UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
September 27, 2017
Date of
Report (Date of Earliest Event Reported)
NOVUME SOLUTIONS, INC.
(Exact
Name of Small Business Issuer as Specified in Its
Charter)
Delaware
|
|
000-55833
|
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81-56266334
|
(State
or other jurisdiction of
incorporation
or organization)
|
|
(Commission
File
Number)
|
|
(I.R.S.
Employer
Identification
Number)
|
14420 Albemarle Point Place, Suite 200,
Chantilly, VA, 20151
|
(Address
of Principal Executive Offices)
|
|
(703) 953-3838
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(Issuer’s
Telephone Number, Including Area Code)
|
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
☐ Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
☐ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Indicate
by check
mark whether the registrant
is an
emerging growth company as defined in in Rule 405 of
the Securities Act of 1933 (§230.405 of this chapter) or Rule
12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of
this chapter).
Emerging
growth company
☐
If an
emerging growth company, indicate by checkmark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
☐
Item 2.03 Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant
.
On
September 29, 2017, Novume Solutions, Inc., a Delaware corporation
(the “
Company
”), assumed from
KeyStone Solutions, LLC, a Delaware limited liability company and
wholly-owned subsidiary of the Company (“
KeyStone
”), four
unsecured subordinated promissory notes made by KeyStone
(collectively, the “
Notes
”), representing
$1,000,000 in aggregate outstanding principal balance.
The
Notes comprise:
●
a promissory note in
favor of Lancer Financial Group, Inc., an Illinois corporation
(“
Lancer
”),
having an outstanding principal amount of
$500,000;
●
a promissory note in favor of Suzanne Loughlin, having an
outstanding principal amount of $166,667;
●
a promissory note in favor of James W. Satterfield, having an
outstanding principal amount of $166,667; and
●
a promissory note in favor of Harry Rhulen, having an outstanding
principal amount of $166,666.
The
Company assumed each such Note under an Assignment and Assumption
Agreement (the “
Assignment Agreement
”),
dated September 27, 2017, by and between the Company and KeyStone.
Upon consummation of the assignment, the Company issued replacement
notes (the “
Replacement Notes
”) to
each of the holders having substantially similar terms to the
Notes.
Each
Replacement Note matures over a period that ends on January 25,
2022. The unpaid principal balance of the Replacement Notes issued
to Mr. Rhulen, Ms. Loughlin and Mr. Satterfield accrues simple
interest at a rate of 2% per annum; and the unpaid principal
balance of the Replacement Note issued to Lancer accrues simple
interest at a rate of 7% per annum. There is no accrued and unpaid
interest on any of the Notes as of the date of this report. Our
payment obligations with respect to the Replacement Notes are
subordinated to
our obligations to Avon
Road Partners, L.P. (“
Avon
Partners
”), an affiliate
of Mr. Robert Berman, our Chief Executive Officer, under a
promissory note, dated March 16, 2016, with an outstanding
principal amount of $500,000 (the “
Avon
Road Note
”). The terms of
the Avon Road Note are more fully described in our response to Item
1.01 of the Current Report on Form 8-K filed
with the
Securities and Exchange Commission (the “
SEC
”) on August 29, 2017
(the “
Merger Closing
8-K
”).
KeyStone
previously assumed the Notes from KeyStone Solutions, Inc., a
Delaware corporation (“
KSI
”), on August 28, 2017
(the “
Closing
Date
”), upon the closing of certain merger
transactions (the “
Mergers
”) under the
Second Amended Agreement and Plan of
Merger (the “
Merger
Agreement
”), dated as of
July 12, 2017, by and among the Company, KeyStone, KSI, Brekford
Traffic Safety, Inc., a Delaware corporation
(“
Brekford
”),
and Brekford Merger Sub, Inc., a Delaware corporation (the
“
Merger
Agreement
”).
Prior
to the Mergers, KSI had issued the Notes in favor of the respective
holders, on the Original Issuance Date, in connection with its
acquisition of 100% of the membership interests in Firestorm
Solutions, LLC, a Delaware limited liability company, and Firestorm
Franchising, LLC, a Georgia limited liability company, as described
in that certain Current Report on Form 1-U filed by KSI with the
SEC on January 26, 2017 (the “
Firestorm
1-U
”).
The
foregoing descriptions of the Assignment Agreement and the
Replacement Notes do not purport to be complete and are qualified
in their entirety to the full text of the Assignment Agreement and
each of the Replacement Notes, which are attached as Exhibits 10.1,
10.2, 10.3, 10.4 and 10.5, respectively. The information contained
in the Merger Closing 8-K and the Firestorm 1-U is also
incorporated herein by reference and qualifies our response to this
Item 2.03.
Item 8.01 Other Events.
On
September 27, 2017, the Company extended the expiration date of
options (the “
Options
”) to purchase an
aggregate of 15,000 shares of the common stock, par value $0.0001
per share (“
Common
Stock
”), of the Company, held by each of Mr. Steve
Ellis and Mr. Robert West. Messrs. Ellis and West received their
respective Options as merger consideration in connection with the
Mergers, in exchange for now-cancelled options to purchase shares
of the common stock, par value $0.0001 per share, of Brekford
originally issued to each such holder under Brekford’s 2008
Stock Incentive Plan. The Options were due to expire on September
27, 2017, being 30 days from the date on which each such holder
ceased to be a director of Brekford. The Company voluntarily
extended that date, for no additional consideration, until December
31, 2017, as described in the option agreements (the
“
Option
Agreements
”) attached hereto as Exhibit 10.6, in
respect of Mr. Ellis, and as Exhibits 10.7 and 10.8, in respect of
Mr. West.
The
foregoing descriptions of the Options and the Option Agreements do
not purport to be complete and are qualified in their entirety by
the full text of the Option Agreements attached as Exhibit 10.6,
10.7 and 10.8 hereto. The information contained in the Merger
Closing 8-K is also incorporated herein by reference and qualifies
our response to this Item 8.01.
Item
9.01
Financial
Statements and Exhibits.
(d)
Exhibits
Exhibit No.
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|
Description
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|
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Assignment
and Assumption Agreement, dated September 29, 2017
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Replacement
Note issued in favor of Harry Rhulen on September 29,
2017
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Replacement
Note issued in favor of Suzanne Loughlin on September 29,
2017
|
|
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Replacement
Note issued in favor of James Satterfield on September 29,
2017
|
|
|
Replacement
Note issued in favor of Lancer Financial Group, Inc. on September
29, 2017
|
|
|
Non-Qualified
Stock Option Agreement by and between the Novume Solutions, Inc.,
and Steve Ellis, dated September 27, 2017
|
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Non-Qualified
Stock Option Agreement by and between the Novume Solutions, Inc.,
and Robert West, dated September 27, 2017 (2014
Options)
|
|
|
Non-Qualified
Stock Option Agreement by and between the Novume Solutions, Inc.,
and Robert West, dated September 27, 2017 (2016
Options)
|
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.
Date:
October 3, 2017
|
By:
|
/s/
Robert A. Berman
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|
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Robert
A. Berman,
Chief
Executive Officer
|
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.
[
S
ignature page
follows]
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
Signature Page to Assignment Agreement of
Firestorm Promissory Notes
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.
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NOVUME SOLUTIONS, INC.
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By: /s/ Robert A.
Berman
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Its: Chief
Executive Officer
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/s/ Steve
Ellis
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Steve
Ellis
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Address:
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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.
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By: /s/
Robert A. Berman
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Its: Chief Executive Officer
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/s/ Robert
West
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Robert
West
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Address:
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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.
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NOVUME SOLUTIONS, INC.
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By: /s/ Robert A.
Berman
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Its: Chief
Executive Officer
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/s/ Robert West
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Robert
West
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Address:
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EXHIBIT A
Original Grant Agreement