Classmates.com 2004 Annual Report Download - page 102

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directors and consultants of the Company. An aggregate of 17.9 million shares have been reserved under the 2001 SIP, of which 0.7 million
shares were available for future grant at December 31, 2004, and 10.6 million options were outstanding at December 31, 2004.
In September 2001, the Board of Directors also adopted the United Online, Inc. 2001 Supplemental Stock Incentive Plan (the "2001 SSIP").
The 2001 SSIP is a non-shareholder approved plan under which nonstatutory stock option grants or direct stock issuances may be made to
employees of the Company (or any parent or subsidiary corporation) who are neither officers nor Board members at the time of the option grant
or direct issuance. An aggregate of 4.2 million shares have been reserved under the 2001 SSIP, of which 0.1 million shares were available for
future grant at December 31, 2004, and 2.2 million options were outstanding at December 31, 2004.
In November 2004, the Company assumed the Classmates Online, Inc. Amended and Restated 1999 Stock Plan (the "Classmates 1999
Stock Plan") and the Classmates Online, Inc. 2004 Stock Plan (the "Classmates 2004 Stock Plan"), including all unvested and outstanding
options under such plans. No future grants are permissible under the Classmates 1999 Stock Plan, although shares underlying options cancelled
under the Classmates 1999 Stock Plan will become available for grant under the Classmates 2004 Stock Plan. Nonstatutory options and direct
stock issuances may be made under the Classmates 2004 Stock Plan (i) to employees, directors and officers of Classmates or its subsidiaries
whose service commenced prior to the date of the acquisition and (ii) to employees, consultants, directors and executive officers of United
Online or its subsidiaries whose service commenced or commences following the date of the acquisition. An aggregate of approximately
0.4 million shares have been reserved under the Classmates 1999 Stock Plan, of which approximately 0.4 million were outstanding at
December 31, 2004. An aggregate of 1.0 million shares have been reserved under the Classmates 2004 Stock Plan of which 0.8 million shares
were available for future grant and 0.2 million were outstanding at December 31, 2004.
Options granted to employees under the Plans generally vest over a three or four-year period. Options granted to directors generally vest
over a nine-month to three-year period, either monthly or annually. Option grants expire after ten years unless cancelled earlier due to
termination of employment or Board service. Certain grants are immediately exercisable for unvested shares of common stock, with the unvested
portion of the shares remaining subject to repurchase by the Company at the exercise price until the vesting period is complete.
F-33