Exhibit 10.1

 
LOAN AND SECURITY AGREEMENT
 
THIS LOAN AND SECURITY AGREEMENT is made and dated as of April 30, 2018 and is
entered into by and among RUMBLEON, INC., a Nevada corporation (“Parent”),
NEXTGEN PRO, LLC, a Delaware limited liability company (“NextGen Pro”), RMBL
MISSOURI, LLC, a Delaware limited liability company (“RMBL Missouri”), RMBL
TEXAS, LLC, a Delaware limited liability company (“RMBL Texas”), and each of
their Qualified Subsidiaries from time to time party hereto (together with
Parent, NextGen Pro, RMBL Missouri and RMBL Texas, individually, each, a
“Borrower”, and collectively, “Borrowers”), the several banks and other
financial institutions or entities from time to time parties to this Agreement
(collectively, “Lender”) and HERCULES CAPITAL, INC., a Maryland corporation, in
its capacity as administrative agent and collateral agent for Lender (in such
capacity, “Agent”).
 
RECITALS
 
A. Borrowers have requested Lender to make available to Borrowers one or more
growth capital term loans in an aggregate principal amount of up to $20,000,000;
and
 
B. Lender is willing to make such growth capital term loans on the terms and
conditions set forth in this Agreement.
 
AGREEMENT
 
NOW, THEREFORE, Borrowers, Agent and Lender agree as follows:
 
SECTION 1. DEFINITIONS AND RULES OF CONSTRUCTION
 
1.1              Unless otherwise defined herein, the following capitalized
terms shall have the following meanings:
 
“Account Control Agreement(s)” means any agreement entered into by and among
Agent, Borrowers and a third party bank or other institution (including a
Securities Intermediary) in which any Borrower maintains a Deposit Account or an
account holding Investment Property and which perfects Agent’s first priority
security interest in the subject account or accounts.
 
“ACH Authorization” means the ACH Debit Authorization Agreement in substantially
the form of Exhibit H.
 
“Adjusted EBITDA” means for any period of determination, for Parent and each of
its Subsidiaries, on a consolidated basis, an amount equal to Net Income for
such period plus (a) the following to the extent deducted in calculating Net
Income for such period: (i) Interest Expense for such period, (ii) federal,
state, local and foreign income taxes for such period, (iii) depreciation and
amortization expense for such period, (iv) all non-cash expenses related to
stock based compensation for such period, (v) extraordinary or non-recurring
items reducing Net Income for such period in an amount not to exceed 10% of
Adjusted EBITDA to the extent in excess of $0 or as otherwise approved by Agent,
and (vi) all non-cash items, other than described in clauses (a)(i) through (v)
above, deducted to arrive at Net Income for such period, and minus (b) the
following the extent included in calculating such Net Income for such period:
(i) interest income for such period, (ii) federal, state, local and foreign
income tax credits for such period, (iii) extraordinary or non-recurring income
or gains for such period, (iv) capitalized software development costs for such
period and (v) all non-cash items, other than described in clause (b)(i) through
(iv) above, increasing Net Income for such period.
 
“Advance” means a Growth Capital Term Loan Advance.
 
“Advance Date” means the funding date of any Advance.
 
 

 
 
“Advance Request” means a request for an Advance submitted by Borrower
Representative to Agent in substantially the form of Exhibit A.
 
“Affiliate” means (a) any Person that directly or indirectly controls, is
controlled by, or is under common control with the Person in question, (b) any
Person directly or indirectly owning, controlling or holding with power to vote
ten percent (10%) or more of the outstanding voting securities of another
Person, (c) any Person ten percent (10%) or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held by another
Person with power to vote such securities, or (d) any Person related by blood or
marriage to any Person described in subsection (a), (b) or (c) of this defined
term. As used in the definition of “Affiliate,” the term “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.
 
“Agent” has the meaning given to it in the preamble to this Agreement.
 
“Agreement” means this Loan and Security Agreement, as amended, restated,
supplemented or otherwise modified from time to time.
 
“Amortization Date” means (i) with respect to any Advance pursuant to Tranche I
or Tranche II, December 1, 2018, provided however, if (A) as of December 1,
2018, or (B) as of any Amortization Date, as extended from time to time, then in
effect, or (C) as of the last day of any month after the Amortization Date then
in effect has passed, but prior to September 30, 2019, Borrowers have satisfied
the Interest Only Extension Condition, then the Amortization Date may be
extended to be three (3) months after the later of (x) the Amortization Date in
effect prior to such extension, and (y) if Borrower has commenced principal
payments, the first day of the fourth month after the date the Interest Only
Extension Condition is satisfied, provided that in no event shall the
Amortization Date with respect to any Advance pursuant to Tranche I or Tranche
II be extended to be later than November 1, 2019, (ii) with respect to any
Advance pursuant to Tranche III, February 1, 2021, and (iii) with respect to any
Advance pursuant to Tranche IV, as agreed among Borrowers and Agent.
 
“Anti-Corruption Laws” shall mean all laws, rules, and regulations of any
jurisdiction applicable to any Borrower or any of its Affiliates from time to
time concerning or relating to bribery or corruption, including without
limitation the United States Foreign Corrupt Practices Act of 1977, as amended,
the UK Bribery Act 2010 and other similar legislation in any other
jurisdictions.
 
“Anti-Terrorism Laws” means any laws, rules, regulations or orders relating to
terrorism or money laundering, including without limitation Executive Order No.
13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising
or implementing the Bank Secrecy Act, and the laws administered by OFAC.
 
“Assignee” has the meaning given to it in Section 11.13.
 
“Blocked Person” means any Person: (a) listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224, (b) a Person owned or
controlled by, or acting for or on behalf of, any Person that is listed in the
annex to, or is otherwise subject to the provisions of, Executive Order No.
13224, (c) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person
that commits, threatens or conspires to commit or supports “terrorism” as
defined in Executive Order No. 13224, or (e) a Person that is named a “specially
designated national” or “blocked person” on the most current list published by
OFAC or other similar list.
 
“Board” means, with respect to any Person that is a corporation, its board of
directors, with respect to any Person that is a limited liability company, its
board of managers, board of members or similar governing body, and with respect
to any other Person that is a legal entity, such Person’s governing body in
accordance with its Organizational Documents.
 
 
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“Borrower Products” means all products, software, service offerings, technical
data or technology currently being designed, manufactured or sold by a Borrower
or which a Borrower intends to sell, license, or distribute in the future
including any products or service offerings under development, collectively,
together with all products, software, service offerings, technical data or
technology that have been sold, licensed or distributed by a Borrower since each
of its formation.
 
“Borrower Representative” means Parent.
 
 
“Budget” means a budget for Parent and its Subsidiaries, on a consolidated
basis, acceptable to Agent, provided that in any event a budget reflecting
Revenue, Adjusted EBITDA, if applicable, and Gross Profit, if applicable, of no
less than the amounts set forth in the projections delivered to Agent as of the
Closing Date will be acceptable to Agent, provided further that, if a Borrower
consummates a Permitted Acquisition and such Permitted Acquisition is reasonably
likely to affect the projections previously delivered, as reasonably determined
by Agent based on its review of the proposed transaction, at all times
thereafter, a budget will be acceptable to Agent if reflecting Revenue, Adjusted
EBITDA, if applicable, and Gross Profit, if applicable, of no less than the
amounts set forth in the updated projections reasonably approved by Agent in
connection with such transaction.
 
“Business Day” means any day other than Saturday, Sunday and any other day on
which banking institutions in the State of California are closed for business.
 
“Cash” means all cash, cash equivalents and liquid funds.
 
“Change in Control” means (i) any consolidation or merger (or similar
transaction or series of related transactions) of Parent, (ii) sale or exchange
of outstanding shares (or similar transaction or series of related transactions)
of Parent in which holders of outstanding shares immediately before consummation
of such transaction or series of related transactions (or such holders’
Affiliates) do not, immediately after consummation of such transaction or series
of related transactions, retain shares representing more than fifty percent
(50%) of the voting power of the surviving entity of such transaction or series
of related transactions (or the parent of such surviving entity if such
surviving entity is wholly owned by such parent), in each case without regard to
whether Parent is the surviving entity, or (iii) any transaction or series of
related transactions, resulting in a Borrower (other than Parent) no longer
being a direct or indirect wholly-owned Subsidiary of Parent, provided that the
following shall not constitute or cause on their own a “Change in Control”: (x)
any transfers to any trust or otherwise for estate planning purposes and
(y) sales on a public exchange or market in one or more transactions (regardless
of whether related) except for such sales resulting in a single “person” or
“group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange
Act), other than Marshall Chesrown, becoming, or obtaining rights (whether by
means of warrants, options or otherwise) to become, the “beneficial owner” (as
defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act) of more than fifty
percent (50%) of the voting power for the election of directors of Parent.
 
“Charter” means, with respect to any Person, such Person’s formation documents,
as in effect from time to time.
 
“Claims” has the meaning given to it in Section 11.10.
 
“Closing Date” means the date of this Agreement.
 
“Collateral” means the property described in Section 3.
 
“Compliance Certificate” means a certificate in the form attached hereto as
Exhibit F
 
“Confidential Information” has the meaning given to it in Section 11.12.
 
 
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“Contingent Obligation” means, as applied to any Person, any direct or indirect
liability of that Person with respect to (i) any guarantee, contingent or
otherwise, of any Indebtedness, lease, letter of credit or other obligation of
another, including any such obligation directly or indirectly guaranteed,
endorsed, co-made or discounted or sold with recourse by that Person, or in
respect of which that Person is otherwise directly or indirectly liable; (ii)
any obligations with respect to undrawn letters of credit, company credit cards
or merchant services issued for the account of that Person; and (iii) all net
mark-to-market obligations arising under any interest rate, currency or
commodity swap agreement, interest rate cap agreement, interest rate collar
agreement, or other similar agreement or arrangement designated to protect a
Person against fluctuation in interest rates, currency exchange rates or
commodity prices; provided, however, that the term “Contingent Obligation” shall
not include endorsements for collection or deposit in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determined amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as
determined by such Person in good faith; provided, however, that such amount
shall not in any event exceed the maximum amount of the obligations under the
guarantee or other support arrangement nor, in the case of obligations described
in clause (iii) above, exceed the amount of the obligation after all netting
agreements.
 
“Copyright License” means any written agreement granting any right to use any
Copyright or Copyright registration, now owned or hereafter acquired by a
Borrower or in which a Borrower now holds or hereafter acquires any interest.
 
“Copyrights” means all copyrights, whether registered or unregistered, held
pursuant to the laws of the United States of America, any State thereof, or of
any other country.
 
“Deposit Accounts” means any “deposit accounts,” as such term is defined in the
UCC, and includes any checking account, savings account, or certificate of
deposit.
 
“Domestic Subsidiary” means any Subsidiary that is not a Foreign Subsidiary.
 
“Due Diligence Fee” means $20,000, which fee has been paid to Lender prior to
the Closing Date, and shall be deemed fully earned on such date regardless of
the early termination of this Agreement.
 
“Eligible Foreign Subsidiary” means any Foreign Subsidiary whose execution of a
Joinder Agreement could not result in a material adverse tax consequence to
Borrowers.
 
“Equity Interests” means, with respect to any Person, the capital stock,
partnership or limited liability company interest, or other equity securities or
equity ownership interests of such Person.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended,
and the regulations promulgated thereunder.
 
“Event of Default” has the meaning given to it in Section 9.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“Excluded Taxes” means any of the following Taxes imposed on or with respect to
a Recipient or required to be withheld or deducted from a payment to a
Recipient, (a) Taxes imposed on or measured by net income (however denominated),
franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result
of such Recipient being organized under the laws of, or having its principal
office or, in the case of any Lender, its applicable lending office located in,
the jurisdiction imposing such Tax (or any political subdivision thereof) or
(ii) that are Other Connection Taxes, (b) in the case of a Lender,
U.S. federal withholding Taxes imposed on amounts payable to or for the account
of such Lender with respect to an applicable interest in an Advance or a
commitment to make Advances pursuant to a law in effect on the date on which
(i) such Lender acquires such interest in the Loan or commitment to make
Advances or (ii) such Lender changes its lending office, except in each case to
the extent that, amounts with respect to such Taxes were payable either to such
Lender’s assignor immediately before such Lender became a party hereto or to
such Lender immediately before it changed its lending office, (c) Taxes
attributable to such Recipient’s failure to comply with Section 2.9 and (d) any
withholding Taxes imposed under FATCA, provided that following an Event of
Default, subsections (b) and (d) shall not be considered “Excluded Taxes” to the
extent Lender (or any successor or assign of Lender) assigns its interests in
the Loan or any Financing Document following such Event of Default.
 
 
4

 
 
“FATCA” means sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof, any intergovernmental agreement
or foreign legislation (including official administrative rules or practices)
implemented to give effect to any intergovernmental agreements entered into
thereunder and any agreements entered into pursuant to section 1471(b) of the
Code.
 
“Facility Charge” means (i) at the Closing Date, $150,000, in respect of Tranche
I, Tranche II and Tranche III, and (ii) 1.0% of the principal amount of any
Advance pursuant to Tranche IV.
 
“Financial Statements” has the meaning given to it in Section 7.1.
 
“Foreign Subsidiary” means any Subsidiary other than a Subsidiary organized
under the laws of any state within the United States of America.
 
“GAAP” means generally accepted accounting principles in the United States of
America, as in effect from time to time, provided that to the extent any change
in GAAP affect the determination of financial covenant compliance, milestones or
other limitations or requirements under this Agreement, upon written notice by
Borrower or Agent, the parties hereto agree to negotiate in good faith with
respect to an amendment to the terms of this Agreement to adjust for such
change, provided further that until such amendment is so agreed, all
calculations with respect to financial covenant compliance, milestones or other
limitations or requirements under this Agreement shall be made in accordance
with GAAP as in effect prior to such change in GAAP.
 
“Gross Margin” means, for any period, the ratio, expressed as a percentage, of
(a) an amount equal to (i) Revenue for such period, less (ii) costs of Revenue
for such period to (b) Revenue for such period, determined in accordance with
GAAP and consistently with past practices.
 
“Gross Profit” means, for any period, Revenue, for such period, minus costs of
goods sold, for such period, determined in accordance with GAAP and consistently
with past practices.
 
“Growth Capital Term Commitment” means as to any Lender, the obligation of such
Lender, if any, to make a Growth Capital Term Loan Advance to Borrowers in a
principal amount not to exceed the amount set forth under the heading “Growth
Capital Term Commitment” opposite such Lender’s name on Schedule 1.1.
 
“Growth Capital Term Loan Advance” means an Advance pursuant to Section 2.1(a)
 
“Indebtedness” means indebtedness of any kind, including (a) all indebtedness
for borrowed money or the deferred purchase price of property or services
(excluding trade credit entered into in the ordinary course of business due
within ninety (90) days), including reimbursement and other obligations with
respect to surety bonds and letters of credit, (b) all obligations evidenced by
notes, bonds, debentures or similar instruments, (c) all capital lease
obligations, and (d) all Contingent Obligations; provided, however, Indebtedness
shall not include obligations to make payment on the Equity Interests of the
Parent.
 
“Intellectual Property” means all of each Borrower’s Copyrights, Trademarks,
Patents, Licenses, trade secrets and inventions; mask works; each Borrower’s
applications therefor and reissues, extensions, or renewals thereof; and each
Borrower’s goodwill associated with any of the foregoing, together with each
Borrower’s rights to sue for past, present and future infringement of
Intellectual Property and the goodwill associated therewith.
 
“Interest Expense” is, for any period of determination, for Parent and each of
its Subsidiaries on a consolidated basis, an amount equal to the sum of all
interest charges (including imputed interest charges with respect to capitalized
lease obligations and all amortization of debt discount and expense) of such
Person for such period.
 
 
5

 
 
“Interest Only Extension Condition” shall mean satisfaction of each of the
following events: (a) no default or Event of Default shall have occurred and be
continuing; and (b) either (i) Borrower Representative shall have provided
evidence reasonably satisfactory to Agent that Parent, on a consolidated basis,
shall have achieved Gross Profit and Adjusted EBITDA for the most recent fiscal
quarter then ended in an amount not less than 80% of the projected Gross Profit
and Adjusted EBITDA for such fiscal quarter, as set forth in the Budget, or (ii)
Borrower Representative shall have provided evidence reasonably satisfactory to
Agent that (A) Parent, on a consolidated basis, shall have achieved Gross Profit
and Adjusted EBITDA for the most recent fiscal quarter then ended in an amount
not less than 75% of the projected Gross Profit and Adjusted EBITDA for such
fiscal quarter, as set forth in the Budget, and (B) Parent shall have received
net cash proceeds from the issuance of its Equity Interest (not including any
proceeds from the conversion of indebtedness) of at least $5,000,000 during the
period commencing on the first day of such fiscal quarter and ending on the
Amortization Date as then in effect.
 
“Inventory Financing Agreement” means that certain Inventory Financing and
Security Agreement, by and among Inventory Financing Lenders and RMBL Missouri,
dated February 16, 2018, as it may be amended in compliance with the Inventory
Financing Intercreditor Agreement and similar agreements entered into with any
Inventory Financing Lender.
 
“Inventory Financing Intercreditor Agreement” means an intercreditor agreement
by and among any Inventory Financing Lender, Agent and Borrowers in form and
substance satisfactory to Agent in Agent’s reasonable discretion (it being
understood that the Inventory Financing Intercreditor Agreement dated of even
date with this Agreement shall be deemed satisfactory in form and substance),
pursuant to which the Liens securing Indebtedness of any Borrower pursuant to
any Inventory Financing Agreement shall be subordinated to Agent’s Lien except
that the Lien granted to such Inventory Financing Lender may be prior to Agent’s
Lien with respect to the following Collateral: (i) Inventory financed pursuant
to the applicable Inventory Financing Agreement, (ii) Permitted Inventory
Financing Cash Collateral, and (iii) cash proceeds from the sale of such
financed Inventory until the earlier of payment to Inventory Financing Lender of
the advance associated with such financed Inventory and the date that is 30 days
after the sale of such financed Inventory, or, if a default or event of default
has occurred of which Agent has been duly notified, all cash proceeds from the
sale of Inventory constituting financed Inventory as of the date the default or
event of default occurred (or if Inventory Financing Lender notifies Agent of
the default or event of default more than 30 days after the occurrence of the
default or event of default, all cash proceeds from Inventory constituting
financed Inventory as of the date that is 30 days prior to the date notice of
the default or event of default is duly given to Agent), provided further, that
if an Advance pursuant to Tranche III has been made, Agent agrees that it will
negotiate in good faith with respect to an Inventory Financing Intercreditor
Agreement pursuant to which an Inventory Financing Lender may have a first
priority Lien (prior to Agent’s Lien) on all Inventory of the applicable
Borrower and certain cash proceeds thereof, as approved by Agent in its sole
discretion, subject to Borrowers maintenance of a minimum cash balance of at
least $2,000,000 in Deposit Accounts and accounts in which Investment Property
is maintained, in each case, subject to an Account Control Agreement in favor of
Agent, if the amount of total Indebtedness pursuant to inventory financing
arrangements exceeds 70% of total value of the aggregate book value of Inventory
of Borrowers, on a consolidated basis (such minimum cash requirement to be set
forth in an amendment to this Agreement, if so requested by Agent).
 
“Inventory Financing Lenders” means Ally Bank and Ally Financial Inc.,
collectively and each of their assigns or successors in interest, and any
additional or replacement lenders providing inventory financing to any Borrower
other than Parent, provided that such lender shall be domiciled in the United
States and shall be in the business of extending credit of such type in the
ordinary course of business.
 
“Investment” means any beneficial ownership (including stock, partnership or
limited liability company interests) of or in any Person, or any loan, advance
or capital contribution to any Person or the acquisition of any asset of another
Person.
 
“Joinder Agreements” means for each Qualified Subsidiary, a completed and
executed Joinder Agreement in substantially the form attached hereto as Exhibit
G.
 
“Lender” has the meaning given to it in the preamble to this Agreement.
 
 
6

 
 
“License” means any Copyright License, Patent License, Trademark License or
other license of rights or interests.
 
“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
against any property, any conditional sale or other title retention agreement,
and any lease in the nature of a security interest.
 
“Loan” means the Advances made under this Agreement.
 
“Loan Documents” means this Agreement, the Notes (if any), the ACH
Authorization, the Account Control Agreements, the Joinder Agreements, all UCC
Financing Statements, the Warrant, and any other documents executed in
connection with the Secured Obligations or the transactions contemplated hereby,
as the same may from time to time be amended, modified, supplemented or
restated.
 
“Material Adverse Effect” means a material adverse effect upon: (i) the
business, operations, properties, assets or financial condition of Borrowers and
each of its Subsidiaries taken as a whole; or (ii) the ability of Borrowers to
perform or pay the Secured Obligations in accordance with the terms of the Loan
Documents, or the ability of Agent or Lender to enforce any of its material
rights or remedies with respect to the Secured Obligations; or (iii) the
Collateral or Agent’s Liens on the Collateral or the priority of such Liens.
 
“Maximum Growth Capital Term Loan Amount” means $20,000,000.
 
“Maximum Rate” shall have the meaning assigned to such term in Section 2.2.
 
“Net Income” is, for any period of determination, for Parent and its
Subsidiaries on a consolidated basis, the net income of Parent and its
Subsidiaries determined in accordance with GAAP for such period.
 
“NextGen Pro” has the meaning assigned to it in the preamble to this Agreement.
 
“Non-Disclosure Agreement” means that certain Non-Disclosure
Agreement/Confidentiality Agreement by and between Borrower Representative and
Agent dated as of August 17, 2017.
 
“Note” means the Term Note.
 
“OFAC” is the U.S. Department of Treasury Office of Foreign Assets Control.
 
“OFAC Lists” are, collectively, the Specially Designated Nationals and Blocked
Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed.
Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other
restricted Persons maintained pursuant to any of the rules and regulations of
OFAC or pursuant to any other applicable Executive Orders.
 
“Organizational Documents” means with respect to any Person, such Person’s
formation documents, and (a) if such Person is a corporation, its bylaws, (b) if
such Person is a limited liability company, its limited liability company
agreement (or similar agreement), and (c) if such Person is a partnership, its
partnership agreement (or similar agreement), each of the foregoing with all
current amendments or modifications thereto.
 
“Other Connection Taxes” means, with respect to any Recipient, Taxes imposed as
a result of a present or former connection between such Recipient and the
jurisdiction imposing such Tax (other than connections arising from such
Recipient having executed, delivered, become a party to, performed its
obligations under, received payments under, received or perfected a security
interest under, engaged in any other transaction pursuant to or enforced any
Loan Document, or sold or assigned an interest in any Loan or Loan Document).
 
 
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“Parent” has the meaning assigned to it in the preamble to this Agreement.
 
“Patent License” means any written agreement granting any right with respect to
any invention on which a Patent is in existence or a Patent application is
pending, in which agreement a Borrower now holds or hereafter acquires any
interest.
 
“Patents” means all letters patent of, or rights corresponding thereto, in the
United States of America or in any other country, all registrations and
recordings thereof, and all applications for letters patent of, or rights
corresponding thereto, in the United States of America or any other country. No
Patent of the Borrowers on the date of this Agreement shall be deemed to be
necessary or material to the Borrowers’ business.
 
 
“Performance Milestone I” means (a) either (i) Borrower Representative shall
have provided evidence reasonably satisfactory to Agent that Parent, on a
consolidated basis, shall have achieved Gross Profit and Adjusted EBITDA for
each of the fiscal quarters ending June 30, 2018 and September 30, 2018 in an
amount not less than 80% of the projected Gross Profit and Adjusted EBITDA for
each such quarter as set forth in the Budget, or (ii) Borrower Representative
shall have provided evidence reasonably satisfactory to Agent that (A) Parent,
on a consolidated basis, shall have achieved Gross Profit and Adjusted EBITDA
for the fiscal quarter ending June 30, 2018 or the fiscal quarter ending
September 30, 2018 in an amount not less than 75% of the projected Gross Profit
and Adjusted EBITDA for such quarter as set forth in the Budget, and (B) Parent
shall have received net cash proceeds from the issuance of its Equity Interests
(not including any proceeds from the conversion of indebtedness) of at least
$5,000,000 not later than December 31, 2018; and (b) as of the date such
evidence is provided, no Event of Default shall have occurred and be continuing.
 
“Performance Milestone II” means Borrower Representative shall have provided
evidence reasonably satisfactory to Agent that Parent, on a consolidated basis,
shall have achieved: (i) Adjusted EBITDA for a fiscal quarter ending on or prior
to December 31, 2018 of at least $1.00 for such quarterly period, and shall have
demonstrated, to Lender’s reasonable satisfaction, projections for continued
positive Adjusted EBITDA during subsequent periods; and (ii) $35,000,000 or more
in Revenue for at least one fiscal quarter ending on or prior to December 31,
2018 with associated Gross Margin for such fiscal quarter of not less than
13.0%; and as of the date such evidence is provided, no Event of Default shall
have occurred and be continuing.
 
“Permitted Acquisition” means any acquisition (including by way of merger) by a
Borrower of all or substantially all of the assets of another Person, or of a
division or line of business of another Person, or capital stock of another
Person, in each case located entirely within the United States of America, which
is conducted in accordance with the following requirements:
 
(a) such acquisition is of a business or Person engaged in a line of business
related to that of the Parent or its Subsidiaries;
 
(b) if such acquisition is structured as a stock acquisition, then the Person so
acquired shall either (i) become a wholly-owned Subsidiary of a Borrower or of a
Subsidiary and such Borrower shall comply, or cause such Subsidiary to comply,
with Section 7.13 hereof or (ii) such Person shall be merged with and into a
Borrower (with such Borrower being the surviving entity);
 
(c) if such acquisition is structured as an acquisition of assets, such assets
shall be acquired by a Borrower, and shall be free and clear of Liens other than
Permitted Liens;
 
(d) both immediately before and after such acquisition no default or Event of
Default shall have occurred and be continuing;
 
(e) Borrowers have provided Agent with any term sheet or letter of intent for
any such acquisition together with all documents to be entered into in
connection therewith and all exhibits and schedules thereto together with pro
forma combined financial statements and updated pro forma combined projections;
 
 
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(f) Borrowers have provided Agent with written confirmation, supported by
reasonably detailed calculations, that
 
(i) To the extent Borrowers are not then subject to Section 7.21, the acquired
Person, business line or assets did not have pro forma Adjusted EBITDA of less
than $1.00 during the consecutive twelve (12) month period most recently
concluded prior to the date of the proposed acquisition;
 
(ii) to the extent then applicable, based on pro forma combined financial
statements and updated pro forma combined projections, Borrowers would have been
in compliance with the financial covenants set forth in Section 7.21, as of the
end of the preceding fiscal quarter ended immediately prior to the consummation
of the proposed acquisition, and is projected to be in compliance with such
financial covenants at the end of each of the following four fiscal quarter
periods following the consummation of such proposed acquisition; and
 
(iii) after giving effect to the proposed transaction, Borrowers shall maintain
Cash in an aggregate amount of at least (A) $5,000,000, if the proposed
acquisition is consummated prior to any Advance pursuant to Tranche III, and (B)
$10,000,000, if the proposed acquisition is consummated after the Advance
pursuant to Tranche III is made;
 
(g) the consideration payable in respect of such acquisition (including deferred
or contingent consideration) shall not exceed (A) $5,000,000 per fiscal year, if
the proposed acquisition is consummated prior to any Advance pursuant to Tranche
III, and (B) $10,000,000 per fiscal year, if the proposed acquisition is
consummated after the Advance pursuant to Tranche III is made, provided that
purchase consideration funded substantially contemporaneously with (and in any
event prior to) the consummation of such acquisition from the sale and issuance
of Parent’s Equity Interests in a transaction not resulting in a Change in
Control shall be disregarded in determining compliance with this clause (g);
 
(h) any Indebtedness owing by a Borrower to the seller of assets or Equity
Interests to a Borrower in connection with the consummation of such acquisition
is subordinated to the Secured Obligations on terms and conditions reasonably
acceptable to Agent; and
 
(i) Agent has determined, based upon review of the foregoing documents and
financial statements, that such transaction is not reasonably expected to
materially and adversely affect Borrower’s ability to repay the Secured
Obligations when due, Agent’s security interest in the Collateral or Agent’s
rights and remedies pursuant to the Loan Documents or pursuant to applicable
law.
 
“Permitted Indebtedness” means:
 
(a) Indebtedness of a Borrower in favor of Lender or Agent arising under this
Agreement or any other Loan Document;
 
(b) Indebtedness of up to $200,000 outstanding at any time secured by a Lien
described in clause (f) of the defined term “Permitted Liens”, provided in the
case of acquired Equipment such Indebtedness does not exceed the cost of the
Equipment financed with such Indebtedness;
 
(c) Indebtedness to trade creditors incurred in the ordinary course of business,
including Indebtedness incurred in the ordinary course of business with company
credit cards;
 
(d) Indebtedness that also constitutes a Permitted Investment;
 
 
9

 
 
(e) Subordinated Indebtedness;
 
(f) reimbursement obligations in connection with letters of credit that are
secured by Cash and issued on behalf of a Borrower or a Subsidiary in an amount
not to exceed $250,000 at any time outstanding, and reimbursement obligations in
connection with letters of credit serving as a lease deposit;
 
(g) intercompany Indebtedness as long as each of the Subsidiary obligor and the
Subsidiary obligee under such Indebtedness is a Qualified Subsidiary that has
executed a Joinder Agreement;
 
(h) Indebtedness pursuant to a Qualified Inventory Financing;
 
(i) Indebtedness of any Person whose assets or Equity Interests are acquired by
a Borrower or any of its Subsidiaries in a Permitted Acquisition provided, that
the aggregate amount of such Indebtedness outstanding at any time does not
exceed $100,000 and was not incurred in connection with, or in contemplation of,
such Permitted Acquisition;
 
(j) Indebtedness consisting of deferred consideration payable in connection with
the consummation of a Permitted Acquisition, provided that such Indebtedness is
subordinated to the Secured Obligations on terms and conditions reasonably
acceptable to Agent;
 
(k) Indebtedness owed to any Person providing workers’ compensation, health,
disability or other employee benefits or property, casualty or liability
insurance, pursuant to reimbursement or indemnification obligations to such
Person, in each case incurred in the ordinary course of business; and
 
(l) other Indebtedness, including Indebtedness covered by, but in excess of the
amounts permitted under clauses (b), (f) and (i) above, at any time outstanding
in an amount not to exceed $750,000, (which amount shall be reduced by the
aggregate amount of Indebtedness described in clauses (b), (f) and (i) above, in
each case up to the amount permitted thereunder, that is outstanding as of the
date of determination).
 
“Permitted Inventory Financing Cash Collateral” means cash collateral required
to be provided pursuant to any Inventory Financing Agreement, provided that (a)
the aggregate amount of such cash collateral shall not in any event exceed the
greater of (i) $250,000 and (ii) 10.0% of the approved credit line pursuant to
such Qualified Inventory Financing, and (b) at any time, no additional cash
collateral shall be provided if doing so would result in an Event of Default or
could reasonably be expected to result in an Event of Default.
 
“Permitted Investment” means:
 
(a) (i) marketable direct obligations issued or unconditionally guaranteed by
the United States of America or any agency or any State thereof maturing within
one year from the date of acquisition thereof currently having a rating of at
least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors
Services, (ii) commercial paper maturing no more than one year from the date of
creation thereof and currently having a rating of at least A-2 or P-2 from
either Standard & Poor’s Corporation or Moody’s Investors Services, (iii)
certificates of deposit issued by any bank with assets of at least $500,000,000
maturing no more than one year from the date of investment therein, and (iv)
money market accounts;
 
(b) all repurchases of stock from former employees, directors, or consultants of
Borrower under the terms of applicable repurchase agreements at the original
issuance price of such securities in an aggregate amount not to exceed $100,000
in any fiscal year, provided that no Event of Default has occurred and is
continuing or could exist after giving effect to the repurchases;
 
 
10

 
 
(c) Investments accepted in connection with Permitted Transfers;
 
(d) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of customers or suppliers and in settlement of
delinquent obligations of, and other disputes with, customers or suppliers
arising in the ordinary course of a Borrower’s business;
 
(e) Investments consisting of (i) notes receivable of, or prepaid royalties and
other credit extensions, to customers and suppliers who are not Affiliates, in
the ordinary course of business, provided that this clause (e) shall not apply
to Investments of any Borrower in any Subsidiary and (ii) prepaid insurance
premiums and prepaid rent to carriers and landlords, respectively, that are not
Affiliates, in the ordinary course of business;
 
(f) Investments consisting of loans not involving the net transfer on a
substantially contemporaneous basis of cash proceeds to employees, officers or
directors relating to the purchase of capital stock of Parent pursuant to
employee stock purchase plans or other similar agreements approved by Parent’s
Board;
 
(g) Investments consisting of travel and relocation advances in the ordinary
course of business;
 
(h) Investments of any Borrower in any other Borrower, Investments of Parent in
any Borrower and Investments in newly-formed Domestic Subsidiaries, provided
each such newly-formed Domestic Subsidiary has entered into a Joinder Agreement
in accordance with Section 7.13 prior to or simultaneously with such
newly-formed Domestic Subsidiary making an Investment;
 
(i) Investments in Foreign Subsidiaries approved in advance in writing by Agent;
 
(j) joint ventures or strategic alliances in the ordinary course of Borrowers’
business consisting of the nonexclusive licensing of technology, the development
of technology or the providing of technical support, provided that cash
Investments (if any) by any Borrower do not exceed $100,000 in the aggregate in
any fiscal year;
 
(k) Permitted Acquisitions; and
 
(l) additional Investments, including Investments covered by, but in excess of
the amounts permitted under, clauses (b) and (j) above, that do not exceed
$750,000 during the term of this Agreement (less the amount of Investments
described in clauses (b) and (j) above made, in each case, up to the amount
permitted thereunder, from the Closing Date through the date of determination).
 
“Permitted Liens” means any and all of the following:
 
(a) Liens in favor of Agent or Lender;
 
(b) Liens for taxes, fees, assessments or other governmental charges or levies,
either not delinquent or being contested in good faith by appropriate
proceedings; provided, that Borrowers maintain adequate reserves therefor in
accordance with GAAP;
 
(c) Liens securing claims or demands of materialmen, artisans, mechanics,
carriers, warehousemen, landlords and other like Persons arising in the ordinary
course of Borrowers’ business and imposed without action of such parties;
provided, that the payment thereof is not yet delinquent, subject to any grace
period, by more than fifteen (15) days or payment is disputed by Borrowers in
good faith, subject to reserves with respect to such obligation is in accordance
with GAAP;
 
 
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(d) Liens arising from judgments, decrees or attachments in circumstances which
do not constitute an Event of Default hereunder;
 
(e) the following deposits, to the extent made in the ordinary course of
business: deposits under worker’s compensation, unemployment insurance, social
security and other similar laws, or to secure the performance of bids, tenders
or contracts (other than for the repayment of borrowed money) or to secure
indemnity, performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed money) or to
secure statutory obligations (other than Liens arising under ERISA or
environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance or other similar bonds;
 
(f) Liens on Equipment or software or other intellectual property constituting
purchase money Liens and Liens in connection with capital leases securing
Indebtedness in an amount not in excess of the amount set forth in clause (b)
(or clause (l) if applicable) of “Permitted Indebtedness”;
 
(g) Liens incurred in connection with Subordinated Indebtedness;
 
(h) leasehold interests in leases or subleases and licenses granted in the
ordinary course of business and not interfering in any material respect with the
business of the licensor;
 
(i) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payment of custom duties that are promptly paid on or before the date
they become due;
 
(j) Liens on insurance proceeds securing the payment of financed insurance
premiums that are promptly paid on or before the date they become due (provided
that such Liens extend only to such insurance proceeds and not to any other
property or assets);
 
(k) statutory and common law rights of set-off and other similar rights as to
deposits of cash and securities in favor of banks, other depository institutions
and brokerage firms;
 
(l) easements, zoning restrictions, rights-of-way and similar encumbrances on
real property imposed by law or arising in the ordinary course of business so
long as they do not materially impair the value or marketability of the related
property as it is then being used;
 
(m) (i) Liens on Cash securing obligations permitted under clause (f) of the
definition of Permitted Indebtedness and (ii) security deposits in connection
with real property leases, the combination of (i) and (ii) in an aggregate
amount not to exceed $250,000 at any time;
 
(n) Liens securing Indebtedness described in clause (i) of the defined term
“Permitted Indebtedness”, provided that such Liens shall be limited to specific
financed assets; and
 
(o) Liens securing Indebtedness pursuant to a Qualified Inventory Financing,
provided that such Liens are subject to the Inventory Financing Intercreditor
Agreement and that any cash collateral subject to a Lien in favor of Inventory
Financing Lenders shall not exceed the amount of the Permitted Inventory
Financing Cash Collateral.
 
“Permitted Transfers” means:
 
(a) sales or leases of Inventory in the ordinary course of business;
 
 
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(b) non-exclusive licenses and similar arrangements for the use of Intellectual
Property in the ordinary course of business and licenses that could not result
in a legal transfer of title of the licensed property but that may be exclusive
in respects other than territory and that may be exclusive as to territory only
as to discreet geographical areas outside of the United States of America in the
ordinary course of business;
 
(c) dispositions of worn-out, obsolete or surplus Inventory and Equipment in the
ordinary course of business;
 
(d) transfers among Borrowers; and
 
(e) other transfers of assets having a fair market value of not more than
$100,000 in the aggregate in any fiscal year.
 
“Person” means any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association, corporation, limited liability
company, institution, other entity or government.
 
“Prepayment Charge” shall have the meaning assigned to such term in Section 2.4.
 
“Qualified Inventory Financing” means Indebtedness owing to Inventory Financing
Lenders pursuant to an Inventory Financing Agreement, provided that (i) any
Inventory Financing Lender shall have entered into and continue to be subject to
the Inventory Financing Intercreditor Agreement with respect to any Inventory
Financing Agreement to which it is a party, (ii) the aggregate outstanding
amount of the aggregate amount of such Indebtedness at any time outstanding
shall not exceed an amount equal (x) 85% of the aggregate book value of all
Inventory of Borrowers, on consolidated basis less (y) the aggregate amount of
cash collateral maintained by such Inventory Financing Lenders, (iii) the
advance rates shall not deviate materially from the advance rate structure
pursuant to the inventory financing arrangements as in effect on the Closing
Date, and (iv) the interest rate and applicable fees shall not be higher and the
cash collateral or deposit required shall not be a higher percentage of the
approved credit limit, in each case, relative to the inventory financing
arrangements as in effect on the Closing Date.
 
“Qualified Subsidiary” means any direct or indirect Domestic Subsidiary or
Eligible Foreign Subsidiary.
 
“Receivables” means (i) all of each Borrower’s Accounts, Instruments, Documents,
Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter
of credit, and Letter of Credit Rights, and (ii) all customer lists, software,
and business records related thereto.
 
“Recipient” means (a)  Agent, or (b)  Lender, as applicable.
 
“Required Lenders” means at any time, the holders of more than 50% of the sum of
the aggregate unpaid principal amount of the Growth Capital Term Loan Advances
then outstanding.
 
“Revenue” means revenue of Parent, determined on a consolidated basis, in
accordance with GAAP.
 
“RMBL Missouri” has the meaning assigned to it in the preamble to this
Agreement.
 
“RMBL Texas” has the meaning assigned to it in the preamble to this Agreement.
 
“Sanctioned Country” shall mean, at any time, a country or territory which is
the subject or target of any Sanctions.
 
 
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“Sanctioned Person” shall mean, at any time, (a) any Person listed in any
Sanctions-related list of designated Persons maintained by the Office of Foreign
Assets Control of the U.S. Department of the Treasury or the U.S. Department of
State, or by the United Nations Security Council, the European Union or any EU
member state, (b) any Person operating, organized or resident in a Sanctioned
Country or (c) any Person controlled by any such Person.
 
“Sanctions” shall mean economic or financial sanctions or trade embargoes
imposed, administered or enforced from time to time by (a) the U.S. government,
including those administered by the Office of Foreign Assets Control of the U.S.
Department of the Treasury or the U.S. Department of State, or (b) the United
Nations Security Council, the European Union or Her Majesty’s Treasury of the
United Kingdom.
 
“Secured Obligations” means Borrowers’ obligations under this Agreement and any
Loan Document (other than the Warrant), including any obligation to pay any
amount now owing or later arising.
 
“Shares” means one hundred percent (100%) of the issued and outstanding capital
stock, membership units or other securities owned or held of record by each
Borrower in any of its Subsidiary, provided that with respect to any Foreign
Subsidiary other than a Qualified Subsidiary or any Foreign Subsidiary that is a
Borrower hereunder or guarantor with respect to the Secured Obligations, from
time to time, “Shares” shall be limited to 65% of the shares of capital stock
entitled to vote.
 
“Subordinated Indebtedness” means Indebtedness (other than Qualified Inventory
Financing) subordinated to the Secured Obligations in amounts and on terms and
conditions satisfactory to Agent in its sole discretion and subject to a
subordination agreement in form and substance satisfactory to Agent in its sole
discretion.
 
“Subsidiary” means an entity, whether corporate, partnership, limited liability
company, joint venture or otherwise, in which a Borrower owns or controls 50% or
more of the outstanding voting securities.
 
“Taxes” shall have the meaning assigned to such term in Section 2.9.
 
“Term Loan Interest Rate” means, for any day a per annum rate of interest equal
to the greater of either (i) the prime rate as reported in The Wall Street
Journal plus 5.75%, and (ii) 10.25%.
 
“Term Loan Maturity Date” means May 1, 2021, provided that if Borrower achieves
the Performance Milestone II, the Term Loan Maturity Date shall be November 1,
2021.
 
“Term Note” means a promissory note in substantially the form of Exhibit B.
 
“Trademark License” means any written agreement granting any right to use any
Trademark or Trademark registration, now owned or hereafter acquired by a
Borrower or in which a Borrower now holds or hereafter acquires any interest.
 
“Trademarks” means all trademarks (registered, common law or otherwise) and any
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States of America, any State thereof or any other
country or any political subdivision thereof.
 
“Tranche I” has the meaning set forth in Section 2.1(a).
 
“Tranche II” has the meaning set forth in Section 2.1(a).
 
“Tranche III” has the meaning set forth in Section 2.1(a).
 
 
14

 
 
“Tranche IV” has the meaning set forth in Section 2.1(a).
 
“UCC” means the Uniform Commercial Code as the same is, from time to time, in
effect in the State of California; provided, that in the event that, by reason
of mandatory provisions of law, any or all of the attachment, perfection or
priority of, or remedies with respect to, Agent’s Lien on any Collateral is
governed by the Uniform Commercial Code as the same is, from time to time, in
effect in a jurisdiction other than the State of California, then the term “UCC”
shall mean the Uniform Commercial Code as in effect, from time to time, in such
other jurisdiction solely for purposes of the provisions thereof relating to
such attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.
 
“Warrant” means any warrant entered into in connection with the Loan, as may be
amended, restated or modified from time to time.
 
Unless otherwise specified, all references in this Agreement or any Annex or
Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule”
shall refer to the corresponding Section, subsection, Exhibit, Annex, or
Schedule in or to this Agreement. Unless otherwise specifically provided herein,
any accounting term used in this Agreement or the other Loan Documents shall
have the meaning customarily given such term in accordance with GAAP, and all
financial computations hereunder shall be computed in accordance with GAAP,
consistently applied. Unless otherwise defined herein or in the other Loan
Documents, terms that are used herein or in the other Loan Documents and defined
in the UCC shall have the meanings given to them in the UCC.
 
SECTION 2. THE LOAN
 
2.1              Growth Capital Term Loan Advances.
 
(a) Growth Capital Term Commitment. Subject to the terms and conditions of this
Agreement, Lender will severally (and not jointly) make in an amount not to
exceed its respective Growth Capital Term Commitment, and Borrowers agree to
draw, a Growth Capital Term Loan Advance of $5,000,000 on the Closing Date
(“Tranche I”). During the period commencing on Borrower’s achievement of
Performance Milestone I and ending December 31, 2018, Lender will severally (and
not jointly) make in an amount not to exceed its respective Growth Capital Term
Commitment, and Borrowers agree to draw, a Growth Capital Term Loan Advance of
$2,500,000 (“Tranche II”). During the period commencing upon Borrowers’
achievement of Performance Milestone II and ending March 31, 2019, Borrower
Representative may request an additional Growth Capital Term Loan Advances in an
amount of $7,500,000 (“Tranche III”). Upon Borrower Representative’s request and
approval by Lender’s investment committee, in its sole discretion, Borrower
Representative may request additional Growth Capital Term Loan Advances in an
aggregate amount $5,000,000 (“Tranche IV”). The aggregate outstanding Growth
Capital Term Loan Advances shall not exceed the Maximum Growth Capital Term Loan
Amount.
 
(b) Advance Request. To obtain a Growth Capital Term Loan Advance, Borrower
shall complete, sign and deliver an Advance Request at least three (3) Business
Days before the Advance Date, other than the Growth Capital Term Loan Advance to
be made on the Closing Date, which shall be at least one (1) Business Day before
the Advance Date, to Agent. Lender shall fund each Growth Capital Term Loan
Advance in the manner requested by the Advance Request provided that each of the
conditions precedent to such Growth Capital Term Loan Advance is satisfied as of
the requested Advance Date.
 
(c) Interest. The principal balance of each Growth Capital Term Loan Advance
shall bear interest thereon from such Advance Date at the Term Loan Interest
Rate based on a year consisting of 360 days, with interest computed daily based
on the actual number of days elapsed. The Term Loan Interest Rate will float and
change on the day the prime rate changes from time to time.
 
 
 
15

 
 
(d) Payment. Borrowers will pay interest on each Growth Capital Term Loan
Advance on the first Business Day of each month, beginning the month after the
Advance Date continuing until (but not including) the Amortization Date.
Borrowers shall repay the aggregate principal balance of the Growth Capital Term
Loan Advances that is outstanding on the day immediately preceding the
Amortization Date, in equal monthly installments of principal and interest
(mortgage style) beginning on the Amortization Date and continuing on the first
Business Day of each month thereafter until the Secured Obligations (other than
inchoate indemnity obligations) are repaid, provided that if the Term Loan
Interest Rate is adjusted in accordance with its terms, or the Amortization Date
or the Term Loan Maturity Date is extended, the amount of each subsequent
monthly installment shall be recalculated, and provided further, that if, with
respect to Advances pursuant to Tranche I or Tranche II, Borrowers achieve the
Interest Only Extension Condition after principal payments have commenced in
accordance with the Amortization Date previously in effect, then commencing on
the first Business Day of the following month and each month thereafter until
the Amortization Date, as extended, Borrower shall make payments of interest
only, and on the Amortization Date, as extended, shall resume payment of equal
monthly installments of principal and interest (as recalculated based on the
extended Amortization Date), as set forth above. The entire principal balance of
the Growth Capital Term Loan Advances and all accrued but unpaid interest
hereunder, shall be due and payable on the Term Loan Maturity Date. Borrowers
shall make all payments under this Agreement without setoff, recoupment or
deduction and regardless of any counterclaim or defense. Lender will initiate
debit entries to the applicable Borrower’s account as authorized on the ACH
Authorization (i) on each payment date of all periodic obligations payable to
Lender under each Growth Capital Term Loan Advance and (ii) out-of-pocket legal
fees and costs incurred by Agent or Lender in connection with Section 11.11 of
this Agreement; provided that, with respect to clause (i) above, in the event
that Lender or Agent informs Borrower Representative that Lender will not
initiate a debit entry to such Borrower’s account for a certain amount of the
periodic obligations due on a specific payment date, Borrowers shall pay to
Lender such amount of periodic obligations in full in immediately available
funds on such payment date; provided, further, that, with respect to clause (i)
above, if Lender or Agent informs Borrower Representative that Lender will not
initiate a debit entry as described above later than the date that is three (3)
Business Days prior to such payment date, Borrowers shall pay to Lender such
amount of periodic obligations in full in immediately available funds on the
date that is three (3) Business Days after the date on which Lender or Agent
notifies Borrower Representative thereof; provided, further, that, with respect
to clause (ii) above, in the event that Lender or Agent informs Borrower
Representative that Lender will not initiate a debit entry to a Borrower’s
account for specified out-of-pocket legal fees and costs incurred by Agent or
Lender, Borrowers shall pay to Lender such amount in full in immediately
available funds within three (3) Business Days.
 
2.2 Maximum Interest. Notwithstanding any provision in this Agreement or any
other Loan Document, it is the parties’ intent not to contract for, charge or
receive interest at a rate that is greater than the maximum rate permissible by
law that a court of competent jurisdiction shall deem applicable hereto (which
under the laws of the State of California shall be deemed to be the laws
relating to permissible rates of interest on commercial loans) (the “Maximum
Rate”). If a court of competent jurisdiction shall finally determine that
Borrowers have actually paid to Lender an amount of interest in excess of the
amount that would have been payable if all of the Secured Obligations had at all
times borne interest at the Maximum Rate, then such excess interest actually
paid by Borrowers shall be applied as follows: first, to the payment of the
Secured Obligations consisting of the outstanding principal; second, after all
principal is repaid, to the payment of Lender’s accrued interest, costs,
expenses, professional fees and any other Secured Obligations; and third, after
all Secured Obligations are repaid, the excess (if any) shall be refunded to
Borrowers.
 
2.3 Default Interest. In the event any payment is not paid on the scheduled
payment date (other than due to failure to pay due solely to an administrative
or operational error of Agent or Lender or the applicable Borrower’s bank if
Borrowers had the funds to make the payment when due and make the payment within
three (3) Business Days following Borrowers’ knowledge of such failure to pay),
an amount equal to five percent (5%) of the past due amount shall be payable on
demand. In addition, upon the occurrence and during the continuation of an Event
of Default hereunder, all Secured Obligations, including principal, interest
and, to the extent demand for payment has been made, professional fees, shall
bear interest at a rate per annum equal to the rate set forth in Section 2.1(c),
plus five percent (5%) per annum. In the event any interest is not paid when due
hereunder, delinquent interest shall be added to principal monthly and shall
bear interest on interest, compounded at the rate set forth in Section 2.1(c) or
 Section 2.4, as applicable.
 
 
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2.4 Prepayment. At its option, upon at least seven (7) Business Days prior
written notice to Agent, Borrowers may prepay all, but not less than all, of the
outstanding Advances by paying the entire principal balance, all accrued and
unpaid interest thereon, together with the applicable prepayment charge equal to
the following percentage of the Advance amount being prepaid: with respect to
amounts prepaid on or prior to the one year anniversary of the Closing Date,
3.0%; after the one year anniversary of the Closing Date, through the two year
anniversary of the Closing Date, 2.0%; and after the two year anniversary of the
Closing Date through the date that is forty-five (45) days prior to the then
current Term Loan Maturity Date, 1.0% (each, a “Prepayment Charge”), provided
that if the Secured Obligations are prepaid from the proceeds of the issuance of
Indebtedness, Borrowers shall afford Agent the opportunity to provide a term
sheet to refinance the Secured Obligations (but no Borrower shall be required to
enter into a refinancing transaction with Agent or any Lender even if on
substantially similar terms as the proposed issuance). Borrowers agree that the
Prepayment Charge is a reasonable calculation of Lender’s lost profits in view
of the difficulties and impracticality of determining actual damages resulting
from an early repayment of the Advances. Borrowers shall prepay the outstanding
amount of all principal and accrued interest through the prepayment date and the
Prepayment Charge upon the occurrence of a Change in Control.
 
2.5 End of Term Charge. On the earliest to occur of (i) the Term Loan Maturity
Date, (ii) the date that Borrowers prepay the outstanding Secured Obligations
(other than any inchoate indemnity obligations and any other obligations which,
by their terms, are to survive the termination of this Agreement) in full, or
(iii) the date that the Secured Obligations otherwise become due and payable,
Borrowers shall pay Lender a charge of 4.55% of the Growth Capital Term
Commitment pursuant to Tranche I and Tranche II, 2.95% of the Growth Capital
Term Commitment pursuant to Tranche III, and 2.35% of any principal amount paid
or prepaid in respect of Tranche IV. Notwithstanding the required payment date
of such charge, it shall be deemed earned by Lender as of the Closing Date with
regard to Tranche I, Tranche II and Tranche III, and on the applicable Advance
Date with regards to Tranche IV.
 
2.6 Due Diligence Fee. The Due Diligence Fee has been paid by Borrowers prior to
the Closing Date.
 
2.7 Notes. If so requested by Lender by written notice to Borrower
Representative, then Borrowers shall execute and deliver to Lender (and/or, if
applicable and if so specified in such notice, to any Person who is an assignee
of Lender pursuant to Section 11.13) (promptly after Borrower Representative’s
receipt of such notice) a Note or Notes to evidence Lender’s Loans.
 
2.8 Pro Rata Treatment; Application of Payments. Each payment (including
prepayment) on account of any fee and any reduction of the Growth Capital Term
Loan Advances shall be made pro rata according to the Growth Capital Term
Commitments of the relevant Lender. Lender has the exclusive right to determine
the order and manner in which all payments then due and payable with respect to
the Secured Obligations may be applied. No Borrower shall have a right to
specify the order or the accounts to which Lender shall allocate or apply any
payments made by a Borrower to Lender or otherwise received by Lender under this
Agreement when any such allocation or application is not expressly specified
elsewhere in this Agreement.
 
2.9 Withholding. Payments received by Agent or Lender from any Borrower under
any Loan Document will be made free and clear of and without deduction for any
taxes, levies, deductions, withholdings, assessments, fees or other charges
imposed by any governmental authority (“Taxes”) other than Excluded Taxes.
Specifically, however, if at any time any governmental authority, applicable
law, regulation or international agreement requires any Borrower to make any
withholding or deduction from any such payment or other sum payable hereunder to
Agent or Lender, authority other than Excluded Taxes such payment or other sum
payable hereunder shall be increased to the extent necessary to ensure that,
after the making of such required withholding or deduction, Agent or Lender, as
applicable receives a net sum equal to the sum which it would have received had
no withholding or deduction been required, and the applicable Borrower shall pay
the full amount withheld or deducted to the relevant governmental authority. The
applicable Borrower will, upon request, furnish Agent with proof reasonably
satisfactory to Agent indicating that such Borrower has made such withholding
payment. The agreements and obligations of Borrowers contained in this Section
2.9 shall survive the termination of this Agreement. Agent and Lender will use
commercially reasonable efforts to cooperate with Borrowers to minimize any
withholding taxes to the maximum extent permitted by applicable law, including
by providing a properly completed and duly executed Form W-9 or applicable Form
W-8, provided such cooperation does not subject Agent or Lender to any
unreimbursed cost or expense and would not otherwise be materially
disadvantageous to Lender or Agent.
 
 
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SECTION 3. SECURITY INTEREST
 
3.1              As security for the prompt and complete payment when due
(whether on the payment dates or otherwise) of all the Secured Obligations, each
Borrower grants to Agent a security interest in all of Borrower’s right, title,
and interest in, to and under all of Borrower’s personal property and other
assets including without limitation the following (except as set forth herein)
whether now owned or hereafter acquired (collectively, the “Collateral”): (a)
Receivables; (b) Equipment; (c) Fixtures; (d) General Intangibles; (e)
Inventory; (f) Investment Property; (g) Deposit Accounts; (h) Cash; (i) Goods;
and all other tangible and intangible personal property of Borrower whether now
or hereafter owned or existing, leased, consigned by or to, or acquired by,
Borrower and wherever located, and any of Borrowers’ property in the possession
or under the control of Agent; and, to the extent not otherwise included, all
Proceeds of each of the foregoing and all accessions to, substitutions and
replacements for, and rents, profits and products of each of the foregoing.
 
3.2 Notwithstanding the broad grant of the security interest set forth in
Section 3.1, above, to the extent excluded from the collateral pursuant to every
Qualified Inventory Financing, the Collateral shall not include (a) more than
65% of the presently existing and hereafter arising issued and outstanding
shares of capital stock owned by a Borrower of any Foreign Subsidiary (other
than an Eligible Foreign Subsidiary) which shares entitle the holder thereof to
vote for directors or any other matter, and (b) nonassignable licenses or
contracts, which by their terms or applicable law require the consent of the
licensor thereof or another party (but only to the extent such prohibition on
transfer is enforceable under applicable law, including, without limitation,
Sections 9406, 9407 and 9408 of the UCC), provided further, that upon the lapse
of such prohibition or such consent being provided with respect to any license
or contract, such license or contract shall automatically be included in the
Collateral.
 
3.3 Pledge of Shares. Each Borrower hereby pledges, assigns and grants to Agent
a security interest in the Shares, together with all proceeds and substitutions
thereof, all cash, stock and other moneys and property paid thereon, all rights
to subscribe for securities declared or granted in connection therewith, and all
other cash and noncash proceeds of the foregoing, as security for the
performance of the Secured Obligations. Borrowers represent and warrant that as
of the Closing Date, none of the Shares are evidenced by certificates. To the
extent required by the terms and conditions governing the Shares, the applicable
Borrower shall cause the books of each entity whose Shares are pledged pursuant
hereto and any transfer agent to reflect the pledge of the Shares. Upon the
occurrence of an Event of Default hereunder, Agent may effect the transfer of
the Shares included in the Collateral into the name of Agent and cause new
certificates representing such securities to be issued in the name of Agent or
its transferee. Each Borrower will execute and deliver such documents, and take
or cause to be taken such actions, as Agent may reasonably request to perfect or
continue the perfection of Agent’s security interest in the Shares. Unless an
Event of Default shall have occurred and be continuing, each Borrower shall be
entitled to exercise any voting rights with respect to the Shares and to give
consents, waivers and ratifications in respect thereof, provided that no vote
shall be cast or consent, waiver or ratification given or action taken which
would violate or result in the violation of any of the terms of this Agreement,
or which would adversely affect Agent’s security interest. All such rights to
vote and give consents, waivers and ratifications shall terminate upon the
occurrence and continuance of an Event of Default. If any Shares not evidenced
by certificates as of the Closing Date subsequently become evidenced by
certificates, or if a Borrower subsequently acquires any Shares evidenced by
certificates, such Borrower shall promptly deliver to Agent the certificates
evidencing the Shares together with a stock power or other similar instrument of
transfer duly executed in blank by such Borrower to be held by Agent as
possessory collateral.
 
SECTION 4. CONDITIONS PRECEDENT TO LOAN
 
The obligations of Lender to make the Loans hereunder are subject to the
satisfaction by Borrowers of the following conditions:
 
 
 
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4.1 Initial Advance. On or prior to the Closing Date or initial Advance, to the
extent indicated below, Borrowers shall have delivered to Agent the following:
 
(a) duly executed copies of the following, in form and substance acceptable to
Agent:
 
(i) this Agreement;
 
(ii) the completed ACH Authorization;
 
(iii) the intellectual property security agreement;
 
(iv) Account Control Agreements with respect to all Deposit Accounts and any
accounts where Investment Property is maintained, as required by Section 7.12
hereof, prior to the initial Advance;
 
(v) a duly executed certificate of an officer of each Borrower certifying and
attaching copies of (A) the Charter, certified as of a recent date by the
jurisdiction of organization of such Borrower; (B) the bylaws, operating
agreement or similar governing document of such Borrower; (C) resolutions of
such Borrower’s Board or consent of sole member evidencing approval of (1) the
Loan and other transactions contemplated by the Loan Documents, and with respect
to Parent, (2) the Warrant and issuance of Equity Interests in accordance with
its terms; (D) resolutions of the holders of such Borrower’s Equity Interests in
connection with the transactions contemplated by this Agreement, to the extent
required pursuant to the terms of the Charter or other governing document, in
each case, as in effect as of the Closing Date, and (E) a schedule setting forth
the name, title and specimen signature of officers or other authorized signers
on behalf of each Borrower;
 
(vi) a legal opinion of Borrowers’ counsel;
 
(vii) a subordination agreement, duly executed by each of Blue Flame Capital,
LLC, Lori Sue Chesrown and Ralph Wegis;
 
(viii) a subordination agreement, duly executed by Halcyon Consulting, LLC;
 
(ix) an Inventory Financing Intercreditor Agreement, duly executed by Ally Bank
and Ally Financial Inc.;
 
(x) any other Loan Documents (other than the Warrant, which shall be delivered
pursuant to subsection (b) below);
 
(xi) and all other documents and instruments reasonably required by Agent to
effectuate the transactions contemplated hereby or to create and perfect the
Liens of Agent with respect to all Collateral (provided that no certificates of
title need be delivered or endorsed);
 
(b) Originals of the following, in form and substance acceptable to Agent:
 
(i) the Warrant, and
 
(ii) any certificates evidencing Shares pledged pursuant to Section 3.3,
together with any unit powers or other instruments of transfer;
 
(c) a certificate of good standing for each Borrower from its state of
incorporation and similar certificates from all other jurisdictions in which it
does business and where the failure to be qualified could have a Material
Adverse Effect;
 
 
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(d) payment of the Facility Charge and reimbursement of Agent’s and Lender’s
current expenses reimbursable pursuant to this Agreement, which amounts may be
deducted from the initial Advance;
 
(e) all certificates of insurance, endorsements, and copies of each insurance
policy required pursuant to Section 6.2, except to the extent delivery after the
Closing Date is permitted in accordance with Section 7.24; and
 
(f) such other documents as Agent may reasonably request.
 
4.2 All Advances. On each Advance Date:
 
(a) Agent shall have received (i) an Advance Request for the relevant Advance as
required by Section 2.1(b), duly executed by Borrower Representative’s Chief
Executive Officer or Chief Financial Officer, and (ii) any other documents Agent
may reasonably request.
 
(b) The representations and warranties set forth in this Agreement shall be true
and correct in all material respects on and as of the Advance Date with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.
 
(c) Borrowers shall be in compliance with all the terms and provisions set forth
herein and in each other Loan Document on its part to be observed or performed
in all material respects, and at the time of and immediately after such Advance
no Event of Default shall have occurred and be continuing.
 
(d) Each Advance Request shall be deemed to constitute a representation and
warranty by Borrowers on the relevant Advance Date as to the matters specified
in paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in
the Advance Request.
 
4.3 No Default. As of the Closing Date and each Advance Date, (i) no fact or
condition exists that could (or could, with the passage of time, the giving of
notice, or both) reasonably be expected to constitute an Event of Default and
(ii) no event that could reasonably be expected to have a Material Adverse
Effect has occurred and is continuing.
 
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BORROWERS
 
Borrowers represent and warrant that:
 
5.1 Organizational Status. Each Borrower is duly organized, legally existing and
in good standing under the laws of its jurisdiction of organization, and is duly
qualified as a foreign corporation in all jurisdictions in which the nature of
its business or location of its properties require such qualifications and where
the failure to be qualified could reasonably be expected to have a Material
Adverse Effect. Each Borrower’s present name, former names (if any), locations,
place of formation, tax identification number, organizational identification
number and other information are correctly set forth in Exhibit C, or as such
Borrower has subsequently notified Agent after the Closing Date in accordance
with this Agreement (including in any Compliance Certificate).
 
5.2 Collateral. Each Borrower owns the Collateral free of all Liens, except for
Permitted Liens. Each Borrower has the power and authority to grant to Agent a
Lien in the Collateral as security for the Secured Obligations.
 
 
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5.3 Consents. Each Borrower’s execution, delivery and performance of this
Agreement and all other Loan Documents, and Parent’s issuance of the Warrant and
the Equity Interests issuable upon exercise of the Warrant, (i) have been duly
authorized by all necessary action in accordance with Borrower’s Organizational
Documents, (ii) will not result in the creation or imposition of any Lien upon
the Collateral, other than Permitted Liens and the Liens created by this
Agreement and the other Loan Documents, (iii) do not violate any provisions of a
Borrower’s Organizational Documents, or any, law, regulation, order, injunction,
judgment, decree or writ to which a Borrower is subject and (iv) do not violate
any material contract or agreement in any material respect or require the
consent or approval of any other Person which has not already been obtained. The
individual or individuals executing the Loan Documents and the Warrant are duly
authorized to do so.
 
5.4 Material Adverse Effect. No event that has had, or could reasonably be
expected to have, a Material Adverse Effect has occurred and is continuing.
 
5.5 Actions Before Governmental Authorities. There are no actions, suits or
proceedings at law or in equity or by or before any governmental authority now
pending or, to the knowledge of a Borrower, threatened against a Borrower or its
property, that is reasonably expected to result in a Material Adverse Effect.
 
5.6 Laws.
 
(a) Neither any Borrower nor any of its Subsidiaries is in violation of any law,
rule or regulation, or in default with respect to any judgment, writ, injunction
or decree of any governmental authority, where such violation or default is
reasonably expected to result in a Material Adverse Effect. No Borrower is in
default in any material respect under any agreement or instrument evidencing
Indebtedness material to the Borrowers as a whole, or any other agreement
necessary or material to the operation or conduct of the business of the
Borrowers to which any Borrower is a party or by which it is bound, subject to
any applicable grace period.
 
(b) Neither a Borrower nor any of its Subsidiaries is an “investment company” or
a company “controlled” by an “investment company” under the Investment Company
Act of 1940, as amended. Neither a Borrower nor any of its Subsidiaries is
engaged as one of its important activities in extending credit for margin stock
(under Regulations X, T and U of the Federal Reserve Board of Governors). Each
Borrower and each of its Subsidiaries has complied in all material respects with
the Federal Fair Labor Standards Act. Neither a Borrower nor any of its
Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or
a “subsidiary company” of a “holding company” as each term is defined and used
in the Public Utility Holding Company Act of 2005. Neither a Borrower’s nor any
of its Subsidiaries’ properties or assets has been used by a Borrower or such
Subsidiary or, to a Borrower’s Knowledge, by previous Persons, in disposing,
producing, storing, treating, or transporting any hazardous substance other than
in material compliance with applicable laws. Each Borrower and each of its
Subsidiaries has obtained all consents, approvals and authorizations of, made
all declarations or filings with, and given all notices to, all governmental
authorities that are necessary to continue in all material respects their
respective businesses as currently conducted.
 
(c) None of Borrowers, any of its Subsidiaries, or any of Borrowers’ or its
Subsidiaries’ Affiliates or any of their respective agents acting or benefiting
in any capacity in connection with the transactions contemplated by this
Agreement is (i) in violation of any Anti-Terrorism Law, (ii) engaging in or
conspiring to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding or attempts to violate, any of the prohibitions
set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. None of
Borrowers, any of its Subsidiaries, or to the knowledge of any Borrower and any
of their Affiliates or agents, acting or benefiting in any capacity in
connection with the transactions contemplated by this Agreement, (x) conducts
any business or engages in making or receiving any contribution of funds, goods
or services to or for the benefit of any Blocked Person, or (y) deals in, or
otherwise engages in any transaction relating to, any property or interest in
property blocked pursuant to Executive Order No. 13224, any similar executive
order or other Anti-Terrorism Law. None of the funds to be provided under this
Agreement will be used, directly or indirectly, (a) for any activities in
violation of any applicable anti-money laundering, economic sanctions and
anti-bribery laws and regulations laws and regulations or (b) for any payment to
any governmental official or employee, political party, official of a political
party, candidate for political office, or anyone else acting in an official
capacity, in order to obtain, retain or direct business or obtain any improper
advantage, in violation of the United States Foreign Corrupt Practices Act of
1977, as amended.
 
 
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5.7 Information Correct and Current. No information, report, Advance Request,
financial statement, exhibit or schedule furnished, by or on behalf of Borrowers
to Agent in connection with any Loan Document or included therein or delivered
pursuant thereto contained, or, when taken as a whole, contains or will contain
any material misstatement of fact or, when taken together with all other such
information or documents, omitted, omits or will omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were, are or will be made, not materially misleading at the
time such statement was made or deemed made. Additionally, any and all financial
or business projections provided by a Borrower to Agent, whether prior to or
after the Closing Date, were (i) provided in good faith and based on the most
current data and information available to Borrowers, and (ii) the most current
of such projections provided to Parent’s Board (it being understood that such
projections are subject to significant uncertainties and contingencies, many of
which are beyond the control of the Borrowers, that no assurance is given that
any particular projections will be realized and that actual results may differ
materially).
 
5.8 Tax Matters. Except to the extent contested in good faith with adequate
reserves under GAAP, (a) each Borrower has filed all material federal, state and
local tax returns that it is required to file, (b) each Borrower has duly paid
or fully reserved for all taxes or installments thereof (including any interest
or penalties) as and when due, which have or may become due pursuant to such
returns, and (c) as of the Closing Date, each Borrower has paid or fully
reserved for any tax assessment received by such Borrower for the three (3)
years preceding the Closing Date, if any (including any taxes being contested in
good faith and by appropriate proceedings).
 
5.9 Intellectual Property Claims. Borrowers are the sole owner of, or otherwise
has the right to use, the Intellectual Property material to Borrowers’ business.
Each of the Borrowers’ Copyrights, Trademarks and Patents material to the
Borrowers’ business is valid and enforceable, the Intellectual Property material
to the Borrowers’ business has not been judged invalid or unenforceable, in
whole or in part, and no claim has been made in writing to a Borrower that any
material part of the Intellectual Property material or necessary to the conduct
of the Borrowers’ business violates the rights of any third party, except to the
extent Borrowers have provided evidence satisfactory to Agent that such claim is
without merit or otherwise not reasonably likely to be successful. Exhibit D is
a true, correct and complete list of each of Borrowers’ Patents, registered
Trademarks, registered Copyrights, and material agreements under which a
Borrower licenses Intellectual Property from third parties (other than
shrink-wrap software licenses), together with application or registration
numbers, as applicable, owned by a Borrower or any Subsidiary, in each case as
of the Closing Date. No Borrower is in material breach of, nor has any Borrower
failed to perform any material obligations under, any of the foregoing
contracts, licenses or agreements material to the Borrowers’ business and, to
any Borrower’s knowledge, no third party to any such contract, license or
agreement material to the Borrowers’ business is in material breach thereof or
has failed to perform any material obligations thereunder, except to the extent
such breach or failure to perform could not reasonably be expected to result in
a Material Adverse Effect, Borrowers have notified Agent of such breach or
failure to perform, and Borrowers are taking actions to mitigate such
circumstances satisfactory to Agent.
 
5.10 Intellectual Property. Borrowers have all material rights with respect to
Intellectual Property necessary or material in the operation or conduct of
Borrowers’ business as currently conducted and proposed to be conducted by
Borrowers. Without limiting the generality of the foregoing, and in the case of
Borrowers’ Licenses, except for restrictions that are unenforceable under
Division 9 of the UCC, Borrowers have the right, to the extent required to
operate Borrowers’ business, to freely transfer, license or assign Intellectual
Property necessary or material in the operation or conduct of Borrowers’
business as currently conducted and proposed to be conducted by Borrowers,
without condition, restriction or payment of any kind (other than license
payments in the ordinary course of business and customary covenants in inbound
license agreements) to any third party, and Borrowers own or have the right to
use, pursuant to valid licenses, all software development tools, library
functions, compilers and all other third-party software and other items that are
material to Borrowers’ business and used in the design, development, promotion,
sale, license, manufacture, import, export, use or distribution of Borrower
Products except customary covenants in inbound license agreements and equipment
leases where a Borrower is the licensee or lessee.
 
 
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5.11 Borrower Products. No Intellectual Property necessary or material in the
operation or conduct of Borrowers’ business as currently conducted and proposed
to be conducted and owned by a Borrower or Borrower Product that constitutes
Intellectual Property has been or is subject to any actual or, to the knowledge
of any Borrower, threatened litigation, proceeding (including any proceeding in
the United States Patent and Trademark Office or any corresponding foreign
office or agency) or outstanding decree, order, judgment, settlement agreement
or stipulation that restricts in any material respect the applicable Borrower’s
use, transfer or licensing thereof or that could reasonably be expected to
affect the validity, use or enforceability thereof. There is no decree, order,
judgment, agreement, stipulation, arbitral award or other provision entered into
in connection with any litigation or proceeding that obligates any Borrower to
grant licenses or ownership interest in any future Intellectual Property
necessary or material to the operation or conduct of the business of Borrowers
or Borrower Products. No Borrower has received any written notice or claim
challenging or questioning any Borrower’s ownership in any such Intellectual
Property (or written notice of any claim challenging or questioning the
ownership in any licensed such Intellectual Property of the owner thereof) or
suggesting that any third party has any claim of legal or beneficial ownership
with respect thereto nor, to any Borrower’s knowledge, is there a reasonable
basis for any such claim, except for claims with respect to which Borrowers have
provided evidence satisfactory to Agent that such claim is without merit or
otherwise not reasonably likely to be successful. Neither any Borrower’s use of
its Intellectual Property material in the conduct of its business as currently
conducted or proposed to be conducted, nor the production and sale of a Borrower
Product infringes the Intellectual Property or other rights of others.
 
5.12 Financial Accounts. Exhibit E, as may be updated by Borrowers in a written
notice provided to Agent after the Closing Date, is a true, correct and complete
list of (a) all banks and other financial institutions at which a Borrower or
any Subsidiary maintains Deposit Accounts and (b) all institutions at which a
Borrower or any Subsidiary maintains an account holding Investment Property, and
such exhibit correctly identifies the name, address and telephone number of each
bank or other institution, the name in which the account is held, a description
of the purpose of the account, and the complete account number therefor,
provided that Borrowers may provide the details regarding any Deposit Account or
other account in which initial Permitted Inventory Financing Cash Collateral is
maintained shall be provided within five (5) Business Days of the Closing Date.
 
5.13 [Intentionally Omitted].
 
5.14 Capitalization and Subsidiaries. Parent’s capitalization as of the Closing
Date is set forth on Schedule 5.14 annexed hereto. No Borrower owns any stock,
partnership interest or other securities of any Person, except for Permitted
Investments. Attached as Schedule 5.14, as may be updated by Borrowers in a
written notice provided after the Closing Date, is a true, correct and complete
list of each Subsidiary.
 
5.15 Foreign Subsidiary Voting Rights. No decision or action in any governing
document of any Foreign Subsidiary (other than an Eligible Foreign Subsidiary)
requires a vote of greater than 50.1% of the Equity Interests or voting rights
of such Foreign Subsidiary.
 
SECTION 6. INSURANCE; INDEMNIFICATION
 
6.1              Coverage. Each Borrower shall cause to be carried and
maintained commercial general liability insurance, on an occurrence form,
against risks customarily insured against in Borrowers’ line of business. Such
risks shall include the risks of bodily injury, including death, property
damage, personal injury, advertising injury, and contractual liability per the
terms of the indemnification agreement found in Section 6.3. Borrowers must
maintain a minimum of $1,000,000 of commercial general liability insurance for
each occurrence. Borrowers have and agree to maintain a minimum of $2,000,000 of
directors’ and officers’ insurance for each occurrence and $5,000,000 in the
aggregate. So long as there are any Secured Obligations outstanding, Borrowers
shall also cause to be carried and maintained insurance upon the Collateral,
insuring against all risks of physical loss or damage howsoever caused, in an
amount not less than the full replacement cost of the Collateral, provided that
such insurance may be subject to standard exceptions and deductibles.
 
 
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6.2 Certificates. Borrowers shall deliver to Agent certificates of insurance
that evidence Borrowers’ compliance with its insurance obligations in Section
6.1 and the obligations contained in this Section 6.2. Borrowers’ insurance
certificate shall state Agent (shown as “Hercules Capital, Inc.”, as “Agent”) is
an additional insured for commercial general liability, a lender loss payee for
all risk property damage insurance, subject to the insurer’s approval, and a
lender loss payee for property insurance and additional insured for liability
insurance for any future insurance that Borrowers may acquire from such insurer.
Attached to the certificates of insurance will be additional insured
endorsements for liability and lender’s loss payable endorsements for all risk
property damage insurance. All certificates of insurance will provide for a
minimum of thirty (30) days advance written notice to Agent of cancellation
(other than cancellation for non-payment of premiums, for which ten (10) days’
advance written notice shall be sufficient) or any other change adverse to
Agent’s interests. Any failure of Agent to scrutinize such insurance
certificates for compliance is not a waiver of any of Agent’s rights, all of
which are reserved. Borrowers shall provide Agent with copies of each insurance
policy, and upon entering or amending any insurance policy required hereunder,
Borrowers shall provide Agent with copies of such policies and shall promptly
deliver to Agent updated insurance certificates with respect to such policies.
 
6.3 Indemnity. Borrowers agree to indemnify and hold Agent, Lender and their
officers, directors, employees, agents, in-house attorneys, representatives and
shareholders (each, an “Indemnified Person”) harmless from and against any and
all claims, costs, expenses, damages and liabilities (including such claims,
costs, expenses, damages and liabilities based on liability in tort, including
strict liability in tort), including reasonable attorneys’ fees and
disbursements and other costs of investigation or defense (including those
incurred upon any appeal) (collectively, “Liabilities”), that may be instituted
or asserted against or incurred by such Indemnified Person as the result of
credit having been extended, suspended or terminated under this Agreement and
the other Loan Documents or the administration of such credit, or in connection
with or arising out of the transactions contemplated hereunder and thereunder,
or any actions or failures to act in connection therewith, or arising out of the
disposition or utilization by Agent or Lender after an Event of Default of the
Collateral, excluding in all cases Liabilities to the extent resulting from any
Indemnified Person’s gross negligence or willful misconduct. Borrowers agree to
pay, and to save Agent and Lender harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all excise, sales or
other similar taxes (excluding taxes imposed on or measured by the net income of
Agent or Lender) that may be payable or determined to be payable with respect to
any of the Collateral or this Agreement. In no event shall any Indemnified
Person be liable on any theory of liability for any special, indirect,
consequential or punitive damages (including any loss of profits, business or
anticipated savings). This Section 6.3 shall survive the repayment of
indebtedness under, and otherwise shall survive the expiration or other
termination of, the Loan Agreement.
 
SECTION 7. COVENANTS OF BORROWERS
 
Each Borrower agrees as follows:
 
7.1 Financial Reports. Borrower Representative shall furnish to Agent the
financial statements and reports listed hereinafter (the “Financial
Statements”):
 
(a) through the period ending October 31, 2018, as soon as practical (and in any
case within 30 days) after the end each month, unaudited management prepared
reports in a form agreed among Borrowers and Agent prior to the Closing Date,
and in any event including a statement of profits and losses, a report of cash
balances, a report of accounts receivable and accounts payable, and an inventory
report and, thereafter, as soon as practicable (and in any event within 30 days)
after the end of the first two months of each fiscal quarter of Parent,
unaudited internally prepared interim financial statements as of the end of such
month;
 
 
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(b) as soon as practicable (and in any event within 45 days) after the end of
each fiscal quarter of Parent, unaudited interim and year-to-date financial
statements as of the end of such fiscal quarter (prepared on a consolidated and
consolidating basis) including balance sheet and related statements of income
and cash flows accompanied by a report detailing any material contingencies
(including the commencement of any material litigation by or against any
Borrower) or any other occurrence that could reasonably be expected to have a
Material Adverse Effect, certified by Borrower Representative’s Chief Executive
Officer or Chief Financial Officer as having been prepared in accordance with
GAAP, (i) except for the absence of footnotes, and (ii) subject to normal
year-end adjustments; as well as the most recent capitalization table for
Parent, including the weighted average exercise price of employee stock options;
provided, however, that in lieu of the reporting requirements pursuant to this
Section 7.1(b), Parent may provide to Agent a link to its quarterly report on
Form 10-Q filed pursuant to the Exchange Act through its investor relations web
page;
 
(c) as soon as practicable (and in any event within 90 days) after the end of
each fiscal year, unqualified audited financial statements as of the end of such
year including balance sheet and related statements of income and cash flows,
and setting forth in comparative form the corresponding figures for the
preceding fiscal year, certified by a firm of independent certified public
accountants selected by Borrowers and reasonably acceptable to Agent,
accompanied by any management report from such accountants; provided, however,
that in lieu of the reporting requirements pursuant to this Section 7.1(c),
Parent may provide to Agent a link to its annual report on Form 10-K filed
pursuant to the Exchange Act through its investor relations web page;
 
(d) as soon as practicable (and in any event together with monthly financial
statements delivered pursuant to subsection (a) above and together with
quarterly financial statements delivered pursuant to subsection (b) above), a
Compliance Certificate in the form of Exhibit F;
 
(e) as soon as practicable (and in any event within 30 days) after the end of
each month, (i) a report showing agings of accounts receivable, to the extent
accounts receivable as of the last day of such month exceed $1,000,000 and (ii)
a report showing agings of accounts payable, to the extent accounts payable as
of the last day of such month exceed $600,000;
 
(f) through its investor relations web page, copies of any proxy statements,
financial statements or reports that Parent has made available to holders of its
capital stock, and copies of any regular, periodic and special reports or
registration statements that Parent files with the Securities and Exchange
Commission or any governmental authority that may be substituted therefor, or
any national securities exchange;
 
(g) financial and business projections and budget promptly following their
approval by Parent’s Board, and in any event, within 60 days after the end of
Parent’s fiscal year, which projections and budget shall be in format acceptable
to Agent, it being understood that the format of the projections and budget
delivered to Agent as of the Closing Date is acceptable, and which projections
and budget shall be consistent with financial covenant compliance (if
applicable) and Borrower’s ability to pay the Secured Obligations when due, and
promptly after any update to such projections or budget is approved by Parent’s
Board, such updated projections and budget, as well as such other budgets, plans
or financial information as Agent may reasonably request, provided that if any
projections or budget delivered to Agent do not reflect levels consistent with
financial covenant compliance (if applicable) or Borrower’s ability to pay the
Secured Obligations when due, then Borrower shall promptly (and in any event
within 10 Business Days) deliver to Agent a proposal or plan reasonably
satisfactory to Agent to address the circumstances;
 
(h) a daily inventory report, which shall indicate with respect to each item of
Inventory whether it is financed pursuant to a Qualified Inventory Financing, on
each Business Day, with respect to the preceding Business Day, in form approved
by Agent as of the Closing Date or as subsequently agreed among the parties;
provided, however, Borrowers shall not be in breach of this clause (h) if they
fail less than four times in any calendar month to timely provide such daily
reports;
 
 
25

 
 
(i) any material statement, or notice of increased commitment, change in terms,
non-renewal or default or any demand for payment pursuant to a Qualified
Inventory Financing; and
 
(j) immediate notice if a Borrower or any Subsidiary has knowledge that a
Borrower, or any Subsidiary or Affiliate of a Borrower, is listed on the OFAC
Lists or (a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on,
or (d) is arraigned and held over on charges involving money laundering or
predicate crimes to money laundering.
 
No Borrower shall make any change in its (a) accounting policies or reporting
practices (except as required by GAAP), or (b) fiscal years or fiscal quarters.
The fiscal year of each Borrower shall end on December 31.
 
The executed Compliance Certificate may be sent via email to Agent at
legal@herculestech.com, with a copy to tharris@htgc.com. All Financial
Statements required to be delivered pursuant to clauses (a), (b) and (c) shall
be sent via e-mail to financialstatements@herculestech.com with a copy to
legal@herculestech.com and tharris@htgc.com provided, that if e-mail is not
available or sending such Financial Statements via e-mail is not possible, they
shall be faxed to Agent at: (650) 473-9194, attention Account Manager: RumbleON,
Inc. Notwithstanding the foregoing, documents required to be delivered under
Sections 7.1(a), (b), (c) or (f) (to the extent any such documents are included
in materials otherwise filed with the Securities Exchange Commission) may be
delivered electronically and if so delivered, shall be deemed to have been
delivered on the date on which Borrower emails a link thereto to Agent.
 
7.2 Management Rights. Borrowers shall permit any representative that Agent or
Lender authorizes, including its attorneys and accountants, to inspect the
Collateral and examine and make copies and abstracts of the books of account and
records of Borrowers at reasonable times and upon reasonable notice during
normal business hours; provided, however, that so long as no Event of Default
has occurred and is continuing, such examinations shall be limited to no more
often than twice per fiscal year. In addition, any such representative shall
have the right to meet with management and officers of Borrowers to discuss such
books of account and records. In addition, Agent or Lender may at reasonable
times and intervals consult with and advise the management and officers of
Borrowers concerning significant business issues affecting Borrowers. Such
consultations and advice shall not unreasonably interfere with Borrowers’
business operations. The parties intend that the rights granted Agent shall
constitute “management rights” within the meaning of 29 C.F.R. Section
2510.3-101(d)(3)(ii), but that any advice, recommendations or participation by
Agent or Lender with respect to any business issues shall not be deemed to give
Agent or Lender, nor be deemed an exercise by Agent or Lender of, control over
Borrowers’ management or policies, and the Borrowers shall have no obligation to
act upon or follow any such advice or recommendation or to allow the Agent or
Lender to attend meetings of the Board of the Parent.
 
7.3 Further Assurances. Each Borrower shall from time to time execute, deliver
and file, alone or with Agent, any financing statements, security agreements,
collateral assignments, notices, control agreements, or other documents to
perfect or give the highest priority to Agent’s Lien on the Collateral, subject
to Permitted Liens. Each Borrower shall from time to time procure any
instruments or documents as may be reasonably requested by Agent, and take all
further action that may be necessary, or that Agent may reasonably request, to
perfect and protect the Liens granted hereby and thereby; provided, however,
certificates of title for vehicles need not be delivered or endorsed so long as
no Event of Default is then continuing. In addition, and for such purposes only,
each Borrower hereby authorizes Agent to execute and deliver on behalf of such
Borrower and to file such financing statements (including an indication that the
financing statement covers “all assets or all personal property” of such
Borrower in accordance with Section 9-504 of the UCC), collateral assignments,
notices, control agreements, security agreements and other documents without the
signature of such Borrower either in Agent’s name or in the name of Agent as
agent and attorney-in-fact for such Borrower. Each Borrower shall protect and
defend such Borrower’s title to the Collateral and Agent’s Lien thereon against
all Persons claiming any interest adverse to such Borrower or Agent other than
Permitted Liens.
 
 
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7.4 Indebtedness. No Borrower shall create, incur, assume, guarantee or be or
remain liable with respect to any Indebtedness, or permit any Subsidiary so to
do, other than Permitted Indebtedness, or prepay any Indebtedness or take any
actions which impose on any Borrower an obligation to prepay any Indebtedness,
except for (a) the conversion of Indebtedness into equity securities and the
payment of cash in lieu of fractional shares in connection with such conversion,
(b) purchase money Indebtedness pursuant to its then applicable payment
schedule, (c) prepayment by any Subsidiary of (i) intercompany Indebtedness owed
by such Subsidiary to any Borrower, or (ii) if such Subsidiary is not a
Borrower, intercompany Indebtedness owed by such Subsidiary to another
Subsidiary that is not a Borrower, (d) as permitted pursuant to any Inventory
Financing Intercreditor Agreement or any subordination agreement related to
Subordinated Indebtedness, or (e) as otherwise permitted hereunder or approved
in writing by Agent.
 
7.5 Collateral. Each Borrower shall at all times keep the Collateral and all
other property and assets used in Borrowers’ business or in which such Borrower
now or hereafter holds any interest free and clear from any Liens whatsoever
(except for Permitted Liens), and shall give Agent prompt written notice of any
legal process affecting the Collateral, such other property or assets, or any
Liens thereon, provided however, that the Collateral and such other property and
assets may be subject to Permitted Liens. No Borrower shall agree with any
Person other than Agent, Lender, Inventory Financing Lenders and holders of
Subordinated Indebtedness not to encumber its property. Each Borrower shall
cause each of its Subsidiaries to protect and defend such Subsidiary’s title to
its assets from and against all Persons claiming any interest adverse to such
Subsidiary, and each Borrower shall cause each of its Subsidiaries at all times
to keep such Subsidiary’s property and assets free and clear from any Liens
whatsoever (except for Permitted Liens) and shall give Agent prompt written
notice of any legal process affecting such Subsidiary’s assets.
 
7.6 Investments; Capital Expenditures. Each Borrower shall not directly or
indirectly acquire or own, or make any Investment in or to any Person, or permit
any of each of its Subsidiaries so to do, other than Permitted Investments, and
shall not permit aggregate capital expenditures (other than software development
costs, which may be capitalized), determined in accordance with GAAP, to exceed
$250,000 per fiscal year.
 
7.7 Distributions. No Borrower shall, and shall not allow any Subsidiary to, (a)
repurchase or redeem any class of stock or other Equity Interest other than
repurchases described in clause (b) of the defined term “Permitted Investments”
or in accordance with clause (l) of the defined term “Permitted Investments”,
(b) declare or pay any cash dividend or make a cash distribution on any class of
stock or other Equity Interest, except that a Subsidiary may pay dividends or
make distributions to a Borrower; (c) except for Permitted Investments, lend
money to any employees, officers or directors or guarantee the payment of any
such loans granted by a third party in excess of $100,000 in the aggregate; or
(d) waive, release or forgive any Indebtedness owed by any employees, officers
or directors in excess of $100,000 in the aggregate.
 
7.8 Transfers. Except for Permitted Transfers, no Borrower shall, or shall allow
any Subsidiary to, voluntarily or involuntarily transfer, sell, lease, license,
lend or in any other manner convey any equitable, beneficial or legal interest
in any material portion of its assets (it being understood and agreed that the
issuance of Equity Interests in the Parent shall not violate this Section 7.8).
 
7.9 Mergers or Acquisitions. Except for Permitted Acquisitions, no Borrower
shall merge or consolidate, or permit any of each of its Subsidiaries to merge
or consolidate, with or into any other business organization (other than mergers
or consolidations of (a) a Subsidiary which is not a Borrower into another
Subsidiary or into a Borrower or (b) a Borrower into another Borrower), or
acquire, or permit any of each of its Subsidiaries to acquire, all or
substantially all of the capital stock or property of another Person.
 
 
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7.10 Taxes. Borrowers and each of its Subsidiaries shall pay when due (or within
any applicable grace period) all material taxes, fees or other charges of any
nature whatsoever (together with any related interest or penalties) now or
hereafter imposed or assessed against a Borrower or the Collateral or upon a
Borrower’s ownership, possession, use, operation or disposition thereof or upon
a Borrower’s rents, receipts or earnings arising therefrom. Each Borrower shall
file on or before the due date therefor all personal property tax returns in
respect of the Collateral, or file for appropriate extensions by such due date.
Notwithstanding the foregoing, a Borrower may contest, in good faith and by
appropriate proceedings, taxes for which such Borrower maintains adequate
reserves therefor in accordance with GAAP.
 
7.11 Certain Changes. Neither a Borrower nor any Subsidiary shall change its
jurisdiction of organization, organizational form or legal name without twenty
(20) days’ prior written notice to Agent. Neither a Borrower nor any Subsidiary
shall suffer a Change in Control. Neither a Borrower nor any Subsidiary shall
relocate its chief executive office or its principal place of business unless:
(i) it has provided prior written notice to Agent; and (ii) such relocation
shall be within the continental United States of America. Neither a Borrower nor
any Qualified Subsidiary shall relocate Collateral (excluding vehicles not
constituting Inventory), other than (w) sales of Inventory in the ordinary
course of business, (x) Inventory in transit in the ordinary course of business,
(y) relocations of Collateral from a location described on Exhibit C to another
location described on Exhibit C or another location that is, from time to time,
subject to a landlord waiver or bailee agreement, in form and substance
satisfactory to Agent, in favor of Agent, or (z) to the extent after giving
effect to such relocation, the aggregate value of Collateral (other than
vehicles not constituting Inventory) which is at locations not subject to a
landlord waiver or bailee agreement does not exceed $400,000 (excluding for such
purposes the value of Inventory in transit in the ordinary course of business).
With respect to any leased location or location where Collateral (other than
vehicles not constituting Inventory) is held by a bailee, Borrowers shall
deliver a landlord waiver or bailee agreement in favor of Agent, in form and
substance reasonably satisfactory to Agent, provided that for locations existing
as of the Closing Date and for which a landlord waiver or bailee agreement would
be required, Borrowers may deliver the same within thirty (30) days of the
Closing Date (subject to extension from time to time in Agent’s discretion if
Borrowers have demonstrated their use of commercially reasonable efforts to
obtain such landlord waivers and agreements), and provided that no landlord
waiver or bailee agreement shall be required to the extent that Collateral
(other than vehicles not constituting Inventory) at all leased or bailee
locations not subject to such a landlord waiver or bailee agreement does not
exceed $400,000 at any time.
 
7.12 Deposit Accounts; Cash Management. Neither a Borrower nor any Qualified
Subsidiary shall maintain any Deposit Accounts, or accounts holding Investment
Property except for (i) the Deposit Account used exclusively for maintaining the
Permitted Inventory Financing Cash Collateral with a balance not in excess of
the amount permitted herein (for which no Account Control Agreement shall be
required), or (ii) with respect to which Agent has an Account Control Agreement.
Any Subsidiary, including RMBL Missouri, that receives proceeds from the sale of
Inventory, shall, after settlement of any amounts due in respect of a Qualified
Inventory Financing with respect to the Inventory sold, immediately transfer the
excess proceeds, if any, to a Deposit Account that is subject to an Account
Control Agreement in favor of Agent pursuant to which Agent is the first lien or
controlling secured party, as applicable.
 
7.13 Formation of Subsidiaries. Borrower Representative shall notify Agent of
each Subsidiary formed subsequent to the Closing Date and, within 30 days, shall
cause any Qualified Subsidiary to execute and deliver to Agent a Joinder
Agreement. In the event of a restructuring resulting in Parent no longer being a
publicly traded entity and one or more holding companies owning all or
substantially all of the shares of Parent, Borrowers shall cause such Person to
enter into a Joinder Agreement.
 
7.14 [Reserved.]
 
7.15 Notification of Event of Default. Borrower Representative shall notify
Agent immediately of the occurrence of any Event of Default.
 
 
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7.16 [Reserved.]
 
7.17 Use of Proceeds. Each Borrower agrees that the proceeds of the Loans shall
be used solely to pay related fees and expenses in connection with this
Agreement and for working capital and general business purposes. The proceeds of
the Loans will not be used in violation of Anti-Corruption Laws or applicable
Sanctions.
 
7.18 Foreign Subsidiary Voting Rights. Each Borrower shall not, and shall not
permit any Subsidiary, to amend or modify any governing document of any Foreign
Subsidiary of such Borrower (other than an Eligible Foreign Subsidiary) the
effect of which is to require a vote of greater than 50.1% of the Equity
Interests or voting rights of such entity for any decision or action of such
entity.
 
7.19 [Reserved.]
 
7.20 Compliance with Laws.
 
(a) Each Borrower shall maintain, and shall cause each of its Subsidiaries to
maintain compliance in all material respects with all applicable laws, rules or
regulations (including, without limitation, dealership laws, laws applicable to
the brokering of loans and consumer protection laws), and shall, or cause its
Subsidiaries to, obtain and maintain all required governmental authorizations,
approvals, licenses, franchises, permits or registrations reasonable necessary
in connection with the conduct of Borrowers’ business.
 
(b) Neither a Borrower nor any of its Subsidiaries shall, nor shall a Borrower
or any of its Subsidiaries permit any Affiliate to, directly or indirectly,
knowingly enter into any documents, instruments, agreements or contracts with
any Person listed on the OFAC Lists. Neither a Borrower, nor any of its
Subsidiaries shall, nor shall a Borrower or any of its Subsidiaries, permit any
Affiliate to, directly or indirectly, (i) conduct any business or engage in any
transaction or dealing with any Blocked Person, including, without limitation,
the making or receiving of any contribution of funds, goods or services to or
for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any
transaction relating to, any property or interests in property blocked pursuant
to Executive Order No. 13224 or any similar executive order or other
Anti-Terrorism Law, or (iii) engage in or conspire to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to
violate, any of the prohibitions set forth in Executive Order No. 13224 or other
Anti-Terrorism Law.
 
(c) Each Borrower has implemented and maintains in effect policies and
procedures designed to ensure compliance by a Borrower, each of its Subsidiaries
and their respective directors, officers, employees and agents with
Anti-Corruption Laws and applicable Sanctions, and each Borrower, each of its
Subsidiaries and, to the knowledge of each Borrower, its directors, officers,
employees and agents, are in compliance with Anti-Corruption Laws and applicable
Sanctions in all material respects.
 
(d) None of Borrowers, any of its Subsidiaries or to the knowledge of Borrowers,
any director, officer, employee or agent for Borrowers or any of its
Subsidiaries that will act in any capacity in connection with or benefit from
the credit facility established hereby, is a Sanctioned Person. No Loan, use of
proceeds or other transaction contemplated by this Agreement will violate
Anti-Corruption Laws or applicable Sanctions.
 
7.21 Financial Covenants.
 
Beginning with the draw of Tranche III, Borrowers shall be subject to the
following financial covenants:
 
(a) Parent shall achieve Revenue for each quarterly period in an amount of at
least 75% of the amount set forth in the Budget for such period, tested
quarterly.
 
 
29

 
 
(b) If during any fiscal quarter, the average balance of all Deposit Accounts of
Borrowers and accounts in which Investment Property of Borrowers is maintained
that are subject to an Account Control Agreement in favor of Lender is less than
$15,000,000, then Parent shall achieve quarterly Adjusted EBITDA of not less
than $2,000,000 for such quarter, tested quarterly.
 
7.22 Intellectual Property. Each Borrower shall (i) protect, defend and maintain
the validity and enforceability of its Intellectual Property that is material to
the business of Borrowers as a whole; (ii) promptly advise Agent in writing of
material infringements of its Intellectual Property that is material to the
business of Borrowers as a whole; and (iii) not allow any Intellectual Property
material to Borrowers’ business to be abandoned, forfeited or dedicated to the
public without Agent’s written consent. If a Borrower (i) obtains any Patent,
registered Trademark, registered Copyright, registered mask work, or any pending
application for any of the foregoing, whether as owner, licensee or otherwise,
or (ii) applies for any Patent or the registration of any Trademark, then such
Borrower shall promptly provide written notice thereof to Agent and shall
execute such intellectual property security agreements and other documents and
take such other actions as Agent may request in its good faith business judgment
to perfect and maintain a first priority perfected security interest in favor of
Agent in such property. If a Borrower decides to register any Copyrights or mask
works in the United States Copyright Office, such Borrower shall: (x) provide
Agent notice of such Borrower’s intent to register such Copyrights or mask works
together with a copy of the application it intends to file with the United
States Copyright Office (excluding exhibits thereto); (y) execute an
intellectual property security agreement and such other documents and take such
other actions as Agent may request in its good faith business judgment to
perfect and maintain a first priority perfected security interest in favor of
Agent in the Copyrights or mask works intended to be registered with the United
States Copyright Office; and (z) record such intellectual property security
agreement with the United States Copyright Office contemporaneously (or promptly
thereafter) with filing the Copyright or mask work application(s) with the
United States Copyright Office. Borrowers shall promptly provide to Agent copies
of all applications that it files for Patents or for the registration of
Trademarks, Copyrights or mask works, together with evidence of the recording of
the intellectual property security agreement required for Agent to perfect and
maintain a first priority perfected security interest in such property.
 
7.23 Transactions with Affiliates. No Borrower shall or shall permit any
Subsidiary to, directly or indirectly, enter into or permit to exist any
transaction of any kind with any Affiliate of any Borrower or such Subsidiary on
terms that are less favorable to Borrowers or such Subsidiary, as the case may
be, than those that might be obtained in an arm’s length transaction from a
Person who is not an Affiliate of a Borrower or such Subsidiary.
 
7.24 Post-Closing Deliveries. Borrowers shall have delivered
 
(a) the landlord waivers and bailee agreements as required pursuant to Section
7.11;
 
(b) within 30 days of the Closing Date, the insurance certificate and
endorsement with respect to commercial property insurance in accordance with
Section 6.2; and
 
(c) within 5 Business Days of the Closing Date, the details regarding any
Deposit Account or other account in which Permitted Inventory Financing Cash
Collateral is maintained.
 
SECTION 8. [Reserved.]
 
 
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SECTION 9. EVENTS OF DEFAULT
 
The occurrence of any one or more of the following events shall be an Event of
Default:
 
9.1 Payments. Borrowers fail to pay any amount due under this Agreement or any
of the other Loan Documents on the due date; provided, however, that an Event of
Default shall not occur on account of a failure to pay due solely to an
administrative or operational error of Agent or Lender or the applicable
Borrower’s bank if Borrowers had the funds to make the payment when due and make
the payment within three (3) Business Days following Borrowers’ knowledge of
such failure to pay; or
 
9.2 Covenants. A Borrower breaches or defaults in the performance of any
covenant or Secured Obligation under this Agreement, or any of the other Loan
Documents or any other agreement among any Borrower, Agent and Lender, and
(a) with respect to a default under any covenant under this Agreement (other
than the Sections specifically identified in clause (b) hereof), any other Loan
Document or any other agreement between any Borrower and Agent or Lender, such
default continues for more than twenty (20) days, or (b) with respect to a
default under any of Sections 6.1, 6.2, 7.1, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.11,
7.12, 7.15, 7.17, 7.18, 7.20(b), (c) or (d), 7.21, or 7.24 the occurrence of
such default; or
 
9.3 Material Adverse Effect. A circumstance has occurred that could reasonably
be expected to have a Material Adverse Effect; or
 
9.4 Representations. Any representation or warranty made by any Borrower in any
Loan Document or in the Warrant shall have been false or misleading in any
material respect when made or when deemed made; or
 
9.5 Insolvency. (i)(A) Any Borrower shall make an assignment for the benefit of
creditors; or (B) Borrowers, as a whole, shall be unable to pay their debts as
they become due, or be unable to pay or perform their material obligations under
the Loan Documents, or shall become insolvent; or (C) any Borrower shall file a
voluntary petition in bankruptcy; or (D) any Borrower shall file any petition,
answer, or document seeking for itself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation pertinent to such circumstances; or
(E) any Borrower shall seek or consent to or acquiesce in the appointment of any
trustee, receiver, or liquidator of any Borrower or of all or any material part
of the assets or property of Borrowers, as a whole; or (F)  any Borrower (other
than a Borrower that has no material operations) shall cease operations of its
business as its business has normally been conducted, or Borrowers, as a whole,
terminate substantially all of their employees; or (G) any Borrower or its
directors or a majority of the holders of its Equity Interests shall take any
action initiating any of the foregoing actions described in clauses (A) through
(F); or (ii) either (A) thirty (30) days shall have expired after the
commencement of an involuntary action against any Borrower seeking
reorganization, arrangement, composition, readjustment, liquidation, dissolution
or similar relief under any present or future statute, law or regulation,
without such action being dismissed or all orders or proceedings thereunder
affecting the operations or the business of any Borrower being stayed; or (B) a
stay of any such order or proceedings shall thereafter be set aside and the
action setting it aside shall not be appealed within ten (10) days; or (C) any
Borrower shall file any answer admitting or not contesting the material
allegations of a petition filed against any Borrower in any such proceedings; or
(D) the court in which such proceedings are pending shall enter a decree or
order granting the relief sought in any such proceedings; or (E) thirty (30)
days shall have expired after the appointment, without the consent or
acquiescence of any Borrower, of any trustee, receiver or liquidator of such
Borrower or of all or any material part of the properties of Borrowers, taken as
a whole without such appointment being vacated; or
 
 
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9.6 Attachments; Judgments. Any material portion of any Borrower’s assets is
attached or seized, or a levy is filed against any such assets, or a judgment or
judgments is/are entered for the payment of money (not covered by independent
third party insurance as to which liability has been accepted (subject to
customary reservation of rights) by such insurance carrier), individually or in
the aggregate, of at least $250,000, or any Borrower is enjoined or in any way
prevented by court order from conducting any material part of its business;
 
9.7 Other Obligations. The occurrence of any default and the passing of any
applicable grace period under any agreement or obligation of any Borrower
(including pursuant to the Inventory Financing Agreement) involving any
Indebtedness in excess of $250,000, which could entitle or permit any Person to
accelerate such Indebtedness, or any other material agreement or obligation, if
a Material Adverse Effect could reasonably be expected to result from such
default; or
 
9.8 Stop Trade. At any time, an SEC stop trade order or NASDAQ market trading
suspension of the Common Stock of Parent shall be in effect for five (5)
consecutive days or five (5) days during a period of ten (10) consecutive days,
excluding in all cases a suspension of all trading on a public market, provided
that Borrower shall not have been able to cure such trading suspension within
thirty (30) days of the notice thereof or list the Common Stock on another
public market within sixty (60) days of such notice.
 
SECTION 10. REMEDIES
 
10.1              General. Upon and during the continuance of any one or more
Events of Default, (i) Agent may, and at the direction of the Required Lenders
shall, accelerate and demand payment of all or any part of the Secured
Obligations together with a Prepayment Charge and declare them to be immediately
due and payable (provided, that upon the occurrence of an Event of Default of
the type described in Section 9.5, all of the Secured Obligations shall
automatically be accelerated and made due and payable, in each case without any
further notice or act), (ii) Agent may, at its option, sign and file in any
Borrower’s name any and all collateral assignments, notices, control agreements,
security agreements and other documents it deems necessary or appropriate to
perfect or protect the repayment of the Secured Obligations, and in furtherance
thereof, each Borrower hereby grants Agent an irrevocable power of attorney
coupled with an interest, and (iii) Agent may notify any of any Borrower’s
account debtors to make payment directly to Agent, compromise the amount of any
such account on such Borrower’s behalf and endorse Agent’s name without recourse
on any such payment for deposit directly to Agent’s account. Agent may, and at
the direction of the Required Lenders shall, exercise all rights and remedies
with respect to the Collateral under the Loan Documents or otherwise available
to it under the UCC and other applicable law, including the right to release,
hold, sell, lease, liquidate, collect, realize upon, or otherwise dispose of all
or any part of the Collateral and the right to occupy, utilize, process and
commingle the Collateral. All Agent’s rights and remedies shall be cumulative
and not exclusive.
 
10.2 Collection; Foreclosure. Upon the occurrence and during the continuance of
any Event of Default, Agent may, and at the direction of the Required Lenders
shall, at any time or from time to time, apply, collect, liquidate, sell in one
or more sales, lease or otherwise dispose of, any or all of the Collateral, in
its then condition or following any commercially reasonable preparation or
processing, in such order as Agent may elect. Any such sale may be made either
at public or private sale at its place of business or elsewhere. Each Borrower
agrees that any such public or private sale may occur upon ten (10) calendar
days’ prior written notice to Borrower Representative. Agent may require any
Borrower to assemble the Collateral and make it available to Agent at a place
designated by Agent. The proceeds of any sale, disposition or other realization
upon all or any part of the Collateral shall be applied by Agent in the
following order of priorities:
 
 
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First, to Agent and Lender in an amount sufficient to pay in full Agent’s and
Lender’s reasonable costs and professionals’ and advisors’ fees and expenses as
described in Section 11.11;
 
Second, to Lender in an amount equal to the then unpaid amount of the Secured
Obligations (including principal, interest, subject to increase in accordance
with Section 2.3), in such order and priority as Agent may choose in its sole
discretion; and
 
Finally, after the full and final payment in Cash of all of the Secured
Obligations (other than inchoate obligations), to any creditor holding a junior
Lien on the Collateral, or to Borrowers or each of its representatives or as a
court of competent jurisdiction may direct.
 
Agent shall be deemed to have acted reasonably in the custody, preservation and
disposition of any of the Collateral if it complies with the obligations of a
secured party under the UCC.
 
10.3 No Waiver. Agent shall be under no obligation to marshal any of the
Collateral for the benefit of any Borrower or any other Person, and each
Borrower expressly waives all rights, if any, to require Agent to marshal any
Collateral.
 
10.4 Shares. Each Borrower recognizes that Agent may be unable to effect a
public sale of any or all the Shares, by reason of certain prohibitions
contained in federal securities laws and applicable state securities laws or
otherwise, and may be compelled to resort to one or more private sales thereof
to a restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof. Each Borrower acknowledge and
agree that any such private sale may result in prices and other terms less
favorable than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. Agent shall be under no obligation to
delay a sale of any of the Shares for the period of time necessary to permit the
issuer thereof to register such securities for public sale under federal
securities laws or under applicable state securities laws, even if such issuer
would agree to do so.
 
10.5 Cumulative Remedies. The rights, powers and remedies of Agent hereunder
shall be in addition to all rights, powers and remedies given by statute or rule
of law and are cumulative. The exercise of any one or more of the rights, powers
and remedies provided herein shall not be construed as a waiver of or election
of remedies with respect to any other rights, powers and remedies of Agent. Only
Agent can exercise the remedies set forth in this Section 10 it being understood
that no Lender can act under this Section 10 except through the Agent.
 
SECTION 11. MISCELLANEOUS
 
11.1              Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective only to the extent
and duration of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
 
11.2 Notice. Except as otherwise provided herein, any notice, demand, request,
consent, approval, declaration, service of process or other communication
(including the delivery of Financial Statements) that is required, contemplated,
or permitted under the Loan Documents or with respect to the subject matter
hereof shall be in writing, and shall be deemed to have been validly served,
given, delivered, and received upon the earlier of: (i) the day of transmission
by electronic mail or hand delivery or delivery by an overnight express service
or overnight mail delivery service; or (ii) the third calendar day after deposit
in the United States of America mails, with proper first class postage prepaid,
in each case addressed to the party to be notified as follows:
 
 
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(a) If to Agent:
 
HERCULES CAPITAL, INC.
 
Legal Department
Attention: Chief Legal Officer and Thomas Harris
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
email: legal@herculestech.com; tharris@htgc.com
Telephone: 650-289-3060
 
(b) If to Lender:
 
HERCULES CAPITAL, INC.
 
Legal Department
Attention: Chief Legal Officer and Thomas Harris
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
email: legal@herculestech.com; tharris@htgc.com
Telephone: 650-289-3060
 
(c) If to Borrowers:
 
RumbleON, Inc.
Attention: Tom Aucamp
 
4521 Sharon Road
Suite 370
Charlotte, NC 28211
email: tom@rumbleon.com
Telephone: 704-445-4753
 
or to such other address as each party may designate for itself by like notice.
 
11.3 Entire Agreement; Amendments.
 
(a) This Agreement and the other Loan Documents constitute the entire agreement
and understanding of the parties hereto in respect of the subject matter hereof
and thereof, and supersede and replace in their entirety any prior proposals,
term sheets, non-disclosure or confidentiality agreements, letters, negotiations
or other documents or agreements, whether written or oral, with respect to the
subject matter hereof or thereof (including Agent’s proposal letter dated March
7, 2018 and the Non-Disclosure Agreement).
 
(b) Neither this Agreement, any other Loan Document, nor any terms hereof or
thereof may be amended, supplemented or modified except in accordance with the
provisions of this Section 11.3(b). The Required Lenders and Borrowers party to
the relevant Loan Document may, or, with the written consent of the Required
Lenders, Agent and Borrowers party to the relevant Loan Document may, from time
to time, (i) enter into written amendments, supplements or modifications hereto
and to the other Loan Documents for the purpose of adding any provisions to this
Agreement or the other Loan Documents or changing in any manner the rights of
Lender or of Borrowers hereunder or thereunder or (ii) waive, on such terms and
conditions as the Required Lenders or Agent, as the case may be, may specify in
such instrument, any of the requirements of this Agreement or the other Loan
Documents or any default or Event of Default and its consequences; provided,
however, that no such waiver and no such amendment, supplement or modification
shall (A) forgive the principal amount or extend the final scheduled date of
maturity of any Loan, extend the scheduled date of any amortization payment in
respect of any Growth Capital Term Loan Advance, reduce the stated rate of any
interest or fee payable hereunder, or extend the scheduled date of any payment
thereof, in each case without the written consent of each Lender directly
affected thereby; (B) eliminate or reduce the voting rights of any Lender under
this Section 11.3(b) without the written consent of such Lender; (C) reduce any
percentage specified in the definition of Required Lenders, consent to the
assignment or transfer by Borrowers of any of its rights and obligations under
this Agreement and the other Loan Documents, release all or substantially all of
the Collateral or release a Borrower (other than a Borrower that has no material
operations) from its obligations under the Loan Documents, in each case without
the written consent of all Lenders; or (D) amend, modify or waive any provision
of Section 11.17 without the written consent of Agent. Any such waiver and any
such amendment, supplement or modification shall apply equally to each Lender
and shall be binding upon Borrowers, Lender, Agent and all future holders of the
Loans.
 
 
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11.4 No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
 
11.5 No Waiver. The powers conferred upon Agent and Lender by this Agreement are
solely to protect its rights hereunder and under the other Loan Documents and
its interest in the Collateral and shall not impose any duty upon Agent or
Lender to exercise any such powers. No omission or delay by Agent or Lender at
any time to enforce any right or remedy reserved to it, or to require
performance of any of the terms, covenants or provisions hereof by Borrowers at
any time designated, shall be a waiver of any such right or remedy to which
Agent or Lender is entitled, nor shall it in any way affect the right of Agent
to enforce such provisions thereafter.
 
11.6 Survival. All agreements, representations and warranties contained in this
Agreement and the other Loan Documents or in any document delivered pursuant
hereto or thereto shall be for the benefit of Agent and Lender and shall survive
the execution and delivery of this Agreement. Section 6.3 shall survive the
termination of this Agreement.
 
11.7 Successors and Assigns. The provisions of this Agreement and the other Loan
Documents shall inure to the benefit of and be binding on each Borrower and its
permitted assigns (if any). No Borrower shall assign its obligations under this
Agreement or any of the other Loan Documents without Agent’s express prior
written consent, and any such attempted assignment shall be void and of no
effect. Agent and Lender may assign, transfer, or endorse its rights hereunder
and under the other Loan Documents without prior notice to Borrowers, and all of
such rights shall inure to the benefit of Agent’s and Lender’s successors and
assigns; provided that as long as no Event of Default has occurred and is
continuing, neither Agent nor any Lender may assign, transfer or endorse its
rights hereunder or under the Loan Documents to any party that is a direct
competitor of Borrowers (as reasonably determined by Agent), it being
acknowledged that in all cases, any transfer to an Affiliate of any Lender or
Agent shall be allowed.
 
11.8 Governing Law. This Agreement and the other Loan Documents have been
negotiated and delivered to Agent and Lender in the State of California, and
shall have been accepted by Agent and Lender in the State of California. Payment
to Agent and Lender by Borrowers of the Secured Obligations is due in the State
of California. This Agreement and the other Loan Documents shall be governed by,
and construed and enforced in accordance with, the laws of the State of
California, excluding conflict of laws principles that would cause the
application of laws of any other jurisdiction.
 
11.9 Consent to Jurisdiction and Venue. All judicial proceedings (to the extent
that the reference requirement of Section 11.10 is not applicable) arising in or
under or related to this Agreement or any of the other Loan Documents may be
brought in any state or federal court located in the State of California. By
execution and delivery of this Agreement, each party hereto generally and
unconditionally: (a) consents to nonexclusive personal jurisdiction in Santa
Clara County, State of California; (b) waives any objection as to jurisdiction
or venue in Santa Clara County, State of California; (c) agrees not to assert
any defense based on lack of jurisdiction or venue in the aforesaid courts; and
(d) irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement or the other Loan Documents. Service of process
on any party hereto in any action arising out of or relating to this Agreement
shall be effective if given in accordance with the requirements for notice set
forth in Section 11.2, and shall be deemed effective and received as set forth
in Section 11.2. Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of either party to bring
proceedings in the courts of any other jurisdiction.
 
 
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11.10 Mutual Waiver of Jury Trial / Judicial Reference.
 
(a) Because disputes arising in connection with complex financial transactions
are most quickly and economically resolved by an experienced and expert Person
and the parties wish applicable state and federal laws to apply (rather than
arbitration rules), the parties desire that their disputes be resolved by a
judge applying such applicable laws. EACH OF BORROWERS, AGENT AND LENDER
SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF
ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM
(COLLECTIVELY, “CLAIMS”) ASSERTED BY BORROWERS AGAINST AGENT, LENDER OR THEIR
RESPECTIVE ASSIGNEE OR BY AGENT, LENDER OR THEIR RESPECTIVE ASSIGNEE AGAINST A
BORROWER. This waiver extends to all such Claims, including Claims that involve
Persons other than Agent, Borrowers and Lender; Claims that arise out of or are
in any way connected to the relationship among Borrowers, Agent and Lender; and
any Claims for damages, breach of contract, tort, specific performance, or any
equitable or legal relief of any kind, arising out of this Agreement, any other
Loan Document.
 
(b) If the waiver of jury trial set forth in Section 11.10(a) is ineffective or
unenforceable, the parties agree that all Claims shall be resolved by reference
to a private judge sitting without a jury, pursuant to Code of Civil Procedure
Section 638, before a mutually acceptable referee or, if the parties cannot
agree, a referee selected by the Presiding Judge of the Santa Clara County,
California. Such proceeding shall be conducted in Santa Clara County,
California, with California rules of evidence and discovery applicable to such
proceeding.
 
(c) In the event Claims are to be resolved by judicial reference, either party
may seek from a court identified in Section 11.9, any prejudgment order, writ or
other relief and have such prejudgment order, writ or other relief enforced to
the fullest extent permitted by law notwithstanding that all Claims are
otherwise subject to resolution by judicial reference.
 
11.11 Professional Fees. Each Borrower promises to pay Agent’s fees and expenses
necessary to finalize the loan documentation, including but not limited to
reasonable attorneys’ fees, UCC searches, filing costs, and other miscellaneous
expenses. In addition, each Borrower promises to pay any and all reasonable
attorneys’ and other reasonable out of pocket professionals’ fees and expenses
incurred by Agent after the Closing Date in connection with or related to:
(a) the Loan; (b) the administration, collection, or enforcement of the Loan;
(c) the amendment or modification of the Loan Documents; (d) any waiver,
consent, release, or termination under the Loan Documents; (e) the protection,
preservation, audit, field exam, sale, lease, liquidation, or disposition of
Collateral or the exercise of remedies with respect to the Collateral; (f) any
legal, litigation, administrative, arbitration, or out of court proceeding in
connection with or related to a Borrower or the Collateral, and any appeal or
review thereof; and (g) any bankruptcy, restructuring, reorganization,
assignment for the benefit of creditors, workout, foreclosure, or other action
related to a Borrower, the Collateral, the Loan Documents, including
representing Agent in any adversary proceeding or contested matter commenced or
continued by or on behalf of a Borrower’s estate, and any appeal or review
thereof.
 
 
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11.12 Confidentiality. Agent and Lender acknowledge that certain items of
Collateral and information provided to Agent and Lender by a Borrower are
confidential and proprietary information of Borrowers, if and to the extent such
information either (i) is marked as confidential by such Borrower at the time of
disclosure, or (ii) should reasonably be understood to be confidential (the
“Confidential Information”). Accordingly, Agent and Lender agree that any
Confidential Information it has obtained and may obtain in connection with this
Agreement and the Loan Documents shall not be disclosed to any other Person or
entity in any manner whatsoever, in whole or in part, without the prior written
consent of Borrowers, except that Agent and Lender may disclose any such
information: (a) to its own directors, officers, employees, accountants, counsel
and other professional advisors and to its Affiliates if Agent or Lender in
their sole discretion determines that any such party should have access to such
information in connection with such party’s responsibilities in connection with
the Loan or this Agreement and, provided that such recipient of such
Confidential Information either (i) agrees to be bound by the confidentiality
provisions of this paragraph or (ii) is otherwise subject to confidentiality
restrictions that reasonably protect against the disclosure of Confidential
Information; (b) if such information is generally available to the public;
(c) if required or appropriate in any report, statement or testimony submitted
to any governmental authority having or claiming to have jurisdiction over Agent
or Lender; (d) if required or appropriate in response to any summons or subpoena
or in connection with any litigation, to the extent permitted or deemed
advisable by Agent’s or Lender’s counsel; (e) to comply with any legal
requirement or law applicable to Agent or Lender; (f) to the extent reasonably
necessary in connection with the exercise of any right or remedy under any Loan
Document, including Agent’s sale, lease, or other disposition of Collateral
after default; (g) to any participant or assignee of Agent or Lender or any
prospective participant or assignee; provided, that such participant or assignee
or prospective participant or assignee agrees in writing to be bound by this
Section prior to disclosure; or (h) otherwise with the prior consent of any
Borrower; provided, that any disclosure made in violation of this Agreement
shall not affect the obligations of any Borrower or any of its Affiliates or any
guarantor under this Agreement or the other Loan Documents. Agent and Lender are
aware of their obligations with respect to material non-public Confidential
Information of a publicly traded company and both Agent and Lender agree on
behalf of themselves and their Affiliates that they will not engage in
transactions in or relating to the securities of the Parent while in possession
of material non-public Confidential Information. Agent’s and Lender’s
obligations under this Section 11.12 shall supersede all of their respective
obligations under the Non-Disclosure Agreement.
 
11.13 Assignment of Rights. Each Borrower acknowledges and understands that
Agent or Lender may, subject to Section 11.7, sell and assign all or part of its
interest hereunder and under the Loan Documents to any Person or entity (an
“Assignee”). After such assignment the term “Agent” or “Lender” as used in the
Loan Documents shall mean and include such Assignee, and such Assignee shall be
vested with all rights, powers and remedies of Agent and Lender hereunder with
respect to the interest so assigned; but with respect to any such interest not
so transferred, Agent and Lender shall retain all rights, powers and remedies
hereby given. No such assignment by Agent or Lender shall relieve any Borrower
of any of its obligations hereunder. Lender agrees that in the event of any
transfer by it of the Note(s)(if any), it will endorse thereon a notation as to
the portion of the principal of the Note(s), which shall have been paid at the
time of such transfer and as to the date to which interest shall have been last
paid thereon.
 
11.14 Revival of Secured Obligations. This Agreement and the Loan Documents
shall remain in full force and effect and continue to be effective if any
petition is filed by or against any Borrower for liquidation or reorganization,
if any Borrower becomes insolvent or makes an assignment for the benefit of
creditors, if a receiver or trustee is appointed for all or any significant part
of any Borrower’s assets, or if any payment or transfer of Collateral is
recovered from Agent or Lender. The Loan Documents and the Secured Obligations
and Collateral security shall continue to be effective, or shall be revived or
reinstated, as the case may be, if at any time payment and performance of the
Secured Obligations or any transfer of Collateral to Agent, or any part thereof
is rescinded, avoided or avoidable, reduced in amount, or must otherwise be
restored or returned by, or is recovered from, Agent, Lender or by any obligee
of the Secured Obligations, whether as a “voidable preference,” “fraudulent
conveyance,” or otherwise, all as though such payment, performance, or transfer
of Collateral had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or
recovered, the Loan Documents and the Secured Obligations shall be deemed,
without any further action or documentation, to have been revived and reinstated
except to the extent of the full, final, and indefeasible payment to Agent or
Lender in Cash.
 
 
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11.15 Counterparts. This Agreement and any amendments, waivers, consents or
supplements hereto may be executed in any number of counterparts, and by
different parties hereto in separate counterparts, each of which when so
delivered shall be deemed an original, but all of which counterparts shall
constitute but one and the same instrument.
 
11.16 No Third Party Beneficiaries. No provisions of the Loan Documents are
intended, nor will be interpreted, to provide or create any third-party
beneficiary rights or any other rights of any kind in any Person other than
Agent, Lender and Borrowers unless specifically provided otherwise herein, and,
except as otherwise so provided, all provisions of the Loan Documents will be
personal and solely among Agent, Lender and Borrowers.
 
11.17 Agency.
 
(a) Lender hereby irrevocably appoints Hercules Capital, Inc. to act on its
behalf as Agent hereunder and under the other Loan Documents and authorizes
Agent to take such actions on its behalf and to exercise such powers as are
delegated to Agent by the terms hereof or thereof, together with such actions
and powers as are reasonably incidental thereto.
 
(b) Lender agrees to indemnify Agent in its capacity as such (to the extent not
reimbursed by Borrowers and without limiting the obligation of Borrowers to do
so), according to its respective Growth Capital Term Commitment percentages
(based upon the total outstanding Growth Capital Term Commitments) in effect on
the date on which indemnification is sought under this Section 11.17, from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever that may at any time be imposed on, incurred by or asserted against
Agent in any way relating to or arising out of, this Agreement, any of the other
Loan Documents or any documents contemplated by or referred to herein or therein
or the transactions contemplated hereby or thereby or any action taken or
omitted by Agent under or in connection with any of the foregoing; The
agreements in this Section shall survive the payment of the Loans and all other
amounts payable hereunder.
 
(c) Agent in Its Individual Capacity. The Person serving as Agent hereunder
shall have the same rights and powers in its capacity as a Lender as any other
Lender and may exercise the same as though it were not Agent and the term
“Lender” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include each such Person serving as Agent hereunder in its
individual capacity.
 
(d) Exculpatory Provisions. Agent shall have no duties or obligations except
those expressly set forth herein and in the other Loan Documents. Without
limiting the generality of the foregoing, Agent shall not:
 
(i)
be subject to any fiduciary or other implied duties, regardless of whether any
default or any Event of Default has occurred and is continuing;
 
(ii)
have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or
by the other Loan Documents that Agent is required to exercise as directed in
writing by Lender, provided that Agent shall not be required to take any action
that, in its opinion or the opinion of its counsel, may expose Agent to
liability or that is contrary to any Loan Document or applicable law; and
 
(iii)
except as expressly set forth herein and in the other Loan Documents, have any
duty to disclose, and Agent shall not be liable for the failure to disclose, any
information relating to Borrowers or any of its Affiliates that is communicated
to or obtained by any Person serving as Agent or any of its Affiliates in any
capacity.
 
 
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(e) Agent shall not be liable for any action taken or not taken by it (i) with
the consent or at the request of Lender or as Agent shall believe in good faith
shall be necessary, under the circumstances or (ii) in the absence of its own
gross negligence or willful misconduct.
 
(f) Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with
this Agreement or any other Loan Document, (ii) the contents of any certificate,
report or other document delivered hereunder or thereunder or in connection
herewith or therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein or therein
or the occurrence of any default or Event of Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document or (v) the satisfaction
of any condition set forth in Section 4 or elsewhere herein, other than to
confirm receipt of items expressly required to be delivered to Agent.
 
(g) Reliance by Agent. Agent may rely, and shall be fully protected in acting,
or refraining to act, upon, any resolution, statement, certificate, instrument,
opinion, report, notice, request, consent, order, bond or other paper or
document that it has no reason to believe to be other than genuine and to have
been signed or presented by the proper party or parties or, in the case of
cables, telecopies and telexes, to have been sent by the proper party or
parties. In the absence of its gross negligence or willful misconduct, Agent may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions furnished to Agent
and conforming to the requirements of the Loan Agreement or any of the other
Loan Documents. Agent may consult with counsel, and any opinion or legal advice
of such counsel shall be full and complete authorization and protection in
respect of any action taken, not taken or suffered by Agent hereunder or under
any Loan Documents in accordance therewith. Agent shall have the right at any
time to seek instructions concerning the administration of the Collateral from
any court of competent jurisdiction. Agent shall not be under any obligation to
exercise any of the rights or powers granted to Agent by this Agreement, the
Loan Agreement and the other Loan Documents at the request or direction of
Lenders unless Agent shall have been provided by Lender with adequate security
and indemnity against the costs, expenses and liabilities that may be incurred
by it in compliance with such request or direction.
 
11.18 Publicity. None of the parties hereto nor any of its respective member
businesses and Affiliates shall, without the other parties’ prior written
consent (which shall not be unreasonably withheld or delayed), publicize or use
(a) the other party’s name (including a brief description of the relationship
among the parties hereto), logo or hyperlink to such other parties’ web site,
separately or together, in written and oral presentations, advertising,
promotional and marketing materials, client lists, public relations materials or
on its web site (together, the “Publicity Materials”); (b) the names of officers
of such other parties in the Publicity Materials; and (c) such other parties’
name, trademarks, servicemarks in any news or press release concerning such
party; provided however, notwithstanding anything to the contrary herein, no
such consent shall be required (i) to the extent necessary or customary to
comply with the requests of any regulators, legal requirements or laws
applicable to such party (including all disclosure requirements of the Parent
pursuant to the securities laws), or pursuant to any listing agreement with any
national securities exchange and (ii) to comply with Section 11.12.
 
11.19 Multiple Borrowers.
 
(a) Borrowers’ Agent. Each of Borrowers hereby irrevocably appoints Borrower
Representative as its agent, attorney-in-fact and legal representative for all
purposes, including requesting disbursement of the Growth Capital Term Loan
Advance and receiving account statements and other notices and communications to
Borrowers (or any of them) from Agent or any Lender. Agent may rely, and shall
be fully protected in relying, on any request for the Growth Capital Term Loan
Advance, disbursement instruction, report, information or any other notice or
communication made or given by Borrower Representative, whether in its own name
or on behalf of one or more of the other Borrowers, and Agent shall not have any
obligation to make any inquiry or request any confirmation from or on behalf of
any other Borrower as to the binding effect on it of any such request,
instruction, report, information, other notice or communication, nor shall the
joint and several character of Borrowers’ obligations hereunder be affected
thereby.
 
 
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(b) Waivers. Each Borrower hereby waives: (i) any right to require Agent to
institute suit against, or to exhaust its rights and remedies against, any other
Borrower or any other Person, or to proceed against any property of any kind
which secures all or any part of the Secured Obligations, or to exercise any
right of offset or other right with respect to any reserves, credits or deposit
accounts held by or maintained with Agent or any Indebtedness of Agent or any
Lender to any other Borrower, or to exercise any other right or power, or pursue
any other remedy Agent or any Lender may have; (ii) any defense arising by
reason of any disability or other defense (other than performance) of any other
Borrower or any guarantor or any endorser, co-maker or other Person, or by
reason of the cessation from any cause whatsoever of any liability of any other
Borrower or any guarantor or any endorser, co-maker or other Person (other than
because of performance), with respect to all or any part of the Secured
Obligations, or by reason of any act or omission of Agent or others which
directly or indirectly results in the discharge or release of any other Borrower
or any guarantor or any other Person or any Secured Obligations or any security
therefor, whether by operation of law or otherwise; (iii) any defense arising by
reason of any failure of Agent to obtain, perfect, maintain or keep in force any
Lien on, any property of any Borrower or any other Person; (iv) any defense
based upon or arising out of any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, liquidation or dissolution proceeding
commenced by or against any other Borrower or any guarantor or any endorser,
co-maker or other Person, including without limitation any discharge of, or bar
against collecting, any of the Secured Obligations (including without limitation
any interest thereon), in or as a result of any such proceeding. Until all of
the Secured Obligations have been paid, performed, and discharged in full,
nothing shall discharge or satisfy the liability of any Borrower hereunder
except the full performance and payment of all of the Secured Obligations. If
any claim is ever made upon Agent for repayment or recovery of any amount or
amounts received by Agent in payment of or on account of any of the Secured
Obligations, because of any claim that any such payment constituted a
preferential transfer or fraudulent conveyance, or for any other reason
whatsoever, and Agent repays all or part of said amount by reason of any
judgment, decree or order of any court or administrative body having
jurisdiction over Agent or any of its property, or by reason of any settlement
or compromise of any such claim effected by Agent with any such claimant
(including without limitation the any other Borrower), then and in any such
event, each Borrower agrees that any such judgment, decree, order, settlement
and compromise shall be binding upon such Borrower, notwithstanding any
revocation or release of this Agreement or the cancellation of any note or other
instrument evidencing any of the Secured Obligations, or any release of any of
the Secured Obligations, and each Borrower shall be and remain liable to Agent
and Lender under this Agreement for the amount so repaid or recovered, to the
same extent as if such amount had never originally been received by Agent or any
Lender, and the provisions of this sentence shall survive, and continue in
effect, notwithstanding any revocation or release of this Agreement. Until
payment in full of the Secured Obligations (other than obligations that survive
the termination of the Loan Documents) each Borrower hereby expressly and
unconditionally waives all rights of subrogation, reimbursement and indemnity of
every kind against any other Borrower, and all rights of recourse to any assets
or property of any other Borrower, and all rights to any collateral or security
held for the payment and performance of any Secured Obligations, including (but
not limited to) any of the foregoing rights which a Borrower may have under any
present or future document or agreement with any other Borrower or other Person,
and including (but not limited to) any of the foregoing rights which any
Borrower may have under any equitable doctrine of subrogation, implied contract,
or unjust enrichment, or any other equitable or legal doctrine.
 
 
40

 
 
(c) Consents. Each Borrower hereby consents and agrees that, without notice to
or by such Borrower and without affecting or impairing in any way the
obligations or liability of such Borrower hereunder, Agent may, from time to
time before or after revocation of this Agreement, do any one or more of the
following in its sole and absolute discretion: (i) accept partial payments of,
compromise or settle, renew, extend the time for the payment, discharge, or
performance of, refuse to enforce, and release all or any parties to, any or all
of the Secured Obligations; (ii) grant any other indulgence to any Borrower or
any other Person in respect of any or all of the Secured Obligations or any
other matter; (iii) accept, release, waive, surrender, exchange, modify, impair,
or extend the time for the performance, discharge, or payment of, any and all
property of any kind securing any or all of the Secured Obligations or any
guaranty of any or all of the Secured Obligations, or on which Agent at any time
may have a Lien, or refuse to enforce its rights or make any compromise or
settlement or agreement therefor in respect of any or all of such property; (iv)
substitute or add, or take any action or omit to take any action which results
in the release of, any one or more other Borrowers or any endorsers or
guarantors of all or any part of the Secured Obligations, including, without
limitation one or more parties to this Agreement, regardless of any destruction
or impairment of any right of contribution or other right of such Borrower; (v)
apply any sums received from any other Borrower, any guarantor, endorser, or
co-signer, or from the disposition of any Collateral or security, to any
Indebtedness whatsoever owing from such Person or secured by such Collateral or
security, in such manner and order as Agent determines in its sole discretion
(subject to the terms of this Agreement), and regardless of whether such
Indebtedness is part of the Secured Obligations, is secured, or is due and
payable. Each Borrower consents and agrees that Agent shall be under no
obligation to marshal any assets in favor of Borrower, or against or in payment
of any or all of the Secured Obligations. Each Borrower further consents and
agrees that Agent shall have no duties or responsibilities whatsoever with
respect to any property securing any or all of the Secured Obligations. Without
limiting the generality of the foregoing, Agent shall have no obligation to
monitor, verify, audit, examine, or obtain or maintain any insurance with
respect to, any property securing any or all of the Secured Obligations.
 
(d) Independent Liability. Each Borrower hereby agrees that one or more
successive or concurrent actions may be brought hereon against such Borrower, in
the same action in which any other Borrower may be sued or in separate actions,
as often as deemed advisable by Agent. Each Borrower is fully aware of the
financial condition of each other Borrower and is executing and delivering this
Agreement based solely upon its own independent investigation of all matters
pertinent hereto, and such Borrower is not relying in any manner upon any
representation or statement of Agent or any Lender with respect thereto. Each
Borrower represents and warrants that it is in a position to obtain, and each
Borrower hereby assumes full responsibility for obtaining, any additional
information concerning any other Borrower’s financial condition and any other
matter pertinent hereto as such Borrower may desire, and such Borrower is not
relying upon or expecting Agent to furnish to it any information now or
hereafter in Agent’s possession concerning the same or any other matter.
 
(e) Subordination. All Indebtedness of any Borrower now or hereafter arising
held by another Borrower is subordinated to the Secured Obligations and any
Borrower holding the Indebtedness shall take all actions reasonably requested by
Agent to effect, to enforce and to give notice of such subordination.
 
[REMAINDER OF SIGNATURE PAGE INTENTIONALLY LEFT BLANK]
 
 
41

 
[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]
 
IN WITNESS WHEREOF, Borrowers, Agent and Lender have duly executed and delivered
this Loan and Security Agreement as of the day and year first above written.
 
BORROWERS:
 
RUMBLEON, INC.
 
Signature:      

_/s/ Steven R. Berrard_____
 
Print Name:         

__Steven R. Berrard______
 
Title:             

__Chief Financial Officer___
 
 
NEXTGEN PRO, LLC
 
Signature:         

_/s/ Steven R. Berrard_____
 
Print Name:  

__Steven R. Berrard______
 
Title:       

__Manager______________
 
 
RMBL MISSOURI, LLC
 
Signature:       

_/s/ Steven R. Berrard_____
 
Print Name:

__Steven R. Berrard______
 
Title:               

__Manager______________
 
 
RMBL TEXAS, LLC
 
Signature:       

_/s/ Steven R. Berrard_____
 
Print Name:     

__Steven R. Berrard______
 
Title:       

__Manager______________
 
 
 

 
 
Accepted in Palo Alto, California:
 
AGENT:
 
HERCULES CAPITAL, INC.
 
Signature:        

_/s/ Zhuo Huang _________
 
Print Name:      

_Zhuo Huang __________
 
Title:    

_Associate General Counsel_
 
 
LENDER:
 
HERCULES CAPITAL, INC.
 
Signature:        

_/s/ Zhuo Huang _________
 
Print Name:      

_ Zhuo Huang __________
 
Title:       

_Associate General Counsel_
 
 

 

 
Table of Exhibits and Schedules
 
Exhibit A: 

Advance Request
 
Attachment to Advance Request
 
Exhibit B:           

Term Note
 
Exhibit C:       

Name, Locations, and Other Information for Borrowers
 
Exhibit D:      

Borrowers’ Patents, Trademarks, Copyrights and Licenses
 
Exhibit E:    

Borrowers’ Deposit Accounts and Investment Accounts
 
Exhibit F:       

Compliance Certificate
 
Exhibit G:  

Joinder Agreement
 
Exhibit H:   

ACH Debit Authorization Agreement
 
Schedule 1.1                

Commitments
Schedule 5.14        

Capitalization
 
 

 

 
EXHIBIT A
 
ADVANCE REQUEST
 
To:            
Agent:                                                                            
Date:                                                    
 
Hercules Capital, Inc. (the “Agent”)
 
400 Hamilton Avenue, Suite 310
 
Palo Alto, CA 94301
 
email: legal@herculestech.com; tharris@htgc.com
 
Attn: Legal Department; Thomas Haris
 
Re: Loan and Security Agreement dated as of April 30, 2018 (as amended,
restated, supplemented or otherwise modified from time to time, the
“Agreement”), by and among RUMBLEON, INC., a Nevada corporation, NEXTGEN PRO,
LLC, a Delaware limited liability company, RMBL MISSOURI, LLC, a Delaware
limited liability company, RMBL TEXAS, LLC, a Delaware limited liability
company, and each of their Qualified Subsidiaries from time to time party to the
Loan Agreement (individually, each, a “Borrower”, and collectively,
“Borrowers”), the several banks and other financial institutions or entities
from time to time parties to this Agreement (collectively, “Lender”) and
HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as
administrative agent and collateral agent for Lender (in such capacity,
“Agent”).
 
Borrower Representative, on behalf of Borrowers, hereby requests Agent to cause
Lender to make an Advance in the amount of _____________________ Dollars
($________________) on ______________, _____ (the “Advance Date”) pursuant to
the Agreement. Capitalized words and other terms used but not otherwise defined
herein are used with the same meanings as defined in the Agreement.
 
Please:
 
(a)            
Issue a check payable to a Borrower                  

☐
 
or
 
(b)            
Wire Funds to a Borrower’s account         

☐
 
Bank:                           
Address:                           
 
ABA Number:                           
Account Number:                        

Account Name:                                                                
Contact Person:                                                                
Phone Number:                                                                
To Verify Wire
Info:                                                                
Email address:                           
 
Borrower Representative represents that the conditions precedent to the Advance
set forth in the Agreement are satisfied and shall be satisfied upon the making
of such Advance, including but not limited to: (i) that no event that has had or
could reasonably be expected to have a Material Adverse Effect has occurred and
is continuing; (ii) that the representations and warranties set forth in the
Agreement are true and correct in all material respects on and as of the Advance
Date with the same effect as though made on and as of such date, except to the
extent such representations and warranties expressly relate to an earlier date;
(iii) that each Borrower is in compliance with all the terms and provisions set
forth in each Loan Document on its part to be observed or performed in all
material respects; and (iv) that as of the Advance Date, no fact or condition
exists that constitutes (or could, with the passage of time, the giving of
notice, or both reasonably be expected to constitute) an Event of Default under
the Loan Documents. Borrower Representative understands and acknowledges that
Agent has the right to review the financial information supporting this
representation and, based upon such review, Lender may decline to fund the
requested Advance.
 
 

 
 
Borrower Representative hereby represents that each Borrower’s jurisdiction of
organization, organizational form, legal name and locations have not changed
since the date of the Agreement or, if the Attachment to this Advance Request is
completed, are as set forth in the Attachment to this Advance Request.
 
Borrower Representative agrees to notify Agent promptly before the funding of
the Loan if any of the matters which have been represented above shall not be
true and correct on the Advance Date and if Agent has received no such notice
before the Advance Date then the statements set forth above shall be deemed to
have been made and shall be deemed to be true and correct as of the Advance
Date.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
 
 
 
 
 
 

 

 
[SIGNATURE PAGE TO ADVANCE REQUEST]
 
This Advance Request is duly executed as of the date set forth above.
 
RUMBLEON, INC.
 
SIGNATURE:                                                               
 
TITLE:                       
 
PRINT NAME:                                 
 
 

 

 
ATTACHMENT TO ADVANCE REQUEST
 
Dated: _______________________
 
Borrower Representative hereby represents and warrants to Agent, on behalf of
each Borrower, that each of Borrowers’ current names and organizational status
is as follows:
 
[Name:
RumbleON, Inc.
Type of organization:
corporation
State of organization:
Nevada
Organization file number:
Business ID - NV20131625617
Name:
NextGen Pro, LLC
Type of organization:
limited liability company
State of organization:
Delaware
Organization file number:
File #6297691
Name:
RMBL Missouri, LLC
Type of organization:
limited liability company
State of organization:
Delaware
Organization file number:
File # 6326654
Name:
RMBL Texas, LLC
Type of organization:
limited liability company
State of organization:
Delaware
Organization file number:
File #6681648] 1

Borrower Representative hereby represents and warrants to Agent, on behalf of
Borrowers, that the street addresses, cities, states and postal codes of each
Borrower’s current locations (in addition to those leased and bailee locations
listed on Exhibit C to the Agreement) are as follows:
 
[1431 Greenway Drive
Suite 775
Irving, TX 75038
 
RumbleOn, Inc.
4521 Sharon Road
Suite 370
Charlotte, North Carolina 28211
 
 
RMBL Missouri, LLC
2100 E Outer Road
Scott City, MO. 63780]2
 
1 Update for Tranches II, III and IV as needed
2 Update for Tranches II, III and IV as needed
 
 

 

 
EXHIBIT B
 
SECURED TERM PROMISSORY NOTE
 
$[______________]
 
 
Advance Date: [____________]
 
 
 
Maturity Date: [_____________], subject to extension in accordance with the
terms of the Loan Agreement
 

 
FOR VALUE RECEIVED, each of RUMBLEON, INC., a Nevada corporation, NEXTGEN PRO,
LLC, a Delaware limited liability company, RMBL MISSOURI, LLC, a Delaware
limited liability company, RMBL TEXAS, LLC, a Delaware limited liability
company, and each of their Qualified Subsidiaries from time to time party to the
Loan Agreement (individually, each, a “Borrower”, and collectively,
“Borrowers”), from time to time, hereby promises to pay to the order of Hercules
Capital, Inc., a Delaware limited partnership or the holder of this Secured Term
Promissory Note (the “Lender”) at 400 Hamilton Avenue, Suite 310, Palo Alto, CA
94301 or such other place of payment as the holder of this Secured Term
Promissory Note (this “Term Note”) may specify from time to time in writing, in
lawful money of the United States of America, the principal amount of
$[_____________] or such other principal amount as Lender has advanced to
Borrowers, together with interest at a rate as set forth in Section 2.1(c) of
the Loan Agreement based upon a year consisting of 360 days, with interest
computed daily based on the actual number of days in each month.
 
This Term Note is the Term Note referred to in, and is executed and delivered in
connection with, that certain Loan and Security Agreement dated as of April 30,
2018, by and among Borrowers, Hercules Capital, Inc., a Maryland corporation
(the “Agent”) and the several banks and other financial institutions or entities
from time to time party thereto as lender (as the same may from time to time be
amended, modified or supplemented in accordance with its terms, the “Loan
Agreement”), and is entitled to the benefit and security of the Loan Agreement
and the other Loan Documents (as defined in the Loan Agreement), to which
reference is made for a statement of all of the terms and conditions thereof.
All payments shall be made in accordance with the Loan Agreement. All terms
defined in the Loan Agreement shall have the same definitions when used herein,
unless otherwise defined herein. An Event of Default under the Loan Agreement
shall constitute a default under this Term Note.
 
Each Borrower waives presentment and demand for payment, notice of dishonor,
protest and notice of protest under the UCC or any applicable law. Each Borrower
agrees to make all payments under this Term Note without setoff, recoupment or
deduction and regardless of any counterclaim or defense. Borrowers shall be
jointly and severally liable with respect to all Secured Obligations pursuant to
this Term Note and the Loan Agreement. This Term Note has been negotiated and
delivered to Lender and is payable in the State of California. This Term Note
shall be governed by and construed and enforced in accordance with, the laws of
the State of California, excluding any conflicts of law rules or principles that
would cause the application of the laws of any other jurisdiction.
 
 

 

 
[SIGNATURE PAGE TO TERM NOTE]
 
The undersigned have duly executed this Term Note.
 
 
 
RUMBLEON, INC.
 
SIGNATURE:                                                               
TITLE:                       
PRINT NAME:               

 
NEXTGEN PRO, LLC
 
SIGNATURE:                                                               
TITLE:                       
PRINT NAME:                

 
RMBL MISSOURI, LLC
 
SIGNATURE:                                                               
TITLE:                       
PRINT NAME:               

 
RMBL TEXAS, LLC
 
SIGNATURE:                                                               
TITLE:                       
PRINT NAME:                 

 
 
 

 
EXHIBIT C
 
NAME, LOCATIONS, AND OTHER INFORMATION FOR BORROWER
 
1.
Borrower Representative hereby represents and warrants to Agent, on behalf of
each Borrower, that each of Borrowers’ current names and organizational status
is as follows:
 
Name:
RumbleON, Inc.
Type of organization:
corporation
State of organization:
Nevada
Organization file number:
Business ID - NV20131625617
Fiscal year end:
31-Dec
Federal taxpayer identification number:
46-3951329
Former Name(s):
Smart Server, Inc. (10/24/2013-2/13/2017)
 
 
Name:
NextGen Pro, LLC
Type of organization:
limited liability company
State of organization:
Delaware
Organization file number:
File #6297691
Fiscal year end:
31-Dec
Federal taxpayer identification number:
35-2584798
Former Name(s):
N/A
 
 
Name:
RMBL Missouri, LLC
Type of organization:
limited liability company
State of organization:
Delaware
Organization file number:
File # 6326654
Fiscal year end:
31-Dec
Federal taxpayer identification number:
81-5484099
Former Name(s):
LBMR Dealer MO, LLC (2/24/2017-2/28/2017)
 
 
Name:
RMBL Texas, LLC
Type of organization:
limited liability company
State of organization:
Delaware
Organization file number:
File #6681648
Fiscal year end:
31-Dec
Federal taxpayer identification number:
82-4802484
Former Name(s):
N/A

 
2.
Borrower Representative hereby represents and warrants to Agent, on behalf of
Borrowers, that each Borrower’s chief executive office is located at the
following location:
 
1431 Greenway Drive
Suite 775
Irving, TX. 75038
 
 

 
 
3.
Borrower Representative hereby represents and warrants to Agent, on behalf of
Borrowers, that the Borrowers also utilize the following locations:
 
RumbleOn, Inc.
4521 Sharon Road
Suite 370
Charlotte, North Carolina 28211
 
 
RMBL Missouri, LLC
2100 E Outer Road
Scott City, MO. 63780
 
 
Bailee locations as set forth on Schedule attached hereto.
 
 
 

 
 
SCHEDULE OF BAILEE LOCATIONS
 
Bailee
 
Locations
 
ADESA, INC.
 
Adesa Golden Gate
18501 W. Stanford Road
Tracy, CA 95377
 
Adesa Kansas City
15511 Adesa Drive
Belton, MO 64012
COPART, INC.
 
All locations owned or operated by Copart in which vehicles owned by Borrowers,
regardless of whether there is an existing lien on such vehicle, are located.
The current list of all Copart North American locations can be found at:
https://www.copart.com/locations/?region=NORTH_AMERICA
 
CYCLEEXPRESS, LLC (D/B/A NPA AUCTIONS)
 
NPA Atlanta
4800 North Commerce Drive, Suite 200
East Point, GA 30344
 
NPA Cincinnati
10132 Business Center Drive
Cincinnati, OH 45246
 
NPA Dallas
900 Gerault Road
Flower Mound, TX 75028
 
NPA Denver
8300 Blakeland Drive
Littleton, CO 80125
 
NPA Philadelphia
2578 Pearl Buck Road
Bristol, PA 19007
 
NPA San Diego
12400 Stowe Drive
Poway, CA 92064
LABRIER INVESTMETNS, LLC
 
3258 South East Outer Road South
Scott City, MO 63780
MANHEIM, INC.
 
Manhiem Indy
3110 S. Post Road
Indianapolis IN 46239
Manhiem Statesville
145 Auction Lane
Statesville, NC 28625
 

 
 

 
 
 
 
EXHIBIT D
 
BORROWER’S PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
 
PATENTS
 
Owner

 
Description

 
Patent / ApplicationNumber

 
Issue / Application Date

 
NEXTGEN PRO, LLC
 
NEAR FIELD COMMUNICATION (NFC) VEHICLE IDENTIFICATION SYSTEM AND PROCESS
 
14/614,160
 
02/04/2015
 

 
 
TRADEMARKS
 
Owner

 
Description

 
Registration/ Serial Number

 
Registration/ Application Date

 
RUMBLEON, INC.
 
[rmbl_ex10-1000.jpg]
 
87/537,145
 
07/21/2017
 
RUMBLEON, INC.
 
[rmbl_ex10-1001.jpg]
 
87/532,685
 
07/18/2017
 
RUMBLEON, INC.
 
RUMBLEON
 
5,340,911
 
11/21/2017
 
RUMBLEON, INC.
 
[rmbl_ex10-1002.jpg]
 
87/532,644
 
07/18/2017
 
RUMBLEON, INC.
 
RUMBLEON
 
87/430,981
 
04/29/2017
 
NEXTGEN PRO, LLC
 
[rmbl_ex10-1003.jpg]
 
4,662,863
 
12/30/2014
 

 
COPYRIGHTS AND LICENSES
 
 
None
 
 

 

 
EXHIBIT E
 
DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS
 
(a)
 
Accountholder
 
Account Numbers
 
Bank
 
Address
 
Description of Use
 
RumbleOn, Inc.
 
##########
 
Wells Fargo
 
4525 Sharon Road, 4th Floor
Charlotte, NC 28211
 
General business account.
 
RMBL Missouri, LLC
 
##########
 
Wells Fargo
 
4525 Sharon Road, 4th Floor
Charlotte, NC 28211
 
General business account.
 
NextGen Pro, LLC
 
##########
 
Wells Fargo
 
4525 Sharon Road, 4th Floor
Charlotte, NC 28211
 
Transactions between dealer partners and the Companies.
 

 
 
(b)
 
None
 
 

 

 
EXHIBIT F
 
COMPLIANCE CERTIFICATE
 
Hercules Capital, Inc.
 
400 Hamilton Avenue, Suite 310
 
Palo Alto, CA 94301
 
Reference is made to that certain
 
Loan and Security Agreement dated as of April 30, 2018, by and among RUMBLEON,
INC., a Nevada corporation, NEXTGEN PRO, LLC, a Delaware limited liability
company, RMBL MISSOURI, LLC, a Delaware liability company, RMBL TEXAS, LLC, a
Delaware limited liability company, and each of their Qualified Subsidiaries
from time to time party to the Loan Agreement (individually, each, a “Borrower”,
and collectively, “Borrowers”), the several banks and other financial
institutions or entities from time to time parties to this Agreement
(collectively, “Lender”) and HERCULES CAPITAL, INC., a Maryland corporation, in
its capacity as administrative agent and administrative agent for Lender (in
such capacity “Agent”). All capitalized terms not defined herein shall have the
same meaning as defined in the Loan Agreement.
 
The undersigned is an Officer of the Borrower Representative, knowledgeable of
all Borrowers’ financial matters, and is authorized to provide certification of
information regarding Borrowers; hereby certifies, in such capacity, that in
accordance with the terms and conditions of the Loan Agreement, each Borrower is
in compliance in all material respects for the period ending ___________ with
all covenants, conditions and terms and hereby reaffirms that as of the date of
the fiscal quarter ended _________________ all representations and warranties
contained therein (except Sections 5.3 and 5.4) are true and correct on and as
of the date of this Compliance Certificate with the same effect as though made
on and as of such date, except to the extent such representations and warranties
expressly relate to an earlier date, after giving effect in all cases to any
standard(s) of materiality contained in the Loan Agreement as to such
representations and warranties. Attached are the required documents and
calculations supporting the above certification. The undersigned further
certifies that the financial statements and calculations are prepared in
accordance with GAAP (to the extent required pursuant to the terms of the Loan
Agreement) and are consistent from one period to the next except as explained
below.
 
REPORTING REQUIREMENT
 
REQUIRED
 
CHECK IF ATTACHED
 
Monthly Financial Statements (Section 7.1(a))
 
Monthly, within 30 days
 
☐
 
 
 
Quarterly Financial Statements (or link to 10-Q filing) (Section 7.1(b))
 
Quarterly, within 45 days or such later date as permitted by the SEC or under
the applicable securities laws (which may be delivered by link through investor
relations page)
 
☐
 
 
 
Annual Financial Statements (or link to 10-K) (Section 7.1(c))
 
Annually, within 90 days or such later date as is permitted by the SEC or under
the applicable securities laws (which may be delivered by link through investor
relations page)
 
☐
 
 
 

 
 
 
 

 
 
Compliance Certificate (Section 7.1(d))
 
Together with Monthly or Quarterly Statements
 
☐
 
 
 
A/R Agings Report (if A/R > $1,000,000) (Section 7.1(e))
 
Monthly, within 30 days
 
☐
 
 
 
A/P Agings Report (if A/P > $600,000) (Section 7.1(e))
 
Monthly, within 30 days
 
☐
 
 
 
Budget and Projections (Section 7.1(g))
 
Annually, within 60 days of fiscal year end, and promptly upon any Board
approved update
 
☐
 
 
 
Daily Inventory Report (including detail of financed / not financed Inventory)
(Section 7.1(h))
 
Every Business Day
 
☐
 
 
 
Material Statement, Report or Notice of any increased commitment, change in
terms, non-renewal or default or any demand for payment received pursuant to
Qualified Inventory Financing (Section 7.1(i))
 
When received
 
☐
 
 
 
FINANCIAL COVENANTS
 
REQUIRED
 
ACTUAL
 
Minimum Quarterly Revenue (after Tranche III Advance)
 
75% of Budget
 
☐ not applicable
Budget Quarterly Revenue
$                        
Actual Quarterly Revenue
$                        
% of Budget
 
Minimum Quarterly Adjusted EBITDA, if average cash balance is less than
$15,000,000 (after Tranche III Advance)
 
$2,000,000
 
☐ not applicable
$                        
 
OTHER COVENANTS
 
REQUIRED
 
ACTUAL
 
Equipment Financing
 
Not to exceed $200,000
 
$                        
 
Letters of Credit (cash secured) except for security for leases
 
Not to exceed $250,000
 
$                        
 

 
 
 

 
 
Acquired Indebtedness
 
Not to exceed $100,000
 
$                        
 
Other Indebtedness
 
Not to exceed $750,000 (less on Equipment Financing, Letters of Credit and
Acquired Indebtedness outstanding)
 
$                        
 
Inventory Financing
 
Not to exceed 85% of aggregate Inventory value less Inventory Financing Lenders’
aggregate cash collateral
 
(1) Aggregate Inventory value:
$                        
(2) Aggregate Inventory financing Lender cash collateral
$                        
Maximum Inventory financing permitted (line 1 less line 2)
$                        
Actual Inventory financing amount outstanding
$                        
 
Repurchases of stock from employees, directors or consultants
 
Not to exceed $100,000
 
$                        
 
Joint Ventures
 
Cash contributions not to exceed $100,00
 
$                        
 
Additional Investments
 
Not to exceed $750,000 (less Repurchases and Joint Ventures made during the
term)
 
$                        
 
Investments in Foreign Subsidiaries
 
As approved by Agent
 
$                        
 
Cash Collateral and Security Deposits
 
Not to exceed $250,000
 
$                        
 
Landlord Waivers and Bailee Agreements
 
For locations where Collateral (other than non-Inventory vehicles) in excess of
$400,000 is maintained
 
☐ all applicable locations covered
☐ landlord waiver or bailee agreement required for the following new location:
 

 
 

 
 
The undersigned hereby also confirms the below accounts represent all depository
accounts and securities accounts presently open in the name of each Borrower or
Subsidiary, as applicable.
 
 
 
Depository AC #
 
Financial Institution
 
Account Type (Depository / Securities)
 
Last Month Ending Account Balance
 
Purpose of Account
 
BORROWER Name/Address:
 
 
 
1
 
 
 
 
 
 
2
 
 
 
 
 
 
3
 
 
 
 
 
 
4
 
 
 
 
 
 
5
 
 
 
 
 
 
6
 
 
 
 
 
 
7
 
 
 
 
 
 
 
BORROWER SUBSIDIARY COMPANY Name/Address
 
 
 
1
 
 
 
 
 
 
2
 
 
 
 
 
 
3
 
 
 
 
 
 
4
 
 
 
 
 
 
5
 
 
 
 
 
 
6
 
 
 
 
 
 
7
 
 
 
 
 
 
 

 
 
 

 
 
[SIGNATURE PAGE TO COMPLIANCE CERTIFICATE]
 
Very Truly Yours,
 
RUMBLEON, INC.
 
SIGNATURE: 
 
TITLE: 
 
PRINT NAME: 
 
 

 

 
EXHIBIT G
 
FORM OF JOINDER AGREEMENT
 
This Joinder Agreement (the “Joinder Agreement”) is made and dated as of [ ],
and is entered into by and between__________________, a ___________ corporation
(“Subsidiary”), and HERCULES CAPITAL, INC., a Maryland corporation (as “Agent”).
 
RECITALS
 
A. Subsidiary’s Affiliate, RumbleON, Inc. (“Company”) [has entered/desires to
enter] into that certain Loan and Security Agreement dated as of April 30, 2018,
with the several banks and other financial institutions or entities from time to
time party thereto as lender (collectively, the “Lender”) and Agent, as such
agreement may be amended (the “Loan Agreement”), together with the other
agreements executed and delivered in connection therewith;
 
B. Subsidiary acknowledges and agrees that it will benefit both directly and
indirectly from Company’s execution of the Loan Agreement and the other
agreements executed and delivered in connection therewith;
 
AGREEMENT
 
NOW THEREFORE, Subsidiary and Agent agree as follows:
 
1.
The recitals set forth above are incorporated into and made part of this Joinder
Agreement. Capitalized terms not defined herein shall have the meaning provided
in the Loan Agreement.
 
2.
By signing this Joinder Agreement, Subsidiary shall be bound by the terms and
conditions of the Loan Agreement the same as if it were a Borrower (as defined
in the Loan Agreement) under the Loan Agreement, mutatis mutandis, provided
however, that (a) with respect to (i) Section 5.1 of the Loan Agreement,
Subsidiary represents that it is an entity duly organized, legally existing and
in good standing under the laws of [____________], (b) neither Agent nor Lender
shall have any duties, responsibilities or obligations to Subsidiary arising
under or related to the Loan Agreement or the other Loan Documents, (c) that if
Subsidiary is covered by Company’s insurance, Subsidiary shall not be required
to maintain separate insurance or comply with the provisions of Sections 6.1 and
6.2 of the Loan Agreement, and (d) that as long as Company satisfies the
requirements of Section 7.1 of the Loan Agreement, Subsidiary shall not have to
provide Agent separate Financial Statements. To the extent that Agent or Lender
has any duties, responsibilities or obligations arising under or related to the
Loan Agreement or the other Loan Documents, those duties, responsibilities or
obligations shall flow only to Company and not to Subsidiary or any other Person
or entity. By way of example (and not an exclusive list): (i) Agent’s providing
notice to Company in accordance with the Loan Agreement or as otherwise agreed
among Company, Agent and Lender shall be deemed provided to Subsidiary; (ii) a
Lender’s providing an Advance to Company shall be deemed an Advance to
Subsidiary; and (iii) Subsidiary shall have no right to request an Advance or
make any other demand on Lender.
 
3.
Subsidiary agrees not to certificate its equity securities without Agent’s prior
written consent, which consent may be conditioned on the delivery of such equity
securities to Agent in order to perfect Agent’s security interest in such equity
securities.
 
4.
Subsidiary acknowledges that it benefits, both directly and indirectly, from the
Loan Agreement, and hereby waives, for itself and on behalf on any and all
successors in interest (including without limitation any assignee for the
benefit of creditors, receiver, bankruptcy trustee or itself as
debtor-in-possession under any bankruptcy proceeding) to the fullest extent
provided by law, any and all claims, rights or defenses to the enforcement of
this Joinder Agreement on the basis that (a) it failed to receive adequate
consideration for the execution and delivery of this Joinder Agreement or (b)
its obligations under this Joinder Agreement are avoidable as a fraudulent
conveyance.
 
5.
As security for the prompt, complete and indefeasible payment when due (whether
on the payment dates or otherwise) of all the Secured Obligations, Subsidiary
grants to Agent a security interest in all of Subsidiary’s right, title, and
interest in and to the Collateral.
 
[SIGNATURE PAGE FOLLOWS]
 
 

 
 [SIGNATURE PAGE TO JOINDER AGREEMENT]
 
SUBSIDIARY:
 
[ 
]
 
 
By:                                                             
Name:                                                             
Title:                                                             
 
Address:
[                                                            
]
[                                                            
]
[                                                            
]
 
Telephone: [                                                             
]
email: [                                                             
]
 
 
 
AGENT:
 
HERCULES CAPITAL, INC.
 
 
 
By:            
 
Name:                       
 
Title:            
 
 
 
Address:
 
400 Hamilton Ave., Suite 310
 
Palo Alto, CA 94301
 
email: legal@herculestech.com; tharris@htgc.com
 
Telephone: 650-289-3060
 
 

 

 
EXHIBIT H
 
ACH DEBIT AUTHORIZATION AGREEMENT
 
Hercules Capital, Inc.
 
400 Hamilton Avenue, Suite 310
 
Palo Alto, CA 94301
 
Re: Loan and Security Agreement dated as of April 30, 2018 (as amended,
restated, supplemented or otherwise modified from time to time, the “Agreement”)
by and among RUMBLEON, INC., NEXTGEN PRO, LLC, RMBL MISSOURI, LLC, RMBL TEXAS,
LLC, and each of their Qualified Subsidiaries from time to time party to the
Loan Agreement (individually, each, a “Borrower”, and collectively, “Borrowers”)
and Hercules Capital, Inc., as administrative agent (“Agent”) and the lenders
party thereto (collectively, “Lender”).
 
In connection with the above referenced Agreement, the undersigned Borrower
hereby authorizes Agent to initiate debit entries for (i) the periodic payments
due under the Agreement and (ii) out-of-pocket legal fees and costs incurred by
Agent or Lender pursuant to Section 11.11 of the Agreement to its account
indicated below. The undersigned authorizes the depository institution named
below to debit to such account.
 
 DEPOSITORY NAME
 
BRANCH
 
CITY
 
STATE AND ZIP CODE
 
TRANSIT/ABA NUMBER
 
ACCOUNT NUMBER
 

 
 
This authority will remain in full force and effect so long as any amounts are
due under the Agreement.
 
RUMBLEON, INC.
 
By:                                                                    
 
Name:                                                                    
 
Date:                                                                    
 
 
 
 

 
 
SCHEDULE 1.1
 
COMMITMENTS
 
LENDER
 
TRANCHE I COMMITMENT
 
TRANCHE II COMMITMENT
 
TRANCHE III COMMITMENT
 
TRANCHE IV COMMITMENT
 
Hercules Capital, Inc.
 
$5,000,000
 
$2,500,000
 
$7,500,000
 
$5,000,000, in Agent’s sole discretion, upon approval by Agent’s investment
committee
 
TOTAL COMMITMENTS
 
$5,000,000
 
$2,500,000
 
$7,500,000
 
$5,000,000, in Agent’s sole discretion, upon approval by Agent’s investment
committee
 

 
 
 
 
 
 
 
 
 

 
 
SCHEDULE 5.14
 
CAPITALIZATION AND SUBSIDIARIES
 
Parent:
 
Class
No. of Authorized Shares
No. of Shares Outstanding
No. of Shares
Issuable upon
Exercise of any
Options, Warrants
or Convertible
Notes
Class A Common Stock, $0.001 par value
 
 1,000,000
 
 1,000,000
 
 -
 
Class B Common Stock, $0.001 par value
 
99,000,000
 
11,928,541
 
218,250
 
Preferred Stock, $0.001 par value
 
  10,000,000
 
0
 
  -
 

 
There are 741,000 restricted stock units outstanding, which have been granted
under the Company’s Stock Incentive Plan.
 
Subsidiaries:
 
Entity
Owner
Ownership %
NextGen Pro, LLC
RumbleON
100%
RMBL Missouri, LLC
RumbleON
100%
RMBL Texas, LLC
RumbleON
100%