Item 1.01. Entry into Material Definitive Agreement.
Public Offering
On January 10, 2020, RumbleOn, Inc. (the "Company") entered into an underwriting
agreement (the "Underwriting Agreement") with National Securities Corporation,
as representative to the several underwriters named on Schedule 1-A to the
Underwriting Agreement (the "Underwriters"), relating to the Company's public
offering (the "Offering") of 18,000,000 shares of Class B Common Stock (the
"Firm Shares") and an additional 2,700,000 shares of Class B Common Stock (the
"Additional Shares," and together with Firm Shares, the "Shares").
The Underwriters agreed to purchase the Firm Shares at a price of $0.57 per
share. The Firm Shares were offered, issued, and sold pursuant to a prospectus
supplement and accompanying prospectus filed with the Securities and Exchange
Commission (the "SEC") pursuant to an effective shelf registration statement
filed with the SEC on Form S-3 (Registration No. 333-234340) under the
Securities Act of 1933, as amended (the "Securities Act").
On January 14, 2020, the Company issued the Firm Shares and closed the Offering
at a public price of $0.57 per share for net proceeds to the Company of
approximately $9.3 million after deducting the underwriting discount and
offering fees and expenses payable by the Company. Certain of the Company's
officers and directors participated in the Offering.
On January 16, 2020, the Company received notice of the Underwriters' intent to
exercise the over-allotment option in full. The Company expects to close on the
over-allotment exercise on January 17, 2020.
The Underwriting Agreement included customary representations, warranties, and
agreements by the Company, customary conditions to closing, indemnification
obligations of the Company and the Underwriters, including for liabilities under
the Securities Act, other obligations of the parties and termination provisions.
The representations, warranties and covenants contained in the Underwriting
Agreement were made only for purposes of such agreement and as of specific
dates, were solely for the benefit of the parties to the agreement and were
subject to limitations agreed upon by the contracting parties.
The Underwriting Agreement is filed as Exhibit 1.1 to this report and is
incorporated herein by reference. The foregoing description of the terms of the
Underwriting Agreement is qualified in its entirety by reference to Exhibit 1.1.
A copy of the opinion of Snell & Wilmer L.L.P. relating to the legality of the
issuance and sale of the Shares in the Offering is attached hereto as Exhibit
5.1.
The Company intends to use the net proceeds of the Offering for working capital
and general corporate purposes, which may include further technology
development, increased spending on marketing and advertising and capital
expenditures necessary to grow the business. Pending these uses, the Company may
invest the net proceeds in short-term interest-bearing investment grade
instruments.
Convertible Note Exchange and Offer
Also on January 10, 2020, the Company entered into a note exchange and
subscription agreement (the "Note Exchange & Subscription Agreement"), as
amended by that certain Joinder and Amendment effective January 13, 2020 (the
"Joinder Agreement," and together with the Note Exchange & Subscription
Agreement, the "Note Agreement"), with the investors in the Company's May 2019
144A Convertible Note transaction (the "Note Investors"), pursuant to which the
Company agreed to complete (i) a note exchange pursuant to which $30 million of
the Company's 6.75% Convertible Senior Notes due 2024 would be cancelled in
exchange for a new series of 6.75% Convertible Senior Notes due 2025 (the "New
Notes") and (ii) the issuance of additional New Notes in a private placement in
reliance on the exemption from registration provided by Rule 506 of Regulation D
of the Securities Act as a sale not involving any public offering (the "Note
Offering"). On January 14, 2020, the Company closed the Note Offering. The net
proceeds for the Note Offering were approximately $8.6 million, after deducting
offering-related expenses.
2
The New Notes were issued on January 14, 2020 pursuant to an Indenture (the
"Indenture"), by and between the Company and Wilmington Trust, National
Association, as trustee (the "Trustee"). The Note Agreement includes customary
representations, warranties and covenants by the Company and customary closing
conditions. The New Notes will bear interest at 6.75% per annum, payable
semiannually on January 1 and July 1 of each year, beginning on July 1, 2020.
The New Notes may bear additional interest under specified circumstances
relating to the Company's failure to comply with its reporting obligations under
the Indenture or if the New Notes are not freely tradeable as required by the
Indenture. The New Notes will mature on January 1, 2025, unless earlier
converted, redeemed or repurchased pursuant to their terms.
The initial conversion rate of the New Notes is 500 shares of Class B Common
Stock per $1,000 principal amount of New Notes, which is equal to an initial
conversion price of $2.00 per share. The conversion rate is subject to
adjustment in certain events as set forth in the Indenture, but will not be
adjusted for any accrued and unpaid interest. In addition, upon the occurrence
of a "make-whole fundamental change" (as defined in the Indenture), the Company
will, in certain circumstances, increase the conversion rate by a number of
additional shares for a holder that elects to convert its New Notes in
connection with such make-whole fundamental change. Before July 1, 2024, the New
Notes will be convertible only under circumstances as described in the
Indenture. No adjustment to the conversion rate as a result of conversion or a
. . .
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 1.01 is incorporated herein by reference.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth under Item 1.01 is incorporated herein by reference.
The New Investor Notes and the New Notes were sold to the investors pursuant to
the Investor Note Exchange Agreement and the Note Agreement, respectively, in a
private placement in reliance on the exemption from registration provided by
Rule 506 of Regulation D of the Securities Act as a sale not involving any
public offering. To the extent that any shares of Class B Common Stock are
issued upon conversion of the New Investor Notes and the New Notes, they will be
issued in transactions anticipated to be exempt from registration under the
Securities Act by virtue of Section 3(a)(9) thereof, because no commission or
other remuneration is expected to be paid in connection with conversion of the
New Investor Notes and the New Notes, and any resulting issuance of shares of
Class B Common Stock.
Item 8.01. Other Events.
On January 14, 2020, the Company issued a press release announcing the closing
of the offerings. The press release is attached as Exhibit 99.1 to this report
and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. Description
1.1 Underwriting Agreement, between the Company and the underwriters named
therein, dated January 10, 2020.
4.1 Indenture, dated January 14, 2020, between the Company and Wilmington
Trust National Association.
4.2 Form of 6.75% Convertible Senior Note due 2025 (included as Exhibit A
to the Indenture filed as Exhibit 4.1).
4.3 Form of Registration Rights Agreement, dated January 14, 2020
5.1 Opinion of Snell & Wilmer L.L.P.
10.1 Form of Note Exchange & Subscription Agreement, dated January 10, 2020
10.2 Form of Joinder & Amendment, dated January 10, 2020
10.3 Form of Investor Note Exchange Agreement
10.4 Form of New Investor Note
10.5 Form of Security Agreement, dated January 14, 2020
23.1 Consent of Snell & Wilmer L.L.P. (included in Exhibit 5.1).
99.1 Press Release, dated January 14, 2020
4© Edgar Online, source Glimpses
RUMBLEON, INC. 
