Exhibit 10.19
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
EXECUTION VERSION
ASSET PURCHASE AGREEMENT BY AND AMONG
BFT FRANCHISE HOLDINGS, LLC, AS BUYER, GRPX LIVE PTY LTD,
BODY FIT TRAINING COMPANY PTY LTD, AND BODY FIT TRAINING USA, INC.
AS SELLERS, AND
THE SHAREHOLDERS PARTY HERETO, AND
CAMERON FALLOON, AS THE SELLERS’ REPRESENTATIVE DATED AS OF OCTOBER 13, 2021
TABLE OF CONTENTS
Page
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Article 1 PURCHASE AND SALE 1
Article 2 CLOSING 6
Article 3 [INTENTIONALLY OMITTED] 8
Article 4 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS 8
Article 5 REPRESENTATIONS AND WARRANTIES OF SELLERS AND SHAREHOLDERS 9
TABLE OF CONTENTS continued
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Page
Article 6 REPRESENTATIONS AND WARRANTIES OF BUYER 21
Article 7 COVENANTS 22
Article 8 CONDITIONS TO CLOSING 27
Article 9 INDEMNIFICATION 28
TABLE OF CONTENTS continued
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Article 10 [INTENTIONALLY OMITTED] 34
Article 11 MISCELLANEOUS 35
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of October 13, 2021, is entered into by and among (i) BFT FRANCHISE HOLDINGS, LLC, a Delaware limited liability company (“Buyer”) wholly-owned by Xponential Fitness Inc., a Delaware corporation, on the one hand, and (ii) GRPX LIVE PTY LTD, an Australian corporation (ACN 614 817 962), as Trustee for GRPX Live Unit Trust (“GRPX Live”), BODY FIT TRAINING COMPANY PTY LTD, an Australian corporation (ACN 622 444 008), as Trustee for the Body Fit Training Unit (“Body Fit Training”), and BODY FIT TRAINING USA, INC., a Delaware corporation (“BFT USA” and collectively with GRPX Live and Body Fit Training, “Sellers,” and each a “Seller”), and all of the shareholders and/or equity holders of each of Sellers that are a party hereto (the “Shareholders”), and CAMERON FALLOON, an individual, as the Sellers’ Representative (the “Sellers’ Representative”), on the other hand. Appendix A hereto contains definitions of certain initially capitalized terms used in this Agreement.
RECITALS
WHEREAS, the Sellers own, license and franchise that certain concept and brand known as Body Fit Training™, BFT™ and certain derivatives thereof throughout the world, including ownership of certain intellectual property rights therein and certain rights to license and franchise such concept and brand globally (collectively, the “Business”);
WHEREAS, as part of the Business, Sellers have developed a franchise system for the Body Fit Training™ and BFT™ concept and brand (the “Franchise System”), which has been licensed to and franchised (i) by Body Fit Training in Australia, New Zealand, Canada and Singapore and (ii)
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by BFT USA in the United States of America at the locations set forth on Schedule I;
WHEREAS, Sellers wish to sell and assign to Buyer, and Buyer wishes to purchase and assume from Sellers, certain of the assets, and certain specified liabilities, of the Business, on the terms and subject to the conditions set forth herein; and
WHEREAS, in consideration of the direct and indirect benefits accruing to the Shareholders, and to induce Buyer to enter into this Agreement, the Shareholders agree to be party to this Agreement and to make certain representations and warranties, and agree to certain covenants, as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
Article 1 PURCHASE AND SALE
real, personal or mixed, tangible or intangible (including goodwill), wherever located and whether now existing or hereafter acquired (other than the Excluded Assets), which relate to, or are used or held for use in connection with, the Business as set forth below (collectively, the “Purchased Assets”):
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policies and practices), strategic plans, marketing and promotional surveys, material and research and files relating to Owned IP (“Books and Records”).
Without limiting the provisions of Article 1 hereof, each Seller hereby assigns to the Buyer, with respect to the period from and after the Closing Date, any and all rights of indemnification from, or other rights against, any Person with respect to any of the Purchased Assets or Assumed Liabilities (other than the Excluded Assets or Excluded Liabilities), to the extent that such indemnification and/or rights are assignable. To the extent not assignable, in the event an indemnifiable claim arises with respect to any of the Purchased Assets or Assumed Liabilities for the period from and after the Closing Date, each Seller will, on behalf of Buyer and its successors and assigns and at Buyer’s direction, pursue such indemnification and/or rights in the name of such Seller, at Sellers’ expense.
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the Business;
included in the Purchase Assets (including, without limitation, books of account, ledgers and general, financial and accounting records, machinery and equipment maintenance files, and internal financial statements); and
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Nothing contained in this Section 1.3 or in any instrument of assumption executed by Buyer at the Closing shall release or relieve each Seller from its representations, warranties, covenants and agreements contained herein. Without limiting the foregoing, in no event shall Buyer be deemed to have assumed any liability that is inconsistent with or constitutes an inaccuracy in, or that arises or exists by virtue of any breach of, (x) any representation or warranty made by each Seller contained herein, or (y) any covenant or obligation of each Seller contained herein.
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(ii) [*] for each invoiced Franchise System equipment package Buyer sells in the United States or Canada; and (iii) [*] of all Franchise System royalties due and owing to Buyer from United States or Canada-based franchisees, provided, that aggregate minimum payments of $AUD
$5,000,000 will be paid for the two year period ended December 31, 2023 regardless of the number of franchises sold, and that the aggregate amount of such Sale Bonus Payment shall not exceed Fourteen Million Australian Dollars (AUD $14,000,000). Each Sale Bonus Payment shall accrue starting the Closing Date and shall be payable quarterly within thirty (30) days of the end of each applicable calendar quarter (provided, subject to the terms and conditions of such Master Franchise Agreement, no further Sales Bonus Payments shall accrue on the earlier of (i) the date of the expiration or termination of such Master Franchise Agreement or (ii) after the termination of such Master Franchise Agreement pursuant to Article 13 thereof).
Article 2 CLOSING
p.m. Los Angeles time on the Closing Date (the “Effective Time”) for all purposes, except as may otherwise be expressly provided herein.
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Article 3 [INTENTIONALLY OMITTED]
Article 4
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS
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The Shareholders, jointly and severally, represent and warrant to Buyer that the statements contained in this Article 4 are true and correct as to each Shareholder on the date hereof and shall be true and correct on the Closing Date as if made thereon.
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Article 5
REPRESENTATIONS AND WARRANTIES OF SELLERS AND SHAREHOLDERS
Each Seller and each Shareholder hereby, jointly and severally, represents and warrants to Buyer that the statements contained in this Article 5 are true and correct on the date hereof and shall be true and correct on the Closing Date as if made thereon:
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such Seller;
Australian Franchising Code of Conduct) , consent or approval under, conflict with, violate, result in a breach of, result in the acceleration of obligations, loss of a benefit or increase in Liabilities or fees under, create in any Person the right to terminate, cancel or modify, or cause a default under or give rise to any rights or penalties under (a) any provision of Law relating to such Seller, (ii) any provision of any Governmental Order to which such Seller or any of its properties are subject, or (iii) any provision of any material Contract to which such Seller is bound or to which its assets are affected;
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(ii) presents fairly, in all material respects, the financial position of Sellers on a consolidated basis as of the dates thereof, and (iii) has been prepared on a consistent basis, except (A) as may be stated in the notes thereto; (B) that the Most Recent Balance Sheet and related unaudited statement of operations for the two (2)-month period ended on the Most Recent Balance Sheet Date are subject to normal year-end adjustments that will not individually or in the aggregate, be material; and (C) as set forth on Section 5.5.2 of the Disclosure Schedule.
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(i) material lawsuits pending or, to Sellers’ Knowledge, threatened against or affecting Sellers in regards to their actions as such, including with respect to any matter arising from or related to Covid-19 or Covid-19 Measures (whether regarding contractual, labor, employment, benefits or other matters), (ii) to Seller’s Knowledge, basis for any such Suit; or (iii) Order outstanding to which Sellers or the Business is subject; and (B) there are no lawsuits pending or, to Sellers’ Knowledge, threatened seeking to prevent, hinder, modify, delay or challenge the transactions contemplated by this Agreement or the Ancillary Documents.
Seller);
obligations on behalf of any Seller (nor has any Seller pledged any assets, posted any letters of credit or guaranteed any obligations on behalf of any such Person); or
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(i) Franchise-related or Franchisee-related proceedings, Orders, material complaints or disputes raised since the inception of the Franchise System, (ii) proceedings or Orders required to be disclosed in Franchise Disclosure Documents under applicable Franchise Laws, or (iii) other proceedings or complaints that are pending or, to the Knowledge of Sellers, have been threatened against Sellers or any other Subsidiary of Sellers since the inception of the Franchise System
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Article 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Seller Parties that the statements contained in this Article 6 are true and correct as of the date hereof and as of the Closing.
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Article 7 COVENANTS
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(x) any Seller’s or Shareholder’s services approved in writing by Buyer or the discharge of any obligations of any Seller and/or Shareholder (or any of their Affiliates) under any agreement with the Buyer or any Affiliate of the Buyer, or (y) ownership by a Seller or Shareholder, as a passive investment, in the aggregate of less than [*] of the outstanding shares or other equity interests of capital stock of any corporation or other entity listed on a national securities exchange or publicly traded on any nationally recognized over-the-counter market.
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(ii) the Seller and Shareholders are primarily responsible for the creation of such value, and (iii) Buyer would not have entered into this Agreement or consummated the Transactions without the restrictions contained in this Section 7.11.
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Article 8 CONDITIONS TO CLOSING
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Article 9 INDEMNIFICATION
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(iv) the Third Party Claim has a reasonable likelihood of resulting in indemnifiable Losses that would result in the Cap being exceeded or does not have a reasonable likelihood of resulting in indemnifiable Losses that would result in the Basket being exceeded; (v) settlement of, or an adverse judgment with respect to, the Third Party Claim is not, in the good faith judgment of the Indemnified Person, likely to establish a precedential custom or practice adverse to the continuing business interests or the reputation of the Indemnified Person or have a material adverse effect on the Indemnified Person; (vi) the Third-Party Claim does not involve a supplier, customer, distributor, licensor, licensee, lessor or insurer of Buyer or any Affiliate thereof or a Governmental Authority, (viii) the Third-Party Claim does not involve a class action lawsuit and (ix) the Indemnifying Person conducts the defense of the Third Party Claim actively and diligently. The Indemnifying Person will keep the Indemnified Person apprised of all material developments, including settlement offers, with respect to the Third Party Claim and permit the Indemnified Person to participate in the defense of the Third-Party Claim with counsel selected by it subject to the Indemnifying Person’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Person, provided, that if in the reasonable opinion of counsel to the Indemnified Person, (A) there are legal defenses available to an Indemnified Person that are different from or additional to those available to the Indemnifying Person; or (B) there exists a conflict of interest between the Indemnifying Person and the Indemnified Person that cannot be waived, the Indemnifying Person shall be liable for the reasonable fees and expenses of counsel to the Indemnified Person in each jurisdiction for which the Indemnified Person determines counsel is required. If the Indemnifying Person elects not to or is not entitled to defend such Third Party Claim, fails to promptly notify the Indemnified Person in writing of its election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified Person may, subject to Section 9.5.2, pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. The Shareholders and Sellers, on the one hand, and Buyer, on the other hand, shall cooperate with each other in all reasonable respects in connection with the defense of any Third Party Claim.
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9.11.5 Proceeds from Actions. In the event that any of the Seller Actions results in proceeds payable to one or more Seller Action Indemnitees, any such proceeds shall be disbursed in the following order and manner: (i) repayment to the Buyer for all amounts reimbursed to Seller Action Indemnitees for Losses pursuant to Section 9.11.4; (ii) repayment to Seller Action Indemnitees for all amounts paid in connection with the defense of such Actions and the lawsuit filed against [*] in the U.S. District Court, Central District of California (Case No. [*]), as evidenced by written documentation; and (iii) payment [*] between the Buyer and Seller Action Indemnitees of any proceeds remaining.
Article 10 [INTENTIONALLY OMITTED]
Article 11 MISCELLANEOUS
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If to Sellers, the Sellers’ Representative or the Shareholders:
c/o MinterEllison 165 Varsity Parade,
Varsity Lakes QLD 4227 PO Box 11
Attn: Steve Latham
Email: steve.latham@minterellison.com
with a copy (which shall not constitute notice) to:
Buchalter, a Professional Corporation
18400 Von Karman Avenue, Suite 800
Irvine, CA 92612-0514
Attention: J. Rick Taché
Facsimile: (949) 720-0182
Email: rtache@buchalter.com
If to Buyer:
BFT Franchise Holdings, LLC
17877 Von Karman Avenue, Suite 100
Irvine, CA 92614
Attention: Anthony Geisler, John Meloun
Email: anthony@xponential.com; john.meloun@xponential.com
with a copy (which shall not constitute notice) to:
Buchalter, a Professional Corporation
1000 Wilshire Blvd., Suite 1500
Los Angeles CA, 90017
Attention: Jeremy Weitz
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Facsimile: (213) 896-0400
Email: jweitz@buchalter.com
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(a) any claim that it is not personally subject to the jurisdiction of the courts in Delaware as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts. Notwithstanding the foregoing, the parties agree that disputes with respect to the matters referenced in Section 7.12.2.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, each party has duly executed and delivered this Asset Purchase Agreement as of the date first above written.
SELLERS:
GRPX LIVE PTY LTD, an Australian corporation (ACN 614 817 962), as Trustee for GRPX Live Unit Trust in accordance with section 127(1) of the Corporations Act
By:
Name: Cameron Falloon
Title: Founder and Joint-CEO
BODY FIT TRAINING COMPANY
PTY LTD, an Australian corporation (ACN 622 444 008), as Trustee for Body Fit Training Unit Trust in accordance with section 127(1) of the Corporations Act
By:
Name: Cameron Falloon
Title: Founder and Joint-CEO
BODY FIT TRAINING USA INC., a
Delaware corporation
By:
Name: Cameron Falloon
Title: Founder and Joint-CEO
IN WITNESS WHEREOF, each party has duly executed and delivered this Asset Purchase Agreement as of the date first above written.
SHAREHOLDERS:
THREE SPOUTS PTY LTD, an Australian corporation (ACN 603 434 108), as Trustee for Jurien Family Trust in accordance with section 127(1) of the Corporations Act
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By:
Name: Cameron Falloon
Title: Founder and Joint-CEO
THE BURNET FAMILY TRUST
By:
Name: Richard Langham Burnett
Title: Trustee
TEN GOALS PARTY LTD, an Australian corporation (ACN 096 421 555) as Trustee for the Hamish McLachlan Family Trust in accordance with section 127(1) of the Corporations Act
By: Name: Hamish McLachlan
Title:
SELLERS’ REPRESENTATIVE:
CAMERON FALLOON
IN WITNESS WHEREOF, each party has duly executed and delivered this Asset Purchase Agreement as of the date first above written.
BUYER:
BFT FRANCHISE HOLDINGS, LLC
By: Name: Anthony Geisler
Title: President
APPENDIX A DEFINITIONS
In this Appendix, and in the Agreement and the other Appendices and Schedules thereto, unless the context otherwise requires, the following terms shall have the meanings assigned below
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and the terms listed in the chart below shall have the meanings assigned to them in the Section set forth opposite to such term (unless otherwise specified, section references in this Appendix are to Sections of this Agreement):
Term:
Accounts Receivable 1.2.2
Agreement Preamble
Allocation Schedule 7.12.2
Assigned Contracts 1.1.7
Assignment and Assumption Agreement 2.2.2
Assumed Liabilities 1.3
Basket 9.4.1
Bill of Sale 2.2.1
Books and Records 1.1.11
Business Recitals
Buyer Preamble
Buyer Deliverables 2.3
Buyer Indemnitees 9.2
Cap 9.4.1
Closing 2.1
Closing Date 2.1
Confidential Information 7.5
Dataroom 11.4
Direct Claim 9.5.2
Effective Time 2.1
Enforceability Exceptions 4.2
Excluded Assets 1.2
Excluded Contracts 1.2.7
Excluded Liabilities 1.4
Financial Statements 5.5.1
Franchise Agreement 5.24.1
Franchise Laws 5.24.5
Franchise System Recitals
Franchisee 5.24.2
Indemnified Person 9.5
Indemnifying Person 9.5
Information Privacy Laws 5.12.15
IP Agreements 5.12.3
IP Assignment 2.2.3
Licensed IP 5.12.2
Most Recent Balance Sheet 5.5.1(b)
Owned IP 5.12.1
Purchase Price 1.5.1
Purchased Assets 1.1
Registered Intellectual Property 5.12.1
Related Party Transactions and Relationships 5.23
Restricted Period 7.11.1
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Sale Bonus Payments 1.5.2
Seller Actions 9.11.1
Seller IT Systems 5.12.8
Sellers Preamble
Seller Action Indemnitees 9.11.1
Seller Indemnitees 9.3
Seller Parties Deliverables 2.2
Sellers’ Representative Preamble
Shareholders Preamble
Straddle Period 7.12.3
Tangible Personal Property 1.2.4
Tax Clearance Certificate 7.12.1
Third Party Claim ......................................................................................... 9.5.1(a)
Year-End Balance Sheets.............................................................................. 5.5.1(a)
Year-End Balance Sheet Date....................................................................... 5.5.1(a)
“Action(s)” means any governmental, judicial, administrative or adversarial proceeding (public or private), any action, complaint, claim, lawsuit, legal proceeding, whistleblower complaint, litigation, arbitration or mediation, any hearing, investigation (internal or otherwise), audit, probe or inquiry by any Governmental Authority or any other dispute, including any adversarial proceeding arising out of this Agreement.
“Accountant” means a certified public accountant, mutually agreed upon by Buyer and Sellers’ Representative, licensed and located in both the United States and Australia and qualified to conduct intellectual property asset valuations in accordance with applicable United States and Australian tax laws and related regulations.
“Affiliate” means, with respect to any Person, any other Person who, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including, with correlative meanings, the terms “under common control with” and “controlled by”), as used in the preceding sentence, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in the State of California are authorized or required by Law to be closed for business.
“Code” means the Internal Revenue Code of 1986, as amended.
“Contracts” means all contracts, purchase orders, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.
“Covid-19” means SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2), coronavirus disease or COVID-19.
“COVID-19 Measures” means any quarantine, “shelter in place”, “stay at home”,
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workforce reduction, shut down, closure, sequester or any other Law, Order, directive, guidelines or recommendations by any Governmental Authority in connection with or in response to Covid- 19.
“Disclosure Schedule” means that certain document identified as the Disclosure Schedule, dated as of the date hereof (as the same may be modified from time to time in accordance with the terms hereof), delivered by the Seller Parties and the Shareholders to Buyer in connection with this Agreement. Each Section in the Disclosure Schedule shall be deemed to qualify only the corresponding Section of this Agreement and any other Section of this Agreement to which such disclosure makes express reference.
“Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership. For purposes of this Agreement, a Person will be deemed to own a property or asset subject to an Encumbrance if it holds such property or asset subject to the interest of a vendor or a lessor under any conditional sale agreement, capital lease, or other title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such property or asset.
“Environmental Law(s)” means any Law relating to, regulating, or imposing an obligation or standards of conduct concerning (i) releases or threatened releases of Hazardous Substances or materials containing Hazardous Substances; (ii) the manufacture, handling, transport, use, treatment, storage or disposal of Hazardous Substances or materials containing Hazardous Substances; or (iii) pollution or protection of the environment, worker health and safety and/or natural resources.
“EBITDA” means earnings before deduction of interest, taxes, depreciation and amortization, without giving effect to any other adjustments.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“Exchange Act” means the Securities Exchange Act of 1934, as amended
“Family” means, with respect to a particular individual, (a) the individual, (b) the individual’s spouse and former spouse(s), (c) any other natural person who is related to the individual or the individual’s spouse within the second degree, and (d) any other natural person who resides with such individual.
“Fundamental Representations” means Article 4, Section 5.1, Section 5.2, Section 5.3, Section 5.4, Section 5.10, the first sentence of Section 5.12.2, Section 5.12.7, Section 5.23, Section 5.25, Section 6.1, and Section 6.2.
“Governing Documents” means with respect to any Person: (a) if a corporation, the articles or certificate of incorporation and the bylaws; (b) if a general partnership, the partnership agreement and any statement of partnership; (c) if a limited partnership, the limited partnership agreement and the certificate of limited partnership; (d) if a limited liability company, the articles
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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of organization and operating agreement; (e) if a trust, the instrument governing the trust, (f) if another type of Person, any other charter or similar document adopted or filed in connection with the creation, formation or organization of the Person; (g) all equity holders’ agreements, voting agreements, voting trust agreements, joint venture agreements, registration rights agreements or other agreements or documents relating to the organization, management or operation of any Person or relating to the rights, duties and obligations of the equity holders of any Person; and
(h) any amendment or supplement to any of the foregoing.
“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.
“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.
“Hazardous Substances” means (i) any waste or substance that forms the basis for liability or is regulated under any Environmental Law; and (ii) any substance, material or waste that is defined or classified pursuant to any Environmental Law as a “hazardous waste,” “hazardous material,” “hazardous substance,” “extremely hazardous waste,” “pollutant,” “restricted hazardous waste,” “contaminant,” “toxic waste,” or “toxic substance” or any similar term under any provision of Environmental Law, including, without limitation, petroleum, or any fraction or derivative thereof, asbestos or asbestos-containing material, urea formaldehyde, per- and polyfluoroalkyl substances, or polychlorinated biphenyls (PCBs).
“Indebtedness” means the following obligations: (a) all indebtedness or other obligations of any Seller for borrowed money, whether current, short-term or long-term, secured or unsecured, including all overdrafts and negative cash balances; (b) all indebtedness of any Seller for the deferred purchase price for purchases of property or services with respect to which any Seller is liable, contingently or otherwise, as obligor or otherwise (whether earn-outs, indemnity payments, non-compete payments, consulting payments, retention bonuses, severance payments or other similar payments, or otherwise; in each case whether contingent or not and valued at the maximum amount thereof) except any trade payable incurred in the Ordinary Course of Business; (c) all lease obligations of any Seller under leases that have been or should be capitalized; (d) the aggregate face amount of all outstanding letters of credit issued on behalf of any Seller; (e) all obligations of any Seller arising under acceptance facilities; (f) all guaranties, endorsements and other contingent obligations of any Seller to purchase, to provide funds for payment, to supply funds to invest in any other Person, or otherwise to assure a creditor against loss; (g) all obligations of any Seller under any interest rate protection, foreign currency exchange, or other interest or exchange rate swap or hedging agreement or arrangement, or other derivative product; (h) all obligations secured by an Encumbrance upon any assets or properties of any Seller; (i) all outstanding or held checks, money orders or similar instruments of any Seller as of the Closing; (j) all Liabilities of any Seller pursuant to any phantom equity plan or Liabilities with respect stock appreciation or similar rights or arising from non-qualified deferred compensation arrangements, plans or policies or other forms of deferred compensation arrangements; (k) all trade payable and current liabilities of any Seller not incurred in the Ordinary Course of Business or more than sixty (60) days past invoice or sixty
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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(60) days past due; (l) any other Liabilities, contingent or otherwise, that, should be classified upon the balance sheet of any Seller as indebtedness; (m) all “withdrawal liability” of any Seller to a “multiemployer plan” as such terms are defined under ERISA; (n) all indebtedness referred to in clauses (a) through (n) above of any Person other than a Seller that is guaranteed by a Seller; and
(o) accrued and unpaid interest on, and prepayment premiums, penalties or similar contractual charges arising as a result of the discharge of, any such foregoing obligation.
“Intellectual Property” and “IP” means all rights in intellectual property of any type throughout the world, including, but not limited to, the following: (i) any U.S. patent, patent application, divisional, continuation, reissue, renewal, registration, confirmation, re-examination, certificate of inventorship, extension, and the like, and any provisional application of any such patents or patent applications, and any foreign or international equivalent of any of the foregoing (collectively, “Patents”), (ii) any U.S. trademark, service mark, service name, brand name, trade dress, logo, domain name, social media identifiers or handles, trade name, corporate name, business symbol, and other source identifiers, whether or not registered, including, but not limited to, all common-law rights thereto, and registrations, and applications for registration thereof, and any foreign or international equivalent of any of the foregoing and all goodwill associated therewith (collectively, “Trademarks”); (iii) any works, whether or not registered in the U.S. or elsewhere, including, without limitation, mechanical and electronic design drawings (including, without limitation, computer-aided design files), specifications, software (including, without limitation, documentation and object and source code), data, databases, application programming interfaces, computerized databases, algorithms, routines, processes, whether registered or unregistered, and registrations and applications for registration thereof, and moral rights, (collectively, “Copyrights”); and (iv) technical, scientific, business and other know-how and information, trade secrets, knowledge, technology, means, methods, processed, practices, formulas, assembly procedures, specifications, books, records, reports, manuals, data and results, in written, electronic, or any other form not known or hereafter developed (collectively, “Trade Secrets”).
“Knowledge of Seller” or any other similar knowledge qualification, means the knowledge of any of the following persons: Cameron Falloon, Brandon Evans or Hamish McLachlan. Any such person shall be deemed to have “knowledge” of a particular fact or other matter if such person
“Law” means (a) any federal, state, local, municipal, foreign, international, multinational or other administrative law, constitution, common law principle, ordinance, code, statute, judgment, injunction, decree, order, rule, statute or governmental regulation, or “fair price,” “moratorium,” “control share acquisition” or other similar anti-takeover statute or regulation,
“Liability” means, with respect to any Person, any liability or obligation of such Person of
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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any kind, character or description, whether known or unknown, absolute or contingent, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise and whether or not the same is required to be accrued on the financial statements of such Person.
“Losses” mean any and all claims, damages, decline in value, judgements, liabilities, losses, lost profits, penalties, settlement payments, arbitration awards, taxes and costs and expenses (including reasonable attorneys’, consultants’ and experts’ fees and expenses and other costs of defending, investigating or settling claims or enforcing rights to indemnification hereunder) and the cost of pursuing any insurance providers in each case whether or not arising out of Third Party Claims; provided, however, that “Losses” shall not include punitive damages, except in the case of fraud or to the extent actually awarded to a Governmental Authority or other third party.
“Master Franchise Agreement” means that certain Master Franchise Agreement in the form of Exhibit D attached hereto.
“Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually or in the aggregate, materially adverse to
(a) the business, results of operations, condition (financial or otherwise), or assets of the Business or the Seller Parties, (b) the value of the Purchased Assets, or (c) the ability of the Seller Parties to consummate the Transactions on a timely basis; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which Business operates; (iii) any changes in financial or securities markets in general; or (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; provided further, however, that any event, occurrence, fact, condition or change referred to in clauses (i) through (iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event, occurrence, fact, condition or change has a disproportionate effect on the Business compared to other participants in the industries in which the Business operates.
“Ordinary Course of Business” of a Person means an action taken by such Person if that action is consistent in nature, scope and magnitude with the past practices of such Person and is taken in the ordinary course of the normal, day-to-day operations of such Person.
“Permits” means all permits, certificates, licenses, approvals, governmental notifications, franchises, certificates, approvals, exemptions, classifications, registrations and other similar authorizations (and applications therefor) from Governmental Authorities.
“Permitted Encumbrances” means (a) liens for Taxes not yet due and payable or being contested in good faith by appropriate procedures and for which there are adequate accruals or reserves on the Year-End Balance Sheets; (b) mechanics, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the Ordinary Course of Business or amounts that are not delinquent and which are not, individually or in the aggregate, material to the Business; or
(c) easements, rights of way, zoning ordinances and other similar encumbrances affecting Real Property which are not, individually or in the aggregate, material to the Business.
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.
“Pre-Closing Taxes” means (i) Taxes of the Seller Parties for all Pre-Closing Tax Periods (including the portion of the Straddle Period ending on and including the Closing Date), including, for the avoidance of doubt, any Taxes attributable to an imputed underpayment for a reviewed year that is a Pre-Closing Tax Period, (ii) any and all Taxes of any member of an affiliated, consolidated, combined or unitary group of which any Seller (or any predecessor thereof) is or was a member on or prior to the Closing Date, including pursuant to Treasury Regulations Section 1.1502-6 or any analogous or similar Law, (iii) any and all Taxes of any Person imposed on any Seller as a transferee or successor, by contract or pursuant to any Law, which Taxes are imposed on any Seller as a result of an event or transaction occurring on or prior to the Closing Date.
“Pre-Closing Tax Period” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.
“Related Person” means (a) with respect to an entity, (i) any Affiliate of such entity,
“Representative” means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.
“Seller Parties” means Sellers and Shareholders.
“Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, joint venture or other legal entity of any kind of which such Person (either alone or through or together with one or more of its other Subsidiaries) owns, directly or indirectly, more than fifty percent (50%) of the capital stock or other equity interests the holders of which are (a) generally entitled to vote for the election of the board of directors or other governing body of such legal entity or (b) generally entitled to share in the profits or capital of such legal entity.
“Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.
“Taxes” means (i) all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, escheat or unclaimed property, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties, (ii) any Liability for payment of amounts described in clause (i) whether as a result of transferee liability, of being a member of an affiliated consolidated, combined or unitary group for any period or otherwise through operation of Law, and (iii) any Liability for the payment of amounts described in clauses (i) or (ii) as a result of any tax sharing, tax indemnity or tax allocation agreement, or any other express or implied agreement to indemnify any other Person for Taxes.
“Transaction Documents” means, with respect to a party, all agreements, certificates and other instruments to be delivered by such party pursuant to this Agreement.
“Transactions” means the purchase and sale of the Purchased Assets, the assumption of the Assumed Liabilities and the other Transactions and the Transaction Documents.
[*] = Certain confidential information contained in this document, marked by brackets, has been omitted because it is both (i) not material and (ii) would be competitively harmful if publicly disclosed.
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