Blueprint





  Exhibit 4.1











 



WARRANT TO PURCHASE CLASS B COMMON STOCK


OF



RUMBLEON, INC.

 


ISSUED
ON April 30, 2018

 


VOID
AFTER 5:30 P.M., EASTERN TIME, ON April 30, 2023

 


THIS
WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), AND MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT
COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF
APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE
EXEMPTIONS THEREFROM.

 


FOR
VALUE RECEIVED, RUMBLEON, INC., a Nevada corporation (the
“Company”),
hereby agrees to sell upon the terms and conditions hereinafter set
forth, but no later than 5:30 p.m., Eastern Time, on the Expiration
Date (as hereinafter defined) to Hercules Capital, Inc. or its
registered assigns (the “Holder”), under the terms as
hereinafter set forth, the Applicable
Number of fully paid and non-assessable shares of the
Company’s Class B Common Stock, par value $0.001 per share
(the “Warrant
Shares”), at a per share purchase price equal to $5.50
per share (the “Warrant
Price”), pursuant to this warrant (this
“Warrant”). The
term “Applicable
Number” shall mean 81,818 shares, provided that upon
Lender making an Advance pursuant to the Tranche IV , in each case,
as defined in the Loan and Security Agreement, dated as of the date
hereof (as amended, restated, supplemented or otherwise modified
from time to time, the “Loan
Agreement”), by and among the Company, certain other
borrowers party thereto, the several banks and other financial
institutions or entities from time to time parties to this
Agreement and Hercules Capital, Inc., in its capacity as
administrative agent and collateral agent for lenders, the
Applicable Number shall be 109,091. The number of Warrant Shares to
be so issued and the Warrant Price are subject to adjustment in
certain events as hereinafter set forth. The term
“Class B Common Stock” shall mean, when
used herein, unless the context otherwise requires, the stock and
other securities and property at the time receivable upon the
exercise of this Warrant.

 

1. Definitions

 

a. “Act” has the meaning set forth in
the legend above.

 

b. “Aggregate Exercise Price” has the
meaning set forth in Section 10(c) hereof.

 

c. “Applicable Number” has the meaning
set forth in the preamble hereto.

 

d. “Articles” means the
Company’s Articles of Incorporation, as may be amended from
time to time.

 

e. “Business Day” means a day Monday
through Friday on which banks are generally open for business in
New York City.

 

f. “Buy-In” has the meaning set forth
in Section 6 hereof.

 

g. “Class B Common Stock” has the meaning set
forth in the preamble hereto.

 

h. “Common Stock” means the common
stock of the Company, as defined in the Articles, and including the
Class A Common Stock and the Class B Common Stock.

 

i. “Company” has the meaning set forth
in the preamble hereto.

 

j. “Dilutive Issuance” has the meaning
set forth in Section 7(d) hereof.

 




 








 






 

k. “Excluded Securities”
means:

 

(i) shares of Class B
Common Stock, or options to acquire shares of Class B Common Stock,
issued to directors, officers, employees and consultants of the
Company or any subsidiary pursuant to any qualified or
non-qualified stock option plan or agreement, stock purchase plan
or agreement, stock restriction agreement, employee stock ownership
plan, consultant equity compensation plan or arrangement approved
by the Board of Directors of the Company or an authorized committee
thereof, including any repurchase or stock restriction agreement,
or such other options, issuances, arrangements, agreements or plans
intended principally as a means of providing compensation for
employment or services and approved by the Board of Directors of
the Company;

 

(ii) shares
of Class B Common Stock, or warrants or options to purchase Class B
Common Stock, issued in connection with bona fide acquisitions,
mergers or similar transactions, the terms of which are approved by
the Board of Directors of the Company; and

 

(iii) shares
of Class B Common Stock issued upon exercise or conversion of any
options, warrants or convertible notes of the Company set forth on
the capitalization table set forth on Schedule A hereto.

 

l. “Expiration Date” means April 30,
2023.

 

m. “fair market value” has the meaning
set forth in Section 2(a) hereof.

 

n. “Filing Date” has the meaning set
forth in Section 10(a) hereof.

 

o. “Final Prospectus” has the meaning
set forth in Section 10(f) hereof.

 

p. “Fully-Diluted Basis” means, at any
given time and without duplication, the aggregate number of Common
Stock and Preferred Stock (as such terms are defined in the
Articles) and any other shares of the Company outstanding at such
time plus the aggregate number of Common Stock and Preferred Stock
and any other shares of the Company issuable (subject to
readjustment upon the actual issuance thereof) upon the exercise,
conversion or exchange of any option, right, warrant or convertible
or exchangeable security outstanding at such time.

 

q. “Holder” has the meaning set forth
in the preamble hereto.

 

r. “Indemnified Party” has the meaning
set forth in Section 10(f) hereof.

 

s. “Indemnifying Party” has the
meaning set forth in Section 10(f) hereof.

 

t. “Loan Agreement” has the meaning set forth in the
preamble hereto.

 

u. “Net Issuance” has the meaning set
forth in Section 2(a) hereof.

 

v. “New Issuance” means (A) any
issuance or sale by the Company of any class of shares of the
Company (including the issuance or sale of any shares owned or held
by or for the account of the Company) other than Excluded
Securities, (B) any issuance or sale by the Company of any options,
rights or warrants to subscribe for any class of shares of the
Company other than Excluded Securities, or (C) the issuance or sale
of any securities convertible into or exchangeable for any class of
shares of the Company other than Excluded Securities.

 

w. “New Issuance Price” has the
meaning set forth in Section 7(d) hereof.

 

x. “Penalty Period” has the meaning
set forth in Section 10(c) hereof.

 

y. “Purchase Price” means, with
respect to any exercise of this Warrant, an amount equal to the
Warrant Price as of the relevant time multiplied by the number of
shares of Common Stock requested to be exercised under this Warrant
pursuant to such exercise.

 




 

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z. “Registrable Securities” means the
Warrant Shares; provided, however, that the Warrant
Shares shall only be treated as Registrable Securities if and only
for so long as they (i) have not been disposed of pursuant to a
Registration Statement declared effective by the SEC, (ii) have not
been sold in a transaction exempt from the registration and
prospectus delivery requirements of the Act so that all transfer
restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale or (iii) are held by the
Holder or a permitted transferee pursuant to Section
10(i).

 

aa. “Registration Default” has the
meaning set forth in Section 10(c) hereof.

 

bb. “Registration Expenses” means all
expenses incurred by the Company in complying with Section 10
hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees
and expenses of counsel for the Company, blue sky fees and expenses
and the expense of any special audits incident to or required by
any such registration (but excluding the fees of legal counsel for
the Holder).

 

cc. “Registration Period” has the
meaning set forth in Section 10(d) hereof.

 

dd. “Registration Statement” has the
meaning set forth in Section 10(a) hereof.

 

ee. “Selling Expenses” means all
selling commissions applicable to the sale of Registrable
Securities and all fees and expenses of legal counsel for the
Holder.

 

ff. “Trading Day” means a day on which
the New York Stock Exchange is open for trading.

 

gg. “Trading Market” means any of the
following markets or exchanges on which the Class B Common Stock is
listed or quoted for trading on the date in question: the NYSE
American, LLC, The NASDAQ Capital Market, The NASDAQ Global Market,
The NASDAQ Global Select Market, or the New York Stock Exchange (or
any successors to any of the foregoing).

 

hh. “Transfer Notice” has the meaning
set forth in Section 3(b) hereof.

 

ii. “VWAP” means, for any date, the
price determined by the first of the following clauses that
applies: (a) if the Class B Common Stock is then listed or quoted
on a Trading Market, the daily volume weighted average price of the
Class B Common Stock for such date (or the nearest preceding date)
on the Trading Market on which the Class B Common Stock is then
listed or quoted as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b) if Class B Common Stock is not then listed or quoted
for trading on a Trading Market, the volume weighted average price
of a share of Class B Common Stock for such date (or the nearest
preceding date) on the OTCQB or OTCQX as applicable, (c) if Class B
Common Stock is not then listed or quoted for trading on the OTCQB
or OTCQX and if prices for Class B Common Stock are then reported
in the “Pink Sheets” published by OTC Markets Group,
Inc. (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share
of Class B Common Stock so reported, or (d) in all other cases, the
fair market value of the Class B Common Stock as determined by an
independent appraiser selected in good faith by the Holder and
reasonably acceptable to the Company, the fees and expenses of
which shall be paid by the Company.

 

jj. “Warrant” means this Warrant and
any subsequent Warrant issued in accordance with the terms
hereof.

 

kk. “Warrant Price” has the meaning set forth in the
preamble hereto.

 

ll. “Warrant Register” has the meaning
set forth in Section 9(c) hereof.

 

mm. “Warrant Share Delivery Date” has
the meaning set forth in Section 6 hereof.

 

nn. “Warrant Shares” means has the
meaning set forth in the preamble hereto.

 




 

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2. Exercise of
Warrant.

 

a. The Holder or its
assignee may exercise this Warrant according to its terms by
completing the subscription form attached hereto and surrendering
this Warrant to the Company at the address set forth in Section 14,
accompanied by payment in full of the Purchase Price, as specified
in the subscription form, or as otherwise provided in this Warrant,
prior to 5:30 p.m., Eastern Time on the Expiration Date. Payment of
the purchase price may be made (i) in cash or certified check or by
bank draft in lawful money of the United States of America or (ii)
in accordance with the net issuance formula below
(“Net
Issuance”).

 


If the
Holder elects the Net Issuance method of payment, then the Company
shall issue to Holder upon exercise such number of shares of Class
B Common Stock determined in accordance with the following
formula:

 


  X=Y(A-B)


A


 


Where X
= the number of shares of Class B Common Stock to be issued to the
Holder;

 


Y = the
number of shares of Class B Common Stock with respect to which the
Holder is exercising its rights under this Warrant;

 


A = the
fair market value of one (1) share of Class B Common Stock on the
date of exercise; and

 


B = the
Warrant Price.

 


For
purposes of the above calculation, “fair market value” shall
mean:

 



(i) 

if the Class B
Common Stock is listed or traded on the NASDAQ stock market or any
United States securities exchange or quoted on any securities
quotation service operated by NASDAQ (including the OTC Bulletin
Board), the twenty day volume weighted average trading price for
the twenty Trading Days ending on the second Trading Day prior to
the date of exercise; or





 



(ii) 

if at any time the
Class B Common Stock is not listed or traded on any United States
stock exchange or quoted on any securities quotation service
operated by NASDAQ, the fair market value determined in good faith
by the Board of Directors of the Company and approved in good faith
by the Holder. In the event that the Holder does not accept the
valuation determined by the board of directors of the Company, then
the Company and the Holder shall, in good faith, select an
independent valuation firm mutually acceptable to each of them to
conduct a valuation of the price of a Warrant Share. The Holder may
elect, in its sole discretion, to receive the number of shares of
Class B Common Stock issuable to it upon exercise of this Warrant
calculated using the fair market value as determined in good faith
by the Board of Directors of the Company. Upon the determination of
the independent valuation firm, the Company and the Holder will
make adjustments to the issuance of Class B Common Stock based on
the determination of such independent valuation firm. The
determination of such independent valuation firm shall be
conclusive, absent manifest error, as between the Company and the
Holder for purposes herein. The Company shall pay all costs and
expenses associated with the engagement of the independent
valuation firm; provided that a valuation is
not required more than once in any given twelve (12) consecutive
month period. If at any time there will be more than one Holder,
then any determination of the fair market value, made with respect
to a Holder, shall apply to all the Holders, unless any party
proves that a material change in the valuation of the Company has
occurred since the valuation was determined.





 




 

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b. This Warrant may be
exercised in whole or in part so long as any exercise in part
hereof would not involve the issuance of fractional shares of
Warrant Shares. If exercised in part, the Company shall deliver to
the Holder a new Warrant, identical in form, in the name of the
Holder, evidencing the right to purchase the number of Warrant
Shares as to which this Warrant has not been exercised, which new
Warrant shall be signed by the Chairman, Chief Executive Officer or
President and the Secretary or Assistant Secretary of the
Company.

 

c. No fractional
shares or scrip representing fractional shares shall be issued upon
the exercise of this Warrant. The Company shall pay cash in lieu of
fractional shares with respect to the Warrants based upon the fair
market value of such fractional shares of Class B Common Stock
(which, for purposes of this Section 2(c), shall be the closing
price of such shares on the exchange or market on which the Class B
Common Stock is then traded) at the time of exercise of this
Warrant.

 

3. Disposition of Warrant Shares and
Warrant.

 

a. The Holder hereby
acknowledges that (i) this Warrant and any Warrant Shares purchased
pursuant hereto are, as of the date hereof, not registered: (A)
under the Act on the ground that the issuance of this Warrant is
exempt from registration under Section 4(2) of the Act as not
involving any public offering or (B) under any applicable state
securities law because the issuance of this Warrant does not
involve any public offering and (ii) the Company’s reliance
on the Section 4(2) exemption of the Act and under applicable state
securities laws is predicated in part on the representations hereby
made to the Company by the Holder. The Holder represents and
warrants that it is (i) an “accredited investor” within
the meaning of Rule 501(a) of Regulation D under the Securities
Act, (ii) (A) familiar with the business and affairs of the Company
and (B) knowledgeable and experienced in financial and business
matters to the extent that such Holder is capable of evaluating the
merits and risks of an investment in the Warrant and the Warrant
Shares, and (iii) acquiring this Warrant and will acquire the
Warrant Shares for investment for its own account, with no present
intention of dividing his, her or its participation with others or
reselling or otherwise distributing the same such that Holder may
be deemed an “underwriter” as such term is defined
under the Securities Act of 1933, as amended.

 

b. Subject to
compliance with applicable federal and state securities laws and
the immediately following sentence, and if such intended transferee
is not an affiliate of the Holder and the intended transferee
provides a duly executed written confirmation that the
representations and warranties in Section 3(a) of this Warrant are
true and correct as to such intended transferee, this Warrant and
all rights hereunder are transferable, in whole or in part, without
charge to the Holder (except for transfer taxes) upon surrender of
this Warrant properly endorsed. The Holder hereby agrees that it
will not sell or transfer all or any part of this Warrant and/or
Warrant Shares unless and until it shall first have given notice to
the Company describing such sale or transfer and, if requested by
the Company in writing, furnished to the Company either (i) an
opinion, reasonably satisfactory to counsel for the Company, of
counsel (skilled in securities matters, selected by the Holder and
reasonably satisfactory to the Company) to the effect that the
proposed sale or transfer may be made without registration under
the Act and without registration or qualification under any state
law, or (ii) an interpretative letter from the Securities and
Exchange Commission to the effect that no enforcement action will
be recommended if the proposed sale or transfer is made without
registration under the Act. Each taker and holder of this Warrant,
by taking or holding the same, consents and agrees that this
Warrant, when endorsed in blank, shall be deemed negotiable subject
to the transfer restrictions provided for herein, and that the
holder hereof, when this Warrant shall have been so endorsed and
its transfer recorded on the Company’s books, shall be
treated by the Company and all other persons dealing with this
Warrant as the absolute owner hereof for any purpose and as the
person entitled to exercise the rights represented by this Warrant
and, notwithstanding any other provision of this Warrant to the
contrary, shall be the Holder as referred to in this
Warrant.

 


The
proper transfer of this Warrant shall be recorded in the registry
referred to in Section 9(c) upon receipt by the Company of a notice
of transfer in the form attached hereto as Exhibit II (the
“Transfer
Notice”), at its principal offices and the payment to
the Company of all transfer taxes and other governmental charges
imposed on such transfer. Until the Company receives such Transfer
Notice, the Company may treat the registered owner hereof as the
owner for all purposes.

 




 

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c. If, at the time of
issuance of the shares issuable upon exercise of this Warrant, no
Registration Statement is in effect with respect to such shares
under applicable provisions of the Act, the Company may at its
election require that the Holder provide the Company with written
reconfirmation of the Holder’s investment intent and that any
stock certificate delivered to the Holder of a surrendered Warrant
shall bear legends reading substantially as follows:

 


“THE SHARES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THIS CERTIFICATE
THAT REGISTRATION IS NOT REQUIRED UNDER SAID
ACT.”

 


In
addition, so long as the foregoing legend may remain on any stock
certificate delivered to the Holder, the Company may maintain
appropriate “stop transfer” orders with respect to such
certificates and the shares represented thereby on its books and
records and with those to whom it may delegate registrar and
transfer functions.

 

4. Reservation of Shares. The
outstanding shares of capital stock of the Company as of the issue
date of this Warrant is as set forth on Schedule A hereto. The Company
hereby agrees that at all times there shall be reserved for
issuance upon the exercise of this Warrant such number of shares of
its Class B Common Stock as shall be required for issuance upon
exercise of this Warrant and shall at all times have a sufficient
number of authorized shares so as to permit the issuance of the
shares of Class B Common Stock upon exercise of this Warrant. The
Company further agrees that all Warrant Shares represented by this
Warrant will be duly authorized and will, upon issuance and against
payment of the exercise price, be validly issued, fully paid and
non-assessable.

 

5. Exchange, Transfer or Assignment of
Warrant. This Warrant is exchangeable, without expense, at
the option of the Holder, upon presentation and surrender hereof to
the Company or at the office of its stock transfer agent, if any,
for other Warrants of different denominations, entitling the Holder
or Holders thereof to purchase in the aggregate the same number of
shares of Class B Common Stock purchasable hereunder. Upon
surrender of this Warrant to the Company or at the office of its
stock transfer agent, if any, with funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and
deliver a new Warrant in the name of the assignee named in such
instrument of assignment and this Warrant shall promptly be
canceled.

 

6. Delivery of Stock Certificate Upon
Exercise. Within the third day after the Notice of Exercise
is delivered pursuant to this Warrant (the “Warrant Share Delivery Date”) and
payment of the Warrant Price (which payment shall be deemed to have
occurred when the funds are immediately available to the Company),
if applicable, the Company will cause to be issued in the name of
and delivered to the registered Holder hereof or its assigns, or
such Holder’s nominee or nominees, a certificate or
certificates for the full number of shares of Class B Common Stock
of the Company to which such Holder shall be entitled upon exercise
(and in the case of partial exercise, a Warrant of like tenor for
the unexercised portion remaining subject to exercise prior to the
Expiration Date set forth herein). For all corporate purposes, such
certificate or certificates shall be deemed to have been issued and
such Holder or Holder’s designee to be named therein shall be
deemed to have become a holder of record of such shares of Class B
Common Stock as of the date the duly executed exercise form
pursuant to this Warrant, together with the full payment of the
Warrant Price, is received by the Company as aforesaid. No fraction
of a share or scrip certificate for such fraction shall be issued
upon exercise of this Warrant; in lieu thereof, the Company will
pay or cause to be paid to such Holder cash equal to a like
fraction at the prevailing fair market price for such share as
determined in good faith by the Company. If the Company fails for
any reason to deliver to the Holder the Warrant Shares subject to a
Notice of Exercise by the second Trading Day following the Warrant
Share Delivery Date, the Company shall pay to the Holder, in cash,
as liquidated damages and not as a penalty, for each $1,000 of
Warrant Shares subject to such exercise (based on the VWAP of the
Class B Common Stock on the date of the applicable Notice of
Exercise), $10 per Trading Day (increasing to $20 per Trading Day
on the fifth Trading Day after such liquidated damages begin to
accrue) for each Trading Day after the second Trading Day following
such Warrant Share Delivery Date until such Warrant Shares are
delivered or Holder rescinds such exercise. In addition, if the
Company fails to cause its transfer agent to transmit to the Holder
the Warrant Shares pursuant to an exercise on or before the second
Trading Day following the Warrant Share Delivery Date, and if after
such date the Holder is required by its broker to purchase (in an
open market transaction or otherwise) or the Holder’s
brokerage firm otherwise purchases, shares of Class B Common Stock
to deliver in satisfaction of a sale by the Holder of the Warrant
Shares which the Holder anticipated receiving upon such exercise (a
“Buy-In”), then
the Company shall (A) pay in cash to the Holder the amount, if any,
by which (x) the Holder’s total purchase price (including
brokerage commissions, if any) for the shares of Class B Common
Stock so purchased exceeds (y) the amount obtained by multiplying
(1) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue
times (2) the price at which the sell order giving rise to such
purchase obligation was executed, and (B) at the option of the
Holder, either reinstate the portion of the Warrant and equivalent
number of Warrant Shares for which such exercise was not honored
(in which case such exercise shall be deemed rescinded) or deliver
to the Holder the number of shares of Class B Common Stock that
would have been issued had the Company timely complied with its
exercise and delivery obligations hereunder. For example, if the
Holder purchases Class B Common Stock having a total purchase price
of $11,000 to cover a Buy-In with respect to an attempted exercise
of shares of Class B Common Stock with an aggregate sale price
giving rise to such purchase obligation of $10,000, under clause
(A) of the immediately preceding sentence the Company shall be
required to pay the Holder $1,000. The Holder shall provide the
Company written notice indicating the amounts payable to the Holder
in respect of the Buy-In and, upon request of the Company, evidence
of the amount of such loss. Nothing herein shall limit a
Holder’s right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver shares of
Class B Common Stock upon exercise of the Warrant as required
pursuant to the terms hereof.

 




 

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7. Adjustment of Warrant Price and Number
of Warrant Shares. The number of Warrant Shares purchasable
upon the exercise of this Warrant and the Warrant Price shall be
subject to adjustment as follows:

 

a. Recapitalization, Reclassification and
Succession. If any recapitalization of the Company or
reclassification of its Common Stock or any merger or consolidation
of the Company into or with a corporation or other business entity,
or the sale or transfer of all or substantially all of the
Company’s assets or of any successor corporation’s
assets to any other corporation or business entity (any such
corporation or other business entity being included within the
meaning of the term “successor corporation”) shall be
effected, at any time while this Warrant remains outstanding and
unexpired, then, as a condition of such recapitalization,
reclassification, merger, consolidation, sale or transfer, lawful
and adequate provision shall be made whereby the Holder of this
Warrant thereafter shall have the right to receive upon the
exercise hereof as provided in Section 2 and in lieu of the shares
of Common Stock immediately theretofore issuable upon the exercise
of this Warrant, such shares of capital stock, securities or other
property as may be issued or payable with respect to or in exchange
for a number of outstanding shares of Common Stock equal to the
number of shares of Common Stock immediately theretofore issuable
upon the exercise of this Warrant had such recapitalization,
reclassification, merger, consolidation, sale or transfer not taken
place, and in each such case, the terms of this Warrant shall be
applicable to the shares of stock or other securities or property
receivable upon the exercise of this Warrant after such
consummation.

 

b. Subdivision or Combination of
Shares. If the Company at any time while this Warrant
remains outstanding and unexpired shall subdivide or combine its
Common Stock, the number of Warrant Shares purchasable upon
exercise of this Warrant shall be adjusted in accordance with
Section 7(d)(i).

 

c. Stock Dividends and
Distributions. If the Company at any time while this Warrant
is outstanding and unexpired shall issue or pay the holders of its
Common Stock, or take a record of the holders of its Common Stock
for the purpose of entitling them to receive, a dividend payable
in, or other distribution of, Common Stock, then the Warrant Price
shall be adjusted in accordance with Section 7(d)(ii).

 

d. Anti-Dilution.

 

(i) If, at any time
during the one-year period commencing on the date of issuance of
this Warrant, (A) the Company shall make a New Issuance for no
consideration or for a consideration per share less than the
Warrant Price in effect immediately prior to such New Issuance (a
“Dilutive
Issuance”) or (B) the total consideration paid
(including exercise price of any option, right or warrant to
subscribe for any class of shares of the Company or the conversion
price of any security convertible into or exchangeable for any
class of shares of the Company) (other than an option, right or
warrant that is an Excluded Security) is when issued or is later
adjusted downward to a price that is less than the exercise price
in effect immediately prior to such downward adjustment (such lower
consideration price or adjusted exercise price or conversion price,
the “New Issuance
Price”), then immediately after such Dilutive Issuance
or downward adjustment of such exercise price or conversion price,
the Warrant Price then in effect shall be reduced to an amount
equal to the New Issuance Price. For purposes of this Warrant, if a
part or all of the consideration received by the Company in
connection with a New Issuance consists of property other than
cash, such consideration shall be deemed to have a fair market
value as defined in Section 2(a) above.

 

(ii) If,
at any time after the one-year period commencing on the date of
issuance of this Warrant, the Company makes a Dilutive Issuance,
then, upon such issuance, the Warrant Price shall be reduced to
equal the amount computed using the following formula:

 


A * [(C
+ D)/B]

 


where:

 


A   =   the
Warrant Price in effect immediately prior to the Dilutive
Issuance;


B   =   the
number of shares of Common Stock outstanding immediately after the
New Issuance (calculated on a Fully-Diluted Basis);


 




 

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C   =   the
number of shares of Common Stock outstanding immediately prior to
the New Issuance (calculated on a Fully-Diluted Basis);
and


D  =  the
number of shares of Common Stock that would be issuable for the
total consideration to be received for the New Issuance if the
purchaser paid the Warrant Price in effect immediately prior to the
New Issuance.

 

(iii) Upon
each adjustment in the Warrant Price pursuant to this Section 7,
the number of Warrant Shares purchasable hereunder shall be
adjusted, to the nearest whole share, to the product obtained by
multiplying the number of Warrant Shares purchasable immediately
prior to such adjustment by a fraction, (i) the numerator of which
shall be the Warrant Price immediately prior to such adjustment,
and (ii) the denominator of which shall be the Warrant Price
immediately thereafter.

 

e. Certain Shares Excluded. The
number of shares of Class B Common Stock outstanding at any given
time for purposes of the adjustments set forth in this Section 7
shall exclude any shares then directly or indirectly held in the
treasury of the Company.

 

f. No Impairment. The Company will
not, in any way whatsoever, including by amendment of the Articles,
avoid or seek to avoid the observance or performance of any of the
terms to be observed or performed hereunder, or impair the economic
interest of the Holder, but will at all times in good faith assist
in the carrying out of all of the provisions hereof and in the
taking of all such actions and making of all such adjustments as
may be necessary or appropriate in order to protect the rights and
economic interests of the Holder against impairment.

 

8. Representations,
Warranties And Covenants of the Company.

 

a. Reservation of Common Stock.
The Warrant Shares have been duly and validly reserved and, when
issued in accordance with the provisions of this Warrant, will be
validly issued, fully paid and non-assessable, and will be free of
any taxes, liens, charges or encumbrances of any nature whatsoever;
provided that the
Common Stock issuable pursuant to this Warrant may be subject to
restrictions on transfer under state and/or federal securities
laws. The Company has made available to the Holder true, correct
and complete copies of its Articles and current bylaws. The
issuance of certificates for shares of Common Stock upon exercise
of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof, or other cost incurred by the
Company in connection with such exercise and the related issuance
of shares of Common Stock; provided that the Company shall
not be required to pay any tax that may be payable in respect of
any transfer and the issuance and delivery of any certificate in a
name other than that of the Holder.

 

b. Due Authority. The execution,
delivery and issuance by the Company of this Warrant and the
performance of all obligations of the Company hereunder, including
the issuance to Holder of the Warrant Shares, have been duly
authorized by all necessary corporate action on the part of the
Company. This Warrant constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, or other laws affecting the enforcement of
creditors’ rights in general, and except that the
enforceability of this Warrant is subject to general principles of
equity.

 

c. Consents and Approvals. No
consent or approval of, giving of notice to, registration with, or
taking of any other action in respect of any state, federal or
other governmental authority or agency is required with respect to
the execution, delivery and performance by the Company of its
obligations under this Warrant, except for the filing of notices
pursuant to Regulation D under the Act, and any filing required by
applicable state securities law and any required filings or
notifications regarding the issuance or listing of additional
shares with NASDAQ.

 

d. Exempt Transaction. Subject to
the accuracy of the Holder’s representations in Section 10,
the issuance of the Class B Common Stock upon exercise of this
Warrant will constitute a transaction exempt from (i) the
registration requirements of Section 5 of the Act and (ii) the
qualification requirements of the applicable state securities
laws.

 




 

8








 






 

e. Compliance with Rule 144. If
the Holder proposes to sell Class B Common Stock issuable upon the
exercise of this Warrant and in compliance with Rule 144, then,
upon Holder’s written request to the Company, the Company
shall furnish to the Holder, within ten days after receipt of such
request, a written statement confirming the Company’s
compliance with the filing requirements of the SEC as set forth in
such Rule, as such Rule may be amended from time to
time.

 

9. Notice To Holders.

 

a. Notice of Record Date. In
case:

 

(i) the Company shall
take a record of the holders of its Common Stock (or other stock or
securities at the time receivable upon the exercise of this
Warrant) for the purpose of entitling them to receive any dividend
(other than a cash dividend payable out of earned surplus of the
Company) or other distribution, or any right to subscribe for or
purchase any shares of stock of any class or any other
securities;

 

(ii) of
any capital reorganization of the Company, any reclassification of
the capital stock of the Company, any consolidation with or merger
of the Company into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another
corporation; or

 

(iii) of
any voluntary dissolution, liquidation or winding-up of the
Company;

 


then,
and in each such case, the Company will mail or cause to be mailed
to the Holder hereof a notice specifying, as the case may be, (A)
the date on which a record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, or (B) the date
on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to
take place, and the time, if any is to be fixed, as of which the
holders of record of Common Stock (or such stock or securities at
the time receivable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other
stock or securities) for securities or other property deliverable
upon such reorganization, reclassification, consolidation, merger,
conveyance, dissolution or winding-up. Unless otherwise agreed to
by the parties, such notice shall be mailed at least 10 days prior
to the record date therein specified; provided, however, failure to
provide any such notice shall not affect the validity of such
transaction.

 

b. Notice of Adjustment. Whenever
any adjustment shall be made pursuant to Section 7 hereof, the
Company shall promptly notify the Holder of this Warrant of the
event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated and the Warrant
Price and number of Warrant Shares purchasable upon exercise of
this Warrant after giving effect to such adjustment.

 

c. Warrant Register. The Company
shall maintain a registry showing the name and address of the
registered holder of this Warrant (the “Warrant Register”). The Holder may
change such address by giving written notice of the change to the
Company.

 

10. Registration
Rights

 

a. Filing of Registration
Statement. As soon as reasonably practicable, but in no
event later than 90 days after the issue date of this Warrant (such
date of filing is referred to as the “Filing Date”), the Company shall
file a registration statement covering the resale of the
Registrable Securities on a registration statement (the
“Registration
Statement”) with the SEC and effect the registration,
qualifications or compliances (including, without limitation, the
execution of any required undertaking to file post-effective
amendments, appropriate qualifications or exemptions under
applicable blue sky or other state securities laws and appropriate
compliance with applicable securities laws, requirements or
regulations) as promptly as possible after the filing thereof, but
in any event prior to the date that is 180 days after the issue
date of this Warrant. The Registration Statement will be on Form
S-3; provided that
if Form S-3 is not available for use by the Company on the Filing
Date, then the Registration Statement will be on such form as is
then available.

 




 

9








 






 

b. Expenses. All Registration
Expenses incurred in connection with any registration,
qualification, exemption or compliance pursuant to this Section 10
shall be borne by the Company. All Selling Expenses relating to the
sale of securities registered by or on behalf of the Holder shall
be borne by the Holder.

 

c. Registration Defaults. The
Company further agrees that, in the event that the Registration
Statement (i) has not been filed with the SEC within 90 days after
the issue date of this Warrant, (ii) has not been declared
effective by the SEC within 180 days after the issue date of this
Warrant, or (iii) after the Registration Statement is declared
effective by the SEC, is suspended by the Company or ceases to
remain continuously effective as to all Registrable Securities for
which it is required to be effective, other than, in each case,
within the time period(s) permitted by Section 10(g)(ii) (each such
event referred to in clauses (i), (ii) and (iii), (a
“Registration
Default”)), for any thirty-day period (a
“Penalty
Period”) during which the Registration Default remains
uncured (which initial thirty-day period shall commence on the
fifth Business Day after the date of such Registration Default if
such Registration Default has not been cured by such date), the
Company shall pay to the Holder an amount equal to one percent (1%)
of the aggregate Purchase Price due and payable upon full exercise
of the Warrants (the “Aggregate Exercise Price”) for
each Penalty Period during which the Registration Default remains
uncured; provided,
however, that if
the Holder fails to provide the Company with any information that
is required to be provided in the Registration Statement with
respect to the Holder as set forth herein, then the commencement of
the Penalty Period described above shall be extended until five
Business Days following the date of receipt by the Company of such
required information; provided further, that the amount
payable to the Holder hereunder for any partial Penalty Period
shall be prorated for the number of actual days during such Penalty
Period during which a Registration Default remains uncured; and
provided
further, that in no
event shall the Company be required to pay to the Holder pursuant
to this Section 10(c) an aggregate amount that exceeds 10% of the
Aggregate Exercise Price. The Company shall deliver said cash
payment to the Holder by the fifth Business Day after the end of
such Penalty Period. If the Company fails to pay said cash payment
to the Holder in full by the fifth Business Day after the end of
such Penalty Period, the Company will pay interest thereon at a
rate of 10% per annum (or such lesser maximum amount that is
permitted to be paid by applicable law) to the Holder, accruing
daily from the date such liquidated damages are due until such
amounts, plus all such interest thereon, are paid in
full.

 

d. Registration Period Covenants.
In the case of the registration, qualification, exemption or
compliance effected by the Company pursuant to this Warrant, the
Company shall, upon reasonable request, inform the Holder as to the
status of such registration, qualification, exemption and
compliance. At its expense, during the Registration Period, the
Company shall:

 

(i) except for such
times as the Company is permitted hereunder to suspend the use of
the prospectus forming part of the Registration Statement under
Section 10(g)(ii), use its commercially reasonable efforts to keep
such registration, and any qualification, exemption or compliance
under state securities laws that the Company determines to obtain,
continuously effective with respect to the Holder, and to keep such
Registration Statement free of any material misstatements or
omissions, until the earlier of the following: (i) the second
anniversary of the issue date of this Warrant and (ii) the date all
Warrant Shares may be sold under Rule 144 during any 90 day period.
The period of time during which the Company is required hereunder
to keep the Registration Statement effective is referred to herein
as the “Registration
Period;”

 

(ii) advise
the Holders:

 

A. within two Business
Days when the Registration Statement or any amendment thereto has
been filed with the SEC and when the Registration Statement or any
post-effective amendment thereto has become effective;

 

B. within five
Business Days of any request by the SEC for amendments or
supplements to the Registration Statement or the prospectus
included therein or for additional information;

 

C. within five
Business Days of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for such purpose;

 




 

10








 






 

D. within five
Business Days of the receipt by the Company of any notification
with respect to the suspension of the qualification of the
Registrable Securities included therein for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose; and

 

E. within five
Business Days of the occurrence of any event that requires the
making of any changes in the Registration Statement or the
prospectus so that, as of such date, the statements therein are not
misleading and do not omit to state a material fact required to be
stated therein or necessary to make the statements therein (in the
case of the prospectus, in the light of the circumstances under
which they were made) not misleading;

 

(iii) use
its commercially reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of any Registration Statement as
soon as reasonably practicable;

 

(iv) promptly
deliver to the Holder, without charge, as many copies of the
prospectus included in such Registration Statement and any
amendment or supplement thereto as the Holder may reasonably
request in writing; and the Company consents to the use, consistent
with the provisions hereof, of the prospectus or any amendment or
supplement thereto by the Holder of Registrable Securities in
connection with the offering and sale of the Registrable Securities
covered by the prospectus or any amendment or supplement
thereto;

 

(v) if the Holder so
requests in writing, deliver to the Holder, without charge, (i) one
copy of the following documents, other than those documents
available via EDGAR: (A) its annual report to its stockholders, if
any (which annual report shall contain financial statements audited
in accordance with generally accepted accounting principles in the
United States of America by a firm of certified public accountants
of recognized standing), (B) if not included in substance in its
annual report to stockholders, its annual report on Form 10-K (or
similar form), (C) its definitive proxy statement with respect to
its annual meeting of stockholders, (D) each of its quarterly
reports to its stockholders, and, if not included in substance in
its quarterly reports to stockholders, its quarterly report on Form
10-Q (or similar form), and (E) a copy of the full Registration
Statement (the foregoing, in each case, excluding exhibits); and
(ii) if explicitly requested, all exhibits excluded by the
parenthetical to the immediately preceding clause (E);

 

(vi) prior
to any public offering of Registrable Securities pursuant to any
Registration Statement, promptly take such actions as may be
necessary to register or qualify or obtain an exemption for offer
and sale under the securities or blue sky laws of such United
States jurisdictions as any such Holders reasonably request in
writing, provided that the Company shall not for any such purpose
be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to
consent to general service of process in any such jurisdiction, and
do any and all other acts or things reasonably necessary or
advisable to enable the offer and sale in such jurisdictions of the
Registrable Securities covered by such Registration
Statement;

 

(vii) upon
the occurrence of any event contemplated by Section 10(d)(ii)(E)
above, except for such times as the Company is permitted hereunder
to suspend the use of the prospectus forming part of the
Registration Statement, the Company shall use its commercially
reasonable efforts to as soon as reasonably practicable prepare a
post-effective amendment to the Registration Statement or a
supplement to the related prospectus, or file any other required
document so that, as thereafter delivered to purchasers of the
Registrable Securities included therein, the prospectus will not
include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading;

 

(viii) otherwise
use its commercially reasonable efforts to comply in all material
respects with all applicable rules and regulations of the SEC that
could affect the sale of the Registrable Securities;

 

(ix) use
its commercially reasonable efforts to cause all Registrable
Securities to be listed on each securities exchange or market, if
any, on which equity securities issued by the Company have been
listed;

 




 

11








 






 

(x) use its
commercially reasonable efforts to take all other steps necessary
to effect the registration of the Registrable Securities
contemplated hereby and to enable the Holders to sell Registrable
Securities under Rule 144;

 

(xi) provide
to the Holder and its representatives, if requested, the
opportunity to conduct a reasonable inquiry of the Company’s
financial and other records during normal business hours and make
available on reasonable prior notice and during normal business
hours its officers, directors and employees for questions regarding
information that the Holder may reasonably request in order to
fulfill any due diligence obligation on its part; and

 

(xii) permit
a single counsel for the Holder to review the Registration
Statement and all amendments and supplements thereto, at least two
Business Days prior to the filing thereof with the
SEC;

 


provided that, in
the case of clauses (xi) and (xii) above, the Company shall not be
required (A) to delay the filing of the Registration Statement or
any amendment or supplement thereto as a result of any ongoing
diligence inquiry by or on behalf of the Holder or to receive any
comments to the Registration Statement or any amendment or
supplement thereto by or on behalf of the Holder if such inquiry or
comments would require or result in a delay in the filing of such
Registration Statement, amendment or supplement, as the case may
be, or (B) to provide, and shall not provide, the Holder or its
representatives with material, non-public information unless the
Holder agrees to receive such information and enters into a written
confidentiality agreement with the Company in a form reasonably
acceptable to the Company.

 

e. Certain Limitations. The Holder
shall have no right to take any action to restrain, enjoin or
otherwise delay any registration pursuant to Section 10 hereof as a
result of any controversy that may arise with respect to the
interpretation or implementation of the Warrants.

 

f. Indemnity. To the extent
permitted by law, the Company shall indemnify the Holder and each
person controlling the Holder within the meaning of Section 15 of
the Act, with respect to which any registration that has been
effected pursuant to this Section 10, against all claims, losses,
damages and liabilities (or action in respect thereof), including
any of the foregoing incurred in settlement of any litigation,
commenced or threatened (subject to Section 10(f)(iii) below),
arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in the Registration
Statement, prospectus, any amendment or supplement thereof, or
other document incident to any such registration, qualification or
compliance or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, in light of the
circumstances in which they were made, or any violation by the
Company of any rule or regulation promulgated by the Act applicable
to the Company and relating to any action or inaction required of
the Company in connection with any such registration, qualification
or compliance, and will reimburse the Holder and each person
controlling the Holder, for reasonable legal and other
out-of-pocket expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability
or action as incurred; provided that the Company will
not be liable in any such case to the extent that any untrue
statement or omission or allegation thereof is made in reliance
upon and in conformity with written information furnished to the
Company by or on behalf of the Holder for use in preparation of
such Registration Statement, prospectus, amendment or supplement;
provided
further that the
Company will not be liable in any such case where the claim, loss,
damage or liability arises out of or is related to the failure of
the Holder to comply with the covenants and agreements contained in
this Warrant respecting sales of Registrable Securities, and except
that the foregoing indemnity agreement is subject to the condition
that, insofar as it relates to any such untrue statement or alleged
untrue statement or omission or alleged omission made in the
preliminary prospectus but eliminated or remedied in the amended
prospectus on file with the SEC at the time the Registration
Statement becomes effective or in the amended prospectus filed with
the SEC pursuant to Rule 424(b) or in the prospectus subject to
completion under Rule 434 of the Act, which together meet the
requirements of Section 10(a) of the Act (the “Final Prospectus”), such indemnity
shall not inure to the benefit of the Holder or any such
controlling person, if a copy of the Final Prospectus furnished by
the Company to the Holder for delivery was not furnished to the
person or entity asserting the loss, liability, claim or damage at
or prior to the time such furnishing is required by the Act and the
Final Prospectus would have cured the defect giving rise to such
loss, liability, claim or damage.

 




 

12








 






 

(i) The Holder will
severally, and not jointly, indemnify the Company, each of its
directors and officers, and each person who controls the Company
within the meaning of Section 15 of the Act, against all claims,
losses, damages and liabilities (or actions in respect thereof),
including any of the foregoing incurred in settlement of any
litigation, commenced or threatened (subject to Section 10(f)(iii)
below), arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in the Registration
Statement, prospectus, or any amendment or supplement thereof,
incident to any such registration, or based on any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in light of the circumstances in which they were made,
and will reimburse the Company, such directors and officers, and
each person controlling the Company for reasonable legal and any
other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability or action as
incurred, in each case to the extent, but only to the extent, that
such untrue statement or omission or allegation thereof is made in
reliance upon and in conformity with written information furnished
to the Company by or on behalf of the Holder for use in preparation
of the Registration Statement, prospectus, amendment or supplement;
provided that the
indemnity shall not apply to the extent that such claim, loss,
damage or liability results from the fact that a current copy of
the prospectus was not made available to the person or entity
asserting the loss, liability, claim or damage at or prior to the
time such furnishing is required by the Act and the Final
Prospectus would have cured the defect giving rise to such loss,
claim, damage or liability. Notwithstanding the foregoing, the
Holder’s aggregate liability pursuant to this subsection (b)
shall be limited to the net amount received by the Holder from the
sale of the Registrable Securities giving rise to such claims,
losses, damages and liabilities (and actions in respect
thereof).

 

(ii) Each
party entitled to indemnification under this Section 10(f) (the
“Indemnified
Party”) shall give notice to the party required to
provide indemnification (the “Indemnifying Party”) promptly
after such Indemnified Party has actual knowledge of any claim as
to which indemnity may be sought, and shall permit the Indemnifying
Party (at its expense) to assume the defense of any such claim or
any litigation resulting therefrom; provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose
approval shall not unreasonably be withheld or delayed), and the
Indemnified Party may participate in such defense at such
Indemnified Party’s expense; provided further that the failure of any
Indemnified Party to give notice as provided herein shall not
relieve the Indemnifying Party of its obligations under this
Warrant, unless such failure is materially prejudicial to the
Indemnifying Party in defending such claim or litigation. An
Indemnifying Party shall not be liable for any settlement of an
action or claim effected without its written consent (which consent
will not be unreasonably withheld or delayed). No Indemnifying
Party, in its defense of any such claim or litigation, shall,
except with the consent (such consent not to be unreasonably
withheld or delayed) of the Indemnified Party consent to entry of
any judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation.

 

(iii) If
the indemnification provided for in this Section 10(f) is held by a
court of competent jurisdiction to be unavailable to an Indemnified
Party or is insufficient to hold such Indemnified Party harmless
with respect to any loss, liability, claim, damage or expense
referred to therein, then the Indemnifying Party shall contribute
to the amount paid or payable by such Indemnified Party as a result
of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on
the other in connection with the statements or omissions that
resulted in such loss, liability, claim, damage or expense as well
as any other relevant equitable considerations. The relative fault
of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the
parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the Holder’s aggregate
liability pursuant to this subsection (iv) shall be limited to the
net amount received by the Holder from the sale of Registrable
Securities giving rise to such loss, liability, claim, damage or
expense (or actions in respect thereof) less all other amounts paid
as damages in respect thereto.

 

g. Additional Covenants and Agreements of
the Holder. The Holder agrees that, upon receipt of any
notice from the Company of the happening of any event requiring the
preparation of a supplement or amendment to a prospectus relating
to Registrable Securities so that, as thereafter delivered to the
Holder, such prospectus shall not contain an untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading, the Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the Registration Statement and
prospectus contemplated by Section 10(a) until its receipt of
copies of the supplemented or amended prospectus from the Company
and, if so directed by the Company, the Holder shall deliver to the
Company all copies, other than permanent file copies then in the
Holder’s possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such
notice.

 

(i) The Holder shall
suspend, upon request of the Company, any disposition of
Registrable Securities pursuant to the Registration Statement and
prospectus contemplated by Section 10(a) during no more than 90
calendar days (which need not be consecutive days) during any
12-month period to the extent that the Board of Directors of the
Company determines in good faith that the sale of Registrable
Securities under the Registration Statement would be reasonably
likely to cause a violation of the Act or Exchange
Act.

 

(ii) As
a condition to the inclusion of its Registrable Securities, the
Holder shall furnish to the Company such information regarding the
Holder and the distribution proposed by the Holder as the Company
may reasonably request in writing, including completing a
Registration Statement questionnaire in the form provided by the
Company, or as shall be required in connection with any
registration referred to in this Section 10.

 

(iii) The
Holder hereby covenants with the Company (A) not to make any sale
of the Registrable Securities without effectively causing the
prospectus delivery requirements under the Act to be satisfied, and
(B) if such Registrable Securities are to be sold by any method or
in any transaction other than on a national securities exchange,
Nasdaq or in the over-the-counter market, in privately negotiated
transactions, or in a combination of such methods, to notify the
Company at least five Business Days prior to the date on which the
Holder first offers to sell any such Registrable
Securities.

 

(iv) The
Holder acknowledges and agrees that the Registrable Securities sold
pursuant to the Registration Statement are not transferable on the
books of the Company unless the stock certificate submitted to the
transfer agent evidencing such Registrable Securities is
accompanied by a certificate reasonably satisfactory to the Company
to the effect that (A) the Registrable Securities have been sold in
accordance with such Registration Statement and (B) the requirement
of delivering a current prospectus has been satisfied.

 

(v) The Holder agrees
not to take any action with respect to any distribution deemed to
be made pursuant to such Registration Statement that would
constitute a violation of Regulation M under the Exchange Act or
any other applicable rule, regulation or law.

 

(vi) At
the end of the Registration Period, the Holders shall discontinue
sales of shares pursuant to such Registration Statement upon
receipt of notice from the Company of its intention to remove from
registration the shares covered by such Registration Statement
which remain unsold, and such Holders shall notify the Company of
the number of shares registered which remain unsold immediately
upon receipt of such notice from the Company.

 

h. Additional Covenants and Agreements of
the Company. With a view to making available to the Holder
the benefits of certain rules and regulations of the SEC that at
any time permit the sale of the Registrable Securities to the
public without registration, so long as the Holder still own
Registrable Securities, the Company shall use its commercially
reasonable efforts to:

 

(i) make and keep
public information available, as those terms are understood and
defined in Rule 144, at all times;

 

(ii) file
with the SEC in a timely manner all reports and other documents
required of the Company under the Exchange Act; and

 

(iii) so
long as the Holder owns any Registrable Securities, make available
or furnish to the Holder, upon any reasonable request, a written
statement by the Company as to its compliance with Rule 144 and of
the Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of the
Company as the Holder may reasonably request in availing itself of
any rule or regulation of the SEC allowing the Holder to sell any
such securities without registration.

 




 

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i. Assignment of Registration
Rights. The rights to cause the Company to register
Registrable Securities granted to the Holder by the Company under
Section 10(a) may be assigned by the Holder in connection with a
transfer by the Holder to a single transferee of the Warrants and
all Registrable Securities, provided, however, that (i) such transfer
complies with all applicable securities laws and with the terms and
provisions of Section 10 of each of the Warrants; (ii) the Holder
gives prior written notice to the Company; and (iii) such
transferee agrees in writing to comply with the terms and
provisions of each of the Warrants, and has provided the Company
with a completed Registration Statement questionnaire in such form
as is reasonably requested by the Company. Except as specifically
permitted by this Section 10(i), the rights of the Holder with
respect to Registrable Securities as set out herein shall not be
transferable to any other person.

 

j. Waiver of Registration Rights.
The rights of the Holder under any provision of this Section 10 may
be waived (either generally or in a particular instance, either
retroactively or prospectively and either for a specified period of
time or indefinitely) or amended by an instrument in writing signed
by the Holders holding not less than a majority of the Registrable
Securities; provided, however, that no consideration
shall be offered or paid to any person to amend or consent to a
waiver or modification of any provision of this Section 10 unless
the same consideration also is offered to all holders of
Registrable Securities.

 

11. Loss, Theft, Destruction or
Mutilation. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership and the loss, theft,
destruction or mutilation of this Warrant and, in the case of loss,
theft or destruction, of indemnity reasonably satisfactory to the
Company and, in the case of mutilation, upon surrender and
cancellation thereof, the Company will execute and deliver a new
Warrant of like tenor dated the date hereof.

 

12. Warrant Holder not a
Stockholder. The Holder of this Warrant, in its capacity as
a warrant holder, shall not be entitled by reason of this Warrant
to any rights whatsoever as a stockholder of the
Company.

 


13. [Reserved]

 

14. Notices. Any notice required or
contemplated by this Warrant shall be deemed to have been duly
given if transmitted by registered or certified mail, return
receipt requested, or nationally recognized overnight delivery
service, to the Company at its principal executive offices at 4251
Sharon Road, Suite 370, Charlotte, NC 28211, Attention: Chief
Executive Officer, or to the Holder at the name and address set
forth in the Warrant Register maintained by the
Company.

 

15. Choice of Law. THIS WARRANT IS
ISSUED UNDER AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW.

 

16. Jurisdiction and Venue. The
Company and the Holder hereby agree that any dispute which may
arise between them arising out of or in connection with this
Warrant shall be adjudicated before a court located in Santa Clara
County, California and they hereby submit to the exclusive
jurisdiction of the federal and state courts of the State of
California located in Santa Clara County with respect to any action
or legal proceeding commenced by any party, and irrevocably waive
any objection they now or hereafter may have respecting the venue
of any such action or proceeding brought in such a court or
respecting the fact that such court is an inconvenient forum,
relating to or arising out of this Warrant or any acts or omissions
relating to the sale of the securities hereunder, and consent to
the service of process in the manner set forth in Section 13 of
this Warrant.

 


 


[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 




 

14








 






 


 


[SIGNATURE
PAGE TO WARRANT TO PURCHASE STOCK]

 


IN
WITNESS WHEREOF, the undersigned has duly executed this Warrant as
of the date set forth above.

 


 


RUMBLEON,
INC.


 


 


By:
/s/ Steven R.
Berrard


       Name:
Steven R. Berrard


       Title:
Chief Financial Officer


 


 


 


 


 


 


 


 




 








 










 



SCHEDULE A

 



CAPITALIZATION

 


	


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.


 


 




 








 










 



EXHIBIT I

 


FORM OF
EXERCISE

 


(to be
executed by the registered holder hereof)

 



1.            

In lieu of
exercising the attached Warrant for cash, certified check or bank
draft, the undersigned hereby elects to effect the Net Issuance
provision of Section 2 of this Warrant and receive ______________
(leave blank if you choose Alternative No.2 below) shares of Class
B Common Stock, par value $0.001 per share (“Class B Common
Stock”), of RumbleON, Inc. issuable pursuant to the terms of
the Warrant. (Initial here if the undersigned elects this
alternative) _____





 



2.            

The undersigned
hereby exercises the right to purchase _____________ (leave blank
if you choose Alternative No.1 above) shares of Class B Common
Stock of RumbleON, Inc., evidenced by the within this Warrant
Certificate for an Warrant Price equal to [$________] per share and
herewith makes payment of the Purchase Price in full of
$_________.





 



3.            

Kindly issue
certificates for shares of Class B Common Stock (and for the
unexercised balance of the Warrants evidenced by the within
Warrant, if any) in accordance with the instructions given
below.





 


Dated:
________________, 20__.


 


 


 


 


Instructions
for registration of stock:


 


 


 


Name
(Please Print)


 



Social Security or
other identifying
Number:                      








 


 



Address:                                                                 






City/State
and Zip Code


 


 


Instructions
for registration of certificate representing


the
unexercised balance of Warrants (if any)


 




 








 






 


Name
(Please Print)



Social Security or
other identifying
Number:                        








 


 



Address:                                                                 






City,
State and Zip Code


 


 


 


 


 


 


 


 


 




 








 










 



EXHIBIT II

 


TRANSFER
NOTICE

 


(To
transfer or assign the foregoing Warrant execute this form and
supply required information. Do not use this form to purchase
shares.)

 


FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby transferred and assigned to

 


 


(Please
Print)


 



whose address
is                                                                                                            






 


 



Dated:                                                                                      






 



Holder’s
Signature:                                                                                      






 



Holder’s
Address:                                             








 


 


 


 



Signature
Guaranteed:                                                                                                            






 


NOTE:
The signature to this Transfer Notice must correspond with the name
as it appears on the face of the Warrant, without alteration or
enlargement or any change whatever. Officers of corporations and
those acting in a fiduciary or other representative capacity should
file proper evidence of authority to assign the foregoing
Warrant.