of Common Stock shall be offered for purchase
under the Plan through a series of successive offering periods until such time
as (i) the maximum number of shares of Common Stock available for issuance
under the Plan shall have been purchased or (ii) the Plan shall have been
sooner terminated.

 

B.            Unless otherwise specified by the Plan Administrator,
each offering period shall have a twenty-four (24) month duration.  Offering periods shall commence on the first
business day of May and the first business day of November each year.  Special offering periods may be established
with respect to entities that are acquired by the Corporation (or by a
subsidiary of the Corporation) or under such other circumstances as the Plan
Administrator deems appropriate.

 

C.            Each offering period shall be comprised of four successive
Purchase Intervals.  Purchase Intervals
shall run from the first business day in November each year to the last
business day in April in the following year and from the first business
day in May each year to the last business day in October.

 

D.            Should the Fair Market Value per share of Common Stock
on any Purchase Date within an offering period be less than the Fair Market
Value per share of Common Stock on the start date of that offering period, then
the individuals participating in that offering period shall, immediately after
the purchase of shares of Common Stock on their behalf on such Purchase Date,
be transferred from that offering period and be automatically enrolled in the
next offering period commencing on the next business day following such
Purchase Date.  The new offering period
shall have a duration of twenty (24) months, unless a shorter duration is
established by the Plan Administrator within five (5) business days following
the start date of that offering period.

 

V.            ELIGIBILITY

 

A.            Each individual who is an Eligible Employee on the
start date of an offering period under the Plan may enter that offering period
only on such start date.  However, the
Eligible Employees who were employees of Juno Online Service, Inc. prior to the
Effective Time, may enter the offering period that begins on November 1,
2001 on the first business day in February 2002.  Eligible Employees may not be entered into more than one offering
period.

 

B.            The date an individual enters an offering period shall
be designated his or her Entry Date for purposes of that offering period.

 

2

 

C.            To participate in the Plan for a particular offering
period, the Eligible Employee must complete the enrollment forms prescribed by the
Plan Administrator (including a stock purchase agreement and a payroll
deduction authorization) and file such forms with the Plan Administrator (or
its designate) on or before his or her scheduled Entry Date.

 

VI.           PAYROLL
DEDUCTIONS

 

A.            The payroll deduction authorized by the Participant
for purposes of acquiring shares of Common Stock during an offering period may
be any multiple of one percent (1%) of the Cash Earnings paid to the
Participant during each Purchase Interval within that offering period, up to a
maximum of fifteen percent (15%).  The
deduction rate so authorized shall continue in effect throughout the offering
period, except to the extent such rate is changed in accordance with the
following guidelines:

 

(i)            The
Participant may, at any time during the offering period, reduce his or her rate
of payroll deduction to become effective as soon as possible after filing the
appropriate form with the Plan Administrator. 
The Participant may not, however, effect more than one (1) such
reduction per Purchase Interval.

 

(ii)           The
Participant may, at any time during the offering period, increase the rate of
his or her payroll deduction to become effective as soon as possible after
filing the appropriate form with the Plan Administrator.  The Participant may not, however, effect
more than one (1) such increase per Purchase Interval.

 

B.            Payroll deductions shall begin on the first pay day
administratively feasible following the Participant’s Entry Date into the
offering period and shall (unless sooner terminated by the Participant)
continue through the pay day ending with or immediately prior to the last day
of that offering period.  The amounts so
collected shall be credited to the Participant’s book account under the Plan,
but no interest shall be paid on the balance from time to time outstanding in
such account.  The amounts collected
from the Participant shall not be required to be held in any segregated account
or trust fund and may be commingled with the general assets of the Corporation
and used for any corporate purpose.

 

C.            Payroll deductions shall automatically cease upon the
termination of the Participant’s purchase        right in accordance with the provisions of the Plan.

 

D.            The Participant’s acquisition of Common Stock under
the Plan on any Purchase Date shall neither limit nor require the Participant’s
acquisition of Common Stock on any subsequent Purchase Date, whether within the
same or a different offering period.

 

VII.         PURCHASE RIGHTS

 

A.            Grant
of Purchase Right. 
A Participant shall be granted a separate purchase right for each
offering period in which he or she participates.  The purchase right shall be

 

3

 

granted
on the Participant’s Entry Date into the offering period.  The purchase right shall be deemed to
provide the Participant with the right to purchase the lesser of (1) 15,000 shares
of Common Stock or (2) the maximum amount permitted by Code
Section 423(b)(8).  The actual
number of shares of Common Stock purchasable on any one Purchase Date shall be
limited by the provisions contained herein, including, but not limited to,
those restrictions contained in Article VII Section D and
Article VIII.  The Participant
shall execute a stock purchase agreement embodying such terms and such other
provisions (not inconsistent with the Plan) as the Plan Administrator may deem
advisable.

 

Under no circumstances
shall purchase rights be granted under the Plan to any Eligible Employee if
such individual would, immediately after the grant, own (within the meaning of
Code Section 424(d)) or hold outstanding options or other rights to
purchase, stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Corporation or any
Corporate Affiliate.

 

B.            Exercise
of the Purchase Right. Each purchase right shall be
automatically exercised in installments on each successive Purchase Date within
the offering period, and shares of Common Stock shall accordingly be purchased
on behalf of each Participant (other than Participants whose payroll deductions
have previously been refunded pursuant to the Termination of Purchase Right
provisions below) on each such Purchase Date. 
The purchase shall be effected by applying the Participant’s payroll
deductions for the Purchase Interval ending on such Purchase Date to the
purchase of whole shares of Common Stock at the purchase price in effect for
the Participant for that Purchase Date.

 

C.            Purchase
Price.  The purchase price per share at which Common Stock
will be purchased on the Participant’s behalf on each Purchase Date within the
offering period shall be equal to eighty-five percent (85%) of the lower
of (i) the Fair Market Value per share of Common Stock on the Participant’s
Entry Date into that offering period or (ii) the Fair Market Value per share of
Common Stock on that Purchase Date.

 

D.            Number
of Purchasable Shares. The number of shares of Common
Stock purchasable by a Participant on each Purchase Date during the offering
period shall be the number of whole shares obtained by dividing the amount
collected from the Participant through payroll deductions during the Purchase
Interval ending with that Purchase Date by the purchase price in effect for the
Participant for that Purchase Date. 
However, the maximum number of shares of Common Stock purchasable per
Participant on any one Purchase Date shall not exceed 3,750 shares, subject to
periodic adjustments in the event of certain changes in the Corporation’s
capitalization.  In addition, the
maximum number of shares of Common Stock purchasable in total by all
Participants on any one Purchase Date shall not exceed 900,000 shares, subject
to periodic adjustments in the event of certain changes in the Corporation’s
capitalization.  However, the Plan
Administrator shall have the discretionary authority, exercisable prior to the
start of any offering period under the Plan, to increase or decrease the
limitations to be in effect for the number of shares purchasable per
Participant and in total by all Participants on each Purchase Date within that
offering period.

 

E.             Excess
Payroll Deductions. 
Any payroll deductions not applied to the purchase of shares of Common
Stock on any Purchase Date because they are not sufficient to purchase a whole
share of Common Stock shall be held for the purchase of Common Stock on

 

4

 

the
next Purchase Date.  However, any
payroll deductions not applied to the purchase of Common Stock by reason of the
limitation on the maximum number of shares purchasable per Participant or in
the aggregate on the Purchase Date shall be promptly refunded.

 

F.             Suspension
of Payroll Deductions.  In the event that a Participant is, by reason of the
accrual limitations in Article VIII, precluded from purchasing additional
shares of Common Stock on one or more Purchase Dates during the offering period
in which he or she is enrolled, then no further payroll deductions shall be
collected from such Participant with respect to those Purchase Dates.  The suspension of such deductions shall not
terminate the Participant’s purchase right for the offering period in which he
or she is enrolled, and payroll deductions shall automatically resume on behalf
of such Participant once he or she is again able to purchase shares during that
offering period in compliance with the accrual limitations of
Article VIII.

 

G.            Termination
of Purchase Right. 
The following provisions shall govern the termination of outstanding
purchase rights:

 

(i)            A
Participant may withdraw from the offering period in which he or she is
enrolled by filing the appropriate form with the Plan Administrator (or its
designate) at any time prior to the next scheduled Purchase Date in that
offering period, and no further payroll deductions shall be collected from the
Participant with respect to the offering period.  Any payroll deductions collected during the Purchase Interval in
which such withdrawal occurs shall, at the Participant’s election, be
immediately refunded or held for the purchase of shares on the next Purchase
Date.  If no such election is made at
the time of such withdrawal, then the payroll deductions collected with respect
to the Purchase Interval in which such withdrawal occurs shall be refunded as
soon as possible.

 

(ii)           The
Participant’s withdrawal from the offering period shall be irrevocable, and the
Participant may not subsequently rejoin that offering period.  In order to resume participation in any
subsequent offering period, such individual must re-enroll in the Plan (by
making a timely filing of the prescribed enrollment forms) on or before his or
her scheduled Entry Date into that offering period.

 

(iii)          Should
the Participant cease to remain an Eligible Employee for any reason (including
death, disability or change in status) while his or her purchase right remains
outstanding, then that purchase right shall immediately terminate, and all of
the Participant’s payroll deductions for the Purchase Interval in which the
purchase right so terminates shall be immediately refunded.  However, should the Participant cease to
remain in active service by reason of an approved unpaid leave of absence, then
the Participant shall have the right, exercisable up until the last business
day of the Purchase Interval in which such leave commences, to (a) withdraw all
the payroll deductions collected to date on his or her behalf for that Purchase
Interval or (b) have such funds held for the purchase of shares on his or her
behalf on the next scheduled Purchase Date. 
In no event, however, shall any further payroll deductions be collected
on the Participant’s behalf during such leave. 
Upon the Participant’s return to active

 

5

 

service (x) within
ninety (90) days following the commencement of such leave or (y) prior to the
expiration of any longer period for which such Participant’s right to
reemployment with the Corporation is guaranteed by statute or contract, his or
her payroll deductions under the Plan shall automatically resume at the rate in
effect at the time the leave began, unless the Participant withdraws from the
Plan prior to his or her return.  An
individual who returns to active employment following a leave of absence which
exceeds in duration the applicable (x) or (y) time period will be treated as a
new Employee for purposes of subsequent participation in the Plan and must
accordingly re-enroll in the Plan (by making a timely filing of the prescribed
enrollment forms) on or before his or her scheduled Entry Date into the
offering period.

 

H.            Change
in Control. 
Each outstanding purchase right shall automatically be exercised,
immediately prior to the effective date of any Change in Control, by applying
the payroll deductions of each Participant for the Purchase Interval in which
such Change in Control occurs to the purchase of whole shares of Common Stock
at a purchase price per share equal to eighty-five percent (85%) of the lower
of (i) the Fair Market Value per share of Common Stock on the Participant’s
Entry Date into the offering period in which such Change in Control occurs or
(ii) the Fair Market Value per share of Common Stock immediately prior to the
effective date of such Change in Control. 
However, the applicable limitation on the number of shares of Common
Stock purchasable per Participant shall continue to apply to any such purchase,
but not the limitation applicable to the maximum number of shares of Common
Stock purchasable in total by all Participants.

 

The Corporation shall use
reasonable efforts to provide at least ten (10)-days prior written notice of the
occurrence of any Change in Control, and Participants shall, following the
receipt of such notice, have the right to terminate their outstanding purchase
rights prior to the effective date of the Change in Control.

 

I.              Proration
of Purchase Rights. 
Should the total number of shares of Common Stock to be purchased
pursuant to outstanding purchase rights on any particular date exceed the
number of shares then available for issuance under the Plan, the Plan
Administrator shall make a pro-rata allocation of the available shares on a
uniform and nondiscriminatory basis, and the payroll deductions of each
Participant, to the extent in excess of the aggregate purchase price payable
for the Common Stock pro-rated to such individual, shall be refunded.

 

J.             ESPP
Accounts.  The Plan Administrator shall have the
discretionary authority to require each Participant who purchases shares of
Common Stock under this Plan to maintain those shares in a brokerage account
established on his or her behalf at a Corporation-designated brokerage firm
until the earlier
of (i) the date the Participant sells or otherwise transfers ownership of those
shares or (ii) the disqualifying disposition period for those shares under the
federal tax laws (two years after the start date of the offering period in
which the shares are purchased and one year after the actual purchase date) has
elapsed.  Accordingly, such requirement,
if imposed, shall not in any way limit the ability of the Participant to sell or
otherwise transfer ownership of the purchased shares at any time.

 

6

 

K.            Assignability.  The purchase right shall be exercisable only
by the Participant and shall not be assignable or transferable by the
Participant.

 

L.             Stockholder
Rights. 
A Participant shall have no stockholder rights with respect to the
shares subject to his or her outstanding purchase right until the shares are
purchased on the Participant’s behalf in accordance with the provisions of the
Plan and the Participant has become a holder of record of the purchased shares.

 

VIII.        ACCRUAL
LIMITATIONS

 

A.            No Participant shall be entitled to accrue rights to
acquire Common Stock pursuant to any purchase right outstanding under this Plan
if and to the extent such accrual, when aggregated with (i) rights to purchase
Common Stock accrued under any other purchase right granted under this Plan and
(ii) similar rights accrued under other employee stock purchase plans (within
the meaning of Code Section 423) of the Corporation or any Corporate
Affiliate, would otherwise permit such Participant to purchase more than
Twenty-Five Thousand Dollars ($25,000.00) worth of stock of the Corporation or
any Corporate Affiliate (determined on the basis of the Fair Market Value per
share on the date or dates such rights are granted) for each calendar year such
rights are at any time outstanding.

 

B.            For purposes of applying such accrual limitations to
the purchase rights granted under the Plan, the following provisions shall be
in effect:

 

(i)            The
right to acquire Common Stock under each outstanding purchase right shall
accrue in a series of installments on each successive Purchase Date during the
offering period on which such right remains outstanding.

 

(ii)           No right
to acquire Common Stock under any outstanding purchase right shall accrue to
the extent the Participant has already accrued in the same calendar year the
right to acquire Common Stock under one or more other purchase rights at a rate
equal to Twenty-Five Thousand Dollars ($25,000.00) worth of Common Stock
(determined on the basis of the Fair Market Value per share on the date or
dates of grant) for each calendar year such rights were at any time
outstanding.

 

C.            If by reason of such accrual limitations, any purchase
right of a Participant does not accrue for a particular Purchase Interval, then
the payroll deductions which the Participant made during that Purchase Interval
with respect to such purchase right shall be promptly refunded.

 

D.            In the event there is any conflict between the
provisions of this Article and one or more provisions of the Plan or any
instrument issued thereunder, the provisions of this Article shall be
controlling.

 

7

 

IX.           EFFECTIVE DATE
AND TERM OF THE PLAN

 

A.            The June 5, 2001 amendment and restatement of the
Plan shall become effective at the Effective Time, provided no purchase rights
granted under the Plan shall be exercised, and no shares of Common Stock shall
be issued hereunder, until the Corporation shall have complied with all
applicable requirements of the 1933 Act (including the registration of the
shares of Common Stock issuable under the Plan on a Form S-8 registration
statement filed with the Securities and Exchange Commission), all applicable
listing requirements of any Stock Exchange (or the Nasdaq Stock Market, if
applicable) on which the Common Stock is listed for trading and all other
applicable requirements established by law or regulation.

 

B.            The Plan shall serve as the successor to the
Predecessor Plans, and no further offering periods under either Predecessor
Plan shall commence after the Effective Date.

 

C.            Unless terminated by the Board prior to such time, the
Plan shall terminate on the last business day in April 2011.  If the Board terminates the Plan prior to a
regularly scheduled Purchase Date, any outstanding purchase rights shall be
automatically exercised, immediately prior to the effective date of such
termination, by applying payroll deductions of each Participant to the purchase
of whole shares of Common Stock at a purchase price per share equal to 85% of
the lower
of:  (i) the fair market value per share
of Common Stock on the Participant’s Entry Date into the offering period or
(ii) the Fair Market Value per share of Common Stock immediately prior to the
effective date of the termination of the Plan. 
No further purchase rights shall be granted or exercised, and no further
payroll deductions shall be collected, under the Plan following such
termination.

 

X.            AMENDMENT OF THE
PLAN

 

A.            The Board may alter, amend or suspend the Plan at any
time.

 

B.            In no event may the Board effect any of the following
amendments or revisions to the Plan without the approval of the Corporation’s
stockholders: (i) increase the number of shares of Common Stock issuable under
the Plan, except for permissible adjustments in the event of certain changes in
the Corporation’s capitalization or (ii) modify the eligibility requirements
for participation in the Plan.

 

C.            The Board amended and restated the Plan on
January 29, 2002 to reflect, among other things, the automatic share
reserve increase that occurred on January 2, 2002.

 

XI.           GENERAL
PROVISIONS

 

A.            All costs and expenses incurred in the administration
of the Plan shall be paid by the Corporation; however, each Plan Participant
shall bear all costs and expenses incurred by such individual in the sale or
other disposition of any shares purchased under the Plan.

 

B.            Nothing in the Plan shall confer upon the Participant
any right to continue in the employ of the Corporation or any Corporate
Affiliate for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Corporate

 

8

 

Affiliate
employing such person) or of the Participant, which rights are hereby expressly
reserved by each, to terminate such person’s employment at any time for any
reason, with or without cause.

 

C.            The provisions of the Plan shall be governed by the
laws of the State of Delaware without resort to that State’s conflict-of-laws
rules.

 

9

 

Schedule A

 

Corporations Participating in

the United Online, Inc. 2001

Employee Stock Purchase Plan

 

United Online,
Inc.

Juno Online
Services, Inc.

NetZero, Inc.

NetBrands, Inc.

Mega Web Services,
Inc.

 

 

APPENDIX

 

The following definitions
shall be in effect under the Plan:

 

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

 

B.            Cash
Earnings  shall mean (i) the regular base
salary paid to a Participant by one or more Participating Companies during such
individual’s period of participation in one or more offering periods under the
Plan and (ii) any overtime payments, bonuses, commissions, profit-sharing
distributions and other incentive-type payments received during such
period.  Cash Earnings shall be
calculated before deduction of (A) any income or employment tax
withholdings or (B) any contributions made by the Participant to any Code
Section 401(k) salary deferral plan or Code Section 125 cafeteria
benefit program now or hereafter established by the Corporation or any
Corporate Affiliate.  Cash Earnings
shall not include any contributions made on the Participant’s behalf by the
Corporation or any Corporate Affiliate to any employee benefit or welfare plan
now or hereafter established (other than Code Section 401(k) or Code
Section 125 contributions deducted from such Cash Earnings).

 

C.            Change
in Control
shall mean a change in ownership of the Corporation pursuant to any of the
following transactions:

 

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

 

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

 

(iii)          the
acquisition, directly or indirectly, by a 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.

 

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

 

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

 

F.             Corporate
Affiliate
shall mean any parent or subsidiary corporation of the Corporation (as
determined in accordance with Code Section 424), whether now existing or
subsequently established.

 

A-1

 

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

 

H.            Effective
Time
shall be November 1, 2001.  Any
Corporate Affiliate that becomes a Participating Corporation after such
Effective Time shall designate a subsequent Effective Time with respect to its
employee-Participants.

 

I.              Eligible
Employee
shall mean any person who is employed by a Participating Corporation on a basis
under which he or she is regularly expected to render more than twenty (20)
hours of service per week for more than five (5) months per calendar year for
earnings that are considered wages under Code Section 3401 (a).

 

J.             Entry
Date
shall mean the date an Eligible Employee first commences participation in the
offering period in effect under the Plan. 
The earliest Entry Date under the Plan shall be the Effective Time.

 

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

 

(i)            If the Common Stock is
at the time traded on the Nasdaq Stock Market, then the Fair Market Value shall
be 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 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.

 

L.             Juno
ESPP
shall mean the Juno Online, Inc. 1999 Employee Stock Purchase Plan.

 

M.           1933
Act
shall mean the Securities Act of 1933, as amended.

 

N.            Participant shall mean any Eligible Employee of
a Participating Corporation who is actively participating in the Plan.

 

O.            Participating
Corporation
shall mean the Corporation and such Corporate Affiliate or Affiliates as may be
authorized from time to time by the Board to extend the benefits of the Plan to
their Eligible Employees.  The
Participating Corporations in the Plan are listed in attached Schedule A.

 

A-2

 

P.             Plan shall mean the United Online, Inc.
2001 Employee Stock Purchase Plan, as set forth in this document.

 

Q.            Plan
Administrator
shall mean the committee of two (2) or more Board members appointed by the
Board to administer the Plan.

 

R.            Predecessor
Plans
shall mean the Juno ESPP and the NetZero, Inc. 1999 Employee Stock Purchase
Plan.

 

S.             Purchase
Date
shall mean the last business day of each Purchase Interval.

 

T.            Purchase
Interval
shall mean each successive six (6)-month period within the offering period at
the end of which there shall be purchased shares of Common Stock on behalf of
each Participant.

 

U.            Stock
Exchange
shall mean either the American Stock Exchange or the New York Stock Exchange.

 

A-3

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