BREKFORD CORPORATION (OTCBB:BFDI) Files An 8-K Entry into a Material Definitive Agreement

BREKFORD CORPORATION (OTCBB:BFDI) Files An 8-K Entry into a Material Definitive Agreement

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Item 1.01. Entry into a Material Definitive Agreement

Merger Agreement
On February10, 2017, Brekford Corporation, a Delaware corporation
(Brekford or the Company) entered into an Agreement and Plan of
Merger (the Merger Agreement) to combine the businesses of
Brekford and KeyStone Solutions, Inc., a Delaware corporation
(KeyStone). The Merger Agreement provides that Brekford and
KeyStone will each engage in merger transactions (the Mergers)
with separate wholly-owned subsidiaries of a newly-formed
company, Novume Solutions, Inc., a Delaware corporation (Novume).
Under one merger transaction (the Brekford Merger), one
wholly-owned subsidiary of Novume will merge with and into
Brekford, leaving Brekford as a wholly-owned subsidiary of
Novume. Under a separate merger transaction (the KeyStone
Merger), KeyStone will merge with and into another wholly-owned
subsidiary of Novume (KeyStone Merger Sub), with KeyStone Merger
Sub surviving such merger. The time at which the Mergers are
completed in accordance with the Merger Agreement is referred to
as the Effective Time. As soon as practicable after the Effective
Time, Brekford will change its name to Brekford Traffic Safety,
Inc. and KeyStone Merger Sub will change its name to KeyStone
Solutions, Inc.
Merger Consideration
As consideration for the Mergers, each outstanding share of the
common stock, par value $0.0001 per share, of Brekford (Brekford
Common Stock) immediately prior to the Effective Time will become
convertible into and exchangeable for 1/15th of a share of common
stock, par value $0.0001 per share, of Novume (Novume Common
Stock and such ratio, the Brekford Exchange Ratio). Each
outstanding share of the common stock, par value $0.0001 per
share, of KeyStone (KeyStone Common Stock) immediately prior to
the Effective Time, will become convertible into and exchangeable
for 1.9975 shares of Novume Common Stock, and each outstanding
share of the Series A Cumulative Convertible Redeemable Preferred
Stock, par value $0.0001 per share, of KeyStone (KeyStone
Preferred Stock) will become convertible into and exchangeable
for 1.9975 shares of the Series A Cumulative Convertible
Redeemable Preferred Stock of Novume (Novume Preferred Stock and
such ratio, the KeyStone Exchange Ratio). The outstanding
warrants and options to purchase shares of Brekford Common Stock
and KeyStone Common Stock, as applicable, shall be exchanged for
warrants and options to purchase Novume Common Stock at the
Brekford Exchange Ratio or the KeyStone Exchange Ratio, as
applicable. Collectively, the forgoing is referred to herein as
the Merger Consideration.
The Merger Consideration, and each of the Brekford Exchange Ratio
and the KeyStone Exchange Ratio, were determined so that,
immediately after the Effective Time, the pre-merger stockholders
of Brekford will own such portion of the capital stock of Novume
as shall be equal to approximately 20% of the issued and
outstanding Novume Common Stock, on a fully-diluted basis, and
the pre-merger stockholders of KeyStone will own that portion of
the capital stock of Novume as is equal to approximately 80% of
the issued and outstanding Novume Common Stock, on a
fully-diluted basis.
Closing Conditions
The closing of the Merger Agreement (the Closing) will take place
upon the fulfillment or waiver of all of the conditions to
closing set forth in Article VIII of the Merger Agreement or as
soon thereafter as practicable, but not later than June1, 2017,
unless otherwise mutually agreed by Brekford and KeyStone.
One closing condition is that each of Brekford and KeyStone
receive all stockholder approvals and corporate approvals
required by the Delaware General Corporations Code and the
organizational documents of each company to complete the Mergers.
This satisfaction of this condition is assured. On February 10,
2017, the board of directors of Brekford (the Brekford Board)
authorized and approved the Mergers and the adoption of the
Merger Agreement. On the same day, Chandra Brechin, a member of
Brekfords Board of Directors, Scott Rutherford, Brekfords Chief
Strategic Officer and a member of its Board of Directors and
Robert West, a member of the Board of Directors of Brekford who
own an aggregate of 25,712,787 shares of Brekford Common Stock,
which represent approximately 52.13% of the issued and
outstanding shares of Brekford’s Common Stock entered into
separate agreements (Voting Agreements) with Brekford to which
they separately agreed with Brekford to vote all of their shares
in favor of the Brekford Merger and against any action or
transaction that would delay or compromise the ability of
Brekford to effectuate the Mergers. On February 9, 2017, the
board of directors of KeyStone (the KeyStone Board) authorized
and approved the Mergers and the adoption of the Merger
Agreement. On the same date, certain holders of more than 51% of
the issued and outstanding shares of KeyStone Common Stock
entered into Voting Agreements with KeyStone, and such holders
indeed delivered written consents to KeyStone approving the
Mergers and adopt the Merger Agreement.
A second closing condition requires Novume to prepare and file a
Registration Statement on Form S-4 (the Registration Statement),
which shall be declared effective by the Securities and Exchange
Commission (the SEC) prior to the Effective Time, registering the
Merger Consideration. This shall not include registration of the
options issuable as Merger Consideration in exchange for options
previously received by stockholders of Brekford under Brekfords
2008 Directors Compensation Plan or stockholders of KeyStone
under KeyStones 2016 Equity Award Plan, which are intended to be
registered separately on a Registration Statement on Form S-8
after the Effective Time. The Registration Statement will include
an information statement of Brekford, which Brekford shall
distribute to its stockholders in accordance with the rules and
regulations of the Securities Exchange Act of 1934, as amended
(the Exchange Act), prior to the Effective Time. In furtherance
of this condition, Novume filed the Registration Statement with
the SEC on February 10, 2017. The Registration Statement remains
subject to the SECs review and comment, and to amendment, as
appropriate, by Novume.
Brekford is required to sell 81% of the assets and liabilities
related to its vehicle services business (the Upfitting Business)
and to use all proceeds from such disposition to repay all
indebtedness of Brekford. In furtherance of this condition, on
February 6, 2017, Brekford entered into that certain
previously-disclosed Contribution and Unit Purchase Agreement
(the Purchase Agreement) with LBB Associates Inc. (the Purchaser)
and Global Public Safety, LLC (GPS).
Finally, prior to the Effective Time, Novume shall enter into
five-yearemployment agreements with each of Scott Rutherford,
Brekfords current Chief Strategy Officer, and Rodney Hillman,
Brekfords current President and Chief Operating Officer (the
Employment Agreements). to the Merger Agreement Mr. Rutherford
shall serve as Chief Technology Officer and Mr. Hillman shall
serve as President and Chief Operating officer of Brekford
Traffic Safety, Inc.
Under the Merger Agreement, Novume shall use its best efforts, as
soon as practicable after the Effective Time, to obtain listings
for Novume Common Stock, Novume Preferred Stock and certain
warrants to purchase Novume Common Stock on a national stock
exchange, or, alternatively, to obtain quotations for such
securities on the OTCQX.
Leadership of Novume
The leadership of Novume shall be substantially comprised of the
current management of KeyStone. Robert A. Berman, the current
Chief Executive Officer of KeyStone, shall serve as the Chief
Executive Officer of Novume. Harry Rhulen, the current President
of KeyStone, shall serve as the President of Novume. Riaz
Latifullah, the current Chief Financial Officer of KeyStone,
shall serve as the Chief Financial Officer of Novume. Suzanne
Loughlin, the current General Counsel and Chief Administrative
Officer of KeyStone, shall serve as the General Counsel and Chief
Administrative Officer of Novume. James McCarthy, the current
Chief Strategy Officer of KeyStone, shall serve as the Chief
Strategy Officer of Novume.
At the Effective Time, the Board of Directors of Novume (the
Novume Board), shall have seven (7) members, four (4) of whom
shall be independent within the meaning of the Exchange Act, and
the national stock exchange to which Novume intends to apply for
listings of the Novume securities indicated above. Six (6)
members of the Novume Board shall be designated by KeyStone, and
one (1) member of the Novume Board shall be designated by
Brekford, subject to the approval of KeyStone. The members
designated by KeyStone 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 KeyStone 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 KeyStone; such
member shall be identified by Brekford and approved by KeyStone
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.
Termination Fee
If (i)the Merger Agreement (A)is terminated by KeyStone due to
the withdrawal of the recommendation of the Merger Agreement by
the board of directors of Brekford (the Brekford Board), or by
Brekford or KeyStone because of the failure to obtain the
requisite Brekford stockholders approval, or (B)is terminated as
a result of Brekfords material breach of its obligations with
regard to Closing and to filing and distributing of the
Registration Statement required for the transaction, which breach
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 (as defined in the Merger
Agreement) 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 KeyStone a termination fee of $250,000 (the Termination Fee).
The Termination Fee shall be payable in cash at the date of
termination.
The foregoing information is a summary of the Merger Agreement
described above, is not complete, and is qualified in its
entirety by reference to the full text of the Agreement, a copy
of which is attached as an exhibit to this Current Report on Form
8-K.Readers should review the Merger Agreement for a complete
understanding of the terms and conditions associated with this
transaction.
Item 8.01. Other Events
On February 13, 2017, Brekford issued the press release annexed
hereto as Exhibit 99.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are filed with this report:
Exhibit No.
Description of Exhibit
10.1
Agreement and Plan of Merger dated February 10, 2017,
among Novume Solutions, Inc., KeyStone Solutions, Inc.,
Brekford Corp., KeyStone Merger Sub, Inc., and Brekford
Merger Sub, Inc.
99.1
Press release, dated February 13, 2017


About BREKFORD CORPORATION (OTCBB:BFDI)

Brekford Corp. is a public safety technology service provider of integrated traffic safety solutions, parking enforcement citation management and mobile technology equipment for public safety vehicle services to state and local municipalities, the United States Military and various federal public safety agencies throughout the United States and Mexico. The Company operates through the Traffic Safety Solutions segment. The Company’s products and services include Automated Traffic Safety Enforcement (ATSE), Electronic Ticketing System, Rugged Information Technology Solutions and 360 Vehicle Solution. ATSE systems are a range of measures that reduce vehicle speeds and crashes. It develops integrated and interoperable mobile systems that enable first responders, such as police, fire and emergency medical service (EMS), to obtain and exchange information in real time. Its 360-degree vehicle solution provides vehicle upfitting, mobile data and video solutions.

BREKFORD CORPORATION (OTCBB:BFDI) Recent Trading Information

BREKFORD CORPORATION (OTCBB:BFDI) closed its last trading session 00.000 at 0.118 with 26,730 shares trading hands.

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