Purchase Agreement
6.75%
Convertible Senior Notes due 2024
May 9,
2019
JMP
Securities LLC
As
Initial Purchaser
000
Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxxxx, XX 00000
Ladies
and Gentlemen:
RumbleOn, Inc., a
Nevada corporation (the “Company”), proposes to issue and
sell to the initial purchaser (the “Initial Purchaser”) $30,000,000
aggregate principal amount of its 6.75% Convertible Senior Notes
due 2024 (the “Securities”). The Securities will
be convertible into cash, shares (the “Underlying Securities”) of Class B
common stock of the Company, par value $0.001 per share (the
“Common Stock”),
or a combination thereof, at the Company’s election. The
Securities will be issued pursuant to an Indenture, to be dated as
of May 14, 2019 (the “Indenture”), between the Company
and Wilmington Trust, N.A., as trustee (the “Trustee”).
The
holders of the Securities will be entitled to the benefits of a
registration rights agreement, to be dated as of the Closing Date
(as defined below) and substantially in the form attached hereto as
Exhibit B (the
“Registration Rights
Agreement”), between the Company and the Initial
Purchaser, pursuant to which the Company will agree to file one or
more registration statements with the Commission (as defined below)
providing for the registration under the Securities Act (as defined
below) of the resale of the Securities and the Underlying
Securities. This Agreement, the Registration Rights Agreement and
the Indenture are referred to herein as the “Transaction
Documents.”
The
Company hereby confirms its agreement with the Initial Purchaser
concerning the purchase and sale of the Securities, as
follows:
1. Offering Memorandum and Transaction
Information. The Securities will be sold to the Initial
Purchaser without being registered under the Securities Act of
1933, as amended, and the rules and regulations of the Securities
and Exchange Commission (the “Commission”) thereunder (the
“Securities
Act”), in reliance upon an exemption therefrom. The
Company has prepared a preliminary offering memorandum dated May 9,
2019 (the “Preliminary
Offering Memorandum”) and will prepare an offering
memorandum dated the date hereof (the “Offering Memorandum”) setting
forth information concerning the Company and the Securities. Copies
of the Preliminary Offering Memorandum have been, and copies of the
Offering Memorandum will be, delivered by the Company to the
Initial Purchaser pursuant to the terms of this purchase agreement
(this “Agreement”). The Company hereby
confirms that it has authorized the use of the Preliminary Offering
Memorandum, the other Time of Sale Information (as defined below)
and the Offering Memorandum in connection with the offering and
resale of the Securities by the Initial Purchaser in the manner
contemplated by this Agreement. References herein to the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum shall be deemed to refer to and include any
document incorporated by reference therein and any reference to
“amend,” “amendment” or
“supplement” with respect to the Preliminary Offering
Memorandum or the Offering Memorandum shall be deemed to refer to
and include any documents filed after such date and incorporated by
reference therein.
1
At or
prior to the time when sales of the Securities were first made (the
“Time of Sale”),
the Company had prepared the following information (collectively,
the “Time of Sale
Information”): the Preliminary Offering Memorandum, as
supplemented and amended by the written communications listed on
Annex A
hereto.
2.
Purchase and Resale of the
Securities.
(a) The Company agrees
to issue and sell the Securities to the Initial Purchaser as
provided in this Agreement, and the Initial Purchaser, on the basis
of the representations, warranties and agreements set forth herein
and subject to the conditions set forth herein, agrees to purchase
from the Company the aggregate principal amount of Securities set
forth in Schedule 1
hereto at a price equal to 93% of the principal amount thereof (the
“Purchase
Price”). The offering and sale of the Securities is
hereinafter referred to as the “Offering.”
(b) The Company
understands that the Initial Purchaser intends to offer the
Securities for resale on the terms set forth in the Time of Sale
Information. Initial Purchaser represents, warrants and agrees
that:
(i) it is a qualified
institutional buyer within the meaning of Rule 144A under the
Securities Act (a “QIB”) and an accredited investor
within the meaning of Rule 501(a) of Regulation D under the
Securities Act (“Regulation
D”);
(ii) it
has not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Securities by means of
any form of general solicitation or general advertising within the
meaning of Rule 502(c) of Regulation D or in any manner involving a
public offering within the meaning of Section 4(a)(2) of the
Securities Act; and
(iii) it
has not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Securities as part of
their initial offering, except to persons whom it reasonably
believes to be QIBs in transactions pursuant to Rule 144A under the
Securities Act (“Rule
144A”) and in connection with each such sale, it has
taken or will take reasonable steps to ensure that the purchaser of
the Securities is aware that such sale is being made in reliance on
Rule 144A.
(c) Initial Purchaser
acknowledges and agrees that the Company and, for purposes of the
“no registration” opinions to be delivered to the
Initial Purchaser pursuant to Sections 6(f) and 6(g), counsels for the Company
and counsel for the Initial Purchaser, respectively, may rely upon
the accuracy of the representations and warranties of the Initial
Purchaser, and compliance by the Initial Purchaser with its
agreements, contained in paragraph (c) above, and the Initial
Purchaser hereby consents to such reliance.
(d) The Company
acknowledges and agrees that the Initial Purchaser may offer and
sell Securities to or through any affiliate of the Initial
Purchaser and that any such affiliate may offer and sell Securities
purchased by it to or through the Initial Purchaser.
(e) Payment for the
Securities shall be made by wire transfer in immediately available
funds to the account specified by the Company at the offices of
McGuireWoods LLP, 1251 Avenue of the Americas, 00xx Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000 at 10:00 A.M. New York City time on May 14, 2019, or
at such other time or place on the same or such other date, not
later than the fifth business day thereafter, as the Initial
Purchaser and the Company may agree upon in writing. The time and
date of such payment for the Securities is referred to herein as
the “Closing
Date.”
Payment
for the Securities to be purchased on the Closing Date shall be
made against delivery to the nominee of The Depository Trust
Company (“DTC”),
for the accounts of the Initial Purchaser of the Securities to be
purchased on such date of one or more global notes representing the
Securities (collectively, the “Global Note”), with any transfer
taxes payable in connection with the sale of such Securities duly
paid by the Company. The Global Note will be made available for
inspection by the Initial Purchaser at the office of JMP Securities
LLC set forth above not later than 1:00 P.M., New York City time,
on the business day prior to the Closing Date.
(f) The Company
acknowledges and agrees that the Initial Purchaser is acting solely
in the capacity of an arm’s length contractual counterparty
to the Company with respect to the offering of Securities
contemplated hereby (including in connection with determining the
terms of the offering) and not as a financial advisor or a
fiduciary to, or an agent of, the Company or any other person.
Additionally, the Initial Purchaser is not advising the Company or
any other person as to any legal, tax, investment, accounting or
regulatory matters in any jurisdiction. The Company shall consult
with its own advisors concerning such matters and shall be
responsible for making its own independent investigation and
appraisal of the transactions contemplated hereby, and the Initial
Purchaser shall have no responsibility or liability to the Company
with respect thereto. Any review by the Initial Purchaser of the
Company, the transactions contemplated hereby or other matters
relating to such transactions will be performed solely for the
benefit of the Initial Purchaser and shall not be on behalf of the
Company.
3. Representations and Warranties of the
Company. The Company represents and warrants to the Initial
Purchaser that:
(a) Preliminary Offering Memorandum. The
Preliminary Offering Memorandum, as of its date, did not contain
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; provided that the Company makes
no representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information
relating to the Initial Purchaser furnished to the Company in
writing by the Initial Purchaser expressly for use in any
Preliminary Offering Memorandum, it being understood and agreed
that the only such information furnished by the Initial Purchaser
consists of the information described as such in Section 7(b).
(b) Time of Sale Information. The Time of
Sale Information, at the Time of Sale, did not, and at the Closing
Date, will not, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company makes
no representation or warranty with respect to any statements or
omissions made in reliance upon and in conformity with information
relating to the Initial Purchaser furnished to the Company in
writing by the Initial Purchaser expressly for use in such Time of
Sale Information, it being understood and agreed that the only such
information furnished by the Initial Purchaser consists of the
information described as such in Section 7(b) (the
“Initial Purchaser
Information”). No statement of material fact included
in the Offering Memorandum has been omitted from the Time of Sale
Information and no statement of material fact included in the Time
of Sale Information that is required to be included in the Offering
Memorandum has been omitted therefrom.
(c) Additional Written Communications.
Other than the Preliminary Offering Memorandum and the Offering
Memorandum, the Company (including its agents and representatives,
other than the Initial Purchaser in its capacity as such) has not
prepared, made, used, authorized, approved or referred to and will
not prepare, make, use, authorize, approve or refer to any
“written communication” (as defined in Rule 405 under
the Securities Act) that constitutes an offer to sell or
solicitation of an offer to buy the Securities (each such
communication by the Company or its agents and representatives
(other than a communication referred to in clauses (i), (ii) and
(iii) below) an “Issuer
Written Communication”) other than (i) the Preliminary
Offering Memorandum, (ii) the Offering Memorandum, (iii) the
documents listed on Annex
A hereto, including a term sheet substantially in the form
of Annex B hereto,
which constitute part of the Time of Sale Information, and (iv)
each electronic road show and any other written communications
approved in writing in advance by the Initial Purchaser. Each such
Issuer Written Communication does not conflict with the information
contained in the Time of Sale Information, and when taken together
with the Time of Sale Information, did not, and at the Closing
Date, will not, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company makes
no representation or warranty with respect to any statements or
omissions made in each such Issuer Written Communication in
reliance upon and in conformity with information relating to the
Initial Purchaser furnished to the Company in writing by the
Initial Purchaser expressly for use in such Issuer Written
Communication, it being understood and agreed that the only such
information furnished by the Initial Purchaser consists of the
Initial Purchaser Information.
3
(d) Offering Memorandum. As of the date of
the Offering Memorandum and as of the Closing Date, the Offering
Memorandum does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that the Company makes
no representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information
relating to the Initial Purchaser furnished to the Company in
writing by the Initial Purchaser expressly for use in the Offering
Memorandum, it being understood and agreed that the only such
information furnished by the Initial Purchaser consists of the
Initial Purchaser Information.
(e) Incorporated Documents. The documents
incorporated by reference in the Offering Memorandum or the Time of
Sale Information, when they were filed with the Commission
conformed or will conform, as the case may be, in all material
respects to the requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the “Exchange Act”) and such documents
did not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
(f) Distribution of Offering Material by the
Company. The Company and its affiliates have not distributed
and will not distribute, prior to the completion of the Initial
Purchaser’s distribution of the Securities, any written
offering material in connection with the offering and sale of the
Securities other than the Preliminary Offering Memorandum, Time of
Sale Information and Offering Memorandum.
(g) Authorization of the Transaction
Documents. The Transaction Documents have been duly
authorized by the Company and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors’ rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(h) Authorization of the Securities. The
Company has all requisite corporate power and authority to execute,
issue, sell and perform its obligations under the Securities. The
Securities have been duly authorized and, at the Closing Date, will
have been duly executed by the Company and, when authenticated,
issued and delivered in the manner provided for in the Indenture
and delivered against payment of the Purchase Price therefor as
provided in this Agreement, will constitute valid and binding
obligations of the Company entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their
terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors’ rights
generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and will be in the
form contemplated by, and entitled to the benefits of, the
Indenture.
(i) Authorization of the Underlying
Securities. Upon issuance and delivery of the Securities in
accordance with this Agreement and the Indenture, the Securities
will be convertible at the option of the holder thereof into cash,
shares of the Underlying Securities or a combination thereof, in
accordance the terms of the Securities and the Indenture; the
Underlying Securities (assuming physical settlement and the maximum
conversion rate under any “make-whole” adjustment
applies) reserved for issuance upon conversion of the Securities
have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the
Securities and the Indenture, will be validly issued, fully paid
and non assessable, no holder of the Underlying Securities will be
subject to personal liability by reason of being such a holder and
the issuance of the Underlying Securities will not be subject to
any preemptive right, right of first refusal or other similar
rights of any securityholder of the Company or any other
person.
(j) Description of Securities. The
Securities and Indenture conform in all material respects to the
description thereof contained in the sections of the Time of Sale
Information and the Offering Memorandum titled “Description
of notes.”
(k) Rule 144A Eligibility. On the Closing
Date, the Securities will not be of the same class as securities
listed on a national securities exchange registered under Section 6
of the Exchange Act or quoted in an automated inter-dealer
quotation system; and each of the Time of Sale Information, as of
the Time of Sale, and the Offering Memorandum, as of its date,
contains or will contain all the information that, if requested by
a prospective purchaser of the Securities, would be required to be
provided to such prospective purchaser pursuant to Rule 144A(d)(4)
under the Securities Act.
(l) No Integration. Neither the Company nor
any of its affiliates (as defined in Rule 501(b) of Regulation D)
has, directly or through any agent, sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act), that is or will be
integrated with the sale of the Securities in a manner that would
require registration of the Securities under the Securities
Act.
4
(m) No General Solicitation or Directed Selling
Efforts. None of the Company or any of its affiliates or any
other person acting on its or their behalf (other than the Initial
Purchaser, as to which no representation is made) has (i) solicited
offers for, or offered or sold, the Securities by means of any form
of general solicitation or general advertising within the meaning
of Rule 502(c) of Regulation D or in any manner involving a public
offering within the meaning of Section 4(a)(2) of the Securities
Act or (ii) engaged in any directed selling efforts within the
meaning of Regulation S under the Securities Act
(“Regulation
S”), and all such persons have complied with the
offering restrictions requirement of Regulation S.
(n) Securities Law Exemptions. Assuming the
accuracy of the representations and warranties of the Initial
Purchaser contained in Section 2(b) and its compliance
with its agreements set forth therein, it is not necessary, in
connection with the issuance and sale of the Securities to the
Initial Purchaser and the offer, resale and delivery of the
Securities by the Initial Purchaser in the manner contemplated by
this Agreement, the Time of Sale Information and the Offering
Memorandum, to register the offer, issue and sale of the Securities
under the Securities Act or to qualify the Indenture under the
Trust Indenture Act.
(o) Regulations. The disclosures in the
Preliminary Offering Memorandum and the Offering Memorandum
concerning the effects of federal, state, local and all foreign
regulation on the Offering and the Company’s business as
currently contemplated are correct in all material respects and no
other such regulations are required to be disclosed in the
Preliminary Offering Memorandum and the Offering Memorandum which
are not so disclosed.
(p) No Material Adverse Change. Since the
respective dates as of which information is given in the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum, except as otherwise specifically stated
therein: (i) there has been no material adverse change in the
financial position or results of operations of the Company, nor any
change or development that, singularly or in the aggregate, would
involve a material adverse change or a prospective material adverse
change, in or affecting the condition (financial or otherwise),
results of operations, business, assets or prospects of the Company
(a “Material Adverse
Change”); (ii) there have been no material
transactions entered into by the Company, other than as
contemplated pursuant to this Agreement; and (iii) no officer or
director of the Company has resigned from any position with the
Company.
(q) Recent Securities Transactions, etc.
Subsequent to the respective dates as of which information is given
in the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum, and except as may
otherwise be indicated or contemplated herein or disclosed in the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum, the Company has not: (i) issued any
securities or incurred any liability or obligation, direct or
contingent, for borrowed money; or (ii) declared or paid any
dividend or made any other distribution on or in respect to its
capital stock.
(r) Independent Accountants. Xxxxxx Pera
& Co., PLCC (the “Auditor”), whose report is filed
with the Commission as part of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2018, is an independent
registered public accounting firm as required by the Securities Act
and the Public Company Accounting Oversight Board. The Auditor has
not, during the periods covered by the financial statements
included or incorporated by reference in the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering
Memorandum, provided to the Company any non-audit services, as such
term is used in Section 10A(g) of the Exchange Act, except as
disclosed in the Company’s proxy statement filed with the
Commission on April 19, 2019.
(s) Financial Statements, etc. The
financial statements, including the notes thereto and supporting
schedules, included or incorporated by reference in the Preliminary
Offering Memorandum, the Time of Sale Information or the Offering
Memorandum, fairly present the financial position and the results
of operations of the Company at the dates and for the periods to
which they apply; and such financial statements have been prepared
in conformity with U.S. generally accepted accounting principles
(“GAAP”),
consistently applied throughout the periods involved (provided that unaudited interim
financial statements are subject to year-end audit adjustments that
are not expected to be material in the aggregate and do not contain
all footnotes required by GAAP). All disclosures contained in the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum regarding “non-GAAP financial
measures” (as such term is defined by the rules and
regulations of the Commission), if any, comply with Regulation G of
the Exchange Act and Item 10 of Regulation S-K of the Securities
Act, to the extent applicable. Each of the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering
Memorandum discloses all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), and
other relationships of the Company with unconsolidated entities or
other persons that may have a material current or future effect on
the Company’s financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures,
capital resources, or significant components of revenues or
expenses. Except as disclosed or incorporated by reference in the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum, (a) the Company has not incurred any
material liabilities or obligations, direct or contingent, or
entered into any material transactions other than in the ordinary
course of business, (b) the Company has not declared or paid any
dividends or made any distribution of any kind with respect to its
capital stock, (c) there has not been any change in the capital
stock of the Company, or, other than in the course of business, any
grants under any stock compensation plan, and (d) there has not
been any material adverse change in the Company’s long-term
or short-term debt.
5
(t) Authorized Capital, etc. The Company
had, at the date or dates indicated in the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering
Memorandum, the duly authorized, issued and outstanding
capitalization as set forth therein. Based on the assumptions
stated in the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum, the Company will have on
the Closing Date the adjusted stock capitalization set forth
therein. Except as set forth in, or contemplated by, the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum, at the Time of Sale and on the Closing
Date, there will be no stock options, warrants, or other rights to
purchase or otherwise acquire any authorized, but unissued shares
of the Company’s Class A Common Stock, $0.001 per share (the
“Class A Common
Stock”) or the Class B Common Stock, $0.001 per share
(the “Class B Common
Stock”), or any security convertible or exercisable
into shares of Class A Common Stock or Class B Common Stock, or any
contracts or commitments to issue or sell shares of Class A Common
Stock, Class B Common Stock or any such options, warrants, rights
or convertible securities.
(u) Outstanding Securities. All issued and
outstanding securities of the Company issued prior to the
transactions contemplated
by this Agreement have been duly authorized and validly issued and
are fully paid and non-assessable; the holders thereof have no
rights of rescission with respect thereto, and are not subject to
personal liability by reason of being such holders; and none of
such securities were issued in violation of the preemptive rights
of any holders of any security of the Company or similar
contractual rights granted by the Company. The Underlying
Securities conform in all material respects to all statements
relating thereto contained in the Preliminary Offering Memorandum,
the Time of Sale Information and the Offering Memorandum. The
offers and sales of the outstanding shares of Class A Common Stock
and Class B Common Stock were at all relevant times either
registered under the Securities Act and the applicable state
securities or “blue sky” laws or, based in part on the
representations and warranties of the purchasers of such shares of
Class A Common Stock and Class B Common Stock, exempt from such
registration requirements.
(v) Registration Rights of Third Parties.
Except as set forth in the Preliminary Offering Memorandum, the
Time of Sale Information and the Offering Memorandum, no holders of
any securities of the Company or any rights exercisable for or
convertible or exchangeable into securities of the Company have the
right to require the Company to (i) register the sale or resale of
any such securities of the Company under the Securities Act (other
than pursuant to the Registration Rights Agreement), (ii) include
any such securities in a registration statement to be filed by the
Company (including any registration statement required to be filed
pursuant to the Registration Rights Agreement, other than the
holders of the Securities) or (iii) register the resale of any
securities of the Company held by such persons, or that such
persons may acquire upon the exercise or conversion of any other
securities of the Company or pursuant to the prospectus as part of
the Concurrent Common Stock Offering.
(w) Validity and Binding Effect of
Agreement. This Agreement has been duly and validly
authorized by the Company, and, when duly executed and delivered in
accordance with its terms by the Initial Purchaser, will
constitute, the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors’ rights generally and
except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a
proceeding in equity or at law).
(x) No Conflicts, etc. The execution,
delivery and performance by the Company of the Transaction
Documents, the consummation by the Company of the transactions
herein and therein contemplated and the compliance by the Company
with the terms hereof and thereof do not and will not, with or
without the giving of notice or the lapse of time or both: (i)
result in a material breach of, or conflict with any of the terms
and provisions of, or constitute a material default under, or
result in the creation, modification, termination or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company pursuant to the terms of any agreement or instrument to
which the Company is a party; (ii) result in any violation of the
provisions of the Company’s Articles of Incorporation (as the
same may be amended or restated from time to time, the
“Charter”) or
the Company’s bylaws (the “Bylaws”); or (iii) violate any
existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign,
having jurisdiction over the Company or any of its assets or
businesses (each, a “Governmental Entity”) as of the
date hereof.
(y) No Defaults; Violations. No material
default exists in the due performance and observance of any term,
covenant or condition of any material license, contract, indenture,
mortgage, deed of trust, note, loan or credit agreement, or any other
agreement or instrument evidencing an obligation for borrowed
money, or any other material agreement or instrument to which the
Company is a party or by which the Company may be bound or to which
any of the properties or assets of the Company is subject. The
Company is not in violation of any term or provision of its Charter
or Bylaws, or in violation of any franchise, license, permit,
applicable law, rule, regulation, judgment or decree of any
Governmental Entity.
6
(z) Corporate Power; Licenses;
Consents.
(i) Conduct of Business. The Company has
all requisite corporate power and authority, and has all necessary
authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental regulatory officials and
bodies that it needs as of the date hereof to conduct its business
purpose as described in the Preliminary Offering Memorandum, the
Time of Sale Information and the Offering Memorandum.
(ii) Transactions
Contemplated Herein. The Company has all corporate power and
authority to enter into this Agreement and the other Transaction
Documents and to carry out the provisions and conditions hereof and
thereof, and all consents, authorizations, approvals and orders
required in connection therewith have been obtained. No consent,
authorization or order of, and no filing with, any court,
Governmental Entity or other body is required for the valid
issuance, sale and delivery of the Securities and the consummation
of the transactions and agreements contemplated by this Agreement
and the other Transaction Documents and as contemplated by the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum, except with respect to applicable federal
and state securities laws.
(aa) Directors,
Officers and Principal Shareholders. To the Company’s
knowledge, all information concerning the Company’s
directors, officers and principal shareholders as described in the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum, as well as in the Lock-Up Agreement (as
defined in Section
3(ii)), is true and correct in all material respects and the
Company has not become aware of any information which would cause
such information to become materially inaccurate and
incorrect.
(bb) Litigation;
Governmental Proceedings. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or
governmental proceeding pending or, to the Company’s
knowledge, threatened against, or involving the Company which has
not been disclosed in the Preliminary Offering Memorandum, the Time
of Sale Information and the Offering Memorandum, which if resolved
adversely to the Company is reasonably likely to result in a
Material Adverse Change.
(cc) Good
Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of
the State of Nevada as of the date hereof, and is duly qualified to
do business and is in good standing in each other jurisdiction in
which its ownership or lease of property or the conduct of business
requires such qualification, except where the failure to qualify,
singularly or in the aggregate, would not have or reasonably be
expected to result in a Material Adverse Change.
(dd) Insurance.
The Company carries or is entitled to the benefits of insurance,
with reputable insurers, in such amounts and covering such risks
which the Company believes are adequate, including, but not limited
to, directors and officers insurance coverage at least equal to
$5,000,000. The Company has no reason to believe that it will not
be able (i) to renew its existing insurance coverage as and when
such policies expire or (ii) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct
its business as now conducted and at a cost that would not result
in a Material Adverse Change.
(ee) Foreign
Corrupt Practices Act. The Company or, to the
Company’s knowledge, any director, officer, agent, employee
or affiliate of the Company or any other person acting on behalf of
the Company, has not, directly or indirectly, given or agreed to
give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or
official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was,
is, or may be in a position to help or hinder the business of the
Company (or assist it in connection with any actual or proposed
transaction) that (i) might subject the Company to any damage or
penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, might have had a
Material Adverse Change, or (iii) if not continued in the future,
might adversely affect the assets, business, operations or
prospects of the Company. The Company has taken reasonable steps to
ensure that its accounting controls and procedures are sufficient
to cause the Company to comply in all material respects with the
Foreign Corrupt Practices Act of 1977, as amended.
7
(ff) Compliance
with OFAC. Neither the Company nor, to the Company’s
knowledge, any director, officer, agent, employee or affiliate of
the Company or any other person acting on behalf of the Company, is
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Department of the Treasury
(“OFAC”), and
the Company will not, directly or indirectly, use the proceeds of
the Offering hereunder, or lend, contribute or otherwise make
available such proceeds to any subsidiary, joint venture partner or
other person or entity, for the purpose of financing the activities
of any person currently subject to any U.S. sanctions administered
by OFAC.
(gg) Money
Laundering Laws. The operations of the Company are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and
Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any Governmental
Entity (collectively, the “Money Laundering Laws”); and no
action, suit or proceeding by or before any Governmental Entity
involving the Company with respect to the Money Laundering Laws is
pending or, to the best knowledge of the Company,
threatened.
(hh) Officers’
Certificate. Any certificate signed by any duly authorized
officer of the Company and delivered to the Initial Purchaser or to
the Initial Purchaser’s counsel shall be deemed a
representation and warranty by the Company to the Initial Purchaser
as to the matters covered thereby.
(ii) Lock-Up
Agreements. Schedule 2 hereto contains a
complete and accurate list of the Company’s executive
officers and directors as well as any stockholders deemed to be
affiliates through their ownership of the Company’s Class B
Common Stock or Class A Common Stock (collectively, the
“Lock-Up
Parties”). The Company has caused each of the Lock-Up
Parties to deliver to the Initial Purchaser an executed Lock-Up
Agreement, in the form attached hereto as Exhibit A (the
“Lock-Up
Agreement”), prior to the execution of this
Agreement.
(jj) Subsidiaries.
Except as set forth in the Preliminary Offering Memorandum, the
Time of Sale Information and the Offering Memorandum, the Company
has no direct or indirect subsidiaries.
(kk) Related
Party Transactions. There are no business relationships or
related party transactions involving the Company or any other
person required to be described in the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering
Memorandum that have not been described as required.
(ll) Board
of Directors. The Board of Directors of the Company is
comprised of the persons set forth in the Company’s Annual
Report on Form 10-K filed with the Commission on April 1, 2019 and
incorporated by reference into the Preliminary Offering Memorandum,
the Time of Sale Information and the Offering Memorandum. The
qualifications of the persons serving as board members and the
overall composition of the board comply with the Exchange Act, the
Xxxxxxxx-Xxxxx Act of 2002 and the rules promulgated thereunder
(the “Xxxxxxxx-Xxxxx
Act”) applicable to the Company and the listing rules
of the NASDAQ Capital Market. At least one member of the Audit
Committee of the Board of Directors of the Company qualifies as an
“audit committee financial expert,” as such term is
defined under Regulation S-K and the listing rules of the NASDAQ
Capital Market.
(mm) Xxxxxxxx-Xxxxx
Compliance.
(i) Disclosure Controls. The Company has
developed and currently maintains disclosure controls and
procedures that comply with Rule 13a-15 or 15d-15 under the
Exchange Act Regulations, and such controls and procedures are
effective to ensure that all material information concerning the
Company is made known on a timely basis to the individuals
responsible for the preparation of the Company’s Exchange Act
filings and other public disclosure documents.
(ii) Compliance.
The Company is, or at the Time of Sale and on the Closing Date will
be, in material compliance with the provisions of the
Xxxxxxxx-Xxxxx Act applicable to it, and has implemented or will
implement such programs and taken reasonable steps to ensure the
Company’s future compliance (not later than the relevant
statutory and regulatory deadlines therefor) with all of the
material provisions of the Xxxxxxxx-Xxxxx Act.
(nn) Accounting
Controls. The Company maintains systems of “internal
control over financial reporting” (as defined under Rules
13a-15 and 15d-15 under the Exchange Act Regulations) that comply
with the requirements of the Exchange Act and have been designed
by, or under the supervision of, its principal executive and
principal financial officers, or persons performing similar
functions, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with GAAP,
including, but not limited to, internal accounting controls
sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or
specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as disclosed in the Preliminary
Offering Memorandum, the Time of Sale Information and the Offering
Memorandum, the Company is not aware of any material weaknesses in
its internal controls. The Company’s auditors and the Audit
Committee of the Board of Directors of the Company have been
advised of: (i) all significant deficiencies and material
weaknesses in the design or operation of internal controls over
financial reporting which are known to the Company’s
management and that have adversely affected or are reasonably
likely to adversely affect the Company’ ability to record,
process, summarize and report financial information; and (ii) any
fraud known to the Company’s management, whether or not
material, that involves management or other employees who have a
significant role in the Company’s internal controls over
financial reporting.
8
(oo) No
Investment Company Status. The Company is not and, after
giving effect to the Offering and the application of the proceeds
thereof as described in the Preliminary Offering Memorandum, the
Time of Sale Information and the Offering Memorandum, will not be,
required to register as an “investment company,” as
defined in the Investment Company Act of 1940, as
amended.
(pp) No
Labor Disputes. No labor dispute with the employees of the
Company exists or, to the knowledge of the Company, is
imminent.
(qq) Intellectual
Property Rights. The Company owns or possesses or has valid
rights to use all patents, trademarks, service marks, trade names,
trademark registrations, service xxxx registrations, copyrights,
licenses, trade secrets and similar rights (“Intellectual Property Rights”), if
any, necessary for the conduct of the business of the Company as
currently carried on and as described in the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering
Memorandum. To the knowledge of the Company, no action or use by
the Company necessary for the conduct of its business as currently
carried on and as described in the Preliminary Offering Memorandum
and the Offering Memorandum will involve or give rise to any
infringement of, or license or similar fees for, any Intellectual
Property Rights of others. Except as would not reasonably be
expected to result, individually or in the aggregate, in a Material
Adverse Change, the Company has not received any notice alleging
any such infringement, fee or conflict with asserted Intellectual
Property Rights of others. Except as would not reasonably be
expected to result, individually or in the aggregate, in a Material
Adverse Change (A) to the knowledge of the Company, there is no
infringement, misappropriation or violation by third parties of any
of the Intellectual Property Rights owned by the Company; (B) there
is no pending or, to the knowledge of the Company, threatened
action, suit, proceeding or claim by others challenging the rights
of the Company in or to any such Intellectual Property Rights, and
the Company is unaware of any facts which would form a reasonable
basis for any such claim, that would, individually or in the
aggregate, together with any other claims in this Section 3(qq), reasonably be
expected to result in a Material Adverse Change; (C) the
Intellectual Property Rights owned by the Company and, to the
knowledge of the Company, the Intellectual Property Rights licensed
to the Company have not been adjudged by a court of competent
jurisdiction invalid or unenforceable, in whole or in part, and
there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property Rights, and
the Company is unaware of any facts which would form a reasonable
basis for any such claim that would, individually or in the
aggregate, together with any other claims in this Section 3(qq), reasonably be
expected to result in a Material Adverse Change; (D) there is no
pending or, to the Company’s knowledge, threatened action,
suit, proceeding or claim by others that the Company infringes,
misappropriates or otherwise violates any Intellectual Property
Rights or other proprietary rights of others, the Company has not
received any written notice of such claim and the Company is
unaware of any other facts which would form a reasonable basis for
any such claim that would, individually or in the aggregate,
together with any other claims in this Section 3 (rr), reasonably be
expected to result in a Material Adverse Change; and (E) to the
Company’s knowledge, no employee of the Company is in
violation in any material respect of any term of any employment
contract, patent disclosure agreement, invention assignment
agreement, non-competition agreement, non-solicitation agreement,
nondisclosure agreement or any restrictive covenant to or with a
former employer where the basis of such violation relates to such
employee’s employment with the Company, or actions undertaken
by the employee while employed with the Company and could
reasonably be expected to result, individually or in the aggregate,
in a Material Adverse Change. To the Company’s knowledge, all
material trade secrets developed by and belonging to the Company
which have not been patented have been kept confidential. The
Company is not a party to or bound by any options, licenses or
agreements with respect to the Intellectual Property Rights of any
other person or entity that are required to be set forth in the
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum and are not described therein. The
Preliminary Offering Memorandum, the Time of Sale Information and
the Offering Memorandum contain in all material respects the same
description of the matters set forth in the preceding sentence.
None of the technology employed by the Company has been obtained or
is being used by the Company in violation of any contractual
obligation binding on the Company or, to the Company’s
knowledge, any of its officers, directors or employees, or
otherwise in violation of the rights of any persons.
(rr) Taxes.
The Company has filed all returns (as hereinafter defined) required
to be filed with taxing authorities prior to the date hereof or has
duly obtained extensions of time for the filing thereof. The
Company has paid all taxes (as hereinafter defined) shown as due on
such returns that were filed and has paid all taxes imposed on or
assessed against the Company. The provisions for taxes payable, if
any, shown on the financial statements accompanying or incorporated
by reference into the Offering Memorandum are sufficient for all
accrued and unpaid taxes, whether or not disputed, and for all
periods to and including the dates of such financial statements.
Except as disclosed in writing to the Initial Purchaser, (i) no
issues have been raised (and are currently pending) by any taxing
authority in connection with any of the returns or taxes asserted
as due from the Company, and (ii) no waivers of statutes of
limitation with respect to the returns or collection of taxes have
been given by or requested from the Company. The term
“taxes” means
all federal, state, local, foreign and other net income, gross
income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, windfall profits, customs, duties or
other taxes, fees, assessments or charges of any kind whatever,
together with any interest and any penalties, additions to tax or
additional amounts with respect thereto. The term
“returns” means
all returns, declarations, reports, statements and other documents
required to be filed in respect to taxes.
9
(ss) ERISA
Compliance. The Company and any “employee benefit
plan” (as defined under the Employee Retirement Income
Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (collectively, “ERISA”)) established or maintained
by the Company or its “ERISA Affiliates” (as defined
below) are in compliance in all material respects with ERISA.
“ERISA
Affiliate” means, with respect to the Company, any
member of any group of organizations described in Sections
414(b),(c),(m) or (o) of the Internal Revenue Code of 1986, as
amended, and the regulations and published interpretations
thereunder (the “Code”) of which the Company is a
member. No “reportable event” (as defined under ERISA)
has occurred or is reasonably expected to occur with respect to any
“employee benefit plan” established or maintained by
the Company or any of its ERISA Affiliates. No “employee
benefit plan” established or maintained by the Company or any
of its ERISA Affiliates, if such “employee benefit
plan” were terminated, would have any “amount of
unfunded benefit liabilities” (as defined under ERISA).
Neither the Company nor any of its ERISA Affiliates has incurred or
reasonably expects to incur any material liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any
“employee benefit plan” or (ii) Sections 412, 4971,
4975 or 4980B of the Code. Each “employee benefit plan”
established or maintained by the Company or any of its ERISA
Affiliates that is intended to be qualified under Section 401(a) of
the Code is so qualified and, to the knowledge of the Company,
nothing has occurred, whether by action or failure to act, which
would cause the loss of such qualification.
(tt) Compliance
with Laws. The Company: (A) is and at all times has been in
compliance with all statutes, rules or regulations applicable to
the conduct of the Company’s business (collectively, the
“Applicable
Laws”), except as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Change; (B) has not received any warning letter, untitled letter or
other correspondence or notice from any other Governmental Entity
alleging or asserting noncompliance with any Applicable Laws or any
licenses, certificates, approvals, clearances, authorizations,
permits and supplements or amendments thereto required by any such
Applicable Laws (collectively, the “Authorizations”); (C) possesses
all material Authorizations and such Authorizations are valid and
in full force and effect and the Company is not in material
violation of any term of any such Authorizations; (D) has not
received notice of any claim, action, suit, proceeding, hearing,
enforcement, investigation, arbitration or other action from any
Governmental Entity or third party alleging that any of the
Company’s activities is in violation of any Applicable Laws
or Authorizations and has no knowledge that any such Governmental
Entity or third party is considering any such claim, litigation,
arbitration, action, suit, investigation or proceeding; (E) has not
received notice that any Governmental Entity has taken, is taking
or intends to take action to limit, suspend, modify or revoke any
Authorizations and has no knowledge that any such governmental
authority is considering such action; and (F) has filed, obtained,
maintained or submitted all material reports, documents, forms,
notices, applications, records, claims, submissions and supplements
or amendments as required by any Applicable Laws or Authorizations
and that all such reports, documents, forms, notices, applications,
records, claims, submissions and supplements or amendments were
complete and correct on the date filed (or were corrected or
supplemented by a subsequent submission).
(uu) Real
Property. Except as described in the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering
Memorandum, the Company has good and marketable title in fee simple
to, or has valid rights to lease or otherwise use, all items of
real or personal property which are material to the business of the
Company, in each case free and clear of all liens, encumbrances,
security interests, claims and defects that could not, singly or in
the aggregate, materially affect the value of such property and do
not interfere with the use made and proposed to be made of such
property by the Company; and all of the leases and subleases
material to the business of the Company, and under which the
Company holds properties described in the Preliminary Offering
Memorandum, the Time of Sale Information and the Offering
Memorandum, are in full force and effect, and the Company has not
received any notice of any material claim of any sort that has been
asserted by anyone adverse to the rights of the Company under any
of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company to the continued possession
of the leased or subleased premises under any such lease or
sublease.
(vv) Contracts
Affecting Capital. There are no transactions, arrangements
or other relationships between and/or among the Company, any of its
affiliates (as such term is defined in Rule 405 of the Securities
Act Regulations) and any unconsolidated entity, including, but not
limited to, any structured finance, special purpose or limited
purpose entity, that could reasonably be expected to materially
affect the Company’s liquidity or the availability of or
requirements for its capital resources required to be described or
incorporated by reference in the Preliminary Offering Memorandum,
the Time of Sale Information and the Offering Memorandum which have
not been described or incorporated by reference as
required.
(ww) Loans
to Directors or Officers. There are no outstanding loans,
advances (except normal advances for business expenses in the
ordinary course of business) or guarantees or indebtedness by the
Company to or for the benefit of any of the officers or directors
of the Company or any of their respective family members, except as
disclosed in the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum.
(xx) Smaller
Reporting Company. As of the Time of Sale, the Company was a
“smaller reporting company,” as defined in Rule 12b-2
of the Exchange Act Regulations.
10
(yy) Industry
Data. The statistical and market-related data included in
each of the Preliminary Offering Memorandum, the Time of Sale
Information and the Offering Memorandum are based on or derived
from sources that the Company reasonably and in good faith believes
are reliable and accurate or represent the Company’s good
faith estimates that are made on the basis of data derived from
such sources.
(zz) Emerging
Growth Company. From the Time of Sale through the date
hereof, the Company has been and is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act
(an “Emerging Growth
Company”).
(aaa) Margin
Securities. The Company owns no “margin
securities” as that term is defined in Regulation U of the
Board of Governors of the Federal Reserve System (the
“Federal Reserve
Board”), and none of the proceeds of Offering will be
used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase
or carry any margin security or for any other purpose which might
cause any of the shares of Class B Common Stock to be considered a
“purpose credit” within the meanings of Regulation T, U
or X of the Federal Reserve Board.
(bbb) NASDAQ
Marketplace Rules. The Company is, and after giving effect
to the Offering will be, in compliance in all material respects
with all applicable corporate governance requirements set forth in
the NASDAQ Marketplace Rules.
(ccc) NASDAQ
Stockholder Approval Rules. No approval of the stockholders
of the Company under the rules and regulations of NASDAQ (including
Rule 5635 of the NASDAQ Marketplace Rules) is required to issue and
deliver the Securities to the Initial Purchaser or the Underlying
Securities upon the conversion thereof.
4. Further Agreements of the
Company. The Company covenants and agrees with the Initial
Purchaser that:
(a) Delivery of Copies. The Company will
deliver to the Initial Purchaser as many copies of the Preliminary
Offering Memorandum, any other Time of Sale Information, any Issuer
Written Communication and the Offering Memorandum (including all
amendments and supplements thereto) as the Initial Purchaser may
reasonably request.
(b) Offering Memorandum, Amendments or
Supplements. Before finalizing the Offering Memorandum or
making or distributing any amendment or supplement to any of the
Time of Sale Information or the Offering Memorandum or filing with
the Commission any document that will be incorporated by reference
therein, the Company will furnish to the Initial Purchaser and
counsel for the Initial Purchaser a copy of the proposed Offering
Memorandum or such amendment or supplement or document to be
incorporated by reference therein for review, and will not
distribute any such proposed Offering Memorandum, amendment or
supplement or file any such document with the Commission to which
the Initial Purchaser reasonably objects.
(c) Additional Written Communications.
Before making, preparing, using, authorizing, approving or
referring to any Issuer Written Communication, the Company will
furnish to the Initial Purchaser and counsel for the Initial
Purchaser a copy of such written communication for review and will
not make, prepare, use, authorize, approve or refer to any such
written communication to which the Initial Purchaser reasonably
objects.
11
(d) Notice to the Initial Purchaser. The
Company will advise the Initial Purchaser promptly, and confirm
such advice in writing, (i) of the issuance by any governmental or
regulatory authority of any order preventing or suspending the use
of any of the Time of Sale Information, any Issuer Written
Communication or the Offering Memorandum or the initiation or
threatening of any proceeding for that purpose; (ii) of the
occurrence or development of any event at any time prior to the
completion of the initial offering of the Securities as a result of
which any of the Time of Sale Information, any Issuer Written
Communication or the Offering Memorandum as then amended or
supplemented would include any untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances existing when
such Time of Sale Information, Issuer Written Communication or the
Offering Memorandum is delivered to a purchaser, not misleading;
and (iii) of the receipt by the Company of any notice with respect
to any suspension of the qualification of the Securities for offer
and sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose; and the Company will use its
reasonable best efforts to prevent the issuance of any such order
preventing or suspending the use of any of the Time of Sale
Information, any Issuer Written Communication or the Offering
Memorandum or suspending any such qualification of the Securities
and, if any such order is issued, will obtain as soon as possible
the withdrawal thereof.
(e) Ongoing Compliance of the Offering Memorandum
and Time of Sale Information. (1) If at any time prior to
the completion of the initial offering of the Securities, (i) any
event or development shall occur or condition shall exist as a
result of which the Offering Memorandum as then amended or
supplemented would include any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances existing when
the Offering Memorandum is delivered to a purchaser, not misleading
or (ii) it is necessary to amend or supplement the Offering
Memorandum to comply with law, the Company will immediately notify
the Initial Purchaser thereof and forthwith prepare and, subject to
paragraph (b) above, furnish to the Initial Purchaser such
amendments or supplements to the Offering Memorandum (or any
document to be filed with the Commission and incorporated by
reference therein) as may be necessary so that the statements in
the Offering Memorandum as so amended or supplemented (or including
such document to be incorporated by reference therein) will not, in
the light of the circumstances existing when the Offering
Memorandum is delivered to a purchaser, be misleading or so that
the Offering Memorandum will comply with law and (2) if at any time
prior to the Closing Date (i) any event or development shall occur
or condition shall exist as a result of which any of the Time of
Sale Information as then amended or supplemented would include any
untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading or (ii) it is necessary to amend or supplement any of
the Time of Sale Information to comply with law, the Company will
immediately notify the Initial Purchaser thereof and forthwith
prepare and, subject to paragraph (b) above, furnish to the Initial
Purchaser such amendments or supplements to any of the Time of Sale
Information (or any document to be filed with the Commission and
incorporated by reference therein) as may be necessary so that the
statements in any of the Time of Sale Information as so amended or
supplemented will not, in light of the circumstances under which
they were made, be misleading.
(f) Blue Sky Compliance. The Company will
qualify the Securities for offer and sale under the securities or
“blue sky” laws of such jurisdictions as the Initial
Purchaser shall reasonably request and will continue such
qualifications in effect so long as required for the offering and
resale of the Securities; provided that the Company shall
not be required to (i) qualify as a foreign corporation or other
entity or as a dealer in securities in any such jurisdiction where
it would not otherwise be required to so qualify, (ii) file any
general consent to service of process in any such jurisdiction or
(iii) subject itself to taxation in any such jurisdiction if it is
not otherwise so subject.
(g) Clear Market. For a period of 90 days
after the date of the offering of the Securities, the Company will
not (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise
transfer or dispose of, directly or indirectly, or file with, or
submit to, the Commission a registration statement under the
Securities Act relating to, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for
Common Stock (other than pursuant to the Registration Rights
Agreement), or publicly disclose the intention to make any offer,
sale, pledge, disposition, submission or filing (except for
registration statements on Form S-4 or Form S-8, the registration
statement required pursuant to the Registration Rights Agreement
and a registration statement on Form S-3 registering the sale by us
of shares of Common Stock or other securities, provided we are not permitted
to make any sales pursuant thereto until August 8, 2019, or a
registration statement on Form S-3 registering (y) the resale by
the purchasers of our Class B Common Stock in the Concurrent Common
Stock Offering as described in the Time of Sale Information and the
Offering Memorandum (the “Concurrent Common Stock Offering”)
and (z) the resale of 540,358 shares of Common Stock issued or to
be issued by the Company as consideration in connection with the
Company’s purchase of AutoSport, Inc., as described in the
Company’s Annual Report on Form 10-K filed with the SEC on
April 1, 2019), or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of
ownership of the Common Stock or any such other securities, whether
any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in
cash or otherwise. The restrictions contained in this Section 4(g) shall not apply
(i) the Securities to be sold hereunder and any Underlying
Securities issued upon conversion thereof, (ii) the issuance by the
Company of shares of capital stock of the Company upon the exercise
of a stock option or warrant or the conversion or vesting of a
security outstanding on the date hereof, (iii) the issuance by the
Company of equity awards of the Company under any equity
compensation plan of the Company, (iv) the issuance by the Company
of shares of capital stock of the Company or securities convertible
into, exchangeable for or that represent the right to receive
shares of capital stock of the Company in connection with the
acquisition by the Company of the securities, business, technology,
property or other assets of another person or entity, (v) the entry
into the purchase agreement related to the Concurrent Common Stock
Offering, (vi) the sale of shares of capital stock of the Company
to cover the payment of exercise prices or the payment of taxes
associated with the exercise or vesting of equity awards under any
equity compensation plan of the Company, (vii) the filing of a
post-effective amendment to the Company’s registration
statements on Form S-3 (Reg. Nos. 333-223425, 333-226514 and
333-228483) and Form S-8 (Reg. Nos. 333-219203, 333-223428 and
333-226440) with the Commission to maintain effectiveness of such
registration statements and (viii) the filing of the registration
statement required pursuant to the Registration Rights Agreement,
provided that in
each of (ii) and (iii) above, the underlying shares of capital
stock of the Company shall be restricted from sale during the
entire Lock-Up Period.
12
(h) Use of Proceeds. The Company will apply
the net proceeds from the sale of the Securities as described in
each of the Time of Sale Information and the Offering Memorandum
under the heading “Use of Proceeds”.
(i) No Stabilization. The Company will not
take, directly or indirectly, any action designed to or that could
reasonably be expected to cause or result in any stabilization or
manipulation of the price of the Securities and will not take any
action prohibited by Regulation M under the Exchange Act in
connection with the distribution of the Securities contemplated
hereby.
(j) Underlying Securities. The Company will
reserve and keep available at all times, free of pre-emptive
rights, shares of Common Stock for the purpose of enabling the
Company to satisfy all obligations to issue the Underlying
Securities upon conversion of the Securities (assuming physical
settlement and the maximum conversion rate under any
“make-whole” adjustment applies). The Company will use
its best efforts to cause the Underlying Securities to be listed on
NASDAQ.
(k) Investment Company. The Company is
familiar with the Investment Company Act and the rules and
regulations thereunder, and will in the future conduct its affairs,
in such a manner and will use its commercially reasonable best
efforts to ensure that the Company will not be an “investment
company” within the meaning of the Investment Company Act and
the rules and regulations thereunder.
(l) Supplying Information. While the
Securities remain outstanding and are “restricted
securities” within the meaning of Rule 144(a)(3) under the
Securities Act, the Company will, during any period in which the
Company is not subject to and in compliance with Section 13 or
15(d) of the Exchange Act, furnish to holders of the Securities,
prospective purchasers of the Securities designated by such holders
and securities analysts, in each case upon request, the information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act.
(m) DTC. The Company will assist the
Initial Purchaser in arranging for the Securities to be eligible
for clearance and settlement through DTC.
(n) No Resales by the Company. During the
period from the Closing Date until one year after the Closing Date,
the Company will not, and will not permit any of its affiliates (as
defined in Rule 144 under the Securities Act) to, resell any of the
Securities that have been acquired by any of them, except for
Securities purchased by the Company or any of its affiliates and
resold in a transaction registered under the Securities
Act.
(o) No Integration. Neither the Company nor
any of its affiliates (as defined in Rule 501(b) of Regulation D)
will, directly or through any agent, sell, offer for sale, solicit
offers to buy or otherwise negotiate in respect of, any security
(as defined in the Securities Act), that is or will be integrated
with the sale of the Securities in a manner that would require
registration of the Securities under the Securities
Act.
(p) No General Solicitation or Directed Selling
Efforts. None of the Company or any of its affiliates or any
other person acting on its or their behalf (other than the Initial
Purchaser, as to which no covenant is given) will (i) solicit
offers for, or offer or sell, the Securities by means of any form
of general solicitation or general advertising within the meaning
of Rule 502(c) of Regulation D or in any manner involving a public
offering within the meaning of Section 4(a)(2) of the Securities
Act or (ii) engage in any directed selling efforts within the
meaning of Regulation S, and all such persons will comply with the
offering restrictions requirement of Regulation S.
13
(q) Right of Participation. The Company
grants the Initial Purchaser the right of first refusal
(“Right of
Participation”) for a period of time commencing on the
date of this Agreement and ending on February 8, 2021 to act as
sole (or lead, in the Initial Purchase’s sole discretion)
managing underwriter and bookrunner, placement agent and/or
distribution agent, as the case may be, in any direct or indirect
offer to sell, sale, contract to sell, grant of any option to sell
or other disposal of shares of capital stock of the Company or any
securities convertible into or exercisable or exchangeable for
shares of capital stock of the Company, in each case in any
“at-the-market” or continuous equity transaction to the
extent the Company is not contractually prohibited from undertaking
such equity transaction. The Company shall provide written notice
to the Initial Purchaser of the terms of such offering and if the
Initial Purchaser fails to accept in writing any such proposal
within ten (10) days after receipt of such written notice, then the
Initial Purchaser will have no claim or right with respect to any
such offering(s).
5. Certain Agreements of the Initial
Purchaser. The Initial Purchaser hereby represents and
agrees that it has not and will not use, authorize use of, refer
to, or participate in the planning for use of, any written
communication that constitutes an offer to sell or the solicitation
of an offer to buy the Securities other than (i) the Preliminary
Offering Memorandum and the Offering Memorandum, (ii) a written
communication that contains no “issuer information” (as
defined in Rule 433(h)(2) under the Securities Act) that was not
included (including through incorporation by reference) in the Time
of Sale Information or the Offering Memorandum, (iii) any written
communication listed on Annex A or prepared pursuant to
Section 4(c) above
(including any electronic road show), (iv) any written
communication prepared by the Initial Purchaser and approved by the
Company in advance in writing or (v) any written communication
relating to or that contains the terms of the Securities and/or
other information that was included (including through
incorporation by reference) in the Time of Sale Information or the
Offering Memorandum.
6. Conditions of Initial
Purchaser’s Obligations. The obligation of the Initial
Purchaser to purchase the Securities on the Closing Date as
provided herein is subject to the performance by the Company of its
covenants and other obligations hereunder and to the following
additional conditions:
(a) Representations and Warranties. The
representations and warranties of the Company contained herein
shall be true and correct on the date hereof and on and as of the
Closing Date; and the statements of the Company and its officers
made in any certificates delivered pursuant to this Agreement shall
be true and correct on and as of the Closing Date.
(b) No Downgrade. Subsequent to the earlier
of (A) the Time of Sale and (B) the execution and delivery of this
Agreement, (i) no downgrading shall have occurred in the rating
accorded any securities or preferred stock issued or guaranteed by
the Company or any of its subsidiaries by any “nationally
recognized statistical rating organization”, as such term is
defined under Section 3(a)(62) under the Exchange Act and (ii) no
such organization shall have publicly announced that it has under
surveillance or review, or has changed its outlook with respect to,
its rating of any such securities or preferred stock issued or
guaranteed by the Company or any of its subsidiaries (other than an
announcement with positive implications of a possible
upgrading).
(c) No Material Adverse Change. No event or
condition of a type described in Section 3(p) hereof shall have
occurred or shall exist, which event or condition is not described
in the Time of Sale Information (excluding any amendment or
supplement thereto) and the Offering Memorandum (excluding any
amendment or supplement thereto) and the effect of which in the
judgment of the Initial Purchaser makes it impracticable or
inadvisable to proceed with the offering, sale or delivery of the
Securities on the Closing Date on the terms and in the manner
contemplated by this Agreement, the Time of Sale Information and
the Offering Memorandum.
14
(d) Officer's Certificate. The Initial
Purchaser shall have received on and as of the Closing Date, a
certificate of the chief financial officer or chief accounting
officer of the Company and one additional senior executive officer
of the Company who is satisfactory to the Initial Purchaser (i)
confirming that such officers have carefully reviewed the Time of
Sale Information and the Offering Memorandum and, to the knowledge
of such officers, the representations set forth in Sections 3(b) and 3(d) hereof are true and
correct, (ii) confirming that the other representations and
warranties of the Company in this Agreement are true and correct
and that the Company has complied with all agreements and satisfied
all conditions on their part to be performed or satisfied hereunder
at or prior to such Closing Date and (iii) to the effect set forth
in paragraphs (b)
and (c)
above.
(e) Comfort Letters. (i) On the date of
this Agreement and on the Closing Date, Xxxxxx Pera & Co., PLCC
shall have furnished to the Initial Purchaser, at the request of
the Company, a letter, dated the respective dates of delivery
thereof and addressed to the Initial Purchaser, in form and
substance reasonably satisfactory to the Initial Purchaser,
containing statements and information of the type customarily
included in accountants’ “comfort letters” to
Initial Purchaser with respect to the financial statements and
certain financial information contained or incorporated by
reference in each of the Time of Sale Information and the Offering
Memorandum; provided, that the letters
delivered on the Closing Date shall use a “cut-off”
date no more than three business days prior to such Closing
Date.
(f) Opinion and 10b-5 Statement of Counsel for the
Company. At the request of the Company, (i) Xxxxx &
Xxxxxx L.L.P., Nevada counsel for the Company, shall have furnished
to the Initial Purchaser their written opinion, dated the Closing
Date, and addressed to the Initial Purchaser, in form and substance
reasonably satisfactory to the Initial Purchaser, and (ii) Akerman
LLP, counsel for the Company, shall have furnished to the Initial
Purchaser their written opinion (which written opinion shall
include a 10b-5 opinion), dated the Closing Date and addressed to
the Initial Purchaser, in form and substance reasonably
satisfactory to the Initial Purchaser.
(g) Opinion and 10b-5 Statement of Counsel for the
Initial Purchaser. The Initial Purchaser shall have received
on and as of the Closing Date, a 10b-5 statement of McGuireWoods
LLP, counsel for the Initial Purchaser, with respect to such
matters as the Initial Purchaser may reasonably request, and such
counsel shall have received such documents and information as they
may reasonably request to enable them to pass upon such
matters.
(h) No Legal Impediment to Issuance. No
action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any federal,
state or foreign governmental or regulatory authority that would,
as of the Closing Date, prevent the issuance or sale of the
Securities; and no injunction or order of any federal, state or
foreign court shall have been issued that would, as of the Closing
Date, prevent the issuance or sale of the Securities.
(i) Good Standing. The Initial Purchaser
shall have received on and as of the Closing Date satisfactory
evidence of the good standing of the Company and its subsidiaries
in their respective jurisdictions of organization and their good
standing in such other jurisdictions as the Initial Purchaser may
reasonably request, in each case in writing or any standard form of
telecommunication from the appropriate governmental authorities of
such jurisdictions.
(j) Exchange Listing. An application for
the listing of the Underlying Securities shall have been submitted
to NASDAQ.
(k) Lock-up Agreements. The
“lock-up” agreements, each substantially in the form of
Exhibit A hereto,
between you and the persons and entities listed on Schedule 2 hereto relating to
sales and certain other dispositions of shares of Class A Common
Stock, Class B Common Stock or certain other securities, delivered
to you on or before the date hereof, shall be full force and effect
on the Closing Date.
(l) Registration Rights Agreement. The
Registration Rights Agreement, substantially in the form of
Exhibit B hereto,
between the Company and the Initial Purchaser, shall have been duly
executed and delivered by the Company.
(m) DTC. The Securities shall be eligible
for clearance and settlement through DTC.
(n) Additional Documents. On or prior to
the Closing Date, the Company shall have furnished to the Initial
Purchaser such further certificates and documents as the Initial
Purchaser may reasonably request.
15
All
opinions, letters, certificates and evidence mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance
with the provisions hereof only if they are in form and substance
reasonably satisfactory to counsel for the Initial
Purchaser.
7. Indemnification and
Contribution.
(a) Indemnification of the Initial
Purchaser. The Company agrees to indemnify and hold harmless
the Initial Purchaser, its affiliates, directors and officers and
each person, if any, who controls the Initial Purchaser within the
meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages
and liabilities (including, without limitation, legal fees and
other expenses incurred in connection with any suit, action or
proceeding or any claim asserted, as such fees and expenses are
incurred) that arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained
in the Preliminary Offering Memorandum, any of the other Time of
Sale Information, any Issuer Written Communication, any road show
as defined in Rule 433(h) under the Securities Act (a
“road show”) or
the Offering Memorandum (or any amendment or supplement thereto) or
any omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, in
each case except insofar as such losses, claims, damages or
liabilities arise out of, or are based upon, any untrue statement
or omission or alleged untrue statement or omission made in
reliance upon and in conformity with any information relating to
the Initial Purchaser furnished to the Company in writing by the
Initial Purchaser expressly for use therein, it being understood
and agreed that the only such information furnished by the Initial
Purchaser consists of the Initial Purchaser
Information.
(b) Indemnification of the Company. Initial
Purchaser agrees to indemnify and hold harmless the Company, its
directors, its officers, and each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the indemnity
set forth in paragraph
(a) above, but only with respect to any losses, claims,
damages or liabilities that arise out of, or are based upon, any
untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with any
information relating to the Initial Purchaser furnished to the
Company in writing by the Initial Purchaser expressly for use in
the Preliminary Offering Memorandum, any of the other Time of Sale
Information (including any of the other Time of Sale Information
that has subsequently been amended), any Issuer Written
Communication, any road show or the Offering Memorandum (or any
amendment or supplement thereto), it being understood and agreed
that the only such information furnished by the Initial Purchaser
consists of the following information in the Offering Memorandum
furnished on behalf of the Initial Purchaser: the information
contained in the second paragraph and the third and fourth
sentences of the third paragraph in the subsection “New Issue
of Notes” and the first sentence of the first paragraph in
the subsection “Price Stabilization and Short Positions;
Purchase of Class B Common Stock” under the caption
“Plan of Distribution.”
(c) Notice and Procedures. If any suit,
action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted
against any person in respect of which indemnification may be
sought pursuant to either paragraph (a) or (b) above, such person (the
“Indemnified
Person”) shall promptly notify the person against whom
such indemnification may be sought (the “Indemnifying Person”) in writing;
provided that the
failure to notify the Indemnifying Person shall not relieve it from
any liability that it may have under paragraph (a) or (b) above except to the extent
that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided, further, that the failure to
notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than
under paragraph (a)
or (b) above. If
any such proceeding shall be brought or asserted against an
Indemnified Person and it shall have notified the Indemnifying
Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person (who shall not,
without the consent of the Indemnified Person, be counsel to the
Indemnifying Person) to represent the Indemnified Person and any
others entitled to indemnification pursuant to this Section that
the Indemnifying Person may designate in such proceeding and shall
pay the fees and expenses in such proceeding and shall pay the fees
and expenses of such counsel related to such proceeding, as
incurred. In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall
have mutually agreed to the contrary; (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably
satisfactory to the Indemnified Person; (iii) the Indemnified
Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to
those available to the Indemnifying Person; or (iv) the named
parties in any such proceeding (including any impleaded parties)
include both the Indemnifying Person and the Indemnified Person and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying
Person shall not, in connection with any proceeding or related
proceeding in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and
expenses shall be paid or reimbursed as they are incurred. Any such
separate firm for the Initial Purchaser, its affiliates, directors
and officers and any control persons of the Initial Purchaser shall
be designated in writing by the Initial Purchaser and any such
separate firm for the Company, its directors, its officers and any
control persons of the Company shall be designated in writing by
the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent,
but if settled with such consent or if there be a final judgment
for the plaintiff, the Indemnifying Person agrees to indemnify each
Indemnified Person from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an Indemnified Person shall have requested
that an Indemnifying Person reimburse the Indemnified Person for
fees and expenses of counsel as contemplated by this paragraph, the
Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by the
Indemnifying Person of such request and (ii) the Indemnifying
Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement.
No Indemnifying Person shall, without the written consent of the
Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is
or could have been a party and indemnification could have been
sought hereunder by such Indemnified Person, unless such settlement
(x) includes an unconditional release of such Indemnified Person,
in form and substance reasonably satisfactory to such Indemnified
Person, from all liability on claims that are the subject matter of
such proceeding and (y) does not include any statement as to or any
admission of fault, culpability or a failure to act by or on behalf
of any Indemnified Person.
16
(d) Contribution. If the indemnification
provided for in paragraphs (a) or (b) above is unavailable to an
Indemnified Person or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each
Indemnifying Person under such paragraph, in lieu of indemnifying
such Indemnified Person thereunder, shall contribute to the amount
paid or payable by such Indemnified Person as a result of such
losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Initial Purchaser, on the other,
from the offering of the Securities or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) but also the relative fault of
the Company, on the one hand, and the Initial Purchaser, on the
other, in connection with the statements or omissions that resulted
in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits
received by the Company, on the one hand, and the Initial
Purchaser, on the other, shall be deemed to be in the same
respective proportions as the net proceeds (before deducting
expenses) received by the Company from the sale of the Securities
and the total discounts and commissions received by the Initial
Purchaser in connection therewith, as provided in this Agreement,
bear to the aggregate offering price of the Securities. The
relative fault of the Company, on the one hand, and the Initial
Purchaser, on the other, shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or by
the Initial Purchaser and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission.
(e) Limitation on Liability. The Company
and the Initial Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by
pro rata any method of allocation
that does not take account of the equitable considerations referred
to in paragraph (d) above. The amount paid or payable by an
Indemnified Person as a result of the losses, claims, damages and
liabilities referred to in paragraph (d) above shall be deemed to
include, subject to the limitations set forth above, any legal or
other expenses incurred by such Indemnified Person in connection
with any such action or claim. Notwithstanding the provisions of
this Section 7, in
no event shall the Initial Purchaser be required to contribute any
amount in excess of the amount by which the total discounts and
commissions received by the Initial Purchaser with respect to the
offering of the Securities exceeds the amount of any damages that
the Initial Purchaser has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) Non-Exclusive Remedies. The remedies
provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be
available to any Indemnified Person at law or in
equity.
8. Effectiveness of Agreement.
This Agreement shall become effective as of the date first written
above.
9. Termination. This Agreement may
be terminated in the absolute discretion of the Initial Purchaser,
by notice to the Company, if after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally
shall have been suspended or materially limited on or by any of
NYSE or The NASDAQ Stock Market; (ii) trading of any securities
issued or guaranteed by the Company shall have been suspended on
any exchange or in any over-the-counter market; (iii) a general
moratorium on commercial banking activities shall have been
declared by federal or New York State authorities; or (iv) there
shall have occurred any outbreak or escalation of hostilities or
any change in financial markets or any calamity or crisis, either
within or outside the United States, that, in the judgment of the
Initial Purchaser, is material and adverse and makes it
impracticable or inadvisable to proceed with the offering, sale or
delivery of the Securities on the Closing Date on the terms and in
the manner contemplated by this Agreement, the Time of Sale
Information and the Offering Memorandum.
10. Payment of Expenses.
(a) Whether or not the
transactions contemplated by this Agreement are consummated or this
Agreement is terminated, the Company will pay or cause to be paid
all costs and expenses incident to the performance of its
obligations hereunder, including without limitation, (i) the costs
incident to the authorization, issuance, sale, preparation and
delivery of the Securities and any taxes payable in that
connection; (ii) the costs incident to the preparation and printing
of the Preliminary Offering Memorandum, any other Time of Sale
Information, any Issuer Written Communication and the Offering
Memorandum (including any amendments and supplements thereto) and
the distribution thereof; (iii) the costs of reproducing and
distributing each of the Transaction Documents; (iv) the fees and
expenses of the Company's counsel and independent accountants; (v)
the fees and expenses incurred in connection with the registration
or qualification and determination of eligibility for investment of
the Securities under the laws of such jurisdictions as the Initial
Purchaser may designate and the preparation, printing and
distribution of a Blue Sky Memorandum (including the related fees
and expenses of counsel for the Initial Purchaser); (vi) any fees
charged by rating agencies for rating the Securities; (vii) the
fees and expenses of the Trustee and any paying agent (including
related fees and expenses of any counsel to such parties); (viii)
all expenses and application fees incurred in connection with the
approval of the Securities for book-entry transfer by DTC; (ix) all
expenses incurred by the Company in connection with any “road
show” presentation to potential investors; (x) all expenses
and application fees related to the listing of the Underlying
Securities on Nasdaq; and (xi) up to a maximum of $150,000 for all
out-of-pocket costs and expenses (including the fees and expenses
of its counsel) reasonably incurred by the Initial Purchaser in
connection with this Agreement and the offering contemplated
hereby.
17
(b) If (i) this
Agreement is terminated pursuant to Section 9, (ii) the Company for
any reason fails to tender the Securities for delivery to the
Initial Purchaser or (iii) the Initial Purchaser decline to
purchase the Securities for any reason permitted under this
Agreement, the Company shall reimburse the Initial Purchaser up to
a maximum of $150,000 for all out-of-pocket costs and expenses
(including the fees and expenses of its counsel) reasonably
incurred by the Initial Purchaser in connection with this Agreement
and the offering contemplated hereby.
11. Persons Entitled to Benefit of
Agreement. This Agreement shall inure to the benefit of and
be binding upon the parties hereto and their respective successors
and the officers and directors and any controlling persons referred
to herein, and the affiliates of the Initial Purchaser referred to
in Section 7
hereof. Nothing in this Agreement is intended or shall be construed
to give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision
contained herein. No purchaser of Securities from the Initial
Purchaser shall be deemed to be a successor merely by reason of
such purchase.
12. Survival. The respective
indemnities, rights of contribution, representations, warranties
and agreements of the Company and the Initial Purchaser contained
in this Agreement or made by or on behalf of the Company or the
Initial Purchaser pursuant to this Agreement or any certificate
delivered pursuant hereto shall survive the delivery of and payment
for the Securities and shall remain in full force and effect,
regardless of any termination of this Agreement or any
investigation made by or on behalf of the Company or the Initial
Purchaser.
13. Certain Defined Terms. For
purposes of this Agreement, (a) except where otherwise expressly
provided, the term “affiliate” has the meaning set
forth in Rule 405 under the Securities Act; (b) the term
“business day”
means any day other than a day on which banks are permitted or
required to be closed in New York City; (c) the term
“subsidiary” has
the meaning set forth in Rule 405 under the Securities Act; and (d)
the term “significant
subsidiary” has the meaning set forth in Rule 1-02 of
Regulation S-X under the Exchange Act.
14. Compliance with USA Patriot
Act. In accordance with the requirements of the USA Patriot
Act, the Initial Purchaser is required to obtain, verify and record
information that identifies their clients, including the Company,
which information may include the name and address of its clients,
as well as other information that will allow the Initial Purchaser
to properly identify its clients.
15. Miscellaneous.
(a) Notices. All notices and other
communications hereunder shall be in writing and shall be deemed to
have been duly given if mailed or transmitted and confirmed by any
standard form of telecommunication.
If to
the Initial Purchaser:
JMP
Securities LLC
000
Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxxxxxxx, XX 00000
with a
copy (which shall not constitute notice) to:
McGuireWoods
LLP
1251
Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx X. Older, Esq.
Email:
xxxxxx@xxxxxxxxxxxx.xxx
Fax:
(000) 000-0000
If to
the Company:
0000
Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx,
Xxxxx 00000
Attention:
Xxxxxxxx Xxxxxxxx, Chairman and Chief Executive
Officer
Xxxxxx X. Xxxxxxx, Chief Financial Officer
Fax No:
000-000-0000
with a
copy (which shall not constitute notice) to:
Akerman
LLP
000
Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxx
Xxxxxxxxxx, XX 00000
Attention:
Xxxxxxx Xxxxxxx, Esq. and Xxxxxxxxx Xxxxx, Esq.
Email:
xxxxxxx.xxxxxxx@xxxxxxx.xxx and
xxxxxxxxx.xxxxx@xxxxxxx.xxx
Fax No:
(000) 000-0000
18
(b) Governing Law. This Agreement and any
claim, controversy or dispute arising under or related to this
Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
(c) Waiver of Jury Trial. Each of the
parties hereto hereby waives any right to trial by jury in any suit
or proceeding arising out of or relating to this
Agreement.
(d) Counterparts. This Agreement may be
signed in counterparts (which may include counterparts delivered by
any standard form of telecommunication), each of which shall be an
original and all of which together shall constitute one and the
same instrument.
(e) Amendments or Waivers. No amendment or
waiver of any provision of this Agreement, nor any consent or
approval to any departure therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
parties hereto.
(f) Headings. The headings herein are
included for convenience of reference only and are not intended to
be part of, or to affect the meaning or interpretation of, this
Agreement.
[Signature page
follows]
19
If
the foregoing is in accordance with your understanding, please
indicate your acceptance of this Agreement by signing in the space
provided below.
Very
truly yours,
|
|
||
|
|
|
|
|
By:
|
/s/ Xxxxxx X. Xxxxxxx
|
|
|
|
Xxxxxx X. Xxxxxxx
|
|
|
|
Chief Financial
Officer
|
|
Accepted: As of the date first
written above:
|
JMP
SECURITIES LLC
|
|
|
|
|
|
|
|
By:
|
/s/ Xxxxxxx Xxxxxx
|
|
|
|
Xxxxxxx Xxxxxx
|
|
|
|
Managing
Director
|
|
20
Schedule
1
Initial
Purchaser
Aggregate Principal Amount
JMP Securities
LLC
$30,000,000
Total:
$30,000,000
21
Schedule
2
Parties Signing Lock-Up Agreements
1.
Xxxxxxxx
Xxxxxxxx
2.
Xxxxxx X.
Xxxxxxx
3.
Xxxxxx
Xxxxx
4.
Xxxxxx
Xxxxxxxx
5.
Xxxxx
Xxxxxxxx
6.
Xxxxxxx X.
Xxxx
7.
Xxxxxx
Xxxxx
8.
Halcyon Consulting,
LLC
9.
Berrard Holdings
Limited Partnership
10.
Blue Flame Capital,
LLC
22
Annex
A
Time of Sale Information
Term
sheet containing the terms of the Securities, substantially in the
form of Annex B.
23
Annex
B
PRICING TERM SHEET
|
STRICTLY CONFIDENTIAL
|
DATED May 9, 2019
|
|
![](https://www.sec.gov/Archives/edgar/data/1596961/000165495419006142/termsheet000.jpg)
$30,000,000
6.75%
CONVERTIBLE SENIOR NOTES DUE 2024
The information in this pricing term sheet supplements RumbleOn,
Inc.’s preliminary offering memorandum, dated May 9, 2019
(the “Preliminary Offering Memorandum”), and supersedes
the information in the Preliminary Offering Memorandum to the
extent inconsistent with the information in the Preliminary
Offering Memorandum. In all other respects, this term sheet is
qualified in its entirety by reference to the Preliminary Offering
Memorandum, including all documents incorporated by reference
therein. References to “we,” “our” and
“us” refer to RumbleOn, Inc. and not to its
subsidiaries. Terms used herein but not defined herein shall have
the respective meanings as set forth in the Preliminary Offering
Memorandum. All references to dollar amounts are references to U.S.
dollars.
Issuer:
|
|
Ticker/Exchange
for Our Class B Common Stock:
|
“RMBL”/The
NASDAQ Capital Market (“Nasdaq”)
|
Securities:
|
6.75% Convertible
Senior Notes due 2024 (the “notes”)
|
Aggregate
Principal Amount of Notes Offered:
|
$30,000,000. The
initial purchaser will not have an option to purchase additional
notes.
|
Denominations:
|
$1,000 and integral
multiples of $1,000 in excess thereof
|
Ranking:
|
Senior
unsecured
|
Issue
Price
|
100% of principal,
plus accrued interest, if any, from May 14, 2019 if settlement
occurs after that date
|
Maturity:
|
May 1, 2024, unless
earlier converted, redeemed or repurchased
|
Interest
and Interest Payment Dates:
|
6.75% per
year
|
|
Interest will
accrue from May 14, 2019 and will be payable semiannually in
arrears on May 1 and November 1 of each year, beginning on November
1, 2019
|
Regular
Record Dates:
|
April 15 and
October 15 of each year, immediately preceding the May 1 and
November 1 interest payment date, as the case may be
|
Initial
Conversion Rate:
|
173.9130 shares of
Class B Common Stock
per $1,000 principal amount of the notes, subject to
adjustment
|
Initial
Conversion Price:
|
Approximately $5.75
per share of Class B Common Stock, subject to
adjustment
|
Conversion
Premium:
|
15% above the sale
price of our Class B Common Stock in the concurrent Common Stock
Offering on May 9, 2019.
|
Optional
Redemption:
|
We may not redeem
the notes prior to May 6, 2022. We may redeem for cash all or any
portion of the notes, at our option, on or after May 6, 2022 if the
last reported sale price of our Class B Common Stock has been at
least 150% of the conversion price then in effect for at least 20
trading days (whether or not consecutive), including the trading
day immediately preceding the date on which we provide notice of
redemption, during any 30 consecutive trading day period ending on,
and including, the trading day immediately preceding the date on
which we provide notice of redemption at a redemption price equal
to 100% of the principal amount of the notes to be redeemed, plus
accrued and unpaid interest to, but excluding, the redemption
date.
|
Fundamental
Change:
|
If we undergo a
“fundamental change” (as defined in the Preliminary
Offering Memorandum under the heading “Description of
Notes—Fundamental Change Permits Holders to Require Us to
Repurchase Notes”), subject to certain conditions, holders
may require us to repurchase for cash all or any portion of their
notes in principal amounts of $1,000 or an integral multiple
thereof, at a repurchase price equal to 100% of the principal
amount of the notes to be repurchased, plus accrued and unpaid
interest to, but excluding, the fundamental change repurchase date.
See “Description of Notes—Fundamental Change Permits
Holders to Require Us to Repurchase Notes” in the Preliminary
Offering Memorandum.
|
Interest
Make-Whole Payment upon Certain Conversions:
|
On or after the
date that is one year after the last date of original issuance of
the notes offered by the Preliminary Offering Memorandum, we will
make an interest make-whole payment (an “interest make-whole
payment”) to a converting holder (other than a conversion in
connection with a make-whole fundamental change in which the
conversion rate is adjusted) equal to the sum of the present values
of the scheduled payments of interest that would have been made on
the notes to be converted had such notes remained outstanding from
the conversion date through the earlier of (i) the date that is two
years after the conversion date and (ii) June 15, 2022 if the notes
had not been so converted. The present values of the remaining
interest payments will be computed using a discount rate equal to
2.0%.
We may pay any
interest make-whole payment either in cash or in shares of our
Class B Common Stock, at our election. If we elect, or are deemed
to have elected, to pay any interest make-whole payment by
delivering shares of our Class B Common Stock, the number of shares
of Class B Common Stock a converting holder of notes will receive
will be equal to the amount of the interest make-whole payment due
divided by the greater of (A) the product of (x) 95.0% and (y) the
simple average of the daily VWAP of our Class B Common Stock for
the 10 trading days ending on and including the trading day
immediately preceding the conversion date and (B) the conversion
price (rounded to the nearest ten-thousandth) on the applicable
conversion date. If we elect to pay any interest make-whole payment
in cash we will pay cash in an amount equal to the interest
make-whole payment.
Notwithstanding the
foregoing, (x) if we elect or are deemed to have elected to pay any
interest make-whole payment in shares of our Class B Common Stock,
the number of shares of our Class B Common Stock we may deliver in
connection with a conversion of the notes, including those
delivered in connection with an interest make-whole payment, will
not exceed 197.0440 shares of Class B Common Stock per $1,000
principal amount of notes, subject to adjustment at the same time
and in the same manner as the conversion rate as set forth under
“Description of Notes—Conversion
Rights—Conversion Rate Adjustments” in the Preliminary
Offering Memorandum and (y) if we elect to pay any interest
make-whole payment in cash, the amount of cash we may deliver in
connection with an interest make-whole payment will not exceed
$117.39 per $1,000 principal amount of notes.
|
Concurrent
Common Stock Offering:
|
Concurrently with
the offering of notes, we are selling, in a private placement
exempt from registration under the Securities Act of 1933, as
amended (the “Securities Act”), 1,900,000 shares of our
Class B Common Stock, at a price per share equal to $5.00, in the
Concurrent Common Stock Offering. The net proceeds of the
Concurrent Common Stock Offering, less commissions to the placement
agent and estimated expenses payable by us, are expected to be
approximately $8.8 million. The offering of notes is not contingent
upon the Concurrent Common Stock Offering and the Concurrent Common
Stock Offering is not contingent upon the offering of
notes.
|
Use
of Proceeds:
|
We estimate that
the net proceeds from this offering will be approximately $27.6
million, after deducting the initial purchaser’s discounts
and commissions and estimated offering expenses payable by us. We
intend to use approximately $11.1 million of the net proceeds from
this offering and the Concurrent Common Stock Offering to refinance
certain outstanding restrictive indebtedness and the remainder for
other general corporate purposes, which may include purchases of
additional inventory held for sale, increased spending on marketing
and advertising, and capital expenditures necessary to grow the
business. Pending these uses, we may invest the net proceeds in
short-term interest-bearing investment grade
instruments.
See “Use of
Proceeds” in the Preliminary Offering
Memorandum.
|
Sole
Book-Running Manager:
|
JMP Securities
LLC
|
Pricing
Date:
|
May 9,
2019
|
Trade
Date:
|
May 10,
2019
|
Expected
Settlement Date:
|
May 14,
2019
|
Listing:
|
None
|
CUSIP
Number (144A):
|
781386
AA5
|
ISIN
(144A):
|
US781386AA56
|
Increase
in Conversion Rate upon Conversion upon a Make-Whole Fundamental
Change or Notice of Redemption:
|
If the effective
date of a make-whole fundamental change occurs prior to the
maturity date of the notes or we give a notice of redemption with
respect to any or all of the notes and, in each case, a holder
elects to convert its notes in connection with such make-whole
fundamental change or redemption notice, as applicable, the
following table sets forth the number of additional shares of Class
B Common Stock by which the conversion rate will be increased per
$1,000 principal amount of notes for each stock price and effective
date set forth below:
|
Stock
Price
|
||||||||||
Effective
Date
|
$5.075
|
$5.75
|
$6.00
|
$7.00
|
$8.00
|
$9.00
|
$10.00
|
$11.00
|
$12.00
|
|
May 14,
2019
|
23.1310
|
20.0000
|
18.7500
|
15.8857
|
13.1250
|
8.8889
|
4.5000
|
2.1818
|
0.0000
|
|
May 1,
2020
|
23.1310
|
19.5000
|
18.2813
|
15.4886
|
12.7969
|
8.6667
|
4.3875
|
2.1273
|
0.0000
|
|
May 1,
2021
|
23.1310
|
18.8000
|
17.6250
|
14.9326
|
12.3375
|
8.3556
|
4.2300
|
2.0509
|
0.0000
|
|
May 1,
2022
|
23.1310
|
18.0000
|
16.8750
|
14.2971
|
11.8125
|
8.0000
|
4.0500
|
1.9636
|
0.0000
|
|
May 1,
2023
|
23.1310
|
17.5000
|
16.4063
|
13.9000
|
11.4844
|
7.7778
|
3.9375
|
1.9091
|
0.0000
|
|
May 1,
2024
|
23.1310
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
0.0000
|
|
The exact stock
price and effective date may not be set forth in the table above,
in which case:
●
If the stock price
is between two stock prices in the table or the effective date is
between two effective dates in the table, the number of additional
shares by which the conversion rate will be increased will be
determined by a straight-line interpolation between the number of
additional shares set forth for the higher and lower stock prices
and the earlier and later effective dates, as applicable, based on
a 365-day year.
●
If the stock price
is greater than $12.00 per share (subject to adjustment in the same
manner as the stock prices set forth in the column headings of the
table above), no additional shares will be added to the conversion
rate.
●
If the stock price
is less than $5.075 per share (subject to adjustment in the same
manner as the stock prices set forth in the column headings of the
table above), no additional shares will be added to the conversion
rate.
Notwithstanding the
foregoing, in no event will the conversion rate per $1,000
principal amount of notes exceed 197.0440 shares of Class B Common
Stock, subject to adjustment in the same manner as the conversion
rate set forth in the Preliminary Offering Memorandum under the
caption “Description of Notes—Conversion
Rights—Conversion Rate Adjustments.”
This
communication is intended for the sole use of the person to whom it
is provided by the sender. This material is confidential and is for
your information only and is not intended to be used by anyone
other than you. This information does not purport to be a complete
description of the notes or the offering thereof. This
communication does not constitute an offer to sell or the
solicitation of an offer to buy any notes in any jurisdiction to
any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction.
The
notes and any shares of Class B Common Stock issuable upon
conversion of the notes have not been and will not be registered
under the U.S. Securities Act, or any other securities laws, and
may not be offered or sold within the United States or any other
jurisdiction, except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act and any other applicable securities laws. The
initial purchaser is initially offering the notes only to qualified
institutional buyers as defined in, and in reliance on, Rule 144A
under the Securities Act.
The
notes and any shares of Class B Common Stock issuable upon
conversion of the notes are not transferable except in accordance
with the restrictions described under “Notice to
Investors” and “Transfer Restrictions” in the
Preliminary Offering Memorandum.
Any
legends, disclaimers or other notices that may appear below are not
applicable to this communication and should be disregarded. Such
legends, disclaimers or other notices have been automatically
generated as a result of this communication having been sent via
Bloomberg or another system.
24
Exhibit
A
Form of Lock-Up Agreement
May
, 2019
JMP
Securities LLC
000
Xxxxxxx Xxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Re:
Ladies
and Gentlemen:
The
undersigned understands that JMP Securities LLC (hereinafter
referred to as the “Initial
Purchaser”) proposes to enter into a Purchase
Agreement (the “Purchase
Agreement”) with RumbleOn, Inc., a Nevada corporation
(the “Company”),
providing for the issuance and sale by the Company (the
“Offering”) to
the Initial Purchaser of up to $30,000,000 principal amount of the
Company’s 6.75% Convertible Senior Notes due 2024 (the
“Securities”).
To
induce the Initial Purchaser to continue its efforts in connection
with the Offering, the undersigned hereby agrees that, without the
prior written consent of the Initial Purchaser, the undersigned
will not, during the period commencing on the date hereof and
ending ninety (90) days after the date of the final offering
memorandum (the “Offering
Memorandum”) relating to the Offering (the
“Lock-Up
Period”), (1) offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase,
lend, or otherwise transfer or dispose of, directly or indirectly,
any shares of capital stock of the Company or any securities
convertible into or exercisable or exchangeable for shares of
capital stock of the Company, whether now owned or hereafter
acquired by the undersigned or with respect to which the
undersigned has or hereafter acquires the power of disposition
(collectively, the “Lock-Up
Securities”); (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of Lock-Up Securities,
whether any such transaction is to be settled by delivery of shares
of Lock-Up Securities, in cash or otherwise; (3) make any demand
for or exercise any right with respect to the registration of any
Lock-Up Securities; or (4) publicly disclose the intention to make
any offer, sale, pledge or disposition, or to enter into any
transaction, swap, hedge or other arrangement relating to any
Lock-Up Securities. Notwithstanding the foregoing, and subject to
the conditions below, the undersigned may transfer Lock-Up
Securities without the prior written consent of the Initial
Purchaser in connection with (a) transactions relating to Lock-Up
Securities acquired in open market transactions after the
completion of the Offering; provided that no filing under Section
16(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”),
shall be required or shall be voluntarily made in connection with
subsequent sales of Lock-Up Securities acquired in such open market
transactions; (b) transfers of Lock-Up Securities as a bona fide
gift, by will or intestacy or to a family member or trust for the
benefit of a family member (for purposes of this lock-up agreement,
“family member”
means any relationship by blood, marriage or adoption, not more
remote than first cousin); (c) transfers of Lock-Up Securities to a
charity or educational institution; (d) if the undersigned,
directly or indirectly, controls a corporation, partnership,
limited liability company or other business entity, any transfers
of Lock-Up Securities to any shareholder, partner or member of, or
owner of similar equity interests in, the undersigned, as the case
may be, or (e) the sales of shares of capital stock of the Company
to cover the payment of the exercise prices or the payment of taxes
associated with the exercise or vesting of equity awards under any
equity compensation plan of the Company; provided that in the case of
any transfer pursuant to the foregoing clauses (b), (c) or (d), (i)
any such transfer shall not involve a disposition for value, (ii)
each transferee shall sign and deliver to the Initial Purchaser a
lock-up agreement substantially in the form of this lock-up
agreement and (iii) no filing under Section 16(a) of the Exchange
Act shall be required or shall be voluntarily made, except for a
Form 5. The undersigned also agrees and consents to the entry of
stop transfer instructions with the Company’s transfer agent
and registrar against the transfer of the undersigned’s
Lock-Up Securities except in compliance with this lock-up
agreement.
25
If the
undersigned is an officer or director of the Company, (i) the
undersigned agrees that the foregoing restrictions shall be equally
applicable to any issuer-directed or “friends and
family” Securities that the undersigned may purchase in the
Offering; (ii) the Initial Purchaser agrees that, at least three
(3) Business Days (as that term is defined in the Purchaser
Agreement) before the effective date of any release or waiver of
the foregoing restrictions in connection with a transfer of Lock-Up
Securities, the Initial Purchaser will notify the Company of the
impending release or waiver; and (iii) the Company has agreed in
the Purchase Agreement to announce the impending release or waiver
by press release through a major news service at least two (2)
Business Days before the effective date of the release or waiver.
Any release or waiver granted by the Initial Purchaser hereunder to
any such officer or director shall only be effective two (2)
Business Days after the publication date of such press release. The
provisions of this paragraph will not apply if (a) the release or
waiver is effected solely to permit a transfer of Lock-Up
Securities not for consideration and (b) the transferee has agreed
in writing to be bound by the same terms described in this lock-up
agreement to the extent and for the duration that such terms remain
in effect at the time of such transfer.
No
provision in this agreement shall be deemed to restrict or prohibit
the exercise, exchange or conversion by the undersigned of any
securities exercisable or exchangeable for or convertible into
shares of capital stock of the Company, as applicable; provided that the undersigned
does not transfer the shares acquired on such exercise, exchange or
conversion during the Lock-Up Period, unless otherwise permitted
pursuant to the terms of this lock-up agreement. In addition, no
provision herein shall be deemed to restrict or prohibit the entry
into or modification of a so-called “10b5-1” plan at
any time (other than the entry into or modification of such a plan
in such a manner as to cause the sale of any Lock-Up Securities
within the Lock-Up Period).
The
undersigned understands that the Company and the Initial Purchaser
are relying upon this lock-up agreement in proceeding toward
consummation of the Offering. The undersigned further understands
that this lock-up agreement is irrevocable and shall be binding
upon the undersigned’s heirs, legal representative,
successors and assigns.
The
undersigned understands that, if the Purchase Agreement is not
executed by May 30, 2019, or if the Purchase Agreement (other than
the provisions thereof which survive termination) shall terminate
or be terminated prior to payment for and delivery of the
Securities to be sold thereunder, then this lock-up agreement shall
be void and of no further force or effect.
Whether
or not the Offering actually occurs depends on a number of factors,
including market conditions. Any Offering will only be made
pursuant to the Purchase Agreement, the terms of which are subject
to negotiation between the Company and the Initial
Purchaser.
[Signature page follows]
26
Very
truly yours,
Very
truly yours,
__________________________________________
(Name -
Please Print)
__________________________________________
(Signature)
__________________________________________
(Name
of Signatory, in the case of entities - Please Print)
__________________________________________
(Title
of Signatory, in the case of entities - Please Print)
Address:
__________________________________________
__________________________________________
__________________________________________
27
Exhibit
B
Form of Registration Rights Agreement
(See
Exhibit 4.3)
28