| Item 1.01 | Entry into a Material Definitive Agreement. |
Merger Agreement
On April
30, 2023, Midwest Holding Inc., a Delaware corporation (the “Midwest” or the “Company”), entered into an Agreement
and Plan of Merger (the “Merger Agreement”) with Midas Parent, LP, a Delaware limited partnership (“Parent”) and
an affiliate of Antarctica Capital, LLC (“Antarctica”), and Midas Merger Acquisition Sub, Inc., a Delaware corporation and
wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub will merge with and into the Company and whereupon
Merger Sub will cease to exist and the Company will be the surviving corporation in the Merger and will continue as a wholly-owned subsidiary
of Parent (the “Merger”).
The board
of directors of the Company (the “Company Board”) has unanimously approved and declared it advisable to enter into the Merger
Agreement and resolved to recommend that the Company’s stockholders approve the adoption of the Merger Agreement and the transactions
contemplated thereby (the “Transactions”), including the Merger on the terms and subject to the conditions set forth in the
Merger Agreement.
As a result
of the Merger, at the effective time of the Merger (the “Effective Time”), each outstanding share of common stock of the Company,
par value $0.001 per share (the “Company Common Stock”) (other than (i) Company Common Stock held by Parent or the Company
or any of their respective wholly owned subsidiaries, and (ii) any shares of Company Common Stock who properly exercise appraisal rights
under Delaware law), outstanding immediately prior to the Effective Time, will be converted into the right to receive $27.00 per share
in cash, without interest.
Consummation
of the Merger is subject to certain conditions, including, but not limited to, (i) the Company’s receipt of approval of the Company’s
stockholders, (ii) the absence of any law or order prohibiting or making illegal the consummation of the Merger, (iii) the approval of
the Merger by the Nebraska Department of Insurance and Vermont Department of Financial Regulation without the imposition of any Burdensome
Condition (as defined in the Merger Agreement), and (iv) the absence of any Company Material Adverse Effect (as defined in the Merger
Agreement).
The Company
has made customary representations and warranties in the Merger Agreement and has agreed to customary covenants regarding the operation
of the business of the Company and its subsidiaries prior to the Effective Time.
The Merger
Agreement also includes covenants prohibiting the Company from soliciting alternative acquisition
proposals, and subject to certain exceptions, engaging in discussions or negotiations with respect to such proposals.
The Merger
Agreement contains certain termination rights for each of the Company and Parent. Upon termination of the Merger Agreement in accordance
with its terms, under certain specified circumstances, the Company will be required to pay Parent a termination fee in an amount equal
to $3,597,100.00, including if the Merger Agreement is terminated by the Company to accept a Superior Proposal (as defined in the Merger
Agreement) or due to the Company Board changing its recommendation to the Company’s stockholders to vote to approve the Merger Agreement.
The Merger
Agreement further provides that Parent will be required to pay the Company a reverse termination fee in an amount equal to $6,166,457.00
in the event the Merger Agreement is terminated under certain specified circumstances.
Parent has
obtained equity financing commitments for purposes of financing the transactions contemplated by the Merger Agreement.
Certain investment funds and entities affiliated
with Antarctica, (each, an “Equity Investor” and collectively, the “Equity Investors”) have committed to capitalize
Parent at the closing of the Merger with an aggregate equity contribution equal to $127,774,278.00 on the terms and subject to the conditions
set forth in an equity commitment letter. In addition, one of those funds has guaranteed payment of the reverse termination fee, as well
as certain enforcement expenses and reimbursement obligations that may be owed by Parent pursuant to the Merger Agreement, subject to
the terms and conditions set forth in the Merger Agreement and a limited guarantee provided by that fund to the Company.
The foregoing
description of the Merger Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text
of the Merger Agreement, a copy of which is filed as Exhibit 2.1 hereto and is incorporated by reference herein.
The Merger
Agreement has been included to provide investors with information regarding its terms. It is not intended to provide any other factual
information about the Company, Parent, Merger Sub or their respective affiliates. The representations, warranties and covenants contained
in the Merger Agreement were made only for purposes of the Merger Agreement as of the specific dates therein, were solely for the benefit
of the parties to the Merger Agreement, may be subject to limitations agreed upon by the contracting parties, including being qualified
by confidential disclosures made for the purposes of allocating contractual risk among the parties to the Merger Agreement instead of
establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ
from those applicable to investors. Investors should not rely on the representations, warranties and covenants or any descriptions thereof
as characterizations of the actual state of facts or condition of the parties thereto or any of their respective subsidiaries or affiliates.
Moreover, information concerning the subject matter of representations and warranties may change after the date of the Merger Agreement,
which subsequent information may or may not be reflected in the Company’s public disclosures. The Merger Agreement should not be
read alone, but should instead be read in conjunction with the other information regarding the Company, Parent and Merger Sub and the
Transactions that will be contained in or attached as an annex to the proxy statement that the Company will file in connection with the
Transactions, as well as in the other filings that the Company will make with the U.S. Securities and Exchange Commission (the “SEC”).
Voting Agreements
In connection
with the Merger Agreement, certain stockholders entered into voting agreements (the “Voting Agreements”) with Parent pursuant
to which, among other things, the stockholders agreed to vote their shares of Company Common Stock representing approximately 33% of the
shares of Company Common Stock outstanding as of the date of the Merger Agreement in favor of the approval and adoption of the Merger,
the Merger Agreement or any related action reasonably required in furtherance thereof, and against any acquisition proposal or any action
that would reasonably be expected to prevent, materially delay or materially impair the consummation of the Merger or the Transactions.
The Voting
Agreements terminate upon the first to occur of (i) the Effective Time, (ii) the termination of the Merger Agreement in accordance with
its terms, (iii) with respect to any stockholder, the mutual written agreement of such stockholder and Parent or (iv) any amendment to
the Merger Agreement that decreases the amount of, or changes the form of, the Merger Consideration or increases the liabilities or obligations
of such stockholders without the consent of such stockholder, upon written notice by such stockholder to Parent within ten (10) Business
Days of such amendment.