This Amended and Restated Employment Agreement (the "Agreement") is made and entered into effective as of the 27th day of January 2004, by and between United Online, Inc., a Delaware corporation (the "Company"), with principal corporate offices at 2555 Townsgate Road, Westlake Village, California 91361, and Brian Woods, whose address is 26620 West Alsace Drive, Calabasas, California 91302 ("Employee").

        WHEREAS, the Employee had previously entered into an employment agreement (the "Prior Agreement") effective December 1, 1999, with NetZero, Inc., a wholly-owned subsidiary of the Company; and

        WHEREAS, the Prior Agreement was amended effective February 9, 2001 and October 1, 2003 and that, effective as of the date hereof, the Employee and the Company desire to further amend the Prior Agreement.

        NOW THEREFORE, the Employee and the Company hereby amend and restate the Prior Agreement as follows.


The Company hereby agrees to employ Employee, and Employee hereby accepts such employment, on the terms and conditions set forth herein, commencing the date hereof, and continuing through February 9, 2008 (the "Term"), unless such employment is terminated earlier as provided in Section 4 below. Employee's place of employment shall be in the greater Los Angeles metropolitan area.

Duties of Employee.

Employee shall serve as Executive Vice President and Chief Marketing Officer of the Company. In this capacity, Employee shall perform such customary, appropriate and reasonable executive duties as are usually performed by the Chief Marketing Officer, including such duties as are delegated to him from time to time by the Board of Directors of the Company or a committee thereof (the "Board"). Employee shall report directly to the Company's Chief Executive Officer.

Employee agrees to devote Employee's full time, attention, skill and efforts to the performance of his duties for the Company during the Term. This Agreement shall not be interpreted to prohibit Employee from making passive personal investments or engaging in charitable and public service activities if such activities do not materially interfere with the services required under this Agreement.

Compensation and Other Benefits.

Base Salary. During the Term, the Company shall pay to Employee a base per fiscal year equal to Employee's current base salary (the "Base Salary"), with payments to be made in accordance with the Company's standard payment policy and subject to such withholding as may be required by law. Employee's Base Salary shall be increased to include any increases in Employee's base salary as approved by the Board.

Bonus. During the Term, the Employee shall also be eligible to receive an annual cash bonus of up to 100% of Employee's base salary for each fiscal year (the "Annual Bonus"), less withholding required by law, based on performance criteria established by the Board. Employee's Annual Bonus shall be increased to include any increases in Employee's annual



Termination for Cause.



Noncompetition. For the eighteen (18) month period following the termination of Employee's employment with the Company (but only if Employee has received the severance payments specified in Section 4.2 above) (the "Noncompetition Period"), Employee shall not directly engage in, or manage or direct persons engaged in, a Competitive Business Activity (as defined below) anywhere in the Restricted Territory (as defined below); provided, that the Noncompetition Period shall terminate if the Company terminates operations or if the Company no longer engages in any Competitive Business Activity. The term "Competitive Business Activity" shall mean the business of providing consumers with dial-up Internet access services (free or pay). The term "Restricted Territory" shall mean each and every county, city or other political subdivision of the United States in which the Company is engaged in business or providing its services. The Company agrees that providing services to a company or entity that is involved in a Competitive Business Activity but which services are unrelated to the Competitive Business Activity shall not be deemed a violation of this Agreement. For the purposes of damages to the Company with respect to any breach of this Section 5, the value of Employee's obligations to the Company under this Section 5 equals 37.5% of the cash severance payment in Section 4.2(iv) above.

Gross-Up Payment. If the aggregate of all payments or benefits made or provided to the Employee under this Agreement and under all other plans and programs of the Company (the "Aggregate Payment") is determined to constitute a "parachute payment," as such term is defined in Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code"), the Company shall pay to the Employee, prior to or coincident with the time any excise tax imposed by Section 4999 of the Code (the "Excise Tax") is payable with respect to such Aggregate Payment, an additional amount that, after the imposition of all penalties, income, excise and other federal, state and local taxes thereon, is equal to the sum of the Excise Tax on the Aggregate Payment and interest and penalties imposed with respect to the Excise Tax and such additional amount (the "Gross-Up Payment"). For example, if the Excise Tax imposed with respect to the Aggregate Payment equals $1,000,000 and all penalties, income, excise and other federal, state and local taxes on the Gross-Up Payment equal $2,333,333, the Gross-Up Payment will be $3,333,333. The determination of whether the Aggregate Payment constitutes a parachute payment and, if so, the amount to be paid to the Employee and the time of payment pursuant to this Section 6 shall be made by an independent auditor (the "Auditor") selected and paid by the Company and reasonably acceptable to the Employee. The Auditor shall be a nationally recognized United States public accounting firm. For purposes of determining the amount of the Gross-Up Payment, the Employee shall be deemed to pay income tax at the highest marginal rates of federal, state and local income taxation in the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.


Assignment. Neither the Company nor Employee may assign this Agreement or any rights or obligations hereunder. This Agreement will be binding upon the Company and its successors and assigns. In the event of a Corporate Transaction, the Company shall cause this Agreement to be assumed by the Company's successor as well as any acquiring or ultimate parent entity, if any, following any Corporate Transaction.


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

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

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

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

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

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


        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the first date written above.






/s/  MARK GOLDSTON      
Mark Goldston, Chief Executive Officer





/s/  BRIAN WOODS      
Brian Woods


Source: OneCLE Business Contracts.