Document:

Exhibit 10.3

 

FIRST AMENDMENT

TO

EMPLOYMENT AGREEMENT

 

This amendment dated and
effective January 1, 2009 (this “Amendment”), amends that certain
Employment Agreement dated effective as of October 1, 2007 (the “Original
Agreement”) by and between United Online, Inc. (the “Company”) and Scott
H. Ray. Capitalized terms used and not otherwise defined herein shall have the
respective meanings set forth in the Original Agreement.

 

RECITALS

 

WHEREAS, Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”), places certain
restrictions, among other things, as to the timing of distributions from
nonqualified deferred compensation plans and arrangements; and

 

WHEREAS, the parties desire
to amend the Original Agreement to comply with Section 409A of the Code.

 

NOW, THEREFORE, in
consideration of the mutual promises set forth herein, the parties hereto
hereby agree as follows:

 

1.             The first sentence of
Section 3 of the Original Agreement is hereby deleted and replaced as
follows:

 

“You will also be eligible
to receive an annual bonus of up to 100% of your annual base salary for each
fiscal year (the ‘Annual Bonus’), less withholding required by law, based on
performance criteria established by the Board of Directors.”

 

2.             A new sentence is
hereby added to the end of Section 3 of the Original Agreement, as
follows:

 

“Your annual bonus award
shall in no event be paid later than the 15th day of the third month following
the end of your taxable year or, if later, the end of the Company’s taxable
year in which such bonus award is earned.”

 

3.             A new sentence is
hereby added to the end of each of Section 4(b) and 4(c) of the
Original Agreement, as follows:

 

“Except as otherwise
expressly provided in the agreement evidencing a particular  restricted stock unit award, the shares of
common stock underlying the restricted stock units that vest on such an
accelerated basis will be issued to you on the first business day, within the
sixty (60)-day period following the date of your cessation from service as a
result of your termination “without cause” (as defined below) or your
resignation for “good reason” (as defined below), on which the executed Release
required of you pursuant to Section 7(b) is effective and enforceable
in accordance with its terms following any applicable revocation period, or as
soon thereafter as administratively practicable, but in no event later than the
last business day of that sixty (60)-day period on which such Release is
effective and enforceable.”

 

 

4.             The
first sentence of Section 7(a) is hereby amended to read as follows:

 

“If you terminate your employment with the Company for
any reason other than for “good reason”( as defined below), then all
obligations of the Company as set forth in this letter will cease, other than
the obligation to pay you any accrued base salary for services rendered through
the  date of such termination, to pay you
for any accrued but unused vacation days as of the date of such termination,
and to fulfill its obligations in accordance with terms of the applicable stock
plan or restrict stock unit agreement, with the payment of your accrued base
salary and vacation pay to be made to you on your termination date.”

 

5.             The first paragraph
of Section 7(b) of the Original Agreement is hereby deleted and replaced
in its entirety to read as follows:

 

“If
(A) your employment is terminated by the Company “without cause” (as
defined below) prior to November 15, 2011, (B) you execute and
deliver to the Company, within twenty-one (21) days (or forty-five (45) days to
the extent such longer period is required under applicable law) after the
effective date of your termination of employment, a Release (as defined in Section 4(b))
and (C) such Release becomes effective and enforceable after the
expiration of any applicable revocation period under federal or state law, then
the Company will pay you a separation payment (the “Separation
Payment”) equal to the sum of (i) twenty-four (24) months
of your then current monthly base salary, (ii) your Annual Bonus (as
defined below), and (iii) a prorated portion of your Annual Bonus (as
defined below) based upon the time elapsed between December 31 of the
preceding year and your date of termination. For purposes of clauses (ii) and
(iii) above, “Annual Bonus” shall mean the
lesser of 100% of your then current annual base salary or the Annual Bonus paid
to you for the preceding fiscal year. 
Payment of the Separation Payment under this Section 7(b) and
the accelerated vesting of your equity awards under Section 4 will each be
contingent upon the satisfaction of the following requirements: (i) you
execute and deliver to the Company on a timely basis your required Release in
accordance with this Section 7(b) and (ii) such Release becomes effective and enforceable after the
expiration of any applicable revocation period under federal or state law. The Separation Payment under this Section 7(b) will
be payable in a series of twenty-four (24) successive equal monthly
installments, beginning on the first regular payday for the Company’s salaried
employees, within the sixty (60)-day period following the date of your “separation
from service” (as such term is defined in Treasury Regulations issued under
Code Section 409A) as a result of your termination “without cause” (as
defined below), on which your executed Release is effective and enforceable in
accordance with its terms following any applicable revocation period, or as
soon thereafter as administratively practicable, but in no event later than the
last day of that sixty (60)-day period on which such Release is effective and
enforceable. Your right to each such monthly installment of the
Separation Payment shall be deemed, for purposes of Section 409A of the
Code, to be a right to a series of separate payments. Upon termination of your
employment by the Company “without cause,” other than the obligations set forth
in the first sentence of Section 7(a) above and the acceleration of
vesting provided in Section 4 above, the Company will have no further
obligation to you except pursuant to this paragraph.”

 

6.             The last paragraph of
Section 7(b) of the Original Agreement is hereby deleted and replaced
in its entirety as follows:

 

“If any payment or
benefit received or to be received by you (including any payment or benefit
received pursuant to this letter or otherwise) would be (in whole or part)
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the 

 

2

 

‘Code’), or any successor provision thereto, or any
similar tax imposed by state or local law, or any interest or penalties with
respect to such excise tax (such tax or taxes, together with any such interest
and penalties, are hereafter collectively referred to as the ‘Excise Tax’),
then, the cash payments provided to you under this letter shall first be
reduced, with each such payment to be reduced pro-rata but without any change
in the payment date and with the monthly installments of the Separation Payment
to be the first such cash payments so reduced, and then, if necessary, the
accelerated vesting of your equity awards pursuant to the provisions of this letter
shall be reduced in the same chronological order in which those awards were
made, but only  to the extent necessary
to assure that  you receive only the greater of (i)  the amount
of those payments and benefits which would not constitute a parachute payment
under Code Section 280G or (ii)  the amount which yields you the
greatest after-tax amount of benefits after taking into account any Excise Tax
imposed on the payments and benefits provided you hereunder (or on any other
payments or benefits to which your may become entitled in connection with any
change in control or ownership of the Company or the subsequent termination of
your employment with the Company).”

 

7.             The definition of “good
reason” as set forth in Section 7(c) of the Original Agreement is
hereby deleted and replaced in its
entirety as follows:

 

“ For purposes of this
letter, ‘good reason’ means:

(i)               a material reduction in your base salary
without your prior written consent;

(ii)              a material reduction in your authority,
duties or responsibilities in a manner inconsistent with the terms of this letter,
without your prior written consent; or

(iii)             any material un-waived breach by the Company of
the terms of this letter; provided however, that with respect to any of the
clause (i) – (iii) events above, you will not be deemed to have
resigned for good reason unless (A) you provide written notice to the
Company of the existence of the good reason event within ninety (90) days after  its initial occurrence, (B) the Company
is provided with thirty (30) days in which to cure such good reason event, and (C) your
termination of employment is effected within one hundred eighty (180) days
following the occurrence of the non-cured clause (i) – (iii) event.”

 

8.             Section 7(d) of
the Original Agreement is hereby deleted and replaced in its entirety as
follows:

 

“d.           Notwithstanding any
provision in this letter to the contrary (other than Section 7(e) below),
no payment or distribution under this letter which constitutes an item of
deferred compensation under Section 409A of the Code and becomes payable
by reason of your termination of employment with the Company will be made to
you until you incur a “separation from service” (as such term is defined in
Treasury Regulations issued under Section 409A of the Code) in connection
with such termination of employment.  For
purposes of this letter, each amount to be paid or benefit to be provided you
shall be treated as a separate identified payment or benefit for purposes of Section 409A
of the Code.  In addition, no payment or
benefit which constitutes an item of deferred compensation under Section 409A
of the Code and becomes payable by reason of your  separation from service will be made to you
prior to the earlier of (i) the first
day of the seventh (7th) month measured from the date of such separation from
service or (ii) the date of your 
death, if you are deemed at the time of such separation from service to
be a specified employee (as determined pursuant to Code Section 409A and
the Treasury Regulations thereunder) and such delayed commencement is otherwise
required in order to avoid a prohibited distribution under Code Section 409A(a)(2).  Upon the expiration of the applicable
deferral period, all payments and 

 

3

 

benefits deferred
pursuant to this Section 7(d) (whether they would have otherwise been
payable in a single sum or in installments in the absence of such deferral)
shall be paid or provided to you in a lump sum on the first day of the seventh
(7th) month after the date of your separation from service or, if earlier, the
first day of the month immediately following the date the Company receives
proof of your death. Any remaining payments or benefits due under this letter will
be paid in accordance with the normal payment dates specified herein.”

 

9.             A
new Section 7(e) is hereby added as follows:

 

“e.           Notwithstanding
Section 7(d) above, the following provisions shall also be applicable
to you if you are a specified employee at the time of your separation of
service:

 

(i)            Any payments or
benefits which become due and payable to you during the period beginning with
the date of your separation from service and ending on March 15 of the
following calendar year shall not be subject to the holdback provisions of Section 7(d) and
shall accordingly be paid as and when they become due and payable under this letter
in accordance with the short-term deferral exception to Code Section 409A.

 

(ii)           The remaining portion
of the payments and benefits to which you become entitled under this letter, to
the extent they do not in the aggregate exceed the dollar limit described below
and are otherwise scheduled to be paid no later than the last day of the second
calendar year following the calendar year in which your  separation from service occurs, shall not be
subject to any deferred commencement date under Section 7(d) and
shall be paid to you as they become due and payable under this letter.  For purposes of this subparagraph (ii), the
applicable dollar limitation will be equal to two times the lesser of (i) your annualized
compensation (based on your annual rate of pay for the calendar year preceding
the calendar year of your separation from service, adjusted to reflect any
increase during that calendar year which was expected to continue indefinitely
had such separation from service not occurred) or (ii) the compensation
limit under Section 401(a)(17) of the Code as in effect in the year of
such  separation from service.  To the extent the portion of the severance
payments and benefits to which you would otherwise be entitled under this letter
during the deferral period under Section 7(d) exceeds the foregoing
dollar limitation, such excess shall be paid in a lump sum upon the expiration
of that deferral period, in accordance with the deferred payment provisions of Section 7(d),
and the remaining severance payments and benefits (if any) shall be paid in
accordance with the normal payment dates specified for them herein.”

 

10.           Except as modified by this Amendment, all the terms and provisions of
the Original Agreement shall continue in full force and effect.

 

(Signature Page Follows)

 

4

 

IN WITNESS WHEREOF, each
of the parties hereto has executed this Amendment on the date specified
therefor below.

 

	
   

  	
  UNITED
  ONLINE, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Mark R. Goldston

  
	
   

  	
   

  	
  Mark R. Goldston

  
	
   

  	
   

  	
  Chairman, President and Chief Executive

  
	
   

  	
   

  	
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
  December 19,
  2008

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Scott H. Ray

  
	
   

  	
   

  	
  Scott H. Ray

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
  December 29,
  2008Exhibit 10.4

 

SECOND AMENDED AND RESTATED EMPLOYMENT
AGREEMENT

 

This Second Amended and
Restated Employment Agreement (the “Agreement”) is made and entered into
effective the 1st day of January 2009, by and between United Online, Inc.,
a Delaware corporation (“United Online”), with principal corporate offices at
21301 Burbank Boulevard, Woodland Hills, California 91367, and Frederic A.
Randall, Jr. (“Employee”).

 

WHEREAS, the Employee had previously entered into an employment
agreement effective March 20, 1999 with NetZero, Inc., a wholly-owned
subsidiary of United Online which was subsequently amended and restated as an
employment agreement effective January 27, 2004, with United Online and
again effective August 13, 2007 (the “Prior Agreement”); and

 

WHEREAS, effective as of the date hereof (the “Effective Date”), the
Employee and United Online desire to further amend and restate the Prior
Agreement.

 

NOW THEREFORE, the Employee and United Online hereby agree as follows:

 

For purposes of this Agreement, the term “Company” shall mean (i) United
Online or (ii) in the event of an initial public offering of securities of
Classmates Media Corporation, a Delaware corporation, or securities issued by
an entity that is a direct or indirect parent of Classmates Media Corporation
(which entity shall hereinafter be referred to as “CMC,” and such initial
public offering shall be hereinafter referred to as the “CMC IPO”) and the
assignment of this Agreement to CMC pursuant to Section 7 hereof, CMC.

 

1.                                       Employment.

 

1.1                                 The Company hereby
agrees to employ Employee, and Employee hereby accepts such employment, on the
terms and conditions set forth herein, commencing the date hereof, and
continuing through February 15, 2011 (the “Term”), unless such employment
is terminated or this Agreement expires earlier, as provided in Section 4
below.  Employee’s place of employment
shall be in the greater Los Angeles metropolitan area.

 

2.                                       Duties of
Employee.

 

2.1                                 Employee shall serve
as Executive Vice President and General Counsel of the Company.  In this capacity, Employee shall perform such
customary, appropriate and reasonable executive duties as are usually performed
by the General Counsel, including such duties as are delegated to him from time
to time by the Board of Directors of the Company or a committee 

 

1

 

thereof (the “Board”).  Employee shall report directly to the Company’s
Chief Executive Officer.

 

2.2                                 Employee
agrees to devote Employee’s full time, attention, skill and efforts to the
performance of his duties for the Company during the Term.  This Agreement shall not be interpreted to
prohibit Employee from making passive personal investments or engaging in
charitable and public service activities if those activities do not materially
interfere with the services required under this Agreement.

 

3.                                       Compensation
and Other Benefits.

 

3.1                                 Base Salary.  During the Term, the Company shall pay to
Employee a base salary per fiscal year equal to Employee’s current base salary
(the “Base Salary”), with payments to be made in accordance with the Company’s
standard payment policy and subject to such withholding as may be required by
law.  Employee’s Base Salary shall be
increased to include any increases in Employee’s base salary as approved by the
Board.

 

3.2                                 Bonus.  During the Term, the Employee shall also be
eligible to receive an annual bonus of up to 100% of Employee’s base salary for
each fiscal year (the “Annual Bonus”), less withholding required by law, based
on performance criteria established by the Board.  Employee’s Annual Bonus shall be increased to
include any increases in Employee’s annual bonus as approved by the Board.  Employee shall not be eligible to receive any
unpaid Annual Bonus if his employment hereunder is terminated pursuant to
either Section 4.1, or if Employee voluntarily resigns.  Employee’s bonus awards shall be paid in no
event later than the 15th day of the third month following the end of the
taxable year (of the Company or Employee, whichever is later) in which such
bonus award is earned.

 

3.3                                 Restricted
Stock Units.

 

(a)           On August 15, 2007, the Employee was
awarded restricted stock units covering 210,000 shares of United Online’s
common stock (the “UOL Restricted Stock Units”).  The UOL Restricted Stock Units will vest
according to the following three (3)-year vesting schedule subject to Employee’s
continued employment with United Online (as determined in accordance with terms
of the applicable stock plan and the restricted unit agreement): one-third of
the UOL Restricted Stock Units will vest on February 15, 2009; one-third
of the UOL Restricted Stock Units will vest of February 15, 2010; and the
remaining on-third of the UOL Restricted Stock Units will vest on February 15,
2011.  In all other respects, except as
set forth herein, the UOL Restricted Stock Units will be subject to the terms
and conditions set forth in the applicable stock plan and the 

 

2

 

restricted stock unit agreement between
United Online and the Employee.

 

(b)           [Intentionally omitted.]

 

(c)           Contingent on the effectiveness of the CMC
IPO prior to April 30, 2008, on the effective date of such CMC IPO, you
will be awarded restricted stock units covering that number of shares of common
stock of CMC equal to $2,800,000 divided by the initial offering price of a
share of common stock in such initial public offering (the “CMC Restricted
Stock Units”).  For purposes of this
Agreement, all references to common stock of CMC shall be deemed
to refer to Class A common stock of CMC.  In the event that the CMC IPO does not become
effective prior to April 30, 2008, CMC will not be obligated to award the
CMC Restricted Stock Units described in the preceding sentence.  The CMC Restricted Stock Units will vest
according to the following schedule subject to your continued employment with
CMC: 50% of CMC Restricted Stock Units will vest on February 15, 2009 and
the remaining 50% of CMC Restricted Stock Units will vest on February 15,
2010.  Except as otherwise set forth
herein, in all other respects, the CMC Restricted Stock Units will be subject
to the terms and conditions set forth in the applicable stock plan and the
restricted stock unit agreement.

 

(d)           If, following a CMC IPO, United Online
ceases to own more than fifty percent (50%) of the total combined voting power
of all of CMC’s outstanding securities, and at that time the Employee is
employed by CMC or its subsidiaries and not by United Online or any of its 50%
or more owned subsidiaries, then the vesting of all outstanding United Online
equity-based awards held by Employee will be accelerated in full and any
Company repurchase options applicable to any such awards will lapse.  For the avoidance of doubt, unless otherwise
specifically provided in this Agreement, applicable stock plan or award
agreement, the sale of CMC prior to a CMC IPO shall not cause or otherwise give
rise to such acceleration of vesting  or
such lapse of repurchase rights.

 

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

 

3.5                                 Other
Benefits.  Employee shall be eligible
to participate, as of the date of Employee’s employment, in all group life,
health, medical, dental or disability insurance or other employee, health and
welfare benefits made available generally to other similarly situated
executives of the Company or that have been made available to you by the Board
or any affiliate of the Company.  If
Employee elects to participate in any of such plans, Employee’s portion of the
premium(s) will be deducted from Employee’s paycheck.

 

3

 

3.6                                 Business
Expenses.  The Company shall promptly
reimburse Employee for all reasonable and necessary business expenses incurred
by Employee in connection with the business of the Company and the performance
of his duties under this Agreement, subject to Employee providing the Company
with reasonable documentation thereof. 
Any such reimbursements paid to Employee shall be made in no event later
than the end of the calendar year following the calendar year in which the
expenses were incurred and any amounts so reimbursed in any one calendar year
shall not affect the amounts reimbursable in any other calendar year.  Employee’s right to receive such
reimbursements may not be exchanged or liquidated for any other benefit.

 

3.7                                 Telecommuting.  Employee shall be entitled to telecommute for
a portion of the work week consistent with past practices or otherwise as
agreed by Employee and the Chief Executive Officer.

 

4.             Termination.

 

4.1           Termination for
Cause.

 

(a)                                  Termination
“for cause” is defined as follows: the Company terminates Employee’s employment
with the Company (1) if Employee is convicted of a felony, including
any act of moral turpitude,  which
adversely impacts the Company, or (2) if Employee fails, after receipt of
detailed written notice and after receiving a period of at least thirty (30)
days following such notice to cure such failure, to use his reasonable good
faith efforts to follow the direction of the Company’s Board of Directors and
to perform his obligations hereunder.

 

(b)                                 The
Company may terminate this Agreement for any of the reasons stated in Section 4.1(a) by
giving written notice to Employee without prejudice to any other remedy to
which the Company may be entitled.  The
notice of termination shall specify the grounds for termination.  If Employee’s employment hereunder is
terminated “for cause” pursuant to this Section 4.1, Employee shall be
entitled to receive hereunder his accrued but unpaid Base Salary and vacation
pay through the date of termination, and reimbursement for any expenses as set
forth in Section 3.6, through the date of termination, but shall not be
entitled to receive any unpaid portion of the Annual Bonus or any other amount.

 

4.2   Termination
Without Cause or Involuntary Termination.

 

(a)                                  If
Employee’s employment is terminated without “cause” as 

 

4

 

defined in Section 4.1(a),
or if Employee is Involuntarily Terminated (as defined below), the Company (or
its successor, as the case may be) shall pay to Employee (i) any accrued
but unpaid Base Salary and vacation through the date of termination, (ii) reimbursement
for any expenses as set forth in Section 3.6, through the date of
termination, (iii) Employee’s Annual Bonus, prorated through the date of
termination, and (iv), subject to Employee’s execution (without revocation) of
a general waiver and release of all claims against the Company, its affiliates
and successors, in a form satisfactory to the Company (a “Release”), a
severance payment in an amount equal to three times Employee’s Base Salary and
Annual Bonus, payable in one lump sum on the date of termination, subject to
withholding as may be required by law, and such severance payment will be paid
upon the expiration of all applicable review and revocation periods applicable
to the Release as statutorily required by law, or as soon thereafter as
administratively practicable.  For the
purposes of Section 4.2(a)(iii) and Section 4.2(a)(iv) above,
Annual Bonus shall mean the greater of 75% of Employee’s then current Base
Salary or the Annual Bonus paid to Employee for the preceding fiscal year in
the event of Involuntary Termination, or 75% of Employee’s then current Base
Salary in the event of termination without cause.

 

(b)                                 In
addition, if Employee’s employment is terminated without cause (other than if
Employee is Involuntarily Terminated) and if Employee executes and does not
revoke a Release, (i) the vesting of all outstanding restricted stock
units held by the Employee will be immediately accelerated by the additional
number of units in which the Employee would have been vested at the time of
such termination if he had completed an additional twelve (12) months of
service (calculated as if such units vest on a monthly basis) and (ii) the
Company repurchase option will lapse with respect to a number of outstanding
restricted shares equal to (x) the sum of the number of full months that
have elapsed between the grant date and the date of termination, plus twelve
(12) additional months, divided by (y) 48 months, multiplied by (z) the
total number of such outstanding restricted shares.  Such acceleration will occur upon the
expiration of all applicable review and revocation periods applicable to the
Release as statutorily required by law, or as soon thereafter as
administratively practicable, and in no event later than the later of (i) the
15th day of the third month following the end of your taxable year
in which such termination of employment occurs or (ii) the 15th
day of the third month following the end of the Company’s taxable year in which
such termination of employment occurs.

 

5

 

(c)                                  If
Employee’s employment is terminated due to death or permanent disability, the
vesting of all outstanding equity-based awards will be accelerated in full and
any Company repurchase options applicable to any such awards will lapse.

 

(d)                                 If
Employee is Involuntarily Terminated, and if Employee executes and does not
revoke a Release (i) all outstanding options shall remain in effect for a
one (1) year period following the date of termination but not beyond the
expiration date of such option as set forth in the applicable stock plan or
award agreement, (ii) the vesting of all outstanding restricted stock
units will be accelerated in full and (iii) any Company repurchase options
applicable to restricted shares will lapse.  
The acceleration described above will occur upon the expiration of all
applicable review and revocation periods applicable to the Release as
statutorily required by law, or as soon thereafter as administratively
practicable, and in no event later than the later of (i) the 15th
day of the third month following the end of your taxable year in which such
termination of employment occurs or (ii) the 15th day of the
third month following the end of the Company’s taxable year in which such
termination of employment occurs.

 

(e)                                  As
used in this Section 4.2, Employee shall be deemed terminated without
cause if Employee resigns following a material breach by the Company of its
obligations hereunder; provided, however, Employee shall first provide the
Company with written notice of such breach within ninety (90) days after the
conduct occurs giving rise to such breach, (ii) the Company shall have
fifteen (15) days following such notice to cure such breach and (iii) Employee’s
termination of employment must occur within one hundred eighty (180) days
following the initial existence of such breach.

 

As used in this Section 4.2, Employee
shall be deemed “Involuntarily Terminated” if (i) the Company or any
successor to the Company terminates Employee’s employment without cause in
connection with or following a Change in Control (as defined in Appendix A
attached hereto); or (ii) in connection with or following a Change in
Control there is (a) a decrease in Employee’s authorities, duties or
responsibilities without Employee’s consent (it being deemed to be a decrease
in authorities, duties and/or responsibilities if Employee is not offered the
position of Executive Vice President and General Counsel of the Company or its
successor as well as the acquiring and ultimate parent entity, if any,
following the Change in Control), (b) a material decrease in base
compensation from those provided by the 

 

6

 

Company immediately prior to the Change in
Control without Employee’s consent or (c) a requirement that Employee
re-locate out of the greater Los Angeles metropolitan area without Employee’s
consent; provided however that with respect to any of (a) — (c), (i) Employee
shall provide written notice to the Company of the existence of the
aforementioned condition within ninety (90) days of its initial existence, (ii) the
Company shall have until the first to occur of (x) the thirty (30) day
period immediately following such notice and (y) the end of the calendar
year in which such Change in Control occurs, to cure such condition, and (iii) 
Employee’s termination of employment must occur before the last day of the
calendar year in which such Change in Control occurs.

 

(f)                                    Notwithstanding
any provision to the contrary in this Agreement, upon the earlier of (i) one
hundred eighty (180) days following a Change in Control or (ii) the last
day of the calendar year in which a Change in Control occurs, this Agreement
shall expire on such date, in which event Employee shall be entitled to the
same benefits that otherwise would have been payable to Employee had Employee
been Involuntarily Terminated prior to such Change in Control, as set forth in
Sections 4.2(a) and 4.2(d) above.

 

5.                                       Noncompetition.  For the eighteen (18) month period following
the termination of Employee’s employment with the Company (but only if Employee
has received the severance payments specified in Section 4.2 above) (the “Noncompetition
Period”), Employee shall not directly engage in, or manage or direct persons
engaged in, a Competitive Business Activity (as defined below) anywhere in the
Restricted Territory (as defined below); provided, that the Noncompetition
Period shall terminate if the Company terminates operations or if the Company
no longer engages in any Competitive Business Activity.  The term “Competitive Business Activity”
shall mean, prior to the effectiveness of the CMC IPO, the business of
providing consumers with dial-up Internet access services (free or pay) and, as
of the effectiveness of the CMC IPO, a business primarily involved in online
social networking or a business primarily involving online loyalty rewards
programs.  The term “Restricted Territory”
shall mean each and every county, city or other political subdivision of the
United States in which the Company is engaged in business or providing its
services.  The Company agrees that
providing services to a company or entity that is involved in a Competitive
Business Activity but which services are unrelated to the Competitive Business
Activity shall not be deemed a violation of this Agreement.  For the purposes of damages to the Company
with respect to any breach of this Section 5, the value of Employee’s
obligations to the Company under this Section 5 equals 37.5% of the cash
severance payment in Section 4.2(a)(iv) above.

 

As an employee of the Company, you will be expected to abide by all of
the 

 

7

 

policies and procedures applicable to
similarly situated executives of the Company, including, without limitation,
the terms of the Proprietary Information and Inventions Agreement between you
and the Company (or any successor thereto or affiliate thereof).

 

6.                                       Gross-Up
Payment.     If the aggregate of all payments or
benefits made or provided to the Employee under this Agreement, under all other
plans and programs of the Company or otherwise (the “Aggregate Payment”) is
determined to constitute a “parachute payment,” as such term is defined in Section 280G(b)(2) of
the Internal Revenue Code of 1986, as amended (the “Code”), the Company shall
pay to the Employee, prior to or coincident with the time any excise tax
imposed by Section 4999 of the Code (the “Excise Tax”) is payable with
respect to such Aggregate Payment, an additional amount that, after the
imposition of all penalties, income, excise and other federal, state and local
taxes thereon, is equal to the sum of the Excise Tax on the Aggregate Payment
and interest and penalties imposed with respect to the Excise Tax and such
additional amount (the “Gross-Up Payment”). 
For example, if the Excise Tax imposed with respect to the Aggregate
Payment equals $1,000,000 and all penalties, income, excise and other federal,
state and local taxes on the Gross-Up Payment equal $2,333,333, the Gross-Up
Payment will be $3,333,333.   The
determination of whether the Aggregate Payment constitutes a parachute payment
and, if so, the amount to be paid to the Employee and the time of payment
pursuant to this Section 6 shall be made by an independent auditor (the “Auditor”)
selected and paid by the Company and reasonably acceptable to the
Employee.  The Auditor shall be a
nationally recognized United States public accounting firm.  For purposes of determining the amount of the
Gross-Up Payment, the Employee shall be deemed to pay income tax at the highest
marginal rates of federal, state and local income taxation in the calendar year
in which the Gross-Up Payment is to be made, net of the maximum reduction in
federal income taxes which could be obtained from deduction of such state and
local taxes.

 

In the event that the Excise Tax is finally determined to be less than
the amount taken into account hereunder in calculating the Gross-Up Payment,
the Employee shall repay to the Company, within five (5) business days
following the time that the amount of such reduction in the Excise Tax is
finally determined, the portion of the Gross-Up Payment attributable to such
reduction plus that portion of the Gross-Up Payment attributable to the Excise
Tax and federal, state and local income and employment taxes imposed on the
Gross-Up Payment being repaid by the Employee, to the extent that such
repayment results in a reduction in the Excise Tax and a dollar-for-dollar
reduction in the Employee’s taxable income and wages for purposes of federal,
state and local income and employment taxes, plus interest on the amount of
such repayment at 120% of the rate provided in section 1274(b)(2)(B) of
the Code.  In the event that the Excise
Tax is determined to exceed the amount taken into account hereunder in
calculating the Gross-Up Payment (including by reason of any payment the
existence or amount of which 

 

8

 

cannot be determined at the time of the payment of the Gross-Up
Payment), the Company shall make an additional Gross-Up Payment in respect of
such excess (plus any interest, penalties or additions payable by the Employee
with respect to such excess) within five (5) business days following the
time that the amount of such excess is finally determined.  The Employee and the Company shall cooperate
with each other in connection with any proceeding or claim relating to the
existence or amount of liability for Excise Tax, and all expenses incurred by
the Employee in connection therewith shall be paid by the Company promptly upon
notice of demand from the Employee.  Any
payments made by the Company to or on behalf of the Employee pursuant to this Section 6
shall be made in no event later than the end of the Employee’s taxable year
next following the Employee’s taxable year in which the related taxes are
remitted.

 

7.                                       Assignment.  Except as provided herein, neither the
Company nor Employee may assign this Agreement or any rights or obligations
hereunder.   This Agreement will be
binding upon the Company and its successors and assigns.  In the event of a Change in Control (as
defined in Appendix A attached hereto), 
the Company shall cause this Agreement to be assumed by the Company’s
successor as well as any acquiring or ultimate parent entity, if any, following
any Corporate Transaction.

 

Upon the effectiveness of the CMC IPO, the
Company shall assign this agreement to CMC. 
Notwithstanding this assignment, however, Employee’s Annual Bonus
pursuant to Section 3.2 of this Agreement for fiscal year 2007 shall be
payable by United Online under its applicable bonus plans and any bonuses for
subsequent fiscal years during the Term shall be payable by CMC.

 

8.                                       Miscellaneous.

 

8.1                                 The
Release required as a condition to Employee’s entitlement to severance benefits
under this Agreement must be delivered within twenty-one (21) days (or
forty-five (45) days if such longer period is required under applicable law)
after the date of Employee’s termination of employment.  The severance benefits to which Employee
becomes entitled under this Agreement upon the effectiveness of the delivered
Release following the expiration of all applicable revocation periods shall be
paid or issued on such effective date or as soon as administratively
practicable thereafter, but in no event later than the later of the following
dates on which the Release is so effective: (i) the 15th day of
the third month following the end of Employee’s taxable year in which such
termination of employment occurs or (ii) the 15th day of the
third month following the end of the Company’s taxable year in which such termination
of employment occurs.

 

8.2                                 This
Agreement supersedes any and all other agreements, either oral or in 

 

9

 

writing, between the parties hereto with
respect to the employment of Employee by the Company, other than the
Confidentiality and Proprietary Agreement, and constitutes the entire agreement
between the Company and the Employee with respect to its subject matter.

 

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

 

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

 

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

 

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

 

8.7                                 All
notices and other communications required or permitted hereunder shall be in
writing and shall be mailed by first-class mail, postage prepaid, registered or
certified, or delivered either by hand, by messenger or by overnight courier
service, and addressed to the receiving party at the respective address set forth
in the heading of this Agreement, or at such other address as such party shall
have furnished to the other party in accordance with this Section 8.7
prior to the giving of such notice or other communication.

 

8.8                                 Notwithstanding
any provision to the contrary in this Agreement, no payment or distribution
under this Agreement which constitutes an item of deferred compensation under Section 409A
of Code and becomes payable by reason of Employee’s termination of employment
with the Company will be made to Employee unless Employee’s termination of
employment constitutes a “separation from service” (as such term is defined in
Treasury Regulations issued under Section 409A of the Code).  For 

 

10

 

purposes of this Agreement, each amount to be
paid or benefit to be provided shall be construed as a separate identified
payment for purposes of Section 409A of the Code.  No payment or distribution under this
Agreement which constitutes an item of deferred compensation under Section 409A
of the Code and becomes payable by reason of Employee’s termination of
employment with the Company will be made to Employee prior to the earlier of (i) the
expiration of the six (6)-month period measured from the date of Employee’s “separation
from service” (as such term is defined in Treasury Regulations issued under Section 409A
of the Code) or (ii) the date of Employee’s death, if he is deemed at the
time of such separation from service to be a “key employee” within the meaning
of that term under Code Section 416(i) and such delayed commencement
is otherwise required in order to avoid a prohibited distribution under Section 409A
of the Code.  Upon the expiration of the
applicable Section 409A deferral period, all payments and benefits deferred
pursuant to this Section 8.8 (whether they would have otherwise been
payable in a single sum or in installments in the absence of such deferral)
shall be paid or reimbursed to Employee in a lump sum, and any remaining
payments due under this Agreement will be paid in accordance with the normal
payment dates specified for them herein.

 

(Signature Page Follows)

 

11

 

IN WITNESS WHEREOF, each of the parties
hereto has executed this Agreement on the date specified therefor below.

 

	
   

  	
  UNITED ONLINE, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert Berglass

  
	
   

  	
   

  	
  Name: Robert Berglass

  
	
   

  	
   

  	
  Title: Lead Independent Director,

  
	
   

  	
   

  	
  Compensation Committee Chair of

  
	
   

  	
   

  	
  United Online, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:

  	
  December 21, 2008

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark R. Goldston

  
	
   

  	
   

  	
  Name: Mark R. Goldston

  
	
   

  	
   

  	
  Title: Chairman, President and CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Dated:

  	
  December 19, 2008

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Frederic A.
  Randall, Jr.

  
	
   

  	
  Frederic A. Randall, Jr.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
  December 29,
  2008

  
						

 

12

 

Appendix A

 

For
purposes of this Agreement, a Change in Control shall be deemed to have
occurred (i) if a Change in Control of United Online occurs as described
in Paragraph A below or (ii) if a Change in Control of CMC occurs as
described in Paragraph B below following the CMC IPO.

 

A.            If CMC
IPO Does Not Become Effective or CMC IPO Becomes Effective and United Online
Owns 33 1/3% or More of CMC’s 
Outstanding Securities:

 

In the event a CMC IPO does
not become effective, or a CMC IPO becomes effective and the Company owns
33-1/3% or more of the total combined voting power of all of CMC’s outstanding
securities, “Change in Control” shall mean a change in ownership or control
effected through any of the following transactions:

 

“United
Online” 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.

 

“Board” shall mean United
Online’s Board of Directors.

 

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

 

(i)                                     a merger or
consolidation approved by United Online’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 United Online’s outstanding
voting securities immediately prior to such transaction,

 

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

 

(iii)                                                                               the
acquisition, directly or indirectly by any person or related group of persons
(other than United Online or a person that directly or indirectly controls, is
controlled by, or is under common control with, United Online), 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
United Online’s outstanding securities, 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 

 

13

 

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.

 

B.            Change
in Control of Classmates Media Corporation

 

“Change in Control” of Classmates Media Corporation
shall mean a change in ownership or control of CMC effected through any of the
following transactions:

 

“CMC” shall mean Classmates Media Corporation, a
Delaware corporation, and any successor corporation to all or substantially all
of the assets or voting stock of Classmates Media Corporation.

 

“Board” shall mean CMC’s Board of Directors.

 

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

 

(i)                                                 a merger, consolidation or reorganization
approved by CMC’s stockholders, unless securities representing more than
33-1/3 percent (33.33%) of the total combined voting power of the voting
securities of the successor corporation are immediately thereafter beneficially
owned, directly or indirectly, by the person or persons who beneficially owned
33-1/3 percent (33.33%) or more of CMC’s outstanding voting securities
immediately prior to such transaction,

 

(ii)                                              any stockholder-approved transfer or
other disposition of all or substantially all of CMC’s assets,

 

(iii)                                           the closing of any transaction or series
of related transactions pursuant to which any person or any group of persons
comprising a “group” within the meaning of Rule 13d-5(b)(1) of the
1934 Act (other than CMC or a person that, prior to such transaction or series
of related transactions, directly or indirectly controls, is controlled by or
is under common control with, CMC) becomes directly or indirectly (whether as a
result of a single acquisition or by reason of one or more acquisitions within
the twelve (12)-month period ending with the most recent acquisition) the
beneficial owner (within the meaning of Rule 13d-3 of the 1934 Act) of (A) securities
possessing (or convertible into or exercisable for securities possessing)
33-1/3 percent (33.33%) or more of the total combined voting power of all of
CMC’s outstanding securities (as measured in terms of the power to vote with
respect to the election of Board members) or (B) securities representing
33-1/3 percent (33.33%) or more of the aggregate market value of all of the CMC’s
outstanding capital stock, measured in each instance immediately 

 

14

 

after the consummation of
such transaction or series of related transactions and whether such transaction
or transactions involve a direct issuance from the CMC or the acquisition of
outstanding securities held by one or more of the CMC’s existing 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.

 

In no event, however,
shall a Change in Control be deemed to occur as a result of a spin-off
distribution by United Online, Inc. of all or any portion of CMC’s
outstanding securities held by United Online, Inc. to its existing
stockholders in proportion to their holdings of United Online, Inc.
capital stock.

 

15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00151-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00151-of-00352.parquet"}]]