Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities and Exchange Act
of 1934
Date of
Report (Date of earliest reported): February 10, 2017
BREKFORD CORPORATION
(Exact
name of registrant as specified in charter)
Delaware
|
000-52719
|
20-4086662
|
(State
or Other Jurisdiction of Incorporation or
Organization)
|
(Commission File
Number)
|
(IRS
Employer Identification No.)
|
7020
Dorsey Road
Hanover,
Maryland 21076
(Address
of principal executive offices) (Zip Code)
Registrant's
telephone number, including area code: (443) 557-0200
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))
Merger Agreement
On
February 10, 2017, Brekford Corporation, a Delaware
corporation (“Brekford”
or the “Company”)
entered into an Agreement and Plan of Merger (the
“Merger
Agreement”) to combine
the businesses of Brekford and KeyStone Solutions, Inc., a Delaware
corporation (“KeyStone”).
The Merger Agreement provides that Brekford and KeyStone will each
engage in merger transactions (the “Mergers”)
with separate wholly-owned subsidiaries of a newly-formed company,
Novume Solutions, Inc., a Delaware corporation
(“Novume”).
Under one merger transaction (the “Brekford
Merger”), one
wholly-owned subsidiary of Novume will merge with and into
Brekford, leaving Brekford as a wholly-owned subsidiary of Novume.
Under a separate merger transaction (the “KeyStone
Merger”), KeyStone will
merge with and into another wholly-owned subsidiary of Novume
(“KeyStone Merger
Sub”), with KeyStone
Merger Sub surviving such merger. The time at which the
Mergers are completed in accordance with the Merger Agreement is
referred to as the “Effective
Time”. As soon as
practicable after the Effective Time, Brekford will change its name
to “Brekford Traffic Safety, Inc.” and KeyStone Merger
Sub will change its name to “KeyStone Solutions,
Inc.”
Merger Consideration
As consideration for the Mergers, each outstanding
share of the common stock, par value $0.0001 per share, of Brekford
(“Brekford Common
Stock”) immediately prior
to the Effective Time will become convertible into and exchangeable
for 1/15th
of a share of common stock, par value
$0.0001 per share, of Novume (“Novume Common
Stock” and such ratio,
the “Brekford Exchange
Ratio”). Each outstanding
share of the common stock, par value $0.0001 per share, of KeyStone
(“KeyStone Common
Stock”) immediately prior
to the Effective Time, will become convertible into and
exchangeable for 1.9975 shares of Novume Common Stock, and each
outstanding share of the Series A Cumulative Convertible Redeemable
Preferred Stock, par value $0.0001 per share, of KeyStone
(“KeyStone Preferred
Stock”) will become
convertible into and exchangeable for 1.9975 shares of the Series A
Cumulative Convertible Redeemable Preferred Stock of Novume
(“Novume Preferred
Stock” and such ratio,
the “KeyStone Exchange
Ratio”). The outstanding
warrants and options to purchase shares of Brekford Common Stock
and KeyStone Common Stock, as applicable, shall be exchanged for
warrants and options to purchase Novume Common Stock at the
Brekford Exchange Ratio or the KeyStone Exchange Ratio, as
applicable. Collectively, the forgoing is referred to herein as the
“Merger
Consideration”.
The Merger Consideration, and each of the Brekford
Exchange Ratio and the KeyStone Exchange Ratio, were determined so
that, immediately after the Effective Time, the pre-merger
stockholders of Brekford will own such portion of the capital stock
of Novume as shall be equal to approximately 20% of the issued and
outstanding Novume Common
Stock, on a fully-diluted
basis, and the pre-merger stockholders of KeyStone will own that
portion of the capital stock of Novume as is equal to approximately
80% of the issued and outstanding Novume Common Stock, on a
fully-diluted basis.
Closing Conditions
The closing of the Merger Agreement (the “Closing”)
will take place upon the fulfillment or waiver of all of the
conditions to closing set forth in Article VIII of the Merger
Agreement or as soon thereafter as practicable, but not later than
June 1, 2017, unless otherwise mutually agreed by Brekford and
KeyStone.
One closing condition
is that each of Brekford and KeyStone receive all stockholder
approvals and corporate approvals required by the Delaware General
Corporations Code and the organizational documents of each company
to complete the Mergers. The satisfaction of this condition is
assured. On February 10, 2017, the board of directors of Brekford
(the “Brekford
Board”) authorized and
approved the Mergers and the adoption of the Merger Agreement. On
the same day, certain holders
of more than 51% of the issued and outstanding Brekford Common
Stock entered into agreements (“Voting
Agreements”) with
Brekford pursuant to which they agreed to vote all of their shares
in favor of the Brekford Merger and against any action or
transaction that would delay or compromise the ability of Brekford
to effectuate the Mergers. On February 9, 2017, the board of
directors of KeyStone (the “KeyStone
Board”) authorized and
approved the Mergers and the adoption of the Merger Agreement. On
the same date, certain holders of more than 51% of the issued and
outstanding shares of KeyStone Common Stock entered into Voting
Agreements with KeyStone, and such holders indeed delivered written
consents to KeyStone approving the Mergers and adopt the Merger
Agreement.
A second closing condition requires Novume to prepare and file a
Registration Statement on Form S-4 (the “Registration
Statement”), which shall
be declared effective by the Securities and Exchange Commission
(the “SEC”)
prior to the Effective Time, registering the Merger Consideration.
This shall not include registration of the options issuable as
Merger Consideration in exchange for options previously received by
stockholders of Brekford under Brekford’s 2008
Director’s Compensation Plan or stockholders of KeyStone
under KeyStone’s 2016 Equity Award Plan, which are intended to
be registered separately on a Registration Statement on Form S-8
after the Effective Time. The Registration Statement will include
an information statement of Brekford, which Brekford shall
distribute to its stockholders in accordance with the rules and
regulations of the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”), prior to the
Effective Time. In furtherance of this condition, Novume filed the
Registration Statement with the SEC on February 10, 2017. The
Registration Statement remains subject to the SEC’s review
and comment, and to amendment, as appropriate, by
Novume.
Brekford is required to sell 81% of the assets and liabilities
related to its vehicle services business (the
“Upfitting
Business”) and to
use all proceeds from such disposition to repay all
indebtedness of Brekford. In furtherance of this condition, on
February 6, 2017, Brekford entered into that certain
previously-disclosed Contribution and Unit Purchase Agreement (the
“Purchase
Agreement”) with LB&B Associates Inc. (the
“Purchaser”) and Global
Public Safety, LLC (“GPS”).
Finally,
prior to the Effective Time, Novume shall enter into five-year employment agreements with each of
Scott Rutherford, Brekford’s current Chief Strategy Officer,
and Rodney Hillman, Brekford’s current President and Chief
Operating Officer (the “Employment
Agreements”).
Pursuant to
the Merger Agreement Mr. Rutherford shall serve as Chief Technology
Officer and Mr. Hillman shall serve as President and Chief
Operating officer of Brekford Traffic Safety,
Inc.
Under the Merger Agreement, Novume shall use its best efforts, as
soon as practicable after the Effective Time, to obtain listings
for Novume Common Stock, Novume Preferred Stock and certain
warrants to purchase Novume Common Stock on a national stock
exchange, or, alternatively, to obtain quotations for such
securities on the OTCQX.
Leadership of Novume
The leadership of Novume shall be substantially comprised of the
current management of KeyStone. Robert A. Berman, the current Chief
Executive Officer of KeyStone, shall serve as the Chief Executive
Officer of Novume. Harry Rhulen, the current President of KeyStone,
shall serve as the President of Novume. Riaz Latifullah, the
current Chief Financial Officer of KeyStone, shall serve as the
Chief Financial Officer of Novume. Suzanne Loughlin, the current
General Counsel and Chief Administrative Officer of KeyStone, shall
serve as the General Counsel and Chief Administrative Officer of
Novume. James McCarthy, the current Chief Strategy Officer of
KeyStone, shall serve as the Chief Strategy Officer of
Novume.
At the Effective Time, the Board of Directors of Novume (the
“Novume
Board”), shall have
seven (7) members, four (4) of whom shall be independent
within the meaning of the Exchange Act, and the national stock
exchange to which Novume intends to apply for listings of the
Novume securities indicated above. Six (6) members of the Novume
Board shall be designated by KeyStone, and one (1) member of the
Novume Board shall be designated by Brekford, subject to the
approval of KeyStone. The members designated by KeyStone are James
McCarthy, who shall serve as Chairman, Robert A. Berman, Dr.
Richard Nathan, Glenn Goord, Paul DeBary and one additional
independent director who shall be designated by KeyStone prior to
the Effective Time. The member to be designated by Brekford shall
be independent, as provided herein, and shall be subject to the
approval by KeyStone; such member shall be identified by Brekford
and approved by KeyStone prior to the Effective Time. As of the
date hereof, Glenn Goord and Paul DeBary are independent as
provided herein, and shall so remain, as and at the Effective
Time.
Termination Fee
If (i) the Merger Agreement (A) is
terminated by KeyStone due to the withdrawal of the recommendation
of the Merger Agreement by the board of directors of Brekford (the
“Brekford
Board”), or by Brekford
or KeyStone because of the failure to obtain the requisite Brekford
stockholders’ approval, or (B) is terminated as a result
of Brekford’s material breach of its obligations with regard
to Closing and to filing and distributing of the Registration
Statement required for the transaction, which breach is not cured
within thirty (30) days after notice thereof to Brekford, and
(ii) at the time of such termination there shall have been an
Acquisition Proposal (as defined in the Merger Agreement) involving
Brekford or any of its subsidiaries (whether or not such offer
shall have been rejected or shall have been withdrawn prior to the
time of such termination), Brekford shall pay KeyStone a
termination fee of $250,000 (the “Termination
Fee”). The Termination
Fee shall be payable in cash at the date of
termination.
The
foregoing information is a summary of the Merger Agreement
described above, is not complete, and is qualified in its entirety
by reference to the full text of the Agreement, a copy of which is
attached as an exhibit to this Current Report on Form
8-K. Readers should review the Merger Agreement for a
complete understanding of the terms and conditions associated with
this transaction.
Item
8.01
Other
Events
On
February 13, 2017, Brekford issued the press release annexed hereto
as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d)
Exhibits. The following exhibits are filed with this
report:
Exhibit
No.
|
|
Description
of Exhibit
|
|
|
Agreement
and Plan of Merger dated February 10, 2017, among Novume Solutions,
Inc., KeyStone Solutions, Inc., Brekford Corp., KeyStone Merger
Sub, Inc., and Brekford Merger Sub, Inc.
|
99.1
|
|
Press release,
dated February 13, 2017
|
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 hereunto duly authorized.
|
BREKFORD
CORPORATION
|
|
|
|
|
|
|
Date: February 13,
2017
|
By:
|
/s/
Rodney
Hillman
|
|
|
|
Name: Rodney
Hillman
|
|
|
|
Title: President
and Chief Operating Officer
|
|