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Exhibit 10.20
LENDINGTREE, INC.
DEFERRED COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
SECTION 1. NAME. This plan shall be known as the LendingTree, Inc. Deferred
Compensation Plan for Non-Employee Directors and is herein referred to as the
"Plan."
SECTION 2. DEFINITIONS. The following definitions shall apply in interpreting
the Plan:
2.1 "Account" shall mean either (i) a Cash Account, (ii) a Stock
Account or (iii) an Option Proceed Account.
2.2 "Beneficiary" shall mean such individual or the trustees or
trustee of a trust as may be designated by a Participant pursuant
to such Participant's deferral election.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Change in Control" shall mean (i) the acquisition by any Person
of shares of the Company's stock representing more than 50.0% of
the total voting power of the Company; (ii) the following
individuals cease for any reason to constitute a majority of the
number of directors then serving: individuals who, on the date
hereof, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with
an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of
directors of the Company) whose appointment or election by the
Board or nomination for election by the Company's stockholders was
approved or recommended by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors on
the date hereof or whose appointment, election or nomination for
election was previously so approved or recommended; (iii) any
merger, share exchange, consolidation or other reorganization or
business combination in which the Company is not the surviving or
continuing corporation or in which the Company's stockholders do
not control greater than 50.0% of the voting power of the
surviving or continuing corporation, or in which the Company's
stockholders become entitled to receive cash, securities of the
Company other than voting common
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stock, or securities of another issuer; or (v) the stockholders of
the Company approve a plan of complete liquidation or dissolution
of the Company or there is consummated an agreement for the sale
or disposition by the Company of all or substantially all of the
Company's assets, other than a sale or disposition by the Company
of all or substantially all of the Company's assets to an entity,
at least 50.0% of the combined voting power of the voting
securities of which are owned by stockholders of the Company in
substantially the same proportions as their ownership of the
Company immediately prior to such sale.
2.5 "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
2.6 "Company" shall mean LendingTree, Inc., a Delaware corporation.
2.7 "Compensation" shall mean any the Board fees payable in cash or
Stock, and any stock awards, in any case, paid by the Company as
consideration for services as a director of the Company (other
than Option Proceeds) deferred pursuant to Section 4 hereof.
2.8 "Compensation Committee" shall mean the Compensation Committee of
the Board of Directors of the Company.
2.9 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
2.10 "Fair Market Value" shall mean the Fair Market Value of a share of
the Common Stock for any purpose on a particular date as shall be
determined in a manner such as the Compensation Committee shall in
good faith determine to be appropriate; provided, that with
respect to awards granted on the date of the consummation of the
Initial Public Offering, the "Fair Market Value" of a share of
Common Stock on such date shall be the initial price to the public
as set forth in the final prospectus included within the
registration statement on form S-1 filed with the Securities and
Exchange Commission for the Initial Public Offering.
2.11 "Initial Public Offering" shall mean the initial public offering
of shares of Stock, as registered with the Securities and Exchange
Commission.
2.12 "Non-Employee Director" means a person (a) who is serving as a
member of the Board and (b) who is not an officer or employee of
the Company.
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2.13 "Non-Qualified Option" shall mean a stock option granted under a
Company Stock Plan that is not intended to be an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended from time to time.
2.14 "Option Proceeds" shall mean, with respect to the exercise of a
Non-Qualified Option, the excess of (i) the number of shares
exercised, over (ii) the number of shares utilized to pay the
price of such Option.
2.15 "Participant" shall mean an eligible Non-Employee Director who
elects to defer Compensation or Option Proceeds under the terms of
the Plan.
2.16 "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d)
thereof, except that such term shall not include (i) the Company
or any of its subsidiaries, (ii) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company
or any of its affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of
the Company in substantially the same proportions as their
ownership of stock of the Company.
2.17 "Plan Year" shall mean the calendar year; provided, however, that
the first Plan Year shall commence on the date on which the Plan
is adopted and shall terminate on the next December 31.
2.18 "Stock" shall mean the Common Stock of the Company.
2.19 "Stock Unit" shall mean a unit allocated to a Stock Account or
Option Proceeds Account having the equivalent value of a share of
Stock.
2.20 "Stock Plan" shall mean the Company's Amended and Restated 1999
Stock Incentive Plan and similar prior or subsequent plans of the
Company providing for granting of stock options and other
equity-based incentives to Non-Employee Directors.
SECTION 3. PARTICIPATION.
3.1 Any eligible Non-Employee Director of the Company receiving
Compensation for services performed as a Non-Employee Director
may elect to have all
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or part of such Compensation otherwise payable to him or her
deferred and paid at the time and in the manner prescribed herein.
Any eligible Non-Employee Director of the Company who has been
granted a Non-Qualified Option may elect to have all or part of
the Option Proceeds otherwise payable to him or her deferred and
paid at the time and in the manner prescribed herein. Such
deferral shall be made on such form as shall be determined by the
Compensation Committee from time to time.
3.2 An eligible Non-Employee Director may elect to participate in the
Plan with respect to Compensation to be earned as a Non-Employee
Director by making an election no later than December 31, of the
Plan year immediately preceding the Plan year in respect of which
such Compensation is payable; provided, however, the Compensation
Committee may allow a Non-Employee Director whose term begins
during any Plan Year to elect to defer Compensation commencing
with the beginning of any calendar quarter of such Plan Year.
3.3 Any election to defer Compensation communicated to the Company as
provided in Section 3.2 shall continue in force with respect to
all succeeding terms of the Non-Employee Director's service unless
the Non-Employee Director advises the Company in writing at least
seven days prior to the commencement of any new fiscal quarter
that he or she has elected to terminate such deferral effective
with respect to all Compensation earned after the commencement of
such next fiscal quarter, except that with respect to any
Compensation payable in Stock, such notice shall be made at least
seven days prior to the commencement of the Company's fiscal year
to terminate such deferral effective with respect to Compensation
payable in Stock earned after the commencement of such next fiscal
year. The amount accumulated pursuant to the Plan prior to notice
of the election to terminate deferral will continue to be subject
to the provisions of the Plan.
SECTION 4. METHOD OF DEFERRAL OF COMPENSATION.
4.1 The Company shall establish a separate deferred compensation
account (a "Deferred Compensation Account") on its books in the
name of each Participant. The Deferred Compensation Account shall
consist of two parts: (1) an amount equal to cash Compensation
(the "Cash Account") deferred by the Non-Employee Director under
the Plan, together with interest credited thereto pursuant to
Section 4.3 hereof; and (2) a number of Stock Units equal to the
number of shares of Stock hypothetically purchased with deferred
cash Com-
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pensation and/or the number of shares of deferred Stock
Compensation (the "Stock Account"), together with dividend
equivalents deemed to have been paid on each Stock Unit allocated
to the Non-Employee Director's Stock Account. The number of Stock
Units hypothetically purchased with deferred cash Compensation and
dividend equivalents shall be equal to the amount of such cash
Compensation or dividend equivalents divided by the average of the
high and low selling price of a share of Stock as reported by the
New York Stock Exchange - Composite Transactions Reporting System
on the date of payment of such cash Compensation or dividend
payment date, or if the Stock is not traded on such date, on the
immediately prior trading date or if the Common Stock is neither
listed on a national securities exchange or quotation system not
quoted by NASDAQ, the fair market value as determined by such
other method as the Compensation Committee determines otherwise.
4.2 There shall be allocated to each participating Non-Employee
Director's Deferred Compensation Account all Compensation at such
times and in such amounts as such Compensation would have been
available to such Non-Employee Director had he or she not elected
to defer the receipt of such Compensation pursuant to Section 3.
4.3 Interest shall be credited on the balance credited to the
Non-Employee Director's Cash Account. Such interest shall be
computed quarterly at a rate equal to one-fourth of the one-year
Treasury Bill rate plus one percentage point, on the last business
day of each quarter, and shall be paid on the average balance of
the Cash Account, determined by dividing the sum of the opening
and closing balances of the Account by two. If installment
payments are being made from the cash portion of the Non-Employee
Director's Account as provided in Section 6 hereunder, such
interest accruing during the payout period shall be paid quarterly
in cash to the Non-Employee Director or Beneficiary, as the case
may be.
4.4 Dividend equivalents shall be deemed to have been paid on deferred
cash Compensation allocated to the Non-Employee Director's Stock
Account as if there were actual shares of Stock issued and
outstanding on the record date for payment of dividends. Dividend
equivalents so allocated will in turn be converted into deferred
Stock Units and credited to the Non-Employee Director's Stock
Account on each dividend payment date. If installment payments are
being made from the Non-Employee Director's Stock Account as
provided in Section 6 hereunder, such dividend equivalents
accruing during
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the payout period shall be paid on each Payment Date (as defined
in Section 6.1) to the Non-Employee Director or Beneficiary, as
the case may be.
SECTION 5. METHOD OF DEFERRAL OF STOCK OPTION PROCEEDS.
5.1 Any eligible Non-Employee Director who has been granted a
Non-Qualified Option may make an irrevocable election to defer the
receipt of any proceeds from the exercise of such Option ("Option
Proceeds") into an Option Proceeds Account. The Company shall
establish an Option Proceeds Account on its books in the name of
each such Participant.
5.2 An election to defer Option Proceeds communicated to the Company
as provided in Section 5.1 shall be made no later than six months
prior to the date on which such option is first to be exercised.
An election to defer Option Proceeds may be made with respect to
all or a portion of the shares covered by a single Non-Qualified
Option. Such an election may be made once with respect to any such
Non-Qualified Option. Option Proceeds deferred under the Plan
shall be allocated to the Participant's Option Proceeds Account in
a number of Stock Units equal to the number of shares of Stock
that otherwise would have been delivered to such Participant, net
of any taxes required to be withheld by the Company at the time of
exercise of the Non-Qualified Option.
5.3 To qualify for the deferral of Option Proceeds, the Participant
must pay the full exercise price with respect to a Non-Qualified
Option either (i) by delivery of shares of Common Stock already
owned by such Participant for at least six months (which may
include shares received as a result of prior exercise of an
option) having a Fair Market Value (determined as of the date such
Option is exercised) equal to all or part of the aggregate
exercise price of such Option or (ii) if provided for in the
agreement evidencing such Option, by authorizing the Company to
withhold from those shares that would otherwise be obtained upon
exercise of such Option a number of shares having a Fair Market
Value equal to the aggregate exercise price of such Option.
5.4 Dividend equivalents shall be deemed to have been paid on deferred
Stock Units allocated to the Non-Employee Director's Option
Proceeds Account as if there were actual shares of Stock issued
and outstanding on the record date for payment of dividends.
Dividend equivalents so allocated will in turn be converted into
deferred Stock Units and credited to the Non-Employee Director's
Option Proceeds Account on each dividend payment date. If
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installment payments are being made from the Non-Employee
Director's Option Proceeds Account as provided in Section 6
hereunder, such dividend equivalents accruing during the payout
period shall be paid on each Payment Date (as defined in Section
6.1) to the Non-Employee Director or Beneficiary, as the case may
be.
SECTION 6. PAYMENT OF DEFERRED COMPENSATION.
6.1 The Company shall pay or commence payment to the Non-Employee
Director of the balance credited to such Non-Employee Director's
Account upon the Non-Employee Director's retirement from his or
her primary occupation or employment, or upon attaining the age of
65, or upon termination of the Non-Employee Director's
appointment as a director of the Company for any reason other than
death, whichever occurs later, or at such other time as the Non-
Employee Director shall specifically and irrevocably designate
when he or she signs the letter agreement in the form attached as
Exhibit A (hereinafter called the "Distribution Event").
Distributions from Accounts may be made in cash or in whole shares
of Stock; provided, however, that the portion of the Account
attributable to the deferral of Stock awards or Option Proceeds
may be paid only in shares of Stock, as set forth below. If no
specific election as to time and manner of payment is designated,
payment shall be as follows: (i) payments will be made in equal
installments as of the last business day of each quarter of the
fiscal year of the Company ("Payment Date") over a five- year
period following the occurrence of the applicable Distribution
Event; (ii) the first installment payment shall be paid as of the
Payment Date coincident with or next succeeding the Distribution
Event and the succeeding installment payments shall be paid as of
the succeeding Payment Dates; (iii) each installment payment
shall be equal to one-twentieth (or an appropriate fraction if a
payout period other than five years is selected) of the value of
the Non-Employee Director's Account on the first Payment Date;
(iv) each installment payment of the cash portion of the
Non-Employee Director's Account shall be paid in cash; and (v)
each installment payment of the Stock portion of the Non-Employee
Director's Account shall be paid in whole shares of Stock and any
fractional interests shall be accrued until the last Payment Date
and paid out in whole shares of Stock, with any remaining
fractional interest paid in cash. The value of the Stock portion
of the Non-Employee Director's Account shall be equal to the
number of hypothetical shares held in such Account multiplied by
the average of the high and low selling price of the Stock as
reported by the New York Stock Exchange - Composite Transaction
Report-
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ing System on the date of the applicable Distribution Event or the
applicable Payment Date, or if the Stock was not traded on such
date, on the immediately prior trading date, or if the Common
Stock is neither listed on a national securities exchange or
quotation systems not quoted by NASDAQ, the fair market value as
determined by such other methods as the Compensation Committee
determines otherwise.
6.2 Upon termination by reason of death, or upon the death of a
Non-Employee Director either before or while receiving
distributions under Section 6.1 hereof, all installments, or
remaining installments, as the case may be, shall be paid in a
lump sum to such Beneficiaries and in such proportions among them
as the Non-Employee Director shall have designated in the latest
written agreement filed with the Company; provided, however, that
the Non-Employee Director may specify that such undistributed
amount shall be paid to any one Beneficiary in equal quarterly
installments commencing with the next succeeding Payment Date
after the Non-Employee Director's death. The aggregate number of
such installments paid to any Beneficiary hereunder shall not
exceed the number of installments which could have been paid to
the Non-Employee Director as provided under Section 6.1 had he or
she survived. If there shall be no Beneficiary designated or in
existence at the time of the Non-Employee Director's death, any
undistributed amount shall be paid to the executor or
administrator of the Non-Employee Director's estate. If payments
are being made in installments to an individual Beneficiary, then
upon such Beneficiary's death any amount then undistributed shall
be paid in a lump sum to the executor or administrator of his or
her estate.
6.3 Notwithstanding any other provisions of this Plan to the contrary,
the Compensation Committee in its sole and absolute discretion
may at any time authorize payment of part or all of the
Non-Employee Director's Account to such Non-Employee Director or
his or her Beneficiary prior to the time such deferred
compensation would otherwise be payable pursuant to the provisions
of the Plan, in such manner as shall be determined by the
Compensation Committee, in any case where the Compensation
Committee determines that the Non-Employee Director or Beneficiary
has proved a demonstrated financial hardship. The determination
of the Compensation Committee shall be final, conclusive and
binding upon all persons affected thereby.
SECTION 7. CHANGE IN CONTROL.
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7.1 In the event that the Compensation Committee shall have determined
that a Change in Control is imminent, the Compensation Committee
shall direct the Company to establish a trust and to contribute to
such trust (a) money or other property in an amount sufficient to
fund the present value of the benefits allocated to the Cash
Accounts of the Plan's participants and (b) a number of shares of
Stock equal to the number of phantom shares allocated to the Stock
Accounts and Option Proceeds Accounts of the Plan's participants.
The trust shall be treated as a grantor trust, of which the
Company is the grantor, within the meaning of subpart E, part I,
subchapter J, chapter 1, subtitle A of the Code, and shall be
based on the guidelines established by the Internal Revenue
Service in Revenue Procedure 92-64 (or any successor guidelines).
7.2 In the event of a Change in Control involving the sale, exchange,
or other disposition of shares of Stock, each Stock Unit allocated
to a Participant's Stock Account and/or Option Proceeds Account,
together with dividend equivalents accrued thereon, shall be
converted, where applicable, into the per share consideration
received by the Company's stockholders in the transaction
constituting a Change in Control as though such Stock Units were
actual shares of Stock.
SECTION 8. ADMINISTRATION.
8.1 The Plan shall be administered by the Compensation Committee. The
Compensation Committee may delegate such duties as it determines
to members of management.
8.2 All determinations made by the Compensation Committee with respect
to the Plan shall be conclusive and binding on the Company and its
successors, the Participants and their Beneficiaries.
SECTION 9. GENERAL PROVISIONS.
9.1 The number of Stock Units allocated to Stock Accounts or Option
Proceeds Accounts shall be adjusted by the Compensation Committee,
as it deems appropriate, to reflect any reclassification,
recapitalization, stock split, dividend or other distribution
(whether in the form of cash, stock or other property),
combination, merger, consolidation, spin-off, share exchange,
repurchase or other similar corporate transaction or event that,
in the discretion of the Compensation Committee, affects the Stock
such that an adjustment is
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appropriate in order to prevent diminution or enlargement of the
rights of Participants under the Plan.
9.2 The right of any Non-Employee Director to receive future payments
of cash or Stock under the provisions of the Plan shall be an
unsecured claim against the general assets of the Company.
9.3 A Participant may change his or her Beneficiary at any time by
notifying the Compensation Committee in such form as the
Compensation Committee shall from time to time designate.
9.4 No Non-Employee Director or Beneficiary shall have any power to
commute, encumber, sell, or otherwise dispose of the rights
provided herein, and such rights shall be non-assignable and
non-transferable.
SECTION 10. TERMINATION OF THE PLAN; AMENDMENT OF THE PLAN.
10.1 The Plan shall continue in effect until terminated by resolution
of the Board.
10.2 The Plan may be amended from time to time by resolution of the
Compensation Committee; provided, however, that the Plan may not
be adversely amended with respect to outstanding deferrals of
Compensation or Option Proceeds for at least two years following
the occurrence of a Change in Control
SECTION 11. EFFECTIVE DATE OF THE PLAN.
The Plan shall be effective with respect to any Compensation payable to a
Non-Employee Director for services or with respect to Option Proceeds relating
to the exercise of Non-Qualified Options that are exercised after the date upon
which the Plan was adopted.
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EXHIBIT A
Lending Tree, Inc.
[Address]
Attention: Secretary
Gentlemen:
Pursuant to the provisions of Section 3 of the Lending Tree, Inc.
Deferred Compensation Plan for Non-Employee Directors (hereinafter called the
"Plan"), I hereby irrevocably elect to have the Compensation checked below
deferred in the manner provided in the Plan: (Designate percentage to be
deferred.)
Cash Stock
---- -----
- - Annual Board cash retainer ____% _____%
- - Fees for attendance at Board
meetings ____% _____%
- - Fees for attendance at Board
Committee meetings ____% _____%
- - Exercise of Non-Qualified Stock Option _____%
This direction shall be effective with respect to all terms of office to which I
may be elected subsequent to the date hereof until I advise the Company to
terminate said deferment as provided in Section 3 of the Plan.
I specifically and irrevocably designate that if no specific
designation is made below, the amounts due me under the Plan as Deferred
Compensation shall be distributed to me as specified in Section 6 of the Plan:
Time of Distribution Event
Period of Payment:
[ ] In a lump sum
[ ] In equal quarterly installment over ____ years
[ ] Other: __________
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Form of Payment of that portion of my Account representing cash
Compensation invested in Stock (that portion of the Account representing Stock
awards may be paid only in Stock):
[ ] In Stock
[ ] In Cash
In the event that I should die while a Director of the Company or prior
to receipt of all distributions to which I am entitled under the Plan, I hereby
direct that, pursuant to Section 6 thereof, all amounts distributable to me
under the Plan or the undistributed balance thereof, as the case may be, be
distributed as follows:
[ ] In a lump sum to ______________________________
(Insert Name of Beneficiary)
______________________________
______________________________
(If more than one Beneficiary is named, indicate
percentages to be paid to each Beneficiary)
[ ] In installments as provided in the Plan to
______________________________
(Name one Beneficiary only)
______________________________
(Signature)
Date:
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