Document:

Exhibit 10.16

 

AMENDED AND RESTATED

 

UNITED ONLINE, INC.

 

SEVERANCE BENEFIT PLAN

 

AND

 

SUMMARY PLAN DESCRIPTION

 

 

Amended and Restated Effective January 1, 2010

 

 

UNITED ONLINE, INC. SEVERANCE BENEFIT PLAN

AND

SUMMARY PLAN DESCRIPTION

 

I.             INTRODUCTION

 

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

 

This Plan shall only apply to the Company and the subsidiaries of the Company listed in attached Schedule A.  The Plan shall not apply to any other subsidiary, parent or affiliated company unless the Chief Executive Officer of the Company so extends the application of this Plan in a written addendum to attached Schedule A. This Plan shall not apply to any subsidiary listed in attached Schedule A following the time such subsidiary ceases to be a direct or indirect subsidiary of the Company.

 

This Severance Benefit Plan (the “Plan”) supersedes all obligations, agreements or policies regarding severance pay, except such terms as are set forth in a written agreement signed by an authorized officer of the Company or one of its subsidiaries and in effect at the time of the applicable termination of employment.  This Plan supplements any such written agreements to provide all terms that are not otherwise expressly incorporated into those written agreements.  The purpose of severance pay is to provide economic help to compensate for periods of unemployment due to job loss as provided herein.

 

This Plan is designed to be an “employee welfare benefit plan,” as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and to meet the descriptive requirements of a plan constituting a “severance pay plan” within the meaning of the regulations published by the Secretary of Labor at Title 29, Code of Federal Regulations, section 2510.3-2(b).  This document shall also serve as a Summary Plan Description.  Accordingly, the benefits paid by the Plan are not deferred compensation and no employee shall have a vested right to such benefits.

 

II.            DEFINITIONS

 

For purposes of this Plan, the following definitions shall be in effect:

 

“base pay” means: (a) in the case of a Layoff Termination (as defined herein): (i) if you are a salaried employee, your set weekly salary (“Weekly Salary”) in effect as of your termination date or (ii) if you are an employee paid on an hourly basis, your base hourly rate times 40 for a work week (“Weekly Rate”); or (b) in the case of an Involuntary Termination (as defined herein):  the greater of (i) your highest Weekly Salary or Weekly Rate, as applicable, at any time during the Transaction Protection Period (as defined herein), and (ii) your Weekly Salary or Weekly Rate, as applicable, at the time you received your notice of termination.  Base pay does not include any variable forms of compensation such as, but not limited to, overtime, shift differentials, bonuses, incentive compensation, commissions, expenses or expense allowances.

 

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“Change in Control” means the event of a change in ownership or control of United Online, Inc. affected through either of the following transactions:

 

(i)           the acquisition, directly or indirectly, by any person or related group of persons (other than United Online, Inc. or a person that directly or indirectly controls, is controlled by, or is under common control with, United Online, Inc.) of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of securities possessing more than fifty percent (50%) of the total combined voting power of the outstanding securities of United Online, Inc. pursuant to a tender or exchange offer made directly to the stockholders of United Online, Inc., or

 

(ii)          a change in the composition of the Board of Directors of United Online, Inc. (“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.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

 

“Corporate Transaction” means either of the following stockholder-approved transactions to which United Online, Inc. is a party:

 

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

 

(ii)          the sale, transfer or other disposition of all or substantially all of the assets of United Online, Inc. resulting in the complete liquidation or dissolution of United Online, Inc.

 

“Covered Subsidiary” means any subsidiary listed in attached Schedule A, as such schedule may be revised from time to time, as a participating Employer in the Plan.

 

“Employer Group” means the Company and each member of the group of commonly controlled corporations or other businesses that include the Company, as determined in accordance with Sections 414(b) and (c) of the Code and the Treasury Regulations thereunder, except that in applying Sections 1563(1), (2) and (3) of the Code for purposes of determining the controlled group of corporations under Section 414(b), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in such sections and in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or businesses that are under common control for purposes of Section 414(c), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in Section 1.414(c)-2 of the Treasury Regulations.

 

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“Involuntary Termination” or “Involuntarily Terminated” means the following: (i) you are terminated by the Company or any successor to the Company or any Covered Subsidiary for reasons other than Misconduct (as defined below) during the Transaction Protection Period or (ii) your employment terminates as a result of a Resignation for Good Reason during the Transaction Protection Period.  Unless otherwise determined by the Chief Executive Officer of United Online, Inc., the Involuntary Termination provisions of the Plan shall only apply in the event of a Change in Control or Corporate Transaction with respect to United Online, Inc.

 

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

 

“Plan Administrator” means the Compensation Committee of the Board of Directors of the Company or any other committee appointed by the Board of Directors to perform the functions of the Compensation Committee (the “Committee”) or any person, committee or entity to whom or which the Committee delegates any of its power or duties under the Plan from time to time.

 

“Resignation for Good Reason” means the termination of your employment during the Transaction Protection Period as a result of your resignation for either of the following reasons: (A) a material reduction in the amount of base salary in effect for you immediately prior to the commencement of the Transaction Protection Period or (B) a relocation of your primary place of employment by more than fifty (50) miles; provided, however, that your resignation for either of the foregoing reasons shall constitute a Resignation for Good Reason only if the following requirements are satisfied: (i) you provide written notice of the clause (A) or (B) event to your Employer within thirty (30) days after the occurrence of that event, (ii) your Employer fails to take appropriate remedial action to remedy such event within thirty (30) days after receipt of such notice and (iii) you resign from your employment with such Employer within ninety (90) days following the initial occurrence of the clause (A) or (B) event.

 

“Separation from Service” means your cessation of employment with your Employer (as defined herein) and all other members of the Employer Group and shall be deemed to occur at such time as the level of bona fide services you are render as such an employee (or non-employee consultant) permanently decreases to a level that is not more than twenty percent (20%) of the average level of services you rendered as an employee of the Company or any other member of the Employer Group during the immediately preceding thirty-six (36) months (or such shorter period of time in which your have been in such employee status). Any such determination, however, shall be made in accordance with the applicable standards of the Treasury Regulations issued under Internal Revenue Code Section 409A.

 

“Transaction” means a Change in Control or a Corporate Transaction, as such terms are defined herein.

 

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“Transaction Protection Period” means the period beginning with the closing date of the Transaction and ending upon the expiration date of the eighteen (18)-month period measured from such closing date.

 

III.           ELIGIBILITY

 

A.      Eligibility Criteria.

 

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

 

1.            You are a full-time U.S. employee of the Company or any subsidiary thereof listed in attached Schedule A, with the company for which you are such a full-time employee to be designated your “Employer” for purposes of the Plan.

 

2.            You are either (i) notified while the Plan is in effect that, as a result of a reduction-in-force decision by your Employer that eliminates your position, your employment is terminated (“Layoff Termination”), or (ii) Involuntarily Terminated during the Transaction Protection Period.

 

3.            You are not offered an alternate position with the Company or other Employer within fifty (50) miles of either your residence or your most recent work place; provided, however, that this condition will not be required during the Transaction Protection Period.

 

4.            Prior to your employment termination date, you have signed a form of confidential/proprietary/trade secret information, non-disclosure and inventions assignment agreement(s) with the Company, a predecessor of the Company, or your Employer that covers the period of your employment with the Company (and/or with a predecessor of the Company) or any other member of the Employer Group and which also may include post-employment obligations concerning the confidential information of the Company and its subsidiaries.

 

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

 

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

 

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

 

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

 

9.            You have signed a general release of all claims in a form acceptable to the Company (the “Required Release”) and delivered it to your Employer in accordance with following requirements:

 

·                  if you are under age forty (40), then (i) you must sign the Required Release and deliver it to your Employer within ten (10) business days (or such shorter  period of time required by your Employer) after the date of your Layoff Termination or Involuntary Termination and (ii) such Required Release must become effective after the expiration of any revocation period applicable by law or regulation to that release.

 

·                  If you are age forty (40) or older, then (i) you must sign the Required Release and deliver it to your Employer within twenty-one  (21) days (or forty-five (45) days if required by applicable law) after the date of your Layoff Termination or Involuntary Termination and (ii) such Required Release must become effective after the expiration of any revocation period applicable by law or regulation to that release.

 

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

 

B.      Criteria for Exclusion from Eligibility.

 

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

 

1.            You are a temporary, leased or seasonal employee of the Company or any Covered Subsidiary.

 

2.            You work for the Company or any Covered Subsidiary as an independent contractor, consultant, or agent under a written contract or purchase order or you are otherwise classified as such by your Employer (whether or not such classification is upheld on governmental, judicial or other review.)

 

3.            You resign your employment with the Company or any Covered Subsidiary (other than a resignation constituting an Involuntary Termination).

 

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

 

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

 

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

 

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

 

8.            In situations other than an Involuntary Termination during the Transaction Protection Period, you are offered comparable employment by a company or entity that acquires, merges with, acquires some or all of the assets of, or otherwise carries on the business of the Company or other Employer relating to your employment.  For purposes of this provision “comparable employment” means employment within 50 miles of your prior employment site and at least 100% of your prior base pay.

 

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

 

10.          You are covered by any other written severance or separation pay plan or arrangement with the Company, or any subsidiary of the Company, or by an employment or other agreement with the Company or any subsidiary of the Company that provides for severance or separation pay/benefits in a lump sum or in installment payments following termination of your employment.

 

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

 

IV.           HOW THE PLAN WORKS

 

A.    Payment Date of Severance Benefits

 

If you satisfy all the eligibility criteria of Section III and are eligible for benefits under the Plan, you will receive your separation benefits (the “Severance Payment Benefit”), in the amount determined pursuant to Section IV.B. below, in a lump sum payment on the third business day, within the sixty (60)-day period measured from the date of your Separation from Service due to your Layoff Termination or Involuntary Termination, following the date on which your Required Release first becomes effective and enforceable following the expiration of the maximum applicable delivery/review and revocation periods and you have otherwise complied with all the other terms and conditions of Section III.A, or on such subsequent date as the Company may determine in its sole discretion, but in no event later the last business day of such sixty (60)-day period.

 

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B.      Severance Benefits Guidelines

 

The Severance Payment Benefit for which you are eligible under the Plan depends on your position, your base pay, your length of service, the type of termination, and whether you are entitled to receive prior notice of your termination under the terms of the Worker Adjustment and Retraining Notification Act (“WARN Act”).  No Severance Payment Benefit will be paid to you if you fail to comply with or meet the eligibility conditions stated above, including (without limitation) the execution and effectiveness of the Required Release on or before applicable date specified in Section III.A.9. above, but in no event after the expiration of the sixty (60)-day period measured from the date of your Separation from Service.

 

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

 

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

 

(a)          For employees other than Presidents, Executive Vice Presidents, Senior Vice Presidents or Vice Presidents, the Severance Payment Benefit shall depend on whether you are terminated during the Transaction Protection Period as follows:

 

(i)           For a termination that does not occur during the Transaction Protection Period, the Severance Payment Benefit for employees who are not entitled to prior notice of layoff under the WARN Act is one week’s base pay for each full $20,000 of annual base pay, and an additional one week’s base pay for each full six (6) month period of employment completed prior to termination, up to a maximum of an additional five (5) weeks of base pay.  For example, an employee with a $40,000 per year base salary who has been employed continuously for four years would be eligible for a severance benefit equal to seven (7) weeks of base pay.

 

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

 

(b)          The Severance Payment Benefit amount for Presidents and Executive Vice Presidents shall be one year of base pay. The Severance Payment Benefit amount for Senior Vice Presidents and Vice Presidents shall be six (6) months of base pay.  The amounts for Presidents, Executive Vice Presidents, Senior Vice Presidents and Vice Presidents shall apply whether or not the termination occurs during the Transaction Protection Period.  Whether an employee is a President, Executive Vice President, Senior Vice President or Vice President will be based upon such employee’s title as of the date of termination or, if during the Transaction Protection Period, the employee’s highest title at any time during that period. It shall be solely in the Company’s discretion to change employees’ titles.

 

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2.            Severance Payment Benefit Guideline for Employees Entitled to Notice Under the WARN Act.  If you are entitled to prior notice of your termination pursuant to the provisions of the WARN Act, the Severance Payment Benefit guideline is as follows:  The Severance Payment Benefit amount is the greater of (a) the amount for which you would be eligible under Section IV.B.1. above (if you had not been entitled to WARN Act notice) minus eight weeks’ base pay, or (b) one week’s base pay.  For example, the benefit guideline for a person who has been employed for five years with a base salary of $100,000 who is not terminated during the Transaction Protection Period would be two weeks’ base pay.  The benefit guideline for a person who has been employed for three years with a base salary of $60,000 would be one week’s base pay.

 

3.            Payment of Benefits.  The lump sum payment of the Severance Payment Benefit determined in accordance with the provisions of this Section IV.B. will be subject to legally required tax withholdings and all other applicable payroll deductions.  Such withholdings and deductions may not include 401k Plan contributions or other elective benefit and benefit plan contributions as participation in such benefits and plans terminate upon termination of employment.

 

4.            Administrator Discretion.  The Plan Administrator may, as it deems appropriate and in its sole discretion, authorize Severance Payment Benefits in an amount different from that set forth in the Severance Payment Benefit Guidelines.  Under certain circumstances, the Plan Administrator may, in its sole discretion, waive or modify, with respect to one or more employees or classes of employees, the eligibility requirements for Severance Payment Benefits or modify the amount of Severance Payment Benefits.  The foregoing shall not apply during the Transaction Protection Period.  In no event, however, shall any Severance Payment Benefit payments be structured in a manner, or shall the Plan Administrator take any other action, that would contravene the applicable requirements, restrictions and limitations of Code Section 409A and the Treasury Regulations thereunder or otherwise result in a prohibited acceleration, or impermissible deferral, of benefit payments under Code Section 409A and the Treasury Regulations thereunder.

 

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

 

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

 

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

 

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

 

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

 

·                  You will receive information describing unemployment insurance benefits separately.

 

V.            OTHER IMPORTANT INFORMATION

 

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

 

It is the intention of the Company and the other Employers that this Plan continues to comply with the requirements of the short-term deferral exception of 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 this Plan would otherwise contravene the requirements or limitations of Code Section 409A 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 Code Section 409A and the Treasury Regulations thereunder that apply to such exception.

 

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

 

C.      Claims Procedure.

 

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

 

2.            Denial of Application for Benefits.  In the event that your application for benefits is denied in whole or in part, the Plan Administrator must notify you, in writing, of the denial of the application, and of your right to review the denial.  The written notice of denial will be set forth in a manner designed to be understood by you, and will include specific reasons for the denial, specific references to the Plan provision upon which the denial is based, a description of any information or material that the Plan Administrator needs to complete the review and an explanation of the Plan’s review procedure.  This written notice will be given to

 

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you within ninety (90) days after the Plan Administrator receives the application, unless special circumstances require an extension of time, in which case, the Plan Administrator has up to an additional ninety (90) days for processing the application.  If an extension of time for processing is required, written notice of the extension will be furnished to you before the end of the initial ninety (90) day period.  This notice of extension will describe the special circumstances necessitating the additional time and the date by which the Plan Administrator is to render its decision on the application.  If written notice of denial of the application for benefits is not furnished within the specified time, the application shall be deemed to be denied.  You will then be permitted to appeal the denial in accordance with the review procedure described below.

 

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

 

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

 

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

 

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

 

E.                     Plan Amendment or Termination.  The Compensation Committee of the Company reserves the right to change, suspend, discontinue or terminate all or any part of this Plan at any time; provided, however, that the Plan may not be amended, modified or terminated during the Transaction Protection Period with respect to eligible employees under the Plan as of the

 

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closing of that Transaction.  Other than during the Transaction Protection Period with respect to eligible employees as of the closing of that Transaction, the provisions of the Plan are intended to serve as mere guidelines for the payment of benefits under certain prescribed circumstances and are not intended to provide any employee with a vested right to benefits.  Accordingly, any termination or amendment of the Plan may be made effective immediately with respect to any benefits not yet paid, whether or not prior notice of such amendment or termination has been given to affected employees.  This Plan terminates by its own terms when all benefits hereunder have been paid.

 

F.        Taxes and Other Payroll Deductions.  Company will withhold taxes and all other applicable payroll deductions from any Severance Payment Benefit made under this Plan.  The Company may also offset from any Severance Payment Benefit any amounts owed to the Company, except to the extent such offset would contravene any applicable restrictions  or limitations under Code Section 409A.

 

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

 

VI.           STATEMENT OF ERISA RIGHTS

 

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

 

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

 

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

 

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

 

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

 

If your claim for a benefit under this Plan is denied in whole or in part, you must receive a written explanation of the reason for the denial.  You have the right to have the Plan Administrator review and reconsider your claim.  Under ERISA, there are steps you can take to enforce the above rights.  For instance, if you request materials from the Plan and do not receive them within thirty (30) days, you may file suit in a federal court.  In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator.  If you have a claim for a benefit under this Plan that is denied or ignored, in

 

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whole or in part, you may file suit in a federal or a state court.  If it should happen that the Plan fiduciaries misuse the Plan’s assets (if any) or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor or you may file suit in a federal court.  The court will decide who should pay court costs and legal fees.  If you are successful in your lawsuit, the court may order the party you have sued to pay your legal costs, including attorney fees.  However, if you lose, the court may order you to pay these costs and fees, for example, if it finds that your claim or suit is frivolous.

 

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

 

13

 

ADDITIONAL PLAN INFORMATION

 

	
Plan Sponsor:
    	
United   Online, Inc.
    
	
 
    	
 
    
	
Plan Name:
    	
The   United Online, Inc. Severance Benefit Plan
    
	
 
    	
 
    
	
Employer Identification Number
    	
77-0575839
    
	
 
    	
 
    
	
Plan Number:
    	
5   01
    
	
 
    	
 
    
	
Plan Effective Date:
    	
January 1,   2010
    
	
 
    	
 
    
	
Plan Administrator:
    	
United   Online, Inc.
    
	
 
    	
21301 Burbank Blvd.
    
	
 
    	
Woodland Hills, CA 91367
    
	
 
    	
Telephone: (818) 287-3000
    
	
 
    	
 
    
	
Direct Inquiries to:
    	
Plan   Administrator
    
	
 
    	
c/o General Counsel
    
	
 
    	
United Online, Inc.
    
	
 
    	
21301 Burbank Blvd.
    
	
 
    	
Woodland Hills, CA 91367
    
	
 
    	
Telephone: (818) 287-3000
    
	
 
    	
 
    
	
Agent for Service of Legal Process:
    	
Plan   Administrator or
    
	
 
    	
United Online’s Executive Vice President and
    
	
 
    	
General Counsel
    
	
 
    	
 
    
	
Type of Plan:
    	
Severance   Plan / Employee Welfare Benefit Plan
    
	
 
    	
 
    
	
Plan Costs:
    	
The   cost of the plan is paid by United Online, Inc.
    

 

14

 

IN WITNESS WHEREOF, UNITED ONLINE, INC. HAS CAUSED THIS AMENDED AND RESTATED SEVERANCE BENEFIT PLAN AND SUMMARY PLAN DESCRIPTION TO BE EXECUTED ON ITS BEHALF BY ITS DULY AUTHORIZED OFFICER ON THE DATE AND YEAR INDICATED BELOW.

 

	
 
    	
UNITED   ONLINE, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Mark R. Goldston
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Chief   Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
Dated:
    	
November 22,   2010
    

 

15

 

SCHEDULE A

 

LIST OF COVERED SUBSIDIARIES PARTICIPATING IN THE PLAN

AS OF JANUARY 1, 2010

 

	
NetZero, Inc.
    
	
Juno   Internet Services, Inc.
    
	
United   Online Advertising Network, Inc.
    
	
Classmates   Online, Inc.
    
	
MyPoints.com, Inc.
    
	
FTD.COM, Inc.
    
	
Florists’   Transworld Delivery, Inc.
    

 

16Exhibit 10.17

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is made and entered into effective the 6th day of December, 2010 by and between United Online, Inc., a Delaware corporation (the “Company”), with principal corporate offices at 21301 Burbank Boulevard, Woodland Hills, California 91367, and Mark R. Goldston, whose address is 21301 Burbank Boulevard, Woodland Hills California 91367 (“Employee”).

 

WHEREAS, Employee and the Company had previously entered into an employment agreement (the “Prior Agreement”) effective April 3, 2007, amended as of August 22, 2007 and amended and restated effective as of January 1, 2009;

 

WHEREAS, effective as of the date hereof, Employee and the Company desire to enter into a new employment agreement to replace the Prior Agreement.

 

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

 

1.                                      EMPLOYMENT

 

1.1                                 The Company hereby agrees to continue to employ Employee, and Employee hereby accepts such continued employment, on the terms and conditions set forth herein, commencing the date hereof and continuing through December 21, 2015 (as extended pursuant to Section 1.2 below, the “Term”), unless this Agreement expires or Employee is terminated earlier as provided in Section 4 below.  Employee’s place of employment shall be the in the greater Los Angeles metropolitan area.

 

1.2                                 On December 21, 2011 and on each succeeding December 21, the term of this Agreement shall automatically be extended for one additional year unless, on or prior to September 21 of the relevant year, either Employee or the Company has delivered a notice that such automatic extension shall not occur.

 

2.                                      DUTIES OF EMPLOYEE

 

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

 

2.2                                 Employee agrees to devote Employee’s good faith, full time, attention, skill and efforts to the performance of his duties for the Company during the Term; provided, however, this paragraph shall not preclude Employee from writing and promoting books or other published materials, engaging in civic, charitable or religious activities, or from serving on boards of directors of companies or organizations that do not present any conflict with the interests of the Company or otherwise adversely affect Employee’s performance of the services required under this Agreement.  This Agreement also shall not be interpreted to prohibit Employee from making personal investments (including the purchase of interests in professional sports teams) and overseeing or participating in management of entities

 

 

controlled by him or his immediate family if those activities do not materially interfere with the services required under this Agreement and do not present any conflict with the interests of the Company.

 

3.                                      COMPENSATION AND OTHER BENEFITS

 

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

 

3.2                                 Bonus.  During the Term, Employee shall also be eligible to receive an annual target bonus of 100% of Employee’s base salary for each fiscal year (the “Annual Bonus”), less withholding required by law, based on performance criteria established by the Board provided that this target shall not be deemed to establish a maximum bonus and the Board or its compensation committee may award a bonus equal to more than 100% of Base Salary.  Employee’s Annual Bonus shall be increased to include any increases in Employee’s Annual Bonus as approved by the Board.  Employee shall not be eligible to receive any unpaid Annual Bonus if his employment hereunder is terminated pursuant to either Section 4.1 or if Employee voluntarily resigns.  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                                 Vacation.  Employee shall be entitled to five (5) weeks paid vacation per year in accordance with the Company’s vacation policies.

 

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

 

3.5                                 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.

 

3.6                                 Board of Directors.  If Employee is elected to the Board, Employee shall serve as Chairman of the Board.  Employee’s appointments as Chairman and as a member of the Board will automatically terminate upon the termination of Employee’s employment with the Company for any reason.

 

4.                                      TERMINATION

 

4.1                                 Termination for Cause.

 

(a)                                  Termination “for cause” is defined as follows:  (1) if Employee is convicted of, or enters a plea of nolo contendere to, a felony, including any act of moral turpitude that

 

2

 

adversely impacts the Company or any of its subsidiaries, (2) if Employee commits an act of actual fraud, embezzlement, theft or similar dishonesty against the Company or any of its subsidiaries that adversely and materially impacts the Company or any of its subsidiaries, (3) if Employee commits any willful misconduct or gross negligence resulting in material harm to the Company or any of its subsidiaries, or (4) if Employee fails, after receipt of detailed written notice and after receiving a period of at least thirty (30) days following such notice to cure such failure, to use his reasonable good faith efforts to follow the reasonable and lawful direction of the Board and to perform his obligations hereunder.

 

The Company may terminate this Agreement immediately (except as required by clause 4.1(a)(4) above) for any of the reasons stated in Section 4.1(a) by giving written notice to Employee without prejudice to any other remedy to which the Company may be entitled.  The notice of termination shall specify the grounds for termination.  If Employee’s employment hereunder is terminated “for cause” pursuant to this Section 4.1, Employee shall be entitled to receive hereunder his accrued but unpaid Base Salary and vacation pay through the date of termination, and reimbursement for any expenses as set forth in Section 3.5, through the date of termination, but shall not be entitled to receive any unpaid portion of the Annual Bonus or any other amount except for amounts earned under any plan (including criteria for the Annual Bonus) but not yet paid as of the date of termination.

 

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

 

4.3                                 Severance Payments and Other Benefits Upon Termination Without Cause or Involuntary Termination.  If the Company terminates Employee’s employment hereunder without cause, or if Employee is Involuntarily Terminated, the Company (or its successor, as the case may be) shall pay to Employee (i) any accrued but unpaid Base Salary and vacation through the date of termination and (ii) reimbursement for any expenses as set forth in Section 3.5, through the date of termination.  Additionally, subject to Employee entering into and not revoking a release of claims in favor of the Company and abiding by the non-solicitation provisions set forth in Section 5 below, the Company (or its successor, as the case may be) shall pay to Employee a severance payment (the “Severance Payment”) equal to the sum of (x)  the Bonus Amount (as defined below), prorated through the date of termination, and (y) a severance payment in an amount equal to three times the sum of Employee’s Base Salary and the Bonus Amount, payable in one lump sum on the date of termination, subject to withholding as may be required by law.  For the purposes of Section 4.3(x) and Section 4.3(y) above, the term “Bonus Amount” shall mean 100% of Employee’s then current Base Salary or, in the event of Involuntary Termination, the greater of 100% of Employee’s then current Base Salary, or the Annual Bonus paid to Employee for the preceding fiscal year.  The release required as a condition to Employee’s entitlement to such Severance Payment shall be a comprehensive agreement releasing the Company and its officers, directors, employees, stockholders, subsidiaries, affiliates, representatives and other related parties from all claims that Employee may have with respect to such parties relating to Employee’s employment with the Company and the termination of that employment relationship and containing such customary other and additional terms as the Company reasonably deems satisfactory and 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 Payment to which Employee accordingly becomes entitled hereunder will be made to Employee in a lump sum on the third business day following the expiration of the maximum applicable review/delivery and revocation periods with respect to the required release or as soon as administratively practicable thereafter, but in no event later than the sixtieth (60th) day following the date of Employee’s termination of employment.

 

With respect to Employee’s outstanding options to purchase shares of the Company’s Common Stock (“Option Awards”), restricted unit awards covering shares of the Company’s Common

 

3

 

Stock (the “Restricted Unit Awards”) and restricted shares of the Company’s Common Stock (the “Restricted Shares”), if Employee’s employment is terminated without cause or due to Employee’s death or permanent disability, or if Employee is Involuntarily Terminated:

 

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

 

(ii)                                  Each Restricted Unit Award (including the Sign-On Restricted Unit Award granted pursuant to the Prior Agreement) will become vested with respect to all non-vested shares, except to the extent otherwise provided in any Restricted Unit Award granted after the date this Agreement is effective, and any shares which so vest shall be issued in accordance with the terms of the applicable award agreement; and

 

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

 

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

 

Employee shall be deemed terminated without cause if Employee resigns following a material breach by the Company of its obligations hereunder; provided, however, (i) 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 thirty (30) 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.  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; or (ii) in connection with or following a Change in Control there is (a) a material decrease in Employee’s authorities, duties or responsibilities (it being deemed to be a material decrease in authorities, duties and/or responsibilities if Employee is not offered and provided the position of Chairman of the Board of Directors and Chief Executive Officer of the Company or its successor as well as the acquiring and ultimate parent entity, if any, following a Change in Control), (b) a material decrease in pay and/or benefits from those provided by the Company immediately prior to the Change in Control, (c) a requirement that Employee re-locate out of the greater Los Angeles metropolitan area, or (d) a failure by any successor to Company to confirm in writing that this Agreement remains in full force and effect; provided, however, (i) Employee shall first provide the Company with written notice of the occurrence of the conduct constituting the grounds for such involuntary termination within ninety (90) days after the occurrence of such conduct,  (ii) the Company shall have thirty (30) days following such notice to cure such conduct, and (iii) Employee terminates his employment with the Company within one hundred eighty (180) days following the initial occurrence of such conduct.

 

“Change in Control” shall mean a change in ownership or control of the Company effected through any of the following transactions: (i) the closing of a merger, consolidation or other reorganization approved by the Company’s stockholders in which a change in ownership or control of the Company is effected through the acquisition by any person or group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Company or a person that, prior to such transaction, directly or indirectly controls, is controlled by or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s

 

4

 

outstanding securities (as measured in terms of the power to vote with respect to the election of Board members), (ii) the closing of a sale, transfer or other disposition of all or substantially all of the Company’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 the Company 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, the Company) acquires 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) beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s securities (as measured in terms of the power to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Company or the acquisition of outstanding securities held by one or more of the Company’s existing stockholders, (iv) a merger, recapitalization, consolidation, or other transaction to which the Company is a party or a sale, transfer or other disposition of all or substantially all of the Company’s assets if, in either case, the members of the Board immediately prior to consummation of the transaction do not, upon consummation of the transaction, constitute at least a majority of the board of directors of the surviving entity or the entity acquiring the Company’s assets, as the case may be, or a parent thereof, or (v) 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 appointed 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 appointment or nomination.

 

5.                                      NON-SOLICITATION

 

For the eighteen (18) month period following the termination of Employee’s employment with the Company (but only if Employee has received the Severance Payment specified in Section 4.3 above with respect to a termination of Employee’s employment prior to a Change in Control) (the “Restricted Period”) Employee shall not directly or indirectly solicit or recruit for employment, any person or persons who are employed by Company or any of its subsidiaries or affiliates, or who were so employed at any time within a period of twelve (12) months immediately prior to the date Employee’s employment terminated, or otherwise interfere with the relationship between any such person and the Company; nor will Employee assist anyone else in recruiting any such employee to work for another company or business or discuss with any such person his or her leaving the employ of the Company or engaging in a business activity in competition with the Company.

 

6.                                      LIMITATION ON PAYMENTS

 

Notwithstanding any other provision of this Agreement, if any payment or benefit received or to be received by Employee (including any payment or benefit received pursuant to this Agreement 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 Employee under this Agreement shall first be reduced, with each such payment to be reduced pro-rata but without any change in the payment date and with the Severance Payment to be the first such cash payments so reduced, and then, if necessary, the accelerated vesting of Employee’s equity awards pursuant to the provisions of this Agreement shall be reduced in the same chronological order in which those awards were made, but only to the extent necessary to assure that Employee receives only the

 

5

 

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 Employee the greatest after-tax amount of benefits after taking into account any Excise Tax imposed on the payments and benefits provided Employee hereunder (or on any other payments or benefits to which Employee may become entitled in connection with any change in control or ownership of the Company or the subsequent termination of Employee’s employment with the Company).

 

7.                                      ASSIGNMENT

 

Neither the Company nor Employee may assign this Agreement or any rights or obligations hereunder except as provided herein.  The Company may assign this Agreement and all of its rights and obligations hereunder to any successor to the business of the Company.  This Agreement will be binding upon the Company and its successors and assigns.  In the event of a Change in Control, 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 Change in Control, and all references herein to the “Company” shall be deemed to include such successor or assignee.

 

8.                                      MISCELLANEOUS

 

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

 

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

 

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

 

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

 

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

 

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

 

8.7                                 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 the Code and becomes payable by reason of Employee’s termination of employment

 

6

 

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 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.  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 Employee’s separation from service will be made to Employee 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 Employee’s death, if Employee is 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 Section 409A deferral period, all payments and benefits deferred pursuant to this Section 8.7 (whether they would have otherwise been payable in a single sum or in installments in the absence of such deferral) shall be credited with interest at a rate equal to the Company’s cost of funds and shall be paid provided to Employee in a lump sum on the first day of the seventh (7th) month after the date of Employee’s separation from service or, if earlier, the first day of the month immediately following the date the Company receives proof of Employee’s death. Any remaining payments or benefits due under this Agreement will be paid in accordance with the normal payment dates specified for them herein.

 

8.8                                 The Severance Payment and benefits under this letter agreement are intended, where possible, to comply with the “short term deferral exception” and the “involuntary separation pay exception” to Code Section 409A. Accordingly, the provisions of this Agreement applicable to the Severance Payment described in Section 4.3 and the accelerated vesting of Employee’s equity awards and the issuance of shares of the Company’s common stock thereunder and the determination of Employee’s separation from service due to termination of Employee’s employment without cause or Employee’s Involuntary Termination shall be applied, construed and administered so that those payments and benefits qualify for one or both of those exceptions, to the maximum extent allowable.  However, to the extent any payment or benefit to which Employee becomes entitled under this Agreement is deemed to constitute an item of deferred compensation subject to the requirements of Code Section 409A, the provisions of this Agreement applicable to that payment or benefit shall be applied, construed and administered so that such payment or benefit is made or provided in compliance with the applicable requirements of Code Section 409A. In addition, should there arise any ambiguity as to whether any other provisions of this letter agreement would contravene one or more applicable requirements or limitations of Code Section 409A and the Treasury Regulations thereunder, such provisions shall be interpreted, administered and applied in a manner that complies with the applicable requirements of Code Section 409A and the Treasury Regulations thereunder.

 

8.9                                 Any compensation deferred by Employee pursuant to one or more non-qualified deferred compensation plans or arrangements of the Company subject to Section 409A of the Code and not otherwise expressly addressed by the terms of this Agreement, shall be paid at such time and in such form of payment as set forth in each applicable plan or arrangement governing the payment of any such deferred amounts.

 

8.10                           Any amounts paid or payable to Employee pursuant to this Agreement or the Company’s equity or compensation plans shall be subject to recovery or clawback to the extent required by any applicable law or any applicable securities exchange listing standards.

 

7

 

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 6,   2010
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Charles B. Ammann
    
	
 
    	
Name:
    	
Charles   B. Ammann
    
	
 
    	
Title:
    	
EVP   and General Counsel
    
	
 
    	
 
    	
 
    
	
 
    	
Dated:
    	
December 6,   2010
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MARK R. GOLDSTON
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
/s/   Mark R. Goldston
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Dated:
    	
December 6,   2010
    

 

8

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