RumbleOn, Inc. appointed Mr. Tkach as new CEO

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.


Settlement of Proxy Contest


On June 15, 2023, RumbleOn, Inc. (the "Company" or "RumbleOn") entered into a binding term sheet (the "Proxy Term Sheet") with William Coulter and Mark Tkach (the "Stockholders") relating to the settlement of all outstanding matters currently subject to a proxy contest at the Company's 2023 annual meeting of stockholders (the "2023 Annual Meeting"). The management and director changes and other matters set forth below are pursuant to the terms of the Proxy Term Sheet.


The following description of the Proxy Term Sheet is qualified in its entirety by reference to the full text of the Proxy Term Sheet, which is attached to this report as Exhibit 10.1 and incorporated herein by reference.


Appointment of Interim Chief Executive Officer 


On June 16, 2023, the Board of Directors (the "Board") of the Company appointed Mr. Tkach as the Company's Interim Chief Executive Officer.

Mr. Tkach, 66, currently serves as a consultant for Coulter Management Group, LLLP, a business that manages auto dealerships and investments in real estate. Mr. Tkach previously served as a director and as an executive officer of the Company from August 2021 until February 2022. Before joining the Company, Mr. Tkach served as a co-founder of RideNow and oversaw its strategic growth from 1989 until it was acquired by the Company in August of 2021. Mr. Tkach has over 40 years of experience in powersports operations.

There are no family relationships between Mr. Tkach and any Company director or executive officer, and Mr. Tkach was selected as a director pursuant to the Proxy Term Sheet. Related party transactions information between the Company and Mr. Tkach which would require disclosure under Item 404 of Regulation S-K is set forth in Part III Item 13 of Amendment No. 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission (the "SEC") on April 28, 2023 (the "Annual Report") and incorporated herein by reference.

Also on June 16, 2023, the Company entered into a binding term sheet with Mr. Tkach for his service as Interim Chief Executive Officer (the "Employment Term Sheet"). The Employment Term Sheet has an initial term of six months and may be extended by mutual agreement between the Company and Mr. Tkach. Pursuant to the Employment Term Sheet, Mr. Tkach will receive an annualized salary of $700,000 and Mr. Tkach will receive a grant of restricted stock units ("RSUs") with a grant date fair value equal to $500,000 upon the filing of the Company's earnings for the quarter ended June 30, 2023 (the "Bonus"). The Bonus will vest 50% on September 16, 2023 and the remaining 50% on December 16, 2023.


The foregoing description of the Employment Term Sheet is qualified in its entirety by reference to the full text of the Employment Term Sheet, which is attached to this report as Exhibit 10.2 and incorporated herein by reference.


Appointment of Directors


Also, on June 15, 2023, the Board temporarily increased the size of the Board from seven to nine members and appointed Mr. Tkach and Melvin Flanigan as directors. Mr. Tkach is a non-classified director with a term to expire in connection with Marshall Chesrown's resignation or removal or other vacancy from the Board, at which time the Board will appoint Mr. Tkach to replace Mr. Chesrown or any other director whose seat has become vacant on the Board. Mr. Tkach will resign from the Board the later of the end of his term as Interim Chief Executive Officer or Mr. Chesrown's vacating of his Board seat. Mr. Flanigan is a non-classified director with a term to expire at the 2023 Annual Meeting. Mr. Flanigan has been nominated for election as a Class II director at the 2023 Annual Meeting.


Mr. Flanigan will participate in the Company's non-employee director compensation program, which is described under the section titled "Non-Employee Director Compensation" in the Company's proxy statement for its 2022 annual meeting of stockholders, which was filed with the SEC on May 2, 2022.


There are no family relationships between Mr. Flanigan and any Company director or executive officer, and Mr. Flanigan was selected as a director pursuant to the Proxy Term Sheet. There are no related party transactions between the Company and Mr. Flanigan which would require disclosure under Item 404 of Regulation S-K.


Chairman


Also, on June 15, 2023, the Board named Steve Pully as Chairman of the Board.


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Board Observer


Also on June 15, 2023, the Board named Mr. Coulter as a Board observer until the 2023 Annual Meeting, subject to a mutually agreeable non-disclosure agreement. Mr. Coulter has been nominated for election as a Class II director at the 2023 Annual Meeting.


Board Committees


Also, on June 15, 2023, the Board reorganized its committees as follows:


- Nominating and Corporate Governance Committee: Shin Lee (Chair), Melvin Flanigan, and Becca Polak. 


- Audit Committee: Melvin Flanigan (Chair), Steve Pully, and Kevin Westfall. 


- Compensation Committee: Becca Polak (Chair), Melvin Flanigan, and Steve Pully. 


- CEO Transition Committee: Mark Tkach (Chair), Shin Lee, Becca Polak, Steve Pully, Kevin Westfall, and William Coulter (non-voting until such time he is appointed/elected to Board). 


Mr. Pully's role as Chairman and the composition of the committees of the Board shall remain unchanged until at least the conclusion of the Standstill Agreement Period (defined below), unless the Stockholders consent in writing otherwise.

Standstill Agreement Period and Voting Agreement


For a period of 90 days following execution of the Proxy Term Sheet, the Stockholders agree to vote as recommended by the Board at any annual meeting or special meeting of the Company's stockholders, and to refrain from calling any special meetings of the Company's stockholders, granting or soliciting proxies (other than to named proxies included in the Company's proxy card for any stockholder meeting), or making any nominations or proposals at any annual or special meetings of stockholders (the "Standstill Agreement Period").


Reimbursement of Advisor Fees


The Company has agreed to reimburse the reasonable, documented, out of pocket advisor fees incurred by the Stockholders in connection with their proxy contest, which are estimated to be $2.5 million.