Exhibit 10.2 

 
ESCROW AGREEMENT
 
This Escrow Agreement (this “Agreement”) is made and entered into as of October
30, 2018 by and among RumbleOn, Inc., a Nevada corporation located at 4521
Sharon Road, Suite 370, Charlotte, NC 28211 (“Buyer”), Steven Brewster, a
Tennessee resident (“Representative”), as representative of the Sellers under
the Acquisition Agreements (as defined below), and Continental Stock Transfer &
Trust Company, a New York corporation located at 1 State Street, 30th Floor, New
York, New York 10004 (the “Escrow Agent”). Each capitalized term used but not
otherwise defined herein shall have the meaning ascribed to such term in the
Merger Agreement (as defined below).
 
Recitals
 
WHEREAS, Buyer, Wholesale Holdings, Inc., a Tennessee corporation (“Wholesale”),
Wholesale, LLC, a Tennessee corporation, Representative, certain shareholders of
Wholesale (the “Stockholders”), and certain other parties named therein have
entered into an Agreement and Plan of Merger dated as of October 26, 2018 (the
“Merger Agreement”);
 
WHEREAS, Buyer, the members (individually, the “Express Sellers,” and together
with the Stockholders, the “Sellers”) of Wholesale Express LLC, a Tennessee
limited liability company (individually, “Express” and together with Wholesale,
the “Companies”), Representative, and certain other parties named therein have
entered into a Membership Interest Purchase Agreement dated as of the date
hereof (individually, the “MIPA,” and together with the Merger Agreement, the
“Acquisition Agreements”);
 
WHEREAS, the Sellers have duly appointed Representative to act as their
representative under the Acquisition Agreements; and
 
WHEREAS, the Acquisition Agreements contemplate placing in escrow certain stock
consideration to secure certain rights of Buyer and the other Parent Indemnitees
pursuant to the Acquisition Agreements.
 
Agreement
 
NOW, THEREFORE, in consideration of the premises and the mutual promises herein
made, and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
 
Section 1. Escrow.
 
1.1 Appointment; Cash and Shares Placed in Escrow. Buyer and
Representative hereby appoint the Escrow Agent as their escrow agent for the
purposes set forth herein, and the Escrow Agent hereby accepts such appointment
under the terms and conditions set forth herein. Contemporaneously with the
execution and delivery of this Agreement, Buyer shall deliver or cause to be
delivered to the Escrow Agent one or more newly issued certificates representing
six hundred eighty-one thousand four hundred eighty-one (681,481) shares of
Buyer’s Series B Non-Voting Convertible Preferred Stock or, following
conversion, Conversion Shares (the “Escrow Shares”), registered in the name of
the Stockholders, to be held in escrow under this Agreement.
 
 

 
 
1.2 Escrow Fund; Escrow Accounts.
 
(a) The Escrow Shares being held in escrow pursuant to this Agreement shall
collectively constitute an escrow fund (the “Escrow Fund”) securing the
indemnification, compensation and reimbursement rights of Buyer and the other
Parent Indemnitees under the Acquisition Agreements.
 
(b) The Escrow Shares shall be deposited and held in a separate account (the
“Escrow Account”), subject to the terms and conditions of this Agreement.
 
1.3 Voting of Escrow Shares. The Representative (on behalf of the Stockholders)
shall be entitled to exercise all voting rights with respect to such Escrow
Shares. The Escrow Agent is not obligated to distribute to the Representative or
any other person any proxy materials and other documents related to the Escrow
Shares received by the Escrow Agent from Buyer.
 
1.4 Interest. The Escrow Fund shall be held in the escrow accounts uninvested
and without interest accruing thereon.
 
1.5 Dividends, Etc. The Stockholders shall remain the beneficial owners of the
Escrow Shares unless any such Escrow Shares are transferred to a Parent
Indemnitee or Purchaser Indemnitee pursuant to this Agreement and, until such
time, the Stockholders shall retain all rights and benefits of a holder of such
Escrow Shares, subject to the terms and limitations of this Agreement. Buyer and
Representative agree that any cash distributed in respect of the Escrow Shares
shall be distributed to the beneficial owners of the Escrow Shares. Buyer and
Representative agree that any equity shares of Buyer (“Buyer Shares”) or other
property (excluding cash) distributable or issuable (whether by way of dividend,
stock split or otherwise) in respect of or in exchange for any Escrow Shares
(including pursuant to or as a part of a merger, consolidation, acquisition of
property or stock, reorganization or liquidation involving Buyer) shall not be
distributed or issued to the beneficial owners of such Escrow Shares, but rather
shall be distributed or issued to and held by the Escrow Agent in the Escrow
Account as part of the Escrow Fund. Any securities or other property (excluding
cash distributed in respect of the Escrow Shares) received by the Escrow Agent
in respect of any Escrow Shares held in escrow as a result of any stock split or
combination of Buyer Shares, payment of a stock dividend or other stock
distribution in or on Buyer Shares, or change of Buyer Shares into any other
securities pursuant to a conversion or as a part of a merger, consolidation,
acquisition of property or stock, reorganization or liquidation involving Buyer,
or otherwise, shall be held by the Escrow Agent in the Escrow Account as part of
the Escrow Fund.
 
1.6 Trust Fund. The Escrow Fund shall be held in trust and shall not be subject
to any lien, attachment, trustee process or any other judicial process of any
creditor of Buyer or Representative. The Escrow Agent shall hold and safeguard
the Escrow Fund until the Termination Date (as defined in Section 5) or earlier
distribution in accordance with this Agreement.
 
 
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Section 2. Indemnification Claims; Release of Escrow Fund.
 
2.1 Claims. Buyer shall give Representative and the Escrow Agent written notice
of any indemnification claim made by any Parent Indemnitee or Purchaser
Indemnitee pursuant to the applicable Acquisition Agreement setting forth the
facts giving rise to such claim, the provisions of the applicable Acquisition
Agreement that were breached by such facts and the amount of any Losses arising
therefrom (a “Claim Notice”).
 
2.2 Disbursement. The Escrow Agent shall make disbursements as provided in this
Section 2.2 from the Escrow Account to satisfy the Sellers’ indemnification
obligations under the Acquisition Agreements.
 
(a) At any time prior to the First Escrow Distribution Date or Second Escrow
Distribution Date (as such terms are defined below), as promptly as practicable,
but in any event within five (5) Business Days after receiving (i) joint written
instructions from Buyer and Representative, (ii) written instruction from Buyer
attaching a final non-appealable court order from a court of competent
jurisdiction setting forth the amount of the Losses and relating to the release
of any Escrow Shares from the Escrow Account, or (iii) written instruction from
Representative pursuant to Section 7.6 of the Merger Agreement attaching
evidence of payment by Representative of cash in lieu of Escrow Shares in final
settlement of any Claim to Parent or Parent Indemnitees pursuant to an
Acquisition Agreement (each of the forgoing, “Release Instructions”), the Escrow
Agent shall release or cause to be released any such Escrow Shares in the
amounts, to the Persons, and in the manner set forth in such Release
Instructions.
 
(b) On March 31, 2019 (the “First Escrow Distribution Date”), the Escrow Agent
shall release from the Escrow Account twenty-five percent (25%) of the Escrow
Shares then remaining in the Escrow Account to the Representative for further
distribution to the Stockholders, less the amount in number of Escrow Shares
(valued at the Per Share Valuation Amount) equal to the Losses claimed in any
Pending Claims (as defined below) that were made prior to the First Escrow
Distribution Date.  A “Pending Claim” means any (A) claim asserted in good faith
pursuant to a Claim Notice in accordance with this Agreement and the appropriate
Acquisition Agreement by any Parent Indemnitee for indemnification for Losses
that are pending before a court of competent jurisdiction or otherwise remains
unresolved or (B) any portion of the Escrow Fund due and owing to Buyer or the
other Parent Indemnitees pursuant to Release Instructions but not yet paid.
Following the First Escrow Distribution Date, upon resolution of any Pending
Claim, the Escrow Agent shall, within two (2) Business Days after receiving
Release Instructions release to the Representative for further distribution to
the Stockholders from the Escrow Account such number of Escrow Shares equal to
the portion of such Pending Claim resolved that is not required to pay the
Losses pursuant to such Pending Claim.
 
(c) On the first anniversary of the date of this Agreement (the “Second Escrow
Distribution Date”), the Escrow Agent shall release from the Escrow Account the
balance of the Escrow Shares then remaining in the Escrow Account to the
Representative for further distribution to the Stockholders, less the amount in
number of Escrow Shares (valued at the Per Share Valuation Amount) equal to the
Losses claimed in any Pending Claims. Following the Second Escrow Distribution
Date, upon resolution of any Pending Claim, the Escrow Agent shall, within two
(2) Business Days after receiving Release Instructions release to the
Representative for further distribution to the Stockholders from the Escrow
Account such number of Escrow Shares equal to the portion of such Pending Claim
resolved that is not required to pay the Losses pursuant to such Pending Claim.
 
 
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(d) The parties to this Agreement acknowledge and agree that the Escrow Shares
shall be deemed to have a value of $6.75 per share (the “Per Share Valuation
Amount”) for all purposes when calculating any claim against, or release from,
the Escrow Account. If at any time while the Escrow Shares are held pursuant to
this Agreement, there is any stock dividend, combination, subdivision, split or
the like with respect to the Escrow Shares, (any such event, a “Stock Event”),
then the Per Share Valuation Amount shall be equitably adjusted to take into
account the effect of the Stock Event as reasonably agreed to by Representative
and Buyer acting in good faith.
 
Section 3. Fees and Expenses. The Escrow Agent shall be entitled to receive,
from time to time, fees in accordance with Schedule 1, which fees shall be paid
by Buyer. In accordance with Schedule 1, the Escrow Agent will also be entitled
to reimbursement for reasonable and documented out-of-pocket expenses incurred
by the Escrow Agent in the performance of its duties hereunder and the execution
and delivery of this Agreement, which fees shall be paid by Buyer.
 
Section 4. Limitation of Escrow Agent’s Liability.
 
4.1 The Escrow Agent undertakes to perform such duties as are specifically set
forth in this Agreement only and shall have no duty under any other agreement or
document, and no implied covenants or obligations shall be read into this
Agreement against the Escrow Agent. The Escrow Agent shall incur no liability
with respect to any action taken by it or for any inaction on its part in
reliance upon any notice, direction, instruction, consent, statement or other
document believed by it in good faith to be genuine and duly authorized, nor for
any other action or inaction except for its own gross negligence or willful
misconduct. In all questions arising under this Agreement and/or its
interpretation hereof in conjunction with the Acquisition Agreements, the Escrow
Agent may rely on the advice of counsel, and for anything done, omitted or
suffered in good faith by the Escrow Agent based upon such advice the Escrow
Agent shall not be liable to anyone. In no event shall the Escrow Agent be
liable for incidental, punitive or consequential damages.
 
4.2  Buyer and Representative hereby agree to jointly and severally indemnify
the Escrow Agent and its officers, directors, employees and agents for, and hold
it and them harmless against, any loss, liability or expense (including attorney
fees) incurred without gross negligence or willful misconduct on the part of the
Escrow Agent, arising out of or in connection with the Escrow Agent’s carrying
out its duties hereunder. This right of indemnification shall survive the
termination of this Agreement and the resignation of the Escrow Agent.
 
Section 5. Termination. This Agreement shall terminate upon the release by the
Escrow Agent of the final amounts held in the Escrow Accounts in accordance with
Section 1 (the date of such release being referred to as the “Termination
Date”).
 
 
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Section 6. Successor Escrow Agent. In the event the Escrow Agent becomes
unavailable or unwilling to continue as escrow agent under this Agreement, the
Escrow Agent may resign and be discharged from its duties and obligations
hereunder by giving its written resignation to the parties to this Agreement.
Such resignation shall take effect not less than 30 days after it is given to
all the other parties hereto. In such event, Buyer may appoint a successor
Escrow Agent (acceptable to Representative, acting reasonably). If Buyer fails
to appoint a successor Escrow Agent within 15 days after receiving the Escrow
Agent’s written resignation, the Escrow Agent shall have the right to apply to a
court of competent jurisdiction for the appointment of a successor Escrow Agent.
The successor Escrow Agent shall execute and deliver to the Escrow Agent an
instrument accepting such appointment, and the successor Escrow Agent shall,
without further acts, be vested with all the estates, property rights, powers
and duties of the predecessor Escrow Agent as if originally named as Escrow
Agent herein. The Escrow Agent shall act in accordance with written instructions
from Buyer and Representative as to the transfer of the Escrow Fund to a
successor Escrow Agent.
 
Section 7. Representative. Unless and until Buyer and the Escrow Agent shall
have received written notice of the appointment of a successor Representative,
each of Buyer and the Escrow Agent shall be entitled to rely on, and shall be
fully protected in relying on, the power and authority of Representative to act
on behalf of the Sellers.
 
Section 8. Miscellaneous.
 
8.1 Notices. All notices and other communications under this Agreement shall be
in writing and shall be given by personal delivery, nationally recognized
overnight courier or certified mail at the following addresses (or to such other
address as a Party may have specified by notice given to the other Party
pursuant to this provision):
 
If to Buyer:
RumbleOn, Inc.
4521 Sharon Road, Suite 370
Charlotte, NC 28211
Attention: Thomas Aucamp, Corporate Secretary
Email: tom@rumbleon.com
 
With a copy, which shall not constitute notice, to:
 
 
Akerman LLP
350 E. Las Olas Boulevard, Suite 1600
Fort Lauderdale, FL 33301
Attention: Michael Francis
                 Christina C. Russo
Email: michael.francis@akerman.com;
christina.russo@akerman.com
 
If to Representative:
Steven Brewster
250 Bluegrass Dr.
Hendersonville, TN 37075
Email: steve.brewster@wholesalenashville.com

 
 
 
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With a copy, which shall not constitute notice, to:
 
 
Bass, Berry & Sims PLC
150 Third Avenue South, Suite 2800 Nashville, TN 37201
Attention: Allen Overby
                 Taylor Ashley
Email: aoverby@bassberry.com;
tashley@bassberry.com
 
 
 

 
Any such notice or communication shall be deemed to have been received (i) when
delivered, if personally delivered, (ii) on the next Business Day after
dispatch, if sent postage pre-paid by nationally recognized, overnight courier
guaranteeing next Business Day delivery, and (iii) on the fifth (5th) Business
Day following the date on which the piece of mail containing such communication
is posted, if sent by certified mail, postage prepaid, return receipt requested.
Any party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other
parties notice in the manner herein set forth. Notwithstanding the foregoing,
notices addressed to the Escrow Agent shall be effective only upon receipt. If
any notice or other document is required to be delivered to the Escrow Agent and
any other Person, the Escrow Agent may assume without inquiry that notice or
other document was received by such other Person on the date on which it was
received by the Escrow Agent.
 
8.2 Headings. The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
 
8.3 Counterparts. This Agreement may be executed in one or more counterparts
(including by means of electronic mail or facsimile), each of which shall be
deemed an original but all of which together will constitute one and the same
instrument.
 
8.4 Governing Law. This Agreement and any claim, controversy or dispute arising
out of or related to this Agreement, any of the transactions contemplated
hereby, the relationship of the parties, and/or the interpretation and
enforcement of the rights and duties of the parties, whether arising in
contract, tort, equity or otherwise, shall be governed by and construed in
accordance with the internal laws of the state of New York (without giving
effect to any choice or conflict of law provision or rule (whether of the state
of New York or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the state of New York).
 
 
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8.5 Waiver of Jury Trial. BUYER AND REPRESENTATIVE EACH WAIVE THEIR RESPECTIVE
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OR RELATED TO THIS AGREEMENT IN ANY ACTION, PROCEEDING OR OTHER LITIGATION
OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY
AFFILIATE OF ANY OTHER SUCH PARTY, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS OR OTHERWISE. THE PARTIES AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION
SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING,
THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS
WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR
ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION HEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT.
 
8.6 Succession and Assignment. This Agreement shall be binding upon and shall
inure to the benefit of each of the parties hereto and each of their respective
permitted successors and assigns; provided, however, that neither Buyer nor
representative may assign its rights and/or obligations hereunder without the
consent of the other.
 
8.7 Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by the Escrow
Agent, Buyer and Representative. No waiver by any party hereto of any provision
of this Agreement or any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be valid unless the same
shall be in writing and signed by the party making such waiver nor shall such
waiver be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent such occurrence.
 
8.8 Severability. Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.
 
 
8.9 No Third-Party Beneficiaries. Except as expressly provided herein, this
Agreement shall not confer any rights or remedies upon any Person other than the
parties hereto and their respective successors and permitted assigns.
 
8.10 Entire Agreement. This Agreement and the Acquisition Agreements set forth
the entire agreement among the parties hereto relating to the subject matter
hereof and supersede any prior understandings, agreements, or representations by
or among the parties hereto, written or oral, to the extent they relate in any
way to the subject matter hereof.
 
8.11 Cooperation. Representative and Buyer agree to cooperate fully with each
other and the Escrow Agent and to execute and deliver such further documents,
certificates, agreements, stock powers and instruments and to take such other
actions as may be reasonably requested by Buyer, Representative or the Escrow
Agent to carry out the intent and purposes of this Agreement.
 
 
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8.12 Construction.
 
(a) For purposes of this Agreement, whenever the context requires: the singular
number shall include the plural, and vice versa; the masculine gender shall
include the feminine and neutral genders; the feminine gender shall include the
masculine and neutral genders; and the neutral gender shall include masculine
and feminine genders.
 
(b) The parties hereto agree that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be applied
in the construction or interpretation of this Agreement.
 
(c) As used in this Agreement, the words “include” and “including,” and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words “without limitation.”
 
(d) Except as otherwise indicated, all references in this Agreement to
“Sections” and “Schedules” are intended to refer to Sections of this Agreement
and Schedules to this Agreement.
 
[Remainder of page intentionally left blank]
 
 
 
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In Witness Whereof, the parties hereto have duly caused this Agreement to be
executed as of the day and year first above written.
 
BUYER:
 
 
RUMBLEON, INC., a Nevada corporation
 
By: /s/ Marshall Chesrown
Name: Marshall Chesrown

Title: Chief Executive Officer

 
 
REPRESENTATIVE:
 
/s/ Steven Brewster
Steven Brewster
 
 
ESCROW AGENT:
 
CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a New York corporation
 
 
By: /s/ Francis E. Wolf
Name: Francis E. Wolf

Title: Vice President

 
 
 
 
 

 
 
Schedule 1
 
Escrow Agent’s Fees
 
Acceptance fee
 
Waived

 
 
Administration fee, M&A stock escrow, annually
$6,250.00

 
The acceptance fee and administration fee covers all account set-up services,
the review, negotiation and execution of the escrow agent agreement, KYC, OFAC
and USA Patriot Act due diligence, comply with investment instructions, claim
instructions and release instructions, coordinate with exchange agent for
on-going account maintenance and subsequent distributions or additional merger
consideration payments, compliance review, records retention, escheat services
The escrow agent acceptance fee and administration fee is due and payable upon
the effective date of appointment. See assumptions for duration.
 
Claims processing, each claim
$750.00

 
Out-of-pocket expenses
At cost

Out-of-pocket expenses when applicable will be billed at cost at the sole
discretion of Continental Stock Transfer & Trust Company.
 
Extraordinary services
Market rate

Fees for services not specifically covered in this schedule will be billed in
accordance with our prevailing rates for such services.
 
These costs may include, but are not limited to, review of IRS Form W-8IMY for
foreign holders, shareholder presentment status updates, shareholder record
adjustments, electronic copies of shareholder presentments and non-standard
shareholder records.
 
Assumptions
 
This proposal is based upon the following assumptions with respect to the role
of escrow agent. Should any of the assumptions, duties or responsibilities
change, we reserve the right to affirm, modify or rescind this proposal.
 
●
All escrow releases are expected to be completed by April 2020. Beyond this
duration, fees of $450.00/month will be in effect.
●
All funds held by Continental Stock Transfer & Trust Company will be uninvested.
●
ALL FUNDS WILL BE RECEIVED FROM OR DISTRIBUTED TO AN INDIVIDUAL OR A DOMESTIC OR
AN APPROVED FOREIGN ENTITY