ASSIGNMENT AND ASSUMPTION AGREEMENT

 

This Assignment and Assumption Agreement (this “ Assignment ”), dated as of October 1, 2017, is by and between KeyStone Solutions, LLC, a Delaware limited liability company (“ Assignor ”), as successor of KeyStone Solutions, Inc., a Delaware corporation (“ KSI ”), and Novume Solutions, Inc., a Delaware corporation (“ Assignee ”).

 

WHEREAS, effective as of January 25, 2017, KSI entered into that certain Membership Interest Purchase Agreement (the “ Membership Interest Purchase Agreement ”) by and among KSI, Firestorm Solutions LLC, a Delaware limited liability company (“ Firestorm Solutions ”), Firestorm Franchising LLC, a Georgia limited liability company (“ Firestorm Franchising ” and, together with Firestorm Solutions, “ Firestorm ”), Suzanne Loughlin (“ SL ”), Harry Rhulen (“ HR ”), James Satterfield (“ JS ”), and Lancer Financial Group, Inc., an Illinois corporation (“ Lancer ”), pursuant to which KSI acquired all of the outstanding membership interests in Firestorm in consideration of, among other things, four promissory notes (collectively, the “ Firestorm Notes ”) made by KSI in favor of each of Lancer, SL, JS and HR in the principal amounts of $500,000.00, $166,666.67, $166,666.67 and $166,666.66, respectively; and

 

WHEREAS, effective as of August 28, 2017, KSI merged with and into Assignor, and Assignor succeeded KSI as the issuer of the Firestorm Notes, pursuant to the terms of that certain Second Amended and Restated Agreement and Plan of Merger (the “ Merger Agreement ”) by and among Assignor, Assignee, KSI, Brekford Traffic Safety, Inc., a Delaware corporation, and Brekford Merger Sub, Inc., a Delaware corporation;

 

WHEREAS, Assignee, being the sole member of Assignor, desires to assume all right, title and interest in, to and under the Firestorm Notes from Assignor, and Assignor wishes to assign all right, title and interest in, to and under the Firestorm Notes to Assignee;

 

WHEREAS, Assignor and Assignee have agreed to enter into this Assignment providing for the assignment, transfer and conveyance to Assignee of all of Assignor’s right, title and interest in, to and under the Firestorm Notes;

 

NOW, THEREFORE, the parties hereto hereby agree as follows:

 

           1.   Assignment of Firestorm Notes . Assignor hereby transfers, assigns, conveys and delivers to Assignee all of Assignor’s right, title and interest in, to and under the Firestorm Notes, and Assignee hereby accepts such assignment.

 

2.            Entire Agreement; No Third Party Beneficiary . This Assignment constitutes the entire agreement, and supersedes all other prior agreements and understandings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof. This Assignment shall be binding upon and inure solely to the benefit of each party hereto and their respective successors and permitted assigns, and and nothing in this Assignment, express or implied, is intended to confer or shall confer upon any other person any rights or remedies of any nature whatsoever (including any third-party beneficiary rights) under or by reason of this Agreement.

 

3.            Severability . If any term or other provision of this Assignment is invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Assignment shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party.

 

4.            Counterparts . This Assignment may be executed and delivered (including by facsimile transmission) in two (2) or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

 

               5.            Headings . The headings contained in this Assignment are for reference purposes only and shall not affect in any way the meaning or interpretation of this Assignment.

 

6.            Governing Law . This Assignment shall be governed by, and construed in accordance with the laws of the State of New York, without giving effect to any choice or conflict of laws provision or rule that would cause the application of the laws of any other state of jurisdiction.

 

7.            Jurisdiction and Venue . Each of Assignor and Assignee irrevocably consents to the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York, to the extent subject matter jurisdiction exists therefor, or, but only if jurisdiction does not exist in the Southern District of New York, the Supreme Court of the State of New York, County of Sullivan, in connection with any matter based upon or arising out of this Note or the matters contemplated herein, and agrees that process may be served upon them in any manner authorized by the laws of the State of New York for such persons.

 

 

 

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IN WITNESS WHEREOF, the parties, intending to be legally bound hereby, have duly executed this Assignment on the date first above written.

 

 

ASSIGNOR:

 

KEYSTONE SOLUTIONS, LLC

 

 

By: /s/ Robert A. Berman        

       Name: Robert A. Berman

       Title: Chief Executive Officer

 

 

 

ASSIGNEE:

 

NOVUME SOLUTIONS, INC.

 

 

B y : /s/ Robert A. Berman       

       Name: Robert A. Berman

       Title: Chief Executive Officer

 

 

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT Of 1933, AS AMENDED (THE “ SECURITIES ACT ”) AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.

 

 

 

 

 

UNSECURED SUBORDINATED PROMISSORY NOTE

 

$166,666.66

January 25, 2022

 

For value received, Novume Solutions, Inc., a Delaware corporation (the “ Company ”) , as assignee of KeyStone Solutions, LLC, a Delaware LLC (“ KeyStone ”, being successor of KeyStone Solutions, Inc., a Delaware corporation (“ KSI ”)), promises to pay to Harry Rhulen (the “ Holder ”) , the principal sum of one hundred sixty-six thousand six hundred sixty-six dollars and sixty-six cents ($166,666.66) or such other amount as may have been advanced and may be outstanding from time to time (the “ Principal Amount ”). Simple interest shall accrue from the Issuance Date (as defined below) of this Note on the unpaid Principal Amount at a rate equal to the lower of (i) 2% per annum, or (ii) the highest rate permitted by applicable law. This Note was originally issued by KSI to the Holder as one of a series of Unsecured Subordinated Promissory Notes containing substantially identical terms and conditions issued pursuant to that certain Membership Interest Purchase Agreement (the “ Purchase Agreement ”), dated January 25, 2017 (the “ Issuance Date ”) , by and among KSI and certain other parties, including the other note holders. KSI merged with and into KeyStone as of August 28, 2017, with KeyStone surviving such merger and succeeding KSI as the issuer of this Note. KeyStone assigned this Note to the Company pursuant to an Assignment and Assumption Agreement by and between KeyStone and the Company dated as of September 29, 2017. Such Notes are referred to herein, collectively, as the “ Notes ,” and the holders thereof are referred to herein, collectively, as the “ Holders .” This Note is subject to the following terms and conditions.

 

 

1.            Maturity . This Note will automatically mature and be due and payable on January 25, 2022 (the “ Maturity Date ”) . Interest shall accrue on this Note and shall be payable monthly in arrears. Notwithstanding any of the foregoing, the entire unpaid Principal Amount of this Note, together with accrued and unpaid interest thereon, shall become immediately due and payable upon the insolvency of the Company, the commission of any act of bankruptcy by the Company, the execution by   the Company of a general assignment for the benefit of creditors, the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy act or the continuation of such petition without dismissal for a period of ninety (90) days or more, or the appointment of a receiver or trustee to take possession of the property or assets of the Company.

 

 

2.          Payment; Prepayment . All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company. Payment shall be credited first to the accrued interest then due and payable, and the remainder shall be applied to the outstanding Principal Amount. This Note may be prepaid in whole or in part from time to time by the Company.

 

 

3.         Nature of Obligation. This Note is a general unsecured obligation of the Company.

 

 

4.        Transfer; Successors and Assigns . The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Notwithstanding the foregoing, the Holder may not assign, pledge or otherwise transfer all or any part of this Note without the prior written consent of the Company.

 

 

5.            Purchase Agreement Indemnification . To the extent one or more Buyer Indemnified Persons is entitled to indemnification under Section 8.2(a) or Section 8.2(b) of the Purchase Agreement as determined by the non-appealable decision or order of a Court of competent jurisdiction as provided for in Section 11.13 of the Purchase Agreement , the aggregate dollar amount recoverable by such Buyer Indemnified Person, or Buyer Indemnified Persons, as the case may be, shall, at Novume’s option, be offset on a pro rata basis against the outstanding amounts payable by Novume under the Notes. The aggregate amount owing as outstanding Principal Amounts and accrued but unpaid interest under all of the Notes shall, at Novume’s option, be reduced dollar for dollar, on a pro rata basis , by the aggregate amount owing to one or more Buyer Indemnified Persons under Section 8.2(a) or Section 8.2(b) of the Purchase Agreement.

 

 

6.            Governing Law . This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New York, without giving effect to principles of conflicts of Law.

 

 

7.           Jurisdiction and Venue . Each of the Holder and the Company irrevocably consents to the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York, to the extent subject matter jurisdiction exists therefor, or, but only if jurisdiction does not exist in the Southern District of New York, the Supreme Court of the State of New York, County of Sullivan, in connection with any matter based upon or arising out of this Note or the matters contemplated herein, and agrees that process may be served upon them in any manner authorized by the laws of the State of New York for such persons.

 

 

8.            Subordination .

 

(a)         The Holder acknowledges and agrees that the Company’s payment obligations under this Note may be subordinated to the obligations of the Company to its lenders under any financing facility that it may obtain during the term of this Note, including any increase in the size of such facility from time to time (the lenders under any such facility, the “ Lenders ”) solely in the event that Company is unable to meet its obligations under the financing facility; solely in such event, no payments under this Note shall be paid to Holder and any payment received by Holder shall be held in trust for the Lenders and shall be immediately turned over to the Lenders until such time as the Company is able to satisfy such obligations to the Lenders in full. By accepting this Note, the Holder agrees to execute a subordination agreement with any Lender or Lenders evidencing such subordination as requested by the Company and/or its Lenders. If the terms or conditions of any subordination agreement with any Lender shall change, the Holder shall execute and deliver such further documents or instruments as such Lender may reasonably request in order to give effect to the provisions of such subordination agreement and the provisions of this Note.

 

(b)         The Holder acknowledges and agrees that the Company’s payment obligations under this Note shall be subordinate to the obligations of the Company to Avon Road Partners, L.P. (“ Avon Partners ”) under that certain subordinated note in the original principal amount of $500,000, dated March 16, 2016 and assumed by the Company, as assignee of KSI, on August 25, 2017 (the “ Avon Note ”) solely in the event that Company is unable to meet its obligations under the Avon Note; solely in such event, no payments under this Note shall be paid to Holder and any payment received by Holder shall be held in trust for Avon Partners and shall be immediately turned over to Avon Partners until such time as the Company is able to satisfy such obligations to Avon Partners in full. By accepting this Note, the Holder agrees to execute a subordination agreement with Avon Partners evidencing such subordination as requested by the Company and/or Avon Partners. If the terms or conditions of any subordination agreement with any Avon Partners shall change, the Holder shall execute and deliver such further documents or instruments as Avon Partners may reasonably request in order to give effect to the provisions of such subordination agreement and the provisions of this Note so long as such additional terms and conditions are consistent with this Section 8 .

 

(c)          This Note is one of four Notes issued under the Purchase Agreement, one of which was issued to Lancer Financial Group, Inc., an Illinois corporation (“ Lancer ”). Notwithstanding the forgoing and anything else to the contrary herein, the Company may not cause, permit or suffer the aggregate amount of indebtedness to which this Note is subordinate to exceed seven million dollars ($7,000,000.00), without the prior written consent of Lancer.

 

 

9.            Offset of Notes . Notwithstanding anything else in this Note or the Purchase Agreement to the contrary, with respect to any right of a Buyer Indemnified Person to offset certain amounts due to it against sums outstanding under one or more Notes, as described in Section 8.4 of the Purchase Agreement, no such sums may be set off against any payments due to Lancer under the Note issued to it, unless and until the aggregate amount recoverable by such Buyer Indemnified Person is first offset against the outstanding amounts due under each of the Notes issued to SL, HR and JS (each as defined in the Purchase Agreement). To the extent that, subsequent to the offsets against the Notes issued to SL, HR and JS, there remain excess amounts due such Buyer Indemnified Person under Article VIII of the Purchase Agreement, then such excess amounts may be set off against the Note issued to Lancer. 

 

[Signature Page to Follow]

 

 

 

 

 

 

COMPANY:

 

NOVUME SOLUTIONS, INC.

 

 

                                                                                        Name: Robert A. Berman

 

                                                                                        Title: Chief Executive Officer

 

Address:

 

14420 Albemarle Point Place, Suite 200

Chantilly, VA 20151

 

Copy to:

 

Morris DeFeo

Crowell & Moring LLP

1001 Pennsylvania Ave. NY

Washington, D.C. 20004

 

 

 

 

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT Of 1933, AS AMENDED (THE “

SECURITIES ACT ”) AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.

 

 

UNSECURED SUBORDINATED PROMISSORY NOTE

 

$166,666.67

January 25, 2022

 

For value received, Novume Solutions, Inc., a Delaware corporation (the “ Company ”) , as assignee of KeyStone Solutions, LLC, a Delaware LLC (“ KeyStone ”, being successor of KeyStone Solutions, Inc., a Delaware corporation (“ KSI ”)), promises to pay to Suzanne Loughlin (the “ Holder ”), the principal sum of one hundred sixty-six thousand six hundred sixty-six dollars and sixty-seven cents ($166,666.67) or such other amount as may have been advanced and may be outstanding from time to time (the “ Principal Amount ”). Simple interest shall accrue from the Issuance Date (as defined below) of this Note on the unpaid Principal Amount at a rate equal to the lower of (i) 2% per annum, or (ii) the highest rate permitted by applicable law. This Note was originally issued by KSI to the Holder as one of a series of Unsecured Subordinated Promissory Notes containing substantially identical terms and conditions issued pursuant to that certain Membership Interest Purchase Agreement (the “ Purchase Agreement ”), dated January 25, 2017 (the “ Issuance Date ”) , by and among KSI and certain other parties, including the other note holders. KSI merged with and into KeyStone as of August 28, 2017, with KeyStone surviving such merger and succeeding KSI as the issuer of this Note. KeyStone assigned this Note to the Company pursuant to an Assignment and Assumption Agreement by and between KeyStone and the Company dated as of September 29, 2017. Such Notes are referred to herein, collectively, as the “ Notes ,” and the holders thereof are referred to herein, collectively, as the “ Holders .” This Note is subject to the following terms and conditions.

 

 

1.          Maturity . This Note will automatically mature and be due and payable on January 25, 2022 (the “ Maturity Date ”) . Interest shall accrue on this Note and shall be payable monthly in arrears. Notwithstanding any of the foregoing, the entire unpaid Principal Amount of this Note, together with accrued and unpaid interest thereon, shall become immediately due and payable upon the insolvency of the Company, the commission of any act of bankruptcy by the Company, the execution by   the Company of a general assignment for the benefit of creditors, the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy act or the continuation of such petition without dismissal for a period of ninety (90) days or more, or the appointment of a receiver or trustee to take possession of the property or assets of the Company.

 

 

2.          Payment; Prepayment . All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company. Payment shall be credited first to the accrued interest then due and payable, and the remainder shall be applied to the outstanding Principal Amount. This Note may be prepaid in whole or in part from time to time by the Company.

 

 

3.         Nature of Obligation . This Note is a general unsecured obligation of the Company.

 

 

4.      Transfer; Successors and Assigns . The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Notwithstanding the foregoing, the Holder may not assign, pledge or otherwise transfer all or any part of this Note without the prior written consent of the Company.

 

 

               5.           Purchase Agreement Indemnification . To the extent one or more Buyer Indemnified Persons is entitled to indemnification under Section 8.2(a) or Section 8.2(b) of the Purchase Agreement as determined by the non-appealable decision or order of a Court of competent jurisdiction as provided for in Section 11.13 of the Purchase Agreement , the aggregate dollar amount recoverable by such Buyer Indemnified Person, or Buyer Indemnified Persons, as the case may be, shall, at Novume’s option, be offset on a pro rata basis against the outstanding amounts payable by Novume under the Notes. The aggregate amount owing as outstanding Principal Amounts and accrued but unpaid interest under all of the Notes shall, at Novume’s option, be reduced dollar for dollar, on a pro rata basis , by the aggregate amount owing to one or more Buyer Indemnified Persons under Section 8.2(a) or Section 8.2(b) of the Purchase Agreement.

 

 

6.            Governing Law . This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New York, without giving effect to principles of conflicts of Law.

 

 

7.          Jurisdiction and Venue . Each of the Holder and the Company irrevocably consents to the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York, to the extent subject matter jurisdiction exists therefor, or, but only if jurisdiction does not exist in the Southern District of New York, the Supreme Court of the State of New York, County of Sullivan, in connection with any matter based upon or arising out of this Note or the matters contemplated herein, and agrees that process may be served upon them in any manner authorized by the laws of the State of New York for such persons

 

 

8.            Subordination .

 

(a)          The Holder acknowledges and agrees that the Company’s payment obligations under this Note may be subordinated to the obligations of the Company to its lenders under any financing facility that it may obtain during the term of this Note, including any increase in the size of such facility from time to time (the lenders under any such facility, the “ Lenders ”) solely in the event that Company is unable to meet its obligations under the financing facility; solely in such event, no payments under this Note shall be paid to Holder and any payment received by Holder shall be held in trust for the Lenders and shall be immediately turned over to the Lenders until such time as the Company is able to satisfy such obligations to the Lenders in full. By accepting this Note, the Holder agrees to execute a subordination agreement with any Lender or Lenders evidencing such subordination as requested by the Company and/or its Lenders. If the terms or conditions of any subordination agreement with any Lender shall change, the Holder shall execute and deliver such further documents or instruments as such Lender may reasonably request in order to give effect to the provisions of such subordination agreement and the provisions of this Note.

 

(b)          The Holder acknowledges and agrees that the Company’s payment obligations under this Note shall be subordinate to the obligations of the Company to Avon Road Partners, L.P. (“ Avon Partners ”) under that certain subordinated note in the original principal amount of $500,000, dated March 16, 2016 and assumed by the Company, as assignee of KSI, on August 25, 2017 (the “ Avon Note ”) solely in the event that Company is unable to meet its obligations under the Avon Note; solely in such event, no payments under this Note shall be paid to Holder and any payment received by Holder shall be held in trust for Avon Partners and shall be immediately turned over to Avon Partners until such time as the Company is able to satisfy such obligations to Avon Partners in full. By accepting this Note, the Holder agrees to execute a subordination agreement with Avon Partners evidencing such subordination as requested by the Company and/or Avon Partners. If the terms or conditions of any subordination agreement with any Avon Partners shall change, the Holder shall execute and deliver such further documents or instruments as Avon Partners may reasonably request in order to give effect to the provisions of such subordination agreement and the provisions of this Note so long as such additional terms and conditions are consistent with this Section 8 .

 

(c)          This Note is one of four Notes issued under the Purchase Agreement, one of which was issued to Lancer Financial Group, Inc., an Illinois corporation (“ Lancer ”). Notwithstanding the forgoing and anything else to the contrary herein, the Company may not cause, permit or suffer the aggregate amount of indebtedness to which this Note is subordinate to exceed seven million dollars ($7,000,000.00), without the prior written consent of Lancer.

 

 

9.            Offset of Notes . Notwithstanding anything else in this Note or the Purchase Agreement to the contrary, with respect to any right of a Buyer Indemnified Person to offset certain amounts due to it against sums outstanding under one or more Notes, as described in Section 8.4 of the Purchase Agreement, no such sums may be set off against any payments due to Lancer under the Note issued to it, unless and until the aggregate amount recoverable by such Buyer Indemnified Person is first offset against the outstanding amounts due under each of the Notes issued to SL, HR and JS (each as defined in the Purchase Agreement). To the extent that, subsequent to the offsets against the Notes issued to SL, HR and JS, there remain excess amounts due such Buyer Indemnified Person under Article VIII of the Purchase Agreement, then such excess amounts may be set off against the Note issued to Lancer. 

 

[Signature Page to Follow]

 

 

 

 

 

 

COMPANY:

 

NOVUME SOLUTIONS, INC.

 

 

                                                                                        Name: Robert A. Berman

 

                                                                                        Title: Chief Executive Officer

 

 

Address:

 

14420 Albemarle Point Place, Suite 200

Chantilly, VA 20151

 

Copy to:

 

Morris DeFeo

Crowell & Moring LLP

1001 Pennsylvania Ave. NY

Washington, D.C. 20004

 

 

 

 

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT Of 1933, AS AMENDED (THE “ SECURITIES ACT ”) AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.

 

UNSECURED SUBORDINATED PROMISSORY NOTE

 

$166,666.67

January 25, 2022

 

For value received, Novume Solutions, Inc., a Delaware corporation (the “ Company ”) , as assignee of KeyStone Solutions, LLC, a Delaware LLC (“ KeyStone ”, being successor of KeyStone Solutions, Inc., a Delaware corporation (“ KSI ”)), promises to pay to James Satterfield (the “ Holder ”), the principal sum of one hundred sixty-six thousand six hundred sixty-six dollars and sixty-seven cents ($166,666.67) or such other amount as may have been advanced and may be outstanding from time to time (the “ Principal Amount ”). Simple interest shall accrue from the Issuance Date (as defined below) of this Note on the unpaid Principal Amount at a rate equal to the lower of (i) 2% per annum, or (ii) the highest rate permitted by applicable law. This Note was originally issued by KSI to the Holder as one of a series of Unsecured Subordinated Promissory Notes containing substantially identical terms and conditions issued pursuant to that certain Membership Interest Purchase Agreement (the “ Purchase Agreement ”), dated January 25, 2017 (the “ Issuance Date ”) , by and among KSI and certain other parties, including the other note holders. KSI merged with and into KeyStone as of August 28, 2017, with KeyStone surviving such merger and succeeding KSI as the issuer of this Note. KeyStone assigned this Note to the Company pursuant to an Assignment and Assumption Agreement by and between KeyStone and the Company dated as of September 29, 2017. Such Notes are referred to herein, collectively, as the “ Notes ,” and the holders thereof are referred to herein, collectively, as the “ Holders .” This Note is subject to the following terms and conditions.

 

 

1.            Maturity . This Note will automatically mature and be due and payable on January 25, 2022 (the “ Maturity Date ”) . Interest shall accrue on this Note and shall be payable monthly in arrears. Notwithstanding any of the foregoing, the entire unpaid Principal Amount of this Note, together with accrued and unpaid interest thereon, shall become immediately due and payable upon the insolvency of the Company, the commission of any act of bankruptcy by the Company, the execution by   the Company of a general assignment for the benefit of creditors, the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy act or the continuation of such petition without dismissal for a period of ninety (90) days or more, or the appointment of a receiver or trustee to take possession of the property or assets of the Company.

 

 

2.            Payment; Prepayment . All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company. Payment shall be credited first to the accrued interest then due and payable, and the remainder shall be applied to the outstanding Principal Amount. This Note may be prepaid in whole or in part from time to time by the Company.

 

 

3.          Nature of Obligation . This Note is a general unsecured obligation of the Company.

 

 

4.          Transfer; Successors and Assigns . The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Notwithstanding the foregoing, the Holder may not assign, pledge or otherwise transfer all or any part of this Note without the prior written consent of the Company.

 

 

5.            Purchase Agreement Indemnification . To the extent one or more Buyer Indemnified Persons is entitled to indemnification under Section 8.2(a) or Section 8.2(b) of the Purchase Agreement as determined by the non-appealable decision or order of a Court of competent jurisdiction as provided for in Section 11.13 of the Purchase Agreement , the aggregate dollar amount recoverable by such Buyer Indemnified Person, or Buyer Indemnified Persons, as the case may be, shall, at Novume’s option, be offset on a pro rata basis against the outstanding amounts payable by Novume under the Notes. The aggregate amount owing as outstanding Principal Amounts and accrued but unpaid interest under all of the Notes shall, at Novume’s option, be reduced dollar for dollar, on a pro rata basis , by the aggregate amount owing to one or more Buyer Indemnified Persons under Section 8.2(a) or Section 8.2(b) of the Purchase Agreement.

 

 

6.            Governing Law . This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New York, without giving effect to principles of conflicts of Law.

 

 

7.          Jurisdiction and Venue . Each of the Holder and the Company irrevocably consents to the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York, to the extent subject matter jurisdiction exists therefor, or, but only if jurisdiction does not exist in the Southern District of New York, the Supreme Court of the State of New York, County of Sullivan, in connection with any matter based upon or arising out of this Note or the matters contemplated herein, and agrees that process may be served upon them in any manner authorized by the laws of the State of New York for such persons

 

 

8.            Subordination .

 

(a)         The Holder acknowledges and agrees that the Company’s payment obligations under this Note may be subordinated to the obligations of the Company to its lenders under any financing facility that it may obtain during the term of this Note, including any increase in the size of such facility from time to time (the lenders under any such facility, the “ Lenders ”) solely in the event that Company is unable to meet its obligations under the financing facility; solely in such event, no payments under this Note shall be paid to Holder and any payment received by Holder shall be held in trust for the Lenders and shall be immediately turned over to the Lenders until such time as the Company is able to satisfy such obligations to the Lenders in full. By accepting this Note, the Holder agrees to execute a subordination agreement with any Lender or Lenders evidencing such subordination as requested by the Company and/or its Lenders. If the terms or conditions of any subordination agreement with any Lender shall change, the Holder shall execute and deliver such further documents or instruments as such Lender may reasonably request in order to give effect to the provisions of such subordination agreement and the provisions of this Note.

 

(b)         The Holder acknowledges and agrees that the Company’s payment obligations under this Note shall be subordinate to the obligations of the Company to Avon Road Partners, L.P. (“ Avon Partners ”) under that certain subordinated note in the original principal amount of $500,000, dated March 16, 2016 and assumed by the Company, as assignee of KSI, on August 25, 2017 (the “ Avon Note ”) solely in the event that Company is unable to meet its obligations under the Avon Note; solely in such event, no payments under this Note shall be paid to Holder and any payment received by Holder shall be held in trust for Avon Partners and shall be immediately turned over to Avon Partners until such time as the Company is able to satisfy such obligations to Avon Partners in full. By accepting this Note, the Holder agrees to execute a subordination agreement with Avon Partners evidencing such subordination as requested by the Company and/or Avon Partners. If the terms or conditions of any subordination agreement with any Avon Partners shall change, the Holder shall execute and deliver such further documents or instruments as Avon Partners may reasonably request in order to give effect to the provisions of such subordination agreement and the provisions of this Note so long as such additional terms and conditions are consistent with this Section 8 .

 

(c)         This Note is one of four Notes issued under the Purchase Agreement, one of which was issued to Lancer Financial Group, Inc., an Illinois corporation (“ Lancer ”). Notwithstanding the forgoing and anything else to the contrary herein, the Company may not cause, permit or suffer the aggregate amount of indebtedness to which this Note is subordinate to exceed seven million dollars ($7,000,000.00), without the prior written consent of Lancer.

 

 

9.            Offset of Notes .  Notwithstanding anything else in this Note or the Purchase Agreement to the contrary, with respect to any right of a Buyer Indemnified Person to offset certain amounts due to it against sums outstanding under one or more Notes, as described in Section 8.4 of the Purchase Agreement, no such sums may be set off against any payments due to Lancer under the Note issued to it, unless and until the aggregate amount recoverable by such Buyer Indemnified Person is first offset against the outstanding amounts due under each of the Notes issued to SL, HR and JS (each as defined in the Purchase Agreement). To the extent that, subsequent to the offsets against the Notes issued to SL, HR and JS, there remain excess amounts due such Buyer Indemnified Person under Article VIII of the Purchase Agreement, then such excess amounts may be set off against the Note issued to Lancer. 

 

[Signature Page to Follow]

 

 

 

 

 

 

COMPANY:

 

NOVUME SOLUTIONS, INC.

 

 

                                                                                        Name: Robert A. Berman

 

                                                                                        Title: Chief Executive Officer

 

 

Address:

 

14420 Albemarle Point Place, Suite 200

Chantilly, VA 20151

 

Copy to:

 

Morris DeFeo

Crowell & Moring LLP

1001 Pennsylvania Ave. NY

Washington, D.C. 20004

 

 

 

 

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT Of 1933, AS AMENDED (THE “ SECURITIES ACT ”) AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT.

 

 

UNSECURED SUBORDINATED PROMISSORY NOTE

 

$500,000.00

January 25, 2022

 

For value received, Novume Solutions, Inc., a Delaware corporation (the “ Company ”) , as assignee of KeyStone Solutions, LLC, a Delaware LLC (“ KeyStone ”, being successor of KeyStone Solutions, Inc., a Delaware corporation (“ KSI ”)), promises to pay to Lancer Financial Group, Inc. , an Illinois corporation, (the “ Holder ”) , the principal sum of five hundred thousand dollars ($500,000.00) or such other amount as may have been advanced and may be outstanding from time to time (the “ Principal Amount ”). Simple interest shall accrue from the Issuance Date (as defined below) of this Note on the unpaid Principal Amount at a rate equal to the lower of (i) 7% per annum, or (ii) the highest rate permitted by applicable law. This Note was originally issued by KSI to the Holder as one of a series of Unsecured Subordinated Promissory Notes containing substantially identical terms and conditions issued pursuant to that certain Membership Interest Purchase Agreement (the “ Purchase Agreement ”), dated January 25, 2017 (the “ Issuance Date ”) , by and among KSI and certain other parties, including the other note holders. KSI merged with and into KeyStone as of August 28, 2017, with KeyStone surviving such merger and succeeding KSI as the issuer of this Note. KeyStone assigned this Note to the Company pursuant to an Assignment and Assumption Agreement by and between KeyStone and the Company dated as of September 29, 2017. Such Notes are referred to herein, collectively, as the “ Notes ,” and the holders thereof are referred to herein, collectively, as the “ Holders .” This Note is subject to the following terms and conditions.

 

 

1.        Maturity . This Note will automatically mature and be due and payable on January 25, 2022 (the “ Maturity Date ”) . Interest shall accrue on this Note and shall be payable monthly in arrears. Notwithstanding any of the foregoing, the entire unpaid Principal Amount of this Note, together with accrued and unpaid interest thereon, shall become immediately due and payable upon the insolvency of the Company, the commission of any act of bankruptcy by the Company, the execution by   the Company of a general assignment for the benefit of creditors, the filing by or against the Company of a petition in bankruptcy or any petition for relief under the federal bankruptcy act or the continuation of such petition without dismissal for a period of ninety (90) days or more, or the appointment of a receiver or trustee to take possession of the property or assets of the Company.

 

 

               2.         Payment; Prepayment . All payments shall be made in lawful money of the United States of America at such place as the Holder hereof may from time to time designate in writing to the Company. Payment shall be credited first to the accrued interest then due and payable, and the remainder shall be applied to the outstanding Principal Amount. This Note may be prepaid in whole or in part from time to time by the Company.

 

 

3.    Nature of Obligation . This Note is a general unsecured obligation of the Company.

 

 

4.       Transfer; Successors and Assigns . The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and permitted assigns of the parties. Notwithstanding the foregoing, the Holder may not assign, pledge or otherwise transfer all or any part of this Note without the prior written consent of the Company.

 

 

5.          Purchase Agreement Indemnification . To the extent one or more Buyer Indemnified Persons is entitled to indemnification under Section 8.2(a) or Section 8.2(b) of the Purchase Agreement as determined by the non-appealable decision or order of a Court of competent jurisdiction as provided for in Section 11.13 of the Purchase Agreement , the aggregate dollar amount recoverable by such Buyer Indemnified Person, or Buyer Indemnified Persons, as the case may be, shall, at Novume’s option, be offset on a pro rata basis against the outstanding amounts payable by Novume under the Notes. The aggregate amount owing as outstanding Principal Amounts and accrued but unpaid interest under all of the Notes shall, at Novume’s option, be reduced dollar for dollar, on a pro rata basis , by the aggregate amount owing to one or more Buyer Indemnified Persons under Section 8.2(a) or Section 8.2(b) of the Purchase Agreement.

 

 

6.          Governing Law . This Note and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of New York, without giving effect to principles of conflicts of Law.

 

 

7.         Jurisdiction and Venue . Each of the Holder and the Company irrevocably consents to the exclusive jurisdiction and venue of the United States District Court for the Southern District of New York, to the extent subject matter jurisdiction exists therefor, or, but only if jurisdiction does not exist in the Southern District of New York, the Supreme Court of the State of New York, County of Sullivan, in connection with any matter based upon or arising out of this Note or the matters contemplated herein, and agrees that process may be served upon them in any manner authorized by the laws of the State of New York for such persons

 

 

8.          Subordination .

 

                            (a)        The Holder acknowledges and agrees that the Company’s payment obligations under this Note may be subordinated to the obligations of the Company to its lenders under any financing facility that it may obtain during the term of this Note, including any increase in the size of such facility from time to time (the lenders under any such facility, the “ Lenders ”) solely in the event that Company is unable to meet its obligations under the financing facility; solely in such event, no payments under this Note shall be paid to Holder and any payment received by Holder shall be held in trust for the Lenders and shall be immediately turned over to the Lenders until such time as the Company is able to satisfy such obligations to the Lenders in full. By accepting this Note, the Holder agrees to execute a subordination agreement with any Lender or Lenders evidencing such subordination as requested by the Company and/or its Lenders. If the terms or conditions of any subordination agreement with any Lender shall change, the Holder shall execute and deliver such further documents or instruments as such Lender may reasonably request in order to give effect to the provisions of such subordination agreement and the provisions of this Note.

 

                            (b)        The Holder acknowledges and agrees that the Company’s payment obligations under this Note shall be subordinate to the obligations of the Company to Avon Road Partners, L.P. (“ Avon Partners ”) under that certain subordinated note in the original principal amount of $500,000, dated March 16, 2016 and assumed by the Company, as assignee of KSI, on August 25, 2017 (the “ Avon Note ”) solely in the event that Company is unable to meet its obligations under the Avon Note; solely in such event, no payments under this Note shall be paid to Holder and any payment received by Holder shall be held in trust for Avon Partners and shall be immediately turned over to Avon Partners until such time as the Company is able to satisfy such obligations to Avon Partners in full. By accepting this Note, the Holder agrees to execute a subordination agreement with Avon Partners evidencing such subordination as requested by the Company and/or Avon Partners. If the terms or conditions of any subordination agreement with any Avon Partners shall change, the Holder shall execute and deliver such further documents or instruments as Avon Partners may reasonably request in order to give effect to the provisions of such subordination agreement and the provisions of this Note so long as such additional terms and conditions are consistent with this Section 8 .

 

                            (c)        Notwithstanding the forgoing and anything else to the contrary herein, the Company may not cause, permit or suffer the aggregate amount of indebtedness to which this Note is subordinate to exceed seven million dollars ($7,000,000.00), without the prior written consent of the Holder.

 

 

9.         Offset of Notes . This Note is one of four (4) Notes issued under the Purchase Agreement and assumed by the Company. Notwithstanding anything else in this Note or the Purchase Agreement to the contrary, with respect to any right of a Buyer Indemnified Person to offset certain amounts due to it against sums outstanding under one or more Notes, as described in Section 8.4 of the Purchase Agreement, no such sums may be set off against any payments due to the Holder of this Note unless and until the aggregate amount recoverable by such Buyer Indemnified Person is first offset against the outstanding amounts due under each of the Notes issued to SL, HR and JS (each as defined in the Purchase Agreement). To the extent that, subsequent to the offsets against such other Notes, there remain excess amounts due the Buyer Indemnified Person under Article VIII of the Purchase Agreement, then the excess amounts may be set off against this Note.

 

 

[Signature Page to Follow]

 

 

 

 

COMPANY:

 

NOVUME SOLUTIONS, INC.

 

 

                                                                                        Name: Robert A. Berman

 

                                                                                        Title: Chief Executive Officer

 

 

Address:

 

14420 Albemarle Point Place, Suite 200

Chantilly, VA 20151

 

Copy to:

 

Morris DeFeo

Crowell & Moring LLP

1001 Pennsylvania Ave. NY

Washington, D.C. 20004

 

 

 

 

 

NOVUME SOLUTIONS, INC.

NON-QUALIFIED STOCK OPTION GRANT AGREEMENT

 

THIS AGREEMENT (“ Agreement ”), is dated this 27 th day of September, 2017, and effective as of August 28, 2017, between Novume Solutions, Inc., a Delaware corporation (the “ Company ”), and Steve Ellis (the “ Grantee ”). 

 

WITNESSETH :

 

WHEREAS, the Grantee is a former non-employee director of Brekford Traffic Safety, Inc., a Delaware corporation (“ Brekford ”), which became a wholly-owned subsidiary of the Company pursuant to the consummation of a merger transaction (the “ Merger ”) that closed on August 28, 2017;

 

WHEREAS, on August 11, 2016 (the “ Original Grant Date ”), Grantee received a grant of options (the “ Brekford Options ”) to purchase up to 75,000 shares of the common stock, par value $0.0001 per share, of Brekford, under Brekford’s 2008 Stock Incentive Plan (“ Brekford Plan ”), pursuant to the terms of the agreement attached as Exhibit A hereto (the “ Original Grant Agreement ”) and the terms of the Brekford Plan;

 

WHEREAS, upon consummation of the Merger, the Brekford Options were fully vested and they were automatically converted into options to purchase up to 5,000 shares of the common stock, par value $0.0001 per share, of the Company (“ Common Stock ”), upon the closing of the Merger in accordance with the terms of the merger agreement;

 

WHEREAS, upon consummation of the Merger, Grantee ceased to provide services to Brekford;

 

NOW, THEREFORE, in consideration of the various covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1. Grant of Option . The Company hereby grants to the Grantee fully-vested options (the “ Options ”) to purchase all or part of an aggregate of 5,000 shares of Common Stock (the “ Shares ”), subject to the requirements set forth in this Agreement. The Option is a Non-Qualified Stock Option and is not intended to qualify as an “incentive stock option” as that term is used in Section 422 of the Internal Revenue Code of 1986, as amended (the “ Code ”).

 

2. Exercise Price . The per share purchase price of the Shares issuable upon exercise of the Options shall be $ 1.80 (the “ Exercise Price ”), being the product of the original exercise price of $0.12 under the Brekford Option and fifteen, as required by the terms of the merger agreement.

 

3. Term . The date on which the term of the Options would have expired in accordance with the Original Grant Agreement and the Brekford Plan is September 27, 2017, being 30 days after the date on which the Grantee ceased to provide services to Brekford; however, for no additional consideration, the parties hereto have agreed to extend the term until December 31, 2017 .

 

4. Exercise .

 

 (a) Subject to the terms and conditions of this Agreement, the Options may be exercised by written notice delivered to the Company or its designated representative in the manner and at the address for notices set forth in Section 9 hereof. Such notice shall state that the Options are being exercised thereby and shall specify the number of Shares for which the Options are being exercised. The notice shall be signed by the person or persons exercising the Options and shall be accompanied by payment in full of the Exercise Price for such Shares being acquired upon the exercise of the Options. Payment of such Exercise Price may be made by one of the following methods:

 

 (i) in cash (in the form of a certified or bank check or such other instrument as the Administrator may accept);

 

 (ii) in any combination of (a) and (b) above;

 

(iii) by delivery of a properly executed exercise notice together with such other documentation as the Company’s Board of Directors (the “ Board ”) and a qualified broker, if applicable, shall require to effect an exercise of the Options, and delivery to the Company of the proceeds required to pay the Exercise Price; or

 

(iv) by requesting that the Company withhold such number of Shares then issuable upon exercise of the Options as will have a Fair Market Value equal to the Exercise Price of the Shares being acquired upon the exercise of the Options. “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: (a) if the Common Stock is listed on a U.S. national securities exchange, its Fair Market Value shall be either the mean of the highest and lowest reported sale prices of the stock (or, if no sales were reported, the average of the closing bid and asked price) or the last reported sale price of the stock, as determined by the Administrator in its discretion, on a U.S. national securities exchange for any given day or, if not listed on such exchange, on any other national securities exchange on which the Common Stock is listed as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (b) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be either the mean between the high bid and low asked prices or the last asked price, as determined by the Board for the Common Stock on any given day, as reported in The Wall Street Journal or such other source as the Board deems reliable; or (c) in the absence of an established regular public market for the Common Stock, the Fair Market Value shall be determined in good faith by the Board pursuant to the reasonable application of a reasonable valuation method in accordance with the provisions of Section 409A of the Code and the regulations thereunder and, with respect to an Incentive Stock Option, in accordance with such regulations as may be issued under the Code.

 

If the tender of shares of Common Stock as payment of the Exercise Price would result in the issuance of fractional shares of Common Stock, the Company shall instead return the balance in cash or by check to the Grantee. If the Options are exercised by any person or persons other than the Grantee, the notice described in this shall be accompanied by appropriate proof (as determined by the Board) of the right of such person or persons to exercise the Options under the terms of this Agreement. The Company shall issue and deliver, in the name of the person or persons exercising the Options, a certificate or certificates representing such Shares as soon as practicable after notice and payment are received and the exercise is approved.

 

(b) The Options may be exercised in accordance with the terms of this Agreement with respect to any whole number of Shares, but in no event may an Options be exercised as to fewer than one hundred (100) Shares at any one time, or the remaining Shares covered by the Options if less than two hundred (200).

 

(c) The Grantee shall have no rights of a stockholder with respect to Shares to be acquired by the exercise of the Options until the date of issuance of a certificate or certificates representing such Shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. All Shares purchased upon the exercise of the Options as provided herein shall be fully paid and non-assessable.

 

(d) The Grantee agrees that no later than the date as of which an amount first becomes includible in his gross income for federal income tax purposes with respect to the Options, the Grantee shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Withholding obligations may be settled with shares of Common Stock, including Shares that are acquired upon exercise of the Options. The obligations of the Company under this Agreement shall be conditional on such payment or arrangements.

 

6. Non-Transferability . These Options may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than (i) by will or the laws of descent or distribution or (ii) pursuant to a qualified domestic relations order (as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder). These Options may be exercised, during the lifetime of the Grantee, only by the Grantee, his guardian or his legal representative, or by an alternate payee pursuant to a qualified domestic relations order. Any attempt to assign, pledge or otherwise transfer the Options or of any right or privilege conferred thereby, or the sale or levy or similar process upon the rights and privileges conferred hereby, shall be void.

 

7. Adjustment upon Changes in Capitalization . If, during the term of this Agreement, there shall be any merger, reorganization, consolidation, recapitalization, stock dividend, special cash dividend, stock split, reverse stock split, rights offering or extraordinary distribution with respect to the Common Stock, or other change in corporate structure affecting the Common Stock shall make or cause to be made an appropriate and equitable substitution, adjustment or treatment in the aggregate number, kind and Exercise Price of Shares subject to these Options; provided, however , that in no event shall the Exercise Price be adjusted below the par value of a share of Common Stock, nor shall any fraction of a Share be issued upon the exercise of the Option. Any securities, awards or rights issued pursuant to this Section 7 shall be subject to the same restrictions as the underlying Shares to which they relate.

 

8. Conditions upon Issuance of Option . As a condition to the exercise of the Option, the Company may require the Grantee to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of legal counsel for the Company, such a representation is required by any relevant provision of law.

 

9. Miscellaneous .

 

(a) Successors . This Agreement and all the terms and provisions hereof shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, heirs and successors, except as expressly herein otherwise provided.

 

 (b) Entire Agreement; Modification . This Agreement contains the entire understanding between the parties with respect to the matters referred to herein.

 

(c) Capitalized Terms; Headings; Pronouns; Governing Law . The descriptive headings of the respective sections and subsections of this Agreement are inserted for convenience of reference only and shall not be deemed to modify or construe the provisions which follow them. Any use of any masculine pronoun shall include the feminine and vice-versa and any use of a singular, the plural and vice-versa, as the context and facts may require. The construction and interpretation of this Agreement shall be governed in all respects by the laws of the State of Delaware.

 

(d) Notices . Each notice relating to this Agreement shall be in writing and shall be sufficiently given if delivered by registered or certified mail, or by a nationally recognized overnight delivery service, with postage or charges prepaid, to the address hereinafter provided in this Section 9 . Any such notice or communication given by first-class mail shall be deemed to have been given two business days after the date so mailed, and such notice or communication given by overnight delivery service shall be deemed to have been given one business day after the date so sent, provided such notice or communication arrives at its destination. Each notice to the Company shall be addressed to it at its offices at 14420 Albemarle Point Place, Suite 200, Chantilly, VA, 20151 (attention: Chief Financial Officer), with a copy to the Secretary of the Company or to such other designee of the Company. Each notice to the Grantee shall be addressed to the Grantee at the Grantee’s address shown on the signature page hereof.

 

(e) Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement or the application thereof to any party or circumstance shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the minimal extent of such provision or the remaining provisions of this Agreement or the application of such provision to other parties or circumstances.

 

(f) Counterpart Execution . This Agreement may be executed in counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute the entire document.

 

*            *             *

 

 

 

 

 

IN WITNESS WHEREOF , the Company has caused this Agreement to be duly executed by its officer thereunto duly authorized, and the Grantee has executed this Agreement all as of the day and year first above written.

 

NOVUME SOLUTIONS, INC.

By: /s/ Robert A. Berman

Its: Chief Executive Officer

 

		/s/ Steve Ellis
		Steve Ellis
		Address:

 

 

 

 

 

EXHIBIT A

Original Grant Agreement

 

 

NOVUME SOLUTIONS, INC.

NON-QUALIFIED STOCK OPTION GRANT AGREEMENT

 

THIS AGREEMENT (“ Agreement ”), is dated this 27 th day of September, 2017, and effective as of August 28, 2017, between Novume Solutions, Inc., a Delaware corporation (the “ Company ”), and Robert West (the “ Grantee ”). 

 

WITNESSETH :

 

WHEREAS, the Grantee is a former non-employee director of Brekford Traffic Safety, Inc., a Delaware corporation (“ Brekford ”), which became a wholly-owned subsidiary of the Company pursuant to the consummation of a merger transaction (the “ Merger ”) that closed on August 28, 2017;

 

WHEREAS, on February 20, 2014 (the “ Origi nal Grant Date ”), Grantee received a grant of options (the “ Brekford Options ”) to purchase up to 75,000 shares of the common stock, par value $0.0001 per share, of Brekford, under Brekford’s 2008 Stock Incentive Plan (“ Brekford Plan ”), pursuant to the terms of the agreement attached as Exhibit A hereto (the “ Original Grant Agreement ”) and the terms of the Brekford Plan;

 

WHEREAS, upon consummation of the Merger, the Brekford Options were fully vested and they were automatically converted into options to purchase up to 5,000 shares of the common stock, par value $0.0001 per share, of the Company (“ Common Stock ”), upon the closing of the Merger in accordance with the terms of the merger agreement;

 

WHEREAS, upon consummation of the Merger, Grantee ceased to provide services to Brekford;

 

NOW, THEREFORE, in consideration of the various covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1. Grant of Option . The Company hereby grants to the Grantee fully-vested options (the “ Options ”) to purchase all or part of an aggregate of 5,000 shares of Common Stock (the “ Shares ”), subject to the requirements set forth in this Agreement. The Option is a Non-Qualified Stock Option and is not intended to qualify as an “incentive stock option” as that term is used in Section 422 of the Internal Revenue Code of 1986, as amended (the “ Code ”).

 

2. Exercise Price . The per share purchase price of the Shares issuable upon exercise of the Options shall be $3.00 (the “ Exercise Price ”), being the product of the original exercise price of $0.20 under the Brekford Option and fifteen, as required by the terms of the merger agreement.

 

3. Term . The date on which the term of the Options would have expired in accordance with the Original Grant Agreement and the Brekford Plan is September 27, 2017, being 30 days after the date on which the Grantee ceased to provide services to Brekford; however, for no additional consideration, the parties hereto have agreed to extend the term until December 31, 2017 ;

 

4. Exercise .

 

 (a) Subject to the terms and conditions of this Agreement, the Options may be exercised by written notice delivered to the Company or its designated representative in the manner and at the address for notices set forth in Section 9 hereof. Such notice shall state that the Options are being exercised thereby and shall specify the number of Shares for which the Options are being exercised. The notice shall be signed by the person or persons exercising the Options and shall be accompanied by payment in full of the Exercise Price for such Shares being acquired upon the exercise of the Options. Payment of such Exercise Price may be made by one of the following methods:

 

 (i) in cash (in the form of a certified or bank check or such other instrument as the Administrator may accept);

 

 (ii) in any combination of (a) and (b) above;

 

(iii) by delivery of a properly executed exercise notice together with such other documentation as the Company’s Board of Directors (the “ Board ”) and a qualified broker, if applicable, shall require to effect an exercise of the Options, and delivery to the Company of the proceeds required to pay the Exercise Price; or

 

(iv) by requesting that the Company withhold such number of Shares then issuable upon exercise of the Options as will have a Fair Market Value equal to the Exercise Price of the Shares being acquired upon the exercise of the Options. “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: (a) if the Common Stock is listed on a U.S. national securities exchange, its Fair Market Value shall be either the mean of the highest and lowest reported sale prices of the stock (or, if no sales were reported, the average of the closing bid and asked price) or the last reported sale price of the stock, as determined by the Administrator in its discretion, on a U.S. national securities exchange for any given day or, if not listed on such exchange, on any other national securities exchange on which the Common Stock is listed as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (b) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be either the mean between the high bid and low asked prices or the last asked price, as determined by the Board for the Common Stock on any given day, as reported in The Wall Street Journal or such other source as the Board deems reliable; or (c) in the absence of an established regular public market for the Common Stock, the Fair Market Value shall be determined in good faith by the Board pursuant to the reasonable application of a reasonable valuation method in accordance with the provisions of Section 409A of the Code and the regulations thereunder and, with respect to an Incentive Stock Option, in accordance with such regulations as may be issued under the Code.

 

If the tender of shares of Common Stock as payment of the Exercise Price would result in the issuance of fractional shares of Common Stock, the Company shall instead return the balance in cash or by check to the Grantee. If the Options are exercised by any person or persons other than the Grantee, the notice described in this shall be accompanied by appropriate proof (as determined by the Board) of the right of such person or persons to exercise the Options under the terms of this Agreement. The Company shall issue and deliver, in the name of the person or persons exercising the Options, a certificate or certificates representing such Shares as soon as practicable after notice and payment are received and the exercise is approved.

 

(b) The Options may be exercised in accordance with the terms of this Agreement with respect to any whole number of Shares, but in no event may an Options be exercised as to fewer than one hundred (100) Shares at any one time, or the remaining Shares covered by the Options if less than two hundred (200).

 

(c) The Grantee shall have no rights of a stockholder with respect to Shares to be acquired by the exercise of the Options until the date of issuance of a certificate or certificates representing such Shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. All Shares purchased upon the exercise of the Options as provided herein shall be fully paid and non-assessable.

 

(d) The Grantee agrees that no later than the date as of which an amount first becomes includible in his gross income for federal income tax purposes with respect to the Options, the Grantee shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Withholding obligations may be settled with shares of Common Stock, including Shares that are acquired upon exercise of the Options. The obligations of the Company under this Agreement shall be conditional on such payment or arrangements.

 

6. Non-Transferability . These Options may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than (i) by will or the laws of descent or distribution or (ii) pursuant to a qualified domestic relations order (as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder). These Options may be exercised, during the lifetime of the Grantee, only by the Grantee, his guardian or his legal representative, or by an alternate payee pursuant to a qualified domestic relations order. Any attempt to assign, pledge or otherwise transfer the Options or of any right or privilege conferred thereby, or the sale or levy or similar process upon the rights and privileges conferred hereby, shall be void.

 

7. Adjustment upon Changes in Capitalization . If, during the term of this Agreement, there shall be any merger, reorganization, consolidation, recapitalization, stock dividend, special cash dividend, stock split, reverse stock split, rights offering or extraordinary distribution with respect to the Common Stock, or other change in corporate structure affecting the Common Stock shall make or cause to be made an appropriate and equitable substitution, adjustment or treatment in the aggregate number, kind and Exercise Price of Shares subject to these Options; provided, however , that in no event shall the Exercise Price be adjusted below the par value of a share of Common Stock, nor shall any fraction of a Share be issued upon the exercise of the Option. Any securities, awards or rights issued pursuant to this Section 7 shall be subject to the same restrictions as the underlying Shares to which they relate.

 

8. Conditions upon Issuance of Option . As a condition to the exercise of the Option, the Company may require the Grantee to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of legal counsel for the Company, such a representation is required by any relevant provision of law.

 

9. Miscellaneous .

 

(a) Successors . This Agreement and all the terms and provisions hereof shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, heirs and successors, except as expressly herein otherwise provided.

 

(b) Entire Agreement; Modification . This Agreement contains the entire understanding between the parties with respect to the matters referred to herein.

 

(c) Capitalized Terms; Headings; Pronouns; Governing Law . The descriptive headings of the respective sections and subsections of this Agreement are inserted for convenience of reference only and shall not be deemed to modify or construe the provisions which follow them. Any use of any masculine pronoun shall include the feminine and vice-versa and any use of a singular, the plural and vice-versa, as the context and facts may require. The construction and interpretation of this Agreement shall be governed in all respects by the laws of the State of Delaware.

 

(d) Notices . Each notice relating to this Agreement shall be in writing and shall be sufficiently given if delivered by registered or certified mail, or by a nationally recognized overnight delivery service, with postage or charges prepaid, to the address hereinafter provided in this Section 9 . Any such notice or communication given by first-class mail shall be deemed to have been given two business days after the date so mailed, and such notice or communication given by overnight delivery service shall be deemed to have been given one business day after the date so sent, provided such notice or communication arrives at its destination. Each notice to the Company shall be addressed to it at its offices at 14420 Albemarle Point Place, Suite 200, Chantilly, VA, 20151 (attention: Chief Financial Officer), with a copy to the Secretary of the Company or to such other designee of the Company. Each notice to the Grantee shall be addressed to the Grantee at the Grantee’s address shown on the signature page hereof.

 

(e) Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement or the application thereof to any party or circumstance shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the minimal extent of such provision or the remaining provisions of this Agreement or the application of such provision to other parties or circumstances.

 

(f) Counterpart Execution . This Agreement may be executed in counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute the entire document.

 

*            *             *

 

 

 

 

 

IN WITNESS WHEREOF , the Company has caused this Agreement to be duly executed by its officer thereunto duly authorized, and the Grantee has executed this Agreement all as of the day and year first above written.

 

NOVUME SOLUTIONS, INC.

By: /s/ Robert A. Berman

Its: Chief Executive Officer

 

		/s/ Robert West
		Robert West
		Address:

 

 

 

 

 

EXHIBIT A

Original Grant Agreement

 

NOVUME SOLUTIONS, INC.

NON-QUALIFIED STOCK OPTION GRANT AGREEMENT

 

THIS AGREEMENT (“ Agreement ”), is dated this 27 th day of September, 2017, and effective as of August 28, 2017, between Novume Solutions, Inc., a Delaware corporation (the “ Company ”), and Robert West (the “ Grantee ”). 

 

WITNESSETH :

 

WHEREAS, the Grantee is a former non-employee director of Brekford Traffic Safety, Inc., a Delaware corporation (“ Brekford ”), which became a wholly-owned subsidiary of the Company pursuant to the consummation of a merger transaction (the “ Merger ”) that closed on August 28, 2017;

 

WHEREAS, on August 11, 2016 (the “ Original Grant Date ”), Grantee received a grant of options (the “ Brekford Options ”) to purchase up to 75,000 shares of the common stock, par value $0.0001 per share, of Brekford, under Brekford’s 2008 Stock Incentive Plan (“ Brekford Plan ”), pursuant to the terms of the agreement attached as Exhibit A hereto (the “ Original Grant Agreement ”) and the terms of the Brekford Plan;

 

WHEREAS, upon consummation of the Merger, the Brekford Options were fully vested and they were automatically converted into options to purchase up to 5,000 shares of the common stock, par value $0.0001 per share, of the Company (“ Common Stock ”), upon the closing of the Merger in accordance with the terms of the merger agreement;

 

WHEREAS, upon consummation of the Merger, Grantee ceased to provide services to Brekford;

 

NOW, THEREFORE, in consideration of the various covenants and agreements contained herein, and intending to be legally bound hereby, the parties hereto agree as follows:

 

1. Grant of Option . The Company hereby grants to the Grantee fully-vested options (the “ Options ”) to purchase all or part of an aggregate of 5,000 shares of Common Stock (the “ Shares ”), subject to the requirements set forth in this Agreement. The Option is a Non-Qualified Stock Option and is not intended to qualify as an “incentive stock option” as that term is used in Section 422 of the Internal Revenue Code of 1986, as amended (the “ Code ”).

 

2. Exercise Price . The per share purchase price of the Shares issuable upon exercise of the Options shall be $1.80 (the “ Exercise Price ”), being the product of the original exercise price of $0.12 under the Brekford Option and fifteen, as required by the terms of the merger agreement.

 

3. Term . The date on which the term of the Options would have expired in accordance with the Original Grant Agreement and the Brekford Plan is September 27, 2017, being 30 days after the date on which the Grantee ceased to provide services to Brekford; however, for no additional consideration, the parties hereto have agreed to extend the term until December 31, 2017 ;

 

4. Exercise .

 

 (a) Subject to the terms and conditions of this Agreement, the Options may be exercised by written notice delivered to the Company or its designated representative in the manner and at the address for notices set forth in Section 9 hereof. Such notice shall state that the Options are being exercised thereby and shall specify the number of Shares for which the Options are being exercised. The notice shall be signed by the person or persons exercising the Options and shall be accompanied by payment in full of the Exercise Price for such Shares being acquired upon the exercise of the Options. Payment of such Exercise Price may be made by one of the following methods:

 

 (i) in cash (in the form of a certified or bank check or such other instrument as the Administrator may accept);

 

 (ii) in any combination of (a) and (b) above;

 

(iii) by delivery of a properly executed exercise notice together with such other documentation as the Company’s Board of Directors (the “ Board ”) and a qualified broker, if applicable, shall require to effect an exercise of the Options, and delivery to the Company of the proceeds required to pay the Exercise Price; or

 

(iv) by requesting that the Company withhold such number of Shares then issuable upon exercise of the Options as will have a Fair Market Value equal to the Exercise Price of the Shares being acquired upon the exercise of the Options. “Fair Market Value” means, as of any date, the value of Common Stock determined as follows: (a) if the Common Stock is listed on a U.S. national securities exchange, its Fair Market Value shall be either the mean of the highest and lowest reported sale prices of the stock (or, if no sales were reported, the average of the closing bid and asked price) or the last reported sale price of the stock, as determined by the Administrator in its discretion, on a U.S. national securities exchange for any given day or, if not listed on such exchange, on any other national securities exchange on which the Common Stock is listed as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (b) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be either the mean between the high bid and low asked prices or the last asked price, as determined by the Board for the Common Stock on any given day, as reported in The Wall Street Journal or such other source as the Board deems reliable; or (c) in the absence of an established regular public market for the Common Stock, the Fair Market Value shall be determined in good faith by the Board pursuant to the reasonable application of a reasonable valuation method in accordance with the provisions of Section 409A of the Code and the regulations thereunder and, with respect to an Incentive Stock Option, in accordance with such regulations as may be issued under the Code.

 

If the tender of shares of Common Stock as payment of the Exercise Price would result in the issuance of fractional shares of Common Stock, the Company shall instead return the balance in cash or by check to the Grantee. If the Options are exercised by any person or persons other than the Grantee, the notice described in this shall be accompanied by appropriate proof (as determined by the Board) of the right of such person or persons to exercise the Options under the terms of this Agreement. The Company shall issue and deliver, in the name of the person or persons exercising the Options, a certificate or certificates representing such Shares as soon as practicable after notice and payment are received and the exercise is approved.

 

(b) The Options may be exercised in accordance with the terms of this Agreement with respect to any whole number of Shares, but in no event may an Options be exercised as to fewer than one hundred (100) Shares at any one time, or the remaining Shares covered by the Options if less than two hundred (200).

 

(c) The Grantee shall have no rights of a stockholder with respect to Shares to be acquired by the exercise of the Options until the date of issuance of a certificate or certificates representing such Shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued. All Shares purchased upon the exercise of the Options as provided herein shall be fully paid and non-assessable.

 

(d) The Grantee agrees that no later than the date as of which an amount first becomes includible in his gross income for federal income tax purposes with respect to the Options, the Grantee shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Withholding obligations may be settled with shares of Common Stock, including Shares that are acquired upon exercise of the Options. The obligations of the Company under this Agreement shall be conditional on such payment or arrangements.

 

6. Non-Transferability . These Options may not be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than (i) by will or the laws of descent or distribution or (ii) pursuant to a qualified domestic relations order (as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder). These Options may be exercised, during the lifetime of the Grantee, only by the Grantee, his guardian or his legal representative, or by an alternate payee pursuant to a qualified domestic relations order. Any attempt to assign, pledge or otherwise transfer the Options or of any right or privilege conferred thereby, or the sale or levy or similar process upon the rights and privileges conferred hereby, shall be void.

 

7. Adjustment upon Changes in Capitalization . If, during the term of this Agreement, there shall be any merger, reorganization, consolidation, recapitalization, stock dividend, special cash dividend, stock split, reverse stock split, rights offering or extraordinary distribution with respect to the Common Stock, or other change in corporate structure affecting the Common Stock shall make or cause to be made an appropriate and equitable substitution, adjustment or treatment in the aggregate number, kind and Exercise Price of Shares subject to these Options; provided, however , that in no event shall the Exercise Price be adjusted below the par value of a share of Common Stock, nor shall any fraction of a Share be issued upon the exercise of the Option. Any securities, awards or rights issued pursuant to this Section 7 shall be subject to the same restrictions as the underlying Shares to which they relate.

 

8. Conditions upon Issuance of Option . As a condition to the exercise of the Option, the Company may require the Grantee to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of legal counsel for the Company, such a representation is required by any relevant provision of law.

 

9. Miscellaneous .

 

(a) Successors . This Agreement and all the terms and provisions hereof shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, heirs and successors, except as expressly herein otherwise provided.

 

 (b) Entire Agreement; Modification . This Agreement contains the entire understanding between the parties with respect to the matters referred to herein.

 

(c) Capitalized Terms; Headings; Pronouns; Governing Law . The descriptive headings of the respective sections and subsections of this Agreement are inserted for convenience of reference only and shall not be deemed to modify or construe the provisions which follow them. Any use of any masculine pronoun shall include the feminine and vice-versa and any use of a singular, the plural and vice-versa, as the context and facts may require. The construction and interpretation of this Agreement shall be governed in all respects by the laws of the State of Delaware.

 

(d) Notices . Each notice relating to this Agreement shall be in writing and shall be sufficiently given if delivered by registered or certified mail, or by a nationally recognized overnight delivery service, with postage or charges prepaid, to the address hereinafter provided in this Section 9 . Any such notice or communication given by first-class mail shall be deemed to have been given two business days after the date so mailed, and such notice or communication given by overnight delivery service shall be deemed to have been given one business day after the date so sent, provided such notice or communication arrives at its destination. Each notice to the Company shall be addressed to it at its offices at 14420 Albemarle Point Place, Suite 200, Chantilly, VA, 20151 (attention: Chief Financial Officer), with a copy to the Secretary of the Company or to such other designee of the Company. Each notice to the Grantee shall be addressed to the Grantee at the Grantee’s address shown on the signature page hereof.

 

(e) Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement or the application thereof to any party or circumstance shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the minimal extent of such provision or the remaining provisions of this Agreement or the application of such provision to other parties or circumstances.

 

(f) Counterpart Execution . This Agreement may be executed in counterparts, each of which shall constitute an original and all of which, when taken together, shall constitute the entire document.

 

*            *             *

 

 

 

 

 

IN WITNESS WHEREOF , the Company has caused this Agreement to be duly executed by its officer thereunto duly authorized, and the Grantee has executed this Agreement all as of the day and year first above written.

 

NOVUME SOLUTIONS, INC.

By: /s/ Robert A. Berman

Its: Chief Executive Officer

 

		/s/ Robert West
		Robert West
		Address:

 

 

 

 

 

 

EXHIBIT A

Original Grant Agreement