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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