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): April 27,
2023
Siebert
Financial Corp.
(Exact
name of registrant as specified in its charter)
|
New
York |
|
0-5703 |
|
11-1796714 |
(State
or other jurisdiction
of incorporation) |
|
(Commission
File Number) |
|
(IRS
Employer
Identification Number) |
|
535 Fifth Avenue, 4th Floor, New
York, NY |
|
10017 |
| (Address of principal executive
offices) |
|
(Zip Code) |
Registrant’s
telephone number, including area code: (212)
644-2400
(Former name or former address, if changed since last report.)
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 |
|
☒ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act |
|
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange
Act |
|
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act |
Securities
registered pursuant to Section 12(b) of the Act:
|
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
|
Common
Stock - $0.01 par value |
|
SIEB |
|
The
Nasdaq Capital Market |
Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933 (§230.405 of
this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934
(§240.12b-2 of this chapter).
Emerging
growth company ☐
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Item
1.01 Entry into a Material Definitive Agreement.
On
April 27, 2023, Siebert Financial Corp., a New York corporation
(the “Company”), announced that it entered into an agreement to
sell newly issued shares of the Company’s Common Stock, par value
$0.01 per share (the “Common Stock”) to Kakaopay Corporation
(“Kakaopay”), a company established under the Laws of the Republic
of Korea and a fintech subsidiary of Korean-based conglomerate
Kakao Corp.
Stock Purchase Agreements
On
April 27, 2023, the Company entered into a Stock Purchase Agreement
with Kakaopay (the “First Tranche Stock Purchase Agreement”),
pursuant to which the Company will issue and sell to Kakaopay
8,075,607 shares of Common Stock (the “First Tranche Shares”, and
such transaction, the “First Tranche”) at a per share price of Two
Dollars Fifteen Cents ($2.15), which will represent 19.9% of the
outstanding equity securities of the Company on a fully diluted
basis (taking into account the issuance of the First Tranche
Shares).
Concurrent
with the execution of the First Tranche Stock Purchase Agreement,
the Company and Kakaopay entered into a second Stock Purchase
Agreement (the “Second Tranche Stock Purchase Agreement”, and
together with the First Tranche Stock Purchase Agreement, the
“Stock Purchase Agreements”), pursuant to which the Company will
issue and sell to Kakaopay an additional 25,756,470 shares of
Common Stock (the “Second Tranche Shares”, and such transaction,
the “Second Tranche”) at a per share price of Two Dollars Thirty
Five Cents ($2.35), so that Kakaopay will own 51% of the
outstanding equity securities of the Company on a fully diluted
basis (taking into account the issuance of the First Tranche Shares
and the Second Tranche Shares).
The
consummation of each of the First Tranche and the Second Tranche is
subject to a number of conditions, including among others, (i) the
listing by the Company of the shares of Common Stock issuable in
the First Tranche and the Second Tranche, respectively, on the
Nasdaq Capital Market, (ii) the accuracy of certain representations
and warranties as of the closing of the First Tranche and Second
Tranche, respectively, (iii) the absence of any material adverse
effect having occurred between April 27, 2023 and the closing of
the First Tranche and the Second Tranche, respectively, and (iv)
the performance by each of Kakaopay and the Company of all
covenants, agreements and obligations required to be performed by
each party prior to the closing of the First Tranche and Second
Tranche, respectively.
The
consummation of the First Tranche is further subject to specific
conditions. The conditions of Kakaopay’s obligation to close the
First Tranche, includes among others, the filing by the Company of
the notice of the change in ownership and control of Park Wilshire
(contemplated by the First Tranche Stock Purchase Agreement) with
the Texas Department of Insurance. The approval of the Company’s
stockholders is not required to close the First Tranche.
The
consummation of the Second Tranche is also subject to a number of
specific conditions. The conditions of Kakaopay’s obligation to
close the Second Tranche, includes among others, (i) the
affirmative vote of a majority of the outstanding shares of Common
Stock and the affirmative vote of the holders of a majority of the
outstanding shares of Common Stock not beneficially owned, directly
or indirectly, by the Gebbia Stockholders, Kakaopay or any of their
respective affiliates (together, the “Requisite Stockholder
Approval”), (ii) approval by FINRA, (iii) favorable completion of
the review by the Committee on Foreign Investment in the United
States (“CFIUS”), (iv) certain performance conditions relating to
order execution and the execution of employment and consulting
agreements for key personnel of the Company and the Company’s
registered broker-dealer subsidiary, Muriel Siebert & Co., Inc.
(“Muriel Siebert & Co.”) and (v) the approvals in connection to
the filing of an overseas direct investment report as required
under the Foreign Exchange Transactions Act of the Republic of
Korea, and, if applicable in accordance with applicable law, any
antitrust report or filing with the Korea Fair Trade Commission
shall have been obtained or provided.
For
the avoidance of doubt, the terms of the Stock Purchase Agreements
contemplate the possibility that the First Tranche, but not the
Second Tranche, is consummated.
The
Stock Purchase Agreements and the transactions contemplated thereby
(the “Transactions”) were unanimously approved by the Company’s
board of directors (the “Board”) based upon the unanimous
recommendation of a special committee of independent directors (the
“Special Committee”). The Company agreed that it will not solicit
alternative proposals. However, the Company (acting upon the
recommendation of the Special Committee) or the Special Committee,
subject to certain conditions, may respond to an unsolicited
Alternative Proposal (as defined below) and enter into an agreement
for a Superior Proposal (as defined below and such agreement, an
“Alternative Acquisition Agreement”) and terminate the Stock
Purchase Agreement only if the Board (acting on the recommendation
of the Special Committee) or the Special Committee, in good faith,
after consultation with its financial advisor and its outside legal
counsel, determines (x) that a bona fide, written and unsolicited
Alternative Proposal constitutes a Superior Proposal and (y) that
failure to enter into an Alternative Acquisition Agreement and
terminate the Second Tranche Stock Purchase Agreement pursuant to
its terms could be inconsistent with the directors’ fiduciary
duties under applicable law; provided that the Company notifies
Kakaopay in writing that the Board (acting on the recommendation of
the Special Committee) or the Special Committee has made the
determinations provided in the foregoing clause (x) and (y) ten
(10) calendar days (the “Company Notice Period”) prior to
terminating the Second Tranche Stock Purchase Agreement or changing
its recommendation to stockholders to approve the Second Tranche
Stock Purchase Agreement. A “Superior Proposal” means a bona fide,
written and unsolicited Alternative Proposal involving (i) assets
that generate more than fifty percent (50%) of the consolidated
total revenues of the Company and its subsidiaries, taken as a
whole, (ii) assets that constitute more than fifty percent (50%) of
the consolidated total assets of the Company and its subsidiaries,
taken as a whole, or (iii) more than fifty percent (50%) of the
total voting power of the equity securities of the Company, in each
case, that the Board (after consultation with outside legal counsel
and an independent financial advisor) reasonably determines, in
good faith, would, if consummated, result in a transaction that is
more favorable to the stockholders of the Company than the
Transactions after taking into account all such factors and matters
deemed relevant in good faith by the Board, including legal,
financial (including the financing terms of any such proposal),
regulatory, timing or other aspects of such proposal and the
Transactions. An “Alternative Proposal” means any proposal or offer
relating to (i) a merger, consolidation, share exchange or business
combination involving the Company or any of its Subsidiaries, (ii)
a sale, lease, exchange, mortgage, transfer or other disposition,
in a single transaction or series of related transactions, of ten
percent (10%) or more of the assets of the Company and its
subsidiaries, taken as a whole, (iii) a purchase or sale of shares
of capital stock or other securities, in a single transaction or a
series of related transactions, representing ten percent (10%) or
more of the voting power of the capital stock of Company or any of
its subsidiaries, including by way of a tender offer or exchange
offer, (iv) a reorganization, recapitalization, liquidation or
dissolution of the Company or any of its subsidiaries or (v) any
other transaction having a similar effect to those described in
clauses (i) - (iv) or that would prevent or materially impede or
delay the consummation of the closing of either the first or second
stock purchase, in each case, other than the
Transactions.
Neither
the Special Committee nor the Board shall withdraw, modify or
amend, or propose to withdraw the Board’s recommendation to the
Company stockholders that they vote in favor of approval of the
Second Tranche (the “Board Recommendation”) in any manner adverse
to Kakaopay unless the Company terminates the Second Tranche Stock
Purchase Agreement as provided in the Second Tranche Stock Purchase
Agreement and described below. During the Company Notice Period
(which may be extended by mutual written consent between the
parties), the Company shall negotiate with Kakaopay in good faith
in respect of adjustments in the terms and conditions of the Second
Tranche Stock Purchase Agreement such that such Alternative
Proposal would cease to constitute a Superior Proposal, if the
Company, in its sole discretion, proposes to make such adjustments
(it being agreed that in the event that, after commencement of the
Company Notice Period, there is any revision to the terms of a
superior proposal, including, any revision in price, the Company
Notice Period shall be extended by four (4) Business Days (it being
understood that there may be multiple extensions)). If, following
the end of such Company Notice Period (as extended pursuant to the
preceding sentence), the Board determines in good faith, after
consulting with outside financial advisor and legal counsel, that
such Alternative Proposal continues to constitute a Superior
Proposal after taking into account any adjustments made by Kakaopay
during the Company Notice Period upon the terms and subject to the
conditions of the Second Tranche Stock Purchase Agreement, provided
that the Company shall have complied with its obligations under
such agreement, and the Board shall terminate the Second Tranche
Stock Purchase Agreement pursuant to its terms to enter into an
agreement relating to such Superior Proposal.
The
Stock Purchase Agreements provide for the termination of such
agreements under certain circumstances, including among others, (i)
by mutual consent of the parties, (ii) by either party upon the
outside date of each respective agreement, and (iii) by either
party for breaches by the other party of certain representations
and warranties.
The
Second Tranche Stock Purchase Agreement can also be terminated
under certain circumstances, including among others, (i) by either
party if the First Tranche Stock Purchase Agreement has been
terminated by its own terms, (ii) by either party if certain
closing conditions have not been satisfied, including those
relating to CFIUS and obtaining the Requisite Stockholder Approval,
(iii) by Kakaopay if the Board (acting upon the recommendation of
the Special Committee) fails to make, withdraws, modified or amends
in any manner adverse to Kakaopay, the Board Recommendation, and
(iv) by the Company if the Board has authorized the Company to
enter into an Alternative Acquisition Agreement. The Second Tranche
Stock Purchase Agreement also provides that the Company shall pay
to Kakaopay a termination fee of $5 million if the Second Tranche
Stock Purchase Agreement is terminated under certain circumstances,
including among others, pursuant to clauses (iii) and (iv)
above.
The
foregoing descriptions of the First Tranche Stock Purchase
Agreement and Second Tranche Stock Purchase Agreement are not
complete and are qualified in their entirety by reference to the
First Tranche Stock Purchase Agreement and Second Tranche Stock
Purchase Agreement, copies of which are attached to this Current
Report on Form 8-K as Exhibits 10.28 and 10.29 and incorporated
herein by reference.
Foreign Broker-Dealer Fee Sharing Agreement
Concurrent
with the execution of the Stock Purchase Agreements, Muriel Siebert
& Co., Inc. and Kakaopay’s registered brokerage, Kakaopay
Securities Corp., a corporation organized and existing under the
laws of South Korea, entered into a Foreign Broker-Dealer Fee
Sharing Agreement (the “Foreign Broker-Dealer Fee Sharing
Agreement”), establishing the terms relating to the brokerage,
trading, sharing of revenues, and similar matters.
The
foregoing description of the Foreign Broker-Dealer Fee Sharing
Agreement is not complete and is qualified in its entirety by
reference to the Broker-Dealer Fee Sharing Agreement, a copy of
which is attached to this Current Report on Form 8-K as Exhibit
10.30 and incorporated herein by reference.
Support and Restrictive Covenant Agreement
Concurrent
with the execution of the Stock Purchase Agreements, Company
Directors Gloria Gebbia and John J. Gebbia and certain persons who
control in excess of 50% (in the aggregate) of the voting
securities of the Company (collectively, the “Gebbia
Stockholders”), each entered into a Support and Restrictive
Covenant Agreement (the “Support and Restrictive Covenant
Agreement”), pursuant to which the Gebbia Stockholders agreed to
vote in favor of the Stock Purchase Agreements and against any
transaction that could reasonably result in the failure or
interference with the transactions contemplated by the Stock
Purchase Agreements and the Transactions.
The
Gebbia Stockholders also agreed that until earlier of the closing
of the Second Tranche or the termination of the Second Tranche
Stock Purchase Agreement (the “Restricted Period”), the Gebbia
Stockholders would not, directly or indirectly, (i) transfer or
otherwise dispose of their shares, or enter into any undertakings
with respect to such transfer or disposal, subject to certain
limited exceptions; (ii) engage, or resolve or agree to engage, in
various activities that would reasonably be expected to lead to any
Alternative Proposal. The Gebbia Stockholders also agreed that
during the three year-period following consummation of the First
Tranche (but in no event surviving the termination of the Second
Tranche Stock Purchase Agreement), they (i) would not solicit any
employee or customer or interfere with business relationships
between the Company (or its subsidiaries) and any of its customers
or suppliers; provided, however, such non-solicitation restriction
does not apply to soliciting customers on behalf of two companies
in which certain Gebbia Stockholders have an interest or to real
estate ventures (the “Permitted Ventures”); and (ii) would not
compete or assist any person that engages in the same industry as
the Company or its affiliates or otherwise competes against
Kakaopay of its affiliates anywhere in the world; provided,
however, that such non-competition restriction does not apply to
the Permitted Ventures nor to the business of RISE Financial
Services, LLC. The Gebbia Stockholders and Kakaopay also mutually
agreed that they shall not make any disparaging statement about one
another.
The
foregoing description of the Support and Restrictive Covenant
Agreement is not complete and is qualified in its entirety by
reference to the Support and Restrictive Covenant Agreement, a copy
of which is attached to this Current Report on Form 8-K as Exhibit
10.31 through Exhibit 10.37 and incorporated herein by
reference.
Stockholders’ Agreement
Concurrent
with the consummation of the First Tranche, the Company, Kakaopay,
and the Gebbia Stockholders shall enter into a Stockholders’
Agreement (the “Stockholders’ Agreement”) whereby the parties agree
that the Board will consist of seven directors. The parties agree
that following the consummation of the First Tranche, one of the
seven directors will be designated by Kakaopay, and six (the
“Gebbia Directors”) will be nominated by the Gebbia Stockholders,
of whom three shall be independent directors. The parties agree
that following the consummation of the Second Tranche three of the
Gebbia Directors will resign and be replaced by three individuals
designated by Kakaopay, such that the composition of the Board will
be: four nominees designated by Kakaopay, of whom one shall be an
independent director, and three designated by the Gebbia
Stockholders, two of whom shall be independent directors and one of
whom shall be an “audit committee financial expert” within the
meaning of Sections 406 and 407 of the Sarbanes-Oxley Act of 2002.
The Stockholders’ Agreement also provides for designation of
directors in the event that the Gebbia Stockholders or Kakaopay
reduce their shareholdings in the Company. The Stockholders’
Agreement also includes provisions to reallocate who among Kakaopay
and the Gebbia Stockholders are entitled to designate directors in
the event that the ownership percentages of Kakaopay or the Gebbia
Stockholders change.
The
Stockholders’ Agreement provides further that for a period of one
year following the consummation of the Second Tranche (the
“Transition Period”), the Company, Kakaopay and the Gebbia
Stockholders agree to cause the Board and management of the Company
to implement the Company business plan as such has been agreed to
by the parties, and to use the investment proceeds as documented
under the Stockholders’ Agreement. The parties further agree that
various specified events require the prior written consent of at
least two/thirds of the Board, including at least one director
designated by Kakaopay and one director designated by the Gebbia
Stockholders.
Pursuant
to the Stockholders’ Agreement, from the period commencing with the
consummation of the First Tranche and continuing until such time as
either the Gebbia Stockholders, in the aggregate, or Kakaopay, hold
less than five percent of the issued and outstanding Common Stock
on a fully-diluted basis, Kakaopay and each Gebbia Stockholder
agree to vote all shares of Common Stock held by such stockholder
to elect directors nominated by Kakaopay and Gebbia
Stockholders.
The
Stockholders’ Agreement also restricts each of Kakaopay and the
Gebbia Stockholders (in each case, an “Offering Stockholder”) from
transferring any shares of Common Stock except in compliance with
the terms of the Stockholders’ Agreement, which provides the
Company a right of first refusal if Kakaopay or any of the Gebbia
Stockholders desires to accept a bona fide offer to transfer all or
any portion of its or their shares, provided that the Offering
Stockholder may transfer shares of Common Stock representing up to
5% of the outstanding shares of Common Stock as of the date of the
agreement without triggering the Company’s right of first refusal.
After the Offering Stockholder allows the Company to exercise its
right of first refusal to purchase the shares offered by the
Offering Stockholder, and in the event that the Company has not
exercised its right to purchase all or a portion of the offered
stock, the other party to the Stockholders’ Agreement shall have
the right of second refusal to purchase the offered shares (or any
portion thereof).
The
foregoing description of the Stockholders’ Agreement is not
complete and is qualified in its entirety by reference to the
Stockholders’ Agreement, a copy of which is attached to this
Current Report on Form 8-K as Exhibit 10.38 and incorporated herein
by reference.
Registration Rights and Lock-Up Agreement
Concurrent
with the consummation of the First Tranche, the Company and
Kakaopay shall enter into a Registration Rights Agreement (the
“Registration Rights Agreement”) whereby the Company agrees to
grant Kakaopay certain registration rights with respect to certain
securities of the Company held by Kakaopay. In exchange for such
registration rights, the parties agree to a lock-up period ending
the earlier of the outside date pursuant to the Second Tranche
Stock Purchase Agreement and the date that such agreement is
terminated.
The
foregoing description of the Registration Rights Agreement is not
complete and is qualified in its entirety by reference to the
Registration Rights Agreement, a copy of which is attached to this
Current Report on Form 8-K as Exhibit 10.39 and incorporated herein
by reference.
The
representations, warranties and covenants of each party set forth
in the aforementioned agreements have been made and/or will be made
only for purposes of, and were and are solely for the benefit of
the parties to, such agreements, 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 between the parties to such agreements, 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. In addition, certain
representations and warranties were made only as of the date of any
of the aforementioned agreements or such other date as is specified
therein. Moreover, information concerning the subject matter of the
representations and warranties may change after the date of any of
the aforementioned agreements, which subsequent information may or
may not be fully reflected in the parties’ public disclosures.
Accordingly, the aforementioned agreements have been included with
this filing only to provide investors with information regarding
the terms of these agreements, and not to provide investors with
any other factual information regarding the parties, their
respective affiliates or their respective businesses.
No Offer or Solicitation
This
communication is not intended to and does not constitute an offer
to sell or the solicitation of an offer to subscribe for or buy or
an invitation to purchase or subscribe for any securities or the
solicitation of any vote or approval in any jurisdiction in
connection with the Stock Purchase Agreements, the Transactions or
stockholder approval or otherwise, nor shall there be any sale,
issuance or transfer of securities in any jurisdiction in
contravention of applicable law. In particular, this communication
is not an offer of securities for sale into the United States. No
offer of securities shall be made in the United States absent
registration under the Securities Act of 1933, as amended, or
pursuant to an exemption from, or in a transaction not subject to,
such registration requirements.
Participants in the Solicitation
The
Company and their directors and executive officers may be deemed
participants in the solicitation of proxies of the Company’s
stockholders in respect of the proposed Second Tranche Stock
Purchase Agreement. The Company’s stockholders and other interested
persons may obtain more detailed information about the names and
interests of these directors and officers of the Company,
including, when filed with the SEC, the Company’s proxy statement.
These documents can be obtained free of charge at the SEC’s web
site at www.sec.gov.
Forward-Looking Statements
This
Current Report on Form 8-K contains certain “forward-looking
statements” within the meaning of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995 with respect
to the proposed transactions. These forward-looking statements
generally are identified by the words such as “believe,” “project,”
“expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,”
“opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,”
“will continue,” “will likely result” and similar expressions, but
the absence of these words does not mean that a statement is not
forward-looking. Forward-looking statements are predictions,
projections and other statements about future events that are based
on current expectations and assumptions and, as a result, are
subject to risks and uncertainties. Actual results may differ from
their expectations, estimates and projections and consequently, you
should not rely on these forward-looking statements as predictions
of future events. Many factors could cause actual future events to
differ materially from the forward-looking statements in this
Current Report on Form 8-K, including but not limited to: (i) the
risk that the closing of the First Tranche Stock Purchase Agreement
or Second Tranche Stock Purchase Agreement may not be completed in
a timely manner or at all, which may adversely affect the price of
the Company’s securities; (ii) the failure to satisfy the
conditions to the closing of the First Tranche Stock Purchase
Agreement or Second Tranche Stock Purchase Agreement, including the
approval of various regulators and approval by a
majority-of-the-minority stockholders of the Company; (iii) the
occurrence of any event, change or other circumstance that could
give rise to the termination of the First Tranche Stock Purchase
Agreement or Second Tranche Stock Purchase Agreement; (iv) the
outcome of any legal proceedings that may be instituted against any
of the parties to the First Tranche Stock Purchase Agreement,
Second Tranche Stock Purchase Agreement or related transaction
agreements following the announcement of the entry into the
agreements; (v) the ability of the parties to recognize the
benefits of the investment; the expected future market
opportunities of the Company, and (vi) those factors discussed in
the Company’s filings with the SEC and that that will be contained
in the definitive Proxy Statement relating to a Special Meeting of
Shareholders. You should carefully consider the foregoing factors
and the other risks and uncertainties that will be described in the
“Risk Factors” section of the definitive Proxy Statement and other
documents to be filed by the Company from time to time with the
SEC. These filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Forward-looking statements speak only as of the date they are made.
Readers are cautioned not to put undue reliance on forward-looking
statements, and while the Company may elect to update these
forward-looking statements at some point in the future, they assume
no obligation to update or revise these forward-looking statements,
whether as a result of new information, future events or otherwise,
subject to applicable law. The Company gives no assurance that the
Company will achieve its expectations.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits. The following exhibit is furnished with this Form
8-K.
SIGNATURES
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 thereunto duly authorized.
| Dated: May 3, 2023 |
SIEBERT FINANCIAL
CORP. |
| |
|
| |
By |
/s/ Andrew H. Reich |
| |
|
Andrew H. Reich Executive Vice
President, Chief Operating Officer, Chief Financial Officer,
Secretary and Director (Principal executive, financial and
accounting officer) |
Siebert Financial (NASDAQ:SIEB)
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