false 0001788717 0001788717 2022-07-24 2022-07-24

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 24, 2022

 

 

F45 Training Holdings Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001-40590   84-2529722

(State or Other Jurisdiction

of Incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification No.)

3601 South Congress Avenue, Building E

Austin, Texas 78704

(Address of Principal Executive Offices)

(737) 787-1955

(Registrant’s telephone number, including area code)

 

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

  ☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  ☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  ☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 210.14d-2(b))

 

  ☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

  

Trading

Symbol(s)

  

Name of each exchange

on which registered

Common stock, par value $0.00005 per share   FXLV   NYSE

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

Item 1.01

Entry into a Material Definitive Agreement.

Waiver Under Credit Agreement

On July 25, 2022, F45 Training Holdings Inc. (the “Company”), as borrower, certain other loan parties thereto, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent and Australian Security Trustee, entered into a Waiver Under Credit Agreement, dated July 25, 2022 (the “Credit Agreement Waiver”). Pursuant to the Credit Agreement Waiver, certain lenders party to the Amended and Restated Credit Agreement dated as of August 13, 2021, as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of December 20, 2021, as amended by that certain Second Amendment to Amended and Restated Credit Agreement dated as of May 13, 2022 (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”) have agreed to waive certain defaults under the Credit Agreement, subject to the terms and conditions set forth in the Credit Agreement Waiver.

The foregoing summary of the Credit Agreement Waiver does not purport to be a complete description of the Credit Agreement Waiver and is qualified in its entirety by reference to the full text of the Credit Agreement Waiver, a copy of which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

 

Item 2.02

Results of Operations and Financial Condition.

On July 26, 2022, the Company issued a press release providing information on the Company’s updated outlook and financial guidance. The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The press release also announced Adam J. Gilchrist’s separation from the Company, cost and employee headcount reduction plans, and the appointment of Mr. Coates as Interim Chief Executive Officer (as further described in this Current Report on Form 8-K).

The information included or incorporated by reference in this Item 2.02, including Exhibit 99.1, is being furnished to the Securities and Exchange Commission (the “SEC”) and shall not be deemed to be “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 incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

Item 2.05

Costs Associated with Exit or Disposal Activities.

Due to market conditions, on July 26, 2022, the Company decided to reduce its number of employees by approximately 110 employees, which represents approximately 45% of the Company’s total employees globally. The Company expects to complete this workforce reduction in the third quarter of 2022. As a result of this workforce reduction, the Company expects to incur a pre-tax cash charge for one-time termination benefits, which consist of severance and related costs, of between approximately $10 million and $12 million in the third quarter of 2022.

 

Item 3.01

Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

On July 26, 2022, the Company filed with the New York Stock Exchange (the “NYSE”) a Section 303A Interim Written Affirmation notifying the NYSE that, due to the appointment of Mr. Coates as Interim Chief Executive Officer, the Company currently has five independent directors and six non-independent directors and, accordingly, does not have a majority of independent directors pursuant to Section 303A.01 of the NYSE Listed Company Manual. Section 303A.01 requires listed companies to have a majority of independent directors. The Company’s search for one or more additional independent members of the Company’s Board of Directors (the “Board”) is underway and the Company intends to complete the process as soon as practical.

Item 5.02.

Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

Departure of President and Chief Executive Officer

On July 26, 2022, the Company announced that President, Chief Executive Officer and Chairman of the Board, Adam J. Gilchrist, will be stepping down, effective as of July 24, 2022 (the “separation date”). Mr. Gilchrist will remain a director of the Company and the Board will appoint a new Chairman.

Mr. Gilchrist has entered into a Separation Agreement with the Company, effective as of the separation date (the “Separation Agreement”). Pursuant to the Separation Agreement, Mr. Gilchrist will remain available to provide transition services to the extent needed by the Company. Mr. Gilchrist will remain on the Board as a Class III, non-employee director.

Under the terms of the Separation Agreement, Mr. Gilchrist will be eligible to receive the following payments and benefits, subject to certain agreed conditions set forth in the Separation Agreement: (i) a one-time cash payment of $4,800,000; (ii) commencing on August 1, 2022, payment by the Company of a 12-month lease of Mr. Gilchrist’s residence in Florida, with an annual lease amount of up to $1,200,000; (iii) reimbursement for COBRA premiums for Mr. Gilchrist and his covered dependents for up to eighteen months; (iv) relocation expenses up to $20,000; (v) reimbursement of legal fees related to the Separation Agreement; and (vi) a one-time cash payment of $1,000,000. As a non-employee member of the Board, as of the separation date, Mr. Gilchrist will be eligible to receive compensation pursuant to the Company’s non-employee director compensation program, as described in the Company’s Proxy Statement for the year ended December 31, 2021, filed with the SEC on May 2, 2022.

Pursuant to the Separation Agreement, Mr. Gilchrist has also agreed to enter into an amendment to or waiver under the Company’s Third Amended and Restated Stockholders’ Agreement, dated as of July 14, 2021 (the “Stockholders’ Agreement”), filed as Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 23, 2022 (the “2021 10-K”), to agree to certain amendments to his board nomination rights. Such board nomination rights will consist of (i) the right to designate two individuals, including Mr. Gilchrist, to be nominated for election to serve as members of the Board, for so long as Mr. Gilchrist or his affiliated entities hold at least 50% of the shares of the Company’s common stock beneficially owned by Mr. Gilchrist at the time of the Company’s initial public offering, and (ii) the right to designate one individual, including Mr. Gilchrist, to be nominated for election to serve as a member of the Board, for so long as Mr. Gilchrist or his affiliated entities hold at least 25% of the shares of the Company’s common stock beneficially owned by Mr. Gilchrist at the time of the Company’s initial public offering (in each case subject to appropriate adjustment for stock splits, dividends, recapitalizations, or similar actions).

The Company has also agreed to, as soon as practicable following the Company’s eligibility to use a registration statement on Form S-3, under the Securities Act, use commercially reasonable efforts to file a registration statement on Form S-3 to cover the resale of securities beneficially owned by Mr. Gilchrist. Certain sections of the Stockholders’ Agreement, including indemnification provisions and provisions relating to market stand-off agreements, will apply to such registration rights.

Under the Separation Agreement, Mr. Gilchrist has further agreed to certain standstill obligations for a period of one year following the separation date. Pursuant to such standstill obligations, Mr. Gilchrist and his affiliates and representatives will not, among other things, offer or propose to effect or participate in any acquisition of securities of all or substantially all of the Company’s assets, any tender or exchange offer involving the Company, any recapitalization transaction with respect to the Company, or any solicitation of proxies to vote any voting securities of the Company. Mr. Gilchrist also agreed not to form or participate in any “group” with respect to Company securities, as such term is defined under the Securities Exchange Act of 1934, as amended, or to make any public announcement with respect to an unsolicited proposal for or offer of any extraordinary transaction involving the Company or its securities.

The Separation Agreement additionally provides for a general release of claims in favor of the Company, as well as a release of claims against Mr. Gilchrist, subject to certain exceptions. The Separation Agreement includes customary cooperation, confidentiality and mutual non-disparagement provisions.

The foregoing summary of the Separation Agreement does not purport to be a complete description of the Separation Agreement and is qualified in its entirety by reference to the full text of the Separation Agreement, a copy of which is attached hereto as Exhibit 10.2 and incorporated herein by reference.

Appointment of Interim Chief Executive Officer

On July 24, 2022, the Board appointed Ben Coates, a current member of the Board, as Interim Chief Executive Officer, to serve while the Board conducts a formal search for a permanent successor to Mr. Gilchrist. In addition to his new role as Interim Chief Executive Officer, Mr. Coates will continue to serve as a member of the Company’s Board.

Mr. Coates, age 52, joined the Board in August 2021. Prior to his role as Interim Chief Executive Officer, Mr. Coates was a Director of Coolgardie Investments, a private investment company that he founded in 2006. Mr. Coates has actively worked with Coolgardie since 2014 and has acted in multiple roles during this period, including as a partner with Prime Production, a global translation company based in the UK, a Director with National Civil Group, an Australian civil contracting business, and Glen Eden Pastoral an Australian rural business where he currently serves as a Director. During the period from 2007 to 2014, Mr. Coates held various roles at National Australia Bank (NAB) at both the Australia and United Kingdom offices. From 2010 to 2014, Mr. Coates served as Director of Strategy for NAB Europe Ltd. where he was responsible for strategy and implementation of compliance programs designed to ensure NAB Europe operated in accordance with updated UK banking and finance legislation. From 2007 to 2010, he served as an Executive Director at NAB Private Wealth, where he was responsible for origination and distribution of structured investments products across the group. Prior to joining NAB, Mr. Coates spent a number of years as General Manager, Funds Management at Hanover Group, where he was responsible for developing and managing the retail and wholesale fund raising activities as well as compliance and risk management. Mr. Coates received his Master of Applied Finance degree from Macquarie University and his DipFP from Deakin University.

There are no arrangements or understandings between Mr. Coates and any other persons pursuant to which Mr. Coates was selected as an officer of the Company, and Mr. Coates has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K of the Securities Act.

Mr. Coates and the Company have previously executed an indemnification agreement, which provides among other matters, that the Company will indemnify Mr. Coates to the fullest extent permitted by applicable law with respect to any action, suit, arbitration, or any other proceeding whether civil, criminal, administrative or investigative by reason of the fact that Mr. Coates is or was a director, officer, employee, agent or trustee of the Company. Mr. Coates’ indemnification agreement is the same as that of other executive officers of the Company, the form of which is attached as Exhibit 10.14 to the 2021 10-K, and incorporated herein by reference.

Chief Financial Officer Employment Agreement Amendment

On July 25, 2022, the Company entered into an amendment to the employment agreement between the Company and Chris Payne, dated July 5, 2021 (the “Payne Employment Agreement Amendment”). Pursuant to the amendment, so long as Mr. Payne remains through October 15, 2022, Mr. Payne will be entitled to a cash retention bonus in the amount of $2,400,000, along with accelerated vesting of his outstanding and unvested equity awards. Mr. Payne will also be entitled to 18 months of Company-paid COBRA and the relocation benefits provided for in his existing employment agreement following any termination of employment following that date. These retention payments and benefits will be paid immediately upon any involuntary termination of Mr. Payne’s employment prior to October 15, 2022. The Payne Employment Agreement Amendment also provides that if Mr. Payne receives these retention payments and benefits, he will not be entitled to any additional severance compensation or benefits under his employment agreement in connection with any termination of employment with the Company.

The foregoing summary of the Payne Employment Agreement Amendment does not purport to be a complete description of the Payne Employment Agreement Amendment and is qualified in its entirety by reference to the full text of the Payne Employment Agreement Amendment, a copy of which is attached hereto as Exhibit 10.3 and incorporated herein by reference.

 

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits

 

Exhibit
No.		   

Description

10.1    Waiver Under Credit Agreement, by and among F45 Training Holdings Inc., the other Loan Parties thereto, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and Australian Security Trustee, dated July 25, 2022.
10.2    Separation Agreement, by and between Adam J. Gilchrist and F45 Training Holdings Inc., dated July 24, 2022.
10.3    Amendment No. 1 to Executive Employment Agreement by and between Chris Payne and F45 Training Holdings Inc., dated July 25, 2022.
99.1    Press Release, dated July 26, 2022, issued by F45 Training Holdings Inc.
104    Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: July 26, 2022   F45 Training Holdings Inc.
    By:  

/s/ Patrick Grosso

    Patrick Grosso
    Chief Legal Officer

Exhibit 10.1

EXECUTION VERSION

WAIVER UNDER CREDIT AGREEMENT

THIS WAIVER UNDER CREDIT AGREEMENT (this “Agreement”) is made and entered into as of July 25, 2022, by and among F45 TRAINING HOLDINGS INC., a Delaware corporation (the “Borrower”), the other Loan Parties party hereto, the Lenders party hereto, and JPMORGAN CHASE BANK, N.A., as Administrative Agent and Australian Security Trustee (the “Administrative Agent”).

W I T N E S S E T H :

WHEREAS, the Borrower, the other Loan Parties party thereto, the Lenders, and Administrative Agent have executed and delivered that certain Amended and Restated Credit Agreement dated as of August 13, 2021, as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of December 20, 2021, as amended by that certain Second Amendment to Amended and Restated Credit Agreement dated as of May 13, 2022 (as the same may be amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”).

WHEREAS, the Borrower has requested that the Required Lenders waive certain defaults, and Required Lenders have agreed to waive certain defaults, subject to the terms and conditions hereof.

NOW, THEREFORE, for and in consideration of the above premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the parties hereto, Borrower, the Administrative Agent, and the Lenders party hereto hereby covenant and agree as follows:

SECTION 1. Definitions. Unless otherwise specifically defined herein, each term used herein (and in the recitals above) which is defined in the Credit Agreement shall have the meaning assigned to such term in the Credit Agreement. Each reference to “hereof,” “hereunder,” “herein,” and “hereby” and each other similar reference and each reference to “this Agreement” and each other similar reference contained in the Credit Agreement from and after the date hereof refer to the Credit Agreement as amended hereby.

SECTION 2. Waiver. The Lenders party hereto hereby waive any Event of Default that may have occurred or that may occur pursuant to clause (r) of Article VII of the Credit Agreement as a result of a violation of Section 7.1(u) of the Specified Securitization Credit Agreement only so long as the outstanding balance under the Specified Securitization Credit Agreement remains unfunded.

SECTION 3. Conditions Precedent. This Agreement shall become effective only upon satisfaction of the following conditions precedent on or before the date hereof:

(a) execution and delivery of this Agreement by the Borrower, Administrative Agent and the Required Lenders;

(b) execution and delivery by the Guarantors of the Consent, Reaffirmation, and Agreement of Guarantors attached hereto; and

(c) Lender shall have received all other fees, costs and expenses due and payable pursuant to the Credit Agreement (including without limitation the reasonable fees and expenses of Holland & Knight, counsel to Administrative Agent).

SECTION 4. Miscellaneous Terms.

(a) Loan Document. For avoidance of doubt, the Borrower, the Administrative Agent, and the Lenders party hereto hereby acknowledge and agree that this Agreement is a Loan Document.

(b) Effect of Agreement. Except as set forth expressly hereinabove, all terms of the Credit Agreement and the other Loan Documents shall be and remain in full force and effect, and shall constitute the legal, valid, binding, and enforceable obligations of the Loan Parties. Except to the extent otherwise expressly set forth herein, the amendments and waiver set forth herein shall have prospective application only from and after the date of this Agreement.

(c) No Novation or Mutual Departure. The Borrower expressly acknowledges and agrees that (i) there has not been, and this Agreement does not constitute or establish, a novation with respect to the Credit Agreement or any of the other Loan Documents, or a mutual departure from the strict terms, provisions, and conditions thereof, other than with respect to the waiver contained in Section 2 above, and (ii) nothing in this Agreement shall affect or limit the Administrative Agent or any Lender’s right to demand payment of liabilities owing from any Loan Party to Administrative Agent or the Lenders under, or to demand strict performance of the terms, provisions and conditions of, the Credit Agreement and the other Loan Documents, to exercise any and all rights, powers, and remedies under the Credit Agreement or the other Loan Documents or at law or in equity, or to do any and all of the foregoing, immediately at any time after the occurrence of a Default or an Event of Default under the Credit Agreement or the other Loan Documents.

(d) Ratification. The Borrower (i) hereby restates, ratifies, and reaffirms each and every term, covenant, and condition set forth in the Credit Agreement and the other Loan Documents to which it is a party effective as of the date hereof and (ii) restates and renews each and every representation and warranty heretofore made by it in the Credit Agreement and the other Loan Documents as fully as if made on the date hereof and with specific reference to this Agreement and any other Loan Documents executed or delivered in connection herewith (except with respect to representations and warranties made as of an expressed date, in which case such representations and warranties shall be true and correct in all material respects as of such date).

(e) No Default. To induce the Administrative Agent and the Lenders to enter into this Agreement and to continue to make advances pursuant to the Credit Agreement (subject to the terms and conditions thereof), the Borrower hereby acknowledges and agrees that, as of the date hereof, and after giving effect to the terms hereof, there exists (i) no Default or Event of Default, and (ii) no right of offset, defense, counterclaim, claim, or objection in favor of the Borrower or any other Loan Party or arising out of or with respect to any of the Loans or other obligations of any Borrower or any other Loan Party owed to the Administrative Agent or the Lenders under the Credit Agreement or any other Loan Document.

 

-2-

(f) Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. This Agreement may be executed by each party on separate copies, which copies, when combined so as to include the signatures of all parties, shall constitute a single counterpart of the Agreement.

(g) Fax or Other Transmission. Delivery by one or more parties hereto of an executed counterpart of this Agreement via facsimile, telecopy or other electronic method of transmission pursuant to which the signature of such party can be seen (including Adobe Corporation’s Portable Document Format or PDF) shall have the same force and effect as the delivery of an original manually executed counterpart of this Agreement or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any Applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act. Any party delivering an executed counterpart of this Agreement by facsimile or other electronic method of transmission shall also deliver an original executed counterpart thereof, but the failure to do so shall not affect the validity, enforceability, or binding effect of this Agreement. The words “execution,” “signed,” “signature,” and words of like import in this Agreement shall be deemed to include electronic signatures or the keeping of records in electronic form.

(h) Recitals Incorporated Herein. The preamble and the recitals to this Agreement are hereby incorporated herein by this reference.

(i) Section References. Section titles and references used in this Agreement shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreements among the parties hereto evidenced hereby.

(j) Further Assurances. The Borrower agrees to take, at Borrower’s expense, such further actions as Administrative Agent shall reasonably request from time to time to evidence the amendments and waiver set forth herein and the transactions contemplated hereby.

(k) Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the internal laws of the State of New York but excluding any principles of conflicts of law or other rule of law that would cause the application of the law of any jurisdiction other than the laws of the State of New York.

(l) Severability. Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.

[SIGNATURES ON FOLLOWING PAGES.]

 

-3-

IN WITNESS WHEREOF, the Borrower, the Administrative Agent, and the Lenders party hereto have caused this Agreement to be duly executed under seal by its duly authorized officer as of the day and year first above written.

 

BORROWER:
F45 TRAINING HOLDINGS INC., a Delaware corporation
By:   /s/ Chris Payne
Name:   Chris Payne
Title:   Chief Financial Officer

 

[JPMORGAN/F45 - WAIVER UNDER CREDIT AGREEMENT]

ADMINISTRATIVE AGENT AND LENDERS:

JPMORGAN CHASE BANK, N.A., individually, and as Administrative Agent, Australian Security Trustee, Lender, Swingline Lender and Issuing Bank

By:   /s/ Eleftherios Karsos
Name:   Eleftherios Karsos
Title:   Authorized Officer

 

[JPMORGAN/F45 - WAIVER UNDER CREDIT AGREEMENT]

MUFG UNION BANK, N.A., as a Lender

By:

   /s/ John DeLaittre

Name:

   John DeLaittre

Title:

   Director

[JPMORGAN/F45 - WAIVER UNDER CREDIT AGREEMENT]

GOLDMAN SACHS BANK USA, as a Lender

By:

    

Name:

  

Title:

  

 

[JPMORGAN/F45 - WAIVER UNDER CREDIT AGREEMENT]

CONSENT, REAFFIRMATION, AND AGREEMENT OF GUARANTORS

Each of the undersigned (a) acknowledges receipt of the foregoing Waiver Under Credit Agreement (the “Agreement”); (b) consents to the execution and delivery of the Agreement; and (c) reaffirms all of its obligations and covenants under the Credit Agreement (as defined in the Agreement) or the Guarantees, as applicable (in each case, as amended, restated, supplemented, or otherwise modified from time to time) and all of its other obligations under the Loan Documents to which it is a party, and, agrees that none of its obligations and covenants shall be reduced or limited by the execution and delivery of the Agreement or any of the other instruments, agreements or other documents executed and delivered pursuant thereto.

This Consent, Reaffirmation, and Agreement of Guarantors (this “Consent”) may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same instrument. This Consent may be executed by each party on separate copies, which copies, when combined so as to include the signatures of all parties, shall constitute a single counterpart of the Consent.

This Consent, Reaffirmation, and Agreement of Guarantors shall be deemed executed under seal.

As of July 25, 2022

 

GUARANTORS:

F45 TRAINING CANADA LIMITED

By:

   /s/ Chris Payne

Name:

  

Chris Payne

Title:

  

Chief Financial Officer

F45 UNITED, LLC

By:

   /s/ Chris Payne

Name:

  

Chris Payne

Title:

  

Chief Financial Officer

F45 U, LLC

By:

   /s/ Chris Payne

Name:

  

Chris Payne

Title:

  

Chief Financial Officer

 

[JPMORGAN/F45 – WAIVER UNDER CREDIT AGREEMENT]

F45 TRAINING INCORPORATED
By:   /s/ Chris Payne
Name:   Chris Payne
Title:   CFO

Executed by F45 AUS HOLD CO PTY LTD

ACN 620 135 426 in accordance with

section 127 of the Corporations Act 2001:

/s/ Patrick Grosso     /s/ Chris Payne
Director/company secretary     Director
Patrick Grosso     Chris Payne

Name of director/company secretary

(BLOCK LETTERS)

    

Name of director

(BLOCK LETTERS)

[JPMORGAN/F45 – WAIVER UNDER CREDIT AGREEMENT]

Executed by FLYHALF AUSTRALIA

HOLDING COMPANY PTY LTD ACN 632

249 131 in accordance with section 127 of

the Corporations Act 2001:

               
/s/ Patrick Grosso      

/s/ Chris Payne

Director/company secretary

      

Director

Patrick Grosso       Chris Payne

Name of director/company secretary

(BLOCK LETTERS)

      

Name of director

(BLOCK LETTERS)

 

Executed by FLYHALF ACQUISITION

COMPANY PTY LTD ACN 632 252 110 in

accordance with section 127 of the

Corporations Act 2001:

               
/s/ Patrick Grosso      

/s/ Chris Payne

Director/company secretary

      

Director

Patrick Grosso       Chris Payne

Name of director/company secretary

(BLOCK LETTERS)

      

Name of director

(BLOCK LETTERS)

 

Executed by F45 HOLDINGS PTY LTD

ACN 616 570 506 in accordance with

section 127 of the Corporations Act 2001:

               
/s/ Patrick Grosso      

/s/ Chris Payne

Director/company secretary

      

Director

Patrick Grosso       Chris Payne

Name of director/company secretary

(BLOCK LETTERS)

      

Name of director

(BLOCK LETTERS)

 

Executed by F45 ROW HOLD CO PTY LTD

ACN 620 135 480 in accordance with

section 127 of the Corporations Act 2001:

               
/s/ Patrick Grosso      

/s/ Chris Payne

Director/company secretary

      

Director

Patrick Grosso       Chris Payne

Name of director/company secretary

(BLOCK LETTERS)

      

Name of director

(BLOCK LETTERS)

 

[JPMORGAN/F45 – WAIVER UNDER CREDIT AGREEMENT]

Executed by F45 TRAINING PTY LTD

ACN 162 731 900 in accordance with

section 127 of the Corporations Act 2001:

/s/ Patrick Grosso     

/s/ Chris Payne

Director/company secretary      Director
Patrick Grosso      Chris Payne
Name of director/company secretary
(BLOCK LETTERS)		      Name of director
(BLOCK LETTERS)

 

[JPMORGAN/F45 - WAIVER UNDER CREDIT AGREEMENT]

Exhibit 10.2

July 24, 2022

Dear Adam:

The Company received your resignation notice subject to terms being agreed. This letter of agreement and general release (“Agreement”) confirms our mutual agreement regarding the terms and conditions of your separation from employment and with F45 Training Holdings Inc. and each of its parents, subsidiaries and affiliates, including any and all offices or positions held with the subsidiaries and affiliates (“F45” or the “Company”). You and the Company agree as follows:

 

1.

Separation from Employment. By mutual agreement with the Company, and in consideration of the mutual promises and commitments set forth in this Agreement, you have resigned from the Company effective upon your execution of this Agreement (the “Separation Date”).

 

2.

Consideration.

 

  a)

Provided that you have executed this Agreement and that it becomes effective in accordance with its terms, and that you otherwise comply with your commitments and obligations under this Agreement, you shall receive the following consideration:

 

  i)

A single cash payment in the amount of Four Million Eight Hundred Thousand Dollars and Zero Cents ($4,800,000.00), payable within 7 days of your Separation Date.

 

  ii)

The Company will ask the landlord to assume and transfer the current lease for your residence in Gulfstream, Florida, with a 12-month lease starting on August 1, 2022, with the annual lease amount of up to One Million Two Hundred Thousand Dollars and Zero Cents ($1,200,000.00). If the landlord does not agree to transfer the lease to the Company within 7 days of your Separation Date then the Company will pay for the rent upfront in accordance with the lease agreement (which you have provided to the Company) within 10 days of your Separation Date. If you relocate during the aforementioned twelve (12) month period, the Company shall have the right to seek an early termination (or other arrangement) with respect to such lease, and you agree to fully cooperate with the Company’s efforts in doing so.

 

  iii)

Subject to Paragraph 8, you will be permitted to retain your current Company email address (adam@f45hq.com), Company laptop (with all company information to be removed) and phone.

 

  iv)

The Company will directly pay, or reimburse you for the premium, for you and your covered dependents to maintain continued health coverage pursuant to the provisions of Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) through the earlier of (i) the eighteen

 

1

  (18) month anniversary of the Separation Date, and (ii) the date you and your covered dependents, if any, become eligible for healthcare coverage under another employer’s plan(s), as set forth in the Employment Agreement between you and the Company dated July 5, 2021 and attached hereto as Exhibit B (the “Employment Agreement”).

 

  v)

The Company shall directly pay, or reimburse you for, an amount equal to your reasonable relocation expenses, up to Twenty Thousand Dollars ($20,000.00), incurred by you in connection with your and your family’s relocation from the United States to Australia, conditioned upon your providing the Company with documentation related to such expenses.

 

  vi)

The Company will pay, or reimburse you for, any reasonable legal fees you incurred in reviewing, negotiating and obtaining advice related to this Agreement and your separation from employment, subject to your counsel providing a reasonably detailed statement of services.

 

  vii)

You will maintain the right to nominate up to two individuals to the Board of Directors, consistent with the rights set forth in the Third Amended and Restated Stockholders’ Agreement dated July 14, 2021 (the “Stockholders’ Agreement”), subject to the following additional conditions:

 

  A.

As long as you continue to beneficially own at least 50% of the shares of Common Stock beneficially owned by you at the time of the Company’s initial public offering (subject to appropriate adjustment for any stock splits, stock dividends, combinations, recapitalizations and the like), you can designate two individuals to be nominated for election to serve as a director on the Board of the Company at each applicable annual or special meeting of the Company’s stockholders; and

 

  B.

As long as you continue to beneficially own at least 25% of the shares of Common Stock beneficially owned by you at the time of the Company’s initial public offering (subject to appropriate adjustment for any stock splits, stock dividends, combinations, recapitalizations and the like), you can designate one individual to be nominated for election to serve as a director on the Board of the Company at each applicable annual or special meeting of the Company’s stockholders.

In connection therewith, you and the Company agree that you will enter into an amendment or waiver under the Stockholders’ Agreement pursuant to which you will waive your prior board nomination rights and replace such rights with the above, and you and the Company will use commercially reasonable efforts to obtain all additional approvals for such amendment or waiver from other stockholders of the Company as required by the Stockholders’ Agreement.

 

  viii)

As a Director you will be paid the same as the other non-executive Directors, consistent with your obligations when serving on the Board of Directors and the Company’s Director compensation policies.

 

  ix)

As soon as practicable following the Company becoming eligible to register securities on Form S-3, the Company shall use commercially reasonable

 

2

  efforts to file a registration statement on Form S-3, or include your securities in a registration statement on Form S-3 the Company is otherwise filing, in either case covering the sale or distribution from time to time by you, or your affiliated entities, on a delayed or continuous basis pursuant to Rule 415 of the Securities Act of all of the Company’s common stock on Form S-3 owned by you or your affiliated entities, at the Company’s expense. Such registration is subject to you furnishing to the Company all required information to be disclosed in the registration statement on a timely basis. In connection with such registration, Sections 3.8 and 3.11 of the Stockholders’ Agreement are incorporated herein by reference as if set forth fully herein and you acknowledge and agree that such provisions shall be deemed to apply to you as if a Holder under the Stockholders’ Agreement.

 

  b)

Provided that you have executed this Agreement and that it becomes effective in accordance with its terms, and provided further that you timely execute and do not revoke the release of claims under the federal Age Discrimination in Employment Act attached as Exhibit A and otherwise comply with your commitments and obligations under this Agreement, you shall receive the following additional separation benefits:

 

  i)

A single cash payment in the amount of One Million Dollars and Zero Cents ($1,000,000.00), payable within 90) days of your Separation Date.

 

  c)

All payments set forth in this Paragraph 2 shall be paid by the Company less applicable taxes, withholdings, and other deductions and are subject to any legal approvals required.

 

  d)

You and the Company mutually agree to execute documentation necessary to effectuate the following:

 

  i)

Termination of the Asset Transfer and IP License Agreement dated as of June 23, 2020 between the Company and LIIT LLC in exchange for termination of the outstanding receivable balance of $2m. The parties mutually agree to fully cooperate in the prompt preparation and execution of any necessary documentation to effectuate this termination and transfer all intellectual property and other assets back to the Company and to terminate this agreement within 30 days of receiving final documents.

 

  ii)

Transfer the assets of, and all rights to, the ownership and operation of each F45 Training studios located in the territories referred to as Venice, CA, Santa Monica, CA and Pacific Palisades, CA, and mutually agree to terminate the related franchise agreements, in exchange for termination of outstanding receivable balance of approximately $850,000, owed to the Company related to these studios. The parties mutually agree to fully cooperate in the prompt preparation and execution of any necessary documentation to effectuate the transfers and terminations and to transfer these assets within 30 days of receiving final documents.

 

  e)

You agree that (i) you shall be solely responsible for all federal, state, and local tax liabilities, interests, and/or penalties that may you may incur as a result of the payments and benefits provided to you under this Agreement; (ii) the Company and

 

3

  any other Company Releasee shall bear no responsibility for any such tax liabilities, interests, and/or penalties; and (iii) you shall indemnify and hold harmless the Company and any other Company Releasee for any such federal, state or local tax liabilities, interests and/or penalties incurred as a result of these payments.

 

3.

Liquidated Damages. The Company will pay liquidated damages of Ten Thousand Dollars and Zero Cents ($10,000.00) per day for any late payment detailed in Paragraph 2(a)(i) and 2(a)(ii), provided that such late payment is not cured within the five (5) day cure period set forth in Paragraph 20(f)(iii) and that you are otherwise in compliance with this Agreement.

 

4.

Release.

 

  a)

In consideration of the payments, benefits, and other items of value set forth in Paragraph 2(a) and (d) hereof, and the other promises and consideration provided by the Company hereunder, to the fullest extent permitted by law and in any and all jurisdictions, specifically including Australia, you waive, release, and forever discharge the Company and each of its past and current parents, subsidiaries, affiliates, and each of its and their respective past and current directors, officers, trustees, employees, representatives, advisors, agents, employee benefit plans and such plans’ administrators, fiduciaries, trustees, recordkeepers and service providers, and each of its and their respective successors and assigns, each and all of them in their personal and representative capacities (collectively the “Company Releasees”) from any and all claims legally capable of being waived, grievances, injuries, controversies, agreements, covenants, promises, debts, accounts, actions, causes of action, suits, arbitrations, sums of money, attorneys’ fees, costs, damages, or any right to any monetary recovery or any other personal relief, whether known or unknown, in law or in equity, by contract, tort, law of trust or pursuant to federal, state or local statute, regulation, ordinance, or common law, which you now have, ever have had, or may hereafter have, based upon or arising from any fact or set of facts, whether known or unknown to you, from the beginning of time until the date of execution of this Agreement, including but not limited to claims arising out of or relating in any way to your employment relationship with the Company or the Company Releasees or other associations with the Company or the Company Releasees or any termination thereof. Without limiting the generality of the foregoing, this waiver, release, and discharge includes any claim or right, to the extent legally capable of being waived, based upon or arising under any federal, state, or local fair employment practices or equal opportunity laws, including, but not limited to, Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§ 2000e, et seq. (“Title VII”); the Equal Pay Act of 1963, 29 U.S.C. § 206(d) (the “Equal Pay Act” or “EPA”); the Americans with Disabilities Act, 29 U.S.C. § 12101 et seq. (“ADA”); the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001, et seq. (“ERISA”) (except for vested benefits otherwise entitled); the Family and Medical Leave Act of 1993, including all amendments thereto; the Florida Civil Rights Act; the Florida Wage Discrimination Law; the Florida Equal Pay Act; the retaliation provision of Florida Workers Compensation Act; the Florida Private Sector Whistleblower’s Act; Florida minimum wage and wage payment laws; the retaliation provisions of the Florida False Claims Act; the Texas Labor Code (specifically including the Texas Payday Act, the Texas Anti-Retaliation Act, Chapter 21 of the Texas Labor Code, the Texas Minimum Wage

 

4

  Act, the Texas Whistleblower Act); Chapter 121 of the Texas Human Resource Code, the Texas Health & Safety Code; the Texas Disability Discrimination Law; the Texas Deceptive Trade Practices Act; any federal, state, local, and/or municipal statute, law, amendment, directive, order, and/or regulation enacted in response to the COVID-19 pandemic; and any other federal, state, or local statutes, common law, or regulation, including any and all amendments to the foregoing.

 

  b)

Notwithstanding the generality of the foregoing, nothing herein constitutes a release or waiver by you of, or prevents you from making or asserting: (i) any claim or right you may have under COBRA; (ii) any claim or right you may have for unemployment insurance or workers’ compensation benefits; (iii) any medical claim incurred during your employment that is payable under applicable medical plans or an employer-insured liability plan; (iv) any claim or right that may arise after the execution of this Agreement; (v) any claim or right you may have under this Agreement; (vi) any claim to indemnification under your indemnification agreement with the Company; or (vii) any claim that is not otherwise waivable under applicable law.

 

  c)

The Company hereby waives, releases and forever discharges you from any and all claims legally capable of being waived, grievances, injuries, controversies, agreements, covenants, promises, debts, accounts, actions, causes of action, suits, arbitrations, sums of money, attorneys’ fees, costs, damages, or any right to any monetary recovery or any other personal relief, whether known or unknown, in law or in equity, by contract, tort, law of trust or pursuant to federal, state or local statute, regulation, ordinance, or common law, which it now has, ever has had, or may hereafter have, based upon or arising from any fact or set of facts, whether known or unknown, from the beginning of time until the date of execution of this Agreement. Notwithstanding the foregoing, nothing herein constitutes a release or waiver by the Company of (i) any claim or right that may arise after the execution of this Agreement; (ii) any claim or right the Company may have under this Agreement; (iii) any act or omission by you that would constitute Cause as defined by Article 1.2 of the Employment Agreement or (iv) any claim that is not otherwise waivable under applicable law.

 

5.

Indemnity. The Company will maintain Directors and Officers professional liability insurance and will indemnify you pursuant to the terms of your indemnification agreement dated July 14, 2021.

 

6.

Standstill. For a period of one year after the date of this Agreement (“Standstill Period”), you and your affiliates and representatives, will not in any manner, directly or indirectly:

 

  a)

propose (whether publicly or otherwise) to effect, or cause in, or in any way assist any other person to effect, seek, offer or propose (whether publicly or otherwise) to effect or participate in:

 

  i)

any acquisition of any securities (or beneficial ownership thereof) or all or substantially all of the assets of the Company or any of its subsidiaries,

 

  ii)

any tender or exchange offer, merger or other business combination involving the Company or any of its subsidiaries,

 

  iii)

any recapitalization, restructuring, liquidation, dissolution or other

 

5

  extraordinary transaction with respect to the Company or any of its subsidiaries, or

 

  iv)

any “solicitation” of “proxies” (as such terms are used in the proxy rules of the Securities and Exchange Commission) or consents to vote any voting securities of the Company;

 

  b)

form, join or in any way participate in a “group” (as defined under the Securities Exchange Act of 1934) with respect to the securities of the Company; or

 

  c)

make any public announcement with respect to or submit an unsolicited proposal for or offer of (with or without condition), any extraordinary transaction involving the Company or its securities or assets.

 

7.

Violations of Any Law or Other Misconduct. You hereby agree, promise and covenant that during your employment with the Company: (i) you did not violate any federal, state, or local law, statute, or regulation while acting within the scope of your employment with the Company; and (ii) you did not engage in conduct that would constitute Cause as defined by the Employment Agreement (collectively, “Violations”).

 

8.

Return of Property. On or before the Separation Date, you agree to promptly return to the Company all of its property, including, but not limited to, computers, iPads, cell phones, files, documents, identification cards, credit cards, keys, equipment, software, and data, however stored. Notwithstanding the foregoing, you will be permitted to retain your Company laptop and iPhone, subject to you providing such devices to a mutually agreed upon reputable, top-tier and professional level third party IT consultant (e.g., EY, PWC) designated by the Company to permanently delete or transfer all Company related materials from your laptop and iPhone. You will cooperate in allowing the Company to review and retain a copy of the business-related contents thereof, and allow such consultant to permanently remove all Company information and material. You, or your designated representative will be able to be present and observe during this process. The Company will not view, disseminate, transfer, duplicate or publish any of your private or personal documents on such laptop and iPhone other than during the joint review session and in order to identify documents as either personal or business related; provided, however, that such consultant may consult with Company counsel regarding whether particular information is business-related. You are permitted to continue use of the telephone number currently associated with the aforementioned iPhone, provided that the Company will no longer be responsible for any charges associated with the continuing use of such telephone number or devices as of the Separation Date.

To the extent you have any Company information or property stored on any personal computer, personal laptop, iPad, cloud storage, personal email account, or any other personal device, you agree to cooperate with the Company to permanently delete any such information or property from such devices, subject to any legal duty to preserve and retain such information and any litigation preservation directive that may be in place and is applicable to you.

 

9.

No Additional Entitlements. You agree that other than the payments described in Paragraphs 2(a) and 2(b): (i) you have received all entitlements due from the Company relating to your employment with the Company including, but not limited to, all wages earned, sick pay, bonuses, overtime pay, and any paid and unpaid personal leave for which

 

6

  you were eligible and entitled, and that no other entitlements are due to you other than as set forth in this Agreement, including Exhibit A; (ii) you further acknowledge and agree that, other than as expressly set forth in this Agreement, including Exhibit A, you are not entitled to and shall not receive any further payments, compensation, or benefits under this Agreement or Exhibit A or under any other prior agreement with the Company or any of its subsidiaries including, but not limited to, any payments or compensation relating to any equity or any payments, compensation, or other benefits; and (iii) other than as expressly incorporated herein, your Employment Agreement is terminated at your request under your resignation notice and you shall no longer have any right or entitlement thereunder.

 

10.

Transition. To the extent the Company deems necessary, you agree that you will assist the Company with the transition of your responsibilities.

 

11.

Cooperation. You agree to reasonably cooperate with the Company (including its officers, their designees, or legal counsel) by providing all information that the Company may reasonably request with respect to matters involving the work you performed for the Company and your responsibilities and duties during your employment with the Company, as well as with respect to any internal or external investigation, or any litigation or other legal proceeding involving the Company, so long as such requests do not unreasonably interfere with any other employment or work in which you are engaged. You agree to appear without the necessity of a subpoena to participate and/or testify truthfully in any investigation, litigation or other legal proceedings in which the Company requires or calls you as a witness, provided that you are provided reasonable notice. Further, you agree to sign any such further documents necessary to give effect to this Agreement and the releases contained in this Agreement. In connection with fulfilling your obligations under this Paragraph, your pre-approved, reasonable out-of-pocket expenses will be reimbursed by the Company (including attorneys’ fees). You shall continue to be entitled to all benefits, indemnification, advancement rights, and protections provided for in your indemnification agreement and to the fullest extent permitted by law and applicable insurance policy.

 

12.

Continuing Obligations. Except as expressly permitted in Paragraph 15 of this Agreement or if otherwise required by law, you hereby acknowledge and agree to comply with your continuing obligations as set forth in your Employment Agreement, including Articles 5 (Proprietary Information Obligations), 6 (Outside Activities) and 7 (Noninterference), the terms of which are hereby incorporated into this Agreement.

 

13.

Protection of Confidential Information.

 

  a)

Except as expressly permitted in Paragraph 15 of this Agreement or if otherwise required by law, and without limiting the generality of the foregoing obligations set forth in Paragraph 12, you agree that you will not at any time, directly or indirectly, disclose any trade secret, confidential or proprietary information you have learned by reason of your association with the Company (the “Confidential Information”) and your continued cooperation under Paragraph 11 or use any such Confidential Information to the detriment of the Company, its parents, affiliates, or subsidiaries, or to the benefit of any business or enterprise that competes with the Company, its parents, affiliates, or subsidiaries. Confidential Information is deemed to include, but is not limited to, information pertaining to Company strategic plans, advertising and marketing plans, sales plans, formulae, processes, methods, machines, ideas, concepts, new product developments, proposed launches, discontinuance of

 

7

  existing products, product and consumer testing data, sales and market research, technology research and development, budgets, profit and loss data, raw material costs, identity of suppliers, customer lists, customer information, non-public information about employees that is maintained as confidential by the Company, improvements, inventions, and associations with other organizations that the Company has not previously made public. Confidential Information does not include information that can be shown by written evidence to be in the public domain at the time of disclosure by you or that is publicized or otherwise becomes part of the public domain through no fault of your own or wrongdoing of a third party.

 

  b)

You acknowledge that in the course of your employment with the Company, you have acquired and/or had access to non-public information and material including privileged information relating to litigation involving the Company and/or the resolution or settlement thereof, privileged internal and/or external investigations and regulatory matters, attorney-client communications, communications with outside counsel, and other Company legal matters, all of which are subject to and protected from disclosure by the attorney-client privilege, attorney work product doctrine, and/or any other applicable privileges (referred to collectively as “Privileged Information”). You acknowledge and agree that such Privileged Information (including any underlying privilege therein) belongs exclusively to the Company, and that the Company has not waived any such underlying privilege.

 

14.

Non-Disparagement/Separation Communications. Subject to Paragraph 15:

 

  a)

You agree that you shall not publish or communicate, or cause, direct, induce, or encourage any other person, entity, or other third party to make, publish, or communicate, whether anonymously or not, any statement, observation, opinion, or information, whether verbal or written, of a defamatory or disparaging nature regarding the Company and/or the Company Releasees or their personnel or products and you shall not take any action that would cause the Company and/or the Company Releasees or their personnel, services or products any embarrassment or humiliation or otherwise cause or contribute to their being held in disrepute.

 

  b)

You agree that you will not disclose, directly or indirectly, any information about or relating to (i) the Company; (ii) legal matters involving or relating to the Company or any other Company Releasee, or the resolution thereof; or (iii) personal matters, personal lives, and other information concerning officers, directors, members, or employees of the Company or any other Company Releasee, in the case of each of the foregoing categories covered under this Paragraph 14(b), to any reporter, journalist, editor, author, producer, publisher, newspaper, blog, website, social media or similar person or entity, or take any other action that results in such information being made available to the general public, including, without limitation, books, articles, writings or electronic media of any other kind, as well as film, videotape, television or other broadcasts, audio tape, electronic/internet format or any other medium.

 

  c)

The Company agrees that it will not encourage or induce any of its representatives to make, publish or communicate, or cause to be made, published or communicated,

 

8

  any statement, observation, opinion or information, whether verbal or written, of a defamatory or disparaging nature regarding, or that is likely in any way to harm the reputation of, embarrass, humiliate or otherwise cause or contribute to your being held in disrepute.

 

  d)

You will be permitted to review Company communications related to your resignation prior to publication.

 

  e)

Your and the Company’s communications regarding your separation from the Company shall be, in form and substance, consistent with the Company-issued communications referenced in Paragraph 14(d) above.

 

15.

Permitted Conduct. Nothing in this Agreement or its exhibits shall prohibit or restrict the Company or you from lawfully (A) initiating communications directly with, cooperating with, providing information to, causing information to be provided to, or otherwise assisting in an investigation by any governmental or regulatory agency, entity, or official(s) (collectively, “Governmental Authorities”) regarding a possible violation of any law; (B) responding to any inquiry or legal process directed to you individually (and not directed to the Company and/or its subsidiaries) or to the Company from any such Governmental Authorities; (C) testifying, participating, or otherwise assisting in an action or proceeding by any such Governmental Authorities relating to a possible violation of law; or (D) making any disclosures to the SEC or other Governmental Authority or as may be protected under the whistleblower provisions of any applicable law. You may also disclose the requirements of Paragraph 11 to a future employer. Additionally, pursuant to the federal Defend Trade Secrets Act of 2016, you shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made (i) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made to your attorney in relation to a lawsuit for retaliation against you for reporting a suspected violation of law; or (c) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Nor does this Agreement require you to obtain prior authorization from the Company before engaging in any conduct described in this Paragraph, or to notify the Company that you have engaged in any such conduct. This Agreement also does not require the Company to obtain prior authorization from you before engaging in any conduct described in this Paragraph, or to notify you that the Company has engaged in any such conduct.

 

16.

Non-Admission. It is understood and agreed that neither the execution of this Agreement, nor the terms of the Agreement, constitute an admission of liability by you or the Company or the Company Releasees, and such liability is expressly denied. It is further understood and agreed that no person shall use the Agreement, or the consideration paid pursuant thereto, as evidence of an admission of liability, inasmuch as such liability is expressly denied.

 

17.

No Obligation to Re-Hire. You acknowledge and understand that your employment relationship with the Company will permanently end as of the Separation Date and that neither the Company nor any of its parents, subsidiaries, affiliates, or related companies will be obligated to rehire you or to consider you for reemployment after the Separation Date.

 

9

18.

Acknowledgments. You hereby acknowledge that:

 

  a)

The Company advises you to consult with an attorney before signing this Agreement;

 

  b)

You have obtained independent legal advice from an attorney of your own choice with respect to this Agreement and all exhibits, or you have knowingly and voluntarily chosen not to do so;

 

  c)

You freely, voluntarily and knowingly entered into this Agreement after due consideration;

 

  d)

In exchange for your waivers, releases, and commitments set forth herein, the payments, benefits, and other considerations that you are receiving pursuant to this Agreement exceed any payment, benefit, or other thing of value to which you would otherwise be entitled, and are just and sufficient consideration for the waivers, releases, and commitments set forth herein; and

 

  e)

No promise or inducement has been offered to you, except as expressly set forth herein, and you are not relying upon any such promise or inducement in entering into this Agreement.

 

19.

Dispute Resolution.

 

  a)

You and the Company each agree that with respect to any all claims that you or the Company now have or in the future may have against the other, including, without limitation, contract claims, tort claims, claims for compensation, penalties or restitution and any other claim under any federal, state or local statute, constitution, regulation, rule, ordinance or common law, in each case, directly or indirectly arising out of or related to this Agreement, your relationship with the Company, your employment with the Company or the resignation of your employment with the Company or the claims described above (collectively “Covered Claims”) the claimant agrees to notify the other party in writing of any Covered Claim within five (5) calendar days of becoming aware of such Covered Claim so that the parties can attempt in good faith to resolve such Covered Claim informally. Such notice must include a sufficiently detailed description of the nature or basis of the Covered Claim, and the specific relief sought.

 

  b)

Any Covered Claim that that cannot be resolved between the parties pursuant to Paragraph 19(a) shall be submitted to mediation before a single mediator with JAMS in accordance with the then-current arbitration rules and procedures of JAMS. If the parties cannot agree upon a mediator within five (5) calendar days, a mediator shall be selected using the same process for Arbitrator Selection under the applicable JAMS arbitration rules.

 

  c)

To the extent that any Covered Claims cannot be resolved pursuant to Paragraph 19(a)-(b), and except with respect to any claim (i) that is expressly precluded from arbitration by a governing federal law or by a state law that is not preempted by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”); (ii) that seeks injunctive or other equitable relief in aid of arbitration; or (iii) regarding sexual harassment or sexual assault to the extent you elect to exclude such claims from arbitration

 

10

  hereunder, such Covered Claims are subject to and will be resolved by binding arbitration. The parties irrevocably consent and agree that (i) any arbitration will occur in the State of Florida; (ii) arbitration will be conducted confidentially in accordance with the then-current arbitration rules and procedures of the JAMS (and its then-existing emergency relief procedures to the extent either party seeks emergency relief prior to the appointment of an arbitrator), unless those rules or procedures conflict with any express term of this Agreement, in which case this Agreement shall control; (iii) the federal courts sitting in the State of Florida, have exclusive jurisdiction over any appeals and the enforcement of an arbitration award; and (iv) the state or federal courts sitting in the State of Florida have exclusive jurisdiction over any claim that is not subject to arbitration, and in such case, the rights and obligations of the parties will be governed by, and construed and enforced, both substantively and procedurally, in accordance with, the laws of the State of Florida without regard to choice of law or conflict of law rules or provisions (whether of the State of Florida or any other jurisdiction).

Each party shall pay the fees of its attorneys, the expenses of its witnesses, and any other costs and expenses that the party incurs in connection with any mediation or arbitration pursuant to this Paragraph 19. EACH PARTY HEREBY IRREVOCABLY CONSENTS AND AGREES TO ARBITRATE ANY COVERED CLAIMS THROUGH BINDING ARBITRATION, AND FOREVER WAIVES AND GIVES UP ITS RIGHT TO HAVE A JUDGE OR JURY DECIDE ANY COVERED CLAIMS.

 

20.

Miscellaneous.

 

  a)

Entire Agreement. This Agreement, including all exhibits, sets forth the entire agreement between you and the Company and replaces any other oral or written agreement between you and the Company relating to the subject matter of this Agreement, except for those provisions and continuing obligations under the Employment Agreement and any other applicable agreements which are incorporated expressly herein, which shall be made part of this Agreement and continue in full force and effect.

 

  b)

Governing Law. This Agreement shall be construed, performed, enforced and in all respects governed in accordance with the laws of the State of Florida, without giving effect to the principles of conflicts of law thereof. Additionally, all disputes arising from or related to this Agreement shall be brought in a state or federal court situated in the State of Florida, and the parties hereby expressly consent to the jurisdiction of such courts for all purposes related to resolving such disputes.

 

  c)

Severability. Should any provision of this Agreement, including all exhibits, be held to be void or unenforceable, the remaining provisions shall remain in full force and effect, to be read and construed as if the void or unenforceable provisions were originally deleted.

 

  d)

Website. You will be listed first above other staff, directors and executives on the Company’s investor relations page under “About Us”, or any similar webpage containing information for staff, executives and directors for investor relations

 

11

  purposes, with a title of Co-Founder.

 

  e)

Amendments. This Agreement may not be modified or amended, except upon the express written consent of both you and the Company.

 

  f)

Breach.

 

  i.

In the event that the Company reasonably determines subsequent to the Separation Date that you (a) materially breached this Agreement, or (b) engaged in conduct that would constitute Cause as defined in the Employment Agreement: (i) the Company shall have the right to cease any payments set forth in Paragraph 2 hereof that remain unpaid at the time of such determination, and (ii) you and the Company agree to engage in the resolution process set forth in Paragraph 19.

 

  ii.

To the extent it is determined by an arbitrator pursuant to Paragraph 19 that (a) you materially breached this Agreement, or (b) you engaged in conduct that would constitute Cause as defined in the Employment Agreement, in addition to any remedy or damages available to the Company as permitted by law, you will permanently forfeit any claim or entitlement to the payments described in Paragraph 2 hereof that may remain unpaid at the time of the determination in Paragraph 20(f)(i) and you will immediately repay to the Company all other compensation provided by the Company pursuant to this Agreement; provided, however, that in no event shall you retain less than One Thousand Dollars and Zero Cents ($1,000.00), which amount you and the Company agree constitutes valid ongoing consideration for the releases in Paragraph 3 and Exhibit A.

 

  iii.

Notwithstanding anything contained in this Agreement to the contrary, each party shall be entitled to written notice of any default and shall have five (5) days from receipt of such notice to cure a breach of this Agreement, provided such breach can be reasonably cured.

 

  g)

Waiver. A waiver by either party hereto of a breach of any term or provision of the Agreement shall not be construed as a waiver of any subsequent breach.

 

  h)

Counterparts and Electronic Signature. This Agreement may be executed by electronic signature and in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.

 

  i)

Effective Date. This Agreement shall become effective upon your signing of the Agreement (“Effective Date”).

If the above accurately states our agreement, including the separation, waiver and release, kindly sign below and return the original Agreement to me. I will sign it and return a copy to you.

Sincerely,

/s/ F45 Training Holdings Inc.

 

By:

  

/s/ Richard Grellman

 

Richard Grellman

 

Lead Independent Director

Date: July 24, 2022

UNDERSTOOD, AGREED TO

AND ACCEPTED WITH THE

INTENTION TO BE LEGALLY BOUND:

/s/ Adam Gilchrist

Adam Gilchrist

Date: July 24, 2022

Enclosures

 

12

EXHIBIT A

RELEASE OF AGE CLAIMS

 

1.

Release of Age Claims. In exchange for the payments set forth in Paragraph 2(b) of the Separation Agreement and Release between F45 Training Holdings Inc. (“F45” or the “Company”) and Adam Gilchrist (“you”) dated July 24, 2022 (the “Agreement”), you hereby waive all claims under the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. (“ADEA”) and the Older Workers’ Benefits Protection Act (“OWBPA”) against the Company and Company Releasees (as defined in the Agreement), including but not limited to claims arising out of your employment with the Company or your resignation from employment.

 

2.

Acknowledgments. You hereby acknowledge that:

 

  a)

The Company advises you to consult with an attorney before signing this Exhibit A;

 

  b)

You have obtained independent legal advice from an attorney of your own choice with respect to this Exhibit A, or you have knowingly and voluntarily chosen not to do so;

 

  c)

You freely, voluntarily and knowingly entered into this Exhibit A after due consideration;

 

  d)

You have had a minimum of twenty-one (21) days to review and consider this Exhibit A;

 

  e)

If you knowingly and voluntarily choose to do so, you may accept the terms of this Exhibit A before the twenty-one (21) day consideration period provided for in Paragraph 2(d) above has expired;

 

  f)

You and the Company agree that changes to the Company’s offer contained in the Agreement or this Exhibit A, whether material or immaterial, will not restart the twenty-one (21) day consideration period provided for in Paragraph 2(d) above;

 

  g)

You have a right to revoke this Exhibit A by notifying Patrick Grosso in writing, via hand delivery, facsimile, or electronic mail, within seven (7) days of your execution of this Exhibit A;

 

  h)

If you revoke this Exhibit A as set forth in Paragraph 2(g), you will not be entitled to the payments set forth in Paragraph 2(b) of the Agreement;

 

  i)

In exchange for your waiver and release of all claims arising under ADEA, the payments, benefits, and other considerations that you are receiving pursuant to this Exhibit A exceed any payment, benefit, or other thing of value to which you would otherwise be entitled, and are just and sufficient consideration for the waivers, releases, and commitments set forth herein; and

 

  j)

No promise or inducement has been offered to you, except as expressly set forth in the Agreement and this Exhibit A, and you are not relying upon any such promise or inducement in entering into this Exhibit A.

 

3.

For the avoidance of doubt, any revocation of this Exhibit A shall have no effect on the validity of the Agreement which shall remain in full force and effect.

 

UNDERSTOOD, AGREED TO AND ACCEPTED WITH THE INTENTION TO BE LEGALLY BOUND:
/s/ Adam Gilchrist
Adam Gilchrist
Date: July 24, 2022

EXHIBIT B

EMPLOYMENT AGREEMENT

Exhibit 10.3

AMENDMENT NO. 1 TO EXECUTIVE EMPLOYMENT AGREEMENT

This Amendment No. 1 to Executive Employment Agreement (this “Amendment”), dated July 25, 2022, is by and between F45 Training Holdings Inc., a Delaware corporation (the “Company”), and Chris Payne (“Executive” and, collectively with the Company, the “Parties” and each a “Party”).

RECITALS

WHEREAS, on July 5, 2021, the Parties entered into that certain Executive Employment Agreement (the “Original Agreement”); and

WHEREAS, the Parties mutually wish to amend the Original Agreement as set forth in this Amendment.

NOW THEREFORE, for and in consideration of the mutual consideration and covenants contained herein, the adequacy and sufficiency of which are hereby acknowledged, the Parties intending to be legally bound agree as follows:

1. DEFINITIONS. Initially capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Original Agreement.

2. RETENTION BONUS. So long as Executive remains continuously employed by the Company through October 15, 2022 (the “Retention Date”), Executive shall be entitled to receive: (i) on or prior to the next payroll date following the Retention Date, a lump sum cash payment equal to the benefits set forth in Section 4.1(a)(i) and (ii) of the Original Agreement, (ii) the benefits set forth in Section 4.1(a)(iv) of the Original Agreement, effective as of the Retention Date and (iii) following Executive’s termination of employment with the Company, the benefits set forth in Sections 4.1(a)(iii) and (v) of the Original Agreement (collectively, the “Retention Bonus”). In the event that Executive’s employment with the Company is involuntarily terminated for any reason prior to the Retention Date, Executive’s right to the Retention Bonus shall accelerate and be paid in accordance with the existing terms of Section 4.1(a) of the Original Agreement. If Executive receives the Retention Bonus, Executive shall not be eligible to receive any severance compensation or benefits pursuant to Section 4.1 of the Original Agreement regardless of the date or circumstances of Executive’s termination of employment.

3. EFFECT OF AMENDMENT. This Amendment shall form a part of the Original Agreement for all purposes, and each Party shall be bound hereby. Any reference to the Original Agreement shall be deemed a reference to the Original Agreement as amended hereby. In the event of any conflict or inconsistency between the Original Agreement and this Amendment, this Amendment shall prevail and control. This Amendment shall be deemed to be in full force and effect from and after the date hereof. Except as amended hereby, each term and condition of the Original Agreement shall continue in full force and effect.

[The remainder of this page has been intentionally left blank.]

IN WITNESS WHEREOF, the Parties, which may be by and through their appointed counsel, enter into this Amendment. Each person signing this Amendment represents and warrants that he or she has been duly authorized to enter into this Amendment by the company or entity on whose behalf it is indicated that the person is signing.

 

F45 TRAINING HOLDINGS INC.
By:   /s/ Richard Grellman
Name: Richard Grellman
Title: Director
CHRIS PAYNE
/s/ Chris Payne

SIGNATURE PAGE TO AMENDMENT NO. 1 TO EXECUTIVE EMPLOYMENT AGREEMENT

Exhibit 99.1

 

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F45 Training Announces Strategic Update

CEO Transition and Strategic Reorganization to Support F45’s Next Chapter of Growth;

Company Updates 2022 Full-Year Guidance

Austin, TX – F45 Training Holdings Inc. (“F45” or the “Company”) (NYSE: FXLV), the fastest growing fitness franchisor in the world according to Entrepreneur, today announced strategic updates to align the Company more closely with macroeconomic conditions and current business trends and prepare for the next phase of studio and membership growth.

CEO Transition

After founding F45 in 2013 and successfully leading the Company for the last decade, President, CEO, and Chairman of the Board of Directors Adam J. Gilchrist has stepped down, effective June 24, 2022. This transition will allow his successor to establish and execute new opportunities amid changing macroeconomic and business conditions. Mr. Gilchrist will remain on the Board as a director and the Board of Directors will appoint a new Chairman.

Mr. Gilchrist said, “When we founded F45, we made it our principal goal to change people’s lives by creating the world’s best workout.” He continued, “To the staff that have worked tirelessly since our inception, you have been incredible in your efforts and I thank you for all of your support. To the investors that have joined us along our journey, I thank you for your commitment to F45. Lastly, I am forever grateful to our franchisees who deliver the world’s best workout each day to F45 members around the world.”

“Adam has done a tremendous job in leading F45, and I want to thank him for his countless contributions and innovations. We are fortunate that we will continue to benefit from his ongoing counsel and insights during this transition and well beyond as a member of our Board,” said Mr. Richard Grellman, F45’s Lead Independent Director.

While the Board conducts a formal search for a permanent CEO successor, Ben Coates, an independent director with extensive corporate executive and financial leadership experience, will serve as interim CEO until a permanent CEO is appointed.

Mr. Coates has held management, directorship, and advisory roles at a range of businesses. He currently serves as director of Coolgardie Investments, a private investment vehicle that he founded in 2006. Prior to this, Mr. Coates held management, compliance, risk management, and strategy roles with multiple companies in the financial services industry, including National Australia Bank (NAB), Westpac Banking Corporate, Hanover Group, and ANZ Banking Group. He has been a member of F45’s Board of Directors since August 2021.

Strategic Reorganization and Cost Reduction Plan

Amid ongoing macroeconomic uncertainty, F45 initiated a comprehensive review of its strategic and financial priorities in order to best position the Company to succeed and grow sustainably over the long term. As a result of this review, the Company is realigning its corporate operations around an updated growth outlook that prioritizes profitability and cash flow generation. This includes reducing operational expenses and strategically streamlining corporate functions, including reducing global workforce by approximately 110 employees. Following these reductions, the Company expects SG&A expenses to be approximately $15 million to $20 million per quarter, which is approximately 40% to 50% less than SG&A expenses during the first quarter of 2022.

 

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“We are taking the necessary steps to right-size our business in light of shifting macroeconomic and business conditions,” said Chris Payne, CFO of F45. He continued, “While we expect growth to continue, market dynamics are having a greater than expected impact on the ability of franchisees to obtain capital to develop new F45 locations. In addition, recent share price performance has made it challenging for franchisees to utilize financing facilities announced earlier this year. While reducing corporate headcount was an incredibly difficult decision, acting proactively to realign our resources is an important step to enable the Company to remain on track for long-term, sustainable success. Additionally, we believe that once these cost reductions are fully realized, the Company will be able to generate positive free cash flow on a normalized basis. Despite the headwinds, F45’s business fundamentals remain strong, and we are as excited as ever to continue bringing the world’s best workout to a growing base of members every day.”

Updated 2022 Outlook

Following F45’s comprehensive review of its strategic and financial priorities, the Company is providing revised guidance for full-year 2022.

The revised guidance assumes that the $250 million of growth capital provided by two previously announced franchise financing facilities, which F45 had arranged for franchisees to open additional studios, will not be available despite strong demand from franchisees.

 

  •  

Full-year net New Franchises Sold between 350 and 450, compared to the prior guidance of 1,500.

 

  •  

Full-year net Initial Studio Openings between 350 and 450, compared to the prior guidance of 1,000.

 

  •  

Full-year revenue between $120 million and $130 million, compared to the prior guidance of $255 million to $275 million.

 

  •  

Full-year Adjusted EBITDA between $25 million and $30 million, compared to the prior guidance of $90 million to $100 million.

 

  •  

Full-year free cash flow guidance withdrawn.

F45 is expected to report results and host its second quarter earnings conference call in mid-August.

About F45

F45 offers consumers functional 45-minute workouts that are effective, fun and community-driven. F45 utilizes proprietary technologies: a fitness programming algorithm and a patented technology-enabled delivery platform that leverages a rich content database of over 8,000 unique functional training movements across modalities to offer new workouts each day and provide a standardized experience across the Company’s global footprint.

For more information, please visit www.f45training.com.

Contacts

Media Relations:

Judy Lee, SVP ICR, Inc.

ICR Global

F45PR@icrinc.com

Investor Relations:

Bruce Williams, Managing Director ICR, Inc.

F45IR@icrinc.com 332-242-4303

 

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Non-GAAP Financial Measures

This press release presents certain other supplemental financial measures, including Adjusted EBITDA, which is a measurement that is not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). Management believes that Adjusted EBITDA is useful to management as it allows investors to evaluate the effectiveness of our business strategies, make budgeting and capital allocation decisions, and compare our performance against that of other peer companies using similar measures.

Adjusted EBITDA is defined as net income before interest, taxes, depreciation and amortization and adjusted to exclude the impact of sales tax liability, transaction expenses, certain legal costs and settlements, COVID-19 concessions, growth and new market development expense as well as certain other items identified as affecting comparability, when applicable. Adjusted EBITDA eliminates non-cash depreciation and amortization expense that results from our capital investments and intangible assets, as well as income taxes, which may not be comparable with other companies based on our tax structure. Adjusted EBITDA should be considered in addition to, and not as a substitute for, net income in accordance with GAAP as a measure of performance. Other companies may define Adjusted EBITDA differently and, as a result the Company’s measure of Adjusted EBITDA may not be directly comparable to those of other companies.

Financial Metrics and Other Data

This press release includes several key financial metrics and other data used by Company management

in assessing the Company’s financial outlook:

“Initial Studio Openings” means the number of studios that were determined to be first opened during such period. Prior to October 1, 2021, we classify an Initial Studio Opening to occur in the first month in which the studio first generates monthly revenue of at least $4,500. Starting on October 1, 2021, we classify an Initial Studio Opening to occur in the month in which we record the initial studio opening in our internal systems. Any studios that do not have an Initial Studio Opening under the prior definition are included as of October 1, 2021. Initial Studio Openings are not adjusted downward for studios that were temporarily closed due to the COVID-19 pandemic or otherwise.

“New Franchises Sold” means, for any specific period, the number of franchises sold during such period using the methodology set forth below for “Total Franchises Sold.”

“Total Franchises Sold” represents, as of any specified date, (i) the total number of signed franchise agreements in place as of such date for which an establishment fee has been paid and (ii) the total number of franchises committed in a multi-studio agreement in place as of such date for which an upfront payment has been made, in each case that have not been terminated. Each new franchise is

included in the number of total franchises sold from the date on which such franchise first satisfies the condition in clause (i) or (ii) above, as applicable. total franchises sold includes franchise arrangements in all stages of development after signing a franchise agreement, and includes franchises with open studios. Franchises are removed from total franchises sold upon termination of the franchise agreement.

 

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Forward-Looking Statements

F45’s financial outlook and other statements in this press release that refer to future plans and expectations, including those relating to F45’s long-term growth expectations, are forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve a number of risks and

uncertainties. Words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” “or negatives of these words and variations of such words and similar expressions are intended to identify such forward-looking statements. Statements that refer to or are based on

estimates, forecasts, projections, uncertain events or assumptions, including statements relating to F45’s strategy, total addressable market and market opportunity, financial outlook, business plans, future macroeconomic conditions, future impacts of the COVID-19 pandemic, and future products and services, also identify forward-looking statements. All forward-looking statements included in this press release are based on management’s expectations as of the date of this press release and, except as required by law, F45 disclaims any obligation to update these forward- looking statements to reflect future events or circumstances.

Forward-looking statements are subject to certain risks, uncertainties and assumptions relating to factors that could cause actual results to differ materially from those anticipated in such statements, including, without limitation, the following: our dependence on the operational and financial results of, and our relationships with, our franchisees and the success of their new and existing studios; our ability to protect our brand and reputation; our ability to identify, recruit and contract with a sufficient number of qualified franchisees; our ability to execute our growth strategy, including through development of new studios by new and existing franchisees; our ability to manage our growth and the associated strain on our resources; our ability to successfully integrate any acquisitions, or realize their anticipated benefits; the high level of competition in the health and fitness industry; economic, political

and other risks associated with our international operations; changes to the industry in which we operate; our reliance on information systems and our and our franchisees’ ability to properly maintain the confidentiality and integrity of our data; the occurrence of cyber incidents or a deficiency in our cybersecurity protocols; our and our franchisees’ ability to attract and retain members; our and our

franchisees’ ability to identify and secure suitable sites for new franchise studios; risks related to franchisees generally; our ability to obtain third-party licenses for the use of music to supplement our workouts; certain health and safety risks to members that arise while at our studios; our ability to adequately protect our intellectual property; risks associated with the use of social media platforms in

our marketing; our ability to obtain and retain high-profile strategic partnership arrangements; our ability to comply with existing or future franchise laws and regulations; our ability to anticipate and satisfy consumer preferences and shifting views of health and fitness; our business model being susceptible to litigation; the increased expenses associated with being a public company; and additional factors discussed in our filings with the Securities and Exchange Commission (the “SEC”). Further, many of these factors are, and may continue to be, amplified by the COVID-19 pandemic. Detailed information regarding these and other factors that could affect F45’s business and results is included in F45’s SEC filings, including in the section titled “Risk Factors” in F45’s Annual Report on Form 10-K and other SEC filings.

 

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