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): February 1, 2024
Clover Leaf Capital
Corp.
(Exact name of registrant
as specified in its charter)
| Delaware |
|
001-40625 |
|
85-2303279 |
(State or other jurisdiction
of incorporation) |
|
(Commission File Number) |
|
(IRS Employer
Identification No.) |
1450 Brickell Avenue,
Suite 2520
Miami, FL 33131
(Address of principal
executive offices, including zip code)
Registrant’s
telephone number, including area code: (305) 577-0031
(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:
| ☒ |
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)) |
Securities registered
pursuant to Section 12(b) of the Act:
| Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
| Units, each consisting of one share of Class A Common Stock, $0.0001 par value and one Right to receive one-eighth (1/8) of one share of Class A Common Stock upon the consummation of an initial business combination |
|
CLOEU |
|
The Nasdaq Stock Market LLC |
| Class A Common Stock, par value $0.0001 per share |
|
CLOE |
|
The Nasdaq Stock Market LLC |
| Rights, every eight (8) rights entitles the holder to receive one share of Class A Common Stock upon the consummation of an initial business combination |
|
CLOER |
|
The Nasdaq Stock Market LLC |
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 February 1, 2024,
Clover Leaf Capital Corp. (“Clover Leaf”), Kustom Entertainment, Inc. (“Kustom Entertainment”) and Digital Ally,
Inc. (“Digital Ally”) entered into an indemnification agreement (the “Indemnification Agreement”), pursuant to
which Kustom Entertainment and Digital Ally agreed to indemnify Clover Leaf and its officers and directors for liabilities incurred in
connection with Digital Ally disclosure incorporated by reference into the Registration Statement or Proxy Statement (each as defined
in the Agreement and Plan of Merger, dated June 1, 2023, between Clover Leaf, Kustom Entertainment, Digital Ally and certain other parties
thereto).
A copy of the Indemnification
Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference, and the foregoing description
of the Indemnification Agreement is qualified in its entirety by reference thereto.
Additional Information and Where to Find
It
In
connection with the business combination between Clover Leaf and Kustom Entertainment (the “Business Combination”), Clover
Leaf has filed a proxy statement and registration statement on Form S-4 (the “Proxy/Registration Statement”) with the SEC
(as defined herein), which includes a preliminary proxy statement to be distributed to holders of Clover Leaf’s common stock in
connection with Clover Leaf’s solicitation of proxies for the vote by Clover Leaf’s stockholders with respect to the Business
Combination and other matters as described in the Proxy/Registration Statement, as well as, a prospectus relating to the offer of the
securities to be issued to Kustom Entertainment’s stockholder in connection with the Business Combination. After the Proxy/Registration
Statement has been declared effective by the SEC, Clover Leaf will mail a definitive proxy statement, to its stockholders. Before making
any voting or investment decision, investors and security holders of Clover Leaf and other interested parties are urged to read the proxy
statement and/or prospectus, any amendments thereto and any other documents filed with the SEC carefully and in their entirety when they
become available because they will contain important information about the Business Combination and the parties to the Business Combination.
Investors and security holders may obtain free copies of the preliminary proxy statement/prospectus and definitive proxy statement/prospectus
(when available) and other documents filed with the U.S. Securities and Exchange Commission (the “SEC”) by Clover Leaf through
the website maintained by the SEC at http://www.sec.gov, or by directing a request to: 1450 Brickell Avenue, Suite 1420, Miami, FL 33131.
Forward-Looking Statements
This
report contains certain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities
Litigation Reform Act of 1955. These forward-looking statements include, without limitation, Digital Ally’s, Clover Leaf’s
and Kustom Entertainment’s expectations with respect to the proposed Business Combination between Clover Leaf and Kustom Entertainment,
including statements regarding the benefits of the Business Combination, the anticipated timing of the Business Combination, the implied
valuation of Kustom Entertainment, the products offered by Kustom Entertainment and the markets in which it operates, and Kustom Entertainment’s
projected future results. 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 are intended to identify such forward-looking statements. 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 significant risks and uncertainties that could cause the actual results to differ materially from the expected
results. Most of these factors are outside of Digital Ally’s, Clover Leaf’s and Kustom Entertainment’s control and are
difficult to predict. Factors that may cause actual future events to differ materially from the expected results, include, but are not
limited to: (i) the risk that the Business Combination may not be completed in a timely manner or at all, which may adversely affect the
price of Digital Ally’s and Clover Leaf’s securities, (ii) the risk that the Business Combination may not be completed by
Clover Leaf’s business combination deadline, even if extended by its stockholders, (iii) the potential failure to obtain an extension
of the business combination deadline if sought by Clover Leaf; (iv) the failure to satisfy the conditions to the consummation of the Business
Combination, including the adoption of the agreement and plan of merger (“Merger Agreement”) by the stockholders of Clover
Leaf, (v) the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, (vi)
the failure to obtain any applicable regulatory approvals required to consummate the Business Combination, (vii) the receipt of an unsolicited
offer from another party for an alternative transaction that could interfere with the Business Combination, (viii) the effect of the announcement
or pendency of the Business Combination on Kustom Entertainment’s business relationships, performance, and business generally, (ix)
the inability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition
and the ability of the post-combination company to grow and manage growth profitability and retain its key employees, (x) costs related
to the Business Combination, (xi) the outcome of any legal proceedings that may be instituted against Kustom Entertainment or Clover Leaf
following the announcement of the proposed Business Combination, (xii) the ability to maintain the listing of Clover Leaf’s securities
on the Nasdaq prior to the Business Combination, (xiii) the ability to implement business plans, forecasts, and other expectations after
the completion of the proposed Business Combination, and identify and realize additional opportunities, (xiv) the risk of downturns and
the possibility of rapid change in the highly competitive industry in which Kustom Entertainment operates, (xv) the risk that demand for
Kustom Entertainment’s services may be decreased due to a decrease in the number of large-scale sporting events, concerts and theater
shows, (xvi) the risk that any adverse changes in Kustom Entertainment’s relationships with buyer, sellers and distribution partners
may adversely affect the business, financial condition and results of operations, (xvii) the risk that changes in Internet search engine
algorithms and dynamics, or search engine disintermediation, or changes in marketplace rules could have a negative impact on traffic for
Kustom Entertainment’s sites and ultimately, its business and results of operations, (xviii) the risk that any decrease in the willingness
of artists, teams and promoters to continue to support the secondary ticket market may result in decreased demand for Kustom Entertainment’s
services, (xix) the risk that Kustom Entertainment is not able to maintain and enhance its brand and reputation in its marketplace, adversely
affecting Kustom Entertainment’s business, financial condition and results of operations, (xx) the risk of the occurrence of extraordinary
events, such as terrorist attacks, disease epidemics or pandemics, severe weather events and natural disasters, (xxi) the risk that because
Kustom Entertainment’s operations are seasonal and its results of operations vary from quarter to quarter and year over year, its
financial performance in certain financial quarters or years may not be indicative of, or comparable to, Kustom Entertainment’s
financial performance in subsequent financial quarters or years, (xxii) the risk that periods of rapid growth and expansion could place
a significant strain on Kustom Entertainment’s resources, including its employee base, which could negatively impact Kustom Entertainment’s
operating results, (xxiii) the risk that Kustom Entertainment may never achieve or sustain profitability, (xxiv) the risk that Kustom
Entertainment may need to raise additional capital to execute its business plan, which many not be available on acceptable terms or at
all; (xxv) the risk that third-parties suppliers and manufacturers are not able to fully and timely meet their obligations, (xxvi) the
risk that Kustom Entertainment is unable to secure or protect its intellectual property, (xxvii) the risk that the post-combination company’s
securities will not be approved for listing on Nasdaq or if approved, maintain the listing and (xxviii) other risks and uncertainties
indicated from time to time in the proxy statement and/or prospectus to be filed relating to the Business Combination. There may be additional
risks that Digital Ally and Kustom Entertainment presently do not know or that Digital Ally and Kustom Entertainment currently believe
are immaterial that could also cause results to differ from those contained in any 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 Digital Ally,
Kustom Entertainment and Clover Leaf assume no obligation and do not intend to update or revise these forward-looking statements, whether
as a result of new information, future events, or otherwise.
The
foregoing list of factors is not exhaustive. Recipients should carefully consider such factors, with respect to the proposed Business
Combination, and the other risks and uncertainties described and to be described in the “Risk Factors” section of Clover Leaf’s
Annual Report on Form 10-K filed for the year ended December 31, 2022 filed with the SEC on April 14, 2023 and subsequent periodic reports
filed by Clover Leaf with the SEC, the Proxy Statement and Registration Statement and other documents filed or to be filed by Clover Leaf
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 with respect to the proposed Business Combination.
Forward-looking statements speak only as of the date they are made. Recipients are cautioned not to put undue reliance on forward-looking
statements with respect to the proposed Business Combination, and neither Kustom Entertainment nor Clover Leaf assume any obligation to,
nor intend to, update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise,
except as required by law. Neither Kustom Entertainment nor Clover Leaf gives any assurance that either Kustom Entertainment or Clover
Leaf, or the combined company, will achieve its expectations.
Participants in the Solicitation
Clover
Leaf and Kustom Entertainment and their respective directors and certain of their respective executive officers and other members of management
and employees may be considered participants in the solicitation of proxies from the stockholders of Clover Leaf with respect to the Business
Combination. Information about the directors and executive officers of Clover Leaf is set forth in its Annual Report on Form 10-K for
the fiscal year ended December 31, 2022 filed with the SEC on April 14, 2023. Additional information regarding the participants in the
proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be included in the
proxy statement and/or prospectus and other relevant materials to be filed with the SEC regarding the Business Combination when they become
available. Stockholders, potential investors and other interested persons should read the proxy statement and/or prospectus carefully
when it becomes available before making any voting or investment decisions. When available, these documents can be obtained free of charge
from the sources indicated above.
No Offer or Solicitation
This
communication shall not constitute a solicitation of a proxy, consent or authorization with respect to any securities or in respect of
the proposed Business Combination. This communication shall not constitute an offer to sell or the solicitation of an offer to buy any
securities, nor shall there be any sale of securities in any state or jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended, or
an exemption therefrom.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
See the Exhibit Index below, which is incorporated
by reference herein.
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.
| |
Clover Leaf Capital Corp. |
| |
|
|
| Date: February 7, 2024 |
By: |
/s/ Felipe MacLean |
| |
|
Name: |
Felipe MacLean |
| |
|
Title: |
Chief Executive Officer |
4
Exhibit 10.1
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION
AGREEMENT (this “Agreement”) is made and entered into as of February 1, 2024 by and between (i) Clover Leaf
Capital Corp., a Delaware corporation (including any successor entity thereto, the “Purchaser”), (ii)
Kustom Entertainment, Inc., a Nevada corporation (“Company”), and (iii) Digital Ally, Inc., a Nevada
corporation (“Company Stockholder” and along with the Company, each a “Company
Party” and together the “Company Parties”). Any capitalized term used but not defined in
this Agreement will have the meaning ascribed to such term in the Merger Agreement.
WHEREAS, on June 1,
2023, (i) the Purchaser, (ii) CL Merger Sub, Inc. a Nevada corporation and a wholly-owned subsidiary of the Purchaser (“Merger
Sub”), (iii) Yntegra Capital Investments, LLC, a Delaware limited liability company, in the capacity under the Merger
Agreement as the Purchaser Representative (including any successor Purchaser Representative appointed in accordance the Merger Agreement,
the “Purchaser Representative”), (iv) the Company and (v) the Company Stockholder, the sole stockholder of the
Company, entered into that certain Agreement and Plan of Merger (as amended from time to time in accordance with the terms thereof, the
“Merger Agreement”), pursuant to which Merger Sub will merge with and into the Company, with the Company continuing
as the surviving entity (the “Merger”), and as a result of which, (a) all of the issued and outstanding capital
stock of the Company, immediately prior to the consummation of the Merger, shall no longer be outstanding and shall automatically be cancelled
and shall cease to exist, in exchange for the Merger Consideration Shares, all upon the terms and subject to the conditions set forth
in the Merger Agreement and in accordance with the applicable provisions of the of the Delaware General Corporation Law and the Nevada
Revised Statutes; and
WHEREAS, in accordance
with the Merger Agreement, the Company Parties have provided information to be incorporated into the Registration Statement and Proxy
Statement.
NOW, THEREFORE, in
consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and intending to
be legally bound hereby, the parties hereby agree as follows:
1. The
Company Parties agree to indemnify and hold harmless the Purchaser, its directors, officers and its affiliates against any and all loss,
liability, claim, damage and expense whatsoever (including but not limited to any and all legal or other expenses reasonably incurred
in investigating, preparing or defending against any litigation, commenced or threatened, or any claim whatsoever, whether arising out
of any action between the Purchaser and the Company Parties or between the Purchaser and any third party or otherwise) to which they or
any of them may become subject under the Securities Act, the Exchange Act or any other federal, state or local statute, law, rule, regulation
or ordinance or at common law or otherwise or under the laws, rules and regulation of foreign countries, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact provided by or on behalf of a Company Party contained in the Registration
Statement or Proxy Statement (as from time to time each may be amended and supplemented), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The Company Parties agree promptly to notify the Purchaser of the commencement of any litigation
or proceedings against a Company Party or any of its officers or directors in connection with the Registration Statement or the Proxy
Statement.
2. If
any action is brought against the Purchaser in respect of which indemnity may be sought against the Company Parties pursuant to Section
1, the Purchaser shall promptly notify the Company Parties in writing of the institution of such action and the Company Parties shall
assume the defense of such action, including the employment and fees of counsel (subject to the reasonable approval of the Purchaser)
and payment of actual expenses. The Purchaser shall have the right to employ its own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of the Purchaser unless: (i) the employment of such counsel at the expense of the Company Parties
shall have been authorized in writing by the Company Parties in connection with the defense of such action within reasonable time under
the circumstances; (ii) the Company Parties shall not have employed counsel to have charge of the defense of such action; or (iii) such
indemnified party or parties shall have reasonably concluded that there may be defenses available to it or them which are different from
or additional to those available to the Company Parties (in which case the Company Parties shall not have the right to direct the defense
of such action on behalf of the indemnified party or parties), in any of which events the reasonable fees and expenses of not more than
one additional firm of attorneys selected by the Purchaser, which firm shall be from a list previously approved by the Company Parties,
shall be borne by the Company Parties. Notwithstanding anything to the contrary contained herein, if the Purchaser shall assume the defense
of such action as provided above, the Company Parties shall have the right to approve the terms of any settlement of such action which
approval shall not be unreasonably withheld.
3. Within
fifteen (15) days after receipt by a Company Party or the Purchaser of notice of the commencement of any action, suit or proceeding, such
party will, if a claim for contribution in respect thereof is to be made against another party (“Contributing Party”),
notify the Contributing Party of the commencement thereof, but the omission to so notify the Contributing Party will not relieve it from
any liability which it may have to any other party other than for contribution hereunder. In case any such action, suit or proceeding
is brought against any party, and such party notifies a Contributing Party or its representative of the commencement thereof within the
aforesaid fifteen (15) days, the Contributing Party will be entitled to participate therein with the notifying party and any other Contributing
Party similarly notified. Any such Contributing Party shall not be liable to any party seeking contribution on account of any settlement
of any claim, action or proceeding effected by such party seeking contribution without the written consent of such Contributing Party.
The contribution provisions contained in this Section are intended to supersede, to the extent permitted by law, any right to contribution
under the Securities Act, the Exchange Act or otherwise available.
4. This
Agreement and any dispute or controversy arising out of or relating to this Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the conflict of law principles thereof. All actions arising out of or relating
to this Agreement shall be heard and determined exclusively in any state or federal court located in New York, New York (or in any appellate
court thereof) (the “Specified Courts”). Each party hereto hereby (i) submits to the exclusive jurisdiction
of any Specified Court for the purpose of any action arising out of or relating to this Agreement brought by any party hereto and (ii)
irrevocably waives, and agrees not to assert by way of motion, defense or otherwise, in any such action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the
action is brought in an inconvenient forum, that the venue of the action is improper, or that this Agreement or the transactions contemplated
hereby may not be enforced in or by any Specified Court. Each party agrees that a final judgment in any action shall be conclusive and
may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each party irrevocably consents
to the service of the summons and complaint and any other process in any other action or proceeding relating to the transactions contemplated
by this Agreement, on behalf of itself, or its property, by personal delivery of copies of such process to such party at the applicable
address set forth in Section 10.1 of the Merger Agreement. Nothing in this Section 4 shall affect the right of any party to serve legal
process in any other manner permitted by applicable law.
5. EACH
OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT
TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.
6. In
the event either party institutes litigation to enforce its rights under this Agreement, the parties agree that the prevailing party(ies)
in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys’ fees and expenses relating
to such action or proceeding and/or incurred in connection with the preparation therefor.
7. This
agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall
be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when
one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto. Delivery of
a signed counterpart of this agreement by fax or email/.pdf transmission shall constitute valid and sufficient delivery thereof.
8. The
failure of any of the parties hereto to at any time enforce any of the provisions of this agreement shall not be deemed or construed to
be a waiver of any such provision, nor to in any way effect the validity of this agreement or any provision hereof or the right of any
of the parties hereto to thereafter enforce each and every provision of this agreement. No waiver of any breach, non-compliance or non-fulfillment
of any of the provisions of this agreement shall be effective unless set forth in a written instrument executed by the party or parties
against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non- compliance or non-fulfillment shall
be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.
[Remainder of Page Intentionally Left Blank;
Signature Pages Follow]
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first written above.
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The Purchaser: |
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CLOVER LEAF CAPITAL CORP. |
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By: |
/s/ Felipe MacLean |
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Name: |
Felipe MacLean |
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Title: |
Chief Executive Officer |
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The Company: |
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KUSTOM ENTERTAINMENT, INC. |
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By: |
/s/ Stanton E. Ross |
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Name: |
Stanton E. Ross |
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Title: |
CEO |
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The Company Stockholder: |
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DIGITAL ALLY, INC. |
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By: |
/s/ Stanton E. Ross |
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Name: |
Stanton E. Ross |
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Title: |
CEO |
[Signature Page to Indemnification Agreement]
4
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