-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QhKyNsGUwSlciLQ/od6ixT78aEhXXlz2if7i9BcejYYVm+UWm4jCT+hqQJciLf44 fA4kd2qOPmS69UbSztaajA== 0001104659-05-021749.txt : 20050509 0001104659-05-021749.hdr.sgml : 20050509 20050509171805 ACCESSION NUMBER: 0001104659-05-021749 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20050509 DATE AS OF CHANGE: 20050509 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GOLDSTON MARK R CENTRAL INDEX KEY: 0001230439 FILING VALUES: FORM TYPE: SC 13D MAIL ADDRESS: STREET 1: C/O UNITED ONLINE STREET 2: 2555 TOWNSGATE ROAD CITY: WESTLAKE VILLAGE STATE: CA ZIP: 91361 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: UNITED ONLINE INC CENTRAL INDEX KEY: 0001142701 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 770575839 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-62069 FILM NUMBER: 05812787 BUSINESS ADDRESS: STREET 1: 21301 BURBANK BOULEVARD CITY: WOODLAND HILLS STATE: CA ZIP: 91367 BUSINESS PHONE: 8182873000 MAIL ADDRESS: STREET 1: 21301 BURBANK BOULEVARD CITY: WOODLAND HILLS STATE: CA ZIP: 91367 SC 13D 1 a05-8993_1sc13d.htm SC 13D

	UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
	SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. )*

United Online, Inc.

(Name of Issuer)

Common Stock, $0.0001 Par Value

(Title of Class of Securities)

911268100

(CUSIP Number)

Mark R. Goldston

United Online, Inc.

21301 Burbank Boulevard

Woodland Hills, CA 91367

(818) 287-3000

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

January 1, 2002

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

^* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 911268100

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Mark R. Goldston

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			ý

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) PF, OO

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization United States of America

Number of Shares Beneficially Owned by Each Reporting Person With			7.	Sole Voting Power 3,789,457

			8.	Shared Voting Power 608,581

			9.	Sole Dispositive Power 2,449,348

			10.	Shared Dispositive Power 608,581

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person 4,398,038

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 6.8% (based on the number of shares of Common Stock outstanding as of May 3, 2005)

	14.	Type of Reporting Person (See Instructions) IN

Item 1.	Security and Issuer
This statement on Schedule 13D relates to the common stock, par value $0.0001 per share (the “Common Stock”), of United Online, Inc., a Delaware corporation (the “Issuer” or “United Online”). The principal executive offices of the Issuer are located at 21301 Burbank Boulevard, Woodland Hills, CA 91367.
Item 2.	Identity and Background
(a) The name of the person filing this statement is Mark R. Goldston, an individual.
(b) The address of the principal office and principal business of Mr. Goldston is United Online, Inc., 21301 Burbank Boulevard, Woodland Hills, CA 91367.
(c) Mr. Goldston currently serves as Chairman of the Board of Directors, Chief Executive Officer and President of the Issuer.
(d) During the past five years, Mr. Goldston has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the past five years, Mr. Goldston has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which he was or is subject to a judgment, decree or final order enjoining future violations of or prohibiting or mandating activity subject to federal or state securities laws or finding any violation with respect to such laws.
(f) Mr. Goldston is a citizen of the United States of America.

Item 3.	Source and Amount of Funds or Other Consideration
On September 25, 2001, NetZero, Inc. (“NetZero”) and Juno Online Services, Inc. merged into two wholly-owned subsidiaries of United Online (the “Merger”). As a result of the conversion of Mr. Goldston’s NetZero stock into United Online stock in connection with the Merger, Mr. Goldston acquired 1,022,026 shares of Common Stock. Also, as a result of the conversion of Mr. Goldston’s stock options in connection with the Merger, Mr. Goldston received options to purchase 400,000 shares of Common Stock.
On September 26, 2001, Mr. Goldston was granted an option to purchase 1,160,000 shares of Common Stock, at an exercise price of $1.84 per share, pursuant to a Notice of Grant of Stock Option by and between United Online and Mr. Goldston. One-half of such options became exercisable on September 26, 2001 and one half became exercisable on January 1, 2002. Twenty-five percent (25%) of such options vested on September 26, 2002 and the remainder vested or will vest, as the case may be, in 36 equal monthly installments thereafter.
On January 1, 2002, when the second half of the option granted to Mr. Goldston on September 26, 2001 became exercisable, Mr. Goldston’s beneficial ownership of the Common Stock exceeded five percent (5%) of the total number of shares of Common Stock outstanding. From January 1, 2002 to the date hereof, the following transactions increased or decreased, as the case may be, Mr. Goldston’s beneficial ownership of the Common Stock:
• On May 7, 2002, Mr. Goldston was granted an option to purchase 550,000 shares of Common Stock, at an exercise price of $8.65 per share, pursuant to a Notice of Grant of Stock Option by and between United Online and Mr. Goldston. The options were immediately exercisable and twenty-five percent (25%) of such options vested on May 7, 2003 and the remainder vested or will vest, as the case may be, in 36 equal monthly installments thereafter.
• From August 12, 2002 to January 27, 2003, Mr. Goldston disposed of 500,000 shares of Common Stock through a series of open market transactions.
• On June 18, 2003, Mr. Goldston was granted an option to purchase 550,000 shares of Common Stock, at an exercise price of $26.92 per share, pursuant to a Notice of Grant of Stock Option by and between United Online and Mr. Goldston. The options were immediately exercisable and thirty-three percent (33%) of such options vested on June 18, 2004 and the remainder vested or will vest, as the case may be, in 24 equal monthly installments thereafter.
• From August 7, 2003 to August 18, 2003, Mr. Goldston disposed of 500,000 shares of Common Stock through a series of open market transactions.
• On October 31, 2003, United Online paid a stock dividend to all holders of record of Common Stock on October 14, 2003 of one share of Common Stock for every two shares of Common Stock outstanding. As a result of the stock dividend, Mr. Goldston received 202,860 shares of Common Stock and the number of shares subject to his existing options to purchase Common Stock increased by 1,138,152 shares.
• On January 27, 2004, Mr. Goldston was awarded 250,000 shares of restricted stock of United Online, which will vest on January 27, 2008, subject to Mr. Goldston’s continued service through such date.
• On January 29, 2004, Mr. Goldston was granted an option to purchase 625,000 shares of Common Stock, at an exercise price of $18.70 per share, pursuant to a Notice of Grant of Stock Option by and between United Online and Mr. Goldston. The options were immediately exercisable and thirty-three percent (33%) of such options vested on January 29, 2005 and the remainder vested or will vest, as the case may be, in 24 equal monthly installments thereafter.

• From November 18, 2004 to April 7, 2005, Mr. Goldston disposed of 500,000 shares of Common Stock through a series of open market transactions pursuant to the trading plan described under Item 5(c) below.
• On March 24, 2005, Mr. Goldston was awarded 500,000 restricted stock units with each unit entitling Mr. Goldston to one share of Common Stock upon vesting. Twenty-five percent (25%) of the award will vest on February 15th of each year, beginning with February 15, 2006, subject to Mr. Goldston’s continued service through such date.
All of the transactions listed above were reported by Mr. Goldston on a Form 3, 4 or 5, as appropriate. Information regarding Mr. Goldston’s beneficial ownership, stock option exercises and equity awards has also been made publicly available in United Online’s proxy statements.
Item 4.	Purpose of Transaction
The shares covered by this Schedule 13D are being held for investment purposes. Mr. Goldston may from time to time acquire shares of Common Stock, including by exercise of his stock options, or dispose of Common Stock, depending upon his personal investment goals, the market price of the Common Stock, the exercise of his responsibilities as trustee with respect to the Trust Shares (as defined in Item 5 below), and other factors.
Except as described above and in his role as Chairman, Chief Executive Officer and President of the Issuer, Mr. Goldston has no present plans or proposals which would result in or relate to any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5.	Interest in Securities of the Issuer
(a) As of May 3, 2005, Mr. Goldston was the beneficial owner of 4,398,038 shares of Common Stock, which comprises 6.8% of the of 64,957,067 shares of Common Stock outstanding as of that date (including shares subject to Mr. Goldston’s options which are currently exercisable or which will become exercisable within 60 days). Mr. Goldston’s beneficial ownership includes 3,539,457 shares subject to options which are currently exercisable or which will become exercisable within 60 days of May 3, 2005.
(b) As of May 3, 2005, Mr. Goldston had (i) sole power to vote 3,789,457 shares of Common Stock; (ii) shared power to vote 608,581 shares of Common Stock, which are owned by the Mark and Nancy Jane Goldston Family Trust dated November 8, 1997 (the “Trust Shares”); (iii) sole power to dispose of 2,449,348 shares of Common Stock; and (iv) shared power to dispose the 608,581 Trust Shares.
(c) In August 2004, Mr. Goldston entered into a trading plan pursuant to which he sold an aggregate of 500,000 shares of Common Stock during a period commencing in November 2004 and ending in April 2005. A portion of the 500,000 shares were sold ratably at market prices twice each month during such period. The shares sold were issued pursuant to the cashless exercise of stock options held by Mr. Goldston. Mr. Goldston had no control over the timing of the sales under the plan. Mr. Goldston’s trading plan was intended to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, and complied with United Online’s insider trading policy. The following table describes the transactions pursuant to the 10b5-1 plan made over the past sixty days:

Date	Number of Shares	Average Selling Price Per Share

3/21/2005	41,667	$	10.01
4/1/2005	41,666	$	10.40
4/7/2005	41,667	$	10.10

On March 24, 2005, Mr. Goldston was awarded 500,000 restricted stock units with each unit entitling Mr. Goldston to one share of Common Stock upon vesting. Subject to Mr. Goldston’s continued service, twenty-five percent (25%) of the award will vest on February 15th of each year, beginning with February 15, 2006.
(d) Except for the Trust Shares, no other person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common Stock beneficially owned by Mr. Goldston.
(e) Not applicable.
Item 6.	Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer
From time to time, Mr. Goldston may be named in the form of proxy card distributed in connection with the annual meeting of United Online’s stockholders.
Except as otherwise described in this Schedule 13D, to the best of Mr. Goldston’s knowledge there are no contracts, arrangements, understandings or relationships (legal or otherwise) among Mr. Goldston and between Mr. Goldston and any person with respect to any securities of the Issuer, including but not limited to transfer or voting of any of the securities, finder’s fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies.
Item 7.	Material to Be Filed as Exhibits

Exhibit Number		Description

10.1		Form of Notice of Grant of Stock Option for the 2001 Stock Incentive Plan.
10.2		Stock Issuance Agreement, dated January 27, 2004, between Mr. Goldston and United Online.
10.3		Restricted Stock Unit Issuance Agreement, dated March 24, 2005, between Mr. Goldston and United Online.

Signature

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

	May 9, 2005
	Date
	/s/ Mark R. Goldston
	Signature
	Mark R. Goldston Chairman, CEO and President
	Name/Title

EX-10.1 2 a05-8993_1ex10d1.htm EX-10.1

Exhibit 10.1

Discretionary Option Grant Program

UNITED ONLINE, INC.

2001 STOCK INCENTIVE PLAN

NOTICE OF GRANT OF STOCK OPTION

Notice is hereby given of the following option grant (the “Option”) to purchase shares of the Common Stock of United Online, Inc.:

Optionee:		<Optionee>
Grant Date:		<Grant Date>
Vesting Commencement Date:		<Grant Date>
Exercise Price:		$<Exercise Price> per share
Number of Option Shares:		<No. of Shares> shares
Expiration Date:		<Expiration Date>
Type of Option:		<Type of Option>
Date Exercisable:		<Exercise Schedule>

Vesting Schedule: [Thirty three percent (33%) of the Option Shares shall vest upon Optionee’s completion of one year of Service measured from the Vesting Commencement Date and the remainder of the Option Shares shall vest in a series of twenty-four successive equal monthly installments upon Optionee’s completion of each additional month of Service over the twenty-four month period thereafter.] OR [Twenty-five percent (25%) of the Option Shares shall vest upon Optionee’s completion of one year of Service measured from the Vesting Commencement Date and the remainder of the Option Shares shall vest in a series of thirty-six successive equal monthly installments upon Optionee’s completion of each additional month of Service over the thirty-six month period thereafter.] The Option shall vest as to one or more of the Option Shares on an accelerated basis pursuant to the terms of the Employment Agreement between the Corporation and the Optionee in the event the Optionee’s Service with the Corporation terminates under certain prescribed circumstances. Accordingly, the vesting acceleration provisions of such Employment Agreement are hereby incorporated into the Option Agreement for this Option and shall have the same force and effect as if expressly set forth therein.

Optionee understands and agrees that the Option is granted subject to and in accordance with the terms of the United Online, Inc. 2001 Stock Incentive Plan (the “Plan”). Optionee further agrees to be bound by the terms of the Plan and the terms of the Option as set forth in the Stock Option Agreement attached hereto as Exhibit A. Optionee hereby acknowledges the receipt of a copy of the official prospectus for the Plan in the form attached hereto as Exhibit B. A copy of the Plan is available upon request made to the Corporate Secretary at the Corporation’s principal offices.

Employment at Will. Nothing in this Notice or in the attached Stock Option Agreement or in the Plan shall confer upon Optionee any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining Optionee) or of Optionee, which rights are hereby expressly reserved by each, to terminate Optionee’s Service at any time for any reason, with or without cause.

Definitions. All capitalized terms in this Notice shall have the meaning assigned to them in this Notice or in the attached Stock Option Agreement.

DATED: <Grant Date>

UNITED ONLINE, INC.

By:

Name:
Title:

OPTIONEE

Name: <Optionee>

Signature:

Address:

ATTACHMENTS

Exhibit A - Stock Option Agreement

Exhibit B — Plan Summary and Prospectus

EXHIBIT A

Discretionary Option Grant Program

UNITED ONLINE, INC.

2001 STOCK INCENTIVE PLAN

STOCK OPTION AGREEMENT

A. The Board has adopted the Plan for the purpose of retaining the services of selected Employees, non-employee members of the Board (or the board of directors of any Parent or Subsidiary) and independent contractors who provide services to the Corporation (or any Parent or Subsidiary).

B. Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s grant of an option to Optionee.

C. All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix.

NOW, THEREFORE, it is hereby agreed as follows:

1. Grant of Option. The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase up to the number of Option Shares specified in the Grant Notice. The Option Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at the Exercise Price.

2. Option Term. This option shall expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6.

3. Limited Transferability.

(a) Except as otherwise provided in this Paragraph 3, this option shall be neither transferable nor assignable by Optionee other than by will or the laws of inheritance following Optionee’s death and may be exercised, during Optionee’s lifetime, only by Optionee. However, Optionee may designate one or more persons as the beneficiary or beneficiaries of this option, and this option shall, in accordance with such designation, automatically be transferred to such beneficiary or beneficiaries upon the Optionee’s death while holding this option. Such beneficiary or beneficiaries shall take the transferred option subject to all the terms and conditions of this Agreement, including (without limitation) the limited time period during which this option may, pursuant to Paragraph 5, be exercised following Optionee’s death.

(b) If this option is designated a Non-Statutory Option in the Grant Notice, then (with the Plan Administrator’s consent) this option may be assigned in whole or in part during Optionee’s lifetime to one or more members of Optionee’s family or to a trust established for the exclusive benefit of one or more such family members, to the extent such assignment is in connection with the Optionee’s estate plan. The assigned portion shall be exercisable only by the person or persons who acquire a proprietary interest in the option pursuant to such assignment. The terms applicable to the assigned portion shall be the same as those in effect for this option immediately prior to such assignment.

4. Dates of Exercise. This option shall become exercisable for the Option Shares in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the

accumulated installments until the close of business on the Expiration Date or sooner termination of the option term under Paragraph 5 or 6.

5. Cessation of Service. The option term specified in Paragraph 2 shall terminate (and this option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable:

(a) Should Optionee cease to remain in Service for any reason (other than death, Permanent Disability, Misconduct or Involuntary Termination following a Corporate Transaction or Change in Control) while this option is outstanding, then this option shall terminate upon the earlier of (i) the expiration of the three (3) month period measured from the date of such cessation of Service or (ii) the close of business on the Expiration Date.

(b) Should Optionee die while this option is outstanding, then the personal representative of Optionee’s estate or the person or persons to whom the option is transferred pursuant to Optionee’s will or the laws of inheritance shall have the right to exercise this option. However, if Optionee has designated one or more beneficiaries of this option, then those persons shall have the exclusive right to exercise this option following Optionee’s death. Any such right to exercise this option shall lapse, and this option shall terminate, upon the earlier of (i) the expiration of the twelve (12)-month period measured from the date of Optionee’s death or (ii) the close of business on the Expiration Date.

(c) Should Optionee cease Service by reason of Permanent Disability while this option is outstanding, then this option shall terminate upon the earlier of (i) the expiration of the twelve (12) month period measured from the date of such cessation of Service or (ii) the close of business on the Expiration Date.

(d) Should Optionee’s Service terminate by reason of an Involuntary Termination within twelve (12) months following a Corporate Transaction or Change in Control while this option is outstanding, then this option shall terminate upon the earlier of (i) the expiration of the twelve (12) month period measured from the date of the Optionee’s Involuntary Termination or (ii) the close of business on the Expiration Date.

(e) During the limited period of post-Service exercisability, this option may not be exercised in the aggregate for more than the number of Option Shares for which the option is exercisable at the time of Optionee’s cessation of Service. Upon the expiration of such limited exercise period or (if earlier) upon the Expiration Date, this option shall terminate and cease to be outstanding for any exercisable Option Shares for which the option has not been exercised. However, this option shall, immediately upon Optionee’s cessation of Service for any reason, terminate and cease to be outstanding with respect to any Option Shares for which this option is not otherwise at that time exercisable.

(f) Should Optionee’s Service be terminated for Misconduct or should Optionee otherwise engage in any Misconduct while this option is outstanding, then this option shall terminate immediately and cease to remain outstanding.

6. Special Acceleration of Option.

(a) This option, to the extent outstanding at the time of a Corporate Transaction but not otherwise fully exercisable, shall automatically accelerate so that this option shall, immediately prior to the effective date of such Corporate Transaction, become exercisable for all of the Option Shares at the time subject to this option and may be exercised for any or all of those Option Shares as fully vested shares of Common Stock. No such acceleration of this option shall occur, however, if and to the extent: (i) this option is, in connection with the Corporate Transaction, to be assumed by the successor corporation (or parent thereof) or (ii) this option is to be replaced with a cash incentive program of the

successor corporation which preserves the spread existing at the time of the Corporate Transaction on the Option Shares for which this option is not otherwise at that time exercisable (the excess of the Fair Market Value of those Option Shares over the aggregate Exercise Price payable for such shares) and provides for subsequent payout in accordance with the same option exercise/vesting schedule set forth in the Grant Notice.

(b) Immediately following the Corporate Transaction, this option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(c) If this option is assumed in connection with a Corporate Transaction, then this option shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the number and class of securities which would have been issuable to Optionee in consummation of such Corporate Transaction had the option been exercised immediately prior to such Corporate Transaction, and appropriate adjustments shall also be made to the Exercise Price, provided the aggregate Exercise Price shall remain the same. To the extent the holders of Common Stock receive cash consideration for their Common Stock in consummation of the Corporate Transaction, with the Plan Administrator’s consent prior to the consummation of the Corporate Transaction, the successor corporation may, in connection with the assumption of this option, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in such Corporate Transaction.

(d) This option shall continue, over Optionee’s period of Service following a Corporate Transaction in which this option is assumed, to become exercisable for the Option Shares in one or more installments in accordance with the provisions of this Agreement and the Grant Notice. However, immediately upon an Involuntary Termination of Optionee’s Service within twelve (12) months following the effective date of that Corporate Transaction, this option, to the extent outstanding at the time but not otherwise fully exercisable, shall automatically accelerate as to a part of the Option Shares so that the total number of Option Shares for which this option shall be exercisable, after taking such acceleration into account, shall be equal to the greater of (i) the number of Option Shares which Optionee could have, in accordance with the normal Exercise Schedule (after taking into account any prior exercises), exercised this option at the time of such Involuntary Termination had Optionee completed twice the amount of Service actually completed by him or her at the time of such Involuntary Termination (but in no event shall the number of Option Shares for which this option becomes exercisable on such an accelerated basis exceed the number of Option Shares for which this option would not have otherwise been exercisable at the time of such Involuntary Termination in accordance with the normal Exercise Schedule) or (ii) the number of Option Shares for which the Option would have become exercisable under the normal Exercise Schedule had the Optionee actually completed twelve (12) months of Service prior to his or her Involuntary Termination.

(e) This option shall not accelerate upon the occurrence of a Change in Control, and this option shall accordingly, over Optionee’s period of Service following such Change in Control, continue to become exercisable for the Option Shares in one or more installments in accordance with the provisions of this Agreement and the Grant Notice. However, immediately upon an Involuntary Termination of Optionee’s Service within twelve (12) months following that Change in Control, this option, to the extent outstanding at the time but not otherwise fully exercisable, shall automatically accelerate as to a part of the Option Shares so that the total number of Option Shares for which this option shall be exercisable, after taking such acceleration into account, shall be equal to the greater of (i) the number of Option Shares which Optionee could have, in accordance with the normal Exercise Schedule (after taking into account any prior exercises), exercised this option at the time of such Involuntary Termination had Optionee completed twice the amount of Service actually completed by him or her at the time of such Involuntary Termination (but in no event shall the number of Option Shares for which this option becomes exercisable on such an accelerated basis exceed the number of Option Shares for which

this option would not have otherwise been exercisable at the time of such Involuntary Termination in accordance with the normal Exercise Schedule) or (ii) the number of Option Shares for which the Option would have become exercisable under the normal Exercise Schedule had the Optionee actually completed twelve (12) months of Service prior to his or her Involuntary Termination.

(f) This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

7. Adjustment in Option Shares. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made to (a) the total number and/or class of securities subject to this option and (b) the Exercise Price in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

8. Stockholder Rights. The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option, paid the Exercise Price and become a holder of record of the purchased shares.

9. Manner of Exercising Option.

(a) In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

(i) Execute and deliver to the Corporation a Notice of Exercise (attached hereto as Exhibit I) for the Option Shares for which the option is exercised.

(ii) Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

(A) cash or check made payable to the Corporation;

(B) a promissory note payable to the Corporation, but only to the extent authorized by the Plan Administrator in accordance with Paragraph 13;

(C) shares of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; or

(D) if the option is exercised for vested shares, through a special sale and remittance procedure pursuant to which Optionee (or any other person or persons exercising the option) shall concurrently provide irrevocable instructions (1) to a Corporation-designated brokerage firm to effect the immediate sale of the purchased shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds to cover the aggregate Exercise Price payable for the purchased shares plus all applicable Federal, state and local income and employment taxes required to be withheld by the Corporation by reason of such exercise and (2) to the Corporation to deliver

the certificates for the purchased shares directly to such brokerage firm in order to complete the sale.

Except to the extent the sale and remittance procedure is utilized in connection with the option exercise, payment of the Exercise Price must accompany the Notice of Exercise delivered to the Corporation in connection with the option exercise.

(iii) Furnish to the Corporation appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

(iv) Make appropriate arrangements with the Corporation (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the option exercise.

(b) As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising this option) the purchased Option Shares, with the appropriate legends affixed thereto.

(c) In no event may this option be exercised for any fractional shares.

10. Compliance with Laws and Regulations.

(a) The exercise of this option and the issuance of the Option Shares upon such exercise shall be subject to compliance by the Corporation and Optionee with all applicable requirements of law relating thereto and with all applicable regulations of any applicable Stock Exchange or the Nasdaq Stock Market on which the Common Stock may be listed for trading at the time of such exercise and issuance.

(b) The inability of the Corporation to obtain approval from any regulatory body having authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common Stock pursuant to this option shall relieve the Corporation of any liability with respect to the non-issuance or sale of the Common Stock as to which such approval shall not have been obtained.

11. Successors and Assigns. Except to the extent otherwise provided in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Optionee, Optionee’s assigns, the legal representatives, heirs and legatees of Optionee’s estate and any beneficiaries of this option designated by Optionee.

12. Notices. Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and addressed to Optionee at the address indicated on the Corporation’s records. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

13. Financing. The Plan Administrator may, in its absolute discretion and without any obligation to do so, permit Optionee to pay the Exercise Price for the purchased Option Shares by delivering a full-recourse promissory note payable to the Corporation. The terms of any such promissory note (including the interest rate, the requirements for collateral and the terms of repayment) shall be established by the Plan Administrator in its sole discretion.

14. Construction. This Agreement and the option evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in this option.

15. Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to that State’s conflict-of-laws rules.

16. Excess Shares. If the Option Shares covered by this Agreement exceed, as of the Grant Date, the number of shares of Common Stock which may without stockholder approval be issued under the Plan, then this option shall be void with respect to those excess shares, unless stockholder approval of an amendment sufficiently increasing the number of shares of Common Stock issuable under the Plan is obtained in accordance with the provisions of the Plan.

17. Additional Terms Applicable to an Incentive Option. In the event this option is designated an Incentive Option in the Grant Notice, the following terms and conditions shall also apply to the grant:

(a) This option shall cease to qualify for favorable tax treatment as an Incentive Option if (and to the extent) this option is exercised for one or more Option Shares: (A) more than three (3) months after the date Optionee ceases to be an Employee for any reason other than death or Permanent Disability or (B) more than twelve (12) months after the date Optionee ceases to be an Employee by reason of Permanent Disability.

(b) No installment under this option shall qualify for favorable tax treatment as an Incentive Option if (and to the extent) the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which such installment first becomes exercisable hereunder would, when added to the aggregate value (determined as of the respective date or dates of grant) of the Common Stock or other securities for which this option or any other Incentive Options granted to Optionee prior to the Grant Date (whether under the Plan or any other option plan of the Corporation or any Parent or Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate. Should such One Hundred Thousand Dollar ($100,000) limitation be exceeded in any calendar year, this option shall nevertheless become exercisable for the excess shares in such calendar year as a Non-Statutory Option.

(c) Should the exercisability of this option be accelerated pursuant to the provisions of Paragraph 6 of this Agreement, then this option shall qualify for favorable tax treatment as an Incentive Option only to the extent the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for which this option first becomes exercisable in the calendar year in which such acceleration occurs does not, when added to the aggregate value (determined as of the respective date or dates of grant) of the Common Stock or other securities for which this option or one or more other Incentive Options granted to Optionee prior to the Grant Date (whether under the Plan or any other option plan of the Corporation or any Parent or Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate. Should the applicable One Hundred Thousand Dollar ($100,000) limitation be exceeded in the calendar year of such acceleration, the option may nevertheless be exercised for the excess shares in such calendar year as a Non-Statutory Option.

(d) Should Optionee hold, in addition to this option, one or more other options to purchase Common Stock which become exercisable for the first time in the same calendar year as this option, then the foregoing limitations on the exercisability of such options as Incentive Options shall be applied on the basis of the order in which such options are granted.

EXHIBIT I

NOTICE OF EXERCISE

FOR EXERCISES EXECUTED THROUGH THE CORPORATION’S STOCK PLAN ADMINISTRATOR, PLEASE SEE INSTRUCTIONS AND FORMS POSTED ON SUCH ADMINISTRATOR’S WEBSITE

I hereby notify United Online, Inc. (the “Corporation”) that I elect to purchase shares of the Corporation’s Common Stock (the “Purchased Shares”) at the option exercise price of $ per share (the “Exercise Price”) pursuant to that certain option (the “Option”) granted to me under the United Online, Inc. 2001 Stock Incentive Plan on , .

Concurrently with the delivery of this Exercise Notice to the Corporation, I shall hereby pay to the Corporation the Exercise Price for the Purchased Shares in accordance with the provisions of my agreement with the Corporation (or other documents) evidencing the Option and shall deliver whatever additional documents may be required by such agreement as a condition for exercise. Alternatively, I may utilize the special broker-dealer sale and remittance procedure specified in my agreement to effect payment of the Exercise Price.

Date


		Optionee

		Address:



Print name in exact manner it is to appear on the stock certificate:

Address to which certificate is to be sent, if different from address above:



Social Security Number:

APPENDIX

The following definitions shall be in effect under the Agreement:

A. Agreement shall mean this Stock Option Agreement.

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

C. Change in Control shall mean the event of a change in ownership or control of the Corporation effected through either of the following transactions:

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

(ii) a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (i) have been Board members continuously since the beginning of such period or (ii) 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 (i) who were still in office at the time the Board approved such election or nomination.

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

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

F. Corporate Transaction shall mean either of the following stockholder approved transactions to which the Corporation is a party:

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

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

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

H. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

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I. Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9 of the Agreement.

J. Exercise Price shall mean the exercise price per Option Share as specified in the Grant Notice.

K. Exercise Schedule shall mean the installment schedule specified in the Grant Notice pursuant to which the option is to become exercisable for the Option Shares in a series of installments over Optionee’s period of Service.

L. Expiration Date shall mean the date on which the option expires as specified in the Grant Notice.

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

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

(ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be deemed equal to the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

N. Grant Date shall mean the date of grant of the option as specified in the Grant Notice.

O. Grant Notice shall mean the Notice of Grant of Stock Option or the Certificate of Stock Option Grant accompanying the Agreement or posted on a website maintained by the Corporation’s stock plan administrator containing the terms authorized by the Corporation, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby.

P. Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

Q. Involuntary Termination shall mean the termination of Optionee’s Service by reason of:

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

(ii) Optionee’s voluntary resignation following (A) a material reduction in the scope of his or her day-to-day responsibilities for the Corporation (or any Parent or Subsidiary), it being understood that a change in Optionee’s title shall not, in and of itself, be deemed a material reduction, (B) a reduction in Optionee’s base salary or (C) a relocation of Optionee’s place of employment by more than fifty (50)

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miles, provided and only if such change, reduction or relocation is effected by the Corporation (or any Parent or Subsidiary) without Optionee’s consent.

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

S. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

T. Notice of Exercise shall mean the notice of exercise in the form attached hereto as Exhibit I.

U. Option Shares shall mean the number of shares of Common Stock subject to the Option as specified in the Grant Notice; provided, however, that the Grant Notice may include only a portion of Option Shares subject to the Option if such Option has been split between an Incentive Option and a Non-Statutory Option.

V. Optionee shall mean the person to whom the option is granted as specified in the Grant Notice.

W. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

X. Permanent Disability shall mean the inability of Optionee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or has lasted or can be expected to last for a continuous period of twelve (12) months or more.

Y. Plan shall mean the United Online, Inc. 2001 Stock Incentive Plan.

Z. Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.

AA. Service shall mean the Optionee’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of directors or an independent contractor.

BB. Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange.

CC. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

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EXHIBIT B

PLAN SUMMARY AND PROSPECTUS

EX-10.2 3 a05-8993_1ex10d2.htm EX-10.2

Exhibit 10.2

UNITED ONLINE, INC.

2001 STOCK INCENTIVE PLAN
STOCK ISSUANCE AGREEMENT

AGREEMENT made this 27^th day of January 2004, by and between United Online, Inc., a Delaware corporation, and Mark Goldston, a Participant in the Plan.

All capitalized terms in this Agreement shall have the meaning assigned to them in this Agreement or in the attached Appendix.

A. PURCHASE OF SHARES

1. Purchase. Participant hereby purchases 250,000 shares of Common Stock (the “Purchased Shares”) pursuant to the provisions of the Stock Issuance Program at the purchase price of $0.0001 per share (the “Purchase Price”).

2. Payment. Concurrently with the delivery of this Agreement to the Corporation, Participant shall pay the Purchase Price for the Purchased Shares in cash or check payable to the Corporation and shall deliver a duly-executed blank Assignment Separate from Certificate (in the form attached hereto as Exhibit I) with respect to the Purchased Shares.

3. Stockholder Rights. Until such time as the Corporation exercises the Repurchase Right, Participant (or any successor in interest) shall have all the rights of a stockholder (including voting, dividend and liquidation rights) with respect to the Purchased Shares, subject, however, to the transfer restrictions of this Agreement.

4. Escrow. The Corporation shall have the right to hold the Purchased Shares in escrow until those shares have vested in accordance with the Vesting Schedule.

5. Compliance with Law. Under no circumstances shall shares of Common Stock or other assets be issued or delivered to Participant pursuant to the provisions of this Agreement unless, in the opinion of counsel for the Corporation or its successors, there shall have been compliance with all applicable requirements of Federal and state securities laws, all applicable listing requirements of any applicable Stock Exchange or the Nasdaq Stock Market on which the Common Stock is at the time listed for trading and all other requirements of law or of any regulatory bodies having jurisdiction over such issuance and delivery.

B. TRANSFER RESTRICTIONS

1. Restriction on Transfer. Except for any Permitted Transfer, Participant shall not transfer, assign, encumber or otherwise dispose of any of the Purchased Shares which are subject to the Repurchase Right.

2. Restrictive Legend. The stock certificate for the Purchased Shares shall be endorsed with the following restrictive legend:

“The shares represented by this certificate are unvested and subject to certain repurchase rights granted to the Corporation and accordingly may not be sold, assigned, transferred, encumbered, or in any manner disposed of except in conformity with the terms of a written agreement dated January 27, 2004 between the Corporation and the registered holder of the shares (or the predecessor in interest to the shares). A copy of such agreement is maintained at the Corporation’s principal corporate offices.”

3. Transferee Obligations. Each person (other than the Corporation) to whom the Purchased Shares are transferred by means of a Permitted Transfer must, as a condition precedent to the validity of such transfer, acknowledge in writing to the Corporation that such person is bound by the provisions of this Agreement and that the transferred shares are subject to the Repurchase Right to the same extent such shares would be so subject if retained by Participant.

C. REPURCHASE RIGHT

1. Grant. The Corporation is hereby granted the right (the “Repurchase Right”) to repurchase at the Purchase Price any or all of the Purchased Shares in which Participant is not, at the time of his or her cessation of Service, vested in accordance with the Vesting Schedule set forth in Paragraph C.3 of this Agreement or the special vesting acceleration provisions of Paragraph C.5 of this Agreement (such shares to be hereinafter referred to as the “Unvested Shares”).

2. Exercise of the Repurchase Right. The Repurchase Right shall be exercisable by written notice delivered to each Owner of the Unvested Shares during the ninety (90)-day period following the date Participant ceases for any reason to remain in Service. The notice shall indicate the number of Unvested Shares to be repurchased and the date on which the repurchase is to be effected, such date to be not more than thirty (30) days after the date of such notice. The certificates representing the Unvested Shares to be repurchased shall be delivered to the Corporation on the closing date specified for the repurchase. Concurrently with the receipt of such stock certificates, the Corporation shall pay to Owner, in cash or cash equivalent (including the cancellation of any purchase-money indebtedness), an amount equal to the Purchase Price previously paid for the Unvested Shares to be repurchased from Owner.

3. Termination of the Repurchase Right. The Repurchase Right shall terminate with respect to any Unvested Shares for which it is not timely exercised under Paragraph C.2. In addition, the Repurchase Right shall terminate and cease to be exercisable with respect to any and all Purchased Shares in which Participant vests in accordance with the following Vesting Schedule:

(i) Upon Participant’s completion of four years of Service measured from January 27, 2004, Participant shall acquire a vested interest in, and the Repurchase Right shall lapse with respect to, 100% of the Purchased Shares.

(ii) If Participant’s Service is terminated without cause, Involuntarily Terminated or terminated due to death or disability (each as defined in the Employment Agreement), Participant shall acquire a vested interest in, and the Repurchase Right shall lapse with respect to, 100% of the Purchased Shares.

4. Recapitalization. Any new, substituted or additional securities or other property (including cash paid other than as a regular cash dividend) which is by reason of any Recapitalization distributed with respect to the Purchased Shares shall be immediately subject to the Repurchase Right and any escrow requirements hereunder, but only to the extent the Purchased Shares are at the time covered by such right or escrow requirements. Appropriate adjustments to reflect such distribution shall be made to the number and/or class of securities subject to this Agreement and to the price per share to be paid upon the exercise of the Repurchase Right in order to reflect the effect of any such Recapitalization upon the Corporation’s capital structure; provided, however, that the aggregate purchase price shall remain the same.

5. Corporate Transaction.

(a) Immediately prior to the consummation of any Corporate Transaction, the Repurchase Right shall automatically lapse in its entirety and the Purchased Shares shall vest in full, except to the extent the Repurchase Right is to be assigned to the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(b) To the extent the Repurchase Right remains in effect following a Corporate Transaction, such right shall apply to the new capital stock or other property (including any cash payments) received in exchange for the Purchased Shares in consummation of the Corporate Transaction, but only to the extent the Purchased Shares are at the time covered by such right. Appropriate adjustments shall be made to the price per share payable upon exercise of the Repurchase Right to reflect the effect of the Corporate Transaction upon the Corporation’s capital structure; provided, however, that the aggregate purchase price shall remain the same. The new securities or other property (including cash payments) issued or distributed with respect to the Purchased Shares in consummation of the Corporate Transaction shall immediately be deposited in escrow with the Corporation (or the successor entity) and shall not be released from escrow until Participant vests in such securities or other property in accordance with the same Vesting Schedule in effect for the Purchased Shares.

D. SPECIAL TAX ELECTION

1. Section 83(b) Election. Under Code Section 83, the excess of the fair market value of the Purchased Shares on the date any forfeiture restrictions applicable to such shares lapse over the Purchase Price paid for such shares will be reportable as ordinary income on the lapse date. For this purpose, the term “forfeiture restrictions” includes the right of the

Corporation to repurchase the Purchased Shares pursuant to the Repurchase Right. Participant may elect under Code Section 83(b) to be taxed at the time the Purchased Shares are acquired, rather than when and as such Purchased Shares cease to be subject to such forfeiture restrictions. Such election must be filed with the Internal Revenue Service within thirty (30) days after the date of this Agreement. Even if the fair market value of the Purchased Shares on the date of this Agreement equals the Purchase Price paid (and thus no tax is payable), the election must be made to avoid adverse tax consequences in the future. THE FORM FOR MAKING THIS ELECTION IS ATTACHED AS EXHIBIT II HERETO. PARTICIPANT UNDERSTANDS THAT FAILURE TO MAKE THIS FILING WITHIN THE APPLICABLE THIRTY (30)-DAY PERIOD WILL RESULT IN THE RECOGNITION OF ORDINARY INCOME AS THE FORFEITURE RESTRICTIONS LAPSE.

2. FILING RESPONSIBILITY. PARTICIPANT ACKNOWLEDGES THAT IT IS PARTICIPANT’S SOLE RESPONSIBILITY, AND NOT THE CORPORATION’S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF PARTICIPANT REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.

E. GENERAL PROVISIONS

1. Assignment. The Corporation may assign the Repurchase Right to any person or entity selected by the Board, including (without limitation) one or more stockholders of the Corporation.

2. Notices. Any notice required to be given under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, registered or certified, postage prepaid and properly addressed to the party entitled to such notice at the address indicated below such party’s signature line on this Agreement or at such other address as such party may designate by ten (10) days advance written notice under this paragraph to all other parties to this Agreement.

3. No Waiver. The failure of the Corporation in any instance to exercise the Repurchase Right shall not constitute a waiver of any other repurchase rights that may subsequently arise under the provisions of this Agreement or any other agreement between the Corporation and Participant. No waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.

4. Cancellation of Shares. If the Corporation shall make available, at the time and place and in the amount and form provided in this Agreement, the consideration for the Purchased Shares to be repurchased in accordance with the provisions of this Agreement, then from and after such time, the person from whom such shares are to be repurchased shall no longer have any rights as a holder of such shares (other than the right to receive payment of such consideration in accordance with this Agreement). Such shares shall be deemed purchased in accordance with the applicable provisions hereof, and the Corporation shall be deemed the owner and holder of such shares, whether or not the certificates therefor have been delivered as required

by this Agreement.

5. Participant Undertaking. Participant hereby agrees to take whatever additional action and execute whatever additional documents the Corporation may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either Participant or the Purchased Shares pursuant to the provisions of this Agreement.

6. Agreement is Entire Contract. This Agreement constitutes the entire contract between the parties hereto with regard to the subject matter hereof. This Agreement is made pursuant to the provisions of the Plan and shall in all respects be construed in conformity with the terms of the Plan.

7. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without resort to that State’s conflict-of-laws rules.

8. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

9. Successors and Assigns. The provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and upon Participant, Participant’s assigns and the legal representatives, heirs and legatees of Participant’s estate, whether or not any such person shall have become a party to this Agreement and have agreed in writing to join herein and be bound by the terms hereof.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.

	UNITED ONLINE, INC.


	By:	/s/ Frederic A. Randall, Jr.

	Title:	EVP and General Counsel

	Address:	2555 Townsgate Road

		Westlake Village, CA 91361


	PARTICIPANT


	/s/ Mark R. Goldston
	Signature


	Address:	XXXXXXX

		XXXXXXX

SPOUSAL ACKNOWLEDGMENT

The undersigned spouse of the Participant has read and hereby approves the foregoing Stock Issuance Agreement. In consideration of the Corporation’s granting the Participant the right to acquire the Purchased Shares in accordance with the terms of such Agreement, the undersigned hereby agrees to be irrevocably bound by all the terms of such Agreement, including (without limitation) the right of the Corporation (or its assigns) to purchase any Purchased Shares in which the Participant is not vested at the time of his or her termination of Service.

	/s/ Nancy Jane Goldston
		PARTICIPANT’S SPOUSE

Address:		XXXXXXX

		XXXXXXX

EXHIBIT I

ASSIGNMENT SEPARATE FROM CERTIFICATE

1. FOR VALUE RECEIVED hereby sell(s), assign(s) and transfer(s) unto United Online, Inc. and any successor to its rights (the “Corporation”), ( ) shares of the Common Stock of the Corporation standing in his or her name on the books of the Corporation represented by Certificate No. herewith and do(es) hereby irrevocably constitute and appoint Attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises.

Dated: , .

Signature

Instruction: Please do not fill in any blanks other than the signature line. Please sign exactly as you would like your name to appear on the issued stock certificate. The purpose of this assignment is to enable the Corporation to exercise the Repurchase Right without requiring additional signatures on the part of Participant.

EXHIBIT II

SECTION 83(b) TAX ELECTION

This statement is being made under Section 83(b) of the Internal Revenue Code, pursuant to Treas. Reg. Section 1.83-2.

1. The taxpayer who performed the services is:

Name:
Address:
Taxpayer Ident. No.:

2. The property with respect to which the election is being made is shares of the common stock of United Online, Inc.

3. The property was issued on , .

4. The taxable year in which the election is being made is the calendar year .

5. The property is subject to a repurchase right pursuant to which the issuer has the right to acquire the property at the original purchase price if for any reason taxpayer’s service with the issuer terminates. The issuer’s repurchase right will lapse in whole or in part over a 48-month period ending on January 27, 2008.

6. The fair market value at the time of transfer (determined without regard to any restriction other than a restriction which by its terms will never lapse) is $ per share.

7. The amount paid for such property is $ per share.

8. A copy of this statement was furnished to United Online, Inc. for whom taxpayer rendered the services underlying the transfer of property.

9. This statement is executed on , .


Spouse (if any)		Taxpayer

This election must be filed with the Internal Revenue Service Center with which taxpayer files his or her Federal income tax returns and must be made within thirty (30) days after the execution date of the Stock Issuance Agreement. This filing should be made by registered or certified mail, return receipt requested. Participant must retain two (2) copies of the completed form for filing with his or her Federal and state tax returns for the current tax year and an additional copy for his or her records.

APPENDIX

The following definitions shall be in effect under the Agreement:

A. Agreement shall mean this Stock Issuance Agreement.

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

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

D. Common Stock shall mean shares of the Corporation’s common stock.

E. Corporate Transaction shall have the meaning set forth in the Employment Agreement.

F. Corporation shall mean United Online, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of United Online, Inc., which has assumed United Online, Inc.’s rights under this Agreement.

G. Employment Agreement shall mean that certain Amended and Restated Employment Agreement dated effective as of January 27, 2004, by and between the Corporation and Participant.

H. Involuntary Termination shall have the meaning set forth in the Employment Agreement.

I. Owner shall mean Participant and all subsequent holders of the Purchased Shares who derive their chain of ownership through a Permitted Transfer from Participant.

J. Participant shall mean the person to whom the Purchased Shares are issued under the Stock Issuance Program.

K. Permitted Transfer shall mean (i) a gratuitous transfer of the Purchased Shares, provided and only if Participant obtains the Corporation’s prior written consent to such transfer, (ii) a transfer of title to the Purchased Shares effected pursuant to Participant’s will or the laws of inheritance following Participant’s death or (iii) a transfer to the Corporation in pledge as security for any purchase-money indebtedness incurred by Participant in connection with the acquisition of the Purchased Shares.

L. Plan shall mean the United Online, Inc. 2001 Stock Incentive Plan.

M. Plan Administrator shall mean either the Board or a committee of the Board acting in its administrative capacity under the Plan.

N. Purchase Price shall have the meaning assigned to such term in Paragraph A.1.

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O. Purchased Shares shall have the meaning assigned to such term in Paragraph A.1.

P. Recapitalization shall mean any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the Corporation’s outstanding Common Stock as a class without the Corporation’s receipt of consideration.

Q. Repurchase Right shall mean the right granted to the Corporation in accordance with Article C.

R. Service shall mean the Participant’s performance of services for the Corporation in the capacity of an employee, as described in the Employment Agreement.

S. Stock Issuance Program shall mean the Stock Issuance Program under the Plan.

T. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

U. Vesting Schedule shall mean the vesting schedule specified in Paragraph C.3, pursuant to which the Purchased Shares are to vest in whole or in part over Participant’s period of Service.

V. Unvested Shares shall have the meaning assigned to such term in Paragraph C.1.

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EX-10.3 4 a05-8993_1ex10d3.htm EX-10.3

Exhibit 10.3

UNITED ONLINE, INC.

RESTRICTED STOCK UNIT ISSUANCE AGREEMENT

RECITALS

A. The Board has adopted the Plan for the purpose of retaining the services of selected Employees and consultants and other independent advisors who provide services to the Corporation (or any Parent or Subsidiary).

B. Participant is to render valuable services to the Corporation (or a Parent or Subsidiary), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation’s issuance of shares of Common Stock to the Participant under the Stock Issuance Program.

C. All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix A.

NOW, THEREFORE, it is hereby agreed as follows:

1. Grant of Restricted Stock Units. The Corporation hereby awards to the Participant, as of the Award Date, Restricted Stock Units under the Plan. Each Restricted Stock Unit represents the right to receive one share of Common Stock on the vesting date of that unit. The number of shares of Common Stock subject to the awarded Restricted Stock Units, the applicable vesting schedule for those shares, the dates on which those vested shares shall become issuable to Participant and the remaining terms and conditions governing the award (the “Award”) shall be as set forth in this Agreement.

AWARD SUMMARY

Award Date:		March 24, 2005

Number of Shares Subject to Award:		500,000 shares of Common Stock (the “Shares”)

Vesting Schedule:		The Shares shall vest in a series of four (4) successive equal annual installments upon the Participant’s completion of each year of Service over the four (4)-year period measured from February 15, 2005. However, one or more Shares may be subject to accelerated vesting in accordance with the provisions of Paragraphs 4 and 6 of this Agreement.

Issuance Schedule		The Shares in which the Participant vests in accordance with the foregoing Vesting Schedule will be issuable immediately upon vesting, subject to the Corporation’s collection of the applicable Withholding Taxes. The procedures pursuant to which the applicable Withholding Taxes are to be collected are set forth in Paragraph 8 of this Agreement.

2. Limited Transferability. Prior to actual receipt of the Shares which vest hereunder, the Participant may not transfer any interest in the Award or the underlying Shares. Any Shares which vest hereunder but which otherwise remain unissued at the time of the Participant’s death may be transferred pursuant to the provisions of the Participant’s will or the laws of inheritance or to the Participant’s designated beneficiary or beneficiaries of this Award. The Participant may also direct the Corporation to issue the stock certificates for any Shares which in fact vest and become issuable under the Award during his or her lifetime to one or more designated family members or a trust established for the Participant and/or his or her family members. The Participant may make such a beneficiary designation or certificate directive at any time by filing the appropriate form with the Plan Administrator or its designee.

3. Cessation of Service. Except as otherwise provided in Paragraphs 4 and 6 below, should the Participant cease Service for any reason prior to vesting in one or more Shares subject to this Award, then the Award will be immediately cancelled with respect to those unvested Shares, and the number of Restricted Stock Units will be reduced accordingly. The Participant shall thereupon cease to have any right or entitlement to receive any Shares under those cancelled units.

4. Accelerated Vesting. The following special vesting acceleration provisions shall be in effect for the Award and shall be in addition to the vesting acceleration provisions of Paragraph 6(c) of this Agreement:

(a) Should the Participant’s Service terminate by reason of death or permanent disability, then all the Shares at the time subject to this Award shall immediately vest.

(b) Should the Participant’s Service be terminated at any time by the Corporation (or any Parent or Subsidiary) other than for Cause, then all the Shares at the time subject to this Award shall immediately vest.

5. Stockholder Rights and Dividend Equivalents

(a) The holder of this Award shall not have any stockholder rights, including voting or dividend rights, with respect to the Shares subject to the Award until the Participant becomes the record holder of those Shares following their actual issuance upon the Corporation’s collection of the applicable Withholding Taxes.

(b) Notwithstanding the foregoing, should any dividend or other distribution, whether regular or extraordinary and whether payable in cash, shares of Common Stock or other property, be declared and paid on the outstanding Common Stock while one or

more Shares remain subject to this Award (i.e., those Shares are not otherwise issued and outstanding for purposes of entitlement to the dividend or distribution), then the following provisions shall govern the Participant’s interest in that dividend or distribution:

(i) If the dividend is a regularly-scheduled cash dividend on the Common Stock, then the Participant shall be entitled to a current cash distribution from the Corporation equal to the cash dividend the Participant would have received with respect to the Shares at the time subject to this Award had those Shares actually been issued and outstanding and entitled to that cash dividend. Each cash dividend equivalent payment under this subparagraph (i) shall be paid within five (5) business day following the payment of the actual cash dividend on the outstanding Common Stock, subject to the Corporation’s collection of all applicable federal, state and local income and employment withholding taxes.

(ii) For any other dividend or distribution, a special book account shall be established for the Participant and credited with a phantom dividend equivalent to the actual dividend or distribution which would have been paid on the Shares at the time subject to this Award had they been issued and outstanding and entitled to that dividend or distribution. As the Shares subsequently vest hereunder, the phantom dividend equivalents so credited to those Shares in the book account shall be distributed to the Participant (in the same form the actual dividend or distribution was paid to the holders of the Common Stock entitled to that dividend or distribution) concurrently with the issuance of the vested Shares to which those phantom dividend equivalents relate. However, each such distribution shall be subject to the Corporation’s collection of the Withholding Taxes applicable to that distribution.

6. Change of Control.

(a) Any Restricted Stock Units subject to this Award at the time of a Change in Control may be assumed by the successor entity or otherwise continued in full force and effect or may be replaced with a cash incentive program of the successor entity which preserves the Fair Market Value of the unvested shares of Common Stock subject to the Award at the time of the Change in Control and provides for subsequent payout of that value in accordance with the vesting schedule applicable to the Award. In the event of such assumption or continuation of the Award or such replacement of the Award with a cash incentive program, no accelerated vesting of the Restricted Stock Units shall occur at the time of the Change in Control.

(b) In the event the Award is assumed or otherwise continued in effect, the Restricted Stock Units subject to the Award shall be adjusted immediately after the consummation of the Change in Control so as to apply to the number and class of securities into which the Shares subject to those units immediately prior to the Change in Control would have been converted in consummation of that Change in Control had those Shares actually been issued and outstanding at that time. To the extent the actual holders of the outstanding Common Stock receive cash consideration for their Common Stock in consummation of the Change in Control, the successor corporation (or parent entity) may, in connection with the assumption or continuation of the Restricted Stock Units subject to the Award at that time and with the Participant’s prior written consent, substitute one or more shares of its own common stock with a fair market value equivalent to the cash consideration paid per share of Common Stock in the

Change in Control transaction, provided the substituted common stock is readily tradable on an established U.S. securities exchange or market.

(c) Any Restricted Stock Units which are assumed or otherwise continued in effect in connection with a Change in Control or replaced with a cash incentive program under Paragraph 6(a) shall be subject to accelerated vesting in accordance with the following provision:

Should the Participant’s Service be Involuntarily Terminated in connection with or following the Change in Control event, then the Participant shall immediately vest in all of the unvested Shares at the time subject to the Award.

(d) If the Restricted Stock Units subject to this Award at the time of the Change in Control are not assumed or otherwise continued in effect or replaced with a cash incentive program under Paragraph 6(a), then those units will vest immediately prior to the closing of the Change in Control. The Shares subject to those vested units will be issued immediately upon such vesting (or otherwise converted into the right to receive the same consideration per share of Common Stock payable to the other stockholders of the Corporation in consummation of that Change in Control), subject to the Corporation’s collection of the applicable Withholding Taxes pursuant to the provisions of Paragraph 8.

(e) Should the accelerated vesting of the Shares pursuant to the provisions of this Paragraph 6 result in a parachute payment under Code Section 280G, then the Participant shall be entitled to the Code Section 4999 tax gross-up payment provided under his Employment Agreement, whether or not that Employment Agreement with such gross-up payment provision is in effect at the time of such accelerated vesting. Accordingly, the Code Section 4999 tax gross-up payment provisions of the Participant’s Employment Agreement are hereby incorporated by reference into this Agreement and shall form part of the terms and provisions of this Agreement as if expressly set forth herein.

(f) This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

7. Adjustment in Shares. Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate adjustments shall be made to the total number and/or class of securities issuable pursuant to this Award in order to reflect such change and thereby preclude a dilution or enlargement of benefits hereunder.

8. Issuance of Shares of Common Stock.

(a) As soon as administratively practicable following each date one or more Shares vest in accordance with the provisions of this Agreement, the Corporation shall issue to or on behalf of the Participant a certificate (which may be in electronic form) for the shares of Common Stock which vest on that date under the Award and shall concurrently distribute to the Participant any phantom dividend equivalents with respect to those Shares, subject in each instance to the Corporation’s collection of the applicable Withholding Taxes. The Corporation shall collect the Withholding Taxes with respect to the distributed phantom dividend equivalents by withholding a portion of that distribution equal to the amount of the applicable Withholding Taxes, with the cash portion of the distribution to be the first portion so withheld. Until such time as the Corporation provides the Participant with notice to the contrary, the Corporation shall collect the Withholding Taxes with respect to the vested Shares through an automatic Share withholding procedure pursuant to which the Corporation will withhold, immediately as the Shares vest under the Award, a portion of those vested Shares with a Fair Market Value (measured as of the vesting date) equal to the amount of such Withholding Taxes (the “Share Withholding Method”); provided, however, that the amount of any Shares so withheld shall not exceed the amount necessary to satisfy the Corporation’s required tax withholding obligations using the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to supplemental taxable income. Participant shall be notified in writing in the event such Share Withholding Method is no longer available.

(b) Should any Shares vest under the Award at time the Share Withholding Method is not available, then the Withholding Taxes shall be collected from the Participant through either of the following alternatives:

• the Participant’s delivery of his or her separate check payable to the Corporation in the amount of such Withholding Taxes, or

• the use of the proceeds from a next-day sale of the Shares issued to the Participant, provided and only if (i) such a sale is permissible under the Corporation’s trading policies governing the sale of Common Stock, (ii) the Participant makes an irrevocable commitment, on or before the vesting date for those Shares, to effect such sale of the Shares and (iii) the transaction is not otherwise deemed to constitute a prohibited loan under Section 402 of the Sarbanes-Oxley Act of 2002.

(c) Except as otherwise provided in Paragraph 6 or Paragraph 8(a), the settlement of all Restricted Stock Units which vest under the Award shall be made solely in shares of Common Stock. In no event, however, shall any fractional shares be issued. Accordingly, the total number of shares of Common Stock to be issued at the time the Award vests shall, to the extent necessary, be rounded down to the next whole share in order to avoid the issuance of a fractional share.

9. Compliance with Laws and Regulations. The issuance of shares of Common Stock pursuant to the Award shall be subject to compliance by the Corporation and Participant with all applicable requirements of law relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq National Market, if applicable) on which the Common Stock may be listed for trading at the time of such issuance.

10. Notices. Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Participant shall be in writing and addressed to Participant at the address indicated below Participant’s signature line on this Agreement. All notices shall be deemed effective upon personal delivery or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

11. Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to that State’s conflict-of-laws rules.

12. Successors and Assigns. Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Participant, Participant’s assigns, the legal representatives, heirs and legatees of Participant’s estate and any beneficiaries of the Award designated by Participant.

13. Construction. This Agreement and the Award evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All decisions of the Plan Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in the Award.

IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above.

UNITED ONLINE, INC.


By:		/s/ Frederic A. Randall, Jr.

Title:		EVP and General Counsel


PARTICIPANT


Signature:	/s/ Mark R. Goldston

Address:	XXXXXXX

	XXXXXXX

APPENDIX A

DEFINITIONS

The following definitions shall be in effect under the Agreement:

A. Agreement shall mean this Restricted Stock Unit Issuance Agreement.

B. Award shall mean the award of restricted stock units made to the Participant pursuant to the terms of this Agreement.

C. Award Date shall mean the date the restricted stock units are awarded to Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.

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

E. Cause shall have the meaning assigned to such term in the Employment Agreement.

F. Change in Control shall mean a change in ownership or control of the Corporation effected through any of the following transactions:

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

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

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

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(iv) a change in the composition of the Board over a period of thirty-six (36) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

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

H. Common Stock shall mean shares of the Corporation’s common stock.

I. Corporation shall mean United Online, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of United Online, Inc. which shall by appropriate action adopt the Plan.

J. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

K. Employment Agreement shall mean the Amended and Restated Employment Agreement between the Participant and the Corporation dated as of January 27, 2004 and as in effect on the date of the Award.

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

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

(ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market Value shall be the closing selling price per share of Common Stock on the date in question on the Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.

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M. Involuntarily Terminated shall have the meaning assigned to that term in the Employment Agreement.

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

O. Participant shall mean the person to whom the Award is made pursuant to the Agreement.

P. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

Q. Plan shall mean the Corporation’s 2001 Stock Incentive Plan, as amended and restated.

R. Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.

S. Service shall mean the Participant’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of directors or a consultant or independent advisor. For purposes of this Agreement, Participant shall be deemed to cease Service immediately upon the occurrence of the either of the following events: (i) Participant no longer performs services in any of the foregoing capacities for the Corporation (or any Parent or Subsidiary) or (ii) the entity for which Participant performs such services ceases to remain a Parent or Subsidiary of the Corporation, even though Participant may subsequently continue to perform services for that entity. Service shall not be deemed to cease during a period of military leave, sick leave or other personal leave approved by the Corporation; provided, however, that except to the extent otherwise required by law or expressly authorized by the Plan Administrator, no Service credit shall be given for vesting purposes for any period the Participant is on a leave of absence.

T. Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange.

U. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

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V. Withholding Taxes shall mean the federal, state and local income taxes and the employee portion of the federal, state and local employment taxes required to be withheld by the Corporation in connection with the issuance of the shares of Common Stock which vest under of the Award and any phantom dividend equivalents distributed with respect to those shares.

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Under the Securities Exchange Act of 1934 (Amendment No. )*

Signature

1. Grant of Option. The Corporation hereby grants to Optionee, as of the Grant Date, an option to purchase up to the number of Option Shares specified in the Grant Notice. The Option Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at the Exercise Price.

2. Option Term. This option shall expire at the close of business on the Expiration Date, unless sooner terminated in accordance with Paragraph 5 or 6.

3. Limited Transferability.

4. Dates of Exercise. This option shall become exercisable for the Option Shares in one or more installments as specified in the Grant Notice. As the option becomes exercisable for such installments, those installments shall accumulate, and the option shall remain exercisable for the

accumulated installments until the close of business on the Expiration Date or sooner termination of the option term under Paragraph 5 or 6.

5. Cessation of Service. The option term specified in Paragraph 2 shall terminate (and this option shall cease to be outstanding) prior to the Expiration Date should any of the following provisions become applicable:

(f) Should Optionee’s Service be terminated for Misconduct or should Optionee otherwise engage in any Misconduct while this option is outstanding, then this option shall terminate immediately and cease to remain outstanding.

6. Special Acceleration of Option.

(b) Immediately following the Corporate Transaction, this option shall terminate and cease to be outstanding, except to the extent assumed by the successor corporation (or parent thereof) in connection with the Corporate Transaction.

(f) This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

8. Stockholder Rights. The holder of this option shall not have any stockholder rights with respect to the Option Shares until such person shall have exercised the option, paid the Exercise Price and become a holder of record of the purchased shares.

9. Manner of Exercising Option.

(a) In order to exercise this option with respect to all or any part of the Option Shares for which this option is at the time exercisable, Optionee (or any other person or persons exercising the option) must take the following actions:

(i) Execute and deliver to the Corporation a Notice of Exercise (attached hereto as Exhibit I) for the Option Shares for which the option is exercised.

(ii) Pay the aggregate Exercise Price for the purchased shares in one or more of the following forms:

(A) cash or check made payable to the Corporation;

(B) a promissory note payable to the Corporation, but only to the extent authorized by the Plan Administrator in accordance with Paragraph 13;

(C) shares of Common Stock held by Optionee (or any other person or persons exercising the option) for the requisite period necessary to avoid a charge to the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value on the Exercise Date; or

the certificates for the purchased shares directly to such brokerage firm in order to complete the sale.

(iii) Furnish to the Corporation appropriate documentation that the person or persons exercising the option (if other than Optionee) have the right to exercise this option.

(iv) Make appropriate arrangements with the Corporation (or Parent or Subsidiary employing or retaining Optionee) for the satisfaction of all Federal, state and local income and employment tax withholding requirements applicable to the option exercise.

(b) As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf of Optionee (or any other person or persons exercising this option) the purchased Option Shares, with the appropriate legends affixed thereto.

(c) In no event may this option be exercised for any fractional shares.

10. Compliance with Laws and Regulations.

15. Governing Law. The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of Delaware without resort to that State’s conflict-of-laws rules.

17. Additional Terms Applicable to an Incentive Option. In the event this option is designated an Incentive Option in the Grant Notice, the following terms and conditions shall also apply to the grant:

A. Agreement shall mean this Stock Option Agreement.

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

C. Change in Control shall mean the event of a change in ownership or control of the Corporation effected through either of the following transactions:

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

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

F. Corporate Transaction shall mean either of the following stockholder approved transactions to which the Corporation is a party:

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

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

H. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

I. Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9 of the Agreement.

J. Exercise Price shall mean the exercise price per Option Share as specified in the Grant Notice.

K. Exercise Schedule shall mean the installment schedule specified in the Grant Notice pursuant to which the option is to become exercisable for the Option Shares in a series of installments over Optionee’s period of Service.

L. Expiration Date shall mean the date on which the option expires as specified in the Grant Notice.

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

N. Grant Date shall mean the date of grant of the option as specified in the Grant Notice.

P. Incentive Option shall mean an option which satisfies the requirements of Code Section 422.

Q. Involuntary Termination shall mean the termination of Optionee’s Service by reason of:

S. Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422.

T. Notice of Exercise shall mean the notice of exercise in the form attached hereto as Exhibit I.

V. Optionee shall mean the person to whom the option is granted as specified in the Grant Notice.

Y. Plan shall mean the United Online, Inc. 2001 Stock Incentive Plan.

Z. Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan.

AA. Service shall mean the Optionee’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-employee member of the board of directors or an independent contractor.

BB. Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange.

A. PURCHASE OF SHARES

1. Purchase. Participant hereby purchases 250,000 shares of Common Stock (the “Purchased Shares”) pursuant to the provisions of the Stock Issuance Program at the purchase price of $0.0001 per share (the “Purchase Price”).

4. Escrow. The Corporation shall have the right to hold the Purchased Shares in escrow until those shares have vested in accordance with the Vesting Schedule.

B. TRANSFER RESTRICTIONS

1. Restriction on Transfer. Except for any Permitted Transfer, Participant shall not transfer, assign, encumber or otherwise dispose of any of the Purchased Shares which are subject to the Repurchase Right.

2. Restrictive Legend. The stock certificate for the Purchased Shares shall be endorsed with the following restrictive legend:

C. REPURCHASE RIGHT

(i) Upon Participant’s completion of four years of Service measured from January 27, 2004, Participant shall acquire a vested interest in, and the Repurchase Right shall lapse with respect to, 100% of the Purchased Shares.

5. Corporate Transaction.

D. SPECIAL TAX ELECTION

2. FILING RESPONSIBILITY. PARTICIPANT ACKNOWLEDGES THAT IT IS PARTICIPANT’S SOLE RESPONSIBILITY, AND NOT THE CORPORATION’S, TO FILE A TIMELY ELECTION UNDER CODE SECTION 83(b), EVEN IF PARTICIPANT REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS OR HER BEHALF.

E. GENERAL PROVISIONS

1. Assignment. The Corporation may assign the Repurchase Right to any person or entity selected by the Board, including (without limitation) one or more stockholders of the Corporation.

by this Agreement.

Under the Securities Exchange Act of 1934
(Amendment No. )*