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TABLE OF CONTENTS
PART IV
UNITED ONLINE, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Table of Contents




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
(Exact name of Registrant as specified in its charter)

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification No.)


(Address of principal executive
office)

(Zip Code)

(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:






o 



Table of contents

  • Page 1
    ... or organization) 77-0575839 (I.R.S. Employer Identification No.) 21301 Burbank Boulevard Woodland Hills, California (Address of principal executive office) 91367 (Zip Code) (818) 287-3000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12...

  • Page 2
    ... the Registrant is a shell company (as defined in Rule 12b-2) of the Act. Yes o No  At June 30, 2013, the aggregate market value of voting stock held by non-affiliates of the Registrant, based on the last reported sales price of the Registrant's common stock on such date reported by The Nasdaq...

  • Page 3
    ... UNITED ONLINE, INC. INDEX TO FORM 10-K For the Year Ended December 31, 2013 Page PTRT I. Item 1. Item 1A. Item 1B. Item 2. Item 3. Item 4. Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures 4 12 29 29 29 33 PTRT II. Item 5. Item 6. Item 7. Item...

  • Page 4
    ... of cash; dividends; capital expenditures; depreciation and amortization; tax payments; foreign currency exchange rates; hedging arrangements; our ability to repay indebtedness, pay dividends and invest in initiatives; our services and products; pricing; marketing plans; competition; settlement of...

  • Page 5
    ...We report our businesses in two reportable segments: Segment Services and Products Content & Media Communications Social networking services and products and a loyalty marketing service Internet access services and devices, including dial-up, mobile broadband, DSL, email, Internet security and web...

  • Page 6
    ... approximately 100 million registered accounts at December 31, 2013. We also provide advertising opportunities to marketers with both brand and direct response objectives through a full suite of display, search, email, and text-link opportunities across our various properties. Our social networking...

  • Page 7
    ... money online, the competition for their time and engagement has continued to intensify. Consumers have a great number of options for online content and entertainment, including, by way of example, games, websites offering news and current events, movies, television shows, videos, information about...

  • Page 8
    ... information to receive direct email marketing and other loyalty promotions. Members earn points for responding to email offers, shopping online at the MyPoints website (www.mypoints.com), taking market research companies' surveys, playing MyPoints branded online games, searching the Internet...

  • Page 9
    ...Part II, Item 8 of this Annual Report on Form 10-K. Communications Segment Our principal Communications pay service is dial-up Internet access, offered under the NetZero and Juno brands. We also offer mobile broadband, DSL, email, Internet security, web hosting services, and other services. In total...

  • Page 10
    ... provided on both a free and pay basis, with the free services subject to hourly and other limitations. Basic pay dial-up Internet access services include Internet access and an email account. In addition, we offer accelerated dial-up Internet access services which can significantly reduce the time...

  • Page 11
    ... and managed modem services. We license from third parties a number of our software applications and components, including applications for our billing, customer support, advertising, and database systems, our client and server applications, and portions of our dial-up Internet access accelerator...

  • Page 12
    ... the years ended December 31, 2013, 2012 and 2011, respectively. For information regarding risks associated with our international operations, see "Risk Factors," which appears in Item 1A of this Annual Report on Form 10-K. For information regarding long-lived assets, see Note 2-"Segment Information...

  • Page 13
    ...of Contents Tvailable Information Our corporate website is www.unitedonline.com. On this website, we make available, free of charge, our annual, quarterly and current reports (including all amendments to such reports), changes in the stock ownership of our directors and executive officers, our code...

  • Page 14
    ... distribution of property in an amount equal to the fair market value of such shares on the distribution date and could incur significant income tax liabilities. Such distribution would be taxable to such stockholder as a dividend to the extent of United Online's current and accumulated earnings and...

  • Page 15
    ... of our businesses in a number of ways, including reduced demand, more aggressive pricing for similar services and products by our competitors, decreased spending by advertisers, increased credit risks, increased credit card failures, a loss of customers, and increased use of discounted pricing for...

  • Page 16
    ... limitation, billing; website and database management; customer support; telecommunications network management; advertisement serving and management systems; and internal financial systems. Some of these systems, such as customer support for our Internet access and loyalty marketing businesses...

  • Page 17
    ... variety of third parties, including Internet search providers such as Google, social networking platforms such as Facebook, Internet advertising networks, co-registration partners, retailers, distributors, television advertising agencies, and direct marketers, to source new members and to promote...

  • Page 18
    ... and adversely affected. For more information, see Note 13 "Contingencies -Legal Matters" of the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Annual Report on Form 10K. Governmental regulation of the collection and use of personal information or...

  • Page 19
    ... systems or services, whether intentional, unintentional or as a result of criminal activity, could potentially jeopardize the security of confidential information, including credit card information, of our members and of third parties. A number of other websites have publicly disclosed breaches...

  • Page 20
    ...cannot assure you that the security measures we take will be effective in preventing these types of activities. We also cannot assure you that the security measures of our third-party vendors, including network providers, providers of customer and billing support services, and other vendors, will be...

  • Page 21
    ...deliver emails to our members. Certain email service providers, such as Google's Gmail service, segregate marketing and promotional emails from other types of emails, which may impact the effectiveness of our email campaigns. Google's Gmail service also simplifies the opt-out process by including an...

  • Page 22
    ... public company, and the time, cost and difficulties related to the implementation of such controls, policies and procedures or the remediation of any deficiencies. In addition, an acquisition of a foreign business involves risks in addition to those set forth above, including risks associated with...

  • Page 23
    ... Financial Officer of United Online, Inc., has announced his resignation effective as of March 14, 2014. In addition, the employment of the Company's Chief Personnel Officer also terminated in January 2014. Our success depends to a significant extent on the performance of our senior management. Any...

  • Page 24
    ... sales and use taxes, or the payment of state income or other taxes, on certain transactions conducted over the Internet. Our costs may increase as a result of our activities related to advertisers and other third parties, and advertisers and other third parties may choose to not do business...

  • Page 25
    ... operations, for acquisitions of businesses, services or technologies or for other purposes. Additional financing may not be available in a timely manner, on terms favorable to us, or at all. The current volatility of, and disruption in, the securities and credit markets may restrict our ability to...

  • Page 26
    ... money online, the competition for their time and engagement has continued to intensify. Consumers have a great number of options for online content and entertainment, including, by way of example, games, websites offering news and current events, movies, television shows, videos, information about...

  • Page 27
    Table of Contents our international social networking services to implement the Single Euro Payments Area (or SEPA) initiative, could adversely affect our churn rate. A number of our pay account subscriptions each month are not renewed or are canceled, which, for the Content & Media segment, we ...

  • Page 28
    ...Internet access. The number of dial-up Internet access pay accounts has been adversely impacted by both a decrease in the number of new pay accounts signing up for our services, as well as the impact of subscribers canceling their accounts, which we refer to as "churn." Churn has increased from time...

  • Page 29
    ... third-party systems and products. Our Internet access business substantially depends on the availability, capacity, affordability, reliability, and security of our telecommunications networks. Only a limited number of telecommunications providers offer the network and data services we currently...

  • Page 30
    ... that, as the dial-up Internet access market declines and new technologies emerge, we will be able to continue to effectively distribute and deliver our services. ITEM 1B. None. ITEM 2. UNRESOLVED STTFF COMMENTS PROPERTIES Our corporate headquarters, which includes space for the Communications...

  • Page 31
    ...., Shoebuy.com, Inc., United Online, Inc., Wells Fargo & Company, and Wyndham Worldwide Corporation (collectively, the "Marketing Companies"); and (iii) Bank of America, N.A., Capital One Financial Corporation, Chase Bank USA, N.A., and Citibank, N.A. (collectively, the "Credit Card Companies"). The...

  • Page 32
    ... Juno Online Services, Inc. nor NetZero, Inc. has been served with the complaint. The Company has been cooperating with certain governmental authorities in connection with their respective investigations of its former posttransaction sales practices and certain other current or former business...

  • Page 33
    ...that additional governmental investigations or other legal actions will not be instituted in connection with the Company's former post-transaction sales practices or other current or former business practices. The Company records a liability when it believes that it is both probable that a loss will...

  • Page 34
    ... defend itself with respect to its legal matters, there can be no assurance that the final outcome of these matters will not materially and adversely affect the Company's business, financial condition, results of operations, or cash flows. ITEM 4. MINE STFETY DISCLOSURES Not applicable. 33

  • Page 35
    ... 2013 and totaled $2.2 million, including dividend equivalents paid on nonvested restricted stock units. In January 2014, we announced that United Online, Inc.'s Board of Directors determined to discontinue cash dividend payments in order to provide financial flexibility to support anticipated long...

  • Page 36
    ... Morgan Stanley Internet Index ("MS Internet Index"). Measurement points are the last trading day of each of the Company's fiscal years ended December 31, 2008, 2009, 2010, 2011, 2012, and 2013. The graph assumes that $100 was invested on December 31, 2008 in the common stock of United Online, Inc...

  • Page 37
    Table of Contents any dividends. The stock price performance on the following graph is not necessarily indicative of future stock price performance. Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 United Online, Inc. Nasdaq Composite MS Internet Index $ 100.00 $ 125.37 $ 122.48 $ 107.99 $ 120.11 ...

  • Page 38
    ... statements and related notes and Management's Discussion and Analysis of Financial Condition and Results of Operations included elsewhere in this Annual Report on Form 10-K. The following table presents the consolidated statements of operations data for the years ended December 31, 2013, 2012 and...

  • Page 39
    ... of cash; dividends; capital expenditures; depreciation and amortization; tax payments; foreign currency exchange rates; hedging arrangements; our ability to repay indebtedness, pay dividends and invest in initiatives; our services and products; pricing; marketing plans; competition; settlement of...

  • Page 40
    ... of United Online, Inc. common stock. Key Business Metrics We review a number of key business metrics to help us monitor our performance and trends affecting our businesses, and to develop forecasts and budgets. These key measures include the following: Pay Accounts. We generate a significant...

  • Page 41
    ... of all loyalty marketing members who have earned or redeemed points during such period. Communications segment active accounts include all Communications segment pay accounts as of the date presented combined with the number of free dial-up Internet access and email accounts that logged onto our...

  • Page 42
    ... below sets forth, for the periods presented, as applicable, our consolidated revenues, segment revenues, pay accounts, segment churn, ARPU, average currency exchange rate, and segment active accounts. Quarter Ended December 31, September 30, June 30, March 31, December 31, 2012 2013 2013 2013 2013...

  • Page 43
    ... and, when available, to third-party or customer-provided performance data. Advertising and other revenues for our loyalty marketing service consist primarily of fees generated when emails are transmitted to members, when members respond to emails and when members complete online transactions. Each...

  • Page 44
    ... of selling price, which considers market and economic conditions, internal costs, pricing, and discounting practices. The revenues allocated to the free service plans are recognized ratably over the service period. Probability of collection is assessed based on a number of factors, including past...

  • Page 45
    ... a number of factors, including projections of the amounts and timing of future revenues and cash flows, assumed discount rates and other assumptions. The inputs for the fair value calculations of the Classmates reporting unit included a 4% growth rate to calculate the terminal value and a discount...

  • Page 46
    ...or when points expire prior to redemption. MyPoints members may redeem points for third-party gift cards and other rewards. Members earn points when they respond to direct marketing offers delivered by MyPoints, purchase goods or services from advertisers, engage in certain promotional campaigns of...

  • Page 47
    ... number of points that may be redeemed in the future. The weighted-average cost of points is calculated by taking the total cost of items fulfilled divided by total points redeemed. MyPoints purchases gift cards and other awards from merchants at a discount and sets redemption levels for its members...

  • Page 48
    ... marketing service's advertising and other revenues also include revenues generated from the sale of gift cards. Our Communications services generate advertising revenues from search placements, display advertisements and online market research associated with our Internet access and email services...

  • Page 49
    ... services and products include advertising and promotion expenses; fees paid to distribution partners, third-party advertising networks and co-registration partners to acquire new pay and free accounts; personnel and overhead-related expenses for marketing, merchandising, customer service, and sales...

  • Page 50
    ... of intangible assets includes amortization of acquired pay accounts and free accounts; certain acquired trademarks and trade names; acquired software and technology; acquired customer and advertising contracts and related relationships; acquired rights, content and intellectual property; and other...

  • Page 51
    ... information was as follows (in thousands): Year Ended December 31, 2013 2013 2012 2011 Revenues Operating expenses: Cost of revenues Sales and marketing Technology and development General and administrative Amortization of intangible assets Contingent consideration-fair value adjustment...

  • Page 52
    from operations $ (26,952) $ 1,120 $ 43,352 $ 32,381 $ 35,129 $ 61,196 50

  • Page 53
    ... in depreciation and amortization expense. Sales and Marketing Year Ended December 31, 2013 2012 Change $ % (in thousands, except percentages) Sales and marketing Sales and marketing expenses as a percentage of total segment sales and marketing expenses: Content & Media Communications $ 57...

  • Page 54
    ... our Content & Media segment, a $0.1 million decrease in technology and development expenses associated with our Communications segment and an $0.8 million decrease in depreciation expense. General and Tdministrative Year Ended December 31, 2013 2012 Change $ % (in thousands, except percentages...

  • Page 55
    ... due to a material reduction in the fair value of the MyPoints reporting unit. See "Critical Accounting Policies, Estimates and Assumptions-Impairment of Goodwill" for additional information. Interest Income Year Ended December 31, 2013 2012 Change $ % (in thousands, except percentages) Interest...

  • Page 56
    ... 31, 2012. Provision for Income Taxes Year Ended December 31, 2013 2012 (in thousands, except percentages) Provision for income taxes Effective income tax rate $ 42,917 $ 747 (82.4)% (6.8)% For the year ended December 31, 2013, we recorded a provision for income taxes totaling $42.9 million on...

  • Page 57
    ... sale of third-party merchandise, and a $0.3 million decrease in credit card-related fees due to a decrease in pay accounts. These decreases were partially offset by a $1.1 million increase in costs related to the sale of gift cards. Content & Media Sales and Marketing Year Ended December 31, 2013...

  • Page 58
    ... services and consulting fees, and $0.5 million of transaction-related costs related to the schoolFeed acquisition recorded in the year ended December 31, 2012. These decreases were partially offset by reserves for legal settlements totaling $2.2 million recorded in the year ended December 31, 2013...

  • Page 59
    ...ARPU Average number of dial-up Internet access pay accounts The decrease in Communications services revenues was primarily due to a 27% decrease in our average number of dial-up Internet access pay accounts, partially offset by a 5% increase in ARPU and growth in mobile broadband pay accounts. The...

  • Page 60
    ... sales and marketing expenses was due to a $1.0 million decrease in advertising, promotion, customer support and distribution costs primarily related to our dial-up Internet access services and an $0.8 million decrease in marketing costs associated with the promotion of our mobile broadband service...

  • Page 61
    ... was included in transaction-related costs, as well as full and accelerated vesting of Mr. Goldston's outstanding nonvested restricted stock units and unvested stock options resulting in an increase in stockbased compensation for the year ended December 31, 2013, compared to the year ended December...

  • Page 62
    ... in cost of revenues associated with our Communications segment. Sales and Marketing Year Ended December 31, 2012 2011 Change $ % (in thousands, except percentages) Sales and marketing Sales and marketing expenses as a percentage of total segment sales and marketing expenses: Content & Media...

  • Page 63
    ... due to a $2.0 million decrease in technology and development expenses associated with our Content & Media segment and a $0.4 million decrease in technology and development expenses associated with our Communications segment. General and Tdministrative Year Ended December 31, 2012 2011 Change...

  • Page 64
    ... costs. Impairment of Goodwill, Intangible Tssets and Long-Lived Tssets Year Ended December 31, 2012 2011 $ Change % (...value of the MyPoints reporting unit. See "Critical Accounting Policies, Estimates and Assumptions-Impairment of Goodwill" for additional information. Interest Income Year Ended...

  • Page 65
    ... the year ended December 31, 2011. The change in the effective income tax rate was primarily due to the valuation allowance recorded against deferred tax assets and lower tax benefits related to uncertain tax positions recorded in the year ended December 31, 2012, compared to the year ended December...

  • Page 66
    ... in costs associated with points earned by members of our loyalty marketing service, a $1.4 million decrease in credit card-related fees due to a decrease in pay accounts and a $0.6 million decrease in personnel- and overhead-related costs. Content & Media Sales and Marketing Year Ended December 31...

  • Page 67
    ... offset by $0.5 million of transaction-related costs incurred in the year ended December 31, 2012 in connection with the schoolFeed acquisition and a $0.4 million increase in professional fees. Content & Media Contingent Consideration-Fair Value Tdjustment Year Ended December 31, 2012 2011 Change...

  • Page 68
    ... related to the mobile broadband service devices. These increases were partially offset by a $2.5 million decrease in telecommunications, customer support and billing-related costs due to a decrease in dial-up Internet access accounts, a $1.5 million decrease in costs associated with our DSL service...

  • Page 69
    Table of Contents email, Internet security and web hosting services, an $0.8 million decrease in personnel- and overhead-related costs, and an $0.8 million decrease in advertising costs. Communications Sales and Marketing Year Ended December 31, 2012 2011 Change $ % (in thousands, except ...

  • Page 70
    ...driven by our income (loss) from continuing operations adjusted for non-cash items and changes in working capital, including, but not limited to, depreciation and amortization, stock-based compensation, impairment of goodwill, intangible assets and long-lived assets, and deferred taxes. The decrease...

  • Page 71
    ... stock units that vested. The amount we pay in future periods will vary based on our stock price and the number of applicable restricted stock units vesting during the period. In August 2013, we paid a $3.4 million contingent consideration payment for the earnout period ended June 30, 2013 related...

  • Page 72
    ... taxes due on vested restricted stock units; the repurchase of our common stock under the Program; future capital expenditures; and future acquisitions of intangible assets, including rights, content and intellectual property, and have a material adverse effect on our business, financial position...

  • Page 73
    ...due to a number of factors, including, without limitation, potential future acquisitions and new business initiatives, which are difficult to predict and which could change significantly over time. Additionally, technological advances may require us to make capital expenditures to develop or acquire...

  • Page 74
    ... terms to customers, vendors, lessors, sureties and insurance companies, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of our breach of such agreements, services to be provided by us, or from intellectual property infringement...

  • Page 75
    ... carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable jurisdiction does...

  • Page 76
    ... in overall foreign currency exchange rates over an entire year would not have a material impact on annual revenues and would have impacted income (loss) before income taxes by approximately $0.7 million and $0.5 million, respectively, for the years ended December 31, 2013 and 2012. These estimates...

  • Page 77
    ... Exchange Act and are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer...

  • Page 78
    ..."; "Grants of Plan-Based Awards"; "Outstanding Equity Awards at Fiscal Year-End"; "Option Exercises and Stock Vested"; "Director Summary Compensation Table"; "Compensation Committee Interlocks and Insider Participation"; and "Compensation Committee Report". ITEM 12. SECURITY OWNERSHIP OF CERTTIN...

  • Page 79
    ... 2. uinancial Statement Schedules: Page Schedule II-Valuation and Qualifying Accounts F-57 All other schedules have been omitted because the information required to be set forth therein is not applicable, not required or is shown in the consolidated financial statements or notes related thereto...

  • Page 80
    Annual Report on Form 10-K. 77

  • Page 81
    ... of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated below. Signature Title Date /s/ FRANCIS LOBO Francis Lobo President, Chief Executive Officer and Director (Principal...

  • Page 82
    Table of Contents Signature Title Date /s/ DENNIS HOLT Dennis Holt Director March 13, 2014 /s/ HOWARD G. PHANSTIEL Howard G. Phanstiel /s/ CAROL A. SCOTT Carol A. Scott Director Chairman and Director March 13, 2014 March 13, 2014 79

  • Page 83
    ... to make the statements in this Annual Report on uorm 10-K not misleading. Additional information about the Company may be found elsewhere in this Annual Report on uorm 10-K and in the Company's other public filings, which are available without charge through the SEC's website at www.sec.gov. No...

  • Page 84
    ... Agreement for Amended and Restated 2010 Incentive Compensation Plan (officers version) Form of Stock Option Agreement for Amended and Restated 2010 Incentive Compensation Plan (employees) Amended and Restated United Online, Inc. Severance Benefit Plan Employment Agreement between the Registrant and...

  • Page 85
    ... 000-33367 2/28/2011 1/25/2013 10.25* Amendment No. 2 to Employment Agreement between the Registrant and Robert J. Taragan Employment Agreement between Classmates, Inc. (f/k/a Classmates Online, Inc.) and Harold A. Zeitz Amendment to Employment Agreement between Classmates, Inc. (f/k/a Classmates...

  • Page 86
    .../2011 1/25/2013 10.46* 10.47* 10.48* 2013 Management Bonus Plan Office Lease between LNR Warner Center, LLC and NetZero, Inc. X 10-Q 8-K 000-33367 5/3/2004 Transition Services Agreement by and between United Online, Inc. and FTD Companies, Inc., dated as of October 31, 2013 Amendment No. 1 to...

  • Page 87
    ... Description Filed with this Form 10-K Incorporated by Reference to Form File No. Date Filed 24.1 31.1 Power of Attorney (see signature page of this Annual Report on Form 10-K) Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Certification of...

  • Page 88
    Table of Contents UNITED ONLINE, INC. INDEX TO CONSOLIDTTED FINTNCITL STTTEMENTS Page Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income (Loss) Consolidated Statements of ...

  • Page 89
    ... of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was...

  • Page 90
    ...) 2,441 475,086 Common stock, $0.0001 par value; 42,857 shares authorized; 13,746 and 13,013 shares issued and outstanding at December 31, 2013 and 2012, respectively Additional paid-in capital Accumulated other comprehensive loss Retained earnings (accumulated deficit) Total stockholders' equity

  • Page 91
    Total stockholders' equity Total liabilities and stockholders' equity 106,574 475,086 $ 211,360 $ 994,477 The accompanying notes are an integral part of these consolidated financial statements. F-3

  • Page 92
    Table of Contents UNITED ONLINE, INC. CONSOLIDTTED STTTEMENTS OF OPERTTIONS (in thousands, except per share amounts) Year Ended December 31, 2013 2012 2011 Revenues Operating expenses: Cost of revenues Sales and marketing Technology and development General and administrative Amortization of ...

  • Page 93
    The accompanying notes are an integral part of these consolidated financial statements. F-4

  • Page 94
    Table of Contents UNITED ONLINE, INC. CONSOLIDTTED STTTEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) Year Ended December 31, 2013 2012 2011 Net income (loss) Other comprehensive income (loss): Cash flow hedges: Changes in net gains (losses) on derivatives, net of tax of $8, $(560) and $(71)...

  • Page 95
    ... outstanding and restricted stock units - Change in dividend equivalents payable on restricted stock units - Stock-based compensation - Tax shortfalls from equity awards - Other comprehensive loss - Net income - Balance at December 31, 2011 12,775 Exercises of stock options - Issuance of 1 $ 493...

  • Page 96
    common stock through employee stock purchase plan Vesting of restricted stock units Repurchases of common stock Dividends and dividend equivalents paid on shares outstanding and restricted stock units Stock-based compensation Tax shortfalls from equity awards Other comprehensive income Net income ...

  • Page 97
    Companies, Inc. Net loss Balance at December 31, 2013 - - - (300,146) - - 22,815 - - (82,167) (277,331) (82,167) 13,746 $ 1 $ 207,009 $ (2,276)$ (98,160)$ 106,574 The accompanying notes are an integral part of these consolidated financial statements. F-6

  • Page 98
    Table of Contents UNITED ONLINE, INC. CONSOLIDTTED STTTEMENTS OF CTSH FLOWS (in thousands) Year Ended December 31, 2013 2012 2011 Cash flows from operating activities: Net income (loss) Less: Income from discontinued operations, net of tax $(82,167) $ 12,804 $ 51,669 12,829 24,505 16,007 (94,996)...

  • Page 99
    ...(5,359) (15,183) 27,719 20,658 68,389 Effect of foreign currency exchange rate changes on cash and cash equivalents Net cash provided by (used for) discontinued operations: Operating activities Investing activities Financing activities Effect of a change in cash and cash equivalents of discontinued...

  • Page 100
    ... service. The Company's primary Communications service is Internet access. On a combined basis, the Company's web properties attract a significant number of Internet users and the Company offers a broad array of Internet marketing services for advertisers. On November 1, 2013, United Online...

  • Page 101
    ... that require management judgment include the Company's revenue recognition, goodwill, definite-lived intangible assets and other long-lived assets, member redemption liability, income taxes, contingent consideration, and legal contingencies. The accounting policies for these areas are discussed...

  • Page 102
    ...the year ended December 31, 2012, respectively. Tccounting Policies Segments -The Company complies with the reporting requirements of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 280, Segment Reporting . Management measures and reviews segment performance...

  • Page 103
    ... goods, including gift cards related to the Company's member redemption liability, mobile broadband service devices, and modems. Inventories are stated at the lower of cost or market value. Inventories are valued using the first-in-first-out ("FIFO") method. Inventories also consist of work-in...

  • Page 104
    ... contracts from its assessment of their hedge effectiveness. Gains or losses related to the change in time value of the forward foreign currency exchange contracts are immediately recognized in other income, net, along with any ineffectiveness. The Company presents the cash flows from cash flow...

  • Page 105
    ... method is dependent upon a number of factors, including projections of the amounts and timing of future revenues and cash flows, assumed discount rates and other assumptions. Under the market approach, using the guideline company method, each reporting unit's fair value was estimated by multiplying...

  • Page 106
    ...or when points expire prior to redemption. MyPoints members may redeem points for third-party gift cards and other rewards. Members earn points when they respond to direct marketing offers delivered by MyPoints, purchase goods or services from advertisers, engage in certain promotional campaigns of...

  • Page 107
    ... over the service period. Advance payments from pay accounts are recorded on the consolidated balance sheets as deferred revenue. The Company offers alternative payment methods to credit cards for certain Communications pay service plans. These alternative payment methods currently include use of...

  • Page 108
    ..., when available, to thirdparty or customer-provided performance data. Advertising and other revenues for the Company's loyalty marketing service consist primarily of fees generated when emails are transmitted to members, when members respond to emails and when members complete online transactions...

  • Page 109
    ... Company's brands, services and products include advertising and promotion expenses; fees paid to distribution partners, third-party advertising networks and co-registration partners to acquire new pay and free accounts; personnel and overhead-related expenses for marketing, merchandising, customer...

  • Page 110
    ... and directors including restricted stock units, stock awards, stock options, and employee stock purchases. ASC 718 requires companies to estimate the fair value of share-based payment awards on the grant date using an option-pricing model. The Company values its restricted stock units based...

  • Page 111
    ... income taxes of the United Online tax reporting group for which FTD is severally liable, and the Company will indemnify FTD for these taxes. The Company and FTD generally will be jointly responsible for any taxes that arise from the failure of the FTD Spin-Off Transaction to qualify as tax-free...

  • Page 112
    .... Recent Tccounting Pronouncements Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income -Effective January 1, 2013, the Company adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2013-02, Reporting of Amounts Reclassified Out...

  • Page 113
    ... interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The Company is currently assessing the impact...

  • Page 114
    F-21

  • Page 115
    ...UNITED ONLINE, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) 2. SEGMENT INFORMTTION (Continued) A reconciliation of segment revenues to consolidated revenues was as follows for each period presented (in thousands): Year Ended December 31, 2013... corporate expenses Intersegment eliminations Consolidated operating expenses $...

  • Page 116
    ...): December 31, 2013 2012 United States Europe India $ 19,644 $ 24,935 3,181 2,718 232 321 $ 23,057 $ 27,974 Total long-lived assets Segment assets are not reported to, or used by, the Company's chief operating decision maker to allocate resources to, or assess performance of, the segments...

  • Page 117
    ... Prepaid expenses Prepaid insurance Income taxes receivable Other Total $ 5,442 $ 4,245 1,537 1,054 765 266 2,654 3,598 $ 10,398 $ 9,163 Property and Equipment Property and equipment consisted of the following (in thousands): December 31, 2013 2012 Computer software and equipment Furniture and...

  • Page 118
    ... UNITED ONLINE, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) 3. BTLTNCE SHEET COMPONENTS (Continued) Tccrued Liabilities Accrued liabilities consisted of the following (in thousands): December 31, 2013 2012 Employee compensation and related liabilities Non-income taxes payable...

  • Page 119
    ... Goodwill at December 31, 2013 Impairment of Goodwill During the quarter ended June 30, 2012, due to the sustained decline in the Company's market capitalization, the Company performed an interim quantitative goodwill impairment assessment for all of the Company's reporting units. Step one of the...

  • Page 120
    ... consisted of the following (in thousands): December 31, 2013 Gross Value Tccumulated Tmortization Net Pay accounts and free accounts Customer contracts and relationships Trademarks and trade names Software and technology Rights, content and intellectual property $ 103,357 $ 7,900 26,082 8,518 13...

  • Page 121
    ..., INTTNGIBLE TSSETS TND OTHER LONG-LIVED TSSETS (Continued) December 31, 2012 Gross Value Tccumulated Tmortization Net Pay accounts and free accounts Customer contracts and relationships Trademarks and trade names Software and technology Rights, content and intellectual property $ 103,284 $ 7,900...

  • Page 122
    ... Reclassified from Tccumulated Other Comprehensive Loss into Earnings (Effective Portion) Year Ended December 31, Derivatives Designated as Cash Flow Hedging Instruments Location 2013 2012 2011 Forward foreign currency exchange contracts Technology and development expenses $ 323 $ 267 $ - F-29

  • Page 123
    ... in Earnings on Derivatives Year Ended December 31, Derivatives Not Designated as Hedging Instruments Location 2013 2012 2011 Forward foreign currency exchange contracts Other income, net $ 44 $ (75) $ 654 For additional information related to derivative instruments, see Note 1-"Description...

  • Page 124
    ... value calculations of the trademarks included revenue projections, a trademarks royalty rate of 0.3% and a discount rate of 14.5%. Classmates Goodwill During the quarter ended September 30, 2013, the Company recorded a preliminary goodwill impairment charge related to the Classmates reporting unit...

  • Page 125
    ... reporting unit included a 4% growth rate to calculate the terminal value and a discount rate of 12%. In addition, the Company assumed revenue growth and applied margin and other cost assumptions consistent with the reporting unit's historical trends. 7. STOCKHOLDERS' EQUITY Preferred Stock United...

  • Page 126
    ... with a fair market value equal to the amount of the minimum statutory employee withholding taxes due, which is accounted for as a repurchase of common stock. The Company then pays the minimum statutory withholding taxes in cash. The amounts remitted in the year ended December 31, 2013, 2012 and...

  • Page 127
    ...over a one- to four-year period under a variety of vesting schedules and are canceled upon termination of employment. Restricted stock units granted to non-employee members of United Online, Inc.'s Board of Directors generally vest annually over a one-year period. Stock options granted to employees...

  • Page 128
    ... stock-based compensation that has been included in the following line items within the consolidated statements of operations for each of the periods presented (in thousands): Year Ended December 31, 2013 2012 2011 Operating expenses: Cost of revenues Sales and marketing Technology and development...

  • Page 129
    ... Committee of the Board of Directors of United Online, Inc. approved restricted stock unit grants to the Company's executive officers totaling 0.2 million shares. The restricted stock units will vest as to one-third of the total number of units awarded annually over a three-year period beginning...

  • Page 130
    ... of the Board of Directors of United Online, Inc. approved restricted stock unit grants to certain non-executive officer employees totaling 0.1 million shares. The restricted stock units will vest as to one-third of the total number of units awarded annually over a three-year period beginning...

  • Page 131
    related to unvested stock options, net of expected forfeitures, was $55,000 and was expected to be recognized over a weighted-average period of 0.1 years. F-37

  • Page 132
    ...Board of Directors of United Online, Inc. approved stock option grants to the Company's executive officers totaling 0.4 million shares. Each stock option entitles the recipient to receive one share of common stock upon exercise of the vested award and payment of the exercise price. The stock options...

  • Page 133
    ... the closing market price of United Online, Inc.'s common stock at the date of grant. At December 31, 2013, total unrecognized compensation cost related to the 2010 Employee Stock Purchase Plan was $1.0 million and was expected to be recognized over a weighted-average period of 0.7 years. 9. INCOME...

  • Page 134
    ...): Year Ended December 31, 2013 2012 2011 Federal statutory rate State taxes, net Nondeductible compensation Deferred tax adjustment-U.K. statutory rate reduction Deferred tax adjustment-federal and state rate reduction Effects of foreign income Foreign distribution Foreign tax credit Changes...

  • Page 135
    ...an impact on the Company's effective income tax rate, if recognized. A reconciliation of the beginning and ending amounts of gross unrecognized tax benefits (before federal impact of state items), excluding interest and penalties, was as follows (in thousands): Year Ended December 31, 2013 2012 2011...

  • Page 136
    .... If these earnings were repatriated to the U.S., the Company would not expect to owe additional U.S. income taxes due to the utilization of net operating loss and foreign tax credit carryovers. For the year ended December 31, 2013, excess income tax benefits, net, attributable to stock-based...

  • Page 137
    ...of Contents UNITED ONLINE, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) 10. NET INCOME (LOSS) PER COMMON SHTRE The following table sets forth the computation of basic and diluted net income (loss) per common share (in thousands, except per share amounts): Year Ended December 31, 2013...

  • Page 138
    ... officer. In addition, in the year ended December 31, 2011, the Company recorded $0.2 million of restructuring and other exit costs related to contract termination and facility closure costs in the Communications segment. In the year ended December 31, 2013, the Company recorded restructuring...

  • Page 139
    ... Facebook application that helps users find and re-connect with past classmates. The primary reason for the acquisition was to acquire the Yearbook App subscription customer relationships and developed technology, which had a total estimated fair value of $0.4 million upon acquisition. The effect of...

  • Page 140
    ...ii) the number of eligible new subscribers who convert to pay accounts, all subject to certain conditions. The contingent consideration is measured based on three annual earnout periods ending June 30, 2013, 2014 and 2015 and if earned, will be paid annually shortly after the closing of each earnout...

  • Page 141
    ... of Contents UNITED ONLINE, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) 12. TCQUISITIONS (Continued) subscribers to pay accounts, could significantly impact the estimated fair value of the contingent consideration. A 100 basis point increase or decrease in the discount rate would...

  • Page 142
    ... and pay membership base of the Classmates business by extending its presence through Facebook. These factors contributed to a purchase price in excess of the fair value of schoolFeed's net liabilities as of the date of acquisition and, as a result, the Company has recorded goodwill in connection...

  • Page 143
    ... by the Company in connection with certain of these letters of credit and were included in other current assets and other assets in the consolidated balance sheets. Commitments under letters of credit at December 31, 2013 were scheduled to expire as follows (in thousands): Year Ending December 31...

  • Page 144
    ... to customers, vendors, lessors, sureties and insurance companies, business partners, and other parties with respect to certain matters, including, but not limited to, losses arising out of the Company's breach of such agreements, services to be provided by the Company, or from intellectual property...

  • Page 145
    ...and 52,000 stock options in the first half of 2014. In addition, the Company paid $1.1 million to these executive officers in connection with their 2013 annual bonuses. Legal Matters In June 2011, Memory Lane, Inc., a California corporation, filed a complaint in United States District Court, Central...

  • Page 146
    ...) Shoebuy.com, Inc., United Online, Inc., Wells Fargo & Company, and Wyndham Worldwide Corporation (collectively, the "Marketing Companies"); and (iii) Bank of America, N.A., Capital One Financial Corporation, Chase Bank USA, N.A., and Citibank, N.A. (collectively, the "Credit Card Companies"). The...

  • Page 147
    ... Juno Online Services, Inc. nor NetZero, Inc. has been served with the complaint. The Company has been cooperating with certain governmental authorities in connection with their respective investigations of its former posttransaction sales practices and certain other current or former business...

  • Page 148
    ...that additional governmental investigations or other legal actions will not be instituted in connection with the Company's former post-transaction sales practices or other current or former business practices. The Company records a liability when it believes that it is both probable that a loss will...

  • Page 149
    ...Contents UNITED ONLINE, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) 14. SUPPLEMENTTL CTSH FLOW INFORMTTION The following table sets forth supplemental cash flow disclosures (in thousands): Year Ended December 31, 2013 2012 2011 Cash paid for interest Cash paid for income taxes, net...

  • Page 150
    ... Total current liabilities Long-term debt, net of discounts Deferred tax liabilities, net Other liabilities Total liabilities $ 399,356 The Company recorded $1.7 million and $3.4 million of transaction-related costs in the years ended December 31, 2013 and 2012, respectively, in connection with...

  • Page 151
    ... UNITED ONLINE, INC. NOTES TO CONSOLIDTTED FINTNCITL STTTEMENTS (Continued) 16. QUTRTERLY FINTNCITL DTTT (UNTUDITED) (in thousands, except per share data) Quarter Ended December 31 September 30 June 30 March 31 Year ended December 31, 2013: Revenues Cost of revenues Operating income (loss) Income...

  • Page 152
    ...UNITED ONLINE, INC. SCHEDULE II-VTLUTTION TND QUTLIFYING TCCOUNTS (in thousands) Charged (Credited) to Other Tccounts Balance at Beginning of Period Tdditions Charged to Expense Charges Utilized (Write-offs) Balance at End of Period Tllowance for doubtful accounts: Year ended December 31, 2013...

  • Page 153

  • Page 154
    ...Amended Effective as of October 31M 2013) ARTICLE 1 The name of the Corporation is United Online, Inc. (the "Corporation"). No change to the name of the Corporation may be made (by amendment, merger or otherwise) to contain the words "NetZero" or "Zero" or the letter "Z." ARTICLE 2 The address of...

  • Page 155
    ... The number of directors of the Corporation shall be as from time to time fixed by resolution of the Board of Directors. Election of directors need not be by written ballot unless the Bylaws so provide. Advance notice of stockholder nominations for the election of directors and of any other business...

  • Page 156
    ... resolution of the Board of Directors. At the first annual meeting of stockholders following the closing of the transactions set forth in the Agreement and Plan of Merger, dated as of June 7, 2001 (the "Merger Agreement"), by and among NetZero, Inc., a Delaware corporation, Juno Online Services, Inc...

  • Page 157
    ... the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws. Any action reyuired or permitted to be taken by the stockholders of the Corporation may only be effected at a duly called annual or special meeting of the stockholders...

  • Page 158
    ...the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article 8 to directors and officers of the Corporation. The rights to indemnification...

  • Page 159
    be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of the Corporation, as the case may be, and also on the Corporation. 6

  • Page 160
    Exhibit 3.2 AMENDED AND RESTATED BYLAWS OF UNITED ONLINE, INC. As Amended Effective December 17, 2013 1

  • Page 161
    ... 1.1 Officef. United Online, Inc., a Delaware corporation (the "Corporation"), may have offices at such places both within and without the State of Delaware as the board of directors of the Corporation (the "Board of Directors") may from time to time determine or the business of the Corporation may...

  • Page 162
    ... the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of...

  • Page 163
    ... as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person that would...

  • Page 164
    ... meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iv) a description of...

  • Page 165
    ...) limitations on the time allotted to questions or comments by participants. Section 2.13 Infpectorf of Election. Before any meeting of stockholders of the Corporation, the Board of Directors shall appoint an inspector or inspectors of election to act at the meeting or its adjournment. The number of...

  • Page 166
    ...in the manner provided in the Bylaws. The number of directors may not be increased by more than one unless approved by (a) two thirds of each class of directors or (b) two thirds of each outstanding class or series of such class of stock of the Corporation. Section 3.2 Election and Term of Office of...

  • Page 167
    ...a director is effective at a future time, the board of directors may elect a successor to take office when the resignation becomes effective. Unless otherwise provided in the Certificate of Incorporation, vacancies and newly created directorships resulting from any increase in the authorized number...

  • Page 168
    ... and shall receive such compensation for their services as directors as shall be determined by the Board of Directors. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be...

  • Page 169
    ... be officers of the Corporation unless so designated by the Board of Directors. Any number of offices may be held by the same person, unless the certificate of incorporation or these Bylaws otherwise provide. Section 5.2 Election. The Board of Directors at its first meeting after each annual meeting...

  • Page 170
    ... are, from time to time, assigned to him by the Board of Directors as may be provided by law. Section 5.7 The Chief Executive Officer, Prefident and Senior Vice-Prefidentf. The chief executive officer of the Corporation shall have general and active management of the business of the Corporation and...

  • Page 171
    ... the powers of the chief financial officer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. ARTICLE 6 CAPITAL STOCK Section 6.1 Certificatef. The shares of capital stock of the Corporation shall be represented by a certificate...

  • Page 172
    ... in cash, in property or in shares of capital stock, subject to the provisions of the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its...

  • Page 173
    ... Checkf. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 7.3 Fifcal Year. The fiscal year of the Corporation shall be fixed by resolution of the...

  • Page 174
    ...the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or...

  • Page 175
    ... at the request of the Corporation as a director, officer, employee or agent. The provisions of this Section 8.4 shall not be deemed to be exclusive or to limit in any way the circumstances in which a person may be deemed to have met the applicable standard of conduct set forth in Section 8.1 or...

  • Page 176
    ... excise taxes assessed on a person with respect to an employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director or officer...

  • Page 177
    ... officer in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors. Section 8.12 Indemnification of Employeef and Agentf. The Corporation may, to the extent authorized from time to time...

  • Page 178
    ...10.16 OFFICER WITH EMPLOYMENT AGREEMENT 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...

  • Page 179
    ...issued, subject to the Corporation's collection of all applicable Withholding Taxes, on the applicable vesting date specified for that Share or as soon thereafter as administratively practicable, but in no event later than the close of the calendar year in which such vesting date occurs or (if later...

  • Page 180
    ...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 upon their actual issuance following the Corporation's collection of the applicable Withholding Taxes. Notwithstanding the...

  • Page 181
    ... (5) business days 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...

  • Page 182
    ...) may, in connection with the assumption or continuation of the Restricted Stock Units subject to the Award at that time, but subject to the Plan Administrator's approval prior to the Change in Control, substitute one or more shares of its own common stock with a fair market value equivalent to the...

  • Page 183
    ... and addressed to Participant at the most current address then indicated for Participant on the Corporation's employee records or delivered electronically to Participant through the Corporation's electronic mail system. All notices shall be deemed effective upon personal delivery or delivery through...

  • Page 184
    ... binding on all persons having an interest in the Award. In the event of a conflict between the terms of this Agreement and the terms of the Participant's Employment Agreement, the terms set forth in this Agreement shall control. 12. Governing Law . The interpretation, performance and enforcement of...

  • Page 185
    ... date or dates on which those amounts are to be distributed pursuant to the Normal Vesting Schedule or (to the extent applicable) the provisions of Paragraph 5(c) of this Agreement. IN NITNESS NHEREOI , the parties have executed this Agreement on the day and year first indicated above. UNITED ONLINE...

  • Page 186
    ... of performance. L. Employment Agreement shall mean the Employment Agreement or Offer Letter Agreement between the Participant and the Corporation (or any Parent or Subsidiary) in effect on the Award Date. M. Iair Market Value per share of Common Stock on any relevant date shall be the closing price...

  • Page 187
    ... period is required under applicable law) after the effective date of Participant's termination of employment, a comprehensive agreement releasing the Corporation and its officers, directors, employees, stockholders, subsidiaries, affiliates, representatives and other related parties from all claims...

  • Page 188
    ... the Plan Administrator or by the Corporation's written policy on leaves of absence in effect at the time of such leave, no Service credit shall be given for vesting purposes for any period the Participant is on a leave of absence. X. Exchange. Stock Exchange shall mean the American Stock Exchange...

  • Page 189
    ... 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. ANARD SUMMARY Award Date: Number...

  • Page 190
    ... be issued, subject to the Corporation's collection of all applicable Withholding Taxes, on the applicable vesting date for that Share or as soon thereafter as administratively practicable, but in no event later than the close of the calendar year in which such vesting date occurs or (if later) the...

  • Page 191
    ...) may, in connection with the assumption or continuation of the Restricted Stock Units subject to the Award at that time, but subject to the Plan Administrator's approval prior to the Change in Control, substitute one or more shares of its own common stock with a fair market value equivalent to the...

  • Page 192
    ... all or any part of its business or assets. 6. Adjustment in Shares . The total number and/or class of securities issuable pursuant to this Award shall be subject to adjustment upon certain corporate events as set forth in Article One, Section V(H) of the Plan. The adjustments shall be made in...

  • Page 193
    ...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. (c) Should any Shares vest under the Award when the...

  • Page 194
    ... and addressed to Participant at the most current address then indicated for Participant on the Corporation's employee records or delivered electronically to Participant through the Corporation's electronic mail system. All notices shall be deemed effective upon personal delivery or delivery through...

  • Page 195
    ... date or dates on which those amounts are to be distributed pursuant to the Normal Vesting Schedule or (to the extent applicable) the provisions of Paragraph 5(c) of this Agreement. IN NITNESS NHEREOI , the parties have executed this Agreement on the day and year first indicated above. UNITED ONLINE...

  • Page 196
    ...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. L. Iair Market Value per share of Common Stock on any relevant date shall be the closing price per...

  • Page 197
    ... of transactions on any other Stock Exchange on which the Common Stock is then primarily traded. 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...

  • Page 198
    ... may subsequently continue to perform services for that entity. Except to the extent otherwise required by law or expressly authorized by the Plan Administrator or by the Corporation's written policy on leaves of absence in effect at the time of such leave, no Service credit shall be given for...

  • Page 199
    ...tte Common Stock of United Online, Inc. (tte "Corporation"): Optionee: Grant Date: Exercise Price: , 201 $ per stare Number of Option Stares: Expiration Date: stares , 202 Incentive Stock Option Type of Option: Non-Statutory Stock Option Exercise Sctedule : Tte Option stall become exercisable...

  • Page 200
    DATED: , 201 UNITED ONLINE, INC. By: Title: OPTIONEE ATTACHMENTS EXHIBIT A - STOCK OPTION AGREEMENT 2

  • Page 201
    EXHIBIT A UNITED ONLINE, INC. STOCK OPTION AGREEMENT RECITALS A. Tte Corporation tas implemented tte Plan for tte purpose of providing eligible persons in tte Corporation's service witt tte opportunity to participate in one or more cast or equity incentive compensation programs designed to ...

  • Page 202
    ... and exercisable at tte time of Optionee's cessation of Service, but in no event stall ttis option be exercisable at any time after tte close of business on tte last business day coincident witt or immediately preceding tte Expiration Date. (b) In tte event Optionee ceases Service by reason of tis...

  • Page 203
    ...exercise of ttis option or tte immediate sale of tte Option Stares acquired under ttis option cannot be effected in compliance witt applicable federal and state securities laws, but in no event stall suct an extension result in tte continuation of ttis option beyond tte close of business on tte last...

  • Page 204
    ... time vested and exercisable (tte excess of tte Fair Market Value of ttose Option Stares over tte aggregate Exercise Price payable for suct stares) and provides for tte subsequent vesting and concurrent payout of ttat spread in accordance witt tte same Exercise Sctedule for ttose Option Stares set...

  • Page 205
    ... witt a fair market value equivalent to tte cast consideration paid per stare of Common Stock in suct Ctange in Control, provided suct common stock is readily tradable on an establisted U.S. securities exctange. (d) Ttis Agreement stall not in any way affect tte rigtt of tte Corporation to adjust...

  • Page 206
    ... ctarge to tte Corporation's earnings for financial reporting purposes and valued at Fair Market Value on tte Exercise Date; or (C) ttrougt a special sale and remittance procedure pursuant to wtict Optionee (or any otter person or persons exercising tte option) stall concurrently provide irrevocable...

  • Page 207
    (a) Tte exercise of ttis option and tte issuance of tte Option Stares upon suct exercise stall be subject to compliance by tte Corporation and Optionee witt all 9

  • Page 208
    ... and addressed to Optionee at tte most current address tten indicated for Optionee on tte Corporation's employee records or stall be delivered electronically to Optionee ttrougt tte Corporation's electronic mail system. All notices stall be deemed effective upon personal delivery or delivery ttrougt...

  • Page 209
    ... to tte aggregate value (determined as of tte respective date or dates of grant) of tte Common Stock or otter securities for wtict ttis option or any otter Incentive Options granted to Optionee prior to tte Grant Date (wtetter under tte Plan or any otter option plan of tte Corporation or any Parent...

  • Page 210
    ...to tte Corporation. In no event stall ttis option be exercised in tte absence of suct acceptance. IN WITNESS WHEREOF , United Online, Inc. tas caused ttis Agreement to be executed on its betalf by its duly-auttorized officer on tte day and year first indicated in tte Grant Notice. UNITED ONLINE, INC...

  • Page 211
    ... and mettod of performance. J. Employment Agreement stall mean tte Employment Agreement or Offer Letter Agreement between Optionee and tte Corporation (or any Parent or Subsidiary) in effect on tte Award Date. K. Agreement. Exercise Date stall mean tte date on wtict tte option stall tave been...

  • Page 212
    ...maximum term for wtict tte option may O. Fair Market Value per stare of Common Stock on any relevant date stall be tte closing price per stare of Common Stock at tte close of regular trading tours (i.e., before after-tours trading begins) on tte date in question on tte Stock Exctange serving as tte...

  • Page 213
    ... period is required under applicable law) after tte effective date of Optionee's termination of employment, a compretensive agreement releasing tte Corporation and its officers, directors, employees, stocktolders, subsidiaries, affiliates, representatives and otter related parties from all claims...

  • Page 214
    ... tte Corporation's written policy on leaves of absence in effect at tte time of suct leave, no Service credit stall be given for vesting purposes for any period Optionee is on a leave of absence. II. Stock Exchange stall mean tte American Stock Exctange, tte Nasdaq Global or Global Select Market or...

  • Page 215
    ...tte Common Stock of United Online, Inc. (tte "Corporation"): Optionee: Grant Date: Exercise Price: , 201 $ per stare Number of Option Stares: Expiration Date: stares , 202 Incentive Stock Option Type of Option: Non-Statutory Stock Option Exercise Sctedule : Tte Option stall become exercisable...

  • Page 216
    DATED: , 20 UNITED ONLINE, INC. By: Title: OPTIONEE ATTACHMENTS EXHIBIT A - STOCK OPTION AGREEMENT

  • Page 217
    EXHIBIT A UNITED ONLINE, INC. STOCK OPTION AGREEMENT RECITALS A. Tte Corporation tas implemented tte Plan for tte purpose of providing eligible persons in tte Corporation's service witt tte opportunity to participate in one or more cast or equity incentive compensation programs designed to ...

  • Page 218
    ... and exercisable at tte time of Optionee's cessation of Service, but in no event stall ttis option be exercisable at any time after tte close of business on tte last business day coincident witt or immediately preceding tte Expiration Date. (b) In tte event Optionee ceases Service by reason of tis...

  • Page 219
    ... at tte time of suct cessation of Service. In no event, towever, stall ttis option be exercisable at any time after tte close of business on tte last business day coincident witt or immediately preceding tte Expiration Date. (d) Tte applicable period of post-Service exercisability in effect pursuant...

  • Page 220
    ... entity (or parent ttereof) may, in connection witt tte assumption or continuation of ttis option, but subject to tte Plan Administrator's approval prior to tte Ctange in Control, substitute one or more stares of its own common stock witt a fair market value equivalent to tte cast consideration paid...

  • Page 221
    ...of suct Separation from Service tad Optionee completed an additional twelve (12) montts of employment witt tte Corporation and tad tte Option been structured so as to vest in successive equal monttly installments over tte vesting sctedule. (f) Ttis Agreement stall not in any way affect tte rigtt of...

  • Page 222
    Corporation's earnings for financial reporting purposes and valued at Fair Market Value on tte Exercise Date; or (C) ttrougt a special sale and remittance procedure pursuant to wtict Optionee (or any otter person or persons exercising tte option) stall concurrently provide irrevocable instructions ...

  • Page 223
    Notice, tte following terms and conditions stall also apply to tte grant: 9

  • Page 224
    ... to tte aggregate value (determined as of tte respective date or dates of grant) of tte Common Stock or otter securities for wtict ttis option or any otter Incentive Options granted to Optionee prior to tte Grant Date (wtetter under tte Plan or any otter option plan of tte Corporation or any Parent...

  • Page 225
    ...to tte Corporation. In no event stall ttis option be exercised in tte absence of suct acceptance. IN WITNESS WHEREOF , United Online, Inc. tas caused ttis Agreement to be executed on its betalf by its duly-auttorized officer on tte day and year first indicated in tte Grant Notice. UNITED ONLINE, INC...

  • Page 226
    ...Agreement stall mean ttis Stock Option Agreement. Board stall mean tte Corporation's Board of Directors. B. C. Cause stall mean Optionee's commission of any act of fraud, embezzlement or distonesty, any unauttorized use or disclosure by Optionee of confidential information or trade secrets of tte...

  • Page 227
    ...maximum term for wtict tte option may N. Fair Market Value per stare of Common Stock on any relevant date stall be tte closing price per stare of Common Stock at tte close of regular trading tours (i.e., before after-tours trading begins) on tte date in question on tte Stock Exctange serving as tte...

  • Page 228
    ... of tte Plan. Plan stall mean tte Corporation's 2010 Incentive Compensation Plan, as amended from time to time. Plan Administrator stall mean tte Compensation Committee of tte Board (or a subcommittee ttereof) acting in its capacity as BB. Separation from Service means Optionee's cessation...

  • Page 229
    ...by tte Plan Administrator or by tte Corporation's written policy on leaves of absence in effect at tte time of suct leave, no Service credit stall be given for vesting purposes for any period Optionee is on a leave of absence. DD. Exctange. Stock Exchange stall mean tte American Stock Exctange, tte...

  • Page 230
    ... AGREEMENT This Employment Agreement (the "Agreement ") is made and entered into as of the date the last party hereto signs the Agreement but is made effective as of the Effective Date (as defined below in Section 1(a)) by and between United Online, Inc., a Delaware corporation (the "Company"), with...

  • Page 231
    ... next regularly scheduled grant of equity awards to executive officers following the Effective Date, which grant is currently expected to occur in March 2014, the Board of Directors shall grant to Employee (i) a number of restricted stock units relating to the Company's common stock ( "Common Stock...

  • Page 232
    ... the Release Condition set forth in Section 7(b) below, any and all equity awards Employee holds on the date of such termination will fully vest on an accelerated basis with respect to all non-vested shares of Common Stock at the time subject to those awards, except to the extent otherwise provided...

  • Page 233
    ... installments over the vesting schedule for that award. Except as otherwise expressly provided in the agreement evidencing a particular restricted stock unit or other equity award or to the extent another issuance date may be required in order to comply with any applicable requirements of Section...

  • Page 234
    ... pro-rated bonus will be determined by multiplying (A) the actual bonus (if any) Employee would have earned for that fiscal year, based on the level at which the applicable performance goals for such fiscal year are in fact attained, had Employee continued in the Company's employ through the date...

  • Page 235
    ... period is required under applicable law) after the effective date of Employee's termination of employment, a comprehensive agreement releasing the Company and its officers, directors, employees, stockholders, subsidiaries, affiliates, representatives and other related parties from all claims that...

  • Page 236
    ... and enforceable in accordance with its terms following the expiration of the applicable revocation period in effect for that Release. However, should such sixty (60)-day period span two taxable years, then such payment shall be made during the portion of that period that occurs in the second...

  • Page 237
    ... services (the parties acknowledge that Employee is currently required to perform services at 21301 Burbank Boulevard, Woodland Hills, California 91367) without Employee's prior written consent; or (iii) (iv) any material un-waived breach by the Company of the terms of this Agreement; provided...

  • Page 238
    ... be paid in accordance with the normal payment dates specified herein. (f) Provisions Applicable to "Specified Employee ". Notwithstanding Section 7(e) above, the following provisions shall also be applicable to Employee if Employee is a "specified employee" at the time of Employee's separation of...

  • Page 239
    ... this subparagraph (ii), the applicable dollar limitation will be equal to two times the lesser of (i) Employee's annualized compensation (based on Employee's annual rate of pay for the calendar year preceding the calendar year of Employee's separation from service, adjusted to reflect any increase...

  • Page 240
    ... any applicable law or any applicable securities exchange listing standards. 12. Entire Agreement/Construction of Terms. (a) This Agreement, together with any Company handbooks and policies in effect from time to time and the applicable stock plans and agreements evidencing the equity awards made...

  • Page 241
    ... express written agreement sign by Employee and the Chairman of the Board of Directors of the Company and approved by the Board of Directors. Employee agrees that any dispute in the meaning, effect or validity of this Agreement shall be resolved in accordance with the laws of the State of California...

  • Page 242
    ... Lobo Date signed: October 1, 2013 UNITED ONLINE, INC. By: Name: Title: /s/ Mark R. Goldston Mark R. Goldston Chairman, President and CEO United Online, Inc. October 2, 2013 Date signed: By: Name: Title: /s/ Robert Berglass Robert Berglass Lead Director Date signed: October 2, 2013 13

  • Page 243
    Appendix A EMPLOYEE PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT (to be attached)

  • Page 244
    ... I agree as follows: 1. PROPRIETARY INFORMATION. (a) Parties. I understand and agree that this Agreement is intended to benefit Employer and all of its affiliates including , but not limited to, United Online, Inc. (" United Online ") and all of its current and future direct and indirect parents...

  • Page 245
    ... to the Company's business or the business of Company customers or clients. I agree that during my employment, I will not deliver any Company Materials to any person or entity outside the Company, except as I am required to do in connection with performing my duties for the Company. For purposes...

  • Page 246
    ... any third party: (i) solicit, directly or indirectly, any customer of the Company who was a Company customer during my employment for the purpose of offering products or services that compete in the same market with the Company's products or services by using Proprietary Information or by otherwise...

  • Page 247
    ... inventions that either: (1) Relate at the time of conception or reduction to practice of the invention to the employer's business, or actual or demonstrably anticipated research or development of the employer; or (2) Result from any work performed by the employee for the employer. I agree that all...

  • Page 248
    ... be the sole property of Employer, whether or not patentable. The rights I have assigned, and will assign, include all copyrights, patent rights, trademarks, trade secret rights and any rights of publicity or personality (including usage of my name, voice, image, likeness and performance in any and...

  • Page 249
    ... whether it results from access to Proprietary Information or the Company's equipment, facilities, or data, I agree that any Invention Idea related to the foregoing shall be presumed to be a Company Invention Idea if it relates to any existing or planned service or product of the Company, and if it...

  • Page 250
    ... shall replace and supersede any similar agreement that currently is in effect between me and Employer or the Company, provided that Employer shall retain all rights that have arisen under that prior agreement up to the time I sign this new Agreement. This Agreement shall constitute the complete and...

  • Page 251
    EXHIBIT A EMPLOYEE'S DISCLOSURE Prior Inventions. Except as set forth below, there are no Invention Ideas that I wish to exclude from the operation of this Agreement: Date: Employee Signature Employee Name (Print) 23

  • Page 252
    ... approval of the Company's Board of Directors (the " Board"). The primary location of your employment will be at the offices of MyPoints.com, located in San Francisco, California. However, there may be extensive travel required to other offices and locations, including the corporate headquarters...

  • Page 253
    ... price equal to the per share fair market value of our common stock on the grant date; and (ii) 50% of the award value will be granted as restricted stock units (" RSUs"). The Stock Options and RSUs will be granted by the Board at its next regularly scheduled meeting. The number of Stock Options...

  • Page 254
    ...release of claims in a form provided by the Company, you will be eligible to receive a cash separation payment in the aggregate amount of the sum of (a) your annual base salary in effect at the time of such termination and (b) any earned but unpaid annual bonus for the fiscal year preceding the year...

  • Page 255
    ... stock or other property, are subject to reduction to reflect applicable withholding and payroll taxes. Restrictive Covenants Until one year after the termination of your employment with the Company, you agree not to, directly or indirectly, solicit or recruit for employment, any person or persons...

  • Page 256
    ... period following your "separation from service" within the meaning of Section 409A, so long as the release has become effective and enforceable in accordance with its terms following the expiration of the applicable revocation period in effect for that release; provided, however, that should such...

  • Page 257
    ... the Proprietary Information and Inventions Agreement between you and the Company, any Company handbooks and policies in effect from time to time and the applicable stock plans and agreements evidencing the equity awards made to you from time to time during your period of employment, contains all...

  • Page 258
    ... to the Company's business or the business of Company customers or clients. I agree that during my employment, I will not deliver any Company Materials to any person or entity outside the Company, except as I am required to do in connection with performing my duties for the Company. For purposes...

  • Page 259
    ... any third party: (i) solicit, directly or indirectly, any customer of the Company who was a Company customer during my employment for the purpose of offering products or services that compete in the same market with the Company's products or services by using Proprietary Information or by otherwise...

  • Page 260
    ... any existing or planned service or product of the Company, (ii) are aided by the use of time, material, Proprietary Information or facilities of the Company, whether or not during working hours, or (iii) relate to any work I perform for Employer, whether or not during normal working hours, that are...

  • Page 261
    ... be the sole property of Employer, whether or not patentable. The rights I have assigned, and will assign, include all copyrights, patent rights, trademarks, trade secret rights and any rights of publicity or personality (including usage of my name, voice, image, likeness and performance in any and...

  • Page 262
    ... shall replace and supersede any similar agreement that currently is in effect between me and Employer or the Company, provided that Employer shall retain all rights that have arisen under that prior agreement up to the time I sign this new Agreement. This Agreement shall constitute the complete and...

  • Page 263
    I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS. I HAVE COMPLETELY NOTED ON EXHIBIT A TO THIS AGREEMENT ANY PROPRIETARY INFORMATION OR INVENTION IDEAS THAT I DESIRE TO EXCLUDE FROM THIS AGREEMENT. Date: Gail Shulman

  • Page 264
    EXYIBIT A EMPLOYEE'S DISCLOSURE Prior Inventions. Except as set forth below, there are no Invention Ideas that I wish to exclude from the operation of this Agreement: Date: Gail Shulman

  • Page 265
    ... Online, Inc.), a Washington corporation (the "Company "), and Harold Alan Zeitz (the " Employee "), effective as of July 29, 2013. RECITALS WHEREAS, the Company and the Employee entered into an Employment Agreement on January 14, 2011, as amended by the Amendment dated as of January 25, 2013...

  • Page 266
    ... this Amendment No. 2, in the case of the Company by a duly authorized officer, as of the date stated in the opening paragraph. MEMORY LANE, INC. /s/ Mark R. Goldston By: Mark R. Goldston Chairman and Chief Executive Officer Date: July 29, 2013 EMPLOYEE /s/ Harold Alan Zeitz Harold Alan Zeitz...

  • Page 267
    ...is made as of January 24, 2014 by and between United Online, Inc., a Delaware corporation (the " Company"), and Neil P. Edwards ("Executive"). The Company and Executive are collectively referred to herein as the " Parties". Capitalized terms not defined herein will have the meanings ascribed to them...

  • Page 268
    ... terms of the Employment Agreement which survive as set forth herein and listed in Section 4 below, this Agreement or the Consulting Agreement as of the Release Effectiveness Date, Executive's outstanding equity awards shall be treated as follows: (i) 29,677 restricted stock units which would have...

  • Page 269
    ... not be obligated to pay any other sums to Executive or to provide any other benefits to Executive after the Separation Date, except (i) as set forth in this Agreement, the Consulting Agreement or the Release; and (ii) for reimbursement of business expenses in accordance with Company policy and for...

  • Page 270
    ...minimis informational requests relating to Executive's employment by the Company or about which Executive is knowledgeable; provided that the Company will make reasonable efforts not to furnish Executive with material non-public information which would preclude Executive from trading in the stock of...

  • Page 271
    ... (or at such other address for a party as shall be specified by like notice): if to Executive, at his current address on file with the Company or such different address as Executive may provide the Company in writing, to his email address at [email protected] and to Christopher Rudd at...

  • Page 272
    ... and responsibilities to his successor (or other person or persons as may be requested by the Chief Executive Officer of the Company) by providing advice and assistance as to general transitional matters relating to the areas in which Consultant provided services while he was an employee of the...

  • Page 273
    ..., Consultant shall comply with all applicable policies of the Company with which he has been provided, including but not limited to any policies relating to insider trading, conduct/ethics and finance operations. 3. Consulting Payments . As compensation for his services hereunder, and subject to the...

  • Page 274
    ...officer charged with expense review for the Company, the Company shall reimburse Consultant for all reasonable expenses incurred by Consultant in connection with the performance of the Consulting Services (" Expenses") in accordance with the Company's expense reimbursement policy in effect from time...

  • Page 275
    ...party. 7.3 Responsibility for Taxes. Consultant shall be issued a tax form 1099 by the Company, which reflects the applicable amount of any taxable payments received by Consultant in respect of his consulting services... one year may not affect amounts reimbursable or provided in any subsequent year. ...

  • Page 276
    ... State of California without giving effect to the principles of conflicts of laws thereof. The Company shall indemnify Consultant for expenses (reasonable attorneys' fees and expenses) relating to claims by third parties arising from or in connection with his performance of services hereunder during...

  • Page 277
    expiration of this Agreement, including without limitation the provisions of Sections 7 through 17 hereof, shall survive the termination or expiration of the Consulting Period or this Agreement. [Signatures appear on the following page ] 6

  • Page 278
    IN WITNESS WHEREOF, the Company and Consultant have executed and delivered this Agreement as of the date written above. UNITED ONLINE, INC. By: Name: Francis Lobo Title: President and Chief Executive Officer CONSULTANT: Neil P. Edwards

  • Page 279
    ...each of the persons and entities described in this sentence (collectively, the " Company Released Parties ") from any and all claims, causes of action, and liabilities arising out of or relating in any way to my employment with the Company, including, but not limited to, the offer and termination of...

  • Page 280
    ...I have returned, or within seven (7) days after the Separation Date will return, to the Company all Company documents, information, and property, including files, records, computer access codes, and instruction manuals, as well as any Company assets or equipment that I have in my possession or under...

  • Page 281
    ... the Release Delivery Date in which to review and consider it. I understand and acknowledge that the Company has advised me to obtain advice concerning this Release from an attorney of my choice before signing this Release. I further represent that I have had sufficient time to review and consider...

  • Page 282
    ...of the state and federal courts located in Los Angeles, California in the event that the Company takes legal action to enforce any of the terms of this Release. EMPLOYEE'S ACCEPTANCE OF RELEASE BEFORE SIGNING MY NAME TO THIS RELEASE, I STATE THE FOLLOWING: I HAVE READ IT; I UNDERSTAND IT AND I KNOW...

  • Page 283
    ..., would materially affect the Company's decision to execute this Release, regardless of whether the lack of knowledge is the result of ignorance, oversight, error, negligence or any other cause. UNITED ONLINE, INC. DATED: By: Name: Title: Francis Lobo President and Chief Executive Officer 5

  • Page 284
    ... and responsibilities to his successor nor other person or persons as may be requested by the Chief Executive Officer of the Company) by providing advice and assistance as to general transitional matters relating to the areas in which Consultant provided services while he was an employee of the...

  • Page 285
    ...officer charged with expense review for the Company, the Company shall reimburse Consultant for all reasonable expenses incurred by Consultant in connection with the performance of the Consulting Services n" Expenses") in accordance with the Company's expense reimbursement policy in effect from time...

  • Page 286
    ... shall pay or provide to Consultant nor his estate, as the case may be), within ten n10) days after the Date of Termination, any incurred but unpaid or unreimbursed Expenses. 7. Independent Contractor Status. The Company and Consultant each acknowledge and agree that, following the Effective Date...

  • Page 287
    ...in writing signed by Consultant or his legal representative and such officerns) as may be specifically designated by the Company. No waiver by a party hereto at any time of any breach by another party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such...

  • Page 288
    ... State of California without giving effect to the principles of conflicts of laws thereof. The Company shall indemnify Consultant for expenses nreasonable attorneys' fees and expenses) relating to claims by third parties arising from or in connection with his performance of services hereunder during...

  • Page 289
    IN WITNESS WHEREOF, the Company and Consultant have executed and delivered this Agreement as of the date written above. UNITED ONLINE, INC. By: /s/ Francis Lobo Name: Francis Lobo Title: President and Chief Executive Officer CONSULTANT: /s/ Neil P. Edwards Neil P. Edwards

  • Page 290
    ... 11, 2013 by and between United Online, Inc., a Delaware corporation (the " Company"), and Charles B. Ammann (" Executive"). The Company and Executive are collectively referred to herein as the " Parties". Capitalized terms not defined herein will have the meanings ascribed to them in the Employment...

  • Page 291
    ...) or (ii) the annual bonus for 2013 which would be due to Executive based on actual performance, no later than January 24, 2014. On the same date, the Company shall reimburse Executive for up to $25,000 in legal fees and expenses incurred in connection with this Agreement. (e) Equity Treatment. In...

  • Page 292
    ... relating to Executive's employment by the Company or about which Executive is knowledgeable, provided that the Company will make reasonable efforts not to furnish Executive with material non-public information which would preclude Executive from trading in the stock of the Company or FTD Companies...

  • Page 293
    ... on the date of delivery if delivered personally or (b) on the first business day following the date of dispatch if sent by a nationally recognized overnight courier (providing proof of delivery), in each case to the parties at the following addresses (or at such other address for a party as shall...

  • Page 294
    if to the Company: United Online, Inc. 21301 Burbank Blvd Woodland Hills, CA 91367 Attention: Chief Executive Officer 14. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, and such counterparts ...

  • Page 295
    ..., and intending to be legally bound hereby, the Parties hereby execute this Agreement as of the first date set forth below. CHARLES B. AMMANN DATED: December 11, 2013 /s/ Charles B. Ammann UNITED ONLINE, INC. DATED: December 11, 2013 By: Name: Title: /s/ Francis Lobo Francis Lobo President...

  • Page 296
    ..." for purposes of Section 409A shall be the Effective Date. In structuring the level and timing of the services to be provided hereunder, the Company shall be mindful of, and coordinate with, the requirements of Consultant's then-current employment, if any, so as to permit Consultant to fulfill...

  • Page 297
    ...expense review for the Company, the Company shall reimburse Consultant for all reasonable expenses incurred by Consultant in connection with the performance of the Consulting Serv ices ("Expenses") in accordance with the Company 's expense reimbursement policy in effect from time to time. Consultant...

  • Page 298
    ...in writing signed by Consultant or his legal representative and such officer(s) as may be specifically designated by the Company. No waiver by a party hereto at any time of any breach by another party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such...

  • Page 299
    ... State of California without giving effect to the principles of conflicts of laws thereof. The Company shall indemnify Consultant for expenses (reasonable attorneys' fees and expenses) relating to claims by third parties arising from or in connection with his performance of services hereunder during...

  • Page 300
    IN WITNESS WHEREOF, the Company and Consultant have executed and delivered this Agreement as of the date written above. UNITED ONLINE, INC. By: Name: Francis Lobo Title: President and Chief Executive Officer CONSULTANT: Charles B. Ammann

  • Page 301
    ... each of the persons and entities described in this sentence (collectively, the "Company Released Parties ") from any and all claims, causes of action, and liabilities arising out of or relating in any way to my employment with the Company, including, but not limited to, the offer and termination of...

  • Page 302
    ...I have returned, or within seven (7) days after the Separation Date will return, to the Company all Company documents, information, and property, including files, records, computer access codes, and instruction manuals, as well as any Company assets or equipment that I have in my possession or under...

  • Page 303
    ... the Release Delivery Date in which to review and consider it. I understand and acknowledge that the Company has advised me to obtain advice concerning this Release from an attorney of my choice before signing this Release. I further represent that I have had sufficient time to review and consider...

  • Page 304
    ..., and assigns, from any and all claims, causes of action, and liabilities arising out of or relating in any way to his notice of his intention to terminate his employment or the timing of such notice. UNITED ONLINE, INC. DATED: By: Name: Title: Francis Lobo President and Chief Executive Officer

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    ... AGREEMENT This Consulting Agreement nthis " Agreement "), is made and entered into as of gecember 11, 2013, by and between United Online, Inc., a gelaware corporation nthe " Company"), and Charles B. Ammann n" Consultant "). RECITALS WHEREAS, Consultant has served as the Executive Vice President...

  • Page 306
    ...regarding certain post-transaction sales practices of FTg.COM Inc. and Classmates Online, Inc., renamed Memory Lane, Inc., as described in more detail in the Company's public filings. 3. Equity Vesting. Consultant shall be provided with the equity vesting nthe " Equity Vesting") set forth in Section...

  • Page 307
    ... sultant in connection with the performance of the Consulting Services n" Expenses") in accordance with the Company 's expense reimbursement policy in effect from time to time. Consultant agrees to obtain Company's prior written approval for travel expenses or out of pocket expense items expected to...

  • Page 308
    ...in writing signed by Consultant or his legal representative and such officerns) as may be specifically designated by the Company. No waiver by a party hereto at any time of any breach by another party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such...

  • Page 309
    ...performance of services hereunder during the Consulting Period. Such indemnification shall be on terms at least as favorable as the most favorable terms the Company provides its officers and directors... or expiration of this Agreement, including without limitation the provisions of Sections 7 through...

  • Page 310
    IN WITNESS WHEREOF, the Company and Consultant have executed and delivered this Agreement as of the date written above. UNITEg ONLINE, INC. By: /s/ Francis Lobo Name: Francis Lobo Title: President and Chief Executive Officer CONSULTANT: _ /s/ Charles B. Ammann Charles B. Ammann

  • Page 311
    ... by and between United Online, Inc., a Delaware corporation (the " Company"), and Paul E. Jordan (the " Employee "), effective as of July 29, 2013. RECITALS WHEREAS, the Company and the Employee entered into an Employment Agreement on February 7, 2011, as amended by the Amendment dated as of January...

  • Page 312
    ... Amendment No. 2, in the case of the Company by a duly authorized officer, as of the date stated in the opening paragraph. UNITED ONLINE, INC. /s/ Mark R. Goldston By: Mark R. Goldston Chairman, President and Chief Executive Officer Date: July 29, 2013 EMPLOYEE /s/ Paul E. Jordan Paul E. Jordan...

  • Page 313
    ...UNITED ONLINE, INC. 2013 MANAGEMENT BONUS PLAN I. PURPOSES OF THE PLAN 1.01 1he United Online, Inc. (the " Company") 2013 Management Bonus Plan (the " Plan") is herebc established under the Incentive Bonus Program of the Companc's stockholder-approved 2010 Incentive Compensation Plan (the " 2010...

  • Page 314
    ... Business Unit in writing not later than ninetc (90) dacs after the commencement of the 2013 Fiscal Year, provided that the outcome of the applicable goals must be substantiallc uncertain at the time of their establishment (the " Performance Goals Schedule "). 1he Performance Goals Schedule...

  • Page 315
    ... would have earned, based on the Companc's actual performance for the 2013 Fiscal Year in the Combined Businesses, the designated Business Segment or the Classmates Business Unit, as applicable, had he remained continuouslc in the Companc's emploc through the Bonus Qualification Date. 3.03 For...

  • Page 316
    ...F1D Segment, the Communications Segment and the Classmates Business Unit; provided, however, that the calculation of Adjusted OIBDA for the Combined Businesses shall also take into account anc unallocated corporate expenses that were not included in the calculation of Adjusted OIBDA for the separate...

  • Page 317
    ... therefor that was included in the respective Business Segment's or the Classmates Business Unit's Adjusted OIBDA 1argets set forth in the Performance Goals Schedule and (ii) in determining the actual level at which Combined Businesses Adjusted OIBDA has been attained, the associated amount under...

  • Page 318
    ...for the Combined Businesses and the applicable Business Segment or the Classmates Business Unit, as applicable, shall be made (1) bc taking into account the actual revenue and Adjusted OIBDA performance of the divested business during the portion of the 2013 Fiscal Year preceding the closing of such...

  • Page 319
    ... allocated to the Classmates Business Unit was not utilized during the 2013 Fiscal Year. 1he Committee shall set forth in the Performance Goals Schedule the methodologc for anc such negative adjustment. 4.05 Except as otherwise provided in Section 3.02, no Participant shall earn or accrue anc right...

  • Page 320
    ... between the Participants and the Companc with respect to their incentive bonus compensation for the 2013 Fiscal Year and the related service period through the Bonus Qualification Date. 1his Plan does not supersede, but is supplemental to, anc provisions of anc emplocment agreement to which...

  • Page 321
    SCHEDULE I Payout Level for Revenue Targets GOLDSTON PAYOUTS Combined AMMANN/ EDWARDS/ JORDAN PAYOUTS Combined (% of Salary) (% of Salary) 1 2 3 4 5 6 0.00% 20.00% 40.00% 60.00% 80....

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    5 6 7 8 9 10 45.00% 50.00% 55.00% 60.00% 65.00% 70.00% 11 [Continues on Next Page] 75.00%

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    ....00% 5 6 45.00% 50.00% 7 8 9 10 55.00% 60.00% 65.00% 70.00% 11 Payout Level for 75.00% Revenue Targets ZEITZ PAYOUTS Classmates Business Unit (% of Salary) 1 2 3 4 0.00% 5 6 6.00% 12.00% 18.00% 24.00% 30.00% 34.00% 38.00% 42.00% 7 8 9 10 11 Payout Level for 46.00...

  • Page 324
    8 9 10 60.00% 65.00% 70.00% 11 2013 SALARIES: Goldston, Mark R. Ammann, Charles B. Edwards, Neil P. Jordan, Paul E. Apatoff, Robert S. 1aragan, Robert J. Zeitz, Harold A. 75.00% $ $ $ $ $ $ $ 997,750.26 387,500.10 420,000.10 336,000.34 630,000.02 420,000.36 400,000.12

  • Page 325
    ... to the end thereof: "From January 1, 2014 throudh January 31, 2014 (the " Extended Period "), the Service entails the followind: (i) three (3) consecutive days on in-person trainind of FTD's new stock plan administrator, which will take place in United Online's Woodland Hills, California corporate...

  • Page 326
    ... hereby have executed this Amendment as of the date first above written. UNITED ONLINE, INC.: By: /s/ Neil P. Edwards Print Name: Neil P. Edwards Title: Executive Vice President and Chief Financial Officer FTD COMPANIES, INC.: By: /s/ Becky Sheehan Name: Becky Sheehan Title: EVP, Chief Financial...

  • Page 327
    ... incorporated in France United Online Advertising Network, Inc., a Delaware corporation (also dba United Online Media Group) United Online Software Development (India) Private Limited, a corporation organized under the laws of India United Online Web Services, Inc., a Delaware corporation (also dba...

  • Page 328
    QuickLinks Exhibit 21.1 List of Subsidiaries

  • Page 329
    ...-193067) of United Online, Inc. of our report dated March 12, 2014 relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this norm 10-K. /s/ PRICEWATERHOUSECOOPERS LLP Los Angeles, California March 12...

  • Page 330
    QuickLinks Exhibit 23.1 CONSENT On INDEPENDENT REGISTERED PUBLIC ACCOUNTING nIRM

  • Page 331
    ... 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Francis Lobo, certify thati 1. I have reviewed this Annual Report on Form 10-K of United Online, Inc.; 2. Based on my...

  • Page 332
    QuickLinks Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

  • Page 333
    ... 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Neil P. Edwards, certify that: 1. I have reviewed this Annual Report on Form 10-K of United Online, Inc.; 2. Based on my...

  • Page 334
    QuickLinks Exhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECURITIES EXCHANGE ACT RULES 13A-14 AND 15D-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

  • Page 335
    ... The Annual Report on Form 10-K of United Online, Inc. for the year ended December 31, 2013, as filed with the Securities and Exchange Commission fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and The information contained in such report fairly...

  • Page 336
    QuickLinks Exhibit 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

  • Page 337
    ... on Form 10-K of United Online, Inc. for the year ended December 31, 2013, as filed with the Securities and Exchange Commission fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange yct of 1934; and The information contained in such report fairly presents, in all...

  • Page 338
    QuickLinks Exhibit 32.2 CERTIFICyTION OF CHIEF FINyNCIyL OFFICER PURSUyNT TO 18 U.S.C. SECTION 1350 yS yDOPTED PURSUyNT TO SECTION 906 OF THE SyRByNES-OXLEY yCT OF 2002

  • Page 339