Item 1.01 Entry into a Material Definitive Agreement.
Merger Agreement and Transaction
On September 28, 2021, Force Protection Video Equipment Corp. (the "Company" or
"FPVD") entered into an Agreement and Plan of Merger (the "Merger Agreement")
with BritePool, Inc., a Delaware corporation ("BritePool"), FPVD Merger Sub,
Inc., a Delaware corporation and wholly owned subsidiary of the Company ("Merger
Sub"), and certain other parties. Upon the terms and subject to the satisfaction
of the conditions described in the Merger Agreement, Merger Sub will be merged
with and into BritePool (the "Merger"), with BritePool surviving the Merger as a
wholly owned subsidiary of the Company. The Merger is intended to qualify as a
tax-free reorganization for U.S. federal income tax purposes.
At the effective time of the Merger (the "Effective Time"):
(a) Each share of BritePool's Class A and Class B common stock ("BritePool
Common Stock") outstanding immediately prior to the Effective Time, other
than certain excluded shares, will be automatically converted solely into
the right to receive a number of shares of the Company's common stock
("Company Common Stock") equal to the Exchange Ratio defined below (with
fractional shares rounded up or down to the nearest whole number).
(b) Each option to purchase shares of BritePool Common Stock (each, a "BritePool
Option") that is outstanding and unexercised immediately prior to the
Effective Time will be converted into and become an option to purchase
shares of Company Common Stock (the "Assumed Options"). The number of shares
of Company Common Stock subject to each Assumed Option will be determined by
multiplying (i) the number of shares of BritePool Common Stock that were
subject to such BritePool Option, as in effect immediately prior to the
Effective Time, by (ii) the Exchange Ratio, and rounding the resulting
number down to the nearest whole number of shares, and the per share
exercise price for the Company Common Stock issuable upon exercise of each
Assumed Option will be determined by dividing (A) the per share exercise
price of such BritePool Option, as in effect immediately prior to the
Effective Time, by (B) the Exchange Ratio and rounding the resulting per
share exercise price up to the nearest one ten millionth of a cent
($0.0000001). Any restriction on the exercise of any BritePool Option will
continue in full force and effect and the term, exercisability, vesting
schedule, accelerated vesting provisions, and any other provisions of such
BritePool Option will otherwise remain unchanged.
Closing Conditions.
The closing of the Merger (the "Closing") is subject to the following
conditions: (i) expansion of the Company's Board of Directors ("Board") from
three (3) seats to five (5) seats and the appointment of David Moore,
BritePool's Chief Executive Officer, and Robert Perkins, BritePool's Chief
Operating Officer, to the Board, (ii) the entry into employment agreements, in
the forms attached as exhibits to the Merger Agreement, with David Moore, George
Stella, and Robert Perkins as Chief Executive Officer, President and Executive
Vice President of the Company, respectively, and (iii) entry into an exchange
agreement (the "Exchange Agreement:") with SRAX, Inc. ("SRAX"), pursuant to
which SRAX will exchange all of its outstanding Company Common Stock for a class
of non-voting preferred stock of the Company containing a beneficial ownership
limitation of 4.99% (subject to increase on 61 days' notice) and otherwise
having the same rights, preferences, and privileges of the Company Common Stock
(the "SRAX Exchange").
In addition to the foregoing conditions, the Closing is subject to the
satisfaction or waiver of certain other customary conditions, including among
other things: (i) the accuracy of the parties' representations and warranties,
(ii) compliance by the parties with their respective covenants, and (iii) no law
or order preventing the Merger and related transactions.
Exchange Ratio
The Exchange Ratio provided in the Merger Agreement is 16,154.07 (the "Exchange
Ratio"). As a result of the Exchange Ratio, at the Effective Time, the holders
of (i) BritePool Common Stock will receive an aggregate of 183,445,351,630
shares of Company Common Stock, accounting for approximately 44.71% of the
aggregate number of shares of outstanding Company Common Stock immediately
following the Closing (with such number assuming the full conversion of the SRAX
preferred stock received in the SRAX Exchange back into Company Common Stock)
and (ii) BritePool Options will receive options to purchase an aggregate of
71,220,059,440 shares of Company Common Stock.
Employment Agreements
As a required closing condition under the Merger Agreement, the Company is
required to enter into employment agreements (collectively, the "Employment
Agreements") with (i) David Moore ("Moore Agreement"), (ii) George Stella
("Stella Agreement") and (iii) Robert Perkins ("Perkins Agreement"). The Company
will enter into the Employment Agreements at the Closing, subject to customary
background checks.
David Moore Employment
The Moore Agreement will entitle Mr. Moore to receive a base salary of $240,000
per annum ("Moore Base Salary"), which will increase to $350,000 and become the
new Moore Base Salary on the date that the Company completes a financing with
gross proceeds of $5,000,000 subsequent to March 12, 2022 (a "Qualified
Financing"). Additionally, upon the effective date of the Moore Agreement, the
Board will appoint Mr. Moore to the Board.
Mr. Moore will be eligible to be considered for an annual discretionary target
cash bonus of 60% of the Moore Base Salary with (i) 50% of such bonus based on
corporate revenue targets and metrics and (ii) 50% of such bonus based on
certain corporate profit and loss targets, each to be approved by the Board or a
compensation committee thereof.
Additionally, Mr. Moore will be eligible to receive an annual market-based
equity grant if and when determined by the Board.
On the one (1) year anniversary of the effective date of employment, the Company
will issue Mr. Moore such number of restricted stock units as is equal to (i)
$1,900,000 divided by (ii) the closing price per share of the Company Common
Stock on the grant date.
In the event that the Company terminates Mr. Moore's employment without "Cause"
(as defined in the Moore Agreement), or upon Mr. Moore resigning for "Good
Reason" (as defined in the Moore Agreement), the Company, or Mr. Moore, as
applicable will provide at least six (6) months notice prior to such termination
("Termination Period"). During such Termination Period, Mr. Moore will continue
to receive the Moore Base Salary and continue to vest in all then outstanding
equity-based awards that are time or performance based.
George Stella Employment
George Stella currently serves as the Company's President and Chief Revenue
Officer. Subject to the Stella Agreement, he will continue to serve as the
Company's President and will be entitled to receive a base salary of $240,000
per annum ("Stella Base Salary"), which will increase to $350,000 and become the
new Stella Base Salary on the date that the Company completes a Qualified
Financing subsequent to March 12, 2022.
Mr. Stella will be eligible to be considered for an annual discretionary target
cash bonus of 60% of the Stella Base Salary with (i) 50% of such bonus based on
corporate revenue targets and metrics and (ii) 50% of such bonus based on
certain corporate profit and loss targets, each to be approved by the Board or a
compensation committee thereof.
Additionally, Mr. Stella will be eligible to receive an annual market-based
equity grant if and when determined by the Board.
On the one (1) year anniversary of the effective date of employment, the Company
will issue Mr. Stella such number of restricted stock units as is equal to (i)
$1,900,000 divided by (ii) the closing price per share of the Company Common
Stock on the grant date.
In the event that the Company terminates Mr. Stella's employment without "Cause"
(as defined in the Stella Agreement), or upon Mr. Stella resigning for "Good
Reason" (as defined in the Stella Agreement), the Company, or Mr. Stella, as
applicable will provide at least the six (6) months notice Termination Period.
During such Termination Period, Mr. Stella will continue to receive the Stella
Base Salary and continue to vest in all then outstanding equity-based awards
that are time or performance based.
Robert Perkins Employment
The Perkins Agreement will entitle Mr. Perkins to receive a base salary of
$180,000 per annum ("Perkins Base Salary"), which will increase to $240,000 and
become the new Perkins Base Salary on the date that the Company completes a
Qualified Financing subsequent to March 12, 2022.
Mr. Perkins will be eligible to be considered for an annual discretionary target
cash bonus of 60% of the Perkins Base Salary with (i) 50% of such bonus based on
corporate revenue targets and metrics and (ii) 50% of such bonus based on
certain corporate profit and loss targets, each to be approved by the Board or a
compensation committee thereof.
Additionally, Mr. Perkins will be eligible to receive an annual market-based
equity grant if and when determined by the Board.
On the one (1) year anniversary of the effective date of employment, the Company
will issue Mr. Perkins such number of restricted stock units as is equal to (i)
$1,200,000 divided by (ii) the closing price per share of the Company Common
. . .
Item 8.01 Other Events
On September 29, 2021, the Company and BritePool jointly announced the Merger
Agreement. A copy of the press release is attached as Exhibit 99.01.
Cautionary Statement Regarding Forward-Looking Statements
This communication contains "forward-looking" statements within the meaning of
the Private Securities Litigation Reform Act of 1995, including, without
limitation, statements related to the anticipated consummation of the proposed
transactions, and other statements that are not historical facts. Any statements
contained in this communication that are not statements of historical fact may
be deemed to be forward-looking statements. Forward-looking statements may be
identified by the use of words referencing future events or circumstances such
as "expect," "intend," "plan," "anticipate," "believe," "will," and similar
expressions and their variants. These forward-looking statements are based upon
the Company's current expectations. Forward-looking statements involve risks and
uncertainties. The Company's actual results and the timing of events could
differ materially from those anticipated in such forward-looking statements as a
result of these risks and uncertainties, which include, without limitation,
risks relating to the completion of the Merger, including the satisfaction of
closing conditions. The risks and uncertainties may be amplified by the COVID-19
pandemic, which has caused significant economic uncertainty. The extent to which
the COVID-19 pandemic impacts the Company's business, operations, and financial
results, including the duration and magnitude of such effects, will depend on
numerous factors, which are unpredictable, including, but not limited to, the
duration and spread of the outbreak, its severity, the actions to contain the
virus or treat its impact, and how quickly and to what extent normal economic
and operating conditions can resume.
There can be no assurance that the Company will be able to complete the proposed
transactions on the anticipated terms, or at all. Additional risks and
uncertainties relating to the Company and its business can be found under the
caption "Risk Factors" and elsewhere in the Company's filings and reports with
the SEC, including in the Company's Annual Report on Form 10-K for the year
ended December 31, 2020, filed with the SEC on April 15, 2021 and as amended on
May 28, 2021 and the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2021, filed with the SEC on August 16, 2021. Except as required
by law, the Company expressly disclaims any obligation or undertaking to release
publicly any updates or revisions to any forward-looking statements contained
herein to reflect any change in the Company's expectations with regard thereto
or any change in events, conditions or circumstances on which any such
statements are based.
Item 9.01 Financial Statements and Exhibits.
Exhibit
No. Description
2.01 Agreement and Plan of Merger
99.01 Press Release dated September 29, 2021
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