Nxt-ID, Inc. (NASDAQ:NXTD) Files An 8-K Entry into a Material Definitive Agreement

Item 1.01Entry into a Material Definitive Agreement

On May 23, 2017, Nxt-ID, Inc. (the Company), completed a merger
(the Merger) to an executed Agreement and Plan of Merger (the
Merger Agreement) by and among the Company, Fit Merger Sub, Inc.,
a wholly-owned subsidiary of the Company (the Merger Sub), Fit
Pay, Inc. (Fit Pay), Michael Orlando (Orlando), Giesecke Devrient
Mobile Security America, Inc. (GD), the other stockholders of Fit
Pay (the Other Holders) and Michael Orlando in his capacity as
stockholder representative representing the Other Holders (the
Stockholder Representative, and together with Orlando and GD, the
Sellers). to the Merger, Fit Pay merged with and into the Merger
Sub, with the Merger Sub continuing as the surviving entity and a
wholly owned subsidiary of the Company.

Merger Agreement

to the terms of the Merger Agreement, the aggregate purchase
price paid for Fit Pay was: (i) 19.96% of the outstanding shares
of common stock of the Company (the Common Stock); (ii) 2,000
shares of the Series C Non- Convertible Preferred Stock of the
Company (the Series C Preferred Stock); (iii) the payment of
certain debts by the Company; and (iv) the payment of certain
unpaid transaction expenses by the Company. In addition, the
Company will be required to pay the Sellers an earnout payment
equal to 12.5% of the gross revenue derived from Fit Pays
technology for sixteen (16) fiscal quarters commencing on October
1, 2017 and ending on December 31, 2021. The Company also assumed
various promissory notes issued by Fit Pay to Orlando. Following
the Merger, all of the preferred and common stock of Fit Pay was
transferred to the Company.

The Merger Agreement contains customary representations,
warranties, covenants and indemnification obligations of the
parties to the Merger. The Merger Agreement is also subject to
customary closing conditions. Following the Merger, Orlando, Fit
Pays President, became Chief Operating Officer of the Company,
and President of the Merger Sub.

The foregoing description of the Merger Agreement is not
complete, and is qualified in its entirety by reference to the
full text of the Merger Agreement, the form of which is filed as
Exhibit 10.1 hereto, and is incorporated herein by reference.

Series C Non-Convertible Preferred
Stock

Ranking

The Series C Preferred Stock will rank junior to our Series A
Convertible Preferred Stock, $0.0001 par value per share, and our
Series B Convertible Preferred, $0.0001 par value per share with
respect to dividend rights and/or rights upon distributions,
liquidation, dissolution or winding up of the Company.

Dividends on Series C Non-Convertible Preferred
Stock

Holders of Series C Preferred Stock shall be entitled to receive
from, from and after the first date of issuance of the Series C
Preferred Stock, cumulative dividends at a rate of 5% per annum
on a compounded basis, which dividend amount shall be guaranteed.
Accrued and unpaid dividends shall be payable in cash.

Redemption of Series C Non-Convertible Preferred
Stock

The Series C Preferred Stock may be redeemed by the Company in
cash at any time, in whole or in part, upon payment of the stated
value of the Series C Preferred Stock, and all related accrued
but unpaid dividends.

Fundamental Change

If a fundamental change occurs at any time while the Series C
Preferred Stock is outstanding, the holders of shares of Series C
Preferred Stock then outstanding shall be immediately paid, out
of the assets of the Company or the proceeds of such fundamental
change, as applicable, and legally available for distribution to
its stockholders, an amount in cash equal to the stated value of
the Series C Preferred Stock, and all related accrued but unpaid
dividends.

If the legally available assets of the Company and the proceeds
of such fundamental change are insufficient to pay the all of the
Holders of the Series C Preferred Stock, then the Holders of the
Series C Preferred Stock shall share ratably in any such
distribution in proportion to the amount that they would have
been entitled to. A fundamental change includes but is not
limited to any change in the ownership of at least 50% of the
voting stock; liquidation or dissolution; or the Common Stock
ceases to be listed on the market upon which it currently trades.

Voting Rights

The holders of the Series C Preferred Stock shall be entitled to
vote on any matter submitted to the stockholders of the Company
for a vote. One (1) share of Series C Preferred Stock shall carry
the same voting rights as one (1) share of Common Stock.

In connection with the Merger, Michael Orlando became Chief
Operating Officer of the Company and President of the Merger Sub
effective as of May 23, 2017.

Mr. Orlando founded Fit Pay in September of 2014. Prior to
founding Fit Pay, Mr. Orlando served in numerous roles at
payment, authentication, and software-as-a-service companies. In
2012, Mr. Orlando served as Senior Vice President, Sales and
Marketing at EZ Prints, Inc., an online merchandise printing and
fulfillment services company. From September 2000 to February
2012, Mr. Orlando served as Senior Vice President, Global Sales
and Services at CyberSource Inc., a leading e-commerce and credit
card systems management company, where he oversaw all enterprise
sales and professional services functions worldwide.

There are no arrangements or understandings between Mr. Orlando
and any other persons to which he was named as Chief Operating
Officer.There are also no family relationships between Mr.
Orlando and any director or executive officer of the Company and
he has no direct or indirect material interest in any transaction
required to be disclosed to Item 404(a) of Regulation S-K.

In connection with Mr. Orlandos employment with the Company, Mr.
Orlando will receive an annual base salary of $150,000 and will
be granted an award of 250,000 restricted shares of the Companys
common stock on the effective date of his employment from the
Companys Long-Term Incentive Plan of 2013.

Series C Certificate of Designations

On May 23, 2017, the Company filed the Certificate of
Designations for its Series C Preferred Stock with the Secretary
of State of the State of Delaware, establishing the rights,
preferences, privileges, qualifications, restrictions, and
limitations relating toitsSeries C Preferred Stock. The Series C
Certificate of Designations became effective with the Secretary
of State of the State of Delaware upon filing. A copy of the
Certificate of Designations is included in Exhibit 3.1 to this
Current Report on Form 8-K and is incorporated herein by
reference. The information pertaining to the Series C Preferred
Stock set forth in Item1.01 hereof is incorporated herein by
reference.

On May 23, 2017, the Company issued a press release (the Press
Release) announcing the Merger. A copy of the Press Release is
attached hereto as Exhibit 99.1 and is incorporated herein by
reference.

About Nxt-ID, Inc. (NASDAQ:NXTD)

Nxt-ID, Inc. is a technology company. The Company is focused on products, solutions and services for security on mobile devices. The Company’s core technologies consist of those that support digital payments, biometric identification, encryption, sensors and miniaturization. It has three lines of business: mobile commerce (m-commerce), primarily through the application of secure digital payment technologies; biometric access control applications, and Department of Defense contracting. It intends to use its core biometric facial and voice recognition algorithms to develop security applications (both cloud based and locally hosted) that can be used for companies, as well as individuals, law enforcement, the defense industry, and the United States Department of Defense. Its offerings include Wocket, a physical electronic smart wallet; the NXT Smartcard, a standalone smartcard; Wi-Mag, an antenna and payment technology, and 3D FaceMatch and 3D SketchArtist facial recognition products.

Nxt-ID, Inc. (NASDAQ:NXTD) Recent Trading Information

Nxt-ID, Inc. (NASDAQ:NXTD) closed its last trading session down -0.07 at 1.61 with 150,364 shares trading hands.