What happens if an Aira Fitness franchisee becomes insolvent or files for bankruptcy?

that will identify the grounds for the termination; and (iv) the termination will be effective immediately upon our issuance of the written notice of termination.

• 1. Immediate Termination With No Opportunity to Cure. In the event any of the following defaults occurs, you will have no right or opportunity to cure the default and this Agreement will terminate effective immediately on our issuance of written notice of termination: (i) you have failed to identify a mutually acceptable site for the operation of the Aira Fitness Business or to open the Aira Fitness Business for business within the time period provided by this Agreement; (ii) you or any Owner has made any material misrepresentation or omission in your franchise application or any other report to us; (iii) your voluntary abandonment of this Agreement or the Authorized Location, (iv) the loss of your lease, or the failure to timely cure a default under the lease, (v) the loss of your right of possession or failure to reopen or relocate under Section 5.G.; (vi) the closing of the Aira Fitness Business by any state or local authorities for health or public safety reasons; (vii) any unauthorized use of the Confidential Information; (viii) voluntary or involuntary bankruptcy by or against you or any Owner or guarantor, insolvency, making an assignment for the benefit of creditors or any similar voluntary or involuntary arrangement for the disposition of assets for the benefit of creditors; (ix) conviction of you, any Owners, or guarantors of (or pleading no contest to) any felony or misdemeanor that brings or tends to bring any of the Marks into disrepute or impairs or tends to impair your reputation or the goodwill of the Marks or the Aira Fitness Business, (x) you, any Owner, guarantor or an affiliate of any of you are listed by the United States or United Nations as being a terrorist, financier of terrorism or otherwise restricted from doing business in or with the United States; (xi) intentionally underreport membership sales or Gross Sales, falsify financial data, or otherwise commit an act of fraud with respect to your acquisition of this franchise or your rights or obligations under this Agreement, or any understatement or 2% variance on a subsequent audit within a two- year period under Section 10.C., (xii) any unauthorized transfer or assignment in violation of Section 12; (xiii) your failure to use the approved payment processor, (xiv) you failed to meet the Minimum Membership Requirement for six (6) consecutive months, (xv) you failed to meet the Minimum Monthly Gross Sales Requirement for six (6) consecutive months, or *(xv)*any default by you that is the second same or similar default within any 12 month consecutive period or the third default of any type within any 24-month consecutive period.
• 1. Immediate Termination After No More than 24 Hours to Cure. In the event that a default under this Agreement occurs that materially impairs the goodwill associated with any of the Marks, violates any health, safety or sanitation law or regulation, or if the operation of the Aira Fitness Business presents a health or safety hazard to your members or to the public: (i) you will have no more than 24 hours after we provide written notice of the default to cure the default; and (ii) this Agreement will terminate effective immediately on our issuance of written notice of termination.
• 1. Effect of Other Laws. The provisions of any valid, applicable law or regulation prescribing permissible grounds, cure rights or minimum periods of notice for termination of this franchise supersede any provision of this Agreement that is less favorable to you.

• B. Cross Default. Where there is more than one agreement in existence between you and us (including agreements guaranteed by the Owners), you agree that we have the right to treat a material breach or default of any one agreement between the parties as a material breach or default of all or any of the other agreements between the parties, and any such material breach or default of any one agreement shall be treated, in respect of any of the other agreements, as a material breach or default of each such agreement in accordance with its own terms.

• C. Termination by You. You may terminate this Agreement as a result of a breach by us of a material provision of this Agreement provided that: (i) you provide us with written notice of the breach that identifies the grounds for the breach; and (ii) we fail to cure the breach within a reasonable time, which will in no event be less than ninety (90) days after our receipt of the written notice. If we fail to cure the breach, the termination will be effective sixty (60) days after our receipt of your written notice of breach. Your termination of this Agreement under this Section will not release or modify your post-term obligations under Section 11.D and Section 15 of this Agreement.

• D. Right to Operate Upon Default. In addition to our right to terminate this Agreement and not in lieu of such right or any other rights, in the event that you have not cured a default under this Agreement within fourteen (14) days after receipt of a written notice of default, we may, at our option, enter upon the premises and exercise complete authority with respect to the operation of the Aira Fitness Business until such time as we determine that the default has been cured and that there is compliance with the requirements of this Agreement. You acknowledge and agree that our agent or other representative we designate may take over, control and operate the Business, that you shall pay us a fee for such management service, not to exceed fifteen percent (15%) of Gross Sales plus all travel expenses, room and board and other expenses actually incurred by such agent or representative so long as it shall be required to enforce compliance with this Agreement. You further acknowledge that if we temporarily operate the Business on your behalf under this Paragraph 14.D., you will indemnify us and hold us and our agent or representative harmless and respecting any and all claims arising out of our operation of the Business under this Paragraph 14.D.. Nothing herein shall require us to operate the Business when you are in default.

• E. Other Remedies. In addition to and without limiting our rights and remedies under this Agreement, any other agreement and applicable law, upon any events upon which we may terminate this Agreement under this Article 14, we may, at our sole option and upon delivery of written notice to you, elect to take any or all of the following actions without terminating this Agreement:

  • (1) temporarily or permanently reduce the size of the Designated Area, in which even the restrictions upon Paragraph 2.C. will not apply in the geographic area that was removed from the Designated Area;
  • (2) suspend online enrollment;
  • (3) suspend our facilitation of the member billing process;
  • (2) refuse to provide any operation support that this Agreement required or we have elected to provide or suspend any other services that we or our affiliates provide to you under this Agreement or any other agreement; and/or
    • (3) remove your Aira Fitness Business from any website we manage.

• F. Liquidated Damages. In the event of any default by you that results in a premature termination of this Agreement (regardless of which party actually terminates this Agreement), without prejudice to any other remedy we may have under the terms of this Agreement or otherwise, you must pay us, as liquidated damages and not as a penalty, an amount equal to thirty-six (36) times the Royalty owed to us over the past twelve (12) month period immediately preceding the date of termination (or if you have been in business less than twelve (12) months, then during the entire period you have been in business). The parties acknowledge and agree that such amount represents

a reasonable estimate of the damages we will incur as a result of such default and premature termination.

15. POST-TERM OBLIGATIONS

A. Reversion of Rights; Discontinuation of Trademark Use. All of your rights to the use of the Marks and all other rights and licenses granted in this Agreement and the right and license to conduct business under the Marks at the Authorized Location will revert to us without further act or deed of any party. All of your right, title and interest in, to and under this Agreement will become our property.

Source: Item 23 — **RECEIPTS (FDD pages 59–254)