Document:

Blueprint

 Exhibit 10.4

 

FORM OF

 

SENIOR SECURED CONFESSED JUDGMENT PROMISSORY NOTE

 

THIS
NOTE AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE
ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.

 

$___________  January
14, 2020 (“Effective
Date”)

 

 

IMPORTANT NOTICE

 

THIS INSTRUMENT CONTAINS A CONFESSION OF JUDGMENT PROVISION WHICH
CONSTITUTES A WAIVER OF IMPORTANT RIGHTS YOU MAY HAVE AS A DEBTOR
AND ALLOWS THE CREDITOR TO OBTAIN A JUDGMENT AGAINST YOU WITHOUT
ANY FURTHER NOTICE.

 

 

FOR VALUE
RECEIVED, the undersigned,
RumbleOn, Inc., a Nevada corporation (“Borrower”),
does hereby promise to pay to the order of ___________
(“Lender”),
on January 31, 2021 (the “Maturity
Date”), or such earlier
time as provided herein, the principal sum of
______________________ Dollars ($___________) (the
“Principal
Amount”), in lawful money
of the United States of America, together with any unpaid, accrued
interest (“Interest”)
thereon, on the terms and conditions set forth in this Senior
Secured Confessed Judgment Promissory Note (this
“Note”).

 

1. Interest.
From the Effective Date through and until the Maturity Date,
Interest shall accrue on the outstanding and unpaid Principal
Amount at the rate of 10.0% per annum. Interest shall be computed
on the basis of a 365-day year for the actual number of days in the
interest period. All accrued Interest shall be paid to Lender
quarterly in arrears on the last day of each of the Company's
fiscal quarters beginning on March 30, 2020, and, if applicable, on
the Maturity Date.

 

2. Maturity
Date. Borrower will repay the
outstanding Principal Amount, together with any accrued and unpaid
Interest thereon, in one lump sum on the Maturity
Date.

 

3. Prepayment.
The Principal Amount and any Interest accrued thereon may be
prepaid by Borrower at any time prior to the Maturity Date without
premium or penalty.

 

4. Application
of Payments. All payments made
under this Note shall be applied first to late penalties or other
sums owed to the holder of this Note, next to accrued interest, if
any, and then to the Principal Amount.

 

 

 

 

5. Conversion.

 

(a) At
any time prior to and including the Maturity Date, any Interest and
Principal Amount due under the Note shall be convertible into
shares of the Borrower’s Class B
Common Stock, par value $0.001 per share (“Conversion
Shares”) at a conversion price of $3.00 per share (a
“Conversion”) at the Lender's option.

 

(b) In the event that
any Conversion of this Note in whole or in part into Class B Common
Stock is not permitted under applicable law, rule, regulation or
stock exchange requirement or would result in the issuance of any
fraction of a share of Class B Common Stock, the Borrower shall not
be obligated to issue such shares or fraction of a share of Common
Stock but shall promptly pay to the Lender in cash the amount of
the Note otherwise to be satisfied by such shares or fraction of a
share of Class B Common Stock.

 

(c) Subject to Section
5(a) above, the Borrower shall at all times cause to be reserved
for issuance such number of authorized and unissued shares of
Common Stock as shall be sufficient for conversion of this Note.
The Borrower (i) covenants to instruct its transfer agent to issue
certificates for the Common Stock issuable upon conversion of this
Note and (ii) agrees that its issuance of this Note shall
constitute full authority to its officers and agents who are
charged with the duty of executing stock certificates to execute
and issue the necessary certificates for shares of Class B Common
Stock in accordance with the terms and conditions of this
Note.

 

(d) Any certificates
issued in exchange for, or in substitution or upon conversion of
this Note, shall bear the following legend:

 

“THE
SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR UNDER ANY APPLICABLE STATE SECURITIES LAW AND MAY
NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO A VALID EXEMPTION UNDER SUCH ACT AS EVIDENCED IN AN
OPINION OF COUNSEL TO RUMBLEON, INC. THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT AND THE RULES AND REGULATIONS
PROMULGATED THEREUNDER.”

 

6. Adjustments
for Certain Structural Events.

(a) Splits
and Combinations. If the
Borrower combines its outstanding equity securities into a smaller
number of equity securities, the conversion price in effect
immediately before the combination will be proportionately
increased, as of the effective date of the combination, as follows:
(i) the number of Conversion Shares issuable to the Lender
hereunder immediately before the effective date of the combination
will be adjusted so that the Lender, if the Note is converted on or
after that date, will receive the number of Conversion Shares that
the Lender would have owned and been entitled to receive as a
result of the combination had the Note been converted immediately
before that date; and (ii) the conversion price in effect
immediately before such adjustment will be adjusted by multiplying
the conversion price by a fraction, the numerator of which is the
aggregate number of Conversion Shares issuable to the Lender upon
conversion of this Note immediately before such adjustment, and the
denominator of which is the aggregate number of Conversion Shares
issuable to the Lender upon conversion of this Note immediately
thereafter. If the Borrower subdivides its outstanding equity
securities, the number of Conversion Shares issuable upon
Conversion hereunder will be proportionally increased and the
conversion price in effect before the subdivision will be
proportionately decreased, as of the effective date of the
subdivision, as follows: (A) the number of Conversion Shares
issuable to the Lender upon the conversion of this Note immediately
before the effective date of the subdivision will be adjusted so
that the Lender, if converted on or after that date, will receive
the number of Conversion Shares that the Lender would have owned
and been entitled to receive as a result of the subdivision had the
Note been converted immediately before that date; and (B) the
conversion price in effect immediately before the adjustment will
be adjusted by multiplying the conversion price by a fraction, the
numerator of which is the aggregate number of Conversion Shares
issuable to the Lender upon Conversion of this Note immediately
before such adjustment, and the denominator of which is the
aggregate number of Conversion Shares issuable to the Lender upon
Conversion of this Note immediately thereafter.

 

(b) Reorganization,
Recapitalization, Merger. If
there occurs any reorganization, recapitalization,
reclassification, merger, or statutory conversion to another form
of business entity involving the Borrower in which the equity
securities of the Borrower are converted into or exchanged for
other securities (other than a transaction covered by Section 6(a),
then Lender will receive upon conversion of this Note, in lieu of
the Conversion Shares of the Borrower immediately theretofore
issuable upon conversion of this Note, for the aggregate conversion
price in effect prior thereto, the kind and amount of other
securities receivable upon such reorganization, recapitalization,
reclassification, merger, or statutory conversion to another form
of business entity, by the holders of the number of Conversion
Shares of the Borrower for which this Note could have been
converted immediately prior to such reorganization,
recapitalization, reclassification, merger, or statutory conversion
to another form of business entity.

 

 

 

 

7.   
Default.
If (1) Borrower shall fail to pay the then unpaid Principal Amount
on the Maturity Date or any Interest accrued thereon when due, (2)
Borrower shall fail to perform, observe or comply with any other obligation under
this Note, which failure is not cured promptly but in no case more
than fifteen (15) days after written notice to Borrower, except
that in the event Borrower is unable to complete the cure within
the fifteen (15) day period, the cure period shall be extended if
Borrower has commenced the cure within fifteen (15) days and is
diligently pursuing the cure; in no event, however, shall the cure
period exceed thirty (30) days from the date of Lender’s
notice, unless Lender and Borrower mutually agree to an extension
of the cure period, (3) Borrower shall fail to perform, observe or
comply with any other obligation under the Security Agreement
attached hereto and incorporated herein by reference
as
Exhibit A and executed on the date
hereof by the Borrower in favor of the Lender (the “Security
Agreement”), which failure is not cured promptly but in no
case more than fifteen (15) days after written notice to Borrower,
except that in the event Borrower is unable to complete the cure
within the fifteen (15) day period, the cure period shall be
extended if Borrower has commenced the cure within fifteen (15)
days and is diligently pursuing the cure; in no event, however,
shall the cure period exceed thirty (30) days from the date of
Lender’s notice, unless Lender and Borrower mutually agree to
an extension of the cure period, (4) Borrower is acquired in a
merger, consolidation, transfer of all or substantially all of its
assets, or enters into any other strategic transaction with a third
party(ies) pursuant to which Borrower assigns to the third
party(ies) the right to use all of the assets of Borrower in
exchange for payments, or (7) Borrower shall commence a voluntary
case concerning itself under Title 11 of the United States Code
entitled “Bankruptcy,” as now or hereafter in effect,
or any successor thereto (the “Bankruptcy
Code”); or an involuntary
case is commenced against Borrower under the Bankruptcy Code, and
the petition is not controverted within 30 days, or is not
dismissed within 90 days, after commencement of the case; or a
trustee or custodian is appointed for, or takes charge of, all or
substantially all of the property of Borrower, or Borrower
commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to Borrower, or there
is commenced against Borrower any such proceeding which remains
undismissed for a period of 90 days, or Borrower is adjudicated
insolvent or bankrupt; or any order of relief or other order
approving any such case or proceeding is entered; or Borrower makes
a general assignment for the benefit of creditors (any of the
events referred to in Section 7 (1) – (7) above being
referred to herein as a “Default”); then Lender, by
written notice to Borrower, may declare the unpaid Principal Amount
and any accrued Interest thereon to be, and the same shall
thereupon become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are
hereby waived by Borrower, and Interest on the unpaid Principal
Amount shall thereafter accrue at the rate of fifteen percent (15%)
per annum.

 

8. Security.

 

As
security for the prompt payment and complete performance of
Borrower of its obligations under this Note, Borrower has executed
and delivered to the Lender on the date hereof the Security
Agreement.

 

9.   
Subordination.

 

(a) Notwithstanding
anything to the contrary set forth in this Note, all of the
obligations under this Note ("Subordinated
Obligations") shall at all
times and in all respects be subordinate and junior in right of
payment to all Senior Debt (defined below), and for so long as any
Senior Debt shall be outstanding, Borrower shall not be obligated
to make any payments otherwise required hereunder if the Borrower
is then in default under any agreements evidencing and securing the
Senior Debt ("Senior Debt
Documents") or the payment
would cause the Borrower to be in default under the Senior Debt
Documents. For purposes of this Note, "Senior
Debt" shall mean any other
indebtedness of the Borrower as defined under United States
Generally Accepted Accounting Principles, as in effect on the date
hereof, that is secured by any assets of the Borrower, and that is
(i) indebtedness for borrowed money or indebtedness evidenced by
notes, bonds or similar instruments, related to any term loan,
revolving credit financing, working capital financing, floor plan
financing or real estate financing, and (ii) purchase money
indebtedness and capital leases, in the case of (i) or (ii),
whether now existing or entered into
after the date hereof.

 

(b) The
security interest granted under the Security Agreement (the
“Security Interest”) shall be subordinated for all
purposes and in all respects to the liens and security interests
securing any Senior Debt, regardless of the time, manner or order
of perfection of any such liens and security
interests.

 

(c) Promptly
upon Borrower's request, Lender will from time to time execute and
deliver a subordination agreement on the terms consistent with this
Section 9 and reasonably requested by any holder of any Senior Debt
(or any agent for such holders), including but not limited to
subordination provisions providing for "deep subordination" of this
Note, the Subordinated Obligations and the Security Interest to any
Senior Debt; provided that the provisions of such subordination
agreement shall not expand the limitations on Borrower's payment
obligations set forth in the first sentence of Section
9(a), that is, those provisions shall not restrict a
payment by Borrower to Lender in a manner that is not otherwise
contemplated by the first sentence of Section 9(a). Lender shall
also agree to provide any requested UCC amendment subordinating any
of its collateral that is subject to the security interest of any
holder of Senior Debt.

 

(d) The
subordination, agreements and priorities set forth in this Section
9 shall remain in full force and effect until this Note shall have
been indefeasibly paid in full (regardless of whether or not any
Senior Debt shall be outstanding), and in the event the Lender is
required to return to any party funds or other property that Lender
receives from Borrower or any of its respective affiliates in
respect of the Subordinated Obligations, the Lender shall not have
been deemed to have waived its rights to payment in full under this
Note, provided that the provisions of this Section 9 shall apply to
such rights to payment of the Lender and to the continuing
obligations of the Borrower in respect thereof (which for all
purposes shall continue to be Subordinated Obligations hereunder),
and Lender agrees to be bound thereby.

 

 

 

 

10. CONFESSION
OF JUDGMENT. UPON A DEFAULT OF
THIS NOTE, THE BORROWER AUTHORIZES ANY ATTORNEY ADMITTED TO
PRACTICE BEFORE ANY COURT OF RECORD IN THE UNITED STATES, INCLUDING
GLENN D. SOLOMON, AS THE BORROWER’S TRUE AND LAWFUL
ATTORNEY-IN-FACT, WITH FULL POWER AND AUTHORITY FOR THE BORROWER,
IN THE BORROWER’S NAME, PLACE AND STEAD, ON BORROWER’S
BEHALF, TO WAIVE THE ISSUANCE AND SERVICE OF PROCESS AND CONFESS
JUDGMENT AGAINST THE BORROWER, IN THE FULL AMOUNT THEN DUE UNDER
THIS NOTE, INCLUDING ANY EXPENSES OF COLLECTION, PLUS REASONABLE
ATTORNEYS’ FEES. THE AUTHORITY AND POWER TO APPEAR FOR AND
ENTER JUDGMENT AGAINST THE BORROWER SHALL NOT BE EXTINGUISHED BY
ANY JUDGMENT ENTERED PURSUANT THERETO; SUCH AUTHORITY AND POWER MAY
BE EXERCISED ON ONE OR MORE OCCASIONS FROM TIME TO TIME, IN THE
SAME OR DIFFERENT JURISDICTIONS, AS OFTEN AS THE HOLDER OF THIS
NOTE SHALL DEEM NECESSARY OR ADVISABLE UNTIL ALL SUMS DUE UNDER
THIS NOTE HAVE BEEN PAID IN FULL.

 

11. No
Waiver or Modification Except in Writing. No failure on the part of Lender to exercise,
and no delay in exercising, any right, remedy, or power under this
Note or under any other document or agreement executed in
connection with this Note shall operate as a waiver thereof. This
Note may not be amended or modified orally, nor may any right or
provision hereof be waived orally, but only by an instrument in
writing signed by the party against which enforcement of such
amendment, modification or waiver is sought.

 

12. Waiver
of Presentment. Borrower hereby
waives presentment for payment, protest and notice of maturity or
non-payment.

 

13. Severability.
If any provision of this Note is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this
Note will remain in full force and effect. Any provision of this
Note held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or
unenforceable. The parties consent to the reformation of any
invalid or unenforceable provision so that it is enforceable to the
maximum extent permitted by law.

 

14. Notices.
All notices, requests, consents, demands, and other communications
under this Note shall be in writing and shall be delivered either
(a) via hand delivery; (b) via facsimile to the recipient’s
number (with a confirmation copy delivered via reputable airborne
carrier); or (c) via reputable airborne carrier (e.g., Federal
Express or DHL). Notice shall be deemed delivered when actually
received by the intended recipient. All notices shall be addressed
to such address as any party may indicate for itself by written
notice to the other party.

 

15. Assignments.
The Lender shall not assign or transfer any claim, or suffer or
permit the creation or attachment of any lien, claim, encumbrance,
hypothecation or pledge upon any claim, with respect to the
Subordinated Obligations, unless such assignment or transfer is
made expressly subject to this Note, and Lender agrees to provide
to any holder of Senior Debt (or its agents) written confirmation
from any such assignee or transferee of receipt of, and agreement
to be bound by, this Note. Any assignee or pledgee of this Note
shall promptly deliver to Borrower a written acknowledgement of the
subordination provisions contained in Section 9 of this Note and
its obligation to comply therewith. In the event one or more
subordination agreements are in effect, any assignee or pledgee of
this Note shall promptly execute a joinder to or an acknowledgement
of such subordination agreement(s) in the form reasonably
acceptable to the Senior Lender(s) party to such subordination
agreement(s).

 

16. Governing
Law. This Note shall be
governed by and construed in accordance with the laws of the State
of Maryland.

 

17. Consent
to Jurisdiction. Each of
Borrower and Lender submits to the exclusive jurisdiction of any
state or federal court within the State of Maryland in any action
or proceeding arising out of or relating to this Agreement and
agrees that all claims in respect of the action or proceeding shall
be exclusively heard and determined in any such court. The parties
hereby irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have
to the laying of venue of any such dispute brought in such court.
Each of the Parties waives any defense of inconvenient forum to the
maintenance of any action or proceeding so
brought.

 

18. WAIVER
OF JURY TRIAL: EACH PARTY
HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS NOTE OR THE SUBJECT MATTER
HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS NOTE,
INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH
OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS
SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND
THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY
HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS
REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL.

 

 

 

 

19. Facsimile
Signature. The execution of
this Note by Borrower and the delivery to Lender of a facsimile or
PDF copy of such executed Note shall be effective to obligate
Borrower hereunder for all purposes and such facsimile or PDF copy
shall be deemed to be an original for all
purposes.

 

20. Usury
Laws. It is the intention of
the parties to conform strictly to all applicable usury laws now or
hereafter in force, and if the interest imposed hereunder is in
excess of the maximum legal amount allowed under the applicable
usury laws as now or hereafter construed by the courts having
jurisdiction over such matters (the “Usury Laws’) any
Interest payable under this Note shall be subject to reduction to
the amount equal to the maximum legal amount allowed under the
Usury Laws. The aggregate of all interest (whether designated as
interest, service charges, points, or otherwise) contracted for,
chargeable, or receivable under this Note shall under no
circumstances exceed the maximum legal rate upon the unpaid
principal balance of this Note remaining unpaid. If such interest
does exceed the maximum legal rate, it shall be deemed a mistake
and such excess shall be canceled automatically and, if theretofore
paid, rebated to Borrower or credited on the unpaid Principal
Amount, or if this Note has been repaid, then such excess shall be
rebated to Borrower.

 

21. Expenses
of Collection. Upon a Default,
this Note may be referred to an attorney for collection, whether or
not judgment has been confessed or suit has been filed, and the
Borrower shall pay all of the reasonable costs, fees, and expenses,
including reasonable attorney’s fees, incurred by the
Lender.

 

22. Binding
Nature. This Note shall inure
to the benefit of and be enforceable by the Lender and the
Lender’s successors and permitted assigns, and shall be
binding and enforceable against the Borrower and the
Borrower’s successors and assigns.

 

NOW THEREFORE,
Borrower has executed this Senior
Secured Confessed Judgment Promissory Note under seal on the date
first above written.

 

	

WITNESS: 

	
BORROWER: 

	

 

	

	
RUMBLEON,
INC.

	

 

	

 

	

 

	

 

	

 

	

	
By:  

	

	

 

	

 

	

 

	
Marshall
Chesrown

	

 

	

 

	

 

	

Chief
Executive Officer

	

 

 

 

ACKNOWLEDGED
AND AGREED:

 

LENDER:

 

 

__________________________________

[Signature Page to the Form of Note]Blueprint

 Exhibit 10.5

FORM
OF

SECURITY AGREEMENT

 

THIS
SECURITY AGREEMENT (the “Agreement”), made this
14th day
of January, 2020, by and among RUMBLEON, INC., a Nevada
corporation, with an address of 901 West Walnut Hill Lane, Irving,
Texas 75038 ("Debtor"),
and HALCYON CONSULTING, LLC, a Maryland limited liability company,
with an address of 8600 S. Freeport Parkway, Suite 330, Irving,
Texas 75063, Denmar Dixon, with an address of
___________________________________________, Blue Flame Capital,
LLC, with an address of __________________________________________,
Lori Sue Chesrown, with an address of
____________________________________, and Ralph Wegis, with an
address of _____________________________________, (each, a
"Secured
Party" and collectively, "Secured
Parties").

 

1. Grant of Security
Interest. Subject to the applicable terms of this Agreement,
Debtor grants to Secured Parties a security interest in the
Collateral to secure, on a pro rata basis based on the percentage
equal to the amount of principal outstanding on a Note divided by
the amount of principal outstanding on all of the Notes to each
Secured Party, the payment of the Obligations, provided that the
security interest granted hereby is subject to the provisions of
applicable law (e.g., UCC Section 9-408(c)).

 

2. The
Obligations. As used in this Agreement, "Obligations"
means collectively all of the following:

 

(a) All amounts due
pursuant to the terms of the five (5) promissory notes of even date
herewith described in Exhibit A
attached hereto (individually, a “Note” and
collectively, "Notes").

 

(b) All costs incurred
by Secured Parties to enforce the security interest granted hereby
("Security
Interest"), collect the Obligations, and maintain the
Collateral free of liens (other than Permitted Encumbrances as
defined in Exhibit B
attached hereto), and including (but not limited to) reasonable
attorneys' fees and legal expenses, and expenses of
sale.

 

3. The
Collateral. As used in this Agreement, "Collateral"
shall mean all of Debtor's assets, both now and hereafter acquired,
and wherever located, including but not limited to:

 

(a) Accounts;

 

(b) Chattel
paper;

 

(c) Contracts;

 

(d) Deposit
accounts;

 

(e) Documents;

 

 

 

 

(f) Equipment;

 

(g) Farm
products;

 

(h) Fixtures;

 

(i) General
intangibles;

 

(j) Goods;

 

(k) Instruments;

 

(l) Inventory;

 

(m) Investment
property;

 

(n) Letter-of-credit
rights;

 

(o) The Trademark
Collateral; and

 

(p) Proceeds and
products of all of the foregoing; provided however,
that the "Collateral" shall exclude the "Excluded
Property". Excluded Property means (i) motor vehicles and
other assets subject to certificates of title, letter of credit
rights and commercial tort claims; (ii) pledges and security
interests prohibited by applicable law, rule, regulation; (iii)
equity interests in any person other than wholly-owned subsidiaries
of Debtor; (iv) any lease, license or other agreement to the extent
that a grant of a security interest therein would violate or
invalidate such lease, license or agreement or create a right of
termination in favor of any other party thereto; (v) any
governmental licenses or state or local franchises, charters and
authorizations (but not registered patents and trademarks); (vi)
any equipment or other asset subject to liens securing capitalized
lease obligations or permitted purchase money indebtedness; and
(vii) any property subject to liens securing indebtedness for floor
plan financing, and Secured Parties shall release from their
security interest (including, without limitation, by the filing of
applicable UCC release amendments) any property that now or
hereafter constitutes Excluded Property.

 

“Trademark
Collateral” means:

 

(a)           
All trademark registrations and applications registered with the
United States Patent and Trademark Office, including for the design
logo “R” serial number 87532685 and for RumbleOn,
serial numbers 874309812, 87975582 and 87532644, together with the
goodwill connected with the use of and symbolized thereby and all
extensions and renewals thereof (the "Trademarks"), excluding only
United States intent-to-use trademark applications to the extent
that and solely during the period in which the grant of a security
interest therein would impair, under applicable federal law, the
registrability of such applications or the validity or
enforceability of registrations issuing from such
applications;

 

(b)           all
rights of any kind whatsoever of Debtor accruing under any of the
Trademarks provided by applicable law of any jurisdiction, by
international treaties and conventions and otherwise throughout the
world;

 

(c)           any
and all royalties, fees, income, payments and other proceeds now or
hereafter due or payable with respect to any and all of the
Trademarks; and

 

(d)         
any and all claims and causes of action, with respect to any of the
Trademarks, whether occurring before, on or after the date hereof,
including all rights to and claims for damages, restitution and
injunctive and other legal and equitable relief for past, present
and future infringement, dilution, misappropriation, violation,
misuse, breach or default, with the right but no obligation to sue
for such legal and equitable relief and to collect, or otherwise
recover, any such damages.

 

 

 

 

4. Debtor's
Covenants.

 

(a) Debtor shall
maintain at its principal place of business complete records
regarding all account balances due Debtor, whether secured or
unsecured, which account balances comprise the Collateral
hereunder. Such records shall include, without limitation, current
statements of balances due, and copies of all contracts,
instruments or documents evidencing, securing or guarantying such
balances. Upon reasonable prior notice by Secured Parties, Debtor
shall make all such records available for inspection and copying by
any Secured Party and/or its agents during normal business
hours.

 

(b) Debtor covenants
and agrees that it shall: (i) take adequate care of the Collateral
(except as provided in 4(b)(viii) below) in accordance with
reasonable and customary business practices for similar businesses
as the Debtor's, reasonable wear and tear excepted; (ii) insure the
Collateral for such hazards and in such amounts customary for
similar businesses as the Debtor's, with policies to name the
Secured Parties as additional insured and/or loss payee, as the
case may be; (iii) pay all costs necessary to enforce the Security
Interest, collect the Obligations, and maintain the Collateral free
of liens (other than Permitted Encumbrances), including (but not
limited to) taxes, assessments, reasonable attorneys' fees and
legal expenses, and expenses of sale; (iv) furnish Secured Parties
with any information on the Collateral reasonably requested by
Secured Parties; (v) upon receipt of reasonable prior written
notice, allow any Secured Party to inspect the Collateral, and
inspect and copy all records relating to the Collateral and the
Obligations, in each case, during business hours; (vi) take
commercially reasonable steps to preserve the liability of account
debtors, obligors, and secondary parties whose obligations are part
of the Collateral; (vii) notify Secured Parties of any material
change occurring in or to the Collateral, taken as a whole, and
(viii) in its sole discretion, make the decisions regarding any
continued prosecution and maintenance of patent Collateral and
trademark Collateral.

 

(c) Debtor agrees and
covenants that it shall not (without Secured Parties' consent,
which shall not be unreasonably withheld): (i) remove the
Collateral (except in the ordinary course of business) or any
records relating thereto from the address set forth above; (ii)
allow the Collateral to become an accession to other goods; or
(iii) allow the Collateral to be affixed to real estate, except
goods identified herein as fixtures.

 

(d) Debtor warrants and
represents to the best of its information, knowledge and belief, as
follows: (i) Debtor is absolute owner of the Collateral and the
Collateral is not encumbered other than by Permitted Encumbrances;
(ii) none of the Collateral is affixed to real estate or an
accession to other goods, nor will Collateral acquired hereafter be
affixed to real estate or an accession to other goods when
acquired, unless Debtor has furnished Secured Parties the consents
or disclaimers necessary to make this Security Interest valid
against persons holding interests in the real estate or other
goods; (iii) all of the Collateral is located at Debtor's premises;
and (iv) Debtor has never been known by, or done business under,
any other name.

 

(e) Debtor authorizes
Secured Parties to file financing statements and assignments
covering the Collateral and containing such legends as Secured
Parties shall deem necessary or desirable to protect Secured
Parties' interest in the Collateral.

 

5. Default.

 

(a) Any "Default" as
defined under the Notes shall be an event of default hereunder.
"Senior Debt" means any indebtedness of the Debtor as defined under
United States Generally Accepted Accounting Principles
("GAAP"), as
in effect on the date hereof, that is secured by any assets of the
Debtor, and that is (i) indebtedness for borrowed money or
indebtedness evidenced by notes, bonds or similar instruments,
relating to any term loan, revolving credit financing, working
capital financing, floor plan financing or real estate financing,
and (ii) purchase money indebtedness and capital leases, in each
case, whether now existing or entered into after the date
hereof.

 

(b) When an event of
default occurs, the entire Obligations become immediately due and
payable at Secured Parties' option without notice to Debtor, and
Secured Parties may proceed to enforce payment of same and exercise
any and all of the rights and remedies available to a secured party
under the Uniform Commercial Code as well as all other rights and
remedies provided for herein or by law. When Debtor is in default,
Debtor, upon demand by Secured Parties, shall assemble the
Collateral and make it available to Secured Parties at a place
reasonably convenient to both parties. Debtor is entitled to any
surplus and shall be liable to Secured Parties for any deficiency,
arising from accounts, contract rights, or chattel paper included
in the Collateral through sale thereof to the Secured
Parties.

 

6. Remedies of Secured
Parties. Secured Parties may, in their discretion, after an
event of default: (i) require Debtor to give possession or control
of the Collateral to Secured Parties, and Secured Parties may take
possession of the Collateral without the exercise of judicial
process; (ii) indorse as Debtor's agent any instruments or chattel
paper in the Collateral; (iii) notify account debtors and obligors
on instruments constituting Collateral to make payment directly to
Secured Parties; (iv) contact account debtors directly to verify
information furnished by Debtor relating to Collateral; (v) take
control of proceeds and use cash proceeds from Collateral to reduce
any part of the Obligations; (vi) take any action Debtor is
required to take or otherwise necessary to perfect, preserve, and
enforce the Security Interest, and maintain and preserve the
Collateral, without notice to Debtor, and add costs of same to the
Obligations (but Secured Parties are under no duty to take any such
action); (vii) release Collateral in its possession to Debtor,
temporarily or otherwise; (viii) take control of funds generated by
the Collateral, such as dividends, interest, proceeds or refunds
from insurance, and use same to reduce any part of the Obligations;
and (ix) waive any of its rights hereunder without such waiver
prohibiting the later exercise of the same or similar
rights.

 

 

 

 

7. Application of
Proceeds. If Secured Parties dispose of the Collateral
following default, the proceeds of such disposition shall be
applied first to the Notes, and thereafter to any remaining
Obligations secured hereby.

 

8. Subordination.
Notwithstanding anything to the contrary set forth in this
Agreement:

 

(a)           The
Security Interest shall be subordinated for all purposes and in all
respects to the liens and security interests securing any Senior
Debt, regardless of the time, manner or order of perfection of any
such liens and security interests.

 

(b)           Promptly
upon Debtor's request, Secured Parties will from time to time
execute and deliver a subordination agreement on the terms
consistent with Section 9 of the Notes and this Section 8 and
reasonably requested by any holder of any Senior Debt (or any agent
for such holders), including but not limited to subordination
provisions providing for subordination of the Notes, the
Obligations and the Security Interest to any Senior
Debt.

 

9. Release.
Upon payment in full of the Obligations, the Security Interest
shall automatically terminate and be released without any further
action of the Secured Parties, and at such time Debtor is
authorized to file terminations, releases and any other document
necessary to terminate and release any evidence of the Security
Interest delivered by Debtor or otherwise recorded or filed to
evidence the Security Interest, including releases or terminations
of UCC financing statements.

 

10. Miscellaneous.
The rights and privileges of each Secured Party shall inure to its
successors and assigns. All representations, warranties, covenants
and agreements of Debtor shall bind Debtor and Debtor's successors
and assigns. Unless otherwise defined herein, definitions in the
Uniform Commercial Code apply to words and phrases in this
Agreement. Debtor waives presentment, demand, notice of dishonor,
protest, and extension of time without notice as to any instruments
and chattel paper in the Collateral. Notice mailed to Debtor's
address set forth above, or to Debtor's most recent changed address
on file with Secured Parties, at least five (5) days prior to the
related action (or, if the Uniform Commercial Code specifies a
longer period, such longer period prior to the related action),
shall be deemed reasonable. The laws of the State of New York shall
govern the rights and obligations of the parties to this Agreement
and the interpretation, construction and enforceability thereof. As
used herein, the singular shall include the plural, the plural
shall include the singular, and the use of any gender shall include
all genders. A photographic or other reproduction of this
Agreement, or any financing statement signed by Debtor, is
sufficient as a financing statement.

 

 

 

 

IN
WITNESS WHEREOF, the parties have executed this Agreement under
seal as of the day and year first above written.

 

	

WITNESS:
 

	
RUMBLEON,
INC.

	

 

	

 

	

 

	

 

	

 

	

	
By:  

	

	

 

	

 

	

 

	
Marshall
Chesrown

	

 

	

 

	

 

	

President

"Debtor"

	

 

 

	

WITNESS:
 

	
HALCYON CONSULTING,
LLC

	

 

	

 

	

 

	

 

	

 

	

	
By:  

	

	

 

	

 

	

 

	
Kartik
Kakarala

	

 

	

 

	

 

	

Manager

"Secured
Party"

	

 

	

WITNESS:
 

	

 

	

 

	

 

	

  

	

By:  

	

	

 

	

 

	

 

	

Denmar
Dixon  

	

 

	

 

	

 

	

"Secured
Party"
  

	

 

  

	

WITNESS:
 

	
BLUE FLAME CAPITAL,
LLC

	

 

	

 

	

 

	

 

	

 

	

	
By:  

	

	

 

	

 

	

 

	
Denmar
Dixon

	

 

	

 

	

 

	

Managing
Partner

"Secured
Party"

	

 

	

WITNESS:
 

	

 

	

 

	

 

	

  

	

By:  

	

	

 

	

 

	

 

	

Lori Sue
Chesrown  

	

 

	

 

	

 

	

"Secured
Party"
  

	

 

	

WITNESS:
   

	

 

	

 
  

	

 

	

 

	

By: 
 

	

	

 

	

 

	

 

	

Ralph Wegis
    

	

 

	

 

	

 

	

"Secured
Party"
    

	

 

 

 

 

 

EXHIBIT "A"

 

Notes

 

 

(1)
________ Senior Secured Confessed Judgment Promissory Note by
RumbleOn, Inc. to the order of Halcyon Consulting,
LLC;

 

(2)
________ Senior Secured Confessed Judgment Promissory Note by
RumbleOn, Inc. to the order of Denmar Dixon;

 

(3)
________ Senior Secured Confessed Judgment Promissory Note by
RumbleOn, Inc. to the order of Blue Flame Capital,
LLC;

 

(4)
________ Senior Secured Confessed Judgment Promissory Note by
RumbleOn, Inc. to the order of Lori Sue Chesrown; and

 

(5)
________ Senior Secured Confessed Judgment Promissory Note by
RumbleOn, Inc. to the order of Ralph Wegis

 

 

 

 

EXHIBIT "B"

 

Permitted Encumbrances

 

(a) liens created
hereby or otherwise securing the Note;

 

(b) the following liens
existing on the date hereof and any renewals or extensions thereof:
________________________________________________________;

 

(c) liens (other than
liens imposed under ERISA) for taxes, assessments or governmental
charges or levies not yet due or which are being contested in good
faith and by appropriate proceedings diligently conducted, if
adequate reserves with respect thereto are maintained on the books
of the applicable person in accordance with GAAP;

 

(d) statutory or common
law liens of landlords (and customary landlords’ liens in
leases), carriers, warehousemen, mechanics, materialmen and
suppliers and other liens imposed by law or pursuant to customary
reservations or retentions of title arising in the ordinary course
of business, provided that such liens secure only amounts not
overdue by more than 90 days or, if more than 90 days overdue, are
unfiled and no other action has been taken to enforce such lien or
which are being contested in good faith by appropriate proceedings
for which adequate reserves determined in accordance with GAAP have
been established;

 

(e) pledges or deposits
in the ordinary course of business in connection with
workers’ compensation, unemployment insurance and other
social security legislation, other than any lien imposed by
ERISA;

 

(f) deposits to secure
the performance of bids, trade contracts and leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;

 

(g) easements,
rights-of-way, restrictions and other similar encumbrances
affecting real property which, in the aggregate, are not
substantial in amount, and which do not in any case materially
detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of
the applicable person;

 

(h) judgment liens in
respect of judgments, the uninsured portion of which, if any, does
not exceed $100,000;

 

(i) liens securing
Senior Debt;

 

(j) leases or subleases
granted to others not interfering in any material respect with the
business of Debtor;

 

(k) any interest of
title of a lessor under, and liens arising from UCC financing
statements (or equivalent filings, registrations or agreements in
foreign jurisdictions) relating to, leases;

 

(l) normal and
customary rights of setoff upon deposits of cash in favor of banks
or other depository institutions;

 

(m) liens of a
collection bank arising under Section 4-210 of the Uniform
Commercial Code on items in the course of collection;

 

(n) liens of sellers of
goods to the Debtor arising under Article 2 of the Uniform
Commercial Code or similar provisions of applicable law in the
ordinary course of business, covering only the goods sold and
securing only the unpaid purchase price for such goods and related
expenses; and

 

(o) liens existing on
property at the time of its acquisition; provided, that, (i) such lien was not
created in contemplation of such acquisition, and (ii) such lien
does not encumber any property other than the property encumbered
at the time of such acquisition.

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