UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549
	SCHEDULE 13D

 

Under the Securities Exchange Act of 1934

(Name of Issuer)

 

(Title of Class of Securities)

 

(CUSIP Number)

 

(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications)

 

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. o

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

 

 

 

 

(1) The aggregate number includes 21,772,176 stock options, all of which are presently exercisable.  These stock options may be settled (i) at the election of Match Group, Inc., a Delaware corporation (“Match” or the “Issuer”), in shares of common stock, par value $0.001 per share (the “Common Stock”), of Match or (until such time as IAC/InterActiveCorp, a Delaware corporation (“IAC”), ceases to own shares representing a majority of the combined voting power of the outstanding Common Stock, Class B Common Stock, par value $0.001 per share, of Match (the “Class B Common Stock”), and Class C Common Stock, par value $0.001 per share, of Match) shares of common stock, par value $0.001 per share, of IAC, if Sean Rad (the “Reporting Person”) elects to “net settle” such options by having shares withheld to cover the exercise price and any applicable withholding taxes, or (ii) in shares of Common Stock, if the Reporting Person elects to pay the exercise price and any applicable withholding taxes in cash.  These stock options resulted from the Merger (as defined and described below) effected by Match, and the reported number of options was provided to the Reporting Person by Match in the Statement of Holdings attached hereto as Exhibit 10.3 (the “Statement of Holdings”).

 

(2) Based on 48,433,964 shares of Common Stock outstanding as of May 1, 2017.

 

2

 

Introductory Note

 

The Reporting Person is the Founder of Tinder, Inc., a Delaware corporation (“Tinder”), which on July 13, 2017 was merged with and into Match (the “Merger”). The Reporting Person may be deemed to beneficially own, as of July 24, 2017, 1,000 shares of Match’s Common Stock, and stock options for the purchase of 21,772,176 shares of Common Stock that are presently exercisable.  In aggregate, the Reporting Person may be deemed to beneficially own 21,773,176 shares of Common Stock, representing approximately 31.0% of Match’s outstanding Common Stock based on 48,433,964 shares of Common Stock outstanding as of May 1, 2017.

 

In accordance with U.S. Securities and Exchange Commission (the “SEC”) Rule 13d-3, the ownership percentages for the Reporting Person set forth above do not take into account 209,919,402 shares of Match’s Class B Common Stock outstanding, all of which are owned by Match’s controlling stockholder, IAC. Each share of Class B Common Stock is convertible into Common Stock on a one-for-one basis. Class B Common Stock is not publicly traded. Except where applicable law requires a separate class vote, the Common Stock and the Class B Common Stock vote together as a single class on all matters presented to stockholders for vote or approval, including the election of directors, with each share of Class B Common Stock having ten votes per share and each share of Common Stock having one vote per share. The 21,773,176 shares of Common Stock that may be deemed to be beneficially owned by the Reporting Person as of July 24, 2017 represent approximately 1.0% of the combined total voting power of Match’s Common Stock and Class B Common Stock as of such date. Assuming the conversion of all outstanding shares of Class B Common Stock into Common Stock, as of July 24, 2017, the Reporting Person may be deemed to beneficially own approximately 7.8% of Match’s outstanding capital stock. All beneficial ownership percentages in this paragraph are based on 48,433,964 shares of Common Stock and 209,919,402 shares of Class B Common Stock outstanding, in each case, as of May 1, 2017.

 

A filing pursuant to Section 16 of the Securities Exchange Act of 1934, as amended (the “Act”), is being made on behalf of the Reporting Person.

 

Item 1. Security and Issuer

 

This Report on Schedule 13D relates to the Common Stock of Match.  Match’s principal executive offices are located at 8750 North Central Expressway, Suite 1400, Dallas, Texas 75231.

 

Item 2. Identity and Background

 

(a) Name: Sean Rad.

 

(b) Business Address: The Reporting Person’s business address is c/o Match Group, Inc., 8750 North Central Expressway, Suite 1400, Dallas, Texas 75231.

 

(c) Principal Occupation or Employment: The Reporting Person is the Founder of Tinder and holds the title Founder and Chairman. Match’s principal executive offices are located at 8750 North Central Expressway, Suite 1400, Dallas, Texas 75231.

 

(d) Criminal Proceedings: During the last five years the Reporting Person has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

 

(e) Civil Proceedings: During the last five years, the Reporting Person was not a party to any civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

 

(f) Citizenship: The Reporting Person is a citizen of the United States of America.

 

Item 3. Source and Amount of Funds or Other Consideration

 

The Common Stock which the Reporting Person may be deemed to beneficially own is comprised entirely of stock options for the purchase of 21,772,176 shares of Common Stock, all of which are presently exercisable, and 1,000 shares of Match’s Common Stock.

 

3

 

The Reporting Person founded Tinder in 2012 and served as its President and Chief Executive Officer at various times until December 2016.  The Reporting Person currently holds the title of Founder and Chairman.  All of the stock options identified in this Statement were originally granted by Tinder under the Tinder, Inc. Restated 2014 Equity Incentive Plan (as amended from time to time, the “Tinder Plan”) in connection with the Reporting Person’s service with Tinder, and as a result, no additional consideration was paid by the Reporting Person in connection with the receipt of such stock options.

 

On July 13, 2017, Match effected the Merger with Tinder whereby Tinder was merged with and into Match.  By virtue of the Merger, equity interests in Tinder not owned by Match were converted into equity interests in Match, and in connection with the Merger, Match assumed the stock options originally granted to the Reporting Person by Tinder.  The reported number of stock options identified in this Statement was provided by Match in a Statement of Holdings, attached to this Statement as Exhibit 10.3.  All of these stock options are governed by the Tinder Plan, which following the Merger operates as a subsidiary plan of the Match Group, Inc. 2017 Stock and Annual Incentive Plan (the “Match Plan”), and the Statement of Holdings. In addition, the Reporting Person is party to a Tinder, Inc. Restated 2014 Equity Incentive Plan Restated Stock Option Agreement, as amended (the “Tinder Option Agreement”), with Tinder and IAC.  The stock options may be settled in shares of Common Stock of Match, or, under certain circumstances involving a net settlement of the stock options, in shares of common stock, par value $0.001 per share, of IAC.

 

The Reporting Person acquired 1,000 outstanding shares of Common Stock in the open market, using personal funds.

 

Item 4.  Purpose of Transaction

 

Prior to the Merger, the stock options identified in this Statement were governed by the Tinder Plan and the Tinder Option Agreement.  Also, following the Merger, the Reporting Person was informed by Match that such options are governed by the Statement of Holdings (which by its terms incorporates all material applicable terms from the Tinder Option Agreement) and, to the extent applicable, the Match Plan.  The stock options identified in this Statement were acquired by the Reporting Person in connection with his service with Tinder and had been in respect of common stock, par value $0.00001 per share, of Tinder (“Tinder Common Stock”) prior to Match’s decision to effect the Merger.  As described in Item 3 above, the Reporting Person acquired the outstanding shares of Common Stock identified in this Statement in the open market.

 

The Reporting Person believes that Match acquired Tinder for a price that is attractive for Match and its stockholders.  The Reporting Person believes that there remain significant value creation opportunities for Match in light of Tinder's rapid growth, market position, product road map, and the near- and long-term prospects for its business.  The Reporting Person intends to continue to consider ways to optimize Tinder’s potential value for Match and its stockholders.

 

The Reporting Person intends to seek liquidity for his equity interests in Match from time to time, including in the open market, privately solicited transactions and otherwise. The Reporting Person may acquire additional Common Stock through public or private purchases of Common Stock (or other securities of Match). The Reporting Person may, at any time and from time to time, exercise the stock options identified in this Statement and subsequently dispose of the underlying Common Stock or his other securities identified in this Statement, or otherwise acquire or dispose of Common Stock (or other securities of Match), in his discretion and in light of his general investment strategies and capital allocation decisions, market conditions, including the market trading price of the Common Stock, and other factors.  Except as described in this Statement, the Reporting Person has no plans or proposals which relate to or would result in the matters specified in clauses (a) through (j) of this Item 4.

 

Item 5. Interest in Securities of the Issuer

 

(a) The Reporting Person may be deemed to beneficially own 21,773,176 shares of Common Stock of Match, consisting of stock options for the purchase of 21,772,176 shares of Common Stock that are presently exercisable and 1,000 shares of Common Stock.  The Reporting Person may be deemed to beneficially own approximately 31.0% of Match’s outstanding Common Stock based on 48,433,964 shares of Common Stock outstanding as of May 1, 2017 and assuming that the shares of Common Stock underlying these stock options are deemed outstanding pursuant to SEC Rule 13d-3(d)(1)(i).

 

(b) The Reporting Person has the sole power to vote or direct the vote, and to dispose or direct the disposition, of 1,000 shares of Common Stock. Upon exercise of the stock options, the Reporting Person will have the sole power to vote or direct the vote, and to dispose or direct the disposition, of all of the 21,772,176 shares of Common Stock of Match underlying the stock options.

 

(c) The Reporting Person has not effected any transaction in the Common Stock of Match in the past sixty days.

 

(d) No person, other than the Reporting Person, is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale, of the Common Stock underlying the stock options identified in this Statement.

 

(e) Not applicable.

 

4

 

Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer

 

The Reporting Person, Tinder and IAC are parties to a Funding and Governance Agreement, dated as of July 28, 2014 (the “Funding and Governance Agreement”), the purpose of which was to provide the Reporting Person with certain protections as provided therein relating to affiliated transactions between Tinder, on the one hand, and IAC and/or its affiliates, on the other hand. These protections applied to, among other things, any merger of Tinder with IAC or any of its affiliates (including Match).

 

Under the terms of the Funding and Governance Agreement, the price paid in the Merger to holders of Tinder stock options (i.e., the number of shares of Common Stock of Match for which the Tinder stock options would be exercisable following the Merger) was to be determined based on the results of a process described in Section 10(d) of the Reporting Person’s Tinder Option Agreement and in Schedule A to the Settlement Plan attached as Exhibit C to the Tinder Option Agreement (the “Settlement Plan”).  This process was to determine the value of Tinder based on the price at which shares of Tinder Common Stock would trade if such shares were then trading on a major securities exchange in the United States, treating Tinder as widely traded with a significant public float (the “Tinder Public Company Trading Price”).1

 

While the Reporting Person believes that Match acquired Tinder for a price that is attractive for Match and its stockholders, he has been discussing with Match whether the price determination was appropriate under the Funding and Governance Agreement.

 

Except as set forth above or set forth in the exhibits, there are no contracts, arrangements, understandings or relationships between the Reporting Person and any other person with respect to any securities of Match.

 

The descriptions of the contracts and agreements set forth in this Statement do not purport to be complete and are qualified in their entirety by reference to the exhibits attached hereto and incorporated in this Statement by reference.

 

Item 7. Materials to be Filed as Exhibits

 

10.1		Match Group, Inc. 2017 Stock and Annual Incentive Plan (incorporated by reference to Appendix A to Match’s Definitive Proxy Statement on Schedule 14A, filed on April 28, 2017).
10.2		Tinder, Inc. Restated 2014 Equity Incentive Plan.
10.3		Statement of Holdings and Match Group, Inc. Option Award Terms and Conditions (Converted Award).
10.4		Tinder, Inc. Restated 2014 Equity Incentive Plan Restated Stock Option Agreement.
10.5		Amendment No. 1 to Tinder, Inc. Restated 2014 Equity Incentive Plan Restated Stock Option Agreement.
10.6		Amendment No. 2 to Tinder, Inc. Restated 2014 Equity Incentive Plan Restated Stock Option Agreement.
10.7		Funding and Governance Agreement.
10.8		Addendum to Funding and Governance Agreement.

 

(1)  As set forth in Item 2 of Schedule A to the Settlement Plan, the Tinder Public Company Trading Price (A) would not take into account (1) any potential control premium that may be paid in an acquisition transaction, (2) IAC’s control of Tinder, (3) the effect of any high or low vote stock, (4) any discount for lack of liquidity/marketability or (5) any Tinder 409A or similar fair market valuation analysis undertaken by or on behalf of Tinder, and (B) would assume that Tinder has ready access to capital at market rates and has appropriate infrastructure to operate as a public company (with the estimated reasonable cost of such infrastructure taken into account for purposes of such analysis).

 

5

 

SIGNATURE

 

After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information in this Statement is true, complete and correct

.

	/s/ Sean Rad
Dated: July 24, 2017	Sean Rad

 

6

Exhibit 10.2

 

TINDER, INC.

 

RESTATED 2014 EQUITY INCENTIVE PLAN

 

1.                                      Purposes of the Plan. The purposes of this Plan are:

 

·                                     to attract and retain the best available personnel for positions of substantial responsibility,

 

·                                     to provide additional incentive to Employees, Directors and Consultants, and

 

·                                     to promote the success of the Company’s business.

 

The Plan permits the grant of Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock and Restricted Stock Units.

 

2.                                      Definitions. As used herein, the following definitions will apply:

 

(a)                            “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.

 

(b)                            “Affiliate” means means with respect to any Person, any other Person directly or indirectly controlling, directly or indirectly controlled by or under direct or indirect common control with such Person.

 

(c)                             “Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.

 

(d)                            “Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, or Restricted Stock Units.

 

(e)                             “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.

 

(f)                              “Board” means the Board of Directors of the Company.

 

(g)                             “Cashless Exercise” means an exercise of vested Options by a Participant through forfeiture to the Company of a number of shares of Common Stock that would have otherwise been issued upon exercise of Options with a Fair Market Value on the date of exercise equal to the aggregate exercise price and withholding tax liability of the shares of Common Stock being exercised.

 

 

(h)                            “Change of Control” means, except as may otherwise be provided in an Award Agreement, the occurrence of any of the following events:

 

(i)                           The acquisition by any individual, entity or group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”), directly or indirectly, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of equity securities of the Company representing more than 50% of the total voting power of the then-outstanding equity securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i) the following acquisitions shall not constitute a Change of Control: (1) any acquisition by the Company; (2) any acquisition by IAC, Match.com or Barry Diller and their respective Affiliates; (3) any acquisition by an employee benefit plan (or related trust) sponsored by or maintained by the Company or any entity controlled by the Company; and (4) any acquisition by any Person pursuant to a transaction which complies with clauses (A) and (B) of subsection (ii); and provided further, that any change in the ownership of the stock of the Company as a result of a private financing of the Company that is approved by the Board will not be considered a Change in Control; or

 

(ii)                        Individuals who, as of the date of adoption of this Plan (the “Effective  Date”) constitute the Board (the “Incumbent Board”), cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date, whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

 

(iii)                     The consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the purchase of assets or stock of another entity (a “Business Combination”), in each case, unless immediately following such Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Match Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then outstanding combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportion as their ownership immediately prior to such Business Combination of the Outstanding Company Voting Securities, and (B) no Person (excluding IAC, Match.com and Barry Diller and their respective Affiliates, any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination) beneficially owns, directly or indirectly, more than a majority of the combined voting power of the then outstanding voting securities of such entity except to the extent that such ownership of the Company existed prior to the Business Combination; or

 

2

 

(iv)                    Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

 

Notwithstanding the foregoing, a transaction will not be deemed a Change of Control unless the transaction qualifies as a change in control event within the meaning of Code Section 409A, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time.

 

Further and for the avoidance of doubt, a transaction will not constitute a Change of Control if: (i) its sole purpose is to change the jurisdiction of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.

 

(i)                                “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code.

 

(j)                               “Commission” means the U.S. Securities and Exchange Commission.

 

(k)                            “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board, or by the compensation committee of the Board, in accordance with Section 4 hereof.

 

(1)                            “Common Stock” means the Common Stock of the Company, par value $0.00001 per share.

 

(m)                        “Company” means Tinder, Inc., a Delaware corporation, or any successor thereto.

 

(n)                            “Consultant” means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary to render bona fide services to such entity, provided the services (i) are not in connection with the offer or sale of securities in a capital-raising transaction, and (ii) do not directly promote or maintain a market for the Company’s securities.

 

(o)                            “Director” means a member of the Board.

 

(p)                            “Disability” means total and permanent disability as determined by the Administrator in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.

 

(q)                            “Employee” means any person, including officers and Directors, employed by the Company or any Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

 

(r)                               “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

3

 

(s)                              “Exchange Program” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for Awards of the same type (which may have higher or lower exercise prices and different terms), Awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is reduced or increased. The Administrator will determine the terms and conditions of any Exchange Program in its Sole discretion.

 

(t)                               “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

 

(i)                                If the Common Stock is listed on any established stock exchange or a national market system, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(ii)                             If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Common Stock on the day of determination (or, if no bids and asks were reported on that date, as applicable, on the last trading date such bids and asks were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

 

(iii)                          In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator.

 

(u)                            “Net Exercise” means an exercise of vested Options by a Participant through forfeiture to the Company of a number of shares of Common Stock that would have otherwise been issued upon exercise of Options with a Fair Market Value on the date of exercise equal to the aggregate exercise price of the shares of Common Stock being exercised.

 

(v)                            “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an incentive stock option within the meaning of Code Section 422 and the regulations promulgated thereunder.

 

(w)                          “Option” means a stock option granted pursuant to the Plan.

 

(x)                            “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Code Section 424(e).

 

(y)                            “Participant” means the holder of an outstanding Award.

 

(z)                             “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.

 

4

 

(aa)                     “Plan” means this Restated 2014 Equity Incentive Plan.

 

(bb)                     “Restricted Stock” means Shares issued pursuant to an Award of Restricted Stock under Section 8 of the Plan.

 

(cc)                       “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 9. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.

 

(dd)                     “Service Provider” means an Employee, Director or Consultant.

 

(ee)                       “Share” means a share of the Common Stock, as adjusted in accordance with Section 13 of the Plan.

 

(ff)                         “Stock Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 7 is designated as a Stock Appreciation Right.

 

(gg)                       “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Code Section 424(f).

 

3.                                      Stock Subject to the Plan.

 

(a)                            Stock Subject to the Plan. Subject to the provisions of Section 13 of the Plan, the maximum aggregate number of Shares that may be subject to Awards and sold under the Plan is 4,000,000 Shares. The Shares may be authorized but unissued, or reacquired Common Stock.

 

(b)                            Lapsed Awards. If an Award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an Exchange Program, or, with respect to Restricted Stock or Restricted Stock Units, is forfeited to or repurchased by the Company due to the failure to vest, the unpurchased Shares (or for Awards other than Options or Stock Appreciation Rights the forfeited or repurchased Shares) which were subject thereto will become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to Stock Appreciation Rights, only Shares actually issued pursuant to a Stock Appreciation Right will cease to be available under the Plan; all remaining Shares under Stock Appreciation Rights will remain available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued pursuant to Awards of Restricted Stock or Restricted Stock Units are repurchased by the Company or are forfeited to the Company due to the failure to vest, such Shares will become available for future grant under the Plan. Shares used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award will become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.

 

(c)                             Share Reserve. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan.

 

5

 

4.                                      Administration of the Plan.

 

(a)                            Procedure.

 

(i)                                Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.

 

(ii)                             Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which Committee will be constituted to satisfy Applicable Laws.

 

(b)                            Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:

 

(i)                                to determine the Fair Market Value;

 

(ii)                             to select the Service Providers to whom Awards may be granted hereunder;

 

(iii)                          to determine the number of Shares to be covered by each Award granted hereunder;

 

(iv)                         to approve forms of Award Agreements for use under the Plan;

 

(v)                            to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine;

 

(vi)                         to institute and determine the terms and conditions of an Exchange Program;

 

(vii)                      to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;

 

(viii)                   to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws or for qualifying for favorable tax treatment under applicable foreign laws;

 

(ix)                         to modify or amend each Award (subject to Section 18(c) of the Plan), including but not limited to the discretionary authority to extend the post-termination exercisability period of Awards and to extend the maximum term of an Option (subject to Section 6(c));

 

(x)                            to allow Participants to satisfy withholding tax obligations in a manner prescribed in Section 14;

 

6

 

(xi)                              to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;

 

(xii)                           to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that otherwise would be due to such Participant under an Award; and

 

(xiii)                        to make all other determinations deemed necessary or advisable for administering the Plan.

 

(c)                             Effect of Administrator’s Decision.         The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards.

 

5.                                      Eligibility. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, and Restricted Stock Units may be granted to Service Providers.

 

6.                                      Stock Options.

 

(a)                            Grant of Options. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Options in such amounts as the Administrator, in its sole discretion, will determine.

 

(b)                            Option Agreement. Each Award of an Option will be evidenced by an Award Agreement that will specify the exercise price, the term of the Option, the number of Shares subject to the Option, the exercise restrictions, if any, applicable to the Option, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

 

(c)                             Term of Option. The term of each Option will be stated in the Award Agreement; provided, however, that the term will be no more than ten (10) years from the date of grant thereof.

 

(d)                            Option Exercise Price and Consideration.

 

(i)                                     Exercise Price. The per Share exercise price for the Shares to be issued pursuant to the exercise of an Option will be determined by the Administrator, but will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. Notwithstanding the foregoing provisions of this Section 6(d)(i), Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Code Section 424(a).

 

(ii)                                  Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.

 

7

 

(iii)                               Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. Such consideration may consist entirely of: (1) cash; (2) check; (3) promissory note, to the extent permitted by Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised; (5) consideration received by the Company under cashless exercise program (whether through a broker or otherwise) implemented by the Company in connection with the Plan; (6) by Cashless Exercise, (7) by Net Exercise, (8) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws, or (9) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator will consider if acceptance of such consideration may be reasonably expected to benefit the Company.

 

(e)                             Exercise of Option.

 

(i)                           Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.

 

An Option will be deemed exercised when the Company receives: (i) notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with applicable tax withholding). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option, except as may be provided in an individual Award Agreement.The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised (or deemed exercise). No adjustment will be made for a dividend or other right for which the record date is prior to the date the Options are issued, except as provided in Section 13 of the Plan.

 

Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan (subject to Section 3(b)) and for sale under the Option, by the number of Shares as to which the Option is exercised.

 

(ii)                        Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s termination as the result of the Participant’s death or Disability, the Participant may exercise his or her Option within thirty (30) days of termination, or such longer period of time as is specified in the Award Agreement (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement) to the extent that the Option is vested on the date of termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

8

 

(iii)                          Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within six (6) months of termination, or such longer period of time as is specified in the Award Agreement (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement) to the extent the Option is vested on the date of termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

(iv)                         Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised within six (6) months following the Participant’s death, or within such longer period of time as is specified in the Award Agreement (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement) to the extent that the Option is vested on the date of death, by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to the Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. Unless otherwise provided by the Administrator, if at the time of death Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

 

(f)                              Limitations. No individual may be granted awards under the Plan covering in excess of 3,000,000 shares of Company Common Stock during the term of the Plan. The foregoing limitations shall be adjusted proportionately in connection with any change described in Section 13(a).

 

7.                                      Stock Appreciation Rights.

 

(a)                                 Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.

 

(b)                                 Number of Shares. The Administrator will have complete discretion to determine the number of Shares subject to any Award of Stock Appreciation Rights.

 

(c)                                  Exercise Price and Other Terms. The per Share exercise price for the Shares that will determine the amount of the payment to be received upon exercise of a Stock Appreciation Right as set forth in Section 7(f) will be determined by the Administrator and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. Otherwise, the Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan.

 

9

 

(d)                                 Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

 

(e)                                  Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 6(c) relating to the maximum term and Section 6(e) relating to exercise also will apply to Stock Appreciation Rights.

 

(f)                                   Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:

 

(i)                                The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times

 

(ii)                             The number of Shares with respect to which the Stock Appreciation Right is exercised.

 

At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof.

 

8.                                      Restricted Stock.

 

(a)                                 Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.

 

(b)                                 Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such shares have lapsed.

 

(c)                                  Transferability. Except as provided in this Section 8 or as the Administrator determines, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.

 

(d)                                 Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.

 

(e)                                  Removal of Restrictions. Except as otherwise provided in this Section 8, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction or at such other time as the Administrator may determine. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed.

 

10

 

(f)                              Voting Rights. During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise.

 

(g)                             Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares, unless the Administrator provides otherwise. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.

 

(h)                            Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again will become available for grant under the Plan.

 

9.                                      Restricted Stock Units.

 

(a)                            Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. After the Administrator determines that it will grant Restricted Stock Units, it will advise the Participant in an Award Agreement of the terms, conditions, and restrictions related to the grant, including the number of Restricted Stock Units.

 

(b)                            Vesting Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment or service), or any other basis determined by the Administrator in its discretion.

 

(c)                             Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.

 

(d)                            Form and Timing of Payment. Payment of earned Restricted Stock Units will be made as soon as practicable after the date(s) determined by the Administrator and set forth in the Award Agreement. The Administrator, in its sole discretion, may settle earned Restricted Stock Units in cash, Shares, or a combination of both.

 

(e)                             Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Stock Units will be forfeited to the Company.

 

11

 

10.                               Compliance With Code Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Code Section 409A, except as otherwise determined in the sole discretion of the Administrator. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Code Section 409A and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Code Section 409A, the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Code Section 409A, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A. The Administrator shall have the authority to make such modifications or adjustments to the Options or the terms of this Plan only to the extent necessary to effectuate the foregoing and in doing so, will endeavor to minimize any adverse economic impact to the Participants to the maximum extent practicable.

 

11.                               Leaves of Absence/Transfer Between Locations. Unless the Administrator provides otherwise, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary.

 

12.                              Limited Transferability of Awards.

 

(a)                            Unless determined otherwise by the Administrator, Awards may not be sold, pledged, assigned, hypothecated, or otherwise transferred in any manner other than by will or by the laws of descent and distribution, and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award may only be transferred (i) by will, (ii) by the laws of descent and distribution, or (iii) as permitted by Rule 701 of the Securities Act of 1933, as amended (the “Securities Act”).

 

(b)                            Further, during the period the Company is relying upon the exemption from registration provided in Rule 12h-1(f)(1) promulgated under the Exchange Act (the “Rule 12h-1(f) Exemption”) until the Company either (i) becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or (ii) is no longer relying upon the Rule 12h-1(f) Exemption, an Option, or prior to exercise, the Shares subject to the Option, may not be pledged, hypothecated or otherwise transferred or disposed of, in any manner, including by entering into any short position, any “put equivalent position” or any “call equivalent position” (as defined in Rule 16a-1(h) and Rule 16a-1(b) of the Exchange Act, respectively), other than to (x) persons who are “family members” (as defined in Rule 701(c)(3) of the Securities Act) through gifts or domestic relations orders, or (y) to an executor or guardian of the Participant upon the death or disability of the Participant, in each case, to the extent required for continued reliance on the Rule 12h-1(f) Exemption. Notwithstanding the foregoing sentence, the Administrator, in its sole discretion, may determine to permit transfers to the Company or in connection with a Change in Control or other acquisition transactions involving the Company to the extent permitted by Rule 12h-1(f) or, if the Company is not relying on the Rule 12h-1(f) Exemption, to the extent permitted by the Plan.

 

12

 

13.                              Adjustments; Dissolution or Liquidation; Merger or Change of Control.

 

(a)                            Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will equitably adjust the number and class of shares of stock that may be delivered under the Plan and/or the number, class, and price of shares of stock covered by each outstanding Award; provided, in the case of a dividend or other distribution, in lieu of any such adjustment, the Company or the Administrator may choose (including by specifying such in the applicable Award Agreement) to provide that such dividend or distribution is paid to a Participant upon vesting of an Award; and provided further, however, that the Administrator will make such adjustments to an Award required by Section 25102(o) of the California Corporations Code to the extent the Company is relying upon the exemption afforded thereby with respect to the Award.

 

(b)                                 Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.

 

(c)                                  Merger or Change of Control. In the event of a merger of the Company with or into another corporation or other entity or a Change of Control, each outstanding Award will be treated as the Administrator determines (subject to the provisions of the following paragraph) without a Participant’s consent, including, without limitation, that (i) Awards will be assumed, or substantially equivalent Awards will be substituted, by the acquiring or succeeding corporation (or an Affiliate thereof) with appropriate adjustments as to the number and kind of shares and prices; (ii) upon written notice to a Participant, that the Participant’s Awards will terminate upon or immediately prior to the consummation of such merger or Change of Control; (iii) outstanding Awards will vest and become exercisable, realizable, or payable, or restrictions applicable to an Award will lapse, in whole or in part prior to or upon consummation of such merger or Change of Control, and, to the extent the Administrator determines, terminate upon or immediately prior to the effectiveness of such merger or Change of Control; (iv) (A) the termination of an Award in exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Participant’s rights as of the date of the occurrence of the transaction (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction the Administrator determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment), or (B) the replacement of such Award with other rights or property selected by the Administrator in its sole discretion; or (v) any combination of the foregoing. In taking any of the actions permitted under this subsection 13(c), the Administrator will not be obligated to treat all Awards, all Awards held by a Participant, or all Awards of the same type, similarly.

 

In the event that the successor corporation does not assume or substitute for the Award (or portion thereof), the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Awards with performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or substituted in the event of a merger or Change of Control, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Stock Appreciation Right will terminate upon the expiration of such period.

 

13

 

For the purposes of this Section 13(c), an Award will be considered assumed if, following the merger or Change of Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the merger or Change of Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change of Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change of Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, for each Share subject to such Award, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or Change of Control.

 

Notwithstanding anything in this Section 13(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Change of Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.

 

Notwithstanding anything in this Section 13(c) to the contrary, if a payment under an Award Agreement is subject to Code Section 409A and if the Change of Control definition contained in the Award Agreement does not comply with the definition of “change of control” for purposes of a distribution under Code Section 409A, then any payment of an amount that is otherwise accelerated under this Section will be delayed until the earliest time that such payment would be permissible under Code Section 409A without triggering any penalties applicable under Code Section 409A.

 

14.                               Tax Withholding.

 

(a)                                 Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).

 

(b)                                 Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld, (iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the statutory amount required to be

 

14

 

withheld, provided the delivery of such Shares will not result in any adverse accounting consequences, as the Administrator determines in its sole discretion, or (iv) selling a sufficient number of Shares otherwise deliverable to the Participant through such means as the Administrator may determine in its sole discretion (whether through a broker or otherwise) equal to the amount required to be withheld. The amount of the withholding requirement will be deemed to include any amount which the Administrator agrees may be withheld at the time the election is made, not to exceed the amount determined by using the maximum federal, state or local marginal income tax rates applicable to the Participant with respect to the Award on the date that the amount of tax to be withheld is to be determined. The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.

 

15.                     No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.

 

16.                     Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.

 

17.                     Term of Plan. Subject to Section 21 of the Plan, the Plan will become effective upon its adoption by the Board. Unless sooner terminated under Section 18, it will continue in effect for a term of ten (10) years from the later of (a) the effective date of the Plan, or (b) the earlier of the most recent Board or stockholder approval of an increase in the number of Shares reserved for issuance under the Plan.

 

18.                     Amendment and Termination of the Plan.

 

(a)                                 Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

 

(b)                                 Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

 

(c)                                  Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

 

15

 

19.                         Conditions Upon Issuance of Shares.

 

(a)                            Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.

 

(b)                            Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

 

20.                               Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained.

 

21.                               Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.

 

16

Exhibit 10.3

 

STRICTLY CONFIDENTIAL

 

Statement of Holdings

 

To: Sean Rad

 

Re: Conversion of Tinder Options into Match Options

 

On July 13, 2017 (the “Conversion Date”), your Tinder options (“Tinder Options”) converted into options relating to Match common stock (“Match Options”), pursuant to Section 6 of the Tinder, Inc. 2014 Settlement Plan. Your Match Options are further described in the table below and subject to the Terms and Conditions attached as Exhibit A.

 

The following is a summary of your Tinder Options immediately prior to the Conversion Date and the Match Options you hold as of the Conversion Date. The grant date and expiration date applicable to your Match Options are the same as your Tinder Options immediately prior to the completion of the conversion. As of the Conversion Date, all of your Match Options are vested.

 

				Tinder Options Pre-Conversion							Match Options Post-Conversion
Grant Date		Expiration Date		Exercise (Strike) Price per Tinder Option			# Tinder Options Vested and Exercisable		# Unvested Tinder Options		Exercise (Strike) Price per Match Option			# Match Options Vested and Exercisable		# Unvested Match Options
4/22/2013		4/22/2023		$	0.05		4,425,278		—		$	0.06		4,166,399		—
4/22/2013		4/22/2023		$	0.25		944,461		—		$	0.27		889,210		—
4/22/2013		4/22/2023		$	0.50		944,461		—		$	0.54		889,210		—
4/22/2013		4/22/2023		$	0.75		944,461		—		$	0.80		889,210		—
4/22/2013		4/22/2023		$	1.00		944,461		—		$	1.07		889,210		—
4/22/2013		4/22/2023		$	1.03		885,055		—		$	1.10		833,279		—
4/22/2013		4/22/2023		$	1.19		188,892		—		$	1.27		177,841		—
4/22/2013		4/22/2023		$	1.40		188,892		—		$	1.49		177,841		—
4/22/2013		4/22/2023		$	1.61		188,892		—		$	1.72		177,841		—
4/22/2013		4/22/2023		$	1.82		188,892		—		$	1.94		177,841		—
4/22/2013		4/22/2023		$	2.04		7,164,736		—		$	2.17		6,745,598		—
4/22/2013		4/22/2023		$	2.16		1,529,128		—		$	2.30		1,439,674		—
4/22/2013		4/22/2023		$	2.32		1,529,128		—		$	2.47		1,439,674		—
4/22/2013		4/22/2023		$	2.47		1,529,128		—		$	2.63		1,439,674		—
4/22/2013		4/22/2023		$	2.63		1,529,128		—		$	2.80		1,439,674		—

 

References to the “exercise price” and “Expiration Date” in the Terms and Conditions refer to the exercise price and expiration date applicable to the specific tranches of your Match Option as described above.

 

 

Exhibit A

 

Match Group, Inc. Option Award Terms and Conditions (Converted Award)

 

These Terms and Conditions apply to your Tinder Options that were assumed by Match Group, Inc. (“Match” or the “Company”) as of July 13, 2017, (the “Conversion Date”). As of the Conversion Date, your Tinder Options converted into options (the “Match Options”) corresponding to the number of shares of common stock of the Company, par value $0.001 per share (the “Common Stock”), set forth in the Statement of Holdings provided to you with these terms and conditions (the Statement of Holdings, collectively with these Terms and Conditions, the “Terms and Conditions”) at the per share exercise price set forth above in the Statement of Holdings. Unless earlier terminated pursuant to these Terms and Conditions or the Applicable Plan (as defined below), your Match Options shall expire on the applicable expiration date set forth in the Statement of Holdings (the “Expiration Date”).

 

Following the Conversion Date, unless otherwise specified in these Terms and Conditions, your Match Options will continue to be governed by the Tinder, Inc. Restated 2014 Equity Incentive Plan (the “Tinder Plan”), which was assumed by Match on the Conversion Date and now operates as a subsidiary plan of the Match Group, Inc. 2017 Stock and Annual Incentive Plan (the “Match Plan” and collectively with the Tinder Plan, the “Applicable Plans”). All references to the “Company” under the Tinder Plan now refer to Match and all references to the “Administrator” or “Committee” now refer to the Compensation Committee of the Board of Directors of Match (or its applicable committee).

 

These Terms and Conditions (which incorporate all material applicable terms from your Restated Stock Option Agreement (the “Tinder Option Agreement”) under the Tinder Plan), the Tinder Plan, and, to the extent applicable, the Match Plan, constitute the entire agreement between you and Match regarding the subject matter hereof and supersede in their entirety all prior undertakings and agreements of Match, Tinder and you with respect to the subject matter hereof. For the avoidance of doubt, following the Conversion Date, the Tinder, Inc. 2014 Equity Settlement Plan and the Tinder Option Agreement shall have no further force and effect.

 

All capitalized terms used herein, to the extent not defined, shall have the meanings set forth in the Tinder Plan.

 

Method of Exercise; Rights Upon Exercise

 

The portion of your Match Option that is vested may be exercised by delivering to the Company or the agent selected by Match to administer the Applicable Plans (the “Agent”) a written (including by way of electronic means) notice stating (1) the number of whole shares with respect to which you would like to exercise your Match Option pursuant to these Terms and Conditions, and (2) whether you select the “Net Settlement” approach described below or the “Cash Payment” approach described below, and, (3) if you choose the “Cash Payment” approach, whether you intend to pay the per share exercise price and tax withholdings applicable to such portion of your Match Option in cash or by check. Notwithstanding anything to the contrary in the Match Plan, the portion of your Match Option that is vested may be exercised at any one time as to fewer than 100 shares. Your Match Option may not be exercised for a fraction of a share.

 

 

(a)         Net Settlement. If you elect to “net settle” some or all of your vested Match Option, upon exercise, at the election of the Company, you will be entitled to receive an amount in (i) shares of Common Stock or (ii) until the Sunset Date (as defined below), in IAC Shares (as defined in the Match Plan) equal to the product of (A) the excess of the Fair Market Value of one share of Common Stock over the per share exercise price of your Match Option, multiplied by (B) the number of shares of Common Stock in respect of which your Match Option has been exercised, less any required tax withholdings. For purposes of these Terms and Conditions, “Sunset Date” means such time as IAC/InterActiveCorp ceases to own shares representing a majority of the combined voting power of the outstanding Match Capital Stock and “Match Capital Stock” means Common Stock, class B Common Stock, par value $0.001 per share, of Match, and class C Common Stock, par value $0.001 per share of Match.

 

(b)         Cash Payment. If you elect to pay in advance, by cash or check, the per share exercise price and applicable tax withholdings due upon exercise of your vested Match Option, you will be entitled to receive a number of shares of Common Stock equal to the number of shares of Common Stock in respect of which your Match Option has been exercised.

 

Termination of Employment

 

The treatment of your Match Option upon the termination of your employment is set forth in these Terms and Conditions. Except as provided in these Terms and Conditions, if you cease to be a Service Provider for any reason, any and all of the unvested portion of your Match Option will be forfeited and canceled in its entirety. Except as set forth below, upon the date on which you cease to be a Service Provider, that portion of your Match Option, if any, which is exercisable at the time you cease to be a Service Provider may be exercised until the thirtieth day after the date on which you cease to be a Service Provider, and will thereafter be forfeited and canceled; provided that in no event shall your Match Option be exercised following the Expiration Date.

 

In the event that you cease to be a Service Provider due to your death, that portion of your Match Option, if any, which is exercisable at the time of death may be exercised by your estate or by a person who acquired the right to exercise such Match Option by bequest or inheritance or otherwise by reason of your death at any time prior to the first to occur of: (a) the six-month anniversary of the date of your death or (b) the Expiration Date, and will thereafter be forfeited and canceled. In the event that you cease to be a Service Provider due to your Disability, that portion of your Match Option, if any, which is exercisable at the time you cease to be a Service Provider for Disability may be exercised by you or your guardian or legal representative at any time prior to the first to occur of: (1) the six-month anniversary of the date on which you cease to be a Service Provider or (2) the Expiration Date, and will thereafter be forfeited and canceled.

 

2

 

Taxes and Withholding

 

No later than the date as of which an amount in respect of your Match Option first becomes includible in your gross income for federal, state, local or foreign income or employment or other tax purposes, you shall pay to the Company or make arrangements satisfactory to the Committee regarding payment of any federal, state, local and/or foreign taxes of any kind required by law to be withheld with respect to such amount and the Company shall, to the extent permitted or required by law, have the right to deduct from any payment of any kind otherwise due to you (either directly or indirectly through its agent) (including payment in respect of the exercise of your Match Option), federal, state, local and foreign taxes of any kind required by law to be withheld. Notwithstanding the foregoing, the Company shall be entitled to hold the shares issuable to you upon the exercise of your Match Option (or the related proceeds) until the Company or the Agent has received from you: (a) a duly executed Form W-9 or W-8, as applicable and (b) payment for any federal, state, local and/or foreign taxes of any kind required by law to be withheld with respect to such Match Option. Match shall have the unilateral authority to determine that your Match Option will be settled net of applicable tax withholdings.

 

Non-Transferability of Match Option

 

Your Match Option is non-transferable (including by way of sale, assignment, exchange, encumbrance, pledge, hedge or otherwise) by you other than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order, and your Match Option may be exercised, during your lifetime, only by you or by your guardian or legal representative or any transferee described above.

 

No Rights as a Stockholder

 

Neither you nor any transferee of your Match Option shall have rights as a stockholder (including the right to vote the shares underlying your Match Option and the right to receive dividends) with respect to any shares covered by such Match Option until you or your transferee: (a) has given written notice of exercise, (b) if requested, has given the representation described in Section 19(b) of the Tinder Plan and (c) has paid in full for the shares issuable upon exercise.

 

Payment of Transfer Taxes, Fees and Other Expenses

 

The Company agrees to pay any and all original issue taxes and stock transfer taxes that may be imposed on the issuance of shares acquired pursuant to exercise of your Match Option, together with any and all other fees and expenses necessarily incurred by the Company in connection therewith. Notwithstanding the foregoing, you shall be solely responsible for any other taxes (including, without limitation, federal, state, local or foreign income taxes, social security, Medicare and/or other similar taxes and/or estate or excise taxes) that may be payable as a result of your participation in the Applicable Plans or as a result of the exercise of your Match Option and/or the sale, disposition or transfer of any shares of Common Stock acquired upon the exercise of your Match Option.

 

3

 

Other Restrictions

 

The exercise of your Match Option shall be subject to the requirement that, if at any time the Committee shall determine that: (a) the listing, approval, registration or other qualification of the shares of Common Stock subject or related thereto upon any securities exchange or under any state or federal law or (b) the consent or approval or permit of any government regulatory body, is necessary or desirable as a condition of, or in connection with, such exercise or the delivery or purchase of shares pursuant thereto, then in any such event, the exercise shall not be effective unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee.

 

Conflicts and Interpretation

 

In the event of any conflict between these Terms and Conditions and the Applicable Plans, the Applicable Plan shall control; provided, that an action or provision that is permissive under the terms of the Applicable Plan, and required under these Terms and Conditions, shall not be deemed a conflict and these Terms and Conditions shall control. In the event of any ambiguity in these Terms and Conditions, or any matters as to which these Terms and Conditions is silent, the Applicable Plans shall govern, including, without limitation, the provisions thereof pursuant to which the Committee has the power, among others, to: (a) interpret the Applicable Plans, (b) prescribe, amend and rescind rules and regulations relating to the Applicable Plans and (c) make all other determinations deemed necessary or advisable for the administration of the Applicable Plans. In the event of (1) any conflict between these Terms and Conditions (or any other information posted on Match’s extranet or given to you directly or indirectly through the Agent and Match’s books and records), or (2) ambiguity in these Terms and Conditions (or any other information posted on Match’s extranet or given to you directly or indirectly through the Agent, Match’s books and records), these Terms and Conditions shall control.

 

Amendment

 

The Board may modify, amend or waive the terms of your Match Option, prospectively or retroactively, at any time, but the terms of your Match Option may not be modified adversely to your interest except by means of a writing signed by you and the Company. The waiver by either party of compliance with any provision of these Terms and Conditions shall not operate or be construed as a waiver of any other provision hereof.

 

Data Protection

 

The acceptance of your Match Option constitutes your authorization of the release from time to time to Match or any of its Subsidiaries or Affiliates and to the Agent (together, the “Relevant Companies”) of any and all personal or professional data that is necessary or desirable for the administration of your Match Option and/or the Match Plan (the “Relevant Information”). Without limiting the above, this authorization permits your employing company to collect, process, register and transfer to the Relevant Companies all Relevant Information (including any professional and personal data that may be useful or necessary for the purposes of the administration of your Match Option and/or the Match Plan and/or to implement or structure any further grants of equity awards (if any)). The acceptance of your Match Option also constitutes your authorization of the transfer of the Relevant Information to any jurisdiction in which Match, your employing company or the Agent considers appropriate. You shall have access to, and the right to change, the Relevant Information, which will only be used in accordance with applicable law.

 

4

 

Code Section 409A

 

Your Match Option is intended to be exempt from the requirements of Code Section 409A and will be construed and interpreted in accordance with such intent. To the extent that your Match Option, or the settlement or deferral thereof, is subject to Code Section 409A, your Match Option will be paid, settled or deferred in a manner that will meet the requirements of Code Section 409A, such that the payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A. The Administrator shall have the authority to make such modifications or adjustments to your Match Options or the terms of these Terms and Conditions only to the extent necessary to effectuate the foregoing and in doing so, will endeavor to minimize any adverse economic impact to you to the maximum extent practicable.

 

You acknowledge that under Code Section 409A, a Match Option that is granted with a per share exercise price that is determined by the Internal Revenue Service (the “IRS”) to be less than the Fair Market Value of a share on the date of grant (a “discount option”) may be considered “deferred compensation.” A Match Option that is a “discount option” may result in (a) income recognition by you prior to the exercise of your Match Option, (b) an additional twenty percent (20%) federal income tax, and (c) potential penalty and interest charges. The “discount option” may also result in additional state income, penalty and interest tax to you. Notwithstanding clause (a), you acknowledge that the Company cannot and has not guaranteed that the IRS will agree that the per share exercise price of this Match Option equals or exceeds the Fair Market Value of a share on the date of grant in a later examination. You agree that if the IRS determines that your Match Option was granted with a per share exercise price that was less than the Fair Market Value of a share on the date of grant, you shall be solely responsible for your costs related to such a determination.

 

Governing Law

 

Your Match Option and these Terms and Conditions are governed by the internal laws of the State of Delaware, without regard to any conflict of laws provision that would require the application of the law of any other jurisdiction.

 

5

Exhibit 10.4

 

EXECUTION COPY

 

TINDER, INC.

RESTATED 2014 EQUITY INCENTIVE PLAN

RESTATED STOCK OPTION AGREEMENT

 

RECITALS:

 

1.              Pursuant to an Option Award Agreement dated April 22, 2013 (the “2013  Option Agreement”), Tinder, Inc. (the “Company”) granted to the participant designated on the signature page hereto (the “Participant”) certain Options under the Tinder, Inc. 2013 Incentive Plan (the “2013 Plan”).

 

2.              On July 25, 2014, the Company effected a 1,000-for-I stock split with respect to the shares of the common stock of the Company, and the number of Shares underlying the Options, and the exercise prices of the Options, were adjusted accordingly.

 

3.              On July 28, 2014, the Company adopted (i) the Restated 2014 Equity Incentive Plan (the “Plan”), the terms and conditions of which are intended to supersede the 2013 Plan in its entirety and (ii) the Tinder, Inc. 2014 Equity Settlement Plan (the “Settlement Plan”).

 

4.              The Company and Participant have agreed to amend and restate the terms of the 2013 Option Agreement in its entirety with this Restated Stock Option Agreement (this “Option Agreement”).

 

5.              In connection with the foregoing, Participant has agreed to forfeit certain Options granted pursuant to the 2013 Option Agreement.

 

6.              Capitalized terms used but not otherwise defined in this Option Agreement shall have the meanings ascribed thereto in the Plan or the Settlement Plan, as the case may be.

 

NOW THEREFORE, in consideration for the foregoing and the mutual promises and covenants made herein, and the mutual benefits to be derived herefrom, the parties to this Option Agreement agree as follows:

 

1.                                          Option Grant: Forfeiture. On April 22, 2013, Participant was granted Options to purchase the number of Shares, at the exercise price per Share (the “Exercise Price”), set forth in the first two columns of the table below. The Options were subsequently adjusted for a stock split related to the Shares (as noted in the third and fourth columns of the table below). Participant hereby agrees to forfeit the Options noted in the columns under the heading “Forfeited Options” below:

 

 

Options Originally Granted on April 22, 2013					Options As Adjusted for 1000-for-1 Stock Split					Forfeited Options					Post-Forfeiture and Post-Stock Split Options
Number of Shares		Exercise Price Per Share			Number of Shares		Exercise Price Per Share			Number of Shares		Exercise Price Per Share			Number of Shares		Exercise Price Per Share
953.50		$	1,000		953,500.00		$	1.00		329,746.46		$	1.00		623,753.54		$	1.00
203.50		$	5,000		203,500.00		$	5.00		70,375.88		$	5.00		133,124.12		$	5.00
203.50		$	10,000		203,500.00		$	10.00		70,375.88		$	10.00		133,124.12		$	10.00
203.50		$	15,000		203,500.00		$	15.00		70,375.88		$	15.00		133,124.12		$	15.00
203.50		$	20,000		203,500.00		$	20.00		70,375.88		$	20.00		133,124.12		$	20.00

 

The Options held by Participant (after giving effect to the forfeiture contemplated by this Section 1) shall be subject to the terms and conditions of this Option Agreement and the Plan, which is incorporated herein by reference. In the event of a conflict between the terms and conditions of this Option Agreement and the Plan, the terms and conditions of this Option Agreement shall prevail.

 

2.                                                Vesting.

 

(a)                            General. The Company and Participant agree that as of the date of this Option Agreement, that portion of the Options identified in the table below (in the columns under the heading “Vested Options”) are vested. The remaining portion of the Options (identified in the table below in the columns under the heading “Unvested Options”) shall vest in eight equal installments commencing on November 1, 2014, and on each subsequent six-month anniversary thereof (with the final vesting date scheduled to occur on May 1, 2018), subject to Participant continuing to be a Service Provider through the applicable date.

 

Retained Options					Vested Options					Unvested Options
Number of Shares		Exercise Price Per Share			Number of Shares		Exercise Price Per Share			Number of Shares		Exercise Price Per Share
623,753.54		$	1.00		269,731.26		$	1.00		354,022.28		$	1.00
133,124.12		$	5.00		57,567.19		$	5.00		75,556.93		$	5.00
133,124.12		$	10.00		57,567.19		$	10.00		75,556.93		$	10.00
133,124.12		$	15.00		57,567.19		$	15.00		75,556.93		$	15.00
133,124.12		$	20.00		57,567.19		$	20.00		75,556.93		$	20.00

 

(b)                            Termination as a Service Provider.

 

(i)                                                   Except as set forth in (ii) below and Section 2(c) below, if Participant ceases to be a Service Provider, any unvested Options shall immediately be forfeited by Participant without consideration and be cancelled.

 

(ii)                                                If Participant ceases to be a Service Provider by virtue of a termination by the Company without Cause (as defined in clause (ii)(1) below) or by the Participant for Good Reason (as defined in clause (ii)(2) below), then an additional number of Shares underlying each Option equal to the Additional Vesting Shares will accelerate and vest as of the date of such termination; provided, the Company may, as a condition to any such acceleration, require Participant to execute a release agreement in the form of Exhibit F.

 

2

 

(1)                             For purposes of this Option Agreement, “Cause” shall mean (A) the plea of guilty or nolo contendere to, or conviction for, the commission of a felony offense by Participant; (B) a material breach by Participant of a fiduciary duty owed to the Company; (C) a material breach by Participant of any confidentiality or non-solicitation covenant contained in (x) the Employee Confidentiality and Intellectual Property Agreement between Participant and Hatch Labs and (y) the At-Will, Confidentiality and Inventions Agreement between Participant and the Company (it being understood, in the case of the confidentiality obligations, that disclosures made in connection with Participant’s duties as a Service Provider shall not be deemed breaches); (D) the continued willful or gross neglect by Participant of his material duties to the Company, including insubordination with respect to direction given by the Board or one or more of its members, and material violation of policies by which Participant is bound (and which have been disseminated to Participant in advance) pertaining to ethics, wrongdoing or conflicts of interest; provided, that in the case of conduct described in clauses (A) through (D) above which is capable of being cured or remedied, Participant shall have failed to cure or remedy such conduct within ten (10) days after the Participant was provided written notice from the Board describing the conduct and indicating that it intends to terminate Participant with Cause if such conduct is not so cured or remedied.

 

(2)                             For purposes of this Option Agreement, “Good Reason” shall mean the occurrence of any of the following without Participant’s prior written consent: (A) (i) the reduction in Participant’s duties or level of job responsibilities below such level as would be consistent with a chief product officer of the Company, excluding for this purpose any such reduction that is an isolated and inadvertent action not taken in bad faith (it being understood that the appointment of a chief executive officer (or similar title) to whom Participant may report shall not in and of itself constitute “Good Reason”), or (ii) the reduction in Participant’s title below “Co-Founder and Chief Product Officer”; (B) the failure of Participant to be elected to the Board, or removal of Participant from the Board; (B) any material reduction in Participant’s base salary; or (C) the relocation of Participant’s principal place of employment to a location that is more than 30 miles from Participant’s location of employment as of the date of this Option Agreement; provided that in no event shall Executive’s resignation be for “Good Reason” unless (x) an event or circumstance constituting “Good Reason” shall have occurred and Participant provides the Company with written notice thereof within thirty (30) days after Participant has knowledge of the occurrence or existence of such event or circumstance, which notice specifically identifies the event or circumstance that Participant believes constitutes Good Reason (it being understood that such 30-day time requirement shall not be applicable in the case of clause (A)(i) above), (y) the Company fails to correct the circumstance or event so identified within thirty (30) days after the receipt of such notice, and (z) Participant resigns within ninety (90) days after the date of delivery of the notice referred to in clause (x) above,

 

(3)                             For purposes of this Option Agreement, “Additional Vesting Shares” shall mean the sum of (i) the number of additional Shares that would have vested under each Option if Participant were a Service Provider on the Six Month Anniversary Date plus (ii) a number of additional Shares under each Option equal to a fraction, the numerator of which is the number of days between (A) the next vesting date that would have occurred following such termination by the Company without Cause or by the Participant for Good Reason and (B) the Six Month Anniversary Date, and the denominator of which is 180 days, such sum rounded to the nearest whole Share.

 

3

 

(4)                             For purposes of this Option Agreement, “Six Month Anniversary Date” shall mean the date that is the six month anniversary of the date of the termination by the Company without Cause or Participant’s termination for Good Reason.

 

(c)                             Change of Control. Notwithstanding anything else in this Option Agreement to the contrary, Options held by Participant and any permitted transferees of Participant will accelerate and vest in full (i) upon consummation of (A) a Change of Control or (B) an IAC Acquisition and (ii) if Participant is terminated by the Company without Cause or terminates his employment for Good Reason within 45 days prior to (A) Board approval of an agreement, the consummation of which would result in an IAC Acquisition or (B) the entering into by the Company of a definitive agreement, the consummation of which would result in a Change of Control.

 

3.                                                Exercise of Options.

 

(a)                                 Settlement Plan. Except as provided in Section 10, for so long as the Settlement Plan is in effect pursuant to its terms, matters relating to the exercise, transfer and settlement of the Options, and any other matters governed by the Settlement Plan, shall be controlled by the Settlement Plan, a copy of which is attached hereto as Exhibit C. Participant is an express third party beneficiary of the Settlement Plan as a “Plan Beneficiary” (as each such term is defined in the Settlement Plan). For avoidance of doubt, the provisions of Sections 3(c), 4, 5, 6, 7 and 12(a) of this Option Agreement shall not be operative while the Settlement Plan is in effect pursuant to its terms.

 

(b)                                 Right to Exercise. The Options shall be exercisable during their term in accordance with the Vesting Schedule set out in Section 2 above and with the applicable provisions of the Plan and this Option Agreement (but only to the extent permissible under the Settlement Plan (and Section 10 hereof) while the Settlement Plan is in effect).

 

(c)                                  Method of Exercise. The Options shall be exercisable by delivery of an exercise notice in the form attached as Exhibit A (the “Exercise Notice”) or in a manner and pursuant to such procedures as the Administrator may determine, which shall state the election to exercise the Option(s), the number of Shares with respect to which the Option(s) is (are) being exercised (the “Exercises Shares”), and such other representations and agreements as may be required by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares, together with any applicable tax withholding. An Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price, together with any applicable tax withholding.

 

No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise comply with Applicable Laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to Participant on the date on which the Option is exercised with respect to such Shares.

 

4.                                      Participant’s Representations. In the event the Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), at the time an Option is exercised, Participant shall, if required by the Company, concurrently with the exercise of all or

 

4

 

any portion of an Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit B.

 

5.                                                Stockholder Arrangements. In the event the Common Stock is not registered under the Exchange Act at the time an Option is exercised, Participant shall, if requested by Company, concurrently with the exercise of all or any portion of an Option, enter into a customary (in the Company’s judgment) arrangement for privately held companies providing for a right of first refusal in favor of the Company and other major stockholders in connection with a transfer of the Shares by Participant, subject to customary exceptions.

 

6.                                                Market Standoff. Participant hereby agrees that Participant shall not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of directly or indirectly, any Common Stock (or other securities) of the Company or enter into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Common Stock (or other securities) of the Company held by Participant (other than those included in the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one hundred and eighty (180) days following the effective date of any registration statement of the Company filed under the Securities Act (or such other period as may be requested by the Company or the underwriters to accommodate regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations and opinions.

 

Participant agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, Participant shall provide, within ten (10) days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Securities Act. The obligations described in this Section 5 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one hundred and eighty (180) day (or other) period. Participant agrees that any transferee of any Option or shares acquired pursuant to any Option shall be bound by this Section 5.

 

7.                                            Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Participant:

 

(a)                                 cash;

 

(b)                                 check; or

 

(c)                                  such other manner as may be permitted under the Plan and permitted by the Administrator in its sole discretion.

 

5

 

8.                                                Restrictions on Exercise. The Options may not be exercised if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any Applicable Law; provided the Company shall use all reasonable efforts to remove such impediment.

 

9.                                                Non-Transferability of Option.

 

(a)                            The Options may not be transferred in any manner otherwise than as provided in the Plan or the Settlement Plan. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and permitted assigns of Participant.

 

(b)                            Further, until the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, or after the Administrator determines that it is, will, or may no longer be relying upon the exemption from registration of Options under the Exchange Act as set forth in Rule 12h-I(f) promulgated under the Exchange Act (the “Reliance End Date”), Participant shall not transfer the Options or, prior to exercise, the Shares subject to the Options, in any manner other than (i) to persons who are “family members” (as defined in Rule 701(c)(3) of the Securities Act) through gifts or domestic relations orders, or (ii) to an executor or guardian of Participant upon the death or disability of Participant. Until the Reliance End Date, the Options and, prior to exercise, the Shares subject to this Option, may not be pledged, hypothecated or otherwise transferred or disposed of, including by entering into any short position, any “put equivalent position” or any “call equivalent position” (as defined in Rule 16a-1(h) and Rule 16a-1(b) of the Exchange Act, respectively), other than as permitted in clauses (i) and (ii) of this paragraph.

 

10.                                         Supplemental Provisions Related to the Settlement Plan. The terms of the Settlement Plan shall be supplemented by the provisions of this Section 10, and shall remain applicable with respect to Participant for so long as the Settlement Plan remains in effect.

 

(a)                            Additional Exercise Rights. Notwithstanding the provisions of Settlement Plan, vested Options shall also be exercisable by Participant (and Shares resulting from a permitted exercise shall, as applicable, be sold by Participant):

 

(i)                                                   in connection with a Founder Departure Put (as such term is defined in Section 10(b) below),

 

(ii)                                                on a Cashless Exercise basis or on a cash basis (i.e., with payment of the exercise price in cash, but withholding a sufficient number of shares to cover required withholding taxes), in either case effective immediately prior to the expiration of the Options; provided, that for so long as the Settlement Plan remains in effect, the provisions of the Settlement Plan and this Section 10 shall apply to the Shares received upon exercise of the Options mutatis mutandis (e.g., such Shares shall be subject to the associated put rights and obligations, transfer restrictions, shall be entitled to the appropriate “Put Price” in settlement rather than the Option Spread, etc.); provided further, that if, prior to a Public Offering, Participant fails to exercise this Option prior to its expiration, this Option will be deemed exercised by Participant by means of a Cashless Exercise as of immediately prior to the expiration of such Option with a forfeited Share having a value equal to the Public Company Trading Price determined in good faith by the Board.

 

6

 

(iii)                                                  in connection with a sale of the Shares received upon exercise of the Options to a Third Party investor in a transaction arranged by the Company or IAC as more fully described on Exhibit D hereto.

 

(iv)                                                 in connection with a sale of the Shares received upon exercise of the Options taking place in connection with a sale by IAC or its affiliates, in one or a series of related transactions, of more than 1,000,000 Shares (or securities convertible into more than 1,000,000 Shares, in each case, as equitably adjusted for stock splits, stock dividends, reverse stock splits, recapitalizations, reorganizations and similar events), as provided in Exhibit E:  provided that this clause (a)(iv) shall not be applicable if IAC’s fully diluted ownership of the Company (on an as-converted to Shares basis and assuming for these purposes all outstanding options and warrants to acquire capital stock, whether or not vested, are fully exercised for cash) after giving effect to such sale of Shares is equal to or greater than 60% (a “Co-Sale Transaction”).

 

(b)                                      Founder Departure Put Right.                                  In the event of a termination of Participant’s service with the Company as a Service Provider by the Company without Cause or by Participant for Good Reason prior to November 15, 2015, Participant shall be entitled (by providing written notice to the Company) to cause the Company to initiate a Discretionary Put with a Discretionary Put Date on or promptly following November 15, 2015 (a “Founder Departure Put”), which such Discretionary Put shall involve a Qualifying Valuation Process with two Qualified Banks (with the possibility of a third if the conditions are met) as provided in the Settlement Plan. Participant shall be obligated to exercise all vested Options in connection with Founder Departure Put initiated hereunder, which such Options shall be settled in accordance with the terms of the Settlement Plan. The Company shall initiate the Qualifying Valuation Process for a Founder Departure Put following receipt of the aforementioned written notice from Participant so as to cause the determination of the Put Price on, or as soon as practicable following, November 15, 2015.

 

(c)                                       Option Exercise Following Termination of Employment. Notwithstanding the provisions of the Settlement Plan:

 

(i)                                                   Termination without Cause/Resignation for Good Reason. Upon termination of Participant’s service with the Company as a Service provider by the Company without Cause or by Participant for Good Reason, vested Options held by Participant will remain outstanding and Participant may hold Shares until the consummation of the earliest to occur of (1) the Founder Departure Put; (2) the earliest Scheduled Put which is scheduled to occur (including after giving effect to any acceleration pursuant to Section 3 of the Settlement Plan) at least 18 months following such termination; (3) the last Scheduled Put; (4) the first Discretionary Put initiated by the Company with a Discretionary Put Date at least 24 months following such termination involving two Qualified Banks (with the possibility of a third if the conditions are met); (5) a Discretionary Put initiated pursuant to Section 10(g); and (6) any other Qualifying Put under the Settlement Plan in which Participant elects to participate, at which time (in the case of (1) through (6)) any remaining vested Options held by Participant shall be exercised and settled and all Shares sold in accordance with the Settlement Plan.

 

(ii)                                                Termination with Cause/Voluntary Resignation. Upon termination of Participant’s service with the Company as a Service Provider by the Company for Cause or voluntarily by Participant without Good Reason, vested Options held by Participant will remain

 

7

 

outstanding until the consummation of the earlier to occur of (1) the next Scheduled Put, (2) the first Discretionary Put initiated by the Company involving two Qualified Banks (with the possibility of a third if the conditions are met), so long as such Discretionary Put has a Discretionary Put Date within 12 months following the termination of Participant’s service and such Discretionary Put Date is not within six months of a Scheduled Put Date, and (3) the first Discretionary Put initiated by the Company with a Discretionary Put Date at least 24 months following such termination involving two Qualified Banks (with the possibility of a third if the conditions are met), at which time in each case any remaining vested Options held by Participant shall be exercised and settled and all Shares sold in accordance with the Settlement Plan (including, as may be applicable, Section 10(a)(ii) hereof); provided, any Discretionary Put contemplated by this clause (c)(ii) shall be subject to the provisions of Sections 10(d) and 10(e);

 

(d)                                      Rights Associated with a Qualifying Valuation Process. For so long as Participant holds vested Options issued under the Plan (or Shares obtained in connection with a permitted exercise thereof), with respect to any Qualifying Valuation Process undertaken pursuant to the Settlement Plan in connection with (1) any Scheduled Put, (2) any Discretionary Put undertaken with respect to an IAC Acquisition, (3) any Founder Departure Put, or (4) any Discretionary Put in which Participant is required to exercise and settle his Options or Shares (other than a Discretionary Put described in Section 10(e)(ii)):

 

(i)                                                        The Qualifying Valuation Process shall involve two Qualified Banks (with the possibility of a third if the conditions are met) and Participant shall have the right to approve the identity of any Qualified Bank selected by the Company, such right to be reasonably exercised. Participant acknowledges that IAC shall also have the right to approve the identity of any Qualified Bank, such right to be reasonably exercised. Not withstanding anything to the contrary in the Settlement Plan, “Qualified Bank” shall mean a U.S.-based investment bank that was one of the top five lead managers of initial public offerings on a U.S. national securities exchange in terms of aggregate offering amount in any of the three calendar years immediately preceding the initiation of the applicable Qualifying Put for which the Qualified Bank is being engaged, as published by IPOvitalsigns.com or, if not available, Bloomberg Finance L.P..

 

(ii)                                                     Participant shall have the right, in addition to IAC, to initiate a Third Banker Process if the other conditions to the initiation of a Third Banker Process exist, by providing written notice to the Company and IAC of the initiation of a Third Banker Process.

 

(iii)                                                  Participant shall have the same rights as IAC under the second paragraph of Section 2 “Determination of Public Company Trading Price” of Schedule A of the Settlement Plan as if Participant were included in such paragraph, and shall have access to the third Qualified Bank if the Third Banker Process is inititated. In addition, the Company shall make available to Participant on a timely basis such information (referenced in such second paragraph) as is provided to the Qualified Banks, as well as reasonable access to management of the Company to discuss such information.

 

(e)                                       Discretionary Put Following termination with Cause/Voluntary Resignation. In the event the Company initiates a Discretionary Put following a termination of Participant’s service with the Company as a Service Provider by the Company for Cause or voluntarily by Participant without Good Reason (as contemplated by clause (c)(ii) of this Section 10):

 

8

 

(i)                                                   The Put Price shall be determined pursuant to a Qualifying Valuation Process under the Settlement Plan (and Section 10(d) hereof), but Participant shall bear one-half of the expenses associated with the Company’s engagement of the Qualifying Banks, up to a maximum cost to Participant of $500,000; and

 

(ii)                                                In the event the termination occurs prior to May 1, 2015, the Put Price in any Discretionary Put initiated pursuant to Section 10(c)(ii)(2) will be the Public Company Trading Price but may be determined by IAC in its good faith discretion, rather than by Qualified Banks, if IAC so elects; provided IAC shall provide notice to Participant of its intention to exercise this right within sixty (60) days of such termination and promptly completes the Discretionary Put.

 

(f)                              Amendments. Notwithstanding anything to the contrary, no amendment to, or waiver of, any provision of the Settlement Plan shall be binding on Participant unless such amendment or waiver is approved by Participant. For avoidance of doubt, the parties agree that notwithstanding anything in the Settlement Plan to the contrary, if Participant is not the Largest Holder under the Settlement Plan, no amendment or waiver of any provision of the Settlement Plan or any other action taken by the Largest Holder shall be binding on Participant unless Participant expressly agrees in writing to such specific amendment, waiver or other action. The rights and obligations of Participant hereunder and under the Settlement Plan shall apply to Participant’s permitted transferees, so long as they are exercised by Participant personally during his lifetime.

 

(g)                             Competitive Activities: Breach of Release. Participant acknowledges that should he (i) engage in a Competing Business (as defined below) or (ii) breach any material term of the release agreement executed in connection with Participant’s termination as a Service Provider, in each case following termination as a Service Provider, the Company shall have the right to commence a Discretionary Put and Participant may be required to exercise and settle his Option and sell Shares in connection therewith (notwithstanding any limitation contained in Section 10(c)(i)(4)). In the event the Company initiates a Discretionary Put pursuant to this Section 10(g), Participant shall bear one-half of the expenses associated with the Company’s engagement of the Qualifying Banks, up to a maximum cost to Participant of $500,000. For purposes of this Section 10(g), a “Competing Business” means a business engaged in providing products or services that would reasonably be considered by consumers to substitutes or alternatives to the products or services provided by the Company at such time. Participant shall be considered to be “engaged in a Competing Business” if Participant is an employee, principal, officer, director, independent contractor, advisor, consultant, equity holder or lender of or to an entity that is engaged in a Competing Business; provided, however, that Participant shall not be deemed to be engaged in a Competing Business as a result of (i) any activity for or on behalf of the Company, IAC or any of its Affiliates; (ii) passive ownership of less than 5% of the outstanding capital stock of any entity so long as Employee is not otherwise affiliated with such entity; or (iii) any activity for an entity engaged in a Competing Business provided that (x) Participant is not actively involved in the aspect of the business engaged in the Competing Business and (y) the revenues from the Competing Business in which such other entity is engaged do not constitute more than 20% of the consolidated revenues of such entity. The Company shall provide written notice to Participant if it wishes to initiate a Discretionary Put pursuant to this Section I 0(g) on the basis of Participant being engaged in a Competing Business. If Participant reasonably and in good faith believed that he was not engaged in a Competing Business and ceases to be engaged in such Competing Business within 30 days of receipt of such

 

9

 

notice from the Company, the Company shall not be permitted initiate a Discretionary Put pursuant to this Section 10(g) as it relates to such activity (but for avoidance of doubt shall not be otherwise foreclosed from exercising its rights pursuant to this Section 10(g) as a result of other facts or circumstances).

 

(h)                                 Rights in Connection with a Third Party Sale or a Co-Sale Transaction. In connection with a Third Party Sale (as defined in Exhibit D), Participant shall have the rights provided in Exhibit D. In connection with a Co-Sale Transaction, Participant shall have the rights provided in Exhibit E.

 

(i)                                     Certain Rights. In connection with Participant’s role as a Service Provider, the Company acknowledges that Participant shall be a beneficiary of Article IX of the Company’s Amended and Restated Certificate of Incorporation.

 

(j)                                    Acceleration of Put Dates. Participant shall have the right to accelerate the first Scheduled Put Date pursuant to Section 3 of the Settlement Plan if the conditions contained therein have been satisfied (and subject to the restrictions contained therein), notwithstanding the fact that Participant may not be the holder of the the largest number of vested Options outstanding at such time.

 

(k)                                 Compliance with Obligations. For so long as IAC controls the Company, IAC will cause the Company to comply with its obligations hereunder and under the Settlement Plan.

 

11.                                    Term/Expiration Date. The Options may be exercised only in accordance with the Plan, the Settlement Plan and the terms of this Option Agreement. In no event may the Options be exercised after April 30, 2019 (the “Expiration Date”). The Options may be subject to earlier termination as provided in Section 13 of the Plan; provided, however, that in in connection with an IAC Acquisition the Options shall be treated as contemplated in the Settlement Plan, if then in effect.

 

12.                                    Tax Obligations.

 

(a)                                 Tax Withholding. Except in the case of a Cashless Exercise, Participant agrees to make appropriate arrangements with the Company (or the Parent or Subsidiary employing or retaining Participant) for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to any Option exercise. Participant acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver the Shares if such withholding amounts are not delivered at the time of exercise.

 

(b)                                 Code Section 409A.

 

(i)                                                        The Options are intended to be exempt from the requirements of Code Section 409A and will be construed and interpreted in accordance with such intent. To the extent that the Options, or the settlement or deferral thereof, are subject to Code Section 409A, the Options will be paid, settled or deferred in a manner that will meet the requirements of Code Section 409A, such that the payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A. The Administrator shall have the authority to make such modifications or adjustments to the Options or the terms of this Agreement only to

 

10

 

the extent necessary to effectuate the foregoing and in doing so, will endeavor to minimize any adverse economic impact to the Plan Beneficiaries to the maximum extent practicable.

 

(ii)                                                     Participant acknowledges that under Code Section 409A, an Option that is granted with a per Share exercise price that is determined by the Internal Revenue Service (the “IRS”) to be less than the Fair Market Value of a Share on the date of grant (a “discount option”) may be considered “deferred compensation.” An Option that is a “discount option” may result in (i) income recognition by Participant prior to the exercise of the Option, (ii) an additional twenty percent (20%) federal income tax, and (iii) potential penalty and interest charges. The “discount option” may also result in additional state income, penalty and interest tax to the Participant. Notwithstanding clause (i) of this Section 11(b), Participant acknowledges that the Company cannot and has not guaranteed that the IRS will agree that the per Share exercise price of an Option equals or exceeds the Fair Market Value of a Share on the date of grant in a later examination. Participant agrees that if the IRS determines that an Option was granted with a per Share exercise price that was less than the Fair Market Value of a Share on the date of grant, Participant shall be solely responsible for Participant’s costs related to such a determination.

 

13.                                         Entire Agreement. The Plan and the Settlement Plan are incorporated herein by reference. The Plan, the Settlement Plan and this Option Agreement, together with the Funding and Governance Agreement among IAC, the Company and Participant, constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof (including the Tinder 2013 Plan and the 2013 Option Agreement), and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Company and Participant.

 

14.                                         Governing Law. This Option Agreement is governed by the internal laws of the State of Delaware, without regard to any conflict of laws provision that would require the application of the law of any other jurisdiction.

 

15.                                         No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF OPTIONS PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT), AND AS OTHERWISE PROVIDED HEREIN, AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

 

11

 

Participant acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Options subject to all of the terms and provisions thereof. Participant has reviewed the Plan and the Options in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option Agreement and fully understands all provisions of the Options. Participant hereby agrees to notify the Company upon any change in the residence address indicated below.

 

PARTICIPANT		TINDER, INC.
/s/ Sean Rad		/s/ Gregg Winiarski
Signature		By
SEAN RAD		GREGG WINIARSKI
Print Name		Print Name
		VP
		Title
Residence Address
IAC
/s/ Gregg Winiarski
By
GREGG WINIARSKI
Print Name
EVP & General Counsel
Title

 

[SIGNATURE PAGE TO RESTATED OPTION AGREEMENT]

 

12

 

EXHIBIT A

 

RESTATED 2014 EQUITY INCENTIVE PLAN

 

EXERCISE NOTICE

 

Tinder, Inc.

[Address]

 

Attention: [Title]

 

1.                                      Exercise of Option. Effective as of today,                              ,            , the undersigned (“Participant”) hereby elects to exercise Participant’s option (the “Option”) to purchase                             shares of the Common Stock (the “Shares”) of Tinder, Inc. (the “Company”) under and pursuant to the Restated 2014 Equity Incentive Plan (the “Plan”) and the Stock Option Agreement dated                          ,              (the “Option Agreement”).

 

2.                                      Delivery of Payment. Participant herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding taxes due in connection with the exercise of the Option.

 

3.                                      Representations of Participant. Participant acknowledges that Participant has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.

 

4.                                      Rights as Stockholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Common Stock subject to an Award, notwithstanding the exercise of the Option. The Shares shall be issued to Participant as soon as practicable after the Option is exercised in accordance with the Option Agreement. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in Section 13 of the Plan.

 

5.                                      Tax Consultation. Participant understands that Participant may suffer adverse tax consequences as a result of Participant’s purchase or disposition of the Shares. Participant represents that Participant has consulted with any tax consultants Participant deems advisable in connection with the purchase or disposition of the Shares and that Participant is not relying on the Company for any tax advice.

 

6.                                      Restrictive Legends and Stop-Transfer Orders.

 

(a)                                 Legends. Participant understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws:

 

13

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

 

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR A PERIOD OF TIME FOLLOWING THE EFFECTIVE DATE OF THE UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY’S SECURITIES SET FORTH IN AN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER PRIOR TO THE EXPIRATION OF SUCH PERIOD WITHOUT THE CONSENT OF THE COMPANY OR THE MANAGING UNDERWRITER.

 

(b)                                 Stop-Transfer Notices. Participant agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

 

(c)                                  Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

 

7.                                      Successors and Assigns. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice shall be binding upon Participant and his or her heirs, executors, administrators, successors and assigns.

 

8.                                      Interpretation. Any dispute regarding the interpretation of this Exercise Notice shall be submitted by Participant or by the Company forthwith to the Administrator, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Administrator shall be final and binding on all parties.

 

9.                                      Governing Law: Severability. This Exercise Notice is governed by the internal substantive laws, but not the choice of law rules, of the State of Delaware. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Exercise Notice shall continue in full force and effect.

 

10.                               Entire Agreement. The Plan and Option Agreement are incorporated herein by reference. This Exercise Notice, the Plan, the Option Agreement and the Investment Representation Statement constitute the entire agreement of the parties with respect to the subject

 

14

 

matter hereof and, except as otherwise expressly provided in another agreement to which Participant is a party, supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Company and Participant.

 

Submitted by:		Accepted by:
PARTICIPANT		TINDER, INC.
Signature		By
Print Name		Print Name
Address:		Address:
		Date Received

 

15

 

EXHIBIT B

 

INVESTMENT REPRESENTATION STATEMENT

 

PARTICIPANT	:
COMPANY	:	TINDER, INC.
SECURITY	:	COMMON STOCK
AMOUNT	:
DATE	:

 

In connection with the purchase of the above-listed Securities, the undersigned Participant represents to the Company the following:

 

(a)                                 Participant is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Participant is acquiring these Securities for investment for Participant’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).

 

(b)                                 Participant acknowledges and understands that the Securities constitute “restricted securities” under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Participant’s investment intent as expressed herein. In this connection, Participant understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Participant’s representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one (1) year or any other fixed period in the future. Participant further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Participant further acknowledges and understands that the Company is under no obligation to register the Securities. Participant understands that the certificate evidencing the Securities shall be imprinted with any legend required under applicable state securities laws.

 

(c)                                  Participant is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to Participant, the exercise shall be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such

 

 

longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of the applicable conditions specified by Rule 144, including in the case of affiliates (1) the availability of certain public information about the Company, (2) the amount of Securities being sold during any three (3) month period not exceeding specified limitations, (3) the resale being made in an unsolicited “broker’s transaction”, transactions directly with a “market maker” or “riskless principal transactions” (as those terms are defined under the Securities Exchange Act of 1934) and (4) the timely filing of a Form 144, if applicable.

 

In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which may require (i) the availability of current public information about the Company; (ii) the resale to occur more than a specified period after the purchase and full payment (within the meaning of Rule 144) for the Securities; and (iii) in the case of the sale of Securities by an affiliate, the satisfaction of the conditions set forth in sections (2), (3) and (4) of the paragraph immediately above.

 

(d)                                 Participant further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption shall be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 shall have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Participant understands that no assurances can be given that any such other registration exemption shall be available in such event.

 

	PARTICIPANT
	Signature
	Print Name
	Date

 

2

 

EXHIBIT C

 

SETTLEMENT PLAN

 

3

 

TINDER, INC.

 

2014 EQUITY SETTLEMENT PLAN

 

(adopted by the Company and IAC as of July 28,2014)

 

Reference is hereby made to the Tinder, Inc. Restated 2014 Equity Incentive Plan (the “Stock Option Plan”) and the Stock Option Agreements that may be entered into in connection therewith. Capitalized terms used but not defined herein shall have the meanings given to them in the Stock Option Plan.

 

The purpose of this 2014 Equity Settlement Plan (the “Plan”) is to provide certain Service Providers who have been granted Options subject to the Stock Option Plan and designated for participation in this Plan by separate agreement (“Plan Beneficiaries”) with certain liquidity provisions relating to their Options.

 

The Company and IAC each agree as follows:

 

1.                                      Restrictions on Exercise of Options. Vested Options may be exercised by Plan Beneficiaries only in connection with the valuation and settlement events described herein that occur on or around (i) certain scheduled dates (a “Scheduled Put”) and (ii) certain dates selected by the Company in its discretion (a “Discretionary Put”, and together with the Scheduled Puts, the “Qualifying Puts”).

 

2.                                      Put Rights and Obligations.

 

(a)                                 Put Pates and Valuation. On or promptly following each of May 15, 2017, November 15, 2018, May 15, 2020 and May 15, 2021 (each date, as it may be changed pursuant to Section 3, a “Scheduled Put Date”), and on or promptly following such other date(s), if any, that the Company may choose in its discretion (each such date, a “Discretionary Put Date” and, together with the Scheduled Put Dates, the “Put Dates”), the Company shall determine the value of a Share as of such date (the “Put Price”) pursuant to the Qualifying Valuation Process described on Schedule A. The Company will use reasonable efforts to cause such Qualifying Valuation Process to have been completed on, or, if not practicable, as soon as possible following, the Put Date in question.

 

(b)                                 Notice of Put Price. Promptly following the determination of the applicable Put Price pursuant to Section 2(a), the Company shall deliver to all Plan Beneficiaries eligible to participate in the Qualifying Put written notice of the Put Price and supporting calculation(s) (the “Put Price Notice”). The Put Price Notice shall also include instructions for exercising any vested Options that such holders may choose to exercise. Scheduled Puts shall be available to all Plan Beneficiaries who hold vested Options, while the Company has the right to make Discretionary Puts available to some, but not all, such holders of Options at its discretion, except as provided in Section 6.  With respect to any particular Qualifying Put, “Holders” shall refer to Plan Beneficiaries eligible

 

 

to participate in such Qualifying Put. Plan Beneficiaries shall be express third party beneficiaries of the rights conferred upon such Plan Beneficiaries and Holders hereunder.

 

(c)                                  Exercise of Options. Any vested Options held by a Holder shall be exercisable, in whole or in part, at a Holder’s election, during the ten (10) business day period (which may be extended to up to a total of twenty (20) business days to the extent necessary to comply with applicable law) commencing ten (10) business days after delivery of the Put Price Notice (the “Put Exercise Window”), by delivering to the Company written notice of a Holder’s decision to exercise (a “Put Exercise Notice”). Holders shall be obligated to exercise all vested Options in the last Scheduled Put, and shall be deemed to have delivered a Put Exercise Notice in connection therewith. In addition, in the event that following the settlement of Options pursuant to a Qualifying Put there would be less than 500,000 (as such number may be adjusted for any stock split, stock dividend, or similar transaction) Options, and underlying Shares that may be acquired upon exercise of Options, outstanding and held by parties eligible to participate in future Qualifying Puts, then a Holder’s Options shall, at IAC’s option, be deemed exercised pursuant to this Section 2(c) in such Qualifying Put.

 

(d)                                 Settlement. Not later than ten (10) days following receipt of the Put Exercise Notice:

 

(i)                                     In full settlement of each Option being exercised, a Holder shall be entitled to receive payment from the Company in an amount equal to the Option Spread (as defined below) applicable to such exercised Option, less any required tax withholdings (as provided in Section 9). For purposes hereof, the “Option Spread” with respect to an Option shall mean an amount equal to (x) the excess, if any, of the applicable Put Price over the exercise price of such Option multiplied by (y) the number of Shares underlying such Option.

 

(ii)                                  Any payment required by this Section 2(d) shall be made in Freely Tradable shares of common stock of IAC (valued at the closing sale price of such IAC common stock on the trading day immediately prior to the settlement date); provided, (A) that in lieu of delivery of any fractional IAC shares, Holder shall receive a cash payment; (B) if the common stock of IAC is not Freely Tradable, then any payment required by this Section 2(d) shall be made in cash; and (C) IAC may substitute shares of common stock of another parent entity of the Company as payment to the extent such shares are Freely Tradable. For purposes of this Section 2(d), “Freely Tradable” means that the shares are listed for trading on a U.S. national securities exchange, registered pursuant to an effective registration statement under the Securities Act and the class of stock to which the shares belong have a significant public float.

 

3.                                      Acceleration of Put Dates. Notwithstanding the provisions of Section 2(a), the first Scheduled Put Date may be accelerated following the completion of any fiscal quarter in which the Company has generated revenue of $25 million or more (determined in accordance with generally accepted accounting principles in the United States) from advertising, subscriptions, in-app purchases, licensing or data sales, in each case comprised of such revenue that the Company reasonably expects is of the type that will be recurring; provided, that an election to do so is made by the holder of the largest number of vested Options then outstanding, provided further that in no event shall the date of the first Scheduled Put Date be earlier than May 15, 2016.  In the event that the first

 

2

 

Scheduled Put Date is earlier than May 15, 2017, then the date of each subsequent Scheduled Put Date will be accelerated by a number of days equal to the number of days by which the first Scheduled Put date was accelerated.

 

4.                                      Tolling of Put Obligations. If at any time the Company is pursuing, or commences pursuit of, a Public Offering (as defined below), then the Company and IAC shall have the right to suspend all of their respective obligations relating to a Qualifying Put (a “Public Offering Tolling”). In such event, and upon delivery of written notice by the Company to a Holder (the “Public Offering Tolling Notice”), all obligations of IAC and the Company under Section 2 of this Plan with respect to the Qualifying Put in question shall be tolled so long as the Company is actively pursuing such Public Offering in good faith (e.g., drafting a registration statement with bankers and lawyers, engaging with the SEC on comments, etc.), provided that all such rights and obligations in Section 2 of this Plan shall resume in the event such active pursuit ceases. Notwithstanding anything to the contrary, no Public Offering Tolling with respect to a particular Qualifying Put can exceed an elapsed amount of time of more than 12 months from the earlier of (i) the date of the Public Offering Tolling Notice or (ii) the Put Date relating to that Put (it being understood that that if the Company has not successfully completed a Public Offering by that 12-month mark, all obligations under Section 2 of this Plan shall be reinstated (notwithstanding the occurrence, if any, of an additional Put Date and any additional right that might otherwise exist to trigger a new Public Offering Tolling)). In addition, notwithstanding anything to the contrary, (x) in the event a Put Price with respect to a Put is determined, that Put Price shall be the Put Price for such Put (in the event that no Public Offering occurs), notwithstanding any Public Offering Tolling, and (y) no Public Offering Tolling shall suspend the respective obligations of the Company and IAC with regard to any Options for which a Put Exercise Notice has been delivered prior to delivery of the Public Offering Tolling Notice. For purposes hereof, a “Public Offering” shall mean a transaction or series of related transactions resulting in the common stock of the Company (or of such company resulting from such transactions or series of transactions) being publicly traded and registered under the Exchange Act (whether by underwritten public offering, spin off to shareholders or similar means).

 

5.                                      Option Exercise following a Termination of Employment. Upon termination of Holder’s service with the Company as a Service Provider for any reason, vested Options shall remain outstanding and shall be exercised by Holder in the next Qualifying Put, and settled in accordance with Section 2 of this Plan.

 

6.                                      IAC Acquisition. In connection with (i) a sale of all or substantially all of the assets of the Company to IAC or any of its affiliates, (ii) any merger, consolidation or acquisition of the Company with IAC or any of its affiliates, (iii) a license of all or substantially all of the assets of the Company to IAC or any of its affiliates (an “IAC Acquisition”), then the Company shall institute a Discretionary Put with respect to which all Plan Beneficiaries will be deemed Holders. All outstanding Options that are not exercised in such Discretionary Put (if such Discretionary Put is consummated prior to the IAC Acquisition) shall be converted into options in the successor entity, as permitted by and pursuant to the terms of the Stock Option Plan and the Stock Option Agreement applicable to such Options. The Put Price for the Discretionary Put shall still be determined with respect to the Company as a standalone entity as of a date in reasonable proximity of the date of the IAC Acquisition (which date shall constitute the Discretionary Put Date), and such Put Price shall be used to settle the converted Options that are sold in such Discretionary Put.  Notwithstanding the

 

3

 

foregoing, if the IAC Acquisition does not result in any meaningful change in the assets owned or controlled by the Company (or its successor) and there is no meaningful change in the operating structure or integration of the business into any of IAC’s other businesses, no Discretionary Put shall be triggered and these arrangements shall remain unchanged.

 

7.                                      Notification of Intentions. If the Company deems that a Holder is a senior executive of the Company, then in connection with a Qualifying Valuation Process being undertaken pursuant to Section 2 of this Plan, the Company may request that such Holder provide, and such Holder shall provide by a date requested by the Company that is prior to completion of the Qualifying Valuation Process, written notice to the Company of the maximum number of Options that such Holder is willing to exercise in connection with the Put for which the Qualifying Valuation Process is being undertaken. The indication shall be binding on such Holder in terms of maximum amounts (i.e., such Holder shall not be permitted to exercise a greater number of Options in such Put).

 

8.                                      Transfer Restrictions. Plan Beneficiaries may not sell, transfer, pledge, assign or otherwise alienate or hypothecate any Options, except (a) in connection with a Qualifying Put as provided by Section 2 of this Plan and (b) by will or the laws of descent, or to a trust or trusts for the exclusive benefit of such Plan Beneficiary or Plan Beneficiary’s lineal descendants; provided that, in all cases, the transferee or other recipient executes a counterpart copy of the Stock Option Agreement and becomes bound thereby with respect to such Options.

 

9.                                      Taxes and Withholding. No later than the date as of which an amount in respect of any Option first becomes includible in Plan Beneficiary’s gross income for federal, state, local or foreign income or employment or other tax purposes, the Company shall withhold or otherwise deduct from such amount or any other payment of any kind otherwise due to Plan Beneficiary (either directly or indirectly through its agent), all federal, state, local and foreign taxes of any kind required by law to be withheld, and in the case of a required withholding of such taxes resulting from a Qualifying Put, the Company shall satisfy such withholding obligation by deducting the amount of such withholding obligation from the Option Spread. Notwithstanding the foregoing, the Company shall be entitled to hold the shares and/or cash issuable or payable to the Plan Beneficiary upon exercise of any Option until the Company or an agent on the Company’s behalf has received from the Plan Beneficiary a duly executed Form W-9 or W-8, as applicable, to the extent that backup withholding could be required in connection with such payment.

 

10.                               Termination of the Plan. This Plan, and the parties’ obligations hereunder, shall terminate upon the earlier to occur of (i) a Public Offering and (ii) such time as IAC, together with its affiliates, owns less than a majority of the outstanding equity of the Company (measured on a fully-diluted, as-converted-to-common-stock basis); provided, however, that the termination of this Plan pursuant to clause (ii) shall not terminate the Company’s and IAC’s obligations hereunder with respect to any Scheduled Put, the Scheduled Put Date for which has occurred prior to such termination (but for which settlement has not occurred pursuant to Section 2(d)).

 

11.                               Amendment and Waiver. This Plan may be amended by written agreement approved in writing by the Company, IAC and the Plan Beneficiary holding the largest number of Options subject to the Plan at such time (the “Largest Holder”). Any such amendment will be binding on

 

4

 

all Holders. Any provision of this Plan may be waived but only if such waiver is in writing and is signed by the Person against whom the waiver is to be effective (it being understood that the Largest Holder may waive any provision of this Plan on behalf of all Plan Beneficiaries). No course of dealing and no failure or delay on the part of any Person in exercising any right, power or remedy conferred by this Plan will operate as a waiver thereof or otherwise prejudice such Person’s rights, powers or remedies. The failure of any Person to require the performance of a term or obligation under this Plan or the waiver by any Person of any breach hereunder will not prevent subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach hereunder. No single or partial exercise of any right, power or remedy conferred by this Plan will preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

 

12.                         Expenses. All expenses associated with a Qualifying Valuation Process shall be borne by the Company.

 

13.                         No Effect on Employment or Service. This Plan does not confer upon a Plan Beneficiary any right with respect to continued employment with the Company, nor will it interfere in any way with a Plan Beneficiary’s right, or the Company’s right, to terminate such employment at any time, with or without cause, to the extent permitted by applicable laws.

 

14.                         Notice. All notices, requests, demands and other communications hereunder must be in writing and will be deemed to have been given (a) when delivered personally, (b) the next business day if sent by a nationally-recognized overnight delivery service (unless the records of the delivery service indicate otherwise), or (c) three business days after deposit in the United States mail, certified and with proper postage prepaid, addressed as follows: (i) if to the Company, to 8899 Beverly Blvd., West Hollywood, CA 90048, Attn: Chief Executive Officer, with a copy to IAC, 555 West 18th Street, New York, NY 10011, Attn: General Counsel, (ii) if to IAC, to 555 West 18th Street, New York, NY 10011, Attn: General Counsel, or (iii) if to Plan Beneficiary, to the address indicated on a signature page to the Stock Option Agreement of their most recently granted Option. Any party or other recipient may from time to time change its contact information for purposes of this Plan by giving notice of such change as provided herein.

 

15.                         Section 409A of the Code. It is the intention of the Company and IAC that no Option shall be “deferred compensation” subject to Section 409A of the Internal Revenue Code (“Section 409A”), unless and to the extent that the board of directors of the Company specifically determines otherwise, and this Plan and the terms and conditions of all Options shall be interpreted accordingly. To the extent any Option, or any settlement or payment required hereunder, would be subject to Section 409A, then the Option will be settled or paid in a manner that would meet the requirements of Section 409A such that the payment or settlement will not be subject to additional tax or interest under Section 409A. The Administrator of the Stock Option Plan shall have the authority to make such modifications or adjustments to the Options or the terms of this Plan only to the extent necessary to effectuate the foregoing and in doing so, will endeavor to minimize any adverse economic impact to the Plan Beneficiaries to the maximum extent practicable.

 

5

 

16.                         Governing Law. This Plan shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to any conflict of laws provision that would require the application of the law of any other jurisdiction.

 

17.                         Successors and Assigns. In the event there is a successor to IAC as ultimate parent of the Company, then IAC shall be permitted to assign its obligations hereunder to such successor entity, and such successor entity shall assume IAC’s obligations under this Plan. In such event, references to IAC shall be deemed references to such assignor.

 

6

 

Schedule A – Qualifying Valuation Process

 

The Company and IAC shall undertake the process described below (a “Qualifying Valuation Process”) at such times as are provided this Plan in order to determine the “Put Price” (as defined below) applicable to a liquidity opportunity available under this Plan.

 

1.              Selection of Qualified Banks

 

The Company will select one or two (as required by Section 4 of this Schedule A) nationally recognized financial firms (“Qualified Banks”). The Qualified Banks will each be retained by the Company to provide their independent determinations of the “Public Company Trading Price” (as defined below).

 

2.                Determinations of Public Company Trading Price

 

The “Public Company Trading Price” shall be a Qualified Bank’s best estimate of the price at which a Share would trade if the Shares were then trading in the United States on a major exchange, treating the Company as widely traded with a significant public float. In coming to such determination, the Qualified Bank(s) may consider such financial and/or non-financial factors as the investment bankers deem relevant to reflect how the Company would be valued in the US public trading markets. The valuation estimate will take into account, among other things the Qualified Bank(s) deem relevant, the net debt of the Company, and the number of shares, Options and other derivative securities outstanding and the exercise prices and vesting thereof. The valuation (A) will not take into account (1) any potential control premium that may be paid in an acquisition transaction, (2) lAC’s control of the Company, (3) the effect of any high or low vote stock, (4) any discount for lack of liquidity/marketability or (5) any Company 409A or similar fair market valuation analysis undertaken by or on behalf of the Company, and (B) will assume that the Company has ready access to capital at market rates and has appropriate infrastructure to operate as a public company (with the estimated reasonable cost of such infrastructure taken into account for purposes of such analysis).

 

The Company will grant each Qualified Bank prompt and generally equivalent access to such diligence information regarding the Company as the Qualified Bank(s) reasonably request (and shall make reasonable efforts to provide such information as any other Qualified Bank may have been provided) and ready and equivalent access to management of the Company to discuss such information and the Company’s business and prospects. Each Qualified Bank shall also provide in-person opportunities for each of IAC and management of the Company to discuss their perspectives of the Company’s business and prospects (notice shall be given to all relevant parties of such meetings with the others, and the Qualified Bank(s) shall endeavor to grant equitable access to all parties through such processes as they determine). The Qualified Bank(s) will each be asked to provide a preliminary summary overview of their valuation estimates and their analyses to the Company for review by the relevant parties at least 10 days prior to providing their final determination of Public Company Trading Price, and shall, if so requested, meet in person with IAC and Company management to discuss their preliminary determination prior to finalizing such determination.

 

7

 

3.               Calculation of Put Price

 

After the final Public Company Trading Price has been determined by the Qualified Bank(s), the Put Price will be calculated. The “Put Price” will equal (i) the Public Company Trading Price if there is only one Qualified Bank, and (ii) the average of the two Public Company Trading Prices determined by the Qualified Banks if there are two Qualified Banks; provided, that in such event if the lower of the two Public Company Trading Prices is less than 2/3 of the higher of the two Public Company Trading Prices, then IAC may, at its election, initiate the Third Banker Process (described below), and the Put Price shall be calculated as described below.

 

If the Third Banker Process is initiated, the Company will use all reasonable efforts to obtain a Public Company Trading Price estimate from a third Qualified Bank within 45 days, and make reasonable efforts to provide the third Qualified Bank with access to the same information and parties as provided to the initial two Qualified Banks, as described under “Determinations of Public Company Trading Price “ above.

 

If the Third Banker Process is initiated, the Put Price will be calculated in the following manner:

 

Put Price = (A + B + C)/3

 

Where:

 

A = highest of the two closest Public Company Trading Prices determined by the three Qualified Banks (measured by the percentage the lower of two valuations represents of the higher);

 

B = lowest of the two closest Public Company Trading Prices determined by the three Qualified Banks (measured by the percentage the lower of two valuations represents of the higher); and

 

C = the third of the three Public Company Trading Prices determined by the three Qualified Banks, provided that if such third Public Company Trading Price is greater than 1.5 times A, C will be deemed to equal 1.5 times A, and if such amount is less than 0.5 times B, C will be deemed to equal 0.5B.

 

For example, if the first two Public Company Trading Prices are $24 and $10, then a third Qualified Bank may be selected (because $10 is less than 2/3 of $24). If the third valuation is $20, then the Put Price would be calculated as follows:

 

·                A = $24 (the highest of the two closest numbers)

 

·                B = $20 (the lowest of the two closest numbers)

 

·                C = $10 (the outlier number)

 

Put Price = ($24 + $20 +$10) / 3 = $18.

 

If the $10 valuation had instead been $7, the calculation would still be the same, because C cannot be less than 50% of B.

 

8

 

4.                Number of Participating Qualified Banks

 

Scheduled Puts and Discretionary Puts triggered by an IAC Acquisition shall involve two Qualified Banks (with the possibility of a third, if the conditions are satisfied). Other Discretionary Puts may involve either one Qualified Bank or two Qualified Banks (with the possibility of a third), at the Company’s discretion.

 

9

 

EXHIBIT D

 

RIGHTS IN CONNECTION WITH THIRD PARTY SALES

 

Beginning on November 1, 2014, the Company will keep Participant informed regarding potential equity financings of the Company. If Participant expresses an interest in potentially selling some of Participant’s equity in such financing (i.e., through the exercise of Options and the sale of underlying Shares), the Company will inform Participant on a timely basis of developments in such financing, and will make reasonable efforts to attempt to arrange for the sale of certain Shares of Participant in the context of the Company’s financing at the best possible price, provided the Company shall not have any obligation to include more parties in such financing or otherwise alter the manner in which it is conducting the financing. Participant will be required to cooperate and make decisions on the timetable of the financing, as it may evolve. Additionally, Participant may inform the Company of a desire to sell some of Participant’s equity independently of a financing of the Company, and the Company shall attempt to arrange a sale process with select investors mutually agreeable to the Company and Participant. Participant agrees to cooperate with the Company in conducting such process.

 

In no event shall the Company be required to make any alterations to Participant’s equity, or grant any additional rights or privileges to any purchaser of such equity, in connection with any such transaction. Any purchaser of Participant’s equity shall be required to enter into reasonable arrangements with the Company comparable to those of employees of the Company who hold equity subject to the Settlement Plan (but not to those of Participant or Justin Mateen), as may be reasonably required by the Company. The Company shall have the right to delay its attempts to arrange any such sale by up to three (3) months for any reason. The Companyshall not have any obligation to attempt to arrange more than two (2) of any such sale processes (or one (1) such sale process, together with a Company financing) during any twelve month period, or more than three (3) such sales processes in total pursuant to this Exhibit D.

 

In order to effectuate any such sale, Participant would immediately prior to such sale, exercise Options in the manner prescribed by Section 10(a)(ii) on the Agreement, and then sell the resulting Shares; provided that in no event shall the aggregate Option Spread for any such exercised Options, when taken together with the Option Spread for any Options previously exercised by Participant pursuant to this Exhibit D, exceed $15.0 million.

 

4

 

EXHIBIT E

 

RIGHTS IN CONNECTION WITH A CO-SALE TRANSACTION

 

In connection with a Co-Sale Transaction, Participant shall have the following rights:

 

1.                                   Co-Sale Notice. The Company will promptly inform Participant if it engaged in substantive discussions relating to a Co-Sale Transaction. If Participant expresses an interest in selling some of Participant’s equity in such transaction (i.e., through the exercise of Options and the sale of underlying Shares), the Company will inform Participant on a timely basis of developments in such transaction, including (i) the identity of the proposed purchaser or purchasers (each, a “Co-Sale Investor”); (ii) the number of shares of Company capital stock and the class and/or series of capital stock proposed to be sold in such transaction by IAC; (iii) the proposed per share sale price for the shares of Company capital stock to be sold by IAC; (iv) the anticipated closing date of the Co-Sale Transaction and (v) a calculation of Participant’s Pro Rata Portion (as defined in Section 6 below). If the Co-Sale Transaction involves the sale by IAC or its Affiliates of capital stock of the Company other than Common Stock, then the Company shall also indicate the maximum number of shares of Common Stock of the Company, if any, that the Co-Sale Investors are willing to purchase in such Co-Sale Transaction (the “Common Cap”).

 

2.                                   Exercisability. Participant shall have the right to exercise vested Options by any means permitted under the Stock Option Plan and sell up to a number of Shares equal to Participant’s Pro Rata Portion in the Co-Sale Transaction; provided that, except as provided in Section 5, Participant will not be permitted to exercise vested Options, and sell a number of Shares, greater than the Common Cap. To exercise his rights hereunder, Participant must provide written notice to the Company and IAC indicating the number of vested Options he wishes to exercise (and the method of exercise) and/or the number of Shares he wishes to sell pursuant to this Exhibit E (subject to adjustment as provided in Section 3(b)).

 

3.                                   Price.

 

(a)                              If the Co-Sale Transaction involves the sale by IAC or its Affiliates of shares of Common Stock, then the per Share sale price to be received by Participant in the Co-Sale Transaction shall equal the price per share of Common Stock received by IAC or its Affiliates in such Co-Sale Transaction; provided, however, that if there was more than one transaction that caused the Co-Sale Transaction to occur, the per Share sale price shall mean the volume weighted average sale price or proposed sale price for all Shares of Common Stock sold or proposed to be sold in such transactions.

 

(b)                              If the Co-Sale Transaction does not involve the sale by IAC or its Affiliates of shares of Common Stock, then IAC will make reasonable efforts to attempt to arrange for the sale of Shares of Participant in the context of the Co-Sale Transaction at the best possible price, provided IAC shall not have any obligation to include more Co-Sale Investors in such transaction or otherwise alter the manner in which it is conducting the Co-Sale Transaction. Participant may elect to decrease or increase the number of Shares to be sold (up to the lower of (x) the Common Cap and (y) the Pro

 

5

 

Rata Portion) upon learning the per Share sale price the IAC has been able to obtain pursuant to this paragraph (b).

 

4.                                  Closing; Consummation of the Co-Sale. The sale of the Shares by Participant in the Co-Sale Transaction shall occur concurrently with the closing of the initial closing of the Co-Sale Transaction.

 

5.                                  Backstop. In the event the Co-Sale Transaction results in the termination of the Settlement Plan pursuant to Section 10(ii) thereof, and Participant does not have the opportunity to sell his Pro Rata Portion in such transaction by virtue of the Common Cap, then IAC or one of its Affiliates will purchase from Participant (or arrange for the purchase from Participant of) that number of Shares equal to (x) Participant’s Pro Rata Portion less (y) the number of Shares, if any, sold by Participant in such Co-Sale Transaction. The price per Share payable to Participant shall equal the sale price of each share of capital stock sold by IAC in the Co-Sale Transaction (as appropriately adjusted if such shares are not convertible, directly or indirectly, into shares of Common Stock on a one-for-one basis); provided, however, that if there was more than one related transaction that caused the Co-Sale Transaction to occur, the per Share sale price shall mean the volume weighted average sale price or proposed sale price for all such shares sold or proposed to be sold in such transactions (as appropriately adjusted if such shares are not convertible, directly or indirectly, into shares of Common Stock on a one-for-one basis).

 

6.                                  Definition. For purposes of this Exhibit E, “Pro Rata Portion” means the product obtained by multiplying (x) a fraction, the numerator of which is (i) the number of Shares held by Participant and Participant’s permitted transferees and Shares issuable upon exercise of vested Options (assuming an exercise for cash) held by Participant and Participant’s permitted transferees, and the denominator of which is (ii) the sum of (A) the number of Shares held by Participant and Participant’s permitted transferees and Shares issuable upon exercise of vested Options (assuming an exercise for cash) held by Participant and Participant’s permitted transferees plus (B) the number of shares of Common Stock (including shares issuable conversion of Class B Common Stock and convertible preferred stock) held by IAC and its Affiliates plus (C) the number of shares of Common Stock (including shares issuable conversion of convertible preferred stock) held by third parties that have co-sale, tag-along or similar rights to participate in the Co-Sale Transaction, such fraction rounded to the nearest whole share, by (y) the number of shares of Common Stock into which the shares of capital stock to be sold in such Co-Sale Transaction are convertible, whether directly or indirectly.

 

6

 

EXHIBIT F

 

NOTE TO THIS EXHIBIT F: THE COMPANY MAY IN ITS DISCRETION ELECT TO WAIVE OR STRIKE PARAGRAPH 3 OF THIS RELEASE PRIOR TO EXECUTION OF THIS AGREEMENT BY EMPLOYEE AND THE COMPANY.

 

RELEASE OF CLAIMS

 

This Release of Claims (“Agreement”) is made by and between Sean Rad (“Employee”) and Tinder, Inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).

 

RECITALS

 

WHEREAS, Employee has been a service provider to the Company;

 

WHEREAS, Employee is (x) party to a Funding and Governance Agreement, dated as of July 28, 2014, by and among Employee, the Company and IAC, and a Restated Stock Option Agreement, dated July 28, 2014, pursuant to which Employee received Options under the Tinder, Inc. 2014 Restated Equity Incentive Plan; and (y) a beneficiary of the Tinder, Inc. 2014 Equity Settlement Plan;

 

NOW, THEREFORE, for good and valuable consideration of the mutual promises made herein and in the aforementioned agreements (some of which are conditioned on the Employee’s execution and delivery of this Agreement), the Company and Employee hereby agree as follows:

 

COVENANTS

 

1.   Release of Claims. Employee agrees to release, and hereby releases, any and all claims and causes of action, of every kind and nature, whether known or unknown, arising against the Company, Match.com Inc. (“Match”), IAC/InterActiveCorp (“IAC”) and any of their respective directors, officers, current and former employees, affiliates and representatives, in their representative capacities (collectively the “Releasees”) for, upon or by reason of any matter, cause or thing arising from the beginning of the world to the date of execution of this Agreement, including, but not limited to, the following: (a) claims arising under the federal or any state constitution; (b) claims arising under any federal or any state statute, including the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act and the California Labor Code; (c) claims arising under federal, state or local laws prohibiting discrimination in employment; (d) claims for wrongful termination, breach of contract, breach of public policy, physical or mental harm or distress; (e) any claim for attorneys’ fees and costs; and (f) any and all other claims arising from Employee’s employment relationship with the Company or the termination of that relationship. Employee agrees that he will not file any legal action asserting any such claims. Employee agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not extend to: (i) any obligations incurred under this Agreement; (ii) claims that cannot be released as a

 

1

 

matter of law; (iii) claims for wages, vacation/paid time off, or reimbursable expenses earned or due to Employee; and (iv) claims arising out of or relating to Employee’s right to purchase, or actual purchase of, shares of stock of the Company or any rights under the Stock Option Plan, Stock Option Agreement, Settlement Agreement, or Funding and Governance Agreement.

 

2.             California Civil Code Section 1542. Employee acknowledges that he has been advised to consult with legal counsel and is familiar with the provisions of California Civil Code Section 1542, a statute that otherwise prohibits the release of unknown claims, which provides as follows:

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

 

Employee, being aware of said code section, agrees to expressly waive any rights he may have thereunder, as well as under any other statute or common law principles of similar effect.

 

3.             Mutual Non-disparagement. Employee, on the one hand, and the Company, Match and IAC, including all spokespersons, directors and officers of the foregoing, on the other hand, each agree to agree to refrain from any public disparagement of the other party, except as may be required in a judicial or other governmental proceeding.

 

4.             Employee Non-solicitation. Employee agrees that for a period of twelve (12) months immediately following the Effective Date of this Agreement Employee shall not solicit any of the Company’s employees to leave their employment at the Company; provided, however, that nothing in this Section will prevent Employee from (i) publishing a general solicitation of employment, or (ii) retaining a recruitment firm to make a general solicitation of employment so long as Employee has directed such recruitment firm not to target Company employees.

 

5.             Governing Law. This Agreement shall be governed by the laws of the State of California, without regard for choice-of-law provisions.

 

6.             Effective Date. This Agreement will become effective on the date it was signed by both Parties, (the “Effective Date”).

 

[Signature Page Follows]

 

2

 

IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

 

 

			SEAN RAD, an individual
Dated:
			Sean Rad
			TINDER, INC.
Dated:			By
			Officer Name (Print)
			Officer Title

 

3

Exhibit 10.5

 

AMENDMENT NO. 1 TO

RESTATED STOCK OPTION AGREEMENT

 

This Amendment No. 1 (this “Amendment”) to the Restated Option Agreement (the “Option Agreement”), dated July 28, 2014, by and among Sean Rad (“Participant”), Tinder, Inc., a Delaware corporation (the “Company”) and IAC/InterActiveCorp (“IAC”), is made as of July 7, 2015, by the undersigned parties hereto.

 

RECITALS

 

1.         Participant holds certain Options to acquire common stock of the Company, governed by the terms of the Option Agreement;

 

2.         The Company and Participant have agreed to amend and the terms of the Option Agreement as set forth herein;

 

3.         Capitalized terms used but not otherwise defined in this Amendment shall have the meanings ascribed thereto in the Option Agreement.

 

NOW THEREFORE, in consideration for the foregoing and the mutual promises and covenants made herein, and the mutual benefits to be derived herefrom, the parties to this Option Agreement agree as follows:

 

1.                            Amendment to Options. The vested Options held by Participant on the date hereof shall be amended to adjust the Exercise Price thereof as indicated in the third column of the table below:

 

Vested Options Held on Date Hereof
		Exercise Price			Exercise Price
		per Share			per Share
Number of		(before			(as amended
Shares		amendment)			hereby)
358,236.83		$	1.00		$	25.31
76,456.42		$	5.00		$	28.29
76,456.42		$	10.00		$	32.02
76,456.42		$	15.00		$	35.75
76,456.42		$	20.00		$	39.48

 

2.                                 Elimination of Rights in Connection with a Third Party Sale. Section 10(h) of the Option Agreement shall be deleted in its entirety and replaced with the following:

 

 

“(h)                      Rights in Connection with a Co-Sale Transaction. In connection with a Co-Sale Transaction, Participant shall have the rights provided in Exhibit E.”

 

3.                                 Exhibit D of the Option Agreement shall be deleted in its entirety.

 

4.                                 No Other Amendments. The parties hereto acknowledge and agree that, other than as expressly modified by this Amendment, the Option Agreement remains in full force and effect without modification or change. Any future reference to the Option Agreement shall mean the Option Agreement, as amended by this Amendment.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and year first written above.

 

 

PARTICIPANT		TINDER, INC.
/s/ Sean Rad		/s/ Gregg Winiarski
Signature		By
SEAN RAD		GREGG WINIARSKI
Print Name		Print Name
		VP
		Title
IAC/INTERACTIVECORP
/s/ Gregg Winiarski
By
GREGG WINIARSKI
Print Name
EVP & GENERAL COUNSEL
Title

 

[SIGNATURE PAGE TO AMENDMENT NO. 1]

 

Exhibit 10.6

 

AMENDMENT NO. 2 TO

RESTATED STOCK OPTION AGREEMENT

 

This Amendment No. 2 (this “Amendment”) to the Amended and Restated Option Agreement, dated July 28, 2014 (as amended by Amendment No. 1, dated July 6, 2015, the “Option Agreement”), by and among Sean Rad (“Participant”), Tinder, Inc., a Delaware corporation (the “Company”) and IAC/InterActiveCorp (“IAC”), is made as of November 18, 2015, by the undersigned parties hereto.

 

RECITALS

 

1.              Participant holds certain Options to acquire common stock of the Company, governed by the terms of the Option Agreement;

 

2.              The Company and Participant have agreed to amend and the terms of the Option Agreement as set forth herein;

 

3.              Capitalized terms used but not otherwise defined in this Amendment shall have the meanings ascribed thereto in the Option Agreement.

 

NOW THEREFORE, in consideration for the foregoing and the mutual promises and covenants made herein, and the mutual benefits to be derived herefrom, the parties to this Option Agreement agree as follows:

 

1.             Amendment to Options. The vested Options held by Participant on the date hereof shall be amended to adjust the Exercise Price thereof as indicated in the third column of the table below:

 

Vested Options Held on Date Hereof
		Exercise Price per			Exercise Price
		Share			per Share
Number of		(before			(as amended
Shares		amendment)			hereby)
44,252.79		$	1.00		$	20.44
9,444.62		$	5.00		$	23.78
9,444.62		$	10.00		$	27.94
9,444.62		$	15.00		$	32.11
9,444.62		$	20.00		$	36.27
358,236.83		$	25.31		$	40.68
76,456.42		$	28.29		$	43.17
76,456.42		$	32.02		$	46.27
76,456.42		$	35.75		$	49.38
76,456.42		$	39.48		$	52.49

 

 

2.           Consideration; Purchase of Match Group Shares. As consideration for the amendments contemplated in Section 1 above, Participant shall receive a payment from the Company in the amount of $11,292,416, which amount shall be subject to withholding for all federal, state, local and foreign taxes of any kind required by law to be withheld. Participant shall use the net proceeds from such payment to subscribe for shares of common stock of Match Group Inc. offered through the Directed Share Program established in connection with the initial public offering of shares of common stock of Match Group.

 

3.           No Other Amendments. The parties hereto acknowledge and agree that, other than as expressly modified by this Amendment, the Option Agreement remains in full force and effect without modification or change. Any future reference to the Option Agreement shall mean the Option Agreement, as amended by this Amendment.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the parties have executed this Amendment as of the date and year first written above.

 

PARTICIPANT		TINDER, INC.
/s/ Sean Rad		/s/ Gregg Winiarski
Signature		By
SEAN RAD		GREGG WINIARSKI
Print Name		Print Name
		VP
		Title
IAC/INTERACTIVECORP
/s/ Gregg Winiarski
By
Gregg Winiarski
Print Name
EVP & GENERAL COUNSEL
Title

 

[SIGNATURE PAGE TO AMENDMENT No. 2]

 

Exhibit 10.7

 

EXECUTION COPY

 

FUNDING AND GOVERNANCE AGREEMENT

 

This Funding and Governance Agreement (this “Agreement”) is entered into as of this 28th day of July, 2014 by and among Tinder, Inc., a Delaware corporation (the “Company”), lAC/InterActiveCorp, a Delaware corporation (“IAC”) and Sean Rad (the “Founder”). Certain capitalized terms used but not defined herein shall have the meanings given to them in the Tinder, Inc. 2014 Equity Settlement Plan (the “Settlement Plan”) and the Tinder, Inc. Restated 2014 Equity Incentive Plan (the “Stock Option Plan”).

 

RECITALS

 

A.                                    The Company and IAC have adopted the Settlement Plan to provide certain Service Providers with liquidity opportunities with respect to certain Options held by, or that may be issued to, them.

 

B.                                    Founder, the Company and IAC are parties to that certain Restated Stock Option Agreement under the Stock Option Plan (the “Stock Option Agreement”).

 

C.                                    The parties desire to enter into this Agreement to provide Founder with certain protections as provided herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

AGREEMENT

 

1.                                      Financing.

 

(a)                                 Initial Investments. IAC agrees, on behalf of itself and its Affiliates, that the first $20 million of investments made by IAC and/or its Affiliates in the Company occurring after May 1, 2014 (the “Initial Investments”), whether made in the form of Equity Securities or otherwise, shall not be dilutive to the Founder’s equity interest in the Company (but may have the economic consequence to Founder of such financing having been made in the form of indebtedness). “Equity Securities” means capital stock of the Company or any securities or instruments convertible into, or exercisable or exchangeable for, whether directly or indirectly at any time, capital stock of the Company.

 

(a)                                 No Equity Securities Prior to a Third Party Financing. Without limiting Section 1(a), the Company and IAC, on behalf of itself and its Affiliates, each agrees that after the date of this Agreement, IAC and its Affiliates will not make any investments in Equity Securities of the Company prior to a Third Party Financing. Any investments made by IAC prior to a Third Party Financing shall be in the form of indebtedness under terms generally made

 

 

available to lAC’s other operating subsidiaries. As of the date of this Agreement, IAC intends to actively seek a minority investor for the Company in consultation with the Founder. A “Third Party Financing” means an investment in Equity Securities by institutional private equity sources (e.g., venture capital firms, growth funds and the like that are not Affiliates of IAC) in a single round of financing in which the lead investor appoints a member to the Board and has a contractual right to do so.

 

(c)                                  Equity Investments. After the Initial Investments have been made, IAC and/or its Affiliates may invest in Equity Securities concurrently with or following a Third Party Financing if the Board approves and the investment is for fair market value (as determined in good faith by the Board) and for an amount of capital that is reasonable in connection with the operating and strategic needs of the Company (it being understood that if IAC together with its Affiliates would increase their pro rata holdings in the Company (based on the then-outstanding shares of capital stock of the Company) as a result of any such investment in Equity Securities, either (i) the approval of the Board, including at least one member independent of IAC and its Affiliates, would be required, or (ii) such financing must occur within three months following determination of a Put Price pursuant to a Qualifying Valuation Process involving two Qualified Banks (with the possibility of a third if the conditions are satisfied), in accordance with Section 10(d) of the Stock Option Agreement and Schedule A of the Settlement Plan and be made at the valuation resulting from the Qualifying Valuation Process, and, in the case of (i) and (ii), be for an amount of capital that is reasonable in connection with the operating and strategic needs of the Company).

 

(d)                                 Notwithstanding anything to the contrary contained in paragraphs (a), (b) or (c) of this Section 1:

 

(i)                                     IAC may make investments in Equity Securities that are dilutive to under in order to finance up to 50% of (x) any cash amounts that are paid in connection with the matter captioned Whitney Wolfe v Tinder; Match.com; and IAC, Inc. (Case No. BC 550105, Superior Court of the State of California) or any other dispute or action alleging substantially similar facts (any such claims, the “Wolfe Action”) and (y) any equity paid in connection with the Wolfe Action (up to the total number of shares underlying unvested Options held by Wolfe at the time of her termination which may have been vested in connection with the settlement or resolution of such matter); provided, such investments are made for fair market value (with the understanding that any amounts related to the Wolfe Action not funded by investments in Equity Securities pursuant to this clause (i) to be treated as a portion of the Initial Investments pursuant to paragraph 1(a)).

 

(ii)                                  IAC may make investments in Equity Securities in order to finance the settlement of Options granted under the Stock Option Plan. In any such settlement, IAC may provide the Company with cash equal to the Company’s tax withholding

 

2

 

liability associated with such settlement, plus cash or Freely Tradable shares of IAC common stock (as defined in, and in accordance with, Section 2(d) of the Settlement Plan) equal to the value of the spread on such Options, minus the tax withholding liability (“After Tax Spread”), plus, if IAC elects, cash equal in value to the exercise price of such Options, and IAC will receive in exchange Equity Securities in the Company equal in value, based on the valuation underlying the Option exercise, to the consideration provided to the Company. In the case of a permitted Option exercise (i.e., not in connection with a concurrent settlement of Options), IAC will not fund an amount equal to the After Tax Spread, and the Option holder will receive the After-Tax Spread in Company shares. The Equity Securities received by IAC for investments pursuant to this clause (ii) shall be of the same class as those underlying the Options settled, and shall be issued at the same price used in the settlement of the Options.

 

2.                                      IAC Acquisition. IAC covenants, on behalf of itself and its Affiliates, that no IAC Acquisition shall occur prior to May 1, 2015. In the event of an IAC Acquisition, the price paid to the Company and/or the holders of Options and Shares issued upon the exercise thereof shall be determined in accordance with Section 10(d) of the Stock Option Agreement and Attachment A to the Settlement Plan.

 

3.                                      Affiliate Transactions.

 

(a)                                 If IAC and/or its Affiliates provides services (e.g., accounting, IT services, etc.) to the Company for a fee, such fee shall be at rates comparable to rates the Company would generally be able to obtain from third parties in the business of providing such services to companies similarly situated to the Company. To the extent the Company and IAC and/or its Affiliates enter into any commercial arrangements with the Company, such commercial arrangements shall be on terms comparable to terms that would be arrived at between unrelated third parties.

 

(b)                                 Without limiting the provisions of Section 3(a):

 

(i)                                     IAC may cause the Company to enter into an information sharing agreement with IAC and its Affiliates pursuant to which the parties may share information regarding their business, best practices, etc. This may include, without limitation, information about consumer monetization, advertising rates, conversion rates, etc., all of which shall be used for the purpose of advancing the performance of the businesses of the Company and IAC/Match, as well as for financial and investor relations purposes.

 

3

 

(ii)                                  IAC may cause the Company to enter into a tax sharing agreement with IAC providing that (1) IAC may charge the Company for its allocable share of taxes paid by IAC, determined without regard to any net operating losses or tax loss carryforwards that may exist; and (2) IAC shall have no obligation to pay the Company for the use of any tax losses, credit or other tax benefits generated by the Company in excess of what the Company can use in the period such loss is generated.

 

4.                                      Information Rights.

 

(a)                                        Financial Statements. The Company will furnish the following financial information to the Founder:

 

(i)                                     as soon as practicable after the end of each fiscal year of the Company, an unaudited balance sheet of the Company as at the end of such fiscal year, and unaudited statements of income and cash flows of the Company for such year, prepared in accordance with U.S. generally accepted accounting principles consistently applied; and

 

(ii)                                  as soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company, an unaudited balance sheet of the Company as of the end of each such quarterly period, and unaudited statements of income and cash flows of the Company for such period, prepared in accordance with U.S. generally accepted accounting principles consistently applied, subject to changes resulting from normal year-end audit adjustments.

 

(b)                                 Public Company Trading Price Determinations and Put Price Notices. The Company will provide written notice to the Founder disclosing all determinations of the Public Company Trading Price as soon as practicable following any such determination. In addition, the Company or IAC will provide the Founder with copies of all Put Price Notices.

 

5.                                      Representations of the Company.

 

(a)                                 Capitalization and Indebtedness. As of the date hereof (giving effect to a 1,000 for one stock split), the Company’s issued and outstanding equity securities consist of the following: (i) 1,000,000 shares of Series A Preferred Stock; and (ii) 5,000,000 shares of Class B Common Stock. In addition, the Company has reserved (giving effect to a 1,000 for one stock split): (x) 2,414,333 shares of Common Stock upon the exercise of outstanding Options and (y) 835,667 shares of Common Stock under the Stock Option Plan for the issuance of Awards in addition to those reflected in clause (x). The aggregate liquidation preference of the outstanding shares of Series A Preferred Stock is $2,000,000. As of June 30, 2014, the Company was

 

4

 

indebted to IAC and/or its Affiliates in the aggregate amount of $7,434,762 (excluding the liquidation preference on the Series A Preferred Stock), of which $1,425,569 was incurred following May 1, 2014.

 

6.                                        Term. This Agreement shall terminate and be of no further force or effect upon the earliest to occur of: (a) such time as the Founder and his permitted transferees no longer hold Shares or Options; and (b) termination of the Settlement Plan.

 

7.                                        Amendments and Waivers. This Agreement shall not be amended without the written consent of the Company, IAC and the Founder. Any provision of this Agreement may be waived but only if such waiver is in writing and is signed by the party against whom the waiver is to be effective. No course of dealing and no failure or delay on the part of any party in exercising any right, power or remedy conferred by this Agreement will operate as a waiver thereof or otherwise prejudice such party’s rights, powers or remedies. The failure of any party to require the performance of a term or obligation under this Agreement or the waiver by any party of any breach hereunder will not prevent subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach hereunder. No single or partial exercise of any right, power or remedy conferred by this Agreement will preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

 

8.                                        Notice. All notices, requests, demands and other communications hereunder must be in writing and will be deemed to have been given (a) when delivered personally, (b) the next business day if sent by a nationally-recognized overnight delivery service (unless the records of the delivery service indicate otherwise), or (c) three business days after deposit in the United States mail, certified and with proper postage prepaid, addressed as follows: (i) if to the Company, to 8899 Beverly Blvd., West Hollywood, CA 90048, Attn: Chief Executive Officer, with a copy to IAC, 555 West 18th Street, New York, NY 10011, Attn: General Counsel, (ii) if to IAC, to 555 West 18th Street, New York, NY 10011, Attn: General Counsel, or (iii) if to the Founder, to the addresses indicated on a signature page hereto. Any party or other recipient may from time to time change its contact information for purposes of this Agreement by giving notice of such change as provided herein.

 

9.                                        Entire Agreement. This Agreement, the Settlement Plan, the Stock Option Plan, the Stock Option Agreement and the other agreements referenced herein constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the parties with respect to the subject matter hereof.

 

10.                                 Governing Law. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without regard to any conflict of laws provision that would require the application of the law of any other jurisdiction.

 

5

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above.

 

FOUNDER		TINDER, INC.
/s/ Sean Rad		/s/ Gregg Winiarski
Signature		By
Sean Rad		Gregg Winiarski
Print Name		Print Name
		VP
		Title
Residence Address
		IAC/INTERACTIVECORP
		/s/ Gregg Winiarski
		Signature
		Gregg Winiarski
		Print Name

 

[SIGNATURE PAGE TO FUNDING AND GOVERNANCE AGREEMENT]

 

6

Exhibit 10.8

 

July 15, 2015

 

Mr. Sean Rad

c/o Tinder, Inc.

8833 Sunset Blvd.

West Hollywood, CA

 

Dear Sean:

 

Reference is made to (i) that certain Funding and Governance Agreement (the “Funding and Governance Agreement”), dated as of July 28, 2014 by and among Tinder, Inc., a Delaware corporation (the “Company”), IAC/InterActiveCorp, a Delaware corporation (“IAC”) and you (the “Founder”), (ii) Amendment No. 1 to the Restated Option Agreement dated July 28, 2014, by and among the Founder, the Company and IAC, dated as of July 7, 2015 (the “Rad Amendment”) and (iii) Amendment No. 1 to the Restated Option Agreement dated July 28, 2014, by and among Justin Mateen, the Company and IAC, dated as of July 7, 2015 (the “Mateen Amendment” and together with the Rad Amendment, the “Option Amendments”).

 

Notwithstanding the provisions of Section 1(d)(ii) of the Funding and Governance Agreement, with respect to the settlement of any Options held by Rad or Mateen which have been amended by the Option Amendments, IAC agrees that it shall not be permitted to contribute cash to the Company equal to the exercise price of such Options and receive Equity Securities in the Company in exchange therefor. No other rights of the parties shall be effected hereby.

 

Please acknowledge your acceptance of the foregoing by executing this letter below.

 

	TINDER, INC.
	By:
	Name: Gregg Winiarski
	Title: Vice President
	IAC/INTERACTIVECORP
	By:
	Name: Gregg Winiarski
	Title: EVP & General Counsel

 

Accepted and Agreed as of this

of July, 2015

 

/s/ Sean Rad
SEAN RAD
20/07/15