EXHIBIT 10.1
EXECUTIVE EMPLOYMENT
AGREEMENT
This Executive Employment Agreement
(“Agreement”) is made effective as of February 12,
2007 (“Effective Date”), by and between Spark Networks
plc, a public limited company incorporated under the laws of
England and Wales (“Company”) and Adam S. Berger
(“Executive”).
The parties agree as
follows:
1. Employment . The Company
hereby employs Executive, and Executive hereby accepts such
employment, upon the terms and conditions set forth
herein.
2. Duties .
2.1 Position . Executive is
employed on a full-time basis as Chief Executive Officer ,
shall report directly to the Board of Directors of the Company (the
“Board”), and shall have the duties and
responsibilities commensurate with such position as shall be
reasonably and in good faith determined from time to time by the
Board. The parties expect that Executive will report to the Company
and commence his duties under this Agreement on or about
February 21, 2007. Executive shall also continue to serve on
the Board. Executive, however, acknowledges that in the event that
he is not re-elected as a director of the Company by the
stockholders from time to time in accordance with the
Company’s articles of association or other applicable
constitutional documents, subject to the Company’s compliance
with Section 2.2 the resulting termination of his position as
a director will not affect his position as an employee and Chief
Executive Officer of the Company and this Agreement will not be
terminated solely as a result of such termination of his
directorship
2.2 Duties . Except for
vacation and illness periods, Executive shall devote substantially
all of his business time, energy, skill and efforts to the
performance of his duties hereunder in a manner that will
faithfully and diligently further the business interests of the
Company, provided, that, notwithstanding the foregoing, Executive
may (i) make and manage personal business investments of his
choice, (ii) serve as a director or in any other capacity of
any business enterprise, including an enterprise whose activities
may involve or relate to the business of the Company, provided that
such service is not to a business enterprise that competes with a
“Company Business,” as defined in Section 9 of
this Agreement, and (iii) serve in any capacity with any
civic, educational, religious or charitable organization, or any
governmental entity or trade association. In addition, during Term
of Employment, subject to the Company’s articles of
association and the rules and requirements of the charter of the
nominating and corporate governance committee of that Board, the
Company shall cause Executive to be nominated as a member of the
Board and the Board shall not take any action to remove Executive
from the Board (the obligation to nominate and for the Board to not
remove will continue even if Executive is not re-elected in any
year). Executive agrees to serve as a member of the
Board.
3. Term of Employment . The
term of Executive’s employment with the Company under this
Agreement shall commence on the Effective Date and shall continue
until December 31, 2010, unless earlier terminated as herein
provided (the “Initial Term”). As used herein,
“Term of Employment” shall include the Initial Term and
any additional term that may be agreed to by the Company and
Executive (the “Extended Term”), but the Term of
Employment shall end upon any termination of Executive’s
employment with the Company as herein provided.
4. Compensation .
4.1 Base Salary . As
compensation for Executive’s performance of Executive’s
duties, the Company shall pay to Executive a base salary of
$350,000 per year (“Base Salary”), payable in
accordance with the normal payroll practices of the Company, less
all legally required or authorized payroll deductions and tax
withholdings. Base Salary shall be reviewed annually, and may be
increased, at the sole discretion of the Board’s Compensation
Committee, in light of Executive’s performance and the
Company’s financial performance and other economic conditions
and relevant factors, but may not be decreased at anytime without
Executive’s written consent.
4.2 Annual Bonus . The
Company shall pay an annual bonus to Executive based on a
performance plan established by the Board of Directors for each
fiscal year during the Term of Employment (the “Annual
Bonus”). With the exception of the fiscal year ending
December 31, 2007, the performance plan shall be based on a
12-month performance period beginning on January 1 and ending
on December 31 of each fiscal year during the Term of
Employment. The performance plan for the fiscal year ending
December 31, 2007, shall begin on the Execution Date of this
Agreement. The performance goals under the performance plan shall
be set by the Board, with the input of Executive and the
Board’s Compensation Committee, and shall be based on the
following metrics: (i) Company gross revenue,
(ii) Company earnings before interest, depreciation and
amortization (“EBITDA”), and (iii) management
objectives. The performance plan for each fiscal year during the
Term of Employment shall be incorporated into this Agreement by
reference. Except as otherwise provided by Section 8 of this
Agreement, to be eligible for an annual incentive bonus, Executive
must maintain continued employment with the Company throughout the
relevant performance period. The Annual Bonus payable under the
performance plan shall be paid to Executive as soon as reasonably
practical upon the release of audited financial statements but in
no event later than two and one-half (2-1/2) months from the last
day of each performance period. The target Annual Bonus payable to
Executive under the performance plan shall be three-hundred
thousand dollars ($300,000) (the “Target Annual
Bonus”). The minimum and maximum Annual Bonus payable under
the performance plan shall be seventy-five thousand dollars
($75,000) and four-hundred and fifty thousand dollars ($450,000),
respectively. The Board or the Compensation Committee may increase
(but not decrease) the amount of the Target Annual Bonus and the
maximum and minimum Annual Bonus payable and may also develop
separate bonus plans. Notwithstanding the foregoing, for the fiscal
year ending December 31, 2007, Executive shall be entitled to
a minimum guaranteed Annual Bonus based on the following
formula:
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$100,000
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X
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Number of Days between the
Execution Date and December 31, 2007
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360
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4.3 Retention Bonus . For
each fiscal year during the Term of Employment, Executive shall be
paid a retention bonus in the amount of fifty thousand dollars
($50,000) (the “Retention Bonus”). Such Retention Bonus
shall be paid to Executive in the first payroll cycle of the year
following the fiscal year in which it is earned. Notwithstanding
the foregoing, in the event Executive’s employment with
Company is terminated for any reason, the Retention Bonus shall be
payable to Executive immediately on the date of such termination of
employment.
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4.4 Stock Options
.
(a) Concurrent with the execution of
this Agreement, Executive shall be granted an option pursuant to
the Company’s 2004 Share Option Scheme (the
“Plan”) to purchase one million thirty thousand
(1,030,000) shares of the Company’s ordinary shares (the
“Shares”). Such option shall be granted with an
exercise price equal to the Fair Market Value of the underlying
stock on the Execution Date and such option shall provide for a
term of ten (10) years. So long as Executive’s
employment relationship with the Company continues, the Shares
underlying the option shall vest and become exercisable in
accordance with the following schedule: Two-hundred fifty-seven
thousand five hundred (257,500) Shares shall vest and become
exercisable on the first anniversary of the Execution Date
(“Initial Vesting Date”) and 1/36th of the remaining
seven hundred seventy-two thousand five hundred
(772,500) Shares shall vest and become exercisable on each
monthly anniversary of the Initial Vesting Date such that all of
the Shares will be fully vested and exercisable on the four year
anniversary of the Execution Date. In addition, such options shall
be subject to the terms and conditions of the Plan and a form of
option agreement (the “Option Agreement”) reflecting
(and not inconsistent with) the terms set forth in this Agreement
between the Company and Executive, which documents are incorporated
herein by reference.
(b) In addition to the stock option
award under Section 4.4(a), concurrent with the execution of
this Agreement, Executive shall also be granted a separate option
pursuant to the Plan to purchase two hundred thousand
(200,000) Shares. The exercise price of the option granted
under this Section 4.4(b) shall be equal to one hundred and
twenty-five percent (125%) of the Fair Market Value of the
underlying stock on the Execution Date and shall provide for a term
of ten (10) years. So long as Executive’s employment
relationship with the Company continues, the Shares underlying the
option shall vest and become exercisable in accordance with the
following schedule: Fifty thousand (50,000) Shares shall vest
and become exercisable on the Initial Vesting Date and 1/36th of
the remaining one hundred and fifty-five thousand
(150,000) Shares shall vest and become exercisable on each
monthly anniversary of the Initial Vesting Date such that all of
the Shares will be fully vested and exercisable on the four year
anniversary of the Execution Date. In addition, such options shall
be subject to the terms and conditions of the Plan and a form of
option agreement (the “Option Agreement”) reflecting
(and not inconsistent with) the terms set forth in this Agreement
between the Company and Executive, which documents are incorporated
herein by reference.
(c) In addition to the stock option
awards under Sections 4.4(a) and (b), effective on the date that
Executive reports to the Company and commences to perform duties as
an employee of the Company under this Agreement, Executive shall
also be granted a separate option pursuant to the Plan to purchase
seventy thousand (70,000) Shares, which option shall be an
“incentive stock option” with respect to the maximum
number of Shares allowable by the Internal Revenue Code of 1986, as
amended, and which shall be a non-qualified stock option with
respect to the balance of the Shares subject to the option. The
exercise price of the option granted under this Section 4.4(c)
shall be equal to the Fair Market Value of the underlying stock on
the date of grant and shall provide for a term of ten
(10) years. So long as Executive’s employment
relationship with the Company continues, the Shares underlying the
option shall vest and become exercisable in accordance with the
following schedule: Seventeen thousand five hundred
(17,500) Shares shall vest and become exercisable on the
one-year anniversary of the date of grant, which shall be the date
Executive commences employment with the Company (the “ISO
Initial Vesting Date”) and 1/36th of the remaining fifty-two
thousand five hundred (52,500) Shares shall vest and become
exercisable on each monthly anniversary of the ISO Initial Vesting
Date such that all of the Shares will be
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fully vested and exercisable on the four year
anniversary of the Execution Date. The Company agrees to promptly
take all actions that are necessary to allow such options to
qualify as “incentive stock options.” In addition, such
options shall be subject to the terms and conditions of the Plan
and a form of option agreement (the “Option Agreement”)
reflecting (and not inconsistent with) the terms set forth in this
Agreement between the Company and Executive, which documents are
incorporated herein by reference.
(d) For purposes of the Agreement,
“Fair Market Value” shall mean the closing price of the
Company’s Global Depositary Shares on the Execution Date as
traded on the Frankfurt Stock Exchange, the principal exchange on
which the Company’s Global Depositary Shares are traded on
the Effective Date.
(e) If the proposed reorganization
(however accomplished) announced by the Company on February 8,
2007 is effected, an appropriate and equitable adjustment shall be
made in the number, exercise price and kind of Shares as to which
all outstanding stock options granted to Executive, or portions
thereof then unexercised, shall be exercisable, to the end that
after the reorganization Executive’s proportionate interest
shall be maintained as before the occurrence of such reorganization
and the economic value of all of Executive’s options is
preserved.
(f) The Company represents and
warrants to Executive that the terms of the Plan do not conflict
with and will not prevent the option grants and the terms and
treatment of the options contemplated anywhere in this Agreement.
To the extent that after the date hereof the Company, the board or
any committee thereof has under the terms of the Plan any
discretion with respect to the interpretation of the Plan or the
power to make any decisions under the Plan, such discretion shall
be exercised and decisions made in a manner to give full effect to
the intent of this Agreement with respect to the
options.
5. Health and Welfare
Benefits . Executive shall be eligible for all health and
welfare benefits generally available to full-time employees of the
Company, subject to the terms and conditions of the Company’s
policies and benefit plan documents. However, Company shall pay one
hundred percent (100%) of the cost of coverage for all Company
health and welfare benefits, and shall reimburse Executive for any
COBRA payments paid by Executive for coverage under the health and
welfare plans of Executive’s prior employer until Executive
is eligible to participate in the Company’s health and
welfare benefit plans.
6. Vacation . Notwithstanding
the standard vacation policy provisions on vacation accrual rates,
Executive shall be entitled to earn vacation at the rate of twenty
(20) days per year.
7. Business and
Personal Expenses . Executive shall be reimbursed promptly for
all reasonable, out-of-pocket business expenses incurred in the
performance of Executive’s duties on behalf of the Company.
Such business expenses shall include the costs incurred by
Executive for cellular telephone hardware and usage fees, facsimile
hardware and usage fees, DSL hardware and usage fees and up to
seven thousand five hundred dollars ($7,500) per year in business
related education and training. In addition, the Company shall
reimburse Executive for any reasonable legal fees incurred in
connection with this 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 Executive’s termination of
employment. To obtain reimbursement, expenses must be submitted
promptly with appropriate supporting documentation and must be
submitted within the same fiscal year in which they were incurred
or within two and one-half (2 1
/
2 ) months after
the end of such year.
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8. Termination of Employment.
Subject to the terms and conditions of this Section 8, either
the Company or Executive may terminate Executive’s employment
at any time, with or without Cause (as defined in
Section 8.9), during the Term of Employment. Any termination
of Executive’s employment during the Term of Employment shall
be communicated by written notice of termination from the
terminating party to the other party (“Notice of
Termination”). The Notice of Termination shall indicate the
specific provision(s) of this Agreement relied upon in effecting
the termination and a written statement of the reason(s) for the
termination. In the case of a Notice of Termination provided by
Executive to the Company, such Notice of Termination shall not be
effective for a period of thirty (30) days after receipt of
such Notice of Termination by the Company. In the case of a Notice
of Termination provided by the Company to Executive, such Notice of
Termination shall be effective on the date designated by the
Company in the Notice of Termination. In the event
Executive’s employment is terminated by either party, for any
reason, during the Term of Employment, the Company shall pay the
prorated Base Salary earned as of the date of Executive’s
termination of employment and the accrued but unused vacation as of
the date of Executive’s termination of employment to
Executive upon Executive’s termination of employment. Except
as otherwise provided in this Section 8 or in any other
agreement between the Company and Executive, the Company shall have
no further obligation to make or provide to Executive, and
Executive shall have no further right to receive or obtain from the
Company, any payments or benefits in respect of the termination of
Executive’s employment with the Company during the Term of
Employment.
8.1 Severance Upon Involuntary
Termination without Cause and Termination by Executive with Good
Reason . In the event that the Company causes to occur an
involuntary termination without Cause (as defined in
Section 8.9) or in the event that Executive resigns from
employment with the Company for Good Reason (as defined in
Section 8.9) during the Term of Employment, Executive shall be
entitled to a “Severance Package” that consists of the
following: (a) a single cash lump-sum “Severance
Payment” equal to the Retention Bonus plus one hundred
percent (100%) of the annual Base Salary in effect immediately
prior to Executive’s termination of employment,
(b) reimbursement of any COBRA payments paid by Executive in
the twelve (12) month period following Executive’s
termination of employment, and (c) immediate vesting of the
lesser of (x) three hundred and twenty-five thousand
stock-option Shares (it being understood the Executive will have
the discretion to elect which of the shares subject to the options
granted under Section 4.4 will vest), or (y) the
remaining unvested stock-option Shares granted under
Section 4.4, and Executive shall also have one year to
exercise all vested options held by Executive immediately following
Executive’s termination of employment; provided
, however, that Executive executes a Separation Agreement that
includes a general mutual release by the Company and Executive in
favor of the other and their successors, affiliates and estates to
the fullest extent permitted by law, drafted by and in a form
reasonably satisfactory to the Company and Executive, and Executive
does not revoke the mutual general release within any legally
required revocation period, if applicable. All legally required and
authorized deductions and tax withholdings shall be made from the
Severance Payment, including for wage garnishments, if applicable,
to the extent required or permitted by law. The Company shall
deliver the entire Severance Payment to Executive on the date the
Company causes to occur an involuntary termination without cause or
within fifteen (15) days of the date of Executive’s
resignation if Executive resigns for Good Reason. Effective
immediately upon termination of employment, Executive shall no
longer be eligible to contribute to or to receive additional
Company contributions as an active participant in any retirement or
benefit plan covering employees of the Company, but shall continue
to have all rights under each such plan that are afforded to
terminated employees and inactive participants.
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8.2 Change in Control; Severance
Upon Termination Following a Change in Control . In the event
of a Change in Control (as defined in Section 8.9), Executive
shall be entitled to immediate vesting of all unvested stock
options held by Executive immediately prior to the Change in
Control. However, in the event a successor company desires to
retain Executive’s services for the one-year period following
a Change in Control, such acceleration of unvested options and the
payment of any proceeds from such option acceleration shall occur
in accordance with the terms and conditions set forth under
Section 8.3 below. In addition, in the event that within
twelve (12) months following a Change in Control, the Company
or its successor causes to occur an involuntary termination without
Cause (as defined in Section 8.9) or in the event that
Executive resigns from employment with the Company for Good Reason
(as defined in Section 8.9), Executive shall be entitled to
the Severance Package provided under Section 8.1, except that
the vesting of all of Executive’s unvested stock options
shall have accelerated immediately prior to the Change in Control;
provided , however, that Executive executes a
Separation Agreement that includes a general mutual release by the
Company and Executive in favor of the other and their successors,
affiliates and estates to the fullest extent permitted by law,
drafted by and in a form reasonably satisfactory to the Company and
Executive, and Executive does not revoke the mutual general release
within any legally required revocation period, if applicable. All
legally required and authorized deductions and tax withholdings
shall be made from the Severance Payment, including for wage
garnishments, if applicable, to the extent required or permitted by
law. The Company shall deliver the entire Severance Payment to
Executive on the date the Company causes to occur an involuntary
termination without cause or within fifteen (15) days of the
date of Executive’s resignation if Executive resigns for Good
Reason. Effective immediately upon termination of employment,
Executive shall no longer be eligible to contribute to or to
receive additional Company contributions as an active participant
in any retirement or benefit plan covering employees of the
Company, but shall continue to have all rights under each such plan
that are afforded to terminated employees and inactive
participants.
8.3 Continuation of Employment
After Change in Control . In the event a successor company
desires to retain Executive’s services for the one-year
period following a Change in Control on all of the terms and
conditions set forth in this Agreement, this Agreement shall
continue to remain in force and effect and any cash or other
proceeds received by Executive with respect to fifty percent
(50%) of Executive’s options the vesting of which was
accelerated under Section 8.2 by reason of the Change in
Control (the “Accelerated Proceeds”) shall be deposited
in an escrow (the “Escrow”) with an independent escrow
holder to be held for Executive’s benefit pursuant to an
escrow agreement which shall provide that (i) if
Executive’s employment with the successor company is
terminated during the one-year period following the Change in
Control by the successor company for Cause or by Executive without
Good Reason, Executive shall forfeit the Accelerated Proceeds (and
any earnings thereon) and they shall be paid to the predecessor
company immediately and (ii) the Accelerated Proceeds (and any
earnings thereon) shall be paid to Executive immediately upon
earlier of (x) the first anniversary of the Change in Control
if Executive maintains continuous employment with the successor
company throughout the one-year period following such Change in
Control date (y) the date of Executive’s termination of
employment with the successor company if Executive’s
employment is terminated for any reason other than by the successor
company for Cause or by Executive without Good Reason. Any taxes
due on the Accelerated Proceeds shall be withheld and paid from the
Escrow at the appropriate time.
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8.4 Section 409A
Compliance. The parties intend for this Agreement either to
satisfy the requirements of Section 409A or to be exempt from
the application of Section 409A, and this Agreement shall be
construed and interpreted accordingly. If this Agreement either
fails to satisfy the requirements of Section 409A or is not
exempt from the application of Section 409A, then the parties
hereby agree to amend or to clarify this Agreement in a timely
manner so that this Agreement either satisfies the requirements of
Section 409A or is exempt from the application of
Section 409A.
(a) Notwithstanding any provision in
this Agreement to the contrary, in the event that Executive is a
“specified employee” (as defined in Section 409A),
any Severance Payment, severance benefits or other amounts payable
under this Agreement that would be subject to the special rule
regarding payments to “specified employees” under
Section 409A(a)(2)(B) of the Code (together, “Specified
Employee Payments”) shall not be paid before the expiration
of a period of six months following the date of Executive’s
termination of employment (or before the date of Executive’s
death, if earlier). The Specified Employee Payments to which
Executive would otherwise have been entitled during the six-month
period following the date of Executive’s termination of
employment shall be accumulated and paid as soon as
administratively practicable following the first date of the
seventh month following the date of Executive’s termination
of employment, with interest on each of the Specified Employee
Payments for the period of deferral, at the prime rate, as
published in the Wall Street Journal (which shall be adjusted on
the effective date of each change in such rate) plus 300 basis
points.
(b) To the extent necessary to
ensure satisfaction the requirements of Section 409A(b)(3) of
the Code, assets shall not be set aside, reserved in a trust or
other arrangement, or otherwise restricted for purposes of the
payment of amounts payable under this Agreement.
(c) The Company hereby informs
Executive that the federal, state, local, and/or foreign tax
consequences (including without limitation those tax consequences
implicated by Section 409A) of this Agreement are complex and
subject to change. Executive acknowledges and understands that
Executive should consult with his or her own personal tax or
financial advisor in connection with this Agreement and its tax
consequences. Executive understands and agrees that the Company has
no obligation and no responsibility to provide Executive with any
tax or other legal advice in connection with this Agreement and its
tax consequences. Executive agrees that Executive shall bear sole
and exclusive responsibility for any and all adverse federal,
state, local, and/or foreign tax consequences (including without
limitation any and all tax liability under Section 409A) of
this Agreement to which he may be subject under applicable law. The
Company shall bear sole and exclusive responsibility for any and
all adverse federal, state, local, and/or foreign tax consequences
(including without limitation any and all tax liability under
Section 409A) of this Agreement to which it may be subject
under applicable law.
8.5 Effect of Death or
Disability . In the event that Executive dies or terminates
employment by reason of a Disability (as defined in
Section 8.9) during the Term of Employment, Executive shall be
entitled to (i) payment of his Retention Bonus and unpaid
prorated Base Salary earned as of the date of Executive’s
death or Disability (the “Measurement Date”),
(ii) reimbursement of any COBRA payments paid by Executive or
his estate or beneficiaries in the twelve (12) month period
following Measurement Date and (iii) and a single cash
lump-sum payment equal to the minimum bonus specified in this
Agreement that otherwise would have been payable to Executive for
the Company’s fiscal year in which the Measurement Date
occurs multiplied by a fraction, the numerator of which is the
number of days that have
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elapsed between the beginning of the fiscal year
in which the Measurement Date occurs and the Measurement Date and
the denominator of which is the number of days in the fiscal year
in which the Measurement Date occurs. All legally required and
authorized deductions and tax withholdings shall be made from the
payments described in the previous sentence, including for wage
garnishments, if applicable, to the extent required or
per