UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 19, 2016 (December 16, 2016)
HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
| Delaware | 001-09764 | 11-2534306 | ||
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) |
(IRS Employer Identification No.) |
400 Atlantic Street, Suite 1500
Stamford, CT 06901
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (203) 328-3500
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☒ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On December 16, 2016, Harman International Industries, Incorporated (the “Company”) entered into letter agreements with each of Sandra E. Rowland, the Company’s Executive Vice President and Chief Financial Officer, and Phillip Eyler, the Company’s Executive Vice President and President, Connected Car Division, that provide for (1) the accelerated vesting of time-based restricted stock unit awards and, in the case of Ms. Rowland, a portion of the performance-based restricted stock unit awards, held by the executive officer; and (2) in the case of Ms. Rowland, the accelerated payment of a prorated annual bonus for fiscal year 2017, in each case, on or prior to December 30, 2016 and subject to the obligations described below.
These actions are intended, by accelerating tax realization events into the 2016 calendar year, to (a) reduce or eliminate excise tax equalization payments that would become payable to Ms. Rowland and Mr. Eyler in connection with the consummation of the transactions contemplated by the Agreement and Plan of Merger, dated as of November 14, 2016 (the “Merger Agreement”), by and among Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., Silk Delaware, Inc., and the Company; and (b) preserve certain tax deductions that would otherwise be lost to the Company. It is expected that all amounts accelerated would have become due and payable upon the expected mid-2017 consummation of the transactions contemplated by the Merger Agreement. The letter agreements provide that, if the transactions are not so consummated, or if the applicable executive officer is terminated with cause or voluntarily terminates employment prior to consummation of the transactions, the executive officer will generally be required to pay to the Company the value of the after-tax proceeds that would not have ultimately been paid absent the accelerations described above.
The foregoing description of the letter agreements with Ms. Rowland and Mr. Eyler does not purport to be complete and is qualified in its entirety by reference to the full text of the letter agreements, which are attached hereto as Exhibits 10.1 and 10.2, respectively, and incorporated herein by reference.
| Item 8.01 | Other Events. |
On December 19, 2016, the Company received notice from the U.S. Federal Trade Commission that it had granted early termination, effective immediately, of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) for the pending acquisition of the Company by Samsung Electronics Co., Ltd. pursuant to the Merger Agreement (the “Merger”).
The early termination of the waiting period under the HSR Act satisfies one of the conditions to the closing of the Merger, which remains subject to other customary closing conditions, including the adoption of the Merger Agreement by requisite vote of the Company’s stockholders and other regulatory approvals.
Additional Information and Where to Find It
In connection with the proposed transaction, the Company filed with the Securities and Exchange Commission (the “SEC”) a preliminary proxy statement on December 12, 2016. The Company intends to file additional relevant materials with the SEC, including a definitive proxy statement and will mail or otherwise provide a copy of the definitive proxy statement to its stockholders. BEFORE MAKING ANY VOTING DECISION, THE COMPANY’S STOCKHOLDERS ARE URGED TO READ THE PRELIMINARY PROXY STATEMENT, THE DEFINITIVE PROXY STATEMENT (WHEN AVAILABLE) AND ANY OTHER DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY REFERENCE THEREIN IN THEIR ENTIRETY BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. Investors and security holders may obtain a free copy of these materials, including any proxy
statement, and other documents that the Company files with the SEC (when available) from the SEC’s website at www.sec.gov and the “Investors” section of www.harman.com. In addition, any documents filed by the Company with the SEC (when available), including any proxy statement, may be obtained from the Company free of charge by writing to Harman International Industries, Incorporated, Attention: Corporate Secretary, 400 Atlantic Street, Suite 1500, Stamford, Connecticut 06901, or by calling (203) 328-3500.
Participants in the Solicitation
The Company and its directors, executive officers and employees may be deemed, under SEC rules, to be participants in the solicitation of proxies from the Company’s stockholders with respect to the proposed transaction. Security holders may obtain information regarding the names, affiliations and interests of such individuals in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016, filed with the SEC on August 11, 2016, and its definitive proxy statement for the 2016 annual meeting of stockholders, filed with the SEC on October 25, 2016. Additional information regarding the interests of such individuals in the proposed transaction was included in the preliminary proxy statement relating to the proposed transaction filed with the SEC on December 12, 2016. These documents may be obtained free of charge from the SEC’s website at www.sec.gov and the “Investors” section of www.harman.com.
Forward-Looking Statements
Statements about the expected timing, completion and effects of the proposed transaction and all other statements in this report and the exhibits furnished or filed herewith, other than historical facts, constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance on these forward-looking statements and any such forward-looking statements are qualified in their entirety by reference to the following cautionary statements. All forward-looking statements speak only as of the date hereof and are based on current expectations and involve a number of assumptions, risks and uncertainties that could cause the actual results to differ materially from such forward-looking statements. The Company may be subject to certain risks during the pendency of the transaction, and may not be able to complete the proposed transaction on the terms described herein or other acceptable terms or at all because of a number of factors, including without limitation (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement, (2) the failure to obtain the requisite approval of the Company’s stockholders or the failure to satisfy the other closing conditions, (3) risks related to disruption of management’s attention from the Company’s ongoing business operations due to the pending transaction and (4) the effect of the announcement of the pending transaction on the ability of the Company to retain and hire key personnel, maintain relationships with its customers and suppliers, and maintain its operating results and business generally.
Actual results may differ materially from those indicated by such forward-looking statements. In addition, the forward-looking statements represent the Company’s views as of the date on which such statements were made. The Company anticipates that subsequent events and developments may cause its views to change. However, although the Company may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to
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do so. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date hereof. Additional factors that may affect the business or financial results of the Company are described in the risk factors included in the Company’s filings with the SEC, including the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2016, which risk factors are incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. See Exhibit Index. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HARMAN INTERNATIONAL INDUSTRIES, INCORPORATED | ||
| By: | /s/ Todd A. Suko | |
| Todd A. Suko | ||
| Executive Vice President and General Counsel | ||
Date: December 19, 2016
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 10.1 | Letter Agreement, dated as of December 16, 2016, by and between Harman International Industries, Incorporated and Sandra E. Rowland. | |
| 10.2 | Letter Agreement, dated as of December 16, 2016, by and between Harman International Industries, Incorporated and Phillip Eyler. | |
Exhibit 10.1
December 16, 2016
Re: Acceleration of Certain Compensation
Dear Sandy:
This letter memorializes our recent discussions concerning tax planning in connection with the anticipated 2017 consummation of the transactions contemplated by the Agreement and Plan and Merger, by and among Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., Silk Delaware, Inc. (“Silk”), and Harman International Industries, Incorporated (the “Company”), dated as of November 14, 2016 (the “Merger Agreement”). The Company has determined, subject to your agreement to the terms set forth herein, to accelerate the vesting and payment of certain compensation that otherwise is expected to become vested and payable in future years as described herein.
Accelerated Awards. Effective no later than December 30, 2016 (the “Acceleration Date”), (i) all unvested service-vesting restricted stock unit awards (“RSUs”) granted to you by the Company shall become fully vested, and (ii) 60% of the then-unvested performance-vesting restricted stock unit awards (“PRSUs”) granted to you by the Company shall become fully vested. As of the Acceleration Date, the Company shall deliver to you a number of Shares (as defined below) that corresponds to the number of RSUs and PRSUs that vest pursuant to this paragraph, less withholding for applicable taxes (which withholding shall be determined based upon the maximum individual rates in each applicable jurisdiction). You agree that any disposition by you of any of the net Shares you receive pursuant to this paragraph prior to the first to occur of (A) the Closing Date (as defined in the Merger Agreement), (B) the date upon which the applicable RSUs or PRSUs would otherwise have vested pursuant to the terms of the applicable award (absent the acceleration contemplated hereunder), and (C) the date of your termination of employment with the Company and its affiliates shall be subject to the Company’s policies with respect to dispositions by executive officers, including the notice and prior approval requirements. You agree to make an election under Section 83(b) of the Internal Revenue Code in the form provided by the Company in respect of the Shares delivered hereunder.
Accelerated 2017 Prorated Bonus. On the Acceleration Date, you will be paid, subject to applicable tax withholding, a prorated bonus for the Company’s 2017 fiscal year of $564,041 (the “Prorated Bonus”), representing 5/6 of your target bonus. On the first to occur of the Closing Date and the date (the “2017 Bonus Payment Date”) that the Company pays annual bonuses for its 2017 fiscal year to similarly situated employees, you will be eligible to receive an additional amount equal to the excess, if any, of the prorated (i.e., if the Closing Date occurs prior to June 30, 2017) or full bonus (i.e., if the Closing Date occurs on or after June 30, 2017) that would be due to you absent the provisions of this paragraph over the Prorated Bonus payable hereunder. If the Closing Date occurs prior to May 1, 2017, your annual bonus for the portion of the 2017 fiscal year following the Closing Date will be equitably adjusted to take into account the payment of the Prorated Bonus for any overlapping portion of the 2017 fiscal year to avoid any duplication for the same period of service.
Damages. You agree that if, prior to the Closing Date (if any), your employment terminates, other than due to a Qualifying Termination (as defined below), then, within ten business days following the termination of your employment, you shall pay to the Company the RSU Amount (as defined below) and the PRSU Amount (as defined below). You further
agree that if a performance period in respect of any of your PRSUs is completed prior to the Closing Date, and it is determined that absent the accelerated vesting and settlement contemplated hereby, you would have vested in fewer PRSUs than were accelerated hereby, you shall, within ten business days following the date of settlement (the “Settlement Date”) of the applicable PRSUs for other award holders, pay to the Company the applicable PRSU Amount.
If, prior to the first to occur of the Closing Date and the 2017 Bonus Payment Date, your employment terminates, other than due to a Qualifying Termination, you shall, within ten business days following the date of such termination, pay the Company an amount equal to the after-tax value of the Prorated Bonus. In the event of your termination of employment, any obligation to pay the Company shall take into account any right you may have to a prorated bonus under any individual agreement to which you are party with the Company or Silk, and you agree that any prorated or full bonus that may become due to you in respect of the Company’s 2017 fiscal year under any such individual agreement shall be reduced (but not below zero) by the amount of the Prorated Bonus. In addition, if the 2017 Bonus Payment Date occurs prior to the Closing Date (if any), and based on actual performance your fiscal year 2017 bonus would have been less than the Prorated Bonus, you shall, within ten business days following the 2017 Bonus Payment Date, pay the Company an amount equal to the excess of the Prorated Bonus over the bonus that you would have received for the 2017 fiscal year absent this paragraph, less the amount of taxes you paid that was attributable to such excess.
Certain Definitions. For purposes hereof, the following terms shall be defined as set forth below.
“Equity Plan” means the Company’s 2012 Stock Option and Incentive Plan.
“PRSU Amount” means a cash amount equal to the product of (i) the Fair Market Value (as defined in the Equity Plan) of a Share on the applicable Settlement Date, multiplied by (ii) the net number of Shares in respect of PRSUs delivered pursuant to this letter (subject to equitable adjustment in the event of a Share Change (as defined in the Equity Plan)) in respect of the applicable PRSUs that would not have vested on the applicable Settlement Date based on actual performance. For clarity, no Share shall be included in calculation of both the RSU Amount and the PRSU Amount.
“Qualifying Termination” means a termination of your employment (i) by the Company other than for Cause (as defined in the Severance Agreement) or (ii) due to your death or Disability (as defined in the Severance Agreement).
“RSU Amount” means a cash amount equal to the product of (i) the Fair Market Value (as defined in the Equity Plan) of a Share on the date of the termination of your employment, multiplied by (ii) the net number of Shares in respect of RSUs delivered pursuant to this letter (subject to equitable adjustment in the event of a Share Change (as defined in the Equity Plan)) that would not have vested prior to or on the date of termination of your employment if not for the accelerated vesting and settlement contemplated hereby. For purposes of the preceding sentence, Shares delivered hereunder shall be determined on an award-by-award net basis, such that the amount that would not have vested shall with respect to a particular award mean the net Shares after tax withholding delivered hereunder in respect of such tranche.
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“Severance Agreement” means the Severance Agreement, dated as of October 12, 2015, between you and the Company.
“Share” has the meaning set forth in the Equity Plan.
This letter shall be governed by, and construed in accordance with, the laws of the State of Delaware without reference to its conflict of law rules.
In order to be eligible to receive the benefits contemplated by this letter, it is important that you sign this letter and return it to John Stacey as soon as practicable.
| Sincerely, | ||||||
| By: | /s/ John Stacey | |||||
|
| ||||||
| Name: |
John Stacey | |||||
| Title: |
Executive Vice President and Chief Human Resources Officer | |||||
Accepted and Acknowledged as of
this 16th day of December, 2016:
/s/ Sandra E. Rowland
Sandra E. Rowland
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Exhibit 10.2
December 16, 2016
Re: Acceleration of Certain Compensation
Dear Phil:
This letter memorializes our recent discussions concerning tax planning in connection with the anticipated 2017 consummation of the transactions contemplated by the Agreement and Plan and Merger, by and among Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., Silk Delaware, Inc. (“Silk”), and Harman International Industries, Incorporated (the “Company”), dated as of November 14, 2016 (the “Merger Agreement”). The Company has determined, subject to your agreement to the terms set forth herein, to accelerate the vesting and payment of certain compensation that otherwise is expected to become vested and payable in future years as described herein.
Accelerated Awards. Effective no later than December 30, 2016 (the “Acceleration Date”), all unvested service-vesting restricted stock unit awards (“RSUs”) granted to you by the Company shall become fully vested. As of the Acceleration Date, the Company shall deliver to you a number of Shares (as defined below) that corresponds to the number of RSUs that vest pursuant to this paragraph, less withholding for applicable taxes (which withholding shall be determined based upon the maximum individual rates in each applicable jurisdiction). You agree that any disposition by you of any of the net Shares you receive pursuant to this paragraph prior to the first to occur of (A) the Closing Date (as defined in the Merger Agreement), (B) the date upon which the applicable RSUs would otherwise have vested pursuant to the terms of the applicable award (absent the acceleration contemplated hereunder), and (C) the date of your termination of employment with the Company and its affiliates shall be subject to the Company’s policies with respect to dispositions by executive officers, including the notice and prior approval requirements. You agree to make an election under Section 83(b) of the Internal Revenue Code in the form provided by the Company in respect of the Shares delivered hereunder.
Damages. You agree that if, prior to the Closing Date (if any), your employment terminates, other than due to a Qualifying Termination (as defined below), then, within ten business days following the termination of your employment, you shall pay to the Company the RSU Amount (as defined below).
Certain Definitions. For purposes hereof, the following terms shall be defined as set forth below.
“Equity Plan” means the Company’s 2012 Stock Option and Incentive Plan.
“Qualifying Termination” means a termination of your employment (i) by the Company other than for Cause (as defined in the Severance Agreement) or (ii) due to your death or Disability (as defined in the Severance Agreement).
“RSU Amount” means a cash amount equal to the product of (i) the Fair Market Value (as defined in the Equity Plan) of a Share on the date of the termination of your employment, multiplied by (ii) the net number of Shares in respect of RSUs delivered pursuant to this letter (subject to equitable adjustment in the event of a Share Change (as defined in the Equity Plan)) that would not have vested prior to or on the date of termination of your employment if not for
the accelerated vesting and settlement contemplated hereby. For purposes of the preceding sentence, Shares delivered hereunder shall be determined on an award-by-award net basis, such that the amount that would not have vested shall with respect to a particular award mean the net Shares after tax withholding delivered hereunder in respect of such tranche.
“Severance Agreement” means the Severance Agreement, dated as of October 12, 2015, between you and the Company.
“Share” has the meaning set forth in the Equity Plan.
This letter shall be governed by, and construed in accordance with, the laws of the State of Delaware without reference to its conflict of law rules.
In order to be eligible to receive the benefits contemplated by this letter, it is important that you sign this letter and return it to John Stacey as soon as practicable.
| Sincerely, | ||
| By: | /s/ John Stacey | |
| Name: John Stacey Title: Executive Vice President and Chief Human Resources Officer | ||
Accepted and Acknowledged as of
this 16th day of December, 2016:
| /s/ Phillip Eyler | ||
| Phillip Eyler | ||
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