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FRF > SEC Filings for FRF > Form 8-K on 12-Aug-2014All Recent SEC Filings

Show all filings for FORTEGRA FINANCIAL CORP



Entry into a Material Definitive Agreement, Submission of Matters to a Vo

Item 1.01. Entry into a Material Definitive Agreement.

On August 11, 2014, Fortegra Financial Corporation (the "Company"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with Tiptree Operating Company, LLC, a Delaware limited liability company ("Parent"), Caroline Holdings LLC, a Delaware limited liability company and a wholly owned subsidiary of Parent ("Holdings"), Caroline Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Holdings ("Merger Sub") Pursuant to the terms of the Merger Agreement, Merger Sub will be merged with and into the Company (the "Merger"), with the Company surviving the Merger as a wholly-owned subsidiary of Holdings. Parent is a subsidiary of Tiptree Financial Inc. ("Tiptree").

The Merger Agreement was unanimously approved by the Company's Board of Directors (the "Board"), based on the recommendation of an independent Special Committee of the Board formed to, among other things, review, evaluate and negotiate any potential transaction with any potentially interested party. The Special Committee was comprised of the members of the Board other than the Company's CEO, Rick Kahlbaugh, and John Carroll, a Managing Director of Summit Partners, LP.

At the effective time of the Merger, each share of the Company's Common Stock, par value $0.01 per share (the "Common Stock"), issued and outstanding immediately prior to the effective time (other than shares owned by (i) Parent, Holdings, Merger Sub or any other direct or indirect wholly-owned subsidiary of Parent, (ii) the Company or (iii) stockholders who have properly exercised and perfected appraisal rights under Delaware law) will be converted automatically into and thereafter entitle the holder thereof to receive $10.00 in cash (the "Merger Consideration"), without interest.

Under the terms of the Merger Agreement, the Company has obtained the adoption by written consent of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of the Common Stock. No additional action by holders of the Common Stock will be required to complete the transaction.

The Merger Agreement further requires that, within thirty (30) business days of the execution and delivery of the Merger Agreement, the Company file with the Securities and Exchange Commission (the "SEC") a preliminary information statement of the type contemplated by Rule 14c-2 promulgated under the Securities Exchange Act of 1934, as amended, relating to the Merger Agreement, the Merger and the transactions contemplated under the Merger Agreement.

Consummation of the Merger is subject to other customary conditions, including without limitation: (i) the expiration or early termination of the waiting period applicable to the Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and any required approvals thereunder;
(ii) filings with, and approvals from, insurance and other regulatory bodies having jurisdiction over any such matters; and (iii) the absence of any law, injunction, judgment or ruling prohibiting or restraining the Merger or making the consummation of the Merger illegal. Moreover, each party's obligation to consummate the Merger is subject to certain other conditions, including without limitation: (x) the accuracy of the other party's representations and warranties contained in the Merger Agreement (subject to certain materiality qualifiers); and (y) the other party's compliance with its covenants and agreements contained in the Merger Agreement in all material respects. Although Parent is not required to consummate the Merger until after completion of a marketing period for the financing it is using to fund a portion of the Merger Consideration, the consummation of that debt financing is not a condition to the closing of the Merger transaction.

The Company has made customary representations and warranties and covenants in the Merger Agreement, including without limitation covenants regarding: (i) the purchase of a six year "tail" prepaid policy on the

Company's current directors' and officers' liability insurance; (ii) conduct of the business of the Company prior to the consummation of the Merger; and (iii) the use of reasonable best efforts to cause the Merger to be consummated.

The Merger Agreement provides for a "go-shop" period of thirty (30) days following the date of the Merger Agreement, during which time the Board may directly or indirectly solicit, encourage and facilitate a competing offer to acquire the Company, change its recommendation regarding the Merger (subject to compliance with the terms of the Merger Agreement, including the payment of a termination fee under certain circumstances), engage in discussions or negotiations concerning any competing offer to acquire the Company, and provide non-public information and access to Company properties, books, records or personnel to any person or entity with whom the Company has entered into a confidentiality agreement, provided that this information has or will be provided to Parent and Merger Sub.

Pursuant to the Merger Agreement, at the effective time of the Merger, all outstanding employee stock options will automatically vest and become exercisable, cease to be outstanding, and be converted into the right to receive cash representing the difference between the per share Merger Consideration and the exercise price of the option, net of any applicable tax withholdings. Similarly, each share of restricted stock outstanding will automatically vest and be converted into the right to receive the per share Merger Consideration.

The Merger Agreement contains certain termination rights for the Company and Parent. Upon a termination of the Merger Agreement under specified circumstances, the Company will be required to pay Parent a termination fee equal to 3.5% of the aggregate Merger Consideration. The Merger Agreement also provides that Parent will be required under the circumstances set forth in the Merger Agreement to pay the Company a reverse termination fee equal to 6% of the aggregate Merger Consideration in the event that Parent's marketing period for the financing has ended, and Parent, Holdings and Merger Sub do not receive the proceeds of the debt financing and, as a result, fail to close the Merger within two (2) business days following notice that all conditions to closing are satisfied. In addition to the foregoing termination rights, if the Merger is not consummated on or before December 11, 2014 (which dated may be extended by Parent or the Company to February 11, 2015, if additional time is needed to procure certain regulatory approvals), either Parent or the Company may terminate the Merger Agreement under the conditions described therein.

Parent, Holdings and Merger Sub have obtained debt financing commitments for the transaction contemplated by the Merger Agreement. A syndicate of lenders led by Wells Fargo Bank, National Association (collectively, the "Lenders") has committed to provide a $90 million secured revolving credit facility and a $50 million secured term loan, on the terms and subject to the conditions set forth in a debt commitment letter (the "Debt Commitment Letter"). The obligation of the Lenders to provide debt financing under the Debt Commitment Letter is subject to a number of conditions, including without limitation (i) a condition that, since December 31, 2013, there shall not have occurred any Material Adverse Change (as defined in the Merger Agreement) with respect to the Company;
(ii) execution and delivery of definitive documentation with respect to the credit facilities consistent with the Debt Commitment Letter; (iii) the accuracy of certain specified representations and warranties in the loan documents and the Merger Agreement; (iv) the Company's pro forma total leverage ratio not exceeding a specified level for the most recently ended period of four fiscal quarters ending prior to the Closing; (v) consummation of the Merger in accordance with the Merger Agreement (without giving effect to any amendment to the Merger Agreement or any waiver thereof that is materially adverse to the Lenders without the consent of the lead arranger under the Debt Commitment Letter), substantially concurrently with the initial borrowing under the senior debt facilities; (vi) delivery of certain customary closing documents (including, among others, a solvency certificate), specified items of collateral and certain Company financial statements; and (vii) payment of applicable fees and expenses.. The final termination date for the Debt Commitment Letter (unless extended in the discretion of the commitment parties thereunder) is December 11, 2014 (or, if additional time is required to procure certain

regulatory approvals, February 11, 2015) (or such earlier date which is the earlier of (i) the date on which the Merger Agreement is validly terminated in accordance with its terms and (ii) the date of the consummation of the Merger and payment of the consideration therefor (but not, for the avoidance of doubt, prior to the consummation thereof)).

The representations and warranties of the Company contained in the Merger . . .

Item 5.07. Submission of Matters to a Vote of Security Holders.

Shortly after the Merger Agreement was executed by the parties, the Company obtained the approval by written consent of stockholders holding a majority of the outstanding shares of Common Stock of the Company adopting and approving the Merger Agreement and the transactions contemplated thereby. No additional action by holders of the Common Stock will be required to complete the transaction.

Forward-Looking Statements:

Certain statements herein are "forward-looking statements". Such forward-looking statements reflect the Company's current expectations or beliefs concerning future events and actual events may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including uncertainties as to the timing of the Merger, the possibility that alternative acquisition proposals will or will not be made, the possibility that various closing conditions for the Merger may not be satisfied or waived, the possibility that Parent, Holdings and Merger Sub will be unable to obtain sufficient funds to close the Merger, the parties' ability to consummate the proposed transaction on the contemplated timeline, and other factors which are set forth in the Company's most recent Form 10-K filed with the SEC on March 14, 2014 and in all filings with the SEC made by the Company subsequent to the filing of that Form 10-K. The Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

Additional Information and Where to Find It:

In connection with the proposed transaction, the Company will file an information statement and file or furnish other relevant materials with the Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS OF THE
COMPANY ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY ALL RELEVANT MATERIALS FILED OR FURNISHED WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE INFORMATION STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE THESE MATERIALS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders may obtain a free copy of the information statement (when available) and other documents filed or furnished to the Securities and Exchange Commission by the Company at the Securities and Exchange Commission's website at The contents of the websites referenced above are not deemed to be incorporated by reference into the information statement.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No. Description
2.1 Agreement and Plan of Merger, dated August 11, 2014, among the Company, Parent, Holdings and Merger Sub.
99.1 Press release dated August 12, 2014.

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