Document:

orbc-ex105_143.htm

Exhibit 10.5

 

«GrantDate»

 

«First_Name» «Last_Name»

«Address_1»

«City», «State»  «Zip»

 

Dear «First_Name»:

In accordance with the 2016 Long-Term Incentives Plan (the “Plan”) of ORBCOMM Inc. (the “Company”), you (“Participant”) have been granted an award (the “Award”) of Stock Appreciation Rights (“SARs”).  Each SAR represents the right to receive a payment measured by the excess of the Fair Market Value (as defined in the Plan) of a specified number of shares of Stock on the date on which the Participant exercises the SAR over the grant price of the SAR as determined by the Committee.

	
 
	
Type of Grant:
	
Stock Appreciation Right
	
 

	
 
	
 
	
 
	
 

	
 
	
Number of SARs:
	
«SARsGranted»
	
 

	
 
	
 
	
 
	
 

	
 
	
Vesting Schedule:
	
See Schedules A and B attached.
	
 

 

All vesting increments are rounded to the nearest whole number of SARs. 

The Award has been granted upon the terms and conditions of this Stock Appreciation Rights Award Agreement, subject in all respects to the provisions of the Plan, as it may be amended from time to time.  The Stock Appreciation Rights Award Agreement Terms and Conditions attached hereto are incorporated into and are part of this Stock Appreciation Rights Award Agreement.  The Award is also subject to the Company’s Executive Incentive Compensation Recoupment Policy, as in effect from time to time.

If you have any questions regarding the Award, please contact Head of Human Resources, ORBCOMM Inc. at (703) 433-6370.

 

 

	
 
	
 
	
With Acknowledgement-2018

	
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Please acknowledge your agreement to this Stock Appreciation Rights Award Agreement by signing below and returning an executed copy of this Stock Appreciation Rights Award Agreement to the Company.

			
	
ORBCOMM Inc.

	
 
	
 
	
 

	
By:
	
 
	
 

	
 
	
 
	
Christian G. Le Brun

	
 
	
 
	
Executive Vice President and

	
 
	
 
	
General Counsel

 

		
	
 
	
Dated:

	
 
	
 

	
 
	
Acknowledged and Agreed:

	
 
	
 

	
 
	
 

	
 
	
Name:

	
 
	
Date:

 

 

 

	
 
	
 
	
 

	
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2
	
 

 

Schedule A

«First_Name» «Last_Name»

TIME VESTED SARs

The Time Vested SARs will vest as follows:

[Amount] will vest on [Date]

[Amount] will vest on [Date]

[Amount] will vest on [Date]

 

 

 

 

 

 

	
 
	
A-1
	
 

	
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Schedule B

 

«First_Name» «Last_Name»

PERFORMANCE VESTED SARs

Target for Performance Vested SARs eligible to vest for 2019:

			
	
 
	
Target
	
Number of Performance vested SARs eligible to vest for each target for 2019*

	
 
	
 
	
 

	
 
	
 
	
 

 

 

	
 
	
B-1
	
 

	
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[Draft of 10/15/18]

ORBCOMM INC.

2016 LONG-TERM INCENTIVES PLAN

STOCK APPRECIATION RIGHTS AWARD AGREEMENT

TERMS AND CONDITIONS

In accordance with the 2016 Long-Term Incentives Plan (the “Plan”) of ORBCOMM Inc. (the “Company”), you (the “Participant”) have been granted an award (the “Award”) of stock appreciation rights (“SARs”).  Each SAR represents the right to receive a payment measured by the excess of the Fair Market Value of a specified number of shares of Stock on the date on which the Participant exercises the SAR over the grant price of the SAR as determined by the Committee. Capitalized terms used herein and not otherwise defined herein will have the respective meanings ascribed to them in the Plan.  These Stock Appreciation Right Award Agreement Terms and Conditions are incorporated into and made a part of the Stock Appreciation Rights Award Agreement (the “Award Agreement”) detailing the specifics of your Award.

The SARs have been granted to you upon the following terms and conditions: 

1.Rights of the Participant with Respect to the SARs

(a)Payment with Respect to SAR.  Payment made in respect of any SAR exercised will be in cash, Stock or a combination of cash and Stock, as determined by the Committee in its sole discretion.  No payment will be made with respect to any SAR until the Participant has provided written notice of exercise (in such form as the Committee may direct) of the number of SARs to be exercised. 

(b)No Stockholder Rights.  The SARs granted pursuant to the Award do not and will not entitle Participant to any rights of a stockholder of the Company.  The rights of Participant with respect to the SARs will remain forfeitable at all times prior to the date on which such rights become vested, and the restrictions with respect to the RSUs lapse, in accordance with Section 2.   

(c)Issuance of Stock.  To the extent payment of any SAR is made in shares of Stock pursuant to Section 1(a) above, no shares of Stock will be issued to Participant prior to the date on which the SARs vest and are exercised pursuant to the Award and the Plan.  Payment of an exercised SAR made in shares of Stock will be calculated based on the Fair Market Value of the Stock on the date of exercise (or such other date as the Committee shall determine in its sole discretion).  To the extent payment of an exercised SAR is made in shares of Stock, the Company will promptly cause to be issued in book-entry form, registered in Participant’s name or in the name of Participant’s legal representatives, beneficiaries or heirs, as the case may be, such number of whole shares of Stock in payment of the portion of the exercised SAR determined by the Committee to be paid in Stock.  The value of any fractional shares of Stock otherwise payable will be paid in cash at the time delivery of the shares of Stock is made to Participant in respect of the exercised SARs.  Neither the Award or the Plan nor any action taken pursuant to or in accordance with this Section 1 will be construed to create a trust of any kind.  

 

	
 
	
 
	
 

	
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(d)Expiration of SARs.  The SARs granted pursuant to the Award will expire on the earlier of (i) the date such SAR is forfeited in accordance with the Award or (ii) ten years after the date of grant. 

2.Vesting.  

(a)Vesting by Time.  You will be deemed to have earned the SARs subject to the Award with respect to the number of SARs set forth on Schedule A to the Award Agreement, based on your remaining employed with the Company for the specified time periods set forth on Schedule A to the Award Agreement.  

(b)Vesting Upon Achievement of Performance Goals.  You will be deemed to have earned the SARs subject to the Award with respect to the number of SARs set forth on Schedule B to the Award Agreement, based on achievement by you and/or the Company (as determined in the sole discretion of the Committee) of the performance targets set forth in Schedule B to the Award Agreement.  

(c)Vesting in Connection With a Change of Control.  Subject to the other terms and conditions set forth herein, if a Change of Control occurs and: 

(i)all outstanding SARs are replaced with Replacement Awards and within two years after such Change of Control, your employment or service with the Company is terminated for any reason other than cause, all unvested Replacement Awards will vest and be exercisable as provided in Section 10(a) of the Plan promptly upon and no later than 30 days after the effective date of such termination of employment or service following a Change of Control and subject to Section 10(c) of the Plan; provided, however, that all applicable performance periods will be deemed completed in full and no pro ration shall be applicable; or 

(ii)all outstanding SARs are not replaced with Replacement Awards, then to the extent that any then-outstanding SARs are not vested, they will vest and be exercisable as provided in Section 10(b) of the Plan promptly upon and no later than 30 days after the effective date of such Change of Control and subject to Section 10(c) of the Plan; provided, however, that all applicable performance periods will be deemed completed in full and no pro ration shall be applicable.

(c)Vesting Upon Termination of Employment.  Except as otherwise specifically provided in a written agreement between the Participant and the Company, if, prior to vesting of the SARs pursuant to Section 3, Participant ceases to be employed by the Company for any reason (voluntary or involuntary) including death or permanent long-term disability, then, subject to the other terms and conditions set forth herein, Participant’s rights to all of the unvested SARs will immediately expire and terminate as of the date of such termination of employment.  

 

	
 
	
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3.Restriction on Transfer.  The SARs will be deliverable, during your lifetime, only to you and are not transferable by you other than (a) by will or by the laws of descent and distribution; or (b) by gift to your spouse or natural, adopted or step-children or grandchildren (“Immediate Family Members”) or to a trust for the benefit of one or more of your Immediate Family Members or to a family charitable trust established by you or a member of your family. 

4.Adjustments to Stock Appreciation Rights.  In the event of any change in or affecting the outstanding shares of Stock by reason of a stock dividend or split, merger or consolidation on or after the date of the Award, or various other events, adjustments will be made as appropriate in connection with the SARs as contemplated in the Plan.  Notwithstanding anything in this paragraph to the contrary, no adjustment will be made to the Award to the extent that the adjustment would constitute an additional deferral or acceleration of payment in violation of Section 409A. 

5.Income Tax Matters.  The Company will have the right, in connection with the exercise of SARs under the Award, (a) to deduct from any payment otherwise due by the Company to Participant or any other person receiving delivery of cash or shares of Stock an amount equal to any taxes required to be withheld by law with respect to such delivery, (b) to require Participant or any other person receiving such delivery to pay to the Company an amount sufficient to provide for any such taxes so required to be withheld, (c) to require Participant to sell such number of shares of Stock otherwise deliverable as may be necessary so that the net proceeds of such sale will be an amount sufficient to provide for any such taxes so required to be withheld and to pay such amount to the Company or (d) to reduce the number of shares of Stock Participant is to receive upon exercise of SARs under the Award by the smallest number of whole shares of Stock which, when multiplied by the Fair Market Value of the shares of Stock determined as of the exercise or delivery date, is equal in value to any such taxes so required to be withheld. 

6.Forfeiture in the Event of Breach of Non-Competition and/or Non-Solicitation Covenant.  The Participant acknowledges that his or her continued employment with the Company and the SARs are sufficient consideration for the obligations contained in the Award, including, without limitation, the restrictions imposed upon the Participant by this Section 6. 

(a)Non-Competition.  The Participant expressly agrees and covenants that during the Participant’s employment and for the six (6)-month period immediately thereafter, the Participant will not, anywhere in the world, whether directly or indirectly, for himself or herself or for any third party, (i) engage in any business activity, (ii) provide professional services to another person or entity (whether as an employee, consultant, or otherwise), or (iii) become a partner, member, principal, or stockholder having a 10% or greater interest in any entity, but in each such case, only to the extent that such activity, person or entity is in competition with the Business (as defined below).  The Participant acknowledges and understands that, due to the global nature of the Company’s business and the technological advancements in electronic communications around the world, any geographic restriction of the Participant’s obligation under this Section 6(a) would be inappropriate and counter to the protections sought by the Company hereunder.

 

	
 
	
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(b)Non-Solicitation.  The Participant expressly agrees and covenants that during the Participant’s employment and for the one (1)-year period immediately thereafter, the Participant will not, anywhere in the world, whether directly or indirectly, for himself or herself or for any third party:  (i) solicit any business or contract, or enter into any business or contract, directly or indirectly, with any supplier, licensee, customer or partner of the Company that (A) was a supplier, licensee, customer or partner of the Company at, or within six (6) months prior to, the termination of Participant’s employment, or (B) was a prospective supplier, licensee, customer, or partner of the Business at the time of the Participant’s termination of employment, and in either case, for purposes of engaging in an activity that is in competition with the Business; or (ii) solicit or recruit, directly or indirectly, any of the Company’s or its subsidiaries’ employees, or any individual who was employed by the Company’s or its subsidiaries’ within six (6) months prior to the termination of the Participant’s employment, for employment or engagement (whether as an employee, consultant or otherwise) with a person or entity involved in marketing or selling products or services competitive with the Business.  The Participant acknowledges and understands that, due to the global nature of the Company’s business and the technological advancements in electronic communications around the world, any geographic restriction of the Participant’s obligation under this Section 6(b) would be inappropriate and counter to the protections sought by the Company hereunder.

(c)Forfeiture. If the Company determines that the Participant has violated any provisions of Section 6(a) or (b), then the Participant agrees and covenants that: 

(i)any portion of SARs (whether vested or unvested) that has not been paid to the Participant as of the date of such determination will be immediately rescinded; 

(ii)the Participant will automatically forfeit any rights the Participant may have with respect to the SARs as of the date of such determination; and 

(iii)if the Participant has received shares of Stock as payment with respect to vested SARs under the terms of the Award within the one (1) year period immediately preceding or following a violation of Section 6(a) or the one (1) year period immediately preceding a violation of Section 6(b), upon the Company’s demand, the Participant will immediately deliver to the Company a certificate or certificates for shares of Stock (1) equal to the number of shares paid to the Participant under the Award if any part of such payment was made in shares of Stock and/or (2) equal to the value paid to the Participant under the terms of the Award if any part of such payment was made in cash.  

(d)Definition of Business. For purposes of Section 6(a) and Section 6(b), “Business” will mean the business of offering wireless data communication services, including for the purpose of tracking and/or monitoring fixed or mobile assets, the business of designing, manufacturing or distributing modems or terminals that operate on such services, or any other business in which the Company is materially engaged during the Participant’s period of employment or, with respect to any post-employment period, during the six (6) month period immediately preceding the Participant’s termination of employment.  

 

	
 
	
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(e)Severability.  The Participant acknowledges and agrees that the period, scope and geographic areas of restriction imposed upon the Participant by the provisions of Section 6 are fair and reasonable and are reasonably required for the protection of the Company.  In the event that any part of the Award, including, without limitation, Section 6, is held to be unenforceable or invalid, the remaining parts of Section 6 and the Award will nevertheless continue to be valid and enforceable as though the invalid portions were not a part of the Award.  If any one of the provisions in Section 6 is held to be excessively broad as to period, scope and geographic areas, any such provision will be construed by limiting it to the extent necessary to be enforceable under applicable law. 

(f)Additional Remedies.  The Participant acknowledges that breach by the Participant of the Award would cause irreparable harm to the Company and that in the event of such breach, the Company will have, in addition to the remedies set forth in Section 6(c), monetary damages and other remedies at law or in equity, the right to an injunction, specific performance and other equitable relief to prevent violations of the Participant’s obligations hereunder.

7.Miscellaneous.

(a)The Award does not confer on Participant any right with respect to the continuance of any relationship with the Company or its subsidiaries, nor will it interfere in any way with the right of the Company to terminate such relationship at any time.

(b)To the extent that any payment of any SAR is made in shares of Stock pursuant to the terms of the Award, the Company will not be required to deliver any shares of Stock upon exercise of any SARs until the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.

(c)To the extent there is any conflict between the terms contained in the Award Agreement (including these Stock Appreciation Right Award Agreement Terms and Conditions) and the Plan, the terms of the Plan will control.

 

 

	
 
	
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Exhibit 4.1

 

WARRANT TO PURCHASE CLASS B COMMON STOCK

 

OF

 

RUMBLEON, INC.

 

ISSUED
ON October 30, 2018

 

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

 

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

 

FOR
VALUE RECEIVED, RUMBLEON, INC., a Nevada corporation (the
“Company”),
hereby agrees to sell upon the terms and conditions hereinafter set
forth, but no later than 5:30 p.m., Eastern Time, on the Expiration
Date (as hereinafter defined) to Hercules Capital, Inc. or its
registered assigns (the “Holder”), under the terms as
hereinafter set forth, the Applicable
Number of fully paid and non-assessable shares of the
Company’s Class B Common Stock, par value $0.001 per share
(the “Warrant
Shares”), at a per share purchase price equal to $7.16
per share (the “Warrant
Price”), pursuant to this warrant (this
“Warrant”). The
term “Applicable
Number” shall mean 20,950 shares. The number of
Warrant Shares to be so issued and the Warrant Price are subject to
adjustment in certain events as hereinafter set forth. The term
“Class B Common Stock” shall mean, when
used herein, unless the context otherwise requires, the stock and
other securities and property at the time receivable upon the
exercise of this Warrant.

 

1.      Definitions

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

k.           “Excluded
Securities” means:

 

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

 

 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

2

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.      Exercise
of Warrant.

 

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

 

 

3

 

 

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

 

  X=Y(A-B)

A

 

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

 

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

 

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

 

B = the
Warrant Price.

 

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

 

(i) 

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

 

(ii) 

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

 

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

 

 

 

4

 

 

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

 

3.      Disposition
of Warrant Shares and Warrant.

 

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

 

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

 

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

 

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

 

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

 

 

5

 

 

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

 

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

 

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

 

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

 

 

6

 

 

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

 

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

 

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

 

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

 

d.           Anti-Dilution.

 

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

 

 

 

7

 

 

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

 

A * [(C
+ D)/B]

 

where:

 

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

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

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

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

 

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

 

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

 

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

 

8.      Representations,
Warranties And Covenants of the Company.

 

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

 

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

 

 

 

8

 

 

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

 

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

 

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

 

9.      Notice
To Holders.

 

a.           Notice
of Record Date. In case:

 

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

 

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

 

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

 

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

 

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

 

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

 

10.                 Registration
Rights

 

 

9

 

 

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

 

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

 

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

 

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

 

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

 

(ii)                 advise
the Holders:

 

 

10

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

11

 

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

12

 

 

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

 

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

 

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

 

 

13

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

 

 

14

 

 

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

 

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

 

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

 

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

 

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

 

13.                 [Reserved]

 

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

 

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

 

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

 

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

 

15

 

[SIGNATURE
PAGE TO WARRANT TO PURCHASE STOCK]

 

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

 

 

	

 

	
RUMBLEON,
INC.

	

 

	

 

	

 

	

 

	

 

	
 

	
By:  

	
/s/ Marshall
Chesrown

	

 

	

 

	

 

	
Name: 
Marshall
Chesrown

	

 

	

 

	

 

	

Title:
Chief Executive Officer

	

 

 

 

 

 

EXHIBIT I

 

FORM OF
EXERCISE

 

(to be
executed by the registered holder hereof)

 

1.            

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

 

2.            

The undersigned
hereby exercises the right to purchase _____________ (leave blank
if you choose Alternative No.1 above) shares of Class B Common
Stock of RumbleON, Inc., evidenced by the within this Warrant
Certificate for a Warrant Price equal to $7.16 per share and herewith makes payment
of the Purchase Price in full of $_________.

 

3.            

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

 

Dated:
________________, 20__.

 

 

 

                                                                 

Instructions
for registration of stock:

 

 

                                                                 

Name
(Please Print)

 

Social Security or other identifying Number:                                                                   

 

  

Address:                                                                 

City/State
and Zip Code

 

 

Instructions
for registration of certificate representing

the
unexercised balance of Warrants (if any)

 

 

 

                                                                 

Name
(Please Print)

 

Social
Security or other identifying Number:                                                                    

  

Address:                                                                 

City/State
and Zip Code

 

  

 

 

 

EXHIBIT II

 

TRANSFER
NOTICE

 

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

 

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

 

                                                                                                         

(Please
Print)

 

whose address
is                                                                                                          

 

 

 

Dated:                                                                                      

 

Holder’s
Signature:                                                                                      

 

Holder’s
Address:                                                                        

 

 

 

 

Signature
Guaranteed:                                                                                                            

 

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

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