XSPA XpresSpa Group Inc

On January 9, 2022, XpresSpa Group entered into an acquisition agreement to acquire all of the equity interests in gcg Connect, LLC, d/b/a HyperPointe, a New Jersey limited liability company (“HyperPointe”), for an aggregate purchase price of approximately $6.5 million, plus a potential earnout described below of up to $7.5 million (the “Acquisition”). As a portion of the initial consideration for the Acquisition, XpresSpa Group has agreed to issue 552,486 shares of XpresSpa Group’s common stock, $0.01 par value (“Common Stock”), valued at the closing reference price of $1.81, which is equal to the volume weighted average trading price of the Common Stock on the Nasdaq Global Select Market for the 30 consecutive trading day period ended December 31, 2021, to the equityholders of HyperPointe upon consummation of the transactions contemplated by the acquisition agreement, subject to certain closing conditions.

XpresSpa Group also agreed pursuant to an earnout provision to issue up to an additional $7.5 million in cash or stock if certain earnout performance targets are met during an earnout period ending on the third anniversary of the date of the acquisition agreement. For purposes of the earnout, the Common Stock will also be valued based on per share. The earnout payments may be satisfied in (i) cash, (i) shares of Common Stock (also priced at $1.81, which is equal to the volume weighted average trading price of the Common Stock on the Nasdaq Global Select Market for the 30 consecutive trading day period ended December 31, 2021, or (iii) any combination thereof, at the election of the equity owners of HyperPointe, provided that in the event (and to the extent) XpresSpa Group does not have sufficient authorized shares of Common Stock that are unissued and not duly reserved for issuance upon options, warrants or other convertible securities), then XpresSpa Group shall be permitted to settle any earnout payments in cash. As a result, XpresSpa Group may issue up to an additional 4,143,647 shares of Common Stock; however, the actual number of shares that will be issued under the earnout, if any, will depend on (i) the extent of fulfillment of the earnout performance targets at the time of calculation of the earnout and (ii) the elections and conditions described in the previous sentence. The parties expect the Acquisition, which is subject to customary closing conditions, will close in the first quarter of 2022.

Effective upon and subject to the closing of the Acquisition, the Company has agreed to issue options to Ezra Ernst to purchase up to an aggregate of 1,000,000 shares of Common Stock, which award was granted as an employment inducement award pursuant to NASDAQ Listing Rule 5635(c)(4) (the “Inducement Award”).

The issuance of shares of Common Stock in connection with the Acquisition, as well as the Inducement Award and the shares of common stock issuable upon exercise thereof, will be made in accordance with the terms and subject to the conditions set forth in the acquisition agreement and in reliance on the private offering exemption of Section 4(a)(2) of the Securities Act of 1933, as amended, and/or the private offering safe harbor provision of Rule 506 of Regulation D promulgated thereunder. The issuance and sale is not being conducted in connection with a public offering, and no public solicitation or advertisement will be made or relied upon in connection with the issuance of the shares.