SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 11, 2011 (April 11, 2011)
Spark Networks, Inc.
(Exact Name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
|8383 Wilshire Boulevard, Suite 800, Beverly Hills, California
(Address of Principal Executive Offices)
(Registrants Telephone Number, Including Area Code)
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
TABLE OF CONTENTS
Item 1.02 Termination of a Material Definitive Agreement.
On April 11, 2011, in connection with the appointment of Gregory R. Liberman as Chief Executive
Officer, which is further described below under Item 5.02 of this Current Report on Form 8-K, the
Company and Mr. Liberman executed an Executive Employment Agreement, which supersedes and replaces
the executive employment agreement entered into with Mr. Liberman on August 31, 2005 and
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
Resignation of Adam S. Berger as Chief Executive Officer and Separation Agreement
April 11, 2011, Adam S. Berger resigned as the Chief Executive
Officer (CEO) of Spark Networks,
Inc. (the Company), as well as his position as Chairman of the board of directors. Mr.
Berger, however, will remain as a member of the Companys board of directors. In connection with
his resignation, the Company and Mr. Berger entered into a Separation Agreement and Release dated
April 11, 2011. A copy of the Separation Agreement and Release is attached as Exhibit 10.1 to this
Current Report on Form 8-K and is incorporated by reference herein. The description of the
Separation Agreement and Release in Item 5.02 of this Current Report on Form 8-K is qualified in
its entirety by the terms of such agreement. Pursuant to the terms of the Separation Agreement
and Release, the parties agreed that (1) vested stock options to purchase a total of 901,079 shares
of the Companys common stock will remain outstanding and exercisable in accordance with the terms
of the applicable Company stock plan and option award agreements, including exercisability of
vested options 12 months following termination of service as a board member; and (2) all remaining
unvested stock options held by Mr. Berger will no longer be exercisable as of his date of
resignation as CEO. Furthermore, on April 11, 2011, the Compensation Committee of the Companys
board of directors granted to Mr. Berger in his capacity as a non-employee director stock options
to purchase up to 50,000 shares of common stock vesting in four equal annual installments beginning
on the first anniversary of the date of grant and with an exercise price of $3.18 per share. As a
director, Mr. Berger is eligible to receive the standard compensation currently in effect, and as
may be changed from time to time, as a member of the board of directors.
Appointment of Gregory R. Liberman as Chief Executive Officer and to Board of Directors
On April 11, 2011, Gregory R. Liberman, currently the Companys President, was appointed as the
Companys new Chief Executive Officer (CEO) effective April 11, 2011. Mr. Liberman will remain
as President but will no longer act as Chief Operating Officer effective as of the date of his
appointment as CEO. Mr. Liberman was also appointed to the board
of directors. Mr. Liberman, 38,
was appointed President of the Company in June 2006 and Chief Operating Officer in August 2005. He
served as the Companys General Counsel from October 2004 to April 2006 and Corporate Secretary
from January 2005 to September 2006. Mr. Liberman earned a J.D., with Honors, from The Law School
at the University of Chicago and an A.B., with University Distinction and Honors in Economics, from
Stanford University. Mr. Liberman does not have any family relationships with any of the Companys
executive officers or directors nor are there any related party transactions since the beginning of
the last fiscal year, or any currently proposed transaction, in which the Company was or is to be a
participant and the amount involved exceeds $120,000, and in which Mr. Liberman and any related
person (as defined in Item 404 of Regulation S-K) had or will have a direct or indirect material
Employment Agreement with Gregory R. Liberman
On April 11, 2011, in connection with the appointment of Mr. Liberman as CEO, the Company and Mr.
Liberman executed an Executive Employment Agreement (the Agreement). The Agreement
supersedes and replaces the executive employment agreement entered into with Mr. Liberman on August
31, 2005 and subsequently amended. A copy of the Agreement is attached as Exhibit 10.2 to this
Current Report on Form 8-K and is incorporated by reference herein. The description of Mr.
Libermans Agreement in Item 5.02 of this Current Report on Form 8-K is qualified in its entirety
by the terms of the Agreement.
Term, Salary and Bonus. The Agreement is for a term of three years, unless terminated earlier.
Pursuant to the terms of the Agreement, Mr. Liberman receives a base salary of $325,000 per year,
which will be reviewed annually and may be increased at the sole discretion of the compensation
committee of the board of directors in light of Mr. Libermans performance and the Companys
financial performance and other economic conditions, but may not be decreased without Mr.
Libermans written consent. Mr. Liberman is eligible to receive an annual bonus (the Annual
Bonus) based on a calendar year performance plan established by the board of directors. The
performance goals under the
performance plan will be based on metrics, which may include: (i) Company gross revenue, (ii)
Company earnings before interest, depreciation and amortization
(EBITDA), and (iii) management
objectives. To be eligible to receive the Annual Bonus, Mr. Liberman must maintain continued
employment with the Company throughout the relevant performance period. The target Annual Bonus
is $225,000, which may be increased by the board of directors or the compensation committee, but
Option Grants. Concurrent with execution of the Agreement, Mr. Liberman received a grant under the
Companys 2007 Omnibus Incentive Plan of 343,000 stock options with an exercise price of $3.18 per
share. 1/36th of the stock options granted will vest on each monthly anniversary of the
date of grant such that the options granted will become fully vested on the three year anniversary
of the date of grant. The stock options have a term of 10 years and are exercisable for one year
following Mr. Libermans termination of employment.
Other Benefits. Mr. Liberman is eligible for all health and welfare benefits generally available
to the Companys other executives, officers, or full-time employees, with the Company covering the costs of such benefits. Mr.
Liberman will be reimbursed for reasonable, out-of-pocket business expenses incurred in the
performance of his duties on behalf of the Company, including any reasonable legal fees incurred in
connection with the Agreement, the negotiation and execution of any new employment agreements of
any successor organization in connection with a change in control and any future agreements with
the Company entered into upon termination of employment. Mr. Liberman will accrue vacation at a
rate of 20 days per year.
Termination Benefits. Generally, upon termination, Mr. Liberman will receive his prorated salary
earned as of the date of termination and a payment for any accrued unused vacation. If Mr.
Liberman is terminated without cause or if he leaves for good reason, then Mr. Liberman will also
receive a severance package that consists of (a) a single cash lump-sum payment equal to his target
Annual Bonus for the year of termination, pro-rated for that year, plus 100% of his base salary, (b)
reimbursement of COBRA health and welfare plan expenses for 12 months following termination, (c)
immediate vesting of the lesser of 89,250 stock options held prior to the Agreement or the
remaining unvested stock options held prior to the Agreement, and (d) immediate vesting of the lesser of 85,750 stock options
granted in connection with his appointment as CEO or the remaining unvested stock options granted in connection with his appointment as CEO. Payment
of the severance package is conditioned on Mr. Libermans execution of a separation agreement with
the Company that includes a general mutual release of all claims. In the event of his termination
without cause or for good reason, Mr. Liberman will have one year from the date of termination of
his service to exercise his vested stock options. Termination with cause means admission to or
conviction of a felony or any criminal offence involving moral turpitude, gross negligence or
willful misconduct in the performance of material employment duties, or material breach of the
Agreement by Mr. Liberman that is not cured within 30 days of notice. Good reason means a
material breach of the Agreement by the Company that is not cured within 30 days of notice, Mr.
Libermans base salary, Annual Bonus target or other bonus opportunity is reduced without his
consent or the terms of the options are not fully complied with by the Company, a reduction in Mr.
Libermans title (other than in connection with a change in control) or a material reduction in his
duties, authorities or responsibilities, a requirement to relocate, without Mr. Libermans consent,
of more than 35 miles, the Companys non-renewal of the Agreement or, to the extent required,
shareholder approval is not obtained for any provisions of the Agreement. Mr. Liberman will not be
entitled to any severance package if he voluntarily resigns or otherwise terminates employment with
the Company other than for good reason, or the Company terminates Mr. Libermans employment with
Death or Disability. Upon death or disability, Mr. Liberman is entitled to his unpaid prorated
base salary, and reimbursement of COBRA health and welfare plan expenses incurred in the subsequent
12-month period. Disability includes Mr. Libermans inability by reason of physical or mental
illness to fulfill his obligations pursuant to the Agreement for 90 consecutive days or for a total
of 180 days in any 12-month period which renders Mr. Liberman unable to perform the essential
functions of his job, even after reasonable accommodations are made by the Company.
Change of Control. Upon a change in control of the Company, all of Mr. Libermans unvested stock
options will immediately vest. However, if a successor company retains Mr. Liberman for the
one-year period following a change in control then the Agreement will remain effective and any
proceeds received by Mr. Liberman with respect to 50% of Mr. Libermans options, the vesting of
which was accelerated by the change in control, will be deposited in escrow to be released upon the
earlier of (x) the one year anniversary of employment by the successor company, (y) if Mr. Liberman
is terminated for any reason except for cause by the successor company or without good reason by
Mr. Liberman and (z) upon a change of control of the successor company. Furthermore, if Mr.
Liberman is terminated without cause or leaves for good reason within one year after a change of
control, then Mr. Liberman will receive the severance package described above under Termination
Benefits. The escrow will be forfeited if, during that one year period, Mr. Liberman is
terminated for cause or if he leaves without good reason. A change in control is the acquisition
of 50% or more of the total voting power of the Companys voting securities, the disposition of all
or substantially all of the Companys assets, the liquidation or dissolution of the Company, a
merger, consolidation, or similar transaction other than a business combination that would result
in the voting securities of the Company outstanding immediately
prior to such a transaction continuing to represent at least 50% of the total voting power
represented by the voting securities of the Company or such surviving entity and a repurchase or
recapitalization of the Companys securities.
Tax-Related Provisions. If Mr. Liberman is deemed a specified employee as defined in Section 409A
of the Internal Revenue Code, certain portions of his severance amount may be deferred and the Company will
pay him interest at the prime rate plus 3% on any
amounts deferred. If it is determined that any payment to Mr. Liberman would be subject to the excise tax on parachute
payments in connection with a change of control of the Company imposed by Section 4999 of the
Internal Revenue Code, the Company will reduce such payments to Mr. Liberman to the extent required
so that Mr. Liberman is not subject to any excise taxes under Section 4999 and such payments will
remain deductible by the Company. However, if it is determined that payment of the full parachute payments would result
in a greater net benefit to Mr. Liberman after his payment of the related excise and income taxes,
the Company will not reduce the payments and they will be subject to the excise taxes under Section
4999 and non-deductible by the Company. The Company will not gross-up Mr. Liberman for any excise
or other taxes that he may incur in connection with any parachute payments that he may receive.
Other Terms. Mr. Liberman is prohibited from disclosing confidential information regarding the
Company or engaging in any work that creates an actual conflict of interest with the Companys
business where such conflict would materially and substantially disrupt the Companys operations.
Any obligation not to disclose confidential Company information will continue for two years after
the date Mr. Libermans employment is terminated. Furthermore, during the term of the Agreement
and for 12 months after, Mr. Liberman has agreed, with certain exceptions, not to interfere with
the Companys relationship with its employees, customers, suppliers and other business partners.
Appointment of Peter L. Garran to Board of Directors
On April 11, 2011, the Companys board of directors appointed Peter L. Garran as a new member of
the board of directors. He was not appointed to any committee. There are no related party
transactions since the beginning of the last fiscal year, or any currently proposed transaction, in
which the Company was or is to be a participant and the amount involved exceeds $120,000, and in
which Mr. Garran and any related person (as defined in Item 404 of Regulation S-K) had or will have
a direct or indirect material interest.
Peter Garran is currently a Vice President at Great Hill Partners, LLC, a Boston-based private
equity firm, where he has worked as an investment professional since September 2008. Mr. Garran
currently serves as a director for Great Hill portfolio companies All Web Leads, Inc. and Educaedu
S.L. Prior to joining Great Hill, since August 1999, Mr. Garran was a technology and media
investment banker at J.P. Morgan. Peter received his B.A. in History & Literature from Harvard
Item 7.01 Regulation FD Disclosure.
On April 11, 2011, the Company issued a press release announcing the resignation of Mr. Berger as
CEO and the appointment of Mr. Liberman as the new CEO. A copy of the press release is attached to
this Current Report on Form 8-K as Exhibit 99.1 and the information therein is incorporated herein
The information reported under Item 7.01 in this Current Report on Form 8-K, including Exhibit 99.1
attached hereto, shall not be deemed filed for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the Exchange Act) or otherwise subject to the liabilities of
that section, nor shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in
Item 9.01 Financial Statements and Exhibits
||Separation Agreement and Release dated April 11, 2011 between Spark Networks, Inc. and Adam S. Berger
||Executive Employment Agreement executed April 11, 2011 between Spark Networks, Inc and Gregory R.
||Press Release of Spark Networks, Inc. dated April 11, 2011
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 11, 2011
|SPARK NETWORKS, INC.
||/s/ Joshua Kreinberg
||Separation Agreement and Release dated April 11, 2011 between
Spark Networks, Inc. and Adam S. Berger
||Executive Employment Agreement executed April 11, 2011 between
Spark Networks, Inc and Gregory R. Liberman
||Press Release of Spark Networks, Inc. dated April 11, 2011