Under what conditions can an Aira Fitness franchisee's interest in the Agreement or Business be transferred to another entity?

ight to control any litigation related to our copyrights or the Work. You agree to assist us, as directed by us, in any claim or action against the infringer.

12. TRANSFER OF FRANCHISE

• A. Transfers. We have entered into this Agreement with specific reliance upon your financial qualifications, experience, skills and managerial qualifications as being essential to the satisfactory operation of the Aira Fitness Business. Consequently, your interest in this Agreement or in the Aira Fitness Business, or all or substantially all of the assets of the Aira Fitness Business, or any Owner's interest in a franchisee that is a partnership or entity may be transferred or assigned to or assumed by any other person or entity (the "transferee"), in whole or in part, unless you have first tendered to us the right of first refusal to acquire this Agreement in accordance with Section 12.E , and if we do not exercise such right, unless our prior written consent is obtained, the transfer fee provided for in Section 12.C is paid, if applicable, and the transfer conditions described in Section 12.C are satisfied. Any sale (including installment sale), lease, pledge, management agreement, contract for deed, option agreement, assignment, bequest, gift or otherwise, or any arrangement pursuant to which you turn over all or part of the daily operation of the business to a person or entity who shares in the losses or profits of the business in a manner other than as an employee will be considered a transfer for purposes of this Agreement. Specifically, but without limiting the generality of the foregoing, the following events constitute a transfer and you must comply with the right of first refusal, consent, transfer fee, and other transfer conditions in this Section 12:
• 1. Any change or series of changes in the percentage of the franchisee entity owned, directly or indirectly, by the Owner (including any addition or deletion of any person or entity who qualifies as an Owner);
  • 1. Any change in the general partner of a franchisee that is a general, limited or other partnership

entity; or

1. For purposes of this Section 12.A, a pledge or seizure of any ownership interests in you or in any Owner that affects the ownership of 25% or more of you or Owner, which we have not approved in advance in writing.

In the event of your insolvency or the filing of any petition by or against you under any provisions of any bankruptcy or insolvency law, if your legal representative, successor, receiver or trustee desires to succeed to your interest in this Agreement or the business conducted hereunder, such person first must notify us, tender the right of first refusal provided for in Section 12.E, and if we do not exercise such right, must apply for and obtain our consent to the transfer, pay the transfer fee provided for in Section 12.C, if applicable, and satisfy the transfer conditions described in Section 12.C. In addition, you or the transferee must pay the attorneys' fees and costs that we incur in any bankruptcy or insolvency proceeding pertaining to you.

You may not place in, on or upon the location of the Aira Fitness Business, or in any communication media or any form of advertising, any information relating to the sale of the Aira Fitness Business or the rights under this Agreement, without our prior written consent.

• B. Consent to Transfer. We will not unreasonably withhold our consent to transfer, provided we determine that all of the conditions described in this Section 12 have been satisfied. Application for our consent to a transfer and tender of the right of first refusal provided for in Section 12.E must be made by submission of our form of application for consent to transfer, which must be accompanied by the documents (including a copy of the proposed purchase or other transfer agreement) or other required information. The application must indicate whether you or an Owner proposes to retain a security interest in the property to be transferred. No security interest may be retained or created, however, without our prior written consent and except upon conditions acceptable to us. Any agreement used in connection with a transfer is subject to our prior written approval, which approval will not be withheld unreasonably. Any attempted transfer by you without our prior written consent or otherwise not in compliance with the terms of this Agreement will be void and will provide us with the right to elect either to default and terminate this Agreement or to collect from you and the guarantors a transfer fee equal to two times the transfer fee provided for in Section 12.C.
• C. Conditions of Transfer. We condition our consent to any proposed transfer, whether to an individual, a corporation, a partnership or any other entity upon the following:
• 1. Transferee Qualifications. The transferee must meet all of our then-current requirements for the franchise we are offering at the time of the proposed transfer.
• 1. Payment of Amounts Owed. All amounts owed by you to us or any of our affiliates, your suppliers or any landlord for the Aira Fitness Business premises and Authorized Location, or upon which we or any of our affiliates have any contingent liability must be paid in full.
  • 1. Reports. You must have provided all required reports to us in accordance with Section 10.
  • 1. Modernization. You must have complied with the provisions of Section 5.F.
• 1. Guarantee. In the case of an installment sale for which we have consented to you or any Owner retaining a security interest or other financial interest in this Agreement or the business operated hereunder, you or such Owner, and the guarantors, are obligated to guarantee the performance under this Agreement until the final close of the installment sale or the termination of such interest, as the case may be.
• 1. Consent to Transfer; General Release. You, each Owner and each guarantor must execute all transfer documents that we require and in the form we designate, which documents will include a general release

of all claims arising out of or relating to this Agreement, your Aira Fitness Business or the parties' business relationship; provided, however, that the release will not be inconsistent with any state law regulating franchising.

• 1. Training. The transferee must, at your or the transferee's expense, comply with the training requirements of Section 7.B.
• 1. Financial Reports and Data. We have the right to require you to prepare and furnish to transferee and/or us such financial reports and other data relating to the Aira Fitness Business and its operations as we deem reasonably necessary or appropriate for transferee and/or us to evaluate the Aira Fitness Business and the proposed transfer. You agree that we have the right to confer with proposed transferees and furnish them with information concerning the Aira Fitness Business and proposed transfer without being held liable to you, except for intentional misstatements made to a transferee. Any information furnished by us to proposed transferees is for the sole purpose of permitting the transferees to evaluate the Aira Fitness Business and proposed transfer and must not be construed in any manner or form whatsoever as earnings claims or claims of success or failure.
• 1. Transfer Fee. If the transferee is an existing AIRA FITNESS franchisee, you must pay us a transfer fee equal to Five Thousand Dollars ($5,000);

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