Document:

Exhibit 10.1

 

UNITED ONLINE, INC.

CHANGE IN CONTROL POLICY FOR EXECUTIVES

 

The United Online, Inc. (the “Company”) Change in Control Policy for Executives (this “Policy”) is established as of February 19, 2015 (the “Effective Date”) and is intended to promote the interests of the Company by (i) encouraging our executives to remain in our employ throughout the uncertainty that may exist in a potential change in control situation, and (ii) enabling our executives to focus on the performance of their duties and to provide us with advice about a potential change in control situation without being distracted about the effects of the transactions on their continued employment with the Company.  This Policy is hereby adopted by the Compensation Committee (the “Committee”) of the Company’s Board of Directors (the “Board”) and shall be administered by the Committee.

 

1.                                      Eligible Individuals

 

The following individuals shall be subject to the terms of this Policy: (i) the Company’s Chief Executive Officer (the “CEO”) and (ii) any other Company employee that may be designated by the Committee as a Tier I Participant (a “Tier I Participant”) or a Tier II Participant (a “Tier II Participant”)(each such individual set forth in (i) and (ii), a “Participant” and collectively, the “Participants”).

 

2.                                      Payments upon a Separation from Service

 

(a)                                 Payment Conditions.  Subject to the terms of this Policy and subject to the Participant’s execution and non-revocation of a general release of claims in a form provided by the Company, if the Participant has a “Separation from Service” (as defined in any regulations or other Internal Revenue Service guidance promulgated under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)) either as a result of (i) the termination of the Participant’s employment by the Company without Cause or (ii) the Participant’s termination of his/her employment with the Company for Good Reason, in either case within twenty-four (24) months following a Change in Control (as defined below), the Company shall pay the Participant the amounts and provide the benefits set forth below in Sections 2(b), 2(d)  and 2(e).

 

(b)                                 Separation Payments.  Subject to Section 2(a), the Company shall pay the Participant the following separation payments (the “Separation Payments”):

 

(i)                                     with respect to the CEO, the Participant shall be paid a lump sum severance payment equal to the sum of (A) two (2) times the Participant’s annual salary as of the date of the termination of the Participant’s employment ( the “Termination Date”), (B) two (2) times the Participant’s target bonus as of the Termination Date for the full fiscal year in which the Termination Date occurs, (C) any unpaid annual bonus earned by the Participant with respect to the fiscal year preceding the year in which the Termination Date occurs; and (D) a pro-rated annual bonus for the fiscal year in which the Termination Date occurs based on the Participant’s target annual bonus for such year, multiplied by a fraction, the numerator of which is the number of whole months the

 

 

Participant was employed by the Company during such fiscal year and the denominator of which is twelve (12);

 

(ii)                                  with respect to a Tier I Participant, the Participant shall be paid a lump sum severance payment equal to the sum of (A) one and one-half (1-1/2) times the Participant’s annual salary as of the Termination Date, (B) one and one-half (1-1/2) times the Participant’s target bonus as of the Termination Date for the full fiscal year in which the Termination Date occurs, (C) any unpaid annual bonus earned by the Participant with respect to the fiscal year preceding the year in which the Termination Date occurs; and (D) a pro-rated annual bonus for the fiscal year in which the Termination Date occurs based on the Participant’s target annual bonus for such year, multiplied by a fraction, the numerator of which is the number of whole months the Participant was employed by the Company during such fiscal year and the denominator of which is twelve (12); and

 

(iii)                               with respect to a Tier II Participant, the Participant shall be paid a lump sum severance payment equal to the sum of (A) one (1) times the Participant’s annual salary as of the Termination Date, (B) one (1) times the Participant’s target bonus as of the Termination Date for the full fiscal year in which the Termination Date occurs, (C) any unpaid annual bonus earned by the Participant with respect to the fiscal year preceding the year in which the Termination Date occurs; and (D) a pro-rated annual bonus for the fiscal year in which the Termination Date occurs based on the Participant’s target annual bonus for such year, multiplied by a fraction, the numerator of which is the number of whole months the Participant was employed by the Company during such fiscal year and the denominator of which is twelve (12).

 

(c)                                  Timing of Separation Payments.                 Subject to the Participant’s execution and delivery of a general release of all claims against the Company and its affiliates in a form provided by the Company and the expiration of any release revocation period with respect thereto (such requirement, the “Release Requirement”), and subject to Section 3(c), the Participant’s Separation Payment will payable in a single lump sum on the first regular payday for the Company’s salaried employees within the sixty (60)-day period following the date of the Participant’s Separation from Service on which the Participant’s executed release is effective and enforceable in accordance with its terms following the expiration of the revocation period applicable to such release.  However, should such sixty (60)-day period span two taxable years, then such payment shall be made during the portion of that period that occurs in the second taxable year.

 

(d)                                 COBRA Payments.                                       Subject to the Release Requirement and the requirements of the Code, if the Participant properly elects health care continuation coverage under the Company’s group health plans pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) to the extent that the Participant is eligible to do so, then the Company shall directly pay or, at its election, reimburse the Participant for the COBRA premiums for the Participant and the Participant’s covered dependents until the earlier of (i) the date the Participant becomes eligible for healthcare coverage under a subsequent employer’s health plan and (ii) in the case of (A) the CEO or a Tier I Participant, eighteen (18) months after the Participant’s Termination Date and (B) a Tier II Participant, twelve (12) months after the

 

 

Participant’s Termination Date (the “COBRA Period” ).  Notwithstanding the foregoing, (i) if any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the period of continuation coverage to be, exempt from the application of Section 409A of the Code under Treasury Regulation Section 1.409A-1(a)(5), or (ii) the Company is otherwise unable to continue to cover the Participant under its group health plans without penalty under applicable law (including without limitation, Section 2716 of the Public Health Service Act or the Patient Protection and Affordable Care Act), then, in either case, an amount equal to each remaining Company subsidy shall thereafter be paid to the Participant in substantially equal monthly installments over the COBRA Period (or the remaining portion thereof).

 

(e)                                  Equity Awards.             Any equity awards (the “Equity Awards”) granted to the Participant under the Company’s equity-based compensation plans (the “Equity Plans”) prior to the Effective Date shall be subject to the terms of the Equity Plans and the Participant’s Equity Award agreements.  Subject to the Release Requirement, any Equity Awards granted to the Participant under the Equity Plans on or after the Effective Date shall not be terminated or expire on the Participant’s Termination Date and shall become fully vested (and exercisable, in the case of any stock options or stock appreciation rights) on the date upon which the Participant’s Release Requirement is satisfied, provided, however that any equity awards which are subject to performance-based vesting or other performance conditions shall be subject to the terms of the Equity Plans and the Participant’s equity award agreements.

 

(f)                                   Other Terminations.  The Company shall have no obligation to pay a Participant any amounts under this Policy in the event of such Participant’s Separation from Service prior to a Change in Control.  The Company shall also have no obligation to pay a Participant any amounts under this Policy if, after a Change in Control, the Company terminates a Participant’s employment for Cause or if a Participant’s employment terminates due to the Participant’s death, Disability or termination of employment other than for Good Reason.

 

(g)                                  Accrued Obligations.  Notwithstanding Section 2(c), upon any Separation from Service, the Participant shall be entitled to earned but unpaid salary and accrued but unused vacation earned through the final date of employment (the “Accrued Obligations”), which amounts will be paid to such Participant (or his or her estate, as the case may be) within thirty (30) days of the Participant’s Termination Date.  Except as set forth in this Policy, rights arising from the terms of the Company’s benefit plans (including any equity plans) (“Other Benefits”) shall be governed by the terms of such plans.

 

(h)                                 Definitions.  For purposes of this Policy:

 

“Cause” means one or more of the following: (i) if the Participant is convicted of, or enters into a plea of nolo contendere to, a felony or a misdemeanor involving any act of moral turpitude; (ii) if the Participant commits an act of fraud, embezzlement, theft or similar dishonesty against the Company or any of its subsidiaries; (iii) if the Participant commits any willful misconduct or gross negligence resulting in material harm to the Company or any of its subsidiaries; or (iv) if the Participant 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 the

 

 

Participant’s reasonable good faith efforts to follow the reasonable and lawful direction of the Board and to perform the Participant’s obligations under his/her offer letter with the Company.

 

“Change in Control” means the occurrence of any one of the following events:

 

(a)                                 During any thirty-six (36) month period, individuals who, as of the beginning of such period, constitute the Board (the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board, provided that any person becoming a director subsequent to the beginning of such period whose election or nomination for election was approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection to such nomination) shall be an Incumbent Director; provided, however, that no individual initially elected or nominated as a director of the Company as a result of an actual or threatened election contest, including but not limited to a consent solicitation, with respect to directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;

 

(b)                                 Any “person” (as such term is defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”); provided, however, that the event described in this paragraph (b) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions:  (i) by the Company or any subsidiary of the Company, (ii) by any employee benefit plan (or related trust) sponsored or maintained by the Company or any subsidiary of the Company, or (iii) by any underwriter temporarily holding securities pursuant to an offering of such securities.

 

(c)                                  The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of a merger, consolidation, reorganization, statutory share exchange or similar form of corporate transaction, in any single transaction or series of related transactions which results in the Company’s Voting Securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly (the Company or such person, the “Successor Entity”)), directly or indirectly, less than a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the transaction;

 

(d)                                 The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of a sale or other disposition of all or substantially all of the Company’s assets in a single transaction or a series of related transactions; or

 

 

(e)                                  The stockholders of the Company approve a plan of complete liquidation or dissolution of the Company.

 

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because (i) the Company sells or otherwise disposes of any one of its business units and its assets or (ii) the Company acquires Company Voting Securities which reduces the number of Company Voting Securities outstanding and results in any person acquiring beneficial ownership of more than 30% of the Company Voting Securities; provided, that if after such acquisition by the Company such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control of the Company shall then occur.  In addition, notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any portion of an Award that provides for the deferral of compensation and is subject to Section 409A of the Code, the transaction or event described in subsection (a), (b), (c), (d) or (e) with respect to such Award (or portion thereof) must also constitute a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Section 409A (a “Qualifying Termination”).

 

“Disability” means the Participant’s inability to engage in any substantial activity necessary to perform such Participant’s duties and responsibilities hereunder by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than twelve (12) months.

 

“Good Reason” means: (i) a material reduction in the Participant’s base salary without the Participant’s prior written consent; (ii) a material reduction in the Participant’s authority, duties or responsibilities, without the Participant’s prior written consent; (iii) a material change in the geographic location at which the Participant must perform services, without the Participant’s prior written consent, (iv) any material unwaived breach by the Company of the terms of the Participant’s offer letter, or (v) with respect to the CEO or Tier I Participant, a material reduction in the Participant’s reporting relationship, with either the Participant’s manager or the Participant’s staff; provided, however, that with respect to any of the clause (i) - (v) events above, the Participant will not be deemed to have resigned for Good Reason unless (A) the Participant provides 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 after receipt of such notice in which to cure such Good Reason event and (C) the Participant effectively terminates his/her employment within one hundred eighty (180) days following the occurrence of the non-cured clause (i) - (v) event.

 

3.                                      Additional Terms

 

(a)                                 Withholding Taxes.  All forms of compensation payable to the Participants by the Company, whether in cash, common stock or other property, are subject to reduction to reflect applicable withholding and payroll taxes.

 

 

(b)                                 Clawback.  Any amounts paid or payable to a Participant pursuant to this Policy or the Company’s equity or compensation plans will be subject to recovery or clawback to the extent required by any applicable law or any applicable securities exchange listing standards.

 

(c)                                  Section 409A.  The intent of the parties is that payments and benefits described in this Policy comply with Section 409A of the Code and accordingly, to the maximum extent permitted, this Policy will be interpreted in compliance therewith.  Each amount to be paid or benefit to be provided under this Policy will be construed as a separate identified payment for purposes of Section 409A.  Without limiting the foregoing and notwithstanding anything contained herein to the contrary, to the extent required in order to avoid an accelerated or additional tax under Section 409A of the Code, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Policy during the six-month period immediately following a Separation from Service will instead be paid on the first business day after the date that is six months following Separation from Service.  In no event will any expense be reimbursed later than the end of the calendar year following the calendar year in which that expense is incurred, and the amounts reimbursed in any one calendar year will not affect the amounts reimbursable in any other calendar year.  A Participant’s right to receive such reimbursements may not be exchanged or liquidated for any other benefit.

 

(d)                                 Section 280G.  If any payment or benefit received or to be received by a Participant (including any payment or benefit received pursuant to this Policy or otherwise) would be (in whole or part) subject to the excise tax imposed by Section 4999 of the 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 the Participant under this Policy will first be reduced, with each such payment to be reduced pro-rata but without any change in the payment date, and then, if necessary, any accelerated vesting of the Participant’s equity awards arising from the terms of such awards shall be reduced in the same chronological order in which those awards were made, but only to the extent necessary to assure that the Participant receives only the greater of (i) the amount of those payments and benefits which would not constitute a parachute payment under Section 280G of the Code or (ii) the amount which yields the Participant the greatest after-tax amount of benefits after taking into account any Excise Tax imposed on the payments and benefits provided to the Participant hereunder (or on any other payments or benefits to which the Participant may become entitled in connection with any change in control or ownership of the Company or the subsequent termination of the Participant’s employment with the Company).  Calculations required by this paragraph will be performed by a national accounting firm designated by the Company.

 

4.                                      Participants’ Covenants 

 

In consideration of and as a condition of the receipt of any payment or benefits under this Policy by a Participant (other than payment of Accrued Obligations or provision of the Other Benefits), the Participant agrees to the following provisions:

 

(a)                                 In the Participant’s capacity in the management of the Company, the Participant has had significant exposure and access to a broad variety of commercially valuable proprietary

 

 

information which is vital to the success of the Company’s business including, by way of illustration, past, current and future services and products and concepts for services and products, marketing strategies, research and plans and information regarding the Company’s employees.  As a result of the Participant’s knowledge of the above information and in consideration for the benefits offered by the Company under this Plan, the Participant reaffirms and recognizes the Participant’s continuing obligations with respect to the use and disclosure of confidential and proprietary information of the Company pursuant to the Company’s policies as they may be amended from time to time and pursuant the Participant’s Employee Proprietary Information and Inventions Agreement entered into with the Company (or a subsidiary of the Company).  At all times after the Termination Date, the Participant shall not, without the prior written consent of the Company, communicate or divulge any such information, knowledge or data to anyone other than the Company and those designated by it.

 

(b)                                 In the case of (i) the CEO or a Tier I Participant, eighteen (18) months after the Participant’s Termination Date and (B) a Tier II Participant, twelve (12) months after the Participant’s Termination Date (each such period, the “Restricted Period”), the Participant will not, directly or indirectly, solicit or recruit for employment, any person or persons who are employed by Company or any of its subsidiaries or affiliates, or who were so employed at any time within a period of twelve (12) months immediately prior to the Participant’s Termination Date, or otherwise interfere with the relationship between any such person and the Company; nor will the Participant assist anyone else in recruiting any such employee to work for another company or business or discuss with any such person his or her leaving the employ of the Company or engaging in a business activity in competition with the Company.

 

(c)                                                 At all times after the Termination Date, the Participant shall not make or encourage or induce others to make statements or representations that disparage or otherwise impair the reputation, goodwill or commercial interests of the Company or any of its affiliated entities or its or their officers, directors, employees, shareholders, agents or products.  The foregoing shall not be violated by truthful statements in connection with required governmental testimony or filings, or judicial, administrative or arbitral proceedings (including, without limitation, depositions or testimony in connection with such proceedings).

 

(d)                                                Notwithstanding anything herein to the contrary, the Company’s remedies at law for a breach or threatened breach of any of the provisions of this Section 4 would be inadequate and, in recognition of this fact, in the event of such a breach or threatened breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available.

 

5.                                      General Provisions

 

(a)                                 The terms of this Policy and the resolution of any disputes will be governed by California law, and the venue for any disputes will be in Los Angeles, California.  The Committee may at any time amend, suspend or terminate this Policy, provided such action is effected by written resolution.  Moreover, the Committee reserves the right to amend this Policy as may be necessary or appropriate to avoid adverse tax consequences under Section 409A of the Code.  Notwithstanding the foregoing, upon and following the occurrence of a Change in

 

 

Control, this Policy may not be amended in any manner which is adverse to any individual who is a Participant as of the date of the Change in Control.

 

(b)                                 This Policy shall be interpreted, administered and operated by the Committee, which shall have complete authority, in its sole discretion subject to the express provisions of this Policy, to interpret this Policy, to prescribe, amend and rescind rules and regulations relating to it and to make all other determinations necessary or advisable for the administration of this Policy.  All questions of any character whatsoever arising in connection with the interpretation of this Policy or its administration or operation shall be submitted to and settled and determined by the Committee, except as specifically otherwise stated herein.  Any such settlement and determination shall be final and conclusive, and shall bind and may be relied upon by the Company, each Participant and all other parties in interest.  The Committee may delegate any of its duties hereunder to such person or persons from time to time as it may designate.

 

(c)                                  No amounts awarded or accrued under this Policy shall actually be funded, set aside or otherwise segregated prior to payment.  The obligation to pay the amount payable hereunder shall at all times be an unfunded and unsecured obligation of the Company.  Participants shall have the status of general creditors and shall look solely to the general assets of the Company for the payment of any amounts hereunder.

 

(d)                                 No Participant shall have the right to alienate, pledge or encumber his or her interest under this Policy or any amounts payable hereunder, and such interest shall not (to the extent permitted by law) be subject in any way to the claims of the employee’s creditors or to attachment, execution or other process of law.  This Policy shall inure to the benefit of and be binding upon the Company and its successors and assigns.  The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform the Company’s obligations under this Policy in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  As used in this Policy, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Policy by operation of law or otherwise.

 

(e)                                  Neither the action of the Company in establishing this Policy, nor any action taken under this Policy by the Committee, nor any provision of this Policy, shall be construed so as to grant any person the right to remain in the employ of the Company or its subsidiaries for any period of specific duration.  Rather, each employee will be employed “at will,” which means that either such employee or the Company may terminate the employment relationship at any time for any reason, with or without cause, subject in each case to any applicable benefits that may become payable under any employment agreement between such person and the Company or any of its subsidiaries.

 

(f)                                   This Policy supersedes any provisions relating to severance benefits payable to any Participants whose employment with the Company is terminated after a Change in Control of any employment or offer letter agreement to which any of the Participants in this Policy may be a party.

 

 

(g)                                  All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to a Participant:

 

At the most recent address on file at the Company.

 

If to the Company:

 

United Online, Inc.
  21255 Burbank Blvd., Suite 400

 

Woodland Hills, CA  91367
 Attention:  General Counsel

 

or to such other address a Participant or the Company shall have furnished in writing in accordance herewith.  Notices and communications shall be effective when actually received by the addressee.

 

(h)                                 This Policy shall not be effective with respect to any person designated as a Participant hereunder unless and until such person agrees in writing to be subject to this Policy and agrees to all of its terms and conditions.

 

Acknowledged and Agreed by the Participant:

 

	
By:
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    
	
Date:Exhibit 10.2

 

UNITED ONLINE, INC.

2015 MANAGEMENT BONUS PLAN

 

I.                                             PURPOSES OF THE PLAN

 

1.01                        The United Online, Inc. (the “Company”) 2015 Management Bonus Plan (the “Plan”) is hereby established under the Incentive Bonus Program of the Company’s stockholder-approved 2010 Incentive Compensation Plan, as amended and restated as of June 13, 2013 (the “2010 ICP”) and is intended to promote the interests of the Company by creating an incentive program to (i) attract and retain employees who will strive for excellence and (ii) motivate those individuals to achieve above-average objectives by providing them with rewards for contributions to the financial performance of one or more business segments or business units of the Company.

 

1.02                        For purposes of the Plan, the financial performance for the 2015 fiscal year of one or more business segments or business units of the Company shall be measured to determine the bonus amounts (if any) payable for such fiscal year to the participants in the Plan.  The applicable business segments (the “Business Segments”) shall be as follows:

 

(i)                                     Communications Segment

 

(ii)                                  Commerce & Loyalty Segment

 

(ii)                                  Social Media Segment

 

The bonus potential under the Plan for participants will be allocated to the combined performance of the Communications Segment, the Commerce & Loyalty Segment and the Social Media Segment (also collectively referred to as the “Combined Businesses”).

 

II.                                               ADMINISTRATION OF THE PLAN

 

2.01                        The Plan is hereby adopted by the Compensation Committee of the Company’s Board of Directors (the “Committee”) as a special cash bonus program under the Incentive Bonus Program of the 2010 ICP and shall be administered by the Committee pursuant to the administrative authority provided the Committee under the 2010 ICP and the Incentive Bonus Program thereunder.

 

2.02                        The bonuses that may be earned under the Plan shall be tied to the financial performance of the Combined Businesses for the Company’s 2015 fiscal year ending December 31, 2015 (the “2015 Fiscal Year”), as set forth below.  The Committee shall establish the applicable performance goals for the Combined Businesses in writing not later than ninety (90) days after the commencement of the 2015 Fiscal Year, provided that the outcome of the applicable goals must be substantially uncertain at the time of their establishment (the “Performance Goals Schedule”).  The Performance Goals Schedule shall be attached to the minutes of the meeting or the consent resolutions at or by which such performance goals were established.

 

2.03                        The interpretation and construction of the Plan and the adoption of rules and

 

 

regulations for administering the Plan shall be made by the Committee in its sole discretion.  Decisions of the Committee shall be final and binding on all parties who have an interest in the Plan.

 

III.                                                 DETERMINATION OF PARTICIPANTS

 

3.01                        The following individuals (each, a “Participant”) will participate in the Plan on the following basis:

 

(i)                                     The bonus potential for Francis Lobo, Edward Zinser, Gail Shulman and Kesa Tsuda shall be allocated seventy-five percent (75%) to the financial results of the Combined Businesses (which seventy-five percent (75%) is, in turn, further weighted as forty percent (40%) on combined revenues and thirty-five percent (35%) on combined Adjusted OIBDA, as further described in this Plan) and twenty-five percent (25%) to the Participant’s individual performance as described in Section 4.04 below.

 

3.02                        Except as provided below and except as otherwise provided in any employment agreement or severance agreement between the Company (or a subsidiary thereof) and a Participant, if a Participant does not continue in the employ of the Company or one of its subsidiaries through the Bonus Payment Date (as defined in Section 5.01), then such Participant will not be eligible to receive a bonus under the Plan.  However, the following special partial payment provisions shall be in effect:

 

(i)                                     Should the Participant’s employment terminate prior to the Bonus Payment Date as a result of death or permanent disability (as defined below), then that individual or his/her estate shall be entitled to a pro-rated portion of the bonus such individual would have earned, based on the Company’s actual performance for the 2015 Fiscal Year in the Combined Businesses, had the individual continued in the Company’s employ through the Bonus Payment Date.  Any such payment shall be made on the Bonus Payment Date.

 

(ii)                                  A Participant who is on a leave of absence or whose employment terminates after the start of the 2015 Fiscal Year but recommences prior to the Bonus Payment Date may remain eligible at the discretion of the Committee, and the Committee may provide that individual with a pro-rated portion (based on period or periods of active employment during such year) of the bonus such individual would have earned, based on the Company’s actual performance for the 2015 Fiscal Year in the Combined Businesses, had he remained continuously in the Company’s employ through the Bonus Payment Date.  Any such payment shall be made on the Bonus Payment Date.

 

3.03                        For purposes of the Plan:

 

A.                                    A Participant shall be considered an employee for so long as such individual remains employed by the Company or one or more corporations that are subsidiary corporations of the Company at all times during the 2015 Fiscal Year.

 

2

 

B.                                    Each corporation (other than the Company) in an unbroken chain of corporations beginning with the Company shall be considered to be a subsidiary of the Company, provided each such corporation (other than the last corporation in the unbroken chain) owns, at the time of determination, stock possessing more than fifty percent (50%) of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

C.                                    Unless defined otherwise in any employment or severance agreement entitling the Participant to a full or pro-rated bonus upon a disability termination, permanent disability shall mean the Participant’s inability to engage in any substantial activity necessary to perform the duties and responsibilities of his position with the Company (or any subsidiary thereof) by reason of any medically-determinable physical or mental impairment which can be expected to result in such individual’s death or which has lasted, or can be expected to last, for a continuous period of not less than twelve (12) months.

 

D.                                    In no event shall there be any duplication of bonus payments under this Plan and any employment agreement or severance agreement between the Company (or any subsidiary thereof) and a Participant that provides such individual with a stated bonus or bonus formula for a particular year or includes an annual bonus payment as part of a severance pay formula thereunder.  Accordingly, in order to avoid any such potential duplication, such Participant shall only be entitled to receive the annual bonus amount to which he may otherwise be entitled under his employment or severance agreement based on the terms and conditions set forth therein and shall not be entitled to any bonus payment under the Plan.  However, the accelerated vesting of any outstanding equity awards held by the Participant under any of the Company’s stock plans, including any outstanding stock options, restricted stock or restricted stock unit awards, or the extension of any exercise periods for such stock options, shall not be deemed to constitute a bonus payment for purposes of this Section 3.03D.

 

IV.                                           BONUS AWARDS

 

4.01                        The following provisions shall govern the calculation and payment of the individual bonus awards that become payable under the Plan.

 

(a)                                 The individual bonus award payable under the Plan to each Participant for the 2015 Fiscal Year shall be payable in cash on the Bonus Payment Date, with the cash bonus amount to be determined on the basis of the performance of the Combined Businesses and the individual performance component in accordance with Section 3.01.

 

(b)                                 The performance of the Combined Businesses shall be measured in terms of (i) the combined revenue for the Communications Segment, the Commerce & Loyalty Segment and the Social Media Segment and (ii) the operating income before depreciation, amortization and certain other expenses and subject to certain adjustments, all as specified in Section 4.02 (“Adjusted OIBDA”), for the Communications Segment, the Commerce & Loyalty Segment and the Social Media Segment; provided, however, that the calculation of Adjusted OIBDA for the Combined Businesses shall also take into account any unallocated corporate expenses that were not included in the calculation of Adjusted OIBDA for the separate Business Segments.  Accordingly, fifty-three-and-one-third percent (53.33%) of the portion of the bonus potential allocated to the performance of the Combined Businesses shall be based upon the achievement of the combined revenue targets (“Combined Businesses Revenue Targets”) specified for the Combined Businesses in the Performance Goals Schedule, and the remaining  forty-six-and-

 

3

 

two-thirds percent (46.67%) of the bonus potential allocated to the performance of the Combined Businesses shall be based upon the achievement of the combined Adjusted OIBDA targets (“Combined Businesses Adjusted OIBDA Targets”) specified for the Combined Businesses in the Performance Goals Schedule.

 

4.02                        The following provisions shall govern the calculation of the levels at which the Revenue Targets and Adjusted OIBDA Targets are attained for the 2015 Fiscal Year and the determination of the bonus amounts based on those calculations:

 

(a)                                 The actual level at which revenues for the Combined Businesses have been attained for the 2015 Fiscal Year will be determined on the basis of the revenues to be reported in the Company’s Financial Statements (as defined in Section 4.03) for such fiscal year and will be calculated, for purposes of the Plan, in a manner consistent with the methodology utilized by the Committee in establishing the Combined Businesses Revenue Targets.

 

(b)                                 In determining the actual level at which Adjusted OIBDA for the Combined Businesses has been attained, Adjusted OIBDA will be determined consistent with the Company’s methodology for calculating Adjusted OIBDA for financial reporting purposes.  For financial reporting purposes, Adjusted OIBDA is defined as operating income before depreciation; amortization; stock-based compensation; restructuring and other exit costs; litigation or dispute settlement charges or gains; transaction-related costs; and impairment of goodwill, intangible assets and long-lived assets.  In addition, to the extent the following are not otherwise taken into account in calculating Adjusted OIBDA for financial reporting purposes, Adjusted OIBDA shall be calculated before, and expenses for the purpose of calculating Adjusted OIBDA shall exclude: (1) any expenses associated with the relocation of the Company’s or any of its subsidiaries’ principal offices; (2) any bonus amounts which accrue under this Plan; (3) any adjustments to Adjusted OIBDA attributable to a change in accounting principles that occurs after the start of the 2015 Fiscal Year; (4) all items of gain, loss or expense determined to be extraordinary or non-recurring (including, without limitation, legal fees and costs related to governmental investigations, claims or litigation involving the Company or any of its subsidiaries); and (5) all items of gain, loss or expense related to the sale or divestiture of a business; provided, however, that in determining the actual level at which Combined Businesses Adjusted OIBDA has been attained, the associated amount under clause (1) or clause (4) shall be excluded from the calculation of Adjusted OIBDA only to the extent the actual aggregate amount under clause (1) or clause (4) for the Combined Businesses exceeds the aggregate budgeted amount therefor that was included in the Combined Businesses Adjusted OIBDA Targets set forth in the Performance Goals Schedule.

 

(c)                                  In the event the actual foreign currency exchange rate (determined as set forth below) for the Euro:U.S. Dollar for the 2015 Fiscal Year is lower than 1:1.25 (the “Euro Floor”), the final revenue and Adjusted OIBDA calculations for the Combined Businesses will be adjusted using the Euro Floor.  For the purpose of clarity, the Euro Floor will not be used to adjust the final revenues and Adjusted OIBDA calculations in the event the actual foreign currency exchange rate for the Euro:U.S. Dollar for such financial measures for the 2015 Fiscal Year is higher than the Euro Floor.  For the purposes of this paragraph, an “actual foreign currency exchange rate” will be determined for each of year-end revenues and Adjusted OIBDA and calculated by (i) translating into U.S. Dollars the year-end revenues and Adjusted OIBDA amounts for the applicable non-U.S. subsidiaries in a manner consistent with the Company’s historical methodology for financial reporting purposes and (ii) dividing each such U.S. Dollars amount by its pre-translation (Euro) year-end revenues or Adjusted OIBDA amount, as applicable.

 

4

 

(d)                                 In the event the Company acquires other companies or businesses during the 2015 Fiscal Year, the financial performance of those acquired entities shall not be taken into account in determining whether the Revenue Targets or Adjusted OIBDA Targets for the Combined Businesses for the 2015 Fiscal Year have been achieved.

 

(e)                                  Should  the Company sell, divest or spin off a business during the 2015 Fiscal Year and the financial performance of such business was taken into account in establishing the Revenue Targets and Adjusted OIBDA Targets set forth in the Performance Goals Schedule, then for the purpose of determining whether the Revenue Targets or Adjusted OIBDA Targets for the Combined Businesses for the 2015 Fiscal Year have been attained, the revenue and Adjusted OIBDA calculations for the Combined Businesses shall be made (1) by taking into account the actual revenue and Adjusted OIBDA performance of the divested business during the portion of the 2015 Fiscal Year preceding the closing of such sale, divestiture or spin off and (2) for the post-closing portion of the 2015 Fiscal Year, by assuming that the sold, divested or spun business attained the level of revenue and Adjusted OIBDA performance that was projected for that period by the Committee for purposes of establishing the “Target” bonus payout levels (i.e., payout level 5) for the Revenue Targets and Adjusted OIBDA Targets for the Combined Businesses.

 

4.03                        With respect to the financial results component of each Participant’s bonus potential, the Committee shall, within sixty (60) days following the close of the 2015 Fiscal Year, determine and certify on the basis of the Company’s financial statements for such fiscal year as publicly reported by the Company in connection with its earnings release related to the 2015 Fiscal Year (the “Financial Statements”), the actual level of attainment for revenue and Adjusted OIBDA (measured on a Combined Businesses basis) for the 2015 Fiscal Year. Such certification shall be included as part of the formal minutes of the meeting at which such determinations are made.  On the basis of such certification, the Committee shall determine for each Participant the portion of such Participant’s actual bonus award that is allocated to the financial results of the Combined Businesses.  However, the Committee, in making such determination, shall not award a bonus in excess of the dollar amount determined for the Participant on the basis of the bonus potential established for the particular levels at which revenue and Adjusted OIBDA for the Combined Businesses for the 2015 Fiscal Year are in fact attained.  In the event that revenue or Adjusted OIBDA for the Combined Businesses falls between two specified levels set forth in the schedule approved by the Committee, the resulting bonus amount shall be interpolated on a straight-line basis between those two points.

 

4.04                        With respect to the individual performance component of each Participant’s bonus potential, the Committee shall, within sixty (60) days following the close of the 2015 Fiscal Year, determine in its sole discretion for each Participant the level of attainment of such Participant’s individual performance goals.  Such determination shall be included in the formal minutes of the meeting at which such determinations are made.

 

4.05                        Except as otherwise provided in Section 3.02, no Participant shall earn or accrue any right to any portion of a bonus award hereunder until the Bonus Payment Date.

 

4.06                        In no event shall the actual bonus amount payable under this Plan to any individual Participant for the 2015 Fiscal Year exceed the dollar amount of Three Million Five Hundred Thousand dollars ($3,500,000).

 

5

 

V.                                                PAYMENT OF BONUS AWARDS

 

5.01                        The actual bonus to which each Participant becomes entitled based on the certified level at which the Revenue and Adjusted OIBDA Targets are actually attained for the 2015 Fiscal Year shall be paid in cash, subject to the Company’s collection of all applicable federal, state and local income, employment and payroll withholding taxes.  Schedule I attached hereto sets forth the bonus amounts payable to each Participant based on the level at which such Revenue and Adjusted OIBDA Targets are attained.   The bonus payments shall be made in the 2016 calendar year but not later than March 7, 2016, with the actual payment date to constitute the Bonus Payment Date.

 

VI.                                               GENERAL PROVISIONS

 

6.01                        The Committee may at any time amend, suspend or terminate the Plan, provided such action is effected by written resolution and is subject to stockholder approval to the extent required under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).  Moreover, the Committee reserves the right to amend this Plan as may be necessary or appropriate to avoid adverse tax consequences under Section 409A of the Code.

 

6.02                        No amounts awarded or accrued under this Plan shall actually be funded, set aside or otherwise segregated prior to payment.  The obligation to pay the bonuses awarded hereunder shall at all times be an unfunded and unsecured obligation of the Company.  Plan participants shall have the status of general creditors and shall look solely to the general assets of the Company for the payment of their bonus awards.

 

6.03                        No Participant shall have the right to alienate, pledge or encumber his/her interest in this Plan or any bonus payable hereunder, and such interest shall not (to the extent permitted by law) be subject in any way to the claims of the employee’s creditors or to attachment, execution or other process of law.

 

6.04                        Neither the action of the Company in establishing the Plan, nor any action taken under the Plan by the Committee, nor any provision of the Plan, shall be construed so as to grant any person the right to remain in the employ of the Company or its subsidiaries for any period of specific duration.  Rather, each employee will be employed “at-will,” which means that either such employee or the Company may terminate the employment relationship at any time for any reason, with or without cause, subject in each case to any applicable benefits that may become payable under any employment agreement between such person and the Company or any of its subsidiaries.

 

6.05                        The Plan shall be administered, operated and construed in compliance with the requirements of the short-term deferral exception to Section 409A of the Code and Treasury Regulations Section 1.409A-1(b)(4).  Accordingly, to the extent there is any ambiguity as to whether one or more provisions of the Plan would otherwise contravene the requirements or limitations of Section 409A of the Code applicable to such short-term deferral exception, then those provisions shall be interpreted and applied in a manner that does not result in a violation of the requirements or limitations of Section 409A of the Code and the Treasury Regulations thereunder that apply to such exception.

 

6

 

6.06                        This is the full and complete agreement between the Participants and the Company with respect to their incentive bonus compensation for the 2015 Fiscal Year and the related service period through the Bonus Payment Date. This Plan does not supersede, but is supplemental to, any provisions of any employment agreement to which any of the Participants in this Plan may be a party.

 

[Remainder of page left blank]

 

7

 

The undersigned Participant acknowledges and agrees to the terms and conditions set forth in this 2015 Management Bonus Plan.

 

	
Acknowledged   and Agreed:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:
    	
 
    	
 
    

 

8

 

SCHEDULE I

 

SUMMARY OF PAYOUTS (% OF SALARY):

 

	
LOBO:
    	
 
    	
Combined
   Revenues
    	
 
    	
Combined
   Adj. OIBDA
    	
 
    	
Individual
   Performance
    	
 
    	
Total
   (as a % of Salary)
    	
 
    
	
Threshold
    	
 
    	
0.0000
    	
%
    	
0.0000
    	
%
    	
0.0000
    	
%
    	
0.0000
    	
%
    
	
Target
    	
 
    	
40.0000
    	
%
    	
35.0000
    	
%
    	
25.0000
    	
%
    	
100.0000
    	
%
    
	
Maximum
    	
 
    	
64.0000
    	
%
    	
56.0000
    	
%
    	
31.2500
    	
%
    	
151.2500
    	
%
    

 

	
ZINSER:
    	
 
    	
Combined
   Revenues
    	
 
    	
Combined
   Adj. OIBDA
    	
 
    	
Individual
   Performance
    	
 
    	
Total
   (as a % of Salary)
    	
 
    
	
Threshold
    	
 
    	
0.0000
    	
%
    	
0.0000
    	
%
    	
0.0000
    	
%
    	
0.0000
    	
%
    
	
Target
    	
 
    	
28.0000
    	
%
    	
24.5000
    	
%
    	
17.5000
    	
%
    	
70.0000
    	
%
    
	
Maximum
    	
 
    	
44.8000
    	
%
    	
39.2000
    	
%
    	
21.8750
    	
%
    	
105.8750
    	
%
    

 

	
SHULMAN:
    	
 
    	
Combined
   Revenues
    	
 
    	
Combined
   Adj. OIBDA
    	
 
    	
Individual
   Performance
    	
 
    	
Total
   (as a % of Salary)
    	
 
    
	
Threshold
    	
 
    	
0.0000
    	
%
    	
0.0000
    	
%
    	
0.0000
    	
%
    	
0.0000
    	
%
    
	
Target
    	
 
    	
22.0000
    	
%
    	
19.2500
    	
%
    	
13.7500
    	
%
    	
55.0000
    	
%
    
	
Maximum
    	
 
    	
35.2000
    	
%
    	
30.8000
    	
%
    	
17.1875
    	
%
    	
83.1875
    	
%
    

 

	
TSUDA:
    	
 
    	
Combined
   Revenues
    	
 
    	
Combined
   Adj. OIBDA
    	
 
    	
Individual
   Performance
    	
 
    	
Total
   (as a % of Salary)
    	
 
    
	
Threshold
    	
 
    	
0.0000
    	
%
    	
0.0000
    	
%
    	
0.0000
    	
%
    	
0.0000
    	
%
    
	
Target
    	
 
    	
20.0000
    	
%
    	
17.5000
    	
%
    	
12.5000
    	
%
    	
50.0000
    	
%
    
	
Maximum
    	
 
    	
32.0000
    	
%
    	
28.0000
    	
%
    	
15.6250
    	
%
    	
75.6250
    	
%
    

 

9

 

	
Payout Level
   for
    	
 
    	
LOBO
   PAYOUTS
    	
 
    	
ZINSER
   PAYOUTS
    	
 
    	
SHULMAN
   PAYOUTS
    	
 
    	
TSUDA
   PAYOUTS
    	
 
    
	
Revenue
    	
 
    	
Combined
    	
 
    	
Combined
    	
 
    	
Combined
    	
 
    	
Combined
    	
 
    
	
Targets
    	
 
    	
(% Salary)
    	
 
    	
(% Salary)
    	
 
    	
(% Salary)
    	
 
    	
(% Salary)
    	
 
    
	
1 (Threshold)
    	
 
    	
0.0000
    	
%
    	
0.0000
    	
%
    	
0.0000
    	
%
    	
0.0000
    	
%
    
	
2
    	
 
    	
10.0000
    	
%
    	
7.0000
    	
%
    	
5.5000
    	
%
    	
5.0000
    	
%
    
	
3
    	
 
    	
20.0000
    	
%
    	
14.0000
    	
%
    	
11.0000
    	
%
    	
10.0000
    	
%
    
	
4
    	
 
    	
30.0000
    	
%
    	
21.0000
    	
%
    	
16.5000
    	
%
    	
15.0000
    	
%
    
	
5   (Target)
    	
 
    	
40.0000
    	
%
    	
28.0000
    	
%
    	
22.0000
    	
%
    	
20.0000
    	
%
    
	
6
    	
 
    	
46.0000
    	
%
    	
32.2000
    	
%
    	
25.3000
    	
%
    	
23.0000
    	
%
    
	
7
    	
 
    	
52.0000
    	
%
    	
36.4000
    	
%
    	
28.6000
    	
%
    	
26.0000
    	
%
    
	
8
    	
 
    	
58.0000
    	
%
    	
40.6000
    	
%
    	
31.9000
    	
%
    	
29.0000
    	
%
    
	
9 (Maximum)
    	
 
    	
64.0000
    	
%
    	
44.8000
    	
%
    	
35.2000
    	
%
    	
32.0000
    	
%
    

 

	
Payout Level
   for
    	
 
    	
LOBO
   PAYOUTS
    	
 
    	
ZINSER
   PAYOUTS
    	
 
    	
SHULMAN
   PAYOUTS
    	
 
    	
TSUDA
   PAYOUTS
    	
 
    
	
Adjusted OIBDA
    	
 
    	
Combined
    	
 
    	
Combined
    	
 
    	
Combined
    	
 
    	
Combined
    	
 
    
	
Targets
    	
 
    	
(% Salary)
    	
 
    	
(% Salary)
    	
 
    	
(% Salary)
    	
 
    	
(% Salary)
    	
 
    
	
1 (Threshold)
    	
 
    	
0.0000
    	
%
    	
0.0000
    	
%
    	
0.0000
    	
%
    	
0.0000
    	
%
    
	
2
    	
 
    	
8.7500
    	
%
    	
6.1250
    	
%
    	
4.8125
    	
%
    	
4.3750
    	
%
    
	
3
    	
 
    	
17.5000
    	
%
    	
12.2500
    	
%
    	
9.6250
    	
%
    	
8.7500
    	
%
    
	
4
    	
 
    	
26.2500
    	
%
    	
18.3750
    	
%
    	
14.4375
    	
%
    	
13.1250
    	
%
    
	
5   (Target)
    	
 
    	
35.0000
    	
%
    	
24.5000
    	
%
    	
19.2500
    	
%
    	
17.5000
    	
%
    
	
6
    	
 
    	
40.2500
    	
%
    	
28.1750
    	
%
    	
22.1375
    	
%
    	
20.1250
    	
%
    
	
7
    	
 
    	
45.5000
    	
%
    	
31.8500
    	
%
    	
25.0250
    	
%
    	
22.7500
    	
%
    
	
8
    	
 
    	
50.7500
    	
%
    	
35.5250
    	
%
    	
27.9125
    	
%
    	
25.3750
    	
%
    
	
9 (Maximum)
    	
 
    	
56.0000
    	
%
    	
39.2000
    	
%
    	
30.8000
    	
%
    	
28.0000
    	
%
    

 

2015 SALARIES:

 

	
Lobo, Francis
    	
 
    	
$
    	
700,000.08
    	
 
    
	
Zinser, Edward
    	
 
    	
$
    	
350,000.04
    	
 
    
	
Shulman, Gail
    	
 
    	
$
    	
315,000.14
    	
 
    
	
Tsuda, Kesa
    	
 
    	
$
    	
250,000.14
    	
 
    

 

10

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