Attached files
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EX-99.2 - PRESS RELEASE - RumbleOn, Inc. | rmbl_ex992.htm |
EX-99.1 - PRESS RELEASE - RumbleOn, Inc. | rmbl_ex991.htm |
EX-1.1 - UNDERWRITING AGREEMENT - RumbleOn, Inc. | rmbl_ex11.htm |
8-K - CURRENT REPORT - RumbleOn, Inc. | rmbl_8k.htm |
Exhibit 4.1
FORM OF
WARRANT TO PURCHASE CLASS B COMMON STOCK
RUMBLEON, INC.
Warrant
Shares: [●]
Initial
Exercise Date: [●], 2018
THIS
WARRANT TO PURCHASE CLASS B COMMON STOCK (the “Warrant”) certifies that, for
value received, [●] or its assigns (the “Holder”) is entitled, upon the
terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after [●], 2018 (the
“Initial Exercise
Date”) and, in accordance with FINRA Rule
5110(f)(2)(G)(i), prior to at 5:00 p.m. (New York time) on the date
that is five (5) years following the Effective Date (the
“Termination
Date”) but not thereafter, to subscribe for and
purchase from RumbleOn, Inc., a Nevada corporation (the
“Company”), up
to [●] shares of Class B Common Stock, par value $0.001 per
share (the “Class B Common
Stock”), of the Company (the “Warrant Shares”), as subject to
adjustment hereunder. The purchase price of one share of Class B
Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).
1. Definitions.
In addition to the terms defined elsewhere in this Agreement, the
following terms have the meanings indicated in this Section 1:
“Affiliate” means any Person that,
directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as
such terms are used in and construed under Rule 405 under the
Securities Act.
“Business Day” means any day except
any Saturday, any Sunday, any day which is a federal legal holiday
in the United States or any day on which banking institutions in
the State of New York are authorized or required by law or other
governmental action to close.
“Class B Common Stock Equivalents”
means any securities of the Company which would entitle the holder
thereof to acquire at any time Class B Common Stock, including,
without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into
or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Class B Common Stock.
“Commission” means the United
States Securities and Exchange Commission.
“Exchange Act” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
“Person” means an individual or
corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock
company, government (or an agency or subdivision thereof) or other
entity of any kind.
“Rule 144” means Rule 144
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.
1
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Trading Day” means a day on which
the New York Stock Exchange is open for trading.
“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).
“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.
2. Exercise.
(a) Exercise
of the purchase rights represented by this Warrant may be made, in
whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to
the Company (or such other office or agency of the Company as it
may designate by notice in writing to the registered Holder at the
address of the Holder appearing on the books of the Company) of a
duly executed facsimile copy (or e-mail attachment) of the Notice
of Exercise Form annexed hereto. Within three (3) Trading Days
following the date of exercise as aforesaid, the Holder shall
deliver the aggregate Exercise Price for the shares specified in
the applicable Notice of Exercise by wire transfer or
cashier’s check drawn on a United States bank unless the
cashless exercise procedure specified in Section 2(c) is specified in
the applicable Notice of Exercise. Notwithstanding anything herein
to the contrary, the Holder shall not be required to physically
surrender this Warrant to the Company until the Holder has
purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date the final Notice of Exercise is
delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant
Shares available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise
Form within two (2) Business Days of receipt of such notice.
The Holder and any assignee, by
acceptance of this Warrant, acknowledge and agree that, by reason
of the provisions of this paragraph, following the purchase of a
portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be
less than the amount stated on the face hereof.
2
(b) Exercise
Price. The exercise price per share of the Class B Common
Stock under this Warrant shall be $[●]1, subject to adjustment hereunder (the
“Exercise
Price”).
(c) Cashless
Exercise. If at any time after the six-month anniversary of
the Initial Exercise Date, there is no effective registration
statement registering, or the prospectus contained therein is not
available for the issuance of the Warrant Shares to the Holder,
then this Warrant may also be exercised, in whole or in part, at
such time by means of a “cashless exercise” in which
the Holder shall be entitled to receive the number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)] by
(A), where:
(A) =
the VWAP on the Trading Day immediately preceding the date on which
Holder elects to exercise this Warrant by means of a
“cashless exercise,” as set forth in the applicable
Notice of Exercise;
(B) =
the Exercise Price of this Warrant, as adjusted hereunder;
and
(X) =
the number of Warrant Shares that would be issuable upon exercise
of this Warrant in accordance with the terms of this Warrant if
such exercise were by means of a cash exercise rather than a
cashless exercise.
If Warrant Shares are issued in such a
“cashless exercise,” the parties acknowledge and agree
that in accordance with Section 3(a)(9) of the Securities Act, the
Warrant Shares shall take on the registered characteristics of the
Warrants being exercised, and the holding period of the Warrants
being exercised may be tacked on to the holding period of the
Warrant Shares. The Company agrees not to take any
position contrary to this Section
2(c).
Notwithstanding
anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise
pursuant to this Section
2(c).
(d) Mechanics
of Exercise.
3
(i)
Delivery of Warrant Shares
Upon Exercise. The Company shall cause the Warrant Shares
purchased hereunder to be transmitted by its transfer agent to the
Holder by crediting the account of the Holder’s or its
designee’s balance account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system
(“DWAC”) if the
Company is then a participant in such system and either
(A) there is an effective registration statement permitting
the issuance of the Warrant Shares to or resale of the Warrant
Shares by Holder, or (B) the Warrant Shares are eligible for resale
by the Holder without volume or manner-of-sale limitations pursuant
to Rule 144 and, in either case, the Warrant Shares have been sold
by the Holder prior to the Warrant Share Delivery Date (as defined
below), and otherwise by physical delivery of a certificate,
registered in the Company’s share register in the name of the
Holder or its designee, for the number of Warrant Shares to which
the Holder is entitled pursuant to such exercise to the address
specified by the Holder in the Notice of Exercise by the date that
is three (3) Trading Days after the delivery to the Company of
the Notice of Exercise (such date, the “Warrant Share Delivery Date”). If
the Warrant Shares can be delivered via DWAC, the transfer agent
shall have received from the Company any legal opinions or other
documentation required by it to deliver such Warrant Shares without
legend (subject to receipt by the Company of reasonable back up
documentation from the Holder, including with respect to affiliate
status) and, if applicable and requested by the Company prior to
the Warrant Share Delivery Date, the transfer agent shall have
received from the Holder a confirmation of sale of the Warrant
Shares (provided the requirement of the Holder to provide a
confirmation as to the sale of Warrant Shares shall not be
applicable to the issuance of unlegended Warrant Shares upon a
cashless exercise of this Warrant if the Warrant Shares are then
eligible for resale pursuant to Rule 144(b)(1)). The Warrant Shares
shall be deemed to have been issued, and Holder or any other person
so designated to be named therein shall be deemed to have become a
holder of record of such shares for all purposes, as of the date
the Warrant has been exercised, with payment to the Company of the
Exercise Price (or by cashless exercise, if permitted) and all
taxes required to be paid by the Holder, if any, pursuant to
Section 2(d)(vi) prior to
the issuance of such shares, having been paid. 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.
(ii)
Delivery of New Warrants
Upon Exercise. If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of
the Warrant Shares, deliver to the Holder a new Warrant evidencing
the rights of the Holder to purchase the unpurchased Warrant Shares
called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant.
(iii) Rescission
Rights. If the Company fails to cause its transfer agent to
deliver to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant
Share Delivery Date, then the Holder will have the right to rescind
such exercise; provided,
however, that the Holder shall be required to return any
Warrant Shares or Class B Common Stock subject to any such
rescinded exercise notice concurrently with the return to Holder of
the aggregate Exercise Price paid to the Company for such Warrant
Shares and the restoration of Holder’s right to acquire such
Warrant Shares pursuant to this Warrant (including, issuance of a
replacement warrant certificate evidencing such restored
right).
4
(iv)
Compensation
for Buy-In on Failure to Timely Deliver Warrant Shares Upon
Exercise. In addition to any other rights available to the
Holder, 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.
(v) No Fractional
Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which the Holder would
otherwise be entitled to purchase upon such exercise, the Company
shall, at its election, either pay a cash adjustment in respect of
such final fraction in an amount equal to such fraction multiplied
by the Exercise Price or round up to the next whole
share.
(vi)
Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made
without charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such Warrant
Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the
Holder or in such name or names as may be directed by the Holder;
provided, however, that in
the event that Warrant Shares are to be issued in a name other than
the name of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto. The Company shall pay all transfer
agent fees required for same-day processing of any Notice of
Exercise.
(vii)
Closing of Books. The Company
will not close its stockholder books or records in any manner which
prevents the timely exercise of this Warrant, pursuant to the terms
hereof.
(viii)
Signature.
This Section 2 and
the exercise form attached hereto set forth the totality of the
procedures required of the Holder in order to exercise this
Purchase Warrant. Without limiting the preceding sentences,
no ink-original exercise form shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of
any exercise form be required in order to exercise this Purchase
Warrant. No additional legal opinion, other information or
instructions shall be required of the Holder to exercise this
Purchase Warrant. The Company shall honor exercises of this
Purchase Warrant and shall deliver shares of Class B Common Stock
underlying this Purchase Warrant in accordance with the terms,
conditions and time periods set forth herein.
5
(e) Holder’s
Exercise Limitations. The Company shall not effect any
exercise of this Warrant, and a Holder shall not have the right to
exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the
extent that after giving effect to such issuance after exercise as
set forth on the applicable Notice of Exercise, the Holder
(together with the Holder’s Affiliates, and any other Persons
acting as a group together with the Holder or any of the
Holder’s Affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below). For
purposes of the foregoing sentence, the number of shares of Class B
Common Stock beneficially owned by the Holder and its Affiliates
shall include the number of shares of Class B Common Stock issuable
upon exercise of this Warrant with respect to which such
determination is being made, but shall exclude the number of shares
of Class B Common Stock which would be issuable upon (i) exercise
of the remaining, nonexercised portion of this Warrant beneficially
owned by the Holder or any of its Affiliates and (ii) exercise or
conversion of the unexercised or nonconverted portion of any other
securities of the Company (including, without limitation, any other
Class B Common Stock Equivalents) subject to a limitation on
conversion or exercise analogous to the limitation contained herein
beneficially owned by the Holder or any of its Affiliates.
Except as set forth in the preceding sentence, for purposes of this
Section 2(e),
beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated
thereunder, it being acknowledged by the Holder that the Company is
not representing to the Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and the Holder is
solely responsible for any schedules required to be filed in
accordance therewith. To the extent that the limitation contained
in this Section
2(e) applies, the determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates) and of which portion of this Warrant
is exercisable shall be in the sole discretion of the Holder, and
the submission of a Notice of Exercise shall be deemed to be the
Holder’s determination of whether this Warrant is exercisable
(in relation to other securities owned by the Holder together with
any Affiliates) and of which portion of this Warrant is
exercisable, in each case subject to the Beneficial Ownership
Limitation, and the Company shall have no obligation to verify or
confirm the accuracy of such determination. In addition, a
determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder. For purposes of
this Section 2(e),
in determining the number of outstanding shares of Class B Common
Stock, a Holder may rely on the number of outstanding shares of
Class B Common Stock as reflected in (A) the Company’s most
recent periodic or annual report filed with the Commission, as the
case may be, (B) a more recent public announcement by the Company
or (C) a more recent written notice by the Company or the
Company’s transfer agent setting forth the number of shares
of Class B Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two (2) Trading Days
confirm orally and in writing to the Holder the number of shares of
Class B Common Stock then outstanding. In any case, the
number of outstanding shares of Class B Common Stock shall be
determined after giving effect to the conversion or exercise of
securities of the Company, including this Warrant, by the Holder or
its Affiliates since the date as of which such number of
outstanding shares of Class B Common Stock was reported. The
“Beneficial Ownership
Limitation” shall be 9.99% of the number of shares of
the Class B Common Stock outstanding immediately after giving
effect to the issuance of shares of Class B Common Stock issuable
upon exercise of this Warrant. The Holder, upon notice to the
Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 2(e), provided that the
Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of the Class B Common Stock outstanding
immediately after giving effect to the issuance of shares of Class
B Common Stock upon exercise of this Warrant held by the Holder and
the provisions of this Section 2(e) shall continue to
apply. Any increase in the Beneficial Ownership Limitation will not
be effective until the 61st day after such
notice is delivered to the Company. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 2(e) to correct this
paragraph (or any portion hereof) which may be defective or
inconsistent with the intended Beneficial Ownership Limitation
herein contained or to make changes or supplements necessary or
desirable to properly give effect to such limitation. The
limitations contained in this paragraph shall apply to a successor
holder of this Warrant.
3. Certain
Adjustments.
(a) Stock
Dividends and Splits. If the Company, at any time while this
Warrant is outstanding: (i) pays a stock dividend or otherwise
makes a distribution or distributions on shares of its Class B
Common Stock or any other equity or equity equivalent securities
payable in shares of Class B Common Stock (which, for avoidance of
doubt, shall not include any shares of Class B Common Stock issued
by the Company upon exercise of this Warrant), (ii) subdivides
outstanding shares of Class B Common Stock into a larger number of
shares, (iii) combines (including by way of reverse stock split)
outstanding shares of Class B Common Stock into a smaller number of
shares, or (iv) issues by reclassification of shares of the Class B
Common Stock any shares of capital stock of the Company, then in
each case the Exercise Price shall be multiplied by a fraction of
which the numerator shall be the number of shares of Class B Common
Stock (excluding treasury shares, if any) outstanding immediately
before such event and of which the denominator shall be the number
of shares of Class B Common Stock outstanding immediately after
such event, and the number of shares issuable upon exercise of this
Warrant shall be proportionately adjusted such that the aggregate
Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in
the case of a subdivision, combination or re-classification. For
the purposes of clarification, the Exercise Price of this Warrant
will not be adjusted in the event that the Company or any future
subsidiary of the Company sells or grants any option to purchase,
or sell or grant any right to reprice, or otherwise dispose of or
issue (or announce any offer, sale, grant or any option to purchase
or other disposition) any Class B Common Stock or Class B Common
Stock Equivalents, at an effective price per share less than the
Exercise Price then in effect.
(b) [RESERVED]
(c)
Subsequent Rights
Offerings. In addition to any adjustments pursuant to
Section 3(a), if at
any time the Company grants, issues or sells any Class B Common
Stock Equivalents or rights to purchase stock, warrants, securities
or other property pro rata to the record holders of any class of
shares of Class B Common Stock (the “Purchase Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of
Class B Common Stock acquirable upon complete exercise of this
Warrant (without regard to any limitations on exercise hereof,
including without limitation, the Beneficial Ownership Limitation)
immediately before the date on which a record is taken for the
grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares
of Class B Common Stock are to be determined for the grant, issue
or sale of such Purchase Rights (provided, however, to the extent
that the Holder’s right to participate in any such Purchase
Right would result in the Holder exceeding the Beneficial Ownership
Limitation, then the Holder shall not be entitled to participate in
such Purchase Right to such extent (or beneficial ownership of such
shares of Class B Common Stock as a result of such Purchase Right
to such extent) and such Purchase Right to such extent shall be
held in abeyance for the Holder until such time, if ever, as its
right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).
(d) Pro
Rata Distributions. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend
(other than cash dividends) or other distribution of its assets (or
rights to acquire its assets) to holders of shares of Class B
Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of shares or other securities,
property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or
other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder
shall be entitled to participate in such Distribution to the same
extent that the Holder would have participated therein if the
Holder had held the number of shares of Class B Common Stock
acquirable upon complete exercise of this Warrant (without regard
to any limitations on exercise hereof, including without
limitation, the Beneficial Ownership Limitation) immediately before
the date of which a record is taken for such Distribution, or, if
no such record is taken, the date as of which the record holders of
shares of Class B Common Stock are to be determined for the
participation in such Distribution (provided, however, that to the extent
that the Holder’s right to participate in any such
Distribution would result in the Holder exceeding the Beneficial
Ownership Limitation, then the Holder shall not be entitled to
participate in such Distribution to such extent (or in the
beneficial ownership of any shares of Class B Common Stock as a
result of such Distribution to such extent) and the portion of such
Distribution shall be held in abeyance for the benefit of the
Holder until such time, if ever, as its right thereto would not
result in the Holder exceeding the Beneficial Ownership
Limitation). To the extent that this Warrant has not been partially
or completely exercised at the time of such Distribution, such
portion of the Distribution shall be held in abeyance for the
benefit of the Holder until the Holder has exercised this
Warrant.
6
(e) Fundamental
Transaction. If, at any time while this Warrant is
outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of
the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii)
any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed
pursuant to which holders of Class B Common Stock are permitted to
sell, tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the
outstanding Class B Common Stock, (iv) the Company, directly or
indirectly, in one or more related transactions effects any
reclassification, reorganization or recapitalization of the Class B
Common Stock or any compulsory share exchange pursuant to which the
Class B Common Stock is effectively converted into or exchanged for
other securities, cash or property, or (v) the Company, directly or
indirectly, in one or more related transactions consummates a stock
or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with another Person or group of
Persons whereby such other Person or group acquires more than 50%
of the outstanding shares of Class B Common Stock (not including
any shares of Class B Common Stock held by the other Person or
other Persons making or party to, or associated or affiliated with
the other Persons making or party to, such stock or share purchase
agreement or other business combination) (each a
“Fundamental
Transaction”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any
limitation in Section
2(e) on the exercise of this Warrant), the number of shares
of Class B Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any
additional consideration (the “Alternate Consideration”)
receivable by holders of Class B Common Stock as a result of such
Fundamental Transaction for each share of Class B Common Stock for
which this Warrant is exercisable immediately prior to such
Fundamental Transaction (without regard to any limitation in
Section 2(e) on the
exercise of this Warrant). For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Class B
Common Stock in such Fundamental Transaction, and the Company shall
apportion the Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Class B
Common Stock are given any choice as to the securities, cash or
property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant
following such Fundamental Transaction. The Company shall cause any
successor entity in a Fundamental Transaction in which the Company
is not the survivor (the “Successor Entity”) to assume in
writing all of the obligations of the Company under this Warrant in
accordance with the provisions of this Section 3(e) pursuant to
written agreements in form and substance reasonably satisfactory to
the Holder and approved by the Holder (without unreasonable delay)
prior to such Fundamental Transaction and shall, at the option of
the Holder, deliver to the Holder in exchange for this Warrant a
security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant which
is exercisable for a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity) equivalent to
the shares of Class B Common Stock acquirable and receivable upon
exercise of this Warrant (without regard to any limitations on the
exercise of this Warrant) prior to such Fundamental Transaction,
and with an exercise price which applies the exercise price
hereunder to such shares of capital stock (but taking into account
the relative value of the shares of Class B Common Stock pursuant
to such Fundamental Transaction and the value of such shares of
capital stock, such number of shares of capital stock and such
exercise price being for the purpose of protecting the economic
value of this Warrant immediately prior to the consummation of such
Fundamental Transaction), and which is reasonably satisfactory in
form and substance to the Holder. Upon the occurrence of any such
Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Warrant referring
to the “Company” shall refer instead to the Successor
Entity), and may exercise every right and power of the Company and
shall assume all of the obligations of the Company under this
Warrant with the same effect as if such Successor Entity had been
named as the Company herein.
(f) Calculations.
All calculations under this Section 3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 3, the number of shares
of Class B Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Class B
Common Stock (excluding treasury shares, if any) issued and
outstanding.
(g) Notice
to Holder.
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(i)
Adjustment to Exercise
Price. Whenever the Exercise Price is adjusted pursuant to
any provision of this Section 3, the Company shall
promptly mail to the Holder a notice setting forth the Exercise
Price after such adjustment and any resulting adjustment to the
number of Warrant Shares and setting forth a brief statement of the
facts requiring such adjustment.
(ii)
Notice to Allow Exercise
by Holder. If (A) the Company shall declare a dividend (or
any other distribution in whatever form) on the Class B Common
Stock, (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Class B Common Stock, (C) the
Company shall authorize the granting to all holders of the Class B
Common Stock rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any rights, (D) the
approval of any stockholders of the Company shall be required in
connection with any reclassification of the Class B Common Stock,
any consolidation or merger to which the Company is a party, any
sale or transfer of all or substantially all of the assets of the
Company, or any compulsory share exchange whereby the Class B
Common Stock is converted into other securities, cash or property,
or (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed a
notice to the Holder at its last address as it shall appear upon
the Warrant Register of the Company, at least 20 calendar days
prior to the applicable record or effective date hereinafter
specified, stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption, rights
or warrants, or if a record is not to be taken, the date as of
which the holders of the Class B Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or
warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share
exchange is expected to become effective or close, and the date as
of which it is expected that holders of the Class B Common Stock of
record shall be entitled to exchange their shares of the Class B
Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer
or share exchange; provided that the failure to provide such notice
or any defect therein shall not affect the validity of the
corporate action required to be specified in such notice. To the
extent that any notice provided hereunder constitutes, or contains,
material, non-public information regarding the Company or any
future subsidiaries of the Company, the Company shall
simultaneously file such notice with the Commission pursuant to a
Current Report on Form 8-K. The Holder shall remain entitled to
exercise this Warrant during the period commencing on the date of
such notice to the effective date of the event triggering such
notice except as may otherwise be expressly set forth
herein.
4. Transfer
of Warrant.
(a) Transferability.
Pursuant to FINRA Rule 5110(g)(1), neither this Warrant nor any
Warrant Shares issued upon exercise of this Warrant shall be sold,
transferred, assigned, pledged, or hypothecated, or be the subject
of any hedging, short sale, derivative, put, or call transaction
that would result in the effective economic disposition of the
securities by any person for a period of 180 days immediately
following the date of effectiveness or commencement of sales of the
offering pursuant to which this Warrant is being issued, except the
transfer of any security:
(i)
by operation of law or by reason of reorganization of the
Company;
(ii)
to any FINRA member firm participating in the offering and the
officers or partners thereof, if all securities so transferred
remain subject to the lock-up restriction in this Section 4(a) for
the remainder of the time period;
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(iii)
if the aggregate amount of securities of the Company held by the
Holder or related person do not exceed 1% of the securities being
offered;
(iv) that is beneficially owned on a pro-rata basis by all
equity owners of an investment fund, provided that no participating
member manages or otherwise directs investments by the fund, and
participating members in the aggregate do not own more than 10% of
the equity in the fund; or
(v)
the exercise or conversion of any security, if all securities
received remain subject to the lock-up restriction in this Section
4(a) for the remainder of the time period.
Subject
to the foregoing restriction, any applicable securities laws and
the conditions set forth in Section 4(d), this Warrant and
all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon
surrender of this Warrant at the principal office of the Company or
its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by
the Holder or its agent or attorney and funds sufficient to pay any
transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute
and deliver a new Warrant or Warrants in the name of the assignee
or assignees, as applicable, and in the denomination or
denominations specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be
cancelled. The Warrant, if properly assigned in accordance
herewith, may be exercised by a new holder for the purchase of
Warrant Shares without having a new Warrant issued.
(b) New
Warrants. This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the
Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by the
Holder or its agent or attorney. Subject to compliance with
Section 4(a), as to
any transfer which may be involved in such division or combination,
the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice. All Warrants issued on transfers or
exchanges shall be dated the initial issuance date of this Warrant
and shall be identical with this Warrant except as to the number of
Warrant Shares issuable pursuant thereto.
(c) Warrant
Register. The Company shall register this Warrant, upon
records to be maintained by the Company for that purpose (the
“Warrant
Register”), in the name of the record Holder hereof
from time to time. The Company may deem and treat the registered
Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for
all other purposes, absent actual notice to the
contrary.
(d) Representation
by the Holder. The Holder, by the acceptance hereof,
represents and warrants that it is acquiring this Warrant and, upon
any exercise hereof, will acquire the Warrant Shares issuable upon
such exercise, for its own account and not with a view to or for
distributing or reselling such Warrant Shares or any part thereof
in violation of the Securities Act or any applicable state
securities law, except pursuant to sales registered or exempted
under the Securities Act.
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5. Miscellaneous.
(a) No
Rights as Stockholder Until Exercise. This Warrant does not
entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set
forth in Section
2(d)(i).
(b) Loss,
Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant or any certificate relating to the Warrant Shares, and
in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it (which, in the case of the Warrant,
shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in
lieu of such Warrant or stock certificate.
(c) Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then, such action may
be taken or such right may be exercised on the next succeeding
Business Day.
(d) Authorized
Shares. The Company covenants that, during the period the
Warrant is outstanding, it will reserve from its authorized and
unissued Class B Common Stock a sufficient number of shares to
provide for the issuance of the Warrant Shares upon the exercise of
any purchase rights under this Warrant. The Company further
covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary
Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which
the Class B Common Stock may be listed. The Company covenants that
all Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant and payment for
such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and nonassessable and free from all
taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).
Except
and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will
(i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to
such increase in par value, (ii) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Warrant Shares upon the
exercise of this Warrant and (iii) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may
be, necessary to enable the Company to perform its obligations
under this Warrant.
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Before
taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction
thereof.
(e) Jurisdiction.
All questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be determined in
accordance with the provisions of the underwriting agreement, dated
[●], 2017, by and between the Company and Roth Capital
Partners, LLC and Maxim Group, LLC, as representatives of the
underwriters set forth therein (the “Underwriting
Agreement”).
(f) Restrictions.
The Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered, and the Holder does
not utilize cashless exercise, will have restrictions upon resale
imposed by state and federal securities laws.
(g) Nonwaiver
and Expenses. No course of dealing or any delay or failure
to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice the Holder’s
rights, powers or remedies. Without limiting any other provision of
this Warrant or the Underwriting Agreement, if the Company
willfully and knowingly fails to comply with any provision of this
Warrant, which results in any material damages to the Holder, the
Company shall pay to the Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to,
reasonable attorneys’ fees, including those of appellate
proceedings, incurred by the Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers
or remedies hereunder.
(h) Notices.
Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company shall be delivered
in accordance with the notice provisions of the Underwriting
Agreement.
(i) Limitation
of Liability. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to
purchase Warrant Shares, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the
Holder for the purchase price of any Class B Common Stock or as a
stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
(j) Remedies.
The Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company
agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of
this Warrant and hereby agrees to waive and not to assert the
defense in any action for specific performance that a remedy at law
would be adequate.
(k) Successors
and Assigns. Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure
to the benefit of and be binding upon the successors and permitted
assigns of the Company and the successors and permitted assigns of
Holder. The provisions of this Warrant are intended to be for the
benefit of any Holder from time to time of this Warrant and shall
be enforceable by the Holder or holder of Warrant
Shares.
(l) Amendment.
This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the
Holder.
(m) Severability.
Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the
remaining provisions of this Warrant.
(n) Headings.
The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of
this Warrant.
********************
(Signature Page Follows)
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IN
WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized as of the date first above
indicated.
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RUMBLEON, INC.
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By:__________________________________________
Name:
Marshall Chesrown
Title:
Chairman and CEO
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NOTICE OF EXERCISE
TO:
RUMBLEON, INC.
(1) The
undersigned hereby elects to purchase ________ Warrant Shares of
the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise
price in full, together with all applicable transfer taxes, if
any.
(2)
Payment shall take the form of (check applicable box):
[ ] in
lawful money of the United States; or
[ ] if
permitted the cancellation of such number of Warrant Shares as is
necessary, in accordance with the formula set forth in Section 2(c), to exercise this
Warrant with respect to the maximum number of Warrant Shares
purchasable pursuant to the cashless exercise procedure set forth
in Section
2(c).
(3)
Please register and issue said Warrant Shares in the name of the
undersigned or in such other name as is specified
below:
_______________________________
The
Warrant Shares shall be delivered to the following DWAC Account
Number or by physical delivery of a certificate to:
_______________________________
_______________________________
_______________________________
[SIGNATURE
OF HOLDER]
Name of
Investing Entity:
_______________________________________________________________
Signature of Authorized Signatory of Investing Entity:
_________________________________________
Name of
Authorized Signatory:
___________________________________________________________
Title
of Authorized Signatory:
____________________________________________________________
Date:
________________________________________________________________________________
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ASSIGNMENT FORM
(To
assign the foregoing warrant, execute
this
form and supply required information.
Do not
use this form to exercise the warrant.)
FOR
VALUE RECEIVED, [____] all of or [_______] shares of the foregoing
Warrant and all rights evidenced thereby are hereby assigned
to
_______________________________________________
whose address is
_______________________________________________________________.
_______________________________________________________________
Dated:
______________, _______
Holder’s
Signature: _____________________________
Holder’s
Address: _____________________________
_____________________________
NOTE:
The signature to this Assignment Form must correspond with the name
as it appears on the face of the Warrant, without alteration or
enlargement or any change whatsoever. 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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