0001193125-14-211357.txt : 20140523 0001193125-14-211357.hdr.sgml : 20140523 20140523144858 ACCESSION NUMBER: 0001193125-14-211357 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20140523 DATE AS OF CHANGE: 20140523 GROUP MEMBERS: JOHN H. LEWIS GROUP MEMBERS: OSMIUM CAPITAL II, LP GROUP MEMBERS: OSMIUM CAPITAL, LP GROUP MEMBERS: OSMIUM DIAMOND, LP GROUP MEMBERS: OSMIUM SPARTAN, LP SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SPARK NETWORKS INC CENTRAL INDEX KEY: 0001314475 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 208901733 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-81138 FILM NUMBER: 14866844 BUSINESS ADDRESS: STREET 1: 11150 SANTA MONICA BOULEVARD STREET 2: SUITE 600 CITY: LOS ANGELES STATE: CA ZIP: 90025 BUSINESS PHONE: 310-893-0550 MAIL ADDRESS: STREET 1: 11150 SANTA MONICA BOULEVARD STREET 2: SUITE 600 CITY: LOS ANGELES STATE: CA ZIP: 90025 FORMER COMPANY: FORMER CONFORMED NAME: SPARK NETWORKS PLC DATE OF NAME CHANGE: 20050114 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Osmium Partners, LLC CENTRAL INDEX KEY: 0001316729 IRS NUMBER: 550793716 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 300 DRAKES LANDING ROAD STREET 2: SUITE 172 CITY: GREENBRAE STATE: CA ZIP: 94904 BUSINESS PHONE: (415) 785-4044 MAIL ADDRESS: STREET 1: 300 DRAKES LANDING ROAD STREET 2: SUITE 172 CITY: GREENBRAE STATE: CA ZIP: 94904 SC 13D/A 1 d731952dsc13da.htm SCHEDULE 13D/A Schedule 13D/A

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 13D

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO

RULE 13d-1(a) AND AMENDMENTS THERETO FILED

PURSUANT TO RULE 13d-2(a)

(Amendment No. 9)*

 

 

Spark Networks, Inc.

(Name of Issuer)

Common Stock, par value $0.001 per share

(Title of Class of Securities)

84651P100

(CUSIP Number)

Osmium Partners, LLC

300 Drakes Landing Road, Suite 172

Greenbrae, CA 94904

Attention: John H. Lewis

Telephone: (415) 785-4044

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

May 22, 2014

(Date of Event Which Requires Filing of This Statement)

 

 

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

 

 

Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent.

 

 

 

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

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

 

 

 


CUSIP No.: 84651P100  

 

  1.   

Name of reporting person

 

S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

John H. Lewis

  2  

Check the appropriate box if a member of a group

(a)  ¨        (b)  x

 

  3  

SEC use only

 

  4  

Source of funds

 

PF

  5  

Check box if disclosure of legal proceedings is required pursuant to Item 2(d) or 2(e)    ¨

 

  6.  

Citizenship or place of organization

 

United States

Number of

shares

beneficially

owned by

each

reporting

person

with

 

     7    

Sole voting power –

 

325,352

     8   

Shared voting power –

 

3,050,210

     9   

Sole dispositive power –

 

325,352

   10   

Shared dispositive power –

 

3,050,210

11  

Aggregate amount beneficially owned by each reporting person

 

3,375,562

12  

Check box if the aggregate amount in Row (11) excludes certain shares    ¨

 

13  

Percent of class represented by amount in Row (11)

 

14.2%

14  

Type of reporting person

 

IN

 

 

Page 2 of 11 pages


CUSIP No.: 84651P100  

 

  1   

Name of reporting person

 

S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

Osmium Partners, LLC

  2  

Check the appropriate box if a member of a group

(a)  ¨        (b)  x

 

  3  

SEC use only

 

  4  

Source of funds

 

AF

  5  

Check box if disclosure of legal proceedings is required pursuant to Item 2(d) or 2(e)    ¨

 

  6  

Citizenship or place of organization

 

Delaware

Number of

shares

beneficially

owned by

each

reporting

person

with

 

     7    

Sole voting power –

 

0

     8   

Shared voting power –

 

3,050,210

     9   

Sole dispositive power –

 

0

   10   

Shared dispositive power –

 

3,050,210

11  

Aggregate amount beneficially owned by each reporting person

 

3,050,210

12  

Check box if the aggregate amount in Row (11) excludes certain shares    ¨

 

13  

Percent of class represented by amount in Row (11)

 

12.8%

14  

Type of reporting person

 

IA, OO

 

 

Page 3 of 11 pages


CUSIP No.: 84651P100  

 

  1   

Name of reporting person

 

S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

Osmium Capital, LP

  2  

Check the appropriate box if a member of a group

(a)  ¨        (b)  x

 

  3  

SEC use only

 

  4  

Source of funds

 

WC

  5  

Check box if disclosure of legal proceedings is required pursuant to Item 2(d) or 2(e)    ¨

 

  6  

Citizenship or place of organization

 

Delaware

Number of

shares

beneficially

owned by

each

reporting

person

with

 

     7    

Sole voting power –

 

0

     8   

Shared voting power –

 

1,255,468

     9   

Sole dispositive power –

 

0

   10   

Shared dispositive power –

 

1,255,468

11  

Aggregate amount beneficially owned by each reporting person

 

1,255,468

12  

Check box if the aggregate amount in Row (11) excludes certain shares    ¨

 

13  

Percent of class represented by amount in Row (11)

 

5.3%

14  

Type of reporting person

 

PN

 

 

Page 4 of 11 pages


CUSIP No.: 84651P100  

 

  1   

Name of reporting person

 

S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

Osmium Capital II, LP

  2  

Check the appropriate box if a member of a group

(a)  ¨        (b)  x

 

  3  

SEC use only

 

  4  

Source of funds

 

WC

  5  

Check box if disclosure of legal proceedings is required pursuant to Item 2(d) or 2(e)    ¨

 

  6  

Citizenship or place of organization

 

Delaware

Number of

shares

beneficially

owned by

each

reporting

person

with

 

     7    

Sole voting power –

 

0

     8   

Shared voting power –

 

1,197,699

     9   

Sole dispositive power –

 

0

   10   

Shared dispositive power –

 

1,197,699

11  

Aggregate amount beneficially owned by each reporting person

 

1,197,699

12  

Check box if the aggregate amount in Row (11) excludes certain shares    ¨

 

13  

Percent of class represented by amount in Row (11)

 

5.0%

14  

Type of reporting person

 

PN

 

 

Page 5 of 11 pages


CUSIP No.: 84651P100  

 

  1   

Name of reporting person

 

S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

Osmium Spartan, LP

  2  

Check the appropriate box if a member of a group

(a)  ¨        (b)  x

 

  3  

SEC use only

 

  4  

Source of funds

 

WC

  5  

Check box if disclosure of legal proceedings is required pursuant to Item 2(d) or 2(e)    ¨

 

  6  

Citizenship or place of organization

 

Delaware

Number of

shares

beneficially

owned by

each

reporting

person

with

 

     7    

Sole voting power –

 

0

     8   

Shared voting power –

 

327,743

     9   

Sole dispositive power –

 

0

   10   

Shared dispositive power –

 

327,743

11  

Aggregate amount beneficially owned by each reporting person

 

327,743

12  

Check box if the aggregate amount in Row (11) excludes certain shares    ¨

 

13  

Percent of class represented by amount in Row (11)

 

1.4%

14  

Type of reporting person

 

PN

 

 

Page 6 of 11 pages


CUSIP No.: 84651P100  

 

  1   

Name of reporting person

 

S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

Osmium Diamond, LP

  2  

Check the appropriate box if a member of a group

(a)  ¨        (b)  x

 

  3  

SEC use only

 

  4  

Source of funds

 

WC

  5  

Check box if disclosure of legal proceedings is required pursuant to Item 2(d) or 2(e)    ¨

 

  6  

Citizenship or place of organization

 

Delaware

Number of

shares

beneficially

owned by

each

reporting

person

with

 

     7    

Sole voting power –

 

0

     8   

Shared voting power –

 

269,300

     9   

Sole dispositive power –

 

0

   10   

Shared dispositive power –

 

269,300

11  

Aggregate amount beneficially owned by each reporting person

 

269,300

12  

Check box if the aggregate amount in Row (11) excludes certain shares    ¨

 

13  

Percent of class represented by amount in Row (11)

 

1.1%

14  

Type of reporting person

 

PN

 

 

Page 7 of 11 pages


EXPLANATORY NOTE

This Amendment No. 9 to Schedule 13D (“Amendment No. 9”) is being filed with respect to the Reporting Persons beneficial ownership of common stock, par value $0.001 per share, of Spark Networks, Inc. (“Spark Networks” or the “Issuer”). This Amendment No. 9 supplements the Schedule 13D previously filed on December 6, 2013 (the “Schedule 13D”) as amended by Amendment No. 1 filed on January 16, 2014 (“Amendment No. 1”), Amendment No. 2 filed on February 24, 2014 (“Amendment No. 2”), Amendment No. 3 filed on March 10, 2014 filed on February 24, 2014 (“Amendment No. 3”), Amendment No. 4 filed on April 21, 2014 (“Amendment No. 4”), Amendment No. 5 filed on April 30, 2014 (“Amendment No. 5”), Amendment No. 6 filed on May 1, 2014 (“Amendment No. 6”), Amendment No. 7 filed on May 16, 2014 (“Amendment No. 7”) and Amendment No. 8 filed on May 21, 2014 (“Amendment No. 8”) (collectively, Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4, Amendment No. 5, Amendment No. 6, Amendment No. 7 and Amendment No. 8 shall be referred to herein as the “Previous Amendments”). Each Item below amends and supplements the information disclosed under the corresponding Item of the Schedule 13D. Unless otherwise indicated herein, capitalized terms used but not defined in this Amendment No. 9 shall have the same meaning herein as are ascribed to such terms in the Schedule 13D, as amended by the Previous Amendments. Except as set forth herein, this Amendment No. 8 does not modify any of the information previously reported by the Reporting Persons in the Schedule 13D, as amended by the Previous Amendments.

ITEM 2. Identity and Background.

The Reporting Persons are parties to that certain Solicitation Agreement (as defined in Item 4) with the 402 Group (as defined in Item 4), which agreement contains, among other things, certain voting and other arrangements relating to the 2014 Annual Meeting of Stockholders of the Issuer (the “2014 Annual Meeting”). As a result, the Reporting Persons may be deemed to be members of a “group,” within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), comprised of the Reporting Persons and the 402 Group. It is the understanding of the Reporting Persons that the 402 Group will file a Schedule 13D separately from the Reporting Persons with respect to its ownership of Shares pursuant to Rule 13d-1(k)(2) of the Exchange Act. Reference is made to such Schedules 13D for information concerning the 402 Group and its investment in the Issuer. All Shares reported herein as beneficially owned by the Reporting Persons exclude Shares owned by the 402 Group. The Reporting Persons disclaim beneficial ownership of the Shares owned by the 402 Group.

ITEM 4. Purpose of Transaction.

On May 22, 2014, the Reporting Persons entered into a Solicitation Agreement (the “Solicitation Agreement”) with 402 Fund, LP, SCA Partners, LP, 402 Capital, LLC and Ian V. Jacobs (collectively, the “402 Group” and together with the Reporting Persons, the “Group”). Pursuant to the terms of the Solicitation Agreement, the members of the Group agreed, amongst other things, to solicit proxies and to vote all of their respective Shares in favor of the election of the Reporting Persons’ four (4) director nominees (the “Nominees”) and the approval of certain business proposals submitted by the Reporting Persons at the 2014 Annual Meeting. The Group further agreed to seek to enter into a settlement agreement with the Issuer on the terms as set forth in the Solicitation Agreement. In the event that a settlement is not reached and all of the Nominees are elected at the 2014 Annual Meeting, the Reporting Persons agreed to request that the Nominees cause the Board to increase the size of the Board from six (6) to seven (7) directors immediately following the 2014 Annual Meeting, and to fill the resulting vacancy with a designee of the Reporting Persons. The foregoing description of the Solicitation Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Solicitation Agreement, which is filed herewith as Exhibit 99.1 and is incorporated herein by reference.

The Reporting Persons purchased the Common Stock based on the belief that such securities, when purchased, were undervalued and represented an attractive investment opportunity. Although no Reporting Person has any specific plan or proposal to acquire or dispose of the Common Stock, consistent with its investment purpose, each Reporting Person at any time and from time to time may acquire additional Common Stock or dispose of any or all of its Common Stock depending upon an ongoing evaluation of the investment in the Common Stock, prevailing market conditions, other investment opportunities, liquidity requirements of the Reporting Persons, and/or other investment considerations. The purpose of the acquisitions of the Common Stock was for investment, and the acquisitions of the Common Stock were made in the ordinary course of business and were not made for the purpose of acquiring control of the Issuer.

Consistent with their investment purpose, the Reporting Persons may engage in communications with one or more stockholders of the Issuer, one or more officers of the Issuer and/or one or more members of the board of directors of the Issuer and/or one or more representatives of the Issuer regarding the Issuer, including but not limited to its operations, and plans of the Reporting Persons. On December 5, 2013, Mr. Lewis spoke with representatives of the Issuer expressing his desire to be added immediately to the Board of Directors of the Issuer (the “Board”).

On February 21, 2014, the Reporting Persons, through stockholder of record Fund I, pursuant to Section 2.9 of the Amended and Restated Bylaws, as amended, of the Issuer (the “Bylaws”), delivered to the Issuer a letter (the “Nomination Letter”) containing advance notice of stockholder nominations and proposals to be brought before the Issuer’s 2014 Annual Meeting. By this Nomination Letter, the Reporting Persons submitted:

(i) nominations for the following four (4) candidates for election to the Board: Stephen J. Davis, Michael J. McConnell, Walter L. Turek, and Mr. Lewis (collectively, the “Stockholder Nominees”); and

(ii) notice of the following three (3) proposals to be brought before the 2014 Annual Meeting (the “Stockholder Proposals”):

 

  1. Amendment of each of the Issuer’s Amended and Restated Certificate of Incorporation and the Bylaws to permit the Issuer’s stockholders to act by written consent in lieu of action at an annual or special meeting of the Issuer;

 

  2. Amendment of the Bylaws to permit beneficial holders of the Issuer’s stock to submit stockholders proposals and director nominations; and

 

  3. Amendment of the Bylaws to permit the Issuer’s stockholders to call special meetings of stockholders.

In addition to the nomination of the Stockholder Nominees and notice of the Stockholder Proposals, the Reporting Persons expressed dissatisfaction in the Nomination Letter with the Issuer’s delays in updating the Board following the departure of former stockholder, Great Hill Partners, and its two directors from the Company and the Board.

 

Page 8 of 11 pages


Further, the Reporting Persons criticized the Issuer’s corporate governance regime for its impediments to stockholder democracy and demanded that the Issuer grant greater access and Board accountability to stockholders.

These nominations and Stockholder Proposals were submitted prior to the Issuer’s February 23, 2014 deadline for such nominations pursuant to the process for stockholder nomination of candidates for directors set forth in the Bylaws and most recent proxy statement on Schedule 14A. The foregoing summary of the Nomination Letter is qualified in its entirety by reference to the full text of the Nomination Letter, a copy of which was filed as Exhibit 2 to Amendment No. 2, and is incorporated herein by reference.

During the week of March 3, 2014, the Reporting Persons discussed the Stockholder Nominees and Stockholder Proposals with representatives of the Issuer. On March 10, 2014, the Reporting Persons issued a press release regarding the Issuer, a copy of which was filed as Exhibit 3 to Amendment No. 3, and is incorporated herein by reference.

On April 17, 2014, the Reporting Persons filed a preliminary proxy statement with the SEC soliciting votes for the Issuer’s 2014 Annual Meeting to vote on the following matters:

 

  1. To elect the Stockholder Nominees to serve as directors on the Board until the Issuer’s 2015 annual meeting of stockholders and until their respective successors are duly elected;

 

  2. To ratify the appointment of Ernst & Young LLP as the independent registered public accounting firm of the Issuer for the year ending December 31, 2014;

 

  3. To consider and act upon a stockholder proposal regarding poison pills, if properly presented at the 2014 Annual Meeting;

 

  4. To approve a stockholder proposal to amend the Company’s Amended and Restated Bylaws to permit stockholders to call special meetings of stockholders, if properly presented at the 2014 Annual Meeting;

 

  5. To approve a stockholder proposal to amend the Company’s Amended and Restated Bylaws to allow beneficial stockholders to submit proposals and nominations for director under the Company’s Amended and Restated Bylaws, if properly presented at the 2014 Annual Meeting; and

 

  6. To transact such other business as may properly come before the 2014 Annual Meeting or any adjournments or postponements thereof.

Proposals 4 and 5 were two of the Reporting Persons’ Stockholder Proposals.

On each of April 28 and April 30, 2014, the Reporting Persons filed a revised preliminary proxy statement with the SEC soliciting votes for the Issuer’s 2014 Annual Meeting.

On May 1, 2014, the Reporting Persons filed a definitive proxy statement with the SEC soliciting votes for the Issuer’s 2014 Annual Meeting.

On May 15, 2014, the Reporting Persons filed definitive additional materials in the form of a press release with the SEC in respect of the Issuer’s 2014 Annual Meeting.

On May 20, 2014, the Reporting Persons filed definitive additional materials in the form of a press release and also an investor presentation with the SEC in respect of the Issuer’s 2014 Annual Meeting.

The Reporting Persons may continue to discuss ideas that, if effected may result in a change in any of the following: the acquisition by persons of additional Common Stock of the Issuer, an extraordinary corporate transaction involving the Issuer, and/or other changes in the board of directors or management of the Issuer.

Except as disclosed above, none of the Reporting Persons has any other plans or proposals which relate to, or would result in, any of the matters referred to in paragraphs (a) through (j), inclusive, of the instructions to Item 4 of Schedule 13D. The Reporting Persons may, at any time and from time to time, review or reconsider their position and/or change their purpose and/or formulate plans or proposals with respect thereto.

ITEM 5. Interest in Securities of the Issuer.

The percentages set forth in this response are based on the 23,832,938 shares of Common Stock outstanding as of the close of May 9, 2014, as reported by the Issuer in its Quarterly Report on Form 10-Q filed with the SEC on May 12, 2014. The Reporting Persons and the 402 Group collectively own an aggregate of 6,402,288 Shares, representing approximately 26.9% of the Shares outstanding. Each Reporting Person disclaims beneficial ownership of the Shares owned by the 402 Group.

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

On May 22, 2014, the Reporting Persons and the members of the 402 Group entered into a Solicitation Agreement as defined and described in Item 4 above. A copy of the Solicitation Agreement is attached as Exhibit 99.1 hereto and is incorporated herein by reference.

Other than as described herein, there are no contracts, arrangements, understandings or relationships among the Reporting Persons, or between the Reporting Persons and any other person, with respect to the securities of the Issuer.

ITEM 7. Material to be Filed as Exhibits.

 

Exhibit 1    Joint Filing Agreement
Exhibit 99.1    Solicitation Agreement by and among the Reporting Persons and the 402 Group, dated May 22, 2014.

 

Page 9 of 11 pages


SIGNATURE

After reasonable inquiry and to the best of its knowledge and belief, the undersigned each certifies that the information with respect to it set forth in this Statement is true, complete and correct.

Dated: May 23, 2014

 

John H. Lewis   
Osmium Partners, LLC   
Osmium Capital, LP   
Osmium Capital II, LP   
Osmium Spartan, LP   
Osmium Diamond, LP   
By:  

/s/ John H. Lewis

  

John H. Lewis, for himself and as

Managing Member of Osmium Partners,

LLC, for itself and as General Partner of

Osmium Capital, LP, Osmium Capital

II, LP, Osmium Spartan, LP and

Osmium Diamond, LP

  

 

Page 10 of 11 pages


EXHIBIT INDEX

 

Exhibit 1    Joint Filing Agreement
Exhibit 99.1    Solicitation Agreement by and among the Reporting Persons and the 402 Group, dated May 22, 2014.

 

Page 11 of 11 pages

EX-1 2 d731952dex1.htm EXHIBIT 1 Exhibit 1

EXHIBIT 1

JOINT FILING AGREEMENT

In accordance with Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, the persons named below agree to the joint filing on behalf of each of them of a statement on Schedule 13D (including amendments thereto) with respect to the Common Stock, par value $0.001 per share, of Spark Networks, Inc., and further agree that this Joint Filing Agreement be included as an Exhibit to such joint filing. In evidence thereof, the undersigned hereby execute this Agreement.

Dated: May 23, 2014

 

John H. Lewis   
Osmium Partners, LLC   
Osmium Capital, LP   
Osmium Capital II, LP   
Osmium Spartan, LP   
Osmium Diamond, LP   
By:  

/s/ John H. Lewis

  

John H. Lewis, for himself and as

Managing Member of Osmium Partners,

LLC, for itself and as General Partner of

Osmium Capital, LP, Osmium Capital

II, LP, Osmium Spartan, LP and

Osmium Diamond, LP

  
EX-99.1 3 d731952dex991.htm EXHIBIT 99.1 Exhibit 99.1

Exhibit 99.1

SOLICITATION AGREEMENT

WHEREAS, certain of the undersigned are stockholders, direct or beneficial, of Spark Networks, Inc., a Delaware corporation (the “Company”);

WHEREAS, Osmium Partners, LLC, Osmium Capital, LP, Osmium Capital II, LP, Osmium Spartan, LP, Osmium Diamond, LP and John H. Lewis (collectively, the “Osmium Group”) have nominated a slate of four (4) director candidates (the “Nominees”) for election to the Board of Directors of the Company (the “Board”), and submitted certain business proposals (the “Business Proposals”) for consideration at, the 2014 annual meeting of stockholders of the Company (including any other meeting of stockholders held in lieu thereof, and any adjournments, postponements, reschedulings or continuations thereof, the “Annual Meeting”), as set forth in the definitive proxy statement filed by the Osmium Group with the Securities and Exchange Commission (“SEC”) on May 1, 2014 (the “Proxy Statement”);

WHEREAS, 402 Capital, LLC, 402 Fund, LP, SCA Partners, LP and Ian V. Jacobs (collectively, the “402 Group”) and the Osmium Group wish to form a group for the purpose of allowing the 402 Group to participate in the Osmium Group’s solicitation of proxies for the election of the Nominees and the approval of the Business Proposals at the Annual Meeting (the “Solicitation”) and to take the other actions specified herein in order to allow the 402 Group to obtain its own representation on the Board.

NOW, IT IS AGREED, this 22nd day of May, 2014 by the parties hereto:

1. Each member of the Osmium Group and the 402 Group (collectively, the “Group”) agrees to form a “group” (as such term is defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) with respect to the securities of the Company. In furtherance of the foregoing and in accordance with Rule 13d-1(k)(1)(iii) under the Exchange Act, the Osmium Group and the 402 Group shall file, separately or jointly, Schedules 13D and any amendments thereto with respect to the securities of the Company to the extent required by applicable law. Each member of the Group shall be responsible for the accuracy and completeness of his or its own disclosure therein, and is not responsible for the accuracy and completeness of the information concerning the other members, unless such member knows or has reason to know that such information is inaccurate.

2. The members of the Group agree to solicit proxies for the election of the Nominees and the approval of the Business Proposals and shall vote all shares of common stock of the Company they are entitled to vote at the Annual Meeting in favor of such election and proposals. In furtherance of the foregoing, the Proxy Statement shall be promptly amended in order to include each member of the 402 Group as a “participant” (as such term is defined in Item 4 of Schedule 14A under the Exchange Act) in the Solicitation. Each member of the Group shall be responsible for the accuracy and completeness of his or its own disclosure therein, and is not responsible for the accuracy and completeness of the information concerning the other members, unless such member knows or has reason to know that such information is inaccurate.

3. The members of the Group agree to attempt to take all reasonable action necessary to avoid an election contest relating to the Annual Meeting and to seek to enter into a


settlement agreement with the Company on terms favorable to and in the best interests of all stockholders in the view of the Group. In furtherance of the foregoing, the members of the Group agree to seek to enter into a settlement agreement with the Company that will result in a reconstituted Board of seven (7) directors, consisting of three (3) incumbent directors, three (3) designees of the Osmium Group and one (1) designee of the 402 Group and that will contain such other or additional terms and conditions to be agreed upon by the parties hereto (the “Settlement”).

4. To the extent the Group does not enter into a Settlement with the Company and all the Nominees are elected at the Annual Meeting, the Osmium Group agrees to request that the Nominees cause the Board to increase the size of the Board from six (6) to seven (7) directors immediately following the Annual Meeting and to fill the vacancy created by such increase with a designee of the 402 Group. The Osmium Group represents that the Nominees have agreed to take the foregoing action if elected at the Annual Meeting.

5. Each member of the Group shall provide written notice to Crowell & Moring LLP (“Crowell”) and Olshan Frome Wolosky LLP (“Olshan”) of (i) any of their purchases or sales of securities of the Company, or (ii) any securities of the Company over which they acquire or dispose of beneficial ownership. Notice shall be given no later than 24 hours after each such transaction.

6. Each member of the Group shall pay its own expenses incident to this Agreement and in performing its obligations hereunder; provided that the Osmium Group will bear the expenses directly associated with the Solicitation.

7. Each member of the Group agrees that any SEC filing, press release or stockholder communication proposed to be made or issued by the Group or any member of the Group in connection with the Group’s activities set forth herein shall be first approved by a representative of the Osmium Group and a representative of the 402 Group, which approval will not be unreasonably withheld. Each of the Osmium Group and the 402 Group shall have a reasonable opportunity to review and comment upon such materials and hereby agree to work in good faith to resolve any disagreement that may arise concerning decisions to be made, actions to be taken or statements to be made. Each of the Osmium Group and the 402 Group acknowledges and agrees that time is of the essence in preparing and filing such materials and each shall use commercially reasonable efforts to cooperate with the other in the furnishing of data and information in order to facilitate the timely completion and filing of such materials.

8. The relationship of the parties hereto shall be limited to carrying on the business of the Group in accordance with the terms of this Agreement. Such relationship shall be construed and deemed to be for the sole and limited purpose of carrying on such business as described herein. Nothing herein shall be construed to authorize any party to act as an agent for any other party, or to create a joint venture or partnership, or to constitute an indemnification. Nothing herein shall restrict any party’s right to purchase or sell securities of the Company, as he or it deems appropriate, in his or its sole discretion, provided that all such purchases and sales are made in compliance with all applicable securities laws.

 

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9. The terms and provisions of this Agreement may not be modified, waived or amended without the written consent of each of the parties hereto. No person or entity may be added as a party hereto and, except as set forth in Section 12, no person or entity may be removed as a party hereto without the written consent of each of the parties hereto.

10. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which, taken together, shall constitute but one and the same instrument, which may be sufficiently evidenced by one counterpart.

11. Any dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration by the American Arbitration Association in accordance with its Commercial Arbitration Rules. Judgment on the Award may be entered in any court having jurisdiction. The number of arbitrators shall be one. The place of arbitration shall be New York, NY. This clause shall not preclude parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction.

12. This Agreement shall automatically terminate upon the earlier of (i) September 30, 2014, (ii) the certification of the final results of the Annual Meeting, or (iii) the entry into a Settlement with the Company; provided, however, that the provisions of Section 4 of this Agreement shall survive any termination under clause (ii) of this Section 12 and the provisions of Section 6 of this Agreement shall survive any termination under this Section 12.

13. Each of the parties hereto hereby agrees that this Agreement shall be filed as an exhibit to the Schedule(s) 13D required to be filed by them as contemplated under Section 1 of this Agreement.

14. Each of the parties hereto hereby agrees that nothing contained in this Agreement shall prevent Crowell from continuing to represent the members of the Osmium Group in matters other than those relating to the Company while this Agreement is in effect and that nothing shall prevent Olshan from continuing to represent the members of the 402 Group in matters other than those relating to the Company while this Agreement is in effect. Each of the parties hereto further agrees that nothing contained in this Agreement shall prevent Crowell from continuing to represent the members of the Osmium Group in matters relating to their investment in the Company following the termination of this Agreement and that nothing shall prevent Olshan from continuing to represent the members of the 402 Group in matters relating to their investment in the Company following the termination of this Agreement.

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.

 

OSMIUM CAPITAL, LP
By:   Osmium Partners, LLC General Partner
By:  

/s/ John H. Lewis

  Name:   John H. Lewis
  Title:   Managing Member
OSMIUM CAPITAL II, LP
By:   Osmium Partners, LLC General Partner
By:  

/s/ John H. Lewis

  Name:   John H. Lewis
  Title:   Managing Member
OSMIUM SPARTAN, LP
By:   Osmium Partners, LLC General Partner
By:  

/s/ John H. Lewis

  Name:   John H. Lewis
  Title:   Managing Member
OSMIUM DIAMOND, LP
By:   Osmium Partners, LLC General Partner
By:  

/s/ John H. Lewis

  Name:   John H. Lewis
  Title:   Managing Member


OSMIUM PARTNERS, LLC
By:  

/s/ John H. Lewis

  Name:   John H. Lewis
  Title:   Managing Member

/s/ John H. Lewis

JOHN H. LEWIS
402 FUND, LP
By:  

402 Capital, LLC

Investment Manager

By:  

/s/ Ian V. Jacobs

  Name:   Ian V. Jacobs
  Title:   Managing Member
SCA PARTNERS, LP
By:  

402 Capital, LLC

Investment Manager

By:  

/s/ Ian V. Jacobs

  Name:   Ian V. Jacobs
  Title:   Managing Member
402 CAPITAL, LLC
By:  

/s/ Ian V. Jacobs

  Name:   Ian V. Jacobs
  Title:   Managing Member

/s/ Ian V. Jacobs

IAN V. JACOBS