TRNR Interactive Strength Inc

 

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): February 01, 2024

 

 

INTERACTIVE STRENGTH INC.

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware			001-41610	82-1432916
(State or Other Jurisdiction of Incorporation)			(Commission File Number)	(IRS Employer Identification No.)
1005 Congress Avenue, Suite 925
Austin, Texas				78701
(Address of Principal Executive Offices)				(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 310 697-8655

 

(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:

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, $0.0001 par value per share		TRNR		The Nasdaq Stock Market LLC

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

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. ☐

 

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Item 1.01 Entry into a Material Definitive Agreement.

On February 1, 2024 (the “Effective Date”), Interactive Strength Inc., a Delaware corporation (the “Company”), entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with CLMBR Holdings LLC, a Delaware limited liability company ("CLMBR"), and Treadway Holdings LLC, a Delaware limited liability company (the “Purchaser”) pursuant to which the (a) Company sold, and the Purchaser purchased, a Senior Secured Convertible Promissory Note (the “Note”) in the aggregate principal amount of $6,000,000, which is convertible into shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”). On February 1, 2024, the Company and the Purchaser entered into that certain Securities Purchase Agreement (the "Purchase Agreement"), pursuant to which the Company shall issue to the Purchaser (i) 750,000 shares of the Common Stock, and (ii) warrants to purchase up to an aggregate of 3,000,000 shares of the Common Stock.

The Company used the net proceeds to fund a portion of the cash consideration paid in connection with the acquisition of substantially all of the assets of CLMBR, Inc.

The Note Purchase Agreement contains customary representations, warranties, and covenants of the Company and the Purchaser.

Description of the Note

The Note accrues interest at a rate of 2.0% per month. The maturity date of the Note is December 15, 2024 (the “Maturity Date”). Interest payments are guaranteed through the Maturity date regardless of whether the Note is earlier converted or redeemed.

The Note is convertible (in whole or in part) at any time prior to the Maturity Date into the number of shares of Common Stock equal to the quotient resulting by dividing the outstanding principal balance of the Note to be converted by a conversion price of $2.00 per share (such shares, the “Note Conversion Shares”).

The Note sets forth certain standard events of default (each such event, an “Event of Default”), upon the occurrence of which the Company is required to deliver written notice to the Purchaser within two (2) business days (a “Notice of Default”). At any time after the earlier of (a) the Purchaser’s receipt of a Notice of Default and (b) the Purchaser becoming aware of the Event of Default, the Purchaser may require the Company to redeem all or any portion of the Note. Upon an Event of Default, the Note shall bear interest at a rate of 4.0% per month.

 

Description of the Warrants

The Warrants are exercisable for 1,500,000 shares of Common Stock, at a price of $1.25 per share (“Warrant 1”) and $1.75 per share (“Warrant 2” and, together with Warrant 1, the “Warrants”) (the “Exercise Prices”). The Warrants may be exercised during the period commencing February 1, 2024 and ending on February 1, 2034. The Exercise Prices are subject to voluntary adjustments and adjustments upon subdivision or combinations of shares of Common Stock.

 

Credit Agreement

On the Effective Date, the Company, entered into a Credit Agreement (the “Credit Agreement”) with Vertical Investors LLC, a Mississippi limited liability company (the “Lender”) pursuant to which the Company agreed to borrow from the Lender a term loan in the aggregate principal amount of $7,968,978 (the “Loan”).

The Credit Agreement contains customary representations, warranties, and covenants of the Company and the Purchaser.

Description of the Loan

The Loan accrues interest at the rate as set forth therein (the “Note Rate”). The maturity date of the Note is June 28, 2024 (the “Maturity Date”).

The Credit Agreement requires the Company to make loan payments on the following schedule: (i) on or before February 23, 2024, the Company shall pay to the Lender the amount which is the sum of (a) $2,000,000, (b) the accrued and unpaid interest then due and owing under the Loan, and (c) the projected interest to be accrued and payable under the Loan through April 30, 2024; (ii) on or before April 30, 2024, the Company shall pay to the Lender the amount which is the sum of (a) $500,000, (b) the accrued and unpaid interest then due and owing under the Loan, and (c) the projected interest to be accrued and payable under the Loan through May 31, 2024; (iii) on or before May 31, 2024, the Company shall pay to the Lender the amount which is the sum of (a) $500,000, (b) the accrued and unpaid interest then due and owing under the Loan, and (c) the projected interest to be accrued and payable under the Loan through the Maturity Date; and (iv) on or before the Maturity Date, the Company shall pay to the Lender the amount which is

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the sum of (a) the remaining principal then outstanding under the Loan and (b) the accrued and unpaid interest then due and owing under the Loan.

The Credit Agreement sets forth certain standard events of default, upon the occurrence of which the Company is required to deliver written notice to the Lender within ten (10) business days. At any time after the earlier of (a) the Lender’s receipt of a notice of default, and (b) the Lender becoming aware of the event of default, the Lender may require the Company to redeem all or any portion of the Loan. Upon an event of default, the Loan shall bear interest at a rate of the sum of the Note Rate and 5.0% per month.

Entry into the Credit Agreement and the related agreements and documents, was approved by the Company’s board of directors on February 1, 2024.

Certain of the lenders under the Credit Agreement and their affiliates have engaged in, and may in the future engage in, investment banking, commercial lending and other commercial dealings in the ordinary course of business with the Company or the Company’s affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.

The foregoing descriptions of the Note Purchase Agreement, Purchase Agreement, Warrant 1, Warrant 2 and Credit Agreement do not purport to be complete and is qualified in their entirety by reference to the full text of the Note Purchase Agreement, form of Warrant 1, form of Warrant 2 and Credit Agreement, which are filed as Exhibits 10.1, 10.2, 4.1, 4.2 and 10.3, respectively, to this Current Report on Form 8-K and are hereby incorporated herein by reference.

 

Waiver

 

As previously disclosed, on December 7, 2023, the Company issued a senior unsecured convertible note to an accredited investor (the “December Lender”).

As previously disclosed, on December 12, 2023, the Company entered into that certain common stock purchase agreement with an accredited investor, a related party to the December Lender (the “Equity Line Investor”).

On February 1, 2024, each of the December Lender and the Equity Line Investor granted a waiver to the Company to allow the Company to issue the Note and to enter into the Credit Agreement (the “Waiver”). As consideration for the Waiver, the Company issued 250,000 shares of Common Stock (the “Waiver Consideration”) and agreed that, by March 15, 2024, the Company would deliver, free of charge, two of the Company’s products to the December Lender.

 

Item 2.01 Completion of Acquisition or Disposition of Assets.

 

As previously disclosed, the Company entered into an asset purchase agreement, which was subsequently amended and restated on January 22, 2024, (as amended and restated, the “Asset Purchase Agreement”) with CLMBR, Inc and CLMBR1, LLC (the “Sellers”) to purchase and acquire substantially all of the assets and assume certain liabilities of the Sellers (the "Acquisition").

On February 2, 2024, pursuant to the Asset Purchase Agreement, the Company completed the Acquisition for a total purchase price enterprise value of approximately $15.4 million, consisting of the issuance at closing of shares of Common Stock with a value of $1.45 million, 1,428,922 shares and shares of non-voting Series B preferred stock with a value of $3.0 million, 1,500,000 shares to the equity holders of the Sellers (each of whom is an “accredited investor” as defined in Rule 501 under the Securities Act), the assumption by the Company of $1.5 million of subordinated debt, and the retirement of $9.4 million of senior debt.

 

The Sellers shall also be entitled to receive a contingent payment in the form of shares of Common Stock (collectively, the “Earn-Out Shares” and collectively with the shares of common stock and shares of Series B Preferred Stock issued at closing, the “Shares”) calculated in the manner set forth in the Asset Purchase Agreement based on the 2024 Unit Sales (as defined in the Asset Purchase Agreement) and the VWAP for the Company’s Common Stock based on the 10 consecutive trading days ending on (and including) December 31, 2024, subject to the VWAP Collar. In addition, in the event the 2024 Unit Sales include at least 2,400 Units sold in the business-to-business channel, the Sellers shall be entitled to an additional number of Earn-Out Shares calculated in the manner set forth in the Asset Purchase Agreement subject to total maximum number of 22,665,681 Earn-Out Shares.

 

The Shares issued at closing were issued (and any Earn-Out Shares will be issued) pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 of Regulation D promulgated thereunder and are subject to restrictions on transfer and resale until October 18, 2024. The 1,500,000 shares of Series B Preferred Stock issued at closing are subject to forfeiture if and to the extent required to satisfy indemnification claims arising during the 24-month period after the closing.

The foregoing description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended and Restated Asset Purchase Agreement, which is attached as Exhibit 10.4 and is incorporated herein by reference.

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Item 3.02 Unregistered Sales of Equity Securities.

 

The information set forth in Items 1.01 and 2.01 of this Current Report on Form 8-K with respect to the issuance of the Shares, the issuance of the Waiver Consideration, the issuance of the Note, and the issuance of the Warrants (collectively, the "Securities") is incorporated by reference into this Item 3.02. The Securities were issued pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder. Each recipient of the Securities is an “accredited investor” as defined in Rule 501 under the Securities Act. Neither the Securities nor any shares of Common Stock issuable upon conversion or exercise of the Series B Preferred Stock, the Note, or the Warrant, has been registered under the Securities Act and thus such shares may not be offered or sold in the United States in the absence of an effective registration statement or exemption from the registration requirements of the Securities Act.

 

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

The Series B Preferred Stock will be subject to voluntary and mandatory conversion provisions, as well as beneficial ownership restrictions and share cap limitations, as set forth in the Certificate of Designation of Series B Convertible Preferred Stock (the “Series B Certificate”),

On January 21, 2024, the Board of Directors of the Company approved the Series B Certificate. The Series B Certificate designated 1,500,000 shares of the Company’s preferred stock as Series B Preferred Stock. Subject to certain conversion restrictions as specified in the Series B Certificate, and applicable legal and regulatory requirements, including without limitation, the listing requirements of the Nasdaq Stock Market, subject to and upon the receipt of the approval of the stockholders of the Company, and provided that such conversion occurs at least 24 months following the Original Issuance Date (as defined in the Series B Certificate), each share of Series B Preferred Stock shall be automatically converted into such whole number of fully paid and non-assessable shares of Common Stock as is determined by dividing the Original Issue Price (as defined in the Series B Certificate) by the Conversion Price (as defined in the Series B Certificate) in effect at the time of conversion. In the event that stockholder approval is not obtained, the holders of the Series B Preferred Stock may voluntarily convert the Series B Preferred Stock into common stock, provided that in no event shall the number of shares of common stock issued upon such voluntary conversion exceed 19.99% of the total number of shares of common stock outstanding as of immediately prior to the execution of the Asset Purchase Agreement. The Series B Certificate became effective February 2, 2024. The Series B Preferred Stock will not have any voting rights, other than any vote required by law or the Company’s certificate of incorporation (which does not currently provide for any such voting rights) and will not be entitled to any dividends. The description of the Series B Certificate herein does not purport to be complete and is qualified in its entirety by reference to the full text of the Series B Certificate, which is attached as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.

We do not intend to list the Series B Preferred Stock on any securities exchange or nationally recognized trading system and there is no established trading market for the Series B Preferred Stock.

 

This Current Report on Form 8-K, including this Item 5.03, shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

 

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

Exhibit No.		Description
3.1		Certificate of Designation of Series B Convertible Preferred Stock of Interactive Strength Inc.
4.1		Form of Warrant 1
4.2		Form of Warrant 2
10.1		Note Purchase Agreement, dated February 1, 2024, by and among Interactive Strength Inc. and CLMBR Holdings LLC and Treadway Holdings LLC
10.2		Securities Purchase Agreement, dated February 1, 2024, by and between Interactive Strength Inc. and Treadway Holdings LLC
10.3		Credit Agreement, dated February 1, 2024, by and between Interactive Strength Inc. and Vertical Investors LLC
10.4		Amended and Restated Asset Purchase Agreement, dated January 22, 2024, by and among CLMBR, INC, CLMBR1, LLC and Interactive Strength Inc. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on January 23, 2024)

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99.1		Press Release
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

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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.

			Interactive Strength Inc.
Date:	February 7, 2024	By:	/s/ Michael J. Madigan
			Michael J. Madigan Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

 

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Exhibit 3.2

CERTIFICATE OF DESIGNATION OF SERIES B Convertible PREFERRED STOCK
OF
INTERACTIVE STRENGTH Inc.

Pursuant to Section 151
of the General Corporation Law of the State of Delaware (the “DGCL”)

I, the Chief Executive Officer of Interactive Strength Inc., a corporation organized and existing under the DGCL (the “Corporation”), in accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY:

That pursuant to the authority conferred upon the Board of the Directors of the Corporation (the “Board”) by the Amended and Restated Certificate of Incorporation of the Corporation, dated May 2, 2023 (the “Certificate of Incorporation”), the Board on January 21, 2024, adopted the following resolution creating a series of Preferred Stock consisting of 1,500,000 shares designated as Series B Preferred Stock:

RESOLVED, that pursuant to the authority vested in the Board by the Certificate of Incorporation, the Board does hereby provide for the issuance of a series of Preferred Stock, par value $0.0001 per share, of the Corporation and, to the extent that the designations, powers, preferences and relative and other special rights and the qualifications, limitations and restrictions of such class of Preferred Stock are not stated and expressed in the Certificate of Incorporation, does hereby fix and herein state and express such designations, powers, preferences and relative and other special rights and the qualifications, limitations and restrictions thereof set forth below.

This Certificate of Designation shall be effective on February 2, 2024 (the “Effective Date”).

The Corporation shall be authorized to issue 1,500,000 shares of Series B Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”). The rights, preferences, powers, restrictions, and limitations of the Series B Preferred Stock shall be as set forth herein.

LIQUIDATION PREFERENCE

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Exhibit 3.2

The shares of Series B Preferred Stock shall not be entitled to any voting rights, other than any vote required by law or the Certificate of Incorporation.

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Exhibit 3.2

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Exhibit 3.2

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Exhibit 3.2

Notwithstanding the foregoing, (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price of Series B Preferred Stock shall be recomputed accordingly as of the close of business on such record date and thereafter the Conversion Price of Series B Preferred Stock shall be adjusted pursuant to this Section 5.2 as of the time of actual payment of such dividends or distributions; (b) no such adjustment shall be made if the holders of Series B Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of Series B Preferred Stock had been converted into Common Stock on the date of such event; and (c) no such adjustment shall be made if such adjustment would result in the requirement to obtain the consent of a majority of the then outstanding shares of Common Stock in connection with the conversion of the Series B Preferred Stock pursuant to Section 4.4.

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Exhibit 3.2

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Exhibit 3.2

then, and in each such case, the Corporation will send or cause to be sent to the holders of the Series B Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Series B Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Series B Preferred Stock and the Common Stock. Such notice shall be sent at least ten (10) days prior to the record date or effective date for the event specified in such notice.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be duly executed as of this 2nd day of February, 2024.

Interactive Strength Inc.

By: /s/ Trent Ward
Name: Trent Ward
Title: Chief Executive Officer

[Signature Page to Series B Preferred Stock Certificate of Designation]

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Exhibit 4.1

NEITHER THIS WARRANT, NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT (COLLECTIVELY, THE “SECURITIES”), HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, PURSUANT TO REGISTRATION OR QUALIFICATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE COMPANY MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY PROPOSED TRANSFER IS IN COMPLIANCE WITH THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE 1933 ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

INTERACTIVE STRENGTH Inc.

Warrant To Purchase Common Stock

Warrant No.: TW-1

Number of Shares of Common Stock: 1,500,000

Date of Issuance: February 1, 2024 (“Issuance Date”)

Interactive Strength Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Treadway Holdings LLC, the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, at any time or times on or after the Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date, (as defined below), One Million Five Hundred Thousand (1,500,000) fully paid nonassessable shares of Common Stock, subject to adjustment as provided herein (the “Warrant Shares”). Except as otherwise defined herein, capitalized terms in this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, this “Warrant”) shall have the meanings set forth in Section 18. This Warrant is being issued pursuant to Section 2.1 of that certain Securities Purchase Agreement, dated as of February 1, 2024 (the “Subscription Date”), by and between the Company and the Holder (the “Securities Purchase Agreement”). Capitalized terms used herein and not otherwise defined shall have the definitions ascribed to such terms in the Securities Purchase Agreement.

 

 

 

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Net Number = (A x B) - (A x C)

B

For purposes of the foregoing formula:

A= the total number of shares with respect to which this Warrant is then being exercised.

B = the quotient of (x) the sum of the VWAP of the Common Stock of each of the five (5) Trading Days ending at the close of business on the Principal Market immediately prior to the time of exercise as set forth in the applicable Exercise Notice, divided by (y) five (5).

C = the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

 

If Warrant Shares are issued in a Cashless Exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the 1933 Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c). Notwithstanding anything herein to the contrary, on the Expiration Date, this Warrant shall be automatically exercised via Cashless Exercise pursuant to this Section 2(c).

 

 

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In addition to and not in substitution for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant). Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder.

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[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.

 

 

INTERACTIVE STRENGTH INC.

 

 

By:___________________________

Name:

Title:

 

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EXHIBIT A

 

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

 

INTERACTIVE STRENGTH INC.

The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of Interactive Strength Inc., a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1. Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be made as:

 

____________ a “Cash Exercise” with respect to _________________ Warrant Shares; and/or

 

____________ a “Cashless Exercise” with respect to _______________ Warrant Shares.

 

 

In the event that the Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder hereby represents and warrants that this Exercise Notice was executed by the Holder at [a.m.][p.m.] on the date set forth below.

 

2. Payment of Exercise Price. In the event that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

 

3. Delivery of Warrant Shares. The Company shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant.

 

_______ Electronic Delivery DTC Participant:

DTC Number: Account Name: Account Number:

 

_______ Physical Delivery Address:

 

Date: _______________ __, ______

 

 

Name of Registered Holder

 

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By:

Name:

Title:

 

 

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ACKNOWLEDGMENT

 

 

The Company hereby acknowledges this Exercise Notice and hereby directs American Stock Transfer & Trust Company, LLC to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _________________ from the Company and acknowledged and agreed to by American Stock Transfer & Trust Company, LLC.

 

INTERACTIVE STRENGTH INC.

 

 

 

By:________________________________

Name:

Title:

 

 

 

 

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, all of or shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

whose address is

Dated: __________________, ____

Holder’s Signature:

Holder’s Address:

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever.

 

 

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Exhibit 4.2

NEITHER THIS WARRANT, NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT (COLLECTIVELY, THE “SECURITIES”), HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT AS PERMITTED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES OR BLUE SKY LAWS, PURSUANT TO REGISTRATION OR QUALIFICATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE COMPANY MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY PROPOSED TRANSFER IS IN COMPLIANCE WITH THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE 1933 ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

INTERACTIVE STRENGTH Inc.

Warrant To Purchase Common Stock

Warrant No.: TW-2

Number of Shares of Common Stock: 1,500,000

Date of Issuance: February 1, 2024 (“Issuance Date”)

Interactive Strength Inc., a Delaware corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Treadway Holdings LLC, the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price (as defined below) then in effect, at any time or times on or after the Issuance Date, but not after 11:59 p.m., New York time, on the Expiration Date, (as defined below), One Million Five Hundred Thousand (1,500,000) fully paid nonassessable shares of Common Stock, subject to adjustment as provided herein (the “Warrant Shares”). Except as otherwise defined herein, capitalized terms in this Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, this “Warrant”) shall have the meanings set forth in Section 18. This Warrant is being issued pursuant to Section 2.1 of that certain Securities Purchase Agreement, dated as of February 1, 2024 (the “Subscription Date”), by and between the Company and the Holder (the “Securities Purchase Agreement”). Capitalized terms used herein and not otherwise defined shall have the definitions ascribed to such terms in the Securities Purchase Agreement.

 

 

 

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Net Number = (A x B) - (A x C)

B

For purposes of the foregoing formula:

A= the total number of shares with respect to which this Warrant is then being exercised.

B = the quotient of (x) the sum of the VWAP of the Common Stock of each of the five (5) Trading Days ending at the close of business on the Principal Market immediately prior to the time of exercise as set forth in the applicable Exercise Notice, divided by (y) five (5).

C = the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

 

If Warrant Shares are issued in a Cashless Exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the 1933 Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c). Notwithstanding anything herein to the contrary, on the Expiration Date, this Warrant shall be automatically exercised via Cashless Exercise pursuant to this Section 2(c).

 

 

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In addition to and not in substitution for any other rights hereunder, prior to the consummation of each Fundamental Transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time after the consummation of the applicable Fundamental Transaction but prior to the Expiration Date, in lieu of the shares of the Common Stock (or other securities, cash, assets or other property (except such items still issuable under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental Transaction, such shares of stock, securities, cash, assets or any other property whatsoever (including warrants or other purchase or subscription rights) which the Holder would have been entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard to any limitations on the exercise of this Warrant). Provision made pursuant to the preceding sentence shall be in a form and substance reasonably satisfactory to the Holder.

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12

 

 

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14

 

 

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[Signature Page Follows]

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IN WITNESS WHEREOF, the Company has caused this Warrant to Purchase Common Stock to be duly executed as of the Issuance Date set out above.

 

 

INTERACTIVE STRENGTH INC.

 

 

By:___________________________

Name:

Title:

 

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EXHIBIT A

 

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

 

INTERACTIVE STRENGTH INC.

The undersigned holder hereby exercises the right to purchase _________________ of the shares of Common Stock (“Warrant Shares”) of Interactive Strength Inc., a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used herein and not otherwise defined shall have the respective meanings set forth in the Warrant.

 

1. Form of Exercise Price. The Holder intends that payment of the Exercise Price shall be made as:

 

____________ a “Cash Exercise” with respect to _________________ Warrant Shares; and/or

 

____________ a “Cashless Exercise” with respect to _______________ Warrant Shares.

 

 

In the event that the Holder has elected a Cashless Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder hereby represents and warrants that this Exercise Notice was executed by the Holder at [a.m.][p.m.] on the date set forth below.

 

2. Payment of Exercise Price. In the event that the holder has elected a Cash Exercise with respect to some or all of the Warrant Shares to be issued pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum of $___________________ to the Company in accordance with the terms of the Warrant.

 

3. Delivery of Warrant Shares. The Company shall deliver to the holder __________ Warrant Shares in accordance with the terms of the Warrant.

 

_______ Electronic Delivery DTC Participant:

DTC Number: Account Name: Account Number:

 

_______ Physical Delivery Address:

 

Date: _______________ __, ______

 

 

Name of Registered Holder

 

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By:

Name:

Title:

 

 

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ACKNOWLEDGMENT

 

 

The Company hereby acknowledges this Exercise Notice and hereby directs American Stock Transfer & Trust Company, LLC to issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _________________ from the Company and acknowledged and agreed to by American Stock Transfer & Trust Company, LLC.

 

INTERACTIVE STRENGTH INC.

 

 

 

By:________________________________

Name:

Title:

 

 

 

 

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ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

FOR VALUE RECEIVED, all of or shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

whose address is

Dated: __________________, ____

Holder’s Signature:

Holder’s Address:

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever.

 

 

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Exhibit 10.1

NOTE PURCHASE AGREEMENT

by and among

INTERACTIVE STRENGTH INC.; and
CLMBR HOLDINGS LLC

as Borrower

and

TREADWAY HOLDINGS LLC

as Purchaser

 

Dated as of February 1, 2024

 

 

 

 

 

 

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TABLE OF CONTENTS

Page

Article 1 DEFINITIONS		1
1.1	Definitions	1
Article 2 TERM LOANS		12
2.1	Purchase, Sale and Issuance of the Notes	12
2.2	Fees Payable; Original Issue Discount	12
2.3	Closing	13
Article 3 INTEREST AND PAYMENTS		13
3.1	Interest	13
3.2	Redemption of Notes	14
3.3	Manner of Payment	15
Article 4 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER		15
4.1	Conditions to the Obligations of the Purchaser to Purchase the Notes on the Closing Date	15
Article 5 CONDITIONS TO OBLIGATIONS OF THE LOAN PARTIES		17
5.1	Representations and Warranties	17
5.2	Compliance with this Agreement	17
Article 6 REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES		17
6.1	Existence and Power	17
6.2	Corporate Authorization; No Contravention	18
6.3	Governmental Authorization; Third Party Consents	18
6.4	Binding Effect	18
6.5	Litigation	18
6.6	Compliance with Laws	18
6.7	No Default or Breach	18
6.8	Closing Date Acquisition	18
6.9	Closing Date Acquisition Documents	19
6.10	Taxes	19
6.11	CLMBR Sales Projections	19
6.12	Environmental Compliance	19
6.13	[Reserved]	20
6.14	Investment Company/Government Regulations	20
6.15	[Reserved]	20
6.16	Capitalization	20
6.17	Private Offering	21
6.18	Broker’s, Finder’s or Similar Fees	21
6.19	Labor Relations	21

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6.20	Employee Benefit Plans	21
6.21	Intellectual Property	21
6.22	Potential Conflicts of Interest	22
6.23	[Reserved]	22
6.24	Debt	22
6.25	Material Contracts	23
6.26	Insurance	23
6.27	Solvency	23
6.28	Licenses and Approvals	23
6.29	OFAC	23
6.30	Disclosure	23
6.31	No Default	24
6.32	Government Contracts	24
Article 7 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER		24
7.1	Authorization; No Contravention	24
7.2	Binding Effect	24
7.3	No Legal Bar	24
7.4	Securities Laws	24
7.5	Governmental Authorization; Third Party Consent	24
Article 8 AFFIRMATIVE COVENANTS		25
8.1	Delivery of Financial and Other Information	25
8.2	Use of Proceeds	25
8.3	Notice of Default	25
8.4	Conduct of Business	25
8.5	Taxes and Claims	26
8.6	Insurance	26
8.7	Compliance with Laws	26
8.8	Maintenance of Properties	26
8.9	Audits and Inspection	27
8.10	Issue Taxes	27
8.11	Delivery of Information by Holders	27
8.12	Execution of Supplemental Documents	27
8.13	Post Closing Covenants	27
8.14	Further Assurances	28
8.15	Payment Account	28
8.16	Vertical Investors Credit Enhancements	28
8.17	Securities Law Disclosure; Non-Public Information	28
8.18	Hazardous Materials	28
8.19	Securities Purchase Agreement	28
Article 9 NEGATIVE COVENANTS		29
9.1	Limitations on Debt.	29
9.2	Liens.	29
9.3	Restricted Payments	30

 

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9.4	Loans	30
9.5	Investments	30
9.6	Mergers, Consolidations, Sales	30
9.7	Subsidiaries	30
9.8	Amendment to Organizational Documents	31
9.9	Restrictive Agreements	31
9.10	Capital Expenditures	31
9.11	Transactions with Affiliates	31
9.12	Additional Negative Pledges	31
9.13	Use of Proceeds	32
9.14	Fiscal Year and Accounting Changes	32
9.15	Disposition of Assets	32
9.16	No Settlement	32
9.17	Anti-Layering	32
9.18	No Assignment of Vertical Investors Debt	32
9.19	Certain Amendments	32
Article 10 CONVERSION OPTION		32
10.1	Conversion Option	32
10.2	Conversion	32
10.3	Procedure for Conversion	32
10.4	Adjustments to Conversion Price	33
Article 11 EVENTS OF DEFAULT		33
11.1	Events of Default	33
11.2	Acceleration	35
11.3	Set-Off	35
11.4	Cumulative Remedies	35
Article 12 INDEMNIFICATION		36
12.1	Indemnification	36
12.2	Procedure; Notification	36
Article 13 MISCELLANEOUS		37
13.1	Survival of Representations and Warranties	37
13.2	Notices	37
13.3	Successors and Assigns	38
13.4	Amendment and Waiver	39
13.5	Signatures; Counterparts	39
13.6	Headings	39
13.7	GOVERNING LAW	39
13.8	JURISDICTION, JURY TRIAL WAIVER, ETC	39
13.9	Severability	40
13.10	Rules of Construction	40
13.11	Entire Agreement	40
13.12	Certain Expenses	40

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13.13	Publicity	41
13.14	Further Assurances	41
13.15	No Strict Construction	41

 

 

 

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Exhibits

 

A Form of Note

B Form of Conversion Notice

C-1 Form of Warrant ($1.25 exercise price)

C-2 Form of Warrant ($1.75 exercise price)

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NOTE PURCHASE AGREEMENT

NOTE PURCHASE AGREEMENT, dated as of February 1, 2024, by and among INTERACTIVE STRENGTH INC., a Delaware corporation (“TRNR”), CLMBR HOLDINGS LLC, a Delaware limited liability company (“CLMBR” and together with TRNR, collectively, the “Borrower”), and TREADWAY HOLDINGS LLC, a Delaware limited liability company (the “Purchaser”).

STATEMENT OF PURPOSE:

WHEREAS, the Borrower wishes to sell to the Purchaser, and the Purchaser wishes to purchase on the terms and conditions set forth herein, senior secured convertible promissory notes issued by the Borrower to the Purchaser in an aggregate principal amount of $6,000,000, substantially in the form of Exhibit A hereto;

WHEREAS, the Borrowers intend to apply the proceeds of such senior secured convertible promissory notes to fund a portion of the cash consideration paid in connection with the acquisition by CLMBR of substantially all of the assets of CLMBR, INC., a Delaware corporation (“CLMBR Seller”) and CLMBR1, LLC, a Colorado limited liability company (“CLMBR1 Seller” and together, with CLMBR Seller, collectively, “Sellers”), pursuant to and subject to the terms and conditions of that certain Amended and Restated Asset Purchase Agreement dated as of the Closing Date (as amended, restated, supplemented, or otherwise modified from time to time, the “Closing Date Acquisition Agreement”; and such acquisition, the “Closing Date Acquisition”) by and among the TRNR, CLMBR, Sellers, and the other parties party thereto and

WHEREAS, the Borrower is willing to secure all of the Obligations by granting to the Purchaser a Lien upon substantially all of its assets subject to any limitations set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, the parties hereto agree as follows:

Article 1
DEFINITIONS

1.1 Definitions. As used in this Agreement, the following terms have the meanings indicated:

“3i Warrants” means those certain common stock purchase warrants issued from time to time pursuant to the 3i SPA.

“3i SPA” means that certain Securities Purchase Agreement dated December 7, 2023, by and among TRNR, 3i, LP and each other Buyer from time to time party thereto.

“3i Transaction Documents” means the 3i SPA, the 3i Warrants and each other agreement, document or other instrument delivered or executed in connection therewith.

“Affiliate” means, with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation (a) with respect to any such Person that is an entity, any general partner, managing member, officer or director of such Person or any venture capital fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company with, such Person and (b) with respect to any such Person that is an individual including, without limitation, such

 

 

 

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individual’s spouse, lineal ancestors, lineal blood or adopted descendants, and any trust or other estate planning vehicle for any of their benefit or any entity in which only such persons own equity interests. A Person shall be deemed to control another Person if the controlling Person owns ten percent (10%) or more of any class of voting securities (or other ownership interests) of the controlled Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of Capital Stock, by contract or otherwise. None of the Purchaser nor any of its Affiliates shall be, or be deemed to be, an Affiliate of any Loan Party.

“Agreement” means this Note Purchase Agreement, including the exhibits and schedules attached hereto, as the same may be amended, supplemented or modified in accordance with the terms hereof.

“Applicable Insolvency Laws” means the United States Bankruptcy Code and all other liquidation, bankruptcy, assignment for the benefit of creditors, conservatorship, moratorium, receivership, insolvency, rearrangement, reorganization or similar debtor relief laws of the United States or other applicable jurisdictions in effect from time to time.

“Asset Disposition” means any sale, lease, license, transfer, assignment or other consensual disposition by any Loan Party or any Subsidiary of any asset but excluding (i) dispositions of Cash and Cash Equivalents and (ii) sales, transfers and other dispositions of accounts receivable in connection with the compromise, settlement or collection thereof in the ordinary course of the Loan Parties’ business.

“Behar Settlement Agreement” means that certain Agreement dated November 17, 2023 by and between TRNR and Yves Behar.

“Board” means the board of directors of TRNR.

“Borrower” has the meaning given to that term in the preamble hereof and shall extend to all permitted successors and assigns of such Persons.

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or required by law or executive order to close.

“Capital Expenditure” means any expenditure for any purchase or other acquisition of any asset which would be classified as a fixed or capital asset on a balance sheet prepared in accordance with GAAP (including, without limitation, the capitalized portion of any software development costs), excluding (a) the cost of assets acquired pursuant to Capitalized Leases, (b) expenditures of insurance proceeds (or other similar recoveries) to rebuild or replace any asset after a casualty loss or cash awards of compensation arising from the taking of eminent domain or condemnation (c) leasehold improvement expenditures for which the Person is reimbursed promptly by the lessor.

“Capital Stock” means (a) any capital stock, partnership, membership, joint venture or other ownership or equity interest, participation or securities (whether voting or non-voting, whether preferred, common or otherwise), and (b) any option, warrant, security or other right (including Debt securities or other evidence of Debt) directly or indirectly convertible into or exercisable or exchangeable for, or otherwise to acquire directly or indirectly, any capital stock, partnership, membership, joint venture or other ownership or equity interest, participation or security described in clause (a) above.

“Capitalized Lease” of a Person means any lease of Property by such Person as lessee which would be capitalized on a balance sheet of such Person prepared in accordance with GAAP; provided,

 

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however, that all obligations of any Person that are or would have been treated as operating leases for purposes of GAAP prior to the issuance by the Financial Accounting Standards Board on February 25, 2016 of an Accounting Standards Update (the “ASU”) shall continue to be accounted for as operating leases for purposes of this definition and all other financial definitions, calculations and covenants for purposes of this Agreement (other than for purposes of the delivery of financial statements prepared in accordance with GAAP) whether or not such operating lease obligations were in effect on such date), notwithstanding the fact that such obligations are required in accordance with the ASU (on a prospective or retroactive basis or otherwise) to be treated as capitalized lease obligations in accordance with GAAP.

“Cash” means the currency of the United States of America.

“Cash Equivalents” means (a) short-term obligations of, or fully guaranteed by, the United States of America or any agency or instrumentality thereof, (b) commercial paper rated A-1 or better by Standard & Poors or P-1 or better by Moody’s, (c) demand deposit accounts maintained in the ordinary course of business, and (d) certificates of deposit issued by and time deposits with commercial banks (whether domestic or foreign) having capital and surplus in excess of $100,000,000; provided in each case that the same provides for payment of both principal and interest (and not principal alone or interest alone) and is not subject to any contingency regarding the payment of principal or interest.

“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended.

“Change of Control” means, (i) the consummation of a merger, consolidation, reorganization, sale of Capital Stock by TRNR or any holder of the TRNR’s Capital Stock, sale or other disposition of all or substantially all of the assets of the TRNR that results in (A) any change in the selection or composition of a majority of the Board as in effect on the Closing Date or (B) any person or “group” (within the meaning of Rules 13d-3 and 13d-5 of the Exchange Act) shall directly or indirectly own or control in excess of fifty percent (50%) of the economic or voting interests of TRNR that does not, as of the Closing Date, directly or indirectly, own or control in excess of 50% of the voting interests of TRNR or (ii) TRNR shall cease to own 100% of the Capital Stock of CLMBR.

“CLMBR” has the assigned to that term in the Recitals to this Agreement.

“CLMBR Sales Projections” has the meaning assigned to that term in Section 6.11.

“CLMBR Subscription Revenue ” means revenue received by CLMBR in connection with the content subscriptions.

“Closing” has the meaning assigned to that term in Section 2.3.

“Closing Date” has the meaning assigned to that term in Section 2.3.

“Closing Date Acquisition” has the assigned to that term in the Recitals to this Agreement.

“Closing Date Acquisition Agreement” has the assigned to that term in the Recitals to this Agreement.

“Closing Date Acquisition Documents” means the Closing Date Acquisition Agreement and all other agreements, documents and instruments executed and/or delivered pursuant thereto or in connection therewith.

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“Closing Date Shares” has the meaning assigned to that term in Section 2.2(a).

“Code” means the Internal Revenue Code of 1986, as amended, or any successor statute thereto.

“Collateral” has the meaning set forth in the Security Agreement.

“Collateral Assignment of Acquisition Documents” means that certain Collateral Assignment of Acquisition Documents dated as of the Closing Date, by and among the Borrower and the Purchaser, as amended, restated, supplemented or otherwise modified from time to time.

“Collateral Documents” means the Security Agreement, the Intellectual Property Security Agreements, the Collateral Assignment of Acquisition Documents, any other collateral assignments, the Lockbox Agreement, each other deposit account control agreement, each landlord waiver, bailee agreement or other similar collateral access agreement and each other agreement or writing pursuant to which the Borrower or any Subsidiary thereof purports to pledge or grant a security interest in any property or assets securing the Obligations, or any such Person purports to guarantee the payment and/or performance of the Obligations, in each case, as amended, restated, supplemented or otherwise modified from time to time.

“Commission” means the U.S. Securities and Exchange Commission or any similar agency then having jurisdiction to enforce the Securities Act.

“Confidential Information” means all information disclosed by a Loan Party that (a) relates to such Loan Party’s business, properties, liabilities (other than the Obligations), technology, Intellectual Property assets, trade secrets, inventions, know-how, software programs, software source documents, financial or business plans, financial projections and affairs, employment arrangements, financial statements, internal management tools and systems, products and product development plans, marketing plans, customers, clients and contracts, and (b) to the extent such information is provided after the Closing Date (other than information provided as required by the terms of this Agreement, which shall be deemed to be Confidential Information), is designated by such Loan Party as confidential by means of appropriate markings. Confidential Information will not include any information or data (i) that has become publicly known through no wrongful act of the recipient of such information, (ii) has been received by the recipient from a third party not known by the recipient to be under any obligation of confidentiality to a Loan Party without breach by the recipient of this Agreement or any other agreement with any Loan Party, or (iii) has been approved for release by written authorization of such Loan Party.

“Controlled Group” means a “controlled group of corporations” (as defined in Section 1563(a) of the Code) in which the Borrower is a member.

“Contractual Obligations” means as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument or arrangement (whether in writing or otherwise), other than a Note Document, to which such Person is a party or by which it or any of such Person’s property is bound.

“Conversion Notice” has the meaning given that term in Section 10.3.

“Conversion Price” means two dollars ($2.00) per share, subject to adjustment pursuant to Section 10.4.

“Conversion Shares” has the meaning given that term in Section 10.2.

 

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“Conversion Trigger Event” has the meaning given that term in Section 10.1.

“Debt” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money; (b) all obligations issued, undertaken or assumed by such Person as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business on ordinary terms); (c) all obligations of such Person evidenced by notes, bonds, debentures or similar instruments; (d) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (e) [reserved]; (f) all indebtedness of such Person referred to in clauses (a) through (e) above secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including accounts and contracts rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Debt (it being understood that if such Person has not assumed or otherwise become personally liable for any such Debt, the amount of the Debt of such Person in connection therewith shall be limited to the lesser of the face amount of such Debt or the fair market value of all property of such Person securing such Debt); and (g) all guaranties of such Person of any Debt of another Person.

“Default” means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

 

“Default Rate” has the meaning given to that term in Section 3.1(b).

“Disclosure Notice” has the meaning given to that term in Section in Section 8.17(a).

“Distributions” by a Person means (a) dividends or other distributions on any now or hereafter outstanding Capital Stock of such Person, (b) the redemption, repurchase, defeasance or acquisition of such Capital Stock or of warrants, rights or other options to purchase such Capital Stock, and (c) any loans or advances (other than salaries, bonuses or reimbursement of employee expenses in the ordinary course of business), to any stockholder(s), partner(s) or member(s) of such Person.

“Environmental Laws” means any and all federal, state, local and foreign statutes, laws, judicial decisions, regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions, Licenses, concessions, grants, franchises, agreements and other governmental restrictions relating to (a) the protection of the environment, (b) the effect of the environment on human health, (c) emissions, discharges or releases of pollutants, contaminants, hazardous substances or wastes into surface water, ground water, air or land, or (d) the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, hazardous substances or wastes or the clean-up or other remediation thereof, including, without limitation, the Clean Air Act, 42 U.S.C. § 7401 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., the Solid Waste Disposal Act (as amended by the Resource Conservation and Recovery Act), 42 U.S.C. § 6901 et seq., and CERCLA.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended and the rules and regulations promulgated thereunder.

“ERISA Affiliate” means a corporation that is or was a member of a controlled group of corporations with the Borrower within the meaning of Section 4001(a) or (b) of ERISA or Section 414(b) of the Code, a trade or business (including a sole proprietorship, partnership, trust, estate or corporation) that is under common control with any Loan Party within the meaning of Section 414(m) of the Code, or a

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trade or business which together with any Loan Party is treated as a single employer under Section 414(o) of the Code.

“Event of Default” has the meaning assigned to that term in Section 11.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Extraordinary Receipt” means any Cash received by or paid to or for the account of any Loan Party not in the ordinary course of business (and not consisting of proceeds described in any of Section 3.2(d)(ii), (iii) or (iv)).

“FINRA” means the Financial Industry Regulatory Authority, Inc.

“Fiscal Quarter” means in respect of a date as of which the applicable financial covenant is being calculated or financial report is being furnished, any fiscal quarter of a Fiscal Year (currently the three month periods ending on or about each March 31, June 30, September 30 and December 31 annually).

“Fiscal Year” means the fiscal year for financial accounting and reporting purposes of the Borrower (currently the fiscal year ending December 31).

“Funded Debt” means, as of any date of determination, all outstanding Debt of the types described in clauses (a), (b), (c), (d) and (f) of the definition of “Debt” as of such date.

“GAAP” means generally accepted accounting principles in effect within the United States from time to time, consistently applied.

“Government” means the United States government or any agency, department or instrumentality thereof.

“Government Contract” means a Government Prime Contract or a Government Subcontract.

“Government Prime Contract” means any written agreement, commitment, contract or instrument or other binding arrangement between the Borrower and the Government where the Borrower is the prime contractor.

“Government Subcontract” means any written agreement, commitment, contract or instrument or other binding arrangement between the Borrower and any Person that is the prime contractor under a related contract with the Government where the Borrower is a subcontractor of such prime contractor.

“Governmental Authority” means the government of any nation, state, city, locality or other political subdivision of any thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, regulation or compliance, including, without limitation, any federal, state or local public utility commission, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

“Guarantor” means Woodway USA, Inc., a Wisconsin corporation.

 

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“Guarantor Change of Control” means, (i) the consummation of a merger, consolidation, reorganization, sale of Capital Stock by Guarantor or any holder of the Guarantor’s Capital Stock, sale or other disposition of all or substantially all of the assets of the Guarantor that results in (A) any change in the selection or composition of a majority of the board of directors of Guarantor as in effect on the Closing Date or (B) any person or “group” (within the meaning of Rules 13d-3 and 13d-5 of the Exchange Act) shall directly or indirectly own or control in excess of fifty percent (50%) of the economic or voting interests of Guarantor that does not, as of the Closing Date, directly or indirectly, own or control in excess of 50% of the voting interests of Guarantor.

“Guaranty Agreement” means that certain Guaranty Agreement dated as of the Closing Date, by and between Guarantor and Purchaser, as amended, restated, supplemented or otherwise modified from time to time, which such Guaranty Agreement shall be in form and substance satisfactory to the Purchaser in its sole discretion.

“Hazardous Materials” means (a) any “hazardous substance” as defined in CERCLA, (b) any “hazardous waste” as defined in RCRA, (c) asbestos, (d) polychlorinated biphenyls, (e) petroleum, its derivatives, by products and other hydrocarbons, (f) toxic mold and (g) any other pollutant, toxic, radioactive, caustic or otherwise hazardous substance regulated under Environmental Laws.

“Hazardous Materials Contamination” means contamination (whether now existing or hereafter occurring) of the improvements, buildings, facilities, personalty, soil, groundwater, air or other elements on or of the relevant property by Hazardous Materials, or any derivatives thereof, or on or of any other property as a result of Hazardous Materials, or any derivatives thereof, generated on, emanating from or disposed of in connection with the relevant property.

“Hedging Agreement” means any rate protection agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging agreement.

“Holder” means each holder of a Note hereunder.

“Indemnified Party” has the meaning given to that term in Section 12.1.

“Insolvency Proceeding” means, with respect to any Person, (a) any case, action or proceeding with respect to such Person before any court or other governmental authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors (including any proceeding under the United States Bankruptcy Code) or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of such Person’s creditors generally or any substantial portion of such creditors.

“Intellectual Property” has the meaning ascribed to such term in the Security Agreement.

“Intellectual Property Security Agreement” means each trademark security agreement, patent security agreement and copyright security agreement, between any Loan Party and the Purchaser, as amended, restated, supplemented or otherwise modified from time to time.

“Interest Rate” has the meaning given to that term in Section 3.1(a).

“Liabilities” has the meaning given to that term in Section 12.1.

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“Licenses” means all licenses, permits, authorizations, determinations, and registrations issued by any Governmental Authority to any Loan Party or any Subsidiary in connection with the conduct of its business.

“Lien” means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, license, charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential arrangement of any kind or nature whatsoever in respect of any property (including those created by, arising under or evidenced by any conditional sale or other title retention agreement, the interest of a lessor under a capital lease, or any financing lease having substantially the same economic effect as any of the foregoing, but not including the interest of a lessor under an operating lease and including any exclusive or non-exclusive license of Intellectual Property).

“Loan Parties” means the Borrower and all of the Borrower’s direct or indirect Subsidiaries which have joined this Agreement pursuant to and have otherwise complied with the provisions of Section 9.7.

“Lockbox Account” means that certain deposit account of CLMBR having the account number 325159759327 maintained at the Lockbox Account Bank.

“Lockbox Account Bank” means Bank of America. N.A.

“Lockbox Control Agreement” means a Deposit Account Control Agreement to be entered into in accordance with Section 8.13(d) by and among CLMBR, Lockbox Account Bank and Purchaser. as amended, restated, supplemented or otherwise modified from time to time, which such Lockbox Control Agreement shall be in form and substance satisfactory to Purchaser in its sole discretion.

“Major Casualty Proceeds” means (i) the aggregate insurance proceeds received in Cash in connection with one or more related events under any property insurance policy or business interruption insurance policy or (ii) any award or other compensation received in Cash with respect to any eminent domain, condemnation of property or similar proceedings (or any transfer or disposition of property in lieu of condemnation), in each case, less (a) any out-of-pocket fees, costs and expenses reasonably incurred by the Borrower or any Subsidiary in connection therewith, (b) the amount of any Debt secured by a Permitted Lien on the related asset and discharged from the proceeds of such event, (c) any Taxes paid or reasonably estimated by the applicable Loan Party or Subsidiary to be payable by such Person as a consequence of such event (provided, that if the actual amount of Taxes actually paid is less than the estimated amount, the difference shall immediately constitute Major Casualty Proceeds) and (d) the amount of any reserve established in accordance with GAAP (provided that such reserved amounts shall be Major Casualty Proceeds to the extent and at the time of any reversal (without the satisfaction of any applicable liabilities in a corresponding amount) of any such reserve).

“Material Adverse Effect” means an effect that results in or causes (a) a material adverse change in, or a material adverse effect upon, the assets, liabilities, business, properties, operations, or condition (financial or otherwise) of the Borrower and its Subsidiaries or the Guarantor, (b) a material adverse effect upon the legality, validity, binding effect or enforceability against the Borrower or any of its Subsidiaries or the Guarantor of any Note Document or (c) material adverse effect upon the validity of any Intellectual Property of the Borrower or its Subsidiaries or any of the Borrower’s or its Subsidiaries’ rights or interests in respect thereof or thereto, including but not limited to as a result of an adverse order, determination or decision by a Governmental Authority.

“Maturity Date” has the meaning given to that term in Section 3.2(a).

 

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“Moody’s” means Moody’s Investors Service, Inc.

“Net Cash Proceeds” means, with respect to any transaction or event, an amount equal to the Cash proceeds received by any Loan Party (or any Subsidiary) from or in respect of such transaction or event (including Cash proceeds of any non‑Cash proceeds of such transaction), less (i) any out‑of‑pocket expenses paid to a Person that are reasonably incurred by such Loan Party or Subsidiary in connection therewith, (ii) amount of any reserve established (provided that such reserved amounts shall be Net Cash Proceeds to the extent and at the time of any reversal (without the satisfaction of any applicable liabilities in a corresponding amount) of any such reserve) and (iii) Taxes paid or payable or reasonably estimated to be paid or payable as a result thereof in that year or the next succeeding year.

“Notes” has the meaning given to that term in Section 2.1(a).

“Note Documents” means this Agreement, the Notes, the Collateral Documents, the Guaranty Agreement, the Securities Purchase Agreement, the Warrants and each other agreement, document or certificate delivered pursuant to this Agreement or the Notes, in each case, as amended, restated, supplemented or otherwise modified from time to time.

“Obligations” means all obligations of every nature of the Borrower or any other Loan Party, as applicable, from time to time owed to the Purchaser under the Note Documents, whether for principal, interest, fees, expenses, indemnification or otherwise; provided, however, for the avoidance of doubt, no obligations owing by any Loan Party to any Holder or any Affiliate of any Holder, or their respective successors or assigns, in respect of or pursuant to any equity investment made by any Holder or any Affiliate of any Holder, or their respective successors and assigns, in the Borrower or any other Loan Party shall be included in the Obligations; provided, however, that no obligations owing by any Loan Party to any Holder or any Affiliate of any Holder, or their respective successors or assigns, in respect of or pursuant to any equity investment (including the Conversion Shares and Closing Date Shares) made by any Holder or any Affiliate of any Holder, or their respective successors and assigns, in any Loan Party shall be included in the Obligations, other than any obligations to issue Capital Stock evidencing such equity investment (including the Conversion Shares and Closing Date Shares).

“OFAC” means the U.S. Department of the Treasury’s Office of Foreign Assets Control.

“Organizational Documents” means the limited liability company agreement or bylaws (as applicable), certificate or articles of formation or certificate or articles of incorporation (as applicable), shareholders’ agreement, membership agreement or any other agreements among equity holders that are known to the Borrower, and other similar organizational and governing documents of the Borrower and its Subsidiaries.

“Participant” has the meaning given to that term in Section 13.3.

“Participant Register” has the meaning given to that term in Section 13.3.

“Payment Account” means (i) prior to the delivery of the Lockbox Control Agreement in accordance with Section 8.13(d), that certain bank account of Purchaser or its designee as designated by Purchaser from time to time and (ii) after delivery of the Lockbox Control Agreement in accordance with Section 8.13(d), the Lockbox Account.

“Payment Date” means the first Business Day of each calendar month in which any Note is outstanding, commencing with the calendar month beginning on February 1, 2024.

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“Permitted Liens” means those Liens permitted pursuant to Section 9.2.

“Person” means any individual, firm, corporation, limited liability company, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.

“Principal Market” shall mean any of the U.S. national exchanges (i.e. NYSE, NYSE AMEX, NASDAQ), or principal quotation systems (i.e. OTCQX, OTCQB, OTC Pink, the OTC Bulletin Board), or other principal exchange or recognized quotation system which is at the time the principal trading platform or market for the common stock of TRNR.

“Property” of a Person means any and all property, whether real, personal, tangible, intangible, or mixed, of such Person, or other assets owned, leased or operated by such Person.

“Purchase Price” has the meaning given to that term in Section 2.1.

“Purchaser” has the meaning given to that term in the preamble hereof.

“Related Person(s)” means, with respect to any Person, each Affiliate of such Person and each director, officer, employee, agent, trustee, representative, attorney, accountant and each insurance, environmental, legal, financial and other advisor and other consultants and agents of or to such Person or any of its Affiliates.

“Required Holders” means the Holders of at least fifty-one percent (51%) of the outstanding principal balance of the Notes.

“Requirements of Law” means as to any Person, provisions of the Organizational Documents of such Person, or any law, treaty, code, rule, regulation, right, privilege, qualification, License or franchise or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to such Person or any of such Person’s property or to which such Person or any of such Person’s property is subject or pertaining to any or all of the transactions contemplated or referred to herein.

“Sanctioned Entity” means (a) an agency of the government of, (b) an organization directly or indirectly controlled by, or (c) a Person resident in a country that is subject to a sanctions program identified on the list maintained by OFAC and available at http://www.treas.gov/offices/enforcement/ofac/programs, or as otherwise published from time to time as such program may be applicable to such agency, organization or person.

“Sanctioned Person” means a Person named on the list of Specially Designated Nationals or Blocked Persons maintained by OFAC available at http://www.treas.gov/offices/
enforcement/ofac/sdn/index.html, or as otherwise published from time to time.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations thereunder as the same shall be in effect at the time.

“Securities Purchase Agreement” means that certain Securities Purchase Agreement, dated as of the Closing Date, by and between TRNR and Purchaser or its designee.

 

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“Security Agreement” means the Security Agreement, among the Loan Parties, the Purchaser, and the other parties thereto, as amended, restated, supplemented or otherwise modified from time to time.

“Solvent” means, with respect to any Person that (a) the assets and the property of such Person exceed the aggregate liabilities (including contingent and unliquidated liabilities) of such Person, (b) after giving effect to the transactions contemplated by this Agreement and the other Note Documents, such Person will not be left with unreasonably small capital, and (c) after giving effect to the transactions contemplated by this Agreement and the other Note Documents, such Person is able to both service and pay its liabilities as they mature. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that is likely to become an actual or matured liability.

“Standard and Poor’s” means Standard and Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.

“Subordinated Debt” means the Debt set forth on Schedule 1.1(a), to the extent subject to a Subordination Agreement.

“Subordination Agreement” means any subordination agreement in form and substance satisfactory to the Holders in their sole discretion subordinating the Subordinated Debt to the Obligations.

“Subsidiary” means, with respect to any Person, a corporation or other entity of which more than fifty percent (50%) of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by such Person.

“Tax” means (a) any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on-minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto and (b) liability for the payment of any amounts of the type described in clause (a) as a transferee or successor, by contract, from any express or implied obligation to indemnify or otherwise assume or succeed to the liability of any other Person, or otherwise.

“Tax Return” means any return, declaration, report, or information return or statement relating to Taxes required to be filed with a Governmental Authority responsible for the administration of Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“Transactions” means, collectively, (a) the issuance of the Notes and (b) the payment of all fees and expenses in connection therewith.

“Tumim SPA” means that certain Common Stock Purchase Agreement dated December 12, 2023, by and between Tumim Stone Capital, LLC and TRNR.

“Tumim ELOC” means the equity line of credit facility provided pursuant to the terms and conditions of the Tumim SPA.

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“Tumim ELOC Documents” means the Tumim SPA, the “Transaction Documents” (as defined in the Tumim SPA) and each other agreement, document or other instrument delivered or executed in connection therewith.

“Vertical Investors” means Vertical Investors, LLC, a Mississippi limited liability company.

“Vertical Investors Credit Agreement” means that certain Credit Agreement dated as of the Closing Date among TRNR and Vertical Investors, as amended restated, supplemented or otherwise modified from time to time in accordance with the terms of the Vertical Investors Intercreditor Agreement.

“Vertical Investors Debt” means the Debt of the Loan Parties created under the Vertical Investors Debt Documents as permitted by the Vertical Investors Intercreditor Agreement.

“Vertical Investors Debt Documents” means the “Loan Documents” as defined in the Vertical Investors Credit Agreement.

“Vertical Investors Intercreditor Agreement” means that certain Intercreditor Agreement dated as of the Closing Date among the Borrowers, the Purchaser and Vertical Investors, as amended restated, supplemented or otherwise modified from time to time.

“Warrants” means each of those certain Warrants to Purchase Common Stock to be executed by TRNR in favor of the Purchaser or its designee in the form attached hereto as Exhibit C-1 and Exhibit C-2.

“Woodway Distribution Agreement” means the exclusive Distribution Agreement between TRNR and Woodway USA, Inc.

“Working Capital” means with respect to the Borrower and its Subsidiaries, as of any period of determination, (i) current assets (other than Cash and amounts due from related parties), plus unbilled revenue and deferred costs, less (ii) current liabilities (other than amounts due to related parties, lines of credit with related parties, and notes payable) and deferred revenue.

Article 2
TERM LOANS

2.1 Purchase, Sale and Issuance of the Notes. Subject to the terms and conditions herein set forth, on the Closing Date, the Borrower will issue to the Purchaser, and the Purchaser will acquire from the Borrower one or more senior secured convertible promissory notes (the “Notes”) in the principal amount of $6,000,000 (the “Purchase Price”).

2.2 Fees Payable; Original Issue Discount.

(a) Closing Fee. Concurrently with the execution hereof, the Borrower shall pay to the Purchaser a closing fee in the amount of nine hundred thousand dollars ($900,000), which the Purchaser shall withhold from the proceeds of the Notes and shall be non-refundable and fully earned on the date hereof.

(b) Issuance of Common Stock and Warrants. Concurrently with the execution hereof, TRNR shall issue to the Purchaser (i) 750,000 shares of TRNR’s common stock (the “Closing Date Shares”) and (ii) the Warrants, in each case, pursuant to the Securities Purchase Agreement.

 

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(c) Due Diligence Fee. At Closing, the Borrower shall pay to the Purchaser a fee in the amount of fifty thousand dollars ($50,000), which shall be non-refundable and fully earned on the Closing Date, and the Borrower hereby authorizes Purchaser to withhold such fee from the proceeds of the Notes.

(d) Reimbursement of Expenses. At the Closing, the Borrower agrees to reimburse the Purchaser’s fees and expenses (including, without limitation, fees, charges and disbursements of professionals and consultants, and other out-of-pocket expenses, including, without limitation, travel expenses) incurred in connection with (i) the negotiation and execution and delivery of this Agreement and the Note Documents, (ii) Purchaser’s due diligence investigation, and (iii) the other transactions contemplated by this Agreement and the Note Documents (including filings or other actions required to perfect the security interests granted under the Collateral Documents).

(e) Original Issue Discount. The Borrower and Holders agree (i) that the Notes are to be treated as indebtedness for U.S. federal income tax purposes, (ii) that the Notes and the Warrants constitute an “investment unit” for purposes of Section 1273(c)(2) of the Code, (iii) that the allocation of the issue price of such investment unit between the Notes and the Warrants in accordance with Section 1273(c)(2) of the Code and Treasury Regulation Section 1.1273-2(h) shall be an aggregate amount of $100.00 allocated to the Warrants and the balance of the Purchase Price allocated to the Notes, and (iii) not to file any Tax Return, report or declaration inconsistent with the foregoing, unless required by a “determination” within the meaning of Section 1313(a) of the Code.

2.3 Closing. The purchase and issuance of the Notes shall take place at the closing (the “Closing”) on the date hereof (the “Closing Date”). At the Closing, the Borrower shall deliver the Notes to the Purchaser and the Purchaser shall deliver the Purchase Price.

Article 3
INTEREST AND PAYMENTS

3.1 Interest.

(a) Interest Rate. Interest on the sum of the outstanding principal amount of each Note shall accrue from the Closing Date until full and final repayment of the principal amount of such Note and the payment of all interest in full at the rate of two percent (2.00%) per month (the “Interest Rate”), payable in cash monthly. Interest on the principal amount for each calendar month will accrue in full on the first day of such calendar month. On each Payment Date, the Borrower shall pay in arrears in cash by distribution from the Payment Account, automatic bank draft or wire transfer of immediately available funds accrued interest on the outstanding principal amount of each such outstanding Note in an amount equal to the interest which is currently payable in cash hereunder as set forth above.

(b) Default Rate of Interest. Notwithstanding the foregoing provisions of this Section 3.1, but subject to Requirements of Law, upon and during the occurrence of any Event of Default, each Note shall bear interest from the date of the occurrence of such Event of Default until such Event of Default is cured at a rate equal to the sum of (i) the Interest Rate payable as provided in Section 3.1(a) above plus (ii) an additional two percent (2.00%) per month (the “Default Rate”). Subject to Requirements of Law, any interest that shall accrue on overdue interest on any Note as provided in the preceding sentence and shall not have been paid in full on or before the next Payment Date to occur after the date on which the overdue interest became due and payable shall itself be capitalized and added to the principal amount of the Notes on each Payment Date, and shall thereafter be treated as principal of the Notes.

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(c) No Usurious Interest. In the event that any interest rate(s) provided for in this Section 3.1 or otherwise in this Agreement shall be determined to exceed any limitation on interest under Requirements of Law, such interest rate(s) shall be computed at the highest rate permitted by Requirements of Law. Any payment by the Borrower of any interest amount in excess of that permitted by law shall be considered a mistake, with the excess being applied to the principal amount of the affected Notes without prepayment premium or penalty; if no such principal amount is outstanding, such excess shall be returned to the Borrower.

3.2 Redemption of Notes.

(a) Maturity Date. The Borrower shall redeem the Notes on December 15, 2024 (the “Maturity Date”), by payment in Cash in full of the entire outstanding principal balance thereof (including all unpaid interest that has been added to the outstanding principal amount of such Note pursuant to Section 3.1(b)), together with any unpaid interest accrued thereon to such date.

(b) Voluntary Prepayment;. The Borrower may voluntarily prepay or redeem the Notes, in whole or in part, upon written notice to the Purchaser.

(c) Optional Redemption by the Holders. Upon the occurrence of (i) a Change of Control (and concurrent with the closing of any such transaction) or (ii) a sale of all or substantially all of the Borrower and its Subsidiaries’ assets, each Holder may elect to sell to the Borrower and the Borrower shall be required to purchase all Notes held by such Holder in full by payment of an amount equal to (A) the unpaid principal balance thereof, plus (B) all unpaid interest accrued thereon through the date of redemption, plus (C) all outstanding and unpaid fees and expenses payable by the Borrower to such Holder through the date of redemption.

(d) Mandatory Prepayments. The Borrower shall prepay the Notes in the following amounts and at the following times.

(i) Casualty and Other Insurance Proceeds. Within five (5) Business Days after any Loan Party or any Subsidiary (or Purchaser as loss payee or assignee) receives any Major Casualty Proceeds, an amount equal to one hundred percent (100%) of such Major Casualty Proceeds, to the extent such Major Casualty Proceeds are not deposited into the Payment Account.

(ii) Asset Disposition Proceeds. Within five (5) Business Days after any Loan Party or any Subsidiary receives the proceeds of any Asset Disposition, the Borrower shall prepay the Notes in an amount equal to one hundred percent (100%) of the Net Cash Proceeds of such Asset Disposition, to the extent such Net Cash Proceeds are not deposited into the Payment Account.

(iii) Financing Proceeds and Extraordinary Receipts. Within five (5) Business Days after any Loan Party or any Subsidiary receives the proceeds of any financings whether by the issuance of Debt (other than the Vertical Investors Debt) or sale of Capital Stock or receives any Extraordinary Receipts, the Borrower shall prepay the Notes as follows: (A) until the aggregate proceeds of all such financings and Extraordinary Receipts are equal or greater than $5,000,000, no such prepayment shall be required and (B) with respect to all proceeds of such financings and Extraordinary Receipts in excess of $5,000,000 in the aggregate, the Borrower shall prepay the Notes in an amount equal to fifty percent (50%) of the Net Cash Proceeds of such excess proceeds.

(iv) [Reserved].

 

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(v) Distributions from Payment Account. On each Payment Date, the Borrower shall prepay the principal of the Notes, by distribution from the Payment Account as set forth in Section 3.3(a), in an amount equal to the total amount on deposit in the Payment Account prior to making such distribution, less the amounts set forth in Section 3.3(b)(i) and (ii) on such Payment Date.

(e) Acceleration. In addition, the Notes shall be subject to acceleration as set forth in Section 11.2.

3.3 Manner of Payment.

(a) On each Payment Date or any such other date and at any frequency the Purchaser may elect, distributions of all deposits maintained in the Lockbox Account shall be made by the Purchaser and applied as set forth in Section 3.3(b). Such distributions are hereby agreed to and authorized by Borrower. Any other payment of fees, interest, premium and principal payable in respect of any Note may otherwise be paid by automatic bank draft or wire transfer of immediately available funds to an account at a bank designated in writing by the Holder of such Note. In the absence of any such written designation, any such payment shall be deemed made on the date a check in the applicable amount payable to the order of the Holder thereof is received by such Holder at its last address as reflected in the Note Register (as defined in the Notes).

(b) All payments made by the Borrower (pursuant to this Article 3 or otherwise) upon the Obligations relating to the Notes and all net proceeds from the enforcement of the Obligations shall be applied (i) first, to that portion of the Obligations constituting fees, indemnities and expenses (including reasonable attorney fees) payable to the Holders, (ii) second, to the payment of that portion of the Obligations constituting accrued and unpaid interest on the Notes, (iii) third, to the payment of that portion of the Obligations constituting unpaid principal of the Notes, (iv) last, the balance, if any, after all of the Obligations have been indefeasibly paid in full, to the Borrower or as otherwise required by any Requirements of Law.

(c) Subject to Section 3.3(b), all payments made by the Borrower upon the Notes (including, without limitation, payments of principal if prepaid or upon earlier acceleration) shall be paid proportionally among the Holders of the Notes, based upon the outstanding principal amounts of such Notes, and without setoff or counterclaim, including for Taxes.

Article 4
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER

4.1 Conditions to the Obligations of the Purchaser to Purchase the Notes on the Closing Date. The obligation of the Purchaser to purchase the Notes, fund the Purchase Price on the Closing Date and perform any obligations hereunder shall be subject to the reasonable satisfaction as determined by, or waived by, the Purchaser of the following conditions on or before the Closing Date; provided, that any waiver of a condition shall not be deemed a waiver of any breach of any representation, warranty, agreement, term or covenant, as specifically set forth elsewhere in this Agreement, or of any misrepresentation by the Borrower.

(a) Representations and Warranties. The representations and warranties contained in Article 6 hereof shall be true and correct in all material respects at and as of the Closing Date after giving effect to the Transactions.

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(b) Compliance with this Agreement. The Borrower shall have performed and complied with all of its agreements and conditions set forth or contemplated herein and the other Note Documents in all material respects that are required to be performed or complied with by the Borrower on or before the Closing Date, and the Purchaser shall have received at the Closing a certificate to the foregoing effect, dated the Closing Date, and executed by the chief executive officer or chief financial officer on behalf of the Borrower.

(c) Secretary’s Certificates. The Purchaser shall have received a certificate from each of the Borrower, dated the Closing Date and signed by the secretary, an assistant secretary, the chief financial officer or the chief executive officer of the Borrower, as applicable, certifying (i) that the attached copies of the Organizational Documents of the Borrower and resolutions of the board of directors or similar governing body of the Borrower approving the Note Documents to which it is a party and the Transactions are all true, complete and correct and remain unamended and in full force and effect, (ii) the incumbency and specimen signature of each officer of the Borrower executing any Note Document to which it is a party or any other document delivered in connection herewith and therewith on behalf of the Borrower and (iii) that each Loan Party and each of their respective subsidiaries are, individually, Solvent.

(d) Documents. The Purchaser shall have received true, complete and correct copies of the Note Documents signed by the Borrower and/or Guarantor, as applicable.

(e) Good Standing Certificates. The Borrower shall have delivered to the Purchaser as of a date not more than fifteen (15) days before the Closing Date, good standing certificates and/or certificates of existence, as the case may be, for the Borrower for which such a certificate is issuable by a Governmental Authority for the Borrower’s jurisdiction of incorporation or formation and all other jurisdictions where it does business.

(f) No Litigation. No action, suit or proceeding before any court or any Governmental Authority shall have been commenced or threatened in writing, no investigation by any Governmental Authority shall have been commenced and no action, suit or proceeding by any Governmental Authority shall have been threatened in writing against the Purchaser or the Loan Parties seeking to restrain, prevent or change the transactions contemplated hereby or questioning the validity or legality of any of such transactions.

(g) Fees, Etc. On the Closing Date, the Borrower shall have paid to the Purchaser all costs, fees and expenses (including, without limitation, reasonable legal fees and expenses) payable to the Purchaser in accordance with the terms of the Note Documents.

(h) Consents. All consents, exemptions, authorizations, or other actions by, or notices to, or filings with, Governmental Authorities and other Persons in respect of all Requirements of Law and with respect to those Contractual Obligations of the Loan Parties reasonably necessary in connection with the execution, delivery or performance by the Loan Parties, or enforcement against the Loan Parties, of the Note Documents to which they are a party shall have been made or obtained and be in full force and effect, and the Purchaser shall have been furnished with appropriate evidence thereof.

(i) Closing Date Acquisition; Closing Date Acquisition Documents. Purchaser shall received (i) executed copies of the Closing Date Acquisition Documents and (ii) evidence of the consummation of the Closing Date Acquisition in accordance with Requirements of Law and in accordance with the terms of the Closing Date Acquisition Agreement, including, without limitation, written confirmation (including via email) from the applicable transfer agent that it has issued book entry positions in the Closing Shares (as defined in the Closing Date Acquisition Agreement), registered in the name of the

 

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Buyer (as defined in the Closing Date Acquisition Agreement), in form and substance reasonably satisfactory to the Purchaser.

(j) [Reserved].

(k) Vertical Investors Debt Documents. Purchaser shall have received final executed copies of the Vertical Investors Credit Agreement and each other Vertical Investors Debt Documents, all in form and substance satisfactory to the Purchaser.

(l) Stock Powers. Purchaser shall have received (i) executed stock powers, proxies or similar instruments of transfer with respect to all Capital Stock owned by TRNR in each of its Subsidiaries and (ii) original stock certificates (if any) representing such Capital Stock, all in form and substance satisfactory to the Purchaser.

(m) Closing Date Shares. TRNR shall have delivered to the Purchaser or its designee, the Closing Date Shares pursuant to the Securities Purchase Agreement.

(n) Additional Documents. The Purchaser shall have received each additional document, instrument, legal opinion or other item reasonably requested.

Article 5
CONDITIONS TO OBLIGATIONS OF THE LOAN PARTIES

The obligations of the applicable Loan Parties to issue the Notes and to perform their other obligations hereunder on the Closing Date shall be subject to the reasonable satisfaction as determined by, or waived by, the Borrower of the following conditions on or before the Closing Date:

5.1 Representations and Warranties. The representations and warranties of the Purchaser contained in Article 7 hereof shall be true and correct in all material respects at and as of the Closing Date as if made at and as of such date (and if as of another date, then as of such other date).

5.2 Compliance with this Agreement. The Purchaser shall have performed and complied in all material respects with all of the agreements and conditions set forth or contemplated herein that are required to be performed or complied with by it on or before the Closing Date.

Article 6
REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES

The following representations and warranties by the Borrower to the Purchaser are qualified by the Disclosure Schedules, which set forth certain disclosures concerning the Borrower and its business (provided that any fact or item disclosed with respect to one representation or warranty shall be deemed to be disclosed with respect to each other representation or warranty). The Borrower hereby represents and warrants to the Purchaser as of the date hereof as follows:

6.1 Existence and Power. Each Loan Party that is not a natural Person: (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, (b) has all requisite power and authority to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently, or is currently proposed to be, engaged, except to the extent that the failure to so own, operate, lease or conduct would not reasonably be expected to have a Material Adverse Effect, (c) is duly qualified as a foreign entity, licensed and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business

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requires such qualification, except to the extent that the failure to so qualify would not result in a material liability to the Borrower or any of its Subsidiaries and (d) has the power and authority to execute, deliver and perform its obligations under each Note Document to which it is or will be a party and to borrow hereunder. The jurisdictions in which each Loan Party is organized and qualified to do business as of the Closing Date are listed on Schedule 6.1.

6.2 Corporate Authorization; No Contravention. The execution, delivery and performance by each Loan Party that is not a natural Person of each Note Document to which it is or will be a party and the consummation of the Transactions: (a) has been duly authorized by all necessary action on the part of such Loan Party, (b) do not and will not contravene or violate the terms of the Organizational Documents of any Loan Party or any amendment thereto or any Requirement of Law applicable to any Loan Party or any Loan Party’s assets, business or properties, (c) do not and will not (i) conflict with, contravene, result in any violation or breach of or default under any material Contractual Obligation of any Loan Party (with or without the giving of notice or the lapse of time or both) other than any right to consent, which consents have been obtained, (ii) create in any other Person a right or claim of termination or amendment of any material Contractual Obligation of any Loan Party, or (iii) require modification, acceleration or cancellation of any material Contractual Obligation of any Loan Party which could result in a material adverse effect, and (d) do not and will not result in the creation of any Lien (or obligation to create a Lien) against any property, asset or business of any Loan Party (other than Liens securing the Notes and Permitted Liens).

6.3 Governmental Authorization; Third Party Consents. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or any other Person in respect of any Requirement of Law or material Contractual Obligation, and no lapse of a waiting period under a Requirement of Law or material Contractual Obligation, is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Loan Party (other than any Loan Party that is a natural Person) of the Note Documents to which it is a party or the consummation of the Transactions, except (i) such as have been obtained or made and are in full force and effect, (ii) filings necessary to perfect Liens created by the Loan Documents and (iii) consents, approvals, exemptions, authorizations or other actions that are not material to any Loan Party.

6.4 Binding Effect. Each Loan Party has duly executed and delivered the Note Documents to which it is a party and such Note Documents constitute the legal, valid and binding obligations of such Loan Party enforceable against it in accordance with their respective terms, except as enforceability may be limited by Applicable Insolvency Laws and similar laws of general applicability relating to or affecting creditors’ rights and by general principles of equity.

6.5 Litigation. Except as set forth on Schedule 6.5, there are no legal actions, suits, proceedings, claims or disputes pending or, to the knowledge of any Loan Party, threatened, at law, in equity, in arbitration or before any Governmental Authority against or affecting any Loan Party that could reasonably be expected to have individually or in the aggregate, a Material Adverse Effect. No injunction, writ, temporary restraining order, decree or any order or determination of any nature by any arbitrator, court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of the Note Documents or, to the knowledge of any Loan Party, which relates to the assets or the business of the Loan Parties, is outstanding.

6.6 Compliance with Laws. Except as set forth on Schedule 6.6, each Loan Party is in compliance with all Requirements of Law, except for such noncompliance that could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

6.7 No Default or Breach. No event has occurred and is continuing or would result from the incurring of Obligations by the Loan Parties under the Note Documents which constitutes or, with the giving

 

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of notice or lapse of time or both, would constitute an Event of Default. No Loan Party is in default under or with respect to any material Contractual Obligation.

6.8 Closing Date Acquisition. The Closing Date Acquisition has been consummated in all material respects pursuant to the provisions of the Closing Date Acquisition Documents, true and complete copies of which have been delivered to the Purchaser, and in material compliance with all applicable Law.

6.9 Closing Date Acquisition Documents. Borrowers have provided to the Purchaser true, correct and complete copies of the Closing Date Acquisition Agreement and the other Closing Date Acquisition Documents, including true, correct and complete copies of the final disclosure schedules referenced in and/or attached thereto. To Borrowers’ knowledge, all of the representations and warranties set forth in the Closing Date Acquisition Documents are true and correct in all material respects (or in all respects to the extent the representation or warranty is already qualified by a materiality concept). All of the conditions precedent to the “Closing” as defined in the Closing Date Acquisition Agreement have been fulfilled (or waived to the satisfaction of Purchaser) other than the payment of the purchase price due at such Closing. Immediately upon the funding of the Notes, the “Closing” under the Closing Date Acquisition Agreement shall be consummated in accordance with the terms and conditions thereof and all applicable Laws, without material waiver of any term or condition thereof which has not been consented to by the Purchaser.

6.10 Taxes.

(a) Except as set forth on Schedule 6.10, each Loan Party has timely filed all federal, state and other material Tax Returns that it was required to file. All such Tax Returns were true, correct and complete in all material respects. All federal, state and other material Taxes due and payable by each Loan Party (whether or not shown on any Tax Return) have been paid or adequately reserved for in accordance with GAAP. Except as set forth on Schedule 6.10, no Loan Party is currently the beneficiary of any extension of time within which to file any Tax Return. No Loan Party has ever received a written claim by a Governmental Authority in a jurisdiction where any Loan Party does not file Tax Returns that any Loan Party is or may be subject to taxation by that jurisdiction. There are no Liens on any of the assets of any Loan Party that arose in connection with any failure to timely pay any Tax.

(b) Except as set forth on Schedule 6.10, there is no action, suit, proceeding, investigation, examination, audit, or claim now pending or, to the knowledge of any Loan Party, threatened by any Governmental Authority regarding any Taxes relating to any Loan Party. No Loan Party has entered into an agreement or waiver extending any statute of limitations relating to the payment or collection of Taxes of such Person. No Loan Party has incurred, or will incur, any material Tax liability in connection with the Transactions.

6.11 CLMBR Sales Projections. Attached as Schedule 6.11 is the pro forma projected sales for all inventory of CLMBR for the fiscal year 2024 (the “CLMBR Sales Projections”). Such CLMBR Sales Projections represent the Borrowers’ good faith estimate of future performance.

6.12 Environmental Compliance.

(a) Hazardous Materials. No Hazardous Materials (i) are currently located on any properties owned, leased or operated by any Loan Party or any of its Subsidiaries in violation of any Environmental Law, or (ii) have been released by any Loan Party, or to the Loan Parties’ knowledge, any other Person, into the environment, or deposited, discharged, placed or disposed of at, on, under or near any of such properties in a manner that would require the taking of any action under any Environmental Law

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and have given rise to, or could reasonably be expected to give rise to, remediation costs and expenses on the part of the Loan Parties and Subsidiaries in excess of $100,000. No portion of any such property is being used, or, to the knowledge of any Loan Party, has been used at any previous time, for the disposal, storage, treatment, processing or other handling of Hazardous Materials in material violation of any Environmental Law nor to the Loan Parties’ knowledge is any such property affected by any Hazardous Materials Contamination. All written notifications of a release of Hazardous Materials required to be filed by or on behalf of any Loan Party or any of their respective Subsidiaries under any applicable Environmental Law have been filed or are in the process of being timely filed by or on behalf of the applicable Loan Party or Subsidiary.

(b) Notices Regarding Environmental Compliance. No notice, notification, demand, request for information, citation, summons, complaint or order has been issued, no complaint has been filed, no penalty has been assessed and no investigation or review is pending, or to Borrowers’ knowledge, threatened by any Governmental Authority or other Person with respect to any (i) alleged violation by any Loan Party or any of their respective Subsidiaries of any Environmental Law, (ii) alleged failure by any Loan Party or any such Subsidiary to have any Permits required by applicable Environmental Law for the conduct of its business or to comply with the terms and conditions thereof, (iii) any generation, treatment, storage, recycling, transportation or disposal of any Hazardous Materials or (iv) release of Hazardous Materials, in each case, that would reasonably be expected to have a Material Adverse Effect

(c) Properties Requiring Remediation. No property now owned or leased by any Loan Party or any of their respective Subsidiaries and, to Borrowers’ knowledge, no such property previously owned or leased by any Loan Party or any such Subsidiary, to which any Loan Party or any such Subsidiary has, directly or indirectly, transported or arranged for the transportation of any Hazardous Materials, is listed or, to Borrowers’ knowledge, proposed for listing, on the National Priorities List promulgated pursuant to CERCLA, or CERCLIS (as defined in CERCLA) or any state list or is the subject of federal, state or local enforcement actions or other investigations which may lead to claims against any Loan Party or any such Subsidiary for clean‑up costs, remedial work, damage to natural resources or personal injury claims, including, but not limited to, claims under CERCLA or RCRA.

(d) Underground Storage Tanks. Except in each case as set forth on Schedule 6.12, no Loan Party or Subsidiary operates any underground storage tanks on any property owned or leased by any Loan Party or any of their respective Subsidiaries that (i) are not registered or permitted in accordance with applicable Environmental Laws or (ii) a Loan Party or Subsidiary is required to monitor, maintain, retrofit, upgrade, investigate, abate, remediate or remove under Environmental Law.

(e) Environmental Liens. Except in each case as set forth on Schedule 6.12, there are no Liens under or pursuant to any applicable Environmental Laws on any real property or other assets owned by any Loan Party or any of their respective Subsidiaries, and to the Loan Parties’ knowledge no actions by any Governmental Authority have been taken or are in process which could subject any of such properties or assets to such Liens.

For purposes of this Section 6.12, each Loan Party and each of their respective Subsidiaries shall be deemed to include any business or business entity (including a corporation) which is, in whole or in part, a predecessor of such Person for whose conduct such Loan Party or such Subsidiary bears liability by contract or by operation of law.

6.13 [Reserved].

6.14 Investment Company/Government Regulations. The Borrower is not an “investment company” within the meaning of the Investment Company Act of 1940, as amended. No Loan Party is subject to regulation under the Public Utility Holding Company Act of 1935, as amended, the Federal Power

 

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Act, the Interstate Commerce Act, or any federal or state statute or regulation limiting its ability to incur Debt.

6.15 [Reserved].

6.16 Capitalization. As of the Closing Date, after giving effect to the transactions contemplated under the Note Documents, the number of shares of issued and outstanding Capital Stock for each Borrower and each Subsidiary thereof shall be as set forth on Schedule 6.16, and such shares of Capital Stock are owned by the Persons in the respective amounts set forth on Schedule 6.16. All such outstanding Capital Stock has been duly authorized by all necessary action of the Borrower or such Subsidiary and has been validly issued and is free and clear of all Liens (other than Liens permitted under the Note Documents). The issuance of the foregoing Capital Stock is not and has not been subject to preemptive rights in favor of any Person other than such rights that have been waived and will not result in the issuance of any additional Capital Stock of the Borrower or any Subsidiary or the triggering of any anti-dilution or similar rights contained in any options, warrant, debentures or other securities or agreements of the Borrower or such Subsidiary. On the Closing Date, there will be no outstanding securities convertible into or exchangeable for Capital Stock of the Borrower or any Subsidiary or options, warrants or other rights to purchase or subscribe to Capital Stock of the Borrower or any Subsidiary or contracts, commitments, agreements, understandings or arrangements of any kind to which any Loan Party is a party (other than the Organizational Documents of such Loan Party) relating to the issuance of any Capital Stock of such Loan Party, any such convertible or exchangeable securities or any such options, warrants or rights.

6.17 Private Offering. No form of general solicitation or general advertising was used by any Loan Party or its representatives in connection with the offer or sale of the Notes to the Purchaser pursuant to this Agreement. Assuming the accuracy of the Purchaser’s representations and warranties contained in Article 7, no registration of the Notes pursuant to the provisions of the Securities Act or the state securities or “blue sky” laws will be required for the offer, sale or issuance of the Notes by any Loan Party to the Purchaser pursuant to this Agreement.

6.18 Broker’s, Finder’s or Similar Fees. Except as set forth on Schedule 6.18, there are no brokerage commissions, finder’s fees or similar fees or commissions payable in connection with the Transactions based on any agreement, arrangement or understanding with any Loan Party or any action taken by any Loan Party.

6.19 Labor Relations. No Loan Party is a party to any collective bargaining agreement.

6.20 Employee Benefit Plans. Within the five-consecutive-year period immediately preceding the first day of the year in which the Closing Date occurs neither any Loan Party nor any ERISA Affiliate thereof has contributed to, or has any actual or contingent, direct or indirect, liability in respect of, any employee benefit plan (as defined in Section 3(3) of ERISA) or other employee benefit arrangement.

6.21 Intellectual Property.

(a) Ownership and Use. Each Loan Party owns or has the right to use all Intellectual Property it currently uses in the operation of the business of the Borrower as presently conducted. Each item of Intellectual Property owned, licensed or used by any Loan Party immediately prior to the Closing will be owned, licensed or available for use by such Loan Party on substantially similar terms and conditions immediately following the Closing. The Loan Parties have taken commercially reasonable action to maintain and protect each item of Intellectual Property that it owns, licenses or uses. To the knowledge of the Loan Parties, each item of Intellectual Property owned, licensed or used by such Loan Party is valid and

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enforceable and otherwise fully complies in all material respects with all laws applicable to the enforceability thereof. However, the Loan Parties have not conducted any invalidity or enforceability searches or studies.

(b) No Violation or Infringement. No Loan Party has violated or infringed upon or otherwise come into conflict with any Intellectual Property of third parties, and no Loan Party has received any notice alleging any such violation, infringement or other conflict. To the knowledge of each Loan Party, no third party has infringed upon or otherwise come into conflict with any Intellectual Property of any Loan Party.

(c) Intellectual Property Listing. Schedule 6.21(c) identifies each patent or registration (including copyright, trademark, service mark and domain name) owned by a Loan Party (which is active and in force) with respect to any of such Loan Party’s Intellectual Property, identifies each patent application or application for registration (including pending applications) that such Loan Party has made with respect to any of its Intellectual Property, and identifies each material license, agreement or other permission that such Loan Party has granted to any third party (whether active and in force) with respect to any of its Intellectual Property. Schedule 6.21(c) also identifies each trade name or unregistered trademark or service mark owned by each Loan Party. With respect to each item of Intellectual Property required to be identified in Schedule 6.21(c) and except as expressly set forth on Schedule 6.21(c): (i) each Loan Party possesses all right, title and interest in and to the item, free and clear of any Liens other than Permitted Liens; (ii) the item is not subject to any order, award, decision, injunction, judgment, ruling, decree, charge, writ, subpoena or verdict entered, issued, made or rendered by any Governmental Authority or arbitrator (each, an “Order”); (iii) no proceeding, charge, complaint, claim, demand, notice, action, suit, litigation, hearing, audit, investigation, arbitration or mediation (in each case, whether civil, criminal, administrative, investigative or informal) is pending before any Governmental Authority, arbitrator or mediator (each, a “Proceeding”) or, to the knowledge of each Loan Party, is threatened or anticipated that challenges the legality, validity, enforceability, use or ownership of the item; and (iv) no Loan Party has agreed to indemnify any Person for or against any interference, infringement, misappropriation or other conflict with respect to the item.

(d) Intellectual Property Licenses. Schedule 6.21(d) identifies each item of Intellectual Property other than off the shelf software that any Person other than any Loan Party owns and that such Loan Party uses pursuant to license, agreement or permission (an “Intellectual Property License”). With respect to each item of Intellectual Property required to be identified on Schedule 6.21(d) and except as expressly set forth on Schedule 6.21(d): (i) to the knowledge of each Loan Party, such item is not subject to any Order; (ii) to the knowledge of each Loan Party, no Proceeding is pending or is threatened or anticipated that challenges the legality, validity or enforceability of such item; and (iii) such Loan Party has not granted any sublicense or similar right with respect to the Intellectual Property License relating to such item.

6.22 Potential Conflicts of Interest. Other than as set forth on Schedule 6.22, no officer, director or manager (or equivalent Person), partner, stockholder or other security holder of the Borrower or any Subsidiary: (a) is an officer, director, manager, employee or consultant of, any Person that is, or is engaged in business as, a competitor, lessor, lessee, supplier, distributor, sales agent or customer of, or lender to or borrower from, the Borrower or its Subsidiaries; (b) has been a party to any material transaction with the Borrower or any Subsidiary; (c) owns, directly or indirectly, in whole or in part, any tangible or intangible property that the Borrower or any Subsidiary uses or contemplates using in the conduct of business; or (d) has any cause of action or other claim whatsoever against, or owes or has advanced any amount to the Borrower or any Subsidiary, except for advances in the ordinary course of business such as for accrued vacation pay, accrued benefits under employee benefit plans, reasonable and customary expense reimbursements, and similar matters and agreements existing on the date hereof.

 

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6.23 [Reserved].

6.24 Debt. Schedule 6.24 lists (a) the amount of all Debt of the Loan Parties and their Subsidiaries (other than Debt under this Agreement and any Debt being repaid on the date hereof) as of the Closing, (b) the Liens that relate to such Debt and that encumber the assets of such Persons, (c) the name of each lender thereof, and (d) the amount of any unfunded commitments, if any, available to such Persons in connection with any such Debt facilities.

6.25 Material Contracts. Schedule 6.25 lists all written contracts, agreements, commitments and other Contractual Obligations of the Loan Parties as of the Closing Date, other than (a) the Note Documents, (b) purchase orders in the ordinary course of business, and (c) any other written contracts, agreements, commitments and other Contractual Obligations of any Loan Party that do not extend beyond one year or involve the receipt or payment of not more than $100,000 in any one year. Except as set forth on Schedule 6.25, each of the contracts, agreements, commitments and other Contractual Obligations of any Loan Party required to be set forth on Schedule 6.25 is in full force and effect. Except as set forth on Schedule 6.25, each Loan Party has satisfied in full or provided for all of its liabilities and obligations under each material Contractual Obligation requiring performance prior to the date hereof in all material respects, and is not in default under any of them, nor does any condition exist that with notice or lapse of time or both would constitute such a default. To the knowledge of each Loan Party, no other party to any such material Contractual Obligation is in default thereunder, nor does any condition exist that with notice or lapse of time or both would constitute such a default. Except as set forth on Schedule 6.25, no approval or consent of any Person is needed for the material Contractual Obligations to continue to be in full force and effect after giving effect to the Transactions.

6.26 Insurance. The properties of each Loan Party are insured with financially sound and reputable insurance companies that are not Affiliates of any Loan Party, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in locations where each Loan Party operates. Schedule 6.26 accurately summarizes all of the insurance policies or programs of the Loan Parties in effect as of the date hereof, and indicates the insurer’s name, policy number, expiration date, amount of coverage, type of coverage, annual premiums, exclusions and deductibles, and also indicates any self-insurance program that is in effect. All such policies will remain in full force and effect and will not terminate or lapse by reason of any of the Transactions.

6.27 Solvency. As of the Closing Date, after giving effect to the Transactions and the other transactions contemplated hereby to be consummated on the Closing Date in accordance with the terms hereof, each Loan Party is and each of the Borrower’s Subsidiaries are, individually, Solvent.

6.28 Licenses and Approvals. Except as set forth on Schedule 6.28 hereto, no Loan Party is a party to and has no knowledge of any investigation, notice of apparent liability, violation, forfeiture or other order or complaint issued by or before any court or regulatory body or of any other proceedings which could be reasonably expected to materially and adversely affect the validity or continued effectiveness of the material Licenses of any Loan Party. No Loan Party has reason to believe that such material Licenses will not be renewed in the ordinary course. Each Loan Party has filed in a timely manner all material reports, applications, documents, instruments and information required to be filed by it pursuant to applicable rules and regulations or requests of every regulatory body having jurisdiction over any of its material Licenses.

6.29 OFAC. Neither any Loan Party nor any Affiliate of any Loan Party: (a) is a Sanctioned Person, (b) has any assets in Sanctioned Entities, or (c) derives any operating income from investments in,

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or transactions with Sanctioned Persons or Sanctioned Entities. The proceeds of the Notes will not be used and have not been used to fund any operations in, finance any investments or activities in, or make any payments to, a Sanctioned Person or a Sanctioned Entity.

6.30 Disclosure. This Agreement, together with all exhibits and schedules hereto, the Note Documents, and the agreements, certificates and other documents furnished to the Purchaser by any Loan Party at the Closing, do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which they were made, not misleading.

6.31 No Default. No Default or Event of Default exists or would result from the incurring of the Obligations by any Loan Party or the grant or perfection of the Liens on the Collateral or the consummation of the Transactions.

6.32 Government Contracts. The Borrower is not party to any Government Contracts.

Article 7
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser hereby represents and warrants as follows:

7.1 Authorization; No Contravention. The execution, delivery and performance by the Purchaser of this Agreement: (a) is within its power and authority and has been duly authorized by all necessary action; and (b) does not contravene or violate the terms of its organizational documents or any amendment thereof.

7.2 Binding Effect. This Agreement has been duly executed and delivered by the Purchaser and this Agreement constitutes the Purchaser’s legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’ rights generally or by equitable principles relating to enforceability.

7.3 No Legal Bar. The execution, delivery and performance of this Agreement by the Purchaser will not violate any Requirements of Law applicable to it.

7.4 Securities Laws.

(a) The Notes are being or will be acquired by the Purchaser hereunder for its own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof in any transaction which would be in violation of state or federal securities laws or which would require the issuance and sale of the Notes hereunder to be registered under the Securities Act, subject, however, to the disposition of the Purchaser’s property being at all times within its control.

(b) The Purchaser is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

(c) The Purchaser understands that (i) the Notes constitute “restricted securities” under the Securities Act, (ii) the offer and sale of the Notes hereunder is not registered under the Securities Act or under any “blue sky” laws in reliance upon certain exemptions from such registration and that the Borrower is relying on the representations made herein by the Purchaser in its determination of whether such specific exemptions are available, and (iii) the Notes may not be transferred except pursuant to an

 

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effective registration statement under the Securities Act, or under an exemption from such registration available under the Securities Act and under applicable “blue sky” laws or in a transaction exempt from such registration.

7.5 Governmental Authorization; Third Party Consent. No approval, consent, compliance, exemption or authorization of any Governmental Authority or any other Person in respect of any Requirements of Law, and no lapse of a waiting period under Requirements of Law, is necessary or required in connection with the execution, delivery or performance by it or enforcement against the Purchaser of this Agreement.

Article 8
AFFIRMATIVE COVENANTS

Until the payment in full in Cash of all of the Obligations, the Loan Parties hereby jointly and severally covenant and agree with the Holders as follows:

8.1 Delivery of Financial and Other Information. The Borrower shall deliver or cause to be delivered to each Holder the following:

(a) If the Borrower or any Subsidiary shall be required to file reports with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act, promptly upon its becoming available, one copy of each financial statement, report, notice or proxy statement sent by any such Person to stockholders generally, and, a copy of each annual, periodic or current report filed by any such Person with the Commission pursuant to such Sections, and any registration statement, or prospectus in respect thereof, filed by any such Person with any securities exchange or with federal or state securities and exchange commissions or any successor agency; provided, however, that nothing in this Section 8.1(d) shall require the Borrower or any of its Subsidiaries to make any filing under the Securities Act or the Exchange Act which the Borrower or its Subsidiaries are not otherwise obligated to make.

(b) On the first Business Day of each calendar month until the issuance of a Disclosure Notice, (i) a monthly sales report with respect to the preceding month, in form and substance satisfactory to the Required Holders, setting forth the inventory of CLMBR sold by month since the Closing Date and average sale price of such inventory by product or model, with comparative figures for the corresponding months set forth in the CLMBR Sales Projections and (ii) a monthly revenue report setting forth the total CLMBR Subscription Revenue by month since the Closing Date, in each case, all in reasonable detail and certified by an officer of Borrower as being true and correct.

(c) Such other information (including non-financial information) as any Holder may from time to time reasonably request.

8.2 Use of Proceeds. The Borrower shall use the proceeds of the Notes hereunder only as follows: (i) first, for the payment of fees and expenses in connection with the transactions contemplated hereunder and in the other Note Documents, (ii) second, to fund a portion of the cash purchase price of the Closing Date Acquisition and (iii) for general working capital.

8.3 Notice of Default. Promptly, and in any event within two (2) Business Days of becoming aware, each Loan Party will give notice in writing to the Holders upon becoming aware of the following: (a) the occurrence of any Default or Event of Default under this Agreement and specify the nature and period of existence thereof and what action such Loan Party is taking (and proposes to take) with respect thereto and (b) any development or other information outside the ordinary course of business of such Loan

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Party or any of its Subsidiaries and excluding matters of a general economic, financial or political nature which could reasonably be expected to have a Material Adverse Effect.

8.4 Conduct of Business. The Borrower and its Subsidiaries will, and will cause each of its Subsidiaries to, carry on and conduct its business in substantially the same manner and in substantially the same fields of enterprise as it is presently conducted and do all things necessary to remain duly incorporated or organized, validly existing and (to the extent such concept applies to such entity) in good standing as a domestic corporation, partnership or limited liability Borrower in its jurisdiction of incorporation or organization, as the case may be, and maintain all requisite authority to conduct its business in each jurisdiction in which its business is conducted to the extent that the failure to maintain such qualification would not reasonably be expected to have a Material Adverse Effect.

8.5 Taxes and Claims. Each Loan Party will, and will cause each of its Subsidiaries to, timely file all federal and state and other material Tax Returns required by law and will pay when due all Taxes of such Loan Party or such Subsidiary, except those which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves have been set aside in accordance with GAAP, which deferment of payment is permissible so long as no Lien other than a lien permitted hereunder has been entered and such Loan Party’s and its Subsidiaries’ title to, and its right to use, its Properties are not materially adversely affected thereby.

8.6 Insurance.

(a) Each Loan Party will, and will cause each of its Subsidiaries to, maintain insurance in such form and with such companies as are reasonably satisfactory to the Purchaser (it being acknowledged that the Loan Parties’ and Subsidiaries’ insurance companies as of the Closing Date are satisfactory), on all its Property in such amounts and covering such risks as is consistent with sound business practice, and maintain such insurance as is required by the terms of any Collateral Document. Each Loan Party will, and will cause each of its Subsidiaries to, furnish to the Holders upon request full information as to the insurance carried by it.

(b) Each Loan Party will, and will cause each of its Subsidiaries to, at all times keep its real and personal Property which is subject to the Lien of the Holders insured and cause such insurance relating to such Property or business to name the Purchaser as an additional insured and loss payee, as appropriate. At or prior to the Closing, each Loan Party shall furnish certificates of insurance issued on applicable Acord Forms for such Loan Party.

(c) If any Loan Party or any of its Subsidiaries shall fail to maintain all insurance in accordance with this Section 8.6 or Section 8.13 or to timely pay or cause to be paid the premium(s) on any such insurance, or if any Loan Party shall fail to deliver all certificates with respect thereto, the Purchaser shall have the right (but shall be under no obligation), upon prior written notice to such Loan Party or such Subsidiary, to procure such insurance or pay such premiums, and such Loan Party agrees to reimburse the Purchaser, on demand, for all costs and expenses relating thereto.

8.7 Compliance with Laws. Each Loan Party will, and will cause each of its Subsidiaries to, comply with any and all Requirements of Law to which it may be subject including, without limitation, all Environmental Laws and obtain any and all licenses, permits, franchises or other governmental authorizations necessary to the ownership of its Property or to the conduct of its businesses, except where failure to do so could not reasonably be expected to have a Material Adverse Effect. Each Loan Party will, and will cause each of its Subsidiaries to, timely satisfy all material assessments, fines, costs and penalties imposed (after exhaustion of all appeals, provided a stay has been put in effect during such appeal) by any Governmental Authority against such Person or any Property of such Person.

 

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8.8 Maintenance of Properties. Each Loan Party will, and will cause each of its Subsidiaries to, do all things necessary to maintain, preserve, protect and keep its Property (other than Property that is obsolete, surplus, or no longer used or useful in the ordinary conduct of its business) in good repair, working order and condition, make all necessary and proper repairs, renewals and replacements such that its business can be carried on in connection therewith and be properly conducted at all times and pay and discharge when due the cost of repairs and maintenance to its Property, and pay all rentals when due for all real estate leased by such Person.

8.9 Audits and Inspection. Each Loan Party will, and will cause each of its Subsidiaries to, (i) permit any of the representatives of the Purchaser, at reasonable times during normal business hours and upon two (2) days’ prior notice not more frequently than once per Fiscal Quarter, to visit and inspect any of its Property, books of account, records and reports to examine, audit and make copies thereof and (ii) promptly upon request thereof, but not less than weekly, schedule and hold calls with the senior management of the Borrower, and to discuss its affairs, finances and accounts with, and to be advised as to the same by, its officers, employees and independent certified public accountants at such reasonable times and intervals as the Purchaser may designate, in each case, at such Loan Party’s expense, plus the Purchaser’s reasonable out-of-pocket expenses (including without limitation any travel expenses).

8.10 Issue Taxes. Each Loan Party shall pay all stamp duty or other court, documentary, intangible, recording, filing, or similar Taxes, if any, in connection with any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, the Notes, excluding, for the avoidance of doubt, any income Tax.

8.11 Delivery of Information by Holders. Each Holder is hereby authorized, to deliver a copy of any financial statement or other information made available by the Loan Parties or their Subsidiaries in connection herewith to any regulatory authority having jurisdiction over such Holder, pursuant to any request therefor by such regulatory authority, and may further divulge to any assignee or purchaser of any portion of the Notes or any prospective assignee or purchaser of any portion of the Notes, all information, and furnish to such Person copies of any reports, financial statements, certificates, and documents obtained under any provision of this Agreement, or related agreements and documents, provided that such prospective assignee or purchaser shall agree to maintain the confidentiality of such information.

8.12 Execution of Supplemental Documents. Each Loan Party will, and will cause each of its Subsidiaries to, execute and deliver to the Purchaser from time to time, upon demand, such supplemental agreements, statements, assignments and transfers, or instructions or documents relating to the Collateral, and such other instruments as the Purchaser may reasonably request, in order that the full intent of this Agreement or the Security Agreement, as applicable, may be carried into effect.

8.13 Post Closing Covenants.

(a) Deposit Account Control Agreements. Within forty-five (45) days, (or such longer period as may be agreed to by the Purchaser acting in its sole discretion) after the Closing Date, each Loan Party agrees to deliver or to cause to be delivered to the Purchaser, in form and substance reasonably satisfactory to the Purchaser, a control agreement for each deposit account (excluding Excluded Deposit Accounts) (as defined in the Security Agreement)).

(b) Insurance Endorsements. Within thirty (30) days (or such longer period as may be agreed to by the Purchaser acting in its sole discretion) after the Closing Date, each Loan Party agrees to deliver or cause to be delivered to the Purchaser the insurance endorsements required by Section 8.6.

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(c) [Reserved].

(d) Lockbox Control Agreement. Within five (5) Business Days (or such longer period as may be agreed to by the Purchaser acting in its sole discretion) following the Closing Date, CLMBR agrees to deliver or to cause to be delivered to the Purchaser the CLMBR Lockbox Control Agreement.

(e) Confession of Judgement. Within ten (10) days (or such longer period as may be agreed to by the Purchaser acting in its sole discretion) following the Closing Date, the Borrower agrees to deliver or to cause to be delivered to the Purchaser a wet-ink duly executed and notarized copy of the confession of judgement attached to the Guaranty Agreement, in form and substance acceptable to Purchaser.

8.14 Further Assurances. Each Loan Party will, and will cause each of its Subsidiaries to, take any action reasonably requested by the Purchaser in order to effectuate the purposes and terms contained in this Agreement and any of the Note Documents.

8.15 Payment Account. The Borrower shall direct, or shall cause the direction of all proceeds of the CLMBR Subscription Revenue and any proceeds of the Collateral of CLMBR to be remitted directly to the Payment Account promptly (and in any event, within one (1) Business Day) upon receipt thereof.

8.16 Vertical Investors Credit Enhancements. If any holder of the Vertical Investors Debt receives any additional guaranty or other credit enhancement after the Closing Date from any Loan Party or Subsidiary thereof that has not also been provided to the Holders, without limitation of any Event of Default that may arise as a result thereof, the Borrowers shall cause the same to be granted to the Holders, subject to the terms of the Vertical Investors Subordination Agreement.

8.17 Securities Law Disclosure; Non-Public Information.

(a) Upon written notice of request therefore by Purchaser (such notice, a “Disclosure Notice”), TRNR shall, by 9:00 a.m. (New York City time) on the second (2nd) Business Day immediately following the Closing Date, shall file a Current Report on Form 8-K disclosing any and all material, non-public information delivered to any of the Purchaser or Holders by TRNR or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Note Documents. From and after the filing of such Form 8-K, the Borrower represents to the Holders that it shall have publicly disclosed all material, non-public information delivered to any of the Purchaser and Holders by the Borrower or any of their respective Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Note Documents.

(b) From and after the issuance of a Disclosure Notice, except with respect to the material terms and conditions of the transactions contemplated by the Note Documents, the Borrower covenants and agrees that neither it, nor any other Person acting on its behalf, will provide the Purchaser, Holders or any of their respective agents or counsel with any information that the Borrower believes constitutes material non-public information, unless prior thereto the Purchaser and/or Holders shall have entered into a written agreement with the Borrower regarding the confidentiality and use of such information. The Borrower understands and confirms that the Purchaser and Holders shall be relying on the foregoing covenant in effecting transactions in securities of the Borrower.

8.18 Hazardous Materials. No Loan Party will, or will permit any Subsidiary to, cause or suffer to exist any release or discharge of any Hazardous Material at, to or from any real property owned or

 

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operated by a Loan Party or a Subsidiary that would violate any Environmental Law, other than such violations that would not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

8.19 Securities Purchase Agreement. Each representation and warranty of TRNR in the Securities Purchase Agreement (each of which is hereby incorporated by reference) is true and correct in all material respects (without duplication of any materiality qualifiers contained therein) as of the date hereof, as qualified by the Disclosure Schedules (as defined in the Securities Purchase Agreement). All such representations and warranties shall be read mutatis mutandis.

 

8.20 Shareholder Approval. Within thirty (30) days following the Closing Date, the Company shall obtain the Shareholder Approval. For the purposes hereof “Shareholder Approval” means the approval of the holders of a sufficient amount of holders of the Common Stock to satisfy the shareholder approval requirements for such action as provided in Nasdaq Listing Rule 5635(a), to effectuate the issuance of the Conversion Shares and Warrant Shares in excess of the Maximum Amount (the “Exchange Cap”). Without limiting the forgoing, the Company shall hold a special meeting of shareholders on or before the date that is thirty (30) calendar days after the date that the Exchange Cap is reached for any Holder, for the purpose of obtaining the Shareholder Approval, with the recommendation of the Company’s board of directors that such proposal be approved, and the Company shall solicit proxies from its shareholders in connection therewith in the same manner as all other management proposals in such proxy statement and all management-appointed proxyholders shall vote their proxies in favor of such proposal. The Company shall use its reasonable best efforts to obtain such Shareholder Approval. If the Company does not obtain Shareholder Approval at the first meeting, the Company shall call a meeting as often as possible thereafter to seek Shareholder Approval until the Shareholder Approval is obtained. Until such approval is obtained, the Holder shall not be issued shares of Common Stock in an amount greater than the Exchange Cap.

 

Article 9
NEGATIVE COVENANTS

Until the payment in full in Cash of all of the Obligations, the Loan Parties hereby jointly and severally covenant and agree with the Holders as follows:

9.1 Limitations on Debt. No Loan Party shall, nor shall any Loan Party permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Debt, without the Purchaser’s prior written consent (which may be withheld in Purchaser’s sole discretion), except for (a) the Obligations, (b) the Vertical Investors Debt, (c) the obligations under the Behar Settlement Agreement or (d) Debt subordinated to the Obligations hereunder on terms and conditions acceptable to the Purchaser in its sole discretion, including, without limitation, the Subordinated Debt.

9.2 Liens. No Loan Party shall, nor shall any Loan Party permit any of its Subsidiaries to, create or permit to exist any Lien on any of its real or personal properties, assets or rights of whatsoever nature (whether now owned or hereafter acquired), except:

(a) Liens for Taxes or other governmental charges not at the time delinquent or thereafter payable without penalty or being contested in good faith by appropriate proceedings and, in each case, for which it maintains adequate reserves in accordance with GAAP;

(b) Liens on assets arising out of pledge or deposits under workers’ compensation, unemployment insurance, pension, social security, retirement benefits or similar legislation in the ordinary course of business consistent with past practice;

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(c) capital leases to the extent permitted under Section 9.1;

(d) Liens subordinated to the Liens securing the Obligations on terms and conditions acceptable to Purchaser in its sole discretion;

(e) Liens securing the Obligations;

(f) Liens granted on the assets of TRNR securing the Vertical Investors Debt;

(g) deposits to secure the performance of bids, trade contracts and leases (other than Debt), statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(h) easements, rights-of-way, restrictions and other similar encumbrances affecting real property which, in the aggregate, are not substantial in amount, and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the applicable Person;

(i) Liens securing judgments for the payment of money not constituting an Event of Default under Section 11.1(j);

(j) any interest of title of a lessor under, and Liens arising from UCC financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) relating to, leases permitted by this Agreement;

(k) Liens (including the right of set-off) in favor of a bank or other depository institution arising as a matter of law encumbering deposits; and

(l) Liens of a collecting bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection.

9.3 Restricted Payments. Except for (1) dividends and distributions to TRNR to the extent necessary to permit TRNR to maintain its legal existence and to pay reasonable out-of-pocket general administrative costs and expenses incurred in connection therewith, which are disclosed to the Holders not later than five (5) Business Days prior to the payment thereof and (2) payments by TRNR required to be made pursuant to the 3i Transaction Documents, which are disclosed to the Holders upon payment thereof, none of the Borrower nor any of its Subsidiaries shall (a) declare or pay any dividends on any of its Capital Stock, (b) purchase or redeem any Capital Stock, (c) make any other distribution to holders of its Capital Stock, (d) prepay, purchase or redeem any other Debt that is subordinated to the Obligations, or (e) set aside funds for any of the foregoing.

9.4 Loans. The Borrower shall not, nor shall the Borrower permit any of its Subsidiaries to, make any loans or pay any advances of any nature whatsoever to any Person, except advances in the ordinary course of business to (a) other Loan Parties, vendors, suppliers and contractors and (b) officers, managers and employees for travel and other business expenses in accordance with the policies of the Borrower or such Subsidiary as in effect on the date hereof.

9.5 Investments. No Loan Party shall, nor shall any Loan Party permit any of its Subsidiaries to, make or suffer to exist any investments or commitments therefor, without the Purchaser’s prior written consent of the required holders, except (a) Cash Equivalents (b) extensions of credit in the nature of accounts receivable or notes receivable arising from the sales of goods or services to unaffiliated third parties in the ordinary course of business; (c) investments received in connection with any Insolvency

 

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Proceedings in respect of any customers, suppliers or clients of the Borrower; (d) investments in the Subsidiaries existing on the date hereof; and (e) Capital Expenditures permitted by Section 9.11.

9.6 Mergers, Consolidations, Sales. No Loan Party shall, nor shall any Loan Party permit any of its Subsidiaries to, without the prior written consent of the Required Holders, be a party to any merger or consolidation, or purchase or otherwise acquire all or substantially all of the assets or any stock of any class of, or any partnership or joint venture interest in, any other Person, or, except in the ordinary course of its business, sell, transfer, convey or lease all or any substantial part of its assets, unless in connection with any such transaction all amounts owing under the Notes are paid in full. Notwithstanding the foregoing provisions of this Section 9.6, (a) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower and (b) any Subsidiary of the Borrower may sell, lease, transfer or otherwise dispose of its Property (upon voluntary liquidation or otherwise) to the Borrower.

9.7 Subsidiaries. The Borrower shall not create any Subsidiary or invest in or acquire minority interests in any other entity without the prior written consent of the Required Holders. Subject to the first sentence of this Section 9.7, if any Loan Party creates, forms or acquires any Subsidiary on or after the Closing Date, such Subsidiary shall become a Loan Party hereunder and agrees to assume all obligations of Borrower hereunder as if such Subsidiary was an issuer of the Note on the Closing Date. The Borrower will promptly thereafter (and in any event within three (3) days after such creation or acquisition), cause such Person to (i) grant to the Purchaser a perfected security interest in, and Lien on, all Collateral owned by such Person by delivering to the Purchaser a duly executed supplement to each Collateral Document or such other document as the Purchaser shall deem appropriate for such purpose and comply with the terms of each Collateral Document, (ii) deliver to the Purchaser such original Capital Stock or other certificates and stock or other transfer powers evidencing the Capital Stock of such Person (if such Capital Stock is certificated), (iii) if such Capital Stock is not certificated, deliver an irrevocable proxy and other documentation reasonably requested by the Purchaser to perfect the Purchaser’s security interest in such Capital Stock, in form and substance reasonably satisfactory to the Purchaser, (iv) execute a joinder to this Agreement joining such Subsidiary as an issuer of the Note, as if such Subsidiary had been an issuer of the Note on the Closing Date, (v) deliver to the Purchaser such documents and certificates referred to in Section 4.1 as may be reasonably requested by the Purchaser, (vi) deliver to the Purchaser such updated schedules to the Note Documents as requested by the Purchaser with regard to such Person and (vii) deliver to the Purchaser such other documents as may be reasonably requested by the Purchaser, in each case, in form, content and scope reasonably satisfactory to the Purchaser.

9.8 Amendment to Organizational Documents. The Borrower will not, nor will it permit any of its Subsidiaries to amend, modify or waive any term or material provision of such Person’s Organizational Documents unless (a) required by law or (b) such amendment, modification or waiver could not reasonably be expected to have a Material Adverse Effect on the Holders’ rights under the Note Documents (including in their capacity as holders of the Capital Stock of the Borrower) or any Loan Party’s obligations under the Note Documents, and the Loan Parties provide the Holders not less than ten (10) Business Days’ prior written notice of such amendment, modification or waiver.

9.9 Restrictive Agreements. No Loan Party will be or become, or cause or permit any Subsidiary to be or become, a party to any contract or agreement which at the time of becoming a party to such contract or agreement materially limits such Person’s ability to perform under this Agreement or under any other Note Document without the prior written consent of the Required Holders.

9.10 Capital Expenditures. No Loan Party shall make, or cause or permit any Subsidiary to make, any Capital Expenditure or enter into any Capitalized Lease if the aggregate amount of all Capital Expenditures (including the Capital Expenditure in question) made by the Loan Parties and their Subsidiaries, determined on a consolidated basis, during any Fiscal Year made or required to be made by

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the Loan Parties and their Subsidiaries, determined on a consolidated basis during such Fiscal Year would exceed $100,000.

9.11 Transactions with Affiliates.

(a) No Loan Party shall, nor permit any of its Subsidiaries to, directly or indirectly enter into or permit to exist any material transaction with any Affiliate of any Loan Party or any of its Subsidiaries except for the transactions set forth on Schedule 9.11 or other transactions that are in the ordinary course of any Loan Parties’ and its Subsidiaries’ business, upon fair and reasonable terms that are no less favorable to such Loan Party or such Subsidiary than would be obtained in an arm’s length transaction with a non-affiliated Person.

(b) Without limitation of the foregoing, each Loan Party shall strictly enforce all non-compete or similar agreements between such Loan Party and its employees, officers, directors and Affiliates, and shall not permit any such Person to conduct any business in competition with or relating to the business of any Loan Party except through and for the benefit of the Loan Parties.

9.12 Additional Negative Pledges. Create or otherwise cause or suffer to exist or become effective, directly or indirectly, (a) any prohibition or restriction (including any agreement to provide equal and ratable security to any other Person in the event a Lien is granted to or for the benefit of Purchaser or the Holders) on the creation or existence of any Lien upon the assets of the Borrower or any Subsidiary, other than or (b) any Contractual Obligation which may restrict or inhibit Purchaser’s rights or ability to sell or otherwise dispose of the Collateral or any part thereof after the occurrence of an Event of Default.

9.13 Use of Proceeds. No Loan Party shall use any proceeds of the sale of the Notes hereunder to, directly or indirectly, purchase or carry any “margin stock” (as defined in Regulation U of the Board of Governors of the Federal Reserve System) or to extend credit to others for the purpose of purchasing or carrying any “margin stock” in violation of the provisions of Regulation T, U or X of the Board of Governors of the Federal Reserve System.

9.14 Fiscal Year and Accounting Changes. No Loan Party shall change its fiscal year from December 31 or make any significant change (a) in accounting treatment and reporting practices except as required by GAAP or (b) in Tax reporting treatment except as required by law.

9.15 Disposition of Assets. The Borrower shall not sell, assign, lease, convey, transfer or otherwise dispose of all or any portion of any Property (including accounts receivable, with or without recourse) or enter into any agreement to do any of the foregoing other than in the ordinary course of business.

9.16 No Settlement. The Borrower shall not settle any dispute, litigation or claim involving the Borrower (including the execution of any confession of judgment or similar instrument) other than out of court settlements of accounts receivable with its customers and accounts payables with its vendors in the ordinary course of business.

9.17 Anti-Layering. The Borrower shall not, or permit any of its Subsidiaries to, create, incur, assume, permit to exist, guarantee, or in any other manner become liable with respect to any Dent, other than the Notes, that is contractually subordinate in right of payment to the Vertical Investors Debt unless such Debt is otherwise permitted by the terms hereof and is subordinated to the Obligations.

9.18 No Assignment of Vertical Investors Debt. The Borrower shall not, or permit any of its Subsidiaries or Affiliates to, acquire, including by participation, or hold, directly or indirectly, any Vertical Investors Debt.

 

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9.19 Certain Amendments. TRNR will not, without the prior written consent of the Purchaser, in its sole discretion, permit or suffer to exist any amendments, restatements, supplements or other modifications to the 3i Transaction Documents, Tumim ELOC Documents, Behar Settlement Agreement or any Subordinated Debt Documents the effect of which would be adverse to the Purchaser or any Holder solely in their respective capacities as a holder of the Obligations.

Article 10
CONVERSION OPTION

10.1 Conversion Option. Each Holder shall have the right, but not the obligation to elect to convert, at any time, in whole or in part, such Holder’s Notes in the manner described in Section 10.2.

10.2 Conversion. The Notes shall be convertible into that number of common shares of the Company equal to the quotient resulting by dividing the outstanding principal balance of the Notes to be converted by the Conversion Price (any such shares upon conversion, the “Conversion Shares”).

10.3 Procedure for Conversion. A Holder shall exercise its right to convert the Notes into the Conversion Shares by delivering a written notice to the Company in the form attached hereto as Exhibit C (the “Conversion Notice”) indicating its desire to convert all or a portion of its Note into Conversion Shares and the effective date of the conversion. Upon the effective date of conversion set forth in the Conversion Notice, the Company shall be deemed to have exchanged the Conversion Shares for that portion of the Obligations represented by the Notes so converted, the Conversion Shares shall be issued to the Purchaser, without further action by any party, and on and after the Conversion Date the Purchaser shall be treated for all purposes as the record holder of such Conversion Shares. As soon as practicable after delivery of the Conversion Notice, the Company shall deliver to such Holder a replacement Note in a principal amount equal to the remaining principal balance of such Holder’s Note after giving effect to the conversion set forth herein, and the Holder shall surrender the Notes (or provide the Company with a notice to the effect that the original Notes have been lost, stolen or destroyed and an agreement reasonably acceptable to the Company whereby the Purchaser agrees to indemnify the Company from any loss incurred by it in connection with such notice) to the Company; provided that any delay or failure to do so shall not in any way affect the exchange and conversion of the Obligations to the Conversion Shares, the issuance of the Conversion Shares. The Company shall, as soon as practicable after conversion of the Note, issue and deliver to the Holder a certificate or certificates for the number of shares of Conversion Securities to which the Holder shall be entitled upon such conversion.

10.4 Adjustments to Conversion Price. In the event that the Company effects a split of any Capital Stock, the Conversion Price shall automatically be adjusted by multiplying the Conversion Price by the smallest fraction applicable to each share or unit of Capital Stock subject to the applicable split.

 

10.5 Limitations on Conversions. Notwithstanding anything to the contrary contained herein, prior to the Company obtaining Shareholder Approval, the Company shall not effect the conversion of any portion of the Notes, and the Holder shall not have the right to convert any portion of the Notes, pursuant to the terms and conditions of the Notes and any such conversion shall be null and void and treated as if never made, to the extent that after giving effect to such conversion, the aggregate amount of shares of Common Stock issued pursuant to (i) the conversion of the Notes; (ii) the exercise of Warrant No. TW-1 issued by the Company to the Holder as of even date herewith, and (iii) the exercise of Warrant No. TW-2 issued by the Company to the Holder as of even date herewith, would exceed 432,283 shares of Common Stock (the “Maximum Amount”, subject to appropriate adjustment for any stock dividend, stock split, stock combination, rights offerings, reclassification or similar transaction that proportionately decreases or

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increases the Common Stock). In addition, at all times, regardless of whether the Company has obtained Shareholder Approval, the Company shall not effect the conversion of any portion of the Notes, and the Holder shall not have the right to conversion any portion of the Notes, pursuant to the terms and conditions of the Notes and any such conversion shall be null and void and treated as if never made, to the extent that after giving effect to such conversion, the Holder together with the other Attribution Parties collectively would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the number of shares of Common Stock outstanding immediately after giving effect to such conversion. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by the Holder and the other Attribution Parties shall include the number of shares of Common Stock held by the Holder and all other Attribution Parties plus the number of shares of Common Stock issuable upon conversion of the Notes with respect to which the determination of such sentence is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (A) conversion of the remaining balance of the Notes beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company (including, without limitation, any convertible notes or convertible preferred stock or warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation on conversion or exercise analogous to the limitation contained in this Section 10.5. For purposes of this Section 10.5, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. For purposes of the Notes, in determining the number of outstanding shares of Common Stock the Holder may acquire upon the conversion of the Notes without exceeding the Maximum Percentage, the Holder may rely on the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other public filing with the Securities and Exchange Commission (the “SEC”), as the case may be, (y) a more recent public announcement by the Company or (z) any other written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding (the “Reported Outstanding Share Number”). If the Company receives an Conversion Notice from the Holder at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company shall notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Conversion Notice would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 10.5, to exceed the Maximum Percentage, the Holder must notify the Company of a reduced number of Conversion Shares to be purchased pursuant to such Conversion Notice (the number of shares by which such purchase is reduced, the “Reduction Shares”). For any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including the Notes, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In the event that the issuance of shares of Common Stock to the Holder upon conversion of the Notes results in the Holder and the other Attribution Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common Stock (as determined under Section 13(d) of the Exchange Act), the number of shares so issued by which the Holder’s and the other Attribution Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer the Excess Shares. Upon delivery of a written notice to the Company, the Holder may from time to time increase (with such increase not effective until the sixty-first (61st) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage not in excess of 9.99% as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first (61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder and the other Attribution Parties and not to any other holder that is not an Attribution Party of the Holder. For purposes of clarity, the shares of Common Stock issuable pursuant to the terms of the Notes in excess of the Maximum Percentage shall not be deemed to be beneficially owned

 

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by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the Exchange Act. No prior inability to convert the Notes pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination of exercisability. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 10.5 to the extent necessary to correct this paragraph or any portion of this paragraph which may be defective or inconsistent with the intended beneficial ownership limitation contained in this Section 10.5 or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained in this paragraph may not be waived and shall apply to a successor holder of the Notes

Article 11
EVENTS OF DEFAULT

11.1 Events of Default. The occurrence of any one or more of the following events shall constitute an “Event of Default”:

(a) Default in the payment, after such amounts become due, of the principal of the Notes (whether at redemption, upon acceleration or otherwise), any interest accrued thereon, any fees payable in connection therewith;

(b) [Reserved];

(c) Any representation or warranty made by or on behalf of any Loan Party or Guarantor in any of the Note Documents, or any document contemplated by the Note Documents, is incorrect in any material respect (or in any respect if such representation, warranty, or financial statement is by its terms already qualified as to materiality) when made (or deemed made);

(d) Failure by the Borrower or any of its Subsidiaries to comply with any term, covenant or provision contained in Sections 8.1, 8.13 or Article 9 of this Agreement;

(e) Failure by any Loan Party to comply with or to perform any other provision of this Agreement (and not constituting an Event of Default under any other provision of this Article 11) and such failure continues unremedied for a period of five (5) days (or such longer period as may be agreed to by the Purchaser) after the earlier of (i) written notice thereof is received by any Loan Party in accordance with Section 13.2 or (ii) a Loan Party obtains knowledge of such failure;

(f) Failure of any Loan Party or any Subsidiary to pay within five (5) days from the date due any payments under any payable or other obligation of the Borrower or its Subsidiaries exceeding $100,000 individually or in the aggregate; or the default by such Loan Party or any Subsidiary in the performance (beyond the applicable grace period with respect thereto, if any) of any term, provision or condition contained in any agreement pursuant to which any such payable or obligation was created or is governed (after the expiration of any applicable cure period, if any), or any other event shall occur or condition exist, the effect of which default or event is to cause, or to permit the holder or the applicable counterparty to cause, such payable or obligation to become due prior to its stated maturity;

(g) After the passing of any notice and opportunity to cure provided in such agreement, default in the payment within fifteen (15) days from the date due, or in the performance or observance of, any material obligation of, or condition agreed to by any Loan Party or any Subsidiary with respect to any material purchase or lease of goods or services of $100,000 or more;

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(h) Any Loan Party or any Subsidiary or Guarantor (i) ceases or fails to be Solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing;

(i) Any involuntary Insolvency Proceeding is commenced or filed against any Loan Party or any Subsidiary or Guarantor, or any writ, judgment, warrant of attachment, warrant of execution or similar process is issued or levied against a substantial part of any Loan Party’s or Subsidiary’s or Guarantor’s properties which is not stayed or dismissed within thirty (30) days; (ii) any Loan Party or any Subsidiary admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) any Loan Party or any Subsidiary or Guarantor acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor) or other similar Person for itself or a substantial portion of its property or business;

(j) Other than as forth on Schedule 11.1(j), one or more judgments, orders, decrees or arbitration awards is entered against a Loan Party or any Subsidiary involving in the aggregate a liability (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage), as to any single or related series of transactions, incidents or conditions, of $25,000 or more, and the same shall remain unvacated and unstayed pending appeal for a period of thirty (30) days after the entry thereof;

(k) Any non-monetary judgment, order or decree is entered against a Loan Party or any Subsidiary which has or would reasonably be expected to have a Material Adverse Effect;

(l) Any Collateral Document shall cease to be in full force and effect; or any Loan Party or any Person by, through or on behalf of any Loan Party, shall contest in writing the validity or enforceability of any Collateral Document;

(m) The Guaranty Agreement shall cease to be in full force and effect; or the Guarantor or any Loan Party or any Person by, through or on behalf of any Loan Party or the Guarantor, shall contest in writing the validity or enforceability of the Guaranty Agreement;

(n) The occurrence of a Change of Control or Guarantor Change of Control;

(o) The trading of TRNR’s common shares shall be suspended by the SEC, the Principal Market or FINRA, or otherwise halted for any reason, and such common stock shall not be approved for listing or quotation on or delisted from the Principal Market;

(p) Any financial statement required to have been filed by TRNR with the SEC pursuant to the reporting requirements of the Exchange Act shall not have been filed with the SEC within the applicable time periods prescribed for such filings under the Exchange Act;

(q) Any Material Adverse Effect occurs;

(r) The Security Agreement shall fail to secure a valid and perfected lien on any Collateral (as defined in the Security Agreement), including, without limitation, one hundred percent (100%) of the Capital Stock of the Borrower and any other Subsidiary of the Borrower;

 

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(s) The Woodway Distribution Agreement shall be terminated or otherwise cease to be in full force and effect or shall be amended, restated, supplemented or otherwise modified without the prior written consent of the Holders;

(t) (i) The actual sales of the inventory of CLMBR inventory since the Closing Date shall be less than seventy five percent (75%) of the projected sales as set forth in the CLMBR Sales Projections or (ii) the average per product or model sales price of any CLMBR inventory, tested at the end of each month on a cumulative basis from the Closing Date until the end of such month commencing with the month ending March 31, 2024, shall be less than $2,500 (provided that such average shall be calculated disregarding the sale of any demonstration units in an amount not to exceed 250 such demonstration units);

(u) CLMBR Subscription Revenue with respect to any month shall be less than seventy percent (70%) of the monthly average CLMBR Subscription Revenue for the three-month period preceding the Closing Date; or

(v) Any Subordination Agreement shall cease to be in full force and effect; or any Loan Party or any Person by shall contest in writing the validity or enforceability of any Subordination Agreement.

11.2 Acceleration. If an Event of Default occurs under Section 11.1(a), (h), (i) or (o), then the outstanding principal of and interest on the Notes shall automatically become immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are expressly waived. If any other Event of Default occurs and is continuing, the Required Holders, by written notice to the Borrower, may declare the principal of and interest on the Notes to be due and payable immediately. Upon any such declaration of acceleration, such principal and interest shall become immediately due and payable, each holder of any Note shall be entitled to exercise all of its rights and remedies hereunder and under its Note whether at law or in equity.

11.3 Set-Off. Upon the occurrence and during the continuation of an Event of Default, in addition to all other rights and remedies that may then be available to any Holder of Notes, each such Holder is hereby authorized at any time and from time to time, without notice to the Borrower (any such notice being expressly waived by the Borrower) to set-off and apply any and all indebtedness at any time owing by such Holder to or for the credit or the account of the Borrower or its Subsidiaries against all amounts which may be owed to such Holder by the Borrower or its Subsidiaries in connection with this Agreement or any Notes. If any Holder of Notes shall obtain from any Borrower payment of any principal of or interest on any Note or payment of any other amount under this Agreement or any Note held by it or any other Note Document through the exercise of any right of set-off, and, as a result of such payment, such Holder shall have received a greater percentage of the principal, interest or other amounts then due hereunder by the Borrower to such Holder than the percentage received by any other Holders, it shall promptly make such adjustments with such other Holders from time to time as shall be equitable, to the end that all the Holders of Notes shall share the benefit of such excess payment (net of any expenses which may be incurred by such Holder in obtaining or preserving such excess payment) pro rata in accordance with the unpaid principal and/or interest on the Notes or other amounts (as the case may be) owing to each of the Holders of the Notes. To such end, all the Holders of the Notes shall make appropriate adjustments among themselves if such payment is rescinded or must otherwise be restored. Any Holder of any Note taking action under this Section 11.3 shall promptly provide notice to the Borrower of any such action taken; provided, that the failure of such Holder to provide such notice shall not prejudice its rights hereunder.

11.4 Cumulative Remedies. The enumeration of the rights and remedies of the Purchaser set forth in this Agreement is not intended to be exhaustive and the exercise by the Purchaser of any right or

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remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the other Note Documents or that may now or hereafter exist at law or in equity or by suit or otherwise. No delay or failure to take action on the part of the Purchaser in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default. No course of dealing between the Borrower, the Purchaser or their respective agents or employees shall be effective to change, modify or discharge any provision of this Agreement or any of the other Note Documents or to constitute a waiver of any Event of Default.

Article 12
INDEMNIFICATION

12.1 Indemnification. In addition to all other sums due hereunder or provided for in this Agreement, the Borrower and its Subsidiaries, jointly and severally, shall indemnify and hold harmless each Purchaser and its Affiliates and their respective officers, directors, agents, employees, Subsidiaries, partners, members, attorneys, accountants and controlling persons (each, an “Indemnified Party”) to the fullest extent permitted by law from and against any and all losses, claims, damages, expenses (including, without limitation, reasonable fees, disbursements and other charges of counsel and costs of investigation incurred by an Indemnified Party in any action or proceeding between the Borrower or any of its Subsidiaries and such Indemnified Party (or Indemnified Parties) or between an Indemnified Party (or Indemnified Parties) and any third party or otherwise) or other liabilities or losses (collectively, “Liabilities”), in each case resulting from or arising out of any breach of any representation or warranty, covenant or agreement of the Borrower or any of its Subsidiaries in this Agreement or any other Note Document, including without limitation, the failure to make payment when due of amounts owing pursuant to this Agreement or any other Note Document, on the due date thereof (whether at the scheduled maturity, by acceleration or otherwise) or any legal, administrative or other actions (including, without limitation, actions brought by any holders of equity or Debt of the Borrower or any of its Subsidiaries or derivative actions brought by any Person claiming through or in the Borrower’s or any of its Subsidiaries’ name), proceedings or investigations (whether formal or informal), or written threats thereof, based upon, relating to or arising out of the Note Documents, the transactions contemplated thereby, or any Indemnified Party’s role therein or in the transactions contemplated thereby; provided, however, that the Borrower and its Subsidiaries shall not be liable under this Section 12.1 to an Indemnified Party to the extent such Liabilities resulted from the willful misconduct or gross negligence of such Indemnified Party; provided, further, that if and to the extent that such indemnification is unenforceable for any reason other than willful misconduct or gross negligence, the Borrower and its Subsidiaries, jointly and severally, shall make the maximum contribution to the payment and satisfaction of such Liabilities which shall be permissible under Requirements of Law. In connection with the obligation of the Borrower and its Subsidiaries to indemnify for expenses as set forth above, each of the Borrower and its Subsidiaries further agrees, upon presentation of invoices, to reimburse each Indemnified Party for all such expenses (including, without limitation, reasonable fees, disbursements and other charges of counsel and costs of investigation incurred by an Indemnified Party in connection with any Liabilities) as they are incurred by such Indemnified Party.

12.2 Procedure; Notification. Each Indemnified Party under this Article 12 will, after the receipt of notice of the commencement of any action, investigation, claim or other proceeding against such Indemnified Party in respect of which indemnity may be sought from the Borrower and its Subsidiaries under this Article 12, notify the Borrower in writing of the commencement thereof. The omission of any Indemnified Party to so notify the Borrower of any such action shall not relieve the Borrower or any of its Subsidiaries from any liability which it may have to such Indemnified Party unless such omission substantially and irrevocably impairs the Borrower’s or any of its Subsidiaries’ ability to defend the action, claim or other proceeding. In case any such action, claim or other proceeding shall be brought against any

 

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Indemnified Party and it shall notify the Borrower of the commencement thereof, the Borrower shall, with Purchaser’s consent, be entitled to assume the defense thereof at its own expense, with counsel satisfactory to such Indemnified Party in its reasonable judgment; provided, that any Indemnified Party may, at its own expense, retain separate counsel to participate in such defense. Notwithstanding the foregoing, in any action, claim or proceeding in which the Borrower or any of its Subsidiaries, on the one hand, and an Indemnified Party, on the other hand, is, or is reasonably likely to become, a party, such Indemnified Party shall have the right to employ separate counsel at the Borrower’s or such Subsidiary’s expense and to control its own defense of such action, claim or proceeding if, in the reasonable opinion of counsel to such Indemnified Party, a conflict or potential conflict exists between the Borrower or any of its Subsidiaries, on the one hand, and such Indemnified Party, on the other hand, that would make such separate representation advisable. Each of the Borrower and its Subsidiaries agrees that it will not, without the prior written consent of the Required Holders, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated hereby (if any Indemnified Party is a party thereto or has been actually threatened to be made a party thereto) unless (i) such settlement, compromise or consent includes an unconditional release of the Purchaser and each other Indemnified Party from all liability arising or that may arise out of such claim, action or proceeding (ii) the Borrower has provided reasonable prior notice thereof and (iii) the Purchaser has provided its prior written consent to such settlement, compromise or consent, which consent will not be unreasonably withheld or delayed. The rights accorded to Indemnified Parties hereunder shall be in addition to any rights that any Indemnified Party may have at common law, by separate agreement or otherwise.

Article 13
MISCELLANEOUS

13.1 Survival of Representations and Warranties . All of the representations and warranties made herein shall survive the execution and delivery of this Agreement, any investigation by or on behalf of the Purchaser, acceptance of the Notes and payment therefor, or termination of this Agreement.

13.2 Notices. All notices, demands and other communications provided for or permitted hereunder shall be made in writing and shall be by registered or certified first-class mail, return receipt requested, telecopier (with receipt confirmed), courier service, e-mail or personal delivery:

(a) if to the Purchaser:

Treadway Holdings LLC

c/o Hutton Ventures LLC

207 W. 25th Street

9th Floor

New York, NY 10001

Facsimile: (212) 656-1214

Email Address:

Attention:

 

With a copy (which shall not constitute notice) to:

K&L Gates LLP

599 Lexington Avenue

New York, NY 10022

Facsimile: (212) 536-3901

Attention: Ed Dartley, Esq.

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(b) if to the Borrower or any Subsidiary:

Interactive Strength, Inc.

1005 Congress Avenue, Suite 925

Austin, Texas 78701

Attention: Trent A. Ward, Chief Executive Officer

Phone: (512) 885-0035

Email: trent@formelife.com

 

With a copy (which shall not constitute notice) to:

Lucosky Brookman LLP

101 Wood Avenue South

Woodbridge, New Jersey 08830

Attention: Seth Brookman, Esq.

All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; when delivered by courier, if delivered by commercial overnight courier service; if mailed, five (5) Business Days after being deposited in the mail, postage prepaid; or if telecopied, when receipt is acknowledged.

13.3 Successors and Assigns.

(a) This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto. Subject to applicable securities laws, the Purchaser may transfer any of its Notes in whole or in part and may assign its rights under the Note Documents at any time. The Purchaser may, without the consent of the Borrower, assign, bifurcate, syndicate, sell, securitize or grant a participation in all or any portion of the Obligations in a private transaction not constituting a public offering, and the Borrower hereby agrees to cooperate in any such transaction. Such transaction shall be negotiated, executed and performed at the Purchaser’s cost and expense; provided that, the Borrower shall be responsible for its own legal fees in connection therewith.

(b) Any Holder may at any time, without the consent of, or notice to Borrower, sell to one or more Persons participating interests in its Notes or other interests hereunder (any such Person, a “Participant”). In the event of a sale by a Holder of a participating interest to a Participant, (i) such Holder’s obligations hereunder shall remain unchanged for all purposes, (ii) Borrower shall continue to deal solely and directly with such Holder in connection with such Holder’s rights and obligations hereunder and (iii) all amounts payable by Borrower shall be determined as if such Holder had not sold such participation and shall be paid directly to such Holder. No Participant shall have any direct or indirect voting rights hereunder except with respect to any event described in Section 13.4. Borrower agrees that if amounts outstanding under this Agreement are due and payable (as a result of acceleration or otherwise), each Participant shall be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Holder under this Agreement; provided that such right of setoff shall be subject to the obligation of each Participant to share with Holders, as provided in Section 11.3. In the event that a Holder sells a participation, the Holder, as a non fiduciary agent on behalf of the Borrower, shall maintain (or cause to be maintained) in the United States a register (the “Participant Register”) on which it enters the name and addresses of all participants in the Obligations held by it and the rights of such participants in the Obligations (including principal amount, interest thereon, and fees of the portion of such Obligations that

 

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is subject to such participations). No Holder shall have an obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any Obligation), except as otherwise required by applicable law and to the Borrower at their reasonable request and then, solely to the extent that such disclosure is required to establish that such participation or Obligation is in registered form under Sections 5f.103-1(c) and 1.871-14(c) of the Treasury Regulations. Any participation or transfer thereof may be effected only by the registration of such participation on the Participant Register.

(c) The Borrower may not assign any of its rights, or delegate any of its obligations, under this Agreement without the prior written consent of the Required Holders, and any such purported assignment by the Borrower without the written consent of the Required Holders shall be void and of no effect. Except as provided in Article 12, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of any of the Note Documents.

13.4 Amendment and Waiver.

(a) No failure or delay on the part of any of the parties hereto in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for in this Agreement are cumulative and are not exclusive of any remedies that may be available to the parties hereto at law, in equity or otherwise.

(b) Any amendment, waiver, supplement or modification of or to any provision of this Agreement, and any consent to any departure by any party from the terms of any provision of this Agreement, shall be effective (i) only if it is made or given in writing and signed by the Borrower and the Required Holders (unless such provision specifically states that such approval is only required by the Purchaser) and (ii) only in the specific instance and for the specific purpose for which made or given.

(c) Except where notice is specifically required by this Agreement, no notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.

13.5 Signatures; Counterparts. Facsimile transmissions of any executed original document and/or retransmission of any executed facsimile transmission shall be deemed to be the same as the delivery of an executed original. At the request of any party hereto, the other parties hereto shall confirm facsimile transmissions by executing duplicate original documents and delivering the same to the requesting party or parties. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

13.6 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

13.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED IN ACCORDANCE WITH, AND ENFORCED UNDER, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW OF SUCH STATE.

13.8 JURISDICTION, JURY TRIAL WAIVER, ETC.

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(a) EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY AGREES THAT THE ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES, OR ANY AGREEMENTS OR TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK AND HEREBY EXPRESSLY SUBMITS TO THE PERSONAL JURISDICTION AND VENUE OF SUCH COURTS FOR THE PURPOSES THEREOF AND EXPRESSLY WAIVES ANY CLAIM OF IMPROPER VENUE AND ANY CLAIM THAT ANY SUCH COURT IS AN INCONVENIENT FORUM. EACH PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS ADDRESS SET FORTH IN SECTION 13.2.

(b) EACH LOAN PARTY HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES, OR ANY OF THE OTHER NOTE DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EACH OF LOAN PARTIES AND THEIR SUBSIDIARIES (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE PURCHASER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE PURCHASER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii) ACKNOWLEDGES THAT THE PURCHASER HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, AND THE OTHER NOTE DOCUMENTS TO WHICH IT IS PARTY BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.

13.9 Severability. If any one or more of the provisions contained in this Agreement, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions of this Agreement. The parties hereto further agree to replace such invalid, illegal or unenforceable provision of this Agreement with a valid, legal and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such invalid, illegal or unenforceable provision.

13.10 Rules of Construction. Unless the context otherwise requires, “or” is not exclusive, and references to sections or subsections refer to sections or subsections of this Agreement.

13.11 Entire Agreement. This Agreement, together with the exhibits and schedules hereto and the other Note Documents, is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained in this Agreement, the exhibits and schedules hereto and the other Note Documents. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein or therein. This Agreement, together with the exhibits and schedules hereto, and the other Note Documents supersede all prior agreements and understandings between the parties with respect to such subject matter.

13.12 Certain Expenses. The Borrower will pay all expenses of the Purchaser (including, without limitation, reasonable fees, charges and disbursements of counsel to the Purchaser) in connection with (a) any enforcement, amendment, supplement, modification or waiver of or to any provision of this Agreement or any of the other Note Documents or any documents relating thereto (including, without limitation, a response to a request by the Borrower for the consent of the Required Holders or the Purchaser

 

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to any action otherwise prohibited hereunder or thereunder), (b) consent to any departure from, the terms of any provision of this Agreement or such other documents, and (c) any redemption of the Notes or any equity or other interests in the Borrower or any Subsidiary of the Borrower owned by such Holder.

13.13 Publicity. Except as may be required by Requirements of Law (including filings by any Holder with the United States Securities Exchange Commission as required under the Securities Act or other applicable law), none of the parties hereto shall issue a publicity release or announcement or otherwise make any public disclosure concerning this Agreement or the transactions contemplated hereby, without prior approval by the other party hereto. If any announcement is required by law to be made by any party hereto, prior to making such announcement such party will deliver a draft of such announcement to the other parties and shall give the other parties an opportunity to comment thereon. Notwithstanding anything herein to the contrary, any party to this Agreement and the other Note Documents (and any employee, representative, or other agent of any such party) may disclose to any and all persons, without limitation of any kind, such party’s tax treatment and the tax structure of the Transactions and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure; provided, however, notwithstanding the above, any such information and materials shall be kept confidential to the extent necessary to comply with applicable securities laws. Notwithstanding anything herein to the contrary, the Borrower shall be permitted to disclose this Agreement and the Note Documents to any Governmental Authority in connection with any licensing or accreditation necessary or desirable to the conduct of the Borrower’s business (it being understood that the Borrower shall provide advance notice of such disclosure to the Purchaser, to the extent practicable).

13.14 Further Assurances. Each of the parties shall execute such documents and perform such further acts (including, without limitation, obtaining any consents, exemptions, authorizations, or other actions by, or giving any notices to, or making any filings with, any Governmental Authority or any other Person) as may be required or desirable to carry out or to perform the provisions of this Agreement, including without limitation, any post-closing assignment(s) by any Holder of a portion of the Notes to a Person not currently a party hereto, subject to the limitations set forth herein.

13.15 No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement and the other Note Documents. In the event an ambiguity or question of intent or interpretation arises under any provision of this Agreement or any Note Document, this Agreement or such other Note Document shall be construed as if drafted jointly by the parties thereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement or any other Note Document. No knowledge of, or investigation, including without limitation, due diligence investigation, conducted by, or on behalf of, the Purchaser or any other Holder shall limit, modify or affect the representations set forth in Article 6 of this Agreement or the right of any Holder to rely thereon.

 

[signature pages follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed and delivered by their respective officers hereunto duly authorized as of the date first above written.

 

Borrower:

 

INTERACTIVE STRENGTH INC.

 

 

By:/s/ Trent Ward

Name: Trent Ward

Title: CEO

 

 

CLMBR HOLDINGS LLC

 

 

By:/s/ Trent Ward

Name: Trent Ward

Title: CEO

 

 

 

[signature pages continue]

[Note Purchase Agreement]

 

 

 

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Purchaser:

 

TREADWAY HOLDINGS LLC

 

 

By:/s/ Ron Friedman

Name: Ron Friedman

Title: Authorized Signatory

 

 

[Note Purchase Agreement]

 

 

 

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Schedule 2.1

Commitments

 

 

Purchaser	Notes
TREADWAY HOLDINGS LLC	$6,000,000
Total	$6,000,000

 

 

 

 

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Exhibit 10.2

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of February 1, 2024, between Interactive Strength Inc., a Delaware corporation (the “Company”), and Treadway Holdings LLC, a Delaware limited liability company (including its successors and permitted assigns, the “Purchaser”).

PREAMBLE

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

“Board of Directors” means the board of directors of the Company.

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Change in Control” means, with respect to the Company, the occurrence of any of the following:

(a) a tender offer (or series of related offers) shall be made and consummated for the ownership of 50% or more of the outstanding voting securities of the Company, unless as a result of such tender offer more than 50% of the outstanding voting securities of the surviving or resulting corporation shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the commencement of such offer), any employee benefit plan of the Company or its Subsidiaries, and their Affiliates;

 

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(b) the Company shall be merged or consolidated with another entity, unless as a result of such merger or consolidation more than 50% of the outstanding voting securities of the surviving or resulting entity shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries, and their Affiliates;

(c) the Company shall sell substantially all of its assets to another entity that is not wholly owned by the Company, unless as a result of such sale more than 50% of such assets shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to such transaction), any employee benefit plan of the Company or its Subsidiaries, and their Affiliates; or

(d) a “Person” (as defined below for purposes of this definition) shall acquire 50% or more of the outstanding voting securities of the Company (whether directly, indirectly, beneficially, or of record), unless as a result of such acquisition more than 50% of the outstanding voting securities of the surviving or resulting Company shall be owned in the aggregate by the stockholders of the Company (as of the time immediately prior to the first acquisition of such securities by such Person), any employee benefit plan of the Company or its Subsidiaries, and their Affiliates.

For purposes of this definition, ownership of voting securities shall take into account and shall include ownership as determined by applying the provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the Exchange Act. In addition, for purposes of this definition, “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof; provided, however, that a Person shall not include (i) the Company or any of its Subsidiaries; (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Subsidiaries; (iii) an underwriter temporarily holding securities pursuant to an offering of such securities; or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportion as their ownership of stock of the Company.

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

“Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to the Closing have been satisfied or waived, but in no event later than the third Trading Day following the date hereof in the case of such Closing.

“Commission” means the United States Securities and Exchange Commission.

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“Commission Documents” shall have the meaning ascribed to such term in Section 3.1(r).

“Common Stock” means the common stock of the Company, $0.0001 par value, and any other class of securities into which such securities may hereafter be reclassified or changed.

“Disclosure Schedules” means the Disclosure Schedules delivered by the Company to the Purchaser pursuant to the Note Purchase Agreement.

“Disqualification Event” shall have the meaning ascribed to such term in Section 3.1(q).

“DTC” shall have the meaning ascribed to such term is Section 3.1(u).

“DWAC” shall have the meaning ascribed to such term is Section 3.1(u).

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“GAAP” shall have the meaning ascribed to such term in Section 3.1(r).

“IPO Registration Statement” shall have the meaning ascribed to such term in Section 3.1(r).

“Issuer Covered Person” shall have the meaning ascribed to such term in Section 3.1(q).

“Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(d).

“Liens” means a lien, charge pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“Material Adverse Effect” shall have the meaning ascribed to such term in the Note Purchase Agreement.

“Note Purchase Agreement” means that certain Note Purchase Agreement, dated as of February 1, 2024, by and among the Company, CLMBR Holdings LLC, a Delaware limited liability company, and the Purchaser.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

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“Protection Period” shall mean the period during which the Purchaser holds ten percent (10%) or more of the aggregate number of Shares or Warrants issued to the Purchaser hereunder.

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.6.

“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(d).

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“Securities” means the Shares, the Warrants and the Warrant Shares.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Securities Laws” means the securities laws of the United States or any state thereof and the rules and regulations promulgated thereunder.

“Shares” means the 750,000 shares of Common Stock issued to the Purchaser pursuant to this Agreement.

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

“SOXA” has the meaning ascribed to such term in Section 3.1(r).

“Subsidiary” means any subsidiary of the Company as set forth in the Disclosure Schedules and shall, where applicable and with regard to future events, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

“Trading Day” means a day on which the principal Trading Market is open for trading; provided, that in the event that the Common Stock is not listed or quoted for trading on a Trading Market on the date in question, then Trading Day shall mean a Business Day.

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTC Bulletin Board, the OTCQB or the OTCQX (or any successors to any of the foregoing).

“Transaction Documents” means this Agreement, the Warrants, the Note Purchase Agreement, the other Note Documents (as defined in the Note Purchase Agreement), all

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exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

“Transfer Agent” means American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, NY, 11219, facsimile: 718-236-2641, and any successor transfer agent of the Company.

“Warrants” means each of (1) a Warrant to Purchase 1,500,000 shares of Common Stock at an initial exercise price of $1.25 delivered to the Purchaser at the Closing and (2) a Warrant to Purchase 1,500,000 shares of Common Stock at an initial exercise price of $1.75 delivered to the Purchaser at the Closing each in the form of Exhibit A attached hereto.

“Warrant Shares” means the shares of Common Stock (subject to adjustment) issuable upon exercise of the Warrants, provided that any share of Common Stock issued upon exercise of the Warrants shall not constitute an issued Warrant Share for purposes of this Agreement after such share has been irrevocably sold pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144 without further restrictions or conditions to transfer pursuant to Rule 144.

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The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect the Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.

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[NEITHER] THIS SECURITY [NOR THE SECURITIES [FOR] WHICH THIS SECURITY IS EXERCISABLE] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) AND APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. TO THE EXTENT PERMITTED BY APPLICABLE SECURITIES LAWS, THIS SECURITY [AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

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(Signature Pages Follow)

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

INTERACTIVE STRENGTH INC.
By: /s/ Trent Ward
Name: Trent Ward
Title: CEO

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

 

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[PURCHASER SIGNATURE PAGE TO INTERACTIVE STRENGTH INC.
SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Purchaser: Treadway Holdings LLC

Signature of Authorized Signatory of Purchaser: /s/ Ron Friedman

Name of Authorized Signatory: Ron Friedman

Title of Authorized Signatory: Authorized Signatory

Address for Delivery of Securities to Purchaser (if not same as address for notice):

EIN Number, if applicable, will be provided under separate cover.

 

 

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EXHIBITS

Exhibit A	Form of Warrant

 

 

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Exhibit 10.3

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (the “Agreement”) dated as of February 1, 2024, by and between INTERACTIVE STRENGTH, INC., a Delaware corporation (the “Borrower”), and VERTICAL INVESTORS, LLC, a Mississippi limited liability company (together with its successors or assigns, the “Lender”).

 

R E C I T A L S:

 

Borrower has requested that Lender make available to Borrower a term loan to facilitate the Closing Acquisition (as defined below), which loan shall be subject to the terms, conditions and limitations provided herein.

 

Lender has agreed to extend the Loan to Borrower provided that Borrower executes and delivers this Agreement and the other Loan Documents (as defined below) evidencing Borrower’s agreement to be bound by the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, Borrower and Lender hereby agree as follows:

 

DEFINITIONS, ACCOUNTING TERMS, GENERAL PROVISIONS

 

 

“Account Debtor” means each Person that is obligated in any way to render payment to Borrower in connection with any of Borrower’s Accounts. For purposes of this Agreement, Affiliates of each Account Debtor shall be consolidated so that each consolidated group of Affiliates are considered one Account Debtor.

 

“Accounts” has the meaning set forth in the UCC, and includes, without limitation, all accounts, contract rights, chattel paper, instruments, deposit accounts, general intangibles, and other obligations of any kind, now or hereafter existing, whether or not arising out of or in connection with the sale or lease of goods or the rendering of services, and all rights now or hereafter existing in and to all security agreements, leases, and other contracts securing or otherwise relating to any such accounts, contract rights, chattel paper, instruments, deposit accounts, general intangibles, and obligations.

 

“Acquisition” means any acquisition (whether in a single transaction or series of related transactions) of (i) any going business, or all or substantially all of the assets of any Person, whether through purchase, merger or otherwise; or (ii) Equity Interests of any Person of five percent (5%) or more of the Equity Interests or voting power in such Person.

 

“Affiliate” when used with respect to a specified Person, means a Person (i) who directly or indirectly controls, is controlled by, or is under common control with such Person, (ii) who is a

 

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director, officer, manager, partner, member, shareholder, employee, or employer of such Person, or (iii) who is a member of the immediate family of such Person.

 

“Agreement” means this Credit Agreement, together with all amendments and supplements thereto.

 

“Business Day” means each day, except for Saturdays, Sundays or holidays for which Lender is authorized or required to close and which Lender has designated as its holiday. Unless otherwise provided, “day” as used herein shall mean a calendar day.

 

“Capital Lease” means all leases which have been or should be capitalized on the books of the lessee in accordance with GAAP, as in effect from time to time.

 

“Change in Control” means (i) a sale of all or substantially all of the assets of the Borrower; (ii) a merger, reorganization or consolidation in which the Borrower is not the surviving entity, (iii) a transaction in which the holders of the Borrower’s outstanding voting stock immediately prior to such transaction own, immediately after such transaction, securities representing less than fifty percent (50%) of the voting power of the entity surviving such transaction or, where the surviving entity is a wholly-owned subsidiary of another entity, the surviving entity’s parent, or (iv) Persons other than members of the board of directors as of the date hereof shall collectively have the right, by ownership of stock or other equity interests, contract or otherwise, the right to appoint a majority of the board of directors or similar governing body of Borrower.

 

“CLMBR Notes” shall mean, collectively, each of the Subordinate Loans that are subject to Subordination Agreements as of the date hereof and that are attached hereto as Exhibit C.

 

“Closing Acquisition” means the Acquisition by Borrower of substantially all the assets of CLMBR, Inc., a Delaware corporation, and CLMBR1, LLC, a Colorado limited liability company, pursuant to the Closing Acquisition Agreement.

 

“Closing Acquisition Agreement” means that certain Amended and Restated Asset Purchase Agreement dated as of January 2, 2024, by and among CLMBR, Inc., CLMBR1, LLC, Borrower, and CLMBR Holdings LLC.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations and published interpretations thereunder.

 

“Collateral” means all of Borrower’s right, title and interest in and to all of Borrower’s assets that currently are or may be subject to Article 9 of the UCC, including, without limitation, all of the following properties and rights, wherever located, and whether now owned or hereafter acquired or arising:

 

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“Commonly Controlled Entity” means an entity, whether or not incorporated, which is under common control with Borrower within the meaning of Section 414(b) or 414(c) of the Code.

 

“Control” shall mean the power to direct the management and policies of an entity, directly or indirectly, whether through the ownership of voting securities or other beneficial interests, by contract or otherwise.

 

“Debt” means (a) indebtedness or liability for borrowed money; (b) obligations evidenced by bonds, debentures, notes, or other similar instruments; (c) obligations for the deferred purchase price of property or services (including trade obligations); (d) obligations as lessee under Capital Leases; (e) current liabilities in respect of unfunded vested benefits under Plans covered by ERISA; (f) obligations under letters of credit; (g) obligations under acceptance facilities; and (h) all guaranties, endorsements (other than for collection or deposit in the ordinary course of business), and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person or entity, or otherwise to assure a creditor against loss; (i) obligations secured by any Liens, whether or not the obligations have been assumed; and (j) the amount of any other obligation (including obligations under financing leases) which would be shown as a liability on a balance sheet prepared in accordance with GAAP.

 

“Default” means any of the events specified in Section 7.1, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.

 

“Default Rate” means the interest rate that is the lesser of (i) five percent (5%) per annum above the then applicable Note Rate, and (ii) the maximum rate permitted by applicable law.

 

“Distribution” means any dividend or other distribution to the shareholders, members, partners or Affiliates of Borrower or the applicable other Person, or the purchase, redemption, retirement or other acquisition for value of any ownership interests in Borrower or the applicable other Person now or hereafter outstanding, or the return of any capital to Borrower’s or the applicable other Person’s members, shareholders or partners, as applicable, or the distribution of any assets of Borrower or the applicable other Person to its members, shareholders or partners, as applicable.

 

“Environmental Inspection” means any environmental inspection, test, audit or assessment.

 

 

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“Environmental Laws” means any federal, state or local statute, law, regulation, order, consent, decree, judgment, permit, license, code, covenant, common law, ordinance or other requirement relating to public health, safety or the environment, including, without limitation, those relating to releases, discharges or emissions to air, water, land or groundwater, to the withdrawal or use of groundwater, to the use and handling of polychlorinated biphenyls or asbestos, to the disposal, treatment, storage or management of hazardous or solid waste or Hazardous Substances or crude oil, or any fraction thereof, or to exposure to toxic or hazardous materials, to the handling, transportation, discharge or release of gaseous or liquid Hazardous Substances and any regulation, order or notice issued pursuant to such law, statute or ordinance, including without limitation, the following: (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended by the Superfund Amendments and Re-authorization Act of 1986; (ii) the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste Amendments of 1984; (iii) the Hazardous Materials Transportation Act, as amended; (iv) the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1976; (v) the Safe Drinking Water Act; (vi) the Clean Air Act, as amended; (vii) the Toxic Substances Control Act of 1976; (viii) the Emergency Planning and Community Right-to-Know Act of 1986; (ix) the National Environmental Policy Act of 1975; (x) the Oil Pollution Act of 1990; any similar or implementing state law; and any other state or federal statute and any further amendments to these laws providing for financial responsibility for cleanup or other actions with respect to the release or threatened release of Hazardous Substances or crude oil, or any fraction thereof and all rules and regulations promulgated thereunder.

 

“Equipment” means all equipment in all its forms, wherever located, now or hereafter existing, all fixtures and all parts thereof and all accessions thereto.

 

“Equity Interest” means any and all ownership or other equitable interests in the applicable Person, including any interest represented by any capital stock, membership interest, partnership interest, or similar interest, but specifically excluding any interest of any Person solely as a creditor of the applicable Person.

 

“Equity Pledge” means that certain Membership Interest Pledge Agreement dated as of even date herewith executed by Borrower in favor of Lender, together with all amendments, restatements and supplements thereto.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations and published interpretations thereof.

 

“Event of Default” means any of the events specified in Section 7.1, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied.

 

“Fee Letter” means the letter agreement dated of even date herewith, issued by Lender and accepted by Borrower in connection with the Loan, as the same may be modified, amended and/or supplemented from time to time.

 

 

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“GAAP” means generally accepted accounting principles in the United States.

 

“Governing Documents” of any Person means the declaration of trust, certificate or articles of incorporation, by-laws, partnership agreement or operating or members agreement, as the case may be, and any other organizational or governing documents, of such Person.

 

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to such government.

 

“Hazardous Substance” means any hazardous or toxic material, substance or waste, pollutant or contaminant that is regulated under any statute, law, ordinance, rule or regulation of any local, state, regional or federal authority having jurisdiction over the Collateral or its use, including, but not limited to any material, substance or waste, that is: (i) defined as a hazardous substance under any Environmental Laws; (ii) a petroleum hydrocarbon, including crude oil or any fraction thereof and all petroleum products; (iii) polychlorinated biphenyls; (iv) lead; (v) urea formaldehyde; (vi) asbestos or asbestos containing materials; (vii) flammable explosives; (viii) radioactive materials; or (ix) defined or regulated as a hazardous substance or hazardous waste under any rules or regulations promulgated under any Environmental Laws.

 

“Holdings” means CLBMR Holdings, LLC, a Delaware limited liability company that is wholly-owned by Borrower.

 

“Indemnified Costs” has the meaning set forth in Section 8.7.

 

“Indemnified Party” has the meaning set forth in Section 8.7.

 

“Indemnity Proceeding” has the meaning set forth in Section 8.7.

 

“Intercreditor Agreement” means that certain Intercreditor Agreement of even date herewith by and between Treadway and Lender, together with all amendments and supplements thereto.

 

“Inventory” means all inventory in all of its forms, wherever located, now or hereafter existing (including, but not limited to, (i) all goods, merchandise, raw materials, work in process, finished goods, and other tangible personal property held for sale or lease or furnished or to be furnished under contracts of service or used or consumed in Borrower’s business; (ii) goods in which Borrower has an interest in mass or a joint or other interest or right of any kind (including, without limitation, goods in which the Borrower has an interest or right as consignee); and (iii) goods which are returned to or repossessed by the Borrower), and all accessions thereto and products thereof and documents therefor.

 

“Investment” or “Investments” means any loan or advance to any Person, any purchase or other acquisition of any capital stock or other ownership or profit interest, warrants, rights, options, obligations or other securities of such Person, any capital contribution to such Person or any other investment in such Person.

 

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“IP Security Agreements” means, collectively, those certain security agreements executed by Borrower in favor of Lender and designated for filing with the United States Patent and Trademark Officer or such other Governmental Authority deemed necessary by Lender with respect to Borrower’s intellectual property, together with all amendments and supplements thereto.

 

“Landlord” means any Person that owns real property that is leased to Borrower.

 

“Landlord’s Waiver” means, individually and collectively, as applicable, those certain Landlord Lien Waivers required to be executed and delivered by any Landlord in favor of Lender.

 

“Late Charge” means an additional charge due to Lender that is in addition to, and not in limitation of, all other fees, charges and amount otherwise payable to Lender, and is equal to equal to the greater of (i) $250.00, and (ii) five percent (5%) of the amount of any interest, not paid within five (5) days of the due date of such amount, not as a penalty, but as compensation to the Lender for the cost of collecting and processing such late payment. Borrower agrees that such Late Charge represents a good faith reasonable estimate of the probable cost to Lender of such delinquency. Lender shall have no obligation to accept any late payment not accompanied by said Late Charge, but if Lender does so, Lender shall not thereby waive its right to the Late Charge. Such Late Charge shall be in addition to, and not in lieu of, any other right or remedy Lender may have, including the right to receive principal and interest and to reimbursement of costs and expenses.

 

“Letter of Credit” means the letter of credit issued in favor of Lender for the account of S Interactive, LLC, an Arkansas limited liability company, together with any successor or additional letter of credit related thereto.

 

“Letter of Credit Agreement” means that certain Agreement Regarding Letter of Credit on or about the date hereof, together with all amendments and supplements thereto.

 

“Lien” means any mortgage, deed of trust, pledge, security interest, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), or preference, priority, or other security agreement or preferential arrangement, charge, or encumbrance of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement under the UCC or comparable law of any jurisdiction to evidence any of the foregoing).

 

“Liquid Assets” means, as of an applicable time, the following, so long as the same is not subject to any Lien nor subject to any restriction on transferability, whether imposed under applicable Law, by agreement, or otherwise: (i) marketable direct obligations issued by, or unconditionally guaranteed by, the United States Government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the applicable time; (ii) certificates of deposit and time deposits having maturities of six months or less from the applicable time and issued by any commercial bank organized under the laws of the United States of America or any state thereof having combined capital and surplus of not less

 

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than $500,000,000; (iii) commercial paper of an issuer rated at least A-1 by Standard & Poor’s Ratings Services (“S&P”) or P-1 by Moody’s Investor’s Service, Inc. (“Moody’s”), or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of commercial paper issuers generally, and maturing within six months from the applicable time; (iv) securities with maturities of one year or less from the applicable time and issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody’s; (v) securities with maturities of six months or less from the applicable time and backed by standby letters of credit by Lender or any commercial bank satisfying the requirements of clause (ii) of this definition; and (vi) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (i) through (iii) of this definition.

 

“Loan” and “Loans” both mean the term loan in the principal sum of $7,968,977.74 made by Lender to Borrower as of the date hereof, as further described herein.

 

“Loan Documents” means this Agreement, the Fee Letter, the IP Security Agreements, the Equity Pledge, the Note, the Letter of Credit Agreement, the Intercreditor Agreement and each Landlord’s Waiver, together with any and all other documents evidencing, securing, or otherwise relating to the Loan, together with all amendments and supplements thereto.

 

“Loan Obligations” means the aggregate sum of all obligations owed by Borrower under the Loan Documents or any other agreement with Lender or an affiliate of Lender, including, without limitation, the sum of (i) all principal and interest owing from time to time under this Agreement or the Note, (ii) all expenses, charges and other amounts from time to time owing under this Agreement, the Note, the Fee Letter or the other Loan Documents, (iii) all covenants, agreements and other obligations from time to time owing to, or for the benefit of, Lender pursuant to the Loan Documents, and (iv) all present and future obligations of any kind of Borrower to Lender, including every loan of money, credit sale, sale on account, consignment sale, sale on approval, sale or return, and other extension of credit heretofore, now, or hereafter made to Borrower by Lender, including, without limitation, any extension or renewals of any of the foregoing; all finance charges and late payment charges due or to become due to Lender on each such obligation; every note or other writing now or hereafter evidencing the obligation of Borrower to repay any such obligation and/or the finance charges or other charges thereon; every guaranty of payment or collection of the debt of another heretofore, now, or hereafter entered into by Borrower with Lender; the payment and performance of all of Borrower’s obligations under this Agreement; every letter of credit issued by Lender for Borrower’s benefit, and all other indebtedness and other obligations of Borrower to Lender, including all sums paid to Lender for Borrower’s account by Borrower or any other person which are later recovered back from Lender by Borrower or any representative of Borrower or of Borrower’s creditors, such as a trustee in bankruptcy, any of the foregoing that arises after the filing of a petition by or against Borrower under the federal Bankruptcy Code even if the obligations do not accrue because of the automatic stay under Section 362 of the federal Bankruptcy Code, and any intended cash sale where the cash consideration was not actually received by Lender; whether any of the foregoing debts and other

 

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obligations are joint or several, primary or secondary, direct or indirect, otherwise secured or unsecured, whether originally payable or owed to Lender or acquired by Lender from another, and whether now existing or hereafter incurred prior to termination of this Agreement as hereinafter provided.

 

“Loan Termination Date” means the earlier of (a) the Maturity Date, or (b) the date to which the maturity of the Loan is accelerated pursuant to Section 7.2 of this Agreement.

 

“Material Adverse Effect” means a material adverse effect on the business, assets, liabilities, financial condition, property or results of operations of the Borrower or Holdings, or a material adverse effect on the ability of Borrower or Holdings to satisfy the Loan Obligations.

 

“Maturity Date” means June 28, 2024.

 

“Multi-employer Plan” means a Plan described in Section 4001(a)(3) of ERISA.

 

“Negative Pledge” means, with respect to a given asset, any provision of a document, instrument or agreement (including any Governing Document), other than any Loan Document, that prohibits, restricts or limits, or purports to prohibit, restrict or limit, the creation or assumption of any Lien on any asset as security for Debt of the Person or any other Person, or entitles another Person to obtain or claim the benefit of a Lien on assets of such Person; provided, however, that an agreement that conditions a Person’s ability to encumber its assets upon the maintenance of one or more specified ratios that limit such Person’s ability to encumber its assets but that do not generally prohibit the encumbrance of its assets, or the encumbrance of specific assets, shall not constitute a Negative Pledge.

“Northern Trust” means The Northern Trust Company, together with its successors or assigns.

 

“Northern Trust Note” means that certain Master Note dated as of June 28, 2022, payable by Lender to the order of Northern Trust, together with all amendments and supplements thereto, as may be adjusted from time to time and subject to all benchmark replacement and other conforming changes or provisions set forth therein.

 

“Note” means that certain Promissory Note of even date herewith payable by Borrower to the order of Lender, the form of which is attached hereto as Exhibit A, together with all amendments, restatements and supplements thereto.

 

“Note Rate” means the rate of interest applicable to the Northern Trust Note, which is incorporated by reference as if set forth herein in full.

 

“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.

 

“Permits” means all licenses, permits, and certificates used or necessary in connection with the construction, ownership, operation, use, or occupancy of Borrower’s business, including,

 

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without limitation, business licenses, state health department licenses, food service licenses, licenses to conduct business, certificates of need, and all such other permits, licenses, and rights, obtained from any governmental, quasi-governmental, or private person or entity whatsoever concerning ownership, operation, use, or occupancy.

 

“Permitted Investments” means (i) Liquid Assets; (ii) purchases and acquisitions of Inventory, supplies, materials and Equipment in the ordinary course of business; (iii) investments consisting of prepaid expenses, loans or advances to employees for reasonable travel, relocation and business expenses in the ordinary course of business; (iv) without duplication, Debt expressly permitted by Section 6.2; (v) Investments (other than Investments specified in clauses (i) through (iv) above) in an aggregate amount that shall not exceed $100,000.00 in any consecutive twelve-month period; and (vi) any other Investments that may be approved in writing by Lender.

 

“Permitted Liens” means those specific Liens delineated in Section 6.1.

 

“Person” means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority, or other entity of whatever nature.

 

“Plan” means any pension plan which is covered by Title IV of ERISA and in respect of which Borrower or a Commonly Controlled Entity is an “employer” as defined in Section 3(5) of ERISA.

 

“Prohibited Transaction” means any transaction set forth in Section 406 of ERISA or Section 4975 of the Code.

 

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, shareholders, directors, officers, employees, agents, counsel, other advisors and representatives of such Person and of such Person’s Affiliates.

 

“Reportable Event” means any of the events set forth in Section 4043 of ERISA.

 

“Requirements of Law” means (a) the Governing Documents of an entity, and (b) any law, regulation, ordinance, code, decree, treaty, ruling or determination of an arbitrator, court or other Governmental Authority, or any Executive Order issued by the President of the United States, in each case applicable to or binding upon such Person or to which such Person, any of its property or the conduct of its business is subject including, without limitation, laws, ordinances and regulations pertaining to the zoning, occupancy and subdivision of real property.

 

 

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“Solvent” means, with respect to Borrower or any other Person, and as of the applicable date, that (i) the fair value of such Person’s assets are greater than the total amount of such Person’s aggregate liabilities, (ii) the fair saleable value of such Person’s assets is not less than the amount that will be required by pay by such Person as its Debts mature, (iii) such Person does not intend to (nor believes it will) incur debts or liabilities beyond such Person’s ability to pay such Debts as they mature, and (iv) such Person is not engaging in a business or transaction with unreasonably small capital.

 

“Subordinated Debt” means any Debt of Borrower to any shareholder, director or Affiliate of Borrower, which Debt shall be properly subordinated to the Loan. In order for said Debt to properly be Subordinated Debt, Borrower must cause each such shareholder, director or Affiliate to execute any and all documents reasonably required by Lender to subordinate such Debt.

“Subordination Agreement” means, collectively, those certain Subordination and Standstill Agreements executed and delivered by any shareholder, director, officer or Affiliate thereof with respect to Subordinated Debt.

 

“Subsidiary” means, for any Person, any corporation, partnership, limited liability company or other entity of which at least a majority of the securities or other ownership interests having by the terms thereof ordinary voting power to elect a majority of the board of directors or other persons performing similar functions of such corporation, partnership, limited liability company or other entity (without regard to the occurrence of any contingency) is at the time directly or indirectly owned or controlled by such Person.

 

“Treadway Loan” means that certain loan made by Treadway Holdings, LLC, a Delaware limited liability company, to Holdings.

 

“Treadway Loan Documents” means those certain loan documents dated as of even date herewith in connection with the Treadway Loan together with all amendments and supplement thereto.

 

“UCC” means that Uniform Commercial Code as in effect from time to time in the State of Mississippi.

 

 

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THE LOAN

 

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Anything in this Agreement to the contrary notwithstanding, the entire unpaid balance of the principal amount of THE LOAN and all interest accrued thereon, tHROUGH and including the Maturity Date (including interest accruing at the Default Rate), and all Late Fees shall, unless sooner paid, and except to the extent that payment thereof is sooner accelerated, be and become due and payable on the Maturity Date.

 

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SECURITY AGREEMENT AND COLLATERAL

 

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REPRESENTATIONS AND WARRANTIES

To induce Lender to enter into this Agreement, and to make the Loan to Borrower, Borrower represents and warrants to Lender as follows

 

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AFFIRMATIVE COVENANTS

Borrower agrees with and covenants unto Lender that until the Loan Obligations have been satisfied in full, Borrower shall (unless expressly waived in writing by Lender in Lender’s sole and absolute discretion):

 

 

 

 

 

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All policies obtained and maintained by Borrower hereunder shall be in such form, for such perils, with such coverage amounts, with such deductibles, and written by such companies as may be satisfactory to Lender in its reasonable discretion. Lender shall be named as the loss payee and an additional insured, as applicable, under such policies of insurance. Borrower may furnish such insurance through an existing policy or a policy independently obtained and paid for by Borrower. All policies of insurance shall provide for a minimum of thirty (30) days’ written notice to Lender before cancellation. At request of Lender, Borrower will deliver such policies, or at Lender’s option, certificates thereof, to Lender to be held by it. aonly during the existence of an Event of Default, Borrower hereby appoints Lender the attorney-in-fact for Borrower for purposes of obtaining, adjusting, settling, and canceling such insurance and of indorsing in Borrower’s name and giving receipt for checks and drafts issued in payment of losses and as return premiums. Upon receipt of any proceeds from any insurance policy, Lender may apply such proceeds to the Loan Obligations as determined by Lender. Borrower shall pay all premiums on policies required hereunder as they become due and payable and promptly deliver to Lender evidence satisfactory to Lender of the timely payment thereof. In the event Borrower fails to provide any insurance as required herein, Lender may, at its option, purchase such insurance or, at Lender’s option and upon

 

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ten (10) days’ written notice to Borrower, insurance covering only Lender’s interest in the Collateral, but Lender shall not be under any duty to purchase any such insurance. Borrower agrees to reimburse Lender on demand for the cost of all such insurance purchased by Lender. Borrower hereby assigns all insurance policies at any time covering the Collateral and all returned or unearned premiums thereon to Lender as additional collateral for the Loan Obligations.

 

 

 

 

 

 

 

 

 

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NEGATIVE COVENANTS

 

Until the Loan Obligations have been satisfied in full, Borrower shall not:

 

 

 

 

 

 

 

 

 

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EVENTS OF DEFAULT

 

 

 

 

 

 

 

 

 

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Then, and in any such event, Lender may, in addition to any and all other remedies set forth herein, at law or in equity, by notice to Borrower, declare the Loan, Note, all interest thereon, and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Loan Obligations, all such interest, and all such additional amounts shall become and be forthwith due and payable, without presentment, demand, protest, or further notice of any kind, all of which are hereby expressly waived by Borrower.

 

 

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All rights and remedies of Lender under the terms of this Agreement, the Note, any of the other Loan Documents, and any applicable statutes or rules of law shall be cumulative and may be exercised successively or concurrently. The rights and remedies of Lender set forth in this Section 7.2 are in addition to other rights and remedies that Lender may have at law or in equity. Borrower agrees to pay Lender on demand any and all reasonable expenses incurred or paid by Lender in the exercise of its rights under this Agreement or under the UCC, including expenses incurred to protect or enforce the Loan Obligations, protect the Collateral, take possession of and sell or dispose of the Collateral, store or collect the Collateral, prepare and advertise the Collateral for sale, conduct the sale and collect the Proceeds of sale, and expenses for the services of attorneys employed by Lender for any purpose related to this Agreement or the Loan Obligations, including consultation, drafting documents, sending notices or instituting, prosecuting or defending litigation or arbitration. Payment of all such expenses and the interest thereon shall be secured by the security interest granted in this Agreement.

 

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MISCELLANEOUS

 

 

 

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If to Borrower: Interactive Strength, Inc.

1005 Congress Avenue, Suite 925

Austin, Texas 78701

Attention: Trent A. Ward, Chief Executive Officer

Phone: (347) 251-0928

Email: trent@formelife.com

 

If to Lender: Vertical Investors, LLC

333 West Franklin St.

Tupelo, Mississippi 38804

Attention: Stephen Miles

Phone: (662) 269-6475

Fax: (888) 398-3602

Email: stephen.miles@addicusadvisors.com

 

with a copy to: David R. Kinman, Esq.

Maynard Nexsen PC

1901 Sixth Avenue North, Suite 1700

Birmingham, Alabama 35203

Phone: (205) 254-1092

Email: dkinman@maynardnexsen.com

 

or at such other address as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section 8.2. Except as otherwise provided in this Agreement, all such notices and communications shall be effective when deposited in the mails or delivered to the telegraph company, or sent, answerback received, respectively, addressed as aforesaid.

 

 

 

 

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[SIGNATURES ON FOLLOWING PAGE]

 

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[Signature Page to Credit Agreement]

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective authorized representatives, as of the date first above written.

 

 

BORROWER:

 

INTERACTIVE STRENGTH, INC., a Delaware corporation

 

 

By: /s/ Trent A. Ward

Trent A. Ward

Its: Chief Executive Officer

 

 

LENDER:

 

VERTICAL INVESTORS, LLC, a Mississippi limited liability company

 

By: Addicus Private Equity, LLC

Its: Manager

 

By: /s/ Stephen Miles

Stephen D. Miles

Its: Manager

 

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EXHIBIT A

 

FORM OF NOTE

 

(Attached hereto)

 

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EXHIBIT B

 

FORM OF UCC-1 FINANCING STATEMENT

 

(Form attached hereto)

 

 

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EXHIBIT C

 

CLMBR NOTES

 

(Subordination Agreements Attached hereto)

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Execution Copy

Exhibit 10.4

 

 

AMENDED AND RESTATED ASSET PURCHASE AGREEMENT

BY AND AMONG

CLMBR, INC,

CLMBR1, LLC

INTERACTIVE STRENGTH INC.

AND

CLMBR HOLDINGS LLC

dated as of

January 22, 2024
 

 

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TABLE OF CONTENTS

Page

ARTICLE I PURCHASE AND SALE 1

SECTION 1.01 PURCHASE AND SALE OF ASSETS 1

SECTION 1.02 EXCLUDED ASSETS 2

SECTION 1.03 ASSUMPTION OF LIABILITIES 2

SECTION 1.04 EXCLUDED LIABILITIES 2

ARTICLE II PURCHASE PRICE 2

SECTION 2.01 PURCHASE PRICE; PAYMENTS AT THE CLOSING 2

SECTION 2.02 INTENTIONALLY OMITTED 3

SECTION 2.03 INTENTIONALLY OMITTED. 3

SECTION 2.04 ALLOCATION OF PURCHASE PRICE 3

SECTION 2.05 WITHHOLDING TAX 4

SECTION 2.06 EARN-OUT 4

SECTION 2.07 CONSENTS 6

ARTICLE III CLOSING 6

SECTION 3.01 CLOSING 7

SECTION 3.02 CLOSING DELIVERABLES 7

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS 8

SECTION 4.01 ORGANIZATION AND AUTHORITY; ENFORCEABILITY 9

SECTION 4.02 NO CONFLICTS; CONSENTS 9

SECTION 4.03 TITLE TO PURCHASED ASSETS; CONDITION OF ASSETS 10

SECTION 4.04 ACCOUNTS RECEIVABLE 10

SECTION 4.05 FINANCIAL STATEMENTS 10

SECTION 4.06 ABSENCE OF CHANGES OR EVENTS 11

SECTION 4.07 UNDISCLOSED LIABILITIES 11

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SECTION 4.08 CONTRACTS 11

SECTION 4.09 INTELLECTUAL PROPERTY; IT/PRIVACY 13

SECTION 4.10 PERMITS 18

SECTION 4.11 REAL PROPERTY MATTERS 18

SECTION 4.12 COMPLIANCE WITH LAWS 19

SECTION 4.13 LEGAL PROCEEDINGS 19

SECTION 4.14 EMPLOYEE BENEFIT PLANS 19

SECTION 4.15 EMPLOYMENT/LABOR MATTERS 20

SECTION 4.16 TAXES 21

SECTION 4.17 CUSTOMERS AND VENDORS 23

SECTION 4.18 BROKERS 23

SECTION 4.19 INSURANCE 23

SECTION 4.20 TRANSACTIONS WITH AFFILIATED PARTIES 24

SECTION 4.21 ENVIRONMENTAL MATTERS 24

ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND ACQUISITION SUB 26

SECTION 5.01 ORGANIZATION AND AUTHORITY; ENFORCEABILITY 26

SECTION 5.02 NO CONFLICTS; CONSENTS 27

SECTION 5.03 LEGAL PROCEEDINGS 27

SECTION 5.04 ISSUANCE OF CLOSING SHARES AND EARN-OUT SHARES. 27

SECTION 5.06 BROKERS 27

ARTICLE VI COVENANTS 28

SECTION 6.01 OPERATIONS PRIOR TO THE CLOSING DATE 28

SECTION 6.02 REASONABLE EFFORTS; CONSENTS OF THIRD PARTIES 29

SECTION 6.03 ACCESS TO INFORMATION 30

SECTION 6.04 ACQUISITION PROPOSALS 30

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SECTION 6.05 NOTIFICATION OF CERTAIN MATTERS; SUPPLEMENT TO DISCLOSURE SCHEDULES 30

SECTION 6.06 PUBLIC ANNOUNCEMENTS 31

SECTION 6.07 BULK SALES LAWS 31

SECTION 6.08 TAX MATTERS 31

SECTION 6.09 FURTHER ASSURANCES 31

SECTION 6.10 CHANGE OF SELLER’S NAME 31

SECTION 6.11 EXCLUDED LIABILITIES 32

SECTION 6.12 CONFIDENTIALITY; NON-DISPARAGEMENT 32

SECTION 6.13 DELIVERY OF FINANCIAL STATEMENTS; PCAOB FINANCIALS 32

SECTION 6.14 CHANGE IN CONTROL PAYMENTS 33

SECTION 6.15 INTENTIONALLY OMITTED 33

SECTION 6.16 SECURITIES LAWS EXEMPTION. 33

ARTICLE VII CONDITIONS TO CLOSING 33

SECTION 7.01 GENERAL CONDITIONS 33

SECTION 7.02 CONDITIONS TO OBLIGATIONS OF SELLERS 34

SECTION 7.03 CONDITIONS TO OBLIGATIONS OF BUYER 34

ARTICLE VIII TERMINATION 35

SECTION 8.01 TERMINATION RIGHTS 35

SECTION 8.02 NOTICE OF TERMINATION 36

SECTION 8.03 EFFECT OF TERMINATION 36

ARTICLE IX INDEMNIFICATION 36

SECTION 9.01 SURVIVAL 36

SECTION 9.02 INDEMNIFICATION BY SELLERS 36

SECTION 9.03 INDEMNIFICATION BY BUYER 36

SECTION 9.04 INDEMNIFICATION PROCEDURES 37

SECTION 9.05 TAX TREATMENT OF INDEMNIFICATION PAYMENTS 37

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SECTION 9.06 INTENTIONALLY OMITTED 37

SECTION 9.07 CUMULATIVE REMEDIES 38

SECTION 9.08 BASKET; CAP 38

SECTION 9.09 SOURCES OF RECOVERY 38

SECTION 9.10 DISREGARD MATERIALITY 39

ARTICLE X MISCELLANEOUS 39

SECTION 10.01 EXPENSES 39

SECTION 10.02 NOTICES 39

SECTION 10.03 HEADINGS 40

SECTION 10.04 SEVERABILITY 40

SECTION 10.05 ENTIRE AGREEMENT; AMENDMENT 40

SECTION 10.06 SUCCESSORS AND ASSIGNS; NO THIRD-PARTY BENEFICIARIES 40

SECTION 10.07 WAIVER 40

SECTION 10.08 GOVERNING LAW 40

SECTION 10.09 VENUE 40

SECTION 10.10 WAIVER OF JURY TRIAL 41

SECTION 10.11 SPECIFIC PERFORMANCE 41

SECTION 10.12 COUNTERPARTS 41

SECTION 10.13 CERTAIN DEFINED TERMS 41

SECTION 10.14 DEFINED TERMS 47

SECTION 10.15 DISCLOSURE SCHEDULES 49

SECTION 10.16 REPRESENTATION BY COUNSEL 49

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AMENDED AND RESTATED ASSET PURCHASE AGREEMENT

THIS ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of January 22, 2024, is entered into by and among (a) CLMBR, INC., a Delaware corporation (“Seller 1”), (b) CLMBR1, LLC, a Colorado limited liability company (“Seller 2”) (each of Seller 1 and Seller 2, a “Seller”, and Seller 1 and Seller 2 together, “Sellers”), (c) INTERACTIVE STRENGTH INC., a Delaware corporation (“Buyer”), and CLMBR HOLDINGS LLC, a Delaware limited liability company (“Acquisition Sub”).

RECITALS

WHEREAS, the Sellers and Buyer previously entered into that certain Asset Purchase Agreement dated October 6, 2023 (the “Prior Agreement”);

WHEREAS, the parties hereto desire to amend and restate the Prior Agreement in the form of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

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5

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In addition to any legend imposed by applicable federal or state securities laws, the book-entries or certificates representing the Common Stock to be issued to the Sellers pursuant to this Agreement shall bear a restrictive legend (and stop transfer orders shall be placed against the transfer thereof with Buyer’s transfer agent), stating substantially as follows:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO RESALE IN CONNECTION WITH A DISTRIBUTION AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT, OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

“THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO A LOCK-UP PERIOD WHICH SHALL EXPIRE NO EARLIER THAN 11:59 PM PACIFIC TIME ON THE DATE WHICH IS 540 DAYS FROM APRIL 27, 2023. SUCH LOCK-UP PERIOD IS BINDING ON TRANSFEREES OF THESE SHARES.”

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7

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8

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Each Seller, jointly and severally, represents and warrants to Buyer that the statements contained in this Article IV are true and correct. For purposes of this Article IV, “Sellers’ knowledge”, “knowledge of Sellers” and any similar phrases shall mean the actual knowledge of Avrum Elmakis or Kenny Rosenzweig, or the knowledge such person should have had after having made a reasonable inquiry of the books and records and relevant personnel of a Seller.

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10

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11

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15

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Sellers have made available to Buyer a true and accurate summary of its Information Security Program.

 

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25

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Buyer and Acquisition Sub each represents and warrants to Sellers that the statements contained in this Article V are true and correct; provided, however, that such statements are qualified in all material respects by the Buyer disclosures in its registration statement on Form S-1 and in its periodic reports filed with the SEC (the “Buyer SEC Filings”).

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2,000,000 shares of Common Stock = ((3,000,000-$1,000,000)/$3,000,000) * 3,000,000

Until such time that all Preferred Shares have been converted to Common Stock, in no event shall Buyer otherwise amend the Certificate of Designation except as otherwise provided in this Section 9.09 without the prior written consent of the holders of a majority of the Preferred Shares issued or issuable to Seller’s stockholders pursuant to this Agreement.

 

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If to Buyer or Acquisition Sub:

 

Interactive Strength Inc.

1005 Congress Avenue, Suite 925

Austin, Texas 78701

Attention: Trent A. Ward, Chief Executive Officer

Email: trent@formelife.com

 

with a copy (which will not constitute notice) to:

 

Moore & Van Allen PLLC

100 North Tryon Street, Suite 4700

Charlotte, North Carolina 28202

Attention: Daniel J. Layfield

Email: daniellayfield@mvalaw.com

 

If to Sellers:

 

CLMBR, Inc.

PO Box 6198

Denver, CO 80206

Attention: Avrum Elmakis

Email: aelmakis@clmbr.com

 

with a copy (which will not constitute notice) to:

 

Michael Best & Friedrich LLP

444 West Lake Street, Suite 3200

Chicago, IL 60606

Attention: Jordan H. Koss

Daniel J. Gawronski

Email: jhkoss@michaelbest.com

djgawronski@michaelbest.com

 

 

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Term	Section
2024 Unit Sales	2.06(a)
Acquisition Sub	Preamble

47

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Action	4.13
Agreement	Preamble
Allocation Schedule	2.04
Assigned Contracts	1.01(d)
Assignment and Assumption Agreement	3.02(a)(ii)
Assumed Liabilities	1.03
Audited Financial Statements	6.13
Basket	9.08(a)
Benefit Plan	4.14(a)
Bill of Sale	3.02(a)(i)
Buyer	Preamble
Buyer Documents	5.01(a)
Buyer Indemnified Parties	9.02
Cap	9.08(b)
Closing	3.01
Closing Date	3.01
Closing Date Purchase Price	2.01(a)
Closing Shares	2.01(b)(i)
Code	2.04
Combined Businesses	2.06(d)
Confidential Information	6.12(a)
Consents	2.07
Deficit	2.04(e)(i)
Disclosure Schedules	3.02(a)(iii)
Earn-Out Calculation	2.06(b)
Earn-Out Review Period	2.06(c)(i)
Earn-Out Shares	2.06(a)
Employees	4.15(a)
End Date	8.01(b)
Environmental Permits	4.21(b)
ERISA	4.14(a)
ERISA Affiliates	4.14(c)
Excluded Assets	1.02
Excluded Liabilities	1.04
Financial Statements	4.05
FLSA	4.15(a)
Indemnified Party	9.04
Indemnifying Party	9.04
Information Security Program	4.09(l)
Intellectual Property Assignment	3.02(a)(v)
IP Agreement	4.09(i)
IP Representations	9.01
Leases	4.11(a)
Neutral Accountant	2.04
Permits	4.10
Privacy Policies	4.09(o)
Proceeding	9.04
Purchased Assets	1.01
Real Property	4.11(a)
Restricted Seller Contracts	2.07
Schedule Supplement	6.05(b)

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Seller	Preamble
Seller 1	Preamble
Seller 2	Preamble
Seller Documents	4.01(a)
Seller Indemnified Parties	9.03
Sellers	Preamble
Surplus	2.04(e)(ii)
Third Party Proceeding	9.04
Top Customers	4.17(a)
Top Vendors	4.17(b)
VWAP	2.01(b)(i)
WARN	4.15(e)

 

[SIGNATURE PAGE TO FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

BUYER:

INTERACTIVE STRENGTH INC.

By /s/ Trent Ward

Name: Trent Ward

Title: CEO

ACQUISITION SUB:

CLMBR HOLDINGS LLC

By /s/ Trent Ward

Name: Trent Ward

Title: CEO

SELLER 1:

CLMBR, INC.

By /s/ Avrum Elmakis

Name: Avrum Elmakis

Title: Director

SELLER 2:

CLMBR1, LLC

By /s/ Avrum Elmakis

Name: Avrum Elmakis

Title: Director

[Signature Page to Amended and Restated Asset Purchase Agreement]

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Interactive Strength Inc. (Nasdaq: TRNR) Completes Acquisition of CLMBR, creating a High-growth, B2B Focused, Connected Fitness Platform

Austin, TX – February 7, 2024 - Interactive Strength Inc. (Nasdaq: TRNR) (“TRNR” or “the Company”), maker of premium smart home gyms and provider of virtual personal training services under the FORME brand, today announced that it has completed the acquisition of substantially all of the assets of CLMBR, Inc., (“CLMBR”) the maker of the first-to-market connected vertical climber.

Trent Ward, Co-Founder and CEO of TRNR, said: “We are thrilled to have acquired CLMBR and its sizeable consumer installed base in this acquisition. More importantly, the move into the B2B channel is expected to add exciting growth to our portfolio of products. We believe this will be a transformational acquisition that can accelerate the Company’s commercialization path.” Ward continues, “We expect this transaction can help us achieve immediate scale across all of our cost centers, resulting in a high-growth, profitable platform that sells connected fitness equipment and digital fitness services across B2B and B2C channels. Additionally, we believe this acquisition could serve as a model to create value going forward.”

The transaction closed on February 2, 2024.

 

Transaction Highlights:

The acquisition is expected to yield several strategic and financial benefits, positioning the combined entity for further growth:

 

 

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TRNR Investor Contact

ir@formelife.com

 

TRNR Media Contact

forme@jacktaylorpr.com

 

About Interactive Strength Inc.:

Interactive Strength Inc. has two main brands: 1) CLMBR and 2) FORME.

CLMBR is an innovative vertical climbing machine. It's the first vertical climber to feature a large-format touch display with on-demand, instructor-led classes. CLMBR's design is compact and easy to move – making it perfect for commercial or in-home use. Unlike many traditional fitness machines, CLMBR offers an efficient and effective full-body strength and cardio workout. With its low impact and ergonomic movement, CLMBR is safe for most ages and levels of ability. CLMBR is available directly to consumers on CLMBR.com as well as businesses, including gyms and fitness studios, hotels, and physical therapy facilities.

FORME is a digital fitness platform that combines premium smart home gyms with live virtual personal training and coaching to deliver an immersive experience and better outcomes for both consumers and trainers. FORME delivers an immersive and dynamic at-home fitness experience through two connected hardware products: 1. The FORME Studio (fitness mirror) and 2. The FORME Studio Lift (fitness mirror and cable-based digital resistance). In addition to the company’s connected fitness hardware products, FORME offers expert personal training and health coaching in different formats and price points through Video On-Demand, Custom Training, and Live 1:1 virtual personal training.

Interactive Strength Inc. is listed on NASDAQ (symbol: TRNR).

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Forward Looking Statements:

This press release includes certain statements that are not historical facts but are forward-looking statements for purposes of the safe harbor provisions under the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as “believe”, “project”, “expect”, “anticipate”, “estimate”, “intend”, “strategy”, “future”, “opportunity”, “plan”, “may”, “should”, “will”, “would”, “will be”, “will continue”, “will likely result” or similar expressions. that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of revenue and other financial and performance metrics and projections of market opportunity and expectations. These statements are based on various assumptions and on the current expectations of FORME and CLMBR’s management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of FORME and CLMBR. These forward looking statements are subject to a number of risks and uncertainties, including general economic, financial, legal, political and business conditions and changes in domestic and foreign markets; failure to realize the anticipated benefits of the proposed transaction, or costs associated with, integrating the businesses of FORME and CLMBR; the incurrence of significant indebtedness by FORME and the risk that FORME defaults in its obligations thereunder; risks related to the rollout of the combined business and the timing of expected business milestones; the effects of competition on FORME’s future business; and those factors discussed in FORME’s Registration Statement on Form S-1 filed with the Securities and Exchange Commission (the “SEC”) on April 27, 2023, Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2023, June 30, 2023 and September 30, 2023 under the heading “Risk Factors”, and other documents of FORME filed, or to be filed, with the SEC. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. There may be additional risks that FORME does not presently know or that FORME currently believes are immaterial that could also cause actual results to differ from those contained in the forward-looking statements. In addition, forward-looking statements reflect FORME’s plans or forecasts of future events and views as of the date of this press release. FORME anticipates that subsequent events and developments will cause its assessments to change. However, while FORME may elect to update these forward-looking statements at some point in the future, FORME specifically disclaims any obligation to do so. These forward-looking statements should not be relied upon as representing FORME’s assessment as of any date subsequent to the date of this press release. Accordingly, undue reliance should not be placed upon the forward-looking statements. FORME gives no assurance that either FORME or the combined company, will achieve its objectives.

 

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v3.24.0.1

Document And Entity Information	Feb. 01, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Period End Date	Feb. 01, 2024
Entity Registrant Name	INTERACTIVE STRENGTH INC.
Entity Central Index Key	0001785056
Entity Emerging Growth Company	true
Entity File Number	001-41610
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-1432916
Entity Address, Address Line One	1005 Congress Avenue, Suite 925
Entity Address, City or Town	Austin
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	78701
City Area Code	310
Local Phone Number	697-8655
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Ex Transition Period	false
Title of 12(b) Security	Common stock, $0.0001 par value per share
Trading Symbol	TRNR
Security Exchange Name	NASDAQ

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