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EXECUTIVE EMPLOYMENT AGREEMENT

Employment Agreement

EXECUTIVE EMPLOYMENT AGREEMENT | Document Parties: SPARK NETWORKS PLC | England and Wales You are currently viewing:
This Employment Agreement involves

SPARK NETWORKS PLC | England and Wales

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Title: EXECUTIVE EMPLOYMENT AGREEMENT
Governing Law: California     Date: 2/13/2007
Industry: Personal Services     Sector: Services

EXECUTIVE EMPLOYMENT AGREEMENT, Parties: spark networks plc , england and wales
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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:

 

 

 

 

 

 

$100,000

  

X

  

Number of Days between the

Execution Date and December 31, 2007

 

 

  

 

  

360

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


 
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