Exhibit 10.4
LENDINGTREE, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The LendingTree, Inc. Employee Stock Purchase Plan
(the "Plan") is being established for the benefit of employees of
LendingTree, Inc., a Delaware corporation (the "Company"), and its
Designated Subsidiaries. The Plan is intended to provide the employees of
the Employer with an opportunity to purchase common shares, without par
value, of the Company (the "Shares"). It is the intention of the Company
that the Plan qualify as an "employee stock purchase plan" within the
meaning of Section 423 of the Code, and the provisions of the Plan shall be
construed in a manner consistent with the requirements of such Section of
the Code.
2. Definitions.
a. "Board" shall mean the Board of Directors of the Company.
b. "Change in Capitalization" shall mean any increase,
reduction, or change or exchange of Shares for a different number or kind
of shares or other securities of the Company by reason of a
reclassification, recapitalization, merger, consolidation, reorganization,
share dividend, share split or reverse share split, combination or exchange
of shares, repurchase of Shares, change in corporate structure or
otherwise.
c. "Change in Control" of the Company shall be deemed to
occur upon the first to occur of the following: (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 stock, or securities of another issuer; or (iv) 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.
d. "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
e. "Committee" shall mean the Compensation Committee or
any other committee of members of the Board appointed by the Board to
administer the Plan and to perform the functions set forth herein.
f. "Company" shall mean LendingTree, Inc., a corporation
organized under the laws of the State of Delaware, or any successor
corporation.
g. "Compensation" shall mean the fixed salary, wages,
commissions, overtime pay and bonuses paid by an Employer to an Employee as
reported by the Employer to the United States government for Federal income
tax purposes, including an Employee's portion of compensation deferral
contributions pursuant to Section 401(k) of the Code, any amount excludable
pursuant to Section 125 of the Code and/or any non-qualified compensation
deferral, but excluding any foreign service allowance, commissions,
severance pay, expense reimbursement or any credit or benefit under any
employee plan maintained by the Employer.
h. "Continuous Status as an Employee" shall mean the
absence of any interruption or termination of service as an Employee.
Continuous Status as an Employee shall not be considered interrupted in the
case of a leave of absence agreed to in writing by the Employee's Employer,
if such leave is for a continuous period of not more than one year or
re-employment upon the expiration of such leave is guaranteed by contract
or statute.
i. "Designated Subsidiaries" shall mean the subsidiaries
of the Company which have been designated by the Board from time to time in
its sole discretion as eligible to participate in the Plan, which may
include corporations which become subsidiaries of the Company after the
adoption of the Plan.
j. "Employee" shall mean any person, including an
officer, who as of an Offering Date has been regularly employed on a
full-time basis by the Company, a wholly owned Subsidiary of the Company or
a Designated Subsidiary of the Company for at least six months; provided,
however, that any individual who is employed on a full-time basis as of the
first Offering Date under the Plan shall be entitled to participate in the
first Offering Period under the Plan.
k. "Employer" shall mean, as to any particular Employee,
the corporation which employs such Employee, whether it is the Company, a
wholly owned Subsidiary of the Company or a Designated Subsidiary of the
Company.
l. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
m. "Exercise Date" shall mean the last business day of each
Purchase Period, except as the Committee may otherwise provide.
n. "Fair Market Value" per Share as of a particular date
shall mean (i) the closing sales price per Share on such date, as reported
by the Composite Transactions reporting system or if not so reported, as
reported by the New York Stock Exchange or (ii) in the event the Shares are
not traded on such date, the closing price per Share, as so reported in the
immediately preceding date on which trading occurred, or if not so
reported, as reported by any national securities exchange on which the
Shares are listed; provided, however, for purposes of the first offering
Period, the "Fair Market Value" of a Share 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 of Shares.
o. "Offering Date" shall mean the first Trading Day of
each Offering Period of the Plan, except with respect to the Offering Date
coinciding with the Company's initial public offering, in which case
"Offering Date" shall mean the date the Company's registration statement
filed in connection with the initial public offering is declared effective
by the Securities and Exchange Commission. The Offering Date of an Offering
Period is the grant date for the options offered in such Offering Period.
p. "Offering Period" shall mean a period as described in
Section 4 hereof.
q. "Parent" shall mean any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if,
at the time of granting an option, each of the corporations other than the
Company owns shares possessing 50% or more of the total combined voting
power of all classes of shares in one of the other corporations in such
chain.
r. "Participant" shall mean an Employee who participates in
the Plan.
s. "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.
t. "Plan" shall mean the LendingTree, Inc. Employee Stock
Purchase Plan, as amended from time to time.
u. "Plan Year" shall mean the calendar year, except that
the first Plan Year shall begin the date the Company's registration
statement filed in connection with the initial public offering is declared
effective by the Securities and Exchange Commission and shall end on the
next December 31.
v. "Purchase Period" shall mean each approximately six-
month period, within an Offering Period, commencing on the Trading Day next
following the last previous Exercise Date in such Offering Period and
ending with the next Exercise Date in such Offering Period, except that the
first Purchase Period of any Offering Period shall commence on the first
Trading Day of such Offering Period and end with the next Exercise Date.
w. "Shares" shall mean shares of the common stock, par value
$.01 per share, of the Company.
x. "Subsidiary" shall mean any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if, at
the time of granting an option, each of the corporations other than the
last corporation in the unbroken chain owns shares possessing fifty percent
(50%) or more of the total combined voting power of all classes of shares
in one of the other corporations in such chain.
y. "Trading Day" shall mean a day on which national stock
exchanges and the NASDAQ system are open for trading.
z. "Year of Service" shall mean each successive period of
twelve consecutive months (from an Employee's original employment date)
during which the Employee's hours of employment are 1,000 hours or more.
3. Eligibility.
a. Subject to the requirements of Section 4.b. hereof, any
person who is an Employee as of an Offering Date shall be eligible to
participate in the Plan and be granted an option for the Offering Period
commencing on such Offering Date.
b. Notwithstanding any provisions of the Plan to the
contrary, no Employee shall be granted an option under the Plan (i) if,
immediately after the grant, such Employee (or any other person whose
shares would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own shares and/or hold outstanding options to purchase
shares possessing five percent (5%) or more of the total combined voting
power or value of all classes of shares of the Company or of any Subsidiary
or Parent of the Company, or (ii) which permits such Employee's right to
purchase shares under all employee stock purchase plans (as described in
Section 423 of the Code) of the Company and any Subsidiary or Parent of the
Company to accrue at a rate which exceeds twenty-five thousand dollars
($25,000) of Fair Market Value of such shares (determined at the time such
option is granted) for any calendar year in which such option would be
outstanding at any time. Any amounts received from an Employee which cannot
be used to purchase Shares as a result of this limitation will be returned
as soon as possible to the Employee without interest.
4. Offering Periods. The Plan shall be implemented by a series
of consecutive, overlapping Offering Periods. The first such Offering
Period shall commence on the first Trading Day on or after the date on
which the Securities and Exchange commission declares the Company's
registration statement on form S-1 to be effective and ending on the last
Trading Day on or before December 31, 2001. Unless otherwise determined by
the Committee, each subsequent Offering Period shall have a duration of two
years, commencing on the first Trading Day on or after January 1 and June 1
of each year. The Plan shall continue until terminated in accordance with
Section 19 hereof. Subject to Section 19 hereof, the Committee shall have
the power to change the duration and/or the frequency of Offering Periods
and/or Purchase Periods with respect to future offerings and shall use its
best efforts to notify Employees of any such change at least 15days prior
to the scheduled beginning of the first Offering Period to be affected. In
no event shall any option granted hereunder be exercisable more than 27
months from its date of grant.
To the extent permitted by any applicable laws, regulations, or
stock exchange rules, if the Fair Market Value of the Shares on any
Exercise Date in an Offering Period is lower than the Fair Market Value of
the Shares on the Offering Date of such Offering Period, then all
Participants in such Offering Period shall be automatically withdrawn from
such Offering Period immediately after the exercise of their option on such
Exercise Date and automatically re-enrolled in the immediately following
Offering Period as of the first day thereof.
5. Grant of Option; Participation; Price.
a. On each Offering Date the Company shall commence an
offering by granting each eligible Employee an option to purchase Shares,
subject to the limitations set forth in Sections 3b and 11 hereof. Each
option so granted shall be exercisable for the number of Shares described
in Section 8 hereof and shall be exercisable only on the Exercise Date.
b. Each eligible Employee may elect to become a
Participant in the Plan with respect to an Offering Period, by filing a
subscription agreement with his or her Employer authorizing payroll
deductions in accordance with Section 6 hereof and filing it with the
Company or the Employer in accordance with the form's instructions at least
ten business days prior to the applicable Offering Date, unless a later
time for filing the subscription agreement is set by the Committee for all
Employees with respect to a given offering. Such authorization will remain
in effect for subsequent Offering Periods, until modified or terminated by
the Participant by giving written notice to his or her Employer prior to
the next occurring Exercise Date. Additionally, a Participant may
participate to a greater extent by authorizing reinvestment of dividends on
the Shares held in his or her account (by giving written notice to the
Company) or by making cash payments to be credited to his or her account
under the Plan in accordance with Section 6 hereof.
c. The option price per Share subject to an offering
shall be 85% of the Fair Market Value of a Share on (i) the Offering Date
or (ii) the Exercise Date, whichever is lower.
6. Payroll Deductions and Cash Payments.
a. Subject to Section 5b hereof, a Participant may, in
accordance with rules and procedures adopted by the Committee, authorize a
payroll deduction of any whole percentage from 1 percent to 20 percent of
such Participant's Compensation each pay period (the permissible range
within such percentages to be determined by the Committee from time to
time). A Participant may increase or decrease such payroll deduction
(including a cessation of payroll deductions) at any time but not more
frequently than once each Offering Period, by filing a new authorization
form with his or her Employer. All payroll deductions made by a Participant
shall be credited to such Participant's account under the Plan.
b. Notwithstanding the foregoing, to the extent necessary
to comply with Section 423(b)(8) of the Code and Section 3b hereof, a
Participant's payroll deductions may be decreased to 0% at any time during
a Purchase Period. Payroll deductions shall recommence at the rate provided
in such Participant's subscription agreement at the beginning of the first
Purchase Period which is scheduled to end in the following calendar year,
unless terminated by the Participant as provided in Section 9 hereof.
c. A Participant may withdraw from the Plan as provided
in Section 9, which will terminate his or her payroll deductions for the
Purchase Period in which such withdrawal occurs. A Participant may increase
or decrease the rate of his or her payroll deductions during an Offering
Period by completing and filing with the Employer a new subscription
agreement authorizing a change in payroll deduction rate. The Committee
may, in its discretion, limit the number of rate changes by a Participant
during an Offering Period. A change in rate shall be effective as of the
next payroll period following the date of filing of the new subscription
agreement.
7. Exercise of Option.
a. Unless a Participant withdraws from the Plan as
provided in Section 9 hereof, or unless the Committee otherwise provides,
such Participant's election to purchase Shares shall be exercised
automatically on the Exercise Date, and the maximum number of Shares
(including any fractional Share) subject to such option will be purchased
for such Participant at the applicable option price with (i)
the accumulated payroll deductions, (ii) cash dividends paid on Shares
which have been credited to the Participant's account under the Plan
pursuant to Section 10 hereof, and (iii) any additional cash payments made
by the Participant and credited to the Participant's account under the Plan
in accordance with Section 6 hereof.
b. Any cash balance remaining in a Participant's account
after the termination of an Offering Period will be carried forward to the
Participant's account for the purchase of Shares during the next Offering
Period if the Participant has elected to continue to participate in the
Plan. Otherwise the Participant will receive a cash payment equal to the
cash balance of his or her account.
c. The Shares purchased upon exercise of an option
hereunder shall be credited to the Participant's account under the Plan as
of the Exercise Date and shall be deemed to be transferred to the
Participant on such date (except that no Shares purchased during the first
Offering Period hereunder shall be credited to the Participant's account
until payment of the aggregate option price has been completed within the
Offering Period). Except as otherwise provided herein, the Participant
shall have all rights of a shareholder with respect to such Shares upon
their being credited to the Participant's account.
8. Delivery of Shares.
a. As promptly as practicable after receipt by the
Company of a written request for withdrawal of Shares from any Participant,
the Company shall arrange the delivery to such Participant of a share
certificate representing the Shares in the Participant's account which the
Participant requests to withdraw (any fractional Share being paid in cash).
Subject to Section 8b hereof, withdrawals may be made no more frequently
than once each Offering Period. Shares received upon share dividends or
share splits shall be treated as having been purchased on the Exercise Date
of the Shares to which they relate.
b. Notwithstanding anything in Section 8a hereof to the
contrary, Shares may be withdrawn by a Participant more than once during an
Offering Period under the following circumstances: (i) within 60 days
following a Change in Control of the Company or (ii) upon the approval of
the Committee, in its sole discretion.
9. Withdrawal; Termination of Employment.
a. A Participant may withdraw at any time all, but not
less than all, cash amounts in his or her account under the Plan that have
not been used to purchase Shares (including, without limitation, the
payroll deductions, cash dividends and cash payments credited to such
Participant's account) by giving written notice to the Company prior to the
next occurring Exercise Date. All such payroll deductions, cash dividends
and cash payments credited to such Participant's account shall be paid to
such Participant promptly after receipt of such Participant's notice of
withdrawal and such Participant's option for the Offering Period in which
the withdrawal occurs shall be automatically terminated. No further payroll
deductions for the purchase of Shares will be made for such Participant
during such Offering Period, and any additional cash dividends during the
Offering Period shall be distributed to the Participant.
b. Upon termination of a Participant's Continuous Status
as an Employee during the Offering Period for any reason, including
voluntary termination, retirement or death, the payroll deductions, cash
dividends and cash payments credited to such Participant's account that
have not been used to purchase Shares (and, as to the first Offering
Period, any such amounts credited to the account for partial payment for
Shares as to which payment has not been completed) shall be returned (and
any future cash dividends shall be distributed) to such Participant or, in
the case of such Participant's death, to the person or persons entitled
thereto under Section 13 hereof, and such Participant's option will be
automatically terminated.
c. A Participant's withdrawal from an offering will not
have any effect upon such Participant's eligibility to participate in a
succeeding offering or in any similar plan which may hereafter be adopted
by the Company.
10. Dividends and Interest.
a. Cash dividends paid on Shares held in a Participant's
account shall be credited to such Participant's account and used in
addition to payroll deductions (and cash contributions, if any) to purchase
Shares on the Exercise Date. Dividends paid in Shares or share splits of
the Shares shall be credited to the accounts of Participants. Dividends
paid in property other than cash or Shares shall be distributed to
Participants as soon as practicable.
b. No interest shall accrue on or be payable with respect
to the payroll deductions or credited cash dividends of a Participant in
the Plan.
11. Shares.
a. Subject to adjustment as provided in Section 17
hereof, the maximum number of Shares which shall be reserved for sale under
the Plan shall be 350,000 Shares, plus an annual increase to be added on
the first day of the Company's fiscal year beginning in 2001 equal to the
lesser of (i) 400,000 Shares or (ii) a lesser amount determined by the
Committee. Such Shares shall be either authorized and unissued Shares or
Shares which have been reacquired by the Company. If the total number of
Shares which would otherwise be subject to options granted pursuant to
Section 5a hereof on an Offering Date exceeds the number of Shares then
available under the Plan (after deduction of all Shares for which options
have been exercised or are then outstanding), the Committee shall make a
pro rata allocation of the Shares remaining available for option grant in
as uniform a manner as shall be practicable and as it shall determine to be
equitable. In such event, the Committee shall give written notice to each
Participant of such reduction of the number of option Shares affected
thereby and shall similarly reduce the rate of payroll deductions, if
necessary.
b. Shares to be delivered to a Participant under the Plan
will be registered in the name of the Participant or, at the election of
the Participant, in the name of the Participant and another person as joint
tenants with rights of survivorship.
12. Administration. The Plan shall be administered by the
Committee, and the Committee may select administrator(s) to whom its duties
and responsibilities hereunder may be delegated. The Committee shall have
full power and authority, subject to the provisions of the Plan, to
promulgate such rules and regulations as it deems necessary for the proper
administration of the Plan, to interpret the provisions and supervise the
administration of the Plan, and to take all action in connection therewith
or in relation thereto as it deems necessary or advisable. Any decision
reduced to writing and signed by a majority of the members of the Committee
shall be fully effective as if it had been made at a meeting duly held.
Except as otherwise provided by the Committee, each Employer shall be
charged with all expenses incurred in the administration of the Plan with
respect to such Employer's Employees. No member of the Committee shall be
personally liable for any action, determination, or interpretation made in
good faith with respect to the Plan, and all members of the Committee shall
be fully indemnified by the Company with respect to any such action,
determination or interpretation. All decisions, determinations and
interpretations of the Committee shall be final and binding on all persons,
including the Company, the Participant (or any person claiming any rights
under the Plan from or through any Participant) and any shareholder.
13. Designation of Beneficiary.
a. A Participant may file with the Company, on forms
supplied by the Company, a written designation of a beneficiary who is to
receive any Shares and cash remaining in such Participant's account under
the Plan in the event of the Participant's death.
b. Such designation of beneficiary may be changed by the
Participant at any time by written notice to the Company, on forms supplied
by the Company. In the event of the death of a Participant and in the
absence of a beneficiary validly designated under the Plan who is living at
the time of such Participant's death, the Company shall deliver such Shares
and/or cash to the executor or administrator of the estate of the
Participant or, if no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its discretion, may deliver
such Shares and/or cash to the spouse or to any one or more dependents or
relatives of the Participant in accordance with the applicable laws of
descent and distribution, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may designate.
14. Transferability. Neither payroll deductions, dividends,
dividend reinvestments or cash payments credited to a Participant's account
nor any rights with regard to the exercise of an option or to receive
Shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way by the Participant (other than by will, the laws of
descent and distribution or as provided in Section 13 hereof). Any such
attempt at assignment, transfer, pledge or other disposition shall be
without effect, except that the Company may treat such act as an election
to withdraw funds in accordance with Section 9 hereof.
15. Use of Funds. All payroll deductions, dividends, reinvested
dividends and additional cash payments received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such funds.
16. Reports. Individual accounts will be maintained for each
Participant in the Plan. Statements of account will be given to
Participants as soon as practicable following each Offering Period, which
statements will set forth the amounts of payroll deductions, dividends,
dividend reinvestments and additional cash payments, the per Share purchase
price, the number of Shares purchased, the aggregate Shares in the
Participant's account and the remaining cash balance, if any.
17. Effect of Certain Changes. In the event of a Change in
Capitalization or the distribution of an extraordinary dividend, the
Committee shall conclusively determine the appropriate equitable
adjustments, if any, to be made under the Plan, including without
limitation adjustments to the number of Shares which have been authorized
for issuance under the Plan but have not yet been placed under option, as
well as the price per Share covered by each option under the Plan which has
not yet been exercised. In the event of a Change in Control of the Company,
the Offering Period shall terminate unless otherwise provided by the
Committee.
18. Term of Plan. Subject to the Board's right to discontinue
the Plan (and thereby end its Term) pursuant to Section 19 hereof, the Term
of the Plan (and its last Offering Period) shall end on the tenth
anniversary of the commencement of the first Offering Period. Upon any
discontinuance of the Plan, unless the Committee shall determine otherwise,
any assets remaining in the Participants' accounts under the Plan shall be
delivered to the respective Participant (or the Participant's legal
representative) as soon as practicable.
19. Amendment to and Discontinuance of Plan. The Board may at
any time amend, suspend or discontinue the Plan. Except as provided in
Section 17 hereof, no such suspension or discontinuance may adversely
affect options previously granted and no amendment may make any change in
any option theretofore granted which adversely affects the rights of any
Participant which accrued prior to the date of effectiveness of such
amendment without the consent of such Participant. No amendment shall be
effective unless it receives the requisite approval of the shareholders of
the Company if such shareholder approval of such amendment is required to
comply with Rule 16b-3 under the Exchange Act or Section 423 of the Code or
to comply with any other applicable law, regulation or stock exchange rule.
20. Notices. All notices or other communications by a
Participant to the Company under or in connection with the Plan shall be
deemed to have been duly given when received in the form specified by the
Company at the location, or by the person, designated by the Company for
the receipt thereof.
21. Regulations and Other Approvals; Governing Law.
a. This Plan and the rights of all persons claiming
hereunder shall be construed and determined in accordance with the laws of
the State of Delaware without giving effect to the choice of law principles
thereof, except to the extent that such law is preempted by federal law.
b. The obligation of the Company to sell or deliver
Shares with respect to options granted under the Plan shall be subject to
all applicable laws, rules and regulations, including all applicable
federal and state securities laws, and the obtaining of all such approvals
by governmental agencies as may be deemed necessary or appropriate by the
Committee.
c. To the extent applicable hereto, the Plan is intended
to comply with Rule 16b-3 under the Exchange Act, and the Committee shall
interpret and administer the provisions of the Plan in a manner consistent
therewith. Any provisions inconsistent with such Rule shall be inoperative
and shall not affect the validity of the Plan.
22. Withholding of Taxes. If the Participant makes a
disposition, within the meaning of Section 424(c) of the Code and
regulations promulgated thereunder, of any Share or Shares issued to such
Participant pursuant to such Participant's exercise of an option, and such
disposition occurs within the two-year period commencing on the day after
the Offering Date or within the one-year period commencing on the day after
the Exercise Date, such Participant shall, within ten (10) days of such
disposition, notify the Company thereof and thereafter immediately deliver
to the Company any amount of Federal, state or local income taxes and other
amounts which the Company informs the Participant the Company is required
to withhold.
23. Effective Date. The Plan shall be effective as of the date
of the completion of the initial public offering of the Shares, subject to
the approval of the Plan by the shareholders of the Company within 12
months before or after the date the Plan is adopted.