PHOENIX, May 16, 2023
/PRNewswire/ -- William Coulter and
Mark Tkach, who together hold
approximately 32.0% of the outstanding Class B shares of common
stock of RumbleOn, Inc. ("RumbleOn" or the "Company") (NASDAQ:
RMBL), today sent a letter to the RumbleOn Board of Directors,
criticizing the Board's recent decision to accelerate severance
payments to former Director and Chief Operating Officer
Peter Levy, and to shield those
payments from accountability.
Below is the full text of the letter:
Dear Members of the RumbleOn Board of Directors:
We were shocked by the RumbleOn Board's recent actions to
accelerate and shield Peter Levy's
severance payment. Mr. Levy's termination was publicly announced
before the market opened on May 10,
2023, in a press release trumpeting "RumbleOn Board
Announces Significant Corporate Governance Enhancements." Yet that
same day, immediately after the market closed, the Company released
the details of Mr. Levy's Release Agreement showing this to be yet
another example of failed governance and corporate waste. The
Company failed its stockholders when it entered into a highly
unusual Release Agreement that contains non-standard terms for any
terminated employee of a public company—much less an executive that
was responsible for leading the Company's operations during such an
incredible destruction of stockholder value.
Mr. Levy's August 31, 2021
Employment Agreement spelled out in detail what severance payments
Mr. Levy would be eligible to receive if he was terminated. Mr.
Levy agreed then that, in the event he was terminated without
cause, he "shall not be entitled to" any severance payment
unless at the time of his termination he executed a Release
Agreement in the form that was attached to that Employment
Agreement and provided for full releases by Mr. Levy of the
Company. Rather than insist that Mr. Levy live by the agreement he
made, RumbleOn inexplicably granted Mr. Levy several material
changes that served only to benefit Mr. Levy at a significant
detriment to the stockholders.
According to last week's public filings, the Company has
calculated the cash portion of Mr. Levy's severance to be
$3,375,000. Under his August 2021 Employment Agreement, Mr. Levy was
entitled to receive that cash "in accordance with the Company's
regular payroll cycle . . . on a continuing basis until the full
amount has been paid." This would have resulted in an orderly
proportional distribution of that $3,375,000 over an approximately three-year
period, subject to a six-month delay as required by applicable tax
law. In the event the Company determined at any point that Mr.
Levy's termination should have been with cause, even with the
benefit of hindsight, or that Mr. Levy was otherwise indebted or
liable to the Company for any reason, the Company would have had
the ability to stop those payments and retain that cash.
Yet, instead of enforcing the terms of Mr. Levy's Employment
Agreement, the Company agreed to highly unusual terms that require,
no later than this this Friday, May 19,
2023, the Company to pay out all of the
$3,375,000 from the Company's
accounts. At that time, Mr. Levy will directly receive more than
25% of this amount in cash ($847,500,
less taxes and withholdings). Also at that time, the balance will
be paid by the Company to a "Rabbi Trust" for the benefit of Mr.
Levy that will then make the remainder of the installment payments
to Mr. Levy in accordance with a schedule that was not publicly
disclosed.
It is especially troubling that the Company made this agreement
that will result in the unnecessary, purely discretionary and
immediate cash payment of $3,375,000
the day before it told investors it was "focused on the
reduction and refinancing of its debt," and publicly announced it
was embarking on a campaign to liquidate $60
million of assets in connection with those efforts. We
cannot reconcile these contradictory statements, much less
recognize how the RumbleOn Board could consider such a maneuver
consistent with its supposed "Significant Corporate Governance
Enhancements."
By immediately paying Mr. Levy's severance to him and into the
Rabbi Trust, the Company has not only made a significant
unnecessary cash expenditure, it purposefully has significantly
diminished the Company's ability to assert any right to that cash
in the future should the facts so warrant. That is not the only
gratuitous protection the Company gave Mr. Levy. The May 9, 2023 Release Agreement also contains a
broad release and covenant by the Company not to sue Mr. Levy for
any reason, other than breach of his representations in the Release
Agreement itself. None of these terms were required under Mr.
Levy's Employment Agreement, which provided only for a broad waiver
and release by Mr. Levy of any claims he may have against RumbleOn,
and no reciprocal release whatsoever by the Company of Mr.
Levy.
RumbleOn (and therefore its stockholders) received nothing of
reasonably equivalent value in exchange for these significant
additional benefits given to Mr. Levy. We do not understand how the
Company's agreement to these terms was in the Company's or its
stockholders' best interests. It instead appears to be a parting
gift from the Company to Mr. Levy, designed to shield his
significant severance payment from any investigation by any new
Board members or executives that join the Company after the Release
Agreement was signed.
Though the public releases made no mention of the Board's role
in Mr. Levy's Release Agreement, the Compensation Committee would
have been required to evaluate and approve that agreement; we
presume the rest of the Board was aware of and approved the
agreement as well. As we know you are aware, each member of the
Board of Directors has duties to act in the Company's best
interests, to rigorously exercise oversight, to conduct adequate
diligence, and to not waste corporate assets. Based on the facts
the Company has disclosed, we are increasingly concerned about the
Board's exercise of these duties.
We demand that the Board immediately take any and all
appropriate steps to rescind Mr. Levy's Release Agreement, amend it
to align with the terms he agreed to in his Employment Agreement,
or otherwise halt the impending $3,375,000 payment. We also request that the
Company either publicly release all Board and Compensation
Committee minutes reflecting discussion of Mr. Levy's Release
Agreement or severance, or publicly explain why it would offer a
terminated executive that has overseen an incredible destruction of
stockholder value such a sweetheart severance package. Our counsel
is also contacting Mr. Francis to request that the Company and each
of its officers and directors preserve and retain all documents and
communications related to Mr. Levy's Release Agreement or
severance.
We also request that the Board direct management not to hire any
replacement for Mr. Levy as Chief Operating Officer until after the
conclusion of the July 14, 2023
annual meeting. The decision of whether to hire a COO, and if so
who to hire, is a critical decision that should not be made until
the new Board is seated.
Finally, this should go without saying, but in the event any
other management leaves the Company, he or she should not be
provided with any unwarranted benefits as occurred with Mr.
Levy.
Sincerely,
Mark Tkach and William Coulter
Contact information:
Bruce Goldfarb/Pat McHugh/Jeremy
Provost
Okapi Partners LLC
212-297-0720
Info@okapipartners.com
William Coulter and Mark Tkach, together with the other participants
named herein (collectively, the "Participants"), have filed a
preliminary proxy statement and an accompanying WHITE universal
proxy card with the Securities and Exchange Commission
(the "SEC") with respect to the election of directors of
RumbleOn, Inc., a Nevada
corporation (the "Company"), and certain proposals for the
Company's 2023 annual meeting of stockholders (the "Annual
Meeting").
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
THE PARTICIPANTS MAY BE DEEMED TO BE PARTICIPANTS IN THE
SOLICITATION OF PROXIES WITH RESPECT TO THE ANNUAL MEETING. THE
PARTICIPANTS STRONGLY ADVISE ALL STOCKHOLDERS OF THE COMPANY TO
READ THE PROXY STATEMENT AND OTHER PROXY MATERIALS RELATED TO THE
ANNUAL MEETING AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO
CHARGE ON THE SEC'S WEB SITE AT HTTP://WWW.SEC.GOV. IN
ADDITION, THE PARTICIPANTS IN THIS PROXY SOLICITATION WILL PROVIDE
COPIES OF THE PROXY STATEMENT WITHOUT CHARGE, WHEN AVAILABLE, UPON
REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE
PARTICIPANTS' PROXY SOLICITOR.
The participants in the proxy solicitation are William Coulter, Mark
Tkach, WJC Properties, L.L.C., WRC- 2009, L.L.C., The WRC-98
Trust, The WRC 2021 Irrevocable Trust, Ride Now Management, LLLP,
Kyle Beaird and Melvin Flanigan.
Information regarding the persons who may, under the rules of
the SEC, be deemed participants in the solicitation of
proxies in connection with the election of directors of the
Company and certain proposals, including a description of their
direct or indirect interests, by security holdings or otherwise,
will be set forth in the proxy statement and other proxy materials
as they are filed with the SEC.
As of the date hereof, the participants in the proxy
solicitation beneficially own in the aggregate 5,242,433 shares of
Class B Common Stock, par value $0.001 per share, of the Company ("Class B Common
Stock"). As of the date hereof, William
Coulter beneficially owns 2,621,405 shares of Class B Common
Stock, which includes 593,472 shares directly owned by The WRC 2021
Irrevocable Trust and 30,377 shares directly owned by WJC
Properties, L.L.C. WRC- 2009, L.L.C. is the controlling member of
WJC Properties, L.L.C., and The WRC-98 Trust is the sole member of
WRC- 2009, L.L.C., and accordingly WRC- 2009, L.L.C. and The WRC-98
Trust may be deemed to beneficially own the shares directly owned
by WJC Properties, L.L.C. Mr. Coulter serves as Manager or Trustee
for each of these entities. As of the date hereof, Mark Tkach beneficially owns 2,621,028 shares of
Class B Common Stock, and the remainder of the Participants do not
beneficially own any shares of Class B Common Stock.
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SOURCE William Coulter and
Mark Tkach