UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 30, 2018
 
 
RumbleOn, Inc.
(Exact name of registrant as specified in its charter)
 
Nevada
(State or Other Jurisdiction
of Incorporation)
 
001-38248
 
46-3951329
(Commission
File Number)
 
 
(I.R.S. Employer
Identification No.)
 
4521 Sharon Road, Suite 370
Charlotte, North Carolina
 
28211
(Address of Principal Executive Offices)
 
(Zip Code)
 
(704) 448-5240
(Registrant’s Telephone Number, Including Area Code)
 
 
(Former Name or Former Address, If Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2 (b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
 
Emerging growth company ☒
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
 

 
 
 
Item 1.01. Entry into Material Definitive Agreement.
 
The information in Item 2.03 below is incorporated into this Item 1.01 by reference.
 
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
 
On April 30, 2018 (the “Closing Date”), RumbleOn, Inc., a Nevada corporation (the “Company”), NextGen Pro, LLC, a Delaware limited liability company (“NextGen Pro”), RMBL Missouri, LLC, a Delaware limited liability company (“RMBL Missouri”) and RMBL Texas, LLC, a Delaware limited liability company (“RMBL Texas," and together with the Company, NextGen Pro, and RMBL Missouri, each, a “Borrower”, and collectively, “Borrowers”) , entered into a Loan and Security Agreement (the "Loan Agreement") with Hercules Capital, Inc. a Maryland Corporation ("Hercules") and other financial institutions or entities that may thereafter from time to time become parties thereto (collectively, “Lender”) and Hercules in its capacity as administrative agent and collateral agent for Lender (in such capacity, “Agent”), pursuant to which Lender may provide one or more term loans in an aggregate principal amount of up to $20 million (the "Loan"). Under the terms of the Loan Agreement, $5.0 million will be funded at closing with the balance available in three additional tranches over the term of the Loan Agreement, subject to certain operating targets and otherwise as set forth in the Loan Agreement. The Loan has an initial 36-month maturity and initial 10.5% interest rate.
 
Under the Loan Agreement, on the Closing Date, the Company issued to the Lender a warrant to purchase 81,818 (increasing to 109,091 if the fourth tranche is advanced) shares of the Company’s Class B common stock at an exercise price of $5.50 per share (the “Warrant”). The Warrant is immediately exercisable and expires on April 30, 2023. The Company agreed to file a registration statement registering the resale of the shares underlying the Warrant no later than 90 days after issuance. The warrants were issued in reliance on the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933, as amended, or Regulation D thereunder, as a sale not involving any public offering.
 
Advances under the Loan ("Advances") will bear interest at a per annum rate equal to the greater of either (i) the prime rate as reported in The Wall Street Journal plus 5.75%, and (ii) 10.25%, based on a year consisting of 360 days, with interest computed daily based on the actual number of days elapsed. Advances under the Loan Agreement are due and payable on May 1, 2021, unless Borrowers achieve certain performance milestones, in which case Advances will be due and payable on November 1, 2021.
 
Upon any event of default, the Agent may, at its option, exercise its right to demand immediate payment of all liabilities and other indebtedness and amounts owed to Lender by Borrowers.
 
 The Loan is secured by a grant of a security interest in all assets (the “Collateral”) of the Borrowers, except that the Collateral should not include (a) more than 65% of the presently existing and later arising issued and outstanding shares of capital stock owned by any Borrower of any foreign subsidiary which shares entitle the holder thereof to vote for directors or any other matter and (b) nonassignable licenses or contracts.
 
In connection with the Loan Agreement, Borrowers and Agent each entered into (i) a Subordination Agreement (the "Halcyon Subordination Agreement"), effective April 30, 2018, with Halcyon Consulting, LLC ("Halcyon"), and (ii) a Subordination Agreement (the “Noteholder Subordination Agreement”), effective April 30, 2018, with certain noteholders of the Company (the “Note Holders”). In addition, the Borrowers have acknowledged and approved an Intercreditor Agreement (the “Intercreditor Agreement”), effective April 30, 2018, by and between Agent and Ally Bank and Ally Financial Inc. (the “Ally Parties”).
 
Under the terms of the Halcyon Subordination Agreement, (i) all of each Borrower’s indebtedness and obligations to Halcyon, whether existing or arising in the future, is and shall be subordinated to all of Borrowers’ indebtedness and obligations to Agent and Lender, subject to the terms and conditions contained therein, and (ii) all of Halcyon’s security interests, if any, in each Borrower’s property is and shall be subordinated to all of Agent’s security interests in Borrowers’ property, subject to the terms and conditions contained therein.
 
Under the terms of the Noteholder Subordination Agreement, (i) all of each Borrower’s indebtedness and obligations to Note Holders, whether existing or arising in the future, is and shall be subordinated to all of Borrowers’ indebtedness and obligations to Agent and Lender, subject to the terms and conditions contained therein, and (ii) all of each Note Holder’s security interests, if any, in each Borrower’s property is and shall be subordinated to all of Agent’s security interests in Borrowers’ property, subject to the terms and conditions contained therein.
 
The Intercreditor Agreement specifies the priority of, and the time and method by which Hercules and the Ally Parties may enforce, their respective security interests in the Collateral.
   
In conjunction with the security interest granted under the Loan Agreement, the Company’s obligations are further secured, pursuant to the terms of an Intellectual Property Security Agreement (the “Security Agreement”), dated as of the Closing Date, among the Company, NextGen Pro and the Agent, by a security interest in all now owned or hereafter acquired intellectual property of the Company and NextGen Pro, except to the extent such intellectual property cannot be assigned or the creation of a security interest would be prohibited by applicable law or contract.

 
 
 
The foregoing descriptions of the Loan, the Loan Agreement, the Warrant, the Intercreditor Agreement, the Noteholder Subordination Agreement, the Halcyon Subordination Agreement and the Security Agreement are qualified in their entirety by reference to the full text of the Warrant, Loan Agreement, the Intercreditor Agreement , the Halcyon Subordination Agreement, the Noteholder Subordination Agreement, and the Intellectual Property Security Agreement which are attached to this report as Exhibits 4.1, 10.1, 10.2, 10.3, 10.4, and 10.5 respectively and incorporated by reference into this report.
 
The Company filed a press release announcing the entry into the Loan on April 30, 2018. A copy of the press release is attached to this Report as Exhibit 99.1 and is incorporated by reference in this Report.
 
Item 3.02. Unregistered Sales of Equity Securities.
 
The disclosure included in Item 2.03 above is incorporated into this Item 3.02 by reference.
 
Item 9.01. Financial Statements and Exhibits .
 
(d) Exhibits
 
Exhibit No.
 
Description
 
Warrant, dated April 30, 2018. 
 
Loan and Security Agreement, by and among the Company, NextGen Pro, LLC, RMBL Missouri, LLC, RMBL Texas, LLC, Lender and Hercules Capital, Inc., dated April 30, 2018.  
 
Intercreditor Agreement, by and among Hercules Capital, Inc., Ally Bank and Ally Financial, Inc. and agreed to by the Company, NextGen Pro, LLC RMBL Missouri, LLC, and RMBL Texas, LLC, dated April 30, 2018.  
 
Subordination Agreement, by and among the Company, Halcyon Consulting, LLC, NextGen Pro, LLC, RMBL Missouri, LLC, RMBL Texas, LLC, and Hercules Capital, Inc., dated April 30, 2018.  
 
Subordination Agreement, by and among the Company, Blue Flame Capital, LLC, Lori Sue Chesrown, Ralph Wegis, NextGen Pro, LLC, RMBL Missouri, LLC, RMBL Texas, LLC, and Hercules Capital, Inc., dated April 30, 2018.  
 
Intellectual Property Security Agreement, by and among Hercules Capital, Inc., the Company and NextGen Pro, LLC, dated April 30, 2018.
 
Press Release, dated April 30, 2018.
 
 
 
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
RUMBLEON, INC.
 
 
 
 
 
Date: May 1, 2018
By:  
/s/ Steven R. Berrard
 
 
 
Steven R. Berrard 
 
 
 
Chief Financial Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
  Exhibit 4.1
 
WARRANT TO PURCHASE CLASS B COMMON STOCK
OF
RUMBLEON, INC.
 
ISSUED ON April 30, 2018
 
VOID AFTER 5:30 P.M., EASTERN TIME, ON April 30, 2023
 
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ ACT ”), AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.
 
FOR VALUE RECEIVED, RUMBLEON, INC., a Nevada corporation (the “ Company ”), hereby agrees to sell upon the terms and conditions hereinafter set forth, but no later than 5:30 p.m., Eastern Time, on the Expiration Date (as hereinafter defined) to Hercules Capital, Inc. or its registered assigns (the “ Holder ”), under the terms as hereinafter set forth, the Applicable Number of fully paid and non-assessable shares of the Company’s Class B Common Stock, par value $0.001 per share (the “ Warrant Shares ”), at a per share purchase price equal to $5.50 per share (the “ Warrant Price ”), pursuant to this warrant (this “ Warrant ”). The term “ Applicable Number ” shall mean 81,818 shares, provided that upon Lender making an Advance pursuant to the Tranche IV , in each case, as defined in the Loan and Security Agreement, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “ Loan Agreement ”), by and among the Company, certain other borrowers party thereto, the several banks and other financial institutions or entities from time to time parties to this Agreement and Hercules Capital, Inc., in its capacity as administrative agent and collateral agent for lenders, the Applicable Number shall be 109,091. The number of Warrant Shares to be so issued and the Warrant Price are subject to adjustment in certain events as hereinafter set forth. The term “ Class B Common Stock ” shall mean, when used herein, unless the context otherwise requires, the stock and other securities and property at the time receivable upon the exercise of this Warrant.
 
1.   Definitions
 
a.   “ Act ” has the meaning set forth in the legend above.
 
b.   “ Aggregate Exercise Price ” has the meaning set forth in Section 10(c) hereof.
 
c.   “ Applicable Number ” has the meaning set forth in the preamble hereto.
 
d.   “ Articles ” means the Company’s Articles of Incorporation, as may be amended from time to time.
 
e.   “ Business Day ” means a day Monday through Friday on which banks are generally open for business in New York City.
 
f.   “ Buy-In ” has the meaning set forth in Section 6 hereof.
 
g.   “ Class B Common Stock ” has the meaning set forth in the preamble hereto.
 
h.   “ Common Stock ” means the common stock of the Company, as defined in the Articles, and including the Class A Common Stock and the Class B Common Stock.
 
i.   “ Company ” has the meaning set forth in the preamble hereto.
 
j.   “ Dilutive Issuance ” has the meaning set forth in Section 7(d) hereof.
 
 
 
 
k.   “ Excluded Securities ” means:
 
(i)   shares of Class B Common Stock, or options to acquire shares of Class B Common Stock, issued to directors, officers, employees and consultants of the Company or any subsidiary pursuant to any qualified or non-qualified stock option plan or agreement, stock purchase plan or agreement, stock restriction agreement, employee stock ownership plan, consultant equity compensation plan or arrangement approved by the Board of Directors of the Company or an authorized committee thereof, including any repurchase or stock restriction agreement, or such other options, issuances, arrangements, agreements or plans intended principally as a means of providing compensation for employment or services and approved by the Board of Directors of the Company;
 
(ii)   shares of Class B Common Stock, or warrants or options to purchase Class B Common Stock, issued in connection with bona fide acquisitions, mergers or similar transactions, the terms of which are approved by the Board of Directors of the Company; and
 
(iii)   shares of Class B Common Stock issued upon exercise or conversion of any options, warrants or convertible notes of the Company set forth on the capitalization table set forth on Schedule A hereto.
 
l.   “ Expiration Date ” means April 30, 2023.
 
m.   “ fair market value ” has the meaning set forth in Section 2(a) hereof.
 
n.   “ Filing Date ” has the meaning set forth in Section 10(a) hereof.
 
o.   “ Final Prospectus ” has the meaning set forth in Section 10(f) hereof.
 
p.   “ Fully-Diluted Basis ” means, at any given time and without duplication, the aggregate number of Common Stock and Preferred Stock (as such terms are defined in the Articles) and any other shares of the Company outstanding at such time plus the aggregate number of Common Stock and Preferred Stock and any other shares of the Company issuable (subject to readjustment upon the actual issuance thereof) upon the exercise, conversion or exchange of any option, right, warrant or convertible or exchangeable security outstanding at such time.
 
q.   “ Holder ” has the meaning set forth in the preamble hereto.
 
r.   “ Indemnified Party ” has the meaning set forth in Section 10(f) hereof.
 
s.   “ Indemnifying Party ” has the meaning set forth in Section 10(f) hereof.
 
t.   “ Loan Agreement ”   has the meaning set forth in the preamble hereto.
 
u.   “ Net Issuance ” has the meaning set forth in Section 2(a) hereof.
 
v.   “ New Issuance ” means (A) any issuance or sale by the Company of any class of shares of the Company (including the issuance or sale of any shares owned or held by or for the account of the Company) other than Excluded Securities, (B) any issuance or sale by the Company of any options, rights or warrants to subscribe for any class of shares of the Company other than Excluded Securities, or (C) the issuance or sale of any securities convertible into or exchangeable for any class of shares of the Company other than Excluded Securities.
 
w.   “ New Issuance Price ” has the meaning set forth in Section 7(d) hereof.
 
x.   “ Penalty Period ” has the meaning set forth in Section 10(c) hereof.
 
y.   “ Purchase Price ” means, with respect to any exercise of this Warrant, an amount equal to the Warrant Price as of the relevant time multiplied by the number of shares of Common Stock requested to be exercised under this Warrant pursuant to such exercise.
 
 
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z.   “ Registrable Securities ” means the Warrant Shares; provided , however , that the Warrant Shares shall only be treated as Registrable Securities if and only for so long as they (i) have not been disposed of pursuant to a Registration Statement declared effective by the SEC, (ii) have not been sold in a transaction exempt from the registration and prospectus delivery requirements of the Act so that all transfer restrictions and restrictive legends with respect thereto are removed upon the consummation of such sale or (iii) are held by the Holder or a permitted transferee pursuant to Section 10(i).
 
aa.   “ Registration Default ” has the meaning set forth in Section 10(c) hereof.
 
bb.   “ Registration Expenses ” means all expenses incurred by the Company in complying with Section 10 hereof, including, without limitation, all registration, qualification and filing fees, printing expenses, escrow fees, fees and expenses of counsel for the Company, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding the fees of legal counsel for the Holder).
 
cc.   “ Registration Period ” has the meaning set forth in Section 10(d) hereof.
 
dd.   “ Registration Statement ” has the meaning set forth in Section 10(a) hereof.
 
ee.   “ Selling Expenses ” means all selling commissions applicable to the sale of Registrable Securities and all fees and expenses of legal counsel for the Holder.
 
ff.   “ Trading Day ” means a day on which the New York Stock Exchange is open for trading.
 
gg.   “ Trading Market ” means any of the following markets or exchanges on which the Class B Common Stock is listed or quoted for trading on the date in question: the NYSE American, LLC, The NASDAQ Capital Market, The NASDAQ Global Market, The NASDAQ Global Select Market, or the New York Stock Exchange (or any successors to any of the foregoing).
 
hh.   “ Transfer Notice ” has the meaning set forth in Section 3(b) hereof.
 
ii.   “ VWAP ” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Class B Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Class B Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Class B Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if Class B Common Stock is not then listed or quoted for trading on a Trading Market, the volume weighted average price of a share of Class B Common Stock for such date (or the nearest preceding date) on the OTCQB or OTCQX as applicable, (c) if Class B Common Stock is not then listed or quoted for trading on the OTCQB or OTCQX and if prices for Class B Common Stock are then reported in the “Pink Sheets” published by OTC Markets Group, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of Class B Common Stock so reported, or (d) in all other cases, the fair market value of the Class B Common Stock as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
 
jj.   “ Warrant ” means this Warrant and any subsequent Warrant issued in accordance with the terms hereof.
 
kk.   “ Warrant Price ”   has the meaning set forth in the preamble hereto.
 
ll.   “ Warrant Register ” has the meaning set forth in Section 9(c) hereof.
 
mm.   “ Warrant Share Delivery Date ” has the meaning set forth in Section 6 hereof.
 
nn.   “ Warrant Shares ” means has the meaning set forth in the preamble hereto.
 
 
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2.   Exercise of Warrant .
 
a.   The Holder or its assignee may exercise this Warrant according to its terms by completing the subscription form attached hereto and surrendering this Warrant to the Company at the address set forth in Section 14, accompanied by payment in full of the Purchase Price, as specified in the subscription form, or as otherwise provided in this Warrant, prior to 5:30 p.m., Eastern Time on the Expiration Date. Payment of the purchase price may be made (i) in cash or certified check or by bank draft in lawful money of the United States of America or (ii) in accordance with the net issuance formula below (“ Net Issuance ”).
 
If the Holder elects the Net Issuance method of payment, then the Company shall issue to Holder upon exercise such number of shares of Class B Common Stock determined in accordance with the following formula:
 
  X= Y(A-B)
A
 
Where X = the number of shares of Class B Common Stock to be issued to the Holder;
 
Y = the number of shares of Class B Common Stock with respect to which the Holder is exercising its rights under this Warrant;
 
A = the fair market value of one (1) share of Class B Common Stock on the date of exercise; and
 
B = the Warrant Price.
 
For purposes of the above calculation, “ fair market value ” shall mean:
 
(i) 
if the Class B Common Stock is listed or traded on the NASDAQ stock market or any United States securities exchange or quoted on any securities quotation service operated by NASDAQ (including the OTC Bulletin Board), the twenty day volume weighted average trading price for the twenty Trading Days ending on the second Trading Day prior to the date of exercise; or
 
(ii) 
if at any time the Class B Common Stock is not listed or traded on any United States stock exchange or quoted on any securities quotation service operated by NASDAQ, the fair market value determined in good faith by the Board of Directors of the Company and approved in good faith by the Holder. In the event that the Holder does not accept the valuation determined by the board of directors of the Company, then the Company and the Holder shall, in good faith, select an independent valuation firm mutually acceptable to each of them to conduct a valuation of the price of a Warrant Share. The Holder may elect, in its sole discretion, to receive the number of shares of Class B Common Stock issuable to it upon exercise of this Warrant calculated using the fair market value as determined in good faith by the Board of Directors of the Company. Upon the determination of the independent valuation firm, the Company and the Holder will make adjustments to the issuance of Class B Common Stock based on the determination of such independent valuation firm. The determination of such independent valuation firm shall be conclusive, absent manifest error, as between the Company and the Holder for purposes herein. The Company shall pay all costs and expenses associated with the engagement of the independent valuation firm; provided that a valuation is not required more than once in any given twelve (12) consecutive month period. If at any time there will be more than one Holder, then any determination of the fair market value, made with respect to a Holder, shall apply to all the Holders, unless any party proves that a material change in the valuation of the Company has occurred since the valuation was determined.
 
 
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b.   This Warrant may be exercised in whole or in part so long as any exercise in part hereof would not involve the issuance of fractional shares of Warrant Shares. If exercised in part, the Company shall deliver to the Holder a new Warrant, identical in form, in the name of the Holder, evidencing the right to purchase the number of Warrant Shares as to which this Warrant has not been exercised, which new Warrant shall be signed by the Chairman, Chief Executive Officer or President and the Secretary or Assistant Secretary of the Company.
 
c.   No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. The Company shall pay cash in lieu of fractional shares with respect to the Warrants based upon the fair market value of such fractional shares of Class B Common Stock (which, for purposes of this Section 2(c), shall be the closing price of such shares on the exchange or market on which the Class B Common Stock is then traded) at the time of exercise of this Warrant.
 
3.   Disposition of Warrant Shares and Warrant .
 
a.   The Holder hereby acknowledges that (i) this Warrant and any Warrant Shares purchased pursuant hereto are, as of the date hereof, not registered: (A) under the Act on the ground that the issuance of this Warrant is exempt from registration under Section 4(2) of the Act as not involving any public offering or (B) under any applicable state securities law because the issuance of this Warrant does not involve any public offering and (ii) the Company’s reliance on the Section 4(2) exemption of the Act and under applicable state securities laws is predicated in part on the representations hereby made to the Company by the Holder. The Holder represents and warrants that it is (i) an “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act, (ii) (A) familiar with the business and affairs of the Company and (B) knowledgeable and experienced in financial and business matters to the extent that such Holder is capable of evaluating the merits and risks of an investment in the Warrant and the Warrant Shares, and (iii) acquiring this Warrant and will acquire the Warrant Shares for investment for its own account, with no present intention of dividing his, her or its participation with others or reselling or otherwise distributing the same such that Holder may be deemed an “underwriter” as such term is defined under the Securities Act of 1933, as amended.
 
b.   Subject to compliance with applicable federal and state securities laws and the immediately following sentence, and if such intended transferee is not an affiliate of the Holder and the intended transferee provides a duly executed written confirmation that the representations and warranties in Section 3(a) of this Warrant are true and correct as to such intended transferee, this Warrant and all rights hereunder are transferable, in whole or in part, without charge to the Holder (except for transfer taxes) upon surrender of this Warrant properly endorsed. The Holder hereby agrees that it will not sell or transfer all or any part of this Warrant and/or Warrant Shares unless and until it shall first have given notice to the Company describing such sale or transfer and, if requested by the Company in writing, furnished to the Company either (i) an opinion, reasonably satisfactory to counsel for the Company, of counsel (skilled in securities matters, selected by the Holder and reasonably satisfactory to the Company) to the effect that the proposed sale or transfer may be made without registration under the Act and without registration or qualification under any state law, or (ii) an interpretative letter from the Securities and Exchange Commission to the effect that no enforcement action will be recommended if the proposed sale or transfer is made without registration under the Act. Each taker and holder of this Warrant, by taking or holding the same, consents and agrees that this Warrant, when endorsed in blank, shall be deemed negotiable subject to the transfer restrictions provided for herein, and that the holder hereof, when this Warrant shall have been so endorsed and its transfer recorded on the Company’s books, shall be treated by the Company and all other persons dealing with this Warrant as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented by this Warrant and, notwithstanding any other provision of this Warrant to the contrary, shall be the Holder as referred to in this Warrant.
 
The proper transfer of this Warrant shall be recorded in the registry referred to in Section 9(c) upon receipt by the Company of a notice of transfer in the form attached hereto as Exhibit II (the “ Transfer Notice ”), at its principal offices and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer. Until the Company receives such Transfer Notice, the Company may treat the registered owner hereof as the owner for all purposes.
 
 
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c.   If, at the time of issuance of the shares issuable upon exercise of this Warrant, no Registration Statement is in effect with respect to such shares under applicable provisions of the Act, the Company may at its election require that the Holder provide the Company with written reconfirmation of the Holder’s investment intent and that any stock certificate delivered to the Holder of a surrendered Warrant shall bear legends reading substantially as follows:
 
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”
 
In addition, so long as the foregoing legend may remain on any stock certificate delivered to the Holder, the Company may maintain appropriate “stop transfer” orders with respect to such certificates and the shares represented thereby on its books and records and with those to whom it may delegate registrar and transfer functions.
 
4.   Reservation of Shares . The outstanding shares of capital stock of the Company as of the issue date of this Warrant is as set forth on Schedule A hereto. The Company hereby agrees that at all times there shall be reserved for issuance upon the exercise of this Warrant such number of shares of its Class B Common Stock as shall be required for issuance upon exercise of this Warrant and shall at all times have a sufficient number of authorized shares so as to permit the issuance of the shares of Class B Common Stock upon exercise of this Warrant. The Company further agrees that all Warrant Shares represented by this Warrant will be duly authorized and will, upon issuance and against payment of the exercise price, be validly issued, fully paid and non-assessable.
 
5.   Exchange, Transfer or Assignment of Warrant . This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other Warrants of different denominations, entitling the Holder or Holders thereof to purchase in the aggregate the same number of shares of Class B Common Stock purchasable hereunder. Upon surrender of this Warrant to the Company or at the office of its stock transfer agent, if any, with funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled.
 
6.   Delivery of Stock Certificate Upon Exercise . Within the third day after the Notice of Exercise is delivered pursuant to this Warrant (the “ Warrant Share Delivery Date ”) and payment of the Warrant Price (which payment shall be deemed to have occurred when the funds are immediately available to the Company), if applicable, the Company will cause to be issued in the name of and delivered to the registered Holder hereof or its assigns, or such Holder’s nominee or nominees, a certificate or certificates for the full number of shares of Class B Common Stock of the Company to which such Holder shall be entitled upon exercise (and in the case of partial exercise, a Warrant of like tenor for the unexercised portion remaining subject to exercise prior to the Expiration Date set forth herein). For all corporate purposes, such certificate or certificates shall be deemed to have been issued and such Holder or Holder’s designee to be named therein shall be deemed to have become a holder of record of such shares of Class B Common Stock as of the date the duly executed exercise form pursuant to this Warrant, together with the full payment of the Warrant Price, is received by the Company as aforesaid. No fraction of a share or scrip certificate for such fraction shall be issued upon exercise of this Warrant; in lieu thereof, the Company will pay or cause to be paid to such Holder cash equal to a like fraction at the prevailing fair market price for such share as determined in good faith by the Company. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the second Trading Day following the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Class B Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after the second Trading Day following such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise. In addition, if the Company fails to cause its transfer agent to transmit to the Holder the Warrant Shares pursuant to an exercise on or before the second Trading Day following the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Class B Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “ Buy-In ”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Class B Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Class B Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Class B Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Class B Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Class B Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
 
 
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7.   Adjustment of Warrant Price and Number of Warrant Shares . The number of Warrant Shares purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to adjustment as follows:
 
a.   Recapitalization, Reclassification and Succession . If any recapitalization of the Company or reclassification of its Common Stock or any merger or consolidation of the Company into or with a corporation or other business entity, or the sale or transfer of all or substantially all of the Company’s assets or of any successor corporation’s assets to any other corporation or business entity (any such corporation or other business entity being included within the meaning of the term “successor corporation”) shall be effected, at any time while this Warrant remains outstanding and unexpired, then, as a condition of such recapitalization, reclassification, merger, consolidation, sale or transfer, lawful and adequate provision shall be made whereby the Holder of this Warrant thereafter shall have the right to receive upon the exercise hereof as provided in Section 2 and in lieu of the shares of Common Stock immediately theretofore issuable upon the exercise of this Warrant, such shares of capital stock, securities or other property as may be issued or payable with respect to or in exchange for a number of outstanding shares of Common Stock equal to the number of shares of Common Stock immediately theretofore issuable upon the exercise of this Warrant had such recapitalization, reclassification, merger, consolidation, sale or transfer not taken place, and in each such case, the terms of this Warrant shall be applicable to the shares of stock or other securities or property receivable upon the exercise of this Warrant after such consummation.
 
b.   Subdivision or Combination of Shares . If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Common Stock, the number of Warrant Shares purchasable upon exercise of this Warrant shall be adjusted in accordance with Section 7(d)(i).
 
c.   Stock Dividends and Distributions . If the Company at any time while this Warrant is outstanding and unexpired shall issue or pay the holders of its Common Stock, or take a record of the holders of its Common Stock for the purpose of entitling them to receive, a dividend payable in, or other distribution of, Common Stock, then the Warrant Price shall be adjusted in accordance with Section 7(d)(ii).
 
d.   Anti-Dilution .
 
(i)   If, at any time during the one-year period commencing on the date of issuance of this Warrant, (A) the Company shall make a New Issuance for no consideration or for a consideration per share less than the Warrant Price in effect immediately prior to such New Issuance (a “ Dilutive Issuance ”) or (B) the total consideration paid (including exercise price of any option, right or warrant to subscribe for any class of shares of the Company or the conversion price of any security convertible into or exchangeable for any class of shares of the Company) (other than an option, right or warrant that is an Excluded Security) is when issued or is later adjusted downward to a price that is less than the exercise price in effect immediately prior to such downward adjustment (such lower consideration price or adjusted exercise price or conversion price, the “ New Issuance Price ”), then immediately after such Dilutive Issuance or downward adjustment of such exercise price or conversion price, the Warrant Price then in effect shall be reduced to an amount equal to the New Issuance Price. For purposes of this Warrant, if a part or all of the consideration received by the Company in connection with a New Issuance consists of property other than cash, such consideration shall be deemed to have a fair market value as defined in Section 2(a) above.
 
(ii)   If, at any time after the one-year period commencing on the date of issuance of this Warrant, the Company makes a Dilutive Issuance, then, upon such issuance, the Warrant Price shall be reduced to equal the amount computed using the following formula:
 
A * [(C + D)/B]
 
where:
 
A   =   the Warrant Price in effect immediately prior to the Dilutive Issuance;
B   =   the number of shares of Common Stock outstanding immediately after the New Issuance (calculated on a Fully-Diluted Basis);
 
 
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C   =   the number of shares of Common Stock outstanding immediately prior to the New Issuance (calculated on a Fully-Diluted Basis); and
D  =  the number of shares of Common Stock that would be issuable for the total consideration to be received for the New Issuance if the purchaser paid the Warrant Price in effect immediately prior to the New Issuance.
 
(iii)   Upon each adjustment in the Warrant Price pursuant to this Section 7, the number of Warrant Shares purchasable hereunder shall be adjusted, to the nearest whole share, to the product obtained by multiplying the number of Warrant Shares purchasable immediately prior to such adjustment by a fraction, (i) the numerator of which shall be the Warrant Price immediately prior to such adjustment, and (ii) the denominator of which shall be the Warrant Price immediately thereafter.
 
e.   Certain Shares Excluded . The number of shares of Class B Common Stock outstanding at any given time for purposes of the adjustments set forth in this Section 7 shall exclude any shares then directly or indirectly held in the treasury of the Company.
 
f.   No Impairment . The Company will not, in any way whatsoever, including by amendment of the Articles, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder, or impair the economic interest of the Holder, but will at all times in good faith assist in the carrying out of all of the provisions hereof and in the taking of all such actions and making of all such adjustments as may be necessary or appropriate in order to protect the rights and economic interests of the Holder against impairment.
 
8.   Representations, Warranties And Covenants of the Company.
 
a.   Reservation of Common Stock . The Warrant Shares have been duly and validly reserved and, when issued in accordance with the provisions of this Warrant, will be validly issued, fully paid and non-assessable, and will be free of any taxes, liens, charges or encumbrances of any nature whatsoever; provided that the Common Stock issuable pursuant to this Warrant may be subject to restrictions on transfer under state and/or federal securities laws. The Company has made available to the Holder true, correct and complete copies of its Articles and current bylaws. The issuance of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issuance tax in respect thereof, or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Common Stock; provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer and the issuance and delivery of any certificate in a name other than that of the Holder.
 
b.   Due Authority . The execution, delivery and issuance by the Company of this Warrant and the performance of all obligations of the Company hereunder, including the issuance to Holder of the Warrant Shares, have been duly authorized by all necessary corporate action on the part of the Company. This Warrant constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium, or other laws affecting the enforcement of creditors’ rights in general, and except that the enforceability of this Warrant is subject to general principles of equity.
 
c.   Consents and Approvals . No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, federal or other governmental authority or agency is required with respect to the execution, delivery and performance by the Company of its obligations under this Warrant, except for the filing of notices pursuant to Regulation D under the Act, and any filing required by applicable state securities law and any required filings or notifications regarding the issuance or listing of additional shares with NASDAQ.
 
d.   Exempt Transaction . Subject to the accuracy of the Holder’s representations in Section 10, the issuance of the Class B Common Stock upon exercise of this Warrant will constitute a transaction exempt from (i) the registration requirements of Section 5 of the Act and (ii) the qualification requirements of the applicable state securities laws.
 
 
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e.   Compliance with Rule 144 . If the Holder proposes to sell Class B Common Stock issuable upon the exercise of this Warrant and in compliance with Rule 144, then, upon Holder’s written request to the Company, the Company shall furnish to the Holder, within ten days after receipt of such request, a written statement confirming the Company’s compliance with the filing requirements of the SEC as set forth in such Rule, as such Rule may be amended from time to time.
 
9.   Notice To Holders .
 
a.   Notice of Record Date . In case:
 
(i)   the Company shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend (other than a cash dividend payable out of earned surplus of the Company) or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities;
 
(ii)   of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation with or merger of the Company into another corporation, or any conveyance of all or substantially all of the assets of the Company to another corporation; or
 
(iii)   of any voluntary dissolution, liquidation or winding-up of the Company;
 
then, and in each such case, the Company will mail or cause to be mailed to the Holder hereof a notice specifying, as the case may be, (A) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (B) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such stock or securities at the time receivable upon the exercise of this Warrant) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution or winding-up. Unless otherwise agreed to by the parties, such notice shall be mailed at least 10 days prior to the record date therein specified; provided, however, failure to provide any such notice shall not affect the validity of such transaction.
 
b.   Notice of Adjustment . Whenever any adjustment shall be made pursuant to Section 7 hereof, the Company shall promptly notify the Holder of this Warrant of the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Warrant Price and number of Warrant Shares purchasable upon exercise of this Warrant after giving effect to such adjustment.
 
c.   Warrant Register . The Company shall maintain a registry showing the name and address of the registered holder of this Warrant (the “ Warrant Register ”). The Holder may change such address by giving written notice of the change to the Company.
 
10.   Registration Rights
 
a.   Filing of Registration Statement . As soon as reasonably practicable, but in no event later than 90 days after the issue date of this Warrant (such date of filing is referred to as the “ Filing Date ”), the Company shall file a registration statement covering the resale of the Registrable Securities on a registration statement (the “ Registration Statement ”) with the SEC and effect the registration, qualifications or compliances (including, without limitation, the execution of any required undertaking to file post-effective amendments, appropriate qualifications or exemptions under applicable blue sky or other state securities laws and appropriate compliance with applicable securities laws, requirements or regulations) as promptly as possible after the filing thereof, but in any event prior to the date that is 180 days after the issue date of this Warrant. The Registration Statement will be on Form S-3; provided that if Form S-3 is not available for use by the Company on the Filing Date, then the Registration Statement will be on such form as is then available.
 
 
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b.   Expenses . All Registration Expenses incurred in connection with any registration, qualification, exemption or compliance pursuant to this Section 10 shall be borne by the Company. All Selling Expenses relating to the sale of securities registered by or on behalf of the Holder shall be borne by the Holder.
 
c.   Registration Defaults . The Company further agrees that, in the event that the Registration Statement (i) has not been filed with the SEC within 90 days after the issue date of this Warrant, (ii) has not been declared effective by the SEC within 180 days after the issue date of this Warrant, or (iii) after the Registration Statement is declared effective by the SEC, is suspended by the Company or ceases to remain continuously effective as to all Registrable Securities for which it is required to be effective, other than, in each case, within the time period(s) permitted by Section 10(g)(ii) (each such event referred to in clauses (i), (ii) and (iii), (a “ Registration Default ”)), for any thirty-day period (a “ Penalty Period ”) during which the Registration Default remains uncured (which initial thirty-day period shall commence on the fifth Business Day after the date of such Registration Default if such Registration Default has not been cured by such date), the Company shall pay to the Holder an amount equal to one percent (1%) of the aggregate Purchase Price due and payable upon full exercise of the Warrants (the “ Aggregate Exercise Price ”) for each Penalty Period during which the Registration Default remains uncured; provided , however , that if the Holder fails to provide the Company with any information that is required to be provided in the Registration Statement with respect to the Holder as set forth herein, then the commencement of the Penalty Period described above shall be extended until five Business Days following the date of receipt by the Company of such required information; provided further , that the amount payable to the Holder hereunder for any partial Penalty Period shall be prorated for the number of actual days during such Penalty Period during which a Registration Default remains uncured; and provided further , that in no event shall the Company be required to pay to the Holder pursuant to this Section 10(c) an aggregate amount that exceeds 10% of the Aggregate Exercise Price. The Company shall deliver said cash payment to the Holder by the fifth Business Day after the end of such Penalty Period. If the Company fails to pay said cash payment to the Holder in full by the fifth Business Day after the end of such Penalty Period, the Company will pay interest thereon at a rate of 10% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such liquidated damages are due until such amounts, plus all such interest thereon, are paid in full.
 
d.   Registration Period Covenants . In the case of the registration, qualification, exemption or compliance effected by the Company pursuant to this Warrant, the Company shall, upon reasonable request, inform the Holder as to the status of such registration, qualification, exemption and compliance. At its expense, during the Registration Period, the Company shall:
 
(i)   except for such times as the Company is permitted hereunder to suspend the use of the prospectus forming part of the Registration Statement under Section 10(g)(ii), use its commercially reasonable efforts to keep such registration, and any qualification, exemption or compliance under state securities laws that the Company determines to obtain, continuously effective with respect to the Holder, and to keep such Registration Statement free of any material misstatements or omissions, until the earlier of the following: (i) the second anniversary of the issue date of this Warrant and (ii) the date all Warrant Shares may be sold under Rule 144 during any 90 day period. The period of time during which the Company is required hereunder to keep the Registration Statement effective is referred to herein as the “ Registration Period ;”
 
(ii)   advise the Holders:
 
A.   within two Business Days when the Registration Statement or any amendment thereto has been filed with the SEC and when the Registration Statement or any post-effective amendment thereto has become effective;
 
B.   within five Business Days of any request by the SEC for amendments or supplements to the Registration Statement or the prospectus included therein or for additional information;
 
C.   within five Business Days of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for such purpose;
 
 
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D.   within five Business Days of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and
 
E.   within five Business Days of the occurrence of any event that requires the making of any changes in the Registration Statement or the prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in the light of the circumstances under which they were made) not misleading;
 
(iii)   use its commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement as soon as reasonably practicable;
 
(iv)   promptly deliver to the Holder, without charge, as many copies of the prospectus included in such Registration Statement and any amendment or supplement thereto as the Holder may reasonably request in writing; and the Company consents to the use, consistent with the provisions hereof, of the prospectus or any amendment or supplement thereto by the Holder of Registrable Securities in connection with the offering and sale of the Registrable Securities covered by the prospectus or any amendment or supplement thereto;
 
(v)   if the Holder so requests in writing, deliver to the Holder, without charge, (i) one copy of the following documents, other than those documents available via EDGAR: (A) its annual report to its stockholders, if any (which annual report shall contain financial statements audited in accordance with generally accepted accounting principles in the United States of America by a firm of certified public accountants of recognized standing), (B) if not included in substance in its annual report to stockholders, its annual report on Form 10-K (or similar form), (C) its definitive proxy statement with respect to its annual meeting of stockholders, (D) each of its quarterly reports to its stockholders, and, if not included in substance in its quarterly reports to stockholders, its quarterly report on Form 10-Q (or similar form), and (E) a copy of the full Registration Statement (the foregoing, in each case, excluding exhibits); and (ii) if explicitly requested, all exhibits excluded by the parenthetical to the immediately preceding clause (E);
 
(vi)   prior to any public offering of Registrable Securities pursuant to any Registration Statement, promptly take such actions as may be necessary to register or qualify or obtain an exemption for offer and sale under the securities or blue sky laws of such United States jurisdictions as any such Holders reasonably request in writing, provided that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction, and do any and all other acts or things reasonably necessary or advisable to enable the offer and sale in such jurisdictions of the Registrable Securities covered by such Registration Statement;
 
(vii)   upon the occurrence of any event contemplated by Section 10(d)(ii)(E) above, except for such times as the Company is permitted hereunder to suspend the use of the prospectus forming part of the Registration Statement, the Company shall use its commercially reasonable efforts to as soon as reasonably practicable prepare a post-effective amendment to the Registration Statement or a supplement to the related prospectus, or file any other required document so that, as thereafter delivered to purchasers of the Registrable Securities included therein, the prospectus will not include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
 
(viii)   otherwise use its commercially reasonable efforts to comply in all material respects with all applicable rules and regulations of the SEC that could affect the sale of the Registrable Securities;
 
(ix)   use its commercially reasonable efforts to cause all Registrable Securities to be listed on each securities exchange or market, if any, on which equity securities issued by the Company have been listed;
 
 
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(x)   use its commercially reasonable efforts to take all other steps necessary to effect the registration of the Registrable Securities contemplated hereby and to enable the Holders to sell Registrable Securities under Rule 144;
 
(xi)   provide to the Holder and its representatives, if requested, the opportunity to conduct a reasonable inquiry of the Company’s financial and other records during normal business hours and make available on reasonable prior notice and during normal business hours its officers, directors and employees for questions regarding information that the Holder may reasonably request in order to fulfill any due diligence obligation on its part; and
 
(xii)   permit a single counsel for the Holder to review the Registration Statement and all amendments and supplements thereto, at least two Business Days prior to the filing thereof with the SEC;
 
provided that, in the case of clauses (xi) and (xii) above, the Company shall not be required (A) to delay the filing of the Registration Statement or any amendment or supplement thereto as a result of any ongoing diligence inquiry by or on behalf of the Holder or to receive any comments to the Registration Statement or any amendment or supplement thereto by or on behalf of the Holder if such inquiry or comments would require or result in a delay in the filing of such Registration Statement, amendment or supplement, as the case may be, or (B) to provide, and shall not provide, the Holder or its representatives with material, non-public information unless the Holder agrees to receive such information and enters into a written confidentiality agreement with the Company in a form reasonably acceptable to the Company.
 
e.   Certain Limitations . The Holder shall have no right to take any action to restrain, enjoin or otherwise delay any registration pursuant to Section 10 hereof as a result of any controversy that may arise with respect to the interpretation or implementation of the Warrants.
 
f.   Indemnity . To the extent permitted by law, the Company shall indemnify the Holder and each person controlling the Holder within the meaning of Section 15 of the Act, with respect to which any registration that has been effected pursuant to this Section 10, against all claims, losses, damages and liabilities (or action in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened (subject to Section 10(f)(iii) below), arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in the Registration Statement, prospectus, any amendment or supplement thereof, or other document incident to any such registration, qualification or compliance or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in light of the circumstances in which they were made, or any violation by the Company of any rule or regulation promulgated by the Act applicable to the Company and relating to any action or inaction required of the Company in connection with any such registration, qualification or compliance, and will reimburse the Holder and each person controlling the Holder, for reasonable legal and other out-of-pocket expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action as incurred; provided that the Company will not be liable in any such case to the extent that any untrue statement or omission or allegation thereof is made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Holder for use in preparation of such Registration Statement, prospectus, amendment or supplement; provided further that the Company will not be liable in any such case where the claim, loss, damage or liability arises out of or is related to the failure of the Holder to comply with the covenants and agreements contained in this Warrant respecting sales of Registrable Securities, and except that the foregoing indemnity agreement is subject to the condition that, insofar as it relates to any such untrue statement or alleged untrue statement or omission or alleged omission made in the preliminary prospectus but eliminated or remedied in the amended prospectus on file with the SEC at the time the Registration Statement becomes effective or in the amended prospectus filed with the SEC pursuant to Rule 424(b) or in the prospectus subject to completion under Rule 434 of the Act, which together meet the requirements of Section 10(a) of the Act (the “ Final Prospectus ”), such indemnity shall not inure to the benefit of the Holder or any such controlling person, if a copy of the Final Prospectus furnished by the Company to the Holder for delivery was not furnished to the person or entity asserting the loss, liability, claim or damage at or prior to the time such furnishing is required by the Act and the Final Prospectus would have cured the defect giving rise to such loss, liability, claim or damage.
 
 
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(i)   The Holder will severally, and not jointly, indemnify the Company, each of its directors and officers, and each person who controls the Company within the meaning of Section 15 of the Act, against all claims, losses, damages and liabilities (or actions in respect thereof), including any of the foregoing incurred in settlement of any litigation, commenced or threatened (subject to Section 10(f)(iii) below), arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in the Registration Statement, prospectus, or any amendment or supplement thereof, incident to any such registration, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in light of the circumstances in which they were made, and will reimburse the Company, such directors and officers, and each person controlling the Company for reasonable legal and any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action as incurred, in each case to the extent, but only to the extent, that such untrue statement or omission or allegation thereof is made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Holder for use in preparation of the Registration Statement, prospectus, amendment or supplement; provided that the indemnity shall not apply to the extent that such claim, loss, damage or liability results from the fact that a current copy of the prospectus was not made available to the person or entity asserting the loss, liability, claim or damage at or prior to the time such furnishing is required by the Act and the Final Prospectus would have cured the defect giving rise to such loss, claim, damage or liability. Notwithstanding the foregoing, the Holder’s aggregate liability pursuant to this subsection (b) shall be limited to the net amount received by the Holder from the sale of the Registrable Securities giving rise to such claims, losses, damages and liabilities (and actions in respect thereof).
 
(ii)   Each party entitled to indemnification under this Section 10(f) (the “ Indemnified Party ”) shall give notice to the party required to provide indemnification (the “ Indemnifying Party ”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party (at its expense) to assume the defense of any such claim or any litigation resulting therefrom; provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not unreasonably be withheld or delayed), and the Indemnified Party may participate in such defense at such Indemnified Party’s expense; provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Warrant, unless such failure is materially prejudicial to the Indemnifying Party in defending such claim or litigation. An Indemnifying Party shall not be liable for any settlement of an action or claim effected without its written consent (which consent will not be unreasonably withheld or delayed). No Indemnifying Party, in its defense of any such claim or litigation, shall, except with the consent (such consent not to be unreasonably withheld or delayed) of the Indemnified Party consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.
 
(iii)   If the indemnification provided for in this Section 10(f) is held by a court of competent jurisdiction to be unavailable to an Indemnified Party or is insufficient to hold such Indemnified Party harmless with respect to any loss, liability, claim, damage or expense referred to therein, then the Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. Notwithstanding the foregoing, the Holder’s aggregate liability pursuant to this subsection (iv) shall be limited to the net amount received by the Holder from the sale of Registrable Securities giving rise to such loss, liability, claim, damage or expense (or actions in respect thereof) less all other amounts paid as damages in respect thereto.
 
g.   Additional Covenants and Agreements of the Holder . The Holder agrees that, upon receipt of any notice from the Company of the happening of any event requiring the preparation of a supplement or amendment to a prospectus relating to Registrable Securities so that, as thereafter delivered to the Holder, such prospectus shall not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, the Holder will forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement and prospectus contemplated by Section 10(a) until its receipt of copies of the supplemented or amended prospectus from the Company and, if so directed by the Company, the Holder shall deliver to the Company all copies, other than permanent file copies then in the Holder’s possession, of the prospectus covering such Registrable Securities current at the time of receipt of such notice.
 
(i)   The Holder shall suspend, upon request of the Company, any disposition of Registrable Securities pursuant to the Registration Statement and prospectus contemplated by Section 10(a) during no more than 90 calendar days (which need not be consecutive days) during any 12-month period to the extent that the Board of Directors of the Company determines in good faith that the sale of Registrable Securities under the Registration Statement would be reasonably likely to cause a violation of the Act or Exchange Act.
 
(ii)   As a condition to the inclusion of its Registrable Securities, the Holder shall furnish to the Company such information regarding the Holder and the distribution proposed by the Holder as the Company may reasonably request in writing, including completing a Registration Statement questionnaire in the form provided by the Company, or as shall be required in connection with any registration referred to in this Section 10.
 
(iii)   The Holder hereby covenants with the Company (A) not to make any sale of the Registrable Securities without effectively causing the prospectus delivery requirements under the Act to be satisfied, and (B) if such Registrable Securities are to be sold by any method or in any transaction other than on a national securities exchange, Nasdaq or in the over-the-counter market, in privately negotiated transactions, or in a combination of such methods, to notify the Company at least five Business Days prior to the date on which the Holder first offers to sell any such Registrable Securities.
 
(iv)   The Holder acknowledges and agrees that the Registrable Securities sold pursuant to the Registration Statement are not transferable on the books of the Company unless the stock certificate submitted to the transfer agent evidencing such Registrable Securities is accompanied by a certificate reasonably satisfactory to the Company to the effect that (A) the Registrable Securities have been sold in accordance with such Registration Statement and (B) the requirement of delivering a current prospectus has been satisfied.
 
(v)   The Holder agrees not to take any action with respect to any distribution deemed to be made pursuant to such Registration Statement that would constitute a violation of Regulation M under the Exchange Act or any other applicable rule, regulation or law.
 
(vi)   At the end of the Registration Period, the Holders shall discontinue sales of shares pursuant to such Registration Statement upon receipt of notice from the Company of its intention to remove from registration the shares covered by such Registration Statement which remain unsold, and such Holders shall notify the Company of the number of shares registered which remain unsold immediately upon receipt of such notice from the Company.
 
h.   Additional Covenants and Agreements of the Company . With a view to making available to the Holder the benefits of certain rules and regulations of the SEC that at any time permit the sale of the Registrable Securities to the public without registration, so long as the Holder still own Registrable Securities, the Company shall use its commercially reasonable efforts to:
 
(i)   make and keep public information available, as those terms are understood and defined in Rule 144, at all times;
 
(ii)   file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act; and
 
(iii)   so long as the Holder owns any Registrable Securities, make available or furnish to the Holder, upon any reasonable request, a written statement by the Company as to its compliance with Rule 144 and of the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company as the Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing the Holder to sell any such securities without registration.
 
 
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i.   Assignment of Registration Rights . The rights to cause the Company to register Registrable Securities granted to the Holder by the Company under Section 10(a) may be assigned by the Holder in connection with a transfer by the Holder to a single transferee of the Warrants and all Registrable Securities, provided , however , that (i) such transfer complies with all applicable securities laws and with the terms and provisions of Section 10 of each of the Warrants; (ii) the Holder gives prior written notice to the Company; and (iii) such transferee agrees in writing to comply with the terms and provisions of each of the Warrants, and has provided the Company with a completed Registration Statement questionnaire in such form as is reasonably requested by the Company. Except as specifically permitted by this Section 10(i), the rights of the Holder with respect to Registrable Securities as set out herein shall not be transferable to any other person.
 
j.   Waiver of Registration Rights . The rights of the Holder under any provision of this Section 10 may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely) or amended by an instrument in writing signed by the Holders holding not less than a majority of the Registrable Securities; provided , however , that no consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of this Section 10 unless the same consideration also is offered to all holders of Registrable Securities.
 
11.   Loss, Theft, Destruction or Mutilation . Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership and the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of indemnity reasonably satisfactory to the Company and, in the case of mutilation, upon surrender and cancellation thereof, the Company will execute and deliver a new Warrant of like tenor dated the date hereof.
 
12.   Warrant Holder not a Stockholder . The Holder of this Warrant, in its capacity as a warrant holder, shall not be entitled by reason of this Warrant to any rights whatsoever as a stockholder of the Company.
 
13.   [Reserved]
 
14.   Notices . Any notice required or contemplated by this Warrant shall be deemed to have been duly given if transmitted by registered or certified mail, return receipt requested, or nationally recognized overnight delivery service, to the Company at its principal executive offices at 4251 Sharon Road, Suite 370, Charlotte, NC 28211, Attention: Chief Executive Officer, or to the Holder at the name and address set forth in the Warrant Register maintained by the Company.
 
15.   Choice of Law . THIS WARRANT IS ISSUED UNDER AND SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.
 
16.   Jurisdiction and Venue . The Company and the Holder hereby agree that any dispute which may arise between them arising out of or in connection with this Warrant shall be adjudicated before a court located in Santa Clara County, California and they hereby submit to the exclusive jurisdiction of the federal and state courts of the State of California located in Santa Clara County with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such court is an inconvenient forum, relating to or arising out of this Warrant or any acts or omissions relating to the sale of the securities hereunder, and consent to the service of process in the manner set forth in Section 13 of this Warrant.
 
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
 
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[SIGNATURE PAGE TO WARRANT TO PURCHASE STOCK]
 
IN WITNESS WHEREOF, the undersigned has duly executed this Warrant as of the date set forth above.
 
 
RUMBLEON, INC.
 
 
By: /s/ Steven R. Berrard
       Name: Steven R. Berrard
       Title: Chief Financial Officer
 
 
 
 
 
 
 
 
 
 
 
SCHEDULE A
 
CAPITALIZATION
 
Class
No. of Authorized Shares
No. of Shares Outstanding
No. of Shares
Issuable upon
Exercise of any
Options, Warrants
or Convertible
Notes
Class A Common Stock, $0.001 par value
 
 1,000,000
 
 1,000,000
 
 -
 
Class B Common Stock, $0.001 par value
 
99,000,000
 
11,928,541
 
218,250
 
Preferred Stock, $0.001 par value
 
  10,000,000
 
0
 
  -
 
 
 
There are 741,000 restricted stock units outstanding, which have been granted under the Company’s Stock Incentive Plan.
 
 
 
 
 
EXHIBIT I
 
FORM OF EXERCISE
 
(to be executed by the registered holder hereof)
 
1.            
In lieu of exercising the attached Warrant for cash, certified check or bank draft, the undersigned hereby elects to effect the Net Issuance provision of Section 2 of this Warrant and receive ______________ (leave blank if you choose Alternative No.2 below) shares of Class B Common Stock, par value $0.001 per share (“Class B Common Stock”), of RumbleON, Inc. issuable pursuant to the terms of the Warrant. (Initial here if the undersigned elects this alternative) _____
 
2.            
The undersigned hereby exercises the right to purchase _____________ (leave blank if you choose Alternative No.1 above) shares of Class B Common Stock of RumbleON, Inc., evidenced by the within this Warrant Certificate for an Warrant Price equal to [$________] per share and herewith makes payment of the Purchase Price in full of $_________.
 
3.            
Kindly issue certificates for shares of Class B Common Stock (and for the unexercised balance of the Warrants evidenced by the within Warrant, if any) in accordance with the instructions given below.
 
Dated: ________________, 20__.
 
 
 
 
Instructions for registration of stock:
 
 
 
Name (Please Print)
 
Social Security or other identifying Number:                      
 
 
Address:                                                                 
City/State and Zip Code
 
 
Instructions for registration of certificate representing
the unexercised balance of Warrants (if any)
 
 
 
 
Name (Please Print)
Social Security or other identifying Number:                        
 
 
Address:                                                                 
City, State and Zip Code
 
 
 
 
 
 
 
 
 
 
 
 
EXHIBIT II
 
TRANSFER NOTICE
 
(To transfer or assign the foregoing Warrant execute this form and supply required information. Do not use this form to purchase shares.)
 
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby transferred and assigned to
 
 
(Please Print)
 
whose address is                                                                                                            
 
 
Dated:                                                                                      
 
Holder’s Signature:                                                                                      
 
Holder’s Address:                                             
 
 
 
 
Signature Guaranteed:                                                                                                            
 
NOTE: The signature to this Transfer Notice must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
 
 
 
  Exhibit 10.1
 
LOAN AND SECURITY AGREEMENT
 
THIS LOAN AND SECURITY AGREEMENT is made and dated as of April 30, 2018 and is entered into by and among RUMBLEON, INC., a Nevada corporation (“ Parent ”), NEXTGEN PRO, LLC, a Delaware limited liability company (“ NextGen Pro ”), RMBL MISSOURI, LLC, a Delaware limited liability company (“ RMBL Missouri ”), RMBL TEXAS, LLC, a Delaware limited liability company (“ RMBL Texas ”), and each of their Qualified Subsidiaries from time to time party hereto (together with Parent, NextGen Pro, RMBL Missouri and RMBL Texas, individually, each, a “ Borrower ”, and collectively, “ Borrowers ”), the several banks and other financial institutions or entities from time to time parties to this Agreement (collectively, “ Lender ”) and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for Lender (in such capacity, “ Agent ”).
 
RECITALS
 
A.   Borrowers have requested Lender to make available to Borrowers one   or more growth capital term loans in an aggregate principal amount of up to $20,000,000; and
 
B.   Lender is willing to make such growth capital term loans on the terms and conditions set forth in this Agreement.
 
AGREEMENT
 
NOW, THEREFORE, Borrowers, Agent and Lender agree as follows:
 
SECTION 1.   DEFINITIONS AND RULES OF CONSTRUCTION
 
1.1                 Unless otherwise defined herein, the following capitalized terms shall have the following meanings:
 
“ Account Control Agreement(s) ” means any agreement entered into by and among Agent, Borrowers and a third party bank or other institution (including a Securities Intermediary) in which any Borrower maintains a Deposit Account or an account holding Investment Property and which perfects Agent’s first priority security interest in the subject account or accounts.
 
“ ACH Authorization ” means the ACH Debit Authorization Agreement in substantially the form of Exhibit H .
 
“ Adjusted EBITDA ” means for any period of determination, for Parent and each of its Subsidiaries, on a consolidated basis, an amount equal to Net Income for such period plus (a) the following to the extent deducted in calculating Net Income for such period: (i) Interest Expense for such period, (ii) federal, state, local and foreign income taxes for such period, (iii) depreciation and amortization expense for such period, (iv) all non-cash expenses related to stock based compensation for such period, (v) extraordinary or non-recurring items reducing Net Income for such period in an amount not to exceed 10% of Adjusted EBITDA to the extent in excess of $0 or as otherwise approved by Agent , and (vi) all non-cash items, other than described in clauses (a)(i) through (v) above, deducted to arrive at Net Income for such period, and minus (b) the following the extent included in calculating such Net Income for such period: (i) interest income for such period, (ii) federal, state, local and foreign income tax credits for such period, (iii) extraordinary or non-recurring income or gains for such period, (iv) capitalized software development costs for such period and (v) all non-cash items, other than described in clause (b)(i) through (iv) above, increasing Net Income for such period.
 
“ Advance ” means a Growth Capital Term Loan Advance.
 
“ Advance Date ” means the funding date of any Advance.
 
 
 
 
“ Advance Request ” means a request for an Advance submitted by Borrower Representative to Agent in substantially the form of Exhibit A .
 
“ Affiliate ” means (a) any Person that directly or indirectly controls, is controlled by, or is under common control with the Person in question, (b) any Person directly or indirectly owning, controlling or holding with power to vote ten percent (10%) or more of the outstanding voting securities of another Person, (c) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held by another Person with power to vote such securities, or (d) any Person related by blood or marriage to any Person described in subsection (a), (b) or (c) of this defined term. As used in the definition of “Affiliate,” the term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.
 
“ Agent ” has the meaning given to it in the preamble to this Agreement.
 
“ Agreement ” means this Loan and Security Agreement, as amended, restated, supplemented or otherwise modified from time to time.
 
“ Amortization Date ” means (i) with respect to any Advance pursuant to Tranche I or Tranche II, December 1, 2018, provided however, if (A) as of December 1, 2018, or (B) as of any Amortization Date, as extended from time to time, then in effect, or (C) as of the last day of any month after the Amortization Date then in effect has passed, but prior to September 30, 2019, Borrowers have satisfied the Interest Only Extension Condition, then the Amortization Date may be extended to be three (3) months after the later of (x) the Amortization Date in effect prior to such extension, and (y) if Borrower has commenced principal payments, the first day of the fourth month after the date the Interest Only Extension Condition is satisfied, provided that in no event shall the Amortization Date with respect to any Advance pursuant to Tranche I or Tranche II be extended to be later than November 1, 2019, (ii) with respect to any Advance pursuant to Tranche III, February 1, 2021, and (iii) with respect to any Advance pursuant to Tranche IV, as agreed among Borrowers and Agent.
 
“ Anti-Corruption Laws ” shall mean all laws, rules, and regulations of any jurisdiction applicable to any Borrower or any of its Affiliates from time to time concerning or relating to bribery or corruption, including without limitation the United States Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act 2010 and other similar legislation in any other jurisdictions.
 
“ Anti-Terrorism Laws ” means any laws, rules, regulations or orders relating to terrorism or money laundering, including without limitation Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by OFAC.
 
“ Assignee ” has the meaning given to it in Section 11.13 .
 
“ Blocked Person ” means any Person: (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (b) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (c) a Person with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (d) a Person that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224, or (e) a Person that is named a “specially designated national” or “blocked person” on the most current list published by OFAC or other similar list.
 
“ Board ” means, with respect to any Person that is a corporation, its board of directors, with respect to any Person that is a limited liability company, its board of managers, board of members or similar governing body, and with respect to any other Person that is a legal entity, such Person’s governing body in accordance with its Organizational Documents.
 
 
2
 
 
“ Borrower Products ” means all products, software, service offerings, technical data or technology currently being designed, manufactured or sold by a Borrower or which a Borrower intends to sell, license, or distribute in the future including any products or service offerings under development, collectively, together with all products, software, service offerings, technical data or technology that have been sold, licensed or distributed by a Borrower since each of its formation.
 
“ Borrower Representative ” means Parent.
 
 
“ Budget ” means a budget for Parent and its Subsidiaries, on a consolidated basis, acceptable to Agent, provided that in any event a budget reflecting Revenue, Adjusted EBITDA, if applicable, and Gross Profit, if applicable, of no less than the amounts set forth in the projections delivered to Agent as of the Closing Date will be acceptable to Agent, provided further that, if a Borrower consummates a Permitted Acquisition and such Permitted Acquisition is reasonably likely to affect the projections previously delivered, as reasonably determined by Agent based on its review of the proposed transaction, at all times thereafter, a budget will be acceptable to Agent if reflecting Revenue, Adjusted EBITDA, if applicable, and Gross Profit, if applicable, of no less than the amounts set forth in the updated projections reasonably approved by Agent in connection with such transaction.
 
“ Business Day ” means any day other than Saturday, Sunday and any other day on which banking institutions in the State of California are closed for business.
 
“ Cash ” means all cash, cash equivalents and liquid funds.
 
“ Change in Control ” means (i) any consolidation or merger (or similar transaction or series of related transactions) of Parent, (ii) sale or exchange of outstanding shares (or similar transaction or series of related transactions) of Parent in which holders of outstanding shares immediately before consummation of such transaction or series of related transactions (or such holders’ Affiliates) do not, immediately after consummation of such transaction or series of related transactions, retain shares representing more than fifty percent (50%) of the voting power of the surviving entity of such transaction or series of related transactions (or the parent of such surviving entity if such surviving entity is wholly owned by such parent), in each case without regard to whether Parent is the surviving entity, or (iii) any transaction or series of related transactions, resulting in a Borrower (other than Parent) no longer being a direct or indirect wholly-owned Subsidiary of Parent, provided that the following shall not constitute or cause on their own a “Change in Control”: (x) any transfers to any trust or otherwise for estate planning purposes and (y) sales on a public exchange or market in one or more transactions (regardless of whether related) except for such sales resulting in a single “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than Marshall Chesrown, becoming, or obtaining rights (whether by means of warrants, options or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act) of more than fifty percent (50%) of the voting power for the election of directors of Parent.
 
“ Charter ” means, with respect to any Person, such Person’s formation documents, as in effect from time to time.
 
“ Claims ” has the meaning given to it in Section 11.10 .
 
“ Closing Date ” means the date of this Agreement.
 
“ Collateral ” means the property described in Section 3 .
 
“ Compliance Certificate ” means a certificate in the form attached hereto as Exhibit F
 
“ Confidential Information ” has the meaning given to it in Section 11.12 .
 
 
3
 
 
“ Contingent Obligation ” means, as applied to any Person, any direct or indirect liability of that Person with respect to (i) any guarantee, contingent or otherwise, of any Indebtedness, lease, letter of credit or other obligation of another, including any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, company credit cards or merchant services issued for the account of that Person; and (iii) all net mark-to-market obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other similar agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement nor, in the case of obligations described in clause (iii) above, exceed the amount of the obligation after all netting agreements.
 
“ Copyright License ” means any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter acquired by a Borrower or in which a Borrower now holds or hereafter acquires any interest.
 
“ Copyrights ” means all copyrights, whether registered or unregistered, held pursuant to the laws of the United States of America, any State thereof, or of any other country.
 
“ Deposit Accounts ” means any “deposit accounts,” as such term is defined in the UCC, and includes any checking account, savings account, or certificate of deposit.
 
“ Domestic Subsidiary ” means any Subsidiary that is not a Foreign Subsidiary.
 
“ Due Diligence Fee ” means $20,000, which fee has been paid to Lender prior to the Closing Date, and shall be deemed fully earned on such date regardless of the early termination of this Agreement.
 
“ Eligible Foreign Subsidiary ” means any Foreign Subsidiary whose execution of a Joinder Agreement could not result in a material adverse tax consequence to Borrowers.
 
“ Equity Interests ” means, with respect to any Person, the capital stock, partnership or limited liability company interest, or other equity securities or equity ownership interests of such Person.
 
“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
 
“ Event of Default ” has the meaning given to it in Section 9 .
 
“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.
 
“ Excluded Taxes ” means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (i) imposed as a result of such Recipient being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in an Advance or a commitment to make Advances pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or commitment to make Advances or (ii) such Lender changes its lending office, except in each case to the extent that, amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 2.9 and (d) any withholding Taxes imposed under  FATCA, provided that following an Event of Default, subsections (b) and (d) shall not be considered “Excluded Taxes” to the extent Lender (or any successor or assign of Lender) assigns its interests in the Loan or any Financing Document following such Event of Default .
 
 
4
 
 
“ FATCA ” means sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof, any intergovernmental agreement or foreign legislation (including official administrative rules or practices) implemented to give effect to any intergovernmental agreements entered into thereunder and any agreements entered into pursuant to section 1471(b) of the Code.
 
“ Facility Charge ” means (i) at the Closing Date, $150,000, in respect of Tranche I, Tranche II and Tranche III, and (ii) 1.0% of the principal amount of any Advance pursuant to Tranche IV.
 
“ Financial Statements ” has the meaning given to it in Section 7.1 .
 
“ Foreign Subsidiary ” means any Subsidiary other than a Subsidiary organized under the laws of any state within the United States of America.
 
“ GAAP ” means generally accepted accounting principles in the United States of America, as in effect from time to time, provided that to the extent any change in GAAP affect the determination of financial covenant compliance, milestones or other limitations or requirements under this Agreement, upon written notice by Borrower or Agent, the parties hereto agree to negotiate in good faith with respect to an amendment to the terms of this Agreement to adjust for such change, provided further that until such amendment is so agreed, all calculations with respect to financial covenant compliance, milestones or other limitations or requirements under this Agreement shall be made in accordance with GAAP as in effect prior to such change in GAAP.
 
“ Gross Margin ” means, for any period, the ratio, expressed as a percentage, of (a) an amount equal to (i) Revenue for such period, less (ii) costs of Revenue for such period to (b) Revenue for such period, determined in accordance with GAAP and consistently with past practices.
 
“ Gross Profit ” means, for any period, Revenue, for such period, minus costs of goods sold, for such period, determined in accordance with GAAP and consistently with past practices.
 
“ Growth Capital Term Commitment ” means as to any Lender, the obligation of such Lender, if any, to make a Growth Capital Term Loan Advance to Borrowers in a principal amount not to exceed the amount set forth under the heading “Growth Capital Term Commitment” opposite such Lender’s name on Schedule 1.1 .
 
“ Growth Capital Term Loan Advance ” means an Advance pursuant to Section 2.1(a)
 
“ Indebtedness ” means indebtedness of any kind, including (a) all indebtedness for borrowed money or the deferred purchase price of property or services (excluding trade credit entered into in the ordinary course of business due within ninety (90) days), including reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations; provided, however, Indebtedness shall not include obligations to make payment on the Equity Interests of the Parent.
 
“ Intellectual Property ” means all of each Borrower’s Copyrights, Trademarks, Patents, Licenses, trade secrets and inventions; mask works; each Borrower’s applications therefor and reissues, extensions, or renewals thereof; and each Borrower’s goodwill associated with any of the foregoing, together with each Borrower’s rights to sue for past, present and future infringement of Intellectual Property and the goodwill associated therewith.
 
“ Interest Expense ” is, for any period of determination, for Parent and each of its Subsidiaries on a consolidated basis, an amount equal to the sum of all interest charges (including imputed interest charges with respect to capitalized lease obligations and all amortization of debt discount and expense) of such Person for such period.
 
 
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“ Interest Only Extension Condition ” shall mean satisfaction of each of the following events: (a) no default or Event of Default shall have occurred and be continuing; and (b) either (i) Borrower Representative shall have provided evidence reasonably satisfactory to Agent that Parent, on a consolidated basis, shall have achieved Gross Profit and Adjusted EBITDA for the most recent fiscal quarter then ended in an amount not less than 80% of the projected Gross Profit and Adjusted EBITDA for such fiscal quarter, as set forth in the Budget, or (ii) Borrower Representative shall have provided evidence reasonably satisfactory to Agent that (A) Parent, on a consolidated basis, shall have achieved Gross Profit and Adjusted EBITDA for the most recent fiscal quarter then ended in an amount not less than 75% of the projected Gross Profit and Adjusted EBITDA for such fiscal quarter, as set forth in the Budget, and (B) Parent shall have received net cash proceeds from the issuance of its Equity Interest (not including any proceeds from the conversion of indebtedness) of at least $5,000,000 during the period commencing on the first day of such fiscal quarter and ending on the Amortization Date as then in effect.
 
“ Inventory Financing Agreement ” means that certain Inventory Financing and Security Agreement, by and among Inventory Financing Lenders and RMBL Missouri, dated February 16, 2018, as it may be amended in compliance with the Inventory Financing Intercreditor Agreement and similar agreements entered into with any Inventory Financing Lender.
 
“ Inventory Financing Intercreditor Agreement ” means an intercreditor agreement by and among any Inventory Financing Lender, Agent and Borrowers in form and substance satisfactory to Agent in Agent’s reasonable discretion (it being understood that the Inventory Financing Intercreditor Agreement dated of even date with this Agreement shall be deemed satisfactory in form and substance), pursuant to which the Liens securing Indebtedness of any Borrower pursuant to any Inventory Financing Agreement shall be subordinated to Agent’s Lien except that the Lien granted to such Inventory Financing Lender may be prior to Agent’s Lien with respect to the following Collateral: (i) Inventory financed pursuant to the applicable Inventory Financing Agreement, (ii) Permitted Inventory Financing Cash Collateral, and (iii) cash proceeds from the sale of such financed Inventory until the earlier of payment to Inventory Financing Lender of the advance associated with such financed Inventory and the date that is 30 days after the sale of such financed Inventory, or, if a default or event of default has occurred of which Agent has been duly notified, all cash proceeds from the sale of Inventory constituting financed Inventory as of the date the default or event of default occurred (or if Inventory Financing Lender notifies Agent of the default or event of default more than 30 days after the occurrence of the default or event of default, all cash proceeds from Inventory constituting financed Inventory as of the date that is 30 days prior to the date notice of the default or event of default is duly given to Agent), provided further, that if an Advance pursuant to Tranche III has been made, Agent agrees that it will negotiate in good faith with respect to an Inventory Financing Intercreditor Agreement pursuant to which an Inventory Financing Lender may have a first priority Lien (prior to Agent’s Lien) on all Inventory of the applicable Borrower and certain cash proceeds thereof, as approved by Agent in its sole discretion, subject to Borrowers maintenance of a minimum cash balance of at least $2,000,000 in Deposit Accounts and accounts in which Investment Property is maintained, in each case, subject to an Account Control Agreement in favor of Agent, if the amount of total Indebtedness pursuant to inventory financing arrangements exceeds 70% of total value of the aggregate book value of Inventory of Borrowers, on a consolidated basis (such minimum cash requirement to be set forth in an amendment to this Agreement, if so requested by Agen t).
 
“ Inventory Financing Lenders ” means Ally Bank and Ally Financial Inc., collectively and each of their assigns or successors in interest, and any additional or replacement lenders providing inventory financing to any Borrower other than Parent, provided that such lender shall be domiciled in the United States and shall be in the business of extending credit of such type in the ordinary course of business.
 
“ Investment ” means any beneficial ownership (including stock, partnership or limited liability company interests) of or in any Person, or any loan, advance or capital contribution to any Person or the acquisition of any asset of another Person.
 
“ Joinder Agreements ” means for each Qualified Subsidiary, a completed and executed Joinder Agreement in substantially the form attached hereto as Exhibit G .
 
“ Lender ” has the meaning given to it in the preamble to this Agreement.
 
 
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“ License ” means any Copyright License, Patent License, Trademark License or other license of rights or interests.
 
“ Lien ” means any mortgage, deed of trust, pledge, hypothecation, assignment for security, security interest, encumbrance, levy, lien or charge of any kind, whether voluntarily incurred or arising by operation of law or otherwise, against any property, any conditional sale or other title retention agreement, and any lease in the nature of a security interest.
 
“ Loan ” means the Advances made under this Agreement.
 
“ Loan Documents ” means this Agreement, the Notes (if any), the ACH Authorization, the Account Control Agreements, the Joinder Agreements, all UCC Financing Statements, the Warrant, and any other documents executed in connection with the Secured Obligations or the transactions contemplated hereby, as the same may from time to time be amended, modified, supplemented or restated.
 
“ Material Adverse Effect ” means a material adverse effect upon: (i) the business, operations, properties, assets or financial condition of Borrowers and each of its Subsidiaries taken as a whole; or (ii) the ability of Borrowers to perform or pay the Secured Obligations in accordance with the terms of the Loan Documents, or the ability of Agent or Lender to enforce any of its material rights or remedies with respect to the Secured Obligations; or (iii) the Collateral or Agent’s Liens on the Collateral or the priority of such Liens.
 
“ Maximum Growth Capital Term Loan Amount ” means $20,000,000.
 
“ Maximum Rate ” shall have the meaning assigned to such term in Section 2.2 .
 
“ Net Income ” is, for any period of determination, for Parent and its Subsidiaries on a consolidated basis, the net income of Parent and its Subsidiaries determined in accordance with GAAP for such period.
 
“ NextGen Pro ” has the meaning assigned to it in the preamble to this Agreement.
 
“ Non-Disclosure Agreement ” means that certain Non-Disclosure Agreement/Confidentiality Agreement by and between Borrower Representative and Agent dated as of August 17, 2017.
 
“ Note ” means the Term Note.
 
“ OFAC ” is the U.S. Department of Treasury Office of Foreign Assets Control.
 
“ OFAC Lists ” are, collectively, the Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) and/or any other list of terrorists or other restricted Persons maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Executive Orders.
 
“ Organizational Documents ” means with respect to any Person, such Person’s formation documents, and (a) if such Person is a corporation, its bylaws, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.
 
“ Other Connection Taxes ” means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient and the jurisdiction imposing such Tax (other than connections arising from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).
 
 
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“ Parent ” has the meaning assigned to it in the preamble to this Agreement.
 
“ Patent License ” means any written agreement granting any right with respect to any invention on which a Patent is in existence or a Patent application is pending, in which agreement a Borrower now holds or hereafter acquires any interest.
 
“ Patents ” means all letters patent of, or rights corresponding thereto, in the United States of America or in any other country, all registrations and recordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States of America or any other country. No Patent of the Borrowers on the date of this Agreement shall be deemed to be necessary or material to the Borrowers’ business.
 
 
“ Performance Milestone I ” means (a) either (i) Borrower Representative shall have provided evidence reasonably satisfactory to Agent that Parent, on a consolidated basis, shall have achieved Gross Profit and Adjusted EBITDA for each of the fiscal quarters ending June 30, 2018 and September 30, 2018 in an amount not less than 80% of the projected Gross Profit and Adjusted EBITDA for each such quarter as set forth in the Budget, or (ii) Borrower Representative shall have provided evidence reasonably satisfactory to Agent that (A) Parent, on a consolidated basis, shall have achieved Gross Profit and Adjusted EBITDA for the fiscal quarter ending June 30, 2018 or the fiscal quarter ending September 30, 2018 in an amount not less than 75% of the projected Gross Profit and Adjusted EBITDA for such quarter as set forth in the Budget, and (B) Parent shall have received net cash proceeds from the issuance of its Equity Interests (not including any proceeds from the conversion of indebtedness) of at least $5,000,000 not later than December 31, 2018; and (b) as of the date such evidence is provided, no Event of Default shall have occurred and be continuing.
 
“ Performance Milestone II ” means Borrower Representative shall have provided evidence reasonably satisfactory to Agent that Parent, on a consolidated basis, shall have achieved: (i) Adjusted EBITDA for a fiscal quarter ending on or prior to December 31, 2018 of at least $1.00 for such quarterly period, and shall have demonstrated, to Lender’s reasonable satisfaction, projections for continued positive Adjusted EBITDA during subsequent periods; and (ii) $35,000,000 or more in Revenue for at least one fiscal quarter ending on or prior to December 31, 2018 with associated Gross Margin for such fiscal quarter of not less than 13.0%; and as of the date such evidence is provided, no Event of Default shall have occurred and be continuing.
 
“ Permitted Acquisition ” means any acquisition (including by way of merger) by a Borrower of all or substantially all of the assets of another Person, or of a division or line of business of another Person, or capital stock of another Person, in each case located entirely within the United States of America, which is conducted in accordance with the following requirements:
 
(a)   such acquisition is of a business or Person engaged in a line of business related to that of the Parent or its Subsidiaries;
 
(b)   if such acquisition is structured as a stock acquisition, then the Person so acquired shall either (i) become a wholly-owned Subsidiary of a Borrower or of a Subsidiary and such Borrower shall comply, or cause such Subsidiary to comply, with Section 7.13 hereof or (ii) such Person shall be merged with and into a Borrower (with such Borrower being the surviving entity);
 
(c)   if such acquisition is structured as an acquisition of assets, such assets shall be acquired by a Borrower, and shall be free and clear of Liens other than Permitted Liens;
 
(d)   both immediately before and after such acquisition no default or Event of Default shall have occurred and be continuing;
 
(e)   Borrowers have provided Agent with any term sheet or letter of intent for any such acquisition together with all documents to be entered into in connection therewith and all exhibits and schedules thereto together with pro forma combined financial statements and updated pro forma combined projections;
 
 
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(f)   Borrowers have provided Agent with written confirmation, supported by reasonably detailed calculations, that
 
(i)   To the extent Borrowers are not then subject to Section 7.21, the acquired Person, business line or assets did not have pro forma Adjusted EBITDA of less than $1.00 during the consecutive twelve (12) month period most recently concluded prior to the date of the proposed acquisition;
 
(ii)   to the extent then applicable, based on pro forma combined financial statements and updated pro forma combined projections, Borrowers would have been in compliance with the financial covenants set forth in Section 7.21 , as of the end of the preceding fiscal quarter ended immediately prior to the consummation of the proposed acquisition, and is projected to be in compliance with such financial covenants at the end of each of the following four fiscal quarter periods following the consummation of such proposed acquisition; and
 
(iii)   after giving effect to the proposed transaction, Borrowers shall maintain Cash in an aggregate amount of at least (A) $5,000,000, if the proposed acquisition is consummated prior to any Advance pursuant to Tranche III, and (B) $10,000,000, if the proposed acquisition is consummated after the Advance pursuant to Tranche III is made;
 
(g)   the consideration payable in respect of such acquisition (including deferred or contingent consideration) shall not exceed (A) $5,000,000 per fiscal year, if the proposed acquisition is consummated prior to any Advance pursuant to Tranche III, and (B) $10,000,000 per fiscal year, if the proposed acquisition is consummated after the Advance pursuant to Tranche III is made, provided that purchase consideration funded substantially contemporaneously with (and in any event prior to) the consummation of such acquisition from the sale and issuance of Parent’s Equity Interests in a transaction not resulting in a Change in Control shall be disregarded in determining compliance with this clause (g) ;
 
(h)   any Indebtedness owing by a Borrower to the seller of assets or Equity Interests to a Borrower in connection with the consummation of such acquisition is subordinated to the Secured Obligations on terms and conditions reasonably acceptable to Agent; and
 
(i)   Agent has determined, based upon review of the foregoing documents and financial statements, that such transaction is not reasonably expected to materially and adversely affect Borrower’s ability to repay the Secured Obligations when due, Agent’s security interest in the Collateral or Agent’s rights and remedies pursuant to the Loan Documents or pursuant to applicable law.
 
“ Permitted Indebtedness ” means:
 
(a)   Indebtedness of a Borrower in favor of Lender or Agent arising under this Agreement or any other Loan Document;
 
(b)   Indebtedness of up to $200,000 outstanding at any time secured by a Lien described in clause (f) of the defined term “Permitted Liens”, provided in the case of acquired Equipment such Indebtedness does not exceed the cost of the Equipment financed with such Indebtedness;
 
(c)   Indebtedness to trade creditors incurred in the ordinary course of business, including Indebtedness incurred in the ordinary course of business with company credit cards;
 
(d)   Indebtedness that also constitutes a Permitted Investment;
 
 
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(e)   Subordinated Indebtedness;
 
(f)   reimbursement obligations in connection with letters of credit that are secured by Cash and issued on behalf of a Borrower or a Subsidiary in an amount not to exceed $250,000 at any time outstanding, and reimbursement obligations in connection with letters of credit serving as a lease deposit;
 
(g)   intercompany Indebtedness as long as each of the Subsidiary obligor and the Subsidiary obligee under such Indebtedness is a Qualified Subsidiary that has executed a Joinder Agreement;
 
(h)   Indebtedness pursuant to a Qualified Inventory Financing;
 
(i)   Indebtedness of any Person whose assets or Equity Interests are acquired by a Borrower or any of its Subsidiaries in a Permitted Acquisition provided, that the aggregate amount of such Indebtedness outstanding at any time does not exceed $100,000 and was not incurred in connection with, or in contemplation of, such Permitted Acquisition;
 
(j)   Indebtedness consisting of deferred consideration payable in connection with the consummation of a Permitted Acquisition, provided that such Indebtedness is subordinated to the Secured Obligations on terms and conditions reasonably acceptable to Agent;
 
(k)   Indebtedness owed to any Person providing workers’ compensation, health, disability or other employee benefits or property, casualty or liability insurance, pursuant to reimbursement or indemnification obligations to such Person, in each case incurred in the ordinary course of business; and
 
(l)   other Indebtedness, including Indebtedness covered by, but in excess of the amounts permitted under clauses (b), (f) and (i) above, at any time outstanding in an amount not to exceed $750,000, (which amount shall be reduced by the aggregate amount of Indebtedness described in clauses (b), (f) and (i) above, in each case up to the amount permitted thereunder, that is outstanding as of the date of determination).
 
“ Permitted Inventory Financing Cash Collateral ” means cash collateral required to be provided pursuant to any Inventory Financing Agreement, provided that (a) the aggregate amount of such cash collateral shall not in any event exceed the greater of (i) $250,000 and (ii) 10.0% of the approved credit line pursuant to such Qualified Inventory Financing, and (b) at any time, no additional cash collateral shall be provided if doing so would result in an Event of Default or could reasonably be expected to result in an Event of Default.
 
“ Permitted Investment ” means:
 
(a)   (i) marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the date of acquisition thereof currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Services, (ii) commercial paper maturing no more than one year from the date of creation thereof and currently having a rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Services, (iii) certificates of deposit issued by any bank with assets of at least $500,000,000 maturing no more than one year from the date of investment therein, and (iv) money market accounts;
 
(b)   all repurchases of stock from former employees, directors, or consultants of Borrower under the terms of applicable repurchase agreements at the original issuance price of such securities in an aggregate amount not to exceed $100,000 in any fiscal year, provided that no Event of Default has occurred and is continuing or could exist after giving effect to the repurchases;
 
 
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(c)   Investments accepted in connection with Permitted Transfers;
 
(d)   Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of a Borrower’s business;
 
(e)   Investments consisting of (i) notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business, provided that this clause (e) shall not apply to Investments of any Borrower in any Subsidiary and (ii) prepaid insurance premiums and prepaid rent to carriers and landlords, respectively, that are not Affiliates, in the ordinary course of business;
 
(f)   Investments consisting of loans not involving the net transfer on a substantially contemporaneous basis of cash proceeds to employees, officers or directors relating to the purchase of capital stock of Parent pursuant to employee stock purchase plans or other similar agreements approved by Parent’s Board;
 
(g)   Investments consisting of travel and relocation advances in the ordinary course of business ;
 
(h)   Investments of any Borrower in any other Borrower, Investments of Parent in any Borrower and Investments in newly-formed Domestic Subsidiaries, provided each such newly-formed Domestic Subsidiary has entered into a Joinder Agreement in accordance with Section 7.13 prior to or simultaneously with such newly-formed Domestic Subsidiary making an Investment;
 
(i)   Investments in Foreign Subsidiaries approved in advance in writing by Agent;
 
(j)   joint ventures or strategic alliances in the ordinary course of Borrowers’ business consisting of the nonexclusive licensing of technology, the development of technology or the providing of technical support, provided that cash Investments (if any) by any Borrower do not exceed $100,000 in the aggregate in any fiscal year;
 
(k)   Permitted Acquisitions; and
 
(l)   additional Investments, including Investments covered by, but in excess of the amounts permitted under, clauses (b) and (j) above, that do not exceed $750,000 during the term of this Agreement (less the amount of Investments described in clauses (b) and (j) above made, in each case, up to the amount permitted thereunder, from the Closing Date through the date of determination).
 
“ Permitted Liens ” means any and all of the following:
 
(a)   Liens in favor of Agent or Lender;
 
(b)   Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings; provided, that Borrowers maintain adequate reserves therefor in accordance with GAAP;
 
(c)   Liens securing claims or demands of materialmen, artisans, mechanics, carriers, warehousemen, landlords and other like Persons arising in the ordinary course of Borrowers’ business and imposed without action of such parties; provided, that the payment thereof is not yet delinquent, subject to any grace period, by more than fifteen (15) days or payment is disputed by Borrowers in good faith, subject to reserves with respect to such obligation is in accordance with GAAP;
 
 
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(d)   Liens arising from judgments, decrees or attachments in circumstances which do not constitute an Event of Default hereunder;
 
(e)   the following deposits, to the extent made in the ordinary course of business: deposits under worker’s compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than Liens arising under ERISA or environmental Liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds;
 
(f)   Liens on Equipment or software or other intellectual property constituting purchase money Liens and Liens in connection with capital leases securing Indebtedness in an amount not in excess of the amount set forth in clause (b) (or clause (l) if applicable) of “Permitted Indebtedness”;
 
(g)   Liens incurred in connection with Subordinated Indebtedness;
 
(h)   leasehold interests in leases or subleases and licenses granted in the ordinary course of business and not interfering in any material respect with the business of the licensor;
 
(i)   Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of custom duties that are promptly paid on or before the date they become due;
 
(j)   Liens on insurance proceeds securing the payment of financed insurance premiums that are promptly paid on or before the date they become due (provided that such Liens extend only to such insurance proceeds and not to any other property or assets);
 
(k)   statutory and common law rights of set-off and other similar rights as to deposits of cash and securities in favor of banks, other depository institutions and brokerage firms;
 
(l)   easements, zoning restrictions, rights-of-way and similar encumbrances on real property imposed by law or arising in the ordinary course of business so long as they do not materially impair the value or marketability of the related property as it is then being used;
 
(m)   (i) Liens on Cash securing obligations permitted under clause (f) of the definition of Permitted Indebtedness and (ii) security deposits in connection with real property leases, the combination of (i) and (ii) in an aggregate amount not to exceed $250,000 at any time;
 
(n)   Liens securing Indebtedness described in clause (i) of the defined term “Permitted Indebtedness”, provided that such Liens shall be limited to specific financed assets; and
 
(o)   Liens securing Indebtedness pursuant to a Qualified Inventory Financing, provided that such Liens are subject to the Inventory Financing Intercreditor Agreement and that any cash collateral subject to a Lien in favor of Inventory Financing Lenders shall not exceed the amount of the Permitted Inventory Financing Cash Collateral.
 
“ Permitted Transfers ” means:
 
(a)   sales or leases of Inventory in the ordinary course of business;
 
 
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(b)   non-exclusive licenses and similar arrangements for the use of Intellectual Property in the ordinary course of business and licenses that could not result in a legal transfer of title of the licensed property but that may be exclusive in respects other than territory and that may be exclusive as to territory only as to discreet geographical areas outside of the United States of America in the ordinary course of business;
 
(c)   dispositions of worn-out, obsolete or surplus Inventory and Equipment in the ordinary course of business;
 
(d)   transfers among Borrowers; and
 
(e)   other transfers of assets having a fair market value of not more than $100,000 in the aggregate in any fiscal year.
 
“ Person ” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, other entity or government.
 
“ Prepayment Charge ” shall have the meaning assigned to such term in Section 2.4 .
 
“ Qualified Inventory Financing ” means Indebtedness owing to Inventory Financing Lenders pursuant to an Inventory Financing Agreement, provided that (i) any Inventory Financing Lender shall have entered into and continue to be subject to the Inventory Financing Intercreditor Agreement with respect to any Inventory Financing Agreement to which it is a party, (ii) the aggregate outstanding amount of the aggregate amount of such Indebtedness at any time outstanding shall not exceed an amount equal (x) 85% of the aggregate book value of all Inventory of Borrowers, on consolidated basis less (y) the aggregate amount of cash collateral maintained by such Inventory Financing Lenders, (iii) the advance rates shall not deviate materially from the advance rate structure pursuant to the inventory financing arrangements as in effect on the Closing Date, and (iv) the interest rate and applicable fees shall not be higher and the cash collateral or deposit required shall not be a higher percentage of the approved credit limit, in each case, relative to the inventory financing arrangements as in effect on the Closing Date.
 
“ Qualified Subsidiary ” means any direct or indirect Domestic Subsidiary or Eligible Foreign Subsidiary.
 
“ Receivables ” means (i) all of each Borrower’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business records related thereto.
 
“ Recipient ” means (a)  Agent, or (b)  Lender, as applicable.
 
“ Required Lenders ” means at any time, the holders of more than 50% of the sum of the aggregate unpaid principal amount of the Growth Capital Term Loan Advances then outstanding.
 
“ Revenue ” means revenue of Parent, determined on a consolidated basis, in accordance with GAAP.
 
“ RMBL Missouri ” has the meaning assigned to it in the preamble to this Agreement.
 
“ RMBL Texas ” has the meaning assigned to it in the preamble to this Agreement.
 
“ Sanctioned Country ” shall mean, at any time, a country or territory which is the subject or target of any Sanctions.
 
 
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“ Sanctioned Person ” shall mean, at any time, (a) any Person listed in any Sanctions-related list of designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or by the United Nations Security Council, the European Union or any EU member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person controlled by any such Person.
 
“ Sanctions ” shall mean economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.
 
“ Secured Obligations ” means Borrowers’ obligations under this Agreement and any Loan Document (other than the Warrant), including any obligation to pay any amount now owing or later arising.
 
“ Shares ” means one hundred percent (100%) of the issued and outstanding capital stock, membership units or other securities owned or held of record by each Borrower in any of its Subsidiary, provided that with respect to any Foreign Subsidiary other than a Qualified Subsidiary or any Foreign Subsidiary that is a Borrower hereunder or guarantor with respect to the Secured Obligations, from time to time, “Shares” shall be limited to 65% of the shares of capital stock entitled to vote.
 
“ Subordinated Indebtedness ” means Indebtedness (other than Qualified Inventory Financing) subordinated to the Secured Obligations in amounts and on terms and conditions satisfactory to Agent in its sole discretion and subject to a subordination agreement in form and substance satisfactory to Agent in its sole discretion.
 
“ Subsidiary ” means an entity, whether corporate, partnership, limited liability company, joint venture or otherwise, in which a Borrower owns or controls 50% or more of the outstanding voting securities.
 
“ Taxes ” shall have the meaning assigned to such term in Section 2.9 .
 
“ Term Loan Interest Rate ” means, for any day a per annum rate of interest equal to the greater of either (i) the prime rate as reported in The Wall Street Journal plus 5.75%, and (ii) 10.25%.
 
“ Term Loan Maturity Date ” means May 1, 2021, provided that if Borrower achieves the Performance Milestone II, the Term Loan Maturity Date shall be November 1, 2021.
 
“ Term Note ” means a promissory note in substantially the form of Exhibit B .
 
“ Trademark License ” means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired by a Borrower or in which a Borrower now holds or hereafter acquires any interest.
 
“ Trademarks ” means all trademarks (registered, common law or otherwise) and any applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States of America, any State thereof or any other country or any political subdivision thereof.
 
“ Tranche I ” has the meaning set forth in Section 2.1(a) .
 
“ Tranche II ” has the meaning set forth in Section 2.1(a) .
 
“ Tranche III ” has the meaning set forth in Section 2.1(a) .
 
 
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“ Tranche IV ” has the meaning set forth in Section 2.1(a) .
 
“ UCC ” means the Uniform Commercial Code as the same is, from time to time, in effect in the State of California; provided, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to, Agent’s Lien on any Collateral is governed by the Uniform Commercial Code as the same is, from time to time, in effect in a jurisdiction other than the State of California, then the term “UCC” shall mean the Uniform Commercial Code as in effect, from time to time, in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.
 
“ Warrant ” means any warrant entered into in connection with the Loan, as may be amended, restated or modified from time to time.
 
Unless otherwise specified, all references in this Agreement or any Annex or Schedule hereto to a “Section,” “subsection,” “Exhibit,” “Annex,” or “Schedule” shall refer to the corresponding Section, subsection, Exhibit, Annex, or Schedule in or to this Agreement. Unless otherwise specifically provided herein, any accounting term used in this Agreement or the other Loan Documents shall have the meaning customarily given such term in accordance with GAAP, and all financial computations hereunder shall be computed in accordance with GAAP, consistently applied. Unless otherwise defined herein or in the other Loan Documents, terms that are used herein or in the other Loan Documents and defined in the UCC shall have the meanings given to them in the UCC.
 
SECTION 2.   THE LOAN
 
2.1                 Growth Capital Term Loan Advances.
 
(a)   Growth Capital Term Commitment. Subject to the terms and conditions of this Agreement, Lender will severally (and not jointly) make in an amount not to exceed its respective Growth Capital Term Commitment, and Borrowers agree to draw, a Growth Capital Term Loan Advance of $5,000,000 on the Closing Date (“ Tranche I ”). During the period commencing on Borrower’s achievement of Performance Milestone I and ending December 31, 2018, Lender will severally (and not jointly) make in an amount not to exceed its respective Growth Capital Term Commitment, and Borrowers agree to draw, a Growth Capital Term Loan Advance of $2,500,000 (“ Tranche II ”). During the period commencing upon Borrowers’ achievement of Performance Milestone II and ending March 31, 2019, Borrower Representative may request an additional Growth Capital Term Loan Advances in an amount of $7,500,000 (“ Tranche III ”). Upon Borrower Representative’s request and approval by Lender’s investment committee, in its sole discretion, Borrower Representative may request additional Growth Capital Term Loan Advances in an aggregate amount $5,000,000 (“ Tranche IV ”). The aggregate outstanding Growth Capital Term Loan Advances shall not exceed the Maximum Growth Capital Term Loan Amount.
 
(b)   Advance Request. To obtain a Growth Capital Term Loan Advance, Borrower shall complete, sign and deliver an Advance Request at least three (3) Business Days before the Advance Date, other than the Growth Capital Term Loan Advance to be made on the Closing Date, which shall be at least one (1) Business Day before the Advance Date, to Agent. Lender shall fund each Growth Capital Term Loan Advance in the manner requested by the Advance Request provided that each of the conditions precedent to such Growth Capital Term Loan Advance is satisfied as of the requested Advance Date.
 
(c)   Interest. The principal balance of each Growth Capital Term Loan Advance shall bear interest thereon from such Advance Date at the Term Loan Interest Rate based on a year consisting of 360 days, with interest computed daily based on the actual number of days elapsed. The Term Loan Interest Rate will float and change on the day the prime rate changes from time to time.
 
 
 
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(d)   Payment. Borrowers will pay interest on each Growth Capital Term Loan Advance on the first Business Day of each month, beginning the month after the Advance Date continuing until (but not including) the Amortization Date. Borrowers shall repay the aggregate principal balance of the Growth Capital Term Loan Advances that is outstanding on the day immediately preceding the Amortization Date, in equal monthly installments of principal and interest (mortgage style) beginning on the Amortization Date and continuing on the first Business Day of each month thereafter until the Secured Obligations (other than inchoate indemnity obligations) are repaid, provided that if the Term Loan Interest Rate is adjusted in accordance with its terms , or the Amortization Date or the Term Loan Maturity Date is extended, the amount of each subsequent monthly installment shall be recalculated, and provided further, that if, with respect to Advances pursuant to Tranche I or Tranche II, Borrowers achieve the Interest Only Extension Condition after principal payments have commenced in accordance with the Amortization Date previously in effect, then commencing on the first Business Day of the following month and each month thereafter until the Amortization Date, as extended, Borrower shall make payments of interest only, and on the Amortization Date, as extended, shall resume payment of equal monthly installments of principal and interest (as recalculated based on the extended Amortization Date), as set forth above. The entire principal balance of the Growth Capital Term Loan Advances and all accrued but unpaid interest hereunder, shall be due and payable on the Term Loan Maturity Date. Borrowers shall make all payments under this Agreement without setoff, recoupment or deduction and regardless of any counterclaim or defense. Lender will initiate debit entries to the applicable Borrower’s account as authorized on the ACH Authorization (i) on each payment date of all periodic obligations payable to Lender under each Growth Capital Term Loan Advance and (ii) out-of-pocket legal fees and costs incurred by Agent or Lender in connection with Section 11.11 of this Agreement; provided that, with respect to clause (i) above, in the event that Lender or Agent informs Borrower Representative that Lender will not initiate a debit entry to such Borrower’s account for a certain amount of the periodic obligations due on a specific payment date, Borrowers shall pay to Lender such amount of periodic obligations in full in immediately available funds on such payment date; provided, further, that, with respect to clause (i) above, if Lender or Agent informs Borrower Representative that Lender will not initiate a debit entry as described above later than the date that is three (3) Business Days prior to such payment date, Borrowers shall pay to Lender such amount of periodic obligations in full in immediately available funds on the date that is three (3) Business Days after the date on which Lender or Agent notifies Borrower Representative thereof; provided, further, that, with respect to clause (ii) above, in the event that Lender or Agent informs Borrower Representative that Lender will not initiate a debit entry to a Borrower’s account for specified out-of-pocket legal fees and costs incurred by Agent or Lender, Borrowers shall pay to Lender such amount in full in immediately available funds within three (3) Business Days.
 
2.2   Maximum Interest. Notwithstanding any provision in this Agreement or any other Loan Document, it is the parties’ intent not to contract for, charge or receive interest at a rate that is greater than the maximum rate permissible by law that a court of competent jurisdiction shall deem applicable hereto (which under the laws of the State of California shall be deemed to be the laws relating to permissible rates of interest on commercial loans) (the “ Maximum Rate ”). If a court of competent jurisdiction shall finally determine that Borrowers have actually paid to Lender an amount of interest in excess of the amount that would have been payable if all of the Secured Obligations had at all times borne interest at the Maximum Rate, then such excess interest actually paid by Borrowers shall be applied as follows: first, to the payment of the Secured Obligations consisting of the outstanding principal; second, after all principal is repaid, to the payment of Lender’s accrued interest, costs, expenses, professional fees and any other Secured Obligations; and third, after all Secured Obligations are repaid, the excess (if any) shall be refunded to Borrowers.
 
2.3   Default Interest. In the event any payment is not paid on the scheduled payment date (other than due to failure to pay due solely to an administrative or operational error of Agent or Lender or the applicable Borrower’s bank if Borrowers had the funds to make the payment when due and make the payment within three (3) Business Days following Borrowers’ knowledge of such failure to pay), an amount equal to five percent (5%) of the past due amount shall be payable on demand. In addition, upon the occurrence and during the continuation of an Event of Default hereunder, all Secured Obligations, including principal, interest and, to the extent demand for payment has been made, professional fees, shall bear interest at a rate per annum equal to the rate set forth in Section 2.1(c) , plus five percent (5%) per annum. In the event any interest is not paid when due hereunder, delinquent interest shall be added to principal monthly and shall bear interest on interest, compounded at the rate set forth in Section 2.1(c) or   Section 2.4 , as applicable.
 
 
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2.4   Prepayment. At its option, upon at least seven (7) Business Days prior written notice to Agent, Borrowers may prepay all, but not less than all, of the outstanding Advances by paying the entire principal balance, all accrued and unpaid interest thereon, together with the applicable prepayment charge equal to the following percentage of the Advance amount being prepaid: with respect to amounts prepaid on or prior to the one year anniversary of the Closing Date, 3.0%; after the one year anniversary of the Closing Date, through the two year anniversary of the Closing Date, 2.0%; and after the two year anniversary of the Closing Date through the date that is forty-five (45) days prior to the then current Term Loan Maturity Date, 1.0% (each, a “ Prepayment Charge ”), provided that if the Secured Obligations are prepaid from the proceeds of the issuance of Indebtedness, Borrowers shall afford Agent the opportunity to provide a term sheet to refinance the Secured Obligations (but no Borrower shall be required to enter into a refinancing transaction with Agent or any Lender even if on substantially similar terms as the proposed issuance). Borrowers agree that the Prepayment Charge is a reasonable calculation of Lender’s lost profits in view of the difficulties and impracticality of determining actual damages resulting from an early repayment of the Advances. Borrowers shall prepay the outstanding amount of all principal and accrued interest through the prepayment date and the Prepayment Charge upon the occurrence of a Change in Control.
 
2.5   End of Term Charge. On the earliest to occur of (i) the Term Loan Maturity Date, (ii) the date that Borrowers prepay the outstanding Secured Obligations (other than any inchoate indemnity obligations and any other obligations which, by their terms, are to survive the termination of this Agreement) in full, or (iii) the date that the Secured Obligations otherwise become due and payable, Borrowers shall pay Lender a charge of 4.55% of the Growth Capital Term Commitment pursuant to Tranche I and Tranche II, 2.95% of the Growth Capital Term Commitment pursuant to Tranche III, and 2.35% of any principal amount paid or prepaid in respect of Tranche IV. Notwithstanding the required payment date of such charge, it shall be deemed earned by Lender as of the Closing Date with regard to Tranche I, Tranche II and Tranche III, and on the applicable Advance Date with regards to Tranche IV.
 
2.6   Due Diligence Fee. The Due Diligence Fee has been paid by Borrowers prior to the Closing Date.
 
2.7   Notes. If so requested by Lender by written notice to Borrower Representative, then Borrowers shall execute and deliver to Lender (and/or, if applicable and if so specified in such notice, to any Person who is an assignee of Lender pursuant to Section 11.13 ) (promptly after Borrower Representative’s receipt of such notice) a Note or Notes to evidence Lender’s Loans.
 
2.8   Pro Rata Treatment; Application of Payments. Each payment (including prepayment) on account of any fee and any reduction of the Growth Capital Term Loan Advances shall be made pro rata according to the Growth Capital Term Commitments of the relevant Lender. Lender has the exclusive right to determine the order and manner in which all payments then due and payable with respect to the Secured Obligations may be applied. No Borrower shall have a right to specify the order or the accounts to which Lender shall allocate or apply any payments made by a Borrower to Lender or otherwise received by Lender under this Agreement when any such allocation or application is not expressly specified elsewhere in this Agreement.
 
2.9   Withholding. Payments received by Agent or Lender from any Borrower under any Loan Document will be made free and clear of and without deduction for any taxes, levies, deductions, withholdings, assessments, fees or other charges imposed by any governmental authority (“ Taxes ”) other than Excluded Taxes. Specifically, however, if at any time any governmental authority, applicable law, regulation or international agreement requires any Borrower to make any withholding or deduction from any such payment or other sum payable hereunder to Agent or Lender, authority other than Excluded Taxes such payment or other sum payable hereunder shall be increased to the extent necessary to ensure that, after the making of such required withholding or deduction, Agent or Lender, as applicable receives a net sum equal to the sum which it would have received had no withholding or deduction been required, and the applicable Borrower shall pay the full amount withheld or deducted to the relevant governmental authority. The applicable Borrower will, upon request, furnish Agent with proof reasonably satisfactory to Agent indicating that such Borrower has made such withholding payment. The agreements and obligations of Borrowers contained in this Section 2.9 shall survive the termination of this Agreement. Agent and Lender will  use commercially reasonable efforts to cooperate  with Borrowers to minimize any withholding taxes to the maximum extent permitted by applicable law, including by providing a properly completed and duly executed Form  W-9  or applicable Form W-8,  provided such cooperation does not subject Agent or Lender to any unreimbursed cost or expense and would not otherwise be materially disadvantageous to Lender or Agent .
 
 
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SECTION 3.   SECURITY INTEREST
 
3.1                 As security for the prompt and complete payment when due (whether on the payment dates or otherwise) of all the Secured Obligations, each Borrower grants to Agent a security interest in all of Borrower’s right, title, and interest in, to and under all of Borrower’s personal property and other assets including without limitation the following (except as set forth herein) whether now owned or hereafter acquired (collectively, the “ Collateral ”): (a) Receivables; (b) Equipment; (c) Fixtures; (d) General Intangibles; (e) Inventory; (f) Investment Property; (g) Deposit Accounts; (h) Cash; (i) Goods; and all other tangible and intangible personal property of Borrower whether now or hereafter owned or existing, leased, consigned by or to, or acquired by, Borrower and wherever located, and any of Borrowers’ property in the possession or under the control of Agent; and, to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing.
 
3.2   Notwithstanding the broad grant of the security interest set forth in Section 3.1 , above, to the extent excluded from the collateral pursuant to every Qualified Inventory Financing, the Collateral shall not include (a) more than 65% of the presently existing and hereafter arising issued and outstanding shares of capital stock owned by a Borrower of any Foreign Subsidiary (other than an Eligible Foreign Subsidiary) which shares entitle the holder thereof to vote for directors or any other matter, and (b) nonassignable licenses or contracts, which by their terms or applicable law require the consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation, Sections 9406, 9407 and 9408 of the UCC), provided further, that upon the lapse of such prohibition or such consent being provided with respect to any license or contract, such license or contract shall automatically be included in the Collateral.
 
3.3   Pledge of Shares. Each Borrower hereby pledges, assigns and grants to Agent a security interest in the Shares, together with all proceeds and substitutions thereof, all cash, stock and other moneys and property paid thereon, all rights to subscribe for securities declared or granted in connection therewith, and all other cash and noncash proceeds of the foregoing, as security for the performance of the Secured Obligations. Borrowers represent and warrant that as of the Closing Date, none of the Shares are evidenced by certificates. To the extent required by the terms and conditions governing the Shares, the applicable Borrower shall cause the books of each entity whose Shares are pledged pursuant hereto and any transfer agent to reflect the pledge of the Shares. Upon the occurrence of an Event of Default hereunder, Agent may effect the transfer of the Shares included in the Collateral into the name of Agent and cause new certificates representing such securities to be issued in the name of Agent or its transferee. Each Borrower will execute and deliver such documents, and take or cause to be taken such actions, as Agent may reasonably request to perfect or continue the perfection of Agent’s security interest in the Shares. Unless an Event of Default shall have occurred and be continuing, each Borrower shall be entitled to exercise any voting rights with respect to the Shares and to give consents, waivers and ratifications in respect thereof, provided that no vote shall be cast or consent, waiver or ratification given or action taken which would violate or result in the violation of any of the terms of this Agreement, or which would adversely affect Agent’s security interest. All such rights to vote and give consents, waivers and ratifications shall terminate upon the occurrence and continuance of an Event of Default. If any Shares not evidenced by certificates as of the Closing Date subsequently become evidenced by certificates, or if a Borrower subsequently acquires any Shares evidenced by certificates, such Borrower shall promptly deliver to Agent the certificates evidencing the Shares together with a stock power or other similar instrument of transfer duly executed in blank by such Borrower to be held by Agent as possessory collateral.
 
SECTION 4.   CONDITIONS PRECEDENT TO LOAN
 
The obligations of Lender to make the Loans hereunder are subject to the satisfaction by Borrowers of the following conditions:
 
 
 
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4.1   Initial Advance. On or prior to the Closing Date or initial Advance, to the extent indicated below, Borrowers shall have delivered to Agent the following:
 
(a)   duly executed copies of the following, in form and substance acceptable to Agent:
 
(i)   this Agreement;
 
(ii)   the completed ACH Authorization;
 
(iii)   the intellectual property security agreement;
 
(iv)   Account Control Agreements with respect to all Deposit Accounts and any accounts where Investment Property is maintained, as required by Section 7.12 hereof, prior to the initial Advance;
 
(v)   a duly executed certificate of an officer of each Borrower certifying and attaching copies of (A) the Charter, certified as of a recent date by the jurisdiction of organization of such Borrower; (B) the bylaws, operating agreement or similar governing document of such Borrower; (C) resolutions of such Borrower’s Board or consent of sole member evidencing approval of (1) the Loan and other transactions contemplated by the Loan Documents, and with respect to Parent, (2) the Warrant and issuance of Equity Interests in accordance with its terms; (D) resolutions of the holders of such Borrower’s Equity Interests in connection with the transactions contemplated by this Agreement, to the extent required pursuant to the terms of the Charter or other governing document, in each case, as in effect as of the Closing Date, and (E) a schedule setting forth the name, title and specimen signature of officers or other authorized signers on behalf of each Borrower;
 
(vi)   a legal opinion of Borrowers’ counsel;
 
(vii)   a subordination agreement, duly executed by each of Blue Flame Capital, LLC, Lori Sue Chesrown and Ralph Wegis;
 
(viii)   a subordination agreement, duly executed by Halcyon Consulting, LLC;
 
(ix)   an Inventory Financing Intercreditor Agreement, duly executed by Ally Bank and Ally Financial Inc.;
 
(x)   any other Loan Documents (other than the Warrant, which shall be delivered pursuant to subsection (b) below);
 
(xi)   and all other documents and instruments reasonably required by Agent to effectuate the transactions contemplated hereby or to create and perfect the Liens of Agent with respect to all Collateral (provided that no certificates of title need be delivered or endorsed);
 
(b)   Originals of the following, in form and substance acceptable to Agent:
 
(i)   the Warrant, and
 
(ii)   any certificates evidencing Shares pledged pursuant to Section 3.3 , together with any unit powers or other instruments of transfer;
 
(c)   a certificate of good standing for each Borrower from its state of incorporation and similar certificates from all other jurisdictions in which it does business and where the failure to be qualified could have a Material Adverse Effect;
 
 
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(d)   payment of the Facility Charge and reimbursement of Agent’s and Lender’s current expenses reimbursable pursuant to this Agreement, which amounts may be deducted from the initial Advance;
 
(e)   all certificates of insurance, endorsements, and copies of each insurance policy required pursuant to Section 6.2 , except to the extent delivery after the Closing Date is permitted in accordance with Section 7.24 ; and
 
(f)   such other documents as Agent may reasonably request.
 
4.2   All Advances. On each Advance Date:
 
(a)   Agent shall have received (i) an Advance Request for the relevant Advance as required by Section 2.1(b) , duly executed by Borrower Representative’s Chief Executive Officer or Chief Financial Officer, and (ii) any other documents Agent may reasonably request.
 
(b)   The representations and warranties set forth in this Agreement shall be true and correct in all material respects on and as of the Advance Date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date.
 
(c)   Borrowers shall be in compliance with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed in all material respects, and at the time of and immediately after such Advance no Event of Default shall have occurred and be continuing.
 
(d)   Each Advance Request shall be deemed to constitute a representation and warranty by Borrowers on the relevant Advance Date as to the matters specified in paragraphs (b) and (c) of this Section 4.2 and as to the matters set forth in the Advance Request.
 
4.3   No Default. As of the Closing Date and each Advance Date, (i) no fact or condition exists that could (or could, with the passage of time, the giving of notice, or both) reasonably be expected to constitute an Event of Default and (ii) no event that could reasonably be expected to have a Material Adverse Effect has occurred and is continuing.
 
SECTION 5.   REPRESENTATIONS AND WARRANTIES OF BORROWERS
 
Borrowers represent and warrant that:
 
5.1   Organizational Status. Each Borrower is duly organized, legally existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation in all jurisdictions in which the nature of its business or location of its properties require such qualifications and where the failure to be qualified could reasonably be expected to have a Material Adverse Effect. Each Borrower’s present name, former names (if any), locations, place of formation, tax identification number, organizational identification number and other information are correctly set forth in Exhibit C , or as such Borrower has subsequently notified Agent after the Closing Date in accordance with this Agreement (including in any Compliance Certificate).
 
5.2   Collateral. Each Borrower owns the Collateral free of all Liens, except for Permitted Liens. Each Borrower has the power and authority to grant to Agent a Lien in the Collateral as security for the Secured Obligations.
 
 
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5.3   Consents. Each Borrower’s execution, delivery and performance of this Agreement and all other Loan Documents, and Parent’s issuance of the Warrant and the Equity Interests issuable upon exercise of the Warrant, (i) have been duly authorized by all necessary action in accordance with Borrower’s Organizational Documents, (ii) will not result in the creation or imposition of any Lien upon the Collateral, other than Permitted Liens and the Liens created by this Agreement and the other Loan Documents, (iii) do not violate any provisions of a Borrower’s Organizational Documents, or any, law, regulation, order, injunction, judgment, decree or writ to which a Borrower is subject and (iv) do not violate any material contract or agreement in any material respect or require the consent or approval of any other Person which has not already been obtained. The individual or individuals executing the Loan Documents and the Warrant are duly authorized to do so.
 
5.4   Material Adverse Effect. No event that has had, or could reasonably be expected to have, a Material Adverse Effect has occurred and is continuing.
 
5.5   Actions Before Governmental Authorities. There are no actions, suits or proceedings at law or in equity or by or before any governmental authority now pending or, to the knowledge of a Borrower, threatened against a Borrower or its property, that is reasonably expected to result in a Material Adverse Effect.
 
5.6   Laws.
 
(a)   Neither any Borrower nor any of its Subsidiaries is in violation of any law, rule or regulation, or in default with respect to any judgment, writ, injunction or decree of any governmental authority, where such violation or default is reasonably expected to result in a Material Adverse Effect. No Borrower is in default in any material respect under any agreement or instrument evidencing Indebtedness material to the Borrowers as a whole, or any other agreement necessary or material to the operation or conduct of the business of the Borrowers to which any Borrower is a party or by which it is bound, subject to any applicable grace period.
 
(b)   Neither a Borrower nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company” under the Investment Company Act of 1940, as amended. Neither a Borrower nor any of its Subsidiaries is engaged as one of its important activities in extending credit for margin stock (under Regulations X, T and U of the Federal Reserve Board of Governors). Each Borrower and each of its Subsidiaries has complied in all material respects with the Federal Fair Labor Standards Act. Neither a Borrower nor any of its Subsidiaries is a “holding company” or an “affiliate” of a “holding company” or a “subsidiary company” of a “holding company” as each term is defined and used in the Public Utility Holding Company Act of 2005. Neither a Borrower’s nor any of its Subsidiaries’ properties or assets has been used by a Borrower or such Subsidiary or, to a Borrower’s Knowledge, by previous Persons, in disposing, producing, storing, treating, or transporting any hazardous substance other than in material compliance with applicable laws. Each Borrower and each of its Subsidiaries has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all governmental authorities that are necessary to continue in all material respects their respective businesses as currently conducted.
 
(c)   None of Borrowers, any of its Subsidiaries, or any of Borrowers’ or its Subsidiaries’ Affiliates or any of their respective agents acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement is (i) in violation of any Anti-Terrorism Law, (ii) engaging in or conspiring to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law, or (iii) is a Blocked Person. None of Borrowers, any of its Subsidiaries, or to the knowledge of any Borrower and any of their Affiliates or agents, acting or benefiting in any capacity in connection with the transactions contemplated by this Agreement, (x) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person, or (y) deals in, or otherwise engages in any transaction relating to, any property or interest in property blocked pursuant to Executive Order No. 13224, any similar executive order or other Anti-Terrorism Law. None of the funds to be provided under this Agreement will be used, directly or indirectly, (a) for any activities in violation of any applicable anti-money laundering, economic sanctions and anti-bribery laws and regulations laws and regulations or (b) for any payment to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended.
 
 
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5.7   Information Correct and Current. No information, report, Advance Request, financial statement, exhibit or schedule furnished, by or on behalf of Borrowers to Agent in connection with any Loan Document or included therein or delivered pursuant thereto contained, or, when taken as a whole, contains or will contain any material misstatement of fact or, when taken together with all other such information or documents, omitted, omits or will omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not materially misleading at the time such statement was made or deemed made. Additionally, any and all financial or business projections provided by a Borrower to Agent, whether prior to or after the Closing Date, were (i) provided in good faith and based on the most current data and information available to Borrowers, and (ii) the most current of such projections provided to Parent’s Board (it being understood that such projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrowers, that no assurance is given that any particular projections will be realized and that actual results may differ materially).
 
5.8   Tax Matters. Except to the extent contested in good faith with adequate reserves under GAAP, (a) each Borrower has filed all material federal, state and local tax returns that it is required to file, (b) each Borrower has duly paid or fully reserved for all taxes or installments thereof (including any interest or penalties) as and when due, which have or may become due pursuant to such returns, and (c) as of the Closing Date, each Borrower has paid or fully reserved for any tax assessment received by such Borrower for the three (3) years preceding the Closing Date, if any (including any taxes being contested in good faith and by appropriate proceedings).
 
5.9   Intellectual Property Claims. Borrowers are the sole owner of, or otherwise has the right to use, the Intellectual Property material to Borrowers’ business. Each of the Borrowers’ Copyrights, Trademarks and Patents material to the Borrowers’ business is valid and enforceable, the Intellectual Property material to the Borrowers’ business has not been judged invalid or unenforceable, in whole or in part, and no claim has been made in writing to a Borrower that any material part of the Intellectual Property material or necessary to the conduct of the Borrowers’ business violates the rights of any third party, except to the extent Borrowers have provided evidence satisfactory to Agent that such claim is without merit or otherwise not reasonably likely to be successful. Exhibit D is a true, correct and complete list of each of Borrowers’ Patents, registered Trademarks, registered Copyrights, and material agreements under which a Borrower licenses Intellectual Property from third parties (other than shrink-wrap software licenses), together with application or registration numbers, as applicable, owned by a Borrower or any Subsidiary, in each case as of the Closing Date. No Borrower is in material breach of, nor has any Borrower failed to perform any material obligations under, any of the foregoing contracts, licenses or agreements material to the Borrowers’ business and, to any Borrower’s knowledge, no third party to any such contract, license or agreement material to the Borrowers’ business is in material breach thereof or has failed to perform any material obligations thereunder, except to the extent such breach or failure to perform could not reasonably be expected to result in a Material Adverse Effect, Borrowers have notified Agent of such breach or failure to perform, and Borrowers are taking actions to mitigate such circumstances satisfactory to Agent.
 
5.10   Intellectual Property. Borrowers have all material rights with respect to Intellectual Property necessary or material in the operation or conduct of Borrowers’ business as currently conducted and proposed to be conducted by Borrowers. Without limiting the generality of the foregoing, and in the case of Borrowers’ Licenses, except for restrictions that are unenforceable under Division 9 of the UCC, Borrowers have the right, to the extent required to operate Borrowers’ business, to freely transfer, license or assign Intellectual Property necessary or material in the operation or conduct of Borrowers’ business as currently conducted and proposed to be conducted by Borrowers, without condition, restriction or payment of any kind (other than license payments in the ordinary course of business and customary covenants in inbound license agreements) to any third party, and Borrowers own or have the right to use, pursuant to valid licenses, all software development tools, library functions, compilers and all other third-party software and other items that are material to Borrowers’ business and used in the design, development, promotion, sale, license, manufacture, import, export, use or distribution of Borrower Products except customary covenants in inbound license agreements and equipment leases where a Borrower is the licensee or lessee.
 
 
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5.11   Borrower Products. No Intellectual Property necessary or material in the operation or conduct of Borrowers’ business as currently conducted and proposed to be conducted and owned by a Borrower or Borrower Product that constitutes Intellectual Property has been or is subject to any actual or, to the knowledge of any Borrower, threatened litigation, proceeding (including any proceeding in the United States Patent and Trademark Office or any corresponding foreign office or agency) or outstanding decree, order, judgment, settlement agreement or stipulation that restricts in any material respect the applicable Borrower’s use, transfer or licensing thereof or that could reasonably be expected to affect the validity, use or enforceability thereof. There is no decree, order, judgment, agreement, stipulation, arbitral award or other provision entered into in connection with any litigation or proceeding that obligates any Borrower to grant licenses or ownership interest in any future Intellectual Property necessary or material to the operation or conduct of the business of Borrowers or Borrower Products. No Borrower has received any written notice or claim challenging or questioning any Borrower’s ownership in any such Intellectual Property (or written notice of any claim challenging or questioning the ownership in any licensed such Intellectual Property of the owner thereof) or suggesting that any third party has any claim of legal or beneficial ownership with respect thereto nor, to any Borrower’s knowledge, is there a reasonable basis for any such claim, except for claims with respect to which Borrowers have provided evidence satisfactory to Agent that such claim is without merit or otherwise not reasonably likely to be successful. Neither any Borrower’s use of its Intellectual Property material in the conduct of its business as currently conducted or proposed to be conducted, nor the production and sale of a Borrower Product infringes the Intellectual Property or other rights of others.
 
5.12   Financial Accounts. Exhibit E , as may be updated by Borrowers in a written notice provided to Agent after the Closing Date, is a true, correct and complete list of (a) all banks and other financial institutions at which a Borrower or any Subsidiary maintains Deposit Accounts and (b) all institutions at which a Borrower or any Subsidiary maintains an account holding Investment Property, and such exhibit correctly identifies the name, address and telephone number of each bank or other institution, the name in which the account is held, a description of the purpose of the account, and the complete account number therefor, provided that Borrowers may provide the details regarding any Deposit Account or other account in which initial Permitted Inventory Financing Cash Collateral is maintained shall be provided within five (5) Business Days of the Closing Date.
 
5.13   [Intentionally Omitted].
 
5.14   Capitalization and Subsidiaries. Parent’s capitalization as of the Closing Date is set forth on Schedule 5.14 annexed hereto. No Borrower owns any stock, partnership interest or other securities of any Person, except for Permitted Investments. Attached as Schedule 5.14 , as may be updated by Borrowers in a written notice provided after the Closing Date, is a true, correct and complete list of each Subsidiary.
 
5.15   Foreign Subsidiary Voting Rights. No decision or action in any governing document of any Foreign Subsidiary (other than an Eligible Foreign Subsidiary) requires a vote of greater than 50.1% of the Equity Interests or voting rights of such Foreign Subsidiary.
 
SECTION 6.   INSURANCE; INDEMNIFICATION
 
6.1                 Coverage. Each Borrower shall cause to be carried and maintained commercial general liability insurance, on an occurrence form, against risks customarily insured against in Borrowers’ line of business. Such risks shall include the risks of bodily injury, including death, property damage, personal injury, advertising injury, and contractual liability per the terms of the indemnification agreement found in Section 6.3 . Borrowers must maintain a minimum of $1,000,000 of commercial general liability insurance for each occurrence. Borrowers have and agree to maintain a minimum of $2,000,000 of directors’ and officers’ insurance for each occurrence and $5,000,000 in the aggregate. So long as there are any Secured Obligations outstanding, Borrowers shall also cause to be carried and maintained insurance upon the Collateral, insuring against all risks of physical loss or damage howsoever caused, in an amount not less than the full replacement cost of the Collateral, provided that such insurance may be subject to standard exceptions and deductibles.
 
 
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6.2   Certificates. Borrowers shall deliver to Agent certificates of insurance that evidence Borrowers’ compliance with its insurance obligations in Section 6.1 and the obligations contained in this Section 6.2 . Borrowers’ insurance certificate shall state Agent (shown as “Hercules Capital, Inc.”, as “Agent”) is an additional insured for commercial general liability, a lender loss payee for all risk property damage insurance, subject to the insurer’s approval, and a lender loss payee for property insurance and additional insured for liability insurance for any future insurance that Borrowers may acquire from such insurer. Attached to the certificates of insurance will be additional insured endorsements for liability and lender’s loss payable endorsements for all risk property damage insurance. All certificates of insurance will provide for a minimum of thirty (30) days advance written notice to Agent of cancellation (other than cancellation for non-payment of premiums, for which ten (10) days’ advance written notice shall be sufficient) or any other change adverse to Agent’s interests. Any failure of Agent to scrutinize such insurance certificates for compliance is not a waiver of any of Agent’s rights, all of which are reserved. Borrowers shall provide Agent with copies of each insurance policy, and upon entering or amending any insurance policy required hereunder, Borrowers shall provide Agent with copies of such policies and shall promptly deliver to Agent updated insurance certificates with respect to such policies.
 
6.3   Indemnity. Borrowers agree to indemnify and hold Agent, Lender and their officers, directors, employees, agents, in-house attorneys, representatives and shareholders (each, an “ Indemnified Person ”) harmless from and against any and all claims, costs, expenses, damages and liabilities (including such claims, costs, expenses, damages and liabilities based on liability in tort, including strict liability in tort), including reasonable attorneys’ fees and disbursements and other costs of investigation or defense (including those incurred upon any appeal) (collectively, “ Liabilities ”), that may be instituted or asserted against or incurred by such Indemnified Person as the result of credit having been extended, suspended or terminated under this Agreement and the other Loan Documents or the administration of such credit, or in connection with or arising out of the transactions contemplated hereunder and thereunder, or any actions or failures to act in connection therewith, or arising out of the disposition or utilization by Agent or Lender after an Event of Default of the Collateral, excluding in all cases Liabilities to the extent resulting from any Indemnified Person’s gross negligence or willful misconduct. Borrowers agree to pay, and to save Agent and Lender harmless from, any and all liabilities with respect to, or resulting from any delay in paying, any and all excise, sales or other similar taxes (excluding taxes imposed on or measured by the net income of Agent or Lender) that may be payable or determined to be payable with respect to any of the Collateral or this Agreement. In no event shall any Indemnified Person be liable on any theory of liability for any special, indirect, consequential or punitive damages (including any loss of profits, business or anticipated savings). This Section 6.3 shall survive the repayment of indebtedness under, and otherwise shall survive the expiration or other termination of, the Loan Agreement.
 
SECTION 7.   COVENANTS OF BORROWERS
 
Each Borrower agrees as follows:
 
7.1   Financial Reports. Borrower Representative shall furnish to Agent the financial statements and reports listed hereinafter (the “ Financial Statements ”):
 
(a)   through the period ending October 31, 2018, as soon as practical (and in any case within 30 days) after the end each month, unaudited management prepared reports in a form agreed among Borrowers and Agent prior to the Closing Date, and in any event including a statement of profits and losses, a report of cash balances, a report of accounts receivable and accounts payable, and an inventory report and, thereafter, as soon as practicable (and in any event within 30 days) after the end of the first two months of each fiscal quarter of Parent, unaudited internally prepared interim financial statements as of the end of such month;
 
 
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(b)   as soon as practicable (and in any event within 45 days) after the end of each fiscal quarter of Parent, unaudited interim and year-to-date financial statements as of the end of such fiscal quarter (prepared on a consolidated and consolidating basis) including balance sheet and related statements of income and cash flows accompanied by a report detailing any material contingencies (including the commencement of any material litigation by or against any Borrower) or any other occurrence that could reasonably be expected to have a Material Adverse Effect, certified by Borrower Representative’s Chief Executive Officer or Chief Financial Officer as having been prepared in accordance with GAAP, (i) except for the absence of footnotes, and (ii) subject to normal year-end adjustments; as well as the most recent capitalization table for Parent, including the weighted average exercise price of employee stock options; provided, however, that in lieu of the reporting requirements pursuant to this Section 7.1(b) , Parent may provide to Agent a link to its quarterly report on Form 10-Q filed pursuant to the Exchange Act through its investor relations web page;
 
(c)   as soon as practicable (and in any event within 90 days) after the end of each fiscal year, unqualified audited financial statements as of the end of such year including balance sheet and related statements of income and cash flows, and setting forth in comparative form the corresponding figures for the preceding fiscal year, certified by a firm of independent certified public accountants selected by Borrowers and reasonably acceptable to Agent, accompanied by any management report from such accountants; provided, however, that in lieu of the reporting requirements pursuant to this Section 7.1(c) , Parent may provide to Agent a link to its annual report on Form 10-K filed pursuant to the Exchange Act through its investor relations web page;
 
(d)   as soon as practicable (and in any event together with monthly financial statements delivered pursuant to subsection (a) above and together with quarterly financial statements delivered pursuant to subsection (b) above), a Compliance Certificate in the form of Exhibit F ;
 
(e)   as soon as practicable (and in any event within 30 days) after the end of each month, (i) a report showing agings of accounts receivable, to the extent accounts receivable as of the last day of such month exceed $1,000,000 and (ii) a report showing agings of accounts payable, to the extent accounts payable as of the last day of such month exceed $600,000;
 
(f)   through its investor relations web page, copies of any proxy statements, financial statements or reports that Parent has made available to holders of its capital stock, and copies of any regular, periodic and special reports or registration statements that Parent files with the Securities and Exchange Commission or any governmental authority that may be substituted therefor, or any national securities exchange;
 
(g)   financial and business projections and budget promptly following their approval by Parent’s Board, and in any event, within 60 days after the end of Parent’s fiscal year, which projections and budget shall be in format acceptable to Agent, it being understood that the format of the projections and budget delivered to Agent as of the Closing Date is acceptable, and which projections and budget shall be consistent with financial covenant compliance (if applicable) and Borrower’s ability to pay the Secured Obligations when due, and promptly after any update to such projections or budget is approved by Parent’s Board, such updated projections and budget, as well as such other budgets, plans or financial information as Agent may reasonably request, provided that if any projections or budget delivered to Agent do not reflect levels consistent with financial covenant compliance (if applicable) or Borrower’s ability to pay the Secured Obligations when due, then Borrower shall promptly (and in any event within 10 Business Days) deliver to Agent a proposal or plan reasonably satisfactory to Agent to address the circumstances;
 
(h)   a daily inventory report, which shall indicate with respect to each item of Inventory whether it is financed pursuant to a Qualified Inventory Financing, on each Business Day, with respect to the preceding Business Day, in form approved by Agent as of the Closing Date or as subsequently agreed among the parties; provided, however, Borrowers shall not be in breach of this clause (h) if they fail less than four times in any calendar month to timely provide such daily reports;
 
 
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(i)   any material statement, or notice of increased commitment, change in terms, non-renewal or default or any demand for payment pursuant to a Qualified Inventory Financing; and
 
(j)   immediate notice if a Borrower or any Subsidiary has knowledge that a Borrower, or any Subsidiary or Affiliate of a Borrower, is listed on the OFAC Lists or (a) is convicted on, (b) pleads nolo contendere to, (c) is indicted on, or (d) is arraigned and held over on charges involving money laundering or predicate crimes to money laundering.
 
No Borrower shall make any change in its (a) accounting policies or reporting practices (except as required by GAAP), or (b) fiscal years or fiscal quarters. The fiscal year of each Borrower shall end on December 31.
 
The executed Compliance Certificate may be sent via email to Agent at legal@herculestech.com, with a copy to tharris@htgc.com. All Financial Statements required to be delivered pursuant to clauses (a), (b) and (c)  shall be sent via e-mail to financialstatements@herculestech.com with a copy to legal@herculestech.com and tharris@htgc.com provided, that if e-mail is not available or sending such Financial Statements via e-mail is not possible, they shall be faxed to Agent at: (650) 473-9194, attention Account Manager: RumbleON, Inc. Notwithstanding the foregoing, documents required to be delivered under Sections 7.1(a), (b), (c) or (f) (to the extent any such documents are included in materials otherwise filed with the Securities Exchange Commission) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date on which Borrower emails a link thereto to Agent.
 
7.2   Management Rights. Borrowers shall permit any representative that Agent or Lender authorizes, including its attorneys and accountants, to inspect the Collateral and examine and make copies and abstracts of the books of account and records of Borrowers at reasonable times and upon reasonable notice during normal business hours; provided, however, that so long as no Event of Default has occurred and is continuing, such examinations shall be limited to no more often than twice per fiscal year. In addition, any such representative shall have the right to meet with management and officers of Borrowers to discuss such books of account and records. In addition, Agent or Lender may at reasonable times and intervals consult with and advise the management and officers of Borrowers concerning significant business issues affecting Borrowers. Such consultations and advice shall not unreasonably interfere with Borrowers’ business operations. The parties intend that the rights granted Agent shall constitute “management rights” within the meaning of 29 C.F.R. Section 2510.3-101(d)(3)(ii), but that any advice, recommendations or participation by Agent or Lender with respect to any business issues shall not be deemed to give Agent or Lender, nor be deemed an exercise by Agent or Lender of, control over Borrowers’ management or policies, and the Borrowers shall have no obligation to act upon or follow any such advice or recommendation or to allow the Agent or Lender to attend meetings of the Board of the Parent.
 
7.3   Further Assurances. Each Borrower shall from time to time execute, deliver and file, alone or with Agent, any financing statements, security agreements, collateral assignments, notices, control agreements, or other documents to perfect or give the highest priority to Agent’s Lien on the Collateral, subject to Permitted Liens. Each Borrower shall from time to time procure any instruments or documents as may be reasonably requested by Agent, and take all further action that may be necessary, or that Agent may reasonably request, to perfect and protect the Liens granted hereby and thereby; provided, however, certificates of title for vehicles need not be delivered or endorsed so long as no Event of Default is then continuing. In addition, and for such purposes only, each Borrower hereby authorizes Agent to execute and deliver on behalf of such Borrower and to file such financing statements (including an indication that the financing statement covers “all assets or all personal property” of such Borrower in accordance with Section 9-504 of the UCC), collateral assignments, notices, control agreements, security agreements and other documents without the signature of such Borrower either in Agent’s name or in the name of Agent as agent and attorney-in-fact for such Borrower. Each Borrower shall protect and defend such Borrower’s title to the Collateral and Agent’s Lien thereon against all Persons claiming any interest adverse to such Borrower or Agent other than Permitted Liens.
 
 
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7.4   Indebtedness. No Borrower shall create, incur, assume, guarantee or be or remain liable with respect to any Indebtedness, or permit any Subsidiary so to do, other than Permitted Indebtedness, or prepay any Indebtedness or take any actions which impose on any Borrower an obligation to prepay any Indebtedness, except for (a) the conversion of Indebtedness into equity securities and the payment of cash in lieu of fractional shares in connection with such conversion, (b) purchase money Indebtedness pursuant to its then applicable payment schedule, (c) prepayment by any Subsidiary of (i) intercompany Indebtedness owed by such Subsidiary to any Borrower, or (ii) if such Subsidiary is not a Borrower, intercompany Indebtedness owed by such Subsidiary to another Subsidiary that is not a Borrower, (d) as permitted pursuant to any Inventory Financing Intercreditor Agreement or any subordination agreement related to Subordinated Indebtedness, or (e) as otherwise permitted hereunder or approved in writing by Agent.
 
7.5   Collateral. Each Borrower shall at all times keep the Collateral and all other property and assets used in Borrowers’ business or in which such Borrower now or hereafter holds any interest free and clear from any Liens whatsoever (except for Permitted Liens), and shall give Agent prompt written notice of any legal process affecting the Collateral, such other property or assets, or any Liens thereon, provided however, that the Collateral and such other property and assets may be subject to Permitted Liens. No Borrower shall agree with any Person other than Agent, Lender, Inventory Financing Lenders and holders of Subordinated Indebtedness not to encumber its property. Each Borrower shall cause each of its Subsidiaries to protect and defend such Subsidiary’s title to its assets from and against all Persons claiming any interest adverse to such Subsidiary, and each Borrower shall cause each of its Subsidiaries at all times to keep such Subsidiary’s property and assets free and clear from any Liens whatsoever (except for Permitted Liens) and shall give Agent prompt written notice of any legal process affecting such Subsidiary’s assets.
 
7.6   Investments; Capital Expenditures. Each Borrower shall not directly or indirectly acquire or own, or make any Investment in or to any Person, or permit any of each of its Subsidiaries so to do, other than Permitted Investments, and shall not permit aggregate capital expenditures (other than software development costs, which may be capitalized), determined in accordance with GAAP, to exceed $250,000 per fiscal year.
 
7.7   Distributions. No Borrower shall, and shall not allow any Subsidiary to, (a) repurchase or redeem any class of stock or other Equity Interest other than repurchases described in clause (b) of the defined term “Permitted Investments” or in accordance with clause (l) of the defined term “Permitted Investments”, (b) declare or pay any cash dividend or make a cash distribution on any class of stock or other Equity Interest, except that a Subsidiary may pay dividends or make distributions to a Borrower; (c) except for Permitted Investments, lend money to any employees, officers or directors or guarantee the payment of any such loans granted by a third party in excess of $100,000 in the aggregate; or (d) waive, release or forgive any Indebtedness owed by any employees, officers or directors in excess of $100,000 in the aggregate.
 
7.8   Transfers. Except for Permitted Transfers, no Borrower shall, or shall allow any Subsidiary to, voluntarily or involuntarily transfer, sell, lease, license, lend or in any other manner convey any equitable, beneficial or legal interest in any material portion of its assets (it being understood and agreed that the issuance of Equity Interests in the Parent shall not violate this Section 7.8 ).
 
7.9   Mergers or Acquisitions. Except for Permitted Acquisitions, no Borrower shall merge or consolidate, or permit any of each of its Subsidiaries to merge or consolidate, with or into any other business organization (other than mergers or consolidations of (a) a Subsidiary which is not a Borrower into another Subsidiary or into a Borrower or (b) a Borrower into another Borrower), or acquire, or permit any of each of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person.
 
 
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7.10   Taxes. Borrowers and each of its Subsidiaries shall pay when due (or within any applicable grace period) all material taxes, fees or other charges of any nature whatsoever (together with any related interest or penalties) now or hereafter imposed or assessed against a Borrower or the Collateral or upon a Borrower’s ownership, possession, use, operation or disposition thereof or upon a Borrower’s rents, receipts or earnings arising therefrom. Each Borrower shall file on or before the due date therefor all personal property tax returns in respect of the Collateral, or file for appropriate extensions by such due date. Notwithstanding the foregoing, a Borrower may contest, in good faith and by appropriate proceedings, taxes for which such Borrower maintains adequate reserves therefor in accordance with GAAP.
 
7.11   Certain Changes. Neither a Borrower nor any Subsidiary shall change its jurisdiction of organization, organizational form or legal name without twenty (20) days’ prior written notice to Agent. Neither a Borrower nor any Subsidiary shall suffer a Change in Control. Neither a Borrower nor any Subsidiary shall relocate its chief executive office or its principal place of business unless: (i) it has provided prior written notice to Agent; and (ii) such relocation shall be within the continental United States of America. Neither a Borrower nor any Qualified Subsidiary shall relocate Collateral (excluding vehicles not constituting Inventory), other than (w) sales of Inventory in the ordinary course of business, (x) Inventory in transit in the ordinary course of business, (y) relocations of Collateral from a location described on Exhibit C to another location described on Exhibit C or another location that is, from time to time, subject to a landlord waiver or bailee agreement, in form and substance satisfactory to Agent, in favor of Agent, or (z) to the extent after giving effect to such relocation, the aggregate value of Collateral (other than vehicles not constituting Inventory) which is at locations not subject to a landlord waiver or bailee agreement does not exceed $400,000 (excluding for such purposes the value of Inventory in transit in the ordinary course of business). With respect to any leased location or location where Collateral (other than vehicles not constituting Inventory) is held by a bailee, Borrowers shall deliver a landlord waiver or bailee agreement in favor of Agent, in form and substance reasonably satisfactory to Agent, provided that for locations existing as of the Closing Date and for which a landlord waiver or bailee agreement would be required, Borrowers may deliver the same within thirty (30) days of the Closing Date (subject to extension from time to time in Agent’s discretion if Borrowers have demonstrated their use of commercially reasonable efforts to obtain such landlord waivers and agreements), and provided that no landlord waiver or bailee agreement shall be required to the extent that Collateral (other than vehicles not constituting Inventory) at all leased or bailee locations not subject to such a landlord waiver or bailee agreement does not exceed $400,000 at any time.
 
7.12   Deposit Accounts; Cash Management. Neither a Borrower nor any Qualified Subsidiary shall maintain any Deposit Accounts, or accounts holding Investment Property except for (i) the Deposit Account used exclusively for maintaining the Permitted Inventory Financing Cash Collateral with a balance not in excess of the amount permitted herein (for which no Account Control Agreement shall be required), or (ii) with respect to which Agent has an Account Control Agreement. Any Subsidiary, including RMBL Missouri, that receives proceeds from the sale of Inventory, shall, after settlement of any amounts due in respect of a Qualified Inventory Financing with respect to the Inventory sold, immediately transfer the excess proceeds, if any, to a Deposit Account that is subject to an Account Control Agreement in favor of Agent pursuant to which Agent is the first lien or controlling secured party, as applicable.
 
7.13   Formation of Subsidiaries. Borrower Representative shall notify Agent of each Subsidiary formed subsequent to the Closing Date and, within 30 days, shall cause any Qualified Subsidiary to execute and deliver to Agent a Joinder Agreement. In the event of a restructuring resulting in Parent no longer being a publicly traded entity and one or more holding companies owning all or substantially all of the shares of Parent, Borrowers shall cause such Person to enter into a Joinder Agreement.
 
7.14   [Reserved.]
 
7.15   Notification of Event of Default. Borrower Representative shall notify Agent immediately of the occurrence of any Event of Default.
 
 
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7.16   [Reserved.]
 
7.17   Use of Proceeds. Each Borrower agrees that the proceeds of the Loans shall be used solely to pay related fees and expenses in connection with this Agreement and for working capital and general business purposes. The proceeds of the Loans will not be used in violation of Anti-Corruption Laws or applicable Sanctions.
 
7.18   Foreign Subsidiary Voting Rights. Each Borrower shall not, and shall not permit any Subsidiary, to amend or modify any governing document of any Foreign Subsidiary of such Borrower (other than an Eligible Foreign Subsidiary) the effect of which is to require a vote of greater than 50.1% of the Equity Interests or voting rights of such entity for any decision or action of such entity.
 
7.19   [Reserved.]
 
7.20   Compliance with Laws.
 
(a)   Each Borrower shall maintain, and shall cause each of its Subsidiaries to maintain compliance in all material respects with all applicable laws, rules or regulations (including, without limitation, dealership laws, laws applicable to the brokering of loans and consumer protection laws), and shall, or cause its Subsidiaries to, obtain and maintain all required governmental authorizations, approvals, licenses, franchises, permits or registrations reasonable necessary in connection with the conduct of Borrowers’ business.
 
(b)   Neither a Borrower nor any of its Subsidiaries shall, nor shall a Borrower or any of its Subsidiaries permit any Affiliate to, directly or indirectly, knowingly enter into any documents, instruments, agreements or contracts with any Person listed on the OFAC Lists. Neither a Borrower, nor any of its Subsidiaries shall, nor shall a Borrower or any of its Subsidiaries, permit any Affiliate to, directly or indirectly, (i) conduct any business or engage in any transaction or dealing with any Blocked Person, including, without limitation, the making or receiving of any contribution of funds, goods or services to or for the benefit of any Blocked Person, (ii) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224 or any similar executive order or other Anti-Terrorism Law, or (iii) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism Law.
 
(c)   Each Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by a Borrower, each of its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and each Borrower, each of its Subsidiaries and, to the knowledge of each Borrower, its directors, officers, employees and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects.
 
(d)   None of Borrowers, any of its Subsidiaries or to the knowledge of Borrowers, any director, officer, employee or agent for Borrowers or any of its Subsidiaries that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Loan, use of proceeds or other transaction contemplated by this Agreement will violate Anti-Corruption Laws or applicable Sanctions.
 
7.21   Financial Covenants.
 
Beginning with the draw of Tranche III, Borrowers shall be subject to the following financial covenants:
 
(a)   Parent shall achieve Revenue for each quarterly period in an amount of at least 75% of the amount set forth in the Budget for such period, tested quarterly.
 
 
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(b)   If during any fiscal quarter, the average balance of all Deposit Accounts of Borrowers and accounts in which Investment Property of Borrowers is maintained that are subject to an Account Control Agreement in favor of Lender is less than $15,000,000, then Parent shall achieve quarterly Adjusted EBITDA of not less than $2,000,000 for such quarter, tested quarterly.
 
7.22   Intellectual Property. Each Borrower shall (i) protect, defend and maintain the validity and enforceability of its Intellectual Property that is material to the business of Borrowers as a whole; (ii) promptly advise Agent in writing of material infringements of its Intellectual Property that is material to the business of Borrowers as a whole; and (iii) not allow any Intellectual Property material to Borrowers’ business to be abandoned, forfeited or dedicated to the public without Agent’s written consent. If a Borrower (i) obtains any Patent, registered Trademark, registered Copyright, registered mask work, or any pending application for any of the foregoing, whether as owner, licensee or otherwise, or (ii) applies for any Patent or the registration of any Trademark, then such Borrower shall promptly provide written notice thereof to Agent and shall execute such intellectual property security agreements and other documents and take such other actions as Agent may request in its good faith business judgment to perfect and maintain a first priority perfected security interest in favor of Agent in such property. If a Borrower decides to register any Copyrights or mask works in the United States Copyright Office, such Borrower shall: (x) provide Agent notice of such Borrower’s intent to register such Copyrights or mask works together with a copy of the application it intends to file with the United States Copyright Office (excluding exhibits thereto); (y) execute an intellectual property security agreement and such other documents and take such other actions as Agent may request in its good faith business judgment to perfect and maintain a first priority perfected security interest in favor of Agent in the Copyrights or mask works intended to be registered with the United States Copyright Office; and (z) record such intellectual property security agreement with the United States Copyright Office contemporaneously (or promptly thereafter) with filing the Copyright or mask work application(s) with the United States Copyright Office. Borrowers shall promptly provide to Agent copies of all applications that it files for Patents or for the registration of Trademarks, Copyrights or mask works, together with evidence of the recording of the intellectual property security agreement required for Agent to perfect and maintain a first priority perfected security interest in such property.
 
7.23   Transactions with Affiliates. No Borrower shall or shall permit any Subsidiary to, directly or indirectly, enter into or permit to exist any transaction of any kind with any Affiliate of any Borrower or such Subsidiary on terms that are less favorable to Borrowers or such Subsidiary, as the case may be, than those that might be obtained in an arm’s length transaction from a Person who is not an Affiliate of a Borrower or such Subsidiary.
 
7.24   Post-Closing Deliveries. Borrowers shall have delivered
 
(a)   the landlord waivers and bailee agreements as required pursuant to Section 7.11 ;
 
(b)   within 30 days of the Closing Date, the insurance certificate and endorsement with respect to commercial property insurance in accordance with Section 6.2 ; and
 
(c)   within 5 Business Days of the Closing Date, the details regarding any Deposit Account or other account in which Permitted Inventory Financing Cash Collateral is maintained.
 
SECTION 8.   [Reserved.]
 
 
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SECTION 9.   EVENTS OF DEFAULT
 
The occurrence of any one or more of the following events shall be an Event of Default:
 
9.1   Payments. Borrowers fail to pay any amount due under this Agreement or any of the other Loan Documents on the due date; provided, however, that an Event of Default shall not occur on account of a failure to pay due solely to an administrative or operational error of Agent or Lender or the applicable Borrower’s bank if Borrowers had the funds to make the payment when due and make the payment within three (3) Business Days following Borrowers’ knowledge of such failure to pay; or
 
9.2   Covenants. A Borrower breaches or defaults in the performance of any covenant or Secured Obligation under this Agreement, or any of the other Loan Documents or any other agreement among any Borrower, Agent and Lender, and (a) with respect to a default under any covenant under this Agreement (other than the Sections specifically identified in clause (b) hereof), any other Loan Document or any other agreement between any Borrower and Agent or Lender, such default continues for more than twenty (20) days, or (b) with respect to a default under any of Sections 6.1, 6.2 , 7.1 , 7.4 , 7.5 , 7.6 , 7.7 , 7.8 , 7.9 , 7.11 , 7.12 , 7.15 , 7.17 , 7.18 , 7.20(b), (c) or (d),   7.21 , or 7.24 the occurrence of such default; or
 
9.3   Material Adverse Effect. A circumstance has occurred that could reasonably be expected to have a Material Adverse Effect; or
 
9.4   Representations. Any representation or warranty made by any Borrower in any Loan Document or in the Warrant shall have been false or misleading in any material respect when made or when deemed made; or
 
9.5   Insolvency. (i)(A) Any Borrower shall make an assignment for the benefit of creditors; or (B) Borrowers, as a whole, shall be unable to pay their debts as they become due, or be unable to pay or perform their material obligations under the Loan Documents, or shall become insolvent; or (C) any Borrower shall file a voluntary petition in bankruptcy; or (D) any Borrower shall file any petition, answer, or document seeking for itself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation pertinent to such circumstances; or (E) any Borrower shall seek or consent to or acquiesce in the appointment of any trustee, receiver, or liquidator of any Borrower or of all or any material part of the assets or property of Borrowers, as a whole; or (F)  any Borrower (other than a Borrower that has no material operations) shall cease operations of its business as its business has normally been conducted, or Borrowers, as a whole, terminate substantially all of their employees; or (G) any Borrower or its directors or a majority of the holders of its Equity Interests shall take any action initiating any of the foregoing actions described in clauses (A) through (F) ; or (ii) either (A) thirty (30) days shall have expired after the commencement of an involuntary action against any Borrower seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, without such action being dismissed or all orders or proceedings thereunder affecting the operations or the business of any Borrower being stayed; or (B) a stay of any such order or proceedings shall thereafter be set aside and the action setting it aside shall not be appealed within ten (10) days; or (C) any Borrower shall file any answer admitting or not contesting the material allegations of a petition filed against any Borrower in any such proceedings; or (D) the court in which such proceedings are pending shall enter a decree or order granting the relief sought in any such proceedings; or (E) thirty (30) days shall have expired after the appointment, without the consent or acquiescence of any Borrower, of any trustee, receiver or liquidator of such Borrower or of all or any material part of the properties of Borrowers, taken as a whole without such appointment being vacated; or
 
 
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9.6   Attachments; Judgments. Any material portion of any Borrower’s assets is attached or seized, or a levy is filed against any such assets, or a judgment or judgments is/are entered for the payment of money (not covered by independent third party insurance as to which liability has been accepted (subject to customary reservation of rights) by such insurance carrier), individually or in the aggregate, of at least $250,000, or any Borrower is enjoined or in any way prevented by court order from conducting any material part of its business;
 
9.7   Other Obligations. The occurrence of any default and the passing of any applicable grace period under any agreement or obligation of any Borrower (including pursuant to the Inventory Financing Agreement) involving any Indebtedness in excess of $250,000, which could entitle or permit any Person to accelerate such Indebtedness, or any other material agreement or obligation, if a Material Adverse Effect could reasonably be expected to result from such default; or
 
9.8   Stop Trade. At any time, an SEC stop trade order or NASDAQ market trading suspension of the Common Stock of Parent shall be in effect for five (5) consecutive days or five (5) days during a period of ten (10) consecutive days, excluding in all cases a suspension of all trading on a public market, provided that Borrower shall not have been able to cure such trading suspension within thirty (30) days of the notice thereof or list the Common Stock on another public market within sixty (60) days of such notice.
 
SECTION 10.   REMEDIES
 
10.1                 General. Upon and during the continuance of any one or more Events of Default, (i) Agent may, and at the direction of the Required Lenders shall, accelerate and demand payment of all or any part of the Secured Obligations together with a Prepayment Charge and declare them to be immediately due and payable (provided, that upon the occurrence of an Event of Default of the type described in Section 9.5 , all of the Secured Obligations shall automatically be accelerated and made due and payable, in each case without any further notice or act), (ii) Agent may, at its option, sign and file in any Borrower’s name any and all collateral assignments, notices, control agreements, security agreements and other documents it deems necessary or appropriate to perfect or protect the repayment of the Secured Obligations, and in furtherance thereof, each Borrower hereby grants Agent an irrevocable power of attorney coupled with an interest, and (iii) Agent may notify any of any Borrower’s account debtors to make payment directly to Agent, compromise the amount of any such account on such Borrower’s behalf and endorse Agent’s name without recourse on any such payment for deposit directly to Agent’s account. Agent may, and at the direction of the Required Lenders shall, exercise all rights and remedies with respect to the Collateral under the Loan Documents or otherwise available to it under the UCC and other applicable law, including the right to release, hold, sell, lease, liquidate, collect, realize upon, or otherwise dispose of all or any part of the Collateral and the right to occupy, utilize, process and commingle the Collateral. All Agent’s rights and remedies shall be cumulative and not exclusive.
 
10.2   Collection; Foreclosure. Upon the occurrence and during the continuance of any Event of Default, Agent may, and at the direction of the Required Lenders shall, at any time or from time to time, apply, collect, liquidate, sell in one or more sales, lease or otherwise dispose of, any or all of the Collateral, in its then condition or following any commercially reasonable preparation or processing, in such order as Agent may elect. Any such sale may be made either at public or private sale at its place of business or elsewhere. Each Borrower agrees that any such public or private sale may occur upon ten (10) calendar days’ prior written notice to Borrower Representative. Agent may require any Borrower to assemble the Collateral and make it available to Agent at a place designated by Agent. The proceeds of any sale, disposition or other realization upon all or any part of the Collateral shall be applied by Agent in the following order of priorities:
 
 
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First, to Agent and Lender in an amount sufficient to pay in full Agent’s and Lender’s reasonable costs and professionals’ and advisors’ fees and expenses as described in Section 11.11 ;
 
Second, to Lender in an amount equal to the then unpaid amount of the Secured Obligations (including principal, interest, subject to increase in accordance with Section 2.3 ), in such order and priority as Agent may choose in its sole discretion; and
 
Finally, after the full and final payment in Cash of all of the Secured Obligations (other than inchoate obligations), to any creditor holding a junior Lien on the Collateral, or to Borrowers or each of its representatives or as a court of competent jurisdiction may direct.
 
Agent shall be deemed to have acted reasonably in the custody, preservation and disposition of any of the Collateral if it complies with the obligations of a secured party under the UCC.
 
10.3   No Waiver. Agent shall be under no obligation to marshal any of the Collateral for the benefit of any Borrower or any other Person, and each Borrower expressly waives all rights, if any, to require Agent to marshal any Collateral.
 
10.4   Shares. Each Borrower recognizes that Agent may be unable to effect a public sale of any or all the Shares, by reason of certain prohibitions contained in federal securities laws and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. Each Borrower acknowledge and agree that any such private sale may result in prices and other terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. Agent shall be under no obligation to delay a sale of any of the Shares for the period of time necessary to permit the issuer thereof to register such securities for public sale under federal securities laws or under applicable state securities laws, even if such issuer would agree to do so.
 
10.5   Cumulative Remedies. The rights, powers and remedies of Agent hereunder shall be in addition to all rights, powers and remedies given by statute or rule of law and are cumulative. The exercise of any one or more of the rights, powers and remedies provided herein shall not be construed as a waiver of or election of remedies with respect to any other rights, powers and remedies of Agent. Only Agent can exercise the remedies set forth in this Section 10 it being understood that no Lender can act under this Section 10 except through the Agent.
 
SECTION 11.   MISCELLANEOUS
 
11.1                 Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective only to the extent and duration of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
 
11.2   Notice. Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication (including the delivery of Financial Statements) that is required, contemplated, or permitted under the Loan Documents or with respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly served, given, delivered, and received upon the earlier of: (i) the day of transmission by electronic mail or hand delivery or delivery by an overnight express service or overnight mail delivery service; or (ii) the third calendar day after deposit in the United States of America mails, with proper first class postage prepaid, in each case addressed to the party to be notified as follows:
 
 
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(a)   If to Agent:
 
HERCULES CAPITAL, INC.
 
Legal Department
Attention: Chief Legal Officer and Thomas Harris
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
email: legal@herculestech.com; tharris@htgc.com
Telephone: 650-289-3060
 
(b)   If to Lender:
 
HERCULES CAPITAL, INC.
 
Legal Department
Attention: Chief Legal Officer and Thomas Harris
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
email: legal@herculestech.com; tharris@htgc.com
Telephone: 650-289-3060
 
(c)   If to Borrowers:
 
RumbleON, Inc.
Attention: Tom Aucamp
 
4521 Sharon Road
Suite 370
Charlotte, NC 28211
email: tom@rumbleon.com
Telephone: 704-445-4753
 
or to such other address as each party may designate for itself by like notice.
 
11.3   Entire Agreement; Amendments.
 
(a)   This Agreement and the other Loan Documents constitute the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and thereof, and supersede and replace in their entirety any prior proposals, term sheets, non-disclosure or confidentiality agreements, letters, negotiations or other documents or agreements, whether written or oral, with respect to the subject matter hereof or thereof (including Agent’s proposal letter dated March 7, 2018 a nd the Non-Disclosure Agreement).
 
(b)   Neither this Agreement, any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this Section 11.3(b) . The Required Lenders and Borrowers party to the relevant Loan Document may, or, with the written consent of the Required Lenders, Agent and Borrowers party to the relevant Loan Document may, from time to time, (i) enter into written amendments, supplements or modifications hereto and to the other Loan Documents for the purpose of adding any provisions to this Agreement or the other Loan Documents or changing in any manner the rights of Lender or of Borrowers hereunder or thereunder or (ii) waive, on such terms and conditions as the Required Lenders or Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents or any default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (A) forgive the principal amount or extend the final scheduled date of maturity of any Loan, extend the scheduled date of any amortization payment in respect of any Growth Capital Term Loan Advance, reduce the stated rate of any interest or fee payable hereunder, or extend the scheduled date of any payment thereof, in each case without the written consent of each Lender directly affected thereby; (B) eliminate or reduce the voting rights of any Lender under this Section 11.3(b) without the written consent of such Lender; (C) reduce any percentage specified in the definition of Required Lenders, consent to the assignment or transfer by Borrowers of any of its rights and obligations under this Agreement and the other Loan Documents, release all or substantially all of the Collateral or release a Borrower (other than a Borrower that has no material operations) from its obligations under the Loan Documents, in each case without the written consent of all Lenders; or (D) amend, modify or waive any provision of Section 11.17 without the written consent of Agent. Any such waiver and any such amendment, supplement or modification shall apply equally to each Lender and shall be binding upon Borrowers, Lender, Agent and all future holders of the Loans.
 
 
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11.4   No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
 
11.5   No Waiver. The powers conferred upon Agent and Lender by this Agreement are solely to protect its rights hereunder and under the other Loan Documents and its interest in the Collateral and shall not impose any duty upon Agent or Lender to exercise any such powers. No omission or delay by Agent or Lender at any time to enforce any right or remedy reserved to it, or to require performance of any of the terms, covenants or provisions hereof by Borrowers at any time designated, shall be a waiver of any such right or remedy to which Agent or Lender is entitled, nor shall it in any way affect the right of Agent to enforce such provisions thereafter.
 
11.6   Survival. All agreements, representations and warranties contained in this Agreement and the other Loan Documents or in any document delivered pursuant hereto or thereto shall be for the benefit of Agent and Lender and shall survive the execution and delivery of this Agreement. Section 6.3 shall survive the termination of this Agreement.
 
11.7   Successors and Assigns. The provisions of this Agreement and the other Loan Documents shall inure to the benefit of and be binding on each Borrower and its permitted assigns (if any). No Borrower shall assign its obligations under this Agreement or any of the other Loan Documents without Agent’s express prior written consent, and any such attempted assignment shall be void and of no effect. Agent and Lender may assign, transfer, or endorse its rights hereunder and under the other Loan Documents without prior notice to Borrowers, and all of such rights shall inure to the benefit of Agent’s and Lender’s successors and assigns; provided that as long as no Event of Default has occurred and is continuing, neither Agent nor any Lender may assign, transfer or endorse its rights hereunder or under the Loan Documents to any party that is a direct competitor of Borrowers (as reasonably determined by Agent), it being acknowledged that in all cases, any transfer to an Affiliate of any Lender or Agent shall be allowed.
 
11.8   Governing Law. This Agreement and the other Loan Documents have been negotiated and delivered to Agent and Lender in the State of California, and shall have been accepted by Agent and Lender in the State of California. Payment to Agent and Lender by Borrowers of the Secured Obligations is due in the State of California. This Agreement and the other Loan Documents shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.
 
11.9   Consent to Jurisdiction and Venue. All judicial proceedings (to the extent that the reference requirement of Section 11.10 is not applicable) arising in or under or related to this Agreement or any of the other Loan Documents may be brought in any state or federal court located in the State of California. By execution and delivery of this Agreement, each party hereto generally and unconditionally: (a) consents to nonexclusive personal jurisdiction in Santa Clara County, State of California; (b) waives any objection as to jurisdiction or venue in Santa Clara County, State of California; (c) agrees not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement or the other Loan Documents. Service of process on any party hereto in any action arising out of or relating to this Agreement shall be effective if given in accordance with the requirements for notice set forth in Section 11.2 , and shall be deemed effective and received as set forth in Section 11.2 . Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction.
 
 
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11.10   Mutual Waiver of Jury Trial / Judicial Reference.
 
(a)   Because disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced and expert Person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties desire that their disputes be resolved by a judge applying such applicable laws. EACH OF BORROWERS, AGENT AND LENDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, “ CLAIMS ”) ASSERTED BY BORROWERS AGAINST AGENT, LENDER OR THEIR RESPECTIVE ASSIGNEE OR BY AGENT, LENDER OR THEIR RESPECTIVE ASSIGNEE AGAINST A BORROWER. This waiver extends to all such Claims, including Claims that involve Persons other than Agent, Borrowers and Lender; Claims that arise out of or are in any way connected to the relationship among Borrowers, Agent and Lender; and any Claims for damages, breach of contract, tort, specific performance, or any equitable or legal relief of any kind, arising out of this Agreement, any other Loan Document.
 
(b)   If the waiver of jury trial set forth in Section 11.10(a) is ineffective or unenforceable, the parties agree that all Claims shall be resolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before a mutually acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of the Santa Clara County, California. Such proceeding shall be conducted in Santa Clara County, California, with California rules of evidence and discovery applicable to such proceeding.
 
(c)   In the event Claims are to be resolved by judicial reference, either party may seek from a court identified in Section 11.9 , any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent permitted by law notwithstanding that all Claims are otherwise subject to resolution by judicial reference.
 
11.11   Professional Fees. Each Borrower promises to pay Agent’s fees and expenses necessary to finalize the loan documentation, including but not limited to reasonable attorneys’ fees, UCC searches, filing costs, and other miscellaneous expenses. In addition, each Borrower promises to pay any and all reasonable attorneys’ and other reasonable out of pocket professionals’ fees and expenses incurred by Agent after the Closing Date in connection with or related to: (a) the Loan; (b) the administration, collection, or enforcement of the Loan; (c) the amendment or modification of the Loan Documents; (d) any waiver, consent, release, or termination under the Loan Documents; (e) the protection, preservation, audit, field exam, sale, lease, liquidation, or disposition of Collateral or the exercise of remedies with respect to the Collateral; (f) any legal, litigation, administrative, arbitration, or out of court proceeding in connection with or related to a Borrower or the Collateral, and any appeal or review thereof; and (g) any bankruptcy, restructuring, reorganization, assignment for the benefit of creditors, workout, foreclosure, or other action related to a Borrower, the Collateral, the Loan Documents, including representing Agent in any adversary proceeding or contested matter commenced or continued by or on behalf of a Borrower’s estate, and any appeal or review thereof.
 
 
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11.12   Confidentiality. Agent and Lender acknowledge that certain items of Collateral and information provided to Agent and Lender by a Borrower are confidential and proprietary information of Borrowers, if and to the extent such information either (i) is marked as confidential by such Borrower at the time of disclosure, or (ii) should reasonably be understood to be confidential (the “ Confidential Information ”). Accordingly, Agent and Lender agree that any Confidential Information it has obtained and may obtain in connection with this Agreement and the Loan Documents shall not be disclosed to any other Person or entity in any manner whatsoever, in whole or in part, without the prior written consent of Borrowers, except that Agent and Lender may disclose any such information: (a) to its own directors, officers, employees, accountants, counsel and other professional advisors and to its Affiliates if Agent or Lender in their sole discretion determines that any such party should have access to such information in connection with such party’s responsibilities in connection with the Loan or this Agreement and, provided that such recipient of such Confidential Information either (i) agrees to be bound by the confidentiality provisions of this paragraph or (ii) is otherwise subject to confidentiality restrictions that reasonably protect against the disclosure of Confidential Information; (b) if such information is generally available to the public; (c) if required or appropriate in any report, statement or testimony submitted to any governmental authority having or claiming to have jurisdiction over Agent or Lender; (d) if required or appropriate in response to any summons or subpoena or in connection with any litigation, to the extent permitted or deemed advisable by Agent’s or Lender’s counsel; (e) to comply with any legal requirement or law applicable to Agent or Lender; (f) to the extent reasonably necessary in connection with the exercise of any right or remedy under any Loan Document, including Agent’s sale, lease, or other disposition of Collateral after default; (g) to any participant or assignee of Agent or Lender or any prospective participant or assignee; provided, that such participant or assignee or prospective participant or assignee agrees in writing to be bound by this Section prior to disclosure; or (h) otherwise with the prior consent of any Borrower; provided, that any disclosure made in violation of this Agreement shall not affect the obligations of any Borrower or any of its Affiliates or any guarantor under this Agreement or the other Loan Documents. Agent and Lender are aware of their obligations with respect to material non-public Confidential Information of a publicly traded company and both Agent and Lender agree on behalf of themselves and their Affiliates that they will not engage in transactions in or relating to the securities of the Parent while in possession of material non-public Confidential Information. Agent’s and Lender’s obligations under this Section 11.12 shall supersede all of their respective obligations under the Non-Disclosure Agreement.
 
11.13   Assignment of Rights. Each Borrower acknowledges and understands that Agent or Lender may, subject to Section 11.7 , sell and assign all or part of its interest hereunder and under the Loan Documents to any Person or entity (an “ Assignee ”). After such assignment the term “ Agent ” or “ Lender ” as used in the Loan Documents shall mean and include such Assignee, and such Assignee shall be vested with all rights, powers and remedies of Agent and Lender hereunder with respect to the interest so assigned; but with respect to any such interest not so transferred, Agent and Lender shall retain all rights, powers and remedies hereby given. No such assignment by Agent or Lender shall relieve any Borrower of any of its obligations hereunder. Lender agrees that in the event of any transfer by it of the Note(s)(if any), it will endorse thereon a notation as to the portion of the principal of the Note(s), which shall have been paid at the time of such transfer and as to the date to which interest shall have been last paid thereon.
 
11.14   Revival of Secured Obligations. This Agreement and the Loan Documents shall remain in full force and effect and continue to be effective if any petition is filed by or against any Borrower for liquidation or reorganization, if any Borrower becomes insolvent or makes an assignment for the benefit of creditors, if a receiver or trustee is appointed for all or any significant part of any Borrower’s assets, or if any payment or transfer of Collateral is recovered from Agent or Lender. The Loan Documents and the Secured Obligations and Collateral security shall continue to be effective, or shall be revived or reinstated, as the case may be, if at any time payment and performance of the Secured Obligations or any transfer of Collateral to Agent, or any part thereof is rescinded, avoided or avoidable, reduced in amount, or must otherwise be restored or returned by, or is recovered from, Agent, Lender or by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment, performance, or transfer of Collateral had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, avoided, avoidable, restored, returned, or recovered, the Loan Documents and the Secured Obligations shall be deemed, without any further action or documentation, to have been revived and reinstated except to the extent of the full, final, and indefeasible payment to Agent or Lender in Cash.
 
 
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11.15   Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which counterparts shall constitute but one and the same instrument.
 
11.16   No Third Party Beneficiaries. No provisions of the Loan Documents are intended, nor will be interpreted, to provide or create any third-party beneficiary rights or any other rights of any kind in any Person other than Agent, Lender and Borrowers unless specifically provided otherwise herein, and, except as otherwise so provided, all provisions of the Loan Documents will be personal and solely among Agent, Lender and Borrowers.
 
11.17   Agency.
 
(a)   Lender hereby irrevocably appoints Hercules Capital, Inc. to act on its behalf as Agent hereunder and under the other Loan Documents and authorizes Agent to take such actions on its behalf and to exercise such powers as are delegated to Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto.
 
(b)   Lender agrees to indemnify Agent in its capacity as such (to the extent not reimbursed by Borrowers and without limiting the obligation of Borrowers to do so), according to its respective Growth Capital Term Commitment percentages (based upon the total outstanding Growth Capital Term Commitments) in effect on the date on which indemnification is sought under this Section 11.17 , from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time be imposed on, incurred by or asserted against Agent in any way relating to or arising out of, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by Agent under or in connection with any of the foregoing; The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.
 
(c)   Agent in Its Individual Capacity. The Person serving as Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not Agent and the term “Lender” shall, unless otherwise expressly indicated or unless the context otherwise requires, include each such Person serving as Agent hereunder in its individual capacity.
 
(d)   Exculpatory Provisions. Agent shall have no duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, Agent shall not:
 
(i)
be subject to any fiduciary or other implied duties, regardless of whether any default or any Event of Default has occurred and is continuing;
 
(ii)
have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that Agent is required to exercise as directed in writing by Lender, provided that Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose Agent to liability or that is contrary to any Loan Document or applicable law; and
 
(iii)
except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and Agent shall not be liable for the failure to disclose, any information relating to Borrowers or any of its Affiliates that is communicated to or obtained by any Person serving as Agent or any of its Affiliates in any capacity.
 
 
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(e)   Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of Lender or as Agent shall believe in good faith shall be necessary, under the circumstances or (ii) in the absence of its own gross negligence or willful misconduct.
 
(f)   Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 4 or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to Agent.
 
(g)   Reliance by Agent. Agent may rely, and shall be fully protected in acting, or refraining to act, upon, any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order, bond or other paper or document that it has no reason to believe to be other than genuine and to have been signed or presented by the proper party or parties or, in the case of cables, telecopies and telexes, to have been sent by the proper party or parties. In the absence of its gross negligence or willful misconduct, Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to Agent and conforming to the requirements of the Loan Agreement or any of the other Loan Documents. Agent may consult with counsel, and any opinion or legal advice of such counsel shall be full and complete authorization and protection in respect of any action taken, not taken or suffered by Agent hereunder or under any Loan Documents in accordance therewith. Agent shall have the right at any time to seek instructions concerning the administration of the Collateral from any court of competent jurisdiction. Agent shall not be under any obligation to exercise any of the rights or powers granted to Agent by this Agreement, the Loan Agreement and the other Loan Documents at the request or direction of Lenders unless Agent shall have been provided by Lender with adequate security and indemnity against the costs, expenses and liabilities that may be incurred by it in compliance with such request or direction.
 
11.18   Publicity. None of the parties hereto nor any of its respective member businesses and Affiliates shall, without the other parties’ prior written consent (which shall not be unreasonably withheld or delayed), publicize or use (a) the other party’s name (including a brief description of the relationship among the parties hereto), logo or hyperlink to such other parties’ web site, separately or together, in written and oral presentations, advertising, promotional and marketing materials, client lists, public relations materials or on its web site (together, the “ Publicity Materials ”); (b) the names of officers of such other parties in the Publicity Materials; and (c) such other parties’ name, trademarks, servicemarks in any news or press release concerning such party; provided however, notwithstanding anything to the contrary herein, no such consent shall be required (i) to the extent necessary or customary to comply with the requests of any regulators, legal requirements or laws applicable to such party (including all disclosure requirements of the Parent pursuant to the securities laws), or pursuant to any listing agreement with any national securities exchange and (ii) to comply with Section 11.12 .
 
11.19   Multiple Borrowers.
 
(a)   Borrowers’ Agent. Each of Borrowers hereby irrevocably appoints Borrower Representative as its agent, attorney-in-fact and legal representative for all purposes, including requesting disbursement of the Growth Capital Term Loan Advance and receiving account statements and other notices and communications to Borrowers (or any of them) from Agent or any Lender. Agent may rely, and shall be fully protected in relying, on any request for the Growth Capital Term Loan Advance, disbursement instruction, report, information or any other notice or communication made or given by Borrower Representative, whether in its own name or on behalf of one or more of the other Borrowers, and Agent shall not have any obligation to make any inquiry or request any confirmation from or on behalf of any other Borrower as to the binding effect on it of any such request, instruction, report, information, other notice or communication, nor shall the joint and several character of Borrowers’ obligations hereunder be affected thereby.
 
 
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(b)   Waivers. Each Borrower hereby waives: (i) any right to require Agent to institute suit against, or to exhaust its rights and remedies against, any other Borrower or any other Person, or to proceed against any property of any kind which secures all or any part of the Secured Obligations, or to exercise any right of offset or other right with respect to any reserves, credits or deposit accounts held by or maintained with Agent or any Indebtedness of Agent or any Lender to any other Borrower, or to exercise any other right or power, or pursue any other remedy Agent or any Lender may have; (ii) any defense arising by reason of any disability or other defense (other than performance) of any other Borrower or any guarantor or any endorser, co-maker or other Person, or by reason of the cessation from any cause whatsoever of any liability of any other Borrower or any guarantor or any endorser, co-maker or other Person (other than because of performance), with respect to all or any part of the Secured Obligations, or by reason of any act or omission of Agent or others which directly or indirectly results in the discharge or release of any other Borrower or any guarantor or any other Person or any Secured Obligations or any security therefor, whether by operation of law or otherwise; (iii) any defense arising by reason of any failure of Agent to obtain, perfect, maintain or keep in force any Lien on, any property of any Borrower or any other Person; (iv) any defense based upon or arising out of any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against any other Borrower or any guarantor or any endorser, co-maker or other Person, including without limitation any discharge of, or bar against collecting, any of the Secured Obligations (including without limitation any interest thereon), in or as a result of any such proceeding. Until all of the Secured Obligations have been paid, performed, and discharged in full, nothing shall discharge or satisfy the liability of any Borrower hereunder except the full performance and payment of all of the Secured Obligations. If any claim is ever made upon Agent for repayment or recovery of any amount or amounts received by Agent in payment of or on account of any of the Secured Obligations, because of any claim that any such payment constituted a preferential transfer or fraudulent conveyance, or for any other reason whatsoever, and Agent repays all or part of said amount by reason of any judgment, decree or order of any court or administrative body having jurisdiction over Agent or any of its property, or by reason of any settlement or compromise of any such claim effected by Agent with any such claimant (including without limitation the any other Borrower), then and in any such event, each Borrower agrees that any such judgment, decree, order, settlement and compromise shall be binding upon such Borrower, notwithstanding any revocation or release of this Agreement or the cancellation of any note or other instrument evidencing any of the Secured Obligations, or any release of any of the Secured Obligations, and each Borrower shall be and remain liable to Agent and Lender under this Agreement for the amount so repaid or recovered, to the same extent as if such amount had never originally been received by Agent or any Lender, and the provisions of this sentence shall survive, and continue in effect, notwithstanding any revocation or release of this Agreement. Until payment in full of the Secured Obligations (other than obligations that survive the termination of the Loan Documents) each Borrower hereby expressly and unconditionally waives all rights of subrogation, reimbursement and indemnity of every kind against any other Borrower, and all rights of recourse to any assets or property of any other Borrower, and all rights to any collateral or security held for the payment and performance of any Secured Obligations, including (but not limited to) any of the foregoing rights which a Borrower may have under any present or future document or agreement with any other Borrower or other Person, and including (but not limited to) any of the foregoing rights which any Borrower may have under any equitable doctrine of subrogation, implied contract, or unjust enrichment, or any other equitable or legal doctrine.
 
 
40
 
 
(c)   Consents. Each Borrower hereby consents and agrees that, without notice to or by such Borrower and without affecting or impairing in any way the obligations or liability of such Borrower hereunder, Agent may, from time to time before or after revocation of this Agreement, do any one or more of the following in its sole and absolute discretion: (i) accept partial payments of, compromise or settle, renew, extend the time for the payment, discharge, or performance of, refuse to enforce, and release all or any parties to, any or all of the Secured Obligations; (ii) grant any other indulgence to any Borrower or any other Person in respect of any or all of the Secured Obligations or any other matter; (iii) accept, release, waive, surrender, exchange, modify, impair, or extend the time for the performance, discharge, or payment of, any and all property of any kind securing any or all of the Secured Obligations or any guaranty of any or all of the Secured Obligations, or on which Agent at any time may have a Lien, or refuse to enforce its rights or make any compromise or settlement or agreement therefor in respect of any or all of such property; (iv) substitute or add, or take any action or omit to take any action which results in the release of, any one or more other Borrowers or any endorsers or guarantors of all or any part of the Secured Obligations, including, without limitation one or more parties to this Agreement, regardless of any destruction or impairment of any right of contribution or other right of such Borrower; (v) apply any sums received from any other Borrower, any guarantor, endorser, or co-signer, or from the disposition of any Collateral or security, to any Indebtedness whatsoever owing from such Person or secured by such Collateral or security, in such manner and order as Agent determines in its sole discretion (subject to the terms of this Agreement), and regardless of whether such Indebtedness is part of the Secured Obligations, is secured, or is due and payable. Each Borrower consents and agrees that Agent shall be under no obligation to marshal any assets in favor of Borrower, or against or in payment of any or all of the Secured Obligations. Each Borrower further consents and agrees that Agent shall have no duties or responsibilities whatsoever with respect to any property securing any or all of the Secured Obligations. Without limiting the generality of the foregoing, Agent shall have no obligation to monitor, verify, audit, examine, or obtain or maintain any insurance with respect to, any property securing any or all of the Secured Obligations.
 
(d)   Independent Liability. Each Borrower hereby agrees that one or more successive or concurrent actions may be brought hereon against such Borrower, in the same action in which any other Borrower may be sued or in separate actions, as often as deemed advisable by Agent. Each Borrower is fully aware of the financial condition of each other Borrower and is executing and delivering this Agreement based solely upon its own independent investigation of all matters pertinent hereto, and such Borrower is not relying in any manner upon any representation or statement of Agent or any Lender with respect thereto. Each Borrower represents and warrants that it is in a position to obtain, and each Borrower hereby assumes full responsibility for obtaining, any additional information concerning any other Borrower’s financial condition and any other matter pertinent hereto as such Borrower may desire, and such Borrower is not relying upon or expecting Agent to furnish to it any information now or hereafter in Agent’s possession concerning the same or any other matter.
 
(e)   Subordination. All Indebtedness of any Borrower now or hereafter arising held by another Borrower is subordinated to the Secured Obligations and any Borrower holding the Indebtedness shall take all actions reasonably requested by Agent to effect, to enforce and to give notice of such subordination.
 
[REMAINDER OF SIGNATURE PAGE INTENTIONALLY LEFT BLANK]
 
 
41
 
[SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]
 
IN WITNESS WHEREOF, Borrowers, Agent and Lender have duly executed and delivered this Loan and Security Agreement as of the day and year first above written.
 
BORROWERS:
 
RUMBLEON, INC.
 
Signature:       
_ /s/ Steven R. Berrard _____
 
Print Name:          
__ Steven R. Berrard ______
 
Title:              
__ Chief Financial Officer ___
 
 
NEXTGEN PRO, LLC
 
Signature:          
_ /s/ Steven R. Berrard _____
 
Print Name:   
__ Steven R. Berrard ______
 
Title:        
__ Manager ______________
 
 
RMBL MISSOURI, LLC
 
Signature:        
_ /s/ Steven R. Berrard _____
 
Print Nam e:
__ Steven R. Berrard ______
 
Title:                
__ Manager ______________
 
 
RMBL TEXAS, LLC
 
Signature:        
_ /s/ Steven R. Berrard _____
 
Print Name:      
__ Steven R. Berrard ______
 
Title:        
__ Manager ______________
 
 
 
 
 
Accepted in Palo Alto, California:
 
AGENT:
 
HERCULES CAPITAL, INC.
 
Signature:         
_ /s/ Zhuo Huang _________
 
Print Name:       
_ Zhuo Huang __________
 
Title:     
_ Associate General Counsel _
 
 
LENDER:
 
HERCULES CAPITAL, INC.
 
Signature:         
_ /s/ Zhuo Huang _________
 
Print Name:       
_ Zhuo Huang __________
 
Title:        
_ Associate General Counsel _
 
 
 
 
Table of Exhibits and Schedules
 
Exhibit A:  
Advance Request
 
Attachment to Advance Request
 
Exhibit B:            
Term Note
 
Exhibit C:        
Name, Locations, and Other Information for Borrowers
 
Exhibit D:       
Borrowers’ Patents, Trademarks, Copyrights and Licenses
 
Exhibit E:     
Borrowers’ Deposit Accounts and Investment Accounts
 
Exhibit F:        
Compliance Certificate
 
Exhibit G:   
Joinder Agreement
 
Exhibit H:    
ACH Debit Authorization Agreement
 
Schedule 1.1                 
Commitments
Schedule 5.14         
Capitalization
 
 
 
 
EXHIBIT A
 
ADVANCE REQUEST
 
To:             
Agent:                                                                             
Date:                                                     
 
Hercules Capital, Inc. (the “ Agent”)
 
400 Hamilton Avenue, Suite 310
 
Palo Alto, CA 94301
 
email: legal@herculestech.com; tharris@htgc.com
 
Attn: Legal Department; Thomas Haris
 
Re: Loan and Security Agreement dated as of April 30, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “ Agreement ”), by and among RUMBLEON, INC., a Nevada corporation, NEXTGEN PRO, LLC, a Delaware limited liability company, RMBL MISSOURI, LLC, a Delaware limited liability company, RMBL TEXAS, LLC, a Delaware limited liability company, and each of their Qualified Subsidiaries from time to time party to the Loan Agreement (individually, each, a “ Borrower ”, and collectively, “ Borrowers ”), the several banks and other financial institutions or entities from time to time parties to this Agreement (collectively, “ Lender ”) and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and collateral agent for Lender (in such capacity, “ Agent ”).
 
Borrower Representative, on behalf of Borrowers, hereby requests Agent to cause Lender to make an Advance in the amount of _____________________ Dollars ($________________) on ______________, _____ (the “ Advance Date ”) pursuant to the Agreement. Capitalized words and other terms used but not otherwise defined herein are used with the same meanings as defined in the Agreement.
 
Please:
 
(a)             
Issue a check payable to a Borrower                   
☐
 
or
 
(b)             
Wire Funds to a Borrower’s account          
☐
 
Bank:                            
Address:                            
 
ABA Number:                            
Account Number:                         
Account Name:                                                                 
Contact Person:                                                                 
Phone Number:                                                                 
To Verify Wire Info:                                                                 
Email address:                            
 
Borrower Representative represents that the conditions precedent to the Advance set forth in the Agreement are satisfied and shall be satisfied upon the making of such Advance, including but not limited to: (i) that no event that has had or could reasonably be expected to have a Material Adverse Effect has occurred and is continuing; (ii) that the representations and warranties set forth in the Agreement are true and correct in all material respects on and as of the Advance Date with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date; (iii) that each Borrower is in compliance with all the terms and provisions set forth in each Loan Document on its part to be observed or performed in all material respects; and (iv) that as of the Advance Date, no fact or condition exists that constitutes (or could, with the passage of time, the giving of notice, or both reasonably be expected to constitute) an Event of Default under the Loan Documents. Borrower Representative understands and acknowledges that Agent has the right to review the financial information supporting this representation and, based upon such review, Lender may decline to fund the requested Advance.
 
 
 
 
Borrower Representative hereby represents that each Borrower’s jurisdiction of organization, organizational form, legal name and locations have not changed since the date of the Agreement or, if the Attachment to this Advance Request is completed, are as set forth in the Attachment to this Advance Request.
 
Borrower Representative agrees to notify Agent promptly before the funding of the Loan if any of the matters which have been represented above shall not be true and correct on the Advance Date and if Agent has received no such notice before the Advance Date then the statements set forth above shall be deemed to have been made and shall be deemed to be true and correct as of the Advance Date.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO ADVANCE REQUEST]
 
This Advance Request is duly executed as of the date set forth above.
 
RUMBLEON, INC.
 
SIGNATURE:                                                                
 
TITLE:                        
 
PRINT NAME:                                  
 
 
 
 
ATTACHMENT TO ADVANCE REQUEST
 
Dated: _______________________
 
Borrower Representative hereby represents and warrants to Agent, on behalf of each Borrower, that each of Borrowers’ current names and organizational status is as follows:
 
[Name:
RumbleON, Inc.
Type of organization:
corporation
State of organization:
Nevada
Organization file number:
Business ID - NV20131625617
Name:
NextGen Pro, LLC
Type of organization:
limited liability company
State of organization:
Delaware
Organization file number:
File #6297691
Name:
RMBL Missouri, LLC
Type of organization:
limited liability company
State of organization:
Delaware
Organization file number:
File # 6326654
Name:
RMBL Texas, LLC
Type of organization:
limited liability company
State of organization:
Delaware
Organization file number:
File #6681648] 1
Borrower Representative hereby represents and warrants to Agent, on behalf of Borrowers, that the street addresses, cities, states and postal codes of each Borrower’s current locations (in addition to those leased and bailee locations listed on Exhibit C to the Agreement) are as follows:
 
[1431 Greenway Drive
Suite 775
Irving, TX 75038
 
RumbleOn, Inc.
4521 Sharon Road
Suite 370
Charlotte, North Carolina 28211
 
 
RMBL Missouri, LLC
2100 E Outer Road
Scott City, MO. 63780] 2
 
1 Update for Tranches II, III and IV as needed
2 Update for Tranches II, III and IV as needed
 
 
 
 
EXHIBIT B
 
SECURED TERM PROMISSORY NOTE
 
$[______________]
 
 
Advance Date: [____________]
 
 
 
Maturity Date: [_____________], subject to extension in accordance with the terms of the Loan Agreement
 
 
FOR VALUE RECEIVED, each of RUMBLEON, INC., a Nevada corporation, NEXTGEN PRO, LLC, a Delaware limited liability company, RMBL MISSOURI, LLC, a Delaware limited liability company, RMBL TEXAS, LLC, a Delaware limited liability company, and each of their Qualified Subsidiaries from time to time party to the Loan Agreement (individually, each, a “ Borrower ”, and collectively, “ Borrowers ”), from time to time, hereby promises to pay to the order of Hercules Capital, Inc., a Delaware limited partnership or the holder of this Secured Term Promissory Note (the “ Lender ”) at 400 Hamilton Avenue, Suite 310, Palo Alto, CA 94301 or such other place of payment as the holder of this Secured Term Promissory Note (this “ Term Note ”) may specify from time to time in writing, in lawful money of the United States of America, the principal amount of $[_____________] or such other principal amount as Lender has advanced to Borrowers, together with interest at a rate as set forth in Section 2.1(c) of the Loan Agreement based upon a year consisting of 360 days, with interest computed daily based on the actual number of days in each month.
 
This Term Note is the Term Note referred to in, and is executed and delivered in connection with, that certain Loan and Security Agreement dated as of April 30, 2018, by and among Borrowers, Hercules Capital, Inc., a Maryland corporation (the “ Agent ”) and the several banks and other financial institutions or entities from time to time party thereto as lender (as the same may from time to time be amended, modified or supplemented in accordance with its terms, the “ Loan Agreement ”), and is entitled to the benefit and security of the Loan Agreement and the other Loan Documents (as defined in the Loan Agreement), to which reference is made for a statement of all of the terms and conditions thereof. All payments shall be made in accordance with the Loan Agreement. All terms defined in the Loan Agreement shall have the same definitions when used herein, unless otherwise defined herein. An Event of Default under the Loan Agreement shall constitute a default under this Term Note.
 
Each Borrower waives presentment and demand for payment, notice of dishonor, protest and notice of protest under the UCC or any applicable law. Each Borrower agrees to make all payments under this Term Note without setoff, recoupment or deduction and regardless of any counterclaim or defense. Borrowers shall be jointly and severally liable with respect to all Secured Obligations pursuant to this Term Note and the Loan Agreement. This Term Note has been negotiated and delivered to Lender and is payable in the State of California. This Term Note shall be governed by and construed and enforced in accordance with, the laws of the State of California, excluding any conflicts of law rules or principles that would cause the application of the laws of any other jurisdiction.
 
 
 
 
[SIGNATURE PAGE TO TERM NOTE]
 
The undersigned have duly executed this Term Note.
 
 
 
RUMBLEON, INC.
 
SIGNATURE:                                                                
TITLE:                        
PRINT NAME:                
 
NEXTGEN PRO, LLC
 
SIGNATURE:                                                                
TITLE:                        
PRINT NAME:                 
 
RMBL MISSOURI, LLC
 
SIGNATURE:                                                                
TITLE:                        
PRINT NAME:                
 
RMBL TEXAS, LLC
 
SIGNATURE:                                                                
TITLE:                        
PRINT NAME:                  
 
 
 
 
EXHIBIT C
 
NAME, LOCATIONS, AND OTHER INFORMATION FOR BORROWER
 
1.
Borrower Representative hereby represents and warrants to Agent, on behalf of each Borrower, that each of Borrowers’ current names and organizational status is as follows:
 
Name:
RumbleON, Inc.
Type of organization:
corporation
State of organization:
Nevada
Organization file number:
Business ID - NV20131625617
Fiscal year end:
31-Dec
Federal taxpayer identification number:
46-3951329
Former Name(s):
Smart Server, Inc. (10/24/2013-2/13/2017)
 
 
Name:
NextGen Pro, LLC
Type of organization:
limited liability company
State of organization:
Delaware
Organization file number:
File #6297691
Fiscal year end:
31-Dec
Federal taxpayer identification number:
35-2584798
Former Name(s):
N/A
 
 
Name:
RMBL Missouri, LLC
Type of organization:
limited liability company
State of organization:
Delaware
Organization file number:
File # 6326654
Fiscal year end:
31-Dec
Federal taxpayer identification number:
81-5484099
Former Name(s):
LBMR Dealer MO, LLC (2/24/2017-2/28/2017)
 
 
Name:
RMBL Texas, LLC
Type of organization:
limited liability company
State of organization:
Delaware
Organization file number:
File #6681648
Fiscal year end:
31-Dec
Federal taxpayer identification number:
82-4802484
Former Name(s):
N/A
 
2.
Borrower Representative hereby r epresents and warrants to Agent, on behalf of Borrowers, that each Borrower’s chief executive office is located at the following location:
 
1431 Greenway Drive
Suite 775
Irving, TX. 75038
 
 
 
 
3.
Borrower Representative hereby represents and warrants to Agent, on behalf of Borrowers, that the Borrowers also utilize the following locations:
 
RumbleOn, Inc.
4521 Sharon Road
Suite 370
Charlotte, North Carolina 28211
 
 
RMBL Missouri, LLC
2100 E Outer Road
Scott City, MO. 63780
 
 
Bailee locations as set forth on Schedule attached hereto.
 
 
 
 
 
SCHEDULE OF BAILEE LOCATIONS
 
Bailee
 
Locations
 
ADESA, INC.
 
Adesa Golden Gate
18501 W. Stanford Road
Tracy, CA 95377
 
Adesa Kansas City
15511 Adesa Drive
Belton, MO 64012
COPART, INC.
 
All locations owned or operated by Copart in which vehicles owned by Borrowers, regardless of whether there is an existing lien on such vehicle, are located.
The current list of all Copart North American locations can be found at:
https://www.copart.com/locations/?region=NORTH_AMERICA
 
CYCLEEXPRESS, LLC (D/B/A NPA AUCTIONS)
 
NPA Atlanta
4800 North Commerce Drive, Suite 200
East Point, GA 30344
 
NPA Cincinnati
10132 Business Center Drive
Cincinnati, OH 45246
 
NPA Dallas
900 Gerault Road
Flower Mound, TX 75028
 
NPA Denver
8300 Blakeland Drive
Littleton, CO 80125
 
NPA Philadelphia
2578 Pearl Buck Road
Bristol, PA 19007
 
NPA San Diego
12400 Stowe Drive
Poway, CA 92064
LABRIER INVESTMETNS, LLC
 
3258 South East Outer Road South
Scott City, MO 63780
MANHEIM, INC.
 
Manhiem Indy
3110 S. Post Road
Indianapolis IN 46239
Manhiem Statesville
145 Auction Lane
Statesville, NC 28625
 
 
 
 
 
 
 
EXHIBIT D
 
BORROWER’S PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES
 
PATENTS
 
Owner
 
Description
 
Patent / ApplicationNumber
 
Issue / Application Date
 
NEXTGEN PRO, LLC
 
NEAR FIELD COMMUNICATION (NFC) VEHICLE IDENTIFICATION SYSTEM AND PROCESS
 
14/614,160
 
02/04/2015
 
 
 
TRADEMARKS
 
Owner
 
Description
 
Registration/ Serial Number
 
Registration/ Application Date
 
RUMBLEON, INC.
 
 
87/537,145
 
07/21/2017
 
RUMBLEON, INC.
 
 
87/532,685
 
07/18/2017
 
RUMBLEON, INC.
 
RUMBLEON
 
5,340,911
 
11/21/2017
 
RUMBLEON, INC.
 
 
87/532,644
 
07/18/2017
 
RUMBLEON, INC.
 
RUMBLEON
 
87/430,981
 
04/29/2017
 
NEXTGEN PRO, LLC
 
 
4,662,863
 
12/30/2014
 
 
COPYRIGHTS AND LICENSES
 
 
None
 
 
 
 
EXHIBIT E
 
DEPOSIT ACCOUNTS AND INVESTMENT ACCOUNTS
 
(a)
 
Accountholder
 
Account Numbers
 
Bank
 
Address
 
Description of Use
 
RumbleOn, Inc.
 
##########
 
Wells Fargo
 
4525 Sharon Road, 4th Floor
Charlotte, NC 28211
 
General business account.
 
RMBL Missouri, LLC
 
##########
 
Wells Fargo
 
4525 Sharon Road, 4th Floor
Charlotte, NC 28211
 
General business account.
 
NextGen Pro, LLC
 
##########
 
Wells Fargo
 
4525 Sharon Road, 4th Floor
Charlotte, NC 28211
 
Transactions between dealer partners and the Companies.
 
 
 
(b)
 
None
 
 
 
 
EXHIBIT F
 
COMPLIANCE CERTIFICATE
 
Hercules Capital, Inc.
 
400 Hamilton Avenue, Suite 310
 
Palo Alto, CA 94301
 
Reference is made to that certain
 
Loan and Security Agreement dated as of April 30, 2018, by and among RUMBLEON, INC., a Nevada corporation, NEXTGEN PRO, LLC, a Delaware limited liability company, RMBL MISSOURI, LLC, a Delaware liability company, RMBL TEXAS, LLC, a Delaware limited liability company, and each of their Qualified Subsidiaries from time to time party to the Loan Agreement (individually, each, a “ Borrower ”, and collectively, “ Borrowers ”), the several banks and other financial institutions or entities from time to time parties to this Agreement (collectively, “ Lender ”) and HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent and administrative agent for Lender (in such capacity “ Agent ”). All capitalized terms not defined herein shall have the same meaning as defined in the Loan Agreement.
 
The undersigned is an Officer of the Borrower Representative, knowledgeable of all Borrowers’ financial matters, and is authorized to provide certification of information regarding Borrowers; hereby certifies, in such capacity, that in accordance with the terms and conditions of the Loan Agreement, each Borrower is in compliance in all material respects for the period ending ___________ with all covenants, conditions and terms and hereby reaffirms that as of the date of the fiscal quarter ended _________________ all representations and warranties contained therein (except Sections 5.3 and 5.4 ) are true and correct on and as of the date of this Compliance Certificate with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, after giving effect in all cases to any standard(s) of materiality contained in the Loan Agreement as to such representations and warranties. Attached are the required documents and calculations supporting the above certification. The undersigned further certifies that the financial statements and calcu lations are prepared in accordance with GAAP (to the extent required pursuant to the terms of the Loan Agreement) and are consistent from one period to the next except as explained below.
 
REPORTING REQUIREMENT
 
REQUIRED
 
CHECK IF ATTACHED
 
Monthly Financial Statements ( Section 7.1(a) )
 
Monthly, within 30 days
 
☐
 
 
 
Quarterly Financial Statements (or link to 10-Q filing) ( Section 7.1(b) )
 
Quarterly, within 45 days or such later date as permitted by the SEC or under the applicable securities laws (which may be delivered by link through investor relations page)
 
☐
 
 
 
Annual Financial Statements (or link to 10-K) ( Section 7.1(c) )
 
Annually, within 90 days or such later date as is permitted by the SEC or under the applicable securities laws (which may be delivered by link through investor relations page)
 
☐
 
 
 
 
 
 
 
 
 
Compliance Certificate ( Section 7.1(d) )
 
Together with Monthly or Quarterly Statements
 
☐
 
 
 
A/R Agings Report (if A/R > $1,000,000) ( Section 7.1(e) )
 
Monthly, within 30 days
 
☐
 
 
 
A/P Agings Report (if A/P > $600,000) ( Section 7.1(e) )
 
Monthly, within 30 days
 
☐
 
 
 
Budget and Projections ( Section 7.1(g) )
 
Annually, within 60 days of fiscal year end, and promptly upon any Board approved update
 
☐
 
 
 
Daily Inventory Report (including detail of financed / not financed Inventory) ( Section 7.1(h) )
 
Every Business Day
 
☐
 
 
 
Material Statement, Report or Notice of any increased commitment, change in terms, non-renewal or default or any demand for payment received pursuant to Qualified Inventory Financing ( Section 7.1(i) )
 
When received
 
☐
 
 
 
FINANCIAL COVENANTS
 
REQUIRED
 
ACTUAL
 
Minimum Quarterly Revenue (after Tranche III Advance)
 
75% of Budget
 
☐ not applicable
Budget Quarterly Revenue
$                         
Actual Quarterly Revenue
$                         
% of Budget
 
Minimum Quarterly Adjusted EBITDA, if average cash balance is less than $15,000,000 (after Tranche III Advance)
 
$2,000,000
 
☐ not applicable
$                         
 
OTHER COVENANTS
 
REQUIRED
 
ACTUAL
 
Equipment Financing
 
Not to exceed $200,000
 
$                         
 
Letters of Credit (cash secured) except for security for leases
 
Not to exceed $250,000
 
$                         
 
 
 
 
 
 
Acquired Indebtedness
 
Not to exceed $100,000
 
$                         
 
Other Indebtedness
 
Not to exceed $750,000 (less on Equipment Financing, Letters of Credit and Acquired Indebtedness outstanding)
 
$                         
 
Inventory Financing
 
Not to exceed 85% of aggregate Inventory value less Inventory Financing Lenders’ aggregate cash collateral
 
(1) Aggregate Inventory value:
$                         
(2) Aggregate Inventory financing Lender cash collateral
$                         
Maximum Inventory financing permitted (line 1 less line 2)
$                         
Actual Inventory financing amount outstanding
$                         
 
Repurchases of stock from employees, directors or consultants
 
Not to exceed $100,000
 
$                         
 
Joint Ventures
 
Cash contributions not to exceed $100,00
 
$                         
 
Additional Investments
 
Not to exceed $750,000 (less Repurchases and Joint Ventures made during the term)
 
$                         
 
Investments in Foreign Subsidiaries
 
As approved by Agent
 
$                         
 
Cash Collateral and Security Deposits
 
Not to exceed $250,000
 
$                         
 
Landlord Waivers and Bailee Agreements
 
For locations where Collateral (other than non-Inventory vehicles) in excess of $400,000 is maintained
 
☐ all applicable locations covered
☐ landlord waiver or bailee agreement required for the following new location:
 
 
 
 
 
The undersigned hereby also confirms the below accounts represent all depository accounts and securities accounts presently open in the name of each Borrower or Subsidiary, as applicable.
 
 
 
Depository AC #
 
Financial Institution
 
Account Type (Depository / Securities)
 
Last Month Ending Account Balance
 
Purpose of Account
 
BORROWER Name/Address:
 
 
 
1
 
 
 
 
 
 
2
 
 
 
 
 
 
3
 
 
 
 
 
 
4
 
 
 
 
 
 
5
 
 
 
 
 
 
6
 
 
 
 
 
 
7
 
 
 
 
 
 
 
BORROWER SUBSIDIARY COMPANY Name/Address
 
 
 
1
 
 
 
 
 
 
2
 
 
 
 
 
 
3
 
 
 
 
 
 
4
 
 
 
 
 
 
5
 
 
 
 
 
 
6
 
 
 
 
 
 
7
 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO COMPLIANCE CERTIFICATE]
 
Very Truly Yours,
 
RUMBLEON, INC.
 
SIGNATURE:  
 
TITLE:  
 
PRINT NAME:  
 
 
 
 
EXHIBIT G
 
FORM OF JOINDER AGREEMENT
 
This Joinder Agreement (the “ Joinder Agreement ”) is made and dated as of [   ], and is entered into by and between__________________, a ___________ corporation (“ Subsidiary ”), and HERCULES CAPITAL, INC., a Maryland corporation (as “ Agent ”).
 
RECITALS
 
A.   Subsidiary’s Affiliate, RumbleON, Inc. (“ Company ”) [has entered/desires to enter] into that certain Loan and Security Agreement dated as of April 30, 2018, with the several banks and other financial institutions or entities from time to time party thereto as lender (collectively, the “ Lender ”) and Agent, as such agreement may be amended (the “ Loan Agreement ”), together with the other agreements executed and delivered in connection therewith;
 
B.   Subsidiary acknowledges and agrees that it will benefit both directly and indirectly from Company’s execution of the Loan Agreement and the other agreements executed and delivered in connection therewith;
 
AGREEMENT
 
NOW THEREFORE, Subsidiary and Agent agree as follows:
 
1.
The recitals set forth above are incorporated into and made part of this Joinder Agreement. Capitalized terms not defined herein shall have the meaning provided in the Loan Agreement.
 
2.
By signing this Joinder Agreement, Subsidiary shall be bound by the terms and conditions of the Loan Agreement the same as if it were a Borrower (as defined in the Loan Agreement) under the Loan Agreement, mutatis mutandis, provided however, that (a) with respect to (i) Section 5.1 of the Loan Agreement, Subsidiary represents that it is an entity duly organized, legally existing and in good standing under the laws of [____________], (b) neither Agent nor Lender shall have any duties, responsibilities or obligations to Subsidiary arising under or related to the Loan Agreement or the other Loan Documents, (c) that if Subsidiary is covered by Company’s insurance, Subsidiary shall not be required to maintain separate insurance or comply with the provisions of Sections 6.1 and 6.2 of the Loan Agreement, and (d) that as long as Company satisfies the requirements of Section 7.1 of the Loan Agreement, Subsidiary shall not have to provide Agent separate Financial Statements. To the extent that Agent or Lender has any duties, responsibilities or obligations arising under or related to the Loan Agreement or the other Loan Documents, those duties, responsibilities or obligations shall flow only to Company and not to Subsidiary or any other Person or entity. By way of example (and not an exclusive list): (i) Agent’s providing notice to Company in accordance with the Loan Agreement or as otherwise agreed among Company, Agent and Lender shall be deemed provided to Subsidiary; (ii) a Lender’s providing an Advance to Company shall be deemed an Advance to Subsidiary; and (iii) Subsidiary shall have no right to request an Advance or make any other demand on Lender.
 
3.
Subsidiary agrees not to certificate its equity securities without Agent’s prior written consent, which consent may be conditioned on the delivery of such equity securities to Agent in order to perfect Agent’s security interest in such equity securities.
 
4.
Subsidiary acknowledges that it benefits, both directly and indirectly, from the Loan Agreement, and hereby waives, for itself and on behalf on any and all successors in interest (including without limitation any assignee for the benefit of creditors, receiver, bankruptcy trustee or itself as debtor-in-possession under any bankruptcy proceeding) to the fullest extent provided by law, any and all claims, rights or defenses to the enforcement of this Joinder Agreement on the basis that (a) it failed to receive adequate consideration for the execution and delivery of this Joinder Agreement or (b) its obligations under this Joinder Agreement are avoidable as a fraudulent conveyance.
 
5.
As security for the prompt, complete and indefeasible payment when due (whether on the payment dates or otherwise) of all the Secured Obligations, Subsidiary grants to Agent a security interest in all of Subsidiary’s right, title, and interest in and to the Collateral.
 
[SIGNATURE PAGE FOLLOWS]
 
 
 
 [SIGNATURE PAGE TO JOINDER AGREEMENT]
 
SUBSIDIARY:
 
[  
]
 
 
By:                                                              
Name:                                                              
Title:                                                              
 
Address:
[                                                             
]
[                                                             
]
[                                                             
]
 
Telephone: [                                                              
]
email: [                                                              
]
 
 
 
AGENT:
 
HERCULES CAPITAL, INC.
 
 
 
By:             
 
Name:                        
 
Title:             
 
 
 
Address:
 
400 Hamilton Ave., Suite 310
 
Palo Alto, CA 94301
 
email: legal@herculestech.com; tharris@htgc.com
 
Telephone: 650-289-3060
 
 
 
 
EXHIBIT H
 
ACH DEBIT AUTHORIZATION AGREEMENT
 
Hercules Capital, Inc.
 
400 Hamilton Avenue, Suite 310
 
Palo Alto, CA 94301
 
Re: Loan and Security Agreement dated as of April 30, 2018 (as amended, restated, supplemented or otherwise modified from time to time, the “ Agreement ”) by and among RUMBLEON, INC., NEXTGEN PRO, LLC, RMBL MISSOURI, LLC, RMBL TEXAS, LLC, and each of their Qualified Subsidiaries from time to time party to the Loan Agreement (individually, each, a “ Borrower ”, and collectively, “ Borrowers ”) and Hercules Capital, Inc., as administrative agent (“ Agent ”) and the lenders party thereto (collectively, “ Lender ”).
 
In connection with the above referenced Agreement, the undersigned Borrower hereby authorizes Agent to initiate debit entries for (i) the periodic payments due under the Agreement and (ii) out-of-pocket legal fees and costs incurred by Agent or Lender pursuant to Section 11.11 of the Agreement to its account indicated below. The undersigned authorizes the depository institution named below to debit to such account.
 
  DEPOSITORY NAME
 
BRANCH
 
CITY
 
STATE AND ZIP CODE
 
TRANSIT/ABA NUMBER
 
ACCOUNT NUMBER
 
 
 
This authority will remain in full force and effect so long as any amounts are due under the Agreement.
 
RUMBLEON, INC.
 
By:                                                                     
 
Name:                                                                     
 
Date:                                                                     
 
 
 
 
 
 
SCHEDULE 1.1
 
COMMITMENTS
 
LENDER
 
TRANCHE I COMMITMENT
 
TRANCHE II COMMITMENT
 
TRANCHE III COMMITMENT
 
TRANCHE IV COMMITMENT
 
Hercules Capital, Inc.
 
$5,000,000
 
$2,500,000
 
$7,500,000
 
$5,000,000, in Agent’s sole discretion, upon approval by Agent’s investment committee
 
TOTAL COMMITMENTS
 
$5,000,000
 
$2,500,000
 
$7,500,000
 
$5,000,000, in Agent’s sole discretion, upon approval by Agent’s investment committee
 
 
 
 
 
 
 
 
 
 
 
 
SCHEDULE 5.14
 
CAPITALIZATION AND SUBSIDIARIES
 
Parent:
 
Class
No. of Authorized Shares
No. of Shares Outstanding
No. of Shares
Issuable upon
Exercise of any
Options, Warrants
or Convertible
Notes
Class A Common Stock, $0.001 par value
 
 1,000,000
 
 1,000,000
 
 -
 
Class B Common Stock, $0.001 par value
 
99,000,000
 
11,928,541
 
218,250
 
Preferred Stock, $0.001 par value
 
  10,000,000
 
0
 
  -
 
 
There are 741,000 restricted stock units outstanding, which have been granted under the Company’s Stock Incentive Plan.
 
Subsidiaries:
 
Entity
Owner
Ownership %
NextGen Pro, LLC
RumbleON
100%
RMBL Missouri, LLC
RumbleON
100%
RMBL Texas, LLC
RumbleON
100%
 
 
 
  Exhibit 10.2
 
INTERCREDITOR AGREEMENT
 
THIS INTERCREDITOR AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, this “ Agreement ”) is entered into as of April 30, 2018, by and between (a) HERCULES CAPITAL, INC., a Maryland corporation, in its capacity as administrative agent under the Hercules Loan Agreement, as defined below (“ Hercules ”), and (b) ALLY BANK (“ Ally Bank ”), and ALLY FINANCIAL INC. (“ Ally Financial ”, and together with Ally Bank, collectively, the “ Ally Parties ”), as lenders under the Ally Financing Agreement, as defined below. Hercules and the Ally Parties are each sometimes referred to herein individually as a “ Lender ” and collectively as “ Lenders ”.
 
RECITALS
 
 
A.   Hercules, RUMBLEON, INC., a Nevada corporation (“ Parent ”), NEXTGEN PRO, LLC, a Delaware limited liability company (“ NextGen Pro ”), RMBL MISSOURI, LLC, a Delaware limited liability company (“ RMBL Missouri ”), RMBL TEXAS, LLC, a Delaware limited liability company (“ RMBL Texas ”), and certain other persons from time to time party hereto (together with Parent, NextGen Pro, RMBL Missouri and RMBL Texas, individually, each, a “ Borrower ”, and collectively, “ Borrowers ”) are parties to that certain Loan and Security Agreement, dated as of April 30, 2018 (as may be amended, modified, restated, replaced, or supplemented from time to time, the “ Hercules Loan Agreement ”), whereby Hercules has made or will make available to Borrower a secured loan facility in the maximum principal amount of Twenty Million Dollars ($20,000,000). The facility contemplated by the Hercules Loan Agreement shall be referred to herein as the “ Hercules Loan ”.
 
 
B.   The Ally Parties and RMBL Missouri are parties to that certain Inventory Financing and Security Agreement, dated as of February 16, 2018 (as the same has been and may be further amended, modified, restated, replaced, or supplemented from time to time pursuant to the terms herein, the “ Ally Financing Agreement ”), whereby the Ally Parties have agreed to make available to RMBL Missouri a secured loan facility up to an aggregate principal amount of Twenty-Five Million Dollars ($25,000,000). The facility contemplated by the Ally Financing Agreement shall be referred to herein as the “ Ally Loan ”.
 
C.   All of the obligations and indebtedness of Borrower to Hercules under the Hercules Loan Documents are secured by the Hercules Collateral and all of the obligations and indebtedness of Borrower to the Ally Parties under the Ally Financing Documents are secured by the Ally Collateral, each as defined below.
 
D.   Hercules and the Ally Parties desire to set forth in this Agreement their respective rights and obligations with respect to the Collateral, as defined below.
AGREEMENT
 
The parties agree as follows:
 
1.
DEFINITIONS AND CONSTRUCTION
 
1.1   Definitions . As used in this Agreement, the following terms shall have the following definitions:
 
“ Account ” is any “account” as defined in the UCC, and includes, without limitation, all accounts receivable and other sums owing to any Borrower.
 
“ Account Control Agreement ” means any agreement entered into by and among Hercules, any Borrower and a third party bank or other institution in which any Borrower maintains a Deposit Account or Investment Account and which perfects Hercules’s first priority security interest in and/or provides rights to exercise exclusive control with respect to the subject account or accounts.
 
 
 
 
“ Ally Bank ” has the meaning given to such term in the preamble.
 
“ Ally Collateral ” means the property of certain Borrowers described in   Exhibit B .
 
“ Ally Credit Balance ” means moneys paid by Borrower to Ally Bank pursuant to that certain Credit Balance Agreement, dated as of February 16, 2018, by and between Ally Bank and RMBL Missouri, provided that such amount shall not exceed 10% of the approved credit line under the Ally Financing Documents.
 
“ Ally Debt Cap ” means $27,500,000 (or such higher amount as permitted under the Hercules Loan Agreement as Qualified Inventory Financing (as defined in the Hercules Loan Agreement)).
 
“ Ally Financed Vehicles ” means, as of any date of determination, vehicles then held by RMBL Missouri and acquired with or held as a result of inventory financing provided pursuant to the Ally Financing Agreement, including any vehicle with respect to which the Ally Parties have made a loan or advance secured by such vehicle and which is specifically identified in written or electronic documents customarily or regularly prepared and delivered to Borrower for the purpose of identifying the vehicle as one for which the Ally Parties have given new value.
 
“ Ally Financial ” has the meaning given to such term in the preamble.
 
“ Ally Financing Agreement ” has the meaning given to such term in Recital B.
 
“ Ally Financing Documents ” means the Ally Financing Agreement, any addenda thereto, including the Addendum to Inventory Financing and Security Agreement, effective as of February 16, 2018, the Guaranty dated as of February 16, 2018, by Parent for the benefit of the Ally Parties, the General Security Agreement, dated as of February 16, 2018, among the Ally Parties and Parent, the Cross Collateral, Cross Default and Guaranty Agreement, dated as of February 16, 2018, by and among the Ally Parties, RMBL Missouri and Parent, the Credit Balance Agreement, dated as of February 16, 2018, by and between Ally Bank and RMBL Missouri, the SmartCash Agreement, dated as of February 16, 2018, by and between Ally Bank and RMBL Missouri, and all other documents entered into in connection with the Ally Financing Agreement, in each case as may be amended, modified, restated, replaced, or supplemented from time to time pursuant to the terms herein.
 
“ Ally Loan ” has the meaning given to such term in Recital B.
 
“ Ally Parties ” has the meaning given to such term in the preamble.
 
“ Ally Priority Collateral ” means, as of any date of determination, all right, title, and interest of RMBL Missouri in and to any Ally Financed Vehicle. For further clarity, if no Event of Default has occurred, Proceeds of any Ally Financed Vehicle shall cease to constitute Ally Priority Collateral upon the earlier of payment to the Ally Parties of the advance associated with such Ally Financed Vehicle or 30 days after RMBL Missouri’s sale or disposition of such Vehicle. After the occurrence of an Event of Default, provided that the Ally Parties have provided notice of such Event of Default to Hercules within 30 days of such Event of Default, Proceeds of all Collateral constituting Ally Financed Vehicles at the time that the Event of Default occurred shall constitute Ally Priority Collateral (or if notice was provided later than 30 days after such Event of Default, Collateral constituting Ally Financed Vehicles as of the date that is 30 days prior to the date the notice of Event of Default was given).
 
“ Bankruptcy Code ” means the federal bankruptcy law of the United States as from time to time in effect, currently as Title 11 of the United States Code. Section references to current sections of the Bankruptcy Code shall refer to comparable sections of any revised version thereof if section numbering is changed.
 
“ Borrower ” and “ Borrowers ” have the respective meanings given to such terms in the preamble.
 
“ Business Day ” means any day other than Saturday, Sunday and any other day on which banking institutions in the State of California are closed for business.
 
 
2
 
 
“ Claim ” means, with respect to any Lender, any and all present and future “claims” (used in its broadest sense, as contemplated by and defined in Section 101(5) of the Bankruptcy Code, but without regard to whether such claim would be disallowed under the Bankruptcy Code) of such Lender now or hereafter arising or existing under or relating to the respective Loan Documents (as applicable), whether joint, several, or joint and several, whether fixed or indeterminate, due or not yet due, contingent or non-contingent, matured or unmatured, liquidated or unliquidated, or disputed or undisputed, whether under a guaranty or a letter of credit, and whether arising under contract, in tort, by law, or otherwise, any interest or fees thereon (including interest or fees that accrue after the filing of a petition by or against Borrower under the Bankruptcy Code, irrespective of whether allowable under the Bankruptcy Code), any costs of Enforcement Actions, all reasonable attorneys’ fees and costs incurred by a Lender under, in connection with or related to its respective Loan Documents, and all prepayment or termination premiums and other fees and sums payable by Borrower to Lender under its respective Loan Documents.
 
“ Collateral ” means, as the context may require, the Hercules Collateral and/or the Ally Collateral.
 
“ Deposit Account ” means any “deposit account” of Borrower as such term is defined in the UCC, and includes any checking account, savings account, or certificate of deposit.
 
 “ Enforcement Action ” means, with respect to any Lender and with respect to any Claim of such Lender or any item of Collateral in which such Lender has or claims a Lien or right of offset, any action, whether judicial or nonjudicial, to repossess, collect, accelerate, offset, recoup, give notification to third parties with respect to, sell, dispose of, foreclose upon, give notice of sale, disposition, or foreclosure with respect to, or obtain equitable or injunctive relief with respect to, such Claim or Collateral. The filing by any Lender, or the joining in the filing by any Lender, of an Insolvency Proceeding against Borrower is also an Enforcement Action.
 
“ Event of Default ” means an “Event of Default”, as defined in the Hercules Loan Documents, or a “Default”, as defined in the Ally Financing Documents.
 
“ Hercules ” has the meaning given to such term in the preamble.
 
“ Hercules Collateral ” means the property of Borrower described in Exhibit A .
 
“ Hercules Loan ” has the meaning given to such term in Recital A .
 
“ Hercules Loan Agreement ” has the meaning given to such term in Recital A .
 
“ Hercules Loan Documents ” means the Hercules Loan Agreement and all of the “Loan Documents” as defined in the Hercules Loan Agreement except any warrant issued by Borrower, in each case as may be amended, modified, restated, replaced, or supplemented from time to time.
 
“ Hercules Priority Collateral ” means, as of any date of determination, all of the Hercules Collateral, other than Ally Priority Collateral as of such date.
 
“ Insolvency Event ” means any distribution, division, or application, partial or complete, voluntary or involuntary, by operation of law or otherwise, of all or any part of the property of Borrower or the Proceeds thereof to the creditors of Borrower , or the readjustment of any of the Claims, whether by reason of liquidation, bankruptcy, arrangement, receivership, assignment for the benefit of creditors or any other action or proceeding involving the readjustment of all or any part of any of the Claims, or the application of the property of Borrower to the payment or liquidation thereof, or upon the dissolution or other winding up of Borrower ’s business, or upon the sale of all or any substantial part of Borrower ’s property .
 
“ Insolvency Proceeding ” means any bankruptcy, assignment for the benefit of creditors, or reorganization of a Borrower.
 
“ Investment Accounts ” means any account holding Investment Property of a Borrower.
 
 
3
 
 
“ Lender ” or “ Lenders ” have the meanings given to such terms in the preamble.
 
“ Lien ” means a lien or security interest in Collateral to secure a Claim of a Lender.
 
“ Loan ” means, as the context may require, singularly the Hercules Loan, the Ally Loan, or any other extension of credit pursuant to a Loan Agreement; and “ Loans ” means collectively the Hercules Loan, the Ally Loan, and any other extension of credit pursuant to a Loan Agreement.
 
“ Loan Agreement ” means, as the context may require, singularly the Hercules Loan Agreement or the Ally Financing Agreement; and “ Loan Agreements ” means collectively, the Hercules Loan Agreement and the Ally Financing Agreement.
 
“ Loan Documents ” means, as applicable, the Hercules Loan Documents and the Ally Financing Documents.
 
“ Non-filing Lender ” has the meaning given to such term in Section 3.6 .
 
“ Option Period ” has the meaning given to such term in Section 4(b ).
 
“ Parent ” has the meaning given to such term in the preamble.
 
“ Priority Collateral ” means, as the context may require and as of any date of determination, the Hercules Priority Collateral or the Ally Priority Collateral.
 
“ Proceeds ” means “proceeds,” as such term is defined in the UCC.
 
“ Proceeds of Collection ” means, collectively, the Proceeds of Collateral from any Enforcement Action taken with respect to such Collateral under the Loan Documents, or any distribution of any Borrower’s assets of any kind or character upon any dissolution or winding up or total or partial liquidation or reorganization, whether voluntary or involuntary, or adjustment or protection or relief or composition of Borrower or Borrower’s debts, or in any Insolvency Event, including without limitation, bankruptcy, insolvency, receivership, arrangement, reorganization, relief or other proceeding of any Borrower or upon an arrangement for the benefit of Borrower’s creditors or any other marshalling of Borrower’s assets and liabilities, in each case, after the occurrence and during the continuance of an Event of Default.
 
“ Purchase ” has the meaning given to such term in Section 4(b) .
 
“ Purchase Documents ” has the meaning given to such term in Section 4(b) .
 
“ Purchase Notice ” has the meaning given to such term in Section 4(a) .
 
“ Purchase Price ” has the meaning given to such term in Section 4(b) .
 
“ RMBL Missouri ” has the meaning given to such term in the preamble.
 
“ UCC ” means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of California; provided, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of, or remedies with respect to any Lender’s Lien on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of California, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions. Unless otherwise defined herein, terms that are defined in the UCC and used herein shall have the meanings given to them in the UCC.
 
 
4
 
 
1.2            Other Interpretive Provisions . References in this Agreement to “Recitals,” “Sections,” and “Exhibits” are to recitals, sections, and exhibits herein and hereto unless otherwise indicated. References in this Agreement to any document, instrument or agreement shall include (a) all exhibits, schedules, annexes and other attachments thereto, (b) all documents, instruments or agreements issued or executed in replacement thereof, and (c) such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified and supplemented from time to time and in effect at any given time. The words “include” and “including” and words of similar import when used in this Agreement shall not be construed to be limiting or exclusive. The Recitals constitute a part of the agreement among the parties hereto.
 
2.
INTERCREDITOR ARRANGEMENTS
 
2.1   Priority of Security Interests .
 
(a)   Notwithstanding any contrary priority established by (i) the filing dates of their respective financing statements, (ii) the recording dates of any other security perfection documents, (iii) which Lender has possession of, or control over, any of the Collateral or (iv) any statute or rule of law to the contrary, the Lenders agree that, except as otherwise provided under Section 3 :
 
(i)   As of any date of determination, the Liens of the Ally Parties in Collateral constituting Ally Priority Collateral, determined as of such date, shall be senior in rank and order of priority and enforcement to the Liens and enforcement rights of Hercules in and against such Collateral;
 
(ii)   As of any date of determination, the Liens of Hercules in Collateral constituting Hercules Priority Collateral, determined as of such date, shall be senior in rank and order of priority and enforcement to the Liens and enforcement rights of the Ally Parties in and against such Collateral;
 
(iii)   As of any date of determination, the Liens of the Ally Parties in Collateral constituting Hercules Priority Collateral, determined as of such date, shall be junior and subordinate in rank, priority and enforcement to the Lien and enforcement rights of Hercules in and against such Collateral;
 
(iv)   As of any date of determination, the Liens of Hercules in Collateral constituting Ally Priority Collateral, determined as of such date, shall be junior and subordinate in rank, priority and enforcement to the Lien and enforcement rights of the Ally Parties in and against such Collateral; and
 
(v)   The Proceeds of Collection of the Hercules Priority Collateral and the Ally Priority Collateral shall be distributed as provided in Section 3 below.
 
(b)   The relative priorities set forth in subsection (a) above are subject to the following:
 
(i)   No Lender shall challenge or contravene the creation, attachment, perfection or enforceability of the Lien of the other Lender in its respective Collateral. The relative priorities described in Section 2.1(a) above, shall not apply to, however, and the provisions of this Agreement shall not be effective as to, any Lien which otherwise would be prior and superior, which Lien, by reason of any act or omission to act by the Lender whose rights therein under the Agreement would be superior, is judicially determined as not to be effective, or is rendered ineffective by reason of any act or omission to act of any third party to this Agreement; provided that such determination is not made on the basis of a claim or motion advanced by or on behalf of the other Lender.
 
(ii)   A Lender’s relative priority in the Proceeds (within the meaning of the UCC, including insurance proceeds) of an asset of a Borrower shall be determined based upon that Lender’s relative priority in the asset from which such Proceeds arose, as set forth in subsection (a) above, except as expressly provided otherwise in the defined term “Ally Priority Collateral”.
 
 
5
 
 
(iii)   If a Lender conducts an Enforcement Action, such Lender shall provide the other Lender with copies of all demands, communications, correspondence, and pleadings which relate to such Enforcement Action and a written statement of the results of such liquidation and the distribution of the Proceeds of Collection. The Proceeds of Collection shall be distributed in accordance with Section 3 below.
 
2.2   Limitation on Further Loans . After the date hereof, except pursuant to the Ally Financing Agreement and subject to the Ally Debt Cap, the Ally Parties may not make loans to or otherwise extend credit to Borrower without notice to and the consent of Hercules.
 
2.3   Transfer of Interest in Loans . Any sale or transfer of an interest in this Agreement and the Loan Documents shall be voidable at the option of any other Lender unless the following provisions are satisfied:
 
(a)   Consent . Each of Hercules and the Ally Parties agree that each of them will not transfer any of its interest in its Loan Documents or its Loan without first delivering a copy of this Agreement to the proposed transferee or assignee, and obtaining the acknowledgment of the proposed transferee or assignee that the transfer or assignment is subject to all of the terms of this Agreement; provided , however , each Lender may sell to any other financial entity participation interests in such Lender’s rights under this Agreement and its respective Loan Documents, provided that notwithstanding the sale of participations, such Lender shall remain solely responsible for the performance of its obligations under this Agreement and its applicable Loan Documents, and the other Lender shall continue to deal solely and directly with such Lender in connection with this Agreement and its Loan Documents unless otherwise agreed to in writing by each Lender.
 
(b)   Assumption of Obligations . The transferee shall assume all obligations of the transferring Lender with respect to the portion of the transferor’s interest under this Agreement and the applicable Loan Documents; provided that to the extent the transferor shall not transfer the entirety and shall retain any portion of its interest in its Loan Document, the transferor shall retain its obligations under this Agreement, its Loan Agreement and its other applicable Loan Documents with respect to that portion of its interest.
 
2.4   Bailee for Perfection . Each Lender hereby appoints the other Lender as agent for the purposes of perfecting its Liens in and on any of its Collateral in the possession or under the control of such other Lender; provided, that, a Lender in possession or having control of any Collateral shall not have any duty or liability to protect or preserve any rights pertaining to any of the other Lender’s Collateral and, except for gross negligence or willful misconduct as determined pursuant to a final non-appealable order of a court of competent jurisdiction, the non-possessing and/or non-controlling Lender hereby waives and releases the other Lender from all claims and liabilities arising pursuant to the possessing Lender’s role as bailee with respect to such Collateral, so long as the possessing and/or controlling Lender shall use the same degree of care with respect thereto as the possessing and/or controlling Lender uses for similar property pledged to the possessing and/or controlling Lender as collateral for indebtedness of others to the possessing and/or controlling Lender.
 
2.5   Insolvency Proceeding . In any Insolvency Proceeding, the Collateral of each Lender shall include applicable Collateral acquired by Borrower, or arising, after the commencement of the Insolvency Proceeding, and this Agreement shall continue to apply during any such Insolvency Proceeding.
 
 
6
 
 
3.
PAYMENTS AND REMEDIES UPON AN EVENT OF DEFAULT
 
3.1   Exercise of Remedies by Hercules . Notwithstanding anything to the contrary contained in this Agreement or in the Hercules Loan Agreement, upon the occurrence of an Event of Default, Hercules shall be free at all times to exercise or to refrain from exercising any and all rights and remedies it may have with respect to the Hercules Priority Collateral under the Hercules Loan Documents or under applicable law (and continue to receive regularly scheduled payments or any prepayment of the Hercules Loans pursuant to the terms therein). In no event shall Hercules take any Enforcement Action against any Collateral then constituting Ally Priority Collateral without the prior written consent of the Ally Parties, provided that with respect to Ally Priority Collateral consisting of cash Proceeds maintained in Deposit Accounts or Investment Accounts subject to an Account Control Agreement in favor of Hercules, Hercules may give notice of exclusive control with respect to such Deposit Account or Investment Account and, if required pursuant to the terms of such Account Control Agreement cause the transfer of funds or assets therefrom pending determination which portion thereof constitutes Ally Priority Collateral, provided further that amounts constituting Ally Priority Collateral shall be received by Hercules in trust for and shall be promptly paid over to the Ally Parties for application to the payments of amounts due in respect of the Claims of the Ally Parties until such Claims are paid in full, subject to the Ally Debt Cap.
 
3.2   Exercise of Remedies by Ally . Notwithstanding anything to the contrary contained in this Agreement or in the Ally Financing Agreement, upon the occurrence of an Event of Default, the Ally Parties shall be free at all times to exercise or to refrain from exercising any and all rights and remedies it may have with respect to the Ally Priority Collateral under the Ally Financing Documents or under applicable law (and continue to receive regularly scheduled payments or any prepayment of the Ally Loans pursuant to the terms therein). In no event shall any one of the Ally Parties take any Enforcement Action against any Collateral then constituting Hercules Priority Collateral without the prior written consent of Hercules.
 
3.3   Application of Proceeds of Collection of Ally Priority Collateral after an Event of Default . Notwithstanding anything to the contrary in the Loan Documents, as among the Lenders, the Proceeds of Collection of all Collateral then constituting Ally Priority Collateral, determined as of the date of the occurrence of an Event of Default, shall upon receipt by either Lender, after the occurrence and during the continuation of an Event of Default be paid to and applied as follows :
 
(a)   First , to the payment of then outstanding reasonable out-of-pocket costs and expenses of the Ally Parties (i) expended to preserve the value of the Ally Priority Collateral, (ii) of foreclosure or suit with respect to Ally Priority Collateral, if any, and (iii) of such sale, foreclosure or suit with respect to the Ally Priority Collateral;
 
(b)   Second , to the Ally Parties in an amount up to the Ally Debt Cap to be applied to the Claims of the Ally Parties;
 
(c)   Third , to Hercules in an amount up to Hercules’s Claims until all such Claims are satisfied in full;
 
(d)   Fourth , to the Ally Parties in an amount up to the Ally Parties’ Claims until all such Claims are satisfied in full; and
 
(e)   Fifth , to Borrowers or whomsoever may be lawfully entitled to receive the same.
 
3.4   Application of Proceeds of Collection of Hercules Priority Collateral after an Event of Default . Notwithstanding anything to the contrary in the Loan Documents, as among the Lenders, the Proceeds of Collection of all Collateral then constituting Hercules Priority Collateral shall upon receipt by either Lender, after the occurrence of an Event of Default be paid to and applied as follows:
 
(a)   First , to the payment of then outstanding reasonable out-of-pocket costs and expenses of Hercules’s (i) expended to preserve the value of the Hercules Priority Collateral, (ii) of foreclosure or suit with respect to Hercules Priority Collateral, if any, and (iii) of such sale, foreclosure or suit with respect to the Hercules Priority Collateral;
 
 
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(b)   Second , to Hercules in an amount up to Hercules’s Claims until all such Claims are satisfied in full;
 
(c)   Third , to the Ally Parties in an amount up to the Claims of the Ally Parties until all such Claims are satisfied in full; and
 
(d)   Fourth , to Borrowers or whomsoever may be lawfully entitled to receive the same.
 
3.5   Insurance . In the event of any loss affecting any Collateral, the Lender having a senior Lien in the affected Collateral under this Agreement shall, subject to Borrower ’s rights under the applicable Loan Documents, have the sole and exclusive right (but not the obligation) to adjust settlement of any insurance policy applicable to such Collateral. All Proceeds of insurance applicable to the affected Collateral shall (subject to Borrower ’s rights under the applicable Loan Documents) be applied in the same manner set forth in Sections 3.3 and 3.4 with respect to such Collateral itself and other Proceeds thereof.
 
3.6   Insolvency Events . In the event of any Insolvency Event, then, and in any such event, and subject to any subordination arrangements to which the Lenders may be subject, (a) all payments and distributions of any kind or character, whether in cash or property or securities in respect of the Lenders’ Claims shall be distributed pursuant to the provisions of Sections 2.1 , 3.3 and 3.4 hereof; (b) each Lender shall promptly file a claim or claims, on the form required in such proceeding, for the full outstanding amount of such Lender’s Claim, and shall use its commercially reasonable efforts to cause said claim or claims to be approved; (c) each of the Lenders hereby irrevocably agrees that, to the extent that it fails timely to do so (a “ Non-filing Lender ”), the other Lender may in the name of the Non-filing Lender, or otherwise, file and prove up any and all claims of the Non-filing Lender relating to the Non-filing Lender’s Claim; (d) in the event that, notwithstanding the foregoing, but subject to the provisions of Sections 2.1 , 3.3 and 3.4 , any payment or distribution of any kind or character, whether in cash, properties or securities, shall be received by a Lender in excess of the amount agreed to herein, then the portion of such payment or distribution in excess of such Lender’s permitted amount shall be received by such Lender in trust for and shall be promptly paid over to the other Lender for application to the payments of amounts due on the other Lender’s Claims; and (e) each of the Lenders hereby irrevocably agrees that neither Lender shall assert or otherwise approve, without the prior written consent of the other Lender, any claim, motion, objection or argument in respect of the other Lender’s Collateral in connection with any Insolvency Proceeding which could otherwise be asserted or raised in connection with such Insolvency Proceeding (including, without limitation, any claim, motion, objection or argument seeking adequate protection or relief from the automatic stay in respect of such Collateral), that is otherwise inconsistent with the terms of this Agreement. The Ally Parties will not object to Hercules providing debtor in possession financing, provided that such debtor in possession financing does not vary the relative priority of the Claims of the Ally Parties or adversely affect the Ally Parties’ Lien on the Ally Priority Collateral. Each Lender agrees that if an Insolvency Event occurs, such Lender will not seek relief from automatic stay with respect to the other Lender’s Priority Collateral or oppose a request by the other Lender for relief from the automatic stay with respect to the other Lender’s Priority Collateral.
 
3.7   Return of Payments . To the extent any payment for the account of Borrower is required to be returned as a voidable transfer or otherwise, the Lenders shall contribute to one another as is necessary to ensure that such return of payment is in accordance with the terms of this Agreement.
 
3.8   Foreclosure .
 
(a)   Credit Bid By Lenders .  Hercules agrees that the Ally Parties shall have the right to credit bid under Section 363(k) of the Bankruptcy Code with respect to, or otherwise object to any such sale or other disposition of, the Ally Priority Collateral and the Ally Parties agree that Hercules shall have the right to credit bid under Section 363(k) of the Bankruptcy Code with respect to, or otherwise object to any such sale or other disposition of, the Hercules Priority Collateral; provided, however, that the Ally Parties shall not be deemed to have agreed to any “credit bid” by Hercules in connection with the sale or other disposition of Collateral which includes Collateral then constituting Ally Priority Collateral, and Hercules shall not be deemed to have agreed to any “credit bid” by the Ally Parties in connection with the sale or other disposition of Collateral which includes Collateral then constituting Hercules Priority Collateral.
 
 
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(b)   Cash Bid for Account of One Lender .  No Lender shall make or cause to be made a cash bid at any foreclosure sale or other sale of any of the Collateral without the prior written consent of the other Lender, unless the Proceeds of the amount of such bid after allocation in accordance with Section 3.3 or 3.4 , as applicable, will be equal to or in excess of the amount of the other Lender’s Claims, as demonstrated by calculations satisfactory to such other Lender.  If a cash bid is made and is successful, then (i) the Proceeds of the sale shall be allocated as set forth in Section 3.3 or 3.4 as applicable, and (ii) the Lender that entered the successful bid shall acquire the Collateral so purchased for its own account, and the other Lender shall have no further interest in that Collateral upon the payment to such other Lender of the shares of the Proceeds in accordance with Section 3.3 or 3.4 as applicable.  The Proceeds allocated under the foregoing clause (i) shall be allocated between the Lenders pursuant to Sections 3.3 or 3.4 as applicable, according to the net book value (per Borrowers’ books) of their respective Priority Collateral which is a part of such Collateral (and Accounts shall be valued at face amount).
 
4.
PURCHASE OPTION .
 
(a)   Purchase Option Triggers . (i) At any time after acceleration of either Loan, (ii) at any time during an Event of Default, and (iii) at any time following the commencement of an Insolvency Proceeding, Hercules shall have the right, but not obligation, upon giving written notice to the Ally Parties, to acquire from the Ally Parties all (but not less than all) of the right, title, and interest of the Ally Parties in and to the Ally Loan and the Ally Financing Documents (a “ Purchase Notice ”).
 
(b)   Consummation of Purchase . Upon the Ally Parties’ receipt of the Purchase Notice, Hercules irrevocably shall be committed to acquire from the Ally Parties, and the Ally Parties irrevocably shall be committed to sell to Hercules, all (but not less than all) of the aggregate amount of the Ally Loan and the right, title, and interest of the Ally Parties in and to the Ally Financing Documents (the “ Purchase ”), by paying to the Ally Parties, within ten (10) Business Days (the “ Option Period ”) following receipt of the Purchase Notice, in immediately available funds by Federal funds wire transfer, a purchase price (the “ Purchase Price ”) equal to: 100% of the outstanding balance with respect to the Ally Loan due thereunder (including, without limitation, principal, interest accrued and unpaid thereon and any unpaid fees and reasonable and documented expenses to the extent earned or due and payable in accordance with the Ally Financing Documents). The Ally Parties agree to provide customary loan sale documents (the “ Purchase Documents ”) to effectuate the Purchase within three (3) Business Days following receipt of the Purchase Notice and shall provide copies of all of the Ally Financing Documents then in effect. Upon execution and delivery of the Purchase Documents and payment of the Purchase Price, the Ally Parties (i) shall assign and deliver to Hercules the Ally Financing Documents, with appropriate assignment and endorsement, and any Collateral in its possession, and (ii) shall execute and deliver such other documents, instruments, and agreements reasonably necessary to effect such assignment. The Purchase shall be without any representation, recourse, or warranty, except that the Ally Parties shall represent and warrant to Hercules (i) the amount of principal, interest and fees owed to the Ally Parties on the closing date of the Purchase, (ii) that none of the Ally Parties has assigned or encumbered its rights in the Ally Loan or the Ally Financing Documents, (iii) that the Ally Financing Documents, as provided by the Ally Parties are the complete and correct forms thereof, and (iv) that each of the Ally Parties owns and has the unrestricted right to transfer to Hercules all right, title, and interest with respect to the Ally Financing Documents at no expense or charge to Hercules other than payment of the Purchase Price. In the event the Ally Parties do not timely comply with the respective obligations set forth above, the Option Period shall be extended, provided that the foregoing shall not constitute a waiver by Hercules for any other remedies it may have in law or equity for failure by the Ally Parties to timely comply with their respective obligations. Upon receipt of the Purchase Notice, the Ally Parties shall cease and refrain from exercising any Enforcement Actions until the expiration of the Option Period.
 
5.
EXCULPATION OF AND DELEGATION BY LENDERS
 
5.1   Exculpation . In connection with any exercise of Enforcement Actions hereunder, no Lender or any of its partners, or any of their respective directors, officers, employees, attorneys, accountants, or agents shall be liable as such to any other Lender for any action taken or omitted by it or them, except with respect to any violation of this Agreement or any gross negligence or willful misconduct.
 
 
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5.2   Delegation of Duties . Each Lender may execute any of its powers and perform any duties hereunder either directly or by or through agents or attorneys-in-fact. Each Lender shall be entitled to advice of counsel concerning all matters pertaining to such powers and duties.
 
6.
RIGHTS IN THE WARRANTS
 
Notwithstanding anything to the contrary herein, no warrants issued to any Lender (or any affiliate thereof) by Borrower, the stock issuable thereunder, any equity securities purchased by any Lender (or any affiliate thereof), any amounts paid thereunder, any dividends, or any other rights in connection therewith shall be subject to the terms and conditions of this Agreement. Nothing herein shall affect any Lender’s rights (or the rights of any affiliate thereof as assignee) under any such warrants or stock to administer, manage, transfer, assign, or exercise such warrants or stock for its own account.
 
7.
NO RESPONSIBILITY FOR INVESTIGATION
 
Each of the Lenders represents that it has made, and agrees that it will continue to make its own independent investigation of the financial condition and affairs of Borrowers in connection with the making, administration and enforcement of its Loan, and that it has made and shall continue to make its own appraisal of the creditworthiness of Borrowers. No Lender shall have any duty or responsibility either initially or on a continuing basis to make any such investigation or any such appraisal on behalf of any other party, or to provide any other party with any credit or other information with respect thereto, whether coming into its possession before the date hereof or any time or times thereafter, and shall further have no responsibility with respect to the accuracy of or the completeness of the information provided to the Lenders by Borrowers.
 
8.
REPRESENTATIONS AND WARRANTIES
 
8.1   Due Organization and Qualification . Each Lender represents and warrants to the other parties that it is a corporation or other entity duly existing and in good standing under the laws of its state of organization and it is qualified and licensed to do business in, and is in good standing in, any state in which the conduct of its business or its ownership of property requires that it be so qualified, except for such states as to which any failure so to qualify would not have a material adverse effect on such Lender.
 
8.2   Authority . Each Lender represents and warrants that it has all necessary power and authority to execute, deliver and perform this Agreement in accordance with the terms hereof and that it has all requisite power and authority to own and operate its properties and to carry on its business as now conducted.
 
8.3   Authorization; Enforceability . Each Lender represents and warrants that (a) the execution and delivery of this Agreement and the consummation of the transactions contemplated herein have each been duly authorized by all necessary action on its part, and (b) this Agreement has been duly executed and delivered and constitutes a legal, valid and binding obligation of such person, enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application relating to or affecting the enforcement of creditors’ rights or by general principles of equity.
 
8.4   Copies of Documents . Each Lender represents and warrants that it has provided the other with true and complete copies of its Loan Documents in effect as of the date of this Agreement.
 
9.
NOTICES
 
(a)   Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except informal documents which may be sent by email) shall be deemed to have been validly served, given, delivered and received upon the earlier of (i) the day of hand delivery or delivery by an overnight express service or overnight mail delivery service; or (ii) the third calendar day after deposit in the United States of America mails, with proper first class postage prepaid, return receipt requested in each case, addressed to the party to be notified as follows:
 
 
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If to Hercules :
 
Hercules Capital, Inc., as agent
Attn: Chief Legal Officer and Tom Harris
400 Hamilton Ave.
Suite #310
Palo Alto, CA 94301
Email: legal@herculestech.com ; tharris@htgc.com
 
If to the Ally Parties:
 
Ally Bank and Ally Financial Inc.
Attn: Sheldon Nicklin, Executive Risk Director
3200 Bristol Street, Suite 700
Costa Mesa, California 92626
Email: sheldon.w.nicklin@ally.com
 
 
The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other. In addition, each Lender agrees (i) to use its best efforts to notify the other Lender promptly upon receipt of any material written notice from Borrowers and (ii) at the other Lender’s request, to send a copy of any such notice to the other Lender, but neither Lender shall have any liability to the other Lender for any inadvertent failure to give such notice under clause (i) or (ii) above.
 
(b)   Each Lender agrees to provide the other Lender with (i) copies of any notice of demand, or similar communication as and when given to a Borrower or any co-borrower or guarantor with respect to a Loan, (ii) as and when received, given, or executed, a copy of any amendment, modification, waiver (including waiver of any Event of Default), replacement or supplement of the Loan Documents, (iii) notice of any intent to sell or transfer all or any part of its right, title and interest in the Loan Documents to any third party (other than a controlled affiliate of such Lender or a successor in interest through merger) at least ten (10) Business Days prior to consummating such sale or transfer.
 
10.
NO BENEFIT TO THIRD PARTIES
 
The terms and provisions of this Agreement shall be for the sole benefit of Lenders, and their respective successors and assigns, and no other person or entity (including Borrowers) shall have any right, benefit, priority, or interest under, or because of this Agreement.
 
11.
CERTAIN AGREEMENTS OF THE ALLY PARTIES .
 
(a)   The Ally Parties acknowledge and consent to (i) the Hercules Loan Documents, (ii) the grant by Borrowers of a Lien on the Hercules Collateral, and (iii) only prior to the occurrence of an Event of Default, the transfer from RMBL Missouri to Parent, in the ordinary course of Borrowers’ business, of any cash Proceeds from the sale of an Ally Financed Vehicle provided the Ally Parties have been paid in full for the outstanding balance of any advance associated with such Ally Financed Vehicle.
 
(b)   Notwithstanding Section 12.1 , the Ally Parties shall not amend the Ally Financing Documents, without prior written consent of Hercules, to (i) increase the interest rate by more than 3.0 percentage points (excluding increases resulting from (A) increases in the underlying reference rate not caused by an amendment of the Ally Financing Documents, or (B) the accrual of interest at the default rate), or (ii) increase the Ally Credit Balance required to be provided to be in excess of 10% of the approved credit line under the Ally Financing Documents.
 
 
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12.
GENERAL PROVISIONS
 
12.1   Lenders’ Rights . Hercules , on the one hand, and the Ally Parties on the other hand, agree that each Lender may at any time, and from time to time, without the consent of the other Lender and without notice to the other Lender: (i) renew or extend any of Borrower ’s indebtedness and obligations owing to such Lender or that of any other person at any time directly or indirectly liable for the payment thereof; (ii) accept partial payments of its Claims; (iii) settle, release (by operation of law or otherwise), compromise, collect or liquidate any of its Claims; (iv) release, exchange, fail to perfect, delay the perfection of, fail to resort to, or realize upon Collateral then constituting its Priority Collateral; (v) change, alter or vary the interest charge on, or any other terms or provisions of its Claims or any present or future instrument, document or agreement with any Borrower ; and (vi) take any other action or omit to take any other action with respect to its Claims as it deems necessary or advisable in its sole discretion; subject , however , in all cases, to the specific provisions of this Agreement. Each Lender waives any right to require the other Lender to proceed first against some Collateral before proceeding against other Collateral, or to exercise certain remedies before exercising other remedies, whether under the equitable doctrine of marshalling or otherwise, but subject, in all cases, to the provisions of this Agreement.
 
12.2   Non-Avoidability . The subordinations and priorities specified in this Agreement are expressly conditioned upon the nonavoidability and perfection of the security interest to which another security interest is subordinated, and if the security interest to which another security interest is subordinated is not perfected or is avoidable, for any reason, then the subordinations and relative priority provided for in this Agreement shall not be effective as to the particular Collateral that is the subject of the unperfected or avoidable security interest.
 
12.3   Successors and Assigns . This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the Ally Parties and Hercules ; provided, however, that neither this Agreement nor any rights hereunder may be assigned, transferred or participated by any of the parties hereto without being in compliance with Section 2.3 , and subject to Section 4 .
 
12.4   Severability of Provisions . Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.
 
12.5   Entire Agreement; Construction; Amendments and Waivers .
 
(a)   This Agreement constitutes and contains the entire agreement among the Lenders, and supersedes any and all prior agreements, negotiations, correspondence, understandings and communications between the parties, whether written or oral, respecting the subject matter hereof.
 
(b)   This Agreement is the result of negotiations between and has been reviewed by each of the Lenders executing this Agreement as of the date hereof and their respective counsel; accordingly, this Agreement shall be deemed to be the product of the parties hereto, and no ambiguity shall be construed in favor of or against any party. Lenders agree that they intend the literal words of this Agreement and that no parole evidence shall be necessary or appropriate to establish any of their actual intentions.
 
(c)   Any and all amendments, modifications, discharges or waivers of, or consents to any departures from any provision of this Agreement shall not be effective without the written consent of each Lender. Any waiver or consent with respect to any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which it was given. Any amendment, modification, waiver or consent effected in accordance with this Section 12.5(c) shall be binding upon each Lender.
 
12.6   Counterparts . This Agreement may be executed in any number of counterparts, including counterparts transmitted by facsimile or other means of electronic transmission, and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement.
 
 
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12.7   Termination . This Agreement shall terminate upon the later of (a) irrevocable payment in full to each Lender of all amounts (other than unasserted amounts in connection with obligations that specifically survive termination of the applicable Loan Documents) owing to it under the applicable Loan Documents, and (b) the termination of all obligations to lend thereunder.
 
12.8   Reinstatement . Notwithstanding any provision of this Agreement to the contrary, the rights and obligations of the parties hereunder shall be reinstated and revived if and to the extent that for any reason any payment by or on behalf of Borrower is rescinded, or must be otherwise restored by Lenders, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, all as though such amount had not been paid. To the extent any payment is rescinded or restored, the obligations shall be revived in full force and effect without reduction or discharge for that payment.
 
12.9   Survival . All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any obligations remain outstanding hereunder.
 
13.
RELATIONSHIP OF LENDERS
 
Lenders shall not under any circumstances be construed to be partners or joint venturers of one another; nor shall the Lenders under any circumstances be deemed to be in a relationship of confidence or trust or a fiduciary relationship with one another, or to owe any fiduciary duty to one another. Lenders do not undertake or assume any responsibility or duty to one another to select, review, inspect, supervise, pass judgment upon or otherwise inform each other of any matter in connection with Borrowers’ property, any Collateral held by any Lender or the operations of Borrowers. Each Lender shall rely entirely on its own judgment with respect to such matters, and any review, inspection, supervision, exercise of judgment or supply of information undertaken or assumed by any Lender in connection with such matters is solely for the protection of such Lender.
 
14.
CHOICE OF LAW AND VENUE; AND JURY TRIAL WAIVER
 
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAWS OTHER THAN THE LAWS OF THE STATE OF CALIFORNIA, AND EACH OF THE LENDERS HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF CALIFORNIA. TO THE EXTENT NOT PROHIBITED BY APPLICABLE STATE LAW, LENDERS HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM, PROCEEDING OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO. If the foregoing waiver of jury trial is ineffective or unenforceable, the parties agree that all claims arising out of this Agreement and the transactions related thereto shall be resolved by reference to a private judge sitting without a jury, pursuant to Code of Civil Procedure Section 638, before a mutually acceptable referee or, if the parties cannot agree, a referee selected by the Presiding Judge of the Santa Clara County, California. Such proceeding shall be conducted in Santa Clara County, California, with California rules of evidence and discovery applicable to such proceeding.
 
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[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]
 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.
 
HERCULES CAPITAL, INC., in its capacity as administrative agent on behalf of certain lenders
 
By: _ /s/ Zhuo Huang _______________
Name: __ Zhuo Huang ________________
Title: _ Associate General Counsel _______
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]
 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written.
 
ALLY BANK
 
By: _ /s/ Margaret Gabriel ____________
Name: _ Margaret Gabriel _____________
Title: _ Authorized Representative ______
 
ALLY FINANCIAL INC.
 
By: _ /s/ Margaret Gabriel ____________
Name: _ Margaret Gabriel _____________
Title: _ Authorized Representative ______
 
 
 
 
 
[SIGNATURE PAGE TO INTERCREDITOR AGREEMENT]
 
Each of the undersigned Borrowers, acknowledges and approves of the terms of this Agreement and further agrees that it shall not take any action (or fail to take any action) in contravention of the terms of this Agreement.
 
RUMBLEON, INC.
 
By: _ /s/ Steven R. Berrard ________
Name: __ Steven R. Berrard _______
Title:__ Chief Financial Officer ____
 
 
 
RMBL MISSOURI, LLC
 
By: _ /s/ Steven R. Berrard ________
Name: __ Steven R. Berrard _______
Title:__ Manager ________________
 
 
 
RMBL TEXAS, LLC
 
By: _ /s/ Steven R. Berrard ________
Name: __ Steven R. Berrard _______
Title:__ Manager ________________
 
 
 
NEXTGEN PRO, LLC
 
By: _ /s/ Steven R. Berrard ________
Name: __ Steven R. Berrard _______
Title:__ Manager ________________
 
 
 
 
 
 
Exhibit A
 
Hercules Collateral
 
All right, title and interest of each Borrower in the following:
 
(a) Receivables
 
(b) Equipment
 
(c) Fixtures
 
(d) General Intangibles
 
(e) Inventory
 
(f) Investment Property
 
(g) Deposit Accounts
 
(h) Cash
 
(i) Goods
 
and all other tangible and intangible personal property of Borrower whether now or hereafter owned or existing, leased, consigned by or to, or acquired by, Borrower and wherever located, and any of Borrowers’ property in the possession or under the control of Hercules; and, to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing.
 
For purposes of the foregoing, the following capitalized terms shall have the following meanings:
 
“ Cash ” means all cash, cash equivalents and liquid funds.
 
“ Deposit Accounts ” means any “deposit accounts,” as such term is defined in the UCC, and includes any checking account, savings account, or certificate of deposit.
 
“ Receivables ” means (i) all of each Borrower’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business records related thereto.
 
To the extent not otherwise defined, capitalized terms used in this Exhibit A shall have the respective meanings given to them in the UCC.
 
 
 
 
Exhibit B
 
Ally Collateral
 
RMBL Missouri
 
All right title and interest of RMBL Missouri in the following: all Vehicles, including but not limited to those for which either of the Ally Parties provides Inventory Financing; other inventory; equipment; fixtures; accounts, including factory open accounts of RMBL Missouri; deposit and other accounts with banks and other financial institutions; cash and cash equivalents; general intangibles; all documents; instruments; investment property; and chattel paper.
 
The Ally Credit Balance, to the extent determined to be property of Borrower.
 
For purposes of the foregoing, the following capitalized terms have the following meanings:
 
“ Inventory Financing ” means advancing the purchase price of the Vehicles directly to the Vehicle Sellers, advancing funds to other third parties who are not Vehicle Sellers or loaning money directly to RMBL Missouri for Vehicles purchased from Vehicle Sellers by RMBL Missouri.
 
“ Vehicle Seller ” means manufacturer, distributor, dealers, auctioneer, merchant, customer, broker, seller, or other supplier.
 
“ Vehicles ” means new and used automobiles, trucks, cars, vans, chassis, buses, trailers, motor homes, recreational vehicles, towable recreational vehicles, motorcycles, all-terrain vehicles, snowmobiles, motorized carts, motor vehicles, other vehicles and/or campers (together with all accessories, accessions, additions and attachments to such vehicles).
 
Parent
 
All of the following described property in which Parent now or hereafter acquires an interest, wherever located, in whatever form: all inventory; equipment; fixtures; accounts, including factory open accounts; accounts with banks and other financial institutions; cash and cash equivalents; general intangibles; all documents; instruments; investment property; and chattel paper.
 
 
  Exhibit 10.3
 
SUBORDINATION AGREEMENT
 
This Subordination Agreement is made as of April 30, 2018 by and among HALCYON CONSULTING, LLC (“Creditor”), RUMBLEON, INC., a Nevada corporation (“ Parent ”), NEXTGEN PRO, LLC, a Delaware limited liability company (“ NextGen Pro ”), RMBL MISSOURI, LLC, a Delaware limited liability company (“ RMBL Missouri ”), RMBL TEXAS, LLC, a Delaware limited liability company (“ RMBL Texas ”), and each of their Qualified Subsidiaries from time to time party hereto (together with Parent, NextGen Pro, RMBL Missouri and RMBL Texas, individually, each, a “ Borrower ”, and collectively, “ Borrowers ”), and HERCULES CAPITAL, INC. (“ Agent ”), in its capacity as administrative agent for itself and Lender (as defined in the Loan Agreement (as defined below)).
 
RECITALS
 
A.   Borrowers have requested certain loans and other credit accommodations pursuant to the terms of that certain Loan and Security Agreement dated as of April 30, 2018 by and between Borrowers, Agent and certain lenders from time to time party to thereto (as amended, restated, supplemented or otherwise modified from time to time, the “ Loan Agreement ”), and have granted a security interest in substantially all assets to secure the obligations thereunder.
 
B.   NextGen Pro and Parent have entered into certain agreements and instruments with NextGen Dealer Solutions, LLC (“Dealer Solutions”) including, without limitation, a Subordinated Secured Confessed Judgment Promissory Note, dated February 8, 2017, issued by Parent (the “ Subordinated Note ”), an Unconditional Guaranty Agreement, dated as of February 8, 2017, by NextGen Pro to and for the benefit of Dealer Solutions, a Security Agreement, dated as of February 8, 2017, by and between NextGen Pro and Dealer Solutions, a Patent Security Agreement, dated as of February 8, 2017, by and between NextGen Pro and Dealer Solutions and a Trademark Security Agreement, dated as of February 8, 2017, by and between NextGen Pro and Dealer Solutions (collectively, the Subordinated Note Documents ”).
 
C.   On December 31, 2017, Dealer Solutions assigned all of its right, title and interest in and to the Subordinated Note Documents to Creditor.
 
D.   Creditor is willing to subordinate: (i) all of each Borrower’s indebtedness and obligations to such Creditor, whether presently existing or arising in the future, (the “ Subordinated Debt ”) to all of Borrowers’ indebtedness and obligations to Agent and Lender; and (ii) all of such Creditor’s security interests, if any, in each Borrower’s property to all of Agent’s security interests in Borrowers’ property, all in accordance with the provisions set forth herein.
 
AGREEMENT
 
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
 
1.   Creditor subordinates to Agent any security interest or lien that Creditor may have in any property of each Borrower. Notwithstanding the respective dates of attachment or perfection of the security interest of Creditor and the security interest of Agent, the security interest of Agent in the Collateral, as defined in the Loan Agreement, shall at all times be prior to the security interest of Creditor. Capitalized terms not otherwise defined herein shall have the same meaning as in the Loan Agreement.
 
2.   Except as expressly set forth in Section 3, all Subordinated Debt is subordinated in right of payment to all obligations of each Borrower to Agent and Lender now existing or hereafter arising, together with all costs of collecting such obligations (including attorneys’ fees), including, without limitation, all interest accruing after the commencement by or against each Borrower of any Bankruptcy, reorganization or similar proceeding, and all obligations under the Loan Agreement (the “ Senior Debt ”).
 
 
1
 
 
 
3.   Creditor will not demand or receive from any Borrower (and no Borrower will pay to Creditor) all or any part of the Subordinated Debt by way of payment, prepayment, setoff, lawsuit or otherwise, nor will Creditor exercise any remedy with respect to the Collateral, nor will Creditor commence, or cause to commence, prosecute or participate in any administrative, legal or equitable action against any Borrower, for so long as any portion of the Senior Debt remains outstanding. Notwithstanding the foregoing, Creditor shall be permitted to receive, and Borrowers shall be permitted to pay, the following payments:
 
(a)
If an Advance has been made pursuant to Tranche III of the Loan Agreement, regularly scheduled payments as set forth in the Subordinated Note in the form attached hereto, but only if no Event of Default has occurred and is continuing as of the date of such payment and no Event of Default would result from such payment.
 
(b)
If no Advance has been made pursuant to Tranche III of the Loan Agreement, (a) regularly scheduled payments of interest as set forth in the Subordinated Note in the form attached hereto, but only if no Event of Default has occurred and is continuing as of the date of such payment and no Event of Default would result from such payment, and (b) regularly scheduled payments of principal as set forth in the Subordinated Note in the form attached hereto, but only if (i) after giving pro forma effect to such payment, Borrowers would have cash in Deposit Accounts or Investment Accounts subject to Account Control Agreements (as such terms are defined in the Loan Agreement) in favor of Agent in an amount not less than $7,500,000, on a consolidated basis, or (ii) as of the end of the last fiscal quarter for which financial statements were required to be delivered to Agent pursuant to the Loan Agreement, Parent maintained Adjusted EBITDA (as defined in the Loan Agreement) for the twelve month period ended as of such date, of not less than $2,000,000.
 
4.   Creditor shall promptly deliver to Agent in the form received (except for endorsement or assignment by Creditor where required by Agent) for application to the Senior Debt any payment, distribution, security or proceeds received by Creditor with respect to the Subordinated Debt other than in accordance with this Agreement.
 
5.   In the event of any Borrower’s insolvency, reorganization or any case or proceeding under any Bankruptcy or insolvency law or laws relating to the relief of debtors, these provisions shall remain in full force and effect, and Agent’s and Lender’s claims against such Borrower shall be paid in full before any payment is made to Creditor.
 
6.   For so long as any of the Senior Debt remains unpaid, Creditor irrevocably appoints Agent as Creditor’s attorney-in-fact, and grants to Agent a power of attorney with full power of substitution, in the name of Creditor or in the name of Agent, for the use and benefit of Agent, without notice to Creditor, to perform at Agent’s option the following acts in any Bankruptcy, insolvency or similar proceeding involving a Borrower
 
a.
To file the appropriate claim or claims in respect of the Subordinated Debt on behalf of Creditor if Creditor does not do so prior to 30 days before the expiration of the time to file claims in such proceeding and if Agent elects, in its sole discretion, to file such claim or claims; or
 
b.
To accept or reject any plan of reorganization or arrangement on behalf of such Creditor and to otherwise vote such Creditor’s claims in respect of any Subordinated Debt in any manner that Agent deems appropriate for the enforcement of its rights hereunder.
 
 
2
 
 
7.   In the event of a Borrower’s insolvency, reorganization or any case or proceeding, arrangement or transaction under any federal or state bankruptcy or insolvency law or similar laws or proceedings involving a Borrower, for so long as any of the Senior Debt remains unpaid, if Agent, Lender or any of them shall seek to provide any Borrower or any of their subsidiaries with any financing under Section 364 of the Bankruptcy Code , or Agent or Lender support or consent to such financing provided by a third party, or consent to any order for the use of cash collateral under Section 363 of the Bankruptcy Code (each, a “ DIP Financing ” or “ Cash Collateral Use ”), with such DIP Financing or Cash Collateral Use to be secured by all or any portion of the Collateral (including assets that, but for the application of Section 552 of the Bankruptcy Code (or any similar provision of any foreign laws relating to the relief of debtors) would be Collateral), then Creditor agrees that it will raise no objection and will not support, directly or indirectly, any objection to such DIP Financing or Cash Collateral Use nor object to the liens or claims granted in connection therewith on any grounds, including a failure to provide “adequate protection” for the liens, if any, securing any Subordinated Debt (and will not request any adequate protection as a result of such DIP Financing or Cash Collateral Use, and will not support any debtor-in-possession financing or Cash Collateral Use which would compete with such DIP Financing or Cash Collateral Use which is provided to or consented to by Agent or Lender). In addition, Creditor agrees that it will not provide nor seek to provide or support any debtor-in-possession financing without the prior written consent of Agent.
 
8.   Creditor shall immediately affix a legend to the instruments evidencing the Subordinated Debt stating that the instruments are subject to the terms of this Agreement. No amendment of the documents evidencing or relating to the Subordinated Debt shall directly or indirectly modify the provisions of this Agreement in any manner which might terminate or impair the subordination of the Subordinated Debt or the subordination of the security interest or lien that Creditor may have in any property of a Borrower. In addition, such instruments shall not be amended to (i) increase the rate of interest with respect to the Subordinated Debt, or (ii) accelerate the payment of the principal or interest or any other portion of the Subordinated Debt. Creditor represents and warrants that a true copy of the Subordinated Note, as in effect as of the date hereof is attached as Exhibit A hereto, and that neither the Subordinated Note, nor any of the Subordinated Note Documents have been assigned to any other person (it being understood that a security interest in the Subordinated Note has been granted to Cycle Express, LLC).
 
9.   This Agreement shall remain effective for so long as Agent or Lender has any obligation to make credit extensions to a Borrower or any Borrower owes any amounts to Agent or Lender under the Loan Agreement or otherwise. If, at any time after payment in full of the Senior Debt any payments of the Senior Debt must be disgorged by Agent or Lender for any reason (including, without limitation, the Bankruptcy of a Borrower), this Agreement and the relative rights and priorities set forth herein shall be reinstated as to all such disgorged payments as though such payments had not been made and Creditor shall immediately pay over to Agent all payments received with respect to the Subordinated Debt to the extent that such payments would have been prohibited hereunder. At any time and from time to time, without notice to Creditor, Agent or Lender may take such actions with respect to the Senior Debt as Agent and Lender, respectively, in its sole discretion, may deem appropriate, including, without limitation, terminating advances to a Borrower, increasing the principal amount (which may include any DIP Financing), extending the time of payment, increasing applicable interest rates, renewing, compromising or otherwise amending the terms of any documents affecting the Senior Debt and any collateral securing the Senior Debt, and enforcing or failing to enforce any rights against a Borrower or any other person. No such action or inaction shall impair or otherwise affect Agent’s or Lender’s rights hereunder.
 
10.   This Agreement shall bind any successors or assignees of Creditor and shall benefit any successors or assigns of Agent. This Agreement is solely for the benefit of Creditor, Agent and Lender and not for the benefit of any Borrower or any other party. Creditor further agrees that if a Borrower is in the process of refinancing a portion of the Senior Debt with a new lender, and if Agent makes a request of Creditor, Creditor shall agree to enter into a new subordination agreement with the new lender on substantially the terms and conditions of this Agreement.
 
11.   This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
 
12.   This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of California, without regard to principles of conflicts of law. Jurisdiction shall lie in the State of California. THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THE UNDERSIGNED PARTIES. If the jury waiver set forth in this Section is not enforceable, then any dispute, controversy or claim arising out of or relating to this Agreement or any of the transactions contemplated herein shall be resolved by judicial reference pursuant to Code of Civil Procedure Section 638 et seq before a mutually acceptable referee or, if none is selected, then a referee chosen by the Presiding Judge of the California Superior Court for Santa Clara County, provided this provision shall not restrict any party from seeking to enforce any prejudgment remedies.
 
13.   This Agreement represents the entire agreement with respect to the subject matter hereof, and supersedes all prior negotiations, agreements and commitments. Creditor is not relying on any representations by Agent, Lender or any Borrower in entering into this Agreement. Creditor has kept and will continue to keep itself fully apprised of the financial and other condition of each Borrower. This Agreement may be amended only by written instrument signed by Creditor, Agent and Borrowers.
 
14.   In the event of any legal action to enforce the rights of a party under this Agreement, the party prevailing in such action shall be entitled, in addition to such other relief as may be granted, all reasonable costs and expenses, including reasonable attorneys’ fees, incurred in such action.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
 
3
 
[SIGNATURE PAGE TO SUBORDINATION AGREEMENT]
 
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.
 
AGENT:
 
HERCULES CAPITAL, INC.
 
By: /s/ Zhuo Huang                                                       
Name: Zhuo Huang                                
Title: Associate General Counsel                                        
 
 
 
 
[SIGNATURE PAGE TO SUBORDINATION AGREEMENT]
 
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.
 
 
CREDITOR:
 
HALCYON CONSULTING, LLC
 
By: /s/ Kartik Kakarala                                           
Name: Kartik Kakarala                  
Title: CEO                                                   
 
 
 
 
 
[SIGNATURE PAGE TO SUBORDINATION AGREEMENT]
 
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.
 
BORROWERS:
 
RUMBLEON, INC.
 
Signature:         
_ /s/ Steven R. Berrard ____
Print Name:     
__ Steven R. Berrard ______
Title:                   
__ Chief Financial Officer __
 
 
NEXTGEN PRO, LLC
 
Signature:          
_ /s/ Steven R. Berrard ____
Print Name:     
__ Steven R. Berrard ______
Title:           
___ Manager _____________
 
 
RMBL MISSOURI, LLC
 
Signature:      
_ /s/ Steven R. Berrard ____
Print Name:     
__ Steven R. Berrard ______
Title:            
___ Manager _____________
 
 
RMBL TEXAS, LLC
 
Signature:           
_ /s/ Steven R. Berrard ____
Print Name:   
__ Steven R. Berrard ______
Title:             
___ Manager _____________
 
 
 
 
 
 
 
 
 
EXHIBIT A
 
SUBORDINATED NOTE
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SUBORDINATED SECURED CONFESSED JUDGMENT PROMISSORY NOTE
 
$1,333,333
February 8, 2017 (“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, Smart Server, Inc., a Delaware corporation (“ Borrower ”), does hereby promise to pay to the order of NextGen Dealer Solutions, LLC (“ Lender ”), on the third anniversary of the Effective Date (the “ Maturity Date ”), or such earlier time as provided herein, the principal sum of One Million Three Hundred Thirty Three Thousand Three Hundred Thirty Three Dollars ($1,333,333) (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 Subordinated Secured Confessed Judgment Promissory Note (this “ Note ”).
 
1.   Interest . From the Effective Date through and until the second anniversary of the Effective Date, Interest shall accrue on the outstanding and unpaid Principal Amount at the rate of 6.5% per annum. From the second anniversary of the Effective Date and until the Maturity Date, Interest shall accrue on the outstanding and unpaid Principal Amount at the rate of 8.5% 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 Interest shall be paid to Lender semi-annually in arrears on the last day of each six month anniversary of the Effective Date, including, 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.   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) NextGen Pro, LLC shall fail to pay any amount due under the Unconditional Guaranty Agreement attached hereto and incorporated herein by reference as Exhibit A and executed on the date hereof by the NextGen Pro, LLC in favor of the Lender (the “Guaranty”), (4) NextGen Pro, LLC shall fail to perform, observe or comply with any other obligation under the Guaranty or the Security Agreement attached hereto and incorporated herein by reference as Exhibit B and executed on the date hereof by the NextGen Pro, LLC 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 NextGen Pro, LLC, except that in the event NextGen Pro, LLC is unable to complete the cure within the fifteen (15) day period, the cure period shall be extended if NextGen Pro, LLC 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 NextGen Pro, LLC mutually agree to an extension of the cure period, (4) Borrower or NextGen Pro, LLC is acquired in a merger, consolidation or transfer of all or substantially all of its assets, or (5) 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 4 (1) – (5) 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 ten percent (10%) per annum.
 
6.   Security .
 
As security for the prompt payment and complete performance of Borrower of its obligations under this Note, NextGen Pro, LLC has executed and delivered to the Lender on the date hereof the Guaranty and the Security Agreement.
 
 
 
 
7.   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 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, including, but not limited to (i) any indebtedness for borrowed money or indebtedness evidenced by notes, bonds or similar instruments, including 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)   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 7 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 7(a).
 
(d) The subordination, agreements and priorities set forth in this Section 7 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 7 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.
 
8.   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.
 
 
 
 
9.   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.
 
10.   Waiver of Presentment . Borrower hereby waives presentment for payment, protest and notice of maturity or non-payment.
 
11.   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.
 
12.   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.
 
13.   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. Borrower agrees that Lender may pledge this Note to Cycle Express, LLC as security for the repayment of the $250,000 Promissory Note executed by the Lender on the date hereof in favor of Cycle Express, LLC. Cycle Express, LLC and any other assignee or pledgee of this Note shall promptly deliver to Borrower a written acknowledgement of the subordination provisions contained in Section 7 of this Note and its obligation to comply therewith. In the event one or more subordination agreements are in effect, Cycle Express, LLC and any other 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).
 
14.   Governing Law . This Note shall be governed by and construed in accordance with the laws of the State of Maryland.
 
15.   Consent to Jurisdiction . E ach 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 .
 
 
 
 
 
16.   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.
 
17.   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.
 
18.   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.
 
19.   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.
 
20.   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 Subordinated Secured Confessed Judgment Promissory Note under seal on the date first above written.
 
  WITNESS:
BORROWER:
 
 
 
 
 
____________________________                                
SMART SERVER, INC.
 
 
 
                                                
By: /s/ Marshall Chesrown
 
Name: Marshall Chesrown
Title: Chief Executive Officer
   
   
 
ACKNOWLEDGED AND AGREED:
 
 
 
LENDER:
 
 
 
NEXTGEN DEALER SOLUTIONS, LLC
 
 
By: /s/ Kartik Kakarala         
Name: Kartik Kakarala
Title: President
 
 
 
 
EXHIBIT A
 
 
 
UNCONDITIONAL GUARANTY AGREEMENT
 
 
 
 
 
 
 
 
 
UNCONDITIONAL GUARANTY AGREEMENT
 
 
 
THIS UNCONDITIONAL GUARANTY AGREEMENT (the "Guaranty") is made as of the 8th day of February, 2017, by NEXTGEN PRO, LLC, a Delaware limited liability company (the "Guarantor") to and for the benefit of NEXTGEN DELAER SOLUTIONS, LLC, a Delaware limited liability company (the "Lender").
 
 
R E C I T A L S
 
A.           Pursuant to the Asset Purchase Agreement executed on January 8, 2017 by and among the Lender, Smart Server, Inc. (“Borrower”), Halcyon Consulting, LLC (“Halcyon”) and certain other parties signatory thereto, the Lender agreed to sell and the Borrower agreed to purchase substantially all of the assets of the Lender (the “Asset Purchase Agreement”).
 
B.           One Million Three Hundred Thirty-Three Thousand Three Hundred Thirty-Three Dollars ($1,333,333.00) of the purchase price under the Asset Purchase Agreement is to be paid pursuant to the terms and conditions set forth in the Subordinated Secured Confessed Judgment Promissory Note of even date herewith executed by Borrower in favor of the Lender (the "Note").
 
C.           On the date hereof, Borrower assigned its rights, but not obligations, under the Asset Purchase Agreement to the Guarantor.
 
D.           As a condition precedent to the Lender’s agreement to close under the Asset Purchase Agreement, the Guarantor has agreed to execute and deliver this Guaranty pursuant to which the Guarantor will guarantee to the Lender (the "Beneficiary") the full payment and performance of all of the Borrower's obligations under the Note.
 
NOW, THEREFORE, in consideration of the foregoing recitals, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Guarantor agrees as follows:
 
1.            Guaranty. The Guarantor unconditionally guarantees to the Beneficiary and its respective successors and assigns, the full and prompt payment to the Beneficiary when due of all amounts of every kind due to the Beneficiary from the Borrower pursuant to the Note, and the full and prompt performance of all of the Borrower's obligations to the Beneficiary under the Note. The Guarantor unconditionally guarantees that all sums due and owing under the Note shall be paid when and as due, whether by reason of installments, acceleration or otherwise, time being of the essence.
 
 
 
 
2.            Nature of the Guaranty. This is a guaranty of payment and not of collection and the obligations of the Guarantor hereunder shall be direct, immediate and primary. This Guaranty shall in all respects be a continuing absolute and unconditional guarantee irrespective of the genuineness, validity or enforceability of the Note or any part thereof, or by the existence, enforceability, perfection or extent of any collateral therefor.
 
3.            Beneficiaries Need Not Pursue Rights Against Borrower, Any Guarantor, or Collateral. The Guarantor authorizes the Beneficiary without notice, demand or any reservation of rights against the Guarantor and without affecting the Guarantor's obligations hereunder, from time to time, to resort to the Guarantor for payment of the amounts due and performance of the obligations under the Note or any part thereof, whether or not the Beneficiary shall have resorted to any collateral securing the Note or any part thereof or shall have proceeded against any other person principally or secondarily obligated with respect to the Note or any part thereof.
 
4.            Accuracy of Representations. The Guarantor warrants that all of the representations made by the Guarantor in connection with the Note and the transactions contemplated thereby are true and correct and not knowingly misleading and the Guarantor agrees to indemnify the Beneficiary from any loss or expense as a result of any representation or statement of the Guarantor or the Borrower being false, incorrect, or knowingly misleading
 
5.            Representations of the Guarantor. To induce the Beneficiary to accept this Guaranty for the purposes for which it is given, the Guarantor represents and warrants to the Beneficiary as follows:
 
A.            Organization . Guarantor is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business. Guarantor is duly qualified or authorized to do business as a foreign company and is in good standing under the laws of each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification or authorization, except to the extent the failure to do so would not reasonably be expected to result in a material adverse effect on Guarantor.
 
B.            Non-Existence of Defaults, etc. The Guarantor is not in material default with respect to any of its existing indebtedness, and the making and performance of this Guaranty will not immediately, or with the passage of time, the giving of notice, or both, constitute a default under any existing indebtedness of Guarantor.
 
C.            Violation of Laws. In the conduct of its businesses and affairs, the Guarantor is not in violation of any applicable federal, state or local laws, the violation of which would cause a material adverse effect on the Guarantor.
 
D.            Capacity. The execution, delivery and performance of this Guaranty has been duly authorized by all necessary action by or on behalf of Guarantor. The Guarantor has the legal capacity to execute and deliver this Guaranty as a valid obligation, which is binding and enforceable in accordance with the terms hereof.
 
 
 
 
E.            No Insolvency . There is no pending or threatened bankruptcy or insolvency proceeding by or against the Guarantor.
 
6.            Security . As security for the prompt payment and complete performance by Guarantor of its obligations under this Guaranty, Guarantor has executed and delivered to the Lender on the date hereof the Security Agreement (hereinafter defined in Section 9).
 
7.            Rights of Beneficiary to Deal With Borrower, Guarantor, and Collateral. The Beneficiary may, without compromising, impairing, diminishing, or in any way releasing the Guarantor from the Guarantor's obligations hereunder and without notifying or obtaining the prior approval of the Guarantor at any time or from time to time: (a) waive or excuse a default or defaults by the Borrower or any person who has guaranteed in whole or in part any of the Borrower's obligations under the Note, or a delay in the exercise by the Beneficiary of any or all of the Beneficiary's rights or remedies with respect to such default or defaults; (b) grant extensions of time for payment or performance by the Borrower or any person who has guaranteed in whole or in part any of the Borrower's obligations under the Note; (c) release, substitute, exchange, surrender, or add collateral of the Borrower or any person who has guaranteed in whole or in part any of the Borrower's obligations under the Note, or waive, release or subordinate, in whole or in part, any lien or security interest held by the Beneficiary on any real or personal property securing payment or performance, in whole or in part, of the Borrower's obligations under the Note; (d) release the Borrower or any person who has guaranteed in whole or in part, any of the Borrower's obligations under the Note; (e) apply payments made by the Borrower, or by any person who has guaranteed in whole or in part, any of the Borrower's obligations under the Note, to any sums owed by the Borrower to the Beneficiary, in any order, or manner, or to any specific account or accounts, as the Beneficiary may elect; or (f) modify, change, renew, extend, or amend, in any respect any of the provisions of the Note or this Guaranty.
 
8.            Waivers by the Guarantor. The Guarantor waives: (a) any and all notices whatsoever with respect to this Guaranty or with respect to any of the Borrower's obligations under the Note, including, but not limited to, notice of: (i) the Beneficiary's acceptance hereof or the Beneficiary's intention to act, or the Beneficiary's action, in reliance hereon; (ii) the present existence or future occurrence of an event of default of any of the Borrower's obligations under the Note or any terms or amounts thereof of any change therein; (iii) any default by the Borrower or any surety, pledgor, grantor of security, guarantor or other person who has guaranteed or secured in whole or in part the Borrower's obligations under the Note; and (iv) the obtaining or release of any guaranty or surety agreement (in addition to this Guaranty), pledge, assignment, or other security for any of the Borrower's obligations under the Note; and (b) (i) presentment, protest and demand for payment of any sum due from the Borrower under the Note or any person who has guaranteed in whole or in part any of the Borrower's obligations under the Note, including the Guarantor; (ii) notice of default by the Borrower or any person who has guaranteed in whole or in part any of the Borrower's obligations under the Note, including the Guarantor; (iii) demand for performance by the Borrower or any person who has guaranteed in whole or in part any of the Borrower's obligations under the Note.
 
 
 
 
9.            Events Authorizing Acceleration of Guaranty. In the event any of the following occur with respect to the Guarantor or, with respect to the Borrower (an "Event of Default"), the Beneficiary may, in the Beneficiary's sole and absolute discretion, accelerate and call due as to the Guarantor all sums due from the Borrower: (a) Guarantor 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 Guarantor 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 Guarantor, or Guarantor 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 Guarantor, or there is commenced against Guarantor any such proceeding which remains undismissed for a period of 90 days, or Guarantor is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or Guarantor makes a general assignment for the benefit of creditors; (b) any "Default" as defined under the Note or under the Security Agreement between the Guarantor and the Lender, dated the date hereof, attached hereto as Exhibit A and incorporated herein by reference (the “Security Agreement”), or (c) a default by the Guarantor in payment or in performance of any of its obligations under this Guaranty.
 
10.            Confession of Judgment. UPON A DEFAULT OF THIS GUARANTY, THE GUARANTOR AUTHORIZES ANY ATTORNEY ADMITTED TO PRACTICE BEFORE ANY COURT OF RECORD IN THE UNITED STATES, INCLUDING GLENN D. SOLOMON, AS GUARANTOR’S TRUE AND LAWFUL ATTORNEY-IN-FACT, WITH FULL POWER AND AUTHORITY FOR GUARANTOR, IN GUARANTOR’S NAME, PLACE AND STEAD, ON GUARANTOR’S BEHALF, TO WAIVE THE ISSUANCE AND SERVICE OF PROCESS AND CONFESS JUDGMENT AGAINST GUARANTOR, IN THE FULL AMOUNT THEN DUE UNDER THIS GUARANTY, INCLUDING ANY EXPENSES OF COLLECTION, PLUS REASONABLE ATTORNEYS’ FEES. THE AUTHORITY AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST GUARANTOR 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 BENEFICIARY SHALL DEEM NECESSARY OR ADVISABLE UNTIL ALL SUMS DUE UNDER THE GUARANTY HAVE BEEN PAID IN FULL .
 
11.            Collection Expenses. All reasonable and documented out-of-pocket costs and expenses (including reasonable attorney fees and expenses) of the prevailing party in any action to enforce any rights under this Guaranty, shall be borne and paid by the non-prevailing party.
 
12.            Subordination of Certain Indebtedness . If the Guarantor shall advance any sums to Borrower or its successors or assigns or if the Borrower or its successors or assigns shall hereafter become indebted to the Guarantor, such sums and indebtedness shall be subordinate in all respects to the amounts then or thereafter due and owing to the Beneficiary. Nothing herein contained shall be construed to give the Guarantor any right of subrogation in and to any obligations of the Borrower to the Beneficiary, or in any of the collateral therefor, or all or any part of the Beneficiary's interest therein.
 
 
 
 
13.            Invalidity of Any Part. If any provision or part of any provision of this Guaranty shall for any reason be held invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions or the remaining part of any effective provisions of this Guaranty and this Guaranty shall be construed as if such invalid, illegal, or unenforceable provision or part thereof had never been contained herein, but only to the extent of its invalidity, illegality, or unenforceability.
 
14.            Subrogation Rights. The Guarantor waives and releases the Beneficiary from any damages which the Guarantor may incur as a result of any impairing, diminishing, or destroying of any of the Guarantor's rights of subrogation, unless such impairing, diminishing or destroying is willful or grossly negligent. To the extent that the Guarantor satisfies or discharges any of the Borrower's obligations to the Beneficiary, the Beneficiary does hereby assign, transfer and convey unto the Guarantor any and all rights, interests, actions or causes of action, claims and remedies of the Beneficiary, provided, that, any and all such rights of the Guarantor shall be subordinate to the rights and interests of the Beneficiary hereunder.
 
15.            Notices . Any notice or consent required or permitted by this Guaranty (but without implying any obligation to give a notice or obtain a consent) shall be in writing and shall be made by hand delivery, by overnight mail by nationally recognized courier, by wire or by certified mail, return receipt requested, postage prepaid, addressed to the Beneficiary or the Guarantor at the appropriate address set forth below or to such other address as may be hereafter specified by written notice by either party, and shall be considered given as of the date of hand delivery or wire, one day after being sent by overnight mail or as of two (2) business days after the date of mailing, as the case may be:
 
If to the Beneficiary:
 
NextGen Dealer Solutions, LLC
1431 Greenway Drive
Suite 775
Irving, TX 75038
Attention: Kartik Kakarala
 
With a copy (which shall not constitute notice) to:
 
Glenn D. Solomon, Esquire
Offit Kurman, P.A.
8171 Maple Lawn Boulevard
Suite 200
Maple Lawn, MD 20759
 
If to the Guarantor:
 
NextGen Pro, LLC
4521 Sharon Road
Suite 370
Charlotte, NC 28211
Attn: Steven Berrard
 
 
 
 
With a copy (which shall not constitute notice) to:
 
Akerman LLP
Three Brickell City Centre
98 SE 7 th Street
Miami, FL 33131
Attn: Scott A. Wasserman
 
16.            Effective Date. The guaranty of the Guarantor as herein set forth shall be effective as of the date of this Guaranty, independent of the date of execution or delivery thereof.
 
17.            Duration. This Guaranty shall be a continuing one and shall be binding upon the Guarantor regardless of how long before or after the date of this Guaranty any of the Borrower's obligations to the Beneficiary were or are incurred by the Borrower. The guaranty under this Guaranty shall be terminated upon the repayment and performance in full of all of the Borrower's obligations under the Note.
 
18.            Binding Nature. This Guaranty shall inure to the benefit of and be enforceable by the Beneficiary and the Beneficiary's successors and assigns and any other person to whom the Beneficiary may grant an interest in the Borrower's obligations to the Beneficiary, and shall be binding upon and enforceable against the Guarantor's heirs, personal representatives, and assigns.
 
19.            Assignability. This Guaranty may be assigned by the Beneficiary at any time or from time to time. This Guaranty may not be assigned by the Guarantor.
 
20.            Choice of Law; Consent to Jurisdiction. This Guaranty shall be construed, interpreted, and enforced under the laws of the State of Maryland.
 
21.            Tense, Gender, Defined Terms, Captions. As used herein, the plural shall refer to and include the singular, and the singular the plural, and the use of any gender shall include and refer to any other gender. All captions are for the purpose of convenience only.
 
 
 
 
IN WITNESS WHEREOF, the Guarantor has executed this Guaranty under seal as of the date first written above, with the specific intention that this Guaranty constitutes an instrument under seal.
 
 
WITNESS:                                                                                      
GUARANTOR
 
 
NEXTGEN PRO, LLC
 
 
_______________________
 By: /s/ Marshall Chesrown (SEAL)
 
 
 
 
 
 
 
EXHIBIT B
 
 
 
SECURITY AGREEMENT
 
 
 
 
 
SECURITY AGREEMENT
 
THIS SECURITY AGREEMENT (the “Agreement”), made this 8th day of February, 2017, by and between NEXTGEN PRO, LLC, a Delaware limited liability company, with an address of 4521 Sharon Road, Suite 370, Charlotte, North Carolina 28211 (" Debtor "), and NEXTGEN DEALER SOLUTIONS, LLC, a Delaware limited liability company, with an address of 1431 Greenway Drive, Suite 775, Irving, Texas 75038 (the " Secured Party ").
 
1.             
Grant of Security Interest . Subject to the applicable terms of this Security
Agreement, Debtor grants to Secured Party a security interest in the Collateral to secure the payment of the Obligation, provided that the security interest granted hereby is subject to the provisions of applicable law (e.g., UCC Section 9-408(c).
 
2.             
The Obligation . As used in this Agreement, " Obligation " means collectively all
 
of the following:
 
(a)   All amounts due pursuant to the terms of an Unconditional Guaranty Agreement dated even date herewith (the " Guaranty ") from the Debtor to Secured Party, pursuant to which the Debtor guaranteed the payment and performance of all obligations of Smart Server, Inc. under a Subordinated Secured Confessed Judgment Promissory Note dated even date herewith in the face amount of One Million Three Hundred Thirty-Three Thousand Three Hundred Thirty-Three Dollars ($1,333,333.00).
 
(b)   All costs incurred by Secured Party to enforce the security interest granted hereby (" Security Interest "), collect the Obligation, and maintain the Collateral free of liens (other than Permitted Encumbrances as defined on Exhibit A 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 Security 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)   Franchise agreements; and
 
(p)   The Patent Collateral (hereinafter defined);
 
(q)   The Trademark Collateral (hereinafter defined);
 
(r)   Intellectual property; and
 
(s)   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 Borrower; (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.
 
“Patent Collateral” means:
 
(a)   All patents and patent applications, including patent application number 14614160 known as “Near Field Communication (NFC) Vehicle Identification System and Process” filed with the United States Patent and Trademark Office and all registrations, reissues, divisions, continuations, continuations-in-part, renewals, extensions and reexaminations thereof and amendments thereto (the "Patents");
 
(b)   all rights of any kind whatsoever of Debtor accruing under any of the Patents 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 Patents; and
 
 
 
(d)             any and all claims and causes of action, with respect to any of the Patents, 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, 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.
 
“Trademark Collateral” means:
 
(a)   All trademark registrations and applications, including the trademark “CyclePro” registered with the United States Patent and Trademark Office, Registration number 4,662,863, 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 Party, Debtor shall make all such records available for inspection and copying by 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 Party as additional insured and/or loss payee, as the case may be; (iii) pay all costs necessary to enforce the Security Interest, collect the Obligation, 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 Party with any information on the Collateral reasonably requested by Secured Party; (v) upon receipt of reasonable prior written notice, allow Secured Party to inspect the Collateral, and inspect and copy all records relating to the Collateral and the Obligation, 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 Party 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 the Patent Collateral and Trademark Collateral.
 
 
 
 
(c)   Debtor agrees and covenants that it shall not (without Secured Party's consent, which shall not be unreasonably withheld): (i) remove the Collateral 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: no financing statement or collateral assignment has been filed or executed with respect to the Collateral except in favor of the Secured Party; (ii) Debtor is absolute owner of the Collateral and the Collateral is not encumbered other than by Permitted Encumbrances; (iii) 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 Party the consents or disclaimers necessary to make this Security Interest valid against persons holding interests in the real estate or other goods; (iv) all of the Collateral is located at Debtor's address set forth above; (v) Debtor has never been known by, or done business under, any name other than those set forth above.
 
(e)   Debtor authorizes Secured Party to (i) file financing statements and assignments covering the Collateral and all personal property of Debtor and containing such legends as Secured Party shall deem necessary or desirable to protect Secured Party's interest in the Collateral, and (ii) file and have recorded with the United States Patent and Trademark Office a short-form of a security agreement evidencing the Security Interest in the Patent Collateral and Trademark Collateral in the forms attached hereto and incorporated herein by reference as Exhibits B and C.
 
5.             
Default .
 
(a)             Any "Default" as defined under the Note or the Guaranty 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, including, but not limited to (i) any indebtedness for borrowed money or indebtedness evidenced by notes, bonds or similar instruments, including 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 Obligation becomes immediately due and payable at Secured Party's option without notice to Debtor, and Secured Party 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 Party, shall assemble the Collateral and make it available to Secured Party at a place reasonably convenient to both parties. Debtor is entitled to any surplus and shall be liable to Secured Party for any deficiency, arising from accounts, contract rights, or chattel paper included in the Collateral through sale thereof to the Secured Party.
 
6.               Remedies of Secured Party . Secured Party may, in its discretion, after an event of default: (i) require Debtor to give possession or control of the Collateral to Secured Party, and Secured Party 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 to make payment directly to Secured Party; (iv) contact account debtors directly to verify information furnished by Debtor; (v) take control of proceeds and use cash proceeds to reduce any part of the Obligation; (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 Obligation (but Secured Party is 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 Obligation; and (ix) waive any of its rights hereunder without such waiver prohibiting the later exercise of the same or similar rights.
 
7.               Satisfaction of Liens . If Secured Party disposes of the Collateral following default, the proceeds of such disposition shall be applied first to the Note secured by the Guaranty included in the Obligation, and thereafter to all remaining Obligations secured hereby. For purposes of this paragraph, an extended or renewed guaranty will be considered executed on the date of the original Guaranty.
 
8.               Subordination . Notwithstanding anything to the contrary set forth in this Security 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 Party will from time to time execute and deliver a subordination agreement on the terms consistent with Section 7 of the Note 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 Note, the Obligation and the Security Interest to any Senior Debt.
 
 
 
 
9.               Release . Upon payment in full of the Obligation, the Security Interest shall automatically terminate and be released without any further action of the Secured Party, 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 of UCC financing statements.
 
10.               Miscellaneous . The rights and privileges of 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 Party, 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 Maryland shall govern the rights and obligations of the parties to this Security 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 Security Agreement, or any financing statement signed by Debtor, is sufficient as a financing statement.
 
 
 
 
IN WITNESS WHEREOF, the parties have executed this Security Agreement under seal as of the day and year first above written.
 
WITNESS:                                                         
NEXTGEN DEALER SOLUTIONS, LLC
 
_________________________________            By: /s/ Marshall Chesrown (SEAL)
                                                                                     Marshall Chesrown, President
 
"Debtor"
 
WITNESS:                                                         
NEXTGEN DEALER SOLUTIONS, LLC
 
_________________________________            By: /s/ Kartik Kakarala    (SEAL)
Kartik Kakarala, Manager
 
"Secured Party"
 
 
 
 
EXHIBIT "A"
 
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.
 
 
 
 
 
 
 
 
 
 
EXHIBIT “B”
 
PATENT SECURITY AGREEMENT
 
 
 
 
 
 
 
 
 
PATENT SECURITY AGREEMENT
 
THIS PATENT SECURITY AGREEMENT (the “ Agreement ”), made this 8th day of February, 2017, by and between NEXTGEN PRO, LLC, a Delaware limited liability company, with an address of 4521 Sharon Road, Suite 370, Charlotte, North Carolina 28211 (“ Debtor ”), and NEXTGEN DEALER SOLUTIONS, LLC, a Delaware limited liability company, with an address of 1431 Greenway Drive, Suite 775, Irving, Texas 75038 (the “ Secured Party ”).
 
WHEREAS, Debtor has executed an Unconditional Guaranty Agreement dated even date herewith (the " Guaranty ") in favor of the Secured Party, pursuant to which the Debtor guaranteed the payment and performance of all obligations of Smart Server, Inc. under a Subordinated Secured Confessed Judgement Promissory Note executed in favor of the Secured Party on the date hereof.
 
WHEREAS, to secure the obligations under the Guaranty, the Debtor executed and delivered to the Secured Party that certain Security Agreement dated as of the date hereof (the “ Security Agreement ”).
 
WHEREAS, under the terms of the Security Agreement, the Debtor granted to the Secured Party, a security interest in, among other property, certain intellectual property of the Debtor, and agreed to execute and deliver this Patent Security Agreement, for recording with national, federal and state government authorities, including, but not limited to, the United States Patent and Trademark Office.
 
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor agrees with the Secured Party as follows:
 
1.             
Grant of Security . Debtor hereby pledges and grants to the Secured Party a security interest in and to all of the right, title and interest of such Debtor in, to and under the following, wherever located, and whether now existing or hereafter arising or acquired from time to time (the “ Patent Collateral ”):
 
(a)   All patents and patent applications, including patent application number 14614160 entitled “Near Field Communication (NFC) Vehicle Identification System and Process” filed with the United States Patent and Trademark Office and all registrations, reissues, divisions, continuations, continuations-in-part, renewals, extensions and re-examinations thereof and amendments thereto (the “ Patents ”);
 
(b)   all rights of any kind whatsoever of such Debtor accruing under any of the Patents 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 Patents; and
 
(d)   any and all claims and causes of action, with respect to any of the Patents, 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, 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.
 
2.                Recordation . Debtor authorizes the Commissioner for Patents and any other government officials to record and register this Patent Security Agreement upon request by the Secured Party.
 
3.                Loan Documents . This Patent Security Agreement has been entered into pursuant to and in conjunction with the Security Agreement, which is hereby incorporated by reference. The provisions of the Security Agreement, including the provisions in Section 8 for subordination, shall supersede and control over any conflicting or inconsistent provision herein. The rights and remedies of the Secured Party with respect to the Patent Collateral are as provided by the Security Agreement, and nothing in this Patent Security Agreement shall be deemed to limit such rights and remedies.
 
4.                Execution in Counterparts . This Patent Security Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page to this Patent Security Agreement by facsimile or in electronic (i.e., “pdf” or “tif” format) shall be effective as delivery of a manually executed counterpart of this Patent Security Agreement.
 
5.                Successors and Assigns . This Patent Security Agreement will be binding on and shall inure to the benefit of the parties hereto and their respective successors and assigns.
 
6.                Governing Law . This Patent Security Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Patent Security Agreement and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the laws of the United States and the State of Maryland, without giving effect to any choice or conflict of law provision or rule (whether of the State of Maryland or any other jurisdiction).
 
[Intentionally Left Blank—Signature Page Follows]
 
 
 
 
IN WITNESS WHEREOF, Debtor has caused this Patent Security Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.
 
NEXTGEN PRO, LLC
 
 
 
 
                                                                             By: /s/ Marshall Chesrown  
Name: Marshall Chesrown
Title: President
Address for Notices:
4521 Sharon Road
Suite 370
Charlotte, North Carolina 28211
Attention: Steven Berard
 
 
AGREED TO AND ACCEPTED:
 
NEXTGEN DEALER SOLUTIONS. LLC
 
By: /s/ Kartik Kakarala
Name: Kartik Kakarala
Title: President
 
Address for Notices:
1431 Greenway Drive
Suite 775
Irving, Texas 75038
Attention: Kartik Kakarala
 
 
 
 
EXHIBIT “C”
 
TRADEMARK SECURITY AGREEMENT
 
 
 
 
 
 
 
 
 
 
TRADEMARK SECURITY AGREEMENT
 
THIS TRADEMARK SECURITY AGREEMENT (the “ Agreement ”), made this 8th day of February, 2017, by and between NEXTGEN PRO, LLC, a Delaware limited liability company, with an address of 4521 Sharon Road, Suite 370, Charlotte, North Carolina 28211 (“ Debtor ”), and NEXTGEN DEALER SOLUTIONS, LLC, a Delaware limited liability company, with an address of 1431 Greenway Drive, Suite 775, Irving, Texas 75038 (the “ Secured Party ”).
 
WHEREAS, Debtor has executed an Unconditional Guaranty Agreement dated even date herewith (the " Guaranty ") in favor of the Secured Party, pursuant to which the Debtor guaranteed the payment and performance of all obligations of Smart Server, Inc. under a Subordinated Secured Confessed Judgement Promissory Note executed in favor of the Secured Party on the date hereof.
 
WHEREAS, to secure the obligations under the Note, the Debtor executed and delivered to the Secured Party that certain Security Agreement dated as of the date hereof (the “ Security   Agreement ”).
 
WHEREAS, under the terms of the Security Agreement, the Debtor granted to the Secured Party, a security interest in, among other property, certain intellectual property of the Debtor, and agreed to execute and deliver this Trademark Security Agreement, for recording with national, federal and state government authorities, including, but not limited to, the United States Patent and Trademark Office.
 
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor agrees with the Secured Party as follows:
 
1.             
Grant of Security . Debtor hereby pledges and grants to the Secured Party a security interest in and to all of the right, title and interest of such Debtor in, to and under the following, wherever located, and whether now existing or hereafter arising or acquired from time to time (the “ Trademark Collateral ”):
 
(a)             
All trademark registrations and applications, including the trademark
 
registered with the United States Trademark and Trademark Office, Registration number 4,662,863, 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 such 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.
 
2.                Recordation . Debtor authorizes the Commissioner for Trademarks and any other government officials to record and register this Trademark Security Agreement upon request by the Secured Party.
 
3.                Loan Documents . This Trademark Security Agreement has been entered into pursuant to and in conjunction with the Security Agreement, which is hereby incorporated by reference. The provisions of the Security Agreement, including the provisions in Section 8 for subordination, shall supersede and control over any conflicting or inconsistent provision herein. The rights and remedies of the Secured Party with respect to the Trademark Collateral are as provided by the Security Agreement, and nothing in this Trademark Security Agreement shall be deemed to limit such rights and remedies.
 
4.                Execution in Counterparts . This Trademark Security Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page to this Trademark Security Agreement by facsimile or in electronic (i.e., “pdf” or “tif” format) shall be effective as delivery of a manually executed counterpart of this Trademark Security Agreement.
 
5.                Successors and Assigns . This Trademark Security Agreement will be binding on and shall inure to the benefit of the parties hereto and their respective successors and assigns.
 
6.                Governing Law . This Trademark Security Agreement and any claim, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Trademark Security Agreement and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the laws of the United States and the State of Maryland, without giving effect to any choice or conflict of law provision or rule (whether of the State of Maryland or any other jurisdiction).
 
 
 
 
IN WITNESS WHEREOF, Debtor has caused this Trademark Security Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.
 
NEXTGEN PRO, LLC
 
 
 
 
                                                                             By: /s/ Marshall Chesrown  
Name: Marshall Chesrown
Title: President
 
Address for Notices:
4521 Sharon Road
Suite 370
Charlotte, North Carolina 28211
Attention: Steven Berrard
 
AGREED TO AND ACCEPTED:
 
NEXTGEN DEALER SOLUTIONS. LLC
 
By: /s/ Kartik Kakarala
Name: Kartik Kakarala
Title: President
 
Address for Notices:
1431 Greenway Drive
Suite 775
Irving, Texas 75038
Attention: Kartik Kakarala
 
 
  Exhibit 10.4
 
SUBORDINATION AGREEMENT
 
This Subordination Agreement is made as of April 30, 2018 by and among the undersigned creditors (collectively, “ Creditors ”, and each, a “ Creditor ”), RUMBLEON, INC., a Nevada corporation (“ Parent ”), NEXTGEN PRO, LLC, a Delaware limited liability company (“ NextGen Pro ”), RMBL MISSOURI, LLC, a Delaware limited liability company (“ RMBL Missouri ”), RMBL TEXAS, LLC, a Delaware limited liability company (“ RMBL Texas ”), and each of their Qualified Subsidiaries from time to time party hereto (together with Parent, NextGen Pro, RMBL Missouri and RMBL Texas, individually, each, a “ Borrower ”, and collectively, “ Borrowers ”), and HERCULES CAPITAL, INC. (“ Agent ”), in its capacity as administrative agent for itself and Lender (as defined in the Loan Agreement (as defined below)).
 
RECITALS
 
 
A.   Borrowers have requested certain loans and other credit accommodations pursuant to the terms of that certain Loan and Security Agreement dated as of April 30, 2018 by and between Borrowers, Agent and certain lenders from time to time party to thereto (as amended, restated, supplemented or otherwise modified from time to time, the “ Loan Agreement ”), and have granted a security interest in substantially all assets to secure the obligations thereunder.
 
B.   Each Creditor has extended loans or other credit accommodations to Borrowers and may in the future extend additional loans or credit accommodations to Borrowers from time to time, subject to the terms of the Loan Agreement, including without limitation that certain Promissory Note, dated March 31, 2017, in original principal amount of $370,556 issued to Blue Flame Capital, LLC, that certain Promissory Note, dated March 31, 2017, in original principal amount of $148,222 issued to Lori Sue Chesrown, and that certain Promissory Note, dated March 31, 2017, in original principal amount of $148,222 issued to Ralph Wegis (collectively, the “ Subordinated Notes ” and each, a “ Subordinated Note ”).
 
C.   Each Creditor is willing to subordinate: (i) all of any Borrower’s indebtedness and obligations to such Creditor, whether presently existing or arising in the future (the “ Subordinated Debt ”) to all of Borrowers’ indebtedness and obligations to Agent and Lender; and (ii) all of such Creditor’s security interests, if any, in any Borrower’s property, to all of Agent’s security interests in Borrowers’ property , all in accordance with the provisions set forth herein.
 
AGREEMENT
 
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
 
1.   Each Creditor subordinates to Agent any security interest or lien that such Creditor may have in any property of any Borrower. Notwithstanding the respective dates of attachment or perfection of the security interest of a Creditor and the security interest of Agent, the security interest of Agent in the Collateral, as defined in the Loan Agreement, shall at all times be prior to the security interest of such Creditor. Capitalized terms not otherwise defined herein shall have the same meaning as in the Loan Agreement.
 
2.   Except as expressly set forth in Section 3, all Subordinated Debt is subordinated in right of payment to all obligations of any Borrower to Agent and Lender now existing or hereafter arising, together with all costs of collecting such obligations (including attorneys’ fees), including, without limitation, all interest accruing after the commencement by or against any Borrower of any Bankruptcy, reorganization or similar proceeding, and all obligations under the Loan Agreement (the “ Senior Debt ”).
 

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3.   No Creditor will demand or receive from any Borrower (and no Borrower will pay to such Creditor) all or any part of the Subordinated Debt, by way of payment, prepayment, setoff, lawsuit or otherwise, nor will such Creditor exercise any remedy with respect to the Collateral, nor will such Creditor commence, or cause to commence, prosecute or participate in any administrative, legal or equitable action against any Borrower, for so long as any portion of the Senior Debt remains outstanding. Notwithstanding the foregoing, Creditors shall be permitted to receive, and Borrowers shall be permitted to pay, the following payments:
 
a.
If an Advance has been made pursuant to Tranche III of the Loan Agreement, regularly scheduled payments as set forth in the Subordinated Notes in the form attached hereto, but only if no Event of Default has occurred and is continuing as of the date of such payment and no Event of Default would result from such payment.
 
b.
If no Advance has been made pursuant to Tranche III of the Loan Agreement, (a) regularly scheduled payments of interest as set forth in the Subordinated Notes in the form attached hereto, but only if no Event of Default has occurred and is continuing as of the date of such payment and no Event of Default would result from such payment, and (b) regularly scheduled payments of principal as set forth in the Subordinated Notes in the form attached hereto, but only if (i) after giving pro forma effect to such payment, Borrowers would have cash in Deposit Accounts or Investment Accounts subject to Account Control Agreements (as such terms are defined in the Loan Agreement) in favor of Agent in an amount not less than $7,500,000, on a consolidated basis, or (ii) as of the end of the last fiscal quarter for which financial statements were required to be delivered to Agent pursuant to the Loan Agreement, Parent maintained Adjusted EBITDA (as defined in the Loan Agreement) for the twelve month period ended as of such date, of not less than $2,000,000.
 
For purposes of the foregoing determinations, amounts of permitted payments shall be determined in the aggregate for all Subordinated Notes and taking into account the aggregate payments due in respect of the Subordinated Notes.
 
4.   Each Creditor shall promptly deliver to Agent in the form received (except for endorsement or assignment by such Creditor where required by Agent) for application to the Senior Debt any payment, distribution, security or proceeds received by such Creditor with respect to the Subordinated Debt other than in accordance with this Agreement.
 
5.   In the event of any Borrower’s insolvency, reorganization or any case or proceeding under any Bankruptcy or insolvency law or laws relating to the relief of debtors, these provisions shall remain in full force and effect, and Agent’s and Lender’s claims against such Borrower shall be paid in full before any payment is made to any Creditor.
 
6.   For so long as any of the Senior Debt remains unpaid, each Creditor irrevocably appoints Agent as such Creditor’s attorney-in-fact, and grants to Agent a power of attorney with full power of substitution, in the name of such Creditor or in the name of Agent, for the use and benefit of Agent, without notice to such Creditor, to perform at Agent’s option the following acts in any Bankruptcy, insolvency or similar proceeding involving a Borrower:
 
(a)
To file the appropriate claim or claims in respect of the Subordinated Debt on behalf of such Creditor if such Creditor does not do so prior to 30 days before the expiration of the time to file claims in such proceeding and if Agent elects, in its sole discretion, to file such claim or claims; or
 
 
2
 
 
(b)
To accept or reject any plan of reorganization or arrangement on behalf of such Creditor and to otherwise vote such Creditor’s claims in respect of any Subordinated Debt in any manner that Agent deems appropriate for the enforcement of its rights hereunder.
 
7.   In the event of a Borrower’s insolvency, reorganization or any case or proceeding, arrangement or transaction under any federal or state bankruptcy or insolvency law or similar laws or proceedings involving a Borrower, for so long as any of the Senior Debt remains unpaid, if Agent, Lender or any of them shall seek to provide a Borrower or any other Loan Party with any financing under Section 364 of the Bankruptcy Code , or Agent or Lender support or consent to such financing provided by a third party, or consent to any order for the use of cash collateral under Section 363 of the Bankruptcy Code (each, a “ DIP Financing ” or “ Cash Collateral Use ”), with such DIP Financing or Cash Collateral Use to be secured by all or any portion of the Collateral (including assets that, but for the application of Section 552 of the Bankruptcy Code (or any similar provision of any foreign laws relating to the relief of debtors) would be Collateral), then each Creditor agrees that it will raise no objection and will not support, directly or indirectly, any objection to such DIP Financing or Cash Collateral Use nor object to the liens or claims granted in connection therewith on any grounds, including a failure to provide “adequate protection” for the liens, if any, securing any Subordinated Debt (and will not request any adequate protection as a result of such DIP Financing or Cash Collateral Use, and will not support any debtor-in-possession financing or Cash Collateral Use which would compete with such DIP Financing or Cash Collateral Use which is provided to or consented to by Agent or Lender). In addition, each Creditor agrees that it will not provide nor seek to provide or support any debtor-in-possession financing without the prior written consent of Agent.
 
8.   Each Creditor shall immediately affix a legend to the instruments evidencing the Subordinated Debt stating that the instruments are subject to the terms of this Agreement. No amendment of the documents evidencing or relating to the Subordinated Debt shall directly or indirectly modify the provisions of this Agreement in any manner which might terminate or impair the subordination of the Subordinated Debt or the subordination of the security interest or lien that such Creditor may have in any property of a Borrower. In addition, such instruments shall not be amended to (i) increase the rate of interest with respect to the Subordinated Debt, or (ii) accelerate the payment of the principal or interest or any other portion of the Subordinated Debt. Each Creditor represents and warrants that a true copy of the Subordinated Note, as in effect as of the date hereof is attached as Exhibit A hereto, and that no Subordinated Note has been assigned to any other person.
 
9.   This Agreement shall remain effective for so long as Agent or Lender has any obligation to make credit extensions to a Borrower or any Borrower owes any amounts to Agent or Lender under the Loan Agreement or otherwise. If, at any time after payment in full of the Senior Debt any payments of the Senior Debt must be disgorged by Agent or Lender for any reason (including, without limitation, the Bankruptcy of a Borrower), this Agreement and the relative rights and priorities set forth herein shall be reinstated as to all such disgorged payments as though such payments had not been made and each Creditor shall immediately pay over to Agent all payments received with respect to the Subordinated Debt to the extent that such payments would have been prohibited hereunder. At any time and from time to time, without notice to Creditors, Agent or Lender may take such actions with respect to the Senior Debt as Agent and Lender, respectively, in its sole discretion, may deem appropriate, including, without limitation, terminating advances to a Borrower, increasing the principal amount (which may include any DIP Financing), extending the time of payment, increasing applicable interest rates, renewing, compromising or otherwise amending the terms of any documents affecting the Senior Debt and any collateral securing the Senior Debt, and enforcing or failing to enforce any rights against a Borrower or any other person. No such action or inaction shall impair or otherwise affect Agent’s or Lender’s rights hereunder.
 
10.   This Agreement shall bind any successors or assignees of a Creditor and shall benefit any successors or assigns of Agent. This Agreement is solely for the benefit of each Creditor, Agent and Lender and not for the benefit of any Borrower or any other party. Each Creditor further agrees that if a Borrower is in the process of refinancing a portion of the Senior Debt with a new lender, and if Agent makes a request of such Creditor, such Creditor shall agree to enter into a new subordination agreement with the new lender on substantially the terms and conditions of this Agreement.
 
 
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11.   This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument.
 
12.   This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of California, without regard to principles of conflicts of law. Jurisdiction shall lie in the State of California. THE UNDERSIGNED ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED UNDER CERTAIN CIRCUMSTANCES. TO THE EXTENT PERMITTED BY LAW, EACH PARTY, AFTER CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF ITS, HIS OR HER CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THE MUTUAL BENEFIT OF ALL PARTIES, WAIVES ANY RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT BETWEEN THE UNDERSIGNED PARTIES. If the jury waiver set forth in this Section is not enforceable, then any dispute, controversy or claim arising out of or relating to this Agreement or any of the transactions contemplated herein shall be resolved by judicial reference pursuant to Code of Civil Procedure Section 638 et seq before a mutually acceptable referee or, if none is selected, then a referee chosen by the Presiding Judge of the California Superior Court for Santa Clara County, provided this provision shall not restrict any party from seeking to enforce any prejudgment remedies.
 
13.   This Agreement represents the entire agreement with respect to the subject matter hereof, and supersedes all prior negotiations, agreements and commitments. No Creditor is relying on any representations by Agent, Lender or any Borrower in entering into this Agreement, and each Creditor has kept and will continue to keep itself fully apprised of the financial and other condition of a Borrower. This Agreement may be amended only by written instrument signed by each Creditor, Agent and Borrowers.
 
14.   In the event of any legal action to enforce the rights of a party under this Agreement, the party prevailing in such action shall be entitled, in addition to such other relief as may be granted, all reasonable costs and expenses, including reasonable attorneys’ fees, incurred in such action.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
 
 
4
 
[SIGNATURE PAGE TO SUBORDINATION AGREEMENT]
 
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.
 
AGENT:
 
HERCULES CAPITAL, INC.
 
By: /s/ Zhuo Huang                        
Name: Zhuo Huang                                          
Title: Associate General Counsel
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO SUBORDINATION AGREEMENT]
 
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.
 
 
CREDITORS:
 
BLUE FLAME CAPITAL, LLC
 
By: /s/ Denmar J. Dixon
Name: Denmar J. Dixon
Title: Managing Partner
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO SUBORDINATION AGREEMENT]
 
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.
 
CREDITORS:
 
LORI SUE CHESROWN
 
By: /s/ Lori Sue Chesrown
Name: Lori Sue Chesrown
Title:                                                                            
 
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO SUBORDINATION AGREEMENT]
 
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.
 
CREDITORS:
 
RALPH WEGIS
 
By: /s/ Ralph Wegis  
Name: Ralph Wegis   
Title:                                                                            
 
 
 
 
 
 
 
 
 
 
 
[SIGNATURE PAGE TO SUBORDINATION AGREEMENT]
 
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.
 
BORROWERS:
 
RUMBLEON, INC.
 
Signature:            
/s/ Steven R. Berrard ______
Print Name:     
_ Steven R. Berrard ______
Title:             
__ Chief Financial Officer __
 
 
NEXTGEN PRO, LLC
 
Signature:         
/s/ Steven R. Berrard ______
Print Name:    
_ Steven R. Berrard ______
Title:                  
___ Manager _____________
 
 
RMBL MISSOURI, LLC
 
Signature:         
/s/ Steven R. Berrard ______
Print Name:   
_ Steven R. Berrard ______
Title:           
__ Manager ______________
 
 
RMBL TEXAS, LLC
 
Signature:      
/s/ Steven R. Berrard ______
Print Name:     
_ Steven R. Berrard ______
Title:              
__ Manager ______________
 
 
 
 
 
 
 
 
 
 
EXHIBIT A
 
SUBORDINATED NOTES
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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.
 
PROMISSORY NOTE
  DUE MARCH 31, 2020
 
US $ 370, 556
 
Date of Issuance: March 31, 2017
 
FOR VALUE RECEIVED, RumbleON, Inc., a Nevada corporation (the " Company "), hereby unconditionally promises to pay to the order of BLUE FLAME CAPITAL, LLC (the " Holder "), or their permitted assigns, the aggregate principal sum of THREE HUNDRED SEVENTY THOUSAND FIVE HUNDRED FIFTY-SIX DOLLARS ($370,556.00) (the " Principal Amount "), together with interest on the unpaid principal balance of this Promissory Note (this " Note ") at the rate specified herein. All payments of principal and interest by the Company under this Note shall be made in United States dollars in immediately available funds to the account specified by the Holder.
 
1.   Definitions . Unless the context otherwise requires, when used herein the following terms shall have the meanings indicated:
 
(a)   " Affiliate " means, with respect to any person or entity, any person or entity which directly or indirectly controls, is controlled by or is under common control with such person or entity, as applicable. As used in this definition, "control" (including, with correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).
 
(b)   " Maturity Date " means the third anniversary of the date of issuance of this Note.
 
(c)   " Outstanding Balance " means all outstanding principal under the Note and any accrued and unpaid interest thereon.
 
(d)   " Person " means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.
 
 
 
 
2.   Transfer . This Note is transferable and assignable by the Holder to any Person previously approved, in writing, by the Company; provided, however , that no approval shall be required in connection with any transfer or assignment of this Note to an Affiliate of the Holder in compliance with applicable securities laws. The Company agrees to issue from time to time a replacement Note in the form hereof to facilitate such approved transfers and assignments. In addition, after delivery of an indemnity in form and substance reasonably satisfactory to the Company, the Company also agrees to promptly issue a replacement Note if this Note is lost, stolen, mutilated or destroyed.
 
3.   Payment of Principal and Interest; Prepayment .  
 
(a)   Interest shall accrue from the date hereof and shall continue to accrue on the outstanding and unpaid Principal Amount until paid in full. From the date hereof through and until the second anniversary of the date hereof, interest shall accrue on the outstanding and unpaid Principal Amount at the rate of 6.5% per annum. From the second anniversary of the date hereof and until the Maturity Date, interest shall accrue on the outstanding and unpaid Principal Amount at the rate of 8.5% 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 Interest shall be paid to Holder semi-annually in arrears on the last day of each six month anniversary of the date hereof, including, if applicable, on the Maturity Date.
 
(b)   The Company may, at its option, at any time, and without penalty, prepay all or any portion of the principal amount or accrued but unpaid interest on this Note without the prior written consent of the Holder.
 
4.   Event of Default .  
 
The occurrence of any of the following events shall constitute an " Event of Default " hereunder:
 
 
(a)   the failure of the Company to make any payment of principal or interest on this Note when due, whether at maturity, upon acceleration or otherwise;
 
(b)   (i) the Company or a subsidiary of the Company (a " Subsidiary ") makes a determination to discontinue (or does cease to conduct) business, makes an assignment for the benefit of creditors or admits in writing its inability to pay its debts generally as they become due; (ii) an order, judgment or decree is entered adjudicating the Company or a Subsidiary as bankrupt or insolvent; (iii) any order for relief with respect to the Company or a Subsidiary is entered under the U.S. Bankruptcy Code or any other applicable bankruptcy or insolvency law; (iv) the Company or a Subsidiary petitions or applies to any tribunal for the appointment of a custodian, trustee, receiver or liquidator of the Company or a Subsidiary or of any substantial part of the assets of the Company or a Subsidiary commences any proceeding relating to it under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction; or (v) any such petition or application in (iv) above is filed, or any such proceeding is commenced, against the Company or a Subsidiary and either (x) the Company or such Subsidiary by any act indicates its approval thereof, consents thereto or acquiesces therein or (y) such petition, application or proceeding is not dismissed within sixty (60) days;
 
 
 
 
(c)   unless waived by the Holder, if the Company fails to observe or perform in any material respect any of its covenants contained in the Note and such failure continues for more than thirty (30) days after delivery of written notice thereof;
 
(d)   unless waived by the Holder, the Company's material breach of any other term or provision in this Note and such failure continues for more than thirty (30) days after delivery of written notice thereof; or
 
(e)   the Company's indebtedness for borrowed money is accelerated as a result of a default or breach under any agreement for such borrowed money, including but not limited to loan agreements, or material breach under any real property lease agreements and material capital equipment lease agreements, by which the Company is bound or obligated, which breach is not cured by the Company within the applicable time periods thereof.
 
Upon the occurrence of any Event of Default, the Outstanding Balance under this Note shall become immediately due and payable upon election of the Holder. Upon the occurrence of any Event of Default, the Holder may, in addition to declaring all amounts due hereunder to be immediately due and payable, pursue any available remedy, whether at law or in equity, including, without limitation, exercising its rights under this Note. If an Event of Default occurs, the Company shall pay to the Holder the reasonable attorneys' fees and disbursement and all other reasonable out-of-pocket costs incurred by the Holder in order to collect amounts due and owing under this Note or otherwise to enforce the Holder's rights and remedies hereunder.
 
5.   Amendments in Writing . Any term of this Note may be amended, modified (including, without limitation, any extension of the Maturity Date) or waived upon the written consent of the Company and the Holder. No such waiver or consent in any one instance shall be construed to be a continuing waiver or a waiver in any other instance unless it expressly so provides.
 
6.   Waivers . The Company hereby forever waives presentment, demand, presentment for payment, protest, notice of protest, notice of dishonor of this Note and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note.
 
7.   Governing Law; Jurisdiction; Venue . This Note, and all matters arising directly and indirectly herefrom (the " Covered Matters "), shall be governed in all respects by the laws of the State of Nevada as such laws are applied to agreements between parties in the State of Nevada. The Company irrevocably submits to the personal jurisdiction of the courts of the State of Nevada and the United States District Court located nearest the Company's principal place of business for the purpose of any suit, action, proceeding or judgment relating to or arising out of the Covered Matters. Service of process on the Company in connection with any such suit, action or proceeding may be served on the Company anywhere in the world by the same methods as are specified for the giving of notices under this Note. The Company irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The Company irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
 
 
 
 
8.   Notices . All notices and other communications given or made pursuant to this Note shall be in writing and shall be deemed effectively given (a) upon personal delivery to the party to be notified; (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Holder at the address set forth on the books and records of the Company or at such other place as may be designated by the Holder in writing to the Company in accordance with the provisions of this Section 8, and to the Company at the Company's principal place of business, or to such e-mail address, facsimile number or address as subsequently modified by written notice in accordance with the provisions of this Section 8.
 
9.   Successors and Assigns . This note shall be binding upon the successors or assigns of the Company and shall inure to the benefit of the successors and permitted assigns of the Holder.
 
 
 
[SIGNATURE PAGE FOLLOWS]
 
 
 
IN WITNESS WHEREOF, the Company has executed this Promissory Note as of the date first above written.
 
 
RumbleON, Inc.
a Nevada corporation
 
 
 
By_ /s/ Steven R. Berrard _________________
Name: Steven R. Berrard
Title: CFO
 
Address:
4521 Sharon Road, Suite 370
Charlotte, North Carolina 28211
 
 
 
 
 
 
 
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.
 
PROMISSORY NOTE
 
DUE March 31, 2020
 
 
 
US $148,222
 
Date of Issuance: March 31, 2017
 
FOR VALUE RECEIVED, RumbleON, Inc., a Nevada corporation (the " Company "), hereby unconditionally promises to pay to the order of LORI SUE CHESROWN (the " Holder "), or their permitted assigns, the aggregate principal sum of ONE HUNDRED FORTY EIGHT THOUSAND TWO HUNDRED TWENTY-TWO DOLLARS ( $148,222.00 ) (the " Principal Amount "), together with interest on the unpaid principal balance of this Promissory Note (this " Note ") at the rate specified herein. All payments of principal and interest by the Company under this Note shall be made in United States dollars in immediately available funds to the account specified by the Holder.
 
10.   Definitions . Unless the context otherwise requires, when used herein the following terms shall have the meanings indicated:
 
(a)   " Affiliate " means, with respect to any person or entity, any person or entity which directly or indirectly controls, is controlled by or is under common control with such person or entity, as applicable. As used in this definition, "control" (including, with correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).
 
(b)   " Maturity Date " means the third anniversary of the date of issuance of this Note.
 
(c)   " Outstanding Balance " means all outstanding principal under the Note and any accrued and unpaid interest thereon.
 
(d)   " Person " means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.
 
 
1
 
 
11.   Transfer . This Note is transferable and assignable by the Holder to any Person previously approved, in writing, by the Company; provided, however , that no approval shall be required in connection with any transfer or assignment of this Note to an Affiliate of the Holder in compliance with applicable securities laws. The Company agrees to issue from time to time a replacement Note in the form hereof to facilitate such approved transfers and assignments. In addition, after delivery of an indemnity in form and substance reasonably satisfactory to the Company, the Company also agrees to promptly issue a replacement Note if this Note is lost, stolen, mutilated or destroyed.
 
12.   Payment of Principal and Interest; Prepayment .  
 
(a)   Interest shall accrue from the date hereof and shall continue to accrue on the outstanding and unpaid Principal Amount until paid in full. From the date hereof through and until the second anniversary of the date hereof, interest shall accrue on the outstanding and unpaid Principal Amount at the rate of 6.5% per annum. From the second anniversary of the date hereof and until the Maturity Date, interest shall accrue on the outstanding and unpaid Principal Amount at the rate of 8.5% 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 Interest shall be paid to Holder semi-annually in arrears on the last day of each six month anniversary of the date hereof, including, if applicable, on the Maturity Date.
 
(b)   The Company may, at its option, at any time, and without penalty, prepay all or any portion of the principal amount or accrued but unpaid interest on this Note without the prior written consent of the Holder.
 
13.   Event of Default .  
 
The occurrence of any of the following events shall constitute an " Event of Default " hereunder:
 
 
(a)   the failure of the Company to make any payment of principal or interest on this Note when due, whether at maturity, upon acceleration or otherwise;
 
(b)   (i) the Company or a subsidiary of the Company (a " Subsidiary ") makes a determination to discontinue (or does cease to conduct) business, makes an assignment for the benefit of creditors or admits in writing its inability to pay its debts generally as they become due; (ii) an order, judgment or decree is entered adjudicating the Company or a Subsidiary as bankrupt or insolvent; (iii) any order for relief with respect to the Company or a Subsidiary is entered under the U.S. Bankruptcy Code or any other applicable bankruptcy or insolvency law; (iv) the Company or a Subsidiary petitions or applies to any tribunal for the appointment of a custodian, trustee, receiver or liquidator of the Company or a Subsidiary or of any substantial part of the assets of the Company or a Subsidiary commences any proceeding relating to it under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction; or (v) any such petition or application in (iv) above is filed, or any such proceeding is commenced, against the Company or a Subsidiary and either (x) the Company or such Subsidiary by any act indicates its approval thereof, consents thereto or acquiesces therein or (y) such petition, application or proceeding is not dismissed within sixty (60) days;
 
 
2
 
 
(c)   unless waived by the Holder, if the Company fails to observe or perform in any material respect any of its covenants contained in the Note and such failure continues for more than thirty (30) days after delivery of written notice thereof;
 
(d)   unless waived by the Holder, the Company's material breach of any other term or provision in this Note and such failure continues for more than thirty (30) days after delivery of written notice thereof; or
 
(e)   the Company's indebtedness for borrowed money is accelerated as a result of a default or breach under any agreement for such borrowed money, including but not limited to loan agreements, or material breach under any real property lease agreements and material capital equipment lease agreements, by which the Company is bound or obligated, which breach is not cured by the Company within the applicable time periods thereof.
 
Upon the occurrence of any Event of Default, the Outstanding Balance under this Note shall become immediately due and payable upon election of the Holder. Upon the occurrence of any Event of Default, the Holder may, in addition to declaring all amounts due hereunder to be immediately due and payable, pursue any available remedy, whether at law or in equity, including, without limitation, exercising its rights under this Note. If an Event of Default occurs, the Company shall pay to the Holder the reasonable attorneys' fees and disbursement and all other reasonable out-of-pocket costs incurred by the Holder in order to collect amounts due and owing under this Note or otherwise to enforce the Holder's rights and remedies hereunder.
 
14.   Amendments in Writing . Any term of this Note may be amended, modified (including, without limitation, any extension of the Maturity Date) or waived upon the written consent of the Company and the Holder. No such waiver or consent in any one instance shall be construed to be a continuing waiver or a waiver in any other instance unless it expressly so provides.
 
15.   Waivers . The Company hereby forever waives presentment, demand, presentment for payment, protest, notice of protest, notice of dishonor of this Note and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note.
 
16.   Governing Law; Jurisdiction; Venue . This Note, and all matters arising directly and indirectly herefrom (the " Covered Matters "), shall be governed in all respects by the laws of the State of Nevada as such laws are applied to agreements between parties in the State of Nevada. The Company irrevocably submits to the personal jurisdiction of the courts of the State of Nevada and the United States District Court located nearest the Company's principal place of business for the purpose of any suit, action, proceeding or judgment relating to or arising out of the Covered Matters. Service of process on the Company in connection with any such suit, action or proceeding may be served on the Company anywhere in the world by the same methods as are specified for the giving of notices under this Note. The Company irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The Company irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
 
 
3
 
 
17.   Notices . All notices and other communications given or made pursuant to this Note shall be in writing and shall be deemed effectively given (a) upon personal delivery to the party to be notified; (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Holder at the address set forth on the books and records of the Company or at such other place as may be designated by the Holder in writing to the Company in accordance with the provisions of this Section 8, and to the Company at the Company's principal place of business, or to such e-mail address, facsimile number or address as subsequently modified by written notice in accordance with the provisions of this Section 8.
 
18.   Successors and Assigns . This note shall be binding upon the successors or assigns of the Company and shall inure to the benefit of the successors and permitted assigns of the Holder.
 
 
 
[SIGNATURE PAGE FOLLOWS]
 
 
4
 
IN WITNESS WHEREOF, the Company has executed this Promissory Note as of the date first above written.
 
 
RumbleON, Inc.
a Nevada corporation
 
 
 
By_ /s/ Steven R. Berrard _________________
Name: Steven R. Berrard
Title: CFO
 
Address:
4521 Sharon Road, Suite 370
Charlotte, North Carolina 28211
 
 
 
 
 
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.
 
 
PROMISSORY NOTE
 
DUE March 31, 2020
 
 
 
US $148,222
 
Date of Issuance: March 31, 2017
 
FOR VALUE RECEIVED, RumbleON, Inc., a Nevada corporation (the " Company "), hereby unconditionally promises to pay to the order of RALPH WEGIS (the " Holder "), or their permitted assigns, the aggregate principal sum of ONE HUNDRED FORTY EIGHT THOUSAND TWO HUNDRED TWENTY-TWO DOLLARS ( $148,222.00 ) (the " Principal Amount "), together with interest on the unpaid principal balance of this Promissory Note (this " Note ") at the rate specified herein. All payments of principal and interest by the Company under this Note shall be made in United States dollars in immediately available funds to the account specified by the Holder.
 
 
19.   Definitions . Unless the context otherwise requires, when used herein the following terms shall have the meanings indicated:
 
(a)   " Affiliate " means, with respect to any person or entity, any person or entity which directly or indirectly controls, is controlled by or is under common control with such person or entity, as applicable. As used in this definition, "control" (including, with correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise).
 
(b)   " Maturity Date " means the third anniversary of the date of issuance of this Note.
 
(c)   " Outstanding Balance " means all outstanding principal under the Note and any accrued and unpaid interest thereon.
 
(d)   " Person " means an individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein.
 
 
1
 
 
20.   Transfer . This Note is transferable and assignable by the Holder to any Person previously approved, in writing, by the Company; provided, however , that no approval shall be required in connection with any transfer or assignment of this Note to an Affiliate of the Holder in compliance with applicable securities laws. The Company agrees to issue from time to time a replacement Note in the form hereof to facilitate such approved transfers and assignments. In addition, after delivery of an indemnity in form and substance reasonably satisfactory to the Company, the Company also agrees to promptly issue a replacement Note if this Note is lost, stolen, mutilated or destroyed.
 
21.   Payment of Principal and Interest; Prepayment .  
 
(a)   Interest shall accrue from the date hereof and shall continue to accrue on the outstanding and unpaid Principal Amount until paid in full. From the date hereof through and until the second anniversary of the date hereof, interest shall accrue on the outstanding and unpaid Principal Amount at the rate of 6.5% per annum. From the second anniversary of the date hereof and until the Maturity Date, interest shall accrue on the outstanding and unpaid Principal Amount at the rate of 8.5% 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 Interest shall be paid to Holder semi-annually in arrears on the last day of each six month anniversary of the date hereof, including, if applicable, on the Maturity Date.
 
(b)   The Company may, at its option, at any time, and without penalty, prepay all or any portion of the principal amount or accrued but unpaid interest on this Note without the prior written consent of the Holder.
 
22.   Event of Default .  
 
The occurrence of any of the following events shall constitute an " Event of Default " hereunder:
 
 
(a)   the failure of the Company to make any payment of principal or interest on this Note when due, whether at maturity, upon acceleration or otherwise;
 
(b)   (i) the Company or a subsidiary of the Company (a " Subsidiary ") makes a determination to discontinue (or does cease to conduct) business, makes an assignment for the benefit of creditors or admits in writing its inability to pay its debts generally as they become due; (ii) an order, judgment or decree is entered adjudicating the Company or a Subsidiary as bankrupt or insolvent; (iii) any order for relief with respect to the Company or a Subsidiary is entered under the U.S. Bankruptcy Code or any other applicable bankruptcy or insolvency law; (iv) the Company or a Subsidiary petitions or applies to any tribunal for the appointment of a custodian, trustee, receiver or liquidator of the Company or a Subsidiary or of any substantial part of the assets of the Company or a Subsidiary commences any proceeding relating to it under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction; or (v) any such petition or application in (iv) above is filed, or any such proceeding is commenced, against the Company or a Subsidiary and either (x) the Company or such Subsidiary by any act indicates its approval thereof, consents thereto or acquiesces therein or (y) such petition, application or proceeding is not dismissed within sixty (60) days;
 
 
2
 
 
(c)   unless waived by the Holder, if the Company fails to observe or perform in any material respect any of its covenants contained in the Note and such failure continues for more than thirty (30) days after delivery of written notice thereof;
 
(d)   unless waived by the Holder, the Company's material breach of any other term or provision in this Note and such failure continues for more than thirty (30) days after delivery of written notice thereof; or
 
(e)   the Company's indebtedness for borrowed money is accelerated as a result of a default or breach under any agreement for such borrowed money, including but not limited to loan agreements, or material breach under any real property lease agreements and material capital equipment lease agreements, by which the Company is bound or obligated, which breach is not cured by the Company within the applicable time periods thereof.
 
Upon the occurrence of any Event of Default, the Outstanding Balance under this Note shall become immediately due and payable upon election of the Holder. Upon the occurrence of any Event of Default, the Holder may, in addition to declaring all amounts due hereunder to be immediately due and payable, pursue any available remedy, whether at law or in equity, including, without limitation, exercising its rights under this Note. If an Event of Default occurs, the Company shall pay to the Holder the reasonable attorneys' fees and disbursement and all other reasonable out-of-pocket costs incurred by the Holder in order to collect amounts due and owing under this Note or otherwise to enforce the Holder's rights and remedies hereunder.
 
23.   Amendments in Writing . Any term of this Note may be amended, modified (including, without limitation, any extension of the Maturity Date) or waived upon the written consent of the Company and the Holder. No such waiver or consent in any one instance shall be construed to be a continuing waiver or a waiver in any other instance unless it expressly so provides.
 
24.   Waivers . The Company hereby forever waives presentment, demand, presentment for payment, protest, notice of protest, notice of dishonor of this Note and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note.
 
25.   Governing Law; Jurisdiction; Venue . This Note, and all matters arising directly and indirectly herefrom (the " Covered Matters "), shall be governed in all respects by the laws of the State of Nevada as such laws are applied to agreements between parties in the State of Nevada. The Company irrevocably submits to the personal jurisdiction of the courts of the State of Nevada and the United States District Court located nearest the Company's principal place of business for the purpose of any suit, action, proceeding or judgment relating to or arising out of the Covered Matters. Service of process on the Company in connection with any such suit, action or proceeding may be served on the Company anywhere in the world by the same methods as are specified for the giving of notices under this Note. The Company irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. The Company irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.
 
 
3
 
 
26.   Notices . All notices and other communications given or made pursuant to this Note shall be in writing and shall be deemed effectively given (a) upon personal delivery to the party to be notified; (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the Holder at the address set forth on the books and records of the Company or at such other place as may be designated by the Holder in writing to the Company in accordance with the provisions of this Section 8, and to the Company at the Company's principal place of business, or to such e-mail address, facsimile number or address as subsequently modified by written notice in accordance with the provisions of this Section 8.
 
27.   Successors and Assigns . This note shall be binding upon the successors or assigns of the Company and shall inure to the benefit of the successors and permitted assigns of the Holder.
 
 
 
[SIGNATURE PAGE FOLLOWS]
 
 
4
 
IN WITNESS WHEREOF, the Company has executed this Promissory Note as of the date first above written.
 
 
RumbleON, Inc.
a Nevada corporation
 
 
 
By_ /s/ Steven R. Berrard _________________
Name: Steven R. Berrard
Title: CFO
 
Address:
4521 Sharon Road, Suite 370
Charlotte, North Carolina 28211
 
 
 
  Exhibit 10.5
 
INTELLECTUAL PROPERTY SECURITY AGREEMENT
 
This Intellectual Property Security Agreement (as amended, restated, supplemented or otherwise modified from time to time, the “ Agreement ”) is entered into as of April 30, by and among HERCULES CAPITAL, INC., a Maryland corporation (“ Agent ”), and RUMBLEON, INC., a Nevada corporation, and NEXTGEN PRO, LLC, a Delaware limited liability company (collectively, “ Grantors ”, and each, a “ Grantor ”).
 
 
RECITALS
 
A.   Lender has agreed to make certain advances of money and to extend certain financial accommodation (the “ Loans ”) to Grantors in the amounts and manner set forth in that certain Loan and Security Agreement by and among the several entities from time to time parties thereto (collectively, referred to as “ Lender ”), Agent, Grantors and any other parties thereto, from time to time, dated as of the date hereof (as amended, modified, supplemented or otherwise modified from time to time, the “ Loan Agreement ”).
 
B.   As a condition to the Loan Agreement, Grantors are required to enter into this Agreement to further evidence the grant to Agent of the security interest in its Copyrights, Trademarks and Patents to secure the Secured Obligations.
 
AGREEMENT
 
NOW, THEREFORE, each Grantor agrees as follows:
 
To secure the Secured Obligations and any other obligations pursuant to the Loan Documents, each Grantor grants and pledges to Agent a security interest in all of such Grantor’s Intellectual Property (including without limitation those Copyrights, Patents and Trademarks listed on Exhibits A, B and C hereto).
 
This security interest is granted in conjunction with the security interest granted to Agent under the Loan Agreement. The rights and remedies of Agent with respect to the security interest are as set forth in the Loan Agreement and the other Loan Documents or as are now or hereafter available to Agent as a matter of law or equity, shall be cumulative and concurrent.
 
Each Grantor represents and warrants that Exhibits A, B, and C attached hereto set forth any and all Copyrights, Patents and Trademarks in connection with which such Grantor, as of the date hereof, has registered or filed an application with the United States Patent and Trademark Office or the United States Copyright Office, as applicable.
 
Each Grantor hereby authorizes Agent to (a) modify this Agreement unilaterally by amending the exhibits to this Agreement to include any Intellectual Property which a Grantor obtains subsequent to the date of this Agreement, and (b) file a duplicate original of this Agreement containing amended exhibits reflecting such new Intellectual Property.
 
All capitalized terms used herein without definition shall have the meanings ascribed thereto in the Loan Agreement.
 
[SIGNATURES TO FOLLOW]
 

 
 
[SIGNATURE PAGE TO INTELLECTUAL PROPERTY SECURITY AGREEMENT]
 
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed effective as of the date set forth above.
 
Address of Grantors:
 
 
4521 Sharon Road
Suite 370
Charlotte, NC 28211
Attention: Tom Aucamp
 
GRANTORS:
RUMBLEON, INC.
By: /s/ Steven R. Berrard                                                                     
Name: Steven R. Berrard                                                                     
Title: Chief Financial Officer                                                                     
 
 
 
 
NEXTGEN PRO, LLC
By: /s/ Steven R. Berrard                                                                     
Name: Steven R. Berrard                                                                     
Title: Vice President                                                                     
 
 
 
 
 
[SIGNATURE PAGE TO INTELLECTUAL PROPERTY SECURITY AGREEMENT]
 
Address of Agent:
Legal Department
400 Hamilton Avenue, Suite 310
Palo Alto, CA 94301
Attn: Loan Documentation
AGENT:
HERCULES CAPITAL, INC.
By: /s/ Zhuo Huang                                                                     
Name: Zhuo Huang                                                                     
Title: Associate General Counsel                                                                     
 
 
 
 
 
 
EXHIBIT A
 
 
COPYRIGHTS
 
 
 
None.
 
 
 
 
EXHIBIT B
 
PATENTS
 
 
Owner
 
Description
 
Patent / ApplicationNumber
 
Issue / Application Date
 
NEXTGEN PRO, LLC
 
NEAR FIELD COMMUNICATION (NFC) VEHICLE IDENTIFICATION SYSTEM AND PROCESS
 
14/614,160
 
02/04/2015
 
 
 
 
 
 
 
 
 
 
 
 
 
EXHIBIT C
 
TRADEMARKS
 
 
 
Owner
 
Description
 
Registration/ Serial Number
 
Registration/ Application Date
 
RUMBLEON, INC.
 
 
87/537,145
 
07/21/2017
 
RUMBLEON, INC.
 
 
87/532,685
 
07/18/2017
 
RUMBLEON, INC.
 
RUMBLEON
 
5,340,911
 
11/21/2017
 
RUMBLEON, INC.
 
 
87/532,644
 
07/18/2017
 
RUMBLEON, INC.
 
RUMBLEON
 
87/430,981
 
04/29/2017
 
NEXTGEN PRO, LLC
 
 
4,662,863
 
12/30/2014
 
 
 
 
 
 
 
 
 
 
 
  Exhibit 99.1
 
 
 
RumbleOn Announces Closing of $15 Million Senior Secured Credit Facility With Hercules Capital, Inc.
 
CHARLOTTE, N.C., April 30, 2018 (GLOBE NEWSWIRE) -- RumbleOn, Inc. (NASDAQ: RMBL ), a disruptive e-commerce platform facilitating, in one online location, the ability of consumers and dealers to buy, sell, trade, and finance pre-owned vehicles with an emphasis on motorcycles and other powersports, today announced it has entered into a $15 million Senior Secured Credit Facility with Hercules Capital, Inc. (“Hercules”), a leader in customized debt financing for companies in technology and life sciences related markets.   Under the terms of the facility, $5.0 million will be funded at closing with the balance available in two additional tranches over the term of the facility, subject to certain operating targets. The facility has an initial 36-month maturity and initial 10.5% interest rate. Pursuant to the loan agreement, RumbleOn issued to Hercules at closing a warrant to purchase 81,818 shares of RumbleOn Class B common stock at an exercise price of $5.50 per share.
 
Marshall Chesrown, Chief Executive Officer of RumbleOn stated, “We are excited to be working with Hercules, a leader in the industry with a long history of supporting innovative technology companies. We are pleased that we were able to work together to design a flexible credit facility structured to handle our growth capital needs for the foreseeable future. This financing underscores   confidence that both RumbleOn and Hercules have in our business plan and provides RumbleOn additional flexibility to fund our accelerated growth while creating the most trusted brand and efficient online marketplace in the powersports market.” 
 
About RumbleOn, Inc.
RumbleOn, Inc. (NASDAQ: RMBL ) operates a capital light disruptive e-commerce platform facilitating the ability of both consumers and dealers to Buy-Sell-Trade-Finance pre-owned vehicles in one online location. RumbleOn’s goal is to transform the way pre-owned vehicles are bought and sold by providing users with the most efficient, timely and transparent transaction experience. RumbleOn’s initial focus is the market for vin specific pre-owned vehicles with an emphasis on motorcycles and other powersports. Serving both consumers and dealers, through its 100% online marketplace platform, RumbleOn makes cash offers for the purchase of pre-owned vehicles. In addition, RumbleOn offers a large inventory of pre-owned vehicles for sale along with third-party financing and associated products.   For additional information, please visit RumbleOn’s website at  www.RumbleOn.com .  Also visit the Company on Facebook, LinkedIn, Twitter, Instagram, YouTube and Pinterest. 
 
About Hercules Capital, Inc.
Hercules Capital, Inc. (NYSE: HTGC ) is the leading and largest specialty finance company focused on providing senior secured venture growth loans to high-growth, innovative venture capital-backed companies in a broad variety of technology, life sciences and sustainable and renewable technology industries. Since inception (December 2003), Hercules has committed more than $7.3 billion to over 410 companies and is the lender of choice for entrepreneurs and venture capital firms seeking growth capital financing.
 
Forward Looking Statement
This press release contains “forward-looking statements,” as that term is defined under the Private Securities Litigation Reform Act of 1995 (PSLRA), which statements may be identified by words such as “expects,” “plans,” “projects,” “will,” “may,” “anticipate,” “believes,” “should,” “intends,” “estimates,” and other words of similar meaning.   Readers are cautioned not to place undue reliance on these forward-looking statements, which are based on our expectations as of the date of this press release and speak only as of the date of this press release and are advised to consider the factors listed above together with the additional factors under the heading “Forward-Looking Statements” and “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as may be supplemented or amended by the Company’s Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.
 
Contact:
Megan Crudele (Investors)
ICR
RumbleOn@icrinc.com  
646-277-1200
Source: RumbleOn, Inc.