Spark Networks, Inc. (NYSEMKT:LOV) Files An 8-K Entry into a Material Definitive Agreement

Spark Networks, Inc. (NYSEMKT:LOV) Files An 8-K Entry into a Material Definitive Agreement

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Item1.01 Entry Into A Material Definitive Agreement.

Merger and Merger Agreement

On May2, 2017, Spark Networks, Inc., a Delaware corporation (the
Company), entered into an Agreement and Plan of Merger by and
among the Company, Affinitas GmbH, a German limited company
(Affinitas), Blitz 17-655 SE, a European stock corporation
(Societas Europaea, SE) with its corporate seat in
Germany (New Parent), and Chardonnay Merger Sub, Inc., a Delaware
corporation and a direct wholly owned subsidiary of New Parent
(Merger Sub) (the Merger Agreement).

The Merger Agreement provides that, upon the terms and subject to
the conditions set forth therein, Merger Sub will be merged with
and into the Company, and the separate existence of Merger Sub
will cease, and the Company will become a wholly owned subsidiary
of New Parent (the Merger).

The Merger Agreement was adopted by the board of directors of the
Company (the Company Board) and the board of directors of
Affinitas (the Affinitas Board).

Merger Consideration

Subject to the terms and conditions of the Merger Agreement, at
the date and time when the Merger becomes effective (the
Effective Time), stockholders of the Company will have the right
to receive, in respect to each share of common stock of the
Company (Company Common Stock) issued and outstanding immediately
prior to the Effective Time, a number of American Depositary
Shares of New Parent (New Parent ADSs) equal to the Exchange
Ratio (as defined below). Each New Parent ADS will equal 0.1
shares of ordinary no-par value registered shares of New Parent
(New Parent Ordinary Shares). Following the Effective Time, each
outstanding share of Company Common Stock will cease to be
outstanding, will be canceled, and will cease to exist. Exchange
Ratio means 0.1, unless any of the warrants to purchase Company
Common Stock (the Company Warrants) issued to that certain
Warrant Agreement, dated as of August9, 2016, by and between the
Company and Peak6 Investments, L.P., are exercised, in which case
Exchange Ratio means (i)0.1 multiplied by (ii)a fraction, the
numerator of which isthe number of shares of Company Common Stock
outstanding as of the Effective Time less the number of shares of
Company Common Stock issued to any Company Warrants, and the
denominator of which is the number of shares of Company Common
Stock outstanding as of the Effective Time.

Termination

The Merger Agreement may be terminated prior to the Effective
Time including: (i)by mutual written consent of the Company and
Affinitas; (ii)by either the Company or Affinitas in the event
that the Merger will not have been consummated by January31, 2018
(iii) by either the Company or Affinitas if a court has issued a
final and nonappealable order or similar action having the effect
of prohibiting the Merger; (iv)by either the Company or Affinitas
if the requisite company stockholder approval for the Merger (the
Company Stockholder Approval) is not obtained; (v)by Affinitas,
at any time prior to the Company Stockholder Approval being
obtained if (A)the Company enters an agreement related to an
alternative proposal to acquire the Company (the Alternative
Acquisition Proposal), or (B)the Company fails to publicly
recommend against an Alternative Acquisition Proposal; (vi)by the
Company or Affinitas in the event of a breach by the other party
of any covenant or agreement or any representation or warranty
that would result in the failure of certain conditions of the
Merger; (vii)by the Company if, prior to obtaining the Company
Stockholder Approval, the Company enters into a superior proposal
to acquire the Company; and (viii)by Affinitas, if the Company
materially breaches certain non-solicitation provisions.

Treatment of Convertible Securities

The Merger Agreement provides that (i)immediately prior to the
Effective time, each restricted stock unit of the Company
(Company RSU) will be accelerated as to vesting and payment (if
required) and converted into one share of Company Common Stock;
(ii)at the Effective Time all outstanding awards of the Companys
restricted stock (Company Restricted Stock Awards) that are
unvested will be issued in exchange for New Parent Ordinary
Shares with vesting terms identical to the Company Restricted
Stock Awards; and (iii)at the Effective Time all options to
purchase Company Common Stock (Company Options) immediately
outstanding prior to the Effective Time will be exchanged for
awards to acquire a number of shares of New Parent ADSs equal to
(w)the number of shares of Company Common Stock subject to such
Company Option multiplied by (x)the Exchange Ratio (the result
rounded down to the nearest whole New Parent ADS), with an
exercise price per share (rounded up to the nearest whole cent)
equal to (y)the per share exercise price specified in such
Company Stock Option or the Companys stock option plan, as
applicable, divided by (z)the Exchange Ratio (with the result
rounded up to the nearest whole cent).

Conditions to Closing

Consummation of the Merger is subject to customary conditions,
including, among others things, approval by the Companys
stockholders.

Board of Directors

Upon consummation of the Merger, the board of directors of the
New Parent (the New Parent Board) will be composed of (i)three
directors to be selected by Affinitas prior to the filing of the
preliminary Registration Statement (as defined below), (ii) one
director to be selected by the Company prior to the filing of the
Registration Statement and (iii)three directors as mutually
agreed by the Company and Affinitas prior to the filing of the
Registration Statement.

Representations and Warranties; Covenants

The Merger Agreement contains customary representations and
warranties made by each of the Company, Merger Sub, New Parent,
and Affinitas. The Company and Affinitas have also agreed to
various covenants in the Merger Agreement, including, among other
things, covenants (i)to conduct their respective material
operations in the ordinary course of business consistent with
past practice, (ii)to promptly notify the other party after
taking certain actions prior to the closing of the Merger, and
(iii)not to solicit other acquisitions proposals and, except
under limited circumstances and with respect to unsolicited
proposals, not to enter into discussions concerning, or provide
information in connection with, alternative transactions.

Meeting of Stockholders

As promptly as practicable after the date of the Registration
Statement is declared effective, the Company will take all action
necessary in accordance with applicable laws to duly call, set a
record date for, give notice of, convene, and hold a meeting of
the holders of Company Common Stock (the Stockholder Meeting).
The Company has agreed to cause the Stockholder Meeting to be
held for the purpose of voting upon a proposal to adopt the
Merger Agreement and Merger.

Proxy Statement/Prospectus and Registration Statement

to the Merger Agreement, New Parent and Affinitas, in cooperation
with the Company, have agreed to file with the U.S. Securities
and Exchange Commission (the SEC) a registration statement on
Form F-4 (the Registration Statement) to which the shares of New
Parent Ordinary Shares issuable to the Merger will be registered
with the SEC under the Securities Act, and the Company will
prepare a proxy statement on Schedule 14A relating to the
approval and adoption by the Companys stockholders at the
Stockholder Meeting of the Merger Agreement, the Merger, and the
other transactions contemplated by the Merger Agreement (the
Proxy Statement/Prospectus) for inclusion in the Registration
Statement as a prospectus, and to be filed with the SEC as part
of the Registration Statement. The Company agrees to use
reasonable best efforts to cause the Registration Statement to
become effective under the Securities Act as soon after filing as
practicable, and to keep the Registration Statement effective as
long as is necessary to consummate the Merger and the
transactions contemplated thereby. Further, the Company agrees to
use its reasonable best efforts to cause the Proxy
Statement/Prospectus to be mailed to its shareholders as promptly
as practicable after the Registration Statement becomes
effective.

Termination Fee

Upon certain events, if the Merger Agreement is terminated by the
Company, then the Company is obligated to pay Affinitas a
one-time fee equal to the greater of (i) $1,500,000 or (ii)the
fees and expenses of Affinitas related to the Merger. Upon
certain events, if the Merger Agreement is terminated by the
Company, then Affinitas is obligated to pay the Company a
one-time fee equal to the greater of (i) $1,500,000 or (ii)the
fees and expenses of the Company related to the Merger.

Additional Agreements

Concurrently with the execution of the Merger Agreement,
(i)certain stockholders of the Company will have entered into
voting agreements with the Company to which such stockholders
have agreed, among other things, to vote their shares of Company
Common Stock in favor of the Merger Agreement and the
transactions contemplated thereby (the Voting Agreements) and
(ii)all stockholder of Affinitas will have entered into a support
agreement to which such stockholders have agreed, among other
things, to vote their shares of Affinitas stock in favor of the
transactions contemplated by the Merger Agreement (the Support
Agreement). In addition, at the time of the closing of the
Merger, New Parent, certain

stockholders of Affinitas, and the Company have agreed to execute
a registration rights agreement (the Registration Rights
Agreement), to which New Parent will register for resale with the
SEC certain shares held by such stockholders.

The foregoing summary of the agreements described above does not
purport to be complete and is qualified in its entirety by the
text of such agreements, which are attached as Exhibit 2.1
(Merger Agreement) and Exhibit 10.1 (Form of Voting Agreement)
and Exhibit 10.2 (Form of Registration Rights Agreement) and
Exhibit 10.3 (Form of Support Agreement) hereto and are
incorporated herein by reference.

Forward-Looking Statements

This Form 8-K contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
All statements other than statements of historical fact are
forward-looking statements. These forward-looking statements
involve known and unknown risks, uncertainties, and other factors
that may cause the Companys or Affinitas or the New Parents
performance or achievements to be materially different from those
of any expected future results, performance, or achievements.
Forward-looking statements speak only as of the date they are
made, and neither the Company nor Affinitas assumes any duty to
update forward-looking statements. We caution readers that a
number of important factors could cause actual results to differ
materially from those expressed in, or implied or projected by,
such forward-looking statements. Such forward-looking statements
include, but are not limited to, statements about the benefits of
the business combination to the existing brand portfolio,
statements about the ability to drive superior growth or achieve
cost savings, statements about becoming the global leader in
premium dating, statements about the ability to leverage
strengths of each company to provide exceptional user experience
and drive shareholder value, statements about the expected size
of the combined company, statements about the projected financial
results of the New Parent for 2018, statements about the New
Parents plans, objectives, expectations and intentions and other
statements that are not historical facts. The following factors,
among others, could cause actual results to differ from those set
forth in the forward-looking statements: (i)the possibility that
the Merger does not close when expected or at all because
required shareholder or other approvals and other conditions to
closing are not received or satisfied on a timely basis or at
all; (ii)changes in the Companys share price before closing,
including as a result of the financial performance of Affinitas
prior to closing, or more generally due to broader stock market
movements, and the performance of peer group companies; (iii)the
risk that the benefits from the transaction may not be fully
realized or may take longer to realize than expected, including
as a result of changes in general economic and market conditions,
interest and exchange rates, monetary policy, laws and
regulations and their enforcement, and the degree of competition
in the geographic and business areas in which the Company and
Affinitas operate; (iv)the ability to promptly and effectively
integrate the businesses of the Company and Affinitas; (v)the
reaction to the transaction of the companies customers, employees
and counterparties; (vi)diversion of management time on
merger-related issues; (vii)lower-than-expected revenues, credit
quality deterioration or a reduction in net earnings; and
(viii)other risks that are described in the Companys public
filings with the SEC. For more information, see the risk factors
described in the Companys Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q and other filings with the SEC.

How to Find Further Information

This communication does not constitute an offer to sell or a
solicitation of an offer to sell or a solicitation of an offer to
buy any securities or a solicitation of any vote or approval, nor
shall there be any sale of securities in any jurisdiction in
which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any
such jurisdiction. No offering of securities shall be made except
by means of a prospectus meeting the requirements of Section10 of
the Securities Act of 1933, as amended, and otherwise in
accordance with applicable law. This communication is being made
in respect of the proposed business combination transaction
between the Company and Affinitas. The proposed transaction will
be submitted to the shareholders of the Company for their
consideration. In connection with the Merger, the New Parent will
file with the SEC a registration statement on Form F-4 that will
include the proxy statement of the Company that also constitutes
a prospectus of the Company. After the registration statement has
been declared effective by the SEC, a definitive proxy
statement/prospectus will be mailed to each stockholder of the
Company entitled to vote at the Stockholder Meeting. INVESTORS
ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER
DOCUMENTS RELATING TO THE TRANSACTION FILED WITH THE SEC
CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED TRANSACTION. Investors may obtain copies of the proxy
statement/prospectus (when available) and all other documents
filed with the SEC regarding the proposed transaction, free of
charge, at the SECs website (http://www.sec.gov). Investors may
also obtain these documents, free of charge, from the Companys
website (www.spark.net) under the link Investor Relations
and then under the tab SEC Filings or by directing request to
[email protected].

Participants in Solicitation

The Company and its directors, executive officers and other
members of management and employees may be deemed to be
participants in the solicitation of proxies from the Companys
stockholders in connection with the proposed transaction.
Information regarding the persons who may, under the rules of the
SEC, be deemed participants in the solicitation of the Companys
stockholders in connection with the proposed transaction and a
description of their direct and indirect interest, by security
holdings or otherwise, will be set forth in the proxy
statement/prospectus filed with the SEC in connection with the
proposed transaction. You can find information about the Companys
executive officers and directors in its definitive proxy
statement filed with the SEC on March31, 2017 and in its Annual
Report on Form 10-K filed with the SEC on March22, 2017. You can
also obtain free copies of these documents from the Company using
the contact information above.

Item 9.01 Financial Statements and
Exhibits

(d) Exhibits
2.1 Agreement and Plan of Merger, dated as of May2, 2017, by and
among Spark Networks, Inc., Affinitas GmbH, Blitz 17-655 SE,
and Chardonnay Merger Sub, Inc.*
10.1 Form of Voting Agreement, dated as of May2, 2017, by and
among by and among Spark Networks, Inc., Affinitas GmbH,
Blitz 17-655 SE, Chardonnay Merger Sub, Inc., and the
stockholders listed on the pages thereto.
10.2 Form of Registration Rights Agreement, by and among by and
among Spark Networks, Inc., , Affinitas GmbH, Blitz 17-655
SE, Chardonnay Merger Sub, Inc., and the stockholders listed
on the pages thereto.
10.3 Form of Support Agreement, dated as of May2, 2017, by and
among by and among Spark Networks, Inc., Affinitas GmbH,
Blitz 17-655 SE, Chardonnay Merger Sub, Inc., and all
stockholders of Affinitas.
* Disclosure schedules and exhibits have been omitted to
Regulation S-K Item 601(b)(2). The Company agrees to furnish
a supplemental copy of such schedule or exhibit upon request
of the SEC.


About Spark Networks, Inc. (NYSEMKT:LOV)

Spark Networks, Inc. is engaged in creating brands and communities that help individuals form life-long relationships with others that share their interests and values. The Company operates through four segments, such as Jewish Networks, which consists of JDate, JDate.co.uk, JDate.fr, JDate.co.il, Cupid.co.il and JSwipe; Christian Networks, which consists of ChristianMingle, CrossPaths, ChristianMingle.co.uk, ChristianMingle.com.au, Believe.com, ChristianCards.net, DailyBibleVerse.com and Faith.com; Other Networks, which consists of Spark.com and related other general market Websites, as well as other properties, which primarily consists of sites focused towards various religious, ethnic, geographic and special interest groups, and Offline & Other Businesses segment, which consists of revenue generated from offline activities. The Company operates a number of international Websites and mobile applications, and maintains its physical presence in both the United States and Israel.

Spark Networks, Inc. (NYSEMKT:LOV) Recent Trading Information

Spark Networks, Inc. (NYSEMKT:LOV) closed its last trading session down -0.030 at 0.990 with 32,351 shares trading hands.

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