TREAN INSURANCE GROUP, INC. ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
Merger Agreement
Transaction Structure; Transaction Consideration
On
A special committee (the "Special Committee") of the Board of Directors of the Company (the "Board"), consisting solely of independent and disinterested directors, unanimously (i) determined that the terms of the Merger Agreement and the transactions contemplated by the Merger Agreement (the "Transactions"), including the Merger, are advisable, fair to, and in the best interests of, the Company and the Unaffiliated Stockholders (as defined in the Merger Agreement), (ii) determined that it is advisable and in the best interests of the Company and the Unaffiliated Stockholders to enter into, and approve, adopt and declare advisable, the Merger Agreement, and (iii) recommended that the Board determine that the terms of the Merger Agreement and the Transactions, including the Merger, are advisable, fair to, and in the best interests of, the Company and its stockholders (including the Unaffiliated Stockholders), determine that it is in the best interests of the Company and its stockholders (including the Unaffiliated Stockholders) to enter into, and approve, adopt and declare advisable, the Merger Agreement, approve the execution and delivery by the Company of the Merger Agreement, the performance by the Company of its covenants and agreements contained therein and the consummation of the Merger and the other Transactions, upon the terms and subject to the conditions contained in the Merger Agreement, direct that the adoption of the Merger Agreement and the approval of the Transactions, including the Merger, be submitted to the stockholders of the Company, and recommend that the stockholders of the Company vote to adopt the Merger Agreement and approve the Transactions, including the Merger, at any meeting of the stockholders held for such purpose and any adjournment or postponement thereof.
The Board (other than
As a result of the Merger, at the Effective Time, subject to any applicable
withholding taxes, each share of the Company's common stock, par value
Pursuant to the Merger Agreement, at the Effective Time:
• each option to purchase Company Common Stock outstanding as of
immediately prior to the Effective Time (each, a "Company Option"),
whether vested or unvested, will be cancelled and will entitle the holder
thereof to receive an amount in cash (without interest and subject to
applicable withholding taxes) equal to the product of (i) the number of
shares of Company Common Stock subject to such Company Option as of
immediately prior to the Effective Time, and (ii) the excess, if any, of
the Transaction Consideration over the exercise price per share of
Company Common Stock subject to such Company Option. Any Company Options
outstanding with an exercise price equal to or in excess of the
Transaction Consideration will be cancelled without any payment to the
holder thereof;
• each performance stock unit award of the Company outstanding as of
immediately prior to the Effective Time (each, a "Company PSU Award")
will automatically become vested, will be cancelled and will entitle the
holder thereof to receive an amount in cash (without interest and subject
to applicable withholding taxes) equal to
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the product of (i) a pro-rated number of shares of Company Common Stock
that would have vested pursuant to the terms of such Company PSU Award
based on projected performance through the end of the applicable
performance period as set forth in the Merger Agreement, and (ii) the
Transaction Consideration;
• each market stock unit award of the Company outstanding as of immediately
prior to the Effective Time (each, a "Company MSU Award") will
automatically become vested, will be cancelled, and will entitle the
holder thereof to receive an amount in cash (without interest and subject
to applicable withholding taxes) equal to the product of (i) the number
of shares of Company Common Stock that would have vested pursuant to the
terms of such Company MSU Award based on actual performance through the
Effective Time, and (ii) the Transaction Consideration; and
• each restricted stock unit award of the Company outstanding as of
immediately prior to the Effective Time (each, a "Company RSU Award")
will automatically become fully vested, will be cancelled, and will
entitle the holder thereof to receive an amount in cash (without interest
and subject to applicable withholding taxes) equal to the product of
(i) the number of shares of Company Common Stock subject to the Company
RSU Award, and (ii) the Transaction Consideration.
Financing of the Merger
Parent and Merger Sub have secured committed financing for the Merger consisting of equity financing from certain funds affiliated with Altaris, the aggregate proceeds of which, along with Company cash on hand, will be sufficient for Parent to pay the aggregate merger consideration and all related fees and expenses of the Parent and Merger Sub. The committed financing is subject to customary terms and conditions. Parent and Merger Sub have committed to use their reasonable best efforts to obtain the financing on the terms and conditions described in the commitment letter relating to the financing (the "Equity Commitment Letter"). The consummation of the Merger is not subject to a financing condition. The Company is a third-party beneficiary of the Equity Commitment Letter solely for the purpose and to the extent of the Company seeking specific performance of the rights granted to Parent under the Equity Commitment Letter to cause the providers of such equity financing to fund their respective equity financing commitments, subject to the terms and conditions of such Equity Commitment Letter and the Merger Agreement.
Conditions to the Merger
The consummation of the Merger is subject to the satisfaction or waiver of various customary conditions set forth in the Merger Agreement, including, but not limited to: (i) the adoption of the Merger Agreement and approval of the Merger and the other Transactions by (x) the holders representing a majority of the aggregate voting power of the outstanding shares of Company Common Stock beneficially owned by the Unaffiliated Stockholders (as defined in the Merger Agreement) entitled to vote thereon as well as (y) the holders representing a majority of the aggregate voting power of the outstanding shares of Company Common Stock entitled to vote thereon; (ii) all required insurance regulatory approvals (or the applicable regulatory authorities' non-objection to requests for exemptions in respect thereof) shall have been obtained; (iii) the expiration or termination of any applicable waiting period (or any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"); (iv) the absence of any restraint or law preventing or prohibiting the consummation of the Merger; (v) the accuracy of Parent's, Merger Sub's, and the Company's representations and warranties (subject to certain materiality qualifiers); (vi) Parent's, Merger Sub's, and the Company's compliance in all material respects with their respective obligations under the Merger Agreement; and (vii) the absence of any Company Material Adverse Effect (as defined in the Merger Agreement) since the date of the Merger Agreement.
No Solicitation of Competing Offers; Fiduciary-Out
Upon the Company's entry into the Merger Agreement, the Company became subject to customary exclusivity and "no shop" restrictions that restrict the Company's ability to solicit proposals from, provide information to, and engage in discussions with, any third parties with respect to the acquisition of the Company.
Subject to certain customary "fiduciary out" exceptions, the Special Committee and the Board are required to recommend that the Company's stockholders vote in favor of the adoption of the Merger agreement and the approval of the Merger and the other Transactions. However, the Board (acting on the recommendation of the Special Committee) or the Special Committee may, prior to the receipt of the requisite stockholder approvals, make a Company Adverse Recommendation Change (as defined in the Merger Agreement) in connection with a Company Superior Proposal or an Intervening Event (each as defined the Merger Agreement) if the Company complies with certain notice and other requirements set forth in the Merger Agreement, including the payment of the Company Termination Fee (as defined below) to Parent or its designee.
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Termination and Termination Fees
Either the Company (upon approval of the Special Committee) or Parent may
terminate the Merger Agreement in certain circumstances, including if: (i) the
Merger shall not have been consummated on or prior to
The Company may also terminate the Merger Agreement if, prior to receipt of the
requisite stockholder approvals, the Board (upon approval of the Special
Committee) or the Special Committee shall have authorized the Company to enter
into an acquisition agreement providing for a Company Superior Proposal and,
immediately prior to or concurrently with such termination, the Company pays a
termination fee of
Parent may terminate the Merger Agreement, and receive the Company Termination Fee from the Company, if, prior to obtaining the requisite stockholder approvals, a Company Adverse Recommendation Change has occurred.
The Company will also be required to pay the Company Termination Fee if (i) a third party publicly discloses a Company Takeover Proposal (as defined in the Merger Agreement) after the date of the Merger Agreement and such Company Takeover Proposal is not withdrawn prior to the termination of the Merger Agreement, and thereafter the Merger Agreement is terminated by (A) either the Company or Parent as a result of the Merger not having been consummated on or prior to the End Date, (B) Parent as a result of a breach by the Company of any representation or covenant which breach is not cured and would result in a failure of certain conditions to closing being satisfied, subject to certain limitations set forth in the Merger Agreement, or (C) Parent or the Company as a result of the Company failing to obtain the requisite stockholder approvals; and (ii) at any time within the 12 months following such termination, the Company enters into a definitive agreement involving a Company Takeover Proposal that is subsequently consummated (whether within such 12-month period or thereafter). The aggregate monetary liability of the Company and any of its affiliates on the one hand, or Parent, Merger Sub or any of their affiliates on the other hand, relating to or arising out of the Merger Agreement or any Ancillary Agreement (as such term is defined in the Merger Agreement) or the transactions . . .
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits. Exhibit No. Description 2.1 Agreement and Plan of Merger, dated as ofDecember 15, 2022 , by and amongTrean Insurance Group, Inc. ,Treadstone Parent Inc. , andTreadstone Merger Sub Inc. * 10.1 Voting and Support Agreement, dated as ofDecember 15, 2022 , by and amongTrean Insurance Group, Inc. ,AHP-BHC LLC ,AHP-TH LLC ,ACP-BHC LLC ,ACP-TH LLC andAltaris Partners, LLC . 10.2 Third Amendment to Second Amended and Restated Credit Agreement by and amongTrean Insurance Group, Inc. ,Trean Corporation ,Benchmark Administrators, LLC , the lenders party thereto andFirst Horizon Bank , as administrative agent, datedDecember 15, 2022 . 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of
Regulation S-K.
omitted schedule or attachment to the
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