Item 1.01. Entry into a Material Definitive Agreement.
On
Merger. The Merger Agreement provides for, among other things, the merger of Sub with and into the Company, on the terms and subject to the conditions set forth in the Merger Agreement (the "Merger"), with the Company continuing as the surviving corporation in the Merger. As a result of the Merger, the Company would become a wholly owned subsidiary of Parent.
Merger Consideration. Pursuant to the Merger Agreement, at the effective time of
the Merger (the "Effective Time"), each share of Company common stock, par value
Treatment of Outstanding Equity Awards. Pursuant to the terms of the Merger Agreement, the Company Board (or, if appropriate, any committee thereof) shall adopt resolutions that provide that immediately prior to the Effective Time:
• outstanding Company stock options ("Company Options") will be fully vested and cancelled, and each holder of a cancelled Company Option will receive a payment in cash equal to the product of (i) the total number of shares subject to the cancelled Company Option and (ii) the excess, if any, of (A) the Merger Consideration over (B) the exercise price per share subject to the cancelled Company Option, without interest, less any applicable withholding taxes; • outstanding Company stock appreciation rights ("Company SARs") will be fully vested and cancelled, and each holder thereof will receive a payment in cash equal to the product of (i) the total number of shares subject to the cancelled Company SAR and (ii) the excess, if any, of (A) the Merger Consideration over (B) the grant price per share subject to the cancelled Company SAR, without interest, less any applicable withholding taxes; • outstanding and unvested Company restricted stock unit awards ("RSUs") (i) will be fully vested, (ii) any performance conditions applicable to such RSU (whether or not the performance period has been completed) will be deemed to be achieved at the greater of (A) actual performance achieved as of the day immediately prior to the Closing Date (as such term is defined in the Merger Agreement) and (B) the target level of performance, and (iii) will be cancelled, and each holder thereof will receive a payment in cash of an amount equal to the product of (y) the Merger Consideration multiplied by (z) the number of shares of Common Stock subject to an RSU award or, in the case of a performance-based RSU, the number of shares of Common Stock earned or deemed earned with respect to such RSU award as provided herein, without interest, less any applicable withholding taxes; and • the restrictions on any shares of Company restricted stock ("Restricted Stock") granted pursuant to a Company stock plan shall lapse and such shares of Restricted Stock shall vest. Each share of Restricted Stock will automatically be converted at the Effective Time into the right to receive the Merger Consideration.
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Treatment of Outstanding Warrant. Pursuant to the terms of the Merger Agreement,
the Company Board (or, if appropriate, any committee thereof) shall also adopt
resolutions to provide that immediately prior to the Effective Time the
outstanding and unexercised Company warrant (the "Warrant") issued to
Closing Conditions. Parent's obligation to consummate the Merger is subject to the satisfaction or waiver of specified closing conditions, including (i) the affirmative vote in favor of the adoption of the Merger Agreement by the holders of a majority of the outstanding shares of Common Stock entitled to vote thereon, (ii) any applicable waiting periods (or extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 having expired or been terminated and any applicable approval having been obtained or any applicable waiting period having expired or been terminated under the competition, antitrust, merger control or investment laws of certain other jurisdictions, (iii) the absence of any judgment issued or entered by a court or similar governmental entity of competent jurisdiction that is in effect and that enjoins or prohibits the consummation of the Merger, (iv) there not having been a Company Material Adverse Effect (as such term is defined in the Merger Agreement) following the date of the Merger Agreement, (v) the accuracy of the Company's representations and warranties and its compliance with its covenants and agreements contained in the Merger Agreement (generally subject to qualifications as to materiality); (vi) the absence of a bankruptcy petition or similar proceeding being filed by or against the Company that has not been dismissed; and (vii) certain other customary closing conditions.
Representations, Warranties and Covenants; Non-Solicitation. The Merger
Agreement contains customary representations, warranties and covenants of the
Company, Parent, HH Finance and Sub. The representations and warranties made by
the Company are qualified by disclosures made in a disclosure letter it has
delivered to Parent and by
The Merger Agreement also contains covenants by the Company not to enter into, engage in, knowingly encourage, continue or otherwise participate in any discussions or negotiations with any person with respect to any Competing Proposal (as such term is defined in the Merger Agreement) made by such person or any inquiry from such person that could reasonably be expected to lead to a Competing Proposal, and requiring the Company Board to recommend to the Company's stockholders that they approve the transactions contemplated by the Merger Agreement, in each case subject to certain exceptions. The Merger Agreement further contains an obligation on the Company to promptly notify Parent following the receipt of any inquiries, Competing Proposal or request for non-public information in connection with a Competing Proposal. At any time prior to obtaining the approval by the Company's stockholders of the Merger (the "Company Stockholder Approval"), the Company Board may change its recommendation in certain circumstances specified in the Merger Agreement in response to a bona fide Competing Proposal that the Company Board determines in good faith, after consultation with its financial advisor and outside legal counsel, constitutes a Superior Proposal or following an Intervening Event (as each such term is defined in the Merger Agreement), but only if certain conditions and obligations are satisfied with respect thereto, including compliance with Parent's matching rights with respect to any such events.
Under the Merger Agreement, each of the Company, Parent, HH Finance and Sub has also agreed to use reasonable best efforts to consummate the Merger, including using reasonable best efforts to obtain all required regulatory approvals, subject to certain exceptions.
Termination; Termination Fees. The Merger Agreement also provides for certain . . .
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Employment Agreements. On
The Employment Agreement with each Executive supersedes such Executive's existing employment agreement.
While each Employment Agreement generally continues the same terms and conditions of each Executive's employment, the amendment and restatement makes certain changes as described below.
First, in the event an Executive is terminated by the Company without "cause" or if the Executive resigns for "good reason" (each as defined in the Executive's Employment Agreement), (i) the cash severance benefit payable to the
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Executive will be paid in a single lump sum payment (to the extent permitted
under applicable tax law) rather than in the form of salary continuation;
(ii) the payment in respect of the Executive's annual bonus for the year in
which the termination occurs would be equal to the prorated portion of the
Executive's target annual bonus, rather than the prorated portion of the annual
bonus based on actual performance; and (iii) each Executive would be entitled to
receive continued coverage under the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended ("COBRA") for twelve (12) months following the date of
termination (or, for
Second, if terminated by the Company without "cause" (as defined in the
Executive's Employment Agreement) within twelve (12) months following a "change
in control" (each as defined in the Executive's Employment Agreement), in
addition to the payments and benefits described above, each of
Under the terms of each Employment Agreement, each Executive would continue to be subject to non-competition and non-solicitation covenants for two (2) years following a termination of employment for any reason, and any cash severance benefits paid or payable to the Executive are subject to recoupment by the Company in the event the Executive breaches such covenants.
The foregoing description of the Employment Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of each of the Employment Agreements, which are filed as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5 to this Current Report on Form 8-K and incorporated herein by reference.
Additional Information Regarding the Transaction and Where to Find It
This communication does not constitute an offer to sell or the solicitation of
an offer to buy any securities of the Company or the solicitation of any vote or
approval. This communication is being made in respect of the proposed merger
transaction involving the Company, Parent, HH Finance and Sub. The proposed
merger of the Company will be submitted to the stockholders of the Company for
their consideration. In connection therewith, the Company intends to file
relevant materials with the
Participants in the Solicitation
The Company and its directors, its executive officers and certain other members
of Company management and Company employees may, under the rules of the
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Forward-Looking Statements
This document contains "forward-looking statements" that are based on beliefs,
assumptions, and expectations of future events, taking into account the
information currently available to the Company. All statements other than
statements of current or historical fact contained in this report are
forward-looking statements. The words "believe," "may," "should," "anticipate,"
"estimate," "expect," "intend," "will," "seek," "plan," and similar statements
are intended to identify forward-looking statements. Forward-looking statements
involve risks and uncertainties that may cause actual outcomes to differ
materially from expectations of future outcomes the Company expresses or implies
in any forward-looking statements. These risks and uncertainties include, but
are not limited to: the satisfaction of the conditions precedent to the
consummation of the proposed merger, including, without limitation, the receipt
of stockholder and regulatory approvals; unanticipated difficulties or
expenditures relating to the proposed merger; legal proceedings, judgments or
settlements, including those that may be instituted against the Company, the
Company's board of directors, officers and others following the announcement of
the proposed merger; disruptions of current plans and operations caused by the
announcement and pendency of the proposed merger; potential difficulties in
employee retention due to the announcement and pendency of the proposed merger;
the response of customers, suppliers, business partners and regulators to the
announcement of the proposed merger; and other risks, relevant factors, and
uncertainties identified in the Company's filings with the
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits: Exhibit No. Description 2.1* Agreement and Plan of Merger, dated as ofJuly 15, 2020 , by and amongInnerWorkings, Inc. ,HH Global Group Limited ,HH Global Finance Limited andProject Idaho Merger Sub, Inc. 10.1 Amended and Restated Employment Agreement, dated as ofJuly 15, 2020 , by and betweenInnerWorkings, Inc. and Richard S. Stoddart 10.2 Amended and Restated Employment Agreement, dated as ofJuly 15, 2020 , by and betweenInnerWorkings, Inc. and Donald W. Pearson 10.3 Amended and Restated Employment Agreement, dated as ofJuly 15, 2020 , by and betweenInnerWorkings, Inc. and Ronald C. Provenzano 10.4 Amended and Restated Employment Agreement, dated as ofJuly 15, 2020 , by and betweenInnerWorkings, Inc. and Oren B. Azar 10.5 Amended and Restated Employment Agreement, dated as ofJuly 15, 2020 , by and betweenInnerWorkings, Inc. and Renae D. Chorzempa 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). * Schedules have been omitted pursuant to Item 601 of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to theSecurities and Exchange Commission upon request, provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act, as amended, for any schedule or exhibit so furnished.
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