Item 1.01. Entry into Material Definitive Agreement.
The disclosure included in Item 2.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item 2.01. Completion of Acquisition or Disposition of Assets.
RideNow Transaction
On August 31, 2021 (the "Closing Date"), RumbleOn, Inc. (the "Company" or
"RumbleOn") completed its business combination with RideNow Powersports, the
nation's largest powersports retailer group (collectively, "RideNow"), creating
the first omnichannel customer experience in powersports (the "RideNow
Transaction"). Pursuant to the RideNow Agreement (as defined below), RideNow
equity holders received cash in the aggregate amount of $400.4 million less any
post-closing adjustments for net working capital and closing indebtedness, and
5,833,333 shares of RumbleOn's Class B Common Stock. The cash consideration for
the RideNow Transaction was funded with (i) approximately $130 million of
proceeds received from the Company's underwritten public offering of 5,053,029
shares of Class B Common Stock resulting in gross proceeds of approximately $167
million, which offering closed on August 31, 2021 (the "Public Offering"), and
(ii) approximately $280 million pursuant to the Credit Agreement (defined
below).
As previously disclosed, on March 12, 2021, the Company entered into the Plan of
Merger and Equity Purchase Agreement, as amended to date (as amended, the
"RideNow Agreement"). Pursuant to the RideNow Agreement, on the Closing Date,
(i) RO Merger Sub I, Inc. merged with and into C&W Motors, Inc., with C&W
Motors, Inc. continuing as a surviving corporation, (ii) RO Merger Sub II, Inc.
merged with and into Metro Motorcycle, Inc., with Metro Motorcycle, Inc.
continuing as a surviving corporation, (iii) RO Merger Sub III, Inc. merged with
and into Tucson Motorcycles, Inc., with Tucson Motorcycles, Inc. continuing as a
surviving corporation, (iv) RO Merger Sub IV, Inc. merged with and into Tucson
Motorsports, Inc., with Tucson Motorsports, Inc. continuing as a surviving
corporation, in each case under the laws of the State of Arizona and each as a
wholly-owned subsidiary of the Company, and (v) RO Merger Sub V, Inc. merged
with and into CMG Powersports, Inc., under the laws of the State of Delaware,
with CMG Powersports, Inc. surviving the merger as a wholly owned direct
subsidiary of the Company. In addition, the Company acquired the outstanding
equity interests of 21 entities that directly or indirectly operate the RideNow
powersports dealerships.
The foregoing description of the RideNow Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Original Agreement, First Amendment, and Second Amendment which are included as
Exhibit 2.1, Exhibit 2.2, and Exhibit 2.3, respectively, to this Current Report
on Form 8-K and incorporated herein by reference.
Credit Agreement
On the Closing Date, the Company entered into a new credit agreement (the
"Credit Agreement") among the Company, as borrower, the lenders party thereto,
and Oaktree Fund Administration, LLC, as administrative agent and collateral
agent (the "Administrative Agent"). The Credit Agreement provides for secured
credit facilities in the form of a $280.0 million principal amount of initial
term loans (the "Initial Term Loan Facility") and a $120.0 million in aggregate
principal amount of delayed draw term loans (the "Delayed Draw Term Loans
Facility," and together with the Initial Term Loan Facility, the "Credit
Facility"). The proceeds from the Initial Term Loan Facility, together with cash
on hand and the proceeds of the Public Offering, were used to (i) consummate the
RideNow Transaction and (ii) pay fees, expenses and other items related to the
. . .
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The disclosure included in Item 2.01 of this Current Report on Form 8-K is
incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
The disclosure included in Item 2.01 of this Current Report on Form 8-K is
incorporated herein by reference. The issuance of the shares of the Company's
Class B Common Stock and the Warrants (including the underlying Class B Common
Stock) in Item 2.01 were not registered under the Securities Act of 1933, as
amended (the "Securities Act"), in accordance with Section 4(a)(2) of Regulation
D, Rule 506 thereunder, as transactions by an issuer not involving a public
offering.
3
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Directors and Executive Officers
Pursuant to the Bylaws Amendment (defined below), on August 31, 2021, the Board
of Directors of the Company (the "Board") increased the size of the Board from
seven (7) to nine (9) and appointed William Coulter and Mark Tkach each as a
director of the Company effective August 31, 2021.
Also, effective August 31, 2021, Mr. Coulter and Mr. Tkach were appointed
executive officers of the Company.
William Coulter, 65, is the co-founder of RideNow. Mr. Coulter oversees
RideNow's financial and growth strategies and is an advisor to the group's
senior management. Mr. Coulter's family has been in the automobile business in
Phoenix since 1923 and Mr. Coulter has worked for auto dealerships for over 50
years and is an owner of several award-winning, Arizona-based auto dealerships
in addition to RideNow. Mr. Coulter has partnered with Mark Tkach since 1989 and
has subsequently grown the RideNow group to more than 40 stores in eight states
to be recognized as the largest powersports dealer group in the United States.
In addition to his professional achievements, Mr. Coulter is an active supporter
of the Phoenix Children's Hospital, the Leukemia Foundation, the American Heart
Association, and the Phoenix Catholic Diocese.
Mark Tkach, 64, is the CEO and co-founder of RideNow. Mr. Tkach's 40 years of
experience in all aspects of powersports operations, including overseeing
RideNow's strategic growth and financial success since he first partnered with
William Coulter in 1989. Under Mr. Tkach's leadership, RideNow grew from a
single dealership into the largest powersports group of companies in the United
States. Mr. Tkach has received numerous awards throughout his years in the
powersports business, having won numerous national sales contests with all
powersports manufacturers. In addition to his professional achievements, Mr.
Tkach has led "rides for charities" such as the Muscular Dystrophy Association
and has also been recognized as a top fundraiser for the Pediatric Brain Tumor
Foundation.
In connection with the RideNow Transaction, the Company entered into related
party leases for 24 properties consisting of dealerships and offices. Each
related party lease is with a wholly-owned subsidiary of the Company as the
tenant and an entity controlled by Mr. Coulter and/or Mr. Tkach as the landlord.
The initial aggregate base rent payment for all 24 leases is approximately $1.2
million per month, and each lease commenced a new 20-year term on September 1,
2021, with each lease containing annual 2% increases on base rent. The Audit
Committee of the Board reviewed and approved these related party leases and
deemed them to be at arms-length and at market rates.
4
Employment Agreements
On August 31, 2021, the Company entered into employment agreements with each of
Marshall Chesrown, William Coulter, Mark Tkach, Peter Levy, and Beverley Rath
(each an "Executive," and collectively, the "Executives") in connection with
their service as executive officers of the Company (the "Employment Agreements"
and each an "Employment Agreement"). The Employment Agreements for each
Executive have a three year term and automatically renew each month unless the
Company or Messrs. Chesrown, Coulter, Tkach, or Levy provides the other party
written notice at least fifteen days prior to the applicable date of renewal or
unless terminated earlier pursuant to the terms of the Employment Agreements.
Ms. Rath's employment agreement does not renew automatically.
In connection with their respective Employment Agreements, Messrs. Chesrown,
Coulter, Tkach and Levy each receive an annual salary of $500,000; and Ms. Rath
receives an annual salary of $220,000. Messrs. Chesrown, Coulter, Tkach and Levy
are eligible for annual cash bonuses of up to 125% of their base salary, upon
achievement of the performance metrics adopted by the Board or the Compensation
Committee. Ms. Rath is eligible for annual cash bonuses of up to 100% of her
base salary, upon achievement of the performance metrics adopted by the Board or
the Compensation Committee. Additionally, the Executives are eligible to
participate in the Company's existing and future equity plans, benefits plan,
policies, or arrangements maintained by the Company and made available to
employees generally and for the benefits of executives.
The Company may terminate the Employment Agreements and each Executive's
employment at any time during the term for "Cause," as such term is defined in
each employment agreement. Also, the Company may terminate the Employment
Agreements and each Executive's employment without cause.
. . .
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
On August 31, 2021, the Board of the Company approved an amendment to the
Amended Bylaws of the Company (the "Bylaws Amendment"). The Bylaws Amendment
increased the maximum number of directors from seven (7) to nine (9) directors.
The foregoing description of the Bylaws Amendment does not purport to be
complete and is qualified in its entirety by the Bylaws Amendment, a copy of
which is attached to this Current Report on Form 8-K as Exhibit 3.1, and
incorporated herein by reference.
Item 7.01. Regulation FD Disclosure.
On September 7, 2021, the Company posted supplemental pro forma combined company
information with respect to historical financial results on its website at
www.rumbleon.com. A copy of the supplemental pro forma information is furnished
herewith as Exhibit 99.1.
The information contained in Item 7.01 of this Current Report on Form 8-K
(including Exhibit 99.1) is being furnished to the U.S. Securities and Exchange
Commission (the "SEC") and shall not be deemed "filed" for purposes of Section
18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
otherwise subject to the liabilities of that Section and shall not be deemed to
be incorporated by reference into any filing under the Exchange Act or the
Securities Act of 1933, as amended, except as shall be expressly set forth by
specific reference in such a filing.
Item 8.01. Other Events.
On August 31, 2021, the Company issued a press release announcing the closing of
the Public Offering and RideNow Transaction. The press release is attached to
this Current Report on Form 8-K as Exhibit 99.2, and is incorporated herein by
reference.
Item 9.01. Financial Statements and Exhibits.
(i) The audited combined financial statements of RideNow Group and Affiliates
for the years ended December 31, 2020 and December 31, 2019, (ii) the audited
combined financial statements of RideNow Group and Affiliates for the years
ended December 31, 2019 and December 31, 2018, (iii) the unaudited condensed
combined financial statements of RideNow Group and Affiliates for the three
months ended March 31, 2021 and 2020, (iv) the unaudited condensed combined
financial statements of RideNow Group and Affiliates for the three and six
months ended June 30, 2021 and 2020, and (v) the unaudited pro forma condensed
combined financial statements of the Company as of June 30, 2021 and for the six
months ended June 30, 2021 and the twelve months ended December 31, 2020, are
included as Exhibit 99.3, 99.4, 99.5, 99.6, and 99.7, respectively, and
incorporated herein by reference.
The unaudited pro forma condensed combined financial statements are based on the
Company's historical consolidated financial statements and RideNow's historical
combined financial statements as adjusted to give effect to the Company's
business combination with RideNow. The unaudited pro forma condensed combined
balance sheet as of June 30, 2021 gives effect to these transactions as if they
occurred on June 30, 2021. The unaudited pro forma condensed combined statements
of operations for the six months ended June 30, 2021 and the twelve months ended
December 31, 2020, give effect to these transactions as if they occurred on
January 1, 2020.
6
(d) Exhibits
Exhibit No. Description
2.1 Plan of Merger and Equity Purchase Agreement, dated March 21, 2021
(incorporated by reference to Exhibit 2.1 to the Company's Current
Report on Form 8-K filed with the SEC on March 15, 2021).
2.2 Joinder and First Amendment to Plan of Merger and Equity Purchase
Agreement, dated June 17, 2021 (incorporated by reference to Exhibit 2.2
to the Company's Current Report on Form 8-K filed with the SEC on June
21, 2021).
2.3 Second Amendment and Plan of Merger and Equity Purchase Agreement,
dated July 20, 2021 (incorporated by reference to Exhibit 2.1 to the
Company's Current Report on Form 8-K filed with the SEC on July 27,
2021).
3.1 Amendment to the Amended Bylaws of RumbleOn, Inc., dated August 31,
2021.
4.1 Form of Warrant.
10.1 Credit Agreement, dated August 31, 2021.
10.2 First Supplemental Indenture, dated August 31, 2021.
10.3 Executive Employment Agreement, dated August 31, 2021, between
Marshall Chesrown and RumbleOn, Inc.
10.4 Executive Employment Agreement, dated August 31, 2021, between William
Coulter and RumbleOn, Inc.
10.5 Executive Employment Agreement, dated August 31, 2021, between Mark
Tkach and RumbleOn, Inc.
10.6 Executive Employment Agreement, dated August 31, 2021, between Peter
Levy and RumbleOn, Inc.
10.7 Executive Employment Agreement, dated August 31, 2021, between
Beverley Rath and RumbleOn, Inc.
23.1 Consent of Dixon Hughes Goodman LLP.
99.1 Supplemental Pro Forma Combined Company Information.
99.2 Press Release, dated August 31, 2021.
99.3 The audited combined financial statements of RideNow Group and
Affiliates for the years ended December 31, 2020 and December 31,
2019.
99.4 The audited combined financial statements of RideNow Group and
Affiliates for the years ended December 31, 2019 and December 31,
2018.
99.5 Unaudited condensed combined financial statements of RideNow Group and
Affiliates for the three months ended March 31, 2021 and 2020.
99.6 Unaudited condensed combined financial statements of RideNow Group and
Affiliates for the three and six months ended June 30, 2021 and 2020.
99.7 Unaudited pro forma condensed combined financial statements of
RumbleOn, Inc. as of June 30, 2021 and for the six months ended June 30,
2021 and twelve months ended December 31, 2020.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
7© Edgar Online, source Glimpses
RUMBLEON, INC. 
