Document:

Blueprint

 

 

 

 

RumbleOn,
Inc.

 

 

6.75%
Convertible Senior Notes due 2024

Purchase Agreement

 

May 9,
2019

 

 

JMP
Securities LLC

As
Initial Purchaser

600
Montgomery Street, Suite 1100

San
Francisco, CA 94111

 

 

 

Ladies
and Gentlemen:

RumbleOn, Inc., a
Nevada corporation (the “Company”), proposes to issue and
sell to the initial purchaser (the “Initial Purchaser”) $30,000,000
aggregate principal amount of its 6.75% Convertible Senior Notes
due 2024 (the “Securities”). The Securities will
be convertible into cash, shares (the “Underlying Securities”) of Class B
common stock of the Company, par value $0.001 per share (the
“Common Stock”),
or a combination thereof, at the Company’s election. The
Securities will be issued pursuant to an Indenture, to be dated as
of May 14, 2019 (the “Indenture”), between the Company
and Wilmington Trust, N.A., as trustee (the “Trustee”).

 

The
holders of the Securities will be entitled to the benefits of a
registration rights agreement, to be dated as of the Closing Date
(as defined below) and substantially in the form attached hereto as
Exhibit B (the
“Registration Rights
Agreement”), between the Company and the Initial
Purchaser, pursuant to which the Company will agree to file one or
more registration statements with the Commission (as defined below)
providing for the registration under the Securities Act (as defined
below) of the resale of the Securities and the Underlying
Securities. This Agreement, the Registration Rights Agreement and
the Indenture are referred to herein as the “Transaction
Documents.”

 

 

The
Company hereby confirms its agreement with the Initial Purchaser
concerning the purchase and sale of the Securities, as
follows:

 

 

1. Offering Memorandum and Transaction
Information. The Securities will be sold to the Initial
Purchaser without being registered under the Securities Act of
1933, as amended, and the rules and regulations of the Securities
and Exchange Commission (the “Commission”) thereunder (the
“Securities
Act”), in reliance upon an exemption therefrom. The
Company has prepared a preliminary offering memorandum dated May 9,
2019 (the “Preliminary
Offering Memorandum”) and will prepare an offering
memorandum dated the date hereof (the “Offering Memorandum”) setting
forth information concerning the Company and the Securities. Copies
of the Preliminary Offering Memorandum have been, and copies of the
Offering Memorandum will be, delivered by the Company to the
Initial Purchaser pursuant to the terms of this purchase agreement
(this “Agreement”). The Company hereby
confirms that it has authorized the use of the Preliminary Offering
Memorandum, the other Time of Sale Information (as defined below)
and the Offering Memorandum in connection with the offering and
resale of the Securities by the Initial Purchaser in the manner
contemplated by this Agreement. References herein to the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum shall be deemed to refer to and include any
document incorporated by reference therein and any reference to
“amend,” “amendment” or
“supplement” with respect to the Preliminary Offering
Memorandum or the Offering Memorandum shall be deemed to refer to
and include any documents filed after such date and incorporated by
reference therein.

 

                                                                      

1

 

 

 

 

At or
prior to the time when sales of the Securities were first made (the
“Time of Sale”),
the Company had prepared the following information (collectively,
the “Time of Sale
Information”): the Preliminary Offering Memorandum, as
supplemented and amended by the written communications listed on
Annex A
hereto.

 

2.

Purchase and Resale of the
Securities.

 

(a) The Company agrees
to issue and sell the Securities to the Initial Purchaser as
provided in this Agreement, and the Initial Purchaser, on the basis
of the representations, warranties and agreements set forth herein
and subject to the conditions set forth herein, agrees to purchase
from the Company the aggregate principal amount of Securities set
forth in Schedule 1
hereto at a price equal to 93% of the principal amount thereof (the
“Purchase
Price”). The offering and sale of the Securities is
hereinafter referred to as the “Offering.”

 

(b) The Company
understands that the Initial Purchaser intends to offer the
Securities for resale on the terms set forth in the Time of Sale
Information. Initial Purchaser represents, warrants and agrees
that:

(i) it is a qualified
institutional buyer within the meaning of Rule 144A under the
Securities Act (a “QIB”) and an accredited investor
within the meaning of Rule 501(a) of Regulation D under the
Securities Act (“Regulation
D”);

 

(ii) it
has not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Securities by means of
any form of general solicitation or general advertising within the
meaning of Rule 502(c) of Regulation D or in any manner involving a
public offering within the meaning of Section 4(a)(2) of the
Securities Act; and

 

 

(iii) it
has not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Securities as part of
their initial offering, except to persons whom it reasonably
believes to be QIBs in transactions pursuant to Rule 144A under the
Securities Act (“Rule
144A”) and in connection with each such sale, it has
taken or will take reasonable steps to ensure that the purchaser of
the Securities is aware that such sale is being made in reliance on
Rule 144A.

 

(c) Initial Purchaser
acknowledges and agrees that the Company and, for purposes of the
“no registration” opinions to be delivered to the
Initial Purchaser pursuant to Sections 6(f) and 6(g), counsels for the Company
and counsel for the Initial Purchaser, respectively, may rely upon
the accuracy of the representations and warranties of the Initial
Purchaser, and compliance by the Initial Purchaser with its
agreements, contained in paragraph (c) above, and the Initial
Purchaser hereby consents to such reliance.

 

(d) The Company
acknowledges and agrees that the Initial Purchaser may offer and
sell Securities to or through any affiliate of the Initial
Purchaser and that any such affiliate may offer and sell Securities
purchased by it to or through the Initial Purchaser.

 

(e) Payment for the
Securities shall be made by wire transfer in immediately available
funds to the account specified by the Company at the offices of
McGuireWoods LLP, 1251 Avenue of the Americas, 20th Floor, New York,
New York 10020 at 10:00 A.M. New York City time on May 14, 2019, or
at such other time or place on the same or such other date, not
later than the fifth business day thereafter, as the Initial
Purchaser and the Company may agree upon in writing. The time and
date of such payment for the Securities is referred to herein as
the “Closing
Date.”

 

                                                                      

2

 

 

Payment
for the Securities to be purchased on the Closing Date shall be
made against delivery to the nominee of The Depository Trust
Company (“DTC”),
for the accounts of the Initial Purchaser of the Securities to be
purchased on such date of one or more global notes representing the
Securities (collectively, the “Global Note”), with any transfer
taxes payable in connection with the sale of such Securities duly
paid by the Company. The Global Note will be made available for
inspection by the Initial Purchaser at the office of JMP Securities
LLC set forth above not later than 1:00 P.M., New York City time,
on the business day prior to the Closing Date.

 

(f) The Company
acknowledges and agrees that the Initial Purchaser is acting solely
in the capacity of an arm’s length contractual counterparty
to the Company with respect to the offering of Securities
contemplated hereby (including in connection with determining the
terms of the offering) and not as a financial advisor or a
fiduciary to, or an agent of, the Company or any other person.
Additionally, the Initial Purchaser is not advising the Company or
any other person as to any legal, tax, investment, accounting or
regulatory matters in any jurisdiction. The Company shall consult
with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and
appraisal of the transactions contemplated hereby, and the Initial
Purchaser shall have no responsibility or liability to the Company
with respect thereto. Any review by the Initial Purchaser of the
Company, the transactions contemplated hereby or other matters
relating to such transactions will be performed solely for the
benefit of the Initial Purchaser and shall not be on behalf of the
Company.

 

 

3. Representations and Warranties of the
Company. The Company represents and warrants to the Initial
Purchaser that:

 

(a) Preliminary Offering Memorandum. The
Preliminary Offering Memorandum, as of its date, did not contain
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; provided that the Company makes
no representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information
relating to the Initial Purchaser furnished to the Company in
writing by the Initial Purchaser expressly for use in any
Preliminary Offering Memorandum, it being understood and agreed
that the only such information furnished by the Initial Purchaser
consists of the information described as such in Section 7(b).

 

(b) Time of Sale Information. The Time of
Sale Information, at the Time of Sale, did not, and at the Closing
Date, will not, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company makes
no representation or warranty with respect to any statements or
omissions made in reliance upon and in conformity with information
relating to the Initial Purchaser furnished to the Company in
writing by the Initial Purchaser expressly for use in such Time of
Sale Information, it being understood and agreed that the only such
information furnished by the Initial Purchaser consists of the
information described as such in Section 7(b) (the
“Initial Purchaser
Information”). No statement of material fact included
in the Offering Memorandum has been omitted from the Time of Sale
Information and no statement of material fact included in the Time
of Sale Information that is required to be included in the Offering
Memorandum has been omitted therefrom.

 

(c) Additional Written Communications.
Other than the Preliminary Offering Memorandum and the Offering
Memorandum, the Company (including its agents and representatives,
other than the Initial Purchaser in its capacity as such) has not
prepared, made, used, authorized, approved or referred to and will
not prepare, make, use, authorize, approve or refer to any
“written communication” (as defined in Rule 405 under
the Securities Act) that constitutes an offer to sell or
solicitation of an offer to buy the Securities (each such
communication by the Company or its agents and representatives
(other than a communication referred to in clauses (i), (ii) and
(iii) below) an “Issuer
Written Communication”) other than (i) the Preliminary
Offering Memorandum, (ii) the Offering Memorandum, (iii) the
documents listed on Annex
A hereto, including a term sheet substantially in the form
of Annex B hereto,
which constitute part of the Time of Sale Information, and (iv)
each electronic road show and any other written communications
approved in writing in advance by the Initial Purchaser. Each such
Issuer Written Communication does not conflict with the information
contained in the Time of Sale Information, and when taken together
with the Time of Sale Information, did not, and at the Closing
Date, will not, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company makes
no representation or warranty with respect to any statements or
omissions made in each such Issuer Written Communication in
reliance upon and in conformity with information relating to the
Initial Purchaser furnished to the Company in writing by the
Initial Purchaser expressly for use in such Issuer Written
Communication, it being understood and agreed that the only such
information furnished by the Initial Purchaser consists of the
Initial Purchaser Information.

 

 

3

 

 

(d) Offering Memorandum. As of the date of
the Offering Memorandum and as of the Closing Date, the Offering
Memorandum does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that the Company makes
no representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information
relating to the Initial Purchaser furnished to the Company in
writing by the Initial Purchaser expressly for use in the Offering
Memorandum, it being understood and agreed that the only such
information furnished by the Initial Purchaser consists of the
Initial Purchaser Information.

 

(e) Incorporated Documents. The documents
incorporated by reference in the Offering Memorandum or the Time of
Sale Information, when they were filed with the Commission
conformed or will conform, as the case may be, in all material
respects to the requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the “Exchange Act”) and such documents
did not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.

 

(f) Distribution of Offering Material by the
Company. The Company and its affiliates have not distributed
and will not distribute, prior to the completion of the Initial
Purchaser’s distribution of the Securities, any written
offering material in connection with the offering and sale of the
Securities other than the Preliminary Offering Memorandum, Time of
Sale Information and Offering Memorandum.

(g) Authorization of the Transaction
Documents. The Transaction Documents have been duly
authorized by the Company and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors’ rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).

 

(h) Authorization of the Securities. The
Company has all requisite corporate power and authority to execute,
issue, sell and perform its obligations under the Securities. The
Securities have been duly authorized and, at the Closing Date, will
have been duly executed by the Company and, when authenticated,
issued and delivered in the manner provided for in the Indenture
and delivered against payment of the Purchase Price therefor as
provided in this Agreement, will constitute valid and binding
obligations of the Company entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their
terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors’ rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and will be in the
form contemplated by, and entitled to the benefits of, the
Indenture.

 

(i) Authorization of the Underlying
Securities. Upon issuance and delivery of the Securities in
accordance with this Agreement and the Indenture, the Securities
will be convertible at the option of the holder thereof into cash,
shares of the Underlying Securities or a combination thereof, in
accordance the terms of the Securities and the Indenture; the
Underlying Securities (assuming physical settlement and the maximum
conversion rate under any “make-whole” adjustment
applies) reserved for issuance upon conversion of the Securities
have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the
Securities and the Indenture, will be validly issued, fully paid
and non assessable, no holder of the Underlying Securities will be
subject to personal liability by reason of being such a holder and
the issuance of the Underlying Securities will not be subject to
any preemptive right, right of first refusal or other similar
rights of any securityholder of the Company or any other
person.

 

(j) Description of Securities. The
Securities and Indenture conform in all material respects to the
description thereof contained in the sections of the Time of Sale
Information and the Offering Memorandum titled “Description
of notes.”

 

(k) Rule 144A Eligibility. On the Closing
Date, the Securities will not be of the same class as securities
listed on a national securities exchange registered under Section 6
of the Exchange Act or quoted in an automated inter-dealer
quotation system; and each of the Time of Sale Information, as of
the Time of Sale, and the Offering Memorandum, as of its date,
contains or will contain all the information that, if requested by
a prospective purchaser of the Securities, would be required to be
provided to such prospective purchaser pursuant to Rule 144A(d)(4)
under the Securities Act.

 

(l) No Integration. Neither the Company nor
any of its affiliates (as defined in Rule 501(b) of Regulation D)
has, directly or through any agent, sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act), that is or will be
integrated with the sale of the Securities in a manner that would
require registration of the Securities under the Securities
Act.

 

                                                                      

4

 

 

(m) No General Solicitation or Directed Selling
Efforts. None of the Company or any of its affiliates or any
other person acting on its or their behalf (other than the Initial
Purchaser, as to which no representation is made) has (i) solicited
offers for, or offered or sold, the Securities by means of any form
of general solicitation or general advertising within the meaning
of Rule 502(c) of Regulation D or in any manner involving a public
offering within the meaning of Section 4(a)(2) of the Securities
Act or (ii) engaged in any directed selling efforts within the
meaning of Regulation S under the Securities Act
(“Regulation
S”), and all such persons have complied with the
offering restrictions requirement of Regulation S.

 

(n) Securities Law Exemptions. Assuming the
accuracy of the representations and warranties of the Initial
Purchaser contained in Section 2(b) and its compliance
with its agreements set forth therein, it is not necessary, in
connection with the issuance and sale of the Securities to the
Initial Purchaser and the offer, resale and delivery of the
Securities by the Initial Purchaser in the manner contemplated by
this Agreement, the Time of Sale Information and the Offering
Memorandum, to register the offer, issue and sale of the Securities
under the Securities Act or to qualify the Indenture under the
Trust Indenture Act.

 

(o) Regulations. The disclosures in the
Preliminary Offering Memorandum and the Offering Memorandum
concerning the effects of federal, state, local and all foreign
regulation on the Offering and the Company’s business as
currently contemplated are correct in all material respects and no
other such regulations are required to be disclosed in the
Preliminary Offering Memorandum and the Offering Memorandum which
are not so disclosed.

 

(p) No Material Adverse Change. Since the
respective dates as of which information is given in the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum, except as otherwise specifically stated
therein: (i) there has been no material adverse change in the
financial position or results of operations of the Company, nor any
change or development that, singularly or in the aggregate, would
involve a material adverse change or a prospective material adverse
change, in or affecting the condition (financial or otherwise),
results of operations, business, assets or prospects of the Company
(a “Material Adverse
Change”); (ii) there have been no material
transactions entered into by the Company, other than as
contemplated pursuant to this Agreement; and (iii) no officer or
director of the Company has resigned from any position with the
Company.

 

(q) Recent Securities Transactions, etc.
Subsequent to the respective dates as of which information is given
in the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum, and except as may
otherwise be indicated or contemplated herein or disclosed in the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum, the Company has not: (i) issued any
securities or incurred any liability or obligation, direct or
contingent, for borrowed money; or (ii) declared or paid any
dividend or made any other distribution on or in respect to its
capital stock.

 

(r) Independent Accountants. Scharf Pera
& Co., PLCC (the “Auditor”), whose report is filed
with the Commission as part of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2018, is an independent
registered public accounting firm as required by the Securities Act
and the Public Company Accounting Oversight Board. The Auditor has
not, during the periods covered by the financial statements
included or incorporated by reference in the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering
Memorandum, provided to the Company any non-audit services, as such
term is used in Section 10A(g) of the Exchange Act, except as
disclosed in the Company’s proxy statement filed with the
Commission on April 19, 2019.

(s) Financial Statements, etc. The
financial statements, including the notes thereto and supporting
schedules, included or incorporated by reference in the Preliminary
Offering Memorandum, the Time of Sale Information or the Offering
Memorandum, fairly present the financial position and the results
of operations of the Company at the dates and for the periods to
which they apply; and such financial statements have been prepared
in conformity with U.S. generally accepted accounting principles
(“GAAP”),
consistently applied throughout the periods involved (provided that unaudited interim
financial statements are subject to year-end audit adjustments that
are not expected to be material in the aggregate and do not contain
all footnotes required by GAAP). All disclosures contained in the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum regarding “non-GAAP financial
measures” (as such term is defined by the rules and
regulations of the Commission), if any, comply with Regulation G of
the Exchange Act and Item 10 of Regulation S-K of the Securities
Act, to the extent applicable. Each of the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering
Memorandum discloses all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), and
other relationships of the Company with unconsolidated entities or
other persons that may have a material current or future effect on
the Company’s financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures,
capital resources, or significant components of revenues or
expenses. Except as disclosed or incorporated by reference in the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum, (a) the Company has not incurred any
material liabilities or obligations, direct or contingent, or
entered into any material transactions other than in the ordinary
course of business, (b) the Company has not declared or paid any
dividends or made any distribution of any kind with respect to its
capital stock, (c) there has not been any change in the capital
stock of the Company, or, other than in the course of business, any
grants under any stock compensation plan, and (d) there has not
been any material adverse change in the Company’s long-term
or short-term debt.

 

 

5

 

 

(t) Authorized Capital, etc. The Company
had, at the date or dates indicated in the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering
Memorandum, the duly authorized, issued and outstanding
capitalization as set forth therein. Based on the assumptions
stated in the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum, the Company will have on
the Closing Date the adjusted stock capitalization set forth
therein. Except as set forth in, or contemplated by, the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum, at the Time of Sale and on the Closing
Date, there will be no stock options, warrants, or other rights to
purchase or otherwise acquire any authorized, but unissued shares
of the Company’s Class A Common Stock, $0.001 per share (the
“Class A Common
Stock”) or the Class B Common Stock, $0.001 per share
(the “Class B Common
Stock”), or any security convertible or exercisable
into shares of Class A Common Stock or Class B Common Stock, or any
contracts or commitments to issue or sell shares of Class A Common
Stock, Class B Common Stock or any such options, warrants, rights
or convertible securities.

 

(u) Outstanding Securities. All issued and
outstanding securities of the Company issued prior to the
transactions contemplated
by this Agreement have been duly authorized and validly issued and
are fully paid and non-assessable; the holders thereof have no
rights of rescission with respect thereto, and are not subject to
personal liability by reason of being such holders; and none of
such securities were issued in violation of the preemptive rights
of any holders of any security of the Company or similar
contractual rights granted by the Company. The Underlying
Securities conform in all material respects to all statements
relating thereto contained in the Preliminary Offering Memorandum,
the Time of Sale Information and the Offering Memorandum. The
offers and sales of the outstanding shares of Class A Common Stock
and Class B Common Stock were at all relevant times either
registered under the Securities Act and the applicable state
securities or “blue sky” laws or, based in part on the
representations and warranties of the purchasers of such shares of
Class A Common Stock and Class B Common Stock, exempt from such
registration requirements.

 

(v) Registration Rights of Third Parties.
Except as set forth in the Preliminary Offering Memorandum, the
Time of Sale Information and the Offering Memorandum, no holders of
any securities of the Company or any rights exercisable for or
convertible or exchangeable into securities of the Company have the
right to require the Company to (i) register the sale or resale of
any such securities of the Company under the Securities Act (other
than pursuant to the Registration Rights Agreement), (ii) include
any such securities in a registration statement to be filed by the
Company (including any registration statement required to be filed
pursuant to the Registration Rights Agreement, other than the
holders of the Securities) or (iii) register the resale of any
securities of the Company held by such persons, or that such
persons may acquire upon the exercise or conversion of any other
securities of the Company or pursuant to the prospectus as part of
the Concurrent Common Stock Offering.

 

(w) Validity and Binding Effect of
Agreement. This Agreement has been duly and validly
authorized by the Company, and, when duly executed and delivered in
accordance with its terms by the Initial Purchaser, will
constitute, the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors’ rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).

 

(x) No Conflicts, etc. The execution,
delivery and performance by the Company of the Transaction
Documents, the consummation by the Company of the transactions
herein and therein contemplated and the compliance by the Company
with the terms hereof and thereof do not and will not, with or
without the giving of notice or the lapse of time or both: (i)
result in a material breach of, or conflict with any of the terms
and provisions of, or constitute a material default under, or
result in the creation, modification, termination or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company pursuant to the terms of any agreement or instrument to
which the Company is a party; (ii) result in any violation of the
provisions of the Company’s Articles of Incorporation (as the
same may be amended or restated from time to time, the
“Charter”) or
the Company’s bylaws (the “Bylaws”); or (iii) violate any
existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign,
having jurisdiction over the Company or any of its assets or
businesses (each, a “Governmental Entity”) as of the
date hereof.

 

(y) No Defaults; Violations. No material
default exists in the due performance and observance of any term,
covenant or condition of any material license, contract, indenture,
mortgage, deed of trust, note, loan or credit agreement, or any other
agreement or instrument evidencing an obligation for borrowed
money, or any other material agreement or instrument to which the
Company is a party or by which the Company may be bound or to which
any of the properties or assets of the Company is subject. The
Company is not in violation of any term or provision of its Charter
or Bylaws, or in violation of any franchise, license, permit,
applicable law, rule, regulation, judgment or decree of any
Governmental Entity.

 

 

6

 

 

(z) Corporate Power; Licenses;
Consents.

 

(i) Conduct of Business. The Company has
all requisite corporate power and authority, and has all necessary
authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental regulatory officials and
bodies that it needs as of the date hereof to conduct its business
purpose as described in the Preliminary Offering Memorandum, the
Time of Sale Information and the Offering Memorandum.

(ii) Transactions
Contemplated Herein. The Company has all corporate power and
authority to enter into this Agreement and the other Transaction
Documents and to carry out the provisions and conditions hereof and
thereof, and all consents, authorizations, approvals and orders
required in connection therewith have been obtained. No consent,
authorization or order of, and no filing with, any court,
Governmental Entity or other body is required for the valid
issuance, sale and delivery of the Securities and the consummation
of the transactions and agreements contemplated by this Agreement
and the other Transaction Documents and as contemplated by the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum, except with respect to applicable federal
and state securities laws.

 

(aa) Directors,
Officers and Principal Shareholders. To the Company’s
knowledge, all information concerning the Company’s
directors, officers and principal shareholders as described in the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum, as well as in the Lock-Up Agreement (as
defined in Section
3(ii)), is true and correct in all material respects and the
Company has not become aware of any information which would cause
such information to become materially inaccurate and
incorrect.

 

(bb) Litigation;
Governmental Proceedings. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or
governmental proceeding pending or, to the Company’s
knowledge, threatened against, or involving the Company which has
not been disclosed in the Preliminary Offering Memorandum, the Time
of Sale Information and the Offering Memorandum, which if resolved
adversely to the Company is reasonably likely to result in a
Material Adverse Change.

 

(cc) Good
Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of
the State of Nevada as of the date hereof, and is duly qualified to
do business and is in good standing in each other jurisdiction in
which its ownership or lease of property or the conduct of business
requires such qualification, except where the failure to qualify,
singularly or in the aggregate, would not have or reasonably be
expected to result in a Material Adverse Change.

 

(dd) Insurance.
The Company carries or is entitled to the benefits of insurance,
with reputable insurers, in such amounts and covering such risks
which the Company believes are adequate, including, but not limited
to, directors and officers insurance coverage at least equal to
$5,000,000. The Company has no reason to believe that it will not
be able (i) to renew its existing insurance coverage as and when
such policies expire or (ii) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct
its business as now conducted and at a cost that would not result
in a Material Adverse Change.

 

(ee) Foreign
Corrupt Practices Act. The Company or, to the
Company’s knowledge, any director, officer, agent, employee
or affiliate of the Company or any other person acting on behalf of
the Company, has not, directly or indirectly, given or agreed to
give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or
official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was,
is, or may be in a position to help or hinder the business of the
Company (or assist it in connection with any actual or proposed
transaction) that (i) might subject the Company to any damage or
penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, might have had a
Material Adverse Change, or (iii) if not continued in the future,
might adversely affect the assets, business, operations or
prospects of the Company. The Company has taken reasonable steps to
ensure that its accounting controls and procedures are sufficient
to cause the Company to comply in all material respects with the
Foreign Corrupt Practices Act of 1977, as amended.

 

                                                                      

7

 

(ff) Compliance
with OFAC. Neither the Company nor, to the Company’s
knowledge, any director, officer, agent, employee or affiliate of
the Company or any other person acting on behalf of the Company, is
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Department of the Treasury
(“OFAC”), and
the Company will not, directly or indirectly, use the proceeds of
the Offering hereunder, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or
other person or entity, for the purpose of financing the activities
of any person currently subject to any U.S. sanctions administered
by OFAC.

 

(gg) Money
Laundering Laws. The operations of the Company are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any Governmental
Entity (collectively, the “Money Laundering Laws”); and no
action, suit or proceeding by or before any Governmental Entity
involving the Company with respect to the Money Laundering Laws is
pending or, to the best knowledge of the Company,
threatened.

 

(hh) Officers’
Certificate. Any certificate signed by any duly authorized
officer of the Company and delivered to the Initial Purchaser or to
the Initial Purchaser’s counsel shall be deemed a
representation and warranty by the Company to the Initial Purchaser
as to the matters covered thereby.

 

(ii) Lock-Up
Agreements. Schedule 2 hereto contains a
complete and accurate list of the Company’s executive
officers and directors as well as any stockholders deemed to be
affiliates through their ownership of the Company’s Class B
Common Stock or Class A Common Stock (collectively, the
“Lock-Up
Parties”). The Company has caused each of the Lock-Up
Parties to deliver to the Initial Purchaser an executed Lock-Up
Agreement, in the form attached hereto as Exhibit A (the
“Lock-Up
Agreement”), prior to the execution of this
Agreement.

 

(jj) Subsidiaries.
Except as set forth in the Preliminary Offering Memorandum, the
Time of Sale Information and the Offering Memorandum, the Company
has no direct or indirect subsidiaries.

 

(kk) Related
Party Transactions. There are no business relationships or
related party transactions involving the Company or any other
person required to be described in the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering
Memorandum that have not been described as required.

 

(ll) Board
of Directors. The Board of Directors of the Company is
comprised of the persons set forth in the Company’s Annual
Report on Form 10-K filed with the Commission on April 1, 2019 and
incorporated by reference into the Preliminary Offering Memorandum,
the Time of Sale Information and the Offering Memorandum. The
qualifications of the persons serving as board members and the
overall composition of the board comply with the Exchange Act, the
Sarbanes-Oxley Act of 2002 and the rules promulgated thereunder
(the “Sarbanes-Oxley
Act”) applicable to the Company and the listing rules
of the NASDAQ Capital Market. At least one member of the Audit
Committee of the Board of Directors of the Company qualifies as an
“audit committee financial expert,” as such term is
defined under Regulation S-K and the listing rules of the NASDAQ
Capital Market. 

 

(mm) Sarbanes-Oxley
Compliance.

 

(i) Disclosure Controls. The Company has
developed and currently maintains disclosure controls and
procedures that comply with Rule 13a-15 or 15d-15 under the
Exchange Act Regulations, and such controls and procedures are
effective to ensure that all material information concerning the
Company is made known on a timely basis to the individuals
responsible for the preparation of the Company’s Exchange Act
filings and other public disclosure documents.

 

(ii) Compliance.
The Company is, or at the Time of Sale and on the Closing Date will
be, in material compliance with the provisions of the
Sarbanes-Oxley Act applicable to it, and has implemented or will
implement such programs and taken reasonable steps to ensure the
Company’s future compliance (not later than the relevant
statutory and regulatory deadlines therefor) with all of the
material provisions of the Sarbanes-Oxley Act.

 

(nn) Accounting
Controls. The Company maintains systems of “internal
control over financial reporting” (as defined under Rules
13a-15 and 15d-15 under the Exchange Act Regulations) that comply
with the requirements of the Exchange Act and have been designed
by, or under the supervision of, its principal executive and
principal financial officers, or persons performing similar
functions, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP,
including, but not limited to, internal accounting controls
sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as disclosed in the Preliminary
Offering Memorandum, the Time of Sale Information and the Offering
Memorandum, the Company is not aware of any material weaknesses in
its internal controls. The Company’s auditors and the Audit
Committee of the Board of Directors of the Company have been
advised of: (i) all significant deficiencies and material
weaknesses in the design or operation of internal controls over
financial reporting which are known to the Company’s
management and that have adversely affected or are reasonably
likely to adversely affect the Company’ ability to record,
process, summarize and report financial information; and (ii) any
fraud known to the Company’s management, whether or not
material, that involves management or other employees who have a
significant role in the Company’s internal controls over
financial reporting.

 

 

8

 

 

(oo) No
Investment Company Status. The Company is not and, after
giving effect to the Offering and the application of the proceeds
thereof as described in the Preliminary Offering Memorandum, the
Time of Sale Information and the Offering Memorandum, will not be,
required to register as an “investment company,” as
defined in the Investment Company Act of 1940, as
amended.

 

(pp) No
Labor Disputes. No labor dispute with the employees of the
Company exists or, to the knowledge of the Company, is
imminent.

(qq) Intellectual
Property Rights. The Company owns or possesses or has valid
rights to use all patents, trademarks, service marks, trade names,
trademark registrations, service mark registrations, copyrights,
licenses, trade secrets and similar rights (“Intellectual Property Rights”), if
any, necessary for the conduct of the business of the Company as
currently carried on and as described in the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering
Memorandum. To the knowledge of the Company, no action or use by
the Company necessary for the conduct of its business as currently
carried on and as described in the Preliminary Offering Memorandum
and the Offering Memorandum will involve or give rise to any
infringement of, or license or similar fees for, any Intellectual
Property Rights of others. Except as would not reasonably be
expected to result, individually or in the aggregate, in a Material
Adverse Change, the Company has not received any notice alleging
any such infringement, fee or conflict with asserted Intellectual
Property Rights of others. Except as would not reasonably be
expected to result, individually or in the aggregate, in a Material
Adverse Change (A) to the knowledge of the Company, there is no
infringement, misappropriation or violation by third parties of any
of the Intellectual Property Rights owned by the Company; (B) there
is no pending or, to the knowledge of the Company, threatened
action, suit, proceeding or claim by others challenging the rights
of the Company in or to any such Intellectual Property Rights, and
the Company is unaware of any facts which would form a reasonable
basis for any such claim, that would, individually or in the
aggregate, together with any other claims in this Section 3(qq), reasonably be
expected to result in a Material Adverse Change; (C) the
Intellectual Property Rights owned by the Company and, to the
knowledge of the Company, the Intellectual Property Rights licensed
to the Company have not been adjudged by a court of competent
jurisdiction invalid or unenforceable, in whole or in part, and
there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property Rights, and
the Company is unaware of any facts which would form a reasonable
basis for any such claim that would, individually or in the
aggregate, together with any other claims in this Section 3(qq), reasonably be
expected to result in a Material Adverse Change; (D) there is no
pending or, to the Company’s knowledge, threatened action,
suit, proceeding or claim by others that the Company infringes,
misappropriates or otherwise violates any Intellectual Property
Rights or other proprietary rights of others, the Company has not
received any written notice of such claim and the Company is
unaware of any other facts which would form a reasonable basis for
any such claim that would, individually or in the aggregate,
together with any other claims in this Section 3 (rr), reasonably be
expected to result in a Material Adverse Change; and (E) to the
Company’s knowledge, no employee of the Company is in
violation in any material respect of any term of any employment
contract, patent disclosure agreement, invention assignment
agreement, non-competition agreement, non-solicitation agreement,
nondisclosure agreement or any restrictive covenant to or with a
former employer where the basis of such violation relates to such
employee’s employment with the Company, or actions undertaken
by the employee while employed with the Company and could
reasonably be expected to result, individually or in the aggregate,
in a Material Adverse Change. To the Company’s knowledge, all
material trade secrets developed by and belonging to the Company
which have not been patented have been kept confidential. The
Company is not a party to or bound by any options, licenses or
agreements with respect to the Intellectual Property Rights of any
other person or entity that are required to be set forth in the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum and are not described therein. The
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum contain in all material respects the same
description of the matters set forth in the preceding sentence.
None of the technology employed by the Company has been obtained or
is being used by the Company in violation of any contractual
obligation binding on the Company or, to the Company’s
knowledge, any of its officers, directors or employees, or
otherwise in violation of the rights of any persons.

 

(rr) Taxes.
The Company has filed all returns (as hereinafter defined) required
to be filed with taxing authorities prior to the date hereof or has
duly obtained extensions of time for the filing thereof. The
Company has paid all taxes (as hereinafter defined) shown as due on
such returns that were filed and has paid all taxes imposed on or
assessed against the Company. The provisions for taxes payable, if
any, shown on the financial statements accompanying or incorporated
by reference into the Offering Memorandum are sufficient for all
accrued and unpaid taxes, whether or not disputed, and for all
periods to and including the dates of such financial statements.
Except as disclosed in writing to the Initial Purchaser, (i) no
issues have been raised (and are currently pending) by any taxing
authority in connection with any of the returns or taxes asserted
as due from the Company, and (ii) no waivers of statutes of
limitation with respect to the returns or collection of taxes have
been given by or requested from the Company. The term
“taxes” means
all federal, state, local, foreign and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties or
other taxes, fees, assessments or charges of any kind whatever,
together with any interest and any penalties, additions to tax or
additional amounts with respect thereto. The term
“returns” means
all returns, declarations, reports, statements and other documents
required to be filed in respect to taxes.

 

 

9

 

 

(ss) ERISA
Compliance. The Company and any “employee benefit
plan” (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, “ERISA”)) established or maintained
by the Company or its “ERISA Affiliates” (as defined
below) are in compliance in all material respects with ERISA.
“ERISA
Affiliate” means, with respect to the Company, any
member of any group of organizations described in Sections
414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as
amended, and the regulations and published interpretations
thereunder (the “Code”) of which the Company is a
member. No “reportable event” (as defined under ERISA)
has occurred or is reasonably expected to occur with respect to any
“employee benefit plan” established or maintained by
the Company or any of its ERISA Affiliates. No “employee
benefit plan” established or maintained by the Company or any
of its ERISA Affiliates, if such “employee benefit
plan” were terminated, would have any “amount of
unfunded benefit liabilities” (as defined under ERISA).
Neither the Company nor any of its ERISA Affiliates has incurred or
reasonably expects to incur any material liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any
“employee benefit plan” or (ii) Sections 412, 4971,
4975 or 4980B of the Code. Each “employee benefit plan”
established or maintained by the Company or any of its ERISA
Affiliates that is intended to be qualified under Section 401(a) of
the Code is so qualified and, to the knowledge of the Company,
nothing has occurred, whether by action or failure to act, which
would cause the loss of such qualification.

 

(tt) Compliance
with Laws. The Company: (A) is and at all times has been in
compliance with all statutes, rules or regulations applicable to
the conduct of the Company’s business (collectively, the
“Applicable
Laws”), except as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Change; (B) has not received any warning letter, untitled letter or
other correspondence or notice from any other Governmental Entity
alleging or asserting noncompliance with any Applicable Laws or any
licenses, certificates, approvals, clearances, authorizations,
permits and supplements or amendments thereto required by any such
Applicable Laws (collectively, the “Authorizations”); (C) possesses
all material Authorizations and such Authorizations are valid and
in full force and effect and the Company is not in material
violation of any term of any such Authorizations; (D) has not
received notice of any claim, action, suit, proceeding, hearing,
enforcement, investigation, arbitration or other action from any
Governmental Entity or third party alleging that any of the
Company’s activities is in violation of any Applicable Laws
or Authorizations and has no knowledge that any such Governmental
Entity or third party is considering any such claim, litigation,
arbitration, action, suit, investigation or proceeding; (E) has not
received notice that any Governmental Entity has taken, is taking
or intends to take action to limit, suspend, modify or revoke any
Authorizations and has no knowledge that any such governmental
authority is considering such action; and (F) has filed, obtained,
maintained or submitted all material reports, documents, forms,
notices, applications, records, claims, submissions and supplements
or amendments as required by any Applicable Laws or Authorizations
and that all such reports, documents, forms, notices, applications,
records, claims, submissions and supplements or amendments were
complete and correct on the date filed (or were corrected or
supplemented by a subsequent submission).

(uu) Real
Property. Except as described in the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering
Memorandum, the Company has good and marketable title in fee simple
to, or has valid rights to lease or otherwise use, all items of
real or personal property which are material to the business of the
Company, in each case free and clear of all liens, encumbrances,
security interests, claims and defects that could not, singly or in
the aggregate, materially affect the value of such property and do
not interfere with the use made and proposed to be made of such
property by the Company; and all of the leases and subleases
material to the business of the Company, and under which the
Company holds properties described in the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering
Memorandum, are in full force and effect, and the Company has not
received any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company under any
of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company to the continued possession
of the leased or subleased premises under any such lease or
sublease.

 

(vv) Contracts
Affecting Capital. There are no transactions, arrangements
or other relationships between and/or among the Company, any of its
affiliates (as such term is defined in Rule 405 of the Securities
Act Regulations) and any unconsolidated entity, including, but not
limited to, any structured finance, special purpose or limited
purpose entity, that could reasonably be expected to materially
affect the Company’s liquidity or the availability of or
requirements for its capital resources required to be described or
incorporated by reference in the Preliminary Offering Memorandum,
the Time of Sale Information and the Offering Memorandum which have
not been described or incorporated by reference as
required.

 

(ww) Loans
to Directors or Officers. There are no outstanding loans,
advances (except normal advances for business expenses in the
ordinary course of business) or guarantees or indebtedness by the
Company to or for the benefit of any of the officers or directors
of the Company or any of their respective family members, except as
disclosed in the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum.

 

(xx) Smaller
Reporting Company. As of the Time of Sale, the Company was a
“smaller reporting company,” as defined in Rule 12b-2
of the Exchange Act Regulations.

 

 

10

 

 

(yy) Industry
Data. The statistical and market-related data included in
each of the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum are based on or derived
from sources that the Company reasonably and in good faith believes
are reliable and accurate or represent the Company’s good
faith estimates that are made on the basis of data derived from
such sources.

 

(zz) Emerging
Growth Company. From the Time of Sale through the date
hereof, the Company has been and is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act
(an “Emerging Growth
Company”).

 

(aaa) Margin
Securities. The Company owns no “margin
securities” as that term is defined in Regulation U of the
Board of Governors of the Federal Reserve System (the
“Federal Reserve
Board”), and none of the proceeds of Offering will be
used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might
cause any of the shares of Class B Common Stock to be considered a
“purpose credit” within the meanings of Regulation T, U
or X of the Federal Reserve Board.

(bbb) NASDAQ
Marketplace Rules. The Company is, and after giving effect
to the Offering will be, in compliance in all material respects
with all applicable corporate governance requirements set forth in
the NASDAQ Marketplace Rules.

 

(ccc) NASDAQ
Stockholder Approval Rules. No approval of the stockholders
of the Company under the rules and regulations of NASDAQ (including
Rule 5635 of the NASDAQ Marketplace Rules) is required to issue and
deliver the Securities to the Initial Purchaser or the Underlying
Securities upon the conversion thereof.

 

4. Further Agreements of the
Company. The Company covenants and agrees with the Initial
Purchaser that:

 

 

(a) Delivery of Copies. The Company will
deliver to the Initial Purchaser as many copies of the Preliminary
Offering Memorandum, any other Time of Sale Information, any Issuer
Written Communication and the Offering Memorandum (including all
amendments and supplements thereto) as the Initial Purchaser may
reasonably request.

 

(b) Offering Memorandum, Amendments or
Supplements. Before finalizing the Offering Memorandum or
making or distributing any amendment or supplement to any of the
Time of Sale Information or the Offering Memorandum or filing with
the Commission any document that will be incorporated by reference
therein, the Company will furnish to the Initial Purchaser and
counsel for the Initial Purchaser a copy of the proposed Offering
Memorandum or such amendment or supplement or document to be
incorporated by reference therein for review, and will not
distribute any such proposed Offering Memorandum, amendment or
supplement or file any such document with the Commission to which
the Initial Purchaser reasonably objects.

 

(c) Additional Written Communications.
Before making, preparing, using, authorizing, approving or
referring to any Issuer Written Communication, the Company will
furnish to the Initial Purchaser and counsel for the Initial
Purchaser a copy of such written communication for review and will
not make, prepare, use, authorize, approve or refer to any such
written communication to which the Initial Purchaser reasonably
objects.

 

 

11

 

 

(d) Notice to the Initial Purchaser. The
Company will advise the Initial Purchaser promptly, and confirm
such advice in writing, (i) of the issuance by any governmental or
regulatory authority of any order preventing or suspending the use
of any of the Time of Sale Information, any Issuer Written
Communication or the Offering Memorandum or the initiation or
threatening of any proceeding for that purpose; (ii) of the
occurrence or development of any event at any time prior to the
completion of the initial offering of the Securities as a result of
which any of the Time of Sale Information, any Issuer Written
Communication or the Offering Memorandum as then amended or
supplemented would include any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing when
such Time of Sale Information, Issuer Written Communication or the
Offering Memorandum is delivered to a purchaser, not misleading;
and (iii) of the receipt by the Company of any notice with respect
to any suspension of the qualification of the Securities for offer
and sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and the Company will use its
reasonable best efforts to prevent the issuance of any such order
preventing or suspending the use of any of the Time of Sale
Information, any Issuer Written Communication or the Offering
Memorandum or suspending any such qualification of the Securities
and, if any such order is issued, will obtain as soon as possible
the withdrawal thereof.

 

(e) Ongoing Compliance of the Offering Memorandum
and Time of Sale Information. (1) If at any time prior to
the completion of the initial offering of the Securities, (i) any
event or development shall occur or condition shall exist as a
result of which the Offering Memorandum as then amended or
supplemented would include any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing when
the Offering Memorandum is delivered to a purchaser, not misleading
or (ii) it is necessary to amend or supplement the Offering
Memorandum to comply with law, the Company will immediately notify
the Initial Purchaser thereof and forthwith prepare and, subject to
paragraph (b) above, furnish to the Initial Purchaser such
amendments or supplements to the Offering Memorandum (or any
document to be filed with the Commission and incorporated by
reference therein) as may be necessary so that the statements in
the Offering Memorandum as so amended or supplemented (or including
such document to be incorporated by reference therein) will not, in
the light of the circumstances existing when the Offering
Memorandum is delivered to a purchaser, be misleading or so that
the Offering Memorandum will comply with law and (2) if at any time
prior to the Closing Date (i) any event or development shall occur
or condition shall exist as a result of which any of the Time of
Sale Information as then amended or supplemented would include any
untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading or (ii) it is necessary to amend or supplement any of
the Time of Sale Information to comply with law, the Company will
immediately notify the Initial Purchaser thereof and forthwith
prepare and, subject to paragraph (b) above, furnish to the Initial
Purchaser such amendments or supplements to any of the Time of Sale
Information (or any document to be filed with the Commission and
incorporated by reference therein) as may be necessary so that the
statements in any of the Time of Sale Information as so amended or
supplemented will not, in light of the circumstances under which
they were made, be misleading.

 

(f) Blue Sky Compliance. The Company will
qualify the Securities for offer and sale under the securities or
“blue sky” laws of such jurisdictions as the Initial
Purchaser shall reasonably request and will continue such
qualifications in effect so long as required for the offering and
resale of the Securities; provided that the Company shall
not be required to (i) qualify as a foreign corporation or other
entity or as a dealer in securities in any such jurisdiction where
it would not otherwise be required to so qualify, (ii) file any
general consent to service of process in any such jurisdiction or
(iii) subject itself to taxation in any such jurisdiction if it is
not otherwise so subject.

 

(g) Clear Market. For a period of 90 days
after the date of the offering of the Securities, the Company will
not (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, or file with, or
submit to, the Commission a registration statement under the
Securities Act relating to, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for
Common Stock (other than pursuant to the Registration Rights
Agreement), or publicly disclose the intention to make any offer,
sale, pledge, disposition, submission or filing (except for
registration statements on Form S-4 or Form S-8, the registration
statement required pursuant to the Registration Rights Agreement
and a registration statement on Form S-3 registering the sale by us
of shares of Common Stock or other securities, provided we are not permitted
to make any sales pursuant thereto until August 8, 2019, or a
registration statement on Form S-3 registering (y) the resale by
the purchasers of our Class B Common Stock in the Concurrent Common
Stock Offering as described in the Time of Sale Information and the
Offering Memorandum (the “Concurrent Common Stock Offering”)
and (z) the resale of 540,358 shares of Common Stock issued or to
be issued by the Company as consideration in connection with the
Company’s purchase of AutoSport, Inc., as described in the
Company’s Annual Report on Form 10-K filed with the SEC on
April 1, 2019), or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of
ownership of the Common Stock or any such other securities, whether
any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in
cash or otherwise. The restrictions contained in this Section 4(g) shall not apply
(i) the Securities to be sold hereunder and any Underlying
Securities issued upon conversion thereof, (ii) the issuance by the
Company of shares of capital stock of the Company upon the exercise
of a stock option or warrant or the conversion or vesting of a
security outstanding on the date hereof, (iii) the issuance by the
Company of equity awards of the Company under any equity
compensation plan of the Company, (iv) the issuance by the Company
of shares of capital stock of the Company or securities convertible
into, exchangeable for or that represent the right to receive
shares of capital stock of the Company in connection with the
acquisition by the Company of the securities, business, technology,
property or other assets of another person or entity, (v) the entry
into the purchase agreement related to the Concurrent Common Stock
Offering, (vi) the sale of shares of capital stock of the Company
to cover the payment of exercise prices or the payment of taxes
associated with the exercise or vesting of equity awards under any
equity compensation plan of the Company, (vii) the filing of a
post-effective amendment to the Company’s registration
statements on Form S-3 (Reg. Nos. 333-223425, 333-226514 and
333-228483) and Form S-8 (Reg. Nos. 333-219203, 333-223428 and
333-226440) with the Commission to maintain effectiveness of such
registration statements and (viii) the filing of the registration
statement required pursuant to the Registration Rights Agreement,
provided that in
each of (ii) and (iii) above, the underlying shares of capital
stock of the Company shall be restricted from sale during the
entire Lock-Up Period.

 

 

12

 

 

(h) Use of Proceeds. The Company will apply
the net proceeds from the sale of the Securities as described in
each of the Time of Sale Information and the Offering Memorandum
under the heading “Use of Proceeds”.

 

(i) No Stabilization. The Company will not
take, directly or indirectly, any action designed to or that could
reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Securities and will not take any
action prohibited by Regulation M under the Exchange Act in
connection with the distribution of the Securities contemplated
hereby.

 

(j) Underlying Securities. The Company will
reserve and keep available at all times, free of pre-emptive
rights, shares of Common Stock for the purpose of enabling the
Company to satisfy all obligations to issue the Underlying
Securities upon conversion of the Securities (assuming physical
settlement and the maximum conversion rate under any
“make-whole” adjustment applies). The Company will use
its best efforts to cause the Underlying Securities to be listed on
NASDAQ.

 

(k) Investment Company. The Company is
familiar with the Investment Company Act and the rules and
regulations thereunder, and will in the future conduct its affairs,
in such a manner and will use its commercially reasonable best
efforts to ensure that the Company will not be an “investment
company” within the meaning of the Investment Company Act and
the rules and regulations thereunder.

 

(l) Supplying Information. While the
Securities remain outstanding and are “restricted
securities” within the meaning of Rule 144(a)(3) under the
Securities Act, the Company will, during any period in which the
Company is not subject to and in compliance with Section 13 or
15(d) of the Exchange Act, furnish to holders of the Securities,
prospective purchasers of the Securities designated by such holders
and securities analysts, in each case upon request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.

 

(m) DTC. The Company will assist the
Initial Purchaser in arranging for the Securities to be eligible
for clearance and settlement through DTC.

 

(n) No Resales by the Company. During the
period from the Closing Date until one year after the Closing Date,
the Company will not, and will not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to, resell any of the
Securities that have been acquired by any of them, except for
Securities purchased by the Company or any of its affiliates and
resold in a transaction registered under the Securities
Act.

 

(o) No Integration. Neither the Company nor
any of its affiliates (as defined in Rule 501(b) of Regulation D)
will, directly or through any agent, sell, offer for sale, solicit
offers to buy or otherwise negotiate in respect of, any security
(as defined in the Securities Act), that is or will be integrated
with the sale of the Securities in a manner that would require
registration of the Securities under the Securities
Act.

 

(p) No General Solicitation or Directed Selling
Efforts. None of the Company or any of its affiliates or any
other person acting on its or their behalf (other than the Initial
Purchaser, as to which no covenant is given) will (i) solicit
offers for, or offer or sell, the Securities by means of any form
of general solicitation or general advertising within the meaning
of Rule 502(c) of Regulation D or in any manner involving a public
offering within the meaning of Section 4(a)(2) of the Securities
Act or (ii) engage in any directed selling efforts within the
meaning of Regulation S, and all such persons will comply with the
offering restrictions requirement of Regulation S.

 

                                                                      

13

 

 

(q) Right of Participation. The Company
grants the Initial Purchaser the right of first refusal
(“Right of
Participation”) for a period of time commencing on the
date of this Agreement and ending on February 8, 2021 to act as
sole (or lead, in the Initial Purchase’s sole discretion)
managing underwriter and bookrunner, placement agent and/or
distribution agent, as the case may be, in any direct or indirect
offer to sell, sale, contract to sell, grant of any option to sell
or other disposal of shares of capital stock of the Company or any
securities convertible into or exercisable or exchangeable for
shares of capital stock of the Company, in each case in any
“at-the-market” or continuous equity transaction to the
extent the Company is not contractually prohibited from undertaking
such equity transaction. The Company shall provide written notice
to the Initial Purchaser of the terms of such offering and if the
Initial Purchaser fails to accept in writing any such proposal
within ten (10) days after receipt of such written notice, then the
Initial Purchaser will have no claim or right with respect to any
such offering(s).

 

5. Certain Agreements of the Initial
Purchaser. The Initial Purchaser hereby represents and
agrees that it has not and will not use, authorize use of, refer
to, or participate in the planning for use of, any written
communication that constitutes an offer to sell or the solicitation
of an offer to buy the Securities other than (i) the Preliminary
Offering Memorandum and the Offering Memorandum, (ii) a written
communication that contains no “issuer information” (as
defined in Rule 433(h)(2) under the Securities Act) that was not
included (including through incorporation by reference) in the Time
of Sale Information or the Offering Memorandum, (iii) any written
communication listed on Annex A or prepared pursuant to
Section 4(c) above
(including any electronic road show), (iv) any written
communication prepared by the Initial Purchaser and approved by the
Company in advance in writing or (v) any written communication
relating to or that contains the terms of the Securities and/or
other information that was included (including through
incorporation by reference) in the Time of Sale Information or the
Offering Memorandum.

 

6. Conditions of Initial
Purchaser’s Obligations. The obligation of the Initial
Purchaser to purchase the Securities on the Closing Date as
provided herein is subject to the performance by the Company of its
covenants and other obligations hereunder and to the following
additional conditions:

 

(a) Representations and Warranties. The
representations and warranties of the Company contained herein
shall be true and correct on the date hereof and on and as of the
Closing Date; and the statements of the Company and its officers
made in any certificates delivered pursuant to this Agreement shall
be true and correct on and as of the Closing Date.

 

(b) No Downgrade. Subsequent to the earlier
of (A) the Time of Sale and (B) the execution and delivery of this
Agreement, (i) no downgrading shall have occurred in the rating
accorded any securities or preferred stock issued or guaranteed by
the Company or any of its subsidiaries by any “nationally
recognized statistical rating organization”, as such term is
defined under Section 3(a)(62) under the Exchange Act and (ii) no
such organization shall have publicly announced that it has under
surveillance or review, or has changed its outlook with respect to,
its rating of any such securities or preferred stock issued or
guaranteed by the Company or any of its subsidiaries (other than an
announcement with positive implications of a possible
upgrading).

 

(c) No Material Adverse Change. No event or
condition of a type described in Section 3(p) hereof shall have
occurred or shall exist, which event or condition is not described
in the Time of Sale Information (excluding any amendment or
supplement thereto) and the Offering Memorandum (excluding any
amendment or supplement thereto) and the effect of which in the
judgment of the Initial Purchaser makes it impracticable or
inadvisable to proceed with the offering, sale or delivery of the
Securities on the Closing Date on the terms and in the manner
contemplated by this Agreement, the Time of Sale Information and
the Offering Memorandum.

 

                                                                      

14

 

(d) Officer's Certificate. The Initial
Purchaser shall have received on and as of the Closing Date, a
certificate of the chief financial officer or chief accounting
officer of the Company and one additional senior executive officer
of the Company who is satisfactory to the Initial Purchaser (i)
confirming that such officers have carefully reviewed the Time of
Sale Information and the Offering Memorandum and, to the knowledge
of such officers, the representations set forth in Sections 3(b) and 3(d) hereof are true and
correct, (ii) confirming that the other representations and
warranties of the Company in this Agreement are true and correct
and that the Company has complied with all agreements and satisfied
all conditions on their part to be performed or satisfied hereunder
at or prior to such Closing Date and (iii) to the effect set forth
in paragraphs (b)
and (c)
above.

 

(e) Comfort Letters. (i) On the date of
this Agreement and on the Closing Date, Scharf Pera & Co., PLCC
shall have furnished to the Initial Purchaser, at the request of
the Company, a letter, dated the respective dates of delivery
thereof and addressed to the Initial Purchaser, in form and
substance reasonably satisfactory to the Initial Purchaser,
containing statements and information of the type customarily
included in accountants’ “comfort letters” to
Initial Purchaser with respect to the financial statements and
certain financial information contained or incorporated by
reference in each of the Time of Sale Information and the Offering
Memorandum; provided, that the letters
delivered on the Closing Date shall use a “cut-off”
date no more than three business days prior to such Closing
Date.

(f) Opinion and 10b-5 Statement of Counsel for the
Company. At the request of the Company, (i) Snell &
Wilmer L.L.P., Nevada counsel for the Company, shall have furnished
to the Initial Purchaser their written opinion, dated the Closing
Date, and addressed to the Initial Purchaser, in form and substance
reasonably satisfactory to the Initial Purchaser, and (ii) Akerman
LLP, counsel for the Company, shall have furnished to the Initial
Purchaser their written opinion (which written opinion shall
include a 10b-5 opinion), dated the Closing Date and addressed to
the Initial Purchaser, in form and substance reasonably
satisfactory to the Initial Purchaser.

 

(g) Opinion and 10b-5 Statement of Counsel for the
Initial Purchaser. The Initial Purchaser shall have received
on and as of the Closing Date, a 10b-5 statement of McGuireWoods
LLP, counsel for the Initial Purchaser, with respect to such
matters as the Initial Purchaser may reasonably request, and such
counsel shall have received such documents and information as they
may reasonably request to enable them to pass upon such
matters.

 

(h) No Legal Impediment to Issuance. No
action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any federal,
state or foreign governmental or regulatory authority that would,
as of the Closing Date, prevent the issuance or sale of the
Securities; and no injunction or order of any federal, state or
foreign court shall have been issued that would, as of the Closing
Date, prevent the issuance or sale of the Securities.

 

(i) Good Standing. The Initial Purchaser
shall have received on and as of the Closing Date satisfactory
evidence of the good standing of the Company and its subsidiaries
in their respective jurisdictions of organization and their good
standing in such other jurisdictions as the Initial Purchaser may
reasonably request, in each case in writing or any standard form of
telecommunication from the appropriate governmental authorities of
such jurisdictions.

(j) Exchange Listing. An application for
the listing of the Underlying Securities shall have been submitted
to NASDAQ.

 

(k) Lock-up Agreements. The
“lock-up” agreements, each substantially in the form of
Exhibit A hereto,
between you and the persons and entities listed on Schedule 2 hereto relating to
sales and certain other dispositions of shares of Class A Common
Stock, Class B Common Stock or certain other securities, delivered
to you on or before the date hereof, shall be full force and effect
on the Closing Date.

 

(l) Registration Rights Agreement. The
Registration Rights Agreement, substantially in the form of
Exhibit B hereto,
between the Company and the Initial Purchaser, shall have been duly
executed and delivered by the Company.

 

(m) DTC. The Securities shall be eligible
for clearance and settlement through DTC.

 

(n) Additional Documents. On or prior to
the Closing Date, the Company shall have furnished to the Initial
Purchaser such further certificates and documents as the Initial
Purchaser may reasonably request.

 

 

15

 

 

All
opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance
with the provisions hereof only if they are in form and substance
reasonably satisfactory to counsel for the Initial
Purchaser.

 

7. Indemnification and
Contribution.

 

(a) Indemnification of the Initial
Purchaser. The Company agrees to indemnify and hold harmless
the Initial Purchaser, its affiliates, directors and officers and
each person, if any, who controls the Initial Purchaser within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages
and liabilities (including, without limitation, legal fees and
other expenses incurred in connection with any suit, action or
proceeding or any claim asserted, as such fees and expenses are
incurred) that arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained
in the Preliminary Offering Memorandum, any of the other Time of
Sale Information, any Issuer Written Communication, any road show
as defined in Rule 433(h) under the Securities Act (a
“road show”) or
the Offering Memorandum (or any amendment or supplement thereto) or
any omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, in
each case except insofar as such losses, claims, damages or
liabilities arise out of, or are based upon, any untrue statement
or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to
the Initial Purchaser furnished to the Company in writing by the
Initial Purchaser expressly for use therein, it being understood
and agreed that the only such information furnished by the Initial
Purchaser consists of the Initial Purchaser
Information.

(b) Indemnification of the Company. Initial
Purchaser agrees to indemnify and hold harmless the Company, its
directors, its officers, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the indemnity
set forth in paragraph
(a) above, but only with respect to any losses, claims,
damages or liabilities that arise out of, or are based upon, any
untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with any
information relating to the Initial Purchaser furnished to the
Company in writing by the Initial Purchaser expressly for use in
the Preliminary Offering Memorandum, any of the other Time of Sale
Information (including any of the other Time of Sale Information
that has subsequently been amended), any Issuer Written
Communication, any road show or the Offering Memorandum (or any
amendment or supplement thereto), it being understood and agreed
that the only such information furnished by the Initial Purchaser
consists of the following information in the Offering Memorandum
furnished on behalf of the Initial Purchaser: the information
contained in the second paragraph and the third and fourth
sentences of the third paragraph in the subsection “New Issue
of Notes” and the first sentence of the first paragraph in
the subsection “Price Stabilization and Short Positions;
Purchase of Class B Common Stock” under the caption
“Plan of Distribution.”

 

(c) Notice and Procedures. If any suit,
action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted
against any person in respect of which indemnification may be
sought pursuant to either paragraph (a) or (b) above, such person (the
“Indemnified
Person”) shall promptly notify the person against whom
such indemnification may be sought (the “Indemnifying Person”) in writing;
provided that the
failure to notify the Indemnifying Person shall not relieve it from
any liability that it may have under paragraph (a) or (b) above except to the extent
that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided, further, that the failure to
notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than
under paragraph (a)
or (b) above. If
any such proceeding shall be brought or asserted against an
Indemnified Person and it shall have notified the Indemnifying
Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person (who shall not,
without the consent of the Indemnified Person, be counsel to the
Indemnifying Person) to represent the Indemnified Person and any
others entitled to indemnification pursuant to this Section that
the Indemnifying Person may designate in such proceeding and shall
pay the fees and expenses in such proceeding and shall pay the fees
and expenses of such counsel related to such proceeding, as
incurred. In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall
have mutually agreed to the contrary; (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably
satisfactory to the Indemnified Person; (iii) the Indemnified
Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to
those available to the Indemnifying Person; or (iv) the named
parties in any such proceeding (including any impleaded parties)
include both the Indemnifying Person and the Indemnified Person and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying
Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and
expenses shall be paid or reimbursed as they are incurred. Any such
separate firm for the Initial Purchaser, its affiliates, directors
and officers and any control persons of the Initial Purchaser shall
be designated in writing by the Initial Purchaser and any such
separate firm for the Company, its directors, its officers and any
control persons of the Company shall be designated in writing by
the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent,
but if settled with such consent or if there be a final judgment
for the plaintiff, the Indemnifying Person agrees to indemnify each
Indemnified Person from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an Indemnified Person shall have requested
that an Indemnifying Person reimburse the Indemnified Person for
fees and expenses of counsel as contemplated by this paragraph, the
Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by the
Indemnifying Person of such request and (ii) the Indemnifying
Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement.
No Indemnifying Person shall, without the written consent of the
Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnification could have been
sought hereunder by such Indemnified Person, unless such settlement
(x) includes an unconditional release of such Indemnified Person,
in form and substance reasonably satisfactory to such Indemnified
Person, from all liability on claims that are the subject matter of
such proceeding and (y) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf
of any Indemnified Person.

 

                                                                      

16

 

(d) Contribution. If the indemnification
provided for in paragraphs (a) or (b) above is unavailable to an
Indemnified Person or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying
such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Initial Purchaser, on the other,
from the offering of the Securities or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) but also the relative fault of
the Company, on the one hand, and the Initial Purchaser, on the
other, in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the Initial
Purchaser, on the other, shall be deemed to be in the same
respective proportions as the net proceeds (before deducting
expenses) received by the Company from the sale of the Securities
and the total discounts and commissions received by the Initial
Purchaser in connection therewith, as provided in this Agreement,
bear to the aggregate offering price of the Securities. The
relative fault of the Company, on the one hand, and the Initial
Purchaser, on the other, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by
the Initial Purchaser and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission.

 

(e) Limitation on Liability. The Company
and the Initial Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by
pro rata any method of allocation
that does not take account of the equitable considerations referred
to in paragraph (d) above. The amount paid or payable by an
Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or
other expenses incurred by such Indemnified Person in connection
with any such action or claim. Notwithstanding the provisions of
this Section 7, in
no event shall the Initial Purchaser be required to contribute any
amount in excess of the amount by which the total discounts and
commissions received by the Initial Purchaser with respect to the
offering of the Securities exceeds the amount of any damages that
the Initial Purchaser has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

 

(f) Non-Exclusive Remedies. The remedies
provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be
available to any Indemnified Person at law or in
equity.

 

8. Effectiveness of Agreement.
This Agreement shall become effective as of the date first written
above.

 

9. Termination. This Agreement may
be terminated in the absolute discretion of the Initial Purchaser,
by notice to the Company, if after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally
shall have been suspended or materially limited on or by any of
NYSE or The NASDAQ Stock Market; (ii) trading of any securities
issued or guaranteed by the Company shall have been suspended on
any exchange or in any over-the-counter market; (iii) a general
moratorium on commercial banking activities shall have been
declared by federal or New York State authorities; or (iv) there
shall have occurred any outbreak or escalation of hostilities or
any change in financial markets or any calamity or crisis, either
within or outside the United States, that, in the judgment of the
Initial Purchaser, is material and adverse and makes it
impracticable or inadvisable to proceed with the offering, sale or
delivery of the Securities on the Closing Date on the terms and in
the manner contemplated by this Agreement, the Time of Sale
Information and the Offering Memorandum.

 

10. Payment of Expenses.

 

(a) Whether or not the
transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Company will pay or cause to be paid
all costs and expenses incident to the performance of its
obligations hereunder, including without limitation, (i) the costs
incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that
connection; (ii) the costs incident to the preparation and printing
of the Preliminary Offering Memorandum, any other Time of Sale
Information, any Issuer Written Communication and the Offering
Memorandum (including any amendments and supplements thereto) and
the distribution thereof; (iii) the costs of reproducing and
distributing each of the Transaction Documents; (iv) the fees and
expenses of the Company's counsel and independent accountants; (v)
the fees and expenses incurred in connection with the registration
or qualification and determination of eligibility for investment of
the Securities under the laws of such jurisdictions as the Initial
Purchaser may designate and the preparation, printing and
distribution of a Blue Sky Memorandum (including the related fees
and expenses of counsel for the Initial Purchaser); (vi) any fees
charged by rating agencies for rating the Securities; (vii) the
fees and expenses of the Trustee and any paying agent (including
related fees and expenses of any counsel to such parties); (viii)
all expenses and application fees incurred in connection with the
approval of the Securities for book-entry transfer by DTC; (ix) all
expenses incurred by the Company in connection with any “road
show” presentation to potential investors; (x) all expenses
and application fees related to the listing of the Underlying
Securities on Nasdaq; and (xi) up to a maximum of $150,000 for all
out-of-pocket costs and expenses (including the fees and expenses
of its counsel) reasonably incurred by the Initial Purchaser in
connection with this Agreement and the offering contemplated
hereby.

 

 

17

 

 

(b) If (i) this
Agreement is terminated pursuant to Section 9, (ii) the Company for
any reason fails to tender the Securities for delivery to the
Initial Purchaser or (iii) the Initial Purchaser decline to
purchase the Securities for any reason permitted under this
Agreement, the Company shall reimburse the Initial Purchaser up to
a maximum of $150,000 for all out-of-pocket costs and expenses
(including the fees and expenses of its counsel) reasonably
incurred by the Initial Purchaser in connection with this Agreement
and the offering contemplated hereby.

 

11. Persons Entitled to Benefit of
Agreement. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors
and the officers and directors and any controlling persons referred
to herein, and the affiliates of the Initial Purchaser referred to
in Section 7
hereof. Nothing in this Agreement is intended or shall be construed
to give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision
contained herein. No purchaser of Securities from the Initial
Purchaser shall be deemed to be a successor merely by reason of
such purchase.

12. Survival. The respective
indemnities, rights of contribution, representations, warranties
and agreements of the Company and the Initial Purchaser contained
in this Agreement or made by or on behalf of the Company or the
Initial Purchaser pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment
for the Securities and shall remain in full force and effect,
regardless of any termination of this Agreement or any
investigation made by or on behalf of the Company or the Initial
Purchaser.

 

13. Certain Defined Terms. For
purposes of this Agreement, (a) except where otherwise expressly
provided, the term “affiliate” has the meaning set
forth in Rule 405 under the Securities Act; (b) the term
“business day”
means any day other than a day on which banks are permitted or
required to be closed in New York City; (c) the term
“subsidiary” has
the meaning set forth in Rule 405 under the Securities Act; and (d)
the term “significant
subsidiary” has the meaning set forth in Rule 1-02 of
Regulation S-X under the Exchange Act.

 

14. Compliance with USA Patriot
Act. In accordance with the requirements of the USA Patriot
Act, the Initial Purchaser is required to obtain, verify and record
information that identifies their clients, including the Company,
which information may include the name and address of its clients,
as well as other information that will allow the Initial Purchaser
to properly identify its clients.

 

15. Miscellaneous.

 

(a) Notices. All notices and other
communications hereunder shall be in writing and shall be deemed to
have been duly given if mailed or transmitted and confirmed by any
standard form of telecommunication.

If to
the Initial Purchaser:

 

JMP
Securities LLC

600
Montgomery Street, Suite 1100

San
Francisco, CA 94111

 

with a
copy (which shall not constitute notice) to:

 

McGuireWoods
LLP

1251
Avenue of the Americas, 20th Floor

New
York, New York 10020

Attention:
Stephen E. Older, Esq.

Email:
solder@mcguirewoods.com

Fax:
(212) 715-2307

 

If to
the Company:

 

RumbleOn,
Inc.

1350
Lakeshore Drive, Suite 160

Coppell,
Texas 75019

Attention:
Marshall Chesrown, Chairman and Chief Executive
Officer

                
Steven R. Berrard, Chief Financial Officer

Fax No:
704-980-0038

 

with a
copy (which shall not constitute notice) to:

 

Akerman
LLP

350
East Las Olas Boulevard, Suite 1600

Fort
Lauderdale, FL 33301

Attention:
Michael Francis, Esq. and Christina Russo, Esq.

Email:
michael.francis@akerman.com and
christina.russo@akerman.com

Fax No:
(954) 463-2224

 

                                                                      

18

 

 

(b) Governing Law. This Agreement and any
claim, controversy or dispute arising under or related to this
Agreement shall be governed by and construed in accordance with the
laws of the State of New York.

 

(c) Waiver of Jury Trial. Each of the
parties hereto hereby waives any right to trial by jury in any suit
or proceeding arising out of or relating to this
Agreement.

 

(d) Counterparts. This Agreement may be
signed in counterparts (which may include counterparts delivered by
any standard form of telecommunication), each of which shall be an
original and all of which together shall constitute one and the
same instrument.

 

(e) Amendments or Waivers. No amendment or
waiver of any provision of this Agreement, nor any consent or
approval to any departure therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
parties hereto.

 

 

(f) Headings. The headings herein are
included for convenience of reference only and are not intended to
be part of, or to affect the meaning or interpretation of, this
Agreement.

 

[Signature page
follows]

 

                                                                      

19

 

 

If
the foregoing is in accordance with your understanding, please
indicate your acceptance of this Agreement by signing in the space
provided below.

 

 

Very
truly yours,

 

 

	

 

	
RUMBLEON,
INC.

	

 

	

 

	

 

	

 

	

 

	

	
By:  

	
/s/ Steven R. Berrard

	

 

	

 

	

 

	
Steven R. Berrard

	

 

	

 

	

 

	

Chief Financial
Officer

	

 

 

 

 

 

Accepted: As of the date first
written above:

 

 

	

 

	
JMP
SECURITIES LLC

	

 

	

 

	

 

	

 

	

 

	

	
By:  

	
/s/ Forrest Koenig

	

 

	

 

	

 

	
Forrest Koenig
 

	

 

	

 

	

 

	

Managing
Director  

	

 

   

 

20

 

 

Schedule
1

 

Initial
Purchaser                                                                                       

Aggregate Principal Amount

 

 

 

JMP Securities
LLC                                                                                      
$30,000,000

 

 

 

Total:                                                                                      

$30,000,000

 

 

 

21

 

 

Schedule
2

 

 

Parties Signing Lock-Up Agreements

 

 

 

1.

Marshall
Chesrown

2.

Steven R.
Berrard

3.

Denmar
Dixon

4.

Kartik
Kakarala

5.

Kevin
Westfall

6.

Richard A.
Gray

7.

Joseph
Reece

8.

Halcyon Consulting,
LLC

9.

Berrard Holdings
Limited Partnership

10.

Blue Flame Capital,
LLC

 

 

 

22

 

Annex
A

 

Time of Sale Information

 

 

 

Term
sheet containing the terms of the Securities, substantially in the
form of Annex B.

 

 

 

 

 

23

 

 

Annex
B

 

	

PRICING TERM SHEET

 

	

STRICTLY CONFIDENTIAL

 

	

DATED May 9, 2019

	
 

 

 

RUMBLEON,
INC.

 

$30,000,000

 

6.75%
CONVERTIBLE SENIOR NOTES DUE 2024

 

The information in this pricing term sheet supplements RumbleOn,
Inc.’s preliminary offering memorandum, dated May 9, 2019
(the “Preliminary Offering Memorandum”), and supersedes
the information in the Preliminary Offering Memorandum to the
extent inconsistent with the information in the Preliminary
Offering Memorandum. In all other respects, this term sheet is
qualified in its entirety by reference to the Preliminary Offering
Memorandum, including all documents incorporated by reference
therein. References to “we,” “our” and
“us” refer to RumbleOn, Inc. and not to its
subsidiaries. Terms used herein but not defined herein shall have
the respective meanings as set forth in the Preliminary Offering
Memorandum. All references to dollar amounts are references to U.S.
dollars.

 

	
Issuer:

 

	
RumbleOn,
Inc.

 

	
Ticker/Exchange
for Our Class B Common Stock:

 

	
“RMBL”/The
NASDAQ Capital Market (“Nasdaq”)

 

	
Securities:

 

	
6.75% Convertible
Senior Notes due 2024 (the “notes”)

 

	
Aggregate
Principal Amount of Notes Offered:

 

	
$30,000,000. The
initial purchaser will not have an option to purchase additional
notes.

 

	
Denominations:

 

	
$1,000 and integral
multiples of $1,000 in excess thereof

 

	
Ranking:

 

	
Senior
unsecured

 

	
Issue
Price

 

	
100% of principal,
plus accrued interest, if any, from May 14, 2019 if settlement
occurs after that date

 

	
Maturity:

 

	
May 1, 2024, unless
earlier converted, redeemed or repurchased

 

	
Interest
and Interest Payment Dates:

 

	
6.75% per
year

 

	
 

	
Interest will
accrue from May 14, 2019 and will be payable semiannually in
arrears on May 1 and November 1 of each year, beginning on November
1, 2019

 

	
Regular
Record Dates:

 

	
April 15 and
October 15 of each year, immediately preceding the May 1 and
November 1 interest payment date, as the case may be

 

	
Initial
Conversion Rate:

 

	
173.9130 shares of
Class B Common Stock
per $1,000 principal amount of the notes, subject to
adjustment

 

	
Initial
Conversion Price:

 

	
Approximately $5.75
per share of Class B Common Stock, subject to
adjustment

 

	
Conversion
Premium:

 

	
15% above the sale
price of our Class B Common Stock in the concurrent Common Stock
Offering on May 9, 2019.

 

 

 

 

 

 

	
Optional
Redemption:

 

	
We may not redeem
the notes prior to May 6, 2022. We may redeem for cash all or any
portion of the notes, at our option, on or after May 6, 2022 if the
last reported sale price of our Class B Common Stock has been at
least 150% of the conversion price then in effect for at least 20
trading days (whether or not consecutive), including the trading
day immediately preceding the date on which we provide notice of
redemption, during any 30 consecutive trading day period ending on,
and including, the trading day immediately preceding the date on
which we provide notice of redemption at a redemption price equal
to 100% of the principal amount of the notes to be redeemed, plus
accrued and unpaid interest to, but excluding, the redemption
date.

 

	
Fundamental
Change:

 

	
If we undergo a
“fundamental change” (as defined in the Preliminary
Offering Memorandum under the heading “Description of
Notes—Fundamental Change Permits Holders to Require Us to
Repurchase Notes”), subject to certain conditions, holders
may require us to repurchase for cash all or any portion of their
notes in principal amounts of $1,000 or an integral multiple
thereof, at a repurchase price equal to 100% of the principal
amount of the notes to be repurchased, plus accrued and unpaid
interest to, but excluding, the fundamental change repurchase date.
See “Description of Notes—Fundamental Change Permits
Holders to Require Us to Repurchase Notes” in the Preliminary
Offering Memorandum.

 

	
Interest
Make-Whole Payment upon Certain Conversions:

 

	
On or after the
date that is one year after the last date of original issuance of
the notes offered by the Preliminary Offering Memorandum, we will
make an interest make-whole payment (an “interest make-whole
payment”) to a converting holder (other than a conversion in
connection with a make-whole fundamental change in which the
conversion rate is adjusted) equal to the sum of the present values
of the scheduled payments of interest that would have been made on
the notes to be converted had such notes remained outstanding from
the conversion date through the earlier of (i) the date that is two
years after the conversion date and (ii) June 15, 2022 if the notes
had not been so converted. The present values of the remaining
interest payments will be computed using a discount rate equal to
2.0%.

We may pay any
interest make-whole payment either in cash or in shares of our
Class B Common Stock, at our election. If we elect, or are deemed
to have elected, to pay any interest make-whole payment by
delivering shares of our Class B Common Stock, the number of shares
of Class B Common Stock a converting holder of notes will receive
will be equal to the amount of the interest make-whole payment due
divided by the greater of (A) the product of (x) 95.0% and (y) the
simple average of the daily VWAP of our Class B Common Stock for
the 10 trading days ending on and including the trading day
immediately preceding the conversion date and (B) the conversion
price (rounded to the nearest ten-thousandth) on the applicable
conversion date. If we elect to pay any interest make-whole payment
in cash we will pay cash in an amount equal to the interest
make-whole payment.

Notwithstanding the
foregoing, (x) if we elect or are deemed to have elected to pay any
interest make-whole payment in shares of our Class B Common Stock,
the number of shares of our Class B Common Stock we may deliver in
connection with a conversion of the notes, including those
delivered in connection with an interest make-whole payment, will
not exceed 197.0440 shares of Class B Common Stock per $1,000
principal amount of notes, subject to adjustment at the same time
and in the same manner as the conversion rate as set forth under
“Description of Notes—Conversion
Rights—Conversion Rate Adjustments” in the Preliminary
Offering Memorandum and (y) if we elect to pay any interest
make-whole payment in cash, the amount of cash we may deliver in
connection with an interest make-whole payment will not exceed
$117.39 per $1,000 principal amount of notes.

 

 

 

 

 

 

	
Concurrent
Common Stock Offering:

 

	
Concurrently with
the offering of notes, we are selling, in a private placement
exempt from registration under the Securities Act of 1933, as
amended (the “Securities Act”), 1,900,000 shares of our
Class B Common Stock, at a price per share equal to $5.00, in the
Concurrent Common Stock Offering. The net proceeds of the
Concurrent Common Stock Offering, less commissions to the placement
agent and estimated expenses payable by us, are expected to be
approximately $8.8 million. The offering of notes is not contingent
upon the Concurrent Common Stock Offering and the Concurrent Common
Stock Offering is not contingent upon the offering of
notes.

 

	
Use
of Proceeds:

 

	
We estimate that
the net proceeds from this offering will be approximately $27.6
million, after deducting the initial purchaser’s discounts
and commissions and estimated offering expenses payable by us. We
intend to use approximately $11.1 million of the net proceeds from
this offering and the Concurrent Common Stock Offering to refinance
certain outstanding restrictive indebtedness and the remainder for
other general corporate purposes, which may include purchases of
additional inventory held for sale, increased spending on marketing
and advertising, and capital expenditures necessary to grow the
business. Pending these uses, we may invest the net proceeds in
short-term interest-bearing investment grade
instruments.

See “Use of
Proceeds” in the Preliminary Offering
Memorandum.

 

	
Sole
Book-Running Manager:

 

	
JMP Securities
LLC

 

	
Pricing
Date:

 

	
May 9,
2019

 

	
Trade
Date:

 

	
May 10,
2019

 

	
Expected
Settlement Date:

 

	
May 14,
2019

 

	
Listing:

 

	
None

 

	
CUSIP
Number (144A):

 

	
781386
AA5

 

	
ISIN
(144A):

 

	
US781386AA56

 

	
Increase
in Conversion Rate upon Conversion upon a Make-Whole Fundamental
Change or Notice of Redemption:

 

	
If the effective
date of a make-whole fundamental change occurs prior to the
maturity date of the notes or we give a notice of redemption with
respect to any or all of the notes and, in each case, a holder
elects to convert its notes in connection with such make-whole
fundamental change or redemption notice, as applicable, the
following table sets forth the number of additional shares of Class
B Common Stock by which the conversion rate will be increased per
$1,000 principal amount of notes for each stock price and effective
date set forth below:

 

 

 

 

 

 

	
Stock
Price

 

	
Effective
Date

	
$5.075

	
$5.75

	
$6.00

	
$7.00

	
$8.00

	
$9.00

	
$10.00

	
$11.00

	
$12.00

	
 

	
May 14,
2019

	
23.1310

	
20.0000

	
18.7500

	
15.8857

	
13.1250

	
8.8889

	
4.5000

	
2.1818

	
0.0000

	
 

	
May 1,
2020

	
23.1310

	
19.5000

	
18.2813

	
15.4886

	
12.7969

	
8.6667

	
4.3875

	
2.1273

	
0.0000

	
 

	
May 1,
2021

	
23.1310

	
18.8000

	
17.6250

	
14.9326

	
12.3375

	
8.3556

	
4.2300

	
2.0509

	
0.0000

	
 

	
May 1,
2022

	
23.1310

	
18.0000

	
16.8750

	
14.2971

	
11.8125

	
8.0000

	
4.0500

	
1.9636

	
0.0000

	
 

	
May 1,
2023

	
23.1310

	
17.5000

	
16.4063

	
13.9000

	
11.4844

	
7.7778

	
3.9375

	
1.9091

	
0.0000

	
 

	
May 1,
2024

	
23.1310

	
0.0000

	
0.0000

	
0.0000

	
0.0000

	
0.0000

	
0.0000

	
0.0000

	
0.0000

	
 

 

The exact stock
price and effective date may not be set forth in the table above,
in which case:

 

●

If the stock price
is between two stock prices in the table or the effective date is
between two effective dates in the table, the number of additional
shares by which the conversion rate will be increased will be
determined by a straight-line interpolation between the number of
additional shares set forth for the higher and lower stock prices
and the earlier and later effective dates, as applicable, based on
a 365-day year.

 

●

If the stock price
is greater than $12.00 per share (subject to adjustment in the same
manner as the stock prices set forth in the column headings of the
table above), no additional shares will be added to the conversion
rate.

 

●

If the stock price
is less than $5.075 per share (subject to adjustment in the same
manner as the stock prices set forth in the column headings of the
table above), no additional shares will be added to the conversion
rate.

 

Notwithstanding the
foregoing, in no event will the conversion rate per $1,000
principal amount of notes exceed 197.0440 shares of Class B Common
Stock, subject to adjustment in the same manner as the conversion
rate set forth in the Preliminary Offering Memorandum under the
caption “Description of Notes—Conversion
Rights—Conversion Rate Adjustments.”

 

This
communication is intended for the sole use of the person to whom it
is provided by the sender. This material is confidential and is for
your information only and is not intended to be used by anyone
other than you. This information does not purport to be a complete
description of the notes or the offering thereof. This
communication does not constitute an offer to sell or the
solicitation of an offer to buy any notes in any jurisdiction to
any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction.

 

The
notes and any shares of Class B Common Stock issuable upon
conversion of the notes have not been and will not be registered
under the U.S. Securities Act, or any other securities laws, and
may not be offered or sold within the United States or any other
jurisdiction, except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and any other applicable securities laws. The
initial purchaser is initially offering the notes only to qualified
institutional buyers as defined in, and in reliance on, Rule 144A
under the Securities Act.

 

The
notes and any shares of Class B Common Stock issuable upon
conversion of the notes are not transferable except in accordance
with the restrictions described under “Notice to
Investors” and “Transfer Restrictions” in the
Preliminary Offering Memorandum.

 

Any
legends, disclaimers or other notices that may appear below are not
applicable to this communication and should be disregarded. Such
legends, disclaimers or other notices have been automatically
generated as a result of this communication having been sent via
Bloomberg or another system.

 

 

 

24

 

 

Exhibit
A

 

Form of Lock-Up Agreement

 

 

 

May              

, 2019

 

 

JMP
Securities LLC

383
Madison Avenue

New
York, New York 10179

 

Re:            

RumbleOn, Inc.

Ladies
and Gentlemen:

The
undersigned understands that JMP Securities LLC (hereinafter
referred to as the “Initial
Purchaser”) proposes to enter into a Purchase
Agreement (the “Purchase
Agreement”) with RumbleOn, Inc., a Nevada corporation
(the “Company”),
providing for the issuance and sale by the Company (the
“Offering”) to
the Initial Purchaser of up to $30,000,000 principal amount of the
Company’s 6.75% Convertible Senior Notes due 2024 (the
“Securities”).

 

To
induce the Initial Purchaser to continue its efforts in connection
with the Offering, the undersigned hereby agrees that, without the
prior written consent of the Initial Purchaser, the undersigned
will not, during the period commencing on the date hereof and
ending ninety (90) days after the date of the final offering
memorandum (the “Offering
Memorandum”) relating to the Offering (the
“Lock-Up
Period”), (1) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly,
any shares of capital stock of the Company or any securities
convertible into or exercisable or exchangeable for shares of
capital stock of the Company, whether now owned or hereafter
acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition
(collectively, the “Lock-Up
Securities”); (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of Lock-Up Securities,
whether any such transaction is to be settled by delivery of shares
of Lock-Up Securities, in cash or otherwise; (3) make any demand
for or exercise any right with respect to the registration of any
Lock-Up Securities; or (4) publicly disclose the intention to make
any offer, sale, pledge or disposition, or to enter into any
transaction, swap, hedge or other arrangement relating to any
Lock-Up Securities. Notwithstanding the foregoing, and subject to
the conditions below, the undersigned may transfer Lock-Up
Securities without the prior written consent of the Initial
Purchaser in connection with (a) transactions relating to Lock-Up
Securities acquired in open market transactions after the
completion of the Offering; provided that no filing under Section
16(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”),
shall be required or shall be voluntarily made in connection with
subsequent sales of Lock-Up Securities acquired in such open market
transactions; (b) transfers of Lock-Up Securities as a bona fide
gift, by will or intestacy or to a family member or trust for the
benefit of a family member (for purposes of this lock-up agreement,
“family member”
means any relationship by blood, marriage or adoption, not more
remote than first cousin); (c) transfers of Lock-Up Securities to a
charity or educational institution; (d) if the undersigned,
directly or indirectly, controls a corporation, partnership,
limited liability company or other business entity, any transfers
of Lock-Up Securities to any shareholder, partner or member of, or
owner of similar equity interests in, the undersigned, as the case
may be, or (e) the sales of shares of capital stock of the Company
to cover the payment of the exercise prices or the payment of taxes
associated with the exercise or vesting of equity awards under any
equity compensation plan of the Company; provided that in the case of
any transfer pursuant to the foregoing clauses (b), (c) or (d), (i)
any such transfer shall not involve a disposition for value, (ii)
each transferee shall sign and deliver to the Initial Purchaser a
lock-up agreement substantially in the form of this lock-up
agreement and (iii) no filing under Section 16(a) of the Exchange
Act shall be required or shall be voluntarily made, except for a
Form 5. The undersigned also agrees and consents to the entry of
stop transfer instructions with the Company’s transfer agent
and registrar against the transfer of the undersigned’s
Lock-Up Securities except in compliance with this lock-up
agreement.

 

 

 

25

 

If the
undersigned is an officer or director of the Company, (i) the
undersigned agrees that the foregoing restrictions shall be equally
applicable to any issuer-directed or “friends and
family” Securities that the undersigned may purchase in the
Offering; (ii) the Initial Purchaser agrees that, at least three
(3) Business Days (as that term is defined in the Purchaser
Agreement) before the effective date of any release or waiver of
the foregoing restrictions in connection with a transfer of Lock-Up
Securities, the Initial Purchaser will notify the Company of the
impending release or waiver; and (iii) the Company has agreed in
the Purchase Agreement to announce the impending release or waiver
by press release through a major news service at least two (2)
Business Days before the effective date of the release or waiver.
Any release or waiver granted by the Initial Purchaser hereunder to
any such officer or director shall only be effective two (2)
Business Days after the publication date of such press release. The
provisions of this paragraph will not apply if (a) the release or
waiver is effected solely to permit a transfer of Lock-Up
Securities not for consideration and (b) the transferee has agreed
in writing to be bound by the same terms described in this lock-up
agreement to the extent and for the duration that such terms remain
in effect at the time of such transfer.

 

No
provision in this agreement shall be deemed to restrict or prohibit
the exercise, exchange or conversion by the undersigned of any
securities exercisable or exchangeable for or convertible into
shares of capital stock of the Company, as applicable; provided that the undersigned
does not transfer the shares acquired on such exercise, exchange or
conversion during the Lock-Up Period, unless otherwise permitted
pursuant to the terms of this lock-up agreement. In addition, no
provision herein shall be deemed to restrict or prohibit the entry
into or modification of a so-called “10b5-1” plan at
any time (other than the entry into or modification of such a plan
in such a manner as to cause the sale of any Lock-Up Securities
within the Lock-Up Period).

 

The
undersigned understands that the Company and the Initial Purchaser
are relying upon this lock-up agreement in proceeding toward
consummation of the Offering. The undersigned further understands
that this lock-up agreement is irrevocable and shall be binding
upon the undersigned’s heirs, legal representative,
successors and assigns.

 

The
undersigned understands that, if the Purchase Agreement is not
executed by May 30, 2019, or if the Purchase Agreement (other than
the provisions thereof which survive termination) shall terminate
or be terminated prior to payment for and delivery of the
Securities to be sold thereunder, then this lock-up agreement shall
be void and of no further force or effect.

 

Whether
or not the Offering actually occurs depends on a number of factors,
including market conditions. Any Offering will only be made
pursuant to the Purchase Agreement, the terms of which are subject
to negotiation between the Company and the Initial
Purchaser.

 

[Signature page follows]

 

 

 

26

 

 

 

 

 

Very
truly yours,

 

Very
truly yours,

 

__________________________________________

(Name -
Please Print)

 

 

__________________________________________ 

(Signature)

 

 

__________________________________________ 

(Name
of Signatory, in the case of entities - Please Print)

 

 

__________________________________________ 

(Title
of Signatory, in the case of entities - Please Print)

 

 

Address:
__________________________________________

             
__________________________________________

             
__________________________________________

 

 

 

 

27

 

 

 Exhibit
B

 

Form of Registration Rights Agreement

 

 
(See
Exhibit 4.3)

 

 

 

28Blueprint

 

SECURITIES PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”)
is dated as of May 9, 2019, between RumbleOn, Inc., a Nevada
corporation (the “Company”),
and each purchaser identified on the signature pages hereto (each,
including its successors and assigns, a “Purchaser”
and collectively the “Purchasers”).

 

WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant
to an exemption from the registration requirements of Section 5 of
the Securities Act (as defined below) contained in Section 4(a)(2)
thereof and/or Regulation D thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and
not jointly, desires to purchase from the Company, securities of
the Company as more fully described in this Agreement;

 

NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the Company
and each Purchaser agree as follows:

 

ARTICLE I

 

DEFINITIONS

 

1.1 Definitions. In
addition to the terms defined elsewhere in this Agreement, for all
purposes of this Agreement, the following terms have the meanings
set forth in this Section
1.1:

 

“Action”
means any action, suit, inquiry, notice of violation, proceeding or
investigation pending or threatened before or by any court,
arbitrator, governmental or administrative agency or regulatory
authority (federal, state, county, local or foreign).

 

“Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person as such terms are used in and construed under
Rule 405 under the Securities Act.

 

“Board of
Directors” means
the board of directors of the Company.

 

“Business
Day” means any day
except any Saturday, any Sunday, any day which is a federal legal
holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.

 

“Closing”
means the closing of the purchase and sale of the Shares pursuant
to Section
2.1.

 

“Closing
Date” means the
Trading Day on which all of the Subscription Documents have been
executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Purchasers’ obligations to pay the Subscription
Amount and (ii) the Company’s obligations to deliver the Shares,
in each case, have been satisfied or waived, but in no event later
than the third Trading Day following the date hereof.

 

“Concurrent 144A Offering”
means the offering and sale by the Company pursuant to Rule 144A
under the Securities Act of the Company’s Convertible Senior
Notes due 2024 under that certain Purchase Agreement by and between
the Company and JMP Securities LLC, as initial purchaser, in a
transaction exempt from the registration requirements of the
Securities Act.

 

“Commission”
means the United States Securities and Exchange
Commission.

 

“Common
Stock” means the
Class B Common Stock of the Company, par value $0.001 per share,
and any other class of securities into which such securities may
hereafter be reclassified or changed.

 

“Company
Counsel” means
Akerman LLP, with offices located at 350 East Las Olas Boulevard,
Fort Lauderdale, Florida 33301.

 

“Disqualification Events”
shall have the meaning ascribed to such term in Section 3.1(o).

 

“Effectiveness Period”
shall have the meaning ascribed to such term in Section 5.1(b).

 

“Event
Date” shall have the
meaning ascribed to such terms in Section
5.1(c).

 

1

 

 

“Exchange
Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

 

“Initial Filing Date”
shall have the meaning ascribed to such term in Section 5.1(a).

 

“Intellectual Property
Rights” shall have the
meaning ascribed to such term in Section
3.1(q).

 

“Investor
Questionnaire”
means the investor questionnaire attached hereto as Exhibit A.

 

“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).

 

“Liens”
means a lien, charge, pledge, security interest, encumbrance, right
of first refusal, preemptive right or other
restriction.

 

“Lock-up Agreement” shall
have the meaning ascribed to such term in Section 4.10.

 

“Material Adverse
Effect” means (i)
a material adverse effect on the legality, validity or
enforceability of any Subscription Document, (ii) a material
adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and
the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s
ability to perform in any material respect on a timely basis its
obligations under any Subscription Document.

 

“Per Share Purchase
Price” equals
$5.00, subject to adjustment for reverse and forward stock splits,
stock dividends, stock combinations and other similar transactions
of the Common Stock that occur after the date of this Agreement but
before the Closing Date.

 

“Person”
means an individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.

 

“Proceeding”
means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or
partial proceeding, such as a deposition), whether commenced or
threatened.

 

“Registrable Securities”
shall have the meaning ascribed to such term in Section 5.1(a).

 

“Registration Statement”
shall have the meaning ascribed to such term in Section 5.1(a).

 

“Required
Approvals” shall
have the meaning ascribed to such term in Section 3.1(e).

 

“Risk
Factors” means the
risk factors attached hereto as Exhibit B.

 

 

2

 

 

“Rule
144” means Rule
144 promulgated by the Commission pursuant to the Securities Act,
as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.

 

“Rule
424” means Rule
424 promulgated by the Commission pursuant to the Securities Act,
as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.

 

“SEC
Reports” shall
have the meaning ascribed to such term in Section 3.1(h).

 

“Securities
Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

 

“Shares”
means the shares of Common Stock issued to each Purchaser pursuant
to this Agreement.

 

“Short
Sales” means all
“short sales” as defined in Rule 200 of
Regulation SHO under the Exchange Act (but shall not be deemed to
include the location and/or reservation of borrowable shares of
Common Stock).

 

“Solicitor”
shall have the meaning ascribed to such term in Section
3.1(o).

 

“Subscription
Amount” means, as
to each Purchaser, the amount to be paid for Shares purchased
hereunder as specified below such Purchaser’s name on the signature page of this
Agreement and next to the heading “Subscription Amount,” in United States dollars and in
immediately available funds.

 

“Subscription
Documents” means
this Agreement, any other documents or agreements executed in
connection with the transactions contemplated
hereunder.

 

“S-1 Registration
Statement” shall have the meaning ascribed to such
term in Section
5.1(a).

 

“S-3 Registration
Statement” shall have the meaning ascribed to such
term in Section
5.1(a).

 

“Subsidiary”
means any subsidiary of the Company as set forth in the SEC
Reports, and shall, where applicable, also include any direct or
indirect subsidiary of the Company formed or acquired after the
date hereof.

 

“Trading
Day” means a day
on which the principal Trading Market is open for
trading.

 

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

 

“Transaction
Documents” means
the Company’s presentation dated May 2019.

 

“Transfer
Agent” means West
Coast Stock Transfer, Inc., the current transfer agent of the
Company, with a mailing address of 721 N. Vulcan Avenue, Suite 205,
Encinitas, California 92024, and any successor transfer agent of
the Company.

 

“Variable Rate
Transactions” shall have the meaning ascribed to such
term in Section
4.9.

 

 

3

 

 

 

ARTICLE II

 

PURCHASE
AND SALE

 

2.1 Closing. On the
Closing Date, upon the terms and subject to the conditions set
forth herein, the Company agrees to sell, and the Purchasers,
severally and not jointly, agree to purchase, up to an aggregate of
1,900,000 Shares (for a purchase price of $9,500,000) in increments
of $100,000, subject to lesser amounts being accepted at the
Company’s discretion; provided, however, that the number of Shares sold
pursuant to this Agreement shall not exceed 19.9% of the
Company’s issued and outstanding shares of Class A Common
Stock of the Company, par value $0.001 per share, and Common Stock
at the time of Closing, on a pre-transaction basis. On the Closing
Date, each Purchaser shall deliver to the Company such
Purchaser’s Subscription
Amount via wire transfer of immediately available funds and the
Company shall deliver to each Purchaser its respective Shares as
determined pursuant to Section 2.2(a), and the Company
and each Purchaser shall deliver the other items set forth in
Section 2.2. Upon
satisfaction of the covenants and conditions set forth in
Sections 2.2 and
2.3, the Closing
shall occur at the offices of Company Counsel or such other
location as the parties shall mutually agree.

 

2.2 Deliveries.

 

(a) On or prior to the
Closing Date, the Company shall deliver or cause to be delivered to
each Purchaser the following:

 

(i) this Agreement duly
executed by the Company; and

 

(ii) a
copy of the irrevocable instructions to the Transfer Agent
instructing the Transfer Agent to issuance in book entry form the
Shares equal to such Purchaser’s Subscription Amount divided by the
Per Share Purchase Price, registered in the name of such
Purchaser.

 

(b) On or prior to the
Closing Date, each Purchaser shall deliver or cause to be delivered
the following:

 

(i) to the Company, a
completed Investor Questionnaire;

 

(ii) to
the Company, this Agreement duly executed by such Purchaser;
and

 

(iii) to
the Company, such Purchaser’s Subscription Amount by wire
transfer of immediately available funds.

 

 

4

 

 

2.3 Closing
Conditions.

 

(a) The obligations of
the Company hereunder in connection with the Closing are subject to
the following conditions being met:

 

(i) the accuracy in all
material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all
respects) on the Closing Date of the representations and warranties
of the Purchasers contained herein (unless as of a specific date
therein in which case they shall be accurate as of such
date);

 

(ii) all
obligations, covenants and agreements of each Purchaser required to
be performed at or prior to the Closing Date shall have been
performed; and

 

(iii) the
delivery by each Purchaser of the items set forth in Section 2.2(b) of this
Agreement.

 

(b) The respective
obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being
met:

 

(i) the accuracy in all
material respects (or, to the extent representations or warranties
are qualified by materiality or Material Adverse Effect, in all
respects) when made and on the Closing Date of the representations
and warranties of the Company contained herein (unless as of a
specific date therein in which case they shall be accurate as of
such date);

 

(ii) all
obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been
performed;

 

(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of this
Agreement;

 

(iv) there
shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and

 

(v) from the date
hereof to the Closing Date, trading in the Common Stock shall not
have been suspended by the Commission or the Company’s principal Trading Market, and, at
any time prior to the Closing Date, trading in securities generally
as reported by Bloomberg L.P. shall not have been suspended or
limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared
either by the United States or New York State authorities nor shall
there have occurred any material outbreak or escalation of
hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any
financial market which, in each case, in the reasonable judgment of
such Purchaser, makes it impracticable or inadvisable to purchase
the Shares at the Closing.

 

 

5

 

ARTICLE III

 

REPRESENTATIONS
AND WARRANTIES

 

3.1 Representations and
Warranties of the Company. Except as set forth in the SEC
Reports, which SEC Reports shall be deemed a part hereof and shall
qualify any representation or otherwise made herein to the extent
of the disclosure contained in the SEC Reports, the Company hereby
makes the following representations and warranties to each
Purchaser:

 

(a) Organization and
Qualification. The Company and each of the Subsidiaries is
an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation or organization, with the requisite power and
authority to own and use its properties and assets and to carry on
its business as described in the SEC Reports. Neither the Company
nor any Subsidiary is in violation nor default of any of the
provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents.
Each of the Company and the Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation
or other entity in each jurisdiction in which the nature of the
business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be
expected to result in a Material
Adverse Effect.

 

(b) Authorization;
Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Subscription
Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and each
of the other Subscription Documents by the Company and the
consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the
Company, the Board of Directors or the Company’s stockholders in connection
herewith or therewith other than in connection with the Required
Approvals. This Agreement and each other Subscription Document to
which the Company is a party has been (or upon delivery will have
been) duly executed by the Company and, when delivered in
accordance with the terms hereof and thereof, will constitute the
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited
by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by
applicable law.

 

(c) No Conflicts.
The execution, delivery and performance by the Company of this
Agreement and the other Subscription Documents to which it is a
party, the issuance and sale of the Shares and the consummation by
it of the transactions contemplated hereby and thereby do not and
will not (i) conflict with or violate any provision of the
Company’s or any
Subsidiary’s certificate
or articles of incorporation, bylaws or other organizational or
charter documents, (ii) conflict with, or constitute a default (or
an event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien upon any of the
properties or assets of the Company or any Subsidiary, or give to
others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or
by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) subject to the Required Approvals,
conflict with or result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not have
or reasonably be expected to result in a Material Adverse
Effect.

 

(d) Conduct of Business. Since
December 31, 2018, the Company has conducted its business in the
ordinary course materially consistent with past practice. Since
December 31, 2018, there has not been any Material Adverse Effect
with respect to the Company or any of its Subsidiaries nor has
there occurred any event that is reasonably likely to result in a
Material Adverse Effect with respect to the Company or any of its
Subsidiaries.

 

(e) Filings, Consents and
Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the
Company of the Subscription Documents, other than: (i) the filings
required pursuant to Section 4.3 of this Agreement,
(ii) application(s) to each applicable Trading Market for the
listing of the Shares for trading thereon in the time and manner
required thereby, and (iii) such filings as are required to be made
under applicable state securities laws (collectively, the
“Required
Approvals”).

 

 

6

 

(f) Issuance of the
Shares. The Shares are duly authorized and, when issued and
paid for in accordance with the applicable Subscription Documents,
will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens imposed by the Company.

 

(g) Capitalization.
The capitalization of the Company is as set forth in the SEC
Reports, except to the extent affected by the Concurrent 144A
Offering. Except as provided for in the Transaction Documents, the
Company has not issued any capital stock since its most recently
filed periodic report under the Exchange Act, other than pursuant
to the vesting and delivery of awards under the Company’s employee equity plans outstanding
as of the date of the most recently filed periodic report under the
Exchange Act. No Person has any right of first refusal, preemptive
right, right of participation, or any similar right to participate
in the transactions contemplated by the Subscription
Documents.

 

(h) SEC Reports; Financial
Statements. Since January 9, 2017, the Company has filed all
reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof
(the foregoing materials, including the exhibits thereto and
documents incorporated by reference therein, being collectively
referred to herein as the “SEC
Reports”), on a
timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration
of any such extension. As of their respective dates, the SEC
Reports complied in all material respects with the requirements of
the Securities Act and the Exchange Act, as applicable, and none of
the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. The financial statements of the Company
included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of
the Commission with respect thereto as in effect at the time of
filing. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles applied
on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements
or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present
in all material respects the financial position of the Company and
its consolidated Subsidiaries as of and for the dates thereof and
the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 

(i) Disclosure Controls. The
Company maintains disclosure controls and procedures as required by
Rule 13a-15 or 15d-15 under the Exchange Act. Such disclosure
controls and procedures are effective to ensure that all
information required to be disclosed by the Company is recorded and
reported on a timely basis to the individuals responsible for the
preparation of the SEC Reports and other public disclosure
documents. The Company maintains internal control over financial
reporting (as defined in Rule 13a-15 or 15d-15, as applicable,
under the Exchange Act). Such internal control over financial
reporting is effective in providing reasonable assurance regarding
the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP
and includes policies and procedures that (i) pertain to the
maintenance of records that are in reasonable detail and accurately
and fairly reflect the transactions and dispositions of the assets
of the Company, (ii) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with GAAP, and that receipts and
expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company, and
(iii) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the
Company’s assets that could have a material effect on its
financial statements. No attorney representing the Company or any
of its Subsidiaries, whether or not employed by the Company or any
of its Subsidiaries, has reported evidence of a violation of
securities laws, breach of fiduciary duty or similar violation by
the Company or any of its officers, directors, employees or agents
pursuant to the rules adopted pursuant to Section 307 of the
Sarbanes-Oxley Act.

 

(j) Internal Controls. The Company
has disclosed, based on the most recent evaluation by its chief
executive officer and its chief financial officer prior to the date
hereof, to the Company’s auditors and the Audit Committee of
Board of Directors (i) any significant deficiencies in the
design or operation of its internal controls over financial
reporting that are reasonably likely to adversely affect the
Company’s ability to record, process, summarize and report
financial information and has identified for the Company’s
auditors and Audit Committee of the Board of Directors any material
weaknesses in internal control over financial reporting and
(ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
Company’s internal control over financial reporting. The
Company has delivered to the Company prior to the date hereof
(A) a complete and correct summary of any such disclosure and
(B) any material communication made by management or the
Company’s auditors to the Audit Committee of the Board of
Directors required or contemplated by listing standards of Trading
Market, the Audit Committee’s charter or professional
standards of the Public Company Accounting Oversight Board. No
material complaints from any source regarding accounting, internal
accounting controls or auditing matters, and no concerns from the
Company’s employees regarding questionable accounting or
auditing matters, have been received by the Company or, to the
knowledge of the Company, the Company’s independent
registered public accounting firm.

 

 

7

 

(k) Trading Market. The Company is
in compliance in all material respects with the applicable listing
and corporate governance rules and regulations of Trading Market.
From January 1, 2017 through the date hereof, the Company has not
received any comment letter from the Commission or the staff
thereof or, except as disclosed in the SEC Reports, any
correspondence from the Trading Market or the staff thereof
relating to the delisting or maintenance of listing of Common Stock
on Trading Market, other than such disclosures or documents that
can be obtained on the Commission’s website at www.sec.gov.
The Company has not taken and will not take any action designed to
or that might reasonably be expected to cause or result in an
unlawful manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.

 

(l) Certain Fees.
Except with respect to the placement agency fees of $665,000
payable to JMP Securities and associated expense reimbursement, no
brokerage or finder’s
fees or commissions are or will be payable by the Company or any
Subsidiary to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with
respect to the transactions contemplated by the Subscription
Documents. The Purchasers shall have no obligation with respect to
any fees or with respect to any claims made by or on behalf of
other Persons for fees of a type contemplated in this Section that
may be due in connection with the transactions contemplated by the
Subscription Documents.

 

(m) Investment
Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Shares, will not be or
be an Affiliate of, an “investment company” within the meaning of the
Investment Company Act of 1940, as amended. The Company shall
conduct its business in a manner so that it will not become an
“investment
company” subject to
registration under the Investment Company Act of 1940, as
amended.

 

(n) Registration
Rights. Except (i) as set forth in the SEC Reports, the
Transaction Documents, and Section 4.10 and Section 5.1 of this
Agreement and (ii) in connection with the Concurrent 144A Offering,
no Person has any right to cause the Company or any Subsidiary to
effect the registration under the Securities Act of any securities
of the Company or any Subsidiary.

 

(o) No “Bad Actor”
Disqualification. The Company has exercised reasonable care,
in accordance with Commission rules and guidance, and has conducted
a factual inquiry, the nature and scope of which reflect reasonable
care under the relevant facts and circumstances, to determine
whether any Covered Person (as defined below) is subject to any of
the “bad actor” disqualifications described in Rule
506(d)(1)(i) to (viii) under the Securities Act
(“Disqualification
Events”). To the Company’s knowledge, after
conducting such sufficiently diligent factual inquiries, no Covered
Person is subject to a Disqualification Event, except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3) under
the Securities Act. The Company has complied, to the extent
applicable, with any disclosure obligations under Rule 506(e) under
the Securities Act. “Covered Persons” are
those persons specified in Rule 506(d)(1) under the Securities Act,
including the Company; any predecessor or affiliate of the Company;
any director, executive officer, other officer participating in the
offering, general partner or managing member of the Company; any
beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power;
any promoter (as defined in Rule 405 under the Securities Act)
connected with the Company in any capacity at the time of the sale
of the Shares; and any person that has been or will be paid
(directly or indirectly) remuneration for solicitation of
purchasers in connection with the sale of the Shares (a
“Solicitor”), any general
partner or managing member of any Solicitor, and any director,
executive officer or other officer participating in the offering of
any Solicitor or general partner or managing member of any
Solicitor.

 

(p) Information Provided. The
Company confirms that, to its knowledge, with the exception of the
proposed sale of the Shares under this Agreement and the
Subscription Documents relating hereto, neither the Company nor any
other persons acting on its behalf has provided any of the
Purchasers or their agents or counsel with any information that
constitutes or might constitute material, nonpublic information.
The Company further confirms that until public disclosure of the
events described above, the Purchasers will be restricted by the
insider trading prohibitions under the Exchange Act from trading or
“tipping” on the basis of such
information.

 

 

8

 

(q) Intellectual Property. Except
as would not reasonably be expected to result, individually or in
the aggregate, in a Material Adverse Effect, the Company owns or
possesses or has valid rights to use all patents, trademarks,
service marks, trade names, trademark registrations, service mark
registrations, copyrights, licenses, trade secrets and similar
rights (“Intellectual Property
Rights”), if any, necessary for the conduct of the
business of the Company as currently carried on and as described in
the Company’s SEC Reports. To the knowledge of the Company,
no action or use by the Company necessary for the conduct of its
business as currently carried on and as described in the
Company’s SEC Reports infringes any Intellectual Property
Rights of others. Except as would not reasonably be expected to
result, individually or in the aggregate, in a Material Adverse
Effect, the Company has not received any notice alleging any such
infringement with asserted Intellectual Property Rights of others.
Except as would not reasonably be expected to result, individually
or in the aggregate, in a Material Adverse Effect (A) to the
knowledge of the Company, there is no infringement,
misappropriation or violation by third parties of any of the
Intellectual Property Rights owned by the Company; (B) there is no
pending or, to the knowledge of the Company, threatened action,
suit, proceeding or claim by others challenging the rights of the
Company in or to any such Intellectual Property Rights, and the
Company is unaware of any facts which would form a reasonable basis
for any such claim, that would, individually or in the aggregate,
together with any other claims in this Section 3.1(q), reasonably be
expected to result in a Material Adverse Effect; (C) the
Intellectual Property Rights owned by the Company and, to the
knowledge of the Company, the Intellectual Property Rights licensed
to the Company, have not been adjudged by a court of competent
jurisdiction invalid or unenforceable, in whole or in part, and
there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property Rights, and
the Company is unaware of any facts which would form a reasonable
basis for any such claim that would, individually or in the
aggregate, together with any other claims in this Section 3.1(q), reasonably be
expected to result in a Material Adverse Effect; (D) there is no
pending or, to the Company’s knowledge, threatened action,
suit, proceeding or claim by others that the Company infringes,
misappropriates or otherwise violates any Intellectual Property
Rights or other proprietary rights of others, the Company has not
received any written notice of such claim and the Company is
unaware of any other facts which would form a reasonable basis for
any such claim that would, individually or in the aggregate,
together with any other claims in this Section 3.1(q), reasonably be
expected to result in a Material Adverse Effect; and (E) to the
Company’s knowledge, no employee of the Company is in
violation in any material respect of any term of any employment
contract, patent disclosure agreement, invention assignment
agreement, non-competition agreement, non-solicitation agreement,
nondisclosure agreement or any restrictive covenant to or with a
former employer where the basis of such violation relates to such
employee’s employment with the Company, or actions undertaken
by the employee while employed with the Company and could
reasonably be expected to result, individually or in the aggregate,
in a Material Adverse Effect. To the Company’s knowledge, all
material trade secrets developed by and belonging to the Company
which have not been patented have been kept confidential. The
Company is not a party to or bound by any options, licenses or
agreements with respect to the Intellectual Property Rights of any
other person or entity that are required to be set forth in the
Company’s SEC Reports and are not described therein. To the
Company’s knowledge, none of the technology employed by the
Company has been obtained or is being used by the Company in
violation of any contractual obligation binding on the Company or
any of its officers, directors or employees, or otherwise in
violation of the rights of any persons.

 

3.2 Representations and
Warranties of the Purchasers. Each Purchaser, for itself and
for no other Purchaser, hereby represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows
(unless as of a specific date therein, in which case they shall be
accurate as of such date):

 

(a) Organization;
Authority. Each Purchaser is either an individual or an
entity duly incorporated or formed, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
formation with full right, corporate, partnership, limited
liability company or similar power and authority to enter into and
to consummate the transactions contemplated by this Agreement and
otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of this Agreement and performance by
such Purchaser of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate, partnership,
limited liability company, investment management or similar action,
as applicable, on the part of such Purchaser. Each Subscription
Document to which it is a party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with
the terms hereof, will constitute the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance
with its terms, except: (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting
enforcement of creditors’
rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable
law.

 

(b) Investment
Purpose. Each Purchaser is
acquiring the Shares for its own account for investment only and
not with a view towards, or for resale in connection with, the
public sale or distribution thereof. Each Purchaser acknowledges
that the Shares will be issued in book entry form with a notation
of restriction as set forth in Section
4.1.

 

(c) Experience
of Such Purchaser. Such Purchaser, either alone or together
with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in
the Shares, and has so evaluated the merits and risks of such
investment. Such Purchaser is able to bear the economic risk of an
investment in the Shares and, at the present time, is able to
afford a complete loss of such investment.

 

(d) Accredited
Investor Status.  Each
Purchaser is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D, as promulgated
under the Securities Act and has delivered to the Company a completed
Investor Questionnaire.

 

 

9

 

 

(e) Reliance
on Exemptions.  Each
Purchaser understands that the Shares are being offered and sold to
it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of,
and each Purchaser’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of each
Purchaser set forth herein in order to determine the availability
of such exemptions and the eligibility of each Purchaser to acquire
the Shares.

 

(f) Information.
Each Purchaser and its representatives, if any, have been furnished
with all materials relating to the business, finances and
operations of the Company and other information each Purchaser
deemed material to making an informed investment decision regarding
its purchase of the Shares, which have been requested by each
Purchaser.  Purchaser acknowledges that it has reviewed a copy
of the Subscription Documents, including the Risk Factors, the
Transaction Documents and the SEC Reports. Each Purchaser and
its advisors, if any, have been afforded the opportunity to ask
questions of the Company and its management. Neither such
inquiries, nor any other due diligence investigations conducted by
any Purchaser or its advisors, if any, or its representatives,
shall modify, amend or affect each Purchaser’s right to rely
on the Company’s representations and warranties contained
in Section
3.1.  Each Purchaser
understands that its investment in the Shares involves a high
degree of risk.  Each Purchaser has sought such accounting,
legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the
Shares.

 

(g) General
Solicitation.  Each
Purchaser is not purchasing the Shares as a result of any
advertisement, article, notice or other communication regarding the
Shares published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or
any other general solicitation or general
advertisement. 

 

(h) Company Affiliated Investors.
Each Purchaser acknowledges that certain officers and directors of
the Company may purchase Shares pursuant to this
Agreement.

 

(i) No Governmental Review. Each
Purchaser understands that no United States federal or state
governmental authority has passed on or made any recommendation or
endorsement of the Shares, or the fairness or suitability of the
investment in the Shares, nor have such governmental authorities
passed upon or endorsed the merits of the offering of the
Shares.

 

(j) Certain Transactions
and Confidentiality. Other than consummating the
transactions contemplated hereunder, each Purchaser has not, nor
has any Person acting on behalf of or pursuant to any understanding
with such Purchaser, directly or indirectly executed any purchases
or sales, including Short Sales, of the securities of the Company
during the period commencing as of the time that such Purchaser
first received a term sheet (written or oral) from the Company or
any other Person representing the Company setting forth the
material terms of the transactions contemplated hereunder and
ending immediately prior to the execution hereof. Other than to
other Persons party to this Agreement or to such
Purchaser’s
representatives, including, without limitation, its officers,
directors, partners, legal and other advisors, employees, agents
and Affiliates, such Purchaser has maintained the confidentiality
of all disclosures made to it in connection with this transaction
(including the existence and terms of this
transaction).

 

ARTICLE IV

 

OTHER
AGREEMENTS OF THE PARTIES

 

4.1 Transfer and Restrictive
Legend.

 

(a) The Shares may only
be disposed of in compliance with state and federal securities
laws. In connection with any transfer of Shares other than pursuant
to an effective registration statement, the Company may require the
transferor thereof to provide to the Company an opinion of counsel
selected by the transferor and reasonably acceptable to the
Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Shares
under the Securities Act.

 

 

10

 

 

(b) The Purchasers
agree to a restrictive notation on the Shares to be issued in book
entry form as follows:

 

THESE
SHARES HAVE BEEN ACQUIRED FROM THE ISSUER WITHOUT REGISTRATION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”) AND ARE RESTRICTED SHARES AS THAT TERM IS DEFINED UNDER
RULE 144, PROMULGATED UNDER THE SECURITIES ACT. THESE SHARES MAY
NOT BE SOLD, PLEDGED, TRANSFERRED, DISTRIBUTED, OR OTHERWISE
DISPOSED OF IN ANY MANNER UNLESS SUCH TRANSACTION IS (I) REGISTERED
UNDER THE SECURITIES ACT, (II) UNLESS SOLD PURSUANT TO RULE 144 OR
RULE 144A UNDER SAID ACT, OR (III) SOLD PURSUANT TO A VALID
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS AS EVIDENCED BY AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE ISSUER, STATING
THAT THE TRANSFER DOES NOT INVOLVE A TRANSACTION REQUIRING
REGISTRATION OF SUCH SHARES UNDER THE SECURITIES ACT.

 

4.2 Integration.
The Company shall not sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the
offer or sale of the Shares in a manner that would require the
registration under the Securities Act of the sale of the Shares or
that would be integrated with the offer or sale of the Shares for
purposes of the rules and regulations of any Trading Market such
that it would require shareholder approval prior to the closing of
such other transaction unless shareholder approval is obtained
before the closing of such subsequent transaction.

 

4.3 Securities Laws
Disclosure; Publicity. On the Trading Day immediately
following the Closing Date, the Company shall file a Current Report
on Form 8-K (the “Announcement
8-K”), including
the Subscription Documents and the Transaction Documents with the
Commission. From and after the filing of the Announcement 8-K, the
Company represents to the Purchasers that it shall have publicly
disclosed all material, non-public information delivered to any of
the Purchasers by the Company or any of its Subsidiaries, or any of
their respective officers, directors, employees or agents in
connection with the transactions contemplated by the Subscription
Documents and the Transaction Documents.

 

4.4 Use of
Proceeds. The Company shall use the net proceeds from the
sale of the Shares hereunder as set forth in the Transaction
Documents and for working capital purposes.

 

4.5 Reservation of Common
Stock. As of the date hereof, the Company has reserved and
the Company shall continue to reserve and keep available at all
times, free of preemptive rights, a sufficient number of shares of
Common Stock for the purpose of enabling the Company to issue
Shares pursuant to this Agreement.

 

4.6 Listing of Common
Stock. The Company hereby agrees to use best efforts to
maintain the listing or quotation of the Common Stock on the
Trading Market on which it is currently listed, and concurrently
with the Closing, the Company shall apply to list or quote all of
the Shares on such Trading Market and promptly secure the listing
of all of the Shares on such Trading Market. The Company further
agrees, if the Company applies to have the Common Stock traded on
any other Trading Market, it will then include in such application
all of the Shares, and will take such other action as is necessary
to cause all of the Shares to be listed or quoted on such other
Trading Market as promptly as possible. The Company will then take
all action reasonably necessary to continue the listing and trading
of its Common Stock on a Trading Market and will comply in all
respects with the Company’s reporting, filing and other
obligations under the bylaws or rules of the Trading Market. The
Company agrees to maintain the eligibility of the Common Stock for
electronic transfer through the Depository Trust Company or another
established clearing corporation, including, without limitation, by
timely payment of fees to the Depository Trust Company or such
other established clearing corporation in connection with such
electronic transfer.

 

4.7 Certain Transactions
and Confidentiality. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that neither it nor
any Affiliate acting on its behalf or pursuant to any understanding
with it will execute any purchases, sales or effect any other
transactions, including Short Sales of any of the
Company’s securities
during the period commencing with the execution of this Agreement
and ending at such time that the transactions contemplated by the
Subscription Documents and Transaction Documents are first publicly
announced pursuant to the filing of the Announcement 8-K as
described in Section
4.3. Each Purchaser, severally and not jointly with the
other Purchasers, covenants that until such time as the
transactions contemplated by the Subscription Documents and
Transaction Documents are publicly disclosed by the Company
pursuant to the filing of the Announcement 8-K as described in
Section 4.3, such
Purchaser will maintain the confidentiality of the existence and
terms of this transaction and the information included in the
Subscription Documents and Transaction Documents.

 

 

11

 

 

4.8 Form D; Blue Sky
Filings. The Company agrees to timely file a Form D with
respect to the Shares as required under Regulation D and to provide
a copy thereof, promptly upon request of any Purchaser. The Company
shall take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for, or to qualify the
Shares for, sale to the Purchasers at the Closing under applicable
securities or “Blue
Sky” laws of the states
of the United States, and shall provide evidence of such actions
promptly upon request of any Purchaser.

 

4.9 Restriction on Variable Rate
Transactions. From the date hereof until the one-year
anniversary of the Closing Date, the Company shall be prohibited
from effecting or entering into an agreement to effect any issuance
by the Company or any of its subsidiaries of Common Stock or any
outstanding convertible instruments, options or warrants or similar
securities (or a combination of units thereof) involving a Variable
Rate Transaction. “Variable Rate
Transaction” means a transaction in which the Company
issues or sells any debt or equity securities that are convertible
into, exchangeable or exercisable for, or include the right to
receive additional shares of Common Stock either (A) at a
conversion price, exercise price or exchange rate or other price
that is based upon and/or varies with the trading prices of or
quotations for the shares of Common Stock at any time after the
initial issuance of such debt or equity securities, or (B) with a
conversion, exercise or exchange price that is subject to being
reset at some future date after the initial issuance of such debt
or equity security or upon the occurrence of specified or
contingent events directly or indirectly related to the business of
the Company or the market for the Common Stock. For the avoidance
of doubt, the issuance of a security which is subject to customary
anti-dilution protections, including where the conversion, exercise
or exchange price is subject to adjustment as a result of stock
splits, reverse stock splits and other similar recapitalization or
reclassification events, shall not be deemed to be a
“Variable Rate Transaction.” Any Purchaser shall be
entitled to obtain injunctive relief against the Company to
preclude any such issuance, which remedy shall be in addition to
any right to collect damages.

 

4.10 Restriction
on Future Issuances. The Company agrees that, without the
prior written consent of JMP Securities LLC, it will not, for a
period of ninety (90) days after the date of the Closing Date, (a)
offer, pledge, sell, contract to sell, sell any option or contract
to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer
or dispose of, directly or indirectly, any shares of capital stock
of the Company or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company, (b) file
or cause to be filed any registration statement with the Commission
relating to the offering of any shares of capital stock of the
Company or any securities convertible into or exercisable or
exchangeable for shares of capital stock of the Company (except for
registration statements on Form S-4 or Form S-8, a resale
registration statement on Form S-3 for the shares of capital stock
of the Company issued hereunder, a resale registration statement on
Form S-3 (or Form S-1, if the Company is unable to use Form S-3)
for the notes and shares of Common Stock underlying the notes
issued in the Concurrent 144A Offering, and a resale registration
statement on Form S-3 for the 540,358 shares of Common Stock issued
or to be issued by the Company as consideration in connection with
the Company’s purchase of AutoSport USA, Inc., as described
in the Company’s Annual Report on Form 10-K filed with the
SEC on April 1, 2019) or (c) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of capital stock of the
Company, whether any such transaction described in clause
(a), (b) or (c) above is to be settled by
delivery of shares of capital stock of the Company or such other
securities, in cash or otherwise. The restrictions contained in
this Section 4.10
shall not apply to (i) the Shares to be sold hereunder, (ii) the
issuance by the Company of shares of capital stock of the Company
upon the exercise of a stock option or warrant or the conversion or
vesting of a security outstanding on the date hereof, (iii) the
issuance by the Company of equity awards of the Company under any
equity compensation plan of the Company, (iv) the issuance by the
Company of shares of capital stock of the Company or securities
convertible into, exchangeable for or that represent the right to
receive shares of capital stock of the Company in connection with
the acquisition by the Company of the securities, business,
technology, property or other assets of another person or entity,
(v) the entry into the purchase agreement governing the Concurrent
Rule 144A Offering or the issuance of shares of Common Stock upon
the conversion of the securities issued in the Concurrent Rule 144A
Offering, (vi) the sale of shares of capital stock of the Company
to cover the payment of exercise prices or the payment of taxes
associated with the exercise or vesting of equity awards under any
equity compensation plan of the Company, or (vii) the filing of a
post-effective amendment to the Company’s registration
statements on Forms S-3 (Reg. Nos. 333-223425, 333-225217 and
333-226514) and Forms S-8 (Reg. No. 333-219203, 333-223428 and
333-226440) with the Commission to maintain effectiveness of such
registration statements, provided that in each of (ii) and (iii) above, the underlying
shares of capital stock of the Company held by the Company’s
directors and officers shall be restricted from sale pursuant to
the Lock-up Agreement (defined below). In connection with the
Concurrent Rule 144A Offering, the Company has caused to be
delivered to JMP Securities LLC prior to the date of this Agreement
a letter from each of the Company’s directors and executive
officers restricting certain acquisitions and dispositions of
Company securities (each, a “Lock-Up Agreement”). The
Company will enforce the terms of each Lock-Up Agreement and issue
stop-transfer instructions to the transfer agent for the Common
Stock with respect to any transaction or contemplated transaction
that would constitute a breach of or default under the applicable
Lock-Up Agreement.

 

 

12

 

ARTICLE V

 

REGISTRATION
RIGHTS

 

5.1 Registration Procedures and Expenses;
Liquidated Damages for Certain Events.

 

(a) The Company shall
prepare and file with the Commission, as promptly as reasonably
practicable following Closing, but in no event later than 30 days
following the date hereof (the “Initial Filing Date”), a
registration statement on Form S-3 (or any successor to Form S-3),
covering the resale of the Registrable Securities (as defined
below) (the “S-3
Registration Statement”) and as soon as reasonably
practicable thereafter but in no event later than 90 days following
the date hereof (180 days in the event of a review of the S-3
Registration Statement by the SEC), to effect such registration and
any related qualification or compliance with respect to all
Registrable Securities held by the Purchasers. For purposes of this
Agreement, the term “Registrable Securities”
shall mean (i) the Shares; and (iii) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in
replacement of, any Shares. In the event that Form S-3 (or any
successor form) is or becomes unavailable to register the resale of
the Registrable Securities at any time prior to the expiration of
the Purchasers’ registration rights pursuant to Article V, the Company shall
prepare and file with the SEC, as promptly as reasonably
practicable following the Closing but in no event later than the
Initial Filing Date, a registration statement on Form S-1 (or any
successor to Form S-1), covering the resale of the Registrable
Securities (the “S-1
Registration Statement” and collectively the S-3
Registration Statement, the “Registration Statement”)
and as soon as reasonably practicable thereafter but in no event
later than 60 days following the date hereof (120 days in the event
of a review of the S-1 Registration Statement by the SEC), to
effect such registration and any related qualification or
compliance with respect to all Registrable Securities held by the
Purchasers. If the Company is not eligible to use Form S-3 at
Initial Filing Date, and the Company subsequently becomes eligible
to use Form S-3 during the Effectiveness Period (as defined below),
the Company shall file, as promptly as reasonably practicable, a
new S-3 Registration Statement covering the resale of the
Registrable Securities and replace the S-1 Registration Statement
with the new S-3 Registration Statement upon the effectiveness of
the new S-3 Registration Statement.

 

(b) The Company shall,
during the Effectiveness Period, use its reasonable best efforts
to:

 

(i) prepare and file
with the Commission such amendments and supplements to the
Registration Statement and the Prospectus used in connection
therewith as may be necessary or advisable to keep the Registration
Statement current and effective for the resale of the Registrable
Securities held by a Purchaser for a period ending on the earlier
of (i) the second anniversary of the Closing Date, (ii) the date on
which all Registrable Securities may be sold pursuant to Rule 144
during any three-month period without the requirement for the
Company to be in compliance with the current public information
required under Rule 144(c)(1) or (iii) such time as all Registrable
Securities have been sold pursuant to a registration statement or
Rule 144 (collectively, the “Effectiveness Period”).
The Company shall notify each Purchaser promptly upon the
Registration Statement and each post-effective amendment thereto
being declared effective by the Commission and advise each
Purchaser that the form of Prospectus contained in the Registration
Statement or post-effective amendment thereto, as the case may be,
at the time of effectiveness meets the requirements of Section
10(a) of the Securities Act or that it intends to file a Prospectus
pursuant to Rule 424(b) under the Securities Act that meets the
requirements of Section 10(a) of the Securities Act;

 

(ii) furnish
to each Purchaser with respect to the Registrable Securities
registered under the Registration Statement such number of copies
of the Registration Statement and the Prospectus (including
supplemental prospectuses) filed with the Commission in conformance
with the requirements of the Securities Act and other such
documents as such Purchaser may reasonably request, in order to
facilitate the public sale or other disposition of all or any of
the Registrable Securities by such Purchaser;

 

(iii) make
any necessary blue sky filings;

 

 

13

 

(iv) pay
the expenses incurred by the Company and the Purchasers in
complying with Article
V, including, all registration and filing fees, FINRA fees,
exchange listing fees, printing expenses, fees and disbursements 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 attorneys’ fees of any Purchaser
and any and all underwriting discounts and selling commissions
applicable to the sale of Registrable Securities by the
Purchasers);

 

(v) advise the
Purchasers, promptly after it shall receive notice or obtain
knowledge of the issuance of any stop order by the Commission
delaying or suspending the effectiveness of the Registration
Statement or of the initiation of any proceeding for that purpose;
and it will promptly use its reasonable best efforts to prevent the
issuance of any stop order or to obtain its withdrawal at the
earliest possible moment if such stop order should be issued;
and

 

(vi) with
a view to making available to the Purchaser the benefits of Rule
144 and any other rule or regulation of the Commission that may at
any time permit the Purchasers to sell Registrable Securities to
the public without registration, the Company covenants and agrees
to: (i) make and keep public information available, as such term is
understood and defined in Rule 144, until the earlier of (A) such
date as all of the Registrable Securities qualify to be resold
immediately pursuant to Rule 144 or any other rule of similar
effect during any three-month period without the requirement for
the Company to be in compliance with the current public information
required under Rule 144(c)(1) or (B) such date as all of the
Registrable Securities shall have been resold pursuant to Rule 144
(and may be further resold without restriction); (ii) file with the
Commission in a timely manner all reports and other documents
required of the Company under the Securities Act and under the
Exchange Act; and (iii) furnish to any Purchaser upon request, as
long as such Purchaser owns any Registrable Securities, (A) a
written statement by the Company as to whether it has complied with
the reporting requirements of the Securities Act and the Exchange
Act, (B) a copy of the Company’s most recent Annual Report on
Form 10-K or Quarterly Report on Form 10-Q, and (C) such other
information as may be reasonably requested in order to avail the
Purchaser of any rule or regulation of the Commission that permits
the selling of any such Registrable Securities without
registration.

 

The
Company understands that the Purchasers disclaim being an
underwriter, but acknowledges that a determination by the
Commission that a Purchaser is deemed an underwriter shall not
relieve the Company of any obligations it has hereunder. The
Company will not name any Purchaser as an underwriter in a
Registration Statement or Prospectus.

 

(c) If (i) the
Registration Statement is not filed on or prior to the Initial
Filing Date, or (ii) the Company fails to file with the Commission
a request for acceleration of the Registration Statement in
accordance with Rule 461 under the Securities Act, within five
Trading Days after the date the Company is first notified (orally
or in writing) by the Commission that the Registration Statement
will not be “reviewed” or will not be subject to
further review or comment, or (iii) prior to the effective date of
the Registration Statement, the Company fails to file a
pre-effective amendment and otherwise respond in writing to
comments made by the Commission in respect of such Registration
Statement within 21 days after the receipt of comments by or notice
from the Commission that such amendment or resolution of such
comments is required in order for such Registration Statement to be
declared effective, or (iv) there occurs the issuance of by the
Commission or any other federal or state governmental authority of
any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose or
(v) at any time during the period commencing from the six-month
anniversary of the date hereof and ending at such time that all of
the Registrable Securities may be resold during any three-month
period without the requirement for the Company to be in compliance
with the current public information required under Rule 144(c)(1),
the Company shall fail to satisfy the current public information
requirement under Rule 144(c) (any of the foregoing being referred
to as an “Event”, and for purposes
of clauses (i) and (v), the date on which such Event occurs, and
for purpose of clause (ii) the date on which such five Trading Day
period is exceeded, and for purpose of clause (iii) the date which
such 21-day period is exceeded, being the “Event Date”), then except
during any period of time during which the Registrable Securities
may be resold pursuant to Rule 144 without volume limitations, in
addition to any other rights the Purchasers may have hereunder or
under applicable law, on each such Event Date and on each monthly
anniversary of each such Event Date (if the applicable Event shall
not have been cured by such date) until the applicable Event is
cured, the Company shall pay to each Purchaser an amount in cash,
as liquidated damages and not as a penalty, equal to the product of
1.0% multiplied by the Purchase Price paid by such Purchaser with
respect to the Registrable Securities affected by such Event and
held by such Purchaser on such Event Date or monthly anniversary
thereof, up to a maximum of 10.0% of the Purchase Price for such
Registrable Securities provided that such maximum shall not apply
if the applicable Event is the Event described in clause (v). If
the Company fails to pay any liquidated damages pursuant to this
Section in full within seven days after the date payable, the
Company will pay interest thereon at a rate of 12% per annum (or
such lesser maximum amount that is permitted to be paid by
applicable law) to the Purchasers, accruing daily from the date
such liquidated damages are due until such amounts, plus all such
interest thereon, are paid in full. The liquidated damages pursuant
to the terms hereof shall apply on a daily pro rata basis for any
portion of a month prior to the cure of an Event.

 

 

14

 

ARTICLE VI

 

MISCELLANEOUS

 

6.1 Termination.
This Agreement may be terminated by any Purchaser, as to such
Purchaser’s obligations
hereunder only and without any effect whatsoever on the obligations
between the Company and the other Purchasers, by written notice to
the other parties, if the Closing has not been consummated on or
before May 30, 2019; provided,
however, that
no such termination will affect the right of any party to sue for
any breach by any other party (or parties).

 

6.2 Fees and
Expenses. Except as expressly set forth in the Subscription
Documents to the contrary, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts,
if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance
of this Agreement. The Company shall pay all Transfer Agent fees
(including, without limitation, any fees required for same-day
processing of any instruction letter delivered by the Company and
any exercise notice delivered by a Purchaser), stamp taxes and
other taxes and duties levied in connection with the delivery of
any Shares to the Purchasers.

 

6.3 Entire
Agreement. The Subscription Documents, together with the
exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.

 

6.4 Notices. Any
and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of: (a) the date of
transmission, if such notice or communication is delivered via
facsimile or email attachment at the facsimile number or email
address as set forth on the signature pages attached hereto at or
prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the
next Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile or email attachment at the
facsimile number or email address as set forth on the signature
pages attached hereto on a day that is not a Trading Day or later
than 5:30 p.m. (New York City time) on any Trading Day, (c) the
second (2nd)
Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual
receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set
forth on the signature pages attached hereto. To the extent that
any notice provided pursuant to any Subscription Document
constitutes, or contains, material, non-public information
regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K.

 

6.5 Amendments;
Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company and the
Purchasers. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of
any such right. Any proposed amendment or waiver that
disproportionately, materially and adversely affects the rights and
obligations of any Purchaser relative to the comparable rights and
obligations of the other Purchasers shall require the prior written
consent of such adversely affected Purchaser. Any amendment
effected in accordance with accordance with this Section 6.5 shall be binding
upon each Purchaser and holder of Shares and the
Company.

 

6.6 Headings. The
headings herein are for convenience only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of
the provisions hereof.

 

6.7 Successors and
Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of each
Purchaser (other than by merger). Any Purchaser may assign any or
all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Shares, provided that such
transferee agrees in writing to be bound, with respect to the
transferred Shares, by the provisions of the Subscription Documents
that apply to the “Purchasers.”

 

 

15

 

6.8 No Third-Party
Beneficiaries. JMP Securities LLC shall be the third party
beneficiary of the representations and warranties of the Company in
Section 3.1 and the
representations and warranties of the Purchasers in Section 3.2. This Agreement is
intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person, except
as otherwise set forth in this Section 6.8.

 

6.9 Governing Law.
All questions concerning the construction, validity, enforcement
and interpretation of the Subscription Documents shall be governed
by and construed and enforced in accordance with the internal laws
of the State of New York, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal
Proceedings concerning the interpretations, enforcement and defense
of the transactions contemplated by this Agreement and any other
Subscription Documents (whether brought against a party hereto or
its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of
New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Subscription Documents), and hereby
irrevocably waives, and agrees not to assert in any Action or
Proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such Action or Proceeding is
improper or is an inconvenient venue for such Proceeding. Each
party hereby irrevocably waives personal service of process and
consents to process being served in any such Action or Proceeding
by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any other
manner permitted by law. If any party shall commence an Action or
Proceeding to enforce any provisions of the Subscription Documents,
then the prevailing party in such Action or Proceeding shall be
reimbursed by the non-prevailing party for its reasonable
attorneys’ fees and other
costs and expenses incurred with the investigation, preparation and
prosecution of such Action or Proceeding.

 

6.10 Survival.
The representations and warranties contained herein shall survive
the Closing and the delivery of the Shares.

 

6.11 Execution.
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) with the same force
and effect as if such facsimile or “.pdf” signature page were an original
thereof.

 

6.12 Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

6.13 Rescission
and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions
of) any of the other Subscription Documents, whenever any Purchaser
exercises a right, election, demand or option under a Subscription
Document and the Company does not timely perform its related
obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time
to time upon written notice to the Company, any relevant notice,
demand or election in whole or in part without prejudice to its
future actions and rights.

 

6.14 Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then such action may be
taken or such right may be exercised on the next succeeding
Business Day.

 

 

16

 

6.15 Construction.
The parties agree that each of them and/or their respective counsel
have reviewed and had an opportunity to revise the Subscription
Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the
Subscription Documents or any amendments thereto. In addition, each
and every reference to share prices and shares of Common Stock in
any Subscription Document shall be subject to adjustment for
reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock
that occur after the date of this Agreement but before the Closing
Date.

 

6.16 WAIVER
OF JURY TRIAL. EACH
PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES. ACCORDINGLY, IN ANY ACTION, SUIT, OR
PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY
OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE
GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY,
UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY
JURY.

 

(Signature Pages Follow)

 

 

17

 

IN
WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.

 

	

RUMBLEON, INC.

	
Address for
Notice:

	
By:

	
1350 Lakeshore
Drive

	
Name: Steven R. Berrard
 

	
Suite 160

	
Title: Chief Financial
Officer 

	
Coppell, Texas
75019

 

With a
copy to (which shall not constitute notice):

 

	
Akerman
LLP

Attn: Michael
Francis

   
     Christina Russo 

350 E. Las Olas
Boulevard

Fort
Lauderdale, FL 33301

 

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

 

 

SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

 

 

18

 

 

[PURCHASER
SIGNATURE PAGES TO RUMBLEON SECURITIES PURCHASE
AGREEMENT]

 

IN
WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.

 

	
 

	
 

	
 

	

Name of
Purchaser:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Signature of Authorized Signatory of Purchaser:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Name of
Authorized Signatory:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Title
of Authorized Signatory:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Email
Address of Authorized Signatory:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Facsimile
Number of Authorized Signatory:

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Address
for Notice to Purchaser:

	
 

	
 

	
 

	
 

	
 

	

Address
for Delivery of Shares to Purchaser (if not same as address
for

	
 

	
 

	

notice):

	
 

	
 

Social Security
Number or Taxpayer ID of
Purchaser:                                                                                                                                                      

 

 

	

Subscription
Amount:

	
 

	

$

	
 

	
 

	

Shares:

	
 

	
 

	
 

	
 

 

☐ Notwithstanding anything contained in this Agreement
to the contrary, by checking this box (i) the obligations of the
above-signed to purchase the securities set forth in this Agreement
to be purchased from the Company by the above-signed, and the
obligations of the Company to sell such securities to the
above-signed, shall be unconditional and all conditions to Closing
shall be disregarded, (ii) the Closing shall occur on the third
(3rd)
Trading Day following the date of this Agreement and (iii) any
condition to Closing contemplated by this Agreement (but prior to
being disregarded by clause (i) above) that required delivery by
the Company or the above-signed of any agreement, instrument,
certificate or the like or purchase price (as applicable) shall no
longer be a condition and shall instead be an unconditional
obligation of the Company or the above-signed (as applicable) to
deliver such agreement, instrument, certificate or the like or
purchase price (as applicable) to such other party on the Closing
Date.

 

 

19

 

 

EXHIBIT A

 

INVESTOR QUESTIONNAIRE

 

IN
CONNECTION WITH RUMBLEON, INC.'S PROPOSED SALE OF CLASS B COMMON
STOCK (THE “SHARES”) , PLEASE INDICATE IF YOU QUALIFY
AS AN "ACCREDITED INVESTOR" UNDER ONE OR MORE OF THE FOLLOWING
(please check all
that apply):

 

 

Any
individual whose net worth, or joint net worth with that
person’s spouse, at the time of his or her purchase of the
Shares, exceeds US$1,000,000. For purposes of calculating net worth
under this section, (i) the person's primary residence shall not be
included as an asset; (ii) indebtedness that is secured by the
person's primary residence, up to the estimated fair market value
of the primary residence at the time of the sale of the Shares,
shall not be included as a liability (except that if the amount of
such indebtedness outstanding at the time of sale of securities
exceeds the amount outstanding 60 days before such time, other than
as a result of the acquisition of the primary residence, the amount
of such excess shall be included as a liability); and (iii)
indebtedness that is secured by the person's primary residence in
excess of the estimated fair market value of the primary residence
at the time of the sale of the Shares shall be included as a
liability.

 

Any
individual who had an individual income in excess of US$200,000 in
each of the two most recent years or joint income with that
person’s spouse in excess of US$300,000 in each of those
years and reasonably expects to reach the same income level in the
current year.

 

Any
director or executive officer of RumbleOn, Inc. For purposes of
this section, “executive officer” means the president;
any vice president in charge of a principal business unit, division
or function, such as sales, administration or finance; or any other
person or persons who perform(s) similar policymaking functions for
RumbleOn, Inc..

 

Any
organization described in section 501(c)(3) of the Internal Revenue
Code, corporation, Massachusetts or similar business trust, or
partnership not formed for the specific purpose of acquiring the
Shares, with total assets in excess of $5,000,000.

 

Any
trust, with total assets in excess of US$5,000,000, not formed for
the specific purpose of acquiring the Shares, whose purchase is
directed by a sophisticated person as described in Rule
506(b)(2)(ii) under the Securities Act of 1933, as
amended.

 

Any
bank, as defined in Section 3(a)(2) of the Securities Act of 1933,
or a savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Securities Act of 1933, whether acting
in its individual or fiduciary capacity

 

Any
broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended.

 

Any
insurance company as defined in Section 2(a)(13) of the Securities
Act of 1933.

 

Any
investment company registered under the Investment Company Act of
1940 or a business development company as defined in Section
2(a)(48) of such Act.

 

Any
Small Business Investment Company licensed by the U. S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958.

 

 

20

 

Any
plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such
plan has total assets in excess of $5,000,000.

 

Any
employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974 (“ERISA”), and either the
decision to acquire the Shares has been made by a plan fiduciary,
as defined in Section 3(21) of ERISA, which is either a bank,
savings and loan association, insurance company or registered
investment advisor, or the employee benefit plan has total assets
in excess of $5,000,000, or if a self-directed plan, investment
decisions are made solely by persons who are accredited
investors.

 

Any
private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940.

 

Any
entity in which all of the equity owners are Accredited Investors,
as described above. Type of entity:

 

 

Names
of Equity Owners:

 

	
1. __________________________________

	
2. __________________________________

	
3. __________________________________

	
4. __________________________________

 

By
signing below, the Investor confirms that the information in this
Investor Questionnaire is true, correct and complete.

 

 
____________________________________

 
Name of
Investor

 

	
By:
_______________________________

	
    
   Signature

	
Title:_______________________________

	
     
    (if any)

	
Date:
______________________________,2019 

 

 

 

 

21

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