Exhibit 2.1
ASSET PURCHASE AGREEMENT
by
and among
RE/MAX,
LLC,
RE/MAX
NORTHERN ILLINOIS AD FUND, INC.
Roaring
Fork Capital Partners, Inc.
and
PRINCIPAL
StockholderS
dated
as of
November
2, 2017
TABLE
OF CONTENTS
| |
|
Page |
| |
|
|
| Article I DefinitionS |
1 |
| |
|
| Article II Purchase and Sale |
9 |
| |
|
|
| Section 2.01 |
Purchase and Sale of Assets |
9 |
| Section 2.02 |
Excluded Assets |
9 |
| Section 2.03 |
Assumed Liabilities |
10 |
| Section 2.04 |
Excluded Liabilities |
11 |
| Section 2.05 |
Purchase Price |
12 |
| Section 2.06 |
Allocation of Purchase Price |
13 |
| Section 2.07 |
Withholding Tax |
13 |
| Section 2.08 |
Third Party Consents |
13 |
| |
|
|
| Article III Closing |
14 |
| |
|
|
| Section 3.01 |
Closing |
14 |
| Section 3.02 |
Closing Deliverables |
14 |
| |
|
|
| Article IV Representations and warranties of seller and PRINCIPAL stockholders |
15 |
| |
|
|
| Section 4.01 |
Organization and Qualification of Seller |
16 |
| Section 4.02 |
Authority |
16 |
| Section 4.03 |
Capitalization |
17 |
| Section 4.04 |
No Conflicts; Consents |
17 |
| Section 4.05 |
Financial Statements |
17 |
| Section 4.06 |
Undisclosed Liabilities |
18 |
| Section 4.07 |
Absence of Certain Changes, Events and Conditions |
18 |
| Section 4.08 |
Material Contracts |
19 |
| Section 4.09 |
Title to Purchased Assets |
19 |
| Section 4.10 |
Owned Real Property |
20 |
| Section 4.11 |
Leased Real Property |
20 |
| Section 4.12 |
Intellectual Property |
20 |
| Section 4.13 |
Accounts Receivable |
21 |
| Section 4.14 |
Franchise Matters |
21 |
| Section 4.15 |
Insurance |
24 |
| Section 4.16 |
Legal Proceedings; Governmental Orders |
24 |
| Section 4.17 |
Compliance With Laws; Permits |
25 |
| Section 4.18 |
Employment and Employee Benefit Matters |
25 |
| Section 4.19 |
Taxes |
26 |
| Section 4.20 |
Brokers |
27 |
| Section 4.21 |
No Other Representations or Warranties |
27 |
| |
|
|
| Article V Representations and warranties of BuyerS |
27 |
| |
|
|
| Section 5.01 |
Organization of Buyer |
27 |
| Section 5.02 |
Authority of Buyer |
27 |
| Section 5.03 |
No Conflicts; Consents |
28 |
| Section 5.04 |
Brokers |
28 |
| Section 5.05 |
Legal Proceedings |
28 |
TABLE OF CONTENTS
(continued)
| |
Page |
| |
|
| Article VI Covenants |
28 |
| |
|
|
| Section 6.01 |
Conduct of Business Prior to the Closing |
28 |
| Section 6.02 |
Access to Information |
29 |
| Section 6.03 |
No Solicitation of Other Bids |
29 |
| Section 6.04 |
Notice of Certain Events |
30 |
| Section 6.05 |
[Reserved] |
30 |
| Section 6.06 |
[Reserved] |
30 |
| Section 6.07 |
Confidentiality |
31 |
| Section 6.08 |
Non-competition; Non-solicitation |
31 |
| Section 6.09 |
Governmental Approvals and Consents |
32 |
| Section 6.10 |
Books and Records |
33 |
| Section 6.11 |
Closing Conditions |
34 |
| Section 6.12 |
Public Announcements |
34 |
| Section 6.13 |
Receivables |
34 |
| Section 6.14 |
Transfer Taxes |
35 |
| Section 6.15 |
Tax Clearance Certificates |
35 |
| Section 6.16 |
No Continued Sales |
35 |
| Section 6.17 |
Further Assurances |
35 |
| Section 6.18 |
Name Change |
35 |
| Section 6.19 |
reTech Arrangements |
35 |
| Section 6.20 |
R&W Insurance |
36 |
| Section 6.21 |
Sales Advisory Council and Broker/Owner Council |
36 |
| |
|
|
| Article VII Conditions to Closing |
36 |
| |
|
|
| Section 7.01 |
Conditions to Obligations of All Parties |
36 |
| Section 7.02 |
Conditions to Obligations of Buyers |
37 |
| Section 7.03 |
Conditions to Obligations of Seller and Principal Stockholders |
39 |
| Section 7.04 |
Waiver; Effect of Closing on Conditions |
40 |
| |
|
|
| Article VIII Indemnification |
40 |
| |
|
|
| Section 8.01 |
Survival |
40 |
| Section 8.02 |
Indemnification By Seller and Principal Stockholders |
41 |
| Section 8.03 |
Indemnification By Buyers |
42 |
| Section 8.04 |
Indemnification Procedures |
42 |
| Section 8.05 |
Payments |
44 |
| Section 8.06 |
Tax Treatment of Indemnification Payments |
44 |
| Section 8.07 |
Certain Limitations |
44 |
| Section 8.08 |
Exclusive Remedies |
45 |
| Section 8.09 |
Termination and Release of Regional Franchise Agreements |
46 |
| |
|
|
| Article IX Termination |
46 |
| |
|
|
| Section 9.01 |
Termination |
46 |
| Section 9.02 |
Effect of Termination |
47 |
| Section 10.01 |
Expenses |
47 |
| Section 10.02 |
Notices |
47 |
| Section 10.03 |
Interpretation |
48 |
| Section 10.04 |
Headings |
48 |
| Section 10.05 |
Severability |
48 |
TABLE OF CONTENTS
(continued)
| |
Page |
| Section 10.06 |
Entire Agreement |
49 |
| Section 10.07 |
Successors and Assigns |
49 |
| Section 10.08 |
No Third-party Beneficiaries |
49 |
| Section 10.09 |
Amendment and Modification; Waiver |
49 |
| Section 10.10 |
Governing Law |
49 |
| Section 10.11 |
Specific Performance |
50 |
| Section 10.12 |
Counterparts |
50 |
EXHIBITS
| Exhibit A |
RE/MAX Purchased Assets |
| Exhibit B |
Ad Fund Purchased Assets |
| Exhibit C |
Assigned Contracts |
| Exhibit D |
Form Assignment and Assumption Agreement |
| Exhibit E |
Form Intellectual Property Assignment |
| Exhibit F |
Form Transition Services Agreement |
ASSET
PURCHASE AGREEMENT
This Asset Purchase Agreement
(this “Agreement”), dated as of November 2, 2017, is entered into by and among Roaring Fork Capital Partners,
Inc., a Colorado corporation doing business as RE/MAX Northern Illinois (the “Seller”), RE/MAX, LLC (formerly
known as RE/MAX International, Inc. and as RE/MAX of America, Inc.), a Delaware limited liability company (“RE/MAX”),
RE/MAX Northern Illinois Ad Fund, Inc., a Colorado corporation (“Ad Fund Buyer” and, together with RE/MAX, the
“Buyers”) and the Principal Stockholders (defined below).
RECITALS
WHEREAS, Seller is party
to those certain RE/MAX Regional Agreements dated February 2, 1977 and September 6, 1977, each between RE/MAX and Richard and Betty
Hegner, which agreements were assigned to RE/MAX of Northern Illinois, Inc. and subsequently assigned to Seller on May 21, 2001
(the “Regional Franchise Agreements”);
WHEREAS, pursuant to the
Regional Franchise Agreements, Seller acquired the subfranchise rights to the RE/MAX System for the territory identified in the
Regional Franchise Agreements and Seller has operated and built a RE/MAX real-estate franchising business (“Business”)
within such territory pursuant to the Regional Franchise Agreements;
WHEREAS, it is a condition
of Buyers to enter into and consummate the transactions contemplated herein that the Principal Stockholders agree to the non-competition
and other obligations provided for herein; and
WHEREAS, Buyers desire
to purchase from Seller, and Seller desires to sell and assign to Buyers, the Purchased Assets, in each case upon the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration
of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
Article
I
DefinitionS
The following terms have
the meanings specified or referred to in this Article I:
“Accounts Receivable”
has the meaning set forth in Exhibit A.
“Acquisition Proposal”
has the meaning set forth in Section 6.03(a).
“Action”
means any collection matter, claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation,
proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory
or otherwise, whether at law or in equity, including related to any claim for indemnification pursuant to Article VIII hereof.
“Ad Fund Assumed
Liabilities” has the meaning set forth in Section 2.03.
“Ad Fund Buyer”
has the meaning set forth in the preamble.
“Ad Fund Purchased
Assets” has the meaning set forth in Section 2.01(b).
“Affiliate”
of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such Person. The term “control” (including the terms “controlled by” and
“under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Agreement”
has the meaning set forth in the preamble.
“Assigned Contracts”
means the Contracts set forth on Exhibit C.
“Assignment and
Assumption Agreement” has the meaning set forth in Section 3.02(a)(ii).
“Assumed Liabilities”
means, collectively, the RE/MAX Assumed Liabilities and the Ad Fund Assumed Liabilities.
“Audited Financial
Statements” has the meaning set forth in Section 4.05.
“Balance Sheet”
has the meaning set forth in Section 4.05.
“Balance Sheet
Date” has the meaning set forth in Section 4.05.
“Benefit Plan”
means any pension, benefit, retirement, compensation, profit-sharing, deferred compensation, incentive, performance award, phantom
equity, stock or stock-based, change in control, retention, severance, vacation, paid time off, fringe-benefit and other similar
agreement, plan, policy, program or arrangement (and any amendments thereto), in each case whether or not reduced to writing and
whether funded or unfunded, including each “employee benefit plan” within the meaning of Section 3(3) of ERISA, whether
or not tax-qualified and whether or not subject to ERISA, which is or has been maintained, sponsored, contributed to, or required
to be contributed to by Seller for the benefit of any current or former employee, officer, director, retiree, independent contractor
or consultant of Seller or any spouse or dependent of such individual, or under which Seller has or may have any Liability, whether
direct or indirect (including any such plan or other arrangement previously maintained by Seller).
“Books and Records”
has the meaning set forth on Exhibit A.
“Broker Payments”
means amounts related to the monthly management fees, the technology fees, broker service fees, advertising fund fees, and any
other fees or other amounts due and payable to Seller under any Franchise Agreement.
“Business”
has the meaning set forth in the recitals, and specifically does not include reTech.
“Business Day”
means any day except Saturday, Sunday or any other day on which commercial banks located in Denver, Colorado are authorized or
required by Law to be closed for business.
“Buyer”
has the meaning set forth in the preamble.
“Buyer Closing
Certificate” has the meaning set forth in Section 7.02(f).
“Buyer Indemnitee”
has the meaning set forth in Section 8.02.
“Closing”
has the meaning set forth in Section 3.01.
“Closing Date”
has the meaning set forth in Section 3.01.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Contracts”
means all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures
and all other agreements, commitments and legally binding arrangements, whether written or oral.
“Direct Claim”
has the meaning set forth in Section 8.04(c).
“Disclosure Schedules”
means the Disclosure Schedules delivered by Seller and Buyer concurrently with the execution and delivery of this Agreement.
“Dollars or $”
means the lawful currency of the United States.
“Encumbrance”
means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option,
security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind, including
any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.
“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.
“ERISA Affiliate”
means each entity that is, or was required to be, treated as a single employer with Seller under Sections 414(b), (c), (m) or (o)
of the Code.
“Escrow Agent” means J.P.
Morgan Chase Bank, N.A.
“Escrow Agreement”
means the Escrow Agreement in the form and substance reasonably agreed to among Buyers, Seller and the Escrow Agent, which shall
provide for the Escrow Amount to be released to Seller not sooner than of four (4) years following the Closing Date, and shall
provide that the investments permitted while funds are in escrow shall be limited to (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 date of acquisition; (ii) certificates of deposit,
time deposits, eurodollar time deposits or overnight bank deposits having maturities of one year or less from the date of acquisition
issued by any commercial bank organized under the laws of the United States or any state thereof having combined capital and surplus
of not less than $500,000,000; (iii) money market mutual funds that comply with the criteria set forth in SEC Rule 2a-7 under the
Investment Company Act of 1940, as amended, are rated AAA by S&P and Aaa by Moody’s and have portfolio assets of at least
$5,000,000,000; and/or (iv) bonds, notes, debentures or other evidences of indebtedness with maturities of one year or less from
the date of acquisition issued or guaranteed by a corporation which are, at the time of purchase, rated by Standard & Poor’s
as A or higher, or by Moody’s as A or higher, and shall provide that any fees or costs payable to the Escrow Agent pursuant
to the Escrow Agreement shall be borne and paid fifty percent (50%) by Seller and fifty percent (50%) by Buyer, when due.
“Escrow Amount”
means an amount equal to Four Hundred Thousand Dollars ($400,000).
“Exchange Act”
has the meaning set forth in Section 6.07.
“Excluded Assets”
has the meaning set forth in Section 2.02.
“Excluded Claims”
has the meaning set forth in Section 2.02(h).
“Excluded Contracts”
has the meaning set forth in Section 2.02(a).
“Excluded Liabilities”
has the meaning set forth in Section 2.04.
“FDD”
means the franchise disclosure document prepared in accordance with the FTC Rule or any other Franchise Law and any other standard
pre-contract information document provided to any prospective Franchisee describing the Franchise opportunity.
“Financial Statements”
has the meaning set forth in Section 4.05.
“Franchise”
means any grant by Seller to any Person of the right to engage in or carry on a “RE/MAX” business, which constitutes
a “franchise,” as that term is defined under (a) the FTC Rule, regardless of the jurisdiction in which the franchised
business is located or operates; or (b) the Franchise Law applicable in the jurisdiction in which the franchised business is located
or operates, if any.
“Franchise Agreements”
means the RE/MAX real estate franchise and license agreements and any other related agreements (including any addenda) and any
renewals thereof, as may be amended from time to time, entered into between Seller or any predecessor thereof and any Franchisee.
“Franchise Law”
means the FTC Rule and any other Law (including the Law of any state of the United States or any other country) regulating the
offer or sale of Franchises, business opportunities, seller-assisted marketing plans or similar relationships or governing the
relationship of the parties to a Franchise arrangement, including in the areas of terminating, failing to renew, and transferring
that arrangement.
“Franchisee”
means a Person who owns an individual real-estate brokerage office that is authorized pursuant to a Franchise Agreement with Seller
to establish such office and operate a real-estate business under the RE/MAX name and RE/MAX Intellectual Property.
“FTC Rule”
means the Federal Trade Commission trade regulation rule entitled “Disclosure Requirements and Prohibitions Concerning
Franchising,” 16 C.F.R. Section 436.1 et seq.
“Fundamental Representations”
has the meaning set forth in Article IV.
“GAAP”
means United States generally accepted accounting principles in effect from time to time.
“Governmental
Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality
of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority
or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the
force of Law), or any arbitrator, court or tribunal of competent jurisdiction.
“Governmental
Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
“Indemnified Party”
has the meaning set forth in Section 8.04.
“Indemnifying
Party” has the meaning set forth in Section 8.04.
“Insurance Policies”
has the meaning set forth in Section 4.15.
“Intellectual
Property” means all of the following and similar intangible property and related proprietary rights, interests and protections,
however arising, pursuant to the Laws of any jurisdiction throughout the world: (a) trademarks, service marks, trade names, brand
names, logos, trade dress and other proprietary indicia of goods and services, whether registered or unregistered, and all registrations
and applications for registration of such trademarks, including intent-to-use applications, all issuances, extensions and renewals
of such registrations and applications and the goodwill connected with the use of and symbolized by any of the foregoing; (b) e-mail
addresses, internet domain names, URL addresses, websites, whether or not trademarks, registered in any top-level domain by any
authorized private registrar or registry or Governmental Authority, and any internet login or identifier, including but not limited
to, any social media screen names, accounts or handles; (c) original works of authorship in any medium of expression, whether or
not published, all copyrights (whether registered or unregistered), all registrations and applications for registration of such
copyrights, and all issuances, extensions and renewals of such registrations and applications; (d) confidential information, formulas,
designs, devices, technology, know-how, research and development, inventions, methods, processes, compositions, customer lists,
lists of and all information related to Franchisees and any franchise, broker, and/or agent prospects, and other trade secrets,
whether or not patentable; and (e) all rights to sue and recover and retain damages, costs and attorneys’ fees for past,
present and future infringement and any other rights relating to any of the foregoing; provided, however, “Intellectual Property”
shall specifically not include (i) Stockholder’s personal email, (ii) reTech’s email, Reagan Partnership’s email,
(iii) Jim Merrion's email, other than those related to the Business, (iv) Debbie O'Leary's email, other than those related to the
Business, (v) Jack Kreider's email other than those related to the Business, and (vi) the domain “rfcpinc.com”.
“Intellectual
Property Assets” means all Intellectual Property that is owned by Seller and used in or necessary for the conduct of
the Business as currently conducted.
“Intellectual
Property Assignment” has the meaning set forth in Section 3.02(a)(iii).
“Intellectual
Property Licenses” means all licenses, sublicenses and other agreements, other than the Regional Franchise Agreement,
by or through which other Persons, including Seller’s Affiliates, grant Seller exclusive or non-exclusive rights or interests
in or to any Intellectual Property that is used in or necessary for the conduct of the Business as currently conducted, except
for readily available off-the-shelf commercial licenses.
“Intellectual
Property Registrations” means all Intellectual Property Assets that are subject to any issuance, registration, application
or other filing by, to or with any Governmental Authority or authorized private registrar or registry in any jurisdiction, including
registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the foregoing.
“Interim Balance
Sheet” has the meaning set forth in Section 4.05.
“Interim Balance
Sheet Date” has the meaning set forth in Section 4.05.
“Interim Financial
Statements” has the meaning set forth in Section 4.05.
“International
Employee Plan” means any Benefit Plan for the benefit of one or more employees who perform services outside the United
States that is subject to the laws of a foreign country and has been adopted by, maintained by or contributed to by Seller, whether
formally or informally, or with respect to which Seller has, may have or will have any Liability.
“Knowledge of
Seller or Seller’s Knowledge” or any other similar knowledge qualification, means (i) the actual knowledge of the
Principal Stockholders (collectively, the “Knowledge Parties”), or (ii) the knowledge of any of the Knowledge
Parties based on what such Person knew or should have known in the normal course of performing their respective duties.
“Law”
means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement
or rule of law of any Governmental Authority.
“Liabilities”
means liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent,
accrued or unaccrued, matured or unmatured or otherwise.
“Losses”
means losses, damages, Liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of
whatever kind, including reasonable attorneys’ fees actually incurred and the cost of enforcing any right to indemnification
hereunder and the cost of pursuing any insurance providers.
“Material Adverse
Effect” means any event, occurrence, fact, condition or change that is, or could reasonably be expected to become, individually
or in the aggregate, materially adverse to (a) the business, results of operations, financial prospects, financial condition, or
assets of Seller, or (b) the value of the Purchased Assets in the aggregate amount in excess of $65,000; provided, that
none of the following events, conditions, changes, occurrences, developments or states of circumstances shall be deemed to be,
either alone or in combination, materially adverse: (a) changes or developments in financial, economic or political conditions
in the United States; (b) changes or developments, after the date hereof, in any Law or GAAP or interpretation or enforcement thereof;
(c) changes or developments resulting from or caused by natural disasters, outbreak of major hostilities in which the United States
is involved or any act of war or terrorism within the United States or directed against its facilities or citizens wherever located;
(d) failure by such Person to meet internal or third party projections or forecasts or any published revenue or earnings projections
for any period (except to the extent that, with respect to this clause (e), the facts or circumstances giving rise or contributing
to such failure may themselves be deemed to constitute a Material Adverse Effect); (f) the announcement, pendency or completion
of the transactions contemplated by this Agreement, including losses or threatened losses of employees, customers, suppliers, distributors
or others having relationships with such Person; (g) any action required or permitted by this Agreement or any action taken (or
omitted to be taken) with the written consent of or at the written request of the other party; or (h) changes or developments that
affect generally the real estate franchising business.
“Material Contracts”
has the meaning set forth in Section 4.08(a).
“Ordinary Course
of Business” means, with respect to any action taken by a Person, such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal day-to-day operations of such Person.
“Permits”
means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained,
or required to be obtained, from Governmental Authorities.
“Person”
means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated
organization, trust, association or other entity.
“Pre-Closing Tax
Period” means any taxable period ending on or before the Closing Date and, with respect to any taxable period beginning
before and ending after the Closing Date, the portion of such taxable period ending on and including the Closing Date.
“Principal Stockholders”
means Thomas Reagan, Brian Reagan, Casey Reagan, and Michelle Blagg.
“Purchase Price”
has the meaning set forth in Section 2.05.
“Purchased Assets”
means collectively the RE/MAX Purchased Assets and the Ad Fund Purchased Assets.
“RE/MAX”
has the meaning set forth in the preamble.
“RE/MAX Assumed
Liabilities” has the meaning set forth in Section 2.03.
“RE/MAX Purchased
Assets” has the meaning set forth in Section 2.01(a).
“reTech”
means RE TECH SOLUTIONS, INC., a Colorado corporation.
“reTech Agreements”
means those certain agreements between Seller and certain of the Franchisees whereby Seller is to provide certain technology services
of reTech to such Franchisees and copies of such agreements shall be set forth in Section 4.14 of the Disclosure Schedules.
“Regional Advertising
Funds” means all working capital balances, including cash and cash equivalents, of any advertising funds, technology
funds, and other similar funds contractually reserved for a particular purpose pursuant to the Franchise Agreements.
“Regional Franchise
Agreements” has the meaning set forth in the recitals.
“Representative”
means, with respect to any Person, any and all directors, officers, employees, consultants, financial advisors, counsel, accountants
and other agents of such Person.
“Restricted Business”
means any residential or commercial real estate brokerage franchising or brokerage business, but specifically excludes the business
of reTech.
“R&W Insurance
Policy” means the buyer-side representation and warranty insurance policy obtained by RE/MAX.
“R&W Insurance
Premium” means all premium, underwriting, diligence, or other fee payments made by a Buyer in respect of the R&W
Insurance Policy.
“Restricted Period”
has the meaning set forth in Section 6.08(a).
“Seller”
has the meaning set forth in the preamble.
“Seller Closing
Certificate” has the meaning set forth in Section 7.02(h).
“Seller Indemnitees”
has the meaning set forth in Section 8.03.
“Stockholders”
means Thomas Reagan, Brian Reagan, Casey Reagan, Michelle Blagg, James Merrion and George Graff.
“Tax Return”
means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
“Taxes”
means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, documentary,
franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated,
excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits,
customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties
with respect thereto and any interest in respect of such additions or penalties.
“Territory”
means Seller’s current territory as set forth in the Regional Franchise Agreements.
“Third Party Claim”
has the meaning set forth in Section 8.04(a).
“Transaction Documents”
means this Agreement, the Assignment and Assumption Agreement, Intellectual Property Assignments, Transition Services Agreement,
and the Escrow Agreement.
“Transition Services
Agreement” has the meaning set forth in Section 3.02(a)(iv).
Article
II
Purchase and Sale
Section 2.01 Purchase
and Sale of Assets. Subject to the terms and conditions set forth herein, at the Closing, Seller shall sell, assign, transfer,
convey and deliver to:
(a) RE/MAX,
and RE/MAX shall purchase from Seller, free and clear of any Encumbrances, all of Seller’s right, title and interest in,
to and under all of the assets, properties and rights listed in Exhibit A, to the extent that such assets, properties and
rights exist as of the Closing Date (collectively, the “RE/MAX Purchased Assets”); and
(b) the
Ad Fund Buyer, and the Ad Fund Buyer shall purchase from Seller, free and clear of any Encumbrances, all of Seller’s right,
title and interest in, to and under all of the assets, properties and rights listed in Exhibit B, to the extent that such
assets, properties, and rights exist as of the Closing Date (collectively, the “Ad Fund Purchased Assets”).
Section 2.02 Excluded
Assets. The Purchased Assets shall not include any assets, properties, or rights of Seller other than the Purchased Assets
(collectively, the “Excluded Assets”). The Excluded Assets shall include, but are not limited to, the following
other such assets:
(a) Contracts,
including Intellectual Property Licenses, that are not Assigned Contracts (the “Excluded Contracts”);
(b) any
furniture, fixtures, equipment, tools, vehicles, office equipment, supplies, computers, telephones and other tangible personal
property;
(c) any
interest in any real property owned or leased by the Seller;
(d) any
inventory, finished goods, raw materials, work in progress, packaging, supplies, parts and other inventories;
(e) the
seals, organizational documents, minute books, ownership books and documents, Tax Returns, books of account or other records having
to do with the organization of Seller;
(f) any
Benefit Plans and assets attributable thereto;
(g) cash
and cash equivalents;
(h) the
claims, demands, suits, causes of action or enforcement rights of Seller as against third parties arising exclusively prior to
the Closing (“Excluded Claims”), including those listed in the Disclosure Schedules in Section 2.02(h),
and any settlement, recoveries, judgments, benefits, awards, damages, interest, costs, or other direct or indirect recovery arising
out of or related to Excluded Claims;
(i) the
confidential or proprietary communications of Seller or its respective Affiliates regarding the transactions contemplated under
this Agreement and communications of Seller or its Affiliates that are subject to attorney-client privilege, in each case whether
in tangible, electronic or other form; and
(j) the
rights which accrue or will accrue to Seller under the Transaction Documents;
(k) the
equity or any assets of any Affiliate of Seller, including but not limited to the equity and assets of reTech and Reagan Partnership,
LLC (“Reagan Partnership”);
(l) Stockholders’
personal email, reTech email, Reagan Partnership email, Jim Merrion's email, other than those related to the Business, Debbie O'Leary's
email, other than those related to the Business, Jack Kreider's email, other than those related to the Business, and the domain
“rfcpinc.com”; and
(m) Any
right of indemnification of Seller by any Franchisee under any Franchise Agreement.
Section 2.03 Assumed
Liabilities. Subject to the terms and conditions set forth herein, RE/MAX or Ad Fund Buyer, as applicable, shall assume and
agree to pay, perform and discharge only the following Liabilities of Seller (such Liabilities to be assumed by RE/MAX, the “RE/MAX
Assumed Liabilities”) and such Liabilities to be assumed by the Ad Fund Buyer, (the “Ad Fund Assumed Liabilities”)
and no other Liabilities:
(a) except
as otherwise provided for in Section 2.04, in the case of RE/MAX, all Liabilities in respect of the Assigned Contracts that
are assigned to RE/MAX, but only to the extent that such Liabilities thereunder are required to be performed after the Closing
Date and in the case of the Ad Fund Buyer, all Liabilities in respect of the Assigned Contracts that are assigned to Ad Fund Buyer,
but only to the extent that such Liabilities thereafter are required to be performed after the Closing Date; and
(b) those
Liabilities of Seller designated to be assumed by RE/MAX or Ad Fund Buyer, as applicable, set forth on Section 2.03(b) of
the Disclosure Schedules.
Section 2.04 Excluded
Liabilities. Notwithstanding the provisions of Section 2.03 or any other provision in this Agreement to the contrary,
Buyers shall not assume and shall not be responsible to pay, perform or discharge any Liabilities of Seller or any of its Affiliates
of any kind or nature whatsoever other than the Assumed Liabilities (the “Excluded Liabilities”). Seller shall,
and shall cause each of its Affiliates to, pay and satisfy as soon as practicable all Excluded Liabilities which they are obligated
to pay and satisfy. Without limiting the generality of the foregoing, the Excluded Liabilities shall include, but not be limited
to, the following:
(a) any
Liabilities of Seller arising or incurred in connection with the negotiation, preparation, investigation and performance of this
Agreement, the other Transaction Documents and the transactions contemplated hereby and thereby, including, without limitation,
fees and expenses of counsel, accountants, investment bankers, consultants, advisers and others;
(b) any
Liability for (i) Taxes of Seller (or any Stockholder or any Affiliate of Seller), including relating to the Business, the Purchased
Assets or the Assumed Liabilities for any Pre-Closing Tax Period; (ii) Taxes of Seller that arise out of the consummation of the
transactions contemplated hereby or that are the responsibility of Seller pursuant to Section 6.14; or (iii) other Taxes
of Seller (or any equityholder or any Affiliate of Seller) of any kind or description (including any Liability for Taxes of Seller
(or any equityholder or any Affiliate of Seller) that becomes a Liability of any Buyer under any common law doctrine of de facto
merger or transferee or successor liability or otherwise by operation of contract or Law);
(c) any
Liabilities relating to or arising out of the Excluded Assets;
(d) any
Liabilities in respect of any pending or threatened Action arising out of, relating to or otherwise in respect of the operation
of the Business or the Purchased Assets to the extent such Action relates to such operation on or prior to the Closing Date or
to the transactions contemplated herein;
(e) any
Liabilities of Seller arising under or in connection with any Benefit Plan;
(f) any
Liabilities of Seller for any present or former employees, officers, directors, retirees, independent contractors or consultants
of Seller, including, without limitation, any Liabilities associated with any claims for wages or other benefits, bonuses, accrued
vacation, workers’ compensation, severance, retention, termination or other payments;
(g) any
trade accounts payable of Seller;
(h) any
Liabilities to indemnify, reimburse or advance amounts to any present or former officer, director, employee or agent of Seller
(including with respect to any breach of fiduciary obligations by same), except for indemnification of same pursuant to Section
8.03 as Seller Indemnitees;
(i) any
Liabilities under the Excluded Contracts, and any Liabilities under any other Contracts that are not validly and effectively assigned
to a Buyer pursuant to this Agreement or that do not conform to the representations and warranties with respect thereto contained
in this Agreement, including any Liabilities that arise out of or relate to a breach by Seller of any such Contracts prior to Closing;
(j) any
Liabilities associated with debt, loans or credit facilities of Seller and/or the Business owing to financial institutions;
(k) any
Liabilities arising out of, in respect of or in connection with the failure by Seller or any of its Affiliates to comply with any
Law or Governmental Order; and
(l) any
Liabilities relating to or arising out of the matters set forth in Section 4.17(a) of the Disclosure Schedules.
Section 2.05 Purchase
Price.
(a) The
aggregate consideration for the Purchased Assets shall be Thirty Five Million Seven Hundred Twenty Thousand and No/100 Dollars
($35,720,000.00) (the “Purchase Price”) plus the assumption of the Assumed Liabilities. The Purchase Price,
less the amount of the R&W Insurance Premium, and less the Escrow Amount, shall be paid on the Closing Date by Buyers to Seller
by wire transfer of immediately available funds to an account designated in writing by Seller to Buyers.
(b) Broker
Payments.
(i) From
and after the Closing Date, unless otherwise instructed in writing by Buyers, Seller shall collect Broker Payments due for the
calendar months of November and December 2017, and Seller shall deposit the amount of such Broker Payments in Seller’s bank
account consistent with Seller’s Ordinary Course of Business prior to the Closing.
(ii) On
the last Business Day of December 2017, Seller shall pay to RE/MAX an amount equal to (A) the amount owed to Buyer from Seller
pursuant to Seller’s Regional Franchise Agreements only for November 1, 2017, until and including the Closing Date, plus
(B) all of the Broker Payments attributable only to the period after (but not including) the Closing Date until and including November
30, 2017. Also, on the last Business Day of January 2018, Seller shall pay to RE/MAX an amount equal to all of the Broker Payments
collected by Seller on behalf of Buyer attributable only to the calendar month of December 2017. RE/MAX will act in good faith
and use commercially reasonable efforts consistent with Seller’s past practice in Seller’s collection of such Broker
Payments. For purposes of the foregoing sentence, “commercially reasonable efforts” shall not include formal demands,
the taking of any collection actions (including assignment to a third party collection agency), or any other legal Action.
(iii) Except
as provided for above, after the Closing Date, no Seller shall attempt to collect any amounts related to any other Accounts Receivable
without RE/MAX’s written consent. If Seller collects any amounts related to any other Accounts Receivable, Seller shall promptly
notify RE/MAX of such collection and Seller shall remit such amounts to RE/MAX within five (5) Business Days after its receipt
thereof.
(iv) In
connection with the collection of the Broker Payments provided for in this Section 2.05, Seller shall provide to Buyer the substantially
similar reports and statistics, on the same schedule, that Seller has provided to Buyer for the period prior to Closing.
Section 2.06 Allocation
of Purchase Price. Seller and Buyers agree that the Purchase Price and the Assumed Liabilities (plus other relevant items)
shall be allocated for purposes of Section 1060 of the Internal Revenue Code of 1986, as amended, among the Purchased Assets in
the manner reasonably agreed to by the parties. Buyers and Seller shall file all Tax Returns (including amended returns and claims
for refund) and information reports in a manner consistent with such allocation. If the Buyers and Seller are not able to agree
to such an allocation, each such party may file such Tax Returns with such information as determined by such Person.
Section 2.07 Withholding
Tax. Buyers shall be entitled to deduct and withhold from the Purchase Price all Taxes that Buyers are required to deduct and
withhold under any provision of applicable Law. All such withheld amounts shall be treated as delivered to Seller hereunder; provided,
however, that such amounts withheld pursuant to applicable Law are actually remitted to the appropriate Governmental Authority
as and when required by Law. RE/MAX must provide written notice to Seller on the later of (i) at least five (5) days in advance
of Closing if it intends to withhold in order to invoke the right in this section to withhold tax, or (ii) promptly after becoming
aware of such withholding obligation as a result of any Tax Clearance Certificate, but in any event such notice must be provided
prior to Closing.
Section 2.08 Third
Party Consents. To the extent that any rights of Seller under any Contract or Permit constituting a Purchased Asset, or any
other Purchased Asset, may not be assigned to a Buyer without the consent of another Person which has not been obtained, this Agreement
shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful,
and Seller, at its expense, shall use commercially reasonable efforts to obtain any such required consent(s) as promptly as possible.
If any such consent shall not be obtained or if any attempted assignment would be ineffective or would impair a Buyer’s rights
under the Purchased Asset in question so that such Buyer would not in effect acquire the benefit of all such rights, the Seller,
to the maximum extent permitted by Law and the Purchased Asset, shall act after the Closing as such Buyer’s agent in order
to obtain for it the benefits thereunder and shall cooperate, to the maximum extent permitted by Law and the Purchased Asset, with
such Buyer in any other reasonable arrangement designed to provide such benefits to such Buyer. Notwithstanding any provision in
this Section 2.08 to the contrary, no Buyer shall be deemed to have waived its rights under Section 7.02(d) hereof
unless and until such Buyer either provides written waivers thereof or elects to proceed to consummate the transactions contemplated
by this Agreement at Closing.
Article
III
Closing
Section 3.01 Closing.
Subject to the terms and conditions of this Agreement, the consummation of the transactions contemplated by this Agreement (the
“Closing”) shall take place concurrently at the offices of the respective counsel to Buyers and Seller, with
Closing deliveries to be made by wire transfer, facsimile, or electronic mail, where appropriate, with originals to follow via
overnight courier, on the third (3rd) Business Day after all of the conditions to Closing set forth in Article VII
are either satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), or in such
other manner and at such other time, date or place as Seller and Buyers may mutually agree upon in writing. The parties hereto
shall use their commercially reasonable efforts to satisfy each of their respective closing conditions on or prior to November
15, 2017. The date on which the Closing is to occur is herein referred to as the “Closing Date”. For accounting
and Tax purposes, the Closing shall be deemed to take effect at 11:59 pm on the Closing Date. For all other purposes, the Closing
shall be deemed to take effect at the time of the payment of the Purchase Price on the Closing Date.
Section 3.02 Closing
Deliverables.
(a) At
the Closing, Seller shall deliver to the respective Buyer, as applicable, the following:
(i) all
of the RE/MAX Purchased Assets owned by Seller to RE/MAX, and all of the Ad Fund Purchased Assets to the Ad Fund Buyer;
(ii) an
assignment and assumption agreement to each of RE/MAX and the Ad Fund Buyer substantially in the form of Exhibit D hereto
(the “Assignment and Assumption Agreement”) and duly executed by Seller, in the case of RE/MAX, effecting the
assignment to and assumption by RE/MAX, and in the case of the Ad Fund Buyer, effecting the assignment to and assumption by the
Ad Fund Buyer of the Ad Fund Purchased Assets owned by Seller and the Ad Fund Assumed Liabilities from Seller of the RE/MAX Purchased
Assets owned by Seller and the RE/MAX Assumed Liabilities from Seller;
(iii) an
assignment substantially in the form of Exhibit E hereto (the “Intellectual Property Assignment”) and
duly executed by Seller, transferring all of Seller’s right, title and interest in and to the Intellectual Property Assets
owned by Seller to the applicable Buyer;
(iv) the
Transition Services Agreement substantially in the form of Exhibit F hereto (the “Transition Services Agreement”)
and duly executed by Seller;
(v) a
Seller Closing Certificate delivered by Seller;
(vi) the
certificates of the Secretary or Assistant Secretary of Seller required by Section 7.02(i) and Section 7.02(j);
(vii) the
Escrow Agreement duly executed by Seller and delivered to RE/MAX;
(viii) all
consents, authorizations, orders and approvals from the Governmental Authorities referred to in Section 6.09 in form and
substance reasonably satisfactory to Buyers; and
(ix) such
other customary instruments of transfer, assumption, filings or documents, in form and substance reasonably satisfactory to Buyers,
as may be required to give effect to this Agreement.
(b) At
the Closing, Buyers, as applicable, shall deliver to Seller the following:
(i) the
Purchase Price, less the amount of the R&W Insurance Premium and less the Escrow Amount, by wire transfer, which such amount
shall be allocated as between RE/MAX and the Ad Fund Buyer as determined by such parties.
(ii) the
Assignment and Assumption Agreement duly executed by the applicable Buyer;
(iii) the
Transition Services Agreement duly executed by RE/MAX;
(iv) a
Buyer Closing Certificate of each Buyer;
(v) the
Escrow Agreement duly executed by RE/MAX;
(vi) a
certificate of the Secretary or Assistant Secretary (or equivalent officer) of each Buyer required by Section 7.03(g) and
Section 7.03(h); and
(vii) such
other customary instruments or documents, in form and substance reasonably satisfactory to Seller and Principal Stockholders, as
may be required to give effect to this Agreement.
(c) At
the Closing, Buyers shall deliver to the Escrow Agent the Escrow Amount to be held and distributed pursuant to the terms of the
Escrow Agreement and shall deliver the remaining amount of the R&W Insurance Premium in accordance with the terms of the R&W
Insurance Policy.
Article
IV
Representations and warranties of seller and PRINCIPAL
stockholders
Except as set forth in
the correspondingly numbered Section of the Disclosure Schedules, Seller represents and warrants to Buyers that the statements
contained in this Article IV are true and correct as of the date hereof and as of the Closing Date with respect to Seller
and the Purchased Assets. Only with respect to the representations and warranties in Sections 4.01, 4.02, 4.03, 4.04 and
4.20 (collectively, the “Fundamental Representations”), each Principal Stockholder represents and warrants
that such information is true and correct as of the date hereof and of the Closing Date.
Section 4.01 Organization
and Qualification of Seller. Seller is a corporation duly organized, validly existing and in good standing under the Laws of
the state of Colorado and has full corporate power and authority to own, operate or lease the properties and assets now owned,
operated or leased by it and to carry on the Business as currently conducted. Section 4.01 of the Disclosure Schedules sets
forth each jurisdiction in which Seller is licensed or qualified to do business. Seller is duly licensed or qualified to do business
and is in good standing in each jurisdiction in which the ownership of the Purchased Assets or the operation of the Business as
currently conducted makes such licensing or qualification necessary.
Section 4.02 Authority.
(a) Seller
has full corporate power and authority to enter into this Agreement and the other Transaction Documents to which Seller is a party,
to carry out Seller’s obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.
The execution and delivery by Seller of this Agreement and any other Transaction Document to which Seller is a party, the performance
by Seller of its obligations hereunder and thereunder and the consummation by Seller of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate action on the part of Seller. This Agreement has been duly executed
and delivered by Seller, and (assuming due authorization, execution and delivery by Buyer) this Agreement constitutes a legal,
valid and binding obligation of Seller enforceable against Seller in accordance with its terms. When each other Transaction Document
to which Seller is or will be a party has been duly executed and delivered by Seller (assuming due authorization, execution and
delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Seller enforceable
against it in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar Laws now or hereafter in effect relating to or affecting creditors’ rights generally or by general equitable
principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).
(b) With
respect only to this Section 4.02(b), each Stockholder has full power and authority to enter into this Agreement and the
other Transaction Documents to which such Stockholder is a party, to carry out its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered by each Stockholder,
and (assuming due authorization, execution and delivery by Buyers) this Agreement constitutes a legal, valid and binding obligation
of such Stockholder enforceable against such Stockholder in accordance with its terms. When each other Transaction Document to
which each Stockholder is or will be a party has been duly executed and delivered by such Stockholder (assuming due authorization,
execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of
such Stockholder enforceable against it in accordance with its terms except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar Laws now or hereafter in effect relating to or affecting creditors’ rights generally
or by general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).
Section 4.03 Capitalization.
(a) The
authorized capital stock of Seller consists of 90,000 shares of capital stock, of which 90,000 are issued and outstanding. All
of the shares of capital stock of Seller have been duly authorized, are validly issued, fully paid and non-assessable, and are
collectively owned of record and beneficially solely by the Stockholders.
(b) There
are no outstanding or authorized options, warrants, convertible securities or other rights, agreements, arrangements or commitments
of any character relating to the capital stock of Seller or obligating the Stockholders to issue or sell any shares of capital
stock of any such Person, or any other interest in, Seller. Seller has no outstanding or authorized stock appreciation, phantom
stock, profit participation or similar rights. There are no voting trusts, stockholder agreements, proxies or other agreements
or understandings in effect with respect to the voting or transfer of any of the capital stock of Seller.
Section 4.04 No
Conflicts; Consents. The execution, delivery and performance by Seller and the Principal Stockholders of this Agreement and
the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereby and thereby,
do not and will not, except as set forth in Section 4.04 of the Disclosure Schedules: (a) conflict with or result in a violation
or breach of, or default under, any provision of the certificate of incorporation, bylaws, or other organizational document of
Seller; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Seller
or the Stockholders, the Business or the Purchased Assets; (c) require the consent, notice or other action by any Person under,
conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time
or both, could constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate,
modify or cancel any Contract or Permit to which Seller or the Stockholders is a party or by which Seller or the Stockholders or
the Business is bound or to which any of the Purchased Assets are subject (including any Assigned Contract); or (d) result in the
creation or imposition of any Encumbrance on the Purchased Assets. No consent, approval, Permit, Governmental Order, declaration
or filing with, or notice to, any Governmental Authority is required by or with respect to Seller or the Stockholders in connection
with the execution and delivery of this Agreement or any of the other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby.
Section 4.05 Financial
Statements. Complete copies of the audited financial statements consisting of the balance sheet of Seller as at December 31,
in each of the years 2014, 2015, and 2016, and the related statements of income and retained earnings, stockholders’ equity
and cash flow for the years then ended (the “Audited Financial Statements”), and unaudited financial statements
consisting of the balance sheet of the Business as at August 31, 2017, and the related statement of income for the nine-month period
then ended (the “Interim Financial Statements” and together with the Audited Financial Statements, the “Financial
Statements”) are attached to Section 4.05 of the Disclosure Schedules. The Financial Statements have been prepared
in accordance with GAAP in all material respects, applied on a consistent basis throughout the periods involved, subject, in the
case of the Interim Financial Statements, to normal and recurring year-end adjustments (the effect of which will not be materially
adverse to Seller) and the absence of notes (that, if presented, based on Seller’s Knowledge would not materially differ
from those presented in the Audited Financial Statements). The Financial Statements are based on the books and records of Seller,
and fairly present in all material respects the financial condition of Seller as of the respective dates they were prepared and
the results of the operations of Seller for the periods indicated. The balance sheet of Seller as of December 31, 2016, is referred
to herein as the “Balance Sheet” and the date thereof as the “Balance Sheet Date” and the
balance sheet of the Business as of August 31, 2017, is referred to herein as the “Interim Balance Sheet” and
the date thereof as the “Interim Balance Sheet Date.” Seller maintains a standard system of accounting established
and administered in accordance with GAAP in all material respects.
Section 4.06 Undisclosed
Liabilities. Seller has no Liabilities, except (a) those which are adequately reflected or reserved against in the Balance
Sheet as of the Balance Sheet Date or are not required to be so reflected or reserved against under GAAP, (b) those which are set
forth on Section 4.06 of the Disclosure Schedules, (c) those which have been incurred in the Seller’s Ordinary Course
of Business since the Balance Sheet Date and which are not, individually or in the aggregate, material in amount, and (d) those
which are Excluded Liabilities.
Section 4.07 Absence
of Certain Changes, Events and Conditions. Since the Balance Sheet Date, and other than in the Seller’s Ordinary Course
of Business or as disclosed in Section 4.07 of the Disclosure Schedules, there has not been any:
(a) event,
occurrence or development that has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect, or could reasonably be expected to become materially adverse to the ability of the Seller to consummate the transactions
contemplated hereby on a timely basis;
(b) material
change in any method of accounting or accounting practice for Seller, except as required by GAAP or as disclosed in the notes to
the Financial Statements;
(c) material
change in cash management practices, practices, or procedures with respect to collection of Accounts Receivable, establishment
of reserves for uncollectible Accounts Receivable, accrual of Accounts Receivable, prepayment of expenses, payment of trade accounts
payable, accrual of other expenses and deferral of revenue;
(d) entry
into any Contract that would constitute a Material Contract;
(e) incurrence,
assumption or guarantee of any indebtedness for borrowed money except unsecured current obligations and Liabilities incurred in
the Seller’s Ordinary Course of Business;
(f) transfer,
assignment, sale or other disposition of any of the assets shown or reflected in the Balance Sheet, other than transfers, assignments,
sales, or other dispositions of assets with an aggregate value of not more than $50,000, or any transfer or assignment by Seller
of any of the Franchise Agreements;
(g) cancellation
of any debts or claims or amendment, termination or waiver of any rights constituting Purchased Assets with an aggregate value
of not more than $50,000 or any cancellation of any debts or claims related to Franchisees;
(h) transfer,
assignment or grant of any license or sublicense of any material rights under or with respect to any Intellectual Property Assets
or Intellectual Property Licenses;
(i) material
damage, destruction or loss, or any material interruption in use, of any Purchased Assets, whether or not covered by insurance;
(j) acceleration,
termination, material modification to or cancellation of any Assigned Contract or Permit;
(k) material
capital expenditures which would constitute an Assumed Liability;
(l) imposition
of any Encumbrance upon any of the Purchased Assets;
(m) adoption
of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any
provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar
Law; or
(n) any
Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.
Section 4.08 Material
Contracts.
(a) Section
4.08(a) of the Disclosure Schedules lists each of the Contracts by which Seller is bound or affected and for which the total
consideration to be paid or received by Seller under such Contract exceeds $50,000 per annum (such Contracts, together with all
Franchise Agreements and all Contracts relating to Intellectual Property set forth in Section 4.12(c) and Section 4.12(e)
of the Disclosure Schedules, being “Material Contracts”).
(b) Each
Material Contract is valid and binding on Seller in accordance with its terms and is in full force and effect. None of Seller or,
to Seller’s Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default
under) in any material respect, or has received any written notice of any intention to terminate, any Material Contract. No event
or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material
Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation
or the loss of any benefit thereunder. Complete and correct copies of each Material Contract (including all modifications, amendments
and supplements thereto and waivers thereunder) have been delivered to Buyer. There are no disputes pending or, to Seller’s
Knowledge, threatened under any Contract included in the Purchased Assets.
Section 4.09 Title
to Purchased Assets. Seller has good and valid title to, or a valid leasehold interest in, all of the Purchased Assets. All
such Purchased Assets (including leasehold interests) are free and clear of Encumbrances except for those items set forth in Section
4.09 of the Disclosure Schedules.
Section 4.10 Owned
Real Property. Seller owns no real property used in or necessary for the conduct of the Business as currently conducted.
Section 4.11 Leased
Real Property. Section 4.11 of the Disclosure Schedules sets forth each parcel of real property leased by Seller and
used in or necessary for the conduct of the Business as currently conducted. Seller is not in breach or default under (or, to the
Seller’s Knowledge, is alleged to be in breach of or default under) any lease or similar agreement related to such leased
real property.
Section 4.12 Intellectual
Property.
(a) Section
4.12(a) of the Disclosure Schedules lists all (i) Intellectual Property Registrations and (ii) Intellectual Property Assets
that are not registered but that are material to the operation of the Business. All required filings and fees related to the Intellectual
Property Registrations have been timely filed with and paid to the relevant Governmental Authorities and authorized registrars
or registrys, and all Intellectual Property Registrations are otherwise in good standing. Seller has made available to Buyers materially
complete copies of file histories, documents, certificates, office actions and correspondence documenting all Intellectual Property
Registrations in Seller’s possession.
(b) Except
as set forth in Section 4.12(b) of the Disclosure Schedules, Seller owns exclusively, all right, title and interest in and
to the Intellectual Property Assets, free and clear of Encumbrances. Seller is in material compliance with all Laws applicable
to the Intellectual Property Assets and Seller’s ownership and use thereof.
(c) Section
4.12(c) of the Disclosure Schedules lists all Intellectual Property Licenses. Seller has made available to Buyers complete
copies of all such Intellectual Property Licenses. Each such Intellectual Property License is a valid and binding agreement of
the Seller that is a party and the other party thereto, and is enforceable against such other party in accordance with its terms,
and Seller and, to the Knowledge of Seller, such other party is in compliance in all material respects with the terms and conditions
of such Intellectual Property License.
(d) The
Intellectual Property Assets and Intellectual Property Licenses as currently owned, licensed or used by Seller, and the conduct
of the Business as currently conducted by Seller do not infringe, violate or misappropriate the Intellectual Property of any Person.
Seller has not received any written communication, and no Action has been instituted, settled or, to Seller’s Knowledge,
threatened that alleges any such infringement, violation or misappropriation, and none of the Intellectual Property Assets are
subject to any outstanding Governmental Order.
(e) Section
4.12(e) of the Disclosure Schedules lists all licenses, sublicenses and other agreements pursuant to which Seller grants rights
or authority to any Person with respect to any Intellectual Property Assets or Intellectual Property Licenses. Each such agreement
is a valid and binding agreement of the Seller and to Seller’s Knowledge the other party thereto, and is enforceable against
such other party in accordance with its terms, and Seller and, to Seller’s Knowledge, such other party are in compliance
in all material respects with the terms and conditions of such agreement. To Seller’s Knowledge, no Person has infringed,
violated or misappropriated, or is infringing, violating or misappropriating, any Intellectual Property Assets.
Section 4.13 Accounts
Receivable. The Accounts Receivable reflected on the Interim Balance Sheet and the Accounts Receivable arising after the date
thereof (a) have arisen from bona fide transactions entered into by Seller in the Seller’s Ordinary Course of Business; and
(b) constitute only valid, and to Seller’s Knowledge, undisputed claims of Seller not subject to claims of set-off or other
defenses or counterclaims other than normal cash discounts accrued in the Seller’s Ordinary Course of Business. The reserve
for bad debts shown on the Interim Balance Sheet or, with respect to Accounts Receivable arising after the Interim Balance Sheet
Date, on the accounting records of the Business have been determined in accordance with GAAP in all material respects, consistently
applied, subject to normal year-end adjustments and the absence of disclosures normally made in footnotes.
Section 4.14 Franchise
Matters.
(a) Section
4.14 of the Disclosure Schedules sets forth with respect to each current Franchisee of Seller: (i) the name of the Franchisee,
(ii) the address of the Franchisee; and (iii) a list of the Franchise Agreements to which such Franchisees are parties thereto,
and any addenda, promissory notes, renewals, or amendments related thereto. There are no other agreements with Franchisees, oral
or written, except for those agreements that appear on Section 4.14 of the Disclosure Schedules. Except as set forth in
Section 4.14 of the Disclosure Schedules, Seller has not received any written notice, and has no reason to believe, based
upon oral or written communications from its current Franchisees, that any Franchisee has terminated, or intends to terminate after
the Closing, its Franchise Agreement or to otherwise terminate or materially reduce its relationship with Seller.
(b) The
FDDs used by the Seller to offer and sell Franchises complied in all material respects with applicable Franchise Law at the time
they were furnished to prospective Franchisees and throughout the period preceding execution and delivery of a Franchise Agreement.
The information in the FDDs at the time they were used by the Seller in connection with the solicitation, offer, grant or sale
of Franchises was true and complete in all material respects and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. The FDDs have been amended or supplemented from time to time as required by applicable
Franchise Law and such amendments and supplements were timely and properly furnished to each applicable Governmental Authority
and Franchisees or prospective franchisees as required by applicable Franchise Law. Notwithstanding anything to the contrary, Seller
does not make any representation or warranty about the completeness or accuracy of any information about RE/MAX delivered to Seller
for the purpose of inclusion in Seller’s FDD that Seller used in the solicitation, offer, grant and sale of Franchises.
(c) A
true and correct copy of all FDDs used by Seller for the years 2017, 2016, and 2015, have been delivered to Buyers. Since the date
of the most recent FDDs used by the Seller, other than the transactions contemplated by this Agreement and those disclosed in the
supplemental information statement dated October 11, 2017, there has been no material change in the business, financial condition,
or affairs of Seller, the Franchise programs and systems, or, to Seller’s Knowledge, the Franchisees that would, taken as
a whole, require an amendment or supplement to such FDDs prior to the date hereof. Except as provided for in Section 4.14
of the Disclosure Schedules, Seller (whether by contract or pursuant to any applicable Law) has not made (i) any material representations
or material agreements with any Franchisee that (y) vary from the Franchise Agreement with such Franchisee and (z) are materially
adverse to the Franchisee, or (ii) except as set forth in the FDDs, any written (or, to Seller’s Knowledge, oral) representations
to prospective Franchisees with respect to historical and/or prospective Franchisee sales, profits, or earnings.
(d) Seller
(and any other Person soliciting, offering, granting, promoting or selling Franchises on behalf of Seller) is and has at all times
been in compliance in all material respects with all Franchise Law applicable to the solicitation, offering, granting and sale
of Franchises. Seller has complied and is complying in all material respects with all Franchise Laws that relate to the regulation
of the relationship between Seller and its Franchisees. Seller has at all times operated in all material respects in compliance
with all Franchise Agreements. Each Franchise Agreement is a valid and binding agreement of the Seller that is a party to such
Franchise Agreement and is in full force and effect, except as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar Laws now or hereafter in effect relating to or affecting creditors’ rights generally or by general
equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at Law). Seller is not
in default under or in breach of, nor in receipt of any written claim of default or breach under, any Franchise Agreement currently
in effect. No event has occurred which with the passage of time or giving of notice or both would result in a default, breach,
or event of non-compliance by Seller under any Franchise Agreement currently in effect that would have a Material Adverse Effect
on Seller or could reasonably be expected to become materially adverse to the ability of the Seller to consummate the transactions
contemplated hereby on a timely basis. Except as set forth on Section 4.14 of the Disclosure Schedules, Seller has not sent
notice of a breach to any Franchisee that remains uncured. There are no material disputes pending or, to Seller’s Knowledge,
threatened under any Franchise Agreement, except as set forth on Section 4.14 of the Disclosure Schedules.
(e) Except
as set forth on Section 4.14 of the Disclosure Schedules, none of the Franchise Agreements contains any grant of exclusive
rights to a territory designated therein, or other exclusive right, which in either case conflicts with any grant of exclusive
rights to a territory or other exclusive right granted under any other Franchise Agreement.
(f) Seller,
prior to the date of Closing, has at all times collected, maintained, administered, managed, directed, spent and utilized all advertising
and marketing funds (including any advertising cooperative funds, if any) contributed by or received from Franchisees in compliance
with the Franchise Agreements and applicable Franchise Law. Except as set forth on Section 4.14 of the Disclosure Schedules,
no Franchisee has delivered to Seller a written claim of Seller’s breach of any Franchise Agreements with respect to such
advertising or marketing funds and Seller has no Knowledge of any threat or notice of such a claim of breach of any Franchise Agreements.
(g) Each
Franchise Agreement is not dissimilar in any way that is both (i) adverse to the Franchisee with respect to the form of Franchise
Agreement attached to the FDDs or similar document that was delivered to the Franchisee in connection with the solicitation, offering,
granting and sale of the applicable Franchise, and (ii) would give rise to a claim of misrepresentation by Seller in connection
with the solicitation, offering, granting and sale of the applicable Franchise. A true and correct copy of each and every amendment,
change, addendum, or modification of any kind to such form of Franchise Agreement that is currently effective or that has been
entered into by Seller in the five (5) years prior to the date hereof has been made available to the Buyers.
(h) Except
as set forth on Section 4.14 of the Disclosure Schedules, there are no written claims made by Franchisees and received by
Seller that any information in any FDDs was materially untrue, misleading, or incomplete at the time such FDDs was in use which
remain unresolved.
(i) Seller
has obtained all authorizations and qualifications from Governmental Authorities under applicable Franchise Laws that are required
in order for Seller to currently offer, sell and grant Franchises and such authorizations and qualifications, if any, remain currently
effective and in good standing.
(j) Except
as set forth on Section 4.14 of the Disclosure Schedules, Seller is not (i) a guarantor or party to an agreement pursuant
to which Seller is directly or contingently liable (as a co-signor or otherwise) for any obligation of any Franchisee, (ii) a lessor
or sublessor of any real or personal property to any Franchisee, or (iii) a party to any written financing arrangement with any
Franchisee.
(k) Except
as set forth on Section 4.14 of the Disclosure Schedules, Seller has at all times complied in all material respects with,
and Seller has received any written notice from, any Governmental Authority with respect to any violation or alleged violation
of, any Franchise Law which governs the offer, sale, terms, operation, advertisement, modification, renewal, transfer, or termination
of franchises and business opportunities, including the FTC Rule, and all applicable state and foreign franchise disclosure and/or
registration laws, franchise termination laws, franchisee rights laws, franchise relationship laws, business opportunity laws,
similar laws of other jurisdictions and all material regulations promulgated under the foregoing.
(l) Except
as set forth on Section 4.14 of the Disclosure Schedules, the transactions contemplated by this Agreement will not require
the approval or consent of any Franchisee. Except as set forth on Section 4.14 of the Disclosure Schedules, no Franchise
Agreement is subject to any right of rescission or termination. Section 4.14 of the Disclosure Schedules sets forth a true
and complete list and description of any written assertion by a Franchisee of (i) a right of rescission or termination or (ii)
an intention to cease operating its Franchise or not renew its Franchise, in either case that has not been finally resolved by
the parties and is still outstanding.
(m) Seller
has not sold, assigned, transferred, conveyed, pledged, granted a security interest in, or otherwise disposed of any interest in
any of the Franchise Agreements or any of its rights thereunder. Seller owns the rights of the franchisor under the Franchise Agreements
to which it is a party, free and clear of any Encumbrances.
(n) Between
September 29, 2017 and the date hereof, Seller has not entered into or executed any new Franchise Agreement or renewal of a Franchise
Agreement except on the terms provided for in the franchise agreement and other ancillary forms attached to Seller’s 2017
FDD that was effective as of September 29, 2017.
Section 4.15 Insurance.
Section 4.15 of the Disclosure Schedules sets forth (a) a true and complete list of all current policies or binders of liability
insurance and of errors and omissions insurance maintained by Seller or its Affiliates (collectively, the “Insurance Policies”);
and (b) a list of all pending claims and the claims history for Seller since January 1, 2014. Except as set forth on Section
4.15 of the Disclosure Schedules, there are no claims related to the Business, the Purchased Assets or the Assumed Liabilities
pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there
is an outstanding reservation of rights. Neither Seller nor any of its Affiliates has received any written notice of cancellation
of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such
Insurance Policies have either been paid or, if not yet due, accrued. All such Insurance Policies (a) are in full force and effect
and enforceable in accordance with their terms; and (b) have not been subject to any lapse in coverage. None of Seller nor any
of its Affiliates is in material default under, or has otherwise failed to comply in any material respect with any provision contained
in any such Insurance Policy. The Insurance Policies are of the type and in the amounts customarily carried by Persons conducting
a business similar to the Business and are sufficient for material compliance with all applicable Laws and Contracts to which Seller
is a party or by which it is bound. True and complete copies of the Insurance Policies have been delivered to Buyers.
Section 4.16 Legal
Proceedings; Governmental Orders.
(a) Except
as set forth in Section 4.16(a) of the Disclosure Schedules, there are no Actions pending or, to Seller’s Knowledge,
threatened against or by Seller (a) relating to or affecting Seller or any of the Purchased Assets; or (b) that challenge or seek
to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist
that may give rise to, or serve as a basis for, any such Action.
(b) Except
as set forth in Section 4.16(b) of the Disclosure Schedules, there are no outstanding Governmental Orders and no unsatisfied
judgments, penalties or awards against, relating to or affecting Seller or any of the Purchased Assets. Seller is in compliance
with the terms of each Governmental Order set forth in Section 4.16(b) of the Disclosure Schedules. No event has occurred
or circumstances exist that may constitute or result in (with or without notice or lapse of time) a violation of any such Governmental
Order.
Section 4.17 Compliance
With Laws; Permits.
(a) Except
as set forth in Section 4.17(a) of the Disclosure Schedules, Seller has complied, and is now complying, in all material
respects, with all Laws applicable to the conduct of the Business as currently conducted or the ownership and use of the Purchased
Assets.
(b) All
Permits required for Seller to conduct the Business as currently conducted or for the ownership and use of Seller’s Purchased
Assets have been obtained by Seller and are valid and in full force and effect. All fees and charges with respect to such Permits
as of the date hereof have been paid in full. Section 4.17(b) of the Disclosure Schedules lists all current Permits issued
to Seller that are related to the conduct of the Business as currently conducted or the ownership and use of Seller’s Purchased
Assets, including the names of the Permits and their respective dates of issuance and expiration. No event has occurred that, with
or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation
of any Permit set forth in Section 4.17(b) of the Disclosure Schedules.
Section 4.18 Employment
and Employee Benefit Matters.
(a) Section
4.18(a) of the Disclosure Schedules contains a list of all persons who are employees, independent contractors or consultants
of the Business as of the date hereof, and sets forth for each such individual the following: (i) name; (ii) title or position
(including whether full or part time); (iii) hire date; (iv) current annual base compensation rate; (v) commission, bonus or other
incentive-based compensation; and (vi) a description of the fringe benefits provided to each such individual as of the date hereof.
Except as set forth in Section 4.18(a) of the Disclosure Schedules, as of the date hereof, all compensation, including wages,
commissions and bonuses payable to employees, independent contractors or consultants of the Business for services performed on
or prior to the date hereof have been paid in full and there are no outstanding agreements, understandings or commitments of Seller
with respect to any compensation, commissions or bonuses.
(b) Seller
is and has been in compliance, in all material respects, with the terms of all applicable Laws pertaining to employment and employment
practices to the extent they relate to employees of the Business, including all Laws relating to labor relations, equal employment
opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability
rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees,
working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence and unemployment
insurance. All individuals characterized and treated by Seller as consultants or independent contractors of the Business qualify
as such and are properly treated as independent contractors under all applicable Laws. All employees of the Business classified
as exempt under the Fair Labor Standards Act and state and local wage and hour laws qualify as and are properly classified. Except
as set forth in Section 4.18(b) of the Disclosure Schedules, there are no Actions against Seller pending, or to Seller’s
Knowledge, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment
of any current or former applicant, employee, consultant, volunteer, intern or independent contractor of the Business, including,
without limitation, any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay,
wages and hours or any other employment related matter arising under applicable Laws.
(c) None
of the Benefit Plans is (w) a “defined benefit plan,” as defined in Section 3(35) of ERISA, that is subject to Title
IV of ERISA, (x) a “multiemployer plan,” as defined in Section 3(37) of ERISA, (y) subject to the minimum funding standards
under Section 302 of ERISA or Section 412 of the Code, (z) an International Employee Plan, nor has Seller or any ERISA Affiliate
ever contributed to, or ever been obligated to contribute to, any such plan. Seller is currently in material compliance with and
has always complied in all material respects with the applicable provisions of Section 4980B of the Code (as well as its predecessor
provision, Section 162(k) of the Code) and Sections 601 through 608, inclusive, of ERISA. Seller has complied with the applicable
requirements of the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation
Act of 2010, and the regulations and related guidance promulgated thereunder. Seller neither owes nor reasonably expects to owe
a penalty or assessable payment under Code Section 4980H for 2016 or for any month in 2017 through the Closing Date.
Section 4.19 Taxes.
Except as set forth in Section 4.19 of the Disclosure Schedules:
(a) All
Tax Returns required to be filed by Seller for any Pre-Closing Tax Period have been, or will be, timely filed. Such Tax Returns
are, or will be, true, complete and correct in all material respects. All Taxes due and owing by Seller (whether or not shown on
any Tax Return) have been, or will be, timely paid.
(b) Seller
has withheld and paid each Tax required to have been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, customer, shareholder or other party, and complied with all information reporting and backup
withholding provisions of applicable Law.
(c) No
extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of Seller.
(d) All
deficiencies asserted, or assessments made, against Seller as a result of any examinations by any taxing authority have been fully
paid.
(e) Seller
is not a party to any Action by any taxing authority. There are no pending or, to Seller’s Knowledge, threatened Actions
by any taxing authority.
(f) There
are no Encumbrances for Taxes upon any of the Purchased Assets nor is any taxing authority, to Seller’s Knowledge, in the
process of imposing any Encumbrances for Taxes on any of the Purchased Assets (other than for current Taxes not yet due and payable).
(g) Seller
is not a “foreign person” as that term is used in Treasury Regulations Section 1.1445-2.
(h) Seller
is not, and has not been, a party to, or a promoter of, a “reportable transaction” within the meaning of Section 6707A(c)(1)
of the Code and Treasury Regulations Section 1.6011-4(b).
(i) None
of the Purchased Assets is property that Seller is required to treat as being owned by any other person pursuant to the so-called
“safe harbor lease” provisions of former Section 168(f)(8) of the Internal Revenue Code of 1954, as amended.
(j) None
of the Purchased Assets is tax-exempt use property within the meaning of Section 168(h) of the Code.
Section 4.20 Brokers.
Except as set forth in Section 4.20 of the Disclosure Schedules, no broker, finder or investment banker is entitled to any
brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any
other Transaction Document based upon arrangements made by or on behalf of Seller or the Stockholders.
Section 4.21 No
Other Representations or Warranties. Except for the representations and warranties contained in this Article IV, neither
Seller nor any other Person makes any other express or implied representation or warranty on behalf of Seller or Stockholders,
including as to the probable success or profitability of the ownership, use or operation of the Purchased Assets or the Business
by Buyers after the Closing.
Article
V
Representations and warranties of BuyerS
Except as set forth in
the correspondingly numbered Section of the Disclosure Schedules, each of the Buyers represents and warrants, severally for itself
only and not jointly, to Seller that the statements contained in this Article V are true and correct as of the date hereof.
Section 5.01 Organization
of Buyer. RE/MAX is a limited liability company duly organized, validly existing and in good standing under the Laws of the
State of Delaware. Ad Fund Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the state
of Colorado.
Section 5.02 Authority
of Buyer. Each Buyer has full limited liability company power and authority to enter into this Agreement and the other Transaction
Documents to which such Buyer is a party, to carry out its obligations hereunder and thereunder and to consummate the applicable
transactions contemplated hereby and thereby. The execution and delivery by each Buyer of this Agreement and any other Transaction
Document to which such Buyer is a party, the performance by such Buyer of its obligations hereunder and thereunder and the consummation
by such Buyer of the transactions contemplated hereby and thereby have been duly authorized by all requisite limited liability
company action on the part of such Buyer. This Agreement has been duly executed and delivered by each Buyer, and (assuming due
authorization, execution and delivery by Seller) this Agreement constitutes a legal, valid and binding obligation of such Buyer
enforceable against such Buyer in accordance with its terms. When each other Transaction Document to which such Buyer is or will
be a party has been duly executed and delivered by such Buyer (assuming due authorization, execution and delivery by each other
party thereto), such Transaction Document will constitute a legal and binding obligation of such Buyer enforceable against it in
accordance with its terms.
Section 5.03 No
Conflicts; Consents. The execution, delivery and performance by each Buyer of this Agreement and the other Transaction Documents
to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not (a) conflict
with or result in a violation or breach of, or default under, any provision of the certificate of formation, limited liability
company agreement or other organizational documents of such Buyer; (b) conflict with or result in a violation or breach of any
provision of any Law or Governmental Order applicable to such Buyer; or (c) except as set forth in Section 5.03 of the Disclosure
Schedules, require the consent, notice or other action by any Person under any Contract to which such Buyer is a party. No consent,
approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with
respect to such Buyer in connection with the execution and delivery of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, except for such consents, approvals, Permits, Governmental Orders,
declarations, filings or notices which, in the aggregate, would not have a Material Adverse Effect.
Section 5.04 Brokers.
No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with
the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf
of such Buyer.
Section 5.05 Legal
Proceedings. There are no Actions pending or, to such Buyer’s knowledge, threatened against or by such Buyer or any Affiliate
of such Buyer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No
event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.
Article
VI
Covenants
Section 6.01 Conduct
of Business Prior to the Closing. From the date hereof until the Closing, except as otherwise provided in this Agreement or
consented to in writing by Buyers, Seller (x) shall conduct its business in the Ordinary Course of Business; and (y) shall use
commercially reasonable efforts to maintain and preserve intact its current business organization, operations and franchise and
to preserve the rights, franchises, goodwill and relationships of its franchisees, prospects, employees, customers, lenders, suppliers,
regulators and others having relationships with the Business. Without limiting the foregoing, from the date hereof until the Closing
Date, except as required or contemplated by this Agreement or approved in writing by Buyers, Seller shall:
(a) preserve
and maintain all Permits required for the conduct of its business as currently conducted or the ownership and use of the Purchased
Assets;
(b) pay
its debts, Taxes and other obligations when due;
(c) continue
to collect Accounts Receivable in a manner consistent with past practice, without discounting such Accounts Receivable;
(d) maintain
the Purchased Assets in the same condition as they were on the date of this Agreement, subject to reasonable wear and tear;
(e) continue
in full force and effect without modification all Insurance Policies, except as required by applicable Law;
(f) defend
and protect the Purchased Assets from infringement or usurpation;
(g) perform
all of its obligations under all Assigned Contracts;
(h) maintain
the Books and Records in accordance with past practice;
(i) comply
with all Laws applicable to the conduct of its business or the ownership and use of the Purchased Assets; and
(j) not
take or permit any action that would cause any of the changes, events or conditions described in Section 4.07 to occur.
Section 6.02 Access
to Information. From the date hereof until the Closing, Seller shall (a) afford Buyers and their Representatives reasonable
access to and the right to inspect, upon reasonable prior notice (but in any event not less than 24 hours in advance) and during
ordinary business hours for Seller, all of the properties, assets, premises, Books and Records, Contracts and other documents and
data related to the Business; (b) furnish Buyers and their Representatives with such financial, operating and other data and information
related to the Business as Buyers or any of their Representatives may reasonably request; and (c) instruct its employees and Representatives
to reasonably cooperate with Buyers in their investigation of the Business. Any investigation pursuant to this Section 6.02
shall be conducted in such manner as not to interfere unreasonably with the conduct of the Seller.
Section 6.03 No
Solicitation of Other Bids.
(a) None
of the Seller or Principal Stockholders shall, nor shall any such Person authorize or permit any of their respective Affiliates
or any of their Representatives to, and Principal Stockholders shall cause the other Stockholders not to, directly or indirectly,
(i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions
or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into
any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. Seller and Principal Stockholders
shall immediately cease and cause to be terminated, and shall cause their Affiliates and all of their Representatives to immediately
cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to,
or that could lead to, an Acquisition Proposal. For purposes hereof, “Acquisition Proposal” means any inquiry,
proposal or offer from any Person (other than Buyers or any of their Affiliates) relating to the direct or indirect disposition,
whether by sale, merger or otherwise, of all or any portion of the Business, the Purchased Assets or Seller.
(b) In
addition to the other obligations under this Section 6.03, Seller and Principal Stockholders shall promptly (and in any
event within three (3) Business Days after receipt thereof by such Person or its Representatives) advise Buyers orally and in writing
of any Acquisition Proposal, any request for information with respect to any Acquisition Proposal, or any inquiry with respect
to or which could reasonably be expected to result in an Acquisition Proposal, the material terms and conditions of such request,
Acquisition Proposal or inquiry, and the identity of the Person making the same.
(c) Each
of Seller and Principal Stockholders agree that the rights and remedies for noncompliance with this Section 6.03 shall include
having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any
such breach or threatened breach shall cause irreparable injury to Buyers and that money damages would not provide an adequate
remedy to Buyers.
Section 6.04 Notice
of Certain Events.
(a) From
the date hereof until the Closing, Seller and Principal Stockholders shall promptly notify Buyers in writing of:
(i) any
fact, circumstance, event or action the existence, occurrence or taking of which (A) has had, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect or could reasonably be expected to become materially adverse
to the ability of the Seller to consummate the transactions contemplated hereby on a timely basis, (B) has resulted in, or could
reasonably be expected to result in, any representation or warranty made by Seller or Principal Stockholders hereunder not being
true and correct or (C) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set
forth in Section 7.02 to be satisfied;
(ii) any
notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with
the transactions contemplated by this Agreement;
(iii) any
notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement;
and
(iv) any
Actions commenced or, to Seller’s Knowledge, threatened against, relating to or involving or otherwise affecting the Business,
the Purchased Assets or the Assumed Liabilities that, if pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 4.16 or that relates to the consummation of the transactions contemplated by this Agreement.
(b) Buyers’
receipt of information pursuant to this Section 6.04 shall not operate as a waiver or otherwise affect any representation,
warranty or agreement given or made by Seller in this Agreement (including Section 8.02 and Section 9.01(b)) and
shall not be deemed to amend or supplement the Disclosure Schedules.
Section 6.05 [Reserved].
Section 6.06 [Reserved].
Section 6.07 Confidentiality.
From and after the Closing, Seller and Principal Stockholders shall, and shall cause their Affiliates and the Stockholders to,
hold, and shall use commercially reasonable efforts to cause their respective Representatives to hold, in confidence any and all
information, whether written or oral, concerning the Business, except to the extent that Seller or Principal Stockholders can show
that such information (a) is generally available to and known by the public through no fault of Seller or Principal Stockholders,
any of their Affiliates or their respective Representatives; or (b) is lawfully acquired by Seller or Principal Stockholders, any
of their Affiliates or their respective Representatives from and after the Closing from sources which are not known by the acquiring
party to be prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If Seller, Principal Stockholders,
or any of their Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative
process or by other requirements of Law, such Person shall promptly notify Buyers in writing and shall disclose only that portion
of such information which such Person is advised by its counsel in writing is legally required to be disclosed, provided that
such Person shall use commercially reasonable efforts to obtain an appropriate protective order or other reasonable assurance that
confidential treatment will be accorded such information. Seller and Principal Stockholders acknowledge and agree that RE/MAX may
file the Agreement with the U.S. Securities and Exchange Commission pursuant to the requirements of the Securities Exchange Act
of 1934 (the “Exchange Act”) and New York Stock Exchange, and any such filing shall not violate this Section
6.07 or any other agreement between the parties hereto.
Section 6.08 Non-competition;
Non-solicitation.
(a) For
a period of one (1) year commencing on the Closing Date (the “Restricted Period”), no Principal Stockholder
shall, directly or indirectly, (i) engage in or assist others in engaging in the Restricted Business in the Territory; (ii) have
an interest in any Person that engages directly or indirectly in the Restricted Business in the Territory in any capacity, including
as a partner, shareholder, member, employee, principal, agent, trustee or consultant; or (iii) cause, induce or encourage any actual
or prospective client, Franchisee, customer, supplier or licensor of the Business (including any existing or former client, Franchisee,
or customer of Seller and any Person that becomes a client, Franchisee, or customer of the Business after the Closing), or any
other Person who has a business relationship with the Business, to terminate or modify any such actual or prospective relationship.
Notwithstanding the foregoing, each Principal Stockholder may own, directly or indirectly, solely as an investment, securities
of any Person traded on any national securities exchange if such Principal Stockholder is not a controlling Person of, or a member
of a group which controls, such Person and does not, directly or indirectly, own 1% or more of any class of securities of such
Person.
(b) During
the Restricted Period, no Principal Stockholder shall, and no such Principal Stockholder shall permit any of their Affiliates to,
directly or indirectly, hire or solicit any person who is then currently employed in the Business during the Restricted Period,
or encourage any such employee to leave such employment, except pursuant to a general solicitation which is not directed specifically
to any such employees.
(c) Each
Principal Stockholder acknowledges that a breach or threatened breach of this Section 6.08 would give rise to irreparable
harm to Buyer, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a
threatened breach by any Principal Stockholder of any such obligations, Buyer shall, in addition to any and all other rights and
remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining
order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without
any requirement to post bond).
(d) Each
Principal Stockholder acknowledges that the restrictions contained in this Section 6.08 are reasonable and necessary to
protect the legitimate interests of Buyer and constitute a material inducement to Buyer, Seller, and Principal Stockholders to
enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained
in this Section 6.08 should ever be adjudicated to exceed the time, geographic, product or service or other limitations
permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant
shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service or other limitations permitted
by applicable Law. The covenants contained in this Section 6.08 and each provision hereof are severable and distinct covenants
and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render
unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such covenant or provision in any other jurisdiction.
Section 6.09 Governmental
Approvals and Consents.
(a) Each
party hereto shall, as promptly as possible, (i) make, or cause or be made, all filings and submissions required under any Law
applicable to such party or any of its Affiliates; and (ii) use commercially reasonable efforts to obtain, or cause to be obtained,
all consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution
and delivery of this Agreement and the performance of its obligations pursuant to this Agreement and the other Transaction Documents.
Each party shall reasonably cooperate with the other party and its Affiliates in promptly seeking to obtain all such consents,
authorizations, orders and approvals. The parties hereto shall not willfully take any action that will have the effect of delaying,
impairing or impeding the receipt of any required consents, authorizations, orders and approvals.
(b) Seller,
Principal Stockholders and Buyers shall use commercially reasonable efforts to give all notices to, and obtain all consents from,
all third parties that are described in Section 4.04 and Section 5.03 of the Disclosure Schedules.
(c) Without
limiting the generality of the parties’ undertakings pursuant to subsections (a) and (b) above, each of the parties hereto
shall use all commercially reasonable efforts to:
(i) respond
to any inquiries by any Governmental Authority regarding antitrust or other matters with respect to the transactions contemplated
by this Agreement or any other Transaction Document;
(ii) avoid
the imposition of any order or the taking of any action that would restrain, alter or enjoin the transactions contemplated by this
Agreement or any other Transaction Document; and
(iii) in
the event any Governmental Order adversely affecting the ability of the parties to consummate the transactions contemplated by
this Agreement or any other Transaction Document has been issued, to have such Governmental Order vacated or lifted.
(d) All
analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals made by or on
behalf of either party before any Governmental Authority or the staff or regulators of any Governmental Authority, in connection
with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any interactions between Seller or
Buyers with Governmental Authorities in such party’s Ordinary Course of Business, any disclosure which is not permitted by
Law or any disclosure containing confidential information) shall be disclosed to the other party hereunder in advance of any filing,
submission or attendance, it being the intent that the parties will consult and cooperate with one another, and consider in good
faith the views of one another, in connection with any such analyses, appearances, meetings, discussions, presentations, memoranda,
briefs, filings, arguments, and proposals. Each party shall give notice to the other party with respect to any meeting, discussion,
appearance or contact with any Governmental Authority or the staff or regulators of any Governmental Authority, with such notice
being sufficient to provide the other party with the opportunity to attend and participate in such meeting, discussion, appearance
or contact.
(e) Notwithstanding
the foregoing, nothing in this Section 6.09 shall require, or be construed to require, (i) any Buyer or any of its Affiliates
to agree to (A) sell, hold, divest, discontinue or limit, before or after the Closing Date, any assets, businesses or interests
of such Buyer or any of its Affiliates; or (B) any conditions relating to, or changes or restrictions in, the operations of any
such assets, businesses or interests which, in either case, could reasonably be expected to result in a Material Adverse Effect,
could reasonably be expected to become materially adverse to the ability of the Seller to consummate the transactions contemplated
hereby on a timely basis, or materially and adversely impact the economic or business benefits to such Buyer of the transactions
contemplated by this Agreement and the other Transaction Documents; or (ii) any Buyer or any of its Affiliates or Seller or any
of its Affiliates to agree to any material modification or waiver of the terms and conditions of this Agreement.
Section 6.10 Books
and Records.
(a) In
order to facilitate the resolution of any claims made against or incurred by Seller prior to the Closing, or for any other reasonable
purpose, after the Closing, Buyers shall:
(i) retain
for a period of at least six (6) years the Books and Records relating to periods prior to the Closing in a manner reasonably consistent
with the prior practices of Buyers; and
(ii) upon
reasonable notice, afford Seller and its Representatives reasonable access (including the right to make, at Seller’s expense,
photocopies), during normal business hours, to such Books and Records of Seller.
(b) In
order to facilitate the resolution of any claims made by or against or incurred by Buyers after the Closing, or for any other reasonable
purpose, following the Closing, Seller shall, and Principal Stockholders shall cause Seller to:
(i) retain
for a period of at least six (6) years the books and records (including personnel files) of Seller that relate to the Business
and its operations for periods prior to the Closing; and
(ii) upon
reasonable notice, afford the Buyers’ Representatives reasonable access (including the right to make, at Buyers’ expense,
photocopies), during normal business hours, to such books and records.
(c) Neither
Buyers nor Seller shall be obligated to provide the other party with access to any books or records (including personnel files)
pursuant to this Section 6.10 where such access would violate any applicable Law.
Section 6.11 Closing
Conditions. From the date hereof until the Closing, each party hereto shall use commercially reasonable efforts to take such
actions as are necessary to expeditiously satisfy the closing conditions of the other parties set forth in Article VII hereof.
Section 6.12 Public
Announcements. Unless otherwise required by applicable Law (based upon the reasonable advice of counsel), Seller and Principal
Stockholders shall not make, and such Persons shall cause the other Stockholders and their Affiliates not to make, any public announcements
in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior
written consent of the Buyers (which consent shall not be unreasonably withheld or delayed). All parties agree to coordinate efforts
with regard to a press release announcing the transaction shortly after the date hereof and such other press releases, external
communications and public disclosures required pursuant to the Exchange Act and/or the New York Stock Exchange.
Section 6.13 Receivables.
From and after the Closing, if Seller, Stockholders, or any of their Affiliates receives or collects any funds relating to any
Accounts Receivable or any other Purchased Asset, such Person shall remit or shall cause to remit (or, in the case of a Stockholder
who is not a Principal Stockholder, Seller and Principal Stockholders shall cause such person to remit or cause to remit) such
funds to Buyers within five (5) Business Days after its receipt thereof. From and after the Closing, if any Buyer receives or collects
any funds relating to any Excluded Asset, such Buyer shall remit any such funds to Seller. Following the Closing, only upon any
Buyer’s request, Seller and Principal Stockholders shall, and shall cause their Affiliates to, utilize its commercially reasonable
efforts to assist Buyers in the collection of any and all Accounts Receivable that remain outstanding as of the Closing Date. For
purposes of the foregoing sentence, “commercially reasonable efforts” shall not include formal demands, the taking
of any collection actions (including assignment to a third party collection agency), or any other legal Action.
Section 6.14 Transfer
Taxes. All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any
penalties and interest) incurred in connection with this Agreement and the other Transaction Documents (including any real property
transfer Tax and any other similar Tax) shall be borne and paid by Seller. Seller shall, at its own expense, timely file any Tax
Return or other document with respect to such Taxes or fees.
Section 6.15 Tax
Clearance Certificates. Seller shall notify all of the taxing authorities in the jurisdictions that impose Taxes on Seller
or where Seller has a duty to file Tax Returns of the transactions contemplated by this Agreement in the form and manner required
by such taxing authorities, if the failure to make such notifications or receive any available tax clearance certificate (a “Tax
Clearance Certificate”) could subject the Buyers to any Taxes of Seller. If any taxing authority asserts that Seller
is liable for any Tax, Seller shall promptly pay any and all such amounts and shall provide evidence to the Buyers that such Liabilities
have been paid in full or otherwise satisfied.
Section 6.16 No
Continued Sales. Seller shall not, and Seller represents and warrants that since September 29, 2017 it has not, without the
prior written consent of Buyers, which shall not be unreasonably withheld, enter into or renew (i) any Franchise Agreements unless
(A) such agreement is on the standard form contained in the Seller’s most recent FDD, (B) such agreement does not grant or
renew any new exclusive territories, and (C) Seller obtains (or has obtained) a written opinion of DLA Piper LLP stating that such
sale or renewal complies in all material respects with applicable Laws and that Buyers are entitled to rely on such opinion; or
(ii) any agreements with vendors or other third parties, except (A) severance agreements or other similar arrangements with its
employees, provided that Seller shall be solely responsible for such agreements and neither Buyer shall assume any such
agreements and (B) for agreements entered into in the Ordinary Course of Business which involve a financial commitment of less
than Ten Thousand Dollars ($10,000) or have a term of less than three (3) months.
Section 6.17 Further
Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute
and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably
required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the other Transaction
Documents, including but not limited to, for a period of five (5) years following the Closing Date, Buyer providing prompt access
to and delivering to Seller, at no cost to Seller, any emails on topics or matters requested with specificity by Buyer and that
are related to the Business of each of Jim Merrion, Debbie O'Leary, and Jack Kreider.
Section 6.18 Name
Change. Seller shall provide evidence to Buyers within five (5) Business Days after Closing that Seller has filed the necessary
documents to change its “doing business as” filing, or any similar filing with any Governmental Authority, to eliminate
the word “RE/MAX”.
Section 6.19 reTech
Arrangements. Following Closing, Buyer agrees, with respect to allowing reTech’s franchise reporting system to continue
to be a supported franchise system, to treat reTech no less favorably than it treats other similarly situated providers of franchise
reporting systems. Seller and the Principal Stockholders shall cause reTech at its or their cost and expense, to develop any software
necessary for such a franchise reporting system owned by reTech. Buyer agrees to provide reTech with all parameters necessary to
develop and test such system. Further, Buyer shall not intentionally adversely interfere with any contractual relationship between
reTech and any Franchisee so long as such contractual relationship remains in effect.
Section 6.20 R&W
Insurance. Seller acknowledges that obtaining the R&W Insurance Policy is a material inducement to the Buyers entering
into the transactions contemplated by this Agreement and the Buyers are relying on Seller’s covenants and obligations set
forth in this Section 6.20. Prior to the Closing, Seller shall provide all assistance, statements, documents and any other
actions necessary or desirable to obtain and bind the R&W Insurance Policy on or prior to the Closing Date. The R&W Insurance
Policy shall provide that (a) the insurer shall have no, and shall waive and not pursue any and all, subrogation rights against
Seller and Stockholders, except to the extent that a written statement or other admission under oath or guilty plea or plea of
no contest by Seller, or a finding of fact, judgment or other ruling in any proceeding, establishes that any stockholder, officer,
employee, or agent of Seller committed a deliberately fraudulent or criminal act with respect to this Agreement and (b) the Seller
is a third party beneficiary of such waiver. Except as set forth in the immediately preceding sentence, Seller and Stockholders
shall have no liability to the insurer under conditional binder or the R&W Insurance Policy. In addition, the R&W Insurance
Policy shall have a “retention amount” equal to or less than $300,000 for the first 12 months, following Closing and
$250,000 thereafter, shall have a term of three (3) years after Closing for general representations and a term of six (6) years
after Closing for fundamental representations and tax representations, and shall have a policy coverage amount of not less than
$3,600,000. Purchaser shall make a claim against the R&W Insurance Policy in respect of any indemnifiable Losses to which the
Buyers are entitled to recovery under such R&W Insurance Policy prior to seeking recovery from the Escrow Amount or the Principal
Stockholders pursuant to the terms of Article VIII.
Section 6.21 Sales
Advisory Council and Broker/Owner Council. At the Closing, Seller shall deliver to RE/MAX all funds and other assets attributable
to the Sales Advisory Council and/or the Broker/Owner Council (each as described in the FDD) that are held by Seller.
Article
VII
Conditions to Closing
Section 7.01 Conditions
to Obligations of All Parties. The obligations of each party to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment, at or prior to the Closing, of each of the following conditions:
(a) No
Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and
has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation
of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.
(b) Seller
shall have received all consents, authorizations, orders and approvals from the Governmental Authorities referred to in Section
4.04 and Buyers shall have received all consents, authorizations, orders and approvals from the Governmental Authorities referred
to in Section 5.03, in each case, in form and substance reasonably satisfactory to Buyers and Seller, and no such consent,
authorization, order and approval shall have been revoked.
Section 7.02 Conditions
to Obligations of Buyers. The obligations of Buyers to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment or Buyers’ waiver, at or prior to the Closing, of each of the following conditions:
(a) Other
than the representations and warranties of Seller contained in Section 4.01, Section 4.02, Section 4.03, Section
4.04 and Section 4.20, the representations and warranties of Seller and the Principal Stockholders contained in this
Agreement and the other Transaction Documents and any certificate or other writing delivered pursuant hereto shall be true and
correct in all respects (in the case of any representation or warranty qualified by materiality, in all material respects, or Material
Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality, in all
material respects, or Material Adverse Effect) on and as of the date hereof and on and as of the Closing Date with the same effect
as though made at and as of such date (except those representations and warranties that address matters only as of a specified
date, the accuracy of which shall be determined as of that specified date in all respects). The representations and warranties
of Seller and the Principal Stockholders contained in Section 4.01, Section 4.02, Section 4.03, Section
4.04 and Section 4.20 shall be true and correct in all respects on and as of the date hereof and on and as of the Closing
Date with the same effect as though made at and as of such date (except those representations and warranties that address matters
only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).
(b) Seller
and Principal Stockholders shall have duly performed and complied in all material respects with all agreements, covenants and conditions
required by this Agreement and each of the other Transaction Documents to be performed or complied with by it prior to or on the
Closing Date; provided, that, with respect to agreements, covenants and conditions that are qualified by materiality, Seller
and Principal Stockholders shall have performed such agreements, covenants and conditions, as so qualified, in all respects.
(c) No
Action shall have been commenced against Buyers, Sellers or Stockholders which would prevent the Closing. No injunction or restraining
order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any transaction contemplated
hereby.
(d) All
approvals, consents and waivers that are listed on Section 4.04 of the Disclosure Schedules shall have been received, and
executed counterparts thereof shall have been delivered to Buyers at or prior to the Closing.
(e) From
the date of this Agreement, there shall not have occurred any Material Adverse Effect or any event or circumstance that could reasonably
be expected to become materially adverse to the ability of the Seller to consummate the transactions contemplated hereby on a timely
basis, nor shall any event or events have occurred that, individually or in the aggregate, with or without the lapse of time, could
reasonably be expected to result in a Material Adverse Effect or could reasonably be expected to become materially adverse to the
ability of the Seller to consummate the transactions contemplated hereby on a timely basis.
(f) Seller
and Principal Stockholders, as applicable, shall have delivered to Buyers (or Buyers shall have waived) duly executed counterparts
to the Transaction Documents (other than this Agreement) and such other documents and deliveries set forth in Section 3.02(a)
to which Seller is a party.
(g) All
Encumbrances relating to the Purchased Assets shall have been released in full (or will otherwise be released concurrent with the
Closing) and Seller or Principal Stockholders, as applicable, shall have delivered to Buyers written evidence, in form satisfactory
to Buyers in its sole discretion, of the release (or release pending confirmation of Closing) of such Encumbrances.
(h) Buyers
shall have received a certificate from Seller, dated the Closing Date and signed by a duly authorized officer of Seller, that each
of the conditions set forth in Section 7.02(a) and Section 7.02(b) has been satisfied (the “Seller Closing
Certificates”).
(i) Buyers
shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Seller certifying that
attached thereto are true and complete copies of all resolutions adopted by all of the equityholders and the board of directors
of Seller authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation
of the transactions contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the
resolutions adopted in connection with the transactions contemplated hereby and thereby.
(j) Buyers
shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Seller certifying the names
and signatures of the officers of Seller authorized to sign this Agreement, the Transaction Documents and the other documents to
be delivered hereunder and thereunder.
(k) Seller
and Principal Stockholders shall have delivered to Buyers such other documents or instruments as Buyers reasonably requests and
are reasonably necessary to consummate the transactions contemplated by this Agreement, and Buyers shall have completed its due
diligence and deemed itself satisfied with the results thereof, in its sole and absolute discretion.
(l) Buyers
and Sellers shall have successfully completed its internal approval process for the consummation of the transitions and the execution
and delivery of the Transaction Documents, each as provided for herein, including receipt of approval by RE/MAX Holdings, Inc.’s
Board of Directors.
(m) Seller
shall have assigned and delegated all of its rights, title, interest, duties, and Liabilities under each reTech Agreement to reTech
and reTech shall have agreed to such assignment and delegation, and any agreement between Seller and reTech shall have terminated.
(n) Evidence
of the R&W Insurance Policy or binder, in each case reflective of effective coverage in accordance with the terms of Section
6.20.
(o) Seller
shall have obtained and paid in full any premium or other costs associated with a director and officer tail liability insurance
policy and a general liability insurance policy for coverage for five (5) years after the Closing Date, in each case on terms and
conditions reasonably acceptable to Buyers.
Section 7.03 Conditions
to Obligations of Seller and Principal Stockholders. The obligations of Seller and Principal Stockholders to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment or Seller’s waiver, at or prior to the Closing,
of each of the following conditions:
(a) Other
than the representations and warranties of Buyers contained in Section 5.01, Section 5.02 and Section 5.04,
the representations and warranties of Buyers contained in this Agreement and the other Transaction Documents shall be true and
correct in all respects (in the case of any representation or warranty qualified by materiality, in all material respects, or Material
Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality, in all
material respects, or Material Adverse Effect) on and as of the date hereof and on and as of the Closing Date with the same effect
as though made at and as of such date (except those representations and warranties that address matters only as of a specified
date, the accuracy of which shall be determined as of that specified date in all respects).. The representations and warranties
of Buyers contained in Section 5.01, Section 5.02 and Section 5.04 shall be true and correct in all respects
on and as of the date hereof and on and as of the Closing Date with the same effect as though made at and as of such date (except
those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined
as of that specified date in all respects).
(b) Buyers
shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this
Agreement and each of the other Transaction Documents to be performed or complied with by it prior to or on the Closing Date; provided,
that, with respect to agreements, covenants and conditions that are qualified by materiality, Buyers shall have performed such
agreements, covenants and conditions, as so qualified, in all respects.
(c) No
injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits
any material transaction contemplated hereby.
(d) All
approvals, consents and waivers that are listed on Section 5.03 of the Disclosure Schedules shall have been received, and
executed counterparts thereof shall have been delivered to Seller at or prior to the Closing.
(e) Buyers
shall have delivered to Seller duly executed counterparts to the Transaction Documents (other than this Agreement) and such other
documents and deliveries set forth in Section 3.02(b).
(f) Seller
shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of each Buyer, that each of the
conditions set forth in Section 7.03(a) and Section 7.03(b) have been satisfied (the “Buyer Closing Certificates”).
(g) Seller
shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of each Buyer certifying that
attached thereto are true and complete copies of all resolutions adopted by all of the manager or managers of such Buyer authorizing
the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions
contemplated hereby and thereby, and that all such resolutions are in full force and effect and are all the resolutions adopted
in connection with the transactions contemplated hereby and thereby.
(h) Seller
shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of each Buyer certifying the
names and signatures of the officers of such Buyer authorized to sign this Agreement, the Transaction Documents and the other documents
to be delivered hereunder and thereunder.
(i) Buyers
shall have delivered the Purchase Price (less the Escrow Amount and less the amount of the R&W Insurance Premium) to Seller
as contemplated by Section 2.05.
(j) Buyers
shall have delivered to Seller (or Seller shall have waived) such other documents or instruments as Seller reasonably requests
and are reasonably necessary to consummate the transactions contemplated by this Agreement.
Section 7.04 Waiver;
Effect of Closing on Conditions. Any condition specified in Section 7.02 may be waived in writing by Buyers prior to
Closing, and any condition specified in Section 7.03 may be waived in writing by Seller and Principal Stockholders prior
to Closing. Notwithstanding anything to the contrary in Section 10.09, consummation of the transactions contemplated by
this Agreement without fulfillment of any condition shall also be deemed as waiver of any such condition(s) with respect to the
party for whose benefit such condition is set forth herein, provided, however, that such waiver of such condition
shall be a waiver only related to this Article VII hereof and shall not affect any other obligation under this Agreement,
including any obligation under Article VIII hereof.
Article
VIII
Indemnification
Section 8.01 Survival.
Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive
the Closing and shall remain in full force and effect until the date that is 24 months after the Closing Date; provided, however,
that the representations and warranties in Section 4.01 (Organization and Qualification of Seller), Section 4.02
(Authority), Section 4.03 (Capitalization), Section 4.04 (No Conflicts; Consents) Section 4.09 (Title
to Purchased Assets), Section 4.14 (Franchise Matters), Section 4.17 (Compliance with Laws), Section 4.18
(Employee and Employee Benefit Matters), Section 4.19 (Taxes), and Section 4.20 (Brokers), Section 5.01 (Organization
of Buyers), Section 5.02 (Authority of Buyers) and Section 5.04 (Brokers), shall survive until the date that is five
(5) years after the Closing Date. All covenants and agreements of the parties contained herein shall survive the Closing for the
period explicitly specified therein, or, if no such period is specified, until the earlier of (i) the full period of all
applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) plus sixty (60) days, or (ii)
the date that is five (5) years after the Closing Date. Notwithstanding the foregoing, any claims asserted in good faith with reasonable
specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party and
Escrow Agent (if required pursuant to the Escrow Agreement) prior to the expiration date of the applicable survival period shall
not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally
resolved.
Section 8.02 Indemnification
By Seller and Principal Stockholders. Subject to the other terms and conditions of this Article VIII, Seller shall indemnify
and defend Buyers and their Representatives (the “Buyer Indemnitees”) against, and shall hold each of them harmless
from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, any
of the Buyer Indemnitees based upon, arising out of, with respect to or by reason of:
(a) any
inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement, the other Transaction
Documents, or in any certificate or instrument delivered by or on behalf of Seller or Principal Stockholders, pursuant to this
Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as
of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or
breach of which will be determined with reference to such specified date);
(b) any
breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller or Principal Stockholders pursuant
to this Agreement, any Transaction Document or in any certificate or instrument delivered by or on behalf of Seller pursuant to
this Agreement;
(c) any
Excluded Asset or any Excluded Liability;
(d) any
Third Party Claim based upon, resulting from or arising out of the business, operations, properties, assets or obligations of Seller
or any of its Affiliates (other than the Assumed Liabilities) conducted, existing or arising on or prior to the Closing Date; or
(e) any
deductible, retention or similar amount paid by any Buyer Indemnitee under the R&W Insurance Policy.
In addition, the Principal
Stockholders shall indemnify and defend the Buyer Indemnitees against, and shall hold each of them harmless from and against, and
shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, any of the Buyer Indemnitees
based upon, arising solely out of, with respect to or by reason of any inaccuracy in or breach of any of the Fundamental Representations,
and any breach or non-fulfillment of any covenant, agreement or obligation to be performed by such Principal Stockholder pursuant
to this Agreement, any Transaction Document or in any certificate or instrument delivered by or on behalf of such Principal Stockholder
pursuant to this Agreement.
Section 8.03 Indemnification
By Buyers. Subject to the other terms and conditions of this Article VIII, each Buyer shall, jointly and severally,
indemnify and defend Seller and its respective Representatives (collectively, the “Seller Indemnitees”) against,
and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred
or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:
(a) any
inaccuracy in or breach of any of the representations or warranties of such Buyer contained in this Agreement or in any certificate
or instrument delivered by or on behalf of such Buyer pursuant to this Agreement, as of the date such representation or warranty
was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties
that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified
date);
(b) any
breach or non-fulfillment of any covenant, agreement or obligation to be performed by such Buyer pursuant to this Agreement; or
(c) any
Assumed Liability that is assumed by such Buyer, including the operations of the Business following Closing.
Section 8.04 Indemnification
Procedures. The party making a claim under this Article VIII is referred to as the “Indemnified Party,”
and the party against whom such claims are asserted under this Article VIII is referred to as the “Indemnifying
Party.”
(a) Third
Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any
Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a
“Third Party Claim”) against such Indemnified Party with respect to which the Indemnifying Party is obligated
to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written
notice thereof, but in any event not later than 30 calendar days after receipt of such notice of such Third Party Claim. The failure
to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except
and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified
Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof
and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified
Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to
assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own
counsel, and the Indemnified Party shall cooperate in good faith in such defense; provided, that if the Indemnifying Party
is Seller or Principal Stockholders, such Indemnifying Party shall not have the right to defend or direct the defense of any such
Third Party Claim that (x) is asserted directly by or on behalf of a Person that is a supplier or customer of the Business, or
(y) seeks an injunction or other equitable relief against the Indemnified Party. In the event that the Indemnifying Party assumes
the defense of any Third Party Claim, subject to Section 8.04(b), it shall have the right to take such action as it deems
necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf
of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with
counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The reasonable fees and
disbursements of such counsel shall be at the expense of the Indemnified Party, provided, that if in the reasonable opinion
of counsel to the Indemnified Party, (A) there are legal defenses available to an Indemnified Party that are different from or
additional to those available to the Indemnifying Party; or (B) there exists a conflict of interest between the Indemnifying Party
and the Indemnified Party that cannot be waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of
counsel to the Indemnified Party in each jurisdiction for which the Indemnified Party determines counsel is required. If the Indemnifying
Party elects not to compromise or defend such Third Party Claim, fails to promptly notify the Indemnified Party in writing of its
election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified
Party may, subject to Section 8.04(b), pay, compromise, defend such Third Party Claim and seek indemnification for any and
all Losses based upon, arising from or relating to such Third Party Claim. Seller, Principal Stockholders and Buyers shall cooperate
with each other in all reasonable respects in connection with the defense of any Third Party Claim, including making available
(subject to the provisions of Section 6.07) records relating to such Third Party Claim and furnishing, without expense (other
than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as
may be reasonably necessary for the preparation of the defense of such Third Party Claim.
(b) Settlement
of Third Party Claims. Notwithstanding any other provision of this Agreement to the contrary, the Indemnifying Party shall
not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party, except as provided
in this Section 8.04(b). If a firm offer is made to settle a Third Party Claim without leading to liability or the creation
of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional
release of each Indemnified Party from all Liabilities and obligations in connection with such Third Party Claim and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified
Party. If the Indemnified Party fails to consent to such firm offer within ten days after its receipt of such notice, the Indemnified
Party may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party
as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to
such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim
upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense
pursuant to Section 8.04(a), it shall not agree to any settlement without the written consent of the Indemnifying Party
(which consent shall not be unreasonably withheld or delayed).
(c) Direct
Claims. Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “Direct
Claim”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof,
but in any event not later than 30 days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such
prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and
only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified
Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall
indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party.
The Indemnifying Party shall have 30 days after its receipt of such notice to respond in writing to such Direct Claim. The Indemnified
Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give
rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified
Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including access to
the Indemnified Party’s premises and personnel and the right to examine and copy any accounts, documents or records) as the
Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within
such 30-day period, the Indemnifying Party shall be deemed to have rejected such claim, in which case the Indemnified Party shall
be free to pursue such remedies as may be available to the Indemnified Party on the terms and subject to the provisions of this
Agreement.
(d) Cooperation.
Each Indemnified Party that may be entitled to indemnification hereunder hereby agrees that, upon becoming aware of any event or
circumstance that would be reasonably expected to, or does, give rise to any Losses, it shall take commercially reasonable actions
in order to mitigate and attempt to reduce the amount of such Losses. Any costs or expenses associated with taking such actions
shall be included as Losses hereunder.
Section 8.05 Payments.
Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this Article VIII, the
Indemnifying Party and the Indemnified Party shall instruct the Escrow Agent to release to the Indemnified Party from the Escrow
Amount the amount of such Loss to satisfy the Indemnifying Party’s obligations thereunder. To the extent that funds in the
escrow accounts established pursuant to the Escrow Agreement is insufficient to pay all or any part of such Loss, the Indemnified
Party may, subject to the limitations contained in this Article VIII, seek payment for such Loss from any Indemnifying Party
or otherwise as provided for in this Agreement.
Section 8.06 Tax
Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties
as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.
Section 8.07 Certain
Limitations.
(a) Notwithstanding
anything in this Agreement to the contrary, no Indemnified Party shall be entitled to receive any amount in respect of any indemnification
claims under Section 8.02(a), or Section 8.03(a), as the case may be, unless and until the aggregate of all Losses
incurred or suffered by such Indemnified Party exceeds Fifty Thousand and No/100 Dollars ($50,000.00) (the “Basket”),
in which event the Indemnified Party shall be entitled to recover for all Losses from the first dollar of such Loss. The aggregate
amount of all Losses for which an Indemnifying Party shall be liable pursuant to Section 8.02(a) or Section 8.03(a),
as the case may be, shall not exceed Four Million and No/100 Dollars ($4,000,000) (the “Cap”), provided,
however, that notwithstanding the foregoing, neither the Basket nor the Cap shall be applied to any claim or recovery of
such Losses related to any violation of, non-fulfillment of, non-compliance with, or any breach of, any representation or warranty
contained in the Fundamental Representations, or any claim arising from intentional and actual fraud or criminal activity on the
part of a party hereto in connection with the transactions contemplated by this Agreement. For purposes of determining the amount
of Losses pursuant to this Article VIII, the representations and warranties of any party shall not be deemed qualified by
any references to materiality or to Material Adverse Effect.
(b) Payments
by an Indemnifying Party pursuant to this Article in respect of any Losses shall be limited to the amount of any Liability or damage
that remains after deducting therefrom any insurance proceeds and any indemnity, contribution or other similar payment actually
received by the Indemnified Party in respect of any such claim, less any related costs and expenses, including the aggregate cost
of pursuing any related insurance claims and any related increases in insurance premiums or other chargebacks. The Indemnified
Party shall use all commercially reasonable efforts to recover under insurance policies or indemnity, contribution or other similar
agreements for any Losses prior to seeking indemnification under this Agreement. For purposes of the foregoing sentence, “commercially
reasonable efforts” shall not include the filing of any lawsuit, arbitration, or other similar action.
(c) In
no event shall any Indemnifying Party be liable to any Indemnified Party for any punitive, incidental, consequential, special or
indirect damages, including loss of future revenue or income, loss of business reputation or opportunity relating to the breach
or alleged breach of this Agreement, or diminution of value or any damages based on any type of multiple (whether used for calculating
the Purchase Price or otherwise).
(d) Prior
to seeking recovery against Seller or any Principal Stockholder for any Losses under Section 8.02, Buyers shall make such
claim against the R&W Insurance Policy; if such claim is not paid in full by the R&W Insurance Policy for any reason (including
because of any retention, exclusion or policy limit applicable to such R&W Insurance Policy), then Buyers may seek recovery
for such remaining Losses against the Escrow Amount, subject to the limitations set forth in this Article VIII, then if
such claim is still not paid in full by the R&W Insurance Policy and/or the Escrow Amount, Buyer shall have the right to make
such claim against the Principal Stockholders and the Seller, subject to the limitations set forth in this Article VIII.
Section 8.08 Exclusive
Remedies. Subject to Section 6.08 and Section 10.11, the parties acknowledge and agree that their sole and exclusive
remedy with respect to any and all claims (other than claims arising from intentional and actual fraud or criminal activity on
the part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of any representation,
warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall
be pursuant to the indemnification provisions set forth in this Article VIII. In furtherance of the foregoing, each party
hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any
representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this
Agreement it may have against the other parties hereto and their Affiliates and each of their respective Representatives arising
under or based upon any Law, except pursuant to the indemnification provisions set forth in this Article VIII. Nothing in
this Section 8.08 shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall
be entitled or to seek any remedy on account of any party’s fraudulent, criminal or intentional misconduct.
Section 8.09 Termination
and Release of Regional Franchise Agreements. The Liabilities, obligations, costs, and expenses of Seller under its Regional
Franchise Agreements are terminated as of Closing, and each Seller is released from any and all Liability, obligation, cost or
expense under its Regional Franchise Agreements, except for (i) the obligations of Seller under Section 6.13 and Section
8.02 of this Agreement, (ii) payment obligations under the Regional Franchise Agreements arising from or relating to periods
prior to the Closing; and (iii) any indemnities that survive termination under the Regional Franchise Agreements.
Article
IX
Termination
Section 9.01 Termination.
This Agreement may be terminated at any time prior to the Closing:
(a) by
the mutual written consent of Seller and Buyers;
(b) by
RE/MAX by written notice to Seller if:
(i) No
Buyer is then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform
any representation, warranty, covenant or agreement made by Seller or Principal Stockholders pursuant to this Agreement that would
give rise to the failure of any of the conditions specified in Article VII and such breach, inaccuracy or failure has not
been cured by Seller or Principal Stockholders, within ten days of such person’s receipt of written notice of such breach
from a Buyer; or
(ii) any
of the conditions set forth in Section 7.01 or Section 7.02 shall not have been fulfilled by December 1, 2017, unless
such failure shall be due to the failure of a Buyer to perform or comply with any of the covenants, agreements or conditions hereof
to be performed or complied with by it prior to the Closing;
(c) by
Seller by written notice to Buyers if:
(i) None
of Seller or Principal Stockholders is then in material breach of any provision of this Agreement and there has been a breach,
inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by a Buyer pursuant to this Agreement
that would give rise to the failure of any of the conditions specified in Article VII and such breach, inaccuracy or failure
has not been cured by such Buyer within ten days of such Buyer’s receipt of written notice of such breach from Seller; or
(ii) any
of the conditions set forth in Section 7.01 or Section 7.03 shall not have been fulfilled by December 1, 2017, unless
such failure shall be due to the failure of Seller or any Principal Stockholder to perform or comply with any of the covenants,
agreements or conditions hereof to be performed or complied with by it prior to the Closing; or
(d) by
Buyers or Seller in the event that (i) there shall be any Law that makes consummation of the transactions contemplated by this
Agreement illegal or otherwise prohibited or (ii) any Governmental Authority shall have issued a Governmental Order restraining
or enjoining the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable.
Section 9.02 Effect
of Termination. In the event of the termination of this Agreement in accordance with this Article, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto except:
(a) as
set forth in this Article IX and Section 6.07 and Article X hereof; and
(b) that
nothing herein shall relieve any party hereto from liability for any fraud, criminal activity, or willful misconduct.
Article
X
Miscellaneous
Section 10.01 Expenses.
Except as otherwise expressly provided herein, all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.
Section 10.02 Notices.
All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed
to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent
by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document
(with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent
after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return
receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in accordance with this Section 10.02):
| If to Seller: |
Roaring fork capital
partners, Inc.
1800 15th Street, Suite 203
Denver, CO 80202
E-mail:
Attention: Thomas Reagan, Chairman |
| |
|
| with a copy to: |
STINSON LEONARD STREET LLP
6400 S. Fiddlers Green Circle, Suite 300
Greenwood Village, CO 80111
E-Mail: deborah.bayles@stinson.com and robert.botts@stinson.com
Attention: Deborah Bayles, Esq. and Robert Botts, Jr., Esq. |
| If to Buyers: |
RE/MAX, LLC
5075 S. Syracuse Street
Denver, CO 80237
E-mail: ascoville@remax.com and legal@remax.net
Attention: Adam Scoville, General Counsel |
| |
|
| with a copy to: |
DAVIS GRAHAM & STUBBS LLP
1550 17th Street, Suite 500
Denver, CO 80202
E-mail: jeff.brandel@dgslaw.com
Attention: Jeffrey R. Brandel, Esq. |
Section 10.03 Interpretation.
For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be
deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the
words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer
to this Agreement as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules
and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement,
instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time
to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time
and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without
regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing
any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral
part of, this Agreement to the same extent as if they were set forth verbatim herein.
Section 10.04 Headings.
The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
Section 10.05 Severability.
If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality
or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term
or provision in any other jurisdiction. Except as provided in Section 6.08(d), upon such determination that any term or
other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement
so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the greatest extent possible. If the parties are unable to mutually
agree to so modify the Agreement, the first sentence of this Section 10.05 shall be of no force or effect if the consequence of
enforcing the remainder of this Agreement without such illegal, invalid, or unenforceable provision would be to cause any party
to lose the material benefit of its economic bargain under this Agreement.
Section 10.06 Entire
Agreement. This Agreement and the other Transaction Documents constitute the sole and entire agreement of the parties to this
Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings
and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements
in the body of this Agreement and those in the other Transaction Documents, the Exhibits and Disclosure Schedules (other than an
exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.
Section 10.07 Successors
and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent
of the other party, which consent shall not be unreasonably withheld or delayed; provided, however, that prior to the Closing
Date, a Buyer may, without the prior written consent of Seller, assign all or any portion of its rights under this Agreement to
one or more of its direct or indirect wholly-owned subsidiaries. No assignment shall relieve the assigning party of any of its
obligations hereunder.
Section 10.08 No
Third-party Beneficiaries. Except as provided in Article VIII, this Agreement is for the sole benefit of the parties
hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer
upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of
this Agreement.
Section 10.09 Amendment
and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by
each party hereto. Except as set forth in Section 10.09, no waiver by any party of any of the provisions hereof shall be
effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be
construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of
a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising,
any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege.
Section 10.10 Governing
Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Colorado without
giving effect to any choice or conflict of Law provision or rule (whether of the State of Colorado or any other jurisdiction) that
would cause the application of Laws of any jurisdiction other than those of the State of Colorado.
Section 10.11 Specific
Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in
accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition
to any other remedy to which they are entitled at law or in equity.
Section 10.12 Counterparts.
This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed
to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission
shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be executed as of the date first written above by the parties or their respective
officers thereunto duly authorized.
| |
BUYERS: |
| |
|
| |
RE/MAX, LLC |
| |
|
| |
By |
/s/ Karri Callahan |
| |
Name: Karri Callahan |
| |
Title: Chief Financial Officer |
| |
|
| |
RE/MAX NORTHERN ILLINOIS AD FUND, INC. |
| |
|
| |
By |
/s/ Karri Callahan |
| |
Name: Karri Callahan |
| |
Title: Vice President |
[Signature page continues]
Signature page to Asset Purchase Agreement
| |
SELLER: |
| |
|
| |
Roaring Fork Capital Partners, Inc. |
| |
|
| |
By |
/s/ Thomas Reagan |
| |
Name: Thomas Reagan |
| |
Title: Chairman of the Board |
| |
|
| |
PRINCIPAL STOCKHOLDERS: |
| |
|
| |
By |
/s/ Thomas Reagan |
| |
Thomas Reagan |
| |
|
| |
By |
/s/ Brian Reagan |
| |
Brian Reagan |
| |
|
| |
By |
/s/ Casey Reagan |
| |
Casey Reagan |
| |
|
| |
By |
/s/ Michelle Blagg |
| |
Michelle Blagg |
Signature page to Asset Purchase Agreement
