Document:

Blueprint

Exhibit 10.1

 

AGREEMENT
AND PLAN OF MERGER

 

BY AND AMONG

 

KEYSTONE SOLUTIONS, INC.,

a Delaware corporation,

 

NOVUME SOLUTIONS, Inc.,

a Delaware corporation,

 

KEYSTONE MERGER SUB, INC.,

a Delaware corporation,

 

BREKFORD MERGER SUB, INC.,

a Delaware corporation,

 

and

 

BREKFORD CORP,

a Delaware corporation

 

DATED AS OF FEBRUARY 10,
2017

 

 

TABLE
OF CONTENTS

 

	

ARTICLE I

	

THE MERGERS

	

2

	

Section
1.1.

	

The Mergers

	

2

	

Section
1.2.

	

Effective Time

	

2

	

Section
1.3.

	

Effects of the Mergers

	

2

	

Section
1.4.

	

Subsequent Actions

	

3

	

Section
1.5.

	

Certificate of Incorporation; Bylaws; Directors and Officers of
Surviving Corporations

	

3

	

Section
1.6.

	

Company Names

	

3

	

Section
1.7.

	

Company Stockholders’ Agreement

	

3

	

ARTICLE II

	

EFFECT ON THE STOCK OF NOVUME, THE SURVIVING CORPORATIONS AND THE
MERGED CORPORATIONS

	

4

	

Section
2.1.

	

Conversion of Securities

	

4

	

Section
2.2.

	

Conversion of Shares

	

4

	

Section
2.3.

	

Cancellation of Treasury Shares and of Outstanding Novume Common
Stock

	

5

	

Section
2.4.

	

Conversion of Common Stock and Preferred Stock of the Merged
Corporations into Common Stock of the Surviving
Corporations

	

5

	

Section
2.5.

	

Exchange of Shares Other Than Treasury Shares

	

5

	

Section
2.6.

	

Transfer Books

	

6

	

Section
2.7.

	

No Fractional Shares

	

6

	

Section
2.8.

	

Options to Purchase Common Stock

	

7

	

Section
2.9.

	

Certain Adjustments

	

8

	

ARTICLE III

	

CERTAIN MATTERS WITH RESPECT TO NOVUME

	

8

	

Section
3.1.

	

Certificate of Incorporation of Novume

	

8

	

Section
3.2.

	

Officers and Directors of Novume

	

8

	

ARTICLE IV

	

REPRESENTATIONS AND WARRANTIES OF BREKFORD

	

 9

	

Section
4.1.

	

Organization and Qualification; Subsidiaries

	

9

	

Section
4.2.

	

Certificate of Incorporation and Bylaws

	

9

	

Section
4.3.

	

Capitalization

	

9

	

Section
4.4.

	

Authority Relative to this Agreement

	

11

 

 

i

 

 

	

Section
4.5.

	

No Conflict; Required Filings and Consents

	

11

	

Section
4.6.

	

SEC Filings; Financial Statements

	

11

	

Section
4.7.

	

No Undisclosed Liabilities; Absence of Certain Changes or
Events

	

12

	

Section
4.8.

	

Litigation

	

12

	

Section
4.9.

	

No Violation of Law; Permits

	

13

	

Section
4.10.

	

Registration Statement; Information Statement

	

14

	

Section
4.11.

	

Employee Matters; ERISA

	

14

	

Section
4.12.

	

Labor Matters

	

15

	

Section
4.13.

	

Environmental Matters

	

16

	

Section
4.14.

	

Board Action; Vote Required

	

18

	

Section
4.15.

	

Brokers

	

19

	

Section
4.16.

	

Tax Matters

	

19

	

Section
4.17.

	

Intellectual Property

	

20

	

Section
4.18.

	

Insurance

	

21

	

Section
4.19.

	

Ownership of Securities

	

21

	

Section
4.20.

	

Certain Contracts

	

21

	

Section
4.21.

	

Investment Company

	

22

	

Section
4.22.

	

Certain Plans

	

22

	

ARTICLE V

	

REPRESENTATIONS OF THE COMPANY AND THE MERGER
SUBSIDIARIES

	

22

	

Section
5.1.

	

Organization and Qualification; Subsidiaries

	

22

	

Section
5.2.

	

Certificate of Incorporation, Certificate of Designations and
Bylaws

	

23

	

Section
5.3.

	

Capitalization

	

23

	

Section
5.4.

	

Authority Relative to this Agreement

	

24

	

Section
5.5.

	

No Conflict; Required Filings and Consents

	

24

	

Section
5.6.

	

SEC Filings; Financial Statements

	

25

	

Section
5.7.

	

No Undisclosed Liabilities; Absence of Certain Changes or
Events

	

26

	

Section
5.8.

	

No Violation of Law; Permits

	

26

	

Section
5.9.

	

Registration Statement; Information Statement

	

26

	

Section
5.10.

	

Board Action; Vote Required

	

27

	

Section
5.11.

	

[Reserved]

	

27

	

Section
5.12.

	

Brokers

	

27

 

 

ii

 

 

	

Section
5.13.

	

Ownership of Securities

	

27

	

Section
5.14.

	

Activities of Merger Subsidiaries

	

27

	

Section
5.15.

	

Litigation

	

28

	

Section
5.16.

	

Employee Matters; ERISA

	

28

	

Section
5.17.

	

Tax Matters

	

29

	

Section
5.18.

	

Intellectual Property

	

31

	

Section
5.19.

	

Certain Contracts

	

31

	

Section
5.20.

	

Investment Company

	

32

	

Section
5.21.

	

Certain Plans

	

32

	

ARTICLE VI

	

CONDUCT OF BUSINESS PENDING THE MERGERS

	

32

	

Section
6.1.

	

Conduct of Business of Brekford

	

32

	

Section
6.2.

	

Conduct of Business of the Company

	

35

	

Section
6.3.

	

Exclusivity

	

38

	

Section
6.4.

	

Subsequent Financial Statements

	

39

	

Section
6.5.

	

Control of Operations

	

39

	

ARTICLE VII

	

ADDITIONAL AGREEMENTS

	

39

	

Section
7.1.

	

Registration Statement; Information Statement

	

39

	

Section
7.2.

	

Stockholders’ Approval; Consummation of the
Mergers

	

39

	

Section
7.3.

	

Additional Agreements

	

40

	

Section
7.4.

	

Notification of Certain Matters

	

40

	

Section
7.5.

	

Access to Information

	

41

	

Section
7.6.

	

Public Announcements

	

41

	

Section
7.7.

	

Indemnification; Directors’ and Officers’
Insurance

	

42

	

Section
7.8.

	

Employee Benefit Plans

	

42

	

Section
7.9.

	

Management and Employment Arrangements

	

43

	

Section
7.10.

	

Stock Exchange Listing

	

43

	

Section
7.11.

	

Sale of Upfitting Business

	

43

	

Section
7.12.

	

Post-Merger Novume Board of Directors

	

43

	

Section
7.13.

	

Registration Rights

	

44

	

Section
7.14.

	

Affiliates

	

44

	

Section
7.15.

	

Blue Sky

	

44

	

Section
7.16.

	

Compliance

	

44

	

Section
7.17.

	

Key Stockholder Agreements

	

44

 

 

iii

 

 

	

Section
7.18.

	

Continuation of Historic Business

	

44

	

ARTICLE VIII

	

CONDITIONS TO MERGERS

	

45

	

Section
8.1.

	

Conditions to the Obligations of Each Party to Effect the
Mergers

	

45

	

Section
8.2.

	

Additional Conditions to Obligations of the Company

	

46

	

Section
8.3.

	

Additional Conditions to Obligations of Brekford

	

47

	

ARTICLE IX

	

TERMINATION, AMENDMENT AND WAIVER

	

48

	

Section
9.1.

	

Termination

	

48

	

Section
9.2.

	

Effect of Termination

	

49

	

Section
9.3.

	

Amendment

	

50

	

Section
9.4.

	

Waiver

	

50

	

ARTICLE X

	

GENERAL PROVISIONS

	

50

	

Section
10.1.

	

Non-Survival of Representations, Warranties and
Agreements

	

50

	

Section
10.2.

	

Notices

	

51

	

Section
10.3.

	

Expenses

	

81

	

Section
10.4.

	

Certain Definitions

	

81

	

Section
10.5.

	

Headings

	

52

	

Section
10.6.

	

Severability

	

52

	

Section
10.7.

	

Entire Agreement; No Third-Party Beneficiaries

	

53

	

Section
10.8.

	

Assignment

	

53

	

Section
10.9.

	

Governing Law

	

53

	

Section
10.10.

	

Counterparts

	

53

 

 

 

iv

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated
as of February 10, 2017 (the “Agreement”), is entered
into by and among KeyStone Solutions, Inc., a Delaware corporation
(the “Company”), Novume
Solutions, Inc., a Delaware corporation and a wholly-owned
subsidiary of the Company (“Novume”), KeyStone Merger
Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of
Novume (“Company
Merger Sub”), Brekford Merger Sub, Inc., a Delaware
corporation and a wholly-owned subsidiary of Novume
(“Brekford Merger
Sub”), and Brekford Corp., a Delaware corporation
(“Brekford” and, together
with the Company, Novume, Company Merger Sub and Brekford Merger
Sub, each a “Party” and collectively
the “Parties”).

WHEREAS, the Boards of Directors of the
Company and Brekford have each determined that it is in the best
interests of the stockholders of the Company and Brekford,
respectively, that each such corporation become a subsidiary of
Novume pursuant to the Mergers (as defined in Section 1.1 hereof) and desire
to make certain representations, warranties and agreements in
connection with the Mergers;

WHEREAS, the Company and Brekford are
unwilling to enter into this Agreement (and effect the transactions
contemplated hereby) unless, contemporaneously with the execution
and delivery hereof, certain record and beneficial holders of
shares of the common stock, par value $0.0001 per share, of the
Company (“Company
Common Stock”), and certain record and beneficial
holders of shares of the common stock, par value $0.0001 per share,
of Brekford (“Brekford Common Stock”),
as applicable, enter into agreements (the “Key Stockholder
Agreements”) providing for certain matters with
respect to their shares of Company Common Stock and Brekford Common
Stock, as applicable (including, without limitation, subject to the
express provisions and conditions of those agreements, to vote such
shares in favor of the Mergers (as defined in Section 1.1
hereof));

WHEREAS, for federal income tax
purposes, it is intended that the formation of Novume and the
Mergers shall constitute one or more integrated tax-free
transactions under Section 368 of the Internal Revenue Code of
1986, as amended (the “Code”);

WHEREAS, Brekford has delivered to the
Company and Novume a letter identifying all persons (each, a
“Brekford
Affiliate”) who are, at the date hereof,
“affiliates” of Brekford for purposes of Rule 145 under
the 1933 Act (as defined in Section 10.4 hereof), and each
Brekford Affiliate has delivered to the Company and Novume a letter
(each, a “Brekford
Affiliate Letter”) relating to (i) the transfer, prior
to the Effective Time (as defined in Section 1.2 hereof), of the
shares of Brekford Common Stock beneficially owned by such Brekford
Affiliate on the date hereof, (ii) the transfer of the shares of
Novume Common Stock to be received by such Brekford Affiliate in
the Brekford Merger and (iii) the obligations of each such Brekford
Affiliate to deliver to Sichenzia Ross Ference Kesner LLP
(“SRFK”), counsel to
Brekford, a certificate requested by such firm (if requested);
and

WHEREAS, the Company has delivered to
Brekford and Novume a letter identifying all persons (each, a
“Company
Affiliate”) who are, at the date hereof,
“affiliates” of the Company for purposes of Rule 145
under the 1933 Act, and each Company Affiliate has delivered to
Brekford and Novume a letter (each, a “Company Affiliate
Letter”) relating to (i) the transfer, prior to the
Effective Time, of the shares of Company Common Stock and Company
Preferred Stock beneficially owned by such Company Affiliate on the
date hereof, (ii) the transfer of the shares of Novume Common Stock
and Novume Preferred Stock to be received by such Company Affiliate
in the Company Merger and (iii) the obligations of each such
Company Affiliate to deliver to Crowell & Moring LLP, counsel
to the Company, a certificate requested by such firm (if
requested).

 

1

 

NOW, THEREFORE, in consideration of the
mutual agreements and covenants set forth herein, the Parties
hereby agree as follows:

ARTICLE
I

THE
MERGERS

Section
1.1. The Mergers. At the Effective Time, and
subject to and upon the terms and conditions of this Agreement, (a)
the Company shall be merged with and into Company Merger Sub in
accordance with the Delaware General Corporation Law
(“Delaware
Law”), the separate corporate existence of the Company
shall cease, and Company Merger Sub shall continue as the surviving
corporation (the “Company Merger”), and (b)
Brekford Merger Sub shall be merged with and into Brekford in
accordance with Delaware Law, the separate corporate existence of
Brekford Merger Sub shall cease, and Brekford shall continue as the
surviving corporation (the “Brekford Merger”).The
Company Merger and the Brekford Merger are herein collectively
referred to as the “Mergers” and each
individually as a “Merger.” The Company
Merger Sub and Brekford as the surviving corporations after the
Mergers are herein sometimes collectively referred to as the
“Surviving
Corporations” and each individually as a
“Surviving
Corporation” and the Company and Brekford Merger Sub
as the non-surviving corporations after the Mergers are herein
sometimes collectively referred to as the “Merged Corporations” and
each individually as a “Merged
Corporation.”

Section
1.2. Effective Time. As promptly as
practicable after the satisfaction or waiver of the conditions set
forth in ARTICLE VIII hereof and the consummation of the Closing
referred to in Section
7.2(c) hereof, the Parties shall cause the Mergers to be
consummated concurrently by filing a Certificate of Merger with the
Secretary of State of the State of Delaware with respect to each of
the Mergers, in such form as required by, and executed in
accordance with, the relevant provisions of Delaware Law (the
effective time of such filings being the “Effective
Time”).

Section
1.3. Effects of the Mergers. At the Effective
Time, the effect of the Mergers shall be as provided in the
applicable provisions of Delaware Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective
Time, (a) all of the property, rights, privileges, powers and
franchises of the Company and Company Merger Sub shall continue
with, or vest in, as the case may be, Company Merger Sub as the
Surviving Corporation, and all debts, liabilities and duties of the
Company and Company Merger Sub shall be, or become, as the case may
be, the debts, liabilities and duties of Company Merger Sub as the
Surviving Corporation, and (b) all of the property, rights,
privileges, powers and franchises of Brekford and Brekford Merger
Sub shall continue with, or vest in, as the case may be, Brekford
as the Surviving Corporation, and all debts, liabilities and duties
of Brekford and Brekford Merger Sub shall continue to be, or
become, as the case may be, the debts, liabilities and duties of
Brekford as the Surviving Corporation. As of the Effective Time,
each of the Surviving Corporations shall be a direct, wholly-owned
Subsidiary of Novume.

 

2

 

Section
1.4. Subsequent Actions. If, at any time
after the Effective Time, either of the Surviving Corporations
shall consider or be advised that any deeds, bills of sale,
assignments, assurances or any other actions or things are
necessary or desirable to continue in, vest, perfect or confirm of
record or otherwise in such Surviving Corporation its right, title
or interest in, to or under any of the rights, properties,
privileges, franchises or assets of either of its constituent
corporations acquired or to be acquired by such Surviving
Corporation as a result of, or in connection with, one of the
Mergers or otherwise to carry out this Agreement, the officers and
directors of such Surviving Corporation shall be directed and
authorized to execute and deliver, in the name and on behalf of
either of such constituent corporations, all such deeds, bills of
sale, assignments and assurances and to take and do, in the name
and on behalf of each of such corporations or otherwise, all such
other actions and things as may be necessary or desirable to vest,
perfect or confirm any and all right, title and interest in, to and
under such rights, properties, privileges, franchises or assets in
such Surviving Corporation or otherwise to carry out this
Agreement.

Section
1.5. Certificate of Incorporation; Bylaws; Directors
and Officers of Surviving Corporations. At the Effective
Time:

(a) the Certificate of
Incorporation of Company Merger Sub as a Surviving Corporation as
in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of Company Merger Sub, and the
Certificate of Incorporation of Brekford Merger Sub as in effect
immediately prior to the Effective Time shall be the Certificate of
Incorporation of Brekford as a Surviving Corporation, in each case
until thereafter amended as provided by law and such Certificates
of Incorporation;

(b) the respective
Bylaws of each of Company Merger Sub and Brekford Merger Sub shall
be the Bylaws of the Company Merger Sub and the Brekford,
respectively, as Surviving Corporations, immediately prior to the
Effective Time, in each case until thereafter amended as provided
by law and the Certificates of Incorporation and such Bylaws of
such Surviving Corporation; and

(c) the officers of
each of Company Merger Sub and Brekford, respectively, as Surviving
Corporations shall be designated and appointed upon mutual
agreement of the Parties prior to the Effective Time. Such persons
shall serve as the officers of Company Merger Sub and Brekford,
respectively, as Surviving Corporations from and after the
Effective Time until their successors are elected or appointed and
qualified or until their resignation or removal.

Section
1.6. Company Names. At the Effective Time,
the name of KeyStone Merger Sub shall be changed to “KeyStone
Solutions, Inc.” and the name of Brekford shall be changed to
“Brekford Traffic Safety, Inc.”

Section
1.7. Company Stockholders’ Agreement.
As of the Effective Time, that certain stockholders’
agreement dated March 16, 2016, as amended (the “Stockholders’
Agreement”), by and among Robert Berman, Avon Road
Partners, L.P., James McCarthy, Richard Nathan, Gregory McCarthy
and Kevin Berrigan shall be terminated.

 

3

 

ARTICLE
II

EFFECT ON THE STOCK
OF NOVUME, THE SURVIVING

CORPORATIONS
AND THE MERGED CORPORATIONS

Section
2.1. Conversion of Securities. The manner and
basis of converting the shares of common stock of Novume, the
Surviving Corporations and of the Merged Corporations at the
Effective Time, by virtue of the Mergers and without any action on
the part of any of the Parties or the holder of any of such
securities, shall be as hereinafter set forth in this ARTICLE
II.

Section
2.2. Conversion of Shares.

(a) Each share of
Company Common Stock issued and outstanding immediately before the
Effective Time (other than those held in the treasury of the
Company) and all rights in respect thereof, shall at the Effective
Time, without any action on the part of any holder thereof,
forthwith cease to exist and be converted into and become
exchangeable for, 1.9975 shares of common stock, par value $0.0001
per share (“Novume
Common Stock”), of Novume, and each share of Series A
Cumulative Convertible Redeemable Preferred Stock
(“Company Preferred
Stock”) of the Company issued and outstanding
immediately before the Effective Time and all rights in respect
thereof, shall at the Effective Time, without any action on the
part of any holder thereof, forthwith cease to exists and be
converted into and become exchangeable for, 1. shares of Series A
Cumulative Convertible Redeemable Preferred Stock
(“Novume Preferred
Stock”), of Novume (collectively, the
“Company Merger
Consideration”, and such ratio of Company Common Stock
to Novume Common Stock and Company Preferred Stock to Novume
Preferred Stock being herein referred to as the “Company Exchange Ratio”).
Fractional shares of Novume Common Stock and Novume Preferred Stock
will not be issued in connection with the Company Merger. For a
discussion of the treatment of fractional shares that would
otherwise be issued, see Section 2.7.

(b) Each share of
Brekford Common Stock issued and outstanding immediately before the
Effective Time (other than those held in the treasury of Brekford)
and all rights in respect thereof, shall at the Effective Time,
without any action on the part of any holder thereof, forthwith
cease to exist and be converted into and become exchangeable for
the right to receive 1/15th of one share (the
“Brekford Exchange
Ratio”) of Novume Common Stock (the
“Brekford Merger
Consideration”). Fractional shares of Novume Common
Stock will not be issued in connection with the Brekford Merger.
For a discussion of the treatment of fractional shares that would
otherwise be issued, see Section 2.7.

(c) Commencing
immediately after the Effective Time, each certificate which,
immediately prior to the Effective Time, represented issued and
outstanding shares of Company Common Stock or Company Preferred
Stock (together, “Company Shares”) or
Brekford Common Stock (“Brekford Shares” and,
together with the Company Shares, the “Shares”), shall evidence
the right to receive the Company Merger Consideration or the
Brekford Merger Consideration, as the case may be, on the basis
hereinbefore set forth, but subject to the limitations set forth in
Sections 2.3,
2.5, 2.7, 2.8 and 2.9 hereof.

 

4

 

Section
2.3. Cancellation of Treasury Shares and of
Outstanding Novume Common Stock.

(a) At the Effective
Time, each share of Company Common Stock and Company Preferred
Stock held in the treasury of the Company immediately prior to the
Effective Time, and each share of Brekford Common Stock held in the
treasury of Brekford immediately prior to the Effective Time, shall
be cancelled and retired and no shares of stock or other securities
of Novume or either of the Surviving Corporations shall be
issuable, and no payment or other consideration shall be made, with
respect thereto.

(b) At the Effective
Time, the shares of Novume Common Stock held by the Company shall
be cancelled and retired and no shares of stock or other securities
of Novume or any other corporation shall be issuable, and no
payment or other consideration shall be made, with respect
thereto.

Section
2.4. Conversion of Common Stock and Preferred Stock
of the Merged Corporations into Common Stock of the Surviving
Corporations.

(a)           At
the Effective Time, each share of common stock of Brekford Merger
Sub issued and outstanding immediately prior to the Effective Time,
and all rights in respect thereof, shall, without any action on the
part of Novume, forthwith cease to exist and be converted into
1,000 validly issued, fully paid and nonassessable shares of common
stock of Brekford, as one of the Surviving Corporations (or such
greater number as the Company shall determine prior to the
Effective Time). Immediately after the Effective Time and upon
surrender by Novume of the certificate representing the shares of
the common stock of Brekford Merger Sub, Brekford as one of the
Surviving Corporations shall deliver to Novume an appropriate
certificate or certificates representing the common stock of
Brekford created by conversion of the common stock of Brekford
Merger Sub owned by Novume as aforesaid.

Section
2.5. Exchange of Shares Other Than Treasury
Shares. Subject to the terms and conditions hereof, at or
prior to the Effective Time, Novume shall appoint an exchange agent
to effect the exchange of Shares for Novume Common Stock and Novume
Preferred Stock in accordance with the provisions of this ARTICLE
II (the “Exchange
Agent”). From time to time after the Effective Time,
Novume shall deposit, or cause to be deposited, (i) certificates
representing Novume Common Stock for conversion of Shares in
accordance with the provisions of Section 2.2 hereof and (ii)
certificates representing Novume Preferred Stock for conversion of
Shares in accordance with the provisions of Section 2.2 hereof (such
certificates, together with any dividends or distributions with
respect thereto, being herein referred to collectively as the
“Exchange
Fund”). Commencing immediately after the Effective
Time and until the appointment of the Exchange Agent shall be
terminated, each holder of a certificate or certificates
theretofore representing Shares may surrender the same to the
Exchange Agent, and, after the appointment of the Exchange Agent
shall be terminated, any such holder may surrender any such
certificate to Novume. Such holder shall be entitled upon such
surrender to receive in exchange therefor a certificate or
certificates representing the number of full shares of Novume
Common Stock or Novume Preferred Stock, as applicable, into which
the Shares theretofore represented by the certificate or
certificates so surrendered shall have been converted in accordance
with the provisions of Section 2.2 hereof. All such
shares of Novume Common Stock or Novume Preferred Stock, as
applicable, issued in accordance with the immediately preceding
sentence shall be deemed to have been issued at the Effective Time.
Until so surrendered and exchanged, each outstanding certificate
which, prior to the Effective Time, represented issued and
outstanding Shares shall be deemed for all corporate purposes of
the Parties, other than the payment of dividends and other
distributions, if any, to represent the right to receive the
Company Merger Consideration or the Brekford Merger Consideration,
as the case may be. Unless and until any such certificate
theretofore representing Shares is so surrendered, no dividend or
other distribution, if any, payable to the holders of record of
Novume Common Stock or Novume Preferred Stock as of any date
subsequent to the Effective Time shall be paid to the holder of
such certificate in respect thereof. Upon the surrender of any such
certificate theretofore representing Shares, however, the record
holder of the certificate or certificates representing shares of
Novume Common Stock or Novume Preferred Stock issued in exchange
therefor shall receive from the Exchange Agent or from Novume, as
the case may be, payment of the amount of dividends and other
distributions, if any, which as of any date subsequent to the
Effective Time and until such surrender shall have become payable
with respect to such number of shares of Novume Common Stock or
Novume Preferred Stock (“Pre-Surrender
Dividends”). No interest shall be payable with respect
to the payment of Pre-Surrender Dividends, upon the surrender of
certificates theretofore representing Shares. After the appointment
of the Exchange Agent shall have been terminated, such holders of
Novume Common Stock that have not received payment of Pre-
Surrender Dividends, shall look only to Novume for payment thereof.
Notwithstanding the foregoing provisions of this Section 2.5, neither the
Exchange Agent nor any Party shall be liable to a holder of Shares
for any Novume Common Stock or Novume Preferred Stock or dividends
or distributions thereon delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law or to a
transferee pursuant to Section 2.6
hereof.

 

5

 

Section
2.6. Transfer Books. The stock transfer books
of the Company with respect to the Company Shares and the stock
transfer books of Brekford with respect to the Brekford Shares
shall each be closed at the Effective Time and no transfer of any
Shares will thereafter be recorded on any of such stock transfer
books. In the event of a transfer of ownership of Shares that is
not registered in the stock transfer records of the Company or
Brekford, as the case may be, at the Effective Time, cash and/or a
certificate or certificates representing the number of full shares
of Novume Common Stock or Novume Preferred Stock, as applicable,
into which such Shares shall have been converted in accordance with
Section 2.2 hereof
shall be issued to the transferee in accordance with Section 2.7 hereof, and a cash
payment in the amount of Pre-Surrender Dividends, if any, in
accordance with Section
2.5 hereof, if the certificate or certificates representing
such Shares is or are surrendered as provided in Section 2.5 hereof, accompanied
by all documents required to evidence and effect such transfer and
by evidence of payment of any applicable stock transfer
tax.

Section
2.7. No Fractional Shares.

(a) No scrip or
fractional share certificate for Novume Common Stock or Novume
Preferred Stock will be issued upon the surrender for exchange of
certificates evidencing Shares. Any such fractional shares that
would have been issued shall be rounded up to the nearest whole
share and such whole share shall be issued.

(b) None of Novume, the
Company or Brekford shall be liable to any holder of Shares or
Novume Common Stock or Novume Preferred Stock, as the case may be,
for such shares (or dividends or distributions with respect
thereto) delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.

 

6

 

Section
2.8. Options and Warrants to Purchase Common
Stock.

(a) At the Effective
Time, each option granted by the Company to purchase shares of
Company Common Stock (each, a “Company Option”), or by
Brekford to purchase shares of Brekford Common Stock (each, a
“Brekford
Option” and, together with the Company Options,
“Options”), which is
outstanding and unexercised immediately prior to the Effective
Time, shall be assumed by Novume and converted into an option (a
“Novume
Option”) to purchase shares of Novume Common Stock in
such amount and at such exercise price as provided below and
otherwise having the same terms and conditions as are in effect
immediately prior to the Effective Time:

(i) the number of
shares of Novume Common Stock to be subject to the Novume Option
shall be equal to the product of (x) the number of shares of
Company Common Stock or Brekford Common Stock subject to the
original Option and (y) the Company Exchange Ratio or the Brekford
Exchange Ratio, as applicable;

(ii) the
exercise price per share of Novume Common Stock under the Novume
Option shall be equal to (x) the exercise price per share of the
Company Common Stock or Brekford Common Stock under the original
Option divided by (y) the Company Exchange Ratio or the Brekford
Exchange Ratio, as applicable; and

(iii) upon
each exercise of Novume Options by a holder thereof, the aggregate
number of shares of Novume Common Stock deliverable upon such
exercise shall be rounded down, if necessary, to the nearest whole
share and the aggregate exercise price shall be rounded up, if
necessary, to the nearest cent. The adjustments provided herein
with respect to any Options which are “incentive stock
options” (as defined in Section 422 of the Code) shall be
effected in a manner consistent with Section 424(a) of the
Code.

(b) Novume shall take
all corporate action necessary to reserve for issuance a sufficient
number of shares of Novume Common Stock for delivery upon exercise
of Novume Options in accordance with this Section 2.8. As soon as
practicable (and in no event later than thirty (30) days) after the
Effective Time, Novume shall file a registration statement on Form
S-8 (or any successor or other appropriate forms), or another
appropriate form with respect to the shares of Novume Common Stock
subject to the Novume Options and shall use its best efforts to
maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as the
Novume Options remain outstanding.

(c) At the Effective
Time, each outstanding warrant to purchase shares of Company Common
Stock (each, a “Company Warrant”), or to
purchase shares of Brekford Common Stock (each, a
“Brekford
Warrant” and, together with the Company Warrants, the
“Warrants”), which is
outstanding and unexercised immediately prior to the Effective
Time, shall be assumed by Novume and converted into a warrant to
purchase shares of Novume Common Stock (a “Novume Warrants”) in such
amount and at such exercise price as provided below and otherwise
having the same terms and conditions as are in effect immediately
prior to the Effective Time:

 

7

 

(i) the number of
shares of Novume Common Stock issuable upon exercise of each Novume
Warrant shall be equal to the product of (x) the number of shares
of Company Common Stock or Brekford Common Stock issuable upon
exercise of the original Warrant and (y) the Company Exchange Ratio
or the Brekford Exchange Ratio, as applicable;

(ii) the
exercise price per share of Novume Common Stock under the Novume
Warrants shall be equal to (x) the exercise price per share of the
Company Common Stock or Brekford Common Stock under the original
Warrant divided by (y) the Company Exchange Ratio or the Brekford
Exchange Ratio, as applicable; and

(iii)     upon
each exercise of Novume Warrants by a holder thereof, the aggregate
number of shares of Novume Common Stock deliverable upon such
exercise shall be rounded down, if necessary, to the nearest whole
share and the aggregate exercise price shall be rounded up, if
necessary, to the nearest cent.

Section
2.9. Certain Adjustments. Without limiting
any other provision of this Agreement, if, between the date of this
Agreement and the Effective Time, the outstanding shares of Company
Common Stock or of Brekford Common Stock shall be changed into a
different number of shares by reason of any reclassification,
recapitalization, split-up, combination or exchange of shares, or
any dividend payable in stock or other securities shall be declared
thereon with a record date within such period, the exchange ratio
established pursuant to the provisions of Section 2.2 hereof shall be
adjusted accordingly to provide to the holders of Company Common
Stock and Brekford Common Stock the same economic effect as
contemplated by this Agreement prior to such reclassification,
recapitalization, split-up, combination, exchange or
dividend.

ARTICLE
III

CERTAIN MATTERS
WITH RESPECT TO NOVUME

Section
3.1. Certificate of Incorporation of Novume.
Prior to the Effective Time, the Company shall cause the
Certificate of Incorporation of Novume to be amended and restated
to read substantially as set forth in Appendix I hereto, and shall
cause Novume to file with the Secretary of State of the State of
Delaware a Certificate of Designations of the Novume Preferred
Stock containing terms substantially identical to the Certificate
of Designations of the Company Preferred Stock filed with the
Secretary of State of the State of Delaware as of the date hereof,
but in any event, which shall provide rights, preferences and
privileges to the holders of Novume Preferred Stock that are no
less favorable to such holders than those currently provided to the
holders of Company Preferred Stock.

Section
3.2. Officers and Directors of
Novume.

(a) At the Effective
Time, Robert A. Berman shall have been appointed the Chief
Executive Officer of Novume; such other persons shall have been
appointed officers of Novume as are designated by the Board of
Directors of the Company as it exists immediately prior to the
Effective Time.

 

8

 

(b) At the Effective
Time, the Novume Board shall consist of seven (7) members, four (4)
of whom shall be independent within the meaning of the 1934 Act,
and the national stock exchange to which the Company has applied
for the listing of Novume Common Stock as described in Section 7.10. Six (6) members
of the Novume Board shall be designated by the Company, and one (1)
member of the Novume Board shall be designated by Brekford, subject
to the approval of KeyStone. The members designated by the Company
are James McCarthy, who shall serve as Chairman, Robert A. Berman,
Dr. Richard Nathan, Glenn Goord, Paul DeBary and one additional
independent director who shall be designated by the Company prior
to the Effective Time. The member to be designated by Brekford
shall be independent, as provided herein, and shall be subject to
the approval by the Company; such member shall be identified by
Brekford and approved by the Company prior to the Effective Time.
As of the date hereof, Glenn Goord and Paul DeBary are independent
as provided herein, and shall so remain, as and at the Effective
Time.

ARTICLE
IV

REPRESENTATIONS AND
WARRANTIES OF BREKFORD

Brekford hereby
represents and warrants to the Company and Novume as
follows:

Section
4.1. Organization and Qualification;
Subsidiaries. Each of Brekford and its Subsidiaries is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation or
organization. Each of Brekford and its Subsidiaries has the
requisite corporate power and authority and any necessary
governmental authority, franchise, license or permit to own,
operate or lease the properties that it purports to own, operate or
lease and to carry on its business as it is now being conducted,
and is duly qualified as a foreign corporation to do business, and
is in good standing, in each jurisdiction where the character of
its properties owned, operated or leased or the nature of its
activities makes such qualification necessary, except for such
failure which, when taken together with all other such failures,
would not reasonably be expected to have a Material Adverse Effect
on Brekford. Brekford’s Subsidiaries are listed on
Schedule 4.1
hereto.

Section
4.2. Certificate of Incorporation and Bylaws.
Brekford has heretofore furnished, or otherwise made available, to
the Company a complete and correct copy of the Certificate, or
Articles, of Incorporation, as applicable, and the Bylaws (or
comparable governing documents), each as amended to the date
hereof, of Brekford and each of its Subsidiaries. Such Certificate
and Articles of Incorporation and Bylaws (or comparable governing
documents) are in full force and effect. Neither Brekford nor any
of its Subsidiaries is in violation of any of the provisions of its
respective Certificate or Articles Incorporation, as applicable, or
its Bylaws (or comparable governing documents).

Section
4.3. Capitalization.

(a) The authorized
capital stock of Brekford consists of (i) 20,000,000 shares of
preferred stock, par value $0.0001 per share, none of which are
outstanding and none of which are reserved for issuance and (ii)
150,000,000 shares of Brekford Common Stock, of which, as of
February 8, 2017, 49,311,265 shares were issued and outstanding and
1,390,000 shares were issuable upon the exercise of options
outstanding under the Brekford option plans listed on Schedule 4.3 hereto. Since
January 1, 2017, no shares of Brekford Common Stock have been
issued, except upon the exercise of options described in the
immediately preceding sentence. Except as set forth on Schedule 4.3, there are no
outstanding Brekford Equity Rights. For purposes of this Agreement,
“Brekford Equity
Rights” shall mean subscriptions, options, warrants,
calls, commitments, agreements, conversion rights or other rights
of any character (contingent or otherwise) to purchase or otherwise
acquire from Brekford or any of Brekford’s Subsidiaries at
any time, or upon the happening of any stated event, any shares of
the capital stock of Brekford. Schedule 4.3 sets forth a
complete and accurate list with respect to all outstanding Brekford
Equity Rights of the holder thereof, the date of grant, the number
of shares for which each such Brekford Equity Right is exercisable,
the respective dates upon which each such Brekford Equity Right
vests, becomes exercisable and expires, and the exercise price of
each such Brekford Equity Right.

 

9

 

(b) There are no
outstanding obligations of Brekford or any of Brekford’s
Subsidiaries to repurchase, redeem or otherwise acquire any shares
of capital stock of Brekford or any such Subsidiary.

(c) All of the issued
and outstanding shares of Brekford Common Stock are validly issued,
fully paid and nonassessable.

(d) All of the
outstanding capital stock of each of Brekford’s Subsidiaries
is duly authorized, validly issued, fully paid and nonassessable,
and, except as set forth on Schedule 4.3, is owned by
Brekford free and clear of any liens, security interests, pledges,
agreements, claims, charges or encumbrances. Except as set forth on
Schedule 4.3, there
are no existing subscriptions, options, warrants, calls,
commitments, agreements, conversion rights or other rights of any
character (contingent or otherwise) to purchase or otherwise
acquire from Brekford or any of Brekford’s Subsidiaries at
any time, or upon the happening of any stated event, any shares of
the capital stock of any of Brekford’s Subsidiaries, or any
securities convertible into or exercisable for shares of the
capital stock of any of Brekford’s Subsidiaries, whether or
not presently issued or outstanding and there are no outstanding
obligations of Brekford or any of Brekford’s Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock
of any of Brekford’s Subsidiaries. Except for equity
interests disclosed on Schedule 4.3 hereto and
Subsidiaries listed on Schedule 4.1 hereto, Brekford
does not directly or indirectly own any equity interest in any
other person. Each of Brekford’s Subsidiaries is a
wholly-owned Subsidiary.

(e) Except as disclosed
on Schedule 4.3
hereto, there are no stockholder agreements, voting trusts or other
agreements or understandings to which Brekford is a party or to
which it is bound relating to the voting or registration of any
shares of capital stock of Brekford. Brekford has not taken any
action that would result in, nor is Brekford a party to any
agreement, arrangement or understanding not disclosed on
Schedule 4.3 hereto
that would result in, any Options to purchase Brekford Common Stock
that are unvested becoming vested in connection with or as a result
of the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby.

 

10

 

Section
4.4. Authority Relative to this Agreement.
Brekford has the necessary corporate power and authority to enter
into this Agreement. The execution and delivery of this Agreement
by Brekford and the consummation by Brekford of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Brekford, including the approval of
this Agreement by Brekford’s stockholders as required by the
Delaware Law. This Agreement has been duly executed and delivered
by Brekford and, assuming the due authorization, execution and
delivery thereof by the other Parties, constitutes a legal, valid
and binding obligation of Brekford, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies
generally, and subject, as to enforceability, to general principles
of equity (the “Bankruptcy
Exception”).

Section
4.5. No Conflict; Required Filings and
Consents.

(a) Except as listed on
Schedule 4.5
hereto, the execution and delivery of this Agreement by Brekford do
not, and the performance of this Agreement by Brekford will not,
(i) violate or conflict with the Certificate of Incorporation or
Bylaws of Brekford, (ii) conflict with or violate any Legal
Requirement, or conflict with or violate any Permit, applicable to
Brekford or any of its Subsidiaries or by which any of their
respective property is bound or affected, (iii) violate or conflict
with the Certificate of Incorporation or Bylaws (or comparable
governing documents) of any of Brekford’s Subsidiaries or
(iv) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination or cancellation
of, or result in the creation of a lien or encumbrance on any of
the properties or assets of Brekford or any of its Subsidiaries
pursuant to, result in the loss of any material benefit under, or
require the consent of any other party to, any contract,
instrument, permit, license or franchise to which Brekford or any
of its Subsidiaries is a party or by which Brekford, each
Subsidiary or any of their respective property is bound or
affected, except, in the case of clauses (ii), (iii) or (iv) above,
for conflicts, violations, breaches, defaults, results or consents
which, individually or in the aggregate, would not have a Material
Adverse Effect on Brekford.

(b) Except as listed on
Schedule 4.5 and
except for applicable requirements, if any, of the Exchange Act (as
defined on Section
10.4 hereof), filing and recordation of appropriate merger
or other documents as required by Delaware Law and any filings
required pursuant to any state securities or “blue sky”
laws or the rules of any applicable stock exchanges, neither
Brekford nor its any of its Subsidiaries is required to submit any
notice, report or other filing with any governmental authority,
domestic or foreign, in connection with the execution, delivery or
performance of this Agreement. Except as set forth in the
immediately preceding sentence, no waiver, consent, approval or
authorization of any governmental or regulatory authority, domestic
or foreign, is required to be obtained by Brekford or any of its
Subsidiaries in connection with its execution, delivery or
performance of this Agreement.

Section
4.6. SEC Filings; Financial
Statements.

(a) Brekford has filed
all forms, reports and documents required to be filed with the
Securities and Exchange Commission (“SEC”) since January 1,
2016, and has heretofore delivered or made available to the
Company, in the form filed with the SEC, together with any
amendments thereto, its (i) Annual Report on Form 10-K for the
fiscal year ended December 31, 2015, (ii) all proxy statements
relating to Brekford’s meetings of stockholders (whether
annual or special) held since January 1, 2016, (iii) Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30,
2016, and (iv) all other reports or registration statements filed
by Brekford with the SEC since January 1, 2016 (collectively, the
“Brekford SEC
Reports”). The Brekford SEC Reports (i) were prepared
substantially in accordance with the requirements of the 1933 Act
(as defined in Section
10.4 hereof), or the Exchange Act as the case may be, and
the rules and regulations promulgated under each of such respective
acts, and (ii) did not at the time they were filed contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading.

 

11

 

(b) The financial
statements, including all related notes and schedules, contained in
the Brekford SEC Reports (or incorporated by reference therein)
fairly present the consolidated financial position of Brekford and
each of its Subsidiaries as at the respective dates thereof and the
consolidated results of operations and cash flows of Brekford and
each of its Subsidiaries for the periods indicated in accordance
with United States generally accepted accounting principles
(“GAAP”) applied on a
consistent basis throughout the periods involved (except for
changes in accounting principles disclosed in the notes thereto)
and subject, in the case of interim financial statements, to normal
year-end adjustments.

(c) Brekford has
heretofore made available to the Company a complete and correct
copy of any material amendments or modifications, which have not
yet been filed with the SEC, to agreements, documents or other
instruments which previously had been filed by Brekford with the
SEC pursuant to the Exchange Act.

Section
4.7. No Undisclosed Liabilities; Absence of Certain
Changes or Events. Except as and to the extent publicly
disclosed by Brekford in the Brekford SEC Reports filed prior to the date of
this Agreement, as of January 1, 2016, neither Brekford nor any of its
Subsidiaries had any material liabilities or obligations of
any nature, whether or
not accrued, contingent or otherwise, and whether due or
to become due or
asserted or unasserted, which would be required by GAAP to
be reflected in,
reserved against or otherwise described in the
consolidated balance
sheet of Brekford (including the notes thereto) as of such date or
which could reasonably be expected to have a Material Adverse
Effect on Brekford. Except as disclosed on Schedule 4.7 hereto, since
September 30, 2016, neither Brekford nor any of its Subsidiaries
has incurred any material liability, except in the ordinary course
of their respective businesses consistent with their past
practices, and there has not been any change, or any event
involving a prospective change, in the business, financial
condition or results of operations of Brekford or any of its
Subsidiaries which has had, or is reasonably likely to have, a
Material Adverse Effect on Brekford, and Brekford and each of its
Subsidiaries has conducted their respective businesses in the
ordinary course consistent with their past practices.

Section
4.8. Litigation. Except as disclosed in
Schedule 4.8
hereto, there are no claims, actions, suits, proceedings or, to
Brekford’s knowledge, investigations pending or, to
Brekford’s knowledge, threatened against Brekford or any of
its Subsidiaries, or any properties or rights of Brekford or any of
its Subsidiaries, before any court, administrative, governmental,
arbitral, mediation or regulatory authority or body, domestic or
foreign, (a) as of the date hereof, as to which there is more than
a remote possibility of an adverse judgment or determination
against Brekford or any of its Subsidiaries or any properties or
rights of Brekford or any of its Subsidiaries in excess of $100,000
or which otherwise is reasonably likely to have a Material Adverse
Effect on Brekford, (b) as of the date hereof, which questions the
validity of this Agreement or any action to be taken by Brekford in
connection with the consummation of the transactions contemplated
by this Agreement or could otherwise prevent or delay the
consummation of the transactions contemplated by this Agreement, or
(c) as to which there is reasonably likely to be an adverse
judgment or determination against Brekford or any of its
Subsidiaries or any properties or rights of Brekford or any of its
Subsidiaries in excess of $100,000 or which otherwise could
reasonably be expected to have a Material Adverse Effect on
Brekford.

 

12

 

Section
4.9. No Violation of Law; Permits. The
business of Brekford and each of its Subsidiaries is not being
conducted in violation of any statute, law, ordinance, rule,
regulation, judgment, order or decree of any domestic or foreign
governmental, regulatory or judicial entity (including any stock
exchange or other self-regulatory body) (“Legal Requirements”), or
in violation of any permits, franchises, licenses, approvals,
tariffs and other authorizations or consents that are granted by
any domestic or foreign government or regulatory or judicial entity
(including any stock exchange or other self-regulatory body)
(“Permits”), except for
possible violations of any Legal Requirements, or violations of any
Permits, none of which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect on
Brekford. Brekford and each of its Subsidiaries have all Permits
that are required in connection with the operation of their
businesses (collectively, “Required Permits”), and
no proceedings are pending or, to the knowledge of Brekford,
threatened to revoke or limit any Required Permit, except, in each
case, those the absence or violation of which do not and will not
have a Material Adverse Effect on Brekford. Except as set forth on
Schedule 4.9
hereto, (a) to Brekford’s knowledge, no investigation or
review by any domestic or foreign governmental or regulatory entity
(including any stock exchange or other self-regulatory body) with
respect to Brekford or any of its Subsidiaries in relation to any
alleged violation of law or regulation is pending or threatened,
and (b) no governmental or regulatory entity (including any stock
exchange or other self-regulatory body) has notified Brekford of
its intention to conduct the same, except for such investigations
which, if they resulted in adverse findings, would not reasonably
be expected to have, individually or in the aggregate, a Material
Adverse Effect on Brekford. Except as set forth on Schedule 4.9 hereto, neither
Brekford nor any of its Subsidiaries is subject to any cease and
desist or other order, judgment, injunction or decree issued by, or
is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment
letter or similar undertaking to, or is subject to any order or
directive by, or has adopted any board resolutions at the request
of, any court, governmental entity or regulatory agency that
materially restricts the conduct of its business or which could
reasonably be expected to have a Material Adverse Effect on
Brekford, or would prevent or delay the consummation of the
transactions contemplated by this Agreement, nor has Brekford or
any of its Subsidiaries been advised that any court, governmental
entity or regulatory agency is considering issuing or requesting
any of the foregoing. Brekford and each of its Subsidiaries and
affiliates has complied with all material federal and state
regulatory reporting requirements necessary for the lawful
provision of services or products currently offered by Brekford or
such Subsidiaries or affiliate.

 

13

 

Section
4.10. Registration Statement; Information
Statement. None of the information supplied or to be
supplied by or on behalf of Brekford for inclusion or incorporation
by reference in the Registration Statement on Form S-4 (the
“Registration
Statement”) to be filed with the SEC by Novume in
connection with the issuance of shares of Novume Common Stock and
Novume Preferred Stock in the Mergers will, at the time the
Registration Statement becomes effective under the 1933 Act,
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the information
supplied or to be supplied by or on behalf of Brekford for
inclusion or incorporation by reference in the information
statement, in definitive form, relating to the approval of the
Mergers by the required Brekford stockholders (the
“Information
Statement”) will, at any time prior to the Effective
Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event with respect to
Brekford, its officers and directors or any of its Subsidiaries
should occur which is required to be described in an amendment of,
or a supplement to, the Registration Statement or the Information
Statement, Brekford shall promptly so advise the Company and such
event shall be so described, and such amendment or supplement
(which the Company shall have a reasonable opportunity to review)
shall be promptly filed with the SEC and, as required by law,
disseminated to the shareholders of Brekford. The Registration
Statement and the Information Statement (except for information
relating to or provided by the Company) will each comply as to form
in all material respects with the provisions of the 1933 Act and
the Exchange Act, as applicable, and the rules and regulations
promulgated thereunder, as applicable.

Section
4.11. Employee Matters; ERISA.

(a) Set forth on
Schedule 4.11
hereto is a true and complete list of all employee benefit plans
within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”), all deferred
compensation, bonus or other incentive compensation, stock options,
restricted stock, stock purchase or other equity-based, severance
or change in control, salary continuation, tuition assistance,
disability, leave of absence plans, policies or agreements, and all
employment, consulting, management or other individual compensation
agreements with respect to any current or former employee of
Brekford or any of its Brekford ERISA Affiliates, which in each
case Brekford or any of its Brekford ERISA Affiliates has any
obligation or liability, contingent or otherwise (collectively, the
“Brekford Benefit
Plans“).

(b) All contributions
and other payments required to be made by Brekford or any Brekford
ERISA Affiliate to or under any Brekford Benefit Plan (or to any
person pursuant to the terms thereof) have been timely made in
accordance with applicable law. No Brekford Benefit Plan is subject
to Section 412 of the Code or Section 302 of ERISA.

(c) Each of the
Brekford Benefit Plans intended to be “qualified”
within the meaning of Section 401(a) of the Code has been
determined by the Internal Revenue Service (the “IRS”) to be so qualified,
and, to the knowledge of Brekford or any Brekford ERISA Affiliate,
no circumstances exist that could reasonably be expected by
Brekford or any Brekford ERISA Affiliate to result in the
revocation of any such determination. Brekford is in compliance
with, and each of the Brekford Benefit Plans is and has been
operated in compliance with, all applicable Legal Requirements
governing such plan, including, without limitation, ERISA and the
Code.

 

14

 

(d) Brekford has made
available to the Company with respect to each Brekford Benefit Plan
a true, correct and complete copy of each of the following
documents where applicable (i) such plan, summary plan description
and summary of material modifications, (ii) the most recent annual
report filed with the IRS, (iii) each related trust agreement, (iv)
the most recent determination of the IRS with respect to the
qualification under any provision of the Code and (v) the most
recent IRS Form 5500 and actuarial report or
valuation.

(e) Except as set forth
on Schedule 4.11
hereto, the consummation or announcement of any transaction
contemplated by this Agreement will not either alone or upon the
occurrence of any additional or further acts or events) result in
any (i) payment (whether of severance pay or otherwise) becoming
due from Brekford or any Brekford ERISA Affiliate to any current or
former officer, employee, former employee or director thereof, or
to any other person for the benefit of any such officer, employee
or director, or (ii) acceleration, vesting or establishment of any
benefit under any Brekford Benefit Plan, or (iii) disqualification
of any of the Brekford Benefit Plans intended to be qualified
under, result in a prohibited transaction or breach of fiduciary
duty under, or otherwise violate, ERISA or the Code.

(f) Neither Brekford
nor any of its Brekford ERISA Affiliates has incurred, and neither
of such entities reasonably expects to incur, any material
liability to the PBGC (other than premiums which are not overdue)
or pursuant to Title IV of ERISA with respect to any Brekford
Benefit Plan. Neither Brekford nor any Brekford ERISA Affiliate is
an employer with respect to, and neither has incurred or reasonably
expects to incur, any withdrawal liability with respect to, any
“multiemployer plan” (as defined in Section 3(37) of
ERISA).

(g) There are no
pending or, to the knowledge of Brekford or any Brekford ERISA
Affiliate, threatened actions, claims or proceedings against any
Brekford Benefit Plan or its assets, plan sponsor, plan
administrator or fiduciaries with respect to the operation of such
plan (other than routine benefit claims).

Section
4.12. Labor Matters. Except as disclosed on
Schedule 4.12
hereto, neither Brekford nor any of its Subsidiaries is party to
any collective bargaining agreement or other labor agreement with
any union or labor organization and no union or labor organization
has been recognized by Brekford or any of its Subsidiaries as an
exclusive bargaining representative for employees of Brekford or
any of its Subsidiaries. Except as disclosed on Schedule 4.12 hereto, there is
no current union representation question involving employees of
Brekford or any of Brekford’s Subsidiaries, nor does Brekford
have knowledge of any significant activity or proceeding of any
labor organization (or representative thereof) or employee group to
organize any such employees. Neither Brekford nor any of its
Subsidiaries has made any commitment not in collective bargaining
agreements listed on Schedule 4.12 hereto that would
require the application of the terms of any collective bargaining
agreements entered into by Brekford or any of its Subsidiaries to
the Company, Novume, or any Subsidiary or joint venture of either
the Company or Novume. Except as disclosed on Schedule 4.12 hereto, (i) there
is no material active arbitration under any collective bargaining
agreement involving Brekford or any of its Subsidiaries, (ii) there
is no material unfair labor practice, grievance, employment
discrimination or other labor or employment related charge,
complaint or claim against Brekford or any of its Subsidiaries
pending before any court, arbitrator, mediator or governmental
agency or tribunal, or threatened, (iii) there is no material
strike, picketing or work stoppage by, or any lockout of, employees
of Brekford or its Subsidiaries pending or, to Brekford’s
knowledge, threatened, against or involving Brekford or any of its
Subsidiaries, (iv) there is no significant active arbitration under
any collective bargaining agreement involving Brekford or any of
its Subsidiaries regarding the employer’s right to move work
from one location or entity to another, or to consolidate work
locations, or involving other similar restrictions on business
operations, and (v) there is no material proceeding, claim, suit,
action or, to Brekford’s knowledge, governmental
investigation pending or, to Brekford’s knowledge,
threatened, in respect of which any director, officer, employee or
agent of Brekford or any of its Subsidiaries is or may be entitled
to claim indemnification from Brekford or any Brekford Subsidiary
pursuant to their respective charters or bylaws or as provided in
the indemnification agreements, if any, listed on Schedule 4.12 hereto. For
purposes of this Section
4.12, “material” refers to any liability which
could reasonably be expected to exceed $100,000. A true, correct
and complete copy has been made available to the Company of each
current or last, in the case where there is no current, expired
collective bargaining agreement to which Brekford or any of its
Subsidiaries is a part or under which Brekford or any of its
Subsidiaries has obligations.

 

15

 

Section
4.13. Environmental Matters. Environmental
Matters. Except as set forth on Schedule 4.13
hereto:

(a) Brekford and each
of its Subsidiaries are and have been in compliance with all
applicable Environmental Laws (as defined below) and neither
Brekford nor any of its Subsidiaries has received any written or
oral communication from any person or governmental authority that
alleges that Brekford or any of its Subsidiaries is not in
compliance with applicable Environmental Laws, except for such
non-compliance which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on
Brekford.

(b) Brekford and each
of its Subsidiaries have obtained or have applied for all
environmental, health and safety permits, licenses, variances,
approvals and authorizations (collectively, the “Environmental Permits”)
necessary for the construction of their facilities or the conduct
of their operations, and all such Environmental Permits are
effective or, where applicable, a renewal application has been
timely filed and is pending agency approval, and Brekford and each
of its Subsidiaries are in compliance with all terms and conditions
of such Environmental Permits except for such non-compliance which,
individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect on Brekford. There are no past or
present events, conditions, circumstances, activities, practices,
incidents, actions or plans that may materially interfere with, or
prevent, future continued compliance on the part of Brekford or any
of its Subsidiaries with such Environmental Permits. Neither
Brekford nor any of its Subsidiaries has knowledge of matters or
conditions that would preclude reissuance or transfer of any such
Environmental Permit, including amendment of such instrument, to
Novume or one of its Subsidiaries, where such action is necessary
to maintain material compliance with Environmental
Laws.

 

16

 

(c) To Brekford’s
knowledge, there is no requirement to be imposed in the future by
any Environmental Law or Environmental Permit which could
reasonably be expected to result in the incurrence of a material
cost by Brekford or any of its Subsidiaries.

(d) There is no
Environmental Claim (as defined below) pending or, to
Brekford’s knowledge, threatened (i) against Brekford or any
of its Subsidiaries, (ii) against any person whose liability for
any Environmental Claim Brekford or any of its Subsidiaries has or
may have retained or assumed either contractually or by operation
of law, or (iii) against or associated with any real or personal
property or operations which Brekford or any of its Subsidiaries
currently or previously owned, leased or operated, in whole or in
part.

(e) There have been no
Releases (as defined below) of any Hazardous Material (as defined
below) that would be reasonably likely to form the basis of any
Environmental Claim against Brekford or any of its Subsidiaries, or
against any person whose liability for any Environmental Claim
Brekford or any of its Subsidiaries has or may have retained or
assumed either contractually or by operation of law.

(f) With respect to any
predecessor of Brekford or any of its Subsidiaries, there is no
Environmental Claim pending or, to Brekford’s knowledge,
threatened, or any Release of Hazardous Materials that would be
reasonably likely to form the basis of any Environmental Claim
against Brekford or any of its Subsidiaries.

(g) Brekford has
disclosed to the Company all material facts which Brekford
reasonably believes form the basis of a material current or future
cost relating to any environmental matter affecting Brekford and
each of its Subsidiaries.

(h) None of the
properties currently or formerly owned, leased or operated by
Brekford, any of its Subsidiaries or any predecessor thereof are
now, or were in the past, listed on the National Priorities List of
Superfund Sites (the “NPL”), the Comprehensive
Environmental Response, Compensation and Liability Information
System (“CERCLIS”), or any other
comparable state or local environmental database, including those
that are triggered by sales or transfers of businesses or real
property.

(i) Brekford has
delivered, or caused to be delivered, to the Company copies of all
written environmental audit reports, written site assessments
performed by environmental professionals, asbestos surveys, written
claims and complaints, and consent decrees and other similar
documents with respect to Brekford or any of its Subsidiaries,
which are in the possession or control of Brekford or any of its
Subsidiaries, related to compliance with Environmental Laws,
Environmental Claims, or Releases of Hazardous
Materials.

For
purposes of this Section
4.13:

(i) “Environmental
Claim” means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of
noncompliance or violation (written or oral) by any person
(including any federal, state, local or foreign governmental
authority) alleging potential liability (including, without
limitation, potential responsibility for or liability for
enforcement, investigatory costs, cleanup costs, governmental
response costs, removal costs, remedial costs, natural resources
damages, property damages, personal injuries or penalties) arising
out of, based on or resulting from (A) the presence, or Release or
threatened Release into the environment, of any Hazardous Materials
at any location, whether or not owned, operated, leased or managed
by Brekford or any of its Subsidiaries (including but not limited
to obligations to clean up contamination resulting from leaking
underground storage tanks); or (B) circumstances forming the basis
of any violation or alleged violation of any Environmental Law; or
(C) any and all claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence or Release of any
Hazardous Materials.

 

17

 

(ii) “Environmental
Laws” means all applicable foreign, federal, state and local
laws (including the common law), rules, requirements and
regulations relating to pollution, the environment (including,
without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or protection of human health as it
relates to the environment including, without limitation, laws and
regulations relating to Releases of Hazardous Materials, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
Hazardous Materials or relating to management of asbestos in
buildings.

(iii) “Hazardous
Materials” means (A) any petroleum or any by-products or
fractions thereof, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, any form of natural
gas, explosives, and polychlorinated biphenyls
(“PCBs”); (B) any chemicals, materials or substances,
whether waste materials, raw materials or finished products, which
are now defined as or included in the definition of
“hazardous substances,” “hazardous wastes,”
“hazardous materials,” “extremely hazardous
substances,” “restricted hazardous wastes,”
“toxic substances,” “toxic pollutants,”
“pollutants,” “contaminants,” or words of
similar import under any Environmental Law; and (C) any other
chemical, material or substance, whether waste materials, raw
materials or finished products, regulated or forming the basis of
liability under any Environmental Law.

(iv) “Release”
means any release, spill, emission, leaking, injection, deposit,
disposal, discharge, dispersal, leaching or migration into the
environment (including without limitation ambient air, atmosphere,
soil, surface water, groundwater or property).

Section
4.14. Board
Action; Vote Required

(a) The Board of
Directors of Brekford has determined that the transactions
contemplated by this Agreement are in the best interests of
Brekford and its stockholders and has resolved to recommend to such
stockholders that they vote in favor thereof.

(b) The approval of the
Merger of Brekford Merger Sub into Brekford by a majority of the
votes entitled to be cast by all holders of Brekford Common Stock
(the “Brekford
Stockholders’ Approval”) is the only vote of the
holders of any class or series of the capital stock of Brekford
required to approve this Agreement, the Mergers and the other
transactions contemplated hereby, in accordance with the provisions
of Delaware Law, any applicable United States federal and state
securities laws, and the Certificate of Incorporation and Bylaws of
Brekford, each as amended and as currently in effect.

(c) The Brekford Key
Stockholders, together, hold the requisite voting power to obtain
the Brekford Stockholders’ Approval.

 

18

 

Section
4.15. Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder’s, investment
banking or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Brekford or any of its
Subsidiaries.

Section
4.16. Tax Matters. Except as set forth on
Schedule 4.16
hereto:

(a) Brekford and each
of its Subsidiaries, and each affiliated group (within the meaning
of Section 1504 of the Code) of which Brekford or any of its
Subsidiaries is or has been a member, has timely filed all federal
state, local, foreign, income and franchise Tax Returns (as defined
below), and all other material Tax Returns required to be filed by
them. All such Tax Returns are true and correct in all material
respects. Except to the extent adequately reserved for in
accordance with GAAP, all material Taxes due and payable by
Brekford and each of its Subsidiaries have been timely paid in
full. The most recent consolidated financial statements contained
in the Brekford SEC Reports reflect an adequate reserve (other than
any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) in accordance with GAAP
for all Taxes payable by Brekford and each of its Subsidiaries for
all taxable periods and portions thereof through the date of such
financial statements.

(b) No material
deficiencies for any Taxes have been proposed, asserted or assessed
in writing against Brekford or any of its Subsidiaries that have
not been fully paid or adequately provided for in the appropriate
financial statements of Brekford and its Subsidiaries, no requests
for waivers of the time to assess any Taxes are pending, and no
power of attorney with respect to any Taxes has been executed or
filed with any taxing authority. No material issues relating to
Taxes have been raised in writing by any governmental authority
during any presently pending audit or examination. For any open
taxable period, neither Brekford nor any of its Subsidiaries has
waived or extended the statute of limitations applicable to any Tax
or Tax Return or consented to any extension of time with respect to
any material tax assessment or deficiency.

(c) There are no
material liens or encumbrances for Taxes on any of the assets of
Brekford or any of its Subsidiaries (other than for current Taxes
not yet due and payable).

(d) Brekford and each
of its Subsidiaries have complied in all material respects with all
applicable Legal Requirements relating to the payment and
withholding of Taxes.

(e) Neither of Brekford
nor any of its Subsidiaries has made any payments, nor are any of
them obligated to make any payments, and none of them is a party to
any agreement that could obligate it to make any payments that
would not be deductible by reason of Sections 280G or 162(m) of the
Code as a result of the transactions contemplated by this
Agreement.

(f) Neither Brekford
nor any of its Subsidiaries is a party to any tax allocation
agreement, tax sharing agreement, tax indemnity agreement or
similar agreement, arrangement or practice with respect to Taxes
(including any advance pricing agreement, closing agreement or
other agreement relating to Taxes with any taxing authority but
excluding in each case any contract entered into in the ordinary
course of business and the primary subject of which is not Taxes).
Neither Brekford nor any of its Subsidiaries (i) has been a member
of an affiliated group for federal income tax purposes other than a
group of which Brekford is the common parent or (ii) has any
liability for the Taxes of any person other than itself under
Treasury Regulations Section 1.1502-6 (or any similar provision of
U.S. state or local or non-U.S. Tax Law), or as a transferee or
successor.

 

19

 

(g) No federal, state,
local or foreign audits or other administrative proceedings or
court proceedings are presently pending with regard to any Taxes or
Tax Returns of Brekford or any of its Subsidiaries and neither
Brekford nor any of its Subsidiaries has received a written notice
of any pending audit or proceeding.

(h) Neither Brekford
nor any of its Subsidiaries has agreed to or is required to make
any adjustment under Section 481(a) of the Code as a result of a
“closing agreement” as described in Section 7121 of the
Code (or any similar or corresponding provision of U.S. state or
local or non-U.S. Tax Law) that, in either case, would result in
the inclusion of a material amount of income in, or the exclusion
of a material amount of deductions from, taxable income for any
taxable period (or portion thereof) ending after the Closing
Date.

(i) No property owned
by Brekford or any of its Subsidiaries (i) constitutes “tax
exempt use property” within the meaning of Section 168(h)(1)
of the Code; or (ii) is tax exempt bond financed property within
the meaning of Section 168(g) of the Code.

(j) Neither Brekford
nor any of its Subsidiaries has (i) in the two (2) years prior to
the date of this Agreement, distributed stock of another person, or
has had its stock distributed by another person, in a transaction
that was purported or intended to be governed in whole or in part
by Sections 355 or 361 of the Code or (ii) engaged in any
“reportable transaction” within the meaning of Treasury
Regulation Section 1.6011-4(b) (or any similar provision of U.S.
state or local or non-U.S. Tax Law).

(k) For purpose of this
Agreement, (A) the terms “Tax” or “Taxes”
shall mean all taxes, charges, fees, imposts, levies or other
assessments, including, without limitation, all net income, gross
receipts, capital, sales, use, ad valorem, value added, transfer,
franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs
duties, fees, assessments and charges of any kind whatsoever,
together with any interest and any penalties, fines, additions to
tax or additional amounts imposed by any taxing authority (domestic
or foreign) and shall include any transferee liability in respect
of Taxes, any liability in respect of Taxes imposed by contract,
tax sharing agreement, tax indemnity agreement or any similar
agreement and (B) the term “Tax Return” shall mean any
report, return, document, declaration or any other information or
filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes,
including, without limitation, information returns, any document
with respect to or accompanying payments or estimated Taxes, or
with respect to or accompanying requests for the extension of time
in which to file any such report, return document, declaration or
other information.

 

Section
4.17. Intellectual Property. Brekford and each
of its Subsidiaries owns or possess all necessary licenses or other
valid rights to use all material computer software and firmware,
patents, trademarks, trade names, brand names, copyrights, trade
secrets, applications for trademarks and for patents, domain names,
know-how and other proprietary rights and information used or held
for use in connection with the business of Brekford and each of its
Subsidiaries as currently conducted or as contemplated to be
conducted, and, to the knowledge of Brekford, except as described
on Schedule 4.17
hereto, as of the date hereof, there has been no assertion or claim
challenging the ownership or validity of any of the foregoing.
Except as disclosed on Schedule 4.17 hereto, the
conduct of the business of Brekford and each of its Subsidiaries as
currently conducted does not to the knowledge of Brekford, in any
material respect, conflict with or infringe any patent, license,
trademark, trade name, service mark, copyright, domain name or any
other intellectual property right of any third party. To the
knowledge of Brekford, except as described on Schedule 4.17 hereto, there are
no infringements of any proprietary rights owned by or licensed by
or to Brekford or any of its Subsidiaries.

 

20

 

Section
4.18. Insurance. Except as set forth on
Schedule 4.18
hereto, each of Brekford and each of its Subsidiaries is, and has
been continuously since January 1, 2016 (or such later date as each
such Subsidiary was organized or acquired by Brekford), insured
with financially responsible insurers in such amounts and against
such risks and losses as are customary for companies conducting the
business as conducted by Brekford and each of its Subsidiaries
during such time period. Except as set forth on such Schedule 4.18, since January 1,
2016 neither Brekford nor any of its Subsidiaries has received
notice of cancellation or termination with respect to any material
insurance policy of Brekford or any of its Subsidiaries. The
insurance policies of Brekford and each of its Subsidiaries are
valid and enforceable policies.

Section
4.19. Ownership of Securities. As of the date
hereof, neither of Brekford nor any of its Subsidiaries nor any of
their affiliates or associates (as such terms are defined under the
Exchange Act), (a)(i) beneficially owns, directly or indirectly, or
(ii) is party to any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of, in each
case, shares of capital stock of the Company, which in the
aggregate represent 10% or more of the outstanding shares of
Company Common Stock, or (b) is an “interested
stockholder” of the Company within the meaning of Section 203
of the Delaware Law. Except as set forth on Schedule 4.19 hereto, neither
Brekford nor any of its Subsidiaries owns any shares of Company
Common Stock.

Section
4.20. Certain Contracts.

(a) Brekford has
delivered or otherwise made available to the Company true, correct
and complete copies of all contracts and agreements (and all
amendments, modifications and supplements thereto and all side
letters to which Brekford is a party affecting the obligations of
any party thereunder) to which Brekford or any of its Subsidiaries
is a party or by which any of its properties or assets are bound
that are material to the business, properties or assets of Brekford
and each of its Subsidiaries taken as a whole, including, without
limitation, all: (i) employment, consulting, non-competition,
severance, golden parachute or indemnification contracts
(including, without limitation, any contract to which Brekford is a
party involving employees of Brekford); (ii) contracts granting a
right of first refusal or first negotiation; (iii) partnership or
joint venture agreements; (iv) agreements for the acquisition, sale
or lease of material properties or assets of Brekford (by merger,
purchase or sale of assets or stock or otherwise); (v) contracts or
agreements with any governmental entity; (vi) contracts or
arrangements limiting or restraining Novume, Brekford, any of
Brekford’s Subsidiaries or any successor thereto from
engaging or competing in any business; and (vii) all commitments
and agreements to enter into any of the foregoing (collectively,
together with any such contracts entered into in accordance with
Section 6.1 hereof,
the “Brekford
Contracts”).

 

21

 

(b) Except as set forth
on Schedule 4.20(b):

(i) There is no default
under any Brekford Contract either by Brekford or any of its
Subsidiaries or, to the knowledge of Brekford, by any other party
thereto, and no event has occurred that with the lapse of time or
the giving of notice or both would constitute a default thereunder
by Brekford or any of its Subsidiaries or, to the knowledge of
Brekford, any other party, in any such case in which such default
or event could reasonably be expected to have a Material Adverse
Effect on Brekford.

(ii) No
party to any such Brekford Contract has given notice to Brekford of
or made a claim against Brekford with respect to any breach or
default thereunder, in any such case in which such breach or
default could reasonably be expected to have a Material Adverse
Effect on Brekford.

(c) Set forth on
Schedule 4.20(c)
hereto is a list of each material contract, agreement or
arrangement to which Brekford or any of its Subsidiaries is a party
or may be bound and under the terms of which any of the rights or
obligations of a party thereto will be modified or altered
(including, without limitation, any acceleration of rights or
obligations thereunder pursuant to the terms of any such contract,
agreement or arrangement) as a result of the transactions
contemplated hereby.

Section
4.21. Investment Company. Brekford is not and
will be not an “investment company” within the meaning
of Code Section 368(a)(2)(F)(ii) immediately before the Effective
Time.

Section 4.22. Certain Plans. Immediately following the
Effective Time, Brekford, as the Surviving Corporation in the
Brekford Merger, will own substantially all of the assets of
Brekford immediately prior to the Brekford Merger.  There is
no plan or intention for Brekford Merger Sub, as the Surviving
Corporation of the Brekford Merger, to transfer any material assets
or businesses or to cease any existing business of the Brekford
after the Effective Time. There is no plan or intention for the
Novume stock issued in the Brekford Merger to be
redeemed.

ARTICLE
V

REPRESENTATIONS OF
THE COMPANY AND THE MERGER SUBSIDIARIES

The
Company and each Merger Subsidiary (as defined below) hereby
represent and warrant to Brekford as follows:

Section
5.1. Organization and Qualification;
Subsidiaries. Each of the Company and each of Novume,
Company Merger Sub and Brekford Merger Sub (collectively, the
“Merger
Subsidiaries” and each individually a
“Merger
Subsidiary”) is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or organization. Each of the Company and each of the
Merger Subsidiaries has the requisite corporate power and authority
and any necessary governmental authority, franchise, license or
permit to own, operate or lease the properties that it purports to
own, operate or lease and to carry on its business as it is now
being conducted, and is duly qualified as a foreign corporation to
do business, and is in good standing, in each jurisdiction where
the character of its properties owned, operated or leased or the
nature of its activities makes such qualification necessary, except
for such failure which, when taken together with all other such
failures, would not reasonably be expected to have a Material
Adverse Effect on the Company. The Company’s Subsidiaries are
listed on Schedule
5.1 hereto.

 

22

 

Section
5.2. Certificate of Incorporation, Certificate of
Designations and Bylaws. The Company has heretofore
furnished, or otherwise made available, to Brekford a complete and
correct copy of the Certificates of Incorporation and the Bylaws
(or comparable governing documents), each as amended to the date
hereof, of the Company and each of the Merger Subsidiaries, and a
complete and correct copy of the Certificates of Designations, each
as amended to the date hereof, for each class of the Company
Preferred Stock and Novume Preferred Stock. Such Certificates of
Incorporation, Bylaws (or comparable governing documents) and
Certificates of Designation are in full force and effect. Neither
the Company nor any of the Merger Subsidiaries is in violation of
any of the provisions of its respective Certificate of
Incorporation or its Bylaws (or comparable governing
documents).

Section
5.3. Capitalization.

(a) The authorized
capital stock of the Company consists of (i) 7,500,000 shares of
Preferred Stock, par value $0.0001 per share, 500,000 shares of
which have been designated Series A Cumulative Convertible
Redeemable Preferred Stock, 421,357 shares of which are issued and
outstanding and none of which are reserved for issuance, and (ii)
25,000,000 shares of Company Common Stock, of which, as of February
7, 2017, 5,488,094 shares were issued and outstanding, no shares
were held in the treasury of the Company, 280,882 shares were
issuable upon the conversion of Company Preferred Stock, 493,230
shares were issuable upon the exercise of warrants, 506,400 shares
were issuable upon the exercise of options outstanding under the
Company option plans listed on Schedule 5.3(a) hereto. Except as
set forth on Schedule
5.3 hereto, (i) from February 9, 2017 through the date
hereof, no shares of Company Common Stock have been issued, except
upon the exercise of options described in the immediately preceding
sentence, and (ii) as of the date hereof, there are no outstanding
“Company Equity
Rights”. For purposes of this Agreement, Company
Equity Rights shall mean subscriptions, options, warrants, calls,
commitments, agreements, conversion rights or other rights of any
character (contingent or otherwise) to purchase or otherwise
acquire from the Company or any of the Company’s Subsidiaries
at any time, or upon the happening of any stated event, any shares
of the capital stock of the Company). Schedule 5.3 hereto sets forth
a complete and accurate list with respect to all outstanding
Company Equity Rights as of February 9, 2017 of the holder thereof,
the date of grant, the number of shares for which each such Company
Equity Right is exercisable, the respective dates upon which each
such Company Equity Right vests, becomes exercisable and expires,
and the exercise price of each such Company Equity
Right.

(b) Except as set forth
on Schedule 5.3(b),
there are no outstanding obligations of the Company or any of the
Company’s Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock of the Company.

 

23

 

(c) All of the issued
and outstanding shares of Company Common Stock and Company
Preferred Stock are validly issued, fully paid and
nonassessable.

(d) The authorized
capital stock of Novume consists of 30,000,000 shares of Novume
Common Stock, par value $0.0001 per share, of which 1,000 shares
are validly issued and outstanding, and 20,000,000 shares of Novume
Preferred Stock, none of which are issued and outstanding. All of
the issued and outstanding capital stock of Novume is, and at the
Effective Time will be, owned by the Company free and clear of any
liens, security interests, pledges, agreements, claims, charges or
encumbrances, and there are (i) no other shares of capital stock or
other voting securities of Novume, (ii) no securities of Novume
convertible into or exchangeable for shares of capital stock or
other voting securities of Novume and (iii) no options or other
rights to acquire from Novume, and no obligations of Novume to
issue, any capital stock, other voting securities or securities
convertible into or exchangeable for capital stock or other voting
securities of Novume. All of the issued and outstanding capital
stock of each of Company Merger Sub and Brekford Merger Sub is duly
authorized, validly issued, fully paid and nonassessable, and is
owned by Novume free and clear of any liens, security interests,
pledges, agreements, claims, charges or encumbrances.

(e) Except as disclosed
on Schedule 5.3
hereto, there are no stockholder agreements, voting trusts or other
agreements or understandings to which the Company is a party or to
which it is bound relating to the voting or registration of any
shares of capital stock of the Company. The Company has not taken
any action that would result in, nor is the Company a party to any
agreement, arrangement or understanding not disclosed on
Schedule 5.3
hereto, that would result in any Options to purchase Company Common
Stock that are unvested becoming vested in connection with or as a
result of the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.

Section
5.4. Authority Relative to this Agreement.
Each of the Company and each Merger Subsidiary has the necessary
corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of
this Agreement by the Company and each Merger Subsidiary and the
consummation by each such Party of the transactions contemplated
hereby have been duly authorized by all necessary corporate action
on the part of each such Party. This Agreement has been duly
executed and delivered by each of the Company and each Merger
Subsidiary and, assuming the due authorization, execution and
delivery thereof by the other Parties, constitutes a legal, valid
and binding obligation of each such Party, enforceable against it
in accordance with its terms, subject to the Bankruptcy
Exception.

Section
5.5. No Conflict; Required Filings and
Consents.

(a) Except as listed on
Schedule 5.5
hereto, the execution and delivery of this Agreement by each of the
Company and each Merger Subsidiary does not, and the performance of
this Agreement by each of the Company and each Merger Subsidiary
will not, (i) violate or conflict with the Certificate of
Incorporation or Bylaws of the Company, (ii) conflict with or
violate any law, regulation, court order, judgment or decree
applicable to the Company or any of its Subsidiaries or by which
any of their respective property is bound or affected, (iii)
violate or conflict with the Articles or Certificate of
Incorporation or Bylaws (or comparable governing documents) of any
of the Company’s Subsidiaries, or (iv) result in any breach
of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others
any rights of termination or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or
assets of the Company or any of its Subsidiaries pursuant to,
result in the loss of any material benefit under, or require the
consent of any other party to, any contract, instrument, permit,
license or franchise to which the Company or any of its
Subsidiaries is a party or by which the Company, any of such
Subsidiaries or any of their respective property is bound or
affected except, in the case of clauses (ii), (iii) or (iv) above,
for conflicts, violations, breaches, defaults, results or consents
which, individually or in the aggregate, would not have a Material
Adverse Effect on the Company.

 

24

 

(b) Except as listed on
Schedule 5.5 and
except for applicable requirements, if any, of the Exchange Act,
filing and recordation of appropriate merger or other documents as
required by Delaware Law and any filings required pursuant to any
state securities or “blue sky” laws or the rules of any
applicable stock exchanges, neither the Company nor any of its
Subsidiaries is required to submit any notice, report or other
filing with any governmental authority, domestic or foreign, in
connection with the execution, delivery or performance of this
Agreement. Except as set forth in the immediately preceding
sentence, no waiver, consent, approval or authorization of any
governmental or regulatory authority, domestic or foreign, is
required to be obtained by the Company or any of its Subsidiaries
in connection with its execution, delivery or performance of this
Agreement.

Section
5.6. SEC Filings; Financial
Statements.

(a) The Company has
filed all forms, reports and documents required to be filed with
the SEC since March 15, 2016, and has heretofore delivered or made
available to Brekford, in the form filed with the SEC, together
with any amendments thereto (collectively, the “Company SEC Reports”).
The Company SEC Reports (i) were prepared substantially in
accordance with the requirements of the 1933 Act or the Exchange
Act, as the case may be, and the rules and regulations promulgated
under each of such respective acts, and (ii) did not at the time
they were filed contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not
misleading.

(b) The financial
statements, including all related notes and schedules, contained in
the Company SEC Reports (or incorporated by reference therein)
fairly present the consolidated financial position of the Company
and its Subsidiaries as at the respective dates thereof and the
consolidated results of operations and cash flows of the Company
and its Subsidiaries for the periods indicated in accordance with
GAAP applied on a consistent basis throughout the periods involved
(except for changes in accounting principles disclosed in the notes
thereto) and subject in the case of interim financial statements to
normal year-end adjustments.

(c) The Company has
heretofore made available to Brekford a complete and correct copy
of any material amendments or modifications, which have not yet
been filed with the SEC, to agreements, documents or other
instruments which previously had been filed by the Company with the
SEC pursuant to the Exchange Act.

 

25

 

Section
5.7. No Undisclosed Liabilities; Absence of Certain
Changes or Events. Except as and to the extent publicly
disclosed by the Company in the Company SEC Reports filed prior to the date of
this Agreement, as of March 15, 2016, none of the Company or its Subsidiaries
had any material liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, and whether due or to become due or asserted or
unasserted, which would be required by GAAP to be reflected in, reserved against or
otherwise described in the consolidated balance sheet of the Company
(including the notes thereto) as of such date or which could reasonably be expected to
have a Material Adverse Effect on the Company. Except as disclosed on Schedule 5.7 hereto, since
March 15, 2016, there has not been any change, or any event involving
a prospective change, in the business, financial condition or results of
operations of the Company or any of its Subsidiaries which has had, or is reasonably
likely to have, a Material Adverse Effect on the Company and the Company and
each of its Subsidiaries has conducted its and their business in
the ordinary course consistent with past practices.

Section
5.8. No Violation of Law; Permits. The
business of the Company and each of its Subsidiaries is not being
conducted in violation of any Legal Requirements, or in violation
of any Permits, except for possible violations none of which,
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect on the Company. The Company and each
of its Subsidiaries have all Permits that are required in
connection with the operation of their businesses (collectively,
“Company Required
Permits”), and no proceedings are pending or, to the
knowledge of the Company, threatened to revoke or limit any Company
Required Permit, except, in each case, those the absence or
violation of which do not and will not have a Material Adverse
Effect on the Company. Except as set forth on Schedule 5.8 hereto, (a) to the
Company’s knowledge, no investigation or review by any
domestic or foreign governmental or regulatory entity (including
any stock exchange or other self-regulatory body) with respect to
the Company or its Subsidiaries in relation to any alleged
violation of law or regulation is pending or threatened, and (b) no
governmental or regulatory entity (including any stock exchange or
other self-regulatory body) has notified the Company of its
intention to conduct the same, except for such investigations
which, if they resulted in adverse findings, would not reasonably
be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company. Except as set forth on Schedule 5.8 hereto, neither
the Company nor any of its Subsidiaries is subject to any cease and
desist or other order, judgment, injunction or decree issued by, or
is a party to any written agreement, consent agreement or
memorandum of understanding with, or is a party to any commitment
letter or similar undertaking to, or is subject to any order or
directive by, or has adopted any board resolutions at the request
of, any court, governmental entity or regulatory agency that
materially restricts the conduct of its business or which could
reasonably be expected to have a Material Adverse Effect on the
Company, or would prevent or delay the consummation of the
transactions contemplated by this Agreement, nor has the Company or
any of its Subsidiaries been advised that any court, governmental
entity or regulatory agency is considering issuing or requesting
any of the foregoing.

Section
5.9. Registration Statement . None of the
information supplied or to be supplied by or on behalf of the
Company for inclusion or incorporation by reference in the
Registration Statement will, at the time the Registration Statement
becomes effective under the 1933 Act, contain any untrue statement
of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading. If at any time prior to the Effective Time any event
with respect to the Company, its officers and directors or any of
its Subsidiaries should occur which is required to be described in
an amendment of, or a supplement to, the Registration Statement,
the Company shall promptly so advise Brekford and such event shall
be so described, and such amendment or supplement (which the
Company shall have a reasonable opportunity to review) shall be
promptly filed with the SEC and, as required by law, disseminated
to the shareholders of Brekford. The Registration Statement (except
for information relating to or provided by Brekford) will each
comply as to form in all material respects with the provisions of
the 1933 Act and the Exchange Act, as applicable, and the rules and
regulations promulgated thereunder, as applicable.

 

26

 

Section
5.10. Board Action; Vote
Required.

(a) The Board of
Directors of the Company has unanimously determined that the
transactions contemplated by this Agreement are in the best
interests of the Company and its stockholders and has resolved to
recommend to such stockholders that they vote in favor
thereof.

(b) The approval of the
Merger of Company into the Company Merger Sub by a majority of the
votes entitled to be cast by all holders of Company Common Stock
(the “Company
Stockholders’ Approval”) is the only vote of the
holders of any class or series of the capital stock of the Company
required to approve this Agreement, the Mergers and the other
transactions contemplated hereby, in accordance with the provisions
of Delaware Law, any applicable United States federal and state
securities laws and the Certificate of Incorporation and Bylaws of
the Company, each as amended and as currently in
effect.

(c) The Company Key
Stockholders, together, hold the requisite voting power to obtain
the Company Stockholders’ Approval.

Section
5.11. [Reserved]

Section
5.12. Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder’s, investment
banking or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company or any of its
Subsidiaries.

Section
5.13. Ownership of Securities. As of the date
hereof, neither the Company nor, to the Company’s knowledge,
any of its affiliates or associates (as such terms are defined
under the Exchange Act), (a) (i) beneficially owns, directly or
indirectly, or (ii) is party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of, in each case, shares of capital stock of Brekford,
which in the aggregate represent 10% or more of the outstanding
shares of Brekford Common Stock. The Company owns no shares of
Brekford Common Stock.

Section
5.14. Activities of Merger Subsidiaries. None
of the Merger Subsidiaries have conducted any activities other than
in connection with the organization thereof, the negotiation and
execution of this Agreement and the consummation of the
transactions contemplated hereby.

 

27

 

Section
5.15. Litigation. Except as disclosed in
Schedule 5.16
hereto, there are no claims, actions, suits, proceedings or, to the
Company’s knowledge, investigations pending or, to the
Company’s knowledge, threatened against the Company or any of
its Subsidiaries, or any properties or rights of the Company or any
of its Subsidiaries, before any court, administrative,
governmental, arbitral, mediation or regulatory authority or body,
domestic or foreign, (a) as of the date hereof, as to which there
is more than a remote possibility of an adverse judgment or
determination against the Company or any of its Subsidiaries or any
properties or rights of the Company or any of its Subsidiaries in
excess of $100,000 or which otherwise could have a Material Adverse
Effect on the Company, (b) as of the date hereof, which questions
the validity of this Agreement or any action to be taken by the
Company in connection with the consummation of the transactions
contemplated by this Agreement or could otherwise prevent or delay
the consummation of the transactions contemplated by this
Agreement, or (c) as to which there is reasonably likely to be an
adverse judgment or determination against the Company or any of its
Subsidiaries which could reasonably be expected to have a Material
Adverse Effect on the Company.

Section
5.16. Employee Matters; ERISA.

(a) Set forth on
Schedule 5.16
hereto is a true and complete list of all employee benefit plans
within the meaning of Section 3(3) of ERISA, all deferred
compensation, bonus or other incentive compensation, stock options,
restricted stock, stock purchase or other equity-based, severance
or change in control, salary, continuation, tuition assistance,
disability, leave of absence plans, policies or agreements, and all
employment, consulting, management or other individual compensation
agreements with respect to any current or former employee of the
Company or any of its Company ERISA Affiliates, which, in each
case, the Company or any of its Company ERISA Affiliates has any
obligation or liability, contingent or otherwise (collectively, the
“Company Benefit
Plans”).

(b) All contributions
and other payments required to be made by the Company or any
Company ERISA Affiliate to or under any Company Benefit Plan
maintained (or to any person pursuant to the terms thereof) have
been timely made. No Company Benefit Plan is subject to Section 412
of the Code or Section 302 of ERISA.

(c) Each of the Company
Benefit Plans intended to be “qualified” within the
meaning of Section 401(a) of the Code has been determined by the
IRS to be so qualified, and, to the knowledge of the Company or any
Company ERISA Affiliate, no circumstances exist that could
reasonably be expected by the Company or any Company ERISA
Affiliate to result in the revocation of any such determination.
The Company is in compliance with, and each of the Company Benefit
Plans is and has been operated in compliance with, all applicable
Legal Requirements governing such plan, including, without
limitation, ERISA and the Code.

(d) Except as set forth
on Schedule 5.16
hereto, the consummation or announcement of any transaction
contemplated by this Agreement will not (either alone or upon the
occurrence of any additional or further acts or events) result in
any (i) payment (whether of severance pay or otherwise) becoming
due from the Company or any Company ERISA Affiliate to any current
or former officer, employee, former employee or director thereof,
or to any other person for the benefit of any such officer,
employee or director, or (ii) acceleration, vesting or
establishment of any benefit under any Company Benefit Plan, or
(iii) disqualification of any of the Company Benefit Plans intended
to be qualified under, result in a prohibited transaction or breach
of fiduciary duty under, or otherwise violate, ERISA or the
Code.

 

28

 

(e) Neither the Company
nor any Company ERISA Affiliate has incurred, and none of such
entities reasonably expects to incur, any material liability to the
PBGC (other than premiums which are not overdue) or pursuant to
Title IV of ERISA with respect to any Company Benefit Plan. Neither
the Company nor any Company ERISA Affiliate is an employer with
respect to, and neither has incurred or reasonably expects to
incur, any withdrawal liability with respect to any
“multiemployer plan” (as defined in Section 3(37) of
ERISA).

(f) There are no
pending or, to the Company’s knowledge, threatened actions,
claims or proceedings against any Company Benefit Plan or its
assets, plan sponsor, plan administrator or fiduciaries with
respect to the operation of such plan (other than routine benefit
claims).

(g) Each Company
Benefit Plan that constitutes in any part a nonqualified deferred
compensation plan within the meaning of Section 409A of the Code
has been operated and maintained in operational and documentary
compliance with Section 409A of the Code and applicable guidance
thereunder. No payment to be made under any Company Benefit Plan
is, or to the knowledge of the Company, will be, subject to the
penalties of Section 409A(a)(1) of the Code.

Section
5.17. Tax Matters. Except as set forth on
Schedule 5.17
hereto:

(a) The Company and
each of its Subsidiaries, and each affiliated group (within the
meaning of Section 1504 of the Code) of which the Company or any
Subsidiary is or has been a member, has timely filed all federal
state, local, foreign, income and franchise Tax Returns (as defined
below), and all other material Tax Returns required to be filed by
them. All such Tax Returns are true and correct in all material
respects. Except to the extent adequately reserved for in
accordance with GAAP, all material Taxes due and payable by the
Company and each of its Subsidiaries have been timely paid in full.
The most recent consolidated financial statements contained in the
Company SEC Reports reflect an adequate reserve (other than any
reserve for deferred Taxes established to reflect timing
differences between book and Tax income) in accordance with GAAP
for all Taxes payable by the Company and its Subsidiaries for all
taxable periods and portions thereof through the date of such
financial statements.

(b) No material
deficiencies for any Taxes have been proposed, asserted or assessed
in writing against the Company or any of its Subsidiaries that have
not been fully paid or adequately provided for in the appropriate
financial statements of the Company and each of its Subsidiaries,
no requests for waivers of the time to assess any Taxes are
pending, and no power of attorney with respect to any Taxes has
been executed or filed with any taxing authority. No material
issues relating to Taxes have been raised in writing by any
governmental authority during any presently pending audit or
examination. For any open taxable period, the Company and each of
its Subsidiaries have not waived or extended the statute of
limitations applicable to any Tax or Tax Return or consented to any
extension of time with respect to any material tax assessment or
deficiency.

 

29

 

(c) There are no
material liens or encumbrances for Taxes on any of the assets of
the Company or any of its Subsidiaries (other than for current
Taxes not yet due and payable).

(d) The Company and
each of its Subsidiaries have complied in all material respects
with all applicable laws, rules and regulations relating to the
payment and withholding of Taxes.

(e) Neither the Company
nor any of its Subsidiaries has made any payments, nor are any of
them obligated to make any payments, and none of them is a party to
any agreement that could obligate it to make any payments that
would not be deductible by reason of Sections 280G or 162(m) of the
Code as a result of the transactions contemplated by this
Agreement.

(f) Neither the Company
nor any of its Subsidiaries is a party to any tax allocation
agreement, tax sharing agreement, tax indemnity agreement or
similar agreement, arrangement or practice with respect to Taxes
(including any advance pricing agreement, closing agreement or
other agreement relating to Taxes with any taxing authority but
excluding in each case any contract entered into in the ordinary
course of business and the primary subject of which is not Taxes).
Neither the Company nor any of its Subsidiaries (i) has been a
member of an affiliated group for federal income tax purposes other
than a group of which the Company is the common parent or (ii) has
any liability for the Taxes of any person other than itself under
Treasury Regulations Section 1.1502-6 (or any similar provision of
U.S. state or local or non-U.S. Tax Law), or as a transferee or
successor.

(g) No federal, state,
local or foreign audits or other administrative proceedings or
court proceedings are presently pending with regard to any Taxes or
Tax Returns of the Company or its Subsidiaries and neither the
Company nor any of its Subsidiaries has received a written notice
of any pending audit or proceeding, in any such case involving a
material issue with respect to Taxes.

(h) Neither the Company
nor any of its Subsidiaries has agreed to or is required to make
any material adjustment under Section 481(a) of the Code as a
result of a “closing agreement” as described in Section
7121 of the Code (or any similar or corresponding provision of U.S.
state or local or non-U.S. Tax Law) that, in either case, would
result in the inclusion of a material amount of income in, or the
exclusion of a material amount of deductions from, taxable income
for any taxable period (or portion thereof) ending after the
Closing Date.

(i) No property owned
by the Company or any of its Subsidiaries (i) constitutes
“tax exempt use property” within the meaning of Section
168(h)(1) of the Code; or (ii) is tax exempt bond financed property
within the meaning of Section 168(g) of the Code.

(j) Neither the Company
nor any of its Subsidiaries has (i) in the two (2) years prior to
the date of this Agreement, distributed stock of another person, or
has had its stock distributed by another person, in a transaction
that was purported or intended to be governed in whole or in part
by Sections 355 or 361 of the Code or (ii) engaged in any
“reportable transaction” within the meaning of Treasury
Regulation Section 1.6011-4(b) (or any similar provision of U.S.
state or local or non-U.S. Tax Law).

 

30

 

Section
5.18. Intellectual Property. The Company and
each of its Subsidiaries owns or possesses all necessary licenses
or other valid rights to use all material computer software and
firmware, patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, brand names, copyrights, service
marks, trade secrets, applications for trademarks and for service
marks, know-how and other proprietary rights and information used
or held for use in connection with the business of the Company and
each of its Subsidiaries as currently conducted or as contemplated
to be conducted, and, to the knowledge of the Company, except as
described on Schedule
5.18 hereto, as of the date hereof, there has been no
assertion or claim challenging the ownership or validity of any of
the foregoing. To the knowledge of the Company, except as disclosed
on Schedule 5.18
hereto, the conduct of the business of the Company and each of its
Subsidiaries as currently conducted does not, in any material
respect, conflict with or infringe any patent, patent right,
license, trademark, trademark right, trade name, trade name right,
service mark, copyright or any other intellectual property right of
any third party. To the knowledge of the Company, except as
described on Schedule
5.18 hereto, there are no infringements of any proprietary
rights owned by or licensed by or to the Company or any of its
Subsidiaries.

Section
5.19. Certain Contracts.

(a) Except for such
contracts as are filed publicly in the Company SEC Reports, the
Company has delivered or otherwise made available to Brekford true,
correct and complete copies of all contracts and agreements (and
all amendments, modifications and supplements thereto and all side
letters to which the Company is a party affecting the obligations
of any party thereunder) to which the Company or any of its
Subsidiaries is a party or by which any of its properties or assets
are bound that are material to the business, properties or assets
of the Company and its Subsidiaries taken as a whole, including,
without limitation, all: (i) employment, consulting,
non-competition, severance, golden parachute or indemnification
contracts (including, without limitation, any contract to which the
Company is a party involving employees of the Company); (ii)
contracts granting a right of first refusal or first negotiation;
(iii) partnership or joint venture agreements; (iv) agreements for
the acquisition, sale or lease of material properties or assets of
the Company (by merger, purchase or sale of assets or stock or
otherwise); (v) contracts or agreements with any governmental
entity; (vi) contracts or arrangements limiting or restraining
Novume, the Company, any of the Company’s Subsidiaries or any
successor thereto from engaging or competing in any business; and
(vii) all commitments and agreements to enter into any of the
foregoing (collectively, together with any such contracts entered
into in accordance with Section 6.2 hereof, the
“Company
Contracts”).

(b) Except as set forth
on Schedule
5.19(b):

(i) There is no default
under any Company Contract either by the Company or any of its
Subsidiaries or, to the knowledge of the Company, by any other
party thereto, and no event has occurred that with the lapse of
time or the giving of notice or both would constitute a default
thereunder by the Company or any of its Subsidiaries or, to the
knowledge of the Company, any other party, in any such case in
which such default or event could reasonably be expected to have a
Material Adverse Effect on the Company.

(ii) No
party to any such Company Contract has given notice to the Company
of or made a claim against the Company with respect to any breach
or default thereunder, in any such case in which such breach or
default could reasonably be expected to have a Material Adverse
Effect on the Company.

 

31

 

(c) Set forth on
Schedule 5.19(c)
hereto is a list of each material contract, agreement or
arrangement to which the Company or any of its Subsidiaries is a
party or may be bound and under the terms of which any of the
rights or obligations of a party thereto will be modified or
altered (including, without limitation, any acceleration of rights
or obligations thereunder pursuant to the terms of any such
contract, agreement or arrangement) as a result of the transactions
contemplated hereby.

Section
5.20. Investment Company. None of Novume, the
Merger Subsidiaries or the Company, is or will be an
“investment company” within the meaning of Code Section
368(a)(2)(F)(ii) immediately before the Effective
Time.

Section
5.21. Certain Plans. Immediately following the
Effective Time, Company Merger Sub, as the Surviving Corporation in
the Company Merger, will own substantially all of the assets of the
Company immediately prior to the Company Merger.  There is no
plan or intention for Company Merger Sub, as the Surviving
Corporation of the Company Merger, to transfer any material assets
or businesses or to cease any existing business of the Company
after the Effective Time. There is no plan or intention for the
Novume stock issued in the Company Merger to be
redeemed.

ARTICLE
VI

CONDUCT OF BUSINESS
PENDING THE MERGERS

Section
6.1. Conduct of Business of Brekford.
Brekford covenants and agrees that, between the date of this
Agreement and the Effective Time, unless the Company shall
otherwise consent in writing, and except as described on
Schedule 6.1 hereto
or as otherwise expressly contemplated hereby, the business of
Brekford and each of its Subsidiaries shall be conducted only in,
and such entities shall not take any action except in, the ordinary
course of business and in a manner consistent with past practice;
and Brekford and each of its Subsidiaries will use their
commercially reasonable efforts to preserve substantially intact
their business organizations, to keep available the services of
those of their present officers, employees and consultants who are
integral to the operation of their businesses as presently
conducted and to preserve their present relationships with
significant customers, significant suppliers and with other persons
with whom they have significant business relations. By way of
amplification and not limitation, except as set forth on
Schedule 6.1 hereto
or as otherwise expressly contemplated by this Agreement, Brekford
agrees on behalf of itself and each of its Subsidiaries that they
will not, between the date of this Agreement and the Effective
Time, directly or indirectly, do any of the following without the
prior written consent of the Company:

(a) (i) except for (A)
the issuance of Brekford Common Stock in order to satisfy
obligations under employee benefit plans disclosed in Schedule 4.11; (B) grants of
Brekford Options as set forth in Schedule 6.1; (C) the issuance
of securities by any of Brekford’s Subsidiaries to any person
which is directly or indirectly wholly-owned by Brekford; and (D)
the issuance of Brekford Common Stock to satisfy the exercise of
outstanding Brekford Warrants or outstanding Brekford Options,
issue, sell, pledge, dispose of, encumber, authorize, or propose
the issuance, sale, pledge, disposition, encumbrance or
authorization of any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any
kind to acquire any shares of capital stock of, or any other
ownership interest in, Brekford or any of its Subsidiaries; (ii)
amend or propose to amend the Certificate of Incorporation or
Bylaws of Brekford or any of its Subsidiaries or adopt any
shareholder rights plan or related rights agreement; (iii) split,
combine or reclassify any outstanding shares of Brekford Common
Stock, or declare, set aside or pay any dividend or distribution
payable in cash, stock, property or otherwise with respect to such
shares; (iv) redeem, purchase or otherwise acquire or offer to
redeem, purchase or otherwise acquire any shares of its capital
stock; or (v) authorize or propose or enter into any contract,
agreement, commitment or arrangement with respect to any of the
matters prohibited by this Section 6.1(a);

 

32

 

(b) (i) acquire (by
merger, consolidation, or acquisition of stock or assets) any
corporation, partnership or other business organization or division
thereof or make any investment in another entity other than an
entity which is a wholly-owned subsidiary of Brekford as of the
date hereof, except for investments which do not exceed $50,000 for
any single investment or series of related investments, or $100,000
in the aggregate for all such investments in any twelve (12)-month
period; (ii) except in the ordinary course of business and in a
manner consistent with past practice, sell, pledge, dispose of, or
encumber or authorize or propose the sale, pledge, disposition or
encumbrance of any assets of Brekford or any of its Subsidiaries;
(iii) authorize or make capital expenditures which are in excess of
the amounts shown in Schedule 6.1 hereto; (iv) enter
into any agreement, contract or commitment which involves payments
by Brekford or any of its Subsidiaries in an amount in excess of
$50,000 individually or as part of a series of related
transactions, except for agreements, contracts and commitments of a
type referred to in another clause of this subsection (b) and not
prohibited thereby because of the amount of such contract; or (v)
authorize, enter into or amend any contract, agreement, commitment
or arrangement with respect to any of the matters prohibited by
this Section
6.1(b);

(c) (i) incur any
indebtedness for borrowed money or assume, guarantee, endorse or
otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person
or issue or sell any debt securities or warrants or rights to
acquire any debt securities of Brekford or any of its Subsidiaries
or guarantee any debt securities of others (other than Brekford or
any of its wholly-owned Subsidiaries) or enter into or amend any
contract, agreement, commitment or arrangement with respect to any
of the foregoing, other than (A) in replacement for existing or
maturing debt, (B) borrowings by Brekford under its lines of credit
existing on the date hereof up to the maximum amount permitted
thereunder (as such maximum amount may be reduced from time to time
in accordance with the terms thereof) or (C) capital leases or
other vendor financing for capital assets the acquisition of which
is otherwise permitted under this Agreement; (ii) make any loans,
advances or capital contributions to, or investments in, any other
person (other than to the wholly-owned subsidiaries of Brekford or
customary loans or advances to employees in the ordinary course of
business consistent with past practice and in amounts not material
to the maker of such loan or advance); or (iii) mortgage or pledge
any of its material assets, tangible or intangible, or create or
suffer to exist any material lien thereupon;

(d) enter into (i)
leveraged derivative contracts (defined as contracts that use a
factor to multiply the underlying index exposure), or (ii) other
derivative contracts except for the purpose of hedging known
interest rate and foreign exchange exposures or otherwise reducing
such Party’s cost of financing;

 

33

 

(e) adopt a plan of
complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other
reorganization of Brekford or any of its Subsidiaries (other than
the Brekford Merger);

(f) alter through
merger, liquidation, reorganization, restructuring or in any other
fashion the corporate structure or ownership of any of
Brekford’s Subsidiaries;

(g) except as may be
required by law or as contemplated by this Agreement, enter into,
adopt or amend or terminate any Brekford Benefit Plan, or (except
for normal increases in the ordinary course of business consistent
with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense to Brekford,
and as required under existing agreements or in the ordinary course
of business generally consistent with past practice) increase in
any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any Brekford
Benefit Plan] as in effect as of the date hereof;

(h) make any payments
(except in the ordinary course of business and in amounts and in a
manner consistent with past practice or as otherwise required by
Legal Requirements or the provisions of any Brekford Benefit Plan)
under any Brekford Benefit Plan to any director or employee of, or
independent contractor or consultant to, Brekford or its
Subsidiaries;

(i) change in any
material respect its tax or accounting policies, methods or
procedures except as required by GAAP;

(j) do any act or omit
to do any act which would cause a material breach of any material
contract, commitment or obligation;

(k) take any action
which could reasonably be expected to adversely affect or delay the
ability of any of the Parties to obtain any approval of any
governmental or regulatory body required to consummate the
transactions contemplated hereby;

(l) other than pursuant
to this Agreement, take any action to cause the Brekford Common
Stock to cease to be quoted on the OTCQX;

(m) (i) issue SARs, new
performance shares, restricted stock, or similar equity based
rights; (ii) materially modify (with materiality to be determined
with respect to the Brekford Benefit Plan in question) any
actuarial cost method, assumption or practice used in determining
benefit obligations, annual expense and funding for any Brekford
Benefit Plan, except to the extent required by GAAP; (iii)
materially modify (with materiality to be determined with respect
to the Brekford Benefit Plan trust in question) the investment
philosophy of the Brekford Benefit Plan trusts or maintain an asset
allocation which is not consistent with such philosophy, subject to
any ERISA fiduciary obligation; (iv) subject to any ERISA fiduciary
obligation, enter into any outsourcing agreement, or any other
material contract relating to the Brekford Benefit Plans or
management of the Brekford Benefit Plan trusts; (v) offer any new
or extend any existing retirement incentive, “window”
or similar benefit program; (vi) grant any ad hoc pension increase;
(vii) establish any new or fund any existing “rabbi” or
similar trust (except in accordance with the current terms of such
trust), or enter into any other arrangement for the purpose of
securing non-qualified benefits or deferred compensation; (viii)
adopt or implement any corporate owned life insurance; or (ix)
adopt, implement or maintain any “split dollar” life
insurance program;

 

34

 

(n) take any action
which would cause its representations and warranties contained
herein to become inaccurate in any material respect;

(o) revalue in any
material respect any of its assets, including, without limitation,
writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary course of business
or as required by GAAP;

(p) make or revoke any
tax election or settle or compromise any tax liability material to
Brekford and/or any of its Subsidiaries taken as a whole or change
(or make a request to any taxing authority to change) any material
aspect of its method of accounting for tax purposes, other than as
required by applicable Legal Requirements;

(q) pay, discharge or
satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of
business of liabilities reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the
notes thereto) of Brekford and its Subsidiaries or incurred in the
ordinary course of business consistent with past
practice;

(r) settle or
compromise any pending or threatened suit, action or claim relating
to the transactions contemplated hereby; or

(s) make any
significant distribution or redemption of its
securities.

Section
6.2. Conduct of Business of the Company. The
Company covenants and agrees that, between the date of this
Agreement and the Effective Time, unless Brekford shall otherwise
consent in writing, and except as described on Schedule 6.2 hereto or as
otherwise expressly contemplated hereby, the Company and each of
its Subsidiaries will use their commercially reasonable efforts to
preserve substantially intact their business organizations, to keep
available the services of those of their present officers,
employees and consultants who are integral to the operation of
their businesses as presently conducted and to preserve their
present relationships with significant clients and with other
persons with whom they have significant business relations. By way
of amplification and not limitation, except as set forth on
Schedule 6.2 hereto
or as otherwise expressly contemplated by this Agreement, the
Company agrees on behalf of itself and each of its Subsidiaries
that they will not, between the date of this Agreement and the
Effective Time, directly or indirectly, do any of the following
without the prior written consent of Brekford:

 

35

 

(a) (i) except for (A)
the issuance of Company Common Stock in order to satisfy
obligations under employee benefit plans disclosed in Schedule 5.16; (B) grants of
Company Options as set forth in Schedule 6.2; (C) the issuance
of securities by any of the Company’s Subsidiaries to any
person which is directly or indirectly wholly-owned by the Company;
and (D) the issuance of Company Common Stock to satisfy the
exercise of outstanding Company Warrants or outstanding Company
Options, issue, sell, pledge, dispose of, encumber, authorize, or
propose the issuance, sale, pledge, disposition, encumbrance or
authorization of any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any
kind to acquire any shares of capital stock of, or any other
ownership interest in, the Company or any of its Subsidiaries; (ii)
amend or propose to amend the Certificate of Incorporation or
Bylaws of the Company or any of its Subsidiaries or adopt any
shareholder rights plan or related rights agreement; (iii) split,
combine or reclassify any outstanding shares of Company Common
Stock, or declare, set aside or pay any dividend or distribution
payable in cash, stock, property or otherwise with respect to such
shares; (iv) redeem, purchase or otherwise acquire or offer to
redeem, purchase or otherwise acquire any shares of its capital
stock; or (v) authorize or propose or enter into any contract,
agreement, commitment or arrangement with respect to any of the
matters prohibited by this Section 6.2(a);

(b) (i) other than as
set forth on Schedule
2(b)(i)(B) hereto, acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or
other business organization or division thereof or make any
investment in another entity other than an entity which is a
wholly-owned Subsidiary of the Company as of the date hereof,
except for investments which do not exceed $50,000 for any single
investment or series of related investments, or $100,000 in the
aggregate for all such investments in any twelve (12)-month period;
(ii) except in the ordinary course of business and in a manner
consistent with past practice, sell, pledge, dispose of, or
encumber or authorize or propose the sale, pledge, disposition or
encumbrance of any assets of the Company or any of its
Subsidiaries; (iii) authorize or make capital expenditures which
are in excess of the amounts shown in Schedule 6.2 hereto; (iv) enter
into any agreement, contract or commitment which involves payments
by the Company or any of its Subsidiaries in an amount in excess of
$50,000 individually or as part of a series of related
transactions, except for agreements, contracts and commitments of a
type referred to in another clause of this subsection (b) and not
prohibited thereby because of the amount of such contract; or (v)
authorize, enter into or amend any contract, agreement, commitment
or arrangement with respect to any of the matters prohibited by
this Section 6.2(b); or

(c) (i) incur any
indebtedness for borrowed money or assume, guarantee, endorse or
otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person
or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any of its
Subsidiaries or guarantee any debt securities of others (other than
the Company or any of its wholly-owned Subsidiaries) or enter into
or amend any contract, agreement, commitment or arrangement with
respect to any of the foregoing, other than (A) in replacement for
existing or maturing debt, (B) borrowings by the Company under its
lines of credit existing on the date hereof up to the maximum
amount permitted thereunder (as such maximum amount may be reduced
from time to time in accordance with the terms thereof) or (C)
capital leases or other vendor financing for capital assets the
acquisition of which is otherwise permitted under this Agreement;
(ii) make any loans, advances or capital contributions to, or
investments in, any other person (other than to the wholly-owned
subsidiaries of the Company or customary loans or advances to
employees in the ordinary course of business consistent with past
practice and in amounts not material to the maker of such loan or
advance); or (iii) mortgage or pledge any of its material assets,
tangible or intangible, or create or suffer to exist any material
lien thereupon;

 

36

 

(d) enter into (i)
leveraged derivative contracts (defined as contracts that use a
factor to multiply the underlying index exposure), or (ii) other
derivative contracts except for the purpose of hedging known
interest rate and foreign exchange exposures or otherwise reducing
such Party’s cost of financing;

(e) adopt a plan of
complete or partial liquidation, dissolution, restructuring,
recapitalization or other reorganization of the Company or any of
its Subsidiaries (other than the Company Merger);

(f) alter through
merger, liquidation, reorganization, restructuring or in any other
fashion the corporate structure or ownership of any of the
Company’s Subsidiaries;

(g) except as may be
required by law or as contemplated by this Agreement, enter into,
adopt or amend or terminate any Company Benefit Plan, or (except
for normal increases in the ordinary course of business consistent
with past practice that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the
Company, and as required under existing agreements or in the
ordinary course of business generally consistent with past
practice) increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any benefit
not required by any Company Benefit Plan as in effect as of the
date hereof;

(h) make any payments
(except in the ordinary course of business and in amounts and in a
manner consistent with past practice or as otherwise required by
Legal Requirements or the provisions of any Company Benefit Plan)
under any Company Benefit Plan to any director or employee of, or
independent contractor or consultant to, the Company or its
Subsidiaries;

(i) change in any
material respect its tax or accounting policies, methods or
procedures except as required by GAAP;

(j) change in any
material respect its tax or accounting policies, methods or
procedures except as required by GAAP;

(k) do any act or omit
to do any act which would cause a material breach of any material
contract, commitment or obligation;

(l) take any action
which could reasonably be expected to adversely affect or delay the
ability of any of the Parties to obtain any approval of any
governmental or regulatory body required to consummate the
transactions contemplated hereby;

(m) (i) issue SARs, new
performance shares, restricted stock, or similar equity based
rights; (ii) materially modify (with materiality to be determined
with respect to the Company Benefit Plan in question) any actuarial
cost method, assumption or practice used in determining benefit
obligations, annual expense and funding for any Company Benefit
Plan, except to the extent required by GAAP; (iii) materially
modify (with materiality to be determined with respect to the
Company Benefit Plan trust in question) the investment philosophy
of the Company Benefit Plan trusts or maintain an asset allocation
which is not consistent with such philosophy, subject to any ERISA
fiduciary obligation; (iv) subject to any ERISA fiduciary
obligation, enter into any outsourcing agreement, or any other
material contract relating to the Company Benefit Plans or
management of the Company Benefit Plan trusts; (v) offer any new or
extend any existing retirement incentive, “window” or
similar benefit program; (vi) grant any ad hoc pension increase;
(vii) establish any new or fund any existing “rabbi” or
similar trust (except in accordance with the current terms of such
trust), or enter into any other arrangement for the purpose of
securing non-qualified benefits or deferred compensation; (viii)
adopt or implement any corporate owned life insurance; or (ix)
adopt, implement or maintain any “split dollar” life
insurance program;

 

37

 

(n) take any action
which would cause its representations and warranties contained
herein to become inaccurate in any material respect;

(o) revalue in any
material respect any of its assets, including, without limitation,
writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary course of business
or as required by GAAP;

(p) make or revoke any
tax election or settle or compromise any tax liability material to
the Company and/or any of its Subsidiaries taken as a whole or
change (or make a request to any taxing authority to change) any
material aspect of its method of accounting for tax purposes, other
than as required by applicable Legal Requirements;

(q) pay, discharge or
satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of
business of liabilities reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the
notes thereto) of the Company and its Subsidiaries or incurred in
the ordinary course of business consistent with past
practice;

(r) settle or
compromise any pending or threatened suit, action or claim relating
to the transactions contemplated hereby; or

(s) make any
significant distribution or redemption of its
securities.

Section
6.3. Exclusivity. During the period
commencing on the date hereof, Brekford, without the prior written
consent of the Company, will not, and will not authorize or permit
any of its Party Representatives (as defined in Section 7.5(b) hereof) to,
directly or indirectly, solicit, initiate, entertain or encourage
or support (including by way of furnishing information) or take any
other action to facilitate any inquiries or the making of any
proposal or offer which constitutes or may reasonably be expected
to lead to an Acquisition Proposal (as defined below) from any
person, or engage in any discussion or negotiations relating
thereto or accept any Acquisition Proposal, unless the Board of
Directors of Brekford shall conclude in good faith, after
considering applicable law, on the basis of oral or written advice
of outside counsel, that such action is necessary for the Board of
Directors to act in a manner consistent with its fiduciary duties.
Consistent with the foregoing provisions of this Section 6.3, Brekford shall
immediately cease and terminate any currently existing
solicitation, initiation, encouragement, activity, discussion or
negotiation with any persons conducted heretofore by Brekford or
its Representatives with respect to the foregoing. Brekford agrees
not to release any third party from, or waive any provision of, any
standstill agreement to which it is a party or any confidentiality
agreement between it and another person who has made, or who may
reasonably be considered likely to make, an Acquisition Proposal,
unless the Board of Directors of Brekford shall conclude in good
faith, after considering applicable law, on the basis of oral or
written advice of outside counsel, that such action is necessary
for the Board of Directors to act in a manner consistent with its
fiduciary duties. As used herein, “Acquisition Proposal”
shall mean a proposal or offer for a tender or exchange offer,
merger, consolidation or other business combination involving
Brekford or any proposal to acquire in any manner a substantial
equity interest in, or all or substantially all of the assets of,
Brekford.

 

38

 

Section
6.4. Subsequent Financial Statements. Prior
to the Effective Time, Brekford shall (a) prior to making publicly
available its financial results for any period, provide a copy of
such financial results to the Company and (b) timely file with the
SEC each Annual Report on Form 10-K, Quarterly Report on Form 10-Q
and Current Report on Form 8-K required to be filed by it under the
Exchange Act and the rules and regulations promulgated thereunder,
and, prior to the filing thereof, provide a copy to the Company,
and will promptly deliver to the Company copies of each such report
filed with the SEC. As of their respective dates, none of such
reports shall contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
respective audited financial statements and unaudited interim
financial statements of Brekford included in such reports will
fairly present the financial position of Brekford and each of its
Subsidiaries as at the dates thereof and the results of their
operations and cash flows for the periods then ended in accordance
with GAAP applied on a consistent basis and, subject, in the case
of unaudited interim financial statements, to normal year-end
adjustments and any other adjustments described
therein.

Section
6.5. Control of Operations. Nothing contained
in this Agreement shall give the Company or Brekford, directly or
indirectly, the right to control or direct the operations of the
other prior to the Effective Time. Prior to the Effective Time,
each of the Company and Brekford shall exercise, consistent with
the terms and conditions of this Agreement, complete control and
supervision over its respective operations.

ARTICLE
VII

ADDITIONAL
AGREEMENTS

Section
7.1. Registration Statement; Information
Statement. As promptly as practicable after the execution
and delivery of this Agreement, the Parties shall prepare and file
with the SEC, and shall use all reasonable efforts to have cleared
by the SEC, the Registration Statement on Form S-4 under the
Securities Act of 1933, and the Information Statement, and Brekford
shall promptly thereafter mail to the holders of record of Brekford
Common Stock the Information Statement in accordance with the
requirements of the applicable rules and regulations of the
Exchange Act.

Section
7.2. Stockholders’ Approval; Consummation of
the Mergers.

(a) At the earliest
reasonably practicable time following the execution and delivery of
this Agreement, each of the Company and Brekford shall promptly
take all action necessary in accordance with Delaware Law and its
Certificate of Incorporation and Bylaws, each as amended and as
currently in effect, to obtain the Company Stockholders’
Approval and the Brekford Stockholders’ Approval, as
applicable. The stockholder vote or consent required for approval
of each of the Mergers will be no greater than that contemplated by
Sections 4.14(b)
and 5.10(b) hereof.
Each of the Parties shall take all other action necessary or, in
the opinion of the other Parties, reasonably advisable to promptly
and expeditiously secure any vote or consent of stockholders
required by Delaware Law, as the case may be, and such
Party’s Certificate of Incorporation and Bylaws, each as
amended and as currently in effect, to adopt this Agreement, and
effect the Mergers and any other transactions contemplated
hereby.

 

39

 

(b) Upon receipt of the
Brekford Stockholders’ Approval, Brekford take all action as
may be necessary and appropriate to distribute the Information
Statement to the holders of record of Brekford Common Stock in
accordance with the applicable rules and regulations of the
Exchange Act.

(c) Upon the terms and
subject to the conditions hereof and as soon as practicable after
the conditions set forth in ARTICLE VIII hereof have been fulfilled
or waived, each of the Parties shall execute in the manner required
by Delaware Law and deliver to and file with the Secretary of State
of the State of Delaware such instruments and agreements as may be
required by Delaware Law, and the Parties shall take all such other
and further actions as may be required by law to make the Mergers
effective. Prior to the filings referred to in this Section 7.2(c), a closing (the
“Closing”) will be held at
the offices of Crowell & Moring LLP, 1001 Pennsylvania Ave NW,
Washington, D.C. 20004 (or such other place as the Company and
Brekford may mutually agree upon), for the purpose of confirming
all the foregoing. The Closing will take place upon the fulfillment
or waiver of all of the conditions to closing set forth in ARTICLE
VIII of this Agreement, or as soon thereafter as practicable (the
date of the Closing being herein referred to as the
“Closing
Date”).

Section
7.3. Additional Agreements. Each of the
Parties will comply in all material respects with all applicable
Legal Requirements of any governmental authority in connection with
its execution, delivery and performance of this Agreement and the
transactions contemplated hereby. Each of the Parties agrees to use
all commercially reasonable efforts to obtain in a timely manner
all necessary waivers, consents and approvals and to effect all
necessary registrations and filings, and to use all commercially
reasonable efforts to take, or cause to be taken, all other actions
and to do, or cause to be done, all other things necessary, proper
or advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement. The
Parties shall cooperate in responding to inquiries from, and making
presentations to, regulatory authorities.

Section
7.4. Notification of Certain Matters. Each of
the Company and Brekford shall give prompt notice to the other of
the following:

(a) the occurrence or
nonoccurrence of any event whose occurrence or nonoccurrence would
be likely to cause either:

(i) any representation
or warranty of such Party contained in this Agreement to be untrue
or inaccurate in any material respect at any time from the date
hereof to the Effective Time, or (ii) directly or indirectly, any
Material Adverse Effect with respect to such Party;

 

40

 

(b) any material
failure of such Party, or any officer, director, employee or agent
of any thereof, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it
hereunder;

(c) any facts relating
to such Party which would make it necessary or advisable to amend
the Registration Statement or the Information Statement in order to
make the statements therein not misleading or to comply with
applicable law;

(d) any notice of, or
other communication relating to, a default or event which, with
notice or lapse of time or both, would become a default, received
by it or any of its Subsidiaries subsequent to the date of this
Agreement and prior to the Effective Time, under any contract or
agreement material to the financial condition, properties,
businesses or results of operations of it and its Subsidiaries
taken as a whole to which it or any of its Subsidiaries is a party
or is subject; and

(e) any notice or other
communication from any third party alleging that the consent of
such third party is or may be required in connection with the
transactions contemplated by this Agreement;

provided, however,
that the delivery of any notice pursuant to this Section 7.4 shall not limit or
otherwise affect the remedies available hereunder to the Party
receiving such notice.

Section
7.5. Access to Information.

(a) From the date
hereof to the Effective Time, each of the Company and Brekford
shall, and shall cause its respective Subsidiaries, and its and
their officers, directors, employees, auditors, counsel and agents
to afford the officers, employees, auditors, counsel and agents of
the other Party complete access at all reasonable times to such
Party’s and its Subsidiaries’ officers, employees,
auditors, counsel agents, properties, offices and other facilities
and to all of their respective books and records, and shall furnish
the other with all financial, operating and other data and
information as such other Party may reasonably
request.

(b) Each of the Company
and Brekford agrees that all information so received from the other
Party shall be deemed received pursuant to the Mutual
Non-Disclosure Agreement between the Company and Brekford dated as
of October 10, 2016, heretofore executed and delivered by the
Company and Brekford (the “Confidentiality
Agreement”) and such Party shall, and shall cause its
Subsidiaries and each of its and their respective officers,
directors, employees, financial advisors and agents
(“Party
Representatives”), to comply with the provisions of
the Confidentiality Agreement with respect to such information and
the provisions of the Confidentiality Agreement are hereby
incorporated herein by reference with the same effect as if fully
set forth herein; provided,
that, the Company, on one hand, and Brekford, on the other
hand, shall be permitted to disclose the contents of this Agreement
and the Mergers in appropriate filings with the SEC, upon
consultation with and agreement by Brekford, on the one hand, and
the Company, on the other hand.

Section
7.6. Public Announcements. Except as required
by applicable law or stock exchange requirements, the Company and
Brekford shall provide the other Party with a reasonable
opportunity to review and comment on all press releases and other
public statements with respect to the transactions contemplated
hereby.

 

41

 

Section
7.7. Indemnification; Directors’ and
Officers’ Insurance.

(a) For a period of six
(6) years after the Effective Time, Novume and the Company jointly
and severally shall indemnify the directors and officers of the
Company who hold such positions at any time during the period from
the date hereof through the Effective Time to the fullest extent to
which the Company is permitted to indemnify such officers and
directors under its Certificate of Incorporation and Bylaws, each
as amended and as currently in effect, and applicable
law.

(b) Prior to the
Effective Time, Brekford will purchase a “tail” on its
directors’ and officers’ liability insurance policy
(“Brekford Insurance
Policies”), which shall be at no less broad coverage
and limits than Brekford’s currently existing Brekford
Insurance Policies and which shall cover the period from the
Closing Date until such date as is six (6) years following the
Closing Date, provided that, nothing shall prevent Novume, from and
after the Closing Date, from purchasing, at its sole option and at
its expense, an additional limit on the “tail”
policy.

Section
7.8. Employee Benefit Plans.

(a) Except as otherwise
set forth in Section
2.8 and Section
2.9 hereof, in the case of the Company Benefit Plans listed
on Schedule
7.8(a)(i) hereto (“Company Stock Plans”) and
the Brekford Benefit Plans listed on Schedule 7.8(b)(i) hereto
(“Brekford Stock
Plans”), to the extent the employees’ interests
are based upon Company Common Stock or Brekford Common Stock, as
applicable, or the market prices thereof (but which interests do
not constitute Options), as applicable, each of the Company and
Brekford agrees that such interests shall, from and after the
Effective Time, be based on Novume Common Stock in accordance with
the Company Exchange Ratio (with respect to Company Stock Plans)
and the Brekford Exchange Ratio (with respect to Brekford Benefit
Plans).

(b) With respect to any
Company Stock Plans or Brekford Stock Plans maintained or
contributed to persons outside the United States for the benefit of
non-United States citizens or residents, the principles set forth
in this Section
7.8, and on Schedule 6.1 or Schedule 6.2, as applicable,
shall apply to the extent the application of such principles does
not violate applicable foreign law.

(c) Without limiting
the applicability of Sections 2.8 and 2.9 hereof, each of the Parties
shall take all actions as are necessary to ensure that the Company
and Brekford will not be at the Effective Time bound by any stock
options, warrants, stock appreciation rights (“SARs”), or other awards,
rights or agreements which would entitle any person, other than
Novume, to own any capital stock of the Surviving Corporations or
to receive any payment in respect thereof, and all Company Stock
Plans and Brekford Benefit Plans conferring any rights with respect
to Company Common Stock, Company Preferred Stock or other capital
stock of the Company, or Brekford Common Stock or other capital
stock of Brekford, as the case may be, shall be deemed hereby to be
amended to be in conformity with this Section 7.8.

Section
7.9. Management and Employment
Arrangements.

 

42

 

(a) Robert A. Berman
shall, as of or prior to the Effective Time, have been appointed
the Chief Executive Officer of Novume, and an executive team of
Novume shall have been appointed, consisting of such individuals as
shall be designated by the Board of Directors of the
Company.

(b) Each of Scott
Rutherford and Rodney Hillman (together, the "Brekford Officers") shall, as
of or prior to the Effective Time, enter into separate five
(5)-year employment agreements (the "Employment Agreements") in the
form attached as Exhibit
A hereto, and proprietary rights agreements
(“Proprietary Rights
Agreements”) in the form attached as Exhibit B hereto, with
Brekford, pursuant to which they shall be engaged to serve as the
Chief Technology Officer and President/Chief Operating Officer,
respectively. None of the Brekford Officers shall have any right,
remedy or cause of action under this Section 7.9, nor shall they be
third party beneficiaries of this Section 7.9. In addition to the
forgoing, the Parties intend that key executives of the Company and
of Brekford, as shall be mutually agreed by the Parties, will enter
into employment agreements with Novume or one or more of its
subsidiaries.

Section
7.10. Stock Exchange Listing. The Company
shall use its best efforts to obtain, prior to the Effective Time,
or as soon as reasonably practicable thereafter, the approval for
listing on a national stock exchange of the shares of Novume Common
Stock into which the Shares will be converted pursuant to ARTICLE
II hereof and which will be issuable upon exercise of options
pursuant to Section
2.8 hereof; provided,
that, if such listing is not obtained within ninety (90)
days of the Effective Time, the Board of Directors of Novume will
use its best efforts to take further actions as appropriate to
achieve such listing as soon as is reasonably
practicable.

Section
7.11. Sale of Upfitting Business. The
obligations of the Company to consummate the transactions
contemplated by this Agreement are conditioned upon the prior or
concurrent closing of the sale by Brekford of not more than 81% of
the ownership of its Rugged Information Technology Solutions and
360° Vehicle Solution Upfitting Business (collectively, the
“Upfitting
Business”); provided, that, (a) Novume shall retain
not less than a 19% ownership interest in the Upfitting Business
and (b) Brekford will use all proceeds from such disposition to
repay in full any and all indebtedness of Brekford such that, as of
the Closing, Brekford shall have no indebtedness other than as
permitted by the Company.

Section
7.12. Post-Merger Novume Board of Directors.
At the Effective Time, the Novume Board shall consist of seven (7)
members, four (4) of whom shall be independent within the meaning
of the 1934 Act, and the national stock exchange to which the
Company has applied for the listing of Novume Common Stock as
described in Section
7.10. Six (6) members of the Novume Board shall be
designated by the Company, and one (1) member of the Novume Board
shall be designated by Brekford, subject to the approval of
KeyStone. The members designated by the Company are James McCarthy,
who shall serve as Chairman, Robert A. Berman, Dr. Richard Nathan,
Glenn Goord, Paul DeBary and one additional independent director
who shall be designated by the Company prior to the Effective Time.
The member to be designated by Brekford shall be independent, as
provided herein, and shall be subject to the approval by the
Company; such member shall be identified by Brekford and approved
by the Company prior to the Effective Time. As of the date hereof,
Glenn Goord and Paul DeBary are independent as provided herein, and
shall so remain, as and at the Effective Time.

 

43

 

Section
7.13. Registration Rights. Novume shall not be
required to amend or maintain the effectiveness of the Registration
Statement for the purpose of permitting resale of the shares of
Novume Common Stock received pursuant hereto by the persons who may
be deemed to be “affiliates” of the Company or Brekford
within the meaning of Rule 145 promulgated under the 1933 Act, as
amended.

Section
7.14. Affiliates. Each of the Company and
Brekford (i) has disclosed to the other all persons who are, or may
be, at the time this Agreement is executed its
“affiliates” for purposes of Rule 145 under the 1933
Act, and (ii) has delivered, or caused each person who is so
identified as an “affiliate” of it to deliver, to the
other as promptly as practicable but in no event later than the
Closing Date, a Company Affiliate Letter or a Brekford Affiliate
Letter, as the case may be. The Company and Brekford shall notify
each other from time to time of any other persons who then are, or
may be, such an “affiliate” and use all reasonable
efforts to cause each additional person who is identified as an
“affiliate” to execute a Company Affiliate Letter or a
Brekford Affiliate Letter, as the case may be.

Section
7.15. Blue Sky. The Company and Brekford will
use their best efforts to obtain prior to the Effective Time all
necessary blue sky permits and approvals required to permit the
distribution of the shares of Novume Common Stock to be issued in
accordance with the provisions of this Agreement.

Section
7.16. Compliance.

(a) In consummating the
Brekford Merger and the transactions contemplated hereby, Brekford
shall comply in all material respects with the provisions of the
Exchange Act and the 1933 Act, and shall comply, and/or cause its
subsidiaries to comply or to be in compliance, in all material
respects, with all other applicable Legal
Requirements.

(b) In consummating the
Company Merger and the transactions contemplated hereby, the
Company shall comply in all material respects with the provisions
of the Exchange Act and the 1933 Act, and shall comply, and/or
cause its subsidiaries to comply or to be in compliance, in all
material respects, with all other applicable Legal
Requirements.

Section
7.17. Key Stockholder Agreements. Each of C.B.
Brechin, Scott Rutherford, Justin Schumer and Robert West (the
“Brekford Key
Stockholders”) shall have entered into a Key
Stockholder Agreement with Brekford, and each of Robert A. Berman,
James McCarthy and Dr. Richard Nathan (the “Company Key Stockholders”
and collectively with the Brekford Key Stockholders, the
“Key
Stockholders”), shall have entered into a Key
Stockholder Agreement with the Company, pursuant to which the Key
Stockholder shall agree to vote all of their voting securities in
the Company or Brekford, as applicable, in favor of this Agreement
and the Mergers.

Section
7.18. Continuation of Historic Business. After
the Effective Time Brekford, as the Surviving Corporation of the
Brekford Merger, will continue Brekford’s historic business
or use a significant portion of Brekford’s historic assets in
a business.  Company Merger Sub, as the Surviving Corporation
of the Company Merger, will continue the Company’s historic
business or use a significant portion of the Company’s
historic assets in a business.

 

44

 

ARTICLE
VIII

CONDITIONS TO
MERGERS

Section
8.1. Conditions to the Obligations of Each Party to
Effect the Mergers. The respective obligations of each Party
to effect the Mergers shall be subject to the following
conditions:

(a) Stockholder Approval. The Mergers, this
Agreement and all transactions contemplated hereby shall have been
approved and adopted by the requisite vote of the stockholders of
each of the Company and Brekford, in accordance with Section 7.2(a), and each of the
Merger Subsidiaries in accordance with Delaware Law, applicable
United States state and federal securities laws, and the
Certificate of Incorporation and Bylaws, each as amended and as
currently in effect, of each such entity;

(b) Legality. No federal, state or foreign
statute, rule, regulation, executive order, decree or injunction
shall have been enacted, entered, promulgated or enforced by any
court or governmental authority which is in effect and has the
effect of making the Mergers illegal or otherwise prohibiting the
consummation of the Mergers;

(c) Required Consents. All authorizations,
licenses, Permits, consents, orders or approvals of, or
declarations, filings with or notices to, any governmental body,
agency or official, or any non-governmental third party (all of the
foregoing, “Required
Consents”), which are necessary for the consummation
of the transactions contemplated hereby, other than immaterial
Required Consents the failure to obtain which would have no
material adverse effect on the consummation of the transactions
contemplated hereby and no Material Adverse Effect on Novume or
either of the Surviving Corporations, shall have been, as
applicable, made, filed, shall have occurred or shall have been
obtained and all such Required Consents shall be in full force and
effect, provided, however, that a Required Consent shall not be
deemed to have been obtained if in connection with the grant
thereof there shall have been an imposition by any state or federal
governmental body, agency or official of any condition,
requirement, restriction or change of regulation, or any other
action directly or indirectly related to such grant taken by such
governmental body, which would reasonably be expected to either (i)
have a Material Adverse Effect on any of Novume or either of the
Surviving Corporations, or (ii) prevent the Parties from realizing
in all material respects the economic benefits of the transactions
contemplated by this Agreement that such Parties currently
anticipate receiving therefrom;

(d) Registration Statement Effective. The
Registration Statement shall have become effective, no stop order
suspending the effectiveness of the Registration Statement shall
then be in effect, and no proceedings for that purpose shall then
be threatened by the SEC or shall have been initiated by the SEC
and not concluded or withdrawn;

(e) Blue Sky. All state securities or blue
sky permits or approvals required to carry out the transactions
contemplated hereby shall have been received; and

(f) Key Stockholder Agreements. Each of the
Key Stockholders shall have entered into a Key Stockholder
Agreement with the Company or Brekford, as applicable, and Brekford
shall have received copies of each such agreement with the Company
Key Stockholders duly executed by Brekford and the applicable Key
Stockholder, and the Company shall have received copies of each
such agreement with the Brekford Key Stockholders duly executed by
Brekford and the applicable Key Stockholder.

 

45

 

Section
8.2. Additional Conditions to Obligations of the
Company. The obligations of the Company to effect the
Mergers are also subject to the fulfillment of the following
conditions:

(a) Representations and Warranties. The
representations and warranties of Brekford contained in this
Agreement shall be true and correct on the date hereof and (except
to the extent such representations and warranties speak as of an
earlier date) shall also be true and correct on and as of the
Closing Date, except for changes expressly contemplated by this
Agreement, with the same force and effect as if made on and as of
the Closing Date;

(b) Agreements, Conditions and Covenants.
Brekford shall have performed or complied in all material respects
with all agreements, conditions and covenants required by this
Agreement to be performed or complied with by Brekford on or before
the Effective Time;

(c) Certificates.

(i) The Company shall
have received a certificate of an executive officer of Brekford to
the effect set forth in paragraphs (a) and (b) above;
and

(ii)           The
Company shall have received a certificate of the Secretary of
Brekford with respect to certain corporate matters, including a
true, correct and complete copy of Brekford’s certificate of
incorporation, as currently in effect, a true, correct and complete
copy of Brekford’s bylaws, as currently in effect,
certificate(s) as to Brekford’s formation and good standing
in its jurisdiction of formation and each other jurisdiction in
which it is qualified to do business, and attaching thereto a true,
correct and complete copy of resolutions and consents, as
applicable, of the stockholder(s) and board of Brekford
authorizing, in each case, the execution, delivery and performance
of this Agreement, the filing and distribution of the Information
Statement, and the consummation of the transactions contemplated
hereby.

(d) Opinions.

(i) The Company shall
have received an opinion of Crowell & Moring LLP, counsel to
the Company, dated as of the Closing Date, in form and substance
reasonably satisfactory to the Company, substantially to the effect
that, on the basis of the facts, representations and assumptions
set forth in such opinion: (A) no gain or loss will be recognized
for federal income tax purposes by Novume, the Company or Company
Merger Sub as a result of the formation of Novume and Company
Merger Sub and the Merger of the Company with and into the Company
Merger Sub; and (B) no gain or loss will be recognized for federal
income tax purposes by the stockholders of the Company upon their
exchange of Company Common Stock or Company Preferred Stock, as
applicable, solely for Novume Common Stock or Novume Preferred
Stock, as applicable, pursuant to such Merger. In rendering such
opinion, Crowell & Moring LLP may require and rely upon
representations and covenants including those contained in
certificates of officers of Novume, the Company, Brekford and
others, as may be requested by Crowell & Moring LLP and shall
be provided by Novume, the Company, Brekford; and

(ii) To
the extent required by the SEC in connection with the filing of the
Registration Statement and the Information Statement, Brekford
shall have received the opinion described in Section 8.3(d)(i) hereof, in
form and substance reasonably satisfactory to the
Company.

 

46

 

(e) Affiliate Letters. The Company shall
have received the Brekford Affiliate Letters required by
Section 7.14, duly
executed by each “affiliate” of Brekford;

(f) No Material Adverse Change. Since
September 30, 2016, there shall not have occurred any event that
has had or could reasonably be expected to have a Material Adverse
Effect on Brekford or Novume;

(g) Consents Under Brekford Agreements.
Brekford shall have obtained the consents listed on Schedule 8.2(g) hereto, as well
as the consent or approval of each other person whose consent or
approval shall be required under any agreement or instrument in
order to permit the consummation of the transactions contemplated
hereby except those which the failure to obtain would not,
individually or in the aggregate, have a Material Adverse Effect on
Novume or either of the Surviving Corporations; and

(h) Employment Agreements; Proprietary Rights
Agreements. The Employment Agreements and Proprietary Rights
Agreements shall be in full force and effect.

(i) Sale of Upfitting Business. The sale of
the Upfitting Business as described, and on the terms and
conditions set forth, in Section 7.11 shall have been
consummated in accordance with the requirements of Delaware Law and
Brekford’s Certificate of Incorporation and Bylaws, each as
amended and as currently in effect.

Section
8.3. Additional Conditions to Obligations of
Brekford. The obligations of Brekford to effect the Mergers
are also subject to the fulfillment of the following
conditions:

(a) Representations and Warranties. The
representations and warranties of the Company contained in this
Agreement shall be true and correct on the date hereof and (except
to the extent such representations and warranties speak as of an
earlier date) shall also be true and correct on and as of the
Closing Date, except for changes expressly contemplated by this
Agreement, with the same force and effect as if made on and as of
the Closing Date;

(b) Agreements, Conditions and Covenants.
The Company shall have performed or complied in all material
respects with all agreements, conditions and covenants required by
this Agreement to be performed or complied with by the Company on
or before the Effective Time;

(c) Certificates.

(i) Brekford shall have
received a certificate of an executive officer of the Company to
the effect set forth in paragraphs (a) and (b) above;
and

(ii) Brekford
shall have received a certificate of the Secretary of the Company
with respect to certain corporate matters, including a true,
correct and complete copy of the Company’s certificate of
incorporation, as currently in effect, a true, correct and complete
copy of the Company’s bylaws, as currently in effect,
certificate(s) as to the Company’s formation and good
standing in its jurisdiction of formation and each other
jurisdiction in which it is qualified to do business, and attaching
thereto a true, correct and complete copy of resolutions and
consents, as applicable, of the stockholder(s) and board of the
Company authorizing, in each case, the execution, delivery and
performance of this Agreement, the filing and distribution of the
Information Statement, and the consummation of the transactions
contemplated hereby.

 

47

 

(d) Tax Opinion.

(i) To the extent
required by the SEC in connection with the filing of the
Registration Statement and the Information Statement, Brekford
shall have received an opinion of counsel, such counsel to be
determined, dated as of the Closing Date, in form and substance
reasonably satisfactory to Brekford, substantially to the effect
that, on the basis of the facts, representations and assumptions
set forth in such opinion: (A) no gain or loss will be recognized
for federal income tax purposes by Novume, Brekford or Brekford
Merger Sub as a result of the formation of Novume and Brekford
Merger Sub and the Merger of Brekford Merger Sub with and into
Brekford; and (B) no gain or loss will be recognized for federal
income tax purposes by the stockholders of Brekford upon their
exchange of Brekford Common Stock for the Brekford Merger
Consideration pursuant to such Merger; and

(ii) the
Company shall have received the opinion described in Section 8.2(d)(i) hereof, in
form and substance reasonably satisfactory to
Brekford;

(e) Affiliate Letters. Brekford shall have
received the Company Affiliate Letters required by Section 7.14 hereof, duly
executed by each “affiliate” of the
Company;

(f) No Material Adverse Change. Since
September 30, 2016, there shall not have occurred any event that
has had or could reasonably be expected to have a Material Adverse
Effect on the Company or Novume; and

(g) Consents Under the Company Agreements.
The Company shall have obtained the consent or approval of each
person whose consent or approval shall be required under any
agreement or instrument in order to permit the consummation of the
transactions contemplated hereby except those which the failure to
obtain would not, individually or in the aggregate, have a Material
Adverse Effect on Novume or either of the Surviving
Corporations.

ARTICLE
IX

TERMINATION,
AMENDMENT AND WAIVER

Section
9.1. Termination. This Agreement may be
terminated at any time before the Effective Time in each case as
authorized by the respective Board of Directors of the Company or
Brekford:

(a) By mutual written
consent of each of the Company and Brekford;

 

48

 

(b) By either the
Company or Brekford if the Mergers shall not have been consummated
on or before June 1, 2017 (the “Termination Date”);
provided, however, that the right to terminate this Agreement under
this Section 9.1(b)
shall not be available to any Party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before the
Termination Date; and provided, further, that if on the Termination
Date the conditions to the Closing set forth in Section 8.1(d) shall not have
been fulfilled, but all other conditions to the Closing shall be
fulfilled or shall be capable of being fulfilled, then the
Termination Date shall be extended to a date mutually agreed upon
by the parties hereto;

(c) By either the
Company or Brekford if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission
shall have issued an order, decree or ruling or taken any other
action (which order, decree or ruling the Parties shall use their
commercially reasonable efforts to lift), in each case permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement, and such order, decree, ruling or
other action shall have become final and
nonappealable;

(d) By either the
Company or Brekford if the other shall have breached, or failed to
comply with, in any material respect any of its obligations under
this Agreement or any representation or warranty made by such other
Party shall have been incorrect in any material respect when made
or shall have since ceased to be true and correct in any material
respect, and such breach, failure or misrepresentation is not cured
within thirty (30) days after notice thereof and such breaches,
failures or misrepresentations, individually or in the aggregate
and without regard to materiality qualifiers contained therein,
results or would reasonably be expected to result in a Material
Adverse Effect on Novume, the Company or Brekford;

(e) By either the
Company or Brekford upon the occurrence of a Material Adverse
Effect on the other or on Novume or an event which could reasonably
be expected to result in a Material Adverse Effect on the other or
on Novume;

(f) By either the
Company or Brekford if the Board of Directors of the other or any
committee of the Board of Directors of the other (i) shall withdraw
or modify in any adverse manner its approval or recommendation of
this Agreement, the Mergers or any other transaction contemplated
hereby, (ii) shall fail to reaffirm such approval or recommendation
upon such Party’s request, (iii) approve or recommend any
acquisition of the other or a material portion of its assets or any
tender offer for shares of its capital stock, in each case, other
than by a Party or an affiliate thereof, or (iv) shall resolve to
take any of the actions specified in clause (i) above;
or

(g) By either the
Company or Brekford if the Company Stockholders’ Approval or
the Brekford Stockholders’ Approval, as applicable, shall
fail to have been obtained in accordance with Section 7.2(a); provided, however, that no termination
by Brekford shall be effective pursuant to Sections 9.1(f) or (g) under circumstances in
which a Termination Fee is payable by Brekford under Section 9.2(b) unless
concurrently with such termination, such Termination Fee is paid in
full by Brekford in accordance with the provisions of Section 9.2(b).

Section
9.2. Effect of Termination.

(a) In the event of
termination of this Agreement as provided in Section 9.1 hereof, and subject
to the provisions of Section 10.1 hereof, this
Agreement shall forthwith become void and there shall be no
liability on the part of any of the Parties, except (i) as set
forth in this Section
9.2 and in Sections
4.10, 4.16, 5.9, 5.12 and 10.3 hereof, and (ii) nothing
herein shall relieve any Party from liability for any willful
breach hereof.

 

49

 

(b) If (i) this
Agreement (A) is terminated by the Company pursuant to Section 9.1(f) hereof, or the
Company or Brekford pursuant to Section 9.1(g) hereof because
of the failure to obtain the Brekford Stockholders’ Approval,
or (B) is terminated as a result of Brekford’s material
breach of Section
7.2 hereof which is not cured within thirty (30) days after
notice thereof to Brekford, and (ii) at the time of such
termination there shall have been an Acquisition Proposal involving
Brekford or any of its subsidiaries (whether or not such offer
shall have been rejected or shall have been withdrawn prior to the
time of such termination), Brekford shall pay to the Company a
termination fee of $250,000 (the “Termination Fee”). The
Termination Fee payable under this Section 9.2(b) shall be payable
in cash at the date of termination.

(c) Brekford agrees
that the agreements contained in Section 9.2(b) above are an
integral part of the transactions contemplated by this Agreement
and constitute liquidated damages and not a penalty. If Brekford
fails to promptly pay to the Company any fee due under such
Section 9.2(b),
Brekford shall pay the costs and expenses (including reasonable
legal fees and expenses) in connection with any action, including
the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee at
the publicly announced prime rate as
reported by The Wall Street Journal's bank
survey

from
the date such fee was required to be paid.

Section
9.3. Amendment. This Agreement may be amended
by the Parties pursuant to a writing adopted by action taken by all
of the Parties at any time before the Effective Time; provided,
however, that, after approval of the Mergers by the stockholders of
the Company or Brekford, whichever shall occur first, no amendment
may be made which would (a) alter or change the amount or kinds of
consideration to be received by the holders of Shares upon
consummation of the Mergers, (b) alter or change any term of the
Certificate of Incorporation of either of the Surviving
Corporations or Novume, or (c) alter or change any of the terms and
conditions of this Agreement if such alteration or change would
adversely affect the holders of any class or series of securities
of the Company or Brekford. This Agreement may not be amended
except by an instrument in writing signed by the
Parties.

Section
9.4. Waiver. At any time before the Effective
Time, any Party may (a) extend the time for the performance of any
of the obligations or other acts of the other Parties, (b) waive
any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a Party to any such extension
or waiver shall be valid only as against such Party and only if set
forth in an instrument in writing signed by such
Party.

ARTICLE
X

GENERAL
PROVISIONS

Section
10.1. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements
in this Agreement shall terminate at the Effective Time or upon the
termination of this Agreement pursuant to Section 9.1 hereof, as the case
may be, except that (a) the agreements set forth in ARTICLE I and
Sections 2.4, 2.5, 2.6,
2.7, 2.8, 7.7, 7.8 and 7.11 hereof and this
Section 10.1 shall
survive the Effective Time indefinitely, (b) the agreements and
representations set forth in Sections 4.10, 4.16, 5.9, 5.12,
7.5(b), 9.2 and 10.3 hereof and this
Section 10.1 shall
survive termination indefinitely and (c) nothing contained herein
shall limit any covenant or agreement of the Parties which by its
terms contemplates performance after the Effective
Time.

 

50

 

Section
10.2. Notices. All notices and other
communications given or made pursuant hereto shall be in writing
and shall be deemed to have been duly given or made as of the date
of receipt and shall be delivered personally or mailed by
registered or certified mail (postage prepaid, return receipt
requested), sent by overnight courier or sent by telecopy, to the
Parties at the following addresses or telecopy numbers (or at such
other address or telecopy number for a Party as shall be specified
by like notice):

(a) if to the Company
or any Merger Subsidiary:

KeyStone Solutions,
Inc.

14420
Albemarle Point Place, Suite 200

Chantilly,
VA 20151

Attn:
Robert Berman

Email :
rberman@keystonewins.com

with a
copy to:

Crowell
& Moring LLP

1001
Pennsylvania Ave NW

Washington, D.C.
20004

Attention: Morris
DeFeo, Esq.

Email:
mdefeo@crowell.com

Telephone.: (202)
624-2925

(b) if to
Brekford:

Brekford
Corp.

7020
Dorsey Road

Hanover, Maryland
21076

Attn:
Rodney Hillman

Email:
rhillman@brekford.com

with a
copy to:

Sichenzia Ross
Ference Kesner LLP

61
Broadway

New
York, NY 10006

Attention: Thomas
A. Rose, Esq.

Email:
trose@srfkllp.com

Telephone: (212)
930-9700

 

 

51

 

Section
10.3. Expenses. Except as otherwise provided
herein, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by
the Party incurring such costs and expenses, whether or not the
transactions contemplated by this Agreement are consummated, and
any actions taken by either party in furtherance thereof shall be
at such Party’s sole risk and expense.

Section
10.4. Certain Definitions. For purposes of
this Agreement, the following terms shall have the following
meanings:

(a) “1933
Act” means the U.S. Securities Act of 1933, as the same may
be amended from time to time, and “Exchange Act” means
the U.S. Securities Exchange Act of 1934, as the same may be
amended from time to time.

(b) “affiliate”
of a person means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person.

(c) “Brekford
ERISA Affiliate” means any entity that would have ever been
considered a single employer with Brekford under Section 4001(b) of
ERISA or part of the same “controlled group” as
Brekford for purposes of Section 302(d)(3) of ERISA.

(d) “Company
ERISA Affiliate” means any entity that would have ever been
considered a single employer with the Company under Section 4001(b)
of ERISA or part of the same “controlled group” as the
Company for purposes of Section 302(d)(3) of ERISA.

(e) “control”
(including the terms “controlled by” and “under
common control with”) means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership
of stock, as trustee or executor, by contract or credit arrangement
or otherwise.

(f) “knowledge”
of any Party shall mean the actual knowledge of the executive
officers of such Party.

(g) “Material
Adverse Effect” means any change in or effect on the business
of the referenced corporation or any of its Subsidiaries that is or
will be materially adverse to the business, operations (including
the income statement), properties (including intangible
properties), condition (financial or otherwise), assets,
liabilities or regulatory status of such referenced corporation and
its Subsidiaries taken as a whole, but shall not include the
effects of changes that are generally applicable in (A) the United
States economy or (B) the United States securities markets if, in
any of (A) or (B), the effect on the Company or Brekford (as the
case may be) and its respective Subsidiaries, taken as a whole, is
not disproportionate relative to the effect on the other and its
Subsidiaries, taken as a whole.

(h) “person”
means an individual, corporation, partnership, association, trust,
unincorporated organization, entity or group (as defined in the
Exchange Act).

(i) “Subsidiary”
means any corporation or other legal entity of which the Company or
Brekford, as the case may be (either alone or through or together
with any other Subsidiary or Subsidiaries), owns, directly or
indirectly, more than 50% of the stock or other equity interests
the holders of which are generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity.

 

52

 

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

Section
10.6. Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of
being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected
in any manner adverse to any Party. Upon such determination that
any term or other provision is invalid, illegal or incapable of
being enforced, the Parties shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the Parties
as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the maximum
extent possible.

Section
10.7. Entire Agreement; No Third-Party
Beneficiaries. This Agreement constitutes the entire
agreement and, except as expressly set forth herein, supersedes any
and all other prior agreements and undertakings, both written and
oral, among the Parties, or any of them, with respect to the
subject matter hereof and, except for Section 7.7 (Indemnification; Directors’ and
Officers’ Insurance), is not intended to confer upon
any person other than the Company, Brekford, Novume, Company Merger
Sub and Brekford Merger Sub and, after the Effective Time, their
respective stockholders, any rights or remedies
hereunder.

Section
10.8. Assignment. This Agreement shall not be
assigned by operation of law or otherwise.

Section
10.9. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of Delaware applicable to contracts executed in and to be
performed entirely within that State, without regard to the
conflicts of laws provisions thereof.

Section
10.10. Counterparts. This Agreement may be
executed in one or more counterparts, and by the different Parties
in separate counterparts, each of which when executed shall be
deemed to be an original, but all of which shall constitute one and
the same agreement.

[Signature Page to Follow]

 

53

 

IN WITNESS WHEREOF, the Parties have
caused this Agreement to be executed by their respective officers
hereunto duly authorized, all as of the date first written
above.

	
 

	

KeyStone Solutions, Inc.,

a
Delaware corporation

/s/ Robert A
Berman                 

Name:
Robert A. Berman      
  

Title:

Chief Executive Officer  

 

Brekford Corp.,

a Delaware
corporation

/s/ Rodney
Hillman                   

Name: Rodney Hillman 
       
  

 

Title: President & COO
          
 

 

Novume Solutions, Inc.,

a Delaware
corporation

/s/ Robert A.
Berman                 

Name:

Robert A. Berman        
 

Title:

Chief Executive Officer   

 

KeyStone Merger Sub, Inc.,

a Delaware
corporation

/s/ Robert A.
Berman                 

Name:

Robert A. Berman        
 

Title:

President                
          

 

Brekford Merger Sub, Inc.,

a Delaware
corporation

/s/ Robert A.
Berman                 

Name:

Robert A. Berman        
 

Title:
President  
                
       

 

 

[Signature page to the Agreement and Plan of Merger]

APPENDIX I

Certificate
of Incorporation of NovumeExhibit

 Exhibit 10.22 
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the “Agreement”), dated May 11, 2016, by and between Brixmor Property Group Inc. (the “Company”) and Mark Horgan (“Executive”).
The Company desires to employ Executive and to enter into an agreement embodying the terms of such employment;
Executive desires to accept such employment and enter into such an agreement;
In consideration of the promises and mutual covenants herein and for other good and valuable consideration, the parties agree as follows:
1.    Term of Employment. Subject to the provisions of Section 5 of this Agreement, Executive shall be employed by the Company for a period commencing on May 20, 2016 (the “Effective Date”) and ending on the third anniversary of the Effective Date (the “Employment Term”) on the terms and subject to the conditions set forth in this Agreement.
2.    Position, Duties and Authority.
(a)    During the Employment Term, Executive shall serve as the Company’s Executive Vice President, Chief Investment Officer. In such position, Executive shall have such duties, functions, responsibilities and authority as shall be determined from time to time by the Chief Executive Officer of the Company and be consistent with the duties, functions, responsibilities and authority of an executive vice president, chief investment officer of a publicly-traded real estate investment trust. Executive shall report directly to the Chief Executive Officer of the Company or such other senior officer of the Company as directed by the Chief Executive Officer.  
(b)    During the Employment Term, Executive will devote his full business time and best efforts to the performance of Executive’s duties hereunder (excluding periods of vacation and sick leave) and will not engage in any other business, profession or occupation for compensation or otherwise which would conflict or interfere with the rendition of such services, either directly or indirectly, without the prior written consent of the Chief Executive Officer; provided that nothing herein shall preclude Executive, subject (in the case of (i) below) to the prior approval of the Chief Executive Officer (which approval shall not be unreasonably withheld), from (i) accepting appointment to or continuing to serve on the board of directors or trustees of up to two other business corporations (but not more than one audit committee), (ii) serving as an officer or director of or otherwise participating in non-profit educational, welfare, social, religious and civil organizations, including, without limitation, all such positions and participation in effect as of the Effective Date, and (iii) managing personal and family investments; provided, however, that any such activities as described in (i), (ii) or (iii) of the preceding provisions of this paragraph do not conflict or materially interfere with the performance and fulfillment of Executive’s duties and responsibilities as an executive of the Company in accordance with this Agreement or conflict with Section 6. Executive shall be permitted to retain all compensation in respect of any of the services or activities referred to in the first proviso of the first sentence of this Section 2(b).
(c)    As of the start of the Employment Term, Executive’s principal place of employment shall be the Company’s offices located at 450 Lexington Avenue, New York, New York, subject to required travel.
3.    Compensation.
(a)    Base Salary. During the Employment Term, the Company shall pay Executive a base salary (“Base Salary”) at the annual rate of $475,000, payable in regular installments in accordance with the Company’s usual payment practices. Executive shall be entitled to such increases in Executive’s Base Salary, if any, as may be determined from time to time in the sole discretion of the Compensation Committee of the Board of Directors of the Company, but in no event shall the Company be entitled to reduce Executive’s Base Salary below the annual rate of $475,000.
(b)    Annual Bonus. During the Employment Term, Executive shall be eligible to earn an annual cash bonus award (an “Annual Bonus”) as follows. In all fiscal years during the Employment Term other than 2016, Executive’s annual bonus will be calculated based on the achievement of performance objectives, metrics and targets (including the level of achievement required for Executive to earn the threshold, target and high performance objectives) adopted by the Board or Compensation Committee of the Board within the first three months of each fiscal year during the Employment Term. During 

each such fiscal year, the minimum bonus payable to Executive, if the threshold performance objectives and targets are achieved, will be 56% of Executive’s Base Salary; the target bonus will be 75% of Executive’s Base Salary (the “Annual Target Bonus”), if target performance objectives and targets are achieved; and the maximum bonus payable to Executive will be 100% of Executive’s Base Salary, if high performance objectives and targets are achieved. The Annual Bonus, if any, shall be paid to Executive in a lump sum in cash within two and one-half months after the end of the applicable fiscal year. Except as provided in Section 5, no Annual Bonus shall be earned or payable in respect of any fiscal year in which Executive’s employment is terminated. 
 In fiscal year 2016, the calculation of the Annual Bonus will be the same as for subsequent years, except that the performance metrics and level of achievement shall be those previously established by the Compensation Committee for other executive officers of the Company for 2016 and provided that in no event shall Executive’s Annual Bonus for 2016 be less than an amount determined by multiplying $356,250 by a fraction, the numerator of which is the number of days during fiscal year 2016 that Executive is employed by the Company (i.e. from the Effective Date to and including December 31, 2016), and the denominator of which is the number of days in fiscal year 2016. 
 (c)    Initial Time Vested Restricted Stock Unit Grant. As of the Effective Date, Executive shall receive a grant (the “Initial RSU Award”) of Restricted Stock Units (“RSUs”) equal to the quotient of (x) $1,250,000 divided by (y) the closing price of the Company’s common stock on the date of this Agreement, rounded down to the nearest even whole number. The terms of the Initial RSU Award shall provide that the RSUs shall vest ratably over five (5) years commencing on the first anniversary of the Effective Date and otherwise be on terms and conditions substantially similar to the form of Restricted Stock Unit Agreement attached hereto as Exhibit A.
(d)    Annual Long Term Restricted Stock Unit Grants. As of the Effective Date, Executive shall receive a grant of RSUs (the “2016 RSU Award”) equal to the quotient of (x) $1,000,000 divided by (y) the closing price of the Company’s common stock on the date of this Agreement, which amount shall be multiplied by a fraction, the numerator of which is the number of days during fiscal year 2016 that Executive is employed by the Company (i.e. from the Effective Date to and including December 31, 2016), and the denominator of which is the number of days in fiscal year 2016, rounded down to the nearest even whole number.  Of this amount, one-third will be subject to the one-year performance targets and two-thirds will be subject to the three-year performance targets, each as provided in Exhibit B. Such number of RSUs shall be deemed to be the “target” number of RSUs.  The terms and provisions of the 2016 RSU Award, other than the amount of the grant, shall be consistent with the form of RSU awards granted to other senior executives of the Company in March 2016, as reflected in Exhibit B.  In 2017 and in subsequent years of the Employment Term, Executive shall receive annual equity compensation with a value at target performance levels equal to $1,000,000, which shall be in such form and subject to performance-based and time-based vesting periods, conditions, timing of grant and other criteria consistent with grants to other senior executives as determined by the Compensation Committee from year to year. 
4.    Benefits.
(a)    General. During the Employment Term, Executive shall be entitled to participate in the Company’s employee benefit, fringe and perquisite plans, practices, policies and arrangements as in effect from time to time (collectively, “Employee Benefits”), on generally the same terms and conditions as each of the Employee Benefits are made available to other senior executives of the Company (other than with respect to annual bonuses, incentive plans and severance plans (as well as any other terms and conditions specifically determined under this Agreement), the benefits for each which shall be determined instead in accordance with this Agreement).
(b)    Reimbursement of Business Expenses. During the Employment Term, the Company shall reimburse Executive for reasonable and necessary business expenses incurred by Executive in the performance of Executive’s duties hereunder in accordance with its then prevailing policy for senior executives (which shall include appropriate itemization and substantiation of expenses incurred).
(c)    Housing. Commencing as of the Effective Date and conditioned on Executive’s continued employment with the Company, the Company shall reimburse Executive for up to six (6) months of housing expenses in New York City, not to exceed $7,500 per month.  In addition, the Company shall reimburse Executive for all necessary and reasonable relocation expenses per Company policy.  Within 120 days following the Effective Date, Executive shall, at his election, list his current primary residence (the “Residence”) for sale and if so elected shall obtain an Appraisal (as defined below) on the Residence within said 120 day period, the cost of such appraisal to be borne by the Company.  If Executive has been unable to sell the Residence within 12 months after the Effective Date, then, upon Executive’s request made within 30 thirty days after the expiration of said 12 month period (the “Notice Period”), the Company shall purchase the Residence from Executive at the value of the Appraisal.  The Company shall close on the purchase of the Residence within 60 days after receipt 

of such request.  Regardless of whether Executive sells the Residence to a third party or to the Company, the Company shall pay Executive’s reasonable and customary closing costs and real estate agent commissions (provided that no real estate commissions will be payable by the Company if the Company purchases the Residence).  An appraisal for purposes of this Agreement is an appraisal performed by a licensed real estate appraiser acceptable to the Company that does not have a prior personal or professional relationship with the Company or Executive.  The provisions of this Section shall not be applicable if Executive does not list the Residence within the 120 day period provided for above or fails to notify the Company of Executive’s request for the Company to purchase the Residence within the Notice Period.
 5.    Termination.
(a)    The Employment Term and Executive’s employment hereunder may be terminated by either party at any time and for any reason; provided that Executive will be required to give the Company at least 60 days advance written notice of any resignation of Executive’s employment (other than as a result of a Constructive Termination) and the Company will be required to give Executive at least 60 days advance written notice of a Termination without Cause. Notwithstanding any other provision of this Agreement, the provisions of this Section 5 shall exclusively govern Executive’s rights upon termination of employment with the Company and its affiliates.
(b)    By the Company For Cause or By Executive Other Than as a Result of a Constructive Termination.
(i)    The Employment Term and Executive’s employment hereunder may be terminated by the Company for Cause and shall terminate automatically upon the effective date of Executive’s resignation other than as a result of a Constructive Termination (as defined in Section 5(d)(i)).
(ii)    Definition of Cause. For purposes of this Agreement, “Cause” shall mean any one of the following events: (A) Executive’s repeated and willful refusal to undertake good faith efforts to substantially perform Executive’s duties hereunder (other than as a result of total or partial incapacity due to physical or mental illness or injury); (B) in connection with his employment, Executive engages in conduct that constitutes willful gross neglect or willful gross misconduct; (C) in connection with his employment, Executive engages in any willful act or omission which is injurious in a non-de minimis manner to the financial condition or business reputation of the Company and its subsidiaries (taken as a whole); (D) an act or acts on Executive’s part constituting (x) a felony under the laws of the United States or any state thereof or (y) a misdemeanor involving moral turpitude; or (E) Executive’s willful and material breach of Section 7 of this Agreement, any breach of Section 6 of this Agreement, or any breach of the representations in Section 9(l) of this Agreement. No act or failure to act shall be considered to be willful unless done or omitted to be done in bad faith and without reasonable belief it was in the best interests of the Company and its subsidiaries. Any act or failure to act based upon express direction given pursuant to a resolution of the Board or upon the express instructions of the Chairman of the Board (provided that Executive was not the Chairman of the Board at the applicable time) shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company. To the extent the Board reasonably determines that any act or failure to act alleged to constitute Cause is curable, Executive shall be provided with notice of at least 30 days to cure any act or omission alleged to constitute Cause. The Company may only terminate Executive for Cause following a resolution approved by a majority of the Board.
(iii)    If Executive’s employment is terminated by the Company for Cause, Executive shall be entitled to receive:
(A)    no later than 10 days following the date of termination, the Base Salary through the date of termination;
(B)    reimbursement, within 60 days following receipt by the Company of Executive’s claim for such reimbursement (including appropriate supporting documentation), for any unreimbursed business expenses properly incurred by Executive in accordance with Company policy prior to Executive’s termination; provided that such claims for such reimbursement are submitted to the Company within 90 days following the date of Executive’s termination of employment; and
(C)    such Employee Benefits, if any, as to which Executive may be entitled under the employee benefit plans of the Company, including accrued vacation, payable in accordance with the terms and conditions of such tax qualified employee benefit plans (the amounts described in clauses (A) through (C) hereof being referred to as the “Accrued Rights”).

Following such termination of Executive’s employment by the Company for Cause, except as set forth in this Section 5(b)(iii), Executive shall have no further rights to any compensation or any other benefits under this Agreement.
(iv)    If Executive resigns other than as a result of a Constructive Termination, Executive shall be entitled to receive the Accrued Rights. Following such resignation by Executive other than as a result of a Constructive Termination, except as set forth in this Section 5(b)(iv), Executive shall have no further rights to any compensation or any other benefits under this Agreement.
(c)    Disability or Death.
(i)    Disability. During any period that Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness or injury (the “Disability Period”), Executive shall continue to receive his full Base Salary set forth in Section 3(a) until his employment is terminated pursuant to Section 5(a). For purposes of this Agreement, “Disability” shall mean Executive’s inability to perform, with or without reasonable accommodation, Executive’s duties under this Agreement due to a physical or mental illness or injury for a period of six consecutive months or for an aggregate of 12 months in any consecutive 24-month period. Any question as to the existence of the Disability of Executive as to which Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to Executive and the Company. If Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third physician who shall make such determination in writing. The determination of Disability made in writing to the Company and Executive shall be final and conclusive for all purposes of this Agreement.
(ii) Upon termination of Executive’s employment hereunder for either Disability or death, Executive or Executive’s estate, survivors or beneficiaries (as the case may be) shall be entitled to receive:
(A)    the Accrued Rights;
(B)    no later than 10 days following the date of termination, a pro rata portion of the Annual Target Bonus, based on a fraction, the numerator of which is the number of days during the fiscal year up to and including the date of termination of Executive’s employment and the denominator of which is the number of days in such fiscal year (the “Pro-Rated Bonus”);
(C)    any Annual Bonus earned, but unpaid, as of the date of termination for the immediately preceding fiscal year, paid in accordance with Section 3(b) (except to the extent payment is otherwise deferred pursuant to any applicable deferred compensation arrangement with the Company, in which case such payment shall be made in accordance with the terms and conditions of such deferred compensation arrangement) (the “Earned Bonus”); and
(D)    death or disability benefits under any applicable plans and programs of the Company in accordance with the terms and provisions of such plans and programs.
(d)    By the Company Without Cause or Resignation by Executive as a Result of Constructive Termination.
(i)    A “Constructive Termination” shall be deemed to have occurred upon (A) a reduction in Executive’s Base Salary or Annual Bonus opportunities at threshold, target, and maximum (as a percentage of Base Salary) below the levels provided for in Section 3(a) and Section 3(b) of this Agreement, or the failure of the Company to pay or cause to be paid Executive’s Base Salary or Annual Bonus when due hereunder; (B) a material diminution in Executive’s authority or responsibilities from those described in Section 2 hereof; (C) the relocation of Executive’s primary office location to a location that is more than fifty (50) miles from the Executive’s primary office location as of the Effective Date; or (D) the Company’s failure to pay or provide any material Employee Benefits required to be provided to Executive under this Agreement; or (E) the Company’s failure to assign (by contract or by law) this Agreement to any Successor as required by Section 9(h) of this Agreement or (F) the Company’s  material breach of this Agreement or any applicable equity agreement; provided that none of the events described in this Section 5(d)(i) shall constitute Constructive Termination if Executive consents to such event and unless the Company fails to cure such event within 30 days after receipt from Executive of written notice of the event which constitutes Constructive Termination; provided, further, that “Constructive Termination” shall cease to exist for an event 

on the 90th day following the later of its occurrence or Executive’s knowledge thereof, unless Executive has given the Board written notice thereof prior to such date.
(ii)    If Executive’s employment is terminated by the Company without Cause (other than by reason of death or Disability) or Executive resigns with a basis for Constructive Termination, Executive shall be entitled to receive:
(A)    the Accrued Rights;
(B)    the Pro-Rated Bonus;
(C)    continuation of medical, vision and dental group insurance coverage (as applicable), contingent on Executive electing continuation coverage under COBRA (including dependent coverage) for 18 months (the “Continuation Period”) following the date of termination, with the Company reimbursing Executive on an after tax basis during the Continuation Period for the total amount of the monthly COBRA premiums payable by Executive for such continued benefits in excess of the cost Executive paid for such coverage (on a monthly premium basis) immediately prior to the date of termination; 
(D)    the Earned Bonus; and
(E)    subject to Executive’s continued compliance with Section 6 and material compliance with Section 7 hereof, (i) a lump-sum cash payment equal to the sum of (x) 200% of Executive’s Base Salary as of the date immediately prior to Executive’s termination of employment and (y) the sum of Executive’s Annual Bonuses payable (if any) in respect of the two fiscal years (the “Reference Fiscal Years”) immediately prior to the date of Executive’s termination of employment (or, if the date of Executive’s termination of employment occurs in 2016 or 2017, the sum of Executive’s Annual Bonuses will be deemed to be two times the Annual Target Bonus in lieu of the foregoing formulation) (the total of (x) and (y), the “Severance Target”); provided that if either Reference Fiscal Year is less than a full 12 months, then the Annual Bonus payable in respect of such fiscal year shall be annualized prior to making the foregoing calculation.
Such payments shall be paid to Executive on the 60th day immediately following the date of Executive’s termination of employment.
(e)    Release. Any and all amounts payable to Executive under Section 5 other than the Accrued Rights (collectively, the “Conditioned Benefits”) are subject to (i) Executive’s execution and non-revocation of a general release of claims in a form acceptable to the Company and no more onerous than other similar agreements entered into with other senior executives of the Company under similar circumstances (the “Release”) within 55 days of the date of termination and (ii) the expiration of any revocation period contained in such Release. Further, to the extent that any of the Conditioned Benefits constitutes “nonqualified deferred compensation” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), any payment of any amount or provision of any benefit otherwise scheduled to occur prior to the 60th day following the date of Executive’s termination of employment hereunder, but for the condition on executing the Release as set forth herein, shall not be made until the first regularly scheduled payroll date following such 60th day, after which any remaining Conditioned Benefits shall thereafter be provided to Executive according to the applicable schedule set forth herein.
(f)    Expiration of Employment Term. Unless the parties otherwise agree in writing, continuation of Executive’s employment with the Company beyond the expiration of the Employment Term shall be deemed an employment at-will and shall not be deemed to extend any of the provisions of this Agreement, and Executive’s employment may thereafter be terminated at will by either Executive or the Company; provided that the provisions of Sections 6, 7 and 8 of this Agreement shall survive any termination of this Agreement or Executive’s termination of employment hereunder.  The Initial RSU Award as well as all future equity grants shall provide that in the event that the Employment Term is not extended, then (i) any earned but unvested equity units (i.e., where the applicable performance period has been completed but any time vesting periods have not been completed) shall become fully vested and (ii) to the extent that any applicable performance period has not been completed, then upon the expiration of the Employment Term, any such performance metrics shall be measured as of that date (or to the nearest practicable date, and prorated to the extent necessary) to determine actual performance through such date and then prorated for the number of days during the performance period that occurred prior to the end of the Employment Term and such equity units shall become fully vested at the end of the Employment Term.

(g)    Notice of Termination; Board/Committee Resignation. Any purported termination of employment by the Company or by Executive (other than due to Executive’s death) pursuant to Section 5 of this Agreement shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of employment under the provision so indicated. Upon termination of Executive’s employment for any reason, Executive agrees to resign, as of the date of such termination and to the extent applicable, from the Board (and any committees thereof) and the board of directors (and any committees thereof) of any of the Company’s affiliates.
(h)    Excise Tax Provision. In the event it is determined that any payment or benefit (within the meaning of Section 280G(B)(2) of the Code, to Executive or for his benefit paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise in connection with, or arising out of, his employment (“Payments”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “Excise Tax”), then the total Payments shall be reduced to the extent the payment of such amounts would cause Executive’s total Payments to constitute an “excess parachute payment” under Section 280G of the Code and by reason of such excess parachute payment the Executive would be subject to an Excise Tax, but only if the after-tax value of the Payments calculated with the foregoing restriction exceed those calculated without the foregoing restriction.  In that event, Executive shall designate those rights, payments, or benefits under this Agreement, any other agreements, and any benefit arrangements that should be reduced or eliminated so as to avoid having the payment or benefit to Executive under this Agreement be deemed to be an excess parachute payment; provided, however, that in order to comply with Section 409A of the Code, the reduction or elimination will be performed in the order in which each dollar of value subject to a right, payment, or benefit reduces the parachute payment to the greatest extent.  All determinations under this subparagraph (h) shall be made at the expense of the Company by a nationally recognized public accounting firm selected by the Company and subject to approval of Executive, which approval shall not be unreasonably withheld.  Such determination shall be binding upon Executive and the Company in the absence of manifest error.  To the extent the terms of this subsection 5(h) conflict with the terms of an equity award granted pursuant to this Agreement, this subsection 5(h) shall govern.
6.    Non-Competition; Non-Solicitation. Executive acknowledges and recognizes the highly competitive nature of the businesses of the Company and its affiliates and accordingly agrees as follows:
(a)    Non-Competition.
(i)    During the Employment Term and, for a period of one year following the date Executive ceases to be employed by the Company (the “Restricted Period”), Executive will not, directly or indirectly, own, manage, operate, control, consult with, be employed by or otherwise provide services to, or participate in the ownership, management, operation or control of any person or entity (“Person”) whose primary and principal business activity is the conduct of the Business. For purposes of this Agreement, “Business” shall mean the ownership, management and/or development of neighborhood and community shopping centers in the United States. 
(ii)    Notwithstanding the foregoing, Executive’s ownership solely as a passive investor of 2% or less of the outstanding securities of any class of any company shall not, by itself, be considered to violate Section 6(a)(i).
(iii)    The period of time during which the provisions of this Section 6(a) shall be in effect shall be extended by the length of time during which Executive is in breach of the terms hereof as determined by any court of competent jurisdiction on the Company’s application for injunctive relief so long as the Company has not acquiesced in such activity. 
(b)    Non-Solicitation. During the Employment Term and the Restricted Period, Executive will not, whether on Executive’s own behalf or on behalf of or in conjunction with any Person:
(i)    solicit or encourage (which shall not include providing references on behalf of any such employee or issuing a non-targeted general employment advertisement) any employee of the Company or its subsidiaries at or above the level of Vice President to leave the employment of the Company or its subsidiaries (collectively, the “Restricted Group”), or hire any such employee who was engaged in the Business and employed by the Restricted Group as of the date of Executive’s termination of employment with the Company or who left such employment of the Restricted Group (except when terminated without 

Cause) coincident with, or within one year prior to, the date of Executive’s termination of employment with the Company; or
(ii)    intentionally encourage any material consultant engaged in the Business and retained by the Restricted Group to cease working with the Restricted Group.
(c)    It is expressly understood and agreed that although Executive and the Company consider the restrictions contained in this Section 6 to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that any restriction contained in this Section 6 is an unenforceable restriction against Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply with such deletion or modification as such court may judicially determine or indicate to make the Agreement valid and enforceable. The restrictions contained in this Section 6 shall be construed as separate and individual restrictions and shall each be capable of being reduced in application or severed without prejudice to the other restrictions contained in this Section 6 or to the remaining provisions of this Agreement.
7.    Confidentiality; Intellectual Property.
(a)    Confidentiality.
(i)    Executive may not at any time (whether during or after Executive’s employment with the Company), disclose, divulge, reveal, communicate, share, transfer or provide access to any Confidential Information that he may obtain during his employment by the Company to any other Person, except (A) in connection with performing his duties for the Company or its subsidiaries, (B) to the Company or its subsidiaries, or to any authorized (or apparently authorized) agent or representative of any of them, (C) when required to do so by law or regulation or requested by a court, governmental agency, legislative body, arbitrator or other person with apparent jurisdiction to order him to communicate, divulge or make accessible any such confidential information, (D) in the course of any proceeding under Section 9(d) of this Agreement, or (E) in confidence to any attorney or other professional advisor for the purposes of securing professional advice. For purposes of this Agreement, “Confidential Information” shall mean any proprietary or confidential information of the Company and its subsidiaries, and includes, without limitation, trade secrets, know-how, research and development, software, databases, inventions, processes, formulae, technology, designs and other intellectual property, information concerning finances, investments, profits, pricing, costs, products, services, vendors, customers, clients, partners, investors, personnel, compensation, recruiting, training, advertising, sales, marketing, promotions, government and regulatory activities and approvals; provided, however, that the term Confidential Information shall not include any document, record, data, compilation or other information that is known or generally available to the public, or within any trade or industry of the Company or any of its affiliates, other than as a result of Executive’s violation of this Section 7, or not otherwise considered confidential by persons within such trade or industry.
(ii)    [Reserved]. 
(iii)    Upon termination of Executive’s employment with the Company for any reason, Executive shall (A) cease and not thereafter commence use of any Confidential Information or intellectual property (including without limitation, any patent, invention, copyright, trade secret, trademark, trade name, logo, domain name or other source indicator) owned or used by the Company, its subsidiaries or affiliates; and (B) immediately destroy, delete, or return to the Company, at the Company’s option, all originals and copies in any form or medium (including memoranda, books, papers, plans, computer files, letters and other data) in Executive’s possession or control (including any of the foregoing stored or located in Executive’s office, home, laptop or other computer, whether or not Company property) that contain Confidential Information or otherwise relate to the Business of the Company and its subsidiaries, except that Executive may retain only those portions of any personal notes, notebooks and diaries that do not contain any Confidential Information and may retain any Company-issued cell phone, his contacts and calendars and any compensation-related information or information reasonably necessary for tax return purposes.

(b)     Intellectual Property.
(i)    If Executive creates, invents, designs, develops, contributes to or improves any works of authorship, inventions, intellectual property, materials, documents or other work product (including, without limitation, research, reports, software, databases, systems, applications, presentations, textual works, content, 

or audiovisual materials) (“Works”), either alone or with third parties, at any time during Executive’s employment by the Company and within the scope of such employment and with the use of any the Company resources (“Company Works”), Executive shall promptly and fully disclose the same to the Company and hereby irrevocably assigns, transfers and conveys, to the maximum extent permitted by applicable law, all rights and intellectual property rights therein (including rights under patent, industrial property, copyright, trademark, trade secret, unfair competition and related laws) to the Company to the extent ownership of any such rights does not vest originally in the Company.
(ii)    Executive shall take all requested actions and execute all requested documents (including any licenses or assignments required by a government contract) at the Company’s expense (but without further remuneration) to assist the Company in validating, maintaining, protecting, enforcing, perfecting, recording, patenting or registering any of the Company’s rights in the Company Works.
(iii)    Executive shall not improperly use for the benefit of, bring to any premises of, divulge, disclose, communicate, reveal, transfer or provide access to, or share with the Company any confidential, proprietary or non-public information or intellectual property relating to a former employer or other third party without the prior written permission of such third party. Executive shall comply with all relevant policies and guidelines of the Company that are from time to time previously disclosed to Executive, including regarding the protection of Confidential Information and intellectual property and potential conflicts of interest.
(iv)    The provisions of Section 7 hereof shall survive the termination of Executive’s employment for any reason (except as otherwise set forth in Section 7(a)(ii) hereof).
8.    Specific Performance. Executive acknowledges and agrees that the Company’s remedies at law for a breach or threatened breach of any of the provisions of Section 6 and Section 7 of this Agreement would be inadequate and the Company would suffer irreparable damages as a result of such breach or threatened breach. In recognition of this fact, Executive agrees that, in the event of such a breach, the Company, without posting any bond, shall be entitled, in addition to any other remedy available at law or equity, to cease making any payments or providing any benefit otherwise required by this Agreement and obtain equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other equitable remedy which may then be available. In addition, upon any breach of Section 6 or any material breach of Section 7 of this Agreement (in each case as determined by a court of competent jurisdiction) within four years of the termination of Executive’s employment, Executive shall promptly return to the Company upon request all cash payments (other than the Accrued Rights) made to Executive pursuant to Section 5 (if any), less any amounts paid by Executive as taxes in respect of such payments (unless such taxes are actually recovered by Executive from the relevant governmental authority, in which case such tax amounts also shall be returned to the Company). Any determination under Section 5(b)(ii)(E), Section 5(d)(ii)(E), or this Section 8 of whether the Executive is in compliance with Section 6 hereof and material compliance with Section 7 hereof shall be determined based solely on the contractual provisions provided therein and the facts and circumstances of Executive’s actions without regard to whether the Company could obtain an injunction or other relief under the law of any particular jurisdiction.
9.    Miscellaneous.
(a)    Professional Fees and Expenses. The Company shall pay or reimburse Executive up to $15,000 for reasonable attorneys’ or other professional fees and for any other expenses Executive incurs in connection with the preparation, negotiation, execution and delivery of this Agreement and the equity incentive agreements entered into in connection herewith. Such reimbursements shall be made within 10 days following presentation to the Company of appropriate invoices or other documentation for the amount of such fees and expenses.
(b)    Indemnification; Directors’ and Officers’ Insurance. To the fullest extent permitted by applicable law, the Company shall indemnify and hold Executive harmless for all acts and omissions occurring during his employment with the Company or service as a member of the Board to the extent provided under the Company’s charter, by-laws and applicable law and shall promptly advance to Executive or Executive’s heirs or representatives all damages, costs, liabilities, losses and expenses (including reasonable attorneys’ fees and expenses) (collectively, “Expenses”) as a result of any claim, demand, request, investigation, dispute, controversy, threat, discovery request or request for testimony or information (collectively, a “Claim”) or any proceeding (whether civil, criminal, administrative or investigative), or any threatened Claim or proceeding (whether civil, criminal, administrative or investigative), against Executive that arises out of or relates to Executive’s service as an officer, director or employee, as the case may be, of the Company, or the Executive’s service in any such capacity or similar capacity with an affiliate of the Company or other entity at the request of the Company, upon receipt 

by the Company of a written request with appropriate documentation of such Expenses, and an undertaking by Executive to repay the amount advanced if it shall ultimately be determined that Executive is not entitled to be indemnified by the Company against such Expenses. During the Employment Term and for a term of six years thereafter, the Company, or any successor to the Company, shall purchase and maintain, at its own expense, directors’ and officers’ liability insurance providing coverage for Executive in the same amount as for members of the Board.
(c)    Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles thereof.
(d)    Jurisdiction; Venue. Except as otherwise provided in Section 8 in connection with equitable remedies, each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of any federal court sitting in the Southern District of New York or any state court in the First Judicial Department over any suit, action or proceeding arising out of or relating to this Agreement, and each of the parties agrees that any action relating in any way to this Agreement must be commenced only in the courts of the State of New York, federal or state. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted or not prohibited by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in such a court and any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum. Each of the parties hereto hereby irrevocably consents to the service of process in any suit, action or proceeding by sending the same by certified mail, return receipt requested, or by recognized overnight courier service, to the address of such party set forth in Section 9(k).  In the event of any litigation regarding the enforcement of any of the terms or provisions of this Agreement, the prevailing party in any such litigation shall be awarded reasonable attorney fees and court costs.
(e)    Entire Agreement; Amendments. This Agreement (including, without limitation, the schedules and exhibits attached hereto) contains the entire understanding of the parties with respect to the employment of Executive by the Company and supersedes all prior agreements and understandings (including verbal agreements) between Executive and the Company and/or its current or former affiliates regarding the terms and conditions of Executive’s employment with the Company and/or its current or former affiliates. There are no restrictions, agreements, promises, warranties, covenants or undertakings between the parties with respect to the subject matter herein other than those expressly set forth herein. This Agreement (including, without limitation, the schedules and exhibits attached hereto) may not be altered, modified, or amended except by written instrument signed by the parties hereto.
(f)    No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.
(g)    Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.
(h)    Assignment. This Agreement, and all of Executive’s rights and duties hereunder, shall not be assignable or delegable by Executive. Any purported assignment or delegation by Executive in violation of the foregoing shall be null and void ab initio and of no force and effect. This Agreement shall be assigned by the Company to a person or entity which is a successor in interest (“Successor”) to substantially all of the business operations of the Company. Upon such assignment, the rights and obligations of the Company hereunder shall become the rights and obligations of such affiliate or Successor.
(i)    Set Off; No Mitigation. The Company’s obligation to pay Executive the amounts provided and to make the arrangements provided hereunder shall not be subject to set-off, counterclaim or recoupment of amounts owed by Executive to the Company or its affiliates. Executive shall not be required to mitigate the amount of any payment provided for pursuant to this Agreement by seeking other employment, and such payments shall not be reduced by any compensation or benefits received from any subsequent employer or other endeavor. Any amounts due under Section 5 of this Agreement are considered reasonable by the Company and are not in the nature of a penalty.
(j)    Compliance with Code Section 409A.
(i)    The intent of the parties is that payments and benefits under this Agreement comply with or be exempt from Code Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be in compliance therewith. If any provision of this Agreement (or of any award of compensation, including equity compensation or benefits) would cause Executive to incur any additional tax 

or interest under Code Section 409A, the Company shall, after consulting with and receiving the approval of Executive, reform such provision in a manner intended to avoid the incurrence by Executive of any such additional tax or interest.
(ii)    A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits that are considered nonqualified deferred compensation under Code Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A, and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” The determination of whether and when a separation from service has occurred for proposes of this Agreement shall be made in accordance with the presumptions set forth in Section 1.409A-1(h) of the Treasury Regulations.
(iii)    Any provision of this Agreement to the contrary notwithstanding, if at the time of Executive’s separation from service, the Company determines that Executive is a “specified employee,” within the meaning of Code Section 409A, then to the extent any payment or benefit that Executive becomes entitled to under this Agreement on account of such separation from service would be considered nonqualified deferred compensation under Code Section 409A, such payment or benefit shall be paid or provided at the date which is the earlier of (i) 6 months and one day after such separation from service and (ii) the date of Executive’s death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 9(j) (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or provided to Executive in a lump-sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.
(iv)    Any reimbursements and in-kind benefits provided under this Agreement that constitute deferred compensation within the meaning of Code Section 409A shall be made or provided in accordance with the requirements of Code Section 409A, including that (A) in no event shall any fees, expenses or other amounts eligible to be reimbursed by the Company under this Agreement be paid later than the last day of the calendar year next following the calendar year in which the applicable fees, expenses or other amounts were incurred; (B) the amount of expenses eligible for reimbursement, or in-kind benefits that the Company is obligated to pay or provide, in any given calendar year shall not affect the expenses that the Company is obligated to reimburse, or the in-kind benefits that the Company is obligated to pay or provide, in any other calendar year, provided that the foregoing clause (B) shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect; (C) Executive’s right to have the Company pay or provide such reimbursements and in-kind benefits may not be liquidated or exchanged for any other benefit; and (D) in no event shall the Company’s obligations to make such reimbursements or to provide such in-kind benefits apply later than Executive’s remaining lifetime (or if longer, through the 6th anniversary of the Effective Date).
(v)    For purposes of Code Section 409A, Executive’s right to receive any installment payments shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (for example, “payment shall be made within 30 days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company. In no event may Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement, to the extent such payment is subject to Code Section 409A.
(vi)    To the extent the terms of this subsection 9(j) conflict with the terms of an equity award granted pursuant to this Agreement, this subsection 9(j) shall govern. 
(k)    Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered by e-mail, hand or overnight courier or three days after it has been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

If to the Company:
Brixmor Property Group Inc.
450 Lexington Avenue
New York, New York 10017
Attention: General Counsel
steven.siegel@brixmor.com
If to Executive:
To the most recent address of Executive set forth in the personnel records of the Company.

(l)    Executive Representation. Executive hereby represents to the Company that the execution and delivery of this Agreement by Executive and the Company and the performance by Executive of Executive’s duties hereunder shall not constitute a breach of the terms of any employment agreement or other agreement or written policy to which Executive is a party or otherwise bound. Executive hereby further represents that he is not subject to any restrictions on his ability to solicit, hire or engage any employee or other service-provider. Executive agrees that the Company is relying on the foregoing representations in entering into this Agreement and related equity-based award agreements.
(m)    Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.
(n)    Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
(o)     Negotiation of Agreement. This Agreement has been negotiated by the Executive and the Company, and both parties have had the opportunity to consult counsel.  Accordingly, this Agreement is not to be construed in favor of one party or another, or its interpretation affected by whether a particular provision was drafted by one party or the other.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.

	
	
	BRIXMOR PROPERTY GROUP, INC.

	 

	/s/ Steven F. Siegel

	By: Steven F. Siegel

	Title: Executive Vice President

	 

	EXECUTIVE

	 

	/s/ Mark Horgan

	Mark Horgan

	 

EXHIBIT A

BRIXMOR PROPERTY GROUP INC.
RESTRICTED STOCK UNIT AGREEMENT

THIS RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) dated as of the Effective Date set forth in the Award Certificate (the “Award Certificate”) is made by and between Brixmor Property Group Inc. (together with its Subsidiaries, the “Company”) and the Participant. The Award Certificate is included with and made part of this Agreement. In this Agreement and each Award Certificate, unless the context otherwise requires, words and expressions shall have the meanings given to them in the Plan, except as herein defined.

		
	1.
	Definitions. For purposes of this Agreement, the following terms shall have the following meanings:

a. “Award” means the award as set forth on the Award Certificate.

b. “Award Certificate” means the certificate attached to this Agreement specifying the Effective Date and the Award.

c. “Board” means the Board of Directors of Brixmor Property Group Inc.

d. “Effective Date” means the Effective Date set forth in the Award Certificate.

e. “Participant” means the Eligible Person whose name is set forth in the Award Certificate.

f. “Plan” means the Brixmor Property Group Inc. 2013 Omnibus Incentive Plan.

g. “Qualifying Termination” means a termination of Participant’s employment by the Company without Cause, by Participant as a result of a Constructive Termination or while Participant has a Disability or resulting from the Participant’s death (as Cause, Constructive Termination and Disability are defined in Participant’s employment agreement with the Company dated April 26, 2016).  In addition, solely for the purposes of this Restricted Stock Unit Agreement, any termination of Participant’s employment (other than for Cause) prior to May 20, 2021 shall also constitute a Qualifying Termination.

h. “RSU” or “Restricted Stock Unit” means a restricted stock unit granted hereunder pursuant to the Plan.

i. “Termination Date” means the effective date of a Termination of Employment for any reason.

j. “Termination of Employment” means a “separation from service” of the Participant from the Company, as defined under Section 409A.

2. RSU Award; Settlement of RSUs.

		
	a.
	Grant of Award. The Company grants to the Participant the number of RSUs set forth in the Award Certificate.

		
	b.
	Vesting. Subject to Section 3, the RSUs granted under the Award shall become vested as follows, subject to the Participant’s continued employment with the Company through the applicable date(s) (each, a “Vesting Date”): One-fifth of the Award shall vest on each of the first, second, third, fourth and fifth anniversary dates of the Effective Date.

		
	c.
	Issuance of Common Stock.

		
	i.
	Settlement of RSUs. Shares underlying a vested RSU shall be transferred to the Participant as soon as administratively practicable following the applicable Vesting Date. No shares of Common Stock shall be issued to the Participant in respect of an RSU prior to the applicable Vesting Date. After an RSU vests, the Company shall promptly cause to be registered in Participant’s name or in the name of the executor or personal representative of the Participant’s estate, as the case may be, one share of Common Stock in payment for each such vested RSU. For purposes of this Agreement, the date on which vested RSUs are converted into Common Stock shall be referred to as the “Settlement Date.”

		
	ii.
	Fractional RSUs. In the event the Participant is vested in a fractional portion of an RSU, such portion shall be rounded down to the nearest whole number.

3.  Effects of Certain Events.

		
	a.
	General. Subject to Section 3(b), in the event that the Participant’s employment with the Company is terminated (including upon resignation by the Participant), any unvested RSUs shall be forfeited automatically and without further action.

		
	b.
	Qualifying Termination. Notwithstanding the foregoing:

		
	i.
	In the event of the Participant’s Qualifying Termination, all unvested RSUs (and any associated Dividend Equivalent Amount) shall immediately vest.

		
	c.
	Termination for Cause. In the event of the Participant’s termination of employment for Cause, then any unvested RSUs (and any associated Dividend Equivalent Amount) and any shares underlying RSUs that have not yet been transferred to the Participant shall be automatically forfeited as of the Termination Date.

4. Dividend Equivalent Rights.

		
	a.
	Each RSU shall have a Dividend Equivalent Right associated with it with respect to any cash dividends on Common Stock that have a record date after the Effective Date and prior to the applicable Settlement Date for such RSU (the total accrued dividends for each earned RSU, a “Dividend Equivalent Amount”).

		
	b.
	The Dividend Equivalent Amount shall be calculated by crediting a hypothetical bookkeeping account for the Participant with an amount equal to the amount of cash dividends that would have been paid on the dividend payment date with respect to the number of shares of Common Stock underlying the unsettled earned RSUs (or RSUs which become earned in accordance with this Agreement) if such shares had been outstanding on the dividend record date. The Participant’s Dividend Equivalent Amount shall not be credited with interest or earnings.

		
	c.
	Any Dividend Equivalent Amount: (i) shall be subject to the same terms and conditions applicable to the earned RSU to which the Dividend Equivalent Right relates, including, without limitation, the restrictions on transfer and the forfeiture conditions contained in the Agreement; (ii) shall vest and be settled upon the same terms and at the same time of settlement as the RSUs to which they relate; and (iii) will be denominated and payable solely in cash. The payment of Dividend Equivalent Rights will be net of all applicable withholding taxes pursuant to Section 5(g).

5. Miscellaneous.

		
	a.
	Administration. The Committee shall administer the Award.

		
	b.
	Agreement Subject to Plan; Amendment. By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The Awards and RSUs granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail. The terms of the Agreement and the Award Certificate may be amended from time to time by the Committee in its sole discretion in any manner that it deems appropriate; provided, that any such amendment that would materially and adversely affect any right of the Participant shall not to that extent be effective without the consent of the Participant.

		
	c.
	Participant is Unsecured General Creditor. The Participant and the Participant’s heirs, successors, and assigns shall have no legal or equitable rights, interest, or claims in any specific property or assets of the Company. Assets of the Company shall not be held under any trust for the benefit of the Participant or the Participant’s heirs, successors, or assigns, or held in any way as collateral security for the fulfilling of the obligations of the Company under the Agreement or the Plan. Any and all of the Company’s assets shall be, and remain, the general unrestricted assets of the Company. The Company’s sole obligation under this Agreement and in respect of the 

Award shall be merely that of an unfunded and unsecured promise of the Company to pay the Participant in the future, subject to the conditions and provisions of the Agreement and the Plan.

		
	d.
	No Transferability; No Assignment. Neither the Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the Award or the RSUs. No part of the RSUs or the shares of Common Stock delivered in respect of any vested RSUs, and/or amounts payable under this Agreement shall, prior to actual settlement or payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by the Participant or any other person, be transferable by operation of law in the event of the Participant’s or any other person’s bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.

		
	e.
	No Right to Continued Employment. Neither the Plan nor this Agreement nor the Participant’s receipt of the Award hereunder (or RSUs issued in settlement of the Award) shall impose any obligation on the Company or any Affiliate to continue the employment of the Participant, subject however to the terms and provisions of Participant’s employment agreement with the Company dated April [  ], 2016.

		
	f.
	Limitation on Shareholder Rights. The Participant shall have no rights as a shareholder of the Company, no dividend rights (subject to Dividend Equivalent Rights as set forth in Section 4) and no voting rights with respect to the RSUs and any shares of Common Stock underlying or issuable in respect of such RSUs until such shares of Common Stock are actually issued to and held of record by the Participant. No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the shares of Common Stock, except for the Dividend Equivalent Rights as set forth in Section 4.

		
	g.
	Tax Withholding.

		
	i.  
	Regardless of any action the Company takes with respect to any or all federal, state or local income tax, employment tax or other tax related items (“Tax Related Items”), the Participant acknowledges that the ultimate liability for all Tax Related Items associated with the RSUs (and the Dividend Equivalent Rights associated therewith) is and remains the Participant’s responsibility and that the Company: (A) makes no representations or undertakings regarding the treatment of any Tax Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant or vesting of the RSUs, the delivery of the shares of Common Stock, the subsequent sale of shares of Common Stock acquired at vesting and the receipt of any Dividend Equivalent Rights; and (B) does not commit to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax Related Items. Further, if Participant has relocated to a different jurisdiction between the date of grant and the date of any taxable event, Participant acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

		
	ii. 
	Prior to the relevant taxable event, the Participant shall pay or make adequate arrangements satisfactory to the Company, in its sole discretion, to satisfy all withholding and payment on account obligations for Tax Related Items of the Company. In this regard, the Participant authorizes the Company, in its sole discretion, to satisfy the obligations with regard to all Tax Related Items legally payable by the Participant with respect to the RSUs by withholding in shares of Common Stock otherwise issuable to the Participant, provided that the Company withholds only the amount of shares of Common Stock necessary to satisfy the minimum statutory withholding amount using the Fair Market Value of the shares of Common Stock on the Settlement Date. Participant shall pay to the Company any amount of Tax Related Items that the Company may be required to withhold as a result of the RSUs that are not satisfied by the previously described method. The Company may refuse to deliver the shares of Common Stock to the Participant if the Participant fails to comply with Participant’s obligations in connection with the Tax Related Items as described in this Section.

		
	h.
	Compensation Recovery Policy. The compensation under this Agreement shall be subject to being recovered under the Company’s compensation recovery policy, if any, or any similar policy that the Company may adopt from time to time applicable to all senior executives. For avoidance of doubt, compensation recovery rights to shares of Common Stock issued under this Agreement shall extend to any proceeds realized by the Participant upon the sale or other transfer of such shares of Common Stock. Without limiting the generality of the foregoing, if in the opinion of the independent directors of the Board, (i) the Company’s financial results are restated or were materially misstated due in whole or in part to intentional fraud or misconduct by the Participant, and (ii) the payment or equity or equity-based award made or issued pursuant to this Agreement based on the corrected 

financial results would be less than the amount previously paid or issued, then by approval by a majority of the independent directors of the Board, the Board may, based upon the facts and circumstances surrounding the restatement, direct that the Company recover all or a portion of any payment or equity or equity-based award made or issued pursuant to this Agreement, and the Participant shall be required, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within 10 business days’ of the Company’s request to Participant therefore, an amount equal to the excess, if any, of (i) the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) Participant received upon the sale or other disposition of, or distributions in respect of the RSUs and any shares of Common Stock issued in respect of such RSUs over (ii) the aggregate Cost of such shares (if any). For purposes of this Agreement, “Cost” means, in respect of any share of Common Stock, the amount paid by Participant for such share, as proportionately adjusted for all subsequent distributions.

		
	i.
	Section 409A Compliance. The Award and the shares of Common Stock and amounts payable under this Agreement are intended to comply with the requirements of Section 409A so as to prevent the inclusion in gross income of any benefits accrued hereunder in a taxable year prior to the taxable year or years in which such amount would otherwise be actually distributed or made available to the Participants. The Agreement shall be administered and interpreted to the extent possible in a manner consistent with that intent. Notwithstanding the terms of Section 2 or Section 3, if a Participant is a “specified employee” within the meaning of Section 409A, no payments in respect of any Award or RSU that is “deferred compensation” subject to Section 409A and which would otherwise be payable upon the Participant’s “separation from service” (as defined in Section 409A) shall be made to such Participant prior to the date that is six months after the date of the Participant’s “separation from service” or, if earlier, the Participant’s date of death. Following any applicable six month delay, all such delayed payments will be paid in a single lump sum on the earliest date permitted under Section 409A that is also a business day. The Participant is solely responsible and liable for the satisfaction of all taxes and penalties under Section 409A that may be imposed on or in respect of the Participant in connection with this Agreement, and the Company shall not be liable to any Participant for any payment made under this Plan that is determined to result in an additional tax, penalty or interest under Section 409A, nor for reporting in good faith any payment made under this Agreement as an amount includible in gross income under Section 409A.

		
	j.
	Section 280G of the Code. In the event that the accelerated vesting of the RSUs or the amounts payable under this Agreement, together with all other payments and the value of any benefit received or to be received by the Participant, would result in all or a portion of such payment being subject to excise tax under Section 4999 of the Code (the “Excise Tax”), then the Participant’s payment shall be either (a) the full payment or (b) such lesser amount that would result in no portion of the payment being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state, and local employment taxes, income taxes, and the Excise Tax, results in the receipt by the Participant, on an after-tax basis, of the greatest amount of the payment notwithstanding that all or some portion of the payment may be taxable under Section 4999 of the Code. Any such reduction shall be made by the Company in compliance with all applicable legal authority, including Section 409A. All determinations required to be made under this Section shall be made by the nationally recognized accounting firm which is the Company’s outside auditor immediately prior to the event triggering the payments that are subject to the Excise Tax, which firm must be reasonably acceptable to the Participant (the “Accounting Firm”). The Company shall cause the Accounting Firm to provide detailed supporting calculations of its determinations to the Company and the Participant. All fees and expenses of the Accounting Firm shall be borne solely by the Company. The Accounting Firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code).

		
	k.
	Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Maryland applicable to contracts made and performed wholly within the State of Maryland, without giving effect to the conflict of law provisions thereof. Any suit, action or proceeding with respect to this Agreement (or any provision incorporated by reference), or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of New York, and each of the Participant and the Company hereby submits to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding, or judgment. Each of the Participant and the Company hereby irrevocably waives (i) any objections which it may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of New York, (ii) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum and (iii) any right to a jury trial.

		
	l.
	Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

* * * * *

BRIXMOR PROPERTY GROUP INC.
RESTRICTED STOCK UNIT AGREEMENT
AWARD CERTIFICATE

		
	1.
	Brixmor Property Group Inc., a Maryland corporation (together with its Subsidiaries, the “Company”), and the Participant who is signatory hereto, hereby agree to the terms of this Award Certificate and the Brixmor Property Group Inc. Restricted Stock Unit Agreement (the “Agreement”) to which it is attached. All capitalized terms used in this Award Certificate and not defined herein shall have the meanings assigned to them in the Company’s 2013 Omnibus Incentive Plan (the “Plan”) or the Agreement.

		
	2.
	Subject to the terms of this Award Certificate, the Agreement and the Plan, the Company hereby grants to the Participant as of the Effective Date, the Award on the terms set forth below:

	
		
	 

	 
	 

	Participant:
	[    ]

	Effective Date:
	[     ], 2016

	RSU Award Amount:
	 

	 
	 

		
	3.
	The Award and any RSUs which may become vested under the Award are subject to the terms and conditions set forth in this Award Certificate, the Plan and the Agreement. All terms and provisions of the Plan and the Agreement, as the same may be amended from time to time, are incorporated and made part of this Award Certificate. If any provision of this Award Certificate is in conflict with the terms of the Plan or the Agreement, then the terms of the Plan or the Agreement, as applicable, shall govern. The Participant hereby expressly acknowledges receipt of a copy of the Plan and the Agreement.

IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as of the date first above written.

	
		
	 

	 
	 

	BRIXMOR PROPERTY GROUP INC.

By: _______________________________
 Name: 
 Title: Authorized Signatory
	PARTICIPANT

___________________________________
Name: [      ]

EXHIBIT B

BRIXMOR PROPERTY GROUP INC.
FORM OF 2016 RSU AWARD

BRIXMOR PROPERTY GROUP INC.
RESTRICTED STOCK UNIT AGREEMENT
THIS RESTRICTED STOCK UNIT AGREEMENT (this “Agreement”) dated as of the Effective Date set forth in the Award Certificate (the “Award Certificate”) is made by and between Brixmor Property Group Inc. (together with its Subsidiaries, the “Company”) and the Participant.  The Award Certificate is included with and made part of this Agreement.  In this Agreement and each Award Certificate, unless the context otherwise requires, words and expressions shall have the meanings given to them in the Plan, except as herein defined.
1.Definitions.  For purposes of this Agreement, the following terms shall have the following meanings:

(a)“Achievement Percentage” means the “Percentage of Award Earned” specified with respect to the threshold, target, and maximum levels for each Performance Component on the Award Certificate, or a percentage determined using linear interpolation if actual performance falls between threshold and target, or between target and maximum levels. In the event that actual performance does not meet the threshold level for any Performance Component, the “Achievement Percentage” with respect to such Performance Component shall be zero.

(b)“Award” means the award as set forth on the Award Certificate. 

(c)“Award Certificate” means the certificate attached to this Agreement specifying the Effective Date and the Award, and the applicable Performance Periods and Performance Components for the Award.

(d)“Board” means the Board of Directors of Brixmor Property Group Inc.

(e)“Brixmor TSR” means the compound annual growth rate, expressed as a percentage and rounded to the nearest one decimal point, in the value of a share of Common Stock due to stock appreciation and dividends, assuming dividends are reinvested in Common Stock as and when paid, during the applicable Performance Period.  For this purpose, the “Beginning Stock Price” means $25.82 per share of Common Stock and the “Ending Stock Price” means the average of the closing sales price of the Company’s Common Stock on the NYSE for the ten (10) trading days immediately preceding and including the last day of a Performance Period (or such other period as the Committee may determine); provided, however, for purposes of the Relative US Shopping Center Index TSR Performance Component, the Ending Stock Price shall be the closing sales price of the Company’s Common Stock on the last day of the applicable Performance Period. 

(f)“Adjusted EBITDA” means adjusted EBITDA as reported in the Company’s supplemental disclosure for any fiscal quarter. 

(g)“Adjusted EBITDA Per Share” means the per share amount obtained by dividing adjusted EBITDA by Fully Diluted Shares. 

(h)“Effective Date” means the Effective Date set forth in the Award Certificate.

(i)“Fully Diluted Shares” means the fully diluted share count of the Company, as reported in the Company’s supplemental disclosure for any fiscal quarter. 

(j) “Participant” means the Eligible Person whose name is set forth in the Award Certificate.

(k)“Performance Components” means the performance criteria applicable to the Award, as set forth on the Award Certificate.

(l)“Performance Period” means the applicable performance period specified in the Award Certificate.

(m)“Plan” means the Brixmor Property Group Inc. 2013 Omnibus Incentive Plan.

(n)“Qualifying Termination” means a termination of Participant’s employment (w) by the Company without Cause or while Participant has a Disability (as defined in the Plan), (x) if the Participant’s written employment agreement with the Company (or any affiliate) includes a definition of “good reason” or “constructive termination,” by the Participant for “good reason” or “constructive termination” (as defined in such written employment agreement) (y) which is a Retirement, or (z) resulting from the Participant’s death.  In addition, solely for the purpose of this Restricted Stock Unit Agreement, any termination of Participant’s employment (other than for Cause) prior to May 20, 2021 shall also constitute a Qualifying Termination.

(o)“Relative US Shopping Center Index TSR” means the comparison of the Brixmor TSR to the Shopping Center Index TSR.

(p)“Relative Weighting” means, in respect of any Performance Component, the “Relative Weighting” set forth for such Performance Component on the Award Certificate.

(q)“Retirement” means the Participant’s Termination of Employment with the Company, other than for Cause, following the date on which (i) the sum of the following equals or exceeds 65 years: (A) the number of years of the Participant’s employment and other business relationships with the Company and any predecessor company, and (B) the Participant’s age on the date of termination, (ii) the Participant attained the age of 55 years old, and (iii) the number of years of the Participant’s employment and other business relationships with the Company and any predecessor company is at least five (5).

(r)“RSU” or “Restricted Stock Unit” means a restricted stock unit granted hereunder pursuant to the Plan.

(s)“Shopping Center Index TSR” means the compound annual growth rate, rounded to the nearest decimal point, in the value of the FTSE NAREIT US Shopping Centers Index during the applicable Performance Period.  The Shopping Center Index TSR is obtained from information publicly reported by the National Association of Real Estate Investment Trusts. 

(t)“Target Award Amount” means, in respect of the Award, the “Target Award Amount” set forth for the Award on the Award Certificate.

(u)“Termination Date” means the effective date of a Termination of Employment for any reason. 

(v)“Termination of Employment” means a “separation from service” of the Participant from the Company, as defined under Section 409A.

2.Range of RSUs under Awards; Calculation of RSUs; Settlement of RSUs.

(a)Grant of Award Ranges.  The Company grants to the Participant the opportunity to earn a number of RSUs under the Award equal to the ranges set forth in the Award Certificate for the Award (with a threshold, target, and maximum number of RSUs for the Award). The actual number of RSUs earned under the Award shall be determined pursuant to Section 2(b) and, further, the RSUs shall be subject to the satisfaction of the service vesting conditions set forth in the Award Certificate and herein. 

(b)Calculation of Number of Earned RSUs. Following the last day of the Performance Period applicable to the Award (the “Determination Date”), subject to the Participant’s continued employment through the last day of the Performance Period:

(i)The total number of RSUs earned and issuable under the Award shall be calculated by the Committee with respect to each Performance Component under the Award.  For each Performance Component, the total number of RSUs earned and issuable shall be equal to the product of (x) the Target Award Amount for such Performance Component, multiplied by (y) the Relative Weighting for such Performance Component, multiplied by (z) the Achievement Percentage for such Performance Component.  In the event that the Company’s actual 

performance does not meet the threshold level for a Performance Component, no RSUs shall be earned in respect of that Performance Component. 

(ii)The foregoing calculation shall be made no later than 90 days following the Determination Date (or as soon thereafter as reasonably practicable), at which time the Company shall notify the Participant of the total number of RSUs earned and issuable under the Award (rounded down to the nearest whole RSU). 

(c)Vesting. Subject to Section 3, the RSUs earned under the Award shall become vested as follows, subject to the Participant’s continued employment with the Company through the applicable date(s) (each, a “Vesting Date”):

(i)the RSUs earned in respect of the one year measurement component of the Award, if any, shall become vested with respect to 50% of such RSUs on the applicable Determination Date, and with respect to an additional 25% of such RSUs on each of January 1, 2018 and January 1, 2019; and 

(ii)the RSUs earned in respect of the three year measurement component of the Award, if any, shall become vested with respect to 50% of such RSUs on the applicable Determination Date, and with respect to an additional 25% of such RSUs on each of January 1, 2020 and January 1, 2021.

(d)Issuance of Common Stock.

(i)Settlement of RSUs.  Shares underlying an earned RSU which become vested in accordance with Section 2(c) or Section 3 shall be transferred to the Participant as soon as administratively practicable following the applicable Vesting Date, but in no event earlier than January 1 of the year in which the Vesting Date occurs or later than March 15 of the year following the year in which such Vesting Date occurs. No shares of Common Stock shall be issued to the Participant in respect of an earned RSU prior to the applicable Vesting Date.  After an earned RSU vests, the Company shall promptly cause to be registered in Participant’s name or in the name of the executor or personal representative of the Participant’s estate, as the case may be, one share of Common Stock in payment for each such earned RSU.  For purposes of this Agreement, the date on which vested RSUs are converted into Common Stock shall be referred to as the “Settlement Date.”

(ii)Fractional RSUs.  In the event the Participant is vested in a fractional portion of an earned RSU, such portion shall be rounded down to the nearest whole number.

3.Effects of Certain Events.

(a)General.  Subject to Section 3(b), in the event that the Participant’s employment with the Company is terminated, any unvested RSUs shall be forfeited automatically and without further action.

(b)Qualifying Termination.  Notwithstanding the foregoing:

(i)In the event of the Participant’s Qualifying Termination prior to the completion of any Performance Period applicable to the Award (and any associated Dividend Equivalent Amount), a portion of the RSUs which may be earned under the Award will become earned, with the actual number of earned RSUs determined as follows:

(A)with respect to the one year measurement component of the Award, based on actual performance through the most recently completed fiscal quarter measured against the Performance Components as pro-rated based on the number of fiscal quarters completed prior to the Termination Date relative to the total number of fiscal quarters in the Performance Period; and

(B)with respect to the three year measurement component, based on actual performance through the Termination Date measured against the Performance Components based on actual performance through the Termination Date (or if not readily available, measured as of the end of the month immediately preceding the Termination Date) ; 

provided, that any performance criteria based on the achievement of company-wide strategic objectives or satisfaction of individual performance criteria shall be deemed achieved or satisfied at target level (as applicable); and 

(ii)The number of earned RSUs calculated in accordance with Section 3(b)(i) which become vested (and any associated Dividend Equivalent Amount) will be pro-rated based on the number of days in the applicable Performance Period completed prior to the Termination Date, and such pro-rated number of earned RSUs under the Award shall be deemed vested in full and settled pursuant to Section 2(d), with the “Vesting Date” meaning the Termination Date.

(iii)In the event of the Participant’s Qualifying Termination after the completion of the Performance Period applicable to an Award, but prior to the last Vesting Date applicable to the earned RSUs granted under such Award, all such earned RSUs shall become vested as of the Termination Date.  In such case, the number of earned RSUs (and any associated Dividend Equivalent Amount) under the Award shall be deemed vested in full and settled pursuant to Section 2(d), with the “Vesting Date” meaning the Termination Date. 

(iv)The levels of achievement with respect to any Performance Components shall be adjusted from time to time by the Committee as it deems equitable and necessary in light of acquisitions, dispositions and other transactions or extraordinary or one- time events that impact the Company’s operations. 

(c)Termination for Cause.  In the event of the Participant’s termination of employment for Cause, then the Award, the RSUs (whether or not earned or vested) (and any associated Dividend Equivalent Amount) and any shares underlying RSUs that have not yet been transferred to the Participant shall be automatically forfeited as of the Termination Date.

(d)Change in Control. Notwithstanding the foregoing:

(i)In the event of a Change in Control during the Participant’s employment and prior to the completion of the Performance Period applicable to an Award, a portion of the RSUs which may be earned under the Award will become earned, with the actual number of earned RSUs determined 

(A)with respect to the one year measurement component of the Award, based on actual performance through the most recently completed fiscal quarter measured against the Performance Components as pro-rated based on the number of fiscal quarters completed prior to the date of such Change in Control relative to the total number of fiscal quarters in the Performance Period, and

(B)with respect to the three year measurement component of the Award, based on actual performance through the date of such Change in Control, measured against the Performance Criteria based on actual performance through the date of such Change in Control (or if not readily available, measured as of the end of the month immediately preceding the date of such Change in Control); 

provided, that any performance criteria based on the achievement of company-wide strategic objectives or satisfaction of individual performance criteria shall be deemed achieved or satisfied at target level (as applicable)
(ii)In the event of a Change in Control during the Participant’s employment and prior to a Vesting Date, all earned RSUs shall become vested as of the date of such Change in Control and settled pursuant to Section 2(d), with the “Vesting Date” meaning the date of the Change in Control. 

4.Dividend Equivalent Rights

(a)Each earned RSU shall have a Dividend Equivalent Right associated with it with respect to any cash dividends on Common Stock that have a record date after the Effective Date and prior to the applicable Settlement Date for such RSU (the total accrued dividends for each earned RSU, a “Dividend Equivalent Amount”). For the avoidance of doubt, no Dividend Equivalent Amount shall accrue in respect of an RSU which is not earned based on the achievement of Performance Components applicable to an Award. 

(b)The Dividend Equivalent Amount shall be calculated by crediting a hypothetical bookkeeping account for the Participant with an amount equal to the amount of cash dividends that would have been paid on the dividend payment date with respect to the number of shares of Common Stock underlying the unsettled earned RSUs (or RSUs which become earned in accordance with this Agreement) if such shares had been outstanding on the dividend record date.  The Participant’s Dividend Equivalent Amount shall not be credited with interest or earnings.

(c)Any Dividend Equivalent Amount: (i) shall be subject to the same terms and conditions applicable to the earned RSU to which the Dividend Equivalent Right relates, including, without limitation, the restrictions on transfer and the forfeiture conditions contained in the Agreement; (ii) shall vest and be settled upon the same terms and at the same time of settlement as the earned RSUs to which they relate; and (iii) will be denominated and payable solely in cash.  The payment of Dividend Equivalent Rights will be net of all applicable withholding taxes pursuant to Section 5(g).

1.Miscellaneous.

(a)Administration.  The Committee shall administer the Award. At the end of the Performance Period applicable to any Award, the Committee shall calculate and approve the number of earned RSUs awarded to the Participant under such Award.

(b)Agreement Subject to Plan; Amendment.  By entering into this Agreement, the Participant agrees and acknowledges that the Participant has received and read a copy of the Plan. The Awards and RSUs granted hereunder are subject to the Plan. The terms and provisions of the Plan, as it may be amended from time to time, are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail. The terms of the Agreement and the Award Certificate may be amended from time to time by the Committee in its sole discretion in any manner that it deems appropriate; provided, that any such amendment that would materially and adversely affect any right of the Participant shall not to that extent be effective without the consent of the Participant.

(c)Participant is Unsecured General Creditor.  The Participant and the Participant’s heirs, successors, and assigns shall have no legal or equitable rights, interest, or claims in any specific property or assets of the Company.  Assets of the Company shall not be held under any trust for the benefit of the Participant or the Participant’s heirs, successors, or assigns, or held in any way as collateral security for the fulfilling of the obligations of the Company under the Agreement or the Plan.  Any and all of the Company’s assets shall be, and remain, the general unrestricted assets of the Company.  The Company’s sole obligation under this Agreement and in respect of the Award shall be merely that of an unfunded and unsecured promise of the Company to pay the Participant in the future, subject to the conditions and provisions of the Agreement and the Plan.

(d)No Transferability; No Assignment.  Neither the Participant nor any other person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate, alienate or convey in advance of actual receipt, the Award or the RSUs.  No part of the RSUs or the shares of Common Stock delivered in respect of any vested RSUs, and/or amounts payable under this Agreement shall, prior to actual settlement or payment, be subject to seizure, attachment, garnishment or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by the Participant or any other person, be transferable by operation of law in the event of the Participant’s or any other person’s bankruptcy or insolvency or be transferable to a spouse as a result of a property settlement or otherwise.

(e)No Right to Continued Employment.  Neither the Plan nor this Agreement nor the Participant’s receipt of the Award hereunder (or RSUs issued in settlement of the Award) shall impose any obligation on the Company or any Affiliate to continue the employment of the Participant. Further, the Company or any Affiliate (as applicable) may at any time terminate the employment of such Participant, free from any liability or claim under the Plan or this Agreement, except as otherwise expressly provided herein or in any written employment agreement between the Participant and the Company (or any affiliate).

(f)Limitation on Shareholder Rights.  The Participant shall have no rights as a shareholder of the Company, no dividend rights (subject to Dividend Equivalent Rights as set forth in Section 4) and no voting rights with respect to the RSUs and any shares of Common Stock underlying or issuable in respect of such RSUs until such shares of Common Stock are actually issued to and held of record by the Participant.  No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the shares of Common Stock, except for the Dividend Equivalent Rights as set forth in Section 4.

(g)Tax Withholding.

(i)Regardless of any action the Company takes with respect to any or all federal, state or local income tax, employment tax or other tax related items (“Tax Related Items”), the Participant acknowledges that the ultimate liability for all Tax Related Items associated with the RSUs (and the Dividend Equivalent Rights associated therewith) 

is and remains the Participant’s responsibility and that the Company: (A) makes no representations or undertakings regarding the treatment of any Tax Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant or vesting of the RSUs, the delivery of the shares of Common Stock, the subsequent sale of shares of Common Stock acquired at vesting and the receipt of any Dividend Equivalent Rights; and (B) does not commit to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax Related Items.  Further, if Participant has relocated to a different jurisdiction between the date of grant and the date of any taxable event, Participant acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(ii) Prior to the relevant taxable event, the Participant shall pay or make adequate arrangements satisfactory to the Company, in its sole discretion, to satisfy all withholding and payment on account obligations for Tax Related Items of the Company.  In this regard, the Participant authorizes the Company, in its sole discretion, to satisfy the obligations with regard to all Tax Related Items legally payable by the Participant with respect to the RSUs by withholding in shares of Common Stock otherwise issuable to the Participant, provided that the Company withholds only the amount of shares of Common Stock necessary to satisfy the minimum statutory withholding amount using the Fair Market Value of the shares of Common Stock on the Settlement Date. Participant shall pay to the Company any amount of Tax Related Items that the Company may be required to withhold as a result of the RSUs that are not satisfied by the previously described method.  The Company may refuse to deliver the shares of Common Stock to the Participant if the Participant fails to comply with Participant’s obligations in connection with the Tax Related Items as described in this Section.

(h)Compensation Recovery Policy.  The compensation under this Agreement shall be subject to being recovered under the Company’s compensation recovery policy, if any, or any similar policy that the Company may adopt from time to time.  For avoidance of doubt, compensation recovery rights to shares of Common Stock issued under this Agreement shall extend to any proceeds realized by the Participant upon the sale or other transfer of such shares of Common Stock. Without limiting the generality of the foregoing, if in the opinion of the independent directors of the Board, (i) the Company’s financial results are restated or were materially misstated due in whole or in part to intentional fraud or misconduct by the Participant, and (ii) the payment or equity or equity-based award made or issued pursuant to this Agreement based on the corrected financial results would be less than the amount previously paid or issued, then by approval by a majority of the independent directors of the Board, the Board may, based upon the facts and circumstances surrounding the restatement, direct that the Company recover all or a portion of any payment or equity or equity-based award made or issued pursuant to this Agreement, and the Participant shall be required, in addition to any other remedy available (on a non-exclusive basis), to pay to the Company, within 10 business days’ of the Company’s request to Participant therefore, an amount equal to the excess, if any, of (i) the aggregate after-tax proceeds (taking into account all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in the year of repayment) Participant received upon the sale or other disposition of, or distributions in respect of the RSUs and any shares of Common Stock issued in respect of such RSUs over (ii) the aggregate Cost of such shares (if any). For purposes of this Agreement, “Cost” means, in respect of any share of Common Stock, the amount paid by Participant for such share, as proportionately adjusted for all subsequent distributions. 

(i)Section 409A Compliance.  The Award and the shares of Common Stock and amounts payable under this Agreement are intended to comply with the requirements of Section 409A so as to prevent the inclusion in gross income of any benefits accrued hereunder in a taxable year prior to the taxable year or years in which such amount would otherwise be actually distributed or made available to the Participants.  The Agreement shall be administered and interpreted to the extent possible in a manner consistent with that intent.  Notwithstanding the terms of Section 2 or Section 3, if a Participant is a “specified employee” within the meaning of Section 409A, no payments in respect of any Award or RSU that is “deferred compensation” subject to Section 409A and which would otherwise be payable upon the Participant’s “separation from service” (as defined in Section 409A) shall be made to such Participant prior to the date that is six months after the date of the Participant’s “separation from service” or, if earlier, the Participant’s date of death. Following any applicable six month delay, all such delayed payments will be paid in a single lump sum on the earliest date permitted under Section 409A that is also a business day.  The Participant is solely responsible and liable for the satisfaction of all taxes and penalties under Section 409A that may be imposed on or in respect of the Participant in connection with this Agreement, and the Company shall not be liable to any Participant for any payment made under this Plan that is determined to result in an additional tax, penalty or interest under Section 409A, nor for reporting in good faith any payment made under this Agreement as an amount includible in gross income under Section 409A.

(j)Section 280G of the Code.  In the event that the accelerated vesting of the RSUs or the amounts payable under this Agreement, together with all other payments and the value of any benefit received or to be received by the Participant, would result in all or a portion of such payment being subject to excise tax under Section 4999 of the Code (the “Excise Tax”), then the Participant’s payment shall be either (a) the full payment or (b) such lesser amount that would result in no portion of the payment being subject to the Excise Tax, whichever of the foregoing amounts, taking into account the applicable federal, state, and local employment taxes, income taxes, and the Excise Tax, results in the receipt by the Participant, on an after-tax basis, of the greatest amount of the payment notwithstanding that all or some portion of the payment may be taxable under Section 4999 of the Code.  Any such reduction shall be made by the Company in compliance with all applicable legal authority, including Section 409A.  All determinations required to be made under this Section shall be made by the nationally recognized accounting firm which is the Company’s outside auditor immediately prior to the event triggering the payments that are subject to the Excise Tax, which firm must be reasonably acceptable to the Participant (the “Accounting Firm”).  The Company shall cause the Accounting Firm to provide detailed supporting calculations of its determinations to the Company and the Participant.  All fees and expenses of the Accounting Firm shall be borne solely by the Company.  The Accounting Firm’s determinations must be made with substantial authority (within the meaning of Section 6662 of the Code).

(k)Governing Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of Maryland applicable to contracts made and performed wholly within the State of Maryland, without giving effect to the conflict of law provisions thereof. Any suit, action or proceeding with respect to this Agreement (or any provision incorporated by reference), or any judgment entered by any court in respect of any thereof, shall be brought in any court of competent jurisdiction in the State of New York, and each of the Participant and the Company hereby submits to the exclusive jurisdiction of such courts for the purpose of any such suit, action, proceeding, or judgment. Each of the Participant and the Company hereby irrevocably waives (i) any objections which it may now or hereafter have to the laying of the venue of any suit, action, or proceeding arising out of or relating to this Agreement brought in any court of competent jurisdiction in the State of New York, (ii) any claim that any such suit, action, or proceeding brought in any such court has been brought in any inconvenient forum and (iii) any right to a jury trial. 

(l)Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

*           *           *           *           *

BRIXMOR PROPERTY GROUP INC.
RESTRICTED STOCK UNIT AGREEMENT
AWARD CERTIFICATE
1. Brixmor Property Group Inc., a Maryland corporation (together with its Subsidiaries, the “Company”), and the Participant who is signatory hereto, hereby agree to the terms of this Award Certificate and the Brixmor Property Group Inc. Restricted Stock Unit Agreement (the “Agreement”) to which it is attached. All capitalized terms used in this Award Certificate and not defined herein shall have the meanings assigned to them in the Company’s 2013 Omnibus Incentive Plan (the “Plan”) or the Agreement. 
2. Subject to the terms of this Award Certificate, the Agreement, and the Plan, the Company hereby grants to the Participant as of the Effective Date, the Award on the terms set forth below: 
	
		
	Participant:
	[                    ]

	Effective Date:
	[                    ] 

	Total Target RSU Award Amount:
	[                    ]      

One Year Measurement Component
Award Range for Company Performance Components
·  Threshold Award Amount: [  ] RSU’s
·  Target Award Amount: [  ] RSU’s
·  Maximum Award Amount: [  ] RSU’s 

In addition to the above number of RSU’s, [   ] RSU’s if Individual Performance Goals are achieved.

Performance Period: January 1, 2016 through December 31, 2016

 Performance Components
·  Adjusted EBITDA Per Share Target (Relative Weighting: 75%)
	
			
	Level of Achievement
	Performance Level Achieved
	Percentage of Award Earned

	Threshold
	$[   ]
	50%

	Target 
	$[   ]
	100%

	Maximum 
	$[   ]
	150%

 

·  Achievement of Individual Performance Goals (Relative Weighting: 25%)

Three Year Measurement Component
Award Range for Company Performance Components
·  Threshold Award Amount: [  ] RSU’s
·  Target Award Amount: [  ] RSU’s  
·  Maximum Award Amount: [  ] RSU’s 

In addition to the above number of RSU’s, [   ]RSU’s if Company Wide Strategic Objectives is achieved.

Performance Period: January 1, 2016 through December 31, 2018

Performance Components:
·  Relative US Shopping Center Index TSR: (Relative Weighting: 60%)
	
			
	Level of Achievement
	Performance Level Achieved
	Percentage of Award Earned

	Threshold
	[  ] bps or less below index return
	50%

	Target 
	[   ] bps above index return
	100%

	Maximum 
	[   ] bps or more over index return
	150%

·  Brixmor TSR (Relative Weighting: 20%)
	
			
	Level of Achievement
	Performance Level Achieved
	Percentage of Award Earned

	Threshold
	[   ]% - Compounded Annual Growth Rate
	50%

	Target 
	[   ]% - Compounded Annual Growth Rate
	100%

	Maximum 
	[   ]% - Compounded Annual Growth Rate
	150%

·  Company-Wide Strategic Objectives (Relative Weighting: 20%)

o  [      ]

3. The Award and any RSUs which may be earned under the Award are subject to the terms and conditions set forth in this Award Certificate, the Plan and the Agreement. All terms and provisions of the Plan and the Agreement, as the same may be amended from time to time, are incorporated and made part of this Award Certificate. If any provision of this Award Certificate is in conflict with the terms of the Plan or the Agreement, then the terms of the Plan or the Agreement, as applicable, shall govern. The Participant hereby expressly acknowledges receipt of a copy of the Plan and the Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as of the date first above written. 

	
		
	BRIXMOR PROPERTY GROUP INC.

By: ___________________________________
Name: 
Title: Authorized Signatory
	PARTICIPANT

__________________________________
Name: [Name]

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