Attached files
| file | filename |
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| EX-99.1 - PRESS RELEASE DATED SEPTEMBER 22, 2017. - Rekor Systems, Inc. | exhibit991-pressreleasegl.htm |
| EX-4.2 - FORM OF CERTIFICATE OF DESIGNATIONS OF NOVUME SERIES B CUMULATIVE CONVERTIBLE PR - Rekor Systems, Inc. | exhibit42-formofcertifica.htm |
| EX-4.1 - FORM OF REGISTRATION RIGHTS AGREEMENT, BY AND AMONG NOVUME SOLUTIONS, INC., G&W - Rekor Systems, Inc. | exhibit41formofregistrati.htm |
| EX-2.1 - PLAN OF PURCHASE, SALE, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR SUCCESSION - Rekor Systems, Inc. | exhibt21agreementandplano.htm |
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
September 21, 2017
Date of Report (date of earliest event reported)
NOVUME SOLUTIONS, INC.
(Exact name of Registrant as specified in its charter)
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Delaware
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000-55833
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81-56266334
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(State or other jurisdiction of
incorporation or organization)
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(Commission
File Number)
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(I.R.S. Employer
Identification Number)
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14420 Albermarle Point Place, Suite 200,
Chantilly, VA 20151
(Address of principal executive offices)
(703) 953-3838
(Registrant’s telephone number, including area
code)
(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 (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))
Indicate
by check mark whether the registrant
is an emerging growth company as defined in 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 checkmark 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.
Merger Agreement
On
September 21, 2017, Novume Solutions, Inc., a Delaware corporation
(“Novume” or the
“Company”), entered into
an Agreement and Plan of Merger (the “Merger Agreement”) by and
among Novume, Global Technical Services Merger Sub, Inc., a
Delaware corporation and a wholly owned subsidiary of Novume
(“GTS Merger
Sub”), Global Contract Professionals Merger Sub, Inc.,
a Delaware corporation and a wholly owned subsidiary of Novume
(“GCP Merger
Sub”), Global Technical Services, Inc. a Texas
corporation (“GTS”), Global Contract
Professionals, Inc., a Texas corporation (“GCP”), and the sole
stockholder of GTS and GCP (the “Stockholder”). Pursuant
to the Merger Agreement, Novume will acquire GTS and GCP through
two reverse triangular mergers, whereby (1) GTS Merger Sub will be
merged with and into GTS with GTS as the surviving corporation and
(2) GCP Merger Sub will be merged with and into GCP, with GCP as
the surviving corporation (each a “Merger” and together the
“Mergers”). The total
value of the transaction is $3.75 million and is comprised of a
combination of common stock, preferred stock and cash as described
below (the “Merger
Consideration”).
The
Merger Agreement was approved by the boards of directors of Novume,
GTS Merger Sub, GCP Merger Sub, GTS and GCP, and the Stockholder.
No vote by the Novume stockholders will be required to consummate
the Mergers.
Subject
to certain adjustments in accordance with the Merger Agreement,
upon the consummation of the Mergers, the Stockholder will receive
(a) $750,000 in cash, (b) 300,000 shares of Novume common stock
(the “Novume Common
Stock”), (c) 180,000 shares of Novume Series B
Cumulative Convertible Preferred Stock (the "Novume Series B Preferred
Stock") and (d) such number of shares of Novume Series B
Preferred Stock representing a value (based on the original issue
price of $10.00 per share of Novume Series B Preferred Stock) equal
to the difference between (x) $1,200,000 and (y) the product of (1)
the five (5) day VWAP (volume-weighted average price as defined in
the Certificate of Designations creating the Series B Preferred
Stock) of Novume Common Stock prior to the Closing Date (as defined
in the Merger Agreement), multiplied by (2) 300,000, but only to
the extent that “(y)” is a lower amount than
“(x)”.
In
addition to the Merger Consideration, Novume intends to pay in full
all of the outstanding debt of GTS and GCP at closing, except for
certain intercompany debt and amounts due under (a) the Secured
Account Purchase Agreement dated August 22, 2012 by and
between GTS and Wells Fargo Bank, National Association (the
“GTS Wells Fargo
Credit Facility”) and (b) the Secured Account Purchase
Agreement dated August 22, 2012 by and between GCP and Wells
Fargo Bank, National Association (the “GCP Wells Fargo Credit
Facility” and together with the GTS Wells Fargo Credit
Facility, the “Wells
Fargo Credit Facilities”), which are expected to
remain in effect following the consummation of the Mergers.
Furthermore, as additional consideration for the cancellation of
the Promissory Note (the "Promissory Note")issued by GTS
for the benefit of G&W Ventures, Inc., Novume will issue 75,000
shares of Novume Common Stock to G&W Ventures, Inc. upon the
consummation of the Mergers.
The
Merger Agreement contains customary representations, warranties and
covenants made by Novume, GTS Merger Sub, GCP Merger Sub, GTS, GCP
and the Stockholder. Among others, GTS and GCP have agreed to
operate their businesses, respectively, in the ordinary course
during the period between the execution of the Merger Agreement and
the consummation of the transactions contemplated by the Merger
Agreement, and not to solicit proposals relating to or enter into
discussions concerning any proposals for alternative business
combination transactions relating to GTS or GCP
(“Alternate
Transactions”).
Novume,
GTS and GCP currently expect to complete the Mergers on or about
October 1, 2017.
The
closing of the Merger Agreement is subject to the satisfaction or
waiver of certain customary closing conditions, including among
other things: (i) regulatory approvals; (ii) the absence of a
material adverse effect on GTS or GCP; (iii) third party consents;
(iv) the termination of certain agreements of GTS and GCP; (v) the
accuracy of each party’s respective representations and
warranties; (vi) payoff letters from the creditors of GTS and GCP,
except in connection with the Wells Fargo Credit Facilities, which
remain in effect following the consummation of the Mergers; and
(vii) the performance of each party’s respective obligations
under the Merger Agreement in all material respects.
The
Merger Agreement may be terminated at any time prior to closing of
the transactions contemplated by the Merger Agreement: (i) by
mutual written agreement of Novume, GTS and GCP; (ii) by Novume,
GTS and GCP if closing is prohibited by a governmental authority;
(iii) by Novume, GTS and GCP if the closing conditions have not
been satisfied or waived by October 1, 2017; (iv) by Novume, in the
event of certain material incurable breaches of representations,
warranties or covenants by GTS and GCP; (v) by GTS and GCP, in the
event of certain material incurable breaches of representations,
warranties or covenants by Novume; (vi) by Novume, in the event (A)
the GTS or GCP board of directors endorses, accepts or agrees to an
Alternative Transaction (as defined in the Merger Agreement)
regarding GTS or GCP, respectively, or (B) if any inquiry, offer or
proposal for an Alternative Transaction regarding either GTS or GCP
has been made and the GTS or GCP board of directors does not
reconfirm its approval of the Merger Agreement, as applicable; or
(vii) by GTS or GCP (if at any time prior to approval of the
Mergers by the Stockholder) it receives a Superior Proposal (as
defined in the Merger Agreement) regarding GTS or GCP.
Pursuant to the
Merger Agreement, the Stockholder has agreed to indemnify Novume
for claims and losses arising out of or related to, among others:
(i) breaches of representations and warranties of GTS and GCP; (ii)
breaches of covenants of GTS, GCP or the Stockholder; (iii) the
amount of the actual net working capital of GTS and GCP at closing
if less than the target net working capital, as set forth in the
Merger Agreement; and (iv) certain tax liabilities. Novume has
agreed to indemnify the Stockholder for claims and losses arising
out of or related to breaches of representations, warranties and
covenants of Novume in the Merger Agreement.
The
shares of Novume Common Stock and Novume Series B Preferred Stock
being issued in the Mergers will be issued in reliance upon the
exemptions from registration under the Securities Act of 1933, as
amended (the “Securities Act”),
provided by Section 4(a)(2) and Rule 506 of Regulation D
promulgated thereunder.
The
foregoing description of the Merger Agreement does not purport to
be complete and is qualified by reference in its entirety to the
full text of the Merger Agreement, a copy of which is attached
hereto as Exhibit 2.1 and is incorporated herein by
reference.
The
Merger Agreement has been filed as an exhibit hereto to provide
investors with information regarding its terms. It is not intended
to provide any other factual information about the Company. In
particular, the representations and warranties and/or covenants
contained in the Merger Agreement were made only for the purposes
of the Merger Agreement as of the specific dates therein, and were
solely for the benefit of the parties to the Merger Agreement. The
representations and warranties and/or covenants contained in the
Merger Agreement may be subject to limitations agreed upon by the
parties to the Merger Agreement and are qualified by information in
confidential disclosure schedules provided in connection with the
signing of the Merger Agreement. These confidential disclosure
schedules contain information that modifies, qualifies and creates
exceptions to the representations and warranties and/or covenants
set forth in the Merger Agreement. Moreover, certain
representations and warranties and/or covenants contained in the
Merger Agreement may be subject to a standard of materiality
provided for in the Merger Agreement and have been used for the
purpose of allocating risk among the parties, rather than
establishing matters of fact. 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 Company or any of its subsidiaries or affiliates.
Moreover, information concerning the subject matter of the
representations and warranties and/or covenants may change after
the date of the Merger Agreement, which subsequent information may
or may not be fully reflected in the Company’s public
disclosures.
Registration Rights
In connection with the
consummation of the Mergers, and pursuant to a Registration Rights
Agreement (the “Registration
Rights Agreement”), the Company
has agreed to provide registration rights to Stockholder and
G&W Ventures, Inc. in respect of the Novume Common Stock issued
to the Stockholder as Merger Consideration and issued to G&W
Ventures, Inc. for the cancellation of the Promissory Note, and the
Novume Common Stock underlying the Novume Series B Preferred Stock
issued to the Stockholder as Merger Consideration (collectively,
the “Registrable
Securities”). Specifically,
following the Company’s initial public offering, the Company
has agreed to use commercially reasonable efforts to include the
Registrable Securities on any registration statement that the
Company proposes to register any of its securities for its own
account or on behalf of any of its other stockholders (other than
in connection with a registration relating solely to the sale of
shares to the Company’s employees).
The
foregoing description of the Registration Rights
Agreement does not purport to be complete and is qualified
by reference in its entirety to the full text of the form of
Registration Rights
Agreement, a copy of which attached hereto as Exhibit 4.1
and is incorporated herein by reference.
Novume Series B Preferred Stock
The
Novume Series B Preferred Stock will be created by the Company in
connection with the consummation of the Mergers. In the event the
transactions contemplated by the Merger Agreement are not
consummated, the Company does not expect to file the Certificate of
Designations for the Novume Series B Preferred Stock or issue any
shares of Novume Series B Preferred Stock.
The
following is a summary of certain material terms and provisions of
the Novume Series B Preferred Stock.
Voting
Rights. The holders of
Novume Series B Preferred Stock
shall not have any voting rights except as expressly set forth
below or as otherwise from time to time required by
law.
So long as any shares of Novume Series B Preferred
Stock are outstanding, in addition to any other vote or consent of
stockholders required by law or by the Novume Certificate of
Incorporation (“Charter”),
(a) each holder of shares of Novume Series B Preferred Stock will
have such number of votes per share of Novume Series B Preferred
Stock held by such holder on an as converted basis in the case
ofvote to be taken for the election of members of the Board of
Directors of Novume and (b) the vote or consent of the holders of a
majority of the outstanding shares of Novume Series B Preferred
Stock at the time outstanding and entitled to vote thereon shall be
necessary for effecting or validating, either directly or
indirectly by amendment, merger, consolidation or
otherwise:
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any amendment,
alteration or repeal to the Novume Charter or the Novume Bylaws
which have an adverse effect on the rights, preferences, privileges
or voting powers of the Novume Series B Preferred
Stock;
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at any time until
November 8, 2018, (x) any declaration or payment of cash
dividends on Novume Common Stock or other stock that is
specifically designated as junior to the Novume Series B Preferred
Stock; (y) any purchase, redemption or other acquisition for
consideration of any Novume Common Stock or other junior stock,
whether directly or indirectly; or (z) if and only if Novume
is delinquent in the payment of dividends on Novume Series B
Preferred Stock, any declaration or payment of cash dividends or
purchase, redemption or other acquisition for consideration of any
class of securities hereafter authorized that is specifically
designated as ranking pari passu with the Novume Series B Preferred
Stock, whether directly or indirectly; provided, further, however,
that the consent of the holders of the Novume Series B Preferred
Stock shall not be required in connection with any repurchase of
any junior stock (A) held by any employee or consultant of
Novume (x) upon any termination of such employee’s or
consultant’s employment or consultancy pursuant to any
agreement providing for such repurchase or (y) otherwise
permitted pursuant to an agreement between Novume and an employee
or consultant thereof; or
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any consummation of
a binding share exchange or reclassification involving the Novume
Series B Preferred Stock, or of a merger or consolidation of Novume
with another corporation or other entity, unless in each case
(x) the shares of Novume Series B Preferred Stock remain
outstanding or, in the case of any such merger or consolidation
with respect to which Novume is not the surviving or resulting
entity, are converted into or exchanged for preference securities
of the surviving or resulting entity or its ultimate parent, in
each case, that is an entity organized and existing under the laws
of the United States of America, any state thereof or the District
of Columbia and (y) such shares of Novume Series B Preferred
Stock remaining outstanding or such preference securities, as the
case may be, have such rights, preferences, privileges and voting
powers, and limitations and restrictions thereof, taken as a whole,
as are not less favorable to the holders thereof than the rights,
preferences, privileges and voting powers, and limitations and
restrictions thereof, of the Novume Series B Preferred Stock
immediately prior to such consummation, taken as a whole; provided,
further, that no vote by the holders of Novume Series B Preferred
Stock under the foregoing shall be required to the extent a plan of
merger, binding share exchange or similar event otherwise provides
that the holders of Novume Series B Preferred Stock would receive
an amount of cash in such merger, share exchange or similar event
equal to the liquidation preference as of the consummation of such
merger, share exchange or similar event.
Dividends. The Novume Series B Preferred Stock is entitled
to quarterly dividends at a rate determined at the closing of the
Mergers pursuant to a formula set forth in the form of the
Certificate of Designations of the Novume Series B Preferred Stock
(the "Certificate of Designation"), a copy of which is attached
hereto as Exhibit 4.2 and is incorporated herein by
reference.
Conversion
Rights. Each holder of the
Novume Series B Preferred Stock will have the right to convert each
share of Novume Series B Preferred Stock into such number of fully
paid and nonassessable shares of Novume Common Stock as is
determined by dividing (i) the sum of (x) $10.00 (as
adjusted pursuant hereto for stock splits, stock dividends,
reclassifications and the like) plus (y) the
amount of any accrued but unpaid dividends on such Novume Series B
Preferred Stock being converted, if any, whether or not declared,
to and including the date immediately prior to such date of
conversion, by (ii) $5.00 (the “Conversion
Price”). The number of
shares of Novume Common Stock into which each share is convertible,
after taking into account any such adjustments, is hereinafter
referred to as the “Conversion
Ratio.”
The Novume Series B Preferred Stock will
automatically be converted at the then effective Conversion
Ratio on the last day of any period of thirty (30)
consecutive trading days, in which, during a period of twenty (20)
trading days (whether consecutive or not), the VWAP per share of
the Novume Common Stock equals or exceeds $7.50 (as adjusted for stock splits, stock dividends,
reclassifications and the like).
Liquidation
Rights. In the event of a
“Liquidation Event” (as defined below), the holders of
Novume Series B Preferred Stock are entitled to be paid out of the
assets of Novume available for distribution to stockholders an
amount equal to $10.00 per share plus the
amount of any accrued but unpaid dividends thereof, if any, whether
or not declared, to and including such date of liquidation.
“Liquidation Event” shall mean a liquidation,
dissolution or winding up of Novume in a single transaction or
series of transactions. The sale, conveyance, exchange or transfer
(for cash, shares of stock, securities or other consideration) of
all or substantially all of the property and assets of Novume shall
not be deemed a Liquidation Event, nor shall the merger,
consolidation or any other business combination transaction of
Novume into or with any other corporation or person or the merger,
consolidation or any other business combination transaction of any
other corporation or person into or with Novume be deemed to be a
Liquidation Event.
The
foregoing description of the Novume Series B Preferred Stock does
not purport to be complete and is qualified by reference in its
entirety to the full text of the form of the Certificate of
Designations, a copy of which is attached hereto as Exhibit 4.2 and
is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities
The
information above in Item 1.01 regarding the Novume Common Stock
and Novume Series B Preferred Stock and the Certificate of
Designations is incorporated herein by reference in response to
this Item 3.02.
Item 3.03 Material Modification to Rights of Security
Holders
The
information above in Item 1.01 regarding the Novume Common Stock
and Novume Series B Preferred Stock and the Certificate of
Designations is incorporated herein by reference in response to
this Item 3.03.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change
in Fiscal Year.
The
information above in Item 1.01 regarding the Novume Series B
Preferred Stock and the Certificate of Designations is incorporated
herein by reference in response to this Item 5.03.
Item 8.01 Other Events.
On
September 22, 2017, Novume, GTS and GCP issued a joint press
release announcing, among other things, the execution of the Merger
Agreement. A copy of the press release is filed as Exhibit 99.1 to
this Current Report on Form 8-K and is incorporated herein by
reference.
Additional Information
This
announcement is neither an offer to sell, nor a solicitation of an
offer to buy, any securities and shall not constitute an offer,
solicitation or sale in any jurisdiction in which such offer,
solicitation or sale is unlawful. The securities described herein
have not been and will not be registered under the Securities Act,
or any state securities laws, and unless so registered, may not be
offered or sold in the United States except pursuant to an
exemption from the registration requirements of the Securities Act,
and applicable state securities laws.
Item 9.01.
Financial Statements and Exhibits.
(d)
Exhibits
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Exhibit No.
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Description
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2.1
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Agreement
and Plan of Merger, dated as of September 21, 2017, by and among
Novume Solutions, Inc., Global Technical Services Merger Sub, Inc.,
Global Contract Professionals Merger Sub, Inc., Global Technical
Services, Inc., Global Contract Professionals, Inc. and Paul
Milligan.
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4.1
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Form of
Registration Rights Agreement, by and among Novume Solutions, Inc.,
G&W Ventures Inc., and Paul Milligan.
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4.2
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Form of
Certificate of Designations of Novume Series B Cumulative
Convertible Preferred Stock.
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99.1
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Press
release dated September 22, 2017.
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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.
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NOVUME SOLUTIONS, INC.
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By:
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/s/ Robert A.
Berman
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Name:
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Robert A.
Berman
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Title:
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Chief Executive
Officer
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Date:
September 21, 2017
EXHIBIT INDEX
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Exhibit No.
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Description
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Agreement
and Plan of Merger, dated as of September 21, 2017, by and among
Novume Solutions, Inc., Global Technical Services Merger Sub, Inc.,
Global Contract Professionals Merger Sub, Inc., Global Technical
Services, Inc., Global Contract Professionals, Inc. and Paul
Milligan.
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Form of
Registration Rights Agreement, by and among Novume Solutions, Inc.,
G&W Ventures, Inc. and Paul Milligan.
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Form of
Certificate of Designations of Novume Series B Cumulative
Convertible Preferred Stock.
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Press
release dated September 22, 2017.
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